Deutsche AM Distributors, Inc. 222 South Riverside Plaza Chicago, IL (800) deutschefunds.com May 9, 2016

Transcription

1 Deutsche AM Distributors, Inc. 222 South Riverside Plaza Chicago, IL (800) deutschefunds.com May 9, 2016 Subject: DeAWM Trust Company Name Change and Service Provider Disclosure Dear Plan Sponsor, As part of a new organizational structure at Deutsche Bank, Deutsche Asset & Wealth Management became two distinct businesses effective January 1, 2016: Deutsche Asset Management and Deutsche Bank Wealth Management. Accordingly, the names of our service providers changed, effective May 9, DeAWM Trust Company the directed trustee of your retirement plan changed its name to Deutsche AM Trust Company. As a result, Deutsche AM Trust Company will be referenced as custodian or directed trustee on all accounts which previously referenced DeAWM Trust Company as custodian or directed trustee. Since this is a change in name only for the custodian or directed trustee and does not change the ownership of your account, no action is required on your part. Account statements dated on or after May 9, 2016, will reflect these changes. The Deutsche Funds in which you are invested will retain the Deutsche Fund name. DeAWM Distributors, Inc. changed its name to Deutsche AM Distributors, Inc. DeAWM Service Company changed its name to Deutsche AM Service Company. Under ERISA Section 408(b)(2), the Department of Labor requires service providers to provide written disclosures regarding fees, services and other relevant information to plan fiduciaries to assist in assessing the reasonableness of the contract or arrangement between your plan and the covered service provider. Because DeAWM Trust Company and its affiliates provide services to your plan, we are providing you the information required by the final regulations. This document refers to the service providers by the new names mentioned, above. This disclosure information is also available on Deutsche Asset Management s website at Deutsche AM Trust Company s disclosure is updated periodically so we encourage you to check this website from time to time for any updates. I. Deutsche AM Trust Company as Directed Trustee For plans other than 403(b) plans, Deutsche AM Trust Company acts as a fiduciary to your plan by serving as a nondiscretionary directed trustee with respect to your plan s assets. Deutsche AM Trust Company s services include: Safekeeping assets held in your plan s trust; Effecting the investment instructions of the person[s] authorized by the plan 1 ; Making distributions as directed by the plan administrator 1 ; and Certifying the annual trust statement. 1

2 Deutsche AM Trust Company and its affiliates may provide services to your plan and to your participants, which are not fiduciary services. With respect to 403(b) plans, Deutsche AM Trust Company acts as a nonfiduciary custodian, providing nondiscretionary services similar to those described above. II. Direct Compensation Your plan does not pay Deutsche AM Trust Company any direct compensation as defined in 29 CFR b- 2(c)(1)(iv)(C)(1) and (viii)(b)(1). III. Indirect Compensation ADP, LLC (ADP) in its capacity as the recordkeeper for certain Deutsche Asset Management retirement plans, pays Deutsche AM Trust Company a monthly fee pursuant to the Service Delegation Agreement between ADP and Deutsche AM Trust Company and the Service/Alliance Agreement between ADP and Deutsche Investment Management Americas Inc. ( DIMA ). The amount Deutsche AM Trust Company receives is based on a tiered fee schedule of $1,750 per plan up to 350 plans and $175 for each plan between 351 and 700. ADP does not pay Deutsche AM Trust Company in connection with 403(b) plans. Indirect Compensation of Deutsche AM Trust Company Affiliates Deutsche AM Distributors, Inc., the principal underwriter and distributor of the Deutsche Funds, which are registered open-end investment companies in which your plan may invest, DIMA, the investment adviser of the Deutsche Funds, and Deutsche AM Service Company, the transfer agent for the Deutsche Funds, are affiliates of Deutsche AM Trust Company. Deutsche AM Distributors, Inc. receives indirect compensation in connection with your plan s investments in Deutsche Funds pursuant to a Master Distribution Agreement, Rule 12b-1 Plans, and/or a Shareholder Services Agreement. The Deutsche Funds pay DIMA indirect compensation pursuant to an Administrative Services Agreement and/or Investment Management Agreement. Class A and R shares deduct 12b-1 fees out of the funds assets; Class R6, Class S shares and Institutional shares do not impose 12b-1 fees. You may find a complete description of the amount of these fees by visiting the website of the Deutsche Funds at deutschefunds.com. The fees are described in the prospectus for the applicable Deutsche Fund in the section entitled Fees and Expenses of the Fund and are detailed in the Annual Fund Operating Expenses table. 12b-1 Distribution/Service Fees As principal underwriter and distributor for Class A and R shares of Deutsche Funds and agent to the Deutsche Funds, Deutsche AM Distributors, Inc. receives an annual distribution fee from the Funds under Rule 12b-1, payable monthly, of 0.25% for Class A shares and 0.50% for Class R shares of average daily net assets of a fund. The 12b-1 fee is paid out of fund assets and is generally used to compensate various financial intermediaries for selling shares of a Deutsche Fund. For details, see Choosing A Share Class in the fund s prospectus under the section entitled Investing in the Funds. Finder s Fees As principal underwriter to the Deutsche Funds, Deutsche AM Distributors, Inc. may receive a finder s fee from the Fund s agent that is then passed on to your plan s financial advisor. In connection with your plan s purchase of Class A shares, the fee ranges from 0.00% to 0.50% depending on the underwriting criteria applicable to your plan, such as the size of your plan and the services provided to your plan by your financial advisor. The fees are paid monthly. There is no finder s fee paid to Deutsche AM Distributors, Inc. in connection with Class A share 2

3 purchases associated with new plans underwritten by Deutsche AM Distributors, Inc. after October 1, No finder s fee is paid to Deutsche AM Distributors, Inc. in connection with Class R, S and Institutional shares. For more information, please refer to the section entitled Purchase and Redemption of Shares in the Fund s Statement of Additional Information. Commissions Due to the asset size of your plan, your plan may be eligible to purchase Class A shares of the Deutsche Funds at net asset value. If you qualify, this means that you do not pay a commission (i.e. sales charge) in connection with Class A purchases. Indirect Compensation from Non-Deutsche Funds To the extent that your plan invests in nonproprietary third-party mutual funds ( non-deutsche Funds ), Deutsche AM Distributors, Inc. may also receive indirect compensation (i.e., finder s fees, 12b-1 distribution fees and/or shareholder service fees) pursuant to a selling agreement between Deutsche AM Distributors, Inc. and the distributor of the nonproprietary mutual fund. You will find a complete description and the amount of the 12b-1 fees by visiting the website for the funds in which your plan invests. If you need assistance in locating the applicable websites, call your plan service contact. The fees are described in the section entitled Annual Fund Operating Expenses Table or something similar. In addition to compensating financial intermediaries for their services to your plan (see Compensation Paid Among Related Parties), the indirect compensation retained by Deutsche AM Distributors, Inc. may enable Deutsche AM Distributors, Inc. to provide you with other services such as: Services Relating to Participants designing, producing and delivering participant communication materials, designing, producing and delivering participant enrollment information, designing, producing and delivering termination information for departing participants, creating and printing retirement plan communications and providing postage and freight charges for plans that meet a minimum asset level, delivering participant newsletters, if applicable, conducting periodic participant education workshops, providing the deutschefunds.com/retire website, which offers access to a suite of participant tools including calculators, interactive financial planning charts, articles, presentations and investment education and planning tools, and distributing fund notices stemming from changes initiated by the fund's Board. Services for Plan Sponsors providing a Client Advisor for plans that meet a minimum asset level, providing communication and education assistance as needed providing factual information to assist you with your plan s investment policy, creating and delivering plan review books consisting of plan demographic stastics, investments and benchmarking data, maintaining Deutsche Asset Management s plan sponsor website which provides access to fiduciary oversight tools and other informative communications to help you effectively manage your planand motivate your employees for retirement readiness, 3

4 creating presentation materials, conducting periodic educational webinars, and delivering prospectuses and proxies to plan participants. Investment Advisory Fee Paid to DIMA DIMA is the investment advisor for each Deutsche Fund and receives a management fee for its services from each Deutsche Fund. Under the oversight of the Deutsche Funds Board, DIMA makes investment decisions, buys and sells securities and conducts research on Deutsche Funds investments. DIMA manages the Deutsche Funds investments and business subject to the policies established by the Fund Board. Management fees, which are a percentage of daily net assets, are a component of the Fund s expense ratio. The annual management fee is disclosed in the Funds Prospectus in the Annual Fund Operating Expenses table under Fees and Expenses of the Fund. You can find the prospectus on deutschefunds.com. Indirect Compensation Related to the Use of Participant Information To the extent authorized in writing by the plan sponsor (or other appropriate plan fiduciary), Deutsche AM Distributors, Inc. receives, as part of its compensation for services provided to the Plan, access to participant information (i.e., telephone numbers and addresses) which Deutsche AM Distributors, Inc. may use to contact plan participants to offer to them two types of services unrelated to the plan: (i) guidance regarding investment of the participant s non-retirement plan assets (which may include investment in Deutsche Asset Management s products);(ii) in the case of a participant who is terminating employment, assistance in evaluating distribution and rollover options, including IRAs available from Deutsche Asset Management. These services to participants are not provided to or on behalf of the plan and in particular are not provided in a fiduciary capacity. Gifts and Entertainment From time to time, employees of Deutsche AM Distributors, Inc. and its affiliates may receive gifts (other than cash or cash equivalents), entertainment or meals from third parties, or attend educational conferences hosted by third parties. There is no agreement or arrangement between Deutsche AM Distributors, Inc. and third parties regarding the provision of gifts, entertainment, meals and conferences that is based on services or arrangement with any particular plan, and any such gifts, entertainment, meals and gratuities are not received by the Deutsche AM Distributors Inc. or its affiliates employees by reason of their services to any particular plan and are generally on account of the entire Deutsche Asset Management book of business. Employees are subject to firm wide policies on gifts and entertainment that include terms consistent with regulatory requirements, including ERISA where applicable. IV. Compensation Paid Among Related Parties 2 Compensation paid by each Deutsche Fund to DIMA and Deutsche AM Service Company for various services, including investment management, administrative, transfer agency, and, for certain Funds, additional administration and recordkeeping services, is set forth in Part 1 Appendix l-e of the Fund s Statement of Additional Information. For information regarding payments made to Deutsche AM Distributors, Inc. by the Funds, see Part I Appendix I-F of the Fund s Statement of Additional Information. Fee rates for DIMA, Deutsche AM Distributors, Inc. and Deutsche AM Service Company s services are included in Part II Appendix II-C of the Fund s Statement of Additional Information. Deutsche AM Service Company is each Fund s transfer agent, dividend-paying agent and shareholder service agent pursuant to the Transfer Agency and Services Agreement. Deutsche AM Service Company receives a flat 4

5 fee of $2.88 per open retirement account and an annual asset based fee from the Fund that ranges from 0.03% to 0.25% of average net assets per open retirement account. One twelfth of the annual service charge for each account is charged and payable to Deutsche AM Service Company each month. Please see Part II Appendix II- C of the Fund s Statement of Additional Information. Certain out-of-pocket expenses, such as for printing and mailing routine Fund disclosure documents, costs of record retention and transaction processing costs are reimbursed by a Fund or are paid directly by the Fund. Certain additional out-of-pocket expenses, including costs for computer hardware and software, third party recordkeeping fees in excess of 0.25% and processing of proxy statements may only be reimbursed by a Fund with the prior approval of the Fund Board. Pursuant to a subtransfer agency agreement between Deutsche AM Service Company and DST Systems, Inc. ( DST ), Deutsche AM Service Company has delegated certain transfer agent, dividend paying agent and shareholder servicing agent functions to DST. The costs and expenses of such delegation are borne by DISC, not by a Fund. DIMA, not the fund, pays ADP a sub-transfer agency fee that ranges from 0.07% to 0.35% of assets. The subtransfer agency fee is made pursuant to a Service/Alliance Agreement between DIMA and ADP and compensates ADP for providing recordkeeping and other administrative services with respect to the accounts of your participants or other beneficial owners of Deutsche Fund shares. Pursuant to a Sub-Administration and Sub-Accounting Agreement between DIMA and State Street Bank &Trust Company ( SSB ), DIMA has delegated certain administrative functions to SSB. Additionally, DIMA has delegated certain fund accounting functions, such as responsibility for determining net asset value per share and maintaining the portfolio and general accounting records for a Fund, to SSB pursuant to a Fund Accounting Agreement. In both cases, the costs and expenses of such delegation are borne by DIMA, not by a Fund. The fees are not paid on a transaction basis and do not affect the net asset value of the fund. Deutsche AM Distributors, Inc., at its discretion, may pay all or a portion of the indirect compensation it receives from Deutsche Funds and third party funds to the investment dealer or other financial services firm that employs your financial advisor. These payments, which reduce the overall compensation Deutsche AM Distributors, Inc. retains, are made pursuant to a Selling Group Agreement between Deutsche AM Distributors, Inc. and the dealer. Please refer to the applicable fund s Statement of Additional Information under Financial Services Firms Compensation or similar section for details. The payments are made at your direction for services that the financial advisor provides to your plan, such as distribution of shares, acting as dealer for its own account, maintenance of records and delivery of prospectus, proxy materials and shareholder reports pursuant to applicable legal requirements. Under the Selling Group Agreement, the investment dealer or other financial services firm is not acting as a subcontractor to Deutsche AM Distributors, Inc. Your financial advisor should provide you with its own service provider disclosure, which details these payments. DIMA pays ADP for assisting DIMA in consolidating investment positions in certain funds in the Program. On a monthly basis, ADP invoices DIMA $15,893. The payment is not transaction based and does not affect the net asset value of the funds. V. Compensation for Termination of Contract Deutsche AM Trust Company does not impose a fee in the event you wish to terminate Deutsche AM Trust Company as directed trustee. You may remove Deutsche AM Trust Company as directed trustee by providing 30 days advance written notice. 5

6 If you have specific questions about Deutsche AM Trust Company s disclosure, please write to Deutsche AM Trust Company at the address below or send an to service@db.com with Section 408(b)(2) in the subject line. You can obtain a Deutsche Funds prospectus or SAI by downloading one from deutschefunds.com. Thank you for your continued support. Deutsche AM Trust Company C/O Deutsche AM Service Company P.O. Box Kansas City, MO As the plan s recordkeeper, ADP performs this service for Deutsche AM Trust Company s behalf. 2 Deutsche Asset Management, Deutsche Investment Management Americas Inc., and Deutsche AM Trust Company are not affiliated with ADP, LLC. Deutsche AM Trust Company provides trust services for your plan and ADP, LLC provides recordkeeping services for your plan pursuant to separate service agreements with your company. Supplement If your plan offers the Deutsche Stock Index Fund as an investment option, the following disclosure applies: I. Deutsche AM Trust Company as Trustee/Investment Manager of the Deutsche Stock Index Fund Deutsche AM Trust Company is the Trustee and Investment Manager, as defined in ERISA Section 3(38), of the Deutsche Stock Index Fund, a bank collective trust that is deemed to hold plan assets under ERISA. In this role, it is acting as a fiduciary with respect to the assets invested in the Deutsche Stock Index Fund. To the extent your plan invests in the Deutsche Stock Index Fund, Deutsche AM Trust Company receives a management and trustee fee from the Deutsche Stock Index Fund for its asset management and trustee services at the annual rate of 0.25% of the market value of your plan s assets invested in the Deutsche Stock Index Fund pursuant to Schedule C of the Investment Management Agreement between Deutsche AM Trust Company and your plan. The management and trustee fee accrues daily and is paid monthly. There is no compensation charged directly against the Deutsche Stock Index Fund that is not included in the annual operating expenses of the fund. The Deutsche Stock Index Fund invests its portfolio in the NT Collective S&P 500 Index Fund Non Lending, a collective investment fund ("NT Fund"). Northern Trust Investments, Inc. ("NTI") is Trustee of the NT Fund. NTI as well as its affiliates that provide services to the NT Fund are reimbursed from the assets of the fund for direct expenses incurred in providing these services. These services include internal audit, accounting, custody, and operational and technical support. These expenses are calculated at the NT Fund s valuation date and reimbursement occurs on a monthly basis. The NT Fund is also charged for audit services related to the preparation of the annual financial statements. For the fiscal year ending July 31, 2015, the NT Fund s turnover rate was 7% and the total expense ratio was 0.01% and is reflected in the unit value of the NT Fund. Deutsche Stock Index Fund s expense ratio is.25% and indirectly bears its proportionate share of the expenses incurred by the NT Fund. 6

7 II. Compensation Paid Among Related Parties Of the 0.25% paid by the Deutsche Stock Index Fund to Deutsche AM Trust Company, Deutsche AM Trust Company may pay up to 0.16% to ADP, LLC for recordkeeping services. Also out of the 0.25%, Deutsche AM Trust Company pays NTI 0.05% annually for investment management and serving as custodian to the underlying NT collective trust. NTI s fee is calculated each calendar quarter based on one-fourth of the annual fee. Deutsche AM Trust Company also pays other service providers for custody, fund accounting and administrative services out of the 0.25% expense ratio of the Deutsche Stock Index Fund. III. Compensation for Termination of Contract Deutsche AM Trust Company does not impose a fee in the event you wish to terminate Deutsche AM Trust Company as directed trustee. You may remove Deutsche AM Trust Company as directed trustee by providing 30 days advance written notice. IV. Investment Disclosure All compensation charged directly against the investment is included in the annual operating expenses of the Deutsche Stock Index Fund. The Deutsche Stock Index Fund does not charge the investment fund for such expenses as commissions, sales loads, sales charges, deferred sales charges, redemption fees, surrender charges, exchange fees, account fees, and purchase fees. The total operating expenses of the Deutsche Stock Index Fund are described in the Financial Statements for the Deutsche Stock Index Fund. The benchmark for the Deutsche Stock Index Fund is the S&P 500 Index. The principal goals and strategies of the Deutsche Stock Index Fund are contained in the fund description that you received when your plan invested in the Deutsche Stock Index Fund. There is no turnover in the Deutsche Stock Index fund since it invests all of its assets in the NT Fund. The description of the Deutsche Stock Index Fund was provided to you when your plan first invested in the Deutsche Stock Index Fund. An additional copy of the fund description can be obtained from your Relationship Manager. Sincerely Deutsche AM Trust Company Deutsche Asset Management represents the asset management activities conducted by Deutsche Bank AG or any of its subsidiaries. Investment products: No bank guarantee I Not FDIC insured I May lose value Investment products offered through Deutsche AM Distributors, Inc. R (5/16) 7