April 2013 DWS Investments Distributors, Inc. 222 South Riverside Plaza Chicago, IL (800) dws-investments.com

Transcription

1 April 2013 DWS Investments Distributors, Inc. 222 South Riverside Plaza Chicago, IL (800) dws-investments.com Subject: DWS Trust Company Service Provider Disclosure Dear Plan Sponsor, 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 DWS Trust Company ( DWSTC ) and its affiliates provide services to your plan, we are providing you the information required by the final regulations. This disclosure information is also available on Deutsche Asset & Wealth Management s website at DWSTC s disclosure is updated periodically so we encourage you to check this website from time to time for any updates. I. DWSTC as Directed Trustee For plans other than 403(b) plans, DWSTC acts as a fiduciary to your plan by serving as a nondiscretionary directed trustee with respect to your plan s assets. DWSTC 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. DWSTC and its affiliates may provide services to your plan and to your participants, which are not fiduciary services. With respect to 403(b) plans, DWSTC acts as a nonfiduciary custodian, providing nondiscretionary services similar to those described above. II. Direct Compensation Your plan does not pay DWSTC any direct compensation as defined in 29 CFR b-2(c)(1)(iv)(C)(1) and (viii)(b)(1). III. Indirect Compensation ADP, Inc., in its capacity as the recordkeeper for Deutsche Asset & Wealth Management s retirement plans, pays DWSTC a monthly fee pursuant to the Service Delegation Agreement between ADP, Inc. and DWSTC and the Service/Alliance Agreement between ADP, Inc. and Deutsche Investment Management Americas Inc.

2 ( DIMA ).The amount DWSTC 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 DWSTC in connection with 403(b) plans. Indirect Compensation of DWSTC Affiliates DWS Investments Distributors, Inc. ( DIDI ), the principal underwriter and distributor of the DWS Funds, which are registered open-end investment companies in which your plan may invest, Deutsche Investment Management Americas Inc. ( DIMA ), the investment adviser of the DWS Funds, and DWS Investments Service Company ( DISC ), the transfer agent for the DWS Funds, are affiliates of DWSTC. DIDI receives indirect compensation in connection with your plan s investments in DWS Funds pursuant to a Master Distribution Agreement, Rule 12b-1 Plans, and/or a Shareholder Services Agreement. The DWS 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 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 DWS Funds at The fees are described in the prospectus for the applicable DWS 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 R shares of DWS Funds and agent to the DWS Funds, DIDI receives an annual distribution fee from the Fund under Rule 12b-1, payable monthly, of 0.25% 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 DWS Fund. For details, see Choosing A Share Class in the fund s prospectus under the section entitled Investing in the Funds. DIDI may also receive an annual shareholder service fee under Rule 12b-1 of up to 0.25% from Class A and Class R shares of the DWS Funds. Shareholder service fees are paid monthly and are a percentage of the average daily net assets of a fund. The 12b-1 shareholder service fee is generally used to compensate various financial intermediaries for providing post-sale services to your plan. 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 DWS Funds, DIDI 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 DIDI in connection with Class A share purchases associated with new plans underwritten by DIDI after October 1, No finder s fee is paid to DIDI 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. 2

3 Commissions Due to the asset size of your plan, your plan is eligible to purchase Class A shares of the DWS Funds at net asset value. This means that you do not pay a commission (i.e. sales charge) in connection with Class A purchases. Indirect Compensation from Non-DWS Funds To the extent that your plan invests in nonproprietary third-party mutual funds ( non-dws Funds ), DIDI may also receive indirect compensation (i.e., finder s fees 2, 12b-1 distribution fees and/or shareholder service fees) pursuant to a selling agreement between DIDI and the distributor of the nonproprietary mutual fund or from ADP 3. You will find a complete description of 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 DIDI may enable DIDI 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 kits, designing, producing and delivering customized termination kits for departing participants, creating and printing retirement plan communications and providing postage and freight charges for plans that meet a minimum asset level, delivering print participant newsletters, if applicable, conducting periodic participant education workshops, providing the dwsretire website, which offers access to a suite of participant tools including calculators, interactive financial planning charts, articles, presentations and investment education and planning tools, providing RolloverCentral via the ADP website and dwsretire.com where participants can access tools to help them evaluate distribution options, compare IRA providers, and securely open an IRA account, 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 conducting an annual review of plan metrics, investments and benchmarks, maintaining Deutsche Asset & Wealth 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, creating presentation materials, conducting periodic educational webinars, and delivering prospectuses and proxies to plan participants. 3

4 Investment Advisory Fee Paid to DIMA DIMA is the investment advisor for each DWS Fund and receives a management fee for its services from each DWS Fund. Under the oversight of the DWS Funds Board, DIMA makes investment decisions, buys and sells securities and conducts research on DWS Funds investments. DIMA manages the DWS 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 dws-investments.com. Payments from ADP for Enrollment Kits A portion of the cost for the customized participant enrollment kits is paid to DWSTC and/or DIDI by your plan s recordkeeper, ADP. On a monthly basis, DIDI invoices ADP $2.00 for each enrollment kit created during the billing period. Indirect Compensation Paid By Wealth Management Systems, Inc. Pursuant to the Rollover Solutions Network Participation Agreement between DIDI and Wealth Management Systems, Inc. and WMSI Securities, Inc. (collectively, WMSI ), Deutsche Asset & Wealth Management participants have access to RolloverCentral 4. RolloverCentral helps participants to evaluate their distribution options, compare IRA providers, and securely open an IRA on-line with Deutsche Asset & Wealth Management or other third party IRA provider. For each rollover by a Deutsche Asset & Wealth Management participant to an IRA provider other than Deutsche Asset & Wealth Management, WMSI pays DIDI a fee equal to 30% of the net compensation received by WMSI Securities from such third party IRA provider for facilitating the IRA rollover. Indirect Compensation Related to the Use of Participant Information To the extent authorized in writing by the plan sponsor (or other appropriate plan fiduciary), DIDI receives, as part of its compensation for services provided to the Plan, access to participant information (i.e., telephone numbers and addresses) which DIDI may use to contact plan participants to offer to them two types of services unrelated to the plan: (i) guidance regarding invest of the participant s non-retirement plan assets (which may include investment in Deutsche Asset & Wealth 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 &Wealth 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 Asset & Wealth Management 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 Asset & Wealth Management and third parties regarding the provision of gifts, entertainment, meals and conferences that is based on Deutsche Asset & Wealth Management s services or arrangement with any particular plan, and any such gifts, entertainment, meals and gratuities are not received by the Deutsche Asset & Wealth Management or its affiliates employees by reason of their services to any particular plan and are generally on account of the entire Deutsche Asset & Wealth 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. 4

5 IV. Compensation Paid Among Related Parties Compensation paid by each DWS Fund to DIMA and DISC 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 DIDI by the Funds, see Part I Appendix I-F of the Fund s Statement of Additional Information. Fee rates for DIMA, DIDI and DISC s services are included in Part II Appendix II-C of the Fund s Statement of Additional Information. DISC is each Fund s transfer agent, dividend-paying agent and shareholder service agent pursuant to the Transfer Agency and Services Agreement. DISC receives a flat 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 DISC each month. Please see Part II Appendix II-C of the Fund s Statement of Additional Information. Certain out-ofpocket 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 sub-transfer agency agreement between DISC and DST Systems, Inc. ( DST ), DISC 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 DWS 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. DIDI, at its discretion, may pay all or a portion of the indirect compensation it receives from DWS 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 DIDI retains, are made pursuant to a Selling Group Agreement between DIDI and the dealer. Please refer to the applicable fund s Statement of Additional Information under Financial Services Firms Compensation or similar section for details. If you need assistance in finding the correct section, please contact your Relationship Manager. 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 DIDI. Your financial advisor should provide you with its own service provider disclosure, which details these payments. 5

6 Pursuant to DIDI s arrangement with WMSI, DIDI pays WMSI a fee to help participants evaluate their distribution options, compare IRA providers, and securely open an IRA on-line. The fees are not paid out of the assets of a plan, and do not affect the net asset value. DIDI pays WMSI a one- time processing fee of between $40-60 for any participant distributions rolled over to a Deutsche Asset & Wealth Management IRA. Pursuant to DIMA s arrangement with ADP, DIMA pays (or causes to be paid) ADP the difference between.25% and the amount of revenue receive by ADP from non-dws Funds for technical support. The fund companies for which these payments are made may include: Alliance Bernstein, Allianz, American, Aston, Davis, Eagle, Federated, Franklin Templeton Investments, Goldman Sachs, Hartford, Invesco, Janus, John Hancock, Keeley, Lord Abbett, Managers, MFS, Morgan Stanley, Natixis, PIMCO, Prudential, RS, T. Rowe Price, Transamerica Premier and Wells Fargo Advantage. A portion of the cost for the customized participant enrollment kits is paid to DWSTC and/or DIDI by ADP. DIMA pays ADP for assisting DIMA in consolidating investment positions in certain funds in the Program. On a monthly basis, ADP invoices DIMA $1,815. The payment is not transaction based and does not affect the net asset value of the funds. V. Compensation for Termination of Contract DWSTC does not impose a fee in the event you wish to terminate DWSTC as directed trustee. You may remove DWSTC as directed trustee by providing 30 days advance written notice. If you have specific questions about DWSTC s disclosure, please write to DWS Trust Company at the address below or send an to service@db.com with Section 408(b)(2) in the subject line. Please direct all other questions to your Relationship Manager. You can obtain a DWS Funds prospectus or SAI by downloading one from dws-investments.com. Thank you for your continued support. DWS Trust Company C/O DWS Investments Service Company P.O. Box Kansas City, MO As the plan s recordkeeper, ADP performs this service for DWS Trust Company s behalf. 2 DIDI receives a finder s fee on purchases of the following funds: American Funds, Class A: 0.25%; Columbia Funds, Class A and R: 0.50% for purchases between $3-$50 million, 0.25% purchases over $50 million; Franklin Templeton, Class A: 1.00%; Munder Capital Management, Class A: 1.00% on first $2 million; 0.50% on next $3 million, 0.25% on amounts in excess of $5 million; Pioneer, Class A: 0.50% on first $50 million; Putnam, Class A and R: up to 1.00%. 3 To the extent your plan invests in the Baron Funds, ADP credits DIDI 0.05% of assets. This credit is made to DIDI pursuant to a Service / Alliance Agreement under which DIMA and ADP have agreed to market jointly a retirement plan product. 4 Deutsche Asset & Wealth Management srollovercentral is a registered trademark of Wealth Management Systems, Inc. The RolloverCentral website is powered by Wealth Management Systems, Inc., which is an independent third party vendor. 6

7 Supplement If your plan offers the DWS Stock Index Fund as an investment option, the following disclosure applies: I. DWSTC as Trustee/Investment Manager of the DWS Stock Index Fund DWSTC is the Trustee and Investment Manager, as defined in ERISA Section 3(38), of the DWS 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 DWS Stock Index Fund. To the extent your plan invests in the DWS Stock Index Fund, DWSTC receives a management and trustee fee from the DWS 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 DWS Stock Index Fund pursuant to Schedule C of the Investment Management Agreement between DWSTC and your plan. The management and trustee fee accrues daily and is paid monthly. There is no compensation charged directly against the DWS Stock Index Fund that is not included in the annual operating expenses of the fund. The DWS 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, 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, 2011, the NT Fund s turnover rate was 8.32% and the total expense ratio was 0.01% and is reflected in the unit value of the NT Fund. DWS Stock Index Fund indirectly bears its proportionate share of the expenses incurred by the NT Fund. II. Compensation Paid Among Related Parties Of the 0.25% paid by the DWS Stock Index Fund to DWSTC, DWSTC may pay up to 0.16% to ADP, Inc. for plan level recordkeeping services. Also out of the 0.25%, DWSTC 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. DWSTC also pays other service providers for custody, fund accounting and administrative services out of the 0.25% expense ratio of the DWS Stock Index Fund. III. Compensation for Termination of Contract DWSTC does not impose a fee in the event you wish to terminate DWSTC as directed trustee. You may remove DWSTC 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 DWS Stock Index Fund. The DWS 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 DWS Stock Index Fund are described in the Financial Statements for the DWS Stock Index Fund. 7

8 The benchmark for the DWS Stock Index Fund is the S&P 500 Index. The principal goals and strategies of the DWS Stock Index Fund are contained in the fund description that you received when your plan invested in the DWS Stock Index Fund. There is no turnover in the DWS Stock Index fund since it invests all of its assets in the NT Fund. Further information such as the total annual operating expenses of the investment for a one-year period expressed as a dollar amount for a $1,000 investment, performance, the turnover in the underlying NT Fund and other information required by the Department of Labor Participant Disclosure regulation will be provided to you later this year. The description of the DWS Stock Index Fund was provided to you when your plan first invested in the DWS Stock Index Fund. An additional copy of the fund description can be obtained from your Relationship Manager. Sincerely DWS Trust Company Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries. Clients will be provided Deutsche Asset & Wealth Management products or services by one or more legal entities that will be identified to clients pursuant to the contracts, agreements, offering materials or other documentation relevant to such products or services. Investment products: No bank guarantee I Not FDIC insured I May lose value Investment products offered through DWS Investments Distributors, Inc. R (04/13) 8

9 Important notice Effective August 11, 2014, the DWS funds will be renamed Deutsche funds to better align with the Deutsche Asset & Wealth Management brand. At the same time, the DWS variable insurance portfolios (VIPs) will be renamed Deutsche VIPs and the DWS-branded closed-end funds will be renamed Deutsche. This change has no effect on the day-to-day management of the funds. A list of all the funds names is available at dws-investments.com. Note: the funds Web address will become deutschefunds.com effective August 11, Key service providers will be renamed as follows: Current name New name, effective August 11, 2014 DWS Investments Distributors, Inc. DWS Trust Company DWS Investments Service Company DeAWM Distributors, Inc. DeAWM Trust Company DeAWM Service Company Visit dws-investments.com for information about the full range of products and services available in the U.S. through Deutsche Asset & Wealth Management. With $1.28 trillion of assets under management (as of 12/31/2013), Deutsche Asset & Wealth Management is one of the world s leading investment organizations. Deutsche Asset & Wealth Management offers individuals and institutions traditional and alternative investments across all major asset classes. It also provides tailored wealth management solutions and private banking services to high-net-worth individuals and family offices. View a prospectus To obtain a summary prospectus, if available, or prospectus, download one from dws-investments.com or call (800) We advise you to carefully consider the product s objectives, risks, charges and expenses before investing. The summary prospectus and prospectus contain this and other important information about each product. Please read the prospectus carefully before you invest. Deutsche Asset & Wealth Management is the brand name of the Asset & Wealth Management division of the Deutsche Bank Group. The legal entities offering products or services under the Deutsche Asset & Wealth Management brand are listed in contracts, sales materials and other product information documents. DWS Investments Distributors, Inc. 222 South Riverside Plaza Chicago, IL service@db.com Tel (800) Deutsche Bank AG. All rights reserved. CC R (6/14) DEAWM-REB