U.S. Bank 401(k) Savings Plan Annual Fee Disclosure Notice

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1 U.S. Bank 401(k) Savings Plan Annual Fee Disclosure Notice The U.S. Bank 401(k) Savings Plan can assist you in saving on a tax-deferred basis for your future. Through the U.S. Bank 401(k) Savings Plan you get: The convenience of automatic savings through payroll deductions and the opportunity for tax advantages through before-tax contributions Contributions from U.S. Bank that match a portion of your savings A diverse investment option lineup that is monitored by the plan s Investment Committee What s Inside 1. About Fees and Expenses 2. The Plan s Investment Options 3. Investment-Related Information 4. Terms You Should Know Use the tools available on the plan s website to explore how your savings and investment decisions impact your longterm savings goals. Review this notice to learn more about fees and expenses, the plan s investment options, and where to go for more information or to take action. To learn more about the plan, please see the Summary Plan Description available on the plan s website. 1. About Fees and Expenses There are several types of fees charged under the Plan: Some fees are asset-based fees. You won t see these fees directly because they are charged to plan investment options and reduce your investment earnings. These fees are shown in Section 3 of this notice. Asset-based fees are utilized to pay for investment management fees and also may be applied to pay for services to the plan such as trustee, legal, accounting, recordkeeping, and participant services, as well as other expenses relating to the maintenance of the plan or plan funds. Some of the plan's administrative expenses may have been paid by fees from one or more of the plan's investment funds. These expenses are included in the expense ratio total annual operating expenses provided in Table 2. You may also have individual fees that result in charges due to activity you have requested (See below to learn about individual fees that may apply to your account). When you decide to invest in any of the investment options in the U.S. Bank 401(k) Savings Plan, there are no upfront sales loads or charges. Individual Fees in the U.S. Bank 401(k) Savings Plan Loan fees: You will pay a $75 fee whenever you take a loan from the U.S. Bank 401(k) Savings Plan. This fee is taken out of your loan proceeds, which comes from your account. Professional Management fees: If you sign up for Professional Management offered by Aon Hewitt Financial Advisors, you will be charged a fee that is based on the size of your account: This fee will be deducted from your 401(k) account each quarter: Your Account Balance Annual Fee Rate Monthly Amount The first $100,000.60% $5.00 per $10,000 The next $150,000.45% $3.75 per $10,000 1

2 Over $250,000.30% $2.50 per $10,000 The fee is calculated based on the average amount of assets under management for the calendar quarter, and is debited from your 401(k) account at the start of the following quarter. Note: The Plan has selected Aon Hewitt Financial Advisors (AFA), an independent Registered Investment Advisor, as an investment manager to be available to participants. If you sign up for Professional Management offered by AFA, then AFA will manage your account. If you select AFA to manage your account, you may terminate AFA s services at any time. See the Your Benefit Resources website for more details. Learn more about applicable plan fees on the plan s website at 2. The Plan s Investment Options As a participant in the U.S. Bank 401(k) Savings Plan, you re responsible for investing your account in one or any combination of the plan s investment options. Section 3 provides more specific information about the investment options, which include Target Retirement Date Funds and Core Funds that primarily provide you with investments that have returns that can change as the market goes up and down. You may change your investment elections as often as you like. But keep in mind that the investment options are subject to restrictions. The restrictions are listed in Section 3, Part B. Choosing Your Investment Strategy Ultimately, how you invest should depend on your age, lifestyle, accumulated wealth, years to retirement, and comfort level around risk. This notice only provides some information about your investment choices like fees, expenses, and historical returns. Your decisions should be based on the full picture, taking into account your individual situation, not just the information in this notice. To learn more about the investment options offered and fees that apply to them, visit the Your Benefits Resources website. You can find fund fact sheets, fund performance, and other fund information. You can also request more information about the investment options online or by calling the U.S. Bank Employee Service Center. To enroll or make changes to your investments, you can enroll in the U.S. Bank 401(k) Savings Plan or make changes to your investments at any time by logging on to the plan s website. Once you have logged on you can: Enroll simply go to Savings and Retirement > Contributions > Start Saving Change your current investment mix or your investment elections for future contributions go to Savings and Retirement > Manage Investments > Change Investments and follow the instructions on the website. You may also enroll or change investment options by calling the U.S. Bank Employee Service Center at Representatives are available from 8:00 a.m. to 8:00 p.m., Central Time, Monday through Friday. 3. Investment-Related Information (Model Comparative Chart) This section has two parts. Part A consists of performance information for plan investment options, showing you how well the investments have performed in the past. Part B lists the fees and expenses you will pay if you invest in an option. 2

3 Part A. Performance Information Table 1 focuses on the performance of investment options that do not have a fixed or stated rate of return. Table 1 shows how these options have performed over time and allows you to compare them with an appropriate benchmark for the same time periods. Past performance does not guarantee how the investment option will perform in the future. Your investment in these options could lose money. Information about an option s principal risks is available on the Your Benefits Resources website. Name/ Type of Option Target Date Funds Target Retirement Date Income Target Retirement Date 2010 Target Retirement Date 2015 Target Retirement Date 2020 Target Retirement Date 2025 Target Retirement Date 2030 Target Retirement Date 2035 Target Retirement Date 2040 Target Retirement Date 2045 Target Retirement Date 2050 Target Retirement Date 2055 Target Retirement Date 2060 ** Name/ Type of Option Equity Funds US Large Cap Equity Index Active US Large Cap Equity * Table 1-Variable Return Investments Average Annual Total Return as of 12/31/12 1yr. 5yr. 10yr. Since Inception Benchmark 1yr. 5yr. 10yr. Since Inception 8.19% 4.90% N/A 5.31% 10.61% 4.54% N/A 4.86% Morningstar Lifetime Moderate % 3.83% N/A 3.94% 10.61% 4.54% N/A 4.86% Morningstar Lifetime Moderate % 3.36% N/A 3.35% 11.49% 4.18% N/A 4.40% Morningstar Lifetime Moderate % 2.86% N/A 2.82% 12.53% 3.62% N/A 3.74% Morningstar Lifetime Moderate % 2.39% N/A 2.24% 13.67% 2.98% N/A 3.01% Morningstar Lifetime Moderate % 1.91% N/A 1.73% 14.68% 2.46% N/A 2.45% Morningstar Lifetime Moderate % 1.72% N/A 1.47% 15.36% 2.18% N/A 2.15% Morningstar Lifetime Moderate % 1.79% N/A 1.56% 15.71% 2.07% N/A 2.05% Morningstar Lifetime Moderate % 1.74% N/A 1.51% 15.84% 2.00% N/A 2.01% Morningstar Lifetime Moderate % 1.84% N/A 1.59% 15.94% 1.96% N/A 1.99% Morningstar Lifetime Moderate % N/A N/A 10.28% 15.94% 1.96% N/A 1.99% Morningstar Lifetime Moderate 2050 N/A N/A N/A 5.27% 15.94% 1.96% N/A 1.99% Morningstar Lifetime Moderate 2050 Table 1-Variable Return Investments Average Annual Total Return as of 12/31/12 1yr. 5yr. 10yr. Since Inception Benchmark 1yr. 5yr. 10yr. Since Inception 15.87% 1.59% 7.05% 4.53% 16.00% 1.66% 7.10% 8.22% S&P 500 Index 12.08% -0.59% 7.55% 9.06% 16.00% 1.66% 7.10% 8.22% S&P 500 Index 3

4 US Small-Mid Equity Index Active US Small-Mid Equity * International Equity Index Active International Equity * 18.37% 4.23% 10.76% 6.78% 18.45% 4.09% N/A N/A S&P Completion Index 15.89% 1.56% N/A 0.61% 17.88% 4.34% N/A 2.63% Russell 2500 Index 18.87% -3.23% 8.49% 2.49% 17.32% -3.69% 8.21% 5.28% FTSE Global All CAP ex US Index 17.54% -3.50% N/A 6.15% 17.32% -3.69% N/A 5.28% MSCI EAFE Index Bond Funds Bond Index 4.07% 5.90% 5.19% 6.79% 1.99% 5.40% 4.75% 6.67% Barclays Capital Aggregate Bond Index Active Bond * 10.25% 8.20% 6.72% 8.34% 1.99% 5.40% 4.75% 6.94% Barclays Capital Aggregate Bond Index Other Stable Value Fund* 1.64% 2.34% 3.06% 3.06% 0.36% 2.74% 2.85% 2.84% US TREASURY T-Bill Cnst Mat Rate 3 Yr U.S. Bancorp ESOP Stock *** Piper Jaffray Stock **** 20.31% 2.08% 7.11% 3.03% 16.00% 1.66% 7.10% 4.47% S&P 500 Index 57.17% -7.05% N/A -2.92% 16.35% 3.56% N/A 6.19% Russell 2000 Index *Performance shown represents actual performance for the fund after November 30, For the time periods prior to this date, the performance of the plan's prior fund the U.S. Bank Stable Asset Fund - is reflected. **Performance shown represents actual performance for the fund after December 2, For the time periods prior to this date, the performance of the underlying fund is reflected. ***Performance shown represents actual performance for the fund after December 2, For the time periods prior to this date, the performance reflects the composite returns of the fund's underlying managers. ****The Target Retirement Date 2060 fund was added as an investment option to the Plan on March 1, *****The U.S. Bancorp ESOP Stock Fund invests primarily in U.S. Bancorp common stock with a small portion of the investment in cash for liquidity. ******The Piper Jaffray Stock Fund is closed and no new investments are allowed in the fund. Part B. Fee and Expense Information Table 2 shows fee and expense information for the investment options listed in Table 1. Table 2 shows the Total Annual Operating Expenses of the options in Table 1. Total Annual Operating Expenses are expenses that reduce the rate of return of the investment option. Table 2 shows Shareholder-Type Fees. These fees are in addition to Total Annual Operating Expenses. The plan adds 11 basis points to the expense ratio of each fund to cover administrative fees. If information for any investment fund (e.g., expense ratio and average annual total return) is available publically, the public information will differ from that disclosed by the plan due to this added administrative fee. Table 2 also shows the different investment restrictions on each fund. Target Date Funds Name/ Type of Option Table 2 Total Annual Operating Expenses Issuer Total Annual Operating Expenses 1 As a Per $1,000 % Shareholder-Type Fees and Investment Restrictions 2 Target Retirement Date Income Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2010 Fund Vanguard 0.19% $ Day Purchase Block 4

5 Target Retirement Date 2015 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2020 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2025 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2030 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2035 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2040 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2045 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2050 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2055 Fund Vanguard 0.19% $ Day Purchase Block Target Retirement Date 2060 Fund 3 Vanguard 0.19% $ Day Purchase Block Core Funds Equity Funds US Large Cap Equity Index Fund Vanguard 0.13% $ Day Purchase Block Active US Large Cap Equity Fund U.S. Bank 0.70% $ Day Purchase Block US Small-Mid Equity Index Fund Vanguard 0.19% $ Day Purchase Block Active US Small-Mid Equity Fund U.S. Bank 1.02% $ Day Purchase Block International Equity Index Fund Vanguard 0.18% $ Day Purchase Block Active International Equity Fund U.S. Bank 0.78% $ Day Purchase Block Bond Funds Bond Index Fund Vanguard 0.18% $ Day Purchase Block Active Bond Fund PIMCO 0.57% $ Day Purchase Block Other Stable Value Fund Galliard 0.25% $ Day Purchase Block U.S. Bancorp ESOP Stock Fund U.S. Bank 0.12% $ Day Purchase Block Piper Jaffray Stock Fund Piper Jaffray 0.16% $1.60 Once sold, a participant may not re-acquire shares 1 Total asset-based fees or investment management company fees plus other expenses. 2 Purchase blocks and redemption fees. 3 The Target Retirement Date 2060 fund was added as an investment option to the Plan on March 1, The cumulative effect of fees and expenses can substantially reduce the growth of your account. Visit the Department of Labor s website for an example showing the long-term effect of fees and expenses at Fees and expenses are only one of many factors to consider when you decide to invest in an option. You may also want to think about whether an investment in a particular option, along with your other investments, will help you achieve your financial goals. Part C. U.S. Bancorp ESOP Stock Fund The Plan uses a unitized accounting method to present the balances in your account. Please see the definition of Unit Accounting in the Terms You Should Know section for further details. Importance of a Well-Balanced and Diversified Investment Portfolio To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic 5

6 conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk. In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerances for risk. Therefore, you should carefully consider the rights described in this notice and how these rights affect the amount of money that you invest in the U.S. Bancorp ESOP Stock Fund through the plan. It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the plan to help ensure that your retirement savings will meet your retirement goals. Certain officers of U.S. Bancorp are subject to the share ownership reporting and short-swing trading liability provisions under Section 16 of the Securities Exchange Act of 1934 (or Exchange Act ). Please see the Plan s Summary Plan Description regarding these trading restrictions. Voting Rights for Certain Investments As a participant in the U.S. Bank 401(k) Savings Plan, you can direct the manner in which the Trustee will vote the U.S. Bancorp ESOP Stock Shares credited to your U.S. Bancorp ESOP Stock Fund account. The Trustee votes your ESOP Shares in accordance with the voting instructions received from you. If you fail to vote your ESOP Shares, those unvoted shares are voted in proportion to the Common Shares voted by all voting participants. 4. Terms You Should Know Here are a few key terms and concepts to help you understand the information described in this notice. A Glossary of Terms and Principal Risks Definition documents are available in Plan Information on the Savings and Retirement menu on Your Benefits Resources website. Administrative fees: Fees paid to the recordkeeper to cover expenses for things like keeping data on participants, communication materials, internet services, and assisting participants with transactions; fees paid to a trustee to manage some operations of the plan including trading and holding assets; plus fees paid for legal and accounting services. Asset-based fees: Fees that are charged as a percent of holdings in an investment to cover investment management fees plus any asset-based administrative service fees. Asset-based fees are also referred to as the expense ratio, or, more technically, the fund s total annual operating expenses. (See box on next page for an example of how asset-based fees work.) How Asset-Based Fees Work Let s assume your current account balance is $30,000, and you ve invested in three funds as shown below. Here s an estimate of what you might pay annually in total expenses. Investment Balance Asset-Based Fees As % of Assets Dollar Amount Bond Index $10, % $18.00 U.S. Large Cap Equity Index $17, % $22.10 Target Retirement Date Income $ 3, % $5.70 Total $30,000 $45.80 Because asset-based fee expenses are accumulated daily, your actual cost will vary as your account value changes. 6

7 Benchmark: A benchmark is typically a market index that tracks general market performance of similar types of investments. For instance, the S&P 500 Index is commonly used as a benchmark for large-cap stocks. Bond Fund: An investment fund that invests primarily in bonds and other debt instruments. Bonds are issued by various entities, including governments (federal, state, local) or corporations. Bond funds may also be invested in debt instruments such as mortgage-backed securities. Brokerage Fees: Brokerage fees/commissions that are charged to the stock funds when shares are bought and sold. Core Funds: Each of these funds represents a single asset class. A combination of Core Funds is needed to have a diversified portfolio that will provide the most optimal long-term investment experience. Equity Fund: An investment option that invests primarily in corporate stocks. Individual fees: These fees apply to your account and generally depend on transactions in your account, like taking a loan from the plan. Investment management fees: Fees paid to the investment manager for selecting and managing the investments in an investment option. These fees may also include costs such as advertising and promotion, administration, and other related services. Managed account service fees: Managed account services are where a designated investment advisor will manage the investment mix in your account for you. If you choose this service, the fees described in Section 1, About Fees and Expenses above will apply. Operating Expenses: The cost associated with operating the fund, including investment management fees and additional expenses such as custodian, legal, audit fees, and other operational expenses incurred by the investment manager. Purchase Block: This transfer restriction applies when money is moved out of a fund and then cannot be moved back into the fund for a specific period of time (usually 30 to 60 days). Redemption Fees: Fees designed to discourage excessive in-and-out trades and to reimburse the costs incurred to the funds from such trades. Some funds impose redemption fees on activities that move money out of a fund before a minimum period of time, known as a holding period. The fees apply only to transfers. The fees do not apply to other plan activities, such as: Contributions, Withdrawals, Loans and Loan repayments. Redemption fees are deducted from the amount you take out of a fund. Target date funds: These funds are premixed, diversified investment strategies that are designed to be a single investment solution. They have a mix of underlying investments that are generally appropriate for a given retirement date. Unit Accounting: When you invest in the funds within U.S. Bank 401(k) Savings Plan, you own a portion of an investment fund that is comprised of the funds as well as a small amount of cash which is invested in a money market fund. This cash is used for liquidity purposes. Your ownership in these funds is determined by an accounting method called unit accounting. Under unit accounting, your ownership in the funds is measured in units. A unit represents an investment in a combination of shares of the funds and cash. Each day, the Fund s Net Asset Value (NAV) is calculated by the Plan s trustee, U.S. Bank. The NAV represents the value of one unit of the fund. It equals the total market value of the fund divided by the number of units. If there is no activity in your account, the number of units you hold will remain constant but their value may change from day to day. 7

8 For more information about this notice access Your Benefits Resources by selecting HRConnection on USBnet or logging in directly to Your Benefits Resources website at You may also contact the U.S. Bank Employee Service Center at or the plan administrator at: U.S. Bank Employee Benefits Administration EP-MN-R2BN 4000 W. Broadway Avenue Robbinsdale, MN