# DWS DISTRIBUTORS, INC. X-17A-5 (2023-03-20) — Broker-dealer annual report - Company: DWS DISTRIBUTORS, INC. - Form: X-17A-5 - Filed: 2023-03-20 - Period: 2022-12-31 - Accession: 0000932690-23-000009 - CIK: 932690 - File #: 8-47765 - Type: Broker-dealer - Material weakness: No - Auditor: KPMG LLP - Auditor location: New York, NY - Contact: Nancy Tanzil - Phone: 12124548603 - Email: nancy.tanzil@dws.com - Website: dws.com - Signed by: Nancy Tanzil (Finance and Operations Principal) Original filing: https://www.sec.gov/Archives/edgar/data/932690/000093269023000009/DDIAFSDec2022.pdf --- {0}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Financial Statements and Schedules As of and for the year ended December 31, 2022 (With Report of Independent Registered Public Accounting Firm Thereon) These Financial Statements and Schedules should be deemed Confidential Pursuant to Subparagraph (e)(3) of Rule 17a-5 under the Securities Exchange Act of 1934 {1}------------------------------------------------ | UNITED STATES | | |------------------------------------|--| | SECURITIES AND EXCHANGE COMMISSION | | | Washington, D.C. 20549 | | | DUCR WHENDAAT | | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--| | OMB Number: 3235-0123 | | | Expires Oct 31, 2023 | | | Estimated average burden: | | | hours per response: 12 | | | SECTILE NUMBER | | | 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 | | | FILING FOR THE PERIOD BEGINNING | 01/01/22 | AND ENDING | | 12/31/22 | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|-----------------------------------------|------------|--------------------------------------------| | | MM/DD/YY | | | MM/DD/YY | | | A. REGISTRANT IDENTIFICATION | | | | | DWS Distributors, Inc.
NAME OF FIRM: | | | | | | TYPE OF REGISTRANT (check all applicable boxes):
Broker-dealer
Security-based swap dealer
Check here if respondent is also an OTC derivatives dealer | | _ Major security-based swap participant | | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) | | | | | | 222 South Riverside Plaza | | | | | | | (No. and Street) | | | | | Chicago | H | | 60606-5808 | | | (City) | (State) | | (Zip Code) | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | Nancy Tanzil | 212-454-8603 | | | nancy.tanzil@dws.com | | (Name) | (Email Address)
(Area Code - Telephone Number) | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing *.
KPMG LLP | | | | | | | [Name - if individual, state last, first, and middle name) | | | | | 345 Park Avenue | Now York | | NY | 10154 | | (Address) | (City) | | (State) | [Zip Code] | | (Bate of Registration with PCADB)(if applicable) | | | | (PCAOB Registration Number, if applicable) | | | FOR OFFICIAL USE ONLY | | | | | " Claims for exemption from the requirement that the annual reports be covered by the reports of an independent public
accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17
CFR 240.17a-5(e)(i){i}, if applicable.
скомстрования в композиции и призирания приводательно политика в кости подарии присода и последние присок | | | | | {2}------------------------------------------------ | I, Nancy Tanzil | swear (or affirm) that, to the best of my knowledge and belief, the | | |-------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|--------| | financial report pertaining to the firm of DWS Distributors, Inc. | | 1 35 0 | | December 31 | 2.022 is true and correct. I further swear (or affirm) that neither the company nor any | | | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | | as that of a customer. | | | | INGRID K. PAERWALD | | | | NOTARY PLAN C DIV/C LICHOW XCHK | Signature: | | | PIQ111117/11/11 | Title: | | | | Finance and Operations principal | | | | | | | | | | - - - - - - - - - - - - - - - - - - - - - - - - - - {3}------------------------------------------------ {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) ![](_page_4_Picture_11.jpeg) {5}------------------------------------------------ ## (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Statement of Financial Condition December 31, 2022 #### Assets | Cash and cash equivalents | \$
36,659,685 | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------| | Time Deposits
Administrative, service and distribution fees receivable
Commissions receivable
Receivable from affiliates
Property, plant and equipment
Other assets
Income tax receivable | 20,000,000
3,288,439
16,372
20,854,290
632
311,826
161,732 | | Deferred tax asset, net | 2,830,330 | | Total assets | \$
84,123,306 | | Liabilities and Stockholder's Equity | 3,303,888 | | Administrative, service and distribution fees payable | \$
5,085,965 | | Payable to affiliates
Income tax payable
Compensation payable
Accounts payable and accrued expenses | 6,592,911
1,802,705
16,728,623
4,512,388 | | Total liabilities | 34,722,592 | | Stockholder's equity:
Common stock:
Class A, par value \$1.00 per share. Authorized, issued, and outstanding 1,000 shares
Class B, par value \$0.01 per share. Authorized, issued, and outstanding 1,000 shares
Paid-in capital
Retained earnings | 1,000
10
12,059,211
37,340,493 | | | | | Total stockholder's equity | 49,400,714 | | Total liabilities and stockholder's equity | \$
84,123,306 | See accompanying notes to financial statements. {6}------------------------------------------------ ### (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Statement of Income For the year ended December 31, 2022 | Revenues: | | |-----------------------------------------------|------------------| | Administrative, service and distribution fees | \$
21,131,819 | | Fees for services provided to affiliates | 119,159,752 | | Commissions | 152,054 | | Other income | 390,292 | | Total revenues | 140,833,917 | | Expenses: | | | Administrative, service and distribution fees | 38,815,520 | | Compensation and benefits | 48,436,648 | | Services provided by affiliates | 16,523,672 | | Commission | 10,206,196 | | Sales | 4,898,549 | | Legal Provision | 4,448,063 | | Communications | 2,342,920 | | Travel and entertainment | 2,142,453 | | Professional fees | 1,305,429 | | Depreciation | 2,597 | | Other | 3,332,139 | | Total expenses | 132,454,186 | | Income before income taxes | 8,379,731 | | Income tax expense | 3,527,632 | | Net income | \$
4,852,099 | See accompanying notes to financial statements. {7}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Statement of Changes in Stockholder's Equity Year ended December 31, 2022 | | Class A
common
stock | Class B
common
stock | Paid-in
capital | Retained
earnings | Total | |---------------------------------|----------------------------|----------------------------|--------------------|----------------------|------------| | Balance at December 31, 2021 | \$
1,000 | 10 | 11,911,755 | 32,488,394 | 44,401,159 | | Net Income | — | — | — | 4,852,099 | 4,852,099 | | Shared-based compensation, net | — | — | 147,456 | — | 147,456 | | Balance at December
31, 2022 | \$
1,000 | 10 | 12,059,211 | 37,340,493 | 49,400,714 | See accompanying notes to financial statements. {8}------------------------------------------------ (A Wholly Owned Subsidiary of # DWS Investment Management Americas, Inc.) Statement of Cash Flows Year ended December 31, 2022 | Cash flows from operating activities: | | |-----------------------------------------------------------------------------------|------------------| | Net Income | \$
4,852,099 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | Depreciation | 2,597 | | Changes for deferred income taxes, net of settlement | 432,481 | | Shared-based compensation, net | 147,456 | | (Increase) decrease in operating assets: | | | Administrative, service and distribution fees receivable | 1,269,207 | | Commissions receivable | 7,454 | | Receivable from affiliates | (9,682,490) | | Income tax receivable | 2,408 | | Other assets | 1,937,089 | | Increase (decrease) in operating liabilities: | | | Administrative, service and distribution fees payable | (1,505,313) | | Payable to affiliates | 2,439,686 | | Income tax payable | (3,324,402) | | Compensation payable | (2,677,026) | | Accounts payable and accrued expenses | 1,166,230 | | Net cash used by operating activities | (4,932,524) | | Cash flows from investing activities: | (20,000,000) | | Net cash used in investing activities | (20,000,000) | | Net decrease in cash and cash equivalents | (24,932,524) | | | 61,592,209 | | | \$
36,659,685 | | Supplemental disclosure on cash flow information: | | | Income taxes paid | \$
6,353,273 | | | | See accompanying notes to financial statements. {9}------------------------------------------------ {10}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 ## (1) Organization and Business DWS Distributors, Inc. (the Company) is a wholly owned subsidiary of DWS Investment Management Americas, Inc. ("DIMA or the Parent"). DIMA is a wholly owned subsidiary of DWS USA Corporation ("DWS USA"). DWS USA is a wholly owned subsidiary of DWS Group GmBH & Co. KGaA ("DWS Group"), a publicly traded company on the Frankfurt Stock Exchange, which is majority–owned by Deutsche Bank AG ("the Bank"). The Company was incorporated in Delaware on September 20, 1994 and is a registered broker-dealer under the Securities Exchange Act of 1934. The Company is a registered broker dealer with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). ## (2) Summary of Significant Accounting Policies ## (a) Basis of Presentation The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying financial statements have been prepared from separate records maintained by the Company, and may not necessarily be indicative of the financial condition and results of operations, which would have existed if the Company had been operating as an unaffiliated entity. #### (b) Use of Estimates The preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions are based on the Company's best estimates and judgment. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and adjusts such estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates. #### (c) Foreign Currency Translation The functional currency of the Company is U.S. dollar. Assets and liabilities denominated in non-U.S. dollar currencies are translated into U.S. dollar equivalents using year-end spot foreign exchange rates. Revenues and expenses are translated into U.S. dollar equivalent using the average {11}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 rates of exchange for the period. Gains and losses resulting from translation to U.S. dollar equivalents are reflected on the statement of income as a part of other expenses. ### (d) Cash and Cash Equivalents The Company defines cash and cash equivalents as cash or short term, highly liquid securities and interest earning deposits with original maturities of three months or less. ### (e) Time Deposits Time deposits are held to maturity and defined by the Company as short-term, highly liquid securities or deposits with original maturities of greater than three months. Time deposits are recorded at cost, which approximates fair value. As of December 31, 2022, time deposit amounted to \$20 million, which is classified as a level 2 security investment in the ASC 820, Fair Value Measurements hierarchy. ## (f) Common Stock The Company has two classes of common stock. The Parent holds all Class A voting shares and Class B non-voting shares. ## (g) Share-Based Compensation The cost of employee services received in exchange for a share-based award is generally measured based on the grant-date fair value of the award in accordance with Accounting Standards Codification (ASC) Topic 718, Stock Compensation and is recorded in the statement of income of the Company. Awards were granted by DWS Group to selected employees of the Company. Both awards (DWS Equity Plan and DWS Stock Appreciation Rights (SAR)) Plan are considered as cash settled but equity-linked plans. All employees who are offered the DWS Equity Plan are subject to performance conditions and forfeiture provisions, which need to be met for each tranche to be eligible for settlement. In case such performance conditions are not met, the tranche will lapse. Employees who are offered the DWS SAR Plan awards are also subject to specific performance and forfeiture provisions, as applicable under the SAR Plan. Compensation expense is recorded on a straight-line basis over the period in which employees perform services to which the awards relate or over the period of the tranches for those awards delivered in tranches and is recorded in the statement of income of the Company. Estimates of expected forfeitures are periodically adjusted in the event of actual forfeitures or for changes in {12}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 expectations. The timing of expense recognition relating to grants which, due to early retirement provisions, include a nominal but non-substantive service period are accelerated by shortening the amortization period of the expense from the grant date to the date when the employee meets the eligibility criteria for the award, and not the vesting date. For awards that are delivered in tranches, each tranche is considered a separate award and amortized separately. The employees continue to participate in the DB Equity Plan under the rules established for the Bank as applicable. Share-based payment transactions where the Bank grants Deutsche Bank AG shares to the employees of the Company are classified as equity-settled transactions reflected in the equity in the financial statements as the Bank has the obligation to settle the shares. The substance of Bank's share award programs is that the Bank makes a capital contribution to the Company, which correspondingly makes a share-based payment to its employees in exchange for services. Compensation cost related to the grant of Bank awards to employees of the Company are recognized in the financial statement as compensation expense with a corresponding credit to equity. The compensation expense based on the fair value at grant date of the awards (and adjusted for expected forfeitures) is amortized over the requisite substantial service period of the award. ## (h) Administrative, Service and Distribution Fees Income and Expense The Company earns administrative service fees (some of which are under 12b-1 plans) and 12b-1 distribution fees from Class C and R mutual fund shares and various classes of money market fund shares. The Administrative Service Fee ("ASF") is for certain funds that have entered into shareholder services agreements with the Company to provide post-sale administrative services to investors. The agreements apply to the Class A, C and R shares of the funds. Under these agreements, the applicable classes pay the Company an ASF at an annual rate that varies among the classes. While the ASF payments for the Class A, C and R shares are covered by Rule 12b-1 plans, the ASF is paid for post-sale administrative services and not for distribution services. Revenue from administrative service and 12b-1 distribution fees are recognized when earned and expenses are recognized when incurred. 12b-1 distribution fees are fees paid by the mutual funds out of mutual funds assets to cover distribution expenses and shareholder service expenses. 12b-1 distribution fees include fees paid for sales and marketing expenses. Some 12b-1 plans also authorize and include shareholder service fees, which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. {13}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 ## (i) Commission Revenue The Company earns commission revenue for the distribution of Class A mutual fund shares sold with a front-end load. Revenue is recognized on the date which shares or notes are sold. ## (j) Commission Expense Commission expense represents amounts paid to broker-dealers for the sale of Class A, B, C, and R mutual fund shares. Expenses are recognized when incurred. ## (k) Income Taxes The results of the Company are included in the consolidated U.S. Federal income tax return of DWS USA Corporation. The Company's full year results are included in certain combined and unitary state tax returns of the Deutsche Bank New York Branch. In addition, the Company files tax returns in certain states on a standalone basis. The Company provides for income taxes on all transactions that have been recognized in the statement of financial condition in accordance with ASC Topic 740, Income Taxes. Accordingly, deferred taxes are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on future deferred tax liabilities and deferred tax assets, as well as other changes in income tax laws, are recognized in the period during which such changes are enacted. Deferred tax assets are recognized subject to management's judgment that realization is more likely than not. Deferred tax assets are included in the statement of financial condition. ASC Topic 740 provides guidance on the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on de-recognition, classification, interest and penalties, disclosure, and transition. Under the Company's accounting policy, interest and penalties recognized in accordance with ASC Topic 740 are classified as interest expense. {14}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 ## (l) Property, Plant, and Equipment Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation of furniture, fixtures, equipment, and computer software is computed using the straight-line method over their estimated useful lives of three to seven years. ## (3) Revenue Recognition The revenue recognition guidance requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Significant judgments are required in the application of the five step model when determining whether performance obligations are satisfied at a point in time or over time; how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on the appropriate measure of the Company's progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. The revenue recognition guidance does not apply to revenue associated with financial instruments, interest income and expense, leasing and insurance contracts. The following is a description of the Company's primary sources of revenue. #### a) Distribution Fees 12b-1 distribution fees are fees paid by the mutual fund out of mutual fund assets to cover distribution expenses and shareholder service expenses. 12b-1 distribution fees include fees paid for sales and marketing expenses. Some 12b-1 plans also authorize and include shareholder service fees, which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. The Company may receive distribution fees paid by the fund upfront, over time, and upon the investor's exit from the fund (that is, a contingent deferred sales charge), or as a combination thereof, for serving as the distributor of mutual funds managed by the Parent. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. {15}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 The upfront commission fee is generally a fixed percentage of the share price. The fixed price is allocated to the performance obligation, which is satisfied at the time shares are sold to investors. For variable amounts, as the uncertainty is dependent on the value of the shares at future points in time as well as the length of time the investor remains in the fund, both of which are highly susceptible to factors outside the Company's influence, the Company does not believe that it can overcome this constraint until the market value of the fund and in the investor activities are known, which are usually monthly or quarterly. Distribution fees recognized in the current period are primarily related to performance obligations that have been satisfied during the period. ## b) Administrative Services Fees (ASF) The ASF fees are for certain mutual funds that have entered into shareholder services agreements with the Company to provide post-sale administrative services to investors. The Company provides administrative services on a daily basis. The Company believes the performance obligation for providing these services is satisfied over time because the customer is receiving and consuming benefits as they are provided by the Company. The ASF fee is generally calculated as a fixed percentage of the mutual funds daily net asset value. The ASF fee is recognized as revenue when the constraint is resolved and it is probable that a subsequent change in the estimate of variable consideration will not result in a significant revenue reversal. This will generally occur on a daily basis when net asset values are known and determined. ## c) Commissions The Company receives a portion of the upfront commission that investors pay as underwriter commissions on sales of certain mutual fund share classes. Revenue is recognized on the trade date. The Company believes that its performance obligation is the sale of securities to investors and as such this is fulfilled on the trade date. The Company believes that the trade date is the appropriate point in time to recognize revenue as there are no significant actions which the Company needs to take subsequent to this date. The following table presents the Company's disaggregated revenue from contracts with customers for the year ended December 31, 2022: {16}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 | Administrative service fees | \$
19,170,500 | |-----------------------------|------------------| | Distribution fees | 1,961,319 | | Commissions | 152,054 | | Total revenue | \$
21,283,873 | #### (4) Related Party Transactions The Company has related-party transactions with Deutsche Bank AG and affiliated companies as the result of transactions entered into in the ordinary course of business. Such transactions are based on contractual agreements or standard allocations methodologies between the Company and its affiliates. DIMA and other bank affiliates provide services to the Company including management, information technology, operations, and back office support, such as finance, compliance, human resources, legal, and risk. Concurrently, the Company provides management, marketing, and sales and distribution support to DIMA and other affiliates. The business areas receiving the benefits of these services are charged for their respective costs based upon service agreements among various affiliated entities. The Company also receives administrative fees for the sale of commingled trust and other collective investment vehicles. The administrative fee is equal to the amount of administrative expense for personnel and service expenses that are incurred with the sale of commingled trust, other collective investment vehicles, and real estate investment products. For the year ended December 31, 2022, the gross amount charged by the Company to the affiliates was \$65,319,309 and the gross amount charged to the Company by affiliates was \$16,523,672. Additionally, in accordance with a separate service level agreement between DIMA and the Company, DIMA reimbursed the Company for its compensation and other operating expenses amounting to \$53,840,443, during 2022. Accordingly, the total amount of fees for services provided to affiliates by the Company was \$119,159,752 for the year ended December 31, 2022. The administrative, service and distribution fees and commissions earned by the Company relates to services provided to DWS mutual funds and are considered affiliates of the Company. ## (a) Related Party Assets and Liabilities The following table sets forth related party assets and liabilities as of December 31, 2022, as included in the statement of financial condition: {17}------------------------------------------------ # (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) #### Notes to Financial Statements #### December 31, 2022 | Assets | | |---------------------------------------------------------|------------------| | Receivable from affiliates | \$
20,854,290 | | Administrative, service and distribution fee receivable | 3,288,439 | | Commission receivable | 16,372 | | | \$
24,159,101 | | | | | Payable to affiliates | \$
6,592,911 | | Compensation payable | 82,752 | | Income tax payable | 1,802,705 | | | \$
8,478,368 | #### (b) Related Party Revenues and Expenses The following table sets forth the Company's related party revenues and expenses for the year ended December 31, 2022, as included in the statement of income: | Revenues | | |----------------------------------------------|-------------------| | Fees for services provided to affiliates | \$
119,159,752 | | Administrative service and distribution fees | 21,131,819 | | Commissions | 152,054 | | | \$
140,443,625 | | Expenses | | | Administrative service and distribution fees | \$
1,089,114 | | Compensation and benefits | 536,167 | | Services provided by affiliates | 16,523,672 | | Professional fees | 21,769 | | Travel and entertainment | 113,295 | | Communications | 680 | | Other | 2,061,244 | | | \$
20,345,941 | #### (5) Income Taxes The provision for income taxes for the year ended December 31, 2022 consisted of the following: {18}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 | Current: | | |--------------------------|-----------------| | Federal | \$
2,321,692 | | State and local | 702,635 | | Total current | 3,024,327 | | Deferred: | | | Federal | 415,728 | | State and local | 87,577 | | Total deferred | 503,305 | | Total income tax expense | \$
3,527,632 | For the year ended December 31, 2022, \$3,527,632 of income tax expense and \$64,204 of income tax benefit were allocated to net income and stockholder's equity, respectively. The reconciliation between the Company's effective tax rate from continuing operations and the statutory tax rate is as follows: | Computed tax expense | \$
1,759,744 | |------------------------------------------------|-----------------| | Fines and Penalties | 934,093 | | State & local tax, net of federal benefit | 624,267 | | Nondeductible meals and entertainment expenses | 118,241 | | Shared-based compensation | 83,068 | | Other | 8,219 | | | \$
3,527,632 | {19}------------------------------------------------ # (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) #### Notes to Financial Statements #### December 31, 2022 Significant components of the Company's deferred tax assets and liabilities as of December 31, 2022, were as follows: | Deferred tax assets: | | |--------------------------------------------------|-----------------| | Deferred compensation | \$
2,811,223 | | State net operating loss carryforward | 3,185 | | Accrued but unpaid foreign related party expense | 888,403 | | Other | 5,801 | | Gross deferred tax assets | 3,708,612 | | Valuation allowance | (3,185) | | Deferred tax assets, net of valuation allowance | 3,705,427 | | Deferred tax liabilities: | | | Pension and post-retirement benefits | (875,097) | | Gross deferred tax liabilities | (875,097) | | Net deferred tax asset | \$
2,830,330 | The Company participates in the tax sharing agreement with DWS USA as a result of the Company being included in the Federal consolidated tax return filed under DWS USA. The Company also participates in the tax sharing agreement with Deutsche Bank New York Branch Consolidated Group as a result of the Company being included in the New York State and New York City Combined tax returns filed under the Deutsche Bank New York Branch. Income taxes are computed on a modified separate company basis and the Company reflects the separate return tax liability as a current tax liability on the books and records. U.S. Federal tax liability is paid by the Company to DWS USA on a current basis. In the event the Company generates a tax benefit from Federal tax losses or tax credits, such benefit is reflected as a current tax receivable on the Company's books and the Company is reimbursed for this tax benefit on a current basis by DWS USA. Since the Company utilizes a modified separate company method for its separate company income tax computation, the taxable income of the DWS USA consolidated tax group of which the Company is a member is considered in evaluating whether deferred tax assets ("DTAs") are expected to be realized. The Company believes it is more likely than not that the results of future operations, taking into account the impact of the Company's various strategic initiatives, will generate sufficient taxable income to realize the net DTAs. {20}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 As of December 31, 2022, the Company determined that it has no uncertain tax positions, interest, or penalties as defined within FASB ASC 740, and accordingly, no additional disclosures are required. In the next twelve months the Company believes that there will be no material changes to unrecognized tax benefits. As of December 31, 2022, the consolidated group of which the Company is a member, is under examination by the IRS for tax years 2017 through 2018. New York State and New York City are under examination for tax years 2015 through 2016. Illinois is under examination for tax years 2011 through 2012. The Company primarily files in the following jurisdictions: Federal, New York State and New York City. Tax refunds receivable from other state tax authorities at December 31, 2022 was \$161,732. Net tax payable to affiliates at December 31, 2022 was \$1,802,705. ## (6) Employee Benefit Plans #### Retirement Plans The Company continues to participate, together with other affiliates of Deutsche Bank Americas Holding Corporation (DBAH) in a tax-qualified 401(k) plan. Employees are able to contribute up to 40% of their eligible compensation on a before-tax and /or after-tax basis, up to IRS limits. For employees hired before January 1, 2005, after a participant has completed six months of service, the Company matches dollar for dollar up to 5% of eligible compensation, up to a maximum of \$4,000 per year. Effective January 1, 2005, the plan was amended for employees hired on or after January 1, 2005. Participants who have completed six months of service receive a Company matching contribution of up to 4% of eligible compensation, up to the IRS annual compensation maximum. Participants employed less than 10 years receive a Company fixed contribution equal to 4% of the first \$100,000 of eligible compensation. Participants employed 10 or more years receive a Company fixed contribution equal to 6% of the first \$100,000 of eligible compensation. In addition, effective as of when Deutsche Bank AG no longer owned (directly or indirectly) at least 80% of DWS KGaA, participants that are not eligible for a Company fixed contribution since they were hired, rehired or localized before January 1, 2005, will receive a supplemental annual contribution in an amount equal to 6.5% of eligible compensation. The Company recognized approximately \$1.6 million in 401(k) expense for this plan, included in compensation and benefits within the statement of income for the year ended December 31, 2022. {21}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 #### (a) Share-Based Compensation Plans #### DWS Equity and Stock Appreciation Rights (SAR) Plans DWS Group made grants of share-based compensation under the DWS Equity Plan. This plan represents a contingent right to receive a cash payment by referencing to the value of DWS shares during a specified time period. The DWS SAR Plan represents a contingent right to receive a cash payment equal to any appreciation (or gain) in the value of a set number of notional DWS shares over a fixed period of time. This award does not provide any entitlement to receive DWS shares, voting rights or associated dividends. The DWS Equity Plan is a phantom share plan representing a contingent right to receive a cash payment by referencing to the value of DWS shares during a specified period of time. The award recipient for any sharebased compensation plan is not entitled to receive dividends during the vesting period of the award. The share awards granted under the terms and conditions of any share-based compensation plan are forfeited fully or partly if the recipient voluntarily terminates employment before the end of the relevant vesting period or the end of the retention period for Upfront Awards. Vesting usually continues after termination of employment in cases such as redundancy or retirement. For the year ended December 31, 2022, the Company recognized approximately \$0.8 million, for these plans which is included in compensation and benefits in the accompanying statement of income. The fair value of the DWS SAR Plan awards have been measured using the generalised Black-Scholes formula model. The liabilities incurred are re-measured at the end of each reporting period until settlement. The principal inputs being the market value on reporting date, discounted for any dividends foregone over the holding periods of the award, and adjustment for expected and actual levels of vesting which includes estimating the number of eligible employees leaving Deutsche Bank Group and number of employees eligible for early retirement. Given the limited trading in the market years of DWS share price volatility and the absence of implied volatility, the expected volatility of the DWS share price has been based in an evaluation of the historical volatility for a comparable peer group over the preceding 5-year period. #### Deutsche Bank Equity Plan: The Company employees continue to participate in the DB Equity Plan under the rules established for Deutsche Bank as applicable. Shared-based payment transactions where the Deutsche Bank Group AG granted the Deutsche Bank AG shares to the employees of the DWS Group are classified as equity-settled transactions reflected in the equity in the statement of financial condition as the Bank has the obligation to settle the shares. The award recipient is not entitled to receive dividends during the vesting period of the award. The share awards granted under the terms and conditions of the DB Equity Plan may be forfeited {22}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 fully or partly if the recipient voluntarily terminates employment before the end of the relevant vesting period. Vesting usually continues after termination of employment in cases such as redundancy or retirement. To the extent that the settlement price is less or greater than the price at grant date, the Company is allocated a gain or loss based on the difference. For the year ended December 31, 2022, the Company recognized approximately \$0.2 million, for these plans which is included in compensation and benefits in the accompanying statement of income. For the year ended December 31, 2022, the Company was allocated a gain of approximately \$0.1 million related to its portion of the overall net gain realized by the Bank that was attributable to share-based awards granted to the Company's employees. This amount has been reflected as an adjustment to the Company's paid-in capital. ### (b) Cash Retention Plan The Company participates in the DB Restricted Incentive Plan, a cash retention plan of the Bank, under which Restrictive Incentive Awards ("RIA") are granted as deferred cash compensation. The RIA consists of four tranches each amounting to one quarter of the grant volume. It is subject to a four-year pro-rata vesting period during which time specific forfeiture conditions apply. In line with regulatory requirements, this plan includes performance-indexed clawback rules. Thus, there is the possibility that parts of the awards will be subject to forfeiture in the event of non-achievement of defined targets, breach of policy or financial impairment. For the year ended December 31, 2022, the Company recognized approximately \$1.6 million in compensation and benefit expense related to these plans in the statement of income. ## (7) Legal Contingencies The Company operates in a legal and regulatory environment that exposes it to significant legal risks. As a result, the Company is involved in litigation, arbitration and regulatory proceedings in the ordinary course of business. In accordance with ASC 450, Loss Contingencies, the Company will accrue a liability when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In many lawsuits, regulatory proceedings and arbitration, it is not possible to determine whether a liability has been incurred or to estimate the ultimate or minimum amount of that liability until the matter is close to resolution, in which event no accrual is made until that time. In view of the inherent difficulty of predicting the outcome {23}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 of such matters, particularly in cases in which claimants seek substantial or indeterminate damages, the Company cannot determine the probability or estimate what the eventual loss or range of loss related to such matters will be. Subject to the foregoing, the Company continues to assess such matters and believes, based on information available, that the resolution of these matters will not have a material adverse effect on the financial condition of the Company. The Company may settle litigation or regulatory proceedings or investigations prior to a final judgment or determination of liability. It may do so for a number of reasons, including to avoid the cost, management efforts or negative business, regulatory or reputational consequences of continuing to contest liability, even when the Company believes it has valid defenses to liability. It may also do so when the potential consequences of failing to prevail would be disproportionate to the costs of settlement. ### Off-Channel Communications Investigations On September 27, 2022, the U.S. Securities and Exchange Commission ("SEC") and the U.S. Commodity Futures Trading Commission ("CFTC") announced resolutions with multiple financial institutions including Deutsche Bank Securities Inc. ("DBSI"), DIMA, the Company, and the Bank, with respect to industry-wide investigations regarding compliance with record retention requirements applicable to brokerdealer firms, investment advisers, swap dealers, and futures commission merchants. The SEC and CFTC found that the Bank and DWS, as applicable, did not maintain certain electronic communications required to be maintained pursuant to their respective record retention obligations because the communications were sent or received by employees over unapproved electronic messaging channels from personal devices. The SEC and CFTC also found related supervisory failures. Under these resolutions, the Bank and DWS paid a \$125 million civil monetary penalty to the SEC, and the Bank paid a \$75 million civil monetary penalty to the CFTC. The Company's allocation of that amount was \$4.4 million. ## (8) Credit Risks Credit risk is measured by the loss the Company would record if its counterparties failed to perform pursuant to the terms of their contractual obligations and the value of collateral held, if any, was not adequate to cover such losses. The Company has established controls to monitor the creditworthiness of counterparties. Concentrations of credit risk from financial instruments, including contractual commitments, exist when groups of issuers or counterparties have similar business characteristics or are engaged in like activities that would cause their ability to meet their contractual commitments to be adversely affected, in a similar manner, by changes in the economy or other market conditions. The Company monitors credit risk on both {24}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Notes to Financial Statements December 31, 2022 an individual and group counterparty basis. The Company minimizes this risk through credit reviews, approvals, trading limits, and monitoring procedures. #### (9) Regulatory Requirements – Net Capital Pursuant to the SEC's Uniform Net Capital Rule (Rule 15c-1), the Company is required to maintain minimum net capital. The Company computes its required net capital using the alternative method. As of December 31, 2022, the Company's net capital, alternative net capital requirement, and excess net capital were \$21,673,273, \$250,000, and \$21,423,273 respectively. Capital may not be withdrawn nor dividends paid to the extent capital is required for continued compliance with Rule 15c3-1. #### (10) Subsequent Events In accordance with U.S. GAAP disclosure requirements on subsequent events, management has evaluated events for possible recognition or disclosure in the financial statements through March 20, 2023, the date the financial statements were issued. {25}------------------------------------------------ #### Schedule I ## DWS Distributors, Inc. (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Computation of Net Capital under Rule 15c3-1 December 31, 2022 | Computation of net capital: | | |---------------------------------------------------------|------------------| | Total stockholder's equity | \$
49,400,714 | | Less: | | | Nonallowable assets: | | | Administrative service and distribution fees receivable | 3,288,439 | | Commissions receivable | 16,372 | | Receivable from affiliates | 20,854,290 | | Property, plant and equipment | 632 | | Other assets | 3,303,888 | | Other deductions | 263,820 | | | 27,727,441 | | Net capital | 21,673,273 | | Alternative net capital requirement | 250,000 | | | \$
21,423,273 | Note: The above computation does not differ from the amended computation filed by the Company on Form X-17A-5 on March 16, 2023. See accompany report of independent registered public accounting firm. {26}------------------------------------------------ (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Computation of Reserve Requirements Pursuant to Rule 15c3-3 and Information Related to Possession and Control Requirements Pursuant to Rule 15c3-3 December 31, 2022 The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240. 15c3-3; and is relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5, because the Company limits its business activities to: (i) mutual fund underwriter or sponsor; (ii) wholesaler of exchange traded funds; (iii) wholesaler of foreign investment company securities to U.S. and non-U.S. broker-dealers; and (iv) wholesaler or distributor of real estate investment trusts (REITs) and the Company (i) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4); (ii) did not carry accounts of or for customers; and (iii) did not carry PAB accounts (as defined in Rule 15c3-3) throughout the most See accompanying report of independent registered public accounting firm. {27}------------------------------------------------ DWS Distributors, Inc. (A Wholly Owned Subsidiary of DWS Investment Management Americas, Inc.) Exemption Report December 31, 2022 DWS Distributors, Inc. (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). This Exemption Report was prepared as required by 17 C.F.R. §240.17a-5(d)(1) and (4). To the best of its knowledge and belief, the Company states the following with respect to its most recent fiscal year: - 1. The Company does not claim an exemption under paragraph (k) of 17 C.F.R. § 240. 15c3-3; and - 2. The Company is filing this Exemption Report relying on Footnote 74 of the SEC Release No. 34-70073 adopting amendments to 17 C.F.R. § 240.17a-5 because, the Company limits its business activities to: (i) mutual fund underwriter or sponsor; (ii) wholesaler of exchange traded funds; (iii) wholesaler of foreign investment company securities to U.S. and non-U.S. broker-dealers; and (iv) wholesaler or distributor of real estate investment trusts (REITs); and the Company (i) did not directly or indirectly receive, hold, or otherwise owe funds or securities for or to customers; (other than money or other consideration received and promptly transmitted in compliance with paragraph (a) or (b)(2) of Rule 15c2-4); (ii) did not carry accounts of or for customers; and (iii) did not carry PAB accounts (as defined in Rule 15c3- 3) throughout the most recent fiscal year without exception. DWS Distributors Inc. I, Nancy Tanzil, affirm that, to the best of my knowledge and belief, this Exemption Report is true and correct. March 20, 2023 {28}------------------------------------------------ {29}------------------------------------------------ ![](_page_29_Picture_0.jpeg) ![](_page_29_Picture_7.jpeg) Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.