UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number: 811-02671
Deutsche Municipal Trust
(Exact Name of Registrant as Specified in Charter)
345 Park Avenue
New York, NY 10154-0004
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, including Area Code: (212) 250-3220
Paul Schubert
345 Park Avenue
New York, NY 10154-0004
(Name and Address of Agent for Service)
Date of fiscal year end: | 05/31 |
Date of reporting period: | 11/30/2017 |
ITEM 1. | REPORT TO STOCKHOLDERS |
November 30, 2017
Semiannual Report
to Shareholders
Deutsche Managed Municipal Bond Fund
Contents
This report must be preceded or accompanied by a prospectus. To obtain a summary prospectus, if available, or prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund’s objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the fund. Please read the prospectus carefully before you invest.
Bond investments are subject to interest-rate, credit, liquidity and market risks to varying degrees. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Investments in lower-quality (“junk bonds”) and non-rated securities present greater risk of loss than investments in higher-quality securities. The fund invests in inverse floaters, which are derivatives that involve leverage and could magnify the fund’s gains or losses. Although the fund seeks income that is exempt from federal income taxes, a portion of the fund’s distributions may be subject to federal, state and local taxes, including the alternative minimum tax. See the prospectus for details.
Deutsche Asset Management represents the asset management activities conducted by Deutsche Bank AG or any of its subsidiaries.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
2 | Deutsche Managed Municipal Bond Fund |
Dear Shareholder:
“Synchronous growth” is the catchphrase for the current market environment — positive momentum in the U.S. as well as for most of the major economies of the globe.
Overseas, both developed and emerging markets continue to improve, marked by low inflation rates, growing corporate earnings and attractive valuations. Here in the U.S., activity remains solid with only limited signs of overheating. Given the notable gains of the past year, a short-term pull-back would not be a surprise. Nevertheless, strong fundamentals remain supportive of this expansion, making it the second longest run in history this spring.
Solid income growth, improvements in net worth, manageable debt, elevated confidence and firm labor markets should continue to support consumer spending. Business investment is also showing signs of picking up, supported by improved confidence, favorable financial conditions and the recent tax reform bill.
The full effect of the new tax policy remains to be seen. While markets can respond almost instantly, and seem to have done so, the economy itself takes time to respond. Our economists believe that the net benefit may be fairly modest with the main beneficiaries being consumption and business investment.
All told, we believe this environment favors a long-term approach, with a focus on thoughtful asset, geographic and sector allocation, rather than market timing calls.
As always, we invite you to visit our website — deutschefunds.com — where you will find the most current insights from our CIO, economists and investment specialists.
Thank you for allowing us to help you address your investment needs.
Best regards,
Hepsen Uzcan
President, Deutsche Funds |
Assumptions, estimates and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results.
Deutsche Managed Municipal Bond Fund | 3 |
Performance Summary | November 30, 2017 (Unaudited) |
Class A | 6-Month‡ | 1-Year | 5-Year | 10-Year | ||||||||||||
Average Annual Total Returns as of 11/30/17 | ||||||||||||||||
Unadjusted for Sales Charge | 0.77% | 5.37% | 2.33% | 4.42% | ||||||||||||
Adjusted for the Maximum Sales Charge (max 2.75% load) | –2.01% | 2.47% | 1.76% | 4.13% | ||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.40% | 5.58% | 2.55% | 4.38% | ||||||||||||
Average Annual Total Returns as of 9/30/17 (most recent calendar quarter end) | ||||||||||||||||
Unadjusted for Sales Charge | 0.50% | 2.94% | 4.53% | |||||||||||||
Adjusted for the Maximum Sales Charge (max 2.75% load) | –2.26% | 2.37% | 4.24% | |||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.87% | 3.01% | 4.52% | |||||||||||||
Class C | 6-Month‡ | 1-Year | 5-Year | 10-Year | ||||||||||||
Average Annual Total Returns as of 11/30/17 | ||||||||||||||||
Unadjusted for Sales Charge | 0.37% | 4.54% | 1.53% | 3.62% | ||||||||||||
Adjusted for the Maximum Sales Charge (max 1.00% CDSC) | –0.62% | 4.54% | 1.53% | 3.62% | ||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.40% | 5.58% | 2.55% | 4.38% | ||||||||||||
Average Annual Total Returns as of 9/30/17 (most recent calendar quarter end) | ||||||||||||||||
Unadjusted for Sales Charge | –0.29% | 2.14% | 3.73% | |||||||||||||
Adjusted for the Maximum Sales Charge (max 1.00% CDSC) | –0.29% | 2.14% | 3.73% | |||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.87% | 3.01% | 4.52% | |||||||||||||
Class S | 6-Month‡ | 1-Year | 5-Year | 10-Year | ||||||||||||
Average Annual Total Returns as of 11/30/17 | ||||||||||||||||
No Sales Charges | 0.87% | 5.58% | 2.53% | 4.63% | ||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.40% | 5.58% | 2.55% | 4.38% | ||||||||||||
Average Annual Total Returns as of 9/30/17 (most recent calendar quarter end) | ||||||||||||||||
No Sales Charges | 0.70% | 3.14% | 4.72% | |||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.87% | 3.01% | 4.52% | |||||||||||||
Institutional Class | 6-Month‡ | 1-Year | 5-Year | 10-Year | ||||||||||||
Average Annual Total Returns as of 11/30/17 | ||||||||||||||||
No Sales Charges | 0.89% | 5.60% | 2.56% | 4.67% | ||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.40% | 5.58% | 2.55% | 4.38% | ||||||||||||
Average Annual Total Returns as of 9/30/17 (most recent calendar quarter end) | ||||||||||||||||
No Sales Charges | 0.71% | 3.17% | 4.78% | |||||||||||||
Bloomberg Barclays Municipal Bond Index† | 0.87% | 3.01% | 4.52% |
4 | Deutsche Managed Municipal Bond Fund |
Performance in the Average Annual Total Returns table(s) above and the Growth of an Assumed $10,000 Investment line graph that follows is historical and does not guarantee future results. Investment return and principal fluctuate, so your shares may be worth more or less when redeemed. Current performance may differ from performance data shown. Please visit deutschefunds.com for the Fund’s most recent month-end performance. Fund performance includes reinvestment of all distributions. Unadjusted returns do not reflect sales charges and would have been lower if they had.
The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated October 1, 2017 are 0.79%, 1.58%, 0.63% and 0.59% for Class A, Class C, Class S and Institutional Class shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.
Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
A portion of the Fund’s distributions may be subject to federal, state and local taxes and the alternative minimum tax.
Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only, and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights.
Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) |
The Fund’s growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 2.75%. This results in a net initial investment of $9,725.
The growth of $10,000 is cumulative.
Performance of other share classes will vary based on the sales charges and the fee structure of those classes.
Deutsche Managed Municipal Bond Fund | 5 |
† | The Bloomberg Barclays Municipal Bond Index is an unmanaged, market-value-weighted measure of municipal bonds issued across the United States. Index issues have a credit rating of at least Baa and a maturity of at least two years. |
‡ | Total returns shown for periods less than one year are not annualized. |
Class A | Class C | Class S | Institutional Class | |||||||||||||
Net Asset Value | ||||||||||||||||
11/30/17 | $ | 9.10 | $ | 9.10 | $ | 9.11 | $ | 9.10 | ||||||||
5/31/17 | $ | 9.17 | $ | 9.17 | $ | 9.18 | $ | 9.17 | ||||||||
Distribution Information as of 11/30/17 | ||||||||||||||||
Income Dividends, Six Months | $ | .14 | $ | .10 | $ | .15 | $ | .15 | ||||||||
November Income Dividend | $ | .0230 | $ | .0171 | $ | .0247 | $ | .0249 | ||||||||
SEC 30-day Yield‡‡ | 1.66% | .92% | 1.92% | 1.95% | ||||||||||||
Tax Equivalent Yield‡‡ | 2.93% | 1.62% | 3.39% | 3.44% | ||||||||||||
Current Annualized Distribution Rate‡‡ | 3.04% | 2.26% | 3.25% | 3.28% |
‡‡ | The SEC yield is net investment income per share earned over the month ended November 30, 2017, shown as an annualized percentage of the maximum offering price per share on the last day of the period. The SEC yield is computed in accordance with a standardized method prescribed by the Securities and Exchange Commission. The SEC yield would have been 0.91% and 1.88% for Class C and S shares had certain expenses not been reduced. Tax equivalent yield is based on the Fund’s yield and a marginal federal income tax rate of 43.4%. Current annualized distribution rate is the latest monthly dividend shown as a percentage of net asset value on November 30, 2017. Distribution rate simply measures the level of dividends and is not a complete measure of performance. The current annualized distribution rate would have been 2.25% and 3.21% for Class C and S shares had certain expenses not been reduced. Yields and distribution rates are historical, not guaranteed and will fluctuate. |
6 | Deutsche Managed Municipal Bond Fund |
Ashton P. Goodfield, CFA, Managing Director
Co-Lead Portfolio Manager of the fund. Began managing the fund in 1998.
– | Joined Deutsche Asset Management in 1986. |
– | Co-Head of Municipal Bonds. |
– | BA, Duke University. |
Matthew J. Caggiano, CFA, Managing Director
Co-Lead Portfolio Manager of the fund. Began managing the fund in 1999.
– | Joined Deutsche Asset Management in 1989. |
– | BS, Pennsylvania State University; MS, Boston College. |
Michael J. Generazo, Director
Co-Lead Portfolio Manager of the fund. Began managing the fund in 2010.
– | Joined Deutsche Asset Management in 1999. |
– | BS, Bryant College; MBA, Suffolk University. |
Deutsche Managed Municipal Bond Fund | 7 |
Effective maturity is the weighted average of the maturity date of bonds held by the fund taking into consideration any available maturity shortening features.
Modified duration is an approximate measure of a fund’s sensitivity to movements in interest rates based on the current interest rate environment.
Quality (As a % of Investment Portfolio) | 11/30/17 | 5/31/17 | ||||||
AAA | 14% | 11% | ||||||
AA | 43% | 51% | ||||||
A | 35% | 32% | ||||||
BBB | 6% | 5% | ||||||
BB | 1% | 0% | ||||||
Not Rated | 1% | 1% | ||||||
100% | 100% |
The quality ratings represent the higher of Moody’s Investors Service, Inc. (“Moody’s”), Fitch Ratings, Inc. (“Fitch”) or Standard & Poor’s Corporation (“S&P”) credit ratings. The ratings of Moody’s, Fitch and S&P represent their opinions as to the quality of the securities they rate. Credit quality measures a bond issuer’s ability to repay interest and principal in a timely manner. Ratings are relative and subjective and are not absolute standards of quality. Credit quality does not remove market risk and is subject to change.
Top Five State Allocations (As a % of Investment Portfolio) | 11/30/17 | 5/31/17 | ||||||
Texas | 15% | 14% | ||||||
New York | 15% | 14% | ||||||
California | 9% | 15% | ||||||
Florida | 7% | 6% | ||||||
Illinois | 5% | 5% |
Portfolio holdings and characteristics are subject to change.
For more complete details about the fund’s investment portfolio, see page 9. A quarterly Fact Sheet is available on deutschefunds.com or upon request. Please see the Account Management Resources section on page 61 for contact information.
8 | Deutsche Managed Municipal Bond Fund |
Investment Portfolio | as of November 30, 2017 (Unaudited) |
Principal Amount ($) | Value ($) | |||||||
Municipal Bonds and Notes 98.8% | ||||||||
Alabama 0.1% | ||||||||
Alabama, Federal Aid Highway Finance Authority, Special Obligation Revenue, Series A, 5.0%, 6/1/2037 | 5,000,000 | 5,946,050 | ||||||
Alaska 0.3% | ||||||||
Alaska, State Industrial Development & Export Authority Revenue, Providence Health Services, Series A, 5.5%, 10/1/2041 | 11,000,000 | 12,136,740 | ||||||
Arizona 1.2% | ||||||||
Arizona, Salt Verde Financial Corp., Gas Revenue: | ||||||||
5.0%, 12/1/2032 | 1,600,000 | 1,934,432 | ||||||
5.0%, 12/1/2037 | 8,405,000 | 10,261,664 | ||||||
Phoenix, AZ, Civic Improvement Corp., Airport Revenue: | ||||||||
Series A, 5.0%, 7/1/2040 | 22,775,000 | 24,726,590 | ||||||
Series A, 5.25%, 7/1/2033 | 20,885,000 | 22,894,764 | ||||||
|
| |||||||
59,817,450 | ||||||||
California 9.1% | ||||||||
Banning, CA, Water & Sewer Revenue, 1989 Water System Improvement Project, ETM, 8.0%, 1/1/2019, INS: AMBAC | 100,000 | 103,543 | ||||||
Banning, CA, Water & Sewer Revenue, Water System Reference & Improvement Project, ETM, 8.0%, 1/1/2019, INS: AMBAC | 55,000 | 56,930 | ||||||
California, Golden State Tobacco Securitization Corp., Tobacco Settlement Revenue, Series A, 5.0%, 6/1/2040 | 11,765,000 | 13,503,279 | ||||||
California, M-S-R Energy Authority, Series B, 7.0%, 11/1/2034, GTY: Citigroup, Inc. | 15,315,000 | 21,890,802 | ||||||
California, State General Obligation: | ||||||||
5.0%, 2/1/2032 | 35,000,000 | 39,467,050 | ||||||
5.0%, 2/1/2033 | 8,000,000 | 9,014,240 | ||||||
5.0%, 8/1/2034 | 11,790,000 | 13,859,381 | ||||||
5.0%, 8/1/2035 | 13,210,000 | 15,488,329 | ||||||
5.0%, 2/1/2043 | 20,000,000 | 22,528,800 | ||||||
5.0%, 5/1/2044 | 11,200,000 | 12,713,344 | ||||||
5.25%, 4/1/2035 | 15,340,000 | 17,477,322 | ||||||
California, State General Obligation, Various Purposes: | ||||||||
5.25%, 9/1/2026 | 18,765,000 | 21,169,547 | ||||||
5.25%, 9/1/2030 | 5,000,000 | 5,640,700 | ||||||
5.25%, 10/1/2032 | 25,000,000 | 28,183,500 | ||||||
California, State Health Facilities Financing Authority Revenue, Sutter Health Obligated Group, Series A, 5.0%, 8/15/2043 | 10,000,000 | 11,498,500 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 9 |
Principal Amount ($) | Value ($) | |||||||
California, State Public Works Board, Lease Revenue, Series A, 5.0%, 9/1/2039 | 25,000,000 | 28,422,500 | ||||||
California, State University Revenue, Series A, 5.0%, 11/1/2038 | 7,410,000 | 8,559,069 | ||||||
California, Statewide Communities Development Authority Revenue, Kaiser Permanente, Kaiser Foundation, Series A, 5.0%, 4/1/2042 | 5,295,000 | 5,958,940 | ||||||
California, Statewide Communities Development Authority Revenue, Loma Linda University Medical Center: | ||||||||
Series A, 144A, 5.0%, 12/1/2041 | 7,000,000 | 7,604,800 | ||||||
Series A, 144A, 5.0%, 12/1/2046 | 3,500,000 | 3,783,815 | ||||||
Los Angeles, CA, Department of Airports Revenue, Series A, AMT, 5.0%, 5/15/2042 | 4,220,000 | 4,852,367 | ||||||
Los Angeles, CA, Department of Airports Revenue, Los Angeles International Airport, Series A, 5.0%, 5/15/2040 | 25,000,000 | 26,844,250 | ||||||
Los Angeles, CA, Municipal Improvement Corp., Lease Revenue, Real Property, Series B, 5.0%, 11/1/2031 | 21,820,000 | 26,055,698 | ||||||
Orange County, CA, Airport Revenue: | ||||||||
Series A, 5.25%, 7/1/2039 | 16,000,000 | 16,840,320 | ||||||
Series B, 5.25%, 7/1/2039 | 12,000,000 | 12,630,240 | ||||||
San Diego County, CA, Regional Airport Authority Revenue: | ||||||||
Series A, 5.0%, 7/1/2034 | 7,000,000 | 7,610,960 | ||||||
Series B, AMT, 5.0%, 7/1/2043 | 12,500,000 | 13,985,375 | ||||||
San Francisco, CA, City & County Airports Commission, International Airport Revenue: | ||||||||
Series F, 5.0%, 5/1/2035 | 27,500,000 | 29,396,400 | ||||||
Series A, AMT, 5.0%, 5/1/2040 | 14,000,000 | 15,786,260 | ||||||
Walnut, CA, Energy Center Authority Revenue, Series A, 5.0%, 1/1/2040 | 10,000,000 | 10,554,300 | ||||||
|
| |||||||
451,480,561 | ||||||||
Colorado 4.5% | ||||||||
Colorado, Public Energy Authority, Natural Gas Purchase Revenue, 6.5%, 11/15/2038, GTY: Merrill Lynch & Co., Inc. | 30,000,000 | 42,223,500 | ||||||
Colorado, State Building Excellent Schools Today, Certificates of Participation, Series G, Prerefunded, 5.0%, 3/15/2032 | 8,630,000 | 9,430,605 | ||||||
Colorado, State Health Facilities Authority Revenue, School Health Systems, Series A, 5.5%, 1/1/2035 | 16,250,000 | 18,818,150 | ||||||
Colorado, Transportation/Tolls Revenue: | ||||||||
Series B, Zero Coupon, 9/1/2018, INS: NATL | 20,560,000 | 20,348,438 | ||||||
Series B, Zero Coupon, 9/1/2019, INS: NATL | 36,500,000 | 35,513,040 | ||||||
Series B, Zero Coupon, 9/1/2020, INS: NATL | 7,000,000 | 6,675,270 | ||||||
Denver City & County, CO, Airport Revenue: | ||||||||
Series A, AMT, 5.5%, 11/15/2028 | 15,000,000 | 17,418,300 | ||||||
Series A, AMT, 5.5%, 11/15/2029 | 14,705,000 | 17,022,949 |
The accompanying notes are an integral part of the financial statements.
10 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Series A, AMT, 5.5%, 11/15/2030 | 15,080,000 | 17,403,225 | ||||||
Series A, AMT, 5.5%, 11/15/2031 | 5,000,000 | 5,755,450 | ||||||
Denver, CO, Convention Center Hotel Authority Revenue, 5.0%, 12/1/2040 | 2,770,000 | 3,110,848 | ||||||
University of Colorado, Hospital Authority Revenue, Series A, 5.0%, 11/15/2042 | 26,010,000 | 29,193,364 | ||||||
|
| |||||||
222,913,139 | ||||||||
Connecticut 1.8% | ||||||||
Connecticut, Harbor Point Infrastructure Improvement District, Special Obligation Revenue, Harbor Point Project, Series A, 7.875%, 4/1/2039 | 13,000,000 | 14,215,760 | ||||||
Connecticut, State Health & Educational Facilities Authority Revenue, Hartford Healthcare, Series A, 5.0%, 7/1/2041 | 20,000,000 | 21,400,200 | ||||||
Connecticut, State Health & Educational Facilities Authority Revenue, Stamford Hospital, Series J, 5.125%, 7/1/2035 | 18,000,000 | 19,603,800 | ||||||
Connecticut, State Revolving Fund General Revenue, Green Bond: | ||||||||
Series A, 5.0%, 5/1/2032 | 5,000,000 | 5,991,100 | ||||||
Series A, 5.0%, 5/1/2033 | 5,130,000 | 6,123,219 | ||||||
Series A, 5.0%, 5/1/2034 | 18,125,000 | 21,551,169 | ||||||
|
| |||||||
88,885,248 | ||||||||
District of Columbia 2.3% | ||||||||
District of Columbia, General Obligation: | ||||||||
Series A, 5.0%, 6/1/2032 | 11,400,000 | 13,441,482 | ||||||
Series A, 5.0%, 6/1/2033 | 10,300,000 | 12,116,754 | ||||||
Series A, 5.0%, 6/1/2034 | 4,000,000 | 4,773,160 | ||||||
District of Columbia, Georgetown University Revenue: | ||||||||
5.0%, 4/1/2032 | 2,500,000 | 2,964,325 | ||||||
5.0%, 4/1/2033 | 5,000,000 | 5,901,600 | ||||||
5.0%, 4/1/2034 | 5,000,000 | 5,879,150 | ||||||
District of Columbia, Income Tax Secured Revenue, Series G, 5.0%, 12/1/2036 | 27,475,000 | 30,588,467 | ||||||
Metropolitan Washington, DC, Airports Authority System Revenue: | ||||||||
AMT, 5.0%, 10/1/2030 | 5,250,000 | 6,255,795 | ||||||
AMT, 5.0%, 10/1/2031 | 3,850,000 | 4,569,334 | ||||||
AMT, 5.0%, 10/1/2032 | 2,250,000 | 2,659,792 | ||||||
Series A, AMT, 5.0%, 10/1/2030 | 7,750,000 | 8,911,260 | ||||||
Series A, AMT, 5.0%, 10/1/2031 | 5,355,000 | 6,288,644 | ||||||
Series A, AMT, 5.0%, 10/1/2032 | 5,000,000 | 5,850,400 | ||||||
Series A, AMT, 5.0%, 10/1/2044 | 3,890,000 | 4,369,326 | ||||||
|
| |||||||
114,569,489 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 11 |
Principal Amount ($) | Value ($) | |||||||
Florida 7.0% | ||||||||
Broward County, FL, Airport Systems Revenue, Series Q-1, 5.0%, 10/1/2037 | 39,000,000 | 43,479,540 | ||||||
Florida, Central Expressway Authority Revenue, Senior Lien: | ||||||||
Series B, 4.0%, 7/1/2035 | 14,335,000 | 15,199,831 | ||||||
Series B, 4.0%, 7/1/2036 | 8,625,000 | 9,125,422 | ||||||
Series B, 4.0%, 7/1/2037 | 8,555,000 | 9,018,510 | ||||||
Florida, Halifax Hospital Medical Center, 5.0%, 6/1/2036 | 2,110,000 | 2,342,395 | ||||||
Florida, Jacksonville Electric Authority, Water & Sewer Revenue, Series A, 5.0%, 10/1/2032 | 5,000,000 | 5,500,400 | ||||||
Florida, State Board of Public Education, Capital Outlay, Series B, 4.0%, 6/1/2032 | 7,135,000 | 7,976,787 | ||||||
Florida, Village Center Community Development District, Utility Revenue, ETM, 6.0%, 11/1/2018, INS: FGIC | 280,000 | 291,684 | ||||||
Fort Pierce, FL, Utilities Authority Revenue, Series B, Zero Coupon, 10/1/2018, INS: AMBAC | 2,000,000 | 1,971,620 | ||||||
Greater Orlando, FL, Aviation Authority Airport Facilities Revenue: | ||||||||
Series A, AMT, 5.0%, 10/1/2042 | 9,925,000 | 11,474,888 | ||||||
Series A, AMT, 5.0%, 10/1/2047 | 6,425,000 | 7,398,966 | ||||||
Hillsborough County, FL, Aviation Authority Revenue, Tampa International Airport, Series A, AMT, 5.0%, 10/1/2040 | 10,000,000 | 11,108,300 | ||||||
Hillsborough County, FL, Industrial Development Authority Revenue, University Community Hospital, ETM, 6.5%, 8/15/2019, INS: NATL | 440,000 | 463,395 | ||||||
Lee County, FL, Airport Revenue, Series A, AMT, 5.375%, 10/1/2032 | 1,750,000 | 1,936,340 | ||||||
Marco Island, FL, Utility Systems Revenue: | ||||||||
Series A, Prerefunded, 5.0%, 10/1/2034 | 1,000,000 | 1,092,650 | ||||||
Series A, Prerefunded, 5.0%, 10/1/2040 | 1,000,000 | 1,092,650 | ||||||
Miami-Dade County, FL, Aviation Revenue: | ||||||||
Series A, AMT, 5.0%, 10/1/2031 | 3,495,000 | 3,881,302 | ||||||
Series B, 5.0%, 10/1/2035, INS: AGMC | 15,000,000 | 16,178,100 | ||||||
Series B, AMT, 5.0%, 10/1/2040 | 14,145,000 | 16,263,497 | ||||||
Series A, 5.5%, 10/1/2041 | 30,000,000 | 31,921,800 | ||||||
Miami-Dade County, FL, Aviation Revenue, Miami International Airport: | ||||||||
Series A-1, 5.375%, 10/1/2035 | 1,000,000 | 1,093,670 | ||||||
Series A-1, 5.375%, 10/1/2041 | 19,290,000 | 21,057,928 | ||||||
Miami-Dade County, FL, Double Barreled Aviation, 5.0%, 7/1/2041 | 6,700,000 | 7,193,187 | ||||||
Miami-Dade County, FL, Expressway Authority, Toll Systems Revenue, Series A, 5.0%, 7/1/2044 | 7,500,000 | 8,465,250 | ||||||
Miami-Dade County, FL, Transit Sales Surtax Revenue, 5.0%, 7/1/2037 | 16,500,000 | 18,393,375 |
The accompanying notes are an integral part of the financial statements.
12 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Miami-Dade County, FL, Water & Sewer Systems Revenue, 5.0%, 10/1/2034 | 17,800,000 | 19,233,612 | ||||||
North Brevard County, FL, Hospital District Revenue, Parrish Medical Center Project, Prerefunded, 5.75%, 10/1/2043 | 10,000,000 | 10,358,700 | ||||||
Orange County, FL, Health Facilities Authority Revenue, Orlando Health, Inc.: | ||||||||
Series A, 5.0%, 10/1/2035 | 2,280,000 | 2,584,334 | ||||||
Series A, 5.0%, 10/1/2036 | 4,135,000 | 4,676,768 | ||||||
Orange County, FL, Health Facilities Authority Revenue, Orlando Regional Healthcare, Series B, 5.25%, 12/1/2029, INS: AGMC | 3,820,000 | 3,961,493 | ||||||
Orange County, FL, Health Facilities Authority Revenue, Orlando Regional Healthcare System: | ||||||||
Series A, 6.25%, 10/1/2018, INS: NATL | 260,000 | 270,192 | ||||||
Series C, 6.25%, 10/1/2021, INS: NATL | 4,945,000 | 5,384,264 | ||||||
Orange County, FL, School Board, Certificates of Participation, Series C, 5.0%, 8/1/2033 | 16,610,000 | 19,443,500 | ||||||
Orlando & Orange County, FL, Expressway Authority Revenue, Series A, 5.0%, 7/1/2040 | 7,250,000 | 7,764,823 | ||||||
Port St. Lucie, FL, Utility System Revenue: | ||||||||
5.0%, 9/1/2035, INS: AGC | 245,000 | 251,370 | ||||||
5.25%, 9/1/2035, INS: AGC | 280,000 | 287,899 | ||||||
Sunrise, FL, Water & Sewer Revenue, Utility Systems, ETM, 5.5%, 10/1/2018, INS: AMBAC | 3,685,000 | 3,811,211 | ||||||
Tallahassee, FL, Health Facilities Revenue, Memorial Healthcare, Inc. Project, Series A, 5.0%, 12/1/2055 | 2,985,000 | 3,223,472 | ||||||
Tampa, FL, Sports Authority Revenue, Sales Tax-Tampa Bay Arena Project, 5.75%, 10/1/2020, INS: NATL | 1,315,000 | 1,397,372 | ||||||
Tampa-Hillsborough County, FL, Expressway Authority, Series A, 5.0%, 7/1/2037 | 10,000,000 | 11,092,500 | ||||||
|
| |||||||
347,662,997 | ||||||||
Georgia 4.4% | ||||||||
Atlanta, GA, Airport Revenue: | ||||||||
Series A, 5.0%, 1/1/2035 | 2,470,000 | 2,615,681 | ||||||
Series B, 5.0%, 1/1/2037 | 720,000 | 799,934 | ||||||
Atlanta, GA, Water & Wastewater Revenue: | ||||||||
Series B, 5.25%, 11/1/2028 | 5,000,000 | �� | 5,819,400 | |||||
Series B, 5.375%, 11/1/2039, INS: AGMC | 13,915,000 | 14,816,831 | ||||||
Burke County, GA, Development Authority Pollution Control Revenue, Oglethorpe Power Corp. Vogtle Project: | ||||||||
Series A, 5.3%, 1/1/2033, INS: AGMC | 10,000,000 | 10,030,600 | ||||||
Series B, 5.5%, 1/1/2033 | 4,000,000 | 4,011,800 | ||||||
Cobb County, GA, Kennestone Hospital Authority, Revenue Anticipation Certificates, Wellstar Health System, Series A, 5.0%, 4/1/2047 | 2,635,000 | 2,974,335 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 13 |
Principal Amount ($) | Value ($) | |||||||
DeKalb County, GA, Water & Sewer Revenue: | ||||||||
Series A, 5.25%, 10/1/2032 | 2,180,000 | 2,435,322 | ||||||
Series A, 5.25%, 10/1/2033 | 3,635,000 | 4,056,478 | ||||||
Series A, 5.25%, 10/1/2036 | 11,115,000 | 12,390,669 | ||||||
Series A, 5.25%, 10/1/2041 | 29,000,000 | 32,249,450 | ||||||
Fulton County, GA, Development Authority Hospital Revenue, Revenue Anticipation Certificates, Wellstar Health System, Series A, 5.0%, 4/1/2047 | 3,155,000 | 3,561,301 | ||||||
Gainesville & Hall County, GA, Hospital Authority, Northeast Georgia Healthcare: | ||||||||
Series A, 5.375%, 2/15/2040 | 1,940,000 | 2,085,209 | ||||||
Series A, 5.5%, 2/15/2045 | 4,720,000 | 5,057,291 | ||||||
Georgia, Main Street Natural Gas, Inc., Gas Project Revenue: | ||||||||
Series A, 5.0%, 3/15/2019, GTY: JPMorgan Chase & Co. | 17,440,000 | 18,183,642 | ||||||
Series B, 5.0%, 3/15/2019, GTY: Merrill Lynch & Co., Inc. | 5,000,000 | 5,207,350 | ||||||
Series A, 5.0%, 3/15/2020, GTY: JPMorgan Chase & Co. | 2,700,000 | 2,893,374 | ||||||
Series B, 5.0%, 3/15/2020, GTY: Merrill Lynch & Co., Inc. | 5,000,000 | 5,348,850 | ||||||
Series A, 5.0%, 3/15/2022, GTY: JPMorgan Chase & Co. | 17,340,000 | 19,387,854 | ||||||
Series A, 5.5%, 9/15/2023, GTY: Merrill Lynch & Co., Inc. | 5,000,000 | 5,808,300 | ||||||
Series A, 5.5%, 9/15/2024, GTY: Merrill Lynch & Co., Inc. | 4,635,000 | 5,440,285 | ||||||
Series A, 5.5%, 9/15/2027, GTY: Merrill Lynch & Co., Inc. | 5,000,000 | 5,977,550 | ||||||
Series A, 5.5%, 9/15/2028, GTY: Merrill Lynch & Co., Inc. | 5,000,000 | 5,990,800 | ||||||
Georgia, Municipal Electric Authority Power Revenue, Series W, 6.6%, 1/1/2018, INS: NATL | 445,000 | 446,749 | ||||||
Georgia, Municipal Electric Authority Revenue, Project One, Series A, 5.0%, 1/1/2035 | 2,995,000 | 3,366,110 | ||||||
Georgia, Private Colleges & Universities Authority Revenue, Emory University, Series B, 4.0%, 10/1/2038 | 17,780,000 | 19,077,584 | ||||||
Georgia, State General Obligation, Series A-2, 5.0%, 2/1/2032 | 10,000,000 | 12,098,500 | ||||||
Georgia, State Municipal Electric Authority, Series GG, 5.0%, 1/1/2039 | 5,695,000 | 6,266,778 | ||||||
|
| |||||||
218,398,027 | ||||||||
Hawaii 0.8% | ||||||||
Hawaii, State Airports Systems Revenue: | ||||||||
Series A, 5.0%, 7/1/2039 | 16,800,000 | 18,014,808 | ||||||
Series A, AMT, 5.0%, 7/1/2041 | 8,930,000 | 10,099,651 | ||||||
Hawaii, State Department of Budget & Finance, Special Purpose Revenue, Hawaiian Electric Co., Inc., 6.5%, 7/1/2039 | 6,000,000 | 6,447,540 | ||||||
Hawaii, State General Obligation, Series FG, 4.0%, 10/1/2036 | 6,250,000 | 6,731,250 | ||||||
|
| |||||||
41,293,249 |
The accompanying notes are an integral part of the financial statements.
14 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Idaho 0.2% | ||||||||
Idaho, Health Facilities Authority Revenue, St. Luke’s Regional Medical Center, 6.75%, 11/1/2037 | 10,060,000 | 10,507,771 | ||||||
Illinois 5.3% | ||||||||
Chicago, IL, Board of Education: | ||||||||
Series H, 5.0%, 12/1/2036 | 6,075,000 | 6,228,698 | ||||||
Series H, 5.0%, 12/1/2046 | 3,470,000 | 3,543,911 | ||||||
Chicago, IL, O’Hare International Airport Revenue, Series A, AMT, 5.0%, 1/1/2034 | 7,000,000 | 7,838,950 | ||||||
Chicago, IL, O’Hare International Airport Revenue, Senior Lien: | ||||||||
Series B, 5.0%, 1/1/2034 | 1,540,000 | 1,788,387 | ||||||
Series C, 5.0%, 1/1/2034 | 6,000,000 | 6,877,920 | ||||||
Series B, 5.0%, 1/1/2035 | 7,560,000 | 8,685,059 | ||||||
Series C, 5.0%, 1/1/2035 | 6,375,000 | 7,283,182 | ||||||
Series B, 5.0%, 1/1/2036 | 3,845,000 | 4,438,668 | ||||||
Series B, 5.0%, 1/1/2037 | 3,845,000 | 4,428,786 | ||||||
Series C, 5.0%, 1/1/2037 | 9,105,000 | 10,360,124 | ||||||
Series B, 5.0%, 1/1/2038 | 5,385,000 | 6,193,396 | ||||||
Chicago, IL, O’Hare International Airport Revenue, Third Lien, Series A, 5.75%, 1/1/2039 | 2,190,000 | 2,428,163 | ||||||
Chicago, IL, Water & Sewer Revenue, Zero Coupon, 11/1/2018, INS: AMBAC | 5,165,000 | 5,082,515 | ||||||
Chicago, IL, Water Revenue, 5.0%, 11/1/2023, INS: AGMC | 10,000,000 | 10,307,100 | ||||||
Cook County, IL, Forest Preservation District, Series C, 5.0%, 12/15/2037 | 3,155,000 | 3,346,225 | ||||||
Illinois, Finance Authority Revenue, Memorial Health Systems: | ||||||||
5.5%, 4/1/2034 | 12,100,000 | 12,728,232 | ||||||
5.5%, 4/1/2039 | 4,800,000 | 5,043,408 | ||||||
Illinois, Metropolitan Pier & Exposition Authority, Dedicated State Tax Revenue, Capital Appreciation-McCormick, Series A, Zero Coupon, 6/15/2038, INS: NATL | 17,305,000 | 6,694,093 | ||||||
Illinois, Metropolitan Pier & Exposition Authority, Special Assessment Revenue, Series A, Zero Coupon, 12/15/2018, INS: NATL | 6,660,000 | 6,479,780 | ||||||
Illinois, Railsplitter Tobacco Settlement Authority, 6.0%, 6/1/2028 | 17,315,000 | 19,483,704 | ||||||
Illinois, Regional Transportation Authority: | ||||||||
Series B, 5.75%, 6/1/2033, INS: NATL | 7,000,000 | 9,024,960 | ||||||
Series A, 6.7%, 11/1/2021, INS: NATL | 12,360,000 | 13,787,456 | ||||||
Illinois, Sales & Special Tax Revenue, 6.25%, 12/15/2020, INS: AMBAC | 2,775,000 | 2,885,695 | ||||||
Illinois, State Finance Authority Revenue, Ascension Health Credit Group, Series A, 5.0%, 11/15/2032 | 2,435,000 | 2,712,858 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 15 |
Principal Amount ($) | Value ($) | |||||||
Illinois, State Finance Authority Revenue, Edward Elmhurst Obligated Group: | ||||||||
Series A, 5.0%, 1/1/2036 | 2,970,000 | 3,263,258 | ||||||
Series A, 5.0%, 1/1/2037 | 3,965,000 | 4,346,869 | ||||||
Illinois, State Finance Authority Revenue, OSF Healthcare Systems, Series A, 5.0%, 5/15/2041 | 13,155,000 | 14,114,920 | ||||||
Illinois, State Finance Authority Revenue, University of Chicago, Series A, 5.0%, 10/1/2038 | 12,000,000 | 13,846,800 | ||||||
Illinois, State General Obligation: | ||||||||
Series D, 5.0%, 11/1/2027 | 7,500,000 | 8,108,325 | ||||||
Series D, 5.0%, 11/1/2028 | 7,500,000 | 8,108,325 | ||||||
Series C, 5.0%, 11/1/2029 | 10,000,000 | 10,768,700 | ||||||
Series A, 5.0%, 12/1/2038 (a) | 4,760,000 | 5,007,996 | ||||||
Series A, 5.0%, 12/1/2039 (a) | 10,240,000 | 10,756,608 | ||||||
Lake Cook Kane & McHenry Counties, IL, School District General Obligation, 6.3%, 12/1/2017, INS: AGMC | 1,885,000 | 1,885,000 | ||||||
Northern Illinois, Municipal Power Agency, Power Project Revenue, Series A, 5.0%, 12/1/2041 | 5,080,000 | 5,671,769 | ||||||
Springfield, IL, Electric Revenue, Senior Lien, 5.0%, 3/1/2040, INS: AGMC | 5,805,000 | 6,463,461 | ||||||
Springfield, IL, Water Revenue, 5.0%, 3/1/2037 | 5,000,000 | 5,489,350 | ||||||
|
| |||||||
265,502,651 | ||||||||
Indiana 0.9% | ||||||||
Indiana, Hospital & Healthcare Revenue, Health Facilities Financing Authority, ETM, 6.0%, 7/1/2018, INS: NATL | 2,175,000 | 2,232,984 | ||||||
Indiana, State Finance Authority Revenue, Community Foundation of Northwest Indiana, 5.0%, 3/1/2041 | 17,395,000 | 18,832,175 | ||||||
Indiana, State Finance Authority Revenue, Stadium Project, Series A, 5.25%, 2/1/2031 | 2,595,000 | 3,085,507 | ||||||
Indiana, State Finance Authority, Wastewater Utility Revenue, First Lien, Series A, 5.25%, 10/1/2038 | 8,000,000 | 8,918,160 | ||||||
St. Joseph County, IN, Educational Facilities Revenue, Notre Dame du Lac Project, 5.0%, 3/1/2036 | 10,000,000 | 10,085,500 | ||||||
|
| |||||||
43,154,326 | ||||||||
Kansas 0.4% | ||||||||
Kansas, State Development Finance Authority Hospital Revenue, Adventist Health System: | ||||||||
Series A, 5.0%, 11/15/2032 | 13,000,000 | 14,532,700 | ||||||
Series A, 5.0%, 11/15/2034 | 4,965,000 | 5,532,499 | ||||||
|
| |||||||
20,065,199 |
The accompanying notes are an integral part of the financial statements.
16 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Kentucky 0.2% | ||||||||
Kentucky, Economic Development Finance Authority, Louisville Arena Project Revenue, Series A-1, 6.0%, 12/1/2038, INS: AGC | 4,500,000 | 4,551,255 | ||||||
Kentucky, State Economic Development Finance Authority, Owensboro Health, Inc. Obligated Group: | ||||||||
Series A, 5.0%, 6/1/2045 | 1,275,000 | 1,375,916 | ||||||
Series A, 5.25%, 6/1/2041 | 1,915,000 | 2,136,125 | ||||||
|
| |||||||
8,063,296 | ||||||||
Louisiana 0.7% | ||||||||
Louisiana, New Orleans Aviation Board, General Airport North Terminal, Series B, AMT, 5.0%, 1/1/2048 | 2,830,000 | 3,214,088 | ||||||
Louisiana, Public Facilities Authority, Hospital Revenue, Lafayette General Medical Center, 5.5%, 11/1/2040 | 5,000,000 | 5,351,400 | ||||||
Louisiana, St. John Baptist Parish Revenue, Marathon Oil Corp., Series A, 5.125%, 6/1/2037 | 450,000 | 450,724 | ||||||
Louisiana, State Local Government Environmental Facilities & Community Development Authority Revenue, Westlake Chemical Corp. Project, 3.5%, 11/1/2032 | 25,285,000 | 25,347,454 | ||||||
|
| |||||||
34,363,666 | ||||||||
Maine 0.2% | ||||||||
Maine, Health & Higher Educational Facilities Authority Revenue, Series A, 5.0%, 7/1/2040 | 9,650,000 | 10,282,654 | ||||||
Maryland 1.7% | ||||||||
Baltimore, MD, Project Revenue, Waste Water Projects, Series A, 5.0%, 7/1/2038 | 11,000,000 | 12,375,770 | ||||||
Maryland, State Health & Higher Educational Facilities Authority Revenue, Adventist Healthcare Obligated Group, Series A, 5.5%, 1/1/2046 | 20,000,000 | 22,720,000 | ||||||
Maryland, State Health & Higher Educational Facilities Authority Revenue, Anne Arundel Health Systems, Series A, Prerefunded, 6.75%, 7/1/2039 | 3,400,000 | 3,672,884 | ||||||
Maryland, State Health & Higher Educational Facilities Authority Revenue, Medstar Health Obligated Group, Series A, 5.0%, 5/15/2042 | 14,735,000 | 16,613,418 | ||||||
Maryland, State Stadium Authority Revenue, Baltimore City Public Schools: | ||||||||
5.0%, 5/1/2035 | 5,000,000 | 5,790,500 | ||||||
5.0%, 5/1/2036 | 5,015,000 | 5,795,685 | ||||||
5.0%, 5/1/2041 | 16,000,000 | 18,374,880 | ||||||
|
| |||||||
85,343,137 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 17 |
Principal Amount ($) | Value ($) | |||||||
Massachusetts 4.3% | ||||||||
Massachusetts, State College Building Authority Revenue: | ||||||||
Series B, 5.0%, 5/1/2037 | 4,500,000 | 4,962,780 | ||||||
Series B, 5.0%, 5/1/2043 | 4,125,000 | 4,536,551 | ||||||
Massachusetts, State Department of Transportation, Metropolitan Highway Systems Revenue, Series B, 5.0%, 1/1/2032 | 28,800,000 | 30,613,824 | ||||||
Massachusetts, State Development Finance Agency Revenue, Linden Ponds, Inc. Facility: | ||||||||
Series B, 11/15/2056* | 314,524 | 20,010 | ||||||
Series A-2, 5.5%, 11/15/2046 | 63,235 | 63,253 | ||||||
Series A-1, 6.25%, 11/15/2031 | 1,182,967 | 1,235,491 | ||||||
Massachusetts, State Development Finance Agency Revenue, Partners Healthcare System, Inc., Series L, 5.0%, 7/1/2036 | 13,680,000 | 15,054,293 | ||||||
Massachusetts, State Development Finance Agency Revenue, South Shore Hospital, Series I, 5.0%, 7/1/2041 | 1,825,000 | 2,019,089 | ||||||
Massachusetts, State Development Finance Agency Revenue, Suffolk University, Series A, 5.75%, 7/1/2039 | 4,785,000 | 5,081,000 | ||||||
Massachusetts, State Development Finance Agency Revenue, UMass Memorial Healthcare, Series I, 5.0%, 7/1/2036 | 1,000,000 | 1,118,120 | ||||||
Massachusetts, State General Obligation: | ||||||||
Series E, 4.0%, 9/1/2039 | 27,250,000 | 28,867,560 | ||||||
Series E, 4.0%, 9/1/2042 | 20,000,000 | 21,145,000 | ||||||
Series A, 5.0%, 7/1/2036 | 22,630,000 | 26,562,868 | ||||||
Series A, 5.0%, 3/1/2041 | 15,000,000 | 17,005,800 | ||||||
Massachusetts, State School Building Authority, Sales Tax Revenue: | ||||||||
Series C, 4.0%, 11/15/2035 | 27,000,000 | 28,776,870 | ||||||
Series B, 5.25%, 10/15/2035 | 12,000,000 | 13,504,800 | ||||||
Massachusetts, State Water Resources Authority, Green Bond, Series C, 4.0%, 8/1/2036 | 10,000,000 | 10,717,800 | ||||||
|
| |||||||
211,285,109 | ||||||||
Michigan 1.3% | ||||||||
Michigan, State Building Authority Revenue, Facilities Program: | ||||||||
Series I, 5.0%, 4/15/2038 | 14,675,000 | 16,827,529 | ||||||
Series H, 5.125%, 10/15/2033 | 9,755,000 | 10,300,597 | ||||||
Series I, 6.0%, 10/15/2038 | 300,000 | 311,724 | ||||||
Michigan, State Finance Authority Revenue, Henry Ford Health System, 5.0%, 11/15/2041 | 12,220,000 | 13,649,129 | ||||||
Michigan, State Finance Authority Revenue, Trinity Health Corp., 5.0%, 12/1/2035 | 4,335,000 | 4,847,484 |
The accompanying notes are an integral part of the financial statements.
18 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Michigan, State Hospital Finance Authority Revenue, Trinity Health Credit: | ||||||||
Series A-1, 6.5%, 12/1/2033 | 335,000 | 351,549 | ||||||
Series A-1, Prerefunded, 6.5%, 12/1/2033 | 1,760,000 | 1,848,810 | ||||||
Royal Oak, MI, Hospital Finance Authority Revenue, William Beaumont Hospital, Prerefunded, 8.25%, 9/1/2039 | 7,200,000 | 7,567,344 | ||||||
Wayne County, MI, Airport Authority Revenue, Detroit Metropolitan Airport, Series A, 5.0%, 12/1/2037 | 9,255,000 | 10,233,716 | ||||||
|
| |||||||
65,937,882 | ||||||||
Mississippi 0.6% | ||||||||
Mississippi, State Business Finance Corp., Solid Waste Disposal Revenue, Waste Pro U.S.A., Inc. Project, AMT, 144A, 5.0%, 2/1/2036 | 2,710,000 | 2,774,200 | ||||||
Mississippi, State General Obligation: | ||||||||
Series A, 4.0%, 10/1/2035 | 8,000,000 | 8,633,680 | ||||||
Series A, 5.0%, 10/1/2033 | 10,000,000 | 11,934,800 | ||||||
Warren County, MS, Gulf Opportunity Zone, International Paper Co., Series A, 6.5%, 9/1/2032 | 7,420,000 | 7,699,734 | ||||||
|
| |||||||
31,042,414 | ||||||||
Missouri 0.4% | ||||||||
Cape Girardeau County, MO, Industrial Development Authority, Health Care Facilities Revenue, St. Francis Medical Center, Series A, Prerefunded, 5.75%, 6/1/2039 | 2,150,000 | 2,282,311 | ||||||
Cape Girardeau County, MO, Industrial Development Authority, St. Francis Medical Center, Series A, 5.0%, 6/1/2033 | 11,075,000 | 11,992,342 | ||||||
Missouri, State Health & Educational Facilities Authority Revenue, Lutheran Senior Services Projects, Series B, 5.0%, 2/1/2046 | 2,460,000 | 2,676,087 | ||||||
Missouri, State Health & Educational Facilities Authority Revenue, Medical Research, Lutheran Senior Services, Series A, 5.0%, 2/1/2046 | 735,000 | 799,562 | ||||||
St. Louis County, MO, Industrial Development Authority, Senior Living Facilities, Friendship Village, 5.0%, 9/1/2048 | 3,255,000 | 3,567,578 | ||||||
|
| |||||||
21,317,880 | ||||||||
Nebraska 0.1% | ||||||||
Douglas County, NE, Hospital Authority No.2, Health Facilities, Children’s Hospital Obligated Group, 5.0%, 11/15/2047 | 5,205,000 | 5,909,913 | ||||||
Nevada 0.1% | ||||||||
Clark County, NV, Airport Revenue, Series B, 5.125%, 7/1/2036 | 5,000,000 | 5,356,100 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 19 |
Principal Amount ($) | Value ($) | |||||||
New Hampshire 0.2% | ||||||||
New Hampshire, Health & Education Facilities Authority Revenue, Wentworth-Douglas Hospital, Series A, 6.5%, 1/1/2031 | 10,000,000 | 11,216,500 | ||||||
New Jersey 1.8% | ||||||||
New Jersey, State Economic Development Authority Revenue: | ||||||||
5.0%, 6/15/2028 | 1,050,000 | 1,128,655 | ||||||
Series BBB, 5.5%, 6/15/2030 | 22,440,000 | 26,039,825 | ||||||
Series DDD, 5.0%, 6/15/2042 | 2,775,000 | 2,997,638 | ||||||
New Jersey, State Economic Development Authority Revenue, Private Activity, The Goethals Bridge Replacement Project, AMT, 5.0%, 1/1/2031, INS: AGMC | 4,000,000 | 4,507,440 | ||||||
New Jersey, State Economic Development Authority, Motor Vehicle Surcharge Revenue, Series A, 5.0%, 7/1/2033 | 1,460,000 | 1,598,262 | ||||||
New Jersey, State Transportation Trust Fund Authority, Transportation Systems: | ||||||||
Series A, 6.0%, 6/15/2035 | 6,000,000 | 6,718,320 | ||||||
Series A, 6.0%, 12/15/2038 | 11,075,000 | 11,554,769 | ||||||
New Jersey, State Turnpike Authority Revenue: | ||||||||
Series B, 5.0%, 1/1/2034 | 10,000,000 | 11,851,900 | ||||||
Series A, 5.0%, 1/1/2035 | 6,025,000 | 6,688,955 | ||||||
Series E, 5.0%, 1/1/2045 | 15,380,000 | 17,390,166 | ||||||
|
| |||||||
90,475,930 | ||||||||
New York 14.5% | ||||||||
New York, Metropolitan Transportation Authority, Dedicated Tax Fund, Climate Board Certified Green Bond: | ||||||||
Series B-2, 5.0%, 11/15/2033 | 12,550,000 | 14,980,558 | ||||||
Series B-2, 5.0%, 11/15/2034 | 10,940,000 | 13,006,347 | ||||||
New York, Higher Education Revenue, Dormitory Authority, Series B, 5.25%, 5/15/2019, INS: FGIC | 2,550,000 | 2,602,632 | ||||||
New York, Metropolitan Transportation Authority Revenue: | ||||||||
Series D, 5.0%, 11/15/2027, INS: AGMC | 16,500,000 | 18,845,475 | ||||||
Series D, 5.0%, 11/15/2038 | 13,635,000 | 15,507,767 | ||||||
Series B, 5.25%, 11/15/2044 | 25,000,000 | 28,780,750 | ||||||
New York, Metropolitan Transportation Authority Revenue, Green Bond, Series A2, 5.0%, 11/15/2027 | 9,000,000 | 10,833,750 | ||||||
New York, Sales Tax Asset Receivable Corp., Series A, 5.0%, 10/15/2031 | 500,000 | 589,075 | ||||||
New York, School District General Obligation, Dormitory Authority, City University, Series A, 5.5%, 5/15/2019 | 1,500,000 | 1,544,595 | ||||||
New York, Senior Care Revenue, Dormitory Authority, City University, Series A, 5.25%, 5/15/2021 | 2,000,000 | 2,200,940 | ||||||
New York, State Agency General Obligation Lease, Urban Development Corp., 5.7%, 4/1/2020 | 2,275,000 | 2,394,278 |
The accompanying notes are an integral part of the financial statements.
20 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
New York, State Dormitory Authority, Personal Income Tax Revenue: | ||||||||
Series A, 5.0%, 2/15/2035 | 9,305,000 | 10,548,241 | ||||||
Series B, 5.0%, 2/15/2035 | 30,000,000 | 34,611,900 | ||||||
Series F, 5.0%, 2/15/2035 | 5,000,000 | 5,325,200 | ||||||
Series A, 5.0%, 2/15/2037 | 5,240,000 | 6,141,018 | ||||||
Series A, 5.0%, 2/15/2038 | 5,525,000 | 6,465,245 | ||||||
Series A, 5.0%, 2/15/2039 | 3,950,000 | 4,615,259 | ||||||
Series C, 5.0%, 3/15/2041 | 10,000,000 | 10,911,100 | ||||||
Series C, 5.0%, 3/15/2042 | 14,750,000 | 16,697,147 | ||||||
Series E, 5.0%, 2/15/2044 | 10,000,000 | 11,389,700 | ||||||
New York, State Liberty Development Corp. Revenue, World Trade Center Port Authority Construction, 5.25%, 12/15/2043 | 45,000,000 | 50,302,800 | ||||||
New York, State Thruway Authority, General Revenue, Junior Indebtedness Obligated, Junior Lien, Series A, 5.0%, 1/1/2041 | 6,545,000 | 7,477,401 | ||||||
New York, State Transportation Development Corp., Special Facilities Revenue, Laguardia Gateway Partners LLC, Redevelopment Project, Series A, AMT, 5.0%, 7/1/2046 | 14,190,000 | 15,534,786 | ||||||
New York, State Transportation Development Corp., Special Facility Revenue, Laguardia Gateway Partners LLC, Redevelopment Project, Series A, AMT, 5.0%, 7/1/2041 | 6,660,000 | 7,324,135 | ||||||
New York, TSASC, Inc., Series A, 5.0%, 6/1/2041 | 1,195,000 | 1,334,612 | ||||||
New York, Utility Debt Securitization Authority, Restructuring Revenue: | ||||||||
Series TE, 5.0%, 12/15/2034 | 3,200,000 | 3,691,680 | ||||||
Series TE, 5.0%, 12/15/2035 | 4,000,000 | 4,604,880 | ||||||
New York City, NY, Municipal Water Finance Authority, Water & Sewer Revenue: | ||||||||
Series DD, 5.0%, 6/15/2035 | 12,000,000 | 13,620,120 | ||||||
Series FF-2, 5.0%, 6/15/2040 | 2,270,000 | 2,378,801 | ||||||
New York City, NY, Municipal Water Finance Authority, Water & Sewer Systems Revenue: | ||||||||
Series DD, 5.0%, 6/15/2036 | 6,000,000 | 6,890,820 | ||||||
Series FF, 5.0%, 6/15/2039 | 22,345,000 | 25,908,357 | ||||||
New York City, NY, Municipal Water Finance Authority, Water & Sewer Systems Revenue, Second General Resolution: | ||||||||
Series CC-1, 4.0%, 6/15/2038 | 5,505,000 | 5,888,148 | ||||||
Series EE, 5.375%, 6/15/2043 | 11,250,000 | 12,409,875 | ||||||
New York City, NY, Transitional Finance Authority Revenue, Future Tax Secured: | ||||||||
Series B-1, 4.0%, 8/1/2037 | 23,500,000 | 25,168,265 | ||||||
Series B-1, 4.0%, 8/1/2039 | 16,500,000 | 17,619,525 | ||||||
Series B-1, 5.0%, 8/1/2035 | 9,295,000 | 10,730,334 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 21 |
Principal Amount ($) | Value ($) | |||||||
Series B-1, 5.0%, 8/1/2036 | 9,900,000 | 11,580,525 | ||||||
Series E-1, 5.0%, 2/1/2037 | 28,685,000 | 33,235,588 | ||||||
Series D-1, 5.0%, 2/1/2038 | 17,655,000 | 20,094,391 | ||||||
Series A-1, 5.0%, 11/1/2038 | 11,560,000 | 13,192,503 | ||||||
Series D-1, 5.0%, 11/1/2038 | 10,000,000 | 11,066,700 | ||||||
Series E-1, 5.0%, 2/1/2039 | 15,000,000 | 17,332,200 | ||||||
Series I, 5.0%, 5/1/2042 | 8,000,000 | 9,031,600 | ||||||
New York City, NY, Transitional Finance Authority, Building Aid Revenue, Fiscal 2018: | ||||||||
Series S-1, 5.0%, 7/15/2032 | 6,800,000 | 8,116,344 | ||||||
Series S-1, 5.0%, 7/15/2035 | 2,800,000 | 3,303,048 | ||||||
New York, NY, General Obligation: | ||||||||
Series A-1, 4.0%, 8/1/2034 | 22,230,000 | 23,983,725 | ||||||
Series A-1, 4.0%, 8/1/2036 | 7,585,000 | 8,135,443 | ||||||
Series B-1, 5.0%, 12/1/2031 | 2,000,000 | 2,377,360 | ||||||
Series D-1, 5.0%, 10/1/2033 | 25,000,000 | 27,709,000 | ||||||
Series D-1, 5.0%, 10/1/2034 | 5,000,000 | 5,534,000 | ||||||
Series I-1, 5.375%, 4/1/2036 | 2,125,000 | 2,231,420 | ||||||
Port Authority of New York & New Jersey, One Hundred Eighty-Fourth: | ||||||||
5.0%, 9/1/2036 | 1,795,000 | 2,059,763 | ||||||
5.0%, 9/1/2039 | 4,490,000 | 5,143,295 | ||||||
Port Authority of New York & New Jersey, One Hundred Ninety-Fifth: | ||||||||
AMT, 5.0%, 10/1/2035 | 9,175,000 | 10,588,134 | ||||||
AMT, 5.0%, 4/1/2036 | 18,000,000 | 20,727,180 | ||||||
Port Authority of New York & New Jersey, One Hundred Ninety-Seven, AMT, 5.0%, 11/15/2036 | 7,000,000 | 8,073,520 | ||||||
Port Authority of New York & New Jersey, One Hundred Ninety-Third: | ||||||||
AMT, 5.0%, 10/15/2029 | 10,000,000 | 11,596,400 | ||||||
AMT, 5.0%, 10/15/2034 | 5,775,000 | 6,582,865 | ||||||
AMT, 5.0%, 10/15/2035 | 2,865,000 | 3,259,339 | ||||||
Port Authority of New York & New Jersey, Two Hundred Second: | ||||||||
AMT, 5.0%, 10/15/2033 | 6,560,000 | 7,682,350 | ||||||
AMT, 5.0%, 10/15/2034 | 5,250,000 | 6,124,808 | ||||||
Syracuse, NY, Industrial Development Agency, Carousel Center Project: | ||||||||
Series A, AMT, 5.0%, 1/1/2035 | 665,000 | 747,560 | ||||||
Series A, AMT, 5.0%, 1/1/2036 | 2,100,000 | 2,355,948 | ||||||
Troy, NY, Capital Resource Corp. Revenue, Rensselaer Polytechnic Institute, Series A, 5.125%, 9/1/2040 | 2,000,000 | 2,151,980 | ||||||
|
| |||||||
712,892,505 |
The accompanying notes are an integral part of the financial statements.
22 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
North Carolina 0.7% | ||||||||
Charlotte, NC, Airport Revenue, Series A, 5.5%, 7/1/2034 | 1,500,000 | 1,644,585 | ||||||
Charlotte-Mecklenberg, NC, Hospital Authority, Health Care System Revenue, Series A, 5.0%, 1/15/2039 | 28,015,000 | 31,200,306 | ||||||
North Carolina, State Municipal Power Agency No.1, Catawba Electric Revenue, Series A, 5.0%, 1/1/2030 | 1,560,000 | 1,614,241 | ||||||
|
| |||||||
34,459,132 | ||||||||
North Dakota 0.2% | ||||||||
Fargo, ND, Sanford Health Systems Revenue, 6.25%, 11/1/2031 | 9,260,000 | 10,752,527 | ||||||
Ohio 3.0% | ||||||||
Chillicothe, OH, Hospital Facilities Revenue, Adena Health System Obligated Group Project, 5.0%, 12/1/2047 | 6,035,000 | 6,786,720 | ||||||
Cleveland, OH, Airport Systems Revenue, Series A, 5.0%, 1/1/2030 | 1,000,000 | 1,093,020 | ||||||
Cleveland, OH, Sales & Special Tax Revenue, Urban Renewal Tax Increment, Rock & Roll Hall of Fame and Museum Project, 6.75%, 3/15/2018 | 170,000 | 170,721 | ||||||
Cuyahoga County, OH, County General Obligation, 5.65%, 5/15/2018 | 110,000 | 112,170 | ||||||
Finneytown, OH, Other General Obligation, Local School District, 6.2%, 12/1/2017, INS: NATL | 70,000 | 70,000 | ||||||
Hamilton County, OH, Health Care Revenue, Life Enriching Communities Project: | ||||||||
5.0%, 1/1/2036 | 975,000 | 1,051,459 | ||||||
5.0%, 1/1/2046 | 2,790,000 | 3,010,159 | ||||||
Hancock County, OH, Hospital Revenue, Blanchard Valley Regional Health Center, Prerefunded, 6.5%, 12/1/2030 | 14,425,000 | 16,751,897 | ||||||
Lucas County, OH, Hospital Revenue, Promedica Healthcare, Series A, 6.5%, 11/15/2037 | 6,000,000 | 7,117,680 | ||||||
Ohio, Akron, Bath & Copley Joint Township Hospital District Revenue, 5.25%, 11/15/2046 | 11,610,000 | 13,026,304 | ||||||
Ohio, Akron, Bath & Copley Joint Township Hospital District Revenue, Children’s Hospital Medical Center of Akron, 5.0%, 11/15/2038 | 15,645,000 | 17,494,082 | ||||||
Ohio, American Municipal Power, Inc. Revenue, Fremont Energy Center Project, Series B, 5.0%, 2/15/2037 | 13,090,000 | 14,303,836 | ||||||
Ohio, Higher Education Revenue, Case Western Reserve University, Series B, 6.5%, 10/1/2020 | 1,215,000 | 1,304,388 | ||||||
Ohio, Northeast Regional Sewer District: | ||||||||
4.0%, 11/15/2037 | 12,280,000 | 13,191,544 | ||||||
5.0%, 11/15/2044 | 10,000,000 | 11,454,700 | ||||||
Ohio, School District General Obligation, 6.0%, 12/1/2019, INS: AMBAC | 155,000 | 161,178 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 23 |
Principal Amount ($) | Value ($) | |||||||
Ohio, State Air Quality Development Authority, Exempt Facilities Revenue, Pratt Paper LLC Project: | ||||||||
AMT, 144A, 4.25%, 1/15/2038, GTY: Pratt Industries, Inc. (a) | 1,205,000 | 1,235,776 | ||||||
AMT, 144A, 4.5%, 1/15/2048, GTY: Pratt Industries, Inc. (a) | 2,110,000 | 2,194,927 | ||||||
Ohio, State Higher Educational Facility Commission Revenue, Summa Health Systems Project: | ||||||||
Series 2010, 5.25%, 11/15/2035, INS: AGMC | 7,500,000 | 8,028,225 | ||||||
Series 2010, 5.5%, 11/15/2030, INS: AGMC | 4,000,000 | 4,325,120 | ||||||
Ohio, State Turnpike Commission, Infrastructure Projects: | ||||||||
Series A-1, 5.25%, 2/15/2030 | 4,620,000 | 5,335,315 | ||||||
Series A-1, 5.25%, 2/15/2031 | 9,375,000 | 10,811,531 | ||||||
Series A-1, 5.25%, 2/15/2032 | 7,500,000 | 8,633,250 | ||||||
|
| |||||||
147,664,002 | ||||||||
Oklahoma 0.3% | ||||||||
Oklahoma, Water & Sewer Revenue, McGee Creek Authority, 6.0%, 1/1/2023, INS: NATL | 13,235,000 | 14,356,666 | ||||||
Tulsa County, OK, Industrial Authority Senior Living Community Revenue, Montereau, Inc. Project, 5.25%, 11/15/2045 | 1,575,000 | 1,747,967 | ||||||
|
| |||||||
16,104,633 | ||||||||
Oregon 0.4% | ||||||||
Oregon, State Department of Administration Services, Lottery Rvenue: | ||||||||
Series A, 5.0%, 4/1/2035 | 6,610,000 | 7,879,715 | ||||||
Series A, 5.0%, 4/1/2036 | 10,000,000 | 11,893,600 | ||||||
|
| |||||||
19,773,315 | ||||||||
Pennsylvania 2.9% | ||||||||
Allegheny County, PA, Hospital Development Authority Revenue, University of Pittsburgh Medical, 5.625%, 8/15/2039 | 11,800,000 | 12,544,580 | ||||||
Lancaster County, PA, Hospital Authority Revenue, University of Pennsylvania Health System Obligated Group, 5.0%, 8/15/2042 | 2,100,000 | 2,398,599 | ||||||
Pennsylvania, Central Bradford Progress Authority Revenue, Guthrie Healthcare System, 5.375%, 12/1/2041 | 12,550,000 | 13,957,483 | ||||||
Pennsylvania, Commonwealth Financing Authority Revenue: | ||||||||
Series A, 5.0%, 6/1/2033 | 5,000,000 | 5,771,600 | ||||||
Series A, 5.0%, 6/1/2034 | 6,000,000 | 6,903,960 | ||||||
Pennsylvania, Geisinger Authority Health System Revenue, Series A-2, 5.0%, 2/15/2034 | 3,000,000 | 3,486,870 | ||||||
Pennsylvania, Sales & Special Tax Revenue, Convention Center Authority, Series A, ETM, 6.0%, 9/1/2019, INS: FGIC | 1,510,000 | 1,584,443 |
The accompanying notes are an integral part of the financial statements.
24 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Pennsylvania, State General Obligation: | ||||||||
Series 2, 4.0%, 9/15/2032 | 10,000,000 | 10,718,600 | ||||||
Series D, 5.0%, 8/15/2032 | 5,000,000 | 5,745,550 | ||||||
Pennsylvania, State Turnpike Commission Revenue: | ||||||||
Series B, 5.0%, 6/1/2033 | 12,000,000 | 13,633,200 | ||||||
Series A-1, 5.0%, 12/1/2040 | 15,000,000 | 16,988,700 | ||||||
Series A-1, 5.0%, 12/1/2041 | 9,645,000 | 10,738,357 | ||||||
Series A-1, 5.0%, 12/1/2042 | 5,000,000 | 5,750,600 | ||||||
Series C, 5.0%, 12/1/2044 | 4,840,000 | 5,492,142 | ||||||
Series A-1, 5.0%, 12/1/2047 | 3,335,000 | 3,820,343 | ||||||
Pennsylvania, State Turnpike Commission Revenue, Turnpike Subordinate Revenue Refunding Bonds, 5.0%, 6/1/2035 | 11,000,000 | 12,427,140 | ||||||
Philadelphia, PA, Airport Revenue, Series A, 5.0%, 6/15/2035 | 7,080,000 | 7,563,493 | ||||||
Philadelphia, PA, Gas Works Revenue, 1998 General Ordinance: | ||||||||
Series 14, 4.0%, 10/1/2035 | 1,090,000 | 1,139,464 | ||||||
Series 14, 4.0%, 10/1/2037 | 895,000 | 931,453 | ||||||
|
| |||||||
141,596,577 | ||||||||
Puerto Rico 0.0% | ||||||||
Puerto Rico, Sales Tax Financing Corp., Sales Tax Revenue, Series C, 5.25%, 8/1/2041* | 6,705,000 | 670,500 | ||||||
Rhode Island 0.3% | ||||||||
Rhode Island, Health & Educational Building Corp., Higher Education Facility Revenue, Brown University, Series A, 5.0%, 9/1/2039 | 13,000,000 | 13,721,240 | ||||||
South Carolina 2.9% | ||||||||
Charleston County, SC, Airport District System Revenue, Series A, AMT, 5.75%, 7/1/2030 | 5,880,000 | 6,851,964 | ||||||
Greenwood County, SC, Hospital Revenue, Self Regional Healthcare, Prerefunded, 5.375%, 10/1/2039 | 7,500,000 | 8,009,850 | ||||||
Lexington County, SC, Health Services District, Lexington Medical Center, 5.0%, 11/1/2041 | 22,390,000 | 25,063,366 | ||||||
South Carolina, Jobs Economic Development Authority, Hospital Facilities Revenue, Palmetto Health Alliance, 5.75%, 8/1/2039 | 1,910,000 | 1,993,314 | ||||||
South Carolina, Piedmont Municipal Power Agency, Electric Revenue: | ||||||||
6.75%, 1/1/2019, INS: NATL | 2,065,000 | 2,177,171 | ||||||
ETM, 6.75%, 1/1/2019, INS: FGIC | 1,460,000 | 1,540,446 | ||||||
South Carolina, State Jobs-Economic Development Authority, Hospital Revenue, Conway Hospitals, Inc., 5.25%, 7/1/2047 | 4,715,000 | 5,351,761 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 25 |
Principal Amount ($) | Value ($) | |||||||
South Carolina, State Ports Authority Revenue, 5.25%, 7/1/2040 | 10,195,000 | 10,971,757 | ||||||
South Carolina, State Public Service Authority Revenue: | ||||||||
Series A, 5.0%, 12/1/2036 | 9,780,000 | 11,103,234 | ||||||
Series C, 5.0%, 12/1/2039 | 6,875,000 | 7,640,187 | ||||||
Series A, Prerefunded, 5.375%, 1/1/2028 | 85,000 | 88,489 | ||||||
South Carolina, State Public Service Authority Revenue, Santee Cooper, Series A, 5.75%, 12/1/2043 | 35,555,000 | 40,775,541 | ||||||
South Carolina, State Transportation Infrastructure Bank Revenue, 5.0%, 10/1/2036 | 17,705,000 | 20,681,742 | ||||||
|
| |||||||
142,248,822 | ||||||||
South Dakota 1.4% | ||||||||
South Dakota, State Health & Educational Facilities Authority Revenue, Avera Health: | ||||||||
5.0%, 7/1/2044 | 20,475,000 | 22,686,505 | ||||||
5.0%, 7/1/2046 | 36,140,000 | 41,154,063 | ||||||
South Dakota, State Health & Educational Facilities Authority Revenue, Sanford Health, 5.5%, 11/1/2040 | 3,000,000 | 3,182,850 | ||||||
|
| |||||||
67,023,418 | ||||||||
Tennessee 0.7% | ||||||||
Jackson, TN, Hospital Revenue, Jackson-Madison Project: | ||||||||
5.5%, 4/1/2033 | 810,000 | 820,417 | ||||||
Prerefunded, 5.5%, 4/1/2033 | 2,190,000 | 2,219,609 | ||||||
5.625%, 4/1/2038 | 1,230,000 | 1,245,990 | ||||||
5.75%, 4/1/2041 | 2,345,000 | 2,376,376 | ||||||
Metropolitan Government Nashville & Davidson County, TN, General Obligation: | ||||||||
5.0%, 1/1/2028 | 7,755,000 | 9,436,594 | ||||||
5.0%, 1/1/2030 | 5,000,000 | 6,014,900 | ||||||
Tennessee, Energy Acquisition Corp., Gas Revenue: | ||||||||
Series A, 5.25%, 9/1/2019, GTY: The Goldman Sachs Group, Inc. | 7,000,000 | 7,425,740 | ||||||
Series A, 5.25%, 9/1/2021, GTY: The Goldman Sachs Group, Inc. | 2,000,000 | 2,238,520 | ||||||
|
| |||||||
31,778,146 | ||||||||
Texas 14.8% | ||||||||
Aldine, TX, Independent School District: | ||||||||
5.0%, 2/15/2035 | 6,560,000 | 7,740,275 | ||||||
5.0%, 2/15/2036 | 9,000,000 | 10,595,340 | ||||||
5.0%, 2/15/2037 | 8,225,000 | 9,661,085 | ||||||
5.0%, 2/15/2042 | 18,450,000 | 21,557,349 | ||||||
Austin, TX, Independent School District, Series B, 4.0%, 8/1/2033 | 9,000,000 | 9,810,540 |
The accompanying notes are an integral part of the financial statements.
26 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Bexar County, TX, General Obligation, 4.0%, 6/15/2034 | 16,020,000 | 17,362,316 | ||||||
Central Texas, Regional Mobility Authority Revenue, 5.0%, 1/1/2040 | 3,750,000 | 4,221,225 | ||||||
Central Texas, Regional Mobility Authority Revenue, Senior Lien, Series A, 5.0%, 1/1/2040 | 4,730,000 | 5,308,715 | ||||||
Crowley, TX, Independent School District, School Building, 5.0%, 2/1/2047 | 13,000,000 | 14,990,690 | ||||||
Dallas, TX, Area Rapid Transit, Sales Tax Revenue, Series B, 4.0%, 12/1/2037 | 10,500,000 | 11,126,535 | ||||||
Harris County, TX, Port Houston Authority, Series D-1, 5.0%, 10/1/2035 | 18,290,000 | 19,847,211 | ||||||
Harris County, TX, Senior Lien: | ||||||||
Series A, 5.0%, 8/15/2033 | 5,000,000 | 5,873,200 | ||||||
Series A, 5.0%, 8/15/2034 | 3,000,000 | 3,511,260 | ||||||
Houston, TX, Airport Systems Revenue: | ||||||||
Series B, 5.0%, 7/1/2032 | 3,510,000 | 3,951,769 | ||||||
Series A, 5.5%, 7/1/2039 | 10,000,000 | 10,246,700 | ||||||
Houston, TX, Higher Education Finance Corp. Revenue, Rice University Project, Series A, Prerefunded, 5.0%, 5/15/2040 | 11,185,000 | 12,065,931 | ||||||
Houston, TX, Utility Systems Revenue, First Lien: | ||||||||
Series B, 5.0%, 11/15/2034 | 32,315,000 | 38,046,712 | ||||||
Series D, 5.0%, 11/15/2036 | 7,000,000 | 7,700,840 | ||||||
Series B, 5.0%, 11/15/2038 | 3,370,000 | 3,826,871 | ||||||
North Texas, Tollway Authority Revenue: | ||||||||
Series A, 5.0%, 1/1/2034 | 10,715,000 | 12,100,878 | ||||||
Series A, 5.0%, 1/1/2039 | 4,230,000 | 4,829,349 | ||||||
Series B, 5.0%, 1/1/2040 | 8,825,000 | 9,785,866 | ||||||
Series C, 5.25%, 1/1/2044 | 20,000,000 | 20,642,000 | ||||||
First Tier, Series A, 5.625%, 1/1/2033 | 800,000 | 802,616 | ||||||
First Tier, Series A, Prerefunded, 5.625%, 1/1/2033 | 2,735,000 | 2,743,943 | ||||||
First Tier, Prerefunded, 6.0%, 1/1/2043 | 30,000,000 | 33,915,900 | ||||||
North Texas, Tollway Authority Revenue, Second Tier: | ||||||||
Series B, 5.0%, 1/1/2043 | 3,075,000 | 3,502,702 | ||||||
Series B, 5.0%, 1/1/2048 | 8,615,000 | 9,776,991 | ||||||
North Texas, Tollway Authority Revenue, Special Project Systems: | ||||||||
Series D, Prerefunded, 5.0%, 9/1/2032 | 8,000,000 | 8,922,080 | ||||||
Series A, Prerefunded, 6.0%, 9/1/2041 | 6,675,000 | 7,697,944 | ||||||
San Antonio, TX, Electric & Gas Revenue, 4.0%, 2/1/2034 | 11,230,000 | 12,178,486 | ||||||
San Antonio, TX, Independent School District, 5.0%, 8/15/2029 | 8,475,000 | 10,180,339 | ||||||
Tarrant County, TX, Cultural Education Facilities Finance Corp., Hospital Revenue, Scott & White Healthcare: | ||||||||
5.0%, 8/15/2036 | 7,000,000 | 7,836,220 | ||||||
5.0%, 8/15/2043 | 9,900,000 | 11,014,047 | ||||||
Prerefunded, 5.625%, 8/15/2035 | 740,000 | 816,856 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 27 |
Principal Amount ($) | Value ($) | |||||||
Tarrant County, TX, Cultural Education Facilities Finance Corp., State Health Resources, 5.0%, 11/15/2040 | 19,325,000 | 20,775,341 | ||||||
Texas, Dallas/Fort Worth International Airport Revenue: | ||||||||
Series D, 5.0%, 11/1/2035 | 24,425,000 | 26,492,088 | ||||||
Series A, 5.25%, 11/1/2038 | 20,000,000 | 21,779,800 | ||||||
Texas, Grand Parkway Transportation Corp., System Toll Revenue, Series B, 5.25%, 10/1/2051 | 20,000,000 | 22,604,600 | ||||||
Texas, Grapevine-Colleyville Independent School District Building: | ||||||||
5.0%, 8/15/2034 | 6,080,000 | 6,733,600 | ||||||
5.0%, 8/15/2035 | 6,130,000 | 6,782,048 | ||||||
5.0%, 8/15/2036 | 3,350,000 | 3,702,554 | ||||||
Texas, Love Field Airport Modernization Corp., General Airport Revenue: | ||||||||
AMT, 5.0%, 11/1/2033 | 1,250,000 | 1,436,750 | ||||||
AMT, 5.0%, 11/1/2034 | 1,000,000 | 1,145,210 | ||||||
Texas, Lower Colorado River Authority Revenue, Series A, Prerefunded, 5.0%, 5/15/2036 | 25,000 | 28,358 | ||||||
Texas, Lower Colorado River Authority, Transmission Contract Revenue, LCRA Transmission Services, 5.0%, 5/15/2040 | 20,000,000 | 21,277,600 | ||||||
Texas, Municipal Gas Acquisition & Supply Corp. I, Gas Supply Revenue: | ||||||||
Series B, 0.67% of 3-month USD-LIBOR + 0.7%, 1.584%***, 12/15/2026, GTY: Merrill Lynch & Co., Inc. | 19,800,000 | 19,270,548 | ||||||
Series D, 6.25%, 12/15/2026, GTY: Merrill Lynch & Co., Inc. | 20,000,000 | 24,348,000 | ||||||
Texas, New Hope Cultural Education Facilities Finance Corp., Retirement Facilities Revenue, Westminster Manor Project: | ||||||||
5.0%, 11/1/2031 | 1,000,000 | 1,124,810 | ||||||
5.0%, 11/1/2040 | 1,070,000 | 1,179,675 | ||||||
Texas, SA Energy Acquisition Public Facility Corp., Gas Supply Revenue: | ||||||||
5.5%, 8/1/2021, GTY: The Goldman Sachs Group, Inc. | 5,575,000 | 6,276,669 | ||||||
5.5%, 8/1/2025, GTY: The Goldman Sachs Group, Inc. | 2,750,000 | 3,311,055 | ||||||
Texas, Southwest Higher Education Authority, Inc., Southern Methodist University Project, Prerefunded, 5.0%, 10/1/2035 | 2,400,000 | 2,591,232 | ||||||
Texas, State General Obligation, 0.97% **, 12/1/2047, SPA: Sumitomo Mitsui Banking | 1,935,000 | 1,935,000 | ||||||
Texas, State Municipal Gas Acquisition & Supply Corp. III Gas Supply Revenue: | ||||||||
5.0%, 12/15/2030, GTY: Macquarie Group Ltd. | 2,250,000 | 2,503,080 | ||||||
5.0%, 12/15/2031, GTY: Macquarie Group Ltd. | 4,500,000 | 5,001,660 | ||||||
5.0%, 12/15/2032, GTY: Macquarie Group Ltd. | 21,215,000 | 23,506,220 |
The accompanying notes are an integral part of the financial statements.
28 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Texas, State Technical University Revenue, Series A, 5.0%, 8/15/2037 | 5,400,000 | 5,956,146 | ||||||
Texas, State Transportation Commission, Series A, 5.0%, 10/1/2039 | 10,000,000 | 11,525,500 | ||||||
Texas, State Transportation Commission Mobility Fund: | ||||||||
Series A, 5.0%, 10/1/2033 | 15,000,000 | 18,132,150 | ||||||
Series B, 5.0%, 10/1/2033 | 10,000,000 | 12,088,100 | ||||||
Texas, State Transportation Commission, State Highway Fund Revenue: | ||||||||
Series A, 5.0%, 10/1/2027 | 5,000,000 | 6,094,850 | ||||||
Series A, 5.0%, 10/1/2028 | 5,000,000 | 6,050,300 | ||||||
Series A, 5.0%, 10/1/2029 | 5,565,000 | 6,684,901 | ||||||
Texas, State Transportation Commission, Turnpike Systems Revenue: | ||||||||
Series C, 5.0%, 8/15/2034 | 14,410,000 | 16,248,716 | ||||||
Series C, 5.0%, 8/15/2042 | 5,085,000 | 5,652,028 | ||||||
Texas, State Transportation Commission-Highway Improvement, 5.0%, 4/1/2044 | 18,000,000 | 20,503,980 | ||||||
Texas, State Water Development Board Revenue, State Water Implementation Revenue Fund: | ||||||||
4.0%, 10/15/2035 | 10,770,000 | 11,663,587 | ||||||
4.0%, 10/15/2036 | 13,315,000 | 14,387,257 | ||||||
|
| |||||||
732,984,194 | ||||||||
Utah 0.3% | ||||||||
Salt Lake City, UT, Airport Revenue, Series A, AMT, 5.0%, 7/1/2047 | 13,435,000 | 15,451,459 | ||||||
Virginia 0.9% | ||||||||
Fairfax County, VA, Economic Development Authority, Residential Care Facility Revenue, Goodwin House, Inc., Series A, 5.0%, 10/1/2036 | 1,750,000 | 1,952,685 | ||||||
Virginia, Small Business Financing Authority, Private Activity Revenue, Transform 66 P3 Project, AMT, 5.0%, 12/31/2052 | 16,520,000 | 18,420,791 | ||||||
Virginia, State Commonwealth Transportation Board, Federal Transportation Grant Anticipation Revenue Notes, 5.0%, 9/15/2027 | 11,425,000 | 13,935,644 | ||||||
Virginia Beach, VA, Hospital & Healthcare Revenue, Development Authority Hospital Facility First Mortgage, 5.125%, 2/15/2018, INS: AMBAC | 665,000 | 670,087 | ||||||
Washington County, VA, Industrial Development Authority, Hospital Facility Revenue, Mountain States Health Alliance, Series C, 7.75%, 7/1/2038 | 7,760,000 | 8,226,842 | ||||||
|
| |||||||
43,206,049 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 29 |
Principal Amount ($) | Value ($) | |||||||
Washington 3.9% | ||||||||
Clark County, WA, School District General Obligation, Zero Coupon, 12/1/2017, INS: NATL | 6,725,000 | 6,725,000 | ||||||
Port of Seattle, WA, Airport Revenue: | ||||||||
Series A, 5.0%, 8/1/2031 | 2,000,000 | 2,240,000 | ||||||
Series A, 5.0%, 8/1/2032 | 2,500,000 | 2,788,300 | ||||||
Seattle, WA, Drainage & Wastewater Revenue, 4.0%, 4/1/2036 | 6,850,000 | 7,356,352 | ||||||
Seattle, WA, Municipal Light & Power Revenue, Series C, 4.0%, 9/1/2035 | 10,000,000 | 10,786,300 | ||||||
Tacoma, WA, Electric System Revenue, Series A, 5.0%, 1/1/2038 | 8,280,000 | 9,304,981 | ||||||
Washington, Central Puget Sound Regional Transit Authority, Green Bond, Series S-1, 5.0%, 11/1/2035 | 10,000,000 | 11,775,800 | ||||||
Washington, Energy Northwest Electric Revenue, Columbia Generating Systems: | ||||||||
Series A, 5.0%, 7/1/2032 | 16,980,000 | 19,879,844 | ||||||
Series A, 5.0%, 7/1/2034 | 7,000,000 | 8,343,790 | ||||||
Washington, State General Obligation: | ||||||||
Series B, 5.0%, 7/1/2030 | 14,000,000 | 16,567,040 | ||||||
Series R-2015D, 5.0%, 7/1/2032 | 10,000,000 | 11,675,300 | ||||||
Series B, 5.0%, 2/1/2033 | 5,000,000 | 5,461,550 | ||||||
Series 2011A, 5.0%, 8/1/2033 | 20,000,000 | 21,631,800 | ||||||
Series A, 5.0%, 8/1/2035 | 12,190,000 | 13,468,975 | ||||||
Washington, State Health Care Facilities Authority, Catholic Health Initiatives, Series A, 5.0%, 2/1/2041 | 11,260,000 | 11,818,834 | ||||||
Washington, State Health Care Facilities Authority, Virginia Mason Medical Center: | ||||||||
5.0%, 8/15/2034 | 1,715,000 | 1,935,446 | ||||||
5.0%, 8/15/2035 | 1,470,000 | 1,651,207 | ||||||
5.0%, 8/15/2036 | 980,000 | 1,098,237 | ||||||
Washington, State Motor Vehicle Tax-Senior 520, Corridor Toll Program: | ||||||||
Series C, 5.0%, 6/1/2032 | 7,725,000 | 8,524,847 | ||||||
Series C, 5.0%, 6/1/2033 | 6,000,000 | 6,612,660 | ||||||
Series C, 5.0%, 6/1/2041 | 11,000,000 | 12,053,030 | ||||||
|
| |||||||
191,699,293 | ||||||||
West Virginia 0.5% | ||||||||
West Virginia, State Hospital Finance Authority, State University Health System Obligated Group, Series A, 5.0%, 6/1/2047 | 20,120,000 | 22,385,512 | ||||||
Wisconsin 1.2% | ||||||||
Milwaukee County, WI, Airport Revenue, Series A, 5.0%, 12/1/2034 | 7,000,000 | 7,375,690 |
The accompanying notes are an integral part of the financial statements.
30 | Deutsche Managed Municipal Bond Fund |
Principal Amount ($) | Value ($) | |||||||
Wisconsin, Hospital & Healthcare Revenue, Health & Education Facilities Authority: | ||||||||
Series B, ETM, 6.25%, 1/1/2022, INS: AMBAC | 2,020,000 | 2,196,952 | ||||||
Series C, ETM, 6.25%, 1/1/2022, INS: AMBAC | 3,530,000 | 3,834,074 | ||||||
Wisconsin, State Health & Educational Facilities Authority Revenue, Agnesian Healthcare, Inc., Series B, 5.0%, 7/1/2036 | 8,500,000 | 9,336,485 | ||||||
Wisconsin, State Health & Educational Facilities Authority Revenue, Ascension Health Credit Group: | ||||||||
Series A, 5.0%, 11/15/2036 | 5,000,000 | 5,757,350 | ||||||
Series A, 5.0%, 11/15/2039 | 15,000,000 | 17,187,600 | ||||||
Wisconsin, State Health & Educational Facilities Authority Revenue, Thedacare, Inc., Series A, 5.5%, 12/15/2038 | 13,235,000 | 13,991,380 | ||||||
|
| |||||||
59,679,531 | ||||||||
Total Municipal Bonds and Notes (Cost $4,638,914,019) | 4,887,018,233 | |||||||
Underlying Municipal Bonds of Inverse Floaters (b) 1.3% | ||||||||
Louisiana 0.2% | ||||||||
Louisiana, State Gas & Fuels Tax Revenue, Series B, 5.0%, 5/1/2033 (c) | 3,023,487 | 3,255,749 | ||||||
Louisiana, State Gas & Fuels Tax Revenue, Series B, 5.0%, 5/1/2034 (c) | 3,300,848 | 3,554,416 | ||||||
Louisiana, State Gas & Fuels Tax Revenue, Series B, 5.0%, 5/1/2035 (c) | 3,663,166 | 3,944,568 | ||||||
Trust: Louisiana, State Gas & Fuels Tax Revenue, Series 2016-XM0289, 144A, 8.368%, 5/1/2018, Leverage Factor at purchase date: 2 to 1 | ||||||||
|
| |||||||
10,754,733 | ||||||||
Nevada 0.4% | ||||||||
Clark County, NV, General Obligation, 5.0%, 6/1/2028 (c) | 6,252,645 | 6,365,313 | ||||||
Clark County, NV, General Obligation, 5.0%, 6/1/2029 (c) | 6,565,277 | 6,683,579 | ||||||
Clark County, NV, General Obligation, 5.0%, 6/1/2030 (c) | 6,372,122 | 6,486,944 | ||||||
Trust: Clark County, NV, General Obligation, Series 2016-XM0280, 144A, 11.75%, 6/1/2018, Leverage Factor at purchase date: 3 to 1 | ||||||||
|
| |||||||
19,535,836 | ||||||||
North Carolina 0.5% | ||||||||
North Carolina, Capital Facilities Finance Agency Revenue, Duke University Project, Series B, 5.0%, 10/1/2038 (c) | 20,000,000 | 20,875,050 | ||||||
Trust: North Carolina, Capital Facilities Finance Agency Revenue, Series 2016-XM0282, 144A, 15.14%, 4/1/2019, Leverage Factor at purchase date: 4 to 1 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 31 |
Principal Amount ($) | Value ($) | |||||||
Texas 0.2% | ||||||||
Dallas, TX, Water Works & Sewer Systems Revenue, 5.0%, 10/1/2035 (c) | 10,000,000 | 10,822,850 | ||||||
Trust: Texas, Water Works & Sewer Systems Revenue, Series 2016-XM0288, 144A, 8.37%, 4/1/2018, Leverage Factor at purchase date: 2 to 1 | ||||||||
| ||||||||
Total Underlying Municipal Bonds of Inverse Floaters (Cost $59,645,760) | 61,988,469 | |||||||
% of Net Assets | Value ($) | |||||||
Total Investment Portfolio (Cost $4,698,559,779) | 100.1 | 4,949,006,702 | ||||||
Floating Rate Notes (b) | (0.8 | ) | (37,782,545 | ) | ||||
Other Assets and Liabilities, Net | 0.7 | 32,747,155 | ||||||
| ||||||||
Net Assets | 100.0 | 4,943,971,312 |
The following table represents bonds that are in default:
Security | Coupon | Maturity Date | Principal Amount ($) | Cost ($) | Value ($) | |||||||||||||||
Puerto Rico, Sales Tax Financing Corp., Sales Tax Revenue, Series C * | 5.25 | % | 8/1/2041 | 6,705,000 | 5,025,473 | 670,500 |
* | Non-income producing security. |
** | Variable rate demand notes are securities whose interest rates are reset periodically (usually daily mode or weekly mode) by remarketing agents based on current market levels, and are not directly set as a fixed spread to a reference rate. These securities may be redeemed at par by the holder at any time, and are shown at their current rates as of November 30, 2017. Date reflects the earlier of demand date or stated maturity date. |
*** | Variable or floating rate security. These securities are shown at their current rate as of November 30, 2017. For securities based on a published reference rate and spread, the reference rate and spread are indicated within the description above. Certain variable rate securities are not based on a published reference rate and spread but adjust periodically based on current market conditions, prepayment of underlying positions and/or other variables. |
(a) | When-issued security. |
(b) | Securities represent the underlying municipal obligations of inverse floating rate obligations held by the Fund. The Floating Rate Notes represents leverage to the Fund and is the amount owed to the floating rate note holders. |
(c) | Security forms part of the below inverse floater. The Fund accounts for these inverse floaters as a form of secured borrowing, by reflecting the value of the underlying bond in the investments of the Fund and the amount owed to the floating rate note holder as a liability. |
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements.
32 | Deutsche Managed Municipal Bond Fund |
AGC: Assured Guaranty Corp.
AGMC: Assured Guaranty Municipal Corp.
AMBAC: Ambac Financial Group, Inc.
AMT: Subject to alternative minimum tax.
ETM: Bonds bearing the description ETM (escrow to maturity) are collateralized usually by U.S. Treasury securities which are held in escrow and used to pay principal and interest on bonds so designated.
FGIC: Financial Guaranty Insurance Co.
GTY: Guaranty Agreement
INS: Insured
LIBOR: London Interbank Offered Rate
NATL: National Public Finance Guarantee Corp.
Prerefunded: Bonds which are prerefunded are collateralized usually by U.S. Treasury securities which are held in escrow and used to pay principal and interest on tax-exempt issues and to retire the bonds in full at the earliest refunding date.
SPA: Standby Bond Purchase Agreement
Fair Value Measurements
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
The following is a summary of the inputs used as of November 30, 2017 in valuing the Fund’s investments. For information on the Fund’s policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.
Assets | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Municipal Investments (d) | $ | — | $ | 4,949,006,702 | $ | — | $ | 4,949,006,702 | ||||||||
Total | $ | — | $ | 4,949,006,702 | $ | — | $ | 4,949,006,702 |
There have been no transfers between fair value measurement levels during the period ended November 30, 2017.
(d) | See Investment Portfolio for additional detailed categorizations. |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 33 |
Statement of Assets and Liabilities
as of November 30, 2017 (Unaudited) | ||||
Assets | ||||
Investments in securities, at value (cost $4,698,559,779) | $ | 4,949,006,702 | ||
Cash | 8,397 | |||
Receivable for investments sold | 4,655,544 | |||
Receivable for Fund shares sold | 6,420,509 | |||
Interest receivable | 58,604,663 | |||
Other assets | 125,992 | |||
Total assets | 5,018,821,807 | |||
Liabilities | ||||
Payable for investments purchased — when-issued securities | 19,054,704 | |||
Line of credit loan payable | 3,600,000 | |||
Payable for Fund shares redeemed | 7,701,278 | |||
Payable for floating rate notes issued | 37,782,545 | |||
Distributions payable | 1,729,389 | |||
Accrued management fee | 1,240,320 | |||
Accrued Trustees’ fees | 64,687 | |||
Other accrued expenses and payables | 3,677,572 | |||
Total liabilities | 74,850,495 | |||
Net assets, at value | $ | 4,943,971,312 | ||
Net Assets Consist of | ||||
Undistributed net investment income | 4,649,623 | |||
Net unrealized appreciation (depreciation) on investments | 250,446,923 | |||
Accumulated net realized gain (loss) | 7,146,103 | |||
Paid-in capital | 4,681,728,663 | |||
Net assets, at value | $ | 4,943,971,312 |
The accompanying notes are an integral part of the financial statements.
34 | Deutsche Managed Municipal Bond Fund |
Statement of Assets and Liabilities as of November 30, 2017 (Unaudited) (continued) |
Net Asset Value | ||||
Class A | ||||
Net Asset Value and redemption price per share ($1,634,694,021 ÷ 179,676,203 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ | 9.10 | ||
Maximum offering price per share (100 ÷ 97.25 of $9.10) | $ | 9.36 | ||
Class C | ||||
Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($237,150,890 ÷ 26,068,105 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ | 9.10 | ||
Class S | ||||
Net Asset Value, offering and redemption price per share ($2,827,841,974 ÷ 310,397,119 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ | 9.11 | ||
Institutional Class | ||||
Net Asset Value, offering and redemption price per share ($244,284,427 ÷ 26,842,628 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ | 9.10 |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 35 |
for the six months ended November 30, 2017 (Unaudited) | ||||
Investment Income | ||||
Income: | ||||
Interest | $ | 96,657,113 | ||
Expenses: | ||||
Management fee | 8,156,046 | |||
Administration fee | 2,510,087 | |||
Services to shareholders | 3,034,024 | |||
Distribution and service fees | 3,284,711 | |||
Custodian fee | 23,616 | |||
Professional fees | 105,727 | |||
Reports to shareholders | 77,375 | |||
Registration fees | 86,752 | |||
Trustees’ fees and expenses | 131,963 | |||
Interest expense and fees on floating rate notes issued | 283,945 | |||
Other | 165,573 | |||
Total expenses before expense reductions | 17,859,819 | |||
Expense reductions | (413,992 | ) | ||
Total expenses after expense reductions | 17,445,827 | |||
Net investment income | 79,211,286 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) from investments | 33,209,414 | |||
Change in net unrealized appreciation (depreciation) on investments | (73,171,724 | ) | ||
Net gain (loss) | (39,962,310 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | 39,248,976 |
The accompanying notes are an integral part of the financial statements.
36 | Deutsche Managed Municipal Bond Fund |
for the six months ended November 30, 2017 (Unaudited) | ||||
Increase (Decrease) in Cash: Cash Flows from Operating Activities | ||||
Net increase (decrease) in net assets resulting from operations | $ | 39,248,976 | ||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | ||||
Purchases of long-term investments | (933,154,632 | ) | ||
Net amortization of premium/(accretion of discount) | 13,750,893 | |||
Proceeds from sales and maturities of long-term investments | 988,194,732 | |||
(Increase) decrease in interest receivable | 2,322,519 | |||
(Increase) decrease in other assets | 6,771 | |||
Increase (decrease) in receivable for investment sold | (3,085,544 | ) | ||
Increase (decrease) in payable for investments purchased — when-issued securities | 8,124,528 | |||
Increase (decrease) in other accrued expenses and payables | (268,464 | ) | ||
Change in unrealized (appreciation) depreciation on investments | 73,171,724 | |||
Net realized (gain) loss from investments | (33,209,414 | ) | ||
Cash provided by (used in) operating activities | 155,102,089 | |||
Cash Flows from Financing Activities | ||||
Net increase (decrease) in line of credit loan payable | 3,600,000 | |||
Proceeds from shares sold | 350,194,956 | |||
Cost for shares redeemed | (481,058,882 | ) | ||
Distributions paid (net of reinvestment of distributions) | (10,868,981 | ) | ||
Increase (decrease) in payable for floating rate notes issued | (22,500,000 | ) | ||
Cash provided by (used in) financing activities | (160,632,907 | ) | ||
Increase (decrease) in cash | (5,530,818 | ) | ||
Cash at beginning of period | 5,539,215 | |||
Cash at end of period | $ | 8,397 | ||
Supplemental Disclosure of Non-Cash Activities | ||||
Reinvestment of distributions | $ | 69,234,661 | ||
Interest expense and fees on floating rate notes issued | $ | (283,945 | ) |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 37 |
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended November 30, 2017 (Unaudited) | Year Ended May 31, 2017 | ||||||
Operations: | ||||||||
Net investment income | $ | 79,211,286 | $ | 185,639,533 | ||||
Net realized gain (loss) | 33,209,414 | 83,885,686 | ||||||
Change in net unrealized appreciation (depreciation) | (73,171,724 | ) | (244,214,068 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 39,248,976 | 25,311,151 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (25,515,923 | ) | (64,773,839 | ) | ||||
Class C | (2,827,975 | ) | (7,307,830 | ) | ||||
Class S | (47,158,730 | ) | (102,577,600 | ) | ||||
Institutional Class | (3,215,902 | ) | (9,147,480 | ) | ||||
Net realized gains: | ||||||||
Class A | — | (773,900 | ) | |||||
Class C | — | (113,792 | ) | |||||
Class S | — | (1,137,907 | ) | |||||
Institutional Class | — | (124,883 | ) | |||||
Total distributions | (78,718,530 | ) | (185,957,231 | ) | ||||
Fund share transactions: | ||||||||
Proceeds from shares sold | 350,725,637 | 1,246,901,306 | ||||||
Reinvestment of distributions | 69,234,661 | 160,134,268 | ||||||
Payments for shares redeemed | (482,381,301 | ) | (1,774,811,187 | ) | ||||
Net increase (decrease) in net assets from Fund share transactions | (62,421,003 | ) | (367,775,613 | ) | ||||
Increase (decrease) in net assets | (101,890,557 | ) | (528,421,693 | ) | ||||
Net assets at beginning of period | 5,045,861,869 | 5,574,283,562 | ||||||
Net assets at end of period (including undistributed net investment income of $4,649,623 and $4,156,867, respectively) | $ | 4,943,971,312 | $ | 5,045,861,869 |
The accompanying notes are an integral part of the financial statements.
38 | Deutsche Managed Municipal Bond Fund |
Six Months Ended 11/30/17 | Years Ended May 31, | |||||||||||||||||||||||||
Class A | (Unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Selected Per Share Data | ||||||||||||||||||||||||||
Net asset value, beginning of period | $9.17 | $9.42 | $9.25 | $9.30 | $9.40 | $9.40 | ||||||||||||||||||||
Income from investment operations: | ||||||||||||||||||||||||||
Net investment income | .14 | .31 | .35 | .36 | .37 | .37 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | (.07 | ) | (.25 | ) | .17 | (.06 | ) | (.10 | ) | (.00 | )*** | |||||||||||||||
Total from investment operations | .07 | .06 | .52 | .30 | .27 | .37 | ||||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||||
Net investment income | (.14 | ) | (.31 | ) | (.35 | ) | (.35 | ) | (.37 | ) | (.37 | ) | ||||||||||||||
Net realized gains | — | (.00 | )*** | (.00 | )*** | (.00 | )*** | — | (.00 | )*** | ||||||||||||||||
Total distributions | (.14 | ) | (.31 | ) | (.35 | ) | (.35 | ) | (.37 | ) | (.37 | ) | ||||||||||||||
Net asset value, end of period | $9.10 | $9.17 | $9.42 | $9.25 | $9.30 | $9.40 | ||||||||||||||||||||
Total Return (%)a | .77 | ** | .71 | 5.70 | 3.34 | 3.08 | 4.01 | |||||||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||||||||
Net assets, end of period ($ millions) | 1,635 | 1,693 | 2,031 | 1,941 | 1,994 | 2,360 | ||||||||||||||||||||
Ratio of expenses (including interest expense) (%)b | .78 | * | .79 | .80 | .81 | .81 | .80 | |||||||||||||||||||
Ratio of expenses (excluding interest expense) (%) | .77 | * | .76 | .76 | .76 | .76 | .75 | |||||||||||||||||||
Ratio of net investment income (%) | 3.06 | * | 3.40 | 3.73 | 3.84 | 4.16 | 3.94 | |||||||||||||||||||
Portfolio turnover rate (%) | 19 | ** | 38 | 29 | 29 | 30 | 34 |
a | Total return does not reflect the effect of any sales charges. |
b | Interest expense represents interest and fees on short-term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. |
* | Annualized |
** | Not annualized |
*** | Amount is less than $.005. |
The accompanying notes are an integral part of the financial statements.
Deutsche Managed Municipal Bond Fund | 39 |
Six Months Ended 11/30/17 | Years Ended May 31, | |||||||||||||||||||||||||
Class C | (Unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Selected Per Share Data | ||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.17 | $ | 9.42 | $ | 9.25 | $ | 9.30 | $ | 9.40 | $ | 9.40 | ||||||||||||||
Income from investment operations: | ||||||||||||||||||||||||||
Net investment income | .11 | .24 | .27 | .29 | .30 | .30 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | (.08 | ) | (.25 | ) | .17 | (.06 | ) | (.10 | ) | (.00 | )*** | |||||||||||||||
Total from investment operations | .03 | (.01 | ) | .44 | .23 | .20 | .30 | |||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||||
Net investment income | (.10 | ) | (.24 | ) | (.27 | ) | (.28 | ) | (.30 | ) | (.30 | ) | ||||||||||||||
Net realized gains | — | (.00 | )*** | (.00 | )*** | (.00 | )*** | — | (.00 | )*** | ||||||||||||||||
Total distributions | (.10 | ) | (.24 | ) | (.27 | ) | (.28 | ) | (.30 | ) | (.30 | ) | ||||||||||||||
Net asset value, end of period | $ | 9.10 | $ | 9.17 | $ | 9.42 | $ | 9.25 | $ | 9.30 | $ | 9.40 | ||||||||||||||
Total Return (%)a | .37 | b** | (.08 | ) | 4.88 | b | 2.53 | b | 2.28 | 3.21 | ||||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||||||||
Net assets, end of period ($ millions) | 237 | 259 | 292 | 256 | 242 | 319 | ||||||||||||||||||||
Ratio of expenses before expense reductions (including interest expense) (%)c | 1.57 | * | 1.58 | 1.59 | 1.61 | 1.59 | 1.58 | |||||||||||||||||||
Ratio of expenses after expense reductions (including interest expense) (%)c | 1.57 | * | 1.58 | 1.59 | 1.60 | 1.59 | 1.58 | |||||||||||||||||||
Ratio of expenses after expense reductions (excluding interest expense) (%) | 1.56 | * | 1.55 | 1.55 | 1.55 | 1.54 | 1.53 | |||||||||||||||||||
Ratio of net investment income (%) | 2.28 | * | 2.61 | 2.94 | 3.05 | 3.37 | 3.15 | |||||||||||||||||||
Portfolio turnover rate (%) | 19 | ** | 38 | 29 | 29 | 30 | 34 |
a | Total return does not reflect the effect of any sales charges. |
b | Total return would have been lower had certain expenses not been reduced. |
c | Interest expense represents interest and fees on short-term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. |
* | Annualized |
** | Not annualized |
*** | Amount is less than $.005. |
40 | Deutsche Managed Municipal Bond Fund |
Six Months Ended 11/30/17 | Years Ended May 31, | |||||||||||||||||||||||||
Class S | (Unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Selected Per Share Data | ||||||||||||||||||||||||||
Net asset value, beginning of period | $9.18 | $9.44 | $9.26 | $9.31 | $9.41 | $9.41 | ||||||||||||||||||||
Income from investment operations: | ||||||||||||||||||||||||||
Net investment income | .15 | .33 | .37 | .38 | .39 | .39 | ||||||||||||||||||||
Net realized and unrealized gain (loss) | (.07 | ) | (.26 | ) | .18 | (.06 | ) | (.10 | ) | (.00 | )*** | |||||||||||||||
Total from investment operations | .08 | .07 | .55 | .32 | .29 | .39 | ||||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||||
Net investment income | (.15 | ) | (.33 | ) | (.37 | ) | (.37 | ) | (.39 | ) | (.39 | ) | ||||||||||||||
Net realized gains | — | (.00 | )*** | (.00 | )*** | (.00 | )*** | — | (.00 | )*** | ||||||||||||||||
Total distributions | (.15 | ) | (.33 | ) | (.37 | ) | (.37 | ) | (.39 | ) | (.39 | ) | ||||||||||||||
Net asset value, end of period | $9.11 | $9.18 | $9.44 | $9.26 | $9.31 | $9.41 | ||||||||||||||||||||
Total Return (%) | .87 | a** | .81 | a | 6.03 | a | 3.55 | a | 3.29 | a | 4.19 | |||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||||||||
Net assets, end of period ($ millions) | 2,828 | 2,918 | 2,940 | 2,873 | 2,911 | 2,887 | ||||||||||||||||||||
Ratio of expenses before expense reductions (including interest expense) (%)b | .61 | * | .63 | .64 | .64 | .66 | .62 | |||||||||||||||||||
Ratio of expenses after expense reductions (including interest expense) (%)b | .58 | * | .60 | .60 | .60 | .62 | .62 | |||||||||||||||||||
Ratio of expenses after expense reductions (excluding interest expense) (%) | .57 | * | .57 | .56 | .55 | .57 | .57 | |||||||||||||||||||
Ratio of net investment income (%) | 3.27 | * | 3.59 | 3.93 | 4.04 | 4.36 | 4.12 | |||||||||||||||||||
Portfolio turnover rate (%) | 19 | ** | 38 | 29 | 29 | 30 | 34 |
a | Total return would have been lower had certain expenses not been reduced. |
b | Interest expense represents interest and fees on short-term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. |
* | Annualized |
** | Not annualized |
*** | Amount is less than $.005. |
Deutsche Managed Municipal Bond Fund | 41 |
Six Months Ended 11/30/17 | Years Ended May 31, | |||||||||||||||||||||||||||
Institutional Class | (Unaudited) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||
Selected Per Share Data | ||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.17 | $9.42 | $9.25 | $ | 9.30 | $9.40 | $9.40 | ||||||||||||||||||||
Income from investment operations: | ||||||||||||||||||||||||||||
Net investment income | .15 | .34 | .37 | .38 | .39 | .39 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) | (.07 | ) | (.26 | ) | .17 | (.06 | ) | (.10 | ) | (.00 | )*** | |||||||||||||||||
Total from investment operations | .08 | .08 | .54 | .32 | .29 | .39 | ||||||||||||||||||||||
Less distributions from: | ||||||||||||||||||||||||||||
Net investment income | (.15 | ) | (.33 | ) | (.37 | ) | (.37 | ) | (.39 | ) | (.39 | ) | ||||||||||||||||
Net realized gains | — | (.00 | )*** | (.00 | )*** | (.00 | )*** | — | (.00 | )*** | ||||||||||||||||||
Total distributions | (.15 | ) | (.33 | ) | (.37 | ) | (.37 | ) | (.39 | ) | (.39 | ) | ||||||||||||||||
Net asset value, end of period | $ | 9.10 | $9.17 | $9.42 | $9.25 | $9.30 | $9.40 | |||||||||||||||||||||
Total Return (%) | .89 | ** | .94 | a | 5.96 | 3.57 | 3.31 | 4.25 | ||||||||||||||||||||
Ratios to Average Net Assets and Supplemental Data | ||||||||||||||||||||||||||||
Net assets, end of period ($ millions) | 244 | 177 | 311 | 100 | 96 | 204 | ||||||||||||||||||||||
Ratio of expenses before expense reductions (including interest expense) (%)b | .55 | * | .59 | .56 | .58 | .55 | .57 | |||||||||||||||||||||
Ratio of expenses after expense reductions (including interest expense) (%)b | .55 | * | .56 | .56 | .58 | .55 | .57 | |||||||||||||||||||||
Ratio of expenses after expense reductions (excluding interest expense) (%) | .54 | * | .53 | .52 | .53 | .50 | .52 | |||||||||||||||||||||
Ratio of net investment income (%) | 3.30 | * | 3.63 | 3.93 | 4.06 | 4.38 | 4.17 | |||||||||||||||||||||
Portfolio turnover rate (%) | 19 | ** | 38 | 29 | 29 | 30 | 34 |
a | Total return would have been lower had certain expenses not been reduced. |
b | Interest expense represents interest and fees on short-term floating rate notes issued in conjunction with inverse floating rate securities. Interest income from such transactions is included in income from investment operations. |
* | Annualized |
** | Not annualized |
*** | Amount is less than $.005. |
42 | Deutsche Managed Municipal Bond Fund |
Notes to Financial Statements | (Unaudited) |
A. Organization and Significant Accounting Policies
Deutsche Managed Municipal Bond Fund (the “Fund”) is a diversified series of Deutsche Municipal Trust (the “Trust”), which is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are subject to an initial sales charge. Class C shares are not subject to an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Class S shares are not subject to initial or contingent deferred sales charges and are only available to a limited group of investors. Institutional Class shares are not subject to initial or contingent deferred sales charges and are generally available only to qualified institutions.
Investment income, realized and unrealized gains and losses and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution and services fees, services to shareholders and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which require the use of management estimates. Actual results could differ from those estimates. The Fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of U.S. GAAP. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for
Deutsche Managed Municipal Bond Fund | 43 |
similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
Municipal debt securities are valued at prices supplied by independent pricing services approved by the Fund’s Board, whose valuations are intended to reflect the mean between the bid and asked prices. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. If the pricing services are unable to provide valuations, the securities are valued at the mean of the most recent bid and asked quotations or evaluated prices, as applicable, obtained from one or more broker-dealers. These securities are generally categorized as Level 2.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund’s valuation procedures, factors considered in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security’s disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company’s or issuer’s financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.
Disclosure about the classification of fair value measurements is included in a table following the Fund’s Investment Portfolio.
Inverse Floaters. The Fund invests in inverse floaters. Inverse floaters are debt instruments with a weekly floating rate of interest that bears an inverse relationship to changes in the short-term interest rate market. Inverse floaters are created by depositing a fixed-rate long-term municipal bond into a special purpose Tender Offer Bond trust (the “TOB Trust”). In turn the TOB Trust issues a short-term floating rate note and an inverse
44 | Deutsche Managed Municipal Bond Fund |
floater. The short-term floating rate note is issued in a face amount equal to some fraction of the underlying bond’s par amount and is sold to a third party, usually a tax-exempt money market fund. The Fund receives the proceeds from the sale of the short-term floating rate note and uses the cash proceeds to make additional investments. The short-term floating rate note represents leverage to the Fund. The Fund, as the holder of the inverse floater, has full exposure to any increase or decrease in the value of the underlying bond. The income stream from the underlying bond in the TOB Trust is divided between the floating rate note and the inverse floater. The inverse floater earns all of the interest from the underlying long-term fixed-rate bond less the amount of interest paid on the floating rate note and the expenses of the TOB Trust. The floating rate notes issued by the TOB Trust are valued at cost, which approximates fair value.
By holding the inverse floater, the Fund has the right to collapse the TOB Trust by causing the holders of the floating rate instrument to tender their notes at par and have the broker transfer the underlying bond to the Fund. The floating rate note holder can also elect to tender the note for redemption at par at each reset date. The Fund accounts for these transactions as a form of secured borrowing, by reflecting the value of the underlying bond in the investments of the Fund and the amount owed to the floating rate note holder as a liability under the caption “Payable for floating rate notes issued” in the Statement of Assets and Liabilities. Income earned on the underlying bond is included in interest income, and interest paid on the floaters and the expenses of the TOB Trust are included in “Interest expense” in the Statement of Operations. The weighted average outstanding daily balance of the floating rate notes issued during the six months ended November 30, 2017 was approximately $38,769,000, with a weighted average interest rate of 1.46%.
The Fund may enter into shortfall and forbearance agreements by which the Fund agrees to reimburse the TOB Trust, in certain circumstances, for the difference between the liquidation value of the underlying bond held by the TOB Trust and the liquidation value of the floating rate notes plus any shortfalls in interest cash flows. This could potentially expose the Fund to losses in excess of the value of the Fund’s inverse floater investments. In addition, the value of inverse floaters may decrease significantly when interest rates increase. The market for inverse floaters may be more volatile and less liquid than other municipal bonds of comparable maturity. The TOB Trust could be terminated outside of the Fund’s control, resulting in a reduction of leverage and disposal of portfolio investments at inopportune times and prices. Investments in inverse floaters generally involve greater risk than in an investment in fixed-rate bonds.
Deutsche Managed Municipal Bond Fund | 45 |
The final rules implementing Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”) preclude banking entities from sponsoring and/or providing services to existing TOB Trusts. In response to these rules, investment market participants have developed and are developing new TOB Trust structures that are designed to ensure that banking entities do not sponsor TOB Trusts in violation of the Volcker Rule. As of July 17, 2017, the Volcker Rule’s final compliance date, all Fund TOB Trusts were structured to be in compliance with the Volcker Rule. Any new TOB Trust structures must currently comply with the Volcker Rule. Accordingly, to the extent the Fund wishes to restructure a Legacy TOB Trust or create a new TOB Trust, it must do so in a Volcker-compliant manner. A Volcker-compliant TOB Trust structure is substantially similar to traditional TOB Trust structures. The ultimate impact of the new rules on the inverse floater market and the municipal market generally is not yet certain. Such changes could make early unwinds of TOB Trusts more likely in adverse market scenarios, may make the use of TOB Trusts more expensive, and may make it more difficult to use TOB Trusts in general. The new rules may also expose the Fund to additional risks, including, but not limited to, compliance, securities law and operational risks.
When-Issued/Delayed Delivery Securities. The Fund may purchase securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded and the value of the transaction is reflected in the net asset value. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. At the time the Fund enters into a purchase transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment.
Certain risks may arise upon entering into when-issued or delayed delivery transaction from the potential inability of counterparties to meet the terms of their contracts or if the issuer does not issue the securities due to political, economic, or other factors. Additionally, losses may arise due to changes in the value of the underlying securities.
Federal Income Taxes. The Fund’s policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable and tax-exempt income to its shareholders.
Under the Regulated Investment Company Modernization Act of 2010, net capital losses incurred post-enactment may be carried forward indefinitely, and their character is retained as short-term and/or long-term. Previously, net capital losses were carried forward for eight years and
46 | Deutsche Managed Municipal Bond Fund |
treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
At May 31, 2017, the Fund had net tax basis capital loss carryforwards of approximately $32,808,000, including $1,746,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until May 31, 2019, the expiration date, whichever occurs first; and approximately $31,062,000 of post-enactment short-term losses, which may be applied against realized net taxable capital gains indefinitely.
At May 31, 2017, the aggregate cost of investments for federal income tax purposes was $4,666,942,172. The net unrealized appreciation for all investments based on tax cost was $330,535,288. This consisted of aggregate gross unrealized appreciation for all investments in which there was an excess of value over tax cost of $353,659,317 and aggregate gross unrealized depreciation for all investments in which there was an excess of tax cost over value of $23,124,029.
The Fund has reviewed the tax positions for the open tax years as of May 31, 2017 and has determined that no provision for income tax and/or uncertain tax provisions is required in the Fund’s financial statements. The Fund’s federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.
Distribution of Income and Gains. Net investment income of the Fund is declared as a daily dividend and is distributed to shareholders monthly. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually. The Fund may also make additional distributions for tax purposes if necessary.
The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in inverse floater transactions, certain securities sold at a loss and accretion of market discount on debt securities. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.
The tax character of current year distributions will be determined at the end of the current fiscal year.
Deutsche Managed Municipal Bond Fund | 47 |
Expenses. Expenses of the Trust arising in connection with a specific fund are allocated to that fund. Other Trust expenses which cannot be directly attributed to a fund are apportioned among the funds in the Trust based upon the relative net assets or other appropriate measures.
Contingencies. In the normal course of business, the Fund may enter into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet been made. However, based on experience, the Fund expects the risk of loss to be remote.
Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for financial reporting purposes, with the exception of securities in default of principal.
Statement of Cash Flows. Information on financial transactions which have been settled through the receipt and disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows represents the cash position at the Fund’s custodian bank at November 30, 2017.
B. Purchases and Sales of Securities
During the six months ended November 30, 2017, purchases and sales of investment securities (excluding short-term investments) aggregated $933,154,632 and $988,194,732, respectively.
C. Related Parties
Management Agreement. Under the Investment Management Agreement with Deutsche Investment Management Americas Inc. (“DIMA” or the “Advisor”), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund.
Under the Investment Management Agreement with the Advisor, the Fund pays a monthly management fee based on the Fund’s average daily
48 | Deutsche Managed Municipal Bond Fund |
net assets, computed and accrued daily and payable monthly, at the following annual rates:
First $250 million of the Fund’s average daily net assets | .365% | |||
Next $750 million of such net assets | .345% | |||
Next $1.5 billion of such net assets | .325% | |||
Next $2.5 billion of such net assets | .315% | |||
Next $2.5 billion of such net assets | .295% | |||
Next $2.5 billion of such net assets | .275% | |||
Next $2.5 billion of such net assets | .255% | |||
Over $12.5 billion of such net assets | .235% |
Accordingly, for the six months ended November 30, 2017, the fee pursuant to the Investment Management Agreement was equivalent to an annualized rate (exclusive of any applicable waivers/reimbursements) of 0.32% of the Fund’s average daily net assets.
For the period from June 1, 2017 through September 30, 2017, the Advisor had contractually agreed to waive its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of certain classes as follows:
Class A | .82% | |||
Class C | 1.57% | |||
Class S | .57% | |||
Institutional Class | .57% |
Effective October 1, 2017 through September 30, 2018, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of certain classes as follows:
Class A | .81% | |||
Class C | 1.56% | |||
Class S | .56% | |||
Institutional Class | .56% |
Deutsche Managed Municipal Bond Fund | 49 |
For the six months ended November 30, 2017, fees waived and/or expenses reimbursed for each class are as follows:
Class C | $ | 1,165 | ||
Class S | 412,827 | |||
$ | 413,992 |
Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays the Advisor an annual fee (“Administration Fee”) of 0.10% of the Fund’s average daily net assets, computed and accrued daily and payable monthly. For the six months ended November 30, 2017, the Administration Fee was $2,510,087, of which $408,843 is unpaid.
Service Provider Fees. Deutsche AM Service Company (“DSC”), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Fund. Pursuant to a sub-transfer agency agreement between DSC and DST Systems, Inc. (“DST”), DSC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DSC compensates DST out of the shareholder servicing fee it receives from the Fund. For the six months ended November 30, 2017, the amounts charged to the Fund by DSC were as follows:
Services to Shareholders | Total Aggregated | Unpaid at November 30, 2017 | ||||||
Class A | $ | 85,726 | $ | 50,438 | ||||
Class C | 4,933 | 3,187 | ||||||
Class S | 169,724 | 92,603 | ||||||
Institutional Class | 2,197 | 1,321 | ||||||
$ | 262,580 | $ | 147,549 |
Distribution and Service Fees. Under the Fund’s Class C 12b-1 Plan, Deutsche AM Distributors, Inc. (“DDI”), an affiliate of the Advisor, receives a fee (“Distribution Fee”) of 0.75% of average daily net assets of Class C shares. In accordance with the Fund’s Underwriting and Distribution Services Agreement, DDI enters into related selling group agreements with various firms at various rates for sales of Class C shares. For the six months ended November 30, 2017, the Distribution Fee was as follows:
Distribution Fee | Total Aggregated | Unpaid at November 30, 2017 | ||||||
Class C | $ | 937,742 | $ | 148,200 |
50 | Deutsche Managed Municipal Bond Fund |
In addition, DDI provides information and administrative services for a fee (“Service Fee”) to Class A and C shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. DDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of shareholder accounts the firms service. For the six months ended November 30, 2017, the Service Fee was as follows:
Service Fee | Total Aggregated | Unpaid at November 30, 2017 | Annualized Rate | |||||||||
Class A | $ | 2,034,388 | $ | 1,014,127 | .24 | % | ||||||
Class C | 312,581 | 154,372 | .25 | % | ||||||||
$ | 2,346,969 | $ | 1,168,499 |
Underwriting Agreement and Contingent Deferred Sales Charge. DDI is the principal underwriter for the Fund. Underwriting commissions paid to DDI in connection with the distribution of Class A shares for the six months ended November 30, 2017 aggregated $22,741.
In addition, DDI receives any contingent deferred ,sales charge (“CDSC”) from Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is 1% of the value of the shares redeemed for Class C. For the six months ended November 30, 2017, the CDSC for Class C shares aggregated $15,522. A deferred sales charge of up to 0.50% is assessed on certain redemptions of Class A shares. For the six months ended November 30, 2017, DDI received $35,730 for Class A shares.
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing certain pre-press and regulatory filing services to the Fund. For the six months ended November 30, 2017, the amount charged to the Fund by DIMA included in the Statement of Operations under “Reports to shareholders” aggregated $11,890, all of which is unpaid.
Trustees’ Fees and Expenses. The Fund paid retainer fees to each Trustee not affiliated with the Advisor, plus specified amounts to the Board Chairperson and Vice Chairperson and to each committee Chairperson.
Transactions with Affiliates. The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is solely due to having a common investment adviser, common officers, or common trustees. During the six months ended November 30, 2017, the Fund engaged in securities purchases of $124,810,000 and securities sales of $153,172,000 with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act.
Deutsche Managed Municipal Bond Fund | 51 |
D. Line of Credit
The Fund and other affiliated funds (the “Participants”) share in a $400 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus, if the one-month LIBOR exceeds the Federal Funds Rate, the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
At November 30, 2017, the Fund had a $3,600,000 outstanding loan. Interest expense incurred on the borrowings was $649 for the period ended November 30, 2017. The average dollar amount of the borrowings was $3,066,667, the weighted average interest rate on these borrowings was 2.57%, and the Fund had a loan outstanding for three days throughout the period. The borrowings were valued at cost, which approximates fair value.
E. Fund Share Transactions
The following table summarizes share and dollar activity in the Fund:
Six Months Ended November 30, 2017 | Year Ended May 31, 2017 | |||||||||||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||||||||||
Shares sold | ||||||||||||||||||||||||
Class A | 6,439,502 | $ | 59,053,403 | 27,979,738 | $ | 260,413,105 | ||||||||||||||||||
Class C | 1,103,278 | 10,119,025 | 5,059,582 | 47,169,120 | ||||||||||||||||||||
Class S | 19,935,780 | 183,126,492 | 91,485,169 | 831,818,790 | ||||||||||||||||||||
Institutional Class | 10,753,122 | 98,426,717 | 11,637,532 | 107,500,291 | ||||||||||||||||||||
$ | 350,725,637 | $ | 1,246,901,306 | |||||||||||||||||||||
Shares issued to shareholders in reinvestment of distributions | ||||||||||||||||||||||||
Class A | 2,501,836 | $ | 22,951,128 | 6,311,269 | $ | 58,134,879 | ||||||||||||||||||
Class C | 271,229 | 2,488,267 | 691,053 | 6,362,714 | ||||||||||||||||||||
Class S | 4,416,678 | 40,560,994 | 9,361,246 | 86,274,699 | ||||||||||||||||||||
Institutional Class | 352,625 | 3,234,272 | 1,012,445 | 9,361,976 | ||||||||||||||||||||
$ | 69,234,661 | $ | 160,134,268 |
52 | Deutsche Managed Municipal Bond Fund |
Six Months Ended November 30, 2017 | Year Ended May 31, 2017 | |||||||||||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||||||||||
Shares redeemed | ||||||||||||||||||||||||
Class A | (13,840,254 | ) | $ | (126,924,239 | ) | (65,197,337 | ) | $ | (593,912,371 | ) | ||||||||||||||
Class C | (3,501,241 | ) | (32,105,380 | ) | (8,531,559 | ) | (77,963,333 | ) | ||||||||||||||||
Class S | (31,736,250 | ) | (291,195,660 | ) | (94,587,849 | ) | (864,483,850 | ) | ||||||||||||||||
Institutional Class | (3,506,099 | ) | (32,156,022 | ) | (26,453,055 | ) | (238,451,633 | ) | ||||||||||||||||
$ | (482,381,301 | ) | $ | (1,774,811,187 | ) | |||||||||||||||||||
Net increase (decrease) | ||||||||||||||||||||||||
Class A | (4,898,916 | ) | $ | (44,919,708 | ) | (30,906,330 | ) | $ | (275,364,387 | ) | ||||||||||||||
Class C | (2,126,734 | ) | (19,498,088 | ) | (2,780,924 | ) | (24,431,499 | ) | ||||||||||||||||
Class S | (7,383,792 | ) | (67,508,174 | ) | 6,258,566 | 53,609,639 | ||||||||||||||||||
Institutional Class | 7,599,648 | 69,504,967 | (13,803,078 | ) | (121,589,366 | ) | ||||||||||||||||||
$ | (62,421,003 | ) | $ | (367,775,613 | ) |
Deutsche Managed Municipal Bond Fund | 53 |
Information About Your Fund’s Expenses
As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include sales charges (loads) and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, Class C and S shares limited these expenses; had they not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (June 1, 2017 to November 30, 2017).
The tables illustrate your Fund’s expenses in two ways:
– | Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund’s actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the “Expenses Paid per $1,000” line under the share class you hold. |
– | Hypothetical 5% Fund Return. This helps you to compare your Fund’s ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund’s actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. |
Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The “Expenses Paid per $1,000” line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. Subject to certain exceptions, an account maintenance fee of $20.00 assessed once per calendar year for Classes A, C and S shares may apply for accounts with balances less than $10,000. This fee is not included in these tables. If it was, the estimate of expenses paid for Classes A, C and S shares during the period would be higher, and account value during the period would be lower, by this amount.
54 | Deutsche Managed Municipal Bond Fund |
Expenses and Value of a $1,000 Investment for the six months ended November 30, 2017 (Unaudited) | ||||||||||||||||
Actual Fund Return | Class A | Class C | Class S | Institutional Class | ||||||||||||
Beginning Account Value 6/1/17 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | ||||||||
Ending Account Value 11/30/17 | $ | 1,007.70 | $ | 1,003.70 | $ | 1,008.70 | $ | 1,008.90 | ||||||||
Expenses Paid per $1,000* | $ | 3.93 | $ | 7.89 | $ | 2.92 | $ | 2.77 | ||||||||
Hypothetical 5% Fund Return | Class A | Class C | Class S | Institutional Class | ||||||||||||
Beginning Account Value 6/1/17 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | ||||||||
Ending Account Value 11/30/17 | $ | 1,021.16 | $ | 1,017.20 | $ | 1,022.16 | $ | 1,022.31 | ||||||||
Expenses Paid per $1,000* | $ | 3.95 | $ | 7.94 | $ | 2.94 | $ | 2.79 |
* | Expenses are equal to the Fund’s annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by 183 (the number of days in the most recent six-month period), then divided by 365. |
Annualized Expense Ratios | Class A | Class C | Class S | Institutional Class | ||||||||||||
Deutsche Managed Municipal Bond Fund† | .78 | % | 1.57 | % | .58 | % | .55 | % |
† | Includes interest expense and fees on short-term floating rate notes issued in conjunction with inverse floating rate securities of 0.01% for each class. |
For more information, please refer to the Fund’s prospectus.
For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.
Deutsche Managed Municipal Bond Fund | 55 |
Advisory Agreement Board Considerations and Fee Evaluation
The Board of Trustees (hereinafter referred to as the “Board” or “Trustees”) approved the renewal of Deutsche Managed Municipal Bond Fund’s (the “Fund”) investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (“DIMA”) in September 2017.
In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:
– | During the entire process, all of the Fund’s Trustees were independent of DIMA and its affiliates (the “Independent Trustees”). |
– | The Board met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board’s Contract Committee reviewed extensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund’s performance, fees and expenses, and profitability from a fee consultant retained by the Fund’s Independent Trustees (the “Fee Consultant”). Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee’s findings and recommendations. |
– | The Board also received extensive information throughout the year regarding performance of the Fund. |
– | The Independent Trustees regularly met privately with counsel to discuss contract review and other matters. In addition, the Independent Trustees were advised by the Fee Consultant in the course of their review of the Fund’s contractual arrangements and considered a comprehensive report prepared by the Fee Consultant in connection with their deliberations. |
– | In connection with reviewing the Agreement, the Board also reviewed the terms of the Fund’s Rule 12b-1 plan, distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements. |
In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests
56 | Deutsche Managed Municipal Bond Fund |
of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund’s shareholders. DIMA is part of Deutsche Bank AG’s (“Deutsche Bank”) Asset Management (“Deutsche AM”) division. Deutsche AM is a global asset management business that offers a wide range of investing expertise and resources, including research capabilities in many countries throughout the world.
As part of the contract review process, the Board carefully considered the fees and expenses of each Deutsche fund overseen by the Board in light of the fund’s performance. In many cases, this led to the negotiation and implementation of expense caps. As part of these negotiations, the Board indicated that it would consider relaxing these caps in future years following sustained improvements in performance, among other considerations.
While shareholders may focus primarily on fund performance and fees, the Fund’s Board considers these and many other factors, including the quality and integrity of DIMA’s personnel and administrative support services provided by DIMA, such as back-office operations, fund valuations, and compliance policies and procedures.
Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel and the resources made available to such personnel. The Board reviewed the Fund’s performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market index(es) and a peer universe compiled using information supplied by Morningstar Direct (“Morningstar”), an independent fund data service. The Board also noted that it has put into place a process of identifying “Funds in Review” (e.g., funds performing poorly relative to a peer universe), and receives additional reporting from DIMA regarding such funds and, where appropriate, DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that, for the one-, three- and five-year periods ended December 31, 2016, the Fund’s performance (Class A shares) was in the 3rd quartile of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has
Deutsche Managed Municipal Bond Fund | 57 |
outperformed its benchmark in the three- and five-year periods and has underperformed its benchmark in the one-year period ended December 31, 2016.
Fees and Expenses. The Board considered the Fund’s investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Broadridge Financial Solutions, Inc. (“Broadridge”) and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund’s administrative services agreement, were higher than the median (3rd quartile) of the applicable Broadridge peer group (based on Broadridge data provided as of December 31, 2016). The Board noted that the Fund’s Class A shares total (net) operating expenses (excluding 12b-1 fees) were expected to be lower than the median (2nd quartile) of the applicable Broadridge expense universe (based on Broadridge data provided as of December 31, 2016, and analyzing Broadridge expense universe Class A (net) expenses less any applicable 12b-1 fees) (“Broadridge Universe Expenses”). The Board also reviewed data comparing each share class’s total (net) operating expenses to the applicable Broadridge Universe Expenses. The Board noted that the expense limitations agreed to by DIMA were expected to help the Fund’s total (net) operating expenses remain competitive.
The Board considered the Fund’s management fee rate as compared to fees charged by DIMA to comparable Deutsche U.S. registered funds (“Deutsche Funds”) and considered differences between the Fund and the comparable Deutsche Funds. The information requested by the Board as part of its review of fees and expenses also included information about institutional accounts (including any sub-advised funds and accounts) and funds offered primarily to European investors (“Deutsche Europe funds”) managed by Deutsche AM. The Board noted that DIMA indicated that Deutsche AM does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.
Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs to DIMA, and pre-tax profits realized by DIMA, from advising the Deutsche Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received
58 | Deutsche Managed Municipal Bond Fund |
information regarding the estimated enterprise-wide profitability of DIMA and its affiliates with respect to all fund services in totality and by fund. The Board and the Fee Consultant reviewed DIMA’s methodology in allocating its costs to the management of the Fund. Based on the information provided, the Board concluded that the pre-tax profits realized by DIMA in connection with the management of the Fund were not unreasonable. The Board also reviewed certain publicly available information regarding the profitability of certain similar investment management firms. The Board noted that, while information regarding the profitability of such firms is limited (and in some cases is not necessarily prepared on a comparable basis), DIMA and its affiliates’ overall profitability with respect to the Deutsche Funds (after taking into account distribution and other services provided to the funds by DIMA and its affiliates) was lower than the overall profitability levels of most comparable firms for which such data was available.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s investment management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.
Other Benefits to DIMA and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DIMA and its affiliates, including any fees received by DIMA for administrative services provided to the Fund, any fees received by an affiliate of DIMA for transfer agency services provided to the Fund and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities. In addition, the Board considered the incidental public relations benefits to DIMA related to Deutsche Funds advertising and cross-selling opportunities among DIMA products and services. The Board considered these benefits in reaching its conclusion that the Fund’s management fees were reasonable.
Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience, seniority and time commitment of the individuals serving as DIMA’s and the Fund’s chief compliance officers; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.
Deutsche Managed Municipal Bond Fund | 59 |
Based on all of the information considered and the conclusions reached, the Board unanimously determined that the continuation of the Agreement is in the best interests of the Fund. In making this determination, the Board did not give particular weight to any single factor identified above. The Board considered these factors over the course of numerous meetings, certain of which were in executive session with only the Independent Trustees and counsel present. It is possible that individual Independent Trustees may have weighed these factors differently in reaching their individual decisions to approve the continuation of the Agreement.
60 | Deutsche Managed Municipal Bond Fund |
For More Information | The automated telephone system allows you to access personalized account information and obtain information on other Deutsche funds using either your voice or your telephone keypad. Certain account types within Classes A, C and S also have the ability to purchase, exchange or redeem shares using this system.
For more information, contact your financial advisor. You may also access our automated telephone system or speak with a Shareholder Service representative by calling:
(800) 728-3337 | |
Web Site | deutschefunds.com View your account transactions and balances, trade shares, monitor your asset allocation, subscribe to fund and account updates by e-mail, and change your address, 24 hours a day.
Obtain prospectuses and applications, blank forms, interactive worksheets, news about Deutsche funds, retirement planning information, and more. | |
Written Correspondence | Deutsche Asset Management
PO Box 219151 Kansas City, MO 64121-9151 | |
Proxy Voting | The fund’s policies and procedures for voting proxies for portfolio securities and information about how the fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 are available on our Web site — deutschefunds.com (click on “proxy voting”at the bottom of the page) — or on the SEC’s Web site — sec.gov. To obtain a written copy of the fund’s policies and procedures without charge, upon request, call us toll free at (800) 728-3337. | |
Portfolio Holdings | Following the fund’s fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. This form will be available on the SEC’s Web site at sec.gov, and it also may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling (800) SEC-0330. The fund’s portfolio holdings are also posted on deutschefunds.com from time to time. Please see the fund’s current prospectus for more information. | |
Principal Underwriter | If you have questions, comments or complaints, contact:
Deutsche AM Distributors, Inc.
222 South Riverside Plaza Chicago, IL 60606-5808 (800) 621-1148 |
Deutsche Managed Municipal Bond Fund | 61 |
Investment Management | Deutsche Investment Management Americas Inc. (“DIMA” or the “Advisor”), which is part of Deutsche Asset Management, is the investment advisor for the fund. DIMA and its predecessors have more than 90 years of experience managing mutual funds and DIMA provides a full range of investment advisory services to both institutional and retail clients.
DIMA is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution engaged in a wide variety of financial services, including investment management, retail, private and commercial banking, investment banking and insurance. | |||||||
Class A | Class C | Class S | Institutional Class | |||||
Nasdaq Symbol | SMLAX | SMLCX | SCMBX | SMLIX | ||||
CUSIP Number | 25158T 608 | 25158T 822 | 25158T 848 | 25158T 855 | ||||
Fund Number | 466 | 766 | 2066 | 544 |
62 | Deutsche Managed Municipal Bond Fund |
FACTS | What Does Deutsche Asset Management Do With Your Personal Information? | |
Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share and protect your personal information. Please read this notice carefully to understand what we do. | |
What? | The types of personal information we collect and share can include:
– Social Security number
– Account balances
– Purchase and transaction history
– Bank account information
– Contact information such as mailing address, e-mail address and telephone number | |
How? | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information, the reasons Deutsche Asset Management chooses to share and whether you can limit this sharing. |
Reasons we can share your personal information | Does Deutsche Asset Management share? | Can you limit this sharing? | ||
For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders or legal investigations | Yes | No | ||
For our marketing purposes — to offer our products and services to you | Yes | No | ||
For joint marketing with other financial companies | No | We do not share | ||
For our affiliates’ everyday business purposes — information about your transactions and experiences | No | We do not share | ||
For our affiliates’ everyday business purposes — information about your creditworthiness | No | We do not share | ||
For non-affiliates to market to you | No | We do not share |
Questions? | Call (800) 728-3337 or e-mail us at service@db.com |
Deutsche Managed Municipal Bond Fund | 63 |
| ||
Who we are | ||
Who is providing this notice? | Deutsche AM Distributors, Inc; Deutsche Investment Management Americas Inc.; Deutsche AM Investor Services, Inc.; Deutsche AM Trust Company; the Deutsche Funds | |
What we do | ||
How does Deutsche Asset Management protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. | |
How does Deutsche Asset Management collect my personal information? | We collect your personal information, for example, when you:
– open an account
– give us your contact information
– provide bank account information for ACH or wire transactions
– tell us where to send money
– seek advice about your investments | |
Why can’t I limit all sharing? | Federal law gives you the right to limit only
– sharing for affiliates’ everyday business purposes
– information about your creditworthiness
– affiliates from using your information to market to you
– sharing for non-affiliates to market to you
State laws and individual companies may give you additional rights to limit sharing. | |
Definitions | ||
Affiliates | Companies related by common ownership or control. They can be financial or non-financial companies. Our affiliates include financial companies with the DWS or Deutsche Bank (“DB”) name, such as DB AG Frankfurt. | |
Non-affiliates | Companies not related by common ownership or control. They can be financial and non-financial companies.
Non-affiliates we share with include account service providers, service quality monitoring services, mailing service providers and verification services to help in the fight against money laundering and fraud. | |
Joint marketing | A formal agreement between non-affiliated financial companies that together market financial products or services to you. Deutsche Asset Management does not jointly market. |
Rev. 05/2017
64 | Deutsche Managed Municipal Bond Fund |
DMMBF-3
(R-025437-7 (1/18)
ITEM 2. | CODE OF ETHICS | |
Not applicable. | ||
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT | |
Not applicable | ||
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | |
Not applicable | ||
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS | |
Not applicable | ||
ITEM 6. | SCHEDULE OF INVESTMENTS | |
Not applicable | ||
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES | |
Not applicable | ||
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES | |
Not applicable | ||
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS | |
Not applicable | ||
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | |
There were no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board. The primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Keith R. Fox, Deutsche Funds Board Chair, c/o Thomas R. Hiller, Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600. | ||
ITEM 11. | CONTROLS AND PROCEDURES | |
(a) | The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. | |
(b) | There have been no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting. | |
ITEM 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. | |
Not applicable | ||
ITEM 13. | EXHIBITS | |
(a)(1) | Not applicable | |
(a)(2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. | |
(b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | Deutsche Managed Municipal Bond Fund, a series of Deutsche Municipal Trust |
By: | /s/Hepsen Uzcan Hepsen Uzcan President |
Date: | 1/29/2018 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Hepsen Uzcan Hepsen Uzcan President |
Date: | 1/29/2018 |
By: | /s/Paul Schubert Paul Schubert Chief Financial Officer and Treasurer |
Date: | 1/29/2018 |