WASHINGTON, D. C. 20549
Deutsche Global/International Fund, Inc.
June 30, 2014
Semiannual Report
to Shareholders
Deutsche Global Infrastructure Fund
(formerly DWS RREEF Global Infrastructure Fund)
Contents
6 Portfolio Management Team 13 Statement of Assets and Liabilities 15 Statement of Operations 16 Statement of Changes in Net Assets 21 Notes to Financial Statements 32 Information About Your Fund's Expenses 34 Advisory Agreement Board Considerations and Fee Evaluation 40 Account Management Resources |
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.
Any fund that concentrates in a particular segment of the market will generally be more volatile than a fund that invests more broadly. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. This fund is non-diversified and can take larger positions in fewer issues, increasing its potential risk. The fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details.
Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DeAWM Distributors, Inc.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Dear Shareholder:
I am very pleased to tell you that the DWS funds have been renamed Deutsche funds, aligning more closely with the Deutsche Asset & Wealth Management brand. We are proud to adopt the Deutsche name — a brand that fully represents the global access, discipline and intelligence that support all of our products and services.
Deutsche Asset & Wealth Management combines the asset management and wealth management divisions of Deutsche Bank to deliver a comprehensive suite of active, passive and alternative investment capabilities. Your investment in the Deutsche funds means you have access to the thought leadership and resources of one of the world’s largest and most influential financial institutions.
In conjunction with your fund’s name change, please note that the Deutsche funds’ Web address has changed as well. The former dws-investments.com is now deutschefunds.com.
In addition, key service providers have been renamed as follows:
| Former Name | New name, effective August 11, 2014 |
| DWS Investments Distributors, Inc. | DeAWM Distributors, Inc. |
| DWS Trust Company | DeAWM Trust Company |
| DWS Investments Service Company | DeAWM Service Company |
These changes have no effect on the day-to-day management of your investment, and there is no action required on your part. You will continue to experience the benefits that come from our decades of experience, in-depth research and worldwide network of investment professionals.
Thanks for your continued support. We appreciate your trust and the opportunity to put our capabilities to work for you.
Best regards,
Brian Binder
President, Deutsche Funds
Performance Summary June 30, 2014 (Unaudited) | Class A | 6-Month‡ | 1-Year | 5-Year | Life of Fund* |
Average Annual Total Returns as of 6/30/14 |
| Unadjusted for Sales Charge | 14.90% | 28.12% | 20.36% | 10.47% |
| Adjusted for the Maximum Sales Charge (max 5.75% load) | 8.30% | 20.75% | 18.94% | 9.38% |
MSCI World Index† | 6.18% | 24.05% | 14.99% | 5.98% |
Dow Jones Brookfield Global Infrastructure Index†† | 16.37% | 28.29% | 20.39% | 11.23% |
| Class C | 6-Month‡ | 1-Year | 5-Year | Life of Fund* |
Average Annual Total Returns as of 6/30/14 |
| Unadjusted for Sales Charge | 14.49% | 27.12% | 19.45% | 9.62% |
| Adjusted for the Maximum Sales Charge (max 1.00% CDSC) | 13.49% | 27.12% | 19.45% | 9.62% |
MSCI World Index† | 6.18% | 24.05% | 14.99% | 5.98% |
Dow Jones Brookfield Global Infrastructure Index†† | 16.37% | 28.29% | 20.39% | 11.23% |
| Class S | 6-Month‡ | 1-Year | 5-Year | Life of Fund* |
Average Annual Total Returns as of 6/30/14 |
| No Sales Charges | 15.03% | 28.34% | 20.60% | 10.69% |
MSCI World Index† | 6.18% | 24.05% | 14.99% | 5.98% |
Dow Jones Brookfield Global Infrastructure Index†† | 16.37% | 28.29% | 20.39% | 11.23% |
| Institutional Class | 6-Month‡ | 1-Year | 5-Year | Life of Fund* |
Average Annual Total Returns as of 6/30/14 |
| No Sales Charges | 15.11% | 28.49% | 20.71% | 10.76% |
MSCI World Index† | 6.18% | 24.05% | 14.99% | 5.98% |
Dow Jones Brookfield Global Infrastructure Index†† | 16.37% | 28.29% | 20.39% | 11.23% |
Performance in the Average Annual Total Returns table 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 May 1, 2014 are 1.42%, 2.19%, 1.25% and 1.10% 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.
The Fund may charge a 2% fee for redemptions of shares held less than 15 days.
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.
Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) |
|
|
| Yearly periods ended June 30 |
The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 5.75%. This results in a net initial investment of $9,425.
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 Global Infrastructure Fund commenced operations on June 24, 2008. The performance shown for the index is for the time period of June 30, 2008 through June 30, 2014, which is based on the performance period of the life of the Fund.
† The Morgan Stanley Capital International (MSCI) World Index is an unmanaged index that tracks the performance of stocks in select developed markets around the world, including the U.S.
†† The Dow Jones Brookfield Global Infrastructure Index measures the stock performance of companies that exhibit strong infrastructure characteristics. Index components are required to have more than 70% of cash flows derived from infrastructure lines of business. The index intends to measure all sectors of the infrastructure market.
‡ Total returns shown for periods less than one year are not annualized.
| | | Class A | | | Class C | | | Class S | | | Institutional Class | |
| Net Asset Value | |
| 6/30/14 | | $ | 15.33 | | | $ | 15.27 | | | $ | 15.27 | | | $ | 15.27 | |
| 12/31/13 | | $ | 13.43 | | | $ | 13.40 | | | $ | 13.37 | | | $ | 13.37 | |
Distribution Information as of 6/30/14 | |
| Income Dividends, Six Months | | $ | .08 | | | $ | .05 | | | $ | .09 | | | $ | .10 | |
| Capital Gain Distributions, Six Months | | $ | .02 | | | $ | .02 | | | $ | .02 | | | $ | .02 | |
Portfolio Management Team
John F. Robertson, CFA, Managing Director
Portfolio Manager of the fund. Began managing the fund in 2008.
— Joined Deutsche Asset & Wealth Management in 1997; previously was an Assistant Vice President of Lincoln Investment Management responsible for REIT research.
— Head of Real Estate & Infrastructure Securities for Deutsche Asset & Wealth Management. Investment industry experience began in 1988.
— BA, Wabash College; MBA, Indiana University.
John W. Vojticek, Managing Director
Portfolio Manager of the fund. Began managing the fund in 2008.
— Joined Deutsche Asset & Wealth Management in 2004; previously worked as Principal at KG Redding and Associates, March 2004–September 2004; and previously Managing Director of Deutsche Asset Management from 1996–March 2004.
— Chief Investment Officer of Real Estate & Infrastructure Securities for Deutsche Asset & Wealth Management. Investment industry experience began in 1996.
— BS, University of Southern California.
Francis Greywitt, Director
Portfolio Manager of the fund. Began managing the fund in 2008.
— Joined Deutsche Asset & Wealth Management in 2005; previously has worked as a REIT analyst with KeyBanc Capital Markets covering the office sector.
— Investment industry experience began in 1999.
— BBA, St. Bonaventure University.
Manoj H. Patel, CFA, Managing Director
Portfolio Manager of the fund. Began managing the fund in 2011.
— Joined Deutsche Asset & Wealth Management in 2011; previously worked as a Director and Portfolio Manager of infrastructure securities funds at Brookfield Investment Management.
— Investment industry experience began in 2002.
— B.Sc, Indiana University-Bloomington.
Portfolio Summary (Unaudited) 
Ten Largest Equity Holdings at June 30, 2014 (49.2% of Net Assets) | Country | Percent |
1. American Tower Corp. Operator and developer of wireless communications and broadcast towers | United States | 7.6% |
2. TransCanada Corp. Focused on natural gas transmission and power services | Canada | 6.4% |
3. National Grid PLC Owns, operates and develops electricity and gas networks | United Kingdom | 5.9% |
4. Enbridge, Inc. Provides energy transportation, distribution and related services | Canada | 5.8% |
5. NiSource, Inc. Provider of gas utilities | United States | 5.0% |
6. Sempra Energy Provider of electric and natural gas products and services | United States | 4.4% |
7. Spectra Energy Corp. Transmits, stores, distributes, gathers and processes natural gas | United States | 4.2% |
8. ITC Holdings Corp. Through subsidiaries, the company transmits electricity from electricity generating stations to local electricity distribution facilities | United States | 3.5% |
9. SBA Communications Corp. Owns and operates wireless communications infrastructure | United States | 3.2% |
10. American Water Works Co., Inc. Provides drinking water, wastewater and other water-related services | United States | 3.2% |
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 40 for contact information. |
Investment Portfolio as of June 30, 2014 (Unaudited) | | | Shares | | | Value ($) | |
| | | | |
| Common Stocks 97.3% | |
| Australia 1.9% | |
| Transurban Group (Cost $82,082,443) | | | 11,464,900 | | | | 79,891,986 | |
| Canada 19.2% | |
| Canadian National Railway Co. | | | 653,600 | | | | 42,497,072 | |
| Canadian Pacific Railway Ltd. | | | 450,500 | | | | 81,603,570 | |
| Enbridge, Inc. (a) | | | 5,231,100 | | | | 248,208,231 | |
| Inter Pipeline Ltd. (a) | | | 1,998,341 | | | | 62,026,197 | |
| Pembina Pipeline Corp. (a) | | | 2,454,698 | | | | 105,613,781 | |
| TransAlta Renewables, Inc. (a) | | | 763,200 | | | | 8,354,038 | |
| TransCanada Corp. (a) | | | 5,674,838 | | | | 270,858,441 | |
| (Cost $711,811,434) | | | | 819,161,330 | |
| China 1.8% | |
| ENN Energy Holdings Ltd. | | | 4,395,500 | | | | 31,589,254 | |
| Jiangsu Expressway Co., Ltd. "H" | | | 16,937,600 | | | | 20,149,240 | |
| Zhejiang Expressway Co., Ltd. "H" | | | 25,823,070 | | | | 26,054,966 | |
| (Cost $71,446,935) | | | | 77,793,460 | |
| France 3.4% | |
| Eutelsat Communications SA | | | 1,815,100 | | | | 63,067,455 | |
| Groupe Eurotunnel SA (Registered) | | | 6,237,100 | | | | 84,354,151 | |
| (Cost $130,339,220) | | | | 147,421,606 | |
| Germany 1.0% | |
| Hamburger Hafen und Logistik AG (a) (Cost $40,308,743) | | | 1,625,603 | | | | 43,172,080 | |
| Hong Kong 1.0% | |
| China Merchants Holdings International Co., Ltd. (a) (Cost $46,076,830) | | | 13,773,700 | | | | 42,918,411 | |
| Italy 4.2% | |
| Atlantia SpA | | | 3,770,800 | | | | 107,501,104 | |
| Snam SpA | | | 11,678,900 | | | | 70,364,453 | |
| (Cost $130,783,080) | | | | 177,865,557 | |
| Luxembourg 0.9% | |
| SES SA (Cost $30,470,860) | | | 1,075,400 | | | | 40,789,511 | |
| Mexico 1.5% | |
| Infraestructura Energetica Nova SAB de CV (Cost $39,378,482) | | | 11,318,193 | | | | 62,795,971 | |
| Netherlands 0.3% | |
| Koninklijke Vopak NV (Cost $12,133,052) | | | 245,270 | | | | 11,989,784 | |
| Spain 1.7% | |
| Ferrovial SA (Cost $56,156,123) | | | 3,182,000 | | | | 70,868,451 | |
| Switzerland 1.5% | |
| Flughafen Zuerich AG (Registered) (Cost $54,430,369) | | | 101,600 | | | | 62,440,235 | |
| United Kingdom 7.1% | |
| National Grid PLC | | | 17,461,759 | | | | 251,026,028 | |
| United Utilities Group PLC | | | 3,482,600 | | | | 52,568,267 | |
| (Cost $259,535,080) | | | | 303,594,295 | |
| United States 51.8% | |
| American Airlines Group, Inc.* | | | 478,500 | | | | 20,556,360 | |
| American Tower Corp. (REIT) | | | 3,611,030 | | | | 324,920,479 | |
| American Water Works Co., Inc. | | | 2,744,904 | | | | 135,735,503 | |
| Cheniere Energy, Inc.* (a) | | | 1,389,691 | | | | 99,640,845 | |
| Crown Castle International Corp. (REIT) | | | 558,812 | | | | 41,497,379 | |
| Enbridge Energy Management LLC (a) | | | 1,263,080 | | | | 44,523,574 | |
| Enbridge Energy Partners LP (a) | | | 2,260,698 | | | | 83,487,577 | |
| Enterprise Products Partners LP | | | 834,800 | | | | 65,356,492 | |
| Genesis Energy LP (a) | | | 1,157,236 | | | | 64,851,505 | |
| ITC Holdings Corp. (a) | | | 4,135,200 | | | | 150,852,096 | |
| Kinder Morgan, Inc. | | | 2,342,500 | | | | 84,939,050 | |
| NextEra Energy Partners LP* | | | 182,060 | | | | 6,100,831 | |
| NiSource, Inc. (a) | | | 5,377,618 | | | | 211,555,492 | |
| NorthWestern Corp. | | | 852,837 | | | | 44,509,563 | |
| Pattern Energy Group, Inc. | | | 700,000 | | | | 23,177,000 | |
| PBF Logistics LP* | | | 300,000 | | | | 8,256,000 | |
| PG&E Corp. | | | 2,565,500 | | | | 123,195,310 | |
| SBA Communications Corp. "A"* (a) | | | 1,337,909 | | | | 136,868,091 | |
| SemGroup Corp. "A" | | | 280,800 | | | | 22,141,080 | |
| Sempra Energy | | | 1,783,138 | | | | 186,712,380 | |
| Spectra Energy Corp. | | | 4,212,053 | | | | 178,928,011 | |
| Union Pacific Corp. | | | 1,005,200 | | | | 100,268,700 | |
| Williams Companies, Inc. | | | 845,500 | | | | 49,216,556 | |
| (Cost $1,852,577,144) | | | | 2,207,289,874 | |
Total Common Stocks (Cost $3,517,529,795) | | | | 4,147,992,551 | |
| | |
| Securities Lending Collateral 14.8% | |
| Daily Assets Fund Institutional, 0.08% (b) (c) (Cost $630,281,458) | | | 630,281,458 | | | | 630,281,458 | |
| | |
| Cash Equivalents 2.4% | |
| Central Cash Management Fund, 0.06% (b) (Cost $104,025,466) | | | 104,025,466 | | | | 104,025,466 | |
| | | % of Net Assets | | | Value ($) | |
| | | | |
Total Investment Portfolio (Cost $4,251,836,719)† | | | 114.5 | | | | 4,882,299,475 | |
| Other Assets and Liabilities, Net | | | (14.5 | ) | | | (618,601,303 | ) |
| Net Assets | | | 100.0 | | | | 4,263,698,172 | |
* Non-income producing security.
† The cost for federal income tax purposes was $4,265,943,620. At June 30, 2014, net unrealized appreciation for all securities based on tax cost was $616,355,855. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $636,190,334 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $19,834,479.
(a) All or a portion of these securities were on loan. In addition, "Other Assets and Liabilities, Net" may include pending sales that are also on loan. The value of securities loaned at June 30, 2014 amounted to $605,554,765, which is 14.2% of net assets.
(b) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
(c) Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.
REIT: Real Estate Investment Trust
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 June 30, 2014 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 | |
| | |
| Common Stocks | |
| Australia | | $ | — | | | $ | 79,891,986 | | | $ | — | | | $ | 79,891,986 | |
| Canada | | | 819,161,330 | | | | — | | | | — | | | | 819,161,330 | |
| China | | | — | | | | 77,793,460 | | | | — | | | | 77,793,460 | |
| France | | | — | | | | 147,421,606 | | | | — | | | | 147,421,606 | |
| Germany | | | — | | | | 43,172,080 | | | | — | | | | 43,172,080 | |
| Hong Kong | | | — | | | | 42,918,411 | | | | — | | | | 42,918,411 | |
| Italy | | | — | | | | 177,865,557 | | | | — | | | | 177,865,557 | |
| Luxembourg | | | — | | | | 40,789,511 | | | | — | | | | 40,789,511 | |
| Mexico | | | 62,795,971 | | | | — | | | | — | | | | 62,795,971 | |
| Netherlands | | | — | | | | 11,989,784 | | | | — | | | | 11,989,784 | |
| Spain | | | — | | | | 70,868,451 | | | | — | | | | 70,868,451 | |
| Switzerland | | | — | | | | 62,440,235 | | | | — | | | | 62,440,235 | |
| United Kingdom | | | — | | | | 303,594,295 | | | | — | | | | 303,594,295 | |
| United States | | | 2,207,289,874 | | | | — | | | | — | | | | 2,207,289,874 | |
| Short-Term Investments (d) | | | 734,306,924 | | | | — | | | | — | | | | 734,306,924 | |
| Total | | $ | 3,823,554,099 | | | $ | 1,058,745,376 | | | $ | — | | | $ | 4,882,299,475 | |
There have been no transfers between fair value measurement levels during the period ended June 30, 2014.
(d) See Investment Portfolio for additional detailed categorizations.
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities | as of June 30, 2014 (Unaudited) | |
| Assets | |
Investments: Investments in non-affiliated securities, at value (cost $3,517,529,795) — including $605,554,765 of securities loaned | | $ | 4,147,992,551 | |
| Investment in Daily Asset Fund Institutional (cost $630,281,458)* | | | 630,281,458 | |
| Investment in Central Cash Management Fund (cost $104,025,466) | | | 104,025,466 | |
| Total investments in securities, at value (cost $4,251,836,719) | | | 4,882,299,475 | |
| Foreign currency, at value (cost $3,420,890) | | | 3,434,095 | |
| Receivable for investments sold | | | 6,227,374 | |
| Receivable for Fund shares sold | | | 40,212,741 | |
| Dividends receivable | | | 17,284,382 | |
| Interest receivable | | | 274,919 | |
| Foreign taxes recoverable | | | 258,079 | |
| Other assets | | | 175,558 | |
| Total assets | | | 4,950,166,623 | |
| Liabilities | |
| Cash overdraft | | | 5,306 | |
| Payable upon return of securities loaned | | | 630,281,458 | |
| Payable for investments purchased | | | 48,110,036 | |
| Payable for Fund shares redeemed | | | 2,816,713 | |
| Accrued management fee | | | 2,937,313 | |
| Accrued Directors' fees | | | 7,068 | |
| Other accrued expenses and payables | | | 2,310,557 | |
| Total liabilities | | | 686,468,451 | |
| Net assets, at value | | $ | 4,263,698,172 | |
| Net Assets Consist of | |
| Undistributed net investment income | | | 8,073,640 | |
Net unrealized appreciation (depreciation) on: Investments | | | 630,462,756 | |
| Foreign currency | | | 189,165 | |
| Accumulated net realized gain (loss) | | | 112,840,677 | |
| Paid-in capital | | | 3,512,131,934 | |
| Net assets, at value | | $ | 4,263,698,172 | |
* Represents collateral on securities loaned.
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of June 30, 2014 (Unaudited) (continued) | |
| Net Asset Value: | |
Class A Net Asset Value and redemption price(a) per share ($1,361,635,757 ÷ 88,839,469 outstanding shares of capital stock, $.01 par value, 150,000,000 shares authorized) | | $ | 15.33 | |
| Maximum offering price per share (100 ÷ 94.25 of $15.33) | | $ | 16.27 | |
Class C Net Asset Value, offering and redemption price(a) (subject to contingent deferred sales charge) per share ($611,578,981 ÷ 40,043,345 outstanding shares of capital stock, $.01 par value, 100,000,000 shares authorized) | | $ | 15.27 | |
Class S Net Asset Value, offering and redemption price(a) per share ($1,566,164,767 ÷ 102,558,765 outstanding shares of capital stock, $.01 par value, 100,000,000 shares authorized) | | $ | 15.27 | |
Institutional Class Net Asset Value, offering and redemption price(a) per share ($724,318,667 ÷ 47,443,539 outstanding shares of capital stock, $.01 par value, 150,000,000 shares authorized) | | $ | 15.27 | |
(a) Redemption price per share for shares held less than 15 days is equal to net asset value less a 2% redemption fee.
The accompanying notes are an integral part of the financial statements.
| for the six months ended June 30, 2014 (Unaudited) | |
| Investment Income | |
Income: Dividends (net of foreign taxes withheld of $4,783,066) | | $ | 50,661,039 | |
| Interest | | | 1,332 | |
| Income distributions — Central Cash Management Fund | | | 39,203 | |
| Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates | | | 1,167,483 | |
| Total income | | | 51,869,057 | |
Expenses: Management fee | | | 14,349,946 | |
| Administration fee | | | 1,611,657 | |
| Services to shareholders | | | 1,793,459 | |
| Distribution and service fees | | | 3,523,742 | |
| Custodian fee | | | 144,862 | |
| Professional fees | | | 68,892 | |
| Reports to shareholders | | | 88,843 | |
| Registration fees | | | 101,151 | |
| Directors' fees and expenses | | | 69,783 | |
| Other | | | 42,861 | |
| Total expenses | | | 21,795,196 | |
| Net investment income (loss) | | | 30,073,861 | |
| Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) from: Investments | | | 127,143,713 | |
| Foreign currency | | | (501,243 | ) |
| | | | 126,642,470 | |
Change in net unrealized appreciation (depreciation) on: Investments | | | 316,804,708 | |
| Foreign currency | | | 171,458 | |
| | | | 316,976,166 | |
| Net gain (loss) | | | 443,618,636 | |
| Net increase (decrease) in net assets resulting from operations | | $ | 473,692,497 | |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets | Increase (Decrease) in Net Assets | | Six Months Ended June 30, 2014 (Unaudited) | | | Year Ended December 31, 2013 | |
Operations: Net investment income (loss) | | $ | 30,073,861 | | | $ | 34,916,587 | |
Operations: Net investment income (loss) | | $ | 30,073,861 | | | $ | 34,916,587 | |
| Net realized gain (loss) | | | 126,642,470 | | | | 61,802,280 | |
| Change in net unrealized appreciation (depreciation) | | | 316,976,166 | | | | 215,109,042 | |
| Net increase (decrease) in net assets resulting from operations | | | 473,692,497 | | | | 311,827,909 | |
Distributions to shareholders from Net investment income: Class A | | | (6,844,837 | ) | | | (10,245,768 | ) |
| Class C | | | (1,931,581 | ) | | | (3,130,310 | ) |
| Class S | | | (8,651,935 | ) | | | (14,503,893 | ) |
| Institutional Class | | | (4,457,276 | ) | | | (6,867,644 | ) |
Net realized gains: Class A | | | (1,832,801 | ) | | | (19,962,128 | ) |
| Class C | | | (825,005 | ) | | | (9,156,513 | ) |
| Class S | | | (2,117,600 | ) | | | (24,853,213 | ) |
| Institutional Class | | | (985,215 | ) | | | (11,429,363 | ) |
| Total distributions | | | (27,646,250 | ) | | | (100,148,832 | ) |
Fund share transactions: Proceeds from shares sold | | | 1,458,504,209 | | | | 1,962,982,804 | |
| Reinvestment of distributions | | | 24,104,522 | | | | 83,100,053 | |
| Payments for shares redeemed | | | (356,853,793 | ) | | | (622,018,713 | ) |
| Redemption fees | | | 21,838 | | | | 43,854 | |
| Net increase (decrease) in net assets from Fund share transactions | | | 1,125,776,776 | | | | 1,424,107,998 | |
| Increase (decrease) in net assets | | | 1,571,823,023 | | | | 1,635,787,075 | |
| Net assets at beginning of period | | | 2,691,875,149 | | | | 1,056,088,074 | |
| Net assets at end of period (including undistributed net investment income and distributions in excess of net investment income of $8,073,640 and $114,592, respectively) | | $ | 4,263,698,172 | | | $ | 2,691,875,149 | |
The accompanying notes are an integral part of the financial statements.
| | | | | | Years Ended December 31, | |
| Class A | | Six Months Ended 6/30/14 (Unaudited) | | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Selected Per Share Data | |
| Net asset value, beginning of period | | $ | 13.43 | | | $ | 11.84 | | | $ | 10.50 | | | $ | 9.46 | | | $ | 8.70 | | | $ | 6.90 | |
Income (loss) from investment operations: Net investment incomea | | | .13 | | | | .22 | | | | .25 | | | | .23 | | | | .16 | | | | .18 | |
| Net realized and unrealized gain (loss) | | | 1.87 | | | | 1.90 | | | | 1.43 | | | | 1.20 | | | | .89 | | | | 1.80 | |
| Total from investment operations | | | 2.00 | | | | 2.12 | | | | 1.68 | | | | 1.43 | | | | 1.05 | | | | 1.98 | |
Less distributions from: Net investment income | | | (.08 | ) | | | (.19 | ) | | | (.23 | ) | | | (.08 | ) | | | (.29 | ) | | | (.18 | ) |
| Net realized gains | | | (.02 | ) | | | (.34 | ) | | | (.11 | ) | | | (.31 | ) | | | — | | | | — | |
| Total distributions | | | (.10 | ) | | | (.53 | ) | | | (.34 | ) | | | (.39 | ) | | | (.29 | ) | | | (.18 | ) |
| Redemption fees | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** |
| Net asset value, end of period | | $ | 15.33 | | | $ | 13.43 | | | $ | 11.84 | | | $ | 10.50 | | | $ | 9.46 | | | $ | 8.70 | |
Total Return (%)b | | | 14.90 | ** | | | 18.19 | c | | | 16.14 | | | | 15.29 | c | | | 12.14 | c | | | 28.76 | c |
| Ratios to Average Net Assets and Supplemental Data | |
| Net assets, end of period ($ millions) | | | 1,362 | | | | 820 | | | | 307 | | | | 82 | | | | 24 | | | | 29 | |
| Ratio of expenses before expense reductions (%) | | | 1.36 | * | | | 1.42 | | | | 1.41 | | | | 1.53 | | | | 1.63 | | | | 1.94 | |
| Ratio of expenses after expense reductions (%) | | | 1.36 | * | | | 1.41 | | | | 1.41 | | | | 1.50 | | | | 1.50 | | | | 1.51 | |
| Ratio of net investment income (%) | | | 1.88 | * | | | 1.74 | | | | 2.26 | | | | 2.24 | | | | 1.87 | | | | 2.39 | |
| Portfolio turnover rate (%) | | | 56 | ** | | | 132 | | | | 171 | | | | 231 | | | | 159 | | | | 232 | |
a Based on average shares outstanding during the period. b Total return does not reflect the effect of any sales charges. c Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. | |
| | | | | | Years Ended December 31, | |
| Class C | | Six Months Ended 6/30/14 (Unaudited) | | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Selected Per Share Data | |
| Net asset value, beginning of period | | $ | 13.40 | | | $ | 11.86 | | | $ | 10.52 | | | $ | 9.47 | | | $ | 8.71 | | | $ | 6.90 | |
Income (loss) from investment operations: Net investment incomea | | | .08 | | | | .13 | | | | .17 | | | | .13 | | | | .10 | | | | .12 | |
| Net realized and unrealized gain (loss) | | | 1.86 | | | | 1.88 | | | | 1.43 | | | | 1.23 | | | | .88 | | | | 1.79 | |
| Total from investment operations | | | 1.94 | | | | 2.01 | | | | 1.60 | | | | 1.36 | | | | .98 | | | | 1.91 | |
Less distributions from: Net investment income | | | (.05 | ) | | | (.13 | ) | | | (.15 | ) | | | (.00 | )*** | | | (.22 | ) | | | (.10 | ) |
| Net realized gains | | | (.02 | ) | | | (.34 | ) | | | (.11 | ) | | | (.31 | ) | | | — | | | | — | |
| Total distributions | | | (.07 | ) | | | (.47 | ) | | | (.26 | ) | | | (.31 | ) | | | (.22 | ) | | | (.10 | ) |
| Redemption fees | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** |
| Net asset value, end of period | | $ | 15.27 | | | $ | 13.40 | | | $ | 11.86 | | | $ | 10.52 | | | $ | 9.47 | | | $ | 8.71 | |
Total Return (%)b | | | 14.49 | ** | | | 17.21 | c | | | 15.22 | | | | 14.55 | c | | | 11.26 | c | | | 27.90 | c |
| Ratios to Average Net Assets and Supplemental Data | |
| Net assets, end of period ($ millions) | | | 612 | | | | 378 | | | | 105 | | | | 28 | | | | 15 | | | | 17 | |
| Ratio of expenses before expense reductions (%) | | | 2.12 | * | | | 2.19 | | | | 2.20 | | | | 2.29 | | | | 2.34 | | | | 2.69 | |
| Ratio of expenses after expense reductions (%) | | | 2.12 | * | | | 2.18 | | | | 2.20 | | | | 2.25 | | | | 2.25 | | | | 2.26 | |
| Ratio of net investment income (%) | | | 1.10 | * | | | 1.00 | | | | 1.48 | | | | 1.32 | | | | 1.12 | | | | 1.64 | |
| Portfolio turnover rate (%) | | | 56 | ** | | | 132 | | | | 171 | | | | 231 | | | | 159 | | | | 232 | |
a Based on average shares outstanding during the period. b Total return does not reflect the effect of any sales charges. c Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. | |
| | | | | | Years Ended December 31, | |
| Class S | | Six Months Ended 6/30/14 (Unaudited) | | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Selected Per Share Data | |
| Net asset value, beginning of period | | $ | 13.37 | | | $ | 11.80 | | | $ | 10.46 | | | $ | 9.43 | | | $ | 8.67 | | | $ | 6.90 | |
Income (loss) from investment operations: Net investment incomea | | | .14 | | | | .24 | | | | .27 | | | | .26 | | | | .19 | | | | .19 | |
| Net realized and unrealized gain (loss) | | | 1.87 | | | | 1.88 | | | | 1.44 | | | | 1.18 | | | | .88 | | | | 1.80 | |
| Total from investment operations | | | 2.01 | | | | 2.12 | | | | 1.71 | | | | 1.44 | | | | 1.07 | | | | 1.99 | |
Less distributions from: Net investment income | | | (.09 | ) | | | (.21 | ) | | | (.26 | ) | | | (.10 | ) | | | (.31 | ) | | | (.22 | ) |
| Net realized gains | | | (.02 | ) | | | (.34 | ) | | | (.11 | ) | | | (.31 | ) | | | — | | | | — | |
| Total distributions | | | (.11 | ) | | | (.55 | ) | | | (.37 | ) | | | (.41 | ) | | | (.31 | ) | | | (.22 | ) |
| Redemption fees | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** |
| Net asset value, end of period | | $ | 15.27 | | | $ | 13.37 | | | $ | 11.80 | | | $ | 10.46 | | | $ | 9.43 | | | $ | 8.67 | |
| Total Return (%) | | | 15.03 | ** | | | 18.28 | b | | | 16.44 | | | | 15.52 | b | | | 12.46 | b | | | 29.16 | b |
| Ratios to Average Net Assets and Supplemental Data | |
| Net assets, end of period ($ millions) | | | 1,566 | | | | 1,014 | | | | 418 | | | | 85 | | | | 14 | | | | 17 | |
| Ratio of expenses before expense reductions (%) | | | 1.18 | * | | | 1.25 | | | | 1.24 | | | | 1.27 | | | | 1.36 | | | | 1.71 | |
| Ratio of expenses after expense reductions (%) | | | 1.18 | * | | | 1.24 | | | | 1.24 | | | | 1.25 | | | | 1.25 | | | | 1.26 | |
| Ratio of net investment income (%) | | | 2.04 | * | | | 1.90 | | | | 2.42 | | | | 2.56 | | | | 2.12 | | | | 2.64 | |
| Portfolio turnover rate (%) | | | 56 | ** | | | 132 | | | | 171 | | | | 231 | | | | 159 | | | | 232 | |
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. | |
| | | | | | Years Ended December 31, | |
| Institutional Class | | Six Months Ended 6/30/14 (Unaudited) | | | 2013 | | | 2012 | | | 2011 | | | 2010 | | | 2009 | |
| Selected Per Share Data | |
| Net asset value, beginning of period | | $ | 13.37 | | | $ | 11.79 | | | $ | 10.46 | | | $ | 9.42 | | | $ | 8.66 | | | $ | 6.89 | |
Income (loss) from investment operations: Net investment incomea | | | .15 | | | | .26 | | | | .28 | | | | .24 | | | | .19 | | | | .19 | |
| Net realized and unrealized gain (loss) | | | 1.87 | | | | 1.89 | | | | 1.43 | | | | 1.22 | | | | .88 | | | | 1.80 | |
| Total from investment operations | | | 2.02 | | | | 2.15 | | | | 1.71 | | | | 1.46 | | | | 1.07 | | | | 1.99 | |
Less distributions from: Net investment income | | | (.10 | ) | | | (.23 | ) | | | (.27 | ) | | | (.11 | ) | | | (.31 | ) | | | (.22 | ) |
| Net realized gains | | | (.02 | ) | | | (.34 | ) | | | (.11 | ) | | | (.31 | ) | | | — | | | | — | |
| Total distributions | | | (.12 | ) | | | (.57 | ) | | | (.38 | ) | | | (.42 | ) | | | (.31 | ) | | | (.22 | ) |
| Redemption fees | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** | | | .00 | *** |
| Net asset value, end of period | | $ | 15.27 | | | $ | 13.37 | | | $ | 11.79 | | | $ | 10.46 | | | $ | 9.42 | | | $ | 8.66 | |
| Total Return (%) | | | 15.11 | ** | | | 18.52 | | | | 16.46 | | | | 15.71 | | | | 12.47 | | | | 29.20 | b |
| Ratios to Average Net Assets and Supplemental Data | |
| Net assets, end of period ($ millions) | | | 724 | | | | 480 | | | | 227 | | | | 124 | | | | 59 | | | | 36 | |
| Ratio of expenses before expense reductions (%) | | | 1.07 | * | | | 1.10 | | | | 1.10 | | | | 1.18 | | | | 1.22 | | | | 1.59 | |
| Ratio of expenses after expense reductions (%) | | | 1.07 | * | | | 1.10 | | | | 1.10 | | | | 1.18 | | | | 1.22 | | | | 1.26 | |
| Ratio of net investment income (%) | | | 2.12 | * | | | 2.01 | | | | 2.48 | | | | 2.38 | | | | 2.15 | | | | 2.64 | |
| Portfolio turnover rate (%) | | | 56 | ** | | | 132 | | | | 171 | | | | 231 | | | | 159 | | | | 232 | |
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized *** Amount is less than $.005. | |
Notes to Financial Statements (Unaudited)
A. Organization and Significant Accounting Policies
Deutsche Global Infrastructure Fund (formerly DWS RREEF Global Infrastructure Fund) (the "Fund") is a non-diversified series of Deutsche Global/International Fund, Inc. (formerly DWS Global/International Fund, Inc.) (the "Corporation"), 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 Maryland corporation.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are offered to investors subject to an initial sales charge. Class C shares are offered to investors without 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. Institutional Class shares are generally available only to qualified institutions and are not subject to initial or contingent deferred sales charges. Class S shares are not subject to initial or contingent deferred sales charges and are only available to a limited group of investors.
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 service 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 which require the use of management estimates. Actual results could differ from those estimates. 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 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.
Equity securities are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation. Equity securities are generally categorized as Level 1. For certain international equity securities, in order to adjust for events which may occur between the close of the foreign exchanges and the close of the New York Stock Exchange, a fair valuation model may be used. This fair valuation model takes into account comparisons to the valuation of American Depository Receipts (ADRs), futures contracts and certain indices and these securities are categorized as Level 2.
Investments in open-end investment companies are valued at their net asset value each business day and are generally categorized as Level 1.
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.
Securities Lending. Deutsche Bank AG, as lending agent, lends securities of the Fund to certain financial institutions under the terms of the Security Lending Agreement. The Fund retains benefits of owning the securities it has loaned and continues to receive interest and dividends generated by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of either cash or liquid, unencumbered assets having a value at least equal to the value of the securities loaned. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of borrower rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may be risks of delay and costs in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. If the Fund is not able to recover securities lent, the Fund may sell the collateral and purchase a replacement investment in the market, incurring the risk that the value of the replacement security is greater than the value of the collateral. The Fund is also subject to all investment risks associated with the reinvestment of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
As of June 30, 2014, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.
Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the prevailing exchange rates at period end. Purchases and sales of investment securities, income and expenses are translated into U.S. dollars at the prevailing exchange rates on the respective dates of the transactions.
Net realized and unrealized gains and losses on foreign currency transactions represent net gains and losses between trade and settlement dates on securities transactions, the acquisition and disposition of foreign currencies, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed but is included with net realized and unrealized gain/appreciation and loss/depreciation on investments.
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 income to its shareholders.
Additionally, the Fund may be subject to taxes imposed by the governments of countries in which it invests and are generally based on income and/or capital gains earned or repatriated. Estimated tax liabilities on certain foreign securities are recorded on an accrual basis and are reflected as components of interest income or net change in unrealized gain/loss on investments. Tax liabilities realized as a result of security sales are reflected as a component of net realized gain/loss on investments.
From November 1, 2013 through December 31, 2013, the Fund elects to defer qualified late year losses of approximately $535,000 of net long-term realized capital losses and treat them as arising in the fiscal year ending December 31, 2014.
The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 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 return for the prior three years remain open subject to examination by the Internal Revenue Service.
Distribution of Income and Gains. Distributions from net investment income of the Fund are declared and distributed to shareholders quarterly. 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 foreign denominated investments and certain securities sold at a loss. 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.
Redemption Fees. The Fund imposes a redemption fee of 2% of the total redemption amount on all Fund shares redeemed or exchanged within 15 days of buying them, either by purchase or exchange. This fee is assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee is accounted for as an addition to paid-in capital.
Expenses. Expenses of the Corporation arising in connection with a specific fund are allocated to that fund. Other Corporation expenses which cannot be directly attributed to a fund are apportioned among the funds in the Corporation 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 the 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. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Certain dividends from foreign securities may be recorded subsequent to the ex-dividend date as soon as the Fund is informed of such dividends. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments.
B. Derivative Instruments
Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange contract ("forward currency contract") is a commitment to purchase or sell a foreign currency at the settlement date at a negotiated rate. For the six months ended June 30, 2014, the Fund entered into forward currency contracts in order to hedge against anticipated currency market changes and for non-hedging purposes to seek to enhance potential gains.
Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and unrealized gain (loss) is recorded daily. On the settlement date of the forward currency contract, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was closed. Certain risks may arise upon entering into forward currency contracts from the potential inability of counterparties to meet the terms of their contracts. The maximum counterparty credit risk to the Fund is measured by the unrealized gain on appreciated contracts. Additionally, when utilizing forward currency contracts to hedge, the Fund gives up the opportunity to profit from favorable exchange rate movements during the term of the contract.
There are no open forward currency contracts as of June 30, 2014. For the six months ended June 30, 2014, the investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from $0 to approximately $373,822,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from $0 to approximately $374,004,000.
The amount of realized gains and losses on derivative instruments recognized in Fund earnings during the six months ended June 30, 2014 and the related location in the accompanying Statement of Operations is summarized in the following table by primary underlying risk exposure:
| Realized Gain (Loss) | | Forward Contracts | |
| Foreign Exchange Contracts (a) | | $ | 78,773 | |
(a) Net realized gain (loss) from foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)
C. Purchases and Sales of Securities
During the six months ended June 30, 2014, purchases and sales of investment securities (excluding short-term investments) aggregated $2,884,527,618 and $1,776,481,782, respectively.
D. 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 or delegates such responsibility to the Fund's subadvisor.
RREEF America L.L.C. ("RREEF"), also an indirect, wholly owned subsidiary of Deutsche Bank AG, is the subadvisor for the Fund. While DIMA is the investment advisor to the Fund, the day-to-day activities of managing the Fund's portfolio have been delegated to RREEF. DIMA compensates RREEF out of the management fee it receives from the Fund.
Under the Investment Management Agreement, the Fund pays a monthly management fee based on the Fund's average daily net assets, computed and accrued daily and payable monthly, at the following annual rates:
| First $2 billion of the Fund's average daily net assets | | | .900 | % |
| Over $2 billion of such net assets | | | .875 | % |
Accordingly, for the six months ended June 30, 2014, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate (exclusive of any applicable waivers/reimbursements) of 0.89% of the Fund's average daily net assets.
For the period from January 1, 2014 through September 30, 2014, 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 operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:
| Class A | 1.47% |
| Class C | 2.22% |
| Class S | 1.32% |
| Institutional Class | 1.22% |
Administration Fee. Pursuant to an Administration Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administration 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 June 30, 2014, the Administration Fee was $1,611,657, of which $330,996 is unpaid.
Service Provider Fees. DeAWM 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 June 30, 2014, the amounts charged to the Fund by DSC were as follows:
| Services to Shareholders | | Total Aggregated | | | Unpaid at June 30, 2014 | |
| Class A | | $ | 46,037 | | | $ | 33,589 | |
| Class C | | | 20,858 | | | | 12,646 | |
| Class S | | | 60,140 | | | | 32,303 | |
| Institutional Class | | | 7,542 | | | | 534 | |
| | | $ | 134,577 | | | $ | 79,072 | |
Distribution and Service Fees. Under the Fund's Class C 12b-1 Plan, DeAWM 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 June 30, 2014, the Distribution Fee was as follows:
| Distribution Fee | | Total Aggregated | | | Unpaid at June 30, 2014 | |
| Class C | | $ | 1,737,659 | | | $ | 354,678 | |
In addition, DDI provides information and administration 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 the six months ended June 30, 2014, the Service Fee was as follows:
| Service Fee | | Total Aggregated | | | Unpaid at June 30, 2014 | | | Annualized
Rate | |
| Class A | | $ | 1,206,863 | | | $ | 490,425 | | | | .24 | % |
| Class C | | | 579,220 | | | | 229,681 | | | | .25 | % |
| | | $ | 1,786,083 | | | $ | 720,106 | | | | | |
Underwriting Agreement and Contingent Deferred Sales Charge. DDI is the principal underwriter for the Fund. Underwriting commissions paid in connection with the distribution of Class A shares for the six months ended June 30, 2014 aggregated $367,488.
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 based on 1% for Class C shares of the value of the shares redeemed. For the the six months ended June 30, 2014, the CDSC for Class C shares aggregated $56,970. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares. For the six months ended June 30, 2014, DDI received $41,336 for Class A shares.
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the six months ended June 30, 2014, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $8,212, of which $5,628 is unpaid.
Directors' Fees and Expenses. The Fund paid retainer fees to each Director not affiliated with the Advisor, plus specified amounts to the Board Chairperson and Vice Chairperson and to each committee Chairperson.
Affiliated Cash Management Vehicles. The Fund may invest uninvested cash balances in Central Cash Management Fund and Deutsche Variable NAV Money Fund, affiliated money market funds which are managed by the Advisor. Each affiliated money market fund seeks to provide a high level of current income consistent with liquidity and the preservation of capital. Each affiliated money market fund is managed in accordance with Rule 2a-7 under the Investment Company Act of 1940, which governs the quality, maturity, diversity and liquidity of instruments in which a money market fund may invest. Central Cash Management Fund seeks to maintain a stable net asset value, and Deutsche Variable NAV Money Fund maintains a floating net asset value. The Fund indirectly bears its proportionate share of the expenses of each affiliated money market fund in which it invests. Central Cash Management Fund does not pay the Advisor an investment management fee. To the extent that Deutsche Variable NAV Money Fund pays an investment management fee to the Advisor, the Advisor will waive an amount of the investment management fee payable to the Advisor by the Fund equal to the amount of the investment management fee payable on the Fund's assets invested in Deutsche Variable NAV Money Fund.
Securities Lending Agent Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the six months ended June 30, 2014, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $102,323.
E. 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 LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 20 percent of its net assets under the agreement. The Fund had no outstanding loans at June 30, 2014.
F. Share Transactions
The following table summarizes share and dollar activity in the Fund:
| | | Six Months Ended June 30, 2014 | | | Year Ended December 31, 2013 | |
| | | Shares | | | Dollars | | | Shares | | | Dollars | |
| Shares sold | |
| Class A | | | 34,458,429 | | | $ | 495,163,684 | | | | 47,173,808 | | | $ | 604,278,746 | |
| Class C | | | 13,678,209 | | | | 195,778,422 | | | | 20,650,674 | | | | 264,505,333 | |
| Class S | | | 38,831,397 | | | | 554,908,523 | | | | 61,517,244 | | | | 782,581,433 | |
| Institutional Class | | | 14,811,453 | | | | 212,653,580 | | | | 24,419,014 | | | | 311,617,292 | |
| | | | | | | $ | 1,458,504,209 | | | | | | | $ | 1,962,982,804 | |
| Shares issued to shareholders in reinvestment of distributions | |
| Class A | | | 550,244 | | | $ | 8,314,177 | | | | 2,229,118 | | | $ | 28,596,409 | |
| Class C | | | 146,234 | | | | 2,202,281 | | | | 724,929 | | | | 9,316,197 | |
| Class S | | | 553,398 | | | | 8,326,662 | | | | 2,204,812 | | | | 28,149,985 | |
| Institutional Class | | | 350,934 | | | | 5,261,402 | | | | 1,334,211 | | | | 17,037,462 | |
| | | | | | | $ | 24,104,522 | | | | | | | $ | 83,100,053 | |
| Shares redeemed | |
| Class A | | | (7,213,960 | ) | | $ | (101,978,434 | ) | | | (14,251,506 | ) | | $ | (182,842,135 | ) |
| Class C | | | (1,963,014 | ) | | | (27,927,624 | ) | | | (2,034,675 | ) | | | (26,210,290 | ) |
| Class S | | | (12,670,452 | ) | | | (175,612,049 | ) | | | (23,282,187 | ) | | | (297,524,219 | ) |
| Institutional Class | | | (3,647,879 | ) | | | (51,335,686 | ) | | | (9,060,729 | ) | | | (115,442,069 | ) |
| | | | | | | $ | (356,853,793 | ) | | | | | | $ | (622,018,713 | ) |
| Redemption fees | | | $ | 21,838 | | | | | | | $ | 43,854 | |
| Net increase (decrease) | |
| Class A | | | 27,794,713 | | | $ | 401,506,286 | | | | 35,151,420 | | | $ | 450,047,552 | |
| Class C | | | 11,861,429 | | | | 170,053,155 | | | | 19,340,928 | | | | 247,613,355 | |
| Class S | | | 26,714,343 | | | | 387,637,009 | | | | 40,439,869 | | | | 513,233,845 | |
| Institutional Class | | | 11,514,508 | | | | 166,580,326 | | | | 16,692,496 | | | | 213,213,246 | |
| | | | | | | $ | 1,125,776,776 | | | | | | | $ | 1,424,107,998 | |
G. Global Infrastructure Concentration Risk
Any fund that concentrates in a particular segment of the market will generally be more volatile than a fund that invests more broadly. Any market price movements, regulatory or technological changes, or economic conditions affecting infrastructure-related companies will have a significant impact on the fund's performance. In particular, infrastructure-related companies can be affected by general or local economic conditions and political developments, changes in regulations, environmental problems, casualty losses, and changes in interest rates.
H. Fund Name Change
Effective August 11, 2014, the "DWS Funds" were rebranded "Deutsche Funds."
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), redemption fees 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. 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 (January 1, 2014 to June 30, 2014).
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.
Expenses and Value of a $1,000 Investment for the six months ended June 30, 2014 (Unaudited) | |
| Actual Fund Return | | Class A | | | Class C | | | Class S | | | Institutional Class | |
| Beginning Account Value 1/1/14 | | $ | 1,000.00 | | | $ | 1,000.00 | | | $ | 1,000.00 | | | $ | 1,000.00 | |
| Ending Account Value 6/30/14 | | $ | 1,149.00 | | | $ | 1,144.90 | | | $ | 1,150.30 | | | $ | 1,151.10 | |
| Expenses Paid per $1,000* | | $ | 7.25 | | | $ | 11.27 | | | $ | 6.29 | | | $ | .5.71 | |
| Hypothetical 5% Fund Return | | Class A | | | Class C | | | Class S | | | Institutional Class | |
| Beginning Account Value 1/1/14 | | $ | 1,000.00 | | | $ | 1,000.00 | | | $ | 1,000.00 | | | $ | 1,000.00 | |
| Ending Account Value 6/30/14 | | $ | 1,018.05 | | | $ | 1,014.28 | | | $ | 1,018.94 | | | $ | 1,019.49 | |
| Expenses Paid per $1,000* | | $ | 6.80 | | | $ | 10.59 | | | $ | 5.91 | | | $ | 5.36 | |
* 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 181 (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 Global Infrastructure Fund | 1.36% | 2.12% | 1.18% | 1.07% |
For more information, please refer to the Fund's prospectuses.
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.
Advisory Agreement Board Considerations and Fee Evaluation
The Board of Directors approved the renewal of DWS RREEF Global Infrastructure Fund's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA"), the sub-advisory agreement (the "Sub-Advisory Agreement") between DIMA and RREEF America L.L.C. ("RREEF"), an affiliate of DIMA, and the sub-sub-advisory agreements (the "Sub-Sub-Advisory Agreements," and together with the Agreement and the Sub-Advisory Agreement, the "Agreements") between RREEF and each of Deutsche Alternatives Asset Management (Global) Limited and Deutsche Investments Australia Limited (collectively, the "Sub-Sub-Advisors"), all affiliates of DIMA, in September 2013.
In terms of the process that the Board followed prior to approving the Agreements, shareholders should know that:
— In September 2013, all of the Fund's Directors were independent of DIMA and its affiliates.
— The Directors 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, in coordination with the Board's Equity Oversight Committee, reviewed comprehensive 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 compiled by a fee consultant retained by the Fund's Independent Directors (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.
— The Independent Directors regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Directors were also 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 Agreements, 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.
— 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.
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 of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund. DIMA, RREEF and the Sub-Sub-Advisors are part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with 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 DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.
In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.
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, RREEF's and the Sub-Sub-Advisors' personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.
Nature, Quality and Extent of Services. The Board considered the terms of the Agreements, including the scope of advisory services provided under the Agreements. The Board noted that, under the Agreements, DIMA, RREEF and the Sub-Sub-Advisors provide 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, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. 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 indices and a peer universe compiled by the Fee Consultant 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 "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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- and three-year periods ended December 31, 2012, the Fund's performance (Class A shares) was in the 2nd quartile and 1st quartile, respectively, 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 outperformed its benchmark in each of the one- and three-year periods ended December 31, 2012. The Board observed that there were significant limitations to the usefulness of the comparative data provided by Morningstar, noting that the applicable Morningstar universe for the Fund included funds that pursue substantially different investment programs as compared to that pursued by the Fund. As a result, the Board gave increased weight to the Fund's performance relative to its benchmark than some of the additional comparative data.
Fees and Expenses. The Board considered the Fund's investment management fee schedule, sub-advisory and sub-sub-advisory fee schedules, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") 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 (4th quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). With respect to the sub-advisory and sub-sub-advisory fees paid to RREEF and the Sub-Sub-Advisors, the Board noted that the fees are paid by DIMA and RREEF, respectively, out of their fees and not directly by the Fund. The Board noted that the Fund's Class A shares total (net) operating expenses (excluding 12b-1 fees) were expected to be higher than the median (3rd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Directors also observed that the Lipper expense universe for the Fund included funds that pursue substantially different investment programs as compared to that pursued by the Fund. The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size).
The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.
The Board noted that, in connection with the 2013 contract renewal process, DIMA agreed to implement a new management fee breakpoint.
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, RREEF and the Sub-Sub-Advisors.
Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprise-wide profitability of DWS 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 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 DWS fund complex (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 many 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 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 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, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.
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 and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.
Based on all of the information considered and the conclusions reached, the Board unanimously determined that the continuation of the Agreements 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 Directors and their independent counsel present. It is possible that individual Directors may have weighed these factors differently in reaching their individual decisions to approve the continuation of the Agreements.
Account Management Resources | |
| 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 & Wealth 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 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: DeAWM Distributors, Inc. 222 South Riverside Plaza Chicago, IL 60606-5808 (800) 621-1148 |
| Investment Management | | Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), which is part of Deutsche Asset & Wealth Management, is the investment advisor for the fund. DIMA and its predecessors have more than 80 years of experience managing mutual funds and DIMA provides a full range of investment advisory services to both institutional and retail clients. RREEF America L.L.C. ("RREEF"), an indirect, wholly owned subsidiary of Deutsche Bank AG, is the subadvisor for the fund. 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. Deutsche Asset & Wealth Management is the retail brand name in the U.S. for the wealth management and asset management activities of Deutsche Bank AG and DIMA. Deutsche Asset & Wealth Management is committed to delivering the investing expertise, insight and resources of this global investment platform to American investors. |
| | | Class A | Class C | Class S | Institutional Class |
| Nasdaq Symbol | | TOLLX | TOLCX | TOLSX | TOLIX |
| CUSIP Number | | 25156A 874 | 25156A 866 | 25156A 809 | 25156A 858 |
| Fund Number | | 456 | 756 | 2156 | 1456 |
| FACTS | What Does Deutsche Asset & Wealth 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 & Wealth Management chooses to share and whether you can limit this sharing. |
| Reasons we can share your personal information | Does Deutsche Asset & Wealth 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 | |
| | | | |
| Who we are |
| Who is providing this notice? | DeAWM Distributors, Inc.; Deutsche Investment Management Americas Inc.; DeAWM Trust Company; the Deutsche Funds |
| What we do |
| How does Deutsche Asset & Wealth 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 & Wealth 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 and DB Alex Brown. |
| 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 & Wealth Management does not jointly market. |
| | | Rev. 08/2014 |
Notes
Notes
Notes
Notes
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.
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.
