March 3, 2015
Ms. Sheila Stout
U.S. Securities and Exchange Commission
Division of Investment Management
Office of Disclosure and Review
100 F Street, NE
Washington DC, 20549-4720
Re: SEC Sarbanes-Oxley Review of the Deutsche Family of Funds.
Dear Ms. Sheila Stout:
Further to our conference call on December 10, 2014 and January 14, 2015, please find enclosed a spreadsheet setting forth the issues raised during the call and our responses. The Registrants referenced in the response include:
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CASH ACCOUNT TRUST CASH MANAGEMENT PORTFOLIO CASH RESERVE FUND, INC. DEUTSCHE EQUITY 500 INDEX PORTFOLIO DEUTSCHE GLOBAL/INTERNATIONAL FUND, INC. DEUTSCHE INCOME TRUST DEUTSCHE INSTITUTIONAL FUNDS DEUTSCHE INTERNATIONAL FUND, INC. DEUTSCHE INVESTMENT TRUST DEUTSCHE MARKET TRUST DEUTSCHE MONEY FUNDS DWS MONEY MARKET TRUST DEUTSCHE MUNICIPAL TRUST DEUTSCHE PORTFOLIO TRUST DEUTSCHE SECURITIES TRUST DEUTSCHE STATE TAX-FREE INCOME SERIES DEUTSCHE TARGET DATE SERIES DEUTSCHE TARGET FUND DEUTSCHE TAX FREE TRUST DEUTSCHE VALUE SERIES, INC. INVESTORS CASH TRUST TAX-EXEMPT CALIFORNIA MONEY MARKET FUND DEUTSCHE HIGH INCOME OPPORTUNITIES FUND, INC. DEUTSCHE GLOBAL HIGH INCOME FUND, INC. DEUTSCHE HIGH INCOME TRUST DEUTSCHE MULTI-MARKET INCOME TRUST DEUTSCHE MUNICIPAL INCOME TRUST DEUTSCHE STRATEGIC INCOME TRUST | 811-05970 811-06073 811-03196 811-06698 811-04670 811-04049 811-06071 811-00642 811-00043 811-01236 811-02527 811-03495 811-02671 811-00042 811-02021 811-03657 811-08606 811-05896 811-03632 811-05385 811-06103 811-05076 811-21949 811-06671 811-05482 811-05689 811-05655 811-08382 |
DEUTSCHE STRATEGIC MUNICIPAL INCOME TRUST DEUTSCHE INVESTMENTS VIT FUNDS DEUTSCHE VARIABLE SERIES I DEUTSCHE VARIABLE SERIES II THE CENTRAL EUROPE, RUSSIA AND TURKEY FUND, INC. THE EUROPEAN EQUITY FUND, INC. THE NEW GERMANY FUND, INC. (collectively, the “Deutsche Funds”) | 811-05767 811-07507 811-04257 811-05002 811-06041 811-04632 811-05983 |
In connection with responding to your comments, please be advised that the Deutsche Funds acknowledge that:
· | The Deutsche Funds are responsible for the adequacy and accuracy of the disclosure in the filings; |
· | Staff comments or changes to disclosure in response to staff comments in the filings reviewed by the staff do not foreclose the Securities and Exchange Commission (the “Commission”) from taking any action with respect to the filing; and |
· | The Deutsche Funds may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
If you have any questions concerning the foregoing, or need further information, please contact the undersigned at (617) 295-2663.
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Sincerely,
/s/Paul Schubert
Paul Schubert
Managing Director,
Treasurer, Deutsche Funds
Enclosure
Number | SEC Request | Fund | Deutsche Response |
1 | When LIBOR is referenced in a derivative description or line of credit note, disclosure the specific LIBOR. In addition, disclose in a table the current LIBOR rate at period end. | Funds with derivatives or line of credit tied to LIBOR | Effective with the January 2015 shareholder reports, disclosure will include the specific LIBOR reference and a table with applicable LIBOR rates will be added. |
2 | For funds with waivers, are the funds able to recapture? Is so, disclose the provisions of the recapture. | All Funds with waivers | Currently there is not a recapture feature in place for any of the funds. |
3 | Sector vs. concentration risk. For funds with greater than 25% in a particular sector, consider adding sector risk as a principal risk | All Funds | To the extent that the Fund invests more than 25% of its assets in a particular sector, the Fund will add appropriate risk disclosure under Stock Market Risk when the Fund next updates its registration statement. |
4 | If material, ensure the Management Discussion of Fund Performance (MDFP) discusses the effect of derivatives on the funds' performance | All Funds | The Funds will evaluate the effect of derivatives on fund performance and consider appropriate disclosure, as necessary, in the MDFP. |
5 | For funds with high portfolio turn-over (>100%, year-over- year), add risk language to the prospectus | Deutsche Global Income Builder Fund | To the extent that the Fund has an annual portfolio turnover rate in excess of 100% and the portfolio manager intends to actively trade the portfolio in the future, the Fund will add appropriate risk disclosure relating to active trading when the Fund next updates its registration statement. |
6 (a) | The net expense ratio in the fee table in the prospectus is inconsistent with the net expense ratio in the financial highlights | All Funds with waivers | The net ratios are different due to timing of contractual cap approval by the Funds’ Board. The Board approves contractual caps annually in September with an effective date of October 1st. Therefore, almost all funds will have multiple caps within the same fiscal year-end. The funds’ net ratios reported in the annual reports reflect a blended rate for the 12 month period and the net ratio in the prospectus fee table shows the highest possible net ratios for the period. |
6(b) | The gross expense ratio in the fee table in the prospectus is inconsistent with the gross expense ratio in the financial highlights | Deutsche Strategic High Yield Tax Free Fund Deutsche Global Small Cap Growth Fund Deutsche High Income Fund | Effective 10/1/2014, the management fee for Deutsche Strategic High Yield Tax Free Fund was reduced by 0.05 % in each tier. Therefore, the prospectus fee table was updated to reflect the change in management fee and footnote was added to the table explaining the new management fee schedule. For Deutsche Global Small Cap Fund, the gross ratios in the 5/1/2014 prospectus are consistent with the gross ratios in the 10/31/13 annual report. For Deutsche High Income Fund, the gross ratios in the 2/1/2014 prospectus are consistent with the 9/30/13 annual report. |
7 | PIK (Payment in kind)- need to bifurcate if all or a portion of the income is paid in kind | Deutsche Core Plus Income Fund | Effective with the January 2015 shareholder reports, securities identified as PIKs in the Schedule of Investments will disclose, if applicable, the portion of the income paid in cash. |
8 | ROCSOP- Suggest disclosing ROCSOP adjustment in the notes to the financial statements | All Funds | In the funds financial statements, we include the primary reasons for book to tax differences but do not include the actual ROCSOP adjustments. We believe this approach is appropriate. |
9 | Allocation of Trust level expenses. Current disclosure states that Trust expenses which cannot be directly attributed to a fund are apportioned among the funds in the Trust based upon relative net assets or other appropriate measurers. What are these other appropriate measures? Enhance disclosure to expand other appropriate measures. | All Funds | All trust level expenses are allocated based on average net assets with the exception of Federal Registration Fee, which is allocated based on a percentage of net subscriptions among impacted funds, and regulatory filing fees, which are allocated based on straight line across funds within the same series. We feel the current disclosure is appropriate. |
10 | Fair Value Measurements Hierarchy. Add additional detail for class of security if entire class is not all is one level | All Funds | If material, the Funds will add additional detail to the leveling detail. |
11 | On the Statement of Assets and Liabilities, include on a separate line item restricted cash, if any | Daily Assets Fund Institutional | The cash held by Daily Assets Fund Institutional as of 6/30/14 was not restricted. Restricted cash, if any, is broken out on the Statement of Assets and Liabilities. |
12 | Is the Lehman receivable for Deutsche Communications Fund still realizable? | Deutsche Communications Fund | Based on discussions with our outside counsel who has contacted the bankruptcy administrator, we believe the receivable is realizable. |
13 | For funds with return of capital distributions, were the funds in compliance with Rule 19a-1? | All funds | Yes, the funds have written procedures designed to be in compliance with Rule 19A-1. At the time of distribution if the character of the distribution is other than net investment income, a section 19 notice accompanies the payment. |
14 | For funds with credit default swaps, do the funds have sufficient collateral for the maximum notional amount of the contracts? | All funds | Yes, the funds with credit default swaps have sufficient unencumbered assets to cover the notional of the credit default swaps. |
15 | Since Deutsche Global Inflation Fund includes "global" in its name, please confirm the fund invests in at lease three countries, including the United States, and that typically at least 40% of its net assets will be foreign investments | Deutsche Global Inflation Fund | Yes, at 9/30/14, the Deutsche Global Inflation Fund is in line with its investment policy set out in the fund's Statement of Additional Information. The fund's investment policy states that under normal conditions, the fund will have investment exposure to at least three countries, including the United States, and combined direct and indirect foreign exposure to foreign securities, foreign currencies and other foreign investments (measured on a gross basis) equal to at least over 40% of the fund's net assets. |