nq022815ce-smit.htm
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
_______________________________
 
Investment Company Act file number:  811-05767
 
Deutsche Strategic Municipal Income Trust
(Exact name of registrant as specified in charter)

345 Park Avenue
New York, NY 10154
(Address of principal executive offices)  (Zip code)
 

Paul Schubert
60 Wall Street
New York, NY 10005
(Name and address of agent for service)
 
Registrant's telephone number, including area code:  (212) 250-3220
 
Date of fiscal year end:  11/30
 
Date of reporting period:  2/28/2015

ITEM 1.
SCHEDULE OF INVESTMENTS


Investment Portfolio    as of February 28, 2015  (Unaudited)
 
Deutsche Strategic Municipal Income Trust
 
Principal
Amount ($)
  
Value ($)
  
 
 
Municipal Bonds and Notes 141.1%
  
Arizona 1.2%
  
Maricopa County, AZ, Pollution Control Corp. Revenue, El Paso Electric Co. Project, Series B, 7.25%, 4/1/2040
  
1,570,000
  
1,847,937
  
California 15.0%
  
California, Health Facilities Financing Authority Revenue, Catholic Healthcare West, Series A, 6.0%, 7/1/2034
  
1,000,000
  
1,170,620
  
California, M-S-R Energy Authority, Series B, 7.0%, 11/1/2034, GTY: Citigroup, Inc.
  
1,310,000
  
1,875,632
  
California, Morongo Band of Mission Indians, Enterprise Casino Revenue, Series B, 144A, 6.5%, 3/1/2028
  
1,000,000
  
1,138,700
  
California, South Bayside Waste Management Authority, Solid Waste Enterprise, Shoreway Environmental, Series A, 6.25%, 9/1/2029
  
1,425,000
  
1,713,192
  
California, State General Obligation:
              
 
5.0%, 11/1/2043
  
1,500,000
  
1,720,245
  
 
5.25%, 4/1/2035
  
1,230,000
  
1,435,558
  
 
5.5%, 3/1/2040
  
1,000,000
  
1,174,440
  
 
5.75%, 4/1/2031
  
1,000,000
  
1,176,870
  
 
6.0%, 4/1/2038
  
1,000,000
  
1,200,980
  
 
6.5%, 4/1/2033
  
1,950,000
  
2,381,827
  
California, State Public Works Board Lease Revenue, Capital Projects, Series I-1, 6.375%, 11/1/2034
  
1,000,000
  
1,229,660
  
California, State Public Works Board Lease Revenue, Riverside Campus Project, Series B, 6.125%, 4/1/2028
  
2,000,000
  
2,395,780
  
California, Statewide Communities Development Authority Revenue, Loma Linda University Medical Center:
              
 
Series A, 5.25%, 12/1/2044
  
195,000
  
213,123
  
 
Series A, 5.5%, 12/1/2054
  
195,000
  
215,857
  
Riverside County, CA, Transportation Commission Toll Revenue Senior Lien, Series A, 5.75%, 6/1/2048
  
1,000,000
  
1,155,020
  
San Buenaventura, CA, Community Memorial Health Systems, 7.5%, 12/1/2041
  
500,000
  
614,880
  
San Francisco City & County, CA, Airports Commission, International Airport Revenue, Series A, AMT, 5.0%, 5/1/2044
  
1,000,000
  
1,112,680
  
San Joaquin Hills, CA, Transportation Corridor Agency, Toll Road Revenue, Series A, 5.0%, 1/15/2050
  
445,000
  
480,262
  
 
 
22,405,326
  
Colorado 2.1%
  
Colorado, Public Energy Authority, Natural Gas Purchased Revenue, 6.25%, 11/15/2028, GTY: Merrill Lynch & Co., Inc.
  
635,000
  
815,060
  
Colorado, State Health Facilities Authority Revenue, Covenant Retirement Communities, Series A, 5.0%, 12/1/2033
  
440,000
  
469,841
  
Colorado, State Health Facilities Authority Revenue, School Health Systems, Series A, 5.5%, 1/1/2035
  
1,000,000
  
1,196,340
  
Denver, CO, City & County Airport Revenue, Series A, AMT, 5.25%, 11/15/2043
  
600,000
  
673,470
  
 
 
3,154,711
  
Connecticut 1.8%
  
Connecticut, Harbor Point Infrastructure Improvement District, Special Obligation Revenue, Harbor Point Project, Series A, 7.875%, 4/1/2039
  
2,000,000
  
2,426,240
  
Connecticut, Mashantucket Western Pequot Tribe Bond, 144A, 6.05%, 7/1/2031 (PIK)
  
2,348,532
  
311,181
  
 
 
2,737,421
  
District of Columbia 0.8%
  
District of Columbia, Metropolitan Airport Authority Systems Revenue:
              
 
Series A, AMT, 5.0%, 10/1/2038
  
200,000
  
223,196
  
 
Series A, AMT, 5.0%, 10/1/2043
  
850,000
  
943,900
  
 
 
1,167,096
  
Florida 10.4%
  
Collier County, FL, Industrial Development Authority, Continuing Care Community Revenue, Arlington of Naples Project, Series A, 8.125%, 5/15/2044
  
500,000
  
578,925
  
Florida, Capital Region Community Development District, Capital Improvement Revenue, Series A, 7.0%, 5/1/2039
  
475,000
  
484,068
  
Florida, Middle Village Community Development District, Special Assessment, Series A, 6.0%, 5/1/2035
  
930,000
  
802,023
  
Florida, Tolomato Community Development District, Special Assessment:
              
 
Series A-2, Step-up Coupon, 0% to 5/1/2017, 6.61% to 5/1/2039
  
50,000
  
36,694
  
 
Series A-3, Step-up Coupon, 0% to 5/1/2019, 6.61% to 5/1/2040
  
110,000
  
65,807
  
 
Series A-4, Step-up Coupon, 0% to 5/1/2022, 6.61% to 5/1/2040
  
55,000
  
24,378
  
 
5.4%, 5/1/2037
  
1,625,000
  
1,627,844
  
 
Series 1, 6.55%, 5/1/2027 *
  
10,000
  
10,239
  
 
Series 2, 6.55%, 5/1/2027 *
  
400,000
  
240,092
  
 
Series 3, 6.55%, 5/1/2027 *
  
130,000
  
1
  
 
Series A-1, 6.55%, 5/1/2027
  
170,000
  
171,234
  
Florida, Village Community Development District No. 9, Special Assessment Revenue, 5.5%, 5/1/2042
  
160,000
  
186,421
  
Hillsborough County, FL, Industrial Development Authority Revenue, Health Facilities, University Community Hospital, Series A, Prerefunded, 5.625%, 8/15/2029
  
1,875,000
  
2,168,362
  
Martin County, FL, Health Facilities Authority, Martin Memorial Medical Center, 5.5%, 11/15/2042
  
335,000
  
371,498
  
Miami Beach, FL, Health Facilities Authority, Mount Sinai Medical Center, 5.0%, 11/15/2044
  
500,000
  
549,405
  
Miami-Dade County, FL, Aviation Revenue:
              
 
Series A, AMT, 5.0%, 10/1/2031
  
30,000
  
33,572
  
 
Series A, 5.5%, 10/1/2041
  
3,000,000
  
3,455,460
  
Orlando & Orange County, FL, Expressway Authority Revenue, Series C, 5.0%, 7/1/2035
  
1,080,000
  
1,215,929
  
Tampa-Hillsborough County, FL, Expressway Authority:
              
 
Series A, 5.0%, 7/1/2031
  
1,500,000
  
1,695,315
  
 
Series A, 5.0%, 7/1/2037
  
1,590,000
  
1,778,145
  
 
 
15,495,412
  
Georgia 6.9%
  
Americus-Sumter County, GA, Hospital Authority, Magnolia Manor Obligated Group, Series A, 6.25%, 5/15/2033
  
1,000,000
  
1,108,870
  
Atlanta, GA, Airport Revenue, Series C, AMT, 5.0%, 1/1/2037
  
375,000
  
409,912
  
Atlanta, GA, Tax Allocation, Beltline Project, Series B, 7.375%, 1/1/2031
  
1,000,000
  
1,177,990
  
Atlanta, GA, Water & Wastewater Revenue, Series A, Prerefunded, 6.25%, 11/1/2034
  
2,000,000
  
2,405,620
  
DeKalb County, GA, Water & Sewer Revenue, Series A, 5.25%, 10/1/2036
  
1,000,000
  
1,157,120
  
Gainesville & Hall County, GA, Development Authority Retirement Community Revenue, ACTS Retirement Life Community, Series A-2, 6.625%, 11/15/2039
  
1,000,000
  
1,153,510
  
Gainesville & Hall County, GA, Hospital Authority, Northeast Georgia Health System, Inc. Project:
              
 
Series A, 5.25%, 8/15/2049
  
100,000
  
115,444
  
 
Series A, 5.5%, 8/15/2054
  
180,000
  
210,069
  
Georgia, Main Street Natural Gas, Inc., Gas Project Revenue, Series A, 5.5%, 9/15/2024, GTY: Merrill Lynch & Co., Inc.
  
1,220,000
  
1,473,980
  
Georgia, Medical Center Hospital Authority Revenue, Anticipation Certificates, Columbus Regional Healthcare System, 6.5%, 8/1/2038, INS: AGC
  
1,000,000
  
1,148,350
  
 
 
10,360,865
  
Guam 2.4%
  
Guam, Government General Obligation, Series A, 7.0%, 11/15/2039
  
1,000,000
  
1,182,370
  
Guam, Government Waterworks Authority, Water & Wastewater System Revenue, Prerefunded, 6.0%, 7/1/2025
  
1,000,000
  
1,019,620
  
Guam, International Airport Authority Revenue, Series C, AMT, 6.375%, 10/1/2043
  
215,000
  
255,955
  
Guam, Power Authority Revenue, Series A, 5.5%, 10/1/2030
  
1,000,000
  
1,135,010
  
 
 
3,592,955
  
Hawaii 0.4%
  
Hawaii, State Department of Budget & Finance, Special Purpose Revenue, Hawaiian Electric Co., Inc., 6.5%, 7/1/2039, GTY: Hawaiian Electric Co., Inc.
  
500,000
  
581,270
  
Idaho 0.2%
  
Idaho, Health Facilities Authority Revenue, St. Luke's Regional Medical Center, 6.75%, 11/1/2037
  
305,000
  
356,938
  
Illinois 6.9%
  
Chicago, IL, Airport Revenue, O'Hare International Airport Revenue, Series B, 6.0%, 1/1/2041
  
2,000,000
  
2,364,040
  
Chicago, IL, General Obligation, Series A, 5.25%, 1/1/2035
  
1,000,000
  
1,045,950
  
Illinois, Finance Authority Revenue, Friendship Village of Schaumburg, Series A, 5.625%, 2/15/2037
  
2,000,000
  
2,000,340
  
Illinois, Finance Authority Revenue, Park Place of Elmhurst, Series A, 8.0%, 5/15/2030
  
1,000,000
  
669,990
  
Illinois, Finance Authority Revenue, The Admiral at Lake Project, Series A, 8.0%, 5/15/2040
  
1,000,000
  
1,112,870
  
Illinois, Finance Authority Revenue, Three Crowns Park Plaza, Series A, 5.875%, 2/15/2038
  
1,000,000
  
1,010,180
  
Illinois, Metropolitan Pier & Exposition Authority Revenue, McCormick Place Project, Series A, 5.0%, 6/15/2042
  
300,000
  
326,535
  
Illinois, Railsplitter Tobacco Settlement Authority, 6.0%, 6/1/2028
  
365,000
  
428,733
  
Illinois, State Finance Authority Revenue, Trinity Health Corp., Series L, 5.0%, 12/1/2030
  
1,000,000
  
1,141,890
  
Illinois, State General Obligation, 5.5%, 7/1/2038
  
130,000
  
144,687
  
 
 
10,245,215
  
Indiana 3.0%
  
Indiana, Finance Authority Hospital Revenue, Deaconess Hospital Obligation, Series A, 6.75%, 3/1/2039
  
525,000
  
615,568
  
Indiana, State Finance Authority Revenue, Community Foundation of Northwest Indiana, 5.0%, 3/1/2041
  
1,000,000
  
1,088,970
  
Indiana, State Finance Authority Revenue, Greencroft Obligation Group, Series A, 7.0%, 11/15/2043
  
460,000
  
540,307
  
Indiana, State Finance Authority Revenue, I-69 Development Partners LLC, AMT, 5.25%, 9/1/2034
  
225,000
  
251,408
  
Valparaiso, IN, Exempt Facilities Revenue, Pratt Paper LLC Project, AMT, 7.0%, 1/1/2044, GTY: Pratt Industries (U.S.A.)
  
780,000
  
963,308
  
Vigo County, IN, Hospital Authority Revenue, Union Hospital, Inc., 144A, 5.7%, 9/1/2037
  
1,000,000
  
1,047,340
  
 
 
4,506,901
  
Iowa 1.5%
  
Iowa, Finance Authority Retirement Community Revenue, Edgewater LLC Project, 6.5%, 11/15/2027
  
1,000,000
  
1,071,670
  
Iowa, State Finance Authority, Midwestern Disaster Area Revenue, Fertilizer Co. Project, 5.25%, 12/1/2025
  
1,000,000
  
1,095,430
  
 
 
2,167,100
  
Kansas 0.2%
  
Lenexa, KS, Health Care Facility Revenue, Lakeview Village, Inc. Project, 7.25%, 5/15/2039
  
300,000
  
339,453
  
Kentucky 5.3%
  
Kentucky, Economic Development Finance Authority, Hospital Facilities Revenue, Owensboro Medical Health Systems, Series A, 6.5%, 3/1/2045
  
2,000,000
  
2,321,860
  
Kentucky, Economic Development Finance Authority, Louisville Arena Project Revenue, Series A-1, 6.0%, 12/1/2033, INS: AGC
  
365,000
  
394,273
  
Kentucky, Public Transportation Infrastructure Authority Toll Revenue, 1st Tier-Downtown Crossing, Series A, 6.0%, 7/1/2053
  
1,440,000
  
1,668,917
  
Louisville & Jefferson County, KY, Metropolitan Government Health Systems Revenue, Norton Healthcare, Inc., 5.0%, 10/1/2030
  
3,425,000
  
3,578,782
  
 
 
7,963,832
  
Louisiana 1.9%
  
Louisiana, Local Government Environmental Facilities, Community Development Authority Revenue, 6.75%, 11/1/2032
  
1,000,000
  
1,117,710
  
Louisiana, St. John Baptist Parish Revenue, Marathon Oil Corp., Series A, 5.125%, 6/1/2037
  
1,500,000
  
1,583,835
  
Louisiana, Tobacco Settlement Financing Corp. Revenue, Series A, 5.25%, 5/15/2035
  
180,000
  
201,157
  
 
 
2,902,702
  
Maine 0.8%
  
Maine, Health & Higher Educational Facilities Authority Revenue, Maine General Medical Center, 6.75%, 7/1/2036
  
1,000,000
  
1,147,860
  
Maryland 3.4%
  
Maryland, Economic Development Corp., Pollution Control Revenue, Potomac Electric Power Co., 6.2%, 9/1/2022
  
1,500,000
  
1,782,285
  
Maryland, State Health & Higher Educational Facilities Authority Revenue, Anne Arundel Health Systems, Series A, Prerefunded, 6.75%, 7/1/2039
  
500,000
  
619,395
  
Maryland, State Health & Higher Educational Facilities Authority Revenue, Washington County Hospital:
              
 
5.75%, 1/1/2033
  
1,000,000
  
1,086,650
  
 
6.0%, 1/1/2028
  
1,385,000
  
1,520,051
  
Westminster, MD, Project Revenue, Lutheran Village Millers Grant, Inc., Series A, 6.25%, 7/1/2044
  
60,000
  
64,062
  
 
 
5,072,443
  
Massachusetts 3.2%
  
Massachusetts, Project Revenue, Health & Educational Facilities Authority, Jordan Hospital, Series E, 6.75%, 10/1/2033
  
1,790,000
  
1,796,945
  
Massachusetts, State Development Finance Agency Revenue, Linden Ponds, Inc. Facility:
              
 
Series B, 11/15/2056 *
  
505,485
  
3,124
  
 
Series A-2, 5.5%, 11/15/2046
  
101,629
  
88,039
  
 
Series A-1, 6.25%, 11/15/2039
  
1,903,948
  
1,845,554
  
Massachusetts, State Health & Educational Facilities Authority Revenue, Milford Regional Medical Center, Series E, 5.0%, 7/15/2037
  
950,000
  
970,596
  
 
 
4,704,258
  
Michigan 6.2%
  
Detroit, MI, Water & Sewerage Department, Sewerage Disposal System Revenue, Series A, 5.25%, 7/1/2039
  
280,000
  
301,515
  
Detroit, MI, Water Supply Systems Revenue, Series A, 5.75%, 7/1/2037
  
1,000,000
  
1,098,320
  
Kalamazoo, MI, Economic Development Corp. Revenue, Limited Obligation, Heritage Community, 5.5%, 5/15/2036
  
1,000,000
  
1,016,160
  
Kentwood, MI, Economic Development, Limited Obligation, Holland Home, Series A, 5.375%, 11/15/2036
  
2,000,000
  
2,026,720
  
Michigan, State Building Authority Revenue, Facilities Program, Series I-A, 5.5%, 10/15/2045
  
2,000,000
  
2,284,440
  
Michigan, State Finance Authority Revenue, Detroit Water & Sewer, Series C-3, 5.0%, 7/1/2033, INS: AGMC
  
180,000
  
200,745
  
Royal Oak, MI, Hospital Finance Authority Revenue, William Beaumont Hospital, Prerefunded, 8.25%, 9/1/2039
  
1,000,000
  
1,252,860
  
Tawas City, MI, Hospital Finance Authority, St. Joseph Health Services, Series A, ETM, 5.75%, 2/15/2023
  
1,095,000
  
1,100,103
  
 
 
9,280,863
  
Minnesota 0.8%
  
Minneapolis, MN, Health Care Systems Revenue, Fairview Health Services, Series A, 6.75%, 11/15/2032
  
1,000,000
  
1,184,540
  
Mississippi 1.2%
  
Lowndes County, MS, Solid Waste Disposal & Pollution Control Revenue, Weyerhaeuser Co. Project, Series A, 6.8%, 4/1/2022
  
250,000
  
318,920
  
Mississippi, Business Finance Corp., Pollution Control Revenue, Systems Energy Resources, Inc. Project, 5.875%, 4/1/2022
  
1,000,000
  
1,001,050
  
Warren County, MS, Gulf Opportunity Zone, International Paper Co., Series A, 6.5%, 9/1/2032
  
435,000
  
501,773
  
 
 
1,821,743
  
Missouri 1.8%
  
Missouri, State Health & Educational Facilities Authority Revenue, Lutheran Senior Services, Series C, 5.0%, 2/1/2042
  
2,000,000
  
2,037,620
  
Missouri, State Health & Educational Facilities Authority, Health Facilities Revenue, Lester E Cox Medical Centers, Series A, 5.0%, 11/15/2048
  
150,000
  
166,777
  
St. Louis, MO, Lambert-St. Louis International Airport Revenue, Series A-1, 6.625%, 7/1/2034
  
415,000
  
488,509
  
 
 
2,692,906
  
Nevada 6.5%
  
Clark County, NV, School District, Series A, 5.0%, 6/15/2022, INS: NATL
  
5,140,000
  
5,779,930
  
Henderson, NV, Health Care Facility Revenue, Catholic Healthcare West, Series B, 5.25%, 7/1/2031
  
2,000,000
  
2,129,600
  
Las Vegas Valley, NV, Water District, Series B, 5.0%, 6/1/2037
  
1,565,000
  
1,767,793
  
 
 
9,677,323
  
New Hampshire 1.2%
  
New Hampshire, State Business Finance Authority, Solid Waste Disposal Revenue, Waste Management, Inc. Project, AMT, 5.2%, 5/1/2027
  
1,750,000
  
1,831,480
  
New Jersey 5.6%
  
New Jersey, Health Care Facilities Financing Authority Revenue, St. Joseph's Health Care System, 6.625%, 7/1/2038
  
715,000
  
798,061
  
New Jersey, State Economic Development Authority Revenue, The Goethals Bridge Replacement Project, AMT, 5.375%, 1/1/2043
  
1,000,000
  
1,114,140
  
New Jersey, State Economic Development Authority, Continental Airlines, Inc. Project, AMT, 4.875%, 9/15/2019
  
755,000
  
796,027
  
New Jersey, State Economic Development Authority, Special Facilities Revenue, Continental Airlines, Inc. Project, Series B, AMT, 5.625%, 11/15/2030
  
500,000
  
566,960
  
New Jersey, State Transportation Trust Fund Authority, Series B, 5.5%, 6/15/2031
  
1,500,000
  
1,729,545
  
New Jersey, Tobacco Settlement Financing Corp., Series 1A, 4.75%, 6/1/2034
  
4,280,000
  
3,333,649
  
 
 
8,338,382
  
New York 10.0%
  
New York, Metropolitan Transportation Authority Revenue:
              
 
Series D, 5.0%, 11/15/2038
  
275,000
  
312,604
  
 
Series E, 5.0%, 11/15/2042
  
305,000
  
341,597
  
 
Series A-1, 5.0%, 11/15/2045
  
1,500,000
  
1,707,000
  
New York & New Jersey Port Authority, Special Obligation Revenue, JFK International Air Terminal LLC, 6.0%, 12/1/2042
  
680,000
  
802,529
  
New York & New Jersey Port Authority, One Hundred Forty-Seventh, AMT, 5.0%, 10/15/2023, INS: NATL
  
8,260,000
  
8,928,895
  
New York City, NY, Industrial Development Agency, Special Facility Revenue, American Airlines, JFK International Airport, AMT, 8.0%, 8/1/2028, GTY: American Airlines Group
  
2,000,000
  
2,185,680
  
New York City, NY, Municipal Water Finance Authority, Water & Sewer Systems Revenue, Second Generation Resolution, Series BB-5, 0.01% **, 6/15/2033, SPA: Bank of America NA
  
580,000
  
580,000
  
 
 
14,858,305
  
North Carolina 0.8%
  
North Carolina, Medical Care Commission, Health Care Facilities Revenue, University Health Systems, Series D, 6.25%, 12/1/2033
  
1,000,000
  
1,154,810
  
Ohio 2.5%
  
Cuyahoga County, OH, Health Care Facilities Revenue, AM McGregor Home Project,      0.02% **, 5/1/2049, LOC: Northern Trust Co.
  
1,900,000
  
1,900,000
  
Ohio, American Municipal Power, Inc. Revenue, Fremont Energy Center Project, Series B, 5.0%, 2/15/2037
  
1,575,000
  
1,754,928
  
 
 
3,654,928
  
Pennsylvania 3.8%
  
Butler County, PA, Hospital Authority Revenue, Butler Health Systems Project, Prerefunded, 7.25%, 7/1/2039
  
2,000,000
  
2,518,900
  
Montgomery County, PA, Industrial Development Authority Revenue, Whitemarsh Continuing Care, 6.25%, 2/1/2035
  
600,000
  
601,488
  
Pennsylvania, State Economic Development Financing Authority Revenue, Bridges Finco LP, AMT, 5.0%, 12/31/2038 (a)
  
715,000
  
789,260
  
Pennsylvania, State Turnpike Commission Revenue, Series C, 5.0%, 12/1/2044
  
240,000
  
271,445
  
Philadelphia, PA, Redevelopment Authority Revenue, First Lien Mortgage, Series A, 6.5%, 1/1/2029
  
491,900
  
492,977
  
Westmoreland County, PA, Industrial Development Authority Revenue, Retirement Community-Redstone, Series A, Prerefunded, 5.875%, 1/1/2032
  
1,000,000
  
1,046,670
  
 
 
5,720,740
  
Puerto Rico 3.1%
  
Commonwealth of Puerto Rico, General Obligation, Series A, 8.0%, 7/1/2035
  
220,000
  
183,845
  
Puerto Rico, Public Buildings Authority Revenue, Series Q, 5.625%, 7/1/2039
  
1,000,000
  
684,600
  
Puerto Rico, Sales Tax Financing Corp., Sales Tax Revenue:
              
 
Series A, 5.5%, 8/1/2042
  
1,000,000
  
661,890
  
 
Series A, 6.0%, 8/1/2042
  
1,000,000
  
707,450
  
 
Series A, 6.375%, 8/1/2039
  
1,320,000
  
961,079
  
Puerto Rico, Sales Tax Financing Corp., Sales Tax Revenue, Convertible Capital Appreciation, Series A, Step-up Coupon, 0% to 8/1/2016, 6.75% to 8/1/2032
  
2,000,000
  
1,463,000
  
 
 
4,661,864
  
South Carolina 1.3%
  
Hardeeville, SC, Assessment Revenue, Anderson Tract Municipal Improvement District, Series A, 7.75%, 11/1/2039
  
919,000
  
883,775
  
South Carolina, State Public Service Authority Revenue, Santee Cooper, Series A, 5.75%, 12/1/2043
  
890,000
  
1,075,761
  
 
 
1,959,536
  
Tennessee 1.6%
  
Clarksville, TN, Natural Gas Acquisition Corp., Gas Revenue:
              
 
5.0%, 12/15/2017, GTY: Merrill Lynch & Co., Inc.
  
500,000
  
545,635
  
 
5.0%, 12/15/2018, GTY: Merrill Lynch & Co., Inc.
  
540,000
  
600,280
  
Johnson City, TN, Health & Educational Facilities Board Hospital Revenue, Mountain States Health Alliance, Series A, 7.75%, 7/1/2038
  
1,000,000
  
1,177,370
  
 
 
2,323,285
  
Texas 18.2%
  
Brazos River, TX, Harbor Navigation District, Brazoria County Environmental Health, Dow Chemical Co. Project:
              
 
Series B-2, 4.95%, 5/15/2033
  
1,000,000
  
1,074,110
  
 
Series A-3, AMT, 5.125%, 5/15/2033
  
1,000,000
  
1,073,550
  
Central Texas, Regional Mobility Authority Revenue, Series A, 5.0%, 1/1/2043
  
1,500,000
  
1,641,270
  
Central Texas, Regional Mobility Authority Revenue, Senior Lien, 6.0%, 1/1/2041
  
545,000
  
635,203
  
Dallas-Fort Worth, International Airport Revenue:
              
 
Series F, AMT, 5.0%, 11/1/2035
  
1,000,000
  
1,096,270
  
 
Series D, AMT, 5.0%, 11/1/2038
  
2,000,000
  
2,189,640
  
Houston, TX, Airport System Revenue, United Airlines, Inc., Terminal E Project, AMT, 4.75%, 7/1/2024
  
615,000
  
670,165
  
Matagorda County, TX, Navigation District No. 1, Pollution Control Revenue, AEP Texas Central Co. Project, Series A, 4.4%, 5/1/2030, INS: AMBAC
  
2,250,000
  
2,429,932
  
North Texas, Tollway Authority Revenue, Toll Second Tier, Series F, 5.75%, 1/1/2033
  
2,000,000
  
2,220,400
  
Red River, TX, Health Facilities Development Corp., Retirement Facilities Revenue, MRC Crossings Project, Series A, 8.0%, 11/15/2049
  
285,000
  
342,094
  
Red River, TX, Health Facilities Development Corp., Retirement Facilities Revenue, Sears Methodist Retirement System Obligated Group Project, Series A, 5.45%, 11/15/2038 *
  
2,410,000
  
1,445,952
  
San Antonio, TX, Convention Center Hotel Finance Corp., Contract Revenue, Empowerment Zone, Series A, AMT, 5.0%, 7/15/2039, INS: AMBAC
  
1,000,000
  
1,013,380
  
Tarrant County, TX, Cultural Education Facilities Finance Corp. Revenue, Trinity Terrace Project, The Cumberland Rest, Inc., Series A-1, 5.0%, 10/1/2044
  
175,000
  
186,525
  
Tarrant County, TX, Cultural Education Facilities Finance Corp., Hospital Revenue, Scott & White Healthcare, 5.0%, 8/15/2043
  
2,100,000
  
2,344,545
  
Tarrant County, TX, Cultural Education Facilities Finance Corp., Retirement Facility, Mirador Project, Series A, 8.25%, 11/15/2044
  
570,000
  
556,936
  
Texas, Grand Parkway Transportation Corp., System Toll Revenue, Series B, 5.0%, 4/1/2053
  
500,000
  
550,945
  
Texas, Love Field Airport Modernization Corp., Special Facilities Revenue, Southwest Airlines Co. Project, 5.25%, 11/1/2040
  
1,055,000
  
1,158,612
  
Texas, SA Energy Acquisition Public Facility Corp., Gas Supply Revenue, 5.5%, 8/1/2020, GTY: The Goldman Sachs Group, Inc.
  
2,000,000
  
2,321,460
  
Texas, State Municipal Gas Acquisition & Supply Corp., III Gas Supply Revenue:
              
 
5.0%, 12/15/2030
  
165,000
  
183,663
  
 
5.0%, 12/15/2031
  
1,000,000
  
1,108,040
  
 
5.0%, 12/15/2032
  
1,000,000
  
1,100,850
  
Texas, State Private Activity Bond, Surface Transportation Corp. Revenue, Senior Lien, North Tarrant Express Mobility Partners Segments LLC, AMT, 6.75%, 6/30/2043
  
280,000
  
343,241
  
Texas, State Transportation Commission, Turnpike Systems Revenue, Series C, 5.0%, 8/15/2034
  
825,000
  
917,656
  
Travis County, TX, Health Facilities Development Corp. Revenue, Westminster Manor Health, 7.125%, 11/1/2040
  
510,000
  
596,287
  
 
 
27,200,726
  
Virgin Islands 1.1%
  
Virgin Islands, Public Finance Authority Revenue, Gross Receipts Tax Loan Note, Series A, 5.0%, 10/1/2032
  
1,500,000
  
1,659,405
  
Virginia 1.8%
  
Virginia, Route 460 Funding Corp., Toll Road Revenue, Series A, 5.0%, 7/1/2052
  
1,000,000
  
1,067,380
  
Washington County, VA, Industrial Development Authority, Hospital Facility Revenue, Mountain States Health Alliance, Series C, 7.75%, 7/1/2038
  
1,370,000
  
1,615,737
  
 
 
2,683,117
  
Washington 3.4%
  
Washington, State Health Care Facilities Authority Revenue, Series C, 5.375%, 8/15/2028, INS: Radian
  
595,000
  
632,658
  
Washington, State Health Care Facilities Authority Revenue, Virginia Mason Medical Center, Series A, 6.125%, 8/15/2037
  
2,000,000
  
2,180,900
  
Washington, State Health Care Facilities Authority, Catholic Health Initiatives, Series A, 5.0%, 2/1/2041
  
1,000,000
  
1,096,180
  
Washington, State Housing Finance Commission, Rockwood Retirement Communities Project, Series A, 7.375%, 1/1/2044
  
1,000,000
  
1,115,360
  
 
 
5,025,098
  
Wisconsin 2.8%
  
Wisconsin, State Health & Educational Facilities Authority Revenue, Agnesian Healthcare, Inc., Series B, 5.0%, 7/1/2036
  
500,000
  
551,750
  
Wisconsin, State Health & Educational Facilities Authority Revenue, Prohealth Care, Inc. Obligation Group:
              
 
5.0%, 8/15/2039
  
200,000
  
225,456
  
 
Prerefunded, 6.625%, 2/15/2039
  
1,110,000
  
1,350,770
  
Wisconsin, State Health & Educational Facilities Authority Revenue, Thedacare, Inc., Series A, 5.5%, 12/15/2038
  
1,765,000
  
1,982,625
  
 
 
4,110,601
  
 
Total Municipal Bonds and Notes (Cost $185,369,042)
  
210,589,347
  
 
 
Underlying Municipal Bonds of Inverse Floaters (b) 11.5%
  
California 3.0%
  
San Diego County, CA, Water Authority Revenue, Certificates of Participation, Series 2008-A, 5.0%, 5/1/2027, INS: AGMC (c)
  
2,121,349
  
2,370,050
  
San Diego County, CA, Water Authority Revenue, Certificates of Participation, Series 2008-A, 144A, 5.0%, 5/1/2028, INS: AGMC (c)
  
1,930,312
  
2,156,615
  
 
Trust: San Diego County, CA, Water Utility Improvements, Certificates of Participation, Series 2008-1104, 144A, 9.374%, 11/1/2015, Leverage Factor at purchase date: 2 to 1
      
 
 
4,526,665
  
New York 4.0%
  
New York, State Dormitory Authority, State Personal Income Tax Revenue, Series A, 5.0%, 3/15/2023 (c)
  
5,535,000
  
6,005,804
  
 
Trust: New York, State Dormitory Authority Revenue, Secondary Issues, Series 1955-2, 144A, 18.303%, 9/15/2016, Leverage Factor at purchase date: 4 to 1
      
Tennessee 4.5%
  
Nashville & Davidson County, TN, Metropolitan Government, 5.0%, 1/1/2024 (c)
  
5,918,585
  
6,624,249
  
 
Trust: Nashville & Davidson County, TN, Metropolitan Government, Series 2631-1, 144A, 18.316%, 1/1/2016, Leverage Factor at purchase date: 4 to 1
      
 
Total Underlying Municipal Bonds of Inverse Floaters (Cost $15,681,957)
  
17,156,718
  
         
 
% of
Net Assets
  
Value ($)
  
 
Total Investment Portfolio (Cost $201,050,999) †
152.6
  
227,746,065
  
Floating Rate Notes (b)
(7.1)
  
(10,615,039)
  
MTPS, at Liquidation Value
(40.5)
  
(60,475,000)
  
Other Assets and Liabilities, Net
1.4
  
2,132,386
  
ARPS, at Liquidation Value
(6.4)
  
(9,525,000)
  
 
Net Assets Applicable to Common Shareholders
100.0
  
149,263,412
  

For information on the Fund’s policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund’s most recent semi-annual or annual financial statements.
 
The following table represents bonds that are in default:
  

Security
  
Coupon
  
Maturity
Date
  
Principal Amount ($)
    
Cost ($)
    
Value ($)
  
Florida, Tolomato Community Development District, Special Assessment, Series 2 *
     6.55 %
5/1/2027
     400,000       141,280       240,092  
Florida, Tolomato Community Development District, Special Assessment, Series 1 *
     6.55 %
5/1/2027
     10,000       4,160       10,239  
Florida, Tolomato Community Development District, Special Assessment, Series 3 *
     6.55 %
5/1/2027
     130,000       1       1  
Red River, TX, Health Facilities Development Corp., Retirement Facilities Revenue, Sears Methodist Retirement System Obligated Group Project, Series A *
     5.45 %
11/15/2038
     2,410,000       2,386,875       1,445,952  
                        2,532,316       1,696,284  

*
Non-income producing security.
**
Variable rate demand notes are securities whose interest rates are reset periodically at market levels. These securities are often payable on demand and are shown at their current rates as of February 28, 2015.
†
The cost for federal income tax purposes was $188,960,937.  At February 28, 2015, net unrealized appreciation for all securities based on tax cost was $28,170,089.  This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $31,930,789 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,760,700.
(a)
When-issued security.
(b)
Securities represent the underlying municipal obligations of inverse floating rate obligations held by the Fund. The Floating Rate Notes represents leverage to the Fund and is the amount owed to the floating rate note holders.
(c)
Security forms part of the below inverse floater. The Fund accounts for these inverse floaters as a form of secured borrowing, by reflecting the value of the underlying bond in the investments of the Fund and the amount owed to the floating rate note holder as a liability.
144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
AGC: Assured Guaranty Corp.
AGMC: Assured Guaranty Municipal Corp.
AMBAC: Ambac Financial Group, Inc.
AMT: Subject to alternative minimum tax.
ETM: Bonds bearing the description ETM (escrow to maturity) are collateralized usually by U.S. Treasury securities which are held in escrow and used to pay principal and interest on bonds so designated.
GTY: Guaranty Agreement
INS: Insured
NATL: National Public Finance Guarantee Corp.
PIK: Denotes that all or a portion of the income is paid in-kind in the form of additional principal.
Prerefunded: Bonds which are prerefunded are collateralized usually by U.S. Treasury securities which are held in escrow and used to pay principal and interest on tax-exempt issues and to retire the bonds in full at the earliest refunding date.
Radian: Radian Asset Assurance, Inc.
SPA: Standby Bond Purchase Agreement


Fair Value Measurements

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.

The following is a summary of the inputs used as of February 28, 2015 in valuing the Fund's investments.

Assets
  
Level 1
    
Level 2
    
Level 3
    
Total
  
Municipal Investments (d)
   $ —     $ 227,746,065     $ —     $ 227,746,065  
 
Total
   $ —     $ 227,746,065     $ —     $ 227,746,065  
 

There have been no transfers between fair value measurement levels during the period ended February 28, 2015.
 (d)
See Investment Portfolio for additional detailed categorizations.



ITEM 2.
CONTROLS AND PROCEDURES
   
 
(a)   The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
   
 
(b)   There have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.
   
ITEM 3.
EXHIBITS
   
 
Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant:
Deutsche Strategic Municipal Income Trust
   
By:
/s/Brian E. Binder
Brian E. Binder
President
   
Date:
April 22, 2015


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:
/s/Brian E. Binder
Brian E. Binder
President
   
Date:
April 22, 2015
   
   
   
By:
/s/Paul Schubert
Paul Schubert
Chief Financial Officer and Treasurer
   
Date:
April 22, 2015