Deutsche Variable Series Ii NCSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM N-CSRS

Investment Company Act file number: 811-05002

Deutsche Variable Series II

(Exact Name of Registrant as Specified in Charter)

345 Park Avenue

New York, NY 10154-0004

(Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, including Area Code: (212) 250-3220

Paul Schubert

60 Wall Street

New York, NY 10005

(Name and Address of Agent for Service)

Date of fiscal year end:	12/31

Date of reporting period:	6/30/2015

ITEM 1.	REPORT TO STOCKHOLDERS

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Alternative Asset Allocation VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Management Team

5 Investment Portfolio

6 Statement of Assets and Liabilities

7 Statement of Operations

7 Statement of Changes in Net Assets

9 Financial Highlights

11 Notes to Financial Statements

15 Information About Your Fund's Expenses

16 Proxy Voting

17 Advisory Agreement Board Considerations and Fee Evaluation

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. 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.

Although allocation among different asset categories generally limits risk, portfolio management may favor an asset category that underperforms other assets or markets as a whole. The Fund expects to invest in underlying funds that emphasize alternatives or non-traditional asset categories or investment strategies, and as a result, it is subject to the risk factors of those underlying funds. Some of those risks include: stock market risk; the political, general economic, liquidity and currency risks of foreign investments, which may be particularly significant for emerging markets; credit and interest rate risk; floating rate loan risk; volatility in commodity prices, infrastructure and high-yield debt securities; market direction risk (market advances when short, market declines when long); and short sales risk. Because Exchange Traded Funds (ETFs) trade on a securities exchange, their shares may trade at a premium or discount to their net asset value. ETFs also incur fees and expenses so they may not fully match the performance of the indexes they are designed to track. The Fund may use derivatives, including as part of its currency and interest-rate strategies. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The success of the Fund’s currency and interest-rate strategies are dependent, in part, on the effectiveness and implementation of portfolio management’s proprietary models. As part of these strategies, the Fund’s exposure to foreign currencies could cause lower returns or even losses because foreign currency rates may fluctuate significantly over short periods of time for a number of reasons. The risk of loss is heightened during periods of rapid rises in interest rates. In addition, the notional amount of the Fund’s aggregate currency and interest-rate exposure resulting from these strategies may significantly exceed the net assets of the Fund. See the prospectus for additional risks and specific details regarding the Fund's risk profile.

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

Performance Summary June 30, 2015 (Unaudited)

Fund performance shown is historical, assumes reinvestment of all dividend and capital gain distributions and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please contact your participating insurance company for the Fund's most recent month-end performance. Performance doesn't reflect charges and fees ("contract charges") associated with the separate account that invests in the Fund or any variable life insurance policy or variable annuity contract for which the Fund is an investment option. These charges and fees will reduce returns. While all share classes have the same underlying portfolio, their performance will differ.

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 are 1.73% and 2.03% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. These expense ratios include net expenses of the underlying funds in which the Fund invests.

Growth of an Assumed $10,000 Investment in Deutsche Alternative Asset Allocation VIP from 2/2/09 to 6/30/15
	The Morgan Stanley Capital International (MSCI) World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The index consists of 23 developed market country indices. The index is calculated using closing local market prices and translates into U.S. dollars using the London close foreign exchange rates. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. The Blended Index is calculated using the performance of two unmanaged indices, representative of stocks (the MSCI World Index (70%)) and bonds (the Barclays U.S. Aggregate Bond Index (30%)). These results are summed to produce the aggregate benchmark. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Alternative Asset Allocation VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Fund*
Class A	Growth of $10,000	$	9,854		$	9,625		$	10,865		$	12,384		$	15,584
Class A	Average annual total return		–1.46	%		–3.75	%		2.80	%		4.37	%		7.16	%
MSCI World Index	Growth of $10,000	$	10,263		$	10,143		$	14,920		$	18,502		$	23,767
MSCI World Index	Average annual total return		2.63	%		1.43	%		14.27	%		13.10	%		14.44	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,990		$	10,186		$	10,558		$	11,790		$	13,272
Barclays U.S. Aggregate Bond Index	Average annual total return		–0.10	%		1.86	%		1.83	%		3.35	%		4.51	%
Blended Index	Growth of $10,000	$	10,188		$	10,165		$	13,496		$	16,357		$	20,353
Blended Index	Average annual total return		1.88	%		1.65	%		10.51	%		10.34	%		11.71	%

The growth of $10,000 is cumulative.

* The Fund commenced offering Class A shares on February 2, 2009. The performance shown for each index is for the time period of January 31, 2009 through June 30, 2015, which is based on the performance period of the life of the Fund.

Comparative Results
Deutsche Alternative Asset Allocation VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Class**
Class B	Growth of $10,000	$	9,843		$	9,601		$	10,782		$	12,226		$	14,413
Class B	Average annual total return		–1.57	%		–3.99	%		2.54	%		4.10	%		5.79	%
MSCI World Index	Growth of $10,000	$	10,263		$	10,143		$	14,920		$	18,502		$	20,298
MSCI World Index	Average annual total return		2.63	%		1.43	%		14.27	%		13.10	%		12.34	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,990		$	10,186		$	10,558		$	11,790		$	12,983
Barclays U.S. Aggregate Bond Index	Average annual total return		–0.10	%		1.86	%		1.83	%		3.35	%		4.38	%
Blended Index	Growth of $10,000	$	10,188		$	10,165		$	13,496		$	16,357		$	18,043
Blended Index	Average annual total return		1.88	%		1.65	%		10.51	%		10.34	%		10.19	%

The growth of $10,000 is cumulative.

** The Fund commenced offering Class B shares on May 18, 2009. The performance shown for each index is for the time period of May 31, 2009 through June 30, 2015, which is based on the performance period of the life of Class B.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation* (As a % of Investment Portfolio excluding Cash Equivalents)	6/30/15	12/31/14

Commodity	13%	10%
Deutsche Enhanced Commodity Strategy Fund	13%	10%
Real Return	37%	35%
Deutsche Global Infrastructure Fund	17%	19%
Deutsche Global Inflation Fund	9%	7%
Deutsche Real Estate Securities Fund	6%	5%
Deutsche Global Real Estate Securities Fund	5%	3%
Deutsche Real Estate Securities Income Fund	0%	1%
Hedge Strategy	12%	11%
Deutsche Diversified Market Neutral Fund	11%	10%
Deutsche Strategic Equity Long/Short Fund	1%	1%
Currency	16%	15%
Deutsche Enhanced Emerging Markets Fixed Income Fund	16%	15%
Opportunistic	22%	29%
Deutsche Floating Rate Fund	12%	13%
SPDR Barclays Convertible Securities ETF	10%	13%
SPDR Barclays Short Term High Yield Bond Fund ETF	—	3%
	100%	100%

* Investment strategies will fall into the following categories: Commodities, Real-Return, Hedge Strategy, Currency and Opportunistic. Commodities investments seek to provide exposure to hard assets. Real-Return investments seek to provide a measure of inflation protection. Hedge Strategy investments seek to generate returns independent of the broader markets. Currency investments seek to offer exposure to foreign investments, many of which are not denominated in U.S. dollars. Opportunistic investments seek to offer exposure to categories generally not included in investors' allocations.

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 5.

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The 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.

Portfolio Management Team

Pankaj Bhatnagar, PhD

Darwei Kung

Portfolio Managers

Investment Portfolio June 30, 2015 (Unaudited)

	Shares		Value ($)

Mutual Funds 88.5%
Deutsche Diversified Market Neutral Fund "Institutional"* (a)		1,428,349		12,169,533
Deutsche Enhanced Commodity Strategy Fund "Institutional" (a)		1,070,099		14,585,443
Deutsche Enhanced Emerging Markets Fixed Income Fund "Institutional" (a)		1,840,127		17,591,613
Deutsche Floating Rate Fund "Institutional" (a)		1,518,785		13,881,699
Deutsche Global Inflation Fund "Institutional" (a)		998,112		9,821,425
Deutsche Global Infrastructure Fund "Institutional" (a)		1,350,265		18,782,184
Deutsche Global Real Estate Securities Fund "Institutional" (a)		652,220		5,635,179
Deutsche Real Estate Securities Fund "Institutional" (a)		332,052		6,959,815
Deutsche Real Estate Securities Income Fund "Institutional" (a)		57,281		539,010
Deutsche Strategic Equity Long/Short Fund "Institutional" (a)		146,205		1,424,037
Total Mutual Funds (Cost $103,759,223)				101,389,938
	Shares		Value ($)

Exchange-Traded Fund 9.4%
SPDR Barclays Convertible Securities (Cost $9,769,384)		226,694		10,783,834

Cash Equivalents 2.2%
Central Cash Management Fund, 0.09% (a) (b) (Cost $2,495,906)		2,495,906		2,495,906

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $116,024,513)†		100.1			114,669,678
Other Assets and Liabilities, Net		(0.1	)		(72,543	)
Net Assets		100.0			114,597,135

* Non-income producing security.

† The cost for federal income tax purposes was $117,792,382. At June 30, 2015, net unrealized depreciation for all securities based on tax cost was $3,122,704. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $4,343,076 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $7,465,780.

(a) Affiliated fund managed by Deutsche Investment Management Americas Inc.

(b) The rate shown is the annualized seven-day yield at period end.

SPDR: Standard & Poor's Depositary Receipt

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, 2015 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

Mutual Funds	$	101,389,938	$	—	$	—	$	101,389,938
Exchange-Traded Fund		10,783,834		—		—		10,783,834
Short-Term Investment		2,495,906		—		—		2,495,906
Total	$	114,669,678	$	—	$	—	$	114,669,678

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

The accompanying notes are an integral part of the financial statements.

Statement of Assets and Liabilities

as of June 30, 2015 (Unaudited)
Assets
Investments: Investments in affiliated Underlying Funds, at value (cost $106,255,129)	$	103,885,844
Investments in non-affiliated Underlying Funds, at value (cost $9,769,384)		10,783,834
Total investments in securities, at value (cost $116,024,513)		114,669,678
Receivable for Fund shares sold		50,699
Interest receivable		265
Other assets		1,577
Total assets		114,722,219
Liabilities
Payable for Fund shares redeemed		29,116
Accrued management fee		14,865
Accrued Trustees' fees		376
Other accrued expenses and payables		80,727
Total liabilities		125,084
Net assets, at value	$	114,597,135
Net Assets Consist of
Undistributed net investment income		860,155
Net unrealized appreciation (depreciation) on investments		(1,354,835	)
Accumulated net realized gain (loss)		(1,866,087	)
Paid-in capital		116,957,902
Net assets, at value	$	114,597,135
Class A Net Asset Value, offering and redemption price per share ($20,407,892 ÷ 1,540,116 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.25
Class B Net Asset Value, offering and redemption price per share ($94,189,243 ÷ 7,104,776 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.26

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Income distributions from affiliated Underlying Funds	$	1,031,311
Dividends		184,744
Total income		1,216,055
Expenses: Management fee		189,044
Administration fee		57,057
Services to shareholders		1,262
Record keeping fees (Class B)		24,946
Distribution service fee (Class B)		117,403
Custodian fee		5,049
Professional fees		32,040
Reports to shareholders		19,140
Registration fees		40
Trustees' fees and expenses		3,404
Other		1,037
Total expenses before expense reductions		450,422
Expense reductions		(131,296	)
Total expenses after expense reductions		319,126
Net investment income (loss)		896,929
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Sale of affiliated Underlying Funds		(113,576	)
Sale of non-affiliated Underlying Funds		(184,053	)
Capital gain distributions from affiliated Underlying Funds		262,745
		(34,884	)
Change in net unrealized appreciation (depreciation) on investments		(2,696,785	)
Net gain (loss)		(2,731,669	)
Net increase (decrease) in net assets resulting from operations	$	(1,834,740	)

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	896,929		$	2,410,031
Operations: Net investment income	$	896,929		$	2,410,031
Net realized gain (loss)		(34,884	)		367,010
Change in net unrealized appreciation (depreciation)		(2,696,785	)		335,372
Net increase (decrease) in net assets resulting from operations		(1,834,740	)		3,112,413
Distributions to shareholders from: Net investment income: Class A		(610,326	)		(310,914	)
Class B		(2,547,011	)		(1,375,733	)
Net realized gains: Class A		(44,846	)		(99,727	)
Class B		(205,010	)		(510,421	)
Total distributions		(3,407,193	)		(2,296,795	)
Fund share transactions: Class A Proceeds from shares sold		2,127,360			5,912,399
Reinvestment of distributions		655,172			410,641
Payments for shares redeemed		(1,074,916	)		(1,499,503	)
Net increase (decrease) in net assets from Class A share transactions		1,707,616			4,823,537
Class B Proceeds from shares sold		7,489,983			15,772,435
Reinvestment of distributions		2,752,021			1,886,154
Payments for shares redeemed		(5,328,418	)		(8,841,659	)
Net increase (decrease) in net assets from Class B share transactions		4,913,586			8,816,930
Increase (decrease) in net assets		1,379,269			14,456,085
Net assets at beginning of period		113,217,866			98,761,781
Net assets at end of period (including undistributed net investment income of $860,155 and $3,120,563, respectively)	$	114,597,135		$	113,217,866
Other Information
Class A Shares outstanding at beginning of period		1,416,911			1,072,115
Shares sold		154,303			422,091
Shares issued to shareholders in reinvestment of distributions		47,892			29,692
Shares redeemed		(78,990	)		(106,987	)
Net increase (decrease) in Class A shares		123,205			344,796
Shares outstanding at end of period		1,540,116			1,416,911
Class B Shares outstanding at beginning of period		6,744,084			6,114,865
Shares sold		545,691			1,125,357
Shares issued to shareholders in reinvestment of distributions		201,024			136,283
Shares redeemed		(386,023	)		(632,421	)
Net increase (decrease) in Class B shares		360,692			629,219
Shares outstanding at end of period		7,104,776			6,744,084

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	13.88		$	13.75		$	13.90		$	13.24		$	13.85		$	12.63
Income (loss) from investment operations: Net investment incomea		.12			.36			.26			.33			.64			.46
Net realized and unrealized gain (loss)		(.31	)		.13			(.13	)		.93			(1.02	)		1.09
Total from investment operations		(.19	)		.49			.13			1.26			(.38	)		1.55
Less distributions from: Net investment income		(.41	)		(.27	)		(.28	)		(.49	)		(.19	)		(.18	)
Net realized gains		(.03	)		(.09	)		—			(.11	)		(.04	)		(.15	)
Total distributions		(.44	)		(.36	)		(.28	)		(.60	)		(.23	)		(.33	)
Net asset value, end of period	$	13.25		$	13.88		$	13.75		$	13.90		$	13.24		$	13.85
Total Return (%)b,c		(1.46	)**		3.50			.93			9.72			(2.87	)		12.46
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		20			20			15			10			7			5
Ratio of expenses before expense reductions (%)d		.54	*		.56			.64			.63			.61			.94
Ratio of expenses after expense reductions (%)d		.34	*		.32			.27			.30			.30			.21
Ratio of net investment income (%)		1.81	*		2.54			1.86			2.46			4.72			3.51
Portfolio turnover rate (%)		14	**		28			40			22			39			6
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Total return would have been lower if the Advisor had not reduced some Underlying Deutsche Funds' expenses. d The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which the Fund is invested. This ratio does not include these indirect fees and expenses. * Annualized ** Not annualized

				Years Ended December 31,
Class B	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	13.87		$	13.74		$	13.88		$	13.23		$	13.84		$	12.61
Income (loss) from investment operations: Net investment incomea		.10			.31			.22			.30			.61			.42
Net realized and unrealized gain (loss)		(.30	)		.14			(.11	)		.91			(1.03	)		1.09
Total from investment operations		(.20	)		.45			.11			1.21			(.42	)		1.51
Less distributions from: Net investment income		(.38	)		(.23	)		(.25	)		(.45	)		(.15	)		(.13	)
Net realized gains		(.03	)		(.09	)		—			(.11	)		(.04	)		(.15	)
Total distributions		(.41	)		(.32	)		(.25	)		(.56	)		(.19	)		(.28	)
Net asset value, end of period	$	13.26		$	13.87		$	13.74		$	13.88		$	13.23		$	13.84
Total Return (%)b,c		(1.57	)**		3.24			.75			9.36			(3.12	)		12.15
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		94			94			84			62			41			23
Ratio of expenses before expense reductions (%)d		.84	*		.86			.93			.88			.86			1.19
Ratio of expenses after expense reductions (%)d		.61	*		.57			.52			.55			.55			.46
Ratio of net investment income (%)		1.52	*		2.22			1.57			2.25			4.47			3.26
Portfolio turnover rate (%)		14	**		28			40			22			39			6
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Total return would have been lower if the Advisor had not reduced some Underlying Deutsche Funds' expenses. d The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which the Fund is invested. This ratio does not include these indirect fees and expenses. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Alternative Asset Allocation VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust. The Fund mainly invests in other affiliated Deutsche funds (i.e., mutual funds, exchange-traded funds and other pooled investment vehicles managed by Deutsche Investment Management Americas Inc. or one of its affiliates, together the "Underlying Deutsche Funds"), non-affiliated exchange-traded funds ("Non-affiliated ETFs") and derivative investments. Non-affiliated ETFs and Underlying Deutsche Funds are collectively referred to as "Underlying Funds." During the six months ended June 30, 2015, the Fund primarily invested in underlying Deutsche Funds and non-affiliated ETFs. Each Underlying Deutsche Fund's accounting policies and investment holdings are outlined in the Underlying Deutsche Funds' financial statements and are available upon request.

Multiple Classes of Shares of Beneficial Interest. The Fund offers two classes of shares (Class A shares and Class B shares). Sales of Class B shares are subject to recordkeeping fees up to 0.15% and Rule 12b-1 fees under the 1940 Act equal to an annual rate of 0.25% of the average daily net assets of the Class B shares of the Fund. Class A shares are not subject to such fees.

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 (including the applicable Rule 12b-1 fee). Differences in class-level expenses may result in payment of different per share dividends by class. All shares 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.

Investments in mutual funds are valued at the net asset value per share of each class of the Underlying Deutsche Funds and are categorized as Level 1.

ETFs 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. ETFs 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. ETF securities are generally categorized as Level 1.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies and to distribute all of its taxable income to its shareholders.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2014 and has determined that no provision for income tax and/or uncertain tax provisions is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

Distribution of Income and Gains. Distributions from net investment income of the Fund, if any, are declared and distributed to shareholders annually. 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 certain securities sold at a loss and capital gain distributions from Underlying Funds. 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.

Expenses. Expenses of the Trust arising in connection with a specific fund are allocated to that fund. Other Trust expenses which cannot be directly attributed to a fund are apportioned among the funds in the Trust based upon the relative net assets or other appropriate measures.

Contingencies. In the normal course of business, the Fund may enter into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet been made. However, based on experience, the Fund expects the risk of loss to be remote.

B. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of affiliated Underlying Funds (excluding money market funds) aggregated $17,376,764 and $4,807,000, respectively. Purchases and sales of Non-affiliated ETFs aggregated $3,834,688 and $10,416,087, respectively.

C. Related Parties

Management Agreement. Under the Investment Management Agreement with Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments in Underlying Funds to be purchased, sold or entered into by the Fund or delegates such responsibility to the Fund's subadvisors.

RREEF America L.L.C. ("RREEF"), an indirect wholly owned subsidiary of Deutsche Bank AG, acts as an investment subadvisor to the Fund. As an investment subadvisor to the Fund, RREEF provides investment management services to the portions of the Fund's portfolio allocated to direct investments in global real estate and global infrastructure securities. RREEF is paid by the Advisor for the services RREEF provides to the Fund. As of the date of this report, the Fund obtained its exposure to global real estate and global infrastructure securities indirectly through investments in other Underlying Deutsche Funds.

The Fund does not invest in the Underlying Deutsche Funds for the purpose of exercising management or control; however, investments within the set limits may represent 5% or more of an Underlying Deutsche Fund's outstanding shares. At June 30, 2015, the Fund held 5% or greater of the following Underlying Deutsche Fund's outstanding shares: approximately 10% of Deutsche Diversified Market Neutral Fund, 9% of Deutsche Enhanced Emerging Markets Fixed Income Fund and 6% of Deutsche Global Inflation Fund.

Pursuant to the Investment Management Agreement with the Advisor, 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:

On assets invested in other Deutsche Funds	.20%
On assets invested in all other assets not considered Deutsche Funds	1.20%

Accordingly, for the six months ended June 30, 2015, the fee pursuant to the Investment Management Agreement was equivalent to an annualized rate (exclusive of any applicable waivers/reimbursements) of 0.33% of the Fund's average daily net assets.

In addition, the Advisor will receive management fees from managing the Underlying Deutsche Funds in which the Fund invests.

For the period from January 1, 2015 through April 30, 2015, the Advisor had contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and Underlying Funds) of each class as follows:

Class A	.32%
Class B	.57%

Effective May 1, 2015 through April 30, 2016, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and Underlying Funds) of each class as follows:

Class A	.42%
Class B	.71%

For the six months ended June 30, 2015, the Advisor agreed to waive 0.15% of the monthly management fee based on average daily net assets for the Fund.

For the six months ended June 30, 2015, fees waived and/or expenses reimbursed for each class are as follows:

Class A	$	20,478
Class B		110,818
	$	131,296

The Fund indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which it is invested.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA 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, 2015, the Administration Fee was $57,057, of which $9,487 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 for 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, 2015, the amounts charged to the Fund by DSC were as follows:

Services to Shareholders	Total Aggregated		Unpaid at June 30, 2015
Class A	$	49	$	24
Class B		75		31
	$	124	$	55

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DeAWM Distributors, Inc. ("DDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the six months ended June 30, 2015, the Distribution Service Fee aggregated $117,403, of which $19,445 is unpaid.

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, 2015, the amount charged to the Fund by DIMA included in the Statement of Operations under "Reports to shareholders" aggregated $8,002, all of which is unpaid.

Trustees' Fees and Expenses. The Fund paid retainer fees to each Trustee not affiliated with the Advisor, plus specified amounts to the Board Chairperson and Vice Chairperson and to each committee Chairperson.

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 1940 Act, 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.

D. Ownership of the Fund

At June 30, 2015, one participating insurance company was the owner of record of 10% or more of the total outstanding Class A shares of the Fund, owning 97%. Two participating insurance companies were the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 62% and 30%, respectively.

E. Transactions with Affiliates

The Fund mainly invests in Underlying Deutsche Funds and Non-affiliated ETFs. The Underlying Deutsche Funds in which the Fund invests are considered to be affiliated investments. A summary of the Fund's transactions with affiliated Underlying Deutsche Funds during the six months ended June 30, 2015 is as follows:

Affiliate	Value ($) at 12/31/2014		Purchases Cost ($)		Sales Cost ($)		Realized Gain/ (Loss) ($)			Income Distributions ($)		Capital Gain Distributions ($)		Value ($) at 6/30/2015
Deutsche Diversified Market Neutral Fund		11,773,693		465,000		—		—			—		—		12,169,533
Deutsche Enhanced Commodity Strategy Fund		11,309,510		3,477,033		33,000		(9,553	)		16,036		—		14,585,443
Deutsche Enhanced Emerging Markets Fixed Income Fund		16,310,878		2,368,220		611,000		(71,723	)		405,220		—		17,591,613
Deutsche Floating Rate Fund		14,486,144		713,620		1,433,000		(31,966	)		304,620		—		13,881,699
Deutsche Global Inflation Fund		7,965,785		2,219,540		264,000		(6,494	)		62,540		—		9,821,425
Deutsche Global Infrastructure Fund		20,612,292		1,144,430		1,644,000		2,596			127,854		30,576		18,782,184
Deutsche Global Real Estate Securities Fund		3,383,883		2,594,842		19,000		99			52,842		—		5,635,179
Deutsche Real Estate Securities Fund		4,870,451		3,632,441		758,000		3,628			51,261		224,180		6,959,815
Deutsche Real Estate Securities Income Fund		465,079		131,638		2,000		(161	)		9,649		7,989		539,010
Deutsche Strategic Equity Long/Short Fund		836,561		630,000		43,000		(2	)		—		—		1,424,037
Central Cash Management Fund		3,316,670		13,788,026		14,608,790		—			1,289		—		2,495,906
		95,330,946		31,164,790		19,415,790		(113,576	)		1,031,311		262,745		103,885,844

Information About Your Fund's Expenses (Unaudited)

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 contract charges, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expense of the Underlying Funds in which the Fund invests. These expenses are not included in the Fund's annualized expense ratios used to calculate the expense estimate in the tables. In the most recent six-month period, the Fund limited the ongoing expenses the Fund bears directly; had it not done so, expenses would have been higher. The examples in the table are based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2015 to June 30, 2015).

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. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	985.40	$	984.30
Expenses Paid per $1,000*	$	1.67	$	3.00
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,023.11	$	1,021.77
Expenses Paid per $1,000*	$	1.71	$	3.06

* 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 B
Deutsche Variable Series II — Deutsche Alternative Asset Allocation VIP		.34%		.61%

** The Fund invests in other funds and indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which the Fund is invested. These ratios do not include these indirect fees and expenses.

For more information, please refer to the Fund's prospectus.

These tables do not reflect charges and fees ("contract charges") associated with the separate account that invests in the Fund or any variable life insurance policy or variable annuity contract for which the Fund is an investment option.

For an analysis of the fees associated with an investment in the fund or similar funds, please refer to the current and hypothetical expense calculators for Variable Insurance Products which can be found at deutschefunds.com/EN/resources/calculators.jsp.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust 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 Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Alternative Asset Allocation VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") and sub-advisory agreement (the "Sub-Advisory Agreement" and together with the Agreement, the "Agreements") between DIMA and RREEF America L.L.C. ("RREEF"), an affiliate of DIMA, in September 2014.

In terms of the process that the Board followed prior to approving the Agreements, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

— The Trustees 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 Fixed Income and Asset Allocation 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 Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with counsel to discuss contract review and other matters. In addition, the Independent Trustees were advised by the Fee Consultant in the course of their review of the Fund’s contractual arrangements and considered a comprehensive report prepared by the Fee Consultant in connection with their deliberations.

— In connection with reviewing the 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 has 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 and RREEF are part of Deutsche Bank AG ("DB"), 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 Deutsche fund overseen by the Board in light of the fund’s performance. In many cases, this led to the negotiation and implementation of expense caps. As part of these negotiations, the Board indicated that it would consider relaxing these caps in future years following sustained improvements in performance, among other considerations.

In 2012, DB combined its Asset Management (of which DIMA was a part) and Wealth Management divisions into a new Asset and Wealth Management ("AWM") division. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that DB will continue to invest in AWM a significant portion of the savings it has realized by combining its Asset and Wealth Management divisions, including ongoing enhancements to AWM’s 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 and RREEF’s 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 and RREEF 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 also requested and received information regarding DIMA’s oversight of Fund sub-advisors, including RREEF. The Board reviewed the Fund’s performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market index(es) and a peer universe compiled 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one- and three-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 4th 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 underperformed its benchmark in the one- and three-year periods ended December 31, 2013. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board observed that the Fund had experienced improved relative performance during the first seven months of 2014. The Board recognized the efforts by DIMA in recent years to enhance its investment platform and improve long-term performance across the Deutsche fund complex.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, sub-advisory fee schedule, 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, 2013). With respect to the sub-advisory fee paid to RREEF, the Board noted that the fee is paid by DIMA out of its fee and not directly by the Fund. The Board noted that the Fund’s Class A shares total (net) operating expenses 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, 2013, 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 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 Board noted that the expense limitations agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. 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 information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA and RREEF.

Profitability. The Board reviewed detailed information regarding revenues received by DIMA from advising the Deutsche Funds along with the estimated costs and pre-tax profits realized by DIMA from advising the Deutsche U.S. mutual funds ("Deutsche Funds"). The Board also received information regarding the estimated enterprise-wide profitability of DIMA and its affiliates with respect to all fund services in totality. The Board did not receive profitability information with respect to the Fund, but did receive such information with respect to the funds in which the Fund invests.

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. In this regard, the Board noted that while the Fund’s current investment management fee schedule does not include breakpoints, the Board intends to consider implementation of one or more breakpoints once the Fund reaches an efficient operating size. 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 Deutsche 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 DIMA’s 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 Trustees and counsel present. It is possible that individual Trustees may have weighed these factors differently in reaching their individual decisions to approve the continuation of the Agreements.

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2AAA-3 (R-028379-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Global Equity VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management Team

7 Investment Portfolio

10 Statement of Assets and Liabilities

11 Statement of Operations

12 Statement of Changes in Net Assets

13 Financial Highlights

14 Notes to Financial Statements

18 Information About Your Fund's Expenses

19 Proxy Voting

20 Advisory Agreement Board Considerations and Fee Evaluation

Stocks may decline in value. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Emerging markets tend to be more volatile than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 is 0.95% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in Deutsche Global Equity VIP
		The MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The index consists of 45 country indices comprising 24 developed and 21 emerging market country indices. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Global Equity VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,425		$	10,118		$	14,347		$	16,160		$	16,155
Class A	Average annual total return		4.25	%		1.18	%		12.79	%		10.08	%		4.91	%
MSCI All Country World Index	Growth of $10,000	$	10,266		$	10,071		$	14,434		$	17,565		$	18,608
MSCI All Country World Index	Average annual total return		2.66	%		0.71	%		13.01	%		11.93	%		6.41	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Common Stocks	98%	96%
Cash Equivalents	2%	3%
Participatory Notes	—	1%
	100%	100%

Sector Diversification (As a % of Common Stocks and Participatory Notes)	6/30/15	12/31/14

Health Care	23%	19%
Financials	14%	11%
Consumer Staples	14%	14%
Information Technology	13%	10%
Industrials	12%	19%
Consumer Discretionary	9%	8%
Materials	8%	11%
Energy	5%	7%
Telecommunication Services	2%	1%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/15	12/31/14

United States	43%	46%
Continental Europe	34%	32%
Canada	7%	7%
United Kingdom	6%	7%
Pacific Basin	5%	3%
Latin America	2%	3%
Other	3%	2%
	100%	100%

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 7.

Portfolio Management Team

Nils E. Ernst, PhD

Martin Berberich, CFA

Sebastian P. Werner, PhD

Portfolio Managers

Investment Portfolio June 30, 2015 (Unaudited)

	Shares		Value ($)

Common Stocks 96.9%
Belgium 1.1%
Anheuser-Busch InBev NV (Cost $326,770)		6,000		715,857
Brazil 1.4%
Estacio Participacoes SA		88,000		509,472
Itau Unibanco Holding SA (ADR) (Preferred)		40,000		438,000
(Cost $1,243,468)				947,472
Canada 6.7%
Agnico Eagle Mines Ltd.		24,000		680,880
Alimentation Couche-Tard, Inc. "B"		31,000		1,326,125
Brookfield Asset Management, Inc. "A"		44,000		1,537,358
Canadian Pacific Railway Ltd.		5,000		800,720
(Cost $3,366,665)				4,345,083
Denmark 1.2%
Jyske Bank AS (Registered)* (Cost $772,801)		16,000		801,311
France 2.9%
JC Decaux SA (a)		27,000		1,126,758
Pernod Ricard SA (a)		6,500		750,221
(Cost $1,838,781)				1,876,979
Germany 4.7%
BASF SE		7,000		614,653
Fresenius Medical Care AG & Co. KGaA		16,000		1,319,435
Lanxess AG		18,641		1,100,327
(Cost $2,538,836)				3,034,415
Hong Kong 0.5%
AIA Group Ltd. (Cost $299,420)		46,000		301,651
Indonesia 1.1%
PT Bank Negara Indonesia Persero Tbk (Cost $906,268)		1,835,000		730,367
Ireland 7.0%
Allergan PLC* (b)		5,600		1,699,376
Glanbia PLC		62,000		1,218,597
Kerry Group PLC "A"		11,000		815,390
Shire PLC		10,000		798,942
(Cost $3,326,508)				4,532,305
Israel 0.8%
Mobileye NV* (b) (Cost $410,247)		10,000		531,700
Luxembourg 1.4%
Eurofins Scientific (a) (Cost $712,011)		3,000		912,774
Malaysia 0.7%
IHH Healthcare Bhd. (Cost $390,629)		300,000		449,969
Mexico 1.0%
Fomento Economico Mexicano SAB de CV (ADR) (Cost $634,131)		7,000		623,630
Netherlands 1.2%
Sensata Technologies Holding NV* (b) (Cost $706,618)		15,000		791,100
	Shares		Value ($)

Norway 4.0%
DNO ASA* (a)		291,000		382,588
Gjensidige Forsikring ASA		62,000		999,456
Marine Harvest ASA		105,000		1,207,634
(Cost $2,797,542)				2,589,678
Philippines 2.7%
GT Capital Holdings, Inc.		35,115		1,065,511
Universal Robina Corp.		160,000		689,187
(Cost $1,623,254)				1,754,698
South Africa 2.5%
Aspen Pharmacare Holdings Ltd.*		25,000		741,902
MTN Group Ltd.		48,000		904,170
(Cost $1,680,402)				1,646,072
Sweden 3.8%
Assa Abloy AB "B"		37,500		706,134
Atlas Copco AB "A"		23,000		643,679
Hennes & Mauritz AB "B"		11,000		423,349
Telefonaktiebolaget LM Ericsson "B"		70,000		724,370
(Cost $2,525,870)				2,497,532
Switzerland 4.9%
Galenica AG (Registered)		1,400		1,459,526
Lonza Group AG (Registered)*		6,000		800,635
Nestle SA (Registered)		12,515		902,874
(Cost $2,557,890)				3,163,035
United Kingdom 6.0%
Anglo American PLC		46,000		663,942
Aon PLC (b)		7,000		697,760
Aveva Group PLC		16,000		454,502
Compass Group PLC		59,000		976,785
Halma PLC		40,000		478,756
Smith & Nephew PLC		14,000		235,937
Spirax-Sarco Engineering PLC		7,714		411,268
(Cost $4,217,013)				3,918,950
United States 41.3%
Acadia Healthcare Co., Inc.*		4,000		313,320
Alliance Data Systems Corp.*		4,800		1,401,312
Amphenol Corp. "A"		33,000		1,913,010
Applied Materials, Inc.		35,000		672,700
Bristol-Myers Squibb Co.		14,000		931,560
CBRE Group, Inc. "A"*		18,000		666,000
Cerner Corp.*		12,000		828,720
Danaher Corp. (a)		13,000		1,112,670
eBay, Inc.*		14,000		843,360
Ecolab, Inc.		11,000		1,243,770
Envision Healthcare Holdings, Inc.*		13,000		513,240
Evolent Health, Inc. "A"*		14,280		278,460
Express Scripts Holding Co.* (a)		9,000		800,460
Exxon Mobil Corp.		6,500		540,800
Harman International Industries, Inc.		8,000		951,520
HealthStream, Inc.*		19,000		577,980
JPMorgan Chase & Co. (a)		26,000		1,761,760
Las Vegas Sands Corp.		16,000		841,120
LKQ Corp.*		23,000		695,635
MasterCard, Inc. "A"		14,000		1,308,720
Mead Johnson Nutrition Co.		6,500		586,430
Nielsen NV		16,000		716,320
	Shares		Value ($)

Noble Energy, Inc.		30,000		1,280,400
Omnicare, Inc.		5,000		471,250
Pall Corp.		11,000		1,368,950
Praxair, Inc.		7,500		896,625
Press Ganey Holdings, Inc.*		20,000		573,400
Schlumberger Ltd.		11,000		948,090
United Technologies Corp.		11,000		1,220,230
Zoetis, Inc.		12,000		578,640
(Cost $23,213,327)				26,836,452
Total Common Stocks (Cost $56,088,451)				63,001,030

	Shares		Value ($)

Securities Lending Collateral 10.5%
Daily Assets Fund Institutional, 0.16% (c) (d) (Cost $6,799,243)		6,799,243		6,799,243

Cash Equivalents 2.4%
Central Cash Management Fund, 0.09% (c) (Cost $1,550,183)		1,550,183		1,550,183

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $64,437,877)†		109.8			71,350,456
Other Assets and Liabilities, Net		(9.8	)		(6,362,195	)
Net Assets		100.0			64,988,261

* Non-income producing security.

† The cost for federal income tax purposes was $64,435,729. At June 30, 2015, net unrealized appreciation for all securities based on tax cost was $6,914,727. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $9,318,661 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,403,934.

(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, 2015 amounted to $6,566,704, which is 10.1% of net assets.

(b) Listed on the New York Stock Exchange.

(c) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.

(d) Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.

ADR: American Depositary Receipt

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks
Belgium	$	—	$	715,857	$	—	$	715,857
Brazil		947,472		—		—		947,472
Canada		4,345,083		—		—		4,345,083
Denmark		—		801,311		—		801,311
France		—		1,876,979		—		1,876,979
Germany		—		3,034,415		—		3,034,415
Hong Kong		—		301,651		—		301,651
Indonesia		—		730,367		—		730,367
Ireland		1,699,376		2,832,929		—		4,532,305
Israel		531,700		—		—		531,700
Luxembourg		—		912,774		—		912,774
Malaysia		—		449,969		—		449,969
Mexico		623,630		—		—		623,630
Netherlands		791,100		—		—		791,100
Norway		—		2,589,678		—		2,589,678
Philippines		—		1,754,698		—		1,754,698
South Africa		—		1,646,072		—		1,646,072
Sweden		—		2,497,532		—		2,497,532
Switzerland		—		3,163,035		—		3,163,035
United Kingdom		697,760		3,221,190		—		3,918,950
United States		26,836,452		—		—		26,836,452
Short-Term Investments (e)		8,349,426		—		—		8,349,426
Total	$	44,821,999	$	26,528,457	$	—	$	71,350,456

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(e) 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, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $56,088,451) — including $6,566,704 of securities loaned	$	63,001,030
Investment in Daily Assets Fund Institutional (cost $6,799,243)*		6,799,243
Investment in Central Cash Management Fund (cost $1,550,183)		1,550,183
Total investments in securities, at value (cost $64,437,877)		71,350,456
Foreign currency, at value (cost $381,709)		380,281
Receivable for investments sold		90,111
Receivable for Fund shares sold		270
Dividends receivable		46,875
Interest receivable		825
Foreign taxes recoverable		58,949
Other assets		659
Total assets		71,928,426
Liabilities
Payable upon return of securities loaned		6,799,243
Payable for Fund shares redeemed		49,954
Accrued management fee		22,802
Accrued Trustees' fees		305
Other accrued expenses and payables		67,861
Total liabilities		6,940,165
Net assets, at value	$	64,988,261
Net Assets Consist of
Undistributed net investment income		319,818
Net unrealized appreciation (depreciation) on: Investments		6,912,579
Foreign currency		(2,895	)
Accumulated net realized gain (loss)		(42,482,717	)
Paid-in capital		100,241,476
Net assets, at value	$	64,988,261
Class A Net Asset Value, offering and redemption price per share ($64,988,261 ÷ 6,806,785 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	9.55

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $61,235)	$	627,954
Interest		761
Income distributions — Central Cash Management Fund		670
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		12,227
Total income		641,612
Expenses: Management fee		216,067
Administration fee		33,241
Services to shareholders		418
Custodian fee		25,675
Professional fees		34,784
Reports to shareholders		11,559
Trustees' fees and expenses		2,443
Other		10,288
Total expenses before expense reductions		334,475
Expense reductions		(31,981	)
Total expenses after expense reductions		302,494
Net investment income		339,118
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		1,648,774
Foreign currency		26,211
		1,674,985
Change in net unrealized appreciation (depreciation) on: Investments		758,730
Foreign currency		2,856
		761,586
Net gain (loss)		2,436,571
Net increase (decrease) in net assets resulting from operations	$	2,775,689

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	339,118		$	421,556
Operations: Net investment income	$	339,118		$	421,556
Net realized gain (loss)		1,674,985			3,328,692
Change in net unrealized appreciation (depreciation)		761,586			(2,963,485	)
Net increase (decrease) in net assets resulting from operations		2,775,689			786,763
Distributions to shareholders from: Net investment income: Class A		(365,100	)		(1,256,998	)
Fund share transactions: Class A Proceeds from shares sold		1,026,406			2,233,568
Reinvestment of distributions		365,100			1,256,998
Payments for shares redeemed		(6,731,345	)		(8,090,295	)
Net increase (decrease) in net assets from Class A share transactions		(5,339,839	)		(4,599,729	)
Increase (decrease) in net assets		(2,929,250	)		(5,069,964	)
Net assets at beginning of period		67,917,511			72,987,475
Net assets at end of period (including undistributed net investment income of $319,818 and $345,800, respectively)	$	64,988,261		$	67,917,511
Other Information
Class A Shares outstanding at beginning of period		7,372,593			7,869,570
Shares sold		107,207			240,333
Shares issued to shareholders in reinvestment of distributions		37,523			138,132
Shares redeemed		(710,538	)		(875,442	)
Net increase (decrease) in Class A shares		(565,808	)		(496,977	)
Shares outstanding at end of period		6,806,785			7,372,593

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	9.21		$	9.27		$	7.96		$	6.98		$	8.08		$	7.45
Income (loss) from investment operations: Net investment incomea		.05			.06			.14			.18			.19			.14
Net realized and unrealized gain (loss)		.34			.04			1.37			1.01			(1.14	)		.66
Total from investment operations		.39			.10			1.51			1.19			(.95	)		.80
Less distributions from: Net investment income		(.05	)		(.16	)		(.20	)		(.21	)		(.15	)		(.17	)
Net asset value, end of period	$	9.55		$	9.21		$	9.27		$	7.96		$	6.98		$	8.08
Total Return (%)		4.25	b**		1.14			19.31	b		17.34			(12.07	)		10.93
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		65			68			73			67			65			83
Ratio of expenses before expense reductions (%)		1.01	*		.95			1.06			1.02			1.03			.99
Ratio of expenses after expense reductions (%)		.91	*		.95			.99			1.02			1.03			.99
Ratio of net investment income (%)		1.02	*		.59			1.69			2.46			2.44			1.90
Portfolio turnover rate (%)		42	**		78			139			18			26			14
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reimbursed. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Global Equity VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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.

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.

Futures contracts are generally valued at the settlement prices established each day on the exchange on which they are traded and are categorized as Level 1.

Investments in open-end investment companies are valued at their net asset value each business day and are 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 the 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, 2015, 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.

Under the Regulated Investment Company Modernization Act of 2010, net capital losses incurred post-enactment may be carried forward indefinitely, and their character is retained as short-term and/or long-term. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.

At December 31, 2014, the Fund had a net tax basis capital loss carryforward of approximately $44,062,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($4,898,000) and December 31, 2017 ($39,164,000), the respective expiration dates, whichever occurs first.

In addition, from November 1, 2014 through December 31, 2014, the Fund elected to defer qualified late year losses of approximately $98,000 of net short-term capital losses and treat them as arising in the fiscal year ending December 31, 2015.

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, income received from passive foreign investment companies 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.

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. 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. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments) aggregated $27,310,896 and $32,209,707, respectively.

C. Related Parties

First $1.5 billion	.650	%
Next $1.75 billion	.635	%
Next $1.75 billion	.620	%
Over $5 billion	.605	%

For the period from January 1, 2015 through April 30, 2016, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A shares at 0.91%.

For the six months ended June 30, 2015, fees waived and/or expenses reimbursed were $31,981.

Securities Lending Fees. Deutsche Bank AG serves as lending agent for the Fund. For the six months ended June 30, 2015, the Fund incurred lending agent fees to Deutsche Bank AG in the amount of $1,063.

D. Ownership of the Fund

At June 30, 2015, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 77% and 23%.

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 the one-month LIBOR exceeds the Federal Funds Rate, the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at June 30, 2015.

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2015 to June 30, 2015).

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,042.50
Expenses Paid per $1,000*	$	4.61
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,020.28
Expenses Paid per $1,000*	$	4.56

* Expenses are equal to the Fund's annualized expense ratio, 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 Ratio	Class A
Deutsche Variable Series II — Deutsche Global Equity VIP	.91%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Global Equity VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

— The Trustees 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 Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— In connection with reviewing the Agreement, the Board also reviewed the terms of the Fund’s distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund’s shareholders. DIMA is part of Deutsche Bank AG ("DB"), 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.

While shareholders may focus primarily on fund performance and fees, the Fund’s Board considers these and many other factors, including the quality and integrity of DIMA’s personnel and 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 Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 3rd quartile of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has underperformed its benchmark in the one-, three- and five-year periods ended December 31, 2013.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 (3rd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses 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, 2013, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). 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 Board noted that the expense limitation agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. 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 information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the Deutsche U.S. mutual funds ("Deutsche 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 DIMA and its affiliates with respect to all fund services in totality and by fund. The Board and the Fee Consultant reviewed DIMA’s methodology in allocating its costs to the management of the Fund. Based on the information provided, the Board concluded that the pre-tax profits realized by DIMA in connection with the management of the Fund were not unreasonable.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

Based on all of the information considered and the conclusions reached, the Board unanimously determined that the continuation of the Agreement is in the best interests of the Fund. In making this determination, the Board did not give particular weight to any single factor identified above. The Board considered these factors over the course of numerous meetings, certain of which were in executive session with only the Independent Trustees and counsel present. It is possible that individual Trustees may have weighed these factors differently in reaching their individual decisions to approve the continuation of the Agreement.

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2GE-3 (R-028380-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Global Growth VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management Team

7 Investment Portfolio

11 Statement of Assets and Liabilities

12 Statement of Operations

13 Statement of Changes in Net Assets

14 Financial Highlights

16 Notes to Financial Statements

21 Information About Your Fund's Expenses

22 Proxy Voting

23 Advisory Agreement Board Considerations and Fee Evaluation

Stocks may decline in value. Smaller company stocks tend to be more volatile than medium-sized or large company stocks. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Emerging markets tend to be more volatile than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 are 1.41% and 1.76% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in Deutsche Global Growth VIP
		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. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Global Growth VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,407		$	9,956		$	14,350		$	16,087		$	18,254
Class A	Average annual total return		4.07	%		–0.44	%		12.79	%		9.97	%		6.20	%
MSCI World Index	Growth of $10,000	$	10,263		$	10,143		$	14,920		$	18,502		$	18,557
MSCI World Index	Average annual total return		2.63	%		1.43	%		14.27	%		13.10	%		6.38	%
Deutsche Global Growth VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	10,390		$	9,914		$	14,204		$	15,808		$	17,603
Class B	Average annual total return		3.90	%		–0.86	%		12.41	%		9.59	%		5.82	%
MSCI World Index	Growth of $10,000	$	10,263		$	10,143		$	14,920		$	18,502		$	18,557
MSCI World Index	Average annual total return		2.63	%		1.43	%		14.27	%		13.10	%		6.38	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Common Stocks	96%	95%
Cash Equivalents	4%	4%
Preferred Stock	0%	—
Participatory Notes	—	1%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/15	12/31/14

Health Care	21%	18%
Industrials	15%	20%
Consumer Staples	13%	13%
Financials	13%	11%
Consumer Discretionary	12%	12%
Information Technology	12%	10%
Materials	8%	9%
Energy	4%	6%
Telecommunication Services	2%	1%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/15	12/31/14

United States	40%	47%
Europe	34%	29%
United Kingdom	8%	7%
Canada	7%	7%
Asia (excluding Japan)	6%	5%
Latin America	2%	2%
Japan	2%	2%
Africa	1%	1%
	100%	100%

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 7.

Portfolio Management Team

Joseph Axtell, CFA

Lead Portfolio Manager

Rafaelina M. Lee

Nils E. Ernst, PhD

Martin Berberich, CFA

Sebastian P. Werner, PhD

Portfolio Managers

Investment Portfolio June 30, 2015 (Unaudited)

	Shares		Value ($)

Common Stocks 95.4%
Australia 0.2%
G8 Education Ltd. (Cost $84,929)		28,757		72,578
Belgium 1.0%
Anheuser-Busch InBev NV (Cost $370,873)		4,000		477,238
Bermuda 0.3%
Lazard Ltd. "A" (Cost $47,986)		2,059		115,798
Brazil 0.7%
Estacio Participacoes SA (Cost $520,471)		57,000		329,999
Canada 6.2%
Agnico Eagle Mines Ltd.		12,000		340,440
Alimentation Couche-Tard, Inc. "B"		18,300		782,841
Brookfield Asset Management, Inc. "A"		25,500		890,969
Canadian Pacific Railway Ltd.		3,000		480,432
Goldcorp, Inc.		8,000		129,600
Quebecor, Inc. "B"		4,507		112,657
SunOpta, Inc.*		11,038		118,438
(Cost $2,433,735)				2,855,377
China 0.2%
Minth Group Ltd. (Cost $85,577)		48,870		109,367
Denmark 1.7%
Jyske Bank AS (Registered)*		10,600		530,869
TDC AS		36,000		263,522
(Cost $799,205)				794,391
Finland 0.2%
Cramo Oyj (Cost $102,721)		4,752		91,762
France 2.4%
Flamel Technologies SA (ADR)*		10,778		228,386
Parrot SA*		664		29,791
Pernod Ricard SA (a)		5,500		634,802
Vivendi SA		9,000		226,901
(Cost $1,128,743)				1,119,880
Germany 5.0%
BASF SE		4,700		412,695
Fresenius Medical Care AG & Co. KGaA		10,500		865,879
LANXESS AG		11,000		649,300
Patrizia Immobilien AG*		4,441		108,586
United Internet AG (Registered)		4,055		180,104
VIB Vermoegen AG		4,543		81,112
(Cost $1,953,170)				2,297,676
Hong Kong 1.1%
AIA Group Ltd.		25,000		163,941
K Wah International Holdings Ltd.		179,323		95,434
Playmates Toys Ltd.		230,951		44,691
REXLot Holdings Ltd.		1,009,635		57,327
Sun Hung Kai & Co., Ltd.		56,380		50,981
Techtronic Industries Co., Ltd.		31,974		105,511
(Cost $562,784)				517,885
	Shares		Value ($)

Indonesia 1.0%
PT Arwana Citramulia Tbk		1,118,618		44,451
PT Bank Negara Indonesia Persero Tbk		800,000		318,416
PT Multipolar Tbk		1,697,639		79,918
(Cost $596,518)				442,785
Ireland 5.8%
Allergan PLC* (c)		3,900		1,183,494
Greencore Group PLC		20,487		100,970
Kerry Group PLC "A"		7,500		555,948
Paddy Power PLC		1,102		94,440
Ryanair Holdings PLC (ADR) (b)		2,097		149,621
Shire PLC		7,500		599,206
(Cost $2,024,151)				2,683,679
Italy 0.8%
Prysmian SpA		4,340		93,529
Unipol Gruppo Finanziario SpA (a)		50,000		254,430
(Cost $263,449)				347,959
Japan 1.8%
Ai Holdings Corp.		5,340		94,673
Avex Group Holdings, Inc.		5,267		92,634
Kusuri No Aoki Co., Ltd.		4,158		184,771
MISUMI Group, Inc.		5,811		82,690
Nippon Seiki Co., Ltd.		7,783		154,909
United Arrows Ltd.		2,070		64,982
Universal Entertainment Corp.		5,003		113,171
UT Holdings Co., Ltd.*		10,269		51,016
(Cost $684,545)				838,846
Korea 0.1%
Suprema, Inc.* (Cost $28,356)		1,395		28,764
Luxembourg 1.4%
Eurofins Scientific (a) (Cost $494,226)		2,100		638,942
Malaysia 0.9%
Hartalega Holdings Bhd.		34,597		78,124
IHH Healthcare Bhd.		150,000		224,984
Nirvana Asia Ltd. 144A		215,599		58,687
Tune Ins Holdings Bhd.		168,551		73,425
(Cost $437,612)				435,220
Mexico 0.9%
Fomento Economico Mexicano SAB de CV (ADR) (Cost $439,160)		4,700		418,723
Netherlands 2.8%
Brunel International NV		3,676		73,103
Constellium NV "A"* (c)		7,061		83,531
ING Groep NV (CVA)		36,000		590,691
SBM Offshore NV*		6,282		74,350
Sensata Technologies Holding NV* (c)		8,632		455,252
(Cost $1,199,971)				1,276,927
Norway 1.8%
DNO ASA* (a)		120,000		157,768
Marine Harvest ASA		60,000		690,077
(Cost $937,473)				847,845
	Shares		Value ($)

Panama 0.2%
Banco Latinoamericano de Comercio Exterior SA "E" (Cost $76,369)		3,417		109,959
Philippines 2.1%
Alliance Global Group, Inc.		167,256		80,628
GT Capital Holdings, Inc.		16,600		503,701
Universal Robina Corp.		88,000		379,053
(Cost $954,593)				963,382
Singapore 0.1%
Lian Beng Group Ltd. (Cost $65,155)		156,264		63,218
South Africa 1.1%
MTN Group Ltd. (Cost $527,752)		27,500		518,014
Spain 0.6%
Mediaset Espana Comunicacion SA		18,000		235,757
Talgo SA 144A*		7,098		56,817
(Cost $281,108)				292,574
Sweden 4.2%
Assa Abloy AB "B"		19,500		367,190
Atlas Copco AB "A"		14,600		408,596
BillerudKorsnas AB		20,000		314,307
Hennes & Mauritz AB "B"		8,500		327,133
Nobina AB 144A*		18,007		68,206
Telefonaktiebolaget LM Ericsson "B"		43,000		444,970
(Cost $1,962,274)				1,930,402
Switzerland 5.2%
Dufry AG (Registered)*		645		89,961
Galenica AG (Registered) (a)		810		844,440
Lonza Group AG (Registered)*		3,200		427,006
Nestle SA (Registered)		11,000		793,576
Novartis AG (Registered)		2,700		265,949
(Cost $2,267,945)				2,420,932
Thailand 0.1%
Malee Sampran PCL (Foreign Registered) (Cost $76,643)		44,799		42,444
United Kingdom 7.7%
Anglo American PLC		25,000		360,838
Arrow Global Group PLC		25,631		106,521
Aveva Group PLC		9,000		255,657
Babcock International Group PLC		11,458		194,306
Clinigen Healthcare Ltd.		9,936		97,340
Compass Group PLC		30,000		496,671
Crest Nicholson Holdings PLC		13,017		114,692
Domino's Pizza Group PLC		6,860		83,710
Halma PLC		22,000		263,316
Hargreaves Lansdown PLC		5,179		93,888
HellermannTyton Group PLC		17,731		96,064
Howden Joinery Group PLC		15,644		126,914
IMI PLC		9,000		159,502
Jardine Lloyd Thompson Group PLC		4,314		70,906
Polypipe Group PLC		24,423		104,187
Reckitt Benckiser Group PLC		5,000		431,260
Rotork PLC		22,540		82,378
Smith & Nephew PLC		19,500		328,627
Spirax-Sarco Engineering PLC		2,103		112,122
(Cost $3,665,717)				3,578,899
	Shares		Value ($)

United States 37.8%
Advance Auto Parts, Inc.		646		102,901
Affiliated Managers Group, Inc.*		538		117,607
Agilent Technologies, Inc.		5,000		192,900
Alliance Data Systems Corp.*		2,800		817,432
Altra Industrial Motion Corp. (a)		1,428		38,813
Amphenol Corp. "A"		18,500		1,072,445
AZZ, Inc.		590		30,562
BE Aerospace, Inc.		1,296		71,150
Berry Plastics Group, Inc.*		2,097		67,943
BorgWarner, Inc.		1,526		86,738
Bristol-Myers Squibb Co.		7,500		499,050
Cardtronics, Inc.* (a)		2,587		95,848
Casey's General Stores, Inc. (a)		1,299		124,366
Cerner Corp.* (a)		6,300		435,078
Danaher Corp.		8,000		684,720
DigitalGlobe, Inc.*		2,120		58,915
eBay, Inc.*		7,500		451,800
Ecolab, Inc.		6,000		678,420
Encore Capital Group, Inc.* (a)		1,457		62,272
Envision Healthcare Holdings, Inc.*		7,500		296,100
Express Scripts Holding Co.*		4,700		418,018
Exxon Mobil Corp.		4,500		374,400
Fogo De Chao, Inc.* (a)		2,139		49,539
Fox Factory Holding Corp.*		5,680		91,334
Gentherm, Inc.* (a)		2,392		131,345
Hain Celestial Group, Inc.*		1,629		107,286
Harman International Industries, Inc.		4,500		535,230
HeartWare International, Inc.*		608		44,196
Jack in the Box, Inc.		1,208		106,497
JPMorgan Chase & Co.		14,000		948,640
Kindred Healthcare, Inc.		4,071		82,601
Las Vegas Sands Corp. (a)		8,800		462,616
MasterCard, Inc. "A"		10,300		962,844
Middleby Corp.*		1,315		147,582
Molina Healthcare, Inc.* (a)		1,947		136,874
Nielsen NV		13,000		582,010
Noble Energy, Inc.		15,600		665,808
NxStage Medical, Inc.*		2,848		40,684
Oaktree Capital Group LLC		2,392		127,207
Oil States International, Inc.*		1,255		46,724
Omnicare, Inc.		7,000		659,750
Pacira Pharmaceuticals, Inc.*		1,189		84,086
Pall Corp.		6,500		808,925
PAREXEL International Corp.*		1,050		67,526
Polaris Industries, Inc. (a)		831		123,079
Praxair, Inc.		5,000		597,750
Primoris Services Corp. (a)		4,351		86,150
Providence Service Corp.*		3,304		146,301
Retrophin, Inc.*		4,519		149,805
Roadrunner Transportation Systems, Inc.*		3,101		80,006
Schlumberger Ltd.		6,000		517,140
Sinclair Broadcast Group, Inc. "A"		3,377		94,252
Tenneco, Inc.*		1,736		99,716
Thoratec Corp.*		2,982		132,908
TiVo, Inc.* (a)		6,631		67,238
TriNet Group, Inc.*		2,703		68,521
Tristate Capital Holdings, Inc.*		6,324		81,769
United Rentals, Inc.*		336		29,440
United Technologies Corp.		7,000		776,510
Urban Outfitters, Inc.* (a)		2,628		91,980
	Shares		Value ($)

VeriFone Systems, Inc.*		3,473		117,943
WABCO Holdings, Inc.*		1,138		140,793
Waddell & Reed Financial, Inc. "A" (a)		2,060		97,459
Western Digital Corp.		1,604		125,786
WEX, Inc.*		421		47,981
Zeltiq Aesthetics, Inc.*		3,900		114,933
Zoe's Kitchen, Inc.*		1,665		68,165
(Cost $14,430,802)				17,522,407
Total Common Stocks (Cost $39,504,013)				44,183,872

Preferred Stock 0.0%
United States
Providence Service Corp.* (Cost $13,600)		136		13,590

	Shares		Value ($)

Securities Lending Collateral 9.4%
Daily Assets Fund Institutional, 0.16% (d) (e) (Cost $4,345,349)		4,345,349		4,345,349

Cash Equivalents 3.7%
Central Cash Management Fund, 0.09% (d) (Cost $1,735,007)		1,735,007		1,735,007

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $45,597,969)†		108.5			50,277,818
Other Assets and Liabilities, Net (a)		(8.5	)		(3,931,822	)
Net Assets		100.0			46,345,996

* Non-income producing security.

† The cost for federal income tax purposes was $45,765,775. At June 30, 2015, net unrealized appreciation for all securities based on tax cost was $4,512,043. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $6,863,037 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,350,994.

(b) Listed on the NASDAQ Stock Market, Inc.

(d) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.

(e) Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.

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.

ADR: American Depositary Receipt

CVA: Certificaten Van Aandelen (Certificate of Stock)

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks
Australia	$	—	$	72,578	$	—	$	72,578
Belgium		—		477,238		—		477,238
Bermuda		115,798		—		—		115,798
Brazil		329,999		—		—		329,999
Canada		2,855,377		—		—		2,855,377
China		—		109,367		—		109,367
China		—		794,391		—		794,391
Finland		—		91,762		—		91,762
France		228,386		891,494		—		1,119,880
Germany		—		2,297,676		—		2,297,676
Hong Kong		—		460,558		57,327		517,885
Indonesia		—		442,785		—		442,785
Ireland		1,333,115		1,350,564		—		2,683,679
Italy		—		347,959		—		347,959
Japan		—		838,846		—		838,846
Korea		—		28,764		—		28,764
Luxembourg		—		638,942		—		638,942
Malaysia		—		435,220		—		435,220
Mexico		418,723		—		—		418,723
Netherlands		538,783		738,144		—		1,276,927
Norway		—		847,845		—		847,845
Panama		109,959		—		—		109,959
Philippines		—		963,382		—		963,382
Singapore		—		63,218		—		63,218
South Africa		—		518,014		—		518,014
Spain		—		292,574		—		292,574
Sweden		—		1,930,402		—		1,930,402
Switzerland		—		2,420,932		—		2,420,932
Thailand		—		42,444		—		42,444
United Kingdom		—		3,578,899		—		3,578,899
United States		17,522,407		—		—		17,522,407
Preferred Stock		—		—		13,590		13,590
Short-Term Investments (f)		6,080,356		—		—		6,080,356
Total	$	29,532,903	$	20,673,998	$	70,917	$	50,277,818

During the period ended June 30, 2015, the amount of transfers between Level 2 and Level 3 was $94,941. The investment was

transferred from Level 2 to Level 3 because the security was halted on the exchange and is valued at the last traded price. A significant

change between the last traded price and the price of the security once it resumes trading on the securities exchange could have a material

change in the fair value measurement.

Transfers between price levels are recognized at the beginning of the reporting period.

(f) 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, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $39,517,613) — including $4,222,774 of securities loaned	$	44,197,462
Investment in Daily Assets Fund Institutional (cost $4,345,349)*		4,345,349
Investment in Central Cash Management Fund (cost $1,735,007)		1,735,007
Total investments in securities, at value (cost $45,597,969)		50,277,818
Cash		15,945
Foreign currency, at value (cost $356,742)		355,772
Receivable for investments sold		130,901
Receivable for Fund shares sold		3,085
Dividends receivable		35,069
Interest receivable		1,253
Foreign taxes recoverable		34,711
Other assets		1,095
Total assets		50,855,649
Liabilities
Payable upon return of securities loaned		4,345,349
Payable for investments purchased		41,011
Payable for Fund shares redeemed		35,182
Accrued management fees		15,538
Accrued Trustees' fees		1,165
Other accrued expenses and payables		71,408
Total liabilities		4,509,653
Net assets, at value		46,345,996
Net Assets Consist of
Undistributed net investment income		141,103
Net unrealized appreciation (depreciation) on: Investments		4,679,849
Foreign currency		(2,640	)
Accumulated net realized gain (loss)		(41,245,620	)
Paid-in capital		82,773,304
Net assets, at value		46,345,996
Class A Net Asset Value, offering and redemption price per share ($46,240,685 ÷ 4,060,281 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.39
Class B Net Asset Value, offering and redemption price per share ($105,311 ÷ 9,219 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.42

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $37,565)	$	460,331
Interest		12
Income distributions — Central Cash Management Fund		516
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		5,188
Total income		466,047
Expenses: Management fee		214,980
Administration fee		23,495
Services to shareholders		521
Record keeping fees (Class B)		6
Distribution service fee (Class B)		142
Custodian fee		25,441
Professional fees		37,798
Reports to shareholders		13,803
Trustees' fees and expenses		2,083
Other		14,290
Total expenses before expense reductions		332,559
Expense reductions		(120,928	)
Total expenses after expense reductions		211,631
Net investment income (loss)		254,416
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		584,549
Futures		(44,599	)
Foreign currency		8,094
		548,044
Change in net unrealized appreciation (depreciation) on: Investments		1,025,069
Futures		17,264
Foreign currency		4,898
		1,047,231
Net gain (loss)		1,595,275
Net increase (decrease) in net assets resulting from operations	$	1,849,691

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, 2015 (Unaudited)			Years Ended December 31, 2014
Operations: Net investment income (loss)	$	254,416		$	355,555
Operations: Net investment income (loss)	$	254,416		$	355,555
Net realized gain (loss)		548,044			2,372,458
Change in net unrealized appreciation (depreciation)		1,047,231			(2,579,995	)
Net increase (decrease) in net assets resulting from operations		1,849,691			148,018
Distributions to shareholders from: Net investment income: Class A		(371,824	)		(509,707	)
Class B		(513	)		(15,999	)
Total distributions		(372,337	)		(525,706	)
Fund share transactions: Class A Proceeds from shares sold		846,963			2,921,038
Reinvestment of distributions		371,824			509,707
Payments for shares redeemed		(3,531,544	)		(7,205,720	)
Net increase (decrease) in net assets from Class A share transactions		(2,312,757	)		(3,774,975	)
Class B Proceeds from shares sold		3,701			24,993
Reinvestment of distributions		513			15,999
Payments for shares redeemed		(13,612	)		(2,651,803	)
Net increase (decrease) in net assets from Class B share transactions		(9,398	)		(2,610,811	)
Increase (decrease) in net assets		(844,801	)		(6,763,474	)
Net assets at beginning of period		47,190,797			53,954,271
Net assets at end of period (including undistributed net investment income of $141,103 and $259,024, respectively)	$	46,345,996		$	47,190,797
Other Information
Class A Shares outstanding at beginning of period		4,265,093			4,601,327
Shares sold		73,507			261,234
Shares issued to shareholders in reinvestment of distributions		31,944			46,464
Shares redeemed		(310,263	)		(643,932	)
Net increase (decrease) in Class A shares		(204,812	)		(336,234	)
Shares outstanding at end of period		4,060,281			4,265,093
Class B Shares outstanding at beginning of period		10,038			246,555
Shares sold		324			2,774
Shares issued to shareholders in reinvestment of distributions		44			1,453
Shares redeemed		(1,187	)		(240,744	)
Net increase (decrease) in Class B shares		(819	)		(236,517	)
Shares outstanding at end of period		9,219			10,038

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	11.04		$	11.13		$	9.24		$	7.90		$	9.28		$	8.24
Income (loss) from investment operations: Net investment incomea		.06			.08			.10			.12			.11			.06
Net realized and unrealized gain (loss)		.38			(.06	)		1.92			1.34			(1.43	)		1.06
Total from investment operations		.44			.02			2.02			1.46			(1.32	)		1.12
Less distributions from: Net investment income		(.09	)		(.11	)		(.13	)		(.12	)		(.06	)		(.08	)
Net asset value, end of period	$	11.39		$	11.04		$	11.13		$	9.24		$	7.90		$	9.28
Total Return (%)b		4.07	**		.21			22.08			18.60			(14.39	)		13.65
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		46			47			51			54			49			68
Ratio of expenses before expense reductions (%)		1.41	*		1.41			1.45			1.42			1.37			1.41
Ratio of expenses after expense reductions (%)		.90	*		.82			.88			.99			1.03			1.05
Ratio of net investment income (%)		1.08	*		.71			1.00			1.40			1.24			.77
Portfolio turnover rate (%)		31	**		63			171			107			127			165
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

				Years Ended December 31,
Class B	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	11.05		$	11.14		$	9.25		$	7.91		$	9.29		$	8.25
Income (loss) from investment operations: Net investment incomea		.04			.02			.07			.09			.08			.04
Net realized and unrealized gain (loss)		.38			(.04	)		1.92			1.34			(1.44	)		1.05
Total from investment operations		.42			(.02	)		1.99			1.43			(1.36	)		1.09
Less distributions from: Net investment income		(.05	)		(.07	)		(.10	)		(.09	)		(.02	)		(.05	)
Net asset value, end of period	$	11.42		$	11.05		$	11.14		$	9.25		$	7.91		$	9.29
Total Return (%)b		3.90	**		(.15	)		21.62			18.16			(14.67	)		13.24
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		.1			.1			3			3			3			5
Ratio of expenses before expense reductions (%)		1.72	*		1.76			1.81			1.76			1.72			1.76
Ratio of expenses after expense reductions (%)		1.21	*		1.15			1.23			1.34			1.38			1.40
Ratio of net investment income (%)		.78	*		.14			.66			1.04			.88			.42
Portfolio turnover rate (%)		31	**		63			171			107			127			165
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

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Global Growth VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

Multiple Classes of Shares of Beneficial Interest. The Fund offers two classes of shares (Class A shares and Class B shares). Sales of Class B shares are subject to recordkeeping fees up to 0.15% and Rule 12b-1 fees under the 1940 Act equal to an annual rate of 0.25% of the average daily net assets for Class B shares of the Fund. Class A shares are not subject to such fees.

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 (including the applicable Rule 12b-1 fee and recordkeeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.

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.

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), exchange-traded funds, futures contracts and certain indices and these securities are categorized as Level 2.

Futures contracts are generally valued at the settlement prices established each day on the exchange on which they are traded and are categorized as Level 1.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

Securities Lending. Brown Brothers Harriman & Co., as lending agent, lends securities of the Fund to certain financial institutions under the terms of the Security Lending Agreement. The Fund retains the 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, 2015, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

Participatory Notes. The Fund may invest in Participatory Notes (P-Notes). P-Notes are promissory notes designed to offer a return linked to the performance of a particular underlying equity security or market. P-Notes are issued by banks or broker-dealers and allow the Fund to gain exposure to local shares in foreign markets. Investments in P-Notes involve the same risks associated with a direct investment in the underlying foreign companies or foreign markets that they seek to replicate. Although each participation note is structured with a defined maturity date, early redemption may be possible. Risks associated with participation notes include the possible failure of a counterparty to perform in accordance with the terms of the agreement and potential delays or an inability to redeem before maturity under certain market conditions.

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.

Under the Regulated Investment Company Modernization Act of 2010, net capital losses incurred post-enactment may be carried forward indefinitely, and their character is retained as short-term and/or long-term. Previously, net capital losses were carried forward for eight years and treated as short-term. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.

At December 31, 2014, the Fund had a net tax basis capital loss carryforward of approximately $41,532,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($23,743,000) and December 31, 2017 ($17,789,000), the respective expiration dates, whichever occurs first.

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, investments in futures contracts, income received from Passive Foreign Investment Companies 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.

B. Derivative Instruments

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the six months ended June 30, 2015, the Fund invested in futures as a substitute for direct investment in a particular asset class or to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the market.

Upon entering into a futures contract, the Fund is required to deposit with a financial intermediary cash or securities ("initial margin") in an amount equal to a certain percentage of the face value indicated in the futures contract. Subsequent payments ("variation margin") are made or received by the Fund dependent upon the daily fluctuations in the value and are recorded for financial reporting purposes as unrealized gains or losses by the Fund. Gains or losses are realized when the contract expires or is closed. Since all futures contracts are exchange-traded, counterparty risk is minimized as the exchange's clearinghouse acts as the counterparty, and guarantees the futures against default.

Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market will limit the Fund's ability to close out a futures contract prior to the settlement date and the risk that the futures contract is not well correlated with the security, index or currency to which it relates. Risk of loss may exceed amounts recognized in the Statement of Assets and Liabilities.

There were no open futures contracts at June 30, 2015. For the six months ended June 30, 2015, the investment in futures contracts purchased had a total notional value generally indicative of a range from $0 to $870,000.

The amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the six months ended June 30, 2015 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Futures Contracts
Equity Contracts (a)	$	(44,599	)
The above derivative is located in the following Statement of Operations account: (a) Net realized gain (loss) from futures

Change in Net Unrealized Appreciation (Depreciation)	Futures Contracts
Equity Contracts (a)	$	17,264
The above derivative is located in the following Statement of Operations account: (a) Change in net unrealized appreciation (depreciation) on futures

C. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments) aggregated $14,231,450 and $16,661,032, respectively.

D. Related Parties

First $250 million	.915	%
Next $500 million	.865	%
Next $750 million	.815	%
Next $1.5 billion	.765	%
Over $3 billion	.715	%

Class A	.90%
Class B	1.25%

For the six months ended June 30, 2015, fees waived and/or expenses reimbursed for each class are as follows:

Class A	$	120,637
Class B		291
	$	120,928

Services to Shareholders	Total Aggregated		Unpaid at June 30, 2015
Class A	$	146	$	74
Class B		28		13
	$	174	$	87

Distribution Service Agreement. Under the Fund's Class B 12b-1 plan, DeAWM Distributors, Inc. ("DDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the six months ended June 30, 2015, the Distribution Service Fee aggregated $142, of which $24 is unpaid.

E. Ownership of the Fund

At June 30, 2015, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 72% and 22%. Two participating insurance companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, owning 56% and 44%.

F. Line of Credit

Information About Your Fund's Expenses (Unaudited)

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 contract charges, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2015 to June 30, 2015).

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,040.70	$	1,039.00
Expenses Paid per $1,000*	$	4.55	$	6.12
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,020.33	$	1,018.79
Expenses Paid per $1,000*	$	4.51	$	6.06

Annualized Expense Ratios	Class A		Class B
Deutsche Variable Series II — Deutsche Global Growth VIP	.90%		1.21%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Global Growth VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

— The Trustees 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 Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— In connection with reviewing the Agreement, the Board also reviewed the terms of the Fund’s Rule 12b-1 plan, distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 3rd quartile, 4th quartile and 3rd 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 the five-year period and has underperformed its benchmark in the one- and three-year periods ended December 31, 2013. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board recognized the efforts by DIMA in recent years to enhance its investment platform and improve long-term performance across the Deutsche fund complex.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2013, 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 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 Board noted that the expense limitations agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. 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 information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2GG-3 (R-028383-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Global Income Builder VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management Team

7 Investment Portfolio

32 Statement of Assets and Liabilities

33 Statement of Operations

34 Statement of Changes in Net Assets

35 Financial Highlights

36 Notes to Financial Statements

44 Information About Your Fund's Expenses

45 Proxy Voting

46 Advisory Agreement Board Considerations and Fee Evaluation

Although allocation among different asset categories generally limits risk, fund management may favor an asset category that underperforms other assets or markets as a whole. Stocks may decline in value. Smaller company stocks tend to be more volatile than medium-sized or large company stocks. Dividends are not guaranteed. If the dividend-paying stocks held by the Fund reduce or stop paying dividends, the Fund’s ability to generate income may be adversely affected. Preferred stocks, a type of dividend-paying stock, present certain additional risks. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Emerging markets tend to be more volatile than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Bond investments are subject to interest-rate, credit, liquidity and market risks to varying degrees. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Because Exchange Traded Funds (ETFs) trade on a securities exchange, their shares may trade at a premium or discount to their net asset value. ETFs also incur fees and expenses so they may not fully match the performance of the indexes they are designed to track. The Fund may lend securities to approved institutions. Any fund that focuses in a particular segment of the market or region of the world will generally be more volatile than a fund that invests more broadly. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 is 0.62% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in Deutsche Global Income Builder VIP


Yearly periods ended June 30

The S&P® Target Risk Moderate Index is designed to measure the performance of S&P's proprietary moderate target risk allocation model. The S&P® Target Risk Moderate Index seeks to provide significant exposure to fixed income, while also allocating a smaller portion of exposure to equities in order to seek current income, some capital preservation, and an opportunity for moderate to low capital appreciation.

The Blended Index consists of an equally weighted blend (50%/50%) of the MSCI World High Dividend Yield Index and Barclays U.S. Universal Index.

MSCI World High Dividend Yield Index includes securities that offer a meaningfully higher-than-average dividend yield relative to the MSCI World Index and pass dividend sustainability and persistence screens. The index offers broad market coverage, and is free-float market capitalization-weighted to ensure that its performance can be replicated in institutional and retail portfolios. The index is calculated using closing local market prices and translates into US dollars using the London close foreign exchange rates.

Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, and the non-ERISA portion of the CMBS Index.

The Russell 1000® Index is an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92% of the total market capitalization of the Russell 3000® Index.

The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more.

Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

On May 1, 2015, the S&P Target Risk Moderate Index replaced the Russell 1000 Index as the comparative broad based securities market index because the Advisor believes that the S&P Target Risk Moderate Index more closely reflects the fund’s investment strategies. On May 1, 2015, the Blended Index replaced the Barclays U.S. Aggregate Bond Index and the S&P Target Risk Moderate Index as the sole additional comparative index. The Advisor believes the Blended Index provides additional comparative performance information and represents the fund’s overall strategic asset allocations.

Comparative Results
Deutsche Global Income Builder VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,260		$	10,108		$	13,256		$	15,857		$	16,513
Class A	Average annual total return		2.60	%		1.08	%		9.85	%		9.66	%		5.14	%
S&P® Target Risk Moderate Index	Growth of $10,000	$	10,070		$	10,077		$	12,156		$	14,206		$	15,943
S&P® Target Risk Moderate Index	Average annual total return		0.70	%		0.77	%		6.72	%		7.27	%		4.78	%
Blended Index	Growth of $10,000	$	9,991		$	9,797		$	12,058		$	14,704		$	16,877
Blended Index	Average annual total return		–0.09	%		–2.03	%		6.44	%		8.02	%		5.37	%
Russell 1000® Index	Growth of $10,000	$	10,171		$	10,733		$	16,317		$	22,470		$	21,853
Russell 1000® Index	Average annual total return		1.71	%		7.37	%		17.73	%		17.58	%		8.13	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,990		$	10,186		$	10,558		$	11,790		$	15,438
Barclays U.S. Aggregate Bond Index	Average annual total return		–0.10	%		1.86	%		1.83	%		3.35	%		4.44	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Equity	53%	53%
Common Stocks	53%	53%

Fixed Income	45%	36%
Corporate Bonds	21%	25%
Government & Agency Obligations	9%	8%
Mortgage-Backed Securities Pass-Throughs	5%	1%
Deutsche Floating Rate Fund	5%	—
Municipal Bonds and Notes	2%	0%
Collateralized Mortgage Obligations	2%	1%
Asset-Backed	1%	1%
Commercial Mortgage-Backed Securities	0%	0%

Cash Equivalents	2%	11%
	100%	100%

Sector Diversification (As a % of Equities, Corporate Bonds, Preferred Securities, Convertible Bonds and Other Investments)	6/30/15	12/31/14

Financials	22%	22%
Consumer Discretionary	12%	12%
Telecommunication Services	10%	10%
Health Care	10%	8%
Information Technology	9%	9%
Industrials	9%	10%
Energy	9%	10%
Consumer Staples	7%	8%
Materials	6%	6%
Utilities	6%	5%
	100%	100%

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 7.

Portfolio Management Team

Di Kumble, CFA William Chepolis, CFA  Philip G. Condon	Gary Russell, CFA John D. Ryan Darwei Kung
Portfolio Managers

Investment Portfolio June 30, 2015 (Unaudited)

	Shares		Value ($)

Common Stocks 55.3%
Consumer Discretionary 6.1%
Auto Components 0.8%
Aisin Seiki Co., Ltd.		2,664		113,703
Bridgestone Corp.		7,805		289,498
Cie Generale des Etablissements Michelin		243		25,429
Delphi Automotive PLC		3,154		268,374
Denso Corp.		79		3,948
Goodyear Tire & Rubber Co.		4,300		129,645
Johnson Controls, Inc.		1,959		97,029
Lear Corp.		1,300		145,938
Magna International, Inc.		2,352		132,006
Sumitomo Electric Industries Ltd.		16,605		256,993
Sumitomo Rubber Industries Ltd.		12,693		197,318
Toyota Industries Corp.		79		4,521
Yokohama Rubber Co., Ltd.		11,543		232,384
				1,896,786
Automobiles 1.7%
Bayerische Motoren Werke (BMW) AG		1,177		128,745
Daihatsu Motor Co., Ltd.		7,600		108,310
Daimler AG (Registered)		1,727		157,419
Ford Motor Co.		29,568		443,816
Fuji Heavy Industries Ltd.		5,600		207,138
General Motors Co.		14,040		467,953
Honda Motor Co., Ltd.		10,350		335,975
Isuzu Motors Ltd.		15,700		206,845
Mazda Motor Corp.		3,700		72,661
Mitsubishi Motors Corp.		23,638		201,569
Nissan Motor Co., Ltd.		46,585		486,583
Renault SA		3,333		345,760
Toyota Motor Corp.		6,190		415,673
Volkswagen AG		2,482		577,178
				4,155,625
Hotels, Restaurants & Leisure 0.5%
Carnival Corp.		4,858		239,937
Compass Group PLC		710		11,754
Dawn Holdings, Inc.* (a)		1		940
McDonald's Corp.		3,056		290,534
Royal Caribbean Cruises Ltd.		799		62,873
Starbucks Corp.		5,642		302,496
Yum! Brands, Inc.		1,959		176,467
				1,085,001
Household Durables 0.3%
Mohawk Industries, Inc.*		784		149,666
Persimmon PLC		6,152		190,373
Sekisui House Ltd.		13,454		214,214
Toll Brothers, Inc.*		500		19,095
Whirlpool Corp.		446		77,180
				650,528
Leisure Products 0.0%
Hasbro, Inc. (b)		921		68,881
Media 1.5%
CBS Corp. "B"		1,176		65,268
Comcast Corp. "A" (b)		7,914		474,365
Comcast Corp. "A"		6,974		419,416
DIRECTV*		1,545		143,361
Discovery Communications, Inc. "A"* (b)		4,200		139,692
	Shares		Value ($)

Discovery Communications, Inc. "C"*		6,500		202,020
News Corp. "A"*		5,485		80,026
Omnicom Group, Inc.		627		43,570
Scripps Networks Interactive, Inc. "A"		2,273		148,586
SES SA		5		168
Shaw Communications, Inc. "B"		7,444		162,111
Sky PLC		10,533		171,358
Thomson Reuters Corp.		4,231		161,110
Time Warner Cable, Inc.		1,254		223,425
Time Warner, Inc.		4,047		353,748
Twenty-First Century Fox, Inc. "A"		3,056		99,458
Twenty-First Century Fox, Inc. "B"		4,701		151,466
Viacom, Inc. "B"		1,881		121,588
Walt Disney Co.		3,683		420,378
WPP PLC		4,538		101,714
				3,682,828
Multiline Retail 0.4%
Canadian Tire Corp., Ltd. "A"		157		16,791
Dollar General Corp.		1,959		152,293
Kohl's Corp. (b)		3,291		206,050
Macy's, Inc.		2,194		148,029
Target Corp.		3,683		300,643
				823,806
Specialty Retail 0.7%
Advance Auto Parts, Inc.		1,200		191,148
AutoZone, Inc.*		314		209,407
Bed Bath & Beyond, Inc.* (b)		941		64,910
Best Buy Co., Inc.		4,800		156,528
GameStop Corp. "A" (b)		6,792		291,784
Hikari Tsushin, Inc.		1,900		128,508
Home Depot, Inc.		2,038		226,483
Lowe's Companies, Inc.		1,332		89,204
O'Reilly Automotive, Inc.*		314		70,958
The Gap, Inc.		862		32,903
TJX Companies, Inc.		1,567		103,688
				1,565,521
Textiles, Apparel & Luxury Goods 0.2%
Michael Kors Holdings Ltd.*		706		29,716
NIKE, Inc. "B"		564		60,923
Swatch Group AG (Bearer)		205		79,777
Swatch Group AG (Registered)		1,724		129,667
VF Corp.		2,642		184,253
Yue Yuen Industrial (Holdings) Ltd.		18,804		62,932
				547,268
Consumer Staples 4.5%
Beverages 0.7%
Anheuser-Busch InBev NV		450		53,689
Carlsberg AS "B"		1,729		156,638
Coca-Cola Co.		6,268		245,894
Constellation Brands, Inc. "A"		2,100		243,642
Diageo PLC		2,821		81,594
Dr. Pepper Snapple Group, Inc.		2,586		188,519
Heineken Holding NV		1,747		122,774
Heineken NV		355		26,984
Molson Coors Brewing Co. "B"		2,899		202,379
PepsiCo, Inc.		3,567		332,944
				1,655,057
	Shares		Value ($)

Food & Staples Retailing 1.4%
Aeon Co., Ltd.		2,415		34,335
Alimentation Couche-Tard, Inc. "B"		3,152		134,837
Casino Guichard-Perrachon SA		524		39,680
Costco Wholesale Corp.		1,332		179,900
CVS Health Corp.		4,342		455,389
Empire Co., Ltd. "A"		3,134		220,735
George Weston Ltd.		1,848		145,162
ICA Gruppen AB		4,973		176,502
J Sainsbury PLC		52,473		218,495
Koninklijke Ahold NV		4,417		82,592
Kroger Co.		3,977		288,372
Lawson, Inc.		862		59,117
Loblaw Companies Ltd.		1,756		88,686
Metro, Inc.		3,996		107,242
Seven & I Holdings Co., Ltd.		1,567		67,487
Sysco Corp.		3,761		135,772
Wal-Mart Stores, Inc.		6,112		433,524
Walgreens Boots Alliance, Inc.		2,245		189,568
Wesfarmers Ltd.		3,813		114,959
WM Morrison Supermarkets PLC		60,530		171,670
Woolworths Ltd.		4,247		88,298
				3,432,322
Food Products 1.3%
Archer-Daniels-Midland Co.		5,328		256,916
Aryzta AG		1,318		65,031
Bunge Ltd.		3,296		289,389
Chocoladefabriken Lindt & Sprungli AG		23		121,605
ConAgra Foods, Inc.		4,466		195,254
General Mills, Inc.		4,780		266,342
Golden Agri-Resources Ltd.		312,000		94,937
Hormel Foods Corp.		2,038		114,882
Kellogg Co.		2,899		181,767
McCormick & Co., Inc.		941		76,174
Mondelez International, Inc. "A"		7,679		315,914
Nestle SA (Registered)		4,850		349,895
Tate & Lyle PLC		6,434		52,505
The Hershey Co.		706		62,714
The JM Smucker Co.		1,567		169,878
Tyson Foods, Inc. "A"		7,052		300,627
Wilmar International Ltd.		61,112		149,038
				3,062,868
Household Products 0.5%
Church & Dwight Co., Inc.		1,803		146,277
Clorox Co.		784		81,551
Colgate-Palmolive Co.		2,429		158,881
Kimberly-Clark Corp.		2,038		215,967
Procter & Gamble Co.		4,566		357,244
Reckitt Benckiser Group PLC		1,733		149,475
				1,109,395
Tobacco 0.6%
Altria Group, Inc.		5,410		264,603
British American Tobacco PLC		4,589		246,475
Imperial Tobacco Group PLC		4,735		228,075
Japan Tobacco, Inc.		5,877		210,109
Philip Morris International, Inc.		3,918		314,106
Reynolds American, Inc.		2,634		196,655
				1,460,023
	Shares		Value ($)

Energy 3.2%
Energy Equipment & Services 0.3%
Amec Foster Wheeler PLC		14,420		184,902
Baker Hughes, Inc.		154		9,502
Ensco PLC "A"		5,500		122,485
Halliburton Co.		1,254		54,010
National Oilwell Varco, Inc.		1,754		84,683
Petrofac Ltd.		4,379		63,789
Schlumberger Ltd.		2,273		195,910
				715,281
Oil, Gas & Consumable Fuels 2.9%
BP PLC		58,111		384,268
Cabot Oil & Gas Corp.		3,996		126,034
Canadian Natural Resources Ltd.		1,646		44,675
Chevron Corp.		3,480		335,715
ConocoPhillips		3,536		217,146
Devon Energy Corp.		1,700		101,133
Enbridge, Inc.		392		18,332
Eni SpA		9,313		164,950
Exxon Mobil Corp.		4,701		391,123
HollyFrontier Corp.		7,389		315,436
Idemitsu Kosan Co., Ltd.		13,827		272,384
Imperial Oil Ltd.		6,974		269,412
JX Holdings, Inc.		73,385		317,887
Kinder Morgan, Inc.		2,935		112,675
Marathon Petroleum Corp.		7,242		378,829
Occidental Petroleum Corp.		3,469		269,784
OMV AG		1,852		51,047
Origin Energy Ltd.		23,178		218,720
Phillips 66		4,075		328,282
Repsol SA		5,901		103,512
Royal Dutch Shell PLC "A"		17,458		491,072
Royal Dutch Shell PLC "B"		14,953		424,950
Spectra Energy Corp.		3,448		112,405
Statoil ASA		6,006		107,898
Suncor Energy, Inc.		4,780		131,651
Tesoro Corp.		3,415		288,260
TonenGeneral Sekiyu KK		6,000		55,905
Total SA		5,089		246,235
TransCanada Corp.		2,273		92,376
Valero Energy Corp.		9,863		617,424
				6,989,520
Financials 14.5%
Banks 6.8%
Aozora Bank Ltd.		90,174		340,860
Australia & New Zealand Banking Group Ltd.		8,236		204,887
Banco Bilbao Vizcaya Argentaria SA		9,682		94,727
Bank Hapoalim BM		89,396		481,342
Bank Leumi Le-Israel BM*		140,917		596,203
Bank of America Corp.		18,553		315,772
Bank of East Asia Ltd.		21,938		96,171
Bank of Montreal (b)		5,328		315,713
Bank of Nova Scotia		5,646		291,431
Barclays PLC		73,958		302,170
BB&T Corp.		6,190		249,519
Bendigo & Adelaide Bank Ltd.		5,567		52,688
BNP Paribas SA		4,637		279,833
BOC Hong Kong (Holdings) Ltd.		93,627		391,926
CaixaBank SA		27,919		129,178
Canadian Imperial Bank of Commerce (b)		4,075		300,388
CIT Group, Inc.		2,682		124,686
	Shares		Value ($)

Citigroup, Inc.		10,048		555,051
Citizens Financial Group, Inc. (b)		12,900		352,299
Comerica, Inc.		1,097		56,298
Commerzbank AG*		10,207		130,571
Commonwealth Bank of Australia		2,037		133,943
Credit Agricole SA		14,547		216,118
Danske Bank AS		11,160		327,067
DBS Group Holdings Ltd.		20,371		313,790
Fifth Third Bancorp.		9,903		206,180
Hang Seng Bank Ltd.		2,224		43,544
HSBC Holdings PLC		57,583		515,337
Huntington Bancshares, Inc.		17,000		192,270
ING Groep NV (CVA)		3,416		56,050
Intesa Sanpaolo SpA (RSP)		55,959		178,899
JPMorgan Chase & Co.		6,967		472,084
KBC Groep NV		3,263		217,956
KeyCorp		12,301		184,761
Lloyds Banking Group PLC		166,742		223,329
M&T Bank Corp. (b)		1,959		244,738
Mitsubishi UFJ Financial Group, Inc.		36,354		262,279
Mizrahi Tefahot Bank Ltd.		17,095		212,023
Mizuho Financial Group, Inc.		132,273		286,995
National Australia Bank Ltd.		6,869		176,738
National Bank of Canada		5,205		195,531
Natixis SA		12,868		92,478
Nordea Bank AB		21,868		272,815
Oversea-Chinese Banking Corp., Ltd.		25,855		195,553
People's United Financial, Inc.		14,025		227,345
PNC Financial Services Group, Inc.		4,780		457,207
Regions Financial Corp.		31,810		329,552
Resona Holdings, Inc.		47,156		258,324
Royal Bank of Canada		4,858		297,081
Royal Bank of Scotland Group PLC*		3,425		18,842
Shinsei Bank Ltd.		74,000		149,828
Skandinaviska Enskilda Banken AB "A"		13,319		170,093
Societe Generale		6,354		295,759
Standard Chartered PLC		9,224		147,565
Sumitomo Mitsui Financial Group, Inc.		9,207		412,302
SunTrust Banks, Inc.		9,077		390,493
Svenska Handelsbanken AB "A"		4,464		65,157
Swedbank AB "A"		8,410		196,065
The Chugoku Bank Ltd.		7,600		120,159
The Toronto-Dominion Bank (b)		8,229		349,452
U.S. Bancorp.		8,070		350,238
United Overseas Bank Ltd.		9,402		161,311
Wells Fargo & Co.		10,969		616,897
Westpac Banking Corp.		6,452		160,301
Yamaguchi Financial Group, Inc.		5,021		62,691
				16,118,853
Capital Markets 0.7%
3i Group PLC		33,208		268,574
Ameriprise Financial, Inc.		627		78,331
Bank of New York Mellon Corp.		3,369		141,397
BlackRock, Inc.		314		108,638
Credit Suisse Group AG (Registered)		13,132		361,028
Morgan Stanley		8,070		313,035
State Street Corp.		1,724		132,748
The Goldman Sachs Group, Inc.		1,097		229,042
	Shares		Value ($)

UBS Group AG (Registered)		6,904		146,432
				1,779,225
Consumer Finance 0.4%
Ally Financial, Inc.*		11,200		251,216
American Express Co.		549		42,668
Capital One Financial Corp.		3,526		310,182
Discover Financial Services		1,959		112,878
Navient Corp.		6,999		127,452
				844,396
Diversified Financial Services 0.7%
Berkshire Hathaway, Inc. "B"*		1,534		208,793
CME Group, Inc.		2,038		189,656
EXOR SpA		778		37,042
Industrivarden AB "C"		21,624		407,341
Intercontinental Exchange, Inc.		314		70,213
Investor AB "B"		6,167		229,661
Leucadia National Corp.		627		15,224
Pargesa Holding SA (Bearer)		2,284		153,111
The NASDAQ OMX Group, Inc.		1,176		57,401
Voya Financial, Inc.		4,800		223,056
				1,591,498
Insurance 5.2%
ACE Ltd.		3,526		358,524
Aegon NV		37,007		271,588
Aflac, Inc.		4,578		284,752
Ageas		7,367		283,937
Alleghany Corp.*		471		220,786
Allianz SE (Registered)		1,307		203,567
Allstate Corp.		2,282		148,033
American International Group, Inc.		7,444		460,188
Aon PLC		471		46,949
Arch Capital Group Ltd.*		2,586		173,158
Assicurazioni Generali SpA		11,479		206,332
Assurant, Inc.		3,134		209,978
Aviva PLC		16,269		125,576
AXA SA		10,958		276,242
Axis Capital Holdings Ltd.		5,314		283,608
Baloise Holding AG (Registered)		3,275		398,947
Chubb Corp.		3,213		305,685
CNP Assurances		6,858		114,517
Delta Lloyd NV		10,049		165,123
Direct Line Insurance Group PLC		28,200		148,792
Everest Re Group Ltd.		2,269		412,981
Fairfax Financial Holdings Ltd.		400		197,239
FNF Group		4,700		173,853
Great-West Lifeco, Inc.		4,466		130,011
Hannover Rueck SE		2,286		221,615
Hartford Financial Services Group, Inc.		6,626		275,443
Insurance Australia Group Ltd.		2,518		10,864
Intact Financial Corp.		3,134		217,774
Legal & General Group PLC		1,991		7,778
Lincoln National Corp.		4,351		257,666
Loews Corp.		5,877		226,323
Manulife Financial Corp.		4,100		76,190
Mapfre SA		24,168		83,096
Marsh & McLennan Companies, Inc.		1,097		62,200
MetLife, Inc.		6,836		382,748
Muenchener Rueckversicherungs- Gesellschaft AG (Registered)		1,302		230,838
NN Group NV		12,080		339,634
Old Mutual PLC		11,627		36,848
	Shares		Value ($)

PartnerRe Ltd.		2,506		322,021
Power Corp. of Canada		7,229		184,863
Power Financial Corp.		4,075		117,030
Principal Financial Group, Inc.		1,097		56,265
Progressive Corp.		4,936		137,369
Prudential Financial, Inc.		4,051		354,543
RenaissanceRe Holdings Ltd.		2,026		205,659
Sampo Oyj "A"		3,489		164,267
SCOR SE		8,888		313,444
Sompo Japan Nipponkoa Holdings, Inc.		3,800		140,023
Suncorp Group Ltd.		9,529		98,879
Swiss Life Holding AG (Registered)		1,932		442,097
The Travelers Companies, Inc.		3,918		378,714
Tokio Marine Holdings, Inc.		4,300		179,461
Torchmark Corp.		2,821		164,239
Unum Group		7,757		277,313
W.R. Berkley Corp.		5,015		260,429
XL Group PLC		6,504		241,949
Zurich Insurance Group AG		1,371		417,371
				12,485,319
Real Estate Investment Trusts 0.3%
AvalonBay Communities, Inc. (REIT)		800		127,896
Crown Castle International Corp. (REIT)		1,600		128,480
Dexus Property Group (REIT)		12,966		73,184
Federation Centres (REIT)		44,060		99,502
GPT Group (REIT)		19,958		65,941
H&R Real Estate Investment Trust (REIT) (Units)		5,686		102,157
HCP, Inc. (REIT)		3,600		131,292
Prologis, Inc. (REIT)		3,100		115,010
				843,462
Real Estate Management & Development 0.4%
First Capital Realty, Inc.		6,425		91,977
Henderson Land Development Co., Ltd.		16,251		111,695
New World Development Co., Ltd.		47,793		62,869
Sun Hung Kai Properties Ltd.		12,536		203,945
Swire Pacific Ltd. "A"		13,320		168,008
Swiss Prime Site AG (Registered)		1,681		127,526
Wharf Holdings Ltd.		7,835		52,351
Wheelock & Co., Ltd.		41,103		211,262
				1,029,633
Thrifts & Mortgage Finance 0.0%
New York Community Bancorp., Inc.		1,399		25,714
Health Care 5.4%
Biotechnology 1.3%
Actelion Ltd. (Registered)		584		85,307
Alexion Pharmaceuticals, Inc.*		941		170,105
Amgen, Inc.		2,283		350,486
Biogen, Inc.*		1,127		455,240
Celgene Corp.*		4,142		479,374
CSL Ltd.		4,391		293,304
Gilead Sciences, Inc.		4,914		575,331
Medivation, Inc.*		1,800		205,560
Regeneron Pharmaceuticals, Inc.*		500		255,065
United Therapeutics Corp.*		1,200		208,740
				3,078,512
Health Care Equipment & Supplies 0.4%
Abbott Laboratories		5,642		276,910
Baxter International, Inc.		2,664		186,294
	Shares		Value ($)

Becton, Dickinson & Co.		1,165		165,022
Medtronic PLC		3,683		272,910
Stryker Corp.		1,190		113,728
Zimmer Biomet Holdings, Inc.		549		59,967
				1,074,831
Health Care Providers & Services 1.3%
Aetna, Inc.		2,718		346,436
AmerisourceBergen Corp.		1,411		150,046
Anthem, Inc.		2,553		419,050
Cardinal Health, Inc.		1,959		163,870
CIGNA Corp.		2,508		406,296
Express Scripts Holding Co.*		3,134		278,738
HCA Holdings, Inc.*		1,213		110,043
Humana, Inc.		894		171,004
Laboratory Corp. of America Holdings*		862		104,492
McKesson Corp.		1,019		229,081
Omnicare, Inc.		941		88,689
Quest Diagnostics, Inc.		2,331		169,044
UnitedHealth Group, Inc.		3,201		390,522
				3,027,311
Life Sciences Tools & Services 0.1%
Thermo Fisher Scientific, Inc.		2,038		264,451
Pharmaceuticals 2.3%
AbbVie, Inc.		2,741		184,168
Allergan PLC*		1,387		420,899
AstraZeneca PLC		1,718		108,552
Bristol-Myers Squibb Co.		3,369		224,173
Eli Lilly & Co.		3,213		268,254
GlaxoSmithKline PLC		11,399		237,209
Hospira, Inc.*		3,900		345,969
Jazz Pharmaceuticals PLC*		1,100		193,677
Johnson & Johnson		3,605		351,343
Mallinckrodt PLC* (b)		2,800		329,616
Merck & Co., Inc.		5,563		316,702
Mylan NV* (b)		1,176		79,804
Novartis AG (Registered)		3,719		366,320
Novo Nordisk AS ''B"		3,854		210,334
Perrigo Co. PLC		392		72,453
Pfizer, Inc.		13,555		454,499
Roche Holding AG (Genusschein)		1,112		311,783
Sanofi		1,531		149,987
Shire PLC		2,965		236,886
Teva Pharmaceutical Industries Ltd.		5,337		314,340
Valeant Pharmaceuticals International, Inc.*		1,200		266,200
				5,443,168
Industrials 5.3%
Aerospace & Defense 0.7%
BAE Systems PLC		11,961		84,711
Boeing Co.		1,489		206,554
General Dynamics Corp.		67		9,493
Honeywell International, Inc.		2,821		287,657
L-3 Communications Holdings, Inc.		281		31,860
Lockheed Martin Corp.		767		142,585
Northrop Grumman Corp.		938		148,795
Precision Castparts Corp.		627		125,319
Raytheon Co.		2,664		254,892
Rockwell Collins, Inc.		941		86,901
Thales SA		506		30,520
United Technologies Corp.		2,586		286,865
				1,696,152
	Shares		Value ($)

Air Freight & Logistics 0.2%
FedEx Corp.		784		133,594
Royal Mail PLC		23,937		193,041
United Parcel Service, Inc. "B"		1,176		113,966
				440,601
Airlines 1.0%
American Airlines Group, Inc.		7,700		307,500
ANA Holdings, Inc.		59,000		160,303
Cathay Pacific Airways Ltd.		127,791		314,622
Delta Air Lines, Inc.		6,644		272,936
Deutsche Lufthansa AG (Registered)*		22,684		293,408
easyJet PLC		3,918		95,361
Japan Airlines Co., Ltd.		9,500		332,430
Singapore Airlines Ltd.		6,474		51,633
Southwest Airlines Co.		6,653		220,148
United Continental Holdings, Inc.*		6,808		360,892
				2,409,233
Building Products 0.0%
Congoleum Corp.*		3,800		0
Commercial Services & Supplies 0.2%
G4S PLC		30		126
Quad Graphics, Inc.		13		241
Republic Services, Inc.		5,171		202,548
Tyco International PLC		2,351		90,467
Waste Management, Inc.		2,194		101,692
				395,074
Electrical Equipment 0.2%
ABB Ltd. (Registered)		8,638		180,596
AMETEK, Inc.		1,332		72,967
Eaton Corp. PLC		421		28,413
Emerson Electric Co.		2,273		125,992
				407,968
Industrial Conglomerates 0.5%
3M Co.		824		127,143
CK Hutchison Holdings Ltd.		16,996		250,833
Danaher Corp.		2,664		228,012
General Electric Co.		9,038		240,140
Keppel Corp., Ltd.		21,000		128,232
Roper Technologies, Inc.		862		148,661
Sembcorp Industries Ltd.		21,938		63,393
Siemens AG (Registered)		1,248		125,671
				1,312,085
Machinery 0.5%
AGCO Corp. (b)		3,761		213,549
Caterpillar, Inc.		862		73,115
Deere & Co.		2,096		203,417
Illinois Tool Works, Inc.		549		50,393
PACCAR, Inc.		1,254		80,018
Schindler Holding AG (Registered)		503		82,094
SKF AB "B"		29		660
Stanley Black & Decker, Inc.		1,332		140,180
Yangzijiang Shipbuilding Holdings Ltd.		286,107		300,958
				1,144,384
Marine 0.5%
A P Moller-Maersk AS "A"		219		384,371
A P Moller-Maersk AS "B"		186		337,129
Mitsui O.S.K Lines Ltd.		80,000		256,846
Nippon Yusen Kabushiki Kaisha		83,050		231,822
				1,210,168
	Shares		Value ($)

Professional Services 0.1%
Adecco SA (Registered)		393		31,842
Nielsen NV		4,145		185,572
				217,414
Road & Rail 0.4%
Canadian National Railway Co.		236		13,616
CSX Corp.		3,840		125,376
East Japan Railway Co.		1,097		98,846
MTR Corp., Ltd.		27,814		129,315
Norfolk Southern Corp.		862		75,304
Union Pacific Corp.		2,194		209,242
West Japan Railway Co.		3,761		241,343
				893,042
Trading Companies & Distributors 1.0%
ITOCHU Corp.		41,839		553,748
Marubeni Corp.		100,549		578,314
Mitsubishi Corp.		14,728		324,677
Mitsui & Co., Ltd.		28,151		383,212
Noble Group Ltd.		193,000		109,029
Sumitomo Corp.		29,466		343,600
W.W. Grainger, Inc. (b)		627		148,379
				2,440,959
Information Technology 6.6%
Communications Equipment 0.7%
Cisco Systems, Inc.		17,899		491,506
Harris Corp.		1,569		120,672
Juniper Networks, Inc.		7,764		201,631
Motorola Solutions, Inc.		790		45,299
Nokia Oyj		19,776		134,356
QUALCOMM, Inc.		8,070		505,424
Telefonaktiebolaget LM Ericsson "B"		19,294		199,657
				1,698,545
Electronic Equipment, Instruments & Components 0.7%
Amphenol Corp. "A"		1,568		90,897
Arrow Electronics, Inc.*		2,528		141,062
Avnet, Inc.		6,660		273,793
Corning, Inc.		9,440		186,251
Flextronics International Ltd.*		14,608		165,217
Hitachi Ltd.		40,485		267,466
Murata Manufacturing Co., Ltd.		706		123,771
TE Connectivity Ltd.		4,388		282,148
				1,530,605
Internet Software & Services 0.6%
eBay, Inc.*		2,942		177,226
Facebook, Inc. "A"*		5,469		469,049
Google, Inc. "A"*		792		427,712
Google, Inc. "C"*		485		252,447
LinkedIn Corp. "A"*		127		26,242
VeriSign, Inc.* (b)		521		32,156
Yahoo!, Inc.*		3,400		133,586
				1,518,418
IT Services 1.9%
Accenture PLC "A"		4,075		394,378
Alliance Data Systems Corp.*		549		160,275
Atos SE		1,677		125,281
Automatic Data Processing, Inc.		3,232		259,303
CGI Group, Inc. "A"*		4,701		183,862
Cognizant Technology Solutions Corp. "A"*		3,291		201,047
Computer Sciences Corp.		3,840		252,058
	Shares		Value ($)

Fidelity National Information Services, Inc.		5,798		358,316
Fiserv, Inc.*		3,761		311,524
Fujitsu Ltd.		26,000		145,907
International Business Machines Corp.		3,056		497,089
Itochu Techno-Solutions Corp.		1,200		29,954
MasterCard, Inc. "A" (b)		3,134		292,966
Nomura Research Institute Ltd.		1,803		70,691
Paychex, Inc.		3,056		143,265
Total System Services, Inc.		5,250		219,293
Vantiv, Inc. "A"*		3,369		128,662
Visa, Inc. "A"		4,184		280,956
Western Union Co. (b)		12,458		253,271
Xerox Corp.		22,704		241,571
				4,549,669
Semiconductors & Semiconductor Equipment 0.7%
Analog Devices, Inc.		2,586		165,983
ASML Holding NV		15		1,558
Avago Technologies Ltd.		1,646		218,803
Broadcom Corp. "A"		1,409		72,549
Intel Corp.		10,673		324,619
KLA-Tencor Corp.		456		25,632
Lam Research Corp.		64		5,206
Marvell Technology Group Ltd.		4,623		60,954
Maxim Integrated Products, Inc.		4,388		151,715
Microchip Technology, Inc. (b)		3,291		156,076
Micron Technology, Inc.*		16,693		314,496
Qorvo, Inc.*		1,800		144,486
Texas Instruments, Inc.		1,646		84,786
				1,726,863
Software 1.1%
Activision Blizzard, Inc.		10,127		245,175
ANSYS, Inc.*		784		71,532
CA, Inc.		7,236		211,942
Electronic Arts, Inc.*		3,600		239,400
Intuit, Inc.		1,034		104,196
Microsoft Corp.		10,949		483,398
Nexon Co., Ltd.		3,794		52,379
NICE Systems Ltd.		2,086		133,042
Nuance Communications, Inc.*		11,800		206,618
Oracle Corp.		6,713		270,534
SAP SE		751		52,374
Symantec Corp.		8,041		186,953
Synopsys, Inc.*		5,407		273,865
The Sage Group PLC		1,325		10,658
VMware, Inc. "A"*		784		67,220
				2,609,286
Technology Hardware, Storage & Peripherals 0.9%
Apple, Inc.		5,178		649,451
Canon, Inc.		6,974		227,435
EMC Corp.		8,058		212,651
Hewlett-Packard Co.		9,206		276,272
NetApp, Inc.		2,586		81,614
Ricoh Co., Ltd.		26,547		275,989
Seagate Technology PLC		3,683		174,942
Seiko Epson Corp.		8,500		151,368
Western Digital Corp.		1,959		153,625
				2,203,347
Materials 2.4%
Chemicals 0.9%
Ashland, Inc.		862		105,078
BASF SE		8		703
	Shares		Value ($)

Celanese Corp. "A"		2,200		158,136
CF Industries Holdings, Inc.		1,180		75,850
Dow Chemical Co.		3,784		193,627
E.I. du Pont de Nemours & Co.		1,489		95,222
Ecolab, Inc.		392		44,323
GEO Specialty Chemicals, Inc.*		19,324		13,558
Israel Chemicals Ltd.		17,163		119,994
Kuraray Co., Ltd.		16,800		206,101
LyondellBasell Industries NV "A"		2,873		297,413
Mitsubishi Gas Chemical Co., Inc.		16,000		89,951
Monsanto Co.		1,019		108,615
Praxair, Inc.		549		65,633
Solvay SA		986		135,723
Sumitomo Chemical Co., Ltd.		41,000		247,103
The Mosaic Co.		5,000		234,250
				2,191,280
Construction Materials 0.1%
Fletcher Building Ltd.		8,805		48,412
Holcim Ltd. (Registered)		1,198		88,416
Taiheiyo Cement Corp.		76,000		222,464
				359,292
Containers & Packaging 0.1%
Rock-Tenn Co. "A"		2,356		141,831
Metals & Mining 1.1%
Alcoa, Inc.		11,400		127,110
Anglo American PLC		21,190		305,846
Barrick Gold Corp.		15,984		170,846
BHP Billiton Ltd.		1,942		39,799
BHP Billiton PLC		3,311		64,837
Boliden AB		5,903		107,504
Glencore PLC		32,398		129,571
Goldcorp, Inc.		5,485		89,016
JFE Holdings, Inc.		9,500		211,609
Mitsubishi Materials Corp.		18,804		72,390
Newcrest Mining Ltd.*		20,735		207,229
Newmont Mining Corp.		7,983		186,483
Nippon Steel & Sumitomo Metal Corp.		53,000		137,740
Nucor Corp.		4,075		179,585
Rio Tinto PLC		3,449		141,197
Silver Wheaton Corp.		9,011		156,195
South32 Ltd.*		1,942		2,682
Sumitomo Metal Mining Co., Ltd.		15,000		229,062
				2,558,701
Paper & Forest Products 0.2%
International Paper Co.		2,874		136,774
UPM-Kymmene Oyj		12,803		226,182
				362,956
Telecommunication Services 3.3%
Diversified Telecommunication Services 2.7%
AT&T, Inc.		18,726		665,147
BCE, Inc.		7,365		312,880
BT Group PLC		57,981		409,493
CenturyLink, Inc.		5,691		167,202
Deutsche Telekom AG (Registered)		10,731		184,569
Elisa Oyj		800		25,329
HKT Trust & HKT Ltd. (Units)		147,000		173,198
Inmarsat PLC		11,052		158,868
Level 3 Communications, Inc.*		3,600		189,612
Nippon Telegraph & Telephone Corp.		12,566		456,891
Orange SA		11,104		170,277
	Shares		Value ($)

PCCW Ltd.		457,633		273,317
Proximus		1,992		70,167
Singapore Telecommunications Ltd.		76,045		240,299
Spark New Zealand Ltd.		56,978		107,937
Swisscom AG (Registered)		606		339,375
TDC AS		33,026		241,753
Telecom Italia SpA*		168,638		213,564
Telecom Italia SpA (RSP)		248,767		253,092
Telefonica SA		14,181		201,283
Telenor ASA		8,848		193,790
TeliaSonera AB		52,444		308,615
Telstra Corp., Ltd.		66,244		314,437
TELUS Corp.		7,287		251,049
Verizon Communications, Inc.		10,902		508,142
				6,430,286
Wireless Telecommunication Services 0.6%
KDDI Corp.		14,300		346,463
Millicom International Cellular SA (SDR)		1,478		109,006
NTT DoCoMo, Inc.		16,169		310,330
Rogers Communications, Inc. "B" (b)		6,503		230,651
SoftBank Corp.		471		27,834
T-Mobile U.S., Inc.*		4,600		178,342
Vodafone Group PLC		77,763		280,302
				1,482,928
Utilities 4.0%
Electric Utilities 2.0%
American Electric Power Co., Inc.		4,388		232,432
Cheung Kong Infrastructure Holdings Ltd.		28,556		221,666
CLP Holdings Ltd.		36,469		310,150
Duke Energy Corp.		5,407		381,842
E.ON SE		3,110		41,467
Edison International		3,056		169,852
EDP — Energias de Portugal SA		53,479		202,705
Electricite de France SA		10,019		223,504
Enel SpA		13,335		60,327
Entergy Corp.		2,971		209,456
Eversource Energy		3,369		152,986
Exelon Corp.		10,603		333,146
FirstEnergy Corp.		4,936		160,667
Fortum Oyj		7,154		127,026
Iberdrola SA		14,717		99,046
NextEra Energy, Inc.		2,743		268,896
OGE Energy Corp.		6,660		190,276
Pepco Holdings, Inc.		5,200		140,088
Pinnacle West Capital Corp.		2,555		145,354
Power Assets Holdings Ltd.		6,747		61,557
PPL Corp.		6,112		180,121
Southern Co.		6,245		261,666
SSE PLC		7,389		178,138
Tokyo Electric Power Co., Inc.*		32,800		179,548
Xcel Energy, Inc.		6,738		216,829
				4,748,745
Gas Utilities 0.1%
Enagas SA		22		599
Osaka Gas Co., Ltd.		31,000		122,686
Tokyo Gas Co., Ltd.		22,000		117,028
				240,313
	Shares		Value ($)

Independent Power & Renewable Eletricity Producers 0.3%
AES Corp.		19,014		252,126
Calpine Corp.*		15,500		278,845
Electric Power Development Co., Ltd.		2,602		92,193
Meridian Energy Ltd.		37,409		54,756
NRG Energy, Inc.		8,000		183,040
				860,960
Multi-Utilities 1.5%
AGL Energy Ltd.		20,375		244,438
Alliant Energy Corp.		2,508		144,762
Ameren Corp.		5,955		224,384
Atco Ltd. "I"		3,000		94,852
CenterPoint Energy, Inc.		8,900		169,367
Centrica PLC		42,247		175,472
CMS Energy Corp.		2,664		84,822
Consolidated Edison, Inc.		4,310		249,463
Dominion Resources, Inc.		3,291		220,069
DTE Energy Co.		2,194		163,760
GDF Suez		5,853		108,583
National Grid PLC		19,631		252,218
NiSource, Inc.		2,150		98,019
PG&E Corp.		6,738		330,836
Public Service Enterprise Group, Inc. (b)		5,720		224,682
SCANA Corp. (b)		3,605		182,593
Sempra Energy		1,567		155,039
WEC Energy Group, Inc.		8,567		385,247
				3,508,606
Water Utilities 0.1%
American Water Works Co., Inc.		2,803		136,310
Total Common Stocks (Cost $117,728,599)				131,933,104

Preferred Stocks 0.6%
Consumer Discretionary
Ally Financial, Inc. Series G, 144A, 7.0%		38		38,588
Bayerische Motoren Werke (BMW) AG		4,148		351,522
Porsche Automobil Holding SE		7,216		611,064
Volkswagen AG		1,914		444,640
Total Preferred Stocks (Cost $1,434,243)				1,445,814

Rights 0.0%
Consumer Staples 0.0%
Safeway Casa Ley, Expiration Date 1/30/2018*		7,499		7,611
Safeway PDC LLC, Expiration Date 1/30/2017*		7,499		366
				7,977
Energy 0.0%
Repsol SA, Expiration Date 7/3/2015*		5,901		3,059
Total Rights (Cost $11,216)				11,036

Warrants 0.0%
Materials
Hercules Trust II, Expiration Date 3/31/2029* (Cost $30,283)		170		1,001

		Principal Amount ($)(c)		Value ($)

Corporate Bonds 22.4%
Consumer Discretionary 3.1%
1011778 BC ULC, 144A, 4.625%, 1/15/2022			35,000		34,475
Ally Financial, Inc.:
3.25%, 2/13/2018			105,000		104,344
4.125%, 3/30/2020 (b)			85,000		84,840
AmeriGas Finance LLC:
6.75%, 5/20/2020			110,000		115,775
7.0%, 5/20/2022			195,000		206,700
Apex Tool Group LLC, 144A, 7.0%, 2/1/2021			50,000		44,500
APX Group, Inc., 6.375%, 12/1/2019			50,000		48,500
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			80,000		84,800
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			80,000		74,400
Avis Budget Car Rental LLC:
144A, 5.25%, 3/15/2025			135,000		126,731
5.5%, 4/1/2023			50,000		49,375
Bed Bath & Beyond, Inc.:
4.915%, 8/1/2034			80,000		78,078
5.165%, 8/1/2044			100,000		99,276
Block Communications, Inc., 144A, 7.25%, 2/1/2020			20,000		20,400
Boyd Gaming Corp., 6.875%, 5/15/2023			40,000		41,000
CCO Holdings LLC:
144A, 5.125%, 5/1/2023			115,000		111,838
144A, 5.375%, 5/1/2025			85,000		82,769
144A, 5.875%, 5/1/2027			140,000		136,675
Cequel Communications Holdings I LLC:
144A, 5.125%, 12/15/2021			385,000		349,628
144A, 6.375%, 9/15/2020			200,000		198,650
Clear Channel Worldwide Holdings, Inc.:
Series A, 6.5%, 11/15/2022			65,000		66,625
Series B, 6.5%, 11/15/2022			370,000		385,262
Series A, 7.625%, 3/15/2020			10,000		10,325
Series B, 7.625%, 3/15/2020			255,000		265,837
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			5,000		5,075
Columbus International, Inc., 144A, 7.375%, 3/30/2021			250,000		268,750
D.R. Horton, Inc., 4.0%, 2/15/2020			35,000		34,815
Dana Holding Corp., 5.5%, 12/15/2024			80,000		78,600
Delphi Corp., 5.0%, 2/15/2023			70,000		74,550
DISH DBS Corp.:
4.25%, 4/1/2018			70,000		71,225
5.0%, 3/15/2023			715,000		661,375
7.875%, 9/1/2019			270,000		299,430
Family Tree Escrow LLC:
144A, 5.25%, 3/1/2020			145,000		151,706
144A, 5.75%, 3/1/2023			122,500		128,012
Fiat Chrysler Automobiles NV, 144A, 4.5%, 4/15/2020			100,000		99,500
Global Partners LP, 144A, 7.0%, 6/15/2023			70,000		68,775
Group 1 Automotive, Inc., 5.0%, 6/1/2022 (b)			95,000		94,525
HD Supply, Inc., 11.5%, 7/15/2020			130,000		150,150
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			40,000		42,000
		Principal Amount ($)(c)		Value ($)

iHeartCommunications, Inc.:
9.0%, 12/15/2019 (b)			250,000		238,250
11.25%, 3/1/2021			70,000		67,988
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019 (PIK)			40,000		35,800
Live Nation Entertainment, Inc., 144A, 7.0%, 9/1/2020			90,000		95,625
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			40,000		39,850
Mediacom Broadband LLC, 6.375%, 4/1/2023			35,000		35,000
MGM Resorts International:
6.625%, 12/15/2021			250,000		261,250
6.75%, 10/1/2020 (b)			130,000		137,800
8.625%, 2/1/2019			240,000		271,200
Numericable-SFR, 144A, 6.0%, 5/15/2022			200,000		197,125
Pinnacle Entertainment, Inc., 6.375%, 8/1/2021			45,000		47,756
Quebecor Media, Inc., 5.75%, 1/15/2023			50,000		49,875
Sabre GLBL, Inc., 144A, 5.375%, 4/15/2023			5,000		4,925
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			35,000		35,350
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020			55,000		58,025
Sirius XM Radio, Inc., 144A, 5.875%, 10/1/2020			60,000		61,500
Spectrum Brands, Inc., 144A, 5.75%, 7/15/2025			35,000		35,525
Springs Industries, Inc., 6.25%, 6/1/2021			85,000		83,088
Starz LLC, 5.0%, 9/15/2019			40,000		40,500
Suburban Propane Partners LP, 5.75%, 3/1/2025			50,000		49,875
Time Warner Cable, Inc., 7.3%, 7/1/2038			45,000		50,702
Time Warner, Inc.:
3.6%, 7/15/2025			40,000		38,907
4.85%, 7/15/2045			20,000		19,402
TRI Pointe Holdings, Inc., 4.375%, 6/15/2019			50,000		49,000
Unitymedia Hessen GmbH & Co., KG, 144A, 5.5%, 1/15/2023			200,000		203,875
Viking Cruises Ltd.:
144A, 6.25%, 5/15/2025			70,000		69,475
144A, 8.5%, 10/15/2022			50,000		55,500
					7,382,459
Consumer Staples 1.0%
Cencosud SA, 144A, 5.5%, 1/20/2021			250,000		262,673
Chiquita Brands International, Inc., 7.875%, 2/1/2021			20,000		21,550
Cott Beverages, Inc.:
5.375%, 7/1/2022			160,000		155,200
144A, 6.75%, 1/1/2020			80,000		83,000
HJ Heinz Co.:
144A, 3.95%, 7/15/2025 (d)			20,000		20,111
144A, 5.2%, 7/15/2045 (d)			10,000		10,248
JBS Investments GmbH, 144A, 7.75%, 10/28/2020			250,000		271,875
JBS U.S.A. LLC:
144A, 5.75%, 6/15/2025			55,000		54,365
144A, 7.25%, 6/1/2021			145,000		152,794
144A, 8.25%, 2/1/2020			370,000		392,200
		Principal Amount ($)(c)		Value ($)

Marfrig Overseas Ltd., 144A, 9.5%, 5/4/2020			100,000		102,170
Minerva Luxembourg SA:
144A, 7.75%, 1/31/2023			250,000		251,875
144A, 12.25%, 2/10/2022			250,000		275,125
Pilgrim's Pride Corp., 144A, 5.75%, 3/15/2025			55,000		55,550
Reynolds American, Inc.:
4.45%, 6/12/2025			10,000		10,188
5.85%, 8/15/2045			10,000		10,489
Smithfield Foods, Inc., 6.625%, 8/15/2022			5,000		5,337
The WhiteWave Foods Co., 5.375%, 10/1/2022			80,000		84,400
Tonon Bioenergia SA, 144A, 9.25%, 1/24/2020 (b)			200,000		68,000
					2,287,150
Energy 3.7%
Afren PLC, 144A, 10.25%, 4/8/2019*			340,000		149,600
Antero Resources Corp.:
5.125%, 12/1/2022			140,000		132,300
5.375%, 11/1/2021			60,000		57,600
144A, 5.625%, 6/1/2023			55,000		53,144
Baytex Energy Corp.:
144A, 5.125%, 6/1/2021			30,000		28,125
144A, 5.625%, 6/1/2024			35,000		32,463
Berry Petroleum Co., LLC:
6.375%, 9/15/2022			50,000		39,000
6.75%, 11/1/2020			50,000		39,500
California Resources Corp.:
5.0%, 1/15/2020			60,000		52,800
5.5%, 9/15/2021 (b)			143,000		124,439
6.0%, 11/15/2024 (b)			50,000		43,000
Carrizo Oil & Gas, Inc., 6.25%, 4/15/2023			75,000		75,188
Chaparral Energy, Inc., 7.625%, 11/15/2022			85,000		61,200
Chesapeake Energy Corp.:
5.75%, 3/15/2023 (b)			200,000		181,000
6.125%, 2/15/2021			20,000		18,800
6.625%, 8/15/2020			70,000		68,250
Concho Resources, Inc., 5.5%, 4/1/2023			175,000		175,000
Crestwood Midstream Partners LP, 144A, 6.25%, 4/1/2023			25,000		26,000
DCP Midstream LLC, 144A, 9.75%, 3/15/2019			200,000		232,084
Delek & Avner Tamar Bond Ltd., 144A, 5.082%, 12/30/2023			350,000		351,750
Ecopetrol SA, 5.875%, 5/28/2045			500,000		441,250
Endeavor Energy Resources LP:
144A, 7.0%, 8/15/2021			85,000		84,575
144A, 8.125%, 9/15/2023			90,000		92,812
EP Energy LLC, 144A, 6.375%, 6/15/2023 (b)			65,000		65,163
EV Energy Partners LP, 8.0%, 4/15/2019			385,000		358,050
GeoPark Latin America Ltd. Agencia en Chile, 144A, 7.5%, 2/11/2020			200,000		173,000
Gulfport Energy Corp., 144A, 6.625%, 5/1/2023			30,000		30,375
		Principal Amount ($)(c)		Value ($)

Halcon Resources Corp.:
144A, 8.625%, 2/1/2020			125,000		123,437
8.875%, 5/15/2021			225,000		147,937
9.75%, 7/15/2020			40,000		26,900
Hilcorp Energy I LP:
144A, 5.0%, 12/1/2024			65,000		60,951
144A, 5.75%, 10/1/2025			100,000		96,000
Holly Energy Partners LP, 6.5%, 3/1/2020			10,000		9,975
Kinder Morgan, Inc.:
3.05%, 12/1/2019			145,000		144,839
5.55%, 6/1/2045			90,000		83,186
Laredo Petroleum, Inc., 6.25%, 3/15/2023			85,000		86,487
Linn Energy LLC, 6.25%, 11/1/2019			145,000		113,462
MEG Energy Corp., 144A, 7.0%, 3/31/2024			435,000		417,056
Memorial Resource Development Corp., 5.875%, 7/1/2022			65,000		62,771
Murphy Oil U.S.A., Inc., 6.0%, 8/15/2023			85,000		88,187
Newfield Exploration Co., 5.375%, 1/1/2026			40,000		39,600
Noble Holding International Ltd., 4.0%, 3/16/2018			10,000		10,238
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			140,000		127,400
Nostrum Oil & Gas Finance BV, 144A, 6.375%, 2/14/2019			200,000		187,500
Oasis Petroleum, Inc.:
6.875%, 3/15/2022			190,000		192,850
6.875%, 1/15/2023			70,000		69,125
Offshore Drilling Holding SA, 144A, 8.625%, 9/20/2020			600,000		537,000
ONEOK Partners LP, 4.9%, 3/15/2025 (b)			40,000		39,568
Pacific Rubiales Energy Corp., 144A, 5.375%, 1/26/2019			200,000		164,300
Parsley Energy LLC, 144A, 7.5%, 2/15/2022			10,000		10,147
QGOG Constellation SA, 144A, 6.25%, 11/9/2019			200,000		146,000
Range Resources Corp., 144A, 4.875%, 5/15/2025			60,000		58,284
Regency Energy Partners LP, 5.0%, 10/1/2022			45,000		45,711
Reliance Industries Ltd., 144A, 4.125%, 1/28/2025			250,000		243,885
Rice Energy, Inc., 144A, 7.25%, 5/1/2023			15,000		15,375
RSP Permian, Inc., 144A, 6.625%, 10/1/2022			165,000		168,712
Sabine Pass Liquefaction LLC:
5.625%, 2/1/2021			175,000		178,500
144A, 5.625%, 3/1/2025			90,000		89,100
5.75%, 5/15/2024			200,000		199,250
SESI LLC, 7.125%, 12/15/2021			205,000		217,300
Seven Generations Energy Ltd., 144A, 6.75%, 5/1/2023			20,000		19,950
Sunoco LP, 144A, 6.375%, 4/1/2023			40,000		41,600
Talisman Energy, Inc., 3.75%, 2/1/2021			120,000		118,797
Talos Production LLC, 144A, 9.75%, 2/15/2018			95,000		82,650
Targa Resources Partners LP, 144A, 4.125%, 11/15/2019			30,000		29,700
		Principal Amount ($)(c)		Value ($)

TerraForm Power Operating LLC, 144A, 5.875%, 2/1/2023			125,000		126,875
Transocean, Inc., 4.3%, 10/15/2022 (b)			370,000		278,425
Transportadora de Gas Internacional SA ESP, 144A, 5.7%, 3/20/2022			200,000		209,750
Triangle U.S.A. Petroleum Corp., 144A, 6.75%, 7/15/2022			55,000		42,625
Whiting Petroleum Corp.:
5.75%, 3/15/2021			120,000		118,080
144A, 6.25%, 4/1/2023			270,000		267,975
Williams Partners LP:
4.0%, 9/15/2025			40,000		37,468
6.125%, 7/15/2022			15,000		15,938
					8,777,334
Financials 2.7%
AerCap Ireland Capital Ltd., 144A, 3.75%, 5/15/2019			80,000		79,100
Assured Guaranty U.S. Holdings, Inc., 5.0%, 7/1/2024			3,000		2,942
Banco Continental SAECA, 144A, 8.875%, 10/15/2017			200,000		210,400
Banco de Credito del Peru, 144A, 4.25%, 4/1/2023			250,000		249,300
Banco do Brasil SA, 144A, 9.0%, 6/29/2049			450,000		405,990
Barclays Bank PLC, 7.625%, 11/21/2022			250,000		284,700
BBVA Bancomer SA:
144A, 6.008%, 5/17/2022			500,000		514,250
144A, 6.75%, 9/30/2022			150,000		165,187
CBL & Associates LP, (REIT), 4.6%, 10/15/2024			255,000		251,080
China Overseas Finance Cayman II Ltd., REG S, 5.5%, 11/10/2020			250,000		270,159
CIT Group, Inc.:
5.0%, 5/15/2017			935,000		964,172
5.25%, 3/15/2018			10,000		10,338
CNO Financial Group, Inc.:
4.5%, 5/30/2020			20,000		20,300
5.25%, 5/30/2025			40,000		40,648
Corpbanca SA, 144A, 3.875%, 9/22/2019			250,000		253,646
Development Bank of Kazakhstan JSC, Series 3, REG S, 6.5%, 6/3/2020			500,000		520,000
E*TRADE Financial Corp., 4.625%, 9/15/2023			55,000		54,037
Equinix, Inc., (REIT), 5.375%, 4/1/2023			175,000		175,000
Everest Reinsurance Holdings, Inc., 4.868%, 6/1/2044			100,000		94,867
Hospitality Properties Trust, (REIT), 5.0%, 8/15/2022			230,000		239,415
HSBC Holdings PLC:
5.625%, 12/29/2049			255,000		255,319
6.375%, 12/29/2049			30,000		30,075
International Lease Finance Corp.:
3.875%, 4/15/2018			100,000		100,500
6.25%, 5/15/2019			410,000		443,312
8.75%, 3/15/2017			40,000		43,764
Legg Mason, Inc., 5.625%, 1/15/2044			75,000		80,021
Macquarie Group Ltd., 144A, 6.0%, 1/14/2020			235,000		264,059
		Principal Amount ($)(c)		Value ($)

Massachusetts Mutual Life Insurance Co., 144A, 4.5%, 4/15/2065			10,000		8,881
MPT Operating Partnership LP, (REIT), 6.375%, 2/15/2022			40,000		42,650
Nationwide Financial Services, Inc., 144A, 5.3%, 11/18/2044			135,000		132,557
Navient Corp., 5.5%, 1/25/2023 (b)			125,000		118,750
Omega Healthcare Investors, Inc., (REIT), 4.95%, 4/1/2024			130,000		132,967
Popular, Inc., 7.0%, 7/1/2019			50,000		50,000
					6,508,386
Health Care 2.1%
AbbVie, Inc., 3.6%, 5/14/2025			35,000		34,594
Actavis Funding SCS, 4.75%, 3/15/2045			2,000		1,904
Alere, Inc., 144A, 6.375%, 7/1/2023			60,000		61,050
Community Health Systems, Inc.:
5.125%, 8/15/2018			290,000		297,250
6.875%, 2/1/2022 (b)			620,000		654,100
7.125%, 7/15/2020			170,000		180,115
Concordia Healthcare Corp., 144A, 7.0%, 4/15/2023			30,000		30,000
Endo Finance LLC:
144A, 5.375%, 1/15/2023			80,000		79,000
144A, 6.0%, 2/1/2025			55,000		55,894
Fresenius Medical Care U.S. Finance II, Inc., 144A, 5.625%, 7/31/2019			10,000		10,825
Fresenius Medical Care U.S. Finance, Inc., 144A, 6.5%, 9/15/2018			10,000		11,000
HCA, Inc.:
6.5%, 2/15/2020			880,000		983,400
7.5%, 2/15/2022			725,000		832,844
Hologic, Inc., 144A, 5.25%, 7/15/2022 (d)			30,000		30,638
IMS Health, Inc., 144A, 6.0%, 11/1/2020			60,000		61,800
Mallinckrodt International Finance SA:
4.75%, 4/15/2023			110,000		102,644
144A, 4.875%, 4/15/2020			45,000		45,790
Par Pharmaceutical Companies, Inc., 7.375%, 10/15/2020			90,000		96,075
Tenet Healthcare Corp.:
144A, 3.786%**, 6/15/2020			55,000		55,481
6.25%, 11/1/2018			230,000		249,837
144A, 6.75%, 6/15/2023			115,000		117,300
Valeant Pharmaceuticals International, 144A, 6.375%, 10/15/2020			90,000		94,781
Valeant Pharmaceuticals International, Inc.:
144A, 5.375%, 3/15/2020			105,000		108,412
144A, 5.875%, 5/15/2023			95,000		97,375
144A, 6.125%, 4/15/2025			285,000		293,194
144A, 7.5%, 7/15/2021			450,000		484,312
					5,069,615
Industrials 2.0%
ADT Corp.:
3.5%, 7/15/2022 (b)			50,000		45,250
5.25%, 3/15/2020			130,000		136,175
6.25%, 10/15/2021			45,000		47,250
Aerojet Rocketdyne Holdings, Inc., 7.125%, 3/15/2021			120,000		127,800
		Principal Amount ($)(c)		Value ($)

Artesyn Embedded Technologies, Inc., 144A, 9.75%, 10/15/2020			70,000		69,475
Belden, Inc., 144A, 5.5%, 9/1/2022			85,000		84,362
Bombardier, Inc.:
144A, 5.5%, 9/15/2018			25,000		24,750
144A, 5.75%, 3/15/2022			328,000		291,920
144A, 7.5%, 3/15/2025			30,000		27,225
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			35,000		34,256
DP World Ltd., 144A, 6.85%, 7/2/2037			250,000		273,000
Empresas ICA SAB de CV, 144A, 8.875%, 5/29/2024			200,000		149,500
EnerSys, 144A, 5.0%, 4/30/2023			15,000		14,836
FTI Consulting, Inc., 6.0%, 11/15/2022			50,000		52,125
Gates Global LLC, 144A, 6.0%, 7/15/2022			65,000		58,825
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			100,000		104,125
Masonite International Corp., 144A, 5.625%, 3/15/2023			60,000		60,975
Meritor, Inc., 6.75%, 6/15/2021			55,000		56,238
Mersin Uluslararasi Liman Isletmeciligi AS, 144A, 5.875%, 8/12/2020			500,000		524,710
Navios Maritime Holdings, Inc., 144A, 7.375%, 1/15/2022			450,000		389,812
Noble Group Ltd., 144A, 6.625%, 8/5/2020			250,000		248,625
Nortek, Inc., 8.5%, 4/15/2021			155,000		165,462
Oshkosh Corp., 5.375%, 3/1/2025			10,000		10,000
Ply Gem Industries, Inc., 6.5%, 2/1/2022			60,000		58,050
SBA Communications Corp., 5.625%, 10/1/2019			50,000		52,000
Titan International, Inc., 6.875%, 10/1/2020 (b)			100,000		91,875
TransDigm, Inc.:
6.0%, 7/15/2022			210,000		207,375
7.5%, 7/15/2021			275,000		295,625
United Rentals North America, Inc.:
4.625%, 7/15/2023			45,000		44,127
6.125%, 6/15/2023			10,000		10,213
7.375%, 5/15/2020			25,000		26,675
7.625%, 4/15/2022			620,000		671,150
Wise Metals Group LLC, 144A, 8.75%, 12/15/2018			95,000		100,344
XPO Logistics, Inc.:
144A, 6.5%, 6/15/2022			70,000		68,513
144A, 7.875%, 9/1/2019			95,000		101,517
					4,724,160
Information Technology 0.9%
ACI Worldwide, Inc., 144A, 6.375%, 8/15/2020			30,000		31,575
Activision Blizzard, Inc., 144A, 5.625%, 9/15/2021			330,000		345,675
Alliance Data Systems Corp., 144A, 5.25%, 12/1/2017			60,000		61,950
Audatex North America, Inc., 144A, 6.0%, 6/15/2021			15,000		15,413
BMC Software Finance, Inc., 144A, 8.125%, 7/15/2021			30,000		24,300
Cardtronics, Inc., 144A, 5.125%, 8/1/2022			55,000		53,762
CDW LLC, 6.0%, 8/15/2022			130,000		134,225
		Principal Amount ($)(c)		Value ($)

EarthLink Holdings Corp., 7.375%, 6/1/2020			70,000		72,800
First Data Corp.:
144A, 6.75%, 11/1/2020 (b)			237,000		250,481
144A, 7.375%, 6/15/2019			276,000		286,902
Infor U.S., Inc., 144A, 6.5%, 5/15/2022			60,000		61,050
Italics Merger Sub, Inc., 144A, 7.125%, 7/15/2023			30,000		29,625
KLA-Tencor Corp., 4.65%, 11/1/2024			150,000		149,918
Micron Technology, Inc., 144A, 5.25%, 8/1/2023			90,000		86,287
NXP BV, 144A, 3.75%, 6/1/2018			90,000		90,675
Open Text Corp., 144A, 5.625%, 1/15/2023			75,000		74,250
Project Homestake Merger Corp., 144A, 8.875%, 3/1/2023			40,000		38,800
Seagate HDD Cayman, 144A, 5.75%, 12/1/2034			220,000		216,617
					2,024,305
Materials 2.1%
Anglo American Capital PLC:
144A, 4.125%, 4/15/2021			200,000		200,092
144A, 4.125%, 9/27/2022 (b)			165,000		160,303
ArcelorMittal, 5.125%, 6/1/2020			20,000		20,275
AVINTIV Specialty Materials, Inc., 7.75%, 2/1/2019			138,000		142,140
Ball Corp., 5.25%, 7/1/2025			70,000		69,213
Berry Plastics Corp., 5.5%, 5/15/2022			320,000		321,200
Cascades, Inc., 144A, 5.5%, 7/15/2022			50,000		48,375
Cemex SAB de CV, 144A, 6.5%, 12/10/2019			200,000		209,940
Chemours Co.:
144A, 6.625%, 5/15/2023			130,000		125,937
144A, 7.0%, 5/15/2025 (b)			25,000		24,250
Clearwater Paper Corp., 144A, 5.375%, 2/1/2025			70,000		68,600
Evolution Escrow Issuer LLC, 144A, 7.5%, 3/15/2022			70,000		66,325
First Quantum Minerals Ltd.:
144A, 6.75%, 2/15/2020			61,000		59,018
144A, 7.0%, 2/15/2021			111,000		106,144
Glencore Funding LLC, 144A, 4.125%, 5/30/2023			50,000		48,371
Gold Fields Orogen Holdings BVI Ltd., 144A, 4.875%, 10/7/2020			250,000		228,750
Hexion, Inc.:
6.625%, 4/15/2020			425,000		389,937
8.875%, 2/1/2018			90,000		81,225
Kaiser Aluminum Corp., 8.25%, 6/1/2020			40,000		43,300
Novelis, Inc., 8.75%, 12/15/2020			955,000		1,009,912
Plastipak Holdings, Inc., 144A, 6.5%, 10/1/2021			70,000		71,225
Platform Specialty Products Corp., 144A, 6.5%, 2/1/2022			80,000		82,600
Reynolds Group Issuer, Inc., 5.75%, 10/15/2020			1,145,000		1,173,625
Tronox Finance LLC, 6.375%, 8/15/2020			55,000		51,013
WR Grace & Co-Conn:
144A, 5.125%, 10/1/2021			40,000		40,300
144A, 5.625%, 10/1/2024			20,000		20,250
		Principal Amount ($)(c)		Value ($)

Yamana Gold, Inc., 4.95%, 7/15/2024			250,000		240,808
					5,103,128
Telecommunication Services 4.2%
America Movil SAB de CV, 7.125%, 12/9/2024	MXN		2,000,000		123,404
AT&T, Inc.:
2.45%, 6/30/2020			40,000		39,211
3.4%, 5/15/2025			70,000		66,760
Bharti Airtel International Netherlands BV, 144A, 5.35%, 5/20/2024			1,000,000		1,058,880
CenturyLink, Inc., Series V, 5.625%, 4/1/2020			25,000		25,031
CommScope, Inc., 144A, 4.375%, 6/15/2020			35,000		35,350
CyrusOne LP: 144A, 6.375%, 11/15/2022 (d)			65,000		67,275
6.375%, 11/15/2022			25,000		25,875
Digicel Group Ltd.:
144A, 7.125%, 4/1/2022			250,000		237,425
144A, 8.25%, 9/30/2020			400,000		401,000
Frontier Communications Corp.:
6.25%, 9/15/2021			60,000		54,600
6.875%, 1/15/2025			240,000		200,700
7.125%, 1/15/2023			390,000		346,125
8.5%, 4/15/2020			290,000		303,195
Hughes Satellite Systems Corp.:
6.5%, 6/15/2019			54,000		58,590
7.625%, 6/15/2021			190,000		209,038
Intelsat Jackson Holdings SA:
5.5%, 8/1/2023			265,000		234,657
7.25%, 10/15/2020			540,000		533,925
7.5%, 4/1/2021			340,000		336,175
Level 3 Financing, Inc.:
5.375%, 8/15/2022			265,000		267,650
144A, 5.375%, 5/1/2025 (b)			55,000		53,006
6.125%, 1/15/2021			100,000		104,870
7.0%, 6/1/2020			185,000		196,331
8.625%, 7/15/2020			450,000		480,915
Millicom International Cellular SA, 144A, 6.0%, 3/15/2025			200,000		193,000
MTN Mauritius Investments Ltd., 144A, 4.755%, 11/11/2024			500,000		496,250
Plantronics, Inc., 144A, 5.5%, 5/31/2023			30,000		30,375
Sprint Communications, Inc.:
6.0%, 11/15/2022 (b)			85,000		77,669
144A, 7.0%, 3/1/2020 (b)			85,000		92,455
144A, 9.0%, 11/15/2018			420,000		474,289
Sprint Corp., 7.125%, 6/15/2024			285,000		264,366
T-Mobile U.S.A., Inc.:
6.375%, 3/1/2025			215,000		219,838
6.625%, 11/15/2020			655,000		681,200
UPCB Finance IV Ltd., 144A, 5.375%, 1/15/2025			285,000		272,032
UPCB Finance V Ltd., 144A, 7.25%, 11/15/2021			252,000		272,160
Wind Acquisition Finance SA, 144A, 6.5%, 4/30/2020			50,000		52,250
Windstream Services LLC:
6.375%, 8/1/2023			60,000		48,825
7.75%, 10/15/2020 (b)			1,075,000		1,052,156
7.75%, 10/1/2021			185,000		169,275
7.875%, 11/1/2017			130,000		138,125
		Principal Amount ($)(c)		Value ($)

Zayo Group LLC:
144A, 6.0%, 4/1/2023 (b)			80,000		79,016
144A, 6.375%, 5/15/2025			70,000		67,900
					10,141,169
Utilities 0.6%
AES Corp., 8.0%, 6/1/2020			30,000		34,650
Calpine Corp.:
5.375%, 1/15/2023			85,000		83,512
5.75%, 1/15/2025			85,000		82,663
Dynegy, Inc.:
144A, 7.375%, 11/1/2022			70,000		73,325
144A, 7.625%, 11/1/2024			135,000		142,762
Hrvatska Elektroprivreda, 144A, 6.0%, 11/9/2017			250,000		260,937
Lamar Funding Ltd., 144A, 3.958%, 5/7/2025			250,000		243,125
NGL Energy Partners LP, 5.125%, 7/15/2019			65,000		64,838
NRG Energy, Inc., 6.25%, 5/1/2024			360,000		357,300
Talen Energy Supply LLC, 144A, 5.125%, 7/15/2019			70,000		68,600
					1,411,712
Total Corporate Bonds (Cost $54,902,313)					53,429,418

Asset-Backed 0.5%
Miscellaneous
ARES CLO Ltd., "D", Series 2012-3A, 144A, 4.907%**, 1/17/2024			250,000		250,029
Hilton Grand Vacations Trust, "B", Series 2014-AA, 144A, 2.07%, 11/25/2026			386,272		380,608
PennyMac LLC, "A1", Series 2015-NPL1, 144A, 4.0%, 3/25/2055			565,215		564,695
Total Asset-Backed (Cost $1,191,410)					1,195,332

Mortgage-Backed Securities Pass-Throughs 5.3%
Federal Home Loan Mortgage Corp.:
3.5%, 12/1/2042 (d)			5,000,000		5,142,187
6.0%, 3/1/2038			7,204		8,191
Federal National Mortgage Association:
4.0%, 4/1/2042 (d)			2,200,000		2,330,625
4.5%, 9/1/2035			20,389		22,207
6.0%, 1/1/2024			24,561		27,879
6.5%, with various maturities from 5/1/2017 until 1/1/2038			4,314		4,546
Government National Mortgage Association 3.5%, 5/1/2043 (d)			5,000,000		5,189,453
Total Mortgage-Backed Securities Pass-Throughs (Cost $12,782,775)					12,725,088

Commercial Mortgage-Backed Securities 0.4%
Del Coronado Trust, "M", Series 2013-HDMZ, 144A, 5.186%**, 3/15/2018			120,000		120,036
FHLMC Multifamily Structured Pass-Through Certificates, "X1", Series K043, 0.678%**, 12/25/2024			4,996,682		217,616
		Principal Amount ($)(c)		Value ($)

JPMBB Commercial Mortgage Securities Trust, "A3", Series 2014-C19, 3.669%, 4/15/2047			125,000		130,650
JPMorgan Chase Commercial Mortgage Securities Corp., "A4", Series 2007-C1, 5.716%, 2/15/2051			222,767		237,699
LB-UBS Commercial Mortgage Trust, "A4", Series 2007-C6, 5.858%, 7/15/2040			238,274		250,967
Total Commercial Mortgage-Backed Securities (Cost $966,303)					956,968

Collateralized Mortgage Obligations 1.7%
Federal Home Loan Mortgage Corp.:
"HI", Series 3979, Interest Only, 3.0%, 12/15/2026			523,474		52,575
"IK", Series 4048, Interest Only, 3.0%, 5/15/2027			629,373		74,613
"ZG", Series 4213, 3.5%, 6/15/2043			56,707		55,021
"LI", Series 3720, Interest Only, 4.5%, 9/15/2025			1,017,364		145,517
"PI", Series 3843, Interest Only, 4.5%, 5/15/2038			546,373		64,604
"SP", Series 4047, Interest Only, 6.465%***, 12/15/2037			566,608		92,702
"H", Series 2278, 6.5%, 1/15/2031			136		151
Federal National Mortgage Association:
"WO", Series 2013-27, Principal Only, Zero Coupon, 12/25/2042			220,000		117,920
"4", Series 406, Interest Only, 4.0%, 9/25/2040			179,886		37,057
"KZ", Series 2010-134, 4.5%, 12/25/2040			437,503		472,161
"I", Series 2003-84, Interest Only, 6.0%, 9/25/2033			187,963		45,107
"PI", Series 2006-20, Interest Only, 6.493%***, 11/25/2030			345,266		55,865
Freddie Mac Structured Agency Credit Risk Debt Notes, "M3", Series 2014-DN4, 4.735%**, 10/25/2024			240,000		243,026
Government National Mortgage Association:
"QI", Series 2011-112, Interest Only, 4.0%, 5/16/2026			534,251		55,247
"GC", Series 2010-101, 4.0%, 8/20/2040			500,000		525,502
"PI", Series 2015-40, Interest Only, 4.0%, 4/20/2044			592,269		104,753
"NI", Series 2011-80, Interest Only, 4.5%, 5/16/2038			663,491		37,988
"BI", Series 2010-30, Interest Only, 4.5%, 7/20/2039			96,953		14,478
"ND", Series 2010-130, 4.5%, 8/16/2039			600,000		658,169
"PI", Series 2014-108, Interest Only, 4.5%, 12/20/2039			144,341		28,922
"IP", Series 2014-11, Interest Only, 4.5%, 1/20/2043			413,059		70,293
"PZ", Series 2010-106, 4.75%, 8/20/2040			444,935		493,703
		Principal Amount ($)(c)		Value ($)

"IQ", Series 2011-18, Interest Only, 5.5%, 1/16/2039			221,285		27,148
"IV", Series 2009-69, Interest Only, 5.5%, 8/20/2039			418,011		82,606
"IN", Series 2009-69, Interest Only, 5.5%, 8/20/2039			425,155		88,365
"IJ", Series 2009-75, Interest Only, 6.0%, 8/16/2039			314,330		64,107
"AI", Series 2007-38, Interest Only, 6.275%***, 6/16/2037			73,133		12,901
Residential Funding Mortgage Securities I, Inc., "M1", Series 2003-S17, 5.5%, 9/25/2033			344,442		244,061
Total Collateralized Mortgage Obligations (Cost $3,586,168)					3,964,562

Government & Agency Obligations 9.0%
Other Government Related (e) 0.1%
Perusahaan Penerbit SBSN, 144A, 4.325%, 5/28/2025			200,000		194,760
Sovereign Bonds 3.7%
Dominican Republic, 144A, 5.5%, 1/27/2025			100,000		100,250
Hashemite Kingdom of Jordan Government AID Bond, 3.0%, 6/30/2025			1,200,000		1,203,000
Indonesia Treasury Bond, Series FR56, 8.375%, 9/15/2026	IDR		1,340,000,000		100,562
Kingdom of Spain-Inflation Linked Bond, REG S, 144A, 1.0%, 11/30/2030	EUR		1,153,761		1,193,401
Portugal Obrigacoes do Tesouro OT, REG S, 144A, 4.1%, 2/15/2045	EUR		1,400,000		1,618,351
Republic of El Salvador:
144A, 6.375%, 1/18/2027			100,000		96,750
144A, 7.65%, 6/15/2035			100,000		100,500
Republic of Hungary, Series 19/A, 6.5%, 6/24/2019	HUF		16,900,000		68,367
Republic of Ireland, REG S, 2.0%, 2/18/2045	EUR		600,000		584,274
Republic of New Zealand, Series 0427, REG S, 4.5%, 4/15/2027	NZD		2,300,000		1,686,811
Republic of Poland, Series 0725, 3.25%, 7/25/2025	PLN		720,000		190,987
Republic of Singapore, 2.75%, 4/1/2042	SGD		600,000		420,760
Republic of Slovenia, 144A, 5.5%, 10/26/2022			200,000		221,790
Republic of South Africa:
Series R204, 8.0%, 12/21/2018	ZAR		2,200,000		183,391
Series R186, 10.5%, 12/21/2026	ZAR		2,700,000		258,326
Republic of Sri Lanka, 144A, 5.125%, 4/11/2019			200,000		199,000
Republic of Turkey, 8.5%, 7/10/2019	TRY		500,000		181,337
Republic of Uruguay, 5.1%, 6/18/2050			40,000		38,100
United Mexican States, 4.6%, 1/23/2046			500,000		462,500
					8,908,457
		Principal Amount ($)(c)		Value ($)

U.S. Government Sponsored Agency 0.4%
Federal National Mortgage Association, 3.0%, 11/15/2027			1,000,000		973,309
U.S. Treasury Obligations 4.8%
U.S. Treasury Bills:
0.06%****, 8/13/2015 (f)			1,327,000		1,327,000
0.07%****, 12/3/2015 (f)			604,000		603,889
U.S. Treasury Bonds:
2.5%, 2/15/2045			25,000		22,002
3.125%, 8/15/2044			142,000		142,233
3.625%, 2/15/2044			176,000		193,504
5.375%, 2/15/2031			1,071,000		1,439,742
U.S. Treasury Notes:
1.0%, 8/31/2016 (g) (h)			5,349,000		5,387,449
1.0%, 9/30/2016			1,200,000		1,209,094
1.25%, 1/31/2020			180,000		177,581
2.125%, 5/15/2025			10,000		9,819
2.25%, 11/15/2024			770,000		765,308
2.5%, 5/15/2024			170,000		172,908
					11,450,529
Total Government & Agency Obligations (Cost $22,212,110)					21,527,055

Municipal Bonds and Notes 2.3%
Arizona, State Transportation Board, Highway Revenue, 5.0%, 7/1/2033			1,000,000		1,149,960
Atlanta, GA, Water & Wastewater Revenue, 5.0%, 11/1/2034			1,000,000		1,134,560
California, State General Obligation:
5.0%, 3/1/2033			285,000		327,106
5.0%, 3/1/2032			715,000		823,208
Honolulu City & County, HI, General Obligation, Series A, 5.0%, 10/1/2035			365,000		420,644
Kentucky, Asset/Liability Commission, General Fund Revenue, 3.165%, 4/1/2018			231,439		238,664
New York City, NY, Transitional Finance Authority Revenue, Future Tax Secured, Series A-1, 5.0%, 8/1/2032			500,000		570,675
		Principal Amount ($)(c)		Value ($)

New York, NY, General Obligation, Series C, 5.0%, 8/1/2033			290,000		330,737
Ventura County, CA, Community College District, 5.0%, 8/1/2030			330,000		388,323
Total Municipal Bonds and Notes (Cost $5,446,873)					5,383,877

Convertible Bond 0.2%
Materials
GEO Specialty Chemicals, Inc., 144A, 7.5%, 10/30/2018 (Cost $205,860)			209,283		382,465

Preferred Security 0.0%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $20,821)			40,000		36,400

	Shares		Value ($)

Mutual Fund 4.7%
Deutsche Floating Rate Fund "Institutional" (i) (Cost $11,234,874)		1,237,106		11,307,152

Securities Lending Collateral 3.3%
Daily Assets Fund Institutional, 0.16% (i) (j) (Cost $7,991,825)		7,991,825		7,991,825

Cash Equivalents 2.5%
Central Cash Management Fund, 0.09% (i) (Cost $5,923,511)		5,923,511		5,923,511

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $245,669,184)†		108.2			258,214,608
Other Assets and Liabilities, Net		(8.2	)		(19,578,903	)
Net Assets		100.0			238,635,705

The following table represents bonds that are in default:

Security

Coupon

Maturity Date

Principal Amount

Cost ($)

Value ($)

Afren PLC*

10.25

4/8/2019

USD

340,000

370,821

149,600

* Non-income producing security.

** Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of June 30, 2015.

*** These securities are shown at their current rate as of June 30, 2015.

**** Annualized yield at time of purchase; not a coupon rate.

† The cost for federal income tax purposes was $246,123,749. At June 30, 2015, net unrealized appreciation for all securities based on tax cost was $12,090,859. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $20,315,859 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $8,225,000.

(a) The Fund may purchase securities that are subject to legal or contractual restrictions on resale ("restricted securities"). Restricted securities are securities which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933. The Fund may be unable to sell a restricted security and it may be more difficult to determine a market value for a restricted security. Moreover, if adverse market conditions were to develop during the period between the Fund's decision to sell a restricted security and the point at which the Fund is permitted or able to sell such security, the Fund might obtain a price less favorable than the price that prevailed when it decided to sell. This investment practice, therefore, could have the effect of increasing the level of illiquidity of the Fund. The future value of these securities is uncertain and there may be changes in the estimated value of these securities.

Schedule of Restricted Securities

Acquisition Date

Cost ($)

Value ($)

Value as % of Net Assets

Dawn Holdings, Inc.*

August 2013

2,342

940

.00

(b) 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, 2015 amounted to $7,511,730, which is 3.1% of net assets.

(d) When-issued or delayed delivery security included.

(e) Government-backed debt issued by financial companies or government sponsored enterprises.

(f) At June 30, 2015, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(g) At June 30, 2015, this security has been pledged, in whole or in part, as collateral for open over-the-counter derivatives.

(h) At June 30, 2015, this security has been pledged, in whole or in part, to cover initial margin requirements for open centrally cleared swap contracts.

(i) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.

(j) Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.

CLO: Collateralized Loan Obligation

CVA: Certificaten Van Aandelen (Certificate of Stock)

Interest Only: Interest Only (IO) bonds represent the "interest only" portion of payments on a pool of underlying mortgages or mortgage-backed securities. IO securities are subject to prepayment risk of the pool of underlying mortgages.

PIK: Denotes that all or a portion of the income is paid in-kind in the form of additional principal.

Principal Only: Principal Only (PO) bonds represent the "principal only" portion of payments on a pool of underlying mortgages or mortgage-backed securities.

REG S: Securities sold under Regulation S may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.

REIT: Real Estate Investment Trust

RSP: Risparmio (Convertible Savings Shares)

SBSN: Surat Berharga Syariah Negara

SDR: Swedish Depositary Receipt

Included in the portfolio are investments in mortgage- or asset-backed securities which are interests in separate pools of mortgages or assets. Effective maturities of these investments may be shorter than stated maturities due to prepayments. Some separate investments in the Federal National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in this investment portfolio.

At June 30, 2015, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year Australian Bond	AUD	9/15/2015		26		2,512,783		12,695
Euro-BUXL 30 Year German Government Bond	EUR	9/8/2015		12		1,988,535		(22,852	)
Total net unrealized depreciation								(10,157	)

At June 30, 2015, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year Canadian Government Bond	CAD	9/21/2015		22		2,465,973		(24,584	)
10 Year U.S. Treasury Note	USD	9/21/2015		148		18,673,438		151,971
Euro-Bund Federal Republic of Germany	EUR	9/8/2015		15		2,541,857		(30,123	)
Ultra Long U.S. Treasury Bond	USD	9/21/2015		55		8,473,438		227,597
Total net unrealized appreciation								324,861

At June 30, 2015, open written options contracts were as follows:

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (k)
Call Options Receive Fixed — 4.48% – Pay Floating — 3-Month LIBOR	5/9/2016 5/11/2026		2,100,000	1	5/5/2016		23,573		(1,396	)
Receive Fixed — 5.132% – Pay Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,100,000	1	3/15/2016		15,172		(90	)
Receive Fixed — 5.132% – Pay Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,100,000	2	3/15/2016		24,780		(90	)
Total Call Options							63,525		(1,576	)
Put Options Pay Fixed — 1.132% – Receive Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,100,000	1	3/15/2016		15,173		(1,078	)
Pay Fixed — 1.132% – Receive Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,100,000	2	3/15/2016		5,355		(1,078	)
Pay Fixed — 2.48% – Receive Floating — 3-Month LIBOR	5/9/2016 5/11/2026		2,100,000	1	5/5/2016		23,572		(40,585	)
Pay Fixed — 2.615% – Receive Floating — 3-Month LIBOR	12/4/2015 12/4/2045		4,900,000	3	12/2/2015		106,330		(87,984	)
Pay Fixed — 2.64% – Receive Floating — 3-Month LIBOR	8/10/2015 8/10/2045		1,900,000	1	8/6/2015		17,765		(10,164	)
Pay Fixed — 2.675% – Receive Floating — 3-Month LIBOR	11/12/2015 11/12/2045		4,900,000	3	11/9/2015		98,245		(99,258	)
Pay Fixed — 2.88% – Receive Floating — LIBOR	9/30/2015 9/30/2045		4,900,000	4	9/28/2015		102,524		(143,286	)
Total Put Options							368,964		(383,433	)
Total							432,489		(385,009	)

(k) Unrealized appreciation on written options on interest rate swap contracts at June 30, 2015 was $47,480.

At June 30, 2015, open credit default swap contracts sold were as follows:

Bilateral Swaps
Effective/ Expiration Dates	Notional Amount ($) (l)			Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (m)	Value ($)		Upfront Payments Paid ($)		Unrealized Appreciation ($)
4/15/2015 6/20/2020		70,000	5		5.0	%	CCO Holdings LLC, 7.25%, 10/30/2017, BB–		6,861		6,691		170
12/22/2014 3/20/2020		135,000	6		5.0	%	General Motors Corp., 6.25%, 10/2/2043, BBB–		22,511		20,287		2,224
Total unrealized appreciation													2,394

(l) The maximum potential amount of future undiscounted payments that the Fund could be required to make under a credit default swap contract would be the notional amount of the contract. These potential amounts would be partially offset by any recovery values of the referenced debt obligation or net amounts received from the settlement of buy protection credit default swap contracts entered into by the Fund for the same referenced debt obligation, if any.

(m) The quality ratings represent the higher of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") credit ratings and are unaudited.

At June 30, 2015, open interest rate swap contracts were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($)		Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Unrealized Appreciation/ (Depreciation) ($)
9/16/2015 9/16/2045		1,900,000	Floating — 3-Month LIBOR	Fixed — 3.0%		19,401			(17,549	)
9/16/2015 9/16/2045		1,900,000	Fixed — 3.0%	Floating — 3-Month LIBOR		(19,401	)		26,268
9/16/2015 9/16/2020		8,037,000	Fixed — 2.25%	Floating — 3-Month LIBOR		(143,871	)		(2,581	)
12/16/2015 9/16/2020		17,900,000	Floating — 3-Month LIBOR	Fixed — 2.214%		207,030			215,734
12/16/2015 9/18/2017		700,000	Fixed — 1.557%	Floating — 3-Month LIBOR		(5,022	)		(5,722	)
2/3/2015 2/3/2045		1,900,000	Fixed — 3.035%	Floating — 3-Month LIBOR		(67,399	)		(44,249	)
1/28/2015 1/28/2045		2,100,000	Fixed — 3.088%	Floating — 3-Month LIBOR		(98,824	)		(77,640	)
12/16/2015 9/18/2045		4,300,000	Fixed — 2.998%	Floating — 3-Month LIBOR		(13,966	)		121,970
12/16/2015 9/17/2035		400,000	Fixed — 2.938%	Floating — 3-Month LIBOR		(1,754	)		6,433
12/16/2015 9/16/2025		800,000	Fixed — 2.64%	Floating — 3-Month LIBOR		(4,742	)		(234	)
Total net unrealized appreciation									222,430

Counterparties:

1 Nomura International PLC

2 BNP Paribas

3 Citigroup, Inc.

4 Morgan Stanley

5 Barclays Bank PLC

6 Credit Suisse

LIBOR: London Interbank Offered Rate; 3-Month LIBOR rate at June 30, 2015 is 0.28%.

As of June 30, 2015, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Appreciation ($)		Counterparty
KRW	1,169,662,000	JPY	130,000,000	7/9/2015		13,874	Nomura International PLC
KRW	1,169,675,000	JPY	130,000,000	7/9/2015		13,863	Australia & New Zealand Banking Group Ltd.
AUD	994,150	GBP	500,000	7/9/2015		18,857	Morgan Stanley
AUD	994,130	GBP	500,000	7/9/2015		18,872	Commonwealth Bank of Australia
USD	2,550,268	JPY	320,000,000	7/9/2015		64,640	Barclays Bank PLC
SEK	8,749,491	EUR	950,000	7/9/2015		3,634	Societe Generale
SEK	8,747,771	EUR	950,000	7/9/2015		3,842	Morgan Stanley
SEK	8,359,200	NOK	8,000,000	7/9/2015		11,699	Crédit Agricole CIB
SEK	8,385,752	NOK	8,000,000	7/9/2015		8,495	Morgan Stanley
JPY	130,000,000	KRW	1,187,160,000	7/9/2015		1,810	Nomura International PLC
JPY	130,000,000	KRW	1,187,095,000	7/9/2015		1,752	Australia & New Zealand Banking Group Ltd.
EUR	1,400,000	USD	1,581,878	7/9/2015		20,935	BNP Paribas
NZD	1,100,000	USD	769,890	7/9/2015		24,937	Macquarie Bank Ltd.
NZD	500,000	USD	346,958	7/9/2015		8,342	National Australia Bank Ltd.
EUR	4,800,000	USD	5,370,235	7/13/2015		18,161	UBS AG
EUR	2,400,000	USD	2,678,299	7/13/2015		2,262	Barclays Bank PLC
USD	5,204,702	EUR	4,800,000	7/13/2015		147,372	Bank of America
USD	2,781,766	EUR	2,581,400	7/13/2015		96,535	Societe Generale
EUR	1,677,000	USD	1,878,502	7/13/2015		8,621	Societe Generale
EUR	302,000	USD	337,191	7/13/2015		457	UBS AG
SGD	1,177,000	USD	878,931	7/13/2015		5,184	Societe Generale
SEK	10,210,000	USD	1,235,505	7/13/2015		3,625	Societe Generale
USD	2,610,834	SEK	22,077,800	7/13/2015		52,946	Societe Generale
USD	695,293	EUR	625,000	7/13/2015		1,592	UBS AG
NZD	2,491,000	USD	1,752,970	7/13/2015		66,581	Societe Generale
PLN	820,000	USD	219,006	8/10/2015		1,145	Citigroup, Inc.
USD	1,204,168	ZAR	14,800,000	8/14/2015		3,336	BNP Paribas
MXN	8,300,000	USD	536,585	8/14/2015		10,114	BNP Paribas
MXN	2,066,000	USD	132,335	8/14/2015		1,288	JPMorgan Chase Securities, Inc.
COP	1,957,500,000	USD	767,207	8/18/2015		19,589	BNP Paribas
Total unrealized appreciation						654,360

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
CAD	1,300,000	USD	1,039,850	7/9/2015		(882	)	Morgan Stanley
CAD	1,300,000	USD	1,040,000	7/9/2015		(733	)	Macquarie Bank Ltd.
GBP	1,000,000	USD	1,561,270	7/9/2015		(9,900	)	Morgan Stanley
JPY	320,000,000	USD	2,605,359	7/9/2015		(9,549	)	Nomura International PLC
USD	622,102	CAD	755,549	7/13/2015		(17,268	)	Societe Generale
NOK	11,904,000	USD	1,469,117	7/13/2015		(48,785	)	BNP Paribas
SGD	825,000	USD	607,214	7/13/2015		(5,225	)	UBS AG
EUR	2,400,000	USD	2,577,566	7/13/2015		(98,471	)	Citigroup, Inc.
EUR	4,942,400	USD	5,308,068	7/13/2015		(202,784	)	Citigroup, Inc.
CAD	755,549	USD	600,610	7/13/2015		(4,224	)	Citigroup, Inc.
SEK	22,115,000	USD	2,536,015	7/13/2015		(132,254	)	Barclays Bank PLC
EUR	2,400,000	USD	2,577,034	7/13/2015		(99,004	)	Bank of America
USD	1,572,969	NOK	11,904,000	7/13/2015		(55,068	)	Barclays Bank PLC
USD	674,019	EUR	604,000	7/13/2015		(549	)	Citigroup, Inc.
USD	2,737,898	EUR	2,400,000	7/13/2015		(61,861	)	Societe Generale
USD	1,259,819	SEK	10,247,200	7/13/2015		(23,450	)	Barclays Bank PLC
USD	2,682,439	EUR	2,400,000	7/13/2015		(6,402	)	UBS AG
USD	420,202	SGD	566,000	7/13/2015		(32	)	Barclays Bank PLC
TRY	510,000	USD	183,484	7/20/2015		(5,765	)	BNP Paribas
ZAR	18,020,000	USD	1,429,682	8/14/2015		(40,536	)	BNP Paribas
USD	400,814	TRY	1,087,500	8/14/2015		(124	)	Nomura International PLC
USD	530,512	MXN	8,300,000	8/14/2015		(4,041	)	BNP Paribas
TRY	1,087,500	USD	387,024	8/14/2015		(13,665	)	Nomura International PLC
ILS	1,950,000	USD	508,886	8/14/2015		(7,882	)	Nomura International PLC
Total unrealized depreciation						(848,454	)

Currency Abbreviations

AUD Australian Dollar

CAD Canadian Dollar

COP Colombian Peso

EUR Euro

GBP British Pound

HUF Hungarian Forint

IDR Indonesian Rupiah

ILS Israeli Shekel

JPY Japanese Yen

KRW South Korean Won

MXN Mexican Peso

NOK Norwegian Krone

NZD New Zealand Dollar

PLN Polish Zloty

SEK Swedish Krona

SGD Singapore Dollar

TRY Turkish Lira

USD United States Dollar

ZAR South African Rand

For information on the Fund's policy and additional disclosures regarding futures contracts, credit default swaps, interest rate swap contracts, forward foreign currency exchange contracts and written options contracts, please refer to Note B in the accompanying Notes to Financial Statements.

Fair Value Measurements

Assets	Level 1			Level 2			Level 3		Total

Common Stocks (n)
Consumer Discretionary	$	9,017,189		$	5,458,115		$	940	$	14,476,244
Consumer Staples		7,557,706			3,161,959			—		10,719,665
Energy		4,617,282			3,087,519			—		7,704,801
Financials		18,013,925			16,704,175			—		34,718,100
Health Care		10,574,251			2,314,022			0		12,888,273
Industrials		5,874,394			6,692,686			—		12,567,080
Information Technology		13,834,847			2,001,886			—		15,836,733
Materials		2,565,987			3,034,515			13,558		5,614,060
Telecommunication Services		2,503,025			5,410,189			—		7,913,214
Utilities		6,621,827			2,873,107			—		9,494,934
Preferred Stocks		—			1,445,814			—		1,445,814
Rights (n)		—			3,059			7,977		11,036
Warrants		—			—			1,001		1,001
Fixed Income Investments (n)
Corporate Bonds		—			53,429,418			—		53,429,418
Asset-Backed		—			1,195,332			—		1,195,332
Mortgage-Backed Securities Pass-Throughs		—			12,725,088			—		12,725,088
Commercial Mortgage-Backed Securities		—			956,968			—		956,968
Collateralized Mortgage Obligations		—			3,964,562			—		3,964,562
Government & Agency Obligations		—			21,527,055			—		21,527,055
Municipal Bonds and Notes		—			5,383,877			—		5,383,877
Convertible Bond		—			—			382,465		382,465
Preferred Security		—			36,400			—		36,400
Mutual Fund		11,307,152			—			—		11,307,152
Short-Term Investments (n)		13,915,336			—			—		13,915,336
Derivatives (o)
Futures Contracts		392,263			—			—		392,263
Credit Default Swap Contracts		—			2,394			—		2,394
Interest Rate Swap Contracts		—			370,405			—		370,405
Forward Foreign Currency Exchange Contracts		—			654,360			—		654,360
Total	$	106,795,184		$	152,432,905		$	405,941	$	259,634,030
Liabilities	Level 1			Level 2			Level 3		Total

Derivatives (o)
Futures Contracts	$	(77,559	)	$	—		$	—	$	(77,559	)
Written Options		—			(385,009	)		—		(385,009	)
Interest Rate Swap Contracts		—			(147,975	)		—		(147,975	)
Forward Foreign Currency Exchange Contracts		—			(848,454	)		—		(848,454	)
Total	$	(77,559	)	$	(1,381,438	)	$	—	$	(1,458,997	)

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(n) See Investment Portfolio for additional detailed categorizations.

(o) Derivatives include unrealized appreciation (depreciation) on open futures contracts, credit default swap contracts, interest rate swap contracts, forward foreign currency exchange contracts and written options, at value.

The accompanying notes are an integral part of the financial statements.

Statement of Assets and Liabilities

as of June 30, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $220,518,974) — including $7,511,730 of securities loaned	$	232,992,120
Investment in Daily Assets Fund Institutional (cost $7,991,825)*		7,991,825
Investments in affiliated Underlying Funds (cost $17,158,385)		17,230,663
Total investments in securities, at value (cost $245,669,184)		258,214,608
Cash		111,237
Foreign currency, at value (cost $534,510)		536,170
Receivable for investments sold		664,645
Receivable for investments sold — when-issued/delayed delivery security		2,273,827
Receivable for Fund shares sold		7,285
Dividends receivable		223,651
Interest receivable		1,152,581
Receivable for variation margin on centrally cleared swaps		30,477
Unrealized appreciation on bilateral swap contracts		2,394
Unrealized appreciation on forward foreign currency exchange contracts		654,360
Upfront payments paid on bilateral swap contracts		26,978
Foreign taxes recoverable		63,764
Other assets		2,344
Total assets		263,964,321
Liabilities
Payable upon return of securities loaned		7,991,825
Payable for investments purchased		537,189
Payable for investments purchased — when-issued/delayed delivery securities		15,146,091
Payable for Fund shares redeemed		167,856
Payable for variation margin on futures contracts		3,341
Options written, at value (premium received $432,489)		385,009
Unrealized depreciation on forward foreign currency exchange contracts		848,454
Accrued management fee		68,230
Accrued Trustees' fees		3,889
Other accrued expenses and payables		176,732
Total liabilities		25,328,616
Net assets, at value	$	238,635,705
Net Assets Consist of
Undistributed net investment income		3,697,961
Net unrealized appreciation (depreciation) on: Investments		12,545,424
Swap contracts		224,824
Futures		314,704
Foreign currency		(197,683	)
Written options		47,480
Accumulated net realized gain (loss)		(464,415	)
Paid-in capital		222,467,410
Net assets, at value	$	238,635,705
Class A Net Asset Value, offering and redemption price per share ($238,635,705 ÷ 9,996,405 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	23.87

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $134,832)	$	2,124,801
Interest (net of foreign taxes withheld of $615)		2,160,359
Income distributions from affiliated Underlying Funds		239,075
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		40,386
Total income		4,564,621
Expenses: Management fee		448,747
Administration fee		121,283
Services to shareholders		756
Custodian fee		42,573
Professional fees		48,026
Reports to shareholders		33,785
Trustees' fees and expenses		6,505
Other		39,453
Total expenses before expense reductions		741,128
Expense reductions		(31,838	)
Total expenses after expense reductions		709,290
Net investment income		3,855,331
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		(333,140	)
Swap contracts		(260,407	)
Futures		(539,975	)
Written options		40,280
Foreign currency		1,007,429
		(85,813	)
Change in net unrealized appreciation (depreciation) on: Investments		1,379,855
Swap contracts		233,231
Futures		360,623
Written options		835,806
Foreign currency		(220,905	)
		2,588,610
Net gain (loss)		2,502,797
Net increase (decrease) in net assets resulting from operations	$	6,358,128

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	3,855,331		$	7,379,735
Operations: Net investment income	$	3,855,331		$	7,379,735
Net realized gain (loss)	��	(85,813	)		7,258,440
Change in net unrealized appreciation (depreciation)		2,588,610			(4,653,232	)
Net increase (decrease) in net assets resulting from operations		6,358,128			9,984,943
Distributions to shareholders from: Net investment income: Class A		(7,355,308	)		(8,047,271	)
Net realized gains: Class A		(6,214,133	)		(26,528,998	)
Total distributions		(13,569,441	)		(34,576,269	)
Fund share transactions: Class A Proceeds from shares sold		3,112,973			5,731,970
Shares issued to shareholders in reinvestment of distributions		13,569,441			34,576,269
Payments for shares redeemed		(18,005,625	)		(37,629,458	)
Net increase (decrease) in net assets from Class A share transactions		(1,323,211	)		2,678,781
Increase (decrease) in net assets		(8,534,524	)		(21,912,545	)
Net assets at beginning of period		247,170,229			269,082,774
Net assets at end of period (including undistributed net investment income of $3,697,961 and $7,197,938, respectively)	$	238,635,705		$	247,170,229
Other Information
Class A Shares outstanding at beginning of period		10,040,081			9,857,478
Shares sold		127,024			223,936
Shares issued to shareholders in reinvestment of distributions		562,580			1,433,510
Shares redeemed		(733,280	)		(1,474,843	)
Net increase (decrease) in Class A shares		(43,676	)		182,603
Shares outstanding at end of period		9,996,405			10,040,081

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	24.62		$	27.30		$	23.90		$	21.49		$	22.13		$	20.52
Income (loss) from investment operations: Net investment incomea		.39			.72			.78			.57			.46			.39
Net realized and unrealized gain (loss)		.26			.25			3.14			2.20			(.75	)		1.88
Total from investment operations		.65			.97			3.92			2.77			(.29	)		2.27
Less distributions from: Net investment income		(.76	)		(.85	)		(.52	)		(.36	)		(.35	)		(.66	)
Net realized gains		(.64	)		(2.80	)		—			—			—			—
Total distributions		(1.40	)		(3.65	)		(.52	)		(.36	)		(.35	)		(.66	)
Net asset value, end of period	$	23.87		$	24.62		$	27.30		$	23.90		$	21.49		$	22.13
Total Return (%)		2.60	b**		3.83			16.63			12.98			(1.42	)		11.22
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		239			247			269			260			264			308
Ratio of expenses before expense reductions (%)		.61	*		.62			.60			.59			.58			.65
Ratio of expenses after expense reductions (%)		.58	*		.62			.60			.59			.58			.65
Ratio of net investment income (loss) (%)		3.18	*		2.83			3.07			2.48			2.09			1.89
Portfolio turnover rate (%)		40	**		88			182			188			109			203
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

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Global Income Builder VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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.

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), exchange-traded funds, futures contracts and certain indices and these securities are categorized as Level 2.

Debt securities are valued at prices supplied by independent pricing services approved by the Fund's Board. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, prepayment speeds and other data, as well as broker quotes. If the pricing services are unable to provide valuations, debt securities are valued at the average of the most recent reliable bid quotations or evaluated prices, as applicable, obtained from broker-dealers. These securities are generally categorized as Level 2.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

Futures contracts are generally valued at the settlement prices established each day on the exchange on which they are traded and are categorized as Level 1.

Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and are categorized as Level 2.

Swap contracts are valued daily based upon prices supplied by a Board approved pricing vendor, if available, and otherwise are valued at the price provided by the broker-dealer. Swap contracts are generally categorized as Level 2.

Exchange-traded options are valued at the last sale price or, in the absence of a sale, the mean between the closing bid and asked prices or at the most recent asked price (bid for purchased options) if no bid or asked price are available. Exchange-traded options are categorized as Level 1. Over-the-counter written or purchased options are valued at prices supplied by a Board approved pricing vendor, if available, and otherwise are valued at the price provided by the broker-dealer with which the option was traded. Over-the-counter written or purchased options are generally categorized as Level 2.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

As of June 30, 2015, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

When-Issued/Delayed Delivery Securities. The Fund may purchase or sell securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the Fund enters into a commitment to purchase or sell a security, the transaction is recorded and the value of the transaction is reflected in the net asset value. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. At the time the Fund enters into a purchase transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment. Additionally, the Fund may be required to post securities and/or cash collateral in accordance with the terms of the commitment.

Certain risks may arise upon entering into when-issued or delayed delivery transactions from the potential inability of counterparties to meet the terms of their contracts or if the issuer does not issue the securities due to political, economic, or other factors. Additionally, losses may arise due to changes in the value of the underlying securities.

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, forward currency contracts, futures contracts, swap contracts 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.

B. Derivative Instruments

Swaps. A swap is a contract between two parties to exchange future cash flows at periodic intervals based on the notional amount of the swap. A bilateral swap is a transaction between the fund and a counterparty where cash flows are exchanged between the two parties. A centrally cleared swap is a transaction executed between the fund and a counterparty, then cleared by a clearing member through a central clearinghouse. The central clearinghouse serves as the counterparty, with whom the fund exchanges cash flows.

The value of a swap is adjusted daily, and the change in value, if any, is recorded as unrealized appreciation or depreciation in the Statement of Assets and Liabilities. Gains or losses are realized when the swap expires or is closed. Certain risks may arise when entering into swap transactions including counterparty default; liquidity; or unfavorable changes in interest rates or the value of the underlying reference security, commodity or index. In connection with bilateral swaps, securities and/or cash may be identified as collateral in accordance with the terms of the swap agreement to provide assets of value and recourse in the event of default. The maximum counterparty credit risk is the net present value of the cash flows to be received from or paid to the counterparty over the term of the swap, to the extent that this amount is beneficial to the Fund, in addition to any related collateral posted to the counterparty by the Fund. This risk may be partially reduced by a master netting arrangement between the Fund and the counterparty. Upon entering into a centrally cleared swap, the Fund is required to deposit with a financial intermediary cash or securities ("initial margin") in an amount equal to a certain percentage of the notional amount of the swap. Subsequent payments ("variation margin") are made or received by the Fund dependent upon the daily fluctuations in the value of the swap. In a cleared swap transaction, counterparty risk is minimized as the central clearinghouse acts as the counterparty.

An upfront payment, if any, made by the Fund is recorded as an asset in the Statement of Assets and Liabilities. An upfront payment, if any, received by the Fund is recorded as a liability in the Statement of Assets and Liabilities. Payments received or made at the end of the measurement period are recorded as realized gain or loss in the Statement of Operations.

Interest Rate Swaps. Interest rate swaps are agreements in which the Fund agrees to pay to the counterparty a fixed rate payment in exchange for the counterparty agreeing to pay to the Fund a variable rate payment, or the Fund agrees to receive from the counterparty a fixed rate payment in exchange for the counterparty agreeing to receive from the Fund a variable rate payment. The payment obligations are based on the notional amount of the swap. For the six months ended June 30, 2015, the Fund entered into interest rate swap agreements to gain exposure to different parts of the yield curve while managing overall duration.

A summary of the open interest rate swap contracts as of June 30, 2015 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in interest rate swap contracts had a total notional amount generally indicative of a range from $26,200,000 to $39,937,000.

Credit Default Swaps. Credit default swaps are agreements between a buyer and a seller of protection against predefined credit events for the reference entity. The Fund may enter into credit default swaps to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller of a credit default swap, the Fund is required to pay the par (or other agreed-upon) value of the referenced entity to the counterparty with the occurrence of a credit event by a third party, such as a U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the swap provided that no credit event has occurred. If no credit event occurs, the Fund keeps the stream of payments with no payment obligations. The Fund may also buy credit default swaps, in which case the Fund functions as the counterparty referenced above. This involves the risk that the swap may expire worthless. It also involves counterparty risk that the seller may fail to satisfy its payment obligations to the Fund with the occurrence of a credit event. When the Fund sells a credit default swap, it will cover its commitment. This may be achieved by, among other methods, maintaining cash or liquid assets equal to the aggregate notional value of the reference entities for all outstanding credit default swaps sold by the Fund. For the six months ended June 30, 2015, the Fund entered into credit default swap agreements to gain exposure to the underlying issuer's credit quality characteristics.

Under the terms of a credit default swap, the Fund receives or makes periodic payments based on a specified interest rate on a fixed notional amount. These payments are recorded as a realized gain or loss in the Statement of Operations. Payments received or made as a result of a credit event or termination of the swap are recognized, net of a proportional amount of the upfront payment, as realized gains or losses in the Statement of Operations.

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the six months ended June 30, 2015, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration. The Fund also entered into interest rate futures contracts for non-hedging purposes to seek to enhance potential gains.

Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market will limit the Fund's ability to close out a futures contract prior to the settlement date and the risk that the futures contract is not well correlated with the security, index or currency to which it relates. Risk of loss may exceed amounts disclosed in the Statement of Assets and Liabilities.

A summary of the open futures contracts as of June 30, 2015 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $4,501,000 to $13,797,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $21,219,000 to $52,895,000.

Options. An option contract is a contract in which the writer (seller) of the option grants the buyer of the option, upon payment of a premium, the right to purchase from (call option), or sell to (put option), the writer a designated instrument at a specified price within a specified period of time. The Fund may write or purchase interest rate swaption agreements which are options to enter into a pre-defined swap agreement. The interest rate swaption agreement will specify whether the buyer of the swaption will be a fixed-rate receiver or a fixed-rate payer upon exercise. Certain options, including options on indices and interest rate options, will require cash settlement by the Fund if exercised. For the six months ended June 30, 2015, the Fund entered into options on interest rate swaps in order to hedge against potential adverse interest rate movements of portfolio assets.

If the Fund writes a covered call option, the Fund foregoes, in exchange for the premium, the opportunity to profit during the option period from an increase in the market value of the underlying security above the exercise price. If the Fund writes a put option it accepts the risk of a decline in the value of the underlying security below the exercise price. Over-the-counter options have the risk of the potential inability of counterparties to meet the terms of their contracts. For exchange traded contracts, the counterparty risk is minimized as the exchange's clearinghouse acts as the counterparty, and guarantees the futures against default. The Fund's maximum exposure to purchased options is limited to the premium initially paid. In addition, certain risks may arise upon entering into option contracts including the risk that an illiquid secondary market will limit the Fund's ability to close out an option contract prior to the expiration date and that a change in the value of the option contract may not correlate exactly with changes in the value of the securities or currencies hedged.

A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in written option contracts had a total value generally indicative of a range from approximately $385,000 to $1,758,000.

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, 2015, the Fund entered into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign currency denominated portfolio holdings, to facilitate transactions in foreign currency denominated securities and to enhance total returns.

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.

A summary of the open forward currency contracts as of June 30, 2015 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $20,741,000 to $46,081,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from approximately $17,111,000 to $35,894,000. The investment in forward currency contracts long vs. other foreign currencies sold had a total contract value generally indicative of a range from approximately $9,923,000 to $21,540,000.

The following tables summarize the value of the Fund's derivative instruments held as of June 30, 2015 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivatives	Forward Contracts		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a)	$	—	$	370,405	$	392,263	$	762,668
Credit Contracts (b)		—		2,394		—		2,394
Foreign Exchange Contracts (c)		654,360		—		—		654,360
	$	654,360	$	372,799	$	392,263	$	1,419,422
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative appreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Unrealized appreciation on bilateral swap contracts (c) Unrealized appreciation on forward foreign currency exchange contracts

Liability Derivatives	Written Options			Forward Contracts			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(385,009	)	$	—		$	(147,975	)	$	(77,559	)	$	(610,543	)
Foreign Exchange Contracts (c)		—			(848,454	)		—			—			(848,454	)
	$	(385,009	)	$	(848,454	)	$	(147,975	)	$	(77,559	)	$	(1,458,997	)
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative depreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Options written, at value (c) Unrealized depreciation on forward foreign currency exchange contracts

Additionally, the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the six months ended June 30, 2015 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Written Options		Forward Contracts		Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a)	$	40,280	$	—	$	(260,407	)	$	(539,975	)	$	(760,102	)
Foreign Exchange Contracts (b)		—		1,006,667		—			—			1,006,667
	$	40,280	$	1,006,667	$	(260,407	)	$	(539,975	)	$	246,565
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Net realized gain (loss) from written options, swap contracts and futures, respectively (b) Net realized gain (loss) from foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

Change in Net Unrealized Appreciation (Depreciation)	Written Options		Forward Contracts			Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a)	$	835,806	$	—		$	230,837	$	360,623	$	1,427,266
Credit Contracts (a)		—		—			2,394		—		2,394
Foreign Exchange Contracts (b)		—		(230,019	)		—		—		(230,019	)
	$	835,806	$	(230,019	)	$	233,231	$	360,623	$	1,199,641
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Change in net unrealized appreciation (depreciation) on written options, swap contracts and futures, respectively (b) Change in net unrealized appreciation (depreciation) on foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

As of June 30, 2015, the Fund has transactions subject to enforceable master netting agreements. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by counterparty, including any collateral exposure, is included in the following tables:

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset			Cash Collateral Received		Non-Cash Collateral Received (a)			Net Amount of Derivative Assets
Australia & New Zealand Banking Group Ltd	$	15,615	$	—		$	—	$	—		$	15,615
Bank of America		147,372		(99,004	)		—		—			48,368
Barclays Bank PLC		67,072		(67,072	)		—		—			—
BNP Paribas		53,974		(53,974	)		—		—			—
Crédit Agricole CIB		11,699		—			—		—			11,699
Citigroup, Inc.		1,145		(1,145	)		—		—			—
Commonwealth Bank of Australia		18,872		—			—		—			18,872
Credit Suisse		2,224		—			—		—			2,224
JPMorgan Chase Securities, Inc.		1,288		—			—		—			1,288
Macquarie Bank Ltd.		24,937		(733	)		—		—			24,204
Morgan Stanley		31,194		(31,194	)		—		—			—
National Australia Bank Ltd.		8,342		—			—		—			8,342
Nomura International PLC		15,684		(15,684	)		—		—			—
Societe Generale		237,126		(79,129	)		—		—			157,997
UBS AG		20,210		(11,627	)		—		—			8,583
	$	656,754	$	(359,562	)	$	—	$	—		$	297,192
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset			Cash Collateral Pledged		Non-Cash Collateral Pledged (a)			Net Amount of Derivative Liabilities
Bank of America	$	99,004	$	(99,004	)	$	—	$	—		$	—
Barclays Bank PLC		210,804		(67,072	)		—		—			143,732
BNP Paribas		100,295		(53,974	)		—		—			46,321
Citigroup, Inc.		493,270		(1,145	)		—		(492,125	)		—
Macquarie Bank Ltd.		733		(733	)		—		—			—
Morgan Stanley		154,068		(31,194	)		—		(122,874	)		—
Nomura International PLC		84,533		(15,684	)		—		(46,331	)		22,518
Societe Generale		79,129		(79,129	)		—		—			—
UBS AG		11,627		(11,627	)		—		—			—
	$	1,233,463	$	(359,562	)	$	—	$	(661,330	)	$	212,571

(a) The actual collateral pledged may be more than the amount shown.

C. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury obligations) aggregated $105,950,093 and $87,788,253, respectively. Purchases and sales of U.S. Treasury obligations aggregated $10,828,374 and $8,294,297, respectively.

For the six months ended June 30, 2015, transactions for written options on interest rate swap contracts were as follows:

	Contract Amount			Premium
Outstanding, beginning of period		37,000,000		$	517,417
Options closed		(4,000,000	)		(41,134	)
Options expired		(3,800,000	)		(43,794	)
Outstanding, end of period		29,200,000		$	432,489

D. Related Parties

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 $250 million	.370	%
Next $750 million	.345	%
Over $1 billion	.310	%

The Fund did not impose a portion of its management fee by an amount equal to the amount of management fee borne by the Fund as a shareholder of the Deutsche Floating Rate Fund. For the six months ended June 30, 2015, the Advisor waived $31,838 of its management fee.

For the period from January 1, 2015 through September 30, 2015, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A shares at 0.73%.

Securities Lending Agent Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the six months ended June 30, 2015, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $3,538.

E. Ownership of the Fund

At June 30, 2015, three participating insurance companies were owners of record of 10% or more of the total outstanding shares of the Fund, each owning 44%, 20% and 17%.

F. Line of Credit

G. Transactions with Affiliates

The Underlying Deutsche Funds in which the Fund invests are considered to be affiliated investments. A summary of the Fund's transactions with affiliated Deutsche Funds during the six months ended June 30, 2015 is as follows:

Affiliate	Value ($) at 12/31/2014		Purchases Cost ($)		Sales Cost ($)		Realized Gain/ (Loss) ($)		Income Distributions ($)		Value ($) at 6/30/2015
Deutsche Floating Rate Fund		—		14,914,998		3,680,124		—		235,375		11,307,152
Central Cash Management Fund		26,756,478		69,366,569		90,199,536		—		3,700		5,923,511
Total		26,756,478		84,281,567		93,879,660		—		239,075		17,230,663

Information About Your Fund's Expenses (Unaudited)

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,026.00
Expenses Paid per $1,000*	$	2.91
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,021.92
Expenses Paid per $1,000*	$	2.91

Annualized Expense Ratio	Class A
Deutsche Variable Series II — Deutsche Global Income Builder VIP	.58%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Global Income Builder VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 1st quartile of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one-, three- and five-year periods ended December 31, 2013.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2013, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). 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 Board noted that the expense limitation agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. The Board considered the Fund’s management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2GIB-3 (R-028382-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Government & Agency Securities VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management Team

7 Investment Portfolio

12 Statement of Assets and Liabilities

13 Statement of Operations

14 Statement of Changes in Net Assets

15 Financial Highlights

17 Notes to Financial Statements

24 Information About Your Fund's Expenses

25 Proxy Voting

26 Advisory Agreement Board Considerations and Fee Evaluation

Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Bond investments are subject to interest-rate, credit, liquidity and market risks to varying degrees. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. The "full faith and credit" guarantee of the US government applies to the timely repayment of interest, and does not eliminate market risk. Because of the rising US government debt burden, it is possible that the US government may not be able to meet its financial obligations or that securities issued by the US government may experience credit downgrades. The Fund may lend securities to approved institutions. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 are 0.72% and 1.06% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in Deutsche Government & Agency Securities VIP
		The Barclays GNMA Index is an unmanaged, market-value-weighted measure of all fixed-rate securities backed by mortgage pools of the Government National Mortgage Association. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Government & Agency Securities VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	9,963		$	10,091		$	10,309		$	11,267		$	15,123
Class A	Average annual total return		–0.37	%		0.91	%		1.02	%		2.41	%		4.22	%
Barclays GNMA Index	Growth of $10,000	$	10,012		$	10,188		$	10,466		$	11,630		$	15,741
Barclays GNMA Index	Average annual total return		0.12	%		1.88	%		1.53	%		3.07	%		4.64	%
Deutsche Government & Agency Securities VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	9,937		$	10,057		$	10,203		$	11,072		$	14.589
Class B	Average annual total return		–0.63	%		0.57	%		0.67	%		2.06	%		3.85	%
Barclays GNMA Index	Growth of $10,000	$	10,012		$	10,188		$	10,466		$	11,630		$	15,741
Barclays GNMA Index	Average annual total return		0.12	%		1.88	%		1.53	%		3.07	%		4.64	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Net Assets)	6/30/15	12/31/14

Mortgage-Backed Securities Pass-Throughs	76%	71%
Collateralized Mortgage Obligations	26%	26%
Government & Agency Obligations	6%	19%
Short-Term US Treasury Obligations	1%	1%
Cash Equivalents and Other Assets and Liabilities, net	–9%	–17%
	100%	100%

Coupons*	6/30/15	12/31/14

Less than 4.5%	47%	50%
4.5%–5.49%	30%	34%
5.5%–6.49%	15%	14%
6.5%–7.49%	8%	2%
7.5% and Greater	0%	0%
	100%	100%

Interest Rate Sensitivity	6/30/15	12/31/14

Effective Maturity	8.8 years	9.7 years
Effective Duration	5.8 years	7.8 years

* Excludes Cash Equivalents, Securities Lending Collateral, U.S. Treasury Bills and Options Purchased.

Effective maturity is the weighted average of the maturity date of bonds held by the Fund taking into consideration any available maturity shortening features.

Effective duration is an approximate measure of the Fund's sensitivity to interest rate changes taking into consideration any maturity shortening features.

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 7.

Portfolio Management Team

William Chepolis, CFA

Scott Agi, CFA

Portfolio Managers

Investment Portfolio June 30, 2015 (Unaudited)

	Principal Amount ($)		Value ($)

Mortgage-Backed Securities Pass-Throughs 76.2%
Federal Home Loan Mortgage Corp., 3.5%, 12/1/2042 (a)		6,000,000		6,170,625
Federal National Mortgage Association:
3.5%, 12/1/2042 (a)		5,000,000		5,151,953
4.0%, 5/1/2042 (a)		1,000,000		1,059,375
Government National Mortgage Association:
3.0%, with various maturities from 4/1/2043 until 10/20/2044 (a)		4,882,112		4,933,363
3.5%, with various maturities from 4/15/2042 until 5/1/2043 (a)		5,186,443		5,398,516
4.0%, with various maturities from 9/20/2040 until 6/20/2043		3,908,241		4,189,027
4.5%, with various maturities from 6/20/2033 until 2/20/2043		9,762,439		10,609,013
4.55%, 1/15/2041		330,218		360,834
4.625%, 5/15/2041		190,503		209,981
5.0%, with various maturities from 11/20/2032 until 4/15/2042		9,699,432		10,849,316
5.5%, with various maturities from 10/15/2032 until 7/20/2040		6,309,054		7,121,656
6.0%, with various maturities from 2/15/2034 until 2/15/2039		5,304,593		6,046,775
6.5%, with various maturities from 9/15/2036 until 2/15/2039		636,463		727,738
7.0%, with various maturities from 2/20/2027 until 11/15/2038		110,718		130,337
7.5%, 10/20/2031		6,572		7,834
Total Mortgage-Backed Securities Pass-Throughs (Cost $61,810,546)				62,966,343

Collateralized Mortgage Obligations 25.9%
Federal Home Loan Mortgage Corp.:
"OA", Series 3179, Principal Only, Zero Coupon, 7/15/2036		149,537		138,348
"KO", Series 4180, Principal Only, Zero Coupon, 1/15/2043		1,269,464		815,102
"YI", Series 3936, Interest Only, 3.0%, 6/15/2025		80,337		4,614
"AI", Series 4016, Interest Only, 3.0%, 9/15/2025		972,206		75,654
"WI", Series 3939, Interest Only, 3.0%, 10/15/2025		337,513		23,679
"EI", Series 3953, Interest Only, 3.0%, 11/15/2025		487,890		37,970
"IO", Series 3974, Interest Only, 3.0%, 12/15/2025		155,781		13,666
"DI", Series 4010, Interest Only, 3.0%, 2/15/2027		126,824		12,746
"IK", Series 4048, Interest Only, 3.0%, 5/15/2027		1,258,747		149,226
"PZ", Series 4094, 3.0%, 8/15/2042		395,842		374,887
"CZ", Series 4113, 3.0%, 9/15/2042		381,533		375,218
"ZT", Series 4165, 3.0%, 2/15/2043		478,787		455,198
	Principal Amount ($)		Value ($)

"IK", Series 3754, Interest Only, 3.5%, 6/15/2025		716,637		65,755
"VZ", Series 4303, 3.5%, 8/15/2042		1,047,702		1,009,513
"ZG", Series 4213, 3.5%, 6/15/2043		189,022		183,403
"PI", Series 3940, Interest Only, 4.0%, 2/15/2041		524,634		102,318
"KZ", Series 4328, 4.0%, 4/15/2044		94,450		96,805
"UZ", Series 4341, 4.0%, 5/15/2044		704,555		753,534
"UA", Series 4298, 4.0%, 2/15/2054		330,110		345,290
"22", Series 243, Interest Only, 4.3%*, 6/15/2021		266,128		10,929
"MI", Series 3871, Interest Only, 6.0%, 4/15/2040		107,476		14,739
"SP", Series 4047, Interest Only, 6.465%*, 12/15/2037		566,608		92,702
"A", Series 172, Interest Only, 6.5%, 1/1/2024		15,198		2,748
"DS", Series 3199, Interest Only, 6.965%*, 8/15/2036		1,643,813		352,209
"S", Series 2416, Interest Only, 7.915%*, 2/15/2032		228,214		51,000
"ST", Series 2411, Interest Only, 8.565%*, 6/15/2021		323,722		19,841
"KS", Series 2064, Interest Only, 9.965%*, 5/15/2022		216,244		45,854
Federal National Mortgage Association:
"DI", Series 2011-136, Interest Only, 3.0%, 1/25/2026		147,420		12,580
"HI", Series 2010-123, Interest Only, 3.5%, 3/25/2024		220,406		11,305
"KI", Series 2011-72, Interest Only, 3.5%, 3/25/2025		654,142		30,380
"IO", Series 2012-146, Interest Only, 3.5%, 1/25/2043		1,787,277		412,416
"4", Series 406, Interest Only, 4.0%, 9/25/2040		359,772		74,113
"ZB", Series 2010-136, 4.0%, 12/25/2040		150,838		159,105
"AZ", Series 2012-29, 4.0%, 4/25/2042		1,511,927		1,593,675
"HZ", Series 2013-20, 4.0%, 3/25/2043		1,584,747		1,631,275
"25", Series 351, Interest Only, 4.5%, 5/25/2019		96,295		5,951
"IN", Series 2003-49, Interest Only, 4.75%, 3/25/2018		137,439		1,038
"21", Series 334, Interest Only, 5.0%, 3/25/2018		36,207		1,777
"20", Series 334, Interest Only, 5.0%, 3/25/2018		57,604		2,874
"23", Series 339, Interest Only, 5.0%, 6/25/2018		81,597		4,071
"26", Series 381, Interest Only, 5.0%, 12/25/2020		34,265		2,810
"ZA", Series 2008-24, 5.0%, 4/25/2038		753,821		827,453
"30", Series 381, Interest Only, 5.5%, 11/25/2019		195,597		16,187
"PI", Series 2009-14, Interest Only, 5.5%, 3/25/2024		329,410		36,912
"PJ", Series 2004-46, Interest Only, 5.813%*, 3/25/2034		253,630		35,056
	Principal Amount ($)		Value ($)

"WI", Series 2011-59, Interest Only, 6.0%, 5/25/2040		209,656		22,387
"101", Series 383, Interest Only, 6.5%, 9/25/2022		700,651		98,010
"SJ", Series 2007-36, Interest Only, 6.583%*, 4/25/2037		137,697		23,618
"KI", Series 2005-65, Interest Only, 6.813%*, 8/25/2035		75,527		14,404
"SA", Series G92-57, IOette, 83.104%*, 10/25/2022		26,676		46,294
Government National Mortgage Association:
"KZ", Series 2014-102, 3.5%, 7/16/2044		1,858,600		1,763,082
"BI", Series 2014-22, Interest Only, 4.0%, 2/20/2029		876,797		117,186
"JY", Series 2010-20, 4.0%, 12/20/2033		2,138,155		2,266,698
"IP", Series 2015-50, Interest Only, 4.0%, 9/20/2040		1,980,999		359,247
"PI", Series 2015-40, Interest Only, 4.0%, 4/20/2044		592,269		104,753
"LI", Series 2009-104, Interest Only, 4.5%, 12/16/2018		124,400		6,575
"NI", Series 2010-44, Interest Only, 4.5%, 10/20/2037		334,179		24,727
"CI", Series 2010-87, Interest Only, 4.5%, 11/20/2038		1,251,588		290,601
"PI", Series 2014-108, Interest Only, 4.5%, 12/20/2039		446,185		89,404
"MI", Series 2010-169, Interest Only, 4.5%, 8/20/2040		565,479		84,925
"Z", Series 2010-169, 4.5%, 12/20/2040		585,170		651,010
"IP", Series 2014-115, Interest Only, 4.5%, 2/20/2044		315,815		64,178
"GZ", Series 2005-24, 5.0%, 3/20/2035		558,674		647,378
"ZA", Series 2005-75, 5.0%, 10/16/2035		628,499		721,081
"MZ", Series 2009-98, 5.0%, 10/16/2039		1,127,751		1,335,815
"Z", Series 2009-112, 5.0%, 11/20/2039		1,321,261		1,470,508
"AI", Series 2008-46, Interest Only, 5.5%, 5/16/2023		125,463		8,250
"GI", Series 2003-19, Interest Only, 5.5%, 3/16/2033		587,330		124,950
"IB", Series 2010-130, Interest Only, 5.5%, 2/20/2038		167,020		34,833
"BS", Series 2011-93, Interest Only, 5.915%*, 7/16/2041		954,912		166,109
"DI", Series 2009-10, Interest Only, 6.0%, 4/16/2038		238,403		39,552
"SA", Series 2012-84, Interest Only, 6.113%*, 12/20/2038		1,065,508		145,098
"QA", Series 2007-57, Interest Only, 6.313%*, 10/20/2037		224,058		41,385
"IP", Series 2009-118, Interest Only, 6.5%, 12/16/2039		61,286		13,404
"IC", Series 1997-4, Interest Only, 7.5%, 3/16/2027		436,547		113,467
	Principal Amount ($)		Value ($)

"SK", Series 2003-11, Interest Only, 7.515%*, 2/16/2033		373,760		71,076
Total Collateralized Mortgage Obligations (Cost $19,079,364)				21,441,931

Government & Agency Obligations 5.4%
U.S. Treasury Obligations
U.S. Treasury Bonds:
2.875%, 5/15/2043		1,500,000		1,429,453
3.375%, 5/15/2044		1,000,000		1,050,391
U.S. Treasury Note, 1.0%, 9/30/2016 (b) (c)		2,000,000		2,015,156
Total Government & Agency Obligations (Cost $4,400,235)				4,495,000

Short-Term U.S. Treasury Obligation 1.3%
U.S. Treasury Bill, 0.06%**, 8/13/2015 (d) (Cost $1,044,925)		1,045,000		1,045,000

	Contract Amount		Value ($)

Call Options Purchased 0.1%
Options on Interest Rate Swap Contracts
Pay Fixed Rate — 3.72% – Receive Floating — 3-Month LIBOR, Swap Expiration Date 4/22/2026, Option Expiration Date 4/20/20161		2,600,000		9,609
Pay Fixed Rate — 4.32% – Receive Floating — 3-Month LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172		6,000,000		31,740
Total Call Options Purchased (Cost $390,446)				41,349

Put Options Purchased 0.1%
Options on Interest Rate Swap Contracts
Receive Fixed Rate — 2.32% – Pay Floating — 3-Month LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172 (Cost $203,883)		6,000,000		107,549

	Shares		Value ($)

Cash Equivalents 4.7%
Central Cash Management Fund, 0.09% (e) (Cost $3,855,326)		3,855,326		3,855,326

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $90,784,725)†		113.7			93,952,498
Other Assets and Liabilities, Net		(13.7	)		(11,319,734	)
Net Assets		100.0			82,632,764

* These securities are shown at their current rate as of June 30, 2015.

** Annualized yield at time of purchase; not a coupon rate.

† The cost for federal income tax purposes was $90,808,279. At June 30, 2015, net unrealized appreciation for all securities based on tax cost was $3,144,219. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $4,364,939 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,220,720.

(a) When-issued or delayed delivery securities included.

(b) At June 30, 2015, this security has been pledged, in whole or in part, as collateral for open over-the-counter derivatives.

(c) At June 30, 2015, this security has been pledged, in whole or in part, to cover initial margin requirements for open centrally cleared swap contracts.

(d) At June 30, 2015, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(e) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.

IOettes: These securities represent the right to receive interest payments on an underlying pool of mortgages with similar features as those associated with IO securities. Unlike IO's, a nominal amount of principal is assigned to an IOette which is small in relation to the interest flow that constitutes almost all of the IOette cash flow. The effective yield of this security is lower than the stated interest rate.

LIBOR: London Interbank Offered Rate; 3-Month LIBOR rate at June 30, 2015 is 0.28%.

Principal Only: Principal Only (PO) bonds represent the "principal only" portion of payments on a pool of underlying mortgages or mortgage-backed securities.

Included in the portfolio are investments in mortgage- or asset-backed securities which are interests in separate pools of mortgages or assets. Effective maturities of these investments may be shorter than stated maturities due to prepayments. Some separate investments in the Government National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in this investment portfolio.

At June 30, 2015, open futures contracts purchased were as follows:

Futures

Currency

Expiration Date

Contracts

Notional Value ($)

Unrealized Depreciation ($)

10 Year U.S. Treasury Note

USD

9/21/2015

3,406,641

(6,382

)

At June 30, 2015, open futures contracts sold were as follows:

Futures

Currency

Expiration Date

Contracts

Notional Value ($)

Unrealized Appreciation ($)

Ultra Long U.S. Treasury Bond

USD

9/21/2015

106

16,330,625

293,298

Currency Abbreviation

USD United States Dollar

At June 30, 2015, open written options contracts were as follows:

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Dates	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (f)
Call Options Receive Fixed — 3.32% – Pay Floating — 3-Month LIBOR	2/3/2017 2/3/2027		3,000,000	2	2/1/2017		216,990		(67,572	)
Receive Fixed — 4.22% – Pay Floating — 3-Month LIBOR	4/22/2016 4/22/2026		2,600,000	1	4/20/2016		92,690		(2,832	)
Receive Fixed — 4.48% – Pay Floating — 3-Month LIBOR	5/9/2016 5/11/2026		2,400,000	1	5/5/2016		26,940		(1,597	)
Receive Fixed — 5.132% – Pay Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,400,000	1	3/15/2016		17,340		(102	)
Receive Fixed — 5.132% – Pay Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,400,000	2	3/15/2016		28,320		(102	)
Total Call Options							382,280		(72,205	)
Put Options Pay Fixed — 1.132% – Receive Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,400,000	2	3/15/2016		6,120		(1,232	)
Pay Fixed — 1.132% – Receive Floating — 3-Month LIBOR	3/17/2016 3/17/2026		2,400,000	1	3/15/2016		17,340		(1,232	)
Pay Fixed — 2.48% – Receive Floating — 3-Month LIBOR	5/9/2016 5/11/2026		2,400,000	1	5/5/2016		26,940		(46,383	)
Pay Fixed — 2.615% – Receive Floating — 3-Month LIBOR	12/4/2015 12/4/2045		1,900,000	3	12/2/2015		41,230		(34,116	)
Pay Fixed — 2.64% – Receive Floating — 3-Month LIBOR	8/10/2015 8/10/2045		2,200,000	1	8/6/2015		20,570		(11,769	)
Pay Fixed — 2.675% – Receive Floating — 3-Month LIBOR	11/12/2015 11/12/2045		1,900,000	3	11/9/2015		38,095		(38,488	)
Pay Fixed — 2.88% – Receive Floating — 3-Month LIBOR	9/30/2015 9/30/2045		1,900,000	4	9/28/2015		39,754		(55,560	)
Pay Fixed — 3.32% – Receive Floating — 3-Month LIBOR	2/3/2017 2/3/2027		3,000,000	2	2/1/2017		216,990		(178,464	)
Total Put Options							407,039		(367,244	)
Total							789,319		(439,449	)

(f) Unrealized appreciation on written options on interest rate swap contracts at June 30, 2015 was $349,870.

At June 30, 2015, open interest rate swap contracts were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($)		Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Unrealized Appreciation/ (Depreciation) ($)
9/16/2015 9/16/2017		11,000,000	Floating — 3-Month LIBOR	Fixed — 1.0%		(10,378	)		6,978
9/16/2015 9/16/2017		18,500,000	Fixed — 1.0%	Floating — 3-Month LIBOR		17,597			(35,206	)
6/17/2015 6/17/2020		8,830,000	Fixed — 1.5%	Floating — 3-Month LIBOR		105,072			23,359
9/16/2015 9/16/2020		7,100,000	Fixed — 1.75%	Floating — 3-Month LIBOR		44,321			(20,436	)
9/16/2015 9/16/2020		3,384,000	Fixed — 2.25%	Floating — 3-Month LIBOR		(60,578	)		(1,087	)
9/16/2015 9/16/2025		7,900,000	Fixed — 2.5%	Floating — 3-Month LIBOR		8,813			10,569
9/16/2015 9/16/2045		2,200,000	Fixed — 3.0%	Floating — 3-Month LIBOR		(22,463	)		30,416
9/16/2015 9/16/2022		16,000,000	Floating — 3-Month LIBOR	Fixed — 2.25%		39,199			(133,661	)
6/17/2015 6/17/2045		8,578,000	Floating — 3-Month LIBOR	Fixed — 2.5%		(750,715	)		(758,428	)
9/16/2015 9/16/2045		800,000	Floating — 3-Month LIBOR	Fixed — 3.0%		8,169			(7,389	)
Total net unrealized depreciation									(884,885	)

Counterparties:

1 Nomura International PLC

2 BNP Paribas

3 Citigroup, Inc.

4 Morgan Stanley

For information on the Fund's policy and additional disclosures regarding futures contracts, purchased and written options contracts, and interest rate swap contracts, please refer to the Derivatives section of Note B in the accompanying Notes to Financial Statements.

Fair Value Measurements

Assets	Level 1			Level 2			Level 3		Total

Fixed-Income Investments (g)
Mortgage-Backed Securities Pass-Throughs	$	—		$	62,966,343		$	—	$	62,966,343
Collateralized Mortgage Obligations		—			21,441,931			—		21,441,931
Government & Agency Obligations		—			4,495,000			—		4,495,000
Short-Term U.S. Treasury Obligations		—			1,045,000			—		1,045,000
Short-Term Investments		3,855,326			—			—		3,855,326
Derivatives (h)
Purchased Options		—			148,898			—		148,898
Futures Contracts		293,298			—			—		293,298
Interest Rate Swap Contracts		—			71,322			—		71,322
Total	$	4,148,624		$	90,168,494		$	—	$	94,317,118
Liabilities	Level 1			Level 2			Level 3		Total

Derivatives (h)
Futures Contracts	$	(6,382	)	$	—		$	—	$	(6,382	)
Written Options		—			(439,449	)		—		(439,449	)
Interest Rate Swap Contracts		—			(956,207	)		—		(956,207	)
Total	$	(6,382	)	$	(1,395,656	)	$	—	$	(1,402,038	)

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(g) See Investment Portfolio for additional detailed categorizations.

(h) Derivatives include value of purchased options, unrealized appreciation (depreciation) on open futures contracts and interest rate swap contracts, and written options, at value.

The accompanying notes are an integral part of the financial statements.

Statement of Assets and Liabilities

as of June 30, 2015 (Unaudited)
Assets
Investments Investments in non-affiliated securities, at value (cost $86,929,399)	$	90,097,172
Investment in Central Cash Management Fund (cost $3,855,326)		3,855,326
Total investments in securities, at value (cost $90,784,725)		93,952,498
Cash		10,000
Receivable for investments sold		4,343,212
Receivable for investments sold — when-issued/delayed delivery securities		9,591,970
Receivable for Fund shares sold		44,727
Interest receivable		340,922
Receivable for variation margin on futures contracts		6,231
Receivable for variation margin on centrally cleared swaps		6,614
Other assets		1,332
Total assets		108,297,506
Liabilities
Payable for investments purchased — when-issued/delayed delivery securities		25,109,263
Payable for Fund shares redeemed		11,104
Options written, at value (premiums received $789,319)		439,449
Accrued management fee		26,570
Accrued Trustees' fees		931
Other accrued expenses and payables		77,425
Total liabilities		25,664,742
Net assets, at value	$	82,632,764
Net Assets Consist of
Undistributed net investment income		992,567
Unrealized appreciation (depreciation) on: Investments		3,167,773
Swap contracts		(884,885	)
Futures		286,916
Written options		349,870
Accumulated net realized gain (loss)		(1,398,492	)
Paid-in capital		80,119,015
Net assets, at value	$	82,632,764
Class A Net Asset Value, offering and redemption price per share ($79,901,636 ÷ 6,990,233 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.43
Class B Net Asset Value, offering and redemption price per share ($2,731,128 ÷ 238,857 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.43

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Interest	$	1,323,210
Income distributions — Central Cash Management Fund		1,742
Total income		1,324,952
Expenses: Management fee		193,045
Administration fee		42,899
Services to shareholders		691
Record keeping fees (Class B)		1,453
Distribution service fees (Class B)		3,477
Custodian fee		16,893
Professional fees		40,755
Reports to shareholders		15,570
Trustees' fees and expenses		2,806
Other		6,644
Total expenses before expense reductions		324,233
Expense reductions		(14,659	)
Total expenses after expense reductions		309,574
Net investment income		1,015,378
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		195,340
Swap contracts		(838,194	)
Futures		34,968
Written options		98,020
		(509,866	)
Change in net unrealized appreciation (depreciation) on: Investments		(980,479	)
Swap contracts		(875,857	)
Futures		276,851
Written options		725,058
		(854,427	)
Net gain (loss)		(1,364,293	)
Net increase (decrease) in net assets resulting from operations	$	(348,915	)

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	1,015,378		$	2,385,165
Operations: Net investment income	$	1,015,378		$	2,385,165
Net realized gain (loss)		(509,866	)		(778,379	)
Change in net unrealized appreciation (depreciation)		(854,427	)		3,438,057
Net increase (decrease) in net assets resulting from operations		(348,915	)		5,044,843
Distributions to shareholders from: Net investment income: Class A		(2,287,159	)		(2,179,180	)
Class B		(68,234	)		(66,035	)
Total distributions		(2,355,393	)		(2,245,215	)
Fund share transactions: Class A Proceeds from shares sold		2,899,823			11,625,548
Reinvestment of distributions		2,287,159			2,179,180
Payments for shares redeemed		(9,341,460	)		(25,367,687	)
Net increase (decrease) in net assets from Class A share transactions		(4,154,478	)		(11,562,959	)
Class B Proceeds from shares sold		96,084			277,916
Reinvestment of distributions		68,234			66,035
Payments for shares redeemed		(368,998	)		(1,055,485	)
Net increase (decrease) in net assets from Class B share transactions		(204,680	)		(711,534	)
Increase (decrease) in net assets		(7,063,466	)		(9,474,865	)
Net assets at beginning of period		89,696,230			99,171,095
Net assets at end of period (including undistributed net investment income of $992,567 and $2,332,582, respectively)	$	82,632,764		$	89,696,230
Other Information
Class A Shares outstanding at beginning of period		7,344,193			8,328,640
Shares sold		247,551			994,555
Shares issued to shareholders in reinvestment of distributions		199,404			189,659
Shares redeemed		(800,915	)		(2,168,661	)
Net increase (decrease) in Class A shares		(353,960	)		(984,447	)
Shares outstanding at end of period		6,990,233			7,344,193
Class B Shares outstanding at beginning of period		256,223			317,145
Shares sold		8,204			23,866
Shares issued to shareholders in reinvestment of distributions		5,944			5,742
Shares redeemed		(31,514	)		(90,530	)
Net increase (decrease) in Class B shares		(17,366	)		(60,922	)
Shares outstanding at end of period		238,857			256,223

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	11.80		$	11.47		$	12.69		$	13.12		$	12.98		$	12.78
Income (loss) from investment operations: Net investment incomea		.14			.29			.24			.34			.48			.50
Net realized and unrealized gain (loss)		(.18	)		.31			(.59	)		.03			.45			.32
Total from investment operations		(.04	)		.60			(.35	)		.37			.93			.82
Less distributions from: Net investment income		(.33	)		(.27	)		(.37	)		(.52	)		(.57	)		(.62	)
Net realized gains		—			—			(.50	)		(.28	)		(.22	)		—
Total distributions		(.33	)		(.27	)		(.87	)		(.80	)		(.79	)		(.62	)
Net asset value, end of period	$	11.43		$	11.80		$	11.47		$	12.69		$	13.12		$	12.98
Total Return (%)		(.37	)b**		5.29	b		(3.04	)b		2.93	b		7.46			6.61
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		80			87			96			121			146			157
Ratio of expenses before expense reductions (%)		.74	*		.72			.71			.68			.67			.64
Ratio of expenses after expense reductions (%)		.71	*		.70			.67			.66			.67			.64
Ratio of net investment income (%)		2.38	*		2.49			2.05			2.65			3.68			3.86
Portfolio turnover rate (%)		133	**		393			794			796			673			423
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

						Years Ended December 31,
Class B	Six Months Ended 6/30/15 (Unaudited)				2014				2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period		$	11.79			$	11.46		$	12.67		$	13.10		$	12.95		$	12.75
Income (loss) from investment operations: Net investment incomea			.12				.25			.20			.29			.43			.46
Net realized and unrealized gain (loss)			(.19	)			.31			(.59	)		.03			.46			.31
Total from investment operations			(.07	)			.56			(.39	)		.32			.89			.77
Less distributions from: Net investment income			(.29	)			(.23	)		(.32	)		(.47	)		(.52	)		(.57	)
Net realized gains			—				—			(.50	)		(.28	)		(.22	)		—
Total distributions			(.29	)			(.23	)		(.82	)		(.75	)		(.74	)		(.57	)
Net asset value, end of period		$	11.43			$	11.79		$	11.46		$	12.67		$	13.10		$	12.95
Total Return (%)			(.63	)b**			4.95	b		(3.25	)b		2.48	b		7.15			6.24
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			3				3			4			5			7			6
Ratio of expenses before expense reductions (%)			1.10	*			1.06			1.06			1.03			1.01			.99
Ratio of expenses after expense reductions (%)			1.06	*			1.03			.99			1.01			1.01			.99
Ratio of net investment income (%)			2.03	*			2.16			1.71			2.29			3.34			3.51
Portfolio turnover rate (%)			133	**			393			794			796			673			423
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

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Government & Agency Securities VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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 (including the applicable Rule 12b-1 fee and recordkeeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.

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.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

Futures contracts are generally valued at the settlement prices established each day on the exchange on which they are traded and are categorized as Level 1.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

Mortgage Dollar Rolls. The Fund may enter into mortgage dollar rolls in which the Fund sells to a bank or broker/dealer (the "counterparty") mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase similar, but not identical, securities on a fixed date. The counterparty receives all principal and interest payments, including prepayments, made on the security while it is the holder. The Fund receives compensation as consideration for entering into the commitment to repurchase. The compensation is paid in the form of a lower price for the security upon its repurchase, or alternatively, a fee. Mortgage dollar rolls may be renewed with a new sale and repurchase price and a cash settlement made at each renewal without physical delivery of the securities subject to the contract.

Certain risks may arise upon entering into mortgage dollar rolls from the potential inability of counterparties to meet the terms of their commitments. Additionally, the value of such securities may change adversely before the Fund is able to repurchase them. There can be no assurance that the Fund's use of the cash that it receives from a mortgage dollar roll will provide a return that exceeds its costs.

When-Issued/Delayed Delivery Securities. The Fund may purchase or sell securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the Fund enters into a commitment to purchase or sell a security, the transaction is recorded and the value of the transaction is reflected in the net asset value. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. At the time the Fund enters into a purchase transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment. Additionally, the Fund or the counterparty may be required to post securities and/or cash collateral in accordance with the terms of the commitment.

Certain risks may arise upon entering into when-issued or delayed delivery transactions from the potential inability of counterparties to meet the terms of their contracts or if the issuer does not issue the securities due to political, economic or other factors. Additionally, losses may arise due to changes in the value of the underlying securities.

At December 31, 2014, the Fund had approximately $806,000 of net tax basis capital loss carryforwards, which may be applied against realized net taxable capital gains indefinitely, including short-term losses ($723,000) and long-term losses ($83,000).

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 futures contracts, paydown losses on mortgage backed securities, investments in swap contracts 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.

B. Derivative Instruments

Swaps. A swap is a contract between two parties to exchange future cash flows at periodic intervals based on the notional amount of the swap. A bilateral swap is a transaction between the Fund and a counterparty where cash flows are exchanged between the two parties. A centrally cleared swap is a transaction executed between the Fund and a counterparty, then cleared by a clearing member through a central clearinghouse. The central clearinghouse serves as the counterparty, with whom the Fund exchanges cash flows.

Interest rate swaps are agreements in which the Fund agrees to pay to the counterparty a fixed rate payment in exchange for the counterparty agreeing to pay to the Fund a variable rate payment, or the Fund agrees to receive from the counterparty a fixed rate payment in exchange for the counterparty agreeing to receive from the Fund a variable rate payment. The payment obligations are based on the notional amount of the swap. For the six months ended June 30, 2015, the Fund entered into interest rate swap agreements to gain exposure to different parts of the yield curve while managing overall duration.

For the six months ended June 30, 2015, the investment in interest rate swap contracts had a total notional amount generally indicative of a range from $43,200,000 to $84,292,000.

Options. An option contract is a contract in which the writer (seller) of the option grants the buyer of the option, upon payment of a premium, the right to purchase from (call option), or sell to (put option), the writer a designated instrument at a specified price within a specified period of time. The Fund may write or purchase interest rate swaption agreements which are options to enter into a pre-defined swap agreement. The interest rate swaption agreement will specify whether the buyer of the swaption will be a fixed-rate receiver or a fixed-rate payer upon exercise. Certain options, including options on indices and interest rate options, will require cash settlement by the Fund if exercised. For the six months ended June 30, 2015, the Fund entered into options on interest rate swap contracts in order to hedge against potential adverse interest rate movements of portfolio assets.

If the Fund writes a covered call option, the Fund foregoes, in exchange for the premium, the opportunity to profit during the option period from an increase in the market value of the underlying security above the exercise price. If the Fund writes a put option it accepts the risk of a decline in the value of the underlying security below the exercise price. Over-the-counter options have the risk of the potential inability of counterparties to meet the terms of their contracts. For exchange-traded contracts, the counterparty risk is minimized as the exchange's clearinghouse acts as the counterparty, and guarantees the futures against default. The Fund's maximum exposure to purchased options is limited to the premium initially paid. In addition, certain risks may arise upon entering into option contracts, including the risk that an illiquid secondary market will limit the Fund's ability to close out an option contract prior to the expiration date and that a change in the value of the option contract may not correlate exactly with changes in the value of the securities or currencies hedged.

A summary of the open purchased option contracts as of June 30, 2015 is included in the Fund's Investment Portfolio. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in written option contracts had a total value generally indicative of a range from approximately $439,000 to $1,280,000, and purchased option contracts had a total value generally indicative of a range from approximately $149,000 to $263,000.

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the six months ended June 30, 2015, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration.

Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market will limit the Fund's ability to close out a futures contract prior to the settlement date and the risk that the futures contract is not well correlated with the security, index or currency to which it relates. Risk of loss may exceed amounts disclosed in the Statement of Assets and Liabilities.

A summary of the open futures contracts as of June 30, 2015, is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $3,407,000 to $21,425,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from $0 to approximately $16,331,000.

Asset Derivatives	Purchased Options		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a) (b)	$	148,898	$	71,322	$	293,298	$	513,518
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Investments in securities, at value (includes purchased options) (b) Includes cumulative appreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Liability Derivatives	Written Options			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(439,449	)	$	(956,207	)	$	(6,382	)	$	(1,402,038	)
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Options written, at value (b) Includes cumulative depreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Realized Gain (Loss)	Written Options		Swap Contracts			Futures Contracts		Total
Interest Rate Contracts (a)	$	98,020	$	(838,194	)	$	34,968	$	(705,206	)
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Net realized gain (loss) from written options, swap contracts and futures, respectively

Change in Net Unrealized Appreciation (Depreciation)	Purchased Options			Written Options		Swap Contracts			Futures Contracts		Total
Interest Rate Contracts (a)	$	(53,364	)	$	725,058	$	(875,857	)	$	276,851	$	72,688
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Change in net unrealized appreciation (depreciation) from investments (includes purchased options), written options, swap contracts and futures, respectively

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Received			Net Amount of Derivative Assets
BNP Paribas	$	139,289	$	(139,289	)	$	—		$	—
Nomura International PLC		9,609		(9,609	)		—			—
	$	148,898	$	(148,898	)	$	—		$	—
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Pledged (a)			Net Amount of Derivative Liabilities
BNP Paribas	$	247,370	$	(139,289	)	$	(108,081	)	$	—
Citigroup, Inc.		72,604		—			(72,604	)		—
Morgan Stanley		55,560		—			—			55,560
Nomura International PLC		63,915		(9,609	)		(54,306	)		—
	$	439,449	$	(148,898	)	$	(234,991	)	$	55,560

(a) The actual collateral pledged may be more than the amount shown.

C. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment securities (excluding short-term investments and U.S. Treasury securities) aggregated $124,410,054 and $134,494,162, respectively. Purchases and sales of U.S. Treasury securities aggregated $7,102,261 and $10,565,135, respectively.

For the six months ended June 30, 2015, transactions for written options on interest rate swap contracts were as follows:

	Contract Amount			Premiums
Outstanding, beginning of period		39,900,000		$	887,339
Options exercised		(4,600,000	)		(47,310	)
Options expired		(4,400,000	)		(50,710	)
Outstanding, end of period		30,900,000		$	789,319

D. Related Parties

First $250 million	.450	%
Next $750 million	.430	%
Next $1.5 billion	.410	%
Next $2.5 billion	.400	%
Next $2.5 billion	.380	%
Next $2.5 billion	.360	%
Next $2.5 billion	.340	%
Over $12.5 billion	.320	%

For the period from January 1, 2015 through April 30, 2016, the Advisor has contractually agreed to waive all or a portion of its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:

Class A	.71%
Class B	1.06%

For the six months ended June 30, 2015, fees waived and/or expenses reimbursed for each class are as follows:

Class A	$	14,092
Class B		567
	$	14,659

	Total Aggregated		Unpaid at June 30, 2015
Class A	$	143	$	71
Class B		35		17
	$	178	$	88

E. Ownership of the Fund

At June 30, 2015, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 44%, 30% and 17%. One participating insurance company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 93%.

F. Line of Credit

Information About Your Fund's Expenses (Unaudited)

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 contract charges, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2015 to June 30, 2015).

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	996.30	$	993.70
Expenses Paid per $1,000*	$	3.51	$	5.24
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,021.27	$	1,019.54
Expenses Paid per $1,000*	$	3.56	$	5.31

Annualized Expense Ratios	Class A		Class B
Deutsche Variable Series II — Deutsche Government & Agency Securities VIP	.71%		1.06%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Government & Agency Securities VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 4th quartile, 3rd 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 the five-year period and has underperformed its benchmark in the one- and three-year periods ended December 31, 2013. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board observed that the Fund had experienced improved relative performance during the first seven months of 2014. The Board recognized the efforts by DIMA in recent years to enhance its investment platform and improve long-term performance across the Deutsche fund complex.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 lower than the median (2nd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses 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, 2013, 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 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 Board noted that the expense limitations agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. The Board considered the Fund’s management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

Notes

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2GAS-3 (R-028384-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche High Income VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Manager

5 Investment Portfolio

16 Statement of Assets and Liabilities

17 Statement of Operations

18 Statement of Changes in Net Assets

19 Financial Highlights

21 Notes to Financial Statements

28 Information About Your Fund's Expenses

29 Proxy Voting

30 Advisory Agreement Board Considerations and Fee Evaluation

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 are 0.75% and 1.13% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in Deutsche High Income VIP
		The Credit Suisse High Yield Index tracks the performance of the global high-yield debt market. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche High Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,185		$	9,842		$	12,010		$	14,622		$	18,557
Class A	Average annual total return		1.85	%		–1.58	%		6.27	%		7.89	%		6.38	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,290		$	9,930		$	12,122		$	14,904		$	20,710
Credit Suisse High Yield Index	Average annual total return		2.90	%		–0.70	%		6.62	%		8.31	%		7.55	%
Deutsche High Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	10,162		$	9,792		$	11,887		$	14,417		$	17,956
Class B	Average annual total return		1.62	%		–2.08	%		5.93	%		7.59	%		6.03	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,290		$	9,930		$	12,122		$	14,904		$	20,710
Credit Suisse High Yield Index	Average annual total return		2.90	%		–0.70	%		6.62	%		8.31	%		7.55	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Corporate Bonds	92%	87%
Cash Equivalents	2%	7%
Convertible Bond	2%	2%
Government & Agency Obligations	1%	1%
Preferred Security	1%	1%
Loan Participations and Assignments	1%	1%
Preferred Stock	1%	1%
Common Stocks	0%	0%
Warrant	0%	0%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Government & Agency Obligations, Cash Equivalents and Securities Lending Collateral)	6/30/15	12/31/14

Consumer Discretionary	22%	20%
Telecommunication Services	18%	20%
Energy	14%	10%
Industrials	12%	12%
Materials	9%	9%
Health Care	9%	8%
Information Technology	5%	8%
Financials	4%	5%
Utilities	4%	3%
Consumer Staples	3%	5%
	100%	100%

Quality (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/15	12/31/14

AAA	2%	1%
BBB	3%	2%
BB	46%	43%
B	39%	41%
CCC	9%	12%
Not Rated	1%	1%
	100%	100%

The quality ratings represent the higher of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") credit ratings. The ratings of Moody's and S&P represent their opinions as to the quality of the securities they rate. Credit quality measures a bond issuer's ability to repay interest and principal in a timely manner. Ratings are relative and subjective and are not absolute standards of quality. Credit quality does not remove market risk and is subject to change.

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 5.

Portfolio Manager

Gary Russell, CFA

Portfolio Manager

Investment Portfolio June 30, 2015 (Unaudited)

			Principal Amount ($)(a)	Value ($)

Corporate Bonds 91.5%
Consumer Discretionary 19.9%
1011778 BC ULC, 144A, 4.625%, 1/15/2022			125,000	123,125
Ally Financial, Inc., 4.125%, 3/30/2020 (b)			285,000	284,464
AMC Entertainment, Inc., 5.875%, 2/15/2022 (b)			220,000	223,300
AMC Networks, Inc., 7.75%, 7/15/2021			80,000	86,400
AmeriGas Finance LLC:
	6.75%, 5/20/2020		460,000	484,150
	7.0%, 5/20/2022		350,000	371,000
Apex Tool Group LLC, 144A, 7.0%, 2/1/2021 (b)			210,000	186,900
APX Group, Inc., 6.375%, 12/1/2019			205,000	198,850
Asbury Automotive Group, Inc., 6.0%, 12/15/2024			495,000	514,800
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			330,000	349,800
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			350,000	325,500
Avis Budget Car Rental LLC:
	144A, 5.25%, 3/15/2025 (b)		480,000	450,600
	5.5%, 4/1/2023 (b)		660,000	651,750
Block Communications, Inc., 144A, 7.25%, 2/1/2020			375,000	382,500
Boyd Gaming Corp., 6.875%, 5/15/2023			140,000	143,500
Cablevision Systems Corp., 5.875%, 9/15/2022 (b)			110,000	106,700
CCO Holdings LLC:
	144A, 5.125%, 5/1/2023		385,000	374,412
	144A, 5.375%, 5/1/2025		285,000	277,519
	144A, 5.875%, 5/1/2027		480,000	468,600
	7.0%, 1/15/2019		51,000	52,976
Cequel Communications Holdings I LLC:
	144A, 5.125%, 12/15/2021		602,000	546,691
	144A, 6.375%, 9/15/2020		940,000	933,655
Clear Channel Worldwide Holdings, Inc.:
	Series A, 6.5%, 11/15/2022		250,000	256,250
	Series B, 6.5%, 11/15/2022		365,000	380,056
	Series A, 7.625%, 3/15/2020		110,000	113,575
	Series B, 7.625%, 3/15/2020		1,115,000	1,162,387
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			20,000	20,300
CSC Holdings LLC, 5.25%, 6/1/2024 (b)			935,000	897,600
Dana Holding Corp., 5.5%, 12/15/2024			180,000	176,850
DISH DBS Corp.:
	4.25%, 4/1/2018		270,000	274,725
	5.0%, 3/15/2023		1,225,000	1,133,125
	6.75%, 6/1/2021		50,000	52,125
	7.875%, 9/1/2019		270,000	299,430
Family Tree Escrow LLC:
	144A, 5.25%, 3/1/2020		420,000	439,425
	144A, 5.75%, 3/1/2023		350,000	365,750
Fiat Chrysler Automobiles NV, 144A, 4.5%, 4/15/2020			345,000	343,275
			Principal Amount ($)(a)	Value ($)

Global Partners LP, 144A, 7.0%, 6/15/2023			235,000	230,888
Group 1 Automotive, Inc., 5.0%, 6/1/2022 (b)			455,000	452,725
HD Supply, Inc.:
	144A, 5.25%, 12/15/2021		275,000	278,781
	7.5%, 7/15/2020 (b)		95,000	100,463
	11.5%, 7/15/2020		345,000	398,475
Hertz Corp., 6.75%, 4/15/2019			305,000	314,730
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			140,000	147,000
iHeartCommunications, Inc.:
	9.0%, 12/15/2019 (b)		530,000	505,090
	11.25%, 3/1/2021		280,000	271,950
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019			160,000	143,200
Live Nation Entertainment, Inc.:
	144A, 5.375%, 6/15/2022		50,000	50,000
	144A, 7.0%, 9/1/2020		345,000	366,562
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			370,000	368,612
Mediacom Broadband LLC:
	5.5%, 4/15/2021		50,000	48,750
	6.375%, 4/1/2023		425,000	425,000
Mediacom LLC, 7.25%, 2/15/2022			110,000	115,225
MGM Resorts International:
	6.0%, 3/15/2023 (b)		280,000	283,500
	6.75%, 10/1/2020 (b)		526,000	557,560
	8.625%, 2/1/2019		510,000	576,300
Nielsen Finance LLC, 144A, 5.0%, 4/15/2022			155,000	151,900
Numericable-SFR:
	144A, 4.875%, 5/15/2019		520,000	514,800
	144A, 6.0%, 5/15/2022		775,000	763,859
Penske Automotive Group, Inc., 5.375%, 12/1/2024			660,000	668,250
Petco Animal Supplies, Inc., 144A, 9.25%, 12/1/2018			315,000	329,175
Pinnacle Entertainment, Inc., 6.375%, 8/1/2021			160,000	169,800
Quebecor Media, Inc., 5.75%, 1/15/2023			205,000	204,488
Sabre GLBL, Inc., 144A, 5.375%, 4/15/2023			25,000	24,625
Schaeffler Finance BV, 144A, 4.75%, 5/15/2023			365,000	355,875
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			125,000	126,250
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020 (b)			230,000	242,650
Sirius XM Radio, Inc., 144A, 5.875%, 10/1/2020			195,000	199,875
Spectrum Brands, Inc., 144A, 5.75%, 7/15/2025			120,000	121,800
Springs Industries, Inc., 6.25%, 6/1/2021			295,000	288,363
Starz LLC, 5.0%, 9/15/2019			175,000	177,188
Suburban Propane Partners LP, 5.75%, 3/1/2025			145,000	144,638
TRI Pointe Holdings, Inc., 4.375%, 6/15/2019			145,000	142,100
UCI International, Inc., 8.625%, 2/15/2019			310,000	275,900
			Principal Amount ($)(a)	Value ($)

Unitymedia Hessen GmbH & Co., KG, 144A, 5.5%, 1/15/2023			945,000	963,309
Viking Cruises Ltd.:
	144A, 6.25%, 5/15/2025		240,000	238,200
	144A, 8.5%, 10/15/2022		205,000	227,550
				25,417,471
Consumer Staples 3.1%
Chiquita Brands International, Inc., 7.875%, 2/1/2021			90,000	96,975
Cott Beverages, Inc.:
	5.375%, 7/1/2022		445,000	431,650
	144A, 6.75%, 1/1/2020		180,000	186,750
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020 (b)			810,000	844,425
JBS Investments GmbH:
	144A, 7.25%, 4/3/2024 (b)		525,000	543,375
	144A, 7.75%, 10/28/2020		405,000	440,437
JBS U.S.A. LLC:
	144A, 5.75%, 6/15/2025		190,000	187,805
	144A, 7.25%, 6/1/2021		485,000	511,069
	144A, 8.25%, 2/1/2020		160,000	169,600
Pilgrim's Pride Corp., 144A, 5.75%, 3/15/2025			200,000	202,000
Post Holdings, Inc., 144A, 6.75%, 12/1/2021			110,000	110,000
Roundy's Supermarkets, Inc., 144A, 10.25%, 12/15/2020			55,000	46,750
Smithfield Foods, Inc., 6.625%, 8/15/2022			9,000	9,608
The WhiteWave Foods Co., 5.375%, 10/1/2022			185,000	195,175
				3,975,619
Energy 13.3%
Antero Resources Corp.:
	5.125%, 12/1/2022		330,000	311,850
	5.375%, 11/1/2021		250,000	240,000
	144A, 5.625%, 6/1/2023		205,000	198,081
Baytex Energy Corp.:
	144A, 5.125%, 6/1/2021		70,000	65,625
	144A, 5.625%, 6/1/2024		95,000	88,113
Berry Petroleum Co., LLC:
	6.375%, 9/15/2022		205,000	159,900
	6.75%, 11/1/2020		680,000	537,200
Blue Racer Midstream LLC, 144A, 6.125%, 11/15/2022			115,000	118,450
California Resources Corp.:
	5.0%, 1/15/2020		140,000	123,200
	5.5%, 9/15/2021 (b)		323,000	281,075
	6.0%, 11/15/2024 (b)		135,000	116,100
Carrizo Oil & Gas, Inc., 6.25%, 4/15/2023			235,000	235,587
Chaparral Energy, Inc., 7.625%, 11/15/2022			465,000	334,800
Chesapeake Energy Corp.:
	5.75%, 3/15/2023 (b)		650,000	588,250
	6.125%, 2/15/2021		50,000	47,000
	6.625%, 8/15/2020		240,000	234,000
Concho Resources, Inc., 5.5%, 4/1/2023			530,000	530,000
Crestwood Midstream Partners LP:
	6.125%, 3/1/2022		165,000	168,300
	144A, 6.25%, 4/1/2023		95,000	98,800
Endeavor Energy Resources LP:
	144A, 7.0%, 8/15/2021		545,000	542,275
	144A, 8.125%, 9/15/2023		285,000	293,906
			Principal Amount ($)(a)	Value ($)

EP Energy LLC, 144A, 6.375%, 6/15/2023 (b)			210,000	210,525
EV Energy Partners LP, 8.0%, 4/15/2019			955,000	888,150
Gulfport Energy Corp., 144A, 6.625%, 5/1/2023			95,000	96,188
Halcon Resources Corp.:
	144A, 8.625%, 2/1/2020		435,000	429,562
	8.875%, 5/15/2021		543,000	357,022
	9.75%, 7/15/2020		145,000	97,513
Hilcorp Energy I LP:
	144A, 5.0%, 12/1/2024		195,000	182,852
	144A, 5.75%, 10/1/2025		335,000	321,600
Holly Energy Partners LP, 6.5%, 3/1/2020			105,000	104,738
Laredo Petroleum, Inc., 6.25%, 3/15/2023			295,000	300,162
Linn Energy LLC, 6.25%, 11/1/2019			140,000	109,550
MEG Energy Corp.:
	144A, 6.5%, 3/15/2021		235,000	226,187
	144A, 7.0%, 3/31/2024		610,000	584,837
Memorial Resource Development Corp., 5.875%, 7/1/2022			195,000	188,312
Murphy Oil U.S.A., Inc., 6.0%, 8/15/2023			290,000	300,875
Newfield Exploration Co., 5.375%, 1/1/2026			155,000	153,450
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			595,000	541,450
Oasis Petroleum, Inc.:
	6.875%, 3/15/2022		610,000	619,150
	6.875%, 1/15/2023		210,000	207,375
Parsley Energy LLC, 144A, 7.5%, 2/15/2022			35,000	35,514
Range Resources Corp., 144A, 4.875%, 5/15/2025			190,000	184,566
Regency Energy Partners LP:
	5.0%, 10/1/2022		125,000	126,975
	5.875%, 3/1/2022		25,000	26,613
Rice Energy, Inc., 144A, 7.25%, 5/1/2023			50,000	51,250
RSP Permian, Inc., 144A, 6.625%, 10/1/2022			460,000	470,350
Sabine Pass Liquefaction LLC:
	5.625%, 2/1/2021		690,000	703,800
	5.625%, 4/15/2023		155,000	154,467
	144A, 5.625%, 3/1/2025		255,000	252,450
	5.75%, 5/15/2024		675,000	672,469
Seven Generations Energy Ltd., 144A, 6.75%, 5/1/2023			70,000	69,825
Sunoco LP, 144A, 6.375%, 4/1/2023			140,000	145,600
Talos Production LLC, 144A, 9.75%, 2/15/2018			410,000	356,700
Targa Resources Partners LP, 144A, 4.125%, 11/15/2019			70,000	69,300
TerraForm Power Operating LLC, 144A, 5.875%, 2/1/2023			340,000	345,100
Triangle U.S.A. Petroleum Corp., 144A, 6.75%, 7/15/2022			145,000	112,375
Welltec AS, 144A, 8.0%, 2/1/2019			400,000	382,000
Whiting Petroleum Corp.:
	5.75%, 3/15/2021		350,000	344,400
	144A, 6.25%, 4/1/2023		910,000	903,175
Williams Partners LP, 6.125%, 7/15/2022			325,000	345,312
				16,984,251
			Principal Amount ($)(a)	Value ($)

Financials 3.6%
CNO Financial Group, Inc.:
	4.5%, 5/30/2020		70,000	71,050
	5.25%, 5/30/2025		140,000	142,268
Credit Agricole SA, 144A, 7.875%, 1/29/2049			330,000	339,246
Denali Borrower LLC, 144A, 5.625%, 10/15/2020			285,000	299,606
E*TRADE Financial Corp.:
	4.625%, 9/15/2023		200,000	196,500
	5.375%, 11/15/2022		170,000	174,250
Equinix, Inc.:
	(REIT), 5.375%, 1/1/2022		225,000	225,563
	(REIT), 5.375%, 4/1/2023		725,000	725,000
	(REIT), 5.75%, 1/1/2025		170,000	168,300
Hellas Telecommunications Finance, 144A, 8.011%*, 7/15/2015		EUR	322,107	0
International Lease Finance Corp.:
	3.875%, 4/15/2018		385,000	386,925
	6.25%, 5/15/2019		320,000	346,000
MPT Operating Partnership LP:
	(REIT), 6.375%, 2/15/2022		290,000	309,213
	(REIT), 6.875%, 5/1/2021		295,000	311,594
Popular, Inc., 7.0%, 7/1/2019			145,000	145,000
Seminole Tribe of Florida, Inc., 144A, 7.804%, 10/1/2020			305,000	325,587
Societe Generale SA, 144A, 7.875%, 12/29/2049			460,000	462,300
				4,628,402
Health Care 8.8%
Alere, Inc., 144A, 6.375%, 7/1/2023			185,000	188,238
Community Health Systems, Inc.:
	5.125%, 8/15/2018		1,155,000	1,183,875
	5.125%, 8/1/2021		55,000	56,031
	6.875%, 2/1/2022 (b)		220,000	232,100
	7.125%, 7/15/2020		1,735,000	1,838,232
Concordia Healthcare Corp., 144A, 7.0%, 4/15/2023			95,000	95,000
Endo Finance LLC:
	144A, 5.375%, 1/15/2023		215,000	212,313
	144A, 5.75%, 1/15/2022 (b)		220,000	222,750
	144A, 6.0%, 7/15/2023 (c)		195,000	199,388
	144A, 6.0%, 2/1/2025		150,000	152,438
Fresenius Medical Care U.S. Finance II, Inc., 144A, 5.625%, 7/31/2019 (b)			220,000	238,150
Fresenius U.S. Finance II, Inc., 144A, 9.0%, 7/15/2015			420,000	420,672
HCA, Inc.:
	6.5%, 2/15/2020		890,000	994,575
	7.5%, 2/15/2022		305,000	350,369
Hologic, Inc., 144A, 5.25%, 7/15/2022 (c)			90,000	91,913
IMS Health, Inc., 144A, 6.0%, 11/1/2020			250,000	257,500
LifePoint Health, Inc., 5.5%, 12/1/2021			275,000	283,937
Mallinckrodt International Finance SA, 144A, 4.875%, 4/15/2020			160,000	162,808
Par Pharmaceutical Companies, Inc., 7.375%, 10/15/2020			345,000	368,287
			Principal Amount ($)(a)	Value ($)

Tenet Healthcare Corp.:
	144A, 3.786%**, 6/15/2020		180,000	181,575
	144A, 6.75%, 6/15/2023		380,000	387,600
Valeant Pharmaceuticals International, Inc.:
	144A, 5.375%, 3/15/2020		365,000	376,862
	144A, 5.875%, 5/15/2023		335,000	343,375
	144A, 6.125%, 4/15/2025		955,000	982,456
	144A, 6.375%, 10/15/2020		245,000	258,016
	144A, 7.5%, 7/15/2021		1,050,000	1,130,062
				11,208,522
Industrials 11.3%
ADT Corp.:
	3.5%, 7/15/2022 (b)		150,000	135,750
	5.25%, 3/15/2020		300,000	314,250
	6.25%, 10/15/2021 (b)		145,000	152,250
Aerojet Rocketdyne Holdings, Inc., 7.125%, 3/15/2021			535,000	569,775
Aguila 3 SA, 144A, 7.875%, 1/31/2018			480,000	475,200
Artesyn Embedded Technologies, Inc., 144A, 9.75%, 10/15/2020			245,000	243,162
AWAS Aviation Capital Ltd., 144A, 7.0%, 10/17/2016			292,520	296,176
Belden, Inc., 144A, 5.5%, 9/1/2022			355,000	352,337
Bombardier, Inc.:
	144A, 4.75%, 4/15/2019		160,000	155,600
	144A, 5.5%, 9/15/2018		100,000	99,000
	144A, 5.75%, 3/15/2022 (b)		225,000	200,250
	144A, 6.0%, 10/15/2022		265,000	235,187
	144A, 7.5%, 3/15/2025		105,000	95,288
Casella Waste Systems, Inc., 7.75%, 2/15/2019			220,000	222,200
Covanta Holding Corp., 5.875%, 3/1/2024			220,000	219,450
CTP Transportation Products LLC, 144A, 8.25%, 12/15/2019			275,000	284,625
D.R. Horton, Inc., 4.0%, 2/15/2020			100,000	99,470
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			160,000	156,600
EnerSys, 144A, 5.0%, 4/30/2023			45,000	44,508
Florida East Coast Holdings Corp., 144A, 6.75%, 5/1/2019			155,000	155,388
FTI Consulting, Inc., 6.0%, 11/15/2022			205,000	213,713
Garda World Security Corp., 144A, 7.25%, 11/15/2021			290,000	278,400
Gates Global LLC, 144A, 6.0%, 7/15/2022			190,000	171,950
Huntington Ingalls Industries, Inc., 144A, 5.0%, 12/15/2021			395,000	401,912
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			575,000	598,719
Masonite International Corp., 144A, 5.625%, 3/15/2023			220,000	223,575
Meritor, Inc.:
	6.25%, 2/15/2024		215,000	212,313
	6.75%, 6/15/2021		300,000	306,750
Moog, Inc., 144A, 5.25%, 12/1/2022			165,000	167,888
Navios Maritime Holdings, Inc., 144A, 7.375%, 1/15/2022			830,000	718,987
Nortek, Inc., 8.5%, 4/15/2021			440,000	469,700
Oshkosh Corp.:
	5.375%, 3/1/2022		165,000	168,713
	5.375%, 3/1/2025		25,000	25,000
			Principal Amount ($)(a)	Value ($)

Ply Gem Industries, Inc., 6.5%, 2/1/2022 (b)			415,000	407,012
SBA Communications Corp., 5.625%, 10/1/2019			200,000	208,000
Spirit AeroSystems, Inc., 5.25%, 3/15/2022			285,000	294,262
Titan International, Inc., 6.875%, 10/1/2020 (b)			340,000	312,375
TransDigm, Inc.:
	6.0%, 7/15/2022		260,000	256,750
	6.5%, 7/15/2024		155,000	153,063
	7.5%, 7/15/2021		1,115,000	1,198,625
Triumph Group, Inc., 5.25%, 6/1/2022			130,000	128,375
United Rentals North America, Inc.:
	4.625%, 7/15/2023		160,000	156,896
	6.125%, 6/15/2023		25,000	25,531
	7.375%, 5/15/2020		595,000	634,859
	7.625%, 4/15/2022		595,000	644,087
USG Corp., 144A, 5.5%, 3/1/2025			10,000	9,963
Wise Metals Group LLC, 144A, 8.75%, 12/15/2018			250,000	264,062
XPO Logistics, Inc.:
	144A, 6.5%, 6/15/2022		230,000	225,113
	144A, 7.875%, 9/1/2019		240,000	256,464
ZF North America Capital, Inc.:
	144A, 4.5%, 4/29/2022		510,000	499,570
	144A, 4.75%, 4/29/2025		205,000	198,467
				14,337,560
Information Technology 4.8%
ACI Worldwide, Inc., 144A, 6.375%, 8/15/2020			105,000	110,513
Activision Blizzard, Inc., 144A, 5.625%, 9/15/2021			805,000	843,237
Alliance Data Systems Corp., 144A, 5.25%, 12/1/2017			255,000	263,287
Audatex North America, Inc.:
	144A, 6.0%, 6/15/2021		315,000	323,662
	144A, 6.125%, 11/1/2023		115,000	118,163
BMC Software Finance, Inc., 144A, 8.125%, 7/15/2021			215,000	174,150
Boxer Parent Co., Inc., 144A, 9.0%, 10/15/2019 (b)			320,000	227,200
Cardtronics, Inc., 144A, 5.125%, 8/1/2022			145,000	141,738
CDW LLC:
	5.5%, 12/1/2024		330,000	326,700
	6.0%, 8/15/2022		370,000	382,025
EarthLink Holdings Corp., 7.375%, 6/1/2020			245,000	254,800
Entegris, Inc., 144A, 6.0%, 4/1/2022			160,000	164,400
First Data Corp.:
	144A, 7.375%, 6/15/2019		96,000	99,792
	144A, 8.75%, 1/15/2022		910,000	967,444
Freescale Semiconductor, Inc., 144A, 6.0%, 1/15/2022			275,000	291,500
Infor U.S., Inc., 144A, 6.5%, 5/15/2022			215,000	218,762
Italics Merger Sub, Inc., 144A, 7.125%, 7/15/2023			95,000	93,813
Micron Technology, Inc., 144A, 5.25%, 8/1/2023			250,000	239,687
			Principal Amount ($)(a)	Value ($)

NCR Corp.:
	5.875%, 12/15/2021		55,000	56,650
	6.375%, 12/15/2023		135,000	143,100
NXP BV, 144A, 3.75%, 6/1/2018			250,000	251,875
Open Text Corp., 144A, 5.625%, 1/15/2023			200,000	198,000
Project Homestake Merger Corp., 144A, 8.875%, 3/1/2023			155,000	150,350
Sanmina Corp., 144A, 4.375%, 6/1/2019			25,000	24,938
				6,065,786
Materials 6.1%
ArcelorMittal, 5.125%, 6/1/2020			60,000	60,825
Ardagh Packaging Finance PLC, 144A, 3.286%**, 12/15/2019			310,000	301,475
AVINTIV Specialty Materials, Inc., 7.75%, 2/1/2019			163,000	167,890
Ball Corp., 5.25%, 7/1/2025			225,000	222,469
Berry Plastics Corp., 5.5%, 5/15/2022			435,000	436,631
Cascades, Inc., 144A, 5.5%, 7/15/2022			145,000	140,287
Chemours Co.:
	144A, 6.625%, 5/15/2023 (b)		435,000	421,406
	144A, 7.0%, 5/15/2025 (b)		80,000	77,600
Clearwater Paper Corp., 144A, 5.375%, 2/1/2025			195,000	191,100
Coveris Holding Corp., 144A, 10.0%, 6/1/2018			230,000	241,500
Coveris Holdings SA, 144A, 7.875%, 11/1/2019			330,000	328,350
Crown Americas LLC, 6.25%, 2/1/2021			50,000	52,125
Evolution Escrow Issuer LLC, 144A, 7.5%, 3/15/2022			245,000	232,137
First Quantum Minerals Ltd.:
	144A, 6.75%, 2/15/2020		36,000	34,830
	144A, 7.0%, 2/15/2021		475,000	454,219
Hexion, Inc.:
	6.625%, 4/15/2020		600,000	550,500
	8.875%, 2/1/2018		270,000	243,675
Perstorp Holding AB, 144A, 8.75%, 5/15/2017			455,000	473,200
Plastipak Holdings, Inc., 144A, 6.5%, 10/1/2021			250,000	254,375
Platform Specialty Products Corp., 144A, 6.5%, 2/1/2022			230,000	237,475
Reynolds Group Issuer, Inc.:
	5.75%, 10/15/2020		1,390,000	1,424,750
	6.875%, 2/15/2021		540,000	562,950
Sealed Air Corp.:
	144A, 4.875%, 12/1/2022		115,000	113,275
	144A, 5.125%, 12/1/2024		55,000	54,244
Signode Industrial Group Lux SA, 144A, 6.375%, 5/1/2022			210,000	203,700
Tronox Finance LLC, 6.375%, 8/15/2020			200,000	185,500
WR Grace & Co-Conn:
	144A, 5.125%, 10/1/2021		90,000	90,675
	144A, 5.625%, 10/1/2024		45,000	45,563
				7,802,726
Telecommunication Services 17.1%
Altice Financing SA:
	144A, 6.5%, 1/15/2022		200,000	200,000
	144A, 7.875%, 12/15/2019		235,000	247,338
			Principal Amount ($)(a)	Value ($)

Altice Finco SA, 144A, 9.875%, 12/15/2020			235,000	258,500
B Communications Ltd., 144A, 7.375%, 2/15/2021			270,000	289,575
CenturyLink, Inc.:
	Series V, 5.625%, 4/1/2020		105,000	105,131
	Series W, 6.75%, 12/1/2023 (b)		280,000	280,875
CommScope, Inc.:
	144A, 4.375%, 6/15/2020		115,000	116,150
	144A, 5.0%, 6/15/2021		260,000	253,500
CyrusOne LP, 144A,
	6.375%, 11/15/2022 (c)		205,000	212,175
	144A, 6.375%, 11/15/2022		105,000	108,675
Digicel Group Ltd.:
	144A, 7.125%, 4/1/2022		265,000	251,671
	144A, 8.25%, 9/30/2020		1,560,000	1,563,900
Digicel Ltd.:
	144A, 6.75%, 3/1/2023		390,000	382,317
	144A, 7.0%, 2/15/2020		200,000	207,000
Frontier Communications Corp.:
	6.25%, 9/15/2021		140,000	127,400
	6.875%, 1/15/2025 (b)		660,000	551,925
	7.125%, 1/15/2023		1,370,000	1,215,875
	8.5%, 4/15/2020		100,000	104,550
Hughes Satellite Systems Corp.:
	6.5%, 6/15/2019		400,000	434,000
	7.625%, 6/15/2021		230,000	253,046
Intelsat Jackson Holdings SA:
	5.5%, 8/1/2023		465,000	411,757
	7.25%, 10/15/2020		810,000	800,887
	7.5%, 4/1/2021		1,270,000	1,255,712
Level 3 Financing, Inc.:
	5.375%, 8/15/2022 (b)		675,000	681,750
	144A, 5.375%, 5/1/2025 (b)		200,000	192,750
	6.125%, 1/15/2021		165,000	173,036
	8.625%, 7/15/2020		510,000	545,037
Millicom International Cellular SA, 144A, 4.75%, 5/22/2020			370,000	355,766
Plantronics, Inc., 144A, 5.5%, 5/31/2023			95,000	96,188
Sprint Communications, Inc.:
	144A, 7.0%, 3/1/2020 (b)		245,000	266,487
	144A, 9.0%, 11/15/2018		845,000	954,225
Sprint Corp., 7.125%, 6/15/2024			1,345,000	1,247,622
T-Mobile U.S.A., Inc.:
	6.125%, 1/15/2022 (b)		110,000	113,575
	6.375%, 3/1/2025		720,000	736,200
	6.625%, 11/15/2020		705,000	733,200
UPCB Finance IV Ltd., 144A, 5.375%, 1/15/2025			955,000	911,547
UPCB Finance V Ltd., 144A, 7.25%, 11/15/2021			886,500	957,420
UPCB Finance VI Ltd., 144A, 6.875%, 1/15/2022			270,000	287,550
Virgin Media Secured Finance PLC, 144A, 5.25%, 1/15/2026			200,000	193,250
Wind Acquisition Finance SA, 144A, 6.5%, 4/30/2020			195,000	203,775
Windstream Services LLC:
	6.375%, 8/1/2023		265,000	215,644
	7.75%, 10/15/2020 (b)		1,880,000	1,840,050
	7.75%, 10/1/2021		675,000	617,625
	7.875%, 11/1/2017		495,000	525,937
			Principal Amount ($)(a)	Value ($)

Zayo Group LLC:
	144A, 6.0%, 4/1/2023 (b)		190,000	187,663
	144A, 6.375%, 5/15/2025		240,000	232,800
				21,901,056
Utilities 3.5%
AES Corp.:
	3.283%**, 6/1/2019		175,000	175,000
	8.0%, 6/1/2020		525,000	606,375
Calpine Corp.:
	5.375%, 1/15/2023		240,000	235,800
	5.75%, 1/15/2025		240,000	233,400
Dynegy, Inc.:
	144A, 7.375%, 11/1/2022		235,000	246,163
	144A, 7.625%, 11/1/2024		425,000	449,437
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024*			550,000	577,500
NGL Energy Partners LP, 5.125%, 7/15/2019			190,000	189,525
NRG Energy, Inc.:
	6.25%, 5/1/2024		1,270,000	1,260,475
	7.875%, 5/15/2021		215,000	228,975
Talen Energy Supply LLC, 144A, 5.125%, 7/15/2019			195,000	191,100
				4,393,750
Total Corporate Bonds (Cost $118,244,543)				116,715,143

Government & Agency Obligation 1.6%
U.S. Treasury Obligation
U.S. Treasury Note, 1.0%, 8/31/2016 (d) (Cost $2,062,147)			2,050,000	2,064,735

Loan Participations and Assignments 0.8%
Senior Loans**
Alliance Mortgage Cycle Loan, Term Loan A, 9.5%, 6/15/2010*			700,000	0
Level 3 Financing, Inc.:
	Term Loan B, 4.0%, 1/15/2020		310,000	310,485
	Term Loan B2, 3.5%, 5/31/2022		365,000	362,985
Ply Gem Industries, Inc., Term Loan, 4.0%, 2/1/2021			306,125	304,595
Total Loan Participations and Assignments (Cost $1,675,623)				978,065

Convertible Bond 1.9%
Materials
GEO Specialty Chemicals, Inc., 144A, 7.5%, 10/30/2018 (Cost $1,267,500)			1,297,793	2,371,717

Preferred Security 0.8%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $778,844)			1,135,000	1,032,850

	Shares		Value ($)

Common Stocks 0.1%
Consumer Discretionary 0.0%
Dawn Holdings, Inc.* (e)		15		21,392
	Shares		Value ($)

Industrials 0.0%
Congoleum Corp.*		24,000		0
Quad Graphics, Inc.		224		4,146
				4,146
Materials 0.1%
GEO Specialty Chemicals, Inc.*		144,027		101,049
GEO Specialty Chemicals, Inc. 144A*		2,206		1,548
				102,597
Total Common Stocks (Cost $345,503)				128,135

Preferred Stock 0.5%
Consumer Discretionary
Ally Financial, Inc. Series G, 144A, 7.0% (Cost $547,374)		568		576,786

	Shares		Value ($)

Warrants 0.0%
Materials
Hercules Trust II, Expiration Date 3/31/2029* (Cost $244,286)		1,100		6,474

Securities Lending Collateral 10.4%
Daily Assets Fund Institutional, 0.16% (f) (g) (Cost $13,271,710)		13,271,710		13,271,710

Cash Equivalents 1.9%
Central Cash Management Fund, 0.09% (f) (Cost $2,460,621)		2,460,621		2,460,621

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $140,898,151)†		109.5			139,606,236
Other Assets and Liabilities, Net		(9.5	)		(12,118,571	)
Net Assets		100.0			127,487,665

The following table represents bonds and senior loans that are in default:

Security	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
Alliance Mortgage Cycle Loan*		9.5	%	6/15/2010	USD	700,000		700,000		0
Energy Future Holdings Corp.*		6.5	%	11/15/2024	USD	550,000		334,642		577,500
Hellas Telecommunications Finance*		8.011	%	7/15/2015	EUR	322,107		92,199		0
								1,126,841		577,500

* Non-income producing security.

† The cost for federal income tax purposes was $140,835,937. At June 30, 2015, net unrealized depreciation for all securities based on tax cost was $1,229,701. This consisted of aggregate gross unrealized depreciation for all securities in which there was an excess of value over tax cost of $3,532,679 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $4,762,380.

(a) Principal amount stated in U.S. dollars unless otherwise noted.

(d) At June 30, 2015, this security has been pledged, in whole or in part, as collateral for swap contracts.

(e) The Fund may purchase securities that are subject to legal or contractual restrictions on resale ("restricted securities"). Restricted securities are securities which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933. The Fund may be unable to sell a restricted security and it may be more difficult to determine a market value for a restricted security. Moreover, if adverse market conditions were to develop during the period between the Fund's decision to sell a restricted security and the point at which the Fund is permitted or able to sell such security, the Fund might obtain a price less favorable than the price that prevailed when it decided to sell. This investment practice, therefore, could have the effect of increasing the level of illiquidity of the Fund. The future value of these securities is uncertain and there may be changes in the estimated value of these securities.

Schedule of Restricted Securities

Acquisition Date

Cost ($)

Value ($)

Value as % of Net Assets

Dawn Holdings, Inc.*

August 2013

53,353

21,392

.02

(f) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.

(g) Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.

REIT: Real Estate Investment Trust

At June 30, 2015, open credit default swap contracts sold were as follows:

Bilateral Swaps
Effective/ Expiration Dates	Notional Amount ($) (h)			Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (i)	Value ($)		Upfront Payments Paid ($)		Unrealized Appreciation/ (Depreciation) ($)
3/20/2015 6/20/2020		240,000	1		5.0	%	CCO Holdings LLC, 7.25%, 10/30/2017, BB–		23,519		22,939		580
9/22/2014 12/20/2019		630,000	2		5.0	%	Community Health Systems, Inc., 8.0%, 11/15/2019, B–		73,351		37,955		35,396
12/22/2014 3/20/2020		345,000	3		5.0	%	General Motors Corp., 6.25%, 10/2/2043, BBB–		57,530		51,846		5,684
6/20/2013 9/20/2018		730,000	4		5.0	%	Sprint Communications, Inc., 6.0%, 12/1/2016, B+		46,675		27,955		18,720
12/20/2013 3/20/2019		3,000,000	5		5.0	%	Sprint Communications, Inc., 6.0%, 12/1/2016, B+		172,448		231,598		(59,150	)
Total net unrealized appreciation													1,230

(h) The maximum potential amount of future undiscounted payments that the Fund could be required to make under a credit default swap contract would be the notional amount of the contract. These potential amounts would be partially offset by any recovery values of the referenced debt obligation or net amounts received from the settlement of buy protection credit default swap contracts entered into by the Fund for the same referenced debt obligation, if any.

(i) The quality ratings represent the higher of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") credit ratings and are unaudited.

Counterparties:

1 Barclays Bank PLC

2 Morgan Stanley

3 Credit Suisse

4 Bank of America

5 Goldman Sachs & Co.

Currency Abbreviations

EUR Euro

USD United States Dollar

For information on the Fund's policy and additional disclosures regarding credit default swap contracts and forward foreign currency exchange contracts, please refer to Note B in the accompanying Notes to Financial Statements.

Fair Value Measurements

Assets	Level 1		Level 2			Level 3		Total

Fixed Income Investments (j)
Corporate Bonds	$	—	$	116,715,143		$	0	$	116,715,143
Government & Agency Obligation		—		2,064,735			—		2,064,735
Loan Participations and Assignments		—		978,065			0		978,065
Convertible Bond		—		—			2,371,717		2,371,717
Preferred Security		—		1,032,850			—		1,032,850
Common Stocks (j)		4,146		—			123,989		128,135
Preferred Stock		—		576,786			—		576,786
Warrants		—		—			6,474		6,474
Short-Term Investments (j)		15,732,331		—			—		15,732,331
Derivatives (k)
Credit Default Swap Contracts		—		60,380			—		60,380
Total	$	15,736,477	$	121,427,959		$	2,502,180	$	139,666,616
Liabilities	Level 1		Level 2			Level 3		Total

Derivatives (k)
Credit Default Swap Contracts	$	—	$	(59,150	)	$	—	$	(59,150	)
Total	$	—	$	(59,150	)	$	—	$	(59,150	)

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(j) See Investment Portfolio for additional detailed categorizations.

(k) Derivatives include unrealized appreciation (depreciation) on credit default swap contracts.

Level 3 Reconciliation

The following is a reconciliation of the Fund's Level 3 investments for which significant unobservable inputs were used in determining value:

	Corporate Bonds		Loan Participations and Assignments		Convertible Bonds			Common Stocks			Warrants			Total
Balance as of December 31, 2014	$	0	$	0	$	2,241,938		$	59,212		$	89,364		$	2,390,514
Realized gains (loss)		—		—		—			(911	)		—			(911	)
Change in unrealized appreciation (depreciation)		—		—		156,763			64,490			(82,890	)		138,363
Amortization of premium/accretion of discount		—		—		(26,984	)		—			—			(26,984	)
Purchases		—		—		—			1,198			—			1,198
(Sales)		—		—		—			0			—			—
Transfer into Level 3		—		—		—			—			—			—
Transfer (out) of Level 3		—		—		—			—			—			—
Balance as of June 30, 2015	$	0	$	0	$	2,371,717		$	123,989		$	6,474		$	2,502,180
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2015	$	—	$	—	$	(156,673	)	$	63,579		$	(4,335	)	$	(97,429	)

Quantitative Disclosure About Significant Unobservable Inputs
Asset Class	Fair Value at 6/30/15		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Common Stocks
Consumer Discretionary	$	21,392	Market Approach	EV/EBITDA Multiple		9.81
				Discount to public comparables		15	%
				Discount for lack of marketability		15	%
Industrials	$	0	Asset Valuation	Book Value of Equity		0	%
Materials	$	102,597	Market Approach	EV/EBITDA Multiple		6.84
				Discount to public comparables		20	%
				Discount for lack of marketability		25	%
Warrants
Materials	$	6,474	Black Scholes Option Pricing Model	Implied Volatility		25	%
	$	6,474	Black Scholes Option Pricing Model	Discount for lack of marketability		20	%
Loan Participations & Assignments
Senior Loans	$	0	Market Approach	Evaluated Price		0
Corporate Bonds
Finance	$	0	Asset Valuation	Book Value		0
Convertible Bonds
Materials	$	2,371,717	Convertible Bond Methodology	EV/EBITDA Multiple		6.84
				Discount to public comparable		20	%
				Discount for lack of marketability		25	%

Qualitative Disclosure About Unobservable Inputs

Significant unobservable inputs developed by the Pricing Committee and used in the fair value measurement of the Fund’s equity investments include enterprise value (EV) to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio with a discount for lack of marketability. A significant change in the EV to EBITDA ratio may result in a significant change in the fair value measurement, while a significant change in the discount for lack of marketability is unlikely to result in a materially higher or lower fair value measurement.

Significant unobservable inputs developed by the Pricing Committee and used in the fair value measurement of the Fund’s fixed income investments include the convertible bond methodology. A significant change in the EV to EBITDA ratio could have a material change on the fair value measurement, while a significant change in the discount for lack of marketability is unlikely to result in a materially higher or lower fair value measurement. Generally, there is a direct relationship between the EV to EBITDA ratio and the fair value measurement of a fixed income investment.

The accompanying notes are an integral part of the financial statements.

Statement of Assets and Liabilities

as of June 30, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $125,165,820) — including $12,780,279 of securities loaned	$	123,873,905
Investment in Daily Assets Fund Institutional (cost $13,271,710)*		13,271,710
Investment in Central Cash Management Fund (cost $2,460,621)		2,460,621
Total investments in securities, at value (cost $140,898,151)		139,606,236
Receivable for investments sold		161,689
Receivable for investments sold — when-issued securities		181,125
Receivable for Fund shares sold		4,830
Interest receivable		1,972,068
Unrealized appreciation on bilateral swap contracts		60,380
Upfront payments paid on bilateral swap contracts		372,293
Foreign taxes recoverable		91
Other assets		1,464
Total assets		142,360,176
Liabilities
Payable upon return of securities loaned		13,271,710
Payable for investments purchased		132,747
Payable for investments purchased — when-issued securities		677,820
Payable for Fund shares redeemed		567,748
Unrealized depreciation on bilateral swap contracts		59,150
Accrued management fee		52,071
Accrued Trustees' fees		1,899
Other accrued expenses and payables		109,366
Total liabilities		14,872,511
Net assets, at value	$	127,487,665
Net Assets Consist of
Undistributed net investment income		3,370,452
Net unrealized appreciation (depreciation) on: Investments		(1,291,915	)
Swap contracts		1,230
Accumulated net realized gain (loss)		(37,988,799	)
Paid-in capital		163,396,697
Net assets, at value	$	127,487,665
Class A Net Asset Value, offering and redemption price per share ($127,376,890 ÷ 20,152,518 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	6.32
Class B Net Asset Value, offering and redemption price per share ($110,775 ÷ 17,454 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	6.35

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Interest	$	3,943,506
Dividends		35,642
Income distributions — Central Cash Management Fund		4,057
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		18,031
Total income		4,001,236
Expenses: Management fee		350,706
Administration fee		70,141
Distribution service fee (Class B)		3,371
Recordkeeping fees (Class B)		1,984
Services to shareholders		713
Custodian fee		14,992
Professional fees		45,846
Reports to shareholders		19,344
Trustees' fees and expenses		4,171
Other		21,019
Total expenses before expense reductions		532,287
Expense reductions		(23,474	)
Total expenses after expense reductions		508,813
Net investment income (loss)		3,492,423
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		(772,980	)
Swap contracts		314,200
Foreign currency		(136	)
		(458,916	)
Change in net unrealized appreciation (depreciation) on: Investments		(184,833	)
Swap contracts		(12,405	)
Foreign currency		4
		(197,234	)
Net gain (loss)		(656,150	)
Net increase (decrease) in net assets resulting from operations	$	2,836,273

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	3,492,423		$	8,068,202
Operations: Net investment income	$	3,492,423		$	8,068,202
Net realized gain (loss)		(458,916	)		1,188,317
Change in net unrealized appreciation (depreciation)		(197,234	)		(6,349,088	)
Net increase (decrease) in net assets resulting from operations		2,836,273			2,907,431
Distributions to shareholders from: Net investment income: Class A		(8,457,661	)		(10,554,088	)
Class B		(6,469	)		(119,183	)
Total distributions		(8,464,130	)		(10,673,271	)
Fund share transactions: Class A Proceeds from shares sold		10,485,677			12,833,015
Reinvestment of distributions		8,457,661			10,554,088
Payments for shares redeemed		(21,022,429	)		(45,572,381	)
Net increase (decrease) in net assets from Class A share transactions		(2,079,091	)		(22,185,278	)
Class B Proceeds from shares sold		7,919,108			7,949,939
Reinvestment of distributions		6,469			119,183
Payments for shares redeemed		(7,952,553	)		(8,248,423	)
Net increase (decrease) in net assets from Class B share transactions		(26,976	)		(179,301	)
Increase (decrease) in net assets		(7,733,924	)		(30,130,419	)
Net assets at beginning of period		135,221,589			165,352,008
Net assets at end of period (including undistributed net investment income of $3,370,452 and $8,342,159, respectively)	$	127,487,665		$	135,221,589
Other Information
Class A Shares outstanding at beginning of period		20,495,541			23,727,813
Shares sold		1,582,894			1,881,827
Shares issued to shareholders in reinvestment of distributions		1,315,344			1,575,237
Shares redeemed		(3,241,261	)		(6,689,336	)
Net increase (decrease) in Class A shares		(343,023	)		(3,232,272	)
Shares outstanding at end of period		20,152,518			20,495,541
Class B Shares outstanding at beginning of period		3,764			46,339
Shares sold		1,195,812			1,159,065
Shares issued to shareholders in reinvestment of distributions		998			17,657
Shares redeemed		(1,183,120	)		(1,219,297	)
Net increase (decrease) in Class B shares		13,690			(42,575	)
Shares outstanding at end of period		17,454			3,764

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	6.60		$	6.96		$	6.93		$	6.56		$	6.90		$	6.55
Income (loss) from investment operations: Net investment incomea		.16			.36			.39			.45			.51			.52
Net realized and unrealized gain (loss)		(.03	)		(.25	)		.14			.48			(.24	)		.36
Total from investment operations		.13			.11			.53			.93			.27			.88
Less distributions from: Net investment income		(.41	)		(.47	)		(.50	)		(.56	)		(.61	)		(.53	)
Net asset value, end of period	$	6.32		$	6.60		$	6.96		$	6.93		$	6.56		$	6.90
Total Return (%)		1.85	b**		1.47	b		7.91	b		14.91			3.84			14.00
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		127			135			165			178			169			195
Ratio of expenses before expense reductions (%)		.75	*		.75			.73			.72			.72			.72
Ratio of expenses after expense reductions (%)		.72	*		.73			.72			.72			.72			.72
Ratio of net investment income (%)		4.98	*		5.21			5.69			6.68			7.59			7.90
Portfolio turnover rate (%)		31	**		52			58			58			59			93
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

				Years Ended December 31,
Class B	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	6.63		$	6.99		$	6.97		$	6.59		$	6.93		$	6.58
Income (loss) from investment operations: Net investment incomea		.16			.35			.36			.43			.49			.50
Net realized and unrealized gain (loss)		(.04	)		(.26	)		.15			.49			(.24	)		.36
Total from investment operations		.12			.09			.51			.92			.25			.86
Less distributions from: Net investment income		(.40	)		(.45	)		(.49	)		(.54	)		(.59	)		(.51	)
Net asset value, end of period	$	6.35		$	6.63		$	6.99		$	6.97		$	6.59		$	6.93
Total Return (%)		1.62	b**		1.22	b		7.44	b		14.70	b		3.57			13.64
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ thousands)		111			25			324			92			85			144
Ratio of expenses before expense reductions (%)		1.15	*		1.13			1.10			.99			.99			.99
Ratio of expenses after expense reductions (%)		1.00	*		.97			.97			.99			.99			.99
Ratio of net investment income (%)		4.86	*		5.09			5.29			6.42			7.33			7.63
Portfolio turnover rate (%)		31	**		52			58			58			59			93
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

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche High Income VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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 (including the applicable Rule 12b-1 fee and recordkeeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.

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.

Debt securities and loan participations and assignments are valued at prices supplied by independent pricing services approved by the Fund's Board. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, prepayment speeds and other data, as well as broker quotes. If the pricing services are unable to provide valuations, debt securities are valued at the average of the most recent reliable bid quotations or evaluated prices, as applicable, obtained from broker-dealers and loan participations and assignments are valued at the mean of the most recent bid and ask quotations or evaluated prices, as applicable, obtained from broker-dealers. Certain securities may be valued on the basis of a price provided by a single source or broker-dealer. No active trading market may exist for some senior loans and they may be subject to restrictions on resale. The inability to dispose of senior loans in a timely fashion could result in losses. These securities are generally categorized as Level 2.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and are categorized as Level 2.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

As of June 30, 2015, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

Loan Participations and Assignments. Loan Participations and Assignments are portions of loans originated by banks and sold in pieces to investors. These floating-rate loans ("Loans") in which the Fund invests are arranged between the borrower and one or more financial institutions ("Lenders"). These Loans may take the form of Senior Loans, which are corporate obligations often issued in connection with recapitalizations, acquisitions, leveraged buy outs and refinancing. The Fund invests in such Loans in the form of participations in Loans ("Participations") or assignments of all or a portion of Loans from third parties ("Assignments"). Participations typically result in the Fund having a contractual relationship with only the Lender, not with the borrower. The Fund has the right to receive payments of principal, interest and any fees to which it is entitled from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, the Fund generally has no right to enforce compliance by the borrower with the terms of the loan agreement relating to the Loan, or any rights of set off against the borrower, and the Fund will not benefit directly from any collateral supporting the Loan in which it has purchased the Participation. As a result, the Fund assumes the credit risk of both the borrower and the Lender that is selling the Participation. Assignments typically result in the Fund having a direct contractual relationship with the borrower, and the Fund may enforce compliance by the borrower with the terms of the loan agreement. Loans held by the Fund are generally in the form of Assignments, but the Fund may also invest in Participations. All Loans involve interest rate risk, liquidity risk and credit risk, including the potential default or insolvency of the borrower.

When-Issued/Delayed Delivery Securities. The Fund may purchase securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded and the value of the transaction is reflected in the net asset value. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. At the time the Fund enters into a purchase transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment. Additionally, the Fund may be required to post securities and/or cash collateral in accordance with the terms of the commitment.

Certain risks may arise upon entering into when-issued or delayed delivery transaction from the potential inability of counterparties to meet the terms of their contracts or if the issuer does not issue the securities due to political, economic, or other factors. Additionally, losses may arise due to changes in the value of the underlying securities.

At December 31, 2014, the Fund had a net tax basis capital loss carryforward of approximately $37,593,000, including $35,391,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2015 ($858,000), December 31, 2016 ($17,301,000) and December 31, 2017 ($17,232,000), the respective expiration dates, whichever occurs first; and approximately $2,202,000 of post-enactment long-term losses, which may be applied against realized net taxable capital gains indefinitely, including short-term losses ($614,000) and long-term losses ($1,588,000).

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 swap contracts 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.

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on ex-dividend date. 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. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes for the Fund, with the exception of securities in default of principal.

B. Derivative Instruments

Credit default swaps are agreements between a buyer and a seller of protection against predefined credit events for the reference entity. The Fund may enter into credit default swaps to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller of a credit default swap, the Fund is required to pay the par (or other agreed-upon) value of the referenced entity to the counterparty with the occurrence of a credit event by a third party, such as a U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the swap provided that no credit event has occurred. If no credit event occurs, the Fund keeps the stream of payments with no payment obligations. The Fund may also buy credit default swaps, in which case the Fund functions as the counterparty referenced above. This involves the risk that the swap may expire worthless. It also involves counterparty risk that the seller may fail to satisfy its payment obligations to the Fund with the occurrence of a credit event. When the Fund sells a credit default swap, it will cover its commitment. This may be achieved by, among other methods, maintaining cash or liquid assets equal to the aggregate notional value of the reference entities for all outstanding credit default swaps sold by the Fund. For the six months ended June 30, 2015, the Fund entered into credit default swap agreements to gain exposure to the underlying issuer's credit quality characteristics.

A summary of the open credit default swap contracts as of June 30, 2015 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the Fund's investment in credit default swap contracts sold had a total notional value generally indicative of a range from $4,945,000 to $7,200,000.

Asset Derivative	Swap Contracts
Credit Contract (a)	$	60,380
The above derivative is located in the following Statement of Assets and Liabilities account: (a) Unrealized appreciation on bilateral swap contracts

Liability Derivative	Swap Contracts
Credit Contracts (a)	$	(59,150	)
The above derivative is located in the following Statement of Assets and Liabilities account: (a) Unrealized depreciation on bilateral swap contracts

Realized Gain (Loss)	Swap Contracts
Credit Contracts (a)	$	314,200
The above derivative is located in the following Statement of Operations account: (a) Net realized gain (loss) from swap contracts

Change in Net Unrealized Appreciation (Depreciation)	Swap Contracts
Credit Contracts (a)	$	(12,405	)
The above derivative is located in the following Statement of Operations account: (a) Change in net unrealized appreciation (depreciation) on swap contracts

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset		Collateral Received		Net Amount of Derivative Assets
Bank of America	$	18,720	$	—	$	—	$	18,720
Barclays Bank PLC		580		—		—		580
Credit Suisse		5,684		—		—		5,684
Morgan Stanley		35,396		—		—		35,396
	$	60,380	$	—	$	—	$	60,380
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset		Collateral Pledged		Net Amount of Derivative Liabilities
Goldman Sachs & Co.	$	59,150	$	—	$	—	$	59,150

C. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury securities) aggregated $40,524,293 and $39,274,697, respectively. Purchases of U.S. Treasury obligations aggregated $1,009,066.

D. Related Parties

First $250 million	.500	%
Next $750 million	.470	%
Next $1.5 billion	.450	%
Next $2.5 billion	.430	%
Next $2.5 billion	.400	%
Next $2.5 billion	.380	%
Next $2.5 billion	.360	%
Over $12.5 billion	.340	%

For the period from January 1, 2015 through April 30, 2015, the Advisor had contractually agreed to waive all or a portion of its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:

Class A	.72%
Class B	1.00%

Effective May 1, 2015 through April 30, 2016, the Advisor has contractually agreed to waive all or a portion of its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:

Class A	.72%
Class B	1.11%

For the six months ended June 30, 2015, fees waived and/or expenses reimbursed for each class are as follows:

Class A	$	21,513
Class B		1,961
	$	23,474

Services to Shareholders	Total Aggregated		Unpaid at June 30, 2015
Class A	$	145	$	65
Class B		25		13
	$	170	$	78

Security Lending Fees. Deutsche Bank AG serves as lending agent for the Fund. For the six months ended June 30, 2015, the Fund incurred lending agent fees to Deutsche Bank AG for the amount of $1,568.

E. Investing in High-Yield Securities

The Fund's performance could be hurt if a security declines in credit quality or goes into default, or if an issuer does not make timely payments of interest or principal. Because the issuers of high-yield debt securities or junk bonds (debt securities rated below the fourth-highest category) may be in uncertain financial health, the risk of loss from default by the issuer is significantly greater. Prices and yields of high-yield securities will fluctuate over time and, during periods of economic uncertainty, volatility of high-yield securities may adversely affect a fund's net asset value. Because the Fund may invest in securities not paying current interest or in securities already in default, these risks may be more pronounced.

F. Ownership of the Fund

At June 30, 2015, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 27% and 61%. Two participating insurance companies were the owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 79% and 20%.

G. Line of Credit

Information About Your Fund's Expenses (Unaudited)

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 contract charges, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2015 to June 30, 2015).

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,018.50	$	1,016.20
Expenses Paid per $1,000*	$	3.60	$	5.00
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,021.22	$	1,019.84
Expenses Paid per $1,000*	$	3.61	$	5.01

Annualized Expense Ratios	Class A		Class B
Deutsche Variable Series II — Deutsche High Income VIP	.72%		1.00%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche High Income VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 2nd quartile, 2nd quartile and 3rd 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 the one-year period and has underperformed its benchmark in the three- and five-year periods ended December 31, 2013.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses 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, 2013, 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 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 Board noted that the expense limitations agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. 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 information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2HI-3 (R-028385-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Large Cap Value VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Manager

5 Investment Portfolio

8 Statement of Assets and Liabilities

9 Statement of Operations

9 Statement of Changes in Net Assets

11 Financial Highlights

13 Notes to Financial Statements

17 Information About Your Fund's Expenses

18 Proxy Voting

19 Advisory Agreement Board Considerations and Fee Evaluation

Stocks may decline in value. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 are 0.78% and 1.09% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in Deutsche Large Cap Value VIP
		The Russell 1000® Value Index is an unmanaged index that consists of those stocks in the Russell 1000® Index with less-than-average growth orientation. The Russell 1000® Index is an unmanaged price-only index of the 1,000 largest capitalized companies that are domiciled in the U.S. and whose common stocks are traded. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Large Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,330		$	10,636		$	15,728		$	19,616		$	19,679
Class A	Average annual total return		3.30	%		6.36	%		16.29	%		14.43	%		7.00	%
Russell 1000® Value Index	Growth of $10,000	$	9,939		$	10,413		$	16,157		$	21,460		$	19,758
Russell 1000® Value Index	Average annual total return		–0.61	%		4.13	%		17.34	%		16.50	%		7.05	%
Deutsche Large Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	10,308		$	10,601		$	15,575		$	19,317		$	19,029
Class B	Average annual total return		3.08	%		6.01	%		15.92	%		14.07	%		6.65	%
Russell 1000® Value Index	Growth of $10,000	$	9,939		$	10,413		$	16,157		$	21,460		$	19,758
Russell 1000® Value Index	Average annual total return		–0.61	%		4.13	%		17.34	%		16.50	%		7.05	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Common Stocks	100%	100%
Cash Equivalents	—	0%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/15	12/31/14

Health Care	32%	24%
Consumer Discretionary	15%	10%
Financials	14%	21%
Information Technology	10%	14%
Energy	8%	11%
Industrials	6%	10%
Utilities	6%	2%
Materials	6%	3%
Consumer Staples	3%	5%
	100%	100%

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 5.

Portfolio Manager

Deepak Khanna, CFA

Lead Portfolio Manager

Investment Portfolio June 30, 2015 (Unaudited)

	Shares		Value ($)

Common Stocks 99.7%
Consumer Discretionary 14.9%
Hotels, Restaurants & Leisure 4.8%
Carnival Corp.		86,203		4,257,566
Del Taco Restaurants, Inc.*		58,492		890,248
Las Vegas Sands Corp.		159,992		8,410,780
Yum! Brands, Inc.		72,521		6,532,692
				20,091,286
Household Durables 1.3%
Whirlpool Corp.		30,889		5,345,341
Media 6.4%
Comcast Corp. "A" (a)		117,297		7,054,242
Starz "A"* (a)		163,506		7,311,988
Viacom, Inc. "B"		193,806		12,527,620
				26,893,850
Multiline Retail 1.0%
Dillard's, Inc. "A" (a)		40,581		4,268,715
Specialty Retail 1.4%
Best Buy Co., Inc.		185,109		6,036,405
Consumer Staples 2.7%
Beverages 1.2%
Molson Coors Brewing Co. "B"		72,883		5,087,962
Food & Staples Retailing 0.6%
CVS Health Corp.		22,901		2,401,857
Household Products 0.9%
Colgate-Palmolive Co.		57,634		3,769,840
Energy 7.6%
Oil, Gas & Consumable Fuels
Devon Energy Corp.		48,021		2,856,769
EQT Corp.		63,049		5,128,406
Gulfport Energy Corp.*		68,886		2,772,661
Marathon Petroleum Corp.		116,492		6,093,697
Range Resources Corp.		114,032		5,630,900
Valero Energy Corp.		146,928		9,197,693
				31,680,126
Financials 14.3%
Banks 5.0%
Citigroup, Inc.		226,408		12,506,778
East West Bancorp., Inc.		86,217		3,864,246
SVB Financial Group*		32,122		4,624,925
				20,995,949
Consumer Finance 3.1%
Capital One Financial Corp.		88,037		7,744,615
Discover Financial Services		88,248		5,084,850
				12,829,465
Insurance 0.8%
Hartford Financial Services Group, Inc.		78,014		3,243,042
Real Estate Investment Trusts 1.2%
HCP, Inc. (REIT)		138,732		5,059,556
Real Estate Management & Development 4.2%
CBRE Group, Inc. "A"*		163,730		6,058,010
Jones Lang LaSalle, Inc.		33,784		5,777,064
Realogy Holdings Corp.*		127,224		5,943,905
				17,778,979
	Shares		Value ($)

Health Care 31.9%
Biotechnology 7.0%
Alexion Pharmaceuticals, Inc.*		52,346		9,462,587
Celgene Corp.*		80,717		9,341,782
Gilead Sciences, Inc.		40,652		4,759,536
Medivation, Inc.*		1,921		219,378
Puma Biotechnology, Inc.* (a)		31,057		3,625,905
Sarepta Therapeutics, Inc.* (a)		66,614		2,027,064
				29,436,252
Health Care Equipment & Supplies 1.3%
Zimmer Biomet Holdings, Inc.		47,474		5,185,585
Health Care Providers & Services 14.7%
Anthem, Inc.		34,762		5,705,835
Centene Corp.*		91,460		7,353,384
Cigna Corp.		91,753		14,863,986
Community Health Systems, Inc.*		135,329		8,521,667
DaVita HealthCare Partners, Inc.*		95,302		7,573,650
Diplomat Pharmacy, Inc.* (a)		95,423		4,270,179
Humana, Inc.		28,253		5,404,234
Tenet Healthcare Corp.*		137,803		7,976,038
				61,668,973
Life Sciences Tools & Services 2.9%
Agilent Technologies, Inc.		108,425		4,183,036
Thermo Fisher Scientific, Inc.		60,309		7,825,696
				12,008,732
Pharmaceuticals 6.0%
Allergan PLC*		26,207		7,952,776
Endo International PLC*		136,834		10,898,828
Mallinckrodt PLC* (a)		54,651		6,433,516
				25,285,120
Industrials 6.2%
Aerospace & Defense 4.0%
Northrop Grumman Corp.		54,204		8,598,380
Raytheon Co.		84,369		8,072,426
				16,670,806
Air Freight & Logistics 1.4%
FedEx Corp.		35,406		6,033,182
Building Products 0.8%
A.O. Smith Corp.		46,427		3,341,816
Information Technology 10.3%
Communications Equipment 2.9%
Cisco Systems, Inc.		439,842		12,078,061
Electronic Equipment, Instruments & Components 1.2%
Corning, Inc.		262,962		5,188,240
Internet Software & Services 3.0%
Rackspace Hosting, Inc.*		147,303		5,478,198
Yahoo!, Inc.*		176,092		6,918,655
				12,396,853
IT Services 3.2%
Alliance Data Systems Corp.*		29,170		8,515,890
Vantiv, Inc. "A"*		126,024		4,812,857
				13,328,747
	Shares		Value ($)

Materials 5.8%
Chemicals 2.4%
PPG Industries, Inc.		49,068		5,629,081
Valspar Corp.		55,273		4,522,437
				10,151,518
Containers & Packaging 1.4%
Rock-Tenn Co. "A"		98,987		5,959,018
Metals & Mining 2.0%
Freeport-McMoRan, Inc.		135,544		2,523,829
Newmont Mining Corp.		241,708		5,646,299
				8,170,128
Utilities 6.0%
Electric Utilities 2.4%
Duke Energy Corp.		58,060		4,100,197
NextEra Energy, Inc.		63,514		6,226,278
				10,326,475
	Shares		Value ($)

Gas Utilities 0.5%
UGI Corp.		58,165		2,003,784
Multi-Utilities 3.1%
Dominion Resources, Inc.		76,585		5,121,239
Sempra Energy		79,113		7,827,440
				12,948,679
Total Common Stocks (Cost $393,015,261)				417,664,342

Securities Lending Collateral 6.7%
Daily Assets Fund Institutional, 0.16% (b) (c) (Cost $28,112,354)		28,112,354		28,112,354

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $421,127,615)†		106.4			445,776,696
Other Assets and Liabilities, Net		(6.4	)		(26,852,632	)
Net Assets		100.0			418,924,064

* Non-income producing security.

† The cost for federal income tax purposes was $421,536,536. At June 30, 2015, net unrealized appreciation for all securities based on tax cost was $24,240,160. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $45,800,062 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $21,559,902.

(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

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (d)	$	417,664,342	$	—	$	—	$	417,664,342
Short-Term Investments		28,112,354		—		—		28,112,354
Total	$	445,776,696	$	—	$	—	$	445,776,696

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(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, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $393,015,261) — including $27,985,165 of securities loaned	$	417,664,342
Investment in Daily Assets Fund Institutional (cost $28,112,354)*		28,112,354
Total investments in securities, at value (cost $421,127,615)		445,776,696
Foreign currency, at value (cost $29,493)		28,421
Receivable for investments sold		3,139,319
Receivable for Fund shares sold		22,062
Dividends receivable		349,660
Interest receivable		6,246
Other assets		6,415
Total assets		449,328,819
Liabilities
Cash overdraft		220,321
Payable upon return of securities loaned		28,112,354
Payable for investments purchased		1,305,225
Payable for Fund shares redeemed		452,279
Accrued management fee		208,919
Accrued Trustees' fees		3,176
Other accrued expenses and payables		102,481
Total liabilities		30,404,755
Net assets, at value	$	418,924,064
Net Assets Consist of
Undistributed net investment income		1,125,188
Net unrealized appreciation (depreciation) on: Investments		24,649,081
Foreign currency		(1,072	)
Accumulated net realized gain (loss)		26,248,403
Paid-in capital		366,902,464
Net assets, at value	$	418,924,064
Class A Net Asset Value, offering and redemption price per share ($413,742,716 ÷ 24,401,955 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	16.96
Class B Net Asset Value, offering and redemption price per share ($5,181,348 ÷ 304,701 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	17.00

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

 Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Dividends	$	2,641,358
Income distributions — Central Cash Management Fund		1,628
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		25,787
Total income		2,668,773
Expenses: Management fee		1,369,063
Administration fee		214,091
Services to shareholders		2,372
Record keeping fees (Class B)		1,470
Distribution and service fee (Class B)		6,394
Custodian fee		7,058
Professional fees		36,546
Reports to shareholders		17,703
Trustees' fees and expenses		9,927
Other		8,555
Total expenses before expense reductions		1,673,179
Expense reductions		(101,641	)
Total expenses after expense reductions		1,571,538
Net investment income	$	1,097,235
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		26,801,480
Foreign currency		(768	)
		26,800,712
Change in net unrealized appreciation (depreciation) on: Investments		(13,798,787	)
Foreign currency		1,431
		(13,797,356	)
Net gain (loss)		13,003,356
Net increase (decrease) in net assets resulting from operations		14,100,591

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	1,097,235		$	6,247,902
Operations: Net investment income	$	1,097,235		$	6,247,902
Net realized gain (loss)		26,800,712			115,236,680
Change in net unrealized appreciation (depreciation)		(13,797,356	)		(77,036,705	)
Net increase (decrease) in net assets resulting from operations		14,100,591			44,447,877
Distributions to shareholders from: Net investment income: Class A		(5,899,426	)		(7,350,279	)
Class B		(54,717	)		(66,263	)
Net realized gains: Class A		(17,852,466	)		—
Class B		(214,368	)		—
Total distributions		(24,020,977	)		(7,416,542	)
Fund share transactions: Class A Proceeds from shares sold		2,936,931			11,756,922
Reinvestment of distributions		23,751,892			7,350,279
Payments for shares redeemed		(33,592,920	)		(57,676,534	)
Net increase (decrease) in net assets from Class A share transactions		(6,904,097	)		(38,569,333	)
Class B Proceeds from shares sold		280,706			1,147,061
Reinvestment of distributions		269,085			66,263
Payments for shares redeemed		(427,687	)		(1,111,822	)
Net increase (decrease) in net assets from Class B share transactions		122,104			101,502
Increase (decrease) in net assets		(16,702,379	)		(1,436,496	)
Net assets at beginning of period		435,626,443			437,062,939
Net assets at end of period (including undistributed net investment income of $1,125,188 and $5,982,096, respectively)	$	418,924,064		$	435,626,443
Other Information
Class A Shares outstanding at beginning of period		24,769,255			27,072,074
Shares sold		169,544			711,170
Shares issued to shareholders in reinvestment of distributions		1,389,812			455,690
Shares redeemed		(1,926,656	)		(3,469,679	)
Net increase (decrease) in Class A shares		(367,300	)		(2,302,819	)
Shares outstanding at end of period		24,401,955			24,769,255
Class B Shares outstanding at beginning of period		297,108			289,672
Shares sold		16,057			68,963
Shares issued to shareholders in reinvestment of distributions		15,690			4,095
Shares redeemed		(24,154	)		(65,622	)
Net increase (decrease) in Class B shares		7,593			7,436
Shares outstanding at end of period		304,701			297,108

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	17.38		$	15.97		$	12.45		$	11.56		$	11.80		$	10.86
Income (loss) from investment operations: Net investment income (loss)a		.04			.24			.26			.25			.25			.23
Net realized and unrealized gain (loss)		.54			1.45			3.54			.87			(.24	)		.93
Total from investment operations		.58			1.69			3.80			1.12			.01			1.16
Less distributions from: Net investment income		(.25	)		(.28	)		(.28	)		(.23	)		(.25	)		(.22	)
Net realized gains on investment transactions		(.75	)		—			—			—			—			—
Total distributions		(1.00	)		(.28	)		(.28	)		(.23	)		(.25	)		(.22	)
Net asset value, end of period	$	16.96		$	17.38		$	15.97		$	12.45		$	11.56		$	11.80
Total Return (%)		3.30	b**		10.72	b		30.89	b		9.79	b		(.07	)		10.77
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		414			430			432			377			396			206
Ratio of expenses before expense reductions (%)		.78	*		.78			.78			.78			.79			.82
Ratio of expenses after expense reductions (%)		.73	*		.73			.74			.77			.79			.82
Ratio of net investment income (loss) (%)		.52	*		1.43			1.82			2.04			2.15			2.13
Portfolio turnover rate (%)		57	**		133			54			63			28			32
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

				Years Ended December 31,
Class B	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	17.40		$	15.99		$	12.46		$	11.57		$	11.81		$	10.86
Income (loss) from investment operations: Net investment income (loss)a		.02			.18			.22			.21			.22			.20
Net realized and unrealized gain (loss)		.52			1.46			3.55			.88			(.25	)		.93
Total from investment operations		.54			1.64			3.77			1.09			(.03	)		1.13
Less distributions from: Net investment income		(.19	)		(.23	)		(.24	)		(.20	)		(.21	)		(.18	)
Net realized gains on investment transactions		(.75	)		—			—			—			—			—
Total distributions		(.94	)		(.23	)		(.24	)		(.20	)		(.21	)		(.18	)
Net asset value, end of period	$	17.00		$	17.40		$	15.99		$	12.46		$	11.57		$	11.81
Total Return (%)		3.08	b**		10.36	b		30.54	b		9.44	b		(.36	)		10.53
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		5			5			5			4			3			1
Ratio of expenses before expense reductions (%)		1.09	*		1.09			1.09			1.09			1.10			1.11
Ratio of expenses after expense reductions (%)		1.04	*		1.04			1.05			1.08			1.10			1.11
Ratio of net investment income (loss) (%)		.21	*		1.10			1.52			1.73			1.84			1.84
Portfolio turnover rate (%)		57	**		133			54			63			28			32
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

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Large Cap Value VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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 (including the applicable Rule 12b-1 fee and recordkeeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.

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.

Equity securities and exchange traded funds ("ETFs") 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 and ETFs are generally categorized as Level 1.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

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 the benefits of owning 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, 2015, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

Distribution of Income and Gains. Distributions from net investment income of the Fund, if any, is declared and distributed to shareholders annually. 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 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.

B. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments) aggregated $242,310,774 and $271,445,861, respectively.

C. Related Parties

Under the Investment Management Agreement with the Advisor, 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 $250 million	.650	%
Next $750 million	.625	%
Next $1.5 billion	.600	%
Next $2.5 billion	.575	%
Next $2.5 billion	.550	%
Next $2.5 billion	.525	%
Next $2.5 billion	.500	%
Over $12.5 billion	.475	%

Class A	.73%
Class B	1.04%

For the six months ended June 30, 2015, fees waived and/or expenses reimbursed for each class are as follows:

Class A	$	100,378
Class B		1,263
	$	101,641

Services to Shareholders	Total Aggregated		Unpaid at June 30, 2015
Class A	$	204	$	103
Class B		117		57
	$	321	$	160

D. Ownership of the Fund

At June 30, 2015, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 61%, 24% and 10%. Two participating insurance companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 61% and 13%.

E. Line of Credit

Information About Your Fund's Expenses (Unaudited)

The tables illustrate your Fund's expenses in two ways:

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 contract charges, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2015 to June 30, 2015).

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,033.00	$	1,030.80
Expenses Paid per $1,000*	$	3.68	$	5.24
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,021.17	$	1,019.64
Expenses Paid per $1,000*	$	3.66	$	5.21

Annualized Expense Ratios	Class A		Class B
Deutsche Variable Series II — Deutsche Large Cap Value VIP	.73%		1.04%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Large Cap Value VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

— The Trustees 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 Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 3rd quartile, 4th quartile and 4th 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 underperformed its benchmark in the one-, three- and five-year periods ended December 31, 2013. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board observed that the Fund had experienced improved relative performance during the first seven months of 2014. The Board recognized the efforts by DIMA in recent years to enhance its investment platform and improve long-term performance across the Deutsche fund complex.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 lower than the median (2nd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2013, 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 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 Board noted that the expense limitations agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. 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 information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

Notes

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2LCV-3 (R-028386-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Money Market VIP

Contents

3 Performance Summary

4 Portfolio Summary

5 Investment Portfolio

9 Statement of Assets and Liabilities

10 Statement of Operations

10 Statement of Changes in Net Assets

12 Financial Highlights

13 Notes to Financial Statements

16 Information About Your Fund's Expenses

17 Other Information

18 Advisory Agreement Board Considerations and Fee Evaluation

An investment in this Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or by any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. The share price of money market funds can fall below the $1.00 share price. You should not rely on or expect the Advisor to enter into support agreements or take other actions to maintain the Fund’s $1.00 share price. The credit quality of the Fund’s holdings can change rapidly in certain markets, and the default of a single holding could have an adverse impact on the Fund’s share price. The Fund’s share price can also be negatively affected during periods of high redemption pressures and/or illiquid markets. The actions of a few large investors in the Fund may have a significant adverse effect on the share price of the Fund. See the prospectus for specific details regarding the Fund’s risk profile.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

Deutsche Money Market VIP

All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when redeemed, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please contact your participating insurance company for the Fund's most recent month-end performance. Performance doesn't reflect charges and fees ("contract charges") associated with the separate account that invests in the Fund or any variable life insurance policy or variable annuity contract for which the Fund is an investment option. These charges and fees will reduce returns. The yield quotation more closely reflects the current earnings of the Fund than the total return quotation.

	7-Day Current Yield
June 30, 2015	.01%*
December 31, 2014	.01%*

* The investment advisor has agreed to waive fees/reimburse expenses. Without such fee waivers/expense reimbursements, the 7-day current yield would have been lower.

Yields are historical, will fluctuate and do not guarantee future performance. The 7-day current yield refers to the income paid by the Fund over a 7-day period expressed as an annual percentage rate of the Fund's shares outstanding.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio)	6/30/15	12/31/14

Commercial Paper	57%	54%
Certificates of Deposit and Bank Notes	23%	10%
Short-Term Notes	6%	6%
Government & Agency Obligations	5%	5%
Time Deposits	4%	4%
Repurchase Agreements	4%	20%
Municipal Bonds and Notes	1%	1%
	100%	100%

Weighted Average Maturity*	6/30/15	12/31/14

Deutsche Variable Series II — Deutsche Money Market VIP	37 days	46 days
First Tier Retail Money Fund Average	36 days	40 days

* The Fund is compared to its respective iMoneyNet Category: First Tier Retail Money Fund Average — Category includes a widely recognized composite of money market funds that invest in only first tier (highest rating) securities. Portfolio Holdings of First Tier funds include U.S. Treasury, U.S. Other, Repos, Time Deposits, Domestic Bank Obligations, Foreign Bank Obligations, First Tier Commercial Paper, Floating Rate Notes and Asset Backed Commercial Paper.

Weighted average maturity, also known as effective maturity, is the weighted average of the maturity date of bonds held by the Fund taking into consideration any available maturity shortening features.

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 5.

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. In addition, each month, information about the Fund and its portfolio holdings is filed with the SEC on Form N-MFP. The SEC delays the public availability of the information filed on Form N-MFP for 60 days after the end of the reporting period included in the filing. These forms will be available on the SEC's Web site at sec.gov, and they may also 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.

Investment Portfolio June 30, 2015 (Unaudited)

	Principal Amount ($)		Value ($)

Certificates of Deposit and Bank Notes 23.1%
Banco del Estado de Chile:
0.25%, 8/28/2015		1,000,000		1,000,000
0.3%, 10/6/2015		1,200,000		1,200,000
0.31%, 9/2/2015		1,000,000		1,000,000
0.32%, 11/4/2015		1,200,000		1,200,000
0.43%, 12/16/2015		1,000,000		1,000,000
Bank of Montreal, 0.25%, 7/15/2015		1,500,000		1,500,000
Canadian Imperial Bank of Commerce, 0.11%, 7/1/2015		3,000,000		3,000,000
Credit Suisse, 0.23%, 7/2/2015		1,000,000		1,000,000
DZ Bank AG:
0.21%, 7/7/2015		1,000,000		1,000,000
0.28%, 9/2/2015		1,500,000		1,500,000
0.33%, 9/18/2015		1,000,000		1,000,000
Industrial & Commercial Bank of China Ltd., 0.3%, 8/24/2015		1,200,000		1,200,000
Mizuho Bank Ltd.:
0.26%, 8/14/2015		1,500,000		1,500,000
0.27%, 7/23/2015		1,000,000		1,000,024
Rabobank Nederland NV, 0.43%, 3/4/2016		1,200,000		1,200,000
Standard Chartered Bank, 0.31%, 10/5/2015		1,500,000		1,500,000
Sumitomo Mitsui Banking Corp.:
0.14%, 7/1/2015		5,000,000		5,000,000
0.25%, 7/24/2015		1,500,000		1,500,000
Swedbank AB, 0.09%, 7/1/2015		7,000,000		7,000,000
The Toronto-Dominion Bank:
0.295%, 7/13/2015		800,000		800,000
0.43%, 3/2/2016		1,500,000		1,500,000
Total Certificates of Deposit and Bank Notes (Cost $36,600,024)				36,600,024

Commercial Paper 57.8%
Issued at Discount** 42.7%
Bank Nederlandse Gemeenten:
0.285%, 9/17/2015		1,800,000		1,798,889
0.295%, 9/14/2015		1,000,000		999,385
Bedford Row Funding Corp.:
144A, 0.35%, 8/27/2015		500,000		499,723
144A, 0.35%, 10/19/2015		750,000		749,198
144A, 0.47%, 12/11/2015		1,000,000		997,872
Caisse Centrale Desjardins, 0.12%, 7/2/2015		4,000,000		3,999,987
Caisse des Depots et Consignations:
144A, 0.21%, 9/16/2015		1,500,000		1,499,326
144A, 0.285%, 9/22/2015		1,500,000		1,499,014
Cancara Asset Securitization LLC, 144A, 0.12%, 7/1/2015		4,685,000		4,685,000
CNPC Finance HK Ltd.:
144A, 0.43%, 7/20/2015		3,000,000		2,999,319
144A, 0.44%, 8/11/2015		500,000		499,749
Coca-Cola Co., 0.31%, 9/16/2015		800,000		799,470
Collateralized Commercial Paper Co., LLC, 0.24%, 7/8/2015		2,200,000		2,199,897
Collateralized Commercial Paper II Co., LLC:
144A, 0.26%, 10/8/2015		1,000,000		999,285
144A, 0.26%, 10/9/2015		1,000,000		999,278
	Principal Amount ($)		Value ($)

DBS Bank Ltd., 144A, 0.25%, 7/7/2015		1,200,000		1,199,950
Erste Abwicklungsanstalt, 144A, 0.28%, 7/28/2015		1,500,000		1,499,685
Hannover Funding Co., LLC, 0.3%, 7/8/2015		2,000,000		1,999,883
Matchpoint Finance PLC:
0.11%, 7/6/2015		1,000,000		999,985
0.12%, 7/1/2015		6,000,000		6,000,000
MetLife Short Term Funding LLC, 144A, 0.23%, 7/15/2015		1,750,000		1,749,843
Nederlandse Waterschapsbank NV:
0.19%, 7/27/2015		500,000		499,931
0.28%, 7/9/2015		800,000		799,950
Nissan Motor Acceptance Corp., 0.34%, 7/9/2015		700,000		699,949
Old Line Funding LLC:
144A, 0.3%, 10/26/2015		2,000,000		1,998,050
144A, 0.32%, 11/16/2015		1,000,000		998,773
Prudential Funding LLC, 0.06%, 7/1/2015		1,000,000		1,000,000
Rabobank Nederland NV, 0.33%, 12/7/2015		1,500,000		1,497,814
Regency Markets No. 1 LLC, 144A, 0.14%, 7/10/2015		6,000,000		5,999,790
Sinopec Century Bright Capital Investment Ltd.:
0.41%, 7/14/2015		1,000,000		999,852
0.42%, 8/20/2015		1,000,000		999,417
Standard Chartered Bank:
0.27%, 7/6/2015		1,500,000		1,499,944
0.34%, 9/10/2015		1,800,000		1,798,793
Svenska Handelsbanken AB:
0.2%, 7/22/2015		1,485,000		1,484,827
0.25%, 8/4/2015		1,000,000		999,764
0.32%, 11/18/2015		1,200,000		1,198,507
United Overseas Bank Ltd., 0.27%, 9/14/2015		1,500,000		1,499,156
Victory Receivables Corp., 144A, 0.14%, 7/2/2015		5,000,000		4,999,981
				67,649,236
Issued at Par* 15.1%
Australia & New Zealand Banking Group Ltd., 144A, 0.375%, 8/18/2015		800,000		800,000
Bank Nederlandse Gemeenten, 144A, 0.287%, 2/25/2016		1,000,000		1,000,000
Bank of Montreal, 0.283%, 10/9/2015		1,500,000		1,500,000
Bank of Nova Scotia, 0.407%, 7/22/2016		1,000,000		1,000,000
Bedford Row Funding Corp., 144A, 0.21%, 1/14/2016		1,000,000		1,000,000
Commonwealth Bank of Australia, 144A, 0.293%, 4/7/2016		1,000,000		999,952
General Electric Capital Corp., 0.258%, 8/11/2015		1,500,000		1,500,000
HSBC Bank PLC:
144A, 0.302%, 12/9/2015		1,000,000		999,888
144A, 0.317%, 12/23/2015		1,200,000		1,200,000
JPMorgan Chase Bank NA, 0.436%, 7/22/2016		2,000,000		2,000,000
National Australia Bank Ltd., 144A, 0.284%, 10/8/2015		1,000,000		1,000,000
	Principal Amount ($)		Value ($)

Old Line Funding LLC, 144A, 0.305%, 12/15/2015		1,000,000		1,000,000
Rabobank Nederland NV, 0.394%, 10/1/2015		500,000		500,066
Royal Bank of Canada:
0.273%, 9/3/2015		2,000,000		1,999,966
0.295%, 12/10/2015		1,500,000		1,500,000
Starbird Funding Corp., 144A, 0.254%, 10/2/2015		1,000,000		1,000,000
Wells Fargo Bank NA:
0.32%, 9/9/2015		1,000,000		1,000,000
0.32%, 12/10/2015		1,000,000		1,000,000
Westpac Banking Corp.:
0.255%, 7/17/2015		1,000,000		1,000,008
144A, 0.286%, 10/13/2015		1,000,000		1,000,000
144A, 0.29%, 3/10/2016		1,000,000		1,000,000
				23,999,880
Total Commercial Paper (Cost $91,649,116)				91,649,116

Short-Term Notes* 6.0%
Bank of Nova Scotia, 0.562%, 12/31/2015		1,500,000		1,501,743
Canadian Imperial Bank of Commerce, 0.42%, 8/18/2015		1,800,000		1,800,000
Commonwealth Bank of Australia, 144A, 0.281%, 7/10/2015		1,200,000		1,200,000
Rabobank Nederland NV, 0.321%, 7/6/2015		1,500,000		1,500,000
Svenska Handelsbanken AB, 144A, 0.391%, 10/2/2015		1,500,000		1,500,000
Wells Fargo Bank NA, 0.335%, 6/3/2016		1,000,000		1,000,000
Westpac Banking Corp., 0.316%, 5/27/2016		1,000,000		1,000,000
Total Short-Term Notes (Cost $9,501,743)				9,501,743

Time Deposit 3.9%
Credit Agricole Corporate & Investment Bank, 0.06%, 7/1/2015 (Cost $6,247,465)		6,247,465		6,247,465

	Principal Amount ($)		Value ($)

Government & Agency Obligations 5.1%
U.S. Government Sponsored Agencies 3.8%
Federal Home Loan Bank:
0.19%, 9/3/2015		500,000		499,984
0.2%, 9/17/2015		325,000		324,988
0.21%, 10/13/2015		500,000		499,960
Federal Home Loan Mortgage Corp., 0.095%**, 9/22/2015		1,500,000		1,499,671
Federal National Mortgage Association:
0.166%*, 10/21/2016		1,300,000		1,299,908
0.19%**, 12/14/2015		2,000,000		1,998,248
				6,122,759
U.S. Treasury Obligation 1.3%
U.S. Treasury Notes, 0.25%, 7/31/2015		2,000,000		2,000,359
Total Government & Agency Obligations (Cost $8,123,118)				8,123,118

Municipal Bonds and Notes 0.6%
New York, State Housing Finance Agency Revenue, 605 West 42nd Street, Series B, 144A, 0.25%***, 5/1/2048, LOC: Bank of China (Cost $1,000,000)		1,000,000		1,000,000

Repurchase Agreements 3.9%
BNP Paribas, 0.2%, dated 1/21/2015, to be repurchased at $1,501,625 on 8/4/2015 (a) (b)		1,500,000		1,500,000
JPMorgan Securities, Inc., 0.424%, dated 2/13/2015, to be repurchased at $1,253,357 on 9/29/2015 (a) (c)		1,250,000		1,250,000
JPMorgan Securities, Inc., 0.451%, dated 7/3/2014, to be repurchased at $2,514,181 on 9/29/2015 (a) (d)		2,500,000		2,500,000
Wells Fargo Bank, 0.4%, dated 5/1/2015, to be repurchased at $1,001,000 on 7/30/2015 (e)		1,000,000		1,000,000
Total Repurchase Agreements (Cost $6,250,000)				6,250,000

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $159,371,466)†		100.4			159,371,466
Other Assets and Liabilities, Net		(0.4	)		(695,900	)
Net Assets		100.0			158,675,566

* Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of June 30, 2015.

** Annualized yield at time of purchase; not a coupon rate.

*** Variable rate demand notes are securities whose interest rates are reset periodically at market levels. These securities are payable on demand and are shown at their current rates as of June 30, 2015.

† The cost for federal income tax purposes was $159,371,466.

(a) Open maturity repurchase agreement whose interest rate resets periodically and is shown at the current rate as of June 30, 2015. The dated date is the original day the repurchase agreement was entered into, the maturity date represents the next repurchase date. Upon notice, both the Fund and counterparty have the right to terminate the repurchase agreement at any time.

(b) Collateralized by:

Principal Amount ($)		Security	Rate (%)		Maturity Date	Collateral Value ($)
	3,726,981	Anadarko Petroleum Corp.	Zero Coupon		10/10/2036		1,495,451
	94	Archer-Daniels-Midland Co.		5.375	9/15/2035		110
	128	Bank of the West Auto Trust		1.65	3/16/2020		129
	13,170	Countrywide Financial Corp.		6.25	5/15/2016		13,790
	367	DIRECTV Holdings LLC		5.0	3/1/2021		404
	14,042	ING Bank NV		2.5	10/1/2019		14,131
	55	Intesa Sanpaolo SpA		3.125	1/15/2016		56
	156	Ocean Trails CLO IV		1.577	8/13/2025		155
	5,564	Omega Healthcare Investors, Inc.		6.75	10/15/2022		5,872
	23,694	Petroleos Mexicanos		6.375	1/23/2045		25,043
	19,248	WhiteHorse VIII Ltd.		1.778	5/1/2026		19,205
Total Collateral Value							1,574,346

(d) Collateralized by:

Principal Amount ($)		Security	Rate (%)		Maturity Date	Collateral Value ($)
	477,000	Dresdner Bank AG		7.25	9/15/2015		492,138
	2,030,000	HCA, Inc.		4.25	10/15/2019		2,086,036
Total Collateral Value							2,578,174

(e) Collateralized by $1,049,026 Burlington Northern Santa Fe LLC, 3.4%, maturing on 9/1/2024 with a value of $1,050,000.

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Investments in Securities (f)	$	—	$	153,121,466	$	—	$	153,121,466
Repurchase Agreements		—		6,250,000		—		6,250,000
Total	$	—	$	159,371,466	$	—	$	159,371,466

(f) 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, 2015 (Unaudited)
Assets
Investments in non-affiliated securities, valued at amortized cost	$	159,371,466
Receivable for investments sold		2,000,115
Receivable for Fund shares sold		536,397
Interest receivable		32,595
Other assets		1,599
Total assets		161,942,172
Liabilities
Payable for Fund shares redeemed		3,152,965
Distributions payable		659
Accrued management fee		5,660
Accrued Trustees' fees		1,192
Other accrued expenses and payables		106,130
Total liabilities		3,266,606
Net assets, at value	$	158,675,566
Net Assets Consist of
Undistributed net investment income		794
Accumulated net realized gain (loss)		50
Paid-in capital		158,674,722
Net assets, at value	$	158,675,566
Class A Net Asset Value, offering and redemption price per share ($158,675,566 ÷ 158,758,438 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	1.00

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Interest	$	186,017
Expenses: Management fee		235,400
Administration fee		82,597
Services to shareholders		1,018
Custodian fee		14,037
Professional fees		26,569
Reports to shareholders		36,854
Trustees' fee and expenses		4,285
Other		3,993
Total expenses before expense reductions		404,753
Expense reductions		(227,003	)
Total expenses after expense reductions		177,750
Net investment income		8,267
Net realized gain (loss)		50
Net increase (decrease) in net assets resulting from operations	$	8,317

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	8,267		$	17,035
Operations: Net investment income	$	8,267		$	17,035
Net realized gain (loss)		50			81
Net increase (decrease) in net assets resulting from operations		8,317			17,116
Distributions to shareholders from: Net investment income Class A		(8,266	)		(17,036	)
Fund share transactions: Class A Proceeds from shares sold		87,783,852			130,299,481
Reinvestment of distributions		8,412			16,947
Cost of shares redeemed		(106,163,399	)		(126,949,638	)
Net increase (decrease) in net assets from Class A share transactions		(18,371,135	)		3,366,790
Increase (decrease) in net assets		(18,371,084	)		3,366,870
Net assets at beginning of period		177,046,650			173,679,780
Net assets at end of period (including undistributed net investment income of $794 and $793, respectively)	$	158,675,566		$	177,046,650
Other Information
Class A Shares outstanding at beginning of period		177,129,573			173,762,783
Shares sold		87,783,852			130,299,481
Shares issued to shareholders in reinvestment of distributions		8,412			16,947
Shares redeemed		(106,163,399	)		(126,949,638	)
Net increase (decrease) in Class A shares		(18,371,135	)		3,366,790
Shares outstanding at end of period		158,758,438			177,129,573

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income from investment operations: Net investment income		.000	***		.000	***		.000	***		.000	***		.000	***		.000	***
Net realized gain (loss)		.000	***		.000	***		.000	***		.000	***		.000	***		.000	***
Total from investment operations		.000	***		.000	***		.000	***		.000	***		.000	***		.000	***
Less distributions from: Net investment income		(.000	)***		(.000	)***		(.000	)***		(.000	)***		(.000	)***		(.000	)***
Net asset value, end of period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return (%)a		.01	**		.01			.01			.01			.01			.01
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		159			177			174			196			217			220
Ratio of expenses before expense reductions (%)		.49	*		.49			.49			.45			.51			.46
Ratio of expenses after expense reductions (%)		.22	*		.18			.20			.31			.25			.34
Ratio of net investment income (%)		.01	*		.01			.01			.01			.01			.01
a Total return would have been lower had certain expenses not been reduced. * Annualized Not annualized * Amount is less than $.0005.

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Money Market VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

Security Valuation. 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 Fund values all securities utilizing the amortized cost method permitted in accordance with Rule 2a-7 under the 1940 Act and certain conditions therein. Under this method, which does not take into account unrealized capital gains or losses on securities, an instrument is initially valued at its cost and thereafter assumes a constant accretion/amortization rate to maturity of any discount or premium. Securities held by the Fund are reflected as Level 2 because the securities are valued at amortized cost (which approximates fair value) and, accordingly, the inputs used to determine value are not quoted prices in an active market.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

Repurchase Agreements. The Fund may enter into repurchase agreements, under the terms of a Master Repurchase Agreement, with certain banks and broker/dealers whereby the Fund, through its custodian or a sub-custodian bank, receives delivery of the underlying securities, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the value is equal to at least the principal amount of the repurchase price plus accrued interest. The custodian bank or another designated sub-custodian holds the collateral in a separate account until the agreement matures. If the value of the securities falls below the principal amount of the repurchase agreement plus accrued interest, the financial institution deposits additional collateral by the following business day. If the financial institution either fails to deposit the required additional collateral or fails to repurchase the securities as agreed, the Fund has the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Fund's claim on the collateral may be subject to legal proceedings.

As of June 30, 2015, the Fund held repurchase agreements with a gross value of $6,250,000. The value of the related collateral exceeded the value of the repurchase agreements at period end. The detail of the related collateral is included in the footnotes following the Fund's Investment Portfolio.

Distribution of Income and Gains. Net investment income of the Fund is declared as a daily dividend and is distributed to shareholders monthly. The Fund may take into account capital gains and losses in its daily dividend declarations. The Fund may also make additional distributions for tax purposes if necessary.

Permanent book and tax differences relating to shareholder distributions will result in reclassifications to paid-in capital. Temporary book and tax differences will reverse in a subsequent period. There were no significant book to tax differences for the Fund.

The tax character of current year distributions will be determined at the end of the current fiscal year.

Other. Investment transactions are accounted for on a trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes.

B. Related Parties

First $500 million	.285	%
Next $500 million	.270	%
Next $1.0 billion	.255	%
Over $2.0 billion	.240	%

For the period from January 1, 2015 through September 30, 2015, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) at 0.51%.

In addition, the Advisor has agreed to voluntarily waive additional expenses. The waiver may be changed or terminated at any time without notice. Under this arrangement, the Advisor waived certain expenses of the Fund.

Accordingly, for the six months ended June 30, 2015, the fee pursuant to the Investment Management Agreement aggregated $235,400, of which $226,677 was waived, resulting in an annualized effective rate of 0.01% of the Fund's average daily net assets.

C. Ownership of the Fund

At June 30, 2015, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 53%, 22% and 12%.

D. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $400 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate, plus 1.25 percent plus if the one-month LIBOR exceeds the Federal Funds Rate, the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement: The Fund had no outstanding loans at June 30, 2015.

E. Money Market Fund Reform

In July 2014, the SEC adopted money market fund reform intended to address potential systemic risks associated with money market funds and to improve transparency for money market fund investors. The Fund is required to comply with money market reforms by the specified compliance dates, with the latest being October 14, 2016. As a result, the Fund may be required to take certain steps that will impact its structure and/or operations, which could impact the return potential of the Fund.

F. Additional Information

At a meeting on July 10, 2015, the Board approved changes to the Fund that would allow the Fund to operate as a government money market fund under the amendments to Rule 2a-7 under the Investment Company Act of 1940, as amended, that were adopted in July 2014 with final compliance dates ranging between July 2015 and October 2016. As currently structured, on the final compliance date for the Rule 2a-7 amendments, the Fund would be required to implement a floating net asset value and would be allowed, and in certain situations, required, to implement liquidity fees and/or redemption gates. As a government money market fund, the Fund will continue to seek to maintain a stable $1.00 net asset value. (Although the Fund will seek to maintain a $1.00 net asset value, there is no guarantee that it will be able do so and if the net asset value falls below $1.00, you would lose money.) The Fund will not be required to implement liquidity fees and/or redemption gates as a government money market fund. As defined in amended Rule 2a-7, a government money market fund is a fund that invests at least 99.5% of the fund’s total assets in cash, government securities, and/or repurchase agreements that are collateralized by these same securities.

In order for the Fund to operate as a government money market fund, the Board approved revisions to the Fund’s fundamental investment policy relating to concentration (the "Concentration Policy") such that the Fund would no longer be required to invest more than 25% of its total assets in obligations of banks and other financial institutions. If not revised, the current Concentration Policy would preclude the Fund from operating as a government money market fund. The revisions to the Concentration Policy are subject to approval by the shareholders of the Fund at a special shareholders’ meeting expected to be held during the fourth quarter of 2015. No assurance can be given that shareholder approval will be obtained for the revisions to the Concentration Policy.

If the revisions to the Concentration Policy are approved by shareholders, the Board approved other changes for the Fund to operate as a government money market fund, including:

(i) The adoption of a principal investment strategy to invest at least 99.5% of the Fund’s total assets in cash, government securities, and/or repurchase agreements that are collateralized by these same securities.

(ii) Name change from Deutsche Money Market VIP to Deutsche Government Money Market VIP.

(iii) A reduction in the management fee rate paid by the Fund to DIMA as set forth below:

Current Management Fee Rate Schedule				Revised Management Fee Rate Schedule
Average Daily Assets	Management Fee Rate			Average Daily Assets	Management Fee Rate
First $500 Million		.285	%	First $500 Million		.235	%
Next $500 Million		.270	%	Next $500 Million		.220	%
Next $1 Billion		.255	%	Next $1 Billion		.205	%
Over $2 Million		.240	%	Over $2 Million		.190	%

If shareholders approve the revisions to the Concentration Policy, DIMA currently anticipates that the change to the Concentration Policy and other changes for the Fund to operate as a government money market fund will take effect on or about May 2, 2016. To ensure an orderly transition to a government money market fund, DIMA anticipates that it will begin to gradually implement changes to the Fund beginning in the first quarter of 2016. As a result, it is expected that the Fund gradually will allocate a larger percentage of its assets to government securities over time until it reaches its new allocation on or about May 2, 2016. Because the yields on government securities generally may be expected to be lower than the yields on comparable non-government securities, it should be expected that the Fund's yield may decrease as more assets are invested in government securities.

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2015 to June 30, 2015).

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,000.05
Expenses Paid per $1,000*	$	1.09
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,023.70
Expenses Paid per $1,000*	$	1.10

Annualized Expense Ratio	Class A
Deutsche Variable Series II — Deutsche Money Market VIP	.22%

For more information, please refer to the Fund's prospectus.

Other Information

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Money Market VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 lower than the median (2nd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses were higher than the median (3rd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2013). 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 Board noted the expense limitation agreed to by DIMA. The Board also noted the significant voluntary fee waivers implemented by DIMA to ensure the Fund maintained a positive yield. 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 information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2MM-3 (R-028387-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Small Mid Cap Growth VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management Team

7 Investment Portfolio

10 Statement of Assets and Liabilities

11 Statement of Operations

12 Statement of Changes in Net Assets

13 Financial Highlights

14 Notes to Financial Statements

17 Information About Your Fund's Expenses

18 Proxy Voting

19 Advisory Agreement Board Considerations and Fee Evaluation

Stocks may decline in value. Smaller and medium company stocks tend to be more volatile than large company stocks. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 is 0.73% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in Deutsche Small Mid Cap Growth VIP
		The Russell 2500™ Growth Index is an unmanaged index that measures the performance of the small- to mid-cap growth segment of the U.S. equity universe. It includes those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Small Mid Cap Growth VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	11,011		$	11,431		$	17,817		$	24,340		$	19,881
Class A	Average annual total return		10.11	%		14.31	%		21.23	%		19.47	%		7.11	%
Russell 2500 Growth Index	Growth of $10,000	$	10,809		$	11,130		$	17,430		$	24,418		$	26,709
Russell 2500 Growth Index	Average annual total return		8.09	%		11.30	%		20.35	%		19.55	%		10.32	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Common Stocks	96%	97%
Cash Equivalents	3%	2%
Exchange-Traded Funds	1%	1%
	100%	100%

Sector Diversification (As a % of Common Stocks, Convertible Preferred Stocks and Exchange-Traded Fund)	6/30/15	12/31/14

Health Care	22%	20%
Information Technology	20%	21%
Consumer Discretionary	19%	21%
Industrials	16%	18%
Financials	9%	7%
Consumer Staples	5%	5%
Materials	4%	4%
Energy	3%	3%
Telecommunication Services	2%	1%
	100%	100%

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 7.

Portfolio Management Team

Joseph Axtell, CFA

Rafaelina M. Lee

Portfolio Managers

Investment Portfolio June 30, 2015 (Unaudited)

	Shares		Value ($)

Common Stocks 95.6%
Consumer Discretionary 18.0%
Auto Components 3.1%
American Axle & Manufacturing Holdings, Inc.*		69,987		1,463,428
Gentherm, Inc.*		39,810		2,185,967
Tenneco, Inc.*		32,782		1,882,998
				5,532,393
Hotels, Restaurants & Leisure 2.8%
Fogo De Chao, Inc.*		39,523		915,353
Jack in the Box, Inc.		27,727		2,444,412
Panera Bread Co. "A"*		9,689		1,693,347
				5,053,112
Household Durables 2.7%
iRobot Corp.* (a)		55,238		1,760,987
Jarden Corp.* (a)		43,965		2,275,189
Ryland Group, Inc.		17,756		823,346
				4,859,522
Leisure Products 1.1%
Polaris Industries, Inc.		13,432		1,989,413
Media 1.0%
Cinemark Holdings, Inc.		45,549		1,829,703
Specialty Retail 5.1%
DSW, Inc. "A"		23,818		794,807
Outerwall, Inc. (a)		19,131		1,456,060
Penske Automotive Group, Inc.		30,944		1,612,492
The Children's Place, Inc.		27,136		1,774,966
Ulta Salon, Cosmetics & Fragrance, Inc.*		14,652		2,263,001
Urban Outfitters, Inc.* (a)		37,243		1,303,505
				9,204,831
Textiles, Apparel & Luxury Goods 2.2%
Carter's, Inc.		15,730		1,672,099
Hanesbrands, Inc.		71,630		2,386,712
				4,058,811
Consumer Staples 4.2%
Food & Staples Retailing 1.9%
Casey's General Stores, Inc.		18,882		1,807,763
United Natural Foods, Inc.* (a)		25,962		1,653,260
				3,461,023
Food Products 2.3%
Hain Celestial Group, Inc.*		33,643		2,215,728
The WhiteWave Foods Co.*		40,730		1,990,882
				4,206,610
Energy 2.9%
Energy Equipment & Services 1.4%
Core Laboratories NV (a)		6,327		721,531
Dril-Quip, Inc.*		10,626		799,606
RPC, Inc. (a)		75,179		1,039,726
				2,560,863
Oil, Gas & Consumable Fuels 1.5%
Diamondback Energy, Inc.*		20,513		1,546,270
Gulfport Energy Corp.*		27,123		1,091,701
				2,637,971
	Shares		Value ($)

Financials 8.9%
Banks 4.9%
FCB Financial Holdings, Inc. "A"*		27,482		873,928
Pinnacle Financial Partners, Inc.		34,294		1,864,565
Signature Bank*		11,972		1,752,581
South State Corp.		10,143		770,766
SVB Financial Group*		9,641		1,388,111
Talmer Bancorp., Inc. "A"		125,484		2,101,857
				8,751,808
Capital Markets 2.6%
Lazard Ltd. "A"		30,574		1,719,482
Moelis & Co. "A"		40,248		1,155,520
Oaktree Capital Group LLC (a)		34,742		1,847,579
				4,722,581
Consumer Finance 1.4%
PRA Group, Inc.* (a)		41,505		2,586,177
Health Care 21.4%
Biotechnology 6.8%
ACADIA Pharmaceuticals, Inc.* (a)		38,619		1,617,364
Alkermes PLC*		19,368		1,246,137
Neurocrine Biosciences, Inc.* (a)		30,555		1,459,307
OvaScience, Inc.* (a)		14,454		418,154
Puma Biotechnology, Inc.* (a)		4,544		530,512
Retrophin, Inc.*		94,125		3,120,244
Threshold Pharmaceuticals, Inc.* (a)		324,763		1,312,042
Ultragenyx Pharmaceutical, Inc.*		9,355		957,858
United Therapeutics Corp.*		9,903		1,722,627
				12,384,245
Health Care Equipment & Supplies 4.5%
HeartWare International, Inc.*		13,132		954,565
NxStage Medical, Inc.*		60,494		864,157
Orthofix International NV*		27,740		918,749
SurModics, Inc.*		22,909		536,529
Thoratec Corp.*		51,731		2,305,650
Zeltiq Aesthetics, Inc.*		84,627		2,493,958
				8,073,608
Health Care Providers & Services 5.7%
Centene Corp.*		39,388		3,166,795
Kindred Healthcare, Inc.		83,858		1,701,479
Molina Healthcare, Inc.* (a)		33,305		2,341,341
Providence Service Corp.*		68,595		3,037,387
				10,247,002
Life Sciences Tools & Services 1.0%
PAREXEL International Corp.*		27,366		1,759,908
Pharmaceuticals 3.4%
Flamel Technologies SA (ADR)*		205,594		4,356,537
Pacira Pharmaceuticals, Inc.*		25,809		1,825,212
				6,181,749
Industrials 15.8%
Aerospace & Defense 1.9%
DigitalGlobe, Inc.*		40,520		1,126,051
HEICO Corp. (a)		39,242		2,287,808
				3,413,859
	Shares		Value ($)

Airlines 0.8%
JetBlue Airways Corp.* (a)		70,173		1,456,792
Building Products 1.5%
A.O. Smith Corp.		15,641		1,125,839
Fortune Brands Home & Security, Inc.		35,691		1,635,362
				2,761,201
Commercial Services & Supplies 0.7%
Team, Inc.*		31,684		1,275,281
Construction & Engineering 0.8%
Primoris Services Corp.		71,608		1,417,838
Electrical Equipment 3.0%
Acuity Brands, Inc.		14,862		2,674,863
AZZ, Inc.		33,222		1,720,899
Thermon Group Holdings, Inc.*		43,538		1,047,960
				5,443,722
Machinery 4.5%
Altra Industrial Motion Corp. (a)		44,741		1,216,060
Manitowoc Co., Inc.		77,759		1,524,076
Middleby Corp.*		23,560		2,644,139
WABCO Holdings, Inc.*		22,322		2,761,678
				8,145,953
Professional Services 1.5%
On Assignment, Inc.*		41,837		1,643,358
TriNet Group, Inc.*		43,566		1,104,398
				2,747,756
Road & Rail 1.1%
Swift Transportation Co.*		82,338		1,866,603
Information Technology 19.3%
Communications Equipment 1.0%
Palo Alto Networks, Inc.*		10,739		1,876,103
Electronic Equipment, Instruments & Components 2.8%
Cognex Corp.		61,616		2,963,730
IPG Photonics Corp.* (a)		25,891		2,205,266
				5,168,996
Internet Software & Services 2.5%
CoStar Group, Inc.* (a)		12,425		2,500,655
LogMeIn, Inc.*		12,772		823,666
WebMD Health Corp.*		26,652		1,180,151
				4,504,472
IT Services 6.6%
Broadridge Financial Solutions, Inc.		17,162		858,272
Cardtronics, Inc.*		69,019		2,557,154
MAXIMUS, Inc.		42,214		2,774,726
VeriFone Systems, Inc.*		66,138		2,246,046
Virtusa Corp.*		50,504		2,595,906
WEX, Inc.*		7,697		877,227
				11,909,331
Semiconductors & Semiconductor Equipment 1.0%
Advanced Energy Industries, Inc.*		68,960		1,895,711
	Shares		Value ($)

Software 4.9%
Aspen Technology, Inc.*		46,290		2,108,509
Splunk, Inc.*		32,438		2,258,334
Tyler Technologies, Inc.*		17,690		2,288,732
Ultimate Software Group, Inc.*		12,959		2,129,682
				8,785,257
Technology Hardware, Storage & Peripherals 0.5%
Super Micro Computer, Inc.*		29,307		866,901
Materials 4.2%
Chemicals 2.3%
A. Schulman, Inc. (a)		33,779		1,476,818
Huntsman Corp.		44,162		974,655
Minerals Technologies, Inc.		24,078		1,640,434
				4,091,907
Construction Materials 0.6%
Eagle Materials, Inc.		13,523		1,032,211
Containers & Packaging 0.8%
Berry Plastics Group, Inc.*		47,351		1,534,172
Metals & Mining 0.5%
Constellium NV "A"*		79,368		938,924
Telecommunication Services 0.9%
Wireless Telecommunication Services
SBA Communications Corp. "A"*		14,172		1,629,355
Total Common Stocks (Cost $120,807,813)				172,863,675

Exchange-Traded Funds 1.4%
SPDR S&P Biotech		6,000		1,513,440
SPDR S&P Oil & Gas Exploration & Production Fund (a)		23,491		1,096,090
Total Exchange-Traded Funds (Cost $1,808,254)				2,609,530

Convertible Preferred Stocks 0.2%
Health Care
Providence Service Corp., 5.5% (Cost $283,300)		2,833		283,101

Securities Lending Collateral 16.5%
Daily Assets Fund Institutional, 0.16% (b) (c) (Cost $29,782,101)		29,782,101		29,782,101

Cash Equivalents 2.6%
Central Cash Management Fund, 0.09% (b) (Cost $4,706,325)		4,706,325		4,706,325

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $157,387,793)†		116.3			210,244,732
Other Assets and Liabilities, Net		(16.3	)		(29,493,218	)
Net Assets		100.0			180,751,514

* Non-income producing security.

† The cost for federal income tax purposes was $158,306,437. At June 30, 2015, net unrealized appreciation for all securities based on tax cost was $51,938,295. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $56,796,124 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $4,857,829.

(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.

ADR: American Depositary Receipt

S&P: Standard & Poor's

SPDR: Standard & Poor's Depositary Receipt

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (d)	$	172,863,675	$	—	$	—	$	172,863,675
Exchange-Traded Funds		2,609,530		—		—		2,609,530
Convertible Preferred Stocks		—		—		283,101		283,101
Short-Term Investments (d)		34,488,426		—		—		34,488,426
Total	$	209,961,631	$	—	$	283,101	$	210,244,732

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(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, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $122,899,367) — including $29,418,609 of securities loaned	$	175,756,306
Investment in Daily Assets Fund Institutional (cost $29,782,101)*		29,782,101
Investment in Central Cash Management Fund (cost $4,706,325)		4,706,325
Total investments in securities, at value (cost $157,387,793)		210,244,732
Receivable for investments sold		731,337
Receivable for Fund shares sold		205
Dividends receivable		21,284
Interest receivable		12,024
Other assets		1,747
Total assets		211,011,329
Liabilities
Payable upon return of securities loaned		29,782,101
Payable for investments purchased		184,446
Payable for Fund shares redeemed		128,909
Accrued management fee		83,169
Accrued Trustees' fees		1,009
Other accrued expenses and payables		80,181
Total liabilities		30,259,815
Net assets, at value	$	180,751,514
Net Assets Consist of
Net investment loss		(171,786	)
Net unrealized appreciation (depreciation) on investments		52,856,939
Accumulated net realized gain (loss)		13,030,503
Paid-in capital		115,035,858
Net assets, at value	$	180,751,514
Class A Net Asset Value, offering and redemption price per share ($180,751,514 ÷ 7,784,820 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	23.22

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Dividends	$	399,111
Income distributions — Central Cash Management Fund		1,131
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		73,615
Total income		473,857
Expenses: Management fee		490,181
Administration fee		89,124
Services to shareholders		1,083
Custodian fee		5,731
Professional fees		36,334
Reports to shareholders		15,045
Trustees' fees and expenses		4,269
Other		3,876
Total expenses		645,643
Net investment income (loss)		(171,786	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from investments		14,387,092
Change in net unrealized appreciation (depreciation) on investments		2,764,733
Net gain (loss)		17,151,825
Net increase (decrease) in net assets resulting from operations	$	16,980,039

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income (loss)	$	(171,786	)	$	(196,065	)
Operations: Net investment income (loss)	$	(171,786	)	$	(196,065	)
Net realized gain (loss)		14,387,092			20,390,112
Change in net unrealized appreciation (depreciation)		2,764,733			(10,889,918	)
Net increase (decrease) in net assets resulting from operations		16,980,039			9,304,129
Distributions to shareholders from: Net realized gains Class A		(13,914,292	)		—
Total distributions		(13,914,292	)		—
Fund share transactions: Class A Proceeds from shares sold		4,939,188			5,733,576
Reinvestment of distributions		13,914,292			—
Cost of shares redeemed		(13,054,640	)		(30,428,185	)
Net increase (decrease) in net assets from Class A share transactions		5,798,840			(24,694,609	)
Increase (decrease) in net assets		8,864,587			(15,390,480	)
Net assets at beginning of period		171,886,927			187,277,407
Net assets at end of period (including net investment loss and undistributed net investment income of $171,786 and $0, respectively)	$	180,751,514		$	171,886,927
Other Information
Class A Shares outstanding at beginning of period		7,527,702			8,676,171
Shares sold		203,836			261,454
Shares issued to shareholders in reinvestment of distributions		604,706			—
Shares redeemed		(551,424	)		(1,409,923	)
Net increase (decrease) in Class A shares		257,118			(1,148,469	)
Shares outstanding at end of period		7,784,820			7,527,702

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012		2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	22.83		$	21.59		$	15.14		$	13.24	$	13.85		$	10.70
Income (loss) from investment operations: Net investment income (loss)a		(.02	)		(.02	)		(.04	)		.02		(.03	)		(.01	)
Net realized and unrealized gain (loss)		2.30			1.26			6.51			1.88		(.50	)		3.16
Total from investment operations		2.28			1.24			6.47			1.90		(.53	)		3.15
Less distributions from: Net investment income		—			—			(.02	)		—		(.08	)		—
Net realized gains		(1.89	)		—			—			—		—			—
Total distributions		(1.89	)		—			(.02	)		—		(.08	)		—
Net asset value, end of period	$	23.22		$	22.83		$	21.59		$	15.14	$	13.24		$	13.85
Total Return (%)		10.11	**		5.74			42.78			14.35		(3.91	)		29.44
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		181			172			187			145		147			88
Ratio of expenses (%)		.72	*		.73			.72			.74		.73			.78
Ratio of net investment income (loss) (%)		(.19	)*		(.11	)		(.22	)		.11		(.23	)		(.12	)
Portfolio turnover rate (%)		24	**		44			56			57		84			64
a Based on average shares outstanding during the period. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Small Mid Cap Growth VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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.

Equity securities and exchange-traded funds ("ETFs") 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 or ETFs 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 and ETF securities are generally categorized as Level 1.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

As of June 30, 2015, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable income to its shareholders.

At December 31, 2014, the Fund had a net tax basis capital loss carryforward of approximately $405,000 of pre-enactment losses, inherited from its mergers with DWS Mid Cap Growth VIP, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($405,000), the expiration date, whichever occurs first, and which may be subject to certain limitations under Section 382–384 of Internal Revenue Code.

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 net operating losses 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.

B. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments) aggregated $41,056,726 and $50,445,418, respectively.

C. Related Parties

First $250 million	.550	%
Next $750 million	.525	%
Over $1 billion	.500	%

D. Ownership of the Fund

At June 30, 2015, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 76% and 21%.

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 the one-month LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at June 30, 2015.

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges, 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, 2015 to June 30, 2015).

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,101.10
Expenses Paid per $1,000*	$	3.75
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,021.22
Expenses Paid per $1,000*	$	3.61

Annualized Expense Ratio	Class A
Deutsche Variable Series II — Deutsche Small Mid Cap Growth VIP	.72%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Small Mid Cap Growth VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

— The Trustees 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 Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 1st quartile, 1st quartile and 2nd 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 the one-year period and has underperformed its benchmark in the three- and five-year periods ended December 31, 2013.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses were expected to be lower than the median (1st quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2013, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). 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 Board noted that the expense limitation agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. The Board considered the Fund’s management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2SMCG-3 (R-028388-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Small Mid Cap Value VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Manager

7 Investment Portfolio

9 Statement of Assets and Liabilities

10 Statement of Operations

11 Statement of Changes in Net Assets

12 Financial Highlights

13 Notes to Financial Statements

17 Information About Your Fund's Expenses

18 Proxy Voting

19 Advisory Agreement Board Considerations and Fee Evaluation

Stocks may decline in value. Smaller and medium company stocks tend to be more volatile than large company stocks. Any fund that focuses in a particular segment of the market or region of the world will generally be more volatile than a fund that invests more broadly. The Fund may lend securities to approved institutions. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 are 0.82% and 1.17% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in Deutsche Small Mid Cap Value VIP
		The Russell 2500™ Value Index is an unmanaged Index of those securities in the Russell 3000® Index with lower price-to-book ratios and lower forecasted growth values. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Small Mid Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,872		$	10,902		$	16,846		$	21,217		$	24,315
Class A	Average annual total return		8.72	%		9.02	%		18.99	%		16.24	%		9.29	%
Russell 2500 Value Index	Growth of $10,000	$	10,171		$	10,099		$	16,011		$	21,220		$	21,123
Russell 2500 Value Index	Average annual total return		1.71	%		0.99	%		16.99	%		16.24	%		7.76	%
Deutsche Small Mid Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	10,858		$	10,870		$	16,660		$	20,853		$	23,469
Class B	Average annual total return		8.58	%		8.70	%		18.55	%		15.83	%		8.91	%
Russell 2500 Value Index	Growth of $10,000	$	10,171		$	10,099		$	16,011		$	21,220		$	21,123
Russell 2500 Value Index	Average annual total return		1.71	%		0.99	%		16.99	%		16.24	%		7.76	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Common Stocks	96%	96%
Cash Equivalents	4%	4%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/15	12/31/14

Financials	26%	23%
Industrials	22%	20%
Information Technology	21%	21%
Consumer Discretionary	13%	12%
Materials	10%	11%
Health Care	4%	6%
Energy	4%	5%
Consumer Staples	—	2%
	100%	100%

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 7.

Portfolio Manager

Richard Glass, CFA

Portfolio Manager

Investment Portfolio June 30, 2015 (Unaudited)

	Shares		Value ($)

Common Stocks 95.5%
Consumer Discretionary 12.6%
Auto Components 2.4%
Visteon Corp.*		50,570		5,308,838
Diversified Consumer Services 1.1%
Ascent Capital Group, Inc. "A"*		59,351		2,536,662
Hotels, Restaurants & Leisure 1.0%
The Wendy's Co. (a)		204,957		2,311,915
Household Durables 2.6%
Newell Rubbermaid, Inc.		141,244		5,806,541
Specialty Retail 3.4%
CST Brands, Inc.		86,819		3,391,150
Ross Stores, Inc.		90,066		4,378,108
				7,769,258
Textiles, Apparel & Luxury Goods 2.1%
Hanesbrands, Inc.		142,674		4,753,898
Energy 3.9%
Energy Equipment & Services 1.3%
Superior Energy Services, Inc.		138,534		2,914,756
Oil, Gas & Consumable Fuels 2.6%
Cimarex Energy Co.		29,351		3,237,709
QEP Resources, Inc.		140,350		2,597,878
				5,835,587
Financials 24.9%
Banks 10.9%
Capital Bank Financial Corp. "A"*		150,950		4,388,117
Great Western Bancorp., Inc.		129,463		3,121,353
Investors Bancorp., Inc.		432,051		5,314,227
KeyCorp		300,171		4,508,568
OFG Bancorp.		263,398		2,810,457
Sterling Bancorp.		311,402		4,577,609
				24,720,331
Capital Markets 2.2%
Lazard Ltd. "A"		88,545		4,979,771
Consumer Finance 2.8%
Synchrony Financial* (a)		190,536		6,274,351
Insurance 4.7%
CNO Financial Group, Inc.		346,036		6,349,761
Reinsurance Group of America, Inc.		46,427		4,404,529
				10,754,290
Real Estate Investment Trusts 1.6%
Plum Creek Timber Co., Inc. (REIT)		86,738		3,518,961
Thrifts & Mortgage Finance 2.7%
Walker & Dunlop, Inc.*		230,333		6,159,104
Health Care 4.3%
Health Care Providers & Services 2.5%
HealthSouth Corp.		126,221		5,813,739
Life Sciences Tools & Services 1.8%
PerkinElmer, Inc.		76,297		4,016,274
	Shares		Value ($)

Industrials 20.6%
Aerospace & Defense 1.4%
Curtiss-Wright Corp.		43,639		3,161,209
Air Freight & Logistics 1.8%
Forward Air Corp.		77,160		4,032,382
Commercial Services & Supplies 3.0%
Covanta Holding Corp.		209,925		4,448,311
The Brink's Co.		78,274		2,303,604
				6,751,915
Electrical Equipment 2.3%
The Babcock & Wilcox Co.		158,183		5,188,402
Machinery 8.0%
Harsco Corp.		220,691		3,641,401
ITT Corp.		78,773		3,295,862
Stanley Black & Decker, Inc.		50,554		5,320,303
Xylem, Inc.		156,181		5,789,630
				18,047,196
Marine 1.0%
Kirby Corp.*		29,551		2,265,380
Professional Services 1.0%
FTI Consulting, Inc.*		56,362		2,324,369
Trading Companies & Distributors 2.1%
AerCap Holdings NV*		104,598		4,789,542
Information Technology 19.8%
Communications Equipment 2.1%
Harris Corp.		60,868		4,681,358
Electronic Equipment, Instruments & Components 7.8%
Belden, Inc.		62,616		5,086,297
Dolby Laboratories, Inc. "A"		98,179		3,895,743
Rogers Corp.*		65,693		4,344,935
Zebra Technologies Corp. "A"*		39,418		4,377,369
				17,704,344
IT Services 6.0%
Convergys Corp. (a)		271,794		6,928,029
Global Payments, Inc.		21,928		2,268,452
NeuStar, Inc. "A"* (a)		150,621		4,399,639
				13,596,120
Software 3.9%
ACI Worldwide, Inc.*		96,044		2,359,801
Verint Systems, Inc.*		106,317		6,458,226
				8,818,027
Materials 9.4%
Chemicals 5.4%
Celanese Corp. "A"		60,868		4,375,192
H.B. Fuller Co.		106,579		4,329,239
Minerals Technologies, Inc.		51,888		3,535,130
				12,239,561
Containers & Packaging 1.8%
Sealed Air Corp.		78,632		4,040,112
Metals & Mining 2.2%
Materion Corp.		143,173		5,046,848
Total Common Stocks (Cost $181,354,312)				216,161,041
	Shares		Value ($)

Securities Lending Collateral 7.1%
Daily Assets Fund Institutional, 0.16% (b) (c) (Cost $15,997,975)		15,997,975		15,997,975

Cash Equivalents 3.7%
Central Cash Management Fund, 0.09% (b) (Cost $8,398,294)		8,398,294		8,398,294

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $205,750,581)†		106.3			240,557,310
Other Assets and Liabilities, Net		(6.3	)		(14,343,976	)
Net Assets		100.0			226,213,334

* Non-income producing security.

† The cost for federal income tax purposes was $205,737,656. At June 30, 2015, net unrealized appreciation for all securities based on tax cost was $34,819,654. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $43,677,777 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $8,858,123.

(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

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (d)	$	216,161,041	$	—	$	—	$	216,161,041
Short-Term Investments (d)		24,396,269		—		—		24,396,269
Total	$	240,557,310	$	—	$	—	$	240,557,310

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(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, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $181,354,312) — including $15,756,851 of securities loaned	$	216,161,041
Investment in Daily Assets Fund Institutional (cost $15,997,975)*		15,997,975
Investment in Central Cash Management Fund (cost $8,398,294)		8,398,294
Total investments in securities, at value (cost $205,750,581)		240,557,310
Receivable for investments sold		2,367,837
Receivable for Fund shares sold		52,599
Dividends receivable		144,067
Interest receivable		25,108
Other assets		1,985
Total assets		243,148,906
Liabilities
Payable upon return of securities loaned		15,997,975
Payable for investments purchased		565,911
Payable for Fund shares redeemed		129,430
Accrued management fee		123,249
Accrued Trustees' fees		1,609
Other accrued expenses and payables		117,398
Total liabilities		16,935,572
Net assets, at value	$	226,213,334
Net Assets Consist of
Undistributed net investment income		446,766
Net unrealized appreciation (depreciation) on: Investments		34,806,729
Accumulated net realized gain (loss)		12,206,767
Paid-in capital		178,753,072
Net assets, at value	$	226,213,334
Class A Net Asset Value, offering and redemption price per share ($210,137,692 ÷ 11,872,563 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	17.70
Class B Net Asset Value, offering and redemption price per share ($16,075,642 ÷ 907,895 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	17.71

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $2,199)	$	1,226,349
Income distributions — Central Cash Management Fund		3,511
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		128,360
Total income		1,358,220
Expenses: Management fee		720,742
Administration fee		110,883
Services to shareholders		3,143
Record keeping fees (Class B)		8,939
Distribution service fee (Class B)		20,541
Custodian fee		4,162
Professional fees		33,407
Reports to shareholders		25,140
Trustees' fees and expenses		5,446
Other		4,193
Total expenses		936,596
Net investment income (loss)		421,624
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from investments		12,218,110
Change in net unrealized appreciation (depreciation) on investments		6,023,569
Net gain (loss)		18,241,679
Net increase (decrease) in net assets resulting from operations	$	18,663,303

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income (loss)	$	421,624		$	687,058
Operations: Net investment income (loss)	$	421,624		$	687,058
Net realized gain (loss)		12,218,110			18,607,552
Change in net unrealized appreciation (depreciation)		6,023,569			(7,308,422	)
Net increase (decrease) in net assets resulting from operations		18,663,303			11,986,188
Distributions to shareholders from: Net investment income: Class A		(593,081	)		(1,782,045	)
Class B		—			(85,579	)
Net realized gains: Class A		(17,173,555	)		(1,065,847	)
Class B		(1,373,376	)		(91,018	)
Total distributions		(19,140,012	)		(3,024,489	)
Fund share transactions: Class A Proceeds from shares sold		4,848,045			7,581,114
Reinvestment of distributions		17,766,636			2,847,892
Payments for shares redeemed		(17,132,769	)		(53,470,098	)
Net increase (decrease) in net assets from Class A share transactions		5,481,912			(43,041,092	)
Class B Proceeds from shares sold		1,329,787			2,985,548
Reinvestment of distributions		1,373,376			176,597
Payments for shares redeemed		(3,573,450	)		(6,702,666	)
Net increase (decrease) in net assets from Class B share transactions		(870,287	)		(3,540,521	)
Increase (decrease) in net assets		4,134,916			(37,619,914	)
Net assets at beginning of period		222,078,418			259,698,332
Net assets at end of period (including undistributed net investment income of $446,766 and $618,223, respectively)	$	226,213,334		$	222,078,418
Other Information
Class A Shares outstanding at beginning of period		11,531,437			14,042,897
Shares sold		268,720			442,556
Shares issued to shareholders in reinvestment of distributions		1,025,787			170,839
Shares redeemed		(953,381	)		(3,124,855	)
Net increase (decrease) in Class A shares		341,126			(2,511,460	)
Shares outstanding at end of period		11,872,563			11,531,437
Class B Shares outstanding at beginning of period		953,703			1,160,889
Shares sold		73,566			174,632
Shares issued to shareholders in reinvestment of distributions		79,203			10,581
Shares redeemed		(198,577	)		(392,399	)
Net increase (decrease) in Class B shares		(45,808	)		(207,186	)
Shares outstanding at end of period		907,895			953,703

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	17.79		$	17.08		$	12.78		$	11.36		$	12.21		$	10.04
Income (loss) from investment operations: Net investment incomea		.04			.05			.12			.14			.13			.12
Net realized and unrealized gain (loss)		1.47			.88			4.35			1.42			(.85	)		2.19
Total from investment operations		1.51			.93			4.47			1.56			(.72	)		2.31
Less distributions from: Net investment income		(.05	)		(.14	)		(.17	)		(.14	)		(.13	)		(.14	)
Net realized gains		(1.55	)		(.08	)		—			—			—			—
Total distributions		(1.60	)		(.22	)		(.17	)		(.14	)		(.13	)		(.14	)
Net asset value, end of period	$	17.70		$	17.79		$	17.08		$	12.78		$	11.36		$	12.21
Total Return (%)		8.72	**		5.53			35.24			13.77			(6.08	)		23.07
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		210			205			240			219			216			247
Ratio of expenses (%)		.82	*		.82			.82			.82			.81			.82
Ratio of net investment income (%)		.41	*		.32			.81			1.18			1.08			1.14
Portfolio turnover rate (%)		16	**		34			115			11			36			38
a Based on average shares outstanding during the period. * Annualized ** Not annualized

						Years Ended December 31,
Class B	Six Months Ended 6/30/15 (Unaudited)				2014				2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period		$	17.77			$	17.07		$	12.78		$	11.36		$	12.20		$	10.03
Income (loss) from investment operations: Net investment incomea			.00	b			(.01	)		.07			.10			.09			.08
Net realized and unrealized gain (loss)			1.49				.87			4.34			1.42			(.85	)		2.19
Total from investment operations			1.49				.86			4.41			1.52			(.76	)		2.27
Less distributions from: Net investment income			—				(.08	)		(.12	)		(.10	)		(.08	)		(.10	)
Net realized gains			(1.55	)			(.08	)		—			—			—			—
Total distributions			(1.55	)			(.16	)		(.12	)		(.10	)		(.08	)		(.10	)
Net asset value, end of period		$	17.71			$	17.77		$	17.07		$	12.78		$	11.36		$	12.20
Total Return (%)			8.58	**			5.09			34.70			13.38			(6.33	)		22.66
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			16				17			20			17			20			26
Ratio of expenses (%)			1.18	*			1.17			1.17			1.16			1.15			1.17
Ratio of net investment income (%)			.04	*			(.04	)		.45			.81			.74			.79
Portfolio turnover rate (%)			16	**			34			115			11			36			38
a Based on average shares outstanding during the period. b Amount is less than $.005. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Small Mid Cap Value VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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 (including the applicable Rule 12b-1 fee and recordkeeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.

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.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

Disclosure about the classification of fair value measurements is included in a table following the Fund's Investment Portfolio.

As of June 30, 2015, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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 income received from Real Estate Investment Trusts 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.

Real Estate Investment Trusts. The Fund periodically recharacterizes distributions received from a Real Estate Investment Trust ("REIT") investment based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available timely from a REIT, the recharacterization will be estimated for financial reporting purposes and a recharacterization will be made to the accounting records in the following year when such information becomes available. Distributions received from REITs in excess of income are recorded as either a reduction of cost of investments or realized gains. The Fund distinguishes between dividends received on a tax basis and a financial reporting basis and only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital.

B. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments) aggregated $33,116,868 and $49,079,547, respectively.

C. Related Parties

First $250 million	.650	%
Next $750 million	.620	%
Next $1.5 billion	.600	%
Next $2.5 billion	.580	%
Next $2.5 billion	.550	%
Next $2.5 billion	.540	%
Next $2.5 billion	.530	%
Over $12.5 billion	.520	%

Class A	.84%
Class B	1.19%

Service to Shareholders	Total Aggregated		Unpaid at June 30, 2015
Class A	$	311	$	166
Class B		283		138
	$	594	$	304

D. Ownership of the Fund

At June 30, 2015, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 59% and 21%. Three participating insurance companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 34%, 25% and 18%.

E. Line of Credit

Information About Your Fund's Expenses (Unaudited)

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,087.20	$	1,085.80
Expenses Paid per $1,000*	$	4.24	$	6.10
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/15	$	1,000.00	$	1,000.00
Ending Account Value 6/30/15	$	1,020.73	$	1,018.94
Expenses Paid per $1,000*	$	4.11	$	5.91

Annualized Expense Ratios	Class A		Class B
Deutsche Variable Series II — Deutsche Small Mid Cap Value VIP	.82%		1.18%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Small Mid Cap Value VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

— The Trustees 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 Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 2nd quartile, 4th quartile and 4th 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 the one-year period and has underperformed its benchmark in the three- and five-year periods ended December 31, 2013. The Board noted the disappointing investment performance of the Fund in some past periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board observed that the Fund had experienced improved relative performance in 2013. The Board recognized the efforts by DIMA in recent years to enhance its investment platform and improve long-term performance across the Deutsche fund complex.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2013, 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 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 Board noted that the expense limitations agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. The Board considered the Fund’s management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

Notes

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2SMCV-3 (R-028381-4 8/15)

June 30, 2015

Semiannual Report

Deutsche Variable Series II

Deutsche Unconstrained Income VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Management Team

5 Investment Portfolio

21 Statement of Assets and Liabilities

22 Statement of Operations

23 Statement of Changes in Net Assets

24 Financial Highlights

25 Notes to Financial Statements

34 Information About Your Fund's Expenses

35 Proxy Voting

36 Advisory Agreement Board Considerations and Fee Evaluation

Bond investments are subject to interest-rate, credit, liquidity and market risks to varying degrees. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Investments in lower-quality ("junk bonds") and non-rated securities present greater risk of loss than investments in higher-quality securities. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Emerging markets tend to be more volatile than the markets of more mature economies, and generally have less diverse and less mature economic structures and less stable political systems than those of developed countries. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. See the prospectus for details.

NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2015 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2015 is 1.10% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in Deutsche Unconstrained Income VIP
		The unmanaged Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index and the non-ERISA portion of the CMBS Index. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
Deutsche Unconstrained Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,107		$	9,852		$	10,945		$	12,807		$	17,599
Class A	Average annual total return		1.07	%		–1.48	%		3.05	%		5.07	%		5.82	%
Barclays U.S. Universal Index	Growth of $10,000	$	10,030		$	10,161		$	10,716		$	12,055		$	15,802
Barclays U.S. Universal Index	Average annual total return		0.30	%		1.61	%		2.33	%		3.81	%		4.68	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,990		$	10,186		$	10,558		$	11,790		$	15,438
Barclays U.S. Aggregate Bond Index	Average annual total return		–0.10	%		1.86	%		1.83	%		3.35	%		4.44	%

The growth of $10,000 is cumulative.

‡ Total returns shown for periods less than one year are not annualized.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/15	12/31/14

Corporate Bonds	45%	52%
Government & Agency Obligations	16%	13%
Cash Equivalents	14%	17%
Mortgage-Backed Securities Pass-Throughs	9%	2%
Collateralized Mortgage Obligations	9%	3%
Loan Participations and Assignments	3%	4%
Municipal Bonds and Notes	2%	2%
Asset-Backed	1%	1%
Commercial Mortgage-Backed Securities	1%	1%
Exchange-Traded Fund	—	5%
	100%	100%

Quality (Excludes Cash Equivalents and Securities Lending Collateral)	6/30/15	12/31/14

AAA	25%	8%
AA	1%	4%
A	5%	5%
BBB	16%	19%
BB	28%	32%
B	17%	19%
CCC or Below	4%	5%
Not Rated	4%	8%
	100%	100%

Interest Rate Sensitivity	6/30/15	12/31/14

Effective Maturity	7.6 years	5.7 years
Effective Duration	4.2 years	3.0 years

Effective maturity is the weighted average of the maturity date of bonds held by the Fund taking into consideration any available maturity shortening features.

Effective duration is an approximate measure of the Fund's sensitivity to interest rate changes taking into consideration any maturity shortening features.

Portfolio holdings and characteristics are subject to change.

For more complete details about the Fund's investment portfolio, see page 5.

Portfolio Management Team

Gary Russell, CFA

William Chepolis, CFA

John D. Ryan

Philip G. Condon

Darwei Kung

Portfolio Managers

Investment Portfolio June 30, 2015 (Unaudited)

		Principal Amount ($)(a)		Value ($)

Corporate Bonds 49.4%
Consumer Discretionary 5.9%
Ally Financial, Inc.:
3.25%, 2/13/2018			35,000		34,781
4.125%, 3/30/2020 (b)			35,000		34,934
AMC Entertainment, Inc., 5.875%, 2/15/2022			30,000		30,450
AMC Networks, Inc., 7.75%, 7/15/2021			15,000		16,200
AmeriGas Finance LLC:
6.75%, 5/20/2020			70,000		73,675
7.0%, 5/20/2022			60,000		63,600
Apex Tool Group LLC, 144A, 7.0%, 2/1/2021			30,000		26,700
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			45,000		47,700
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			50,000		46,500
Avis Budget Car Rental LLC:
144A, 5.25%, 3/15/2025			60,000		56,325
5.5%, 4/1/2023			30,000		29,625
Bed Bath & Beyond, Inc.:
4.915%, 8/1/2034			40,000		39,039
5.165%, 8/1/2044			50,000		49,638
Block Communications, Inc., 144A, 7.25%, 2/1/2020			65,000		66,300
Boyd Gaming Corp., 6.875%, 5/15/2023			20,000		20,500
Cablevision Systems Corp., 5.875%, 9/15/2022			15,000		14,550
CCO Holdings LLC:
144A, 5.125%, 5/1/2023			50,000		48,625
144A, 5.375%, 5/1/2025			35,000		34,081
144A, 5.875%, 5/1/2027			60,000		58,575
7.0%, 1/15/2019			9,000		9,349
Cequel Communications Holdings I LLC:
144A, 5.125%, 12/15/2021			89,000		80,823
144A, 6.375%, 9/15/2020			125,000		124,156
Clear Channel Worldwide Holdings, Inc.:
Series A, 6.5%, 11/15/2022			15,000		15,375
Series A, 7.625%, 3/15/2020			20,000		20,650
Series B, 7.625%, 3/15/2020			185,000		192,862
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			5,000		5,075
Crown Media Holdings, Inc., 10.5%, 7/15/2019			55,000		58,094
CSC Holdings LLC, 5.25%, 6/1/2024 (b)			55,000		52,800
Dana Holding Corp., 5.5%, 12/15/2024			25,000		24,563
DISH DBS Corp.:
4.25%, 4/1/2018			40,000		40,700
5.0%, 3/15/2023			50,000		46,250
6.75%, 6/1/2021			10,000		10,425
7.125%, 2/1/2016			155,000		159,069
Family Tree Escrow LLC:
144A, 5.25%, 3/1/2020			50,000		52,312
144A, 5.75%, 3/1/2023			35,000		36,575
Fiat Chrysler Automobiles NV, 144A, 4.5%, 4/15/2020			45,000		44,775
General Motors Financial Co., Inc., 3.25%, 5/15/2018			15,000		15,341
		Principal Amount ($)(a)		Value ($)

Global Partners LP, 144A, 7.0%, 6/15/2023			30,000		29,475
Group 1 Automotive, Inc., 5.0%, 6/1/2022 (b)			60,000		59,700
HD Supply, Inc.:
7.5%, 7/15/2020			15,000		15,863
11.5%, 7/15/2020			45,000		51,975
Hertz Corp., 6.75%, 4/15/2019			50,000		51,595
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			20,000		21,000
iHeartCommunications, Inc.:
9.0%, 12/15/2019 (b)			70,000		66,710
11.25%, 3/1/2021			40,000		38,850
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019			25,000		22,375
Live Nation Entertainment, Inc.:
144A, 5.375%, 6/15/2022			5,000		5,000
144A, 7.0%, 9/1/2020			50,000		53,125
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			30,000		29,888
Mediacom Broadband LLC:
5.5%, 4/15/2021			5,000		4,875
6.375%, 4/1/2023			65,000		65,000
Mediacom LLC, 7.25%, 2/15/2022			20,000		20,950
MGM Resorts International:
6.75%, 10/1/2020 (b)			76,000		80,560
8.625%, 2/1/2019			85,000		96,050
New Red Finance, Inc., 144A, 4.625%, 1/15/2022			15,000		14,775
Nielsen Finance LLC, 144A, 5.0%, 4/15/2022			20,000		19,600
Numericable-SFR, 144A, 4.875%, 5/15/2019			70,000		69,300
Pinnacle Entertainment, Inc., 6.375%, 8/1/2021			20,000		21,225
Quebecor Media, Inc., 5.75%, 1/15/2023			30,000		29,925
Sabre GLBL, Inc., 144A, 5.375%, 4/15/2023			5,000		4,925
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			15,000		15,150
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020			35,000		36,925
Sirius XM Radio, Inc., 144A, 5.875%, 10/1/2020			30,000		30,750
Spectrum Brands, Inc., 144A, 5.75%, 7/15/2025			15,000		15,225
Springs Industries, Inc., 6.25%, 6/1/2021			35,000		34,212
Starz LLC, 5.0%, 9/15/2019			25,000		25,313
Suburban Propane Partners LP, 5.75%, 3/1/2025			20,000		19,950
Time Warner Cable, Inc., 7.3%, 7/1/2038			35,000		39,435
Time Warner, Inc.:
3.6%, 7/15/2025			30,000		29,180
4.85%, 7/15/2045			10,000		9,701
UCI International, Inc., 8.625%, 2/15/2019			20,000		17,800
Viking Cruises Ltd.:
144A, 6.25%, 5/15/2025			30,000		29,775
144A, 8.5%, 10/15/2022			30,000		33,300
					2,990,449
		Principal Amount ($)(a)		Value ($)

Consumer Staples 3.2%
Anadolu Efes Biracilik Ve Malt Sanayii AS, 144A, 3.375%, 11/1/2022			250,000		221,430
Cencosud SA, 144A, 5.5%, 1/20/2021			250,000		262,673
Chiquita Brands International, Inc., 7.875%, 2/1/2021			11,000		11,853
Cott Beverages, Inc.:
5.375%, 7/1/2022			60,000		58,200
144A, 6.75%, 1/1/2020			25,000		25,938
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020			85,000		88,613
HJ Heinz Co.:
144A, 3.95%, 7/15/2025 (c)			10,000		10,055
144A, 5.2%, 7/15/2045 (c)			5,000		5,124
JBS Investments GmbH:
144A, 7.25%, 4/3/2024			70,000		72,450
144A, 7.75%, 10/28/2020			200,000		217,500
JBS U.S.A. LLC:
144A, 5.75%, 6/15/2025			25,000		24,711
144A, 7.25%, 6/1/2021			80,000		84,300
144A, 8.25%, 2/1/2020			25,000		26,500
Marfrig Overseas Ltd., 144A, 9.5%, 5/4/2020			200,000		204,340
Minerva Luxembourg SA, 144A, 12.25%, 2/10/2022			200,000		220,100
Pilgrim's Pride Corp., 144A, 5.75%, 3/15/2025			25,000		25,250
Post Holdings, Inc., 144A, 6.75%, 12/1/2021			15,000		15,000
Reynolds American, Inc.:
4.45%, 6/12/2025			10,000		10,188
5.85%, 8/15/2045			10,000		10,489
Roundy's Supermarkets, Inc., 144A, 10.25%, 12/15/2020			10,000		8,500
Smithfield Foods, Inc., 6.625%, 8/15/2022			2,000		2,135
The WhiteWave Foods Co., 5.375%, 10/1/2022			30,000		31,650
					1,636,999
Energy 9.1%
Afren PLC, 144A, 10.25%, 4/8/2019*			140,000		61,600
Antero Resources Corp.:
5.125%, 12/1/2022			45,000		42,525
5.375%, 11/1/2021			35,000		33,600
144A, 5.625%, 6/1/2023			25,000		24,156
Baytex Energy Corp.:
144A, 5.125%, 6/1/2021			10,000		9,375
144A, 5.625%, 6/1/2024			15,000		13,913
Berry Petroleum Co., LLC:
6.375%, 9/15/2022			30,000		23,400
6.75%, 11/1/2020			140,000		110,600
California Resources Corp.:
5.0%, 1/15/2020			20,000		17,600
5.5%, 9/15/2021			43,000		37,419
6.0%, 11/15/2024 (b)			15,000		12,900
Carrizo Oil & Gas, Inc., 6.25%, 4/15/2023			30,000		30,075
Chaparral Energy, Inc., 7.625%, 11/15/2022			20,000		14,400
		Principal Amount ($)(a)		Value ($)

Chesapeake Energy Corp.:
5.75%, 3/15/2023 (b)			75,000		67,875
6.125%, 2/15/2021			5,000		4,700
6.625%, 8/15/2020			30,000		29,250
Concho Resources, Inc., 5.5%, 4/1/2023			70,000		70,000
Crestwood Midstream Partners LP:
6.125%, 3/1/2022			20,000		20,400
144A, 6.25%, 4/1/2023			10,000		10,400
Delek & Avner Tamar Bond Ltd., 144A, 5.082%, 12/30/2023			200,000		201,000
Ecopetrol SA, 5.875%, 5/28/2045			250,000		220,625
Endeavor Energy Resources LP:
144A, 7.0%, 8/15/2021			75,000		74,625
144A, 8.125%, 9/15/2023			35,000		36,094
EP Energy LLC, 144A, 6.375%, 6/15/2023 (b)			25,000		25,062
EV Energy Partners LP, 8.0%, 4/15/2019			155,000		144,150
GeoPark Latin America Ltd. Agencia en Chile, 144A, 7.5%, 2/11/2020			200,000		173,000
Gulfport Energy Corp., 144A, 6.625%, 5/1/2023			10,000		10,125
Halcon Resources Corp.:
144A, 8.625%, 2/1/2020			55,000		54,312
8.875%, 5/15/2021			10,000		6,575
9.75%, 7/15/2020			20,000		13,450
Hilcorp Energy I LP:
144A, 5.0%, 12/1/2024			25,000		23,443
144A, 5.75%, 10/1/2025			40,000		38,400
Holly Energy Partners LP, 6.5%, 3/1/2020			20,000		19,950
Kinder Morgan, Inc.:
3.05%, 12/1/2019			75,000		74,917
5.55%, 6/1/2045			50,000		46,214
7.25%, 6/1/2018			55,000		62,029
Laredo Petroleum, Inc., 6.25%, 3/15/2023			35,000		35,612
Linn Energy LLC, 6.25%, 11/1/2019			25,000		19,563
MEG Energy Corp.:
144A, 6.5%, 3/15/2021			40,000		38,500
144A, 7.0%, 3/31/2024			95,000		91,081
Memorial Resource Development Corp., 5.875%, 7/1/2022			25,000		24,143
Murphy Oil U.S.A., Inc., 6.0%, 8/15/2023			40,000		41,500
Newfield Exploration Co., 5.375%, 1/1/2026			20,000		19,800
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			90,000		81,900
Oasis Petroleum, Inc.:
6.875%, 3/15/2022			75,000		76,125
6.875%, 1/15/2023			30,000		29,625
Odebrecht Offshore Drilling Finance Ltd.:
144A, 6.625%, 10/1/2022			189,580		131,758
144A, 6.75%, 10/1/2022			229,775		164,864
Offshore Drilling Holding SA, 144A, 8.625%, 9/20/2020			200,000		179,000
ONEOK Partners LP, 4.9%, 3/15/2025			20,000		19,784
Pacific Rubiales Energy Corp., 144A, 5.375%, 1/26/2019			200,000		164,300
		Principal Amount ($)(a)		Value ($)

Parsley Energy LLC, 144A, 7.5%, 2/15/2022			5,000		5,073
Petrobras Global Finance BV, 6.85%, 6/5/2115			250,000		205,090
Range Resources Corp., 144A, 4.875%, 5/15/2025			25,000		24,285
Regency Energy Partners LP:
5.0%, 10/1/2022			15,000		15,237
5.875%, 3/1/2022			5,000		5,323
Rice Energy, Inc., 144A, 7.25%, 5/1/2023			5,000		5,125
RSP Permian, Inc., 144A, 6.625%, 10/1/2022			60,000		61,350
Sabine Pass Liquefaction LLC:
5.625%, 2/1/2021			105,000		107,100
144A, 5.625%, 3/1/2025			30,000		29,700
SESI LLC, 7.125%, 12/15/2021			60,000		63,600
Seven Generations Energy Ltd., 144A, 6.75%, 5/1/2023			10,000		9,975
Sunoco LP, 144A, 6.375%, 4/1/2023			20,000		20,800
Talos Production LLC, 144A, 9.75%, 2/15/2018			60,000		52,200
Targa Resources Partners LP, 144A, 4.125%, 11/15/2019			10,000		9,900
TerraForm Power Operating LLC, 144A, 5.875%, 2/1/2023			40,000		40,600
Tesoro Corp., 4.25%, 10/1/2017			35,000		35,700
Transocean, Inc., 4.3%, 10/15/2022			145,000		109,112
Transportadora de Gas Internacional SA ESP, 144A, 5.7%, 3/20/2022			500,000		524,375
Triangle U.S.A. Petroleum Corp., 144A, 6.75%, 7/15/2022			20,000		15,500
Whiting Petroleum Corp.:
5.75%, 3/15/2021			45,000		44,280
144A, 6.25%, 4/1/2023			115,000		114,137
Williams Partners LP:
4.0%, 9/15/2025			30,000		28,101
6.125%, 7/15/2022			55,000		58,437
WPX Energy, Inc., 5.25%, 1/15/2017			40,000		40,900
					4,601,614
Financials 7.5%
Assured Guaranty U.S. Holdings, Inc., 5.0%, 7/1/2024			2,000		1,962
Banco Continental SAECA, 144A, 8.875%, 10/15/2017			200,000		210,400
Banco de Credito del Peru, 144A, 4.25%, 4/1/2023			250,000		249,300
Banco do Brasil SA, 144A, 9.0%, 6/29/2049			200,000		180,440
Barclays Bank PLC, 7.625%, 11/21/2022			200,000		227,760
BBVA Bancomer SA, 144A, 6.75%, 9/30/2022			150,000		165,187
CBL & Associates LP, (REIT), 4.6%, 10/15/2024			120,000		118,155
China Overseas Finance Cayman II Ltd., REG S, 5.5%, 11/10/2020			250,000		270,159
CIT Group, Inc.:
3.875%, 2/19/2019			145,000		143,912
5.0%, 5/15/2017			80,000		82,496
5.25%, 3/15/2018			90,000		93,037
CNO Financial Group, Inc.:
4.5%, 5/30/2020			10,000		10,150
5.25%, 5/30/2025			15,000		15,243
		Principal Amount ($)(a)		Value ($)

Development Bank of Kazakhstan JSC, Series 3, REG S, 6.5%, 6/3/2020			500,000		520,000
E*TRADE Financial Corp., 4.625%, 9/15/2023			25,000		24,563
Equinix, Inc., (REIT), 5.375%, 4/1/2023			105,000		105,000
Everest Reinsurance Holdings, Inc., 4.868%, 6/1/2044			50,000		47,433
Hellas Telecommunications Finance, 144A, 8.011%*, 7/15/2015	EUR		109,187		0
Hospitality Properties Trust, (REIT), 5.0%, 8/15/2022			110,000		114,503
International Lease Finance Corp.:
3.875%, 4/15/2018			65,000		65,325
5.75%, 5/15/2016			20,000		20,500
6.25%, 5/15/2019			50,000		54,063
8.625%, 9/15/2015			40,000		40,500
8.75%, 3/15/2017			120,000		131,293
Legg Mason, Inc., 5.625%, 1/15/2044			45,000		48,012
Macquarie Group Ltd., 144A, 6.0%, 1/14/2020			200,000		224,731
Massachusetts Mutual Life Insurance Co., 144A, 4.5%, 4/15/2065			10,000		8,881
Morgan Stanley, Series H, 5.45%, 7/29/2049			20,000		19,850
MPT Operating Partnership LP:
(REIT), 6.375%, 2/15/2022			45,000		47,981
(REIT), 6.875%, 5/1/2021			50,000		52,813
Nationwide Financial Services, Inc., 144A, 5.3%, 11/18/2044			65,000		63,824
Navient Corp., 5.5%, 1/25/2023 (b)			125,000		118,750
Neuberger Berman Group LLC, 144A, 5.875%, 3/15/2022			45,000		48,094
Omega Healthcare Investors, Inc., (REIT), 4.95%, 4/1/2024			130,000		132,967
Popular, Inc., 7.0%, 7/1/2019			20,000		20,000
Seminole Tribe of Florida, Inc., 144A, 7.804%, 10/1/2020			70,000		74,725
The Goldman Sachs Group, Inc., Series L, 5.7%, 12/29/2049			35,000		35,126
					3,787,135
Health Care 3.1%
AbbVie, Inc., 3.6%, 5/14/2025			20,000		19,768
Actavis Funding SCS, 4.75%, 3/15/2045			2,000		1,904
Alere, Inc., 144A, 6.375%, 7/1/2023			25,000		25,438
Community Health Systems, Inc.:
5.125%, 8/15/2018			185,000		189,625
5.125%, 8/1/2021			5,000		5,094
6.875%, 2/1/2022 (b)			30,000		31,650
7.125%, 7/15/2020			60,000		63,570
Concordia Healthcare Corp., 144A, 7.0%, 4/15/2023			10,000		10,000
Endo Finance LLC:
144A, 5.375%, 1/15/2023			35,000		34,563
144A, 5.75%, 1/15/2022			35,000		35,438
144A, 6.0%, 2/1/2025			20,000		20,325
		Principal Amount ($)(a)		Value ($)

HCA, Inc.:
6.5%, 2/15/2020			210,000		234,675
7.5%, 2/15/2022			80,000		91,900
Hologic, Inc., 144A, 5.25%, 7/15/2022 (c)			10,000		10,213
LifePoint Health, Inc., 5.5%, 12/1/2021			35,000		36,137
Mallinckrodt International Finance SA:
4.75%, 4/15/2023			75,000		69,984
144A, 4.875%, 4/15/2020			20,000		20,351
Par Pharmaceutical Companies, Inc., 7.375%, 10/15/2020			55,000		58,712
Tenet Healthcare Corp.:
144A, 3.786%**, 6/15/2020			20,000		20,175
6.25%, 11/1/2018			80,000		86,900
144A, 6.75%, 6/15/2023			50,000		51,000
Valeant Pharmaceuticals International, Inc.:
144A, 5.375%, 3/15/2020			50,000		51,625
144A, 5.875%, 5/15/2023			40,000		41,000
144A, 6.125%, 4/15/2025			115,000		118,306
144A, 6.375%, 10/15/2020			35,000		36,859
144A, 6.75%, 8/15/2018			70,000		73,412
144A, 7.5%, 7/15/2021			140,000		150,675
					1,589,299
Industrials 4.3%
ADT Corp.:
3.5%, 7/15/2022 (b)			20,000		18,100
5.25%, 3/15/2020			40,000		41,900
6.25%, 10/15/2021			25,000		26,250
Aerojet Rocketdyne Holdings, Inc., 7.125%, 3/15/2021			80,000		85,200
Artesyn Embedded Technologies, Inc., 144A, 9.75%, 10/15/2020			40,000		39,700
Belden, Inc., 144A, 5.5%, 9/1/2022			55,000		54,587
Bombardier, Inc.:
144A, 4.75%, 4/15/2019			20,000		19,450
144A, 5.5%, 9/15/2018			15,000		14,850
144A, 5.75%, 3/15/2022			55,000		48,950
144A, 6.0%, 10/15/2022			35,000		31,063
144A, 7.5%, 3/15/2025			10,000		9,075
144A, 7.75%, 3/15/2020			45,000		45,248
Casella Waste Systems, Inc., 7.75%, 2/15/2019			80,000		80,800
Covanta Holding Corp., 5.875%, 3/1/2024			30,000		29,925
CTP Transportation Products LLC, 144A, 8.25%, 12/15/2019			35,000		36,225
D.R. Horton, Inc., 4.0%, 2/15/2020			10,000		9,947
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			25,000		24,469
Empresas ICA SAB de CV, 144A, 8.875%, 5/29/2024			200,000		149,500
EnerSys, 144A, 5.0%, 4/30/2023			5,000		4,945
Florida East Coast Holdings Corp., 144A, 6.75%, 5/1/2019			15,000		15,038
Garda World Security Corp., 144A, 7.25%, 11/15/2021			45,000		43,200
Gates Global LLC, 144A, 6.0%, 7/15/2022			30,000		27,150
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			25,000		26,031
Masonite International Corp., 144A, 5.625%, 3/15/2023			25,000		25,406
		Principal Amount ($)(a)		Value ($)

Meritor, Inc.:
6.25%, 2/15/2024			30,000		29,625
6.75%, 6/15/2021			40,000		40,900
Navios Maritime Holdings, Inc., 144A, 7.375%, 1/15/2022			110,000		95,287
Noble Group Ltd., 144A, 6.625%, 8/5/2020			250,000		248,625
Nortek, Inc., 8.5%, 4/15/2021			75,000		80,062
Oshkosh Corp.:
5.375%, 3/1/2022			22,500		23,006
5.375%, 3/1/2025			5,000		5,000
Ply Gem Industries, Inc., 6.5%, 2/1/2022			60,000		58,850
SBA Communications Corp., 5.625%, 10/1/2019			30,000		31,200
Spirit AeroSystems, Inc., 5.25%, 3/15/2022			40,000		41,300
Titan International, Inc., 6.875%, 10/1/2020 (b)			55,000		50,531
TransDigm, Inc.:
6.0%, 7/15/2022			40,000		39,500
6.5%, 7/15/2024			25,000		24,688
7.5%, 7/15/2021			125,000		134,375
Triumph Group, Inc., 5.25%, 6/1/2022			20,000		19,750
United Rentals North America, Inc.:
4.625%, 7/15/2023			20,000		19,612
7.375%, 5/15/2020			95,000		101,364
7.625%, 4/15/2022			95,000		102,837
Wise Metals Group LLC, 144A, 8.75%, 12/15/2018			30,000		31,688
XPO Logistics, Inc.:
144A, 6.5%, 6/15/2022			30,000		29,363
144A, 7.875%, 9/1/2019			35,000		37,401
					2,151,973
Information Technology 2.3%
ACI Worldwide, Inc., 144A, 6.375%, 8/15/2020			15,000		15,788
Activision Blizzard, Inc., 144A, 5.625%, 9/15/2021			130,000		136,175
Audatex North America, Inc., 144A, 6.0%, 6/15/2021			25,000		25,688
BMC Software Finance, Inc., 144A, 8.125%, 7/15/2021			30,000		24,300
Boxer Parent Co., Inc., 144A, 9.0%, 10/15/2019 (b)			40,000		28,400
Cardtronics, Inc., 144A, 5.125%, 8/1/2022			20,000		19,550
CDW LLC, 6.0%, 8/15/2022			50,000		51,625
EarthLink Holdings Corp., 7.375%, 6/1/2020			30,000		31,200
Entegris, Inc., 144A, 6.0%, 4/1/2022			20,000		20,550
First Data Corp.:
144A, 6.75%, 11/1/2020			72,000		76,095
144A, 7.375%, 6/15/2019			17,000		17,672
144A, 8.75%, 1/15/2022			60,000		63,787
Freescale Semiconductor, Inc., 144A, 6.0%, 1/15/2022			40,000		42,400
Infor U.S., Inc., 144A, 6.5%, 5/15/2022			30,000		30,525
Italics Merger Sub, Inc., 144A, 7.125%, 7/15/2023			10,000		9,875
Jabil Circuit, Inc., 7.75%, 7/15/2016			30,000		31,425
KLA-Tencor Corp., 4.65%, 11/1/2024			65,000		64,965
		Principal Amount ($)(a)		Value ($)

Micron Technology, Inc., 144A, 5.25%, 8/1/2023			30,000		28,762
NCR Corp.:
5.875%, 12/15/2021			10,000		10,300
6.375%, 12/15/2023			20,000		21,200
NXP BV, 144A, 3.75%, 6/1/2018			35,000		35,262
Open Text Corp., 144A, 5.625%, 1/15/2023			25,000		24,750
Project Homestake Merger Corp., 144A, 8.875%, 3/1/2023			20,000		19,400
Sanmina Corp., 144A, 4.375%, 6/1/2019			5,000		4,988
Seagate HDD Cayman, 144A, 5.75%, 12/1/2034			100,000		98,462
Tencent Holdings Ltd., 144A, 3.375%, 5/2/2019			200,000		205,344
					1,138,488
Materials 4.7%
Anglo American Capital PLC, 144A, 4.125%, 9/27/2022			200,000		194,307
ArcelorMittal, 5.125%, 6/1/2020			5,000		5,069
Ashland, Inc., 3.875%, 4/15/2018			20,000		20,550
AVINTIV Specialty Materials, Inc., 7.75%, 2/1/2019			30,000		30,900
Ball Corp., 5.25%, 7/1/2025			30,000		29,662
Berry Plastics Corp., 5.5%, 5/15/2022			60,000		60,225
Cascades, Inc., 144A, 5.5%, 7/15/2022			20,000		19,350
Cemex SAB de CV, 144A, 6.5%, 12/10/2019			200,000		209,940
Chemours Co.:
144A, 6.625%, 5/15/2023			55,000		53,281
144A, 7.0%, 5/15/2025 (b)			10,000		9,700
Clearwater Paper Corp., 144A, 5.375%, 2/1/2025			25,000		24,500
Coveris Holding Corp., 144A, 10.0%, 6/1/2018			40,000		42,000
Coveris Holdings SA, 144A, 7.875%, 11/1/2019			5,000		4,975
Crown Americas LLC, 6.25%, 2/1/2021			10,000		10,425
Evolution Escrow Issuer LLC, 144A, 7.5%, 3/15/2022			30,000		28,425
First Quantum Minerals Ltd.:
144A, 6.75%, 2/15/2020			5,000		4,838
144A, 7.0%, 2/15/2021			60,000		57,375
Glencore Funding LLC, 144A, 4.125%, 5/30/2023			110,000		106,416
Gold Fields Orogen Holdings BVI Ltd., 144A, 4.875%, 10/7/2020			250,000		228,750
Greif, Inc., 7.75%, 8/1/2019			195,000		216,937
Hexion, Inc.:
6.625%, 4/15/2020			85,000		77,987
8.875%, 2/1/2018			60,000		54,150
Huntsman International LLC, 8.625%, 3/15/2021 (b)			10,000		10,524
Kaiser Aluminum Corp., 8.25%, 6/1/2020			40,000		43,300
Novelis, Inc., 8.75%, 12/15/2020			215,000		227,362
Plastipak Holdings, Inc., 144A, 6.5%, 10/1/2021			40,000		40,700
Platform Specialty Products Corp., 144A, 6.5%, 2/1/2022			25,000		25,813
Reynolds Group Issuer, Inc.:
5.75%, 10/15/2020			235,000		240,875
6.875%, 2/15/2021			100,000		104,250
		Principal Amount ($)(a)		Value ($)

Signode Industrial Group Lux SA, 144A, 6.375%, 5/1/2022			30,000		29,100
Tronox Finance LLC, 6.375%, 8/15/2020			30,000		27,825
WR Grace & Co-Conn:
144A, 5.125%, 10/1/2021			15,000		15,113
144A, 5.625%, 10/1/2024			5,000		5,063
Yamana Gold, Inc., 4.95%, 7/15/2024			120,000		115,588
					2,375,275
Telecommunication Services 7.2%
America Movil SAB de CV, 7.125%, 12/9/2024	MXN		2,000,000		123,404
AT&T, Inc.:
2.45%, 6/30/2020			20,000		19,605
3.4%, 5/15/2025			40,000		38,148
B Communications Ltd., 144A, 7.375%, 2/15/2021			35,000		37,538
CenturyLink, Inc.:
Series V, 5.625%, 4/1/2020			15,000		15,019
Series W, 6.75%, 12/1/2023 (b)			35,000		35,109
CommScope, Inc.:
144A, 4.375%, 6/15/2020			15,000		15,150
144A, 5.0%, 6/15/2021			35,000		34,125
CyrusOne LP, 144A, 6.375%, 11/15/2022			30,000		31,050
Digicel Group Ltd.:
144A, 7.125%, 4/1/2022			35,000		33,240
144A, 8.25%, 9/30/2020			305,000		305,765
Frontier Communications Corp.:
6.25%, 9/15/2021			20,000		18,200
6.875%, 1/15/2025			85,000		71,081
7.125%, 1/15/2023			200,000		177,500
8.25%, 4/15/2017			62,000		66,650
8.5%, 4/15/2020			20,000		20,910
Hughes Satellite Systems Corp.:
6.5%, 6/15/2019			63,000		68,355
7.625%, 6/15/2021			40,000		44,008
Intelsat Jackson Holdings SA:
5.5%, 8/1/2023			55,000		48,703
7.25%, 10/15/2020			140,000		138,425
7.5%, 4/1/2021			215,000		212,581
Level 3 Financing, Inc.:
5.375%, 8/15/2022			90,000		90,900
144A, 5.375%, 5/1/2025 (b)			30,000		28,913
6.125%, 1/15/2021			20,000		20,974
7.0%, 6/1/2020			75,000		79,594
8.625%, 7/15/2020			50,000		53,435
MTN Mauritius Investments Ltd., 144A, 4.755%, 11/11/2024			200,000		198,500
Plantronics, Inc., 144A, 5.5%, 5/31/2023			10,000		10,125
Sprint Communications, Inc.:
144A, 7.0%, 3/1/2020 (b)			40,000		43,508
144A, 9.0%, 11/15/2018			175,000		197,620
Sprint Corp., 7.125%, 6/15/2024			200,000		185,520
T-Mobile U.S.A., Inc.:
6.125%, 1/15/2022			15,000		15,488
6.375%, 3/1/2025			90,000		92,025
6.625%, 11/15/2020			65,000		67,600
Telefonica Celular del Paraguay SA, 144A, 6.75%, 12/13/2022			200,000		207,000
UPCB Finance IV Ltd., 144A, 5.375%, 1/15/2025			200,000		190,900
		Principal Amount ($)(a)		Value ($)

UPCB Finance V Ltd., 144A, 7.25%, 11/15/2021			27,000		29,160
UPCB Finance VI Ltd., 144A, 6.875%, 1/15/2022			9,000		9,585
VimpelCom Holdings BV, 144A, 5.95%, 2/13/2023			200,000		176,460
Wind Acquisition Finance SA, 144A, 6.5%, 4/30/2020			30,000		31,350
Windstream Services LLC:
6.375%, 8/1/2023			40,000		32,550
7.75%, 10/15/2020 (b)			20,000		19,575
7.75%, 10/1/2021			55,000		50,325
7.875%, 11/1/2017			205,000		217,812
Zayo Group LLC:
144A, 6.0%, 4/1/2023 (b)			20,000		19,754
144A, 6.375%, 5/15/2025			30,000		29,100
					3,652,339
Utilities 2.1%
AES Corp.:
3.283%**, 6/1/2019			20,000		20,000
8.0%, 6/1/2020			175,000		202,125
Calpine Corp.:
5.375%, 1/15/2023			35,000		34,387
5.75%, 1/15/2025			35,000		34,038
Dynegy, Inc.:
144A, 7.375%, 11/1/2022			30,000		31,425
144A, 7.625%, 11/1/2024			50,000		52,875
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024*			100,000		105,000
IPALCO Enterprises, Inc., 5.0%, 5/1/2018			145,000		152,975
Lamar Funding Ltd., 144A, 3.958%, 5/7/2025			250,000		243,125
NGL Energy Partners LP, 5.125%, 7/15/2019			30,000		29,925
NRG Energy, Inc.:
6.25%, 5/1/2024			100,000		99,250
7.875%, 5/15/2021			30,000		31,950
Talen Energy Supply LLC, 144A, 5.125%, 7/15/2019			30,000		29,400
					1,066,475
Total Corporate Bonds (Cost $25,453,883)					24,990,046

Mortgage-Backed Securities Pass-Throughs 10.3%
Federal Home Loan Mortgage Corp., 3.5%, 12/1/2042 (c)			1,500,000		1,542,656
Federal National Mortgage Association, 4.0%, 4/1/2042 (c)			1,000,000		1,059,375
Government National Mortgage Association, 3.5%, 5/1/2043 (c)			2,500,000		2,594,727
Total Mortgage-Backed Securities Pass-Throughs (Cost $5,222,266)					5,196,758

Asset-Backed 1.3%
Home Equity Loans 0.1%
CIT Group Home Equity Loan Trust, "AF6", Series 2002-1, 6.2%, 2/25/2030			43,368		43,246
		Principal Amount ($)(a)		Value ($)

Miscellaneous 1.2%
ARES CLO Ltd., "D", Series 2012-3A, 144A, 4.907%**, 1/17/2024			250,000		250,029
Domino's Pizza Master Issuer LLC, "A2", Series 2012-1A, 144A, 5.216%, 1/25/2042			144,938		149,608
Hilton Grand Vacations Trust, "B", Series 2014-AA, 144A, 2.07%, 11/25/2026			231,763		228,365
					628,002
Total Asset-Backed (Cost $668,682)					671,248

Commercial Mortgage-Backed Securities 1.0%
Commercial Mortgage Trust, "AM", Series 2007-GG11, 5.867%, 12/10/2049			290,000		311,068
Del Coronado Trust, "M", Series 2013-HDMZ, 144A, 5.186%**, 3/15/2018			80,000		80,024
JPMBB Commercial Mortgage Securities Trust, "A3", Series 2014-C19, 3.669%, 4/15/2047			125,000		130,650
Total Commercial Mortgage-Backed Securities (Cost $480,959)					521,742

Collateralized Mortgage Obligations 10.2%
Banc of America Mortgage Securities, "2A2", Series 2004-A, 2.666%**, 2/25/2034			87,649		87,111
Bear Stearns Adjustable Rate Mortgage Trust, "2A1", Series 2005-11, 2.841%**, 12/25/2035			117,295		118,024
Countrywide Home Loans, "2A5", Series 2004-13, 5.75%, 8/25/2034			69,577		69,464
Federal Home Loan Mortgage Corp.:
"AI", Series 4016, Interest Only, 3.0%, 9/15/2025			972,206		75,654
"ZT", Series 4165, 3.0%, 2/15/2043			287,272		273,119
"ZG", Series 4213, 3.5%, 6/15/2043			56,707		55,021
"JI", Series 3558, Interest Only, 4.5%, 12/15/2023			19,556		500
"PI", Series 3843, Interest Only, 4.5%, 5/15/2038			346,282		40,945
"DZ", Series 4253, 4.75%, 9/15/2043			1,073,446		1,201,000
"HI", Series 2934, Interest Only, 5.0%, 2/15/2020			81,448		6,597
"WI", Series 3010, Interest Only, 5.0%, 7/15/2020			130,413		10,329
"SP", Series 4047, Interest Only, 6.465%***, 12/15/2037			433,289		70,890
"JS", Series 3572, Interest Only, 6.615%***, 9/15/2039			539,310		83,244
Federal National Mortgage Association:
"4", Series 406, Interest Only, 4.0%, 9/25/2040			179,886		37,056
"KZ", Series 2010-134, 4.5%, 12/25/2040			243,058		262,312
"BI", Series 2010-13, Interest Only, 5.0%, 12/25/2038			43,211		2,135
		Principal Amount ($)(a)		Value ($)

"PI", Series 2006-20, Interest Only, 6.493%***, 11/25/2030			345,266		55,865
"SI", Series 2007-23, Interest Only, 6.583%***, 3/25/2037			223,963		46,442
Freddie Mac Structured Agency Credit Risk Debt Notes, "M3", Series 2015-DN1, 4.335%**, 1/25/2025			750,000		757,082
Government National Mortgage Association:
"GI", Series 2014-146, Interest Only, 3.5%, 9/20/2029			2,135,708		293,072
"GC", Series 2010-101, 4.0%, 8/20/2040			200,000		210,201
"ME", Series 2014-4, 4.0%, 1/16/2044			400,000		428,425
"PI", Series 2015-40, Interest Only, 4.0%, 4/20/2044			296,134		52,377
"HI", Series 2015-77, Interest Only, 4.0%, 5/20/2045			496,459		100,892
"IP", Series 2014-115, Interest Only, 4.5%, 2/20/2044			90,233		18,337
"PZ", Series 2010-106, 4.75%, 8/20/2040			222,467		246,851
"IV", Series 2009-69, Interest Only, 5.5%, 8/20/2039			278,674		55,071
"IN", Series 2009-69, Interest Only, 5.5%, 8/20/2039			283,437		58,910
"IJ", Series 2009-75, Interest Only, 6.0%, 8/16/2039			263,252		53,690
"AI", Series 2007-38, Interest Only, 6.275%***, 6/16/2037			73,133		12,901
JPMorgan Mortgage Trust, "2A1", Series 2006-A2, 2.631%**, 4/25/2036			253,010		230,428
Merrill Lynch Mortgage Investors Trust, "2A", Series 2003-A6, 2.521%**, 10/25/2033			60,212		60,002
Wells Fargo Mortgage-Backed Securities Trust, "2A3",Series 2004-EE, 2.695%**, 12/25/2034			87,574		86,938
Total Collateralized Mortgage Obligations (Cost $4,981,471)					5,160,885

Government & Agency Obligations 17.6%
Other Government Related (d) 0.4%
Perusahaan Penerbit SBSN, 144A, 4.325%, 5/28/2025			200,000		194,760
Sovereign Bonds 10.5%
Dominican Republic, 144A, 5.5%, 1/27/2025			100,000		100,250
Federative Republic of Brazil, 12.5%, 1/5/2016	BRL		250,000		79,815
Hashemite Kingdom of Jordan Government AID Bond, 3.0%, 6/30/2025			600,000		601,500
Indonesia Treasury Bond, Series FR56, 8.375%, 9/15/2026	IDR		1,340,000,000		100,562
Kingdom of Spain-Inflation Linked Bond, REG S, 144A, 1.0%, 11/30/2030	EUR		556,367		575,482
Republic of Argentina- Inflation Linked Bond, 5.83%, 12/31/2033	ARS		375		127
		Principal Amount ($)(a)		Value ($)

Republic of El Salvador:
144A, 6.375%, 1/18/2027			75,000		72,562
144A, 7.65%, 6/15/2035			100,000		100,500
Republic of Hungary:
4.0%, 3/25/2019			200,000		206,460
Series 19/A, 6.5%, 6/24/2019	HUF		11,600,000		46,927
Republic of Ireland, REG S, 2.0%, 2/18/2045	EUR		320,000		311,613
Republic of New Zealand, Series 0427, REG S, 4.5%, 4/15/2027	NZD		1,100,000		806,736
Republic of Poland, Series 0725, 3.25%, 7/25/2025	PLN		360,000		95,494
Republic of Portugal, 144A, REG S, 4.1%, 2/15/2045	EUR		700,000		809,176
Republic of Singapore, 2.75%, 4/1/2042	SGD		300,000		210,380
Republic of Slovenia:
144A, 4.75%, 5/10/2018			200,000		212,517
144A, 5.5%, 10/26/2022			100,000		110,895
Republic of South Africa:
Series R204, 8.0%, 12/21/2018	ZAR		1,100,000		91,695
Series R186, 10.5%, 12/21/2026	ZAR		2,700,000		258,326
Republic of Sri Lanka, 144A, 5.125%, 4/11/2019			200,000		199,000
Republic of Turkey, 8.5%, 7/10/2019	TRY		280,000		101,548
Republic of Uruguay, 5.1%, 6/18/2050			40,000		38,100
United Mexican States, 4.6%, 1/23/2046			200,000		185,000
					5,314,665
U.S. Treasury Obligations 6.7%
U.S. Treasury Bills:
0.06%****, 8/13/2015 (e)			254,000		254,000
0.07%****, 12/3/2015 (e)			501,000		500,908
U.S. Treasury Bonds:
2.5%, 2/15/2045			21,000		18,482
3.125%, 8/15/2044			80,400		80,532
3.625%, 2/15/2044			36,000		39,580
U.S. Treasury Notes:
1.0%, 8/31/2016 (f)			1,630,000		1,641,717
1.0%, 9/30/2016			500,000		503,789
1.5%, 5/31/2019			232,600		233,890
1.625%, 6/30/2019			19,000		19,180
1.625%, 12/31/2019			109,000		109,451
2.125%, 5/15/2025			5,000		4,909
					3,406,438
Total Government & Agency Obligations (Cost $9,305,798)					8,915,863

Loan Participations and Assignments 3.6%
Senior Loans**
American Rock Salt Holdings LLC, First Lien Term Loan, 4.75%, 5/20/2021			103,950		103,858
Avis Budget Car Rental LLC, Term Loan B, 3.0%, 3/15/2019			58,945		59,117
Calpine Corp., Term Loan B5, 3.5%, 5/27/2022			195,000		193,635
		Principal Amount ($)(a)		Value ($)

CSC Holdings, Inc., Term Loan B, 2.687%, 4/17/2020			94,663		93,834
DaVita HealthCare Partners, Inc., Term Loan B, 3.5%, 6/24/2021			69,300		69,426
Goodyear Tire & Rubber Co., Second Lien Term Loan, 3.75%, 4/30/2019			183,333		184,059
HJ Heinz Co., Term Loan B2, 3.25%, 6/5/2020			163,781		163,997
Level 3 Financing, Inc., Term Loan B2, 3.5%, 5/31/2022			60,000		59,669
MacDermid, Inc.:
Term Loan B2, 4.75%, 6/7/2020			30,000		30,171
First Lien Term Loan, 4.5%, 6/7/2020			53,900		54,112
MEG Energy Corp., Term Loan, 3.75%, 3/31/2020			254,078		249,246
NRG Energy, Inc., Term Loan B, 2.75%, 7/2/2018			116,633		115,870
Par Pharmaceutical Companies, Inc., Term Loan B2, 4.0%, 9/30/2019			116,259		116,383
Quebecor Media, Inc., Term Loan B1, 3.25%, 8/17/2020			88,425		87,237
Valeant Pharmaceuticals International, Inc.:
Term Loan B, 3.5%, 2/13/2019			137,133		136,982
Term Loan B, 3.5%, 12/11/2019			115,706		115,553
Total Loan Participations and Assignments (Cost $1,840,403)					1,833,149

Municipal Bonds and Notes 1.8%
Chicago, IL, Airport Revenue, O'Hare International Airport, Series B, 6.0%, 1/1/2041			145,000		168,832
Massachusetts, State School Building Authority, Sales Tax Revenue, Qualified School Construction Bond, Series A, 4.885%, 7/15/2028			300,000		325,497
Orlando & Orange County, FL, Expressway Authority Revenue, Series C, 5.0%, 7/1/2040			145,000		158,950
Port Authority of New York & New Jersey, 4.926%, 10/1/2051			260,000		274,048
Total Municipal Bonds and Notes (Cost $849,814)					927,327

Convertible Bond 0.4%
Materials
GEO Specialty Chemicals, Inc., 144A, 7.5%, 10/30/2018 (Cost $117,596)			120,175		219,620

Preferred Security 0.2%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $60,889)			95,000		86,450

	Shares		Value ($)

Common Stocks 0.0%
Consumer Discretionary 0.0%
Dawn Holdings, Inc.* (g)		1		2,115
	Shares		Value ($)

Industrials 0.0%
Congoleum Corp.*		2,500		0
Quad Graphics, Inc.		24		444
				444
Materials 0.0%
GEO Specialty Chemicals, Inc.*		13,196		9,258
Total Common Stocks (Cost $25,206)				11,817

Preferred Stock 0.1%
Consumer Discretionary
Ally Financial, Inc., Series G, 144A, 7.0% (Cost $41,756)		45		45,696

Warrant 0.0%
Materials
Hercules Trust II, Expiration Date 3/31/2029* (Cost $17,432)		85		500

	Contract Amount		Value ($)

Call Options Purchased 0.1%
Options on Interest Rate Swap Contracts
Pay Fixed Rate — 3.72% – Receive Floating — 3-Month LIBOR, Swap Expiration Date 4/22/2026, Option Expiration Date 4/20/20161		1,300,000		4,805
Pay Fixed Rate — 4.19% – Receive Floating — 3-Month LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172		1,500,000		9,733
Pay Fixed Rate — 4.32% – Receive Floating — 3-Month LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20173		1,400,000		7,406
Total Call Options Purchased (Cost $191,320)				21,944

Put Options Purchased 0.1%
Options on Interest Rate Swap Contracts
Receive Fixed Rate — 2.19% – Pay Floating — 3-Month LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172		1,500,000		22,196
Receive Fixed Rate — 2.32% – Pay Floating — 3-Month LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20173		1,400,000		25,095
Total Put Options Purchased (Cost $98,573)				47,291

	Shares		Value ($)

Securities Lending Collateral 1.4%
Daily Assets Fund Institutional, 0.16% (h) (i) (Cost $717,278)		717,278		717,278

Cash Equivalents 15.2%
Central Cash Management Fund, 0.09% (h) (Cost $7,670,269)		7,670,269		7,670,269

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $57,743,595)†		112.7			57,037,883
Other Assets and Liabilities, Net		(12.7	)		(6,437,586	)
Net Assets		100.0			50,600,297

The following table represents bonds that are in default:

Security	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
Afren PLC*		10.25	%	4/8/2019	USD	140,000		152,586		61,600
Energy Future Holdings Corp.*		6.5	%	11/15/2024	USD	100,000		60,368		105,000
Hellas Telecommunications Finance*		8.011	%	7/15/2015	EUR	109,187		32,169		0
								245,123		166,600

* Non-income producing security.

*** These securities are shown at their current rate as of June 30, 2015.

****Annualized yield at time of purchase; not a coupon rate.

† The cost for federal income tax purposes was $57,739,660. At June 30, 2015, net unrealized depreciation for all securities based on tax cost was $701,777. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $1,035,446 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,737,223.

(a) Principal amount stated in U.S. dollars unless otherwise noted.

(d) Government-backed debt issued by financial companies or government-sponsored enterprises.

(e) At June 30, 2015, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(f) At June 30, 2015, this security has been pledged, in whole or in part, to cover initial margin requirements for open centrally cleared swap contracts.

(g) The Fund may purchase securities that are subject to legal or contractual restrictions on resale ("restricted securities"). Restricted securities are securities which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933. The Fund may be unable to sell a restricted security and it may be more difficult to determine a market value for a restricted security. Moreover, if adverse market conditions were to develop during the period between the Fund's decision to sell a restricted security and the point at which the Fund is permitted or able to sell such security, the Fund might obtain a price less favorable than the price that prevailed when it decided to sell. This investment practice, therefore, could have the effect of increasing the level of illiquidity of the Fund. The future value of these securities is uncertain and there may be changes in the estimated value of these securities.

Schedule of Restricted Securities

Acquisition Date

Cost ($)

Value ($)

Value as % of Net Assets

Dawn Holdings, Inc.*

August 2013

5,273

2,115

.00

(h) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.

(i) Represents collateral held in connection with securities lending. Income earned by the Fund is net of borrower rebates.

CLO: Collateralized Loan Obligation

LIBOR: London Interbank Offered Rate; 3-Month LIBOR rate at June 30, 2015 is 0.28%.

REIT: Real Estate Investment Trust

SBSN: Surat Berharga Syariah Negara

At June 30, 2015, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year Australian Bond	AUD	9/15/2015		12		1,159,746		5,859
10 Year U.S. Treasury Note	USD	9/21/2015		3		378,516		(2,912	)
Euro-BUXL 30 Year German Government Bond	EUR	9/8/2015		6		994,267		(11,425	)
Total net unrealized depreciation								(8,478	)

At June 30, 2015, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year Canadian Government Bond	CAD	9/21/2015		10		1,120,897		(11,175	)
10 Year U.S. Treasury Note	USD	9/21/2015		6		757,031		657
Euro-Bund German Federal Government Bond	EUR	9/8/2015		8		1,355,657		(16,066	)
Ultra Long U.S. Treasury Bond	USD	9/21/2015		28		4,313,750		119,853
Total net unrealized appreciation								93,269

At June 30, 2015, open written options contracts were as follows:

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (j)
Call Options Receive Fixed — 3.19% – Pay Floating — 3-Month LIBOR	2/3/2017 2/3/2027		700,000	2	2/1/2017		50,400		(18,581	)
Receive Fixed — 3.32% – Pay Floating — 3-Month LIBOR	2/3/2017 2/3/2027		700,000	3	2/1/2017		50,631		(15,767	)
Receive Fixed — 4.22% – Pay Floating — 3-Month LIBOR	4/22/2016 4/22/2026		1,300,000	1	4/20/2016		46,345		(1,416	)
Total Call Options							147,376		(35,764	)
Put Options Pay Fixed — 3.19% – Receive Floating — 3-Month LIBOR	2/3/2017 2/3/2027		700,000	2	2/1/2017		50,400		(36,599	)
Pay Fixed — 3.32% – Receive Floating — 3-Month LIBOR	2/3/2017 2/3/2027		700,000	3	2/1/2017		50,631		(41,642	)
Total Put Options							101,031		(78,241	)
Total							248,407		(114,005	)

(j) Unrealized appreciation on written options on interest rate swap contracts at June 30, 2015 was $134,402.

At June 30, 2015, open credit default swap contracts purchased were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($)		Fixed Cash Flows Paid			Underlying Debt Obligation	Value ($)			Unrealized Appreciation ($)
3/20/2015 6/20/2020		2,970,000		5.0	%	Markit Dow Jones CDX North America High Yield Index		(190,843	)		1,473

At June 30, 2015, open credit default swap contracts sold were as follows:

Bilateral Swaps
Effective/ Expiration Dates	Notional Amount ($) (k)			Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (l)	Value ($)		Upfront Payments Paid ($)		Unrealized Appreciation ($)
6/20/2013 9/20/2018		100,000	4		5.0	%	Sprint Communications, Inc., 6.0%, 12/1/2016, B+		6,394		3,830		2,564
1/21/2015 3/20/2020		45,000	5		5.0	%	General Motors Corp., 6.25%, 10/2/2043, BBB–		7,503		6,762		741
4/15/2015 6/20/2020		30,000	6		5.0	%	CCO Holdings LLC, 7.25%, 10/30/2017, BB–		2,940		2,867		73
Total unrealized appreciation													3,378

(k) The maximum potential amount of future undiscounted payments that the Fund could be required to make under a credit default swap contract would be the notional amount of the contract. These potential amounts would be partially offset by any recovery values of the referenced debt obligation or net amounts received from the settlement of buy protection credit default swap contracts entered into by the Fund for the same referenced debt obligation, if any.

(l) The quality ratings represent the higher of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") credit ratings and are unaudited.

At June 30, 2015, open interest rate swap contracts were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($)		Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Unrealized Appreciation/ (Depreciation) ($)
12/16/2015 9/18/2017		3,600,000	Fixed — 1.557%	Floating — 3-Month LIBOR		(25,832	)		(29,430	)
12/16/2015 9/16/2020		2,000,000	Floating — 3-Month LIBOR	Fixed — 2.214%		23,131			24,103
9/16/2015 9/16/2020		3,807,000	Fixed — 2.25%	Floating — 3-Month LIBOR		(68,150	)		(1,223	)
6/17/2015 6/18/2025		4,000,000	Fixed — 2.404%	Floating — 3-Month LIBOR		11,503			11,503
12/16/2015 9/16/2025		3,000,000	Fixed — 2.64%	Floating — 3-Month LIBOR		(17,783	)		(876	)
12/16/2015 9/17/2035		200,000	Fixed — 2.938%	Floating — 3-Month LIBOR		(877	)		3,216
9/16/2015 9/16/2045		900,000	Floating — 3-Month LIBOR	Fixed — 3.0%		9,189			(8,313	)
12/16/2015 9/18/2045		500,000	Floating — 3-Month LIBOR	Fixed — 2.998%		1,624			(14,745	)
Total net unrealized depreciation									(15,765	)

Counterparties:

1 Nomura International PLC

2 JPMorgan Chase Securities, Inc.

3 BNP Paribas

4 Bank of America

5 Credit Suisse

6 Barclays Bank PLC

As of June 30, 2015, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Appreciation ($)		Counterparty
KRW	584,831,000	JPY	65,000,000	7/9/2015		6,937	Nomura International PLC
KRW	584,837,500	JPY	65,000,000	7/9/2015		6,931	Australia & New Zealand Banking Group Ltd.
AUD	497,075	GBP	250,000	7/9/2015		9,428	Morgan Stanley
AUD	497,065	GBP	250,000	7/9/2015		9,436	Commonwealth Bank of Australia
USD	1,195,438	JPY	150,000,000	7/9/2015		30,300	Barclays Bank PLC
SEK	4,144,496	EUR	450,000	7/9/2015		1,721	Societe Generale
SEK	4,143,681	EUR	450,000	7/9/2015		1,820	Morgan Stanley
SEK	4,179,600	NOK	4,000,000	7/9/2015		5,849	Crédit Agricole CIB
SEK	4,192,876	NOK	4,000,000	7/9/2015		4,248	Morgan Stanley
JPY	65,000,000	KRW	593,580,000	7/9/2015		905	Nomura International PLC
JPY	65,000,000	KRW	593,547,500	7/9/2015		876	Australia & New Zealand Banking Group Ltd.
EUR	700,000	USD	790,939	7/9/2015		10,467	BNP Paribas
NZD	500,000	USD	349,950	7/9/2015		11,335	Macquarie Bank Ltd.
NZD	200,000	USD	138,783	7/9/2015		3,337	National Australia Bank Ltd.
USD	1,186,326	EUR	1,102,200	7/13/2015		42,645	Societe Generale
EUR	839,000	USD	939,811	7/13/2015		4,313	Societe Generale
EUR	161,000	USD	179,761	7/13/2015		243	UBS AG
SEK	5,150,000	USD	623,198	7/13/2015		1,829	Societe Generale
SGD	589,000	USD	439,836	7/13/2015		2,592	Societe Generale
USD	1,316,652	SEK	11,133,700	7/13/2015		26,677	Societe Generale
USD	335,966	EUR	302,000	7/13/2015		769	UBS AG
NZD	1,192,000	USD	838,495	7/13/2015		31,520	Societe Generale
PLN	410,000	USD	109,503	8/10/2015		581	Citigroup, Inc.
USD	585,811	ZAR	7,200,000	8/14/2015		1,314	BNP Paribas
MXN	4,050,000	USD	261,827	8/14/2015		4,989	BNP Paribas
MXN	2,042,900	USD	130,856	8/14/2015		1,301	JPMorgan Chase Securities, Inc.
COP	945,000,000	USD	370,376	8/18/2015		9,578	BNP Paribas
Total unrealized appreciation						231,941

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
CAD	650,000	USD	519,925	7/9/2015		(441	)	Morgan Stanley
CAD	650,000	USD	520,000	7/9/2015		(366	)	Macquarie Bank Ltd.
GBP	500,000	USD	780,635	7/9/2015		(4,950	)	Morgan Stanley
JPY	150,000,000	USD	1,221,275	7/9/2015		(4,463	)	Nomura International PLC
USD	350,959	CAD	426,243	7/13/2015		(9,742	)	Societe Generale
NOK	5,952,000	USD	734,558	7/13/2015		(24,392	)	BNP Paribas
SGD	396,000	USD	291,463	7/13/2015		(2,508	)	UBS AG
EUR	2,591,700	USD	2,783,450	7/13/2015		(106,336	)	Citigroup, Inc.
CAD	426,243	USD	338,834	7/13/2015		(2,383	)	Citigroup, Inc.
SEK	11,136,000	USD	1,277,009	7/13/2015		(66,597	)	Barclays Bank PLC
USD	786,485	NOK	5,952,000	7/13/2015		(27,534	)	Barclays Bank PLC
USD	359,328	EUR	322,000	7/13/2015		(293	)	Citigroup, Inc.
USD	633,438	SEK	5,152,300	7/13/2015		(11,791	)	Barclays Bank PLC
USD	210,101	SGD	283,000	7/13/2015		(16	)	Barclays Bank PLC
TRY	280,000	USD	100,736	7/20/2015		(3,085	)	BNP Paribas
ZAR	10,420,000	USD	830,525	8/14/2015		(19,175	)	BNP Paribas
USD	193,496	TRY	525,000	8/14/2015		(197	)	Nomura International PLC
USD	258,865	MXN	4,050,000	8/14/2015		(2,026	)	BNP Paribas
TRY	525,000	USD	186,839	8/14/2015		(6,459	)	Nomura International PLC
ILS	950,000	USD	247,919	8/14/2015		(3,844	)	Nomura International PLC
Total unrealized depreciation						(296,598	)

Currency Abbreviations

ARS Argentine Peso

AUD Australian Dollar

BRL Brazilian Real

CAD Canadian Dollar

COP Colombian Peso

EUR Euro

GBP British Pound

HUF Hungarian Forint

IDR Indonesian Rupiah

ILS Israeli Shekel

JPY Japanese Yen

KRW South Korean Won

MXN Mexican Peso

NOK Norwegian Krone

NZD New Zealand Dollar

PLN Polish Zloty

SEK Swedish Krona

SGD Singapore Dollar

TRY Turkish Lira

USD United States Dollar

ZAR South African Rand

For information on the Fund's policy and additional disclosures regarding options purchased, futures contracts, credit default swap contracts, interest rate swap contracts, forward foreign currency exchange contracts and written option contracts, please refer to Note B in the accompanying Notes to Financial Statements.

Fair Value Measurements

Assets	Level 1			Level 2			Level 3		Total

Fixed Income Investments (m)
Corporate Bonds	$	—		$	24,990,046		$	0	$	24,990,046
Mortgage-Backed Securities Pass-Throughs		—			5,196,758			—		5,196,758
Asset-Backed		—			671,248			—		671,248
Commercial Mortgage-Backed Securities		—			521,742			—		521,742
Collateralized Mortgage Obligations		—			5,160,885			—		5,160,885
Government & Agency Obligations		—			8,915,863			—		8,915,863
Loan Participations and Assignments		—			1,833,149			—		1,833,149
Municipal Bonds and Notes		—			927,327			—		927,327
Convertible Bond		—			—			219,620		219,620
Preferred Security		—			86,450			—		86,450
Common Stocks (m)		444			—			11,373		11,817
Preferred Stock		—			45,696			—		45,696
Warrant		—			—			500		500
Short-Term Investments (m)		8,387,547			—			—		8,387,547
Derivatives (n) Purchased Options		—			69,235			—		69,235
Futures Contracts		126,369			—			—		126,369
Credit Default Swap Contracts		—			4,851			—		4,851
Interest Rate Swap Contracts		—			38,822			—		38,822
Forward Foreign Currency Exchange Contracts		—			231,941			—		231,941
Total	$	8,514,360		$	48,694,013		$	231,493	$	57,439,866
Liabilities	Level 1			Level 2			Level 3		Total

Derivatives (n) Futures Contracts	$	(41,578	)	$	—		$	—	$	(41,578	)
Written Options		—			(114,005	)		—		(114,005	)
Interest Rate Swap Contracts		—			(54,587	)		—		(54,587	)
Forward Foreign Currency Exchange Contracts		—			(296,598	)		—		(296,598	)
Total	$	(41,578	)	$	(465,190	)	$	—	$	(506,768	)

There have been no transfers between fair value measurement levels during the period ended June 30, 2015.

(m) See Investment Portfolio for additional detailed categorizations.

(n) Derivatives include value of options purchased, unrealized appreciation (depreciation) on futures contracts, credit default swap contracts, interest rate swap contracts and forward foreign currency exchange contracts, and written options, at value.

The accompanying notes are an integral part of the financial statements.

Statement of Assets and Liabilities

as of June 30, 2015 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $49,356,048) — including $693,496 of securities loaned	$	48,650,336
Investment in Daily Assets Fund Institutional (cost $717,278)*		717,278
Investment in Central Cash Management Fund (cost $7,670,269)		7,670,269
Total investments in securities, at value (cost $57,743,595)		57,037,883
Foreign currency, at value (cost $433,857)		434,799
Receivable for investments sold		493,336
Receivable for investments sold — when-issued/delayed delivery securities		1,031,265
Receivable for Fund shares sold		9,215
Receivable for variation margin on centrally cleared swaps		13,773
Interest receivable		526,035
Unrealized appreciation on bilateral swap contracts		3,378
Unrealized appreciation on forward foreign currency exchange contracts		231,941
Upfront payments paid on bilateral swap contracts		13,459
Foreign taxes recoverable		4,132
Other assets		538
Total assets	$	59,799,754
Liabilities
Cash overdraft		14,000
Payable upon return of securities loaned		717,278
Payable for investments purchased		1,626,592
Payable for investments purchased — when-issued/delayed delivery securities		6,286,306
Payable for Fund shares redeemed		38,866
Payable for variation margin on futures contracts		3,483
Options written, at value (premiums received $248,407)		114,005
Unrealized depreciation on forward foreign currency exchange contracts		296,598
Accrued management fee		5,774
Accrued Trustees' fees		233
Other accrued expenses and payables		96,322
Total liabilities		9,199,457
Net assets, at value	$	50,600,297
Net Assets Consist of
Undistributed net investment income		1,001,827
Net unrealized appreciation (depreciation) on: Investments		(705,712	)
Swap contracts		(10,914	)
Futures		84,791
Foreign currency		(64,424	)
Written options		134,402
Accumulated net realized gain (loss)		(1,365,433	)
Paid-in capital		51,525,760
Net assets, at value	$	50,600,297
Class A Net Asset Value, offering and redemption price per share ($50,600,297 ÷ 4,652,647 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	10.88

* Represents collateral on securities loaned.

The accompanying notes are an integral part of the financial statements.

Statement of Operations

for the six months ended June 30, 2015 (Unaudited)
Investment Income
Income: Interest (net of foreign taxes withheld of $615)	$	1,114,039
Dividends		7,040
Income distributions — Central Cash Management Fund		2,968
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		1,329
Total income		1,125,376
Expenses: Management fee		142,074
Administration fee		25,832
Services to shareholders		405
Custodian fee		34,093
Professional fees		41,715
Reports to shareholders		12,218
Trustees' fees and expenses		2,172
Pricing fee		23,079
Other		1,821
Total expenses before expense reductions		283,409
Expense reductions		(102,450	)
Total expenses after expense reductions		180,959
Net investment income		944,417
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		(569,008	)
Swap contracts		54,154
Futures		(230,208	)
Foreign currency		499,009
		(246,053	)
Change in net unrealized appreciation (depreciation) on: Investments		(163,772	)
Swap contracts		(39,284	)
Futures		100,327
Written options		17,693
Foreign currency		(46,411	)
		(131,447	)
Net gain (loss)		(377,500	)
Net increase (decrease) in net assets resulting from operations	$	566,917

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, 2015 (Unaudited)			Year Ended December 31, 2014
Operations: Net investment income	$	944,417		$	2,471,475
Operations: Net investment income	$	944,417		$	2,471,475
Net realized gain (loss)		(246,053	)		(166,856	)
Change in net unrealized appreciation (depreciation)		(131,447	)		(970,135	)
Net increase (decrease) in net assets resulting from operations		566,917			1,334,484
Distributions to shareholders from: Net investment income: Class A		(2,026,151	)		(2,905,554	)
Total distributions		(2,026,151	)		(2,905,554	)
Fund share transactions: Class A Proceeds from shares sold		1,217,200			3,829,411
Reinvestment of distributions		2,026,151			2,905,554
Payments for shares redeemed		(4,769,449	)		(12,535,275	)
Net increase (decrease) in net assets from Class A share transactions		(1,526,098	)		(5,800,310	)
Increase (decrease) in net assets		(2,985,332	)		(7,371,380	)
Net assets at beginning of period		53,585,629			60,957,009
Net assets at end of period (including undistributed net investment income of $1,001,827 and $2,083,561, respectively)	$	50,600,297		$	53,585,629
Other Information
Class A Shares outstanding at beginning of period		4,786,192			5,284,551
Shares sold		109,414			334,959
Shares issued to shareholders in reinvestment of distributions		184,028			258,501
Shares redeemed		(426,987	)		(1,091,819	)
Net increase (decrease) in Class A shares		(133,545	)		(498,359	)
Shares outstanding at end of period		4,652,647			4,786,192

The accompanying notes are an integral part of the financial statements.

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/15 (Unaudited)			2014			2013			2012			2011			2010
Selected Per Share Data
Net asset value, beginning of period	$	11.20		$	11.53		$	12.60		$	11.90		$	11.96		$	11.61
Income (loss) from investment operations: Net investment incomea		.20			.49			.49			.57			.63			.66
Net realized and unrealized gain (loss)		(.07	)		(.23	)		(.59	)		.92			(.01	)		.47
Total from investment operations		.13			.26			(.10	)		1.49			.62			1.13
Less distributions from: Net investment income		(.45	)		(.59	)		(.62	)		(.76	)		(.68	)		(.78	)
Net realized gains		—			—			(.35	)		(.03	)		—			—
Total distributions		(.45	)		(.59	)		(.97	)		(.79	)		(.68	)		(.78	)
Net asset value, end of period	$	10.88		$	11.20		$	11.53		$	12.60		$	11.90		$	11.96
Total Return (%)b		1.07	**		2.23			(1.04	)		13.08			5.31			10.05
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		51			54			61			73			69			76
Ratio of expenses before expense reductions (%)		1.10	*		1.08			1.02			.99			.99			.95
Ratio of expenses after expense reductions (%)		.70	*		.77			.74			.77			.79			.86
Ratio of net investment income (%)		3.66	*		4.23			4.16			4.72			5.38			5.62
Portfolio turnover rate (%)		108	**		185			183			164			144			167
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

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

Deutsche Unconstrained Income VIP (the "Fund") is a diversified series of Deutsche Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.

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.

Debt securities and loan participations and assignments are valued at prices supplied by independent pricing services approved by the Fund's Board. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics, prepayment speeds and other data, as well as broker quotes. If the pricing services are unable to provide valuations, debt securities are valued at the average of the most recent reliable bid quotations or evaluated prices, as applicable, obtained from broker-dealers and loan participations and assignments are valued at the mean of the most recent bid and ask quotations or evaluated prices, as applicable, obtained from one or more broker-dealers. Certain securities may be valued on the basis of a price provided by a single source or broker-dealer. No active trading market may exist for some senior loans and they may be subject to restrictions on resale. The inability to dispose of senior loans in a timely fashion could result in losses. These securities are generally categorized as Level 2.

Equity securities and exchange-traded funds ("ETFs") 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. Equity securities or ETFs 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 and ETFs are generally categorized as Level 1.

Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

Futures contracts are generally valued at the settlement prices established each day on the exchange on which they are traded and are categorized as Level 1.

Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and are categorized as Level 2.

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, 2015, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

When-Issued/Delayed Delivery Securities. The Fund may purchase or sell securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the Fund enters into a commitment to purchase or sell a security, the transaction is recorded and the value of the transaction is reflected in the net asset value. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. At the time the Fund enters into this type of transaction, it is required to segregate cash or other liquid assets at least equal to the amount of the commitment. Additionally, the Fund may be required to post securities and/or cash collateral in accordance with the terms of the commitment.

At December 31, 2014, the Fund had net tax basis capital loss carryforwards of approximately $1,129,000, which may be applied against realized net taxable capital gains indefinitely, including short-term losses ($829,000) and long-term losses ($300,000).

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, forward currency contracts, futures contracts, swap contracts 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.

Contingencies. In the normal course of business, the Fund may enter into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet been made. However, based on experience, the Fund expects the risk of loss to be remote.

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. 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. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes for the Fund, with the exception of securities in default of principal.

B. Derivative Instruments

A summary of the open credit default swap contracts as of June 30, 2015 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in credit default swap contracts purchased had a total notional value generally indicative of a range from $0 to $2,970,000, and the investment in credit default swap contracts sold had a total notional value generally indicative of a range from $145,000 to $445,000.

Options. An option contract is a contract in which the writer (seller) of the option grants the buyer of the option, upon payment of a premium, the right to purchase from (call option), or sell to (put option), the writer a designated instrument at a specified price within a specified period of time. The Fund may write or purchase interest rate swaption agreements which are options to enter into a pre-defined swap agreement. The interest rate swaption agreement will specify whether the buyer of the swaption will be a fixed-rate receiver or a fixed-rate payer upon exercise. Certain options, including options on indices, will require cash settlement by the Fund if the option is exercised. For the six months ended June 30, 2015, the Fund entered into options on interest rate swaps in order to hedge against potential adverse interest rate movements of portfolio assets.

If the Fund writes a covered call option, the Fund foregoes, in exchange for the premium, the opportunity to profit during the option period from an increase in the market value of the underlying security above the exercise price. If the Fund writes a put option it accepts the risk of a decline in the value of the underlying security below the exercise price. Over-the-counter options have the risk of the potential inability of counterparties to meet the terms of their contracts. The Fund's maximum exposure to purchased options is limited to the premium initially paid. In addition, certain risks may arise upon entering into option contracts including the risk that an illiquid secondary market will limit the Fund's ability to close out an option contract prior to the expiration date and that a change in the value of the option contract may not correlate exactly with changes in the value of the securities.

A summary of the open purchased option contracts as of June 30, 2015 is included in the Fund's Investment Portfolio. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in written option contracts had a total value generally indicative of a range from approximately $114,000 to $152,000, and purchased option contracts had a total value generally indicative of a range from approximately $69,000 to $121,000.

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the six months ended June 30, 2015, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration and for non-hedging purposes to seek to enhance potential gains.

Certain risks may arise upon entering into futures contracts, including the risk that an illiquid market will limit the Fund's ability to close out a futures contract prior to the settlement date and the risk that the futures contract is not well correlated with the security, index or currency to which it relates. Risk of loss may exceed amounts disclosed in the Statement of Assets and Liabilities.

A summary of the open futures contracts as of June 30, 2015 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2015, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $2,533,000 to $4,992,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $3,123,000 to $18,678,000.

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, 2015, 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.

A summary of the open forward currency contracts as of June 30, 2015, is included in a table following the Fund’s Investment Portfolio. For the six months ended June 30, 2015, the investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $8,466,000 to $19,951,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from approximately $7,413,000 to $14,683,000. The investment in forward currency contracts long vs. other foreign currencies sold had a total contract value generally indicative of a range from $4,905,000 to approximately to $9,640,000.

Asset Derivatives	Purchased Options		Forward Contracts		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a) (b)	$	69,235	$	—	$	38,822	$	126,369	$	234,426
Credit Contracts (a) (b)		—		—		4,851		—		4,851
Foreign Exchange Contracts (c)		—		231,941		—		—		231,941
	$	69,235	$	231,941	$	43,673	$	126,369	$	471,218
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative appreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Investments in securities, at value (includes purchased options) and unrealized appreciation on bilateral swap contracts, respectively (c) Unrealized appreciation on forward foreign currency exchange contracts

Liability Derivatives	Written Options			Forward Contracts			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(114,005	)	$	—		$	(54,587	)	$	(41,578	)	$	(210,170	)
Foreign Exchange Contracts (c)		—			(296,598	)		—			—			(296,598	)
	$	(114,005	)	$	(296,598	)	$	(54,587	)	$	(41,578	)	$	(506,768	)
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative depreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Options written, at value (c) Unrealized depreciation on forward foreign currency exchange contracts

Realized Gain (Loss)	Forward Contracts		Swap Contracts		Futures Contracts			Total
Interest Rate Contracts (a)	$	—	$	1,953	$	(230,208	)	$	(228,255	)
Credit Contracts (a)		—		52,201		—			52,201
Foreign Exchange Contracts (b)		466,131		—		—			466,131
	$	466,131	$	54,154	$	(230,208	)	$	290,077
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Net realized gain (loss) from swap contracts and futures, respectively (b) Net realized gain (loss) from foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

Change in Net Unrealized Appreciation (Depreciation)	Purchased Options			Written Options		Forward Contracts			Swap Contracts			Futures Contracts		Total
Interest Rate Contracts (a)	$	(24,710	)	$	17,693	$	—		$	(22,256	)	$	100,327	$	71,054
Credit Contracts (a)		—			—		—			(17,028	)		—		(17,028	)
Foreign Exchange Contracts (b)		—			—		(49,851	)		—			—		(49,851	)
	$	(24,710	)	$	17,693	$	(49,851	)	$	(39,284	)	$	100,327	$	4,175
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Change in net unrealized appreciation (depreciation) on investments (includes purchased options), written options, swap contracts and futures, respectively (b) Change in net unrealized appreciation (depreciation) on foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset			Collateral Received		Net Amount of Derivative Assets
Australia & New Zealand Banking Group Ltd.	$	7,807	$	—		$	—	$	7,807
Bank of America		2,564		—			—		2,564
Barclays Bank PLC		30,373		(30,373	)		—		—
BNP Paribas		58,849		(58,849	)		—		—
Crédit Agricole CIB		5,849		—			—		5,849
Citigroup, Inc.		581		(581	)		—		—
Commonwealth Bank of Australia		9,436		—			—		9,436
Credit Suisse		741		—			—		741
JPMorgan Chase Securities, Inc.		33,230		(33,230	)		—		—
Macquarie Bank Ltd.		11,335		(366	)		—		10,969
Morgan Stanley		15,496		(5,391	)		—		10,105
National Australia Bank Ltd.		3,337		—			—		3,337
Nomura International PLC		12,647		(12,647	)		—		—
Societe Generale		111,297		(9,742	)		—		101,555
UBS AG		1,012		(1,012	)		—		—
	$	304,554	$	(152,191	)	$	—	$	152,363
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset			Collateral Pledged		Net Amount of Derivative Liabilities
Barclays Bank PLC	$	105,938	$	(30,373	)	$	—	$	75,565
BNP Paribas		106,087		(58,849	)		—		47,238
Citigroup, Inc.		109,012		(581	)		—		108,431
JPMorgan Chase Securities, Inc.		55,180		(33,230	)		—		21,950
Macquarie Bank Ltd.		366		(366	)		—		—
Morgan Stanley		5,391		(5,391	)		—		—
Nomura International PLC		16,379		(12,647	)		—		3,732
Societe Generale		9,742		(9,742	)		—		—
UBS AG		2,508		(1,012	)		—		1,496
	$	410,603	$	(152,191	)	$	—	$	258,412

C. Purchases and Sales of Securities

During the six months ended June 30, 2015, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury obligations) aggregated $50,977,268 and $47,068,467, respectively. Purchases and sales of U.S. Treasury obligations aggregated $3,370,281 and $2,710,919, respectively.

For the six months ended June 30, 2015, transactions for written options on interest rate swap contracts were as follows:

	Contract Amount		Premiums
Outstanding, beginning of period		4,100,000	$	248,407
Outstanding, end of period		4,100,000	$	248,407

D. Related Parties

First $250 million	.550	%
Next $750 million	.520	%
Next $1.5 billion	.500	%
Next $2.5 billion	.480	%
Next $2.5 billion	.450	%
Next $2.5 billion	.430	%
Next $2.5 billion	.410	%
Over $12.5 billion	.390	%

For the period from January 1, 2015 through April 30, 2016, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) at 0.70%.

For the six months ended June 30, 2015, fees waived and/or expenses reimbursed amounted to $102,450.

Security Lending Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the six months ended June 30, 2015, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $116.

E. Investing in High-Yield Securities

F. Investing in Emerging Markets

Investing in emerging markets may involve special risks and considerations not typically associated with investing in developed markets. These risks include revaluation of currencies, high rates of inflation or deflation, repatriation restrictions on income and capital, and future adverse political, social and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls or delayed settlements, and may have prices that are more volatile or less easily assessed than those of comparable securities of issuers in developed markets.

G. Ownership of the Fund

At June 30, 2015, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 68% and 29%.

H. Line of Credit

Information About Your Fund's Expenses (Unaudited)

The tables illustrate your Fund's expenses in two ways:

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2015
Actual Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,010.70
Expenses Paid per $1,000*	$	3.49
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/15	$	1,000.00
Ending Account Value 6/30/15	$	1,021.32
Expenses Paid per $1,000*	$	3.51

Annualized Expense Ratio	Class A
Deutsche Variable Series II — Deutsche Unconstrained Income VIP	.70%

For more information, please refer to the Fund's prospectus.

Proxy Voting

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of Deutsche Unconstrained Income VIP’s investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2014.

In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:

— In September 2014, all of the Fund’s Trustees were independent of DIMA and its affiliates.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, 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 index(es) 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 a peer universe), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one-, three- and five-year periods ended December 31, 2013, the Fund’s performance (Class A shares) was in the 4th quartile, 2nd quartile and 4th 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 the one-, three- and five-year periods ended December 31, 2013. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board recognized the efforts by DIMA in recent years to enhance its investment platform and improve long-term performance across the Deutsche fund complex.

Fees and Expenses. The Board considered the Fund’s investment management fee schedule, 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 equal to the median of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2013). The Board noted that the Fund’s Class A shares total (net) operating expenses 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, 2013, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). 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 Board noted that the expense limitation agreed to by DIMA helped to ensure that the Fund’s total (net) operating expenses would remain competitive. 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 information requested by the Board as part of its review of fees and expenses also included information about institutional accounts and funds offered primarily to European investors ("Deutsche Europe funds") managed by DIMA and its affiliates. The Board noted that DIMA indicated that it does not manage any institutional accounts or Deutsche Europe funds comparable to the Fund.

On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.

Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

Notes

DeAWM Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148 

VS2UI-3 (R-028389-4 8/15)


ITEM 2.	CODE OF ETHICS

	Not applicable.

ITEM 3.	AUDIT COMMITTEE FINANCIAL EXPERT

	Not applicable

ITEM 4.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

	Not applicable

ITEM 5.	AUDIT COMMITTEE OF LISTED REGISTRANTS

	Not applicable

ITEM 6.	SCHEDULE OF INVESTMENTS

	Not applicable

ITEM 7.	DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

	Not applicable

ITEM 8.	PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

	Not applicable

ITEM 9.	PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS

	Not applicable

ITEM 10.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

	There were no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board. The primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Kenneth C. Froewiss, Independent Chairman, Deutsche Mutual Funds, P.O. Box 390601, Cambridge, MA 02139.

ITEM 11.	CONTROLS AND PROCEDURES

	(a)	The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.

	(b)	There have been no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.

ITEM 12.	EXHIBITS

	(a)(1)	Not applicable

	(a)(2)	Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

	(b)	Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.

SIGNATURES

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

Registrant:	Deutsche Variable Series II


By:	/s/Brian E. Binder Brian E. Binder President

Date:	August 21, 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:	August 21, 2015



By:	/s/Paul Schubert Paul Schubert Chief Financial Officer and Treasurer

Date:	August 21, 2015

Deutsche Variable Series Ii N-CSRSCertified semi-annual shareholder report (management investment company)