Annual Report to Shareholders

Transcription

1 November 30, 2016 Annual Report to Shareholders Deutsche MLP & Energy Infrastructure Fund Deutsche MLP & Energy Infrastructure Fund 1

2 Contents 4 Letter to Shareholders 5 Portfolio Management Review 10 Performance Summary 12 Investment Portfolio 15 Statement of Assets and Liabilities 17 Statement of Operations 18 Statements of Changes in Net Assets 19 Financial Highlights 23 Notes to Financial Statements 36 Report of Independent Registered Public Accounting Firm 37 Information About Your Fund's Expenses 38 Tax Information 39 Advisory Agreement and Sub-Advisory Agreement Board Considerations and Fee Evaluation 43 Board Members and Officers 48 Account Management Resources Deutsche Asset Management represents the asset management activities conducted by Deutsche Bank AG or any of its subsidiaries. NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY 2 Deutsche MLP & Energy Infrastructure Fund

3 This report must be preceded or accompanied by a prospectus. To obtain a summary prospectus, if available, or prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the fund. Please read the prospectus carefully before you invest. Investments in securities of master limited partnerships (MLPs) involve risks that differ from investments in common stock, including risks related to: limited control and limited rights to vote on matters affecting the MLP, potential conflicts of interest between the MLP and the MLP s general partner, cash flows, dilution and the general partner s right to require unit holders to sell their common units at an undesirable time or price. The fund concentrates its investments in the group of industries comprising the energy infrastructure sector, and will therefore be susceptible to adverse economic, environmental, business, regulatory or other occurrences affecting that sector, including among others: substantial price volatility, fluctuations in commodity prices; reduced availability and consumer demand. A change in current tax law or a change in the underlying business mix of a given MLP could result in an MLP being treated as a corporation for U.S. federal income tax purposes (rather than a partnership), which would result in the MLP being required to pay U.S. federal income tax (as well as state and local income taxes) on its taxable income which could reduce the amount of cash available for distribution, result in a reduction of the value of the fund s investment, or lower income to the fund. The fund s strategy of investing to a significant degree in MLPs results in the fund being taxed as a regular corporation and involves complicated accounting, tax and valuation issues especially in the calculation of the fund s share price. Unlike a traditional open end mutual fund, the fund is subject to U.S. federal income tax on its taxable income at the graduated rates applicable to corporations, will not benefit from current favorable federal income tax rates on long term capital gains, and will be subject to state and local, and possibly foreign, income taxes. Refer to the prospectus for more details about tax risks. The securities markets are volatile and the market prices of the fund s securities may decline. If the market prices of the securities owned by the fund fall, the value of your investment in the fund will decline. Fund management could be wrong in its analysis of industries, companies, economic trends and favor a security that underperforms the market. This fund is non diversified and can take larger positions in fewer issues, increasing its potential risk. In certain situations, it may be difficult or impossible to sell an investment at an acceptable price. Investing in foreign securities presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Emerging markets tend to be more volatile and less liquid 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. Deutsche MLP & Energy Infrastructure Fund 3

4 Letter to Shareholders Dear Shareholder: Today s low return investment environment punctuated by periods of short term volatility and plenty of opinions in the financial media can be a challenge for those of us just trying to keep our portfolios moving forward. Let s face it: a report about the obstacles to economic growth grabs more attention than an article about the slow, steady improvement of the economy. The fact is, we continue to see the U.S. economy remaining on a moderate expansionary path. Although net exports are still challenged by modest global growth, most metrics suggest the labor market here at home continues to heal, which, along with low interest rates, is supporting the consumer. Is action necessary? Numerous studies have found that acting impulsively on negative financial news can actually reduce your overall investment returns over time. That s because there is a good chance you ll miss the gains to be achieved if the market or a specific security recovers from a brief setback. So, assuming you have built your portfolio based on long term needs and an honest assessment of your risk tolerance, short term fluctuations should not cause an extreme level of worry. As a global asset manager with decades of experience in helping investors through multiple market cycles, we want you to know and trust that our global intelligence, expertise and resources are here to support you. As always, we appreciate the opportunity to help you meet your goals. Best regards, Brian Binder President, Deutsche Funds Assumptions, estimates and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results. 4 Deutsche MLP & Energy Infrastructure Fund

5 Portfolio Management Review (Unaudited) Market Overview and Fund Performance All performance information below is historical and does not guarantee future results. Returns shown are for Class A shares, unadjusted for sales charges. Investment return and principal fluctuate, so your shares may be worth more or less when redeemed. Current performance may differ from performance data shown. Please visit deutschefunds.com for the most recent month end performance of all share classes. Fund performance includes reinvestment of all distributions. Unadjusted returns do not reflect sales charges and would have been lower if they had. Please refer to pages 10 through 11 for more complete performance information. Investment Strategy The fund seeks total return. Under normal circumstances, the fund invests at least 80% of its assets in master limited partnership (MLP) investments and securities issued by energy infrastructure companies. Deutsche MLP & Energy Infrastructure Fund returned 7.17% for its most recent fiscal year ended November 30, 2016, compared with the Alerian MLP Infrastructure Index return of 11.38%. The fund seeks total return through its MLP investments and securities issued by energy infrastructure companies. With respect to its MLP investments, the fund invests primarily in publicly traded MLPs that (i) operate or own, directly or indirectly, energy infrastructure related assets, including, but not limited to, assets used in exploring, developing, producing, generating, transporting (including marine), transmitting, operating terminals, storing, gathering, processing, refining, distributing, mining, or marketing of natural gas, natural gas liquids, crude oil, refined Asset Allocation (As a % of Net Assets) 11/30/16 11/30/15 Master Limited Partnerships 95% 75% Common Stocks 5% 22% Cash Equivalents and Other Assets and Liabilities, net 0% 3% 100% 100% Deutsche MLP & Energy Infrastructure Fund 5

6 petroleum products (including biodiesel and ethanol), coal, or electricity; or (ii) provide energy related equipment or services. During the fund s fiscal year, MLPs overcame a difficult start to the period to eventually close in positive fashion. The early months of the period were characterized by extreme volatility, both within the MLP segment and more broadly within energy related stocks. MLPs fell sharply in the first two months of 2016 amid bouts of technical selling pressure, negative investor sentiment given weak commodity prices, a lack of visibility as to when fundamentals would improve and funding concerns regarding MLPs. The sector had its low point on February 11, 2016, before recovering sharply over the next several months based on higher oil prices, supportive statements from the Federal Reserve Board (the Fed), solid economic data, a thawing in MLP equity markets and improved investor sentiment. MLPs were able to maintain this positive momentum through the latter half of 2016 as oil prices stabilized and corporate activity continued at a reasonable pace. More recently, market reaction to the results of the U.S. election was positive as investors envisioned a supportive environment for oil and gas and infrastructure activity, while news on November 30, 2016, that OPEC ministers had struck a deal to reduce production also lent support for the segment. Positive Contributors to Fund Performance During the period, the fund s overweight position in Boardwalk Pipeline Partners LP,* which has enjoyed a stable cash flow profile, contributed significantly to relative performance. Overweights to the Canadian pipeline stocks Enbridge Energy Partners LP and Inter Pipeline Ltd.* Sector Diversification (As a % of Master Limited Partnerships and Common Stocks) 11/30/16 11/30/15 Diversified Midstream 51% 52% Crude Oil & Refined Products 27% 19% Fee Based Gathering & Processing 14% 6% Natural Gas Pipelines & Storage 8% 23% 100% 100% * Not held in the portfolio as of November 30, Deutsche MLP & Energy Infrastructure Fund

7 also contributed, as did exposure to MPLX LP. In addition, the fund s position in Columbia Pipeline Group, Inc.* had a positive impact. Shares of Columbia surged following a takeover offer from TransCanada Corp., a Canadian pipeline company. Going forward, we currently expect a favorable backdrop for the energy infrastructure sector given recent OPEC plans to reduce production. Negative Contributors to Fund Performance The fund s underweight positioning within Williams Partners LP and ONEOK, Inc., and its overweight to Shell Midstream Partners LP, detracted from performance. In general, a lack of holdings in lower quality companies that rallied off their lows amid a more stable outlook for energy prices, discounted valuations and lower interest rates weighed on fund returns. Outlook and Positioning Going forward, we currently expect a favorable backdrop for the energy infrastructure sector given recent OPEC plans to reduce production. As such, we view MLP companies to be attractive on a relative basis. We also believe that the new U.S. administration may favor oil and gas development going forward. This could provide companies and investors more confidence to invest in midstream energy infrastructure, given shorter project timelines and faster realization of project cash flows. * Not held in the portfolio as of November 30, Deutsche MLP & Energy Infrastructure Fund 7

8 Ten Largest Equity Holdings at November 30, 2016 (72.9% of Net Assets) 1. Enbridge Energy Partners LP 9.3% Transports and stores hydrocarbon energy 2. Plains All American Pipeline LP 9.0% Owns and operates midstream energy infrastructure 3. Enterprise Products Partners LP 9.0% Provides processing and transportation services to producers and consumers of natural gas liquids 4. Energy Transfer Partners LP 8.1% Owns and operates a diversified portfolio of energy assets 5. MPLX LP 7.4% Acquires, owns, operates and develops crude oil 6. Sunoco Logistics Partners LP 6.4% Acquires, owns and operates a group of refined product and crude oil pipelines and terminal facilities 7. Magellan Midstream Partners LP 6.2% Primarily involved in the storage, transportation and distribution of refined petroleum products and ammonia 8. Williams Partners LP 6.1% Owns, operates, develops and acquires natural gas gathering system and other energy assets 9. ONEOK Partners LP 5.8% Through a subsidiary limited partnership, owns a general partner interest in a master limited partnership 10. PennTex Midstream Partners LP 5.6% Owns, operates, acquires and develops midstream energy infrastructure assets Portfolio holdings and characteristics are subject to change. For more complete details about the fund's investment portfolio, see page 12. A quarterly Fact Sheet is available on deutschefunds.com or upon request. Please see the Account Management Resources section on page 48 for contact information. Portfolio Management Team John W. Vojticek, Managing Director Portfolio Manager of the fund. Began managing the fund in Joined Deutsche Asset Management in 2004; previously worked as Principal at KG Redding and Associates, March 2004 September 2004; and previously Managing Director of Deutsche Asset Management from 1996 March Co Head and Chief Investment Officer of Liquid Real Assets for Deutsche Asset Management. BS, University of Southern California. 8 Deutsche MLP & Energy Infrastructure Fund

9 Manoj H. Patel, CFA, Managing Director Portfolio Manager of the fund. Began managing the fund in Joined Deutsche Asset Management in 2011; previously worked as a Director and Portfolio Manager of infrastructure securities funds at Brookfield Investment Management. Co Head of Infrastructure Securities and Co Lead Portfolio Manager: Chicago. Investment industry experience began in BS, Indiana University Bloomington. Francis X. Greywitt III, Managing Director Portfolio Manager of the fund. Began managing the fund in Joined Deutsche Asset Management in 2005; previously has worked as a REIT analyst with KeyBanc Capital Markets covering the office sector. Co Head of Infrastructure Securities and Co Lead Portfolio Manager: Chicago. Investment industry experience began in BBA, St. Bonaventure University; MBA, University of Chicago. The views expressed reflect those of the portfolio management team only through the end of the period of the report as stated on the cover. The management team's views are subject to change at any time based on market and other conditions and should not be construed as a recommendation. Past performance is no guarantee of future results. Current and future portfolio holdings are subject to risk. Terms to Know The Alerian MLP Infrastructure Index is a composite of energy infrastructure Master Limited Partnerships (MLPs). The index is a capped, float adjusted, capitalization weighted index, whose constituents earn the majority of their cash flow from the transportation, storage and processing of energy commodities and is disseminated real time on a price return basis and on a total return basis. Index returns do not reflect fees or expenses and it is not possible to invest directly into an index. Overweight means the fund holds a higher weighting in a given sector or security than the benchmark. Underweight means the fund holds a lower weighting. Deutsche MLP & Energy Infrastructure Fund 9

10 Performance Summary November 30, 2016 (Unaudited) Class A Average Annual Total Returns as of 11/30/16 1 Year Life of Fund * Unadjusted for Sales Charge 7.17% 11.84% Adjusted for the Maximum Sales Charge (max 5.75% load) 1.01% 14.66% Alerian MLP Infrastructure Index 11.38% 12.02% Class C Average Annual Total Returns as of 11/30/16 1 Year Life of Fund * Unadjusted for Sales Charge 6.51% 12.38% Adjusted for the Maximum Sales Charge (max 1.00% load) 6.51% 12.38% Alerian MLP Infrastructure Index 11.38% 12.02% Class S Average Annual Total Returns as of 11/30/16 1 Year Life of Fund * No Sales Charges 7.33% 11.67% Alerian MLP Infrastructure Index 11.38% 12.02% Institutional Class Average Annual Total Returns as of 11/30/16 1 Year Life of Fund * No Sales Charges 7.58% 11.55% Alerian MLP Infrastructure Index 11.38% 12.02% Performance in the Average Annual Total Returns table above and the Growth of an Assumed $10,000 Investment line graph that follows is historical and does not guarantee future results. Investment return and principal fluctuate, so your shares may be worth more or less when redeemed. Current performance may differ from performance data shown. Please visit deutschefunds.com for the Fund's most recent month end performance. Fund performance includes reinvestment of all distributions. Unadjusted returns do not reflect sales charges and would have been lower if they had. The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated March 1, 2016 are 19.06%, 19.93%, 19.03% and 18.79% for Class A, Class C, Class S and Institutional Class shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. The Fund may charge a 2% fee for redemptions of shares held less than 15 days. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index. Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 10 Deutsche MLP & Energy Infrastructure Fund

11 Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only, and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) Deutsche MLP & Energy Infrastructure Fund Class A Alerian MLP Infrastructure Index $12,500 $10,000 $7,500 $8,033 $7,490 $5,000 $2,500 $0 2/3/15 * 2/15 5/15 8/15 11/15 2/16 5/16 8/16 11/16 The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 5.75%. This results in a net initial investment of $9,425. The growth of $10,000 is cumulative. Performance of other share classes will vary based on the sales charges and the fee structure of those classes. * The Fund commenced operations on February 3, The Alerian MLP Infrastructure Index is a composite of energy infrastructure Master Limited Partnerships (MLPs). The index is a capped, float adjusted, capitalization weighted index, whose constituents earn the majority of their cash flow from the transportation, storage and processing of energy commodities and is disseminated real time on a price return basis and on a total return basis. Class A Class C Class S Institutional Class Net Asset Value 11/30/16 $ 7.62 $ 7.63 $ 7.61 $ /30/15 $ 7.27 $ 7.27 $ 7.26 $ 7.27 Distribution Information as of 11/30/16 Twelve Months: Return of Capital $.20 $.14 $.21 $.22 Deutsche MLP & Energy Infrastructure Fund 11

12 Investment Portfolio as of November 30, 2016 Shares Value ($) Master Limited Partnerships 94.7% Crude Oil & Refined Products 27.5% Fairway Energy LP (Units), 144A* 10,000 90,391 Magellan Midstream Partners LP 4, ,700 MPLX LP 11, ,795 Shell Midstream Partners LP 3, ,046 Sunoco Logistics Partners LP 13, ,708 Tesoro Logistics LP 1,900 89,547 Valero Energy Partners LP 2,100 84,882 1,347,069 Diversified Midstream 47.3% Enbridge Energy Partners LP 18, ,480 Energy Transfer Partners LP 11, ,573 Enterprise Products Partners LP 17, ,940 ONEOK Partners LP 6, ,240 Plains All American Pipeline LP 13, ,530 Williams Partners LP 8, ,300 2,315,063 Fee Based Gathering & Processing 13.6% Antero Midstream Partners LP 3, ,412 EnLink Midstream Partners LP 6, ,120 PennTex Midstream Partners LP 17, ,410 Western Gas Partners LP 3, , ,566 Natural Gas Pipelines & Storage 6.3% Dominion Midstream Partners LP 3, ,581 EQT Midstream Partners LP 1,363 99,813 Spectra Energy Partners LP 2, , ,511 Total Master Limited Partnerships (Cost $4,404,377) 4,636,209 Common Stocks 5.6% Diversified Midstream 3.8% Kinder Morgan, Inc. 8, ,147 Natural Gas Pipelines & Storage 1.8% Cheniere Energy, Inc.* 2,200 89,892 Total Common Stocks (Cost $235,008) 276,039 The accompanying notes are an integral part of the financial statements. 12 Deutsche MLP & Energy Infrastructure Fund

13 Shares Value ($) Cash Equivalents 8.0% Deutsche Central Cash Management Government Fund, 0.38% (a) (Cost $390,719) 390, ,719 % of Net Assets Value ($) Total Long Positions (Cost $5,030,104) ,302,967 Other Assets and Liabilities, Net (8.3) (408,436) Net Assets ,894,531 * Non income producing security. The cost for federal income tax purposes was $5,055,672. At November 30, 2016, net unrealized appreciation for all securities based on tax cost was $247,295. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $342,297 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $95,002. (a) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven day yield at period end. 144A: Security exempt from registration under Rule 144A of the Securities Act of These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. Fair Value Measurements Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. The following is a summary of the inputs used as of November 30, 2016 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 Master Limited Partnerships (b) $ 4,545,818 $ $ 90,391 $ 4,636,209 Common Stocks (b) 276, ,039 Short Term Investments 390, ,719 Total $ 5,212,576 $ $ 90,391 $ 5,302,967 There have been no transfers between fair value measurement levels during the year ended November 30, (b) See Investment Portfolio for additional detailed categorizations. The accompanying notes are an integral part of the financial statements. Deutsche MLP & Energy Infrastructure Fund 13

14 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: Master Limited Partnership Balance as of November 30, 2015 $ 88,081 Net realized gain (loss) Change in unrealized appreciation (depreciation) 2,310 Amortization of premium/accretion of discount Purchases (Sales) Transfers into Level 3 Transfers out of Level 3 Balance as of November 30, 2016 $ 90,391 Net change in unrealized appreciation (depreciation) from investments still held as of November 30, 2016 $ 2,310 Quantitative Disclosure About Significant Unobservable Inputs Asset Class Fair Value at 11/30/16 Valuation Technique Master Limited Partnership: Crude Oil & Refined Products $ 90,391 Market Approach Unobservable Input Last Traded Price Adjusted for Proxy 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 the last traded price on the Exchange adjusted for proxy (the movement in a comparable securities index). A significant change between last traded price, adjusted for proxy, and the price of the security based on current trading on the securities exchange could result in a material change in the fair value measurement. The accompanying notes are an integral part of the financial statements. 14 Deutsche MLP & Energy Infrastructure Fund

15 Statement of Assets and Liabilities as of November 30, 2016 Assets Investments: Investments in non affiliated securities, at value (cost $4,639,385) $ 4,912,248 Investment in Deutsche Central Cash Management Government Fund (cost $390,719) 390,719 Total investments in securities, at value (cost $5,030,104) 5,302,967 Cash 10,000 Foreign currency, at value (cost $2,368) 2,379 Receivable for investments sold 385,371 Receivable for Fund shares sold 13,880 Dividends receivable 124 Interest receivable 72 Other assets 6,576 Total assets 5,721,369 Liabilities Payable for investments purchased 592,990 Payable for Fund shares redeemed 3,368 Accrued Trustees' fees 528 Accrued audit and tax fees 153,141 Due to Advisor 56,827 Other accrued expenses and payables 19,984 Total liabilities 826,838 Net assets, at value $ 4,894,531 Net Assets Consist of Accumulated net investment loss, net of taxes (67,472) Net unrealized appreciation (depreciation) on: Investments, net of taxes 272,863 Foreign currency, net of taxes 11 Accumulated net realized gain (loss), net of taxes (560,601) Paid in capital 5,249,730 Net assets, at value $ 4,894,531 The accompanying notes are an integral part of the financial statements. Deutsche MLP & Energy Infrastructure Fund 15

16 Statement of Assets and Liabilities as of November 30, 2016 (continued) Net Asset Value Class A Net Asset Value and redemption price (a) per share ($1,491, ,701 outstanding shares of beneficial interest, $.01 par value, unlimited shares authorized) $ 7.62 Maximum offering price per share ( of $7.62) $ 8.08 Class C Net Asset Value, offering and redemption price (a) (subject to contingent deferred sales charge) per share ($789, ,494 outstanding shares of beneficial interest, $.01 par value, unlimited shares authorized) $ 7.63 Class S Net Asset Value, offering and redemption price (a) per share ($954, ,381 outstanding shares of beneficial interest, $.01 par value, unlimited shares authorized) $ 7.61 Institutional Class Net Asset Value, offering and redemption price (a) per share ($1,659, ,737 outstanding shares of beneficial interest, $.01 par value, unlimited shares authorized) $ 7.62 (a) Redemption price per share for shares held less than 15 days is equal to net asset value less a 2% redemption fee. The accompanying notes are an integral part of the financial statements. 16 Deutsche MLP & Energy Infrastructure Fund

17 Statement of Operations for the year ended November 30, 2016 Investment Income Distributions from master limited partnerships $ 243,633 Less return of capital distributions (243,633) Dividends (net of foreign taxes withheld of $3,516) 31,032 Income distributions Deutsche Central Cash Management Government Fund 1,756 Other income 1,504 Total income 34,292 Expenses: Management fee 50,672 Administration fee 4,607 Services to shareholders 6,503 Distribution and service fees 8,224 Custodian fee 4,383 Audit and tax fees 184,310 Legal fees 19,148 Reports to shareholders 30,929 Registration fees 52,873 Trustees' fees and expenses 2,108 Dividend expense on securities sold short 13,977 Interest expense on securities sold short 1,491 Other 5,436 Total expenses before expense reductions, before taxes 384,661 Expense reductions (294,890) Total expenses after expense reductions, before taxes 89,771 Net tax expense (benefit) Net investment loss, net of taxes (55,479) Realized and Unrealized Gain (Loss) Net realized gain (loss) from: Investments (125,754) Securities sold short (143,749) Foreign currency (3,420) Net tax (expense) benefit (272,923) Change in net unrealized appreciation (depreciation) on: Investments 693,672 Foreign currency ,882 Deferred tax expense (benefit) Net gain (loss) 420,959 Net increase (decrease) in net assets resulting from operations $ 365,480 The accompanying notes are an integral part of the financial statements. Deutsche MLP & Energy Infrastructure Fund 17

18 Statements of Changes in Net Assets Increase (Decrease) in Net Assets Year Ended November 30, 2016 Period Ended November 30, 2015* Operations: Net investment loss, net of taxes $ (55,479) $ (11,993) Net realized gain (loss), net of taxes (272,923) (287,678) Change in net unrealized appreciation (depreciation), net of taxes 693,882 (421,008) Net increase (decrease) in net assets resulting from operations 365,480 (720,679) Distributions to shareholders from: Return of capital: Class A (39,272) (7,548) Class C (12,593) (859) Class S (39,534) (3,644) Institutional Class (46,244) (27,897) Total distributions (137,643) (39,948) Fund share transactions: Proceeds from shares sold 6,800,341 1,117,483 Reinvestment of distributions 137,571 39,948 Payments for shares redeemed (4,689,857) (126,234) Redemption fees 1,069 Net increase (decrease) in net assets from Fund share transactions 2,249,124 1,031,197 Increase (decrease) in net assets 2,476, ,570 Net assets at beginning of period 2,417,570 2,147,000** Net assets at end of year (including accumulated net investment loss, net of taxes of $67,472 and $11,993, respectively) $ 4,894,531 $ 2,417,570 * For the period from February 3, 2015 (commencement of operations) to November 30, ** Initial capital The accompanying notes are an integral part of the financial statements. 18 Deutsche MLP & Energy Infrastructure Fund

19 Financial Highlights Class A Year Period Ended Ended 11/30/16 11/30/15 a Selected Per Share Data Net asset value, beginning of period $ 7.27 $10.00 Income (loss) from investment operations: Net investment income (loss) b (.10) (.05) Net realized and unrealized gain (loss).65 (2.56) Total from investment operations.55 (2.61) Less distributions from: Return of capital (.20) (.12) Net asset value, end of period $ 7.62 $ 7.27 Total Return (%) c,d 7.17 (25.85) ** Ratios to Average Net Assets and Supplemental Data Net assets, end of period ($ millions) 1.6 Ratio of expenses before expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (excluding interest expense and dividend expense for securities sold short) (%) * Ratio of net investment income (loss) (%) (1.38) (.70) * Portfolio turnover rate (%) ** a For the period from February 3, 2015 (commencement of operations) to November 30, b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized Deutsche MLP & Energy Infrastructure Fund 19

20 Class C Year Period Ended Ended 11/30/16 11/30/15 a Selected Per Share Data Net asset value, beginning of period $ 7.27 $10.00 Income (loss) from investment operations: Net investment income (loss) b (.16) (.12) Net realized and unrealized gain (loss).66 (2.54) Total from investment operations.50 (2.66) Less distributions from: Return of capital (.14) (.07) Net asset value, end of period $ 7.63 $ 7.27 Total Return (%) c,d 6.51 (26.22) ** Ratios to Average Net Assets and Supplemental Data Net assets, end of period ($ millions) 1.1 Ratio of expenses before expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (excluding interest expense and dividend expense for securities sold short) (%) * Ratio of net investment income (loss) (%) (2.12) (1.65) * Portfolio turnover rate (%) ** a For the period from February 3, 2015 (commencement of operations) to November 30, b Based on average shares outstanding during the period. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized 20 Deutsche MLP & Energy Infrastructure Fund

21 Class S Year Period Ended Ended 11/30/16 11/30/15 a Selected Per Share Data Net asset value, beginning of period $ 7.26 $10.00 Income (loss) from investment operations: Net investment income (loss) b (.06) (.05) Net realized and unrealized gain (loss).62 (2.56) Total from investment operations.56 (2.61) Less distributions from: Return of capital (.21) (.13) Net asset value, end of period $ 7.61 $ 7.26 Total Return (%) c 7.33 (25.70) ** Ratios to Average Net Assets and Supplemental Data Net assets, end of period ($ millions) 1.2 Ratio of expenses before expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (excluding interest expense and dividend expense for securities sold short) (%) * Ratio of net investment income (loss) (%) (.77) (.71) * Portfolio turnover rate (%) ** a For the period from February 3, 2015 (commencement of operations) to November 30, b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized Deutsche MLP & Energy Infrastructure Fund 21

22 Institutional Class Year Period Ended Ended 11/30/16 11/30/15 a Selected Per Share Data Net asset value, beginning of period $ 7.27 $10.00 Income (loss) from investment operations: Net investment income (loss) b (.08) (.04) Net realized and unrealized gain (loss).65 (2.55) Total from investment operations.57 (2.59) Less distributions from: Return of capital (.22) (.14) Net asset value, end of period $ 7.62 $ 7.27 Total Return (%) c 7.58 (25.69) ** Ratios to Average Net Assets and Supplemental Data Net assets, end of period ($ millions) 2 2 Ratio of expenses before expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (including interest expense and dividend expense for securities sold short) (%) * Ratio of expenses after expense reductions (excluding interest expense and dividend expense for securities sold short) (%) * Ratio of net investment income (loss) (%) (1.08) (.55) * Portfolio turnover rate (%) ** a For the period from February 3, 2015 (commencement of operations) to November 30, b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized 22 Deutsche MLP & Energy Infrastructure Fund

23 Notes to Financial Statements A. Organization and Significant Accounting Policies Deutsche MLP & Energy Infrastructure Fund (the Fund ) is a non diversified series of Deutsche Securities Trust (the Trust ), which is registered under the Investment Company Act of 1940, as amended (the 1940 Act ), as an open end management investment company organized as a Massachusetts business trust. The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are subject to an initial sales charge. Class C shares are not subject to an initial sales charge, but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Class C shares do not automatically convert into another class. Class S shares are not subject to initial or contingent deferred sales charges and are only available to a limited group of investors. Institutional Class shares are not subject to initial or contingent deferred sales charges and are generally available only to qualified institutions. Investment income, realized and unrealized gains and losses, and certain fund level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution and service fees, services to shareholders and certain other class specific expenses. Differences in class level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class specific arrangements. The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ( U.S. GAAP ) which require the use of management estimates. Actual results could differ from those estimates. The Fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of U.S. GAAP. The policies described below are followed consistently by the Fund in the preparation of its financial statements. Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Deutsche MLP & Energy Infrastructure Fund 23

24 Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Equity securities are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over the counter market on which they trade. Long equity 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. Short equity securities for which no sales are reported are valued at the calculated mean between the most recent bid and ask quotations on the relevant market or, if a mean cannot be determined, at the most recent ask quotation. Equity 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. 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; length of time of a halt in trading of the security; movement in the security's proxy index; 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. Master Limited Partnerships. Master Limited Partnerships, or MLPs, are entities that receive partnership taxation treatment under the Internal Revenue Code, as amended, and whose interests or units are traded on securities exchanges like shares of corporate stock. The Fund invests 24 Deutsche MLP & Energy Infrastructure Fund

25 primarily in publicly traded MLP investments and securities issued by energy infrastructure companies that (i) operate or own, directly or indirectly, energy infrastructure related assets; or (ii) provide energy related equipment or services. Due to their partnership structure, MLPs generally do not pay income taxes. To be treated as a partnership for U.S. federal income tax purposes, an MLP must derive at least 90% of its gross income for each taxable year from qualifying sources, including activities such as exploration, development, mining, production, processing, refining, transportation, storage and certain marketing of mineral or natural resources. MLPs are generally organized under state law as limited partnerships or limited liability companies. An MLP consists of a general partner and limited partners (or in the case of MLPs organized as limited liability companies, a managing member and members). The general partner or managing member typically controls the operations and management of the MLP, has an ownership stake in the MLP and may be eligible to receive an incentive distribution. The limited partners or members, through their ownership of limited partner or member interests, provide capital to the entity, are intended to have no role in the operation and management of the entity, and receive cash distributions. Equity securities issued by MLPs generally consist of common units, subordinated units and preferred units. Short Sales. When the Fund takes a short position, it sells at the current market price a security it does not own but has borrowed in anticipation that the market price of the security will decline. To complete, or close out, the short sale transaction, the Fund buys the same security in the market and returns it to the lender. Upon entering into a short sale, the Fund is required to designate liquid assets it owns in the form of cash or securities as segregated assets at its custodian in an amount at least equal to its obligations to purchase the securities sold short. For financial statements purposes, segregated cash is reflected as an asset on the Statement of Assets and Liabilities, and the settlement amount for securities sold short is reflected as a corresponding liability. Securities segregated as collateral are identified in the Investment Portfolio. The amount of the liability is marked to market to reflect the current value of the short position. The Fund may receive or pay the net of the borrowing fee on securities sold short and any income earned on the cash held as collateral for securities sold short. The net amounts of income or fees are included as interest income, or interest expense on securities sold short, in the Statement of Operations. Short sales involve the risk that the Fund will incur a loss by subsequently buying a security at a higher price than the price at which the Fund previously sold the security short. Any loss will be increased by the Deutsche MLP & Energy Infrastructure Fund 25

26 amount of compensation, interest or dividends, and transaction costs the Fund must pay to a lender of the security. In addition, because the Fund's loss on a short sale stems from increases in the value of the security sold short, the extent of such loss, like the price of the security sold short, is theoretically unlimited. By contrast, the Fund's loss on a long position arises from decreases in the value of the security held by the Fund and therefore is limited by the fact that a security's value cannot drop below zero. Federal Income Taxes. The Fund has not elected to qualify as a regulated investment company under Subchapter M of the of the Internal Revenue Code, as amended due to the concentration in Master Limited Partnerships, or MLP, securities. As a result, the Fund is treated as a regular corporation, or C corporation, for U.S. federal, state and local income tax purposes and will pay federal, state and local tax on its taxable income. MLPs are entities that receive partnership taxation treatment under the Internal Revenue Code, as amended, and whose interests or units are traded on securities exchanges like shares of corporate stock. The Fund invests primarily in publicly traded MLP investments and securities issued by energy infrastructure companies that (i) operate or own, directly or indirectly, energy infrastructure related assets; or (ii) provide energy related equipment or services. Due to their partnership structure, MLPs generally do not pay income taxes. To the extent that the Fund invests in the equity securities of an MLP taxed as a partnership, the Fund will be a partner in such MLP. Accordingly, the Fund will be required to take into account the Fund's allocable share of the income, gains, losses, deductions, expenses and tax credits recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. The Fund generally will accrue a deferred income tax liability for the future tax liability associated with the capital appreciation of its investments and reduction in basis as a result of distributions received by the Fund on interests of MLPs considered to be return of capital and for any net operating gains. The Fund may also accrue a deferred tax asset which reflects an estimate of the Fund s future tax benefit associated with net operating losses and unrealized losses. The Fund's tax expense or benefit, if any, is included in the Statement of Operations based on the component of income or gains/losses to which such expense or benefit is related. To the extent the Fund has a net deferred tax asset, consideration is given as to whether or not a valuation allowance, which would offset the value of some or all of the net deferred tax asset, is required. These calculations are subject to numerous estimates and assumptions, including estimates of the amount and character of distributions expected to be received from MLP investments; assumptions regarding whether or 26 Deutsche MLP & Energy Infrastructure Fund

27 not netting of certain assets and liabilities is permitted; assumptions and judgments regarding the likelihood of realizing deferred tax assets; and estimates of the appropriate tax rates. The Fund has reviewed the activity for the current period ended November 30, 2016, and has determined that there is no provision for income tax required in the Fund's financial statements. Additionally, the Fund determined that no accrual for uncertain tax provisions is required. The Fund recognizes interest and penalties related to income taxes as a component of income tax expense. Total income taxes have been computed by applying the federal statutory income tax rate of 34% plus a blended state income tax rate of 2.94%. The Fund applied this rate to net investment income (loss) and realized and unrealized gains (losses) on investments before income taxes in computing its total income tax expense (benefit). The provision for income taxes differs from the amount derived from applying the statutory income tax rate to net investment income (loss) and realized and unrealized gain (loss) before income taxes at November 30, 2016 is as follows: Effective Tax Rate Reconciliation Provision at statutory rates $ 124, % State taxes, net of federal tax benefit 7, % Permanent differences and other (2,535) (0.69)% Change in estimated state deferred rate % Other (1,476) (0.41)% Valuation allowance (127,416) (34.86)% Total $ 0.00% At November 30, 2016, the components of the Fund's net deferred tax asset (liability) were as follows: Deferred Tax Assets (Liabilities) Federal net operating loss carryforward $ 33,894 State net operating loss carryforward 1,934 Capital loss carryforward 184,366 Other 19 Valuation allowance (131,335) Unrealized losses on investment securities (88,878) Net deferred tax assets (liabilities) $ The Fund had a capital loss carryforward of $512,984 as of November 30, 2016, which may be carried forward for five years and applied against any realized net taxable capital gains of each succeeding year until fully Deutsche MLP & Energy Infrastructure Fund 27

28 utilized or until November 30, 2020 ($250,845) and November 30, 2021 ($262,139), the respective expiration dates. The Fund has a federal net operating loss carryforward as of November 30, 2016 of $99,687, which if not utilized, expires November 30, 2035 ($21,072) and November 30,2036 ($78,615). At November 30, 2016, based on the net unrealized losses on the Fund's investment securities, the Fund has recorded a valuation allowance to offset the deferred tax asset, as the Fund has determined at November 30, 2016, based on historical evidence, it is unlikely the deferred tax asset will be realized. Distributions. The Fund anticipates making distributions to its shareholders each fiscal quarter of substantially all of the Fund s distributable cash flow. Distributable cash flow means the amount received as cash or pay in kind distributions from MLPs or their affiliates, interest payments received on debt securities owned by the Fund and other payments received on securities owned by the Fund less accrued operating expenses of the Fund and taxes on the Fund s taxable income. The Fund is not required to make such distributions and, consequently, may not make a distribution or may make a distribution less than such amount for a given quarter. Although the Fund expects that a significant portion of its distributions will be treated as nontaxable returns of capital or taxable gains, no assurance can be given in this regard. 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 distributions paid to shareholders by the Fund is summarized as follows: Year Ended November 30, 2016 Period Ended November 30, 2015* Return of capital $ 137,643 $ 39,948 * For the period from February 3, 2015 (commencement of operations) to November 30, Redemption Fees. The Fund imposes a redemption fee of 2% of the total redemption amount on Fund shares redeemed or exchanged within 28 Deutsche MLP & Energy Infrastructure Fund