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

DWS 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: (201) 593-6408

Paul Schubert

100 Plaza One

Jersey City, NJ 07311

(Name and Address of Agent for Service)

Date of fiscal year end:	12/31

Date of reporting period:	6/30/2011

ITEM 1.	REPORT TO STOCKHOLDERS

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Alternative Asset Allocation Plus VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

7 Statement of Assets and Liabilities

7 Statement of Operations

8 Statement of Changes in Net Assets

9 Financial Highlights

12 Notes to Financial Statements

14 Proxy Voting

16 Summary of Management Fee Evaluation by Independent Fee Consultant

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, Fund 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, credit and interest rate risk, volatility in commodity prices and high-yield debt securities, short sales risk and the political, general economic, liquidity and currency risks of foreign investments, which may be particularly significant for emerging markets. The Fund may use derivatives, including as part of its Global Tactical Asset Allocation (GTAA) strategy. The Fund also expects to have direct and indirect exposure to derivatives, which may be more volatile and less liquid than traditional securities. The Fund could suffer losses on its derivative positions. See the prospectus for additional risks and specific details regarding the Fund's risk profile.

DWS Investments is part of Deutsche Bank's Asset Management division and, within the US, represents the retail asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment Management Americas Inc. and DWS Trust Company.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2011

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, 2011 are 2.33% and 2.58% 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 fund in which the Fund invests.

Growth of an Assumed $10,000 Investment in DWS Alternative Asset Allocation Plus VIP from 2/2/09 to 6/30/11
[] DWS Asset Allocation Plus VIP — Class A [] MSCI World Index [] Barclays Capital US Aggregate Bond Index [] Blended Index		The Morgan Stanley Capital International (MSCI) World Index is an unmanaged, capitalization-weighted measure of global stock markets including the US, Canada, Europe, Australia and the Far East. The index is calculated using closing local market prices and translates into US dollars using the London close foreign exchange rates. The Barclays Capital US Aggregate Bond Index is an unmanaged, market-value-weighted measure of Treasury issues, agency issues, corporate bond issues and mortgage securities. The Blended Index is calculated using the performance of two unmanaged indices, representative of stocks (the Morgan Stanley Capital International (MSCI) World Index (70%)) and bonds (the Barclays Capital US 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.

* The Fund commenced offering Class A shares on February 2, 2009. Index returns began on January 31, 2009.

Comparative Results
DWS Alternative Asset Allocation Plus VIP		6-Month‡			1-Year			Life of Fund*
Class A	Growth of $10,000	$	10,249		$	11,568		$	14,558
Class A	Average annual total return		2.49	%		15.68	%		16.85	%
MSCI World Index	Growth of $10,000	$	10,529		$	13,051		$	16,765
MSCI World Index	Average annual total return		5.29	%		30.51	%		23.84	%
Barclays Capital US Aggregate Bond Index	Growth of $10,000	$	10,272		$	10,390		$	11,696
Barclays Capital US Aggregate Bond Index	Average annual total return		2.72	%		3.90	%		6.70	%
Blended Index	Growth of $10,000	$	10,455		$	12,222		$	15,188
Blended Index	Average annual total return		4.55	%		22.22	%		18.19	%
DWS Alternative Asset Allocation Plus VIP		6-Month‡			1-Year			Life of Class**
Class B	Growth of $10,000	$	10,230		$	11,530		$	13,310
Class B	Average annual total return		2.30	%		15.30	%		14.46	%
MSCI World Index	Growth of $10,000	$	10,529		$	13,051		$	14,318
MSCI World Index	Average annual total return		5.29	%		30.51	%		18.80	%
Barclays Capital US Aggregate Bond Index	Growth of $10,000	$	10,272		$	10,390		$	11,442
Barclays Capital US Aggregate Bond Index	Average annual total return		2.72	%		3.90	%		6.68	%
Blended Index	Growth of $10,000	$	10,455		$	12,222		$	13,467
Blended Index	Average annual total return		4.55	%		22.22	%		14.72	%

The growth of $10,000 is cumulative.

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

* The Fund commenced offering Class A shares on February 2, 2009. Index returns began on January 31, 2009.

** The Fund commenced offering Class B shares on May 18, 2009. Index returns began on May 31, 2009.

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. 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, 2011 to June 30, 2011).

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, 2011
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,024.90	$	1,023.00
Expenses Paid per $1,000*	$	1.31	$	2.56
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,023.51	$	1,022.07
Expenses Paid per $1,000*	$	1.30	$	2.56

* 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 the number of days in the most recent six-month period, then divided by 365.

Annualized Expense Ratios**	Class A	Class B
DWS Variable Series II — DWS Alternative Asset Allocation Plus VIP	.26%	.51%

** 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.

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio)		6/30/11	12/31/10
Emerging Markets	DWS Emerging Markets Equity Fund DWS Enhanced Emerging Market Fixed Income Fund WisdomTree Emerging Markets Local Debt Fund	19%	18%
Market Neutral	DWS Disciplined Market Neutral Fund	15%	18%
Commodities	DWS Enhanced Commodity Strategy Fund	14%	13%
Global Real Estate	DWS RREEF Global Real Estate Securities Fund	14%	14%
Treasury Inflation Protected Securities	DWS Global Inflation Plus Fund	12%	14%
Floating Rate Notes	DWS Floating Rate Plus Fund	10%	5%
Global Infrastructure	DWS RREEF Global Infrastructure Fund	7%	5%
International Small Cap	iShares MSCI EAFE Small Cap Index ETF Vanguard FTSE All World ex-US Small-Cap Fund	3%	2%
Money Market Fund	Central Cash Management Fund	2%	4%
Gold	DWS Gold & Precious Metals Fund	2%	5%
International Treasury Bond	SPDR Barclays Capital International Treasury Bond	2%	2%
		100%	100%

Asset allocation is subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

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 www.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 www.dws-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio June 30, 2011 (Unaudited)

	Shares		Value ($)

Mutual Funds 92.0%
DWS Disciplined Market Neutral Fund "Institutional"		622,411		6,031,161
DWS Emerging Markets Equity Fund "Institutional"		215,525		4,049,715
DWS Enhanced Commodity Strategy Fund "Institutional"*		1,339,263		5,999,899
DWS Enhanced Emerging Markets Fixed Income Fund "Institutional"		300,546		3,224,854
DWS Floating Rate Plus Fund "Institutional"		427,895		4,013,654
DWS Global Inflation Plus Fund "Institutional"		449,784		4,808,186
DWS Gold & Precious Metals Fund "Institutional"		38,712		807,155
DWS RREEF Global Infrastructure Fund "Institutional"		269,056		2,825,092
DWS RREEF Global Real Estate Securities Fund "Institutional"		712,630		5,658,282
Total Mutual Funds (Cost $35,156,595)				37,417,998

	Shares		Value ($)

Exchange-Traded Funds 6.9%
iShares MSCI EAFE Small Cap Index Fund		9,056		395,113
SPDR Barclays Capital International Treasury Bond		12,687		783,676
Vanguard FTSE All World ex-US Small-Cap Fund		6,823		700,927
WisdomTree Emerging Markets Local Debt Fund		14,745		789,152
WisdomTree Emerging Markets SmallCap Dividend Fund		2,319		121,818
Total Exchange-Traded Funds (Cost $2,605,238)				2,790,686

Cash Equivalents 2.4%
Central Cash Management Fund (Cost $966,074)		966,074		966,074

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $38,727,907)+		101.3			41,174,758
Other Assets and Liabilities, Net		(1.3	)		(503,554	)
Net Assets		100.0			40,671,204

* Non-income producing security.

+ The cost for federal income tax purposes was $38,745,386. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $2,429,372. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $2,446,851 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $17,479.

EAFE: Europe, Australasia and Far East

FTSE: Financial Times and the London Stock Exchange

MSCI: Morgan Stanley Capital International

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 inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used as of June 30, 2011 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	$	37,417,998	$	—	$	—	$	37,417,998
Exchange-Traded Funds		2,790,686		—		—		2,790,686
Short-Term Investments		966,074		—		—		966,074
Total	$	41,174,758	$	—	$	—	$	41,174,758

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments: Investments in affiliated Underlying Funds, at value (cost $36,122,669)	$	38,384,072
Investments in non-affiliated Underlying Funds, at value (cost $2,605,238)		2,790,686
Total investments in securities, at value (cost $38,727,907)		41,174,758
Receivable for investments sold		210,000
Receivable for Fund shares sold		92,894
Due from Advisor		652
Other assets		322
Total assets		41,478,626
Liabilities
Payable for investments purchased		775,263
Payable for Fund shares redeemed		37
Accrued expenses and other liabilities		32,122
Total liabilities		807,422
Net assets, at value	$	40,671,204
Net Assets Consist of
Undistributed net investment income		108,161
Net unrealized appreciation (depreciation) on investments		2,446,851
Accumulated net realized gain (loss)		(121,219	)
Paid-in capital		38,237,411
Net assets, at value	$	40,671,204
Class A Net Asset Value, offering and redemption price per share ($7,523,616 ÷ 538,678 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.97
Class B Net Asset Value, offering and redemption price per share ($33,147,588 ÷ 2,372,343 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.97

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Income: Income distributions from affiliated Underlying Funds	$	182,452
Dividends		17,563
Income distributions — Central Cash Management Fund		526
Total income		200,541
Expenses: Management fee		45,062
Administration fee		17,428
Services to shareholders		549
Distribution service fee (Class B)		35,684
Custodian fee		3,830
Audit and tax fees		20,634
Legal fees		6,851
Reports to shareholders		12,440
Trustees' fees and expenses		2,138
Other		502
Total expenses before expense reductions		145,118
Expense reductions		(63,828	)
Total expenses after expense reductions		81,290
Net investment income (loss)		119,251
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Sale of affiliated Underlying Funds		(98,145	)
Change in net unrealized appreciation (depreciation) on investments		850,428
Net gain (loss)		752,283
Net increase (decrease) in net assets resulting from operations	$	871,534

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income	$	119,251		$	432,715
Net realized gain (loss)		(98,145	)		94,561
Change in net unrealized appreciation (depreciation)		850,428			1,382,244
Net increase (decrease) in net assets resulting from operations		871,534			1,909,520
Distributions to shareholders from: Net investment income: Class A		(92,242	)		(29,328	)
Class B		(344,882	)		(74,563	)
Net realized gains: Class A		(18,623	)		(23,912	)
Class B		(86,109	)		(82,873	)
Total distributions		(541,856	)		(210,676	)
Fund share transactions: Class A Proceeds from shares sold		2,796,002			3,888,928
Reinvestment of distributions		110,865			53,240
Payments for shares redeemed		(456,780	)		(529,532	)
Net increase (decrease) in net assets from Class A share transactions		2,450,087			3,412,636
Class B Proceeds from shares sold		12,749,430			19,061,697
Reinvestment of distributions		430,991			157,436
Payments for shares redeemed		(3,230,983	)		(1,070,014	)
Net increase (decrease) in net assets from Class B share transactions		9,949,438			18,149,119
Increase (decrease) in net assets		12,729,203			23,260,599
Net assets at beginning of period		27,942,001			4,681,402
Net assets at end of period (including undistributed net investment income of $108,161 and $426,034, respectively)	$	40,671,204		$	27,942,001
Other Information
Class A Shares outstanding at beginning of period		362,411			101,099
Shares sold		201,461			298,581
Shares issued to shareholders in reinvestment of distributions		7,775			4,172
Shares redeemed		(32,969	)		(41,441	)
Net increase (decrease) in Class A shares		176,267			261,312
Shares outstanding at end of period		538,678			362,411
Class B Shares outstanding at beginning of period		1,656,043			270,064
Shares sold		914,365			1,454,814
Shares issued to shareholders in reinvestment of distributions		30,202			12,329
Shares redeemed		(228,267	)		(81,164	)
Net increase (decrease) in Class B shares		716,300			1,385,979
Shares outstanding at end of period		2,372,343			1,656,043

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

Financial Highlights

Class A	Six Months Ended 6/30/11 (Unaudited)			Year Ended 12/31/10			Period Ended 12/31/09a
Selected Per Share Data
Net asset value, beginning of period	$	13.85		$	12.63		$	10.00
Income (loss) from investment operations: Net investment incomeb		.06			.46			.57
Net realized and unrealized gain (loss)		.29			1.09			2.06
Total from investment operations		.35			1.55			2.63
Less distributions from: Net investment income		(.19	)		(.18	)		—
Net realized gains		(.04	)		(.15	)		—
Total distributions		(.23	)		(.33	)		—
Net asset value, end of period	$	13.97		$	13.85		$	12.63
Total Return (%)c,d		2.49	**		12.46			26.30	**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		8			5			1
Ratio of expenses before expense reductions (%)e		.63	*		.94			11.67	*
Ratio of expenses after expense reductions (%)e		.26	*		.21			.21	*
Ratio of net investment income (%)		.89	*		3.51			5.39	*
Portfolio turnover rate (%)		19	**		6			155	**
a For the period from February 2, 2009 (commencement of operations of Class A shares) to December 31, 2009. b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d Total return would have been lower if the Advisor had not reduced some affiliated Underlying Funds' expenses. e The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the affiliated Underlying Funds and non-affiliated funds in which the Fund is invested. This ratio does not include these indirect fees and expenses. * Annualized ** Not annualized

Class B	Six Months Ended 6/30/11 (Unaudited)			Year Ended 12/31/10			Period Ended 12/31/09a
Selected Per Share Data
Net asset value, beginning of period	$	13.84		$	12.61		$	10.87
Income (loss) from investment operations: Net investment incomeb		.04			.42			.35
Net realized and unrealized gain (loss)		.28			1.09			1.39
Total from investment operations		.32			1.51			1.74
Less distributions from: Net investment income		(.15	)		(.13	)		—
Net realized gains		(.04	)		(.15	)		—
Total distributions		(.19	)		(.28	)		—
Net asset value, end of period	$	13.97		$	13.84		$	12.61
Total Return (%)c,d		2.30	**		12.15			16.01	**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		33			23			3
Ratio of expenses before expense reductions (%)e		.88	*		1.19			5.37	*
Ratio of expenses after expense reductions (%)e		.51	*		.46			.61	*
Ratio of net investment income (%)		.64	*		3.26			4.66	*
Portfolio turnover rate (%)		19	**		6			155	**
a For the period from May 18, 2009 (commencement of operations of Class B shares) to December 31, 2009. b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d Total return would have been lower if the Advisor had not reduced some affiliated Underlying Funds' expenses. e The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the affiliated Underlying Funds and non-affiliated 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

DWS Alternative Asset Allocation Plus VIP (the "Fund") is a diversified series of DWS 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 DWS funds (the "Underlying DWS Funds"), derivative investments and exchange-traded funds ("ETFs"). ETFs and Underlying DWS Funds are collectively referred to as "Underlying Funds." Each Underlying DWS Fund's accounting policies and investment holdings are outlined in the Underlying DWS 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 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 the Underlying Funds are valued at the net asset value per share of each class of the Underlying Funds and are categorized as Level 1.

ETFs are valued at the most recent sale price or official closing price reported on the exchange (US or foreign) or over-the-counter market on which they trade and are categorized as Level 1 securities. 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.

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.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the "Act") was enacted. Under the Act, net capital losses may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. 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. As a result of this ordering rule, pre-enactment capital loss carryforwards may expire unused, whereas under the previous rules these losses may have been utilized. This change is effective for fiscal years beginning after the date of enactment.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior two fiscal years remain open subject to examination by the Internal Revenue Service.

Distribution of Income and Gains. 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 gains 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.

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.

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. Realized gains and losses from investment transactions are recorded on an identified cost basis and may include proceeds from litigation. Distributions of income and capital gains from the Underlying Funds are recorded on the ex-dividend date.

B. Purchases and Sales of Securities

During the six months ended June 30, 2011, purchases and sales of affiliated Underlying Funds (excluding short-term investments) aggregated $18,034,952 and $6,735,000, respectively. Purchases and sales of non-affiliated Underlying Funds (excluding short-term investments) aggregated $1,477,909 and $0, 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 to be purchased, sold or entered into by the Fund or delegates such responsibility to the Fund's subadvisor.

QS Investors, LLC ("QS Investors") acts as an investment subadvisor to the Fund. As an investment subadvisor to the Fund, QS Investors renders strategic asset allocation services for the Fund. QS Investors is paid by the Advisor for the services QS Investors provides to the Fund.

RREEF America L.L.C. ("RREEF") acts as an investment sub-advisor to the Fund. As an investment subadvisor to the Funds, RREEF provides investment management services to the portions of 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 DWS Funds.

The Fund does not invest in the Underlying DWS Funds for the purpose of exercising management or control; however, investments within the set limits may represent 5% or more of an Underlying DWS Fund's outstanding shares. At June 30, 2011, the Fund did not invest in more than 5% of any Underlying DWS 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 DWS Funds	.200%
On assets invested in all other assets not considered DWS Funds	1.200%

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

For the period from January 1, 2010 through April 30, 2011, the Advisor had contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and Underlying Funds) of each class as follows:

Class A	.21%
Class B	.61%

For the period from May 1, 2011 through April 30, 2012, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and Underlying Funds) of each class as follows:

Class A	.35%
Class B	.75%

For the six months ended June 30, 2011, the Advisor has agreed to waive 0.15% of the monthly management fee based on average daily net assets for the Fund.

Accordingly, for the six months ended June 30, 2011, the fee pursuant to the Investment Management Agreement charged to the Fund was $45,062, all of which was waived, resulting in an annualized effective rate of 0.00% of the Fund's average daily net assets.

In addition, for the six months ended June 30, 2011, the Advisor waived $1,316 of other expenses.

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, 2011, the Administration Fee was $17,428, all of which was waived.

Service Provider Fees. DWS Investments Service Company ("DISC"), 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 DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the six months ended June 30, 2011, the amounts charged to the Fund by DISC were as follows:

Services to Shareholders	Total Aggregated		Waived		Unpaid at June 30, 2011
Class A	$	22	$	22	$	—
Class B		23		—		23
	$	45	$	22	$	23

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DWS Investments Distributors, Inc. ("DIDI") 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, 2011, the Distribution Service Fee aggregated $35,684, of which $6,566 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, 2011, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $10,085, of which $568 is unpaid.

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

Affiliated Cash Management Vehicle. The Fund may invest uninvested cash balances in Central Cash Management Fund, which is managed by the Advisor. The Fund indirectly bears its proportionate share of the expenses of Central Cash Management Fund. Central Cash Management Fund does not pay the Advisor an investment management fee. Central Cash Management Fund seeks a high level of current income consistent with liquidity and the preservation of capital.

D. 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.

E. Ownership of the Fund

At June 30, 2011, one Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class A shares of the Fund, owning 98%. One Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 95%.

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 — www.dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — www.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.

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Pursuant to an Order entered into by Deutsche Investment Management Americas and affiliates (collectively, "DeAM") with the Attorney General of New York, I, Thomas H. Mack, have been appointed the Independent Fee Consultant for the DWS Funds (formerly the DWS Scudder Funds). My duties include preparing an annual written evaluation of the management fees DeAM charges the Funds, considering among other factors the management fees charged by other mutual fund companies for like services, management fees DeAM charges other clients for like services, DeAM's costs of supplying services under the management agreements and related profit margins, possible economies of scale if a Fund grows larger, and the nature and quality of DeAM's services, including fund performance. This report summarizes my evaluation for 2010, including my qualifications, the evaluation process for each of the DWS Funds, consideration of certain complex-level factors, and my conclusions. I served in substantially the same capacity in 2007, 2008, and 2009.

Qualifications

For more than 35 years I have served in various professional capacities within the investment management business. I have held investment analysis and advisory positions, including securities analyst, portfolio strategist and director of investment policy with a large investment firm. I have also performed business management functions, including business development, financial management and marketing research and analysis.

Since 1991, I have been an independent consultant within the asset management industry. I have provided services to over 125 client organizations, including investment managers, mutual fund boards, product distributors and related organizations. Over the past ten years I have completed a number of assignments for mutual fund boards, specifically including assisting boards with management contract renewal.

I hold a Master of Business Administration degree, with highest honors, from Harvard University and Master of Science and Bachelor of Science (highest honors) degrees from the University of California at Berkeley. I am an independent director and audit committee financial expert for two closed-end mutual funds and have served in various leadership and financial oversight capacities with non-profit organizations.

Evaluation of Fees for each DWS Fund

My work focused primarily on evaluating, fund-by-fund, the fees charged to each of the 118 publicly offered Fund portfolios in the DWS Fund family. For each Fund, I considered each of the key factors mentioned above, as well as any other relevant information. In doing so I worked closely with the Funds' Independent Directors in their annual contract renewal process, as well as in their approval of contracts for several new funds (documented separately).

In evaluating each Fund's fees, I reviewed comprehensive materials provided by or on behalf of DeAM, including expense information prepared by Lipper Analytical, comparative performance information, profitability data, manager histories, and other materials. I also accessed certain additional information from the Lipper and Morningstar databases and drew on my industry knowledge and experience.

To facilitate evaluating this considerable body of information, I prepared for each Fund a document summarizing the key data elements in each area as well as additional analytics discussed below. This made it possible to consider each key data element in the context of the others.

In the course of contract renewal, DeAM agreed to implement a number of fee and expense adjustments requested by the Independent Directors which will favorably impact future fees and expenses, and my evaluation includes the effects of these changes.

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's contractual management fee (the advisory fee plus the administration fee where applicable) compared with those of a group of typically 12-15 funds in the same Lipper investment category (e.g. Large Capitalization Growth) having similar distribution arrangements and being of similar size.

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

These two comparisons provide a view of not only the level of the fee compared with funds of similar scale but also the total expense the Fund bears for all the services it receives, in comparison with the investment choices available in the Fund's investment category and distribution channel. The principal figure-of-merit used in these comparisons was the subject Fund's percentile ranking against peers.

DeAM's Fees for Similar Services to Others

DeAM provided management fee schedules for all of its US domiciled fund and non-fund investment management accounts in any of the investment categories where there is a DWS Fund. These similar products included the other DWS Funds, non-fund pooled accounts, institutional accounts and sub-advisory accounts. Using this information, I calculated for each Fund the fee that would be charged to each similar product, at the subject Fund's asset level.

Evaluating information regarding non-fund products is difficult because there are varying levels of services required for different types of accounts, with mutual funds generally requiring considerably more regulatory and administrative types of service as well as having more frequent cash flows than other types of accounts. Also, while mutual fund fees for similar fund products can be expected to be similar, there will be some differences due to different pricing conditions in different distribution channels (e.g. retail funds versus those used in variable insurance products), differences in underlying investment processes and other factors.

Costs and Profit Margins

DeAM provided a detailed profitability analysis for each Fund. After making some adjustments so that the presentation would be more comparable to the available industry figures, I reviewed profit margins from investment management alone, from investment management plus other fund services (excluding distribution) provided to the Funds by DeAM (principally shareholder services), and DeAM profits from all sources, including distribution. A later section comments on overall profitability.

Economies of Scale

Economies of scale — an expected decline in management cost per dollar of fund assets as fund assets grow — are very rarely quantified and documented because of inherent difficulties in collecting and analyzing relevant data. However, in virtually every investment category that I reviewed, larger funds tend to have lower fees and lower total expenses than smaller funds. To see how each DWS Fund compares with this industry observation, I reviewed:

The trend in Fund assets over the last five years and the accompanying trend in total expenses. This shows if the Fund has grown and, if so, whether total expense (management fees as well as other expenses) have declined as a percent of assets.

Whether the Fund has break-points in its management fee schedule, the extent of the fee reduction built into the schedule and the asset levels where the breaks take effect, and in the case of a sub-advised Fund how the Fund's break-points compare with those of the sub-advisory fee schedule.

How the Fund's contractual fee schedule compares with trends in the industry data. To accomplish this, I constructed a chart showing how actual latest-fiscal-year contractual fees of the Fund and of other similar funds relate to average fund assets, with the subject Fund's contractual fee schedule superimposed.

Quality of Service — Performance

The quality-of-service evaluation focused on investment performance, which is the principal result of the investment management service. Each Fund's performance was reviewed over the past 1, 3, 5 and 10 years, as applicable, and compared with that of other funds in the same investment category and with a suitable market index.

In addition, I calculated and reviewed risk-adjusted returns relative to an index of similar mutual funds' returns and a suitable market index. The risk-adjusted returns analysis provides a way of determining the extent to which the Fund's return comparisons are mainly the product of investment value-added (or lack thereof) or alternatively taking considerably more or less risk than is typical in its investment category.

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

While this evaluation was conducted mainly at the individual fund level, there are some issues relating to the reasonableness of fees that can alternatively be considered across the whole fund complex:

I reviewed DeAM's profitability analysis for all DWS Funds, with a view toward determining if the allocation procedures used were reasonable and how profit levels compared with public data for other investment managers.

I considered whether DeAM and affiliates receive any significant ancillary or "fall-out" benefits that should be considered in interpreting the direct profitability results. These would be situations where serving as the investment manager of the Funds is beneficial to another part of the Deutsche Bank organization.

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Based on the process and analysis discussed above, which included reviewing a wide range of information from management and external data sources and considering among other factors the fees DeAM charges other clients, the fees charged by other fund managers, DeAM's costs and profits associated with managing the Funds, economies of scale, possible fall-out benefits, and the nature and quality of services provided, in my opinion the management fees charged the DWS Funds are reasonable.

Thomas H. Mack

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2AAAP-3 (R-023287-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Balanced VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

22 Statement of Assets and Liabilities

22 Statement of Operations

23 Statement of Changes in Net Assets

25 Financial Highlights

26 Notes to Financial Statements

32 Proxy Voting

33 Summary of Management Fee Evaluation by Independent Fee Consultant

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. Bond investments are subject to interest-rate and credit risks. 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 Fund may use derivatives, including as part of its Global Tactical Asset Allocation (GTAA) strategy. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Stocks may decline in value. 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, 2011

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 is 0.67% 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 DWS Balanced VIP
[] DWS Balanced VIP — Class A [] Russell 1000® Index [] Barclays Capital US Aggregate Bond 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 Capital US Aggregate Bond Index is an unmanaged, market-value-weighted measure of Treasury issues, agency issues, corporate bond issues and mortgage securities. 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
DWS Balanced VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,362		$	11,875		$	10,822		$	11,751		$	12,919
Class A	Average annual total return		3.62	%		18.75	%		2.67	%		3.28	%		2.59	%
Russell 1000 Index	Growth of $10,000	$	10,637		$	13,193		$	11,145		$	11,763		$	13,716
Russell 1000 Index	Average annual total return		6.37	%		31.93	%		3.68	%		3.30	%		3.21	%
Barclays Capital US Aggregate Bond Index	Growth of $10,000	$	10,272		$	10,390		$	12,065		$	13,715		$	17,481
Barclays Capital US Aggregate Bond Index	Average annual total return		2.72	%		3.90	%		6.46	%		6.52	%		5.74	%

The growth of $10,000 is cumulative.

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

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges, redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2011 to June 30, 2011).

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, 2011
Actual Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,036.20
Expenses Paid per $1,000*	$	3.03
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,021.82
Expenses Paid per $1,000*	$	3.01

* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the most recent six-month period, then divided by 365.

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Balanced VIP	.60%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Common Stocks	53%	55%
Exchange-Traded Funds — Equity	5%	5%
Total Equity	58%	60%

Government & Agency Obligations	10%	9%
Exchange-Traded Funds — Fixed income	8%	7%
Corporate Bonds	6%	7%
Mortgage-Backed Securities Pass-Throughs	6%	7%
Commercial Mortgage-Backed Securities	3%	2%
Asset-Backed	1%	0%
Municipal Bonds and Notes	0%	1%
Preferred Stocks	0%	1%
Total Fixed Income	34%	34%

Cash Equivalents	8%	6%
	100%	100%

Sector Diversification (As a % of Equities, Corporate Bonds, Senior Loans and Preferred Securities)	6/30/11	12/31/10

Information Technology	16%	16%
Financials	15%	13%
Energy	12%	14%
Health Care	12%	10%
Industrials	11%	11%
Consumer Discretionary	11%	12%
Consumer Staples	9%	9%
Materials	5%	6%
Utilities	5%	4%
Telecommunication Services	4%	5%
	100%	100%

Asset allocation and sector diversification exclude derivatives and are subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Shares		Value ($)

Common Stocks 53.8%
Consumer Discretionary 5.4%
Auto Components 0.9%
Autoliv, Inc.		8,231		645,722
BorgWarner, Inc.*		10,596		856,051
Continental AG*		2,940		308,683
Minth Group Ltd.		90,486		146,839
Nippon Seiki Co., Ltd.		8,574		113,740
TRW Automotive Holdings Corp.*		7,920		467,517
				2,538,552
Automobiles 0.1%
Honda Motor Co., Ltd.		7,567		291,659
Distributors 0.2%
Genuine Parts Co.		11,463		623,587
Li & Fung Ltd.		56,000		112,629
				736,216
Diversified Consumer Services 0.3%
H&R Block, Inc.		54,638		876,394
Hotels Restaurants & Leisure 1.3%
Bwin.Party Digital Entertainment PLC*		15,660		37,774
Carnival Corp. (Units)		26,529		998,286
Darden Restaurants, Inc.		15,717		782,078
Domino's Pizza UK & IRL PLC		10,905		70,658
McDonald's Corp.		9,344		787,886
Paddy Power PLC		3,140		170,649
REXLot Holdings Ltd.		1,202,664		116,312
Starwood Hotels & Resorts Worldwide, Inc.		17,344		971,958
Trump Entertainment Resorts, Inc.*		2		37
				3,935,638
Household Durables 0.1%
Hajime Construction Co., Ltd.		3,264		86,340
Jarden Corp.		1,779		61,393
				147,733
Leisure Equipment & Products 0.1%
Universal Entertainment Corp.		5,166		172,576
Media 0.4%
Aegis Group PLC		23,040		59,137
Charm Communications, Inc. (ADR)*		5,970		71,043
Dex One Corp.*		245		620
JC Decaux SA*		3,392		108,661
News Corp. "A"		58,237		1,030,795
SuperMedia, Inc.*		43		161
Vertis Holdings, Inc.*		111		1,969
				1,272,386
Multiline Retail 0.3%
Dollar General Corp.*		10,690		362,284
Nordstrom, Inc.		12,830		602,240
				964,524
Specialty Retail 1.1%
Advance Auto Parts, Inc.		1,691		98,907
Aeropostale, Inc.*		4,315		75,512
AutoZone, Inc.*		1,707		503,309
Best Buy Co., Inc.		10,732		337,092
Dick's Sporting Goods, Inc.*		18,212		700,251
	Shares		Value ($)

Guess?, Inc.		2,261		95,098
Hennes & Mauritz AB "B"		3,500		120,624
hhgregg, Inc.*		3,791		50,799
Industria de Diseno Textil SA		1,660		151,586
L'Occitane International SA*		24,785		66,357
Limited Brands, Inc.		28,706		1,103,746
Urban Outfitters, Inc.*		3,012		84,788
				3,388,069
Textiles, Apparel & Luxury Goods 0.6%
Burberry Group PLC		4,013		93,302
Deckers Outdoor Corp.*		2,239		197,346
Luxottica Group SpA		4,500		144,251
NIKE, Inc. "B"		13,382		1,204,112
				1,639,011
Consumer Staples 5.1%
Beverages 1.2%
Anheuser-Busch InBev NV		4,600		266,731
C&C Group PLC		27,420		142,696
Carlsberg AS "B"		2,500		272,034
Central European Distribution Corp.*		1,961		21,963
Foster's Group Ltd.		19,600		108,504
Heineken NV		14,200		854,087
PepsiCo, Inc.		28,509		2,007,889
Treasury Wine Estates Ltd.*		6,533		23,824
				3,697,728
Food & Staples Retailing 1.7%
Costco Wholesale Corp.		11,429		928,492
CVS Caremark Corp.		29,327		1,102,109
Kroger Co.		25,886		641,973
Tesco PLC		44,000		284,173
Wal-Mart Stores, Inc.		24,840		1,319,998
Wesfarmers Ltd.		4,077		139,720
Whole Foods Market, Inc.		4,958		314,585
William Morrison Supermarkets PLC		23,100		110,375
Woolworths Ltd.		10,200		304,160
				5,145,585
Food Products 1.3%
Diamond Foods, Inc.		2,594		198,026
General Mills, Inc.		14,715		547,692
Golden Agri-Resources Ltd.		274,000		152,273
Green Mountain Coffee Roasters, Inc.*		1,362		121,572
Kellogg Co.		31,919		1,765,759
Mead Johnson Nutrition Co.		9,016		609,031
Nestle SA (Registered)		2,006		124,672
SunOpta, Inc.*		17,401		123,721
Unilever PLC		4,600		148,446
				3,791,192
Household Products 0.1%
Reckitt Benckiser Group PLC		5,400		298,152
Personal Products 0.1%
Beiersdorf AG		2,270		147,305
Tobacco 0.7%
Altria Group, Inc.		44,430		1,173,396
Philip Morris International, Inc.		13,750		918,088
				2,091,484
	Shares		Value ($)

Energy 6.7%
Energy Equipment & Services 2.0%
AMEC PLC		7,384		129,040
Complete Production Services, Inc.*		3,070		102,415
Dresser-Rand Group, Inc.*		2,009		107,984
Halliburton Co.		9,600		489,600
John Wood Group PLC		10,486		109,031
Lamprell PLC		16,170		97,951
National Oilwell Varco, Inc.		13,484		1,054,584
Noble Corp.		22,458		885,070
Oil States International, Inc.*		7,043		562,806
ProSafe SE		8,450		63,618
SBM Offshore NV		5,583		147,685
Schlumberger Ltd.		12,763		1,102,723
Seadrill Ltd.		4,200		147,844
Technip SA		2,660		284,936
Tecnicas Reunidas SA		1,045		53,775
Transocean Ltd.		9,784		631,655
				5,970,717
Oil, Gas & Consumable Fuels 4.7%
Anadarko Petroleum Corp.		12,421		953,436
Approach Resources, Inc.*		2,573		58,330
BP PLC		121,700		896,685
Canadian Natural Resources Ltd.		20,140		843,060
Chevron Corp.		11,582		1,191,093
Cloud Peak Energy, Inc.*		3,229		68,778
ConocoPhillips		10,952		823,481
EOG Resources, Inc.		9,618		1,005,562
Exxon Mobil Corp.		10,516		855,792
INPEX Corp.		40		295,309
Marathon Oil Corp.		36,926		1,945,262
Nexen, Inc.		29,198		656,955
Northern Oil & Gas, Inc.*		2,904		64,324
Occidental Petroleum Corp.		20,458		2,128,450
Origin Energy Ltd.		8,300		141,141
Plains Exploration & Production Co.*		13,306		507,225
Royal Dutch Shell PLC "B"		7,700		274,861
Suncor Energy, Inc.		28,257		1,104,849
Ultra Petroleum Corp.*		1,274		58,349
Woodside Petroleum Ltd.		2,931		129,292
				14,002,234
Financials 6.5%
Capital Markets 1.2%
Affiliated Managers Group, Inc.*		837		84,914
Ameriprise Financial, Inc.		7,094		409,182
Ashmore Group PLC		24,681		157,747
Charles Schwab Corp.		28,274		465,107
ICAP PLC		7,822		59,358
Jefferies Group, Inc.		4,267		87,047
Lazard Ltd. "A"		1,701		63,107
Morgan Stanley		29,583		680,705
Partners Group Holding AG		691		122,299
T. Rowe Price Group, Inc.		21,449		1,294,233
UOB-Kay Hian Holdings Ltd.		44,575		58,833
Waddell & Reed Financial, Inc. "A"		2,092		76,044
				3,558,576
Commercial Banks 1.0%
Australia & New Zealand Banking Group Ltd.		5,618		132,678
BOC Hong Kong (Holdings) Ltd.		146,000		423,936
	Shares		Value ($)

Dah Sing Banking Group Ltd.		39,579		55,706
DGB Financial Group, Inc.*		6,545		99,311
DnB NOR ASA		18,200		253,693
Lloyds Banking Group PLC*		151,000		118,650
National Australia Bank Ltd.		9,961		274,827
Prosperity Bancshares, Inc.		2,109		92,416
Resona Holdings, Inc.		27,200		128,091
Societe Generale		23,364		1,384,820
Zions Bancorp.		3,112		74,719
				3,038,847
Consumer Finance 0.0%
Kiatnakin Bank PCL (Foreign Registered)		56,609		60,800
Magma Fincorp Ltd.		663		1,086
				61,886
Diversified Financial Services 0.4%
ING Groep NV (CVA)*		22,326		275,398
JPMorgan Chase & Co.		22,122		905,675
				1,181,073
Insurance 3.3%
Allianz SE (Registered)		10,280		1,436,293
Assurant, Inc.		22,130		802,655
AXA SA		42,424		963,195
Fidelity National Financial, Inc. "A"		43,138		678,992
HCC Insurance Holdings, Inc.		21,261		669,722
Lincoln National Corp.		39,101		1,113,987
MetLife, Inc.		14,617		641,248
Old Mutual PLC		63,969		136,968
PartnerRe Ltd.		14,850		1,022,423
Prudential Financial, Inc.		16,947		1,077,660
Transatlantic Holdings, Inc.		12,227		599,245
Zurich Financial Services AG*		3,400		859,338
				10,001,726
Real Estate Investment Trusts 0.3%
CapitaMall Trust (REIT)		350,000		533,815
Klepierre (REIT)		3,600		148,559
Westfield Group (REIT) (Units)		15,100		140,713
				823,087
Real Estate Management & Development 0.3%
K Wah International Holdings Ltd.		266,509		98,732
Mitsubishi Estate Co., Ltd.		17,600		308,965
Mitsui Fudosan Co., Ltd.		17,000		293,088
Sumitomo Realty & Development Co., Ltd.		4,000		89,428
				790,213
Health Care 6.5%
Biotechnology 1.2%
Amgen, Inc.*		5,649		329,619
Celgene Corp.*		22,199		1,339,044
Gilead Sciences, Inc.*		41,865		1,733,630
Metabolix, Inc.*		3,431		24,497
Onyx Pharmaceuticals, Inc.*		1,688		59,586
				3,486,376
Health Care Equipment & Supplies 1.3%
Accuray, Inc.*		9,687		77,593
Baxter International, Inc.		20,984		1,252,535
Becton, Dickinson & Co.		9,573		824,906
CareFusion Corp.*		17,624		478,844
CONMED Corp.*		2,230		63,510
Edwards Lifesciences Corp.*		5,620		489,952
Kinetic Concepts, Inc.*		1,792		103,273
	Shares		Value ($)

Merit Medical Systems, Inc.*		1,705		30,639
NxStage Medical, Inc.*		5,004		104,183
Sirona Dental Systems, Inc.*		1,420		75,402
Terumo Corp.		5,300		286,403
Thoratec Corp.*		4,537		148,904
				3,936,144
Health Care Providers & Services 2.0%
Aetna, Inc.		11,051		487,239
Centene Corp.*		4,013		142,582
Express Scripts, Inc.*		23,774		1,283,321
Fleury SA		9,033		131,561
Fresenius Medical Care AG & Co. KGaA		5,241		391,847
Humana, Inc.		7,952		640,454
McKesson Corp.		26,028		2,177,242
WellPoint, Inc.		7,999		630,081
				5,884,327
Health Care Technology 0.1%
SXC Health Solutions Corp.*		2,659		156,668
Life Sciences Tools & Services 0.2%
Life Technologies Corp.*		2,261		117,730
Thermo Fisher Scientific, Inc.*		10,400		669,656
				787,386
Pharmaceuticals 1.7%
AstraZeneca PLC		2,942		146,899
Eisai Co., Ltd.		9,000		351,510
Flamel Technologies SA (ADR)*		11,590		62,007
GlaxoSmithKline PLC		65,900		1,410,963
Merck & Co., Inc.		31,487		1,111,176
Merck KGaA		1,390		151,050
Novartis AG (Registered)		2,510		153,756
Novo Nordisk AS "B"		2,317		290,490
Pacira Pharmaceuticals. Inc.*		8,434		101,208
Questcor Pharmaceuticals, Inc.*		7,602		183,208
Teva Pharmaceutical Industries Ltd. (ADR)		21,887		1,055,391
VIVUS, Inc.*		6,982		56,834
				5,074,492
Industrials 6.7%
Aerospace & Defense 1.8%
BAE Systems PLC		16,300		83,326
BE Aerospace, Inc.*		3,097		126,389
European Aeronautic Defence & Space Co. NV		15,500		518,807
Northrop Grumman Corp.		12,413		860,842
Raytheon Co.		16,466		820,830
TransDigm Group, Inc.*		7,739		705,719
United Technologies Corp.		26,072		2,307,633
				5,423,546
Airlines 0.1%
Cebu Air, Inc.		33,058		69,573
Ryanair Holdings PLC (ADR)		3,097		90,866
				160,439
Building Products 0.4%
Compagnie de Saint-Gobain		13,500		874,281
Congoleum Corp.*		190,000		0
Daikin Industries Ltd.		4,600		163,024
				1,037,305
Commercial Services & Supplies 0.3%
Babcock International Group PLC		13,356		152,609
Quad Graphics, Inc.		38		1,477
	Shares		Value ($)

Serco Group PLC		8,918		79,035
Stericycle, Inc.*		8,102		722,050
				955,171
Construction & Engineering 0.1%
Aecom Technology Corp.*		3,513		96,045
Chicago Bridge & Iron Co. NV		3,765		146,459
Shui On Construction & Materials Ltd.		48,522		65,267
Yongnam Holdings Ltd.		204,514		44,274
				352,045
Electrical Equipment 0.9%
AMETEK, Inc.		22,259		999,429
Mitsubishi Electric Corp.		28,900		335,635
Prysmian SpA		3,288		66,137
Roper Industries, Inc.		10,892		907,303
Schneider Electric SA		1,695		283,187
				2,591,691
Industrial Conglomerates 0.0%
Keppel Corp., Ltd.		1		9
Machinery 1.9%
Altra Holdings, Inc.*		3,363		80,678
Amtek Engineering Ltd.*		114,245		92,275
Andritz AG		1,127		116,044
Austal Ltd.		25,013		74,721
Charter International PLC		5,093		64,745
Dover Corp.		22,913		1,553,501
EVA Precision Industrial Holdings Ltd.		404,394		124,303
Joy Global, Inc.		678		64,573
Meritor, Inc.*		23,973		384,527
Nabtesco Corp.		5,800		140,625
Navistar International Corp.*		12,553		708,742
Parker Hannifin Corp.		15,975		1,433,596
Rational AG		449		118,334
Rotork PLC		3,404		92,115
SMC Corp.		400		72,067
SPX Corp.		7,757		641,194
				5,762,040
Marine 0.1%
Kawasaki Kisen Kaisha Ltd.		43,000		150,423
Mitsui O.S.K Lines Ltd.		31,229		168,055
				318,478
Professional Services 0.0%
Brunel International NV		1,933		85,273
Road & Rail 0.5%
Norfolk Southern Corp.		20,575		1,541,685
Trading Companies & Distributors 0.6%
JFE Shoji Holdings, Inc.		13,581		66,548
MISUMI Group, Inc.		5,366		138,946
Mitsubishi Corp.		58,967		1,477,415
Sumikin Bussan Corp.		27,841		67,586
				1,750,495
Transportation Infrastructure 0.0%
Koninklijke Vopak NV		2,560		125,449
Information Technology 9.4%
Communications Equipment 1.2%
Brocade Communications Systems, Inc.*		72,290		466,993
Cisco Systems, Inc.		37,759		589,418
Harris Corp.		1,867		84,127
Nokia Corp.		16,000		103,338
	Shares		Value ($)

QUALCOMM, Inc.		35,395		2,010,082
Riverbed Technology, Inc.*		8,971		355,162
Sycamore Networks, Inc.		2,491		55,400
				3,664,520
Computers & Peripherals 2.0%
Apple, Inc.*		10,432		3,501,709
EMC Corp.*		69,445		1,913,210
Hewlett-Packard Co.		13,344		485,722
				5,900,641
Electronic Equipment, Instruments & Components 0.2%
Cognex Corp.		2,280		80,781
E Ink Holdings, Inc.*		56,742		106,990
Itron, Inc.*		2,224		107,108
Kingboard Chemical Holdings Ltd.		19,661		91,659
Nippon Electric Glass Co., Ltd.		9,000		115,293
Star Micronics Co., Ltd.		5,833		69,175
Venture Corp., Ltd.		12,752		88,787
				659,793
Internet Software & Services 0.3%
Google, Inc. "A"*		1,288		652,217
Internet Initiative Japan, Inc.		23		89,156
Meetic*		879		19,072
NIC, Inc.		6,210		83,587
United Internet AG (Registered)		5,689		119,577
				963,609
IT Services 1.1%
Accenture PLC "A"		16,691		1,008,470
Cap Gemini		4,900		287,090
Cardtronics, Inc.*		5,271		123,605
Digital Garage, Inc.*		18		73,528
International Business Machines Corp.		4,928		845,398
VeriFone Systems, Inc.*		19,430		861,721
				3,199,812
Semiconductors & Semiconductor Equipment 1.1%
ARM Holdings PLC		13,511		127,781
EZchip Semiconductor Ltd.*		1,906		70,465
FSI International, Inc.*		14,306		39,198
Intel Corp.		101,555		2,250,459
Lam Research Corp.*		1,127		49,904
Skyworks Solutions, Inc.*		28,826		662,421
				3,200,228
Software 3.5%
Adobe Systems, Inc.*		10,005		314,657
Check Point Software Technologies Ltd.*		12,150		690,727
Concur Technologies, Inc.*		10,171		509,262
Dassault Systemes SA		16,200		1,379,308
Microsoft Corp.		94,287		2,451,462
NetQin Mobile, Inc. "A" (ADR)* (b)		2,799		15,394
Oracle Corp.		64,547		2,124,242
Rovi Corp.*		1,674		96,021
SAP AG		34,098		2,062,319
Solera Holdings, Inc.		11,561		683,949
TiVo, Inc.*		5,675		58,396
VanceInfo Technologies, Inc. (ADR)*		2,712		62,674
				10,448,411
	Shares		Value ($)
					��
Materials 2.8%
Chemicals 1.6%
Air Products & Chemicals, Inc.		12,865		1,229,637
Huntsman Corp.		68,938		1,299,481
Lanxess AG		3,200		262,343
Praxair, Inc.		8,859		960,227
STR Holdings, Inc.*		3,279		48,923
The Mosaic Co.		11,742		795,286
				4,595,897
Containers & Packaging 0.5%
Owens-Illinois, Inc.*		18,058		466,077
Sonoco Products Co.		29,658		1,054,045
				1,520,122
Metals & Mining 0.7%
Cliffs Natural Resources, Inc.		718		66,379
Freeport-McMoRan Copper & Gold, Inc.		27,432		1,451,153
Lynas Corp., Ltd.*		47,284		102,952
Newcrest Mining Ltd.		6,550		265,868
Northam Platinum Ltd.		7,994		50,310
Randgold Resources Ltd. (ADR)		921		77,410
Thompson Creek Metals Co., Inc.*		5,513		55,020
				2,069,092
Paper & Forest Products 0.0%
Schweitzer-Mauduit International, Inc.		1,793		100,677
Telecommunication Services 2.0%
Diversified Telecommunication Services 1.3%
AT&T, Inc.		46,605		1,463,863
CenturyLink, Inc.		36,937		1,493,363
Inmarsat PLC		14,600		130,329
TeliaSonera AB		115,800		849,507
				3,937,062
Wireless Telecommunication Services 0.7%
American Tower Corp. "A"*		19,137		1,001,439
Softbank Corp.		7,300		276,486
Vodafone Group PLC (ADR)		33,702		900,517
				2,178,442
Utilities 2.7%
Electric Utilities 2.0%
American Electric Power Co., Inc.		21,326		803,564
Duke Energy Corp.		37,361		703,508
Entergy Corp.		12,976		886,001
Exelon Corp.		25,175		1,078,497
FirstEnergy Corp.		29,293		1,293,286
Kyushu Electric Power Co., Inc.		8,100		146,057
Red Electrica Corporacion SA		4,600		277,965
Southern Co.		19,094		771,016
Tokyo Electric Power Co., Inc.		28,100		115,421
				6,075,315
Gas Utilities 0.1%
Snam Rete Gas SpA		50,800		300,737
Multi-Utilities 0.6%
Centrica PLC		27,800		144,256
GDF Suez		7,294		266,938
National Grid PLC		14,500		142,690
PG&E Corp.		25,175		1,058,105
				1,611,989
Total Common Stocks (Cost $130,132,762)				160,417,929

	Shares		Value ($)

Preferred Stocks 0.2%
Consumer Discretionary
Porsche Automobil Holding SE		4,100		325,220
Volkswagen AG		1,496		308,438
Total Preferred Stocks (Cost $571,209)				633,658

Warrants 0.0%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		80		2
Information Technology 0.0%
Kingboard Chemical Holdings Ltd., Expiration Date 10/31/2012*		3,400		1,770
Materials 0.0%
Hercules Trust II, Expiration Date 3/31/2029*		170		1,708
Total Warrants (Cost $30,283)				3,480

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

Corporate Bonds 6.2%
Consumer Discretionary 0.9%
AMC Entertainment, Inc.:
8.0%, 3/1/2014			35,000		35,087
8.75%, 6/1/2019			35,000		36,925
Asbury Automotive Group, Inc., 7.625%, 3/15/2017			35,000		34,738
Avis Budget Car Rental LLC, 8.25%, 1/15/2019			15,000		15,188
CanWest LP, 144A, 9.25%, 8/1/2015*			25,000		4,250
Carrols Corp., 9.0%, 1/15/2013			15,000		15,038
CBS Corp., 5.9%, 10/15/2040			270,000		258,426
DineEquity, Inc., 144A, 9.5%, 10/30/2018			10,000		10,850
DIRECTV Holdings LLC:
6.0%, 8/15/2040			530,000		537,364
6.35%, 3/15/2040			51,000		53,648
DISH DBS Corp.:
6.625%, 10/1/2014			40,000		42,100
7.125%, 2/1/2016			35,000		36,925
Fontainebleau Las Vegas Holdings LLC, 144A, 11.0%, 6/15/2015*			25,000		13
Great Canadian Gaming Corp., 144A, 7.25%, 2/15/2015			30,000		30,675
Home Depot, Inc.:
5.4%, 9/15/2040			125,000		119,190
5.875%, 12/16/2036			50,000		51,172
Mediacom Broadband LLC, 8.5%, 10/15/2015			20,000		20,500
NBCUniversal Media LLC, 144A, 5.95%, 4/1/2041			247,000		251,172
Penske Automotive Group, Inc., 7.75%, 12/15/2016			50,000		51,000
Sears Holdings Corp., 144A, 6.625%, 10/15/2018			10,000		9,275
TCI Communications, Inc., 8.75%, 8/1/2015			135,000		165,705
Time Warner, Inc.:
5.875%, 11/15/2016			147,000		168,027
6.2%, 3/15/2040			175,000		179,283
7.625%, 4/15/2031			175,000		209,961
		Principal Amount ($) (a)		Value ($)

Travelport LLC, 4.879%**, 9/1/2014			20,000		17,050
Unitymedia Hessen GmbH & Co., KG, 144A, 8.125%, 12/1/2017			100,000		106,250
Yum! Brands, Inc.:
3.875%, 11/1/2020			210,000		203,840
5.3%, 9/15/2019			65,000		69,867
					2,733,519
Consumer Staples 0.5%
Anheuser-Busch InBev Worldwide, Inc., 7.75%, 1/15/2019			500,000		629,022
CVS Caremark Corp., 5.75%, 5/15/2041			130,000		127,820
Kraft Foods, Inc., 5.375%, 2/10/2020			600,000		655,919
Kroger Co., 5.4%, 7/15/2040			110,000		105,703
North Atlantic Trading Co., 144A, 10.0%, 3/1/2012			108,750		106,847
SUPERVALU, Inc., 8.0%, 5/1/2016			10,000		10,200
					1,635,511
Energy 0.7%
BreitBurn Energy Partners LP, 8.625%, 10/15/2020			10,000		10,550
Bristow Group, Inc., 7.5%, 9/15/2017			30,000		31,425
DCP Midstream LLC, 144A, 9.75%, 3/15/2019			200,000		261,395
El Paso Corp., 7.25%, 6/1/2018			20,000		22,464
Enterprise Products Operating LLC, 6.125%, 10/15/2039			230,000		233,897
Kinder Morgan Energy Partners LP:
6.5%, 9/1/2039			50,000		51,919
7.3%, 8/15/2033			360,000		410,165
ONEOK Partners LP, 6.15%, 10/1/2016			201,000		231,280
Petrohawk Energy Corp., 7.875%, 6/1/2015			15,000		15,712
Plains All American Pipeline LP, 8.75%, 5/1/2019			300,000		377,406
Stone Energy Corp., 6.75%, 12/15/2014			25,000		24,875
Weatherford International Ltd., 5.125%, 9/15/2020			300,000		306,306
Williams Partners LP, 4.125%, 11/15/2020			253,000		242,853
					2,220,247
Financials 2.4%
American Express Co., 7.0%, 3/19/2018			390,000		458,966
Ashton Woods USA LLC, 144A, Step-up Coupon, 0% to 6/30/2012, 11.0% to 6/30/2015			36,400		22,022
Bank of America Corp., Series L, 7.625%, 6/1/2019			410,000		474,941
Bunge Ltd. Finance Corp., 4.1%, 3/15/2016			110,000		114,584
Calpine Construction Finance Co., LP, 144A, 8.0%, 6/1/2016			30,000		32,400
CIT Group, Inc.:
7.0%, 5/1/2015			355		355
144A, 7.0%, 5/4/2015			65,000		65,081
Citigroup, Inc., 5.375%, 8/9/2020			500,000		521,781
CNA Financial Corp., 5.75%, 8/15/2021			365,000		376,895
Fifth Third Bancorp., 5.45%, 1/15/2017			429,000		459,511
		Principal Amount ($) (a)		Value ($)

General Electric Capital Corp., 5.3%, 2/11/2021			185,000		192,500
Hartford Financial Services Group, Inc., 5.95%, 10/15/2036			150,000		141,242
JPMorgan Chase & Co., 2.6%, 1/15/2016			700,000		690,360
KeyCorp, 5.1%, 3/24/2021			250,000		254,623
Lincoln National Corp., 8.75%, 7/1/2019			190,000		239,761
MetLife, Inc.:
6.75%, 6/1/2016			113,000		131,527
7.717%, 2/15/2019			250,000		302,606
Morgan Stanley:
3.45%, 11/2/2015			45,000		44,576
5.75%, 1/25/2021			260,000		263,076
Nationwide Financial Services, Inc., 144A, 5.375%, 3/25/2021			119,000		119,528
Navios Maritime Acquisition Corp., 8.625%, 11/1/2017			10,000		9,850
Nielsen Finance LLC, 144A, 7.75%, 10/15/2018			10,000		10,500
PNC Bank NA, 6.875%, 4/1/2018			300,000		353,594
Prudential Financial, Inc.:
Series B, 5.1%, 9/20/2014			100,000		108,718
6.2%, 1/15/2015			100,000		111,954
7.375%, 6/15/2019			30,000		35,577
Royal Bank of Scotland PLC, 6.125%, 1/11/2021			210,000		215,274
Santander US Debt SA Unipersonal, 144A, 2.991%, 10/7/2013			500,000		498,862
SunTrust Banks, Inc., 3.6%, 4/15/2016			98,000		98,951
The Goldman Sachs Group, Inc., 6.15%, 4/1/2018			400,000		435,337
Tropicana Entertainment LLC, 9.625%, 12/15/2014*			75,000		38
Wells Fargo & Co., 4.6%, 4/1/2021			310,000		311,721
					7,096,711
Health Care 0.5%
Amgen, Inc., 5.65%, 6/15/2042			89,000		89,144
Express Scripts, Inc.:
6.25%, 6/15/2014			250,000		281,531
7.25%, 6/15/2019			320,000		382,741
HCA, Inc., 8.5%, 4/15/2019			10,000		11,050
McKesson Corp., 4.75%, 3/1/2021			200,000		207,535
Quest Diagnostics, Inc.:
4.7%, 4/1/2021			300,000		307,091
6.4%, 7/1/2017			250,000		288,443
					1,567,535
Industrials 0.3%
Actuant Corp., 6.875%, 6/15/2017			20,000		20,450
ARAMARK Corp., 8.5%, 2/1/2015			10,000		10,388
BE Aerospace, Inc., 8.5%, 7/1/2018			50,000		54,562
Belden, Inc., 7.0%, 3/15/2017			25,000		25,625
Cenveo Corp., 144A, 10.5%, 8/15/2016			10,000		9,825
Congoleum Corp., 9.0%, 12/31/2017 (PIK)			62,700		40,755
Corrections Corp. of America, 7.75%, 6/1/2017			10,000		10,888
CSX Corp.:
6.15%, 5/1/2037			150,000		160,621
6.25%, 3/15/2018			190,000		219,228
		Principal Amount ($) (a)		Value ($)

Owens Corning, Inc., 9.0%, 6/15/2019			10,000		11,944
Republic Services, Inc., 5.7%, 5/15/2041			155,000		151,314
United Rentals North America, Inc., 10.875%, 6/15/2016			35,000		39,156
					754,756
Information Technology 0.3%						��
Alcatel-Lucent USA, Inc., 6.45%, 3/15/2029			30,000		27,000
Applied Materials, Inc., 5.85%, 6/15/2041			260,000		263,713
eBay, Inc., 1.625%, 10/15/2015			500,000		488,565
MasTec, Inc., 7.625%, 2/1/2017			35,000		35,613
Vangent, Inc., 9.625%, 2/15/2015			15,000		15,150
					830,041
Materials 0.3%
Appleton Papers, Inc., 11.25%, 12/15/2015			15,000		15,150
Crown Americas LLC, 7.625%, 5/15/2017			10,000		10,713
Domtar Corp., 10.75%, 6/1/2017			20,000		26,025
Dow Chemical Co., 4.25%, 11/15/2020			185,000		180,552
GEO Specialty Chemicals, Inc.:
7.5%, 3/31/2015 (PIK)			209,283		192,540
10.0%, 3/31/2015			206,080		204,019
Graphic Packaging International, Inc., 9.5%, 6/15/2017			30,000		32,850
NewMarket Corp., 7.125%, 12/15/2016			65,000		67,763
Owens-Brockway Glass Container, Inc., 7.375%, 5/15/2016			10,000		10,875
Radnor Holdings Corp., 11.0%, 3/15/2010*			40,000		4
Silgan Holdings, Inc., 7.25%, 8/15/2016			20,000		21,100
Wolverine Tube, Inc., 15.0%, 3/31/2012 (PIK)*			43,120		20,805
					782,396
Telecommunication Services 0.1%
American Tower Corp., 7.25%, 5/15/2019			175,000		197,429
Cincinnati Bell, Inc., 8.375%, 10/15/2020			20,000		19,950
Cricket Communications, Inc., 10.0%, 7/15/2015			50,000		53,875
ERC Ireland Preferred Equity Ltd., 144A, 8.42%**, 2/15/2017 (PIK)	EUR		112,944		819
Verizon Communications, Inc., 4.6%, 4/1/2021			116,000		119,688
West Corp., 144A, 8.625%, 10/1/2018			10,000		10,100
Windstream Corp., 7.0%, 3/15/2019			25,000		25,250
					427,111
Utilities 0.2%
AES Corp.:
8.0%, 10/15/2017			35,000		37,100
8.0%, 6/1/2020			30,000		31,950
DTE Energy Co., 7.625%, 5/15/2014			81,000		93,496
FirstEnergy Solutions Corp., 6.8%, 8/15/2039			234,000		243,330
		Principal Amount ($) (a)		Value ($)

Sempra Energy, 6.5%, 6/1/2016			135,000		156,342
					562,218
Total Corporate Bonds (Cost $18,045,716)					18,610,045

Asset-Backed 0.5%
Automobile Receivables 0.1%
Ford Credit Auto Owner Trust, "B", Series 2007-B, 5.69%, 11/15/2012			379,000		388,109
Student Loans 0.4%
Nelnet Student Loan Trust:
"A1", Series 2007-1, 0.267%**, 11/27/2018			543,285		536,162
"A4", Series 2006-1, 0.349%**, 11/23/2022			675,000		662,531
					1,198,693
Total Asset-Backed (Cost $1,579,235)					1,586,802

Mortgage-Backed Securities Pass-Throughs 5.6%
Federal Home Loan Mortgage Corp.:
4.0%, 8/1/2039			1,702,881		1,709,600
6.0%, 3/1/2038			32,027		35,172
Federal National Mortgage Association:
3.193%**, 8/1/2037			158,426		165,669
3.5%, 8/1/2025 (c)			2,275,000		2,316,234
4.0%, 5/1/2039			1,674,953		1,683,917
4.5%, with various maturities from 9/1/2035 until 5/1/2041 (c)			3,544,157		3,668,905
5.0%, with various maturities from 7/1/2036 until 3/1/2040 (c)			3,708,897		3,937,988
6.0%, with various maturities from 1/1/2024 until 8/1/2037			1,845,748		2,037,918
6.5%, with various maturities from 5/1/2017 until 1/1/2038			49,434		54,819
8.0%, 9/1/2015			58,203		63,164
Government National Mortgage Association, 4.5%, 6/1/2039 (c)			875,000		923,467
Total Mortgage-Backed Securities Pass-Throughs (Cost $16,549,579)					16,596,853

Commercial Mortgage-Backed Securities 2.6%
Banc of America Commercial Mortgage, Inc.:
"A5A", Series 2005-4, 4.933%, 7/10/2045			575,000		613,362
"A4", Series 2006-3, 5.889%, 7/10/2044			750,000		824,697
Bear Stearns Commercial Mortgage Securities, Inc., "A4", Series 2007-PW18, 5.7%, 6/11/2050			400,000		434,777
Citigroup/Deutsche Bank Commercial Mortgage Trust, "A5", Series 2006-CD3, 5.617%, 10/15/2048			350,000		379,900
Commercial Mortgage Pass-Through Certificates, "A4", Series 2007-C9, 6.008%**, 12/10/2049			550,000		604,109
		Principal Amount ($) (a)		Value ($)

Greenwich Capital Commercial Funding Corp., "A4", Series 2007-GG9, 5.444%, 3/10/2039			550,000		589,983
GS Mortgage Securities Corp. II, "A4A", Series 2005-GG4, 4.751%, 7/10/2039			750,000		799,459
LB-UBS Commercial Mortgage Trust:
"A2", Series 2005-C2, 4.821%, 4/15/2030			7,765		7,771
"A4", Series 2006-C1, 5.156%, 2/15/2031			1,250,000		1,352,457
"A3", Series 2006-C7, 5.347%, 11/15/2038			700,000		753,542
"A4", Series 2007-C6, 5.858%, 7/15/2040			260,000		282,086
Wachovia Bank Commercial Mortgage Trust, "A4", Series 2005-C22, 5.44%**, 12/15/2044			885,000		959,208
Total Commercial Mortgage-Backed Securities (Cost $7,444,405)					7,601,351

Collateralized Mortgage Obligations 0.2%
Federal Home Loan Mortgage Corp., "H", Series 2278, 6.5%, 1/15/2031			5,380		6,047
Government National Mortgage Association:
"IU", Series 2010-164, Interest Only, 2.0%, 12/20/2013			1,640,757		63,431
"PI", Series 2010-84, Interest Only, 4.5%, 2/20/2033			3,392,789		319,157
"IA", Series 2010-58, Interest Only, 5.0%, 3/20/2039			1,054,753		226,735
Total Collateralized Mortgage Obligations (Cost $614,601)					615,370

Government & Agency Obligations 10.1%
Sovereign Bonds 2.8%
Federal Republic of Germany-Inflation Linked Note, 2.25%, 4/15/2013	EUR		219,896		329,054
Government of Canada-Inflation Linked Bond, 4.0%, 12/1/2031	CAD		275,274		444,869
Government of France-Inflation Linked Bonds:
1.0%, 7/25/2017	EUR		247,523		364,724
2.25%, 7/25/2020	EUR		645,266		1,022,474
3.15%, 7/25/2032	EUR		496,877		908,248
Government of Japan-Inflation Linked Bond, Series 9, 1.1%, 9/10/2016	JPY		41,790,000		537,526
Government of Sweden-Inflation Linked Bond, Series 3105, 3.5%, 12/1/2015	SEK		2,650,000		572,508
Republic of Italy-Inflation Linked Bond, 2.1%, 9/15/2017	EUR		89,394		126,717
Republic of Poland, 6.375%, 7/15/2019			100,000		114,250
State of Qatar, 144A, 6.4%, 1/20/2040			100,000		110,500
		Principal Amount ($) (a)		Value ($)

United Kingdom Treasury-Inflation Linked Bonds:
1.125%, 11/22/2037	GBP		556,171		996,797
1.875%, 11/22/2022	GBP		524,147		964,807
2.0%, 1/26/2035	GBP		190,000		529,712
2.5%, 8/16/2013	GBP		75,000		345,237
2.5%, 7/26/2016	GBP		112,000		593,495
2.5%, 4/16/2020	GBP		71,000		381,293
					8,342,211
US Treasury Obligations 7.3%
US Treasury Bill, 0.135%***, 9/15/2011 (d)			221,000		220,991
US Treasury Bonds:
4.75%, 2/15/2037			1,500,000		1,604,766
5.375%, 2/15/2031			1,000,000		1,172,031
7.125%, 2/15/2023			2,800,000		3,792,250
US Treasury Inflation-Indexed Bonds:
2.125%, 2/15/2040			88,429		96,229
2.375%, 1/15/2025			799,232		918,618
3.625%, 4/15/2028			618,657		814,645
3.875%, 4/15/2029			218,850		299,875
US Treasury Inflation-Indexed Notes:
1.875%, 7/15/2015			190,743		210,324
2.375%, 1/15/2017			752,632		858,588
2.5%, 7/15/2016			495,476		567,011
3.0%, 7/15/2012			133,814		139,627
US Treasury Notes:
1.0%, 1/15/2014			605,000		610,341
1.75%, 1/31/2014			8,000,000		8,221,872
3.125%, 5/15/2019			500,000		516,250
4.5%, 11/15/2015			1,500,000		1,693,359
					21,736,777
Total Government & Agency Obligations (Cost $28,069,461)					30,078,988

Loan Participations and Assignments 0.0%
Senior Loans**
Hawker Beechcraft Acquisition Co., LLC:
Term Loan, 2.186%, 3/26/2014			21,604		18,234
Letter of Credit, 2.246%, 3/26/2014			1,336		1,127
Total Loan Participations and Assignments (Cost $22,428)					19,361

Municipal Bonds and Notes 0.3%
California, University Revenues, Build America Bonds, 5.946%, 5/15/2045 (e)			125,000		117,648
Chicago, IL, Transit Authority, Sales Tax Receipts Revenue, Build America Bonds, Series B, 6.2%, 12/1/2040 (e)			185,000		186,894
		Principal Amount ($) (a)		Value ($)

Kentucky, Asset/Liability Commission, General Fund Revenue, 3.165%, 4/1/2018 (e)			500,000		502,285
Louisville & Jefferson County, KY, Metropolitan Sewer District & Drain System, Build America Bonds, 6.25%, 5/15/2043 (e)			150,000		157,269
Total Municipal Bonds and Notes (Cost $960,265)					964,096

Preferred Securities 0.1%
Financials 0.1%
Farm Credit Bank of Texas, Series 1, 7.561%, 12/15/2013 (f)			218,000		228,440
Materials 0.0%
Hercules, Inc., 6.5%, 6/30/2029			40,000		33,800
Total Preferred Securities (Cost $243,668)					262,240

	Units		Value ($)

Other Investments 0.0%
Consumer Discretionary
AOT Bedding Super Holdings LLC* (Cost $2,000)		2		2,000

	Shares		Value ($)

Exchange-Traded Funds 13.5%
iShares JPMorgan USD Emerging Markets Bond Fund		40,448		4,421,775
iShares Russell 2000 Value Index Fund		81,296		5,967,939
SPDR Barclays Capital International Treasury Bond		71,890		4,440,645
Vanguard MSCI Emerging Markets		185,417		9,014,975
Vanguard Total Bond Market Fund		200,217		16,249,612
Total Exchange-Traded Funds (Cost $33,830,689)				40,094,946

Securities Lending Collateral 0.0%
Daily Assets Fund Institutional, 0.13% (g) (h) (Cost $14,479)		14,479		14,479

Cash Equivalents 8.1%
Central Cash Management Fund, 0.11% (g) (Cost $24,016,675)		24,016,675		24,016,675

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $262,127,455)+		101.2			301,518,273
Other Assets and Liabilities, Net		(1.2	)		(3,501,249	)
Net Assets		100.0			298,017,024

The following table represents bonds that are in default:

	Coupon			Maturity Date	Principal Amount ($)			Acquisition Cost ($)		Value ($)
CanWest LP*		9.25	%	8/1/2015		25,000	USD		25,000		4,250
Fontainebleau Las Vegas Holdings LLC*		11.0	%	6/15/2015		25,000	USD		25,000		13
Radnor Holdings Corp.*		11.0	%	3/15/2010		40,000	USD		25,775		4
Tropicana Entertainment LLC*		9.625	%	12/15/2014		75,000	USD		55,245		38
Wolverine Tube, Inc.*		15.0	%	3/31/2012		43,120	USD		43,120		20,805
									174,140		25,110

* Non-income producing security. In the case of a bond, generally denotes that the issuer has defaulted on the payment of principal or interest or has filed for bankruptcy.

** These securities are shown at their current rate as of June 30, 2011. Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the US Treasury bill rate.

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

+ The cost for federal income tax purposes was $265,206,582. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $36,311,691. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $42,887,291 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $6,575,600.

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

(b) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $13,849, which is 0.0% of net assets.

(d) At June 30, 2011, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(e) Taxable issue.

(f) Date shown is call date; not a maturity date for the perpetual preferred securities.

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

(h) 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

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.

MSCI: Morgan Stanley Capital International

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

REIT: Real Estate Investment Trust

SPDR: Standard & Poor's 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, 2011, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year Australian Treasury Bond	AUD	9/15/2011		17		1,933,777		(4,383	)
10 Year Canadian Government Bond	CAD	9/21/2011		31		3,985,370		(28,928	)
10 Year Japanese Government Bond	JPY	9/8/2011		12		21,023,290		10,434
2 Year US Treasury Note	USD	9/30/2011		51		11,186,531		26,297
S&P 500 E-Mini Index	USD	9/16/2011		20		1,315,500		30,950
United Kingdom Long Gilt Bond	GBP	9/28/2011		4		771,339		(3,964	)
Total net unrealized appreciation								30,406

At June 30, 2011, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year US Treasury Note	USD	9/21/2011		189		23,120,016		(29,707	)
30 Year US Treasury Bond	USD	9/21/2011		20		2,460,625		63,750
Federal Republic of Germany Euro-Bund	EUR	9/8/2011		30		5,458,943		(16,097	)
Federal Republic of Germany Euro-Schatz	EUR	9/8/2011		209		32,597,907		(59,101	)
Total net unrealized depreciation								(41,155	)

As of June 30, 2011, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver

In Exchange For

Settlement Date

Unrealized Appreciation ($)

Counterparty

USD

2,654,108

EUR

1,860,000

7/19/2011

41,697

UBS AG

USD

8,833,594

AUD

8,320,000

7/19/2011

67,864

UBS AG

USD

346,778

CAD

340,000

7/19/2011

5,581

UBS AG

USD

2,860,037

NZD

3,540,000

7/19/2011

68,970

UBS AG

USD

9,182,782

SEK

59,000,000

7/19/2011

134,434

UBS AG

Total unrealized appreciation

318,546

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
CAD	5,530,000	USD	5,681,322	7/19/2011		(49,693	)	UBS AG
CHF	11,720,000	USD	13,786,362	7/19/2011		(155,147	)	UBS AG
JPY	170,200,000	USD	2,106,631	7/19/2011		(7,724	)	UBS AG
NOK	12,670,000	USD	2,296,441	7/19/2011		(49,149	)	UBS AG
AUD	4,280,000	USD	4,526,802	7/19/2011		(52,313	)	UBS AG
EUR	1,940,000	USD	2,764,894	7/19/2011		(46,860	)	UBS AG
USD	625,334	JPY	50,210,000	7/19/2011		(1,587	)	UBS AG
USD	4,624,619	GBP	2,860,000	7/19/2011		(35,564	)	UBS AG
NZD	9,600,000	USD	7,784,928	7/19/2011		(158,143	)	UBS AG
Total unrealized depreciation						(556,180	)

Currency Abbreviations

AUD Australian Dollar

CAD Canadian Dollar

CHF Swiss Franc

EUR Euro

GBP British Pound

JPY Japanese Yen

NOK Norwegian Krone

NZD New Zealand Dollar

SEK Swedish Krona

USD United States Dollar

For information on the Fund's policy and additional disclosures regarding futures 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

Common Stocks and/or Other Equity Investments (i) Consumer Discretionary	$	13,588,975		$	3,005,435		$	2,008	$	16,596,418
Consumer Staples		11,794,294			3,377,152			—		15,171,446
Energy		17,201,783			2,771,168			—		19,972,951
Financials		10,839,081			8,616,327			—		19,455,408
Health Care		16,142,475			3,182,918			—		19,325,393
Industrials		14,193,538			5,910,088			0		20,103,626
Information Technology		23,303,941			4,734,843			—		28,038,784
Materials		7,604,315			681,473			1,708		8,287,496
Telecommunication Services		4,859,182			1,256,322			—		6,115,504
Utilities		6,593,977			1,394,064			—		7,988,041
Fixed Income Investments (i) Corporate Bonds		—			18,168,477			441,568		18,610,045
Asset Backed		—			1,586,802			—		1,586,802
Mortgage-Backed Securities Pass-Throughs		—			16,596,853			—		16,596,853
Commercial Mortgage-Backed Securities		—			7,601,351			—		7,601,351
Collateralized Mortgage Obligations		—			615,370			—		615,370
Government & Agency Obligations		—			30,078,988			—		30,078,988
Loan Participations and Assignments		—			19,361			—		19,361
Municipal Bonds and Notes		—			964,096			—		964,096
Preferred Securities		—			262,240			—		262,240
Other Investments		—			—			2,000		2,000
Exchange-Traded Funds		40,094,946			—			—		40,094,946
Short-Term Investments (i)		24,031,154			—			—		24,031,154
Derivatives (j)		131,431			318,546			—		449,977
Total	$	190,379,092		$	111,141,874		$	447,284	$	301,968,250
Liabilities
Derivatives (j)	$	(142,180	)	$	(556,180	)	$	—	$	(698,360	)
Total	$	(142,180	)	$	(556,180	)	$	—	$	(698,360	)

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(i) See Investment Portfolio for additional detailed categorizations.

(j) Derivatives include unrealized appreciation (depreciation) on open futures contracts and forward foreign currency exchange 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:

	Common Stocks and/or Other Equity Investments
	Consumer Discretionary		Industrials		Materials			Corporate Bonds			Other Investments		Total
Balance as of December 31, 2010	$	39	$	0	$	1,934		$	414,996		$	2,000	$	418,969
Realized gains (loss)		—		—		—			(121,142	)		—		(121,142	)
Change in unrealized appreciation (depreciation)		947		0		(226	)		145,989			0		146,710
Amortization premium/discount		—		—		—			1,725			—		1,725
Purchases		1,022		—		—			—			—		1,022
(Sales)		—		—		—			0			—		0
Transfers into Level 3		—		—		—			—			—		—
Transfers (out) of Level 3		—		—		—			—			—		—
Balance as of June 30, 2011	$	2,008	$	0	$	1,708		$	441,568		$	2,000	$	447,284
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2011	$	947	$	0	$	(226	)	$	25,334		$	0	$	26,055

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

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $238,096,301) — including $13,849 of securities loaned	$	277,487,119
Investment in Daily Assets Fund Institutional (cost $14,479)*		14,479
Investment in Central Cash Management Fund (cost $24,016,675)		24,016,675
Total investments in securities, at value (cost $262,127,455)		301,518,273
Cash		88,040
Foreign currency, at value (cost $489,939)		493,467
Deposits with broker for futures contracts		1,305,784
Cash held as collateral for forward foreign currency exchange contracts		1,770,000
Receivable for investments sold		1,410,273
Receivable for Fund shares sold		27,049
Dividends receivable		256,568
Interest receivable		690,678
Unrealized appreciation on forward foreign currency exchange contracts		318,546
Foreign taxes recoverable		67,705
Other assets		2,115
Total assets		307,948,498
Liabilities
Payable upon return of securities loaned		14,479
Payable for investments purchased		571,637
Payable for investments purchased — when issued/delayed delivery securities		8,279,884
Payable for Fund shares redeemed		131,481
Payable for daily variation margin on futures contracts		79,166
Unrealized depreciation on forward foreign currency exchange contracts		556,180
Deferred foreign taxes payable		1,570
Accrued management fee		88,960
Other accrued expenses and payables		208,117
Total liabilities		9,931,474
Net assets, at value	$	298,017,024
Net Assets Consist of
Undistributed net investment income		2,637,225
Net unrealized appreciation (depreciation) on: Investments (net of deferred foreign taxes of $1,570)		39,389,248
Futures		(10,749	)
Foreign currency		(220,126	)
Accumulated net realized gain (loss)		(42,805,158	)
Paid-in capital		299,026,584
Net assets, at value	$	298,017,024
Class A Net Asset Value, offering and redemption price per share ($298,017,024 ÷ 13,194,914 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	22.59

* Represents collateral of securities loaned.

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $68,243)	$	2,129,907
Interest		1,666,450
Income distributions — Central Cash Management Fund		18,589
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		18,539
Total income		3,833,485
Expenses: Management fee		542,016
Administration fee		151,513
Services to shareholders		1,976
Custodian fee		73,390
Professional fees		45,493
Reports to shareholders		37,925
Trustees' fees and expenses		6,247
Other		49,086
Total expenses		907,646
Net investment income		2,925,839
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments (net of foreign taxes of $869)		12,139,313
Swap contracts		267
Futures		(18,311	)
Foreign currency		(772,384	)
		11,348,885
Change in net unrealized appreciation (depreciation) on: Investments (net of deferred foreign taxes credit of $4,028)		(3,244,891	)
Futures		144,929
Foreign currency		(300,241	)
		(3,400,203	)
Net gain (loss)		7,948,682
Net increase (decrease) in net assets resulting from operations	$	10,874,521

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	2,925,839		$	5,817,509
Net realized gain (loss)		11,348,885			18,663,004
Change in net unrealized appreciation (depreciation)		(3,400,203	)		7,951,045
Net increase (decrease) in net assets resulting from operations		10,874,521			32,431,558
Distributions to shareholders from: Net investment income: Class A		(4,612,028	)		(9,827,154	)
Total distributions		(4,612,028	)		(9,827,154	)
Fund share transactions: Class A Proceeds from shares sold		2,574,414			4,966,734
Shares issued to shareholders in reinvestment of distributions		4,612,028			9,827,154
Payments for shares redeemed		(23,704,106	)		(48,195,061	)
Net increase (decrease) in net assets from Class A share transactions		(16,517,664	)		(33,401,173	)
Increase (decrease) in net assets		(10,255,171	)		(10,796,769	)
Net assets at beginning of period		308,272,195			319,068,964
Net assets at end of period (including undistributed net investment income of $2,637,225 and $4,323,414, respectively)	$	298,017,024		$	308,272,195
Other Information
Class A Shares outstanding at beginning of period		13,930,205			15,551,177
Shares sold		113,816			238,427
Shares issued to shareholders in reinvestment of distributions		200,697			467,070
Shares redeemed		(1,049,804	)		(2,326,469	)
Net increase (decrease) in Class A shares		(735,291	)		(1,620,972	)
Shares outstanding at end of period		13,194,914			13,930,205

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

Financial Highlights

						Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period		$	22.13			$	20.52		$	17.35		$	24.81		$	24.46		$	22.75
Income (loss) from investment operations: Net investment incomea			.22				.39			.44			.61			.74			.69	c
Net realized and unrealized gain (loss)			.59				1.88			3.43			(7.20	)		.42			1.60
Total from investment operations			.81				2.27			3.87			(6.59	)		1.16			2.29
Less distributions from: Net investment income			(.35	)			(.66	)		(.70	)		(.87	)		(.81	)		(.58	)
Net asset value, end of period		$	22.59			$	22.13		$	20.52		$	17.35		$	24.81		$	24.46
Total Return (%)			3.62	**			11.22			23.43			(27.33	)b		4.84	b		10.24	b,c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			298				308			319			307			528			600
Ratio of expenses before expense reductions (%)			.60	*			.65			.60			.64			.52			.55
Ratio of expenses after expense reductions (%)			.60	*			.65			.60			.62			.51			.51
Ratio of net investment income (%)			1.93	*			1.89			2.40			2.83			3.00			2.99	c
Portfolio turnover rate (%)			53	**			203			207			263			199			108
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.024 per share and an increase in the ratio of net investment income of 0.10%. Excluding this non-recurring income, total return would have been 0.10% lower. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Balanced VIP (the "Fund") is a diversified series of DWS 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 (US or foreign) or over-the-counter market on which they trade and are categorized as Level 1 securities. 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. 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 and senior loans are valued by independent pricing services approved by the Fund's Board. If the pricing services are unable to provide valuations, securities are valued at the most recent bid quotation or evaluated price, as applicable, obtained from one or more broker-dealers. 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 and other data, as well as broker quotes. These securities are generally categorized as Level 2.

Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost, which approximates value, and are 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.

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 used 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.

Foreign Currency Translations. The books and records of the Fund are maintained in US dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into US dollars at the prevailing exchange rates at period end. Purchases and sales of investment securities, income and expenses are translated into US 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 US 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.

Securities Lending. The Fund lends securities to certain financial institutions. The Fund retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the issuer of 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. 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.

Loan Participations and Assignments. Senior loans are portions of loans originated by banks and sold in pieces to investors. These US dollar-denominated fixed and floating rate loans ("Loans") in which the Fund invests, are arranged through private negotiations between the borrower and one or more financial institutions ("Lenders"). 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 only with 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, nor 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. All Senior Loans involve interest rate risk, liquidity risk and credit risk, including the potential default or insolvency of the borrower.

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.

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.

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, based on the Fund's understanding of the tax rules and rates related to income, gains and transactions for the foreign jurisdictions in which it invests, the Fund will provide for foreign taxes, and where appropriate, deferred foreign taxes.

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $51,528,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($6,483,000) and December 31, 2017 ($45,045,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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 of net investment income of the Fund, if any, are made 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 gains 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 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 and may include proceeds from litigation. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes, with the exception of securities in default of principal.

B. Derivative Instruments

Credit Default Swap Contracts. A credit default swap is a contract between a buyer and a seller of protection against pre-defined credit events for the reference entity. For the six months ended June 30, 2011, the Fund bought credit default swap contracts to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer, or to hedge the risk of default on Fund securities. As a seller in the credit default swap contract, 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 US 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 contract 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 swap contracts in order to hedge against the risk of a credit event on debt securities, in which case the Fund functions as the counterparty referenced above. This involves the risk that the contract 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 contract 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 swap contracts sold by the Fund.

The value of the credit default swap is adjusted daily and the change in value, if any, is recorded daily as unrealized appreciation or depreciation in the Statement of Assets and Liabilities. 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. Under the terms of the credit default swap contracts, the Fund receives or makes quarterly 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 contract are recognized, net of a proportional amount of the upfront payment, as realized gains or losses in the Statement of Operations.

There were no open credit default swap contracts as of June 30, 2011. For the six months ended June 30, 2011, the investment in credit default swap contracts purchased had a total notional value generally indicative of a range from $0 to approximately $15,000.

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, 2011, the Fund used futures contracts to gain exposure to different parts of the yield curve while managing overall duration, and to gain an exposure to a particular asset class or to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the stock market. In addition, the Fund seeks to enhance returns by employing a global tactical asset allocation overlay strategy by entering into futures contracts on fixed-income securities, including on bond and equity indices. For the six months ended June 30, 2011, as part of this strategy, the Fund used futures contracts to attempt to take advantage of inefficiencies within the global equity and bond markets.

Futures contracts are valued at the most recent settlement price. 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.

A summary of the open futures contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $40,216,000 to $118,748,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $55,224,000 to $95,480,000.

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, 2011, 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. The Fund also entered into forward currency contracts as part of its global tactical asset allocation overlay strategy.

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, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the investment in forward currency contracts short vs. US dollars had a total contract value generally indicative of a range from approximately $21,862,000 to $38,947,000, and the investment in forward currency contracts long vs. US dollars had a total contract value generally indicative of a range from approximately $29,127,000 to $33,480,000.

The following tables summarize the value of the Fund's derivative instruments held as of June 30, 2011 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivatives	Forward Contracts		Future Contracts		Total
Equity Contracts (a)	$	—	$	30,950	$	30,950
Interest Rate Contracts (a)		—		100,481		100,481
Foreign Exchange Contracts (b)		318,546		—		318,546
	$	318,546	$	131,431	$	449,977

Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts:

(a) Includes cumulative appreciation of future contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

(b) Unrealized appreciation on forward foreign currency exchange contracts

Liability Derivatives	Forward Contracts			Futures Contracts			Total
Interest Rate Contracts (a)	$	—		$	(142,180	)	$	(142,180	)
Foreign Exchange Contracts (b)		(556,180	)		—			(556,180	)
	$	(556,180	)	$	(142,180	)	$	(698,360	)

Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts:

(a) Includes cumulative depreciation of future contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

(b) 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, 2011 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Forward Contracts			Futures Contracts			Swap Contracts		Total
Equity Contracts (a)	$	—		$	22,771		$	—	$	22,771
Interest Rate Contracts (a)		—			(41,082	)		—		(41,082	)
Credit Contracts (a)		—			—			267		267
Foreign Exchange Contracts (b)		(758,134	)		—			—		(758,134	)
	$	(758,134	)	$	(18,311	)	$	267	$	(776,178	)

Each of the above derivatives is located in the following Statement of Operations accounts:

(a) Net realized gain (loss) from futures and swap contracts, 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)	Forward Contracts			Futures Contracts			Total
Equity Contracts (a)	$	—		$	(81,898	)	$	(81,898	)
Interest Rate Contracts (a)		—			226,827			226,827
Foreign Exchange Contracts (b)		(320,281	)		—			(320,281	)
	$	(320,281	)	$	144,929		$	(175,352	)

Each of the above derivatives is located in the following Statement of Operations accounts:

(a) Change in net unrealized appreciation (depreciation) on futures

(b) Change in net unrealized appreciation (depreciation) on foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

C. Purchases and Sales of Securities

During the six months ended June 30, 2011, purchases and sales of investment transactions (excluding short-term investments and US Treasury obligations) aggregated $142,907,195 and $170,965,529, respectively. Purchases and sales of US Treasury obligations aggregated $8,090,148 and $7,844,852, respectively.

D. Related Parties

QS Investors, LLC ("QS Investors") acts as an investment subadvisor to the Fund. QS Investors renders strategic asset allocation services and manages the portion of assets allocated to the Fund's global tactical asset allocation overlay strategy. QS Investors is paid by the Advisor for the services QS Investors provides to the Fund.

Pursuant to a written contract with the Advisor, Deutsche Asset Management International GmbH ("DeAMi"), a direct, wholly owned subsidiary of Deutsche Bank AG, serves as a subadvisor to the Fund and is responsible for portfolio management of a portion of the large cap value allocation of the Fund. DeAMi is paid for its services by the Advisor from its fee as Investment Advisor to the Fund.

$0-$250 million	.370	%
Next $750 million	.345	%
Over $1 billion	.310	%

Accordingly, for the six months ended June 30, 2011, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.36% of the Fund's average daily net assets.

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

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 prices of their debt securities can be more vulnerable to bad economic news, or even the expectation of bad news, than investment-grade debt securities. 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, 2011, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding shares of the Fund, each owning 45%, 22% and 14%.

G. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $450 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at June 30, 2011.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2BAL-3 (R-023288-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Blue Chip VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

12 Statement of Assets and Liabilities

12 Statement of Operations

13 Statement of Changes in Net Assets

15 Financial Highlights

17 Notes to Financial Statements

21 Proxy Voting

22 Summary of Management Fee Evaluation by Independent Fee Consultant

Any Fund that focuses in a particular segment of the market will generally be more volatile than a Fund that invests more broadly. Stocks may decline in value. 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, 2011

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 are 0.76% and 1.02% 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 DWS Blue Chip VIP
[] DWS Blue Chip VIP — Class A [] Russell 1000® 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 measures the performance of the 3,000 largest US companies based on total market capitalization. The Russell 1000 Index represents approximately 92% of the total market capitalization of the Russell 3000 Index. 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
DWS Blue Chip VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,850		$	13,221		$	11,441		$	11,692		$	14,038
Class A	Average annual total return		8.50	%		32.21	%		4.59	%		3.18	%		3.45	%
Russell 1000 Index	Growth of $10,000	$	10,637		$	13,193		$	11,145		$	11,763		$	13,716
Russell 1000 Index	Average annual total return		6.37	%		31.93	%		3.68	%		3.30	%		3.21	%
DWS Blue Chip VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Class*
Class B	Growth of $10,000	$	10,839		$	13,184		$	11,389		$	11,556		$	17,544
Class B	Average annual total return		8.39	%		31.84	%		4.43	%		2.93	%		6.45	%
Russell 1000 Index	Growth of $10,000	$	10,637		$	13,193		$	11,145		$	11,763		$	16,703
Russell 1000 Index	Average annual total return		6.37	%		31.93	%		3.68	%		3.30	%		5.87	%

The growth of $10,000 is cumulative.

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

* The Fund commenced offering Class B shares on July 1, 2002. Index returns began on June 30, 2002.

Information About Your Fund's Expenses

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, 2011
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,085.00	$	1,083.90
Expenses Paid per $1,000*	$	3.93	$	5.32
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,021.03	$	1,019.69
Expenses Paid per $1,000*	$	3.81	$	5.16

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Blue Chip VIP	.76%		1.03%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Common Stocks	99%	99%
Cash Equivalents*	1%	1%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/11	12/31/10

Information Technology	17%	19%
Financials	15%	17%
Health Care	15%	14%
Industrials	12%	12%
Energy	12%	11%
Consumer Discretionary	12%	11%
Consumer Staples	7%	7%
Materials	6%	5%
Telecommunication Services	2%	2%
Utilities	2%	2%
	100%	100%

* In order to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the market, the Fund invests in futures contracts.

Asset allocation and sector diversification are subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Shares			Value ($)

Common Stocks 98.5%
Consumer Discretionary 11.2%
Auto Components 0.1%
Dana Holding Corp.*		800			14,640
TRW Automotive Holdings Corp.*		2,100			123,963
					138,603
Diversified Consumer Services 0.1%
Weight Watchers International, Inc.		2,000			150,940
Hotels Restaurants & Leisure 1.4%
Chipotle Mexican Grill, Inc.*		300			92,457
Marriott International, Inc. "A"		5,600			198,744
Wynn Resorts Ltd.		8,800			1,263,152
					1,554,353
Internet & Catalog Retail 0.8%
Priceline.com, Inc.* (a)		1,700			870,281
Leisure Equipment & Products 0.1%
Polaris Industries, Inc.		500			55,585
Media 5.0%
CBS Corp. "B"		59,800			1,703,702
Comcast Corp. "A"		77,500			1,963,850
McGraw-Hill Companies, Inc.		3,000			125,730
Omnicom Group, Inc.		1,500			72,240
Time Warner, Inc. (a)		22,033			801,340
Viacom, Inc. "B"		18,300			933,300
					5,600,162
Multiline Retail 1.3%
Dillard's, Inc. "A" (a)		22,108			1,152,711
Macy's, Inc.		11,500			336,260
					1,488,971
Specialty Retail 1.5%
Aaron's, Inc.		1,700			48,042
Abercrombie & Fitch Co. "A"		1,200			80,304
Bed Bath & Beyond, Inc.*		1,600			93,392
Dick's Sporting Goods, Inc.*		3,700			142,265
Foot Locker, Inc.		2,900			68,904
Limited Brands, Inc.		13,700			526,765
TJX Companies, Inc.		14,300			751,179
Tractor Supply Co.		200			13,376
					1,724,227
Textiles, Apparel & Luxury Goods 0.9%
VF Corp.		9,600			1,042,176
Consumer Staples 6.9%
Beverages 0.2%
Coca-Cola Enterprises, Inc.		6,900			201,342
Food & Staples Retailing 2.0%
Costco Wholesale Corp.		10,300			836,772
Kroger Co.		11,600			287,680
Safeway, Inc. (a)		25,800			602,946
Walgreen Co.		9,600			407,616
Whole Foods Market, Inc. (a)		2,200			139,590
					2,274,604
Food Products 2.2%
ConAgra Foods, Inc.		2,800			72,268
Corn Products International, Inc.		2,800			154,784
Fresh Del Monte Produce, Inc.		5,500			146,685
Hormel Foods Corp.		6,500			193,765
Smithfield Foods, Inc.*		7,300			159,651
	Shares			Value ($)

The Hershey Co.		10,700			608,295
The JM Smucker Co.		600			45,864
Tyson Foods, Inc. "A" (a)		57,300			1,112,766
					2,494,078
Household Products 0.2%
Church & Dwight Co., Inc.		1,000			40,540
Colgate-Palmolive Co.		2,800			244,748
					285,288
Personal Products 0.6%
Herbalife Ltd.		11,700			674,388
Tobacco 1.7%
Lorillard, Inc.		1,800			195,966
Philip Morris International, Inc.		25,100			1,675,927
					1,871,893
Energy 11.8%
Energy Equipment & Services 0.6%
Complete Production Services, Inc.*		10,800			360,288
National Oilwell Varco, Inc.		2,600			203,346
Patterson-UTI Energy, Inc. (a)		3,800			120,118
					683,752
Oil, Gas & Consumable Fuels 11.2%
Anadarko Petroleum Corp.		7,000			537,320
Chevron Corp.		25,700			2,642,988
ConocoPhillips		31,600			2,376,004
CVR Energy, Inc.*		6,600			162,492
Devon Energy Corp.		3,300			260,073
Exxon Mobil Corp.		21,900			1,782,222
Hess Corp.		7,100			530,796
Marathon Oil Corp.		33,800			1,780,584
Murphy Oil Corp.		8,800			577,808
Stone Energy Corp.*		1,400			42,546
Tesoro Corp.*		14,200			325,322
Valero Energy Corp.		55,700			1,424,249
W&T Offshore, Inc.		2,700			70,524
					12,512,928
Financials 15.0%
Capital Markets 0.8%
American Capital Ltd.*		11,800			117,174
BlackRock, Inc.		800			153,448
Franklin Resources, Inc. (a)		4,800			630,192
					900,814
Commercial Banks 2.8%
KeyCorp		74,000			616,420
M&T Bank Corp. (a)		1,700			149,515
Marshall & Ilsley Corp.		11,600			92,452
Regions Financial Corp.		41,700			258,540
SunTrust Banks, Inc.		57,700			1,488,660
Zions Bancorp. (a)		21,600			518,616
					3,124,203
Consumer Finance 2.5%
Capital One Financial Corp.		33,300			1,720,611
Discover Financial Services		41,700			1,115,475
					2,836,086
Diversified Financial Services 2.7%
CME Group, Inc. "A"		900			262,431
JPMorgan Chase & Co.		61,800			2,530,092
The NASDAQ OMX Group, Inc.* (a)		8,300			209,990
					3,002,513
	Shares			Value ($)

Insurance 5.0%
ACE Ltd.		11,900			783,258
Allied World Assurance Co. Holding, AG		3,700			213,046
American International Group, Inc.* (a)		26,100			765,252
Chubb Corp.		13,900			870,279
Hartford Financial Services Group, Inc.		9,900			261,063
Lincoln National Corp.		2,000			56,980
Progressive Corp.		9,700			207,386
Prudential Financial, Inc.		5,400			343,386
Reinsurance Group of America, Inc.		2,000			121,720
RenaissanceRe Holdings Ltd. (a)		600			41,970
The Travelers Companies, Inc.		33,600			1,961,568
					5,625,908
Real Estate Investment Trusts 1.0%
HCP, Inc. (REIT)		1,900			69,711
Public Storage (REIT)		3,200			364,832
Rayonier, Inc. (REIT)		3,500			228,725
Vornado Realty Trust (REIT)		5,200			484,536
					1,147,804
Thrifts & Mortgage Finance 0.2%
People's United Financial, Inc. (a)		13,800			185,472
Health Care 14.9%
Biotechnology 1.9%
Biogen Idec, Inc.*		13,900			1,486,188
Cephalon, Inc.*		8,300			663,170
					2,149,358
Health Care Providers & Services 6.7%
Aetna, Inc.		4,900			216,041
AmerisourceBergen Corp. (a)		11,800			488,520
Cardinal Health, Inc.		12,800			581,376
CIGNA Corp.		7,600			390,868
Coventry Health Care, Inc.*		22,900			835,163
Health Net, Inc.*		2,900			93,061
Humana, Inc.		20,700			1,667,178
McKesson Corp.		2,600			217,490
UnitedHealth Group, Inc.		47,000			2,424,260
WellPoint, Inc.		7,000			551,390
					7,465,347
Pharmaceuticals 6.3%
Bristol-Myers Squibb Co.		56,000			1,621,760
Eli Lilly & Co.		48,400			1,816,452
Endo Pharmaceuticals Holdings, Inc.*		5,400			216,918
Forest Laboratories, Inc.*		38,300			1,506,722
Johnson & Johnson		2,400			159,648
Medicis Pharmaceutical Corp. "A"		4,000			152,680
Merck & Co., Inc.		28,200			995,178
Par Pharmaceutical Companies, Inc.*		5,800			191,284
Pfizer, Inc.		10,000			206,000
Warner Chilcott PLC "A"		4,000			96,520
Watson Pharmaceuticals, Inc.*		1,700			116,841
					7,080,003
Industrials 12.4%
Aerospace & Defense 4.7%
General Dynamics Corp.		12,700			946,404
Honeywell International, Inc.		17,000			1,013,030
Lockheed Martin Corp.		4,600			372,462
Northrop Grumman Corp.		26,600			1,844,710
	Shares			Value ($)

Raytheon Co.		12,476			621,929
United Technologies Corp.		5,500			486,805
					5,285,340
Air Freight & Logistics 0.8%
FedEx Corp.		9,600			910,560
Airlines 0.4%
Alaska Air Group, Inc.*		4,200			287,532
Southwest Airlines Co.		12,500			142,750
					430,282
Commercial Services & Supplies 0.2%
R.R. Donnelley & Sons Co. (a)		13,200			258,852
Construction & Engineering 0.5%
EMCOR Group, Inc.*		4,800			140,688
Fluor Corp.		3,400			219,844
KBR, Inc.		4,700			177,143
					537,675
Industrial Conglomerates 0.9%
General Electric Co.		12,300			231,978
Tyco International Ltd.		16,000			790,880
					1,022,858
Machinery 3.0%
Caterpillar, Inc.		19,800			2,107,908
Cummins, Inc.		2,900			300,121
Dover Corp.		1,300			88,140
Eaton Corp.		13,800			710,010
Joy Global, Inc.		1,900			180,956
Oshkosh Corp.*		500			14,470
					3,401,605
Professional Services 0.2%
Manpower, Inc.		3,200			171,680
Road & Rail 1.1%
CSX Corp.		8,100			212,382
Norfolk Southern Corp.		2,900			217,297
Ryder System, Inc.		13,800			784,530
					1,214,209
Trading Companies & Distributors 0.6%
W.W. Grainger, Inc.		4,200			645,330
Information Technology 16.9%
Communications Equipment 0.4%
Motorola Solutions, Inc.*		3,700			170,348
Polycom, Inc.*		1,900			122,170
Riverbed Technology, Inc.*		1,800			71,262
Telefonaktiebolaget LM Ericsson (ADR)		7,200			103,536
					467,316
Computers & Peripherals 2.6%
Apple, Inc.*		3,500			1,174,845
Dell, Inc.*		33,400			556,778
Lexmark International, Inc. "A"*		13,600			397,936
SanDisk Corp.*		4,500			186,750
Western Digital Corp.*		16,100			585,718
					2,902,027
Electronic Equipment, Instruments & Components 3.1%
Anixter International, Inc. (a)		3,000			196,020
Arrow Electronics, Inc.*		21,200			879,800
Avnet, Inc.*		12,000			382,560
Ingram Micro, Inc. "A"* (a)		11,800			214,052
Jabil Circuit, Inc.		1,500			30,300
TE Connectivity Ltd.		16,700			613,892
	Shares			Value ($)

Tech Data Corp.* (a)		10,100			493,789
Vishay Intertechnology, Inc.* (a)		41,400			622,656
					3,433,069
Internet Software & Services 0.8%
AOL, Inc.* (a)		9,900			196,614
IAC/InterActiveCorp.* (a)		18,400			702,328
					898,942
IT Services 5.2%
Automatic Data Processing, Inc. (a)		21,600			1,137,888
Computer Sciences Corp.		22,136			840,283
Fiserv, Inc.*		5,500			344,465
International Business Machines Corp.		20,300			3,482,465
SAIC, Inc.*		3,400			57,188
VeriFone Systems, Inc.*		600			26,610
					5,888,899
Semiconductors & Semiconductor Equipment 2.0%
Altera Corp.		19,200			889,920
Analog Devices, Inc.		8,300			324,862
Applied Materials, Inc.		11,200			145,712
Cypress Semiconductor Corp.*		3,900			82,446
GT Solar International, Inc.* (a)		15,100			244,620
Intel Corp.		11,000			243,760
Micron Technology, Inc.*		29,300			219,164
NVIDIA Corp.* (a)		8,100			129,073
					2,279,557
Software 2.8%
Activision Blizzard, Inc.		14,300			167,024
CA, Inc.		2,600			59,384
Citrix Systems, Inc.*		200			16,000
Oracle Corp.		73,300			2,412,303
Symantec Corp.*		12,300			242,556
TIBCO Software, Inc.*		7,100			206,042
					3,103,309
Materials 5.8%
Chemicals 3.6%
Dow Chemical Co.		27,200			979,200
E.I. du Pont de Nemours & Co.		30,300			1,637,715
Eastman Chemical Co.		4,800			489,936
Georgia Gulf Corp.*		1,400			33,796
Lubrizol Corp.		200			26,854
OM Group, Inc.*		500			20,320
Potash Corp. of Saskatchewan, Inc.		2,700	��		153,873
PPG Industries, Inc.		3,700			335,923
Rockwood Holdings, Inc.*		3,500			193,515
Westlake Chemical Corp. (a)		2,200			114,180
					3,985,312
	Shares			Value ($)

Metals & Mining 1.0%
Barrick Gold Corp.		15,400			697,466
Cliffs Natural Resources, Inc.		4,700			434,515
					1,131,981
Paper & Forest Products 1.2%
Domtar Corp.		6,900			653,568
International Paper Co.		22,200			662,004
MeadWestvaco Corp.		900			29,979
					1,345,551
Telecommunication Services 2.1%
Diversified Telecommunication Services 2.0%
AT&T, Inc.		8,500			266,985
Verizon Communications, Inc.		53,500			1,991,805
					2,258,790
Wireless Telecommunication Services 0.1%
Vodafone Group PLC (ADR)		3,400			90,848
Utilities 1.5%
Electric Utilities 0.5%
Duke Energy Corp. (a)		27,100			510,293
Pepco Holdings, Inc.		3,000			58,890
					569,183
Independent Power Producers & Energy Traders 0.8%
NRG Energy, Inc.* (a)		36,108			887,535
Multi-Utilities 0.2%
Ameren Corp. (a)		9,000			259,560
Total Common Stocks (Cost $95,070,858)					110,521,349

Securities Lending Collateral 10.5%
Daily Assets Fund Institutional, 0.13% (b) (c) (Cost $11,794,940)		11,794,940			11,794,940

Cash Equivalents 1.4%
Central Cash Management Fund, 0.11% (b) (Cost $1,529,877)		1,529,877			1,529,877

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $108,395,675)+		110.4			123,846,166
Other Assets and Liabilities, Net (a)		(10.4	)		(11,678,224	)
Net Assets		100.0			112,167,942

* Non-income producing security.

+ The cost for federal income tax purposes was $109,348,446. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $14,497,720. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $16,473,451 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,975,731.

(a) All or a portion of these securities were on loan amounting to $11,626,913. In addition, included in other assets and liabilities, net is a pending sale, amounting to $14,903, that is also on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $11,641,816, which is 10.4% of net assets

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

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

ADR: American Depositary Receipt

REIT: Real Estate Investment Trust

At June 30, 2011, open futures contracts purchased were as follows:

Futures

Currency

Expiration Date

Contracts

Notional Value ($)

Unrealized Appreciation ($)

S&P 500 E-Mini Index

USD

9/16/2011

1,512,825

53,820

Currency Abbreviation

USD United States Dollar

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (d)	$	110,521,349	$	—	$	—	$	110,521,349
Short-Term Investments (d)		13,324,817		—		—		13,324,817
Derivatives (e)		53,820		—		—		53,820
Total	$	123,899,986	$	—	$	—	$	123,899,986

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(d) See Investment Portfolio for additional detailed categorizations.

(e) Derivatives include unrealized appreciation (depreciation) on open futures contracts.

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $95,070,858) — including $11,626,913 of securities loaned	$	110,521,349
Investment in Daily Assets Fund Institutional (cost $11,794,940)*		11,794,940
Investment in Central Cash Management Fund (cost $1,529,877)		1,529,877
Total investments in securities, at value (cost $108,395,675)		123,846,166
Foreign currency, at value (cost $2,134)		2,302
Deposit with brokers for futures contracts		102,283
Receivable for investments sold		65,795
Receivable for Fund shares sold		4,984
Receivable for variation margin on futures contracts		53,820
Dividends receivable		132,493
Interest receivable		392
Other assets		672
Total assets		124,208,907
Liabilities
Cash overdraft		53,750
Payable upon return of securities loaned		11,794,940
Payable for Fund shares redeemed		99,254
Accrued management fee		49,455
Other accrued expenses and payables		43,566
Total liabilities		12,040,965
Net assets, at value	$	112,167,942
Net Assets Consist of
Undistributed net investment income		524,401
Net unrealized appreciation (depreciation) on: Investments		15,450,491
Futures		53,820
Foreign currency		168
Accumulated net realized gain (loss)		(40,972,932	)
Paid-in capital		137,111,994
Net assets, at value	$	112,167,942
Class A Net Asset Value, offering and redemption price per share ($111,995,123 ÷ 9,792,989 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.44
Class B Net Asset Value, offering and redemption price per share ($172,819 ÷ 15,046 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.49

* Represents collateral of securities loaned.

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $455)	$	976,208
Interest		13
Income distributions — Central Cash Management Fund		804
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		11,768
Total income		988,793
Expenses: Management fee		312,274
Administration fee		56,191
Services to shareholders		1,178
Distribution service fee (Class B)		215
Custodian fee		9,654
Legal fees		4,193
Audit and tax fees		25,008
Reports to shareholders		12,369
Trustees' fees and expenses		2,685
Other		4,561
Total expenses		428,328
Net investment income (loss)		560,465
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		8,581,437
Futures		137,064
		8,718,501
Change in net unrealized appreciation (depreciation) on: Investments		(181,019	)
Futures		38,602
Foreign currency		69
		(142,348	)
Net gain (loss)		8,576,153
Net increase (decrease) in net assets resulting from operations	$	9,136,618

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	560,465		$	1,225,775
Net realized gain (loss)		8,718,501			11,654,348
Change in net unrealized appreciation (depreciation)		(142,348	)		528,773
Net increase (decrease) in net assets resulting from operations		9,136,618			13,408,896
Distributions to shareholders from: Net investment income: Class A		(1,181,666	)		(1,575,913	)
Class B		(1,333	)		(1,920	)
Total distributions		(1,182,999	)		(1,577,833	)
Fund share transactions: Class A Proceeds from shares sold		5,545,578			4,447,701
Reinvestment of distributions		1,181,666			1,575,913
Payments for shares redeemed		(11,166,281	)		(20,221,768	)
Net increase (decrease) in net assets from Class A share transactions		(4,439,037	)		(14,198,154	)
Class B Proceeds from shares sold		133			1,931
Reinvestment of distributions		1,333			1,920
Payments for shares redeemed		(7,805	)		(19,529	)
Net increase (decrease) in net assets from Class B share transactions		(6,339	)		(15,678	)
Increase (decrease) in net assets		3,508,243			(2,382,769	)
Net assets at beginning of period		108,659,699			111,042,468
Net assets at end of period (including undistributed net investment income of $524,401 and $1,146,935, respectively)	$	112,167,942		$	108,659,699
Other Information
Class A Shares outstanding at beginning of period		10,190,728			11,688,302
Shares sold		496,243			457,619
Shares issued to shareholders in reinvestment of distributions		101,084			153,448
Shares redeemed		(995,066	)		(2,108,641	)
Net increase (decrease) in Class A shares		(397,739	)		(1,497,574	)
Shares outstanding at end of period		9,792,989			10,190,728
Class B Shares outstanding at beginning of period		15,598			17,241
Shares sold		12			199
Shares issued to shareholders in reinvestment of distributions		113			186
Shares redeemed		(677	)		(2,028	)
Net increase (decrease) in Class B shares		(552	)		(1,643	)
Shares outstanding at end of period		15,046			15,598

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	10.65		$	9.49		$	7.25		$	14.65		$	16.17		$	14.88
Income (loss) from investment operations: Net investment incomea		.06			.11			.12			.12			.17			.17	c
Net realized and unrealized gain (loss)		.85			1.19			2.27			(4.97	)		.36			2.07
Total from investment operations		.91			1.30			2.39			(4.85	)		.53			2.24
Less distributions from: Net investment income		(.12	)		(.14	)		(.15	)		(.21	)		(.18	)		(.14	)
Net realized gains		—			—			—			(2.34	)		(1.87	)		(.81	)
Total distributions		(.12	)		(.14	)		(.15	)		(2.55	)		(2.05	)		(.95	)
Net asset value, end of period	$	11.44		$	10.65		$	9.49		$	7.25		$	14.65		$	16.17
Total Return (%)		8.50	**		13.77			33.97			(38.49	)b		3.50			15.65	c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		112			108			111			106			242			314
Ratio of expenses before expense reductions (%)		.76	*		.76			.75			.76			.71			.71
Ratio of expenses after expense reductions (%)		.76	*		.76			.75			.76			.71			.71
Ratio of net investment income (%)		1.00	*		1.16			1.54			1.12			1.13			1.12	c
Portfolio turnover rate (%)		99	**		146			82			127			275			226
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.003 per share and an increase in the ratio of net investment income of 0.02%. Excluding this non-recurring income, total return would have been 0.02% lower. * Annualized ** Not annualized

				Years Ended December 31,
Class B	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	10.68		$	9.51		$	7.26		$	14.61		$	16.12		$	14.83
Income (loss) from investment operations: Net investment incomea		.04			.09			.10			.04			.11			.11	c
Net realized and unrealized gain (loss)		.86			1.19			2.27			(4.89	)		.36			2.07
Total from investment operations		.90			1.28			2.37			(4.85	)		.47			2.18
Less distributions from: Net investment income		(.09	)		(.11	)		(.12	)		(.16	)		(.11	)		(.08	)
Net realized gains		—			—			—			(2.34	)		(1.87	)		(.81	)
Total distributions		(.09	)		(.11	)		(.12	)		(2.50	)		(1.98	)		(.89	)
Net asset value, end of period	$	11.49		$	10.68		$	9.51		$	7.26		$	14.61		$	16.12
Total Return (%)		8.39	**		13.55			33.46			(38.48	)b		3.15			15.19	c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		.17			.17			.16			.13			11			46
Ratio of expenses before expense reductions (%)		1.03	*		1.02			1.02			1.22			1.09			1.09
Ratio of expenses after expense reductions (%)		1.03	*		1.02			1.02			1.21			1.09			1.09
Ratio of net investment income (%)		.73	*		.90			1.27			.67			.75			.74	c
Portfolio turnover rate (%)		99	**		146			82			127			275			226
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.003 per share and an increase in the ratio of net investment income of 0.02%. Excluding this non-recurring income, total return would have been 0.02% lower. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Blue Chip VIP (the "Fund") is a diversified series of DWS 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 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 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.

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.

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $48,723,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($15,813,000) and December 31, 2017 ($32,910,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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 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

A summary of the open futures contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the Fund's investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $1,065,000 to $1,585,000.

The following table summarizes the value of the Fund's derivative instruments held as of June 30, 2011 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivative		Futures Contracts
Equity Contracts (a)		$	53,820

The above derivative is located in the following Statement of Assets and Liabilities account:

(a) Includes cumulative appreciation of futures contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Realized Gain (Loss)		Futures Contracts
Equity Contracts (a)		$	137,064

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)		$	38,602

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, 2011, purchases and sales of investment transactions (excluding short-term investments) aggregated $111,920,772 and $117,166,748, respectively.

D. Related Parties

QS Investors, LLC ("QS Investors") serves as subadvisor. As a subadvisor to the Fund, QS Investors makes investment decisions and buys and sells securities for the Fund. QS Investors is paid by the Advisor for the services QS Investors provides to the Fund.

$0-$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	%

Accordingly, for the six months ended June 30, 2011, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.55% of the Fund's average daily net assets.

Services to Shareholders	Total Aggregated ($)		Unpaid at June 30, 2011
Class A	$	110	$	78
Class B		12		6
	$	122	$	84

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

E. Ownership of the Fund

At June 30, 2011, two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 52% and 37%. One Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 100%.

F. Line of Credit

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2BC-3 (R-023290-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Core Fixed Income VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

11 Statement of Assets and Liabilities

12 Statement of Operations

12 Statement of Changes in Net Assets

14 Financial Highlights

15 Notes to Financial Statements

19 Proxy Voting

20 Summary of Management Fee Evaluation by Independent Fee Consultant

Bond investments are subject to interest-rate and credit risks. 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. In the current market environment, mortgage-backed securities are experiencing increased volatility. 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, 2011

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 is 0.72% for Class A shares, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in DWS Core Fixed Income VIP
[] DWS Core Fixed Income VIP — Class A [] Barclays Capital US Aggregate Bond Index		Barclays Capital US 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 average maturities 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
DWS Core Fixed Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,241		$	10,360		$	9,701		$	10,364		$	12,864
Class A	Average annual total return		2.41	%		3.60	%		-1.01	%		0.72	%		2.55	%
Barclays Capital US Aggregate Bond Index	Growth of $10,000	$	10,272		$	10,390		$	12,065		$	13,715		$	17,481
Barclays Capital US Aggregate Bond Index	Average annual total return		2.72	%		3.90	%		6.46	%		6.52	%		5.74	%

The growth of $10,000 is cumulative.

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

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. 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, 2011 to June 30, 2011).

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2011
Actual Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,024.10
Expenses Paid per $1,000*	$	3.56
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,021.27
Expenses Paid per $1,000*	$	3.56

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Core Fixed Income VIP	.71%

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

Portfolio Summary

Asset Allocation (As a % of Net Assets)	6/30/11	12/31/10

Corporate Bonds	31%	29%
Mortgage-Backed Securities Pass-Throughs	26%	38%
Government & Agency Obligations	16%	34%
Commercial Mortgage-Backed Securities	13%	9%
Municipal Bonds and Notes	7%	8%
Collateralized Mortgage Obligations	4%	2%
Asset-Backed	3%	2%
Cash Equivalents and Other Assets and Liabilities, net	0%	(22)%
	100%	100%

Quality (Excludes Cash Equivalents and Securities Lending Collateral)	6/30/11	12/31/10

US Government and Agencies	41%	59%
AAA	8%	3%
AA	7%	7%
A	17%	13%
BBB	21%	15%
BB	1%	2%
B	1%	—
Not Rated	4%	1%
	100%	100%

Interest Rate Sensitivity	6/30/11	12/31/10

Effective Maturity	7.7 years	7.0 years
Effective Duration	5.4 years	5.0 years

Asset allocation and Interest Rate Sensitivity are subject to change.

Effective maturity is the weighted average of the 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.

The quality ratings represent the lower 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. Ratings are relative and subjective and are not absolute standards of quality. The Fund's credit quality does not remove market risk and is subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Principal Amount ($)		Value ($)

Corporate Bonds 31.0%
Consumer Discretionary 4.5%
AMC Entertainment, Inc., 8.75%, 6/1/2019		143,000		150,865
CBS Corp., 5.9%, 10/15/2040		380,000		363,711
CCO Holdings LLC, 7.0%, 1/15/2019		400,000		412,000
Comcast Cable Holdings LLC, 10.125%, 4/15/2022		180,000		248,965
DIRECTV Holdings LLC:
3.125%, 2/15/2016		200,000		202,901
6.35%, 3/15/2040		312,000		328,197
Home Depot, Inc.:
5.4%, 9/15/2040		175,000		166,867
5.875%, 12/16/2036		75,000		76,759
MGM Resorts International, 9.0%, 3/15/2020		500,000		547,500
NBCUniversal Media LLC, 144A, 5.95%, 4/1/2041		172,000		174,905
Time Warner, Inc.:
6.2%, 3/15/2040		250,000		256,119
7.625%, 4/15/2031		250,000		299,945
Yum! Brands, Inc.:
3.875%, 11/1/2020		300,000		291,200
5.3%, 9/15/2019		100,000		107,487
				3,627,421
Consumer Staples 2.4%
Anheuser-Busch InBev Worldwide, Inc., 7.75%, 1/15/2019		400,000		503,218
CVS Caremark Corp., 5.75%, 5/15/2041		190,000		186,815
Kellogg Co., 4.0%, 12/15/2020		200,000		199,700
Kraft Foods, Inc., 5.375%, 2/10/2020		825,000		901,888
Kroger Co., 5.4%, 7/15/2040		150,000		144,140
				1,935,761
Energy 3.6%
DCP Midstream LLC, 144A, 9.75%, 3/15/2019		280,000		365,953
Enterprise Products Operating LLC, 4.6%, 8/1/2012		500,000		519,288
Kinder Morgan Energy Partners LP, 6.5%, 9/1/2039		300,000		311,514
ONEOK Partners LP, 6.15%, 10/1/2016		321,000		369,357
Plains All American Pipeline LP, 8.75%, 5/1/2019		350,000		440,307
Weatherford International Ltd., 5.125%, 9/15/2020		550,000		561,562
Williams Partners LP, 4.125%, 11/15/2020		360,000		345,561
				2,913,542
Financials 12.4%
American Express Co., 7.0%, 3/19/2018		700,000		823,786
Bank of America Corp.:
5.65%, 5/1/2018		865,000		911,996
6.5%, 8/1/2016		80,000		89,220
Bunge Ltd. Finance Corp., 4.1%, 3/15/2016		145,000		151,042
Citigroup, Inc., 5.375%, 8/9/2020		800,000		834,851
CNA Financial Corp., 5.75%, 8/15/2021		553,000		571,022
	Principal Amount ($)		Value ($)

Fifth Third Bancorp., 5.45%, 1/15/2017		430,000		460,583
General Electric Capital Corp., 5.3%, 2/11/2021		285,000		296,555
Hartford Financial Services Group, Inc., 5.95%, 10/15/2036		270,000		254,236
JPMorgan Chase & Co., 5.125%, 9/15/2014		800,000		864,519
KeyCorp, 5.1%, 3/24/2021		300,000		305,548
Lincoln National Corp., 8.75%, 7/1/2019		350,000		441,664
MetLife, Inc., 7.717%, 2/15/2019		395,000		478,117
Morgan Stanley, 5.75%, 1/25/2021		400,000		404,732
National Rural Utilities Cooperative Finance Corp., 10.375%, 11/1/2018		200,000		276,985
Nationwide Financial Services, Inc., 144A, 5.375%, 3/25/2021		183,000		183,812
Nordea Bank AB, 144A, 4.875%, 5/13/2021		350,000		336,130
PNC Funding Corp., 5.25%, 11/15/2015		450,000		490,325
Prudential Financial, Inc.:
Series B, 5.1%, 9/20/2014		130,000		141,333
6.2%, 1/15/2015		90,000		100,758
7.375%, 6/15/2019		50,000		59,295
Royal Bank of Scotland PLC, 6.125%, 1/11/2021		325,000		333,162
SunTrust Banks, Inc., 3.6%, 4/15/2016		150,000		151,455
The Goldman Sachs Group, Inc., 6.0%, 6/15/2020		550,000		591,793
Wells Fargo & Co., 4.6%, 4/1/2021		475,000		477,637
				10,030,556
Health Care 2.6%
Amgen, Inc., 5.65%, 6/15/2042		156,000		156,253
Express Scripts, Inc.:
6.25%, 6/15/2014		205,000		230,855
7.25%, 6/15/2019		405,000		484,406
Quest Diagnostics, Inc.:
4.7%, 4/1/2021		650,000		665,364
6.4%, 7/1/2017		500,000		576,886
				2,113,764
Industrials 1.2%
CSX Corp.:
6.15%, 5/1/2037		250,000		267,702
6.25%, 3/15/2018		380,000		438,456
Republic Services, Inc., 5.7%, 5/15/2041		245,000		239,174
				945,332
Information Technology 0.5%
Applied Materials, Inc., 5.85%, 6/15/2041		400,000		405,712
Materials 1.6%
ArcelorMittal, 6.125%, 6/1/2018		500,000		535,539
Corp Nacional del Cobre de Chile, 144A, 3.75%, 11/4/2020		550,000		522,540
Dow Chemical Co., 4.25%, 11/15/2020		285,000		278,147
				1,336,226
	Principal Amount ($)		Value ($)

Telecommunication Services 1.2%
American Tower Corp., 7.25%, 5/15/2019		250,000		282,041
Frontier Communications Corp., 7.875%, 4/15/2015		500,000		542,500
Verizon Communications, Inc., 4.6%, 4/1/2021		187,000		192,945
				1,017,486
Utilities 1.0%
DTE Energy Co., 7.625%, 5/15/2014		148,000		170,832
FirstEnergy Solutions Corp., 6.8%, 8/15/2039		292,000		303,643
Sempra Energy, 6.5%, 6/1/2016		290,000		335,846
				810,321
Total Corporate Bonds (Cost $24,018,328)				25,136,121

Mortgage-Backed Securities Pass-Throughs 25.8%
Federal Home Loan Mortgage Corp.:
4.0%, 8/1/2039		1,254,755		1,259,705
6.0%, with various maturities from 12/1/2034 until 3/1/2038		705,694		779,558
Federal National Mortgage Association:
3.193%*, 8/1/2037		192,347		201,141
3.5%, 8/1/2025 (a)		2,487,500		2,532,586
4.0%, 9/1/2040		2,409,752		2,415,118
4.5%, with various maturities from 10/1/2033 until 2/1/2039 (a)		4,374,328		4,529,406
5.0%, with various maturities from 7/1/2036 until 8/1/2040 (a)		3,284,795		3,481,770
5.124%*, 9/1/2038		134,152		141,825
5.5%, with various maturities from 12/1/2032 until 9/1/2036		2,152,103		2,340,460
6.0%, 4/1/2024		618,914		690,109
6.5%, with various maturities from 3/1/2017 until 4/1/2037		936,022		1,058,069
8.0%, 9/1/2015		10,484		11,377
Government National Mortgage Association, 4.5%, 6/1/2039 (a)		1,450,000		1,530,316
Total Mortgage-Backed Securities Pass-Throughs (Cost $20,611,038)				20,971,440

Asset-Backed 2.6%
Student Loans
Nelnet Student Loan Trust:
"A1", Series 2007-1, 0.267%*, 11/27/2018		843,029		831,975
"A4", Series 2006-1, 0.349%*, 11/23/2022		1,300,000		1,275,986
Total Asset-Backed (Cost $2,110,732)				2,107,961

Commercial Mortgage-Backed Securities 12.8%
Banc of America Merrill Lynch Commercial Mortgage, Inc.:
"A5A", Series 2005-4, 4.933%, 7/10/2045		1,100,000		1,173,388
"A2", Series 2007-2, 5.634%, 4/10/2049		216,986		218,944
"A4", Series 2006-3, 5.889%, 7/10/2044		795,000		874,178
	Principal Amount ($)		Value ($)

Bear Stearns Commercial Mortgage Securities, Inc., "A4", Series 2007-PW18, 5.7%, 6/11/2050		1,000,000		1,086,943
Citigroup/Deutsche Bank Commercial Mortgage Trust:
"A4", Series 2006-CD2, 5.524%*, 1/15/2046		250,000		270,641
"A5", Series 2006-CD3, 5.617%, 10/15/2048		1,035,000		1,123,420
Commercial Mortgage Pass-Through Certificates, "A4", Series 2007-C9, 6.008%*, 12/10/2049		825,000		906,164
Greenwich Capital Commercial Funding Corp., "A4", Series 2007-GG9, 5.444%, 3/10/2039		850,000		911,792
GS Mortgage Securities Corp. II, "A4A", Series 2005-GG4, 4.751%, 7/10/2039		1,300,000		1,385,730
LB-UBS Commercial Mortgage Trust:
"A3", Series 2006-C7, 5.347%, 11/15/2038		400,000		430,595
"A4", Series 2007-C6, 5.858%, 7/15/2040		400,000		433,978
Merrill Lynch Mortgage Trust, "ASB", Series 2007-C1, 6.02%*, 6/12/2050		900,000		965,639
Wachovia Bank Commercial Mortgage Trust, "A4", Series 2005-C22, 5.44%*, 12/15/2044		600,000		650,311
Total Commercial Mortgage-Backed Securities (Cost $10,252,893)				10,431,723

Collateralized Mortgage Obligations 4.1%
Federal National Mortgage Association:
''IO", Series 2010-143, Interest Only, 5.0%, 12/25/2025		82,194		10,023
"QD", Series 2005-29, 5.0%, 8/25/2033		435,000		475,719
Government National Mortgage Association:
"IU", Series 2010-164, Interest Only, 2.0%, 12/20/2013		2,412,877		93,281
"CI", Series 2010-145, Interest Only, 4.0%, 11/20/2035		630,615		75,491
"MI", Series 2010-85, Interest Only, 4.5%, 1/20/2036		1,069,948		138,917
"GI", Series 2010-89, Interest Only, 4.5%, 5/20/2039		936,661		181,992
"EI", Series 2010-134, Interest Only, 4.5%, 11/20/2039		487,501		96,515
"DI", Series 2011-40, Interest Only, 4.5%, 12/20/2040		1,968,142		319,866
"IM", Series 2010-87, Interest Only, 4.75%, 3/20/2036		1,230,359		173,516
"JI", Series 2010-67, Interest Only, 5.0%, 10/20/2033		1,757,017		171,626
"IA", Series 2010-58, Interest Only, 5.0%, 3/20/2039		1,894,877		407,332
"BI", Series 2010-168, Interest Only, 5.0%, 4/20/2040		6,178,651		871,219
MASTR Alternative Loans Trust, "5A1", Series 2005-1, 5.5%, 1/25/2020		285,530		292,333
Total Collateralized Mortgage Obligations (Cost $3,533,549)				3,307,830

	Principal Amount ($)		Value ($)

Government & Agency Obligations 16.4%
Sovereign Bonds 1.2%
Republic of Poland, 6.375%, 7/15/2019		500,000		571,250
Republic of South Africa, 6.25%, 3/8/2041		400,000		429,000
				1,000,250
US Treasury Obligations 15.2%
US Treasury Bill, 0.135%**, 9/15/2011 (b)		391,000		390,984
US Treasury Bonds:
4.75%, 2/15/2037 (c)		2,000,000		2,139,688
5.375%, 2/15/2031		2,500,000		2,930,077
7.125%, 2/15/2023		2,400,000		3,250,500
US Treasury Notes:
1.0%, 1/15/2014		955,000		963,431
3.625%, 2/15/2020 (c)		2,500,000		2,644,727
				12,319,407
Total Government & Agency Obligations (Cost $13,329,477)				13,319,657

Municipal Bonds and Notes 7.4%
California, University Revenues, Build America Bonds, 5.946%, 5/15/2045 (d)		180,000		169,412
Chicago, IL, Transit Authority, Sales Tax Receipts Revenue, Build America Bonds, Series B, 6.2%, 12/1/2040 (d)		265,000		267,714
Glendale, AZ, Municipal Property Corp., Excise Tax Revenue, Series B, 6.157%, 7/1/2033, INS: AGMC (d)		420,000		427,480
Jicarilla, NM, Sales & Special Tax Revenue, Apache Nation Revenue, 144A, 5.2%, 12/1/2013 (d)		575,000		573,016
Kentucky, Asset/Liability Commission, General Fund Revenue, 3.165%, 4/1/2018 (d)		775,000		778,542
	Principal Amount ($)		Value ($)

Louisville & Jefferson County, KY, Metropolitan Sewer District & Drain System, Build America Bonds, 6.25%, 5/15/2043 (d)		200,000		209,692
Miami-Dade County, FL, Educational Facilities Authority Revenue, University of Miami, Series B, 6.1%, 4/1/2015 (d)		680,000		706,867
Michigan, Western Michigan University Revenue, 4.41%, 11/15/2014, INS: AMBAC (d)		620,000		630,986
Nashville & Davidson County, TN, Metropolitan Government, Convention Center Authority Revenue, Build America Bonds, Series A2, 7.431%, 7/1/2043 (d)		250,000		280,448
New Jersey, Economic Development Authority Revenue, Series B, 6.5%, 11/1/2014, INS: AGC (d)		585,000		663,706
New Jersey, State Educational Facilities Authority Revenue, NJ City University, Series F, 6.85%, 7/1/2036, INS: AGC (d)		395,000		427,659
Newark, NJ, Pension Obligation, 5.853%, 4/1/2022, INS: AGMC (d)		865,000		866,548
Total Municipal Bonds and Notes (Cost $5,836,690)				6,002,070

	Shares		Value ($)

Securities Lending Collateral 5.3%
Daily Assets Fund Institutional, 0.13% (e) (f) (Cost $4,305,743)		4,305,743		4,305,743

Cash Equivalents 13.1%
Central Cash Management Fund, 0.11% (e) (Cost $10,598,158)		10,598,158		10,598,158

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $94,596,608)+		118.5			96,180,703
Other Assets and Liabilities, Net		(18.5	)		(15,045,058	)
Net Assets		100.0			81,135,645

* These securities are shown at their current rate as of June 30, 2011. Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the US Treasury bill rate.

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

+ The cost for federal income tax purposes was $94,602,993. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $1,577,710. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $2,257,163 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $679,453.

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

(b) At June 30, 2011, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(c) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $4,148,485, which is 5.1% of net assets.

(d) Taxable issue.

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

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

AGC: Assured Guaranty Corp.

AGMC: Assured Guaranty Municipal Corp.

AMBAC: Ambac Financial Group, Inc.

INS: Insured

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 Home Loan Mortgage Corp. and Federal National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in the investment portfolio.

At June 30, 2011, open futures contracts sold were as follows:

Securities

Currency

Expiration Date

Contracts

Notional

Value ($)

Unrealized Appreciation ($)

10 Year US Treasury Note

USD

9/21/2011

7,951,328

34,141

30 Year US Treasury Bond

USD

9/21/2011

3,075,781

52,062

Total unrealized appreciation

86,203

At June 30, 2011, open credit default swap contracts purchased were as follows:

Effective/ Expiration Date		Notional Amount ($) (g)				Fixed Cash Flows Paid			Reference Entity		Value ($)				Upfront Payment (Received) ($)				Unrealized Depreciation ($)
3/21/2011 6/20/2016			4,200,000	1			1.0	%	Markit CDX.NA.IG Index			(17,198	)			(1,974	)			(15,224	)

(g) 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.

Counterparty:

1 Citigroup, Inc.

Currency Abbreviation

USD United States Dollar

For information on the Fund's policy and additional disclosures regarding futures contracts and credit default swap 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 (h)
Corporate Bonds	$	—	$	25,136,121		$	—	$	25,136,121
Mortgage-Backed Securities Pass-Throughs		—		20,971,440			—		20,971,440
Asset-Backed		—		2,107,961			—		2,107,961
Commercial Mortgage-Backed Securities		—		10,431,723			—		10,431,723
Collateralized Mortgage Obligations		—		3,307,830			—		3,307,830
Government & Agency Obligations		—		13,319,657			—		13,319,657
Municipal Bonds and Notes		—		6,002,070			—		6,002,070
Short-Term Investments (h)		14,903,901		—			—		14,903,901
Derivatives (i)		86,203		—			—		86,203
Total	$	14,990,104	$	81,276,802		$	—	$	96,266,906
Liabilities
Derivatives (i)	$	—	$	(15,224	)	$	—	$	(15,224	)
Total	$	—	$	(15,224	)	$	—	$	(15,224	)

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(h) See Investment Portfolio for additional detailed categorizations.

(i) Derivatives include unrealized appreciation (depreciation) on futures contracts and credit default swap contracts.

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $79,692,707) — including $4,148,485 of securities loaned	$	81,276,802
Investment in Daily Assets Fund Institutional (cost $4,305,743)*		4,305,743
Investment in Central Cash Management Fund (cost $10,598,158)		10,598,158
Total investments in securities, at value (cost $94,596,608)		96,180,703
Cash		10,000
Receivable for Fund shares sold		43,593
Interest receivable		835,905
Receivable for daily variation margin on futures contracts		35,956
Foreign taxes recoverable		1,880
Other assets		575
Total assets		97,108,612
Liabilities
Payable upon return of securities loaned		4,305,743
Payable for investment purchased		93,499
Payable for investments purchased — delayed delivery securities		11,431,833
Payable for Fund shares redeemed		20,575
Net payable for closed swap contracts		30,215
Unrealized depreciation on swap contracts		15,224
Upfront payments received on swap contracts		1,974
Accrued management fee		34,932
Other accrued expenses and payables		38,972
Total liabilities		15,972,967
Net assets, at value	$	81,135,645
Net Assets Consist of
Undistributed net investment income		1,434,359
Net unrealized appreciation (depreciation) on: Investments		1,584,095
Swap contracts		(15,224	)
Futures		86,203
Accumulated net realized gain (loss)		(52,603,582	)
Paid-in capital		130,649,794
Net assets, at value	$	81,135,645
Class A Net Asset Value, offering and redemption price per share ($81,135,645 ÷ 9,317,353 outstanding shares of beneficial interest, no par value, 24,742,586 shares authorized)	$	8.71

* Represents collateral of securities loaned.

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Income: Interest	$	1,755,969
Income distributions — Central Cash Management Fund		6,156
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		2,309
Total income		1,764,434
Expenses: Management fee		208,315
Administration fee		41,663
Services to shareholders		1,091
Custodian fee		6,062
Audit and tax fees		22,655
Legal fees		4,615
Reports to shareholders		11,525
Trustees' fees and expenses		2,625
Other		4,400
Total expenses before expense reductions		302,951
Expense reductions		(7,088	)
Total expenses after expense reductions		295,863
Net investment income (loss)		1,468,571
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		1,470,737
Swap contracts		(38,597	)
Futures		295,848
		1,727,988
Change in net unrealized appreciation (depreciation) on: Investments		(689,990	)
Swap contracts		(15,224	)
Futures		(531,188	)
		(1,236,402	)
Net gain (loss)		491,586
Net increase (decrease) in net assets resulting from operations	$	1,960,157

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	1,468,571		$	2,528,721
Net realized gain (loss)		1,727,988			4,071,997
Change in net unrealized appreciation (depreciation)		(1,236,402	)		(457,850	)
Net increase (decrease) in net assets resulting from operations		1,960,157			6,142,868
Distributions to shareholders from: Net investment income: Class A		(2,313,385	)		(5,749,285	)
Total distributions		(2,313,385	)		(5,749,285	)
Fund share transactions: Class A Proceeds from shares sold		2,060,344			26,314,018
Shares converted*		—			53,582
Reinvestment of distributions		2,313,385			5,749,285
Payments for shares redeemed		(10,733,108	)		(38,312,024	)
Net increase (decrease) in net assets from Class A share transactions		(6,359,379	)		(6,195,139	)
Class B Proceeds from shares sold		—			785
Shares converted*		—			(53,582	)
Payments for shares redeemed		—			(78	)
Net increase (decrease) in net assets from Class B share transactions		—			(52,875	)
Increase (decrease) in net assets		(6,712,607	)		(5,854,431	)
Net assets at beginning of period		87,848,252			93,702,683
Net assets at end of period (including undistributed net investment income of $1,434,359 and $2,279,173, respectively)	$	81,135,645		$	87,848,252
Other Information
Class A Shares outstanding at beginning of period		10,037,687			10,676,602
Shares sold		235,645			3,026,894
Shares converted*		—			5,994
Shares issued to shareholders in reinvestment of distributions		268,063			681,204
Shares redeemed		(1,224,042	)		(4,353,007	)
Net increase (decrease) in Class A shares		(720,334	)		(638,915	)
Shares outstanding at end of period		9,317,353			10,037,687
Class B Shares outstanding at beginning of period		—			5,948
Shares sold		—			89
Shares converted*		—			(6,028	)
Shares issued to shareholders in reinvestment of distributions		—			(9	)
Net increase (decrease) in Class B shares		—			(5,948	)
Shares outstanding at end of period		—			—

* On February 5, 2010, Class B shares converted into Class A shares.

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

Financial Highlights

						Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Date
Net asset value, beginning of period		$	8.75			$	8.77		$	8.90		$	11.82		$	11.86		$	11.81
Income (loss) from investment operations: Net investment incomea			.15				.23			.39			.57			.56			.53
Net realized and unrealized gain (loss)			.06				.32			.24			(2.72	)		(.08	)		(.05	)
Total from investment operations			.21				.55			.63			(2.15	)		.48			.48
Less distributions from: Net investment income			(.25	)			(.57	)		(.76	)		(.77	)		(.52	)		(.43	)
Net realized gains			—				—			—			—			—			(.00	)***
Total distributions			(.25	)			(.57	)		(.76	)		(.77	)		(.52	)		(.43	)
Net asset value, end of period		$	8.71			$	8.75		$	8.77		$	8.90		$	11.82		$	11.86
Total Return (%)			2.41	b**			6.51			7.72	c		(19.33	)b		4.17			4.26
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			81				88			94			110			186			277
Ratio of expenses before expense reductions (%)			.73	*			.72			.59			.70			.66			.68
Ratio of expenses after expense reductions (%)			.71	*			.72			.59			.70			.66			.68
Ratio of net investment income (%)			3.52	*			2.62			4.50			5.36			4.78			4.56
Portfolio turnover rate (%)			142	**			356			222			215			209			198
a Based on average shares outstanding during the period. b Total returns would have been lower had certain expenses not been reduced. c Includes a reimbursement from the Advisor to reimburse the effect of losses incurred as the result of certain operation errors during the period. Excluding this reimbursement, total return would have been 0.02% lower. * Annualized Not annualized * Amount is less than $.005.

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Core Fixed Income VIP (the "Fund") is a diversified series of DWS 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 are valued by independent pricing services approved by the Fund's Board. If the pricing services are unable to provide valuations, securities are valued at the most recent bid quotation or evaluated price, as applicable, obtained from one or more broker-dealers. 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 and other data, as well as broker quotes. These securities are generally 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.

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.

At December 31, 2010, the Fund had net tax basis capital loss carryforward of approximately $53,707,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($5,512,000) and December 31, 2017 ($48,195,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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, 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

Credit Default Swap Contracts. A credit default swap is a contract between a buyer and a seller of protection against pre-defined credit events for the reference entity. For the six months ended June 30, 2011, the Fund bought credit default swap contracts to gain exposure to an underlying reference entity's credit quality characteristics without directly investing in that reference entity, or to hedge the risk of default on Fund securities. As a seller in the credit default swap contract, 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 US 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 contract 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 swap contracts in order to hedge against the risk of a credit event on debt securities, in which case the Fund functions as the counterparty referenced above. This involves the risk that the contract 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 contract 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 swap contracts sold by the Fund.

A summary of the open futures contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the Fund's investment in futures contracts sold had a total notional value generally indicative of a range from approximately $11,027,000 to $23,345,000.

Asset Derivative		Futures Contracts
Interest Rate Contracts (a)		$	86,203

The above derivative is located in the following Statement of Assets and Liabilities account:

(a) Includes cumulative appreciation of futures contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Liability Derivative		Swap Contracts
Credit Contracts (a)		$	(15,224	)

The above derivative is located in the following Statement of Assets and Liabilities account:

(a) Unrealized depreciation on swap contracts

Realized Gain (Loss)	Swap Contracts			Futures Contracts		Total
Interest Rate Contracts (a)	$	—		$	295,848	$	295,848
Credit Contracts (a)		(38,597	)		—		(38,597	)
	$	(38,597	)	$	295,848	$	257,251

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

Change in Net Unrealized Appreciation (Depreciation)	Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a)	$	—		$	(531,188	)	$	(531,188	)
Credit Contracts (a)		(15,224	)		—			(15,224	)
	$	(15,224	)	$	(531,188	)	$	(546,412	)

Each of the above derivatives is located in the following Statement of Operations accounts:

(a) Change in net unrealized appreciation (depreciation) on swap contracts and futures, respectively

C. Purchases and Sales of Securities

During the six months ended June 30, 2011, purchases and sales of investment transactions (excluding short-term investments and US Treasury obligations) aggregated $108,700,006 and $118,448,131, respectively. Purchases and sales of US Treasury obligations aggregated $14,032,509 and $31,059,586, respectively.

D. Related Parties

$0-$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, 2011 through September 30, 2011, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) at 0.71%.

Accordingly, for the six months ended June 30, 2011, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $7,023, and the amount charged aggregated $201,292, which was equivalent to an annualized effective rate of 0.48% of the Fund's average daily net assets.

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

E. Ownership of the Fund

At June 30, 2011, 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%, 41% and 13%.

F. Line of Credit

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2CFI-3 (R-023292-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Diversified International Equity VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

16 Statement of Assets and Liabilities

17 Statement of Operations

18 Statement of Changes in Net Assets

20 Financial Highlights

21 Notes to Financial Statements

25 Proxy Voting

26 Summary of Management Fee Evaluation by Independent Fee Consultant

Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Stocks may decline in value. 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, 2011

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 is 0.99% 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 DWS Diversified International Equity VIP
[] DWS Diversified International Equity VIP — Class A [] MSCI EAFE® Index		The Morgan Stanley Capital International (MSCI) Europe, Australasia and the Far East EAFE® Index is an unmanaged, free float-adjusted, market capitalization index that tracks international stock performance in the 21 developed markets of Europe, Australasia and the Far East. The index is calculated using closing local market prices and translates into US dollars using the London close foreign exchange rates. 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
DWS Diversified International Equity VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,493		$	13,064		$	8,201		$	10,304		$	15,624
Class A	Average annual total return		4.93	%		30.64	%		-6.40	%		0.60	%		4.56	%
MSCI EAFE Index	Growth of $10,000	$	10,498		$	13,036		$	9,478		$	10,760		$	17,344
MSCI EAFE Index	Average annual total return		4.98	%		30.36	%		-1.77	%		1.48	%		5.66	%

The growth of $10,000 is cumulative.

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

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2011 to June 30, 2011).

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, 2011
Actual Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,049.30
Expenses Paid per $1,000*	$	5.08
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,019.84
Expenses Paid per $1,000*	$	5.01

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Diversified International Equity VIP	1.00%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Common Stocks	87%	87%
Exchange-Traded Funds	10%	9%
Cash Equivalents*	2%	3%
Preferred Stocks	1%	1%
	100%	100%

Sector Diversification (As a % of Common and Preferred Stocks)	6/30/11	12/31/10

Telecommunication Services	14%	16%
Consumer Staples	13%	12%
Health Care	12%	9%
Financials	11%	10%
Utilities	11%	8%
Consumer Discretionary	10%	8%
Materials	9%	11%
Industrials	8%	11%
Information Technology	7%	6%
Energy	5%	9%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/11	12/31/10

Continental Europe	49%	49%
Japan	13%	21%
Canada	11%	5%
Emerging Markets	11%	10%
United Kingdom	7%	7%
Asia (excluding Japan)	5%	4%
Australia	4%	4%
	100%	100%

* In order to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the market, the Fund invests in futures contracts.

Asset allocation, sector and geographical diversification are subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Shares		Value ($)

Common Stocks 86.4%
Australia 3.7%
AGL Energy Ltd.		18,406		289,695
Asciano Ltd.		17,279		30,585
Australia & New Zealand Banking Group Ltd.		2,823		66,669
BHP Billiton Ltd.		4,758		224,879
Brambles Ltd.		13,105		101,812
Coca-Cola Amatil Ltd.		2,294		28,148
Cochlear Ltd.		674		52,027
Commonwealth Bank of Australia		1,574		88,588
Crown Ltd.		9,187		88,210
CSL Ltd.		5,197		184,208
Fairfax Media Ltd. (a)		54,011		57,047
Foster's Group Ltd.		7,671		42,466
Leighton Holdings Ltd.		1,643		36,893
National Australia Bank Ltd. (a)		2,600		71,735
Newcrest Mining Ltd.		1,231		49,967
Origin Energy Ltd.		6,869		116,807
Qantas Airways Ltd.*		18,444		36,560
QBE Insurance Group Ltd.		2,063		38,300
QR National Ltd.*		14,433		52,435
Rio Tinto Ltd.		735		65,714
Santos Ltd.		6,168		89,877
Sonic Healthcare Ltd.		4,124		56,896
SP AusNet		58,973		59,797
TABCORP Holdings Ltd.		15,130		53,594
Tatts Group Ltd.		24,689		63,705
Telstra Corp., Ltd.		88,649		275,275
Toll Holdings Ltd.		7,945		41,500
Transurban Group (Units)		14,907		83,935
Wesfarmers Ltd.		3,054		104,661
Westfield Group (REIT) (Units)		3,912		36,455
Westpac Banking Corp.		2,569		61,625
Woodside Petroleum Ltd.		3,950		174,242
Woolworths Ltd.		3,431		102,311
WorleyParsons Ltd.		1,721		52,255
(Cost $1,947,949)				2,978,873
Austria 0.5%
Erste Group Bank AG (a)		3,560		186,471
Immofinanz AG* (a)		21,500		91,637
Raiffeisen Bank International AG (a)		881		45,344
Vienna Insurance Group AG Wiener Versicherung Gruppe (a)		1,323		72,720
(Cost $228,099)				396,172
Belgium 1.1%
Ageas		34,376		93,218
Anheuser-Busch InBev NV		3,696		214,313
Compagnie Nationale a Portefeuille*		539		38,198
Delhaize Group		593		44,460
Dexia SA* (a)		10,150		31,582
Groupe Bruxelles Lambert SA (a)		588		52,269
KBC Groep NV (a)		2,458		96,553
Solvay SA (a)		1,159		179,084
Umicore SA		2,235		121,819
(Cost $581,785)				871,496
Bermuda 0.1%
Seadrill Ltd. (a) (Cost $31,566)		3,016		106,166
	Shares		Value ($)

Canada 11.2%
Agnico-Eagle Mines Ltd.		700		44,259
Alimentation Couche-Tard, Inc. "B"		3,600		104,963
Bank of Montreal		1,300		82,695
Bank of Nova Scotia		2,500		150,604
Barrick Gold Corp. (a)		2,300		104,429
BCE, Inc. (a)		6,300		247,049
Bell Aliant, Inc.		2,300		68,491
Bombardier, Inc. "B"		19,900		143,403
Brookfield Asset Management, Inc. "A"		1,700		56,564
CAE, Inc.		3,800		51,260
Canadian Imperial Bank of Commerce		1,000		78,957
Canadian National Railway Co. (a)		6,400		511,894
Canadian Natural Resources Ltd.		1,800		75,456
Canadian Pacific Railway Ltd.		2,600		162,208
Canadian Tire Corp., Ltd. "A"		1,700		111,224
Canadian Utilities Ltd. "A"		5,900		342,701
CGI Group, Inc. "A"*		11,100		274,033
Empire Co., Ltd. "A"		900		52,164
EnCana Corp.		1,500		46,317
Finning International, Inc.		2,600		77,101
Fortis, Inc.		11,900		399,155
George Weston Ltd.		1,400		101,525
Gildan Activewear, Inc.		2,500		88,107
Goldcorp, Inc.		1,800		87,065
Imperial Oil Ltd.		1,000		46,576
Kinross Gold Corp.		2,300		36,320
Loblaw Companies Ltd.		2,900		117,119
Magna International, Inc. "A"		4,506		243,650
Manulife Financial Corp.		4,700		83,235
Metro, Inc. "A"		2,800		139,325
National Bank of Canada		600		48,662
Open Text Corp.* (a)		2,800		179,505
Potash Corp. of Saskatchewan, Inc. (a)		1,800		102,813
Research In Motion Ltd.*		21,100		609,952
Ritchie Bros. Auctioneers, Inc. (a)		1,600		44,062
Rogers Communications, Inc. "B" (a)		10,900		431,615
Royal Bank of Canada		3,300		188,635
Saputo, Inc.		3,800		183,253
Shaw Communications, Inc. "B"		7,800		177,844
Shoppers Drug Mart Corp.		5,700		234,631
SNC-Lavalin Group, Inc.		2,200		134,311
Sun Life Financial, Inc.		2,000		60,242
Suncor Energy, Inc.		2,420		94,848
Teck Resources Ltd. "B"		1,200		60,992
Telus Corp.		1,600		88,092
Telus Corp. (Non-Voting Shares) (a)		4,000		210,773
Thomson Reuters Corp. (b)		6,100		229,023
Thomson Reuters Corp. (b)		1,158		43,494
Tim Hortons, Inc.		3,600		175,773
Toronto-Dominion Bank		2,100		178,068
TransAlta Corp.		14,500		309,560
Valeant Pharmaceuticals International, Inc.		19,000		987,972
Viterra, Inc.		10,100		109,750
Yellow Media, Inc. (a)		11,800		29,364
(Cost $7,800,152)				9,041,083
	Shares		Value ($)

Cyprus 0.1%
Bank of Cyprus Public Co., Ltd. (Cost $92,968)		21,752		64,190
Denmark 2.4%
A P Moller-Maersk AS "A"		7		57,929
A P Moller-Maersk AS "B" (a)		15		129,424
Carlsberg AS "B"		4,596		500,108
Coloplast AS "B" (a)		299		45,457
Danske Bank AS*		14,587		270,907
DSV AS		2,622		62,917
Novo Nordisk AS "B"		6,131		768,663
Tryg AS		621		35,805
Vestas Wind Systems AS*		2,251		52,331
William Demant Holding AS* (a)		427		38,528
(Cost $1,426,185)				1,962,069
Finland 3.1%
Fortum Oyj		11,788		341,390
Kone Oyj "B" (a)		1,991		125,012
Metso Corp. (a)		1,709		97,066
Nokia Corp. (a)		52,222		337,281
Outokumpu Oyj (a)		7,460		98,748
Pohjola Bank PLC (a)		5,199		67,231
Rautaruukki Oyj		4,708		106,371
Sampo Oyj "A"		9,439		304,761
Stora Enso Oyj "R" (a)		34,707		364,145
UPM-Kymmene Oyj (a)		31,076		568,271
Wartsila Corp. (a)		2,307		77,843
(Cost $1,981,271)				2,488,119
France 6.8%
Air Liquide SA (a)		1,503		215,443
Alcatel-Lucent*		19,719		113,841
Atos Origin SA (a)		697		39,385
AXA SA (a)		3,081		69,951
BNP Paribas		1,550		119,544
Bouygues SA		734		32,270
Cap Gemini		1,341		78,569
Carrefour SA* (a)		4,540		186,461
Casino Guichard-Perrachon SA (a)		794		74,845
Compagnie de Saint-Gobain		755		48,895
Credit Agricole SA		1,831		27,538
DANONE SA (a)		4,560		340,242
Dassault Systemes SA		830		70,668
Electricite de France		2,181		85,621
Essilor International SA (a)		3,351		271,799
France Telecom SA (a)		32,122		683,342
GDF Suez		11,364		415,887
Iliad SA (a)		426		57,163
L'Oreal SA (a)		1,857		241,195
Lafarge SA (a)		1,230		78,385
LVMH Moet Hennessy Louis Vuitton SA		420		75,591
Pernod Ricard SA		1,706		168,164
Sanofi		14,584		1,172,175
Schneider Electric SA (a)		447		74,681
Societe Generale		1,069		63,361
Suez Environnement Co.		1,869		37,251
Total SA		6,374		368,647
Unibail-Rodamco SE (REIT) (a)		265		61,240
Vallourec SA (a)		299		36,410
Veolia Environnement		2,754		77,594
Vinci SA		944		60,471
	Shares		Value ($)

Vivendi		2,577		71,663
(Cost $4,074,471)				5,518,292
Germany 5.9%
Adidas AG		1,331		105,575
Allianz SE (Registered)		1,458		203,708
BASF SE		1,618		158,338
Bayer AG		6,352		510,676
Bayerische Motoren Werke (BMW) AG		2,347		233,870
Beiersdorf AG		2,600		168,719
Commerzbank AG*		10,242		44,042
Continental AG* (a)		632		66,356
Daimler AG (Registered)		6,253		470,606
Deutsche Boerse AG		688		52,215
Deutsche Post AG (Registered)		3,555		68,269
Deutsche Telekom AG (Registered)		48,743		764,538
E.ON AG		7,336		208,254
Fresenius Medical Care AG & Co. KGaA		1,256		93,906
Fresenius SE & Co. KGaA		632		65,965
HeidelbergCement AG		310		19,762
Henkel AG & Co. KGaA		3,480		199,452
Infineon Technologies AG (a)		6,144		68,943
K+S AG		447		34,354
Kabel Deutschland Holding AG*		519		31,911
Linde AG		332		58,208
Merck KGaA		430		46,728
Metro AG		3,345		202,494
Muenchener Rueckversicherungs-Gesellschaft AG (Registered) (a)		598		91,294
RWE AG		1,527		84,511
SAP AG		6,095		368,638
Siemens AG (Registered) (a)		1,513		207,742
Suedzucker AG		2,222		78,958
ThyssenKrupp AG		776		40,255
Volkswagen AG		228		41,890
(Cost $3,401,032)				4,790,177
Greece 0.4%
Alpha Bank AE*		13,183		66,621
EFG Eurobank Ergasias*		8,459		39,803
National Bank of Greece SA*		24,508		176,087
(Cost $435,030)				282,511
Hong Kong 2.5%
AIA Group Ltd.*		23,000		80,197
Cathay Pacific Airways Ltd.		15,000		34,888
Cheung Kong (Holdings) Ltd.		5,000		73,531
Cheung Kong Infrastructure Holdings Ltd.		7,000		36,369
CLP Holdings Ltd.		27,000		239,686
Esprit Holdings Ltd.		14,495		45,153
Genting Singapore PLC* (a)		178,000		280,882
Hang Seng Bank Ltd.		2,200		35,185
Hong Kong & China Gas Co., Ltd. (a)		56,650		128,905
Hong Kong Exchanges & Clearing Ltd. (a)		3,500		73,729
Hutchison Whampoa Ltd.		31,000		336,102
Li & Fung Ltd.		42,000		84,471
MTR Corp., Ltd.		28,500		101,360
Noble Group Ltd.		29,363		47,273
NWS Holdings Ltd.		30,000		40,199
Power Assets Holdings Ltd.		17,500		131,998
Shangri-La Asia Ltd. (a)		18,000		44,424
	Shares		Value ($)

SJM Holdings Ltd.		12,000		28,679
Sun Hung Kai Properties Ltd.		5,000		72,777
Swire Pacific Ltd. "A"		3,500		51,700
Yue Yuen Industrial (Holdings) Ltd. (a)		10,500		33,493
(Cost $1,400,594)				2,001,001
Ireland 1.6%
CRH PLC (b)		20,956		464,056
CRH PLC (b)		34,837		774,721
Experian PLC		5,338		67,984
(Cost $1,132,104)				1,306,761
Italy 3.4%
A2A SpA		20,926		32,578
Assicurazioni Generali SpA		3,242		68,369
Atlantia SpA		5,777		122,987
Enel Green Power SpA		16,188		44,651
Enel SpA		64,634		422,176
Eni SpA		11,687		277,058
Fiat Industrial SpA*		9,511		122,956
Fiat SpA (a)		12,889		141,504
Finmeccanica SpA		7,959		96,320
Intesa Sanpaolo		32,101		85,369
Luxottica Group SpA		2,649		84,916
Mediaset SpA (a)		10,870		51,106
Pirelli & C. SpA		4,802		51,888
Prysmian SpA		3,602		72,453
Saipem SpA		1,672		86,323
Snam Rete Gas SpA		9,753		57,738
Telecom Italia SpA		337,823		470,074
Telecom Italia SpA (RSP)		223,543		260,159
Terna — Rete Elettrica Nationale SpA		14,939		69,420
UBI Banca — Unione di Banche Italiane ScpA (a)		3,919		22,063
UniCredit SpA		41,574		87,934
(Cost $2,253,559)				2,728,042
Japan 12.5%
AEON Co., Ltd. (a)		10,100		121,902
Ajinomoto Co., Inc.		10,000		118,916
Alfresa Holdings Corp.		1,000		38,923
Asahi Breweries Ltd.		5,900		118,883
Asahi Kasei Corp.		7,000		47,267
Astellas Pharma, Inc.		4,800		185,603
Bridgestone Corp.		2,100		48,331
Canon, Inc.		1,800		85,836
Central Japan Railway Co.		3		23,580
Chubu Electric Power Co., Inc.		13,700		268,119
Chugai Pharmaceutical Co., Ltd.		2,900		47,579
Chugoku Electric Power Co., Inc.		6,000		104,085
Dai-ichi Life Insurance Co., Ltd. (a)		35		49,006
Daiichi Sankyo Co., Ltd.		7,900		154,523
Daiwa House Industry Co., Ltd.		2,000		25,181
Daiwa Securities Group, Inc. (a)		10,000		44,055
Denso Corp.		1,100		40,842
East Japan Railway Co.		726		41,719
Eisai Co., Ltd.		2,900		113,264
Electric Power Development Co., Ltd.		2,600		70,225
FamilyMart Co., Ltd.		1,000		36,758
FANUC Corp.		300		50,025
FUJIFILM Holdings Corp.		1,800		56,105
	Shares		Value ($)

Hisamitsu Pharmaceutical Co., Inc. (a)		900		38,373
Hitachi Ltd. (a)		9,000		53,201
Hokkaido Electric Power Co., Inc.		3,900		64,975
Hokuriku Electric Power Co.		2,800		53,550
Honda Motor Co., Ltd.		4,600		177,301
HOYA Corp.		1,400		31,031
Idemitsu Kosan Co., Ltd. (a)		400		42,724
INPEX Corp.		21		155,037
Japan Tobacco, Inc.		55		212,258
JFE Holdings, Inc.		2,300		63,288
JX Holdings, Inc.		22,920		154,775
Kansai Electric Power Co., Inc.		14,800		295,396
Kao Corp.		7,300		191,850
KDDI Corp.		40		287,804
Keyence Corp.		100		28,361
Kikkoman Corp.		3,000		31,577
Kirin Holdings Co., Ltd.		12,000		167,774
Komatsu Ltd.		1,300		40,447
Kyocera Corp.		500		50,864
Kyowa Hakko Kirin Co., Ltd.		5,000		47,693
Kyushu Electric Power Co., Inc.		8,100		146,057
Lawson, Inc. (a)		900		47,268
MEIJI Holdings Co., Ltd.		1,200		50,569
Miraca Holdings, Inc.		1,000		40,570
Mitsubishi Chemical Holdings Corp.		6,500		46,110
Mitsubishi Corp.		2,400		60,132
Mitsubishi Estate Co., Ltd.		5,000		87,774
Mitsubishi Tanabe Pharma Corp.		3,000		50,335
Mitsubishi UFJ Financial Group, Inc.		48,300		235,138
Mitsui & Co., Ltd.		3,200		55,338
Mitsui Fudosan Co., Ltd.		3,000		51,721
Mitsui O.S.K Lines Ltd.		7,000		37,670
Mizuho Financial Group, Inc.		77,200		127,273
MS&AD Insurance Group Holdings, Inc.		2,400		56,294
Nintendo Co., Ltd.		200		37,664
Nippon Meat Packers, Inc.		3,000		43,015
Nippon Steel Corp. (a)		21,000		68,150
Nippon Telegraph & Telephone Corp.		6,809		331,091
Nishi-Nippon City Bank Ltd.		13,000		38,489
Nissan Motor Co., Ltd.		6,000		62,984
Nisshin Seifun Group, Inc.		3,000		37,483
Nissin Foods Holdings Co., Ltd.		700		25,475
NKSJ Holdings, Inc.		7,000		46,185
Nomura Holdings, Inc. (a)		12,000		59,371
NTT DoCoMo, Inc.		213		379,980
Olympus Corp. (a)		2,900		97,743
Ono Pharmaceutical Co., Ltd.		1,200		64,058
Oriental Land Co., Ltd.		500		42,384
Osaka Gas Co., Ltd.		30,000		113,951
Otsuka Holdings Co., Ltd.		2,000		53,019
Panasonic Corp.		4,600		56,210
Resona Holdings, Inc.		6,900		32,494
Santen Pharmaceutical Co., Ltd.		1,000		40,651
Seven & I Holdings Co., Ltd.		10,200		274,399
Sharp Corp.		3,000		27,361
Shikoku Electric Power Co., Inc.		3,800		86,316
Shin-Etsu Chemical Co., Ltd.		1,500		80,459
Shionogi & Co., Ltd.		4,200		68,804
Shiseido Co., Ltd.		5,000		93,508
SOFTBANK Corp. (a)		11,900		450,710
Sony Corp.		2,100		55,586
	Shares		Value ($)

Sumitomo Chemical Co., Ltd.		10,000		49,946
Sumitomo Corp.		4,200		57,246
Sumitomo Mitsui Financial Group, Inc.		5,200		160,035
Sumitomo Mitsui Trust Holdings, Inc.		13,410		46,782
Sumitomo Realty & Development Co., Ltd. (a)		2,000		44,714
Suzuken Co., Ltd.		1,300		30,043
Sysmex Corp.		1,200		45,137
T&D Holdings, Inc.		1,800		42,760
Taisho Pharmaceutical Co., Ltd. (a)		2,000		45,090
Takeda Pharmaceutical Co., Ltd.		8,200		379,258
Terumo Corp.		2,000		108,077
Tohoku Electric Power Co., Inc.		9,100		131,295
Tokio Marine Holdings, Inc.		2,200		61,807
Tokyo Electric Power Co., Inc. (a)		29,000		119,118
Tokyo Gas Co., Ltd.		50,000		226,183
TonenGeneral Sekiyu KK (a)		4,000		49,183
Toray Industries, Inc. (a)		6,000		44,404
Toshiba Corp.		8,000		42,340
Toyo Suisan Kaisha Ltd.		1,000		23,636
Toyota Motor Corp.		7,400		311,561
Tsumura & Co.		1,500		47,994
Unicharm Corp.		1,500		65,552
Yakult Honsha Co., Ltd. (a)		1,700		49,219
(Cost $8,842,471)				10,120,175
Luxembourg 0.4%
ArcelorMittal		4,154		144,548
Millicom International Cellular SA (SDR) (a)		1,194		124,575
Tenaris SA		2,802		63,976
(Cost $178,537)				333,099
Macau 0.1%
Sands China Ltd.*		20,800		56,404
Wynn Macau Ltd. (a)		13,600		44,895
(Cost $50,091)				101,299
Netherlands 6.3%
AEGON NV* (a)		10,987		74,879
Akzo Nobel NV		2,534		159,852
ASML Holding NV (a)		30,585		1,126,829
Fugro NV (CVA)		2,406		173,486
Heineken Holding NV		913		46,721
Heineken NV		3,364		202,334
ING Groep NV (CVA)*		19,810		244,362
Koninklijke (Royal) KPN NV		49,296		716,570
Koninklijke Ahold NV (a)		14,948		200,864
Koninklijke DSM NV		1,774		115,137
Koninklijke Philips Electronics NV		6,373		163,558
PostNL NV		2,825		23,970
Randstad Holding NV (a)		918		42,426
Reed Elsevier NV		35,902		482,147
Royal Dutch Shell PLC "A"		3,949		140,712
Royal Dutch Shell PLC "B"		3,179		113,479
SBM Offshore NV		6,192		163,794
TNT Express NV*		3,139		32,556
Unilever NV (CVA)		16,399		537,232
Wolters Kluwer NV (a)		15,248		337,887
(Cost $4,003,221)				5,098,795
Norway 1.7%
Aker Solutions ASA		1,915		38,337
DnB NOR ASA		16,840		234,735
	Shares		Value ($)

Norsk Hydro ASA (a)		22,115		169,337
Statoil ASA		8,941		226,392
Telenor ASA		28,434		465,653
Yara International ASA		3,979		224,895
(Cost $697,313)				1,359,349
Portugal 0.7%
EDP — Energias de Portugal SA (Cost $536,855)		152,492		541,380
Singapore 2.5%
CapitaLand Ltd. (a)		20,000		47,564
DBS Group Holdings Ltd.		10,000		119,696
Fraser & Neave Ltd.		15,000		70,815
Golden Agri-Resources Ltd.		173,000		96,143
Hutchison Port Holdings Trust (Units)*		63,000		53,324
Jardine Cycle & Carriage Ltd.		3,000		105,440
Keppel Corp., Ltd.		15,400		139,343
Olam International Ltd.		35,000		77,833
Oversea-Chinese Banking Corp., Ltd.		14,000		106,834
SembCorp Industries Ltd.		19,000		77,475
SembCorp Marine Ltd.		8,000		34,661
Singapore Airlines Ltd.		6,000		69,361
Singapore Exchange Ltd. (a)		7,000		42,973
Singapore Press Holdings Ltd.		37,000		117,602
Singapore Technologies Engineering Ltd.		15,000		36,889
Singapore Telecommunications Ltd.		185,000		476,375
United Overseas Bank Ltd.		7,000		112,465
Wilmar International Ltd.		47,000		207,801
(Cost $1,316,141)				1,992,594
Spain 3.5%
Abertis Infraestructuras SA (a)		4,785		106,901
Acciona SA (a)		263		27,915
ACS, Actividades de Construccion y Servicios SA (a)		2,437		114,931
Banco Bilbao Vizcaya Argentaria SA (a)		7,473		87,589
Banco Santander SA		14,432		166,523
EDP Renovaveis SA*		17,487		115,363
Enagas (a)		2,258		54,754
Ferrovial SA (a)		7,222		91,193
Gas Natural SDG SA		2,049		42,959
Iberdrola Renovables SA (a)		11,066		48,882
Iberdrola SA*		39,318		349,930
Industria de Diseno Textil SA		2,942		268,654
Mediaset Espana Comunicacion SA (a)		2,352		20,435
Red Electrica Corporacion SA		1,144		69,129
Repsol YPF SA (a)		12,042		418,084
Telefonica SA (a)		31,343		766,460
Zardoya Otis SA		3,050		44,918
(Cost $2,016,364)				2,794,620
Sweden 2.4%
Assa Abloy AB "B"		1,207		32,440
Atlas Copco AB "A"		2,084		54,862
Boliden AB		5,037		93,111
Electrolux AB "B" (a)		1,929		46,030
Hennes & Mauritz AB "B" (a)		5,804		200,029
Holmen AB "B"		1,214		37,849
Husqvarna AB "B"		4,852		32,108
Modern Times Group "B" (a)		537		35,482
Nordea Bank AB		10,270		110,358
	Shares		Value ($)

Sandvik AB (a)		3,095		54,268
Skandinaviska Enskilda Banken AB "A"		6,486		53,018
Skanska AB "B"		1,724		30,855
SKF AB "B" (a)		1,279		37,006
SSAB AB "A"		2,870		42,904
Svenska Cellulosa AB "B" (a)		9,672		136,190
Svenska Handelsbanken AB "A"		2,807		86,585
Swedbank AB "A"		2,295		38,546
Tele2 AB "B" (a)		4,023		79,508
Telefonaktiebolaget LM Ericsson "B"		34,517		496,442
TeliaSonera AB (a)		28,839		211,562
Volvo AB "B"		3,948		68,976
(Cost $1,263,795)				1,978,129
Switzerland 6.6%
ABB Ltd. (Registered)*		7,290		189,039
Adecco SA (Registered)* (a)		824		52,830
Compagnie Financiere Richemont SA "A"		3,148		206,140
Credit Suisse Group AG (Registered)*		1,994		77,503
Geberit AG (Registered)* (a)		246		58,288
Givaudan SA (Registered)* (a)		61		64,537
Holcim Ltd. (Registered)*		1,480		111,695
Lonza Group AG (Registered)*		466		36,471
Nestle SA (Registered) (a)		19,933		1,238,821
Novartis AG (Registered) (a)		10,620		650,554
Roche Holding AG (Genusschein)		3,411		570,657
Sika AG (a)		19		45,780
Sonova Holding AG (Registered)*		289		27,052
STMicroelectronics NV (a)		5,378		53,599
Swatch Group AG (Bearer) (a)		214		107,971
Swiss Re Ltd.* (a)		723		40,598
Swisscom AG (Registered)		2,899		1,328,580
Syngenta AG (Registered)*		467		157,650
UBS AG (Registered)*		6,394		116,595
Wolseley PLC		1,218		39,725
Xstrata PLC		2,858		63,030
Zurich Financial Services AG*		398		100,593
(Cost $3,085,191)				5,337,708
United Kingdom 6.9%
Anglo American PLC		1,947		96,489
ARM Holdings PLC		26,763		253,113
AstraZeneca PLC		8,743		436,553
Autonomy Corp. PLC*		4,292		117,592
BAE Systems PLC		10,946		55,957
Barclays PLC		8,467		34,852
BG Group PLC		3,267		74,146
BHP Billiton PLC		3,282		128,640
BP PLC		18,151		133,736
British American Tobacco PLC		3,987		174,764
British Sky Broadcasting Group PLC		4,941		67,107
BT Group PLC		44,070		142,948
Burberry Group PLC		1,367		31,783
Capita Group PLC		2,676		30,731
Centrica PLC		43,037		223,322
Compass Group PLC		7,663		73,919
Diageo PLC		4,423		90,371
GlaxoSmithKline PLC		32,547		696,853
HSBC Holdings PLC		12,924		128,213
Imperial Tobacco Group PLC		1,820		60,512
	Shares		Value ($)

Inmarsat PLC		3,673		32,787
International Consolidated Airlines Group SA* (a)		9,009		36,532
International Power PLC		9,966		51,458
Kingfisher PLC		9,477		40,644
Lloyds Banking Group PLC*		35,330		27,761
Marks & Spencer Group PLC		6,157		35,714
National Grid PLC		28,023		275,766
Next PLC (a)		876		32,715
Pearson PLC		2,885		54,649
Reckitt Benckiser Group PLC		1,170		64,600
Reed Elsevier PLC (a)		4,792		43,580
Rio Tinto PLC		2,033		146,802
Rolls-Royce Holdings PLC*		6,738		69,756
SABMiller PLC		1,731		63,109
Scottish & Southern Energy PLC		7,747		173,278
Severn Trent PLC		2,133		50,361
Shire PLC		4,174		130,303
Smith & Nephew PLC		6,163		65,751
Smiths Group PLC		1,710		32,963
Standard Chartered PLC		1,687		44,330
Subsea 7 SA* (a)		1,418		36,273
Tesco PLC		15,136		97,756
The Sage Group PLC		30,436		141,129
Unilever PLC		1,529		49,342
United Utilities Group PLC		6,323		60,751
Vodafone Group PLC		225,520		599,349
William Morrison Supermarkets PLC (a)		8,072		38,569
WPP PLC		4,824		60,395
(Cost $3,922,681)				5,608,024
Total Common Stocks (Cost $52,699,425)				69,800,124

Preferred Stocks 0.8%
Germany
Bayerische Motoren Werke (BMW) AG		634		40,299
Henkel AG & Co. KGaA (a)		4,546		315,176
Porsche Automobil Holding SE		1,116		88,523
Volkswagen AG (a)		1,019		210,092
Total Preferred Stocks (Cost $379,528)				654,090

Exchange-Traded Funds 10.3%
Emerging Markets
iShares MSCI Emerging Markets Index Fund (a)		86,500		4,117,400
Vanguard MSCI Emerging Markets Fund		85,600		4,161,872
Total Exchange-Traded Funds (Cost $5,737,007)				8,279,272

Securities Lending Collateral 20.0%
Daily Assets Fund Institutional, 0.13% (c) (d) (Cost $16,119,202)		16,119,202		16,119,202

Cash Equivalents 1.8%
Central Cash Management Fund, 0.11% (d) (Cost $1,487,886)		1,487,886		1,487,886

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $76,423,048)+		119.3			96,340,574
Other Assets and Liabilities, Net		(19.3	)		(15,571,952	)
Net Assets		100.0			80,768,622

* Non-income producing security.

+ The cost for federal income tax purposes was $76,885,148. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $19,455,426. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $21,520,593 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,065,167.

(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $15,630,453, which is 19.4% of net assets.

(b) Securities with the same description are the same corporate entity but trade on different stock exchanges.

(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.

CVA: Certificaten Van Aandelen

MSCI: Morgan Stanley Capital International

REIT: Real Estate Investment Trust

RSP: Risparmio (Convertible Savings Shares)

SDR: Swedish Depositary Receipt

At June 30, 2011, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation ($)
ASX SPI 200 Index	AUD	9/15/2011		2		246,740		912
DJ Euro Stoxx 50 Index	EUR	9/16/2011		29		1,197,708		25,233
FTSE 100 Index	GBP	9/16/2011		1		94,732		1,990
Nikkei 225 Index	USD	9/8/2011		6		297,000		15,150
S&P TSX 60 Index	CAD	9/15/2011		1		158,059		4,286
Total net unrealized appreciation								47,571

Currency Abbreviations

AUD Australian Dollar

CAD Canadian Dollar

EUR Euro

GBP British Pound

USD United States Dollar

For information on the Fund's policy and additional disclosures regarding futures 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 and Preferred Stocks (e)
Australia	$	—	$	2,978,873	$	—	$	2,978,873
Austria		—		396,172		—		396,172
Belgium		—		871,496		—		871,496
Bermuda		—		106,166		—		106,166
Canada		8,997,589		43,494		—		9,041,083
Cyprus		—		64,190		—		64,190
Denmark		—		1,962,069		—		1,962,069
Finland		—		2,488,119		—		2,488,119
France		—		5,518,292		—		5,518,292
Germany		—		5,444,267		—		5,444,267
Greece		—		282,511		—		282,511
Hong Kong		—		2,001,001		—		2,001,001
Ireland		—		1,306,761		—		1,306,761
Italy		—		2,728,042		—		2,728,042
Japan		—		10,120,175		—		10,120,175
Luxembourg		—		333,099		—		333,099
Macau		—		101,299		—		101,299
Netherlands		—		5,098,795		—		5,098,795
Norway		—		1,359,349		—		1,359,349
Portugal		—		541,380		—		541,380
Singapore		—		1,992,594		—		1,992,594
Spain		—		2,794,620		—		2,794,620
Sweden		—		1,978,129		—		1,978,129
Switzerland		—		5,337,708		—		5,337,708
United Kingdom		—		5,608,024		—		5,608,024
Exchange-Traded Funds		8,279,272		—		—		8,279,272
Short-Term Investments (e)		17,607,088		—		—		17,607,088
Derivatives (f)		47,571		—		—		47,571
Total	$	34,931,520	$	61,456,625	$	—	$	96,388,145

(e) See Investment Portfolio for additional detailed categorizations.

(f) Derivatives include unrealized appreciation (depreciation) on open futures contracts.

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $58,815,960) — including $15,630,453 of securities loaned	$	78,733,486
Investment in Daily Assets Fund Institutional (cost $16,119,202)*		16,119,202
Investment in Central Cash Management Fund (cost $1,487,886)		1,487,886
Total investments in securities, at value (cost $76,423,048)		96,340,574
Foreign currency, at value (cost $351,694)		357,499
Deposits with broker for futures contracts		215,092
Receivable for investments sold		1,576
Dividends receivable		108,314
Interest receivable		21,800
Receivable for daily variation margin on futures contracts		47,571
Foreign taxes recoverable		33,701
Other assets		450
Total assets		97,126,577
Liabilities
Payable upon return of securities loaned		16,119,202
Payable for Fund shares redeemed		114,110
Accrued management fee		53,352
Other accrued expenses and payables		71,291
Total liabilities		16,357,955
Net assets, at value	$	80,768,622
Net Assets Consist of
Undistributed net investment income		1,189,359
Net unrealized appreciation (depreciation) on: Investments		19,917,526
Futures		47,571
Foreign currency		8,877
Accumulated net realized gain (loss)		(64,672,730	)
Paid-in capital		124,278,019
Net assets, at value	$	80,768,622
Class A Net Asset Value, offering and redemption price per share ($80,768,622 ÷ 9,697,843 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	8.33

* Represents collateral of securities loaned.

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $206,252)	$	1,718,393
Interest		1,060
Income distributions — Central Cash Management Fund		1,186
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		57,573
Other income		211
Total income		1,778,423
Expenses: Management fee		268,394
Administration fee		41,291
Services to shareholders		955
Custodian fee		32,697
Legal fees		4,276
Audit and tax fees		29,044
Reports to shareholders		15,290
Trustees' fees and expenses		2,798
Other		19,024
Total expenses		413,769
Net investment income (loss)		1,364,654
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		4,917,960
Futures		(53,965	)
Foreign currency		28,588
		4,892,583
Change in net unrealized appreciation (depreciation) on: Investments		(2,308,200	)
Futures		86,598
Foreign currency		6,495
		(2,215,107	)
Net gain (loss)		2,677,476
Net increase (decrease) in net assets resulting from operations	$	4,042,130

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	1,364,654		$	1,519,774
Net realized gain (loss)		4,892,583			3,056,365
Change in net unrealized appreciation (depreciation)		(2,215,107	)		3,397,247
Net increase (decrease) in net assets resulting from operations		4,042,130			7,973,386
Distributions to shareholders from: Net investment income: Class A		(1,512,225	)		(1,843,687	)
Total distributions		(1,512,225	)		(1,843,687	)
Fund share transactions: Class A Proceeds from shares sold		1,623,224			3,841,591
Reinvestment of distributions		1,512,225			1,843,687
Payments for shares redeemed		(8,069,165	)		(14,779,706	)
Net increase (decrease) in net assets from Class A share transactions		(4,933,716	)		(9,094,428	)
Increase (decrease) in net assets		(2,403,811	)		(2,964,729	)
Net assets at beginning of period		83,172,433			86,137,162
Net assets at end of period (including undistributed net investment income of $1,189,359 and $1,336,930, respectively)	$	80,768,622		$	83,172,433
Other Information
Class A Shares outstanding at beginning of period		10,297,508			11,562,525
Shares sold		195,055			508,055
Shares issued to shareholders in reinvestment of distributions		175,432			252,215
Shares redeemed		(970,152	)		(2,025,287	)
Net increase (decrease) in Class A shares		(599,665	)		(1,265,017	)
Shares outstanding at end of period		9,697,843			10,297,508

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

Financial Highlights

						Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period		$	8.08			$	7.45		$	6.22		$	16.76		$	16.31		$	13.25
Income (loss) from investment operations: Net investment incomea			.14				.14			.12			.33	d		.25			.24	b
Net realized and unrealized gain (loss)			.26				.66			1.51			(6.67	)		2.24			3.11
Total from investment operations			.40				.80			1.63			(6.34	)		2.49			3.35
Less distributions from: Net investment income			(.15	)			(.17	)		(.40	)		(.13	)		(.46	)		(.29	)
Net realized gains			—				—			—			(4.07	)		(1.58	)		—
Total distributions			(.15	)			(.17	)		(.40	)		(4.20	)		(2.04	)		(.29	)
Net asset value, end of period		$	8.33			$	8.08		$	7.45		$	6.22		$	16.76		$	16.31
Total Return (%)			4.93	**			10.93			29.36			(48.81	)c,e		16.71			25.56
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			81				83			86			91			236			223
Ratio of expenses before expense reductions (%)			1.00	*			.99			.94			1.02			.93			.88
Ratio of expenses after expense reductions (%)			1.00	*			.99			.94			1.01			.93			.88
Ratio of net investment income (%)			1.64	f**			1.90			1.89			3.04	d		1.53			1.65	b
Portfolio turnover rate (%)			19	**			14			139			132			117			122
a Based on average shares outstanding during the period. b Net investment income per share and the ratio of net investment income without non-recurring dividend income amounting to $0.20 per share and 1.39% of average daily net assets, respectively. c Total return would have been lower had certain expenses not been reimbursed. d Net investment income per share and ratio of net investment income include non-recurring dividend income amounting to $0.16 per share and 1.49% of average daily net assets, respectively. e Includes a reimbursement from the Advisor to reimburse the effect of losses incurred as the result of certain operation errors during the period. Excluding this reimbursement, total return would have been 0.14% lower. f The ratio for the six months ended June 30, 2011 has not been annualized since the Fund believes it would not be appropriate because the Fund's dividend income is not earned ratably throughout the fiscal year. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Diversified International Equity VIP (the "Fund") is a diversified series of DWS 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.

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.

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $69,239,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until the December 31, 2016 ($30,075,000) and December 31, 2017 ($39,164,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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 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 and may include proceeds from litigation.

B. Derivative Instruments

Asset Derivative		Futures Contracts
Equity Contracts (a)		$	47,571

The above derivative is located in the following Statement of Assets and Liabilities account:

(a) Includes cumulative appreciation of futures contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Realized Gain (Loss)		Futures Contracts
Equity Contracts (a)		$	(53,965	)

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)		$	86,598

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, 2011, purchases and sales of investment transactions (excluding short-term investments) aggregated $15,205,816 and $19,379,665, respectively.

D. Related Parties

$0-$1.5 billion	.650	%
Next $1.75 billion	.635	%
Next $1.75 billion	.620	%
Over $5 billion	.605	%

Accordingly, for the six months ended June 30, 2011, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.65% of the Fund's average daily net assets.

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

E. Investing in Emerging Markets

F. Ownership of the Fund

At June 30, 2011, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 42%, 30% and 27%.

G. Line of Credit

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2DIE-3 (R-023293-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Dreman Small Mid Cap Value VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 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 Proxy Voting

17 Summary of Management Fee Evaluation by Independent Fee Consultant

Any Fund that focuses in a particular segment of the market will generally be more volatile than a Fund that invests more broadly. Stocks of small and medium-sized companies involve greater risk than securities of larger, more-established companies. Any decline in value of a Fund security that is out on loan by the Fund will adversely affect performance. Financial failure of the borrower may mean a delay in recovery or loss of rights in the collateral. Stocks may decline in value. 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, 2011

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 are 0.87% and 1.22% 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 DWS Dreman Small Mid Cap Value VIP
[] DWS Dreman Small Mid Cap Value VIP — Class A [] Russell 2500™ Value Index		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
DWS Dreman Small Mid Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,450		$	13,375		$	12,271		$	12,667		$	25,310
Class A	Average annual total return		4.50	%		33.75	%		7.06	%		4.84	%		9.73	%
Russell 2500 Value Index	Growth of $10,000	$	10,610		$	13,454		$	12,550		$	11,902		$	22,317
Russell 2500 Value Index	Average annual total return		6.10	%		34.54	%		7.87	%		3.54	%		8.36	%
DWS Dreman Small Mid Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Class*
Class B	Growth of $10,000	$	10,439		$	13,335		$	12,151		$	12,447		$	23,042
Class B	Average annual total return		4.39	%		33.35	%		6.71	%		4.48	%		9.72	%
Russell 2500 Value Index	Growth of $10,000	$	10,610		$	13,454		$	12,550		$	11,902		$	20,937
Russell 2500 Value Index	Average annual total return		6.10	%		34.54	%		7.87	%		3.54	%		8.56	%

The growth of $10,000 is cumulative.

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

* The Fund commenced offering Class B shares on July 1, 2002. Index returns began on June 30, 2002.

Information About Your Fund's Expenses

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, 2011
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,045.00	$	1,043.90
Expenses Paid per $1,000*	$	4.11	$	5.83
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,020.78	$	1,019.09
Expenses Paid per $1,000*	$	4.06	$	5.76

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Dreman Small Mid Cap Value VIP	.81%		1.15%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Common Stocks	96%	99%
Cash Equivalents	4%	1%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/11	12/31/10

Financials	22%	19%
Information Technology	15%	14%
Industrials	14%	13%
Consumer Discretionary	13%	11%
Health Care	11%	11%
Energy	10%	11%
Materials	6%	9%
Consumer Staples	5%	6%
Utilities	4%	6%
	100%	100%

Asset allocation and sector diversification are subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Shares		Value ($)

Common Stocks 95.9%
Consumer Discretionary 12.5%
Auto Components 1.1%
Cooper Tire & Rubber Co.		154,275		3,053,102
Diversified Consumer Services 1.0%
Regis Corp. (a)		187,925		2,879,011
Hotels Restaurants & Leisure 3.2%
Brinker International, Inc. (a)		156,300		3,823,098
International Speedway Corp. "A"		113,475		3,223,825
LIFE TIME FITNESS, Inc.* (a)		48,596		1,939,466
				8,986,389
Household Durables 1.3%
Whirlpool Corp. (a)		42,825		3,482,529
Leisure Equipment & Products 1.3%
Mattel, Inc. (a)		131,425		3,612,873
Media 1.2%
Meredith Corp. (a)		105,125		3,272,541
Multiline Retail 1.1%
Big Lots, Inc.*		91,179		3,022,584
Textiles, Apparel & Luxury Goods 2.3%
Hanesbrands, Inc.* (a)		129,900		3,708,645
The Jones Group, Inc.		239,790		2,601,722
				6,310,367
Consumer Staples 4.9%
Beverages 1.2%
Constellation Brands, Inc. "A"*		160,525		3,342,131
Food & Staples Retailing 1.1%
SUPERVALU, Inc. (a)		332,525		3,129,060
Food Products 1.3%
Ralcorp Holdings, Inc.* (a)		40,500		3,506,490
Household Products 1.3%
Energizer Holdings, Inc.* (a)		50,975		3,688,551
Energy 9.2%
Energy Equipment & Services 6.0%
Atwood Oceanics, Inc.* (a)		96,040		4,238,245
Cal Dive International, Inc.*		575,100		3,439,098
McDermott International, Inc.*		126,125		2,498,536
Superior Energy Services, Inc.* (a)		93,500		3,472,590
Tidewater, Inc. (a)		57,775		3,108,873
				16,757,342
Oil, Gas & Consumable Fuels 3.2%
Arch Coal, Inc. (a)		98,550		2,627,343
Forest Oil Corp.* (a)		102,800		2,745,788
Ultra Petroleum Corp.* (a)		77,022		3,527,608
				8,900,739
Financials 21.0%
Capital Markets 2.3%
Raymond James Financial, Inc. (a)		104,600		3,362,890
Apollo Investment Corp.		302,775		3,091,333
				6,454,223
Commercial Banks 6.5%
Associated Banc-Corp.		251,475		3,495,503
Bank of Hawaii Corp. (a)		73,675		3,427,361
BOK Financial Corp. (a)		69,500		3,806,515
East West Bancorp., Inc. (a)		190,200		3,843,942
Zions Bancorp. (a)		149,500		3,589,495
				18,162,816
	Shares		Value ($)

Insurance 4.7%
Allied World Assurance Co. Holdings AG		62,450		3,595,871
Argo Group International Holdings Ltd.		104,813		3,115,042
Axis Capital Holdings Ltd.		93,800		2,904,048
Everest Re Group Ltd. (a)		40,225		3,288,394
				12,903,355
Real Estate Investment Trusts 7.5%
CBL & Associates Properties, Inc. (REIT) (a)		196,250		3,558,013
CommonWealth REIT (REIT)		126,756		3,275,375
Hospitality Properties Trust (REIT)		146,750		3,558,687
Medical Properties Trust, Inc. (REIT) (a)		298,300		3,430,450
MFA Financial, Inc. (REIT)		411,975		3,312,279
Weingarten Realty Investors (REIT) (a)		149,400		3,758,904
				20,893,708
Health Care 11.0%
Biotechnology 0.8%
Cephalon, Inc.*		28,600		2,285,140
Health Care Equipment & Supplies 2.4%
Alere, Inc.* (a)		88,500		3,240,870
Teleflex, Inc. (a)		57,050		3,483,473
				6,724,343
Health Care Providers & Services 5.2%
Amedisys, Inc.* (a)		115,050		3,063,782
Healthspring, Inc.* (a)		84,675		3,904,364
LifePoint Hospitals, Inc.* (a)		88,825		3,471,281
Owens & Minor, Inc.		114,350		3,943,931
				14,383,358
Life Sciences Tools & Services 1.3%
Charles River Laboratories International, Inc.*		93,375		3,795,694
Pharmaceuticals 1.3%
Endo Pharmaceuticals Holdings, Inc.* (a)		87,700		3,522,909
Industrials 13.3%
Aerospace & Defense 2.3%
Alliant Techsystems, Inc. (a)		45,250		3,227,682
Spirit AeroSystems Holdings, Inc. "A"*		137,150		3,017,300
				6,244,982
Commercial Services & Supplies 3.5%
Pitney Bowes, Inc. (a)		143,600		3,301,364
R.R. Donnelley & Sons Co. (a)		175,000		3,431,750
The Brink's Co.		101,475		3,026,999
				9,760,113
Construction & Engineering 2.4%
Tutor Perini Corp. (a)		155,900		2,990,162
URS Corp.*		81,850		3,661,969
				6,652,131
Electrical Equipment 1.3%
Hubbell, Inc. "B" (a)		57,425		3,729,754
Machinery 2.7%
Crane Co.		74,500		3,681,045
Oshkosh Corp.*		131,500		3,805,610
				7,486,655
	Shares		Value ($)

Trading Companies & Distributors 1.1%
Textainer Group Holdings Ltd. (a)		99,500		3,058,630
Information Technology 14.1%
Communications Equipment 1.2%
Arris Group, Inc.* (a)		292,375		3,394,474
Computers & Peripherals 1.8%
NCR Corp.*		185,925		3,512,123
Synaptics, Inc.* (a)		59,211		1,524,091
				5,036,214
Electronic Equipment, Instruments & Components 2.4%
Arrow Electronics, Inc.*		79,215		3,287,423
Jabil Circuit, Inc. (a)		165,475		3,342,595
				6,630,018
IT Services 4.0%
Amdocs Ltd.*		125,900		3,826,101
DST Systems, Inc.		66,125		3,491,400
ManTech International Corp. "A" (a)		85,625		3,803,463
				11,120,964
Semiconductors & Semiconductor Equipment 3.4%
Microsemi Corp.*		156,150		3,201,075
PMC-Sierra, Inc.*		452,625		3,426,371
Teradyne, Inc.* (a)		191,775		2,838,270
				9,465,716
Software 1.3%
Synopsys, Inc.* (a)		138,575		3,562,763
Materials 5.9%
Chemicals 1.6%
Lubrizol Corp.		32,900		4,417,483
	Shares		Value ($)

Containers & Packaging 1.0%
Owens-Illinois, Inc.*		108,925		2,811,354
Metals & Mining 3.3%
Coeur d'Alene Mines Corp.* (a)		116,350		2,822,651
IAMGOLD Corp.		158,475		2,972,991
Reliance Steel & Aluminum Co. (a)		68,800		3,415,920
				9,211,562
Utilities 4.0%
Electric Utilities 1.4%
Portland General Electric Co.		150,350		3,800,848
Gas Utilities 1.4%
AGL Resources, Inc. (a)		94,875		3,862,361
Multi-Utilities 1.2%
Ameren Corp. (a)		121,650		3,508,386
Total Common Stocks (Cost $216,050,685)				266,823,663

Securities Lending Collateral 40.1%
Daily Assets Fund Institutional, 0.13% (b) (c) (Cost $111,665,965)		111,665,965		111,665,965

Cash Equivalents 4.1%
Central Cash Management Fund, 0.11% (b) (Cost $11,439,080)		11,439,080		11,439,080

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $339,155,730)+		140.1			389,928,708
Other Assets and Liabilities, Net		(40.1	)		(111,627,763	)
Net Assets		100.0			278,300,945

* Non-income producing security.

+ The cost for federal income tax purposes was $340,118,310. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $49,810,398. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $62,341,834 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $12,531,436.

(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $110,095,962, which is 39.6% of net assets.

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

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

REIT: Real Estate Investment Trust

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (d)	$	266,823,663	$	—	$	—	$	266,823,663
Short-Term Investments (d)		123,105,045		—		—		123,105,045
Total	$	389,928,708	$	—	$	—	$	389,928,708

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(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, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $216,050,685) — including $110,095,962 of securities loaned	$	266,823,663
Investment in Daily Assets Fund Institutional (cost $111,665,965)*		111,665,965
Investment in Central Cash Management Fund (cost $11,439,080)		11,439,080
Total investments in securities, at value (cost $339,155,730)		389,928,708
Cash		10,000
Receivable for investments sold		54,489
Receivable for Fund shares sold		353,593
Dividends receivable		297,602
Interest receivable		6,389
Other assets		1,802
Total assets		390,652,583
Liabilities
Payable upon return of securities loaned		111,665,965
Payable for Fund shares redeemed		434,959
Accrued management fee		158,990
Accrued expenses and payables		91,724
Total liabilities		112,351,638
Net assets, at value	$	278,300,945
Net Assets Consist of:
Undistributed net investment income		1,070,064
Net unrealized appreciation (depreciation) on investments		50,772,978
Accumulated net realized gain (loss)		(83,070,722	)
Paid-in capital		309,528,625
Net assets, at value	$	278,300,945
Class A Net Asset Value, offering and redemption price per share ($252,284,899 ÷ 19,956,897 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	12.64
Class B Net Asset Value, offering and redemption price per share ($26,016,046 ÷ 2,055,404 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	12.66

* 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, 2011 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes witheld of $2,375)	$	2,236,813
Income distributions — Central Cash Management Fund		7,649
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		36,336
Total income		2,280,798
Expenses: Management fee		906,528
Administration fee		140,216
Services to shareholders		4,063
Distribution service fee (Class B)		32,966
Record keeping fees (Class B)		11,384
Custodian fee		6,848
Professional fees		31,675
Trustees fees and expenses		4,918
Reports to shareholders		33,105
Other		7,617
Total expenses		1,179,320
Net investment income (loss)		1,101,478
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from investments		21,393,064
Change in net unrealized appreciation (depreciation) on investments		(9,922,300	)
Net gain (loss)		11,470,764
Net increase (decrease) in net assets resulting from operations	$	12,572,242

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	1,101,478		$	2,826,446
Net realized gain (loss)		21,393,064			30,809,807
Change in net unrealized appreciation (depreciation)		(9,922,300	)		18,581,828
Net increase (decrease) in net assets resulting from operations		12,572,242			52,218,081
Distributions to shareholders from: Net investment income: Class A		(2,506,080	)		(3,068,046	)
Class B		(161,946	)		(217,515	)
Total distributions		(2,668,026	)		(3,285,561	)
Fund share transactions: Class A Proceeds from shares sold		20,769,273			28,003,012
Reinvestment of distributions		2,506,080			3,068,046
Payments for shares redeemed		(27,424,088	)		(62,437,627	)
Net increase (decrease) in net assets from Class A share transactions		(4,148,735	)		(31,366,569	)
Class B Proceeds from shares sold		2,095,735			3,472,987
Reinvestment of distributions		161,946			217,515
Payments for shares redeemed		(3,417,429	)		(5,804,013	)
Net increase (decrease) in net assets from Class B share transactions		(1,159,748	)		(2,113,511	)
Increase (decrease) in net assets		4,595,733			15,452,440
Net assets at beginning of period		273,705,212			258,252,772
Net assets at end of period (including undistributed net investment income of $1,070,064 and $2,636,612, respectively)	$	278,300,945		$	273,705,212
Other Information
Class A Shares outstanding at beginning of period		20,271,172			23,383,684
Shares sold		1,635,347			2,611,387
Shares issued to shareholders in reinvestment of distributions		187,021			271,509
Shares redeemed		(2,136,643	)		(5,995,408	)
Net increase (decrease) in Class A shares		(314,275	)		(3,112,512	)
Shares outstanding at end of period		19,956,897			20,271,172
Class B Shares outstanding at beginning of period		2,147,844			2,341,698
Shares sold		163,074			327,236
Shares issued to shareholders in reinvestment of distributions		12,067			19,214
Shares redeemed		(267,581	)		(540,304	)
Net increase (decrease) in Class B shares		(92,440	)		(193,854	)
Shares outstanding at end of period		2,055,404			2,147,844

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

Financial Highlights

						Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period		$	12.21			$	10.04		$	7.93		$	20.12		$	22.93		$	19.98
Income (loss) from investment operations: Net investment incomea			.05				.12			.16			.13			.18			.15
Net realized and unrealized gain (loss)			.51				2.19			2.11			(4.92	)		.54			4.69
Total from investment operations			.56				2.31			2.27			(4.79	)		.72			4.84
Less distributions from: Net investment income			(.13	)			(.14	)		(.16	)		(.29	)		(.23	)		(.18	)
Net realized gains			—				—			—			(7.11	)		(3.30	)		(1.71	)
Total distributions			(.13	)			(.14	)		(.16	)		(7.40	)		(3.53	)		(1.89	)
Net asset value, end of period		$	12.64			$	12.21		$	10.04		$	7.93		$	20.12		$	22.93
Total Return (%)			4.50	**			23.07			29.70			(33.42	)b		3.06			25.06
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			252				247			235			223			468			562
Ratio of expenses before expense reductions (%)			.81	*			.82			.79			.83			.78			.79
Ratio of expenses after expense reductions (%)			.81	*			.82			.79			.82			.78			.79
Ratio of net investment income (%)			.82	*			1.14			1.92			1.13			.85			.71
Portfolio turnover rate (%)			20	**			38			72			49			110			52
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 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period		$	12.20			$	10.03		$	7.92		$	20.08		$	22.88		$	19.93
Income (loss) from investment operations: Net investment incomea			.03				.08			.13			.09			.10			.07
Net realized and unrealized gain (loss)			.51				2.19			2.12			(4.92	)		.54			4.67
Total from investment operations			.54				2.27			2.25			(4.83	)		.64			4.74
Less distributions from: Net investment income			(.08	)			(.10	)		(.14	)		(.22	)		(.14	)		(.08	)
Net realized gains			—				—			—			(7.11	)		(3.30	)		(1.71	)
Total distributions			(.08	)			(.10	)		(.14	)		(7.33	)		(3.44	)		(1.79	)
Net asset value, end of period		$	12.66			$	12.20		$	10.03		$	7.92		$	20.08		$	22.88
Total Return (%)			4.39	**			22.66			29.28			(33.67	)b		2.67			24.59
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			26				26			23			24			34			90
Ratio of expenses before expense reductions (%)			1.15	*			1.17			1.14			1.18			1.16			1.17
Ratio of expenses after expense reductions (%)			1.15	*			1.17			1.14			1.17			1.16			1.17
Ratio of net investment income (%)			.48	*			.79			1.57			.78			.47			.33
Portfolio turnover rate (%)			20	**			38			72			49			110			52
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

DWS Dreman Small Mid Cap Value VIP (the "Fund") is a diversified series of DWS 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.

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

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $103,501,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($10,090,000) and December 31, 2017 ($93,411,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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 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, 2011, purchases and sales of investment transactions (excluding short-term investments) aggregated $55,002,638 and $70,624,642, respectively.

C. Related Parties

Dreman Value Management, L.L.C. ("DVM") serves as subadvisor. As a subadvisor to the Fund, DVM makes investment decisions and buys and sells securities for the Fund. DVM is paid by the Advisor for the services DVM provides to the Fund.

$0-$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	%

Service to Shareholders	Total Aggregated		Unpaid at June 30, 2011
Class A	$	313	$	225
Class B		194		134
	$	507	$	359

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

D. Ownership of the Fund

At June 30, 2011, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 38%, 25% and 14%. Four participating Insurance Companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 39%, 18%, 11% and 11%.

E. Line of Credit

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2DSMC-3 (R-023294-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Global Thematic VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

10 Statement of Assets and Liabilities

11 Statement of Operations

12 Statement of Changes in Net Assets

14 Financial Highlights

16 Notes to Financial Statements

20 Proxy Voting

21 Summary of Management Fee Evaluation by Independent Fee Consultant

Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. Any decline in value of a Fund security that is out on loan by the Fund will adversely affect performance. Financial failure of the borrower may mean a delay in recovery or loss of rights in the collateral. Stocks may decline in value. 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, 2011

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 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 DWS Global Thematic VIP
[] DWS Global Thematic VIP — Class A [] MSCI World Index		The Morgan Stanley Capital International (MSCI) World Index is an unmanaged, capitalization-weighted measure of global stock markets including the US, Canada, Europe, Australia and the Far East. The index is calculated using closing local market prices and translates into US dollars using the London close foreign exchange rates. 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
DWS Global Thematic VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,382		$	12,932		$	10,082		$	11,060		$	17,552
Class A	Average annual total return		3.82	%		29.32	%		0.27	%		2.04	%		5.79	%
MSCI World Index	Growth of $10,000	$	10,529		$	13,051		$	10,140		$	11,194		$	14,786
MSCI World Index	Average annual total return		5.29	%		30.51	%		0.47	%		2.28	%		3.99	%
DWS Global Thematic VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Class*
Class B	Growth of $10,000	$	10,356		$	12,880		$	9,967		$	10,854		$	19,480
Class B	Average annual total return		3.56	%		28.80	%		-0.11	%		1.65	%		7.69	%
MSCI World Index	Growth of $10,000	$	10,529		$	13,051		$	10,140		$	11,194		$	17,439
MSCI World Index	Average annual total return		5.29	%		30.51	%		0.47	%		2.28	%		6.37	%

The growth of $10,000 is cumulative.

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

* The Fund commenced offering Class B shares on July 1, 2002. Index returns began on June 30, 2002.

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges, redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. 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, 2011 to June 30, 2011).

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, 2011
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,038.20	$	1,035.60
Expenses Paid per $1,000*	$	5.21	$	6.97
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,019.69	$	1,017.95
Expenses Paid per $1,000*	$	5.16	$	6.90

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Global Thematic VIP	1.03%		1.38%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Common Stocks	95%	94%
Participatory Notes	2%	3%
Preferred Stocks	2%	1%
Cash Equivalents	1%	2%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/11	12/31/10

Financials	22%	21%
Information Technology	15%	14%
Health Care	12%	12%
Consumer Discretionary	11%	6%
Industrials	11%	11%
Materials	9%	9%
Energy	7%	5%
Consumer Staples	6%	11%
Telecommunication Services	4%	7%
Utilities	3%	4%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/11	12/31/10

United States	36%	32%
Continental Europe	28%	23%
Asia (excluding Japan)	9%	8%
Latin America	8%	8%
Japan	7%	9%
United Kingdom	4%	8%
Middle East	3%	4%
Africa	3%	4%
Bermuda	1%	1%
Other	1%	3%
	100%	100%

Asset allocation, sector and geographical diversification are subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Shares		Value ($)

Common Stocks 94.6%
Australia 0.4%
Centamin Egypt Ltd.* (a) (Cost $312,232)		148,825		301,385
Austria 2.5%
Erste Group Bank AG		24,981		1,308,491
Raiffeisen Bank International AG		6,975		358,994
(Cost $1,121,668)				1,667,485
Bahrain 0.4%
Aluminium Bahrain (GDR) 144A (Cost $263,463)		21,937		241,088
Bermuda 0.7%
Frontline Ltd. (b) (c)		14,347		211,475
Lazard Ltd. "A" (b)		7,284		270,236
(Cost $571,717)				481,711
Brazil 3.4%
All America Latina Logistica		72,817		612,621
Gol Linhas Aereas Inteligentes SA (ADR) (Preferred) (c)		26,956		327,515
Itau Unibanco Holding SA (ADR) (Preferred)		15,612		367,663
SLC Agricola SA		63,318		750,168
Tam SA (ADR) (Preferred) (c)		11,749		256,481
(Cost $2,207,042)				2,314,448
Cayman Islands 0.4%
Herbalife Ltd. (b) (Cost $100,710)		4,946		285,087
China 2.3%
Home Inns & Hotels Management, Inc. (ADR)*		7,418		282,181
Li Ning Co., Ltd. (c)		101,452		175,612
Mindray Medical International Ltd. (ADR) (c)		22,649		635,304
Trina Solar Ltd. (ADR)* (c)		19,840		444,813
(Cost $1,739,635)				1,537,910
Colombia 0.4%
Bancolombia SA (ADR) (Preferred) (Cost $230,654)		4,248		283,469
Denmark 0.9%
Vestas Wind Systems AS* (Cost $811,836)		26,326		612,023
Egypt 0.5%
Orascom Telecom Holding SAE (GDR) REG S* (Cost $177,339)		97,029		335,929
France 0.8%
Carrefour SA* (c) (Cost $640,011)		13,166		540,737
Germany 10.2%
Axel Springer AG		13,694		676,345
Commerzbank AG*		231,496		995,458
Deutsche Lufthansa AG (Registered)		69,505		1,513,805
Deutsche Post AG (Registered)		29,139		559,576
E.ON AG		24,872		706,066
Muenchener Rueckversicherungs-Gesellschaft AG (Registered)		6,498		992,018
RWE AG		9,398		520,128
Siemens AG (Registered)		7,218		991,067
(Cost $6,624,138)				6,954,463
	Shares		Value ($)

Greece 0.3%
Hellenic Exchanges SA (Cost $204,528)		28,382		202,451
India 3.2%
ICICI Bank Ltd. (ADR)		16,810		828,733
Larsen & Toubro Ltd.		10,052		413,291
Mahindra & Mahindra Ltd.		30,627		481,559
Reliance Industries Ltd.		22,566		453,200
(Cost $2,066,130)				2,176,783
Indonesia 0.5%
PT Semen Gresik (Persero) Tbk (Cost $236,713)		305,993		343,226
Israel 1.6%
NICE Systems Ltd. (ADR)*		5,702		207,324
Teva Pharmaceutical Industries Ltd. (ADR)		18,558		894,867
(Cost $1,064,304)				1,102,191
Japan 6.6%
Dai-ichi Life Insurance Co., Ltd.		193		270,233
FANUC Corp.		1,900		316,828
Hitachi Ltd.		126,000		744,821
INPEX Corp.		181		1,336,274
Mitsubishi UFJ Financial Group, Inc.		121,600		591,982
Toyota Motor Corp.		25,200		1,060,991
Toyota Motor Corp. (ADR)		1,736		143,081
(Cost $3,627,928)				4,464,210
Kazakhstan 0.0%
Kazakhstan Kagazy PLC (GDR)* (Cost $886,300)		174,800		12,236
Korea 2.6%
NHN Corp.*		2,018		357,980
Samsung Electronics Co., Ltd.		1,843		1,432,452
(Cost $1,660,241)				1,790,432
Luxembourg 0.2%
Ternium SA (ADR) (d) (Cost $119,285)		3,529		104,211
Malaysia 0.4%
Axiata Group Bhd. (Cost $196,103)		169,800		281,908
Mexico 0.9%
Grupo Aeroportuario del Sureste SAB de CV (ADR)		4,205		247,843
Grupo Financiero Banorte SAB de CV "O"		86,640		393,371
(Cost $584,002)				641,214
Netherlands 4.3%
Koninklijke (Royal) KPN NV		39,955		580,789
QIAGEN NV*		22,841		437,872
Unilever NV (CVA)		36,614		1,199,476
VimpelCom Ltd. (ADR) (e)		55,206		704,429
(Cost $2,955,511)				2,922,566
Panama 1.7%
Copa Holdings SA "A" (Cost $750,332)		16,997		1,134,380
Peru 0.4%
Credicorp Ltd. (Cost $300,398)		3,065		263,896
	Shares		Value ($)

Puerto Rico 1.4%
Popular, Inc.* (c) (Cost $978,172)		336,183		927,865
Russia 0.9%
Aeroflot-Russian Airlines		122,917		304,808
VTB Bank OJSC (GDR) REG S		53,416		329,020
(Cost $652,052)				633,828
South Africa 2.6%
MTN Group Ltd.		31,639		674,138
Murray & Roberts Holdings Ltd.		62,871		279,125
Standard Bank Group Ltd.		37,732		558,330
Tiger Brands Ltd.		9,049		264,474
(Cost $1,546,951)				1,776,067
Sweden 2.1%
Telefonaktiebolaget LM Ericsson "B" (Cost $1,118,046)		97,949		1,408,756
Switzerland 1.9%
Julius Baer Group Ltd.*		12,607		520,372
Roche Holding AG (Genusschein)		4,789		801,195
(Cost $1,215,793)				1,321,567
Thailand 0.1%
Seamico Securities PCL (Foreign Registered)* (Cost $153,906)		1,403,300		79,014
Turkey 1.3%
Turkiye Garanti Bankasi AS		147,649		669,792
Turkiye Vakiflar Bankasi TAO "D"		86,720		196,135
(Cost $880,513)				865,927
United Kingdom 3.5%
African Minerals Ltd.* (f)		14,153		117,666
Anglo American PLC		6,722		333,127
Barratt Developments PLC*		200,908		368,399
GlaxoSmithKline PLC		37,163		795,685
Tesco PLC		113,551		733,367
(Cost $2,075,008)				2,348,244
United States 35.2%
Abbott Laboratories		13,475		709,055
Advanced Micro Devices, Inc.* (c)		81,702		571,097
AGCO Corp.*		1,182		58,344
Allscripts Healthcare Solutions, Inc.* (c)		27,878		541,391
Apple, Inc.*		6,059		2,033,825
Bank of America Corp.		104,443		1,144,695
Calpine Corp.* (c)		40,228		648,878
Chevron Corp.		5,310		546,080
Cisco Systems, Inc.		30,572		477,229
DreamWorks Animation SKG, Inc. "A"* (c)		12,409		249,421
Electronic Arts, Inc.*		14,543		343,215
Exxon Mobil Corp.		8,938		727,374
General Motors Co.*		35,460		1,076,566
Harris Corp. (c)		12,188		549,191
Interpublic Group of Companies, Inc. (c)		49,863		623,288
iRobot Corp.* (c)		2,970		104,811
JPMorgan Chase & Co.		31,914		1,306,559
Kinetic Concepts, Inc.* (c)		12,582		725,101
Laboratory Corp. of America Holdings*		9,464		916,021
Life Technologies Corp.*		20,881		1,087,274
Medco Health Solutions, Inc.*		6,415		362,576
	Shares		Value ($)

Monsanto Co.		13,280		963,331
Morgan Stanley (c)		52,902		1,217,275
NCR Corp.*		33,724		637,046
New York Times Co. "A"* (c)		33,206		289,556
Newmont Mining Corp.		17,051		920,242
RadioShack Corp. (c)		26,308		350,159
Schlumberger Ltd.		6,503		561,859
Symantec Corp.*		36,009		710,097
The Mosaic Co.		23,398		1,584,747
WebMD Health Corp.* (c)		4,388		200,005
Whirlpool Corp. (c)		10,964		891,592
Williams Companies, Inc. (c)		24,191		731,778
(Cost $22,423,883)				23,859,678
Total Common Stocks (Cost $60,496,544)				64,216,385

Preferred Stock 1.6%
Germany
Volkswagen AG (Cost $811,860)		5,070		1,045,308

Participatory Notes 2.2%
Jordan 0.2%
Arab Bank PLC (issuer HSBC Bank PLC), Expiration Date 4/12/2013* (Cost $162,698)		10,256		121,118
Nigeria 0.5%
Bank of Nigeria (issuer HSBC Bank PLC), Expiration Date 11/5/2013*		2,034,569		166,767
Guaranty Trust Bank PLC (issuer Morgan Stanley BV), Expiration Date 3/25/2013*		536,764		54,838
Zenith Bank Ltd. (issuer Morgan Stanley BV), Expiration Date 3/25/2013*		1,015,714		97,642
(Cost $307,700)				319,247
Pakistan 0.2%
National Bank of Pakistan (issuer Merrill Lynch International & Co.), Expiration Date 2/25/2015* (Cost $200,357)		296,691		174,005
Saudi Arabia 1.3%
Saudi Basic Industrial Corp. (issuer HSBC Bank PLC), Expiration Date 3/26/2012*		18,969		526,059
Yanbu National Petrochemicals Co. (issuer HSBC Bank PLC), Expiration Date 1/7/2013		28,701		362,006
(Cost $829,726)				888,065
Total Participatory Notes (Cost $1,500,481)				1,502,435

Securities Lending Collateral 13.6%
Daily Assets Fund Institutional, 0.13% (g) (h) (Cost $9,252,532)		9,252,532		9,252,532

Cash Equivalents 1.5%
Central Cash Management Fund, 0.11% (g) (Cost $1,012,516)		1,012,516		1,012,516

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $73,073,933)+		113.5			77,029,176
Other Assets and Liabilities, Net		(13.5	)		(9,150,490	)
Net Assets		100.0			67,878,686

* Non-income producing security.

+ The cost for federal income tax purposes was $73,473,607. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $3,555,569. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $7,048,493 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,492,924.

(a) Security is listed in country of domicile. Significant business activities of company are in Egypt.

(b) Listed on the New York Stock Exchange.

(c) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $9,129,036, which is 13.4% of net assets.

(d) Security is listed in country of domicile. Significant business activities of company are in Argentina, Mexico and Venezuela.

(e) Security is listed in country of domicile. Significant business activities of company are in Eastern Europe and South Asia.

(f) Security is listed in country of domicile. Significant business activities of company are in Africa.

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

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

ADR: American Depositary Receipt

CVA: Certificaten Van Aandelen

GDR: Global Depositary Receipt

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, US persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks & Preferred Stock (i)
Australia	$	—	$	301,385	$	—	$	301,385
Austria		—		1,667,485		—		1,667,485
Bahrain		—		241,088		—		241,088
Bermuda		481,711		—		—		481,711
Brazil		2,314,448		—		—		2,314,448
Cayman Islands		285,087		—		—		285,087
China		1,362,298		175,612		—		1,537,910
Colombia		283,469		—		—		283,469
Denmark		—		612,023		—		612,023
Egypt		—		335,929		—		335,929
France		—		540,737		—		540,737
Germany		—		7,999,771		—		7,999,771
Greece		—		202,451		—		202,451
India		828,733		1,348,050		—		2,176,783
Indonesia		—		343,226		—		343,226
Israel		1,102,191		—		—		1,102,191
Japan		143,081		4,321,129		—		4,464,210
Kazakhstan		—		12,236		—		12,236
Korea		—		1,790,432		—		1,790,432
Luxembourg		104,211		—		—		104,211
Malaysia		—		281,908		—		281,908
Mexico		641,214		—		—		641,214
Netherlands		704,429		2,218,137		—		2,922,566
Panama		1,134,380		—		—		1,134,380
Peru		263,896		—		—		263,896
Puerto Rico		927,865		—		—		927,865
Russia		—		633,828		—		633,828
South Africa		—		1,776,067		—		1,776,067
Sweden		—		1,408,756		—		1,408,756
Switzerland		—		1,321,567		—		1,321,567
Thailand		—		79,014		—		79,014
Turkey		—		865,927		—		865,927
United Kingdom		—		2,348,244		—		2,348,244
United States		23,859,678		—		—		23,859,678
Participatory Notes (i)		—		1,502,435		—		1,502,435
Short-Term Investments (i)		10,265,048		—		—		10,265,048
Total	$	44,701,739	$	32,327,437	$	—	$	77,029,176

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(i) 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, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $62,808,885) — including $9,129,036 of securities loaned	$	66,764,128
Investment in Daily Assets Fund Institutional (cost $9,252,532)*		9,252,532
Investment in Central Cash Management Fund (cost $1,012,516)		1,012,516
Total investments in securities, at value (cost $73,073,933)		77,029,176
Foreign currency, at value (cost $86,043)		87,072
Receivable for investments sold		395,812
Receivable for Fund shares sold		16,462
Dividends receivable		114,430
Interest receivable		1,642
Foreign taxes recoverable		19,921
Other assets		444
Total assets		77,664,959
Liabilities
Payable upon return of securities loaned		9,252,532
Payable for investments purchased		322,707
Payable for Fund shares redeemed		97,112
Accrued management fee		29,092
Other accrued expenses and payables		84,830
Total liabilities		9,786,273
Net assets, at value	$	67,878,686
Net Assets Consist of
Undistributed net investment income		592,982
Net unrealized appreciation (depreciation) on: Investments		3,955,243
Foreign currency		482
Accumulated net realized gain (loss)		(48,711,711	)
Paid-in capital		112,041,690
Net assets, at value	$	67,878,686
Class A Net Asset Value, offering and redemption price per share ($63,773,789 ÷ 6,659,301 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	9.58
Class B Net Asset Value, offering and redemption price per share ($4,104,897 ÷ 427,416 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	9.60

* 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, 2011 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $100,814)	$	971,842
Income distributions — Central Cash Management Fund		519
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		35,500
Total income		1,007,861
Expenses: Management fee		324,753
Administration fee		35,492
Services to shareholders		1,499
Distribution service fee (Class B)		5,740
Record keeping fees (Class B)		2,273
Custodian fee		65,657
Audit and tax fees		31,313
Legal fees		4,282
Reports to shareholders		10,011
Trustees' fees and expenses		2,445
Other		19,646
Total expenses before expense reductions		503,111
Expense reductions		(128,529	)
Total expenses after expense reductions		374,582
Net investment income (loss)		633,279
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		4,804,780
Foreign currency		(62,483	)
		4,742,297
Change in net unrealized appreciation (depreciation) on: Investments		(2,663,021	)
Foreign currency		(1,626	)
		(2,664,647	)
Net gain (loss)		2,077,650
Net increase (decrease) in net assets resulting from operations	$	2,710,929

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	633,279		$	514,123
Net realized gain (loss)		4,742,297			7,206,315
Change in net unrealized appreciation (depreciation)		(2,664,647	)		899,469
Net increase (decrease) in net assets resulting from operations		2,710,929			8,619,907
Distributions to shareholders from: Net investment income: Class A		(391,766	)		(621,927	)
Class B		(9,700	)		(28,358	)
Total distributions		(401,466	)		(650,285	)
Fund share transactions: Class A Proceeds from shares sold		1,408,415			5,854,566
Reinvestment of distributions		391,766			621,927
Payments for shares redeemed		(7,948,644	)		(12,215,497	)
Net increase (decrease) in net assets from Class A share transactions		(6,148,463	)		(5,739,004	)
Class B Proceeds from shares sold		24,012			308,827
Reinvestment of distributions		9,700			28,358
Payments for shares redeemed		(933,653	)		(1,123,823	)
Net increase (decrease) in net assets from Class B share transactions		(899,941	)		(786,638	)
Increase (decrease) in net assets		(4,738,941	)		1,443,980
Net assets at beginning of period		72,617,627			71,173,647
Net assets at end of period (including undistributed net investment income of $592,982 and $361,169, respectively)	$	67,878,686		$	72,617,627
Other Information
Class A Shares outstanding at beginning of period		7,301,949			8,018,621
Shares sold		146,685			692,269
Shares issued to shareholders in reinvestment of distributions		39,334			72,065
Shares redeemed		(828,667	)		(1,481,006	)
Net increase (decrease) in Class A shares		(642,648	)		(716,672	)
Shares outstanding at end of period		6,659,301			7,301,949
Class B Shares outstanding at beginning of period		519,624			617,302
Shares sold		2,486			36,659
Shares issued to shareholders in reinvestment of distributions		971			3,275
Shares redeemed		(95,665	)		(137,612	)
Net increase (decrease) in Class B shares		(92,208	)		(97,678	)
Shares outstanding at end of period		427,416			519,624

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	9.28		$	8.24		$	5.84		$	15.66		$	17.39		$	14.44
Income (loss) from investment operations: Net investment incomea		.09			.06			.08			.11			.14			.15	c
Net realized and unrealized gain (loss)		.27			1.06			2.42			(5.83	)		.88			4.02
Total from investment operations		.36			1.12			2.50			(5.72	)		1.02			4.17
Less distributions from: Net investment income		(.06	)		(.08	)		(.10	)		(.19	)		(.11	)		(.09	)
Net realized gains		—			—			—			(3.91	)		(2.64	)		(1.13	)
Total distributions		(.06	)		(.08	)		(.10	)		(4.10	)		(2.75	)		(1.22	)
Net asset value, end of period	$	9.58		$	9.28		$	8.24		$	5.84		$	15.66		$	17.39
Total Return (%)b		3.82	**		13.65			43.82			(47.75	)		6.29			30.14	c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		64			68			66			59			151			143
Ratio of expenses before expense reductions (%)		1.39	*		1.41			1.38			1.47			1.44			1.38
Ratio of expenses after expense reductions (%)		1.03	*		1.05			1.04			1.09			1.11			1.04
Ratio of net investment income (%)		1.81	*		.77			1.23			1.09			.82			.92	c
Portfolio turnover rate (%)		71	**		165			190			229			191			136
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.004 per share and an increase in the ratio of net investment income of 0.03%. Excluding this non-recurring income, total return would have been 0.02% lower. * Annualized ** Not annualized

				Years Ended December 31,
Class B	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	9.29		$	8.25		$	5.85		$	15.66		$	17.38		$	14.43
Income (loss) from investment operations: Net investment incomea		.07			.04			.06			.07			.07			.09	c
Net realized and unrealized gain (loss)		.26			1.05			2.42			(5.83	)		.90			4.02
Total from investment operations		.33			1.09			2.48			(5.76	)		.97			4.11
Less distributions from: Net investment income		(.02	)		(.05	)		(.08	)		(.14	)		(.05	)		(.03	)
Net realized gains		—			—			—			(3.91	)		(2.64	)		(1.13	)
Total distributions		(.02	)		(.05	)		(.08	)		(4.05	)		(2.69	)		(1.16	)
Net asset value, end of period	$	9.60		$	9.29		$	8.25		$	5.85		$	15.66		$	17.38
Total Return (%)b		3.56	**		13.24			43.23			(47.87	)		5.84			29.65	c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		4			5			5			4			10			25
Ratio of expenses before expense reductions (%)		1.75	*		1.76			1.73			1.82			1.81			1.76
Ratio of expenses after expense reductions (%)		1.38	*		1.40			1.39			1.45			1.47			1.43
Ratio of net investment income (%)		1.46	*		.42			.88			.73			.46			.53	c
Portfolio turnover rate (%)		71	**		165			190			229			191			136
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.004 per share and an increase in the ratio of net investment income of 0.03%. Excluding this non-recurring income, total return would have been 0.02% lower. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Global Thematic VIP (the "Fund") is a diversified series of DWS 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 (US or foreign) or over-the-counter market on which they trade and are categorized as Level 1 securities. 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. 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.

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

Participatory Notes. The Fund invests 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.

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $53,053,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($35,242,000) and December 31, 2017 ($17,811,000), the respective expiration dates, whichever occurs first.

In addition, from November 1, 2010 through December 31, 2010, the Fund incurred $43,000 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended December 31, 2011.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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 and may include proceeds from litigation.

B. Purchases and Sales of Securities

During the six months ended June 30, 2011, purchases and sales of investment transactions (excluding short-term investments) aggregated $50,034,729 and $57,332,573, respectively.

C. Related Parties

Global Thematic Partners, LLC ("GTP") serves as subadvisor. As a subadvisor to the Fund, GTP makes investment decisions and buys and sells securities for the Fund. GTP is paid by the Advisor for the services GTP provides to the Fund.

$0-$250 million	.915	%
Next $500 million	.865	%
Next $750 million	.815	%
Next $1.5 billion	.765	%
Over $3 billion	.715	%

Class A	1.03%
Class B	1.43%

Accordingly, for the six months ended June 30, 2011, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $128,362, and the amount charged aggregated $196,391, which was equivalent to an annualized effective rate of 0.55% of the Fund's average daily net assets.

Services to Shareholders	Total Aggregated		Waived		Unpaid at June 30, 2011
Class A	$	167	$	167	$	—
Class B		35		—		21
	$	202	$	167	$	21

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

D. Investing in Emerging Markets

E. Ownership of the Fund

At June 30, 2011, two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 58% and 32%. One Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 98%.

F. Line of Credit

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2GT-3 (R-023295-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Government & Agency Securities VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

10 Statement of Assets and Liabilities

10 Statement of Operations

11 Statement of Changes in Net Assets

13 Financial Highlights

15 Notes to Financial Statements

20 Proxy Voting

21 Summary of Management Fee Evaluation by Independent Fee Consultant

Bond investments are subject to interest-rate and credit risks. 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. In the current market environment, mortgage backed securities are experiencing increased volatility. The "full faith and credit" guarantee of the US government applies to the timely repayment of interest, and does not eliminate market risk. 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, 2011

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 are 0.64% and 0.99% 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 DWS Government & Agency Securities VIP
[] DWS Government & Agency Securities VIP — Class A [] Barclays Capital GNMA Index		The Barclays Capital 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
DWS Government & Agency Securities VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,411		$	10,427		$	12,385		$	13,986		$	16,982
Class A	Average annual total return		4.11	%		4.27	%		7.39	%		6.94	%		5.44	%
Barclays Capital GNMA Index	Growth of $10,000	$	10,352		$	10,491		$	12,326		$	14,122		$	17,594
Barclays Capital GNMA Index	Average annual total return		3.52	%		4.91	%		7.22	%		7.15	%		5.81	%
DWS Government & Agency Securities VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Class*
Class B	Growth of $10,000	$	10,396		$	10,388		$	12,262		$	13,723		$	15,190
Class B	Average annual total return		3.96	%		3.88	%		7.03	%		6.54	%		4.76	%
Barclays Capital GNMA Index	Growth of $10,000	$	10,352		$	10,491		$	12,326		$	14,122		$	16,207
Barclays Capital GNMA Index	Average annual total return		3.52	%		4.91	%		7.22	%		7.15	%		5.51	%

The growth of $10,000 is cumulative.

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

* The Fund commenced offering Class B shares on July 1, 2002. Index returns began on June 30, 2002.

Information About Your Fund's Expenses

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, 2011
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,041.10	$	1,039.60
Expenses Paid per $1,000*	$	3.49	$	5.21
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,021.37	$	1,019.69
Expenses Paid per $1,000*	$	3.46	$	5.16

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Government & Agency Securities VIP	.69%		1.03%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Mortgage-Backed Securities Pass-Throughs	62%	69%
Government & Agency Obligations	19%	14%
Collateralized Mortgage Obligation	19%	15%
Cash Equivalents	0%	2%
	100%	100%

Coupons*	6/30/11	12/31/10

Less than 4.5%	52%	4%
4.5%-5.49%	31%	50%
5.5%-6.49%	10%	40%
6.5%-7.49%	5%	4%
7.5% and Greater	2%	2%
	100%	100%

Interest Rate Sensitivity	6/30/11	12/31/10

Effective Maturity	5.5 years	5.9 years
Effective Duration	5.4 years	5.0 years

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

Asset allocation, coupons and interest rate sensitivity are subject to change.

Effective maturity is the weighted average of the 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.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Principal Amount ($)		Value ($)

Mortgage-Backed Securities Pass-Throughs 66.8%
Federal Home Loan Mortgage Corp.:
4.5%, 3/1/2039 (a)		12,000,000		12,396,563
5.0%, 11/1/2036 (a)		3,000,000		3,182,344
7.0%, with various maturities from 6/1/2032 until 8/1/2035		204,258		227,692
Federal National Mortgage Association:
4.0%, 10/1/2039 (a)		12,000,000		12,000,000
4.5%, with various maturities from 2/1/2039 until 5/1/2041 (a)		11,667,884		12,074,048
5.0%, with various maturities from 10/1/2033 until 7/1/2036 (a)		364,943		389,662
Government National Mortgage Association:
4.5%, with various maturities from 2/15/2039 until 5/20/2041 (a)		11,168,865		11,781,275
5.0%, with various maturities from 12/15/2032 until 5/20/2041 (a) (b)		5,601,634		6,280,272
5.5%, with various maturities from 3/15/2029 until 7/20/2040 (a)		12,135,156		13,478,774
6.0%, with various maturities from 7/15/2014 until 7/20/2039		18,854,844		21,067,874
6.5%, with various maturities from 4/15/2031 until 2/15/2039		4,979,903		5,626,830
7.0%, with various maturities from 2/20/2027 until 11/15/2038		862,829		979,583
7.5%, with various maturities from 4/15/2026 until 1/15/2037		727,913		839,252
Total Mortgage-Backed Securities Pass-Throughs (Cost $93,881,789)				100,324,169

Collateralized Mortgage Obligations 20.4%
Fannie Mae Benchmark Remic, "ZA", Series 2007-B2, 5.5%, 6/25/2037		1,751,622		1,913,463
FannieMae Whole Loan, "1A6", Series 2007-W8, 6.482%*, 9/25/2037		746,276		784,807
Federal Home Loan Mortgage Corp.:
"OA", Series 3179, Principal Only, Zero Coupon, 7/15/2036		810,057		687,663
"FO", Series 2418, 1.087%*, 2/15/2032		463,839		471,713
"FA", Series 2419, 1.187%*, 2/15/2032		382,914		390,618
"FA", Series 2436, 1.187%*, 3/15/2032		364,615		371,830
"IK", Series 3754, Interest Only, 3.5%, 6/15/2025		2,456,890		324,056
"NI", Series 3657, Interest Only, 4.5%, 8/15/2027		2,258,386		239,106
"ZK", Series 3382, 5.0%, 7/15/2037		1,195,775		1,232,393
"22", Series 243, Interest Only, 5.239%**, 6/15/2021		1,989,430		231,412
"PI", Series 2535, Interest Only, 6.0%, 9/15/2032		847,620		59,091
"WS", Series 2877, Interest Only, 6.413%**, 10/15/2034		913,423		78,468
"A", Series 172, Interest Only, 6.5%, 1/1/2024		43,683		7,857
	Principal Amount ($)		Value ($)

"S", Series 2416, Interest Only, 7.913%**, 2/15/2032		573,715		109,074
"ST", Series 2411, Interest Only, 8.563%**, 6/15/2021		2,127,944		315,754
"KS", Series 2064, Interest Only, 9.963%**, 5/15/2022		529,222		105,552
Federal National Mortgage Association:
"FA", Series G92-53, 0.969%*, 9/25/2022		1,201,680		1,215,477
"OF", Series 2001-60, 1.136%*, 10/25/2031		193,561		196,845
"FB", Series 2002-30, 1.186%*, 8/25/2031		419,857		428,262
"FG", Series 2002-66, 1.186%*, 9/25/2032		639,459		652,205
"25", Series 351, Interest Only, 4.5%, 5/1/2019		436,034		44,577
"HI", Series 2009-77, Interest Only, 4.5%, 9/25/2027		1,878,999		274,352
"20", Series 334, Interest Only, 5.0%, 3/1/2018		317,093		31,598
"21", Series 334, Interest Only, 5.0%, 3/1/2018		212,599		22,044
''23", Series 339, Interest Only, 5.0%, 7/1/2018		448,044		43,953
"ZA", Series 2008-24, 5.0%, 4/25/2038		617,433		659,272
"PI", Series 2009-14, Interest Only, 5.5%, 3/25/2024		1,526,754		172,019
"ZQ", Series G93-39, 6.5%, 12/25/2023		416,322		467,268
"SA", Series G92-57, IOette, 82.85%**, 10/25/2022		66,978		130,955
Government National Mortgage Association:
"FB", Series 2001-28, 0.686%*, 6/16/2031		450,621		454,182
"JY", Series 2010-20, 4.0%, 12/20/2033		1,822,500		1,767,099
"LI", Series 2009-104, Interest Only, 4.5%, 12/16/2018		521,601		53,701
"NI", Series 2010-44, Interest Only, 4.5%, 10/20/2037		923,050		132,273
"CI", Series 2010-87, Interest Only, 4.5%, 11/20/2038		1,251,588		391,775
"MI", Series 2010-169, Interest Only, 4.5%, 8/20/2040		1,186,353		201,583
"VB", Series 2010-26, 5.0%, 1/20/2024		600,000		650,691
"KE", Series 2004-19, 5.0%, 3/16/2034		500,000		539,770
"ZM", Series 2004-24, 5.0%, 4/20/2034		2,144,816		2,302,116
"Z", Series 2004-61, 5.0%, 8/16/2034		1,054,719		1,098,268
"LE", Series 2004-87, 5.0%, 10/20/2034		1,000,000		1,057,478
"ZB", Series 2005-15, 5.0%, 2/16/2035		1,508,807		1,614,585
"GZ", Series 2005-24, 5.0%, 3/20/2035		457,594		450,623
"ZA", Series 2005-75, 5.0%, 10/16/2035		514,785		539,687
"CK", Series 2007-31, 5.0%, 5/16/2037		1,000,000		1,090,825
	Principal Amount ($)		Value ($)

"MZ", Series 2009-98, 5.0%, 10/16/2039		923,709		951,815
"AI", Series 2008-46, Interest Only, 5.5%, 5/16/2023		498,651		63,974
"AI", Series 2008-51, Interest Only, 5.5%, 5/16/2023		1,034,249		128,100
"GI", Series 2003-19, Interest Only, 5.5%, 3/16/2033		1,090,909		325,010
"ZA", Series 2006-7, 5.5%, 2/20/2036		2,277,985		2,539,112
"IB", Series 2010-130, Interest Only, 5.5%, 2/20/2038		1,964,508		147,559
"NZ", Series 2009-65, 5.5%, 8/20/2039		367,138		404,490
"KZ", Series 2009-78, 5.5%, 9/16/2039		336,842		357,178
"DI", Series 2009-10, Interest Only, 6.0%, 4/16/2038		552,833		98,817
"PY", Series 2009-122, 6.0%, 12/20/2039		561,709		619,260
"SA", Series 2008-44, Interest Only, 6.214%**, 5/20/2038		1,239,406		168,520
"QA", Series 2007-57, Interest Only, 6.314%**, 10/20/2037		752,524		102,810
"IP", Series 2009-118, Interest Only, 6.5%, 12/16/2039		230,829		45,338
"SA", Series 2006-69, Interest Only, 6.614%**, 12/20/2036		1,348,781		204,338
"PS", Series 2004-34, Interest Only, 6.964%**, 4/16/2034		314,168		53,799
"IC", Series 1997-4, Interest Only, 7.5%, 3/16/2027		892,755		198,045
"SK", Series 2003-11, Interest Only, 7.514%**, 2/16/2033		818,559		149,828
Total Collateralized Mortgage Obligations (Cost $27,496,088)				30,564,333

Government & Agency Obligations 20.4%
US Government Sponsored Agency 11.4%
Federal Home Loan Bank, 3.625%, 10/18/2013		16,000,000		17,077,024
	Principal Amount ($)		Value ($)

US Treasury Obligations 9.0%
US Treasury Bill, 0.135%***, 9/15/2011 (c)		1,045,000		1,044,956
US Treasury Notes:
0.75%, 6/15/2014		10,000,000		9,988,280
0.875%, 2/29/2012		2,500,000		2,512,100
				13,545,336
Total Government & Agency Obligations (Cost $30,672,485)				30,622,360

	Contracts		Value ($)

Call Options Purchased 0.0%
Floating Rate — LIBOR, Effective Date 6/28/2011, Expiration Date 9/28/2011, Cap Rate 3.205% (Cost $14,756)		3,261,000		14,756

Put Options Purchased 0.0%
10 Year US Treasury Note Future, Expiration Date 8/26/2011, Strike Price $122.0		35		44,297
Floating Rate — LIBOR, Effective Date 6/27/2011, Expiration Date 9/17/2011, Cap Rate 3.178%		3,261,000		14,674
Total Put Options Purchased (Cost $41,424)				58,971

	Shares		Value ($)

Securities Lending Collateral 5.7%
Daily Assets Fund Institutional, 0.13% (d) (e) (Cost $8,614,278)		8,614,278		8,614,278

Cash Equivalents 0.0%
Central Cash Management Fund, 0.11% (d) (Cost $11,974)		11,974		11,974

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $160,732,794)+		113.3			170,210,841
Other Assets and Liabilities, Net (b)		(13.0	)		(19,951,241	)
Net Assets		100.0			150,259,600

** These securities are shown at their current rate as of June 30, 2011.

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

+ The cost for federal income tax purposes was $160,732,834. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $9,478,007. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $9,965,884 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $487,877.

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

(b) All or a portion of these securities were on loan amounting to $6,280,272 (see Notes to Financial Statements). In addition, included in other assets and liabilities, net are pending sales, amounting to $2,178,861, that is also on loan. The value of all securities loaned at June 30, 2011 amounted to $8,437,424, which is 5.6% of net assets.

(c) At June 30, 2011, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(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.

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.

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 Federal Home Loan Mortgage Corp., Federal National Mortgage Association and Government National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in this investment portfolio.

At June 30, 2011, open futures contracts sold were as follows:

Futures

Currency

Expiration Date

Contracts

Notional Value ($)

Unrealized Depreciation ($)

10 Year US Treasury Note

USD

9/21/2011

366,984

(328

)

Currency Abbreviation

USD United States Dollar

At June 30, 2011, open interest rate swap contracts were as follows:

Effective/ Expiration Dates	Notional Amount ($)			Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Upfront Payments Paid/ (Received) ($)		Unrealized Depreciation ($)
10/28/2010 10/28/2025		320,000	1	Floating — LIBOR	Floating — 4.154%++		(12,441	)		—		(12,441	)
11/1/2010 11/1/2025		540,000	2	Floating — LIBOR	Floating — 4.123%++		(36,426	)		—		(36,426	)
11/12/2010 11/12/2025		640,000	1	Floating — LIBOR	Floating — 4.264%++		(24,015	)		—		(24,015	)
11/15/2010 11/15/2025		640,000	2	Floating — LIBOR	Floating — 4.560%++		(39,671	)		—		(39,671	)
11/16/2010 11/16/2025		320,000	1	Floating — LIBOR	Floating — 4.560%++		(9,275	)		—		(9,275	)
11/19/2010 11/19/2025		320,000	2	Floating — LIBOR	Floating — 5.072%++		(18,426	)		—		(18,426	)
11/23/2010 11/23/2025		150,000	1	Floating — LIBOR	Floating — 4.808%++		(3,498	)		—		(3,498	)
Total unrealized depreciation												(143,752	)

++ These interest rate swaps are shown at their current rate as of June 30, 2011.

At June 30, 2011, open total return swap contracts were as follows:

Effective/ Expiration Date		Notional Amount ($)				Fixed Cash Flows Paid			Reference Entity		Value ($)				Upfront Payments Paid/ (Received) ($)				Unrealized Depreciation ($)
5/28/2010 6/1/2012			6,900,000	3			0.45	%	Citi Global Interest Rate Strategy Index			(48,605	)			—				(48,605	)

Counterparties:

1 Morgan Stanley

2 Barclays Capital Securities, Inc.

3 Citigroup, Inc.

LIBOR: London Interbank Offered Rate

For information on the Fund's policy and additional disclosures regarding options purchased, futures contracts, options contracts, interest rate swap contracts and total return 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 (f) Mortgage-Backed Securities Pass-Throughs	$	—		$	100,324,169		$	—	$	100,324,169
Collateralized Mortgage Obligations		—			30,564,333					30,564,333
Government & Agency Obligations		—			30,622,360			—		30,622,360
Short-Term Investments (f)		8,626,252			—			—		8,626,252
Derivatives (g)		44,297			—			29,430		73,727
Total	$	8,670,549		$	161,510,862		$	29,430	$	170,210,841
Liabilities
Derivatives (g)	$	(328	)	$	(192,357	)	$	—	$	(192,685	)
Total	$	(328	)	$	(192,357	)	$	—	$	(192,685	)

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(f) See Investment Portfolio for additional detailed categorizations.

(g) Derivatives include value of options purchased, unrealized appreciation (depreciation) on open futures contracts, interest rate swap contracts and total return 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:

	Collateralized Mortgage Obligations			Put Options Purchased		Total
Balance as of December 31, 2010	$	518,128		$	—	$	518,128
Realized gains (loss)		42,664			—		42,664
Change in unrealized appreciation (depreciation)		(44,578	)		0		(44,578	)
Amortization premium/discount		(9,779	)		—		(9,779	)
Purchases		—			29,430		29,430
(Sales)		(506,435	)		—		(506,435	)
Transfers into Level 3		—			—		—
Transfers (out) of Level 3		—			—		—
Balance as of June 30, 2011	$	—		$	29,430	$	29,430
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2011	$	—		$	0	$	0

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

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments Investments in non-affiliated securities, at value (cost $152,106,542) — including $8,437,424 of securities loaned	$	161,584,589
Investment in Daily Assets Fund Institutional Fund (cost $8,614,278)*		8,614,278
Investment in Central Cash Management Fund (cost $11,974)		11,974
Total investments in securities, at value (cost $160,732,794)		170,210,841
Cash		10,310
Receivable for variation margin on futures contracts		69,842
Receivable for investments sold		17,355,350
Receivable for investments sold — when-issued/delayed delivery securities		76,126,530
Receivable for Fund shares sold		223
Interest receivable		717,739
Other assets		1,231
Total assets		264,492,066
Liabilities
Payable upon return of securities loaned		8,614,278
Payable for investments purchased		11,672,929
Payable for investments purchased — when-issued/delayed delivery securities		92,841,642
Line of credit loan payable		500,000
Payable for Fund shares redeemed		271,082
Unrealized depreciation on swap contracts		192,357
Accrued management fee		59,403
Other accrued expenses and payables		80,775
Total liabilities		114,232,466
Net assets, at value	$	150,259,600
Net Assets Consist of
Undistributed net investment income		2,957,833
Net unrealized appreciation (depreciation) on: Investments		9,478,047
Swap contracts		(192,357	)
Futures		(328	)
Accumulated net realized gain (loss)		1,819,265
Paid-in capital		136,197,140
Net assets, at value	$	150,259,600
Class A Net Asset Value, offering and redemption price per share ($144,473,331 ÷ 11,370,982 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	12.71
Class B Net Asset Value, offering and redemption price per share ($5,786,269 ÷ 455,391 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	12.71

* 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, 2011 (Unaudited)
Investment Income
Income: Interest	$	3,518,878
Income distributions — Central Cash Management Fund		2,855
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		902
Total income		3,522,635
Expenses: Management fee		348,283
Administration fee		77,396
Services to shareholders		1,192
Distribution service fee (Class B)		7,195
Record keeping fees (Class B)		2,543
Custodian fee		23,094
Audit and tax fees		31,886
Legal fees		4,826
Reports to shareholders		20,566
Trustees' fees and expenses		3,893
Interest expense		1,187
Other		21,709
Total expenses		543,770
Net investment income		2,978,865
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		1,728,061
Swap contracts		139,913
Futures		(115,531	)
Written options		(16,517	)
		1,735,926
Change in net unrealized appreciation (depreciation) on: Investments		1,343,891
Swap contracts		(33,822	)
Futures		145,355
		1,455,424
Net gain (loss)		3,191,350
Net increase (decrease) in net assets resulting from operations	$	6,170,215

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income	$	2,978,865		$	6,744,096
Net realized gain (loss)		1,735,926			3,185,188
Change in net unrealized appreciation (depreciation)		1,455,424			1,407,447
Net increase (decrease) in net assets resulting from operations		6,170,215			11,336,731
Distributions to shareholders from: Net investment income: Class A		(6,311,902	)		(7,785,441	)
Class B		(230,895	)		(277,185	)
Net realized gain: Class A		(2,391,762	)		—
Class B		(95,528	)		—
Total distributions		(9,030,087	)		(8,062,626	)
Fund share transactions: Class A Proceeds from shares sold		15,071,235			38,574,553
Reinvestment of distributions		8,703,664			7,785,441
Payments for shares redeemed		(33,813,043	)		(61,339,038	)
Net increase (decrease) in net assets from Class A share transactions		(10,038,144	)		(14,979,044	)
Class B Proceeds from shares sold		150,198			653,336
Reinvestment of distributions		326,423			277,185
Payments for shares redeemed		(446,055	)		(1,704,050	)
Net increase (decrease) in net assets from Class B share transactions		30,566			(773,529	)
Increase (decrease) in net assets		(12,867,450	)		(12,478,468	)
Net assets at beginning of period		163,127,050			175,605,518
Net assets at end of period (including undistributed net investment income of $2,957,833 and $6,521,765, respectively)	$	150,259,600		$	163,127,050
Other Information
Class A Shares outstanding at beginning of period		12,120,178			13,231,519
Shares sold		1,173,826			2,996,102
Shares issued to shareholders in reinvestment of distributions		700,214			623,833
Shares redeemed		(2,623,236	)		(4,731,276	)
Net increase (decrease) in Class A shares		(749,196	)		(1,111,341	)
Shares outstanding at end of period		11,370,982			12,120,178
Class B Shares outstanding at beginning of period		452,192			510,999
Shares sold		11,742			50,683
Shares issued to shareholders in reinvestment of distributions		26,240			22,193
Shares redeemed		(34,783	)		(131,683	)
Net increase (decrease) in Class B shares		3,199			(58,807	)
Shares outstanding at end of period		455,391			452,192

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	12.98		$	12.78		$	12.40		$	12.38		$	12.28		$	12.26
Income (loss) from investment operations: Net investment incomea		.25			.50			.52			.56			.58			.55
Net realized and unrealized gain (loss)		.27			.32			.45			.04			.12			(.06	)
Total from investment operations		.52			.82			.97			.60			.70			.49
Less distributions from: Net investment income		(.57	)		(.62	)		(.59	)		(.58	)		(.60	)		(.47	)
Net realized gains		(.22	)		—			—			—			—			—
Total distributions		(.79	)		(.62	)		(.59	)		(.58	)		(.60	)		(.47	)
Net asset value, end of period	$	12.71		$	12.98		$	12.78		$	12.40		$	12.38		$	12.28
Total Return (%)		4.11	**		6.61			8.08			4.93	b		5.95	b		4.16
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		144			157			169			211			199			211
Ratio of expenses before expense reductions (%)		.69	*		.64			.58			.66			.66			.67
Ratio of expenses after expense reductions (%)		.69	*		.64			.58			.65			.63			.67
Ratio of net investment income (%)		3.86	*		3.86			4.16			4.58			4.77			4.56
Portfolio turnover rate (%)		315	**		423			390			543			465			241
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 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	12.95		$	12.75		$	12.37		$	12.35		$	12.25		$	12.23
Income (loss) from investment operations: Net investment incomea		.23			.46			.48			.52			.53			.50
Net realized and unrealized gain (loss)		.27			.31			.45			.03			.12			(.06	)
Total from investment operations		.50			.77			.93			.55			.65			.44
Less distributions from: Net investment income		(.52	)		(.57	)		(.55	)		(.53	)		(.55	)		(.42	)
Net realized gains		(.22	)		—			—			—			—			—
Total distributions		(.74	)		(.57	)		(.55	)		(.53	)		(.55	)		(.42	)
Net asset value, end of period	$	12.71		$	12.95		$	12.75		$	12.37		$	12.35		$	12.25
Total Return (%)		3.96	**		6.24			7.70			4.60	b		5.43	b		3.74
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		6			6			7			8			5			33
Ratio of expenses before expense reductions (%)		1.03	*		.99			.92			1.00			1.04			1.07
Ratio of expenses after expense reductions (%)		1.03	*		.99			.92			1.00			1.01			1.07
Ratio of net investment income (%)		3.52	*		3.51			3.81			4.24			4.39			4.16
Portfolio turnover rate (%)		315	**		423			390			543			465			241
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

DWS Government & Agency Securities VIP (the "Fund") is a diversified series of DWS 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.

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.

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 based upon a price provided by the broker-dealer with which the option, was traded and are generally categorized as Level 3.

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

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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, 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

Interest Rate Swap Contracts. For the six months ended June 30, 2011, the Fund entered into interest rate swap transactions to gain exposure to different parts of the yield curve while managing overall duration. The use of interest rate swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an interest rate swap, the Fund agrees to pay to the other party to the interest rate swap (which is known as 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. Certain risks may arise when entering into swap transactions including counterparty default, liquidity or unfavorable changes in interest rates. In connection with these agreements, securities and or cash may be identified as collateral in accordance with the terms of the swap agreements 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 interest rate swap contract, 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. The value of the 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. 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.

A summary of the open interest rate swap contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the investment in interest rate swap contracts had a total notional amount of $2,930,000.

Total Return Swap Contracts. Total return swaps involve commitments to pay interest in exchange for a market-linked return based on a notional amount. For the six months ended June 30, 2011, the Fund entered into total return swap transactions to enhance potential gains. To the extent the total return of the reference security or index underlying the total return swap exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment or make a payment to the counterparty, respectively. Certain risks may arise when entering into swap transactions including counterparty default, liquidity or unfavorable changes in the value of underlying reference security or index. The value of the 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. 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 each measurement period are recorded as realized gain or loss in the Statement of Operations.

A summary of the open total return swap contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio.

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. Certain options, including options on indices, will require cash settlement by the Fund if the option is exercised. Interest rate options are comprised of multiple European style options that have periodic exercise dates within the terms of the contract. For the six months ended June 30, 2011, the Fund entered into purchased option contracts on interest rates in order to hedge portfolio assets against potential adverse interest rate movements.

The liability representing the Fund's obligation under an exchange-traded written option or investment in a purchased option is 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 and asked price are available. Over-the-counter written or purchased options are valued using dealer-supplied quotations. Gain or loss is recognized when the option contract expires, exercised or is closed.

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 or currencies hedged.

A summary of the option contracts as of June 30, 2011 is included in the Fund's Investment Portfolio. During the six months ended June 30, 2011, the Fund's investment in written option contracts had a total value generally indicative of a range from $0 to approximately $26,000 and purchased option contracts had a total value generally indicative of a range from $0 to approximately $74,000.

A summary of the open futures contracts as of June 30, 2011, is included in a table following the Fund's Investment Portfolio. For the period ended June 30, 2011, the investment in futures contracts purchased had a total notional value generally indicative of a range from $0 to approximately $2,288,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $367,000 to $16,307,000.

Asset Derivative		Purchased Options
Interest Rate Contracts (a)		$	73,727

The above derivative is located in the following Statement of Assets and Liabilities account:

(a) Investments in securities, at value (includes purchased options)

Liability Derivatives		Futures Contracts				Swap Contracts				Total
Interest Rate Contracts (a)		$	(328	)		$	(192,357	)		$	(192,685	)

Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts:

(a) Unrealized depreciation on futures and swap contracts. Includes cumulative depreciation of futures contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Realized Gain (Loss)		Purchased Options				Written Options				Swap Contracts				Futures Contracts				Total
Interest Rate Contracts (a)		$	51,730			$	(16,517	)		$	139,913			$	(115,531	)		$	59,595

Each of the above derivatives is located in the following Statement of Operations accounts:

(a) Net realized gain (loss) from investments (includes purchased options), written options, swap contracts and futures, respectively

Change in Net Unrealized Appreciation (Depreciation)		Purchased Options				Swap Contracts				Futures Contracts				Total
Interest Rate Contracts (a)		$	17,547			$	(33,822	)		$	145,355			$	129,080

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), swap contracts and futures, respectively

C. Purchases and Sales of Securities

During the six months ended June 30, 2011, purchases and sales of investment securities (excluding short-term investments and US Treasury obligations) aggregated $551,867,958 and $595,491,446, respectively. Purchases and sales of US Treasury obligations aggregated $10,034,018 and $0, respectively.

For the six months ended June 30, 2011, transactions for written options were as follows:

	Number of Contracts			Premiums
Outstanding, beginning of period		—		$	—
Options written		70			26,096
Options closed		(70	)		(26,096	)
Outstanding, end of period		—		$	—

D. Related Parties

$0-$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	%

Accordingly, for the six months ended June 30, 2011, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.45% of the Fund's average daily net assets.

	Total Aggregated		Unpaid at June 30, 2011
Class A	$	144	$	103
Class B		23		12
	$	167	$	115

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

E. Ownership of the Fund

At June 30, 2011, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 40%, 38% and 16%. One Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 96%.

F. Line of Credit

At June 30, 2011, DWS Government & Agency Securities VIP had a $500,000 outstanding loan. Interest expense incurred on the borrowing was $1,159 for the six months ended June 30, 2011. The average dollar amount of the borrowings was $2,640,909, the weighted average interest rate on these borrowings was 1.44% and the Fund had a loan outstanding for eleven days throughout the period. The borrowings were valued at cost, which approximates fair value.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2GAS-3 (R-023296-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS High Income VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

18 Statement of Assets and Liabilities

19 Statement of Operations

19 Statement of Changes in Net Assets

21 Financial Highlights

22 Notes to Financial Statements

27 Proxy Voting

28 Summary of Management Fee Evaluation by Independent Fee Consultant

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2011

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 are 0.72% and 0.99% 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 DWS High Income VIP
[] DWS High Income VIP — Class A [] Credit Suisse High Yield Index		The Credit Suisse High Yield Index is an unmanaged, trader-priced portfolio constructed to mirror 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
DWS High Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,400		$	11,426		$	12,796		$	13,622		$	20,353
Class A	Average annual total return		4.00	%		14.26	%		8.56	%		6.38	%		7.36	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,484		$	11,459		$	13,816		$	15,161		$	24,040
Credit Suisse High Yield Index	Average annual total return		4.84	%		14.59	%		11.38	%		8.68	%		9.17	%
DWS High Income VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Class*
Class B	Growth of $10,000	$	10,388		$	11,409		$	12,715		$	13,406		$	20,420
Class B	Average annual total return		3.88	%		14.09	%		8.34	%		6.04	%		8.26	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,484		$	11,459		$	13,816		$	15,161		$	23,657
Credit Suisse High Yield Index	Average annual total return		4.84	%		14.59	%		11.38	%		8.68	%		10.03	%

The growth of $10,000 is cumulative.

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

* The Fund commenced offering Class B shares on July 1, 2002. Index returns began on June 30, 2002.

Information About Your Fund's Expenses

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, 2011
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,040.00	$	1,038.80
Expenses Paid per $1,000*	$	3.64	$	4.95
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,021.22	$	1,019.93
Expenses Paid per $1,000*	$	3.61	$	4.91

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS High Income VIP	.72%		.98%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Corporate Bonds	97%	87%
Loan Participations and Assignments	1%	4%
Preferred Stocks	1%	0%
Preferred Securities	1%	1%
Cash Equivalents	—	8%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/11	12/31/10

Consumer Discretionary	21%	20%
Financials	16%	19%
Materials	13%	12%
Industrials	12%	10%
Telecommunication Services	11%	11%
Energy	11%	12%
Information Technology	6%	4%
Consumer Staples	5%	4%
Utilities	4%	3%
Health Care	1%	5%
	100%	100%

Quality (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/11	12/31/10

BB	13%	15%
B	54%	54%
CCC	30%	26%
D	1%	1%
Not Rated	2%	4%
	100%	100%

Interest Rate Sensitivity	6/30/11	12/31/10

Effective Maturity	6.1 years	5.5 years
Effective Duration	4.1 years	3.5 years

Asset allocation, sector diversification and interest rate sensitivity are subject to change.

Effective maturity is the weighted average of the 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.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

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

Corporate Bonds 94.4%
Consumer Discretionary 19.8%
Allison Transmission, Inc., 144A, 7.125%, 5/15/2019			270,000		262,575
AMC Entertainment, Inc.:
8.0%, 3/1/2014			590,000		591,475
8.75%, 6/1/2019			765,000		807,075
AMC Networks, Inc., 144A, 7.75%, 7/15/2021			80,000		83,600
American Achievement Corp., 144A, 10.875%, 4/15/2016			260,000		234,000
Asbury Automotive Group, Inc.:
7.625%, 3/15/2017			590,000		585,575
144A, 8.375%, 11/15/2020			460,000		468,050
Avis Budget Car Rental LLC:
8.25%, 1/15/2019			535,000		541,687
9.625%, 3/15/2018			260,000		277,550
Beazer Homes USA, Inc., 9.125%, 6/15/2018			135,000		116,438
Bon-Ton Department Stores, Inc., 10.25%, 3/15/2014			105,000		105,000
Burlington Coat Factory Warehouse Corp., 144A, 10.0%, 2/15/2019			250,000		247,500
Cablevision Systems Corp.:
7.75%, 4/15/2018			65,000		69,306
8.0%, 4/15/2020			65,000		69,713
Caesar's Entertainment Operating Co., Inc.:
10.0%, 12/15/2018			790,000		712,975
11.25%, 6/1/2017			715,000		789,181
12.75%, 4/15/2018			295,000		294,263
CanWest LP, 144A, 9.25%, 8/1/2015*			340,000		57,800
Carrols Corp., 9.0%, 1/15/2013			225,000		225,563
CCO Holdings LLC:
6.5%, 4/30/2021			1,155,000		1,139,119
7.0%, 1/15/2019			120,000		123,600
7.25%, 10/30/2017			520,000		538,850
7.875%, 4/30/2018			225,000		237,094
8.125%, 4/30/2020			150,000		162,000
Cequel Communications Holdings I LLC, 144A, 8.625%, 11/15/2017			1,495,000		1,554,800
Claire's Stores, Inc.:
144A, 8.875%, 3/15/2019			145,000		135,575
9.625%, 6/1/2015 (PIK)			115,706		112,524
Clear Channel Communications, Inc., 144A, 9.0%, 3/1/2021			140,000		134,050
Clear Channel Worldwide Holdings, Inc.:
Series A, 9.25%, 12/15/2017			100,000		108,750
Series B, 9.25%, 12/15/2017			150,000		163,500
Cumulus Media, Inc., 144A, 7.75%, 5/1/2019			135,000		130,275
DineEquity, Inc., 144A, 9.5%, 10/30/2018			620,000		672,700
DISH DBS Corp.:
144A, 6.75%, 6/1/2021			50,000		51,250
7.125%, 2/1/2016			465,000		490,575
7.875%, 9/1/2019			270,000		291,263
Dunkin' Brands, Inc., 144A, 9.625%, 12/1/2018			147,000		148,285
		Principal Amount ($) (a)		Value ($)

EH Holding Corp., 144A, 7.625%, 6/15/2021			230,000		234,600
Fontainebleau Las Vegas Holdings LLC, 144A, 11.0%, 6/15/2015*			490,000		245
Gannett Co., Inc., 9.375%, 11/15/2017			295,000		324,500
Great Canadian Gaming Corp., 144A, 7.25%, 2/15/2015			505,000		516,362
Hertz Corp.:
144A, 6.75%, 4/15/2019			660,000		653,400
144A, 7.5%, 10/15/2018			905,000		932,150
J. Crew Group, Inc., 144A, 8.125%, 3/1/2019 (b)			190,000		182,875
Kabel BW Erste Beteiligungs GmbH, 144A, 7.5%, 3/15/2019			435,000		443,700
Lear Corp.:
7.875%, 3/15/2018			235,000		252,625
8.125%, 3/15/2020			230,000		247,825
Lions Gate Entertainment, Inc., 144A, 10.25%, 11/1/2016			540,000		549,450
Macy's Retail Holdings, Inc., 8.125%, 7/15/2015			85,000		100,831
Mediacom Broadband LLC, 8.5%, 10/15/2015 (b)			635,000		650,875
Mediacom LLC, 9.125%, 8/15/2019 (b)			560,000		590,800
MGM Resorts International:
7.5%, 6/1/2016			205,000		194,750
7.625%, 1/15/2017			560,000		539,000
9.0%, 3/15/2020			145,000		158,775
144A, 10.0%, 11/1/2016 (b)			225,000		238,500
11.125%, 11/15/2017			235,000		268,488
Michaels Stores, Inc., Step-up Coupon, 0% to 11/1/2011, 13.0% to 11/1/2016			150,000		155,250
Needle Merger Sub Corp., 144A, 8.125%, 3/15/2019			280,000		282,100
Neiman Marcus Group, Inc., 10.375%, 10/15/2015			155,000		162,750
Norcraft Companies LP, 10.5%, 12/15/2015			1,260,000		1,278,900
Palace Entertainment Holdings LLC, 144A, 8.875%, 4/15/2017			435,000		436,087
Penske Automotive Group, Inc., 7.75%, 12/15/2016			1,085,000		1,106,700
PETCO Animal Supplies, Inc., 144A, 9.25%, 12/1/2018			315,000		334,687
Phillips-Van Heusen Corp., 7.375%, 5/15/2020			160,000		171,200
Regal Entertainment Group, 9.125%, 8/15/2018			180,000		186,300
Sabre Holdings Corp., 8.35%, 3/15/2016			515,000		453,200
Sears Holdings Corp., 144A, 6.625%, 10/15/2018			345,000		319,988
Seminole Indian Tribe of Florida:
144A, 7.75%, 10/1/2017			200,000		207,000
144A, 7.804%, 10/1/2020			450,000		442,260
Simmons Bedding Co., 144A, 11.25%, 7/15/2015			315,000		330,750
Sirius XM Radio, Inc., 144A, 8.75%, 4/1/2015			340,000		374,850
		Principal Amount ($) (a)		Value ($)

Sonic Automotive, Inc., Series B, 9.0%, 3/15/2018			565,000		594,662
Standard Pacific Corp.:
8.375%, 5/15/2018			240,000		237,900
10.75%, 9/15/2016			440,000		498,300
Toys "R" Us, Inc., 7.375%, 10/15/2018			695,000		675,019
Toys "R" Us-Delaware, Inc., 144A, 7.375%, 9/1/2016			200,000		202,000
Travelport LLC:
4.879%**, 9/1/2014			390,000		332,475
9.0%, 3/1/2016			390,000		348,075
UCI International, Inc., 8.625%, 2/15/2019			120,000		123,600
Unitymedia GmbH, 144A, 9.625%, 12/1/2019	EUR		550,000		865,377
Unitymedia Hessen GmbH & Co., KG, 144A, 8.125%, 12/1/2017			945,000		1,004,062
Univision Communications, Inc.:
144A, 6.875%, 5/15/2019			60,000		59,400
144A, 7.875%, 11/1/2020			140,000		143,500
UPC Holding BV:
144A, 8.375%, 8/15/2020	EUR		210,000		309,099
144A, 9.75%, 4/15/2018	EUR		425,000		656,374
Valassis Communications, Inc., 144A, 6.625%, 2/1/2021			180,000		178,200
Visant Corp., 10.0%, 10/1/2017			460,000		476,100
Visteon Corp., 144A, 6.75%, 4/15/2019			435,000		419,775
Yonkers Racing Corp., 144A, 11.375%, 7/15/2016			335,000		363,475
					33,542,702
Consumer Staples 4.9%
American Rock Salt Co., LLC, 144A, 8.25%, 5/1/2018			340,000		341,275
B&G Foods, Inc., 7.625%, 1/15/2018			230,000		242,075
Del Monte Foods Co., 144A, 7.625%, 2/15/2019			710,000		717,100
Dole Food Co., Inc., 144A, 8.0%, 10/1/2016			215,000		225,213
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020			555,000		556,387
NBTY, Inc., 144A, 9.0%, 10/1/2018			140,000		147,700
North Atlantic Trading Co., 144A, 10.0%, 3/1/2012			2,081,750		2,045,319
Rite Aid Corp.:
7.5%, 3/1/2017			295,000		292,788
8.0%, 8/15/2020			580,000		624,950
10.25%, 10/15/2019			230,000		253,000
Smithfield Foods, Inc., 7.75%, 7/1/2017			1,880,000		1,950,500
Stater Bros. Holdings, Inc., 144A, 7.375%, 11/15/2018			180,000		186,750
SUPERVALU, Inc., 8.0%, 5/1/2016 (b)			210,000		214,200
Tops Holding Corp., 10.125%, 10/15/2015			330,000		350,212
US Foodservice, 144A, 8.5%, 6/30/2019			200,000		194,000
					8,341,469
		Principal Amount ($) (a)		Value ($)

Energy 10.6%
Alpha Natural Resources, Inc., 6.0%, 6/1/2019			345,000		344,138
Arch Coal, Inc., 7.25%, 10/1/2020			110,000		111,925
Berry Petroleum Co., 6.75%, 11/1/2020			535,000		537,675
BreitBurn Energy Partners LP, 8.625%, 10/15/2020			300,000		316,500
Brigham Exploration Co., 144A, 6.875%, 6/1/2019			115,000		114,425
Bristow Group, Inc., 7.5%, 9/15/2017			485,000		508,037
Chaparral Energy, Inc., 8.25%, 9/1/2021			645,000		649,837
Cloud Peak Energy Resources LLC:
8.25%, 12/15/2017			145,000		155,150
8.5%, 12/15/2019			150,000		162,188
CONSOL Energy, Inc.:
144A, 6.375%, 3/1/2021			90,000		89,550
8.0%, 4/1/2017			655,000		713,950
8.25%, 4/1/2020			250,000		272,500
Continental Resources, Inc.:
7.125%, 4/1/2021			175,000		184,625
7.375%, 10/1/2020			195,000		207,188
8.25%, 10/1/2019			105,000		114,713
Crestwood Midstream Partners LP, 144A, 7.75%, 4/1/2019			920,000		913,100
Crosstex Energy LP, 8.875%, 2/15/2018			365,000		388,725
Dresser-Rand Group, Inc., 144A, 6.5%, 5/1/2021			420,000		432,600
Eagle Rock Energy Partners LP, 144A, 8.375%, 6/1/2019			535,000		533,662
Energy Transfer Equity LP, 7.5%, 10/15/2020			215,000		227,900
Frontier Oil Corp., 6.875%, 11/15/2018			315,000		332,325
Genesis Energy LP, 144A, 7.875%, 12/15/2018			230,000		228,850
Global Geophysical Services, Inc., 10.5%, 5/1/2017			775,000		813,750
Harvest Operations Corp., 144A, 6.875%, 10/1/2017			140,000		144,550
Holly Corp., 9.875%, 6/15/2017			545,000		607,675
Holly Energy Partners LP, 8.25%, 3/15/2018			330,000		349,800
Linn Energy LLC:
144A, 6.5%, 5/15/2019			285,000		282,150
144A, 7.75%, 2/1/2021			335,000		348,400
8.625%, 4/15/2020			305,000		330,925
MEG Energy Corp., 144A, 6.5%, 3/15/2021			235,000		236,175
Newfield Exploration Co., 7.125%, 5/15/2018			270,000		286,200
Oasis Petroleum, Inc., 144A, 7.25%, 2/1/2019			435,000		431,737
Offshore Group Investments Ltd.:
11.5%, 8/1/2015			275,000		299,063
144A, 11.5%, 8/1/2015			30,000		32,625
Petrohawk Energy Corp.:
7.25%, 8/15/2018			700,000		718,375
7.875%, 6/1/2015			220,000		230,450
10.5%, 8/1/2014			380,000		427,500
Plains Exploration & Production Co., 7.625%, 6/1/2018			320,000		336,000
		Principal Amount ($) (a)		Value ($)

Range Resources Corp., 6.75%, 8/1/2020			105,000		108,675
Regency Energy Partners LP, 6.875%, 12/1/2018			205,000		212,175
Sabine Pass LNG LP:
7.25%, 11/30/2013			930,000		953,250
7.5%, 11/30/2016			355,000		363,875
SandRidge Energy, Inc., 144A, 7.5%, 3/15/2021			300,000		303,750
SESI LLC, 144A, 6.375%, 5/1/2019			235,000		232,650
Southwestern Energy Co., 7.5%, 2/1/2018			585,000		665,437
Stone Energy Corp.:
6.75%, 12/15/2014			590,000		587,050
8.625%, 2/1/2017			125,000		128,750
Venoco, Inc., 144A, 8.875%, 2/15/2019			590,000		590,000
Xinergy Corp., 144A, 9.25%, 5/15/2019			335,000		338,350
					17,898,900
Financials 14.0%
Abengoa Finance SAU, 144A, 8.875%, 11/1/2017			775,000		791,469
Algoma Acquisition Corp., 144A, 9.875%, 6/15/2015			450,000		418,500
Antero Resources Finance Corp., 9.375%, 12/1/2017			390,000		419,250
Ardagh Packaging Finance PLC, 144A, 7.375%, 10/15/2017			215,000		221,450
Ashton Woods USA LLC, 144A, Step-up Coupon, 0% to 6/30/2012, 11.0% to 6/30/2015			712,400		431,002
AWAS Aviation Capital Ltd., 144A, 7.0%, 10/15/2016			571,200		586,194
Bumble Bee Acquisition Corp., 144A, 9.0%, 12/15/2017			150,000		150,750
Calpine Construction Finance Co., LP, 144A, 8.0%, 6/1/2016			570,000		615,600
CIT Group, Inc.:
7.0%, 5/1/2015			195		195
144A, 7.0%, 5/4/2015			623,000		623,779
144A, 7.0%, 5/2/2017			2,085,000		2,079,787
CPI International Acquisition, Inc., 144A, 8.0%, 2/15/2018			260,000		245,700
DuPont Fabros Technology LP, (REIT), 8.5%, 12/15/2017			435,000		475,237
E*TRADE Financial Corp.:
6.75%, 6/1/2016			570,000		558,600
12.5%, 11/30/2017 (PIK)			632,000		739,440
Felcor Lodging LP, (REIT), 144A, 6.75%, 6/1/2019			410,000		393,600
Ford Motor Credit Co., LLC:
6.625%, 8/15/2017			355,000		377,380
8.125%, 1/15/2020			100,000		115,841
Fresenius US Finance II, Inc., 144A, 9.0%, 7/15/2015			420,000		475,125
Giraffe Acquisition Corp., 144A, 9.125%, 12/1/2018			330,000		310,200
Hellas Telecommunications Finance SCA, 144A, 8.985%*, 7/15/2015 (PIK)	EUR		322,107		280
Hexion US Finance Corp., 8.875%, 2/1/2018			2,000,000		2,080,000
		Principal Amount ($) (a)		Value ($)

Inmarsat Finance PLC, 144A, 7.375%, 12/1/2017			670,000		710,200
International Lease Finance Corp.:
5.75%, 5/15/2016			105,000		103,395
6.25%, 5/15/2019			270,000		263,808
8.625%, 9/15/2015			235,000		254,681
8.75%, 3/15/2017			465,000		508,594
Level 3 Escrow, Inc., 144A, 8.125%, 7/1/2019			400,000		402,000
MPT Operating Partnership LP, (REIT), 144A, 6.875%, 5/1/2021			295,000		289,838
National Money Mart Co., 10.375%, 12/15/2016			790,000		867,025
Navios Maritime Acquisition Corp., 8.625%, 11/1/2017			150,000		147,750
Nielsen Finance LLC, 144A, 7.75%, 10/15/2018			50,000		52,500
NII Capital Corp., 7.625%, 4/1/2021			335,000		350,075
Nuveen Investments, Inc.:
10.5%, 11/15/2015			725,000		741,312
144A, 10.5%, 11/15/2015			525,000		531,562
OMEGA Healthcare Investors, Inc., (REIT), 144A, 6.75%, 10/15/2022			305,000		300,806
Pinnacle Foods Finance LLC:
8.25%, 9/1/2017			425,000		440,938
9.25%, 4/1/2015			695,000		721,062
Reynolds Group Issuer, Inc.:
144A, 6.875%, 2/15/2021			540,000		526,500
144A, 7.125%, 4/15/2019			415,000		411,888
144A, 8.25%, 2/15/2021			225,000		210,375
144A, 8.5%, 10/15/2016			550,000		573,375
144A, 8.75%, 5/15/2018			610,000		599,325
144A, 9.0%, 4/15/2019			590,000		582,625
Susser Holdings LLC, 8.5%, 5/15/2016			175,000		184,188
Tomkins LLC, 144A, 9.0%, 10/1/2018			230,000		247,825
Tropicana Entertainment LLC, 9.625%, 12/15/2014*			1,220,000		610
UPCB Finance III Ltd., 144A, 6.625%, 7/1/2020			185,000		182,688
Virgin Media Finance PLC, Series 1, 9.5%, 8/15/2016			1,135,000		1,282,550
					23,596,874
Health Care 1.4%
Aviv Healthcare Properties LP, 144A, 7.75%, 2/15/2019			235,000		240,288
HCA Holdings, Inc., 144A, 7.75%, 5/15/2021 (b)			605,000		627,687
Mylan, Inc., 144A, 7.875%, 7/15/2020			95,000		104,263
STHI Holding Corp., 144A, 8.0%, 3/15/2018			345,000		350,175
Vanguard Health Holding Co. II, LLC, 8.0%, 2/1/2018			590,000		609,175
Warner Chilcott Co., LLC, 144A, 7.75%, 9/15/2018			420,000		423,675
					2,355,263
Industrials 11.8%
Accuride Corp., 9.5%, 8/1/2018			405,000		433,350
Actuant Corp., 6.875%, 6/15/2017			300,000		306,750
Aguila 3 SA, 144A, 7.875%, 1/31/2018			310,000		311,937
		Principal Amount ($) (a)		Value ($)

American Airlines, Inc., 144A, 7.5%, 3/15/2016 (b)			490,000		480,200
AMGH Merger Sub, Inc., 144A, 9.25%, 11/1/2018			190,000		200,450
ARAMARK Corp., 8.5%, 2/1/2015			560,000		581,700
ARAMARK Holdings Corp., 144A, 8.625%, 5/1/2016 (PIK)			105,000		106,838
Armored Autogroup, Inc., 144A, 9.25%, 11/1/2018			610,000		603,900
B-Corp Merger Sub, Inc., 144A, 8.25%, 6/1/2019			335,000		331,650
BE Aerospace, Inc.:
6.875%, 10/1/2020			210,000		219,975
8.5%, 7/1/2018			300,000		327,375
Belden, Inc., 7.0%, 3/15/2017			420,000		430,500
Boart Longyear Management Pty Ltd., 144A, 7.0%, 4/1/2021			190,000		194,275
Briggs & Stratton Corp., 6.875%, 12/15/2020			195,000		206,700
Casella Waste Systems, Inc., 144A, 7.75%, 2/15/2019			415,000		416,037
Cenveo Corp., 8.875%, 2/1/2018			1,055,000		1,023,350
CHC Helicopter SA, 144A, 9.25%, 10/15/2020			950,000		857,375
Congoleum Corp., 9.0%, 12/31/2017 (PIK)			396,000		257,400
Corrections Corp. of America, 7.75%, 6/1/2017			35,000		38,106
Delta Air Lines, Inc., 144A, 9.5%, 9/15/2014			99,000		105,559
Deluxe Corp., 144A, 7.0%, 3/15/2019			180,000		178,200
Ducommun, Inc., 144A, 9.75%, 7/15/2018			305,000		313,387
DynCorp International, Inc., 144A, 10.375%, 7/1/2017			490,000		502,250
Florida East Coast Railway Corp., 144A, 8.125%, 2/1/2017			225,000		232,313
FTI Consulting, Inc., 6.75%, 10/1/2020			195,000		196,950
Garda World Security Corp., 144A, 9.75%, 3/15/2017			375,000		396,562
H&E Equipment Services, Inc., 8.375%, 7/15/2016			615,000		628,837
Heckler & Koch GmbH, 144A, 9.5%, 5/15/2018	EUR		580,000		799,032
Huntington Ingalls Industries, Inc.:
144A, 6.875%, 3/15/2018			180,000		184,500
144A, 7.125%, 3/15/2021			60,000		62,100
Interline Brands, Inc., 7.0%, 11/15/2018			295,000		298,688
K. Hovnanian Enterprises, Inc., 10.625%, 10/15/2016			365,000		364,087
Kansas City Southern de Mexico SA de CV, 8.0%, 2/1/2018			205,000		222,425
Meritor, Inc., 8.125%, 9/15/2015			280,000		291,900
Navios Maritime Holdings, Inc., 144A, 8.125%, 2/15/2019			760,000		729,600
Navios South American Logistics, Inc., 144A, 9.25%, 4/15/2019			295,000		297,213
		Principal Amount ($) (a)		Value ($)

Nortek, Inc., 144A, 8.5%, 4/15/2021			720,000		666,000
Ply Gem Industries, Inc.:
144A, 8.25%, 2/15/2018			275,000		260,563
13.125%, 7/15/2014			515,000		540,750
RailAmerica, Inc., 9.25%, 7/1/2017			304,000		333,640
RBS Global, Inc. & Rexnord Corp.:
8.5%, 5/1/2018			715,000		755,219
11.75%, 8/1/2016 (b)			120,000		126,900
Rearden G Holdings EINS GmbH, 144A, 7.875%, 3/30/2020			135,000		147,150
Sitel LLC, 11.5%, 4/1/2018			565,000		516,975
Spirit AeroSystems, Inc.:
6.75%, 12/15/2020			205,000		208,075
7.5%, 10/1/2017			215,000		226,288
SPX Corp., 144A, 6.875%, 9/1/2017			130,000		139,100
Titan International, Inc., 144A, 7.875%, 10/1/2017			945,000		987,525
Triumph Group, Inc., 8.0%, 11/15/2017			75,000		78,938
Tutor Perini Corp., 7.625%, 11/1/2018			325,000		312,000
United Rentals North America, Inc.:
9.25%, 12/15/2019			830,000		900,550
10.875%, 6/15/2016			390,000		436,312
USG Corp., 144A, 9.75%, 8/1/2014			220,000		233,200
					20,000,656
Information Technology 5.4%
Alcatel-Lucent USA, Inc., 6.45%, 3/15/2029			570,000		513,000
Allen Systems Group, Inc., 144A, 10.5%, 11/15/2016			210,000		211,050
Amkor Technology, Inc.:
144A, 6.625%, 6/1/2021			50,000		48,125
7.375%, 5/1/2018			250,000		254,063
Aspect Software, Inc., 10.625%, 5/7/2017			350,000		376,250
Avaya, Inc., 144A, 7.0%, 4/1/2019			830,000		803,025
CDW LLC:
144A, 8.5%, 4/1/2019			600,000		588,000
11.0%, 10/12/2015			52,000		54,730
CommScope, Inc., 144A, 8.25%, 1/15/2019			485,000		499,550
eAccess Ltd., 144A, 8.25%, 4/1/2018			335,000		334,162
Equinix, Inc., 8.125%, 3/1/2018			120,000		130,650
Fidelity National Information Services, Inc., 7.625%, 7/15/2017			95,000		100,819
First Data Corp.:
144A, 7.375%, 6/15/2019			170,000		171,275
144A, 8.25%, 1/15/2021			785,000		769,300
144A, 8.875%, 8/15/2020			495,000		528,412
Freescale Semiconductor, Inc., 144A, 9.25%, 4/15/2018			990,000		1,066,725
Jabil Circuit, Inc., 7.75%, 7/15/2016			145,000		160,588
MasTec, Inc., 7.625%, 2/1/2017			610,000		620,675
MEMC Electronic Materials, Inc., 144A, 7.75%, 4/1/2019			240,000		237,000
Sanmina-SCI Corp., 144A, 7.0%, 5/15/2019			245,000		231,525
		Principal Amount ($) (a)		Value ($)

Seagate HDD Cayman, 144A, 7.0%, 11/1/2021			290,000		290,000
Sensata Technologies BV, 144A, 6.5%, 5/15/2019			290,000		289,275
SunGard Data Systems, Inc.:
7.375%, 11/15/2018			140,000		140,000
10.625%, 5/15/2015			365,000		395,112
Vangent, Inc., 9.625%, 2/15/2015			350,000		353,500
					9,166,811
Materials 11.8%
Aleris International, Inc., 144A, 7.625%, 2/15/2018			220,000		219,450
APERAM:
144A, 7.375%, 4/1/2016			215,000		216,075
144A, 7.75%, 4/1/2018			260,000		261,950
Appleton Papers, Inc., 11.25%, 12/15/2015			237,000		239,370
Berry Plastics Corp.:
8.25%, 11/15/2015			660,000		696,300
9.5%, 5/15/2018			390,000		387,075
9.75%, 1/15/2021			460,000		445,050
Boise Paper Holdings LLC, 8.0%, 4/1/2020			170,000		178,500
BWAY Parent Co., Inc., 144A, 10.125%, 11/1/2015 (PIK)			242,853		242,853
Celanese US Holdings LLC:
5.875%, 6/15/2021			165,000		168,713
6.625%, 10/15/2018			200,000		211,000
China Lumena New Materials Corp., 144A, 12.0%, 10/27/2014			1,120,000		1,096,200
Clearwater Paper Corp., 7.125%, 11/1/2018			390,000		399,750
Clondalkin Acquisition BV, 144A, 2.247%**, 12/15/2013			265,000		253,075
Crown Americas LLC, 144A, 6.25%, 2/1/2021			50,000		50,500
Domtar Corp., 10.75%, 6/1/2017			380,000		494,475
Essar Steel Algoma, Inc., 144A, 9.375%, 3/15/2015			1,410,000		1,413,525
Exopack Holding Corp., 144A, 10.0%, 6/1/2018			230,000		228,275
FMG Resources August 2006 Pty Ltd., 144A, 7.0%, 11/1/2015			140,000		142,800
GEO Specialty Chemicals, Inc.:
144A, 7.5%, 3/31/2015 (PIK)			1,297,793		1,193,970
10.0%, 3/31/2015			1,277,440		1,264,666
Graham Packaging Co., LP, 8.25%, 10/1/2018			135,000		150,188
Graphic Packaging International, Inc.:
7.875%, 10/1/2018			70,000		74,200
9.5%, 6/15/2017			810,000		886,950
Hexcel Corp., 6.75%, 2/1/2015			475,000		483,312
Huntsman International LLC:
8.625%, 3/15/2020			330,000		359,700
8.625%, 3/15/2021			140,000		152,250
JMC Steel Group, 144A, 8.25%, 3/15/2018			350,000		355,250
Koppers, Inc., 7.875%, 12/1/2019			440,000		469,700
Longview Fibre Paper & Packaging, Inc., 144A, 8.0%, 6/1/2016			335,000		336,675
		Principal Amount ($) (a)		Value ($)

Lyondell Chemical Co., 144A, 8.0%, 11/1/2017			290,000		322,625
Momentive Performance Materials, Inc.:
9.0%, 1/15/2021			385,000		392,700
9.5%, 1/15/2021	EUR		385,000		552,725
NewMarket Corp., 7.125%, 12/15/2016			1,005,000		1,047,712
OI European Group BV, 144A, 6.75%, 9/15/2020	EUR		130,000		187,577
Packaging Dynamics Corp., 144A, 8.75%, 2/1/2016			535,000		543,025
Phibro Animal Health Corp., 144A, 9.25%, 7/1/2018			70,000		73,850
Polymer Group, Inc., 144A, 7.75%, 2/1/2019			300,000		300,750
Radnor Holdings Corp., 11.0%, 3/15/2010*			265,000		27
Rain CII Carbon LLC, 144A, 8.0%, 12/1/2018			270,000		287,550
Silgan Holdings, Inc., 7.25%, 8/15/2016			415,000		437,825
Solo Cup Co., 10.5%, 11/1/2013			210,000		218,400
Texas Industries, Inc., 9.25%, 8/15/2020			465,000		449,887
United States Steel Corp., 7.375%, 4/1/2020 (b)			480,000		493,200
Verso Paper Holdings LLC, 144A, 8.75%, 2/1/2019			130,000		115,700
Viskase Companies, Inc., 144A, 9.875%, 1/15/2018			940,000		979,949
Wolverine Tube, Inc., 15.0%, 3/31/2012 (PIK)*			830,088		400,517
					19,875,816
Telecommunication Services 11.2%
Buccaneer Merger Sub, Inc., 144A, 9.125%, 1/15/2019			130,000		135,200
Cincinnati Bell, Inc.:
8.25%, 10/15/2017			1,020,000		1,025,100
8.375%, 10/15/2020			1,030,000		1,027,425
8.75%, 3/15/2018			350,000		332,500
Clearwire Communications LLC:
144A, 12.0%, 12/1/2015			425,000		453,688
144A, 12.0%, 12/1/2015			465,000		498,131
Cricket Communications, Inc.:
7.75%, 10/15/2020 (b)			1,795,000		1,759,100
10.0%, 7/15/2015			380,000		409,450
Digicel Group Ltd., 144A, 10.5%, 4/15/2018			495,000		554,400
Digicel Ltd., 144A, 8.25%, 9/1/2017			1,090,000		1,130,875
ERC Ireland Preferred Equity Ltd., 144A, 8.42%**, 2/15/2017 (PIK)	EUR		665,001		4,822
Frontier Communications Corp.:
7.875%, 4/15/2015			65,000		70,525
8.25%, 4/15/2017			395,000		429,563
8.5%, 4/15/2020			195,000		212,550
8.75%, 4/15/2022			70,000		76,300
Intelsat Jackson Holdings SA:
144A, 7.25%, 10/15/2020			695,000		691,525
144A, 7.5%, 4/1/2021			855,000		849,656
8.5%, 11/1/2019			580,000		614,800
		Principal Amount ($) (a)		Value ($)

Intelsat Luxembourg SA:
11.25%, 2/4/2017			1,450,000		1,556,937
11.5%, 2/4/2017 (PIK)			1,340,625		1,441,172
144A, 11.5%, 2/4/2017 (PIK)			445,000		478,375
MetroPCS Wireless, Inc.:
6.625%, 11/15/2020			480,000		475,200
7.875%, 9/1/2018			420,000		444,675
Pacnet Ltd., 144A, 9.25%, 11/9/2015			225,000		214,875
Sprint Nextel Corp., 8.375%, 8/15/2017			590,000		648,262
Telesat Canada, 11.0%, 11/1/2015			1,545,000		1,689,844
West Corp.:
144A, 7.875%, 1/15/2019			285,000		276,450
144A, 8.625%, 10/1/2018			75,000		75,750
Windstream Corp.:
7.0%, 3/15/2019			430,000		434,300
7.5%, 4/1/2023			40,000		40,000
7.75%, 10/15/2020			180,000		188,550
7.875%, 11/1/2017			495,000		525,319
8.125%, 9/1/2018			180,000		190,800
					18,956,119
Utilities 3.5%
AES Corp.:
144A, 7.375%, 7/1/2021			540,000		548,100
8.0%, 10/15/2017			415,000		439,900
8.0%, 6/1/2020			525,000		559,125
Calpine Corp.:
144A, 7.5%, 2/15/2021			485,000		494,700
144A, 7.875%, 7/31/2020			560,000		585,200
Edison Mission Energy, 7.0%, 5/15/2017			1,570,000		1,271,700
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024			1,110,000		555,000
Energy Future Intermediate Holding Co. LLC, 10.0%, 12/1/2020			125,000		133,308
Ferrellgas LP, 144A, 6.5%, 5/1/2021			120,000		113,400
NRG Energy, Inc.:
7.375%, 1/15/2017			320,000		335,200
144A, 7.625%, 1/15/2018			200,000		200,500
8.25%, 9/1/2020			220,000		224,400
Texas Competitive Electric Holdings Co., LLC:
Series A, 10.25%, 11/1/2015			275,000		166,376
144A, 11.5%, 10/1/2020			360,000		353,700
					5,980,609
Total Corporate Bonds (Cost $159,590,828)					159,715,219

Loan Participations and Assignments 1.2%
Senior Loans**
Alliance Mortgage Cycle Loan, Term Loan A, 9.5%, 6/1/2010*			700,000		0
Buffets, Inc., Letter of Credit, First Lien, 7.496%, 4/22/2015			96,058		77,087
Hawker Beechcraft Acquisition Co., LLC:
Term Loan, 2.186%, 3/26/2014			980,677		827,677
Letter of Credit, 2.246%, 3/26/2014			60,643		51,181
		Principal Amount ($) (a)		Value ($)

Roundy's Supermarkets, Inc., Second Lien Term Loan, 10.0%, 4/18/2016			325,000		329,368
Tribune Co., Term Loan B, LIBOR plus 3.0%, 6/4/2014*			1,009,426		686,409
Total Loan Participations and Assignments (Cost $2,955,324)					1,971,722

Convertible Bonds 0.4%
Consumer Discretionary
Group 1 Automotive, Inc., 144A, 3.0%, 3/15/2020			375,000		467,344
Sonic Automotive, Inc., 5.0%, 10/1/2029			155,000		204,600
Total Convertible Bonds (Cost $530,313)					671,944

Preferred Security 0.6%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $737,867)			1,135,000		959,075

	Units		Value ($)

Other Investments 0.0%
Consumer Discretionary
AOT Bedding Super Holdings LLC* (Cost $31,000)		31		31,000

	Shares		Value ($)

Common Stocks 0.1%
Consumer Discretionary 0.1%
Buffets Restaurants Holdings, Inc.*		18,256		73,024
Dex One Corp.*		3,884		9,827
SuperMedia, Inc.*		726		2,722
Trump Entertainment Resorts, Inc.*		45		821
Vertis Holdings, Inc.		676		11,992
				98,386
Industrials 0.0%
Congoleum Corp.*		1,200,000		1
Quad Graphics, Inc.		649		25,220
				25,221
Materials 0.0%
GEO Specialty Chemicals, Inc.*		24,225		20,592
GEO Specialty Chemicals, Inc. 144A*		2,206		1,875
				22,467
Total Common Stocks (Cost $2,412,740)				146,074

Warrants 0.0%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		1,115		33
Materials 0.0%
Hercules Trust II, Expiration Date 3/31/2029*		1,100		11,053
Total Warrants (Cost $244,286)				11,086
	Shares		Value ($)

Preferred Stocks 0.8%
Financials
Ally Financial, Inc. Series G, 144A, 7.0%		440		413,545
Ally Financial, Inc. Series A, 8.5%		18,090		454,104
GMAC Capital Trust I Series 2, 8.125%		19,000		486,400
Total Preferred Stocks (Cost $1,330,112)				1,354,049

	Shares		Value ($)

Securities Lending Collateral 3.0%
Daily Assets Fund Institutional, 0.13% (c) (d) (Cost $5,138,221)		5,138,221		5,138,221

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $172,970,691)+		100.5			169,998,390
Other Assets and Liabilities, Net (b)		(0.5	)		(856,604	)
Net Assets		100.0			169,141,786

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

Securities	Coupon			Maturity Date	Principal Amount ($)			Acquisition Cost ($)		Value ($)
Alliance Mortgage Cycle Loan*		9.5	%	6/1/2010		700,000	USD		700,000		0
CanWest LP*		9.25	%	8/1/2015		340,000	USD		340,000		57,800
Fontainebleau Las Vegas Holdings LLC*		11.0	%	6/15/2015		490,000	USD		495,963		245
Hellas Telecommunications Finance SCA*		8.985	%	7/15/2015		322,107	EUR		92,199		280
Radnor Holdings Corp.*		11.0	%	3/15/2010		265,000	USD		234,313		27
Tribune Co.*	LIBOR plus 3.0%			6/4/2014		1,009,426	USD		905,407		686,409
Tropicana Entertainment LLC*		9.625	%	12/15/2014		1,220,000	USD		959,601		610
Wolverine Tube, Inc.*		15.0	%	3/31/2012		830,088	USD		830,088		400,517
									4,557,571		1,145,888

* Non-income producing security. In the case of a bond, generally denotes that the issuer has defaulted on the payment of principal or interest or has filed for bankruptcy.

+ The cost for federal income tax purposes was $172,970,724. At June 30, 2011, net unrealized depreciation for all securities based on tax cost was $2,972,334. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $6,337,420 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $9,309,754.

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

(b) All or a portion of these securities were on loan amounting to $4,925,225. In addition, included in other assets and liabilities, net is a pending sale, amounting to $43,313, that is also on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $4,968,538, which is 2.9% of net assets.

(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.

LIBOR: London Interbank Offered Rate

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

REIT: Real Estate Investment Trust

At June 30, 2011, open credit default swap contracts sold were as follows:

Effective/ Expiration Date	Notional Amount ($) (e)			Fixed Cash Flows Received			Underlying Debt Obligation/Quality Rating (f)	Value ($)		Upfront Payments Paid/ (Received) ($)			Unrealized Appreciation/ (Depreciation) ($)
3/21/2011 6/20/2016		610,000	1		5.0	%	Ally Financial Corp., 8.3%, 2/12/2015, B+		40,762		34,677			6,085
3/21/2011 6/20/2016		540,000	2		5.0	%	Ally Financial Corp., 6.75%, 12/1/2014, B+		36,085		58,646			(22,561	)
6/21/2010 9/20/2013		1,230,000	1		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		109,934		(37,769	)		147,703
6/21/2010 9/20/2013		380,000	3		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		33,963		4,657			29,306
6/21/2010 9/20/2015		175,000	4		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		19,051		(16,625	)		35,676
6/21/2010 9/20/2015		320,000	5		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		34,837		(27,750	)		62,587
6/21/2010 9/20/2015		100,000	1		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		10,887		(6,896	)		17,783
6/21/2010 9/20/2015		560,000	6		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		60,966		(9,982	)		70,948
6/20/2011 9/20/2016		575,000	6		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		56,234		55,435			799
3/21/2011 6/20/2016		1,085,000	2		5.0	%	Ford Motor Credit Co., LLC, 7.25%, 10/25/2011, B+		124,793		129,387			(4,594	)
6/20/2011 9/20/2015		1,145,000	1		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B-		63,040		61,450			1,590
3/21/2011 6/20/2016		610,000	4		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B-		28,871		22,713			6,158
6/20/2011 9/20/2016		1,145,000	7		5.0	%	International Lease Finance Corp., 8.25%, 12/15/2020, B+		39,329		37,739			1,590
6/20/2011 9/20/2016		1,145,000	3		5.0	%	Neiman Marcus Group, Inc., 7.12%, 06/01/2028, B		53,643		52,053			1,590
6/20/2011 9/20/2016		1,145,000	5		5.0	%	Smithfield Foods, Inc., 7.75%, 7/1/2017, B-		53,643		52,053			1,590
Total net unrealized appreciation														356,250

(e) 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.

(f) The quality ratings represent the lower of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") credit ratings.

Counterparties:

1 The Goldman Sachs & Co.

2 Barclays Bank PLC

3 Citigroup, Inc.

4 JPMorgan Chase Securities, Inc.

5 Credit Suisse

6 Bank of America

7 Morgan Stanley

At June 30, 2011, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver

In Exchange For

Settlement Date

Unrealized Appreciation ($)

Counterparty

USD

1,090,733

EUR

755,734

7/11/2011

4,848

JPMorgan Chase Securities, Inc.

USD

47,861

EUR

33,800

7/11/2011

1,138

Citigroup, Inc.

Total unrealized appreciation

5,986

Contracts to Deliver

In Exchange For

Settlement Date

Unrealized Depreciation ($)

Counterparty

EUR

3,100,100

USD

4,464,532

7/11/2011

(29,656

)

Citigroup, Inc.

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 A in the accompanying Notes to Financial Statements.

Fair Value Measurements

Assets	Level 1		Level 2			Level 3		Total

Fixed Income Investments (g)
Corporate Bonds	$	—	$	156,941,356		$	2,773,863	$	159,715,219
Loan Participations and Assignments		—		1,971,722			0		1,971,722
Convertible Bonds		—		671,944			—		671,944
Preferred Securities		—		959,075			—		959,075
Other Investments		—		—			31,000		31,000
Common Stocks (g)		110,793		—			35,281		146,074
Preferred Stock		940,504		413,545			—		1,354,049
Warrants (g)		—		—			11,086		11,086
Short-Term Investments		5,138,221		—			—		5,138,221
Derivatives (h)		—		389,391			—		389,391
Total	$	6,189,518	$	161,347,033		$	2,851,230	$	170,387,781
Liabilities
Derivatives (h)	$	—	$	(56,811	)	$	—	$	(56,811	)
Total	$	—	$	(56,811	)	$	—	$	(56,811	)

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(g) See Investment Portfolio for additional detailed categorizations.

(h) Derivatives include unrealized appreciation (depreciation) on credit default swap contracts and forward foreign currency exchange 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		Other Investments		Common Stocks		Warrants			Total
Balance as of December 31, 2010	$	2,784,439		$	0	$	31,000	$	23,288	$	12,547		$	2,851,274
Realized gains (loss)		(2,014,745	)		—		—		—		—			(2,014,745	)
Change in unrealized appreciation (depreciation)		2,166,957			0		0		5,767		(1,461	)		2,171,263
Amortization premium/discount		12,234			—		—		—		—			12,234
Purchases		—			—		—		6,226		—			6,226
(Sales)		0			—		—		—		—			0
Transfers into Level 3		—			—		—		—		—			—
Transfers (out) of Level 3		(175,022	) (i)		—		—		—		—			(175,022	)
Balance as of June 30, 2011	$	2,773,863		$	0	$	31,000	$	35,281	$	11,086		$	2,851,230
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2011	$	153,566		$	0	$	0	$	5,767	$	(1,461	)	$	157,872

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

(i) The investment was transferred from Level 3 to Level 2 as a result of the availability of a pricing source supported by observable inputs.

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $167,832,470) — including $4,925,225 of securities loaned	$	164,860,169
Investment in Daily Assets Fund Institutional (cost $5,138,221)*		5,138,221
Total investments in securities, at value (cost $172,970,691)		169,998,390
Foreign currency, at value (cost $70)		71
Deposit from broker on swap contracts		10,000
Receivable for investments sold		2,190,757
Receivable for Fund shares sold		47,763
Interest receivable		3,231,678
Unrealized appreciation on swap contracts		383,405
Unrealized appreciation on forward foreign currency exchange contracts		5,986
Upfront payments paid on swap contracts		508,810
Foreign taxes recoverable		588
Other assets		1,463
Total assets		176,378,911
Liabilities
Cash overdraft		752,304
Payable upon return of securities loaned		5,138,221
Line of credit loan payable		650,000
Payable for Fund shares redeemed		83,475
Payable upon return of deposit for swap contracts		10,000
Net payable for open swap contracts		265,889
Unrealized depreciation on swap contracts		27,155
Unrealized depreciation on forward foreign currency exchange contracts		29,656
Upfront payments received on swap contracts		99,022
Accrued management fee		72,776
Other accrued expenses and payables		108,627
Total liabilities		7,237,125
Net assets, at value	$	169,141,786
Net Assets Consist of
Undistributed net investment income		7,008,620
Net unrealized appreciation (depreciation) on: Investments		(2,972,301	)
Swap contracts		356,250
Foreign currency		(21,987	)
Accumulated net realized gain (loss)		(52,334,737	)
Paid-in capital		217,105,941
Net assets, at value	$	169,141,786
Class A Net Asset Value, offering and redemption price per share ($168,996,214 ÷ 25,708,819 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	6.57
Class B Net Asset Value, offering and redemption price per share ($145,572 ÷ 22,021 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	6.61

* Represents collateral of securities loaned.

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Interest (net of foreign taxes withheld of $545)	$	8,066,103
Dividends		20,954
Income distributions — Central Cash Management Fund		4,059
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		8,578
Total income		8,099,694
Expenses: Management fee		478,886
Administration fee		95,777
Services to shareholders		2,863
Distribution service fee (Class B)		181
Custodian fee		17,814
Audit and tax fees		35,506
Legal fees		7,094
Reports to shareholders		19,574
Trustees' fees and expenses		4,316
Interest expense		2,987
Other		20,312
Total expenses		685,310
Net investment income (loss)		7,414,384
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		1,433,918
Swap contracts		141,883
Foreign currency		(595,090	)
		980,711
Change in net unrealized appreciation (depreciation) on: Investments		(608,534	)
Swap contracts		(30,006	)
Foreign currency		36,361
		(602,179	)
Net gain (loss)		378,532
Net increase (decrease) in net assets resulting from operations	$	7,792,916

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income	$	7,414,384		$	14,943,059
Net realized gain (loss)		980,711			2,920,800
Change in net unrealized appreciation (depreciation)		(602,179	)		6,951,753
Net increase (decrease) in net assets resulting from operations		7,792,916			24,815,612
Distributions to shareholders from: Net investment income: Class A		(16,387,608	)		(15,325,538	)
Class B		(11,864	)		(11,524	)
Total distributions		(16,399,472	)		(15,337,062	)
Fund share transactions: Class A Proceeds from shares sold		5,782,373			73,550,670
Reinvestment of distributions		16,387,608			15,325,538
Payments for shares redeemed		(39,447,282	)		(100,347,223	)
Net increase (decrease) in net assets from Class A share transactions		(17,277,301	)		(11,471,015	)
Class B Proceeds from shares sold		8,880			2,173
Reinvestment of distributions		11,864			11,524
Payments for shares redeemed		(13,027	)		(27,277	)
Net increase (decrease) in net assets from Class B share transactions		7,717			(13,580	)
Increase (decrease) in net assets		(25,876,140	)		(2,006,045	)
Net assets at beginning of period		195,017,926			197,023,971
Net assets at end of period (including undistributed net investment income of $7,008,620 and $15,993,708, respectively)	$	169,141,786		$	195,017,926
Other Information
Class A Shares outstanding at beginning of period		28,235,548			30,057,940
Shares sold		829,063			11,151,687
Shares issued to shareholders in reinvestment of distributions		2,479,215			2,379,742
Shares redeemed		(5,835,007	)		(15,353,821	)
Net increase (decrease) in Class A shares		(2,526,729	)		(1,822,392	)
Shares outstanding at end of period		25,708,819			28,235,548
Class B Shares outstanding at beginning of period		20,802			22,888
Shares sold		1,265			319
Shares issued to shareholders in reinvestment of distributions		1,784			1,778
Shares redeemed		(1,830	)		(4,183	)
Net increase (decrease) in Class B shares		1,219			(2,086	)
Shares outstanding at end of period		22,021			20,802

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

Financial Highlights

						Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period		$	6.90			$	6.55		$	5.30		$	7.81		$	8.38		$	8.23
Income (loss) from investment operations: Net investment incomea			.27				.52			.51			.57			.63			.62
Net realized and unrealized gain (loss)			.01				.36			1.40			(2.29	)		(.54	)		.19
Total from investment operations			.28				.88			1.91			(1.72	)		.09			.81
Less distributions from: Net investment income			(.61	)			(.53	)		(.66	)		(.79	)		(.66	)		(.66	)
Net asset value, end of period		$	6.57			$	6.90		$	6.55		$	5.30		$	7.81		$	8.38
Total Return (%)			4.00	**			14.00			39.99			(23.94	)b		.96			10.47
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			169				195			197			154			248			322
Ratio of expenses before expense reductions (%)			.72	*			.72			.67			.80			.69			.71
Ratio of expenses after expense reductions (%)			.72	*			.72			.67			.79			.69			.71
Ratio of net investment income (%)			7.74	*			7.90			8.81			8.42			7.84			7.73
Portfolio turnover rate (%)			38	**			93			66			38			61			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 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period		$	6.93			$	6.58		$	5.31		$	7.81		$	8.38		$	8.22
Income (loss) from investment operations: Net investment incomea			.26				.50			.49			.53			.60			.59
Net realized and unrealized gain (loss)			.01				.36			1.42			(2.27	)		(.54	)		.20
Total from investment operations			.27				.86			1.91			(1.74	)		.06			.79
Less distributions from: Net investment income			(.59	)			(.51	)		(.64	)		(.76	)		(.63	)		(.63	)
Net asset value, end of period		$	6.61			$	6.93		$	6.58		$	5.31		$	7.81		$	8.38
Total Return (%)			3.88	**			13.64			39.64			(24.13	)b		.54			10.11
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			.1				.1			.2			.1			10			53
Ratio of expenses before expense reductions (%)			.98	*			.99			.94			1.25			1.08			1.10
Ratio of expenses after expense reductions (%)			.98	*			.99			.94			1.23			1.08			1.10
Ratio of net investment income (%)			7.47	*			7.63			8.54			7.98			7.45			7.34
Portfolio turnover rate (%)			38	**			93			66			38			61			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

DWS High Income VIP (the "Fund") is a diversified series of DWS 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.

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.

Loan Participations and Assignments. Senior loans are portions of loans originated by banks and sold in pieces to investors. These US dollar-denominated fixed and floating rate loans ("Loans") in which the Fund invests are arranged through private negotiations between the borrower and one or more financial institutions ("Lenders"). 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 only with 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, nor 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. All senior loans involve interest rate risk, liquidity risk and credit risk, including the potential default or insolvency of the borrower.

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $53,111,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2011 ($13,877,000), December 31, 2014 ($3,844,000), December 31, 2015 ($858,000), December 31, 2016 ($17,300,000) and December 31, 2017 ($17,232,000), the respective expiration dates, whichever occurs first.

In addition, from November 1, 2010 through December 31, 2010, the Fund incurred $185,000 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ended December 31, 2011.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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 forward currency contracts, 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. Realized gains and losses from investment transactions are recorded on an identified cost basis and may include proceeds from litigation. 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 Swap Contracts. A credit default swap is a contract between a buyer and a seller of protection against pre-defined credit events for the reference entity. For the six months ended June 30, 2011, the Fund bought or sold credit default swap contracts to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer, or to hedge the risk of default on Fund securities. As a seller in the credit default swap contract, 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 US 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 contract 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 swap contracts in order to hedge against the risk of a credit event on debt securities, in which case the Fund functions as the counterparty referenced above. This involves the risk that the contract 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 contract 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 swap contracts sold by the Fund.

A summary of the open credit default swap contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the Fund's investment in credit default swap contracts purchased had a total notional value generally indicative of a range from $0 to $280,000, and the investment in credit default swap contracts sold had a total notional value generally indicative of a range from approximately $2,765,000 to $10,765,000.

A summary of the open forward currency contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the Fund's investment in forward currency contracts short vs. US dollars had a total contract value generally indicative of a range from approximately $4,465,000 to $7,198,000. The Fund's investment in forward currency contracts long vs. US dollars had a total contract value generally indicative of a range from $0 to approximately $1,139,000.

Asset Derivatives	Forward Contracts		Swap Contracts		Total
Credit Contracts (a)	$	—	$	383,405	$	383,405
Foreign Exchange Contracts (b)		5,986		—		5,986
	$	5,986	$	383,405	$	389,391

Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts:

(a) Unrealized appreciation on swap contracts

(b) Unrealized appreciation on forward foreign currency exchange contracts

Liability Derivatives	Forward Contracts			Swap Contracts			Total
Credit Contracts (a)	$	—		$	(27,155	)	$	(27,155	)
Foreign Exchange Contracts (b)		(29,656	)		—			(29,656	)
	$	(29,656	)	$	(27,155	)	$	(56,811	)

Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts:

(a) Unrealized depreciation on swap contracts

(b) Unrealized depreciation on forward foreign currency exchange contracts

Realized Gain (Loss)	Forward Contracts			Swap Contracts		Total
Credit Contracts (a)	$	—		$	141,883	$	141,883
Foreign Exchange Contracts (b)		(581,356	)		—		(581,356	)
	$	(581,356	)	$	141,883	$	(439,473	)

Each of the above derivatives is located in the following Statement of Operations accounts:

(a) Net realized gain (loss) from swap contracts

(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)	Forward Contracts		Swap Contracts			Total
Credit Contracts (a)	$	—	$	(30,006	)	$	(30,006	)
Foreign Exchange Contracts (b)		34,761		—			34,761
	$	34,761	$	(30,006	)	$	4,755

Each of the above derivatives is located in the following Statement of Operations accounts:

(a) Change in net unrealized appreciation (depreciation) on swap contracts

(b) Change in net unrealized appreciation (depreciation) on foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

C. Purchases and Sales of Securities

During the six months ended June 30, 2011, purchases and sales of investment transactions (excluding short-term investments) aggregated $69,260,296 and $82,300,868, respectively.

D. Related Parties

$0-$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	%

Accordingly, for the six months ended June 30, 2011, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.50% of the Fund's average daily net assets.

Services to Shareholders	Total Aggregated		Unpaid at June 30, 2011
Class A	$	135	$	97
Class B		13		6
	$	148	$	103

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

E. Investing in High-Yield Securities

F. Ownership of the Fund

At June 30, 2011, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 32%, 31% and 30%. One Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 100%.

G. Line of Credit

At June 30, 2011, the Fund had a $650,000 outstanding loan. Interest expense incurred on the borrowings was $2,987 for the six months ended June 30, 2011. The average dollar amount of the borrowings was $1,898,718, the weighted average interest rate on these borrowings was 1.45% and the Fund had a loan outstanding for thirty-nine days throughout the period. The borrowings were valued at cost, which approximates fair value.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2HI-3 (R-023297-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Large Cap Value VIP

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

7 Investment Portfolio

10 Statement of Assets and Liabilities

11 Statement of Operations

12 Statement of Changes in Net Assets

13 Financial Highlights

15 Notes to Financial Statements

19 Proxy Voting

20 Summary of Management Fee Evaluation by Independent Fee Consultant

Stocks may decline in value. 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, 2011

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 are 0.82% and 1.11% 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 DWS Large Cap Value VIP
[] DWS Large Cap Value VIP — Class A [] Russell 1000® Value Index		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. Russell 1000® Index is an unmanaged price-only index of the 1,000 largest capitalized companies that are domiciled in the US 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
DWS Large Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,650		$	12,720		$	9,736		$	11,822		$	15,336
Class A	Average annual total return		6.50	%		27.20	%		-0.89	%		3.40	%		4.37	%
Russell 1000 Value Index	Growth of $10,000	$	10,592		$	12,894		$	10,699		$	10,590		$	14,781
Russell 1000 Value Index	Average annual total return		5.92	%		28.94	%		2.28	%		1.15	%		3.99	%
DWS Large Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			Life of Class*
Class B	Growth of $10,000	$	10,636		$	12,688		$	9,648		$	11,620		$	15,608
Class B	Average annual total return		6.36	%		26.88	%		-1.19	%		3.05	%		5.07	%
Russell 1000 Value Index	Growth of $10,000	$	10,592		$	12,894		$	10,699		$	10,590		$	16,234
Russell 1000 Value Index	Average annual total return		5.92	%		28.94	%		2.28	%		1.15	%		5.53	%

The growth of $10,000 is cumulative.

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

* The Fund commenced offering Class B shares on July 1, 2002. Index returns began on June 30, 2002.

Information About Your Fund's Expenses

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, 2011
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,065.00	$	1,063.60
Expenses Paid per $1,000*	$	4.10	$	5.58
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/11	$	1,000.00	$	1,000.00
Ending Account Value 6/30/11	$	1,020.83	$	1,019.39
Expenses Paid per $1,000*	$	4.01	$	5.46

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Large Cap Value VIP	.80%		1.09%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Common Stocks	94%	98%
Cash Equivalents	6%	2%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/11	12/31/10

Energy	15%	18%
Health Care	14%	12%
Financials	13%	13%
Consumer Staples	13%	12%
Utilities	11%	10%
Consumer Discretionary	8%	7%
Telecommunication Services	7%	9%
Materials	7%	5%
Industrials	6%	6%
Information Technology	6%	8%
	100%	100%

Asset allocation and sector diversification are subject to change.

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

Investment Portfolio June 30, 2011 (Unaudited)

	Shares		Value ($)

Common Stocks 94.2%
Consumer Discretionary 7.8%
Auto Components 0.8%
TRW Automotive Holdings Corp.*		60,706		3,583,475
Distributors 1.0%
Genuine Parts Co.		87,404		4,754,778
Diversified Consumer Services 1.4%
H&R Block, Inc.		418,772		6,717,103
Hotels Restaurants & Leisure 1.6%
Carnival Corp. (Units)		201,697		7,589,858
Media 1.7%
News Corp. "A"		439,358		7,776,637
Specialty Retail 1.3%
AutoZone, Inc.*		12,934		3,813,590
Best Buy Co., Inc.		79,591		2,499,953
				6,313,543
Consumer Staples 12.0%
Beverages 1.8%
PepsiCo, Inc.		117,687		8,288,695
Food & Staples Retailing 3.9%
CVS Caremark Corp.		224,691		8,443,888
Kroger Co.		194,356		4,820,029
Wal-Mart Stores, Inc.		90,153		4,790,730
				18,054,647
Food Products 3.0%
General Mills, Inc.		111,180		4,138,120
Kellogg Co.		96,060		5,314,039
Mead Johnson Nutrition Co.		68,763		4,644,941
				14,097,100
Tobacco 3.3%
Altria Group, Inc.		335,875		8,870,459
Philip Morris International, Inc.		102,032		6,812,676
				15,683,135
Energy 14.3%
Energy Equipment & Services 2.5%
Noble Corp.		170,405		6,715,661
Transocean Ltd.		74,573		4,814,433
				11,530,094
Oil, Gas & Consumable Fuels 11.8%
Canadian Natural Resources Ltd.		152,938		6,401,985
Chevron Corp.		88,802		9,132,398
ConocoPhillips		83,415		6,271,974
Marathon Oil Corp.		213,883		11,267,356
Nexen, Inc.		223,844		5,036,490
Occidental Petroleum Corp.		85,791		8,925,695
Suncor Energy, Inc.		215,019		8,407,243
				55,443,141
Financials 12.2%
Diversified Financial Services 1.4%
JPMorgan Chase & Co.		160,129		6,555,681
Insurance 10.7%
Assurant, Inc.		165,254		5,993,763
Fidelity National Financial, Inc. "A"		329,427		5,185,181
HCC Insurance Holdings, Inc.		163,173		5,139,949
Lincoln National Corp.		298,871		8,514,835
	Shares		Value ($)

MetLife, Inc.		113,575		4,982,535
PartnerRe Ltd.		112,743		7,762,356
Prudential Financial, Inc.		128,129		8,147,723
Transatlantic Holdings, Inc.		91,161		4,467,801
				50,194,143
Thrifts & Mortgage Finance 0.1%
Washington Mutual, Inc.*		1,394,944		180,645
Health Care 13.4%
Biotechnology 1.8%
Gilead Sciences, Inc.*		201,149		8,329,580
Health Care Equipment & Supplies 3.4%
Baxter International, Inc.		160,977		9,608,717
Becton, Dickinson & Co.		72,578		6,254,046
				15,862,763
Health Care Providers & Services 4.7%
Aetna, Inc.		83,536		3,683,102
Humana, Inc.		60,114		4,841,582
McKesson Corp.		104,862		8,771,706
WellPoint, Inc.		60,471		4,763,301
				22,059,691
Pharmaceuticals 3.5%
Merck & Co., Inc.		235,416		8,307,831
Teva Pharmaceutical Industries Ltd. (ADR)		166,389		8,023,277
				16,331,108
Industrials 5.7%
Aerospace & Defense 4.1%
Northrop Grumman Corp.		94,141		6,528,678
Raytheon Co.		126,669		6,314,450
United Technologies Corp.		70,356		6,227,209
				19,070,337
Machinery 1.6%
Dover Corp.		109,936		7,453,661
Information Technology 5.6%
Communications Equipment 1.7%
Brocade Communications Systems, Inc.*		564,336		3,645,611
Cisco Systems, Inc.		286,487		4,472,062
				8,117,673
Computers & Peripherals 0.8%
Hewlett-Packard Co.		100,084		3,643,058
Semiconductors & Semiconductor Equipment 1.4%
Intel Corp.		300,491		6,658,880
Software 1.7%
Microsoft Corp.		307,643		7,998,718
Materials 6.1%
Chemicals 3.6%
Air Products & Chemicals, Inc.		98,147		9,380,891
Praxair, Inc.		67,262		7,290,528
				16,671,419
Containers & Packaging 1.7%
Sonoco Products Co.		225,373		8,009,756
Metals & Mining 0.8%
Freeport-McMoRan Copper & Gold, Inc.		72,320		3,825,728
	Shares		Value ($)

Telecommunication Services 6.3%
Diversified Telecommunication Services 4.8%
AT&T, Inc.		355,776		11,174,924
CenturyLink, Inc.		280,135		11,325,858
				22,500,782
Wireless Telecommunication Services 1.5%
Vodafone Group PLC (ADR)		252,849		6,756,126
Utilities 10.8%
Electric Utilities 9.0%
American Electric Power Co., Inc.		165,290		6,228,127
Duke Energy Corp.		289,099		5,443,734
Entergy Corp.		96,989		6,622,409
Exelon Corp.		191,280		8,194,435
FirstEnergy Corp.		224,956		9,931,808
Southern Co.		143,460		5,792,915
				42,213,428
	Shares		Value ($)

Multi-Utilities 1.8%
PG&E Corp.		194,622		8,179,962
Total Common Stocks (Cost $382,582,979)				440,445,345

Cash Equivalents 5.8%
Central Cash Management Fund, 0.11% (a) (Cost $26,971,272)		26,971,272		26,971,272

	% of Net Assets		Value ($)

Total Investment Portfolio (Cost $409,554,251)+		100.0		467,416,617
Other Assets and Liabilities, Net		0.0		170,628
Net Assets		100.0		467,587,245

* Non-income producing security.

+ The cost for federal income tax purposes was $411,650,680. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $55,765,937. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $73,040,564 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $17,274,627.

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

ADR: American Depositary Receipt

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (b)	$	440,445,345	$	—	$	—	$	440,445,345
Short-Term Investments (b)		26,971,272		—		—		26,971,272
Total	$	467,416,617	$	—	$	—	$	467,416,617

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(b) 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, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $382,582,979)	$	440,445,345
Investment in Central Cash Management Fund (cost $26,971,272)		26,971,272
Total investments in securities, at value (cost $409,554,251)		467,416,617
Cash		24,014
Foreign currency, at value (cost $31,425)		36,375
Receivable for Fund shares sold		20,224
Dividends receivable		1,007,666
Interest receivable		4,562
Foreign taxes recoverable		2,107
Other assets		6,313
Total assets		468,517,878
Liabilities
Payable for Fund shares redeemed		536,948
Accrued management fee		251,766
Other accrued expenses and payables		141,919
Total liabilities		930,633
Net assets, at value	$	467,587,245
Net Assets Consist of
Undistributed net investment income		3,041,277
Net unrealized appreciation (depreciation) on: Investments		57,862,366
Foreign currency		5,733
Accumulated net realized gain (loss)		(35,300,023	)
Paid-in capital		441,977,892
Net assets, at value	$	467,587,245
Class A Net Asset Value, offering and redemption price per share ($464,586,946 ÷ 37,707,504 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	12.32
Class B Net Asset Value, offering and redemption price per share ($3,000,299 ÷ 242,922 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	12.35

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $17,969)	$	4,265,621
Income distributions — Central Cash Management Fund		9,709
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		7,583
Total income		4,282,913
Expenses: Management fee		955,384
Administration fee		147,458
Services to shareholders		5,428
Distribution service fee (Class B)		2,382
Record keeping fees (Class B)		353
Custodian fee		6,609
Professional fees		33,988
Reports to shareholders		19,995
Trustees' fees and expenses		5,543
Other		5,245
Total expenses		1,182,385
Net investment income		3,100,528
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		7,878,919
Foreign currency		4,009
		7,882,928
Change in net unrealized appreciation (depreciation) on: Investments		(1,589,902	)
Foreign currency		(519	)
		(1,590,421	)
Net gain (loss)		6,292,507
Net increase (decrease) in net assets resulting from operations	$	9,393,035

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	3,100,528		$	4,298,825
Net realized gain (loss)		7,882,928			8,028,746
Change in net unrealized appreciation (depreciation)		(1,590,421	)		7,889,692
Net increase (decrease) in net assets resulting from operations		9,393,035			20,217,263
Distributions to shareholders from: Net investment income: Class A		(4,120,416	)		(4,108,146	)
Class B		(23,046	)		(14,019	)
Total distributions	$	(4,143,462	)	$	(4,122,165	)
Fund share transactions: Class A Proceeds from shares sold		7,690,497			8,671,405
Net assets acquired in tax-free reorganization		273,358,779			—
Reinvestment of distributions		4,120,416			4,108,146
Payments for shares redeemed		(31,314,531	)		(36,788,065	)
Net increase (decrease) in net assets from Class A share transactions		253,855,161			(24,008,514	)
Class B Proceeds from shares sold		327,344			506,629
Net assets acquired in tax-free reorganization		1,731,132			—
Reinvestment of distributions		23,046			14,019
Payments for shares redeemed		(357,751	)		(88,091	)
Net increase (decrease) in net assets from Class B share transactions		1,723,771			432,557
Increase (decrease) in net assets		260,828,505			(7,480,859	)
Net assets at beginning of period		206,758,740			214,239,599
Net assets at end of period (including undistributed net investment income of $3,041,277 and $4,084,211, respectively)	$	467,587,245		$	206,758,740
Other Information
Class A Shares outstanding at beginning of period		17,416,427			19,667,770
Shares sold		627,562			778,508
Shares issued in tax-free reorganization		21,886,687			—
Shares issued to shareholders in reinvestment of distributions		332,560			366,145
Shares redeemed		(2,555,732	)		(3,395,996	)
Net increase (decrease) in Class A shares		20,291,077			(2,251,343	)
Shares outstanding at end of period		37,707,504			17,416,427
Class B Shares outstanding at beginning of period		105,172			66,594
Shares sold		26,654			45,434
Shares issued in tax-free reorganization		138,157			—
Shares issued to shareholders in reinvestment of distributions		1,855			1,246
Shares redeemed		(28,916	)		(8,102	)
Net increase (decrease) in Class B shares		137,750			38,578
Shares outstanding at end of period		242,922			105,172

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	11.80		$	10.86		$	8.92		$	19.21		$	17.96		$	15.81
Income (loss) from investment operations: Net investment income (loss)a		.13			.23			.21			.21			.26			.29	c
Net realized and unrealized gain (loss)		.64			.93			1.97			(5.68	)		1.98			2.12
Total from investment operations		.77			1.16			2.18			(5.47	)		2.24			2.41
Less distributions from: Net investment income		(.25	)		(.22	)		(.24	)		(.34	)		(.32	)		(.26	)
Net realized gains		—			—			—			(4.48	)		(.67	)		—
Total distributions		(.25	)		(.22	)		(.24	)		(4.82	)		(.99	)		(.26	)
Net asset value, end of period	$	12.32		$	11.80		$	10.86		$	8.92		$	19.21		$	17.96
Total Return (%)		6.50	**		10.77			25.37			(36.40	)b		13.15	b,d		15.41	c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		465			206			214			118			229			275
Ratio of expenses before expense reductions (%)		.80	*		.82			.76			.87			.83			.83
Ratio of expenses after expense reductions (%)		.80	*		.82			.76			.86			.82			.83
Ratio of net investment income (loss) (%)		2.10	*		2.13			2.22			1.59			1.43			1.73	c
Portfolio turnover rate (%)		14	**		32			76			97			103			76
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.008 per share and an increase in the ratio of net investment income of 0.04%. Excluding this non-recurring income, total return would have been 0.04% lower. d Includes a reimbursement from the Advisor to reimburse the effect of losses incurred as the result of certain operation errors during the period. Excluding this reimbursement, total return would have been 0.04% lower. * Annualized ** Not annualized

				Years Ended December 31,
Class B	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	11.81		$	10.86		$	8.92		$	19.20		$	17.94		$	15.79
Income (loss) from investment operations: Net investment income (loss)a		.11			.20			.19			.12			.19			.23	c
Net realized and unrealized gain (loss)		.64			.93			1.96			(5.64	)		1.99			2.11
Total from investment operations		.75			1.13			2.15			(5.52	)		2.18			2.34
Less distributions from: Net investment income		(.21	)		(.18	)		(.21	)		(.28	)		(.25	)		(.19	)
Net realized gains		—			—			—			(4.48	)		(.67	)		—
Total distributions		(.21	)		(.18	)		(.21	)		(4.76	)		(.92	)		(.19	)
Net asset value, end of period	$	12.35		$	11.81		$	10.86		$	8.92		$	19.20		$	17.94
Total Return (%)		6.36	**		10.53			24.86			(36.64	)b		12.77	b,d		14.96	c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		3			1			1			.29			8			40
Ratio of expenses before expense reductions (%)		1.09	*		1.11			1.06			1.28			1.21			1.21
Ratio of expenses after expense reductions (%)		1.09	*		1.11			1.06			1.26			1.20			1.21
Ratio of net investment income (loss) (%)		1.81	*		1.84			1.92			1.20			1.06			1.35	c
Portfolio turnover rate (%)		14	**		32			76			97			103			76
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.008 per share and an increase in the ratio of net investment income of 0.04%. Excluding this non-recurring income, total return would have been 0.04% lower. d Includes a reimbursement from the Advisor to reimburse the effect of losses incurred as the result of certain operation errors during the period. Excluding this reimbursement, total return would have been 0.04% lower. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Large Cap Value VIP (the "Fund") is a diversified series of DWS 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.

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

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $41,087,000, including $19,469,000 inherited from its merger with an affiliated fund in fiscal year 2009, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($29,003,000) and December 31, 2017 ($12,084,000), the respective expiration dates, whichever occurs first, and which may be subject to certain limitations under Sections 381-384 of the Internal Revenue Code.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

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, 2011, purchases and sales of investment transactions (excluding short-term investments) aggregated $43,777,742 and $75,079,022, respectively.

C. Related Parties

Deutsche Asset Management International GmbH ("DeAMi"), an affiliate of the Advisor, serves as subadvisor. As a subadvisor to the Fund, DeAMi makes investment decisions and buys and sells securities for the Fund. DeAMi is paid by the Advisor for the services DeAMi provides to the Fund.

$0-$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	%

For the six months ended June 30, 2011, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.65% of the Fund's average daily net assets.

Services to Shareholders	Total Aggregated		Unpaid at June 30, 2011
Class A	$	190	$	190
Class B		48		48
	$	238	$	238

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

D. Ownership of the Fund

At June 30, 2011, two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 54% and 29%. Two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 52% and 16%.

E. Line of Credit

F. Acquisition of Assets

On April 29, 2011, the Fund acquired all of the net assets of DWS Strategic Value VIP pursuant to a plan of reorganization approved by shareholders on January 12, 2011. The acquisition was accomplished by a tax-free exchange of 31,515,416 Class A shares and 198,385 Class B shares of DWS Strategic Value VIP for 21,886,687 Class A shares and 138,157 Class B shares of the Fund, respectively, outstanding on April 29, 2011. DWS Strategic Value VIP's net assets at that date, $275,089,911, including $20,489,725 of net unrealized appreciation, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $212,494,328. The combined net assets of the Fund immediately following the acquisition were $487,584,239.

The financial statements reflect the operations of the Fund for the period prior to the acquisition and the combined portfolio for the period subsequent to the portfolio merger. Assuming the acquisition had been completed on January 1, 2011, the Fund's pro forma results of operations for the six months ended June 30, 2011, are as follows:

	Total Aggregated
Net investment income*	$	3,898,552
Net gain (loss) on investments	$	27,675,421
Net increase (decrease) in net assets resulting from operations	$	31,573,973

* Net investment income includes $36,372 of pro forma eliminated expenses.

Because the combined investment portfolio has been managed as a single integrated Fund since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of DWS Strategic Value VIP that have been included in the Fund's Statement of Operations since April 29, 2011.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2LCV-3 (R-023298-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Money Market VIP

Contents

3 Information About Your Fund's Expenses

4 Portfolio Summary

5 Investment Portfolio

8 Statement of Assets and Liabilities

9 Statement of Operations

10 Statement of Changes in Net Assets

12 Financial Highlights

13 Notes to Financial Statements

15 Proxy Voting

16 Summary of Management Fee Evaluation by Independent Fee Consultant

18 Summary of Administrative Fee Evaluation by Independent Fee Consultant

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

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. 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, 2011 to June 30, 2011).

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, 2011
Actual Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,000.05
Expenses Paid per $1,000*	$	1.39
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,023.41
Expenses Paid per $1,000*	$	1.40

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Money Market VIP	.28%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio)	6/30/11	12/31/10

Repurchase Agreements	27%	20%
Commercial Paper	27%	31%
Short-Term Notes	22%	21%
Government & Agency Obligations	13%	14%
Certificates of Deposit and Bank Notes	11%	14%
	100%	100%

Weighted Average Maturity*

DWS Variable Series II — DWS Money Market VIP	42 days	51 days
First Tier Retail Money Fund Average	39 days	39 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 US Treasury, US 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 bonds held by the Fund taking into consideration any available maturity shortening features.

Asset allocation and weighted average maturity 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 www.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 www.dws-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio June 30, 2011 (Unaudited)

	Principal Amount ($)		Value ($)

Certificates of Deposit and Bank Notes 11.4%
Banco Del Estado De Chile, 0.32%, 8/17/2011		1,250,000		1,250,000
Bank Nederlandse Gemeenten NV, 6.0%, 3/26/2012		500,000		520,588
Bank of Montreal, 0.14%, 7/6/2011		1,800,000		1,800,001
BNP Paribas, 0.35%, 8/8/2011		1,500,000		1,500,000
Credit Agricole SA, 0.3%, 8/4/2011		1,000,000		1,000,000
Dexia Credit Local, 144A, 2.375%, 9/23/2011		665,000		667,689
International Finance Corp., 3.0%, 11/15/2011		500,000		504,852
Intesa Sanpaolo SpA, 0.25%, 7/5/2011		1,000,000		1,000,000
Mitsubishi UFJ Trust & Banking Corp., 0.32%, 8/19/2011		1,200,000		1,200,000
Mizuho Corporate Bank Ltd., 0.19%, 7/8/2011		2,000,000		2,000,000
Nederlandse Waterschapsbank NV, 1.375%, 2/17/2012		800,000		804,997
Nordea Bank Finland PLC, 0.28%, 7/5/2011		1,250,000		1,250,001
Skandinaviska Enskilda Banken AB:
0.2%, 8/17/2011		1,000,000		1,000,000
0.21%, 7/8/2011		1,000,000		1,000,000
0.24%, 7/1/2011		2,300,000		2,300,000
Societe Generale:
0.2%, 7/5/2011		1,000,000		1,000,000
0.24%, 9/1/2011		2,000,000		2,000,000
Sumitomo Mitsui Banking Corp.:
0.19%, 7/6/2011		1,000,000		1,000,000
0.19%, 7/8/2011		1,800,000		1,800,000
Svenska Handelsbanken AB, 0.24%, 7/6/2011		1,500,000		1,500,000
Total Certificates of Deposit and Bank Notes (Cost $25,098,128)				25,098,128

Commercial Paper 26.8%
Issued at Discount**
Abbey National North America LLC, 0.35%, 8/29/2011		348,000		347,800
Argento Variable Funding, 144A, 0.26%, 8/1/2011		1,000,000		999,776
Bank of Montreal, 0.2%, 7/5/2011		5,000,000		4,999,889
Barclays Bank PLC, 0.22%, 9/1/2011		1,000,000		999,621
BPCE SA, 0.27%, 7/26/2011		1,000,000		999,813
Caisse d'Amortissement de la Dette Sociale, 0.22%, 8/5/2011		2,000,000		1,999,572
DnB NOR Bank ASA, 0.21%, 10/3/2011		1,000,000		999,452
Erste Abwicklungsanstalt:
0.24%, 9/29/2011		2,500,000		2,498,500
0.37%, 1/9/2012		1,000,000		998,027
0.39%, 2/16/2012		1,200,000		1,197,010
0.4%, 3/9/2012		600,000		598,320
0.4%, 3/29/2012		800,000		797,582
Google, Inc., 0.4%, 9/16/2011		800,000		799,316
Grampian Funding LLC:
144A, 0.22%, 9/8/2011		1,000,000		999,578
144A, 0.25%, 8/9/2011		1,000,000		999,729
144A, 0.26%, 7/19/2011		1,000,000		999,870
	Principal Amount ($)		Value ($)

144A, 0.28%, 7/7/2011		500,000		499,977
144A, 0.28%, 7/8/2011		1,000,000		999,946
Johnson & Johnson, 144A, 0.19%, 8/22/2011		1,500,000		1,499,588
Kells Funding LLC:
144A, 0.35%, 2/17/2012		800,000		798,203
144A, 0.37%, 3/19/2012		700,000		698,115
144A, 0.38%, 4/17/2012		700,000		697,850
144A, 0.39%, 7/5/2011		850,000		849,963
144A, 0.39%, 9/6/2011		1,750,000		1,748,730
144A, 0.4%, 7/1/2011		650,000		650,000
NRW.Bank:
0.22%, 7/14/2011		1,000,000		999,921
0.24%, 11/1/2011		1,500,000		1,498,770
SBAB Bank AB:
144A, 0.29%, 9/8/2011		1,000,000		999,444
144A, 0.39%, 7/5/2011		1,500,000		1,499,935
Scaldis Capital LLC, 0.21%, 8/1/2011		1,500,000		1,499,729
Straight-A Funding LLC:
144A, 0.15%, 7/25/2011		2,000,000		1,999,800
144A, 0.17%, 8/9/2011		1,158,000		1,157,787
Swedbank AB:
0.215%, 8/24/2011		1,500,000		1,499,516
0.27%, 7/11/2011		600,000		599,955
0.27%, 7/26/2011		800,000		799,850
0.34%, 7/5/2011		1,000,000		999,962
Tasman Funding, Inc., 144A, 0.23%, 9/6/2011		1,000,000		999,572
Total Capital Canada Ltd., 144A, 0.31%, 9/15/2011		800,000		799,476
Victory Receivables Corp.:
144A, 0.18%, 7/5/2011		2,500,000		2,499,950
144A, 0.19%, 7/7/2011		1,500,000		1,499,953
144A, 0.2%, 7/26/2011		2,200,000		2,199,694
Wal-Mart Stores Inc., 0.08%, 7/29/2011		7,500,000		7,499,533
Total Commercial Paper (Cost $58,729,074)				58,729,074

Short-Term Notes* 21.7%
Abbey National Treasury Services PLC, 0.38%, 9/2/2011		1,500,000		1,500,000
Australia & New Zealand Banking Group Ltd., 144A, 0.31%, 1/20/2012		1,200,000		1,200,000
Bank of Nova Scotia:
0.2%, 8/25/2011		1,400,000		1,400,000
0.25%, 9/12/2011		800,000		800,000
0.3%, 7/10/2012		1,000,000		1,000,000
0.33%, 12/8/2011		800,000		800,000
Barclays Bank PLC, 0.505%, 7/19/2011		2,000,000		2,000,000
Caisse d'Amortissement de la Dette Sociale, 144A, 0.273%, 5/25/2012		2,000,000		1,999,801
Canadian Imperial Bank of Commerce, 0.265%, 4/26/2012		1,200,000		1,200,000
Commonwealth Bank of Australia:
144A, 0.279%, 5/11/2012		2,000,000		2,000,000
144A, 0.288%, 2/3/2012		1,000,000		1,000,000
JPMorgan Chase Bank NA, 0.275%, 7/9/2012		2,000,000		2,000,000
	Principal Amount ($)		Value ($)

Kells Funding LLC:
144A, 0.287%, 8/15/2011		1,200,000		1,200,000
144A, 0.291%, 2/27/2012		1,000,000		1,000,000
144A, 0.315%, 2/24/2012		1,750,000		1,750,000
144A, 0.331%, 12/1/2011		1,000,000		1,000,000
Landesbank Baden-Wuerttemberg, 144A, 0.465%, 6/22/2012		7,250,000		7,250,000
Lloyds TSB Bank PLC, 0.265%, 5/11/2012		2,000,000		2,000,000
Nordea Bank Finland PLC:
0.574%, 10/20/2011		2,000,000		2,001,782
0.58%, 10/14/2011		2,000,000		2,001,680
Rabobank Nederland NV:
0.269%, 1/10/2012		750,000		750,000
144A, 0.396%, 9/28/2011		1,000,000		1,000,365
Royal Bank of Canada, 0.29%, 8/12/2011		1,200,000		1,200,000
Societe Generale, 0.19%, 8/1/2011		2,000,000		2,000,000
Svenska Handelsbanken AB, 144A, 0.291%, 6/29/2012		750,000		750,000
Toronto-Dominion Bank, 0.209%, 5/11/2012		1,000,000		1,000,000
Westpac Banking Corp.:
0.25%, 10/12/2011		1,000,000		1,000,000
0.278%, 7/11/2012		750,000		750,000
0.279%, 5/9/2012		1,500,000		1,500,000
144A, 0.323%, 10/28/2011		1,000,000		1,000,075
0.34%, 1/10/2012		1,500,000		1,500,000
Total Short-Term Notes (Cost $47,553,703)				47,553,703

Government & Agency Obligations 12.9%
Foreign Government Obligations 0.5%
Kingdom of Denmark, 2.75%, 11/15/2011		1,000,000		1,008,642
Other Government Related 1.0%
European Investment Bank, 2.625%, 11/15/2011 (a)		2,100,000		2,117,706
US Government Sponsored Agencies 6.5%
Federal Farm Credit Bank:
0.17%*, 11/2/2011		750,000		749,987
0.318%**, 12/16/2011		800,000		798,805
	Principal Amount ($)		Value ($)

Federal Home Loan Bank:
0.089%**, 9/21/2011		1,000,000		999,795
0.13%, 1/23/2012		2,000,000		1,999,628
0.24%, 10/28/2011		1,800,000		1,799,625
0.25%, 10/28/2011		750,000		749,980
0.267%**, 9/12/2011		2,500,000		2,498,631
Federal National Mortgage Association:
0.086%*, 7/27/2011		1,200,000		1,199,944
0.149%**, 1/17/2012		2,500,000		2,497,917
0.159%**, 11/21/2011		1,000,000		999,365
				14,293,677
US Treasury Obligations 4.9%
US Treasury Bill, 0.217%**, 10/20/2011		1,000,000		999,329
US Treasury Notes:
0.875%, 1/31/2012		1,250,000		1,254,884
1.0%, 9/30/2011		2,000,000		2,003,611
1.0%, 10/31/2011		1,000,000		1,002,514
1.125%, 12/15/2011		1,200,000		1,204,494
4.625%, 8/31/2011		2,800,000		2,820,427
4.625%, 10/31/2011		1,500,000		1,521,729
				10,806,988
Total Government & Agency Obligations (Cost $28,227,013)				28,227,013

Repurchase Agreements 27.8%
JPMorgan Securities, Inc., 0.0001%, dated 6/30/2011, to be repurchased at $39,000,000 on 7/1/2011 (b)		39,000,000		39,000,000
Merrill Lynch & Co., Inc., 0.05%, dated 6/30/2011, to be repurchased at $21,823,789 on 7/1/2011 (c)		21,823,759		21,823,759
Total Repurchase Agreements (Cost $60,823,759)				60,823,759

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $220,431,677)+		100.6			220,431,677
Other Assets and Liabilities, Net		(0.6	)		(1,375,565	)
Net Assets		100.0			219,056,112

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

+ The cost for federal income tax purposes was $220,431,677.

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

(b) Collateralized by $39,825,000 US Treasury Note, 1.375% maturing on 11/30/2015 with a value of $39,825,864.

Principal Amount ($)

Security

Rate %

Maturity Date

Collateral Value ($)

18,400,000

Federal National Morgage Association

Zero Coupon

5/1/2012

18,371,848

3,890,000

Federal Home Loan Bank

0.136

11/26/2012

3,888,250

Total Collateral Value

22,260,098

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Investments in Securities (d)	$	—	$	159,607,918	$	—	$	159,607,918
Repurchase Agreements		—		60,823,759		—		60,823,759
Total	$	—	$	220,431,677	$	—	$	220,431,677

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(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, 2011 (Unaudited)
Assets
Investments: Investment in non-affiliated securities, valued at amortized cost	$	159,607,918
Repurchase agreements, valued at amortized cost		60,823,759
Total investments, valued at amortized cost		220,431,677
Cash		8
Receivable for Fund shares sold		382,406
Interest receivable		133,833
Due from Advisor		12,700
Other assets		1,216
Total assets		220,961,840
Liabilities
Payable for investments purchased		1,498,770
Payable for Fund shares redeemed		347,601
Distributions payable		878
Other accrued expenses and payables		58,479
Total liabilities		1,905,728
Net assets, at value	$	219,056,112
Net Assets Consist of
Distributions in excess of net investment income		(1,007	)
Accumulated net realized gain (loss)		1,198
Paid-in capital		219,055,921
Net assets, at value	$	219,056,112
Class A Net Asset Value, offering and redemption price per share ($219,056,112 ÷ 219,139,637 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, 2011 (Unaudited)
Investment Income
Income: Interest	$	297,371
Expenses: Management fee		293,960
Administration fee		103,147
Services to shareholders		824
Custodian fee		11,922
Professional fees		28,329
Reports to shareholders		72,148
Trustees' fee and expenses		4,889
Other		6,488
Total expenses		521,707
Expense reductions		(234,654	)
Total expenses after expense reductions		287,053
Net investment income		10,318
Net realized gain (loss)		1,198
Net increase (decrease) in net assets resulting from operations	$	11,516

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income	$	10,318		$	24,815
Net realized gain (loss)		1,198			1,201
Net increase (decrease) in net assets resulting from operations		11,516			26,016
Distributions to shareholders from: Net investment income Class A		(10,318	)		(24,815	)
Total distributions	$	(10,318	)	$	(24,815	)
Fund share transactions: Class A Proceeds from shares sold		54,737,578			111,590,276
Reinvestment of distributions		10,447			26,864
Payments for shares redeemed		(55,609,656	)		(161,340,354	)
Net increase (decrease) in net assets from Class A share transactions		(861,631	)		(49,723,214	)
Increase (decrease) in net assets		(860,433	)		(49,722,013	)
Net assets at beginning of period		219,916,545			269,638,558
Net assets at end of period (including distributions in excess of net investment income of $1,007 and $1,007, respectively)	$	219,056,112		$	219,916,545
Other Information
Class A Shares outstanding at beginning of period		220,001,268			269,724,482
Shares sold		54,737,578			111,590,276
Shares issued to shareholders in reinvestment of distributions		10,447			26,864
Shares redeemed		(55,609,656	)		(161,340,354	)
Net increase (decrease) in Class A shares		(861,631	)		(49,723,214	)
Shares outstanding at end of period		219,139,637			220,001,268

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000
Income from investment operations: Net investment income		.000	***		.000	***		.003			.026			.049			.046
Total from investment operations		.000	***		.000	***		.003			.026			.049			.046
Less distributions from: Net investment income		.000	***		.000	***		(.003	)		(.026	)		(.049	)		(.046	)
Net asset value, end of period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000
Total Return (%)		.00	a**		.01	a		.34			2.64	a		5.00	a		4.65	a
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		219			220			270			398			355			294
Ratio of expenses before expense reductions (%)		.51	*		.46			.43			.52			.46			.52
Ratio of expenses after expense reductions (%)		.28	*		.34			.43			.50			.45			.51
Ratio of net investment income (%)		.01	*		.01			.37			2.56			4.88			4.58
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

DWS Money Market VIP (the "Fund") is a diversified series of DWS 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 inputs or methodology used for valuing securities are not necessarily an indication of the risk 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 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 or another designated sub-custodian bank 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.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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. 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

$0-$500 million	.285	%
next $500 million	.270	%
next $1.0 billion	.255	%
over $2.0 billion	.240	%

Accordingly, for the six months ended June 30, 2011, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $234,313, and the amount charged aggregated $59,647, which was equivalent to an annualized effective rate of 0.06% of the Fund's average daily net assets.

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

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

C. Ownership of the Fund

At June 30, 2011, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 31%, 22% and 14%.

D. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $450 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement: The Fund had no outstanding loans at June 30, 2011.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

Summary of Administrative Fee Evaluation by Independent Fee Consultant

October 4, 2010

Pursuant to an Order entered into by Deutsche Asset Management (DeAM) with the Attorney General of New York, I, Thomas H. Mack, have been appointed the Independent Fee Consultant for the DWS Funds and have as part of my duties evaluated the reasonableness of a proposed pass-through to the funds of certain reporting costs associated with new regulations for money funds. My evaluation considered the following:

• My recently completed annual evaluation (please see my summary report of October 3, 2010), concluding that the prospective fees and expenses of all the DWS-sponsored money funds are reasonable.

• The fact that in my opinion the services DWS would provide under the combination of the Advisory and proposed Administration Agreements continues to be comparable with those typically provided to competitive funds under their management agreements.

• Management's analysis showing that the maximum total expense ratio impact of this change on any fund share class would be 1.3 basis points, which in my opinion is not material to my conclusions about the reasonableness of expenses.

Based on the foregoing considerations, in my opinion the proposed fees and expenses for the affected DWS-sponsored money funds are reasonable.

Thomas H. Mack

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2MM-3 (R-023299-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Small Mid Cap Growth VIP

(formerly DWS Small Cap Growth VIP)

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

9 Statement of Assets and Liabilities

10 Statement of Operations

11 Statement of Changes in Net Assets

13 Financial Highlights

14 Notes to Financial Statements

17 Proxy Voting

18 Summary of Management Fee Evaluation by Independent Fee Consultant

Stocks of smaller and medium-sized companies involve greater risk than securities of larger, more-established companies. Stocks may decline in value. 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, 2011

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 is 0.78% 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 DWS Small Mid Cap Growth VIP
[] DWS Small Mid Cap Growth VIP — Class A [] Russell 2500™ Growth Index [] Russell 2000® Growth Index		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. Effective May 1, 2011, the Russell 2500 Growth Index replaces the Russell 2000 Growth Index as the fund's benchmark index because the Advisor believes that it better reflects the fund's investment strategy. The Russell 2000® Growth Index is an unmanaged, capitalization-weighted measure of 2,000 of the smallest capitalized US companies with a greater-than-average growth orientation and whose common stocks trade on the NYSE, NYSE Alternext US (formerly known as "Amex") and Nasdaq. 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
DWS Small Mid Cap Growth VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	11,046		$	14,725		$	12,104		$	10,975		$	10,132
Class A	Average annual total return		10.46	%		47.25	%		6.57	%		1.88	%		0.13	%
Russell 2500 Growth Index	Growth of $10,000	$	11,025		$	14,471		$	12,778		$	13,810		$	17,117
Russell 2500 Growth Index	Average annual total return		10.25	%		44.71	%		8.51	%		6.67	%		5.52	%
Russell 2000 Growth Index	Growth of $10,000	$	10,859		$	14,350		$	12,721		$	13,252		$	15,730
Russell 2000 Growth Index	Average annual total return		8.59	%		43.50	%		8.35	%		5.79	%		4.63	%

The growth of $10,000 is cumulative.

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

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (January 1, 2011 to June 30, 2011).

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, 2011
Actual Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,104.60
Expenses Paid per $1,000*	$	4.12
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,020.88
Expenses Paid per $1,000*	$	3.96

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Small Mid Cap Growth VIP	.79%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Common Stocks	98%	97%
Cash Equivalents	2%	3%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/11	12/31/10

Information Technology	24%	25%
Consumer Discretionary	17%	16%
Health Care	15%	20%
Industrials	15%	16%
Energy	9%	9%
Financials	8%	6%
Consumer Staples	6%	3%
Materials	5%	5%
Telecommunication Services	1%	—
	100%	100%

Asset allocation and sector diversification are subject to change.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

	Shares		Value ($)

Common Stocks 98.4%
Consumer Discretionary 16.3%
Auto Components 2.0%
BorgWarner, Inc.*		25,321		2,045,684
TRW Automotive Holdings Corp.*		27,381		1,616,300
				3,661,984
Hotels Restaurants & Leisure 1.5%
Panera Bread Co. "A"*		21,889		2,750,572
Household Durables 1.0%
Jarden Corp.		52,942		1,827,028
Internet & Catalog Retail 1.1%
Shutterfly, Inc.*		36,621		2,102,778
Media 1.8%
Cinemark Holdings, Inc.		94,221		1,951,317
Interpublic Group of Companies, Inc.		117,895		1,473,687
				3,425,004
Specialty Retail 6.3%
Advance Auto Parts, Inc.		21,496		1,257,301
Children's Place Retail Stores, Inc.*		39,540		1,759,135
DSW, Inc. "A"*		43,305		2,191,666
Guess?, Inc.		47,672		2,005,084
PetSmart, Inc.		44,662		2,026,315
Ulta Salon, Cosmetics & Fragrance, Inc.*		36,806		2,376,931
				11,616,432
Textiles, Apparel & Luxury Goods 2.6%
Deckers Outdoor Corp.*		31,900		2,811,666
Hanesbrands, Inc.*		68,923		1,967,752
				4,779,418
Consumer Staples 5.8%
Food Products 3.0%
Diamond Foods, Inc.		46,970		3,585,690
Green Mountain Coffee Roasters, Inc.*		20,866		1,862,499
				5,448,189
Household Products 1.3%
Church & Dwight Co., Inc.		59,120		2,396,725
Personal Products 1.5%
Herbalife Ltd.		49,349		2,844,476
Energy 8.4%
Energy Equipment & Services 4.0%
Complete Production Services, Inc.*		65,039		2,169,701
Core Laboratories NV		19,419		2,165,995
Dresser-Rand Group, Inc.*		35,943		1,931,936
Dril-Quip, Inc.*		15,983		1,084,127
				7,351,759
Oil, Gas & Consumable Fuels 4.4%
Approach Resources, Inc.*		97,661		2,213,975
Clean Energy Fuels Corp.*		45,722		601,244
Cloud Peak Energy, Inc.*		65,425		1,393,553
Northern Oil & Gas, Inc.*		57,576		1,275,308
Rosetta Resources, Inc.*		35,422		1,825,650
Whiting Petroleum Corp.*		15,516		883,016
				8,192,746
Financials 8.3%
Capital Markets 2.9%
Affiliated Managers Group, Inc.*		26,690		2,707,700
Lazard Ltd. "A"		44,535		1,652,249
	Shares		Value ($)

Stifel Financial Corp.*		25,124		900,947
				5,260,896
Commercial Banks 0.9%
Zions Bancorp.		69,716		1,673,881
Consumer Finance 1.0%
Dollar Financial Corp.*		83,523		1,808,273
Diversified Financial Services 1.6%
Portfolio Recovery Associates, Inc.*		34,236		2,902,870
Insurance 1.0%
W.R. Berkley Corp.		59,059		1,915,874
Real Estate Management & Development 0.9%
CB Richard Ellis Group, Inc. "A"*		68,596		1,722,446
Health Care 14.8%
Biotechnology 0.8%
Onyx Pharmaceuticals, Inc.*		41,813		1,475,999
Health Care Equipment & Supplies 3.8%
Accuray, Inc.*		141,982		1,137,276
Kinetic Concepts, Inc.*		51,400		2,962,182
Merit Medical Systems, Inc.*		78,093		1,403,331
Sirona Dental Systems, Inc.*		30,013		1,593,690
				7,096,479
Health Care Providers & Services 3.4%
Centene Corp.*		87,787		3,119,072
ExamWorks Group, Inc.*		125,496		3,186,344
				6,305,416
Health Care Technology 1.1%
SXC Health Solutions Corp.*		34,806		2,050,770
Life Sciences Tools & Services 1.0%
Life Technologies Corp.*		35,376		1,842,028
Pharmaceuticals 4.7%
Hospira, Inc.*		37,110		2,102,653
Pacira Pharmaceuticals. Inc.*		76,306		915,672
Par Pharmaceutical Companies, Inc.*		51,389		1,694,809
Questcor Pharmaceuticals, Inc.*		161,403		3,889,812
				8,602,946
Industrials 14.5%
Commercial Services & Supplies 1.0%
United Stationers, Inc.		52,216		1,850,013
Construction & Engineering 2.0%
Chicago Bridge & Iron Co. NV		46,140		1,794,846
MYR Group, Inc.*		78,695		1,841,463
				3,636,309
Electrical Equipment 2.3%
General Cable Corp.*		52,198		2,222,591
Thomas & Betts Corp.*		37,093		1,997,458
				4,220,049
Machinery 6.3%
Altra Holdings, Inc.*		83,109		1,993,785
Flowserve Corp.		12,703		1,395,933
Gardner Denver, Inc.		18,212		1,530,718
Joy Global, Inc.		17,452		1,662,128
Sauer-Danfoss, Inc.*		35,948		1,811,420
Terex Corp.*		41,995		1,194,758
Timken Co.		39,302		1,980,821
				11,569,563
Professional Services 0.9%
Robert Half International, Inc.		62,533		1,690,267
	Shares		Value ($)

Road & Rail 1.2%
Kansas City Southern*		39,042		2,316,362
Trading Companies & Distributors 0.8%
United Rentals, Inc.*		59,021		1,499,133
Information Technology 23.8%
Communications Equipment 7.0%
Acme Packet, Inc.*		22,232		1,559,130
Aruba Networks, Inc.*		28,666		847,080
Ciena Corp.*		39,306		722,444
F5 Networks, Inc.*		19,910		2,195,078
Harris Corp.		37,215		1,676,908
Polycom, Inc.*		41,125		2,644,338
Riverbed Technology, Inc.*		62,483		2,473,702
Sycamore Networks, Inc.		39,696		882,839
				13,001,519
Computers & Peripherals 1.0%
Western Digital Corp.*		48,570		1,766,977
Electronic Equipment, Instruments & Components 2.1%
Cognex Corp.		65,952		2,336,679
Coherent, Inc.*		28,729		1,587,852
				3,924,531
IT Services 3.6%
Cardtronics, Inc.*		96,542		2,263,910
Syntel, Inc.		33,421		1,975,850
VeriFone Systems, Inc.*		54,287		2,407,628
				6,647,388
Semiconductors & Semiconductor Equipment 2.4%
Cavium, Inc.*		26,197		1,141,927
Cypress Semiconductor Corp.*		88,347		1,867,655
Netlogic Microsystems, Inc.*		34,597		1,398,411
				4,407,993
Software 7.7%
Compuware Corp.*		112,517		1,098,166
Concur Technologies, Inc.*		25,287		1,266,120
MICROS Systems, Inc.*		40,634		2,019,916
NetQin Mobile, Inc. (ADR)* (a)		42,133		231,731
OPNET Technologies, Inc.		28,827		1,180,177
Red Hat, Inc.*		33,312		1,529,021
	Shares		Value ($)

Rovi Corp.*		36,974		2,120,829
Taleo Corp. "A"*		52,290		1,936,299
Ultimate Software Group, Inc.*		35,354		1,924,318
VanceInfo Technologies, Inc. (ADR)*		41,579		960,891
				14,267,468
Materials 5.4%
Chemicals 2.3%
CF Industries Holdings, Inc.		10,420		1,476,201
Solutia, Inc.*		60,429		1,380,803
STR Holdings, Inc.*		97,236		1,450,761
				4,307,765
Containers & Packaging 1.2%
Crown Holdings, Inc.*		57,325		2,225,357
Metals & Mining 1.9%
Cliffs Natural Resources, Inc.		11,236		1,038,768
Molycorp, Inc.*		18,324		1,118,864
Thompson Creek Metals Co., Inc.*		128,882		1,286,242
				3,443,874
Telecommunication Services 1.1%
Wireless Telecommunication Services
MetroPCS Communications, Inc.*		112,065		1,928,638
Total Common Stocks (Cost $151,132,728)				181,758,195

Securities Lending Collateral 0.1%
Daily Assets Fund Institutional, 0.13% (b) (c) (Cost $201,929)		201,929		201,929

Cash Equivalents 1.9%
Central Cash Management Fund, 0.11% (b) (Cost $3,581,871)		3,581,871		3,581,871

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $154,916,528)+		100.4			185,541,995
Other Assets and Liabilities, Net		(0.4	)		(810,044	)
Net Assets		100.0			184,731,951

* Non-income producing security.

+ The cost for federal income tax purposes was $155,320,917. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $30,221,078. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $34,001,526 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,780,448.

(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $193,149, which is 0.1% of net assets.

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

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

ADR: American Depositary Receipt

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (d)	$	181,758,195	$	—	$	—	$	181,758,195
Short-Term Investments (d)		3,783,800		—		—		3,783,800
Total	$	185,541,995	$	—	$	—	$	185,541,995

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(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, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $151,132,728) — including $193,149 of securities loaned	$	181,758,195
Investment in Daily Assets Fund Institutional (cost $201,929)*		201,929
Investment in Central Cash Management Fund (cost $3,581,871)		3,581,871
Total investments in securities, at value (cost $154,916,528)		185,541,995
Cash		1,961
Foreign currency, at value (cost $10,174)		10,223
Receivable for investments sold		93,601
Receivable for Fund shares sold		849
Dividends receivable		18,873
Interest receivable		7,683
Foreign taxes recoverable		319
Other assets		1,704
Total assets		185,677,208
Liabilities
Payable upon return of securities loaned		201,929
Payable for Fund shares redeemed		485,172
Accrued management fee		83,922
Other accrued expenses and payables		174,234
Total liabilities		945,257
Net assets, at value	$	184,731,951
Net Assets Consist of
Net investment loss		(310,859	)
Net unrealized appreciation (depreciation) on: Investments		30,625,467
Foreign currency		49
Accumulated net realized gain (loss)		(25,323,085	)
Paid-in capital		179,740,379
Net assets, at value	$	184,731,951
Class A Net Asset Value, offering and redemption price per share ($184,731,951 ÷ 12,135,791 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	15.22

* 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, 2011 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $731)	$	186,497
Income distributions — Central Cash Management Fund		2,081
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		19,031
Total income		207,609
Expenses: Management fee		341,202
Administration fee		62,281
Services to shareholders		1,640
Custodian fee		6,124
Audit and tax fees		28,779
Legal fees		4,403
Reports to shareholders		37,915
Trustees' fees and expenses		3,431
Other		3,750
Total expenses		489,525
Net investment income (loss)		(281,916	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		17,405,299
Foreign currency		(173	)
Payments by affiliates (see Note F)		75,429
		17,480,555
Change in net unrealized appreciation (depreciation) on: Investments		(10,495,321	)
Foreign currency		49
		(10,495,272	)
Net gain (loss)		6,985,283
Net increase (decrease) in net assets resulting from operations	$	6,703,367

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income (loss)	$	(281,916	)	$	(87,977	)
Net realized gain (loss)		17,480,555			11,959,891
Change in net unrealized appreciation (depreciation)		(10,495,272	)		8,823,086
Net increase (decrease) in net assets resulting from operations		6,703,367			20,695,000
Distributions to shareholders from: Net investment income: Class A		(545,355	)		—
Total distributions		(545,355	)		—
Fund share transactions: Class A Proceeds from shares sold		11,935,184			6,051,148
Net assets acquired in tax free reorganization		93,892,921			—
Reinvestment of distributions		545,355			—
Cost of shares redeemed		(16,228,784	)		(17,902,129	)
Net increase (decrease) in net assets from Class A share transactions		90,144,676			(11,850,981	)
Increase (decrease) in net assets		96,302,688			8,844,019
Net assets at beginning of period		88,429,263			79,585,244
Net assets at end of period (including net investment loss and undistributed net investment income of $310,859 and $516,412, respectively)	$	184,731,951		$	88,429,263
Other Information
Class A Shares outstanding at beginning of period		6,384,947			7,439,067
Shares sold		814,620			517,480
Shares issued in tax free reorganization		6,003,455			—
Shares issued to shareholders in reinvestment of distributions		34,959			—
Shares redeemed		(1,102,190	)		(1,571,600	)
Net increase (decrease) in Class A shares		5,750,844			(1,054,120	)
Shares outstanding at end of period		12,135,791			6,384,947

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

Financial Highlights

						Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)				2010				2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period		$	13.85			$	10.70		$	7.61		$	15.07		$	14.19		$	13.48
Income (loss) from investment operations: Net investment income (loss)a			(.03	)			(.01	)		(.02	)		(.01	)		(.01	)		(.04	)c
Net realized and unrealized gain (loss)			1.48				3.16			3.11			(7.45	)		.89			.75
Total from investment operations			1.45				3.15			3.09			(7.46	)		.88			.71
Less distributions from: Net investment income			(.08	)			—			—			—			—			—
Net asset value, end of period		$	15.22			$	13.85		$	10.70		$	7.61		$	15.07		$	14.19
Total Return (%)			10.46	**			29.44			40.60			(49.50	)b		6.20	b		5.27	b,c
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)			185				88			80			69			174			208
Ratio of expenses before expense reductions (%)			.79	*			.78			.77			.88			.75			.73
Ratio of expenses after expense reductions (%)			.79	*			.78			.77			.85			.72			.72
Ratio of net investment income (loss) (%)			(.45	)*			(.12	)		(.22	)		(.04	)		(.09	)		(.32	)c
Portfolio turnover rate (%)			59	**			64			93			67			67			73
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced. c Includes non-recurring income from the Advisor recorded as a result of an administrative proceeding regarding disclosure of brokerage allocation practices in connection with sales of DWS Funds. The non-recurring income resulted in an increase in net investment income of $0.008 per share and an increase in the ratio of net investment income of 0.06%. Excluding this non-recurring income, total return would have been 0.06% lower. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Small Mid Cap Growth VIP (the "Fund") is a diversified series of DWS 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.

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

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $42,400,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($8,113,000) and December 31, 2017 ($34,287,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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, 2011, purchases and sales of investment transactions (excluding short-term investments) aggregated $78,701,900 and $81,717,360, respectively.

C. Related Parties

$0-$250 million	.550	%
next $750 million	.525	%
over $1 billion	.500	%

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

D. Ownership of the Fund

At June 30, 2011, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 54%, 24% and 14%.

E. Line of Credit

F. Changes to Investment Strategy and Fund Name

On January 12, 2011, the Board approved changes to the name and strategy of the Fund. Effective May 1, 2011, the Fund's investment objective changed from maximum appreciation of investor's capital to long-term capital appreciation and the name changed from DWS Small Cap Growth VIP to DWS Small Mid Cap Growth VIP. The Advisor agreed to reimburse the Fund for transaction costs of $75,429 incurred in connection with the repositioning of the Fund's investments.

G. Acquisition of Assets

On April 29, 2011, the Fund acquired all of the net assets of DWS Mid Cap Growth VIP and DWS Turner Mid Cap Growth VIP pursuant to a plan of reorganization approved by shareholders on January 12, 2011. The acquisition was accomplished by a tax-free exchange of 2,029,578 Class A shares of DWS Mid Cap Growth VIP and 6,543,235 Class A shares of DWS Turner Mid Cap Growth VIP for 1,818,964 Class A shares and 4,184,491 Class A shares of the Fund, respectively, outstanding on April 29, 2011. DWS Mid Cap Growth VIP and DWS Turner Mid Cap Growth VIP's net assets at that date, $28,448,304 and $65,444,617, respectively, including $6,234,926 and $6,931,871 of net unrealized appreciation, respectively, were combined with those of the Fund. The aggregate net assets of the Fund immediately before the acquisition were $105,299,610. The combined net assets of the Fund immediately following the acquisition were $199,192,531.

Net investment income*	$	(495,648	)
Net gain (loss) on investments	$	18,139,716
Net increase (decrease) in net assets resulting from operations	$	17,644,068

* Net investment income includes $42,719 of pro forma eliminated expenses.

Because the combined investment portfolio has been managed as a single integrated portfolio since the acquisitions were completed, it is not practicable to separate the amounts of revenue and earnings of DWS Mid Cap Growth VIP and DWS Turner Mid Cap Growth VIP that have been included in the Fund's Statement of Operations since April 29, 2011.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2SCG-3 (R-023301-1 8/11)

JUNE 30, 2011

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Strategic Income VIP

(Effective on or about September 22, 2011: DWS Unconstrained Income Fund)

Contents

3 Performance Summary

4 Information About Your Fund's Expenses

5 Portfolio Summary

6 Investment Portfolio

24 Statement of Assets and Liabilities

25 Statement of Operations

26 Statement of Changes in Net Assets

27 Financial Highlights

29 Notes to Financial Statements

36 Proxy Voting

37 Summary of Management Fee Evaluation by Independent Fee Consultant

Bond investments are subject to interest-rate and credit risks. 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 and non-rated securities present greater risk of loss than investments in higher-quality securities. The Fund may use derivatives, including as part of its Global Tactical Asset Allocation (GTAA) strategy. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. 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, 2011

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2011 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 DWS Strategic Income VIP
[] DWS Strategic Income VIP — Class A [] Barclays Capital US Government/Credit Index [] Blended Index		The Barclays Capital US Government/Credit Index is an unmanaged index comprising intermediate- and long-term government and investment-grade corporate debt securities. The Blended Index consists of the Credit Suisse High Yield Index (35%), Barclays Capital US Government/Credit Index (35%), JPMorgan Emerging Markets Bond Index Global Diversified (15%) and Citigroup Non US Hedged World Government Bond Index ("WGBI") (15%). The Advisor believes this blended benchmark, which is a secondary benchmark, more accurately reflects typical portfolio asset allocations and represents the overall investment process. 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
DWS Strategic Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,283		$	10,817		$	12,790		$	14,439		$	20,159
Class A	Average annual total return		2.83	%		8.17	%		8.55	%		7.62	%		7.26	%
Barclays Capital US Government/Credit Index	Growth of $10,000	$	10,261		$	10,368		$	11,966		$	13,603		$	17,473
Barclays Capital US Government/Credit Index	Average annual total return		2.61	%		3.68	%		6.17	%		6.35	%		5.74	%
Blended Index	Growth of $10,000	$	10,339		$	10,803		$	12,833		$	14,389		$	20,766
Blended Index	Average annual total return		3.39	%		8.03	%		8.67	%		7.55	%		7.58	%

The growth of $10,000 is cumulative.

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

Information About Your Fund's Expenses

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. 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, 2011 to June 30, 2011).

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, 2011
Actual Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,028.30
Expenses Paid per $1,000*	$	3.97
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/11	$	1,000.00
Ending Account Value 6/30/11	$	1,020.88
Expenses Paid per $1,000*	$	3.96

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Strategic Income VIP	.79%

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

Portfolio Summary

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/11	12/31/10

Corporate Bonds	68%	62%
Government & Agency Obligations	10%	17%
Cash Equivalents	9%	5%
Collateralized Mortgage Obligations	4%	3%
Loan Participations and Assignments	3%	4%
Convertible Bonds	3%	0%
Commercial Mortgage-Backed Securities	2%	3%
Preferred Securities	1%	1%
Mortgage-Backed Securities Pass-Throughs	—	5%
	100%	100%

Quality (Excludes Cash Equivalents and Securities Lending Collateral)	6/30/11	12/31/10

AAA	7%	20%
AA	2%	2%
A	7%	5%
BBB	17%	16%
BB	20%	16%
B	29%	28%
CCC	15%	11%
Not Rated	3%	2%
	100%	100%

Interest Rate Sensitivity	6/30/11	12/31/10

Effective Maturity	6.4 years	7.2 years
Effective Duration	4.6 years	4.7 years

Asset allocation and interest rate sensitivity are subject to change.

Effective maturity is the weighted average of the 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.

For more complete details about the Fund's investment portfolio, see page 6.

Investment Portfolio June 30, 2011 (Unaudited)

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

Corporate Bonds 67.1%
Consumer Discretionary 9.6%
Allison Transmission, Inc., 144A, 7.125%, 5/15/2019			50,000		48,625
AMC Entertainment, Inc., 8.0%, 3/1/2014			105,000		105,262
AMC Networks, Inc., 144A, 7.75%, 7/15/2021			15,000		15,675
American Achievement Corp., 144A, 10.875%, 4/15/2016			45,000		40,500
Asbury Automotive Group, Inc.:
7.625%, 3/15/2017			65,000		64,512
144A, 8.375%, 11/15/2020			80,000		81,400
Avis Budget Car Rental LLC:
8.25%, 1/15/2019			95,000		96,187
9.625%, 3/15/2018			45,000		48,038
Beazer Homes USA, Inc., 9.125%, 6/15/2018			25,000		21,563
Bon-Ton Department Stores, Inc., 10.25%, 3/15/2014			50,000		50,000
Bresnan Broadband Holdings LLC, 144A, 8.0%, 12/15/2018			95,000		97,969
Burlington Coat Factory Warehouse Corp., 144A, 10.0%, 2/15/2019			45,000		44,550
Cablevision Systems Corp.:
7.75%, 4/15/2018			10,000		10,663
8.0%, 4/15/2020			10,000		10,725
Caesar's Entertainment Operating Co., Inc.:
10.0%, 12/15/2018			135,000		121,837
11.25%, 6/1/2017			240,000		264,900
12.75%, 4/15/2018			55,000		54,863
CanWest LP, 144A, 9.25%, 8/1/2015*			50,000		8,500
Carnival Corp., 6.65%, 1/15/2028			145,000		150,373
Carrols Corp., 9.0%, 1/15/2013			30,000		30,075
CCO Holdings LLC:
6.5%, 4/30/2021			215,000		212,044
7.0%, 1/15/2019			20,000		20,600
7.25%, 10/30/2017			90,000		93,262
7.875%, 4/30/2018			40,000		42,150
8.125%, 4/30/2020			25,000		27,000
Cequel Communications Holdings I LLC, 144A, 8.625%, 11/15/2017			270,000		280,800
Claire's Stores, Inc.:
144A, 8.875%, 3/15/2019			25,000		23,375
9.625%, 6/1/2015 (PIK)			21,037		20,458
Clear Channel Communications, Inc., 144A, 9.0%, 3/1/2021			25,000		23,938
Clear Channel Worldwide Holdings, Inc.:
Series A, 9.25%, 12/15/2017			15,000		16,313
Series B, 9.25%, 12/15/2017			25,000		27,250
Crown Media Holdings, Inc., 144A, 10.5%, 7/15/2019 (b)			55,000		56,719
		Principal Amount ($) (a)		Value ($)

Cumulus Media, Inc., 144A, 7.75%, 5/1/2019			25,000		24,125
DineEquity, Inc., 144A, 9.5%, 10/30/2018			180,000		195,300
DIRECTV Holdings LLC, 6.375%, 3/1/2041			145,000		154,814
DISH DBS Corp.:
6.625%, 10/1/2014			65,000		68,412
144A, 6.75%, 6/1/2021			10,000		10,250
7.125%, 2/1/2016			155,000		163,525
Dunkin' Brands, Inc., 144A, 9.625%, 12/1/2018			27,000		27,236
EH Holding Corp., 144A, 7.625%, 6/15/2021			40,000		40,800
Fontainebleau Las Vegas Holdings LLC, 144A, 11.0%, 6/15/2015*			65,000		33
Ford Motor Co., 7.45%, 7/16/2031			65,000		73,686
Great Canadian Gaming Corp., 144A, 7.25%, 2/15/2015			55,000		56,237
Hertz Corp.:
144A, 6.75%, 4/15/2019			115,000		113,850
144A, 7.5%, 10/15/2018			155,000		159,650
8.875%, 1/1/2014			26,000		26,650
Hyundai Motor Manufacturing Czech, 144A, 4.5%, 4/15/2015			145,000		151,295
J. Crew Group, Inc., 144A, 8.125%, 3/1/2019			35,000		33,688
Kabel BW Erste Beteiligungs GmbH, 144A, 7.5%, 3/15/2019			150,000		153,000
Kia Motors Corp., 144A, 3.625%, 6/14/2016			200,000		197,839
Lear Corp.:
7.875%, 3/15/2018			40,000		43,000
8.125%, 3/15/2020			40,000		43,100
Limited Brands, Inc., 7.0%, 5/1/2020			20,000		21,050
Lions Gate Entertainment, Inc., 144A, 10.25%, 11/1/2016			95,000		96,662
Macy's Retail Holdings, Inc., 8.125%, 7/15/2015			10,000		11,863
Mediacom Broadband LLC, 8.5%, 10/15/2015			110,000		112,750
Mediacom LLC, 9.125%, 8/15/2019 (c)			30,000		31,650
MGM Resorts International:
7.5%, 6/1/2016			30,000		28,500
7.625%, 1/15/2017			100,000		96,250
9.0%, 3/15/2020			65,000		71,175
144A, 10.0%, 11/1/2016			45,000		47,700
10.375%, 5/15/2014			45,000		51,075
11.125%, 11/15/2017			50,000		57,125
Michaels Stores, Inc., Step-up Coupon, 0% to 11/1/2011, 13.0% to 11/1/2016			25,000		25,875
National CineMedia LLC, 144A, 7.875%, 7/15/2021			45,000		45,675
Needle Merger Sub Corp., 144A, 8.125%, 3/15/2019			50,000		50,375
		Principal Amount ($) (a)		Value ($)

Neiman Marcus Group, Inc., 10.375%, 10/15/2015			25,000		26,250
Palace Entertainment Holdings LLC, 144A, 8.875%, 4/15/2017			75,000		75,187
Penske Automotive Group, Inc., 7.75%, 12/15/2016			175,000		178,500
PETCO Animal Supplies, Inc., 144A, 9.25%, 12/1/2018			60,000		63,750
Phillips-Van Heusen Corp., 7.375%, 5/15/2020			25,000		26,750
Regal Entertainment Group, 9.125%, 8/15/2018			35,000		36,225
Sabre Holdings Corp., 8.35%, 3/15/2016			90,000		79,200
Sears Holdings Corp., 144A, 6.625%, 10/15/2018			60,000		55,650
Seminole Indian Tribe of Florida:
144A, 7.75%, 10/1/2017			40,000		41,400
144A, 7.804%, 10/1/2020			70,000		68,796
Servicios Corporativos Javer SAPI de CV, 144A, 9.875%, 4/6/2021			100,000		104,250
Simmons Bedding Co., 144A, 11.25%, 7/15/2015			50,000		52,500
Sirius XM Radio, Inc., 144A, 8.75%, 4/1/2015			155,000		170,887
Sonic Automotive, Inc., Series B, 9.0%, 3/15/2018			95,000		99,987
Standard Pacific Corp.:
8.375%, 5/15/2018			100,000		99,125
10.75%, 9/15/2016			80,000		90,600
Toys "R" Us-Delaware, Inc., 144A, 7.375%, 9/1/2016			35,000		35,350
Travelport LLC:
4.879%**, 9/1/2014			45,000		38,363
9.0%, 3/1/2016			65,000		58,012
UCI International, Inc., 8.625%, 2/15/2019			20,000		20,600
Unitymedia Hessen GmbH & Co., KG, 144A, 8.125%, 12/1/2017			200,000		212,500
Univision Communications, Inc.:
144A, 6.875%, 5/15/2019			10,000		9,900
144A, 7.875%, 11/1/2020			25,000		25,625
144A, 8.5%, 5/15/2021			25,000		24,938
UPC Holding BV, 144A, 9.75%, 4/15/2018	EUR		100,000		154,441
Valassis Communications, Inc., 144A, 6.625%, 2/1/2021			30,000		29,700
Visant Corp., 10.0%, 10/1/2017			80,000		82,800
Visteon Corp., 144A, 6.75%, 4/15/2019			75,000		72,375
Wyndham Worldwide Corp., 5.75%, 2/1/2018			210,000		216,844
Wynn Las Vegas LLC, 7.75%, 8/15/2020			50,000		54,313
Yonkers Racing Corp., 144A, 11.375%, 7/15/2016			60,000		65,100
					7,064,259
		Principal Amount ($) (a)		Value ($)

Consumer Staples 2.7%
Alliance One International, Inc., 10.0%, 7/15/2016			25,000		24,125
Altria Group, Inc.:
4.75%, 5/5/2021			155,000		154,894
9.95%, 11/10/2038			145,000		203,732
American Rock Salt Co., LLC, 144A, 8.25%, 5/1/2018			60,000		60,225
B&G Foods, Inc., 7.625%, 1/15/2018			35,000		36,837
Central Garden & Pet Co., 8.25%, 3/1/2018			35,000		36,138
Darling International, Inc., 144A, 8.5%, 12/15/2018			80,000		86,400
Del Monte Foods Co., 144A, 7.625%, 2/15/2019			130,000		131,300
Dole Food Co., Inc., 144A, 8.0%, 10/1/2016			35,000		36,663
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020			85,000		85,212
NBTY, Inc., 144A, 9.0%, 10/1/2018			25,000		26,375
North Atlantic Trading Co., 144A, 10.0%, 3/1/2012			223,000		219,097
Reynolds American, Inc., 6.75%, 6/15/2017			200,000		230,915
Rite Aid Corp.:
7.5%, 3/1/2017			60,000		59,550
8.0%, 8/15/2020			100,000		107,750
Smithfield Foods, Inc.:
7.75%, 7/1/2017			220,000		228,250
10.0%, 7/15/2014			85,000		98,600
Stater Bros. Holdings, Inc., 144A, 7.375%, 11/15/2018			30,000		31,125
SUPERVALU, Inc., 8.0%, 5/1/2016			35,000		35,700
TreeHouse Foods, Inc., 7.75%, 3/1/2018			25,000		26,563
US Foodservice, 144A, 8.5%, 6/30/2019			35,000		33,950
					1,953,401
Energy 6.8%
Allis-Chalmers Energy, Inc., 9.0%, 1/15/2014			24,000		24,510
Alpha Natural Resources, Inc., 6.0%, 6/1/2019			60,000		59,850
Anadarko Petroleum Corp., 6.375%, 9/15/2017			215,000		246,462
Arch Coal, Inc.:
144A, 7.0%, 6/15/2019			20,000		19,950
7.25%, 10/1/2020			20,000		20,350
144A, 7.25%, 6/15/2021			35,000		35,044
8.75%, 8/1/2016			90,000		97,650
Berry Petroleum Co., 6.75%, 11/1/2020			90,000		90,450
Bill Barrett Corp., 9.875%, 7/15/2016			40,000		44,800
BreitBurn Energy Partners LP, 8.625%, 10/15/2020			50,000		52,750
Brigham Exploration Co., 144A, 6.875%, 6/1/2019			20,000		19,900
Bristow Group, Inc., 7.5%, 9/15/2017			70,000		73,325
Chaparral Energy, Inc., 8.25%, 9/1/2021			115,000		115,862
CITGO Petroleum Corp., 144A, 11.5%, 7/1/2017			105,000		121,800
		Principal Amount ($) (a)		Value ($)

CONSOL Energy, Inc.:
144A, 6.375%, 3/1/2021			15,000		14,925
8.0%, 4/1/2017			115,000		125,350
8.25%, 4/1/2020			60,000		65,400
Continental Resources, Inc.:
7.125%, 4/1/2021			30,000		31,650
7.375%, 10/1/2020			35,000		37,188
8.25%, 10/1/2019			20,000		21,850
Crestwood Midstream Partners LP, 144A, 7.75%, 4/1/2019			160,000		158,800
Crosstex Energy LP, 8.875%, 2/15/2018			55,000		58,575
Dresser-Rand Group, Inc., 144A, 6.5%, 5/1/2021			75,000		77,250
Eagle Rock Energy Partners LP, 144A, 8.375%, 6/1/2019			95,000		94,763
El Paso Corp., 7.25%, 6/1/2018			55,000		61,777
Energy Transfer Equity LP, 7.5%, 10/15/2020			35,000		37,100
Frontier Oil Corp., 6.875%, 11/15/2018			55,000		58,025
Genesis Energy LP, 144A, 7.875%, 12/15/2018			40,000		39,800
Global Geophysical Services, Inc., 10.5%, 5/1/2017			130,000		136,500
Harvest Operations Corp., 144A, 6.875%, 10/1/2017			25,000		25,813
Holly Energy Partners LP, 8.25%, 3/15/2018			55,000		58,300
Inergy LP:
144A, 6.875%, 8/1/2021			10,000		10,000
7.0%, 10/1/2018			60,000		60,600
KazMunayGaz National Co., 144A, 6.375%, 4/9/2021			200,000		211,720
Linn Energy LLC:
144A, 6.5%, 5/15/2019			50,000		49,500
144A, 7.75%, 2/1/2021			60,000		62,400
8.625%, 4/15/2020			55,000		59,675
Marathon Petroleum Corp., 144A, 5.125%, 3/1/2021			120,000		123,366
MEG Energy Corp., 144A, 6.5%, 3/15/2021			40,000		40,200
Newfield Exploration Co., 7.125%, 5/15/2018			90,000		95,400
Nexen, Inc., 5.875%, 3/10/2035			75,000		71,018
Niska Gas Storage US LLC, 8.875%, 3/15/2018			55,000		57,750
Oasis Petroleum, Inc., 144A, 7.25%, 2/1/2019			20,000		19,850
Offshore Group Investments Ltd., 144A, 11.5%, 8/1/2015			10,000		10,875
Petrohawk Energy Corp.:
7.25%, 8/15/2018			125,000		128,281
7.875%, 6/1/2015			30,000		31,425
Plains All American Pipeline LP, 5.0%, 2/1/2021			170,000		172,864
Plains Exploration & Production Co., 7.625%, 6/1/2018			60,000		63,000
Quicksilver Resources, Inc., 11.75%, 1/1/2016			15,000		17,175
Range Resources Corp., 6.75%, 8/1/2020			20,000		20,700
		Principal Amount ($) (a)		Value ($)

Regency Energy Partners LP:
6.875%, 12/1/2018			35,000		36,225
9.375%, 6/1/2016			115,000		128,225
Reliance Holdings USA, Inc., 144A, 6.25%, 10/19/2040			250,000		230,644
Sabine Pass LNG LP:
7.25%, 11/30/2013			115,000		117,875
7.5%, 11/30/2016			100,000		102,500
SandRidge Energy, Inc.:
144A, 7.5%, 3/15/2021			50,000		50,625
144A, 8.0%, 6/1/2018			45,000		45,900
SESI LLC, 144A, 6.375%, 5/1/2019			40,000		39,600
Southwestern Energy Co., 7.5%, 2/1/2018			85,000		96,688
Stone Energy Corp.:
6.75%, 12/15/2014			95,000		94,525
8.625%, 2/1/2017			25,000		25,750
Transocean, Inc., 6.5%, 11/15/2020			215,000		240,421
Valero Energy Corp., 6.125%, 2/1/2020			160,000		175,830
Venoco, Inc., 144A, 8.875%, 2/15/2019			105,000		105,000
Xinergy Corp., 144A, 9.25%, 5/15/2019			60,000		60,600
					4,981,976
Financials 19.1%
Akbank TAS, 144A, 5.125%, 7/22/2015			145,000		144,275
Algoma Acquisition Corp., 144A, 9.875%, 6/15/2015			85,000		79,050
Ally Financial, Inc.:
144A, 6.25%, 12/1/2017			95,000		94,367
8.0%, 3/15/2020			115,000		122,187
8.3%, 2/12/2015			135,000		150,862
ALROSA Finance SA, 144A, REG S, 7.75%, 11/3/2020			200,000		217,500
American International Group, Inc., Series G, 5.6%, 10/18/2016			290,000		303,623
Antero Resources Finance Corp., 9.375%, 12/1/2017			30,000		32,250
Ashton Woods USA LLC, 144A, Step-up Coupon, 0% to 6/30/2012, 11.0% to 6/30/2015			75,400		45,617
Banco do Brasil SA, 144A, 5.875%, 1/26/2022			121,000		119,669
Banco Votorantim SA, 144A, 7.375%, 1/21/2020			100,000		106,000
Bank of America Corp., 5.0%, 5/13/2021			245,000		242,023
Barclays Bank PLC, 5.14%, 10/14/2020			140,000		132,778
BBVA Bancomer SA, 144A, 6.5%, 3/10/2021			290,000		295,800
BNP Paribas, 3.6%, 2/23/2016			145,000		146,620
BP Capital Markets PLC, 4.5%, 10/1/2020			120,000		122,375
Bumble Bee Acquisition Corp., 144A, 9.0%, 12/15/2017			55,000		55,275
Calpine Construction Finance Co., LP, 144A, 8.0%, 6/1/2016			200,000		216,000
		Principal Amount ($) (a)		Value ($)

Case New Holland, Inc., 7.75%, 9/1/2013			45,000		48,713
CIT Group, Inc.:
Series C, 144A, 5.25%, 4/1/2014			275,000		273,625
7.0%, 5/1/2015			970		971
144A, 7.0%, 5/4/2015			105,000		105,131
144A, 7.0%, 5/2/2017			355,000		354,112
Citigroup, Inc., 5.375%, 8/9/2020			145,000		151,317
CNA Financial Corp., 5.75%, 8/15/2021			75,000		77,444
Country Garden Holdings Co., 144A, 11.125%, 2/23/2018			200,000		206,000
CPI International Acquisition, Inc., 144A, 8.0%, 2/15/2018			45,000		42,525
Credit Agricole SA, 144A, 3.5%, 4/13/2015			171,000		171,492
Discover Bank, 7.0%, 4/15/2020			145,000		161,050
E*TRADE Financial Corp., 6.75%, 6/1/2016			105,000		102,900
Felcor Lodging LP, (REIT), 144A, 6.75%, 6/1/2019			70,000		67,200
Ford Motor Credit Co., LLC:
7.25%, 10/25/2011			60,000		60,900
7.5%, 8/1/2012			500,000		523,202
9.875%, 8/10/2011			145,000		145,917
FUEL Trust, 144A, 3.984%, 6/15/2016			290,000		287,644
General Electric Capital Corp., 5.3%, 2/11/2021			75,000		78,041
Giraffe Acquisition Corp., 144A, 9.125%, 12/1/2018			55,000		51,700
Gruposura Finance, 144A, 5.7%, 5/18/2021			200,000		199,500
Hartford Financial Services Group, Inc., 5.5%, 3/30/2020			145,000		149,467
HCP, Inc., (REIT), 5.375%, 2/1/2021			143,000		147,494
Health Care REIT, Inc., (REIT), 5.25%, 1/15/2022			145,000		144,443
Hellas Telecommunications Finance SCA, 144A, 8.985%*, 7/15/2015 (PIK)	EUR		109,187		95
Hexion US Finance Corp., 8.875%, 2/1/2018			340,000		353,600
Hospitality Properties Trust, (REIT), 7.875%, 8/15/2014			200,000		225,659
Host Hotels & Resorts LP, (REIT), 6.875%, 11/1/2014			165,000		169,125
HSBC Finance Corp., 144A, 6.676%, 1/15/2021			120,000		123,122
Intergas Finance BV, REG S, 6.875%, 11/4/2011			275,000		279,125
International Finance Corp., 5.75%, 3/16/2015	AUD		285,000		308,404
International Lease Finance Corp.:
5.75%, 5/15/2016			20,000		19,694
6.25%, 5/15/2019			50,000		48,853
8.625%, 9/15/2015			40,000		43,350
8.75%, 3/15/2017			180,000		196,875
Intesa Sanpaolo SpA, 144A, 2.658%**, 2/24/2014			205,000		204,498
		Principal Amount ($) (a)		Value ($)

JBS Finance II Ltd., 144A, 8.25%, 1/29/2018			100,000		102,000
Jefferies Group, Inc., 5.125%, 4/13/2018			290,000		290,585
KeyCorp, 5.1%, 3/24/2021			130,000		132,404
Level 3 Escrow, Inc., 144A, 8.125%, 7/1/2019			75,000		75,375
Lincoln National Corp., 7.0%, 6/15/2040			145,000		163,509
Lloyds TSB Bank PLC, 144A, 6.5%, 9/14/2020			215,000		202,806
Lukoil International Finance BV, 144A, 7.25%, 11/5/2019			145,000		161,109
Macquarie Group Ltd., 144A, 6.25%, 1/14/2021			210,000		209,877
Manulife Financial Corp., 4.9%, 9/17/2020			135,000		134,911
Morgan Stanley, 5.75%, 1/25/2021			290,000		293,430
MPT Operating Partnership LP, (REIT), 144A, 6.875%, 5/1/2021			50,000		49,125
Navios Maritime Acquisition Corp., 8.625%, 11/1/2017			25,000		24,625
Nielsen Finance LLC:
144A, 7.75%, 10/15/2018			25,000		26,250
11.5%, 5/1/2016			13,000		15,210
NII Capital Corp., 7.625%, 4/1/2021			60,000		62,700
Nomura Holdings, Inc., 6.7%, 3/4/2020			90,000		98,339
Nuveen Investments, Inc.:
10.5%, 11/15/2015			140,000		143,150
144A, 10.5%, 11/15/2015			95,000		96,188
Odebrecht Finance Ltd., 144A, 6.0%, 4/5/2023			145,000		144,094
OMEGA Healthcare Investors, Inc., (REIT), 144A, 6.75%, 10/15/2022			55,000		54,244
Petrobras International Finance Co., 5.375%, 1/27/2021			145,000		148,887
Pinnacle Foods Finance LLC:
8.25%, 9/1/2017			70,000		72,625
9.25%, 4/1/2015			35,000		36,313
PNC Bank NA, 6.875%, 4/1/2018			180,000		212,156
Qtel International Finance Ltd., 144A, 4.75%, 2/16/2021			200,000		195,000
Reynolds Group Issuer, Inc.:
144A, 6.875%, 2/15/2021			100,000		97,500
144A, 7.125%, 4/15/2019			100,000		99,250
144A, 8.75%, 5/15/2018			195,000		191,587
144A, 9.0%, 4/15/2019			105,000		103,688
Santander US Debt SA Unipersonal, 144A, 3.724%, 1/20/2015			145,000		140,355
Shinhan Bank, 144A, 4.125%, 10/4/2016			145,000		147,656
Societe Generale, 144A, 3.5%, 1/15/2016			145,000		143,402
Susser Holdings LLC, 8.5%, 5/15/2016			30,000		31,575
Telecom Italia Capital SA, 4.95%, 9/30/2014			174,000		181,424
Telemovil Finance Co., Ltd., 144A, 8.0%, 10/1/2017			100,000		105,350
		Principal Amount ($) (a)		Value ($)

The Goldman Sachs Group, Inc., 6.25%, 2/1/2041			155,000		156,267
Tomkins LLC, 144A, 9.0%, 10/1/2018			40,000		43,100
Toys "R" Us Property Co. I, LLC, 10.75%, 7/15/2017			50,000		55,625
Tropicana Entertainment LLC, 9.625%, 12/15/2014*			150,000		75
Virgin Media Finance PLC, Series 1, 9.5%, 8/15/2016			300,000		339,000
Virgin Media Secured Finance PLC, 6.5%, 1/15/2018			375,000		411,094
Wells Fargo & Co., 4.6%, 4/1/2021			170,000		170,944
Woori Bank, 144A, 5.875%, 4/13/2021			290,000		290,332
					14,002,595
Health Care 2.1%
Aviv Healthcare Properties LP, 144A, 7.75%, 2/15/2019			40,000		40,900
Community Health Systems, Inc., 8.875%, 7/15/2015			80,000		82,400
Endo Pharmaceuticals Holdings, Inc.:
144A, 7.0%, 7/15/2019			55,000		56,375
144A, 7.25%, 1/15/2022			50,000		50,750
HCA Holdings, Inc., 144A, 7.75%, 5/15/2021 (c)			105,000		108,938
HCA, Inc.:
7.875%, 2/15/2020			365,000		396,025
8.5%, 4/15/2019			45,000		49,725
9.25%, 11/15/2016			310,000		328,987
9.625%, 11/15/2016 (PIK)			152,000		161,690
Mylan, Inc., 144A, 7.875%, 7/15/2020			15,000		16,463
STHI Holding Corp., 144A, 8.0%, 3/15/2018			60,000		60,900
Vanguard Health Holding Co. II, LLC, 8.0%, 2/1/2018			100,000		103,250
Warner Chilcott Co., LLC, 144A, 7.75%, 9/15/2018			75,000		75,656
					1,532,059
Industrials 6.1%
Accuride Corp., 9.5%, 8/1/2018			75,000		80,250
Actuant Corp., 6.875%, 6/15/2017			40,000		40,900
American Airlines, Inc., 144A, 7.5%, 3/15/2016			85,000		83,300
AMGH Merger Sub, Inc., 144A, 9.25%, 11/1/2018			30,000		31,650
ARAMARK Corp., 8.5%, 2/1/2015			20,000		20,775
ARAMARK Holdings Corp., 144A, 8.625%, 5/1/2016 (PIK)			20,000		20,350
Armored Autogroup, Inc., 144A, 9.25%, 11/1/2018			105,000		103,950
B-Corp Merger Sub, Inc., 144A, 8.25%, 6/1/2019			60,000		59,400
BAA Funding Ltd., "A", 144A, 4.875%, 7/15/2021			290,000		282,519
BE Aerospace, Inc.:
6.875%, 10/1/2020			35,000		36,663
8.5%, 7/1/2018			105,000		114,581
		Principal Amount ($) (a)		Value ($)

Belden, Inc.:
7.0%, 3/15/2017			45,000		46,125
9.25%, 6/15/2019			40,000		44,500
Boart Longyear Management Pty Ltd., 144A, 7.0%, 4/1/2021			35,000		35,788
Bombardier, Inc., 144A, 7.75%, 3/15/2020			55,000		61,875
Briggs & Stratton Corp., 6.875%, 12/15/2020			35,000		37,100
Casella Waste Systems, Inc., 144A, 7.75%, 2/15/2019			110,000		110,275
Cenveo Corp.:
8.875%, 2/1/2018			100,000		97,000
144A, 10.5%, 8/15/2016			55,000		54,037
CHC Helicopter SA, 144A, 9.25%, 10/15/2020			215,000		194,037
Congoleum Corp., 9.0%, 12/31/2017 (PIK)			41,250		26,813
Corrections Corp. of America, 7.75%, 6/1/2017			30,000		32,663
Deluxe Corp., 144A, 7.0%, 3/15/2019			30,000		29,700
Ducommun, Inc., 144A, 9.75%, 7/15/2018			65,000		66,787
DynCorp International, Inc., 144A, 10.375%, 7/1/2017			85,000		87,125
Florida East Coast Railway Corp., 144A, 8.125%, 2/1/2017			40,000		41,300
FTI Consulting, Inc., 6.75%, 10/1/2020			145,000		146,450
Garda World Security Corp., 144A, 9.75%, 3/15/2017			60,000		63,450
H&E Equipment Services, Inc., 8.375%, 7/15/2016			110,000		112,475
Huntington Ingalls Industries, Inc.:
144A, 6.875%, 3/15/2018			30,000		30,750
144A, 7.125%, 3/15/2021			10,000		10,350
Interline Brands, Inc., 7.0%, 11/15/2018			50,000		50,625
Kansas City Southern de Mexico SA de CV, 8.0%, 2/1/2018			105,000		113,925
Kansas City Southern Railway Co., 8.0%, 6/1/2015			100,000		107,250
Masco Corp., 7.125%, 3/15/2020			145,000		148,427
Meritor, Inc.:
8.125%, 9/15/2015			55,000		57,337
10.625%, 3/15/2018			60,000		67,350
Navios Maritime Holdings, Inc., 144A, 8.125%, 2/15/2019			135,000		129,600
Nortek, Inc., 144A, 8.5%, 4/15/2021			125,000		115,625
Oshkosh Corp.:
8.25%, 3/1/2017			10,000		10,725
8.5%, 3/1/2020			25,000		27,063
Owens Corning, Inc., 9.0%, 6/15/2019			217,000		259,184
Ply Gem Industries, Inc.:
144A, 8.25%, 2/15/2018			50,000		47,375
13.125%, 7/15/2014			95,000		99,750
RailAmerica, Inc., 9.25%, 7/1/2017			36,000		39,510
		Principal Amount ($) (a)		Value ($)

RBS Global, Inc. & Rexnord Corp., 8.5%, 5/1/2018			120,000		126,750
Republic Services, Inc., 5.7%, 5/15/2041			185,000		180,601
Sitel LLC, 11.5%, 4/1/2018			95,000		86,925
Spirit AeroSystems, Inc., 6.75%, 12/15/2020			75,000		76,125
SPX Corp., 144A, 6.875%, 9/1/2017			20,000		21,400
Titan International, Inc., 144A, 7.875%, 10/1/2017			160,000		167,200
TransDigm, Inc., 144A, 7.75%, 12/15/2018			65,000		68,250
Tutor Perini Corp., 7.625%, 11/1/2018			55,000		52,800
USG Corp., 144A, 9.75%, 8/1/2014			45,000		47,700
Votorantim Cimentos SA, 144A, 7.25%, 4/5/2041			145,000		143,187
					4,447,622
Information Technology 3.0%
Alcatel-Lucent USA, Inc., 6.45%, 3/15/2029			70,000		63,000
Allen Systems Group, Inc., 144A, 10.5%, 11/15/2016			35,000		35,175
Amkor Technology, Inc.:
144A, 6.625%, 6/1/2021			10,000		9,625
7.375%, 5/1/2018			45,000		45,731
Aspect Software, Inc., 10.625%, 5/15/2017			60,000		64,500
Avaya, Inc., 144A, 7.0%, 4/1/2019			145,000		140,287
CDW LLC:
144A, 8.5%, 4/1/2019			110,000		107,800
11.0%, 10/12/2015			9,000		9,473
CommScope, Inc., 144A, 8.25%, 1/15/2019			85,000		87,550
eAccess Ltd., 144A, 8.25%, 4/1/2018			60,000		59,850
Equinix, Inc., 8.125%, 3/1/2018			140,000		152,425
Fidelity National Information Services, Inc., 7.625%, 7/15/2017			20,000		21,225
First Data Corp.:
144A, 7.375%, 6/15/2019			30,000		30,225
144A, 8.25%, 1/15/2021			190,000		186,200
144A, 8.875%, 8/15/2020			85,000		90,737
Freescale Semiconductor, Inc.:
144A, 8.05%, 2/1/2020			85,000		85,425
144A, 9.25%, 4/15/2018			190,000		204,725
Jabil Circuit, Inc., 7.75%, 7/15/2016			30,000		33,225
MasTec, Inc., 7.625%, 2/1/2017			65,000		66,138
MEMC Electronic Materials, Inc., 144A, 7.75%, 4/1/2019			40,000		39,500
Sanmina-SCI Corp., 144A, 7.0%, 5/15/2019			45,000		42,525
Seagate HDD Cayman, 144A, 7.0%, 11/1/2021			50,000		50,000
Sensata Technologies BV, 144A, 6.5%, 5/15/2019			50,000		49,875
SunGard Data Systems, Inc.:
7.375%, 11/15/2018			25,000		25,000
10.25%, 8/15/2015			225,000		232,875
		Principal Amount ($) (a)		Value ($)

Unisys Corp., 144A, 12.75%, 10/15/2014			41,000		47,765
Vangent, Inc., 9.625%, 2/15/2015			35,000		35,350
Western Union Co., 6.2%, 6/21/2040			145,000		145,598
					2,161,804
Materials 6.7%
Aleris International, Inc., 144A, 7.625%, 2/15/2018			40,000		39,900
APERAM, 144A, 7.375%, 4/1/2016			150,000		150,750
Appleton Papers, Inc., 11.25%, 12/15/2015			25,000		25,250
ArcelorMittal, 6.125%, 6/1/2018			250,000		267,769
Ball Corp.:
7.125%, 9/1/2016			30,000		32,700
7.375%, 9/1/2019			25,000		27,313
Berry Plastics Corp.:
9.5%, 5/15/2018			65,000		64,512
9.75%, 1/15/2021			80,000		77,400
Boise Paper Holdings LLC, 8.0%, 4/1/2020			30,000		31,500
BWAY Parent Co., Inc., 144A, 10.125%, 11/1/2015 (PIK)			42,235		42,235
Celanese US Holdings LLC:
5.875%, 6/15/2021			30,000		30,675
6.625%, 10/15/2018			35,000		36,925
Cemex SAB de CV, 144A, 9.0%, 1/11/2018			150,000		152,625
China Oriental Group Co., Ltd., 144A, 8.0%, 8/18/2015			100,000		101,500
Clearwater Paper Corp., 7.125%, 11/1/2018			65,000		66,625
Cliffs Natural Resources, Inc., 6.25%, 10/1/2040			145,000		143,085
Clondalkin Acquisition BV, 144A, 2.247%**, 12/15/2013			75,000		71,625
Crown Americas LLC:
144A, 6.25%, 2/1/2021			10,000		10,100
7.625%, 5/15/2017			30,000		32,138
Essar Steel Algoma, Inc., 144A, 9.375%, 3/15/2015			240,000		240,600
Exopack Holding Corp., 144A, 10.0%, 6/1/2018			40,000		39,700
FMG Resources August 2006 Pty Ltd., 144A, 7.0%, 11/1/2015			25,000		25,500
GEO Specialty Chemicals, Inc.:
144A, 7.5%, 3/31/2015 (PIK)			120,175		110,561
10.0%, 3/31/2015			119,040		117,850
Georgia-Pacific LLC, 144A, 5.4%, 11/1/2020			145,000		147,774
Graham Packaging Co., LP, 8.25%, 10/1/2018			25,000		27,813
Graphic Packaging International, Inc.:
7.875%, 10/1/2018			10,000		10,600
9.5%, 6/15/2017			130,000		142,350
Greif, Inc., 7.75%, 8/1/2019			195,000		210,600
Hexcel Corp., 6.75%, 2/1/2015			93,000		94,627
		Principal Amount ($) (a)		Value ($)

Huntsman International LLC:
8.625%, 3/15/2020			60,000		65,400
8.625%, 3/15/2021			25,000		27,188
International Paper Co., 7.95%, 6/15/2018			145,000		172,651
JMC Steel Group, 144A, 8.25%, 3/15/2018			60,000		60,900
Longview Fibre Paper & Packaging, Inc., 144A, 8.0%, 6/1/2016			60,000		60,300
Lyondell Chemical Co., 144A, 8.0%, 11/1/2017			100,000		111,250
Momentive Performance Materials, Inc., 9.0%, 1/15/2021			230,000		234,600
Nalco Co., 144A, 6.625%, 1/15/2019			45,000		46,125
NewMarket Corp., 7.125%, 12/15/2016			110,000		114,675
Novelis, Inc.:
8.375%, 12/15/2017			140,000		149,450
8.75%, 12/15/2020			110,000		118,800
Owens-Brockway Glass Container, Inc., 7.375%, 5/15/2016			110,000		119,625
Packaging Dynamics Corp., 144A, 8.75%, 2/1/2016			90,000		91,350
Phibro Animal Health Corp., 144A, 9.25%, 7/1/2018			10,000		10,550
Polymer Group, Inc., 144A, 7.75%, 2/1/2019			55,000		55,137
Quadra FNX Mining Ltd., 144A, 7.75%, 6/15/2019			115,000		116,150
Radnor Holdings Corp., 11.0%, 3/15/2010*			25,000		3
Rain CII Carbon LLC, 144A, 8.0%, 12/1/2018			45,000		47,925
Silgan Holdings, Inc., 7.25%, 8/15/2016			50,000		52,750
Solo Cup Co., 10.5%, 11/1/2013			170,000		176,800
Texas Industries, Inc., 9.25%, 8/15/2020			75,000		72,562
United States Steel Corp., 7.375%, 4/1/2020			80,000		82,200
Verso Paper Holdings LLC, 144A, 8.75%, 2/1/2019			25,000		22,250
Viskase Companies, Inc.,
Viskase Companies, Inc., 144A, 9.875%, 1/15/2018			145,000		151,162
Vulcan Materials Co., 6.5%, 12/1/2016			145,000		144,107
Wolverine Tube, Inc., 15.0%, 3/31/2012*			91,631		44,212
					4,920,724
Telecommunication Services 7.7%
American Tower Corp., 4.5%, 1/15/2018			125,000		124,942
Buccaneer Merger Sub, Inc., 144A, 9.125%, 1/15/2019			25,000		26,000
CC Holdings GS V LLC, 144A, 7.75%, 5/1/2017			350,000		378,875
CenturyLink, Inc., 6.45%, 6/15/2021			145,000		143,343
Cincinnati Bell, Inc.:
8.25%, 10/15/2017			55,000		55,275
8.375%, 10/15/2020			180,000		179,550
8.75%, 3/15/2018			170,000		161,500
		Principal Amount ($) (a)		Value ($)

Clearwire Communications LLC, 144A, 12.0%, 12/1/2015			20,000		21,425
Cricket Communications, Inc.:
7.75%, 10/15/2020			310,000		303,800
10.0%, 7/15/2015			100,000		107,750
Crown Castle International Corp., 9.0%, 1/15/2015			195,000		211,575
Digicel Group Ltd., 144A, 10.5%, 4/15/2018			100,000		112,000
Digicel Ltd., 144A, 8.25%, 9/1/2017			300,000		311,250
ERC Ireland Preferred Equity Ltd., 144A, 8.42%**, 2/15/2017 (PIK)	EUR		82,823		601
Frontier Communications Corp.:
7.875%, 4/15/2015			10,000		10,850
8.25%, 4/15/2017			70,000		76,125
8.5%, 4/15/2020			90,000		98,100
8.75%, 4/15/2022			10,000		10,900
Hughes Network Systems LLC, 9.5%, 4/15/2014			150,000		153,750
Intelsat Jackson Holdings SA:
144A, 7.25%, 10/15/2020			120,000		119,400
144A, 7.5%, 4/1/2021			150,000		149,062
8.5%, 11/1/2019			100,000		106,000
11.25%, 6/15/2016			60,000		63,600
Intelsat Luxembourg SA:
11.25%, 2/4/2017			145,000		155,694
11.5%, 2/4/2017 (PIK)			304,218		327,034
144A, 11.5%, 2/4/2017 (PIK)			80,000		86,000
iPCS, Inc., 2.398%**, 5/1/2013			35,000		34,213
MetroPCS Wireless, Inc.:
6.625%, 11/15/2020			90,000		89,100
7.875%, 9/1/2018			75,000		79,406
Qwest Communications International, Inc.:
7.125%, 4/1/2018			55,000		59,056
8.0%, 10/1/2015			60,000		65,250
Qwest Corp., 7.5%, 10/1/2014			285,000		319,556
SBA Telecommunications, Inc.:
8.0%, 8/15/2016			35,000		37,231
8.25%, 8/15/2019			25,000		26,750
Sprint Nextel Corp., 8.375%, 8/15/2017			115,000		126,356
Telefonica Emisiones SAU, 6.421%, 6/20/2016			290,000		323,797
Telesat Canada, 11.0%, 11/1/2015			190,000		207,812
Verizon Communications, Inc., 8.95%, 3/1/2039			110,000		155,283
VimpelCom Holdings BV, 144A, 7.504%, 3/1/2022			200,000		200,200
West Corp.:
144A, 7.875%, 1/15/2019			50,000		48,500
144A, 8.625%, 10/1/2018			15,000		15,150
Windstream Corp.:
7.0%, 3/15/2019			60,000		60,600
7.5%, 4/1/2023			60,000		60,000
7.75%, 10/15/2020			35,000		36,663
7.875%, 11/1/2017			135,000		143,269
		Principal Amount ($) (a)		Value ($)

8.125%, 9/1/2018			70,000		74,200
					5,656,793
Utilities 3.3%
AES Corp.:
144A, 7.375%, 7/1/2021			100,000		101,500
8.0%, 10/15/2017			10,000		10,600
8.0%, 6/1/2020			175,000		186,375
Calpine Corp.:
144A, 7.5%, 2/15/2021			80,000		81,600
144A, 7.875%, 7/31/2020			95,000		99,275
Centrais Eletricas Brasileiras SA, 144A, 6.875%, 7/30/2019			145,000		164,212
Edison Mission Energy, 7.0%, 5/15/2017			125,000		101,250
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024			205,000		102,500
Energy Future Intermediate Holding Co., LLC, 10.0%, 12/1/2020			25,000		26,661
Ferrellgas LP, 144A, 6.5%, 5/1/2021			20,000		18,900
IPALCO Enterprises, Inc., 144A, 5.0%, 5/1/2018			290,000		283,288
Korea Gas Corp., 144A, 4.25%, 11/2/2020			185,000		175,970
Majapahit Holding BV, 144A, 8.0%, 8/7/2019			290,000		342,925
NRG Energy, Inc.:
7.375%, 1/15/2017			90,000		94,275
144A, 7.625%, 1/15/2018			35,000		35,087
8.25%, 9/1/2020			45,000		45,900
San Diego Gas & Electric Co., 6.0%, 6/1/2026			180,000		202,633
Suburban Propane Partners LP, 7.375%, 3/15/2020			15,000		15,675
Texas Competitive Electric Holdings Co., LLC, Series A, 10.25%, 11/1/2015			50,000		30,250
Toledo Edison Co., 7.25%, 5/1/2020			230,000		277,144
					2,396,020
Total Corporate Bonds (Cost $48,012,575)					49,117,253

Commercial Mortgage-Backed Securities 2.3%
Citigroup Commercial Mortgage Trust, "AMP3", Series 2006-C5, 144A, 5.684%**, 10/15/2049			126,345		113,778
CS First Boston Mortgage Securities Corp., "H", Series 2002-CKP1, 144A, 7.418%**, 12/15/2035			290,000		290,986
Greenwich Capital Commercial Funding Corp., "AM", Series 2007-GG11, 5.867%, 12/10/2049			290,000		265,166
JPMorgan Chase Commercial Mortgage Securities Corp., "A4", Series 2006-LDP7, 6.067%**, 4/15/2045			140,000		155,379
		Principal Amount ($) (a)		Value ($)

LB-UBS Commercial Mortgage Trust:
"A3", Series 2006-C7, 5.347%, 11/15/2038			440,000		473,655
"E", Series 2005-C2, 5.522%**, 4/15/2040			300,000		241,489
Wachovia Bank Commercial Mortgage Trust, "A4", Series 2005-C22, 5.44%**, 12/15/2044			140,000		151,739
Total Commercial Mortgage-Backed Securities (Cost $1,679,604)					1,692,192

Collateralized Mortgage Obligations 3.5%
Banc of America Mortgage Securities, "2A2", Series 2004-A, 2.848%**, 2/25/2034			174,498		151,931
Bear Stearns Adjustable Rate Mortgage Trust, "2A1", Series 2005-11, 3.301%**, 12/25/2035			243,748		226,662
Citicorp Mortgage Securities, Inc., "1A7", Series 2006-4, 6.0%, 8/25/2036			10,285		10,157
Countrywide Home Loans, "2A5", Series 2004-13, 5.75%, 8/25/2034			171,270		151,361
Federal National Mortgage Association, "BI", Series 2010-13, Interest Only, 5.0%, 12/25/2038			414,574		54,391
Government National Mortgage Association, "XA", Series 2009-118, 5.0%, 12/20/2039			321,571		325,367
JPMorgan Mortgage Trust, "2A1", Series 2006-A2, 5.655%**, 4/25/2036			574,194		500,789
Merrill Lynch Mortgage Investors Trust:
"2A1A", Series 2005-A9, 2.655%**, 12/25/2035			56,127		55,277
"2A", Series 2003-A6, 3.188%**, 10/25/2033			126,607		119,701
Morgan Stanley Mortgage Loan Trust, "5A5", Series 2005-4, 5.5%, 8/25/2035			115,887		112,371
Vericrest Opportunity Loan Transferee, "M", Series 2010-NPL1, 144A, 6.0%, 5/25/2039			133,115		131,095
Washington Mutual Mortgage Pass-Through Certificates Trust, "1A1", Series 2005-AR12, 2.722%**, 10/25/2035			94,278		88,349
Wells Fargo Mortgage- Backed Securities Trust:
"2A3",Series 2004-EE, 2.771%**, 12/25/2034			232,125		208,506
"A3", Series 2005-4, 5.0%, 4/25/2035			82,891		82,654
"B1", Series 2004-1, 5.5%, 2/25/2034			292,185		279,592
"A19", Series 2006-11, 6.0%, 9/25/2036			56,537		56,535
Total Collateralized Mortgage Obligations (Cost $2,543,873)					2,554,738
		Principal Amount ($) (a)		Value ($)

Government & Agency Obligations 10.2%
Other Government Related (d) 2.0%
Citibank NA, FDIC Guaranteed, 0.298%**, 5/7/2012			650,000		650,613
International Bank for Reconstruction & Development, 5.25%**, 4/9/2025			290,000		282,750
JPMorgan Chase & Co., Series 3, FDIC Guaranteed, 0.497%**, 12/26/2012			232,000		233,044
NAK Naftogaz Ukraine, 9.5%, 9/30/2014			100,000		110,125
Qatari Diar Finance QSC, 144A, 5.0%, 7/21/2020			150,000		153,750
					1,430,282
Sovereign Bonds 5.4%
Dominican Republic, 144A, 7.5%, 5/6/2021			100,000		104,000
Federative Republic of Brazil, 12.5%, 1/5/2016	BRL		250,000		188,623
Government of Canada, 4.5%, 6/1/2015	CAD		350,000		395,479
Government of Ukraine, 144A, 7.75%, 9/23/2020			145,000		150,438
MDC-GMTN BV, 144A, 5.5%, 4/20/2021			200,000		200,455
Republic of Argentina:
Series NY, 8.28%, 12/31/2033			131,728		116,250
Series 1, 8.75%, 6/2/2017			145,000		150,800
Republic of Argentina-Inflation Linked Bond, 5.83%, 12/31/2033	ARS		456		139
Republic of Belarus, REG S, 8.75%, 8/3/2015			145,000		130,500
Republic of Croatia, 144A, 6.375%, 3/24/2021			290,000		301,600
Republic of Greece, 4.5%, 9/20/2037	EUR		1,000,000		614,138
Republic of Lithuania, 144A, 7.375%, 2/11/2020			140,000		162,050
Republic of Peru, 8.75%, 11/21/2033			145,000		197,708
Republic of South Africa, 6.25%, 3/8/2041			250,000		268,125
Republic of Uruguay, 7.625%, 3/21/2036			60,000		75,600
Republic of Venezuela, 7.65%, 4/21/2025			290,000		188,500
Russian Federation, REG S, 7.5%, 3/31/2030			376,184		443,427
Wakala Global Sukuk Bhd., 144A, 4.646%, 7/6/2021 (b)			250,000		249,490
					3,937,322
US Government Sponsored Agency 0.1%
Federal Home Loan Mortgage Corp., 1.125%, 12/15/2011			100,000		100,450
US Treasury Obligations 2.7%
US Treasury Bills:
0.01%***, 9/15/2011 (e)			56,000		55,998
0.135%***, 9/15/2011 (e)			143,000		142,994
		Principal Amount ($) (a)		Value ($)

US Treasury Bonds:
3.875%, 8/15/2040			55,000		50,359
4.25%, 11/15/2040			115,000		112,412
US Treasury Notes:
0.875%, 2/29/2012			1,500,000		1,507,260
3.625%, 2/15/2021			125,000		130,342
					1,999,365
Total Government & Agency Obligations (Cost $7,381,814)					7,467,419

Loan Participations and Assignments 2.8%
Senior Loans** 1.9%
Buffets, Inc., Letter of Credit, First Lien, 7.496%, 4/22/2015			12,198		9,788
Charter Communications Operating LLC:
Replacement Term Loan, 2.19%, 3/6/2014			598		597
Term Loan, 3.5%, 9/6/2016			207,101		206,737
New Term Loan, 7.25%, 3/6/2014			3,106		3,122
Chrysler Group LLC, Term Loan, 6.0%, 5/24/2017			10,000		9,788
Clear Channel Communications, Inc., Term Loan B, 3.836%, 1/28/2016			106,043		90,136
Dunkin' Brands, Inc., Term Loan B, 4.25%, 11/23/2017			69,650		69,678
Ford Motor Co., Term Loan B1, 2.94%, 12/16/2013			79,840		79,905
Hawker Beechcraft Acquisition Co., LLC:
Term Loan, 2.186%, 3/26/2014			160,140		135,156
Letter of Credit, 2.246%, 3/26/2014			9,903		8,358
Roundy's Supermarkets, Inc., Second Lien Term Loan, 10.0%, 4/18/2016			65,000		65,874
Syniverse Technologies, Inc., Term Loan B, 5.25%, 12/21/2017			49,750		50,061
Tomkins LLC, New Term Loan B, 4.25%, 9/29/2016			520,295		521,210
Tribune Co., Term Loan B, LIBOR plus 3.0%, 6/4/2014*			88,875		60,435
VML US Finance LLC:
Term Delay Draw B, 4.69%, 5/25/2012			17,934		17,925
Term Loan B, 4.69%, 5/27/2013			31,049		31,033
					1,359,803
Sovereign Loans 0.9%
Alfa Bank OJSC, 144A, 7.75%, 4/28/2021			200,000		201,760
Gazprom OAO, 144A, 9.25%, 4/23/2019			150,000		187,312
Russian Railways, 5.739%, 4/3/2017			145,000		154,063
		Principal Amount ($) (a)		Value ($)

VTB Bank OJSC, 144A, 6.875%, 5/29/2018			145,000		155,585
					698,720
Total Loan Participations and Assignments (Cost $2,043,329)					2,058,523

Municipal Bonds and Notes 0.4%
Chicago, IL, O'Hare International Airport Revenue, Series B, 6.0%, 1/1/2041			145,000		151,785
Orlando & Orange County, FL, Expressway Authority Revenue, Series C, 5.0%, 7/1/2040			145,000		141,211
Total Municipal Bonds and Notes (Cost $292,404)					292,996

Convertible Bonds 2.6%
Consumer Discretionary 0.2%
Group 1 Automotive, Inc., 144A, 3.0%, 3/15/2020			65,000		81,006
Sonic Automotive, Inc., 5.0%, 10/1/2029			25,000		33,000
Virgin Media, Inc., 6.5%, 11/15/2016			17,000		30,409
					144,415
Consumer Staples 0.3%
AEON Co., Ltd., Series 7, 0.3%, 11/22/2013	JPY		2,000,000		28,073
Archer-Daniels-Midland Co., 0.875%, 2/15/2014			50,000		52,750
Molson Coors Brewing Co., 2.5%, 7/30/2013			40,000		43,900
TEM, Series DG, 4.25%, 1/1/2015	EUR		12,500		10,089
Tyson Foods, Inc., 3.25%, 10/15/2013			30,000		38,700
					173,512
Energy 0.0%
China Petroleum & Chemical Corp., Zero Coupon, 4/24/2014	HKD		70,000		10,322
Financials 0.9%
Billion Express Investments Ltd., 0.75%, 10/18/2015			100,000		116,950
Boston Properties LP, 144A, 3.625%, 2/15/2014			30,000		33,337
Glory River Holdings Ltd., 1.0%, 7/29/2015	HKD		100,000		13,573
Industrivarden AB, REG S, 1.875%, 2/27/2017	EUR		50,000		71,094
Kloeckner & Co. Financial Services SA, 1.5%, 7/27/2012	EUR		100,000		141,535
Lukoil International Finance BV, 2.625%, 6/16/2015			100,000		116,309
NASDAQ OMX Group, Inc., 2.5%, 8/15/2013			40,000		40,150
ORIX Corp., Series 3, 1.0%, 3/31/2014	JPY		5,000,000		77,724
					610,672
		Principal Amount ($) (a)		Value ($)

Health Care 0.4%
Amgen, Inc., Series B, 0.375%, 2/1/2013			50,000		50,187
Dendreon Corp., 2.875%, 1/15/2016			10,000		10,988
Gilead Sciences, Inc., Series C, 144A, 1.0%, 5/1/2014			50,000		55,625
Medtronic, Inc., Series B, 1.625%, 4/15/2013			50,000		51,125
Mylan, Inc., 1.25%, 3/15/2012			20,000		22,250
Shire PLC, 2.75%, 5/9/2014			100,000		116,600
					306,775
Industrials 0.1%
Asahi Glass Co., Ltd., Zero Coupon, 11/14/2014	JPY		5,000,000		66,875
Information Technology 0.5%
Advanced Micro Devices, Inc., 6.0%, 5/1/2015			50,000		50,687
EMC Corp., Series B, 1.75%, 12/1/2013			20,000		35,050
Hitachi Ltd., Series 8, 0.1%, 12/12/2014	JPY		3,000,000		56,363
Intel Corp., 2.95%, 12/15/2035			90,000		93,037
Microsoft Corp., 144A, Zero Coupon, 6/15/2013			60,000		61,350
SanDisk Corp., 1.0%, 5/15/2013			30,000		28,988
Symantec Corp., Series B, 1.0%, 6/15/2013			50,000		60,750
					386,225
Materials 0.0%
Newmont Mining Corp., Series A, 1.25%, 7/15/2014			17,000		22,143
Other Government Related (d) 0.2%
Kreditanstalt fuer Wiederaufbau, 3.25%, 6/27/2013	EUR		100,000		151,613
Total Convertible Bonds (Cost $1,838,487)					1,872,552

Preferred Securities 0.8%
Financials 0.7%
Capital One Capital VI, 8.875%, 5/15/2040			330,000		340,365
USB Capital XIII Trust, 6.625%, 12/15/2039			145,000		149,048
					489,413
Materials 0.1%
Hercules, Inc., 6.5%, 6/30/2029			95,000		80,275
Total Preferred Securities (Cost $527,345)					569,688

	Units		Value ($)

Other Investments 0.0%
Consumer Discretionary
AOT Bedding Super Holdings LLC* (Cost $4,000)		4		4,000

	Shares		Value ($)

Common Stocks 0.0%
Consumer Discretionary 0.0%
Buffets Restaurants Holdings, Inc.*		2,318		9,272
Dex One Corp.*		540		1,366
SuperMedia, Inc.*		99		371
Trump Entertainment Resorts, Inc.*		6		110
Vertis Holdings, Inc.*		63		1,118
				12,237
Industrials 0.0%
Congoleum Corp.*		125,000		0
Quad Graphics, Inc.		69		2,681
				2,681
Materials 0.0%
GEO Specialty Chemicals, Inc.*		2,058		1,749
Total Common Stocks (Cost $280,047)				16,667

Preferred Stock 0.1%
Financials
Ally Financial, Inc., Series G, 144A, 7.0% (Cost $99,895)		110		103,386

Warrants 0.0%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		159		5
Materials 0.0%
Hercules Trust II, Expiration Date 3/31/2029*		85		854
Total Warrants (Cost $17,432)				859

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

Call Options Purchased 0.0%
Floating Rate — LIBOR, Effective Date 6/28/2011, Expiration Date 9/28/2011, Cap Rate 3.205% (Cost $6,760)		1,494,000		6,760

Put Options Purchased 0.0%
Floating Rate — LIBOR, Effective Date 6/27/2011, Expiration Date 9/17/2011, Cap Rate 3.178% (Cost $6,723)		1,494,000		6,723

	Shares		Value ($)

Securities Lending Collateral 0.2%
Daily Assets Fund Institutional, 0.13% (f) (g) (Cost $127,606)		127,606		127,606

Cash Equivalents 9.2%
Central Cash Management Fund, 0.11% (f) (Cost $6,720,710)		6,720,710		6,720,710

	% of Net Assets		Value ($)

Total Investment Portfolio (Cost $71,582,604)+		99.2		72,612,072
Other Assets and Liabilities, Net		0.8		576,484
Net Assets		100.0		73,188,556

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

Securities	Coupon			Maturity Date	Principal Amount ($)			Acquisition Cost ($)		Value ($)
CanWest LP*		9.25	%	8/1/2015		50,000	USD		50,000		8,500
Fontainebleau Las Vegas Holdings LLC*		11.0	%	6/15/2015		65,000	USD		65,225		33
Hellas Telecommunications Finance SCA*		8.985	%	7/15/2015		109,187	EUR		32,169		95
Radnor Holdings Corp.*		11.00	%	3/15/2010		25,000	USD		15,888		3
Tribune Co.*	LIBOR plus 3.0		%	6/4/2014		88,875	USD		88,819		60,435
Tropicana Entertainment LLC*		9.625	%	12/15/2014		150,000	USD		122,979		75
Wolverine Tube, Inc.*		15.0	%	3/31/2012		91,631	USD		91,631		44,212
									466,711		113,353

* Non-income producing security. In the case of a bond, generally denotes that the issuer has defaulted on the payment of principal or interest or has filed for bankruptcy.

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

+ The cost for federal income tax purposes was $71,651,109. At June 30, 2011, net unrealized appreciation for all securities based on tax cost was $960,963. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $2,499,073 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,538,110.

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

(b) When-issued security.

(c) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2011 amounted to $122,915, which is 0.2% of net assets.

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

(e) At June 30, 2011, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(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.

FDIC: Federal Deposit Insurance Corp.

LIBOR: London Interbank Offered Rate

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

REIT: Real Estate Investment Trust

At June 30, 2011, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year Australian Treasury bond	AUD	9/15/2011		4		455,006		(1,031	)
10 Year Canadian Government Bond	CAD	9/21/2011		7		899,922		(6,532	)
10 Year Japanese Government Bond	JPY	9/8/2011		3		5,255,823		2,609
2 Year US Treasury Note	USD	9/30/2011		12		2,632,125		6,187
Federal Republic of Germany Euro-Bobl	EUR	9/8/2011		7		1,183,409		2,842
United Kingdom Long Gilt Bond	GBP	9/28/2011		17		3,278,193		3,631
Total net unrealized appreciation								7,706

At June 30, 2011, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year US Treasury Note	USD	9/21/2011		64		7,829,000		50,652
Federal Republic of Germany Euro-Bund	EUR	9/8/2011		7		1,273,753		(3,756	)
Federal Republic of Germany Euro-Schatz	EUR	9/8/2011		49		7,642,571		(13,856	)
Total net unrealized appreciation								33,040

At June 30, 2011, open credit default swap contracts sold were as follows:

Effective/ Expiration Date	Notional Amount ($) (i)			Fixed Cash Flows Received			Underlying Debt Obligation/Quality Rating (h)	Value ($)			Upfront Payments Paid/ (Received) ($)			Unrealized Appreciation/ (Depreciation) ($)
3/21/2011 6/20/2016		120,000	1		5.0	%	Ally Financial Corp., 8.3%, 02/12/2015, B+		8,019			6,822			1,197
9/21/2009 12/20/2014		290,000	2		1.0	%	Berkshire Hathaway Finance Corp., 4.625%, 10/15/2013, AA		2,384			(7,340	)		9,724
3/21/2011 6/20/2016		120,000	2		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B-		5,679			4,468			1,211
6/21/2010 9/20/2013		70,000	3		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		6,257			858			5,399
6/21/2010 9/20/2015		90,000	4		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, B+		9,798			(1,605	)		11,403
12/20/2010 3/20/2016		290,000	5		1.0	%	Freeport-McMoRan Copper & Gold, Inc., 8.375%, 4/1/2017, BBB-		(3,915	)		(127	)		(3,788	)
Total net unrealized appreciation															25,146

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

(i) 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.

At June 30, 2011, open interest rate swaps contracts were as follows:

Effective/ Expiration Date	Notional Amount ($)			Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Upfront Payments Paid/ (Received) ($)			Unrealized Appreciation/ (Depreciation) ($)
4/13/2012 4/13/2016		1,500,000	6	Floating — LIBOR	Fixed — 3.04%		45,889			135			45,754
6/23/2012 6/23/2022		2,000,000	6	Fixed — 3.6%	Floating — LIBOR		23,696			(4,222	)		27,918
10/28/2010 10/28/2025		140,000	5	Floating — LIBOR	Floating — 4.154%++		(5,443	)		—			(5,443	)
11/1/2010 11/1/2025		240,000	7	Floating — LIBOR	Floating — 4.123%++		(16,189	)		—			(16,189	)
11/12/2010 11/12/2025		280,000	5	Floating — LIBOR	Floating — 4.264%++		(10,507	)		—			(10,507	)
11/15/2010 11/15/2025		280,000	7	Floating — LIBOR	Floating — 4.56%++		(17,356	)		—			(17,356	)
11/16/2010 11/16/2025		140,000	5	Floating — LIBOR	Floating — 4.56%++		(4,058	)		—			(4,058	)
11/19/2010 11/19/2025		140,000	7	Floating — LIBOR	Floating — 5.072%++		(8,062	)		—			(8,062	)
11/23/2010 11/23/2025		70,000	5	Floating — LIBOR	Floating — 4.808%++		(1,633	)		—			(1,633	)
Total net unrealized appreciation													10,424

++ These interest rate swaps are shown at their current rate as of June 30, 2011.

At June 30, 2011, open total return swap contracts were as follows:

Effective/ Expiration Date	Notional Amount ($)			Fixed Cash Flows Paid			Reference Entity	Value ($)			Upfront Payments Paid/ (Received) ($)		Unrealized Depreciation ($)
4/26/2011 4/26/2012		1,100,000	6		.07	%	BNP Paribas BPSTAR Enhanced Momentum Index		(236	)		—		(236	)
5/28/2010 6/1/2012		2,800,000	3		.45	%	Global Interest Rate Strategy Index		(19,724	)		—		(19,724	)
Total unrealized depreciation														(19,960	)

Counterparties:

1 The Goldman Sachs & Co.

2 JPMorgan Chase Securities, Inc.

3 Citigroup, Inc.

4 Bank of America NA

5 Morgan Stanley

6 BNP Paribas

7 Barclays Bank PLC

At June 30, 2011, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Appreciation ($)		Counterparty
USD	230,476	EUR	160,000	7/11/2011		1,474	JPMorgan Chase Securities, Inc.
USD	112,998	EUR	79,800	7/11/2011		2,687	Citigroup, Inc.
USD	2,155,617	SEK	13,850,000	7/19/2011		31,561	UBS AG
USD	2,070,374	AUD	1,950,000	7/19/2011		15,906	UBS AG
USD	627,854	EUR	440,000	7/19/2011		9,864	UBS AG
USD	670,574	NZD	830,000	7/19/2011		16,171	UBS AG
USD	81,595	CAD	80,000	7/19/2011		1,313	UBS AG
JPY	30,000,000	USD	374,768	7/21/2011		2,739	UBS AG
USD	285,195	EUR	200,000	8/15/2011		4,941	BNP Paribas
EUR	1,000,000	USD	1,459,200	8/15/2011		8,518	Nomura International PLC
GBP	1,075,000	USD	1,758,978	8/15/2011		32,543	Credit Suisse
Total unrealized appreciation						127,717

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
EUR	346,000	USD	498,283	7/11/2011		(3,310	)	Citigroup, Inc.
EUR	400,000	USD	571,096	7/19/2011		(9,620	)	State Street Bank & Trust Co.
USD	1,083,375	GBP	670,000	7/19/2011		(8,317	)	UBS AG
USD	146,712	JPY	11,780,000	7/19/2011		(372	)	UBS AG
NOK	2,970,000	USD	538,312	7/19/2011		(11,522	)	UBS AG
AUD	1,000,000	USD	1,057,664	7/19/2011		(12,223	)	UBS AG
CHF	2,750,000	USD	3,234,868	7/19/2011		(36,391	)	UBS AG
EUR	460,000	USD	655,593	7/19/2011		(11,111	)	UBS AG
CAD	1,300,000	USD	1,335,573	7/19/2011		(11,682	)	UBS AG
NZD	2,250,000	USD	1,824,593	7/19/2011		(37,065	)	UBS AG
JPY	39,940,000	USD	494,353	7/19/2011		(1,812	)	UBS AG
EUR	200,000	USD	287,459	8/15/2011		(2,678	)	BNP Paribas
CAD	236,000	USD	240,733	8/15/2011		(3,767	)	BNP Paribas
Total unrealized depreciation						(149,870	)

Currency Abbreviations

ARS Argentine Peso

AUD Australian Dollar

BRL Brazilian Real

CAD Canadian Dollar

CHF Swiss Franc

EUR Euro

GBP British Pound

HKD Hong Kong Dollar

JPY Japanese Yen

NOK Norwegian Krone

NZD New Zealand Dollar

SEK Swedish Krona

USD United States Dollar

For information on the Fund's policy and additional disclosures regarding options purchased, futures contracts, credit default swap contracts, interest rate swap contracts, total return 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	$	—		$	48,853,526		$	263,727	$	49,117,253
Commercial Mortgage-Backed Securities		—			1,692,192			—		1,692,192
Collateralized Mortgage Obligations		—			2,554,738			—		2,554,738
Government & Agency Obligations		—			7,184,669			282,750		7,467,419
Loan Participations and Assignments		—			2,058,523			—		2,058,523
Municipal Bonds and Notes		—			292,996			—		292,996
Convertible Bonds		—			1,872,552			—		1,872,552
Preferred Securities		—			569,688			—		569,688
Common Stocks (j)		13,690			—			2,977		16,667
Preferred Stock		—			103,386			—		103,386
Warrants (j)		—			—			859		859
Other Investments		—			—			4,000		4,000
Short-Term Investments (j)		6,848,316			—			—		6,848,316
Derivatives (k)		65,921			230,323			13,483		309,727
Total	$	6,927,927		$	65,412,593		$	567,796	$	72,908,316
Liabilities
Derivatives (k)	$	(25,175	)	$	(236,866	)	$	—	$	(262,041	)
Total	$	(25,175	)	$	(236,866	)	$	—	$	(262,041	)

There have been no transfers between Level 1 and Level 2 fair value measurements during the period ended June 30, 2011.

(j) See Investment Portfolio for additional detailed categorizations.

(k) Derivatives include value of options purchased, unrealized appreciation (depreciation) on futures contracts, credit default swap contracts, interest rate swap contracts, total return swap contracts and forward foreign currency exchange 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			Government & Agency Obligations			Common Stocks		Warrants			Call Options Purchased			Put Options Purchased		Other Investments		Total			Written Options
Balance as of December 31, 2010	$	543,619		$	284,461		$	1,858	$	972		$	467		$	—	$	4,000	$	835,377		$	(35,163	)
Total realized gain (loss)		(229,279	)		—			—		—			(53,970	)		—		—		(283,249	)		(9,135	)
Change in unrealized appreciation (depreciation)		240,022			(1,711	)		538		(113	)		53,993			0		0		292,729			4,423
Amortization premium/discount		4,365			—			—		—			—			—		—		4,365			—
Purchases		274,920			—			581		—			61,220			6,723		—		343,444			70,615
(Sales)		(569,920	)		—			—		—			(54,950	)		—		—		(624,870	)		(30,740	)
Transfers into Level 3		—			—			—		—			—			—		—		—			—
Transfers (out) of Level 3		—			—			—		—			—			—		—		—			—
Balance as of June 30, 2011	$	263,727		$	282,750		$	2,977	$	859		$	6,760		$	6,723	$	4,000	$	567,796		$	—
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2011	$	14,478		$	(1,711	)	$	538	$	(113	)	$	0		$	0	$	0	$	13,192		$	—

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

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

Statement of Assets and Liabilities

as of June 30, 2011 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $64,734,288) — including $122,915 of securities loaned	$	65,763,756
Investment in Daily Assets Fund Institutional (cost $127,606)*		127,606
Investment in Central Cash Management Fund (cost $6,720,710)		6,720,710
Total investments in securities, at value (cost $71,582,604)		72,612,072
Cash		57,504
Foreign currency, at value (cost $130,708)		132,842
Deposit with broker for futures contracts		272,434
Receivable for investments sold		521,456
Receivable for Fund shares sold		65,761
Interest receivable		1,069,740
Unrealized appreciation on swap contracts		102,606
Unrealized appreciation on forward foreign currency exchange contracts		127,717
Upfront payments paid on swap contracts		12,283
Foreign taxes recoverable		1,591
Other assets		472
Total assets		74,976,478
Liabilities
Payable upon return of securities loaned		127,606
Payable for investments purchased		952,633
Payable for investments purchased — when-issued securities		305,000
Payable for Fund shares redeemed		8,862
Payable for daily variation margin on open futures contracts		62,154
Unrealized depreciation on swap contracts		86,996
Unrealized depreciation on forward foreign currency exchange contracts		149,870
Upfront payments received on swap contracts		13,294
Accrued management fee		12,747
Other accrued expenses and payables		68,760
Total liabilities		1,787,922
Net assets, at value	$	73,188,556
Net Assets Consist of
Undistributed net investment income		2,047,660
Net unrealized appreciation (depreciation) on: Investments		1,029,468
Swap contracts		15,610
Futures		40,746
Foreign currency		(6,171	)
Accumulated net realized gain (loss)		(191,536	)
Paid-in capital		70,252,779
Net assets, at value	$	73,188,556
Class A Net Asset Value, offering and redemption price per share ($73,188,556 ÷ 6,300,090 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.62

* Represents collateral of securities loaned.

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

Statement of Operations

for the six months ended June 30, 2011 (Unaudited)
Investment Income
Income: Interest (net of foreign taxes withheld of $1,100)	$	2,346,218
Dividends		3,885
Income distributions — Central Cash Management Fund		3,896
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		233
Total income		2,354,232
Expenses: Management fee		202,097
Administration fee		36,745
Services to shareholders		618
Custodian fee		32,345
Audit and tax fees		32,500
Legal fees		7,196
Reports to shareholders		9,682
Trustees' fees and expenses		2,586
Other		22,796
Total expenses before expense reductions		346,565
Expense reductions		(56,527	)
Total expenses after expense reductions		290,038
Net investment income (loss)		2,064,194
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		1,289,353
Swap contracts		(110,227	)
Futures		127,344
Written options		(9,135	)
Foreign currency		(544,033	)
		753,302
Change in net unrealized appreciation (depreciation) on: Investments		(1,136,978	)
Swap contracts		270,344
Futures		136,046
Written options		4,423
Foreign currency		(15,095	)
		(741,260	)
Net gain (loss)		12,042
Net increase (decrease) in net assets resulting from operations	$	2,076,236

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, 2011 (Unaudited)			Year Ended December 31, 2010
Operations: Net investment income	$	2,064,194		$	4,195,261
Net realized gain (loss)		753,302			2,382,740
Change in net unrealized appreciation (depreciation)		(741,260	)		522,516
Net increase (decrease) in net assets resulting from operations		2,076,236			7,100,517
Distributions to shareholders from: Net investment income: Class A		(4,074,552	)		(4,806,010	)
Fund share transactions: Class A Proceeds from shares sold		3,807,805			11,245,997
Reinvestment of distributions		4,074,552			4,806,010
Payments for shares redeemed		(8,402,339	)		(16,514,815	)
Net increase (decrease) in net assets from Class A share transactions		(519,982	)		(462,808	)
Increase (decrease) in net assets		(2,518,298	)		1,831,699
Net assets at beginning of period		75,706,854			73,875,155
Net assets at end of period (including undistributed net investment income of $2,047,660 and $4,058,018, respectively)	$	73,188,556		$	75,706,854
Other Information
Class A Shares outstanding at beginning of period		6,329,747			6,362,456
Shares sold		320,957			957,272
Shares issued to shareholders in reinvestment of distributions		348,849			420,473
Shares redeemed		(699,463	)		(1,410,454	)
Net increase (decrease) in Class A shares		(29,657	)		(32,709	)
Shares outstanding at end of period		6,300,090			6,329,747

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/11 (Unaudited)			2010			2009			2008			2007			2006
Selected Per Share Data
Net asset value, beginning of period	$	11.96		$	11.61		$	10.03		$	11.70		$	11.80		$	11.50
Income (loss) from investment operations: Net investment incomea		.33			.66			.63			.55			.63			.62
Net realized and unrealized gain (loss)		.01			.47			1.50			(1.38	)		(.01	)		.36
Total from investment operations		.34			1.13			2.13			(.83	)		.62			.98
Less distributions from: Net investment income		(.68	)		(.78	)		(.55	)		(.69	)		(.72	)		(.57	)
Net realized gains		—			—			—			(.15	)		—			(.11	)
Total distributions		(.68	)		(.78	)		(.55	)		(.84	)		(.72	)		(.68	)
Net asset value, end of period	$	11.62		$	11.96		$	11.61		$	10.03		$	11.70		$	11.80
Total Return (%)		2.83	b**		10.05	b		22.73	b		(7.75	)b		5.43	b		8.98
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		73			76			74			73			100			86
Ratio of expenses before expense reductions (%)		.94	*		.95			.86			.89			.84			.85
Ratio of expenses after expense reductions (%)		.79	*		.86			.80			.87			.83			.85
Ratio of net investment income (%)		5.62	*		5.62			5.96			5.06			5.50			5.47
Portfolio turnover rate (%)		97	**		167			370			234			147			143
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

DWS Strategic Income VIP (the "Fund") is a diversified series of DWS 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.

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.

Loan Participations and Assignments. The Fund invests in Loan Participations and Assignments. Loan Participations and Assignments are portions of loans originated by banks and sold in pieces to investors. These US dollar-denominated fixed and 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 refinancings, and Sovereign Loans, which are debt instruments between a foreign sovereign entity and one or more financial institutions. 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 only with 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. All Loan Participations and Assignments 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 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.

At December 31, 2010, the Fund had a net tax basis capital loss carryforward of approximately $543,000, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2017, the expiration date, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2010 and has determined that no provision for income tax 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.

The timing and characterization of certain income and capital gains 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 and may include proceeds from litigation. 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

Interest Rate Swap Contracts. The value of the Fund's underlying bond investments is subject to interest rate risk. As interest rates increase, the value of the Fund's fixed rate bonds may fall. The longer the duration of the Fund's securities, the more sensitive the Fund will be to interest rate changes. For the six months ended June 30, 2011, the Fund entered into interest rate swap transactions to gain exposure to different parts of the yield curve while managing overall duration. The use of interest rate swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In an interest rate swap, the Fund agrees to pay to the other party to the interest rate swap (which is known as 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. Certain risks may arise when entering into swap transactions including counterparty default, liquidity or unfavorable changes in interest rates. In connection with these agreements, securities and or cash may be identified as collateral in accordance with the terms of the swap agreements 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 interest rate swap contract, 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. The value of the 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. 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.

Credit Default Swap Contracts. A credit default swap is a contract between a buyer and a seller of protection against pre-defined credit events for the reference entity. For the six months ended June 30, 2011, the Fund sold credit default swap contracts to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer, or to hedge the risk of default on Fund securities. As a seller in the credit default swap contract, 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 US 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 contract 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 swap contracts in order to hedge against the risk of a credit event on debt securities, in which case the Fund functions as the counterparty referenced above. This involves the risk that the contract 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 contract 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 swap contracts sold by the Fund.

A summary of the open credit default swap contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the investment in credit default swap contracts sold had a total notional value generally indicative of a range from approximately $740,000 to $2,370,000.

Total Return Swap Contracts. Total return swaps involve commitments to pay interest in exchange for a market-linked return based on a notional amount. For the six months ended June 30, 2011, the Fund entered into total return swap transactions to enhance potential gain. To the extent the total return of the reference security or index underlying the total return swap exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment or make a payment to the counterparty, respectively. Certain risks may arise when entering into swap transactions including counterparty default, liquidity or unfavorable changes in the value of underlying reference security or index. The value of the 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. 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 each measurement period are recorded as realized gain or loss in the Statement of Operations.

A summary of the open total return swap contracts as of June 30, 2011 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the investment in total return swap contracts had a total notional amount generally indicative of a range from approximately $2,800,000 to $3,900,000.

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. Certain options, including options on indices and interest rate options, will require cash settlement by the Fund if the option is exercised. Interest rate options are comprised of multiple European style options that have periodic exercise dates within the terms of the contract. For the six months ended June 30, 2011, the Fund entered into purchased option contracts on interest rates in order to hedge portfolio assets against potential adverse interest rate movements.

There are no open written option contracts as of June 30, 2011. A summary of the open purchased option contracts as of June 30, 2011 is included in the Fund's Investment Portfolio. For the six months ended June 30, 2011, the Fund's investment in purchased option contracts had a total value generally indicative of a range from $0 to approximately $13,000.

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, 2011, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration. In addition, the Fund seeks to enhance returns by employing a global tactical asset allocation overlay strategy. The Fund enters into futures contracts on fixed-income securities, including on financial indices and security indices, as part of its global tactical asset allocation overlay strategy. For the six months ended June 30, 2011, as part of this strategy, the Fund used futures contracts to attempt to take advantage of short-term and medium-term inefficiencies within the global equity and bond markets.

A summary of the open futures contracts as of June 30, 2011, is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $13,704,000 to $32,102,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $10,173,000 to $21,385,000.

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, 2011, 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 and to facilitate transactions in foreign currency denominated securities. In addition, the Fund seeks to enhance returns by employing a global tactical asset allocation overlay strategy. For the six months ended June 30, 2011, as part of this strategy, the Fund used forward currency contracts to gain exposure to changes in the value of foreign currencies to attempt to take advantage of inefficiencies within the currency markets.

A summary of the open forward currency contracts as of June 30, 2011, is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2011, the investment in forward currency contracts short vs. US dollars had a total contract value generally indicative of a range from approximately $13,330,000 to $14,346,000, and the investment in forward currency contracts long vs. US dollars had a total contract value generally indicative of a range from approximately $7,465,000 to $11,548,000.

Asset Derivatives	Purchased Options		Forward Contracts		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a) (b)	$	13,483	$	—	$	73,672	$	65,921	$	153,076
Credit Contracts (b)		—		—		28,934		—		28,934
Foreign Exchange Contracts (c)		—		127,717		—		—		127,717
	$	13,483	$	127,717	$	102,606	$	65,921	$	309,727

Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts:

(a) Includes cumulative appreciation of futures 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 swap contracts

Liability Derivatives	Forward Contracts			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	—		$	(83,208	)	$	(25,175	)	$	(108,383	)
Credit Contracts (b)		—			(3,788	)		—			(3,788	)
Foreign Exchange Contracts (c)		(149,870	)		—			—			(149,870	)
	$	(149,870	)	$	(86,996	)	$	(25,175	)	$	(262,041	)

Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts:

(a) Includes cumulative depreciation of futures contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

(b) Unrealized depreciation on swap contracts

Realized Gain (Loss)	Purchased Options			Written Options			Forward Contracts			Swap Contracts			Futures Contracts		Total
Equity Contracts (a)	$	—		$	—		$	—		$	—		$	28,637	$	28,637
Interest Rate Contracts (a)		(53,970	)		(9,135	)		—			(111,648	)		98,707		(76,046	)
Credit Contracts (a)		—			—			—			1,421			—		1,421
Foreign Exchange Contracts (b)		—			—			(517,128	)		—			—		(517,128	)
	$	(53,970	)	$	(9,135	)	$	(517,128	)	$	(110,227	)	$	127,344	$	(563,116	)

Each of the above derivatives is located in the following Statement of Operations accounts:

(a) Net realized gain (loss) from investments (includes purchased options), 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)	Purchased Options		Written Options		Forward Contracts			Swap Contracts		Futures Contracts			Total
Equity Contracts (a)	$	—	$	—	$	—		$	—	$	(31,298	)	$	(31,298	)
Interest Rate Contracts (a)		53,993		4,423		—			242,486		167,344			468,246
Credit contracts (a)		—		—		—			27,858		—			27,858
Foreign Exchange Contracts (b)		—		—		(18,822	)		—		—			(18,822	)
	$	53,993	$	4,423	$	(18,822	)	$	270,344	$	136,046		$	445,984

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)

C. Purchases and Sales of Securities

During the six months ended June 30, 2011, purchases and sales of investment transactions (excluding short-term investments and US Treasury obligations) aggregated $61,616,899 and $67,254,088, respectively. Purchases and sales of US Treasury obligations aggregated $5,461,107 and $8,433,177, respectively.

For the six months ended June 30, 2011, transactions for written options on interest rate swaps were as follows:

	Contract Amount			Premiums
Outstanding, beginning of period		29,000,000		$	30,740
Options written		29,000,000			30,740
Options closed		(58,000,000	)		(61,480	)
Outstanding, end of period		—		$	—

D. Related Parties

QS Investors, LLC ("QS Investors") serves as subadvisor to the Fund. As subadvisor to the Fund, QS Investors manages the assets attributable only to the Fund's global tactical asset allocation overlay strategy. QS Investors is paid by the Advisor for the services QS Investors provides to the Fund.

$0-$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	%

Accordingly, for the six months ended June 30, 2011, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $56,473, and the amount charged aggregated $145,624, which was equivalent to an annualized effective rate of 0.40% of the Fund's average daily net assets.

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

E. Investing in High-Yield Securities

F. Investing in Emerging Markets

G. Ownership of the Fund

At June 30, 2011, 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 39%.

H. Line of Credit

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

October 3, 2010

Qualifications

Evaluation of Fees for each DWS Fund

Fees and Expenses Compared with Other Funds

The competitive fee and expense evaluation for each fund focused on two primary comparisons:

The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.

DeAM's Fees for Similar Services to Others

Costs and Profit Margins

Economies of Scale

Quality of Service — Performance

I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.

Complex-Level Considerations

I considered how aggregated DWS Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.

I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.

Findings

Thomas H. Mack

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2SI-3 (R-023302-1 8/11)


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 Paul K. Freeman, Independent Chairman, DWS Funds, P.O. Box 101833, Denver, CO 80250-1833.

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)	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.

Form N-CSRS Item F

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:	DWS Variable Series II


By:	/s/W. Douglas Beck W. Douglas Beck President

Date:	August 18, 2011

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/W. Douglas Beck W. Douglas Beck President

Date:	August 18, 2011



By:	/s/Paul Schubert Paul Schubert Chief Financial Officer and Treasurer

Date:	August 18, 2011

Deutsche Variable Series Ii N-CSRSCertified semi-annual shareholder report (management investment company)