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: (212) 250-3220

Paul Schubert

60 Wall Street

New York, NY 10005

(Name and Address of Agent for Service)

Date of fiscal year end:	12/31

Date of reporting period:	6/30/2013

ITEM 1.	REPORT TO STOCKHOLDERS

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Alternative Asset Allocation VIP

Contents

3 Performance Summary

5 Portfolio Summary

5 Portfolio Management

6 Investment Portfolio

7 Statement of Assets and Liabilities

7 Statement of Operations

8 Statement of Changes in Net Assets

10 Financial Highlights

12 Notes to Financial Statements

16 Information About Your Fund's Expenses

17 Proxy Voting

18 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. Because Exchange Traded Funds (ETFs) trade on a securities exchange, their shares may trade at a premium or discount to their net asset value. ETFs also incur fees and expenses so they may not fully match the performance of the indexes they are designed to track. Short sales — which involve selling borrowed securities in anticipation of a price decline, then returning an equal number of the securities at some point in the future — could magnify losses and increase volatility. The Fund may use derivatives, including as part of its currency and interest-rate strategies. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The success of the Fund's currency and interest-rate strategies are dependent, in part, on the effectiveness and implementation of portfolio management's proprietary models. As part of these strategies, the Fund's exposure to foreign currencies could cause lower returns or even losses because foreign currency rates may fluctuate significantly over short periods of time for a number of reasons. The risk of loss is heightened during periods of rapid rises in interest rates. In addition, the notional amount of the Fund's aggregate currency and interest-rate exposure resulting from these strategies may significantly exceed the net assets of the Fund. See the prospectus for additional risks and specific details regarding the Fund's risk profile.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

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

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 1.91% and 2.16% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. These expense ratios include net expenses of the underlying funds in which the Fund invests.

Growth of an Assumed $10,000 Investment in DWS Alternative Asset Allocation VIP from 2/2/09 to 6/30/13
		The Morgan Stanley Capital International (MSCI) World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The index consists of 24 developed market country indices. The index is calculated using closing local market prices and translates into U.S. dollars using the London close foreign exchange rates. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. The Blended Index is calculated using the performance of two unmanaged indices, representative of stocks (the MSCI World Index (70%)) and bonds (the Barclays U.S. Aggregate Bond Index (30%)). These results are summed to produce the aggregate benchmark. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Comparative Results
DWS Alternative Asset Allocation VIP		6-Month‡			1-Year			3-Year			Life of Fund*
Class A	Growth of $10,000	$	9,800		$	10,343		$	11,789		$	14,835
Class A	Average annual total return		-2.00	%		3.43	%		5.64	%		9.36	%
MSCI World Index	Growth of $10,000	$	10,843		$	11,858		$	14,705		$	18,889
MSCI World Index	Average annual total return		8.43	%		18.58	%		13.72	%		15.49	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,756		$	9,931		$	11,090		$	12,484
Barclays U.S. Aggregate Bond Index	Average annual total return		-2.44	%		-0.69	%		3.51	%		5.15	%
Blended Index	Growth of $10,000	$	10,512		$	11,262		$	13,649		$	16,715
Blended Index	Average annual total return		5.12	%		12.62	%		10.92	%		12.33	%

The growth of $10,000 is cumulative.

* The Fund commenced offering Class A shares on February 2, 2009. The performance shown for each index is for the time period of January 31, 2009 through June 30, 2013, which is based on the performance period of the life of the Fund.

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

Comparative Results
DWS Alternative Asset Allocation VIP		6-Month‡			1-Year			3-Year			Life of Class**
Class B	Growth of $10,000	$	9,796		$	10,317		$	11,698		$	13,504
Class B	Average annual total return		-2.04	%		3.17	%		5.37	%		7.58	%
MSCI World Index	Growth of $10,000	$	10,843		$	11,858		$	14,705		$	16,132
MSCI World Index	Average annual total return		8.43	%		18.58	%		13.72	%		12.43	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,756		$	9,931		$	11,090		$	12,212
Barclays U.S. Aggregate Bond Index	Average annual total return		-2.44	%		-0.69	%		3.51	%		5.02	%
Blended Index	Growth of $10,000	$	10,512		$	11,262		$	13,649		$	15,265
Blended Index	Average annual total return		5.12	%		12.62	%		10.92	%		10.89	%

The growth of $10,000 is cumulative.

** The Fund commenced offering Class B shares on May 18, 2009. The performance shown for each index is for the time period of May 31, 2009 through June 30, 2013, which is based on the performance period of the life of Class B.

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

Portfolio Summary (Unaudited)

Asset Allocation* (As a % of Investment Portfolio excluding Cash Equivalents)	6/30/13	12/31/12

Commodities	18%	19%
DWS Enhanced Commodity Strategy Fund	14%	13%
DWS Gold & Precious Metals Fund	—	1%
Market Vectors Agribusiness Fund	4%	4%
iShares S&P Global Timber & Forestry Index Fund	—	1%
Real Return	32%	32%
DWS Global Inflation Fund	11%	12%
DWS RREEF Global Infrastructure Fund	12%	11%
DWS RREEF Global Real Estate Securities Fund	9%	9%
Hedge Strategy	15%	15%
DWS Disciplined Market Neutral Fund	15%	15%
Currency	14%	14%
DWS Enhanced Emerging Markets Fixed Income Fund	8%	8%
WisdomTree Emerging Markets Local Debt Fund	5%	4%
PowerShares DB G10 Currency Harvest Fund	1%	—
SPDR Barclays International Treasury Bond Fund	—	2%
Opportunistic	21%	20%
DWS Floating Rate Fund	13%	13%
iShares S&P U.S. Preferred Stock Index Fund	4%	4%
SPDR Barclays Capital Convertible Securities	3%	3%
iShares S&P International Preferred Stock Index Fund	1%	—
	100%	100%

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

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Effective July 12, 2013, QS Investors no longer serves as subadvisor to the fund and day-to-day portfolio management of the fund transitioned to Deutsche Investment Management Americas Inc.

The new portfolio management team for the fund is as follows:

Pankaj Bhatnagar, PhD 

Benjamin Pace 

Darwei Kung

Portfolio Managers, Deutsche Investment Management Americas Inc.

Investment Portfolio June 30, 2013 (Unaudited)

	Shares		Value ($)

Mutual Funds 80.7%
DWS Disciplined Market Neutral Fund "Institutional"* (a)		1,323,803		13,026,220
DWS Enhanced Commodity Strategy Fund "Institutional" (a)		3,761,000		11,395,831
DWS Enhanced Emerging Markets Fixed Income Fund "Institutional" (a)		673,880		6,994,871
DWS Floating Rate Fund "Institutional" (a)		1,101,335		10,363,567
DWS Global Inflation Fund "Institutional" (a)		960,642		9,587,204
DWS RREEF Global Infrastructure Fund "Institutional" (a)		820,690		10,160,140
DWS RREEF Global Real Estate Securities Fund "Institutional" (a)		881,108		7,216,278
Total Mutual Funds (Cost $68,264,423)				68,744,111

	Shares		Value ($)

Exchange-Traded Funds 18.5%
iShares S&P International Preferred Stock Index Fund		33,465		802,825
iShares S&P U.S. Preferred Stock Index Fund		95,910		3,767,345
Market Vectors Agribusiness Fund		64,451		3,299,247
PowerShares DB G10 Currency Harvest Fund* (b)		32,264		819,828
SPDR Barclays Capital Convertible Securities		68,513		2,924,135
WisdomTree Emerging Markets Local Debt Fund		85,217		4,093,825
Total Exchange-Traded Funds (Cost $15,790,626)				15,707,205

Cash Equivalents 0.9%
Central Cash Management Fund, 0.07% (a) (c) (Cost $781,678)		781,678		781,678

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $84,836,727)†		100.1			85,232,994
Other Assets and Liabilities, Net		(0.1	)		(49,717	)
Net Assets		100.0			85,183,277

* Non-income producing security.

† The cost for federal income tax purposes was $85,627,081. At June 30, 2013, net unrealized depreciation for all securities based on tax cost was $394,087. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $3,395,721 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,789,808.

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

(b) Affiliated fund managed by DB Commodity Services LLC, a subsidiary of Deutsche Bank AG.

S&P: Standard & Poor's

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, 2013 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	$	68,744,111	$	—	$	—	$	68,744,111
Exchange-Traded Funds		15,707,205		—		—		15,707,205
Short-Term Investments		781,678		—		—		781,678
Total	$	85,232,994	$	—	$	—	$	85,232,994

There have been no transfers between fair value measurement levels during the period ended June 30, 2013.

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

Statement of Assets and Liabilities

as of June 30, 2013 (Unaudited)
Assets
Investments: Investments in affiliated Underlying Funds, at value (cost $69,908,174)	$	70,345,617
Investments in non-affiliated Underlying Funds, at value (cost $14,928,553)		14,887,377
Total investments in securities, at value (cost $84,836,727)		85,232,994
Receivable for Fund shares sold		15,594
Due from Advisor		3,826
Other assets		478
Total assets		85,252,892
Liabilities
Payable for Fund shares redeemed		2,840
Accrued Trustees' fees		557
Other accrued expenses and payables		66,218
Total liabilities		69,615
Net assets, at value	$	85,183,277
Net Assets Consist of
Undistributed net investment income		568,567
Net unrealized appreciation (depreciation) on investments		396,267
Accumulated net realized gain (loss)		(1,456,164	)
Paid-in capital		85,674,607
Net assets, at value	$	85,183,277
Class A Net Asset Value, offering and redemption price per share ($11,040,405 ÷ 826,804 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.35
Class B Net Asset Value, offering and redemption price per share ($74,142,872 ÷ 5,549,641 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.36

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

Statement of Operations

for the six months ended June 30, 2013 (Unaudited)
Investment Income
Income: Income distributions from affiliated Underlying Funds	$	591,603
Dividends		199,210
Total income		790,813
Expenses: Management fee		150,470
Administration fee		39,941
Services to shareholders		1,106
Record keeping fees (Class B)		4,848
Distribution service fee (Class B)		86,580
Custodian fee		6,149
Audit and tax fees		25,250
Legal fees		10,077
Reports to shareholders		14,205
Trustees' fees and expenses		2,353
Other		1,249
Total expenses before expense reductions		342,228
Expense reductions		(155,795	)
Total expenses after expense reductions		186,433
Net investment income (loss)		604,380
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Sale of affiliated Underlying Funds		(310,854	)
Sale of non-affiliated Underlying Funds		79,648
Capital gain distributions from affiliated Underlying Funds		11,205
		(220,001	)
Change in net unrealized appreciation (depreciation) on investments		(2,248,398	)
Net gain (loss)		(2,468,399	)
Net increase (decrease) in net assets resulting from operations	$	(1,864,019	)

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income	$	604,380		$	1,351,274
Net realized gain (loss)		(220,001	)		(417,287	)
Change in net unrealized appreciation (depreciation)		(2,248,398	)		4,248,342
Net increase (decrease) in net assets resulting from operations		(1,864,019	)		5,182,329
Distributions to shareholders from: Net investment income: Class A		(218,625	)		(277,485	)
Class B		(1,281,892	)		(1,538,242	)
Net realized gains: Class A		—			(65,328	)
Class B		—			(390,800	)
Total distributions		(1,500,517	)		(2,271,855	)
Fund share transactions: Class A Proceeds from shares sold		2,569,612			3,873,528
Reinvestment of distributions		218,625			342,813
Payments for shares redeemed		(1,297,333	)		(1,854,054	)
Net increase (decrease) in net assets from Class A share transactions		1,490,904			2,362,287
Class B Proceeds from shares sold		18,289,425			21,887,200
Reinvestment of distributions		1,281,892			1,929,042
Payments for shares redeemed		(4,532,797	)		(5,211,663	)
Net increase (decrease) in net assets from Class B share transactions		15,038,520			18,604,579
Increase (decrease) in net assets		13,164,888			23,877,340
Net assets at beginning of period		72,018,389			48,141,049
Net assets at end of period (including undistributed net investment income of $568,567 and $1,464,704, respectively)	$	85,183,277		$	72,018,389
Other Information
Class A Shares outstanding at beginning of period		720,220			545,891
Shares sold		185,198			284,613
Shares issued to shareholders in reinvestment of distributions		15,638			25,795
Shares redeemed		(94,252	)		(136,079	)
Net increase (decrease) in Class A shares		106,584			174,329
Shares outstanding at end of period		826,804			720,220
Class B Shares outstanding at beginning of period		4,466,071			3,093,124
Shares sold		1,320,438			1,611,987
Shares issued to shareholders in reinvestment of distributions		91,630			145,041
Shares redeemed		(328,498	)		(384,081	)
Net increase (decrease) in Class B shares		1,083,570			1,372,947
Shares outstanding at end of period		5,549,641			4,466,071

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			Period Ended 12/31/09a
Selected Per Share Data
Net asset value, beginning of period	$	13.90		$	13.24		$	13.85		$	12.63		$	10.00
Income (loss) from investment operations: Net investment incomeb		.12			.33			.64			.46			.57
Net realized and unrealized gain (loss)		(.39	)		.93			(1.02	)		1.09			2.06
Total from investment operations		(.27	)		1.26			(.38	)		1.55			2.63
Less distributions from: Net investment income		(.28	)		(.49	)		(.19	)		(.18	)		—
Net realized gains		—			(.11	)		(.04	)		(.15	)		—
Total distributions		(.28	)		(.60	)		(.23	)		(.33	)		—
Net asset value, end of period	$	13.35		$	13.90		$	13.24		$	13.85		$	12.63
Total Return (%)c,d		(2.00	)**		9.72			(2.87	)		12.46			26.30	**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		11			10			7			5			1
Ratio of expenses before expense reductions (%)e		.63	*		.63			.61			.94			11.67	*
Ratio of expenses after expense reductions (%)e		.25	*		.30			.30			.21			.21	*
Ratio of net investment income (%)		1.74	*		2.46			4.72			3.51			5.39	*
Portfolio turnover rate (%)		9	**		22			39			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 Underlying Funds' expenses. e The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which the Fund is invested. This ratio does not include these indirect fees and expenses. * Annualized ** Not annualized

				Years Ended December 31,
Class B	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			Period Ended 12/31/09a
Selected Per Share Data
Net asset value, beginning of period	$	13.88		$	13.23		$	13.84		$	12.61		$	10.87
Income (loss) from investment operations: Net investment incomeb		.10			.30			.61			.42			.35
Net realized and unrealized gain (loss)		(.37	)		.91			(1.03	)		1.09			1.39
Total from investment operations		(.27	)		1.21			(.42	)		1.51			1.74
Less distributions from: Net investment income		(.25	)		(.45	)		(.15	)		(.13	)		—
Net realized gains		—			(.11	)		(.04	)		(.15	)		—
Total distributions		(.25	)		(.56	)		(.19	)		(.28	)		—
Net asset value, end of period	$	13.36		$	13.88		$	13.23		$	13.84		$	12.61
Total Return (%)c,d		(2.04	)**		9.36			(3.12	)		12.15			16.01	**
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		74			62			41			23			3
Ratio of expenses before expense reductions (%)e		.89	*		.88			.86			1.19			5.37	*
Ratio of expenses after expense reductions (%)e		.50	*		.55			.55			.46			.61	*
Ratio of net investment income (%)		1.48	*		2.25			4.47			3.26			4.66	*
Portfolio turnover rate (%)		9	**		22			39			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 Underlying Funds' expenses. e The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which the Fund is invested. This ratio does not include these indirect fees and expenses. * Annualized ** Not annualized

Notes to Financial Statements (Unaudited)

A. Organization and Significant Accounting Policies

DWS Alternative Asset Allocation 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 (i.e. mutual funds, exchange-traded funds and other pooled investment vehicles managed by Deutsche Investment Management Americas Inc. or one of its affiliates, together the ("Underlying DWS Funds"), non-affiliated exchange-traded funds ("Non-affiliated ETFs") and derivative investments. Non-affiliated 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 recordkeeping fees up to 0.15% and Rule 12b-1 fees under the 1940 Act equal to an annual rate of 0.25% of the average daily net assets of the Class B shares of the Fund. Class A shares are not subject to such fees.

Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares except that each class bears certain expenses unique to that class (including the applicable Rule 12b-1 fee). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.

The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.

Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading.

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

ETFs are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade 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.

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $446,000, which may be applied against realized net taxable capital gains indefinitely, including short-term losses ($68,000) and long-term losses ($378,000).

The Fund has reviewed the tax positions for the open tax years as of December 31, 2012 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 from net investment income of the Fund, if any, are declared and distributed to shareholders annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed and, therefore, will be distributed to shareholders at least annually. The Fund may also make additional distributions for tax purposes if necessary.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.

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

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

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

B. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of affiliated Underlying Funds (excluding money market funds) aggregated $17,904,356 and $4,977,045, respectively. Purchases and sales of non-affiliated Underlying Funds (excluding money market funds) aggregated $4,871,637 and $2,002,441, respectively.

C. Related Parties

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

QS Investors, LLC ("QS Investors") acted as an investment subadvisor to the Fund. As an investment subadvisor, QS Investors rendered strategic asset allocation services and managed the portion of assets allocated from time to time to the Fund's global tactical asset allocation overlay strategy. QS Investors was paid by the Advisor for the services QS Investors provided to the Fund. Effective July 12, 2013, QS Investors no longer acts as subadvisor to the Fund and day-to-day portfolio management of the Fund transitioned to DIMA.

RREEF America L.L.C. ("RREEF") acts as an investment subadvisor to the Fund. As an investment subadvisor to the Fund, RREEF provides investment management services to the portions of the Fund's portfolio allocated to direct investments in global real estate and global infrastructure securities. RREEF is paid by the Advisor for the services RREEF provides to the Fund. As of the date of this report, the Fund obtained its exposure to global real estate and global infrastructure securities indirectly through investments in other Underlying 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. For the six months ended June 30, 2013, 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, 2013 through September 30, 2013, 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 indirect expenses of Underlying Funds) of each class as follows:

Class A	.25%
Class B	.50%

For the six months ended June 30, 2013, the Advisor 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, 2013, the fee pursuant to the Investment Management Agreement aggregating $150,470, all of which was waived resulting in an annualized effective rate of 0.00% of the Fund's average daily net assets.

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, 2013, the Administration Fee was $39,941, of which $168 was waived and $8,448 is unpaid.

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, 2013, the amounts charged to the Fund by DISC were as follows:

Services to Shareholders	Total Aggregated		Waived
Class A	$	39	$	39
Class B		73		73
	$	112	$	112

In addition, for the six months ended June 30, 2013, the Advisor reimbursed $4,848 of non-affiliated recordkeeping fees.

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, 2013, the Distribution Service Fee aggregated $86,580, of which $197 was waived and $15,079 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, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $8,718, of which $7,105 is unpaid.

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

Affiliated Cash Management Vehicles. The Fund may invest uninvested cash balances in Central Cash Management Fund and DWS Variable NAV Money Fund, affiliated money market funds which are managed by the Advisor. Each affiliated money market fund seeks to provide a high level of current income consistent with liquidity and the preservation of capital. Each affiliated money market fund is managed in accordance with Rule 2a-7 under the Investment Company Act of 1940, which governs the quality, maturity, diversity and liquidity of instruments in which a money market fund may invest. Central Cash Management Fund seeks to maintain a stable net asset value, and DWS Variable NAV Money Fund maintains a floating net asset value. The Fund indirectly bears its proportionate share of the expenses of each affiliated money market fund in which it invests. Central Cash Management Fund does not pay the Advisor an investment management fee. To the extent that DWS Variable NAV Money Fund pays an investment management fee to the Advisor, the Advisor will waive an amount of the investment management fee payable to the Advisor by the Fund equal to the amount of the investment management fee payable on the Fund's assets invested in DWS Variable NAV Money Fund.

D. Ownership of the Fund

At June 30, 2013, one Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class A shares of the Fund, owning 99%. Two Participating Insurance Companies were the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 68% and 23%, respectively.

E. Transactions with Affiliates

The Fund mainly invest in Underlying DWS Funds and Non-affiliated ETFs. The Underlying DWS Funds in which the Fund invests are considered to be affiliated investments. A summary of the Fund's transactions with affiliated Underlying DWS Funds during the six months ended June 30, 2013 is as follows:

Affiliate	Value ($) at 12/31/2012		Purchases Cost ($)		Sales Cost ($)		Realized Gain/ (Loss) ($)			Income Distributions ($)		Capital Gain Distributions ($)		Value ($) at 6/30/2013
DWS Disciplined Market Neutral Fund		10,861,175		2,690,000		830,000		2,418			—		—		13,026,220
DWS Enhanced Commodity Strategy Fund		9,764,605		2,891,117		295,000		(127,589	)		81,117		—		11,395,831
DWS Enhanced Emerging Markets Fixed Income Fund		5,788,784		2,015,821		185,000		(8,692	)		130,821		—		6,994,871
DWS Floating Rate Fund		8,973,006		2,222,377		820,000		(4,426	)		232,377		—		10,363,567
DWS Global Inflation Fund		8,483,420		2,502,396		455,000		(30,956	)		32,396		—		9,587,204
DWS Gold & Precious Metals Fund		693,385		120,000		687,045		(150,316	)		—		—		—
DWS RREEF Global Infrastructure Fund		7,644,550		2,936,998		815,000		4,386			95,793		11,205		10,160,140
DWS RREEF Global Real Estate Securities Fund		6,354,589		1,663,574		890,000		4,321			18,574		—		7,216,278
PowerShares DB G10 Currency Harvest Fund		—		862,073		—		—			—		—		819,828
Central Cash Management Fund		772,008		16,619,880		16,610,210		—			525		—		781,678
Total		59,335,522		34,524,236		21,587,255		(310,854	)		591,603		11,205		70,345,617

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	980.00	$	979.60
Expenses Paid per $1,000*	$	1.23	$	2.45
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,023.55	$	1,022.32
Expenses Paid per $1,000*	$	1.25	$	2.51

* Expenses are equal to the Fund's annualized expense ratio for each share class, multiplied by the average account value over the period, multiplied by 181 (the number of days in the most recent six-month period), then divided by 365.

Annualized Expense Ratios**	Class A	Class B
DWS Variable Series II — DWS Alternative Asset Allocation VIP	.25%	.50%

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

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

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

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

September 17, 2012

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 2012, 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, 2009, 2010 and 2011.

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 103 mutual 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 "fallout" 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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2AAA-3 (R-028379-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Diversified International Equity VIP

(On July 12, 2013, DWS Diversified International Equity VIP

was renamed DWS Global Equity VIP)

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Management

5 Investment Portfolio

15 Statement of Assets and Liabilities

16 Statement of Operations

17 Statement of Changes in Net Assets

19 Financial Highlights

20 Notes to Financial Statements

25 Information About Your Fund's Expenses

26 Proxy Voting

27 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. The Fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 is 1.06% 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
		The MSCI AC World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The index consists of 45 country indices comprising 24 developed and 21 emerging market country indices. On July 12, 2013 the MSCI AC World Index replaced the MSCI EAFE Index as the fund's benchmark index because the Advisor believes that it more accurately reflects the fund's investment strategy. The MSCI EAFE Index is an unmanaged index that tracks international stock performance in the 22 developed markets of Europe, Australasia and the Far East. Returns reflect reinvestment of dividends net of withholding taxes. The index is calculated using closing local market prices and translates into U.S. 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	$	10,245		$	11,684		$	13,161		$	8,262		$	19,222
Class A	Average annual total return		2.45	%		16.84	%		9.59	%		-3.75	%		6.75	%
MSCI AC World Index	Growth of $10,000	$	10,605		$	11,657		$	14,186		$	11,205		$	20,776
MSCI AC World Index	Average annual total return		6.05	%		16.57	%		12.36	%		2.30	%		7.59	%
MSCI EAFE Index	Growth of $10,000	$	10,410		$	11,862		$	13,325		$	9,688		$	20,941
MSCI EAFE Index	Average annual total return		4.10	%		18.62	%		10.04	%		-0.63	%		7.67	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Common Stocks	91%	88%
Exchange-Traded Funds	8%	10%
Cash Equivalents	1%	2%
Preferred Stocks	0%	0%
	100%	100%

Sector Diversification (As a % of Common and Preferred Stocks)	6/30/13	12/31/12

Telecommunication Services	15%	15%
Financials	12%	13%
Health Care	12%	12%
Consumer Staples	12%	12%
Materials	9%	9%
Utilities	9%	8%
Industrials	9%	8%
Information Technology	8%	12%
Consumer Discretionary	8%	7%
Energy	6%	4%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/13	12/31/12

Continental Europe	43%	54%
Japan	19%	12%
Emerging Markets	9%	10%
Australia	9%	4%
Asia (excluding Japan)	8%	6%
Canada	6%	7%
United Kingdom	6%	7%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Effective July 12, 2013, QS Investors no longer serves as subadvisor to the fund and day-to-day portfolio management of the fund transitioned to Deutsche Investment Management Americas Inc.

The new portfolio management team for the fund is as follows:

Nils E. Ernst, PhD

Martin Berberich, CFA

Sebastian P. Werner, PhD

Portfolio Managers, Deutsche Investment Management Americas Inc.

Investment Portfolio June 30, 2013 (Unaudited)

	Shares			Value ($)

Common Stocks 89.7%
Australia 8.5%
AGL Energy Ltd.		26,092			344,212
ALS Ltd.		6,039			52,452
Amcor Ltd.		5,214			48,167
APA Group		41,176			224,685
Asciano Ltd.		18,887			86,234
Aurizon Holdings Ltd.		33,963			128,585
Australia & New Zealand Banking Group Ltd.		4,297			111,532
BHP Billiton Ltd.		9,023			260,000
Brambles Ltd.		23,983			204,106
Caltex Australia Ltd.		1,905			31,291
Coca-Cola Amatil Ltd.		4,702			54,449
Cochlear Ltd.		1,084			60,831
Commonwealth Bank of Australia		2,423			152,301
Crown Ltd.		18,867			207,140
CSL Ltd.		8,443			475,491
Echo Entertainment Group Ltd.		38,367			107,139
Flight Centre Ltd.		2,840			101,427
Harvey Norman Holdings Ltd.		27,391			63,431
Leighton Holdings Ltd.		3,250			45,479
National Australia Bank Ltd.		3,728			100,431
Newcrest Mining Ltd.		1,231			11,056
Origin Energy Ltd.		10,739			122,893
QBE Insurance Group Ltd.		2,452			33,841
Ramsay Health Care Ltd.		2,434			79,539
Rio Tinto Ltd.		1,738			82,551
Santos Ltd.		10,058			114,908
Seek Ltd.		5,723			47,201
Sonic Healthcare Ltd.		6,672			90,371
SP AusNet		77,545			82,964
TABCORP Holdings Ltd.		40,735			113,053
Tatts Group Ltd.		68,369			197,610
Telstra Corp., Ltd.		151,878			661,205
Toll Holdings Ltd.		15,282			73,975
Transurban Group		21,758			134,217
Treasury Wine Estates Ltd.		5,945			31,559
Wesfarmers Ltd.		7,527			271,483
Westfield Group (REIT) (Units)		2,462			25,682
Westpac Banking Corp.		4,868			127,441
Woodside Petroleum Ltd.		6,007			191,187
Woolworths Ltd.		9,063			270,904
WorleyParsons Ltd.		2,453			43,374
(Cost $5,120,196)					5,666,397
Austria 0.5%
Erste Group Bank AG		6,505			173,199
Immofinanz AG*		21,199			79,160
Raiffeisen Bank International AG		1,218			35,489
Vienna Insurance Group AG Wiener Versicherung Gruppe		1,323			61,260
(Cost $278,022)					349,108
Belgium 1.5%
Ageas		3,963			138,503
Anheuser-Busch InBev NV		3,560			315,826
Delhaize Group		593			36,450
Groupe Bruxelles Lambert SA		1,509			113,949
KBC Groep NV		3,926			145,212
	Shares			Value ($)

Solvay SA		1,060			138,670
Umicore SA		2,235			92,843
(Cost $558,526)					981,453
Bermuda 0.2%
Seadrill Ltd. (Cost $58,313)		3,256			131,333
Canada 5.8%
Agrium, Inc.		400			34,679
Alimentation Couche-Tard, Inc. "B"		1,500			88,999
Atco Ltd. "I"		1,800			74,263
Bank of Montreal		800			46,401
Bank of Nova Scotia		1,100			58,802
Barrick Gold Corp.		3,500			55,244
BCE, Inc.		3,000			123,001
Bell Aliant, Inc.		1,400			37,619
Bombardier, Inc. "B"		6,500			28,925
Brookfield Asset Management, Inc. "A"		1,000			35,942
Canadian Imperial Bank of Commerce		500			35,485
Canadian National Railway Co.		1,300			126,576
Canadian Natural Resources Ltd.		1,400			39,469
Canadian Pacific Railway Ltd.		500			60,630
Canadian Tire Corp., Ltd. "A"		500			37,644
Canadian Utilities Ltd. "A"		3,000			105,287
Cenovus Energy, Inc.		2,000			57,050
CGI Group, Inc. "A"*		4,900			143,501
Empire Co., Ltd. "A"		500			38,233
Enbridge, Inc.		1,400			58,851
First Quantum Minerals Ltd.		2,300			34,116
Fortis, Inc.		4,600			140,795
George Weston Ltd.		700			55,730
Gildan Activewear, Inc.		800			32,443
Goldcorp, Inc.		2,900			72,024
Loblaw Companies Ltd.		1,000			45,212
Magna International, Inc. "A"		1,106			78,725
Manulife Financial Corp.		2,600			41,607
Metro, Inc. "A"		900			60,314
National Bank of Canada		400			28,540
Open Text Corp.		1,600			109,385
Potash Corp. of Saskatchewan, Inc.		2,800			106,814
Research In Motion Ltd.*		10,800			113,781
Rogers Communications, Inc. "B"		4,100			160,616
Royal Bank of Canada		1,300			75,748
Saputo, Inc.		1,300			59,753
Shaw Communications, Inc. "B"		2,400			57,598
Shoppers Drug Mart Corp.		2,000			92,270
Silver Wheaton Corp.		1,100			21,557
SNC-Lavalin Group, Inc.		600			25,347
Sun Life Financial, Inc.		1,000			29,619
Suncor Energy, Inc.		2,020			59,542
Teck Resources Ltd. "B"		1,200			25,638
Telus Corp.		2,300			67,139
Thomson Reuters Corp. (a)		800			26,106
Thomson Reuters Corp. (a)		1,158			37,716
Tim Hortons, Inc.		1,000			54,084
Toronto-Dominion Bank		900			72,286
TransAlta Corp.		6,800			93,171
TransCanada Corp.		1,400			60,276
Valeant Pharmaceuticals International, Inc.*		7,400			638,045
	Shares			Value ($)

Yamana Gold, Inc.		1,100			10,491
(Cost $2,833,489)					3,873,089
Denmark 2.7%
A P Moller-Maersk AS "A"		7			47,150
A P Moller-Maersk AS "B"		18			128,757
Carlsberg AS "B"		4,293			383,177
Coloplast AS "B"		1,265			70,803
Danske Bank AS*		16,394			279,094
DSV AS		2,622			63,737
Novo Nordisk AS "B"		4,250			661,672
Novozymes AS "B"		2,348			75,107
Tryg AS		621			51,081
William Demant Holding AS*		291			24,061
(Cost $1,394,141)					1,784,639
Finland 2.1%
Kone Oyj "B"		1,396			110,663
Metso Corp.		1,104			37,407
Nokia Oyj*		110,035			409,863
Pohjola Bank PLC "A"		3,258			47,924
Sampo Oyj "A"		8,693			337,359
Stora Enso Oyj "R"		23,027			153,443
UPM-Kymmene Oyj		20,179			196,809
Wartsila Oyj		1,559			67,539
(Cost $868,260)					1,361,007
France 5.4%
Air Liquide SA		2,121			260,929
Arkema		421			38,440
AtoS		697			51,731
AXA SA		4,348			85,431
BNP Paribas SA		2,000			109,274
Cap Gemini		2,014			97,914
Carrefour SA		1,290			35,243
Cie de St-Gobain		755			30,390
Cie Generale des Etablissements Michelin		539			47,953
DANONE SA		1,275			95,626
Dassault Systemes SA		830			101,533
Electricite de France		2,181			50,608
Essilor International SA		1,351			143,654
European Aeronautic Defence & Space Co.		971			51,633
France Telecom SA		16,498			155,364
GDF Suez		12,916			251,840
Iliad SA		261			56,312
L'Oreal SA		574			93,850
Lafarge SA		1,520			92,973
LVMH Moet Hennessy Louis Vuitton SA		420			67,635
Pernod-Ricard SA		585			64,840
Renault SA		494			33,001
Sanofi		7,030			724,491
Schneider Electric SA		894			64,453
Societe Generale		1,549			52,745
Suez Environnement Co.		1,869			24,064
Technip SA		427			43,157
Total SA		6,625			323,064
Unibail-Rodamco SE (REIT)		265			61,446
Veolia Environnement		4,218			47,784
Vinci SA		944			47,095
Vivendi		10,503			197,937
(Cost $3,045,629)					3,602,410
	Shares			Value ($)

Germany 3.6%
Adidas AG		324			35,019
Allianz SE (Registered)		1,642			239,798
BASF SE		1,618			144,509
Bayer AG (Registered)		1,611			171,743
Bayerische Motoren Werke (BMW) AG		448			39,140
Beiersdorf AG		803			70,017
Commerzbank AG*		1,761			15,348
Continental AG		107			14,257
Daimler AG (Registered)		1,209			73,074
Deutsche Boerse AG		688			45,292
Deutsche Post AG (Registered)		2,615			64,985
Deutsche Telekom AG (Registered)		31,631			368,931
E.ON AG		14,726			241,631
Fresenius Medical Care AG & Co. KGaA		504			35,707
Fresenius SE & Co. KGaA		342			42,154
GEA Group AG		565			19,980
Henkel AG & Co. KGaA		790			61,917
Infineon Technologies AG		4,778			39,976
Linde AG		332			61,820
Merck KGaA		83			12,623
Metro AG		1,019			32,216
Muenchener Rueckversicherungs-Gesellschaft AG (Registered)		388			71,247
RWE AG		3,136			100,064
SAP AG		2,934			214,845
Siemens AG (Registered)		1,778			179,654
(Cost $1,771,234)					2,395,947
Hong Kong 3.0%
AIA Group Ltd.		23,000			96,659
Cathay Pacific Airways Ltd.		15,000			26,188
Cheung Kong (Holdings) Ltd.		5,000			67,574
Cheung Kong Infrastructure Holdings Ltd.		14,000			93,451
CLP Holdings Ltd.		35,000			282,589
Galaxy Entertainment Group Ltd.*		12,000			57,909
Hang Lung Properties Ltd.		5,000			17,359
Hang Seng Bank Ltd.		2,200			32,398
Hong Kong & China Gas Co., Ltd.		121,394			295,830
Hong Kong Exchanges & Clearing Ltd.		3,500			52,442
Hutchison Whampoa Ltd.		31,000	��		323,980
Li & Fung Ltd.		36,000			49,000
MTR Corp., Ltd.		17,500			64,066
Noble Group Ltd.		51,363			39,304
NWS Holdings Ltd.		30,000			45,638
Orient Overseas International Ltd.		5,000			32,027
Power Assets Holdings Ltd.		28,500			245,443
SJM Holdings Ltd.		12,000			28,907
Sun Hung Kai Properties Ltd.		5,000			64,285
Swire Pacific Ltd. "A"		2,000			23,953
Wharf Holdings Ltd.		3,000			24,978
(Cost $1,549,024)					1,963,980
Ireland 1.2%
CRH PLC (a)		20,956			424,688
CRH PLC (a)		12,486			252,696
Experian PLC		1,159			20,102
Shire PLC		2,843			90,189
(Cost $634,166)					787,675
	Shares			Value ($)

Italy 3.0%
Assicurazioni Generali SpA		6,464			112,801
Atlantia SpA		5,462			88,722
Enel Green Power SpA		16,188			33,582
Enel SpA (b)		58,620			183,760
Eni SpA		12,656			260,013
Fiat Industrial SpA		11,866			132,183
Fiat SpA*		19,601			135,846
Finmeccanica SpA*		3,437			17,121
Intesa Sanpaolo		70,157			112,260
Luxottica Group SpA		3,208			161,502
Pirelli & C. SpA		5,969			68,803
Prysmian SpA		3,776			70,206
Saipem SpA		1,195			19,335
Snam SpA		16,191			73,724
Telecom Italia SpA		369,240			256,458
Telecom Italia SpA (RSP)		230,121			127,160
Terna — Rete Elettrica Nationale SpA		14,939			62,070
UniCredit SpA		21,088			98,611
(Cost $1,957,857)					2,014,157
Japan 18.8%
AEON Co., Ltd.		5,200			68,270
Ajinomoto Co., Inc.		6,000			88,089
Alfresa Holdings Corp.		500			26,771
Asahi Group Holdings Ltd.		3,400			84,542
Asahi Kasei Corp.		15,000			99,226
Astellas Pharma, Inc.		4,800			261,394
Bridgestone Corp.		2,000			68,170
Canon, Inc.		5,100			167,503
Central Japan Railway Co.		300			36,789
Chubu Electric Power Co., Inc.		13,200			187,141
Chugai Pharmaceutical Co., Ltd.		2,300			47,683
Chugoku Electric Power Co., Inc.		6,300			99,204
Cosmo Oil Co., Ltd.*		28,000			51,667
Dai-ichi Life Insurance Co., Ltd.		16			23,158
Daiichi Sankyo Co., Ltd.		5,800			96,852
Dainippon Sumitomo Pharma Co., Ltd.		1,800			23,796
Daiwa House Industry Co., Ltd.		2,000			37,331
Daiwa Securities Group, Inc.		3,000			25,202
Denso Corp.		800			37,521
East Japan Railway Co.		1,300			101,069
Eisai Co., Ltd.		2,100			85,653
Electric Power Development Co., Ltd.		2,900			90,501
FANUC Corp.		600			87,004
Fast Retailing Co., Ltd.		100			33,732
Fuji Heavy Industries Ltd.		2,000			49,316
FUJIFILM Holdings Corp.		1,200			26,441
Fujitsu Ltd.		11,000			45,478
Hisamitsu Pharmaceutical Co., Inc.		700			35,660
Hitachi Ltd.		22,000			141,322
Hokkaido Electric Power Co., Inc.*		4,400			59,736
Hokuriku Electric Power Co.		2,800			44,074
Honda Motor Co., Ltd.		4,600			170,938
HOYA Corp.		1,400			28,726
Idemitsu Kosan Co., Ltd.		1,200			92,323
INPEX Corp.		84			351,168
ITOCHU Corp.		5,800			66,969
Japan Petroleum Exploration Co., Ltd.		1,600			64,938
	Shares			Value ($)

Japan Tobacco, Inc.		10,600			374,641
JFE Holdings, Inc.		3,900			85,620
JSR Corp.		2,900			58,663
JX Holdings, Inc.		87,920			426,438
Kansai Electric Power Co., Inc.*		15,900			218,359
Kao Corp.		4,500			153,141
KDDI Corp.		6,800			353,813
Keyence Corp.		310			98,937
Kikkoman Corp.		2,000			33,276
Kirin Holdings Co., Ltd.		10,000			157,056
Kobe Steel Ltd.*		23,000			28,528
Komatsu Ltd.		3,300			76,306
Kubota Corp.		4,000			58,071
Kuraray Co., Ltd.		5,600			78,607
Kyocera Corp.		900			91,615
Kyowa Hakko Kirin Co., Ltd.		3,000			33,942
Kyushu Electric Power Co., Inc.*		9,500			143,309
Lawson, Inc.		500			38,165
Marubeni Corp.		9,000			60,171
MEIJI Holdings Co., Ltd.		500			24,024
Miraca Holdings, Inc.		500			23,036
Mitsubishi Chemical Holdings Corp.		6,500			30,544
Mitsubishi Corp.		5,200			89,088
Mitsubishi Electric Corp.		7,000			65,579
Mitsubishi Estate Co., Ltd.		3,000			79,899
Mitsubishi Heavy Industries Ltd.		10,000			55,563
Mitsubishi Materials Corp.		11,000			38,712
Mitsubishi Tanabe Pharma Corp.		2,200			28,564
Mitsubishi UFJ Financial Group, Inc.		30,600			189,887
Mitsui & Co., Ltd.		6,600			82,925
Mitsui Fudosan Co., Ltd.		2,000			58,834
Mizuho Financial Group, Inc.		51,100			106,358
MS&AD Insurance Group Holdings, Inc.		1,300			33,062
Murata Manufacturing Co., Ltd.		1,000			76,133
Nintendo Co., Ltd.		500			58,989
Nippon Meat Packers, Inc.		2,000			30,594
Nippon Steel & Sumitomo Metal		57,000			154,046
Nippon Telegraph & Telephone Corp.		5,409			282,305
Nissan Motor Co., Ltd.		7,500			76,011
Nisshin Seifun Group, Inc.		3,000			35,938
Nissin Foods Holdings Co., Ltd.		700			28,339
Nitto Denko Corp.		1,600			102,937
Nomura Holdings, Inc.		8,800			65,211
NTT DoCoMo, Inc.		187			290,569
Olympus Corp.*		1,900			57,768
OMRON Corp.		1,600			47,744
Ono Pharmaceutical Co., Ltd.		700			47,503
ORIX Corp.		2,000			27,331
Osaka Gas Co., Ltd.		48,000			203,163
Otsuka Holdings KK		4,600			151,903
Panasonic Corp.*		3,100			24,915
Resona Holdings, Inc.		6,900			33,607
Ricoh Co., Ltd.		4,000			47,599
Santen Pharmaceutical Co., Ltd.		700			30,195
Seven & I Holdings Co., Ltd.		7,700			281,479
Shikoku Electric Power Co., Inc.*		4,200			76,069
Shin-Etsu Chemical Co., Ltd.		3,300			218,965
Shionogi & Co., Ltd.		3,900			81,406
Shiseido Co., Ltd.		3,500			52,063
Showa Shell Sekiyu KK		9,000			74,055
SMC Corp.		300			60,419
	Shares			Value ($)

SOFTBANK Corp.		12,100			706,500
Sony Corp.		1,300			27,506
Sumitomo Chemical Co., Ltd.		6,000			18,878
Sumitomo Corp.		5,100			63,616
Sumitomo Metal Mining Co., Ltd.		5,000			55,765
Sumitomo Mitsui Financial Group, Inc.		3,200			146,828
Sumitomo Mitsui Trust Holdings, Inc.		7,410			34,597
Sumitomo Realty & Development Co., Ltd.		1,000			39,883
Suzuken Co., Ltd.		900			30,310
Sysmex Corp.		1,000			65,444
Takeda Pharmaceutical Co., Ltd.		8,300			375,620
Terumo Corp.		1,400			69,670
Toho Gas Co., Ltd.		7,000			36,209
Tohoku Electric Power Co., Inc.*		10,000			125,255
Tokio Marine Holdings, Inc.		1,400			44,400
Tokyo Electric Power Co., Inc.*		31,100			160,649
Tokyo Electron Ltd.		1,000			50,622
Tokyo Gas Co., Ltd.		57,000			315,469
TonenGeneral Sekiyu KK		15,000			145,351
Toray Industries, Inc.		15,000			97,108
Toshiba Corp.		21,000			101,015
Toyo Suisan Kaisha Ltd.		1,000			33,330
Toyota Motor Corp.		6,000			362,288
Unicharm Corp.		900			50,911
Yahoo Japan Corp.		90			44,473
Yakult Honsha Co., Ltd.		700			29,010
(Cost $10,768,602)					12,528,053
Luxembourg 0.5%
ArcelorMittal		7,780			86,723
Millicom International Cellular SA (SDR)		2,289			165,034
Tenaris SA		1,718			34,567
(Cost $296,693)					286,324
Macau 0.1%
Sands China Ltd.		11,200			52,599
Wynn Macau Ltd.		9,200			24,775
(Cost $29,914)					77,374
Netherlands 5.1%
AEGON NV		13,027			86,967
Akzo Nobel NV		2,534			142,338
ASML Holding NV		6,883			539,999
Corio NV (REIT)		729			28,905
DE Master Blenders 1753 NV*		1,545			24,735
Gemalto NV		1,607			145,502
Heineken Holding NV		499			27,952
Heineken NV		780			49,587
ING Groep NV (CVA)*		27,123			247,842
Koninklijke (Royal) KPN NV		223,027			461,262
Koninklijke Ahold NV		4,171			61,965
Koninklijke DSM NV		1,774			115,417
Koninklijke Philips NV		5,110			139,189
Koninklijke Vopak NV		374			22,052
Randstad Holding NV		918			37,485
Reed Elsevier NV		15,755			261,326
Royal Dutch Shell PLC "A"		3,196			101,988
Royal Dutch Shell PLC "B"		2,331			77,088
Unilever NV (CVA)		4,999			196,095
Wolters Kluwer NV		7,591			160,084
	Shares			Value ($)

Ziggo NV		11,865			473,661
(Cost $2,716,360)					3,401,439
Norway 2.0%
DnB ASA		20,390			294,569
Gjensidige Forsikring ASA		5,213			76,568
Norsk Hydro ASA		39,308			156,558
Statoil ASA		8,217			169,397
Telenor ASA		17,773			352,324
Yara International ASA		7,548			300,972
(Cost $880,800)					1,350,388
Singapore 4.1%
CapitaLand Ltd.		20,000			48,310
ComfortDelGro Corp., Ltd.		29,000			41,730
DBS Group Holdings Ltd.		8,000			97,385
Genting Singapore PLC		175,000			181,500
Global Logistic Properties Ltd.		17,000			36,674
Golden Agri-Resources Ltd.		381,000			167,372
Hutchison Port Holdings Trust (Units)		63,000			46,302
Jardine Cycle & Carriage Ltd.		3,000			100,607
Keppel Corp., Ltd.		15,400			125,925
Olam International Ltd. (b)		76,000			98,162
Oversea-Chinese Banking Corp., Ltd.		14,000			109,923
SembCorp Industries Ltd.		16,000			62,178
SembCorp Marine Ltd.		8,000			27,117
Singapore Airlines Ltd.		6,000			47,998
Singapore Exchange Ltd.		7,000			38,651
Singapore Press Holdings Ltd.		54,000			177,261
Singapore Technologies Engineering Ltd.		15,000			49,343
Singapore Telecommunications Ltd.		127,000			376,100
Singapore Telecommunications Ltd.		150,000			443,682
StarHub Ltd.		25,000			82,439
United Overseas Bank Ltd.		7,000			109,191
Wilmar International Ltd.		94,000			232,594
(Cost $2,172,351)					2,700,444
Spain 3.7%
Abertis Infraestructuras SA		7,238			125,713
ACS, Actividades de Construccion y Servicios SA		2,511			66,205
Amadeus IT Holding SA "A"		12,463			398,122
Banco Bilbao Vizcaya Argentaria SA		12,973			108,029
Banco Santander SA		26,579			168,269
Enagas SA		2,258			55,777
Ferrovial SA		7,677			122,648
Gas Natural SDG SA		3,160			63,449
Iberdrola SA		38,478			201,948
Inditex SA		2,822			348,101
Red Electrica Corporacion SA		963			52,819
Repsol SA		17,632			371,703
Telefonica SA*		27,672			356,059
Zardoya Otis SA		3,050			43,083
(Cost $1,933,844)					2,481,925
Sweden 5.4%
Assa Abloy AB "B"		1,207			47,053
Atlas Copco AB "A"		2,084			50,050
Electrolux AB "B"		1,087			27,487
Elekta AB "B"		12,323			187,420
	Shares			Value ($)

Getinge AB "B"		6,438			195,173
Hennes & Mauritz AB "B"		5,804			190,047
Hexagon AB "B"		5,262			140,337
Husqvarna AB "B"		4,852			25,528
Investor AB "B"		3,056			81,771
Nordea Bank AB		10,270			114,241
Sandvik AB		3,095			36,855
Skandinaviska Enskilda Banken AB "A"		4,035			38,389
Skanska AB "B"		1,724			28,488
SKF AB "B"		1,279			29,807
Svenska Cellulosa AB "B"		22,492			563,133
Svenska Handelsbanken AB "A"		1,999			79,930
Swedbank AB "A"		2,795			63,790
Swedish Match AB		8,091			286,043
Tele2 AB "B"		12,231			143,107
Telefonaktiebolaget LM Ericsson "B"		62,244			705,681
TeliaSonera AB		81,015			526,388
Volvo AB "B"		2,677			35,680
(Cost $3,070,182)					3,596,398
Switzerland 5.9%
ABB Ltd. (Registered)*		6,008			129,706
Adecco SA (Registered)*		407			23,103
Aryzta AG*		598			33,532
Compagnie Financiere Richemont SA "A"		1,918			168,250
Credit Suisse Group AG (Registered)		3,051			80,890
Geberit AG (Registered)		147			36,394
Givaudan SA (Registered)*		42			54,235
Glencore Xstrata PLC		25,800			107,327
Holcim Ltd. (Registered)*		980			68,387
Nestle SA (Registered)		12,515			818,562
Novartis AG (Registered)		5,844			414,161
Roche Holding AG (Genusschein)		1,812			448,985
SGS SA (Registered)		29			62,152
Sika AG (Bearer)		9			23,237
STMicroelectronics NV		8,506			76,068
Swatch Group AG (Bearer)		87			47,668
Swiss Re AG.*		723			53,557
Swisscom AG (Registered)		2,001			874,439
Syngenta AG (Registered)		395			154,045
UBS AG (Registered)*		5,885			99,976
Wolseley PLC		878			40,636
Zurich Insurance Group AG*		398			103,145
(Cost $2,158,091)					3,918,455
United Kingdom 6.2%
Anglo American PLC		4,058			78,415
ARM Holdings PLC		22,472			271,907
AstraZeneca PLC		5,312			251,279
BAE Systems PLC		8,559			50,025
Barclays PLC		8,467			36,296
BG Group PLC		3,267			55,758
BHP Billiton PLC		5,678			145,836
BP PLC		14,756			102,365
British American Tobacco PLC		1,714			88,020
British Sky Broadcasting Group PLC		1,048			12,646
BT Group PLC		34,124			159,688
Capita PLC		1,652			24,340
	Shares			Value ($)

Centrica PLC		18,856			103,484
Diageo PLC		2,700			77,445
GlaxoSmithKline PLC		20,289			507,566
HSBC Holdings PLC		12,924			133,933
Imperial Tobacco Group PLC		836			29,047
Inmarsat PLC		3,673			37,695
International Consolidated Airlines Group SA*		16,625			66,425
Kingfisher PLC		2,564			13,422
Lloyds Banking Group PLC*		35,330			34,060
National Grid PLC		14,501			164,028
Pearson PLC		2,051			36,417
Prudential PLC		3,097			50,914
Reckitt Benckiser Group PLC		814			57,704
Reed Elsevier PLC		2,666			30,379
Rio Tinto PLC		3,426			140,420
Rolls-Royce Holdings PLC*		5,596			96,824
SABMiller PLC		790			38,014
Severn Trent PLC		719			18,132
Smith & Nephew PLC		4,043			45,058
Smiths Group PLC		1,710			34,119
SSE PLC		3,756			86,713
Standard Chartered PLC		1,687			36,422
Subsea 7 SA*		3,151			55,136
Tesco PLC		10,251			51,514
The Sage Group PLC		24,217			125,597
Unilever PLC		1,529			62,095
United Utilities Group PLC		2,852			29,623
Vodafone Group PLC		230,436			661,286
WPP PLC		2,440			41,686
(Cost $2,823,925)					4,141,733
United States 0.4%
Catamaran Corp.* (Cost $259,598)		5,300			257,970
Total Common Stocks (Cost $47,179,217)					59,651,698

Preferred Stocks 0.2%
Germany
Henkel AG & Co. KGaA		1,058			99,279
Volkswagen AG		123			24,832
Total Preferred Stocks (Cost $37,424)					124,111

Exchange-Traded Funds 8.4%
Emerging Markets
iShares MSCI Emerging Markets Index Fund (b)		73,000			2,815,610
Vanguard FTSE Emerging Markets Fund		71,400			2,768,892
Total Exchange-Traded Funds (Cost $4,637,577)					5,584,502

Securities Lending Collateral 4.6%
Daily Assets Fund Institutional, 0.10% (c) (d) (Cost $3,080,040)		3,080,040			3,080,040

Cash Equivalents 0.4%
Central Cash Management Fund, 0.07% (c) (Cost $276,960)		276,960			276,960

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $55,211,218)†		103.3			68,717,311
Other Assets and Liabilities, Net		(3.3	)		(2,172,093	)
Net Assets		100.0			66,545,218

* Non-income producing security.

† The cost for federal income tax purposes was $55,497,976. At June 30, 2013, net unrealized appreciation for all securities based on tax cost was $13,219,335. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $15,795,680 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,576,345.

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

(b) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of securities loaned at June 30, 2013 amounted to $3,013,676, which is 4.5% 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.

CVA: Certificaten Van Aandelen (Certificate of Stock)

FTSE: Financial Times and the London Stock Exchange

MSCI: Morgan Stanley Capital International

REIT: Real Estate Investment Trust

RSP: Risparmio (Convertible Savings Shares)

SDR: Swedish Depositary Receipt

At June 30, 2013, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
Euro Stoxx 50 Index	EUR	9/20/2013		18		608,703		(22,000	)
FTSE 100 Index	GBP	9/20/2013		1		93,713		(2,512	)
Nikkei 225 Index	USD	9/12/2013		4		276,800		3,784
SPI 200 Index	AUD	9/19/2013		2		218,074		(2,200	)
Total net unrealized depreciation								(22,928	)

Currency Abbreviations

AUD Australian 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 Stocks and Preferred Stocks (e)
Australia	$	—		$	5,666,397	$	—	$	5,666,397
Austria		—			349,108		—		349,108
Belgium		—			981,453		—		981,453
Bermuda		—			131,333		—		131,333
Canada		3,873,089			—		—		3,873,089
Denmark		—			1,784,639		—		1,784,639
Finland		—			1,361,007		—		1,361,007
France		—			3,602,410		—		3,602,410
Germany		—			2,520,058		—		2,520,058
Hong Kong		—			1,963,980		—		1,963,980
Ireland					787,675		—		787,675
Italy		—			2,014,157		—		2,014,157
Japan		—			12,528,053		—		12,528,053
Luxembourg		—			286,324		—		286,324
Macau		—			77,374		—		77,374
Netherlands		—			3,401,439		—		3,401,439
Norway		—			1,350,388		—		1,350,388
Singapore		—			2,700,444		—		2,700,444
Spain		—			2,481,925		—		2,481,925
Sweden		—			3,596,398		—		3,596,398
Switzerland		—			3,918,455		—		3,918,455
United Kingdom		—			4,141,733		—		4,141,733
United States		257,970			—		—		257,970
Exchange-Traded Funds		5,584,502			—		—		5,584,502
Short-Term Investments (e)		3,357,000			—		—		3,357,000
Derivatives (f) Futures Contracts		3,784			—		—		3,784
Total	$	13,076,345		$	55,644,750	$	—	$	68,721,095
Liabilities
Derivatives (f) Futures Contracts	$	(26,712	)	$	—	$	—	$	(26,712	)
Total	$	(26,712	)	$	—	$	—	$	(26,712	)

There have been no transfers between fair value measurement levels during the period ended June 30, 2013.

(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, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $51,854,218) — including $3,013,676 of securities loaned	$	65,360,311
Investment in Daily Assets Fund Institutional (cost $3,080,040)*		3,080,040
Investment in Central Cash Management Fund (cost $276,960)		276,960
Total investments in securities, at value (cost $55,211,218)		68,717,311
Foreign currency, at value (cost $725,372)		708,545
Deposits with broker for futures contracts		144,547
Receivable for investments sold		9,785
Receivable for Fund shares sold		401
Dividends receivable		131,550
Interest receivable		4,104
Foreign taxes recoverable		63,956
Other assets		432
Total assets		69,780,631
Liabilities
Payable upon return of securities loaned		3,080,040
Payable for Fund shares redeemed		27,328
Payable for variation margin on futures contracts		22,928
Accrued management fee		33,360
Accrued Trustees' fees		228
Other accrued expenses and payables		71,529
Total liabilities		3,235,413
Net assets, at value	$	66,545,218
Net Assets Consist of
Undistributed net investment income		980,681
Net unrealized appreciation (depreciation) on: Investments		13,506,093
Futures		(22,928	)
Foreign currency		(21,353	)
Accumulated net realized gain (loss)		(62,254,077	)
Paid-in capital		114,356,802
Net assets, at value	$	66,545,218
Class A Net Asset Value, offering and redemption price per share ($66,545,218 ÷ 8,359,079 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	7.96

* 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, 2013 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $156,353)	$	1,408,018
Interest		290
Income distributions — Central Cash Management Fund		430
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		56,743
Total income		1,465,481
Expenses: Management fee		222,173
Administration fee		34,180
Services to shareholders		569
Custodian fee		18,685
Legal fees		8,272
Audit and tax fees		28,930
Reports to shareholders		14,353
Trustees' fees and expenses		2,250
Other		15,172
Total expenses before expense reductions		344,584
Expense reductions		(5,951	)
Total expenses after expense reductions		338,633
Net investment income		1,126,848
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		2,347,497
Futures		78,186
Foreign currency		1,032
		2,426,715
Change in net unrealized appreciation (depreciation) on: Investments		(1,863,820	)
Futures		(27,008	)
Foreign currency		(21,381	)
		(1,912,209	)
Net gain (loss)		514,506
Net increase (decrease) in net assets resulting from operations	$	1,641,354

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income	$	1,126,848		$	1,605,589
Net realized gain (loss)		2,426,715			337,693
Change in net unrealized appreciation (depreciation)		(1,912,209	)		8,562,569
Net increase (decrease) in net assets resulting from operations		1,641,354			10,505,851
Distributions to shareholders from: Net investment income: Class A		(1,676,904	)		(1,885,705	)
Total distributions		(1,676,904	)		(1,885,705	)
Fund share transactions: Class A Proceeds from shares sold		2,211,362			2,442,886
Reinvestment of distributions		1,676,904			1,885,705
Payments for shares redeemed		(4,294,300	)		(10,767,707	)
Net increase (decrease) in net assets from Class A share transactions		(406,034	)		(6,439,116	)
Increase (decrease) in net assets		(441,584	)		2,181,030
Net assets at beginning of period		66,986,802			64,805,772
Net assets at end of period (including undistributed net investment income of $980,681 and $1,530,737, respectively)	$	66,545,218		$	66,986,802
Other Information
Class A Shares outstanding at beginning of period		8,411,945			9,288,789
Shares sold		267,221			334,743
Shares issued to shareholders in reinvestment of distributions		202,769			258,316
Shares redeemed		(522,856	)		(1,469,903	)
Net increase (decrease) in Class A shares		(52,866	)		(876,844	)
Shares outstanding at end of period		8,359,079			8,411,945

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	7.96		$	6.98		$	8.08		$	7.45		$	6.22		$	16.76
Income (loss) from investment operations: Net investment incomea		.13			.18			.19			.14			.12			.33	c
Net realized and unrealized gain (loss)		.07			1.01			(1.14	)		.66			1.51			(6.67	)
Total from investment operations		.20			1.19			(.95	)		.80			1.63			(6.34	)
Less distributions from: Net investment income		(.20	)		(.21	)		(.15	)		(.17	)		(.40	)		(.13	)
Net realized gains		—			—			—			—			—			(4.07	)
Total distributions		(.20	)		(.21	)		(.15	)		(.17	)		(.40	)		(4.20	)
Net asset value, end of period	$	7.96		$	7.96		$	6.98		$	8.08		$	7.45		$	6.22
Total Return (%)		2.45	b**		17.34			(12.07	)		10.93			29.36			(48.81	)b,d
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		67			67			65			83			86			91
Ratio of expenses before expense reductions (%)		1.01	*		1.02			1.03			.99			.94			1.02
Ratio of expenses after expense reductions (%)		.99	*		1.02			1.03			.99			.94			1.01
Ratio of net investment income (%)		3.30	*		2.46			2.44			1.90			1.89			3.04	c
Portfolio turnover rate (%)		22	**		18			26			14			139			132
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reimbursed. c 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. 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 0.14% lower. * 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. On July 12, 2013, the Fund was renamed DWS Global Equity VIP.

Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading.

Equity securities and exchange-traded funds ("ETFs") are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade 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.

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

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors 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.

Securities Lending. Deutsche Bank AG, as lending agent, lends securities of the Fund to certain financial institutions under the terms of the Security Lending Agreement. The Fund retains the benefits of owning the securities it has loaned and continues to receive interest and dividends generated by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of either cash or liquid, unencumbered assets having a value at least equal to the value of the securities loaned. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of borrower rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may be risks of delay and costs in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. If the Fund is not able to recover securities lent, the Fund may sell the collateral and purchase a replacement investment in the market, incurring the risk that the value of the replacement security is greater than the value of the collateral. The Fund is also subject to all investment risks associated with the reinvestment of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.

As of June 30, 2013, the Fund had securities on loan with a gross value of $3,013,676. The value of the related collateral, $3,080,040, exceeded the value of the securities loaned at period end.

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

Net realized and unrealized gains and losses on foreign currency transactions represent net gains and losses between trade and settlement dates on securities transactions, the acquisition and disposition of foreign currencies, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. That portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed but is included with net realized and unrealized gain/appreciation and loss/depreciation on investments.

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

Additionally, the Fund may be subject to taxes imposed by the governments of countries in which it invests and are generally based on income and/or capital gains earned or repatriated. Estimated tax liabilities on certain foreign securities are recorded on an accrual basis and are reflected as components of interest income or net change in unrealized gain/loss on investments. Tax liabilities realized as a result of security sales are reflected as a component of net realized gain/loss on investments.

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

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $64,369,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($25,205,000) and December 31, 2017 ($39,164,000), the respective expiration dates, whichever occurs first.

In addition, from November 1, 2012 through December 31, 2012, the Fund elects to defer qualified late year losses of approximately $108,000 of net long-term realized capital losses and treat them as arising in the fiscal year ending December 31, 2013.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in foreign denominated investments, investments in futures contracts, income received from passive foreign investment companies and 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

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 disclosed in the Statement of Assets and Liabilities.

The following table summarizes the value of the Fund's derivative instruments held as of June 30, 2013 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)		$	3,784

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		Futures Contracts
Equity Contracts (a)		$	(26,712	)

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

(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.

Additionally, the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the six months ended June 30, 2013 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)		Futures Contracts
Equity Contracts (a)		$	78,186

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)		$	(27,008	)

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, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $14,864,235 and $15,793,563, respectively.

D. 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.

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

For the period from January 1, 2013 through September 30, 2013, the Advisor has contractually agreed to waive its fees 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) of Class A shares at 0.99%.

Accordingly, for the six months ended June 30, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $5,895, and the amount charged aggregated $216,278, which was equivalent to an annualized effective rate of 0.63% of the Fund's average daily net assets.

Securities Lending Fees. Effective February 7, 2013, Deutsche Bank AG serves as lending agent for the Fund. For the period from February 7, 2013 through June 30, 2013, the Fund incurred lending agent fees to Deutsche Bank AG in the amount of $6,119.

E. 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.

F. Ownership of the Fund

At June 30, 2013, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 47%, 28% and 24%.

G. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 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, 2013.

H. Changes to Fund Name, Portfolio Management Team and Investment Strategies

On July 12, 2013, DWS Diversified International Equity VIP changed its name to DWS Global Equity VIP, and QS Investors, LLC no longer acts as subadvisor to the Fund. In addition, effective at that time, the Fund's portfolio management team changed and certain changes were made to the Fund's investment strategies and portfolio management process. More details regarding these changes are set forth in the Fund's prospectus dated July 12, 2013.

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges 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 ben 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,024.50
Expenses Paid per $1,000*	$	4.97
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,019.89
Expenses Paid per $1,000*	$	4.96

* Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181 (the number of days in the most recent six-month period), then divided by 365.

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Diversified International Equity VIP	.99%

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2DIE-3 (R-028380-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Global Growth VIP

(formerly DWS Global Thematic VIP)

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management

7 Investment Portfolio

13 Statement of Assets and Liabilities

14 Statement of Operations

15 Statement of Changes in Net Assets

16 Financial Highlights

18 Notes to Financial Statements

23 Information About Your Fund's Expenses

24 Proxy Voting

25 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. The fund may lend securities to approved institutions. Smaller company stocks tend to be more volatile than medium-sized or large company stocks. Stocks may decline in value. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 1.42% 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.

Effective May 1, 2013, the Fund's investment strategies changed and the Fund seeks to achieve its objective by allocating its assets among a global growth sleeve and a small cap growth sleeve. The Fund's past performance may have been different if the Fund had been managed using the current investment strategies.

Growth of an Assumed $10,000 Investment in DWS Global Growth VIP
		The Morgan Stanley Capital International (MSCI) World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The index consists of 24 developed market country indices. The index is calculated using closing local market prices and translates into U.S. dollars using the London close foreign exchange rates. 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 Growth VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,464		$	11,805		$	13,234		$	10,318		$	21,273
Class A	Average annual total return		4.64	%		18.05	%		9.79	%		0.63	%		7.84	%
MSCI World Index	Growth of $10,000	$	10,843		$	11,858		$	14,705		$	11,425		$	20,127
MSCI World Index	Average annual total return		8.43	%		18.58	%		13.72	%		2.70	%		7.25	%
DWS Global Growth VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	10,448		$	11,772		$	13,102		$	10,138		$	20,519
Class B	Average annual total return		4.48	%		17.72	%		9.42	%		0.28	%		7.45	%
MSCI World Index	Growth of $10,000	$	10,843		$	11,858		$	14,705		$	11,425		$	20,127
MSCI World Index	Average annual total return		8.43	%		18.58	%		13.72	%		2.70	%		7.25	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Common Stocks	97%	97%
Cash Equivalents	2%	1%
Participatory Notes	1%	0%
Preferred Stock	—	2%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/13	12/31/12

Industrials	20%	13%
Financials	14%	14%
Information Technology	14%	15%
Consumer Staples	13%	8%
Health Care	13%	12%
Consumer Discretionary	12%	10%
Energy	9%	8%
Materials	4%	13%
Telecommunication Services	1%	4%
Utilities	—	3%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/13	12/31/12

United States	48%	37%
Continental Europe	26%	31%
Asia (excluding Japan)	9%	10%
United Kingdom	7%	2%
Canada	5%	6%
Latin America	2%	6%
Japan	2%	3%
Nigeria	1%	0%
Africa	—	2%
Middle East	—	2%
Bermuda	—	1%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Joseph Axtell, CFA

Lead Portfolio Manager

Rafaelina M. Lee

Reid Galas, CFA

Nils E. Ernst, PhD

Martin Berberich, CFA

Sebastian P. Werner, PhD

Portfolio Managers

Investment Portfolio June 30, 2013 (Unaudited)

	Shares		Value ($)

Common Stocks 96.8%
Austria 0.0%
ams AG (Cost $17,728)		194		14,322
Belgium 1.0%
Anheuser-Busch InBev NV (Cost $523,675)		5,500		487,934
Bermuda 0.2%
Lazard Ltd. "A" (a) (Cost $81,931)		3,434		110,403
Canada 4.2%
Brookfield Asset Management, Inc. "A"		23,000		826,662
Canadian Pacific Railway Ltd.		6,400		776,069
Goldcorp, Inc.		13,000		321,490
SunOpta, Inc.*		13,881		105,357
(Cost $2,271,988)				2,029,578
China 0.2%
Minth Group Ltd. (Cost $130,583)		74,438		116,926
Cyprus 0.2%
Prosafe SE (Cost $100,805)		10,632		93,141
Denmark 0.2%
GN Store Nord A/S (Cost $109,509)		5,936		112,070
Finland 0.6%
Stora Enso Oyj "R" (Cost $283,996)		40,000		266,545
France 3.9%
Edenred		14,000		428,243
Etablissements Maurel et Prom (a)		14,000		208,007
JC Decaux SA		3,606		98,290
LVMH Moet Hennessy Louis Vuitton SA		2,300		370,383
Pernod-Ricard SA (a)		7,000		775,867
(Cost $2,010,094)				1,880,790
Germany 4.8%
BASF SE		5,250		468,894
Fresenius Medical Care AG & Co. KGaA		12,000		850,168
Gerresheimer AG		1,472		85,066
SAP AG		5,100		373,452
Stada Arzneimittel AG		9,300		399,374
United Internet AG (Registered)		5,251		147,995
(Cost $2,332,992)				2,324,949
Hong Kong 0.7%
K Wah International Holdings Ltd.		259,956		118,324
REXLot Holdings Ltd.		1,480,479		96,947
Techtronic Industries Co.		43,264		103,240
(Cost $368,087)				318,511
India 1.4%
ICICI Bank Ltd. (ADR) (a) (Cost $805,229)		17,500		669,375
Indonesia 2.4%
PT Arwana Citramulia Tbk		246,103		79,177
PT Ciputra Property Tbk		648,933		77,181
	Shares		Value ($)

PT Gudang Garam Tbk		85,000		432,070
PT Indofood CBP Sukses Makmur Tbk		450,000		551,940
(Cost $1,149,198)				1,140,368
Ireland 2.8%
C&C Group PLC		17,419		94,445
Experian PLC		27,000		468,303
Paddy Power PLC		1,652		141,751
Ryanair Holdings PLC (ADR) (a)		2,934		151,189
Shire PLC		15,000		475,845
(Cost $1,307,994)				1,331,533
Italy 0.8%
Prysmian SpA		4,974		92,481
Unipol Gruppo Finanziario SpA		90,000		294,567
(Cost $418,136)				387,048
Japan 1.8%
Ai Holdings Corp.		6,065		53,451
Avex Group Holdings, Inc.		3,864		121,755
Hajime Construction Co., Ltd.		2,215		123,293
Kusuri No Aoki Co., Ltd.		1,548		102,082
MISUMI Group, Inc.		2,378		65,020
Nippon Seiki Co., Ltd.		9,059		117,017
OSG Corp.		1,078		16,185
Sumikin Bussan Corp.		3,535		9,695
United Arrows Ltd.		3,891		163,015
Universal Entertainment Corp.		5,155		91,215
(Cost $934,020)				862,728
Korea 1.1%
Hyundai Motor Co. (Cost $506,661)		2,600		510,804
Luxembourg 0.6%
Millicom International Cellular SA (SDR) (Cost $359,124)		4,300		310,024
Malaysia 1.3%
CIMB Group Holdings Bhd.		4,900		12,692
Hartalega Holdings Bhd.		67,619		136,739
IHH Healthcare Bhd.*		350,000		437,524
Tune Ins Holdings Bhd.*		86,331		50,432
(Cost $665,517)				637,387
Mexico 2.0%
Fomento Economico Mexicano SAB de CV (ADR) (a)		7,000		722,330
Grupo Aeroportuario del Sureste SAB de CV (ADR) (a)		2,000		222,480
(Cost $1,042,663)				944,810
Netherlands 2.0%
ASML Holding NV		7,000		549,178
Brunel International NV		2,130		89,675
Chicago Bridge & Iron Co. NV (c)		1,989		118,664
Koninklijke Vopak NV		1,654		97,522
SBM Offshore NV*		7,554		126,450
(Cost $945,174)				981,489
Norway 0.5%
DNO International ASA* (Cost $240,816)		135,000		246,315
	Shares		Value ($)

Panama 0.2%
Banco Latinoamericano de Comercio Exterior SA "E" (Cost $95,542)		4,262		95,426
Philippines 1.3%
Alliance Global Group, Inc.*		196,669		105,209
GT Capital Holdings, Inc.		5,556		101,810
House of Investments, Inc.		67,997		11,792
Metropolitan Bank & Trust		155,000		395,626
(Cost $734,863)				614,437
Russia 0.9%
Sberbank of Russia (ADR) (b)		22,119		253,926
Sberbank of Russia (ADR) (b)		17,881		203,875
(Cost $504,773)				457,801
Singapore 0.5%
ARA Asset Management Ltd.		37,216		50,914
Lian Beng Group Ltd.		275,053		112,478
Yongnam Holdings Ltd.		317,588		86,191
(Cost $252,135)				249,583
Spain 0.3%
Mapfre SA (Cost $185,754)		50,000		161,749
Sweden 4.8%
Meda AB "A"		31,000		349,275
Svenska Cellulosa AB "B"		20,000		500,741
Swedish Match AB		18,000		636,358
Telefonaktiebolaget LM Ericsson "B"		40,000		453,493
Volvo AB "B"		30,000		399,847
(Cost $2,311,632)				2,339,714
Switzerland 2.4%
Dufry AG (Registered)*		712		86,149
Nestle SA (Registered)		8,000		523,251
OC Oerlikon Corp. AG (Registered)*		4,566		53,871
Pentair Ltd. (Registered) (c)		9,000		519,210
(Cost $1,192,863)				1,182,481
Thailand 0.1%
Malee Sampran Factory PCL (Foreign Registered) (Cost $72,605)		33,400		36,615
Turkey 0.6%
Emlak Konut Gayrimenkul Yatirim Ortakligi AS (REIT)		100,000		140,774
Turkiye Halk Bankasi AS		20,000		169,056
(Cost $407,986)				309,830
United Kingdom 6.1%
Aveva Group PLC		15,000		515,643
Babcock International Group PLC		8,656		145,741
BP PLC		100,000		693,717
Burberry Group PLC		3,645		75,194
Crest Nicholson Holdings PLC*		11,257		54,758
Domino's Pizza Group PLC		9,879		101,032
Essentra PLC		7,700		81,978
Hargreaves Lansdown PLC		6,942		93,368
HellermannTyton Group PLC*		24,491		96,430
IG Group Holdings PLC		11,488		101,644
Intertek Group PLC		15,000		668,393
	Shares		Value ($)

John Wood Group PLC		8,030		99,209
Rotork PLC		2,366		95,718
Spirax-Sarco Engineering PLC		2,643		107,480
(Cost $3,087,664)				2,930,305
United States 46.9%
Advance Auto Parts, Inc.		992		80,521
AECOM Technology Corp.*		2,707		86,056
Affiliated Managers Group, Inc.*		706		115,742
Agilent Technologies, Inc.		5,000		213,800
Allergan, Inc.		6,000		505,440
Alliance Data Systems Corp.* (a)		5,000		905,150
Altra Holdings, Inc.		2,110		57,772
Amphenol Corp. "A"		10,000		779,400
Applied Industrial Technologies, Inc.		1,766		85,351
BE Aerospace, Inc.*		1,915		120,798
Beam, Inc.		11,500		725,765
Blount International, Inc.*		4,376		51,724
BorgWarner, Inc.*		1,365		117,595
Bristol-Myers Squibb Co.		7,500		335,175
Cardtronics, Inc.*		2,805		77,418
Catamaran Corp.*		1,985		96,709
CBRE Group, Inc. "A"*		25,000		584,000
Cerner Corp.* (a)		4,200		403,578
Colfax Corp.*		10,000		521,100
Danaher Corp. (a)		10,000		633,000
Deckers Outdoor Corp.* (a)		1,165		58,844
DFC Global Corp.*		7,526		103,934
DIRECTV*		7,500		462,150
Dresser-Rand Group, Inc.*		1,695		101,666
Dril-Quip, Inc.*		944		85,234
eBay, Inc.*		3,800		196,536
Edwards Lifesciences Corp.* (a)		4,500		302,400
Encore Capital Group, Inc.*		2,721		90,092
ExamWorks Group, Inc.*		3,459		73,435
Exelis, Inc.		9,000		124,110
Exxon Mobil Corp.		4,200		379,470
FMC Technologies, Inc.*		9,000		501,120
General Electric Co.		20,000		463,800
Google, Inc. "A"*		550		484,203
Green Mountain Coffee Roasters, Inc.*		1,642		123,248
Hain Celestial Group, Inc.*		1,352		87,839
HeartWare International, Inc.* (a)		1,125		106,999
Hi-Tech Pharmacal Co., Inc.		3,675		122,010
Jack in the Box, Inc.*		1,435		56,381
Jarden Corp.*		2,548		111,475
JPMorgan Chase & Co.		16,000		844,640
L Brands, Inc.		12,000		591,000
Las Vegas Sands Corp.		10,000		529,300
Leucadia National Corp.		3,994		104,723
Manitowoc Co., Inc. (a)		6,058		108,499
MasterCard, Inc. "A" (a)		1,450		833,025
McDonald's Corp.		6,000		594,000
MICROS Systems, Inc.*		1,693		73,053
Microsoft Corp.		16,000		552,480
Middleby Corp.*		688		117,022
Monster Beverage Corp.* (a)		7,000		425,390
National Oilwell Varco, Inc.		6,000		413,400
Noble Energy, Inc. (a)		8,500		510,340
Oasis Petroleum, Inc.*		1,932		75,097
Ocwen Financial Corp.*		3,047		125,597
Oil States International, Inc.*		661		61,235
	Shares		Value ($)

Onyx Pharmaceuticals, Inc.* (a)		2,200		191,004
Pacira Pharmaceuticals, Inc.*		5,771		167,359
Pall Corp. (a)		7,500		498,225
Pfizer, Inc.		19,000		532,190
Polaris Industries, Inc. (a)		1,213		115,235
Praxair, Inc.		7,000		806,120
Precision Castparts Corp.		2,700		610,227
PTC, Inc.*		2,159		52,960
Roadrunner Transportation Systems, Inc.*		3,488		97,106
Rosetta Resources, Inc.*		981		41,712
Schlumberger Ltd.		10,000		716,600
Sears Hometown & Outlet Stores, Inc.*		2,142		93,648
Signature Bank*		809		67,163
Stericycle, Inc.*		530		58,528
Tenneco, Inc.*		2,070		93,730
The Bancorp., Inc.*		2,216		33,218
Thermon Group Holdings, Inc.*		4,649		94,840
Thoratec Corp.*		2,807		87,887
TIBCO Software, Inc.*		3,368		72,075
TiVo, Inc.*		3,929		43,415
Tractor Supply Co. (a)		2,600		305,786
Tristate Capital Holdings, Inc.*		4,299		59,111
United Rentals, Inc.*		1,923		95,977
United Technologies Corp.		7,000		650,580
Urban Outfitters, Inc.*		2,157		86,755
WABCO Holdings, Inc.*		1,514		113,081
Waddell & Reed Financial, Inc. "A" (a)		2,494		108,489
	Shares		Value ($)

Western Digital Corp.		2,924		181,551
Zions Bancorp. (a)		4,255		122,885
(Cost $22,295,020)				22,687,298
Total Common Stocks (Cost $47,746,757)				46,842,289

Participatory Note 1.0%
Nigeria
Zenith Bank PLC (issuer Merrill Lynch International), Expiration Date 8/21/2015* (Cost $533,000)		4,100,000		499,478

Securities Lending Collateral 16.9%
Daily Assets Fund Institutional, 0.10% (d) (e) (Cost $8,186,461)		8,186,461		8,186,461

Cash Equivalents 1.9%
Central Cash Management Fund, 0.07% (d) (Cost $905,378)		905,378		905,378

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $57,371,596)†		116.6			56,433,606
Other Assets and Liabilities, Net		(16.6	)		(8,026,509	)
Net Assets		100.0			48,407,097

* Non-income producing security.

† The cost for federal income tax purposes was $57,977,545. At June 30, 2013, net unrealized depreciation for all securities based on tax cost was $1,543,939. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $1,489,386 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,033,325.

(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of securities loaned at June 30, 2013 amounted to $8,026,573, which is 16.6% of net assets.

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

(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.

ADR: American Depositary Receipt

REIT: Real Estate Investment Trust

SDR: Swedish Depositary Receipt

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (f)
Austria	$	—	$	14,322	$	—	$	14,322
Belgium		—		487,934		—		487,934
Bermuda		110,403		—		—		110,403
Canada		2,029,578		—		—		2,029,578
China		—		116,926		—		116,926
Cyprus		—		93,141		—		93,141
Denmark		—		112,070		—		112,070
Finland		—		266,545		—		266,545
France		—		1,880,790		—		1,880,790
Germany		—		2,324,949		—		2,324,949
Hong Kong		—		318,511		—		318,511
India		669,375		—		—		669,375
Indonesia		—		1,140,368		—		1,140,368
Ireland		151,189		1,180,344		—		1,331,533
Italy		—		387,048		—		387,048
Japan		—		862,728		—		862,728
Korea		—		510,804		—		510,804
Luxembourg		—		310,024		—		310,024
Malaysia		—		637,387		—		637,387
Mexico		944,810		—		—		944,810
Netherlands		118,664		862,825		—		981,489
Norway		—		246,315		—		246,315
Panama		95,426		—		—		95,426
Philippines		—		614,437		—		614,437
Russia		253,926		203,875		—		457,801
Singapore		—		249,583		—		249,583
Spain		—		161,749		—		161,749
Sweden		—		2,339,714		—		2,339,714
Switzerland		519,210		663,271		—		1,182,481
Thailand		—		36,615		—		36,615
Turkey		—		309,830		—		309,830
United Kingdom		—		2,930,305		—		2,930,305
United States		22,687,298		—		—		22,687,298
Participatory Note (f)		—		499,478		—		499,478
Short-Term Investments (f)		9,091,839		—		—		9,091,839
Total	$	36,671,718	$	19,761,888	$	—	$	56,433,606

There have been no transfers between fair value measurement levels during the period ended June 30, 2013.

(f) See Investment Portfolio for additional detailed categorizations.

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

Statement of Assets and Liabilities

as of June 30, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $48,279,757) — including $8,026,573 of securities loaned		47,341,767
Investment in Daily Assets Fund Institutional (cost $8,186,461)*		8,186,461
Investment in Central Cash Management Fund (cost $905,378)		905,378
Total investments in securities, at value (cost $57,371,596)		56,433,606
Cash		5,720
Foreign currency, at value (cost $178,413)		175,299
Receivable for investments sold		62,420
Receivable for Fund shares sold		1,819
Dividends receivable		41,984
Interest receivable		1,370
Foreign taxes recoverable		25,378
Other assets		451
Total assets		56,748,047
Liabilities
Payable upon return of securities loaned		8,186,461
Payable for investments purchased		2,899
Payable for Fund shares redeemed		52,262
Accrued management fee		13,389
Accrued Trustees' fees		579
Other accrued expenses and payables		85,360
Total liabilities		8,340,950
Net assets, at value		48,407,097
Net Assets Consist of
Undistributed net investment income		412,328
Net unrealized appreciation (depreciation) on: Investments		(937,990	)
Foreign currency		(4,090	)
Accumulated net realized gain (loss)		(44,888,564	)
Paid-in capital		93,825,413
Net assets, at value		48,407,097
Class A Net Asset Value, offering and redemption price per share ($45,778,415 ÷ 4,798,176 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	9.54
Class B Net Asset Value, offering and redemption price per share ($2,628,682 ÷ 274,767 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	9.57

* 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, 2013 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $51,898)	$	662,048
Income distributions — Central Cash Management Fund		362
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		19,126
Total income		681,536
Expenses: Management fee		246,644
Administration fee		26,956
Services to shareholders		733
Record keeping fees (Class B)		1,377
Distribution service fee (Class B)		3,551
Custodian fee		44,252
Audit and tax fees		31,343
Legal fees		6,725
Reports to shareholders		13,183
Trustees' fees and expenses		2,293
Other		16,606
Total expenses before expense reductions		393,663
Expense reductions		(144,941	)
Total expenses after expense reductions		248,722
Net investment income (loss)		432,814
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		8,414,285
Foreign currency		(18,387	)
		8,395,898
Change in net unrealized appreciation (depreciation) on: Investments		(6,058,400	)
Foreign currency		(3,673	)
		(6,062,073	)
Net gain (loss)		2,333,825
Net increase (decrease) in net assets resulting from operations	$	2,766,639

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income (loss)	$	432,814		$	758,059
Net realized gain (loss)		8,395,898			97,908
Change in net unrealized appreciation (depreciation)		(6,062,073	)		8,394,806
Net increase (decrease) in net assets resulting from operations		2,766,639			9,250,773
Distributions to shareholders from: Net investment income: Class A		(689,482	)		(741,039	)
Class B		(27,740	)		(31,068	)
Total distributions		(717,222	)		(772,107	)
Fund share transactions: Class A Proceeds from shares sold		1,790,554			7,619,915
Reinvestment of distributions		689,482			741,039
Payments for shares redeemed		(12,210,394	)		(12,066,736	)
Net increase (decrease) in net assets from Class A share transactions		(9,730,358	)		(3,705,782	)
Class B Proceeds from shares sold		27,930			80,402
Reinvestment of distributions		27,740			31,068
Payments for shares redeemed		(406,537	)		(823,480	)
Net increase (decrease) in net assets from Class B share transactions		(350,867	)		(712,010	)
Increase (decrease) in net assets		(8,031,808	)		4,060,874
Net assets at beginning of period		56,438,905			52,378,031
Net assets at end of period (including undistributed net investment income of $412,328 and $696,736, respectively)	$	48,407,097		$	56,438,905
Other Information
Class A Shares outstanding at beginning of period		5,793,732			6,234,878
Shares sold		186,147			882,663
Shares issued to shareholders in reinvestment of distributions		71,746			85,967
Shares redeemed		(1,253,449	)		(1,409,776	)
Net increase (decrease) in Class A shares		(995,556	)		(441,146	)
Shares outstanding at end of period		4,798,176			5,793,732
Class B Shares outstanding at beginning of period		311,300			393,322
Shares sold		2,930			9,525
Shares issued to shareholders in reinvestment of distributions		2,878			3,592
Shares redeemed		(42,341	)		(95,139	)
Net increase (decrease) in Class B shares		(36,533	)		(82,022	)
Shares outstanding at end of period		274,767			311,300

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	9.24		$	7.90		$	9.28		$	8.24		$	5.84		$	15.66
Income (loss) from investment operations: Net investment incomea		.08			.12			.11			.06			.08			.11
Net realized and unrealized gain (loss)		.35			1.34			(1.43	)		1.06			2.42			(5.83	)
Total from investment operations		.43			1.46			(1.32	)		1.12			2.50			(5.72	)
Less distributions from: Net investment income		(.13	)		(.12	)		(.06	)		(.08	)		(.10	)		(.19	)
Net realized gains		—			—			—			—			—			(3.91	)
Total distributions		(.13	)		(.12	)		(.06	)		(.08	)		(.10	)		(4.10	)
Net asset value, end of period	$	9.54		$	9.24		$	7.90		$	9.28		$	8.24		$	5.84
Total Return (%)b		4.64	**		18.60			(14.39	)		13.65			43.82			(47.75	)
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		46			54			49			68			66			59
Ratio of expenses before expense reductions (%)		1.44	*		1.42			1.37			1.41			1.38			1.47
Ratio of expenses after expense reductions (%)		.90	*		.99			1.03			1.05			1.04			1.09
Ratio of net investment income (%)		1.62	*		1.40			1.24			.77			1.23			1.09
Portfolio turnover rate (%)		138	**		107			127			165			190			229
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 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	9.25		$	7.91		$	9.29		$	8.25		$	5.85		$	15.66
Income (loss) from investment operations: Net investment incomea		.06			.09			.08			.04			.06			.07
Net realized and unrealized gain (loss)		.36			1.34			(1.44	)		1.05			2.42			(5.83	)
Total from investment operations		.42			1.43			(1.36	)		1.09			2.48			(5.76	)
Less distributions from: Net investment income		(.10	)		(.09	)		(.02	)		(.05	)		(.08	)		(.14	)
Net realized gains		—			—			—			—			—			(3.91	)
Total distributions		(.10	)		(.09	)		(.02	)		(.05	)		(.08	)		(4.05	)
Net asset value, end of period	$	9.57		$	9.25		$	7.91		$	9.29		$	8.25		$	5.85
Total Return (%)b		4.48	**		18.16			(14.67	)		13.24			43.23			(47.87	)
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		3			3			3			5			5			4
Ratio of expenses before expense reductions (%)		1.79	*		1.76			1.72			1.76			1.73			1.82
Ratio of expenses after expense reductions (%)		1.25	*		1.34			1.38			1.40			1.39			1.45
Ratio of net investment income (%)		1.30	*		1.04			.88			.42			.88			.73
Portfolio turnover rate (%)		138	**		107			127			165			190			229
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 Global Growth VIP (formerly 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 (U.S. 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.

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

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

Securities Lending. Brown Brothers Harriman & Co., as lending agent, lends securities of the Fund to certain financial institutions under the terms of the Security Lending Agreement. The Fund retains the benefits of owning the securities it has loaned and continues to receive interest and dividends generated by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of either cash or liquid, unencumbered assets having a value at least equal to the value of the securities loaned. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of borrower rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may be risks of delay and costs in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. If the Fund is not able to recover securities lent, the Fund may sell the collateral and purchase a replacement investment in the market, incurring the risk that the value of the replacement security is greater than the value of the collateral. The Fund is also subject to all investment risks associated with the reinvestment of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.

As of June 30, 2013, the Fund had securities on loan with a gross value of $8,026,573. The value of the related collateral, $8,186,461, exceeded the value of the securities loaned at period end.

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.

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

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

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $52,710,000, including $51,528,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($33,717,000) and December 31, 2017 ($17,811,000), the respective expiration dates, whichever occurs first; and approximately $1,182,000 of post-enactment losses, which may be applied against realized net taxable capital gains indefinitely, including short-term losses ($775,000) and long-term losses ($407,000).

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in foreign denominated investments, income received from Passive Foreign Investment Companies and certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.

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

B. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $73,674,739 and $84,656,183, 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.

Global Thematic Partners, LLC ("GTP") served as subadvisor to the Fund through April 30, 2013. GTP or the "Subadvisor" was paid by the Advisor for the service GTP provided to the Fund. Effective as of the close of business on April 30, 2013, the sub-advisory agreement with GTP was terminated and day-to-day portfolio management of the Fund transitioned to DIMA. At that time, the Fund's name changed from "DWS Global Thematic VIP" to "DWS Global Growth VIP."

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

Class A	.90%
Class B	1.25%

Accordingly, for the six months ended June 30, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $144,800, and the amount charged aggregated $101,844, which was equivalent to an annualized effective rate of 0.38% of the Fund's average daily net assets.

Services to Shareholders	Total Aggregated		Waived
Class A	$	130	$	130
Class B		30		11
	$	160	$	141

D. Investing in Emerging Markets

E. Ownership of the Fund

At June 30, 2013, two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 71% and 24%. 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

G. Changes to Fund Name and Investment Strategy

Effective May 1, 2013, DWS Global Thematic VIP changed its name to DWS Global Growth VIP and the sub-advisory agreement with Global Thematic Partners, LLC was terminated and the day-to-day management of the Fund was transitioned to Deutsche Investment Management Americas Inc. Effective that same day, the Fund's investment strategy changed and the Fund seeks to achieve its objective by allocating its assets among a global growth sleeve and a small cap growth sleeve. For a description of the Fund's investment strategy, please see the Fund's current prospectus dated May 1, 2013.

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges, 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,046.40	$	1,044.80
Expenses Paid per $1,000*	$	4.57	$	6.34
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,020.33	$	1,018.60
Expenses Paid per $1,000*	$	4.51	$	6.26

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Global Growth VIP	.90%		1.25%

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2GG-3 (R-028383-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Global Income Builder VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Management

5 Investment Portfolio

22 Statement of Assets and Liabilities

23 Statement of Operations

24 Statement of Changes in Net Assets

25 Financial Highlights

26 Notes to Financial Statements

34 Information About Your Fund's Expenses

34 Proxy Voting

36 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. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Dividends are not guaranteed. If the dividend-paying stocks held by the Fund reduce or stop paying dividends, the Fund's ability to generate income may be adversely affected. Because Exchange Traded Funds (ETFs) trade on a securities exchange, their shares may trade at a premium or discount to their net asset value. ETFs also incur fees and expenses so they may not fully match the performance of the indexes they are designed to track. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. The Fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 is 0.60% 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 Global Income Builder VIP
		The Russell 1000® Index is an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92% of the total market capitalization of the Russell 3000® Index. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. The S&P® Target Risk Moderate Index is designed to measure the performance of S&P's proprietary moderate target risk allocation model. The S&P® Target Risk Moderate Index seeks to provide significant exposure to fixed income, while also allocating a smaller portion of exposure to equities in order to seek current income, some capital preservation, and an opportunity for moderate to low capital appreciation. 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 Income Builder VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,484		$	11,186		$	13,381		$	12,194		$	16,205
Class A	Average annual total return		4.84	%		11.86	%		10.19	%		4.05	%		4.95	%
Russell 1000® Index	Growth of $10,000	$	11,391		$	12,124		$	16,695		$	14,104		$	20,938
Russell 1000® Index	Average annual total return		13.91	%		21.24	%		18.63	%		7.12	%		7.67	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,756		$	9,931		$	11,090		$	12,878		$	15,559
Barclays U.S. Aggregate Bond Index	Average annual total return		-2.44	%		-0.69	%		3.51	%		5.19	%		4.52	%
S&P® Target Risk Moderate Index	Growth of $10,000	$	10,249		$	10,718		$	12,526		$	11,990		$	17,048
S&P® Target Risk Moderate Index	Average annual total return		2.49	%		7.18	%		7.80	%		3.70	%		5.48	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Equity	57%	55%
Common Stocks	57%	55%

Fixed Income	37%	44%
Corporate Bonds	24%	28%
Government & Agency Obligations	5%	6%
Mortgage-Backed Securities Pass-Throughs	4%	3%
Collateralized Mortgage Obligations	2%	2%
Commercial Mortgage-Backed Securities	1%	1%
Loan Participations and Assignments	1%	3%
Asset-Backed	0%	1%

Cash Equivalents	6%	1%
	100%	100%

Sector Diversification (As a % of Equities, Corporate Bonds, Loan Participations and Assignments, Preferred Securities, Preferred Stocks, Convertible Bonds and Other Investments)	6/30/13	12/31/12

Consumer Staples	17%	13%
Financials	14%	19%
Health Care	13%	11%
Consumer Discretionary	12%	8%
Information Technology	10%	8%
Energy	9%	13%
Telecommunication Services	8%	7%
Materials	7%	8%
Utilities	6%	7%
Industrials	4%	6%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Owen Fitzpatrick, CFA, Managing Director

William Chepolis, CFA, Managing Director

Philip G. Condon, Managing Director

Gary Russell, CFA, Managing Director

John D. Ryan, Director Darwei Kung, Director Louis Cucciniello, Managing Director

Portfolio Managers

Investment Portfolio June 30, 2013 (Unaudited)

	Shares		Value ($)

Common Stocks 58.5%
Consumer Discretionary 4.9%
Distributors 0.6%
Genuine Parts Co.		20,971		1,637,206
Hotels, Restaurants & Leisure 0.0%
Trump Entertainment Resorts, Inc.*		2		0
Media 2.8%
Pearson PLC		146,342		2,598,407
Vertis Holdings, Inc.*		111		0
Wolters Kluwer NV		213,753		4,507,773
				7,106,180
Specialty Retail 0.8%
Staples, Inc. (a)		127,563		2,023,149
Textiles, Apparel & Luxury Goods 0.7%
VF Corp.		9,370		1,808,972
Consumer Staples 12.6%
Beverages 3.1%
PepsiCo, Inc.		96,586		7,899,769
Food Products 2.0%
Nestle SA (Registered)		38,522		2,519,586
Unilever NV (CVA)		70,398		2,761,491
				5,281,077
Household Products 3.9%
Procter & Gamble Co.		131,022		10,087,384
Tobacco 3.6%
Altria Group, Inc.		22,297		780,172
British American Tobacco PLC		75,001		3,851,556
Imperial Tobacco Group PLC		133,518		4,639,105
				9,270,833
Energy 5.1%
Energy Equipment & Services 1.2%
Transocean Ltd.		49,591		2,377,888
WorleyParsons Ltd.		41,890		740,695
				3,118,583
Oil, Gas & Consumable Fuels 3.9%
Canadian Natural Resources Ltd. (b)		148,747		4,193,543
Canadian Natural Resources Ltd. (b)		19,470		550,222
ConocoPhillips		36,670		2,218,535
Enbridge, Inc. (a)		37,678		1,583,859
TransCanada Corp. (a)		35,400		1,524,115
				10,070,274
Financials 6.4%
Commercial Banks 1.7%
Bank of Nova Scotia (a)		42,153		2,253,344
Toronto-Dominion Bank (a)		26,057		2,092,835
				4,346,179
Insurance 4.7%
PartnerRe Ltd.		64,143		5,808,790
Powszechny Zaklad Ubezpieczen SA		19,922		2,454,784
Sampo Oyj "A"		97,659		3,789,963
				12,053,537
	Shares		Value ($)
		��
Health Care 9.1%
Health Care Equipment & Supplies 1.3%
Stryker Corp.		53,814		3,480,689
Health Care Providers & Services 2.0%
Rhoen-Klinikum AG (a)		217,864		5,025,158
Pharmaceuticals 5.8%
Novartis AG (Registered)		70,713		5,011,388
Roche Holding AG (Genusschein)		22,895		5,673,023
Sanofi		40,368		4,160,208
				14,844,619
Industrials 3.9%
Aerospace & Defense 0.8%
BAE Systems PLC		333,558		1,949,569
Air Freight & Logistics 0.7%
Singapore Post Ltd.		1,691,000		1,731,169
Building Products 0.0%
Congoleum Corp.*		3,800		0
Industrial Conglomerates 2.4%
Koninklijke Philips NV		132,940		3,621,084
Smiths Group PLC		132,457		2,642,884
				6,263,968
Information Technology 6.5%
Computers & Peripherals 2.1%
Diebold, Inc.		73,183		2,465,535
Wincor Nixdorf AG		53,134		2,873,238
				5,338,773
IT Services 0.8%
Automatic Data Processing, Inc.		29,631		2,040,391
Semiconductors & Semiconductor Equipment 0.2%
Intel Corp. (a)		16,106		390,087
Software 3.4%
Microsoft Corp.		255,967		8,838,540
Materials 4.1%
Chemicals 1.5%
Air Liquide SA		20,107		2,473,600
Air Products & Chemicals, Inc. (a)		16,448		1,506,143
				3,979,743
Construction Materials 0.0%
Wolverine Tube, Inc.*		366		6,632
Containers & Packaging 1.6%
Sealed Air Corp.		104,279		2,497,482
Sonoco Products Co.		44,783		1,548,148
				4,045,630
Metals & Mining 1.0%
Franco-Nevada Corp. (a)		69,992		2,505,657
Telecommunication Services 1.9%
Diversified Telecommunication Services 0.1%
Belgacom SA		16,948		378,734
Wireless Telecommunication Services 1.8%
NTT DoCoMo, Inc.		1,761		2,736,321
Vodafone Group PLC		647,520		1,858,199
				4,594,520
	Shares		Value ($)

Utilities 4.0%
Gas Utilities 2.9%
UGI Corp.		191,311		7,482,173
Multi-Utilities 1.1%
National Grid PLC		245,568		2,777,739
Total Common Stocks (Cost $130,104,883)				150,376,934

Preferred Stock 0.0%
Financials
Ally Financial, Inc. 144A, 7.0% (Cost $71,281)		75		71,290

Warrants 0.0%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		80		0
Materials 0.0%
GEO Specialty Chemicals, Inc., Expiration Date 3/31/2015*		19,324		11,345
Hercules Trust II, Expiration Date 3/31/2029*		170		2,249
				13,594
Total Warrants (Cost $30,283)				13,594

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

Corporate Bonds 25.0%
Consumer Discretionary 3.5%
AMC Entertainment, Inc., 8.75%, 6/1/2019			405,000		433,350
AmeriGas Finance LLC:
6.75%, 5/20/2020			10,000		10,350
7.0%, 5/20/2022			10,000		10,225
APX Group, Inc., 144A, 6.375%, 12/1/2019			50,000		47,500
Asbury Automotive Group, Inc.:
7.625%, 3/15/2017			35,000		36,007
144A, 8.375%, 11/15/2020			15,000		16,613
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			80,000		83,400
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			80,000		80,800
Avis Budget Car Rental LLC:
144A, 5.5%, 4/1/2023			50,000		48,250
8.25%, 1/15/2019			15,000		16,313
BC Mountain LLC, 144A, 7.0%, 2/1/2021			50,000		51,000
Block Communications, Inc., 144A, 7.25%, 2/1/2020			20,000		21,000
Boyd Gaming Corp., 9.0%, 7/1/2020 (a)			40,000		40,550
British Sky Broadcasting Group PLC, 144A, 3.125%, 11/26/2022			90,000		84,160
Caesar's Entertainment Operating Co., Inc., 8.5%, 2/15/2020			610,000		574,925
Caesar's Operating Escrow LLC, 144A, 9.0%, 2/15/2020			65,000		61,912
		Principal Amount ($)(c)		Value ($)

CCO Holdings LLC:
6.5%, 4/30/2021			420,000		437,850
6.625%, 1/31/2022			705,000		734,962
7.375%, 6/1/2020			10,000		10,875
CDR DB Sub, Inc., 144A, 7.75%, 10/15/2020			55,000		55,137
Cequel Communications Holdings I LLC:
144A, 5.125%, 12/15/2021			65,000		61,100
144A, 6.375%, 9/15/2020			285,000		289,987
Clear Channel Communications, Inc., 144A, 11.25%, 3/1/2021			70,000		72,975
Clear Channel Worldwide Holdings, Inc.:
Series A, 144A, 6.5%, 11/15/2022			65,000		66,625
Series B, 144A, 6.5%, 11/15/2022			90,000		92,700
Series A, 7.625%, 3/15/2020			10,000		10,300
Series B, 7.625%, 3/15/2020			255,000		263,925
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			5,000		4,863
Columbus International, Inc., 144A, 11.5%, 11/20/2014			100,000		107,750
Cox Communications, Inc., 144A, 3.25%, 12/15/2022			80,000		75,266
Cumulus Media Holdings, Inc., 7.75%, 5/1/2019			50,000		48,875
Delphi Corp., 5.0%, 2/15/2023			70,000		71,925
DISH DBS Corp., 7.875%, 9/1/2019			270,000		302,400
Fontainebleau Las Vegas Holdings LLC, 144A, 11.0%, 6/15/2015*			25,000		0
Griffey Intermediate, Inc., 144A, 7.0%, 10/15/2020			95,000		91,675
Harron Communications LP, 144A, 9.125%, 4/1/2020			45,000		48,600
Hertz Corp.:
144A, 4.25%, 4/1/2018			45,000		43,875
6.75%, 4/15/2019			280,000		296,100
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			40,000		40,500
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019 (PIK)			120,000		123,300
Libbey Glass, Inc., 6.875%, 5/15/2020			27,000		28,249
LKQ Corp., 144A, 4.75%, 5/15/2023			80,000		76,400
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			40,000		39,900
Mediacom Broadband LLC, 6.375%, 4/1/2023			35,000		34,825
Mediacom LLC, 9.125%, 8/15/2019			580,000		623,500
MGM Resorts International:
6.625%, 12/15/2021			150,000		154,687
6.75%, 10/1/2020 (a)			40,000		41,400
8.625%, 2/1/2019			400,000		452,000
National CineMedia LLC, 6.0%, 4/15/2022			10,000		10,263
Petco Holdings, Inc., 144A, 8.5%, 10/15/2017 (PIK)			30,000		30,600
		Principal Amount ($)(c)		Value ($)

Quebecor Media, Inc., 5.75%, 1/15/2023			50,000		48,750
Rent-A-Center, Inc., 144A, 4.75%, 5/1/2021			40,000		37,900
SACI Falabella, 144A, 3.75%, 4/30/2023			200,000		183,000
Schaeffler Finance BV, 144A, 7.75%, 2/15/2017			845,000		933,725
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			35,000		33,950
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020			55,000		55,962
SIWF Merger Sub, Inc., 144A, 6.25%, 6/1/2021			85,000		83,300
Starz LLC, 5.0%, 9/15/2019			40,000		39,700
Taylor Morrison Communities, Inc., 144A, 5.25%, 4/15/2021			65,000		61,750
Travelport LLC, 144A, 6.4%**, 3/1/2016			11,536		10,786
Unitymedia Hessen GmbH & Co., KG:
144A, 5.5%, 1/15/2023			200,000		189,000
144A, 7.5%, 3/15/2019	EUR		400,000		552,811
Unitymedia KabelBW GmbH, 144A, 9.625%, 12/1/2019	EUR		110,000		157,500
Univision Communications, Inc., 144A, 6.875%, 5/15/2019			25,000		26,250
Viking Cruises Ltd., 144A, 8.5%, 10/15/2022			50,000		54,750
					8,928,878
Consumer Staples 1.6%
B&G Foods, Inc., 4.625%, 6/1/2021			70,000		66,850
Chiquita Brands International, Inc., 144A, 7.875%, 2/1/2021			45,000		47,138
ConAgra Foods, Inc., 3.25%, 9/15/2022			235,000		224,186
Constellation Brands, Inc.:
3.75%, 5/1/2021			65,000		60,856
6.0%, 5/1/2022			5,000		5,363
Controladora Mabe SA de CV, 144A, 7.875%, 10/28/2019			100,000		107,000
Del Monte Corp., 7.625%, 2/15/2019			95,000		97,612
Hawk Acquisition Sub, Inc., 144A, 4.25%, 10/15/2020			465,000		444,656
JBS U.S.A. LLC, 144A, 8.25%, 2/1/2020			370,000		387,575
MHP SA, 144A, 8.25%, 4/2/2020			200,000		178,165
Minerva Luxembourg SA, 144A, 12.25%, 2/10/2022			250,000		298,750
Mriya Agro Holding PLC, 144A, 9.45%, 4/19/2018			200,000		178,000
Pilgrim's Pride Corp., 7.875%, 12/15/2018			430,000		457,950
Reynolds Group Issuer, Inc.:
5.75%, 10/15/2020			95,000		95,712
7.125%, 4/15/2019			1,015,000		1,072,094
Smithfield Foods, Inc., 6.625%, 8/15/2022			145,000		155,875
Sun Products Corp., 144A, 7.75%, 3/15/2021			90,000		89,325
		Principal Amount ($)(c)		Value ($)

Tops Holding Corp., 144A, 8.875%, 12/15/2017			25,000		27,063
					3,994,170
Energy 2.6%
Access Midstream Partners LP:
4.875%, 5/15/2023			60,000		55,650
6.125%, 7/15/2022			15,000		15,188
Afren PLC, 144A, 10.25%, 4/8/2019			200,000		223,500
Berry Petroleum Co.:
6.375%, 9/15/2022			50,000		49,812
6.75%, 11/1/2020			50,000		51,750
BreitBurn Energy Partners LP, 7.875%, 4/15/2022			50,000		51,000
Chaparral Energy, Inc., 7.625%, 11/15/2022			85,000		86,700
Chesapeake Energy Corp., 5.75%, 3/15/2023			25,000		25,313
Continental Resources, Inc.:
144A, 4.5%, 4/15/2023			15,000		14,588
5.0%, 9/15/2022			40,000		40,700
Crosstex Energy LP, 7.125%, 6/1/2022			25,000		25,250
DCP Midstream LLC, 144A, 9.75%, 3/15/2019			200,000		257,926
Denbury Resources, Inc., 4.625%, 7/15/2023			125,000		115,312
Eagle Rock Energy Partners LP, 8.375%, 6/1/2019			90,000		91,575
EDC Finance Ltd., 144A, 4.875%, 4/17/2020			200,000		183,000
Enterprise Products Operating LLC, 6.125%, 10/15/2039			230,000		255,778
EP Energy LLC:
6.875%, 5/1/2019			15,000		16,050
7.75%, 9/1/2022			80,000		85,600
EPE Holdings LLC, 144A, 8.125%, 12/15/2017 (PIK) (a)			114,717		117,011
EV Energy Partners LP, 8.0%, 4/15/2019			35,000		35,350
FMC Technologies, Inc., 3.45%, 10/1/2022			200,000		191,587
Halcon Resources Corp.:
8.875%, 5/15/2021			135,000		130,950
9.75%, 7/15/2020			65,000		64,837
Holly Energy Partners LP, 6.5%, 3/1/2020			10,000		10,075
KazMunayGas National Co. JSC, 144A, 5.75%, 4/30/2043			200,000		177,000
Kodiak Oil & Gas Corp., 144A, 5.5%, 1/15/2021 (a)			60,000		58,500
Linn Energy LLC:
144A, 6.25%, 11/1/2019			540,000		514,350
6.5%, 5/15/2019			25,000		24,438
Lukoil International Finance BV, 144A, 7.25%, 11/5/2019			250,000		280,375
MEG Energy Corp., 144A, 6.375%, 1/30/2023			230,000		223,100
Memorial Production Partners LP, 144A, 7.625%, 5/1/2021			95,000		93,575
Midstates Petroleum Co., Inc.:
144A, 9.25%, 6/1/2021			135,000		126,900
144A, 10.75%, 10/1/2020			55,000		55,275
		Principal Amount ($)(c)		Value ($)

Murray Energy Corp., 144A, 8.625%, 6/15/2021			15,000		15,000
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			140,000		141,400
Oasis Petroleum, Inc.:
6.5%, 11/1/2021			225,000		230,625
6.875%, 1/15/2023			35,000		36,050
7.25%, 2/1/2019			60,000		62,550
Odebrecht Drilling Norbe VIII/IX Ltd., 144A, 6.35%, 6/30/2021			95,000		95,950
Offshore Group Investment Ltd.:
144A, 7.125%, 4/1/2023			100,000		98,250
7.5%, 11/1/2019 (a)			140,000		145,950
ONEOK Partners LP, 6.15%, 10/1/2016			201,000		229,151
Pacific Drilling SA, 144A, 5.375%, 6/1/2020			70,000		65,450
Pacific Rubiales Energy Corp., 144A, 5.125%, 3/28/2023			200,000		189,000
Petroleos de Venezuela SA, 144A, 8.5%, 11/2/2017			250,000		229,062
Plains Exploration & Production Co., 6.75%, 2/1/2022			15,000		15,897
Range Resources Corp., 5.0%, 3/15/2023			25,000		24,438
Regency Energy Partners LP, 144A, 4.5%, 11/1/2023			25,000		22,625
Reliance Holdings U.S.A., Inc., 144A, 5.4%, 2/14/2022			250,000		253,972
Sabine Pass Liquefaction LLC, 144A, 5.625%, 2/1/2021			175,000		169,750
SandRidge Energy, Inc., 7.5%, 3/15/2021			190,000		181,450
SESI LLC, 7.125%, 12/15/2021			30,000		32,400
Talos Production LLC, 144A, 9.75%, 2/15/2018			95,000		90,250
Tesoro Corp., 5.375%, 10/1/2022			35,000		35,437
Transocean, Inc., 3.8%, 10/15/2022			370,000		352,444
Transportadora de Gas Internacional SA ESP, 144A, 5.7%, 3/20/2022			200,000		206,500
					6,671,616
Financials 4.8%
Ally Financial, Inc.:
5.5%, 2/15/2017			15,000		15,672
6.25%, 12/1/2017			560,000		599,071
American International Group, Inc., 4.875%, 6/1/2022			200,000		213,185
American Tower Corp., (REIT), 3.5%, 1/31/2023			90,000		82,411
Banco de Credito del Peru, 144A, 4.25%, 4/1/2023			200,000		184,500
Banco Santander Brasil SA:
144A, 4.625%, 2/13/2017			250,000		253,750
144A, 8.0%, 3/18/2016	BRL		300,000		123,692
Bank of America Corp., 3.3%, 1/11/2023			105,000		99,240
		Principal Amount ($)(c)		Value ($)

Barclays Bank PLC, 7.625%, 11/21/2022 (a)			250,000		245,312
BBVA Bancomer SA, 144A, 6.5%, 3/10/2021			200,000		210,000
BNP Paribas SA, 3.25%, 3/3/2023			450,000		413,663
CIT Group, Inc.:
4.25%, 8/15/2017			495,000		497,475
5.0%, 5/15/2017			935,000		954,869
5.25%, 3/15/2018			10,000		10,275
CNH Capital LLC, 144A, 3.625%, 4/15/2018			100,000		95,250
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, 3.95%, 11/9/2022			260,000		248,631
Development Bank of Kazakhstan JSC, Series 3, 6.5%, 6/3/2020			500,000		525,000
E*TRADE Financial Corp.:
6.375%, 11/15/2019			140,000		142,100
6.75%, 6/1/2016			745,000		765,487
Ford Motor Credit Co., LLC:
3.0%, 6/12/2017			200,000		200,422
5.875%, 8/2/2021			260,000		283,465
General Motors Financial Co., Inc., 144A, 3.25%, 5/15/2018 (a)			25,000		24,313
Glencore Funding LLC, 144A, 4.125%, 5/30/2023			100,000		89,188
Hartford Financial Services Group, Inc.:
4.3%, 4/15/2043 (a)			410,000		355,116
6.0%, 1/15/2019			117,000		131,894
Host Hotels & Resorts LP, Series D, (REIT), 3.75%, 10/15/2023			110,000		100,886
ING Bank NV, 144A, 2.0%, 9/25/2015			375,000		378,180
International Lease Finance Corp.:
3.875%, 4/15/2018			100,000		94,000
4.625%, 4/15/2021			90,000		82,800
6.25%, 5/15/2019			410,000		421,275
8.625%, 1/15/2022			10,000		11,500
8.75%, 3/15/2017			40,000		44,550
Intesa Sanpaolo SpA, 3.875%, 1/16/2018			200,000		192,042
Jefferies Group LLC, 5.125%, 1/20/2023 (a)			60,000		59,537
Loews Corp., 2.625%, 5/15/2023			65,000		59,123
Macquarie Bank Ltd., 144A, 3.45%, 7/27/2015			130,000		134,722
Morgan Stanley:
3.75%, 2/25/2023			125,000		119,535
4.1%, 5/22/2023			85,000		78,533
MPT Operating Partnership LP, (REIT), 6.375%, 2/15/2022			10,000		10,500
Neuberger Berman Group LLC:
144A, 5.625%, 3/15/2020			10,000		10,350
144A, 5.875%, 3/15/2022			550,000		561,000
Nordea Bank AB, 144A, 4.25%, 9/21/2022			375,000		369,966
OPB Finance Trust, Series C, 2.9%, 5/24/2023	CAD		330,000		298,434
		Principal Amount ($)(c)		Value ($)

PNC Bank NA, 6.875%, 4/1/2018			300,000		359,808
Principal Financial Group, Inc., 3.3%, 9/15/2022			305,000		296,286
RCI Banque SA, 144A, 3.5%, 4/3/2018			100,000		99,508
Royal Bank of Scotland Group PLC, 6.1%, 6/10/2023 (a)			100,000		94,871
Santander U.S. Debt SA, 144A, 2.991%, 10/7/2013			500,000		502,851
Skandinaviska Enskilda Banken AB, 144A, 1.375%, 5/29/2018			552,000		531,742
SLM Corp., 5.5%, 1/25/2023 (a)			125,000		119,026
The Goldman Sachs Group, Inc., 3.625%, 1/22/2023 (a)			165,000		157,868
Turkiye Is Bankasi, 144A, 6.0%, 10/24/2022			250,000		244,375
Turkiye Vakiflar Bankasi Tao, 144A, 3.75%, 4/15/2018			250,000		235,000
Ventas Realty LP, (REIT), 2.7%, 4/1/2020			90,000		85,099
					12,517,348
Health Care 1.3%
Agilent Technologies, Inc., 3.2%, 10/1/2022			200,000		185,407
Aviv Healthcare Properties LP, 7.75%, 2/15/2019			10,000		10,675
Biomet, Inc.:
6.5%, 8/1/2020			85,000		87,603
6.5%, 10/1/2020 (a)			25,000		24,938
Community Health Systems, Inc.:
5.125%, 8/15/2018			290,000		294,350
7.125%, 7/15/2020			170,000		175,100
Fresenius Medical Care U.S. Finance II, Inc.:
144A, 5.625%, 7/31/2019			10,000		10,400
144A, 5.875%, 1/31/2022			15,000		15,788
Fresenius Medical Care U.S. Finance, Inc., 144A, 6.5%, 9/15/2018			10,000		10,875
HCA, Inc.:
6.5%, 2/15/2020			880,000		952,050
7.5%, 2/15/2022			725,000		802,937
Hologic, Inc., 6.25%, 8/1/2020			40,000		41,475
IMS Health, Inc., 144A, 6.0%, 11/1/2020			60,000		61,050
Laboratory Corp. of America Holdings, 3.75%, 8/23/2022			140,000		133,733
Mallinckrodt International Finance SA, 144A, 4.75%, 4/15/2023			110,000		104,787
Physio-Control International, Inc., 144A, 9.875%, 1/15/2019			15,000		16,500
Sky Growth Acquisition Corp., 144A, 7.375%, 10/15/2020			40,000		41,000
Tenet Healthcare Corp.:
144A, 4.375%, 10/1/2021			110,000		100,925
144A, 4.5%, 4/1/2021			10,000		9,325
6.25%, 11/1/2018			230,000		242,075
		Principal Amount ($)(c)		Value ($)

Zoetis, Inc., 144A, 3.25%, 2/1/2023			45,000		42,755
					3,363,748
Industrials 1.9%
Accuride Corp., 9.5%, 8/1/2018			10,000		10,175
Aeropuertos Dominicanos Siglo XXI SA, 144A, 9.25%, 11/13/2019			250,000		250,625
Air Lease Corp., 4.75%, 3/1/2020			75,000		72,375
Alphabet Holding Co., Inc., 7.75%, 11/1/2017 (PIK)			50,000		51,250
BE Aerospace, Inc., 6.875%, 10/1/2020			185,000		199,800
Belden, Inc., 144A, 5.5%, 9/1/2022			85,000		83,512
Bombardier, Inc., 144A, 5.75%, 3/15/2022			628,000		623,290
Clean Harbors, Inc., 5.125%, 6/1/2021			65,000		65,487
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			35,000		33,600
Ferreycorp SAA, 144A, 4.875%, 4/26/2020			200,000		188,000
FTI Consulting, Inc., 144A, 6.0%, 11/15/2022			50,000		50,625
Garda World Security Corp., 144A, 9.75%, 3/15/2017			5,000		5,204
GenCorp, Inc., 144A, 7.125%, 3/15/2021			185,000		191,475
Grupo KUO SAB De CV, 144A, 6.25%, 12/4/2022			200,000		204,750
Huntington Ingalls Industries, Inc., 6.875%, 3/15/2018			560,000		598,500
Ingersoll-Rand Global Holding Co., Ltd., 144A, 2.875%, 1/15/2019			20,000		19,730
Iron Mountain, Inc., 5.75%, 8/15/2024			60,000		56,250
JSC Georgian Railway, 144A, 7.75%, 7/11/2022			250,000		270,175
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			100,000		104,000
Meritor, Inc., 6.75%, 6/15/2021			55,000		52,525
Navios Maritime Holdings, Inc., 8.875%, 11/1/2017			60,000		62,100
Navios South American Logistics, Inc., 144A, 9.25%, 4/15/2019			15,000		16,088
Nortek, Inc., 8.5%, 4/15/2021			155,000		165,850
Odebrecht Finance Ltd., 144A, 7.125%, 6/26/2042			250,000		242,500
Owens Corning, Inc., 4.2%, 12/15/2022			60,000		58,139
Ply Gem Industries, Inc., 9.375%, 4/15/2017			24,000		25,380
Titan International, Inc., 144A, 7.875%, 10/1/2017			35,000		36,750
Total System Services, Inc., 3.75%, 6/1/2023			80,000		74,281
TransDigm, Inc.:
144A, 7.5%, 7/15/2021 (d)			100,000		102,250
7.75%, 12/15/2018			80,000		84,200
Transnet SOC Ltd., 144A, 4.0%, 7/26/2022			500,000		437,200
U.S. Airways Group, Inc., 6.125%, 6/1/2018			70,000		66,150
		Principal Amount ($)(c)		Value ($)

United Rentals North America, Inc.:
6.125%, 6/15/2023			10,000		9,950
7.375%, 5/15/2020			25,000		26,687
7.625%, 4/15/2022			270,000		292,275
Watco Companies LLC, 144A, 6.375%, 4/1/2023			40,000		39,800
					4,870,948
Information Technology 1.5%
Alliance Data Systems Corp., 144A, 5.25%, 12/1/2017			60,000		61,800
CDW LLC, 8.5%, 4/1/2019			610,000		655,750
CyrusOne LP, 144A, 6.375%, 11/15/2022			25,000		25,625
EarthLink, Inc., 144A, 7.375%, 6/1/2020			70,000		67,200
Equinix, Inc.:
4.875%, 4/1/2020			60,000		58,800
5.375%, 4/1/2023			175,000		171,500
7.0%, 7/15/2021			470,000		509,950
First Data Corp.:
144A, 6.75%, 11/1/2020			365,000		371,387
144A, 7.375%, 6/15/2019			725,000		744,937
Fiserv, Inc., 3.5%, 10/1/2022			250,000		237,281
Freescale Semiconductor, Inc., 144A, 9.25%, 4/15/2018			305,000		328,638
Hewlett-Packard Co., 3.3%, 12/9/2016			200,000		207,610
Hughes Satellite Systems Corp.:
6.5%, 6/15/2019			60,000		63,600
7.625%, 6/15/2021			190,000		201,875
IAC/InterActiveCorp., 144A, 4.75%, 12/15/2022			50,000		47,250
					3,753,203
Materials 2.3%
Anglo American Capital PLC, 144A, 4.125%, 9/27/2022			500,000		472,238
Axiall Corp., 144A, 4.875%, 5/15/2023			15,000		14,250
Barrick Gold Corp., 144A, 2.5%, 5/1/2018			50,000		44,869
Bluescope Steel Ltd., 144A, 7.125%, 5/1/2018			40,000		40,600
BOE Intermediate Holding Corp., 144A, 9.0%, 11/1/2017 (PIK)			80,000		76,800
BOE Merger Corp., 144A, 9.5%, 11/1/2017 (PIK)			100,000		102,000
Cemex SAB de CV, 144A, 9.0%, 1/11/2018			200,000		210,000
Cia Minera Milpo SAA, 144A, 4.625%, 3/28/2023			200,000		182,500
Eagle Spinco, Inc., 144A, 4.625%, 2/15/2021			30,000		28,800
FMG Resources (August 2006) Pty Ltd.:
144A, 6.0%, 4/1/2017 (a)			195,000		189,637
144A, 6.375%, 2/1/2016 (a)			250,000		249,687
144A, 6.875%, 4/1/2022 (a)			290,000		281,300
FQM Akubra, Inc.:
144A, 7.5%, 6/1/2021			145,000		138,837
144A, 8.75%, 6/1/2020			85,000		86,913
Freeport-McMoRan Copper & Gold, Inc., 3.55%, 3/1/2022			220,000		199,839
		Principal Amount ($)(c)		Value ($)

GTL Trade Finance, Inc., 144A, 7.25%, 10/20/2017			200,000		216,000
Hexion U.S. Finance Corp.:
6.625%, 4/15/2020			280,000		279,300
8.875%, 2/1/2018			155,000		158,100
Huntsman International LLC:
4.875%, 11/15/2020 (a)			55,000		54,313
8.625%, 3/15/2021 (a)			250,000		274,375
IAMGOLD Corp., 144A, 6.75%, 10/1/2020			75,000		63,375
Kaiser Aluminum Corp., 8.25%, 6/1/2020			40,000		44,300
Metalloinvest Finance Ltd., 144A, 6.5%, 7/21/2016			200,000		206,000
Novelis, Inc., 8.75%, 12/15/2020			955,000		1,024,237
Polymer Group, Inc., 7.75%, 2/1/2019			255,000		265,200
PolyOne Corp., 144A, 5.25%, 3/15/2023			145,000		142,825
Polyus Gold International Ltd., 144A, 5.625%, 4/29/2020			200,000		194,000
Samarco Mineracao SA, 144A, 4.125%, 11/1/2022			200,000		179,000
Sealed Air Corp.:
144A, 5.25%, 4/1/2023			15,000		14,588
144A, 8.125%, 9/15/2019			10,000		11,150
144A, 8.375%, 9/15/2021			10,000		11,300
Tronox Finance LLC, 144A, 6.375%, 8/15/2020			55,000		51,838
Turkiye Sise ve Cam Fabrikalari AS, 144A, 4.25%, 5/9/2020			200,000		182,000
Votorantim Overseas IV, 144A, 7.75%, 6/24/2020			250,000		279,375
					5,969,546
Telecommunication Services 4.5%
America Movil SAB de CV, Series 12, 6.45%, 12/5/2022	MXN		2,000,000		149,481
CC Holdings GS V LLC, 3.849%, 4/15/2023			120,000		113,155
CenturyLink, Inc., Series V, 5.625%, 4/1/2020			25,000		25,250
Cincinnati Bell, Inc.:
8.25%, 10/15/2017			100,000		104,250
8.375%, 10/15/2020			695,000		714,112
8.75%, 3/15/2018 (a)			350,000		350,437
Cricket Communications, Inc., 7.75%, 10/15/2020 (a)			685,000		657,600
Digicel Group Ltd.:
144A, 8.25%, 9/30/2020			200,000		207,000
144A, 10.5%, 4/15/2018			200,000		212,000
Digicel Ltd., 144A, 8.25%, 9/1/2017			850,000		884,000
ERC Ireland Preferred Equity Ltd., 144A, 7.69%*, 2/15/2017 (PIK)	EUR		120,439		0
Frontier Communications Corp.:
7.125%, 1/15/2023 (a)			390,000		388,050
8.5%, 4/15/2020 (a)			810,000		893,025
Intelsat Jackson Holdings SA:
144A, 5.5%, 8/1/2023			175,000		164,500
144A, 6.625%, 12/15/2022			70,000		67,900
		Principal Amount ($)(c)		Value ($)

7.25%, 10/15/2020			690,000		724,500
7.5%, 4/1/2021			305,000		320,250
Intelsat Luxembourg SA:
144A, 7.75%, 6/1/2021			165,000		166,650
144A, 8.125%, 6/1/2023			25,000		25,813
Level 3 Communications, Inc., 8.875%, 6/1/2019 (a)			205,000		213,200
Level 3 Financing, Inc.:
7.0%, 6/1/2020			185,000		184,538
8.625%, 7/15/2020			450,000		479,250
MetroPCS Wireless, Inc.:
6.625%, 11/15/2020			655,000		679,562
144A, 6.625%, 4/1/2023			70,000		71,225
Millicom International Cellular SA, 144A, 4.75%, 5/22/2020			200,000		190,052
SBA Communications Corp., 144A, 5.625%, 10/1/2019			50,000		49,500
Sprint Nextel Corp.:
6.0%, 12/1/2016			820,000		865,100
6.0%, 11/15/2022			85,000		83,300
8.375%, 8/15/2017			210,000		235,725
9.125%, 3/1/2017			15,000		17,250
Telefonica Emisiones SAU, 4.57%, 4/27/2023			195,000		186,673
Telemar Norte Leste SA, 144A, 5.5%, 10/23/2020		��	200,000		186,000
tw telecom holdings, Inc., 5.375%, 10/1/2022			75,000		74,438
UPCB Finance III Ltd., 144A, 6.625%, 7/1/2020			370,000		382,950
Wind Acquisition Finance SA, 144A, 6.5%, 4/30/2020			50,000		49,625
Windstream Corp.:
6.375%, 8/1/2023			60,000		56,100
7.0%, 3/15/2019			25,000		25,063
7.5%, 6/1/2022			40,000		40,800
7.5%, 4/1/2023			20,000		20,300
7.75%, 10/15/2020 (a)			1,100,000		1,138,500
7.75%, 10/1/2021			80,000		82,800
7.875%, 11/1/2017			130,000		142,675
					11,622,599
Utilities 1.0%
AES Corp.:
4.875%, 5/15/2023 (a)			25,000		23,313
8.0%, 10/15/2017			45,000		50,625
8.0%, 6/1/2020			30,000		34,200
American Electric Power Co., Inc., Series F, 2.95%, 12/15/2022			200,000		186,179
Calpine Corp.:
144A, 7.5%, 2/15/2021			761,000		812,368
144A, 7.875%, 7/31/2020			40,000		43,400
DTE Energy Co., 7.625%, 5/15/2014			81,000		85,803
Dubai Electricity & Water Authority, 144A, 8.5%, 4/22/2015			250,000		271,250
Electricite de France SA, 144A, 5.25%, 1/29/2049			100,000		95,600
Energy Future Intermediate Holding Co., LLC, 11.0%, 10/1/2021			141,000		151,223
		Principal Amount ($)(c)		Value ($)

Instituto Costarricense de Electricidad, 144A, 6.95%, 11/10/2021			200,000		210,500
Mexico Generadora de Energia S de RL, 144A, 5.5%, 12/6/2032			250,000		235,000
Oncor Electric Delivery Co., LLC, 4.1%, 6/1/2022			120,000		123,813
PPL Energy Supply LLC, 4.6%, 12/15/2021			250,000		254,406
					2,577,680
Total Corporate Bonds (Cost $65,131,330)					64,269,736

Asset-Backed 0.3%
Credit Card Receivables 0.2%
Citibank Omni Master Trust, "A14", Series 2009-A14A, 144A, 2.943%**, 8/15/2018			550,000		564,829
Miscellaneous 0.1%
ARES CLO Ltd., "D", Series 2012-3A, 144A, 4.958%**, 1/17/2024			250,000		249,611
Total Asset-Backed (Cost $819,418)					814,440

Mortgage-Backed Securities Pass-Throughs 3.7%
Federal Home Loan Mortgage Corp., 6.0%, 3/1/2038			14,449		15,668
Federal National Mortgage Association:
3.5%, 1/1/2042 (d)			1,000,000		1,015,625
4.5%, 9/1/2035			29,376		31,110
6.0%, 1/1/2024			40,303		44,452
6.5%, with various maturities from 5/1/2017 until 1/1/2038			11,749		12,746
8.0%, 9/1/2015			15,335		16,062
Government National Mortgage Association:
3.0%, 10/1/2042 (d)			3,000,000		2,968,125
4.0%, with various maturities from 7/1/2040 until 3/1/2041 (d)			5,000,000		5,250,703
5.5%, 9/20/2040			216,232		236,765
Total Mortgage-Backed Securities Pass-Throughs (Cost $9,660,686)					9,591,256

Commercial Mortgage-Backed Securities 0.9%
Banc of America Large Loan, Inc., "HLTN", Series 2010-HLTN, 144A, 2.493%**, 11/15/2015			446,860		447,207
Bear Stearns Commercial Mortgage Securities, Inc., "A4", Series 2007- PW16, 5.905%**, 6/11/2040			66,000		74,553
Del Coronado Trust, "M", Series 2013-HDMZ, 144A, 5.193%**, 3/15/2018			120,000		120,624
JPMorgan Chase Commercial Mortgage Securities Corp.:
"C", Series 2012-HSBC, 144A, 4.021%, 7/5/2032			380,000		367,850
"A4", Series 2007-C1, 5.716%, 2/15/2051			225,000		251,270
		Principal Amount ($)(c)		Value ($)

LB-UBS Commercial Mortgage Trust, "A4", Series 2007-C6, 5.858%, 7/15/2040			260,000		287,930
WF-RBS Commercial Mortgage Trust, "A5", Series 2013-C14, 3.337%, 6/15/2046			750,000		715,028
Total Commercial Mortgage-Backed Securities (Cost $2,316,593)					2,264,462

Collateralized Mortgage Obligations 2.0%
Federal Home Loan Mortgage Corp.:
"HI", Series 3979, Interest Only, 3.0%, 12/15/2026			803,189		70,084
"IK", Series 4048, Interest Only, 3.0%, 5/15/2027			856,832		109,315
"ZB", Series 4183, 3.0%, 3/15/2043			1,007,519		870,319
"P", Series 3808, 4.0%, 11/15/2038			1,000,000		1,044,211
"LI", Series 3720, Interest Only, 4.5%, 9/15/2025			1,689,757		283,512
"PI", Series 3843, Interest Only, 4.5%, 5/15/2038			809,775		98,819
"H", Series 2278, 6.5%, 1/15/2031			146		162
Federal National Mortgage Association:
"WO", Series 2013-27, Principal Only, Zero Coupon, 12/25/2042			220,000		103,625
"I", Series 2003-84, Interest Only, 6.0%, 9/25/2033			319,783		85,497
"PI", Series 2006-20, Interest Only, 6.487%***, 11/25/2030			511,611		92,642
Government National Mortgage Association:
"QI", Series 2011-112, Interest Only, 4.0%, 5/16/2026			1,061,575		97,144
"NI", Series 2011-80, Interest Only, 4.5%, 5/16/2038			1,574,772		135,600
"GP", Series 2010-67, 4.5%, 3/20/2039			250,000		271,399
"BI", Series 2010-30, Interest Only, 4.5%, 7/20/2039			167,167		42,921
"ND", Series 2010-130, 4.5%, 8/16/2039			600,000		651,209
"MI", Series 2009-76, Interest Only, 5.0%, 3/20/2035			278,777		9,705
"IQ", Series 2011-18, Interest Only, 5.5%, 1/16/2039			494,554		44,979
"IV", Series 2009-69, Interest Only, 5.5%, 8/20/2039			851,868		138,764
"IN", Series 2009-69, Interest Only, 5.5%, 8/20/2039			862,441		138,380
"IJ", Series 2009-75, Interest Only, 6.0%, 8/16/2039			626,990		115,665
"AI", Series 2007-38, Interest Only, 6.268%***, 6/16/2037			144,427		19,582
		Principal Amount ($)(c)		Value ($)

Residential Funding Mortgage Securities I, Inc., "M1", Series 2003-S17, 5.5%, 9/25/2033			609,922		586,103
Total Collateralized Mortgage Obligations (Cost $4,825,649)					5,009,637

Government & Agency Obligations 5.2%
Other Government Related (e) 1.2%
European Investment Bank:
144A, 4.6%, 1/30/2037	CAD		1,000,000		972,625
6.0%, 8/6/2020	AUD		500,000		485,883
KFW, 1.875%, 6/13/2018	CAD		835,000		777,057
Queensland Treasury Corp., Series 23, 4.25%, 7/21/2023	AUD		1,060,000		926,860
					3,162,425
Sovereign Bonds 1.0%
Government of Japan, Series 144, 1.5%, 3/20/2033	JPY		90,000,000		878,456
Government of Ukraine, 144A, 6.58%, 11/21/2016			500,000		463,750
Republic of Belarus, REG S, 8.75%, 8/3/2015			100,000		100,250
Republic of Croatia, REG S, 144A, 6.25%, 4/27/2017			250,000		262,103
Republic of Turkey, 3.25%, 3/23/2023			250,000		218,125
Russian Federation:
Series 6204, 7.5%, 3/15/2018	RUB		2,900,000		91,023
Series 6207, 8.15%, 2/3/2027	RUB		8,700,000		271,939
United Mexican States:
Series M, 7.75%, 5/29/2031	MXN		2,280,000		194,462
Series M 20, 8.5%, 5/31/2029	MXN		1,140,000		104,870
					2,584,978
U.S. Government Sponsored Agencies 0.7%
Federal Home Loan Mortgage Corp., 2.375%, 1/13/2022			305,000		295,154
Federal National Mortgage Association:
0.875%, 5/21/2018			550,000		532,578
3.0%, 11/15/2027			1,000,000		915,788
					1,743,520
U.S. Treasury Obligations 2.3%
U.S. Treasury Bills:
0.1%****, 9/5/2013 (f)			801,000		800,970
U.S. Treasury Note, 0.75%, 6/15/2014			5,000,000		5,026,365
					5,827,335
Total Government & Agency Obligations (Cost $13,937,207)					13,318,258

Loan Participations and Assignments 0.8%
Senior Loan** 0.0%
Chesapeake Energy Corp., Term Loan, 5.75%, 12/1/2017			95,000		96,366
		Principal Amount ($)(c)		Value ($)

Sovereign Loans 0.8%
Bank of Moscow, 144A, 6.699%, 3/11/2015			250,000		263,112
Gazprom Neft OAO, 144A, 4.375%, 9/19/2022			250,000		228,963
Gazprom OAO, 144A, 9.25%, 4/23/2019			100,000		120,500
National JSC Naftogaz of Ukraine, 9.5%, 9/30/2014			250,000		249,375
RZD Capital PLC, 5.739%, 4/3/2017			250,000		265,000
TMK OAO, 144A, 6.75%, 4/3/2020			200,000		185,500
Uralkali OJSC, 144A, 3.723%, 4/30/2018 (a)			200,000		192,250
Vimpel Communications, 144A, 9.125%, 4/30/2018			200,000		229,500
VTB Bank OJSC, 144A, 6.0%, 4/12/2017			250,000		260,000
Total Loan Participations and Assignments (Cost $2,134,514)					2,090,566

Municipal Bonds and Notes 0.2%
Kentucky, Asset/Liability Commission, General Fund Revenue, 3.165%, 4/1/2018 (Cost $413,253)			413,253		429,213

Convertible Bond 0.1%
Materials
GEO Specialty Chemicals, Inc., 7.5%, 3/31/2015 (PIK) (Cost $205,565)			209,283		324,138

Preferred Securities 0.1%
Financials 0.1%
Farm Credit Bank of Texas, Series 1, 7.561%, 12/15/2013 (g)			218,000		218,000
Materials 0.0%
Hercules, Inc., 6.5%, 6/30/2029			40,000		34,800
Total Preferred Securities (Cost $239,295)					252,800

	Units		Value ($)

Other Investments 0.0%
Consumer Discretionary
AOT Bedding Super Holdings LLC* (h) (Cost $2,000)		5		17,388

	Contracts		Value ($)

Call Options Purchased 0.1%
Options on Exchange-Traded Futures Contracts 0.0%
10 Year U.S. Treasury Note Future Expiration Date 8/23/2013, Strike Price $132.5		38		1,781

	Contract Amount		Value ($)

Options on Interest Rate Swap Contracts 0.1%
Pay Fixed Rate — 3.583% - Receive Floating — LIBOR Swap Expiration Date 5/11/2026, Option Expiration Date 5/9/20161		2,300,000		145,475
Total Call Options Purchased (Cost $127,429)				147,256

	Shares		Value ($)

Securities Lending Collateral 9.1%
Daily Assets Fund Institutional, 0.10% (i) (j) (Cost $23,372,464)		23,372,464		23,372,464

Cash Equivalents 6.6%
Central Cash Management Fund, 0.07% (i) (Cost $17,095,777)		17,095,777		17,095,777

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $270,487,627)†		112.6			289,459,209
Other Assets and Liabilities, Net		(12.6	)		(32,282,568	)
Net Assets		100.0			257,176,641

The following table represents bonds that are in default:

Security	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
ERC Ireland Preferred Equity Ltd.*		7.69	%	2/15/2017	EUR	120,439		165,016		0
Fontainebleau Las Vegas Holdings LLC*		11.0	%	6/15/2015	USD	25,000		25,000		0
								190,016		0

* Non-income producing security.

** Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of June 30, 2013.

*** These securities are shown at their current rate as of June 30, 2013.

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

† The cost for federal income tax purposes was $271,050,745. At June 30, 2013, net unrealized appreciation for all securities based on tax cost was $18,408,464. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $24,688,967 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $6,280,503.

(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of securities loaned at June 30, 2013 amounted to $22,576,516, which is 8.8% of net assets.

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

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

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

(f) At June 30, 2013, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

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

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

Schedule of Restricted Securities

Acquisition Date

Cost ($)

Value ($)

Value as % of Net Assets

AOT Bedding Super Holdings LLC*

June 2010

2,000

17,388

0.01

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

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

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.

CLO: Collateralized Loan Obligation

CVA: Certificaten Van Aandelen (Certificate of Stock)

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

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

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

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

REIT: Real Estate Investment Trust

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

At June 30, 2013, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Depreciation ($)
10 Year Canadian Government Bond	CAD	9/19/2013		5		624,750		(25,222	)
10 Year U.S. Treasury Note	USD	9/19/2013		28		3,543,750		(23,207	)
5 Year U.S. Treasury Note	USD	9/30/2013		4		484,188		(7,978	)
Federal Republic of Germany Euro-Bund	EUR	9/6/2013		5		921,047		(18,167	)
Ultra Long U.S. Treasury Bond	USD	9/19/2013		4		543,375		(23,508	)
Total unrealized depreciation								(98,082	)

At June 30, 2013, open futures contracts sold were as follows:

Futures

Currency

Expiration Date

Contracts

Notional Value ($)

Unrealized Appreciation/ (Depreciation) ($)

10 Year U.S. Treasury Note

USD

9/19/2013

460

58,218,750

2,164,258

Ultra Long U.S. Treasury Bond

USD

9/19/2013

736,563

(12,288

)

Total net unrealized appreciation

2,151,970

At June 30, 2013, open written options contracts were as follows:

Options on Exchange-Traded Futures Contracts

Contracts

Expiration Date

Strike Price ($)

Premiums Received ($)

Value ($) (k)

Put Options

10 Year U.S. Treasury Note Future

8/23/2013

130.0

40,756

(174,000

)

(k) Unrealized depreciation on written options on exchange-traded futures contracts at June 30, 2013 was $133,244.

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (l)
Call Options Receive Fixed — 4.083% - Pay Floating — LIBOR	5/11/2016 5/11/2026		2,300,000	1	5/9/2016		78,200		(103,264	)
Receive Fixed — 5.132% - Pay Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	2	3/15/2016		15,172		(39,311	)
Receive Fixed — 4.064% - Pay Floating — LIBOR	5/13/2014 5/13/2044		2,100,000	2	5/19/2014		15,488		(58,129	)
Receive Fixed — 5.132% - Pay Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	3	3/15/2016		24,780		(39,311	)
Total Call Options							133,640		(240,015	)
Put Options Pay Fixed — 1.132% - Receive Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	2	3/15/2016		15,172		(1,861	)
Pay Fixed — 2.385% - Receive Floating — LIBOR	3/31/2014 3/31/2044		2,100,000	4	3/27/2014		28,665		(6,701	)
Pay Fixed — 2.423% - Receive Floating — LIBOR	3/20/2014 3/20/2044		2,100,000	5	3/18/2014		30,240		(7,613	)
Pay Fixed — 1.132% - Receive Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	3	3/15/2016		5,355		(1,861	)
Pay Fixed — 2.064% - Receive Floating — LIBOR	3/20/2014 3/20/2044		2,100,000	2	5/9/2014		15,488		(2,330	)
Total Put Options							94,920		(20,366	)
Total							228,560		(260,381	)

(l) Unrealized depreciation on written options on interest rate swap contracts at June 30, 2013 was $31,821.

As of June 30, 2013, open credit default swap contracts sold were as follows:

Effective/ Expiration Date		Notional Amount ($) (m)				Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (n)		Value ($)				Upfront Payments Paid/ (Received) ($)				Unrealized Appreciation ($)
9/20/2012 12/20/2017			125,000	6			5.0	%	General Motors Corp., 3.3%, 12/20/2017, BB+			15,546				8,311				7,235

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

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

At June 30, 2013, open interest rate swap contracts sold 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) ($)			Unrealized Appreciation (Depreciation) ($)
6/3/2013 6/3/2025		2,100,000	2	Floating — LIBOR	Fixed — 3.0%		19,515			—			19,515
5/1/2014 5/1/2024		3,500,000	4	Fixed — 2.156%	Floating — LIBOR		272,477			(593	)		273,070
5/1/2014 5/1/2044		500,000	4	Floating — LIBOR	Fixed — 2.922%		(61,676	)		829			(62,505	)
Total net unrealized appreciation													230,080

Counterparties:

1 Bank of America

2 Nomura International PLC

3 BNP Paribas

4 Barclays Bank PLC

5 JPMorgan Chase Securities, Inc.

6 UBS AG

LIBOR: London Interbank Offered Rate

As of June 30, 2013, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Appreciation ($)		Counterparty
NOK	9,197,292	EUR	1,200,000	7/5/2013		48,033	Citigroup, Inc.
USD	8,149	NOK	49,678	7/5/2013		28	Citigroup, Inc.
GBP	800,000	USD	1,221,125	7/5/2013		4,390	JPMorgan Chase Securities, Inc.
AUD	500,000	USD	520,922	7/5/2013		63,747	Nomura International PLC
AUD	550,000	USD	566,751	7/9/2013		64,008	Nomura International PLC
JPY	80,000,000	USD	823,216	7/10/2013		16,577	Nomura International PLC
EUR	600,000	USD	794,742	7/11/2013		13,724	JPMorgan Chase Securities, Inc.
GBP	500,000	USD	777,548	7/11/2013		17,120	BNP Paribas
SGD	1,600,000	USD	1,286,036	7/11/2013		23,685	JPMorgan Chase Securities, Inc.
EUR	600,000	USD	796,109	7/11/2013		15,091	Barclays Bank PLC
AUD	1,300,000	NZD	1,551,472	7/12/2013		13,410	Citigroup, Inc.
CZK	15,000,000	USD	770,100	7/12/2013		19,534	Bank Of America N.A.
CZK	14,900,000	USD	771,395	7/12/2013		25,833	BNP Paribas
USD	776,601	ZAR	7,700,000	7/15/2013		880	Barclays Bank PLC
NZD	1,000,000	USD	796,967	7/15/2013		22,739	Citigroup, Inc.
JPY	50,000,000	USD	504,293	7/16/2013		133	Nomura International PLC
JPY	50,000,000	USD	511,589	7/16/2013		7,429	Bank Of America N.A.
EUR	800,000	USD	1,065,849	7/17/2013		24,467	Nomura International PLC
GBP	700,000	USD	1,097,029	7/17/2013		32,472	JPMorgan Chase Securities, Inc.
USD	5,749	EUR	4,418	7/19/2013		2	Citigroup, Inc.
EUR	549,550	USD	732,800	7/19/2013		17,430	Citigroup, Inc.
JPY	70,000,000	USD	710,345	7/24/2013		4,500	Barclays Bank PLC
USD	505,861	ZAR	5,200,000	7/25/2013		18,429	Barclays Bank PLC
USD	728,583	AUD	800,000	7/26/2013		1,768	JPMorgan Chase Securities, Inc.
CAD	800,000	USD	760,541	7/26/2013		299	Nomura International PLC
AUD	800,000	USD	739,142	7/26/2013		8,791	BNP Paribas
CAD	1,000,000	USD	978,926	7/31/2013		28,735	JPMorgan Chase Securities, Inc.
AUD	1,071,800	USD	1,040,724	7/31/2013		62,595	JPMorgan Chase Securities, Inc.
CAD	659,544	USD	639,001	7/31/2013		12,309	Nomura International PLC
JPY	30,000,000	USD	307,148	8/1/2013		4,634	Nomura International PLC
USD	1,007,112	JPY	100,000,000	8/2/2013		1,271	JPMorgan Chase Securities, Inc.
Total unrealized appreciation						574,063

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
USD	808,526	JPY	80,000,000	7/5/2013		(1,903	)	Nomura International PLC
USD	1,245,708	GBP	800,000	7/5/2013		(28,973	)	BNP Paribas
JPY	80,000,000	USD	798,495	7/5/2013		(8,128	)	Nomura International PLC
USD	523,125	AUD	500,000	7/5/2013		(65,951	)	Barclays Bank PLC
EUR	1,200,000	NOK	9,147,614	7/5/2013		(56,210	)	UBS AG
USD	827,605	JPY	80,000,000	7/10/2013		(20,967	)	Barclays Bank PLC
USD	777,720	GBP	500,000	7/11/2013		(17,292	)	Barclays Bank PLC
USD	1,272,644	SGD	1,600,000	7/11/2013		(10,294	)	Nomura International PLC
USD	1,597,224	EUR	1,200,000	7/11/2013		(35,189	)	Barclays Bank PLC
NZD	963,602	AUD	800,000	7/12/2013		(15,105	)	Nomura International PLC
NZD	597,794	AUD	500,000	7/12/2013		(5,989	)	BNP Paribas
USD	1,559,639	CZK	29,900,000	7/12/2013		(63,510	)	Barclays Bank PLC
USD	7,688	NZD	9,923	7/12/2013		(3	)	Barclays Bank PLC
USD	510,204	INR	30,000,000	7/15/2013		(6,539	)	Citigroup, Inc.
USD	804,435	NZD	1,000,000	7/15/2013		(30,207	)	JPMorgan Chase Securities, Inc.
ZAR	7,700,000	USD	767,969	7/15/2013		(9,512	)	UBS AG
INR	30,000,000	USD	492,773	7/15/2013		(10,892	)	Citigroup, Inc.
USD	1,008,657	JPY	100,000,000	7/16/2013		(337	)	Nomura International PLC
USD	1,100,750	GBP	700,000	7/17/2013		(36,194	)	UBS AG
USD	1,057,846	EUR	800,000	7/17/2013		(16,464	)	Nomura International PLC
USD	769,742	ZAR	7,600,000	7/19/2013		(2,803	)	JPMorgan Chase Securities, Inc.
ZAR	7,600,000	USD	761,403	7/19/2013		(5,535	)	JPMorgan Chase Securities, Inc.
NOK	4,763,579	EUR	600,000	7/24/2013		(2,568	)	BNP Paribas
USD	716,336	JPY	70,000,000	7/24/2013		(10,491	)	Nomura International PLC
ZAR	5,200,000	USD	513,782	7/25/2013		(10,508	)	Citigroup, Inc.
TWD	22,700,000	USD	755,156	7/29/2013		(2,397	)	JPMorgan Chase Securities, Inc.
JPY	90,431,642	USD	910,486	7/31/2013		(1,405	)	Nomura International PLC
USD	777,205	ZAR	7,700,000	8/1/2013		(1,641	)	Citigroup, Inc.
ZAR	7,700,000	USD	769,915	8/1/2013		(5,649	)	Citigroup, Inc.
USD	302,877	JPY	30,000,000	8/1/2013		(363	)	UBS AG
USD	1,732,788	MXN	22,400,000	8/19/2013		(11,396	)	JPMorgan Chase Securities, Inc.
Total unrealized depreciation						(494,415	)

Currency Abbreviations

AUD Australian Dollar

BRL Brazilian Real

CAD Canadian Dollar

CZK Czech Koruna

EUR Euro

GBP British Pound

INR Indian Rupee

JPY Japanese Yen

MXN Mexican Peso

NOK Norwegian Krone

NZD New Zealand Dollar

RUB Russian Ruble

SGD Singapore Dollar

TWD Taiwan Dollar

USD United States Dollar

ZAR South African Rand

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

Fair Value Measurements

Assets	Level 1			Level 2			Level 3		Total

Common Stocks and/or Other Equity Investments (o)
Consumer Discretionary	$	5,469,327		$	7,106,180		$	0	$	12,575,507
Consumer Staples		18,767,325			13,771,738			—		32,539,063
Energy		12,448,162			740,695			—		13,188,857
Financials		10,154,969			6,316,037			—		16,471,006
Health Care		3,480,689			19,869,777			—		23,350,466
Industrials		—			9,944,706			0		9,944,706
Information Technology		13,734,553			2,873,238			—		16,607,791
Materials		8,057,430			2,473,600			6,632		10,537,662
Telecommunication Services		—			4,973,254			—		4,973,254
Utilities		7,482,173			2,777,739			—		10,259,912
Warrants (o)		—			—			13,594		13,594
Fixed Income Investments (o)
Corporate Bonds		—			64,269,736			0		64,269,736
Asset Backed		—			814,440			—		814,440
Mortgage-Backed Securities Pass-Throughs		—			9,591,256			—		9,591,256
Commercial Mortgage-Backed Securities		—			2,264,462			—		2,264,462
Collateralized Mortgage Obligations		—			5,009,637			—		5,009,637
Government & Agency Obligations		—			13,318,258			—		13,318,258
Loan Participations and Assignments		—			2,090,566			—		2,090,566
Municipal Bonds and Notes		—			429,213			—		429,213
Convertible Bonds		—			—			324,138		324,138
Preferred Securities		—			252,800			—		252,800
Other Investments		—			—			17,388		17,388
Short-Term Investments (o)		40,468,241			—			—		40,468,241
Derivatives (p)
Futures Contracts		2,164,258			—			—		2,164,258
Purchased Options		1,781			145,475			—		147,256
Credit Default Swap Contracts		—			7,235			—		7,235
Interest Rate Swap Contracts		—			292,585			—		292,585
Forward Foreign Currency Exchange Contracts		—			574,063			—		574,063
Total	$	122,228,908		$	169,906,690		$	361,752	$	292,497,350
Liabilities
Derivatives (p)
Futures Contracts	$	(110,370	)	$	—		$	—	$	(110,370	)
Written Options		(174,000	)		(260,381	)		—		(434,381	)
Interest Rate Swap Contracts		—			(62,505	)		—		(62,505	)
Forward Foreign Currency Exchange Contracts		—			(494,415	)		—		(494,415	)
Total	$	(284,370	)	$	(817,301	)	$	—	$	(1,101,671	)

During the period ended June 30, 2013, the amount of transfers between Level 2 and Level 3 was $16. Investments were transferred from Level 2 to Level 3 because of the lack of observable market data due to a decrease in market activity.

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

(o) See Investment Portfolio for additional detailed categorizations.

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

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

Statement of Assets and Liabilities

as of June 30, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $230,019,386) — including $22,576,516 of securities loaned	$	248,990,968
Investment in Daily Assets Fund Institutional (cost $23,372,464)*		23,372,464
Investment in Central Cash Management Fund (cost $17,095,777)		17,095,777
Total investments in securities, at value (cost $270,487,627)		289,459,209
Cash		49,996
Foreign currency, at value (cost $268,008)		263,138
Receivable for investments sold		133,057
Receivable for investments sold — when-issued/ delayed delivery securities		3,863,487
Receivable for Fund shares sold		2,010
Dividends receivable		330,434
Interest receivable		1,221,001
Receivable for variation margin on futures contracts		36,553
Unrealized appreciation on swap contracts		299,820
Unrealized appreciation on forward foreign currency exchange contracts		574,063
Upfront payments paid on swap contracts		9,140
Foreign taxes recoverable		96,353
Other assets		2,238
Total assets		296,340,499
Liabilities
Payable upon return of securities loaned		23,372,464
Payable for investments purchased		962,375
Payable for investments purchased — when-issued/delayed delivery securities		13,495,007
Payable for Fund shares redeemed		135,550
Options written, at value (premium received $269,316)		434,381
Unrealized depreciation on swap contracts		62,505
Unrealized depreciation on forward foreign currency exchange contracts		494,415
Upfront payments received on swap contracts		593
Accrued management fee		79,105
Accrued Trustees' fees		619
Other accrued expenses and payables		126,844
Total liabilities		39,163,858
Net assets, at value	$	257,176,641
Net Assets Consist of
Undistributed net investment income		4,767,730
Net unrealized appreciation (depreciation) on: Investments		18,971,582
Swap contracts		237,315
Futures		2,053,888
Foreign currency		65,926
Written options		(165,065	)
Accumulated net realized gain (loss)		(6,030,595	)
Paid-in capital		237,275,860
Net assets, at value	$	257,176,641
Class A Net Asset Value, offering and redemption price per share ($257,176,641 ÷ 10,480,859 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	24.54

* 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, 2013 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $261,725)	$	3,090,760
Interest		2,426,188
Income distributions — Central Cash Management Fund		2,696
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		115,397
Total income		5,635,041
Expenses: Management fee		484,558
Administration fee		131,468
Services to shareholders		956
Custodian fee		34,877
Professional fees		43,944
Reports to shareholders		32,581
Trustees' fees and expenses		6,261
Other		29,473
Total expenses		764,118
Net investment income		4,870,923
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		258,289
Swap contracts		86,358
Futures		(456,915	)
Written options		90,646
Foreign currency		(326,274	)
		(347,896	)
Change in net unrealized appreciation (depreciation) on: Investments		5,983,143
Swap contracts		209,806
Futures		2,076,162
Written options		(272,306	)
Foreign currency		90,171
		8,086,976
Net gain (loss)		7,739,080
Net increase (decrease) in net assets resulting from operations	$	12,610,003

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income (loss)	$	4,870,923		$	6,577,137
Net realized gain (loss)		(347,896	)		37,219,792
Change in net unrealized appreciation (depreciation)		8,086,976			(11,355,694	)
Net increase (decrease) in net assets resulting from operations		12,610,003			32,441,235
Distributions to shareholders from: Net investment income: Class A		(5,498,634	)		(4,191,340	)
Total distributions		(5,498,634	)		(4,191,340	)
Fund share transactions: Class A Proceeds from shares sold		4,735,892			5,666,347
Shares issued to shareholders in reinvestment of distributions		5,498,634			4,191,340
Payments for shares redeemed		(20,567,513	)		(41,768,743	)
Net increase (decrease) in net assets from Class A share transactions		(10,332,987	)		(31,911,056	)
Increase (decrease) in net assets		(3,221,618	)		(3,661,161	)
Net assets at beginning of period		260,398,259			264,059,420
Net assets at end of period (including undistributed net investment income of $4,767,730 and $5,395,441, respectively)	$	257,176,641		$	260,398,259
Other Information
Class A Shares outstanding at beginning of period		10,896,924			12,288,136
Shares sold		190,593			246,623
Shares issued to shareholders in reinvestment of distributions		220,917			186,116
Shares redeemed		(827,575	)		(1,823,951	)
Net increase (decrease) in Class A shares		(416,065	)		(1,391,212	)
Shares outstanding at end of period		10,480,859			10,896,924

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	23.90		$	21.49		$	22.13		$	20.52		$	17.35		$	24.81
Income (loss) from investment operations: Net investment incomea		.46			.57			.46			.39			.44			.61
Net realized and unrealized gain (loss)		.70			2.20			(.75	)		1.88			3.43			(7.20	)
Total from investment operations		1.16			2.77			(.29	)		2.27			3.87			(6.59	)
Less distributions from: Net investment income		(.52	)		(.36	)		(.35	)		(.66	)		(.70	)		(.87	)
Net asset value, end of period	$	24.54		$	23.90		$	21.49		$	22.13		$	20.52		$	17.35
Total Return (%)		4.84	**		12.98			(1.42	)		11.22			23.43			(27.33	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		257			260			264			308			319			307
Ratio of expenses before expense reductions (%)		.58	*		.59			.58			.65			.60			.64
Ratio of expenses after expense reductions (%)		.58	*		.59			.58			.65			.60			.62
Ratio of net investment income (%)		3.71	*		2.48			2.09			1.89			2.40			2.83
Portfolio turnover rate (%)		50	**		188			109			203			207			263
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 Global Income Builder 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 and loan participations and assignments are valued at prices supplied 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.

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

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

As of June 30, 2013, the Fund had securities on loan with a gross value of $22,576,516. The value of the related collateral, $23,372,464, exceeded the value of the securities loaned at period end.

Loan Participations and Assignments. Loan participations and assignments are portions of loans originated by banks and sold in pieces to investors. These 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. Loans held by the Fund are generally in the form of Assignments but the Fund may also invest in Participants. 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 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.

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $5,132,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2017, the expiration date, whichever occurs first.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in foreign denominated investments, forward currency contracts, futures contracts, swap contracts and certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.

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

B. Derivative Instruments

Interest Rate Swap Contracts. For the six months ended June 30, 2013, 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. In addition, both the Fund and counterparty may agree to exchange variable rate payments based on different indices. 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, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in interest rate swap contracts had a total notional amount generally indicative of a range from $6,100,000 to $22,800,000.

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. The Fund may enter into credit default swap contracts to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller 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 U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the contract provided that no credit event has occurred. If no credit event occurs, the Fund keeps the stream of payments with no payment obligations. 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. For the six months ended June 30, 2013, the Fund entered into credit default swap contracts to gain exposure to the underlying issuer's credit quality characteristics.

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.

A summary of the open credit default swap contracts as of June 30, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in credit default swap contracts sold had a total notional value generally indicative of a range from $125,000 to $1,925,000.

A summary of the open futures contracts as of June 30, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $1,012,000 to $6,117,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $4,480,000 to $58,955,000.

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 exercised. For the six months ended June 30, 2013, the Fund entered into options on interest rate futures and on interest rate swaps in order to hedge against potential adverse interest rate movements of portfolio assets.

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

A summary of the open purchased option contracts as of June 30, 2013 is included in the Fund's Investment Portfolio. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in written option contracts had a total value generally indicative of a range from approximately $74,000 to $434,000, and purchased option contracts had a total value generally indicative of a range from approximately $83,000 to $147,000.

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, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $6,931,000 to $23,982,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from approximately $3,551,000 to $20,433,000. The investment in forward currency contracts long vs. other foreign currencies sold had a total contract value generally indicative of a range from $0 to approximately $6,419,000.

The following tables summarize the value of the Fund's derivative instruments held as of June 30, 2013 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivatives	Purchased Options		Forward Contracts		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a) (b)	$	147,256	$	—	$	292,585	$	2,164,258	$	2,604,099
Credit Contracts (a)		—		—		7,235		—		7,235
Foreign Exchange Contracts (c)		—		574,063		—		—		574,063
	$	147,256	$	574,063	$	299,820	$	2,164,258	$	3,185,397

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

(a) Investment in securities, at value (includes purchased options) and unrealized appreciation on swap contracts

(b) 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 Derivatives	Written Options			Forward Contracts			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(434,381	)	$	—		$	(62,505	)	$	(110,370	)	$	(607,256	)
Foreign Exchange Contracts (c)		—			(494,415	)		—			—			(494,415	)
	$	(434,381	)	$	(494,415	)	$	(62,505	)	$	(110,370	)	$	(1,101,671	)

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

(a) Options written, at value and unrealized depreciation on swap contracts

(b) 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		Forward Contracts			Swap Contracts		Futures Contracts			Total
Interest Rate Contracts (a)	$	(37,156	)	$	90,646	$	—		$	12,033	$	(456,915	)	$	(391,392	)
Credit Contracts (a)		—			—		—			74,325		—			74,325
Foreign Exchange Contracts (b)		—			—		(276,007	)		—		—			(276,007	)
	$	(37,156	)	$	90,646	$	(276,007	)	$	86,358	$	(456,915	)	$	(593,074	)

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
Interest Rate Contracts (a)	$	57,291	$	(272,306	)	$	—	$	267,097		$	2,076,162	$	2,128,244
Credit Contracts (a)		—		—			—		(57,291	)		—		(57,291	)
Foreign Exchange Contracts (b)		—		—			103,401		—			—		103,401
	$	57,291	$	(272,306	)	$	103,401	$	209,806		$	2,076,162	$	2,174,354

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)

As of June 30, 2013, the Fund has transactions subject to enforceable master netting agreements. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by derivative type, including any collateral exposure, is included in the following tables:

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Received		Net Amount of Derivative Assets
Bank of America	$	172,438	$	(103,264	)	$	—	$	69,174
Barclays Bank PLC		311,970		(272,118	)		—		39,852
BNP Paribas		51,744		(51,744	)		—		—
Citigroup, Inc.		101,642		(35,229	)		—		66,413
JPMorgan Chase Securities, Inc.		168,640		(59,951	)		—		108,689
Nomura International PLC		205,689		(165,758	)		—		39,931
UBS AG		7,235		(7,235	)		—		—
Exchange Traded Futures and Options (b)		2,166,039		—			—		2,166,039
	$	3,185,397	$	(695,299	)	$	—	$	2,490,098
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Pledged		Net Amount of Derivative Liabilities
Bank of America	$	103,264	$	(103,264	)	$	—	$	—
Barclays Bank PLC		272,118		(272,118	)		—		—
BNP Paribas		78,702		(51,744	)		—		26,958
Citigroup, Inc.		35,229		(35,229	)		—		—
JPMorgan Chase Securities, Inc.		59,951		(59,951	)		—		—
Nomura International PLC		165,758		(165,758	)		—		—
UBS AG		102,279		(7,235	)		—		95,044
Exchange Traded Futures and Options (b)		284,370		—			—		284,370
	$	1,101,671	$	(695,299	)	$	—	$	406,372

(a) Forward foreign currency exchange contracts, swap contracts and over-the-counter purchased options and written options are netted.

(b) Includes financial instruments (purchased options or futures) which are not subject to a master netting arrangement, or another similar arrangement.

C. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury obligations) aggregated $131,448,445 and $146,787,952, respectively. Purchases and sales of U.S. Treasury obligations aggregated $0 and $5,000,691, respectively.

For the six months ended June 30, 2013, transactions for written options on interest rate swap contracts and futures contracts were as follows:

	Contract Amount			Premium
Outstanding, beginning of period		8,200,020		$	181,719
Options written		16,800,048			191,116
Options closed		(5,900,000	)		(95,750	)
Options expired		(20	)		(7,769	)
Outstanding, end of period		19,100,048		$	269,316

D. Related Parties

Under the Investment Management Agreement, the Fund pays a monthly management fee based on the Fund's average daily net assets, computed and accrued daily and payable monthly, at the following annual rates:

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

Accordingly, for the six months ended June 30, 2013, the fee pursuant to the Investment Management Agreement was equivalent to an annualized effective rate of 0.37% of the Fund's average daily net assets.

Securities Lending Agent Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the six months ended June 30, 2013, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $12,811.

E. Ownership of the Fund

At June 30, 2013, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding shares of the Fund, each owning 44%, 21% and 16%.

F. Line of Credit

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,048.40
Expenses Paid per $1,000*	$	2.95
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,021.92
Expenses Paid per $1,000*	$	2.91

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

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2GIB-3 (R-028382-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Government & Agency Securities VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Manager

5 Investment Portfolio

9 Statement of Assets and Liabilities

10 Statement of Operations

11 Statement of Changes in Net Assets

13 Financial Highlights

15 Notes to Financial Statements

22 Information About Your Fund's Expenses

23 Proxy Voting

24 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. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. The "full faith and credit" guarantee of the U.S. government applies to the timely repayment of interest, and does not eliminate market risk. Because of the rising U.S. government debt burden, it is possible that the U.S. government may not be able to meet its financial obligations or that securities issued by the U.S. government may experience credit downgrades. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 0.68% and 1.03% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

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

Yearly periods ended June 30

Comparative Results
DWS Government & Agency Securities VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	9,713		$	9,844		$	10,759		$	12,781		$	15,416
Class A	Average annual total return		-2.87	%		-1.56	%		2.47	%		5.03	%		4.42	%
Barclays GNMA Index	Growth of $10,000	$	9,732		$	9,808		$	10,899		$	12,805		$	15,944
Barclays GNMA Index	Average annual total return		-2.68	%		-1.92	%		2.91	%		5.07	%		4.78	%
DWS Government & Agency Securities VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	9,709		$	9,817		$	10,653		$	12,574		$	14,867
Class B	Average annual total return		-2.91	%		-1.83	%		2.13	%		4.69	%		4.05	%
Barclays GNMA Index	Growth of $10,000	$	9,732		$	9,808		$	10,899		$	12,805		$	15,944
Barclays GNMA Index	Average annual total return		-2.68	%		-1.92	%		2.91	%		5.07	%		4.78	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio)	6/30/13	12/31/12

Mortgage-Backed Securities Pass-Throughs	79%	67%
Collateralized Mortgage Obligations	12%	15%
Government & Agency Obligations	8%	17%
Options Purchased	1%	0%
Cash Equivalents	0%	1%
	100%	100%

Coupons*	6/30/13	12/31/12

Less than 4.5%	50%	35%
4.5%-5.49%	27%	37%
5.5%-6.49%	20%	24%
6.5%-7.49%	3%	3%
7.5% and Greater	0%	1%
	100%	100%

Interest Rate Sensitivity	6/30/13	12/31/12

Effective Maturity	10.0 years	7.0 years
Effective Duration	6.0 years	5.5 years

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

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

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

Portfolio holdings and characteristics are subject to change.

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

Portfolio Manager

William Chepolis, CFA

Portfolio Manager

Investment Portfolio June 30, 2013 (Unaudited)

	Principal Amount ($)		Value ($)

Mortgage-Backed Securities Pass-Throughs 94.6%
Federal Home Loan Mortgage Corp.:
3.0%, 9/1/2042 (a)		5,000,000		4,873,440
3.5%, 1/1/2042 (a)		11,000,000		11,145,234
Federal National Mortgage Association:
3.0%, 10/1/2042 (a)		5,000,000		4,889,062
3.5%, 1/1/2042 (a)		14,000,000		14,218,750
Government National Mortgage Association:
3.0%, 10/1/2042 (a)		1,000,000		989,375
3.5%, with various maturities from 12/1/2041 until 3/20/2043 (a)		2,622,665		2,721,003
4.0%, with various maturities from 2/15/2040 until 6/20/2043 (a)		10,580,354		11,182,720
4.5%, with various maturities from 6/20/2033 until 2/20/2043 (a)		8,235,554		8,876,355
4.55%, 1/15/2041		494,500		527,187
4.625%, 5/15/2041		197,654		213,408
5.0%, with various maturities from 11/20/2032 until 4/15/2042		18,168,209		19,710,203
5.5%, with various maturities from 10/15/2032 until 7/20/2040		12,001,010		13,202,631
6.0%, with various maturities from 7/15/2014 until 5/15/2040		10,247,463		11,352,488
6.5%, with various maturities from 4/15/2031 until 2/15/2039		2,095,001		2,356,125
7.0%, with various maturities from 2/20/2027 until 11/15/2038		329,136		375,657
7.5%, 10/20/2031		8,019		9,440
Total Mortgage-Backed Securities Pass-Throughs (Cost $107,246,189)				106,643,078

Collateralized Mortgage Obligations 14.6%
Federal Home Loan Mortgage Corp.:
"OA", Series 3179, Principal Only, Zero Coupon, 7/15/2036		340,042		305,184
"KO", Series 4180, Principal Only, Zero Coupon, 1/15/2043		1,533,311		1,008,089
"KB", Series 4144, 2.5%, 12/15/2042		214,837		173,400
"YI", Series 3936, Interest Only, 3.0%, 6/15/2025		136,503		7,391
"AI", Series 4016, Interest Only, 3.0%, 9/15/2025		1,458,503		105,029
"WI", Series 3939, Interest Only, 3.0%, 10/15/2025		543,611		28,892
"EI", Series 3953, Interest Only, 3.0%, 11/15/2025		750,393		54,374
"IO", Series 3974, Interest Only, 3.0%, 12/15/2025		232,891		21,916
"DI", Series 4010, Interest Only, 3.0%, 2/15/2027		191,990		17,202
"IP", Series 4046, Interest Only, 3.0%, 5/15/2027		503,694		71,657
	Principal Amount ($)		Value ($)

"IK", Series 4048, Interest Only, 3.0%, 5/15/2027		1,713,665		218,630
"IA", Series 3800, Interest Only, 3.5%, 12/15/2022		540,207		6,535
"IK", Series 3754, Interest Only, 3.5%, 6/15/2025		1,224,152		97,051
"DZ", Series 4199, 3.5%, 5/15/2043		234,538		208,441
"NI", Series 3657, Interest Only, 4.5%, 8/15/2027		615,648		27,245
"22", Series 243, Interest Only, 4.741%*, 6/15/2021		825,348		58,419
"PI", Series 2535, Interest Only, 6.0%, 9/15/2032		286,521		15,864
"MI", Series 3871, Interest Only, 6.0%, 4/15/2040		205,555		34,107
"SJ", Series 3501, Interest Only, 6.258%*, 1/15/2039		2,028,989		347,243
"A", Series 172, Interest Only, 6.5%, 1/1/2024		26,319		3,902
"DS", Series 3199, Interest Only, 6.958%*, 8/15/2036		2,442,483		425,927
"S", Series 2416, Interest Only, 7.908%*, 2/15/2032		345,798		72,450
"ST", Series 2411, Interest Only, 8.558%*, 6/15/2021		1,125,622		129,427
"KS", Series 2064, Interest Only, 9.9%*, 5/15/2022		348,903		71,199
Federal National Mortgage Association:
"DI", Series 2011-136, Interest Only, 3.0%, 1/25/2026		223,498		20,208
"LZ", Series 2013-45, 3.0%, 5/25/2043		1,005,006		811,958
"HI", Series 2010-123, Interest Only, 3.5%, 3/25/2024		457,114		32,569
"KI", Series 2011-72, Interest Only, 3.5%, 3/25/2025		1,419,144		73,467
''IO", Series 2012-146, Interest Only, 3.5%, 1/25/2043		2,207,108		528,664
"KZ", Series 2013-66, 3.5%, 7/25/2043		908,534		859,700
"25", Series 351, Interest Only, 4.5%, 5/1/2019		215,330		18,639
"HI", Series 2009-77, Interest Only, 4.5%, 9/25/2027		263,097		7,059
"IN", Series 2003-49, Interest Only, 4.75%, 3/25/2018		1,401,231		72,057
"21", Series 334, Interest Only, 5.0%, 3/1/2018		100,703		7,512
"20", Series 334, Interest Only, 5.0%, 3/1/2018		148,214		11,061
''23", Series 339, Interest Only, 5.0%, 7/1/2018		219,880		15,115
"26", Series 381, Interest Only, 5.0%, 12/25/2020		69,690		5,563
"ZA", Series 2008-24, 5.0%, 4/25/2038		682,227		747,445
"30", Series 381, Interest Only, 5.5%, 11/25/2019		381,093		35,941
"PI", Series 2009-14, Interest Only, 5.5%, 3/25/2024		660,391		87,972
"PJ", Series 2004-46, Interest Only, 5.807%*, 3/25/2034		453,805		58,996
"WI", Series 2011-59, Interest Only, 6.0%, 5/25/2040		460,860		52,168
	Principal Amount ($)		Value ($)

"PI", Series 2007-75, Interest Only, 6.347%*, 8/25/2037		1,438,973		283,983
"101", Series 383, Interest Only, 6.5%, 9/1/2022		1,296,744		190,978
"SJ", Series 2007-36, Interest Only, 6.577%*, 4/25/2037		281,582		37,164
"SA", Series 2005-42, Interest Only, 6.607%*, 5/25/2035		493,658		61,106
"KI", Series 2005-65, Interest Only, 6.807%*, 8/25/2035		121,156		22,462
"ES", Series 2003-17, Interest Only, 6.857%*, 9/25/2022		974,389		26,281
"SA", Series G92-57, IOette, 82.85%*, 10/25/2022		41,972		76,657
Government National Mortgage Association:
"IE", Series 2011-128, Interest Only, 3.5%, 9/20/2026		1,102,919		115,243
"JY", Series 2010-20, 4.0%, 12/20/2033		1,974,028		2,077,098
"LI", Series 2009-104, Interest Only, 4.5%, 12/16/2018		274,397		18,675
"NI", Series 2010-44, Interest Only, 4.5%, 10/20/2037		683,685		74,480
"CI", Series 2010-87, Interest Only, 4.5%, 11/20/2038		1,251,588		479,433
"MI", Series 2010-169, Interest Only, 4.5%, 8/20/2040		891,712		167,668
"AI", Series 2012-15, Interest Only, 4.5%, 9/20/2040		664,667		174,493
"VB", Series 2010-26, 5.0%, 1/20/2024		600,000		676,208
"GZ", Series 2005-24, 5.0%, 3/20/2035		505,614		564,973
"MI", Series 2009-76, Interest Only, 5.0%, 3/20/2035		696,943		24,263
"ZA", Series 2005-75, 5.0%, 10/16/2035		568,808		637,979
"MZ", Series 2009-98, 5.0%, 10/16/2039		1,020,644		1,180,091
"Z", Series 2009-112, 5.0%, 11/20/2039		1,195,775		1,327,063
"AI", Series 2008-51, Interest Only, 5.5%, 5/16/2023		551,349		48,934
"AI", Series 2008-46, Interest Only, 5.5%, 5/16/2023		285,245		26,923
"GI", Series 2003-19, Interest Only, 5.5%, 3/16/2033		960,597		178,117
"IB", Series 2010-130, Interest Only, 5.5%, 2/20/2038		309,091		52,549
"BS", Series 2011-93, Interest Only, 5.908%*, 7/16/2041		1,436,576		228,231
"DI", Series 2009-10, Interest Only, 6.0%, 4/16/2038		381,255		70,273
"SA", Series 2012-84, Interest Only, 6.108%*, 12/20/2038		1,590,504		276,949
"QA", Series 2007-57, Interest Only, 6.308%*, 10/20/2037		403,976		53,145
"IP", Series 2009-118, Interest Only, 6.5%, 12/16/2039		123,334		24,867
"SA", Series 2006-69, Interest Only, 6.608%*, 12/20/2036		774,088		127,227
"IC", Series 1997-4, Interest Only, 7.5%, 3/16/2027		649,269		160,216
"SK", Series 2003-11, Interest Only, 7.508%*, 2/16/2033		567,941		117,459
Total Collateralized Mortgage Obligations (Cost $15,511,042)				16,536,856

	Principal Amount ($)		Value ($)

Government & Agency Obligations 9.5%
U.S. Treasury Obligations
U.S. Treasury Bill, 0.1%**, 9/5/2013 (b)		1,045,000		1,044,961
U.S. Treasury Bond, 2.875%, 5/15/2043		4,500,000		3,982,500
U.S. Treasury Notes:
0.75%, 6/15/2014 (c)		1,000,000		1,005,273
1.75%, 5/15/2023		5,000,000		4,682,810
Total Government & Agency Obligations (Cost $10,643,238)				10,715,544

	Contracts		Value ($)

Call Options Purchased 0.7%
Options on Exchange-Traded Futures Contracts 0.0%
10 Year U.S. Treasury Note Future, Expiration Date 8/23/2013, Strike Price $132.5		126		5,906

	Contract Amount		Value ($)

Options on Interest Rate Swap Contracts 0.7%
Pay Fixed Rate — 3.583% - Receive Floating — LIBOR, Swap Expiration Date 5/11/2026, Option Expiration Date 5/9/20161		2,700,000		170,776
Pay Fixed Rate — 3.635% - Receive Floating — LIBOR, Swap Expiration Date 4/27/2026, Option Expiration Date 4/25/20162		2,600,000		157,126
Pay Fixed Rate — 3.72% - Receive Floating — LIBOR, Swap Expiration Date 4/22/2026, Option Expiration Date 4/20/20163		2,600,000		147,568
Pay Fixed Rate — 4.32% - Receive Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20174		6,000,000		286,825
				762,295
Total Call Options Purchased (Cost $699,978)				768,201

Put Options Purchased 0.1%
Options on Interest Rate Swap Contracts
Receive Fixed Rate — 2.32% - Pay Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20174 (Cost $203,883)		6,000,000		73,596

	Shares		Value ($)

Cash Equivalents 0.2%
Central Cash Management Fund, 0.07% (d) (Cost $248,923)		248,923		248,923

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $134,553,253)†		119.7			134,986,198
Other Assets and Liabilities, Net		(19.7	)		(22,250,746	)
Net Assets		100.0			112,735,452

* These securities are shown at their current rate as of June 30, 2013.

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

† The cost for federal income tax purposes was $134,553,275. At June 30, 2013, net unrealized appreciation for all securities based on tax cost was $432,923. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $4,345,125 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,912,202.

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

(b) At June 30, 2013, 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.

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 Government National Mortgage Association issues which have similar coupon rates have been aggregated for presentation purposes in this investment portfolio.

At June 30, 2013, open futures contracts bought were as follows:

Futures

Currency

Expiration Date

Contracts

Notional Value ($)

Unrealized Depreciation ($)

Ultra Long U.S. Treasury Bond

USD

9/19/2013

2,651,625

(159,173

)

At June 30, 2013, open futures contracts sold were as follows:

Futures

Currency

Expiration Date

Contracts

Notional Value ($)

Unrealized Appreciation ($)

10 Year U.S. Treasury Note

USD

9/19/2013

110

13,921,875

189,212

Currency Abbreviation

USD United States Dollar

At June 30, 2013, open written options contracts were as follows:

Options on Exchange-Traded Futures Contracts

Contracts

Expiration Date

Strike Price ($)

Premiums Received ($)

Value ($) (e)

Put Options

10 Year U.S. Treasury Note Future

101

8/23/2013

130.0

86,502

(366,125

)

(e) Unrealized depreciation on written options on exchange-traded futures contracts at June 30, 2013 was $279,623.

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (f)
Call Options Receive Fixed — 3.32% - Pay Floating — LIBOR	2/3/2017 2/3/2027		3,000,000	4	2/1/2017		216,990		(262,048	)
Receive Fixed — 4.083% - Pay Floating — LIBOR	5/11/2016 5/11/2026		2,700,000	1	5/9/2016		91,800		(121,222	)
Receive Fixed — 4.135% - Pay Floating — LIBOR	4/27/2016 4/27/2026		2,600,000	2	4/25/2016		96,200		(110,846	)
Receive Fixed — 4.22% - Pay Floating — LIBOR	4/22/2016 4/22/2026		2,600,000	3	4/20/2016		92,690		(103,777	)
Receive Fixed — 5.132% - Pay Floating — LIBOR	3/17/2016 3/17/2026		2,400,000	3	3/15/2016		17,340		(44,927	)
Receive Fixed — 4.064% - Pay Floating — LIBOR	5/13/2014 5/13/2044		2,400,000	3	5/19/2014		17,700		(66,434	)
Receive Fixed — 5.132% - Pay Floating — LIBOR	3/17/2016 3/17/2026		2,400,000	4	3/15/2016		28,321		(44,927	)
Total Call Options							561,041		(754,181	)
Put Options Pay Fixed — 1.132% - Receive Floating — LIBOR	3/17/2016 3/17/2026		2,400,000	3	3/15/2016		17,340		(2,127	)
Pay Fixed — 2.385% - Receive Floating — LIBOR	3/31/2014 3/31/2044		2,400,000	5	3/27/2014		32,760		(7,658	)
Pay Fixed — 2.423% - Receive Floating — LIBOR	3/20/2014 3/20/2044		2,400,000	6	3/18/2014		34,560		(8,700	)
Pay Fixed — 3.32% - Receive Floating — LIBOR	2/3/2017 2/3/2027		3,000,000	4	2/1/2017		216,990		(104,378	)
Pay Fixed — 1.132% Receive Floating -- LIBOR	3/17/2016 3/17/2026		2,400,000	4	3/15/2016		6,120		(2,127	)
Pay Fixed — 2.064% Receive Floating -- LIBOR	5/13/2014 5/13/2044		2,400,000	3	5/9/2014		17,700		(2,663	)
Total Put Options							325,470		(127,653	)
Total							886,511		(881,834	)

(f) Unrealized appreciation on written options on interest rate swap contracts at June 30, 2013 was $4,677.

At June 30, 2013, open interest rate swap 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) ($)			Unrealized Appreciation ($)
4/23/2014 4/23/2016		20,000,000	3	Fixed — 0.921%	Floating — LIBOR		10,416			10,416			—
4/23/2014 4/23/2019		5,000,000	3	Fixed — 2.077%	Floating — LIBOR		4,286			4,286			—
4/23/2014 4/23/2024		2,000,000	2	Fixed — 3.024%	Floating — LIBOR		(877	)		(877	)		—
6/3/2013 6/3/2025		2,300,000	3	Floating — LIBOR	Fixed — 3.0%		21,864			—			21,864
4/23/2014 4/23/2034		3,000,000	2	Fixed — 3.532%	Floating — LIBOR		(2,267	)		(2,267	)		—
Total unrealized appreciation													21,864

Counterparty:

1 Bank of America

2 Citigroup, Inc.

3 Nomura International PLC

4 BNP Paribas

5 Barclays Bank PLC

6 JPMorgan Chase Securities, Inc.

LIBOR: London Interbank Offered Rate

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

Fair Value Measurements

Assets	Level 1			Level 2			Level 3		Total

Fixed-Income Investments (g)
Mortgage-Backed Securities Pass-Throughs	$	—		$	106,643,078		$	—	$	106,643,078
Collateralized Mortgage Obligations		—			16,536,856			—		16,536,856
Government & Agency Obligations		—			10,715,544			—		10,715,544
Short-Term Investments		248,923			—			—		248,923
Derivatives (h)
Purchased Options		5,906			835,891			—		841,797
Futures Contracts		189,212			—			—		189,212
Interest Rate Swap Contracts		—			21,864			—		21,864
Total	$	444,041		$	134,753,233		$	—	$	135,197,274
Liabilities
Derivatives (h)
Written Options	$	(366,125	)	$	(881,834	)	$	—	$	(1,247,959	)
Futures Contracts		(159,173	)		—			—		(159,173	)
Total	$	(525,298	)	$	(881,834	)	$	—	$	(1,407,132	)

There have been no transfers between fair value measurement levels during the period ended June 30, 2013.

(g) See Investment Portfolio for additional detailed categorizations.

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

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

Statement of Assets and Liabilities

as of June 30, 2013 (Unaudited)
Assets
Investments Investments in non-affiliated securities, at value (cost $134,304,330)	$	134,737,275
Investment in Central Cash Management Fund (cost $248,923)		248,923
Total investments in securities, at value (cost $134,553,253)		134,986,198
Receivable for investments sold		6,522,176
Receivable for investments sold — when-issued/delayed delivery securities		56,608,951
Receivable for Fund shares sold		824
Interest receivable		548,834
Receivable for variation margin on futures contracts		12,251
Net receivable for pending swap contracts		832,944
Unrealized appreciation on swap contracts		21,864
Upfront payments paid on swap contracts		14,702
Other assets		1,502
Total assets		199,550,246
Liabilities
Cash overdraft		7,265
Payable for investments purchased		11,192,029
Payable for investments purchased — when-issued/delayed delivery securities		74,186,990
Payable for Fund shares redeemed		65,953
Options written, at value (premium received $973,013)		1,247,959
Upfront payments received on swap contracts		3,144
Accrued management fee		37,503
Accrued Trustees' fees		1,068
Other accrued expenses and payables		72,883
Total liabilities		86,814,794
Net assets, at value	$	112,735,452
Net Assets Consist of
Undistributed net investment income		1,032,660
Investments		432,945
Swap contracts		21,864
Futures		30,039
Written options		(274,946	)
Accumulated net realized gain (loss)		1,373,172
Paid-in capital		110,119,718
Net assets, at value	$	112,735,452
Class A Net Asset Value, offering and redemption price per share ($108,262,913 ÷ 9,426,458 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.49
Class B Net Asset Value, offering and redemption price per share ($4,472,539 ÷ 389,307 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.49

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

Statement of Operations

for the six months ended June 30, 2013 (Unaudited)
Investment Income
Income: Interest	$	1,455,176
Income distributions — Central Cash Management Fund		2,652
Total income		1,457,828
Expenses: Management fee		267,190
Administration fee		59,376
Services to shareholders		805
Distribution service fees (Class B)		6,064
Record keeping fees (Class B)		2,401
Custodian fee		19,585
Audit and tax fees		32,037
Legal fees		4,373
Reports to shareholders		16,199
Trustees' fees and expenses		3,169
Other		10,356
Total expenses before expense reductions		421,555
Expense reductions		(18,657	)
Total expenses after expense reductions		402,898
Net investment income		1,054,930
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		920,427
Swap contracts		388,507
Futures		(44,434	)
Written options		177,921
		1,442,421
Change in net unrealized appreciation (depreciation) on: Investments		(5,507,996	)
Swap contracts		364,779
Securities sold short		(129,707	)
Futures		51,877
Written options		(601,208	)
		(5,822,255	)
Net gain (loss)		(4,379,834	)
Net increase (decrease) in net assets resulting from operations	$	(3,324,904	)

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income	$	1,054,930		$	3,586,409
Net realized gain (loss)		1,442,421			4,527,418
Change in net unrealized appreciation (depreciation)		(5,822,255	)		(4,180,279	)
Net increase (decrease) in net assets resulting from operations		(3,324,904	)		3,933,548
Distributions to shareholders from: Net investment income: Class A		(3,325,537	)		(5,435,920	)
Class B		(119,146	)		(209,154	)
Net realized gain: Class A		(4,523,083	)		(2,952,755	)
Class B		(185,024	)		(124,749	)
Total distributions		(8,152,790	)		(8,722,578	)
Fund share transactions: Class A Proceeds from shares sold		6,248,690			18,065,811
Reinvestment of distributions		7,848,620			8,388,675
Payments for shares redeemed		(15,460,992	)		(47,401,824	)
Net increase (decrease) in net assets from Class A share transactions		(1,363,682	)		(20,947,338	)
Class B Proceeds from shares sold		270,866			919,743
Reinvestment of distributions		304,170			333,903
Payments for shares redeemed		(1,093,925	)		(2,329,903	)
Net increase (decrease) in net assets from Class B share transactions		(518,889	)		(1,076,257	)
Increase (decrease) in net assets		(13,360,265	)		(26,812,625	)
Net assets at beginning of period		126,095,717			152,908,342
Net assets at end of period (including undistributed net investment income of $1,032,660 and $3,422,413, respectively)	$	112,735,452		$	126,095,717
Other Information
Class A Shares outstanding at beginning of period		9,511,241			11,145,622
Shares sold		514,981			1,389,466
Shares issued to shareholders in reinvestment of distributions		660,658			672,169
Shares redeemed		(1,260,422	)		(3,696,016	)
Net increase (decrease) in Class A shares		(84,783	)		(1,634,381	)
Shares outstanding at end of period		9,426,458			9,511,241
Class B Shares outstanding at beginning of period		428,962			511,071
Shares sold		22,785			72,277
Shares issued to shareholders in reinvestment of distributions		25,582			26,755
Shares redeemed		(88,022	)		(181,141	)
Net increase (decrease) in Class B shares		(39,655	)		(82,109	)
Shares outstanding at end of period		389,307			428,962

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	12.69		$	13.12		$	12.98		$	12.78		$	12.40		$	12.38
Income (loss) from investment operations: Net investment incomea		.11			.34			.48			.50			.52			.56
Net realized and unrealized gain (loss)		(.44	)		.03			.45			.32			.45			.04
Total from investment operations		(.33	)		.37			.93			.82			.97			.60
Less distributions from: Net investment income		(.37	)		(.52	)		(.57	)		(.62	)		(.59	)		(.58	)
Net realized gains		(.50	)		(.28	)		(.22	)		—			—			—
Total distributions		(.87	)		(.80	)		(.79	)		(.62	)		(.59	)		(.58	)
Net asset value, end of period	$	11.49		$	12.69		$	13.12		$	12.98		$	12.78		$	12.40
Total Return (%)		(2.87	)b**		2.93	b		7.46			6.61			8.08			4.93	b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		108			121			146			157			169			211
Ratio of expenses before expense reductions (%)		.70	*		.68			.67			.64			.58			.66
Ratio of expenses after expense reductions (%)		.67	*		.66			.67			.64			.58			.65
Ratio of net investment income (%)		1.79	*		2.65			3.68			3.86			4.16			4.58
Portfolio turnover rate (%)		315	**		796			673			423			390			543
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 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	12.67		$	13.10		$	12.95		$	12.75		$	12.37		$	12.35
Income (loss) from investment operations: Net investment incomea		.09			.29			.43			.46			.48			.52
Net realized and unrealized gain (loss)		(.45	)		.03			.46			.31			.45			.03
Total from investment operations		(.36	)		.32			.89			.77			.93			.55
Less distributions from: Net investment income		(.32	)		(.47	)		(.52	)		(.57	)		(.55	)		(.53	)
Net realized gains		(.50	)		(.28	)		(.22	)		—			—			—
Total distributions		(.82	)		(.75	)		(.74	)		(.57	)		(.55	)		(.53	)
Net asset value, end of period	$	11.49		$	12.67		$	13.10		$	12.95		$	12.75		$	12.37
Total Return (%)		(2.91	)b**		2.48	b		7.15			6.24			7.70			4.60	b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		4			5			7			6			7			8
Ratio of expenses before expense reductions (%)		1.05	*		1.03			1.01			.99			.92			1.00
Ratio of expenses after expense reductions (%)		.99	*		1.01			1.01			.99			.92			1.00
Ratio of net investment income (%)		1.45	*		2.29			3.34			3.51			3.81			4.24
Portfolio turnover rate (%)		315	**		796			673			423			390			543
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.

Debt securities are valued at prices supplied 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.

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.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in futures contracts, 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

For the six months ended June 30, 2013, the investment in interest rate swap contracts had a total notional amount generally indicative of a range from $32,300,000 to $40,700,000.

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 exercised. For the six months ended June 30, 2013, the Fund entered into options on interest rate futures and on interest rate swap contracts in order to hedge against potential adverse interest rate movements of portfolio assets.

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

A summary of the open purchased option contracts as of June 30, 2013 is included in the Fund's Investment Portfolio. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in written option contracts had a total value generally indicative of a range from approximately $590,000 to $1,248,000, and purchased option contracts had a total value generally indicative of a range from approximately $575,000 to $842,000.

A summary of the open futures contracts as of June 30, 2013, is included in a table following the Fund's Investment Portfolio. For the period ended June 30, 2013, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $2,652,000 to $7,555,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $3,722,000 to $13,922,000.

Asset Derivatives		Purchased Options				Swap Contracts				Futures Contracts				Total
Interest Rate Contracts (a) (b)		$	841,797			$	21,864			$	189,212			$	1,052,873

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

(a) Investments in securities, at value (includes purchased options) and unrealized appreciation on swap contracts

(b) 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 Derivatives		Written Options				Futures Contracts				Total
Interest Rate Contracts (a) (b)		$	(1,247,959	)		$	(159,173	)		$	(1,407,132	)

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

(a) Options written, at value

(b) Includes cumulative depreciation of futures 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)		$	981			$	177,921			$	388,507			$	(44,434	)		$	522,975

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				Written Options				Swap Contracts				Futures Contracts				Total
Interest Rate Contracts (a)		$	230,992			$	(601,208	)		$	364,779			$	51,877			$	46,440

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

(a) Change in net unrealized appreciation (depreciation) from investments (includes purchased options), written options, swap contracts and futures, respectively

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Received			Collateral Received		Net Amount of Derivative Assets
Bank of America	$	170,776	$	(121,222	)	$	—		$	—	$	49,554
BNP Paribas		360,421		(360,421	)		—			—		—
Citigroup, Inc.		157,126		(110,846	)		—			—		46,280
Nomura International PLC		169,432		(169,432	)		—			—		—
Exchange Traded Options and Futures (b)		195,118		—			—			—		195,118
	$	1,052,873	$	(761,921	)	$	—		$	—	$	290,952
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Pledged (c)			Collateral Pledged		Net Amount of Derivative Liabilities
Bank of America	$	121,222	$	(121,222	)	$	—		$	—	$	—
Barclays Bank PLC		7,658		—			—			—		7,658
BNP Paribas		413,480		(360,421	)		—			—		53,059
Citigroup, Inc.		110,846		(110,846	)		—			—		—
JPMorgan Chase Securities, Inc.		8,700		—			—			—		8,700
Nomura International PLC		219,928		(169,432	)		(20,105	)		—		30,391
Exchange Traded Options and Futures (b)		525,298		—			—			—		525,298
	$	1,407,132	$	(761,921	)	$	(20,105	)	$	—	$	625,106

(a) Swap contracts, over-the-counter purchased and written options are netted.

(b) Includes financial instruments (purchased options or futures) which are not subject to a master netting arrangement, or another similar arrangement.

C. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of investment securities (excluding short-term investments and U.S. Treasury securities) aggregated $448,972,090 and $461,297,759, respectively. Purchases and sales of U.S. Treasury securities aggregated $12,972,831 and $12,356,770, respectively.

For the six months ended June 30, 2013, transactions for written options on futures and interest rate swap contracts were as follows:

	Contracts/ Contract Amount			Premiums
Outstanding, beginning of period		25,600,030		$	916,248
Options written		19,200,101			258,343
Options closed		(11,700,000	)		(189,925	)
Options expired		(30	)		(11,653	)
Outstanding, end of period		33,100,101		$	973,013

D. Related Parties

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

For the period from January 1, 2013 through April 30, 2013, the Advisor had contractually agreed to waive its fees 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) of Class A at 0.66%.

For the period from May 1, 2013 through April 30, 2014, the Advisor has contractually agreed to waive its fees 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) of Class A at 0.67%.

For the period from January 1, 2013 through April 30, 2014, the Advisor has contractually agreed to waive its fees 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) of Class B at 0.99%.

Accordingly, for the six months ended June 30, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $17,966, and the amount charged aggregated $249,224, which was equivalent to an annualized effective rate of 0.42% of the Fund's average daily net assets.

	Total Aggregated		Amount Waived
Class A	$	136	$	136
Class B		35		35
	$	171	$	171

In addition, for the six months ended June 30, 2013, the Advisor reimbursed $520 of recordkeeping fees for Class B shares.

E. Ownership of the Fund

At June 30, 2013, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 41%, 33% and 18%. One Participating Insurance Company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 94%.

F. Line of Credit

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges, 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	971.30	$	970.90
Expenses Paid per $1,000*	$	3.27	$	4.84
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,021.47	$	1,019.89
Expenses Paid per $1,000*	$	3.36	$	4.96

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Government & Agency Securities VIP	.67%		.99%

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2GAS-3 (R-028384-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS High Income VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Manager

5 Investment Portfolio

17 Statement of Assets and Liabilities

18 Statement of Operations

19 Statement of Changes in Net Assets

20 Financial Highlights

21 Notes to Financial Statements

28 Information About Your Fund's Expenses

28 Proxy Voting

30 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 ("junk bonds") and non-rated securities present greater risk of loss than investments in higher-quality securities. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 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
		The Credit Suisse High Yield Index tracks the performance of the global high-yield debt market. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
DWS High Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,187		$	10,962		$	13,355		$	14,956		$	21,011
Class A	Average annual total return		1.87	%		9.62	%		10.12	%		8.38	%		7.71	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,152		$	10,918		$	13,423		$	16,185		$	22,948
Credit Suisse High Yield Index	Average annual total return		1.52	%		9.18	%		10.31	%		10.11	%		8.66	%
DWS High Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	10,175		$	10,945		$	13,275		$	14,795		$	20,369
Class B	Average annual total return		1.75	%		9.45	%		9.90	%		8.15	%		7.37	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,152		$	10,918		$	13,423		$	16,185		$	22,948
Credit Suisse High Yield Index	Average annual total return		1.52	%		9.18	%		10.31	%		10.11	%		8.66	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Corporate Bonds	92%	86%
Cash Equivalents	4%	11%
Convertible Bonds	2%	1%
Preferred Security	1%	1%
Preferred Stocks	1%	1%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/13	12/31/12

Consumer Discretionary	19%	23%
Financials	16%	16%
Telecommunication Services	16%	14%
Energy	13%	12%
Industrials	10%	9%
Materials	10%	10%
Information Technology	5%	5%
Health Care	5%	5%
Consumer Staples	4%	3%
Utilities	2%	3%
	100%	100%

Quality (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	6/30/13	12/31/12

BBB	2%	2%
BB	32%	29%
B	51%	57%
CCC	13%	10%
CC	—	1%
Not Rated	2%	1%
	100%	100%

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

Portfolio holdings and characteristics are subject to change.

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

Portfolio Manager

Gary Russell, CFA

Portfolio Manager

Investment Portfolio June 30, 2013 (Unaudited)

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

Corporate Bonds 89.6%
Consumer Discretionary 18.5%
AMC Entertainment, Inc., 8.75%, 6/1/2019			170,000		181,900
AMC Networks, Inc., 7.75%, 7/15/2021			80,000		87,400
AmeriGas Finance LLC:
6.75%, 5/20/2020			110,000		113,850
7.0%, 5/20/2022			110,000		112,475
APX Group, Inc., 144A, 6.375%, 12/1/2019			205,000		194,750
Asbury Automotive Group, Inc.:
8.375%, 11/15/2020			460,000		509,450
144A, 8.375%, 11/15/2020			45,000		49,838
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			330,000		344,025
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			350,000		353,500
Avis Budget Car Rental LLC:
144A, 5.5%, 4/1/2023			205,000		197,825
8.25%, 1/15/2019			535,000		581,812
BC Mountain LLC, 144A, 7.0%, 2/1/2021			210,000		214,200
Block Communications, Inc., 144A, 7.25%, 2/1/2020			375,000		393,750
Boyd Gaming Corp., 9.0%, 7/1/2020 (b)			155,000		157,131
Cablevision Systems Corp., 8.0%, 4/15/2020			65,000		70,850
Caesar's Entertainment Operating Co., Inc., 8.5%, 2/15/2020			760,000		716,300
Caesar's Operating Escrow LLC, 144A, 9.0%, 2/15/2020			245,000		233,363
Carlson Wagonlit BV, 144A, 6.875%, 6/15/2019			215,000		217,150
CCO Holdings LLC:
6.5%, 4/30/2021			655,000		682,837
6.625%, 1/31/2022			450,000		469,125
7.0%, 1/15/2019			120,000		127,200
7.375%, 6/1/2020			50,000		54,375
8.125%, 4/30/2020			150,000		163,875
CDR DB Sub, Inc., 144A, 7.75%, 10/15/2020			230,000		230,575
Cequel Communications Holdings I LLC:
144A, 5.125%, 12/15/2021			245,000		230,300
144A, 6.375%, 9/15/2020			1,215,000		1,236,262
Chester Downs & Marina LLC, 144A, 9.25%, 2/1/2020 (b)			145,000		139,925
Clear Channel Communications, Inc., 144A, 11.25%, 3/1/2021			280,000		291,900
Clear Channel Worldwide Holdings, Inc.:
Series A, 144A, 6.5%, 11/15/2022			250,000		256,250
Series B, 144A, 6.5%, 11/15/2022			365,000		375,950
Series A, 7.625%, 3/15/2020			110,000		113,300
Series B, 7.625%, 3/15/2020			1,115,000		1,154,025
		Principal Amount ($)(a)		Value ($)

Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			20,000		19,450
CSC Holdings LLC, 6.75%, 11/15/2021			900,000		969,750
Cumulus Media Holdings, Inc., 7.75%, 5/1/2019 (b)			375,000		366,562
DISH DBS Corp.:
6.75%, 6/1/2021			50,000		53,125
7.875%, 9/1/2019			270,000		302,400
Fontainebleau Las Vegas Holdings LLC, 144A, 11.0%, 6/15/2015*			490,000		0
Griffey Intermediate, Inc., 144A, 7.0%, 10/15/2020 (b)			405,000		390,825
Harron Communications LP, 144A, 9.125%, 4/1/2020			395,000		426,600
Hertz Corp., 6.75%, 4/15/2019			305,000		322,538
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			140,000		141,750
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019 (PIK)			475,000		488,062
Lear Corp., 8.125%, 3/15/2020			184,000		201,480
Libbey Glass, Inc., 6.875%, 5/15/2020			117,000		122,411
Lions Gate Entertainment, Inc., 144A, 10.25%, 11/1/2016			540,000		578,475
LKQ Corp., 144A, 4.75%, 5/15/2023			290,000		276,950
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			155,000		154,613
Mediacom Broadband LLC, 6.375%, 4/1/2023			425,000		422,875
Mediacom LLC, 7.25%, 2/15/2022			110,000		115,775
MGM Resorts International:
6.625%, 12/15/2021 (b)			590,000		608,437
6.75%, 10/1/2020 (b)			170,000		175,950
7.625%, 1/15/2017			560,000		611,800
8.625%, 2/1/2019			840,000		949,200
10.0%, 11/1/2016			225,000		263,813
National CineMedia LLC, 6.0%, 4/15/2022			200,000		205,250
Norcraft Companies LP, 10.5%, 12/15/2015			1,260,000		1,307,250
Palace Entertainment Holdings LLC, 144A, 8.875%, 4/15/2017			435,000		448,050
Petco Animal Supplies, Inc., 144A, 9.25%, 12/1/2018			315,000		339,412
Petco Holdings, Inc., 144A, 8.5%, 10/15/2017 (PIK)			115,000		117,300
Quebecor Media, Inc., 5.75%, 1/15/2023			205,000		199,875
Rent-A-Center, Inc., 144A, 4.75%, 5/1/2021			145,000		137,388
Schaeffler Finance BV:
144A, 4.75%, 5/15/2021			260,000		247,000
144A, 7.75%, 2/15/2017			420,000		464,100
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			125,000		121,250
		Principal Amount ($)(a)		Value ($)

Seminole Indian Tribe of Florida:
144A, 7.75%, 10/1/2017			200,000		212,500
144A, 7.804%, 10/1/2020			380,000		400,900
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020 (b)			230,000		234,025
SIWF Merger Sub, Inc., 144A, 6.25%, 6/1/2021			295,000		289,100
Starz LLC, 5.0%, 9/15/2019			175,000		173,688
Taylor Morrison Communities, Inc., 144A, 5.25%, 4/15/2021 (b)			250,000		237,500
Travelport LLC:
144A, 6.4%**, 3/1/2016			224,966		210,343
144A, 13.875%, 3/1/2016 (PIK)			50,625		51,764
UCI International, Inc., 8.625%, 2/15/2019			310,000		316,200
Unitymedia Hessen GmbH & Co., KG:
144A, 5.5%, 1/15/2023			945,000		893,025
144A, 7.5%, 3/15/2019			435,000		457,837
Unitymedia KabelBW GmbH, 144A, 9.625%, 12/1/2019	EUR		550,000		787,498
Univision Communications, Inc.:
144A, 6.875%, 5/15/2019			60,000		63,000
144A, 7.875%, 11/1/2020			140,000		151,550
Viking Cruises Ltd., 144A, 8.5%, 10/15/2022			205,000		224,475
Visant Corp., 10.0%, 10/1/2017 (b)			460,000		424,350
Visteon Corp., 6.75%, 4/15/2019			171,000		179,978
Yonkers Racing Corp., 144A, 11.375%, 7/15/2016			335,000		353,844
					27,466,761
Consumer Staples 6.1%
B&G Foods, Inc., 4.625%, 6/1/2021			245,000		233,975
Chiquita Brands International, Inc., 144A, 7.875%, 2/1/2021			200,000		209,500
Del Monte Corp., 7.625%, 2/15/2019			410,000		421,275
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020			810,000		872,775
Hawk Acquisition Sub, Inc., 144A, 4.25%, 10/15/2020			1,890,000		1,807,312
JBS U.S.A. LLC, 144A, 8.25%, 2/1/2020			160,000		167,600
NBTY, Inc., 9.0%, 10/1/2018			190,000		206,625
Pilgrim's Pride Corp., 7.875%, 12/15/2018			290,000		308,850
Reynolds Group Issuer, Inc.:
5.75%, 10/15/2020			405,000		408,038
6.875%, 2/15/2021			540,000		567,000
7.125%, 4/15/2019			415,000		438,344
8.25%, 2/15/2021 (b)			225,000		222,750
8.5%, 5/15/2018 (b)			455,000		468,650
9.875%, 8/15/2019			125,000		133,750
Smithfield Foods, Inc.:
6.625%, 8/15/2022			385,000		413,875
7.75%, 7/1/2017			1,180,000		1,300,950
Sun Products Corp., 144A, 7.75%, 3/15/2021			360,000		357,300
		Principal Amount ($)(a)		Value ($)

Tops Holding Corp., 144A, 8.875%, 12/15/2017			100,000		108,250
U.S. Foods, Inc., 8.5%, 6/30/2019			400,000		418,000
					9,064,819
Energy 12.7%
Access Midstream Partners LP:
4.875%, 5/15/2023			270,000		250,425
6.125%, 7/15/2022			325,000		329,062
Antero Resources Finance Corp.:
7.25%, 8/1/2019			285,000		297,113
9.375%, 12/1/2017			390,000		413,400
Berry Petroleum Co.:
6.375%, 9/15/2022			205,000		204,231
6.75%, 11/1/2020			540,000		558,900
BreitBurn Energy Partners LP:
7.875%, 4/15/2022			205,000		209,100
8.625%, 10/15/2020			225,000		238,500
Chaparral Energy, Inc., 7.625%, 11/15/2022			370,000		377,400
Chesapeake Energy Corp., 5.75%, 3/15/2023			100,000		101,250
Chesapeake Oilfield Operating LLC, 144A, 6.625%, 11/15/2019			150,000		148,500
Continental Resources, Inc.:
144A, 4.5%, 4/15/2023			60,000		58,350
5.0%, 9/15/2022			180,000		183,150
Crestwood Midstream Partners LP, 7.75%, 4/1/2019			325,000		334,750
Crosstex Energy LP, 7.125%, 6/1/2022 (b)			105,000		106,050
Denbury Resources, Inc., 4.625%, 7/15/2023			530,000		488,925
Dresser-Rand Group, Inc., 6.5%, 5/1/2021			420,000		445,200
Eagle Rock Energy Partners LP, 8.375%, 6/1/2019			410,000		417,175
EP Energy LLC:
6.875%, 5/1/2019			330,000		353,100
7.75%, 9/1/2022 (b)			175,000		187,250
9.375%, 5/1/2020			150,000		169,500
EPE Holdings LLC, 144A, 8.125%, 12/15/2017 (PIK) (b)			495,374		505,281
EV Energy Partners LP, 8.0%, 4/15/2019			835,000		843,350
Frontier Oil Corp., 6.875%, 11/15/2018			315,000		337,837
Global Geophysical Services, Inc., 10.5%, 5/1/2017			540,000		469,800
Halcon Resources Corp.:
8.875%, 5/15/2021			585,000		567,450
9.75%, 7/15/2020			280,000		279,300
Holly Energy Partners LP:
6.5%, 3/1/2020			105,000		105,788
8.25%, 3/15/2018			330,000		348,975
Kodiak Oil & Gas Corp., 144A, 5.5%, 1/15/2021 (b)			265,000		258,375
Linn Energy LLC:
144A, 6.25%, 11/1/2019			595,000		566,737
6.5%, 5/15/2019			115,000		112,413
MEG Energy Corp.:
144A, 6.375%, 1/30/2023			780,000		756,600
144A, 6.5%, 3/15/2021			235,000		232,944
		Principal Amount ($)(a)		Value ($)

Memorial Production Partners LP, 144A, 7.625%, 5/1/2021			355,000		349,675
Midstates Petroleum Co., Inc.:
144A, 9.25%, 6/1/2021			485,000		455,900
144A, 10.75%, 10/1/2020			230,000		231,150
Murray Energy Corp., 144A, 8.625%, 6/15/2021			50,000		50,000
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			595,000		600,950
Oasis Petroleum, Inc.:
6.5%, 11/1/2021			175,000		179,375
6.875%, 1/15/2023			130,000		133,900
7.25%, 2/1/2019			665,000		693,262
Offshore Group Investment Ltd.:
144A, 7.125%, 4/1/2023			410,000		402,825
7.5%, 11/1/2019 (b)			580,000		604,650
Pacific Drilling SA, 144A, 5.375%, 6/1/2020			245,000		229,075
Range Resources Corp., 5.0%, 3/15/2023			105,000		102,638
Regency Energy Partners LP, 144A, 4.5%, 11/1/2023			95,000		85,975
Sabine Pass Liquefaction LLC:
144A, 5.625%, 2/1/2021			690,000		669,300
144A, 5.625%, 4/15/2023			155,000		146,475
SandRidge Energy, Inc., 7.5%, 3/15/2021			515,000		491,825
SESI LLC, 6.375%, 5/1/2019			235,000		242,638
Swift Energy Co., 7.875%, 3/1/2022			290,000		288,550
Talos Production LLC, 144A, 9.75%, 2/15/2018			410,000		389,500
Tesoro Corp., 5.375%, 10/1/2022			150,000		151,875
Venoco, Inc., 8.875%, 2/15/2019			590,000		575,250
WPX Energy, Inc., 5.25%, 1/15/2017			510,000		522,750
					18,853,719
Financials 4.4%
AerCap Aviation Solutions BV, 6.375%, 5/30/2017			470,000		493,500
Ally Financial, Inc.:
5.5%, 2/15/2017			385,000		402,252
8.0%, 3/15/2020 (b)			340,000		394,825
CIT Group, Inc., 5.25%, 3/15/2018			540,000		554,850
E*TRADE Financial Corp.:
6.375%, 11/15/2019			585,000		593,775
6.75%, 6/1/2016			710,000		729,525
Hellas Telecommunications Finance SCA, 144A, 8.21%*, 7/15/2015 (PIK)	EUR		322,107		0
International Lease Finance Corp.:
3.875%, 4/15/2018			385,000		361,900
4.625%, 4/15/2021			360,000		331,200
6.25%, 5/15/2019			320,000		328,800
8.625%, 1/15/2022 (b)			310,000		356,500
8.75%, 3/15/2017			245,000		272,869
MPT Operating Partnership LP:
(REIT), 6.375%, 2/15/2022			185,000		194,250
(REIT), 6.875%, 5/1/2021			295,000		312,700
		Principal Amount ($)(a)		Value ($)

National Money Mart Co., 10.375%, 12/15/2016			790,000		837,400
Neuberger Berman Group LLC:
144A, 5.625%, 3/15/2020			160,000		165,600
144A, 5.875%, 3/15/2022			265,000		270,300
					6,600,246
Health Care 5.0%
Aviv Healthcare Properties LP, 7.75%, 2/15/2019			500,000		533,750
Biomet, Inc.:
6.5%, 8/1/2020			355,000		365,872
6.5%, 10/1/2020 (b)			100,000		99,750
Community Health Systems, Inc.:
5.125%, 8/15/2018			1,155,000		1,172,325
7.125%, 7/15/2020			635,000		654,050
Fresenius Medical Care U.S. Finance II, Inc.:
144A, 5.625%, 7/31/2019			220,000		228,800
144A, 5.875%, 1/31/2022			195,000		205,237
Fresenius U.S. Finance II, Inc., 144A, 9.0%, 7/15/2015			420,000		464,100
HCA, Inc.:
5.875%, 3/15/2022			275,000		282,219
6.5%, 2/15/2020			890,000		962,869
7.5%, 2/15/2022			605,000		670,037
Hologic, Inc., 6.25%, 8/1/2020			200,000		207,375
IMS Health, Inc., 144A, 6.0%, 11/1/2020			250,000		254,375
Physio-Control International, Inc., 144A, 9.875%, 1/15/2019			315,000		346,500
Sky Growth Acquisition Corp., 144A, 7.375%, 10/15/2020			175,000		179,375
STHI Holding Corp., 144A, 8.0%, 3/15/2018			345,000		372,600
Tenet Healthcare Corp.:
144A, 4.375%, 10/1/2021			390,000		357,825
144A, 4.5%, 4/1/2021			55,000		51,288
					7,408,347
Industrials 10.2%
Abengoa Finance SAU, 144A, 8.875%, 11/1/2017			190,000		176,700
Accuride Corp., 9.5%, 8/1/2018			345,000		351,037
Aguila 3 SA, 144A, 7.875%, 1/31/2018			480,000		494,400
Air Lease Corp.:
4.75%, 3/1/2020 (b)			315,000		303,975
6.125%, 4/1/2017 (b)			445,000		460,575
Alphabet Holding Co., Inc., 7.75%, 11/1/2017 (PIK)			205,000		210,125
Armored Autogroup, Inc., 9.25%, 11/1/2018			610,000		559,675
AWAS Aviation Capital Ltd., 144A, 7.0%, 10/17/2016			391,400		407,056
BakerCorp International, Inc., 8.25%, 6/1/2019			335,000		328,300
BE Aerospace, Inc., 6.875%, 10/1/2020			180,000		194,400
Belden, Inc., 144A, 5.5%, 9/1/2022			355,000		348,787
		Principal Amount ($)(a)		Value ($)

Bombardier, Inc.:
144A, 5.75%, 3/15/2022			430,000		426,775
144A, 6.125%, 1/15/2023			315,000		312,638
Casella Waste Systems, Inc., 7.75%, 2/15/2019			415,000		394,250
Clean Harbors, Inc., 5.125%, 6/1/2021			240,000		241,800
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			160,000		153,600
Ducommun, Inc., 9.75%, 7/15/2018			305,000		333,212
DynCorp International, Inc., 10.375%, 7/1/2017			490,000		492,450
Florida East Coast Railway Corp., 8.125%, 2/1/2017			225,000		237,938
FTI Consulting, Inc., 144A, 6.0%, 11/15/2022			205,000		207,563
Garda World Security Corp., 144A, 9.75%, 3/15/2017			400,000		422,582
GenCorp, Inc., 144A, 7.125%, 3/15/2021			790,000		817,650
Huntington Ingalls Industries, Inc.:
6.875%, 3/15/2018			280,000		299,250
7.125%, 3/15/2021 (b)			60,000		64,500
Interline Brands, Inc., 7.5%, 11/15/2018			295,000		309,750
Iron Mountain, Inc., 5.75%, 8/15/2024			245,000		229,688
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			410,000		426,400
Meritor, Inc., 6.75%, 6/15/2021			195,000		186,225
Navios Maritime Holdings, Inc.:
8.125%, 2/15/2019			410,000		388,475
8.875%, 11/1/2017			210,000		217,350
Navios South American Logistics, Inc.:
9.25%, 4/15/2019			295,000		316,387
144A, 9.25%, 4/15/2019			55,000		58,988
Nortek, Inc., 8.5%, 4/15/2021			440,000		470,800
Ply Gem Industries, Inc., 9.375%, 4/15/2017			102,000		107,865
Rexel SA, 144A, 5.25%, 6/15/2020			275,000		274,313
Sitel LLC, 11.5%, 4/1/2018			565,000		420,925
Spirit AeroSystems, Inc.:
6.75%, 12/15/2020			205,000		213,200
7.5%, 10/1/2017			215,000		224,675
Titan International, Inc., 7.875%, 10/1/2017			295,000		309,750
TransDigm, Inc., 144A, 7.5%, 7/15/2021 (c)			320,000		327,200
U.S. Airways Group, Inc., 6.125%, 6/1/2018 (b)			240,000		226,800
United Rentals North America, Inc.:
5.75%, 7/15/2018			365,000		383,250
6.125%, 6/15/2023			25,000		24,875
7.375%, 5/15/2020			595,000		635,162
7.625%, 4/15/2022			595,000		644,087
Watco Companies LLC, 144A, 6.375%, 4/1/2023			155,000		154,225
Welltec AS, 144A, 8.0%, 2/1/2019			400,000		416,000
					15,205,628
		Principal Amount ($)(a)		Value ($)

Information Technology 4.7%
Alliance Data Systems Corp., 144A, 5.25%, 12/1/2017			255,000		262,650
CDW LLC, 8.5%, 4/1/2019			1,180,000		1,268,500
CyrusOne LP, 144A, 6.375%, 11/15/2022			105,000		107,625
eAccess Ltd., 144A, 8.25%, 4/1/2018			335,000		366,825
EarthLink, Inc., 144A, 7.375%, 6/1/2020			245,000		235,200
Equinix, Inc.:
4.875%, 4/1/2020			275,000		269,500
5.375%, 4/1/2023			725,000		710,500
7.0%, 7/15/2021			215,000		233,275
First Data Corp.:
144A, 6.75%, 11/1/2020			940,000		956,450
144A, 7.375%, 6/15/2019			250,000		256,875
144A, 8.875%, 8/15/2020			495,000		539,550
144A, 10.625%, 6/15/2021			420,000		414,750
Freescale Semiconductor, Inc., 144A, 9.25%, 4/15/2018			630,000		678,825
Hughes Satellite Systems Corp.:
6.5%, 6/15/2019			225,000		238,500
7.625%, 6/15/2021			230,000		244,375
IAC/InterActiveCorp., 144A, 4.75%, 12/15/2022			215,000		203,175
					6,986,575
Materials 8.4%
APERAM:
144A, 7.375%, 4/1/2016			215,000		208,550
144A, 7.75%, 4/1/2018			260,000		247,000
Axiall Corp., 144A, 4.875%, 5/15/2023			65,000		61,750
Berry Plastics Corp.:
9.5%, 5/15/2018			390,000		424,125
9.75%, 1/15/2021			460,000		519,800
Bluescope Steel Ltd., 144A, 7.125%, 5/1/2018			150,000		152,250
BOE Intermediate Holding Corp., 144A, 9.0%, 11/1/2017 (PIK)			290,000		278,400
BOE Merger Corp., 144A, 9.5%, 11/1/2017 (PIK)			410,000		418,200
Clearwater Paper Corp., 7.125%, 11/1/2018			390,000		417,300
Crown Americas LLC, 6.25%, 2/1/2021			50,000		53,000
Eagle Spinco, Inc., 144A, 4.625%, 2/15/2021			130,000		124,800
Essar Steel Algoma, Inc.:
144A, 9.375%, 3/15/2015			1,290,000		1,225,500
144A, 9.875%, 6/15/2015			195,000		150,150
Exopack Holding Corp., 10.0%, 6/1/2018			230,000		232,875
FMG Resources (August 2006) Pty Ltd.:
144A, 6.0%, 4/1/2017 (b)			315,000		306,337
144A, 6.875%, 4/1/2022 (b)			65,000		63,050
144A, 7.0%, 11/1/2015 (b)			360,000		363,600
144A, 8.25%, 11/1/2019 (b)			270,000		278,100
FQM Akubra, Inc.:
144A, 7.5%, 6/1/2021			610,000		584,075
144A, 8.75%, 6/1/2020			360,000		368,100
		Principal Amount ($)(a)		Value ($)

Hexion U.S. Finance Corp.:
6.625%, 4/15/2020			95,000		94,763
8.875%, 2/1/2018			530,000		540,600
Huntsman International LLC:
4.875%, 11/15/2020 (b)			230,000		227,125
8.625%, 3/15/2020			330,000		358,875
8.625%, 3/15/2021 (b)			335,000		367,662
IAMGOLD Corp., 144A, 6.75%, 10/1/2020			310,000		261,950
Kaiser Aluminum Corp., 8.25%, 6/1/2020			260,000		287,950
Novelis, Inc., 8.375%, 12/15/2017			85,000		90,100
Packaging Dynamics Corp., 144A, 8.75%, 2/1/2016			535,000		540,350
Perstorp Holding AB, 144A, 8.75%, 5/15/2017			200,000		200,000
Polymer Group, Inc., 7.75%, 2/1/2019			300,000		312,000
PolyOne Corp., 144A, 5.25%, 3/15/2023			590,000		581,150
Rain CII Carbon LLC:
144A, 8.0%, 12/1/2018			270,000		276,750
144A, 8.25%, 1/15/2021			200,000		200,000
Sealed Air Corp.:
144A, 5.25%, 4/1/2023			50,000		48,625
144A, 8.125%, 9/15/2019			150,000		167,250
144A, 8.375%, 9/15/2021			150,000		169,500
Tronox Finance LLC, 144A, 6.375%, 8/15/2020 (b)			255,000		240,338
Viskase Companies, Inc., 144A, 9.875%, 1/15/2018			940,000		994,050
					12,436,000
Telecommunication Services 17.4%
Altice Financing SA, 144A, 7.875%, 12/15/2019 (b)			235,000		245,575
Altice Finco SA, 144A, 9.875%, 12/15/2020			235,000		251,450
CenturyLink, Inc., Series V, 5.625%, 4/1/2020 (b)			105,000		106,050
Cincinnati Bell, Inc.:
8.25%, 10/15/2017			1,020,000		1,063,350
8.375%, 10/15/2020			1,030,000		1,058,325
8.75%, 3/15/2018 (b)			350,000		350,437
CPI International, Inc., 8.0%, 2/15/2018			260,000		267,800
Cricket Communications, Inc., 7.75%, 10/15/2020 (b)			1,595,000		1,531,200
Digicel Group Ltd.:
144A, 8.25%, 9/30/2020			790,000		817,650
144A, 10.5%, 4/15/2018			495,000		524,700
Digicel Ltd.:
144A, 7.0%, 2/15/2020			200,000		202,000
144A, 8.25%, 9/1/2017			1,090,000		1,133,600
ERC Ireland Preferred Equity Ltd., 144A, 7.69%*, 2/15/2017 (PIK)	EUR		709,137		0
Frontier Communications Corp.:
7.125%, 1/15/2023			1,370,000		1,363,150
7.625%, 4/15/2024			110,000		110,275
8.25%, 4/15/2017			348,000		391,500
8.5%, 4/15/2020			490,000		540,225
8.75%, 4/15/2022			560,000		610,400
		Principal Amount ($)(a)		Value ($)

Intelsat Jackson Holdings SA:
144A, 5.5%, 8/1/2023			625,000		587,500
144A, 6.625%, 12/15/2022			245,000		237,650
7.25%, 10/15/2020			1,230,000		1,291,500
7.5%, 4/1/2021			1,150,000		1,207,500
8.5%, 11/1/2019			580,000		624,950
Intelsat Luxembourg SA:
144A, 7.75%, 6/1/2021			670,000		676,700
144A, 8.125%, 6/1/2023			105,000		108,413
Level 3 Communications, Inc., 8.875%, 6/1/2019 (b)			55,000		57,200
Level 3 Financing, Inc.:
7.0%, 6/1/2020			750,000		748,125
8.125%, 7/1/2019			670,000		703,500
8.625%, 7/15/2020			510,000		543,150
MetroPCS Wireless, Inc.:
6.625%, 11/15/2020			705,000		731,437
144A, 6.625%, 4/1/2023			245,000		249,287
7.875%, 9/1/2018 (b)			420,000		447,300
Millicom International Cellular SA, 144A, 4.75%, 5/22/2020			720,000		684,187
NII Capital Corp., 7.625%, 4/1/2021			305,000		237,138
Pacnet Ltd., 144A, 9.25%, 11/9/2015			434,000		434,000
SBA Communications Corp., 144A, 5.625%, 10/1/2019			200,000		198,000
Sprint Nextel Corp.:
6.0%, 11/15/2022 (b)			365,000		357,700
9.125%, 3/1/2017			310,000		356,500
Syniverse Holdings, Inc., 9.125%, 1/15/2019			130,000		138,775
Telenet Finance V Luxembourg SCA:
144A, 6.25%, 8/15/2022	EUR		235,000		307,417
144A, 6.75%, 8/15/2024	EUR		235,000		309,834
tw telecom holdings, Inc., 5.375%, 10/1/2022			280,000		277,900
UPCB Finance III Ltd., 144A, 6.625%, 7/1/2020			185,000		191,475
UPCB Finance V Ltd., 144A, 7.25%, 11/15/2021			230,000		243,225
UPCB Finance VI Ltd., 144A, 6.875%, 1/15/2022			300,000		310,500
Wind Acquisition Finance SA:
144A, 6.5%, 4/30/2020			195,000		193,538
144A, 7.25%, 2/15/2018			410,000		413,075
Windstream Corp.:
6.375%, 8/1/2023 (b)			265,000		247,775
7.0%, 3/15/2019			430,000		431,075
7.5%, 6/1/2022			170,000		173,400
7.5%, 4/1/2023			420,000		426,300
7.75%, 10/15/2020 (b)			180,000		186,300
7.75%, 10/1/2021			310,000		320,850
7.875%, 11/1/2017			495,000		543,262
8.125%, 9/1/2018			180,000		191,700
					25,955,825
Utilities 2.2%
AES Corp.:
4.875%, 5/15/2023 (b)			95,000		88,588
8.0%, 10/15/2017			415,000		466,875
8.0%, 6/1/2020			525,000		598,500
		Principal Amount ($)(a)		Value ($)

Calpine Corp.:
144A, 7.5%, 2/15/2021			436,000		465,430
144A, 7.875%, 7/31/2020			481,000		521,885
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024			550,000		376,750
Energy Future Intermediate Holding Co., LLC:
10.0%, 12/1/2020			125,000		136,875
11.0%, 10/1/2021			451,000		483,697
NRG Energy, Inc., 7.625%, 1/15/2018			200,000		214,000
					3,352,600
Total Corporate Bonds (Cost $132,567,397)					133,330,520

Loan Participations and Assignments 0.2%
Senior Loans**
Alliance Mortgage Cycle Loan, Term Loan A, 9.5%, 6/15/2010*			700,000		0
Buffets, Inc., Letter of Credit, First Lien, LIBOR plus 9.25%, 4/22/2015*			73,851		34,525
WP Prism, Inc., Term Loan, 6.25%, 5/31/2018			230,000		230,766
Total Loan Participations and Assignments (Cost $1,004,047)					265,291

Convertible Bonds 1.8%
Consumer Discretionary 0.5%
Group 1 Automotive, Inc., 3.0%, 3/15/2020			375,000		679,219
Materials 1.3%
GEO Specialty Chemicals, Inc., 144A, 7.5%, 3/31/2015 (PIK)			1,297,793		2,010,022
Total Convertible Bonds (Cost $1,652,175)					2,689,241

Preferred Security 0.7%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $756,443)			1,135,000		987,450

	Units		Value ($)

Other Investments 0.2%
Consumer Discretionary
AOT Bedding Super Holdings LLC* (d) (Cost $31,000)		92		319,939

	Shares		Value ($)

Common Stocks 0.1%
Consumer Discretionary 0.0%
Buffets Restaurants Holdings, Inc.*		661		4,131
Trump Entertainment Resorts, Inc.*		45		0
Vertis Holdings, Inc.*		676		0
				4,131
Industrials 0.0%
Congoleum Corp.*		24,000		0
Materials 0.1%
GEO Specialty Chemicals, Inc.*		24,225		14,404
GEO Specialty Chemicals, Inc. 144A*		2,206		1,312
Wolverine Tube, Inc.*		7,045		127,656
				143,372
Total Common Stocks (Cost $480,469)				147,503

Preferred Stock 0.6%
Financials
Ally Financial, Inc. 144A, 7.0% (Cost $841,212)		915		869,736

Warrants 0.1%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		1,115		0
Materials 0.1%
GEO Specialty Chemicals, Inc., Expiration Date 3/31/2015*		119,802		70,336
Hercules Trust II, Expiration Date 3/31/2029*		1,100		14,554
				84,890
Total Warrants (Cost $244,286)				84,890

Securities Lending Collateral 7.7%
Daily Assets Fund Institutional, 0.10% (e) (f) (Cost $11,538,751)		11,538,751		11,538,751

Cash Equivalents 3.6%
Central Cash Management Fund, 0.07% (e) (Cost $5,364,651)		5,364,651		5,364,651

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $154,480,431)†		104.6			155,597,972
Other Assets and Liabilities, Net		(4.6	)		(6,776,228	)
Net Assets		100.0			148,821,744

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

Securities	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
Alliance Mortgage Cycle Loan*		9.5	%	6/15/2010	USD	700,000		700,000		0
Buffets, Inc.*	LIBOR plus 9.25%			4/22/2015	USD	73,851		72,410		34,525
ERC Ireland Preferred Equity Ltd.*		7.69	%	2/15/2017	EUR	709,137		965,174		0
Fontainebleau Las Vegas Holdings LLC*		11.0	%	6/15/2015	USD	490,000		490,000		0
Hellas Telecommunications Finance SCA*		8.21	%	7/15/2015	EUR	322,107		92,199		0
								2,319,783		34,525

* Non-income producing security.

† The cost for federal income tax purposes was $154,480,431. At June 30, 2013, net unrealized appreciation for all securities based on tax cost was $1,117,541. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $6,013,629 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $4,896,088.

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

(b) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of securities loaned at June 30, 2013 amounted to $10,946,630, which is 7.4% of net assets.

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

Schedule of Restricted Securities

Acquisition Date

Cost ($)

Value ($)

Value as % of Net Assets

AOT Bedding Super Holdings LLC*

June 2010

31,000

319,939

0.21

(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.

LIBOR: London Interbank Offered Rate

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

REIT: Real Estate Investment Trust

At June 30, 2013, open credit default swap contracts sold were as follows:

Effective/ Expiration Date	Notional Amount ($) (g)			Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (h)	Value ($)			Upfront Payments Paid/ (Received) ($)			Unrealized Appreciation/ (Depreciation) ($)
12/20/2011 3/20/2017		370,000	1		5.0	%	CIT Group, Inc., 5.5%, 2/15/2019, BB-		46,152			11,605			34,547
6/21/2010 9/20/2013		380,000	2		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		4,906			4,658			248
6/21/2010 9/20/2013		1,230,000	3		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		15,878			(37,769	)		53,647
6/21/2010 9/20/2015		560,000	4		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		53,638			(9,983	)		63,621
6/21/2010 9/20/2015		175,000	5		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		16,761			(16,625	)		33,386
6/21/2010 9/20/2015		320,000	1		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		30,651			(27,749	)		58,400
6/21/2010 9/20/2015		100,000	3		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		9,578			(6,896	)		16,474
6/20/2011 9/20/2016		575,000	4		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		72,201			34,268			37,933
3/21/2011 6/20/2016		1,085,000	6		5.0	%	Ford Motor Credit Co., LLC, 5.0%, 5/15/2018, BBB-		131,278			77,305			53,973
6/20/2011 9/20/2016		440,000	6		5.0	%	Forest Oil Corp., 7.25%, 6/15/2019, B		(4,828	)		10,570			(15,398	)
9/20/2011 12/20/2016		250,000	6		5.0	%	Forest Oil Corp., 7.25%, 6/15/2019, B		(5,438	)		(3,390	)		(2,048	)
9/20/2011 12/20/2016		165,000	3		5.0	%	Forest Oil Corp., 7.25%, 6/15/2019, B		(3,589	)		(2,238	)		(1,351	)
9/20/2012 12/20/2017		485,000	7		5.0	%	General Motors Corp., 3.3%, 12/20/2017, BB+		60,315			32,246			28,069
6/20/2011 9/20/2015		1,145,000	3		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B-		99,058			32,403			66,655
3/21/2011 6/20/2016		610,000	5		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B-		59,237			13,570			45,667
Total net unrealized appreciation															473,823

(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, if any.

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

Counterparties:

1 Credit Suisse

2 Citigroup, Inc.

3 The Goldman Sachs & Co.

4 Bank of America

5 JPMorgan Chase Securities, Inc.

6 Barclays Bank PLC

7 UBS AG

At June 30, 2013, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver

In Exchange For

Settlement Date

Unrealized Appreciation ($)

Counterparty

EUR

1,090,440

USD

1,453,915

7/19/2013

34,434

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 B in the accompanying Notes to Financial Statements.

Fair Value Measurements

Assets	Level 1		Level 2			Level 3		Total

Fixed Income Investments (i)
Corporate Bonds	$	—	$	133,330,520		$	0	$	133,330,520
Loan Participations and Assignments		—		265,291			0		265,291
Convertible Bonds		—		679,219			2,010,022		2,689,241
Preferred Security		—		987,450			—		987,450
Other Investments		—		—			319,939		319,939
Common Stocks (i)		—		4,131			143,372		147,503
Preferred Stock		—		869,736			—		869,736
Warrants (i)		—		—			84,890		84,890
Short-Term Investments (i)		16,903,402		—			—		16,903,402
Derivatives (j)
Credit Default Swap Contracts		—		492,620			—		492,620
Forward Foreign Currency Exchange Contracts		—		34,434			—		34,434
Total	$	16,903,402	$	136,663,401		$	2,558,223	$	156,125,026
Liabilities
Derivatives (j)
Credit Default Swap Contracts	$	—	$	(18,797	)	$	—	$	(18,797	)
Total	$	—	$	(18,797	)	$	—	$	(18,797	)

During the period ended June 30, 2013, the amount of transfers between Level 2 and Level 3 was $306. Investments were transferred from Level 2 to Level 3 because of the lack of observable market data due to a decrease in market activity.

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

(i) See Investment Portfolio for additional detailed categorizations.

(j) 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		Convertible Bonds		Other Investments		Common Stocks		Warrants		Total
Balance as of December 31, 2012	$	155,602		$	0	$	1,538,014	$	107,806	$	139,682	$	63,227	$	2,004,331
Realized gains (loss)		6,235			—		—		—		—		—		6,235
Change in unrealized appreciation (depreciation)		(4,853	)		0		466,539		212,133		3,690		21,663		699,172
Amortization of premium/accretion of discount		1,650			—		5,469		—		—		—		7,119
Purchases		4,768			—		—		—		—		—		4,768
(Sales)		(163,708	)		—		—		—		—		—		(163,708	)
Transfers into Level 3		306			—		—		—		—		—		306
Transfers (out) of Level 3		—			—		—		—		—		—		—
Balance as of June 30, 2013	$	0		$	0	$	2,010,022	$	319,939	$	143,372	$	84,890	$	2,558,223
Net change in unrealized appreciation (depreciation) from investments still held as of June 30, 2013	$	(4,853	)	$	0	$	466,539	$	212,133	$	3,690	$	21,663	$	699,172

Quantitative Disclosure About Significant Unobservable Inputs
Asset Class	Fair Value at 6/30/13		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Other Investments
Consumer Discretionary	$	319,939	Acquisition Value	Acquisition Value	3,477.60 per share
Consumer Discretionary	$	319,939	Acquisition Value	Discount for Lack of Marketability		20	%
Common Stocks
Consumer Discretionary	$	0	Asset Valuation	Book Value of Equity		0
	$	0	Asset Valuation	Book Value of Equity		0
Industrials	$	0	Asset Valuation	Book Value of Equity		0
Materials	$	143,372	Market Approach	EV/EBITDA Multiple		5.65-6.55	(6.48)
Materials	$	143,372	Market Approach	Discount for Lack of Marketability		25-45	%
Warrants
Consumer Discretionary	$	0	Asset Valuation	Book Value of Equity		0
Materials	$	14,554	Black Scholes Option Pricing Model	Implied Volatility		35	%
	$	14,554	Black Scholes Option Pricing Model	Discount for Lack of Marketability		20	%
	$	70,336	Market Approach	EV/EBITDA Multiple		5.65
	$	70,336	Market Approach	Discount for Lack of Marketability		45	%
Loan Participations & Assignments
Senior Loans	$	0	Market Approach	Evaluated by Management		0
Corporate Bonds
Consumer Discretionary	$	0	Asset Valuation	Book Value of Equity		0
Financials	$	0	Asset Valuation	Book Value of Equity		0
Convertible Bonds
	$	2,010,022	Convertible Bond Methodology	EV/EBITDA Multiple		5.65
				Discount to Public Comparable		20	%
				Discount for Lack of Marketability		25	%

Qualitative Disclosure About Unobservable Inputs

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

Significant unobservable inputs developed by the Pricing Committee and used in the fair value measurement of the Fund's fixed income investments include the convertible bond valuation methodology. A significant change in the value of the underlying private equity could have a material change on the fair value measurement of the convertible bond, while a significant change in the discount for lack of marketability is unlikely to result in a materially higher or lower fair value measurement.

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

Statement of Assets and Liabilities

as of June 30, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $137,577,029) — including $10,946,630 of securities loaned	$	138,694,570
Investment in Daily Assets Fund Institutional (cost $11,538,751)*		11,538,751
Investment in Central Cash Management Fund (cost $5,364,651)		5,364,651
Total investments in securities, at value (cost $154,480,431)		155,597,972
Foreign currency, at value (cost $9)		9
Deposit from broker on swap contracts		140,000
Receivable for investments sold		2,340,545
Receivable for Fund shares sold		2,448
Interest receivable		2,574,424
Unrealized appreciation on swap contracts		492,620
Unrealized appreciation on forward foreign currency exchange contracts		34,434
Upfront payments paid on swap contracts		216,625
Due from Advisor		100
Other assets		1,113
Total assets		161,400,290
Liabilities
Cash overdraft		157,171
Payable upon return of securities loaned		11,538,751
Payable for investments purchased — when-issued/delayed delivery security		320,000
Payable for Fund shares redeemed		145,381
Payable upon return of deposit for swap contracts		140,000
Unrealized depreciation on swap contracts		18,797
Upfront payments received on swap contracts		104,650
Accrued management fee		63,185
Accrued Trustees' fees		856
Other accrued expenses and payables		89,755
Total liabilities		12,578,546
Net assets, at value	$	148,821,744
Net Assets Consist of
Undistributed net investment income		4,450,264
Net unrealized appreciation (depreciation) on: Investments		1,117,541
Swap contracts		473,823
Foreign currency		34,300
Accumulated net realized gain (loss)		(41,246,261	)
Paid-in capital		183,992,077
Net assets, at value	$	148,821,744
Class A Net Asset Value, offering and redemption price per share ($148,734,774 ÷ 22,629,085 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 ($86,970 ÷ 13,144 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	6.62

* 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, 2013 (Unaudited)
Investment Income
Interest	$	5,706,401
Dividends		30,188
Income distributions — Central Cash Management Fund		6,557
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		19,159
Total income		5,762,305
Expenses: Management fee		433,284
Administration fee		86,657
Distribution service fee (Class B)		119
Recordkeeping fees (Class B)		2
Services to shareholders		1,111
Custodian fee		14,542
Audit and tax fees		36,140
Legal fees		7,625
Reports to shareholders		19,850
Trustees' fees and expenses		4,435
Other		23,455
Total expenses before expense reductions		627,220
Expense reductions		(1,150	)
Total expenses after expense reductions		626,070
Net investment income (loss)		5,136,235
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		2,160,665
Swap contracts		923,458
Foreign currency		15,692
		3,099,815
Change in net unrealized appreciation (depreciation) on: Investments		(4,393,943	)
Swap contracts		(61,674	)
Foreign currency		20,989
		(4,434,628	)
Net gain (loss)		(1,334,813	)
Net increase (decrease) in net assets resulting from operations	$	3,801,422

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income	$	5,136,235		$	11,527,855
Net realized gain (loss)		3,099,815			1,543,250
Change in net unrealized appreciation (depreciation)		(4,434,628	)		10,498,123
Net increase (decrease) in net assets resulting from operations		3,801,422			23,569,228
Distributions to shareholders from: Net investment income: Class A		(12,380,542	)		(13,517,771	)
Class B		(6,491	)		(7,507	)
Total distributions		(12,387,033	)		(13,525,278	)
Fund share transactions: Class A Proceeds from shares sold		4,194,515			49,009,407
Reinvestment of distributions		12,380,542			13,517,771
Payments for shares redeemed		(37,570,438	)		(63,694,430	)
Net increase (decrease) in net assets from Class A share transactions		(20,995,381	)		(1,167,252	)
Class B Proceeds from shares sold		46,462			8,301
Reinvestment of distributions		6,491			7,507
Payments for shares redeemed		(52,815	)		(13,053	)
Net increase (decrease) in net assets from Class B share transactions		138			2,755
Increase (decrease) in net assets		(29,580,854	)		8,879,453
Net assets at beginning of period		178,402,598			169,523,145
Net assets at end of period (including undistributed net investment income of $4,450,264 and $11,701,062, respectively)	$	148,821,744		$	178,402,598
Other Information
Class A Shares outstanding at beginning of period		25,717,511			25,818,935
Shares sold		600,530			7,431,954
Shares issued to shareholders in reinvestment of distributions		1,834,154			2,118,773
Shares redeemed		(5,523,110	)		(9,652,151	)
Net increase (decrease) in Class A shares		(3,088,426	)		(101,424	)
Shares outstanding at end of period		22,629,085			25,717,511
Class B Shares outstanding at beginning of period		13,214			12,847
Shares sold		6,708			1,197
Shares issued to shareholders in reinvestment of distributions		955			1,168
Shares redeemed		(7,733	)		(1,998	)
Net increase (decrease) in Class B shares		(70	)		367
Shares outstanding at end of period		13,144			13,214

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	6.93		$	6.56		$	6.90		$	6.55		$	5.30		$	7.81
Income (loss) from investment operations: Net investment incomea		.20			.45			.51			.52			.51			.57
Net realized and unrealized gain (loss)		(.06	)		.48			(.24	)		.36			1.40			(2.29	)
Total from investment operations		.14			.93			.27			.88			1.91			(1.72	)
Less distributions from: Net investment income		(.50	)		(.56	)		(.61	)		(.53	)		(.66	)		(.79	)
Net asset value, end of period	$	6.57		$	6.93		$	6.56		$	6.90		$	6.55		$	5.30
Total Return (%)		1.87	b**		14.91			3.84			14.00			39.99			(23.94	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		149			178			169			195			197			154
Ratio of expenses before expense reductions (%)		.72	*		.72			.72			.72			.67			.80
Ratio of expenses after expense reductions (%)		.72	*		.72			.72			.72			.67			.79
Ratio of net investment income (%)		5.93	*		6.68			7.59			7.90			8.81			8.42
Portfolio turnover rate (%)		29	**		58			59			93			66			38
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 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	6.97		$	6.59		$	6.93		$	6.58		$	5.31		$	7.81
Income (loss) from investment operations: Net investment incomea		.20			.43			.49			.50			.49			.53
Net realized and unrealized gain (loss)		(.06	)		.49			(.24	)		.36			1.42			(2.27	)
Total from investment operations		.14			.92			.25			.86			1.91			(1.74	)
Less distributions from: Net investment income		(.49	)		(.54	)		(.59	)		(.51	)		(.64	)		(.76	)
Net asset value, end of period	$	6.62		$	6.97		$	6.59		$	6.93		$	6.58		$	5.31
Total Return (%)		1.75	b**		14.70	b		3.57			13.64			39.64			(24.13	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		.1			.1			.1			.1			.2			.1
Ratio of expenses before expense reductions (%)		1.00	*		.99			.99			.99			.94			1.25
Ratio of expenses after expense reductions (%)		.97	*		.99			.99			.99			.94			1.23
Ratio of net investment income (%)		5.67	*		6.42			7.33			7.63			8.54			7.98
Portfolio turnover rate (%)		29	**		58			59			93			66			38
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.

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 and recordkeeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.

Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading.

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

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

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

As of June 30, 2013, the Fund had securities on loan with a gross value of $10,946,630. The value of the related collateral, $11,538,751, exceeded the value of the securities loaned at period end.

Loan Participations and Assignments. Senior loans are portions of loans originated by banks and sold in pieces to investors. These U.S. 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. Senior loans held by the Fund are generally in the form of Assignments, but the Fund may also invest in Participations. All senior loans involve interest rate risk, liquidity risk and credit risk, including the potential default or insolvency of the borrower.

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

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

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $44,347,000, including $39,235,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2014 ($3,844,000), December 31, 2015 ($858,000), December 31, 2016 ($17,301,000) and December 31, 2017 ($17,232,000), the respective expiration dates, whichever occurs first; and approximately $5,112,000 of post-enactment long-term losses, which may be applied against realized net taxable capital gains indefinitely.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in foreign denominated investments, investments in 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. Dividend income is recorded on ex-dividend date. 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. The Fund may enter into credit default swap contracts to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller 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 U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the contract provided that no credit event has occurred. If no credit event occurs, the Fund keeps the stream of payments with no payment obligations. 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 is 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. For the six months ended June 30, 2013, the Fund entered into credit default swap contracts to gain exposure to the underlying issuer's credit quality characteristics.

A summary of the open credit default swap contracts as of June 30, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the Fund's investment in credit default swap contracts sold had a total notional value generally indicative of a range from $7,890,000 to $20,890,000.

A summary of the open forward currency contracts as of June 30, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the Fund's investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $1,454,000 to $3,344,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from $0 to approximately $2,000.

Asset Derivative	Forward Contracts		Swap Contracts		Total
Credit Contracts (a)	$	—	$	492,620	$	492,620
Foreign Exchange Contracts (b)		34,434		—		34,434
	$	34,434	$	492,620	$	527,054

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 Derivative		Swap Contracts
Credit Contracts (a)		$	(18,797	)

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

(a) Unrealized depreciation on swap contracts

Realized Gain (Loss)	Forward Contracts		Swap Contracts		Total
Credit Contracts (a)	$	—	$	923,458	$	923,458
Foreign Exchange Contracts (b)		18,560		—		18,560
	$	18,560	$	923,458	$	942,018

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)	$	—	$	(61,674	)	$	(61,674	)
Foreign Exchange Contracts (b)		21,848		—			21,848
	$	21,848	$	(61,674	)	$	(39,826	)

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)

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Received (b)			Net Amount of Derivative Assets
Bank of America	$	101,554	$	—		$	—		$	101,554
Barclays Bank PLC		53,973		(17,446	)		—			36,527
Citigroup, Inc.		34,682		—			—			34,682
Credit Suisse		92,947		—			—			92,947
The Goldman Sachs & Co.		136,776		(1,351	)		—			135,425
JPMorgan Chase Securities, Inc.		79,053		—			(79,053	)		—
UBS AG		28,069		—			—			28,069
	$	527,054	$	(18,797	)	$	(79,053	)	$	429,204
Counterpartyb	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Pledged			Net Amount of Derivative Liabilities
Barclays Bank PLC	$	17,446	$	(17,446	)	$	—		$	—
The Goldman Sachs & Co.		1,351		(1,351	)		—			—
	$	18,797	$	(18,797	)	$	—		$	—

(a) Swap contracts and forward foreign currency exchange contracts are netted.

(b) The actual collateral received and/or pledged may be more than the amounts shown.

C. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of investment securities (excluding short-term investments and U.S. Treasury securities) aggregated $45,935,040 and $61,881,044, respectively.

D. Related Parties

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

For the period from January 1, 2013 through September 30, 2013, the Advisor has contractually agreed to waive all or a portion of its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:

Class A	.72%
Class B	.97%

Accordingly, for the six months ended June 30, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $1,003, and the amount charged aggregated $432,281, which was equivalent to an annualized effective rate of 0.50% of the Fund's average daily net assets.

Services to Shareholders	Total Aggregated		Waived
Class A	$	134	$	134
Class B		11		11
	$	145	$	145

In addition, for the six months ended June 30, 2013, the Advisor reimbursed $2 of non-affiliated recordkeeping fees for Class B shares.

Security Lending Fees. Deutsche Bank AG serves as lending agent for the Fund. For the six months ended June 30, 2013, the Fund incurred lending agent fees to Deutsche Bank AG for the amount of $2,129.

E. Investing in High-Yield Securities

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

F. Ownership of the Fund

At June 30, 2013, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 30%, 30% 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

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges, 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,018.70	$	1,017.50
Expenses Paid per $1,000*	$	3.60	$	4.85
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,021.22	$	1,019.98
Expenses Paid per $1,000*	$	3.61	$	4.86

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS High Income VIP	.72%		.97%

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2HI-3 (R-028385-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Large Cap Value VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management

7 Investment Portfolio

12 Statement of Assets and Liabilities

13 Statement of Operations

14 Statement of Changes in Net Assets

15 Financial Highlights

17 Notes to Financial Statements

21 Information About Your Fund's Expenses

22 Proxy Voting

23 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. The Fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 0.78% and 1.09% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

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

Yearly periods ended June 30

Comparative Results
DWS Large Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	11,450		$	12,030		$	15,003		$	11,484		$	19,185
Class A	Average annual total return		14.50	%		20.30	%		14.48	%		2.81	%		6.73	%
Russell 1000® Value Index	Growth of $10,000	$	11,590		$	12,532		$	16,645		$	13,811		$	21,173
Russell 1000® Value Index	Average annual total return		15.90	%		25.32	%		18.51	%		6.67	%		7.79	%
DWS Large Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	11,429		$	11,987		$	14,867		$	11,306		$	18,536
Class B	Average annual total return		14.29	%		19.87	%		14.13	%		2.49	%		6.37	%
Russell 1000® Value Index	Growth of $10,000	$	11,590		$	12,532		$	16,645		$	13,811		$	21,173
Russell 1000® Value Index	Average annual total return		15.90	%		25.32	%		18.51	%		6.67	%		7.79	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Common Stocks	99%	98%
Cash Equivalents	1%	1%
Exchange-Traded Fund	—	1%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/13	12/31/12

Financials	24%	24%
Health Care	15%	14%
Energy	13%	17%
Consumer Staples	11%	8%
Information Technology	10%	6%
Consumer Discretionary	8%	9%
Industrials	7%	10%
Utilities	6%	4%
Materials	3%	5%
Telecommunication Services	3%	3%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Thomas Schuessler, PhD

Lead Portfolio Manager

Peter Steffen, CFA

Oliver Pfeil, PhD

Portfolio Managers

Investment Portfolio June 30, 2013 (Unaudited)

	Shares		Value ($)

Common Stocks 99.3%
Consumer Discretionary 8.1%
Automobiles 1.5%
Ford Motor Co.		400,000		6,188,000
Diversified Consumer Services 0.8%
DeVry, Inc. (a)		55,000		1,706,100
H&R Block, Inc.		55,000		1,526,250
				3,232,350
Hotels, Restaurants & Leisure 0.4%
Carnival Corp.		50,000		1,714,500
Household Durables 0.3%
Jarden Corp.*		30,000		1,312,500
Internet & Catalog Retail 0.2%
Expedia, Inc.		10,000		601,500
Leisure Equipment & Products 0.4%
Hasbro, Inc. (a)		40,000		1,793,200
Media 3.7%
Comcast Corp. "A"		135,000		5,653,800
Meredith Corp. (a)		30,000		1,431,000
News Corp. "A"		60,000		1,956,000
Time Warner, Inc.		40,000		2,312,800
Walt Disney Co. (a)		40,000		2,526,000
Washington Post Co. "B" (a)		2,500		1,209,425
				15,089,025
Specialty Retail 0.8%
Lowe's Companies, Inc.		40,000		1,636,000
Staples, Inc. (a)		90,000		1,427,400
				3,063,400
Consumer Staples 10.5%
Beverages 1.7%
Beam, Inc.		25,000		1,577,750
PepsiCo, Inc.		65,000		5,316,350
				6,894,100
Food & Staples Retailing 3.2%
CVS Caremark Corp.		77,500		4,431,450
Sysco Corp. (a)		45,000		1,537,200
Wal-Mart Stores, Inc.		62,500		4,655,625
Walgreen Co.		50,000		2,210,000
				12,834,275
Food Products 1.5%
Ingredion, Inc.		30,000		1,968,600
Kellogg Co. (a)		67,500		4,335,525
				6,304,125
Household Products 2.1%
Procter & Gamble Co.		112,500		8,661,375
Tobacco 2.0%
Altria Group, Inc.		120,000		4,198,800
Philip Morris International, Inc.		27,500		2,382,050
Universal Corp. (a)		25,000		1,446,250
				8,027,100
Energy 12.9%
Energy Equipment & Services 1.5%
Halliburton Co.		80,000		3,337,600
Helmerich & Payne, Inc. (a)		40,000		2,498,000
				5,835,600
	Shares		Value ($)

Oil, Gas & Consumable Fuels 11.4%
Anadarko Petroleum Corp.		25,000		2,148,250
Apache Corp.		40,000		3,353,200
Chevron Corp.		95,000		11,242,300
ConocoPhillips		45,000		2,722,500
Exxon Mobil Corp.		157,500		14,230,125
Marathon Oil Corp.		65,000		2,247,700
Occidental Petroleum Corp.		55,000		4,907,650
Phillips 66		40,000		2,356,400
Suncor Energy, Inc.		65,000		1,916,850
Valero Energy Corp.		35,000		1,216,950
				46,341,925
Financials 23.3%
Capital Markets 3.4%
Ameriprise Financial, Inc.		40,000		3,235,200
Bank of New York Mellon Corp.		70,000		1,963,500
BlackRock, Inc.		7,000		1,797,950
Oaktree Capital Group LLC		30,000		1,576,500
The Goldman Sachs Group, Inc.		33,000		4,991,250
				13,564,400
Commercial Banks 4.8%
BankUnited, Inc.		50,000		1,300,500
Huntington Bancshares, Inc.		150,000		1,182,000
PNC Financial Services Group, Inc.		100,000		7,292,000
U.S. Bancorp.		90,000		3,253,500
Wells Fargo & Co.		160,000		6,603,200
				19,631,200
Consumer Finance 1.3%
Capital One Financial Corp.		85,000		5,338,850
Diversified Financial Services 5.9%
Bank of America Corp.		475,000		6,108,500
Citigroup, Inc.		90,000		4,317,300
JPMorgan Chase & Co.		200,000		10,558,000
The NASDAQ OMX Group, Inc.		95,000		3,115,050
				24,098,850
Insurance 7.3%
ACE Ltd.		20,000		1,789,600
Alleghany Corp.*		5,000		1,916,550
Allstate Corp.		40,000		1,924,800
Aon PLC		25,000		1,608,750
Chubb Corp.		25,000		2,116,250
CNA Financial Corp.		40,000		1,304,800
Fidelity National Financial, Inc. "A"		125,000		2,976,250
HCC Insurance Holdings, Inc.		40,000		1,724,400
Lincoln National Corp.		65,000		2,370,550
MetLife, Inc.		85,000		3,889,600
PartnerRe Ltd.		25,000		2,264,000
Principal Financial Group, Inc. (a)		40,000		1,498,000
Prudential Financial, Inc.		32,500		2,373,475
Validus Holdings Ltd.		50,000		1,806,000
				29,563,025
Thrifts & Mortgage Finance 0.6%
Home Loan Servicing Solutions Ltd.		50,000		1,198,500
New York Community Bancorp., Inc. (a)		85,000		1,190,000
				2,388,500
Health Care 15.2%
Biotechnology 0.3%
Amgen, Inc.		12,500		1,233,250
	Shares		Value ($)

Health Care Equipment & Supplies 2.6%
Baxter International, Inc.		25,000		1,731,750
Becton, Dickinson & Co.		15,000		1,482,450
C.R. Bard, Inc. (a)		15,000		1,630,200
Medtronic, Inc.		70,000		3,602,900
St. Jude Medical, Inc.		50,000		2,281,500
				10,728,800
Health Care Providers & Services 3.3%
Aetna, Inc.		40,000		2,541,600
HCA Holdings, Inc.		40,000		1,442,400
McKesson Corp.		20,000		2,290,000
Owens & Minor, Inc. (a)		35,000		1,184,050
Select Medical Holdings Corp.		140,000		1,148,000
UnitedHealth Group, Inc.		40,000		2,619,200
WellPoint, Inc.		25,000		2,046,000
				13,271,250
Life Sciences Tools & Services 0.4%
Agilent Technologies, Inc.		35,000		1,496,600
Pharmaceuticals 8.6%
Bristol-Myers Squibb Co.		50,000		2,234,500
Eli Lilly & Co.		37,500		1,842,000
Forest Laboratories, Inc.*		25,000		1,025,000
Hospira, Inc.* (a)		30,000		1,149,300
Johnson & Johnson		97,500		8,371,350
Merck & Co., Inc. (a)		185,000		8,593,250
Pfizer, Inc.		360,000		10,083,600
Teva Pharmaceutical Industries Ltd. (ADR)		40,000		1,568,000
				34,867,000
Industrials 7.2%
Aerospace & Defense 2.7%
Exelis, Inc.		100,000		1,379,000
Northrop Grumman Corp.		25,000		2,070,000
Raytheon Co.		82,500		5,454,900
United Technologies Corp.		20,000		1,858,800
				10,762,700
Commercial Services & Supplies 0.6%
ABM Industries, Inc.		15,000		367,650
Republic Services, Inc.		65,000		2,206,100
				2,573,750
Industrial Conglomerates 3.1%
Danaher Corp.		25,000		1,582,500
General Electric Co.		470,000		10,899,300
				12,481,800
Machinery 0.3%
AGCO Corp.		27,000		1,355,130
Road & Rail 0.5%
Norfolk Southern Corp. (a)		25,000		1,816,250
Information Technology 10.1%
Communications Equipment 1.7%
Brocade Communications Systems, Inc.*		125,000		720,000
Cisco Systems, Inc.		250,000		6,077,500
				6,797,500
Computers & Peripherals 2.1%
Apple, Inc.		3,000		1,188,240
EMC Corp.		75,000		1,771,500
Hewlett-Packard Co.		75,000		1,860,000
SanDisk Corp.*		25,000		1,527,500
Western Digital Corp.		35,000		2,173,150
				8,520,390
	Shares		Value ($)

Electronic Equipment, Instruments & Components 0.3%
Corning, Inc.		100,000		1,423,000
Internet Software & Services 0.3%
IAC/InterActiveCorp.		25,000		1,189,000
IT Services 1.3%
Booz Allen Hamilton Holding Corp. (a)		65,000		1,129,700
International Business Machines Corp.		15,000		2,866,650
Total System Services, Inc.		50,000		1,224,000
				5,220,350
Office Electronics 0.3%
Xerox Corp.		125,000		1,133,750
Semiconductors & Semiconductor Equipment 1.8%
Broadcom Corp. "A"		35,000		1,181,600
Intel Corp. (a)		110,000		2,664,200
Marvell Technology Group Ltd.		125,000		1,463,750
NVIDIA Corp. (a)		80,000		1,122,400
Texas Instruments, Inc.		25,000		871,750
				7,303,700
Software 2.3%
CA, Inc.		50,000		1,431,500
Microsoft Corp.		145,000		5,006,850
Oracle Corp.		90,000		2,764,800
				9,203,150
Materials 3.1%
Chemicals 1.5%
CF Industries Holdings, Inc.		7,500		1,286,250
LyondellBasell Industries NV "A"		30,000		1,987,800
Praxair, Inc.		12,000		1,381,920
The Mosaic Co.		28,000		1,506,680
				6,162,650
Containers & Packaging 0.5%
Sonoco Products Co.		60,000		2,074,200
Metals & Mining 0.4%
Constellium NV "A"*		90,000		1,453,500
Paper & Forest Products 0.7%
International Paper Co.		35,000		1,550,850
Schweitzer-Mauduit International, Inc.		30,000		1,496,400
				3,047,250
Telecommunication Services 2.9%
Diversified Telecommunication Services
AT&T, Inc.		260,000		9,204,000
CenturyLink, Inc. (a)		75,000		2,651,250
				11,855,250
Utilities 6.0%
Electric Utilities 3.9%
American Electric Power Co., Inc.		50,000		2,239,000
Duke Energy Corp.		35,000		2,362,500
Exelon Corp.		45,000		1,389,600
FirstEnergy Corp.		55,000		2,053,700
NextEra Energy, Inc.		27,000		2,199,960
Pinnacle West Capital Corp.		30,000		1,664,100
PPL Corp.		50,000		1,513,000
Southern Co.		55,000		2,427,150
				15,849,010
Gas Utilities 0.5%
UGI Corp.		50,000		1,955,500
	Shares		Value ($)

Independent Power Producers & Energy Traders 0.3%
AES Corp.		90,000		1,079,100
Multi-Utilities 1.3%
Dominion Resources, Inc.		37,500		2,130,750
Public Service Enterprise Group, Inc.		50,000		1,633,000
Wisconsin Energy Corp.		40,000		1,639,600
				5,403,350
Total Common Stocks (Cost $323,631,673)				402,734,980

	Shares		Value ($)

Securities Lending Collateral 8.7%
Daily Assets Fund Institutional, 0.10% (b) (c) (Cost $35,355,055)		35,355,055		35,355,055

Cash Equivalents 0.7%
Central Cash Management Fund, 0.07% (b) (Cost $2,570,663)		2,570,663		2,570,663

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $361,557,391)†		108.7			440,660,698
Other Assets and Liabilities, Net		(8.7	)		(35,118,317	)
Net Assets		100.0			405,542,381

* Non-income producing security.

† The cost for federal income tax purposes was $363,571,412. At June 30, 2013, net unrealized appreciation for all securities based on tax cost was $77,089,286. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $82,694,268 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $5,604,982.

(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of securities loaned at June 30, 2013 amounted to $34,506,197, which is 8.5% 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)	$	402,734,980	$	—	$	—	$	402,734,980
Short-Term Investments (d)		37,925,718		—		—		37,925,718
Total	$	440,660,698	$	—	$	—	$	440,660,698

There have been no transfers between fair value measurement levels during the period ended June 30, 2013.

(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, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $323,631,673) — including $34,506,197 of securities loaned	$	402,734,980
Investment in Daily Assets Fund Institutional (cost $35,355,055)*		35,355,055
Investment in Central Cash Management Fund (cost $2,570,663)		2,570,663
Total investments in securities, at value (cost $361,557,391)		440,660,698
Cash		10,000
Foreign currency , at value (cost $29,619)		29,797
Receivable for investments sold		1,062,554
Receivable for Fund shares sold		546
Dividends receivable		515,483
Interest receivable		4,298
Foreign taxes recoverable		2,107
Other assets		2,074
Total assets		442,287,557
Liabilities
Payable upon return of securities loaned		35,355,055
Payable for investments purchased		768,095
Payable for Fund shares redeemed		324,092
Accrued management fee		203,389
Accrued Trustees' fees		247
Other accrued expenses and payables		94,298
Total liabilities		36,745,176
Net assets, at value	$	405,542,381
Net Assets Consist of
Undistributed net investment income		3,486,800
Net unrealized appreciation (depreciation) on: Investments		79,103,307
Foreign currency		178
Accumulated net realized gain (loss)		(114,214,555	)
Paid-in capital		437,166,651
Net assets, at value	$	405,542,381
Class A Net Asset Value, offering and redemption price per share ($401,567,620 ÷ 28,752,548 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 ($3,974,761 ÷ 283,857 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	14.00

* Represents collateral on securities loaned.

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

Statement of Operations

for the six months ended June 30, 2013 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $19,466)	$	5,149,960
Income distributions — Central Cash Management Fund		1,042
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		13,497
Total income		5,164,499
Expenses: Management fee		1,283,802
Administration fee		200,449
Services to shareholders		2,842
Record keeping fees (Class B)		1,041
Distribution and service fee (Class B)		4,820
Custodian fee		8,343
Professional fees		34,298
Reports to shareholders		21,815
Trustees' fees and expenses		8,053
Other		7,285
Total expenses before expense reductions		1,572,748
Expense reductions		(63,098	)
Total expenses after expense reductions		1,509,650
Net investment income	$	3,654,849
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		26,852,945
Foreign currency		(89	)
		26,852,856
Change in net unrealized appreciation (depreciation) on: Investments		23,538,146
Foreign currency		(1,842	)
		23,536,304
Net gain (loss)		50,389,160
Net increase (decrease) in net assets resulting from operations		54,044,009

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income	$	3,654,849		$	8,087,256
Net realized gain (loss)		26,852,856			9,766,336
Change in net unrealized appreciation (depreciation)		23,536,304			19,604,246
Net increase (decrease) in net assets resulting from operations		54,044,009			37,457,838
Distributions to shareholders from: Net investment income: Class A		(8,048,782	)		(7,645,527	)
Class B		(66,664	)		(54,663	)
Total distributions		(8,115,446	)		(7,700,190	)
Fund share transactions: Class A Proceeds from shares sold		3,005,689			10,324,918
Reinvestment of distributions		8,048,782			7,645,527
Payments for shares redeemed		(31,927,774	)		(66,665,475	)
Net increase (decrease) in net assets from Class A share transactions		(20,873,303	)		(48,695,030	)
Class B Proceeds from shares sold		198,574			728,624
Reinvestment of distributions		66,664			54,663
Payments for shares redeemed		(307,946	)		(918,486	)
Net increase (decrease) in net assets from Class B share transactions		(42,708	)		(135,199	)
Increase (decrease) in net assets		25,012,552			(19,072,581	)
Net assets at beginning of period		380,529,829			399,602,410
Net assets at end of period (including undistributed net investment income of $3,486,800 and $7,947,397, respectively)	$	405,542,381		$	380,529,829
Other Information
Class A Shares outstanding at beginning of period		30,284,545			34,282,579
Shares sold		220,502			851,162
Shares issued to shareholders in reinvestment of distributions		590,519			631,340
Shares redeemed		(2,343,018	)		(5,480,536	)
Net increase (decrease) in Class A shares		(1,531,997	)		(3,998,034	)
Shares outstanding at end of period		28,752,548			30,284,545
Class B Shares outstanding at beginning of period		286,965			298,416
Shares sold		14,349			59,337
Shares issued to shareholders in reinvestment of distributions		4,877			4,499
Shares redeemed		(22,334	)		(75,287	)
Net increase (decrease) in Class B shares		(3,108	)		(11,451	)
Shares outstanding at end of period		283,857			286,965

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	12.45		$	11.56		$	11.80		$	10.86		$	8.92		$	19.21
Income (loss) from investment operations: Net investment income (loss)a		.12			.25			.25			.23			.21			.21
Net realized and unrealized gain (loss)		1.68			.87			(.24	)		.93			1.97			(5.68	)
Total from investment operations		1.80			1.12			.01			1.16			2.18			(5.47	)
Less distributions from: Net investment income		(.28	)		(.23	)		(.25	)		(.22	)		(.24	)		(.34	)
Net realized gains		—			—			—			—			—			(4.48	)
Total distributions		(.28	)		(.23	)		(.25	)		(.22	)		(.24	)		(4.82	)
Net asset value, end of period	$	13.97		$	12.45		$	11.56		$	11.80		$	10.86		$	8.92
Total Return (%)		14.50	b**		9.79	b		(.07	)		10.77			25.37			(36.40	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		402			377			396			206			214			118
Ratio of expenses before expense reductions (%)		.78	*		.78			.79			.82			.76			.87
Ratio of expenses after expense reductions (%)		.75	*		.77			.79			.82			.76			.86
Ratio of net investment income (loss) (%)		1.83	*		2.04			2.15			2.13			2.22			1.59
Portfolio turnover rate (%)		41	**		63			28			32			76			97
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 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	12.46		$	11.57		$	11.81		$	10.86		$	8.92		$	19.20
Income (loss) from investment operations: Net investment income (loss)a		.10			.21			.22			.20			.19			.12
Net realized and unrealized gain (loss)		1.68			.88			(.25	)		.93			1.96			(5.64	)
Total from investment operations		1.78			1.09			(.03	)		1.13			2.15			(5.52	)
Less distributions from: Net investment income		(.24	)		(.20	)		(.21	)		(.18	)		(.21	)		(.28	)
Net realized gains		—			—			—			—			—			(4.48	)
Total distributions		(.24	)		(.20	)		(.21	)		(.18	)		(.21	)		(4.76	)
Net asset value, end of period	$	14.00		$	12.46		$	11.57		$	11.81		$	10.86		$	8.92
Total Return (%)		14.29	b**		9.44	b		(.36	)		10.53			24.86			(36.64	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		4			4			3			1			1			.29
Ratio of expenses before expense reductions (%)		1.09	*		1.09			1.10			1.11			1.06			1.28
Ratio of expenses after expense reductions (%)		1.05	*		1.08			1.10			1.11			1.06			1.26
Ratio of net investment income (loss) (%)		1.53	*		1.73			1.84			1.84			1.92			1.20
Portfolio turnover rate (%)		41	**		63			28			32			76			97
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 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.

Equity securities and exchange traded funds ("ETFs") are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade 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.

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

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

Securities Lending. Deutsche Bank AG, as lending agent, lends securities of the Fund to certain financial institutions under the terms of the Security Lending Agreement. The Fund retains the benefits of owning securities it has loaned and continues to receive interest and dividends generated by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of either cash or liquid, unencumbered assets having a value at least equal to the value of the securities loaned. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of borrower rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may be risks of delay and costs in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. If the Fund is not able to recover securities lent, the Fund may sell the collateral and purchase a replacement investment in the market, incurring the risk that the value of the replacement security is greater than the value of the collateral. The Fund is also subject to all investment risks associated with the reinvestment of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.

As of June 30, 2013, the Fund had securities on loan with a gross value of $34,506,197. The value of the related collateral, $35,355,055, exceeded the value of the securities loaned at period end.

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $137,753,000 of pre-enactment losses, including approximately $116,135,000 inherited from its merger with an affiliated fund in previous years, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2015 ($8,454,000), December 31, 2016 ($120,989,000) and December 31, 2017 ($8,310,000), the respective expiration dates, whichever occurs first, and which may be subject to certain limitations under Section 382-384 of Internal Revenue Code.

In addition, from November 1, 2012 through December 31, 2012, the Fund elects to defer qualified late year losses of approximately $1,300,000 of net short-term realized capital losses and treat them as arising in the fiscal year ending December 31, 2013.

Distribution of Income and Gains. Distributions from net investment income of the Fund, if any, is declared and distributed to shareholders annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed and, therefore, will be distributed to shareholders at least annually. The Fund may also make additional distributions for tax purposes if necessary.

The 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, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $162,617,990 and $185,879,810, respectively.

C. Related Parties

Under the Investment Management Agreement with the Advisor, the Fund pays a monthly management fee based on the Fund's average daily net assets, computed and accrued daily and payable monthly, at the following annual rates:

First $250 million	.650	%
Next $750 million	.625	%
Next $1.5 billion	.600	%
Next $2.5 billion	.575	%
Next $2.5 billion	.550	%
Next $2.5 billion	.525	%
Next $2.5 billion	.500	%
Over $12.5 billion	.475	%

Class A	.75%
Class B	1.05%

Accordingly, for the six months ended June 30, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $62,734, and the amount charged aggregated $1,221,068, which was equivalent to an annualized effective rate of 0.61% of the Fund's average daily net assets.

Services to Shareholders	Total Aggregated		Waived
Class A	$	184	$	184
Class B		94		94
	$	278	$	278

In addition, for the six months ended June 30, 2013, the Advisor reimbursed the Fund $86 of record keeping fees for Class B shares.

D. Ownership of the Fund

At June 30, 2013, two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 55% and 27%. Two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 63% and 10%.

E. Line of Credit

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,145.00	$	1,142.90
Expenses Paid per $1,000*	$	3.99	$	5.58
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,021.08	$	1,019.59
Expenses Paid per $1,000*	$	3.76	$	5.26

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Large Cap Value VIP	.75%		1.05%

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2LCV-3 (R-028386-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Money Market VIP

Contents

3 Performance Summary

4 Portfolio Summary

5 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

16 Information About Your Fund's Expenses

16 Other Information

18 Summary of Management 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.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

DWS Money Market VIP

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

	7-day current yield
June 30, 2013	0.01%*
December 31, 2012	0.01%*

* The investment advisor has agreed to waive fees/reimburse expenses. This wavier may be changed or terminated at any time without notice.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio)	6/30/13	12/31/12

Commercial Paper	37%	38%
Repurchase Agreements	21%	23%
Certificates of Deposit and Bank Notes	15%	12%
Government & Agency Obligations	12%	10%
Short-Term Notes	9%	13%
Time Deposit	4%	2%
Municipal Bonds and Notes	2%	2%
	100%	100%

Weighted Average Maturity*	6/30/13	12/31/12

DWS Variable Series II — DWS Money Market VIP	46 days	48 days
First Tier Retail Money Fund Average	44 days	43 days

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

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

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. In addition, each month, information about the Fund and its portfolio holdings is filed with the SEC on Form N-MFP. The SEC delays the public availability of the information filed on Form N-MFP for 60 days after the end of the reporting period included in the filing. These forms will be available on the SEC's Web site at 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, 2013 (Unaudited)

	Principal Amount ($)		Value ($)

Certificates of Deposit and Bank Notes 15.3%
Banco del Estado de Chile, 0.27%, 11/14/2013		500,000		500,000
Bank of Nova Scotia, 0.27%, 12/11/2013		800,000		800,072
Caisse d'Amortissement de la Dette Sociale, 1.375%, 7/29/2013		500,000		500,436
China Construction Bank Corp., 0.39%, 8/28/2013		1,200,000		1,200,000
Credit Suisse:
0.24%, 8/30/2013		1,000,000		1,000,000
0.25%, 8/8/2013		2,000,000		2,000,000
DNB Bank ASA:
0.19%, 10/3/2013		2,000,000		2,000,000
0.225%, 7/3/2013		1,000,000		1,000,000
0.23%, 11/20/2013		2,000,000		2,000,000
DZ Bank AG:
0.19%, 10/1/2013		2,000,000		2,000,000
0.21%, 8/2/2013		1,000,000		1,000,000
0.21%, 8/12/2013		1,000,000		1,000,000
Industrial & Commercial Bank of China:
0.4%, 8/28/2013		1,500,000		1,500,000
0.4%, 9/6/2013		1,000,000		1,000,000
International Business Machines Corp., 1.25%, 5/12/2014		500,000		504,211
Kreditanstalt Fuer Wiederaufbau, 0.22%, 4/11/2014		1,000,000		999,711
Mitsubishi UFJ Trust & Banking Corp., 0.22%, 7/22/2013		1,000,000		1,000,000
Mizuho Corporate Bank Ltd.:
0.23%, 9/9/2013		1,000,000		1,000,000
0.24%, 8/9/2013		1,000,000		1,000,000
Nordea Bank Finland PLC, 0.25%, 9/9/2013		1,000,000		1,000,000
Norinchukin Bank:
0.14%, 7/11/2013		1,000,000		1,000,000
0.24%, 8/9/2013		1,000,000		1,000,000
Rabobank Nederland NV:
0.27%, 9/9/2013		1,000,000		1,000,000
0.405%, 1/8/2014		1,000,000		1,000,713
Sumitomo Mitsui Banking Corp., 0.24%, 8/23/2013		1,000,000		1,000,000
Svenska Handelsbanken AB:
0.225%, 7/12/2013		1,000,000		1,000,001
0.255%, 9/26/2013		1,000,000		1,000,012
0.28%, 7/23/2013		1,000,000		1,000,003
Total Certificates of Deposit and Bank Notes (Cost $31,005,159)				31,005,159

Commercial Paper 37.0%
Issued at Discount** 33.7%
ASB Finance Ltd., 0.25%, 12/17/2013		1,500,000		1,498,240
Bedford Row Funding Corp.:
144A, 0.32%, 7/15/2013		400,000		399,950
144A, 0.39%, 10/21/2013		400,000		399,515
144A, 0.42%, 1/3/2014		400,000		399,132
Caisse Centrale Desjardins du Quebec:
0.15%, 7/22/2013		2,000,000		1,999,825
0.205%, 8/19/2013		1,000,000		999,721
	Principal Amount ($)		Value ($)

Caisse d'Amortissement de la Dette Sociale, 0.27%, 8/6/2013		1,000,000		999,730
Caisse des Depots et Consignations:
144A, 0.22%, 9/5/2013		1,000,000		999,597
144A, 0.255%, 12/13/2013		1,200,000		1,198,597
144A, 0.26%, 9/27/2013		900,000		899,428
144A, 0.275%, 10/9/2013		500,000		499,618
Collateralized Commercial Paper Co., LLC, 0.24%, 8/6/2013		1,500,000		1,499,640
Collateralized Commercial Paper II Co., LLC:
144A, 0.225%, 9/16/2013		800,000		799,615
144A, 0.225%, 9/17/2013		1,000,000		999,512
144A, 0.25%, 7/9/2013		1,000,000		999,944
DBS Bank Ltd.:
144A, 0.25%, 9/12/2013		800,000		799,594
144A, 0.26%, 10/4/2013		500,000		499,657
Erste Abwicklungsanstalt:
0.2%, 10/30/2013		1,000,000		999,328
0.24%, 8/1/2013		1,000,000		999,793
0.39%, 7/22/2013		1,000,000		999,772
0.425%, 7/8/2013		1,000,000		999,917
0.43%, 7/19/2013		1,000,000		999,785
0.43%, 8/13/2013		800,000		799,589
Exxon Mobil Corp., 0.09%, 7/29/2013		1,500,000		1,499,895
Kells Funding LLC:
144A, 0.25%, 9/17/2013		1,000,000		999,458
144A, 0.25%, 9/20/2013		1,000,000		999,437
144A, 0.25%, 10/3/2013		500,000		499,674
144A, 0.26%, 8/15/2013		1,000,000		999,675
144A, 0.26%, 8/27/2013		500,000		499,794
LMA Americas LLC, 144A, 0.2%, 7/29/2013		2,000,000		1,999,689
Matchpoint Master Trust, 0.19%, 8/16/2013		1,500,000		1,499,636
Nederlandse Waterschapsbank NV, 0.2%, 10/7/2013		2,000,000		1,998,911
Nissan Motor Acceptance Corp., 0.3%, 7/26/2013		500,000		499,896
Nordea North America, Inc.:
0.24%, 11/8/2013		800,000		799,307
0.26%, 8/26/2013		500,000		499,798
0.275%, 7/16/2013		1,000,000		999,885
Oversea-Chinese Banking Corp., Ltd., 0.17%, 8/1/2013		4,000,000		3,999,414
Regency Markets No. 1 LLC:
144A, 0.16%, 7/11/2013		1,500,000		1,499,933
144A, 0.17%, 7/15/2013		2,000,000		1,999,868
144A, 0.17%, 7/16/2013		1,500,000		1,499,894
Scaldis Capital LLC, 0.199%, 8/12/2013		3,000,000		2,999,300
Sinopec Century Bright Capital Investment Ltd., 0.27%, 7/11/2013		700,000		699,948
Skandinaviska Enskilda Banken AB:
0.15%, 7/9/2013		2,350,000		2,349,922
0.22%, 7/2/2013		1,000,000		999,994
0.235%, 10/3/2013		1,500,000		1,499,080
Standard Chartered Bank, 0.27%, 7/11/2013		2,000,000		1,999,850
Starbird Funding Corp., 144A, 0.08%, 7/1/2013		4,235,000		4,235,000
	Principal Amount ($)		Value ($)

Svenska Handelsbanken AB, 0.21%, 11/7/2013		1,000,000		999,248
UOB Funding LLC, 0.25%, 8/26/2013		500,000		499,806
Victory Receivables Corp.:
144A, 0.17%, 7/18/2013		2,500,000		2,499,799
144A, 0.19%, 7/11/2013		2,500,000		2,499,868
144A, 0.2%, 7/16/2013		1,000,000		999,917
Working Capital Management Co., 144A, 0.2%, 8/16/2013		1,500,000		1,499,617
				68,265,012
Issued at Par 3.3%
ASB Finance Ltd., 144A, 0.403%*, 9/4/2013		1,000,000		1,000,000
Atlantic Asset Securitization LLC:
144A, 0.243%*, 9/4/2013		1,000,000		999,984
144A, 0.254%*, 10/4/2013		500,000		500,000
Australia & New Zealand Banking Group Ltd., 144A, 0.31%*, 12/6/2013		1,000,000		1,000,000
BNZ International Funding Ltd., 144A, 0.356%*, 10/23/2013		500,000		500,000
Kells Funding LLC, 144A, 0.252%*, 11/12/2013		1,000,000		1,000,000
Westpac Banking Corp.:
144A, 0.283%*, 9/3/2013		1,000,000		1,000,000
144A, 0.31%*, 11/29/2013		750,000		750,000
				6,749,984
Total Commercial Paper (Cost $75,014,996)				75,014,996

Short-Term Notes* 9.3%
Australia & New Zealand Banking Group Ltd., 144A, 0.338%, 5/12/2014		800,000		800,000
Bank of Nova Scotia:
0.21%, 8/9/2013		1,000,000		1,000,000
0.26%, 1/10/2014		1,000,000		1,000,000
0.412%, 6/24/2019		1,000,000		1,000,000
Canadian Imperial Bank of Commerce, 0.29%, 5/16/2014		1,800,000		1,800,000
China Construction Bank Corp., 0.422%, 10/20/2014		2,000,000		2,000,000
Commonwealth Bank of Australia, 144A, 0.25%, 6/11/2014		1,000,000		1,000,000
JPMorgan Chase Bank NA, Series 2, 0.355%, 4/22/2019		1,000,000		1,000,000
Kommunalbanken AS, 144A, 0.16%, 2/26/2014		1,500,000		1,500,000
National Australia Bank Ltd., 0.272%, 8/13/2013		1,000,000		1,000,000
Rabobank Nederland NV:
0.31%, 5/8/2014		500,000		500,000
0.345%, 1/27/2014		1,500,000		1,500,000
Royal Bank of Canada, 0.31%, 2/28/2014		1,000,000		1,000,000
Svensk Exportkredit AB, 144A, 0.18%, 6/17/2014		2,000,000		2,000,000
Westpac Banking Corp.:
0.282%, 5/9/2014		750,000		750,000
0.31%, 11/15/2013		1,000,000		1,000,000
Total Short-Term Notes (Cost $18,850,000)				18,850,000

	Principal Amount ($)		Value ($)

Time Deposit 3.9%
State Street Bank & Trust Co., 0.01%, 7/1/2013 (Cost $8,000,000)		8,000,000		8,000,000

Government & Agency Obligations 12.1%
Other Government Related (a) 1.5%
European Investment Bank, 3.0%, 4/8/2014		500,000		510,489
International Bank for Reconstruction & Development, 0.118%**, 8/23/2013		2,500,000		2,499,558
				3,010,047
U.S. Government Sponsored Agencies 8.0%
Federal Farm Credit Bank, 0.22%*, 10/29/2014		500,000		500,102
Federal Home Loan Bank:
0.125%, 3/27/2014		750,000		749,685
0.15%*, 11/8/2013		500,000		499,929
0.18%, 3/7/2014		500,000		499,983
0.5%, 8/28/2013		1,000,000		1,000,473
Federal Home Loan Mortgage Corp.:
0.1%**, 12/17/2013		1,000,000		999,531
0.1%**, 12/20/2013		2,000,000		1,999,045
0.109%**, 11/19/2013		750,000		749,677
0.11%**, 1/22/2014		1,500,000		1,499,060
0.118%**, 8/26/2013		1,200,000		1,199,776
0.138%**, 8/13/2013		500,000		499,916
Federal National Mortgage Association:
0.133%**, 7/19/2013		2,000,000		1,999,860
0.148%**, 9/3/2013		2,500,000		2,499,333
0.148%**, 9/16/2013		1,500,000		1,499,519
				16,195,889
U.S. Treasury Obligations 2.6%
U.S. Treasury Bill, 0.177%**, 10/17/2013		1,975,000		1,973,948
U.S. Treasury Notes:
0.5%, 10/15/2013		1,200,000		1,201,099
0.5%, 11/15/2013		500,000		500,650
2.25%, 5/31/2014		600,000		611,468
4.0%, 2/15/2014		1,000,000		1,023,924
				5,311,089
Total Government & Agency Obligations (Cost $24,517,025)				24,517,025

Municipal Bonds and Notes 1.5%
Texas, JPMorgan Chase Putters/Drivers Trust, Various States, Series 4264, 144A, 0.07%***, 8/30/2013, LIQ: JPMorgan Chase Bank NA		2,000,000		2,000,000
Texas, State Transportation Revenue, 2.5%, 8/30/2013		1,000,000		1,003,738
Total Municipal Bonds and Notes (Cost $3,003,738)				3,003,738

	Principal Amount ($)		Value ($)

Repurchase Agreements 20.9%
Barclays Capital, 0.1%, dated 6/28/2013, to be repurchased at $10,000,083 on 7/1/2013 (b)		10,000,000		10,000,000
JPMorgan Securities, Inc., 0.13%, dated 6/28/2013, to be repurchased at $9,000,098 on 7/1/2013 (c)		9,000,000		9,000,000
JPMorgan Securities, Inc., 0.4%, dated 3/18/2013, to be repurchased at $2,510,139 on 3/18/2014 (d)		2,500,000		2,500,000
Merrill Lynch & Co., Inc., 0.17%, dated 3/1/2013, to be repurchased at $2,001,757 on 9/3/2013 (e)		2,000,000		2,000,000
Merrill Lynch & Co., Inc., 0.08%, dated 6/28/2013, to be repurchased at $6,000,093 on 7/5/2013 (f)		6,000,000		6,000,000
	Principal Amount ($)		Value ($)

Merrill Lynch & Co., Inc., 0.1%, dated 6/28/2013, to be repurchased at $10,488,401 on 7/1/2013 (g)		10,488,314		10,488,314
The Toronto-Dominion Bank, 0.06%, dated 6/26/2013, to be repurchased at $1,000,012 on 7/3/2013 (h)		1,000,000		1,000,000
The Toronto-Dominion Bank, 0.1%, dated 6/28/2013, to be repurchased at $1,500,013 on 7/1/2013 (i)		1,500,000		1,500,000
Total Repurchase Agreements (Cost $42,488,314)				42,488,314

	% of Net Assets		Value ($)

Total Investment Portfolio (Cost $202,879,232)†		100.0		202,879,232
Other Assets and Liabilities, Net		0.0		10,639
Net Assets		100.0		202,889,871

* Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of June 30, 2013.

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

*** Variable rate demand notes are securities whose interest rates are reset periodically at market levels. These securities are payable on demand and are shown at their current rates as of June 30, 2013.

† The cost for federal income tax purposes was $202,879,232.

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

(b) Collateralized by $10,294,600 U.S. Treasury Note, 0.25%, maturing on 4/15/2016 with a value of $10,200,049.

(c) Collateralized by $73,490,451 Federal National Mortgage Association — Interest Only, with the various coupon rates from 3.0-6.5%, with various maturity dates of 8/25/2026-4/25/2039 with a value of $9,180,416.

(d) Collateralized by $4,185,000 College Loan Corp. Trust, maturing on 3/1/2042 with a value of $2,603,006.

(e) Collateralized by $2,040,100 U.S. Treasury Bill, maturing on 7/5/2013 with a value of $2,040,092.

(f) Collateralized by $6,120,100 U.S. Treasury Bill, maturing on 7/5/2013 with a value of $6,120,076.

(g) Collateralized by $10,734,100 U.S. Treasury Note, 0.25%, maturing on 9/15/2015 with a value of $10,698,155.

(h) Collateralized by:

Principal Amount ($)		Security	Rate (%)		Maturity Date	Collateral Value ($)
	62,000	Federal National Mortgage Association		1.25	1/30/2017		62,739
	845,335	U.S. Treasury Note		4.625	11/15/2016		957,261
Total Collateral Value							1,020,000

(i) Collateralized by:

Principal Amount ($)		Security	Rate (%)		Maturity Date	Collateral Value ($)
	6,583	Bank of Nova Scotia		2.15	8/3/2016		6,855
	17,365	Cigna Corp.		5.375	2/15/2042		18,503
	7,568	General Electric Capital Corp.		0.475	5/11/2016		7,512
	2,901	JPMorgan Chase & Co.		1.625	5/15/2018		2,783
	11,307	Pepsi Bottling Group, Inc.		7.0	3/1/2029		14,692
	1,236,011	Roche Holdings, Inc.		6.0	3/1/2019		1,499,912
	1,245	Verizon Communications, Inc.		6.25	4/1/2037		1,430
	1,857	Wyeth LLC		5.5	2/1/2014		1,954
Total Collateral Value							1,553,641

LIQ: Liquidity Facility

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Investments in Securities (j)	$	—	$	160,390,918	$	—	$	160,390,918
Repurchase Agreements		—		42,488,314		—		42,488,314
Total	$	—	$	202,879,232	$	—	$	202,879,232

There have been no transfers between fair value measurement levels during the period ended June 30, 2013.

(j) 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, 2013 (Unaudited)
Assets
Investments in non-affiliated securities, valued at amortized cost	$	160,390,918
Repurchase agreements, valued at amortized cost		42,488,314
Total investments, valued at amortized cost		202,879,232
Cash		51
Receivable for Fund shares sold		142,016
Interest receivable		77,615
Due from Advisor		4,901
Other assets		1,176
Total assets		203,104,991
Liabilities
Payable for Fund shares redeemed		143,020
Distributions payable		720
Accrued Trustees' fees		1,713
Other accrued expenses and payables		69,667
Total liabilities		215,120
Net assets, at value	$	202,889,871
Net Assets Consist of
Undistributed net investment income		246
Accumulated net realized gain (loss)		202
Paid-in capital		202,889,423
Net assets, at value	$	202,889,871
Class A Net Asset Value, offering and redemption price per share ($202,889,871 ÷ 202,973,139 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, 2013 (Unaudited)
Investment Income
Income: Interest	$	38,571
Income distributions — Central Cash Management Fund		180,695
Total income		219,266
Expenses: Management fee		266,048
Administration fee		93,350
Services to shareholders		1,175
Custodian fee		12,095
Professional fees		25,218
Reports to shareholders		38,559
Trustees' fee and expenses		3,863
Other		4,580
Total expenses before expense reductions		444,888
Expense reductions		(235,002	)
Total expenses after expense reductions		209,886
Net investment income		9,380
Net realized gain (loss)		202
Net increase (decrease) in net assets resulting from operations	$	9,582

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income	$	9,380		$	20,513
Net realized gain (loss)		202			863
Net increase (decrease) in net assets resulting from operations		9,582			21,376
Distributions to shareholders from: Net investment income Class A		(9,338	)		(20,513	)
Total distributions		(9,338	)		(20,513	)
Fund share transactions: Class A Proceeds from shares sold		51,714,331			76,110,395
Reinvestment of distributions		9,415			20,711
Cost of shares redeemed		(44,977,923	)		(96,940,382	)
Net increase (decrease) in net assets from Class A share transactions		6,745,823			(20,809,276	)
Increase (decrease) in net assets		6,746,067			(20,808,413	)
Net assets at beginning of period		196,143,804			216,952,217
Net assets at end of period (including undistributed net investment income of $246 and $204, respectively)	$	202,889,871		$	196,143,804
Other Information
Class A Shares outstanding at beginning of period		196,227,316			217,036,592
Shares sold		51,714,331			76,110,395
Shares issued to shareholders in reinvestment of distributions		9,415			20,711
Shares redeemed		(44,977,923	)		(96,940,382	)
Net increase (decrease) in Class A shares		6,745,823			(20,809,276	)
Shares outstanding at end of period		202,973,139			196,227,316

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
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	***		.000	***		.000	***		.003			.026
Net realized gain (loss)		.000	***		.000	***		.000	***		.000	***		.000	***		.000	***
Total from investment operations		.000	***		.000	***		.000	***		.000	***		.003			.026
Less distributions from: Net investment income		(.000	)***		(.000	)***		(.000	)***		(.000	)***		(.003	)		(.026	)
Net asset value, end of period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000		$	1.000
Total Return (%)		.00	a,b**		.01	a		.01	a		.01	a		.34			2.64	a
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		203			196			217			220			270			398
Ratio of expenses before expense reductions (%)		.48	*		.45			.51			.46			.43			.52
Ratio of expenses after expense reductions (%)		.22	*		.31			.25			.34			.43			.50
Ratio of net investment income (%)		.01	*		.01			.01			.01			.37			2.56
a Total return would have been lower had certain expenses not been reduced. b Amount is less than .005%. * 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, under the terms of a Master Repurchase Agreement, with certain banks and broker/dealers whereby the Fund, through its custodian or a sub-custodian bank, receives delivery of the underlying securities, the amount of which at the time of purchase and each subsequent business day is required to be maintained at such a level that the value is equal to at least the principal amount of the repurchase price plus accrued interest. The custodian bank or another designated sub-custodian holds the collateral in a separate account until the agreement matures. If the value of the securities falls below the principal amount of the repurchase agreement plus accrued interest, the financial institution deposits additional collateral by the following business day. If the financial institution either fails to deposit the required additional collateral or fails to repurchase the securities as agreed, the Fund has the right to sell the securities and recover any resulting loss from the financial institution. If the financial institution enters into bankruptcy, the Fund's claim on the collateral may be subject to legal proceedings.

As of June 30, 2013, the Fund had investments in repurchase agreements with a gross value of $42,488,314. The value of the related collateral exceeded the value of the repurchase agreements at period end. The detail of the related collateral is included in the footnotes following the Fund's Investment Portfolio.

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

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

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

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

B. Related Parties

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

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.

Accordingly, for the six months ended June 30, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $234,710, and the amount charged aggregated $31,338, which was equivalent to an annualized effective rate of 0.03% of the Fund's average daily net assets.

C. Ownership of the Fund

At June 30, 2013, four Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 37%, 21%, 11% and 10%.

D. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 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, 2013.

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,000.05
Expenses Paid per $1,000*	$	1.09
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,023.70
Expenses Paid per $1,000*	$	1.10

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

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Other Information

Proxy Voting

Money Market Fund Reform

In June 2013, the SEC proposed money market fund reform intended to address perceived systemic risks associated with money market funds and to improve transparency for money market fund investors. The Financial Stability Oversight Council (FSOC), a board of U.S. regulators established by the Dodd-Frank Act, had also previously proposed similar recommendations for money market fund reform. If one or more of the SEC or FSOC proposals for money market fund reform were to be adopted in the future, such regulatory action may affect the fund's operations and/or return potential.

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2MM-3 (R-028387-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Small Mid Cap Growth VIP

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Management

5 Investment Portfolio

9 Statement of Assets and Liabilities

10 Statement of Operations

10 Statement of Changes in Net Assets

12 Financial Highlights

13 Notes to Financial Statements

16 Information About Your Fund's Expenses

17 Proxy Voting

18 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. Smaller and medium company stocks tend to be more volatile than large company stocks. The Fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 is 0.74% 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
		The Russell 2500™ Growth Index is an unmanaged index that measures the performance of the small- to mid-cap growth segment of the U.S. equity universe. It includes those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
DWS Small Mid Cap Growth VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	11,368		$	12,190		$	16,652		$	13,688		$	17,319
Class A	Average annual total return		13.68	%		21.90	%		18.53	%		6.48	%		5.65	%
Russell 2500 Growth Index	Growth of $10,000	$	11,582		$	12,403		$	17,376		$	15,343		$	26,577
Russell 2500 Growth Index	Average annual total return		15.82	%		24.03	%		20.22	%		8.94	%		10.27	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Common Stocks	96%	96%
Cash Equivalents	4%	4%
Exchange-Traded Fund	0%	0%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/13	12/31/12

Information Technology	20%	16%
Consumer Discretionary	19%	17%
Health Care	16%	16%
Industrials	15%	20%
Financials	10%	8%
Energy	7%	9%
Consumer Staples	6%	6%
Materials	5%	7%
Telecommunication Services	2%	1%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Joseph Axtell, CFA

Rafaelina M. Lee

Portfolio Managers

Investment Portfolio June 30, 2013 (Unaudited)

	Shares		Value ($)

Common Stocks 97.1%
Consumer Discretionary 18.9%
Auto Components 1.6%
BorgWarner, Inc.*		15,012		1,293,284
Tenneco, Inc.*		25,873		1,171,529
				2,464,813
Diversified Consumer Services 0.9%
Coinstar, Inc.*		23,337		1,369,182
Hotels, Restaurants & Leisure 3.2%
Jack in the Box, Inc.*		31,768		1,248,164
Life Time Fitness, Inc.*		23,107		1,157,892
Panera Bread Co. "A"* (a)		13,704		2,548,122
				4,954,178
Household Durables 1.4%
Jarden Corp.*		51,061		2,233,919
Leisure Equipment & Products 1.3%
Polaris Industries, Inc. (a)		20,841		1,979,895
Media 0.9%
Cinemark Holdings, Inc.		53,417		1,491,403
Specialty Retail 6.2%
Advance Auto Parts, Inc.		12,251		994,414
Ascena Retail Group, Inc.* (a)		74,289		1,296,343
Children's Place Retail Stores, Inc.* (a)		24,575		1,346,710
DSW, Inc. "A" (a)		21,104		1,550,511
PetSmart, Inc.		23,945		1,604,075
Ulta Salon, Cosmetics & Fragrance, Inc.*		21,695		2,172,971
Urban Outfitters, Inc.*		19,478		783,405
				9,748,429
Textiles, Apparel & Luxury Goods 3.4%
Carter's, Inc.		23,581		1,746,644
Deckers Outdoor Corp.* (a)		18,170		917,767
Hanesbrands, Inc. (a)		53,635		2,757,912
				5,422,323
Consumer Staples 5.7%
Food & Staples Retailing 2.5%
Susser Holdings Corp.* (a)		22,378		1,071,459
The Fresh Market, Inc.* (a)		27,690		1,376,747
United Natural Foods, Inc.*		28,141		1,519,332
				3,967,538
Food Products 1.9%
Green Mountain Coffee Roasters, Inc.* (a)		20,131		1,511,033
Hain Celestial Group, Inc.* (a)		21,652		1,406,730
				2,917,763
Household Products 1.3%
Church & Dwight Co., Inc.		32,931		2,032,172
Energy 6.9%
Energy Equipment & Services 4.3%
Core Laboratories NV (a)		8,260		1,252,711
Dresser-Rand Group, Inc.*		20,519		1,230,730
Dril-Quip, Inc.*		19,106		1,725,081
Helix Energy Solutions Group, Inc.* (a)		53,537		1,233,492
	Shares		Value ($)

Hornbeck Offshore Services, Inc.*		25,262		1,351,517
				6,793,531
Oil, Gas & Consumable Fuels 2.6%
Oasis Petroleum, Inc.* (a)		37,951		1,475,156
Rosetta Resources, Inc.*		40,369		1,716,490
Western Refining, Inc. (a)		27,919		783,686
				3,975,332
Financials 9.8%
Capital Markets 3.1%
Affiliated Managers Group, Inc.*		13,701		2,246,142
Financial Engines, Inc. (a)		27,685		1,262,159
Lazard Ltd. "A"		39,209		1,260,570
				4,768,871
Commercial Banks 1.1%
Signature Bank*		21,457		1,781,360
Consumer Finance 2.5%
DFC Global Corp.*		66,316		915,824
Encore Capital Group, Inc.* (a)		21,325		706,071
Portfolio Recovery Associates, Inc.*		15,086		2,317,662
				3,939,557
Insurance 1.0%
W.R. Berkley Corp.		38,390		1,568,615
Real Estate Management & Development 1.0%
CBRE Group, Inc. "A"*		69,709		1,628,402
Thrifts & Mortgage Finance 1.1%
Ocwen Financial Corp.*		42,627		1,757,085
Health Care 15.6%
Biotechnology 3.0%
Alkermes PLC*		41,983		1,204,072
Cubist Pharmaceuticals, Inc.* (a)		11,462		553,615
Momenta Pharmaceuticals, Inc.*		89,708		1,351,002
Onyx Pharmaceuticals, Inc.*		11,050		959,361
Pharmacyclics, Inc.* (a)		7,344		583,628
				4,651,678
Health Care Equipment & Supplies 3.8%
Analogic Corp.		24,018		1,749,231
ArthroCare Corp.*		45,404		1,567,800
HeartWare International, Inc.*		15,421		1,466,692
Thoratec Corp.*		40,313		1,262,200
				6,045,923
Health Care Providers & Services 4.8%
Catamaran Corp.*		44,552		2,170,573
Centene Corp.*		30,543		1,602,286
ExamWorks Group, Inc.* (a)		83,953		1,782,322
Humana, Inc.		12,817		1,081,498
Team Health Holdings, Inc.*		22,207		912,042
				7,548,721
Health Care Technology 0.6%
athenahealth, Inc.*		10,776		912,943
Pharmaceuticals 3.4%
Endocyte, Inc.* (a)		63,325		831,457
Hi-Tech Pharmacal Co., Inc.		61,884		2,054,549
Pacira Pharmaceuticals, Inc.*		82,132		2,381,828
				5,267,834
	Shares		Value ($)

Industrials 14.2%
Aerospace & Defense 1.3%
BE Aerospace, Inc.*		31,790		2,005,313
Commercial Services & Supplies 1.6%
Interface, Inc. (a)		85,441		1,449,934
Team, Inc.*		26,970		1,020,814
				2,470,748
Electrical Equipment 1.7%
General Cable Corp.		26,743		822,347
Thermon Group Holdings, Inc.* (a)		90,116		1,838,367
				2,660,714
Machinery 6.1%
Altra Holdings, Inc.		41,817		1,144,949
Chart Industries, Inc.* (a)		26,289		2,473,532
Joy Global, Inc. (a)		13,333		647,051
Manitowoc Co., Inc. (a)		101,534		1,818,474
Valmont Industries, Inc.		10,848		1,552,240
WABCO Holdings, Inc.*		27,333		2,041,502
				9,677,748
Road & Rail 1.7%
Kansas City Southern		13,669		1,448,367
Swift Transportation Co.* (a)		71,409		1,181,105
				2,629,472
Trading Companies & Distributors 1.8%
Applied Industrial Technologies, Inc.		22,306		1,078,049
United Rentals, Inc.* (a)		34,025		1,698,188
				2,776,237
Information Technology 19.6%
Communications Equipment 1.4%
Finisar Corp.* (a)		44,604		756,038
Harris Corp.		28,302		1,393,873
				2,149,911
Computers & Peripherals 1.5%
Western Digital Corp.		36,849		2,287,954
Electronic Equipment, Instruments & Components 1.6%
Cognex Corp.		25,109		1,135,429
IPG Photonics Corp. (a)		22,001		1,336,121
				2,471,550
Internet Software & Services 1.6%
CoStar Group, Inc.*		14,057		1,814,337
IAC/InterActiveCorp.		16,460		782,838
				2,597,175
IT Services 3.1%
Cardtronics, Inc.*		58,941		1,626,772
MAXIMUS, Inc.		22,557		1,680,045
VeriFone Systems, Inc.*		48,151		809,418
Virtusa Corp.*		35,720		791,555
				4,907,790
Semiconductors & Semiconductor Equipment 1.4%
ON Semiconductor Corp.*		124,369		1,004,901
RF Micro Devices, Inc.*		219,656		1,175,160
				2,180,061
	Shares		Value ($)

Software 9.0%
Aspen Technology, Inc.*		40,853		1,176,158
Bottomline Technologies de, Inc.*		43,025		1,088,102
Cadence Design Systems, Inc.* (a)		112,322		1,626,423
Concur Technologies, Inc.* (a)		17,465		1,421,302
MICROS Systems, Inc.* (a)		37,721		1,627,661
NQ Mobile, Inc. (ADR)* (a)		83,404		673,904
PTC, Inc.*		61,647		1,512,201
QLIK Technologies, Inc.* (a)		39,524		1,117,343
Red Hat, Inc.*		17,245		824,656
Tyler Technologies, Inc.*		19,916		1,365,242
Ultimate Software Group, Inc.* (a)		14,651		1,718,416
				14,151,408
Materials 4.6%
Chemicals 1.6%
CF Industries Holdings, Inc.		5,001		857,671
Westlake Chemical Corp. (a)		16,277		1,569,266
				2,426,937
Construction Materials 0.9%
Eagle Materials, Inc.		21,321		1,412,943
Containers & Packaging 1.0%
Crown Holdings, Inc.*		39,212		1,612,790
Metals & Mining 0.6%
Detour Gold Corp.*		10,930		85,740
Haynes International, Inc.		17,250		825,757
				911,497
Paper & Forest Products 0.5%
Schweitzer-Mauduit International, Inc.		15,963		796,234
Telecommunication Services 1.8%
Diversified Telecommunication Services 0.8%
inContact, Inc.*		149,084		1,225,471
Wireless Telecommunication Services 1.0%
SBA Communications Corp. "A"*		22,341		1,655,915
Total Common Stocks (Cost $115,462,857)				152,229,335

Exchange-Traded Fund 0.5%
SPDR S&P Biotech (a) (Cost $728,338)		7,865		820,005

Securities Lending Collateral 27.9%
Daily Assets Fund Institutional, 0.10% (b) (c) (Cost $43,757,303)		43,757,303		43,757,303

Cash Equivalents 3.6%
Central Cash Management Fund, 0.07% (b) (Cost $5,669,837)		5,669,837		5,669,837

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $165,618,335)†		129.1			202,476,480
Other Assets and Liabilities, Net		(29.1	)		(45,588,258	)
Net Assets		100.0			156,888,222

* Non-income producing security.

† The cost for federal income tax purposes was $166,070,744. At June 30, 2013, net unrealized appreciation for all securities based on tax cost was $36,405,736. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $40,191,101 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,785,365.

(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of securities loaned at June 30, 2013 amounted to $42,616,651, which is 27.2% 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

S&P: Standard & Poor's

SPDR: Standard & Poor's Depositary Receipt

Fair Value Measurements

Assets	Level 1		Level 2		Level 3		Total

Common Stocks (d)	$	152,229,335	$	—	$	—	$	152,229,335
Exchange-Traded Fund		820,005		—		—		820,005
Short-Term Investments (d)		49,427,140		—		—		49,427,140
Total	$	202,476,480	$	—	$	—	$	202,476,480

There have been no transfers between fair value measurement levels during the six months ended June 30, 2013.

(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, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $116,191,195) — including $42,616,651 of securities loaned	$	153,049,340
Investment in Daily Assets Fund Institutional (cost $43,757,303)*		43,757,303
Investment in Central Cash Management Fund (cost $5,669,837)		5,669,837
Total investments in securities, at value (cost $165,618,335)		202,476,480
Cash		10,000
Foreign currency, at value (cost $275)		269
Receivable for investments sold		1,523,251
Receivable for Fund shares sold		8,080
Dividends receivable		32,582
Interest receivable		12,223
Other assets		1,072
Total assets		204,063,957
Liabilities
Payable upon return of securities loaned		43,757,303
Payable for investments purchased		3,177,740
Payable for Fund shares redeemed		95,910
Accrued management fee		71,460
Accrued Trustees' fees		1,637
Other accrued expenses and payables		71,685
Total liabilities		47,175,735
Net assets, at value	$	156,888,222
Net Assets Consist of
Distributions in excess of net investment income		(247,905	)
Net unrealized appreciation (depreciation) on: Investments		36,858,145
Foreign currency		(104	)
Accumulated net realized gain (loss)		(23,273,717	)
Paid-in capital		143,551,803
Net assets, at value	$	156,888,222
Class A Net Asset Value, offering and redemption price per share ($156,888,222 ÷ 9,124,867 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	17.19

* 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, 2013 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $956)	$	270,257
Income distributions — Central Cash Management Fund		2,519
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		99,596
Total income		372,372
Expenses: Management fee		422,788
Administration fee		76,870
Services to shareholders		1,595
Custodian fee		5,369
Audit and tax fees		29,634
Legal fees		81
Trustees' fees and expenses		3,679
Total expenses		540,016
Net investment income (loss)		(167,644	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		7,988,146
Change in net unrealized appreciation (depreciation) on: Investments		11,733,135
Foreign currency		(113	)
		11,733,022
Net gain (loss)		19,721,168
Net increase (decrease) in net assets resulting from operations	$	19,553,524

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income (loss)	$	(167,644	)	$	160,586
Net realized gain (loss)		7,988,146			3,935,183
Change in net unrealized appreciation (depreciation)		11,733,022			16,236,973
Net increase (decrease) in net assets resulting from operations		19,553,524			20,332,742
Distributions to shareholders from: Net investment income: Class A		(194,886	)		—
Total distributions		(194,886	)		—
Fund share transactions: Class A Proceeds from shares sold		2,230,667			4,543,991
Reinvestment of distributions		194,886			—
Cost of shares redeemed		(10,355,054	)		(26,306,762	)
Net increase (decrease) in net assets from Class A share transactions		(7,929,501	)		(21,762,771	)
Increase (decrease) in net assets		11,429,137			(1,430,029	)
Net assets at beginning of period		145,459,085			146,889,114
Net assets at end of period (including distributions in excess of net investment income and undistributed net investment income of $247,905 and $114,625, respectively)	$	156,888,222		$	145,459,085
Other Information
Class A Shares outstanding at beginning of period		9,604,576			11,094,343
Shares sold		136,395			306,987
Shares issued to shareholders in reinvestment of distributions		11,761			—
Shares redeemed		(627,865	)		(1,796,754	)
Net increase (decrease) in Class A shares		(479,709	)		(1,489,767	)
Shares outstanding at end of period		9,124,867			9,604,576

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012		2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	15.14		$	13.24	$	13.85		$	10.70		$	7.61		$	15.07
Income (loss) from investment operations: Net investment income (loss)a		(.02	)		.02		(.03	)		(.01	)		(.02	)		(.01	)
Net realized and unrealized gain (loss)		2.09			1.88		(.50	)		3.16			3.11			(7.45	)
Total from investment operations		2.07			1.90		(.53	)		3.15			3.09			(7.46	)
Less distributions from: Net investment income		(.02	)		—		(.08	)		—			—			—
Net asset value, end of period	$	17.19		$	15.14	$	13.24		$	13.85		$	10.70		$	7.61
Total Return (%)		13.68	**		14.35		(3.91	)		29.44			40.60			(49.50	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		157			145		147			88			80			69
Ratio of expenses before expense reductions (%)		.72	*		.74		.73			.78			.77			.88
Ratio of expenses after expense reductions (%)		.72	*		.74		.73			.78			.77			.85
Ratio of net investment income (loss) (%)		(.24	)*		.11		(.23	)		(.12	)		(.22	)		(.04	)
Portfolio turnover rate (%)		29	**		57		84			64			93			67
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 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.

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

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

As of June 30, 2013, the Fund had securities on loan with a gross value of $42,616,651. The value of the related collateral, $43,757,303, exceeded the value of the securities loaned at period end.

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

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $30,593,000, including $29,395,000 of pre-enactment losses, including approximately $5,435,000 inherited from its mergers with affiliated funds in previous years, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($5,435,000) and December 31, 2017 ($23,960,000), the respective expiration dates, whichever occurs first, and which may be subject to certain limitations under Section 382-384 of Internal Revenue Code; and approximately $1,198,000 of post-enactment short-term losses, which may be applied against realized net taxable capital gains indefinitely.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to net operating losses and certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.

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

B. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $43,602,723 and $50,366,198, respectively.

C. Related Parties

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

Accordingly, for the six months ended June 30, 2013, 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.

D. Ownership of the Fund

At June 30, 2013, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 55%, 22% and 15%.

E. Line of Credit

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,136.80
Expenses Paid per $1,000*	$	3.81
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,021.22
Expenses Paid per $1,000*	$	3.61

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

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2SMCG-3 (R-028388-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Small Mid Cap Value VIP

(formerly DWS Dreman Small Mid Cap Value VIP)

Contents

3 Performance Summary

4 Portfolio Summary

4 Portfolio Management

5 Investment Portfolio

8 Statement of Assets and Liabilities

9 Statement of Operations

9 Statement of Changes in Net Assets

11 Financial Highlights

13 Notes to Financial Statements

17 Information About Your Fund's Expenses

18 Proxy Voting

19 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. Smaller and medium company stocks tend to be more volatile than large company stocks. The fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 0.82% and 1.16% 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 Small Mid Cap Value VIP
		The Russell 2500™ Value Index is an unmanaged Index of those securities in the Russell 3000® Index with lower price-to-book ratios and lower forecasted growth values. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
DWS Small Mid Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	11,449		$	12,432		$	15,658		$	14,365		$	28,764
Class A	Average annual total return		14.49	%		24.32	%		16.12	%		7.51	%		11.14	%
Russell 2500 Value Index	Growth of $10,000	$	11,510		$	12,688		$	16,816		$	15,686		$	26,326
Russell 2500 Value Index	Average annual total return		15.10	%		26.88	%		18.92	%		9.42	%		10.16	%
DWS Small Mid Cap Value VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	11,426		$	12,385		$	15,502		$	14,125		$	27,762
Class B	Average annual total return		14.26	%		23.85	%		15.73	%		7.15	%		10.75	%
Russell 2500 Value Index	Growth of $10,000	$	11,510		$	12,688		$	16,816		$	15,686		$	26,326
Russell 2500 Value Index	Average annual total return		15.10	%		26.88	%		18.92	%		9.42	%		10.16	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Common Stocks	100%	98%
Cash Equivalents	—	2%
	100%	100%

Sector Diversification (As a % of Common Stocks)	6/30/13	12/31/12

Financials	29%	27%
Industrials	19%	22%
Information Technology	17%	17%
Consumer Discretionary	10%	8%
Energy	6%	5%
Health Care	6%	7%
Materials	6%	7%
Utilities	4%	4%
Consumer Staples	3%	3%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Effective on or about September 3, 2013, Dreman Value Management, L.L.C. will no longer serve as subadvisor to the Fund and day-to-day portfolio management of the Fund will transition to Deutsche Investment Management Americas Inc.

Effective on or about September 3, 2013, the new portfolio manager for the Fund will be as follows:

Richard Glass, CFA

Portfolio Manager, Deutsche Investment Management Americas Inc.

Investment Portfolio June 30, 2013 (Unaudited)

	Shares		Value ($)

Common Stocks 98.8%
Consumer Discretionary 10.0%
Auto Components 1.7%
Cooper Tire & Rubber Co.		121,100		4,016,887
Hotels, Restaurants & Leisure 1.5%
Brinker International, Inc. (a)		88,730		3,498,624
Media 2.7%
Meredith Corp. (a)		81,675		3,895,898
Valassis Communications, Inc. (a)		103,300		2,540,147
				6,436,045
Specialty Retail 1.2%
Rent-A-Center, Inc. (a)		79,275		2,976,776
Textiles, Apparel & Luxury Goods 2.9%
Hanesbrands, Inc.		67,525		3,472,135
The Jones Group, Inc. (a)		243,565		3,349,019
				6,821,154
Consumer Staples 2.7%
Food Products 1.4%
Tyson Foods, Inc. "A" (a)		125,450		3,221,556
Household Products 1.3%
Energizer Holdings, Inc.		31,575		3,173,603
Energy 6.0%
Energy Equipment & Services 4.9%
Atwood Oceanics, Inc.* (a)		54,765		2,850,518
Nabors Industries Ltd.		188,100		2,879,811
Oil States International, Inc.*		38,675		3,582,852
Superior Energy Services, Inc.*		89,775		2,328,764
				11,641,945
Oil, Gas & Consumable Fuels 1.1%
Rosetta Resources, Inc.* (a)		60,450		2,570,334
Financials 28.3%
Capital Markets 1.6%
Raymond James Financial, Inc. (a)		86,950		3,737,111
Commercial Banks 12.6%
Associated Banc-Corp. (a)		211,550		3,289,603
Bank of Hawaii Corp. (a)		60,550		3,046,876
BOK Financial Corp.		48,930		3,133,967
East West Bancorp., Inc.		127,125		3,495,937
FirstMerit Corp. (a)		192,200		3,849,766
Fulton Financial Corp. (a)		276,925		3,179,099
Old National Bancorp.		216,082		2,988,414
Webster Financial Corp.		130,000		3,338,400
Zions Bancorp. (a)		121,800		3,517,584
				29,839,646
Insurance 8.4%
Allied World Assurance Co. Holdings AG		33,250		3,042,708
Argo Group International Holdings Ltd.		81,904		3,471,923
Axis Capital Holdings Ltd.		66,250		3,032,925
Everest Re Group Ltd.		24,775		3,177,641
Hartford Financial Services Group, Inc. (a)		121,025		3,742,093
Unum Group (a)		121,000		3,553,770
				20,021,060
	Shares		Value ($)

Real Estate Investment Trusts 5.7%
CBL & Associates Properties, Inc. (REIT) (a)		128,225		2,746,579
EPR Properties (REIT) (a)		68,700		3,453,549
Hospitality Properties Trust (REIT) (a)		140,925		3,703,509
Weingarten Realty Investors (REIT) (a)		119,075		3,663,938
				13,567,575
Health Care 6.9%
Biotechnology 1.4%
United Therapeutics Corp.* (a)		51,675		3,401,248
Health Care Equipment & Supplies 1.3%
Teleflex, Inc. (a)		38,925		3,016,298
Health Care Providers & Services 2.8%
LifePoint Hospitals, Inc.* (a)		67,675		3,305,247
Owens & Minor, Inc. (a)		98,725		3,339,867
				6,645,114
Life Sciences Tools & Services 1.4%
Charles River Laboratories International, Inc.*		81,750		3,354,203
Industrials 17.8%
Aerospace & Defense 1.5%
Alliant Techsystems, Inc. (a)		43,425		3,575,180
Commercial Services & Supplies 1.1%
The Brink's Co.		97,450		2,485,950
Construction & Engineering 3.1%
Tutor Perini Corp.* (a)		205,100		3,710,259
URS Corp.		78,550		3,709,131
				7,419,390
Electrical Equipment 1.2%
General Cable Corp. (a)		94,962		2,920,081
Machinery 8.6%
Crane Co.		55,925		3,351,026
Harsco Corp.		132,100		3,063,399
Joy Global, Inc. (a)		47,050		2,283,336
Oshkosh Corp.*		86,175		3,272,065
SPX Corp.		40,400		2,907,992
Titan International, Inc. (a)		132,725		2,239,071
Trinity Industries, Inc. (a)		84,125		3,233,765
				20,350,654
Road & Rail 1.2%
AMERCO (a)		17,800		2,881,820
Trading Companies & Distributors 1.1%
Textainer Group Holdings Ltd. (a)		69,575		2,674,463
Information Technology 16.5%
Communications Equipment 1.0%
ARRIS Group, Inc.* (a)		169,475		2,431,966
Computers & Peripherals 1.5%
NCR Corp.*		109,175		3,601,683
Electronic Equipment, Instruments & Components 2.5%
Arrow Electronics, Inc.*		72,640		2,894,704
Jabil Circuit, Inc. (a)		144,050		2,935,739
				5,830,443
	Shares		Value ($)

IT Services 3.8%
Amdocs Ltd. (a)		84,050		3,117,414
DST Systems, Inc. (a)		44,675		2,918,618
ManTech International Corp. "A" (a)		116,450		3,041,674
				9,077,706
Semiconductors & Semiconductor Equipment 5.1%
KLA-Tencor Corp.		54,900		3,059,577
Microsemi Corp.*		131,700		2,996,175
PMC-Sierra, Inc.*		434,725		2,760,504
Teradyne, Inc.* (a)		184,150		3,235,516
				12,051,772
Software 2.6%
BMC Software, Inc.*		66,675		3,009,710
Synopsys, Inc.*		86,350		3,087,012
				6,096,722
Materials 6.6%
Chemicals 1.0%
Huntsman Corp.		145,293		2,406,052
Containers & Packaging 2.6%
Owens-Illinois, Inc.*		104,575		2,906,139
Rock-Tenn Co. "A"		33,275		3,323,507
				6,229,646
	Shares		Value ($)

Metals & Mining 1.9%
Coeur Mining, Inc.*		111,750		1,486,275
Reliance Steel & Aluminum Co. (a)		43,725		2,866,611
				4,352,886
Paper & Forest Products 1.1%
Domtar Corp.		39,225		2,608,463
Utilities 4.0%
Electric Utilities 1.5%
Portland General Electric Co. (a)		117,975		3,608,855
Gas Utilities 1.2%
AGL Resources, Inc. (a)		66,400		2,845,904
Multi-Utilities 1.3%
Ameren Corp.		84,750		2,918,790
Total Common Stocks (Cost $172,761,142)				234,307,605

Securities Lending Collateral 40.4%
Daily Assets Fund Institutional, 0.10% (b) (c) (Cost $95,749,252)		95,749,252		95,749,252

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $268,510,394)†		139.1			330,056,857
Other Assets and Liabilities, Net (a)		(39.1	)		(92,870,584	)
Net Assets		100.0			237,186,273

* Non-income producing security.

† The cost for federal income tax purposes was $268,057,985. At June 30, 2013, net unrealized appreciation for all securities based on tax cost was $61,998,872. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $68,419,788 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $6,420,916.

(a) All or a portion of these securities were on loan. In addition, included in other assets and liabilities, net are pending sales, that are also on loan (see Notes to Financial Statements). The value of securities loaned at June 30, 2013 amounted to $93,258,469, which is 39.3% 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)	$	234,307,605	$	—	$	—	$	234,307,605
Short-Term Investments		95,749,252		—		—		95,749,252
Total	$	330,056,857	$	—	$	—	$	330,056,857

There have been no transfers between fair value measurement levels during the period ended June 30, 2013.

(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, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $172,761,142) — including $93,258,469 of securities loaned	$	234,307,605
Investment in Daily Assets Fund Institutional (cost $95,749,252)*		95,749,252
Total investments in securities, at value (cost $268,510,394)		330,056,857
Cash		3,834
Receivable for investments sold		4,460,680
Receivable for Fund shares sold		249,054
Dividends receivable		265,820
Interest receivable		5,313
Foreign taxes recoverable		3,390
Other assets		1,459
Total assets		335,046,407
Liabilities
Payable upon return of securities loaned		95,749,252
Line of credit loan payable		1,300,000
Payable for Fund shares redeemed		588,204
Accrued management fee		128,512
Acrued Trustees' fees		344
Other accrued expenses and payables		93,822
Total liabilities		97,860,134
Net assets, at value	$	237,186,273
Net Assets Consist of:
Undistributed net investment income		1,122,767
Net unrealized appreciation (depreciation) on investments		61,546,463
Accumulated net realized gain (loss)		(64,619,925	)
Paid-in capital		239,136,968
Net assets, at value	$	237,186,273
Class A Net Asset Value, offering and redemption price per share ($219,653,653 ÷ 15,185,620 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	14.46
Class B Net Asset Value, offering and redemption price per share ($17,532,620 ÷ 1,210,887 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	14.48

* 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, 2013 (Unaudited)
Investment Income
Income: Dividends (net of foreign taxes withheld of $2,543)	$	2,118,833
Income distributions — Central Cash Management Fund		2,220
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		54,210
Total income		2,175,263
Expenses: Management fee		792,855
Administration fee		121,989
Services to shareholders		3,934
Record keeping fees (Class B)		9,284
Distribution service fee (Class B)		22,317
Custodian fee		4,644
Professional fees		31,341
Reports to shareholders		29,202
Trustees' fees and expenses		4,524
Other		5,806
Total expenses		1,025,896
Net investment income (loss)		1,149,367
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from investments		7,154,712
Change in net unrealized appreciation (depreciation) on investments		24,853,202
Net gain (loss)		32,007,914
Net increase (decrease) in net assets resulting from operations	$	33,157,281

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, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income (loss)	$	1,149,367		$	2,773,636
Net realized gain (loss)		7,154,712			13,712,216
Change in net unrealized appreciation (depreciation)		24,853,202			14,140,156
Net increase (decrease) in net assets resulting from operations		33,157,281			30,626,008
Distributions to shareholders from: Net investment income: Class A		(2,660,096	)		(2,544,018	)
Class B		(150,280	)		(170,068	)
Total distributions		(2,810,376	)		(2,714,086	)
Fund share transactions: Class A Proceeds from shares sold		9,677,108			15,242,621
Reinvestment of distributions		2,660,096			2,544,018
Payments for shares redeemed		(39,620,859	)		(40,361,547	)
Net increase (decrease) in net assets from Class A share transactions		(27,283,655	)		(22,574,908	)
Class B Proceeds from shares sold		1,982,177			2,417,600
Reinvestment of distributions		150,280			170,068
Payments for shares redeemed		(3,691,219	)		(8,165,016	)
Net increase (decrease) in net assets from Class B share transactions		(1,558,762	)		(5,577,348	)
Increase (decrease) in net assets		1,504,488			(240,334	)
Net assets at beginning of period		235,681,785			235,922,119
Net assets at end of period (including undistributed net investment income of $1,122,767 and $2,783,776, respectively)	$	237,186,273		$	235,681,785
Other Information
Class A Shares outstanding at beginning of period		17,113,875			18,969,648
Shares sold		686,539			1,248,625
Shares issued to shareholders in reinvestment of distributions		190,143			207,168
Shares redeemed		(2,804,937	)		(3,311,566	)
Net increase (decrease) in Class A shares		(1,928,255	)		(1,855,773	)
Shares outstanding at end of period		15,185,620			17,113,875
Class B Shares outstanding at beginning of period		1,321,925			1,796,701
Shares sold		139,409			195,502
Shares issued to shareholders in reinvestment of distributions		10,719			13,827
Shares redeemed		(261,166	)		(684,105	)
Net increase (decrease) in Class B shares		(111,038	)		(474,776	)
Shares outstanding at end of period		1,210,887			1,321,925

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	12.78		$	11.36		$	12.21		$	10.04		$	7.93		$	20.12
Income (loss) from investment operations: Net investment incomea		.07			.14			.13			.12			.16			.13
Net realized and unrealized gain (loss)		1.78			1.42			(.85	)		2.19			2.11			(4.92	)
Total from investment operations		1.85			1.56			(.72	)		2.31			2.27			(4.79	)
Less distributions from: Net investment income		(.17	)		(.14	)		(.13	)		(.14	)		(.16	)		(.29	)
Net realized gains		—			—			—			—			—			(7.11	)
Total distributions		(.17	)		(.14	)		(.13	)		(.14	)		(.16	)		(7.40	)
Net asset value, end of period	$	14.46		$	12.78		$	11.36		$	12.21		$	10.04		$	7.93
Total Return (%)		14.49	**		13.77			(6.08	)		23.07			29.70			(33.42	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		220			219			216			247			235			223
Ratio of expenses before expense reductions (%)		.81	*		.82			.81			.82			.79			.83
Ratio of expenses after expense reductions (%)		.81	*		.82			.81			.82			.79			.82
Ratio of net investment income (%)		.97	*		1.18			1.08			1.14			1.92			1.13
Portfolio turnover rate (%)		14	**		11			36			38			72			49
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 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	12.78		$	11.36		$	12.20		$	10.03		$	7.92		$	20.08
Income (loss) from investment operations: Net investment incomea		.04			.10			.09			.08			.13			.09
Net realized and unrealized gain (loss)		1.78			1.42			(.85	)		2.19			2.12			(4.92	)
Total from investment operations		1.82			1.52			(.76	)		2.27			2.25			(4.83	)
Less distributions from: Net investment income		(.12	)		(.10	)		(.08	)		(.10	)		(.14	)		(.22	)
Net realized gains		—			—			—			—			—			(7.11	)
Total distributions		(.12	)		(.10	)		(.08	)		(.10	)		(.14	)		(7.33	)
Net asset value, end of period	$	14.48		$	12.78		$	11.36		$	12.20		$	10.03		$	7.92
Total Return (%)		14.26	**		13.38			(6.33	)		22.66			29.28			(33.67	)b
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		18			17			20			26			23			24
Ratio of expenses before expense reductions (%)		1.17	*		1.16			1.15			1.17			1.14			1.18
Ratio of expenses after expense reductions (%)		1.17	*		1.16			1.15			1.17			1.14			1.17
Ratio of net investment income (%)		.62	*		.81			.74			.79			1.57			.78
Portfolio turnover rate (%)		14	**		11			36			38			72			49
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 Small Mid Cap Value VIP (formerly 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.

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

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

As of June 30, 2013, the Fund had securities on loan with a gross value of $93,258,469. The value of the related collateral, $95,749,252, exceeded the value of the securities loaned at period end.

At December 31, 2012, the Fund had a net tax basis capital loss carryforward of approximately $71,435,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2017, the expiration date, whichever occurs first.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to income received from Real Estate Investment Trusts and certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.

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

Real Estate Investment Trusts. The Fund periodically recharacterizes distributions received from a Real Estate Investment Trust ("REIT") investment based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available timely from a REIT, the recharacterization will be estimated for financial reporting purposes and a recharacterization will be made to the accounting records in the following year when such information becomes available. Distributions received from REITs in excess of income are recorded as either a reduction of cost of investments or realized gains. The Fund distinguishes between dividends received on a tax basis and a financial reporting basis and only distributions in excess of tax basis earnings and profits are reported in the financial statements as a return of capital.

B. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $32,845,558 and $61,881,619, 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.

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.

First $250 million	.650	%
Next $750 million	.620	%
Next $1.5 billion	.600	%
Next $2.5 billion	.580	%
Next $2.5 billion	.550	%
Next $2.5 billion	.540	%
Next $2.5 billion	.530	%
Over $12.5 billion	.520	%

Accordingly, for the six months ended June 30, 2013, 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.

Class A	.84%
Class B	1.20%

Service to Shareholders	Total Aggregated		Unpaid at June 30, 2013
Class A	$	277	$	89
Class B		247		72
	$	524	$	161

D. Ownership of the Fund

At June 30, 2013, three Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 55%, 22% and 15%. Three participating Insurance Companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 46%, 13% and 10%.

E. Line of Credit

At June 30, 2013, the Fund had a $1,300,000 outstanding loan. Interest expense incurred on the borrowing was $918 for the six months ended June 30, 2013. The average dollar amount of the borrowings was $878,846, the weighted average interest rate on these borrowings was 1.45% and the Fund had a loan outstanding for twenty-six days throughout the period.

F. Subsequent Event

Effective on or about September 3, 2013, Dreman Value Management, L.L.C. will no longer serve as the subadvisor to the Fund and day-to-day portfolio management of the Fund will transition to Deutsche Investment Management Americas Inc. Materials regarding this change is set forth in a supplement to the Fund's prospectus dated August 2, 2013.

Information About Your Fund's Expenses (Unaudited)

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

Expenses and Value of a $1,000 Investment for the six months ended June 30, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,144.90	$	1,142.60
Expenses Paid per $1,000*	$	4.31	$	6.22
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 1/1/13	$	1,000.00	$	1,000.00
Ending Account Value 6/30/13	$	1,020.78	$	1,018.99
Expenses Paid per $1,000*	$	4.06	$	5.86

Annualized Expense Ratios	Class A		Class B
DWS Variable Series II — DWS Small Mid Cap Value VIP	.81%		1.17%

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2SMCV-3 (R-028381-2 8/13)

JUNE 30, 2013

SEMIANNUAL REPORT

DWS VARIABLE SERIES II

DWS Unconstrained Income VIP

Contents

3 Performance Summary

4 Portfolio Summary

6 Portfolio Management

7 Investment Portfolio

25 Statement of Assets and Liabilities

26 Statement of Operations

27 Statement of Changes in Net Assets

28 Financial Highlights

29 Notes to Financial Statements

38 Information About Your Fund's Expenses

39 Proxy Voting

40 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 ("junk bonds") and non-rated securities present greater risk of loss than investments in higherquality securities. 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. The Fund may lend securities to approved institutions. See the prospectus for details.

DWS Investments is part of the Deutsche Asset & Wealth Management division of Deutsche Bank AG.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary June 30, 2013 (Unaudited)

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 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 Unconstrained Income VIP
		The Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index and the non-ERISA portion of the CMBS Index. On May 1, 2013, the Barclays U.S. Universal Index replaced the Barclays U.S. Aggregate Bond Index as the fund's primary benchmark index because the Advisor believes that it more accurately reflects the fund's investment strategy. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Yearly periods ended June 30

Comparative Results
DWS Unconstrained Income VIP		6-Month‡			1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	9,612		$	10,290		$	12,040		$	14,237		$	18,423
Class A	Average annual total return		-3.88	%		2.90	%		6.38	%		7.32	%		6.30	%
Barclays U.S. Universal Index	Growth of $10,000	$	9,770		$	10,024		$	11,276		$	13,086		$	16,039
Barclays U.S. Universal Index	Average annual total return		-2.30	%		0.24	%		4.09	%		5.53	%		4.84	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,756		$	9,931		$	11,090		$	12,878		$	15,559
Barclays U.S. Aggregate Bond Index	Average annual total return		-2.44	%		-0.69	%		3.51	%		5.19	%		4.52	%

The growth of $10,000 is cumulative.

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

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	6/30/13	12/31/12

Corporate Bonds	52%	56%
Government & Agency Obligations	16%	15%
Cash Equivalents	8%	6%
Mortgage-Backed Securities Pass-Throughs	7%	6%
Loan Participations and Assignments	7%	8%
Commercial Mortgage-Backed Securities	3%	3%
Collateralized Mortgage Obligations	3%	4%
Municipal Bonds and Notes	1%	1%
Exchange-Traded Fund	1%	0%
Asset-Backed	1%	1%
Options Purchased	1%	0%
	100%	100%

Quality (Excludes Cash Equivalents and Securities Lending Collateral)	6/30/13	12/31/12

AAA	23%	21%
AA	4%	2%
A	4%	7%
BBB	20%	23%
BB	18%	18%
B	21%	24%
CCC	3%	2%
Not Rated	7%	3%
	100%	100%

Interest Rate Sensitivity	6/30/13	12/31/12

Effective Maturity	6.5 years	7.4 years
Effective Duration	5.2 years	5.2 years

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

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

Portfolio holdings and characteristics are subject to change.

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

Portfolio Management

Gary Russell, CFA

William Chepolis, CFA

John D. Ryan

Philip G. Condon

Darwei Kung

Portfolio Managers, Deutsche Investment Management Americas Inc.

Investment Portfolio June 30, 2013 (Unaudited)

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

Corporate Bonds 55.9%
Consumer Discretionary 6.6%
AMC Networks, Inc., 7.75%, 7/15/2021			15,000		16,388
AmeriGas Finance LLC:
6.75%, 5/20/2020			20,000		20,700
7.0%, 5/20/2022			20,000		20,450
Asbury Automotive Group, Inc.:
8.375%, 11/15/2020			80,000		88,600
144A, 8.375%, 11/15/2020			5,000		5,538
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			45,000		46,912
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			50,000		50,500
Avis Budget Car Rental LLC:
144A, 5.5%, 4/1/2023			30,000		28,950
8.25%, 1/15/2019			95,000		103,312
BC Mountain LLC, 144A, 7.0%, 2/1/2021			30,000		30,600
Block Communications, Inc., 144A, 7.25%, 2/1/2020			65,000		68,250
Boyd Gaming Corp., 9.0%, 7/1/2020 (b)			25,000		25,344
Bresnan Broadband Holdings LLC, 144A, 8.0%, 12/15/2018			95,000		103,550
British Sky Broadcasting Group PLC, 144A, 3.125%, 11/26/2022			90,000		84,160
Cablevision Systems Corp., 8.0%, 4/15/2020			10,000		10,900
Caesar's Entertainment Operating Co., Inc., 8.5%, 2/15/2020			120,000		113,100
CCO Holdings LLC:
6.5%, 4/30/2021			120,000		125,100
6.625%, 1/31/2022			70,000		72,975
7.0%, 1/15/2019			20,000		21,200
7.25%, 10/30/2017			90,000		95,512
7.375%, 6/1/2020			10,000		10,875
8.125%, 4/30/2020			25,000		27,313
CDR DB Sub, Inc., 144A, 7.75%, 10/15/2020			35,000		35,088
Cequel Communications Holdings I LLC:
144A, 5.125%, 12/15/2021			35,000		32,900
144A, 6.375%, 9/15/2020			160,000		162,800
Chester Downs & Marina LLC, 144A, 9.25%, 2/1/2020			25,000		24,125
Clear Channel Communications, Inc., 144A, 11.25%, 3/1/2021			40,000		41,700
Clear Channel Worldwide Holdings, Inc.:
Series A, 144A, 6.5%, 11/15/2022			15,000		15,375
Series A, 7.625%, 3/15/2020			20,000		20,600
Series B, 7.625%, 3/15/2020			185,000		191,475
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			5,000		4,863
Columbus International, Inc., 144A, 11.5%, 11/20/2014			100,000		107,750
		Principal Amount ($)(a)		Value ($)

Cox Communications, Inc., 144A, 3.25%, 12/15/2022			60,000		56,450
Crown Media Holdings, Inc., 10.5%, 7/15/2019			55,000		61,050
Cumulus Media Holdings, Inc., 7.75%, 5/1/2019			65,000		63,537
Delphi Corp., 5.0%, 2/15/2023			40,000		41,100
DISH DBS Corp.:
6.625%, 10/1/2014			65,000		67,762
6.75%, 6/1/2021			10,000		10,625
7.125%, 2/1/2016			155,000		167,787
Fontainebleau Las Vegas Holdings LLC, 144A, 11.0%, 6/15/2015*			65,000		0
Griffey Intermediate, Inc., 144A, 7.0%, 10/15/2020			65,000		62,725
Harron Communications LP, 144A, 9.125%, 4/1/2020			60,000		64,800
Hertz Corp.:
144A, 4.25%, 4/1/2018			25,000		24,375
6.75%, 4/15/2019			50,000		52,875
7.5%, 10/15/2018			155,000		166,237
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			20,000		20,250
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019 (PIK)			70,000		71,925
L Brands, Inc., 7.0%, 5/1/2020			20,000		22,200
Lear Corp., 8.125%, 3/15/2020			32,000		35,040
Libbey Glass, Inc., 6.875%, 5/15/2020			18,000		18,833
Lions Gate Entertainment, Inc., 144A, 10.25%, 11/1/2016			95,000		101,769
LKQ Corp., 144A, 4.75%, 5/15/2023			40,000		38,200
Mattel, Inc., 5.45%, 11/1/2041			141,400		145,564
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			20,000		19,950
Mediacom Broadband LLC, 6.375%, 4/1/2023			65,000		64,675
Mediacom LLC:
7.25%, 2/15/2022			20,000		21,050
9.125%, 8/15/2019			30,000		32,250
MGM Resorts International:
6.75%, 10/1/2020 (b)			25,000		25,875
7.625%, 1/15/2017			100,000		109,250
8.625%, 2/1/2019			140,000		158,200
National CineMedia LLC:
6.0%, 4/15/2022			35,000		35,919
7.875%, 7/15/2021			45,000		48,825
Palace Entertainment Holdings LLC, 144A, 8.875%, 4/15/2017			75,000		77,250
Petco Holdings, Inc., 144A, 8.5%, 10/15/2017 (PIK)			20,000		20,400
Quebecor Media, Inc., 5.75%, 1/15/2023			30,000		29,250
Regal Entertainment Group, 9.125%, 8/15/2018			21,000		23,100
Rent-A-Center, Inc., 144A, 4.75%, 5/1/2021			20,000		18,950
		Principal Amount ($)(a)		Value ($)

Sabre Holdings Corp., 8.35%, 3/15/2016			55,000		58,850
SACI Falabella, 144A, 3.75%, 4/30/2023			200,000		183,000
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			15,000		14,550
Seminole Indian Tribe of Florida:
144A, 7.75%, 10/1/2017			40,000		42,500
144A, 7.804%, 10/1/2020			70,000		73,850
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020			35,000		35,612
Sirius XM Radio, Inc., 144A, 8.75%, 4/1/2015			155,000		170,500
SIWF Merger Sub, Inc., 144A, 6.25%, 6/1/2021			35,000		34,300
Starz LLC, 5.0%, 9/15/2019			25,000		24,813
Taylor Morrison Communities, Inc., 144A, 5.25%, 4/15/2021			40,000		38,000
Travelport LLC, 144A, 13.875%, 3/1/2016 (PIK)			6,750		6,902
UCI International, Inc., 8.625%, 2/15/2019			20,000		20,400
Univision Communications, Inc.:
144A, 6.875%, 5/15/2019			10,000		10,500
144A, 7.875%, 11/1/2020			25,000		27,063
UPC Holding BV, 144A, 8.375%, 8/15/2020	EUR		50,000		69,280
Viking Cruises Ltd., 144A, 8.5%, 10/15/2022			30,000		32,850
Visteon Corp., 6.75%, 4/15/2019			28,000		29,470
Yonkers Racing Corp., 144A, 11.375%, 7/15/2016			60,000		63,375
					4,720,768
Consumer Staples 3.5%
Agrokor DD, 144A, 8.875%, 2/1/2020			250,000		263,500
Ajecorp BV, 144A, 6.5%, 5/14/2022			150,000		152,700
Alicorp SA, 144A, 3.875%, 3/20/2023			250,000		231,250
Alliance One International, Inc., 10.0%, 7/15/2016			25,000		25,563
Altria Group, Inc., 9.95%, 11/10/2038			145,000		214,602
B&G Foods, Inc., 4.625%, 6/1/2021			35,000		33,425
Chiquita Brands International, Inc., 144A, 7.875%, 2/1/2021			25,000		26,188
ConAgra Foods, Inc., 3.25%, 9/15/2022			45,000		42,929
Constellation Brands, Inc.:
3.75%, 5/1/2021			35,000		32,769
6.0%, 5/1/2022			15,000		16,088
Controladora Mabe SA de CV, 144A, 7.875%, 10/28/2019			100,000		107,000
Del Monte Corp., 7.625%, 2/15/2019			80,000		82,200
Delhaize Group SA, 4.125%, 4/10/2019			140,000		144,214
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020			85,000		91,587
		Principal Amount ($)(a)		Value ($)

JBS U.S.A. LLC, 144A, 8.25%, 2/1/2020			25,000		26,188
MHP SA, 144A, 8.25%, 4/2/2020			200,000		178,165
Mriya Agro Holding PLC, 144A, 9.45%, 4/19/2018			200,000		178,000
NBTY, Inc., 9.0%, 10/1/2018			25,000		27,187
Pilgrim's Pride Corp., 7.875%, 12/15/2018			45,000		47,925
Reynolds Group Issuer, Inc.:
5.75%, 10/15/2020			65,000		65,487
6.875%, 2/15/2021			100,000		105,000
7.125%, 4/15/2019			100,000		105,625
Smithfield Foods, Inc.:
6.625%, 8/15/2022			60,000		64,500
7.75%, 7/1/2017			140,000		154,350
Sun Products Corp., 144A, 7.75%, 3/15/2021			50,000		49,625
					2,466,067
Energy 7.5%
Access Midstream Partners LP, 6.125%, 7/15/2022			55,000		55,688
Afren PLC, 144A, 10.25%, 4/8/2019			200,000		223,500
Antero Resources Finance Corp.:
7.25%, 8/1/2019			50,000		52,125
9.375%, 12/1/2017			30,000		31,800
Arch Coal, Inc., 7.0%, 6/15/2019 (b)			20,000		16,650
Berry Petroleum Co.:
6.375%, 9/15/2022			30,000		29,888
6.75%, 11/1/2020			120,000		124,200
BreitBurn Energy Partners LP:
7.875%, 4/15/2022			30,000		30,600
8.625%, 10/15/2020			35,000		37,100
Chaparral Energy, Inc., 7.625%, 11/15/2022			20,000		20,400
Chesapeake Energy Corp., 5.75%, 3/15/2023			15,000		15,188
Chesapeake Oilfield Operating LLC, 144A, 6.625%, 11/15/2019			25,000		24,750
CITGO Petroleum Corp., 144A, 11.5%, 7/1/2017			105,000		116,550
Continental Resources, Inc.:
144A, 4.5%, 4/15/2023			10,000		9,725
5.0%, 9/15/2022			30,000		30,525
7.125%, 4/1/2021			30,000		33,000
Crestwood Midstream Partners LP, 7.75%, 4/1/2019			65,000		66,950
Crosstex Energy LP:
7.125%, 6/1/2022			15,000		15,150
8.875%, 2/15/2018			55,000		58,300
DCP Midstream Operating LP, 3.875%, 3/15/2023			100,000		93,788
Denbury Resources, Inc., 4.625%, 7/15/2023			75,000		69,187
Dresser-Rand Group, Inc., 6.5%, 5/1/2021			75,000		79,500
Eagle Rock Energy Partners LP, 8.375%, 6/1/2019			75,000		76,312
EDC Finance Ltd., 144A, 4.875%, 4/17/2020			200,000		183,000
El Paso LLC, 7.25%, 6/1/2018			55,000		60,925
		Principal Amount ($)(a)		Value ($)

Enterprise Products Operating LLC, 3.35%, 3/15/2023			65,000		62,550
EP Energy LLC:
6.875%, 5/1/2019			60,000		64,200
7.75%, 9/1/2022			25,000		26,750
9.375%, 5/1/2020			25,000		28,250
EPE Holdings LLC, 144A, 8.125%, 12/15/2017 (PIK) (b)			57,358		58,505
EV Energy Partners LP, 8.0%, 4/15/2019			140,000		141,400
FMC Technologies, Inc., 3.45%, 10/1/2022			40,000		38,317
Frontier Oil Corp., 6.875%, 11/15/2018			55,000		58,987
Global Geophysical Services, Inc., 10.5%, 5/1/2017			90,000		78,300
Halcon Resources Corp.:
8.875%, 5/15/2021			85,000		82,450
9.75%, 7/15/2020			50,000		49,875
Holly Energy Partners LP:
6.5%, 3/1/2020			20,000		20,150
8.25%, 3/15/2018			55,000		58,163
KazMunayGas National Co. JSC, 144A, 5.75%, 4/30/2043			200,000		177,000
Kinder Morgan Energy Partners LP, 5.8%, 3/1/2021			194,000		219,869
Kodiak Oil & Gas Corp., 144A, 5.5%, 1/15/2021			40,000		39,000
Linn Energy LLC:
144A, 6.25%, 11/1/2019			110,000		104,775
6.5%, 5/15/2019			15,000		14,663
MEG Energy Corp.:
144A, 6.375%, 1/30/2023			100,000		97,000
144A, 6.5%, 3/15/2021			40,000		39,650
Memorial Production Partners LP, 144A, 7.625%, 5/1/2021			60,000		59,100
Midstates Petroleum Co., Inc.:
144A, 9.25%, 6/1/2021			70,000		65,800
144A, 10.75%, 10/1/2020			35,000		35,175
Murray Energy Corp., 144A, 8.625%, 6/15/2021			5,000		5,000
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			90,000		90,900
Oasis Petroleum, Inc.:
6.5%, 11/1/2021			25,000		25,625
6.875%, 1/15/2023			25,000		25,750
7.25%, 2/1/2019			40,000		41,700
Odebrecht Drilling Norbe VIII/IX Ltd., 144A, 6.35%, 6/30/2021			190,000		191,900
Offshore Group Investment Ltd., 144A, 7.125%, 4/1/2023			60,000		58,950
Pacific Drilling SA, 144A, 5.375%, 6/1/2020			35,000		32,725
Pacific Rubiales Energy Corp., 144A, 5.125%, 3/28/2023			200,000		189,000
Petroleos de Venezuela SA, 144A, 8.5%, 11/2/2017			300,000		274,875
Plains Exploration & Production Co., 6.75%, 2/1/2022			30,000		31,793
		Principal Amount ($)(a)		Value ($)

Range Resources Corp., 5.0%, 3/15/2023			15,000		14,663
Regency Energy Partners LP, 144A, 4.5%, 11/1/2023			15,000		13,575
Reliance Holdings U.S.A., Inc., 144A, 5.4%, 2/14/2022			250,000		253,972
Sabine Pass Liquefaction LLC, 144A, 5.625%, 2/1/2021			105,000		101,850
SandRidge Energy, Inc., 7.5%, 3/15/2021			75,000		71,625
SESI LLC:
6.375%, 5/1/2019			40,000		41,300
7.125%, 12/15/2021			115,000		124,200
Swift Energy Co., 7.875%, 3/1/2022			55,000		54,725
Talos Production LLC, 144A, 9.75%, 2/15/2018			60,000		57,000
Tesoro Corp.:
4.25%, 10/1/2017			35,000		35,875
5.375%, 10/1/2022			25,000		25,313
Transocean, Inc., 3.8%, 10/15/2022			75,000		71,441
Transportadora de Gas Internacional SA ESP, 144A, 5.7%, 3/20/2022			200,000		206,500
Venoco, Inc., 8.875%, 2/15/2019			105,000		102,375
WPX Energy, Inc., 5.25%, 1/15/2017			40,000		41,000
					5,358,362
Financials 11.6%
Ally Financial, Inc.:
5.5%, 2/15/2017			60,000		62,689
6.25%, 12/1/2017			95,000		101,628
8.0%, 3/15/2020 (b)			115,000		133,544
8.3%, 2/12/2015			135,000		145,462
American International Group, Inc., 3.8%, 3/22/2017			60,000		62,899
American Tower Corp., (REIT), 3.5%, 1/31/2023			60,000		54,940
Banco de Credito del Peru, 144A, 4.25%, 4/1/2023			200,000		184,500
Banco Santander Brasil SA:
144A, 4.625%, 2/13/2017			250,000		253,750
144A, 8.0%, 3/18/2016	BRL		400,000		164,923
Bank of America Corp., 3.3%, 1/11/2023			160,000		151,224
Bank of Ireland Mortgage Bank, Series 6, 4.0%, 7/5/2013	EUR		750,000		976,335
Barclays Bank PLC, 7.625%, 11/21/2022			400,000		392,500
BBVA Bancomer SA, 144A, 6.75%, 9/30/2022			200,000		216,000
BNP Paribas SA, 3.25%, 3/3/2023			115,000		105,714
Case New Holland, Inc., 7.75%, 9/1/2013			45,000		45,281
CIT Group, Inc.:
5.0%, 5/15/2017			80,000		81,700
5.25%, 3/15/2018			90,000		92,475
CNH Capital LLC, 144A, 3.625%, 4/15/2018			60,000		57,150
		Principal Amount ($)(a)		Value ($)

Development Bank of Kazakhstan JSC, Series 3, 6.5%, 6/3/2020			500,000		525,000
E*TRADE Financial Corp., 6.75%, 6/1/2016			130,000		133,575
Ford Motor Credit Co., LLC, 3.984%, 6/15/2016			145,000		151,906
General Electric Capital Corp., 5.3%, 2/11/2021			75,000		82,273
General Motors Financial Co., Inc., 144A, 3.25%, 5/15/2018 (b)			15,000		14,587
Glencore Funding LLC, 144A, 4.125%, 5/30/2023			200,000		178,377
Hartford Financial Services Group, Inc.:
4.3%, 4/15/2043			85,000		73,622
6.0%, 1/15/2019			117,000		131,894
HCP, Inc., (REIT), 5.375%, 2/1/2021			143,000		155,118
Hellas Telecommunications Finance SCA, 144A, 8.21%*, 7/15/2015 (PIK)	EUR		109,187		0
Host Hotels & Resorts LP, Series D, (REIT), 3.75%, 10/15/2023			75,000		68,786
ING Bank NV, 144A, 2.0%, 9/25/2015			200,000		201,696
International Lease Finance Corp.:
3.875%, 4/15/2018			65,000		61,100
4.625%, 4/15/2021			50,000		46,000
5.75%, 5/15/2016			20,000		20,553
6.25%, 5/15/2019			50,000		51,375
8.625%, 9/15/2015			40,000		43,800
8.625%, 1/15/2022			45,000		51,750
8.75%, 3/15/2017			120,000		133,650
Intesa Sanpaolo SpA, 3.875%, 1/16/2018			240,000		230,451
Jefferies Group LLC, 5.125%, 1/20/2023			60,000		59,537
Loews Corp., 2.625%, 5/15/2023			65,000		59,123
Macquarie Bank Ltd., 144A, 3.45%, 7/27/2015			105,000		108,814
Morgan Stanley:
3.75%, 2/25/2023			85,000		81,284
4.1%, 5/22/2023			85,000		78,533
MPT Operating Partnership LP:
(REIT), 6.375%, 2/15/2022			30,000		31,500
(REIT), 6.875%, 5/1/2021			50,000		53,000
Neuberger Berman Group LLC:
144A, 5.625%, 3/15/2020			25,000		25,875
144A, 5.875%, 3/15/2022			45,000		45,900
OPB Finance Trust, Series C, 2.9%, 5/24/2023	CAD		238,000		215,234
Principal Financial Group, Inc., 3.3%, 9/15/2022			150,000		145,714
RCI Banque SA, 144A, 3.5%, 4/3/2018			200,000		199,017
Royal Bank of Scotland Group PLC, 6.1%, 6/10/2023			100,000		94,871
Santander US Debt SAU, 144A, 3.724%, 1/20/2015			45,000		45,421
		Principal Amount ($)(a)		Value ($)

Skandinaviska Enskilda Banken AB, 144A, 1.375%, 5/29/2018			396,000		381,467
SLM Corp., 5.5%, 1/25/2023			125,000		119,025
The Goldman Sachs Group, Inc.:
3.625%, 1/22/2023			55,000		52,623
5.75%, 1/24/2022			160,000		176,482
Turkiye Is Bankasi, 144A, 6.0%, 10/24/2022			250,000		244,375
Turkiye Vakiflar Bankasi Tao, 144A, 3.75%, 4/15/2018			250,000		235,000
Ventas Realty LP, (REIT), 2.7%, 4/1/2020			130,000		122,920
					8,213,942
Health Care 2.9%
Agilent Technologies, Inc., 3.2%, 10/1/2022			40,000		37,081
Aviv Healthcare Properties LP, 7.75%, 2/15/2019			85,000		90,738
Biomet, Inc.:
6.5%, 8/1/2020			55,000		56,684
6.5%, 10/1/2020 (b)			15,000		14,963
Community Health Systems, Inc.:
5.125%, 8/15/2018			185,000		187,775
7.125%, 7/15/2020			60,000		61,800
Fresenius Medical Care U.S. Finance II, Inc.:
144A, 5.625%, 7/31/2019			35,000		36,400
144A, 5.875%, 1/31/2022			30,000		31,575
Fresenius Medical Care U.S. Finance, Inc., 144A, 6.5%, 9/15/2018			20,000		21,750
HCA, Inc.:
5.875%, 3/15/2022			40,000		41,050
6.5%, 2/15/2020			210,000		227,194
7.5%, 2/15/2022			155,000		171,662
7.875%, 2/15/2020			365,000		393,059
8.5%, 4/15/2019			45,000		48,291
Hologic, Inc., 6.25%, 8/1/2020			30,000		31,106
Laboratory Corp. of America Holdings, 3.75%, 8/23/2022			35,000		33,433
Mallinckrodt International Finance SA, 144A, 4.75%, 4/15/2023			75,000		71,445
Physio-Control International, Inc., 144A, 9.875%, 1/15/2019			50,000		55,000
Sky Growth Acquisition Corp., 144A, 7.375%, 10/15/2020			30,000		30,750
STHI Holding Corp., 144A, 8.0%, 3/15/2018			60,000		64,800
Tenet Healthcare Corp.:
144A, 4.375%, 10/1/2021			55,000		50,463
144A, 4.5%, 4/1/2021			10,000		9,325
6.25%, 11/1/2018			80,000		84,200
VPII Escrow Corp., 144A, 6.75%, 8/15/2018 (c)			70,000		71,750
Warner Chilcott Co., LLC, 7.75%, 9/15/2018			75,000		81,000
Zoetis, Inc., 144A, 3.25%, 2/1/2023			30,000		28,504
					2,031,798
		Principal Amount ($)(a)		Value ($)

Industrials 5.6%
Accuride Corp., 9.5%, 8/1/2018			65,000		66,138
Aeropuertos Dominicanos Siglo XXI SA, 144A, 9.25%, 11/13/2019			250,000		250,625
Air Lease Corp.:
4.75%, 3/1/2020			45,000		43,425
6.125%, 4/1/2017 (b)			75,000		77,625
Alphabet Holding Co., Inc., 7.75%, 11/1/2017 (PIK)			30,000		30,750
Armored Autogroup, Inc., 9.25%, 11/1/2018			105,000		96,337
BE Aerospace, Inc., 6.875%, 10/1/2020			25,000		27,000
Belden, Inc., 144A, 5.5%, 9/1/2022			55,000		54,038
Bombardier, Inc.:
144A, 5.75%, 3/15/2022			55,000		54,588
144A, 6.125%, 1/15/2023			45,000		44,663
144A, 7.75%, 3/15/2020			45,000		49,950
Casella Waste Systems, Inc., 7.75%, 2/15/2019			110,000		104,500
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			25,000		24,000
Ducommun, Inc., 9.75%, 7/15/2018			65,000		71,012
DynCorp International, Inc., 10.375%, 7/1/2017			85,000		85,425
Ferreycorp SAA, 144A, 4.875%, 4/26/2020			200,000		188,000
Florida East Coast Railway Corp., 8.125%, 2/1/2017			40,000		42,300
FTI Consulting, Inc., 6.75%, 10/1/2020			145,000		152,612
Garda World Security Corp., 144A, 9.75%, 3/15/2017			65,000		68,654
GenCorp, Inc., 144A, 7.125%, 3/15/2021			115,000		119,025
Georgian Railway JSC, 144A, 7.75%, 7/11/2022			200,000		216,140
Grupo KUO SAB De CV, 144A, 6.25%, 12/4/2022			200,000		204,750
Huntington Ingalls Industries, Inc.:
6.875%, 3/15/2018			50,000		53,438
7.125%, 3/15/2021			10,000		10,750
Ingersoll-Rand Global Holding Co., Ltd., 144A, 2.875%, 1/15/2019			20,000		19,730
Interline Brands, Inc., 7.5%, 11/15/2018			50,000		52,500
Iron Mountain, Inc., 5.75%, 8/15/2024			40,000		37,500
Masco Corp., 7.125%, 3/15/2020			145,000		161,675
Meritor, Inc.:
6.75%, 6/15/2021			25,000		23,875
10.625%, 3/15/2018			60,000		64,950
Navios Maritime Holdings, Inc.:
8.125%, 2/15/2019			75,000		71,062
8.875%, 11/1/2017			35,000		36,225
Navios South American Logistics, Inc., 144A, 9.25%, 4/15/2019			10,000		10,725
Nortek, Inc., 8.5%, 4/15/2021			75,000		80,250
Odebrecht Finance Ltd., 144A, 7.125%, 6/26/2042			250,000		242,500
		Principal Amount ($)(a)		Value ($)

Owens Corning, Inc.:
4.2%, 12/15/2022			30,000		29,070
9.0%, 6/15/2019			29,000		35,604
Ply Gem Industries, Inc., 9.375%, 4/15/2017			15,000		15,863
Sitel LLC, 11.5%, 4/1/2018			95,000		70,775
Spirit AeroSystems, Inc., 6.75%, 12/15/2020			75,000		78,000
Titan International, Inc.:
7.875%, 10/1/2017			90,000		94,500
144A, 7.875%, 10/1/2017			20,000		21,000
Total System Services, Inc., 3.75%, 6/1/2023			70,000		64,995
TransDigm, Inc.:
144A, 7.5%, 7/15/2021 (c)			50,000		51,125
7.75%, 12/15/2018			65,000		68,412
Transnet SOC Ltd., 144A, 4.0%, 7/26/2022			200,000		174,880
U.S. Airways Group, Inc., 6.125%, 6/1/2018			35,000		33,075
United Rentals North America, Inc.:
5.75%, 7/15/2018			60,000		63,000
7.375%, 5/15/2020			95,000		101,412
7.625%, 4/15/2022			95,000		102,837
Watco Companies LLC, 144A, 6.375%, 4/1/2023			25,000		24,875
					3,966,160
Information Technology 1.4%
CDW LLC, 8.5%, 4/1/2019			45,000		48,375
eAccess Ltd., 144A, 8.25%, 4/1/2018			60,000		65,700
EarthLink, Inc., 144A, 7.375%, 6/1/2020			30,000		28,800
Equinix, Inc.:
4.875%, 4/1/2020			40,000		39,200
5.375%, 4/1/2023			105,000		102,900
7.0%, 7/15/2021			40,000		43,400
First Data Corp.:
144A, 6.75%, 11/1/2020			110,000		111,925
144A, 7.375%, 6/15/2019			45,000		46,237
144A, 8.875%, 8/15/2020			85,000		92,650
144A, 10.625%, 6/15/2021			60,000		59,250
Fiserv, Inc., 3.5%, 10/1/2022			95,000		90,167
Freescale Semiconductor, Inc., 144A, 9.25%, 4/15/2018			120,000		129,300
Hughes Satellite Systems Corp.:
6.5%, 6/15/2019			40,000		42,400
7.625%, 6/15/2021			40,000		42,500
IAC/InterActiveCorp., 144A, 4.75%, 12/15/2022			25,000		23,625
Jabil Circuit, Inc., 7.75%, 7/15/2016 (b)			30,000		33,975
					1,000,404
Materials 6.7%
Anglo American Capital PLC, 144A, 4.125%, 9/27/2022			250,000		236,119
Ashland, Inc., 144A, 3.875%, 4/15/2018			20,000		19,800
Axiall Corp., 144A, 4.875%, 5/15/2023			10,000		9,500
Ball Corp., 7.375%, 9/1/2019			25,000		27,000
Barrick Gold Corp., 144A, 2.5%, 5/1/2018			40,000		35,895
		Principal Amount ($)(a)		Value ($)

Bluescope Steel Ltd., 144A, 7.125%, 5/1/2018			25,000		25,375
BOE Intermediate Holding Corp., 144A, 9.0%, 11/1/2017 (PIK)			40,000		38,400
Braskem America Finance Co., 144A, 7.125%, 7/22/2041			200,000		189,250
Cemex SAB de CV, 144A, 9.0%, 1/11/2018			200,000		210,000
Cia Minera Milpo SAA, 144A, 4.625%, 3/28/2023			200,000		182,500
Clearwater Paper Corp., 7.125%, 11/1/2018			65,000		69,550
Crown Americas LLC, 6.25%, 2/1/2021			10,000		10,600
Eagle Spinco, Inc., 144A, 4.625%, 2/15/2021			20,000		19,200
Essar Steel Algoma, Inc.:
144A, 9.375%, 3/15/2015			220,000		209,000
144A, 9.875%, 6/15/2015			35,000		26,950
Exopack Holding Corp., 10.0%, 6/1/2018			40,000		40,500
FMG Resources (August 2006) Pty Ltd.:
144A, 6.0%, 4/1/2017 (b)			55,000		53,487
144A, 6.875%, 4/1/2022			15,000		14,550
144A, 7.0%, 11/1/2015			65,000		65,650
144A, 8.25%, 11/1/2019 (b)			45,000		46,350
FQM Akubra, Inc.:
144A, 7.5%, 6/1/2021			80,000		76,600
144A, 8.75%, 6/1/2020			45,000		46,013
Greif, Inc., 7.75%, 8/1/2019			195,000		223,275
GTL Trade Finance, Inc., 144A, 7.25%, 10/20/2017			200,000		216,000
Hexion U.S. Finance Corp.:
6.625%, 4/15/2020			15,000		14,963
8.875%, 2/1/2018			95,000		96,900
Huntsman International LLC:
8.625%, 3/15/2020			60,000		65,250
8.625%, 3/15/2021			25,000		27,438
IAMGOLD Corp., 144A, 6.75%, 10/1/2020			40,000		33,800
International Paper Co., 7.95%, 6/15/2018			145,000		177,541
Kaiser Aluminum Corp., 8.25%, 6/1/2020			40,000		44,300
KGHM International Ltd., 144A, 7.75%, 6/15/2019			115,000		116,725
LyondellBasell Industries NV, 6.0%, 11/15/2021			15,000		16,856
Metalloinvest Finance Ltd., 144A, 6.5%, 7/21/2016			200,000		206,000
Novelis, Inc.:
8.375%, 12/15/2017			160,000		169,600
8.75%, 12/15/2020			215,000		230,587
Owens-Brockway Glass Container, Inc., 7.375%, 5/15/2016			30,000		33,450
Packaging Dynamics Corp., 144A, 8.75%, 2/1/2016			90,000		90,900
Polymer Group, Inc., 7.75%, 2/1/2019			55,000		57,200
PolyOne Corp., 144A, 5.25%, 3/15/2023			85,000		83,725
		Principal Amount ($)(a)		Value ($)

Polyus Gold International Ltd., 144A, 5.625%, 4/29/2020			200,000		194,000
Rain CII Carbon LLC, 144A, 8.0%, 12/1/2018			45,000		46,125
Samarco Mineracao SA, 144A, 4.125%, 11/1/2022			200,000		179,000
Sealed Air Corp.:
144A, 5.25%, 4/1/2023			10,000		9,725
144A, 8.125%, 9/15/2019			30,000		33,450
144A, 8.375%, 9/15/2021			30,000		33,900
Tronox Finance LLC, 144A, 6.375%, 8/15/2020			40,000		37,700
Turkiye Sise ve Cam Fabrikalari AS, 144A, 4.25%, 5/9/2020 (b)			300,000		273,000
Viskase Companies, Inc., 144A, 9.875%, 1/15/2018			145,000		153,337
Votorantim Overseas IV, 144A, 7.75%, 6/24/2020			250,000		279,375
					4,796,411
Telecommunication Services 7.4%
America Movil SAB de CV, Series 12, 6.45%, 12/5/2022	MXN		2,000,000		149,481
CC Holdings GS V LLC, 3.849%, 4/15/2023			70,000		66,007
CenturyLink, Inc., Series V, 5.625%, 4/1/2020			15,000		15,150
Cincinnati Bell, Inc.:
8.25%, 10/15/2017			55,000		57,338
8.375%, 10/15/2020			180,000		184,950
8.75%, 3/15/2018 (b)			170,000		170,212
Colombia Telecomunicaciones SA ESP, 144A, 5.375%, 9/27/2022			200,000		189,000
CPI International, Inc., 8.0%, 2/15/2018			45,000		46,350
Cricket Communications, Inc., 7.75%, 10/15/2020 (b)			280,000		268,800
Deutsche Telekom International Finance BV, 144A, 4.875%, 3/6/2042			200,000		195,098
Digicel Group Ltd., 144A, 10.5%, 4/15/2018			100,000		106,000
Digicel Ltd., 144A, 8.25%, 9/1/2017			400,000		416,000
ERC Ireland Preferred Equity Ltd., 144A, 7.69%*, 2/15/2017 (PIK)	EUR		88,319		0
Frontier Communications Corp.:
7.125%, 1/15/2023 (b)			200,000		199,000
7.625%, 4/15/2024			15,000		15,038
8.25%, 4/15/2017			62,000		69,750
8.5%, 4/15/2020			90,000		99,225
8.75%, 4/15/2022			10,000		10,900
Intelsat Jackson Holdings SA:
144A, 5.5%, 8/1/2023			85,000		79,900
144A, 6.625%, 12/15/2022			35,000		33,950
7.25%, 10/15/2020			195,000		204,750
7.5%, 4/1/2021			195,000		204,750
8.5%, 11/1/2019			100,000		107,750
Intelsat Luxembourg SA:
144A, 7.75%, 6/1/2021			95,000		95,950
144A, 8.125%, 6/1/2023			10,000		10,325
		Principal Amount ($)(a)		Value ($)

Level 3 Communications, Inc., 8.875%, 6/1/2019			10,000		10,400
Level 3 Financing, Inc.:
7.0%, 6/1/2020			75,000		74,812
8.125%, 7/1/2019			75,000		78,750
8.625%, 7/15/2020			50,000		53,250
MetroPCS Wireless, Inc.:
6.625%, 11/15/2020			65,000		67,437
144A, 6.625%, 4/1/2023			35,000		35,613
7.875%, 9/1/2018			75,000		79,875
Millicom International Cellular SA, 144A, 4.75%, 5/22/2020			200,000		190,052
NII Capital Corp., 7.625%, 4/1/2021			50,000		38,875
SBA Communications Corp., 144A, 5.625%, 10/1/2019			30,000		29,700
SBA Telecommunications, Inc., 8.25%, 8/15/2019			16,000		17,320
Sprint Nextel Corp.:
6.0%, 12/1/2016			320,000		337,600
6.0%, 11/15/2022			50,000		49,000
8.375%, 8/15/2017			55,000		61,737
9.125%, 3/1/2017			50,000		57,500
Syniverse Holdings, Inc., 9.125%, 1/15/2019			25,000		26,688
Telefonica Emisiones SAU, 4.57%, 4/27/2023			170,000		162,741
Telemar Norte Leste SA, 144A, 5.5%, 10/23/2020			200,000		186,000
Telemovil Finance Co., Ltd., 144A, 8.0%, 10/1/2017			100,000		105,750
tw telecom holdings, Inc., 5.375%, 10/1/2022			35,000		34,738
Wind Acquisition Finance SA, 144A, 6.5%, 4/30/2020			30,000		29,775
Windstream Corp.:
6.375%, 8/1/2023			40,000		37,400
7.0%, 3/15/2019			60,000		60,150
7.5%, 6/1/2022			25,000		25,500
7.5%, 4/1/2023			75,000		76,125
7.75%, 10/15/2020 (b)			35,000		36,225
7.875%, 11/1/2017			205,000		224,987
8.125%, 9/1/2018			70,000		74,550
					5,258,224
Utilities 2.7%
AES Corp.:
4.875%, 5/15/2023 (b)			15,000		13,987
8.0%, 10/15/2017			10,000		11,250
8.0%, 6/1/2020			175,000		199,500
American Electric Power Co., Inc., Series F, 2.95%, 12/15/2022			140,000		130,325
Calpine Corp.:
144A, 7.5%, 2/15/2021			72,000		76,860
144A, 7.875%, 7/31/2020			79,000		85,715
Electricite de France SA, 144A, 5.25%, 1/29/2049			100,000		95,600
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024			100,000		68,500
Instituto Costarricense de Electricidad, 144A, 6.95%, 11/10/2021			200,000		210,500
IPALCO Enterprises, Inc., 5.0%, 5/1/2018			145,000		149,350
		Principal Amount ($)(a)		Value ($)

Mexico Generadora de Energia S de rl, 144A, 5.5%, 12/6/2032			200,000		188,000
NRG Energy, Inc., 7.625%, 1/15/2018			35,000		37,450
Oncor Electric Delivery Co., LLC, 4.1%, 6/1/2022			160,000		165,084
PPL Energy Supply LLC, 4.6%, 12/15/2021			200,000		203,525
Toledo Edison Co., 7.25%, 5/1/2020			203,000		251,270
					1,886,916
Total Corporate Bonds (Cost $39,931,725)					39,699,052

Mortgage-Backed Securities Pass-Throughs 7.3%
Federal National Mortgage Association, 3.5%, 1/1/2042 (c)			1,000,000		1,015,625
Government National Mortgage Association:
3.0%, 10/1/2042 (c)			1,000,000		989,375
4.0%, 3/1/2041 (c)			3,000,000		3,152,109
Total Mortgage-Backed Securities Pass-Throughs (Cost $5,412,617)					5,157,109

Asset-Backed 0.9%
Home Equity Loans 0.5%
CIT Group Home Equity Loan Trust, "AF6", Series 2002-1, 6.2%, 2/25/2030			64,977		64,783
Citifinancial Mortgage Securities, Inc., "AFS", Series 2003-4, 5.326%, 10/25/2033			190,000		198,407
Countrywide Home Equity Loan Trust, "2A", Series 2006-I, 0.333%**, 1/15/2037			134,403		117,697
					380,887
Miscellaneous 0.4%
ARES CLO Ltd., "D", Series 2012-3A, 144A, 4.958%, 1/17/2024			250,000		249,611
Total Asset-Backed (Cost $578,591)					630,498

Commercial Mortgage-Backed Securities 3.6%
Banc of America Large Loan, Inc., "HLTN", Series 2010-HLTN, 144A, 2.493%**, 11/15/2015			536,232		536,648
Commercial Mortgage Trust, "AM", Series 2007-GG11, 5.867%, 12/10/2049			290,000		310,666
Del Coronado Trust, "M", Series 2013-HDMZ, 144A, 5.193%**, 3/15/2018			80,000		80,416
JPMorgan Chase Commercial Mortgage Securities Corp.:
"C", Series 2012-HSBC, 144A, 4.021%, 7/5/2032			150,000		145,204
"A4", Series 2006-LDP7, 6.056%**, 4/15/2045			140,000		154,678
LB-UBS Commercial Mortgage Trust, "A3", Series 2006-C7, 5.347%, 11/15/2038			440,000		486,614
		Principal Amount ($)(a)		Value ($)

Wachovia Bank Commercial Mortgage Trust, "A4", Series 2005-C22, 5.465%**, 12/15/2044			140,000		151,509
WF-RBS Commercial Mortgage Trust, "A5", Series 2013-C14, 3.337%, 6/15/2046			750,000		715,028
Total Commercial Mortgage-Backed Securities (Cost $2,527,509)					2,580,763

Collateralized Mortgage Obligations 3.5%
Banc of America Mortgage Securities, "2A2", Series 2004-A, 2.958%**, 2/25/2034			122,947		120,392
Bear Stearns Adjustable Rate Mortgage Trust, "2A1", Series 2005-11, 3.335%**, 12/25/2035			165,625		163,856
Countrywide Home Loans, "2A5", Series 2004-13, 5.75%, 8/25/2034			118,025		119,792
Federal Home Loan Mortgage Corp.:
"AI", Series 4016, Interest Only, 3.0%, 9/15/2025			1,458,503		105,029
"JI", Series 3558, Interest Only, 4.5%, 12/15/2023			80,296		3,869
"PI", Series 3843, Interest Only, 4.5%, 5/15/2038			513,223		62,630
"HI", Series 2934, Interest Only, 5.0%, 2/15/2020			159,677		16,674
"WI", Series 3010, Interest Only, 5.0%, 7/15/2020			262,391		28,610
"JS", Series 3572, Interest Only, 6.608%***, 9/15/2039			887,444		137,524
Federal National Mortgage Association:
"BI", Series 2010-13, Interest Only, 5.0%, 12/25/2038			147,624		12,223
"SK", Series 2011-78, Interest Only, 5.807%***, 8/25/2041			1,866,319		231,204
"PI", Series 2006-20, Interest Only, 6.487%***, 11/25/2030			511,611		92,642
"SI", Series 2007-23, Interest Only, 6.577%***, 3/25/2037			380,087		67,217
"JS", Series 2004-59, Interest Only, 6.907%***, 4/25/2023			45,220		457
Government National Mortgage Association:
"GP", Series 2010-67, 4.5%, 3/20/2039			250,000		271,399
"MI", Series 2009-76, Interest Only, 5.0%, 3/20/2035			278,777		9,705
"ID", Series 2003-79, Interest Only, 5.5%, 12/20/2031			8,753		37
"IV", Series 2009-69, Interest Only, 5.5%, 8/20/2039			567,912		92,510
"IN", Series 2009-69, Interest Only, 5.5%, 8/20/2039			574,961		92,253
		Principal Amount ($)(a)		Value ($)

"IJ", Series 2009-75, Interest Only, 6.0%, 8/16/2039			525,104		96,869
"AI", Series 2007-38, Interest Only, 6.268%***, 6/16/2037			144,427		19,582
JPMorgan Mortgage Trust, "2A1", Series 2006-A2, 2.725%**, 4/25/2036			351,134		305,683
Merrill Lynch Mortgage Investors Trust, "2A", Series 2003-A6, 3.132%**, 10/25/2033			96,360		97,044
Morgan Stanley Mortgage Loan Trust, "5A5", Series 2005-4, 5.5%, 8/25/2035			38,862		38,712
Washington Mutual Mortgage Pass-Through Certificates Trust, "1A1", Series 2005-AR12, 2.444%**, 10/25/2035			5,722		5,725
Wells Fargo Mortgage-Backed Securities Trust:
"2A3",Series 2004-EE, 2.624%**, 12/25/2034			149,972		147,498
"B1", Series 2004-1, 5.5%, 2/25/2034			173,123		172,785
Total Collateralized Mortgage Obligations (Cost $2,556,368)					2,511,921

Government & Agency Obligations 16.8%
Other Government Related (d) 4.3%
European Investment Bank:
144A, 4.6%, 1/30/2037	CAD		1,000,000		972,625
6.0%, 8/6/2020	AUD		500,000		485,883
KFW, 1.875%, 6/13/2018	CAD		605,000		563,017
Queensland Treasury Corp., Series 23, 4.25%, 7/21/2023	AUD		1,180,000		1,031,788
					3,053,313
Sovereign Bonds 4.4%
Federative Republic of Brazil, 12.5%, 1/5/2016	BRL		250,000		119,322
Government of Canada, 0.75%, 5/1/2014	CAD		1,400,000		1,327,105
Government of Japan, Series 144, 1.5%, 3/20/2033	JPY		66,000,000		644,201
Government of Ukraine, 144A, 6.58%, 11/21/2016			250,000		231,875
Republic of Argentina-Inflation Linked Bond, 5.83%, 12/31/2033	ARS		375		87
Republic of Belarus, REG S, 8.75%, 8/3/2015			145,000		145,363
Russian Federation:
Series 6204, 7.5%, 3/15/2018	RUB		2,000,000		62,775
Series 6207, 8.15%, 2/3/2027	RUB		6,000,000		187,544
Slovenia Government International Bond, 144A, 4.75%, 5/10/2018			200,000		190,000
United Mexican States:
Series M, 7.75%, 5/29/2031	MXN		1,640,000		139,876
Series M 20, 8.5%, 5/31/2029	MXN		820,000		75,433
					3,123,581
		Principal Amount ($)(a)		Value ($)

U.S. Government Sponsored Agencies 0.8%
Federal Home Loan Mortgage Corp., 2.375%, 1/13/2022			220,000		212,898
Federal National Mortgage Association, 0.875%, 5/21/2018			390,000		377,646
					590,544
U.S. Treasury Obligations 7.3%
U.S. Treasury Bills, 0.1%****, 9/5/2013 (e)			463,000		462,983
U.S. Treasury Bonds:
3.0%, 5/15/2042			600,000		546,937
4.75%, 2/15/2037			400,000		493,500
U.S. Treasury Notes:
0.75%, 6/15/2014			500,000		502,637
1.5%, 7/31/2016			2,625,000		2,687,549
1.625%, 11/15/2022			400,000		373,406
1.75%, 5/15/2023			98,000		91,783
					5,158,795
Total Government & Agency Obligations (Cost $12,700,997)					11,926,233

Loan Participations and Assignments 7.0%
Senior Loans** 4.3%
Buffalo Gulf Coast Terminals LLC, Term Loan, 5.25%, 10/31/2017			74,438		75,554
Buffets, Inc., Letter of Credit, First Lien, LIBOR plus 9.25%, 4/22/2015*			9,378		4,384
Burger King Corp., Term Loan B, 3.75%, 9/27/2019			69,475		70,008
Calpine Corp., Term Loan B1, 4.0%, 4/2/2018			194,503		194,555
Charter Communications Operating LLC, Term Loan E, 3.0%, 4/10/2020			195,000		193,050
Chesapeake Energy Corp., Term Loan, 5.75%, 12/1/2017			75,000		76,078
Crown Castle International Corp., Term Loan, 3.25%, 1/31/2019			49,499		49,257
Cumulus Media Holdings, Inc., Second Lien Term Loan, 7.5%, 9/16/2019			50,000		51,187
Goodyear Tire & Rubber Co., Second Lien Term Loan, 4.75%, 4/30/2019			220,000		221,042
HJ Heinz Co., Term Loan B2, 3.5%, 6/5/2020			250,000		250,270
Kabel Deutschland GmbH, Term Loan F1, 3.25%, 2/1/2019			385,000		384,673
MacDermid, Inc., First Lien Term Loan, 4.0%, 6/7/2020			55,000		54,794
MEG Energy Corp., Term Loan, 3.75%, 3/31/2020			259,671		259,866
NRG Energy, Inc., Term Loan B, 2.75%, 7/2/2018			119,095		118,140
Par Pharmaceutical Companies, Inc., Term Loan B, 4.25%, 9/30/2019			119,102		118,521
Pilot Travel Centers LLC:
Term Loan B, 3.75%, 3/30/2018			90,284		89,127
Term Loan B2, 4.25%, 8/7/2019			337,450		333,760
Tomkins LLC, First Lien Term Loan, 5.0%, 11/9/2018			64,675		65,160
		Principal Amount ($)(a)		Value ($)

Samson Investment Co., Second Lien Term Loan, 6.0%, 9/25/2018			175,000		175,000
Tallgrass Operations LLC, Term Loan, 5.25%, 11/13/2018			110,261		111,019
Travelport LLC, Second Lien Term Loan, 9.5%, 1/29/2016			5,040		5,179
Univision Communications, Inc., Term Loan, 4.5%, 3/2/2020			59,809		59,361
Warner Chilcott Co., LLC, Term Loan B2, 4.25%, 3/15/2018			3,845		3,855
Warner Chilcott Corp.:
Incremental Term Loan B1, 4.25%, 3/15/2018			12,447		12,477
Term Loan B1, 4.25%, 3/15/2018			28,594		28,662
WC Luxco S.a.r.l., Term Loan B3, 4.25%, 3/15/2018			22,532		22,586
WP Prism, Inc., Term Loan, 6.25%, 5/31/2018			35,000		35,117
					3,062,682
Sovereign Loans 2.7%
Bank of Moscow, 144A, 6.699%, 3/11/2015			250,000		263,112
Gazprom Neft OAO, 144A, 4.375%, 9/19/2022			250,000		228,963
Gazprom OAO, 144A, 9.25%, 4/23/2019			100,000		120,500
National JSC Naftogaz of Ukraine, 9.5%, 9/30/2014			250,000		249,375
RZD Capital PLC, 5.739%, 4/3/2017			250,000		265,000
TMK OAO, 144A, 6.75%, 4/3/2020			200,000		185,500
Uralkali OJSC, 144A, 3.723%, 4/30/2018 (b)			200,000		192,250
Vimpel Communications, 144A, 9.125%, 4/30/2018			200,000		227,500
VTB Bank OJSC, 144A, 6.0%, 4/12/2017			200,000		208,000
					1,940,200
Total Loan Participations and Assignments (Cost $5,052,744)					5,002,882

Municipal Bonds and Notes 1.3%
Chicago, IL, Airport Revenue, O'Hare International Airport, Series B, 6.0%, 1/1/2041			145,000		163,089
Massachusetts, State School Building Authority, Sales Tax Revenue, Qualified School Construction Bond, Series A, 4.885%, 7/15/2028			300,000		317,751
Orlando & Orange County, FL, Expressway Authority Revenue, Series C, 5.0%, 7/1/2040			145,000		150,375
Port Authority of New York & New Jersey, 4.926%, 10/1/2051			260,000		260,606
Total Municipal Bonds and Notes (Cost $851,179)					891,821

Convertible Bonds 0.4%
Consumer Discretionary 0.2%
Group 1 Automotive, Inc., 3.0%, 3/15/2020			65,000		117,731
		Principal Amount ($)(a)		Value ($)

Materials 0.2%
GEO Specialty Chemicals, Inc., 144A, 7.5%, 3/31/2015			120,175		186,127
Total Convertible Bonds (Cost $183,237)					303,858

Preferred Security 0.1%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $58,834)			95,000		82,650

	Units		Value ($)

Other Investments 0.1%
Consumer Discretionary
AOT Bedding Super Holdings LLC* (f) (Cost $4,000)		10		34,776

	Shares		Value ($)

Common Stocks 0.0%
Consumer Discretionary 0.0%
Buffets Restaurants Holdings, Inc.*		84		525
Trump Entertainment Resorts, Inc.*		6		0
Vertis Holdings, Inc.*		63		0
				525
Industrials 0.0%
Congoleum Corp.*		2,500		0
Materials 0.0%
GEO Specialty Chemicals, Inc.*		2,058		1,224
Wolverine Tube, Inc.*		778		14,097
				15,321
Total Common Stocks (Cost $40,747)				15,846

Preferred Stock 0.1%
Financials
Ally Financial, Inc., 144A, 7.0% (Cost $56,382)		60		57,032

Warrants 0.0%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		159		0
Materials 0.0%
GEO Specialty Chemicals, Inc., Expiration Date 3/31/2015*		11,138		6,539
Hercules Trust II, Expiration Date 3/31/2029*		85		1,125
				7,664
Total Warrants (Cost $17,432)				7,664

	Shares		Value ($)

Exchange-Traded Fund 1.0%
SPDR Barclays Capital Convertible Securities (Cost $759,882)		17,300		738,364

	Contracts		Value ($)

Call Options Purchased 0.6%
Options on Exchange-Traded Futures Contracts 0.0%
10 Year U.S. Treasury Note Future, Expiration Date 8/23/2013, Strike Price $132.5		100		4,687

	Contract Amount		Value ($)

Options on Interest Rate Swap Contracts 0.6%
Pay Fixed Rate — 3.583% - Receive Floating — LIBOR, Swap Expiration Date 5/11/2026, Option Expiration Date 5/9/20161		1,400,000		88,550
Pay Fixed Rate — 3.635% - Receive Floating — LIBOR, Swap Expiration Date 4/27/2026, Option Expiration Date 4/25/20162		1,300,000		78,563
Pay Fixed Rate — 3.72% - Receive Floating — LIBOR, Swap Expiration Date 4/22/2026, Option Expiration Date 4/20/20163		1,300,000		73,784
Pay Fixed Rate — 4.19% - Receive Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20174		1,500,000		77,864
Pay Fixed Rate — 4.32% - Receive Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20175		1,400,000		66,926
				385,687
Total Call Options Purchased (Cost $362,335)				390,374

Put Options Purchased 0.0%
Options on Interest Rate Swap Contracts
Receive Fixed Rate — 2.19% - Pay Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20174		1,500,000		15,577
Receive Fixed Rate — 2.32% - Pay Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20175		1,400,000		17,172
Total Put Options Purchased (Cost $98,573)				32,749

	Shares		Value ($)

Securities Lending Collateral 2.4%
Daily Assets Fund Institutional, 0.10% (g) (h) (Cost $1,669,599)		1,669,599		1,669,599

	Shares		Value ($)

Cash Equivalents 9.1%
Central Cash Management Fund, 0.07% (g) (Cost $6,422,777)		6,422,777		6,422,777

	% of Net Assets			Value ($)

Total Investment Portfolio (Cost $79,285,528)†		110.1			78,155,968
Other Assets and Liabilities, Net (b)		(10.1	)		(7,158,430	)
Net Assets		100.0			70,997,538

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

Securities	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
Buffets, Inc.*	LIBOR plus 9.25%			4/22/2015	USD	9,378		9,121		4,384
ERC Ireland Preferred Equity Ltd.*		7.69	%	2/15/2017	EUR	88,319		120,275		0
Fontainebleau Las Vegas Holdings LLC*		11.0	%	6/15/2015	USD	65,000		65,000		0
Hellas Telecommunications Finance SCA*		8.21	%	7/15/2015	EUR	109,187		32,169		0
								226,565		4,384

* Non-income producing security.

*** These securities are shown at their current rate as of June 30, 2013.

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

† The cost for federal income tax purposes was $79,285,568. At June 30, 2013, net unrealized depreciation for all securities based on tax cost was $1,129,600. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $1,867,153 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,996,753.

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

(b) All or a portion of these securities were on loan amounting to $1,469,520. In addition, included in other assets and liabilities, net is a pending sale, amounting to $111,394, that is also on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2013 amounted to $1,580,914, which is 2.2% of net assets.

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

(e) At June 30, 2013, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

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

Schedule of Restricted Securities

Acquisition Date

Cost ($)

Value ($)

Value as % of Net Assets

AOT Bedding Super Holdings LLC*

June 2010

4,000

34,776

.05

(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.

CLO: Collateralized Loan Obligation

LIBOR: London Interbank Offered Rate

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

REIT: Real Estate Investment Trust

SPDR: Standard & Poor's Depositary Receipt

The Fund can invest in certain Senior Loan agreements that include the obligation to make additional loans in certain circumstances. The Fund reserves against such contingent obligations by segregating cash, liquid securities and liquid Senior Loans. At June 30, 2013, the Fund had an unfunded loan commitment of $50,000, which could be extended at the option of the borrower, pursuant to the following loan agreement:

Borrower

Unfunded Loan Commitment ($)

Value ($)

Unrealized Appreciation/ (Depreciation) ($)

Tallgrass Operations LLC, Term Delay Draw, 11/13/2017

50,000

—

At June 30, 2013, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year Canadian Government Bond	CAD	9/19/2013		15		1,874,251		(75,535	)
10 Year U.S. Treasury Note	USD	9/19/2013		9		1,139,063		6,932
Federal Republic of Germany Euro-Bund	EUR	9/6/2013		10		1,842,094		(36,334	)
Total net unrealized depreciation								(104,937	)

At June 30, 2013, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation/ (Depreciation) ($)
10 Year U.S. Treasury Note	USD	9/19/2013		1		126,563		3,392
5 Year U.S. Treasury Note	USD	9/30/2013		20		2,420,938		39,959
Ultra Long U.S. Treasury Bond	USD	9/19/2013		3		441,938		(7,373	)
Total net unrealized appreciation								35,978

At June 30, 2013, open written options contracts were as follows:

Options on Exchange-Traded Futures Contracts

Contracts

Expiration Date

Strike Price ($)

Premiums Received ($)

Value ($) (i)

Put Options

10 Year U.S. Treasury Note Future

8/23/2013

130.0

50,475

(217,500

)

(i) Unrealized depreciation on written options on exchange-traded futures contracts at June 30, 2013 was $167,025.

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (j)
Call Options Receive Fixed — 3.19% - Pay Floating — LIBOR	2/3/2017 2/3/2027		700,000	4	2/1/2017		50,400		(65,697	)
Receive Fixed — 3.32% - Pay Floating — LIBOR	2/3/2017 2/3/2027		700,000	5	2/1/2017		50,631		(61,145	)
Receive Fixed — 4.083% - Pay Floating — LIBOR	5/11/2016 5/11/2026		1,400,000	1	5/9/2016		47,600		(62,856	)
Receive Fixed — 4.135% - Pay Floating — LIBOR	4/27/2016 4/27/2026		1,300,000	2	4/25/2016		48,100		(55,423	)
Receive Fixed — 4.22% - Pay Floating — LIBOR	4/22/2016 4/22/2026		1,300,000	3	4/20/2016		46,345		(51,889	)
Total Call Options							243,076		(297,010	)
Put Options Pay Fixed — 3.19% - Receive Floating — LIBOR	2/3/2017 2/3/2027		700,000	4	2/1/2017		50,400		(21,655	)
Pay Fixed — 3.32% - Receive Floating — LIBOR	2/3/2017 2/3/2027		700,000	5	2/1/2017		50,631		(24,354	)
Total Put Options							101,031		(46,009	)
Total							344,107		(343,019	)

(j) Unrealized appreciation on written options on interest rate swap contracts at June 30, 2013 was $1,088.

At June 30, 2013, open credit default swap contracts sold were as follows:

Effective/ Expiration Date	Notional Amount ($) (k)			Fixed Cash Flows Received			Underlying Debt Obligation/Quality Rating (l)	Value ($)		Upfront Payments Paid/ (Received) ($)			Unrealized Appreciation ($)
6/21/2010 9/20/2013		70,000	2		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		904		858			46
6/21/2010 9/20/2015		90,000	1		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB-		8,621		(1,604	)		10,225
3/21/2011 6/20/2016		120,000	4		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B-		11,653		2,670			8,983
12/20/2011 3/20/2017		60,000	6		5.0	%	CIT Group, Inc., 5.5%, 2/15/2019, BB-		7,484		1,882			5,602
9/20/2012 12/20/2017		75,000	7		5.0	%	General Motors Corp., 3.3%, 12/20/2017, BB+		9,327		4,986			4,341
Total unrealized appreciation														29,197

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

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

At June 30, 2013, open interest rate swap 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) ($)			Unrealized Appreciation/ (Depreciation) ($)
7/16/2013 7/16/2014		1,800,000	3	Floating — LIBOR	Fixed — 0.515%		2,672			(49	)		2,721
4/13/2012 4/13/2016		1,500,000	5	Floating — LIBOR	Fixed — 1.22%		23,138			—			23,138
7/16/2013 7/16/2018		800,000	3	Floating — LIBOR	Fixed — 1.148%		(16,921	)		(149	)		(16,772	)
7/16/2013 7/16/2043		400,000	3	Fixed — 2.424%	Floating — LIBOR		78,489			(264	)		78,753
Total net unrealized appreciation													87,840

Counterparties:

1 Bank of America

2 Citigroup, Inc.

3 Nomura International PLC

4 JPMorgan Chase Securities, Inc.

5 BNP Paribas

6 Credit Suisse

7 UBS AG

At June 30, 2013, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver			In Exchange For		Settlement Date	Unrealized Appreciation ($)		Counterparty
USD		6,112	NOK	37,258	7/5/2013		21	Citigroup, Inc.
AUD		400,000	USD	416,737	7/5/2013		50,998	Nomura International PLC
NOK	��	6,897,969	EUR	900,000	7/5/2013		36,024	Citigroup, Inc.
GBP		600,000	USD	915,844	7/5/2013		3,292	JPMorgan Chase Securities, Inc.
AUD		550,000	USD	566,751	7/9/2013		64,008	Nomura International PLC
CAD		1,500,000	USD	1,464,325	7/9/2013		38,298	JPMorgan Chase Securities, Inc.
JPY		50,000,000	USD	514,510	7/10/2013		10,361	Nomura International PLC
EUR		400,000	USD	529,828	7/11/2013		9,150	JPMorgan Chase Securities, Inc.
GBP		400,000	USD	622,038	7/11/2013		13,696	BNP Paribas
SGD		1,200,000	USD	964,406	7/11/2013		17,643	JPMorgan Chase Securities, Inc.
EUR		400,000	USD	530,739	7/11/2013		10,061	Barclays Bank PLC
AUD		1,000,000	NZD	1,193,440	7/12/2013		10,315	Citigroup, Inc.
CZK		10,700,000	USD	549,338	7/12/2013		13,934	Bank of America
CZK		10,600,000	USD	548,778	7/12/2013		18,378	BNP Paribas
USD		554,715	ZAR	5,500,000	7/15/2013		629	Barclays Bank PLC
NZD		700,000	USD	557,877	7/15/2013		15,917	Citigroup, Inc.
JPY		40,000,000	USD	409,271	7/16/2013		5,943	Bank of America
JPY		40,000,000	USD	403,434	7/16/2013		106	Nomura International PLC
EUR		500,000	USD	666,156	7/17/2013		15,292	Nomura International PLC
GBP		500,000	USD	783,592	7/17/2013		23,195	JPMorgan Chase Securities, Inc.
EUR		53,420	USD	71,213	7/19/2013		1,673	Citigroup, Inc.
JPY		50,000,000	USD	507,389	7/24/2013		3,214	Barclays Bank PLC
USD		359,940	ZAR	3,700,000	7/25/2013		13,113	Barclays Bank PLC
USD		546,437	AUD	600,000	7/26/2013		1,326	JPMorgan Chase Securities, Inc.
CAD		600,000	USD	570,406	7/26/2013		224	Nomura International PLC
AUD		600,000	USD	554,356	7/26/2013		6,593	BNP Paribas
AUD		800,000	USD	797,233	7/31/2013		67,150	BNP Paribas
AUD		384,230	USD	373,090	7/31/2013		22,440	JPMorgan Chase Securities, Inc.
CAD		474,672	USD	459,888	7/31/2013		8,859	Nomura International PLC
CAD		700,000	USD	685,248	7/31/2013		20,114	JPMorgan Chase Securities, Inc.
JPY		20,000,000	USD	204,765	8/1/2013		3,089	Nomura International PLC
USD		704,979	JPY	70,000,000	8/2/2013		890	JPMorgan Chase Securities, Inc.
Total unrealized appreciation							505,946

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
USD	418,500	AUD	400,000	7/5/2013		(52,761	)	Barclays Bank PLC
EUR	900,000	NOK	6,860,711	7/5/2013		(42,158	)	UBS AG
USD	606,394	JPY	60,000,000	7/5/2013		(1,427	)	Nomura International PLC
USD	934,281	GBP	600,000	7/5/2013		(21,730	)	BNP Paribas
JPY	60,000,000	USD	598,871	7/5/2013		(6,096	)	Nomura International PLC
EUR	750,000	USD	975,089	7/9/2013		(1,176	)	Nomura International PLC
USD	517,253	JPY	50,000,000	7/10/2013		(13,104	)	Barclays Bank PLC
USD	622,176	GBP	400,000	7/11/2013		(13,833	)	Barclays Bank PLC
USD	954,483	SGD	1,200,000	7/11/2013		(7,720	)	Nomura International PLC
USD	1,064,816	EUR	800,000	7/11/2013		(23,459	)	Barclays Bank PLC
USD	5,807	NZD	7,496	7/12/2013		(2	)	Barclays Bank PLC
NZD	722,701	AUD	600,000	7/12/2013		(11,329	)	Nomura International PLC
NZD	478,235	AUD	400,000	7/12/2013		(4,791	)	BNP Paribas
USD	1,111,047	CZK	21,300,000	7/12/2013		(45,243	)	Barclays Bank PLC
USD	365,646	INR	21,500,000	7/15/2013		(4,686	)	Citigroup, Inc.
USD	563,105	NZD	700,000	7/15/2013		(21,145	)	JPMorgan Chase Securities, Inc.
ZAR	5,500,000	USD	548,549	7/15/2013		(6,794	)	UBS AG
INR	21,500,000	USD	353,154	7/15/2013		(7,806	)	Citigroup, Inc.
USD	806,926	JPY	80,000,000	7/16/2013		(269	)	Nomura International PLC
USD	786,250	GBP	500,000	7/17/2013		(25,853	)	UBS AG
USD	661,154	EUR	500,000	7/17/2013		(10,290	)	Nomura International PLC
USD	546,922	ZAR	5,400,000	7/19/2013		(1,992	)	JPMorgan Chase Securities, Inc.
ZAR	5,400,000	USD	540,997	7/19/2013		(3,933	)	JPMorgan Chase Securities, Inc.
NOK	3,175,719	EUR	400,000	7/24/2013		(1,712	)	BNP Paribas
USD	511,669	JPY	50,000,000	7/24/2013		(7,494	)	Nomura International PLC
ZAR	3,700,000	USD	365,576	7/25/2013		(7,477	)	Citigroup, Inc.
TWD	16,000,000	USD	532,269	7/29/2013		(1,689	)	JPMorgan Chase Securities, Inc.
JPY	66,316,538	USD	667,690	7/31/2013		(1,031	)	Nomura International PLC
USD	555,146	ZAR	5,500,000	8/1/2013		(1,172	)	Citigroup, Inc.
USD	201,918	JPY	20,000,000	8/1/2013		(242	)	UBS AG
ZAR	5,500,000	USD	549,940	8/1/2013		(4,035	)	Citigroup, Inc.
USD	1,272,516	MXN	16,450,000	8/19/2013		(8,368	)	JPMorgan Chase Securities, Inc.
Total unrealized depreciation						(360,817	)

Currency Abbreviations

ARS Argentine Peso

AUD Australian Dollar

BRL Brazilian Real

CAD Canadian Dollar

CZK Czech Koruna

EUR Euro

GBP British Pound

INR Indian Rupee

JPY Japanese Yen

MXN Mexican Peso

NOK Norwegian Krone

NZD New Zealand Dollar

RUB Russian Ruble

SGD Singapore Dollar

TWD Taiwan Dollar

USD United States Dollar

ZAR South African Rand

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

Fair Value Measurements

Assets	Level 1			Level 2			Level 3		Total

Fixed Income Investments (m)
Corporate Bonds	$	—		$	39,699,052		$	0	$	39,699,052
Mortgage-Backed Securities Pass-Throughs		—			5,157,109			—		5,157,109
Asset-Backed		—			630,498			—		630,498
Commercial Mortgage-Backed Securities		—			2,580,763			—		2,580,763
Collateralized Mortgage Obligations		—			2,511,921			—		2,511,921
Government & Agency Obligations		—			11,926,233			—		11,926,233
Loan Participations and Assignments		—			5,002,882			—		5,002,882
Municipal Bonds and Notes		—			891,821			—		891,821
Convertible Bonds		—			117,731			186,127		303,858
Preferred Security		—			82,650			—		82,650
Other Investments		—			—			34,776		34,776
Common Stocks (m)		—			525			15,321		15,846
Preferred Stock		—			57,032			—		57,032
Warrants (m)		—			—			7,664		7,664
Exchange-Traded Fund		738,364			—			—		738,364
Short-Term Investments (m)		8,092,376			—			—		8,092,376
Derivatives (n) Purchased Options		4,687			418,436			—		423,123
Futures Contracts		50,283			—			—		50,283
Credit Default Swap Contracts		—			29,197			—		29,197
Interest Rate Swap Contracts		—			104,612			—		104,612
Forward Foreign Currency Exchange Contracts		—			505,946			—		505,946
Total	$	8,885,710		$	69,716,408		$	243,888	$	78,846,006
Liabilities
Derivatives (n) Written Options	$	(217,500	)	$	(343,019	)	$	—	$	(560,519	)
Futures Contracts		(119,242	)		—			—		(119,242	)
Interest Rate Swap Contracts		—			(16,772	)		—		(16,772	)
Forward Foreign Currency Exchange Contracts		—			(360,817	)		—		(360,817	)
Total	$	(336,742	)	$	(720,608	)	$	—	$	(1,057,350	)

During the period ended June 30, 2013, the amount of transfers between Level 2 and Level 3 was $41. Investments were transferred from Level 2 to Level 3 because of the lack of observable market data due to a decrease in market activity.

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

(m) See Investment Portfolio for additional detailed categorizations.

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

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

Statement of Assets and Liabilities

as of June 30, 2013 (Unaudited)
Assets
Investments: Investments in non-affiliated securities, at value (cost $71,193,152) — including $1,469,520 of securities loaned	$	70,063,592
Investment in Daily Assets Fund Institutional (cost $1,669,599)*		1,669,599
Investment in Central Cash Management Fund (cost $6,422,777)		6,422,777
Total investments in securities, at value (cost $79,285,528)		78,155,968
Cash		27,691
Foreign currency, at value (cost $809,270)		807,321
Receivable for investments sold		233,081
Receivable for investments sold — when-issued/delayed delivery securitites		6,963,862
Receivable for Fund shares sold		6,734
Interest receivable		891,597
Receivable for variation margin on futures contracts		13,707
Unrealized appreciation on swap contracts		133,809
Unrealized appreciation on forward foreign currency exchange contracts		505,946
Upfront payments paid on swap contracts		10,396
Other assets		853
Total assets	$	87,750,965
Liabilities
Payable upon return of securities loaned		1,669,599
Payable for investments purchased		1,502,444
Payable for investments purchased — when-issued/delayed delivery securities		12,506,590
Payable for Fund shares redeemed		39,940
Options written, at value (premiums received $394,582)		560,519
Unrealized depreciation on swap contracts		16,772
Unrealized depreciation on forward foreign currency exchange contracts		360,817
Upfront payments received on swap contracts		2,066
Accrued management fee		19,213
Accrued Trustees' fees		26
Other accrued expenses and payables		75,441
Total liabilities		16,753,427
Net assets, at value	$	70,997,538
Net Assets Consist of
Undistributed net investment income		1,395,283
Net unrealized appreciation (depreciation) on: Investments		(1,129,560	)
Swap contracts		117,037
Futures		(68,959	)
Foreign currency		150,285
Written options		(165,937	)
Accumulated net realized gain (loss)		(146,603	)
Paid-in-capital		70,845,992
Net assets, at value	$	70,997,538
Class A Net Asset Value, offering and redemption price per share ($70,997,538 ÷ 6,339,378 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.20

* 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, 2013 (Unaudited)
Investment Income
Income: Interest (net of foreign taxes withheld of $282)	$	1,761,886
Dividends		4,262
Income distributions — Central Cash Management Fund		3,355
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		2,359
Total income		1,771,862
Expenses: Management fee		202,215
Administration fee		36,766
Services to shareholders		435
Custodian fee		39,684
Audit and tax fees		32,640
Legal fees		5,489
Reports to shareholders		14,512
Trustees' fees and expenses		2,202
Other		28,121
Total expenses before expense reductions		362,064
Expense reductions		(93,210	)
Total expenses after expense reductions		268,854
Net investment income (loss)		1,503,008
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		340,287
Swap contracts		94,770
Futures		(431,068	)
Written options		66,626
Foreign currency		(165,640	)
		(95,025	)
Change in net unrealized appreciation (depreciation) on: Investments		(4,018,924	)
Swap contracts		(39,202	)
Unfunded loan commitment		(118	)
Futures		(36,998	)
Written options		(306,116	)
Foreign currency		145,058
		(4,256,300	)
Net gain (loss)		(4,351,325	)
Net increase (decrease) in net assets resulting from operations	$	(2,848,317	)

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

Statement of Changes in Net Assets

Increase (Decrease) in Net Assets	Six Months Ended June 30, 2013 (Unaudited)			Year Ended December 31, 2012
Operations: Net investment income	$	1,503,008		$	3,374,357
Net realized gain (loss)		(95,025	)		2,896,387
Change in net unrealized appreciation (depreciation)		(4,256,300	)		2,483,404
Net increase (decrease) in net assets resulting from operations		(2,848,317	)		8,754,148
Distributions to shareholders from: Net investment income: Class A		(3,703,120	)		(4,311,037	)
Net realized gains: Class A		(2,113,421	)		(143,246	)
Total distributions		(5,816,541	)		(4,454,283	)
Fund share transactions: Class A Proceeds from shares sold		7,166,035			8,860,430
Reinvestment of distributions		5,816,541			4,454,283
Payments for shares redeemed		(6,820,159	)		(13,217,365	)
Net increase (decrease) in net assets from Class A share transactions		6,162,417			97,348
Increase (decrease) in net assets		(2,502,441	)		4,397,213
Net assets at beginning of period		73,499,979			69,102,766
Net assets at end of period (including undistributed net investment income of $1,395,283 and $3,595,395, respectively)	$	70,997,538		$	73,499,979
Other Information
Class A Shares outstanding at beginning of period		5,832,490			5,808,640
Shares sold		573,094			731,149
Shares issued to shareholders in reinvestment of distributions		491,677			381,360
Shares redeemed		(557,883	)		(1,088,659	)
Net increase (decrease) in Class A shares		506,888			23,850
Shares outstanding at end of period		6,339,378			5,832,490

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

Financial Highlights

				Years Ended December 31,
Class A	Six Months Ended 6/30/13 (Unaudited)			2012			2011			2010			2009			2008
Selected Per Share Data
Net asset value, beginning of period	$	12.60		$	11.90		$	11.96		$	11.61		$	10.03		$	11.70
Income (loss) from investment operations: Net investment incomea		.25			.57			.63			.66			.63			.55
Net realized and unrealized gain (loss)		(.68	)		.92			(.01	)		.47			1.50			(1.38	)
Total from investment operations		(.43	)		1.49			.62			1.13			2.13			(.83	)
Less distributions from: Net investment income		(.62	)		(.76	)		(.68	)		(.78	)		(.55	)		(.69	)
Net realized gains		(.35	)		(.03	)		—			—			—			(.15	)
Total distributions		(.97	)		(.79	)		(.68	)		(.78	)		(.55	)		(.84	)
Net asset value, end of period	$	11.20		$	12.60		$	11.90		$	11.96		$	11.61		$	10.03
Total Return (%)b		(3.88	)**		13.08			5.31			10.05			22.73			(7.75	)
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		71			73			69			76			74			73
Ratio of expenses before expense reductions (%)		.98	*		.99			.99			.95			.86			.89
Ratio of expenses after expense reductions (%)		.73	*		.77			.79			.86			.80			.87
Ratio of net investment income (%)		4.09	*		4.72			5.38			5.62			5.96			5.06
Portfolio turnover rate (%)		82	**		164			144			167			370			234
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 Unconstrained 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 and loan participations and assignments are valued at prices supplied by independent pricing services approved by the Fund's Board. If the pricing services are unable to provide valuations, debt securities are valued at the most recent bid quotation or evaluated price and loan participations and assignments are valued at the mean of the most recent bid and ask quotations, 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.

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

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

As of June 30, 2013, the Fund had securities on loan with a gross value of $1,580,914. The value of the related collateral, $1,669,599, exceeded the value of the securities loaned at period end.

Loan Participations and Assignments. Loan participations and assignments are portions of loans originated by banks and sold in pieces to investors. These U.S. 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. Loans held by the Fund are generally in the form of Assignments, but the Fund may also invest in Participations. 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.

The timing and characterization of certain income and capital gain distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in foreign denominated investments, forward currency contracts, futures contracts, swap contracts and certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Realized gains and losses from investment transactions are recorded on an identified cost basis 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. For the six months ended June 30, 2013, the Fund entered into interest rate swap transactions to gain exposure to different parts of the yield curve while managing overall duration. 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. To help mitigate this interest rate risk, the Fund invests in interest rate swap contracts to reduce the duration of the Investment Portfolio. 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. In addition, both the Fund and counterparty may agree to exchange variable rate payments based on different indices. 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. The Fund may enter into credit default swap contracts to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller 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 U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the 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 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. For the six months ended June 30, 2013, the Fund entered into credit default swap contracts to gain exposure to the underlying issuer's credit quality characteristics.

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. For the six months ended June 30, 2013, the Fund entered into options on interest rate futures and on interest rates swaps in order to hedge against potential adverse interest rate movements of portfolio assets.

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

A summary of the open purchased option contracts as of June 30, 2013 is included in the Fund's Investment Portfolio. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in written option contracts had a total value generally indicative of a range from approximately $260,000 to $561,000, and purchased option contracts had a total value generally indicative of a range from approximately $284,000 to $423,000.

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, 2013, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration and for non-hedging purposes to seek to enhance potential gains. In addition, the Fund seeks to enhance returns by employing a global tactical asset allocation overlay strategy. The Fund enters into futures contracts on global bonds, including indices, as part of its global tactical asset allocation overlay strategy. For the six months ended June 30, 2013, as part of this strategy, the Fund used futures contracts to attempt to take advantage of inefficiencies within the global bond markets.

A summary of the open futures contracts as of June 30, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $4,855,000 to $7,631,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $2,488,000 to $28,086,000.

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, 2013, the Fund entered into forward currency contracts in order to hedge against anticipated currency market changes and for non-hedging purposes to seek to enhance potential gains. In addition, the Fund seeks to enhance returns by employing a global tactical asset allocation overlay strategy. For the six months ended June 30, 2013, 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, 2013 is included in a table following the Fund's Investment Portfolio. For the six months ended June 30, 2013, the investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $6,896,000 to $19,799,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from approximately $2,431,000 to $14,678,000. The investment in forward currency contracts long vs. other foreign currencies sold had a total contract value generally indicative of a range from $0 to approximately $4,795,000.

Asset Derivatives	Purchased Options		Forward Contracts		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a) (b)	$	423,123	$	—	$	104,612	$	50,283	$	578,018
Credit Contracts (b)		—		—		29,197		—		29,197
Foreign Exchange Contracts (c)		—		505,946		—		—		505,946
	$	423,123	$	505,946	$	133,809	$	50,283	$	1,113,161

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, respectively

Liability Derivatives	Written Options			Forward Contracts			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(560,519	)	$	—		$	(16,772	)	$	(119,242	)	$	(696,533	)
Foreign Exchange Contracts (c)		—			(360,817	)		—			—			(360,817	)
	$	(560,519	)	$	(360,817	)	$	(16,772	)	$	(119,242	)	$	(1,057,350	)

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) Options written, at value and unrealized depreciation on swap contracts, respectively

Realized Gain (Loss)	Purchased Options			Written Options		Forward Contracts			Swap Contracts		Futures Contracts			Total
Interest Rate Contracts (a)	$	(37,156	)	$	66,626	$	—		$	6,704	$	(431,068	)	$	(394,894	)
Credit Contracts (a)		—			—		—			88,066		—			88,066
Foreign Exchange Contracts (b)		—			—		(153,136	)		—		—			(153,136	)
	$	(37,156	)	$	66,626	$	(153,136	)	$	94,770	$	(431,068	)	$	(459,964	)

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
Interest Rate Contracts (a)	$	110,267	$	(306,116	)	$	—	$	8,353		$	(36,998	)	$	(224,494	)
Credit Contracts (a)		—		—			—		(47,555	)		—			(47,555	)
Foreign Exchange Contracts (b)		—		—			151,789		—			—			151,789
	$	110,267	$	(306,116	)	$	151,789	$	(39,202	)	$	(36,998	)	$	(120,260	)

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

(a) Change in net unrealized appreciation (depreciation) on investments (includes purchased options), written options, swap contracts and futures, respectively

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

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Received		Net Amount of Derivative Assets
Bank of America	$	118,652	$	(62,856	)	$	—	$	55,796
Barclays Bank PLC		50,155		(50,155	)		—		—
BNP Paribas		189,915		(113,732	)		—		76,183
Citigroup, Inc.		142,559		(80,599	)		—		61,960
Credit Suisse		5,602		—			—		5,602
JPMorgan Chase Securities, Inc.		238,772		(124,479	)		—		114,293
Nomura International PLC		308,195		(115,493	)		—		192,702
UBS AG		4,341		(4,341	)		—		—
Exchange Traded Options and Futures (b)		54,970		—			—		54,970
	$	1,113,161	$	(551,655	)	$	—	$	561,506
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Pledged		Net Amount of Derivative Liabilities
Bank of America	$	62,856	$	(62,856	)	$	—	$	—
Barclays Bank PLC		148,402		(50,155	)		—		98,247
BNP Paribas		113,732		(113,732	)		—		—
Citigroup, Inc.		80,599		(80,599	)		—		—
JPMorgan Chase Securities, Inc.		124,479		(124,479	)		—		—
Nomura International PLC		115,493		(115,493	)		—		—
UBS AG		75,047		(4,341	)		—		70,706
Exchange Traded Options and Futures (b)		336,742		—			—		336,742
	$	1,057,350	$	(551,655	)	$	—	$	505,695

(a) Forward foreign currency exchange contracts, swap contracts and over-the-counter purchased options and written options are netted.

(b) Includes financial instruments (purchased options or futures) which are not subject to a master netting arrangement, or another similar arrangement.

C. Purchases and Sales of Securities

During the six months ended June 30, 2013, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury obligations) aggregated $58,424,909 and $62,422,869, respectively. Purchases and sales of U.S. Treasury obligations aggregated $95,841 and $1,807,074, respectively.

For the six months ended June 30, 2013, transactions for written options on futures contracts and interest rate swap contracts were as follows:

	Contracts/ Contract Amount			Premiums
Outstanding, beginning of period		10,800,020		$	416,526
Options written		60			50,475
Options closed		(4,000,000	)		(64,650	)
Options expired		(20	)		(7,769	)
Outstanding, end of period		6,800,060		$	394,582

D. 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") acted as an investment subadvisor to the Fund and managed the portion of assets allocated to the Fund's global tactical asset allocation ("GTAA") overlay strategy. QS Investors was paid by the Advisor for the services QS Investors provided to the Fund. Effective May 31, 2013, QS Investors no longer serves as subadvisor to the Fund.

First $250 million	.550	%
Next $750 million	.520	%
Next $1.5 billion	.500	%
Next $2.5 billion	.480	%
Next $2.5 billion	.450	%
Next $2.5 billion	.430	%
Next $2.5 billion	.410	%
Over $12.5 billion	.390	%

Accordingly, for the six months ended June 30, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $93,137, and the amount charged aggregated $109,078, which was equivalent to an annualized effective rate of 0.30% of the Fund's average daily net assets.

Security Lending Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the six months ended June 30, 2013, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $262.

E. Investing in High-Yield Securities

F. Investing in Emerging Markets

G. Ownership of the Fund

At June 30, 2013, two Participating Insurance Companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 67% and 31%.

H. Line of Credit

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees 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, 2013 to June 30, 2013).

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, 2013
Actual Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	961.20
Expenses Paid per $1,000*	$	3.55
Hypothetical 5% Fund Return	Class A
Beginning Account Value 1/1/13	$	1,000.00
Ending Account Value 6/30/13	$	1,021.17
Expenses Paid per $1,000*	$	3.66

Annualized Expense Ratio	Class A
DWS Variable Series II — DWS Unconstrained Income VIP	.73%

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

For an analysis of the fees associated with an investment in the Fund or similar funds, please refer to http://apps.finra.org/fundanalyzer/1/fa.aspx.

Proxy Voting

Summary of Management Fee Evaluation by Independent Fee Consultant

September 17, 2012

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 considered how aggregated DWS Fund performance measures relative to appropriate peers had varied by asset class and over time.

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

President, Thomas H. Mack & Co., Inc.

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148

VS2UI-3 (R-028389-2 8/13)


ITEM 2.	CODE OF ETHICS

	Not applicable.

ITEM 3.	AUDIT COMMITTEE FINANCIAL EXPERT

	Not applicable

ITEM 4.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

	Not applicable

ITEM 5.	AUDIT COMMITTEE OF LISTED REGISTRANTS

	Not applicable

ITEM 6.	SCHEDULE OF INVESTMENTS

	Not applicable

ITEM 7.	DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

	Not applicable

ITEM 8.	PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES

	Not applicable

ITEM 9.	PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS

	Not applicable

ITEM 10.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

	There were no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board. The primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Kenneth C. Froewiss, Independent Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078.

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 19, 2013

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 19, 2013



By:	/s/Paul Schubert Paul Schubert Chief Financial Officer and Treasurer

Date:	August 19, 2013

Deutsche Variable Series Ii N-CSRSCertified semi-annual shareholder report (management investment company)