UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSR
Investment Company Act file number: 811-00642
Deutsche DWS International Fund, Inc.
(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) 250-2500
Diane Kenneally
One International Place
Boston, MA 02110
(Name and Address of Agent for Service)
| Date of fiscal year end: | 8/31 |
| Date of reporting period: | 8/31/2018 |
| ITEM 1. | REPORT TO STOCKHOLDERS |
Table of Contents
August 31, 2018
Annual Report
to Shareholders
DWS CROCI® International Fund
(formerly Deutsche CROCI® International Fund)
Table of Contents
This report must be preceded or accompanied by a prospectus. To obtain a summary prospectus, if available, or prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. We advise you to consider the Fund’s objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.
The Fund will be managed using the CROCI® Investment Process which is based on portfolio management’s belief that, over time, stocks which display more favorable financial metrics (for example, the CROCI® Economic P/E Ratio) as generated by this process may outperform stocks which display less favorable metrics. This premise may not prove to be correct and prospective investors should evaluate this assumption prior to investing in the Fund. The Fund’s use of forward currency contracts may not be successful in hedging currency exchange rates changes and could eliminate some or all of the benefit of an increase in the value of a foreign currency versus the US dollar. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Investing in foreign securities 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. Please read the prospectus for details.
The brand DWS represents DWS Group GmbH & Co. KGaA and any of its subsidiaries such as DWS Distributors, Inc. which offers investment products or DWS Investment Management Americas, Inc. and RREEF America L.L.C. which offer advisory services.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
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Dear Shareholder:
Earlier this year, we adopted our existing European brand, DWS, globally. In connection with that change, “DWS” has replaced “Deutsche” in most of our open-end mutual fund names, including share classes for certain money market funds which previously included the “Deutsche” in their names.
Building on more than 60 years of experience and a reputation for excellence in Germany and across Europe, DWS is known for the values that we see as core elements to our investors’ success: Excellence, Entrepreneurship, Sustainability and Integrity. We aim to demonstrate these qualities in all that we do.
Please remember that, as part of this name change, our website also has a new address: DWS.com. For your convenience, the deutschefunds.com address will remain live and automatically redirect you to our new site. As always, we invite you to visit us online frequently to access the most current insights from our CIO, economists and investment specialists.
Thank you for your ongoing trust in us. We look forward to bringing you the very best in investment insight, strategies and solutions for many years to come.
Best regards,
 |
Hepsen Uzcan
President, DWS Funds |
Assumptions, estimates and opinions contained in this document constitute our judgment as of the date of the document and are subject to change without notice. Any projections are based on a number of assumptions as to market conditions and there can be no guarantee that any projected results will be achieved. Past performance is not a guarantee of future results.
| DWS CROCI® International Fund | | | 3 |
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| Portfolio Management Review | (Unaudited) |
Market Overview and Fund Performance
All performance information below is historical and does not guarantee future results. Returns shown are for Class A shares, unadjusted for sales charges. Investment return and principal fluctuate, so your shares may be worth more or less when redeemed. Current performance may differ from performance data shown. Please visit dws.com for the most recent month-end performance of all share classes. Fund performance includes reinvestment of all distributions. Unadjusted returns do not reflect sales charges and would have been lower if they had. Please refer to pages 10 through 12 for more complete performance information.
Investment Strategy and Process
Portfolio management selects approximately 50 stocks of companies that it believes offer economic value utilizing the Cash Return on Capital Invested (CROCI®) strategy as the primary factor, in addition to other factors. Under the CROCI® strategy, economic value is measured using various metrics such as the CROCI® Economic Price Earnings Ratio. The CROCI® Economic Price Earnings Ratio is a proprietary measure of company valuation using the same relationship between valuation and return as an accounting P/E ratio (i.e., price/book value divided by return on equity). The CROCI® strategy may apply other measures of company valuation, as determined by the CROCI® Investment Strategy and Valuation Group. Portfolio management may use criteria other than the CROCI® strategy in selecting investments.
Portfolio management selects stocks primarily from a universe consisting of approximately 330 of the largest companies in developed markets outside North America represented in the CROCI® Investment Strategy and Valuation Group’s database of companies evaluated using the CROCI® strategy. The Fund is reviewed periodically and adjusted in accordance with is the CROCI® strategy’s rules, and the regional weighting in the Fund is targeted to match the Fund’s benchmark. The region-neutral approach attempts to reduce the risk of significant regional over or underweights in the Fund relative to the broader international equity market.
The Fund returned 1.94% in the 12-month period ended August 31, 2018, underperforming the 4.39% return of the MSCI EAFE Index.
International stocks posted a modest gain in the past 12 months, but all of the positive returns were achieved in the early part of the period. From the beginning of September 2017 through late January of this year, the overseas markets staged a steady, broad-based advance as the prospect of synchronized global growth and rising corporate earnings fueled unusually robust investor sentiment.
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The rally stalled in the final week of January 2018, however, as evidence began to emerge that the improvement in global growth might not be as strong as investors had hoped. In addition, the markets started to factor in the possibility of rising interest rates. The resulting sell-off in early February erased most of the gains achieved in the prior five months of the period, and stocks proceeded to trade in an uneven fashion through mid-June before suffering another downdraft in the summer. The renewed weakness stemmed from the continuation of slowing economic growth in Europe and other major regions, disruptions in the emerging markets, and ongoing volatility associated with the uncertainty surrounding U.S. trade policy. The growing strength of populist political movements in Europe, together with fears about Italy’s government debt and the health of the region’s banking sector, represented additional headwinds for the markets in the summer months.
Currency translation also played a role in international equities’ weak showing in the second half of the period. After performing well throughout 2017, most major foreign currencies began to decline against the U.S. dollar once it became evident that growth had begun to decelerate outside of the United States. The downturn continued through the end of August, taking approximately two percentage points off the index return for the full 12-month period.
Fund Performance
Our value approach put the Fund out of step with the trends in the broader market during the past year. Investors continued to favor faster-growing companies, while showing less interest in those with lower valuations and higher dividends. Although this trend did not account for all of the Fund’s underperformance, it was nonetheless a headwind to
our value-oriented strategy. Our emphasis on lower-volatility stocks also detracted at a time in which higher-beta, momentum-driven stocks generally outperformed.
Stock selection was the primary factor driving the Fund’s results, while sector allocations had a largely neutral effect. With regard to the former, our sizable shortfall in the consumer discretionary sector had the largest impact on returns. Our focus on auto-related stocks was a key detractor amid broad-based weakness in the group. Automotive stocks were at the epicenter of trade concerns, as tariffs were seen as a source of both higher input costs and slowing end-market sales. Additionally, investors
| DWS CROCI® International Fund | | | 5 |
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became worried that rising interest rates in the United States could stem demand. In this environment, holdings in Daimler AG, Mazda Motor Corp., Subaru Corp. and Honda Motor Co., Ltd. all cost the Fund relative performance, as did investments in the tire producers Continental AG and Bridgestone Corp.
Certain holdings outside of the consumer discretionary sector also pressured results, including Japan Tobacco, Inc. The stock posted a sizable loss due to its weaker profit outlook, causing it to lag the overall consumer staples sector by a wide margin. Positions in the Bayer AG (Germany), Deutsche Post AG (Germany) and Adecco AG (Switzerland) were further detractors of note.
| “Our | value approach put the Fund out of step with the trends in the broader market during the past year.” |
On the positive side, we added value through our stock selection in utilities. Three Hong Kong-based stocks — Hong Kong & China Gas Co. Ltd., HK Electric Investments & HK Electric Investments Ltd., and CLP Holdings Ltd. — posted double-digit gains and strongly outpaced the broader category, aiding Fund performance. The materials sector was an additional area of relative strength for the Fund, largely as a result of the gain for the Netherlands-based chemicals producer Koninklijke DSM NV. The company reported rising profits and improved guidance regarding its earnings outlook, boosting its shares. Our portfolio of consumer staples stocks also outperformed, led by an investment in Wesfarmers Limited.* The Australia-based conglomerate announced restructuring measures that were expected to improve its cash generation capacity and lead to stronger credit metrics. The U.K.-based media company Sky PLC,* which received competing bids from multiple companies, was the top overall contributor for the annual period.
In terms of sector allocations, the Fund gained a considerable benefit from having a zero weighting in financials. Weakness in European financial stocks caused the category to finish as the third-worst performer among the 11 major sectors and one of only three to post a negative absolute return. However, the benefit was counterbalanced by the combination of underweights in information technology and energy, together with an overweight position in the underperforming utilities sector.
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Early in the period, the Fund used derivatives — specifically, currency forward contracts — to hedge exposure to the Japanese yen. This strategy was a small contributor to performance. The position was closed in November 2017.
Outlook and Positioning
We are disappointed in the Fund’s results, but we are also remaining true to our value discipline. Not only have value stocks underperformed significantly since the Fund began to use the CROCI® strategy in February 2014, but there were also very few occasions in which the category sustained a rebound for a significant length of time. Although growth remained persistently in favor, it’s important to remember that the two styles tend to alternate leadership over time. We believe our CROCI investment process, through its disciplined approach and emphasis on real value, is well positioned to benefit once the relative performance of the value style inevitably begins to improve.
We continued to emphasize higher-quality stocks with attractive valuations. As of August 31, 2018, the Fund had a price-to-earnings ratio of 11.2 based on one-year forward earnings estimates, versus 12.5 for the MSCI EAFE Index. The portfolio also compared favorably to the benchmark in terms of its fundamentals, illustrated by its higher return on equity (16.2% vs. 14.9%). While these characteristics did not feed through to returns in the past year, we believe they provide a firm foundation for performance, particularly if the returns of momentum stocks and the growth style begin to cool.
| * | Not held in the portfolio as of August 31, 2018. |
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Di Kumble, CFA, Managing Director
Portfolio Manager of the Fund. Began managing the Fund in 2014.
| – | Joined DWS in 2003 with seven years of industry experience. Prior to joining, she served as a Portfolio Manager at Graham Capital Management. Previously, she worked as a Quantitative Strategist at ITG Inc. and Morgan Stanley. |
| – | Portfolio Manager: New York. |
| – | BS, Beijing University; PhD in Chemistry, Princeton University. |
John Moody, Vice President
Portfolio Manager of the Fund. Began managing the Fund in 2016.
| – | Joined DWS in 1998. Prior to his current role, served as a Business Manager for Active Equity. Previously, he was a Portfolio Analyst for EAFE, Global and Technology Funds and an Investment Accountant for International Funds. He began his career as a Client Service Associate for the International Institutional Equity Group. |
| – | Portfolio Analyst: New York. |
| – | BS in Business Management, Fairfield University. |
The views expressed reflect those of the portfolio management team only through the end of the period of the report as stated on the cover. The management team’s views are subject to change at any time based on market and other conditions and should not be construed as a recommendation. Past performance is no guarantee of future results. Current and future portfolio holdings are subject to risk.
Terms to Know
The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index is an equity index which captures large- and mid-cap representation across developed markets countries around the world, excluding the United States and Canada. With 928 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Beta measures a security’s sensitivity to the movements of the Fund’s benchmark or the market as a whole. A beta of greater than one indicates more volatility than the benchmark or market, while a beta of less than one indicates less volatility.
Consumer discretionary represents industries that produce goods and services that are not necessities in everyday life.
Contributors and detractors incorporate both a stock’s return and its weight. If two stocks have the same return but one has a larger weighting in the Fund, it will have a larger contribution to return in the period.
Overweight means the Fund holds a higher weighting in a given sector or security than the benchmark. Underweight means the Fund holds a lower weighting.
Price-to-earnings (P/E) ratio, or earnings multiple, is the price of a stock divided by its earnings per share. It is a widely used gauge of a stock’s valuation that indicates what investors are paying for a company’s earnings on a per-share basis.
Return on equity is the amount of profit returned as a percentage of shareholders’ equity.
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Derivatives are contracts whose values can be based on a variety of instruments including indices, currencies or securities. They can be utilized for a variety of reasons including for hedging purposes; for risk management; for non-hedging purposes to seek to enhance potential gains; or as a substitute for direct investment in a particular asset class or to keep cash on hand to meet shareholder redemptions. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility.
| DWS CROCI® International Fund | | | 9 |
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| Performance Summary | August 31, 2018 (Unaudited) |
| Class A | 1-Year | 5-Year | 10-Year | |||||||||
| Average Annual Total Returns as of 8/31/18 |
| |||||||||||
| Unadjusted for Sales Charge | 1.94% | 4.97% | 1.63% | |||||||||
| Adjusted for the Maximum Sales Charge (max 5.75% load) | –3.92% | 3.73% | 1.03% | |||||||||
| MSCI EAFE Index† | 4.39% | 5.73% | 3.66% | |||||||||
| MSCI EAFE US Dollar Hedged Index†† | 8.37% | 9.17% | 5.84% | |||||||||
| Class T | 1-Year | 5-Year | 10-Year | |||||||||
| Average Annual Total Returns as of 8/31/18 |
| |||||||||||
| Unadjusted for Sales Charge | 2.02% | 4.95% | 1.68% | |||||||||
| Adjusted for the Maximum Sales Charge (max 2.50% load) | –0.53% | 4.42% | 1.42% | |||||||||
| MSCI EAFE Index† | 4.39% | 5.73% | 3.66% | |||||||||
| MSCI EAFE US Dollar Hedged Index†† | 8.37% | 9.17% | 5.84% | |||||||||
| Class C | 1-Year | 5-Year | 10-Year | |||||||||
| Average Annual Total Returns as of 8/31/18 |
| |||||||||||
| Unadjusted for Sales Charge | 1.23% | 4.18% | 0.86% | |||||||||
| Adjusted for the Maximum Sales Charge (max 1.00% CDSC) | 1.23% | 4.18% | 0.86% | |||||||||
| MSCI EAFE Index† | 4.39% | 5.73% | 3.66% | |||||||||
| MSCI EAFE US Dollar Hedged Index†† | 8.37% | 9.17% | 5.84% | |||||||||
| Class R6 | 1-Year | Life of Class* | ||||||||||
| Average Annual Total Returns as of 8/31/18 | ||||||||||||
| No Sales Charges | 2.36% | 3.17% | ||||||||||
| MSCI EAFE Index† | 4.39% | 4.55% | ||||||||||
| MSCI EAFE US Dollar Hedged Index†† | 8.37% | 4.39% | ||||||||||
| Class S | 1-Year | 5-Year | 10-Year | |||||||||
| Average Annual Total Returns as of 8/31/18 |
| |||||||||||
| No Sales Charges | 2.20% | 5.22% | 1.91% | |||||||||
| MSCI EAFE Index† | 4.39% | 5.73% | 3.66% | |||||||||
| MSCI EAFE US Dollar Hedged Index†† | 8.37% | 9.17% | 5.84% | |||||||||
| Institutional Class | 1-Year | 5-Year | 10-Year | |||||||||
| Average Annual Total Returns as of 8/31/18 |
| |||||||||||
| No Sales Charges | 2.27% | 5.29% | 2.02% | |||||||||
| MSCI EAFE Index† | 4.39% | 5.73% | 3.66% | |||||||||
| MSCI EAFE US Dollar Hedged Index†† | 8.37% | 9.17% | 5.84% | |||||||||
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Performance in the Average Annual Total Returns table above and the Growth of an Assumed $10,000 Investment line graph that follows is historical and does not guarantee future results. Investment return and principal fluctuate, so your shares may be worth more or less when redeemed. Current performance may differ from performance data shown. Please visit dws.com for the Fund’s most recent month-end performance. Fund performance includes reinvestment of all distributions. Unadjusted returns do not reflect sales charges and would have been lower if they had.
The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated December 1, 2017 are 1.13%, 1.18%, 1.92%, 0.75%, 0.90% and 0.83% for Class A, Class T, Class C, Class R6, Class S and Institutional Class shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.
Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Returns shown for Class T shares for the period prior to its inception on June 5, 2017 are derived from the historical performance of Institutional Class shares of DWS CROCI® International Fund during such periods and have been adjusted to reflect the higher total annual operating expenses and applicable sales charges of Class T. Any difference in expenses will affect performance.
Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only, and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights.
| Growth of an Assumed $10,000 Investment (Adjusted for Maximum Sales Charge) |
The Fund’s growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 5.75%. This results in a net initial investment of $9,425.
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The growth of $10,000 is cumulative.
Performance of other share classes will vary based on the sales charges and the fee structure of those classes.
| * | Class R6 shares commenced operations on December 1, 2014. |
| † | The Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index is an equity index which captures large and mid cap representation across developed markets countries around the world, excluding the US and Canada. With 928 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. 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. |
| †† | MSCI EAFE US Dollar Hedged Index is designed to provide exposure to equity securities in developed international stock markets, while at the same time mitigating exposure to fluctuations between the value of the US dollar and selected non-US currencies. |
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| * | Currency exposure after taking into account the effects of forward currency contracts and foreign currency balances. |
| DWS CROCI® International Fund | | | 13 |
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Ten Largest Equity Holdings at August 31, 2018 | Country | Percent | ||||||||
| 1 | UCB SA | Belgium | 2.2 | % | ||||||
Global biopharmaceutical company | ||||||||||
| 2 | Deutsche Post AG | Germany | 2.2 | % | ||||||
Provides mail delivery services to the public & businesses | ||||||||||
| 3 | Roche Holding AG | Switzerland | 2.1 | % | ||||||
Developer of pharmaceutical and chemical products | ||||||||||
| 4 | Bunzl PLC | United Kingdom | 2.1 | % | ||||||
Supplies business-to-business consumables | ||||||||||
| 5 | Merck KGaA | Germany | 2.1 | % | ||||||
Global pharmaceutical and chemicals company | ||||||||||
| 6 | Nestle SA | Switzerland | 2.1 | % | ||||||
Multinational company that markets a wide range of food products | ||||||||||
| 7 | CLP Holdings Ltd. | Hong Kong | 2.1 | % | ||||||
Generator and supplier of electricity | ||||||||||
| 8 | Solvay SA | Belgium | 2.1 | % | ||||||
Manufactures pharmaceuticals, chemicals and plastics | ||||||||||
| 9 | Sumitomo Electric Industries Ltd. | Japan | 2.1 | % | ||||||
Manufactures electric wires, cables and their related equipment | ||||||||||
| 10 | Danone SA | France | 2.1 | % | ||||||
Processes food | ||||||||||
Portfolio holdings and characteristics are subject to change.
For more complete details about the Fund’s investment portfolio, see page 15. A quarterly Fact Sheet is available on dws.com or upon request. Please see the Account Management Resources section on page 55 for contact information.
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| Investment Portfolio | as of August 31, 2018 |
| Shares | Value ($) | |||||||
| Common Stocks 97.1% | ||||||||
| Belgium 4.3% | ||||||||
Solvay SA | 137,497 | 18,298,098 | ||||||
UCB SA | 210,572 | 19,250,632 | ||||||
|
| |||||||
(Cost $38,090,078) |
| 37,548,730 | ||||||
| Finland 2.0% | ||||||||
Nokian Renkaat Oyj (Cost $21,275,893) | 421,614 | 17,397,758 | ||||||
| France 10.0% | ||||||||
Arkema SA | 144,768 | 18,131,456 | ||||||
Cie Generale des Etablissements Michelin | 140,055 | 16,573,893 | ||||||
Danone SA | 230,954 | 18,181,175 | ||||||
Pernod Ricard SA | 109,101 | 17,222,901 | ||||||
Sanofi | 206,161 | 17,634,118 | ||||||
|
| |||||||
(Cost $85,990,914) |
| 87,743,543 | ||||||
| Germany 13.4% | ||||||||
BASF SE | 180,808 | 16,724,769 | ||||||
Bayer AG (Registered) | 162,450 | 15,156,760 | ||||||
Beiersdorf AG | 152,759 | 17,784,695 | ||||||
Continental AG | 77,728 | 14,259,709 | ||||||
Daimler AG (Registered) | 260,708 | 16,855,756 | ||||||
Deutsche Post AG (Registered) | 524,228 | 19,112,910 | ||||||
Merck KGaA | 175,354 | 18,416,493 | ||||||
|
| |||||||
(Cost $132,466,327) |
| 118,311,092 | ||||||
| Hong Kong 8.0% | ||||||||
CLP Holdings Ltd. | 1,562,030 | 18,359,263 | ||||||
HK Electric Investments & HK Electric Investments Ltd. “SS”, 144A, (Units) (a) | 17,352,500 | 17,554,241 | ||||||
Hong Kong & China Gas Co., Ltd. | 8,568,827 | 17,642,586 | ||||||
MTR Corp., Ltd. | 3,247,000 | 16,734,021 | ||||||
|
| |||||||
(Cost $60,774,670) |
| 70,290,111 | ||||||
| Japan 23.6% | ||||||||
Bridgestone Corp. | 464,640 | 17,116,115 | ||||||
Central Japan Railway Co. | 85,300 | 17,131,397 | ||||||
Honda Motor Co., Ltd. | 588,500 | 17,436,252 | ||||||
ITOCHU Corp. | 990,700 | 17,329,002 | ||||||
Japan Tobacco, Inc. | 652,400 | 17,156,987 | ||||||
Mazda Motor Corp. | 1,435,600 | 16,648,102 | ||||||
Nissan Motor Co., Ltd. | 1,891,900 | 17,708,361 | ||||||
Sekisui House Ltd. | 1,015,500 | 16,574,649 | ||||||
Subaru Corp. | 609,100 | 18,095,933 | ||||||
The accompanying notes are an integral part of the financial statements.
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| Shares | Value ($) | |||||||
Sumitomo Electric Industries Ltd. | 1,154,200 | 18,261,935 | ||||||
Toyota Industries Corp. | 319,900 | 18,109,720 | ||||||
Toyota Motor Corp. | 267,500 | 16,684,142 | ||||||
|
| |||||||
(Cost $225,042,552) |
| 208,252,595 | ||||||
| Netherlands 4.0% | ||||||||
Koninklijke DSM NV | 167,176 | 17,538,197 | ||||||
Randstad NV | 284,718 | 17,833,046 | ||||||
|
| |||||||
(Cost $29,018,010) |
| 35,371,243 | ||||||
| Singapore 3.7% |
| |||||||
Singapore Airlines Ltd. | 2,195,782 | 15,677,872 | ||||||
Singapore Telecommunications Ltd. | 7,235,400 | 17,132,382 | ||||||
|
| |||||||
(Cost $41,232,649) |
| 32,810,254 | ||||||
| Switzerland 12.3% | ||||||||
Adecco Group AG (Registered) | 294,241 | 18,026,341 | ||||||
Ferguson PLC | 218,661 | 17,522,090 | ||||||
Nestle SA (Registered) | 219,280 | 18,411,149 | ||||||
Novartis AG (Registered) | 214,552 | 17,792,819 | ||||||
Roche Holding AG (Genusschein) | 74,802 | 18,583,773 | ||||||
Schindler Holding AG | 75,398 | 17,985,058 | ||||||
|
| |||||||
(Cost $105,491,346) |
| 108,321,230 | ||||||
| United Kingdom 15.8% | ||||||||
Barratt Developments PLC | 2,542,582 | 17,866,114 | ||||||
Bunzl PLC | 594,738 | 18,489,736 | ||||||
GlaxoSmithKline PLC | 847,847 | 17,151,783 | ||||||
International Consolidated Airlines Group SA | 2,006,500 | 17,969,969 | ||||||
National Grid PLC | 1,649,362 | 17,320,346 | ||||||
Persimmon PLC | 542,487 | 17,111,468 | ||||||
SSE PLC | 1,002,199 | 16,280,243 | ||||||
Taylor Wimpey PLC | 7,698,597 | 16,702,948 | ||||||
|
| |||||||
(Cost $152,191,272) |
| 138,892,607 | ||||||
| Total Common Stocks (Cost $891,573,711) |
| 854,939,163 | ||||||
| Preferred Stock 2.0% | ||||||||
| Germany | ||||||||
Henkel AG & Co. KGaA (Cost $17,701,038) | 142,305 | 18,161,597 | ||||||
| Securities Lending Collateral 1.2% | ||||||||
DWS Government & Agency Securities Portfolio “DWS Government Cash Institutional Shares”, 1.85% (b) (c) (Cost $10,435,700) | 10,435,700 | 10,435,700 | ||||||
The accompanying notes are an integral part of the financial statements.
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| Shares | Value ($) | |||||||
| Cash Equivalents 0.5% | ||||||||
DWS Central Cash Management Government Fund, 1.96% (b) (Cost $4,489,448) | 4,489,448 | 4,489,448 | ||||||
| % of Net Assets | Value ($) | |||||||
| Total Investment Portfolio (Cost $924,199,897) | 100.8 | 888,025,908 | ||||||
| Other Assets and Liabilities, Net | (0.8 | ) | (7,322,354 | ) | ||||
| ||||||||
| Net Assets | 100.0 | 880,703,554 | ||||||
A summary of the Fund’s transactions with affiliated investments during the year ended August 31, 2018 are as follows:
| Value ($) at 8/31/2017 | Purchases Cost ($) | Sales Pro- ceeds ($) | Net Realized Gain/ (Loss) ($) | Net Change in Unrealized Appreci- ation (Deprecia- tion) ($) | Income ($) | Capital Gain Distribu- tions ($) | Number of Shares at 8/31/2018 | Value ($) at 8/31/2018 | ||||||||||||||||||||||||||
| Securities Lending Collateral 1.2% | ||||||||||||||||||||||||||||||||||
| | DWS Government & Agency Securities Portfolio “DWS Government Cash Institutional Shares”, 1.85% (b) (c) | | ||||||||||||||||||||||||||||||||
| — | 10,435,700 | — | — | — | 286,374 | — | 10,435,700 | 10,435,700 | ||||||||||||||||||||||||||
| Cash Equivalents 0.5% | ||||||||||||||||||||||||||||||||||
| DWS Central Cash Management Government Fund, 1.96% (b) | ||||||||||||||||||||||||||||||||||
| 10,814,225 | 189,757,250 | 196,082,027 | — | — | 86,790 | — | 4,489,448 | 4,489,448 | ||||||||||||||||||||||||||
| 10,814,225 | 200,192,950 | 196,082,027 | — | — | 373,164 | — | 14,925,148 | 14,925,148 | ||||||||||||||||||||||||||
| (a) | All or a portion of these securities were on loan. In addition, “Other Assets and Liabilities, Net” may include pending sales that are also on loan. The value of securities loaned at August 31, 2018 amounted to $9,597,296, which is 1.1% of net assets. |
| (b) | Affiliated fund managed by DWS 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. Represents the net increase (purchase cost) or decrease (sales proceeds) in the amount invested for the year ended August 31, 2018. |
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.
The accompanying notes are an integral part of the financial statements.
| DWS CROCI® International Fund | | | 17 |
Table of Contents
Fair Value Measurements
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
The following is a summary of the inputs used as of August 31, 2018 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 | ||||||||||||
| Common Stocks | ||||||||||||||||
Belgium | $ | 37,548,730 | $ | — | $ | — | $ | 37,548,730 | ||||||||
Finland | 17,397,758 | — | — | 17,397,758 | ||||||||||||
France | 87,743,543 | — | — | 87,743,543 | ||||||||||||
Germany | 118,311,092 | — | — | 118,311,092 | ||||||||||||
Hong Kong | 70,290,111 | — | — | 70,290,111 | ||||||||||||
Japan | 208,252,595 | — | — | 208,252,595 | ||||||||||||
Netherlands | 35,371,243 | — | — | 35,371,243 | ||||||||||||
Singapore | 32,810,254 | — | — | 32,810,254 | ||||||||||||
Switzerland | 108,321,230 | — | — | 108,321,230 | ||||||||||||
United Kingdom | 138,892,607 | — | — | 138,892,607 | ||||||||||||
| Preferred Stock | 18,161,597 | — | — | 18,161,597 | ||||||||||||
| Short-Term Investments (d) | 14,925,148 | — | — | 14,925,148 | ||||||||||||
| Total | $ | 888,025,908 | $ | — | $ | — | $ | 888,025,908 | ||||||||
As a result of the fair valuation model utilized by the Fund, certain international securities transferred from Level 2 to Level 1. During the year ended August 31, 2018, the amount of the transfers between Level 2 and Level 1 was $758,531,063.
Transfers between price levels are recognized at the beginning of the reporting period.
| (d) | See Investment Portfolio for additional detailed categorizations. |
The accompanying notes are an integral part of the financial statements.
| 18 | | | DWS CROCI® International Fund |
Table of Contents
Statement of Assets and Liabilities
| as of August 31, 2018 | ||||
| Assets | ||||
| Investments in non-affiliated securities, at value (cost $909,274,749) — including $9,597,296 of securities loaned | $ | 873,100,760 | ||
| Investment in DWS Government & Agency Securities Portfolio (cost $10,435,700)* | 10,435,700 | |||
| Investment in DWS Central Cash Management Government Fund (cost $4,489,448) | 4,489,448 | |||
| Cash | 238 | |||
| Foreign currency, at value (cost $89,394) | 89,920 | |||
| Receivable for Fund shares sold | 205,154 | |||
| Dividends receivable | 2,196,884 | |||
| Interest receivable | 15,021 | |||
| Foreign taxes recoverable | 3,023,508 | |||
| Other assets | 31,999 | |||
| Total assets | 893,588,632 | |||
| Liabilities | ||||
| Payable upon return of securities loaned | 10,435,700 | |||
| Payable for Fund shares redeemed | 1,120,370 | |||
| Accrued management fee | 428,856 | |||
| Accrued Directors’ fees | 23,157 | |||
| Other accrued expenses and payables | 876,995 | |||
| Total liabilities | 12,885,078 | |||
| Net assets, at value | $ | 880,703,554 | ||
| Net Assets Consist of | ||||
| Undistributed net investment income | 20,157,219 | |||
| Net unrealized appreciation (depreciation) on: | ||||
Investments | (36,173,989 | ) | ||
Foreign currency | (3,893 | ) | ||
| Accumulated net realized gain (loss) | (394,287,018 | ) | ||
| Paid-in capital | 1,291,011,235 | |||
| Net assets, at value | $ | 880,703,554 | ||
| * | Represents collateral on securities loaned. |
The accompanying notes are an integral part of the financial statements.
| DWS CROCI® International Fund | | | 19 |
Table of Contents
| Statement of Assets and Liabilities as of August 31, 2018 (continued) |
| Net Asset Value |
| |||
Class A | ||||
| Net Asset Value and redemption price per share ($100,183,112 ÷ 2,133,408 shares of capital stock outstanding, $.01 par value, 100,000,000 shares authorized) | $ | 46.96 | ||
| Maximum offering price per share (100 ÷ 94.25 of $46.96) | $ | 49.82 | ||
Class T | ||||
| Net Asset Value, offering and redemption price per share ($10,081 ÷ 214.6 shares of capital stock outstanding, $.01 par value, 50,000,000 shares authorized) | $ | 46.98 | ||
| Maximum offering price per share (100 ÷ 97.50 of $46.98) | $ | 48.18 | ||
Class C | ||||
| Net Asset Value, offering and redemption price (subject to contingent deferred sales charge) per share ($43,047,958 ÷ 925,652 shares of capital stock outstanding, $.01 par value, 20,000,000 shares authorized) | $ | 46.51 | ||
Class R6 | ||||
| Net Asset Value, offering and redemption price per share ($5,058,010 ÷ 107,808 shares of capital stock outstanding, $.01 par value, 50,000,000 shares authorized) | $ | 46.92 | ||
Class S | ||||
| Net Asset Value, offering and redemption price per share ($650,838,350 ÷ 13,788,096 shares of capital stock outstanding, $.01 par value, 200,595,597 shares authorized) | $ | 47.20 | ||
Institutional Class | ||||
| Net Asset Value, offering and redemption price per share ($81,566,043 ÷ 1,735,911 shares of capital stock outstanding, $.01 par value, 50,000,000 shares authorized) | $ | 46.99 | ||
The accompanying notes are an integral part of the financial statements.
| 20 | | | DWS CROCI® International Fund |
Table of Contents
| for the year ended August 31, 2018 |
| |||
| Investment Income |
| |||
| Income: |
| |||
| Dividends (net of foreign taxes withheld of $2,441,393) | $ | 33,583,211 | ||
| Income distributions — DWS Central Cash Management Government Fund | 86,790 | |||
| Securities lending income, net of borrower rebates | 286,374 | |||
| Other income | 365,919 | |||
| Total income | 34,322,294 | |||
| Expenses: |
| |||
| Management fee | 5,838,159 | |||
| Administration fee | 1,033,302 | |||
| Services to shareholders | 1,681,692 | |||
| Distribution and service fees | 884,496 | |||
| Custodian fee | 239,170 | |||
| Professional fees | 140,579 | |||
| Reports to shareholders | 105,025 | |||
| Registration fees | 101,993 | |||
| Directors’ fees and expenses | 47,143 | |||
| Other | 88,147 | |||
| Total expenses | 10,159,706 | |||
| Net investment income | 24,162,588 | |||
| Realized and Unrealized Gain (Loss) |
| |||
| Net realized gain (loss) from: |
| |||
| Investments | 65,018,170 | |||
| Forward foreign currency contracts | 8,258,934 | |||
| Foreign currency | (74,358 | ) | ||
| 73,202,746 | ||||
| Change in net unrealized appreciation (depreciation) on: |
| |||
| Investments | (66,199,583 | ) | ||
| Forward foreign currency contracts | (1,748,656 | ) | ||
| Foreign currency | (132,393 | ) | ||
| (68,080,632 | ) | |||
| Net gain (loss) | 5,122,114 | |||
| Net increase (decrease) in net assets resulting from operations | $ | 29,284,702 | ||
The accompanying notes are an integral part of the financial statements.
| DWS CROCI® International Fund | | | 21 |
Table of Contents
Statements of Changes in Net Assets
| Years Ended August 31, | ||||||||
| Increase (Decrease) in Net Assets | 2018 | 2017 | ||||||
| Operations: |
| |||||||
| Net investment income (loss) | $ | 24,162,588 | $ | 24,266,480 | ||||
| Net realized gain (loss) | 73,202,746 | 409,351 | ||||||
| Change in net unrealized appreciation (depreciation) | (68,080,632 | ) | 180,661,802 | |||||
| Net increase (decrease) in net assets resulting from operations | 29,284,702 | 205,337,633 | ||||||
| Distributions to shareholders from: |
| |||||||
| Net investment income: |
| |||||||
Class A | (3,072,495 | ) | (8,173,555 | ) | ||||
Class T | (224 | ) | — | |||||
Class C | (894,789 | ) | (2,060,709 | ) | ||||
Class R6 | (85,316 | ) | (89,477 | ) | ||||
Class S | (19,878,518 | ) | (27,391,383 | ) | ||||
Institutional Class | (2,048,408 | ) | (3,671,870 | ) | ||||
| Total distributions | (25,979,750 | ) | (41,386,994 | ) | ||||
| Fund share transactions: |
| |||||||
| Proceeds from shares sold | 110,611,527 | 238,848,267 | ||||||
| Reinvestment of distributions | 24,175,870 | 37,164,654 | ||||||
| Payments for shares redeemed | (357,660,400 | ) | (784,943,910 | ) | ||||
| Redemption fees | — | 7,856 | ||||||
| Net increase (decrease) in net assets from Fund share transactions | (222,873,003 | ) | (508,923,133 | ) | ||||
| Increase (decrease) in net assets | (219,568,051 | ) | (344,972,494 | ) | ||||
| Net assets at beginning of period | 1,100,271,605 | 1,445,244,099 | ||||||
| Net assets at end of period (including undistributed net investment income of $20,157,219 and $22,041,902, respectively) | $ | 880,703,554 | $ | 1,100,271,605 | ||||
The accompanying notes are an integral part of the financial statements.
| 22 | | | DWS CROCI® International Fund |
Table of Contents
| Years Ended August 31, | ||||||||||||||||||||
| Class A | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
| Selected Per Share Data |
| |||||||||||||||||||
| Net asset value, beginning of period | $ | 47.11 | $ | 40.65 | $ | 44.94 | $ | 52.11 | $ | 45.32 | ||||||||||
| Income (loss) from investment operations: |
| |||||||||||||||||||
Net investment income (loss)a | 1.03 | .72 | .93 | 1.48 | 1.67 | b | ||||||||||||||
Net realized and unrealized gain (loss) | (.09 | )c | 7.18 | (3.83 | ) | (3.78 | ) | 5.99 | ||||||||||||
Total from investment operations | .94 | 7.90 | (2.90 | ) | (2.30 | ) | 7.66 | |||||||||||||
| Less distributions from: |
| |||||||||||||||||||
Net investment income | (1.09 | ) | (1.44 | ) | (1.39 | ) | (4.87 | ) | (.87 | ) | ||||||||||
| Redemption fees | — | .00 | * | .00 | * | .00 | * | .00 | * | |||||||||||
| Net asset value, end of period | $ | 46.96 | $ | 47.11 | $ | 40.65 | $ | 44.94 | $ | 52.11 | ||||||||||
| Total Return (%)d | 1.94 | 19.97 | (6.55 | ) | (4.68 | ) | 16.99 | |||||||||||||
| Ratios to Average Net Assets and Supplemental Data |
| |||||||||||||||||||
| Net assets, end of period ($ millions) | 100 | 139 | 314 | 615 | 105 | |||||||||||||||
| Ratio of expenses (%) | 1.17 | 1.13 | 1.14 | 1.08 | 1.18 | |||||||||||||||
| Ratio of net investment income (loss) (%) | 2.13 | 1.69 | 2.25 | 3.02 | 3.34 | b | ||||||||||||||
| Portfolio turnover rate (%) | 53 | 67 | 87 | 76 | 167 | |||||||||||||||
| a | Based on average shares outstanding during the period. |
| b | Net investment income per share and the ratio of net investment income include non-recurring dividend income amounting to $.45 per share and 0.89% of average daily net assets, for the year ended August 31, 2014. |
| c | Because of the timing of subscriptions and redemptions in relation to fluctuating markets at value, the amount shown may not agree with the change in aggregate gains and losses. |
| d | Total return does not reflect the effect of any sales charges. |
| * | Amount is less than $.005. |
The accompanying notes are an integral part of the financial statements.
| DWS CROCI® International Fund | | | 23 |
Table of Contents
| Year Ended | Period Ended | |||||||||||
| Class T | 8/31/18 | 8/31/17a | ||||||||||
| Selected Per Share Data | ||||||||||||
| Net asset value, beginning of period | $ | 47.07 | $ | 47.63 | ||||||||
| Income (loss) from investment operations: | ||||||||||||
Net investment income (loss)b | 1.10 | .10 | ||||||||||
Net realized and unrealized gain (loss) | (.12 | )c | (.66 | ) | ||||||||
Total from investment operations | .98 | (.56 | ) | |||||||||
| Less distributions from: | ||||||||||||
Net investment income | (1.07 | ) | — | |||||||||
| Net asset value, end of period | $ | 46.98 | $ | 47.07 | ||||||||
| Total Return (%)d | 2.02 | (1.18 | )** | |||||||||
| Ratios to Average Net Assets and Supplemental Data | ||||||||||||
| Net assets, end of period ($ thousands) | 10 | 10 | ||||||||||
| Ratio of expenses (%) | 1.11 | 1.18 | * | |||||||||
| Ratio of net investment income (loss) (%) | 2.28 | .93 | * | |||||||||
| Portfolio turnover rate (%) | 53 | 67 | e | |||||||||
| a | For the period from June 5, 2017 (commencement of operations) to August 31, 2017. |
| b | Based on average shares outstanding during the period. |
| c | Because of the timing of subscriptions and redemptions in relation to fluctuating markets at value, the amount shown may not agree with the change in aggregate gains and losses. |
| d | Total return does not reflect the effect of any sales charges. |
| e | Represents the Funds’s portfolio turnover rate for the year ended August 31, 2017. |
| * | Annualized |
| ** | Not annualized |
The accompanying notes are an integral part of the financial statements.
| 24 | | | DWS CROCI® International Fund |
Table of Contents
| Years Ended August 31, | ||||||||||||||||||||
| Class C | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
| Selected Per Share Data |
| |||||||||||||||||||
| Net asset value, beginning of period | $ | 46.61 | $ | 40.23 | $ | 44.47 | $ | 51.48 | $ | 44.76 | ||||||||||
| Income (loss) from investment operations: |
| |||||||||||||||||||
Net investment income (loss)a | .69 | .48 | .63 | 1.15 | 1.26 | b | ||||||||||||||
Net realized and unrealized gain (loss) | (.10 | )c | 7.01 | (3.82 | ) | (3.76 | ) | 5.91 | ||||||||||||
Total from investment operations | .59 | 7.49 | (3.19 | ) | (2.61 | ) | 7.17 | |||||||||||||
| Less distributions from: |
| |||||||||||||||||||
Net investment income | (.69 | ) | (1.11 | ) | (1.05 | ) | (4.40 | ) | (.45 | ) | ||||||||||
| Redemption fees | — | .00 | * | .00 | * | .00 | * | .00 | * | |||||||||||
| Net asset value, end of period | $ | 46.51 | $ | 46.61 | $ | 40.23 | $ | 44.47 | $ | 51.48 | ||||||||||
| Total Return (%)d | 1.23 | 19.01 | (7.26 | ) | (5.35 | ) | 16.07 | |||||||||||||
| Ratios to Average Net Assets and Supplemental Data |
| |||||||||||||||||||
| Net assets, end of period ($ millions) | 43 | 65 | 95 | 160 | 9 | |||||||||||||||
| Ratio of expenses (%) | 1.88 | 1.92 | 1.89 | 1.85 | 1.97 | |||||||||||||||
| Ratio of net investment income (loss) (%) | 1.43 | 1.14 | 1.55 | 2.37 | 2.53 | b | ||||||||||||||
| Portfolio turnover rate (%) | 53 | 67 | 87 | 76 | 167 | |||||||||||||||
| a | Based on average shares outstanding during the period. |
| b | Net investment income per share and the ratio of net investment income include non-recurring dividend income amounting to $.45 per share and 0.89% of average daily net assets, for the year ended August 31, 2014. |
| c | Because of the timing of subscriptions and redemptions in relation to fluctuating markets at value, the amount shown may not agree with the change in aggregate gains and losses. |
| d | Total return does not reflect the effect of any sales charges. |
| * | Amount is less than $.005. |
The accompanying notes are an integral part of the financial statements.
| DWS CROCI® International Fund | | | 25 |
Table of Contents
| Years Ended August 31, | Period Ended | |||||||||||||||
| Class R6 | 2018 | 2017 | 2016 | 8/31/15a | ||||||||||||
| Selected Per Share Data | ||||||||||||||||
| Net asset value, beginning of period | $ | 47.06 | $ | 40.62 | $ | 44.89 | $ | 51.27 | ||||||||
| Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss)b | 1.41 | 1.01 | 1.15 | .66 | ||||||||||||
Net realized and unrealized gain (loss) | (.27 | )c | 7.03 | (3.89 | ) | (1.94 | ) | |||||||||
Total from investment operations | 1.14 | 8.04 | (2.74 | ) | (1.28 | ) | ||||||||||
| Less distributions from: | ||||||||||||||||
Net investment income | (1.28 | ) | (1.60 | ) | (1.53 | ) | (5.10 | ) | ||||||||
| Redemption fees | — | .00 | *** | .00 | *** | .00 | *** | |||||||||
| Net asset value, end of period | $ | 46.92 | $ | 47.06 | $ | 40.62 | $ | 44.89 | ||||||||
| Total Return (%) | 2.36 | 20.41 | (6.20 | ) | (2.77 | )** | ||||||||||
| Ratios to Average Net Assets and Supplemental Data |
| |||||||||||||||
| Net assets, end of period ($ millions) | 5 | 3 | 2 | 1 | ||||||||||||
| Ratio of expenses (%) | .76 | .75 | .75 | .75 | * | |||||||||||
| Ratio of net investment income (loss) (%) | 2.93 | 2.33 | 2.84 | 1.82 | * | |||||||||||
| Portfolio turnover rate (%) | 53 | 67 | 87 | 76 | d | |||||||||||
| a | For the period from December 1, 2014 (commencement of operations) to August 31, 2015. |
| b | Based on average shares outstanding during the period. |
| c | Because of the timing of subscriptions and redemptions in relation to fluctuating markets at value, the amount shown may not agree with the change in aggregate gains and losses. |
| d | Represents the Fund’s portfolio turnover rate for the year ended August 31, 2015. |
| * | Annualized |
| ** | Not annualized |
| *** | Amount is less than $.005. |
The accompanying notes are an integral part of the financial statements.
| 26 | | | DWS CROCI® International Fund |
Table of Contents
| Years Ended August 31, | ||||||||||||||||||||
| Class S | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
| Selected Per Share Data |
| |||||||||||||||||||
| Net asset value, beginning of period | $ | 47.34 | $ | 40.86 | $ | 45.15 | $ | 52.40 | $ | 45.58 | ||||||||||
| Income (loss) from investment operations: |
| |||||||||||||||||||
Net investment income (loss)a | 1.18 | .99 | 1.03 | 1.51 | 1.84 | b | ||||||||||||||
Net realized and unrealized gain (loss) | (.11 | )c | 7.03 | (3.84 | ) | (3.72 | ) | 6.00 | ||||||||||||
Total from investment operations | 1.07 | 8.02 | (2.81 | ) | (2.21 | ) | 7.84 | |||||||||||||
| Less distributions from: |
| |||||||||||||||||||
Net investment income | (1.21 | ) | (1.54 | ) | (1.48 | ) | (5.04 | ) | (1.02 | ) | ||||||||||
| Redemption fees | — | .00 | * | .00 | * | .00 | * | .00 | * | |||||||||||
| Net asset value, end of period | $ | 47.20 | $ | 47.34 | $ | 40.86 | $ | 45.15 | $ | 52.40 | ||||||||||
| Total Return (%) | 2.20 | 20.21 | (6.32 | ) | (4.48 | ) | 17.32 | |||||||||||||
| Ratios to Average Net Assets and Supplemental Data |
| |||||||||||||||||||
| Net assets, end of period ($ millions) | 651 | 816 | 872 | 1,544 | 686 | |||||||||||||||
| Ratio of expenses (%) | .90 | .90 | .92 | .89 | .90 | |||||||||||||||
| Ratio of net investment income (loss) (%) | 2.42 | 2.28 | 2.51 | 3.04 | 3.64 | b | ||||||||||||||
| Portfolio turnover rate (%) | 53 | 67 | 87 | 76 | 167 | |||||||||||||||
| a | Based on average shares outstanding during the period. |
| b | Net investment income per share and the ratio of net investment income include non-recurring dividend income amounting to $.45 per share and 0.89% of average daily net assets, for the year ended August 31, 2014. |
| c | Because of the timing of subscriptions and redemptions in relation to fluctuating markets at value, the amount shown may not agree with the change in aggregate gains and losses. |
| * | Amount is less than $.005. |
The accompanying notes are an integral part of the financial statements.
| DWS CROCI® International Fund | | | 27 |
Table of Contents
| Years Ended August 31, | ||||||||||||||||||||
| Institutional Class | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
| Selected Per Share Data |
| |||||||||||||||||||
| Net asset value, beginning of period | $ | 47.13 | $ | 40.69 | $ | 44.97 | $ | 52.17 | $ | 45.41 | ||||||||||
| Income (loss) from investment operations: |
| |||||||||||||||||||
Net investment income (loss)a | 1.22 | .83 | 1.07 | 1.84 | 1.61 | b | ||||||||||||||
Net realized and unrealized gain (loss) | (.12 | )c | 7.18 | (3.85 | ) | (3.99 | ) | 6.22 | ||||||||||||
Total from investment operations | 1.10 | 8.01 | (2.78 | ) | (2.15 | ) | 7.83 | |||||||||||||
| Less distributions from: |
| |||||||||||||||||||
Net investment income | (1.24 | ) | (1.57 | ) | (1.50 | ) | (5.05 | ) | (1.07 | ) | ||||||||||
| Redemption fees | — | .00 | * | .00 | * | .00 | * | .00 | * | |||||||||||
| Net asset value, end of period | $ | 46.99 | $ | 47.13 | $ | 40.69 | $ | 44.97 | $ | 52.17 | ||||||||||
| Total Return (%) | 2.27 | 20.29 | (6.27 | ) | (4.37 | ) | 17.38 | |||||||||||||
| Ratios to Average Net Assets and Supplemental Data |
| |||||||||||||||||||
| Net assets, end of period ($ millions) | 82 | 78 | 163 | 281 | 6 | |||||||||||||||
| Ratio of expenses (%) | .85 | .83 | .83 | .82 | .84 | |||||||||||||||
| Ratio of net investment income (loss) (%) | 2.52 | 1.95 | 2.60 | 3.76 | 3.20 | b | ||||||||||||||
| Portfolio turnover rate (%) | 53 | 67 | 87 | 76 | 167 | |||||||||||||||
| a | Based on average shares outstanding during the period. |
| b | Net investment income per share and the ratio of net investment income include non-recurring dividend income amounting to $.45 per share and 0.89% of average daily net assets, for the year ended August 31, 2014. |
| c | Because of the timing of subscriptions and redemptions in relation to fluctuating markets at value, the amount shown may not agree with the change in aggregate gains and losses. |
| * | Amount is less than $.005. |
The accompanying notes are an integral part of the financial statements.
| 28 | | | DWS CROCI® International Fund |
Table of Contents
| Notes to Financial Statements |
A. Organization and Significant Accounting Policies
DWS CROCI® International Fund (formerly Deutsche CROCI® International Fund) (the “Fund”) is a diversified series of Deutsche DWS International Fund, Inc. (formerly Deutsche International Fund, Inc.) (the “Corporation”), 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 Maryland corporation.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are subject to an initial sales charge. Class T shares are subject to an initial sales charge and are only available through certain financial intermediaries. Effective October 1, 2018, Class T shares will be closed to new purchases, except in connection with the reinvestment of dividends or other distributions. Class C shares are not subject to an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Effective on August 10, 2018, Class C shares automatically convert to Class A shares in the same fund after 10 years, provided that the fund or the financial intermediary through which the shareholder purchased the Class C shares has records verifying that the Class C shares have been held for at least 10 years. Class R6 shares are not subject to initial or contingent deferred sales charges and are generally available only to certain retirement plans. Class S shares are not subject to initial or contingent deferred sales charges and are only available to a limited group of investors. Institutional Class shares are not subject to initial or contingent deferred sales charges and are generally available only to qualified institutions.
Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution and service fees, services to shareholders and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which require the use of management estimates. Actual results could differ from those estimates. The Fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of U.S. GAAP. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
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Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
Equity securities are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation. Equity securities are generally categorized as Level 1 securities. 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.
Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies 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.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund’s valuation procedures, factors considered in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security’s disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company’s or issuer’s financial statements; an evaluation of the forces
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that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.
Disclosure about the classification of fair value measurements is included in a table following the Fund’s Investment Portfolio.
Foreign Currency Translations. The books and records of the Fund are maintained in 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. The portion of both realized and unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed but is included with net realized and unrealized gain/appreciation and loss/depreciation on investments.
Securities Lending. Deutsche Bank AG serves as security lending agent to the Fund. The lending agent lends securities of the Fund to certain financial institutions under the terms of its securities lending agreement. During the term of the loans, the Fund 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 securities lending agreement. During the year ended August 31, 2018, the Fund invested the cash collateral into a joint trading account in affiliated money market funds including DWS Government & Agency Securities Portfolio managed by DWS Investment Management Americas, Inc. DWS Investment Management Americas, Inc. receives a management/administration fee (0.14% annualized effective rate as of August 31, 2018) on the cash collateral invested in DWS Government & Agency Securities Portfolio. 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
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rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan at any time, and the borrower, after notice, is required to return borrowed securities within a standard time period. 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 August 31, 2018, the Fund had a security on loan, which was classified as common stock in the Investment Portfolio. The value of the related collateral exceeded the value of the securities loaned at period end. As of period end, the remaining contractual maturity of the collateral agreements were overnight and continuous.
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.
At August 31, 2018, the Fund had net tax basis capital loss carry forwards of approximately $393,509,000 losses, which may be applied against realized net taxable capital gains indefinitely, including short-term losses ($234,036,000) and long-term losses ($159,473,000).
The Fund has reviewed the tax positions for the open tax years as of August 31, 2018 and has determined that no provision for income tax and/or uncertain tax positions 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 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.
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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 passive foreign investment companies, certain securities sold at a loss and expired capital loss carryforwards. 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.
At August 31, 2018, the Fund’s components of distributable earnings (accumulated losses) on a tax basis were as follows:
| Undistributed ordinary income | $ | 20,161,942 | ||
| Capital loss carryforwards | $ | (393,509,000 | ) | |
| Net unrealized appreciation (depreciation) on investments | $ | (36,958,784 | ) |
At August 31, 2018, the aggregate cost of investments for federal income tax purposes was $924,983,084. The net unrealized depreciation for all investments based on tax cost was $36,958,784. This consisted of aggregate gross unrealized appreciation for all investments in which there was an excess of value over tax cost of $47,956,406 and aggregate gross unrealized depreciation for all investments in which there was an excess of tax cost over value of $84,915,190.
In addition, the tax character of distributions paid to shareholders by the Fund is summarized as follows:
| Years Ended August 31, | ||||||||
| 2018 | 2017 | |||||||
| Distributions from ordinary income | $ | 25,979,750 | $ | 41,386,994 | ||||
Redemption Fees. Prior to February 1, 2017, the Fund imposed a redemption fee of 2% of the total redemption amount on Fund shares redeemed or exchanged within 15 days of buying them, either by purchase or exchange (subject to certain exceptions). This fee was assessed and retained by the Fund for the benefit of the remaining shareholders. The redemption fee was accounted for as an addition to paid-in capital.
Expenses. Expenses of the Corporation arising in connection with a specific fund are allocated to that fund. Other Corporation expenses which cannot be directly attributed to a fund are apportioned among the funds in the Corporation based upon the relative net assets or other appropriate measures.
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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. Certain dividends from foreign securities may be recorded subsequent to the ex-dividend date as soon as the Fund is informed of such dividends. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments.
B. Derivative Instruments
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 year ended August 31, 2018, from time to time the Fund entered into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on certain of its foreign currency denominated assets.
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.
There were no open forward currency contracts as of August 31, 2018. For the year ended August 31, 2018, the investment in forward currency contracts U.S. dollars purchased had a total contract value generally indicative of a range from $0 to approximately $267,023,000, and the investment in forward currency contracts U.S. dollars sold had a total contract value generally indicative of a range from $0 to approximately $3,726,000.
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Additionally, the amount of realized and unrealized gains and losses on derivative instruments recognized in Fund earnings during the year ended August 31, 2018 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:
| Realized Gain (Loss) | Forward Contracts | |||
| Foreign Exchange Contracts (a) | $ | 8,258,934 | ||
The above derivative is located in the following Statement of Operations account:
| (a) | Net realized gain (loss) from forward foreign currency contracts |
| Change in Net Unrealized Appreciation (Depreciation) | Forward Contracts | |||
| Foreign Exchange Contracts (b) | $ | (1,748,656 | ) | |
The above derivative is located in the following Statement of Operations account:
| (b) | Change in net unrealized appreciation (depreciation) on forward foreign currency contracts |
C. Purchases and Sales of Securities
During the year ended August 31, 2018, purchases and sales of investment securities (excluding short-term investments) aggregated $541,554,347 and $753,610,138, respectively.
D. Related Parties
Management Agreement. Under the Investment Management Agreement with DWS Investment Management Americas, Inc. (formerly Deutsche Investment Management Americas Inc.) (“DIMA” or the “Advisor”), an indirect, wholly owned subsidiary of DWS Group GmbH & Co. KGaA (“DWS Group”), 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.
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 $2.5 billion of the Fund’s average daily net assets | .565% | |||
| Next $2.5 billion of such net assets | .545% | |||
| Next $5 billion of such net assets | .525% | |||
| Next $5 billion of such net assets | .515% | |||
| Over $15 billion of such net assets | .465% |
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Accordingly, for the year ended August 31, 2018, the fee pursuant to the Investment Management Agreement was equivalent to an annual rate (exclusive of any applicable waivers/reimbursements) of 0.565% of the Fund’s average daily net assets.
For the period from September 1, 2017 through September 30, 2017, the Advisor had contractually agreed to waive its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of certain classes as follows:
| Class A | 1.40 | % | ||
| Class T | 1.40 | % | ||
| Class C | 2.15 | % | ||
| Class R6 | 1.15 | % | ||
| Class S | 1.15 | % | ||
| Institutional Class | 1.15 | % |
For the period from October 1, 2017 through September 30, 2018, the Advisor had contractually agreed to waive its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of certain classes as follows:
| Class A | 1.29 | % | ||
| Class T | 1.29 | % | ||
| Class C | 2.04 | % | ||
| Class R6 | 1.04 | % | ||
| Class S | 1.04 | % | ||
| Institutional Class | 1.04 | % |
Effective October 1, 2018 through September 30, 2019, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the total annual operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of certain classes as follows:
| Class A | 1.22 | % | ||
| Class T | 1.22 | % | ||
| Class C | 1.97 | % | ||
| Class R6 | 0.97 | % | ||
| Class S | 0.97 | % | ||
| Institutional Class | 0.97 | % |
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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 the Advisor 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 year ended August 31, 2018, the Administration Fee was $1,033,302, of which $75,904 is unpaid.
Service Provider Fees. DWS Service Company (“DSC”), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DSC and DST Systems, Inc. (“DST”), DSC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DSC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended August 31, 2018, the amounts charged to the Fund by DSC were as follows:
| Services to Shareholders | Total Aggregated | Unpaid at August 31, 2018 | ||||||
| Class A | $ | 75,402 | $ | 19,888 | ||||
| Class T | 19 | 5 | ||||||
| Class C | 8,502 | 2,330 | ||||||
| Class R6 | 241 | 48 | ||||||
| Class S | 407,515 | 106,719 | ||||||
| Institutional Class | 2,555 | 614 | ||||||
| $ | 494,234 | $ | 129,604 | |||||
In addition, for the year ended August 31, 2018, the amounts charged to the Fund for recordkeeping and other administrative services provided by unaffiliated third parties, were as follows:
| Sub-Recordkeeping | Total Aggregated | |||
| Class A | $ | 135,967 | ||
| Class C | 60,220 | |||
| Class S | 685,165 | |||
| Institutional Class | 74,691 | |||
| $ | 956,043 | |||
Distribution and Service Fees. Under the Fund’s Class C 12b-1 Plan, DWS Distributors, Inc. (“DDI”), an affiliate of the Advisor, receives a fee (“Distribution Fee”) of 0.75% of average daily net assets of Class C shares. In accordance with the Fund’s Underwriting and Distribution Services Agreement, DDI enters into related selling group agreements
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with various firms at various rates for sales of Class C shares. For the year ended August 31, 2018, the Distribution Fee was as follows:
| Distribution Fee | Total Aggregated | Unpaid at August 31, 2018 | ||||||
| Class C | $ | 434,747 | $ | 28,700 | ||||
In addition, DDI provides information and administrative services for a fee (“Service Fee”) to Class A, T and C shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. DDI in turn has various agreements with financial services firms that provide these services and pays these fees based upon the assets of shareholder accounts the firms service. For the year ended August 31, 2018, the Service Fee was as follows:
| Service Fee | Total Aggregated | Unpaid at August 31, 2018 | Annual Rate | |||||||||
| Class A | $ | 305,157 | $ | 43,740 | .24 | % | ||||||
| Class T | 17 | 8 | .17 | % | ||||||||
| Class C | 144,575 | 20,418 | .25 | % | ||||||||
| $ | 449,749 | $ | 64,166 | |||||||||
Underwriting Agreement and Contingent Deferred Sales Charge. DDI is the principal underwriter for the Fund. Underwriting commissions paid in connection with the distribution of Class A shares for the year ended August 31, 2018 aggregated $7,704.
In addition, DDI receives any contingent deferred sales charge (“CDSC”) from Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is 1% of the value of the shares redeemed for Class C. For the year ended August 31, 2018, the CDSC for Class C shares aggregated $4,308. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares. For the year ended August 31,2018, DDI received $630 for Class A shares.
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing certain pre-press and regulatory filing services to the Fund. For the year ended August 31, 2018, the amount charged to the Fund by DIMA included in the Statement of Operations under “Reports to shareholders” aggregated $20,815, of which $9,907 is unpaid.
Directors’ Fees and Expenses. The Fund paid retainer fees to each Director 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 DWS Central Cash Management Government Fund and DWS ESG Liquidity Fund, affiliated money market funds which are
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managed by the Advisor. Each affiliated money market fund is managed in accordance with Rule 2a-7 under the 1940 Act, which governs the quality, maturity, diversity and liquidity of instruments in which a money market fund may invest. DWS Central Cash Management Government Fund seeks to maintain a stable net asset value, and DWS ESG Liquidity 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. DWS Central Cash Management Government Fund does not pay the Advisor an investment management fee. To the extent that DWS ESG Liquidity 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 ESG Liquidity Fund.
Security Lending Fees. Deutsche Bank AG serves as lending agent for the Fund. For the year ended August 31, 2018, the Fund incurred lending agent fees to Deutsche Bank AG in the amount of $21,555.
E. Line of Credit
The Fund and other affiliated funds (the “Participants”) share in a $400 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if the one-month LIBOR exceeds the Federal Funds Rate, the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at August 31, 2018.
F. Share Transactions
The following table summarizes share and dollar activity in the Fund:
| Year Ended August 31, 2018 | Year Ended August 31, 2017 | |||||||||||||||||||||||||||||||
| Shares | Dollars | Shares | Dollars | |||||||||||||||||||||||||||||
| Shares sold |
| |||||||||||||||||||||||||||||||
| Class A | 223,505 | $ | 10,768,580 | 396,577 | $ | 17,347,246 | ||||||||||||||||||||||||||
| Class T | — | — | 209.95 | * | 10,000 | * | ||||||||||||||||||||||||||
| Class C | 85,601 | 4,143,266 | 134,783 | 5,910,153 | ||||||||||||||||||||||||||||
| Class R6 | 66,799 | 3,304,623 | 16,777 | 751,703 | ||||||||||||||||||||||||||||
| Class S | 1,039,140 | 50,822,181 | 3,986,588 | 174,431,409 | ||||||||||||||||||||||||||||
| Institutional Class | 864,666 | 41,572,877 | 903,574 | 40,397,756 | ||||||||||||||||||||||||||||
| $ | 110,611,527 | $ | �� 238,848,267 | |||||||||||||||||||||||||||||
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| Year Ended August 31, 2018 | Year Ended August 31, 2017 | |||||||||||||||||||||||||||||||
| Shares | Dollars | Shares | Dollars | |||||||||||||||||||||||||||||
| Shares issued to shareholders in reinvestment of distributions |
| |||||||||||||||||||||||||||||||
| Class A | 60,593 | $ | 2,923,646 | 193,972 | $ | 7,927,652 | ||||||||||||||||||||||||||
| Class T | 4.65 | 224 | — | — | ||||||||||||||||||||||||||||
| Class C | 17,243 | 827,992 | 45,682 | 1,857,899 | ||||||||||||||||||||||||||||
| Class R6 | 1,774 | 85,316 | 2,197 | 89,477 | ||||||||||||||||||||||||||||
| Class S | 377,914 | 18,294,804 | 594,845 | 24,394,670 | ||||||||||||||||||||||||||||
| Institutional Class | 42,422 | 2,043,888 | 70,920 | 2,894,956 | ||||||||||||||||||||||||||||
| $ | 24,175,870 | $ | 37,164,654 | |||||||||||||||||||||||||||||
| Shares redeemed |
| |||||||||||||||||||||||||||||||
| Class A | (1,093,799 | ) | $ | (52,811,980 | ) | (5,368,178 | ) | $ | (227,009,629 | ) | ||||||||||||||||||||||
| Class C | (561,370 | ) | (26,803,182 | ) | (1,148,750 | ) | (48,290,562 | ) | ||||||||||||||||||||||||
| Class R6 | (18,162 | ) | (870,513 | ) | (17,086 | ) | (719,915 | ) | ||||||||||||||||||||||||
| Class S | (4,875,747 | ) | (237,277,264 | ) | (8,666,054 | ) | (369,754,541 | ) | ||||||||||||||||||||||||
| Institutional Class | (825,675 | ) | (39,897,461 | ) | (3,324,389 | ) | (139,169,263 | ) | ||||||||||||||||||||||||
| $ | (357,660,400 | ) | $ | (784,943,910 | ) | |||||||||||||||||||||||||||
| Redemption fees | $ | — | $ | 7,856 | ||||||||||||||||||||||||||||
| Net increase (decrease) |
| |||||||||||||||||||||||||||||||
| Class A | (809,701 | ) | $ | (39,119,754 | ) | (4,777,629 | ) | $ | (201,734,404 | ) | ||||||||||||||||||||||
| Class T | 4.65 | 224 | 209.95 | * | 10,000 | * | ||||||||||||||||||||||||||
| Class C | (458,526 | ) | (21,831,924 | ) | (968,285 | ) | (40,522,387 | ) | ||||||||||||||||||||||||
| Class R6 | 50,411 | 2,519,426 | 1,888 | 121,265 | ||||||||||||||||||||||||||||
| Class S | (3,458,693 | ) | (168,160,279 | ) | (4,084,621 | ) | (170,921,323 | ) | ||||||||||||||||||||||||
| Institutional Class | 81,413 | 3,719,304 | (2,349,895 | ) | (95,876,284 | ) | ||||||||||||||||||||||||||
| $ | (222,873,003 | ) | $ | (508,923,133 | ) | |||||||||||||||||||||||||||
| * | For the period from June 5, 2017 (commencement of operations of Class T) to August 31, 2017. |
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Deutsche DWS International Fund, Inc. and Shareholders of DWS CROCI International Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS CROCI International Fund (one of the funds constituting Deutsche DWS International Fund, Inc., referred to hereafter as the “Fund”) as of August 31, 2018, the related statement of operations for the year ended August 31, 2018, the statements of changes in net assets for each of the two years in the period ended August 31, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of August 31, 2018, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended August 31, 2018 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of August 31, 2018 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 25, 2018
We have served as the auditor of one or more investment companies in the DWS family of funds since 1930.
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Information About Your Fund’s Expenses
As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include sales charges (loads) 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 (March 1, 2018 to August 31, 2018).
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. Subject to certain exceptions, an account maintenance fee of $20.00 assessed once per calendar year for Classes A, C and S shares may apply for accounts with balances less than $10,000. This fee is not included in these tables. If it was, the estimate of expenses paid for Classes A, C and S shares during the period would be higher, and account value during the period would be lower, by this amount.
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| Expenses and Value of a $1,000 Investment for the six months ended August 31, 2018 (Unaudited) | ||||||||||||||||||||||||
| Actual Fund Return | Class A | Class T | Class C | Class R6 | Class S | Institutional Class | ||||||||||||||||||
| Beginning Account Value 3/1/18 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | ||||||||||||
| Ending Account Value 8/31/18 | $ | 976.70 | $ | 977.30 | $ | 973.40 | $ | 978.70 | $ | 977.80 | $ | 978.10 | ||||||||||||
| Expenses Paid per $1,000* | $ | 5.83 | $ | 5.33 | $ | 9.20 | $ | 3.79 | $ | 4.49 | $ | 4.24 | ||||||||||||
| Hypothetical 5% Fund Return | Class A | Class T | Class C | Class R6 | Class S | Institutional Class | ||||||||||||||||||
| Beginning Account Value 3/1/18 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | $ | 1,000.00 | ||||||||||||
| Ending Account Value 8/31/18 | $ | 1,019.31 | $ | 1,019.81 | $ | 1,015.88 | $ | 1,021.37 | $ | 1,020.67 | $ | 1,020.92 | ||||||||||||
| Expenses Paid per $1,000* | $ | 5.96 | $ | 5.45 | $ | 9.40 | $ | 3.87 | $ | 4.58 | $ | 4.33 | ||||||||||||
| * | 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 184 (the number of days in the most recent six-month period), then divided by 365. |
| Annualized Expense Ratios | Class A | Class T | Class C | Class R6 | Class S | Institutional Class | ||||||||||||||||||
| DWS CROCI® International Fund | 1.17 | % | 1.07 | % | 1.85 | % | .76 | % | .90 | % | .85 | % | ||||||||||||
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.
| Tax Information | (Unaudited) |
The Fund paid foreign taxes of $1,781,627 and earned $21,965,270 of foreign source income during the year ended August 31, 2018. Pursuant to Section 853 of the Internal Revenue Code, the Fund designates $0.10 per share as foreign taxes paid and $1.18 per share as income earned from foreign sources for the year ended August 31, 2018.
For federal income tax purposes, the Fund designates $39,600,000, or the maximum amount allowable under tax law, as qualified dividend income.
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call (800) 728-3337.
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Advisory Agreement Board Considerations and Fee Evaluation
The Board of Directors (hereinafter referred to as the “Board” or “Directors”) approved the renewal of Deutsche CROCI® International Fund’s (now known as DWS CROCI® International Fund) (the “Fund”) investment management agreement (the “Agreement”) with Deutsche Investment Management Americas Inc. (now known as DWS Investment Management Americas, Inc.) (“DIMA”) in September 2017.
In terms of the process that the Board followed prior to approving the Agreement, shareholders should know that:
| — | During the entire process, all of the Fund’s Directors were independent of DIMA and its affiliates (the “Independent Directors”). |
| — | The Board met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board’s Contract Committee reviewed extensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund’s performance, fees and expenses, and profitability from a fee consultant retained by the Fund’s Independent Directors (the “Fee Consultant”). Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee’s findings and recommendations. |
| — | The Board also received extensive information throughout the year regarding performance of the Fund. |
| — | The Independent Directors regularly met privately with counsel to discuss contract review and other matters. In addition, the Independent Directors were advised by the Fee Consultant in the course of their review of the Fund’s contractual arrangements and considered a comprehensive report prepared by the Fee Consultant in connection with their deliberations. |
| — | In connection with reviewing the Agreement, the Board also reviewed the terms of the Fund’s Rule 12b-1 plan, distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements. |
In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term
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relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund’s shareholders. DIMA is part of Deutsche Bank AG’s (“Deutsche Bank”) Asset Management (“Deutsche AM”) division. Deutsche AM is a global asset management business that offers a wide range of investing expertise and resources, including research capabilities in many countries throughout the world.
As part of the contract review process, the Board carefully considered the fees and expenses of each Deutsche fund overseen by the Board in light of the fund’s performance. In many cases, this led to the negotiation and implementation of expense caps. As part of these negotiations, the Board indicated that it would consider relaxing these caps in future years following sustained improvements in performance, among other considerations.
While shareholders may focus primarily on fund performance and fees, the Fund’s Board considers these and many other factors, including the quality and integrity of DIMA’s personnel and administrative support services provided by DIMA, such as back-office operations, fund valuations, and compliance policies and procedures.
Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel and the resources made available to such personnel. The Board reviewed the Fund’s performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market index(es) and a peer universe compiled using information supplied by Morningstar Direct (“Morningstar”), an independent fund data service. The Board also noted that it has put into place a process of identifying “Funds in Review” (e.g., funds performing poorly relative to a peer universe), and receives additional reporting from DIMA regarding such funds and, where appropriate, DIMA’s plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that, for the one-, three- and five-year periods ended December 31, 2016, the Fund’s performance (Class A shares) was in the 2nd quartile of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has
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outperformed its benchmark in the three- and five-year periods and has underperformed its benchmark in the one-year period ended December 31, 2016.
Fees and Expenses. The Board considered the Fund’s investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Broadridge Financial Solutions, Inc. (“Broadridge”) and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund’s administrative services agreement, were lower than the median (1st quartile) of the applicable Broadridge peer group (based on Broadridge data provided as of December 31, 2016). The Board noted that the Fund’s Class A shares total (net) operating expenses (excluding 12b-1 fees) were expected to be higher than the median (3rd quartile) of the applicable Broadridge expense universe (based on Broadridge data provided as of December 31, 2016, and analyzing Broadridge expense universe Class A (net) expenses less any applicable 12b-1 fees) (“Broadridge Universe Expenses”). The Board also reviewed data comparing other share classes’ total (net) operating expenses to the applicable Broadridge Universe Expenses. The Board noted that the expense limitations agreed to by DIMA were expected to help the Fund’s total (net) operating expenses remain competitive. The Board considered the Fund’s management fee rate as compared to fees charged by DIMA to comparable Deutsche U.S. registered funds (“Deutsche Funds”) and considered differences between the Fund and the comparable Deutsche Funds. The information requested by the Board as part of its review of fees and expenses also included information about institutional accounts (including any sub-advised funds and accounts) and funds offered primarily to European investors (“Deutsche Europe funds”) managed by Deutsche AM. The Board noted that DIMA indicated that Deutsche AM manages Deutsche Europe funds comparable to the Fund, but does not manage any comparable institutional accounts. The Board took note of the differences in services provided to Deutsche Funds as compared to Deutsche Europe funds and that such differences made comparison difficult.
On the basis of the information provided, the Board concluded that management fees were reasonable and appropriate in light of the nature, quality and extent of services provided by DIMA.
Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs to DIMA, and pre-tax profits realized by DIMA, from
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advising the Deutsche Funds, as well as estimates of the pre-tax profits attributable to managing the Fund in particular. The Board also received information regarding the estimated enterprise-wide profitability of DIMA and its affiliates with respect to all fund services in totality and by fund. The Board and the Fee Consultant reviewed DIMA’s methodology in allocating its costs to the management of the Fund. Based on the information provided, the Board concluded that the pre-tax profits realized by DIMA in connection with the management of the Fund were not unreasonable. The Board also reviewed certain publicly available information regarding the profitability of certain similar investment management firms. The Board noted that, while information regarding the profitability of such firms is limited (and in some cases is not necessarily prepared on a comparable basis), DIMA and its affiliates’ overall profitability with respect to the Deutsche Funds (after taking into account distribution and other services provided to the funds by DIMA and its affiliates) was lower than the overall profitability levels of most comparable firms for which such data was available.
Economies of Scale. The Board considered whether there are economies of scale with respect to the management of the Fund and whether the Fund benefits from any economies of scale. The Board noted that the Fund’s investment management fee schedule includes fee breakpoints. The Board concluded that the Fund’s fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.
Other Benefits to DIMA and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DIMA and its affiliates, including any fees received by DIMA for administrative services provided to the Fund, any fees received by an affiliate of DIMA for transfer agency services provided to the Fund and any fees received by an affiliate of DIMA for distribution services. The Board noted that DIMA pays a licensing fee to an affiliate related to the Fund’s use of the CROCI® strategy. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities. In addition, the Board considered the incidental public relations benefits to DIMA related to Deutsche Funds advertising and cross-selling opportunities among DIMA products and services. The Board considered these benefits in reaching its conclusion that the Fund’s management fees were reasonable.
Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience, seniority and time commitment of the individuals serving as DIMA’s and
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the Fund’s chief compliance officers; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.
Based on all of the information considered and the conclusions reached, the Board unanimously determined that the continuation of the Agreement is in the best interests of the Fund. In making this determination, the Board did not give particular weight to any single factor identified above. The Board considered these factors over the course of numerous meetings, certain of which were in executive session with only the Independent Directors and counsel present. It is possible that individual Independent Directors may have weighed these factors differently in reaching their individual decisions to approve the continuation of the Agreement.
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The following table presents certain information regarding the Board Members and Officers of the Fund. Each Board Member’s year of birth is set forth in parentheses after his or her name. Unless otherwise noted, (i) each Board Member has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity; and (ii) the address of each Independent Board Member is c/o Keith R. Fox, DWS Funds Board Chair, c/o Thomas R. Hiller, Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600. Except as otherwise noted below, the term of office for each Board Member is until the election and qualification of a successor, or until such Board Member sooner dies, resigns, is removed or as otherwise provided in the governing documents of the Fund. Because the Fund does not hold an annual meeting of shareholders, each Board Member will hold office for an indeterminate period. The Board Members may also serve in similar capacities with other funds in the fund complex.
| Independent Board Members | ||||||||
| Name, Year of Birth, Position with the Fund and Length of Time Served1 | Business Experience and Directorships During the Past Five Years | Number of Funds in DWS Fund Complex Overseen | Other Directorships Held by Board Member | |||||
Keith R. Fox, CFA (1954)
Chairperson since 2017, and Board Member since 1996 | Managing General Partner, Exeter Capital Partners (a series of private investment funds) (since 1986). Directorships: Progressive International Corporation (kitchen goods importer and distributor); The Kennel Shop (retailer); former Chairman, National Association of Small Business Investment Companies; former Directorships: BoxTop Media Inc. (advertising); Sun Capital Advisers Trust (mutual funds) (2011–2012) | 86 | — | |||||
John W. Ballantine (1946)
Board Member since 1999 | Retired; formerly, Executive Vice President and Chief Risk Management Officer, First Chicago NBD Corporation/The First National Bank of Chicago (1996–1998); Executive Vice President and Head of International Banking (1995–1996); former Directorships: Director and former Chairman of the Board, Healthways, Inc.2 (population well-being and wellness services) (2003–2014); Stockwell Capital Investments PLC (private equity); Enron Corporation; FNB Corporation; Tokheim Corporation; First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International. Not-for-Profit Director, Trustee: Palm Beach Civic Association; Public Radio International; Window to the World Communications (public media); Harris Theater for Music and Dance (Chicago) | 86 | Portland General Electric2 (utility company) (2003– present) | |||||
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| Name, Year of Birth, Position with the Fund and Length of Time Served1 | Business Experience and Directorships During the Past Five Years | Number of Funds in DWS Fund Complex Overseen | Other Directorships Held by Board Member | |||||
Henry P. Becton, Jr. (1943)
Board Member since 1990 | Vice Chair and former President, WGBH Educational Foundation. Directorships: Public Radio International; Public Radio Exchange (PRX); The Pew Charitable Trusts (charitable organization); Massachusetts Humane Society; American Documentary, Inc. (public media); Overseer of the New England Conservatory; former Directorships: Becton Dickinson and Company2 (medical technology company); Belo Corporation2 (media company); The PBS Foundation; Association of Public Television Stations; Boston Museum of Science; American Public Television; Concord Academy; New England Aquarium; Mass. Corporation for Educational Telecommunications; Committee for Economic Development; Public Broadcasting Service; Connecticut College; North Bennett Street School (Boston) | 86 | — | |||||
Dawn-Marie Driscoll (1946)
Board Member since 1987 | Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly: President, Driscoll Associates (consulting firm); Partner, Palmer & Dodge (law firm) (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene’s (retail) (1978–1988). Directorships: Advisory Board, Center for Business Ethics, Bentley University; Trustee and former Chairman of the Board, Southwest Florida Community Foundation (charitable organization); former Directorships: ICI Mutual Insurance Company (2007–2015); Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees) | 86 | — | |||||
Paul K. Freeman (1950)
Board Member since 1993 | Consultant, World Bank/Inter-American Development Bank; Independent Directors Council (former chair); Investment Company Institute (executive committee); Adjunct Professor, University of Denver Law School (2017–present); formerly: Chairman of Education Committee of Independent Directors Council; Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Knoebel Institute for Healthy Aging, University of Denver (2017–present); former Directorships: Prisma Energy International; Denver Zoo Foundation (2012–2018) | 86 | — | |||||
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| Name, Year of Birth, Position with the Fund and Length of Time Served1 | Business Experience and Directorships During the Past Five Years | Number of Funds in DWS Fund Complex Overseen | Other Directorships Held by Board Member | |||||
Richard J. Herring (1946)
Board Member since 1990 | Jacob Safra Professor of International Banking and Professor, Finance Department, The Wharton School, University of Pennsylvania (since July 1972); Co-Director, Wharton Financial Institutions Center; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006) | 86 | Director, Aberdeen Singapore and Japan Funds (since 2007); Independent Director of Barclays Bank Delaware (since September 2010) | |||||
William McClayton (1944)
Board Member since 2004 | Private equity investor (since October 2009); previously, Managing Director, Diamond Management & Technology Consultants, Inc. (global consulting firm) (2001–2009); Directorship: Board of Managers, YMCA of Metropolitan Chicago; formerly: Senior Partner, Arthur Andersen LLP (accounting) (1966–2001); Trustee, Ravinia Festival | 86 | — | |||||
Rebecca W. Rimel (1951)
Board Member since 1995 | President, Chief Executive Officer and Director, The Pew Charitable Trusts (charitable organization) (1994–present); formerly: Executive Vice President, The Glenmede Trust Company (investment trust and wealth management) (1983–2004); Board Member, Investor Education (charitable organization) (2004–2005); Trustee, Executive Committee, Philadelphia Chamber of Commerce (2001–2007); Director, Viasys Health Care2 (January 2007–June 2007); Trustee, Thomas Jefferson Foundation (charitable organization) (1994–2012) | 86 | Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, BioTelemetry Inc.2 (health care) (2009– present) | |||||
William N. Searcy, Jr. (1946)
Board Member since 1993 | Private investor since October 2003; formerly: Pension & Savings Trust Officer, Sprint Corporation2 (telecommunications) (November 1989–September 2003); Trustee, Sun Capital Advisers Trust (mutual funds) (1998–2012) | 86 | — | |||||
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| Name, Year of Birth, Position with the Fund and Length of Time Served1 | Business Experience and Directorships During the Past Five Years | Number of Funds in DWS Fund Complex Overseen | Other Directorships Held by Board Member | |||||
Jean Gleason Stromberg (1943)
Board Member since 1997 | Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Norton Rose Fulbright, L.L.P. (law firm) (1978–1996); former Directorships: The William and Flora Hewlett Foundation (charitable organization) (2000–2015); Service Source, Inc. (nonprofit), Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996) | 86 | — | |||||
| Officers4 | ||
Name, Year of Birth, Position with the Fund and Length of Time Served5 | Business Experience and Directorships During the Past Five Years | |
Hepsen Uzcan6,9 (1974)
President and Chief Executive Officer, 2017–present
Assistant Secretary, 2013–present | Managing Director,3 DWS; Secretary, DWS USA Corporation (since March 2018); Assistant Secretary, DWS Distributors, Inc. (since June 25, 2018); Director and Vice President, DWS Service Company (since June 25, 2018); Assistant Secretary, DWS Investment Management Americas, Inc. (since June 25, 2018); and Director and President, DB Investment Managers, Inc. (since June 25, 2018); for the Deutsche funds (2016–2017) | |
John Millette8 (1962)
Vice President and Secretary, 1999–present | Director,3 DWS; Chief Legal Officer, DWS Investment Management Americas, Inc. (2015–present); and Director and Vice President, DWS Trust Company (2016–present); formerly: Secretary, Deutsche Investment Management Americas Inc. (2015–2017) | |
Diane Kenneally8,10 (1966)
Treasurer and Chief Financial Officer since 2018 | Director,3 DWS; formerly: Assistant Treasurer for the DWS funds (2007–2018) | |
Caroline Pearson8 (1962)
Chief Legal Officer, 2010–present | Managing Director,3 DWS; formerly: Secretary, Deutsche AM Distributors, Inc. (2002–2017); and Secretary, Deutsche AM Service Company (2010–2017) | |
Scott D. Hogan8 (1970)
Chief Compliance Officer, 2016–present | Director,3 DWS | |
Wayne Salit7 (1967)
Anti-Money Laundering Compliance Officer, 2014–present | Director,3 Deutsche Bank; and AML Officer, DWS Trust Company; formerly: Managing Director, AML Compliance Officer at BNY Mellon (2011–2014); and Director, AML Compliance Officer at Deutsche Bank (2004–2011) | |
Sheila Cadogan8 (1966)
Assistant Treasurer, 2017–present | Director,3 DWS; Director and Vice President, DWS Trust Company (since 2018) |
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Name, Year of Birth, Position with the Fund and Length of Time Served5 | Business Experience and Directorships During the Past Five Years | |
Paul Antosca8 (1957)
Assistant Treasurer, 2007–present | Director,3 DWS |
| 1 | The length of time served represents the year in which the Board Member joined the board of one or more DWS funds currently overseen by the Board. |
| 2 | A publicly held company with securities registered pursuant to Section 12 of the Securities Exchange Act of 1934. |
| 3 | Executive title, not a board directorship. |
| 4 | As a result of their respective positions held with the Advisor or its affiliates, these individuals are considered “interested persons” of the Advisor within the meaning of the 1940 Act. Interested persons receive no compensation from the Fund. |
| 5 | The length of time served represents the year in which the officer was first elected in such capacity for one or more DWS funds. |
| 6 | Address: 345 Park Avenue, New York, NY 10154. |
| 7 | Address: 60 Wall Street, New York, NY 10005. |
| 8 | Address: One International Place, Boston, MA 02110. |
| 9 | Appointed President and Chief Executive Officer effective December 1, 2017. |
| 10 | Appointed Treasurer and Chief Financial Officer effective July 2, 2018. |
The Fund’s Statement of Additional Information (“SAI”) includes additional information about the Board Members. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: (800) 728-3337.
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| For More Information | The automated telephone system allows you to access personalized account information and obtain information on other DWS funds using either your voice or your telephone keypad. Certain account types within Classes A, T, C and S also have the ability to purchase, exchange or redeem shares using this system.
For more information, contact your financial advisor. You may also access our automated telephone system or speak with a Shareholder Service representative by calling:
(800) 728-3337 | |
| Web Site | dws.com
View your account transactions and balances, trade shares, monitor your asset allocation, subscribe to fund and account updates by e-mail, and change your address, 24 hours a day.
Obtain prospectuses and applications, news about DWS funds, insight from DWS economists and investment specialists and access to DWS fund account information. | |
| Written Correspondence | DWS PO Box 219151 Kansas City, MO 64121-9151 | |
| Proxy Voting | The Fund’s policies and procedures for voting proxies for portfolio securities and information about how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 are available on our Web site — dws.com/en-us/resources/proxy-voting — or on the SEC’s Web site — sec.gov. To obtain a written copy of the Fund’s policies and procedures without charge, upon request, call us toll free at (800) 728-3337. | |
| Portfolio Holdings | Following the Fund’s fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. This form will be available on the SEC’s Web site at sec.gov, and it also may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the SEC’s Public Reference Room may be obtained by calling (800) SEC-0330. The Fund’s portfolio holdings are also posted on dws.com from time to time. Please see the Fund’s current prospectus for more information. | |
| Principal Underwriter | If you have questions, comments or complaints, contact:
DWS Distributors, Inc.
222 South Riverside Plaza Chicago, IL 60606-5808 (800) 621-1148 |
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| Investment Management | DWS Investment Management Americas, Inc. (“DIMA” or the “Advisor”), which is part of the DWS Group GmbH & Co. KGaA (“DWS Group”), is the investment advisor for the Fund. DIMA and its predecessors have more than 90 years of experience managing mutual funds and DIMA provides a full range of investment advisory services to both institutional and retail clients. DIMA is an indirect, wholly owned subsidiary of DWS Group.
DWS Group is a global organization that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts and an office network that reaches the world’s major investment centers. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles. | |||||||||
| Class A | Class T | Class C | Class S | Institutional Class | ||||||
| Nasdaq Symbol | SUIAX | SUITX | SUICX | SCINX | SUIIX | |||||
| CUSIP Number | 25156G 673 | 25156G 434 | 25156G 699 | 25156G 715 | 25156G 731 | |||||
| Fund Number | 468 | 1768 | 768 | 2068 | 1468 | |||||
| For shareholders of Class R6 | ||||||||||
| Automated Information Line | DWS/Ascensus Plan Access (800) 728-3337 24-hour access to your retirement plan account. | |||||||||
| Web Site | dws.com
Obtain prospectuses and applications, news about DWS funds, insight from DWS economists and investment specialists and access to DWS fund account information.
Log in/register to manage retirement account assets at https://www.mykplan.com/participantsecure_net/login.aspx. | |||||||||
| For More Information | (800) 728-3337 To speak with a service representative. | |||||||||
| Written Correspondence | DWS Service Company
222 South Riverside Plaza Chicago, IL 60606-5806 | |||||||||
| Class R6 | ||||||||||
| Nasdaq Symbol | SUIRX |
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| CUSIP Number | 25156G 582 |
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| Fund Number | 1668 |
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Table of Contents
Notes
Table of Contents
Notes
Table of Contents
Notes
Table of Contents
DCIF-2
(R-023991-8 10/18)
| ITEM 2. | CODE OF ETHICS |
As of the end of the period covered by this report, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR that applies to its Principal Executive Officer and Principal Financial Officer.
There have been no amendments to, or waivers from, a provision of the code of ethics during the period covered by this report that would require disclosure under Item 2.
A copy of the code of ethics is filed as an exhibit to this Form N-CSR. | |
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT |
| The fund’s audit committee is comprised solely of trustees who are "independent" (as such term has been defined by the Securities and Exchange Commission ("SEC") in regulations implementing Section 407 of the Sarbanes-Oxley Act (the "Regulations")). The fund’s Board of Trustees has determined that there are several "audit committee financial experts" (as such term has been defined by the Regulations) serving on the fund’s audit committee including Mr. Paul K. Freeman, the chair of the fund’s audit committee. An “audit committee financial expert” is not an “expert” for any purpose, including for purposes of Section 11 of the Securities Act of 1933 and the designation or identification of a person as an “audit committee financial expert” does not impose on such person any duties, obligations or liability that are greater than the duties, obligations and liability imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. | |
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
dWS croci international Fund form n-csr disclosure re: AUDIT FEES
The following table shows the amount of fees that PricewaterhouseCoopers, LLP (“PWC”), the Fund’s independent registered public accounting firm, billed to the Fund during the Fund’s last two fiscal years. The Audit Committee approved in advance all audit services and non-audit services that PWC provided to the Fund.
Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Fund
| Fiscal Year Ended August 31, | Audit Fees Billed to Fund | Audit-Related Fees Billed to Fund | Tax Fees Billed to Fund | All Other Fees Billed to Fund |
| 2018 | $88,191 | $0 | $0 | $0 |
| 2017 | $86,888 | $1,500 | $0 | $0 |
The “Audit-Related Fees Billed to Fund” were billed for services rendered in connection with a registration filing and the above “Tax Fees” were billed for professional services rendered for tax return preparation.
Services that the Fund’s Independent Registered Public Accounting Firm Billed to the Adviser and Affiliated Fund Service Providers
The following table shows the amount of fees billed by PWC to DWS Investment Management Americas Inc. (“DIMA” or the “Adviser”), and any entity controlling, controlled by or under common control with DIMA (“Control Affiliate”) that provides ongoing services to the Fund (“Affiliated Fund Service Provider”), for engagements directly related to the Fund’s operations and financial reporting, during the Fund’s last two fiscal years.
| Fiscal Year Ended August 31, | Audit-Related Fees Billed to Adviser and Affiliated Fund Service Providers | Tax Fees Billed to Adviser and Affiliated Fund Service Providers | All Other Fees Billed to Adviser and Affiliated Fund Service Providers |
| 2018 | $0 | $0 | $0 |
| 2017 | $0 | $0 | $0 |
The “Tax Fees Billed to the Advisor” were billed for services associated with foreign tax filings.
Non-Audit Services
The following table shows the amount of fees that PWC billed during the Fund’s last two fiscal years for non-audit services. The Audit Committee pre-approved all non-audit services that PWC provided to the Adviser and any Affiliated Fund Service Provider that related directly to the Fund’s operations and financial reporting. The Audit Committee requested and received information from PWC about any non-audit services that PWC rendered during the Fund’s last fiscal year to the Adviser and any Affiliated Fund Service Provider. The Committee considered this information in evaluating PWC’s independence.
| Fiscal Year Ended August 31, | Total Non-Audit Fees Billed to Fund (A) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Fund) (B) | Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements) (C) | Total of (A), (B) and (C) |
| 2018 | $0 | $0 | $0 | $0 |
| 2017 | $0 | $0 | $0 | $0 |
Audit Committee Pre-Approval Policies and Procedures. Generally, each Fund’s Audit Committee must pre approve (i) all services to be performed for a Fund by a Fund’s Independent Registered Public Accounting Firm and (ii) all non-audit services to be performed by a Fund’s Independent Registered Public Accounting Firm for the DIMA Entities with respect to operations and financial reporting of the Fund, except that the Chairperson or Vice Chairperson of each Fund’s Audit Committee may grant the pre-approval for non-audit services described in items (i) and (ii) above for non-prohibited services for engagements of less than $100,000. All such delegated pre approvals shall be presented to each Fund’s Audit Committee no later than the next Audit Committee meeting.
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
According to the registrant’s principal Independent Registered Public Accounting Firm, substantially all of the principal Independent Registered Public Accounting Firm's hours spent on auditing the registrant's financial statements were attributed to work performed by full-time permanent employees of the principal Independent Registered Public Accounting Firm.
***
In connection with the audit of the 2017 and 2018 financial statements, the Fund entered into an engagement letter with PwC. The terms of the engagement letter required by PwC, and agreed to by the Fund’s Audit Committee, include a provision mandating the use of mediation and arbitration to resolve any controversy or claim between the parties arising out of or relating to the engagement letter or the services provided there-under.
***
Pursuant to PCAOB Rule 3526, PwC is required to describe in writing to the Fund’s Audit Committee, on at least an annual basis, all relationships between PwC, or any of its affiliates, and the DWS Funds, including the Fund, or persons in financial reporting oversight roles at the DWS Funds that, as of the date of the communication, may reasonably be thought to bear on PwC’s independence. Pursuant to PCAOB Rule 3526, PwC has reported the matters set forth below that may reasonably be thought to bear on PwC’s independence. In its PCAOB Rule 3526 communications to the Audit Committee, PwC affirmed that they are independent accountants with respect to the DWS Funds, within the meaning of PCAOB Rule 3520. PwC also informed the Audit Committee that they concluded that a reasonable investor with knowledge of all relevant facts and circumstances would conclude that PwC is capable of exercising objective and impartial judgment on all issues encompassed within PwC’s audit of the financial statements of the Fund. Finally, PwC confirmed to the Audit Committee that they can continue to serve as the independent registered public accounting firm for the Fund.
| · | PwC advised the Fund’s Audit Committee that covered persons within PwC that provided non-audit services to entities within the DWS Funds “investment company complex” (as defined in Regulation S-X) (the “DWS Funds Complex”) maintained financial relationships with investment companies within the DWS Funds Complex. PwC informed the Audit Committee that these financial relationships were inconsistent with Rule 2-01(c)(1) of Regulation S-X. PwC reported that the breaches have been resolved and that, among other things, the breaches (i) did not involve professionals who were part of the audit engagement team for the Fund or in a position to influence the audit engagement team, (ii) involved professionals whose non-audit services were not and will not be utilized or relied upon by the audit engagement team in the audit of the financial statements of the Fund and (iii) involved professionals that did not provide any consultation to the audit engagement team of the Fund. |
| · | PwC advised the Fund’s Audit Committee of certain lending relationships of PwC with owners of greater than 10% of the shares of certain investment companies within the DWS Funds Complex that PwC had identified as inconsistent with Rule 2-01(c)(l)(ii)(A) of Regulation S-X (referred to as the “Loan Rule”). The Loan Rule specifically provides that an accounting firm would not be independent if it receives a loan from a lender that is a record or beneficial owner of more than ten percent of an audit client’s equity securities. For purposes of the Loan Rule, an audit client includes the Fund as well as all other investment companies in the DWS Funds Complex. PwC’s lending relationships affect PwC’s independence under the Loan Rule with respect to all investment companies in the DWS Funds Complex. |
PwC stated that, in each lending relationship, (i) PwC believes that it is unlikely the lenders would have any interest in the outcome of the audit of the Fund and therefore would not seek to influence the outcome of the audit, (ii) no third party made an attempt to influence the outcome of the audit of the Fund and even if an attempt was made, PwC professionals are required to disclose any relationships that may raise issues about objectivity, confidentiality, independence, conflicts of interest or favoritism, and (iii) the lenders typically lack influence over the investment adviser, who controls the management of the Fund. In addition, on June 20, 2016, the SEC Staff issued a “no-action” letter to another mutual fund complex, Fidelity Management & Research Company et al., SEC Staff No-Action Letter (June 20, 2016) (the “Fidelity Letter”), related to similar Loan Rule issues as those described above. In the Fidelity Letter, the SEC Staff confirmed that it would not recommend enforcement action against an investment company that relied on the audit services performed by an audit firm that was not in compliance with the Loan Rule in certain specified circumstances. With respect to each lending relationship identified by PwC, the circumstances described in the Fidelity Letter appear to be substantially similar to the circumstances that affected PwC’s independence under the Loan Rule with respect to the Fund. PwC represented that they have complied with PCAOB Rule 3526(b)(1) and (2), which are conditions to the Fund relying on the no action letter, and affirmed that they are independent accountants within the meaning of PCAOB Rule 3520.
| 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 Keith R. Fox, DWS Funds Board Chair, c/o Thomas R. Hiller, Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600. | ||
| 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. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies | |
| Not applicable | ||
| ITEM 13. | EXHIBITS | |
| (a)(1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. | |
| (a)(2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. | |
| (b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Registrant: | DWS CROCI® International Fund, a series of Deutsche DWS International Fund, Inc. |
| By: | /s/Hepsen Uzcan Hepsen Uzcan President |
| Date: | 10/30/2018 |
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/Hepsen Uzcan Hepsen Uzcan President |
| Date: | 10/30/2018 |
| By: | /s/Diane Kenneally Diane Kenneally Chief Financial Officer and Treasurer |
| Date: | 10/30/2018 |