N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM N-CSR

Investment Company Act file number:  811-05002

DWS Variable Series II

 (Exact Name of Registrant as Specified in Charter)

345 Park Avenue

New York, NY 10154-0004

 (Address of Principal Executive Offices) (Zip Code)

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

Paul Schubert

60 Wall Street

New York, NY 10005

(Name and Address of Agent for Service)

Date of fiscal year end:	12/31
Date of reporting period:	12/31/2013

ITEM 1. REPORT TO STOCKHOLDERS

December 31, 2013

Annual Report

DWS Variable Series II

DWS Alternative Asset Allocation VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

6 Investment Portfolio

7 Statement of Assets and Liabilities

8 Statement of Operations

8 Statement of Changes in Net Assets

10 Financial Highlights

11 Notes to Financial Statements

15 Report of Independent Registered Public Accounting Firm

16 Information About Your Fund's Expenses

17 Tax Information

17 Proxy Voting

18 Advisory Agreement Board Considerations and Fee Evaluation

21 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated July 12, 2013 are 1.91% and 2.16% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. These expense ratios include net expenses of the underlying funds in which the Fund invests.

Growth of an Assumed $10,000 Investment in DWS Alternative Asset Allocation VIP from 2/2/09 to 12/31/13
	The Morgan Stanley Capital International (MSCI) World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The index consists of 24 developed market country indices. The index is calculated using closing local market prices and translates into U.S. dollars using the London close foreign exchange rates. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. The Blended Index is calculated using the performance of two unmanaged indices, representative of stocks (the MSCI World Index (70%)) and bonds (the Barclays U.S. Aggregate Bond Index (30%)). These results are summed to produce the aggregate benchmark. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.

Comparative Results
DWS Alternative Asset Allocation VIP		1-Year			3-Year			Life of Fund*
Class A	Growth of $10,000	$	10,093		$	10,757		$	15,280
	Average annual total return		0.93	%		2.46	%		9.00	%
MSCI World Index	Growth of $10,000	$	12,668		$	13,860		$	22,068
	Average annual total return		26.68	%		11.48	%		17.46	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,798		$	11,011		$	12,538
	Average annual total return		–2.02	%		3.26	%		4.71	%
Blended Index	Growth of $10,000	$	11,742		$	13,055		$	18,914
	Average annual total return		17.42	%		9.29	%		13.84	%

The growth of $10,000 is cumulative.

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

Comparative Results
DWS Alternative Asset Allocation VIP		1-Year			3-Year			Life of Class**
Class B	Growth of $10,000	$	10,075		$	10,675		$	13,888
	Average annual total return		0.75	%		2.20	%		7.37	%
MSCI World Index	Growth of $10,000	$	12,668		$	13,860		$	18,847
	Average annual total return		26.68	%		11.48	%		14.81	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,798		$	11,011		$	12,265
	Average annual total return		–2.02	%		3.26	%		4.55	%
Blended Index	Growth of $10,000	$	11,742		$	13,055		$	16,770
	Average annual total return		17.42	%		9.29	%		11.94	%

The growth of $10,000 is cumulative.

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

Management Summary December 31, 2013 (Unaudited)

DWS Alternative Asset Allocation VIP invests in a broadly diversified portfolio of mutual funds and exchange- traded funds (ETFs) that together provide diversified exposure to alternative asset classes.1 The Fund seeks to be a complement to traditional equity and fixed-income portfolios by investing in asset classes that tend to have a low correlation to the broader global equity markets over the long term.2

The Fund returned 0.93% (Class A shares, unadjusted for contract charges) during 2013, while its blended benchmark returned 17.42%.3 The largest contributors to the Fund's 2013 performance were its positions in DWS RREEF Global Infrastructure Fund and SPDR Barclays Capital Convertible Securities ETF, while the largest detractors were its allocations to DWS Global Inflation Fund and DWS Enhanced Commodity Strategy Fund.

Our team took over the Fund's management duties in July 2013. During the third quarter of 2013, we started to shift the portfolio from its previous positioning to reflect our views on the broader economy and markets. Based on our belief that an increasingly positive macroeconomic backdrop would continue to drive equity markets higher, we tactically increased the Fund's weighting to equity-like asset classes such as global infrastructure and convertible bonds.

At the same time, our expectation for gradually rising long-term bond yields led us to reduce the Fund's duration exposure (or interest-rate sensitivity). We decided to lighten the Fund's allocation to emerging-markets bonds — a longer-duration asset class that proved extremely sensitive to rising U.S. bond yields during the May to June 2013 sell-off — by selling the Fund's position in the WisdomTree Emerging Markets Local Debt ETF and reducing our allocation to DWS Enhanced Emerging Markets Fixed Income Fund. We replaced these positions by increasing our allocation to DWS Floating Rate Fund and initiating a new position in the SPDR Barclays Short Term High Yield Bond ETF. Both offer the favorable combination of below-average interest-rate risk and above-average yields.

We also moved to an underweight position in commodities.4 While commodities have a relatively large strategic weighting in the Fund due to their low long-term correlation to equities, we believe the supply for many commodities has finally caught up with demand.

We believe that a gradual "return to normalcy" — in contrast to an environment in which the U.S. Federal Reserve Board's (the Fed's) policy is the primary driver of asset-class performance — will increase the importance of selectivity and active management in the years ahead. We believe diversifying across the various alternative asset classes should help mitigate the heightened volatility that may be experienced by portfolios invested entirely in stocks and bonds.

Diversification neither assures a profit nor guarantees against loss.

Pankaj Bhatnagar, PhD

Benjamin Pace

Darwei Kung

Portfolio Managers

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.

1 An exchange-traded fund (ETF) is a security that tracks an index or asset like an index fund, but trades like a stock on an exchange.

2 Correlation is a measure of the way securities or asset classes perform in relation to each other and/or the market. Lowly correlated asset classes move in opposite directions to each other. Highly correlated asset classes move in the same direction.

3 The Blended Index is calculated using the performance of two unmanaged indices, representative of stocks (the Morgan Stanley Capital International (MSCI) World Index (70%) and bonds (the Barclays U.S. Aggregate Bond Index (30%). These results are summed to produce the aggregate benchmark. Index returns do not reflect fees or expenses and it is not possible to invest directly into an index.

4 "Underweight" means the Fund holds a lower weighting in a given sector or security than the benchmark. "Overweight" means it holds a higher weighting.

Portfolio Summary (Unaudited)

Asset Allocation* (As a % of Investment Portfolio excluding Cash Equivalents)	12/31/13	12/31/12
Commodities	13%	19%
DWS Enhanced Commodity Strategy Fund	13%	13%
DWS Gold & Precious Metals Fund	—	1%
Market Vectors Agribusiness Fund	—	4%
iShares S&P Global Timber & Forestry Index Fund	—	1%
Real Return	29%	32%
DWS RREEF Global Infrastructure Fund	16%	11%
DWS Global Inflation Fund	6%	12%
DWS RREEF Global Real Estate Securities Fund	3%	9%
SPDR Barclays Short Term High Yield Bond ETF	4%	—
Hedge Strategy	16%	15%
DWS Diversified Market Neutral Fund	16%	15%
Currency	13%	14%
DWS Enhanced Emerging Markets Fixed Income Fund	11%	8%
PowerShares DB U.S. Dollar Index Bullish ETF	2%	—
WisdomTree Emerging Markets Local Debt Fund	—	4%
SPDR Barclays International Treasury Bond ETF	—	2%
Opportunistic	29%	20%
DWS Floating Rate Fund	16%	13%
SPDR Barclays Convertible Securities ETF	13%	3%
iShares S&P U.S. Preferred Stock Index Fund	—	4%
iShares S&P International Preferred Stock Index Fund	—	—
	100%	100%

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

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at 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-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Shares		Value ($)
Mutual Funds 80.1%
DWS Diversified Market Neutral Fund "Institutional" (a)		1,719,815		15,082,780
DWS Enhanced Commodity Strategy Fund "Institutional" (a)		844,453		12,886,360
DWS Enhanced Emerging Markets Fixed Income Fund "Institutional" (a)		1,035,752		10,792,537
DWS Floating Rate Fund "Institutional" (a)		1,641,271		15,542,833
DWS Global Inflation Fund "Institutional" (a)		628,959		6,138,642
DWS RREEF Global Infrastructure Fund "Institutional" (a)		1,173,170		15,685,285
DWS RREEF Global Real Estate Securities Fund "Institutional" (a)		370,653		2,972,636
Total Mutual Funds (Cost $78,917,660)				79,101,073
	Shares		Value ($)
Exchange-Traded Funds 18.5%
PowerShares DB U.S. Dollar Index Bullish* (b)		90,677		1,951,369
SPDR Barclays Convertible Securities		276,358		12,914,209
SPDR Barclays Short Term High Yield Bond		110,988		3,425,090
Total Exchange-Traded Funds (Cost $17,467,503)				18,290,668
Cash Equivalents 1.0%
Central Cash Management Fund, 0.05% (a) (c) (Cost $978,747)		978,747		978,747

	% of Net Assets		Value ($)
Total Investment Portfolio (Cost $97,363,910)†		99.6		98,370,488
Other Assets and Liabilities, Net		0.4		391,293
Net Assets		100.0		98,761,781

* Non-income producing security.

† The cost for federal income tax purposes was $98,540,612. At December 31, 2013, net unrealized depreciation for all securities based on tax cost was $170,124. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $4,002,519 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $4,172,643.

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

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

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

SPDR: Standard & Poor's Depositary Receipt

Fair Value Measurements

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.

The following is a summary of the inputs used as of December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2		Level 3		Total
Mutual Funds	$	79,101,073	$	—	$	—	$	79,101,073
Exchange-Traded Funds		18,290,668		—		—		18,290,668
Short-Term Investments		978,747		—		—		978,747
Total	$	98,370,488	$	—	$	—	$	98,370,488

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in affiliated Underlying Funds, at value (cost $81,898,111)	$	82,031,189
Investments in non-affiliated securities, at value (cost $15,465,799)		16,339,299
Total investments in securities, at value (cost $97,363,910)		98,370,488
Cash		127,821
Receivable for Fund shares sold		136,298
Dividends receivable		147,774
Due from Advisor		23,982
Other assets		1,794
Total assets		98,808,157
Liabilities
Payable for Fund shares redeemed		76
Accrued Trustees' fees		1,161
Accrued record keeping fees		17,707
Accrued reports to shareholders		17,128
Other accrued expenses and payables		10,304
Total liabilities		46,376
Net assets, at value	$	98,761,781
Net Assets Consist of
Undistributed net investment income		1,652,423
Net unrealized appreciation (depreciation) on investments		1,006,578
Accumulated net realized gain (loss)		(544,060	)
Paid-in capital		96,646,840
Net assets, at value	$	98,761,781
Class A Net Asset Value, offering and redemption price per share ($14,742,201 ÷ 1,072,115 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.75
Class B Net Asset Value, offering and redemption price per share ($84,019,580 ÷ 6,114,865 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	13.74

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Income distributions from affiliated Underlying Funds	$	1,265,125
Dividends		540,186
Total income		1,805,311
Expenses: Management fee		314,244
Administration fee		86,121
Services to shareholders		2,247
Record keeping fees (Class B)		28,600
Distribution service fee (Class B)		186,097
Custodian fee		15,839
Audit and tax fees		52,085
Legal fees		18,437
Reports to shareholders		52,851
Trustees' fees and expenses		4,320
Other		2,361
Total expenses before expense reductions		763,202
Expense reductions		(345,204	)
Total expenses after expense reductions		417,998
Net investment income (loss)		1,387,313
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Sale of affiliated Underlying Funds		(589,593	)
Sale of non-affiliated Underlying Funds		(441,781	)
Capital gain distributions from affiliated Underlying Funds		2,024,400
		993,026
Change in net unrealized appreciation (depreciation) on investments		(1,638,087	)
Net gain (loss)		(645,061	)
Net increase (decrease) in net assets resulting from operations	$	742,252

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income	$	1,387,313		$	1,351,274
Net realized gain (loss)		993,026			(417,287	)
Change in net unrealized appreciation (depreciation)		(1,638,087	)		4,248,342
Net increase (decrease) in net assets resulting from operations		742,252			5,182,329
Distributions to shareholders from: Net investment income: Class A		(218,625	)		(277,485	)
Class B		(1,281,892	)		(1,538,242	)
Net realized gains: Class A		—			(65,328	)
Class B		—			(390,800	)
Total distributions		(1,500,517	)		(2,271,855	)
Fund share transactions: Class A Proceeds from shares sold		6,694,957			3,873,528
Reinvestment of distributions		218,625			342,813
Payments for shares redeemed		(2,104,739	)		(1,854,054	)
Net increase (decrease) in net assets from Class A share transactions		4,808,843			2,362,287
Class B Proceeds from shares sold		31,914,829			21,887,200
Reinvestment of distributions		1,281,892			1,929,042
Payments for shares redeemed		(10,503,907	)		(5,211,663	)
Net increase (decrease) in net assets from Class B share transactions		22,692,814			18,604,579
Increase (decrease) in net assets		26,743,392			23,877,340
Net assets at beginning of period		72,018,389			48,141,049
Net assets at end of period (including undistributed net investment income of $1,652,423 and $1,464,704, respectively)	$	98,761,781		$	72,018,389
Other Information
Class A Shares outstanding at beginning of period		720,220			545,891
Shares sold		490,282			284,613
Shares issued to shareholders in reinvestment of distributions		15,638			25,795
Shares redeemed		(154,025	)		(136,079	)
Net increase (decrease) in Class A shares		351,895			174,329
Shares outstanding at end of period		1,072,115			720,220
Class B Shares outstanding at beginning of period		4,466,071			3,093,124
Shares sold		2,327,269			1,611,987
Shares issued to shareholders in reinvestment of distributions		91,629			145,041
Shares redeemed		(770,104	)		(384,081	)
Net increase (decrease) in Class B shares		1,648,794			1,372,947
Shares outstanding at end of period		6,114,865			4,466,071

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			Period Ended 12/31/09a
Selected Per Share Data
Net asset value, beginning of period	$	13.90		$	13.24		$	13.85		$	12.63		$	10.00
Income (loss) from investment operations: Net investment incomeb		.26			.33			.64			.46			.57
Net realized and unrealized gain (loss)		(.13	)		.93			(1.02	)		1.09			2.06
Total from investment operations		.13			1.26			(.38	)		1.55			2.63
Less distributions from: Net investment income		(.28	)		(.49	)		(.19	)		(.18	)		—
Net realized gains		—			(.11	)		(.04	)		(.15	)		—
Total distributions		(.28	)		(.60	)		(.23	)		(.33	)		—
Net asset value, end of period	$	13.75		$	13.90		$	13.24		$	13.85		$	12.63
Total Return (%)c,d		.93			9.72			(2.87	)		12.46			26.30
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		15			10			7			5			1
Ratio of expenses before expense reductions (%)e		.64			.63			.61			.94			11.67
Ratio of expenses after expense reductions (%)e		.27			.30			.30			.21			.21
Ratio of net investment income (%)		1.86			2.46			4.72			3.51			5.39
Portfolio turnover rate (%)		40			22			39			6			155
a For the period from February 2, 2009 (commencement of operations of Class A shares) to December 31, 2009. b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d Total return would have been lower if the Advisor had not reduced some Underlying DWS Funds' expenses. e The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which the Fund is invested. This ratio does not include these indirect fees and expenses.

	Years Ended December 31,
Class B		2013			2012			2011			2010			Period Ended 12/31/09a
Selected Per Share Data
Net asset value, beginning of period	$	13.88		$	13.23		$	13.84		$	12.61		$	10.87
Income (loss) from investment operations: Net investment incomeb		.22			.30			.61			.42			.35
Net realized and unrealized gain (loss)		(.11	)		.91			(1.03	)		1.09			1.39
Total from investment operations		.11			1.21			(.42	)		1.51			1.74
Less distributions from: Net investment income		(.25	)		(.45	)		(.15	)		(.13	)		—
Net realized gains		—			(.11	)		(.04	)		(.15	)		—
Total distributions		(.25	)		(.56	)		(.19	)		(.28	)		—
Net asset value, end of period	$	13.74		$	13.88		$	13.23		$	13.84		$	12.61
Total Return (%)c,d		.75			9.36			(3.12	)		12.15			16.01
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		84			62			41			23			3
Ratio of expenses before expense reductions (%)e		.93			.88			.86			1.19			5.37
Ratio of expenses after expense reductions (%)e		.52			.55			.55			.46			.61
Ratio of net investment income (%)		1.57			2.25			4.47			3.26			4.66
Portfolio turnover rate (%)		40			22			39			6			155
a For the period from May 18, 2009 (commencement of operations of Class B shares) to December 31, 2009. b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d Total return would have been lower if the Advisor had not reduced some Underlying DWS Funds' expenses. e The Fund invests in other Funds and indirectly bears its proportionate share of fees and expenses incurred by the Underlying Funds in which the Fund is invested. This ratio does not include these indirect fees and expenses.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

DWS Alternative Asset Allocation VIP (the "Fund") is a diversified series of DWS Variable Series II (the "Trust"), which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust. The Fund mainly invests in other affiliated DWS funds (i.e. mutual funds, exchange-traded funds and other pooled investment vehicles managed by Deutsche Investment Management Americas Inc. or one of its affiliates, together the "Underlying DWS Funds"), non-affiliated exchange-traded funds ("Non-affiliated ETFs") or directly into securities and derivative investments in which such underlying DWS Funds could invest. Non-affiliated ETFs and Underlying DWS Funds are collectively referred to as "Underlying Funds." During the year ended December 31, 2013, the Fund primarily invested in underlying DWS Funds and non-affiliated ETFs. Each Underlying DWS Fund's accounting policies and investment holdings are outlined in the Underlying DWS Funds' financial statements and are available upon request.

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

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

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

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

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.

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

ETFs are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade. ETFs for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation. Equity securities are categorized as Level 1 securities.

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

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

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	1,652,423
Undistributed long-term capital gains	$	617,541
Unrealized appreciation (depreciation) on investments	$	(170,124	)

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	1,500,517	$	1,819,179
Distributions from long-term capital gains	$	—	$	452,676

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

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

B. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of affiliated Underlying Funds (excluding money market funds) aggregated $44,167,218 and $19,102,285, respectively. Purchases and sales of Non-affiliated ETFs aggregated $19,062,446 and $15,134,575, respectively.

C. Related Parties

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

Proir to July 12, 2013, QS Investors, LLC ("QS Investors") served as subadvisor to the Fund. As subadvisor, QS Investors rendered strategic allocation services to the Fund. QS Investors was paid by the Advisor for the services QS Investors provided to the Fund. Effective July 12, 2013, QS Investors no longer acts as subadvisor to the Fund and day-to-day portfolio management of the Fund transitioned to DIMA.

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

The Fund does not invest in the Underlying DWS Funds for the purpose of exercising management or control; however, investments within the set limits may represent 5% or more of an Underlying DWS Fund's outstanding shares. For the year ended December 31, 2013, the Fund held 5% of DWS Global Inflation Fund.

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

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

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

For the period from January 1, 2013 through September 30, 2013, the Advisor had contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and indirect expenses of Underlying Funds) of each class as follows:

Class A	.25%
Class B	.50%

For the period from October 1, 2013 through July 11, 2014, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest expense and Underlying Funds) of each class as follows:

Class A	.32%
Class B	.57%

For the year ended December 31, 2013, the Advisor agreed to waive 0.15% of the monthly management fee based on average daily net assets for the Fund.

Accordingly, for the year ended December 31, 2013, the fee pursuant to the Investment Management Agreement aggregating $314,244, all of which was waived, resulting in an annual effective rate of 0.00% of the Fund's average daily net assets.

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

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $86,121, of which $2,560 was waived and $5,655 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC were as follows:

Services to Shareholders	Total Aggregated		Waived
Class A	$	87	$	87
Class B		114		114
	$	201	$	201

In addition, for the year ended December 31, 2013, the Advisor reimbursed $28,199 of non-affiliated recordkeeping fees.

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DWS Investments Distributors, Inc. ("DIDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the year ended December 31, 2013, the Distribution Service Fee aggregated $186,097, of which $18,092 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $27,370, of which $4,097 is unpaid.

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

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

D. Ownership of the Fund

At December 31, 2013, one participating insurance company was the owner of record of 10% or more of the total outstanding Class A shares of the Fund, owning 98%. Two participating insurance companies were the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 65% and 30%, respectively.

E. Transactions with Affiliates

The Fund mainly invest in Underlying DWS Funds and Non-affiliated ETFs. The Underlying DWS Funds in which the Fund invests are considered to be affiliated investments. A summary of the Fund's transactions with affiliated Underlying DWS Funds during the year ended December 31, 2013 is as follows:

Affiliate	Value ($) at 12/31/2012		Purchases Cost ($)		Sales Cost ($)		Realized Gain/ (Loss) ($)			Income Distributions ($)		Capital Gain Distributions ($)		Value ($) at 12/31/2013
DWS Diversified Market Neutral Fund		10,861,175		6,850,860		1,362,000		(3,683	)		—		1,652,860		15,082,780
DWS Enhanced Commodity Strategy Fund		9,764,605		4,706,016		713,000		(230,704	)		—		—		12,886,360
DWS Enhanced Emerging Markets Fixed Income Fund		5,788,784		7,905,851		2,266,000		(175,684	)		336,851		—		10,792,537
DWS Floating Rate Fund		8,973,006		7,949,388		2,127,045		(9,514	)		508,388		—		15,542,833
DWS Global Inflation Fund		8,483,420		3,187,302		4,392,000		(536,545	)		84,302		—		6,138,642
DWS Gold & Precious Metals Fund		693,385		120,000		—		(150,315	)		—		—		—
DWS RREEF Global Infrastructure Fund		7,644,550		8,344,106		1,653,000		14,439			210,565		371,540		15,685,285
DWS RREEF Global Real Estate Securities Fund		6,354,589		2,239,919		5,775,000		550,247			123,919		—		2,972,636
PowerShares DB G10 Currency Harvest ETF		—		862,073		814,240		(47,834	)		—		—		—
PowerShares DB US Dollar Index Bullish ETF		—		2,001,703		—		—			—		—		1,951,369
Central Cash Management Fund		772,008		34,621,875		34,415,136		—			1,100		—		978,747
Total		59,335,522		78,789,093		53,517,421		(589,593	)		1,265,125		2,024,400		82,031,189

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Alternative Asset Allocation VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS Alternative Asset Allocation VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Alternative Asset Allocation VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the expense of the Underlying Funds in which the Fund invests. These expenses are not included in the Fund's annualized expense ratios used to calculate the expense estimate in the tables. In the most recent six-month period, the Fund limited the ongoing expenses the Fund bears directly; had it not done so, expenses would have been higher. The examples in the table are based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,030.00	$	1,028.40
Expenses Paid per $1,000*	$	1.48	$	2.76
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,023.74	$	1,022.48
Expenses Paid per $1,000*	$	1.48	$	2.75

* 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 B
DWS Variable Series II — DWS Alternative Asset Allocation VIP	.29%	.54%

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

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

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

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

Tax Information (Unaudited)

Pursuant to Section 852 of the Internal Revenue Code, the Fund designates $680,000 as capital gain dividends for its year ended December 31, 2013.

For corporate shareholders, 8% of income dividends paid during the Fund's fiscal year ended December 31, 2013 qualified for the dividends received deduction.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Alternative Asset Allocation VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") and sub-advisory agreement (the "Sub-Advisory Agreement" and together with the Agreement, the "Agreements") between DIMA and RREEF America L.L.C. ("RREEF"), an affiliate of DIMA, in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Asset Allocation Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

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

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

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund. DIMA and RREEF are part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's and RREEF's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreements, including the scope of advisory services provided under the Agreements. The Board noted that, under the Agreements, DIMA and RREEF provide portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one- and three-year periods ended December 31, 2012, the Fund's performance (Class A shares) was in the 1st quartile of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has underperformed its benchmark in the one- and three-year periods ended December 31, 2012.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, sub-advisory fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were equal to the median (2nd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). With respect to the sub-advisory fee paid to RREEF, the Board noted that the fee is paid by DIMA out of its fee and not directly by the Fund. The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be lower than the median (1st quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitations agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA from advising the DWS Funds along with the estimated costs and pre-tax profits realized by DIMA from advising the DWS Funds. The Board also received information regarding the estimated enterprise-wide profitability of DWS and its affiliates with respect to all fund services in totality. The Board did not receive profitability information with respect to the Fund, but did receive such information with respect to the funds in which the Fund invests. The Board also reviewed 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 DWS fund complex (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 many 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. In this regard, the Board noted that while the Fund's current investment management fee schedule does not include breakpoints, the Board intends to consider implementation of one or more breakpoints once the Fund reaches an efficient operating size. The Board concluded that the Fund's fee schedule represents an appropriate sharing between the Fund and DIMA of such economies of scale as may exist in the management of the Fund at current asset levels.

Other Benefits to DIMA and Its Affiliates. The Board also considered the character and amount of other incidental benefits received by DIMA and its affiliates, including any fees received by DIMA for administrative services provided to the Fund and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2AAA-2 (R-025824-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Global Equity VIP

(formerly DWS Diversified International Equity VIP)

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

6 Investment Portfolio

9 Statement of Assets and Liabilities

10 Statement of Operations

10 Statement of Changes in Net Assets

12 Financial Highlights

13 Notes to Financial Statements

18 Report of Independent Registered Public Accounting Firm

19 Information About Your Fund's Expenses

20 Tax Information

20 Proxy Voting

21 Advisory Agreement Board Considerations and Fee Evaluation

24 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. The Fund may lend securities to approved institutions. Stocks may decline in value. See the prospectus for details.

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated July 12, 2013 is 1.06% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in DWS Global Equity VIP
	The MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The index consists of 45 country indices comprising 24 developed and 21 emerging market country indices. On July 12, 2013 the MSCI All Country World Index replaced the MSCI EAFE Index as the fund's benchmark index because the Advisor believes that it more accurately reflects the fund's current investment strategy. The MSCI EAFE Index is an unmanaged index that tracks international stock performance in the 22 developed markets of Europe, Australasia and the Far East. Returns reflect reinvestment of dividends net of withholding taxes. The index is calculated using closing local market prices and translates into U.S. dollars using the London close foreign exchange rates. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Global Equity VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	11,931		$	12,310		$	17,665		$	17,943
	Average annual total return		19.31	%		7.17	%		12.05	%		6.02	%
MSCI All Country World Index	Growth of $10,000	$	12,280		$	13,213		$	20,042		$	19,985
	Average annual total return		22.80	%		9.73	%		14.92	%		7.17	%
MSCI EAFE Index	Growth of $10,000	$	12,278		$	12,655		$	17,969		$	19,509
	Average annual total return		22.78	%		8.17	%		12.44	%		6.91	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

Global equities delivered strong performance during 2013, as gauged by the 22.80% return of the Fund's benchmark, the MSCI All Country World Index.1 Class A shares of the Fund returned 19.31% (unadjusted for contract charges).

On July 12, 2013, the Fund's name changed from DWS Diversified International Equity VIP to DWS Global Equity VIP, reflecting a change in its strategy and management team. The Fund's benchmark switched from the MSCI EAFE Index to the MSCI All Country World Index at that time.2

Prior to the change in management, the Fund slightly underperformed the MSCI EAFE Index. The primary source of this shortfall was the Fund's position in two exchange-traded funds (ETFs) linked to the performance of the emerging markets: Vanguard FTSE Emerging Markets ETF and iShares MSCI Emerging Markets ETF.3 We sold both from the portfolio in July 2013.

After taking over the Fund, we modestly outperformed due to our strong stock selection in the consumer discretionary, health care and industrials sectors.4 The leading individual contributors in this interval were DNO International ASA and MasterCard, Inc., while the largest detractors were PT Indofood CBP Sukses Makmur Tbk and Swedish Match AB.

Our philosophy is that the stocks of companies with superior revenue and profit growth should outperform in an environment of sluggish global economic activity. Accordingly, our bottom-up strategy is geared toward identifying companies with sustainable, above-average growth that we believe can succeed irrespective of economic and market "noise."

Our global approach means that we have an extensive universe from which to select such growth companies. The emerging markets, and particularly the smaller markets within the emerging world, are home to a wealth of stocks with the growth characteristics we seek. Nevertheless, most of the portfolio is invested in companies domiciled in the developed markets. The majority of this allocation is invested in the United States and Europe, where we are identifying the best bottom-up opportunities. Conversely, we are finding fewer options in Japan. On a sector basis, our bottom-up approach has led us to establish overweight positions in the industrials, health care, consumer staples and information technology sectors, along with underweights in slower-growing areas such as utilities, telecommunication services, financials and energy.5,6

Overall, we believe our approach to companies with above-average earnings prospects provides an attractive option in an environment of anticipated sluggish growth for the world's developed economies.

Nils E. Ernst, PhD

Martin Berberich, CFA

Sebastian P. Werner, PhD

Portfolio Managers,

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.

1 The MSCI All Country World Index tracks the performance of stocks in select developed markets around the world, including the United States.

2 The MSCI EAFE Index is an unmanaged, free-float-adjusted, market-capitalization index that tracks international stock performance in the 21 developed markets of Europe, Australasia and the Far East. The index is calculated using closing local market prices and translates into U.S. dollars using the London close foreign exchange rates.

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

3 An exchange-traded fund (ETF) is a security that tracks an index or asset like an index fund, but trades like a stock on an exchange. The Vanguard FTSE Emerging Markets ETF invests in stocks of companies located in emerging markets around the world, such as Brazil, Russia, China, Korea and Taiwan. The fund seeks to track the return of the MSCI Emerging Markets Index over the long term. The iShares MSCI Emerging Markets ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in emerging markets, as represented by the MSCI Emerging Markets Index.

4The consumer discretionary sector represents industries that produce goods and services that are not necessities in everyday life.

5 "Underweight" means the Fund holds a lower weighting in a given sector or security than the benchmark. "Overweight" means it holds a higher weighting.

6 Consumer staples are the industries that manufacture and sell products such as food and beverages, prescription drugs and household products.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Common Stocks	96%	88%
Cash Equivalents	3%	2%
Participatory Notes	1%	—
Exchange-Traded Funds	—	10%
Preferred Stocks	—	0%
	100%	100%

Sector Diversification(As a % of Common Stocks, Preferred Stocks and Participatory Notes)	12/31/13	12/31/12
Telecommunication Services	13%	15%
Health Care	13%	12%
Financials	12%	13%
Consumer Staples	10%	12%
Materials	9%	9%
Consumer Discretionary	9%	7%
Utilities	9%	8%
Information Technology	9%	12%
Industrials	9%	8%
Energy	7%	4%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	12/31/13	12/31/12
United States	46%	—
Continental Europe	32%	54%
United Kingdom	6%	7%
Canada	6%	7%
Asia (excluding Japan)	5%	6%
Latin America	1%	—
Japan	—	12%
Emerging Markets	—	10%
Australia	—	4%
Other	4%	—
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at 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-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Shares		Value ($)
Common Stocks 95.0%
Belgium 1.9%
Anheuser-Busch InBev NV (Cost $963,260)		13,000		1,386,112
Canada 5.7%
Agnico Eagle Mines Ltd.		15,000		395,700
Brookfield Asset Management, Inc. "A"		39,000		1,513,372
Canadian Oil Sands Ltd.		35,000		658,320
Canadian Pacific Railway Ltd.		10,500		1,587,974
(Cost $3,881,223)				4,155,366
Denmark 2.9%
Coloplast AS "B"		14,000		928,657
DS Norden AS		9,200		484,902
William Demant Holding AS*		7,400		719,481
(Cost $1,853,352)				2,133,040
France 2.8%
Edenred		18,000		603,855
LVMH Moet Hennessy Louis Vuitton SA		2,000		366,122
Pernod Ricard SA		9,300		1,061,865
(Cost $1,884,123)				2,031,842
Germany 3.1%
BASF SE		8,000		853,078
Fresenius Medical Care AG & Co. KGaA		16,400		1,167,188
Stada Arzneimittel AG		5,000		247,715
(Cost $1,949,100)				2,267,981
Hong Kong 1.0%
SA SA International Holdings Ltd. (Cost $665,277)		610,000		716,400
India 1.2%
ICICI Bank Ltd. (ADR) (Cost $774,628)		24,000		892,080
Indonesia 0.9%
PT Indofood CBP Sukses Makmur Tbk (Cost $865,926)		770,000		646,177
Ireland 3.8%
Accenture PLC "A" (a)		13,000		1,068,860
Alkermes PLC* (b)		6,500		264,290
Experian PLC		42,000		775,161
Shire PLC		14,000		659,704
(Cost $2,345,519)				2,768,015
Italy 4.1%
Moncler SpA*		17,545		381,359
Prada SpA		73,000		648,553
Sorin SpA*		132,000		376,703
Unipol Gruppo Finanziario SpA		200,000		1,200,447
World Duty Free SpA*		28,400		357,696
(Cost $2,371,116)				2,964,758
Luxembourg 1.0%
Eurofins Scientific (Cost $654,124)		2,800		758,264
	Shares		Value ($)
Malaysia 0.9%
IHH Healthcare Bhd.* (Cost $729,173)		560,000		660,416
Mexico 1.3%
Fomento Economico Mexicano SAB de CV (ADR) (Cost $959,587)		9,500		929,765
Netherlands 1.4%
ASML Holding NV (Cost $510,738)		11,000		1,032,956
Norway 2.0%
DNO International ASA*		247,000		990,314
Norsk Hydro ASA		105,000		469,386
(Cost $950,024)				1,459,700
Philippines 2.1%
Metropolitan Bank & Trust Co.		520,000		887,648
Puregold Price Club, Inc.		730,000		625,625
(Cost $1,754,673)				1,513,273
Spain 0.7%
Atresmedia Corp. de Medios de Comunicaion SA* (Cost $495,833)		33,000		546,055
Sweden 5.3%
Atlas Copco AB "A"		25,000		697,253
Meda AB "A"		33,000		419,586
Svenska Cellulosa AB "B"		32,000		988,670
Swedish Match AB		30,000		964,651
Telefonaktiebolaget LM Ericsson "B"		63,000		771,478
(Cost $3,481,286)				3,841,638
Switzerland 3.8%
DKSH Holding AG		6,000		466,912
Nestle SA (Registered)		12,515		918,700
Novartis AG (Registered)		5,500		440,168
Pentair Ltd. (Registered) (a)		12,000		932,040
(Cost $1,848,594)				2,757,820
Taiwan 0.7%
Ginko International Co., Ltd. (Cost $502,623)		27,000		510,556
United Kingdom 5.0%
Aberdeen Asset Management PLC		123,000		1,024,322
Aveva Group PLC		22,000		790,150
British American Tobacco PLC		17,500		938,945
Intertek Group PLC		18,000		939,101
(Cost $3,429,948)				3,692,518
United States 43.4%
Actavis PLC*		2,400		403,200
ADT Corp. (c)		9,000		364,230
Aegerion Pharmaceuticals, Inc.*		3,100		219,976
Allergan, Inc.		8,100		899,748
Alliance Data Systems Corp.* (c)		6,600		1,735,338
Amgen, Inc.		6,500		742,040
Amphenol Corp. "A"		17,000		1,516,060
Beam, Inc.		18,600		1,265,916
Bristol-Myers Squibb Co.		14,000		744,100
	Shares		Value ($)
CBRE Group, Inc. "A"*		39,000		1,025,700
Cerner Corp.*		16,000		891,840
Cheniere Energy Partners LP Holdings LLC*		5,155		96,656
Colfax Corp.*		18,000		1,146,420
Cynosure, Inc. "A"*		14,000		373,520
Danaher Corp.		11,500		887,800
Deckers Outdoor Corp.* (c)		4,000		337,840
DIRECTV*		12,200		842,898
Dynavax Technologies Corp.* (c)		70,000		137,200
eBay, Inc.*		7,000		384,230
Exxon Mobil Corp.		8,000		809,600
Google, Inc. "A"*		700		784,497
JPMorgan Chase & Co.		27,000		1,578,960
L Brands, Inc.		13,000		804,050
Las Vegas Sands Corp.		16,000		1,261,920
MasterCard, Inc. "A"		2,100		1,754,466
McDonald's Corp.		9,000		873,270
National Oilwell Varco, Inc.		11,000		874,830
Noble Energy, Inc.		15,000		1,021,650
NPS Pharmaceuticals, Inc.*		6,800		206,448
Orexigen Therapeutics, Inc.* (c)		24,500		137,935
Pall Corp.		12,000		1,024,200
Praxair, Inc.		11,000		1,430,330
Precision Castparts Corp.		5,500		1,481,150
Schlumberger Ltd.		8,500		765,935
Tractor Supply Co.		10,000		775,800
Trimble Navigation Ltd.*		28,400		985,480
United Technologies Corp.		9,500		1,081,100
(Cost $27,565,401)				31,666,333
Total Common Stocks (Cost $60,435,528)				69,331,065
	Shares		Value ($)
Participatory Note 1.4%
Nigeria
Zenith Bank PLC (issuer Merrill Lynch International) Expiration Date 8/21/2015 (Cost $811,200)		6,000,000		1,027,824
Securities Lending Collateral 3.6%
Daily Assets Fund Institutional, 0.08% (d) (e) (Cost $2,611,010)		2,611,010		2,611,010
Cash Equivalents 3.4%
Central Cash Management Fund, 0.05% (d) (Cost $2,485,024)		2,485,024		2,485,024

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $66,342,762)†		103.4			75,454,923
Other Assets and Liabilities, Net		(3.4	)		(2,467,448	)
Net Assets		100.0			72,987,475

* Non-income producing security.

† The cost for federal income tax purposes was $66,342,796. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $9,112,127. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $10,159,863 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,047,736.

(a) Listed on the New York Stock Exchange.

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

(c) 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 December 31, 2013 amounted to $2,553,543, which is 3.5% of net assets.

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

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

ADR: American Depositary Receipt

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2		Level 3		Total
Common Stocks (f)
Belgium	$	—	$	1,386,112	$	—	$	1,386,112
Canada		4,155,366		—		—		4,155,366
Denmark		—		2,133,040		—		2,133,040
France		—		2,031,842		—		2,031,842
Germany		—		2,267,981		—		2,267,981
Hong Kong		—		716,400		—		716,400
India		892,080		—		—		892,080
Indonesia		—		646,177		—		646,177
Ireland		1,333,150		1,434,865		—		2,768,015
Italy		—		2,964,758		—		2,964,758
Luxembourg		—		758,264		—		758,264
Malaysia		—		660,416		—		660,416
Mexico		929,765		—		—		929,765
Netherlands		—		1,032,956		—		1,032,956
Norway		—		1,459,700		—		1,459,700
Philippines		—		1,513,273		—		1,513,273
Spain		—		546,055		—		546,055
Sweden		—		3,841,638		—		3,841,638
Switzerland		932,040		1,825,780		—		2,757,820
Taiwan		—		510,556		—		510,556
United Kingdom		—		3,692,518		—		3,692,518
United States		31,666,333		—		—		31,666,333
Participatory Notes		—		1,027,824		—		1,027,824
Short-Term Investments (f)		5,096,034		—		—		5,096,034
Total	$	45,004,768	$	30,450,155	$	—	$	75,454,923

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

(f) See Investment Portfolio for additional detailed categorizations.

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $61,246,728) — including $2,553,543 of securities loaned	$	70,358,889
Investment in Daily Assets Fund Institutional (cost $2,611,010)*		2,611,010
Investment in Central Cash Management Fund (cost $2,485,024)		2,485,024
Total investments in securities, at value (cost $66,342,762)		75,454,923
Foreign currency, at value (cost $129,901)		126,571
Receivable for Fund shares sold		27
Dividends receivable		65,911
Interest receivable		1,136
Foreign taxes recoverable		65,968
Other assets		1,379
Total assets		75,715,915
Liabilities
Cash overdraft		289
Payable upon return of securities loaned		2,611,010
Payable for Fund shares redeemed		36,642
Accrued management fee		33,422
Accrued Trustees' fees		1,483
Other accrued expenses and payables		45,594
Total liabilities		2,728,440
Net assets, at value	$	72,987,475
Net Assets Consist of
Undistributed net investment income		1,217,770
Net unrealized appreciation (depreciation) on: Investments		9,112,161
Foreign currency		(578	)
Accumulated net realized gain (loss)		(47,522,922	)
Paid-in capital		110,181,044
Net assets, at value	$	72,987,475
Class A Net Asset Value, offering and redemption price per share ($72,987,475 ÷ 7,869,570 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	9.27

* Represents collateral on securities loaned.

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Dividends (net of foreign taxes withheld of $178,600)	$	1,801,122
Interest		414
Income distributions — Central Cash Management Fund		1,203
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		60,811
Total income		1,863,550
Expenses: Management fee		450,754
Administration fee		69,347
Services to shareholders		945
Custodian fee		59,468
Audit and tax fees		60,102
Legal fees		15,351
Reports to shareholders		38,871
Trustees' fees and expenses		4,674
Other		32,744
Total expenses before expense reductions		732,256
Expense reductions		(43,599	)
Total expenses after expense reductions		688,657
Net investment income		1,174,893
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		17,284,356
Futures		81,726
Foreign currency		(13,289	)
		17,352,793
Change in net unrealized appreciation (depreciation) on: Investments		(6,257,752	)
Futures		(4,080	)
Foreign currency		(606	)
		(6,262,438	)
Net gain (loss)		11,090,355
Net increase (decrease) in net assets resulting from operations	$	12,265,248

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income	$	1,174,893		$	1,605,589
Net realized gain (loss)		17,352,793			337,693
Change in net unrealized appreciation (depreciation)		(6,262,438	)		8,562,569
Net increase (decrease) in net assets resulting from operations		12,265,248			10,505,851
Distributions to shareholders from: Net investment income: Class A		(1,676,904	)		(1,885,705	)
Total distributions		(1,676,904	)		(1,885,705	)
Fund share transactions: Class A Proceeds from shares sold		3,395,869			2,442,886
Reinvestment of distributions		1,676,904			1,885,705
Payments for shares redeemed		(9,660,444	)		(10,767,707	)
Net increase (decrease) in net assets from Class A share transactions		(4,587,671	)		(6,439,116	)
Increase (decrease) in net assets		6,000,673			2,181,030
Net assets at beginning of period		66,986,802			64,805,772
Net assets at end of period (including undistributed net investment income of $1,217,770 and $1,530,737, respectively)	$	72,987,475		$	66,986,802
Other Information
Class A Shares outstanding at beginning of period		8,411,945			9,288,789
Shares sold		404,553			334,743
Shares issued to shareholders in reinvestment of distributions		202,770			258,316
Shares redeemed		(1,149,698	)		(1,469,903	)
Net increase (decrease) in Class A shares		(542,375	)		(876,844	)
Shares outstanding at end of period		7,869,570			8,411,945

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	7.96		$	6.98		$	8.08		$	7.45		$	6.22
Income (loss) from investment operations: Net investment incomea		.14			.18			.19			.14			.12
Net realized and unrealized gain (loss)		1.37			1.01			(1.14	)		.66			1.51
Total from investment operations		1.51			1.19			(.95	)		.80			1.63
Less distributions from: Net investment income		(.20	)		(.21	)		(.15	)		(.17	)		(.40	)
Total distributions		(.20	)		(.21	)		(.15	)		(.17	)		(.40	)
Net asset value, end of period	$	9.27		$	7.96		$	6.98		$	8.08		$	7.45
Total Return (%)		19.31	b		17.34			(12.07	)		10.93			29.36
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		73			67			65			83			86
Ratio of expenses before expense reductions (%)		1.06			1.02			1.03			.99			.94
Ratio of expenses after expense reductions (%)		.99			1.02			1.03			.99			.94
Ratio of net investment income (%)		1.69			2.46			2.44			1.90			1.89
Portfolio turnover rate (%)		139			18			26			14			139
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reimbursed.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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. For certain international equity securities, in order to adjust for events which may occur between the close of the foreign exchanges and the close of the New York Stock Exchange, a fair valuation model may be used. This fair valuation model takes into account comparisons to the valuation of American Depository Receipts (ADRs), futures contracts and certain indices and these securities are categorized as Level 2.

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

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

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

As of December 31, 2013, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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

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

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

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

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

At December 31, 2013, the Fund had a net tax basis capital loss carryforward of approximately $47,342,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($8,178,000) and December 31, 2017 ($39,164,000), the respective expiration dates, whichever occurs first.

In addition, from November 1, 2013 through December 31, 2013, the Fund elected to defer qualified late year losses of approximately $36,000 of net long-term realized capital losses and $145,000 of net short-term capital losses and treat them as arising in the fiscal year ending December 31, 2014.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	1,217,770
Capital loss carryforwards	$	(47,342,000	)
Unrealized appreciation (depreciation) on investments	$	9,112,127

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	1,676,904	$	1,885,705

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

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

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the year ended December 31, 2013, the Fund entered into futures contracts as a means of gaining exposure to a particular asset class or to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the market.

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

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

There are no open futures contracts as of December 31, 2013. For the year ended December 31, 2013, the investment in futures contracts purchased had a total notional value generally indicative of a range from $0 to approximately $1,699,000.

The amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the year ended December 31, 2013 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Futures Contracts
Equity Contracts (a)	$	81,726
The above derivative is located in the following Statement of Operations account: (a) Net realized gain (loss) from futures

Change in Net Unrealized Appreciation (Depreciation)	Futures Contracts
Equity Contracts (a)	$	(4,080	)
The above derivative is located in the following Statement of Operations account: (a) Change in net unrealized appreciation (depreciation) on futures

C. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $93,354,290 and $98,812,848, respectively.

D. Related Parties

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

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

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

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

For the period from January 1, 2013 through September 30, 2013, the Advisor had contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A shares at 0.99%.

Effective October 1, 2013 through September 30, 2014, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A shares at 1.00%.

Accordingly, for the year ended December 31, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $43,488, and the amount charged aggregated $407,266, which was equivalent to an annual effective rate of 0.59% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $69,347, of which $6,032 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC aggregated $111, all of which was waived.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $20,577, of which $5,348 is unpaid.

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

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

Securities Lending Fees. Effective February 7, 2013, Deutsche Bank AG serves as lending agent for the Fund. For the period from February 7, 2013 through December 31, 2013, the Fund incurred lending agent fees to Deutsche Bank AG in the amount of $6,571.

E. Ownership of the Fund

At December 31, 2013, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 48%, 28% and 24%.

F. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Global Equity VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio of DWS Global Equity VIP (formerly, DWS Diversified International Equity VIP) (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Global Equity VIP (formerly, DWS Diversified International Equity VIP) (one of funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses, had it not done so, expenses would have ben higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,164.60
Expenses Paid per $1,000*	$	5.46
Hypothetical 5% Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,020.16
Expenses Paid per $1,000*	$	5.09

* Expenses are equal to the Fund's annualized expense ratio, 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 Ratio	Class A
DWS Variable Series II — DWS Global Equity VIP	1.00%

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

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

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

Tax Information (Unaudited)

The Fund paid foreign taxes of $151,000 and earned $1,127,000 of foreign source income year during the year ended December 31, 2013. Pursuant to Section 853 of the Internal Revenue Code, the Fund designates $0.02 per share as foreign taxes paid and $0.14 per share as income earned from foreign sources for the year ended December 31, 2013.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Global Equity VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Asset Allocation Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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 distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 3rd quartile, 2nd quartile and 4th quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one- and three-year periods and has underperformed its benchmark in the five-year period ended December 31, 2012.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be higher than the median (3rd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitation agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2GE-2 (R-025828-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Global Growth VIP

(formerly DWS Global Thematic VIP)

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

7 Investment Portfolio

11 Statement of Assets and Liabilities

12 Statement of Operations

13 Statement of Changes in Net Assets

14 Financial Highlights

15 Notes to Financial Statements

20 Report of Independent Registered Public Accounting Firm

21 Information About Your Fund's Expenses

22 Tax Information

23 Proxy Voting

24 Advisory Agreement Board Considerations and Fee Evaluation

27 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 1.42% and 1.76% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

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

Growth of an Assumed $10,000 Investment in DWS Global Growth VIP
	The Morgan Stanley Capital International (MSCI) World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The index consists of 24 developed market country indices. The index is calculated using closing local market prices and translates into U.S. dollars using the London close foreign exchange rates. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Global Growth VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	12,208		$	12,395		$	20,261		$	20,662
	Average annual total return		22.08	%		7.42	%		15.17	%		7.53	%
MSCI World Index	Growth of $10,000	$	12,668		$	13,860		$	20,135		$	19,629
	Average annual total return		26.68	%		11.48	%		15.02	%		6.97	%
DWS Global Growth VIP		1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	12,162		$	12,263		$	19,891		$	19,927
	Average annual total return		21.62	%		7.04	%		14.74	%		7.14	%
MSCI World Index	Growth of $10,000	$	12,668		$	13,860		$	20,135		$	19,629
	Average annual total return		26.68	%		11.48	%		15.02	%		6.97	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

The Fund's Class A shares returned 22.08% during 2013, underperforming the 26.68% return of the MSCI World Index.1 Our team took over the Fund's management duties on May 1, 2013 at which point the Fund — formerly DWS Global Thematic VIP — was renamed DWS Global Growth VIP.

We allocate the Fund's assets among a global growth sleeve and a global small-cap growth sleeve. Since we took over the Fund on May 1, 2013, the small-cap sleeve has been the better performer of the two, delivering positive returns both an absolute basis and relative to the index.

The leading cause of the Fund's underperformance was its stock selection in the financial and consumer staples sectors.2 In the former, the largest detractors were the Metropolitan Bank and Trust Co., ICICI Bank Ltd. and Turkiye Halk Bankasi AS, which are based in the Philippines, India and Turkey, respectively. The story was similar in consumer staples, where the most notable detractors from performance included PT Indofood and Tbk PT Gudang Garam of Indonesia and Fomento Economico Mexicano SAB de CV. The underperformance of these positions underscores a broader trend that was in place during 2013: the broader shortfall in emerging-markets stocks. We held a sizeable allocation to the emerging markets throughout the past year ending December 31, 2013, whereas the benchmark is invested entirely in the developed markets. While this led to short-term underperformance for the Fund, we believe our holdings in this area provide the opportunity to invest in fast-growing companies at compelling valuations.

On the plus side, our stock picks performed very well in information technology. Among our many outperformers in this sector were the U.S. stocks Alliance Data Systems Corp. and MasterCard Inc. We also added value in the challenging materials sector via our positions in Praxair, Inc. and Stora Enso Oyj.

In the four months before we took over the Fund's management duties, the Fund underperformed its benchmark due largely to adverse stock selection in the financial, consumer staples and telecommunications sectors.

In terms of positioning, the Fund closed the year with overweight positions in information technology and industrial companies, and it was underweight in the financial, consumer discretionary and telecommunication services sectors.3,4 While the Fund is constructed from the bottom up, we continue to seek to find the best combination of growth and value in the financial, consumer discretionary and telecommunication services sectors. Overall, we seek to remain fully invested and own world-class businesses with large barriers to entry, strong growth, pricing power and conservative balance sheets.

Joseph Axtell, CFA

Lead Portfolio Manager

Rafaelina M. Lee

Reid Galas, CFA

Nils E. Ernst, PhD

Martin Berberich, CFA

Sebastien P. Werner, PhD

Portfolio Managers

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.

1 The MSCI World Index tracks the performance of stocks in select developed markets around the world, including the United States. Index returns do not reflect fees or expenses and it is not possible to invest directly into an index.

2 Consumer staples are the industries that manufacture and sell products such as food and beverages, prescription drugs, and household products.

3 The consumer discretionary sector represents industries that produce goods and services that are not necessities in everyday life.

4 "Underweight" means the Fund holds a lower weighting in a given sector or security than the benchmark. "Overweight" means it holds a higher weighting.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Common Stocks	96%	97%
Cash Equivalents	3%	1%
Participatory Notes	1%	0%
Preferred Stock	—	2%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	12/31/13	12/31/12
Industrials	20%	13%
Financials	15%	14%
Health Care	14%	12%
Information Technology	14%	15%
Consumer Discretionary	14%	10%
Consumer Staples	12%	8%
Energy	7%	8%
Materials	4%	13%
Telecommunication Services	—	4%
Utilities	—	3%
	100%	100%

Geographical Diversification (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	12/31/13	12/31/12
United States	45%	37%
Europe	30%	31%
United Kingdom	9%	2%
Asia (excluding Japan)	6%	10%
Canada	6%	6%
Japan	2%	3%
Latin America	1%	6%
Nigeria	1%	0%
Africa	—	2%
Middle East	—	2%
Bermuda	—	1%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330. The Fund's portfolio holdings are also posted on dws-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Shares		Value ($)
Common Stocks 95.4%
Belgium 1.6%
Anheuser-Busch InBev NV (Cost $778,194)		8,200		874,317
Bermuda 0.2%
Lazard Ltd. "A" (Cost $71,779)		3,026		137,138
Brazil 0.4%
CCR SA (Cost $218,874)		29,000		218,858
Canada 5.1%
Agnico Eagle Mines Ltd.		9,000		237,420
Brookfield Asset Management, Inc. "A"		21,000		814,893
Canadian Oil Sands Ltd.		20,000		376,183
Canadian Pacific Railway Ltd.		6,000		907,413
Goldcorp, Inc.		13,000		281,710
Quebecor, Inc. "B"		1,134		28,226
SunOpta, Inc.*		12,874		128,869
(Cost $2,821,768)				2,774,714
China 0.3%
Minth Group Ltd. (Cost $117,228)		66,933		139,392
Cyprus 0.2%
Prosafe SE		13,190		101,779
Songa Offshore*		6,733		3,451
(Cost $129,991)				105,230
Denmark 2.1%
Coloplast AS "B"		4,200		278,597
DS Norden AS		5,500		289,887
GN Store Nord AS		5,755		141,850
William Demant Holding AS*		4,300		418,077
(Cost $984,089)				1,128,411
Finland 0.1%
Cramo Oyj (Cost $56,616)		2,588		54,827
France 2.5%
Edenred		11,000		369,023
JC Decaux SA		3,496		144,380
LVMH Moet Hennessy Louis Vuitton SA		1,500		274,592
Pernod Ricard SA		4,800		548,059
(Cost $1,270,108)				1,336,054
Germany 3.0%
BASF SE		5,250		559,833
Fresenius Medical Care AG & Co. KGaA		12,000		854,040
United Internet AG (Registered)		5,091		216,884
(Cost $1,468,791)				1,630,757
Hong Kong 1.1%
Hong Kong Television Network Ltd.		96,393		44,013
K Wah International Holdings Ltd.		262,818		159,610
Playmates Toys Ltd.*		171,462		80,349
REXLot Holdings Ltd. (a)		1,473,180		199,785
Techtronic Industries Co.		41,941		119,438
(Cost $489,008)				603,195
	Shares		Value ($)
India 0.8%
ICICI Bank Ltd. (ADR) (Cost $529,151)		11,500		427,455
Indonesia 0.8%
PT Arwana Citramulia Tbk		1,138,391		76,749
PT Indofood CBP Sukses Makmur Tbk		450,000		377,636
(Cost $641,566)				454,385
Ireland 3.5%
Accenture PLC "A" (b)		8,100		665,982
C&C Group PLC		12,334		72,148
Experian PLC		21,300		393,117
Paddy Power PLC		1,602		136,920
Ryanair Holdings PLC (ADR)*		2,845		133,516
Shire PLC		10,000		471,217
(Cost $1,633,092)				1,872,900
Italy 2.5%
Prada SpA		42,700		379,359
Prysmian SpA		4,822		124,330
Sorin SpA*		76,000		216,890
Unipol Gruppo Finanziario SpA		102,000		612,228
(Cost $1,101,496)				1,332,807
Japan 1.6%
Ai Holdings Corp.		5,880		73,409
Avex Group Holdings, Inc.		5,838		125,551
Iida Group Holdings Co., Ltd.*		4,527		90,360
Kusuri No Aoki Co., Ltd.		1,448		80,902
MISUMI Group, Inc.		2,278		71,697
Nippon Seiki Co., Ltd.		8,059		155,952
United Arrows Ltd.		2,783		104,241
Universal Entertainment Corp.		4,998		92,288
Yumeshin Holdings Co., Ltd.		7,248		78,678
(Cost $885,397)				873,078
Luxembourg 0.9%
Eurofins Scientific (Cost $419,564)		1,800		487,455
Malaysia 1.1%
Hartalega Holdings Bhd.		60,611		133,777
IHH Healthcare Bhd.*		350,000		412,760
Tune Ins Holdings Bhd.*		112,278		66,878
(Cost $658,501)				613,415
Mexico 0.8%
Fomento Economico Mexicano SAB de CV (ADR) (Cost $491,474)		4,300		420,841
Netherlands 2.8%
ASML Holding NV		6,000		563,431
Brunel International NV		2,065		126,798
Chicago Bridge & Iron Co. NV (b)		1,433		119,139
ING Groep NV (CVA)*		32,000		447,477
Koninklijke Vopak NV		1,604		93,978
SBM Offshore NV*		7,323		149,647
(Cost $1,236,227)				1,500,470
	Shares		Value ($)
Norway 1.5%
DNO International ASA*		125,000		501,171
Norsk Hydro ASA		70,000		312,924
(Cost $521,769)				814,095
Panama 0.2%
Banco Latinoamericano de Comercio Exterior SA "E" (Cost $92,557)		4,132		115,779
Philippines 1.3%
Alliance Global Group, Inc.		184,682		107,721
Century Properties Group, Inc.		818,014		24,444
Emperador, Inc.*		164,472		39,701
House of Investments, Inc.		65,595		9,122
Metropolitan Bank & Trust Co.		310,000		529,175
(Cost $883,689)				710,163
Singapore 0.3%
Lian Beng Group Ltd.		266,639		114,206
UE E&C Ltd.		54,057		44,623
Yongnam Holdings Ltd.		69,256		13,501
(Cost $165,754)				172,330
Spain 0.6%
Mediaset Espana Communication SA* (Cost $323,477)		28,000		323,984
Sweden 4.5%
Atlas Copco AB "A"		19,000		529,912
Meda AB "A"		16,500		209,793
Svenska Cellulosa AB "B"		20,000		617,919
Swedish Match AB		18,000		578,791
Telefonaktiebolaget LM Ericsson "B"		40,200		492,276
(Cost $2,224,535)				2,428,691
Switzerland 4.7%
DKSH Holding AG		3,500		272,365
Dufry AG (Registered)*		691		121,642
Nestle SA (Registered)		10,000		734,080
Novartis AG (Registered)		5,300		424,161
Pentair Ltd. (Registered) (b)		7,000		543,690
Swatch Group AG (Bearer)		630		418,029
(Cost $2,267,370)				2,513,967
Thailand 0.1%
Malee Sampran PCL (Foreign Registered) (Cost $83,742)		46,269		42,242
United Kingdom 7.4%
Aberdeen Asset Management PLC		67,000		557,964
Arrow Global Group PLC*		17,550		77,727
Aveva Group PLC		13,000		466,907
Babcock International Group PLC		8,392		188,363
British American Tobacco PLC		7,500		402,405
Burberry Group PLC		3,534		88,788
Clinigen Healthcare Ltd.		8,084		80,477
Crest Nicholson Holdings PLC*		19,924		120,772
Domino's Pizza Group PLC		9,577		81,384
Essentra PLC		7,465		106,512
Hargreaves Lansdown PLC		5,347		120,234
HellermannTyton Group PLC		22,616		113,273
IG Group Holdings PLC		8,899		91,030
Intertek Group PLC		11,000		573,895
	Shares		Value ($)
Jardine Lloyd Thompson Group PLC		4,265		72,076
John Wood Group PLC		7,785		88,808
Monitise PLC*		60,507		67,536
Reckitt Benckiser Group PLC		5,500		437,892
Rotork PLC		2,294		109,506
Spirax-Sarco Engineering PLC		2,563		127,256
(Cost $3,575,637)				3,972,805
United States 43.4%
Actavis PLC*		1,400		235,200
ADT Corp. (a)		5,000		202,350
Advance Auto Parts, Inc.		962		106,474
AECOM Technology Corp.*		800		23,544
Affiliated Managers Group, Inc.*		584		126,658
Agilent Technologies, Inc.		5,000		285,950
Allergan, Inc.		4,500		499,860
Alliance Data Systems Corp.* (a)		4,000		1,051,720
Altra Industrial Motion Corp.		2,046		70,014
Amgen, Inc.		3,700		422,392
Amphenol Corp. "A" (a)		10,000		891,800
BE Aerospace, Inc.*		1,588		138,204
Beam, Inc.		9,700		660,182
Biogen Idec, Inc.*		700		195,825
BorgWarner, Inc.		2,648		148,050
Bristol-Myers Squibb Co.		10,000		531,500
Cardtronics, Inc.*		2,720		118,184
Catamaran Corp.*		1,896		90,022
CBRE Group, Inc. "A"*		17,500		460,250
Cerner Corp.* (a)		9,000		501,660
Chart Industries, Inc.*		842		80,529
Colfax Corp.*		10,000		636,900
Danaher Corp.		7,500		579,000
Deckers Outdoor Corp.* (a)		2,300		194,258
DFC Global Corp.*		7,296		83,539
DIRECTV*		9,000		621,810
Dresser-Rand Group, Inc.*		1,644		98,032
Dril-Quip, Inc.*		916		100,696
Encore Capital Group, Inc.* (a)		2,638		132,586
Exxon Mobil Corp.		4,000		404,800
Google, Inc. "A"*		550		616,391
Hain Celestial Group, Inc.*		946		85,878
HeartWare International, Inc.* (a)		1,091		102,510
Jack in the Box, Inc.*		1,392		69,628
Jarden Corp.*		2,001		122,761
JPMorgan Chase & Co.		16,500		964,920
Kindred Healthcare, Inc.		3,775		74,519
L Brands, Inc.		7,200		445,320
Las Vegas Sands Corp.		9,000		709,830
Leucadia National Corp.		3,872		109,732
Manitowoc Co., Inc.		5,873		136,958
MasterCard, Inc. "A"		1,200		1,002,552
McDonald's Corp.		5,600		543,368
MICROS Systems, Inc.*		1,642		94,202
Middleby Corp.* (a)		499		119,745
National Oilwell Varco, Inc.		6,000		477,180
Noble Energy, Inc.		11,000		749,210
Oaktree Capital Group LLC		2,482		146,041
Oasis Petroleum, Inc.*		1,734		81,446
Ocwen Financial Corp.*		2,954		163,799
Oil States International, Inc.*		641		65,203
Pacira Pharmaceuticals, Inc.* (a)		4,041		232,317
Pall Corp. (a)		7,500		640,125
Polaris Industries, Inc.		1,085		158,019
	Shares		Value ($)
Praxair, Inc.		6,300		819,189
Precision Castparts Corp.		3,600		969,480
PTC, Inc.*		2,093		74,071
Roadrunner Transportation Systems, Inc.*		3,382		91,145
Rosetta Resources, Inc.*		929		44,629
Schlumberger Ltd.		5,500		495,605
Sears Hometown & Outlet Stores, Inc.*		2,077		52,964
Sinclair Broadcast Group, Inc. "A"		2,954		105,546
Springleaf Holdings, Inc.* (a)		5,127		129,611
Synta Pharmaceuticals Corp.*		8,754		45,871
Tenneco, Inc.*		2,007		113,536
The Bancorp., Inc.*		3,319		59,443
Thermon Group Holdings, Inc.*		3,879		106,013
Thoratec Corp.*		2,722		99,625
TIBCO Software, Inc.*		3,265		73,397
TiVo, Inc.*		5,154		67,620
Tractor Supply Co. (a)		6,200		480,996
Trimble Navigation Ltd.*		16,500		572,550
Tristate Capital Holdings, Inc.*		5,077		60,213
United Rentals, Inc.*		1,865		145,377
United Technologies Corp.		4,700		534,860
Urban Outfitters, Inc.*		2,092		77,613
VeriFone Systems, Inc.*		2,234		59,916
WABCO Holdings, Inc.*		1,293		120,779
	Shares		Value ($)
Waddell & Reed Financial, Inc. "A" (a)		2,418		157,460
Western Digital Corp.		2,835		237,857
(Cost $19,294,032)				23,399,009
Total Common Stocks (Cost $45,435,476)				51,478,764
Participatory Note 1.3%
Nigeria
Zenith Bank PLC (issuer Merrill Lynch International), Expiration Date 8/21/2015 (Cost $533,000)		4,100,000		702,346
Securities Lending Collateral 8.9%
Daily Assets Fund Institutional, 0.08% (c) (d) (Cost $4,778,217)		4,778,217		4,778,217
Cash Equivalents 3.0%
Central Cash Management Fund, 0.05% (c) (Cost $1,623,148)		1,623,148		1,623,148

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $52,369,841)†		108.6			58,582,475
Other Assets and Liabilities, Net		(8.6	)		(4,628,204	)
Net Assets		100.0			53,954,271

* Non-income producing security.

† The cost for federal income tax purposes was $52,480,940. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $6,101,535. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $7,583,184 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,481,649.

(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 December 31, 2013 amounted to $4,692,985, which is 8.7% of net assets.

(b) Listed on the New York Stock Exchange.

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

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

ADR: American Depositary Receipt

CVA: Certificaten Van Aandelen (Certificate of Stock)

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2		Level 3		Total
Common Stocks
Belgium	$	—	$	874,317	$	—	$	874,317
Bermuda		137,138		—		—		137,138
Brazil		218,858		—		—		218,858
Canada		2,774,714		—		—		2,774,714
China		—		139,392		—		139,392
Cyprus		—		105,230		—		105,230
Denmark		—		1,128,411		—		1,128,411
Finland		—		54,827		—		54,827
France		—		1,336,054		—		1,336,054
Germany		—		1,630,757		—		1,630,757
Hong Kong		—		603,195		—		603,195
India		427,455		—		—		427,455
Indonesia		—		454,385		—		454,385
Ireland		799,498		1,073,402		—		1,872,900
Italy		—		1,332,807		—		1,332,807
Japan		—		873,078		—		873,078
Luxembourg		—		487,455		—		487,455
Malaysia		—		613,415		—		613,415
Mexico		420,841		—		—		420,841
Netherlands		119,139		1,381,331		—		1,500,470
Norway		—		814,095		—		814,095
Panama		115,779		—		—		115,779
Philippines		—		710,163		—		710,163
Singapore		—		172,330		—		172,330
Spain		—		323,984		—		323,984
Sweden		—		2,428,691		—		2,428,691
Switzerland		543,690		1,970,277		—		2,513,967
Thailand		—		42,242		—		42,242
United Kingdom		—		3,972,805		—		3,972,805
United States		23,399,009		—		—		23,399,009
Participatory Note		—		702,346		—		702,346
Short-Term Investments (e)		6,401,365		—		—		6,401,365
Total	$	35,357,486	$	23,224,989	$	—	$	58,582,475

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

(e) See Investment Portfolio for additional detailed categorizations.

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $45,968,476) — including $4,697,054 of securities loaned		52,181,110
Investment in Daily Assets Fund Institutional (cost $4,778,217)*		4,778,217
Investment in Central Cash Management Fund (cost $1,623,148)		1,623,148
Total investments in securities, at value (cost $52,369,841)		58,582,475
Cash		12
Foreign currency, at value (cost $133,005)		129,805
Receivable for investments sold		67,225
Receivable for Fund shares sold		26
Dividends receivable		27,842
Interest receivable		68
Foreign taxes recoverable		25,891
Due from Advisor		10,657
Other assets		1,067
Total assets		58,845,068
Liabilities
Payable upon return of securities loaned		4,778,217
Payable for investments purchased		35,919
Payable for Fund shares redeemed		38,836
Accrued Trustees' fees		922
Other accrued expenses and payables		36,903
Total liabilities		4,890,797
Net assets, at value		53,954,271
Net Assets Consist of
Undistributed net investment income		478,685
Net unrealized appreciation (depreciation) on: Investments		6,212,634
Foreign currency		(2,661	)
Accumulated net realized gain (loss)		(44,269,489	)
Paid-in capital		91,535,102
Net assets, at value		53,954,271
Class A Net Asset Value, offering and redemption price per share ($51,207,041 ÷ 4,601,327 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.13
Class B Net Asset Value, offering and redemption price per share ($2,747,230 ÷ 246,555 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.14

* Represents collateral on securities loaned.

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Dividends (net of foreign taxes withheld of $63,811)	$	966,040
Income distributions — Central Cash Management Fund		842
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		23,222
Total income		990,104
Expenses: Management fee		481,790
Administration fee		52,655
Services to shareholders		1,464
Record keeping fees (Class B)		2,995
Distribution service fee (Class B)		6,995
Custodian fee		75,614
Audit and tax fees		65,235
Legal fees		10,969
Reports to shareholders		34,980
Trustees' fees and expenses		3,622
Other		38,311
Total expenses before expense reductions		774,630
Expense reductions		(302,929	)
Total expenses after expense reductions		471,701
Net investment income (loss)		518,403
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		9,034,848
Foreign currency		(30,900	)
		9,003,948
Change in net unrealized appreciation (depreciation) on: Investments		1,092,224
Foreign currency		(2,244	)
		1,089,980
Net gain (loss)		10,093,928
Net increase (decrease) in net assets resulting from operations	$	10,612,331

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income (loss)	$	518,403		$	758,059
Net realized gain (loss)		9,003,948			97,908
Change in net unrealized appreciation (depreciation)		1,089,980			8,394,806
Net increase (decrease) in net assets resulting from operations		10,612,331			9,250,773
Distributions to shareholders from: Net investment income: Class A		(689,482	)		(741,039	)
Class B		(27,740	)		(31,068	)
Total distributions		(717,222	)		(772,107	)
Fund share transactions: Class A Proceeds from shares sold		4,242,450			7,619,915
Reinvestment of distributions		689,482			741,039
Payments for shares redeemed		(16,663,817	)		(12,066,736	)
Net increase (decrease) in net assets from Class A share transactions		(11,731,885	)		(3,705,782	)
Class B Proceeds from shares sold		147,425			80,402
Reinvestment of distributions		27,740			31,068
Payments for shares redeemed		(823,023	)		(823,480	)
Net increase (decrease) in net assets from Class B share transactions		(647,858	)		(712,010	)
Increase (decrease) in net assets		(2,484,634	)		4,060,874
Net assets at beginning of period		56,438,905			52,378,031
Net assets at end of period (including undistributed net investment income of $478,685 and $696,736, respectively)	$	53,954,271		$	56,438,905
Other Information
Class A Shares outstanding at beginning of period		5,793,732			6,234,878
Shares sold		422,826			882,663
Shares issued to shareholders in reinvestment of distributions		71,746			85,967
Shares redeemed		(1,686,977	)		(1,409,776	)
Net increase (decrease) in Class A shares		(1,192,405	)		(441,146	)
Shares outstanding at end of period		4,601,327			5,793,732
Class B Shares outstanding at beginning of period		311,300			393,322
Shares sold		14,554			9,525
Shares issued to shareholders in reinvestment of distributions		2,878			3,592
Shares redeemed		(82,177	)		(95,139	)
Net increase (decrease) in Class B shares		(64,745	)		(82,022	)
Shares outstanding at end of period		246,555			311,300

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	9.24		$	7.90		$	9.28		$	8.24		$	5.84
Income (loss) from investment operations: Net investment incomea		.10			.12			.11			.06			.08
Net realized and unrealized gain (loss)		1.92			1.34			(1.43	)		1.06			2.42
Total from investment operations		2.02			1.46			(1.32	)		1.12			2.50
Less distributions from: Net investment income		(.13	)		(.12	)		(.06	)		(.08	)		(.10	)
Total distributions		(.13	)		(.12	)		(.06	)		(.08	)		(.10	)
Net asset value, end of period	$	11.13		$	9.24		$	7.90		$	9.28		$	8.24
Total Return (%)b		22.08			18.60			(14.39	)		13.65			43.82
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		51			54			49			68			66
Ratio of expenses before expense reductions (%)		1.45			1.42			1.37			1.41			1.38
Ratio of expenses after expense reductions (%)		.88			.99			1.03			1.05			1.04
Ratio of net investment income (%)		1.00			1.40			1.24			.77			1.23
Portfolio turnover rate (%)		171			107			127			165			190
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

	Years Ended December 31,
Class B		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	9.25		$	7.91		$	9.29		$	8.25		$	5.85
Income (loss) from investment operations: Net investment incomea		.07			.09			.08			.04			.06
Net realized and unrealized gain (loss)		1.92			1.34			(1.44	)		1.05			2.42
Total from investment operations		1.99			1.43			(1.36	)		1.09			2.48
Less distributions from: Net investment income		(.10	)		(.09	)		(.02	)		(.05	)		(.08	)
Total distributions		(.10	)		(.09	)		(.02	)		(.05	)		(.08	)
Net asset value, end of period	$	11.14		$	9.25		$	7.91		$	9.29		$	8.25
Total Return (%)b		21.62			18.16			(14.67	)		13.24			43.23
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		3			3			3			5			5
Ratio of expenses before expense reductions (%)		1.81			1.76			1.72			1.76			1.73
Ratio of expenses after expense reductions (%)		1.23			1.34			1.38			1.40			1.39
Ratio of net investment income (%)		.66			1.04			.88			.42			.88
Portfolio turnover rate (%)		171			107			127			165			190
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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

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

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 and are categorized as Level 1 securities. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation. For certain international equity securities, in order to adjust for events which may occur between the close of the foreign exchanges and the close of the New York Stock Exchange, a fair valuation model may be used. This fair valuation model takes into account comparisons to the valuation of American Depository Receipts (ADRs), exchange-traded funds, futures contracts and certain indices and these securities are categorized as Level 2.

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

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

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

As of December 31, 2013, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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

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

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

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

At December 31, 2013, the Fund had a net tax basis capital loss carryforward of approximately $44,211,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($26,421,000) and December 31, 2017 ($17,790,000), the respective expiration dates, whichever occurs first.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	530,306
Capital loss carryforwards	$	(44,211,000	)
Unrealized appreciation (depreciation) on investments	$	6,101,535

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	717,222	$	772,107

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Certain dividends from foreign securities may be recorded subsequent to the ex-dividend date as soon as the Fund is informed of such dividends. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments.

B. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $88,360,238 and $102,273,315, respectively.

C. Related Parties

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

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

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

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

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

Class A	.90%
Class B	1.25%

Effective October 1, 2013 through September 30, 2014, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of each class as follows:

Class A	.80%
Class B	1.15%

Accordingly, for the year ended December 31, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $302,436, and the amount charged aggregated $179,354, which was equivalent to an annual effective rate of 0.34% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $52,655, of which $4,436 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC were as follows:

Services to Shareholders	Total Aggregated		Waived
Class A	$	285	$	285
Class B		71		71
	$	356	$	356

In addition, for the year ended December 31, 2013, the Advisor reimbursed the Fund $137 of recordkeeping fees for Class B shares.

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DWS Investments Distributors, Inc. ("DIDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the year ended December 31, 2013, the Distribution Service Fee aggregated $6,995, of which $568 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $19,139, of which $4,496 is unpaid.

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

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

D. Investing in Emerging Markets

Investing in emerging markets may involve special risks and considerations not typically associated with investing in developed markets. These risks include revaluation of currencies, high rates of inflation or deflation, repatriation restrictions on income and capital, and future adverse political, social and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls or delayed settlements, and may have prices that are more volatile or less easily assessed than those of comparable securities of issuers in developed markets.

E. Ownership of the Fund

At December 31, 2013, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 71% and 24%. One participating insurance company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 96%.

F. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Global Growth VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS Global Growth VIP (formerly, DWS Global Thematic VIP) (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Global Growth VIP (formerly, DWS Global Thematic VIP) (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges, redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,166.70	$	1,164.10
Expenses Paid per $1,000*	$	4.64	$	6.55
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,020.92	$	1,019.16
Expenses Paid per $1,000*	$	4.33	$	6.11

* 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 B
DWS Variable Series II — DWS Global Growth VIP	.85%	1.20%

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

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

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

Tax Information (Unaudited)

For corporate shareholders, 22% of the ordinary dividends (i.e., income dividends plus short-term capital gains) paid during the Fund's fiscal year ended December 31, 2013, qualified for the dividends received deduction.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Global Growth VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Equity Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 3rd quartile, 4th quartile and 4th quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one-year period and has underperformed its benchmark in the three- and five-year periods ended December 31, 2012. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board recognized that DIMA has made changes to its investment personnel and processes in recent years in an effort to enhance its investment platform and improve long-term performance across the DWS fund complex.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were higher than the median (4th quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitations agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2GG-2 (R-025830-4 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Global Income Builder VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

6 Investment Portfolio

29 Statement of Assets and Liabilities

30 Statement of Operations

31 Statement of Changes in Net Assets

32 Financial Highlights

33 Notes to Financial Statements

42 Report of Independent Registered Public Accounting Firm

43 Information About Your Fund's Expenses

44 Tax Information

44 Proxy Voting

45 Advisory Agreement Board Considerations and Fee Evaluation

48 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 is 0.60% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in DWS Global Income Builder VIP
	The Russell 1000® Index is an unmanaged index that measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92% of the total market capitalization of the Russell 3000® Index. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. The S&P® Target Risk Moderate Index is designed to measure the performance of S&P's proprietary moderate target risk allocation model. The S&P® Target Risk Moderate Index seeks to provide significant exposure to fixed income, while also allocating a smaller portion of exposure to equities in order to seek current income, some capital preservation, and an opportunity for moderate to low capital appreciation. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Global Income Builder VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	11,663		$	12,989		$	17,832		$	16,658
	Average annual total return		16.63	%		9.11	%		12.26	%		5.24	%
Russell 1000® Index	Growth of $10,000	$	13,311		$	15,730		$	23,454		$	21,161
	Average annual total return		33.11	%		16.30	%		18.59	%		7.78	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,798		$	11,011		$	12,427		$	15,599
	Average annual total return		–2.02	%		3.26	%		4.44	%		4.55	%
S&P® Target Risk Moderate Index	Growth of $10,000	$	11,047		$	12,267		$	15,108		$	16,940
	Average annual total return		10.47	%		7.05	%		8.60	%		5.41	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

The Fund returned 16.63% during the 12 months ended December 31, 2013 (Class A shares, unadjusted for contract charges) and outperformed the 10.47% return of S&P® Target Risk Moderate Index. Its two other benchmarks — the Barclays U.S. Aggregate Bond Index, which represents domestic taxable investment-grade bonds, and the Russell 1000® Index, which tracks the performance of the 1,000 largest stocks in the Russell 3000® Index — returned –2.02% and 33.11%, respectively.1,2,3

As of December 31, 2013, 63% of the portfolio was allocated to global dividend-paying stocks and 33% was allocated to bonds, with the remainder in cash.

Our equity allocation made the largest contribution to absolute returns, reflecting stocks' strength vs. bonds. The leading contributions came from an overweight in the technology sector and stock selection within the financial, utilities and consumer staples sectors.4,5 The most significant detractor was our stock selection in industrials.

The Fund's bond portfolio finished with a flat return, but performed well relative to the benchmark due to its allocation to high-yield bonds, which outperformed, as well as strong security selection within its corporate bond segment. The largest detractor was the Fund's above-benchmark duration (or interest-rate sensitivity) in the first half of the year ending December 31, 2013, which caused the Fund to underperform during the second-quarter sell-off. The Fund's bond portfolio closed the year with a duration that was about equal to that of the benchmark.

We hold a positive outlook for global equities in 2014, but we expect that the backdrop will remain somewhat challenging for dividend-paying stocks. The high-dividend segment is generally populated by slower, more stable growers, and it has a lower representation of the economically sensitive stocks that typically outperform in periods of improving growth. In this environment, our approach is to continue emphasizing our top ideas within the portfolio. We believe this should position the equity portfolio so its performance is more a function of our stock selection than of the broader performance trends for dividend stocks. As of the close of the year ending December 31, 2013, the equity portion of the Fund held its largest sector overweight in consumer staples, and its largest underweights were in the health care and telecommunications sectors.

With regard to the bond market, we expect that strengthening economic growth will continue to pressure long-term Treasuries but provide support for the investment-grade corporate and high-yield sectors. We remain focused on adding value through individual security selection, portfolio allocation and our "go anywhere" strategy. We believe this approach — and not one that seeks to make interest-rate "bets" — is the prudent course in a potentially challenging environment.

Owen Fitzpatrick, CFA

William Chepolis, CFA
Philip G. Condon

Gary Russell, CFA

John D. Ryan
Darwei Kung

Louis Cucciniello

Portfolio Managers

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.

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

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

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

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

4 "Underweight" means the Fund holds a lower weighting in a given sector or security than the benchmark. "Overweight" means the Fund holds a higher weighting.

5 The consumer staples sector represents companies that produce essential items such as food, beverages and household items.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Equity	63%	55%
Common Stocks	63%	55%
Fixed Income	33%	44%
Corporate Bonds	23%	28%
Government & Agency Obligations	5%	6%
Collateralized Mortgage Obligations	2%	2%
Municipal Bonds and Notes	1%	0%
Mortgage-Backed Securities Pass-Throughs	1%	3%
Commercial Mortgage-Backed Securities	1%	1%
Asset-Backed	0%	1%
Loan Participations and Assignments	0%	3%
Cash Equivalents	4%	1%
	100%	100%

Sector Diversification (As a % of Equities, Corporate Bonds, Loan Participations and Assignments, Preferred Securities, Convertible Bonds and Other Investments)	12/31/13	12/31/12
Financials	22%	19%
Consumer Discretionary	13%	8%
Information Technology	12%	8%
Industrials	11%	6%
Telecommunication Services	9%	7%
Energy	9%	13%
Consumer Staples	7%	13%
Health Care	6%	11%
Utilities	6%	7%
Materials	5%	8%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at 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-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Shares		Value ($)
Common Stocks 63.1%
Consumer Discretionary 7.7%
Auto Components 0.4%
Aisin Seiki Co., Ltd.		3,100		126,148
Bridgestone Corp.		4,600		174,388
Cie Generale des Etablissements Michelin		267		28,493
Delphi Automotive PLC		3,000		180,390
Denso Corp.		1,700		89,884
Johnson Controls, Inc.		700		35,910
Magna International, Inc.		2,500		204,990
Sumitomo Rubber Industries Ltd.		7,200		102,527
Toyota Industries Corp.		2,000		90,395
TRW Automotive Holdings Corp.*		1,400		104,146
Yokohama Rubber Co., Ltd.		4,466		44,000
				1,181,271
Automobiles 1.3%
Bayerische Motoren Werke (BMW) AG		1,501		176,028
Daihatsu Motor Co., Ltd.		6,500		110,261
Daimler AG (Registered)		3,206		277,514
Ford Motor Co.		23,200		357,976
Fuji Heavy Industries Ltd.		4,900		140,757
General Motors Co.*		13,200		539,484
Honda Motor Co., Ltd.		4,600		189,717
Isuzu Motors Ltd.		9,000		56,114
Nissan Motor Co., Ltd.		51,800		436,072
Renault SA		5,413		437,032
Toyota Motor Corp.		6,400		389,456
Volkswagen AG		1,495		405,112
				3,515,523
Diversified Consumer Services 0.1%
Benesse Holdings, Inc.		1,600		64,268
H&R Block, Inc.		4,000		116,160
				180,428
Hotels, Restaurants & Leisure 1.4%
Carnival Corp.		8,300		333,411
Chipotle Mexican Grill, Inc.*		200		106,556
Compass Group PLC		11,746		188,333
Crown Resorts Ltd.		11,826		177,992
Darden Restaurants, Inc.		2,400		130,488
Dawn Holdings, Inc.* (a)		1		1,875
Flight Centre Travel Group Ltd.		2,068		87,827
Galaxy Entertainment Group Ltd.*		14,000		125,711
International Game Technology		5,300		96,248
Las Vegas Sands Corp.		2,200		173,514
Marriott International, Inc. "A"		500		24,680
McDonald's Corp.		4,800		465,744
Oriental Land Co., Ltd.		600		86,519
Royal Caribbean Cruises Ltd.		6,000		284,520
Sands China Ltd.		22,400		184,076
SJM Holdings Ltd.		6,929		23,370
Starbucks Corp.		3,600		282,204
Tatts Group Ltd.		34,755		96,388
Trump Entertainment Resorts, Inc.*		2		0
TUI Travel PLC		31,387		214,884
Whitbread PLC		1,485		92,298
William Hill PLC		22,422		149,258
Wyndham Worldwide Corp.		2,100		154,749
	Shares		Value ($)
Yum! Brands, Inc.		2,500		189,025
				3,669,670
Household Durables 0.7%
Electrolux AB "B"		1,842		48,493
Garmin Ltd. (b)		1,700		78,574
Leggett & Platt, Inc. (b)		2,500		77,350
Mohawk Industries, Inc.*		1,600		238,240
Newell Rubbermaid, Inc.		5,700		184,737
Persimmon PLC*		8,450		173,594
PulteGroup, Inc.		11,600		236,292
Sekisui Chemical Co., Ltd.		7,000		86,050
Sekisui House Ltd.		17,172		240,443
Sony Corp.		4,700		81,178
Toll Brothers, Inc.*		1,300		48,100
Whirlpool Corp.		2,000		313,720
				1,806,771
Internet & Catalog Retail 0.0%
Amazon.com, Inc.*		100		39,879
Leisure Equipment & Products 0.2%
Hasbro, Inc.		2,000		110,020
Mattel, Inc.		4,600		218,868
Namco Bandai Holdings, Inc.		7,000		155,504
				484,392
Media 2.2%
British Sky Broadcasting Group PLC		13,443		188,040
CBS Corp. "B"		1,500		95,610
Comcast Corp. "A"		11,700		583,596
Comcast Corp. "A"		12,000		623,580
DIRECTV*		5,800		400,722
Discovery Communications, Inc. "A"*		400		36,168
Discovery Communications, Inc. "C"*		1,300		109,018
Lagardere SCA		5,335		198,347
Liberty Global PLC "A"*		3,800		338,162
Liberty Global PLC "C"*		4,600		387,872
Liberty Media Corp. "A"*		1,100		161,095
News Corp. "A"*		8,000		144,160
Omnicom Group, Inc.		800		59,496
Pearson PLC		3,218		71,477
Reed Elsevier PLC		6,016		89,671
Scripps Networks Interactive, Inc. "A"		2,800		241,948
SES SA		5,037		163,095
Shaw Communications, Inc. "B"		4,900		119,242
Thomson Reuters Corp.		3,100		117,230
Time Warner Cable, Inc.		1,600		216,800
Time Warner, Inc.		6,800		474,096
Twenty-First Century Fox, Inc. "A"		3,900		137,202
Twenty-First Century Fox, Inc. "B"		5,900		204,140
Vertis Holdings, Inc.*		111		0
Viacom, Inc. "B"		3,400		296,956
Walt Disney Co.		4,700		359,080
WPP PLC		5,791		132,891
				5,949,694
Multiline Retail 0.3%
Canadian Tire Corp., Ltd. "A"		200		18,732
Dollar General Corp.*		2,500		150,800
Family Dollar Stores, Inc.		600		38,982
	Shares		Value ($)
Kohl's Corp.		4,200		238,350
Macy's, Inc.		2,800		149,520
Target Corp.		4,700		297,369
				893,753
Specialty Retail 0.4%
AutoZone, Inc.*		400		191,176
Bed Bath & Beyond, Inc.*		1,200		96,360
GameStop Corp. "A" (b)		2,400		118,224
Home Depot, Inc.		2,600		214,084
Lowe's Companies, Inc.		3,400		168,470
O'Reilly Automotive, Inc.*		400		51,484
PetSmart, Inc.		200		14,550
Staples, Inc.		4,649		73,873
The Gap, Inc.		1,100		42,988
TJX Companies, Inc.		2,000		127,460
				1,098,669
Textiles, Apparel & Luxury Goods 0.7%
Christian Dior SA		1,190		225,288
Cie Financiere Richemont SA (Registered)		1,957		195,835
Coach, Inc.		1,200		67,356
Gildan Activewear, Inc.		1,100		58,622
Kering		407		86,073
LVMH Moet Hennessy Louis Vuitton SA		477		87,320
Michael Kors Holdings Ltd.*		1,100		89,309
NIKE, Inc. "B"		3,400		267,376
Swatch Group AG (Bearer)		261		173,183
Swatch Group AG (Registered)		2,200		248,675
VF Corp.		3,372		210,210
Yue Yuen Industrial (Holdings) Ltd.		38,500		128,815
				1,838,062
Consumer Staples 4.0%
Beverages 0.5%
Anheuser-Busch InBev NV		574		61,202
Carlsberg AS "B"		596		66,211
Coca-Cola Co.		5,800		239,598
Diageo PLC		3,600		118,913
Dr. Pepper Snapple Group, Inc.		3,300		160,776
Heineken Holding NV		2,229		141,357
Heineken NV		452		30,606
Molson Coors Brewing Co. "B"		3,700		207,755
PepsiCo, Inc.		4,552		377,543
				1,403,961
Food & Staples Retailing 1.4%
Aeon Co., Ltd.		9,900		134,259
Alimentation Couche-Tard, Inc. "B"		1,300		97,759
Casino Guichard-Perrachon SA		1,417		163,793
Costco Wholesale Corp.		600		71,406
CVS Caremark Corp.		6,000		429,420
Empire Co., Ltd. "A"		2,100		143,486
George Weston Ltd.		1,100		80,254
J Sainsbury PLC		52,135		315,811
Kesko Oyj "B"		4,436		163,617
Koninklijke Ahold NV		1,309		23,504
Kroger Co.		4,900		193,697
Loblaw Companies Ltd.		1,800		71,814
Metro, Inc.		300		18,329
Safeway, Inc.		1,100		35,827
Sysco Corp.		2,400		86,640
Tesco PLC		74,635		413,346
Wal-Mart Stores, Inc.		5,800		456,402
	Shares		Value ($)
Walgreen Co.		3,900		224,016
Wesfarmers Ltd.		4,338		170,836
WM Morrison Supermarkets PLC		85,433		369,993
Woolworths Ltd.		5,420		163,862
				3,828,071
Food Products 1.0%
Archer-Daniels-Midland Co.		6,800		295,120
Aryzta AG*		1,635		125,687
Bunge Ltd.		4,100		336,651
Campbell Soup Co. (b)		1,700		73,576
ConAgra Foods, Inc.		5,700		192,090
General Mills, Inc.		3,800		189,658
Hormel Foods Corp.		700		31,619
Kellogg Co.		2,100		128,247
Kerry Group PLC "A"		1,139		79,146
Kraft Foods Group, Inc.		1,100		59,312
Lindt & Spruengli AG		10		45,074
Mondelez International, Inc. "A"		7,300		257,690
Nestle SA (Registered)		5,015		368,141
Suedzucker AG		8,323		224,666
Tate & Lyle PLC		524		7,026
The JM Smucker Co.		1,100		113,982
Tyson Foods, Inc. "A"		5,700		190,722
Wilmar International Ltd.		13,000		35,286
				2,753,693
Household Products 0.3%
Church & Dwight Co., Inc.		300		19,884
Colgate-Palmolive Co.		1,700		110,857
Energizer Holdings, Inc. (b)		800		86,592
Kimberly-Clark Corp.		1,800		188,028
Procter & Gamble Co.		4,727		384,825
Reckitt Benckiser Group PLC		1,168		92,992
				883,178
Tobacco 0.8%
Altria Group, Inc.		8,051		309,078
British American Tobacco PLC		4,198		225,240
Imperial Tobacco Group PLC		9,779		379,514
Japan Tobacco, Inc.		4,700		152,924
Lorillard, Inc.		5,600		283,808
Philip Morris International, Inc.		5,000		435,650
Reynolds American, Inc.		4,200		209,958
				1,996,172
Energy 5.7%
Energy Equipment & Services 0.8%
Baker Hughes, Inc.		3,000		165,780
Diamond Offshore Drilling, Inc.		1,500		85,380
Ensco PLC "A"		8,700		497,466
Halliburton Co.		3,200		162,400
National Oilwell Varco, Inc.		1,600		127,248
Noble Corp. PLC		9,000		337,230
Rowan Companies PLC "A"*		8,600		304,096
Schlumberger Ltd.		2,900		261,319
Transocean Ltd.		2,936		143,717
				2,084,636
Oil, Gas & Consumable Fuels 4.9%
Anadarko Petroleum Corp.		800		63,456
Apache Corp.		2,000		171,880
BG Group PLC		8,799		189,621
BP PLC		97,214		787,508
Canadian Natural Resources Ltd.		5,200		175,936
Chesapeake Energy Corp. (b)		13,800		374,532
Chevron Corp.		6,100		761,951
	Shares		Value ($)
ConocoPhillips		6,786		479,431
Cosmo Oil Co., Ltd.*		38,310		73,238
Devon Energy Corp.		4,700		290,789
Enbridge, Inc. (b)		500		21,845
Eni SpA		8,225		198,877
EOG Resources, Inc.		600		100,704
Exxon Mobil Corp.		6,000		607,200
Hess Corp.		3,000		249,000
Husky Energy, Inc.		7,700		244,283
Idemitsu Kosan Co., Ltd.		22,800		519,137
Imperial Oil Ltd.		4,400		194,847
Japan Petroleum Exploration Co.		4,200		159,174
JX Holdings, Inc.		133,400		686,837
Kinder Morgan, Inc.		10,000		360,000
Marathon Oil Corp.		5,800		204,740
Marathon Petroleum Corp.		2,600		238,498
Murphy Oil Corp.		5,400		350,352
Neste Oil Oyj		16,380		325,757
Occidental Petroleum Corp.		3,400		323,340
OMV AG		6,363		304,756
Origin Energy Ltd.		6,983		87,767
Pacific Rubiales Energy Corp.		4,800		82,873
Phillips 66		3,200		246,816
Repsol SA		2,873		72,590
Royal Dutch Shell PLC "A"		23,835		856,018
Royal Dutch Shell PLC "B"		21,361		803,869
Showa Shell Sekiyu KK (b)		26,400		268,405
Spectra Energy Corp.		4,400		156,728
Statoil ASA		14,632		355,410
Suncor Energy, Inc.		6,100		213,852
Tesoro Corp.		2,500		146,250
TonenGeneral Sekiyu KK (b)		19,223		176,418
Total SA		9,591		587,920
TransCanada Corp. (b)		2,900		132,517
Valero Energy Corp.		7,000		352,800
Woodside Petroleum Ltd.		3,325		115,527
				13,113,449
Financials 14.8%
Capital Markets 0.7%
3i Group PLC		69,601		444,047
Ameriprise Financial, Inc.		1,500		172,575
Bank of New York Mellon Corp.		4,300		150,242
BlackRock, Inc.		400		126,588
Credit Suisse Group AG (Registered)		11,423		350,707
Morgan Stanley (b)		4,200		131,712
State Street Corp.		2,200		161,458
The Goldman Sachs Group, Inc.		1,400		248,164
UBS AG (Registered)*		5,403		102,929
				1,888,422
Commercial Banks 6.2%
Aozora Bank Ltd.		193,412		548,043
Australia & New Zealand Banking Group Ltd.		10,511		302,590
Banco Bilbao Vizcaya Argentaria SA		12,357		153,108
Bank Hapoalim BM		63,279		354,990
Bank Leumi Le-Israel BM*		97,420		398,271
Bank of Montreal (b)		5,500		366,632
Bank of Nova Scotia (b)		7,206		450,642
Barclays PLC		77,404		350,222
BB&T Corp.		10,100		376,932
Bendigo & Adelaide Bank Ltd.		7,105		74,571
	Shares		Value ($)
BNP Paribas SA		4,183		327,540
BOC Hong Kong (Holdings) Ltd.		81,000		260,523
Canadian Imperial Bank of Commerce (b)		4,200		358,695
CIT Group, Inc.		4,200		218,946
Comerica, Inc.		1,400		66,556
Commonwealth Bank of Australia		3,824		266,447
Credit Agricole SA*		25,583		328,832
Danske Bank AS*		14,243		327,926
DBS Group Holdings Ltd.		20,000		271,838
Fifth Third Bancorp.		18,000		378,540
Fukuoka Financial Group, Inc.		8,709		38,257
Hang Seng Bank Ltd.		13,500		219,511
HSBC Holdings PLC		52,026		570,616
KeyCorp		15,700		210,694
Lloyds Banking Group PLC*		273,277		357,193
M&T Bank Corp.		2,500		291,050
Mitsubishi UFJ Financial Group, Inc.		46,400		306,800
Mizrahi Tefahot Bank Ltd.		12,289		160,961
Mizuho Financial Group, Inc.		207,500		449,403
National Australia Bank Ltd.		8,766		273,656
National Bank of Canada (b)		4,200		349,483
Natixis		67,199		396,834
Nishi-Nippon City Bank Ltd.		26,000		70,087
Nordea Bank AB		27,911		377,944
Oversea-Chinese Banking Corp., Ltd.		33,000		267,141
PNC Financial Services Group, Inc.		7,100		550,818
Raiffeisen Bank International AG		5,905		208,452
Regions Financial Corp.		23,100		228,459
Resona Holdings, Inc.		54,300		276,960
Royal Bank of Canada		6,200		416,796
Royal Bank of Scotland Group PLC*		27,347		153,952
Skandinaviska Enskilda Banken AB "A"		15,777		208,728
Societe Generale SA		6,521		380,810
Standard Chartered PLC		14,906		335,859
Sumitomo Mitsui Financial Group, Inc.		6,900		356,327
SunTrust Banks, Inc.		7,500		276,075
Svenska Handelsbanken AB "A"		1,899		93,805
Swedbank AB "A"		6,893		194,454
The Bank of Yokohama Ltd.		33,411		186,551
The Chugoku Bank Ltd.		3,000		38,097
The Gunma Bank Ltd.		3,082		17,240
The Hachijuni Bank Ltd.		9,000		52,547
The Toronto-Dominion Bank		4,351		410,053
U.S. Bancorp.		10,300		416,120
United Overseas Bank Ltd.		17,000		286,617
Wells Fargo & Co.		14,000		635,600
Westpac Banking Corp.		8,235		239,153
Yamaguchi Financial Group, Inc.		13,000		120,558
				16,605,505
Consumer Finance 0.4%
American Express Co.		1,600		145,168
Capital One Financial Corp.		6,000		459,660
Discover Financial Services		4,100		229,395
SLM Corp.		6,600		173,448
				1,007,671
Diversified Financial Services 1.2%
Bank of America Corp.		31,600		492,012
Berkshire Hathaway, Inc. "B"*		4,000		474,240
	Shares		Value ($)
Citigroup, Inc.		10,400		541,944
CME Group, Inc.		1,500		117,690
Exor SpA		2,284		91,057
Industrivarden AB "C"		6,658		126,950
ING Groep NV (CVA)*		16,483		230,493
Investor AB "B"		10,415		359,370
JPMorgan Chase & Co.		8,400		491,232
Leucadia National Corp.		800		22,672
Pohjola Bank PLC "A"		7,572		152,509
The NASDAQ OMX Group, Inc.		1,500		59,700
				3,159,869
Insurance 5.3%
ACE Ltd.		3,600		372,708
Admiral Group PLC		4,051		87,932
Aegon NV		21,867		206,444
Aflac, Inc.		3,800		253,840
Alleghany Corp.*		400		159,984
Allianz SE (Registered)		2,154		386,371
Allstate Corp.		8,400		458,136
American International Group, Inc.		9,400		479,870
Aon PLC		600		50,334
Arch Capital Group Ltd.*		1,800		107,442
Assurant, Inc.		4,000		265,480
AXA SA		10,918		304,538
Axis Capital Holdings Ltd.		8,200		390,074
Baloise Holding AG (Registered)		3,007		384,177
Chubb Corp.		3,200		309,216
CNP Assurances		15,957		327,185
Direct Line Insurance Group PLC		84,165		348,446
Everest Re Group Ltd. (b)		3,300		514,371
Great-West Lifeco, Inc.		5,700		175,735
Hannover Rueck SE		3,820		329,920
Hartford Financial Services Group, Inc.		4,500		163,035
Insurance Australia Group Ltd.		3,213		16,702
Intact Financial Corp.		2,600		169,792
Legal & General Group PLC		25,261		93,210
Lincoln National Corp.		3,000		154,860
Loews Corp.		5,300		255,672
Mapfre SA		9,918		42,572
Marsh & McLennan Companies, Inc.		1,400		67,704
MetLife, Inc.		7,900		425,968
Muenchener Rueckversicherungs AG (Registered)		1,661		366,075
Old Mutual PLC		85,111		266,701
PartnerRe Ltd.		2,829		298,261
Power Corp. of Canada		3,100		93,241
Power Financial Corp. (b)		5,200		176,230
Principal Financial Group, Inc.		1,400		69,034
Progressive Corp.		2,700		73,629
Prudential Financial, Inc.		3,900		359,658
RenaissanceRe Holdings Ltd.		3,600		350,424
Resolution Ltd.		42,118		247,720
RSA Insurance Group PLC		185,053		280,243
Sampo Oyj "A"		4,452		219,727
SCOR SE		11,294		412,864
Suncorp Group Ltd.		29,276		343,895
Swiss Life Holding AG (Registered)*		3,144		654,360
Swiss Re AG.*		6,702		619,495
The Travelers Companies, Inc.		5,000		452,700
Torchmark Corp.		1,300		101,595
Unum Group		7,400		259,592
	Shares		Value ($)
W.R. Berkley Corp.		4,400		190,916
XL Group PLC		11,500		366,160
Zurich Insurance Group AG*		2,199		639,463
				14,143,701
Real Estate Investment Trusts 0.4%
CFS Retail Property Trust (REIT)		30,867		53,743
Cole Real Estate Investment, Inc. (REIT)		13,400		188,136
Dexus Property Group (REIT)		99,301		89,141
Federation Centres Ltd. (REIT)		56,236		117,538
GPT Group (REIT)		25,473		77,540
H&R Real Estate Investment Trust (REIT) (Units)		6,100		122,890
HCP, Inc. (REIT)		2,500		90,800
RioCan Real Estate Investment Trust (REIT)		6,200		144,574
Stockland (REIT)		34,178		110,500
Westfield Group (REIT)		13,202		118,989
Westfield Retail Trust (REIT)		29,121		77,251
				1,191,102
Real Estate Management & Development 0.4%
Cheung Kong (Holdings) Ltd.		14,000		221,933
First Capital Realty, Inc.		2,900		48,349
Henderson Land Development Co., Ltd.		17,142		98,008
Lend Lease Group		6,467		64,361
New World Development Co., Ltd.		60,000		76,122
Sun Hung Kai Properties Ltd.		9,000		114,728
Swire Pacific Ltd. "A"		9,500		111,872
Swiss Prime Site AG (Registered)*		3,373		261,694
UOL Group Ltd.		2,000		9,823
Wharf Holdings Ltd.		10,000		76,432
Wheelock & Co., Ltd.		18,000		82,963
				1,166,285
Thrifts & Mortgage Finance 0.2%
New York Community Bancorp., Inc. (b)		13,400		225,790
Ocwen Financial Corp.*		3,200		177,440
People's United Financial, Inc. (b)		12,400		187,488
				590,718
Health Care 4.2%
Biotechnology 0.8%
Actelion Ltd. (Registered)*		1,372		116,306
Alexion Pharmaceuticals, Inc.*		800		106,448
Amgen, Inc.		4,700		536,552
Biogen Idec, Inc.*		800		223,800
Celgene Corp.*		1,800		304,128
CSL Ltd.		5,674		350,243
Gilead Sciences, Inc.*		5,200		390,780
Novozymes AS "B"		355		15,018
Regeneron Pharmaceuticals, Inc.*		300		82,572
				2,125,847
Health Care Equipment & Supplies 0.4%
Abbott Laboratories		5,000		191,650
Baxter International, Inc.		2,200		153,010
Becton, Dickinson & Co. (b)		1,100		121,539
CareFusion Corp.*		2,700		107,514
Covidien PLC		1,700		115,770
Medtronic, Inc.		4,700		269,733
Stryker Corp.		418		31,409
Zimmer Holdings, Inc.		700		65,233
				1,055,858
	Shares		Value ($)
Health Care Providers & Services 1.1%
Aetna, Inc.		5,000		342,950
AmerisourceBergen Corp.		1,800		126,558
Cardinal Health, Inc.		2,500		167,025
Cigna Corp.		3,200		279,936
Express Scripts Holding Co.*		2,800		196,672
HCA Holdings, Inc.*		4,100		195,611
Humana, Inc.		1,900		196,118
Laboratory Corp. of America Holdings* (b)		1,100		100,507
McKesson Corp.		1,300		209,820
Omnicare, Inc.		1,200		72,432
Quest Diagnostics, Inc. (b)		3,800		203,452
UnitedHealth Group, Inc.		6,000		451,800
WellPoint, Inc.		5,300		489,667
				3,032,548
Life Sciences Tools & Services 0.1%
Life Technologies Corp.*		1,500		113,700
Lonza Group AG (Registered)*		48		4,569
Thermo Fisher Scientific, Inc.		1,500		167,025
				285,294
Pharmaceuticals 1.8%
AbbVie, Inc.		3,900		205,959
Actavis PLC*		1,300		218,400
Allergan, Inc.		100		11,108
AstraZeneca PLC		5,458		323,747
Bristol-Myers Squibb Co.		2,700		143,505
Eli Lilly & Co.		4,100		209,100
Forest Laboratories, Inc.*		1,000		60,030
GlaxoSmithKline PLC		11,325		302,057
Johnson & Johnson		4,600		421,314
Merck & Co., Inc.		8,200		410,410
Mylan, Inc.*		1,500		65,100
Novartis AG (Registered)		6,109		488,906
Novo Nordisk AS "B"		593		109,249
Otsuka Holdings Co., Ltd.		5,200		150,177
Pfizer, Inc.		13,500		413,505
Roche Holding AG (Genusschein)		1,419		397,770
Sanofi		1,953		207,889
Teva Pharmaceutical Industries Ltd.		11,593		464,712
Valeant Pharmaceuticals International, Inc.*		1,200		140,780
				4,743,718
Industrials 8.0%
Aerospace & Defense 1.4%
BAE Systems PLC		54,787		395,944
Boeing Co.		1,900		259,331
Cobham PLC		19,835		90,203
European Aeronautic Defence & Space Co.		4,888		376,757
General Dynamics Corp.		2,800		267,540
Honeywell International, Inc.		2,700		246,699
L-3 Communications Holdings, Inc.		3,200		341,952
Lockheed Martin Corp.		2,000		297,320
Meggitt PLC		10,474		91,745
Northrop Grumman Corp.		2,600		297,986
Precision Castparts Corp.		800		215,440
Raytheon Co.		3,400		308,380
Rockwell Collins, Inc.		800		59,136
Rolls-Royce Holdings PLC*		4,868		103,102
Safran SA		2,864		199,166
Thales SA		645		41,581
	Shares		Value ($)
United Technologies Corp.		3,300		375,540
				3,967,822
Air Freight & Logistics 0.1%
FedEx Corp.		1,000		143,770
United Parcel Service, Inc. "B"		700		73,556
				217,326
Airlines 0.5%
Delta Air Lines, Inc.		11,200		307,664
Deutsche Lufthansa AG (Registered)*		4,321		91,690
easyJet PLC		1,126		28,668
Japan Airlines Co., Ltd.		6,800		335,495
Singapore Airlines Ltd.		5,000		41,349
Southwest Airlines Co.		21,200		399,408
United Continental Holdings, Inc.*		2,600		98,358
				1,302,632
Building Products 0.1%
Allegion PLC*		400		17,676
Compagnie de Saint-Gobain		2,073		114,578
Congoleum Corp.*		3,800		0
Geberit AG (Registered)		20		6,118
LIXIL Group Corp.		1,700		46,687
				185,059
Commercial Services & Supplies 0.6%
ADT Corp. (b)		3,300		133,551
Babcock International Group PLC		6,729		151,036
Brambles Ltd.		17,748		145,058
Cintas Corp.		2,000		119,180
G4S PLC		33,563		146,002
Republic Services, Inc.		10,100		335,320
Secom Co., Ltd.		300		18,117
Securitas AB "B"		21,644		230,630
Tyco International Ltd.		5,700		233,928
Waste Management, Inc.		5,100		228,837
				1,741,659
Construction & Engineering 0.4%
ACS, Actividades de Construccion y Servicios SA		9,020		312,676
Bouygues SA		6,594		250,041
Chicago Bridge & Iron Co. NV		1,400		116,396
Jacobs Engineering Group, Inc.*		700		44,093
Quanta Services, Inc.*		4,000		126,240
Skanska AB "B"		6,822		140,073
Vinci SA		1,191		78,480
				1,067,999
Electrical Equipment 0.5%
ABB Ltd. (Registered)*		11,024		291,248
Alstom SA		3,389		123,817
AMETEK, Inc.		1,700		89,539
Eaton Corp. PLC		3,500		266,420
Emerson Electric Co.		2,900		203,522
Rockwell Automation, Inc.		1,000		118,160
Roper Industries, Inc.		500		69,340
Sumitomo Electric Industries Ltd.		9,800		163,769
				1,325,815
Industrial Conglomerates 0.9%
3M Co.		2,200		308,550
Danaher Corp.		3,400		262,480
General Electric Co.		18,300		512,949
Hopewell Holdings Ltd.		54,000		183,294
Hutchison Whampoa Ltd.		23,000		314,479
Keppel Corp., Ltd.		5,000		44,452
	Shares		Value ($)
Koninklijke Philips NV		6,041		222,690
NWS Holdings Ltd.		54,000		82,310
Sembcorp Industries Ltd.		28,000		121,978
Siemens AG (Registered)		1,592		217,521
Smiths Group PLC		3,801		93,467
Toshiba Corp.		21,802		91,748
				2,455,918
Machinery 0.9%
AGCO Corp.		4,800		284,112
Caterpillar, Inc.		2,900		263,349
Cummins, Inc.		500		70,485
Deere & Co.		3,900		356,187
Dover Corp.		2,900		279,966
Hino Motors Ltd.		1,000		15,760
Illinois Tool Works, Inc.		4,100		344,728
Ingersoll-Rand PLC		1,200		73,920
PACCAR, Inc.		3,000		177,510
Parker Hannifin Corp.		800		102,912
Pentair Ltd. (Registered)		400		31,068
Schindler Holding AG (Registered)		86		12,687
SKF AB "B"		3,191		83,743
Stanley Black & Decker, Inc.		600		48,414
Sulzer AG (Registered)		273		44,162
Yangzijiang Shipbuilding Holdings Ltd.		180,102		169,766
				2,358,769
Marine 0.4%
A P Moller-Maersk AS "A"		46		474,348
A P Moller-Maersk AS "B"		37		403,539
Nippon Yusen KK		28,000		89,617
Orient Overseas International Ltd.		17,500		88,114
				1,055,618
Professional Services 0.3%
Adecco SA (Registered)*		1,913		151,931
Dun & Bradstreet Corp.		700		85,925
Equifax, Inc.		1,800		124,362
Nielsen Holdings NV		3,900		178,971
SGS SA (Registered)		58		133,952
Towers Watson & Co. "A"		800		102,088
				777,229
Road & Rail 0.3%
Canadian National Railway Co.		300		17,104
Central Japan Railway Co.		1,800		212,301
CSX Corp.		4,900		140,973
East Japan Railway Co.		300		23,942
MTR Corp., Ltd.		1,500		5,691
Norfolk Southern Corp.		1,100		102,113
Union Pacific Corp.		1,400		235,200
West Japan Railway Co.		2,600		112,837
				850,161
Trading Companies & Distributors 1.6%
Bunzl PLC		3,990		95,882
ITOCHU Corp.		46,700		577,981
Marubeni Corp.		100,000		719,616
Mitsubishi Corp.		31,500		604,573
Mitsui & Co., Ltd.		53,100		740,444
Rexel SA		3,447		90,791
Sojitz Corp.		271,400		483,306
Sumitomo Corp.		57,200		719,480
Toyota Tsusho Corp.		4,300		106,786
W.W. Grainger, Inc.		500		127,710
				4,266,569
	Shares		Value ($)
Information Technology 9.0%
Communications Equipment 1.1%
AAC Technologies Holdings, Inc.		30,000		145,948
Cisco Systems, Inc.		35,100		787,995
Harris Corp.		4,300		300,183
Juniper Networks, Inc.*		6,400		144,448
Motorola Solutions, Inc.		6,600		445,500
QUALCOMM, Inc.		9,100		675,675
Telefonaktiebolaget LM Ericsson "B"		30,698		375,917
				2,875,666
Computers & Peripherals 1.1%
Apple, Inc.		1,600		897,776
EMC Corp. (b)		15,900		399,885
Hewlett-Packard Co.		16,600		464,468
NetApp, Inc.		3,200		131,648
SanDisk Corp.		4,000		282,160
Seagate Technology PLC		5,800		325,728
Western Digital Corp.		3,500		293,650
				2,795,315
Electronic Equipment, Instruments & Components 0.8%
Arrow Electronics, Inc.*		6,800		368,900
Avnet, Inc.		8,500		374,935
Corning, Inc.		21,700		386,694
Flextronics International Ltd.*		48,100		373,737
FUJIFILM Holdings Corp.		3,600		102,228
Hitachi Ltd.		24,000		181,962
Kyocera Corp.		3,100		155,061
TE Connectivity Ltd.		5,600		308,616
				2,252,133
Internet Software & Services 0.9%
Dena Co., Ltd. (b)		11,600		244,252
eBay, Inc.*		7,200		395,208
Facebook, Inc. "A"*		5,600		306,096
Google, Inc. "A"*		600		672,426
Gree, Inc. (b)		19,900		196,691
LinkedIn Corp. "A"*		800		173,464
VeriSign, Inc.* (b)		2,200		131,516
Yahoo!, Inc.*		8,100		327,564
				2,447,217
IT Services 2.1%
Accenture PLC "A"		5,200		427,544
Alliance Data Systems Corp.* (b)		700		184,051
AtoS		2,140		194,311
Automatic Data Processing, Inc.		3,024		244,369
Cap Gemini SA		1,434		97,239
CGI Group, Inc. "A"*		6,000		200,744
Cognizant Technology Solutions Corp. "A"*		2,100		212,058
Computer Sciences Corp.		6,300		352,044
Fidelity National Information Services, Inc.		7,400		397,232
Fiserv, Inc.*		4,800		283,440
FleetCor Technologies, Inc.*		1,000		117,170
Fujitsu Ltd.*		18,000		93,191
International Business Machines Corp.		3,900		731,523
Itochu Techno-Solutions Corp.		800		32,462
Leidos Holdings, Inc. (b)		7,025		326,592
MasterCard, Inc. "A"		400		334,184
Nomura Research Institute Ltd.		1,600		50,458
Otsuka Corp.		700		89,348
	Shares		Value ($)
Paychex, Inc. (b)		3,900		177,567
Recall Holdings Ltd.*		225		816
Total System Services, Inc.		6,700		222,976
Vantiv, Inc. "A"*		4,300		140,223
Visa, Inc. "A"		2,500		556,700
Western Union Co. (b)		15,900		274,275
				5,740,517
Office Electronics 0.3%
Canon, Inc. (b)		8,900		283,291
Konica Minolta, Inc.		2,500		25,061
Ricoh Co., Ltd.		14,776		157,673
Xerox Corp.		33,600		408,912
				874,937
Semiconductors & Semiconductor Equipment 1.3%
Altera Corp.		900		29,277
Analog Devices, Inc.		3,300		168,069
Applied Materials, Inc.		4,300		76,067
ASML Holding NV		960		90,149
Avago Technologies Ltd.		4,900		259,161
Broadcom Corp. "A"		9,200		272,780
Intel Corp.		27,406		711,460
KLA-Tencor Corp.		3,900		251,394
Lam Research Corp.*		5,400		294,030
Linear Technology Corp.		800		36,440
LSI Corp.		26,600		293,132
Maxim Integrated Products, Inc.		4,900		136,759
Microchip Technology, Inc.		4,200		187,950
Micron Technology, Inc.*		11,300		245,888
NVIDIA Corp.		2,900		46,458
Texas Instruments, Inc. (b)		6,600		289,806
Xilinx, Inc.		1,900		87,248
				3,476,068
Software 1.4%
Activision Blizzard, Inc.		20,200		360,166
Adobe Systems, Inc.*		700		41,916
CA, Inc.		13,500		454,275
Electronic Arts, Inc.*		3,800		87,172
GungHo Online Entertainment, Inc.* (b)		11,400		82,265
Intuit, Inc.		4,000		305,280
Microsoft Corp.		18,086		676,959
Nexon Co., Ltd.		22,200		204,973
Nuance Communications, Inc.* (b)		5,300		80,560
Open Text Corp.		100		9,198
Oracle Corp.		17,300		661,898
SAP AG		1,974		169,251
Symantec Corp.		12,600		297,108
Synopsys, Inc.*		4,800		194,736
The Sage Group PLC		14,718		98,699
VMware, Inc. "A"*		1,000		89,710
				3,814,166
Materials 1.8%
Chemicals 0.7%
Agrium, Inc.		600		54,886
Air Products & Chemicals, Inc.		800		89,424
Asahi Kasei Corp.		24,529		192,255
BASF SE		822		87,654
CF Industries Holdings, Inc.		700		163,128
Dow Chemical Co.		3,700		164,280
E.I. du Pont de Nemours & Co.		1,900		123,443
Eastman Chemical Co.		1,100		88,770
Ecolab, Inc.		500		52,135
	Shares		Value ($)
Givaudan SA (Registered)*		2		2,865
LyondellBasell Industries NV "A"		4,500		361,260
Mitsubishi Chemical Holdings Corp.		48,000		222,091
Monsanto Co.		1,300		151,515
Praxair, Inc.		700		91,021
Syngenta AG (Registered)		390		155,468
				2,000,195
Construction Materials 0.1%
Fletcher Building Ltd.		22,389		155,924
Holcim Ltd. (Registered)*		2,596		195,176
Wolverine Tube, Inc.*		366		11,803
				362,903
Containers & Packaging 0.1%
Rock-Tenn Co. "A"		1,800		189,018
Metals & Mining 0.8%
Anglo American PLC		7,424		163,152
Barrick Gold Corp.		25,100		442,100
BHP Billiton Ltd.		5,062		172,149
BHP Billiton PLC		4,225		130,999
Fortescue Metals Group Ltd.		32,908		171,724
Freeport-McMoRan Copper & Gold, Inc.		6,600		249,084
Goldcorp, Inc.		3,200		69,407
Mitsubishi Materials Corp.		24,000		88,711
Newmont Mining Corp.		8,200		188,846
Rio Tinto PLC		4,429		249,926
Sumitomo Metal Mining Co., Ltd.		7,000		91,785
Yamana Gold, Inc.		11,400		98,305
				2,116,188
Paper & Forest Products 0.1%
International Paper Co.		3,800		186,314
UPM-Kymmene Oyj		6,585		111,410
				297,724
Telecommunication Services 3.7%
Diversified Telecommunication Services 3.1%
AT&T, Inc.		17,300		608,268
BCE, Inc.		6,200		268,487
Bell Aliant, Inc.		1,500		37,745
BT Group PLC		60,534		381,144
CenturyLink, Inc. (b)		16,300		519,155
Deutsche Telekom AG (Registered)		23,726		405,790
Elisa Oyj		6,796		180,231
HKT Trust & HKT Ltd.		247,000		244,460
Iliad SA		41		8,400
Nippon Telegraph & Telephone Corp.		14,400		775,100
Orange SA		29,858		371,115
PCCW Ltd.		316,000		141,452
Singapore Telecommunications Ltd.		64,060		185,282
Swisscom AG (Registered)		721		381,271
TDC AS		25,255		245,022
Telecom Corp. of New Zealand Ltd.		144,644		274,325
Telecom Italia SpA		105,086		104,572
Telecom Italia SpA (RSP)		598,241		469,791
Telefonica Deutschland Holding AG		43,762		361,814
Telefonica SA		8,812		143,852
Telenor ASA		7,679		183,373
TeliaSonera AB		55,954		466,665
Telstra Corp., Ltd.		84,550		396,430
TELUS Corp.		9,300		320,083
Verizon Communications, Inc.		9,900		486,486
	Shares		Value ($)
Vivendi SA		8,611		227,796
Ziggo NV		3,720		170,249
				8,358,358
Wireless Telecommunication Services 0.6%
Crown Castle International Corp.*		1,500		110,145
KDDI Corp.		4,300		265,201
Millicom International Cellular SA (SDR)		184		18,334
NTT DoCoMo, Inc.		28,200		463,330
Rogers Communications, Inc. "B"		3,800		171,961
SoftBank Corp.		600		52,598
Vodafone Group PLC		114,096		448,520
				1,530,089
Utilities 4.2%
Electric Utilities 2.5%
American Electric Power Co., Inc.		7,600		355,224
Cheung Kong Infrastructure Holdings Ltd.		40,000		253,545
CLP Holdings Ltd.		13,500		106,967
Contact Energy Ltd.		20,471		86,357
Duke Energy Corp.		6,400		441,664
E.ON SE		7,139		131,561
Edison International		8,300		384,290
EDP — Energias de Portugal SA		117,598		431,976
Electricite de France SA		3,321		117,605
Enel SpA		36,382		159,391
Entergy Corp.		6,100		385,947
Exelon Corp.		11,500		314,985
FirstEnergy Corp.		10,100		333,098
Fortum Oyj		12,723		291,272
Iberdrola SA		23,862		152,618
NextEra Energy, Inc.		4,100		351,042
Northeast Utilities		7,700		326,403
OGE Energy Corp.		2,200		74,580
Pepco Holdings, Inc.		8,000		153,040
Pinnacle West Capital Corp.		3,100		164,052
Power Assets Holdings Ltd.		11,000		87,707
PPL Corp.		13,400		403,206
Southern Co.		8,200		337,102
SSE PLC		17,833		405,532
Tokyo Electric Power Co., Inc.*		16,400		80,646
Xcel Energy, Inc.		12,700		354,838
				6,684,648
Gas Utilities 0.1%
Enagas SA		3,266		85,500
Osaka Gas Co., Ltd.		33,000		129,688
Tokyo Gas Co., Ltd.		33,000		162,608
				377,796
Independent Power Producers & Energy Traders 0.1%
AES Corp.		10,900		158,159
Electric Power Development Co., Ltd.		6,700		195,396
				353,555
Multi-Utilities 1.4%
AGL Energy Ltd.		17,237		231,399
Alliant Energy Corp.		2,900		149,640
Ameren Corp.		4,600		166,336
Centrica PLC		49,959		287,716
CMS Energy Corp.		7,300		195,421
Consolidated Edison, Inc.		5,200		287,456
Dominion Resources, Inc.		2,100		135,849
DTE Energy Co.		4,500		298,755
	Shares		Value ($)
Integrys Energy Group, Inc. (b)		4,300		233,963
MDU Resources Group, Inc.		2,900		88,595
National Grid PLC		18,227		238,161
NiSource, Inc.		2,700		88,776
PG&E Corp.		8,100		326,268
Public Service Enterprise Group, Inc.		10,000		320,400
RWE AG		2,127		77,782
SCANA Corp. (b)		4,600		215,878
Sempra Energy		2,400		215,424
Veolia Environnement SA		5,553		90,738
Wisconsin Energy Corp.		3,800		157,092
				3,805,649
Water Utilities 0.1%
American Water Works Co., Inc.		3,800		160,587
Total Common Stocks (Cost $157,178,161)				169,803,115
Preferred Stocks 0.5%
Consumer Discretionary 0.4%
Bayerische Motoren Werke (BMW) AG		3,428		292,868
Porsche Automobil Holding SE		5,582		582,579
Volkswagen AG		1,130		317,475
				1,192,922
Financials 0.0%
Ally Financial, Inc. Series G, 144A, 7.0%		75		72,007
Utilities 0.1%
RWE AG		3,799		121,517
Total Preferred Stocks (Cost $1,211,893)				1,386,446
Rights 0.0%
Energy
Repsol SA, Expiration Date 1/9/2014* (Cost $1,875)		2,873		1,960
Warrants 0.0%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		80		0
Materials 0.0%
GEO Specialty Chemicals, Inc., Expiration Date 3/31/2015*		19,324		14,227
Hercules Trust II, Expiration Date 3/31/2029*		170		1,796
				16,023
Total Warrants (Cost $30,283)				16,023

		Principal Amount ($)(c)		Value ($)
Corporate Bonds 22.4%
Consumer Discretionary 3.3%
21st Century Fox America, Inc., 144A, 4.0%, 10/1/2023			30,000		29,651
AMC Entertainment, Inc., 8.75%, 6/1/2019			405,000		432,844
		Principal Amount ($)(c)		Value ($)
AmeriGas Finance LLC:
6.75%, 5/20/2020			110,000		120,175
7.0%, 5/20/2022			80,000		86,800
APX Group, Inc., 6.375%, 12/1/2019			50,000		50,750
Asbury Automotive Group, Inc., 8.375%, 11/15/2020			15,000		16,856
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			80,000		85,300
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			80,000		79,000
Avis Budget Car Rental LLC:
5.5%, 4/1/2023			50,000		48,438
8.25%, 1/15/2019			15,000		16,350
BC Mountain LLC, 144A, 7.0%, 2/1/2021			50,000		50,500
Block Communications, Inc., 144A, 7.25%, 2/1/2020			20,000		21,200
Boyd Gaming Corp., 9.0%, 7/1/2020 (b)			40,000		43,800
British Sky Broadcasting Group PLC, 144A, 3.125%, 11/26/2022			90,000		83,793
Caesar's Entertainment Operating Co., Inc.:
8.5%, 2/15/2020			210,000		202,125
9.0%, 2/15/2020			65,000		63,212
CCO Holdings LLC:
6.5%, 4/30/2021			420,000		431,550
6.625%, 1/31/2022			705,000		726,150
7.375%, 6/1/2020			10,000		10,825
CDR DB Sub, Inc., 144A, 7.75%, 10/15/2020			55,000		54,725
Cequel Communications Holdings I LLC:
144A, 5.125%, 12/15/2021			80,000		75,000
144A, 6.375%, 9/15/2020			285,000		292,125
Clear Channel Communications, Inc., 11.25%, 3/1/2021			70,000		75,250
Clear Channel Worldwide Holdings, Inc.:
Series A, 6.5%, 11/15/2022			65,000		65,894
Series B, 6.5%, 11/15/2022			90,000		91,912
Series A, 7.625%, 3/15/2020			10,000		10,400
Series B, 7.625%, 3/15/2020			255,000		268,069
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			5,000		4,825
Columbus International, Inc., 144A, 11.5%, 11/20/2014			100,000		107,750
Cox Communications, Inc., 144A, 3.25%, 12/15/2022			80,000		72,391
Cumulus Media Holdings, Inc., 7.75%, 5/1/2019			50,000		52,750
Delphi Corp., 5.0%, 2/15/2023			70,000		72,012
DISH DBS Corp.:
4.25%, 4/1/2018			70,000		71,400
5.0%, 3/15/2023			95,000		88,587
7.875%, 9/1/2019			270,000		309,150
Griffey Intermediate, Inc., 144A, 7.0%, 10/15/2020			95,000		75,287
Harron Communications LP, 144A, 9.125%, 4/1/2020			45,000		49,838
Hertz Corp.:
4.25%, 4/1/2018			45,000		46,125
6.75%, 4/15/2019			280,000		301,700
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			40,000		41,900
		Principal Amount ($)(c)		Value ($)
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019 (PIK)			120,000		125,550
Libbey Glass, Inc., 6.875%, 5/15/2020			27,000		29,160
Live Nation Entertainment, Inc., 144A, 7.0%, 9/1/2020			90,000		97,650
Marriott International, Inc., 3.375%, 10/15/2020			90,000		89,127
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			40,000		41,850
Mediacom Broadband LLC, 6.375%, 4/1/2023			35,000		35,788
MGM Resorts International:
6.625%, 12/15/2021 (b)			150,000		158,625
6.75%, 10/1/2020 (b)			40,000		42,800
8.625%, 2/1/2019			400,000		469,000
Midcontinent Communications & Midcontinent Finance Corp., 144A, 6.25%, 8/1/2021			50,000		50,375
Myriad International Holdings BV, 144A, 6.0%, 7/18/2020			200,000		214,000
PNK Finance Corp., 144A, 6.375%, 8/1/2021			70,000		71,575
Quebecor Media, Inc., 5.75%, 1/15/2023			50,000		48,375
RCI Banque SA, 144A, 3.5%, 4/3/2018			100,000		101,913
Rent-A-Center, Inc., 4.75%, 5/1/2021			40,000		37,550
Schaeffler Finance BV, 144A, 7.75%, 2/15/2017			845,000		959,075
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			35,000		34,388
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020 (b)			55,000		59,813
Sirius XM Holdings, Inc., 144A, 5.875%, 10/1/2020			60,000		61,200
SIWF Merger Sub, Inc., 144A, 6.25%, 6/1/2021			85,000		85,744
Starz LLC, 5.0%, 9/15/2019			40,000		40,900
Taylor Morrison Communities, Inc., 144A, 5.25%, 4/15/2021			65,000		63,212
Travelport LLC, 144A, 6.364%**, 3/1/2016			11,680		11,738
Unitymedia Hessen GmbH & Co., KG:
144A, 5.5%, 1/15/2023			200,000		194,000
144A, 7.5%, 3/15/2019	EUR		400,000		598,462
Unitymedia KabelBW GmbH, 144A, 9.625%, 12/1/2019	EUR		110,000		167,595
Univision Communications, Inc., 144A, 6.875%, 5/15/2019			25,000		26,719
Viking Cruises Ltd., 144A, 8.5%, 10/15/2022			50,000		56,500
					8,799,093
Consumer Staples 1.7%
Agrokor DD, 144A, 8.875%, 2/1/2020			500,000		535,025
B&G Foods, Inc., 4.625%, 6/1/2021			70,000		67,200
Cencosud SA, 144A, 4.875%, 1/20/2023			200,000		186,635
		Principal Amount ($)(c)		Value ($)
Chiquita Brands International, Inc., 144A, 7.875%, 2/1/2021			45,000		48,713
Controladora Mabe SA de CV, 144A, 7.875%, 10/28/2019			100,000		111,500
Del Monte Corp., 7.625%, 2/15/2019			95,000		98,681
ESAL GmbH, 144A, 6.25%, 2/5/2023			250,000		224,375
Hawk Acquisition Sub, Inc., 144A, 4.25%, 10/15/2020			155,000		149,962
JBS U.S.A. LLC:
144A, 7.25%, 6/1/2021			145,000		150,800
144A, 8.25%, 2/1/2020			370,000		401,450
Marfrig Holding Europe BV, 144A, 11.25%, 9/20/2021			200,000		191,000
MHP SA, 144A, 8.25%, 4/2/2020			200,000		177,540
Minerva Luxembourg SA, 144A, 12.25%, 2/10/2022			250,000		287,500
Mriya Agro Holding PLC, 144A, 9.45%, 4/19/2018			200,000		171,000
Pilgrim's Pride Corp., 7.875%, 12/15/2018			430,000		468,700
Reynolds Group Issuer, Inc.:
5.75%, 10/15/2020			95,000		96,900
7.125%, 4/15/2019			1,015,000		1,080,975
Smithfield Foods, Inc., 6.625%, 8/15/2022			90,000		95,400
Sun Products Corp., 144A, 7.75%, 3/15/2021			90,000		79,200
					4,622,556
Energy 2.2%
Access Midstream Partners LP:
4.875%, 5/15/2023			90,000		86,850
6.125%, 7/15/2022			15,000		16,050
Afren PLC, 144A, 10.25%, 4/8/2019			140,000		161,700
Berry Petroleum Co.:
6.375%, 9/15/2022			50,000		50,875
6.75%, 11/1/2020			50,000		51,875
BreitBurn Energy Partners LP, 7.875%, 4/15/2022			50,000		52,000
Chaparral Energy, Inc., 7.625%, 11/15/2022			85,000		90,950
Crosstex Energy LP, 7.125%, 6/1/2022			25,000		28,438
DCP Midstream LLC, 144A, 9.75%, 3/15/2019			200,000		248,847
Denbury Resources, Inc., 4.625%, 7/15/2023			45,000		40,613
Endeavor Energy Resources LP, 144A, 7.0%, 8/15/2021			85,000		85,850
Energy Transfer Partners LP, 4.15%, 10/1/2020			70,000		71,021
EP Energy LLC:
6.875%, 5/1/2019			15,000		16,144
7.75%, 9/1/2022			80,000		89,600
EPE Holdings LLC, 144A, 8.875%, 12/15/2017 (PIK)			119,807		123,102
EV Energy Partners LP, 8.0%, 4/15/2019			35,000		35,175
FMC Technologies, Inc., 3.45%, 10/1/2022			200,000		184,185
Halcon Resources Corp.:
8.875%, 5/15/2021			135,000		136,350
9.75%, 7/15/2020			65,000		67,763
Holly Energy Partners LP, 6.5%, 3/1/2020			10,000		10,450
		Principal Amount ($)(c)		Value ($)
Kodiak Oil & Gas Corp., 5.5%, 1/15/2021			100,000		99,750
Linn Energy LLC:
6.5%, 5/15/2019			25,000		25,500
144A, 7.0%, 11/1/2019			540,000		545,400
MEG Energy Corp., 144A, 7.0%, 3/31/2024			145,000		146,812
Midstates Petroleum Co., Inc.:
9.25%, 6/1/2021			135,000		141,075
10.75%, 10/1/2020			150,000		163,125
Murphy Oil U.S.A., Inc., 144A, 6.0%, 8/15/2023			85,000		85,425
Murray Energy Corp., 144A, 8.625%, 6/15/2021			15,000		15,525
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			140,000		146,650
Oasis Petroleum, Inc.:
6.5%, 11/1/2021			225,000		240,750
144A, 6.875%, 3/15/2022			115,000		121,900
6.875%, 1/15/2023			35,000		37,275
7.25%, 2/1/2019			60,000		64,500
Offshore Drilling Holding SA, 144A, 8.375%, 9/20/2020			200,000		213,000
Offshore Group Investment Ltd.:
7.125%, 4/1/2023			100,000		102,000
7.5%, 11/1/2019			140,000		152,250
ONEOK Partners LP, 6.15%, 10/1/2016			201,000		225,717
Pacific Drilling SA, 144A, 5.375%, 6/1/2020			70,000		70,350
Pertamina Persero PT, 144A, 5.625%, 5/20/2043			200,000		158,500
Petroleos de Venezuela SA, 144A, 8.5%, 11/2/2017			250,000		208,125
Reliance Holdings U.S.A., Inc., 144A, 5.4%, 2/14/2022			250,000		252,835
Sabine Pass Liquefaction LLC, 144A, 5.625%, 2/1/2021			175,000		171,062
SandRidge Energy, Inc., 7.5%, 3/15/2021			190,000		199,025
SESI LLC, 7.125%, 12/15/2021			30,000		33,450
Talisman Energy, Inc., 3.75%, 2/1/2021			120,000		116,179
Talos Production LLC, 144A, 9.75%, 2/15/2018			95,000		97,137
Tesoro Corp., 5.375%, 10/1/2022 (b)			35,000		35,438
Transocean, Inc., 3.8%, 10/15/2022			370,000		350,696
Whiting Petroleum Corp., 5.0%, 3/15/2019			75,000		76,687
					5,943,976
Financials 3.7%
Ally Financial, Inc.:
5.5%, 2/15/2017			15,000		16,238
6.25%, 12/1/2017			560,000		624,400
American International Group, Inc., 4.875%, 6/1/2022			200,000		214,965
American Tower Corp., (REIT), 3.5%, 1/31/2023			90,000		82,057
Banco de Credito del Peru, 144A, 4.25%, 4/1/2023			200,000		184,750
Banco Santander Brasil SA, 144A, 8.0%, 3/18/2016	BRL		300,000		117,622
Bank of America Corp., 3.3%, 1/11/2023			105,000		99,358
Barclays Bank PLC, 7.625%, 11/21/2022 (b)			250,000		266,250
		Principal Amount ($)(c)		Value ($)
BBVA Bancomer SA, 144A, 6.5%, 3/10/2021			200,000		211,000
BNP Paribas SA, 5.0%, 1/15/2021			470,000		515,584
CIT Group, Inc.:
4.25%, 8/15/2017			495,000		515,419
5.0%, 5/15/2017			935,000		998,112
5.25%, 3/15/2018			10,000		10,725
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, 3.95%, 11/9/2022			260,000		251,937
Development Bank of Kazakhstan JSC, Series 3, 6.5%, 6/3/2020			500,000		527,600
E*TRADE Financial Corp.:
6.375%, 11/15/2019			140,000		150,325
6.75%, 6/1/2016			745,000		808,325
Hartford Financial Services Group, Inc., 6.0%, 1/15/2019			117,000		134,189
Health Care REIT, Inc., (REIT), 4.5%, 1/15/2024			105,000		103,672
ING Bank NV, 144A, 5.8%, 9/25/2023			230,000		240,487
International Lease Finance Corp.:
3.875%, 4/15/2018			100,000		100,250
6.25%, 5/15/2019			410,000		443,825
8.625%, 1/15/2022			10,000		11,818
8.75%, 3/15/2017			40,000		47,100
Intesa Sanpaolo SpA, 3.875%, 1/16/2018			200,000		204,796
Itau Unibanco Holding SA, 144A, 5.5%, 8/6/2022			200,000		190,500
Jefferies Group LLC, 5.125%, 1/20/2023			60,000		60,688
Macquarie Bank Ltd., 144A, 3.45%, 7/27/2015			130,000		134,439
Morgan Stanley:
3.75%, 2/25/2023			125,000		121,633
4.1%, 5/22/2023			85,000		82,259
MPT Operating Partnership LP, (REIT), 6.375%, 2/15/2022			40,000		41,400
Neuberger Berman Group LLC, 144A, 5.625%, 3/15/2020			10,000		10,500
Nordea Bank AB, 144A, 4.25%, 9/21/2022			375,000		370,789
OPB Finance Trust, Series C, 2.9%, 5/24/2023	CAD		330,000		289,136
PNC Bank NA, 6.875%, 4/1/2018			300,000		354,704
ProLogis LP, (REIT), 4.25%, 8/15/2023			90,000		88,907
PSP Capital, Inc., 3.03%, 10/22/2020	CAD		258,000		243,575
Royal Bank of Scotland Group PLC, 6.1%, 6/10/2023			100,000		100,810
SLM Corp., 5.5%, 1/25/2023			125,000		118,076
The Goldman Sachs Group, Inc., 3.625%, 1/22/2023			165,000		159,778
Turkiye Is Bankasi:
144A, 3.875%, 11/7/2017			250,000		240,300
144A, 6.0%, 10/24/2022			250,000		224,250
Turkiye Vakiflar Bankasi Tao, 144A, 3.75%, 4/15/2018			250,000		234,125
Ventas Realty LP, (REIT), 2.7%, 4/1/2020			90,000		86,058
Wells Fargo & Co., 5.375%, 11/2/2043			70,000		71,680
					10,104,411
		Principal Amount ($)(c)		Value ($)
Health Care 1.3%
Agilent Technologies, Inc., 3.2%, 10/1/2022 (b)			200,000		183,057
Aviv Healthcare Properties LP, 7.75%, 2/15/2019			10,000		10,750
Biomet, Inc.:
6.5%, 8/1/2020			85,000		89,250
6.5%, 10/1/2020			25,000		25,750
Community Health Systems, Inc.:
5.125%, 8/15/2018			290,000		299,425
7.125%, 7/15/2020			170,000		176,375
Fresenius Medical Care U.S. Finance II, Inc., 144A, 5.625%, 7/31/2019			10,000		10,800
Fresenius Medical Care U.S. Finance, Inc., 144A, 6.5%, 9/15/2018			10,000		11,300
HCA, Inc.:
6.5%, 2/15/2020			880,000		966,900
7.5%, 2/15/2022			725,000		795,687
Hologic, Inc., 6.25%, 8/1/2020			40,000		42,200
IMS Health, Inc., 144A, 6.0%, 11/1/2020			60,000		63,750
Laboratory Corp. of America Holdings, 3.75%, 8/23/2022			140,000		135,610
Mallinckrodt International Finance SA, 144A, 4.75%, 4/15/2023			110,000		101,523
Par Pharmaceutical Companies, Inc., 7.375%, 10/15/2020			90,000		93,038
Physio-Control International, Inc., 144A, 9.875%, 1/15/2019			14,000		15,680
Tenet Healthcare Corp.:
4.375%, 10/1/2021			110,000		103,400
4.5%, 4/1/2021			10,000		9,475
6.25%, 11/1/2018			230,000		254,725
					3,388,695
Industrials 1.7%
Accuride Corp., 9.5%, 8/1/2018			10,000		9,775
ADT Corp., 144A, 6.25%, 10/15/2021			45,000		47,250
Aeropuertos Dominicanos Siglo XXI SA, 144A, 9.25%, 11/13/2019 (b)			250,000		246,250
Alphabet Holding Co., Inc., 7.75%, 11/1/2017 (PIK)			50,000		51,563
Artesyn Escrow, Inc., 144A, 9.75%, 10/15/2020			70,000		73,500
BE Aerospace, Inc., 6.875%, 10/1/2020			185,000		203,037
Belden, Inc., 144A, 5.5%, 9/1/2022			85,000		83,300
Bombardier, Inc., 144A, 5.75%, 3/15/2022			328,000		325,540
Cemex Finance LLC, 144A, 9.375%, 10/12/2022			200,000		225,500
Clean Harbors, Inc., 5.125%, 6/1/2021			65,000		65,650
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			35,000		34,125
Ferreycorp SAA, 144A, 4.875%, 4/26/2020			200,000		187,000
FTI Consulting, Inc., 6.0%, 11/15/2022			50,000		50,625
GenCorp, Inc., 7.125%, 3/15/2021			185,000		197,950
Georgian Railway JSC, 144A, 7.75%, 7/11/2022			250,000		259,675
		Principal Amount ($)(c)		Value ($)
Grupo KUO SAB de CV, 144A, 6.25%, 12/4/2022			400,000		400,000
Huntington Ingalls Industries, Inc., 6.875%, 3/15/2018			560,000		604,800
Ingersoll-Rand Global Holding Co., Ltd., 144A, 2.875%, 1/15/2019			20,000		19,713
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			100,000		105,250
Meritor, Inc., 6.75%, 6/15/2021			55,000		56,100
Navios South American Logistics, Inc., 9.25%, 4/15/2019			15,000		16,181
Nortek, Inc., 8.5%, 4/15/2021			155,000		171,662
Odebrecht Offshore Drilling Finance Ltd., 144A, 6.75%, 10/1/2022			196,920		201,548
Owens Corning, Inc., 4.2%, 12/15/2022			60,000		57,296
Ply Gem Industries, Inc., 9.375%, 4/15/2017			24,000		25,920
Titan International, Inc., 144A, 6.875%, 10/1/2020			170,000		177,225
Total System Services, Inc., 3.75%, 6/1/2023			80,000		73,950
TransDigm, Inc.:
7.5%, 7/15/2021			100,000		107,500
7.75%, 12/15/2018			80,000		85,800
United Rentals North America, Inc.:
6.125%, 6/15/2023			10,000		10,150
7.375%, 5/15/2020			25,000		27,719
7.625%, 4/15/2022			270,000		300,037
Watco Companies LLC, 144A, 6.375%, 4/1/2023			40,000		39,600
					4,541,191
Information Technology 1.1%
ACI Worldwide, Inc., 144A, 6.375%, 8/15/2020			30,000		31,350
Alliance Data Systems Corp., 144A, 5.25%, 12/1/2017			60,000		62,250
BMC Software Finance, Inc., 144A, 8.125%, 7/15/2021			100,000		103,000
CDW LLC, 8.5%, 4/1/2019			610,000		674,050
CyrusOne LP, 6.375%, 11/15/2022			25,000		25,875
EarthLink, Inc., 7.375%, 6/1/2020			70,000		69,825
Equinix, Inc., 5.375%, 4/1/2023			175,000		171,063
First Data Corp.:
144A, 6.75%, 11/1/2020			365,000		379,600
144A, 7.375%, 6/15/2019			725,000		773,937
Fiserv, Inc., 3.5%, 10/1/2022			250,000		232,152
Healthcare Technology Intermediate, Inc., 144A, 7.375%, 9/1/2018 (PIK)			20,000		20,800
Hewlett-Packard Co., 3.3%, 12/9/2016			200,000		209,325
Hughes Satellite Systems Corp.:
6.5%, 6/15/2019			60,000		64,950
7.625%, 6/15/2021			190,000		211,850
IAC/InterActiveCorp., 4.75%, 12/15/2022			50,000		46,625
					3,076,652
Materials 2.0%
ALROSA Finance SA, 144A, 7.75%, 11/3/2020			200,000		221,700
Anglo American Capital PLC, 144A, 4.125%, 9/27/2022			500,000		470,133
BOE Intermediate Holding Corp., 144A, 9.0%, 11/1/2017 (PIK)			83,640		87,195
		Principal Amount ($)(c)		Value ($)
BOE Merger Corp., 144A, 9.5%, 11/1/2017 (PIK)			100,000		106,250
Cia Minera Milpo SAA, 144A, 4.625%, 3/28/2023			200,000		181,000
CSN Resources SA, 144A, 6.5%, 7/21/2020			200,000		202,250
FMG Resources (August 2006) Pty Ltd.:
144A, 6.0%, 4/1/2017 (b)			195,000		207,187
144A, 6.375%, 2/1/2016 (b)			250,000		258,750
144A, 6.875%, 4/1/2022 (b)			290,000		316,100
FQM Akubra, Inc.:
144A, 7.5%, 6/1/2021			145,000		151,525
144A, 8.75%, 6/1/2020			85,000		92,225
Freeport-McMoRan Copper & Gold, Inc., 3.55%, 3/1/2022			220,000		209,088
Glencore Funding LLC, 144A, 4.125%, 5/30/2023			50,000		46,726
Hexion U.S. Finance Corp.:
6.625%, 4/15/2020			280,000		287,000
8.875%, 2/1/2018			155,000		161,006
IAMGOLD Corp., 144A, 6.75%, 10/1/2020			75,000		64,500
Kaiser Aluminum Corp., 8.25%, 6/1/2020			40,000		45,200
Metalloinvest Finance Ltd., 144A, 6.5%, 7/21/2016			200,000		211,750
Novelis, Inc., 8.75%, 12/15/2020			955,000		1,062,437
Plastipak Holdings, Inc., 144A, 6.5%, 10/1/2021			70,000		72,450
Polymer Group, Inc., 7.75%, 2/1/2019			255,000		271,894
PolyOne Corp., 5.25%, 3/15/2023			55,000		53,625
Polyus Gold International Ltd., 144A, 5.625%, 4/29/2020			200,000		192,750
Samarco Mineracao SA, 144A, 5.75%, 10/24/2023			200,000		198,000
Sealed Air Corp.:
144A, 8.125%, 9/15/2019			10,000		11,225
144A, 8.375%, 9/15/2021			10,000		11,350
The Mosaic Co., 4.25%, 11/15/2023			100,000		98,760
Turkiye Sise ve Cam Fabrikalari AS, 144A, 4.25%, 5/9/2020			200,000		175,980
					5,468,056
Telecommunication Services 4.5%
CC Holdings GS V LLC, 3.849%, 4/15/2023			120,000		112,332
CenturyLink, Inc., Series V, 5.625%, 4/1/2020			25,000		25,438
Cincinnati Bell, Inc.:
8.375%, 10/15/2020			775,000		838,937
8.75%, 3/15/2018 (b)			430,000		451,500
Cricket Communications, Inc., 7.75%, 10/15/2020			615,000		701,100
Digicel Group Ltd.:
144A, 8.25%, 9/30/2020			200,000		207,250
144A, 10.5%, 4/15/2018			200,000		214,000
Digicel Ltd., 144A, 8.25%, 9/1/2017			850,000		884,000
ERC Ireland Preferred Equity Ltd., 144A, 7.69%**, 2/15/2017 (PIK)*	EUR		120,439		0
Frontier Communications Corp.:
7.125%, 1/15/2023			390,000		385,125
8.5%, 4/15/2020 (b)			810,000		907,200
		Principal Amount ($)(c)		Value ($)
Intelsat Jackson Holdings SA:
144A, 5.5%, 8/1/2023			125,000		118,906
7.25%, 10/15/2020			690,000		754,687
7.5%, 4/1/2021			340,000		374,850
Intelsat Luxembourg SA:
144A, 7.75%, 6/1/2021			165,000		176,962
144A, 8.125%, 6/1/2023			25,000		26,813
Level 3 Communications, Inc., 8.875%, 6/1/2019			205,000		223,962
Level 3 Financing, Inc.:
7.0%, 6/1/2020			185,000		196,100
8.625%, 7/15/2020			450,000		504,000
MetroPCS Wireless, Inc.:
6.625%, 11/15/2020			655,000		694,300
144A, 6.625%, 4/1/2023 (b)			70,000		72,275
Millicom International Cellular SA, 144A, 4.75%, 5/22/2020			200,000		192,000
Oi SA, 144A, 5.75%, 2/10/2022			200,000		184,000
SBA Communications Corp., 5.625%, 10/1/2019			50,000		51,500
Sprint Communications, Inc.:
6.0%, 12/1/2016			820,000		894,825
6.0%, 11/15/2022			85,000		82,875
8.375%, 8/15/2017			210,000		243,075
9.125%, 3/1/2017			15,000		17,625
tw telecom holdings, Inc.:
5.375%, 10/1/2022			75,000		73,688
144A, 5.375%, 10/1/2022			15,000		14,738
144A, 6.375%, 9/1/2023			70,000		72,800
UPCB Finance III Ltd., 144A, 6.625%, 7/1/2020			370,000		393,125
Verizon Communications, Inc., 6.55%, 9/15/2043			250,000		292,490
Wind Acquisition Finance SA, 144A, 6.5%, 4/30/2020			50,000		53,250
Windstream Corp.:
6.375%, 8/1/2023			60,000		56,100
7.5%, 4/1/2023			20,000		20,100
7.75%, 10/15/2020 (b)			1,075,000		1,140,844
7.75%, 10/1/2021			185,000		196,100
7.875%, 11/1/2017			130,000		148,525
					11,997,397
Utilities 0.9%
AES Corp.:
8.0%, 10/15/2017			45,000		52,875
8.0%, 6/1/2020			30,000		35,100
American Electric Power Co., Inc., Series F, 2.95%, 12/15/2022			200,000		184,960
Calpine Corp.:
144A, 7.5%, 2/15/2021			676,000		737,685
144A, 7.875%, 7/31/2020			36,000		39,420
DTE Energy Co., 7.625%, 5/15/2014			81,000		83,055
Dubai Electricity & Water Authority, 144A, 8.5%, 4/22/2015			250,000		271,625
Electricite de France SA, 144A, 5.25%, 1/29/2049			100,000		99,450
Energy Future Intermediate Holding Co., LLC, 10.0%, 12/1/2020 (b)			150,000		159,375
Instituto Costarricense de Electricidad, 144A, 6.95%, 11/10/2021			200,000		205,250
Mexico Generadora de Energia S de RL, 144A, 5.5%, 12/6/2032			250,000		238,750
		Principal Amount ($)(c)		Value ($)
PPL Energy Supply LLC, 4.6%, 12/15/2021 (b)			250,000		240,236
					2,347,781
Total Corporate Bonds (Cost $59,241,648)					60,289,808
Asset-Backed 0.3%
Automobile Receivables 0.2%
AmeriCredit Automobile Receivables Trust, "E", Series 2011-2, 144A, 5.48%, 9/10/2018			528,181		555,889
Miscellaneous 0.1%
ARES CLO Ltd., "D", Series 2012-3A, 144A, 4.894%**, 1/17/2024			250,000		251,019
Total Asset-Backed (Cost $797,896)					806,908
Mortgage-Backed Securities Pass-Throughs 0.9%
Federal Home Loan Mortgage Corp., 6.0%, 3/1/2038			12,198		13,454
Federal National Mortgage Association:
4.0%, 5/1/2041 (d)			1,000,000		1,030,469
4.5%, 9/1/2035			26,501		28,142
5.5%, 8/1/2037			900,823		990,448
6.0%, 1/1/2024			35,926		39,443
6.5%, with various maturities from 5/1/2017 until 1/1/2038			10,285		11,017
8.0%, 9/1/2015			9,955		10,304
Government National Mortgage Association, 5.5%, 9/20/2040			184,436		203,240
Total Mortgage-Backed Securities Pass-Throughs (Cost $2,320,605)					2,326,517
Commercial Mortgage-Backed Securities 0.7%
Bear Stearns Commercial Mortgage Securities, Inc., "A4", Series 2007- PW16, 5.706%**, 6/11/2040			66,000		74,014
Del Coronado Trust, "M", Series 2013-HDMZ, 144A, 5.167%**, 3/15/2018			120,000		120,420
JPMorgan Chase Commercial Mortgage Securities Corp.:
"C", Series 2012-HSBC, 144A, 4.021%, 7/5/2032			380,000		366,471
"A4", Series 2007-C1, 5.716%, 2/15/2051			225,000		246,923
LB-UBS Commercial Mortgage Trust, "A4", Series 2007-C6, 5.858%, 7/15/2040			258,838		281,372
WFRBS Commercial Mortgage Trust, "A5", Series 2013-C14, 3.337%, 6/15/2046			750,000		720,610
Total Commercial Mortgage-Backed Securities (Cost $1,868,489)					1,809,810
Collateralized Mortgage Obligations 1.4%
Federal Home Loan Mortgage Corp.:
"HI", Series 3979, Interest Only, 3.0%, 12/15/2026			719,341		79,331
"IK", Series 4048, Interest Only, 3.0%, 5/15/2027			801,231		104,822
		Principal Amount ($)(c)		Value ($)
"ZB", Series 4183, 3.0%, 3/15/2043			1,020,748		825,720
"ZG", Series 4213, 3.5%, 6/15/2043			114,845		107,789
"LI", Series 3720, Interest Only, 4.5%, 9/15/2025			1,460,097		226,003
"PI", Series 3843, Interest Only, 4.5%, 5/15/2038			751,401		110,975
"H", Series 2278, 6.5%, 1/15/2031			144		159
Federal National Mortgage Association:
"WO", Series 2013-27, Principal Only, Zero Coupon, 12/25/2042			220,000		84,764
"I", Series 2003-84, Interest Only, 6.0%, 9/25/2033			272,120		83,554
"PI", Series 2006-20, Interest Only, 6.515%***, 11/25/2030			466,906		78,656
Government National Mortgage Association:
"ZJ", Series 2013-106, 3.5%, 7/20/2043			190,981		158,128
"QI", Series 2011-112, Interest Only, 4.0%, 5/16/2026			883,281		101,846
"NI", Series 2011-80, Interest Only, 4.5%, 5/16/2038			1,237,605		136,681
"GP", Series 2010-67, 4.5%, 3/20/2039			250,000		264,448
"BI", Series 2010-30, Interest Only, 4.5%, 7/20/2039			143,998		25,553
"ND", Series 2010-130, 4.5%, 8/16/2039			600,000		631,701
"MI", Series 2009-76, Interest Only, 5.0%, 3/20/2035			122,850		1,601
"IQ", Series 2011-18, Interest Only, 5.5%, 1/16/2039			400,443		50,208
"IV", Series 2009-69, Interest Only, 5.5%, 8/20/2039			680,738		122,779
"IN", Series 2009-69, Interest Only, 5.5%, 8/20/2039			687,977		122,047
"IJ", Series 2009-75, Interest Only, 6.0%, 8/16/2039			503,456		102,024
"AI", Series 2007-38, Interest Only, 6.293%***, 6/16/2037			117,819		16,901
Residential Funding Mortgage Securities I, Inc., "M1", Series 2003-S17, 5.5%, 9/25/2033			518,474		488,384
Total Collateralized Mortgage Obligations (Cost $3,725,977)					3,924,074
Government & Agency Obligations 4.8%
Other Government Related (e) 1.5%
Bank of Moscow, 144A, 6.699%, 3/11/2015			250,000		262,500
European Investment Bank:
144A, 4.6%, 1/30/2037	CAD		1,000,000		926,637
6.0%, 8/6/2020	AUD		500,000		477,811
Gazprom Neft OAO, 144A, 4.375%, 9/19/2022			250,000		229,062
KFW, 1.875%, 6/13/2018	CAD		577,000		533,578
National JSC Naftogaz of Ukraine, 9.5%, 9/30/2014			250,000		249,025
Queensland Treasury Corp., Series 23, 4.25%, 7/21/2023	AUD		1,060,000		907,053
Vimpel Communications, 144A, 7.748%, 2/2/2021			200,000		217,250
		Principal Amount ($)(c)		Value ($)
VTB Bank OJSC, 144A, 6.0%, 4/12/2017			250,000		265,625
					4,068,541
Sovereign Bonds 1.0%
Norway Government Bond, Series 475, 2.0%, 5/24/2023	NOK		5,719,000		866,765
Republic of Belarus, REG S, 8.75%, 8/3/2015			100,000		101,000
Republic of Croatia, 144A, 6.0%, 1/26/2024			200,000		198,500
Republic of Singapore, 3.375%, 9/1/2033	SGD		1,177,000		978,129
Russian Federation:
Series 6204, 7.5%, 3/15/2018	RUB		2,900,000		90,277
Series 6207, 8.15%, 2/3/2027	RUB		5,800,000		182,071
United Mexican States, Series M, 7.75%, 5/29/2031	MXN		2,280,000		182,809
					2,599,551
U.S. Government Sponsored Agency 0.3%
Federal National Mortgage Association, 3.0%, 11/15/2027			1,000,000		875,148
U.S. Treasury Obligations 2.0%
U.S. Treasury Bills:
0.02%****, 2/13/2014 (f)			209,000		208,997
0.035%****, 2/13/2014 (f)			955,000		954,985
U.S. Treasury Notes:
0.75%, 6/15/2014 (g)			1,000,000		1,002,891
1.0%, 8/31/2016			3,000,000		3,028,125
1.75%, 5/15/2023			100,000		90,133
					5,285,131
Total Government & Agency Obligations (Cost $13,417,773)					12,828,371
Loan Participations and Assignments 0.0%
Senior Loan**
Chesapeake Energy Corp., Term Loan, 5.75%, 12/1/2017 (Cost $93,488)			95,000		97,131
Municipal Bonds and Notes 1.4%
Atlanta, GA, Water & Wastewater Revenue, Series B, 5.25%, 11/1/2030			525,000		571,651
Kentucky, Asset/Liability Commission, General Fund Revenue, 3.165%, 4/1/2018			413,253		426,031
New Jersey, State Transportation Trust Fund Authority, Transportation Program, Series AA, 5.25%, 6/15/2030			780,000		836,433
New York, Triborough Bridge & Tunnel Authority Revenues, Series A, 5.0%, 11/15/2028			785,000		846,458
Pennsylvania, State Turnpike Commission Revenue, Series C, 5.5%, 12/1/2030			390,000		426,130
Texas, Dallas-Fort Worth International Airport Revenue:
Series F, 5.25%, 11/1/2028			120,000		128,957
Series F, 5.25%, 11/1/2029			100,000		106,885
		Principal Amount ($)(c)		Value ($)
Series F, 5.25%, 11/1/2030			390,000		413,965
Total Municipal Bonds and Notes (Cost $3,636,263)					3,756,510
Convertible Bonds 0.2%
Financials 0.0%
Swiss Life Holding AG, Zero Coupon, 12/2/2020	CHF		55,000		64,251
Materials 0.2%
GEO Specialty Chemicals, Inc., 7.5%, 3/31/2015 (PIK)			209,283		405,423
Total Convertible Bonds (Cost $267,161)					469,674
Preferred Security 0.0%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $20,233)			40,000		34,800

	Shares		Value ($)
Securities Lending Collateral 4.2%
Daily Assets Fund Institutional, 0.08% (h) (i) (Cost $11,360,240)		11,360,240		11,360,240
Cash Equivalents 3.9%
Central Cash Management Fund, 0.05% (h) (Cost $10,471,131)		10,471,131		10,471,131

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $265,643,116)†		103.8			279,382,518
Other Assets and Liabilities, Net		(3.8	)		(10,299,744	)
Net Assets		100.0			269,082,774

The following table represents bonds that are in default:

Security	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
ERC Ireland Preferred Equity Ltd.*		7.69	%	2/15/2017	EUR	120,439		165,016		0

* Non-income producing security.

** Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of December 31, 2013.

*** These securities are shown at their current rate as of December 31, 2013.

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

† The cost for federal income tax purposes was $265,977,869. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $13,404,649. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $17,587,673 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $4,183,024.

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

Schedule of Restricted Securities	Acquisition Date	Cost ($)		Value ($)		Value as % of Net Assets
Dawn Holdings, Inc.*	August 2013		2,342		1,875		0.00

(b) All or a portion of these securities were on loan. In addition, "Other Assets and Liabilities, Net" may include pending sales that are also on loan. The value of securities loaned at December 31, 2013 amounted to $10,980,853, which is 4.1% of net assets.

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

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

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

(f) At December 31, 2013, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(g) At December 31, 2013, this security has been pledged, in whole or in part, as collateral for open bilateral interest rate swap contracts and initial margin for centrally cleared swap contracts.

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

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

144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

CLO: Collateralized Loan Obligation

CVA: Certificaten Van Aandelen (Certificate of Stock)

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

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

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

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

REIT: Real Estate Investment Trust

RSP: Risparmio (Convertible Savings Shares)

SDR: Swedish Depositary Receipt

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

At December 31, 2013, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Depreciation ($)
5 Year U.S. Treasury Note	USD	3/31/2014		67		7,993,938		(51,117	)

At December 31, 2013, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation ($)
10 Year Japanese Government Bond	JPY	3/11/2014		2		2,721,869		15,820
10 Year U.S. Treasury Note	USD	3/20/2014		422		51,925,781		999,800
U.S. Treasury Long Bond	USD	3/20/2014		5		641,563		11,240
Ultra Long U.S. Treasury Bond	USD	3/20/2014		16		2,180,000		17,149
Total unrealized appreciation								1,044,009

At December 31, 2013, open written options contracts were as follows:

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (j)
Call Options Receive Fixed — 4.064% – Pay Floating — LIBOR	5/13/2014 5/13/2044		2,100,000	1	5/9/2014		15,487		(48,872	)
Receive Fixed — 5.132% – Pay Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	1	3/15/2016		15,173		(40,183	)
Receive Fixed — 5.132% – Pay Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	2	3/15/2016		24,780		(40,183	)
Total Call Options							55,440		(129,238	)
Put Options Pay Fixed — 1.132% – Receive Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	1	3/15/2016		15,172		(732	)
Pay Fixed — 1.132% – Receive Floating — LIBOR	3/17/2016 3/17/2026		2,100,000	2	3/15/2016		5,355		(732	)
Pay Fixed — 2.064% – Receive Floating — LIBOR	5/13/2014 5/13/2044		2,100,000	1	5/9/2014		15,488		(2	)
Pay Fixed — 2.385% – Receive Floating — LIBOR	3/31/2014 3/31/2044		2,100,000	3	3/27/2014		28,665		(1	)
Pay Fixed — 2.423% – Receive Floating — LIBOR	3/20/2014 3/20/2044		2,100,000	4	3/18/2014		30,240		(1	)
Pay Fixed — 3.033% – Receive Floating — LIBOR	10/24/2014 10/24/2044		4,900,000	5	10/22/2014		62,230		(15,250	)
Pay Fixed — 3.093% – Receive Floating — LIBOR	10/21/2014 10/21/2044		4,900,000	2	10/17/2014		67,620		(17,867	)
Total Put Options							224,770		(34,585	)
Total							280,210		(163,823	)

(j) Unrealized appreciation on written options on interest rate swap contracts at December 31, 2013 was $116,387.

As of December 31, 2013, open credit default swap contracts sold were as follows:

Effective/ Expiration Dates	Notional Amount ($) (k)			Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (l)	Value ($)		Upfront Payments Paid/ (Received) ($)		Unrealized Appreciation ($)
9/20/2012 12/20/2017		125,000	6		5.0	%	General Motors Corp., 3.3%, 12/20/2017, BB+		18,381		7,374		11,007

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

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

At December 31, 2013, open interest rate swap contracts sold were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($)		Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Unrealized Appreciation/ (Depreciation) ($)
12/30/2014 12/30/2016		2,100,000	Fixed — 1.173%	Floating — LIBOR		1,057			1,391
12/30/2014 12/30/2019		100,000	Floating — LIBOR	Fixed — 2.522%		(72	)		21
12/30/2014 12/30/2024		3,800,000	Fixed — 3.524%	Floating — LIBOR		8,504			8,896
5/13/2014 5/13/2044		2,100,000	Fixed — 4.064%	Floating — LIBOR		(24,342	)		235
12/30/2014 12/30/2044		300,000	Floating — LIBOR	Fixed — 4.081%		(2,656	)		(2,278	)
Total net unrealized appreciation									8,265

Bilateral Swap

Effective/ Expiration Dates

Notional Amount ($)

Cash Flows Paid by the Fund

Cash Flows Received by the Fund

Value ($)

Upfront Payment Paid/(Received) ($)

Unrealized Depreciation ($)

6/3/2013 6/3/2025

2,100,000

1

Floating — LIBOR

Fixed — 3.0%

(95,048

)

—

(95,048

)

Counterparties:

1 Nomura International PLC

2 BNP Paribas

3 Barclays Bank PLC

4 JPMorgan Chase Securities, Inc.

5 Citigroup, Inc.

6 UBS AG

LIBOR: London Interbank Offered Rate

As of December 31, 2013, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Appreciation ($)		Counterparty
JPY	190,000,000	USD	1,840,408	1/6/2014		36,210	Citigroup. Inc.
CAD	2,445,981	NZD	2,800,000	1/6/2014		298	Australia & New Zealand Banking Group Ltd.
ZAR	14,000,000	USD	1,352,626	1/17/2014		20,688	UBS AG
NOK	5,430,000	USD	913,670	1/23/2014		19,083	UBS AG
CAD	1,659,544	USD	1,607,229	1/23/2014		45,719	Barclays Bank PLC
SGD	1,169,490	USD	945,094	1/23/2014		18,367	JPMorgan Chase Securities, Inc.
USD	1,324,740	AUD	1,500,000	1/23/2014		12,857	Commonwealth Bank of Australia
AUD	1,621,800	USD	1,564,393	1/23/2014		118,183	UBS
AUD	1,500,000	USD	1,338,112	1/23/2014		515	Nomura International PLC
KRW	1,109,000,000	USD	1,048,056	2/18/2014		433	JPMorgan Chase Securities, Inc.
Total unrealized appreciation						272,353

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
USD	1,847,095	JPY	190,000,000	1/6/2014		(42,898	)	Nomura International PLC
EUR	555,000	USD	762,177	1/15/2014		(1,332	)	Citigroup. Inc.
USD	955,447	SGD	1,200,000	2/18/2014		(4,530	)	Commonwealth Bank of Australia
Total unrealized depreciation						(48,760	)

Currency Abbreviations

AUD Australian Dollar

BRL Brazilian Real

CAD Canadian Dollar

CHF Swiss Franc

EUR Euro

JPY Japanese Yen

KRW South Korean Won

MXN Mexican Peso

NOK Norwegian Krone

NZD New Zealand Dollar

RUB Russian Ruble

SGD Singapore Dollar

USD United States Dollar

ZAR South African Rand

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

Fair Value Measurements

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1			Level 2			Level 3		Total
Common Stocks
Consumer Discretionary	$	13,117,443		$	7,538,794		$	1,875	$	20,658,112
Consumer Staples		6,792,069			4,073,006			—		10,865,075
Energy		8,485,539			6,712,546			—		15,198,085
Financials		18,951,119			20,802,154			—		39,753,273
Health Care		8,312,622			2,930,643			—		11,243,265
Industrials		10,025,358			11,547,218			—		21,572,576
Information Technology		21,204,773			3,071,246			—		24,276,019
Materials		2,762,936			2,191,289			11,803		4,966,028
Telecommunication Services		2,522,330			7,366,117			—		9,888,447
Utilities		7,578,070			3,804,165			—		11,382,235
Preferred Stocks (m)		—			1,386,446			—		1,386,446
Rights		1,960			—			—		1,960
Warrants (m)		—			—			16,023		16,023
Fixed Income Investments (m)
Corporate Bonds		—			60,289,808			—		60,289,808
Asset Backed		—			806,908			—		806,908
Mortgage-Backed Securities Pass-Throughs		—			2,326,517			—		2,326,517
Commercial Mortgage-Backed Securities		—			1,809,810			—		1,809,810
Collateralized Mortgage Obligations		—			3,924,074			—		3,924,074
Government & Agency Obligations		—			12,828,371			—		12,828,371
Loan Participations and Assignments		—			97,131			—		97,131
Municipal Bonds and Notes		—			3,756,510			—		3,756,510
Convertible Bonds		—			64,251			405,423		469,674
Preferred Securities		—			34,800			—		34,800
Short-Term Investments (m)		21,831,371			—			—		21,831,371
Derivatives (n)
Futures Contracts		1,044,009			—			—		1,044,009
Credit Default Swap Contracts		—			11,007			—		11,007
Interest Rate Swap Contracts		—			10,543			—		10,543
Forward Foreign Currency Exchange Contracts		—			272,353			—		272,353
Total	$	122,629,599		$	157,655,707		$	435,124	$	280,720,430
Liabilities	Level 1			Level 2			Level 3		Total
Derivatives (n)
Futures Contracts	$	(51,117	)	$	—		$	—	$	(51,117	)
Written Options		—			(163,823	)		—		(163,823	)
Interest Rate Swap Contracts		—			(97,326	)		—		(97,326	)
Forward Foreign Currency Exchange Contracts		—			(48,760	)		—		(48,760	)
Total	$	(51,117	)	$	(309,909	)	$	—	$	(361,026	)

During the year ended December 31, 2013, the amount of transfers between Level 2 and Level 3 was $48. Investments were transferred from Level 2 to Level 3 because of the lack of observable market data due to a decrease in market activity.

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

(m) See Investment Portfolio for additional detailed categorizations.

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

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $243,811,745) — including $10,980,853 of securities loaned	$	257,551,147
Investment in Daily Assets Fund Institutional (cost $11,360,240)*		11,360,240
Investment in Central Cash Management Fund (cost $10,471,131)		10,471,131
Total investments in securities, at value (cost $265,643,116)		279,382,518
Cash		12,378
Foreign currency, at value (cost $262,436)		262,571
Receivable for investments sold		509,276
Receivable for Fund shares sold		5,283
Dividends receivable		212,669
Interest receivable		1,166,017
Receivable for variation margin on futures contracts		91,291
Receivable for variation margin on centrally cleared swaps		33,875
Net receivable for pending swap contracts		334
Unrealized appreciation on swap contracts		11,007
Unrealized appreciation on forward foreign currency exchange contracts		272,353
Upfront payments paid on swap contracts		7,374
Foreign taxes recoverable		100,215
Other assets		4,732
Total assets		282,071,893
Liabilities
Payable upon return of securities loaned		11,360,240
Payable for investments purchased — when-issued/delayed delivery securities		1,034,684
Payable for Fund shares redeemed		106,177
Options written, at value (premium received $280,210)		163,823
Unrealized depreciation on swap contracts		95,048
Unrealized depreciation on forward foreign currency exchange contracts		48,760
Accrued management fee		83,081
Accrued Trustees' fees		2,830
Other accrued expenses and payables		94,476
Total liabilities		12,989,119
Net assets, at value	$	269,082,774
Net Assets Consist of
Undistributed net investment income		7,643,314
Net unrealized appreciation (depreciation) on: Investments		13,739,402
Swap contracts		(75,776	)
Futures		992,892
Foreign currency		226,466
Written options		116,387
Accumulated net realized gain (loss)		25,328,250
Paid-in capital		221,111,839
Net assets, at value	$	269,082,774
Class A Net Asset Value, offering and redemption price per share ($269,082,774 ÷ 9,857,478 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	27.30

* Represents collateral on securities loaned.

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Dividends (net of foreign taxes withheld of $324,375)	$	4,879,762
Interest (net of foreign taxes withheld of $1,589)		4,668,423
Income distributions — Central Cash Management Fund		6,876
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		147,087
Total income		9,702,148
Expenses: Management fee		973,969
Administration fee		264,194
Services to shareholders		1,305
Custodian fee		106,222
Audit and tax fees		82,698
Legal fees		13,187
Reports to shareholders		75,676
Trustees' fees and expenses		11,523
Other		66,385
Total expenses		1,595,159
Net investment income		8,106,989
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		30,148,469
Swap contracts		372,084
Futures		558,948
Written options		127,540
Foreign currency		(556,512	)
		30,650,529
Change in net unrealized appreciation (depreciation) on: Investments		750,963
Swap contracts		(103,285	)
Futures		1,015,166
Written options		9,146
Foreign currency		250,711
		1,922,701
Net gain (loss)		32,573,230
Net increase (decrease) in net assets resulting from operations	$	40,680,219

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income (loss)	$	8,106,989		$	6,577,137
Net realized gain (loss)		30,650,529			37,219,792
Change in net unrealized appreciation (depreciation)		1,922,701			(11,355,694	)
Net increase (decrease) in net assets resulting from operations		40,680,219			32,441,235
Distributions to shareholders from: Net investment income: Class A		(5,498,634	)		(4,191,340	)
Total distributions		(5,498,634	)		(4,191,340	)
Fund share transactions: Class A Proceeds from shares sold		7,161,669			5,666,347
Shares issued to shareholders in reinvestment of distributions		5,498,634			4,191,340
Payments for shares redeemed		(39,157,373	)		(41,768,743	)
Net increase (decrease) in net assets from Class A share transactions		(26,497,070	)		(31,911,056	)
Increase (decrease) in net assets		8,684,515			(3,661,161	)
Net assets at beginning of period		260,398,259			264,059,420
Net assets at end of period (including undistributed net investment income of $7,643,314 and $5,395,441, respectively)	$	269,082,774		$	260,398,259
Other Information
Class A Shares outstanding at beginning of period		10,896,924			12,288,136
Shares sold		284,532			246,623
Shares issued to shareholders in reinvestment of distributions		220,917			186,116
Shares redeemed		(1,544,895	)		(1,823,951	)
Net increase (decrease) in Class A shares		(1,039,446	)		(1,391,212	)
Shares outstanding at end of period		9,857,478			10,896,924

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	23.90		$	21.49		$	22.13		$	20.52		$	17.35
Income (loss) from investment operations: Net investment incomea		.78			.57			.46			.39			.44
Net realized and unrealized gain (loss)		3.14			2.20			(.75	)		1.88			3.43
Total from investment operations		3.92			2.77			(.29	)		2.27			3.87
Less distributions from: Net investment income		(.52	)		(.36	)		(.35	)		(.66	)		(.70	)
Net asset value, end of period	$	27.30		$	23.90		$	21.49		$	22.13		$	20.52
Total Return (%)		16.63			12.98			(1.42	)		11.22			23.43
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		269			260			264			308			319
Ratio of expenses (%)		.60			.59			.58			.65			.60
Ratio of net investment income (%)		3.07			2.48			2.09			1.89			2.40
Portfolio turnover rate (%)		182			188			109			203			207
a Based on average shares outstanding during the period.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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. For certain international equity securities, in order to adjust for events which may occur between the close of the foreign exchanges and the close of the New York Stock Exchange, a fair valuation model may be used. This fair valuation model takes into account comparisons to the valuation of American Depository Receipts (ADRs), exchange-traded funds, futures contracts and certain indices and these securities are categorized as Level 2.

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

Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost, which approximates value, and are categorized as Level 2. Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

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

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

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

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

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

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

As of December 31, 2013, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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

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

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

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

Additionally, 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.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	12,343,378
Undistributed net long-term capital gains	$	22,165,270
Unrealized appreciation (depreciation) on investments	$	13,404,649

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	5,498,634	$	4,191,340

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

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. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes, with the exception of securities in default of principal.

B. Derivative Instruments

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

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

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

Interest Rate Swaps. Interest rate swaps are agreements in which the Fund agrees to pay to the counterparty a fixed rate payment in exchange for the counterparty agreeing to pay to the Fund a variable rate payment, or the Fund agrees to receive from the counterparty a fixed rate payment in exchange for the counterparty agreeing to receive from the Fund a variable rate payment. The payment obligations are based on the notional amount of the swap. For the year ended December 31, 2013, the Fund entered into interest rate swap agreements to gain exposure to different parts of the yield curve while managing overall duration.

A summary of the open interest rate swap contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in interest rate swap contracts had a total notional amount generally indicative of a range from $6,100,000 to $22,800,000.

Credit Default Swaps. Credit default swaps are agreements between a buyer and a seller of protection against predefined credit events for the reference entity. The Fund may enter into credit default swaps to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller of a credit default swap, the Fund is required to pay the par (or other agreed-upon) value of the referenced entity to the counterparty with the occurrence of a credit event by a third party, such as a U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the swap provided that no credit event has occurred. If no credit event occurs, the Fund keeps the stream of payments with no payment obligations. The Fund may also buy credit default swaps, in which case the Fund functions as the counterparty referenced above. This involves the risk that the swap may expire worthless. It also involves counterparty risk that the seller may fail to satisfy its payment obligations to the Fund with the occurrence of a credit event. When the Fund sells a credit default swap, it will cover its commitment. This may be achieved by, among other methods, maintaining cash or liquid assets equal to the aggregate notional value of the reference entities for all outstanding credit default swaps sold by the Fund. For the year ended December 31, 2013, the Fund entered into credit default swap agreements to gain exposure to the underlying issuer's credit quality characteristics.

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

A summary of the open credit default swap contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in credit default swap contracts sold had a total notional value generally indicative of a range from $125,000 to $1,925,000.

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the year ended December 31, 2013, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration. The Fund also entered into interest rate futures contracts for non-hedging purposes to seek to enhance potential gains.

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

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

A summary of the open futures contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $1,012,000 to $7,994,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $4,480,000 to $76,652,000.

Options. An option contract is a contract in which the writer (seller) of the option grants the buyer of the option, upon payment of a premium, the right to purchase from (call option), or sell to (put option), the writer a designated instrument at a specified price within a specified period of time. The Fund may write or purchase interest rate swaption agreements which are options to enter into a pre-defined swap agreement. The interest rate swaption agreement will specify whether the buyer of the swaption will be a fixed-rate receiver or a fixed-rate payer upon exercise. Certain options, including options on indices and interest rate options, will require cash settlement by the Fund if exercised. For the year ended December 31, 2013, the Fund entered into options on interest rate futures and on interest rate swaps in order to hedge against potential adverse interest rate movements of portfolio assets.

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

There are no open purchased option contracts as of December 31, 2013. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in written option contracts had a total value generally indicative of a range from approximately $74,000 to $434,000, and purchased option contracts had a total value generally indicative of a range from $0 to approximately $147,000.

Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange contract ("forward currency contract") is a commitment to purchase or sell a foreign currency at the settlement date at a negotiated rate. For the year ended December 31, 2013, the Fund entered into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign currency denominated portfolio holdings, to facilitate transactions in foreign currency denominated securities and to enhance total returns.

Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and unrealized gain (loss) is recorded daily. On the settlement date of the forward currency contract, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was closed. Certain risks may arise upon entering into forward currency contracts from the potential inability of counterparties to meet the terms of their contracts. The maximum counterparty credit risk to the Fund is measured by the unrealized gain on appreciated contracts. Additionally, when utilizing forward currency contracts to hedge, the Fund gives up the opportunity to profit from favorable exchange rate movements during the term of the contract.

A summary of the open forward currency contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $6,931,000 to $23,982,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from approximately $3,551,000 to $20,433,000. The investment in forward currency contracts long vs. other foreign currencies sold had a total contract value generally indicative of a range from $0 to approximately $6,419,000.

The following tables summarize the value of the Fund's derivative instruments held as of December 31, 2013 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivatives	Forward Contracts		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a)	$	—	$	10,543	$	1,044,009	$	1,054,552
Credit Contracts (b)		—		11,007		—		11,007
Foreign Exchange Contracts (b)		272,353		—		—		272,353
	$	272,353	$	21,550	$	1,044,009	$	1,337,912
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative appreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Unrealized appreciation on swap contracts and forward foreign currency exchange contracts

Liability Derivatives	Written Options			Forward Contracts			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(163,823	)	$	—		$	(97,326	)	$	(51,117	)	$	(312,266	)
Foreign Exchange Contracts (c)		—			(48,760	)		—			—			(48,760	)
	$	(163,823	)	$	(48,760	)	$	(97,326	)	$	(51,117	)	$	(361,026	)
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative depreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Options written, at value and unrealized depreciation on swap contracts, respectively (c) Unrealized depreciation on forward foreign currency exchange contracts

Additionally, the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the year ended December 31, 2013 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Purchased Options			Written Options		Forward Contracts			Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a)	$	(13,141	)	$	127,540	$	—		$	281,040	$	558,948	$	954,387
Credit Contracts (a)		—			—		—			91,044		—		91,044
Foreign Exchange Contracts (b)		—			—		(412,862	)		—		—		(412,862	)
	$	(13,141	)	$	127,540	$	(412,862	)	$	372,084	$	558,948	$	632,569
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Net realized gain (loss) from investments (includes purchased options), written options, swap contracts and futures, respectively (b) Net realized gain (loss) from foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

Change in Net Unrealized Appreciation (Depreciation)	Purchased Options		Written Options		Forward Contracts		Swap Contracts			Futures Contracts		Total
Interest Rate Contracts (a)	$	37,464	$	9,146	$	—	$	(49,766	)	$	1,015,166	$	1,012,010
Credit Contracts (a)		—		—		—		(53,519	)		—		(53,519	)
Foreign Exchange Contracts (b)		—		—		247,346		—			—		247,346
	$	37,464	$	9,146	$	247,346	$	(103,285	)	$	1,015,166	$	1,205,837
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Change in net unrealized appreciation (depreciation) on investments (includes purchased options), written options, swap contracts and futures, respectively (b) Change in net unrealized appreciation (depreciation) on foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

As of December 31, 2013, the Fund has transactions subject to enforceable master netting agreements. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by derivative type, including any collateral exposure, is included in the following tables:

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Received			Net Amount of Derivative Assets
Australia & New Zealand Banking Group Ltd.	$	298	$	—		$	—		$	298
Barclays Bank PLC		45,719		(1	)		—			45,718
Citigroup, Inc.		36,210		(16,582	)		—			19,628
Commonwealth Bank of Australia		12,857		(4,530	)		—			8,327
JPMorgan Chase Securities, Inc.		18,800		(1	)		—			18,799
Nomura International PLC		515		(515	)		—			—
UBS AG		168,961		—			—			168,961
Exchange Traded Futures and Swaps (b)		1,054,552		—			—			1,054,552
	$	1,337,912	$	(21,629	)	$	—		$	1,316,283
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Pledged (c)			Net Amount of Derivative Liabilities
Barclays Bank PLC	$	1	$	(1	)	$	—		$	—
BNP Paribas		58,782		—			—			58,782
Citigroup, Inc.		16,582		(16,582	)		—			—
Commonwealth Bank of Australia		4,530		(4,530	)		—			—
JPMorgan Chase Securities, Inc.		1		(1	)		—			—
Nomura International PLC		227,735		(515	)		(227,220	)		—
Exchange Traded Futures and Swaps (b)		53,395		—			—			53,395
	$	361,026	$	(21,629	)	$	(227,220	)	$	112,177

(a) Forward foreign currency exchange contracts, bilateral swap contracts and written options are netted.

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

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

C. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury obligations) aggregated $466,561,771 and $497,226,145, respectively. Purchases and sales of U.S. Treasury obligations aggregated $4,122,917 and $9,998,463, respectively.

For the year ended December 31, 2013, transactions for written options on interest rate swap contracts and futures contracts were as follows:

	Contracts/ Contract Amount			Premium
Outstanding, beginning of period		8,200,020		$	181,719
Options written		31,500,114			387,211
Options closed		(13,100,066	)		(240,195	)
Options expired		(68	)		(48,525	)
Outstanding, end of period		26,600,000		$	280,210

D. Related Parties

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

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

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

Accordingly, for the year ended December 31, 2013, the fee pursuant to the Investment Management Agreement was equivalent to an annual effective rate of 0.37% of the Fund's average daily net assets.

For the period from January 1, 2013 through September 30, 2013, the Advisor had contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A shares at 0.68%.

Effective October 1, 2013 through September 30, 2014, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of class A shares at 0.71%.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $264,194, of which $22,543 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC aggregated $396, of which $66 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $21,063, of which $6,528 is unpaid.

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

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

Securities Lending Agent Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the year ended December 31, 2013, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $16,343.

E. Ownership of the Fund

At December 31, 2013, three participating insurance companies were owners of record of 10% or more of the total outstanding shares of the Fund, each owning 44%, 20% and 16%.

F. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Global Income Builder VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS Global Income Builder VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Global Income Builder VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges, redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,112.50
Expenses Paid per $1,000*	$	3.35
Hypothetical 5% Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,022.03
Expenses Paid per $1,000*	$	3.21

* Expenses are equal to the Fund's annualized expense ratio, 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 Ratio	Class A
DWS Variable Series II — DWS Global Income Builder VIP	.63%

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

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

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

Tax Information (Unaudited)

For corporate shareholders, 27% of the ordinary dividends (i.e., income dividends plus short-term capital gains) paid during the Fund's fiscal year ended December 31, 2013 qualified for the dividends received deduction.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Global Income Builder VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Asset Allocation Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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 distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 2nd quartile, 2nd quartile and 3rd quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one- and three-year periods and has underperformed its benchmark in the five-year period ended December 31, 2012.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be lower than the median (1st quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board considered the Fund's management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitation agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2GIB-2 (R-025825-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Government & Agency Securities VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

6 Investment Portfolio

11 Statement of Assets and Liabilities

12 Statement of Operations

12 Statement of Changes in Net Assets

14 Financial Highlights

15 Notes to Financial Statements

23 Report of Independent Registered Public Accounting Firm

24 Information About Your Fund's Expenses

25 Tax Information

25 Proxy Voting

26 Advisory Agreement Board Considerations and Fee Evaluation

29 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

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

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

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

Growth of an Assumed $10,000 Investment in DWS Government & Agency Securities VIP
	The Barclays GNMA Index is an unmanaged, market-value-weighted measure of all fixed-rate securities backed by mortgage pools of the Government National Mortgage Association. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Government & Agency Securities VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	9,696		$	10,724		$	12,357		$	15,230
	Average annual total return		–3.04	%		2.36	%		4.32	%		4.30	%
Barclays GNMA Index	Growth of $10,000	$	9,788		$	10,817		$	12,159		$	15,807
	Average annual total return		–2.12	%		2.65	%		3.99	%		4.69	%
DWS Government & Agency Securities VIP		1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	9,675		$	10,624		$	12,156		$	14,697
	Average annual total return		–3.25	%		2.04	%		3.98	%		3.93	%
Barclays GNMA Index	Growth of $10,000	$	9,788		$	10,817		$	12,159		$	15,807
	Average annual total return		–2.12	%		2.65	%		3.99	%		4.69	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

During the 12-month period ended December 31, 2013, the Fund provided a total return of –3.04% (Class A shares, unadjusted for contract charges) compared with the –2.12% return of its benchmark, the Barclays GNMA Index.1

During the period, the U.S. Federal Reserve Board (the Fed) continued to maintain its benchmark short-term rate at or near zero levels and to engage in bond purchases designed to lower longer-term interest rates as it sought to stimulate economic growth. Longer-term U.S. Treasury yields stayed within a fairly narrow range for the first few months of 2013 as investors attempted to assess mixed economic data. As the period progressed, economic data strengthened and there was increasing speculation that a reduction in Fed bond purchases was imminent. As a result, interest rates mostly drifted higher from May through December 2013. The year finished on a note of optimism for the economy, as third-quarter GDP growth was revised upward to a robust 4.1% and a bipartisan deal was reached on the U.S. budget. GNMAs were negatively impacted by rising rates and modestly lagged comparable-maturity U.S. Treasuries for the period.

The Fund continued to have significant exposure to higher-coupon mortgage pools. While price performance on these holdings was mixed, our focus on seasoned and low-balance mortgage pools with characteristics that defend against increasing prepayments helped maintain the Fund's income stream. We had a meaningful position in interest-only securities in the belief that voluntary prepayments, will remain manageable. Interest-only securities are particularly vulnerable to rising prepayments, as the investor is threatened with the loss of an income stream without receiving any return of principal. This allocation worked well as interest rates rose and prepayment fears eased. The Fund was positioned with an overall duration and corresponding interest-rate sensitivity above that of the benchmark for much of the period, which held back returns as rates rose. With inflation remaining below-target, there would not appear to be any substantive reason for the Fed to initiate a rapid reversal in policy. Nonetheless, given market jitters about the direction of the economy and Fed policy, we expect there will be opportunities to add value in security selection on volatility. With mortgage rates likely to be range-bound over the near term, we are comfortable with our focus on maximizing current income in the Fund. At the same time, we are keeping enough liquidity in the Fund to reposition fairly quickly should higher current mortgage rates become a durable trend.

William Chepolis, CFA

Portfolio Manager

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.

1 The Barclays GNMA Index is an unmanaged, market-value-weighted measure of all fixed-rate securities backed by mortgage pools of the Government National Mortgage Association. Index returns do not reflect fees or expenses and it is not possible to invest directly into an index.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio)	12/31/13	12/31/12
Mortgage-Backed Securities Pass-Throughs	66%	67%
Government & Agency Obligations	15%	17%
Collateralized Mortgage Obligations	11%	15%
Cash Equivalents	8%	1%
	100%	100%

Coupons*	12/31/13	12/31/12
Less than 4.5%	32%	35%
4.5%–5.49%	43%	37%
5.5%–6.49%	21%	24%
6.5%–7.49%	3%	3%
7.5% and Greater	1%	1%
	100%	100%

Interest Rate Sensitivity	12/31/13	12/31/12
Effective Maturity	10.0 years	7.0 years
Effective Duration	6.3 years	5.5 years

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

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

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

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at 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-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Principal Amount ($)		Value ($)
Mortgage-Backed Securities Pass-Throughs 89.4%
Federal Home Loan Mortgage Corp., 3.5%, 3/1/2042 (a)		11,000,000		10,910,625
Federal National Mortgage Association, 3.5%, 3/1/2042 (a)		10,000,000		9,942,188
Government National Mortgage Association:
3.5%, with various maturities from 2/15/2043 until 3/20/2043		4,797,911		4,847,819
4.0%, with various maturities from 7/1/2040 until 6/20/2043 (a)		3,112,797		3,242,575
4.5%, with various maturities from 6/20/2033 until 2/20/2043 (a)		19,373,750		20,718,511
4.55%, 1/15/2041		419,228		449,252
4.625%, 5/15/2041		195,870		211,172
5.0%, with various maturities from 11/20/2032 until 4/15/2042		14,869,090		16,203,049
5.5%, with various maturities from 10/15/2032 until 7/20/2040		9,091,373		10,028,379
6.0%, with various maturities from 7/15/2014 until 5/15/2040		8,752,098		9,730,954
6.5%, with various maturities from 4/15/2031 until 2/15/2039		1,776,993		2,006,338
7.0%, with various maturities from 2/20/2027 until 11/15/2038		283,751		328,900
7.5%, 10/20/2031		7,672		9,114
Total Mortgage-Backed Securities Pass-Throughs (Cost $88,194,940)				88,628,876
Collateralized Mortgage Obligations 14.8%
Federal Home Loan Mortgage Corp.:
"OA", Series 3179, Principal Only, Zero Coupon, 7/15/2036		242,600		211,312
"KO", Series 4180, Principal Only, Zero Coupon, 1/15/2043		1,429,793		790,678
"KB", Series 4144, 2.5%, 12/15/2042		214,837		161,780
"YI", Series 3936, Interest Only, 3.0%, 6/15/2025		120,845		9,803
"AI", Series 4016, Interest Only, 3.0%, 9/15/2025		1,306,090		124,019
"WI", Series 3939, Interest Only, 3.0%, 10/15/2025		477,818		42,647
"EI", Series 3953, Interest Only, 3.0%, 11/15/2025		674,578		64,652
"IO", Series 3974, Interest Only, 3.0%, 12/15/2025		210,025		21,335
"DI", Series 4010, Interest Only, 3.0%, 2/15/2027		171,020		19,388
"IP", Series 4046, Interest Only, 3.0%, 5/15/2027		475,634		59,081
"IK", Series 4048, Interest Only, 3.0%, 5/15/2027		1,602,461		209,644
"IA", Series 3800, Interest Only, 3.5%, 12/15/2022		185,689		949
"IK", Series 3754, Interest Only, 3.5%, 6/15/2025		1,023,970		96,906
	Principal Amount ($)		Value ($)
"DZ", Series 4199, 3.5%, 5/15/2043		238,673		194,011
"ZG", Series 4213, 3.5%, 6/15/2043		382,817		359,297
"NI", Series 3657, Interest Only, 4.5%, 8/15/2027		384,238		11,373
"22", Series 243, Interest Only, 4.571%*, 6/15/2021		630,540		43,505
"PI", Series 2535, Interest Only, 6.0%, 9/15/2032		158,119		5,766
"MI", Series 3871, Interest Only, 6.0%, 4/15/2040		164,772		29,319
"A", Series 172, Interest Only, 6.5%, 1/1/2024		22,895		3,770
"DS", Series 3199, Interest Only, 6.983%*, 8/15/2036		2,236,041		414,659
"S", Series 2416, Interest Only, 7.933%*, 2/15/2032		306,916		64,780
"ST", Series 2411, Interest Only, 8.583%*, 6/15/2021		900,913		97,312
"KS", Series 2064, Interest Only, 9.983%*, 5/15/2022		309,694		63,049
Federal National Mortgage Association:
"DI", Series 2011-136, Interest Only, 3.0%, 1/25/2026		198,516		18,544
"LZ", Series 2013-45, 3.0%, 5/25/2043		1,020,176		757,530
"HI", Series 2010-123, Interest Only, 3.5%, 3/25/2024		386,292		27,175
"KI", Series 2011-72, Interest Only, 3.5%, 3/25/2025		1,131,401		82,400
''IO", Series 2012-146, Interest Only, 3.5%, 1/25/2043		2,133,625		540,584
"KZ", Series 2013-66, 3.5%, 7/25/2043		924,550		807,289
"ZB", Series 2010-136, 4.0%, 12/25/2040		392,003		378,306
"25", Series 351, Interest Only, 4.5%, 5/1/2019		176,467		14,993
"HI", Series 2009-77, Interest Only, 4.5%, 9/25/2027		117,112		1,605
"IN", Series 2003-49, Interest Only, 4.75%, 3/25/2018		997,742		41,222
"21", Series 334, Interest Only, 5.0%, 3/1/2018		80,310		5,634
"20", Series 334, Interest Only, 5.0%, 3/1/2018		122,855		8,846
''23", Series 339, Interest Only, 5.0%, 7/1/2018		176,411		11,798
"26", Series 381, Interest Only, 5.0%, 12/25/2020		56,445		4,602
"ZA", Series 2008-24, 5.0%, 4/25/2038		699,461		755,424
"30", Series 381, Interest Only, 5.5%, 11/25/2019		318,814		30,228
"PI", Series 2009-14, Interest Only, 5.5%, 3/25/2024		542,094		67,347
"PJ", Series 2004-46, Interest Only, 5.835%*, 3/25/2034		395,207		54,483
"WI", Series 2011-59, Interest Only, 6.0%, 5/25/2040		356,288		33,949
"101", Series 383, Interest Only, 6.5%, 9/1/2022		1,075,638		152,375
"SJ", Series 2007-36, Interest Only, 6.605%*, 4/25/2037		222,701		31,890
"KI", Series 2005-65, Interest Only, 6.835%*, 8/25/2035		104,757		19,503
	Principal Amount ($)		Value ($)
"ES", Series 2003-17, Interest Only, 6.885%*, 9/25/2022		168,505		1,058
"SA", Series G92-57, IOette, 83.283%*, 10/25/2022		38,803		73,121
Government National Mortgage Association:
"IE", Series 2011-128, Interest Only, 3.5%, 9/20/2026		947,893		122,468
"JY", Series 2010-20, 4.0%, 12/20/2033		2,013,839		2,092,873
"LI", Series 2009-104, Interest Only, 4.5%, 12/16/2018		229,151		17,479
"NI", Series 2010-44, Interest Only, 4.5%, 10/20/2037		600,193		62,818
"CI", Series 2010-87, Interest Only, 4.5%, 11/20/2038		1,251,588		331,327
"MI", Series 2010-169, Interest Only, 4.5%, 8/20/2040		805,185		151,710
"AI", Series 2012-15, Interest Only, 4.5%, 9/20/2040		594,593		158,588
"GZ", Series 2005-24, 5.0%, 3/20/2035		518,387		541,715
"MI", Series 2009-76, Interest Only, 5.0%, 3/20/2035		307,124		4,001
"ZA", Series 2005-75, 5.0%, 10/16/2035		583,177		618,242
"MZ", Series 2009-98, 5.0%, 10/16/2039		1,046,427		1,111,377
"Z", Series 2009-112, 5.0%, 11/20/2039		1,225,982		1,336,323
"AI", Series 2008-51, Interest Only, 5.5%, 5/16/2023		458,452		38,040
"AI", Series 2008-46, Interest Only, 5.5%, 5/16/2023		239,946		21,173
"GI", Series 2003-19, Interest Only, 5.5%, 3/16/2033		833,289		166,321
"IB", Series 2010-130, Interest Only, 5.5%, 2/20/2038		269,221		49,832
"BS", Series 2011-93, Interest Only, 5.933%*, 7/16/2041		1,260,521		184,536
"DI", Series 2009-10, Interest Only, 6.0%, 4/16/2038		329,398		64,832
"SA", Series 2012-84, Interest Only, 6.133%*, 12/20/2038		1,472,581		248,546
"QA", Series 2007-57, Interest Only, 6.333%*, 10/20/2037		337,473		50,405
"IP", Series 2009-118, Interest Only, 6.5%, 12/16/2039		103,015		23,379
"IC", Series 1997-4, Interest Only, 7.5%, 3/16/2027		587,952		150,723
"SK", Series 2003-11, Interest Only, 7.533%*, 2/16/2033		511,987		100,586
Total Collateralized Mortgage Obligations (Cost $14,113,577)				14,666,235
	Principal Amount ($)		Value ($)
Government & Agency Obligations 20.9%
U.S. Government Sponsored Agency 10.1%
Federal Home Loan Bank, 1.0%, 6/21/2017		10,000,000		9,979,029
U.S. Treasury Obligations 10.8%
U.S. Treasury Bill, 0.02%**, 2/13/2014 (b)		1,045,000		1,044,984
U.S. Treasury Bond, 2.875%, 5/15/2043		4,500,000		3,647,111
U.S. Treasury Notes:
0.75%, 6/15/2014 (c)		550,000		551,590
1.0%, 8/31/2016		3,450,000		3,482,344
2.75%, 11/15/2023		2,000,000		1,956,562
				10,682,591
Total Government & Agency Obligations (Cost $20,977,515)				20,661,620

	Contract Amount		Value ($)
Call Options Purchased 0.5%
Options on Interest Rate Swap Contracts
Pay Fixed Rate — 3.72% – Receive Floating — LIBOR, Swap Expiration Date 4/22/2026, Option Expiration Date 4/20/20161		2,600,000		172,036
Pay Fixed Rate — 4.32% – Receive Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172		6,000,000		347,112
Total Call Options Purchased (Cost $390,446)				519,148
Put Options Purchased 0.0%
Options on Interest Rate Swap Contracts
Receive Fixed Rate — 2.32% – Pay Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172 (Cost $203,884)		6,000,000		32,291

	Shares		Value ($)
Cash Equivalents 11.2%
Central Cash Management Fund, 0.05% (d) (Cost $11,122,156)		11,122,156		11,122,156

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $135,002,518)†		136.8			135,630,326
Other Assets and Liabilities, Net		(36.8	)		(36,459,231	)
Net Assets		100.0			99,171,095

* These securities are shown at their current rate as of December 31, 2013.

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

† The cost for federal income tax purposes was $135,065,809. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $564,517. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $3,440,975 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,876,458.

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

(b) At December 31, 2013, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

(c) At December 31, 2013, this security has been pledged, in whole or in part, as collateral for open swap contracts.

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

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

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

LIBOR: London Interbank Offered Rate

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

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

At December 31, 2013, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Depreciation ($)
10 Year Interest Rate Swap	USD	3/17/2014		35		3,526,250		(2,258	)
10 Year U.S. Treasury Note	USD	3/20/2014		125		15,380,859		(217,588	)
Ultra Long U.S. Treasury Bond	USD	3/20/2014		25		3,406,250		(53,175	)
Total unrealized depreciation								(273,021	)

At December 31, 2013, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation ($)
5 Year U.S. Treasury Note	USD	3/31/2014		47		5,607,688		9,443

Currency Abbreviation

USD United States Dollar

At December 31, 2013, open written options contracts were as follows:

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (e)
Call Options Receive Fixed — 3.32% – Pay Floating — LIBOR	2/3/2017 2/3/2027		3,000,000	2	2/1/2017		216,991		(317,919	)
Receive Fixed — 4.064% – Pay Floating — LIBOR	5/13/2014 5/13/2044		2,400,000	1	5/9/2014		17,700		(55,854	)
Receive Fixed — 4.22% – Pay Floating — LIBOR	4/22/2016 4/22/2026		2,600,000	1	4/20/2016		92,690		(118,030	)
Receive Fixed — 5.132% – Pay Floating — LIBOR	3/17/2016 3/17/2026		2,400,000	1	3/15/2016		17,340		(45,923	)
Receive Fixed — 5.132% – Pay Floating — LIBOR	3/17/2016 3/17/2026		2,400,000	2	3/15/2016		28,320		(45,923	)
Total Call Options							373,041		(583,649	)
Put Options Pay Fixed — 1.132% – Receive Floating — LIBOR	3/17/2016 3/17/2026		2,400,000	1	3/15/2016		17,340		(837	)
Pay Fixed — 1.132% – Receive Floating — LIBOR	3/17/2016 3/17/2026		2,400,000	2	3/15/2016		6,120		(837	)
Pay Fixed — 2.064% – Receive Floating — LIBOR	5/13/2014 5/13/2044		2,400,000	1	5/9/2014		17,700		(2	)
Pay Fixed — 2.385% – Receive Floating — LIBOR	3/31/2014 3/31/2044		2,400,000	3	3/27/2014		32,760		(1	)
Pay Fixed — 2.423% – Receive Floating — LIBOR	3/20/2014 3/20/2044		2,400,000	4	3/18/2014		34,560		(1	)
Pay Fixed — 3.033% – Receive Floating — LIBOR	10/24/2014 10/24/2044		1,900,000	5	10/22/2014		24,130		(5,913	)
Pay Fixed — 3.093% – Receive Floating — LIBOR	10/21/2014 10/21/2044		1,900,000	2	10/17/2014		26,220		(6,928	)
Pay Fixed — 3.32% – Receive Floating — LIBOR	2/3/2017 2/3/2027		3,000,000	2	2/1/2017		216,990		(57,429	)
Total Put Options							375,820		(71,948	)
Total							748,861		(655,597	)

(e) Unrealized appreciation on written options on interest rate swap contracts at December 31, 2013 was $93,264.

At December 31, 2013, open interest rate swap contracts were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($)		Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Unrealized Appreciation/ (Depreciation) ($)
12/30/2014 12/30/2016		23,200,000	Fixed — 1.173%	Floating — LIBOR		(12,108	)		(15,005	)
12/30/2014 12/30/2019		400,000	Fixed — 2.522%	Floating — LIBOR		290			(83	)
12/30/2014 12/30/2030		1,400,000	Fixed — 4.081%	Floating — LIBOR		12,534			(12,466	)
12/30/2014 12/30/2034		1,600,000	Fixed — 4.01%	Floating — LIBOR		10,422			9,935
5/13/2014 5/13/2044		2,400,000	Fixed — 4.064%	Floating — LIBOR		(27,819	)		269
Total net unrealized depreciation									(17,350	)

Bilateral Swaps

Effective/ Expiration Dates

Notional Amount ($)

Cash Flows Paid by the Fund

Cash Flows Received by the Fund

Value ($)

Upfront Payments Paid/ (Received) ($)

Unrealized Depreciation ($)

6/3/2013 6/3/2025

2,300,000

1

Floating — LIBOR

Fixed — 3.0%

(104,100

)

—

(104,100

)

Counterparties:

1 Nomura International PLC

2 BNP Paribas

3 Barclays Bank PLC

4 JPMorgan Chase Securities, Inc.

5 Citigroup, Inc.

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

Fair Value Measurements

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1			Level 2			Level 3		Total
Fixed-Income Investments (f)
Mortgage-Backed Securities Pass-Throughs	$	—		$	88,628,876		$	—	$	88,628,876
Collateralized Mortgage Obligations		—			14,666,235			—		14,666,235
Government & Agency Obligations		—			20,661,620			—		20,661,620
Short-Term Investments		11,122,156			—			—		11,122,156
Derivatives (g)
Purchased Options		—			551,439			—		551,439
Futures Contracts		9,443			—			—		9,443
Interest Rate Swap Contracts		—			10,204			—		10,204
Total	$	11,131,599		$	124,518,374		$	—	$	135,649,973
Liabilities	Level 1			Level 2			Level 3		Total
Derivatives(g)
Futures Contracts	$	(273,021	)	$	—		$	—	$	(273,021	)
Written Options		—			(655,597	)		—		(655,597	)
Interest Rate Swap Contracts		—			(131,654	)		—		(131,654	)
Total	$	(273,021	)	$	(787,251	)	$	—	$	(1,060,272	)

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

(f) See Investment Portfolio for additional detailed categorizations.

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

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments Investments in non-affiliated securities, at value (cost $123,880,362)	$	124,508,170
Investment in Central Cash Management Fund (cost $11,122,156)		11,122,156
Total investments in securities, at value (cost $135,002,518)		135,630,326
Receivable for investments sold — when-issued/delayed delivery securities		50,401,598
Receivable for Fund shares sold		175,090
Interest receivable		455,797
Receivable for variation margin on centrally cleared swaps		42,045
Other assets		3,820
Total assets		186,708,676
Liabilities
Cash overdraft		23,354
Payable for investments purchased		1,966,051
Payable for investments purchased — when-issued/delayed delivery securities		84,643,669
Payable for Fund shares redeemed		5,279
Payable for variation margin on futures contracts		49,276
Options written, at value (premium received $748,861)		655,597
Unrealized depreciation on bilateral swap contracts		104,100
Accrued management fee		38,387
Net payable for pending swap contracts		15,104
Accrued Trustees' fees		2,053
Other accrued expenses and payables		34,711
Total liabilities		87,537,581
Net assets, at value	$	99,171,095
Net Assets Consist of
Undistributed net investment income		2,192,301
Unrealized appreciation (depreciation) on: Investments		627,808
Swap contracts		(121,450	)
Futures		(263,578	)
Written options		93,264
Accumulated net realized gain (loss)		(109,916	)
Paid-in capital		96,752,666
Net assets, at value	$	99,171,095
Class A Net Asset Value, offering and redemption price per share ($95,537,931 ÷ 8,328,640 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.47
Class B Net Asset Value, offering and redemption price per share ($3,633,164 ÷ 317,145 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.46

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Interest	$	3,054,500
Income distributions — Central Cash Management Fund		3,745
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		105
Total income		3,058,350
Expenses: Management fee		505,764
Administration fee		112,392
Services to shareholders		1,402
Distribution service fees (Class B)		11,046
Record keeping fees (Class B)		4,368
Custodian fee		36,775
Audit and tax fees		70,340
Legal fees		9,881
Reports to shareholders		35,041
Trustees' fees and expenses		5,725
Other		16,334
Total expenses before expense reductions		809,068
Expense reductions		(44,510	)
Total expenses after expense reductions		764,558
Net investment income		2,293,792
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		(203,996	)
Swap contracts		626,170
Futures		(719,550	)
Written options		177,488
		(119,888	)
Change in net unrealized appreciation (depreciation) on: Investments		(5,313,133	)
Swap contracts		221,465
Securities sold short		(129,707	)
Futures		(241,740	)
Written options		(232,998	)
		(5,696,113	)
Net gain (loss)		(5,816,001	)
Net increase (decrease) in net assets resulting from operations	$	(3,522,209	)

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income	$	2,293,792		$	3,586,409
Net realized gain (loss)		(119,888	)		4,527,418
Change in net unrealized appreciation (depreciation)		(5,696,113	)		(4,180,279	)
Net increase (decrease) in net assets resulting from operations		(3,522,209	)		3,933,548
Distributions to shareholders from: Net investment income: Class A		(3,325,537	)		(5,435,920	)
Class B		(119,146	)		(209,154	)
Net realized gain: Class A		(4,523,083	)		(2,952,755	)
Class B		(185,024	)		(124,749	)
Total distributions		(8,152,790	)		(8,722,578	)
Fund share transactions: Class A Proceeds from shares sold		9,306,924			18,065,811
Reinvestment of distributions		7,848,620			8,388,675
Payments for shares redeemed		(31,059,765	)		(47,401,824	)
Net increase (decrease) in net assets from Class A share transactions		(13,904,221	)		(20,947,338	)
Class B Proceeds from shares sold		311,619			919,743
Reinvestment of distributions		304,170			333,903
Payments for shares redeemed		(1,961,191	)		(2,329,903	)
Net increase (decrease) in net assets from Class B share transactions		(1,345,402	)		(1,076,257	)
Increase (decrease) in net assets		(26,924,622	)		(26,812,625	)
Net assets at beginning of period		126,095,717			152,908,342
Net assets at end of period (including undistributed net investment income of $2,192,301 and $3,422,413, respectively)	$	99,171,095		$	126,095,717
Other Information
Class A Shares outstanding at beginning of period		9,511,241			11,145,622
Shares sold		782,217			1,389,466
Shares issued to shareholders in reinvestment of distributions		660,658			672,169
Shares redeemed		(2,625,476	)		(3,696,016	)
Net increase (decrease) in Class A shares		(1,182,601	)		(1,634,381	)
Shares outstanding at end of period		8,328,640			9,511,241
Class B Shares outstanding at beginning of period		428,962			511,071
Shares sold		26,355			72,277
Shares issued to shareholders in reinvestment of distributions		25,582			26,755
Shares redeemed		(163,754	)		(181,141	)
Net increase (decrease) in Class B shares		(111,817	)		(82,109	)
Shares outstanding at end of period		317,145			428,962

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	12.69		$	13.12		$	12.98		$	12.78		$	12.40
Income (loss) from investment operations: Net investment incomea		.24			.34			.48			.50			.52
Net realized and unrealized gain (loss)		(.59	)		.03			.45			.32			.45
Total from investment operations		(.35	)		.37			.93			.82			.97
Less distributions from: Net investment income		(.37	)		(.52	)		(.57	)		(.62	)		(.59	)
Net realized gains		(.50	)		(.28	)		(.22	)		—			—
Total distributions		(.87	)		(.80	)		(.79	)		(.62	)		(.59	)
Net asset value, end of period	$	11.47		$	12.69		$	13.12		$	12.98		$	12.78
Total Return (%)		(3.04	)b		2.93	b		7.46			6.61			8.08
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		96			121			146			157			169
Ratio of expenses before expense reductions (%)		.71			.68			.67			.64			.58
Ratio of expenses after expense reductions (%)		.67			.66			.67			.64			.58
Ratio of net investment income (%)		2.05			2.65			3.68			3.86			4.16
Portfolio turnover rate (%)		794			796			673			423			390
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.
Class B	Years Ended December 31,
		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	12.67		$	13.10		$	12.95		$	12.75		$	12.37
Income (loss) from investment operations: Net investment incomea		.20			.29			.43			.46			.48
Net realized and unrealized gain (loss)		(.59	)		.03			.46			.31			.45
Total from investment operations		(.39	)		.32			.89			.77			.93
Less distributions from: Net investment income		(.32	)		(.47	)		(.52	)		(.57	)		(.55	)
Net realized gains		(.50	)		(.28	)		(.22	)		—			—
Total distributions		(.82	)		(.75	)		(.74	)		(.57	)		(.55	)
Net asset value, end of period	$	11.46		$	12.67		$	13.10		$	12.95		$	12.75
Total Return (%)		(3.25	)b		2.48	b		7.15			6.24			7.70
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		4			5			7			6			7
Ratio of expenses before expense reductions (%)		1.06			1.03			1.01			.99			.92
Ratio of expenses after expense reductions (%)		.99			1.01			1.01			.99			.92
Ratio of net investment income (%)		1.71			2.29			3.34			3.51			3.81
Portfolio turnover rate (%)		794			796			673			423			390
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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

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

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.

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

Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost, which approximates value, and are categorized as Level 2. Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

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

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

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

Securities Lending. Deutsche Bank AG, as lending agent, lends securities of the Fund to certain financial institutions under the terms of the Security Lending Agreement. The Fund retains the benefits of owning the securities it has loaned and continues to receive interest and dividends generated by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of either cash or liquid, unencumbered assets having a value at least equal to the value of the securities loaned. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of borrower rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may be risks of delay and costs in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. If the Fund is not able to recover securities lent, the Fund may sell the collateral and purchase a replacement investment in the market, incurring the risk that the value of the replacement security is greater than the value of the collateral. The Fund is also subject to all investment risks associated with the reinvestment of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments. The Fund had no securities on loan at December 31, 2013.

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

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

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

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

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

At December 31, 2013, the Fund had a net tax basis capital loss carryforward of $310,000 of short-term losses, which may be applied against any realized net taxable capital gains indefinitely.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	2,196,608
Capital loss carryforward	$	(310,000	)
Unrealized appreciation (depreciation) on investments	$	564,517

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	5,193,028	$	6,020,886
Distributions from long-term capital gains	$	2,959,762	$	2,701,692

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes for the Fund.

B. Derivative Instruments

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

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

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

Interest Rate Swaps. Interest rate swaps are agreements in which the Fund agrees to pay to the counterparty a fixed rate payment in exchange for the counterparty agreeing to pay to the Fund a variable rate payment, or the Fund agrees to receive from the counterparty a fixed rate payment in exchange for the counterparty agreeing to receive from the Fund a variable rate payment. The payment obligations are based on the notional amount of the swap. For the year ended December 31, 2013, the Fund entered into interest rate swap agreements to gain exposure to different parts of the yield curve while managing overall duration.

For the year ended December 31, 2013, the investment in interest rate swap contracts had a total notional amount generally indicative of a range from $31,300,000 to $48,700,000.

Options. An option contract is a contract in which the writer (seller) of the option grants the buyer of the option, upon payment of a premium, the right to purchase from (call option), or sell to (put option), the writer a designated instrument at a specified price within a specified period of time. The Fund may write or purchase interest rate swaption agreements which are options to enter into a pre-defined swap agreement. The interest rate swaption agreement will specify whether the buyer of the swaption will be a fixed-rate receiver or a fixed-rate payer upon exercise. Certain options, including options on indices and interest rate options, will require cash settlement by the Fund if exercised. For the year ended December 31, 2013, the Fund entered into options on interest rate futures and on interest rate swap contracts in order to hedge against potential adverse interest rate movements of portfolio assets.

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

A summary of the open purchased option contracts as of December 31, 2013 is included in the Fund's Investment Portfolio. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in written option contracts had a total value generally indicative of a range from approximately $590,000 to $1,248,000, and purchased option contracts had a total value generally indicative of a range from approximately $505,000 to $842,000.

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the year ended December 31, 2013, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration.

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

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

A summary of the open futures contracts as of December 31, 2013, is included in a table following the Fund's Investment Portfolio. For the period ended December 31, 2013, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $2,652,000 to $22,313,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from $0 to approximately $13,922,000.

The following tables summarize the value of the Fund's derivative instruments held as of December 31, 2013 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivatives	Purchased Options		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a) (b)	$	551,439	$	10,204	$	9,443	$	571,086
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Investments in securities, at value (includes purchased options) and unrealized appreciation on swap contracts. Unsettled variation margin for centrally cleared swaps is disclosed separately within the Statement of Assets and Liabilities. (b) Includes cumulative appreciation of futures contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Liability Derivatives	Written Options			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(655,597	)	$	(131,654	)	$	(273,021	)	$	(1,060,272	)
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Options written, at value and unrealized depreciation on swap contracts. Unsettled variation margin for centrally cleared swaps is disclosed separately within the Statement of Assets and Liabilities. (b) Includes cumulative depreciation of futures contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities.

Additionally, the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the year ended December 31, 2013 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Purchased Options		Written Options		Swap Contracts		Futures Contracts			Total
Interest Rate Contracts (a)	$	84,738	$	177,488	$	626,170	$	(719,550	)	$	168,846
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Net realized gain (loss) from investments (includes purchased options), written options, swap contracts and futures, respectively

Change in Net Unrealized Appreciation (Depreciation)	Purchased Options		Written Options			Swap Contracts		Futures Contracts			Total
Interest Rate Contracts (a)	$	250,165	$	(232,998	)	$	221,465	$	(241,740	)	$	(3,108	)
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Change in net unrealized appreciation (depreciation) from investments (includes purchased options), written options, swap contracts and futures, respectively

As of December 31, 2013, the Fund has transactions subject to enforceable master netting agreements. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by derivative type, including any collateral exposure, is included in the following tables:

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Received			Net Amount of Derivative Assets
BNP Paribas	$	379,403	$	(379,403	)	$	—		$	—
Nomura International PLC		172,036		(172,036	)		—			—
Exchange Traded Futures and Swaps (b)		19,647		—			—			19,647
	$	571,086	$	(551,439	)	$	—		$	19,647
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Non-Cash Collateral Pledged (c)			Net Amount of Derivative Liabilities
Barclays Bank PLC	$	1	$	—		$	—		$	1
BNP Paribas		429,036		(379,403	)		—			49,633
Citigroup, Inc.		5,913		—			—			5,913
JPMorgan Chase Securities, Inc.		1		—			—			1
Nomura International PLC		324,746		(172,036	)		(152,710	)		—
Exchange Traded Futures and Swaps (b)		300,575		—			—			300,575
	$	1,060,272	$	(551,439	)	$	(152,710	)	$	356,123

(a) Bilateral swap contracts and over-the-counter purchased and written options are netted.

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

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

C. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment securities (excluding short-term investments and U.S. Treasury securities) aggregated $1,069,609,917 and $1,090,179,740, respectively. Purchases and sales of U.S. Treasury securities aggregated $26,318,172 and $25,433,181, respectively.

For the year ended December 31, 2013, transactions for written options on futures and interest rate swap contracts were as follows:

	Contracts/ Contract Amount			Premiums
Outstanding, beginning of period		25,600,030		$	916,248
Options written		24,900,128			334,799
Options closed		(18,900,027	)		(404,031	)
Options expired		(131	)		(98,155	)
Outstanding, end of period		31,600,000		$	748,861

D. Related Parties

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

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

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

For the period from January 1, 2013 through April 30, 2013, the Advisor had contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A at 0.66%.

For the period from May 1, 2013 through April 30, 2014, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A at 0.67%.

For the period from January 1, 2013 through April 30, 2014, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class B at 0.99%.

Accordingly, for the year ended December 31, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $43,084, and the amount charged aggregated $462,680, which was equivalent to an annual effective rate of 0.41% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $112,392, of which $8,500 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC were as follows:

	Total Aggregated		Amount Waived
Class A	$	287	$	287
Class B		71		71
	$	358	$	358

In addition, for the year ended December 31, 2013, the Advisor reimbursed $1,068 of recordkeeping fees for Class B shares.

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DWS Investments Distributors, Inc. ("DIDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the year ended December 31, 2013, the Distribution Service Fee aggregated $11,046, of which $853 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $18,807, of which $5,186 is unpaid.

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

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

Securities Lending Agent Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the year ended December 31, 2013, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $11.

E. Ownership of the Fund

At December 31, 2013, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 42%, 34% and 17%. One participating insurance company was the owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 94%.

F. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Government & Agency Securities VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS Government & Agency Securities VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Government & Agency Securities VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges, redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	969.60	$	967.50
Expenses Paid per $1,000*	$	3.33	$	4.91
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,021.83	$	1,020.21
Expenses Paid per $1,000*	$	3.41	$	5.04

* 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 B
DWS Variable Series II — DWS Government & Agency Securities VIP	.67%	.99%

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

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

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

Tax Information (Unaudited)

The Fund paid distributions of $0.32 per share from net long-term capital gains during its year ended December 31, 2013.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Government & Agency Securities VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Asset Allocation Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 3rd quartile, 1st quartile and 1st quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one- and three-year periods and has underperformed its benchmark in the five-year period ended December 31, 2012.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were higher than the median (3rd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be equal to the median of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Board considered the Fund's management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitations agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2GAS-2 (R-025831-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS High Income VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

6 Investment Portfolio

17 Statement of Assets and Liabilities

18 Statement of Operations

19 Statement of Changes in Net Assets

20 Financial Highlights

21 Notes to Financial Statements

28 Report of Independent Registered Public Accounting Firm

29 Information About Your Fund's Expenses

30 Tax Information

30 Proxy Voting

31 Advisory Agreement Board Considerations and Fee Evaluation

34 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

Bond investments are subject to interest-rate and credit risks. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Investments in lower-quality ("junk bonds") and non-rated securities present greater risk of loss than investments in higher-quality securities. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. The Fund may lend securities to approved institutions. See the prospectus for details.

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 0.72% and 0.99% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in DWS High Income VIP
	The Credit Suisse High Yield Index tracks the performance of the global high-yield debt market. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS High Income VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	10,791		$	12,877		$	20,549		$	20,358
	Average annual total return		7.91	%		8.79	%		15.49	%		7.37	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,753		$	13,010		$	22,957		$	22,290
	Average annual total return		7.53	%		9.17	%		18.08	%		8.35	%
DWS High Income VIP		1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	10,744		$	12,763		$	20,253		$	19,717
	Average annual total return		7.44	%		8.47	%		15.16	%		7.02	%
Credit Suisse High Yield Index	Growth of $10,000	$	10,753		$	13,010		$	22,957		$	22,290
	Average annual total return		7.53	%		9.17	%		18.08	%		8.35	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

High-yield bonds performed very well in 2013, as gauged by the 7.53% return of the Fund's benchmark, the Credit Suisse High Yield Index.1 The Class A shares of the Fund returned 7.91% (unadjusted for contract charges) during 2013, outperforming the benchmark. The asset class soundly outperformed investment-grade bonds, as measured by the –2.02% return of the Barclays U.S. Aggregate Bond Index.2

The year was generally positive for high-yield bonds, as signs of improving economic growth helped fuel a recovery in investors' appetite for higher-risk assets. In addition, the default rate for high-yield issuers remained very low on a historical basis. Double-digit returns for the stock market, along with investors' general preference for higher-yielding asset classes, also contributed to the healthy performance results.

The positive backdrop was reflected in a decline in the yield spread between high-yield bonds and U.S. Treasuries of comparable maturity during the period.3 The BofA Merrill Lynch U.S. High Yield Master II Option-Adjusted Spread closed the year at 4.00 percentage points, down from 5.34 one year ago.4

Consistent with our bottom-up approach, individual security selection was the primary driver of the Fund's outperformance. The leading contributors to performance were Leap Wireless, Fage Dairy Industry SA and DynCorp International, Inc., while the largest detractors were our positions in Getty Images, Inc. and Windstream Corp.

In terms of portfolio structure, at the end of the year, the Fund was overweight vs. the benchmark in securities rated B. This position represents our belief that this credit tier tends to have a low correlation with U.S. Treasuries, which we believe was a potentially positive attribute in an environment similar to what we saw during the year.5 The Fund was also underweight in BB-rated issues and neutral in bonds rated CCC, but we were selectively taking advantage of opportunities in the CCC tier where the risk-reward trade-off was attractive during the year.6

We retain a positive outlook on high-yield bonds based on our expectation for low defaults and satisfactory economic growth, together with their attractive yields relative to government bonds.We continue to focus on using credit research to identify the most compelling investment opportunities for the Fund. We manage the portfolio from a long-term perspective. When seeking to meet its objective of high current income, we do not take on excessive risk for the sake of short-term returns. Instead, we strive to generate outperformance over a multiyear period by achieving an appropriate trade-off of risk and return.

Gary Russell, CFA

Portfolio Manager

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.

1 The Credit Suisse High Yield Index tracks the performance of the global high-yield debt market.

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

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

3 "Spread" refers to the excess yield various bond sectors offer over financial instruments with similar maturities. When spreads widen, yield differences are increasing between bonds in the two sectors being compared. When spreads narrow, the opposite is true

4 The BofA Merrill Lynch Option-Adjusted Spreads (OASs) are the calculated spreads between a computed OAS index of all bonds in a given rating category and a spot Treasury curve. An OAS index is constructed using each constituent bond's OAS, weighted by market capitalization. The BofA Merrill Lynch U.S. High Yield Master II Option-Adjusted Spread (OAS) uses an index of bonds that are below investment grade (those rated BB or below).

5 "Overweight" means the Fund holds a higher weighting in a given sector or security than the benchmark. "Underweight" means it holds a lower weighting.

6 Credit quality measures a bond issuer's ability to repay interest and principal in a timely manner. Rating agencies assign letter designations, such as AAA, AA and so forth. The lower the rating, the higher the probability of default. Credit quality does not remove market risk and is subject to change.

Portfolio Summary (Unaudited)

Asset Allocation(As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Corporate Bonds	82%	86%
Cash Equivalents	10%	11%
Government & Agency Obligations	4%	—
Convertible Bonds	2%	1%
Preferred Securities	1%	1%
Preferred Stocks	1%	1%
	100%	100%

Sector Diversification (As a % of Investment Portfolio excluding Government & Agency Obligations, Cash Equivalents and Securities Lending Collateral)	12/31/13	12/31/12
Telecommunication Services	20%	16%
Consumer Discretionary	19%	23%
Energy	15%	13%
Industrials	10%	9%
Materials	10%	11%
Consumer Staples	7%	4%
Financials	6%	10%
Information Technology	6%	5%
Health Care	5%	6%
Utilities	2%	3%
	100%	100%

Quality (As a % of Investment Portfolio excluding Cash Equivalents and Securities Lending Collateral)	12/31/13	12/31/12
AAA	4%	—
BBB	2%	2%
BB	36%	29%
B	44%	57%
CCC	12%	10%
CC	—	1%
Not Rated	2%	1%
	100%	100%

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

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at 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-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

			Principal Amount ($)(a)	Value ($)
Corporate Bonds 81.3%
Consumer Discretionary 15.5%
AMC Entertainment, Inc., 8.75%, 6/1/2019			170,000	181,688
AMC Networks, Inc., 7.75%, 7/15/2021			80,000	90,000
AmeriGas Finance LLC:
	6.75%, 5/20/2020		460,000	502,550
	7.0%, 5/20/2022		350,000	379,750
APX Group, Inc.:
	6.375%, 12/1/2019		205,000	208,075
	144A, 8.75%, 12/1/2020		25,000	25,438
Asbury Automotive Group, Inc., 8.375%, 11/15/2020			505,000	567,494
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			330,000	351,862
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			350,000	345,625
Avis Budget Car Rental LLC:
	5.5%, 4/1/2023 (b)		205,000	198,594
	8.25%, 1/15/2019		535,000	583,150
BC Mountain LLC, 144A, 7.0%, 2/1/2021			210,000	212,100
Block Communications, Inc., 144A, 7.25%, 2/1/2020			375,000	397,500
Boyd Gaming Corp., 9.0%, 7/1/2020 (b)			155,000	169,725
Cablevision Systems Corp., 8.0%, 4/15/2020 (b)			65,000	72,638
Caesar's Entertainment Operating Co., Inc.:
	8.5%, 2/15/2020		760,000	731,500
	9.0%, 2/15/2020 (b)		245,000	238,263
Carlson Wagonlit BV, 144A, 6.875%, 6/15/2019			215,000	223,063
CCO Holdings LLC:
	6.5%, 4/30/2021		655,000	673,012
	6.625%, 1/31/2022		450,000	463,500
	7.0%, 1/15/2019 (b)		120,000	126,450
	7.375%, 6/1/2020		50,000	54,125
	8.125%, 4/30/2020		150,000	162,750
CDR DB Sub, Inc., 144A, 7.75%, 10/15/2020			230,000	228,850
Cequel Communications Holdings I LLC:
	144A, 5.125%, 12/15/2021		355,000	332,812
	144A, 6.375%, 9/15/2020		1,215,000	1,245,375
Chester Downs & Marina LLC, 144A, 9.25%, 2/1/2020 (b)			145,000	145,363
Clear Channel Communications, Inc., 11.25%, 3/1/2021			280,000	301,000
Clear Channel Worldwide Holdings, Inc.:
	Series A, 6.5%, 11/15/2022		250,000	253,437
	Series B, 6.5%, 11/15/2022		365,000	372,756
	Series A, 7.625%, 3/15/2020		110,000	114,400
	Series B, 7.625%, 3/15/2020 (b)		1,115,000	1,172,144
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			20,000	19,300
Cumulus Media Holdings, Inc., 7.75%, 5/1/2019 (b)			375,000	395,625
			Principal Amount ($)(a)	Value ($)
DISH DBS Corp.:
	4.25%, 4/1/2018		270,000	275,400
	5.0%, 3/15/2023		325,000	303,062
	6.75%, 6/1/2021		50,000	53,000
	7.875%, 9/1/2019		270,000	309,150
GLP Capital LP, 144A, 4.375%, 11/1/2018			95,000	97,138
Griffey Intermediate, Inc., 144A, 7.0%, 10/15/2020 (b)			405,000	320,962
Harron Communications LP, 144A, 9.125%, 4/1/2020			395,000	437,462
Hertz Corp., 6.75%, 4/15/2019			305,000	328,637
Hertz Holdings Netherlands BV, 144A, 4.375%, 1/15/2019		EUR	580,000	798,903
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			140,000	146,650
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019 (PIK)			475,000	496,969
Libbey Glass, Inc., 6.875%, 5/15/2020			117,000	126,360
Live Nation Entertainment, Inc., 144A, 7.0%, 9/1/2020			345,000	374,325
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			240,000	251,100
Mediacom Broadband LLC, 6.375%, 4/1/2023			425,000	434,562
Mediacom LLC, 7.25%, 2/15/2022			110,000	116,600
MGM Resorts International:
	6.625%, 12/15/2021 (b)		590,000	623,925
	6.75%, 10/1/2020 (b)		170,000	181,900
	8.625%, 2/1/2019		840,000	984,900
	10.0%, 11/1/2016		225,000	270,000
Midcontinent Communications & Midcontinent Finance Corp., 144A, 6.25%, 8/1/2021			200,000	201,500
Petco Animal Supplies, Inc., 144A, 9.25%, 12/1/2018			315,000	337,837
PNK Finance Corp., 144A, 6.375%, 8/1/2021			245,000	250,513
Quebecor Media, Inc., 5.75%, 1/15/2023			205,000	198,338
Rent-A-Center, Inc., 4.75%, 5/1/2021			145,000	136,119
Schaeffler Finance BV, 144A, 7.75%, 2/15/2017			420,000	476,700
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			125,000	122,813
Seminole Indian Tribe of Florida, Inc., 144A, 7.804%, 10/1/2020			345,000	377,775
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020 (b)			230,000	250,125
Sirius XM Holdings, Inc., 144A, 5.875%, 10/1/2020 (b)			195,000	198,900
SIWF Merger Sub, Inc., 144A, 6.25%, 6/1/2021 (b)			295,000	297,581
Starz LLC, 5.0%, 9/15/2019			175,000	178,938
Taylor Morrison Communities, Inc., 144A, 5.25%, 4/15/2021 (b)			250,000	243,125
			Principal Amount ($)(a)	Value ($)
Travelport LLC:
	144A, 6.364%**, 3/1/2016		227,786	228,925
	144A, 13.875%, 3/1/2016 (PIK)		51,208	54,280
UCI International, Inc., 8.625%, 2/15/2019			310,000	310,000
Unitymedia Hessen GmbH & Co., KG:
	144A, 5.5%, 1/15/2023		945,000	916,650
	144A, 7.5%, 3/15/2019		435,000	473,062
Unitymedia KabelBW GmbH, 144A, 9.625%, 12/1/2019		EUR	550,000	837,973
Univision Communications, Inc.:
	144A, 6.875%, 5/15/2019		60,000	64,125
	144A, 7.875%, 11/1/2020		140,000	153,825
Viking Cruises Ltd., 144A, 8.5%, 10/15/2022			205,000	231,650
Visant Corp., 10.0%, 10/1/2017			460,000	446,200
Visteon Corp., 6.75%, 4/15/2019			152,000	161,500
				25,619,373
Consumer Staples 5.6%
B&G Foods, Inc., 4.625%, 6/1/2021			245,000	235,200
Chiquita Brands International, Inc., 144A, 7.875%, 2/1/2021			200,000	216,500
Del Monte Corp., 7.625%, 2/15/2019			410,000	425,887
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020 (b)			810,000	846,450
Hawk Acquisition Sub, Inc., 144A, 4.25%, 10/15/2020			860,000	832,050
JBS Investments GmbH, 144A, 7.75%, 10/28/2020			405,000	409,050
JBS U.S.A. LLC:
	144A, 7.25%, 6/1/2021		485,000	504,400
	144A, 8.25%, 2/1/2020		160,000	173,600
Pilgrim's Pride Corp., 7.875%, 12/15/2018			290,000	316,100
Reynolds Group Issuer, Inc.:
	5.75%, 10/15/2020		405,000	413,100
	6.875%, 2/15/2021		540,000	581,850
	7.125%, 4/15/2019		415,000	441,975
	8.25%, 2/15/2021 (b)		225,000	240,188
Roundy's Supermarkets, Inc., 144A, 10.25%, 12/15/2020			220,000	224,400
Smithfield Foods, Inc.:
	6.625%, 8/15/2022		190,000	201,400
	7.75%, 7/1/2017		1,180,000	1,383,550
Sun Products Corp., 144A, 7.75%, 3/15/2021			360,000	316,800
U.S. Foods, Inc., 8.5%, 6/30/2019			400,000	438,000
Viskase Companies, Inc., 144A, 9.875%, 1/15/2018			940,000	988,128
				9,188,628
Energy 12.6%
Access Midstream Partners LP:
	4.875%, 5/15/2023		375,000	361,875
	6.125%, 7/15/2022		325,000	347,750
Antero Resources Finance Corp.:
	144A, 5.375%, 11/1/2021		220,000	222,200
	7.25%, 8/1/2019		185,000	198,875
			Principal Amount ($)(a)	Value ($)
Berry Petroleum Co.:
	6.375%, 9/15/2022		205,000	208,588
	6.75%, 11/1/2020		680,000	705,500
BreitBurn Energy Partners LP:
	7.875%, 4/15/2022		700,000	728,000
	8.625%, 10/15/2020		225,000	241,875
Chaparral Energy, Inc.:
	7.625%, 11/15/2022		465,000	497,550
	8.25%, 9/1/2021		300,000	325,500
Chesapeake Oilfield Operating LLC, 6.625%, 11/15/2019			150,000	157,125
Crestwood Midstream Partners LP:
	144A, 6.125%, 3/1/2022		165,000	169,125
	7.75%, 4/1/2019		325,000	352,625
Crosstex Energy LP, 7.125%, 6/1/2022 (b)			105,000	119,438
Denbury Resources, Inc., 4.625%, 7/15/2023			215,000	194,038
Dresser-Rand Group, Inc., 6.5%, 5/1/2021			420,000	447,300
Endeavor Energy Resources LP, 144A, 7.0%, 8/15/2021			295,000	297,950
EP Energy LLC:
	6.875%, 5/1/2019		330,000	355,162
	7.75%, 9/1/2022		175,000	196,000
	9.375%, 5/1/2020		150,000	173,063
EPE Holdings LLC, 144A, 8.875%, 12/15/2017 (PIK)			517,356	531,583
EV Energy Partners LP, 8.0%, 4/15/2019			835,000	839,175
Frontier Oil Corp., 6.875%, 11/15/2018			315,000	339,806
Halcon Resources Corp.:
	8.875%, 5/15/2021		585,000	590,850
	9.75%, 7/15/2020		280,000	291,900
	144A, 9.75%, 7/15/2020		220,000	229,075
Holly Energy Partners LP:
	6.5%, 3/1/2020		105,000	109,725
	8.25%, 3/15/2018		330,000	348,150
Kodiak Oil & Gas Corp., 5.5%, 1/15/2021 (b)			400,000	399,000
Linn Energy LLC:
	6.5%, 5/15/2019		115,000	117,300
	144A, 7.0%, 11/1/2019		595,000	600,950
MEG Energy Corp.:
	144A, 6.5%, 3/15/2021		235,000	247,338
	144A, 7.0%, 3/31/2024		470,000	475,875
Midstates Petroleum Co., Inc.:
	9.25%, 6/1/2021		485,000	506,825
	10.75%, 10/1/2020		585,000	636,187
Murphy Oil U.S.A., Inc., 144A, 6.0%, 8/15/2023			290,000	291,450
Murray Energy Corp., 144A, 8.625%, 6/15/2021			50,000	51,750
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			595,000	623,262
Oasis Petroleum, Inc.:
	6.5%, 11/1/2021		175,000	187,250
	144A, 6.875%, 3/15/2022		385,000	408,100
	6.875%, 1/15/2023		130,000	138,450
	7.25%, 2/1/2019		665,000	714,875
Offshore Group Investment Ltd.:
	7.125%, 4/1/2023		410,000	418,200
	7.5%, 11/1/2019 (b)		745,000	810,187
Pacific Drilling SA, 144A, 5.375%, 6/1/2020			245,000	246,225
			Principal Amount ($)(a)	Value ($)
QEP Resources, Inc., 5.25%, 5/1/2023			80,000	75,000
Sabine Pass Liquefaction LLC:
	144A, 5.625%, 2/1/2021		690,000	674,475
	144A, 5.625%, 4/15/2023		155,000	144,925
SandRidge Energy, Inc., 7.5%, 3/15/2021			515,000	539,462
SESI LLC, 6.375%, 5/1/2019			235,000	250,863
Swift Energy Co., 7.875%, 3/1/2022			290,000	287,100
Talos Production LLC, 144A, 9.75%, 2/15/2018			410,000	419,225
Tesoro Corp., 5.375%, 10/1/2022 (b)			150,000	151,875
Ultra Petroleum Corp., 144A, 5.75%, 12/15/2018			90,000	92,475
Venoco, Inc., 8.875%, 2/15/2019			590,000	581,150
Welltec AS, 144A, 8.0%, 2/1/2019			400,000	424,000
Whiting Petroleum Corp., 5.0%, 3/15/2019			240,000	245,400
WPX Energy, Inc., 5.25%, 1/15/2017			510,000	544,425
				20,883,402
Financials 4.5%
AerCap Aviation Solutions BV, 6.375%, 5/30/2017			470,000	508,775
Ally Financial, Inc., 5.5%, 2/15/2017			385,000	416,762
CIT Group, Inc.:
	5.0%, 8/1/2023		1,610,000	1,549,625
	5.25%, 3/15/2018		540,000	579,150
E*TRADE Financial Corp.:
	6.375%, 11/15/2019		585,000	628,144
	6.75%, 6/1/2016		710,000	770,350
Hellas Telecommunications Finance, 144A, 8.227%**, 7/15/2015 (PIK)*		EUR	322,107	0
International Lease Finance Corp.:
	3.875%, 4/15/2018		385,000	385,962
	6.25%, 5/15/2019		320,000	346,400
	8.625%, 1/15/2022		310,000	366,343
	8.75%, 3/15/2017		245,000	288,488
MPT Operating Partnership LP:
	(REIT), 6.375%, 2/15/2022		290,000	300,150
	(REIT), 6.875%, 5/1/2021		295,000	315,650
Neuberger Berman Group LLC, 144A, 5.625%, 3/15/2020			160,000	168,000
Societe Generale SA, 144A, 7.875%, 12/31/2049			825,000	830,775
				7,454,574
Health Care 4.5%
Aviv Healthcare Properties LP:
	144A, 6.0%, 10/15/2021		100,000	101,750
	7.75%, 2/15/2019		500,000	537,500
Biomet, Inc.:
	6.5%, 8/1/2020		355,000	372,750
	6.5%, 10/1/2020		100,000	103,000
Community Health Systems, Inc.:
	5.125%, 8/15/2018		1,155,000	1,192,537
	7.125%, 7/15/2020 (b)		635,000	658,812
Endo Finance Co., 144A, 5.75%, 1/15/2022			220,000	221,100
			Principal Amount ($)(a)	Value ($)
Fresenius Medical Care U.S. Finance II, Inc., 144A, 5.625%, 7/31/2019			220,000	237,600
Fresenius U.S. Finance II, Inc., 144A, 9.0%, 7/15/2015			420,000	464,100
HCA, Inc.:
	5.875%, 3/15/2022		275,000	283,938
	6.5%, 2/15/2020		890,000	977,887
	7.5%, 2/15/2022		305,000	334,738
Hologic, Inc., 6.25%, 8/1/2020 (b)			200,000	211,000
IMS Health, Inc., 144A, 6.0%, 11/1/2020			250,000	265,625
LifePoint Hospitals, Inc., 144A, 5.5%, 12/1/2021			275,000	276,031
Par Pharmaceutical Companies, Inc., 7.375%, 10/15/2020			345,000	356,644
Physio-Control International, Inc., 144A, 9.875%, 1/15/2019			299,000	334,880
Salix Pharmaceuticals Ltd., 144A, 6.0%, 1/15/2021			165,000	169,125
Tenet Healthcare Corp.:
	4.375%, 10/1/2021		390,000	366,600
	4.5%, 4/1/2021		55,000	52,113
				7,517,730
Industrials 8.6%
Accuride Corp., 9.5%, 8/1/2018			345,000	337,237
ADT Corp., 144A, 6.25%, 10/15/2021			145,000	152,250
Aguila 3 SA, 144A, 7.875%, 1/31/2018			480,000	508,800
Alphabet Holding Co., Inc.:
	7.75%, 11/1/2017 (PIK)		205,000	211,406
	144A, 7.75%, 11/1/2017 (PIK)		275,000	283,594
Armored Autogroup, Inc., 9.25%, 11/1/2018 (b)			610,000	587,125
Artesyn Escrow, Inc., 144A, 9.75%, 10/15/2020			245,000	257,250
AWAS Aviation Capital Ltd., 144A, 7.0%, 10/17/2016			366,680	379,514
BakerCorp International, Inc., 8.25%, 6/1/2019			335,000	334,163
BE Aerospace, Inc., 6.875%, 10/1/2020			180,000	197,550
Belden, Inc., 144A, 5.5%, 9/1/2022			355,000	347,900
Bombardier, Inc., 144A, 5.75%, 3/15/2022			225,000	223,313
Casella Waste Systems, Inc., 7.75%, 2/15/2019			415,000	425,375
Clean Harbors, Inc., 5.125%, 6/1/2021			240,000	242,400
CTP Transportation Products LLC, 144A, 8.25%, 12/15/2019			275,000	286,688
Darling Escrow Corp., 144A, 5.375%, 1/15/2022 (c)			220,000	221,650
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			160,000	156,000
Ducommun, Inc., 9.75%, 7/15/2018			305,000	339,312
DynCorp International, Inc., 10.375%, 7/1/2017			490,000	501,025
Florida East Coast Railway Corp., 8.125%, 2/1/2017			225,000	234,844
FTI Consulting, Inc., 6.0%, 11/15/2022			205,000	207,563
Garda World Security Corp., 144A, 7.25%, 11/15/2021			290,000	292,175
GenCorp, Inc., 7.125%, 3/15/2021			790,000	845,300
			Principal Amount ($)(a)	Value ($)
Huntington Ingalls Industries, Inc.:
	6.875%, 3/15/2018		280,000	302,400
	7.125%, 3/15/2021		60,000	65,850
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			575,000	605,187
Meritor, Inc., 6.75%, 6/15/2021			195,000	198,900
Navios Maritime Holdings, Inc.:
	144A, 7.375%, 1/15/2022		830,000	834,150
	8.125%, 2/15/2019		410,000	421,275
Navios South American Logistics, Inc., 9.25%, 4/15/2019			350,000	377,562
Nortek, Inc., 8.5%, 4/15/2021			440,000	487,300
Ply Gem Industries, Inc., 9.375%, 4/15/2017			102,000	110,160
Spirit AeroSystems, Inc.:
	6.75%, 12/15/2020		205,000	220,631
	7.5%, 10/1/2017		215,000	223,600
Titan International, Inc., 144A, 6.875%, 10/1/2020			590,000	615,075
TransDigm, Inc., 7.5%, 7/15/2021			320,000	344,000
United Rentals North America, Inc.:
	5.75%, 7/15/2018		365,000	390,094
	6.125%, 6/15/2023		25,000	25,375
	7.375%, 5/15/2020		595,000	659,706
	7.625%, 4/15/2022		595,000	661,194
Watco Companies LLC, 144A, 6.375%, 4/1/2023			155,000	153,450
				14,268,343
Information Technology 4.8%
ACI Worldwide, Inc., 144A, 6.375%, 8/15/2020			105,000	109,725
Activision Blizzard, Inc., 144A, 5.625%, 9/15/2021			695,000	719,325
Alliance Data Systems Corp., 144A, 5.25%, 12/1/2017			255,000	264,562
Audatex North America, Inc., 144A, 6.0%, 6/15/2021			155,000	162,363
BMC Software Finance, Inc., 144A, 8.125%, 7/15/2021			340,000	350,200
CDW LLC, 8.5%, 4/1/2019			1,180,000	1,303,900
CyrusOne LP, 6.375%, 11/15/2022			105,000	108,675
eAccess Ltd., 144A, 8.25%, 4/1/2018			335,000	365,987
EarthLink, Inc., 7.375%, 6/1/2020			245,000	244,388
Equinix, Inc.:
	5.375%, 4/1/2023		725,000	708,687
	7.0%, 7/15/2021		215,000	234,888
First Data Corp.:
	144A, 6.75%, 11/1/2020		940,000	977,600
	144A, 7.375%, 6/15/2019		250,000	266,875
	144A, 8.875%, 8/15/2020		495,000	547,594
Freescale Semiconductor, Inc., 144A, 6.0%, 1/15/2022			275,000	278,437
Healthcare Technology Intermediate, Inc., 144A, 7.375%, 9/1/2018 (PIK)			75,000	78,000
Hughes Satellite Systems Corp.:
	6.5%, 6/15/2019		445,000	481,712
	7.625%, 6/15/2021		230,000	256,450
IAC/InterActiveCorp., 4.75%, 12/15/2022			215,000	200,488
NCR Escrow Corp.:
	144A, 5.875%, 12/15/2021		55,000	56,031
	144A, 6.375%, 12/15/2023		135,000	137,869
				7,853,756
			Principal Amount ($)(a)	Value ($)
Materials 6.5%
APERAM:
	144A, 7.375%, 4/1/2016		215,000	220,913
	144A, 7.75%, 4/1/2018		260,000	266,500
Berry Plastics Corp.:
	9.5%, 5/15/2018 (b)		390,000	418,275
	9.75%, 1/15/2021		460,000	532,450
BOE Intermediate Holding Corp., 144A, 9.0%, 11/1/2017 (PIK)			303,195	316,081
BOE Merger Corp., 144A, 9.5%, 11/1/2017 (PIK)			410,000	435,625
Clearwater Paper Corp., 7.125%, 11/1/2018			390,000	416,325
Crown Americas LLC, 6.25%, 2/1/2021			50,000	54,250
Essar Steel Algoma, Inc.:
	144A, 9.375%, 3/15/2015		1,290,000	1,219,050
	144A, 9.875%, 6/15/2015		195,000	118,950
Exopack Holding Corp., 144A, 10.0%, 6/1/2018			230,000	249,550
Exopack Holdings SA, 144A, 7.875%, 11/1/2019			275,000	280,500
FMG Resources (August 2006) Pty Ltd.:
	144A, 6.0%, 4/1/2017 (b)		315,000	334,688
	144A, 6.875%, 4/1/2022 (b)		270,000	294,300
	144A, 7.0%, 11/1/2015 (b)		358,000	371,425
	144A, 8.25%, 11/1/2019 (b)		270,000	303,075
FQM Akubra, Inc.:
	144A, 7.5%, 6/1/2021		610,000	637,450
	144A, 8.75%, 6/1/2020		360,000	390,600
Hexion U.S. Finance Corp.:
	6.625%, 4/15/2020		95,000	97,375
	8.875%, 2/1/2018		530,000	550,537
IAMGOLD Corp., 144A, 6.75%, 10/1/2020			310,000	266,600
Kaiser Aluminum Corp., 8.25%, 6/1/2020			260,000	293,800
Packaging Dynamics Corp., 144A, 8.75%, 2/1/2016			535,000	549,712
Perstorp Holding AB, 144A, 8.75%, 5/15/2017			455,000	489,125
Plastipak Holdings, Inc., 144A, 6.5%, 10/1/2021			250,000	258,750
Polymer Group, Inc., 7.75%, 2/1/2019			300,000	319,875
PolyOne Corp., 5.25%, 3/15/2023			250,000	243,750
Rain CII Carbon LLC:
	144A, 8.0%, 12/1/2018		270,000	279,450
	144A, 8.25%, 1/15/2021		200,000	204,000
Sealed Air Corp.:
	144A, 8.125%, 9/15/2019		150,000	168,375
	144A, 8.375%, 9/15/2021		150,000	170,250
				10,751,606
Telecommunication Services 16.6%
Altice Financing SA:
	144A, 6.5%, 1/15/2022		200,000	202,000
	144A, 7.875%, 12/15/2019		235,000	255,562
Altice Finco SA, 144A, 9.875%, 12/15/2020			235,000	264,375
CenturyLink, Inc.:
	Series V, 5.625%, 4/1/2020		105,000	106,838
	Series W, 6.75%, 12/1/2023		445,000	450,562
Cincinnati Bell, Inc.:
	8.375%, 10/15/2020		1,340,000	1,450,550
	8.75%, 3/15/2018 (b)		640,000	672,000
			Principal Amount ($)(a)	Value ($)
CPI International, Inc., 8.0%, 2/15/2018			260,000	271,700
Cricket Communications, Inc., 7.75%, 10/15/2020			1,360,000	1,550,400
Digicel Group Ltd.:
	144A, 8.25%, 9/30/2020		1,560,000	1,616,550
	144A, 10.5%, 4/15/2018		495,000	529,650
Digicel Ltd.:
	144A, 7.0%, 2/15/2020		200,000	202,000
	144A, 8.25%, 9/1/2017		1,090,000	1,133,600
ERC Ireland Preferred Equity Ltd., 144A, 7.69%**, 2/15/2017 (PIK)*		EUR	709,137	0
Frontier Communications Corp.:
	7.125%, 1/15/2023 (b)		1,370,000	1,352,875
	7.625%, 4/15/2024		110,000	109,725
	8.25%, 4/15/2017		348,000	403,680
	8.5%, 4/15/2020		490,000	548,800
	8.75%, 4/15/2022		670,000	743,700
Intelsat Jackson Holdings SA:
	144A, 5.5%, 8/1/2023		465,000	442,331
	7.25%, 10/15/2020		1,230,000	1,345,312
	7.5%, 4/1/2021		1,270,000	1,400,175
	8.5%, 11/1/2019		580,000	632,925
Intelsat Luxembourg SA:
	144A, 7.75%, 6/1/2021		670,000	718,575
	144A, 8.125%, 6/1/2023		105,000	112,613
Level 3 Communications, Inc., 8.875%, 6/1/2019			55,000	60,088
Level 3 Financing, Inc.:
	144A, 6.125%, 1/15/2021		165,000	166,650
	7.0%, 6/1/2020		1,260,000	1,335,600
	8.125%, 7/1/2019		670,000	733,650
	8.625%, 7/15/2020		510,000	571,200
MetroPCS Wireless, Inc.:
	6.625%, 11/15/2020		705,000	747,300
	144A, 6.625%, 4/1/2023 (b)		245,000	252,963
	7.875%, 9/1/2018		420,000	450,975
Millicom International Cellular SA, 144A, 4.75%, 5/22/2020			720,000	691,200
NII Capital Corp., 7.625%, 4/1/2021			305,000	125,050
Pacnet Ltd.:
	144A, 9.0%, 12/12/2018		200,000	203,750
	144A, 9.25%, 11/9/2015		434,000	452,987
SBA Communications Corp., 5.625%, 10/1/2019			200,000	206,000
Sprint Communications, Inc., 9.125%, 3/1/2017			310,000	364,250
Sprint Corp., 144A, 7.125%, 6/15/2024			275,000	279,125
T-Mobile U.S.A., Inc.:
	6.125%, 1/15/2022		110,000	111,925
	6.5%, 1/15/2024		110,000	111,375
tw telecom holdings, Inc.:
	5.375%, 10/1/2022		280,000	275,100
	144A, 5.375%, 10/1/2022		50,000	49,125
	144A, 6.375%, 9/1/2023		245,000	254,800
UPCB Finance III Ltd., 144A, 6.625%, 7/1/2020			185,000	196,563
UPCB Finance V Ltd., 144A, 7.25%, 11/15/2021			230,000	249,550
UPCB Finance VI Ltd., 144A, 6.875%, 1/15/2022			300,000	318,750
			Principal Amount ($)(a)	Value ($)
Wind Acquisition Finance SA:
	144A, 6.5%, 4/30/2020		195,000	207,675
	144A, 7.25%, 2/15/2018		410,000	431,525
Windstream Corp.:
	6.375%, 8/1/2023		265,000	247,775
	7.5%, 4/1/2023		420,000	422,100
	7.75%, 10/15/2020		80,000	84,900
	7.75%, 10/1/2021		675,000	715,500
	7.875%, 11/1/2017		495,000	565,537
				27,399,486
Utilities 2.1%
AES Corp.:
	8.0%, 10/15/2017		415,000	487,625
	8.0%, 6/1/2020		525,000	614,250
Calpine Corp.:
	144A, 7.5%, 2/15/2021		387,000	422,314
	144A, 7.875%, 7/31/2020		428,000	468,660
Enel SpA, 144A, 8.75%**, 9/24/2073			360,000	391,452
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024			550,000	192,500
Energy Future Intermediate Holding Co., LLC, 10.0%, 12/1/2020 (b)			615,000	653,437
NRG Energy, Inc., 7.625%, 1/15/2018			200,000	228,000
				3,458,238
Total Corporate Bonds (Cost $130,565,792)				134,395,136
Government & Agency Obligation 3.5%
U.S. Treasury Obligation
U.S. Treasury Note, 0.75%, 6/15/2014 (d) (Cost $5,847,045)			5,830,000	5,846,855
Loan Participations and Assignments 0.0%
Senior Loans**
Alliance Mortgage Cycle Loan, Term Loan A, 9.5%, 6/15/2010*			700,000	0
Travelport LLC, Second Lien Term Loan, 9.5%, 1/29/2016			36,284	37,656
Total Loan Participations and Assignments (Cost $735,300)				37,656
Convertible Bond 1.5%
Materials
GEO Specialty Chemicals, Inc., 144A, 7.5%, 3/31/2015 (PIK) (Cost $1,282,903)			1,297,793	2,514,085
Preferred Security 0.6%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $761,657)			1,135,000	987,450

	Shares		Value ($)
Common Stocks 0.2%
Consumer Discretionary 0.0%
Dawn Holdings, Inc.* (e)		15		42,688
Trump Entertainment Resorts, Inc.*		45		0
Vertis Holdings, Inc.*		676		0
				42,688
	Shares		Value ($)
Industrials 0.0%
Congoleum Corp.*		24,000		0
Materials 0.2%
GEO Specialty Chemicals, Inc.*		24,225		18,016
GEO Specialty Chemicals, Inc. 144A*		2,206		1,641
Wolverine Tube, Inc.*		7,045		227,201
				246,858
Total Common Stocks (Cost $527,543)				289,546
Preferred Stock 0.5%
Financials
Ally Financial, Inc. Series G, 7.0% (Cost $841,212)		915		878,486
Warrants 0.1%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		1,115		0
	Shares		Value ($)
Materials 0.1%
GEO Specialty Chemicals, Inc., Expiration Date 3/31/2015*		119,802		88,198
Hercules Trust II, Expiration Date 3/31/2029*		1,100		11,623
				99,821
Total Warrants (Cost $244,285)				99,821
Securities Lending Collateral 6.0%
Daily Assets Fund Institutional, 0.08% (f) (g) (Cost $9,856,472)		9,856,472		9,856,472
Cash Equivalents 10.4%
Central Cash Management Fund, 0.05% (f) (Cost $17,209,127)		17,209,127		17,209,127

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $167,871,336)†		104.1			172,114,634
Other Assets and Liabilities, Net		(4.1	)		(6,762,626	)
Net Assets		100.0			165,352,008

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

Security	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
Alliance Mortgage Cycle Loan*		9.5	%	6/15/2010	USD	700,000		700,000		0
ERC Ireland Preferred Equity Ltd.*		7.69	%	2/15/2017	EUR	709,137		965,174		0
Hellas Telecommunications Finance*		8.227	%	7/15/2015	EUR	322,107		92,199		0
								1,757,373		0

* Non-income producing security.

** Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of December 31, 2013.

† The cost for federal income tax purposes was $167,871,336. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $4,243,298. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $7,773,005 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,529,707.

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

(b) All or a portion of these securities were on loan. In addition, "Other Assets and Liabilities, Net" may include pending sales that are also on loan. The value of securities loaned at December 31, 2013 amounted to $9,469,663, which is 5.7% of net assets.

(c) When-issued security.

(d) At December 31, 2013, this security has been pledged, in whole or in part, as collateral for open swap contracts.

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

Schedule of Restricted Securities	Acquisition Date	Cost ($)		Value ($)		Value as % of Net Assets
Dawn Holdings, Inc.	August 2013		53,353		42,688		0.03

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

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

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.

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

REIT: Real Estate Investment Trust

At December 31, 2013, open credit default swap contracts sold were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($) (h)		Fixed Cash Flows Received			Underlying Debt Obligation	Value ($)		Unrealized Appreciation ($)
3/20/2013 6/20/2018		6,000,000		5.0	%	Markit Dow Jones CDX North America High Yield Index		576,303		232,972
10/19/2013 12/20/2018		12,000,000		5.0	%	Markit Dow Jones CDX North America High Yield Index		1,039,940		223,929
Total unrealized appreciation										456,901

Bilateral Swaps
Effective/ Expiration Dates	Notional Amount ($) (h)			Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (i)	Value ($)		Upfront Payments Paid/ (Received) ($)			Unrealized Appreciation ($)
12/20/2011 3/20/2017		370,000	1		5.0	%	CIT Group, Inc., 5.5%, 2/15/2019, BB–		44,612		10,034			34,578
6/20/2013 9/20/2018		245,000	1		5.0	%	DISH DBS Corp., 6.75%, 6/1/2021, BB–		33,715		20,654			13,061
6/21/2010 9/20/2015		175,000	3		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB–		14,187		(16,626	)		30,813
6/21/2010 9/21/2015		320,000	1		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB–		25,941		(27,750	)		53,691
6/21/2010 9/20/2015		100,000	4		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB–		8,107		(6,896	)		15,003
6/21/2010 9/20/2015		560,000	2		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB–		45,397		(9,983	)		55,380
6/20/2011 9/20/2016		575,000	2		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB–		69,594		28,911			40,683
3/21/2011 6/20/2016		1,085,000	5		5.0	%	Ford Motor Credit Co., LLC, 5.0%, 5/15/2018, BBB–		119,643		64,195			55,448
6/20/2011 9/20/2016		440,000	5		5.0	%	Forest Oil Corp., 7.25%, 6/15/2019, B–		14,983		8,918			6,065
9/20/2012 12/20/2017		485,000	6		5.0	%	General Motors Corp., 3.3%, 12/20/2017, BB+		71,323		28,613			42,710
6/20/2011 9/20/2015		1,145,000	4		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B–		87,032		25,052			61,980
3/21/2011 6/20/2016		610,000	3		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B–		61,206		11,269			49,937
6/20/2013 9/20/2018		470,000	4		5.0	%	HCA, Inc., 8.0%, 10/1/2018, B–		61,612		35,452			26,160
6/20/2013 9/20/2018		730,000	2		5.0	%	Sprint Communications, Inc., 6.0%, 12/1/2016, BB–		83,241		40,923			42,318
9/20/2013 12/20/2018		300,000	5		5.0	%	CSC Holdings LLC, 7.625%, 7/15/2018, BB+		36,644		28,065			8,579
9/20/2013 12/20/2018		1,125,000	3		5.0	%	CSC Holdings LLC, 7.625%, 7/15/2018, BB+		132,978		111,154			21,824
Total unrealized appreciation														558,230

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

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

Counterparties:

1 Credit Suisse

2 Bank of America

3 JPMorgan Chase Securities, Inc.

4 The Goldman Sachs & Co.

5 Barclays Bank PLC

6 UBS AG

At December 31, 2013, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
EUR	1,190,000	USD	1,634,217	1/15/2014		(2,853	)	Citigroup, Inc.

Currency Abbreviations

EUR Euro

USD United States Dollar

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

Fair Value Measurements

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2			Level 3		Total
Fixed Income Investments(j)
Corporate Bonds	$	—	$	134,395,136		$	0	$	134,395,136
Government & Agency Obligation		—		5,846,855			—		5,846,855
Loan Participations and Assignments		—		37,656			0		37,656
Convertible Bonds		—		—			2,514,085		2,514,085
Preferred Security		—		987,450			—		987,450
Common Stocks		—		—			289,546		289,546
Preferred Stock		—		878,486			—		878,486
Warrants (j)		—		—			99,821		99,821
Short-Term Investments (j)		27,065,599		—			—		27,065,599
Derivatives (k)
Credit Default Swap Contracts		—		1,015,131			—		1,015,131
Total	$	27,065,599	$	143,160,714		$	2,903,452	$	173,129,765
Liabilities	Level 1		Level 2			Level 3		Total
Derivatives (k)
Forward Foreign Currency Exchange Contracts	$	—	$	(2,853	)	$	—	$	(2,853	)
Total	$	—	$	(2,853	)	$	—	$	(2,853	)

During the year ended December 31, 2013, the amount of transfers between Level 2 and Level 3 was $281. Investments were transferred from Level 2 to Level 3 because of the lack of observable market data due to a decrease in market activity.

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

(j) See Investment Portfolio for additional detailed categorizations.

(k) Derivatives include unrealized appreciation (depreciation) on credit default swap contracts and forward foreign currency exchange contracts.

Level 3 Reconciliation

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

	Corporate Bonds			Loan Participations and Assignments		Convertible Bonds		Other Investments			Common Stocks			Warrants		Total
Balance as of December 31, 2012	$	155,602		$	0	$	1,538,014	$	107,806		$	139,682		$	63,227	$	2,004,331
Realized gains (loss)		6,235			—		—		298,987			(4	)		—		305,218
Change in unrealized appreciation (depreciation)		(5,404	)		—		964,874		(76,806	)		96,512			36,594		1,015,770
Amortization of premium/accretion of discount		2,226			—		11,197		—			—			—		13,423
Purchases		4,768			—		—		—			53,356			—		58,124
(Sales)		(163,708	)		—		—		(329,987	)		—			—		(493,695	)
Transfers into Level 3		281			—		—		—			—			—		281
Balance as of December 31, 2013	$	0		$	0	$	2,514,085	$	—		$	289,546		$	99,821	$	2,903,452
Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2013	$	(281	)	$	0	$	964,874	$	—		$	96,512		$	36,594	$	1,097,699

Quantitative Disclosure About Significant Unobservable Inputs
Asset Class	Fair Value at 12/31/13		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Common Stocks
Consumer Discretionary	$	42,688	Acquisition Value	Acquisition Value	$3,628.47 per share
				Discount for Lack of Marketability		20	%
	$	0	Asset Valuation	Book Value of Equity		0
	$	0	Asset Valuation	Book Value of Equity		0
Industrials	$	0	Asset Valuation	Book Value of Equity		0
Materials	$	227,201	Acquisition Value	Acquisition Value	$32.25 per share
	$	19,657	Market Approach	EV/EBITDA Multiple		6.08
				Discount to Public Comparables		20	%
				Discount for Lack of Marketability		25	%
Warrants
Consumer Discretionary	$	0	Asset Valuation	Book Value of Equity		0
Materials	$	11,623	Black Scholes Option Pricing Model	Implied Volatility		32	%
				Discount for Lack of Marketability		20	%
	$	88,198	Market Approach	EV/EBITDA Multiple		6.08
				Discount to Public Comparables		20	%
				Discount for Lack of Marketability		25	%
Loan Participations & Assignments
Senior Loans	$	0	Market Approach	Evaluated by Management		0
Corporate Bonds
Telecommunication Services	$	0	Asset Valuation	Book Value of Equity		0
Financials	$	0	Asset Valuation	Book Value of Equity		0
Convertible Bonds
Materials	$	2,514,085	Convertible Bond Methodology	EV/EBITDA Multiple		6.08
				Discount to Public Comparable		20	%
				Discount for Lack of Marketability		25	%

Qualitative Disclosure About Unobservable Inputs

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

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

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $140,805,737) — including $9,469,663 of securities loaned	$	145,049,035
Investment in Daily Assets Fund Institutional (cost $9,856,472)*		9,856,472
Investment in Central Cash Management Fund (cost $17,209,127)		17,209,127
Total investments in securities, at value (cost $167,871,336)		172,114,634
Cash		61,059
Foreign currency, at value (cost $12)		12
Receivable for investments sold		37,620
Receivable for investments sold — when-issued/delayed delivery security		61,284
Receivable for Fund shares sold		31,416
Receivable for variation margin on centrally cleared swaps contracts		318
Interest receivable		2,436,423
Unrealized appreciation on swap contracts		558,230
Upfront payments paid on swap contracts		413,240
Due from Advisor		61
Other assets		2,718
Total assets		175,717,015
Liabilities
Payable upon return of securities loaned		9,856,472
Payable for investments purchased		1,416
Payable for investments purchased — when-issued/delayed delivery security		280,802
Payable for Fund shares redeemed		46,159
Unrealized depreciation on forward foreign currency exchange contracts		2,853
Upfront payments received on swap contracts		61,255
Accrued management fee		57,071
Accrued Trustees' fees		1,975
Other accrued expenses and payables		57,004
Total liabilities		10,365,007
Net assets, at value	$	165,352,008
Net Assets Consist of
Undistributed net investment income		9,541,574
Net unrealized appreciation (depreciation) on: Investments		4,243,298
Swap contracts		1,015,131
Foreign currency		(2,792	)
Accumulated net realized gain (loss)		(41,156,447	)
Paid-in capital		191,711,244
Net assets, at value	$	165,352,008
Class A Net Asset Value, offering and redemption price per share ($165,028,087 ÷ 23,727,813 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	6.96
Class B Net Asset Value, offering and redemption price per share ($323,921 ÷ 46,339 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	6.99

* Represents collateral on securities loaned.

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Interest	$	10,598,302
Dividends		62,213
Income distributions — Central Cash Management Fund		11,309
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		32,808
Total income		10,704,632
Expenses: Management fee		834,670
Administration fee		166,934
Distribution service fee (Class B)		413
Recordkeeping fees (Class B)		162
Services to shareholders		1,637
Custodian fee		32,166
Audit and tax fees		78,540
Legal fees		13,604
Reports to shareholders		46,783
Trustees' fees and expenses		7,620
Other		43,900
Total expenses before expense reductions		1,226,429
Expense reductions		(21,902	)
Total expenses after expense reductions		1,204,527
Net investment income (loss)		9,500,105
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		2,754,139
Swap contracts		1,192,415
Foreign currency		(29,485	)
		3,917,069
Change in net unrealized appreciation (depreciation) on: Investments		(1,268,186	)
Swap contracts		479,634
Foreign currency		(16,103	)
		(804,655	)
Net gain (loss)		3,112,414
Net increase (decrease) in net assets resulting from operations	$	12,612,519

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income	$	9,500,105		$	11,527,855
Net realized gain (loss)		3,917,069			1,543,250
Change in net unrealized appreciation (depreciation)		(804,655	)		10,498,123
Net increase (decrease) in net assets resulting from operations		12,612,519			23,569,228
Distributions to shareholders from: Net investment income: Class A		(12,380,542	)		(13,517,771	)
Class B		(6,491	)		(7,507	)
Total distributions		(12,387,033	)		(13,525,278	)
Fund share transactions: Class A Proceeds from shares sold		37,136,318			49,009,407
Reinvestment of distributions		12,380,542			13,517,771
Payments for shares redeemed		(63,021,014	)		(63,694,430	)
Net increase (decrease) in net assets from Class A share transactions		(13,504,154	)		(1,167,252	)
Class B Proceeds from shares sold		674,207			8,301
Reinvestment of distributions		6,491			7,507
Payments for shares redeemed		(452,620	)		(13,053	)
Net increase (decrease) in net assets from Class B share transactions		228,078			2,755
Increase (decrease) in net assets		(13,050,590	)		8,879,453
Net assets at beginning of period		178,402,598			169,523,145
Net assets at end of period (including undistributed net investment income of $9,541,574 and $11,701,062, respectively)	$	165,352,008		$	178,402,598
Other Information
Class A Shares outstanding at beginning of period		25,717,511			25,818,935
Shares sold		5,481,259			7,431,954
Shares issued to shareholders in reinvestment of distributions		1,834,154			2,118,773
Shares redeemed		(9,305,111	)		(9,652,151	)
Net increase (decrease) in Class A shares		(1,989,698	)		(101,424	)
Shares outstanding at end of period		23,727,813			25,717,511
Class B Shares outstanding at beginning of period		13,214			12,847
Shares sold		98,852			1,197
Shares issued to shareholders in reinvestment of distributions		955			1,168
Shares redeemed		(66,682	)		(1,998	)
Net increase (decrease) in Class B shares		33,125			367
Shares outstanding at end of period		46,339			13,214

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	6.93		$	6.56		$	6.90		$	6.55		$	5.30
Income (loss) from investment operations: Net investment incomea		.39			.45			.51			.52			.51
Net realized and unrealized gain (loss)		.14			.48			(.24	)		.36			1.40
Total from investment operations		.53			.93			.27			.88			1.91
Less distributions from: Net investment income		(.50	)		(.56	)		(.61	)		(.53	)		(.66	)
Net asset value, end of period	$	6.96		$	6.93		$	6.56		$	6.90		$	6.55
Total Return (%)		7.91	b		14.91			3.84			14.00			39.99
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		165			178			169			195			197
Ratio of expenses before expense reductions (%)		.73			.72			.72			.72			.67
Ratio of expenses after expense reductions (%)		.72			.72			.72			.72			.67
Ratio of net investment income (%)		5.69			6.68			7.59			7.90			8.81
Portfolio turnover rate (%)		58			58			59			93			66
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

	Years Ended December 31,
Class B		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	6.97		$	6.59		$	6.93		$	6.58		$	5.31
Income (loss) from investment operations: Net investment incomea		.36			.43			.49			.50			.49
Net realized and unrealized gain (loss)		.15			.49			(.24	)		.36			1.42
Total from investment operations		.51			.92			.25			.86			1.91
Less distributions from: Net investment income		(.49	)		(.54	)		(.59	)		(.51	)		(.64	)
Net asset value, end of period	$	6.99		$	6.97		$	6.59		$	6.93		$	6.58
Total Return (%)		7.44	b		14.70	b		3.57			13.64			39.64
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		.3			.1			.1			.1			.2
Ratio of expenses before expense reductions (%)		1.10			.99			.99			.99			.94
Ratio of expenses after expense reductions (%)		.97			.99			.99			.99			.94
Ratio of net investment income (%)		5.29			6.42			7.33			7.63			8.54
Portfolio turnover rate (%)		58			58			59			93			66
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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

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

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.

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

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 categorized as Level 1 securities.

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

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

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

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

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

As of December 31, 2013, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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

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

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

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

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

At December 31, 2013, the Fund had a net tax basis capital loss carryforward of approximately $41,157,000, including $39,235,000 of pre-enactment losses, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2014 ($3,844,000), December 31, 2015 ($858,000), December 31, 2016 ($17,301,000) and December 31, 2017 ($17,232,000), the respective expiration dates, whichever occurs first; and approximately $1,922,000 of post-enactment long-term losses, which may be applied against realized net taxable capital gains indefinitely.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	10,553,853
Capital loss carryforwards	$	(41,157,000	)
Unrealized appreciation (depreciation) on investments	$	4,243,298

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	12,387,033	$	13,525,278

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on ex-dividend date. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes for the Fund, with the exception of securities in default of principal.

B. Derivative Instruments

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

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

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

Credit Default Swaps. Credit default swaps are agreements between a buyer and a seller of protection against predefined credit events for the reference entity. The Fund may enter into credit default swaps to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller of a credit default swap, the Fund is required to pay the par (or other agreed-upon) value of the referenced entity to the counterparty with the occurrence of a credit event by a third party, such as a U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the swap provided that no credit event has occurred. If no credit event occurs, the Fund keeps the stream of payments with no payment obligations. The Fund may also buy credit default swaps, in which case the Fund functions as the counterparty referenced above. This involves the risk that the swap may expire worthless. It also involves counterparty risk that the seller may fail to satisfy its payment obligations to the Fund with the occurrence of a credit event. When the Fund sells a credit default swap, it will cover its commitment. This may be achieved by, among other methods, maintaining cash or liquid assets equal to the aggregate notional value of the reference entities for all outstanding credit default swaps sold by the Fund. For the year ended December 31, 2013, the Fund entered into credit default swap agreements to gain exposure to the underlying issuer's credit quality characteristics.

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

A summary of the open credit default swap contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the Fund's investment in credit default swap contracts sold had a total notional value generally indicative of a range from $7,890,000 to $26,735,000.

Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange contract ("forward currency contract") is a commitment to purchase or sell a foreign currency at the settlement date at a negotiated rate. For the year ended December 31, 2013, the Fund entered into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign currency denominated portfolio holdings and to facilitate transactions in foreign currency denominated securities.

Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and unrealized gain (loss) is recorded daily. On the settlement date of the forward currency contract, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was closed. Certain risks may arise upon entering into forward currency contracts from the potential inability of counterparties to meet the terms of their contracts. The maximum counterparty credit risk to the Fund is measured by the unrealized gain on appreciated contracts. Additionally, when utilizing forward currency contracts to hedge, the Fund gives up the opportunity to profit from favorable exchange rate movements during the term of the contract.

A summary of the open forward currency contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the Fund's investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $810,000 to $3,344,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from $0 to approximately $2,000.

The following tables summarize the value of the Fund's derivative instruments held as of December 31, 2013 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivative	Swap Contracts
Credit Contract (a)	$	1,015,131
The above derivative is located in the following Statement of Assets and Liabilities account: (a) Unrealized appreciation on swap contracts. Unsettled variation margin for centrally cleared swap is disclosed separately within the Statement of Assets and Liabilities.

Liability Derivative	Forward Contracts
Foreign Exchange Contracts (a)	$	(2,853	)
The above derivative is located in the following Statement of Assets and Liabilities account: (a) Unrealized appreciation on forward foreign currency exchange contracts

Additionally, the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the year ended December 31, 2013 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Forward Contracts			Swap Contracts		Total
Credit Contracts (a)	$	—		$	1,192,415	$	1,192,415
Foreign Exchange Contracts (b)		(46,095	)		—		(46,095	)
	$	(46,095	)	$	1,192,415	$	1,146,320
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Net realized gain (loss) from swap contracts (b) Net realized gain (loss) from foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

Change in Net Unrealized Appreciation (Depreciation)	Forward Contracts			Swap Contracts		Total
Credit Contracts (a)	$	—		$	479,634	$	479,634
Foreign Exchange Contracts (b)		(14,439	)		—		(14,439	)
	$	(14,439	)	$	479,634	$	465,195
Each of the above derivatives is located in the following Statement of Operations accounts: (a) Change in net unrealized appreciation (depreciation) on swap contracts (b) Change in net unrealized appreciation (depreciation) on foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

As of December 31, 2013, the Fund has transactions subject to enforceable master netting agreements. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by derivative type, including any collateral exposure, is included in the following tables:

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset		Collateral Received		Net Amount of Derivative Assets
Bank of America	$	138,381	$	—	$	—	$	138,381
Barclays Bank PLC		70,092		—		—		70,092
Credit Suisse		101,330		—		—		101,330
The Goldman Sachs & Co.		103,143		—		—		103,143
JPMorgan Chase Securities, Inc.		102,574		—		—		102,574
UBS AG		42,710		—		—		42,710
Exchange Trade Swaps (a)		456,901		—		—		456,901
	$	1,015,131	$	—	$	—	$	1,015,131
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset		Collateral Pledged		Net Amount of Derivative Liabilities
Citigroup, Inc.	$	2,853	$	—	$	—	$	2,853

(a) Includes financial instruments (centrally cleared swaps), which are not subject to a master netting arrangement or another similar arrangement.

C. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury securities) aggregated $82,479,636 and $101,570,850, respectively. Purchases of U.S. Treasury obligations aggregated $5,855,167.

D. Related Parties

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

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

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

For the period from January 1, 2013 through September 30, 2014, the Advisor has contractually agreed to waive all or a portion of its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:

Class A	.72%
Class B	.97%

Accordingly, for the year ended December 31, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $21,419, and the amount charged aggregated $813,251, which was equivalent to an annual effective rate of 0.49% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $166,934, of which $14,093 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC were as follows:

Services to Shareholders	Total Aggregated		Waived
Class A	$	285	$	285
Class B		33		33
	$	318	$	318

In addition, for the year ended December 31, 2013, the Advisor reimbursed $162 of non-affiliated recordkeeping fees.

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DWS Investments Distributors, Inc. ("DIDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the year ended December 31, 2013, the Distribution Service Fee was $413, of which $3 was waived and $78 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $21,463, of which $6,136 is unpaid.

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

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

Security Lending Fees. Deutsche Bank AG serves as lending agent for the Fund. For the year ended December 31, 2013, the Fund incurred lending agent fees to Deutsche Bank AG for the amount of $3,645.

E. Investing in High-Yield Securities

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

F. Ownership of the Fund

At December 31, 2013, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 34%, 28% and 28%. Two participating insurance companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 88% and 12%.

G. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS High Income VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS High Income VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS High Income VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges, redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,059.40	$	1,055.90
Expenses Paid per $1,000*	$	3.74	$	5.03
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,021.58	$	1,020.32
Expenses Paid per $1,000*	$	3.67	$	4.94

* 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 B
DWS Variable Series II — DWS High Income VIP	.72%	.97%

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

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

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

Tax Information (Unaudited)

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS High Income VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Asset Allocation Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

—The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 2nd quartile, 3rd quartile and 3rd quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one-year period and has underperformed its benchmark in the three- and five-year periods ended December 31, 2012.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be equal to the median of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitations agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2HI-2 (R-025832-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Large Cap Value VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

6 Investment Portfolio

9 Statement of Assets and Liabilities

10 Statement of Operations

10 Statement of Changes in Net Assets

12 Financial Highlights

13 Notes to Financial Statements

18 Report of Independent Registered Public Accounting Firm

19 Information About Your Fund's Expenses

20 Tax Information

20 Proxy Voting

21 Advisory Agreement Board Considerations and Fee Evaluation

24 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

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

Growth of an Assumed $10,000 Investment in DWS Large Cap Value VIP
	The Russell 1000® Value Index is an unmanaged index that consists of those stocks in the Russell 1000® Index with less-than-average growth orientation. The Russell 1000® Index is an unmanaged price-only index of the 1,000 largest capitalized companies that are domiciled in the U.S. and whose common stocks are traded. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Large Cap Value VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	13,089		$	14,360		$	19,943		$	18,590
	Average annual total return		30.89	%		12.82	%		14.80	%		6.40	%
Russell 1000® Value Index	Growth of $10,000	$	13,253		$	15,634		$	21,614		$	20,773
	Average annual total return		32.53	%		16.06	%		16.67	%		7.58	%
DWS Large Cap Value VIP		1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	13,054		$	14,234		$	19,645		$	17,970
	Average annual total return		30.54	%		12.49	%		14.46	%		6.04	%
Russell 1000® Value Index	Growth of $10,000	$	13,253		$	15,634		$	21,614		$	20,773
	Average annual total return		32.53	%		16.06	%		16.67	%		7.58	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

DWS Large Cap Value VIP returned 30.89% in 2013 (Class A shares, unadjusted for contract charges), slightly below the 32.53% return of its benchmark, the Russell 1000® Value Index.1

The largest positive contribution to our 2013 results came from our stock selection in the financial sector. Many of our holdings in the sector moved closer to their fair value after trading at a discount throughout the post-financial- crisis era. Our top contributors within financials were Ameriprise Financial, Inc., The NASDAQ OMX Group, Inc. and Lincoln National Corp. We also added value via stock selection in the consumer discretionary sector, where our largest contributor was H&R Block, Inc.2

On the negative side, our stock selection in the information technology and consumer staples sectors detracted from the Fund's return.3 The Fund's relative performance was also pressured by our positions in the types of defensive, high-dividend stocks that lagged during this time of elevated investor risk appetites, such as FirstEnergy Corp., AT&T, Inc. and Kellogg Co.

We enter 2014 with a relatively cautious view on the markets. After a year of such strong gains — which itself followed a four-year bull market in equities — broader-market valuations have become increasingly rich. One reason for this is that much of the past year's rally was driven by an expansion of price-to-earnings ratios rather than an improvement in bottom-line earnings.4 With valuations having become more extended, we see greater potential for negative surprises to disrupt market performance in the year ahead.

In this environment, our approach has been to take profits on stocks that reach our price targets and rotate into those with less expensive valuations. For instance, we have identified opportunities in certain areas that lagged in 2013, such as the consumer staples and information technology sectors. Both groups feature an abundance of companies with stable free-cash-flow yields, above-average dividend yields and attractive valuations. On the other end of the spectrum, we hold the largest underweights in the financial and industrials sectors.5 We believe this "flexible value" approach has helped refresh the portfolio and has ensured that it maintains an attractive valuation relative to the broader market.

Overall, we believe our defensive strategy and continued emphasis on undervalued, fundamentally sound large-cap companies remains the most prudent approach at this stage of the market cycle.

Thomas Schuessler, PhD

Lead Portfolio Manager

Peter Steffen, CFA

Oliver Pfeil, PhD

Portfolio Managers

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.

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

2 The consumer discretionary sector represents industries that produce goods and services that are not necessities in everyday life.

3 Consumer staples are the industries that manufacture and sell products such as food and beverages, prescription drugs, and household products.

4 Price-to-earnings ratio (P/E) ratio compares a company's current share price to its per-share earnings.

5 "Underweight" means the Fund holds a lower weighting in a given sector or security than the benchmark. "Overweight" means the Fund holds a higher weighting.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Common Stocks	99%	98%
Cash Equivalents	1%	1%
Exchange-Traded Fund	—	1%
	100%	100%

Sector Diversification (As a % of Common Stocks)	12/31/13	12/31/12
Financials	24%	24%
Health Care	14%	14%
Energy	14%	17%
Information Technology	11%	6%
Consumer Staples	11%	8%
Consumer Discretionary	8%	9%
Industrials	7%	10%
Utilities	5%	4%
Materials	4%	5%
Telecommunication Services	2%	3%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at 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-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Shares		Value ($)
Common Stocks 98.8%
Consumer Discretionary 8.5%
Automobiles 1.1%
Ford Motor Co.		325,000		5,014,750
Diversified Consumer Services 0.8%
DeVry Education Group, Inc. (a)		50,000		1,775,000
H&R Block, Inc.		55,000		1,597,200
				3,372,200
Hotels, Restaurants & Leisure 0.9%
Carnival Corp.		47,500		1,908,075
McDonald's Corp.		20,000		1,940,600
				3,848,675
Household Durables 0.8%
Jarden Corp.*		30,000		1,840,500
MDC Holdings, Inc.		50,000		1,612,000
				3,452,500
Leisure Equipment & Products 0.4%
Hasbro, Inc. (a)		32,500		1,787,825
Media 3.7%
Comcast Corp. "A"		135,000		7,015,275
News Corp. "A"*		100,000		1,802,000
Time Warner, Inc.		40,000		2,788,800
Twenty-First Century Fox, Inc. "A"		50,000		1,759,000
Walt Disney Co.		40,000		3,056,000
				16,421,075
Specialty Retail 0.8%
Advance Auto Parts, Inc.		17,500		1,936,900
Staples, Inc. (a)		90,000		1,430,100
				3,367,000
Consumer Staples 10.7%
Beverages 2.1%
Beam, Inc.		25,000		1,701,500
Molson Coors Brewing Co. "B"		40,000		2,246,000
PepsiCo, Inc.		60,000		4,976,400
				8,923,900
Food & Staples Retailing 2.8%
CVS Caremark Corp.		70,000		5,009,900
Sysco Corp. (a)		50,000		1,805,000
Wal-Mart Stores, Inc.		40,000		3,147,600
Walgreen Co.		40,000		2,297,600
				12,260,100
Food Products 1.4%
Ingredion, Inc.		25,000		1,711,500
Kellogg Co.		50,000		3,053,500
Tyson Foods, Inc. "A"		40,000		1,338,400
				6,103,400
Household Products 2.7%
Energizer Holdings, Inc.		20,000		2,164,800
Procter & Gamble Co.		120,000		9,769,200
				11,934,000
Tobacco 1.7%
Altria Group, Inc.		100,000		3,839,000
Philip Morris International, Inc.		40,000		3,485,200
				7,324,200
	Shares		Value ($)
Energy 13.6%
Energy Equipment & Services 2.1%
Halliburton Co.		45,000		2,283,750
Helmerich & Payne, Inc. (a)		32,500		2,732,600
National Oilwell Varco, Inc.		25,000		1,988,250
Transocean Ltd. (a)		40,000		1,976,800
				8,981,400
Oil, Gas & Consumable Fuels 11.5%
Anadarko Petroleum Corp.		25,000		1,983,000
Apache Corp.		37,250		3,201,265
Canadian Oil Sands Ltd.		125,000		2,351,141
Chevron Corp.		80,000		9,992,800
ConocoPhillips		50,000		3,532,500
Devon Energy Corp.		40,000		2,474,800
Exxon Mobil Corp.		135,000		13,662,000
Hess Corp.		25,000		2,075,000
Marathon Oil Corp.		65,000		2,294,500
Occidental Petroleum Corp.		34,750		3,304,725
Phillips 66		40,000		3,085,200
Suncor Energy, Inc.		65,000		2,278,250
				50,235,181
Financials 23.4%
Capital Markets 4.1%
Ameriprise Financial, Inc.		20,000		2,301,000
Apollo Global Management LLC "A"		45,000		1,422,450
Bank of New York Mellon Corp.		70,000		2,445,800
BlackRock, Inc.		7,000		2,215,290
Legg Mason, Inc. (a)		45,000		1,956,600
Oaktree Capital Group LLC		35,000		2,059,400
The Goldman Sachs Group, Inc.		30,000		5,317,800
				17,718,340
Commercial Banks 3.8%
PNC Financial Services Group, Inc.		90,000		6,982,200
U.S. Bancorp.		85,000		3,434,000
Wells Fargo & Co.		135,000		6,129,000
				16,545,200
Consumer Finance 1.3%
Capital One Financial Corp.		75,000		5,745,750
Diversified Financial Services 6.6%
Bank of America Corp.		525,000		8,174,250
Citigroup, Inc.		90,000		4,689,900
JPMorgan Chase & Co.		200,000		11,696,000
Leucadia National Corp.		60,000		1,700,400
The NASDAQ OMX Group, Inc.		67,500		2,686,500
				28,947,050
Insurance 6.7%
ACE Ltd.		20,000		2,070,600
Alleghany Corp.*		5,000		1,999,800
Allstate Corp.		40,000		2,181,600
Aon PLC		25,000		2,097,250
Chubb Corp.		25,000		2,415,750
CNA Financial Corp.		50,000		2,144,500
Fidelity National Financial, Inc. "A" (a)		95,000		3,082,750
PartnerRe Ltd.		25,000		2,635,750
Principal Financial Group, Inc.		45,000		2,218,950
Prudential Financial, Inc.		27,500		2,536,050
	Shares		Value ($)
The Travelers Companies, Inc.		25,000		2,263,500
Unum Group		50,000		1,754,000
Validus Holdings Ltd.		50,000		2,014,500
				29,415,000
Thrifts & Mortgage Finance 0.9%
Home Loan Servicing Solutions Ltd.		20,000		459,400
Nationstar Mortgage Holdings, Inc.* (a)		45,000		1,663,200
New York Community Bancorp., Inc. (a)		102,500		1,727,125
				3,849,725
Health Care 13.7%
Biotechnology 0.3%
Amgen, Inc.		12,500		1,427,000
Health Care Equipment & Supplies 2.1%
Becton, Dickinson & Co. (a)		17,500		1,933,575
C.R. Bard, Inc.		15,000		2,009,100
Medtronic, Inc.		50,000		2,869,500
St. Jude Medical, Inc.		37,500		2,323,125
				9,135,300
Health Care Providers & Services 3.2%
Aetna, Inc.		27,500		1,886,225
HCA Holdings, Inc.*		32,500		1,550,575
McKesson Corp.		15,000		2,421,000
Owens & Minor, Inc. (a)		40,000		1,462,400
Select Medical Holdings Corp.		150,000		1,741,500
UnitedHealth Group, Inc.		35,000		2,635,500
WellPoint, Inc.		25,000		2,309,750
				14,006,950
Life Sciences Tools & Services 0.5%
Agilent Technologies, Inc.		40,000		2,287,600
Pharmaceuticals 7.6%
Bristol-Myers Squibb Co.		50,000		2,657,500
Eli Lilly & Co.		37,500		1,912,500
Hospira, Inc.*		30,000		1,238,400
Johnson & Johnson		82,500		7,556,175
Mallinckrodt PLC*		37,500		1,959,750
Merck & Co., Inc.		157,500		7,882,875
Pfizer, Inc.		325,000		9,954,750
				33,161,950
Industrials 7.0%
Aerospace & Defense 2.2%
Exelis, Inc.		100,000		1,906,000
Northrop Grumman Corp.		25,000		2,865,250
Raytheon Co. (a)		55,000		4,988,500
				9,759,750
Airlines 0.2%
Southwest Airlines Co.		50,000		942,000
Commercial Services & Supplies 0.9%
ABM Industries, Inc.		62,500		1,786,875
Republic Services, Inc.		65,000		2,158,000
				3,944,875
Industrial Conglomerates 2.7%
Danaher Corp.		25,000		1,930,000
General Electric Co.		350,000		9,810,500
				11,740,500
Machinery 0.5%
AGCO Corp.		35,000		2,071,650
	Shares		Value ($)
Road & Rail 0.5%
Norfolk Southern Corp.		25,000		2,320,750
Information Technology 11.2%
Communications Equipment 1.5%
Brocade Communications Systems, Inc.*		225,000		1,995,750
Cisco Systems, Inc.		200,000		4,490,000
				6,485,750
Computers & Peripherals 2.8%
Apple, Inc.		7,000		3,927,770
EMC Corp. (a)		75,000		1,886,250
Hewlett-Packard Co.		75,000		2,098,500
SanDisk Corp.		19,500		1,375,530
Western Digital Corp.		37,500		3,146,250
				12,434,300
Electronic Equipment, Instruments & Components 0.4%
Corning, Inc.		95,000		1,692,900
Internet Software & Services 0.4%
IAC/InterActiveCorp.		25,000		1,717,250
IT Services 1.2%
Booz Allen Hamilton Holding Corp. (a)		65,000		1,244,750
International Business Machines Corp.		12,500		2,344,625
Total System Services, Inc.		50,000		1,664,000
				5,253,375
Office Electronics 0.4%
Xerox Corp.		125,000		1,521,250
Semiconductors & Semiconductor Equipment 2.1%
Broadcom Corp. "A"		50,000		1,482,500
Intel Corp.		100,000		2,596,000
Marvell Technology Group Ltd.		125,000		1,797,500
NVIDIA Corp.		100,000		1,602,000
Texas Instruments, Inc.		40,000		1,756,400
				9,234,400
Software 2.4%
CA, Inc.		50,000		1,682,500
Microsoft Corp.		95,000		3,555,850
Oracle Corp.		90,000		3,443,400
Symantec Corp.		75,000		1,768,500
				10,450,250
Materials 3.7%
Chemicals 1.6%
Celanese Corp. "A"		30,000		1,659,300
CF Industries Holdings, Inc.		7,500		1,747,800
LyondellBasell Industries NV "A"		25,000		2,007,000
Praxair, Inc.		12,500		1,625,375
				7,039,475
Containers & Packaging 0.4%
Sonoco Products Co.		45,000		1,877,400
Metals & Mining 1.0%
Constellium NV "A"*		100,000		2,327,000
Reliance Steel & Aluminum Co.		28,000		2,123,520
				4,450,520
Paper & Forest Products 0.7%
International Paper Co.		35,000		1,716,050
Schweitzer-Mauduit International, Inc.		25,000		1,286,750
				3,002,800
	Shares		Value ($)
Telecommunication Services 2.3%
Diversified Telecommunication Services
AT&T, Inc.		237,500		8,350,500
CenturyLink, Inc. (a)		50,000		1,592,500
				9,943,000
Utilities 4.7%
Electric Utilities 2.9%
American Electric Power Co., Inc.		50,000		2,337,000
Duke Energy Corp.		35,000		2,415,350
NextEra Energy, Inc.		27,000		2,311,740
Pinnacle West Capital Corp.		30,000		1,587,600
PPL Corp.		62,500		1,880,625
Southern Co.		55,000		2,261,050
				12,793,365
Gas Utilities 0.5%
UGI Corp.		50,000		2,073,000
Independent Power Producers & Energy Traders 0.4%
AES Corp.		125,000		1,813,750
	Shares		Value ($)
Multi-Utilities 0.9%
Public Service Enterprise Group, Inc.		60,000		1,922,400
Wisconsin Energy Corp.		50,000		2,067,001
				3,989,401
Total Common Stocks (Cost $316,336,429)				431,817,782
Securities Lending Collateral 6.7%
Daily Assets Fund Institutional, 0.08% (b) (c) (Cost $29,485,760)		29,485,760		29,485,760
Cash Equivalents 1.2%
Central Cash Management Fund, 0.05% (b) (Cost $5,055,388)		5,055,388		5,055,388

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $350,877,577)†		106.7			466,358,930
Other Assets and Liabilities, Net		(6.7	)		(29,295,991	)
Net Assets		100.0			437,062,939

* Non-income producing security.

† The cost for federal income tax purposes was $352,040,216. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $114,318,714. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $117,789,408 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $3,470,694.

(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 December 31, 2013 amounted to $28,906,063, which is 6.6% of net assets.

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

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

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2		Level 3		Total
Common Stocks (d)	$	431,817,782	$	—	$	—	$	431,817,782
Short-Term Investments (d)		34,541,148		—		—		34,541,148
Total	$	466,358,930	$	—	$	—	$	466,358,930

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

(d) See Investment Portfolio for additional detailed categorizations.

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $316,336,429) — including $28,906,063 of securities loaned	$	431,817,782
Investment in Daily Assets Fund Institutional (cost $29,485,760)*		29,485,760
Investment in Central Cash Management Fund (cost $5,055,388)		5,055,388
Total investments in securities, at value (cost $350,877,577)		466,358,930
Foreign currency, at value (cost $82,098)		82,815
Receivable for Fund shares sold		733
Dividends receivable		656,434
Interest receivable		14,464
Other assets		6,719
Total assets		467,120,095
Liabilities
Payable upon return of securities loaned		29,485,760
Payable for Fund shares redeemed		288,715
Accrued management fee		214,296
Accrued Trustees' fees		5,833
Other accrued expenses and payables		62,552
Total liabilities		30,057,156
Net assets, at value	$	437,062,939
Net Assets Consist of
Undistributed net investment income		7,303,655
Net unrealized appreciation (depreciation) on: Investments		115,481,353
Foreign currency		717
Accumulated net realized gain (loss)		(97,890,039	)
Paid-in capital		412,167,253
Net assets, at value	$	437,062,939
Class A Net Asset Value, offering and redemption price per share ($432,431,007 ÷ 27,072,074 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	15.97
Class B Net Asset Value, offering and redemption price per share ($4,631,932 ÷ 289,672 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	15.99

* Represents collateral on securities loaned.

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Dividends (net of foreign taxes withheld of $33,314)	$	10,529,716
Income distributions — Central Cash Management Fund		3,401
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		43,358
Total income		10,576,475
Expenses: Management fee		2,639,680
Administration fee		412,349
Services to shareholders		6,674
Record keeping fees (Class B)		2,279
Distribution and service fee (Class B)		10,257
Custodian fee		16,031
Professional fees		71,180
Reports to shareholders		38,373
Trustees' fees and expenses		18,216
Other		16,007
Total expenses before expense reductions		3,231,046
Expense reductions		(146,952	)
Total expenses after expense reductions		3,084,094
Net investment income	$	7,492,381
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		42,916,615
Futures		226,766
Foreign currency		(1,368	)
		43,142,013
Change in net unrealized appreciation (depreciation) on: Investments		59,916,192
Foreign currency		(1,303	)
		59,914,889
Net gain (loss)		103,056,902
Net increase (decrease) in net assets resulting from operations		110,549,283

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income	$	7,492,381		$	8,087,256
Net realized gain (loss)		43,142,013			9,766,336
Change in net unrealized appreciation (depreciation)		59,914,889			19,604,246
Net increase (decrease) in net assets resulting from operations		110,549,283			37,457,838
Distributions to shareholders from: Net investment income: Class A		(8,048,782	)		(7,645,527	)
Class B		(66,664	)		(54,663	)
Total distributions		(8,115,446	)		(7,700,190	)
Fund share transactions: Class A Proceeds from shares sold		7,515,770			10,324,918
Reinvestment of distributions		8,048,782			7,645,527
Payments for shares redeemed		(61,510,110	)		(66,665,475	)
Net increase (decrease) in net assets from Class A share transactions		(45,945,558	)		(48,695,030	)
Class B Proceeds from shares sold		822,748			728,624
Reinvestment of distributions		66,664			54,663
Payments for shares redeemed		(844,581	)		(918,486	)
Net increase (decrease) in net assets from Class B share transactions		44,831			(135,199	)
Increase (decrease) in net assets		56,533,110			(19,072,581	)
Net assets at beginning of period		380,529,829			399,602,410
Net assets at end of period (including undistributed net investment income of $7,303,655 and $7,947,397, respectively)	$	437,062,939		$	380,529,829
Other Information
Class A Shares outstanding at beginning of period		30,284,545			34,282,579
Shares sold		520,949			851,162
Shares issued to shareholders in reinvestment of distributions		590,520			631,340
Shares redeemed		(4,323,940	)		(5,480,536	)
Net increase (decrease) in Class A shares		(3,212,471	)		(3,998,034	)
Shares outstanding at end of period		27,072,074			30,284,545
Class B Shares outstanding at beginning of period		286,965			298,416
Shares sold		55,598			59,337
Shares issued to shareholders in reinvestment of distributions		4,877			4,499
Shares redeemed		(57,768	)		(75,287	)
Net increase (decrease) in Class B shares		2,707			(11,451	)
Shares outstanding at end of period		289,672			286,965

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	12.45		$	11.56		$	11.80		$	10.86		$	8.92
Income (loss) from investment operations: Net investment income (loss)a		.26			.25			.25			.23			.21
Net realized and unrealized gain (loss)		3.54			.87			(.24	)		.93			1.97
Total from investment operations		3.80			1.12			.01			1.16			2.18
Less distributions from: Net investment income		(.28	)		(.23	)		(.25	)		(.22	)		(.24	)
Total distributions		(.28	)		(.23	)		(.25	)		(.22	)		(.24	)
Net asset value, end of period	$	15.97		$	12.45		$	11.56		$	11.80		$	10.86
Total Return (%)		30.89	b		9.79	b		(.07	)		10.77			25.37
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		432			377			396			206			214
Ratio of expenses before expense reductions (%)		.78			.78			.79			.82			.76
Ratio of expenses after expense reductions (%)		.74			.77			.79			.82			.76
Ratio of net investment income (loss) (%)		1.82			2.04			2.15			2.13			2.22
Portfolio turnover rate (%)		54			63			28			32			76
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

	Years Ended December 31,
Class B		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	12.46		$	11.57		$	11.81		$	10.86		$	8.92
Income (loss) from investment operations: Net investment income (loss)a		.22			.21			.22			.20			.19
Net realized and unrealized gain (loss)		3.55			.88			(.25	)		.93			1.96
Total from investment operations		3.77			1.09			(.03	)		1.13			2.15
Less distributions from: Net investment income		(.24	)		(.20	)		(.21	)		(.18	)		(.21	)
Total distributions		(.24	)		(.20	)		(.21	)		(.18	)		(.21	)
Net asset value, end of period	$	15.99		$	12.46		$	11.57		$	11.81		$	10.86
Total Return (%)		30.54	b		9.44	b		(.36	)		10.53			24.86
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		5			4			3			1			1
Ratio of expenses before expense reductions (%)		1.09			1.09			1.10			1.11			1.06
Ratio of expenses after expense reductions (%)		1.05			1.08			1.10			1.11			1.06
Ratio of net investment income (loss) (%)		1.52			1.73			1.84			1.84			1.92
Portfolio turnover rate (%)		54			63			28			32			76
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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

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

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 and exchange traded funds ("ETFs") are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation. Equity securities are generally categorized as Level 1.

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

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

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

As of December 31, 2013, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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

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

At December 31, 2013, the Fund had a net tax basis capital loss carryforward of approximately $96,728,000 of pre-enactment losses, including approximately $88,212,000 inherited from its merger with an affiliated fund in previous years, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($88,418,000) and December 31, 2017 ($8,310,000), the respective expiration dates, whichever occurs first, and which may be subject to certain limitations under Section 382–384 of Internal Revenue Code.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	7,303,655
Capital loss carryforwards	$	(96,728,000	)
Unrealized appreciation (depreciation) on investments	$	114,318,714

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	8,115,446	$	7,700,190

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments.

B. Derivative Instruments

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the year ended December 31, 2013, the Fund used futures for hedging purposes.

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

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

There was no open futures contract as of December 31, 2013. For the year ended December 31, 2013, the investment in futures contracts sold had a total notional value generally indicative of a range from $0 to approximately $10,521,000.

The following table summarizes the amount of realized gains and losses on derivative instruments recognized in Fund earnings during the year ended December 31, 2013 and the related location in the accompanying Statement of Operations is summarized in the following table and by primary underlying risk exposure:

Realized Gain (Loss)	Futures Contracts
Credit Contracts (a)	$	226,766
The above derivative is located in the following Statement of Operations account: (a)Net realized gain (loss) from futures

C. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $220,424,426 and $267,045,161, respectively.

D. Related Parties

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

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

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

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

Class A	.75%
Class B	1.05%

Effective October 1, 2013 through September 30, 2014, the Advisor had contractually agreed to waive all or a portion of its fees and/or reimburse certain operating expenses of the Fund to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) of each class as follows:

Class A	.73%
Class B	1.04%

Accordingly, for the year ended December 31, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $146,226, and the amount charged aggregated $2,493,454, which was equivalent to an annual effective rate of 0.60% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $412,349, of which $36,492 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC were as follows:

Services to Shareholders	Total Aggregated		Waived
Class A	$	371	$	371
Class B		212		212
	$	583	$	583

In addition, for the year ended December 31, 2013, the Advisor reimbursed the Fund $143 of record keeping fees for Class B shares.

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DWS Investments Distributors, Inc. ("DIDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the year ended December 31, 2013, the Distribution Service Fee aggregated $10,257, of which $964 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $17,213, of which $4,299 is unpaid.

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

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

Securities Lending Agent Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the year ended December 31, 2013, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $4,817.

E. Ownership of the Fund

At December 31, 2013, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 55% and 26%. One participating insurance company was owner of record of 10% or more of the total outstanding Class B shares of the Fund, owning 63%.

F. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Large Cap Value VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio of DWS Large Cap Value VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Large Cap Value VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

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

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,143.20	$	1,142.10
Expenses Paid per $1,000*	$	4.00	$	5.62
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,021.48	$	1,019.96
Expenses Paid per $1,000*	$	3.77	$	5.30

* 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 B
DWS Variable Series II — DWS Large Cap Value VIP	.74%	1.04%

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

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

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

Tax Information (Unaudited)

For corporate shareholders, 100% of the ordinary dividends (i.e., income dividends plus short-term capital gains) paid during the Fund's fiscal year ended December 31, 2013, qualified for the dividends received deduction.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Large Cap Value VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Equity Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 4th quartile of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has underperformed its benchmark in the one-, three- and five-year periods ended December 31, 2012. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board recognized that DIMA has made changes to its investment personnel and processes in recent years in an effort to enhance its investment platform and improve long-term performance across the DWS fund complex.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were higher than the median (3rd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitations agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2LCV-2 (R-025833-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Money Market VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

7 Investment Portfolio

11 Statement of Assets and Liabilities

12 Statement of Operations

13 Statement of Changes in Net Assets

14 Financial Highlights

15 Notes to Financial Statements

18 Report of Independent Registered Public Accounting Firm

19 Information About Your Fund's Expenses

20 Tax Information

21 Other Information

22 Advisory Agreement Board Considerations and Fee Evaluation

25 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

DWS Money Market VIP

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

An investment in this Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or by any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. The share price of money market funds can fall below the $1.00 share price.

	7-Day Current Yield
December 31, 2013	0.01%*
December 31, 2012	0.01%*

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

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

Management Summary December 31, 2013 (Unaudited)

During the 12-month period ended December 31, 2013, the Fund provided a total return of 0.01% (Class A shares, unadjusted for contract charges). All performance is historical and does not guarantee future results. Yields fluctuate and are not guaranteed.

Over the Fund's most recent fiscal year ended December 31, 2013, the U.S. economy began to benefit from gradually increasing housing prices and steady, if unspectacular, employment gains. In late May 2013, equity and longer-term fixed-income investors were temporarily rattled by hints from the U.S. Federal Reserve Board (the Fed) that it could begin to taper its monthly asset purchases toward the end of 2013. By November 2013, U.S. job creation had picked up considerably, and speculation that the Fed would begin to taper in January or March 2014 started to build. When the Fed made its December 18 announcement that it would begin tapering in January 2014, financial markets took the news very much in stride. This was because a stream of more favorable economic data had increased overall investor confidence that the U.S. recovery is sustainable.

We were able to maintain a competitive yield for the Fund during the period. Yields fluctuate and are not guaranteed. During the past 12 months ending December 31, 2013, we continued to hold a large percentage of portfolio assets in short-maturity instruments for yield, high credit quality and liquidity purposes. We also maintained a conservative average maturity, with fund assets broadly diversified among a number of sectors, including banks, asset-backed commercial paper, corporate issues, and sovereign and U.S. government debt. In addition, we focused on favorable geographical areas for money market investment, such as Canada, Australia, Scandinavia, the United States and Japan. Based on benign credit conditions and our belief that short-term rates will remain very low for a long period, we extended the Fund's weighted average maturity moderately during the fourth quarter.1

A group of investment professionals is responsible for the day-to-day management of the Fund. These investment professionals have a broad range of experience managing money market funds.

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.

1 Weighted average maturity — the average maturity of all the securities that make up a fund portfolio, expressed in days or years.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio)	12/31/13	12/31/12
Commercial Paper	50%	38%
Short-Term Notes	16%	13%
Certificates of Deposit and Bank Notes	15%	12%
Government & Agency Obligations	8%	10%
Repurchase Agreements	7%	23%
Time Deposit	4%	2%
Municipal Bonds and Notes	—	2%
	100%	100%

Weighted Average Maturity*	12/31/13	12/31/12
DWS Variable Series II — DWS Money Market VIP	43 days	48 days
First Tier Retail Money Fund Average	43 days	43 days

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

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

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. In addition, each month, information about the Fund and its portfolio holdings is filed with the SEC on Form N-MFP. The SEC delays the public availability of the information filed on Form N-MFP for 60 days after the end of the reporting period included in the filing. These forms will be available on the SEC's Web site at sec.gov, and they may also be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330. The Fund's portfolio holdings are also posted on dws-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Principal Amount ($)		Value ($)
Certificates of Deposit and Bank Notes 13.1%
Banco del Estado de Chile, 0.26%, 5/14/2014		1,700,000		1,700,000
China Construction Bank Corp., 0.4%, 1/30/2014		3,000,000		3,000,000
DNB Bank ASA, 0.17%, 4/4/2014		1,000,000		1,000,000
Industrial & Commercial Bank of China Ltd., 0.4%, 1/21/2014		1,500,000		1,500,000
International Business Machines Corp., 1.25%, 5/12/2014		500,000		501,751
Kreditanstalt Fuer Wiederaufbau, 0.22%, 4/11/2014		1,000,000		999,898
Mitsubishi UFJ Trust & Banking Corp., 0.21%, 1/28/2014		1,000,000		1,000,000
Mizuho Bank Ltd.:
0.21%, 4/1/2014		2,000,000		2,000,000
0.22%, 2/26/2014		1,500,000		1,500,000
Nordea Bank Finland PLC, 0.25%, 1/6/2014		1,500,000		1,500,000
Norinchukin Bank, 0.22%, 2/14/2014		1,000,000		1,000,000
Rabobank Nederland NV, 0.405%, 1/8/2014		1,000,000		1,000,026
Sumitomo Mitsui Banking Corp.:
0.11%, 1/6/2014		3,000,000		3,000,000
0.21%, 2/18/2014		2,000,000		2,000,000
Wells Fargo Bank NA, 0.2%, 5/27/2014		1,000,000		1,000,000
Total Certificates of Deposit and Bank Notes (Cost $22,701,675)				22,701,675
Commercial Paper 44.4%
Issued at Discount** 37.2%
Albion Capital Corp. SA:
0.19%, 1/27/2014		1,750,000		1,749,760
0.21%, 2/21/2014		1,800,000		1,799,464
Antalis U.S. Funding Corp., 144A, 0.14%, 1/3/2014		5,000,000		4,999,961
ASB Finance Ltd., 0.22%, 4/3/2014		1,800,000		1,798,988
Bank Nederlandse Gemeenten, 0.22%, 6/17/2014		1,000,000		998,979
Barclays Bank PLC, 0.15%, 1/7/2014		1,000,000		999,975
Bedford Row Funding Corp.:
144A, 0.3%, 4/22/2014		500,000		499,538
144A, 0.31%, 10/27/2014		750,000		748,069
144A, 0.42%, 1/3/2014		400,000		399,991
BNZ International Funding Ltd., 144A, 0.17%, 3/5/2014		1,500,000		1,499,554
Caisse Centrale Desjardins, 0.175%, 2/19/2014		1,000,000		999,762
Collateralized Commercial Paper Co., LLC:
0.22%, 3/17/2014		1,500,000		1,499,313
0.22%, 4/15/2014		1,500,000		1,499,047
Collateralized Commercial Paper II Co., LLC:
144A, 0.22%, 2/5/2014		2,000,000		1,999,572
144A, 0.22%, 3/18/2014		1,000,000		999,536
DBS Bank Ltd., 144A, 0.235%, 3/11/2014		1,000,000		999,550
Dexia Credit Local, 0.33%, 8/18/2014		1,000,000		997,901
	Principal Amount ($)		Value ($)
DNB Bank ASA:
0.22%, 5/7/2014		1,500,000		1,498,845
0.24%, 3/5/2014		800,000		799,664
General Electric Capital Corp.:
0.23%, 3/4/2014		1,500,000		1,499,406
0.24%, 1/8/2014		800,000		799,963
0.24%, 1/14/2014		1,000,000		999,913
Hannover Funding Co., LLC:
0.2%, 1/31/2014		3,000,000		2,999,500
0.22%, 1/22/2014		1,000,000		999,872
Kells Funding LLC, 144A, 0.23%, 2/19/2014		500,000		499,843
LMA Americas LLC, 144A, 0.17%, 1/10/2014		2,500,000		2,499,894
Manhattan Asset Funding Co., LLC, 144A, 0.17%, 1/8/2014		2,000,000		1,999,934
MetLife Short Term Funding LLC:
144A, 0.24%, 2/27/2014		500,000		499,810
144A, 0.25%, 2/3/2014		600,000		599,863
Nordea Bank AB, 0.18%, 3/25/2014		2,500,000		2,498,962
Old Line Funding LLC, 144A, 0.23%, 6/5/2014		1,000,000		999,010
Oversea-Chinese Banking Corp., Ltd., 0.25%, 3/5/2014		1,000,000		999,571
PSP Capital, Inc., 0.1%, 1/3/2014		1,750,000		1,749,990
Regency Markets No. 1 LLC, 144A, 0.13%, 1/3/2014		4,500,000		4,499,967
Skandinaviska Enskilda Banken AB, 0.28%, 5/8/2014		1,000,000		999,012
Standard Chartered Bank:
0.26%, 2/4/2014		1,000,000		999,754
0.27%, 5/19/2014		2,500,000		2,497,412
0.29%, 5/1/2014		1,500,000		1,498,550
Swedbank AB:
0.24%, 5/8/2014		1,500,000		1,498,730
0.255%, 5/7/2014		1,800,000		1,798,393
UOB Funding LLC, 0.24%, 4/10/2014		1,400,000		1,399,076
Victory Receivables Corp., 144A, 0.18%, 2/3/2014		1,800,000		1,799,703
Working Capital Management Co., 144A, 0.19%, 1/7/2014		1,200,000		1,199,962
				64,623,559
Issued at Par* 7.2%
Alpine Securitzation, 144A, 0.2%, 2/7/2014		1,750,000		1,750,000
ASB Finance Ltd.:
144A, 0.26%, 6/11/2014		1,000,000		1,000,000
144A, 0.278%, 10/9/2014		1,250,000		1,249,932
Atlantic Asset Securitization LLC:
144A, 0.194%, 2/27/2014		500,000		500,000
144A, 0.2%, 2/11/2014		1,000,000		999,991
Australia and New Zealand Banking Group Ltd., 144A, 0.157%, 4/7/2014		2,000,000		1,999,734
Kells Funding LLC:
144A, 0.198%, 2/3/2014		1,500,000		1,500,000
144A, 0.238%, 10/28/2014		1,200,000		1,200,000
Nederlandse Waterschapsbank NV, 144A, 0.278%, 8/15/2014		800,000		800,000
PNC Bank NA, 0.25%, 4/23/2014		1,500,000		1,500,000
				12,499,657
Total Commercial Paper (Cost $77,123,216)				77,123,216
	Principal Amount ($)		Value ($)
Short-Term Notes* 14.0%
Australia & New Zealand Banking Group Ltd., 144A, 0.306%, 11/19/2014		800,000		800,000
Bank of Nova Scotia:
0.25%, 1/10/2014		1,000,000		1,000,000
0.26%, 9/3/2014		1,000,000		1,000,000
0.304%, 7/24/2014		1,000,000		1,000,000
Canadian Imperial Bank of Commerce, 0.28%, 5/16/2014		1,800,000		1,800,000
Commonwealth Bank of Australia, 144A, 0.24%, 6/11/2014		1,000,000		1,000,000
DNB Bank ASA, 0.464%, 4/4/2014		2,000,000		2,001,526
JPMorgan Chase Bank NA, 0.32%, 4/22/2019		1,000,000		1,000,000
Kommunalbanken AS, 144A, 0.15%, 2/26/2014		1,500,000		1,500,000
Rabobank Nederland NV:
0.239%, 6/12/2014		1,500,000		1,500,000
0.273%, 5/8/2014		500,000		500,000
0.278%, 7/23/2014		1,000,000		1,000,000
0.308%, 1/27/2014		1,500,000		1,500,000
0.328%, 12/1/2014		1,500,000		1,500,000
Royal Bank of Canada:
0.25%, 12/11/2014		1,000,000		1,000,000
0.3%, 2/28/2014		1,000,000		1,000,000
Svensk Exportkredit AB, 144A, 0.17%, 6/17/2014		2,000,000		2,000,000
Svenska Handelsbanken AB, 144A, 0.325%, 10/3/2014		1,500,000		1,500,000
Wells Fargo Bank NA, 0.25%, 12/10/2014		1,000,000		1,000,000
Westpac Banking Corp., 0.257%, 5/9/2014		750,000		750,000
Total Short-Term Notes (Cost $24,351,526)				24,351,526
Time Deposit 3.6%
Credit Agricole Corporate & Investment Bank, 0.04%, 1/2/2014 (Cost $6,190,137)		6,190,137		6,190,137
Government & Agency Obligations 7.2%
Other Government Related (a) 0.3%
European Investment Bank, 3.0%, 4/8/2014		500,000		503,621
	Principal Amount ($)		Value ($)
U.S. Government Sponsored Agencies 4.6%
Federal Farm Credit Bank:
0.144%*, 10/29/2014		500,000		500,063
0.147%*, 10/20/2014		1,000,000		1,000,046
Federal Home Loan Bank:
0.125%, 3/27/2014		750,000		749,900
0.144%**, 4/9/2014		1,000,000		999,605
0.147%**, 2/18/2014		1,000,000		999,800
0.18%, 3/7/2014		500,000		499,996
Federal Home Loan Mortgage Corp.:
0.106%**, 1/22/2014		1,500,000		1,499,904
0.109%**, 3/19/2014		1,000,000		999,765
Federal National Mortgage Association, 0.139%**, 6/2/2014		800,000		799,527
				8,048,606
U.S. Treasury Obligations 2.3%
U.S. Treasury Notes:
0.5%, 8/15/2014		2,000,000		2,004,336
2.625%, 7/31/2014		1,000,000		1,014,264
4.0%, 2/15/2014		1,000,000		1,004,701
				4,023,301
Total Government & Agency Obligations (Cost $12,575,528)				12,575,528
Repurchase Agreements 5.8%
BNP Paribas, 0.22%, dated 12/23/2013, to be repurchased at $1,500,348 on 1/30/2014 (b)		1,500,000		1,500,000
JPMorgan Securities, Inc., 0.4%, dated 3/18/2013, to be repurchased at $2,510,220 on 3/18/2014 (c)		2,500,000		2,500,000
Nomura Securities International, 0.2%, dated 12/31/2013, to be repurchased at $5,000,006 on 1/2/2014 (d)		5,000,000		5,000,000
The Toronto-Dominion Bank, 0.06%, dated 12/31/2013, to be repurchased at $1,000,003 on 1/2/2014 (e)		1,000,000		1,000,000
Total Repurchase Agreements (Cost $10,000,000)				10,000,000

	% of Net Assets		Value ($)
Total Investment Portfolio (Cost $152,942,082)†		88.1		152,942,082
Other Assets and Liabilities, Net		11.9		20,737,698
Net Assets		100.0		173,679,780

* Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of December 31, 2013.

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

† The cost for federal income tax purposes was $152,942,082.

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

(b) Collateralized by $1,124,739 Deutsche Telekom International Finance BV, 8.75%, maturing on 6/15/2030 with a value of $1,581,179.

(c) Collateralized by:

Principal Amount ($)		Security	Rate (%)		Maturity Date	Collateral Value ($)
	2,217,224	Master Asset Backed Securities Trust		0.465	5/25/2037		1,935,159
	831,139	SLM Private Credit Student Loan Trust		0.543	6/15/2039		666,198
Total Collateral Value							2,601,357

(d) Collateralized by $5,016,176 Government National Mortgage Association, with various coupon rates from 3.0–5.0%, and the various maturity dates of 6/15/2028–8/15/2043 with a value of $5,115,098.

(e) Collateralized by:

Principal Amount ($)		Security	Rate (%)		Maturity Date	Collateral Value ($)
	131	Australia & New Zealand Banking Group Ltd.		2.4	11/23/2016		136
	328,313	Bank of Nova Scotia		2.15	8/3/2016		341,094
	665,606	The Toronto-Dominion Bank		2.2	7/29/2015		689,560
Total Collateral Value							1,030,790

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.

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. Securities held by the Fund are reflected as Level 2 because the securities are valued at amortized cost (which approximates fair value) and, accordingly, the inputs used to determine value are not quoted prices in an active market.

The following is a summary of the inputs used as of December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2		Level 3		Total
Investments in Securities (f)	$	—	$	142,942,082	$	—	$	142,942,082
Repurchase Agreements		—		10,000,000		—		10,000,000
Total	$	—	$	152,942,082	$	—	$	152,942,082

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

(f) See Investment Portfolio for additional detailed categorizations.

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments in non-affiliated securities, valued at amortized cost	$	142,942,082
Repurchase agreements, valued at amortized cost		10,000,000
Total investments, valued at amortized cost		152,942,082
Cash		20,806,471
Receivable for Fund shares sold		192,492
Interest receivable		60,696
Due from Advisor		5,136
Other assets		3,577
Total assets		174,010,454
Liabilities
Payable for Fund shares redeemed		279,739
Distributions payable		716
Accrued Trustees' fees		2,171
Other accrued expenses and payables		48,048
Total liabilities		330,674
Net assets, at value	$	173,679,780
Net Assets Consist of
Undistributed net investment income		712
Paid-in capital		173,679,068
Net assets, at value	$	173,679,780
Class A Net Asset Value, offering and redemption price per share ($173,679,780 ÷ 173,762,783 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	1.00

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Interest	$	400,800
Expenses: Management fee		534,536
Administration fee		187,557
Services to shareholders		2,444
Custodian fee		24,649
Professional fees		52,748
Reports to shareholders		103,760
Trustees' fee and expenses		6,645
Other		9,444
Total expenses before expense reductions		921,783
Expense reductions		(539,751	)
Total expenses after expense reductions		382,032
Net investment income		18,768
Net realized gain (loss)		509
Net increase (decrease) in net assets resulting from operations	$	19,277

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income	$	18,768		$	20,513
Net realized gain (loss)		509			863
Net increase (decrease) in net assets resulting from operations		19,277			21,376
Distributions to shareholders from: Net investment income Class A		(18,768	)		(20,513	)
Total distributions		(18,768	)		(20,513	)
Fund share transactions: Class A Proceeds from shares sold		93,469,677			76,110,395
Reinvestment of distributions		18,849			20,711
Cost of shares redeemed		(115,953,059	)		(96,940,382	)
Net increase (decrease) in net assets from Class A share transactions		(22,464,533	)		(20,809,276	)
Increase (decrease) in net assets		(22,464,024	)		(20,808,413	)
Net assets at beginning of period		196,143,804			216,952,217
Net assets at end of period (including undistributed net investment income of $712 and $204, respectively)	$	173,679,780		$	196,143,804
Other Information
Class A Shares outstanding at beginning of period		196,227,316			217,036,592
Shares sold		93,469,677			76,110,395
Shares issued to shareholders in reinvestment of distributions		18,849			20,711
Shares redeemed		(115,953,059	)		(96,940,382	)
Net increase (decrease) in Class A shares		(22,464,533	)		(20,809,276	)
Shares outstanding at end of period		173,762,783			196,227,316

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000
Income from investment operations: Net investment income		.000	*		.000	*		.000	*		.000	*		.003
Net realized gain (loss)		.000	*		.000	*		.000	*		.000	*		.000	*
Total from investment operations		.000	*		.000	*		.000	*		.000	*		.003
Less distributions from: Net investment income		(.000	)*		(.000	)*		(.000	)*		(.000	)*		(.003	)
Net asset value, end of period	$	1.000		$	1.000		$	1.000		$	1.000		$	1.000
Total Return (%)		.01	a		.01	a		.01	a		.01	a		.34
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		174			196			217			220			270
Ratio of expenses before expense reductions (%)		.49			.45			.51			.46			.43
Ratio of expenses after expense reductions (%)		.20			.31			.25			.34			.43
Ratio of net investment income (%)		.01			.01			.01			.01			.37
a Total return would have been lower had certain expenses not been reduced. * Amount is less than $.0005.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

Security Valuation. Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.

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

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

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

As of December 31, 2013, the Fund had investments in repurchase agreements with a gross value of $10,000,000. The value of the related collateral exceeded the value of the repurchase agreements at period end. The detail of the related collateral is included in the footnotes following the Fund's Investment Portfolio.

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

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income* $ 712

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	18,768	$	20,513

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

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

B. Related Parties

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

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

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

For the period from January 1, 2013 through September 30, 2014, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) at 0.51%.

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

Accordingly, for the year ended December 31, 2013, the fee pursuant to the Investment Management Agreement aggregated $534,536, all of which was waived, resulting in an annual effective rate of 0.00% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $187,557, of which $4,604 was waived and $10,241 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC aggregated $611, all of which was waived.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $13,670, of which $4,342 is unpaid.

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

C. Ownership of the Fund

At December 31, 2013, four participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 35%, 20%, 11% and 10%.

D. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate, plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate, the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement: The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Money Market VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS Money Market VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Money Market VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,000.05
Expenses Paid per $1,000*	$	.91
Hypothetical 5% Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,024.30
Expenses Paid per $1,000*	$	.92

* Expenses are equal to the Fund's annualized expense ratio, 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 Ratio	Class A
DWS Variable Series II — DWS Money Market VIP	.18%

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

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

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

Tax Information (Unaudited)

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 contact your insurance provider.

Other Information

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Money Market Fund Reform

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

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Money Market VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Asset Allocation Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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 distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including a peer universe compiled by the Fee Consultant using information supplied by iMoneyNet, an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial plans to address underperformance. The Board believes this process is an effective manner of identifying and addressing underperforming funds. Based on the information provided, the Board noted that for the one- and three-year periods ended December 31, 2012, the Fund's gross performance (Class A shares) was in the 1st quartile and 2nd quartile, respectively, of the applicable iMoneyNet universe (the 1st quartile being the best performers and the 4th quartile being the worst performers).

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were lower than the median (2nd quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were higher than the median (4th quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012). The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board noted the expense limitation agreed to by DIMA. The Board also noted the significant voluntary fee waivers implemented by DIMA to ensure the Fund maintained a positive yield.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2MM-2 (R-025834-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Small Mid Cap Growth VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

7 Investment Portfolio

10 Statement of Assets and Liabilities

11 Statement of Operations

12 Statement of Changes in Net Assets

13 Financial Highlights

14 Notes to Financial Statements

18 Report of Independent Registered Public Accounting Firm

19 Information About Your Fund's Expenses

20 Tax Information

21 Proxy Voting

22 Advisory Agreement Board Considerations and Fee Evaluation

25 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 is 0.74% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in DWS Small Mid Cap Growth VIP
	The Russell 2500™ Growth Index is an unmanaged index that measures the performance of the small- to mid-cap growth segment of the U.S. equity universe. It includes those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Small Mid Cap Growth VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	14,278		$	15,690		$	28,555		$	19,162
	Average annual total return		42.78	%		16.20	%		23.35	%		6.72	%
Russell 2500 Growth Index	Growth of $10,000	$	14,065		$	16,077		$	29,347		$	26,204
	Average annual total return		40.65	%		17.15	%		24.03	%		10.11	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

For the 12-month period ended December 31, 2013, the Fund returned 42.78% (Class A shares, unadjusted for contract charges), outperforming the 40.65% return of the Russell 2500™ Growth Index.1

The past 12 months represented a robust period for small- and mid-cap stocks, as investor appetite for equities and strong mutual fund inflows provided tremendous momentum to the stock market. At the start of 2013, a last-minute congressional agreement to avert the "fiscal cliff" spurred a strong market rally through most of February. And despite worries regarding the effects of U.S. budget sequestration, the "risk-on" trade returned again in March, as improving macroeconomic data lifted investor confidence through most of the summer months. The rally then paused in August as investors grew worried that the U.S. Federal Reserve Board (the Fed) might begin to taper its quantitative easing (QE) program later in the year, and as the congressional debate regarding the budget and debt ceiling loomed in September.2 However, an end to the federal government shutdown in early October, additional clarity regarding the Fed's plans to taper quantitative easing and a favorable jobs report helped to ignite a sharp market rally into year end, with stocks closing 2013 at all-time highs.

The Fund's outperformance was derived primarily from strong stock selection in information technology, health care and financials. In contrast, Fund positions in consumer staples, energy and consumer discretionary detracted from returns.3 Overall sector allocation had a negative effect on performance, based on underweights to utilities and consumer discretionary and an overweight in energy.4 An overweight position in consumer staples and an underweight in materials contributed to performance. We continue to position the Fund for sustained economic recovery and remain focused on our bottom-up stock selection process. We maintain a long-term perspective, investing in quality small- and mid-cap growth stocks that trade at attractive valuations and which will also likely benefit from a strong merger and acquisition cycle.

Joseph Axtell, CFA

Rafaelina M. Lee

Portfolio Managers

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.

1 The Russell 2500 Growth Index is an unmanaged, capitalization-weighted measure of the performance of the small- to mid-cap growth segment of the U.S. equity universe. It includes Russell 2500® Index companies with higher price-to-book ratios and higher forecasted growth values. Index returns do not reflect fees or expenses and it is not possible to invest directly in an index.

2 Quantitative easing entails the Fed's purchase of government and other securities from the market in an effort to increase money supply.

3 The consumer discretionary sector represents industries that produce goods and services that are not necessities in everyday life. Consumer staples are the industries that manufacture and sell products such as food and beverages, prescription drugs, and household products.

4 "Overweight" means that the Fund holds a higher weighting in a given sector or security than the benchmark. "Underweight" means that the Fund holds a lower weighting.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Common Stocks	97%	96%
Cash Equivalents	2%	4%
Exchange-Traded Fund	1%	0%
	100%	100%

Sector Diversification(As a % of Common Stocks)	12/31/13	12/31/12
Information Technology	23%	16%
Consumer Discretionary	20%	17%
Industrials	16%	20%
Health Care	16%	16%
Financials	10%	8%
Energy	5%	9%
Consumer Staples	5%	6%
Materials	4%	7%
Telecommunication Services	1%	1%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330. The Fund's portfolio holdings are also posted on dws-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Shares		Value ($)
Common Stocks 97.9%
Consumer Discretionary 19.3%
Auto Components 1.8%
American Axle & Manufacturing Holdings, Inc.*		70,091		1,433,361
Tenneco, Inc.*		33,896		1,917,496
				3,350,857
Hotels, Restaurants & Leisure 2.6%
Jack in the Box, Inc.*		32,954		1,648,359
Life Time Fitness, Inc.* (a)		23,969		1,126,543
Panera Bread Co. "A"*		12,169		2,150,141
				4,925,043
Household Durables 2.7%
Jarden Corp.*		52,967		3,249,525
Ryland Group, Inc. (a)		42,009		1,823,611
				5,073,136
Leisure Equipment & Products 1.3%
Polaris Industries, Inc. (a)		17,375		2,530,495
Media 1.1%
Cinemark Holdings, Inc.		60,872		2,028,864
Specialty Retail 7.5%
Advance Auto Parts, Inc.		12,708		1,406,522
Ascena Retail Group, Inc.*		77,063		1,630,653
Children's Place Retail Stores, Inc.*		25,492		1,452,279
DSW, Inc. "A"		43,784		1,870,890
Outerwall, Inc.* (a)		24,208		1,628,472
Penske Automotive Group, Inc.		28,323		1,335,713
PetSmart, Inc.		24,839		1,807,037
Ulta Salon, Cosmetics & Fragrance, Inc.*		19,652		1,896,811
Urban Outfitters, Inc.*		26,516		983,744
				14,012,121
Textiles, Apparel & Luxury Goods 2.3%
Carter's, Inc.		18,475		1,326,320
Hanesbrands, Inc.		41,719		2,931,594
				4,257,914
Consumer Staples 4.7%
Food & Staples Retailing 2.6%
Susser Holdings Corp.* (a)		23,213		1,520,219
The Fresh Market, Inc.* (a)		28,724		1,163,322
United Natural Foods, Inc.*		29,191		2,200,710
				4,884,251
Food Products 1.0%
Hain Celestial Group, Inc.* (a)		20,390		1,851,004
Household Products 1.1%
Church & Dwight Co., Inc. (a)		30,129		1,996,950
Energy 5.2%
Energy Equipment & Services 2.2%
Dresser-Rand Group, Inc.*		23,982		1,430,047
Dril-Quip, Inc.*		15,588		1,713,589
Helix Energy Solutions Group, Inc.*		45,030		1,043,795
				4,187,431
Oil, Gas & Consumable Fuels 3.0%
Goodrich Petroleum Corp.* (a)		76,228		1,297,401
Oasis Petroleum, Inc.* (a)		30,191		1,418,071
	Shares		Value ($)
Rosetta Resources, Inc.*		28,045		1,347,282
Western Refining, Inc. (a)		34,028		1,443,127
				5,505,881
Financials 9.8%
Capital Markets 4.0%
Affiliated Managers Group, Inc.*		5,216		1,131,246
Financial Engines, Inc. (a)		34,556		2,400,951
Lazard Ltd. "A"		39,209		1,776,952
Oaktree Capital Group LLC		35,922		2,113,651
				7,422,800
Commercial Banks 1.0%
Signature Bank*		17,496		1,879,420
Consumer Finance 3.0%
Encore Capital Group, Inc.* (a)		34,670		1,742,514
Portfolio Recovery Associates, Inc.* (a)		32,049		1,693,469
Springleaf Holdings, Inc.*		83,119		2,101,249
				5,537,232
Real Estate Management & Development 0.5%
CBRE Group, Inc. "A"*		38,774		1,019,756
Thrifts & Mortgage Finance 1.3%
Ocwen Financial Corp.*		44,218		2,451,888
Health Care 15.7%
Biotechnology 3.6%
Alkermes PLC*		34,055		1,384,676
Cubist Pharmaceuticals, Inc.*		16,456		1,133,325
Momenta Pharmaceuticals, Inc.*		109,236		1,931,293
Pharmacyclics, Inc.*		5,966		631,083
Spectrum Pharmaceuticals, Inc.* (a)		113,912		1,008,121
Synta Pharmaceuticals Corp.*		127,517		668,189
				6,756,687
Health Care Equipment & Supplies 6.1%
Analogic Corp.		19,993		1,770,580
ArthroCare Corp.*		47,099		1,895,264
HeartWare International, Inc.*		15,996		1,502,984
SurModics, Inc.*		69,874		1,704,227
Thoratec Corp.*		52,833		1,933,688
Zeltiq Aesthetics, Inc.* (a)		144,633		2,735,010
				11,541,753
Health Care Providers & Services 3.4%
Catamaran Corp.*		34,646		1,644,992
Centene Corp.*		31,769		1,872,783
ExamWorks Group, Inc.* (a)		52,900		1,580,123
Kindred Healthcare, Inc.		62,125		1,226,347
				6,324,245
Pharmaceuticals 2.6%
Pacira Pharmaceuticals, Inc.*		65,566		3,769,389
Questcor Pharmaceuticals, Inc. (a)		20,412		1,111,434
				4,880,823
Industrials 15.9%
Aerospace & Defense 1.4%
BE Aerospace, Inc.*		30,948		2,693,404
Building Products 1.1%
Fortune Brands Home & Security, Inc.		44,949		2,054,169
	Shares		Value ($)
Commercial Services & Supplies 2.1%
Interface, Inc. (a)		97,577		2,142,791
Team, Inc.*		41,586		1,760,751
				3,903,542
Electrical Equipment 2.5%
AZZ, Inc.		46,104		2,252,641
Thermon Group Holdings, Inc.*		87,017		2,378,175
				4,630,816
Machinery 5.9%
Altra Industrial Motion Corp.		43,378		1,484,395
Chart Industries, Inc.* (a)		20,595		1,969,706
Joy Global, Inc. (a)		15,425		902,208
Manitowoc Co., Inc.		113,795		2,653,700
Valmont Industries, Inc.		8,819		1,315,089
WABCO Holdings, Inc.*		28,265		2,640,234
				10,965,332
Road & Rail 1.2%
Swift Transportation Co.* (a)		104,742		2,326,320
Trading Companies & Distributors 1.7%
United Rentals, Inc.* (a)		40,625		3,166,719
Information Technology 22.2%
Communications Equipment 1.1%
Harris Corp.		29,358		2,049,482
Computers & Peripherals 1.4%
Western Digital Corp.		30,452		2,554,923
Electronic Equipment, Instruments & Components 2.2%
Cognex Corp.		52,092		1,988,873
IPG Photonics Corp.* (a)		27,794		2,157,092
				4,145,965
Internet Software & Services 1.2%
CoStar Group, Inc.*		12,522		2,311,311
IT Services 4.3%
Cardtronics, Inc.*		56,952		2,474,564
MAXIMUS, Inc.		46,798		2,058,644
VeriFone Systems, Inc.*		84,391		2,263,367
Virtusa Corp.*		31,080		1,183,837
				7,980,412
Semiconductors & Semiconductor Equipment 1.6%
Advanced Energy Industries, Inc.*		105,675		2,415,731
RF Micro Devices, Inc.*		129,858		670,067
				3,085,798
Software 10.4%
Aspen Technology, Inc.*		47,703		1,993,985
Bottomline Technologies de, Inc.* (a)		58,425		2,112,648
Concur Technologies, Inc.* (a)		12,895		1,330,506
FireEye, Inc.* (a)		41,154		1,794,726
	Shares		Value ($)
Imperva, Inc.*		42,572		2,048,990
MICROS Systems, Inc.* (a)		26,681		1,530,689
PTC, Inc.*		57,732		2,043,135
Qlik Technologies, Inc.*		55,026		1,465,342
Seachange International, Inc.*		64,735		787,178
Tyler Technologies, Inc.*		23,014		2,350,420
Ultimate Software Group, Inc.*		13,435		2,058,511
				19,516,130
Materials 3.5%
Chemicals 0.8%
A. Schulman, Inc.		13,376		471,638
Minerals Technologies, Inc.		15,488		930,364
				1,402,002
Construction Materials 1.1%
Eagle Materials, Inc.		27,169		2,103,695
Containers & Packaging 1.1%
Crown Holdings, Inc.*		44,499		1,983,320
Metals & Mining 0.5%
Haynes International, Inc.		17,894		988,465
Telecommunication Services 1.6%
Diversified Telecommunication Services 0.6%
inContact, Inc.*		154,651		1,207,824
Wireless Telecommunication Services 1.0%
SBA Communications Corp. "A"* (a)		20,223		1,816,835
Total Common Stocks (Cost $122,618,575)				183,305,015
Exchange-Traded Fund 0.5%
SPDR S&P Biotech (a) (Cost $728,339)		7,865		1,024,023
Securities Lending Collateral 21.9%
Daily Assets Fund Institutional, 0.08% (b) (c) (Cost $40,943,661)		40,943,661		40,943,661
Cash Equivalents 1.8%
Central Cash Management Fund, 0.05% (b) (Cost $3,470,538)		3,470,538		3,470,538

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $167,761,113)†		122.1			228,743,237
Other Assets and Liabilities, Net		(22.1	)		(41,465,830	)
Net Assets		100.0			187,277,407

* Non-income producing security.

† The cost for federal income tax purposes was $168,016,119. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $60,727,118. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $62,821,094 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $2,093,976.

(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 December 31, 2013 amounted to $40,302,801, which is 21.5% of net assets.

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

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

S&P: Standard & Poor's

SPDR: Standard & Poor's Depositary Receipt

Fair Value Measurements

Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The 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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2		Level 3		Total
Common Stocks (d)	$	183,305,015	$	—	$	—	$	183,305,015
Exchange-Traded Fund		1,024,023		—		—		1,024,023
Short-Term Investments (d)		44,414,199		—		—		44,414,199
Total	$	228,743,237	$	—	$	—	$	228,743,237

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

(d) See Investment Portfolio for additional detailed categorizations.

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $123,346,914) — including $40,302,801 of securities loaned	$	184,329,038
Investment in Daily Assets Fund Institutional (cost $40,943,661)*		40,943,661
Investment in Central Cash Management Fund (cost $3,470,538)		3,470,538
Total investments in securities, at value (cost $167,761,113)		228,743,237
Receivable for investments sold		646,901
Receivable for Fund shares sold		17,010
Dividends receivable		20,753
Interest receivable		29,101
Other assets		2,945
Total assets		229,459,947
Liabilities
Payable upon return of securities loaned		40,943,661
Payable for investments purchased		843,637
Payable for Fund shares redeemed		264,712
Accrued management fee		85,435
Accrued Trustees' fees		2,643
Other accrued expenses and payables		42,452
Total liabilities		42,182,540
Net assets, at value	$	187,277,407
Net Assets Consist of
Net unrealized appreciation (depreciation) on investments		60,982,124
Accumulated net realized gain (loss)		(7,826,190	)
Paid-in capital		134,121,473
Net assets, at value	$	187,277,407
Class A Net Asset Value, offering and redemption price per share ($187,277,407 ÷ 8,676,171 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	21.59

* Represents collateral on securities loaned.

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Dividends (net of foreign taxes withheld of $1,301)	$	600,315
Income distributions — Central Cash Management Fund		3,828
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		215,138
Total income		819,281
Expenses: Management fee		906,903
Administration fee		164,891
Services to shareholders		2,811
Custodian fee		11,489
Audit and tax fees		61,686
Legal fees		10,276
Reports to shareholders		17,802
Trustees' fees and expenses		6,819
Total expenses		1,182,677
Net investment income (loss)		(363,396	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		23,260,876
Foreign currency		256
		23,261,132
Change in net unrealized appreciation (depreciation) on: Investments		35,857,114
Foreign currency		(9	)
		35,857,105
Net gain (loss)		59,118,237
Net increase (decrease) in net assets resulting from operations	$	58,754,841

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income (loss)	$	(363,396	)	$	160,586
Net realized gain (loss)		23,261,132			3,935,183
Change in net unrealized appreciation (depreciation)		35,857,105			16,236,973
Net increase (decrease) in net assets resulting from operations		58,754,841			20,332,742
Distributions to shareholders from: Net investment income: Class A		(194,886	)		—
Total distributions		(194,886	)		—
Fund share transactions: Class A Proceeds from shares sold		5,697,979			4,543,991
Reinvestment of distributions		194,886			—
Cost of shares redeemed		(22,634,498	)		(26,306,762	)
Net increase (decrease) in net assets from Class A share transactions		(16,741,633	)		(21,762,771	)
Increase (decrease) in net assets		41,818,322			(1,430,029	)
Net assets at beginning of period		145,459,085			146,889,114
Net assets at end of period (including undistributed net investment income of $0 and $114,625, respectively)	$	187,277,407		$	145,459,085
Other Information
Class A Shares outstanding at beginning of period		9,604,576			11,094,343
Shares sold		313,223			306,987
Shares issued to shareholders in reinvestment of distributions		11,761			—
Shares redeemed		(1,253,389	)		(1,796,754	)
Net increase (decrease) in Class A shares		(928,405	)		(1,489,767	)
Shares outstanding at end of period		8,676,171			9,604,576

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012		2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	15.14		$	13.24	$	13.85		$	10.70		$	7.61
Income (loss) from investment operations: Net investment income (loss)a		(.04	)		.02		(.03	)		(.01	)		(.02	)
Net realized and unrealized gain (loss)		6.51			1.88		(.50	)		3.16			3.11
Total from investment operations		6.47			1.90		(.53	)		3.15			3.09
Less distributions from: Net investment income		(.02	)		—		(.08	)		—			—
Net asset value, end of period	$	21.59		$	15.14	$	13.24		$	13.85		$	10.70
Total Return (%)		42.78			14.35		(3.91	)		29.44			40.60
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		187			145		147			88			80
Ratio of expenses (%)		.72			.74		.73			.78			.77
Ratio of net investment income (loss) (%)		(.22	)		.11		(.23	)		(.12	)		(.22	)
Portfolio turnover rate (%)		56			57		84			64			93
a Based on average shares outstanding during the period.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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 and exchange-traded funds ("ETFs") are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade. Securities or ETFs for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation. Equity securities are generally categorized as Level 1.

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

As of December 31, 2013, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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

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

At December 31, 2013, the Fund had a net tax basis capital loss carryforward of approximately $7,570,000 of pre-enactment losses, including approximately $2,020,000 inherited from its mergers with affiliated funds in previous years, which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2016 ($2,020,000) and December 31, 2017 ($5,550,000), the respective expiration dates, whichever occurs first, and which may be subject to certain limitations under Section 382–384 of Internal Revenue Code.

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Capital loss carryforwards	$	(7,570,000	)
Unrealized appreciation (depreciation) on investments	$	60,727,118

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	194,886	$	—

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments.

B. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $89,784,430 and $104,689,342, respectively.

C. Related Parties

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

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

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

Accordingly, for the year ended December 31, 2013, the fee pursuant to the Investment Management Agreement was equivalent to an annual effective rate of 0.55% of the Fund's average daily net assets.

Effective October 1, 2013 through September 30, 2014, the Advisor has contractually agreed to waive its fees and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of Class A at 0.89%.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $164,891, of which $15,534 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC aggregated $350, of which $58 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $14,006, of which $4,326 is unpaid.

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

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

Securities Lending Agent Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the year ended December 31, 2013, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $23,903.

D. Ownership of the Fund

At December 31, 2013, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 55%, 22% and 15%.

E. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Small Mid Cap Growth VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio of DWS Small Mid Cap Growth VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Small Mid Cap Growth VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,256.00
Expenses Paid per $1,000*	$	4.15
Hypothetical 5% Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,021.53
Expenses Paid per $1,000*	$	3.72

* Expenses are equal to the Fund's annualized expense ratio, 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 Ratio	Class A
DWS Variable Series II — DWS Small Mid Cap Growth VIP	.73%

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

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

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

Tax Information (Unaudited)

For corporate shareholders, 100% of ordinary dividends (i.e., income dividends plus short-term gains) paid during the Fund's fiscal year ended December 31, 2013, qualified for the dividends received deduction.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Small Mid Cap Growth VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Equity Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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 distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 3rd quartile, 2nd quartile and 3rd quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has underperformed its benchmark in the one-, three- and five-year periods ended December 31, 2012.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be lower than the median (1st quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board considered the Fund's management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitation agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2SMCG-2 (R-025835-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Small Mid Cap Value VIP

(formerly DWS Dreman Small Mid Cap Value VIP)

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

6 Investment Portfolio

8 Statement of Assets and Liabilities

9 Statement of Operations

9 Statement of Changes in Net Assets

11 Financial Highlights

12 Notes to Financial Statements

16 Report of Independent Registered Public Accounting Firm

17 Information About Your Fund's Expenses

18 Tax Information

18 Proxy Voting

19 Advisory Agreement Board Considerations and Fee Evaluation

22 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

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

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratios of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 are 0.82% and 1.16% for Class A and Class B shares, respectively, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report.

Growth of an Assumed $10,000 Investment in DWS Small Mid Cap Value VIP
	The Russell 2500™ Value Index is an unmanaged Index of those securities in the Russell 3000® Index with lower price-to-book ratios and lower forecasted growth values. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Small Mid Cap Value VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	13,524		$	14,450		$	23,066		$	27,502
	Average annual total return		35.24	%		13.06	%		18.19	%		10.65	%
Russell 2500 Value Index	Growth of $10,000	$	13,332		$	15,360		$	24,479		$	24,301
	Average annual total return		33.32	%		15.38	%		19.61	%		9.29	%
DWS Small Mid Cap Value VIP		1-Year			3-Year			5-Year			10-Year
Class B	Growth of $10,000	$	13,470		$	14,305		$	22,685		$	26,521
	Average annual total return		34.70	%		12.68	%		17.80	%		10.25	%
Russell 2500 Value Index	Growth of $10,000	$	13,332		$	15,360		$	24,479		$	24,301
	Average annual total return		33.32	%		15.38	%		19.61	%		9.29	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

Class A shares DWS Small Mid Cap VIP returned 35.24% in 2013 (unadjusted for contract charges), outperforming the 33.32% return of the benchmark, the Russell 2500™ Value Index.1

On September 3, 2013, the Fund's portfolio management team changed. Consequently, the Fund's 12-month results ending December 31, 2013 incorporate the results of two management teams.

Prior to the change in management, the Fund outperformed its benchmark. The largest contribution to performance during this time came from stock selection in the financial sector.

The Fund also outperformed in the interval from the September 3, 2013 changeover through the end of the period ending December 31, 2013. The largest contributions came from stock selection in the industrials, information technology and financial sectors. Sector allocations also made a positive contribution to returns, led by an overweight in industrials and an underweight in financials.2

We employ a "classic value" approach founded in the belief that investor biases can cause quality small- and mid-cap companies to trade below their intrinsic values. In choosing stocks, we focus on individual security selection rather than industry selection. We use an active process that combines financial analysis with company visits to evaluate management and strategies. We also emphasize individual stock selection across all economic sectors, focusing on companies that we believe have strong management, identifiable catalysts such as acquisitions or new products, and valuations that offer an attractive risk/reward trade-off.

At the close of the period ending December 31, 2013, the Fund held its largest overweight positions in the industrial, health care and information technology sectors, while its largest underweights were in financials, energy and utilities. This doesn't reflect a top-down view, but rather our finding many of the most attractive individual stocks in these areas.

In terms of our outlook, we would describe the current U.S. economic environment as "fair." While we do not believe the economy is in danger of slipping into a recession, improvement in the U.S. growth outlook remains slow. Given this backdrop, the markets in general — and small- and mid-cap stocks in particular — have moved very far, very fast over the past year. Valuations aren't extreme in any sense, but new investment ideas have been more difficult to identify. Nevertheless, we remain optimistic on the outlooks for the individual companies we hold in the Fund based on their reasonable valuations and compelling long-term opportunities.

Richard Glass, CFA

Portfolio Manager, Deutsche Investment Management Americas Inc.

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.

1 The Russell 2500 Value Index is an unmanaged index of those securities in the Russell 3000® Index with lower price-to-book ratios and lower forecasted growth values. Index returns do not reflect fees or expenses and it is not possible to invest directly into an index.

2 "Underweight" means the Fund holds a lower weighting in a given sector or security than the benchmark. "Overweight" means the Fund holds a higher weighting.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Common Stocks	96%	98%
Cash Equivalents	4%	2%
	100%	100%

Sector Diversification (As a % of Common Stocks)	12/31/13	12/31/12
Industrials	29%	22%
Financials	16%	27%
Information Technology	14%	17%
Consumer Discretionary	12%	8%
Health Care	10%	7%
Materials	7%	7%
Utilities	5%	4%
Energy	5%	5%
Consumer Staples	2%	3%
	100%	100%

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at 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-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

	Shares		Value ($)
Common Stocks 95.8%
Consumer Discretionary 11.8%
Auto Components 2.4%
Visteon Corp.*		76,390		6,255,577
Hotels, Restaurants & Leisure 1.4%
The Wendy's Co.		421,696		3,677,189
Household Durables 3.1%
Newell Rubbermaid, Inc.		245,170		7,945,960
Media 1.5%
Scripps Networks Interactive, Inc. "A"		44,420		3,838,332
Specialty Retail 1.5%
Ross Stores, Inc.		52,295		3,918,464
Textiles, Apparel & Luxury Goods 1.9%
Hanesbrands, Inc.		71,003		4,989,381
Consumer Staples 2.2%
Food Products
Ingredion, Inc.		85,280		5,838,269
Energy 4.3%
Energy Equipment & Services 1.3%
Superior Energy Services, Inc.*		124,276		3,306,985
Oil, Gas & Consumable Fuels 3.0%
Pioneer Natural Resources Co.		19,540		3,596,728
QEP Resources, Inc.		140,350		4,301,727
				7,898,455
Financials 15.2%
Capital Markets 2.3%
Lazard Ltd. "A"		129,690		5,877,551
Insurance 11.7%
Arch Capital Group Ltd.*		90,610		5,408,511
Axis Capital Holdings Ltd.		68,814		3,273,482
CNO Financial Group, Inc.		368,608		6,520,675
PartnerRe Ltd.		46,190		4,869,812
Reinsurance Group of America, Inc.		67,510		5,225,949
Validus Holdings Ltd.		128,724		5,186,290
				30,484,719
Real Estate Investment Trusts 1.2%
Plum Creek Timber Co., Inc. (REIT)		65,730		3,057,102
Health Care 9.8%
Health Care Equipment & Supplies 1.6%
CareFusion Corp.*		104,820		4,173,932
Health Care Providers & Services 4.9%
HealthSouth Corp.		186,540		6,215,513
Omnicare, Inc.		106,600		6,434,376
				12,649,889
Life Sciences Tools & Services 1.8%
PerkinElmer, Inc.		110,992		4,576,200
Pharmaceuticals 1.5%
Actavis PLC*		23,925		4,019,400
	Shares		Value ($)
Industrials 27.5%
Aerospace & Defense 2.8%
Curtiss-Wright Corp.		53,300		3,316,859
Triumph Group, Inc.		53,300		4,054,531
				7,371,390
Building Products 2.1%
Owens Corning, Inc.*		130,702		5,322,185
Commercial Services & Supplies 5.2%
ADT Corp.		127,361		5,154,300
Covanta Holding Corp.		186,540		3,311,085
The Brink's Co.		148,442		5,067,810
				13,533,195
Electrical Equipment 2.0%
The Babcock & Wilcox Co.		153,488		5,247,755
Machinery 8.0%
Harsco Corp.		184,681		5,176,608
ITT Corp.		85,280		3,702,858
Snap-on, Inc.		39,090		4,281,137
Stanley Black & Decker, Inc.		39,090		3,154,172
Xylem, Inc.		129,281		4,473,122
				20,787,897
Marine 3.1%
Kirby Corp.*		81,720		8,110,710
Professional Services 1.5%
Verisk Analytics, Inc. "A"*		58,630		3,853,164
Trading Companies & Distributors 2.8%
AerCap Holdings NV*		187,046		7,173,214
Information Technology 13.3%
Communications Equipment 1.0%
Juniper Networks, Inc.*		119,582		2,698,966
Computers & Peripherals 0.9%
NCR Corp.*		67,507		2,299,288
Electronic Equipment, Instruments & Components 4.0%
Belden, Inc.		89,008		6,270,614
Dolby Laboratories, Inc. "A"*		106,600		4,110,496
				10,381,110
IT Services 4.9%
Amdocs Ltd.		96,752		3,990,052
Global Payments, Inc.		65,730		4,271,793
NeuStar, Inc. "A"*		88,932		4,434,150
				12,695,995
Office Electronics 1.1%
Zebra Technologies Corp. "A"*		54,513		2,948,063
Software 1.4%
ACI Worldwide, Inc.*		53,993		3,509,545
Materials 6.7%
Chemicals 4.3%
Ashland, Inc.		71,060		6,895,663
Cytec Industries, Inc.		46,465		4,328,679
				11,224,342
Containers & Packaging 2.4%
Sealed Air Corp.		184,770		6,291,418
	Shares		Value ($)
Utilities 5.0%
Electric Utilities 1.8%
Northeast Utilities		108,370		4,593,804
Gas Utilities 1.9%
UGI Corp.		117,260		4,861,600
Multi-Utilities 1.3%
CMS Energy Corp.		129,690		3,471,801
Total Common Stocks (Cost $212,791,265)				248,882,847
	Shares		Value ($)
Cash Equivalents 4.3%
Central Cash Management Fund, 0.05% (a) (Cost $11,169,066)		11,169,066		11,169,066

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $223,960,331)†		100.1			260,051,913
Other Assets and Liabilities, Net		(0.1	)		(353,581	)
Net Assets		100.0			259,698,332

* Non-income producing security.

† The cost for federal income tax purposes was $223,960,331. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $36,091,582. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $37,124,380 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,032,798.

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

REIT: Real Estate Investment Trust

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1		Level 2		Level 3		Total
Common Stocks (b)	$	248,882,847	$	—	$	—	$	248,882,847
Short-Term Investments		11,169,066		—		—		11,169,066
Total	$	260,051,913	$	—	$	—	$	260,051,913

There have been no transfers between fair value measurement levels during the year ended December 31, 2013.

(b) See Investment Portfolio for additional detailed categorizations.

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $212,791,265)	$	248,882,847
Investment in Central Cash Management Fund (cost $11,169,066)		11,169,066
Total investments in securities, at value (cost $223,960,331)		260,051,913
Cash		30,755
Receivable for Fund shares sold		66,438
Dividends receivable		168,908
Interest receivable		540
Other assets		4,102
Total assets		260,322,656
Liabilities
Payable for Fund shares redeemed		412,438
Accrued management fee		138,765
Accrued Trustees' fees		3,617
Other accrued expenses and payables		69,504
Total liabilities		624,324
Net assets, at value	$	259,698,332
Net Assets Consist of
Undistributed net investment income		1,850,167
Net unrealized appreciation (depreciation) on investments		36,091,582
Accumulated net realized gain (loss)		1,033,527
Paid-in capital		220,723,056
Net assets, at value	$	259,698,332
Class A Net Asset Value, offering and redemption price per share ($239,883,278 ÷ 14,042,897 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	17.08
Class B Net Asset Value, offering and redemption price per share ($19,815,054 ÷ 1,160,889 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	17.07

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Dividends	$	3,917,876
Income distributions — Central Cash Management Fund		4,464
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		61,442
Total income		3,983,782
Expenses: Management fee		1,592,789
Administration fee		245,067
Services to shareholders		7,077
Record keeping fees (Class B)		18,952
Distribution service fee (Class B)		46,270
Custodian fee		12,003
Professional fees		67,592
Reports to shareholders		57,633
Trustees' fees and expenses		10,661
Other		10,779
Total expenses		2,068,823
Net investment income (loss)		1,914,959
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from investments		72,681,616
Change in net unrealized appreciation (depreciation) on investments		(601,679	)
Net gain (loss)		72,079,937
Net increase (decrease) in net assets resulting from operations	$	73,994,896

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income (loss)	$	1,914,959		$	2,773,636
Net realized gain (loss)		72,681,616			13,712,216
Change in net unrealized appreciation (depreciation)		(601,679	)		14,140,156
Net increase (decrease) in net assets resulting from operations		73,994,896			30,626,008
Distributions to shareholders from: Net investment income: Class A		(2,660,096	)		(2,544,018	)
Class B		(150,280	)		(170,068	)
Total distributions		(2,810,376	)		(2,714,086	)
Fund share transactions: Class A Proceeds from shares sold		17,897,526			15,242,621
Reinvestment of distributions		2,660,096			2,544,018
Payments for shares redeemed		(65,359,482	)		(40,361,547	)
Net increase (decrease) in net assets from Class A share transactions		(44,801,860	)		(22,574,908	)
Class B Proceeds from shares sold		4,288,905			2,417,600
Reinvestment of distributions		150,280			170,068
Payments for shares redeemed		(6,805,298	)		(8,165,016	)
Net increase (decrease) in net assets from Class B share transactions		(2,366,113	)		(5,577,348	)
Increase (decrease) in net assets		24,016,547			(240,334	)
Net assets at beginning of period		235,681,785			235,922,119
Net assets at end of period (including undistributed net investment income of $1,850,167 and $2,783,776, respectively)	$	259,698,332		$	235,681,785
Other Information
Class A Shares outstanding at beginning of period		17,113,875			18,969,648
Shares sold		1,211,679			1,248,625
Shares issued to shareholders in reinvestment of distributions		190,143			207,168
Shares redeemed		(4,472,800	)		(3,311,566	)
Net increase (decrease) in Class A shares		(3,070,978	)		(1,855,773	)
Shares outstanding at end of period		14,042,897			17,113,875
Class B Shares outstanding at beginning of period		1,321,925			1,796,701
Shares sold		288,710			195,502
Shares issued to shareholders in reinvestment of distributions		10,719			13,827
Shares redeemed		(460,465	)		(684,105	)
Net increase (decrease) in Class B shares		(161,036	)		(474,776	)
Shares outstanding at end of period		1,160,889			1,321,925

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	12.78		$	11.36		$	12.21		$	10.04		$	7.93
Income (loss) from investment operations: Net investment incomea		.12			.14			.13			.12			.16
Net realized and unrealized gain (loss)		4.35			1.42			(.85	)		2.19			2.11
Total from investment operations		4.47			1.56			(.72	)		2.31			2.27
Less distributions from: Net investment income		(.17	)		(.14	)		(.13	)		(.14	)		(.16	)
Total distributions		(.17	)		(.14	)		(.13	)		(.14	)		(.16	)
Net asset value, end of period	$	17.08		$	12.78		$	11.36		$	12.21		$	10.04
Total Return (%)		35.24			13.77			(6.08	)		23.07			29.70
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		240			219			216			247			235
Ratio of expenses (%)		.82			.82			.81			.82			.79
Ratio of net investment income (%)		.81			1.18			1.08			1.14			1.92
Portfolio turnover rate (%)		115			11			36			38			72
a Based on average shares outstanding during the period.

	Years Ended December 31,
Class B		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	12.78		$	11.36		$	12.20		$	10.03		$	7.92
Income (loss) from investment operations: Net investment incomea		.07			.10			.09			.08			.13
Net realized and unrealized gain (loss)		4.34			1.42			(.85	)		2.19			2.12
Total from investment operations		4.41			1.52			(.76	)		2.27			2.25
Less distributions from: Net investment income		(.12	)		(.10	)		(.08	)		(.10	)		(.14	)
Total distributions		(.12	)		(.10	)		(.08	)		(.10	)		(.14	)
Net asset value, end of period	$	17.07		$	12.78		$	11.36		$	12.20		$	10.03
Total Return (%)		34.70			13.38			(6.33	)		22.66			29.28
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		20			17			20			26			23
Ratio of expenses (%)		1.17			1.16			1.15			1.17			1.14
Ratio of net investment income (%)		.45			.81			.74			.79			1.57
Portfolio turnover rate (%)		115			11			36			38			72
a Based on average shares outstanding during the period.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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

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

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.

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

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

Securities Lending. Brown Brothers Harriman & Co., as lending agent, lends securities of the Fund to certain financial institutions under the terms of the Security Lending Agreement. The Fund retains the benefits of owning the securities it has loaned and continues to receive interest and dividends generated by the securities and to participate in any changes in their market value. The Fund requires the borrowers of the securities to maintain collateral with the Fund consisting of either cash or liquid, unencumbered assets having a value at least equal to the value of the securities loaned. When the collateral falls below specified amounts, the lending agent will use its best effort to obtain additional collateral on the next business day to meet required amounts under the security lending agreement. The Fund may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Fund receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of borrower rebates and fees paid to a lending agent. Either the Fund or the borrower may terminate the loan. There may be risks of delay and costs in recovery of securities or even loss of rights in the collateral should the borrower of the securities fail financially. If the Fund is not able to recover securities lent, the Fund may sell the collateral and purchase a replacement investment in the market, incurring the risk that the value of the replacement security is greater than the value of the collateral. The Fund is also subject to all investment risks associated with the reinvestment of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments. The Fund had no securities on loan at December 31, 2013.

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

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	1,850,167
Undistributed net long-term capital gains	$	1,033,527
Unrealized appreciation (depreciation) on investments	$	36,091,582

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	2,810,376	$	2,714,086

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments.

B. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments) aggregated $276,451,414 and $331,010,986, respectively.

C. Related Parties

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

Prior to September 3, 2013, Dreman Value Management, L.L.C. ("DVM") served as subadvisor to the Fund. As a subadvisor, DVM made investment decisions and bought and sold securities for the Fund. DVM was paid by the Advisor for the services DVM provided to the Fund. Effective September 3, 2013, DVM no longer acts as subadvisor to the Fund and day-to-day portfolio management of the Fund transitioned to DIMA.

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

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

Accordingly, for the year ended December 31, 2013, the fee pursuant to the Investment Management Agreement was equivalent to an annual effective rate of 0.65% of the Fund's average daily net assets.

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

Class A	.84%
Class B	1.20%

Effective October 1, 2013 through September 30, 2014, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) of each class as follows:

Class A	.83%
Class B	1.19%

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $245,067, of which $21,360 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC were as follows:

Service to Shareholders	Total Aggregated		Unpaid at December 31, 2013
Class A	$	580	$	98
Class B		538		91
	$	1,118	$	189

Distribution Service Agreement. Under the Fund's Class B 12b-1 plans, DWS Investments Distributors, Inc. ("DIDI") received a fee ("Distribution Service Fee") of 0.25% of average daily net assets of Class B shares. For the year ended December 31, 2013, the Distribution Service Fee aggregated $46,270, of which $4,104 is unpaid.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $16,701, of which $4,147 is unpaid.

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

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

D. Ownership of the Fund

At December 31, 2013, three participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 41%, 20% and 14%. Three participating insurance companies were owners of record of 10% or more of the total outstanding Class B shares of the Fund, each owning 41%, 12% and 10%.

E. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Small Mid Cap Value VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio of DWS Small Mid Cap Value VIP (formerly, DWS Dreman Small Mid Cap Value VIP) (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Small Mid Cap Value VIP (formerly, DWS Dreman Small Mid Cap Value VIP) (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. 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 (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,181.20	$	1,178.90
Expenses Paid per $1,000*	$	4.51	$	6.43
Hypothetical 5% Fund Return	Class A		Class B
Beginning Account Value 7/1/13	$	1,000.00	$	1,000.00
Ending Account Value 12/31/13	$	1,021.07	$	1,019.31
Expenses Paid per $1,000*	$	4.18	$	5.96

* 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 B
DWS Variable Series II — DWS Small Mid Cap Value VIP	.82%	1.17%

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

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

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

Tax Information (Unaudited)

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 contact your insurance provider.

Pursuant to Section 852 of the Internal Revenue Code, the Fund designates $ 1,137,000 as capital gain dividends for its year ended December 31, 2013.

For corporate shareholders, 45% of the ordinary dividends (i.e., income dividends plus short-term capital gains) paid during the Fund's fiscal year ended December 31, 2013, qualified for the dividends received deduction.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Small Mid Cap Value VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Equity Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 4th quartile, 4th quartile and 3rd quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has underperformed its benchmark in the one-, three- and five-year periods ended December 31, 2012. The Board noted the disappointing investment performance of the Fund in recent periods and continued to discuss with senior management of DIMA the factors contributing to such underperformance and actions being taken to improve performance. The Board recognized that DIMA has made changes to its investment personnel and processes in recent years in an effort to enhance its investment platform and improve long-term performance across the DWS fund complex.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were lower than the median (1st quartile) of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be lower than the median (2nd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board also reviewed data comparing each share class's total (net) operating expenses to the applicable Lipper Universe Expenses. The Board considered the Fund's management fee rate as compared to fees charged by DIMA to a comparable fund and considered differences between the Fund and the comparable fund. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitations agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2SMCV-2 (R-025829-3 2/14)

December 31, 2013

Annual Report

DWS Variable Series II

DWS Unconstrained Income VIP

Contents

3 Performance Summary

4 Management Summary

5 Portfolio Summary

7 Investment Portfolio

24 Statement of Assets and Liabilities

25 Statement of Operations

26 Statement of Changes in Net Assets

27 Financial Highlights

28 Notes to Financial Statements

37 Report of Independent Registered Public Accounting Firm

38 Information About Your Fund's Expenses

39 Tax Information

40 Proxy Voting

41 Advisory Agreement Board Considerations and Fee Evaluation

44 Board Members and Officers

This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus or summary prospectus, if available, call (800) 728-3337 or your financial representative. We advise you to consider the Fund's objectives, risks, charges and expenses carefully before investing. The summary prospectus and prospectus contain this and other important information about the Fund. Please read the prospectus carefully before you invest.

Bond investments are subject to interest-rate and credit risks. When interest rates rise, bond prices generally fall. Credit risk refers to the ability of an issuer to make timely payments of principal and interest. Investments in lower-quality ("junk bonds") and non-rated securities present greater risk of loss than investments in higher-quality securities. Investing in derivatives entails special risks relating to liquidity, leverage and credit that may reduce returns and/or increase volatility. Investing in foreign securities, particularly those of emerging markets, presents certain risks, such as currency fluctuations, political and economic changes, and market risks. The Fund may lend securities to approved institutions. See the prospectus for details.

Deutsche Asset & Wealth Management represents the asset management and wealth management activities conducted by Deutsche Bank AG or any of its subsidiaries, including the Advisor and DWS Investments Distributors, Inc.

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

NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

Performance Summary December 31, 2013 (Unaudited)

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

The gross expense ratio of the Fund, as stated in the fee table of the prospectus dated May 1, 2013 is 0.99% for Class A shares and may differ from the expense ratio disclosed in the Financial Highlights table in this report.

Growth of an Assumed $10,000 Investment in DWS Unconstrained Income VIP
	The Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index and the non-ERISA portion of the CMBS Index. On May 1, 2013, the Barclays U.S. Universal Index replaced the Barclays U.S. Aggregate Bond Index as the fund's primary benchmark index because the Advisor believes that it more accurately reflects the fund's investment strategy. The Barclays U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities with an average maturity of one year or more. Index returns do not reflect any fees or expenses and it is not possible to invest directly into an index.
Yearly periods ended December 31

Comparative Results
DWS Unconstrained Income VIP		1-Year			3-Year			5-Year			10-Year
Class A	Growth of $10,000	$	9,896		$	11,783		$	15,915		$	18,757
	Average annual total return		–1.04	%		5.62	%		9.74	%		6.49	%
Barclays U.S. Universal Index	Growth of $10,000	$	9,865		$	11,182		$	13,014		$	16,060
	Average annual total return		–1.35	%		3.79	%		5.41	%		4.85	%
Barclays U.S. Aggregate Bond Index	Growth of $10,000	$	9,798		$	11,011		$	12,427		$	15,599
	Average annual total return		–2.02	%		3.26	%		4.44	%		4.55	%

The growth of $10,000 is cumulative.

Management Summary December 31, 2013 (Unaudited)

The Class A shares of the Fund returned –1.04% (unadjusted for contract charges) during 2013, outperforming the –1.35% return of the Barclays U.S. Universal Index. The Fund has outpaced the benchmark in the three-, five- and 10-year periods ended December 31, 2013.1

The past year was a rather volatile time for the global bond market, as uncertainty regarding the timing of the U.S. Federal Reserve Board's (the Fed's) "tapering" of its quantitative easing policy led to weak performance for the most rate-sensitive segments of the market. We generated outperformance in this potentially challenging environment via three aspects of our positioning.

First, our substantial allocation to high-yield bonds provided the Fund with exposure to the best-performing segment of the bond market. In addition, the Fund's high-yield portfolio outperformed the broader high-yield market thanks to our strong individual security selection. We also held an allocation to senior loans, which feature low duration (interest-rate sensitivity) and floating rates — both of which contributed to their outperformance at a time of rising Treasury yields.2

Second, our holdings performed better than the overall market in the Fund's domestic investment-grade segment. Here, we added value by emphasizing corporate bonds and commercial mortgage-backed securities over U.S. Treasuries and other market segments sensitive to talk of Fed tapering. The third factor boosting performance was our positioning within the Fund's emerging-markets segment. During a time in which emerging-markets bonds suffered a negative absolute return, we added value by holding an underweight in longer-term government debt, which lagged, in favor of emerging-markets corporate bonds, which outperformed.

The most important detractor from performance was that we came into the June 2013 bond market sell-off with an above-benchmark duration, resulting in underperformance for the Fund when yields rose during the second quarter. The Fund closed the year with a duration that was about equal with that of the benchmark.

Looking ahead, we expect that strengthening economic growth will continue to pressure long-term Treasuries but provide support for the investment-grade corporate and high-yield sectors. We remain focused on adding value through individual security selection, portfolio allocation and our "go anywhere" strategy.

Gary Russell, CFA

William Chepolis, CFA

John D. Ryan

Philip G. Condon

Darwei Kung

Portfolio Managers

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.

1 The Barclays U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index and the non-ERISA portion of the CMBS Index. Index returns do not reflect fees or expenses and it is not possible to invest directly in an index.

2 Duration, which is expressed in years, measures the sensitivity of the price of a bond or bond fund to a change in interest rates.

Portfolio Summary (Unaudited)

Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral)	12/31/13	12/31/12
Corporate Bonds	60%	56%
Government & Agency Obligations	19%	15%
Loan Participations and Assignments	5%	8%
Collateralized Mortgage Obligations	5%	4%
Commercial Mortgage-Backed Securities	3%	3%
Mortgage-Backed Securities Pass-Throughs	2%	6%
Cash Equivalents	2%	6%
Municipal Bonds and Notes	2%	1%
Exchange-Traded Fund	1%	0%
Asset-Backed	1%	1%
	100%	100%

Quality (Excludes Cash Equivalents and Securities Lending Collateral)	12/31/13	12/31/12
AAA	20%	21%
AA	3%	2%
A	3%	7%
BBB	18%	23%
BB	25%	18%
B	19%	24%
CCC	4%	2%
Not Rated	8%	3%
	100%	100%

Interest Rate Sensitivity	12/31/13	12/31/12
Effective Maturity	6.6 years	7.4 years
Effective Duration	4.3 years	5.2 years

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

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

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

Portfolio holdings and characteristics are subject to change.

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

Following the Fund's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330. The Fund's portfolio holdings are also posted on dws-investments.com from time to time. Please see the Fund's current prospectus for more information.

Investment Portfolio December 31, 2013

		Principal Amount ($)(a)		Value ($)
Corporate Bonds 59.5%
Consumer Discretionary 8.0%
21st Century Fox America, Inc., 144A, 4.0%, 10/1/2023			30,000		29,651
AMC Networks, Inc., 7.75%, 7/15/2021			15,000		16,875
AmeriGas Finance LLC:
6.75%, 5/20/2020			70,000		76,475
7.0%, 5/20/2022			60,000		65,100
APX Group, Inc., 144A, 8.75%, 12/1/2020			5,000		5,088
Asbury Automotive Group, Inc., 8.375%, 11/15/2020			85,000		95,519
Ashtead Capital, Inc., 144A, 6.5%, 7/15/2022			45,000		47,981
Ashton Woods U.S.A. LLC, 144A, 6.875%, 2/15/2021			50,000		49,375
Avis Budget Car Rental LLC:
5.5%, 4/1/2023			30,000		29,063
8.25%, 1/15/2019			95,000		103,550
BC Mountain LLC, 144A, 7.0%, 2/1/2021			30,000		30,300
Block Communications, Inc., 144A, 7.25%, 2/1/2020			65,000		68,900
Boyd Gaming Corp., 9.0%, 7/1/2020 (b)			25,000		27,375
British Sky Broadcasting Group PLC, 144A, 3.125%, 11/26/2022			90,000		83,793
Cablevision Systems Corp., 8.0%, 4/15/2020 (b)			10,000		11,175
Caesar's Entertainment Operating Co., Inc., 8.5%, 2/15/2020			120,000		115,500
CCO Holdings LLC:
6.5%, 4/30/2021			120,000		123,300
6.625%, 1/31/2022			70,000		72,100
7.0%, 1/15/2019 (b)			20,000		21,075
7.25%, 10/30/2017			90,000		95,287
7.375%, 6/1/2020			10,000		10,825
8.125%, 4/30/2020			25,000		27,125
CDR DB Sub, Inc., 144A, 7.75%, 10/15/2020			35,000		34,825
Cequel Communications Holdings I LLC:
144A, 5.125%, 12/15/2021			50,000		46,875
144A, 6.375%, 9/15/2020			160,000		164,000
Chester Downs & Marina LLC, 144A, 9.25%, 2/1/2020			25,000		25,063
Clear Channel Communications, Inc., 11.25%, 3/1/2021			40,000		43,000
Clear Channel Worldwide Holdings, Inc.:
Series A, 6.5%, 11/15/2022			15,000		15,206
Series A, 7.625%, 3/15/2020			20,000		20,800
Series B, 7.625%, 3/15/2020			185,000		194,481
Cogeco Cable, Inc., 144A, 4.875%, 5/1/2020			5,000		4,825
Columbus International, Inc., 144A, 11.5%, 11/20/2014			100,000		107,750
Cox Communications, Inc., 144A, 3.25%, 12/15/2022			60,000		54,293
Crown Media Holdings, Inc., 10.5%, 7/15/2019			55,000		62,425
Cumulus Media Holdings, Inc., 7.75%, 5/1/2019			65,000		68,575
Delphi Corp., 5.0%, 2/15/2023			40,000		41,150
		Principal Amount ($)(a)		Value ($)
DISH DBS Corp.:
4.25%, 4/1/2018			40,000		40,800
5.0%, 3/15/2023			50,000		46,625
6.625%, 10/1/2014			65,000		67,600
6.75%, 6/1/2021			10,000		10,600
7.125%, 2/1/2016			155,000		171,662
Ford Motor Credit Co., LLC, 3.984%, 6/15/2016			145,000		154,193
General Motors Financial Co., Inc., 144A, 3.25%, 5/15/2018			15,000		15,000
GLP Capital LP, 144A, 4.375%, 11/1/2018			15,000		15,338
Griffey Intermediate, Inc., 144A, 7.0%, 10/15/2020			65,000		51,512
Harron Communications LP, 144A, 9.125%, 4/1/2020			60,000		66,450
Hertz Corp.:
4.25%, 4/1/2018			25,000		25,625
6.75%, 4/15/2019			50,000		53,875
7.5%, 10/15/2018			155,000		167,206
Hertz Holdings Netherlands BV, 144A, 4.375%, 1/15/2019	EUR		105,000		144,629
Hot Topic, Inc., 144A, 9.25%, 6/15/2021			20,000		20,950
Jo-Ann Stores Holdings, Inc., 144A, 9.75%, 10/15/2019 (PIK)			70,000		73,237
L Brands, Inc., 7.0%, 5/1/2020			20,000		22,450
Libbey Glass, Inc., 6.875%, 5/15/2020			18,000		19,440
Live Nation Entertainment, Inc., 144A, 7.0%, 9/1/2020			50,000		54,250
Marriott International, Inc., 3.375%, 10/15/2020			110,000		108,934
Mattel, Inc., 5.45%, 11/1/2041			141,400		141,290
MDC Partners, Inc., 144A, 6.75%, 4/1/2020			30,000		31,387
Mediacom Broadband LLC, 6.375%, 4/1/2023			65,000		66,462
Mediacom LLC, 7.25%, 2/15/2022			20,000		21,200
MGM Resorts International:
6.75%, 10/1/2020 (b)			25,000		26,750
8.625%, 2/1/2019			140,000		164,150
Midcontinent Communications & Midcontinent Finance Corp., 144A, 6.25%, 8/1/2021			30,000		30,225
Myriad International Holdings BV, 144A, 6.0%, 7/18/2020			200,000		214,000
PNK Finance Corp., 144A, 6.375%, 8/1/2021			35,000		35,787
Quebecor Media, Inc., 5.75%, 1/15/2023			30,000		29,025
RCI Banque SA, 144A, 3.5%, 4/3/2018			200,000		203,827
Regal Entertainment Group, 9.125%, 8/15/2018			21,000		22,785
Rent-A-Center, Inc., 4.75%, 5/1/2021			20,000		18,775
Sabre Holdings Corp., 8.35%, 3/15/2016			55,000		61,325
		Principal Amount ($)(a)		Value ($)
Seminole Hard Rock Entertainment, Inc., 144A, 5.875%, 5/15/2021			15,000		14,738
Seminole Tribe of Florida, Inc., 144A, 7.804%, 10/1/2020			70,000		76,650
Serta Simmons Holdings LLC, 144A, 8.125%, 10/1/2020 (b)			35,000		38,062
Sirius XM Holdings, Inc., 144A, 5.875%, 10/1/2020			30,000		30,600
SIWF Merger Sub, Inc., 144A, 6.25%, 6/1/2021			35,000		35,306
Starz LLC, 5.0%, 9/15/2019			25,000		25,563
Taylor Morrison Communities, Inc., 144A, 5.25%, 4/15/2021			40,000		38,900
Travelport LLC, 144A, 13.875%, 3/1/2016 (PIK)			6,827		7,237
UCI International, Inc., 8.625%, 2/15/2019			20,000		20,000
Univision Communications, Inc.:
144A, 6.875%, 5/15/2019			10,000		10,688
144A, 7.875%, 11/1/2020			25,000		27,469
Viking Cruises Ltd., 144A, 8.5%, 10/15/2022			30,000		33,900
Visteon Corp., 6.75%, 4/15/2019			25,000		26,563
					4,871,740
Consumer Staples 3.9%
Agrokor DD, 144A, 8.875%, 2/1/2020			250,000		267,512
Altria Group, Inc., 9.95%, 11/10/2038			47,000		71,694
B&G Foods, Inc., 4.625%, 6/1/2021			35,000		33,600
Chiquita Brands International, Inc., 144A, 7.875%, 2/1/2021			25,000		27,063
Controladora Mabe SA de CV, 144A, 7.875%, 10/28/2019			100,000		111,500
Del Monte Corp., 7.625%, 2/15/2019			80,000		83,100
Delhaize Group SA, 4.125%, 4/10/2019			140,000		143,926
ESAL GmbH, 144A, 6.25%, 2/5/2023			200,000		179,500
FAGE Dairy Industry SA, 144A, 9.875%, 2/1/2020			85,000		88,825
JBS U.S.A. LLC:
144A, 7.25%, 6/1/2021			80,000		83,200
144A, 8.25%, 2/1/2020			25,000		27,125
Marfrig Holding Europe BV, 144A, 11.25%, 9/20/2021			200,000		191,000
MHP SA, 144A, 8.25%, 4/2/2020			200,000		177,540
Mriya Agro Holding PLC, 144A, 9.45%, 4/19/2018			200,000		171,000
Pilgrim's Pride Corp., 7.875%, 12/15/2018			45,000		49,050
Reynolds Group Issuer, Inc.:
5.75%, 10/15/2020			65,000		66,300
6.875%, 2/15/2021			100,000		107,750
7.125%, 4/15/2019			100,000		106,500
Roundy's Supermarkets, Inc., 144A, 10.25%, 12/15/2020			30,000		30,600
Smithfield Foods, Inc.:
6.625%, 8/15/2022			30,000		31,800
7.75%, 7/1/2017			140,000		164,150
Sun Products Corp., 144A, 7.75%, 3/15/2021			50,000		44,000
Viskase Companies, Inc., 144A, 9.875%, 1/15/2018			145,000		152,424
					2,409,159
		Principal Amount ($)(a)		Value ($)
Energy 8.4%
Access Midstream Partners LP:
4.875%, 5/15/2023			15,000		14,475
6.125%, 7/15/2022			55,000		58,850
Afren PLC, 144A, 10.25%, 4/8/2019			140,000		161,700
Antero Resources Finance Corp.:
144A, 5.375%, 11/1/2021			30,000		30,300
7.25%, 8/1/2019			32,000		34,400
Arch Coal, Inc., 7.0%, 6/15/2019 (b)			20,000		15,900
Berry Petroleum Co.:
6.375%, 9/15/2022			30,000		30,525
6.75%, 11/1/2020			140,000		145,250
BreitBurn Energy Partners LP:
7.875%, 4/15/2022			95,000		98,800
8.625%, 10/15/2020			35,000		37,625
Chaparral Energy, Inc., 7.625%, 11/15/2022			20,000		21,400
Chesapeake Oilfield Operating LLC, 6.625%, 11/15/2019			25,000		26,188
CITGO Petroleum Corp., 144A, 11.5%, 7/1/2017			105,000		114,975
Crestwood Midstream Partners LP:
144A, 6.125%, 3/1/2022			20,000		20,500
7.75%, 4/1/2019			65,000		70,525
Crosstex Energy LP:
7.125%, 6/1/2022			15,000		17,063
8.875%, 2/15/2018			55,000		57,819
DCP Midstream Operating LP, 3.875%, 3/15/2023			100,000		92,086
Denbury Resources, Inc., 4.625%, 7/15/2023			35,000		31,588
Dresser-Rand Group, Inc., 6.5%, 5/1/2021			75,000		79,875
EDC Finance Ltd., 144A, 4.875%, 4/17/2020			200,000		194,250
El Paso LLC, 7.25%, 6/1/2018			55,000		62,790
Endeavor Energy Resources LP, 144A, 7.0%, 8/15/2021			45,000		45,450
Energy Transfer Partners LP, 4.15%, 10/1/2020			80,000		81,166
EP Energy LLC:
6.875%, 5/1/2019			60,000		64,575
7.75%, 9/1/2022			25,000		28,000
9.375%, 5/1/2020			25,000		28,844
EPE Holdings LLC, 144A, 8.875%, 12/15/2017 (PIK)			59,903		61,550
EV Energy Partners LP, 8.0%, 4/15/2019			140,000		140,700
FMC Technologies, Inc., 3.45%, 10/1/2022			40,000		36,837
Frontier Oil Corp., 6.875%, 11/15/2018			55,000		59,331
Halcon Resources Corp.:
8.875%, 5/15/2021			85,000		85,850
9.75%, 7/15/2020			50,000		52,125
144A, 9.75%, 7/15/2020			30,000		31,238
Holly Energy Partners LP:
6.5%, 3/1/2020			20,000		20,900
8.25%, 3/15/2018			55,000		58,025
Kodiak Oil & Gas Corp., 5.5%, 1/15/2021 (b)			60,000		59,850
Linn Energy LLC:
6.5%, 5/15/2019			15,000		15,300
144A, 7.0%, 11/1/2019			110,000		111,100
		Principal Amount ($)(a)		Value ($)
MEG Energy Corp.:
144A, 6.5%, 3/15/2021			40,000		42,100
144A, 7.0%, 3/31/2024			75,000		75,938
Midstates Petroleum Co., Inc.:
9.25%, 6/1/2021			70,000		73,150
10.75%, 10/1/2020			85,000		92,437
Murphy Oil U.S.A., Inc., 144A, 6.0%, 8/15/2023			40,000		40,200
Murray Energy Corp., 144A, 8.625%, 6/15/2021			5,000		5,175
Northern Oil & Gas, Inc., 8.0%, 6/1/2020			90,000		94,275
Oasis Petroleum, Inc.:
6.5%, 11/1/2021			25,000		26,750
144A, 6.875%, 3/15/2022			60,000		63,600
6.875%, 1/15/2023			25,000		26,625
7.25%, 2/1/2019			40,000		43,000
Offshore Drilling Holding SA, 144A, 8.375%, 9/20/2020			200,000		213,000
Offshore Group Investment Ltd.:
7.125%, 4/1/2023			60,000		61,200
7.5%, 11/1/2019			20,000		21,750
Pacific Drilling SA, 144A, 5.375%, 6/1/2020			35,000		35,175
Pacific Rubiales Energy Corp., 144A, 7.25%, 12/12/2021			150,000		159,000
Petroleos de Venezuela SA, 144A, 8.5%, 11/2/2017			300,000		249,750
Pertamina Persero PT, 144A, 5.625%, 5/20/2043			200,000		158,500
Reliance Holdings U.S.A., Inc., 144A, 5.4%, 2/14/2022			250,000		252,835
Rosneft Finance SA, 144A, 6.625%, 3/20/2017			200,000		221,000
Sabine Pass Liquefaction LLC, 144A, 5.625%, 2/1/2021			105,000		102,637
SandRidge Energy, Inc., 7.5%, 3/15/2021			75,000		78,562
SESI LLC:
6.375%, 5/1/2019			40,000		42,700
7.125%, 12/15/2021			115,000		128,225
Swift Energy Co., 7.875%, 3/1/2022			55,000		54,450
Talos Production LLC, 144A, 9.75%, 2/15/2018			60,000		61,350
Tesoro Corp.:
4.25%, 10/1/2017			35,000		36,488
5.375%, 10/1/2022 (b)			25,000		25,313
Transocean, Inc., 3.8%, 10/15/2022			75,000		71,087
Ultra Petroleum Corp., 144A, 5.75%, 12/15/2018			10,000		10,275
Venoco, Inc., 8.875%, 2/15/2019			105,000		103,425
Whiting Petroleum Corp., 5.0%, 3/15/2019			40,000		40,900
WPX Energy, Inc., 5.25%, 1/15/2017			40,000		42,700
					5,151,297
Financials 10.0%
Ally Financial, Inc.:
5.5%, 2/15/2017			60,000		64,950
6.25%, 12/1/2017			95,000		105,925
8.3%, 2/12/2015			135,000		145,125
American International Group, Inc., 3.8%, 3/22/2017			60,000		64,074
American Tower Corp., (REIT), 3.5%, 1/31/2023			60,000		54,705
		Principal Amount ($)(a)		Value ($)
Banco Santander Brasil SA, 144A, 8.0%, 3/18/2016	BRL		400,000		156,829
Bank of America Corp., 3.3%, 1/11/2023			160,000		151,403
Barclays Bank PLC, 7.625%, 11/21/2022			400,000		426,000
BBVA Bancomer SA, 144A, 6.5%, 3/10/2021			200,000		211,000
BNP Paribas SA, 5.0%, 1/15/2021			120,000		131,638
CIT Group, Inc.:
5.0%, 5/15/2017			80,000		85,400
5.25%, 3/15/2018			90,000		96,525
Development Bank of Kazakhstan JSC, Series 3, 6.5%, 6/3/2020			500,000		527,600
E*TRADE Financial Corp., 6.75%, 6/1/2016			130,000		141,050
Hartford Financial Services Group, Inc., 6.0%, 1/15/2019			117,000		134,189
HCP, Inc., (REIT), 5.375%, 2/1/2021			143,000		155,667
Health Care REIT, Inc., (REIT), 4.5%, 1/15/2024			125,000		123,418
Hellas Telecommunications Finance, 144A, 8.227%**, 7/15/2015 (PIK)*	EUR		109,187		0
ING Bank NV:
144A, 2.0%, 9/25/2015			200,000		203,313
144A, 5.8%, 9/25/2023			230,000		240,487
ING U.S., Inc., 5.7%, 7/15/2043			65,000		67,912
International Lease Finance Corp.:
3.875%, 4/15/2018			65,000		65,162
5.75%, 5/15/2016			20,000		21,425
6.25%, 5/15/2019			50,000		54,125
8.625%, 9/15/2015			40,000		44,400
8.625%, 1/15/2022 (b)			45,000		53,179
8.75%, 3/15/2017			120,000		141,300
Intesa Sanpaolo SpA, 3.875%, 1/16/2018			240,000		245,755
Jefferies Group LLC, 5.125%, 1/20/2023			60,000		60,688
Macquarie Bank Ltd., 144A, 3.45%, 7/27/2015			105,000		108,586
Morgan Stanley:
3.75%, 2/25/2023			85,000		82,711
4.1%, 5/22/2023			85,000		82,259
MPT Operating Partnership LP:
(REIT), 6.375%, 2/15/2022			45,000		46,575
(REIT), 6.875%, 5/1/2021			50,000		53,500
Neuberger Berman Group LLC:
144A, 5.625%, 3/15/2020			25,000		26,250
144A, 5.875%, 3/15/2022			45,000		46,350
OPB Finance Trust, Series C, 2.9%, 5/24/2023	CAD		238,000		208,528
ProLogis LP, (REIT), 4.25%, 8/15/2023			90,000		88,907
PSP Capital, Inc., 3.03%, 10/22/2020	CAD		184,000		173,713
Royal Bank of Scotland Group PLC, 6.1%, 6/10/2023			100,000		100,810
		Principal Amount ($)(a)		Value ($)
Santander U.S. Debt SAU, 144A, 3.724%, 1/20/2015			45,000		45,897
SLM Corp., 5.5%, 1/25/2023			125,000		118,076
Societe Generale SA, 144A, 7.875%, 12/29/2049			110,000		110,770
The Goldman Sachs Group, Inc.:
3.625%, 1/22/2023			55,000		53,259
5.75%, 1/24/2022			160,000		180,110
Turkiye Is Bankasi, 144A, 6.0%, 10/24/2022			250,000		224,250
Turkiye Vakiflar Bankasi Tao, 144A, 3.75%, 4/15/2018			250,000		234,125
Ventas Realty LP, (REIT), 2.7%, 4/1/2020			130,000		124,306
					6,082,226
Health Care 3.3%
Agilent Technologies, Inc., 3.2%, 10/1/2022			40,000		36,611
Aviv Healthcare Properties LP:
144A, 6.0%, 10/15/2021			15,000		15,263
7.75%, 2/15/2019			85,000		91,375
Biomet, Inc.:
6.5%, 8/1/2020			55,000		57,750
6.5%, 10/1/2020			15,000		15,450
Community Health Systems, Inc.:
5.125%, 8/15/2018			185,000		191,013
7.125%, 7/15/2020			60,000		62,250
Endo Finance Co., 144A, 5.75%, 1/15/2022			35,000		35,175
Fresenius Medical Care U.S. Finance II, Inc., 144A, 5.625%, 7/31/2019			35,000		37,800
Fresenius Medical Care U.S. Finance, Inc., 144A, 6.5%, 9/15/2018			20,000		22,600
HCA, Inc.:
5.875%, 3/15/2022			40,000		41,300
6.5%, 2/15/2020			210,000		230,737
7.5%, 2/15/2022			80,000		87,800
7.875%, 2/15/2020			365,000		391,919
8.5%, 4/15/2019			45,000		47,700
Hologic, Inc., 6.25%, 8/1/2020			30,000		31,650
Laboratory Corp. of America Holdings, 3.75%, 8/23/2022			35,000		33,902
LifePoint Hospitals, Inc., 144A, 5.5%, 12/1/2021			35,000		35,131
Mallinckrodt International Finance SA, 144A, 4.75%, 4/15/2023			75,000		69,220
Par Pharmaceutical Companies, Inc., 7.375%, 10/15/2020			55,000		56,856
Physio-Control International, Inc., 144A, 9.875%, 1/15/2019			48,000		53,760
Salix Pharmaceuticals Ltd., 144A, 6.0%, 1/15/2021			30,000		30,750
Tenet Healthcare Corp.:
4.375%, 10/1/2021			55,000		51,700
4.5%, 4/1/2021			10,000		9,475
6.25%, 11/1/2018			80,000		88,600
Valeant Pharmaceuticals International, 144A, 6.75%, 8/15/2018			70,000		76,913
Warner Chilcott Co., LLC, 7.75%, 9/15/2018			75,000		81,188
					1,983,888
		Principal Amount ($)(a)		Value ($)
Industrials 6.4%
Accuride Corp., 9.5%, 8/1/2018			65,000		63,537
ADT Corp., 144A, 6.25%, 10/15/2021			25,000		26,250
Aeropuertos Dominicanos Siglo XXI SA, 144A, 9.25%, 11/13/2019			250,000		246,250
Alphabet Holding Co., Inc.:
7.75%, 11/1/2017 (PIK)			30,000		30,938
144A, 7.75%, 11/1/2017 (PIK)			35,000		36,094
Armored Autogroup, Inc., 9.25%, 11/1/2018			105,000		101,062
Artesyn Escrow, Inc., 144A, 9.75%, 10/15/2020			40,000		42,000
BE Aerospace, Inc., 6.875%, 10/1/2020			25,000		27,438
Belden, Inc., 144A, 5.5%, 9/1/2022			55,000		53,900
Bombardier, Inc.:
144A, 5.75%, 3/15/2022			55,000		54,587
144A, 7.75%, 3/15/2020			45,000		51,075
Casella Waste Systems, Inc., 7.75%, 2/15/2019			110,000		112,750
Cemex Finance LLC, 144A, 9.375%, 10/12/2022			200,000		225,500
CTP Transportation Products LLC, 144A, 8.25%, 12/15/2019			35,000		36,488
Darling Escrow Corp., 144A, 5.375%, 1/15/2022 (c)			30,000		30,225
DigitalGlobe, Inc., 144A, 5.25%, 2/1/2021			25,000		24,375
Ducommun, Inc., 9.75%, 7/15/2018			65,000		72,312
DynCorp International, Inc., 10.375%, 7/1/2017			85,000		86,912
Ferreycorp SAA, 144A, 4.875%, 4/26/2020			200,000		187,000
Florida East Coast Railway Corp., 8.125%, 2/1/2017			40,000		41,750
FTI Consulting, Inc., 6.75%, 10/1/2020			145,000		156,600
Garda World Security Corp., 144A, 7.25%, 11/15/2021			45,000		45,337
GenCorp, Inc., 7.125%, 3/15/2021			115,000		123,050
Georgian Railway JSC, 144A, 7.75%, 7/11/2022			200,000		207,740
Grupo KUO SAB De CV, 144A, 6.25%, 12/4/2022			200,000		200,000
Huntington Ingalls Industries, Inc.:
6.875%, 3/15/2018			50,000		54,000
7.125%, 3/15/2021			10,000		10,975
Ingersoll-Rand Global Holding Co., Ltd., 144A, 2.875%, 1/15/2019			20,000		19,713
Kenan Advantage Group, Inc., 144A, 8.375%, 12/15/2018			25,000		26,313
Masco Corp., 7.125%, 3/15/2020			145,000		165,519
Meritor, Inc.:
6.75%, 6/15/2021			25,000		25,500
10.625%, 3/15/2018			60,000		63,900
Navios Maritime Holdings, Inc.:
144A, 7.375%, 1/15/2022			110,000		110,550
8.125%, 2/15/2019			75,000		77,062
Navios South American Logistics, Inc., 9.25%, 4/15/2019			10,000		10,788
Nortek, Inc., 8.5%, 4/15/2021			75,000		83,062
Odebrecht Offshore Drilling Finance Ltd., 144A, 6.75%, 10/1/2022			196,920		201,548
		Principal Amount ($)(a)		Value ($)
Owens Corning, Inc.:
4.2%, 12/15/2022			30,000		28,648
9.0%, 6/15/2019			29,000		35,803
Ply Gem Industries, Inc., 9.375%, 4/15/2017			15,000		16,200
Spirit AeroSystems, Inc., 6.75%, 12/15/2020			75,000		80,719
Titan International, Inc., 144A, 6.875%, 10/1/2020			90,000		93,825
Total System Services, Inc., 3.75%, 6/1/2023			70,000		64,706
TransDigm, Inc.:
7.5%, 7/15/2021			50,000		53,750
7.75%, 12/15/2018			65,000		69,712
United Rentals North America, Inc.:
5.75%, 7/15/2018			60,000		64,125
7.375%, 5/15/2020			95,000		105,331
7.625%, 4/15/2022			95,000		105,569
Watco Companies LLC, 144A, 6.375%, 4/1/2023			25,000		24,750
					3,875,238
Information Technology 1.8%
ACI Worldwide, Inc., 144A, 6.375%, 8/15/2020			15,000		15,675
Activision Blizzard, Inc., 144A, 5.625%, 9/15/2021			115,000		119,025
Audatex North America, Inc., 144A, 6.0%, 6/15/2021			20,000		20,950
BMC Software Finance, Inc., 144A, 8.125%, 7/15/2021			50,000		51,500
CDW LLC, 8.5%, 4/1/2019			45,000		49,725
eAccess Ltd., 144A, 8.25%, 4/1/2018			60,000		65,550
EarthLink, Inc., 7.375%, 6/1/2020			30,000		29,925
Equinix, Inc.:
5.375%, 4/1/2023			105,000		102,637
7.0%, 7/15/2021			40,000		43,700
First Data Corp.:
144A, 6.75%, 11/1/2020			110,000		114,400
144A, 7.375%, 6/15/2019			45,000		48,037
144A, 8.875%, 8/15/2020			85,000		94,031
Fiserv, Inc., 3.5%, 10/1/2022			95,000		88,218
Freescale Semiconductor, Inc., 144A, 6.0%, 1/15/2022			40,000		40,500
Healthcare Technology Intermediate, Inc., 144A, 7.375%, 9/1/2018 (PIK)			10,000		10,400
Hughes Satellite Systems Corp.:
6.5%, 6/15/2019			70,000		75,775
7.625%, 6/15/2021			40,000		44,600
IAC/InterActiveCorp., 4.75%, 12/15/2022			25,000		23,313
Jabil Circuit, Inc., 7.75%, 7/15/2016			30,000		34,125
NCR Escrow Corp.:
144A, 5.875%, 12/15/2021			10,000		10,188
144A, 6.375%, 12/15/2023			20,000		20,425
					1,102,699
Materials 6.6%
Anglo American Capital PLC, 144A, 4.125%, 9/27/2022			250,000		235,066
Ashland, Inc., 3.875%, 4/15/2018			20,000		20,250
Ball Corp., 7.375%, 9/1/2019			25,000		27,000
BOE Intermediate Holding Corp., 144A, 9.0%, 11/1/2017 (PIK)			41,820		43,597
		Principal Amount ($)(a)		Value ($)
Cia Minera Milpo SAA, 144A, 4.625%, 3/28/2023			200,000		181,000
Clearwater Paper Corp., 7.125%, 11/1/2018			65,000		69,387
Crown Americas LLC, 6.25%, 2/1/2021			10,000		10,850
CSN Resources SA, 144A, 6.5%, 7/21/2020			200,000		202,250
Essar Steel Algoma, Inc.:
144A, 9.375%, 3/15/2015			220,000		207,900
144A, 9.875%, 6/15/2015			35,000		21,350
Exopack Holding Corp., 144A, 10.0%, 6/1/2018			40,000		43,400
FMG Resources (August 2006) Pty Ltd.:
144A, 6.0%, 4/1/2017 (b)			55,000		58,438
144A, 6.875%, 4/1/2022			15,000		16,350
144A, 7.0%, 11/1/2015			33,000		34,238
144A, 8.25%, 11/1/2019 (b)			45,000		50,513
FQM Akubra, Inc.:
144A, 7.5%, 6/1/2021			80,000		83,600
144A, 8.75%, 6/1/2020			45,000		48,825
Glencore Funding LLC, 144A, 4.125%, 5/30/2023			110,000		102,797
Greif, Inc., 7.75%, 8/1/2019			195,000		221,325
Hexion U.S. Finance Corp.:
6.625%, 4/15/2020			15,000		15,375
8.875%, 2/1/2018			95,000		98,681
Huntsman International LLC:
8.625%, 3/15/2020			60,000		66,375
8.625%, 3/15/2021			25,000		28,250
IAMGOLD Corp., 144A, 6.75%, 10/1/2020			40,000		34,400
International Paper Co., 7.95%, 6/15/2018			145,000		176,130
Kaiser Aluminum Corp., 8.25%, 6/1/2020			40,000		45,200
KGHM International Ltd., 144A, 7.75%, 6/15/2019			115,000		121,325
Metalloinvest Finance Ltd., 144A, 6.5%, 7/21/2016			200,000		211,750
Novelis, Inc., 8.75%, 12/15/2020			215,000		239,187
Owens-Brockway Glass Container, Inc., 7.375%, 5/15/2016			30,000		33,675
Packaging Dynamics Corp., 144A, 8.75%, 2/1/2016			90,000		92,475
Plastipak Holdings, Inc., 144A, 6.5%, 10/1/2021			40,000		41,400
Polymer Group, Inc., 7.75%, 2/1/2019			55,000		58,644
PolyOne Corp., 5.25%, 3/15/2023			40,000		39,000
Polyus Gold International Ltd., 144A, 5.625%, 4/29/2020			200,000		192,750
Rain CII Carbon LLC, 144A, 8.0%, 12/1/2018			45,000		46,575
Samarco Mineracao SA, 144A, 5.75%, 10/24/2023			200,000		198,000
Sealed Air Corp.:
144A, 8.125%, 9/15/2019			30,000		33,675
144A, 8.375%, 9/15/2021			30,000		34,050
The Mosaic Co., 4.25%, 11/15/2023			90,000		88,884
Turkiye Sise ve Cam Fabrikalari AS, 144A, 4.25%, 5/9/2020			300,000		263,970
Vedanta Resources PLC, 144A, 8.25%, 6/7/2021			200,000		200,750
					4,038,657
		Principal Amount ($)(a)		Value ($)
Telecommunication Services 8.3%
CC Holdings GS V LLC, 3.849%, 4/15/2023			70,000		65,527
CenturyLink, Inc.:
Series V, 5.625%, 4/1/2020			15,000		15,263
Series W, 6.75%, 12/1/2023			60,000		60,750
Cincinnati Bell, Inc.:
8.375%, 10/15/2020			215,000		232,737
8.75%, 3/15/2018 (b)			210,000		220,500
CPI International, Inc., 8.0%, 2/15/2018			45,000		47,025
Cricket Communications, Inc., 7.75%, 10/15/2020			245,000		279,300
Digicel Group Ltd.:
144A, 8.25%, 9/30/2020			105,000		108,806
144A, 10.5%, 4/15/2018			100,000		107,000
Digicel Ltd., 144A, 8.25%, 9/1/2017			400,000		416,000
ERC Ireland Preferred Equity Ltd., 144A, 7.69%**, 2/15/2017 (PIK)*	EUR		88,319		0
Frontier Communications Corp.:
7.125%, 1/15/2023 (b)			200,000		197,500
7.625%, 4/15/2024			15,000		14,963
8.25%, 4/15/2017			62,000		71,920
8.5%, 4/15/2020			90,000		100,800
8.75%, 4/15/2022			25,000		27,750
Intelsat Jackson Holdings SA:
144A, 5.5%, 8/1/2023			55,000		52,319
7.25%, 10/15/2020			195,000		213,281
7.5%, 4/1/2021			215,000		237,037
8.5%, 11/1/2019			100,000		109,125
Intelsat Luxembourg SA:
144A, 7.75%, 6/1/2021			95,000		101,887
144A, 8.125%, 6/1/2023			10,000		10,725
Level 3 Communications, Inc., 8.875%, 6/1/2019			10,000		10,925
Level 3 Financing, Inc.:
144A, 6.125%, 1/15/2021			20,000		20,200
7.0%, 6/1/2020			75,000		79,500
8.125%, 7/1/2019			75,000		82,125
8.625%, 7/15/2020			50,000		56,000
MetroPCS Wireless, Inc.:
6.625%, 11/15/2020			65,000		68,900
144A, 6.625%, 4/1/2023 (b)			35,000		36,137
7.875%, 9/1/2018			75,000		80,531
Millicom International Cellular SA, 144A, 4.75%, 5/22/2020			200,000		192,000
NII Capital Corp., 7.625%, 4/1/2021			50,000		20,500
Oi SA, 144A, 5.75%, 2/10/2022			200,000		184,000
SBA Communications Corp., 5.625%, 10/1/2019			30,000		30,900
SBA Telecommunications, Inc., 8.25%, 8/15/2019			16,000		17,160
Sprint Communications, Inc.:
6.0%, 12/1/2016			320,000		349,200
8.375%, 8/15/2017			55,000		63,662
9.125%, 3/1/2017			50,000		58,750
Sprint Corp., 144A, 7.125%, 6/15/2024			35,000		35,525
T-Mobile U.S.A., Inc.:
6.125%, 1/15/2022			15,000		15,263
6.5%, 1/15/2024			15,000		15,188
		Principal Amount ($)(a)		Value ($)
tw telecom holdings, Inc.:
5.375%, 10/1/2022			35,000		34,388
144A, 5.375%, 10/1/2022			5,000		4,913
144A, 6.375%, 9/1/2023			35,000		36,400
UPCB Finance V Ltd., 144A, 7.25%, 11/15/2021			30,000		32,550
UPCB Finance VI Ltd., 144A, 6.875%, 1/15/2022			10,000		10,625
Verizon Communications, Inc., 6.55%, 9/15/2043			250,000		292,490
Wind Acquisition Finance SA, 144A, 6.5%, 4/30/2020			30,000		31,950
Windstream Corp.:
6.375%, 8/1/2023			40,000		37,400
7.5%, 4/1/2023			75,000		75,375
7.75%, 10/15/2020			20,000		21,225
7.75%, 10/1/2021			55,000		58,300
7.875%, 11/1/2017			205,000		234,212
8.125%, 9/1/2018			70,000		75,250
					5,051,759
Utilities 2.8%
AES Corp.:
8.0%, 10/15/2017			10,000		11,750
8.0%, 6/1/2020			175,000		204,750
American Electric Power Co., Inc., Series F, 2.95%, 12/15/2022			140,000		129,472
Calpine Corp.:
144A, 7.5%, 2/15/2021			64,000		69,840
144A, 7.875%, 7/31/2020			70,000		76,650
Electricite de France SA, 144A, 5.25%, 1/29/2049			100,000		99,450
Energy Future Holdings Corp., Series Q, 6.5%, 11/15/2024			100,000		35,000
Energy Future Intermediate Holding Co., LLC, 10.0%, 12/1/2020 (b)			80,000		85,000
Instituto Costarricense de Electricidad, 144A, 6.95%, 11/10/2021			200,000		205,250
IPALCO Enterprises, Inc., 5.0%, 5/1/2018			145,000		151,887
Jersey Central Power & Light Co., 144A, 4.7%, 4/1/2024			160,000		158,368
Mexico Generadora de Energia S de rl, 144A, 5.5%, 12/6/2032			200,000		191,000
NRG Energy, Inc., 7.625%, 1/15/2018			35,000		39,900
PPL Energy Supply LLC, 4.6%, 12/15/2021			200,000		192,189
Toledo Edison Co., 7.25%, 5/1/2020			38,000		45,296
					1,695,802
Total Corporate Bonds (Cost $35,649,971)					36,262,465
Mortgage-Backed Securities Pass-Throughs 1.7%
Federal National Mortgage Association, 4.0%, 5/1/2041 (c) (Cost $1,033,281)			1,000,000		1,030,469
		Principal Amount ($)(a)		Value ($)
Asset-Backed 0.8%
Home Equity Loans 0.4%
CIT Group Home Equity Loan Trust, "AF6", Series 2002-1, 6.2%, 2/25/2030			57,912		57,724
Citifinancial Mortgage Securities, Inc., "AFS", Series 2003-4, 5.326%, 10/25/2033			190,000		198,448
					256,172
Miscellaneous 0.4%
ARES CLO Ltd., "D", Series 2012-3A, 144A, 4.894%**, 1/17/2024			250,000		251,018
Total Asset-Backed (Cost $474,924)					507,190
Commercial Mortgage-Backed Securities 3.4%
Commercial Mortgage Trust, "AM", Series 2007-GG11, 5.867%, 12/10/2049			290,000		317,761
Del Coronado Trust, "M", Series 2013-HDMZ, 144A, 5.167%**, 3/15/2018			80,000		80,280
JPMorgan Chase Commercial Mortgage Securities Corp.:
"C", Series 2012-HSBC, 144A, 4.021%, 7/5/2032			150,000		144,659
"A4", Series 2006-LDP7, 5.863%**, 4/15/2045			140,000		152,830
LB-UBS Commercial Mortgage Trust, "A3", Series 2006-C7, 5.347%, 11/15/2038			440,000		483,102
Wachovia Bank Commercial Mortgage Trust, "A4", Series 2005-C22, 5.289%**, 12/15/2044			140,000		149,030
WFRBS Commercial Mortgage Trust, "A5", Series 2013-C14, 3.337%, 6/15/2046			750,000		720,610
Total Commercial Mortgage-Backed Securities (Cost $2,026,132)					2,048,272
Collateralized Mortgage Obligations 4.9%
Banc of America Mortgage Securities, "2A2", Series 2004-A, 2.91%**, 2/25/2034			112,538		111,025
Bear Stearns Adjustable Rate Mortgage Trust, "2A1", Series 2005-11, 3.141%**, 12/25/2035			144,496		144,643
Countrywide Home Loans, "2A5", Series 2004-13, 5.75%, 8/25/2034			97,691		98,729
Federal Home Loan Mortgage Corp.:
"AI", Series 4016, Interest Only, 3.0%, 9/15/2025			1,306,090		124,019
"ZG", Series 4213, 3.5%, 6/15/2043			114,845		107,789
"JI", Series 3558, Interest Only, 4.5%, 12/15/2023			59,342		2,711
"PI", Series 3843, Interest Only, 4.5%, 5/15/2038			476,226		70,334
"HI", Series 2934, Interest Only, 5.0%, 2/15/2020			137,869		14,570
"WI", Series 3010, Interest Only, 5.0%, 7/15/2020			222,163		22,848
		Principal Amount ($)(a)		Value ($)
"JS", Series 3572, Interest Only, 6.633%***, 9/15/2039			786,433		122,593
Federal National Mortgage Association:
"BI", Series 2010-13, Interest Only, 5.0%, 12/25/2038			100,887		8,504
"SK", Series 2011-78, Interest Only, 5.835%***, 8/25/2041			1,516,456		216,523
"PI", Series 2006-20, Interest Only, 6.515%***, 11/25/2030			466,906		78,656
"SI", Series 2007-23, Interest Only, 6.605%***, 3/25/2037			320,921		51,266
Government National Mortgage Association:
"BO", Series 2013-10, Principal Only, Zero Coupon, 1/16/2043			415,074		212,183
"ZJ", Series 2013-106, 3.5%, 7/20/2043			477,452		395,320
"GP", Series 2010-67, 4.5%, 3/20/2039			250,000		264,448
"MI", Series 2009-76, Interest Only, 5.0%, 3/20/2035			122,850		1,601
"IV", Series 2009-69, Interest Only, 5.5%, 8/20/2039			453,825		81,853
"IN", Series 2009-69, Interest Only, 5.5%, 8/20/2039			458,651		81,365
"IJ", Series 2009-75, Interest Only, 6.0%, 8/16/2039			421,644		85,445
"AI", Series 2007-38, Interest Only, 6.293%***, 6/16/2037			117,819		16,901
JPMorgan Mortgage Trust, "2A1", Series 2006-A2, 2.699%**, 4/25/2036			320,683		284,326
Merrill Lynch Mortgage Investors Trust, "2A", Series 2003-A6, 2.655%**, 10/25/2033			88,507		88,063
Morgan Stanley Mortgage Loan Trust, "5A5", Series 2005-4, 5.5%, 8/25/2035			18,245		18,239
Wells Fargo Mortgage-Backed Securities Trust:
"2A3",Series 2004-EE, 2.613%**, 12/25/2034			129,458		128,351
"B1", Series 2004-1, 5.5%, 2/25/2034			146,586		146,276
Total Collateralized Mortgage Obligations (Cost $2,984,580)					2,978,581
Government & Agency Obligations 19.3%
Other Government Related (d) 6.5%
Bank of Moscow, 144A, 6.699%, 3/11/2015			250,000		262,500
European Investment Bank:
144A, 4.6%, 1/30/2037	CAD		1,000,000		926,637
6.0%, 8/6/2020	AUD		500,000		477,811
Gazprom Neft OAO, 144A, 4.375%, 9/19/2022			250,000		229,063
KFW, 1.875%, 6/13/2018	CAD		421,000		389,317
National JSC Naftogaz of Ukraine, 9.5%, 9/30/2014			250,000		249,025
Queensland Treasury Corp., Series 23, 4.25%, 7/21/2023	AUD		1,180,000		1,009,738
Vimpel Communications, 144A, 7.748%, 2/2/2021			200,000		217,250
VTB Bank OJSC, 144A, 6.0%, 4/12/2017			200,000		212,500
					3,973,841
		Principal Amount ($)(a)		Value ($)
Sovereign Bonds 6.3%
Federative Republic of Brazil:
4.25%, 1/7/2025			200,000		190,500
12.5%, 1/5/2016	BRL		250,000		109,940
Government of Canada, 0.75%, 5/1/2014	CAD		1,400,000		1,317,074
Kingdom of Norway, Series 475, 2.0%, 5/24/2023	NOK		4,002,000		606,539
Republic of Argentina-Inflation Linked Bond, 5.83%, 12/31/2033	ARS		375		115
Republic of Belarus, REG S, 8.75%, 8/3/2015			145,000		146,450
Republic of Croatia, 144A, 6.0%, 1/26/2024			200,000		198,500
Republic of Singapore, 3.375%, 9/1/2033	SGD		862,000		716,352
Republic of Slovenia, 144A, 4.75%, 5/10/2018			200,000		205,000
Russian Federation:
Series 6204, 7.5%, 3/15/2018	RUB		2,000,000		62,260
Series 6207, 8.15%, 2/3/2027	RUB		4,000,000		125,566
United Mexican States, Series M, 7.75%, 5/29/2031	MXN		1,640,000		131,494
					3,809,790
U.S. Treasury Obligations 6.5%
U.S. Treasury Bill, 0.02%****, 2/13/2014 (e)			152,000		151,998
U.S. Treasury Notes:
0.75%, 6/15/2014			500,000		501,445
1.5%, 7/31/2016			3,025,000		3,094,006
1.75%, 5/15/2023			253,000		228,036
					3,975,485
Total Government & Agency Obligations (Cost $12,351,383)					11,759,116
Loan Participations and Assignments 5.0%
Senior Loans**
Air Distribution Technologies, Inc., First Lien Term Loan, 4.25%, 11/9/2018			64,351		64,794
Avis Budget Car Rental LLC, Term Loan B, 3.0%, 3/15/2019			59,849		59,872
Buffalo Gulf Coast Terminals LLC, Term Loan, 5.25%, 10/31/2017			74,063		74,803
Burger King Corp., Term Loan B, 3.75%, 9/28/2019			69,125		69,538
Calpine Corp., Term Loan B1, 4.0%, 4/2/2018			193,508		195,182
Charter Communications Operating LLC, Term Loan E, 3.0%, 7/1/2020			194,025		193,116
Chesapeake Energy Corp., Term Loan, 5.75%, 12/1/2017			75,000		76,682
Crown Castle International Corp., Term Loan, 3.25%, 1/31/2019			49,251		49,423
Cumulus Media Holdings, Inc., Term Loan, Zero Coupon, 12/12/2020			30,000		30,225
Goodyear Tire & Rubber Co., Second Lien Term Loan, 4.75%, 4/30/2019			220,000		222,695
		Principal Amount ($)(a)		Value ($)
HJ Heinz Co., Term Loan B2, 3.5%, 6/5/2020			248,750		251,026
MacDermid, Inc., First Lien Term Loan, 4.0%, 6/8/2020			54,725		55,221
MEG Energy Corp., Term Loan, 3.75%, 3/31/2020			258,026		259,961
NRG Energy, Inc., Term Loan B, 2.75%, 7/2/2018			118,423		118,310
Par Pharmaceutical Companies, Inc., Term Loan B, 4.25%, 9/30/2019			118,503		119,392
Pilot Travel Centers LLC:
Term Loan B, 3.75%, 3/30/2018			89,829		90,137
Term Loan B2, 4.25%, 8/7/2019			335,750		337,850
Quebecor Media, Inc., Term Loan B1, 3.25%, 8/17/2020			89,775		89,270
Samson Investment Co., Second Lien Term Loan, 6.0%, 9/25/2018			175,000		175,875
Tallgrass Operations LLC:
Term Loan B, 4.25%, 11/13/2018			51,260		51,660
Term Loan, 5.25%, 11/13/2018			109,748		110,605
Travelport LLC, Second Lien Term Loan, 9.5%, 1/29/2016			5,040		5,231
Univision Communications, Inc., Term Loan, 4.5%, 3/2/2020			59,509		59,886
Valeant Pharmaceuticals International, Inc.:
Term Loan B, 3.75%, 2/13/2019			158,794		160,095
Term Loan B, 3.75%, 12/11/2019			133,982		135,142
Total Loan Participations and Assignments (Cost $3,039,477)					3,055,991
Municipal Bonds and Notes 1.4%
Chicago, IL, Airport Revenue, O'Hare International Airport, Series B, 6.0%, 1/1/2041			145,000		155,955
Massachusetts, State School Building Authority, Sales Tax Revenue, Qualified School Construction Bond, Series A, 4.885%, 7/15/2028			300,000		303,426
Orlando & Orange County, FL, Expressway Authority Revenue, Series C, 5.0%, 7/1/2040			145,000		146,040
Port Authority of New York & New Jersey, 4.926%, 10/1/2051			260,000		245,471
Total Municipal Bonds and Notes (Cost $850,852)					850,892
Convertible Bond 0.4%
Materials
GEO Specialty Chemicals, Inc., 144A, 7.5%, 3/31/2015 (Cost $118,762)			120,175		232,803
Preferred Security 0.1%
Materials
Hercules, Inc., 6.5%, 6/30/2029 (Cost $59,311)			95,000		82,650

	Shares		Value ($)
Common Stocks 0.1%
Consumer Discretionary 0.0%
Dawn Holdings, Inc.* (f)		1		4,221
Trump Entertainment Resorts, Inc.*		6		0
Vertis Holdings, Inc.*		63		0
				4,221
Industrials 0.0%
Congoleum Corp.*		2,500		0
Materials 0.1%
GEO Specialty Chemicals, Inc.*		2,058		1,531
Wolverine Tube, Inc.*		778		25,090
				26,621
Total Common Stocks (Cost $45,222)				30,842
Preferred Stock 0.1%
Financials
Ally Financial, Inc., Series G, 144A, 7.0% (Cost $56,381)		60		57,606
Warrants 0.0%
Consumer Discretionary 0.0%
Reader's Digest Association, Inc., Expiration Date 2/19/2014*		159		0
Materials 0.0%
GEO Specialty Chemicals, Inc., Expiration Date 3/31/2015*		11,138		8,200
Hercules Trust II, Expiration Date 3/31/2029*		85		898
				9,098
Total Warrants (Cost $17,432)				9,098
Exchange-Traded Fund 1.3%
SPDR Barclays Convertible Securities (Cost $759,882)		17,300		808,429

	Contract Amount		Value ($)
Call Options Purchased 0.4%
Options on Interest Rate Swap Contracts
Pay Fixed Rate — 3.72 % – Receive Floating — LIBOR, Swap Expiration Date 4/22/2026, Option Expiration Date 4/20/20161		1,300,000		86,018
Pay Fixed Rate — 4.19% – Receive Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172		1,500,000		94,471
Pay Fixed Rate — 4.32% – Receive Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20173		1,400,000		80,993
Total Call Options Purchased (Cost $191,320)				261,482
Put Options Purchased 0.0%
Options on Interest Rate Swap Contracts
Receive Fixed Rate — 2.19% – Pay Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20172		1,500,000		6,681
Receive Fixed Rate — 2.32% – Pay Floating — LIBOR, Swap Expiration Date 2/3/2027, Option Expiration Date 2/1/20173		1,400,000		7,534
Total Put Options Purchased (Cost $98,573)				14,215

	Shares		Value ($)
Securities Lending Collateral 1.5%
Daily Assets Fund Institutional, 0.08% (g) (h) (Cost $927,648)		927,648		927,648
Cash Equivalents 1.7%
Central Cash Management Fund, 0.05% (g) (Cost $1,020,194)		1,020,194		1,020,194

	% of Net Assets			Value ($)
Total Investment Portfolio (Cost $61,705,325)†		101.6			61,937,943
Other Assets and Liabilities, Net		(1.6	)		(980,934	)
Net Assets		100.0			60,957,009

The following table represents bonds that are in default:

Security	Coupon			Maturity Date	Principal Amount		Cost ($)		Value ($)
ERC Ireland Preferred Equity Ltd.*		7.69	%	2/15/2017	EUR	88,319		120,275		0
Hellas Telecommunications Finance*		8.227	%	7/15/2015	EUR	109,187		32,169		0
								152,444		0

* Non-income producing security.

** Floating rate securities' yields vary with a designated market index or market rate, such as the coupon-equivalent of the U.S. Treasury Bill rate. These securities are shown at their current rate as of December 31, 2013.

***These securities are shown at their current rate as of December 31, 2013.

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

† The cost for federal income tax purposes was $61,712,106. At December 31, 2013, net unrealized appreciation for all securities based on tax cost was $225,837. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $2,170,821 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $1,944,984.

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

(b) All or a portion of these securities were on loan. In addition, "Other Assets and Liabilities, Net" may include pending sales that are also on loan. The value of securities loaned at December 31, 2013 amounted to $888,134, which is 1.5% of net assets.

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

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

(e) At December 31, 2013, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.

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

Schedule of Restricted Securities	Acquisition Date	Cost ($)		Value ($)		Value as % of Net Assets
Dawn Holdings, Inc.*	August 2013		5,273		4,221		.01

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

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

144A: Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

CLO: Collateralized Loan Obligation

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

LIBOR: London Interbank Offered Rate

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

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

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

REIT: Real Estate Investment Trust

SPDR: Standard & Poor's Depositary Receipt

The Fund can invest in certain Senior Loan agreements that include the obligation to make additional loans in certain circumstances. The Fund reserves against such contingent obligations by segregating cash and liquid securities. At December 31, 2013, the Fund had an unfunded loan commitment of $50,000, which could be extended at the option of the borrower, pursuant to the following loan agreement:

Borrower	Unfunded Loan Commitment ($)		Value ($)		Unrealized Depreciation ($)
Tallgrass Operations LLC, Term Delay Draw, 11/13/2017		50,000		49,875		(125	)

At December 31, 2013, open futures contracts purchased were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Depreciation ($)
5 Year U.S. Treasury Note	USD	3/31/2014		46		5,488,375		(34,917	)

At December 31, 2013, open futures contracts sold were as follows:

Futures	Currency	Expiration Date	Contracts		Notional Value ($)		Unrealized Appreciation ($)
10 Year Japanese Government Bond	JPY	3/11/2014		1		1,360,934		7,910
90 Day Eurodollar	USD	12/14/2015		9		2,224,688		2,108
U.S. Treasury Long Bond	USD	3/20/2014		4		513,250		8,992
Ultra Long U.S. Treasury Bond	USD	3/20/2014		11		1,498,750		11,790
Total unrealized appreciation								30,800

At December 31, 2013, open written options contracts were as follows:

Options on Interest Rate Swap Contracts	Swap Effective/ Expiration Date	Contract Amount			Option Expiration Date	Premiums Received ($)		Value ($) (i)
Call Options Receive Fixed — 3.19% – Pay Floating — LIBOR	2/3/2017 2/3/2027		700,000	2	2/1/2017		50,400		(79,535	)
Receive Fixed — 3.32% – Pay Floating — LIBOR	2/3/2017 2/3/2027		700,000	3	2/1/2017		50,631		(74,181	)
Receive Fixed — 4.22% – Pay Floating — LIBOR	4/22/2016 4/22/2026		1,300,000	1	4/20/2016		46,345		(59,015	)
Total Call Options							147,376		(212,731	)
Put Options Pay Fixed — 3.19% – Receive Floating — LIBOR	2/3/2017 2/3/2027		700,000	2	2/1/2017		50,400		(11,569	)
Pay Fixed — 3.32% – Receive Floating — LIBOR	2/3/2017 2/3/2027		700,000	3	2/1/2017		50,631		(13,400	)
Total Put Options							101,031		(24,969	)
Total							248,407		(237,700	)

(i) Unrealized appreciation on written options on interest rate swap contracts at December 31, 2013 was $10,707.

At December 31, 2013, open credit default swap contracts sold were as follows:

Effective/ Expiration Dates	Notional Amount ($) (j)			Fixed Cash Flows Received			Underlying Debt Obligation/ Quality Rating (k)	Value ($)		Upfront Payments Paid/ (Received) ($)			Unrealized Appreciation ($)
6/21/2010 9/20/2015		90,000	4		5.0	%	Ford Motor Co., 6.5%, 8/1/2018, BBB–		7,296		(1,604	)		8,900
3/21/2011 6/20/2016		120,000	2		5.0	%	HCA, Inc., 6.375%, 1/15/2015, B–		12,039		2,217			9,822
12/20/2011 3/20/2017		60,000	5		5.0	%	CIT Group, Inc., 5.5%, 2/15/2019, BB–		7,234		1,627			5,607
9/20/2012 12/20/2017		75,000	6		5.0	%	General Motors Corp., 3.3%, 12/20/2017, BB+		11,030		4,425			6,605
6/20/2013 9/20/2018		40,000	5		5.0	%	DISH DBS Corp., 6.75%, 6/1/2021, BB–		5,505		3,372			2,133
6/20/2013 9/20/2018		125,000	7		5.0	%	HCA, Inc., 8.0%, 10/1/2018, B–		16,386		9,429			6,957
6/20/2013 9/20/2018		100,000	4		5.0	%	Sprint Communications, Inc., 6.0%, 12/1/2016, BB–		11,403		5,606			5,797
Total unrealized appreciation														45,821

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

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

At December 31, 2013, open interest rate swap contracts were as follows:

Centrally Cleared Swaps
Effective/ Expiration Dates	Notional Amount ($)		Cash Flows Paid by the Fund	Cash Flows Received by the Fund	Value ($)			Unrealized Appreciation/ (Depreciation) ($)
12/30/2014 12/30/2016		1,900,000	Fixed — 1.173%	Floating —- LIBOR		(991	)		(1,228	)
12/30/2014 12/30/2024		2,300,000	Fixed — 3.524%	Floating —- LIBOR		5,146			5,383
12/30/201412/30/2019		500,000	Floating —- LIBOR	Fixed — 2.522%		(365	)		102
12/30/2014 12/30/2034		100,000	Floating —- LIBOR	Fixed — 4.01%		51			765
12/30/2014 12/30/2044		200,000	Floating —- LIBOR	Fixed — 4.081%		(1,770	)		(1,518	)
Total net unrealized appreciation									3,504

Counterparties:

1 Nomura International PLC

2 JPMorgan Chase Securities, Inc.

3 BNP Paribas

4 Bank of America

5 Credit Suisse

6 UBS AG

7 The Goldman Sachs & Co.

At December 31, 2013, the Fund had the following open forward foreign currency exchange contracts:

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Appreciation ($)		Counterparty
JPY	130,000,000	USD	1,259,226	1/6/2014		24,776	Citigroup. Inc.
CAD	1,572,402	NZD	1,800,000	1/6/2014		205	Australia & New Zealand Banking Group Ltd.
ZAR	9,500,000	USD	917,853	1/17/2014		14,038	UBS AG
NOK	3,800,000	USD	639,400	1/23/2014		13,354	UBS AG
CAD	2,674,672	USD	2,590,356	1/23/2014		73,685	Barclays Bank PLC
SGD	856,500	USD	692,159	1/23/2014		13,451	JPMorgan Chase Securities, Inc.
USD	883,160	AUD	1,000,000	1/23/2014		8,572	Commonwealth Bank of Australia
AUD	1,000,000	USD	892,075	1/23/2014		343	Nomura International PLC
AUD	1,734,230	USD	1,672,843	1/23/2014		126,375	UBS AG
KRW	779,000,000	USD	736,191	2/18/2014		304	JPMorgan Chase Securities, Inc.
Total unrealized appreciation						275,103

Contracts to Deliver		In Exchange For		Settlement Date	Unrealized Depreciation ($)			Counterparty
USD	1,263,802	JPY	130,000,000	1/6/2014		(29,351	)	Nomura International PLC
EUR	105,000	USD	144,196	1/15/2014		(252	)	Citigroup. Inc.
USD	716,586	SGD	900,000	2/18/2014		(3,397	)	Commonwealth Bank of Australia
Total unrealized depreciation						(33,000	)

Currency Abbreviations

ARS Argentine Peso

AUD Australian Dollar

BRL Brazilian Real

CAD Canadian Dollar

EUR Euro

JPY Japanese Yen

KRW South Korean Won

MXN Mexican Peso

NOK Norwegian Krone

NZD New Zealand Dollar

RUB Russian Ruble

SGD Singapore Dollar

USD United States Dollar

ZAR South African Rand

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

Fair Value Measurements

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 December 31, 2013 in valuing the Fund's investments. For information on the Fund's policy regarding the valuation of investments, please refer to the Security Valuation section of Note A in the accompanying Notes to Financial Statements.

Assets	Level 1			Level 2			Level 3		Total
Fixed Income Investments (l)
Corporate Bonds	$	—		$	36,262,465		$	0	$	36,262,465
Mortgage-Backed Securities Pass-Throughs		—			1,030,469			—		1,030,469
Asset-Backed		—			507,190			—		507,190
Commercial Mortgage-Backed Securities		—			2,048,272			—		2,048,272
Collateralized Mortgage Obligations		—			2,978,581			—		2,978,581
Government & Agency Obligations		—			11,759,116			—		11,759,116
Loan Participations and Assignments		—			3,055,991			—		3,055,991
Municipal Bonds and Notes		—			850,892			—		850,892
Convertible Bonds		—			—			232,803		232,803
Preferred Security		—			82,650			—		82,650
Common Stocks (l)		—			—			30,842		30,842
Preferred Stock (l)		—			57,606			—		57,606
Warrants (l)		—			—			9,098		9,098
Exchange-Traded Fund		808,429			—			—		808,429
Short-Term Investments (l)		1,947,842			—			—		1,947,842
Derivatives (m) Purchased Options		—			275,697			—		275,697
Futures Contracts		30,800			—			—		30,800
Credit Default Swap Contracts		—			45,821			—		45,821
Interest Rate Swap Contracts		—			6,250			—		6,250
Forward Foreign Currency Exchange Contracts		—			275,103			—		275,103
Total	$	2,787,071		$	59,236,103		$	272,743	$	62,295,917
Liabilities	Level 1			Level 2			Level 3		Total
Unfunded Loan Commitment	$	—		$	(125	)	$	—	$	(125	)
Derivatives (m) Futures Contracts		(34,917	)		—			—		(34,917	)
Written Options		—			(237,700	)		—		(237,700	)
Interest Rate Swap Contracts		—			(2,746	)		—		(2,746	)
Forward Foreign Currency Exchange Contracts		—			(33,000	)		—		(33,000	)
Total	$	(34,917	)	$	(273,571	)	$	—	$	(308,488	)

During the year ended December 31, 2013, the amount of transfers between Level 2 and Level 3 was $35. Investments were transferred from Level 2 to Level 3 because of the lack of observable market data due to a decrease in market activity.

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

(l) See Investment Portfolio for additional detailed categorizations.

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

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

Statement of Assets and Liabilities

as of December 31, 2013
Assets
Investments: Investments in non-affiliated securities, at value (cost $59,757,483) — including $888,134 of securities loaned	$	59,990,101
Investment in Daily Assets Fund Institutional (cost $927,648)*		927,648
Investment in Central Cash Management Fund (cost $1,020,194)		1,020,194
Total investments in securities, at value (cost $61,705,325)		61,937,943
Cash		39,571
Foreign currency, at value (cost $106,381)		106,091
Receivable for investments sold		17,344
Receivable for Fund shares sold		49,550
Dividends receivable		8,367
Interest receivable		796,749
Receivable for variation margin on futures contracts		11,254
Receivable for variation margin on centrally cleared swaps		2,071
Unrealized appreciation on swap contracts		45,821
Unrealized appreciation on forward foreign currency exchange contracts		275,103
Upfront payments paid on swap contracts		26,676
Due from Advisor		3,676
Other assets		1,690
Total assets	$	63,321,906
Liabilities
Payable upon return of securities loaned		927,648
Payable for investments purchased		40,753
Payable for investments purchased — when-issued/delayed delivery securities		1,064,615
Payable for Fund shares redeemed		73
Options written, at value (premiums received $248,407)		237,700
Net payable for pending swaps		9,476
Unrealized depreciation on forward foreign currency exchange contracts		33,000
Unrealized depreciation on unfunded loan commitment		125
Upfront payments received on swap contracts		1,604
Accrued Trustees' fees		1,546
Other accrued expenses and payables		48,357
Total liabilities		2,364,897
Net assets, at value	$	60,957,009
Net Assets Consist of
Undistributed net investment income		2,602,311
Net unrealized appreciation (depreciation) on: Investments		232,618
Swap contracts		49,325
Futures		(4,117	)
Unfunded loan commitment		(125	)
Foreign currency		251,317
Written options		10,707
Accumulated net realized gain (loss)		(1,037,195	)
Paid-in-capital		58,852,168
Net assets, at value	$	60,957,009
Class A Net Asset Value, offering and redemption price per share ($60,957,009 ÷ 5,284,551 outstanding shares of beneficial interest, no par value, unlimited number of shares authorized)	$	11.53

* Represents collateral on securities loaned.

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

Statement of Operations

for the year ended December 31, 2013
Investment Income
Income: Interest (net of foreign taxes withheld of $1,164)	$	3,393,333
Dividends		25,563
Income distributions — Central Cash Management Fund		4,729
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates		3,880
Total income		3,427,505
Expenses: Management fee		384,985
Administration fee		69,997
Services to shareholders		882
Custodian fee		75,335
Audit and tax fees		71,796
Legal fees		12,447
Reports to shareholders		34,546
Pricing fee		56,183
Trustees' fees and expenses		4,887
Other		4,134
Total expenses before expense reductions		715,192
Expense reductions		(198,692	)
Total expenses after expense reductions		516,500
Net investment income (loss)		2,911,005
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from: Investments		(386,939	)
Swap contracts		236,214
Futures		(909,441	)
Written options		65,881
Foreign currency		(192,341	)
		(1,186,626	)
Change in net unrealized appreciation (depreciation) on: Investments		(2,656,746	)
Swap contracts		(106,914	)
Unfunded loan commitment		(243	)
Futures		27,844
Written options		(129,472	)
Foreign currency		246,090
		(2,619,441	)
Net gain (loss)		(3,806,067	)
Net increase (decrease) in net assets resulting from operations	$	(895,062	)

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

Statement of Changes in Net Assets

	Years Ended December 31,
Increase (Decrease) in Net Assets	2013			2012
Operations: Net investment income	$	2,911,005		$	3,374,357
Net realized gain (loss)		(1,186,626	)		2,896,387
Change in net unrealized appreciation (depreciation)		(2,619,441	)		2,483,404
Net increase (decrease) in net assets resulting from operations		(895,062	)		8,754,148
Distributions to shareholders from: Net investment income: Class A		(3,703,120	)		(4,311,037	)
Net realized gains: Class A		(2,113,421	)		(143,246	)
Total distributions		(5,816,541	)		(4,454,283	)
Fund share transactions: Class A Proceeds from shares sold		8,233,284			8,860,430
Reinvestment of distributions		5,816,541			4,454,283
Payments for shares redeemed		(19,881,192	)		(13,217,365	)
Net increase (decrease) in net assets from Class A share transactions		(5,831,367	)		97,348
Increase (decrease) in net assets		(12,542,970	)		4,397,213
Net assets at beginning of period		73,499,979			69,102,766
Net assets at end of period (including undistributed net investment income of $2,602,311 and $3,595,395, respectively)	$	60,957,009		$	73,499,979
Other Information
Class A Shares outstanding at beginning of period		5,832,490			5,808,640
Shares sold		666,814			731,149
Shares issued to shareholders in reinvestment of distributions		491,677			381,360
Shares redeemed		(1,706,430	)		(1,088,659	)
Net increase (decrease) in Class A shares		(547,939	)		23,850
Shares outstanding at end of period		5,284,551			5,832,490

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

Financial Highlights

	Years Ended December 31,
Class A		2013			2012			2011			2010			2009
Selected Per Share Data
Net asset value, beginning of period	$	12.60		$	11.90		$	11.96		$	11.61		$	10.03
Income (loss) from investment operations: Net investment incomea		.49			.57			.63			.66			.63
Net realized and unrealized gain (loss)		(.59	)		.92			(.01	)		.47			1.50
Total from investment operations		(.10	)		1.49			.62			1.13			2.13
Less distributions from: Net investment income		(.62	)		(.76	)		(.68	)		(.78	)		(.55	)
Net realized gains		(.35	)		(.03	)		—			—			—
Total distributions		(.97	)		(.79	)		(.68	)		(.78	)		(.55	)
Net asset value, end of period	$	11.53		$	12.60		$	11.90		$	11.96		$	11.61
Total Return (%)b		(1.04	)		13.08			5.31			10.05			22.73
Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions)		61			73			69			76			74
Ratio of expenses before expense reductions (%)		1.02			.99			.99			.95			.86
Ratio of expenses after expense reductions (%)		.74			.77			.79			.86			.80
Ratio of net investment income (%)		4.16			4.72			5.38			5.62			5.96
Portfolio turnover rate (%)		183			164			144			167			370
a Based on average shares outstanding during the period. b Total return would have been lower had certain expenses not been reduced.

Notes to Financial Statements

A. Organization and Significant Accounting Policies

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

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

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

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.

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

Equity securities and exchange-traded funds ("ETFs") are valued at the most recent sale price or official closing price reported on the exchange (U.S. or foreign) or over-the-counter market on which they trade. Securities or ETFs for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation. Equity securities and ETFs are generally categorized as Level 1.

Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost, which approximates value, and are categorized as Level 2. Investments in open-end investment companies are valued at their net asset value each business day and are categorized as Level 1.

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

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

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

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

Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Board and are generally categorized as Level 3. In accordance with the Fund's valuation procedures, factors used in determining value may include, but are not limited to, the type of the security; the size of the holding; the initial cost of the security; the existence of any contractual restrictions on the security's disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); an analysis of the company's or issuer's financial statements; an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold; and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination and the movement of the market in which the security is normally traded. The value determined under these procedures may differ from published values for the same securities.

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

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

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

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

As of December 31, 2013, the Fund had securities on loan. The value of the related collateral exceeded the value of the securities loaned at period end.

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

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

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

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

Additionally, 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 December 31, 2013, the Fund had net tax basis capital loss carryforwards of approximately $1,042,000, which may be applied against realized net taxable capital gains indefinitely, including short-term losses ($671,000) and long-term losses ($371,000).

The Fund has reviewed the tax positions for the open tax years as of December 31, 2013 and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain open subject to examination by the Internal Revenue Service.

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

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

At December 31, 2013, the Fund's components of distributable earnings on a tax basis were as follows:

Undistributed ordinary income*	$	2,880,005
Capital loss carryforwards	$	(1,042,000	)
Unrealized appreciation (depreciation) on investments	$	225,837

In addition, the tax character of distributions paid by the Fund is summarized as follows:

	Years Ended December 31,
	2013		2012
Distributions from ordinary income*	$	5,146,797	$	4,311,037
Distributions from long-term capital gains	$	669,744	$	143,246

* For tax purposes, short-term capital gain distributions are considered ordinary income distributions.

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

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

Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Realized gains and losses from investment transactions are recorded on an identified cost basis. Proceeds from litigation payments, if any, are included in net realized gain (loss) from investments. All discounts and premiums are accreted/amortized for both tax and financial reporting purposes for the Fund, with the exception of securities in default of principal.

B. Derivative Instruments

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

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

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

Interest Rate Swaps. Interest rate swaps are agreements in which the Fund agrees to pay to the counterparty a fixed rate payment in exchange for the counterparty agreeing to pay to the Fund a variable rate payment, or the Fund agrees to receive from the counterparty a fixed rate payment in exchange for the counterparty agreeing to receive from the Fund a variable rate payment. The payment obligations are based on the notional amount of the swap. For the year ended December 31, 2013, the Fund entered into interest rate swap agreements to gain exposure to different parts of the yield curve while managing overall duration.

A summary of the open interest rate swap contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in interest rate swap contracts had a total notional amount generally indicative of a range from $4,500,000 to $5,000,000.

Credit Default Swaps. Credit default swaps are agreements between a buyer and a seller of protection against predefined credit events for the reference entity. The Fund may enter into credit default swaps to gain exposure to an underlying issuer's credit quality characteristics without directly investing in that issuer or to hedge against the risk of a credit event on debt securities. As a seller of a credit default swap, the Fund is required to pay the par (or other agreed-upon) value of the referenced entity to the counterparty with the occurrence of a credit event by a third party, such as a U.S. or foreign corporate issuer, on the reference entity, which would likely result in a loss to the Fund. In return, the Fund receives from the counterparty a periodic stream of payments over the term of the swap provided that no credit event has occurred. If no credit event occurs, the Fund keeps the stream of payments with no payment obligations. The Fund may also buy credit default swaps, in which case the Fund functions as the counterparty referenced above. This involves the risk that the swap may expire worthless. It also involves counterparty risk that the seller may fail to satisfy its payment obligations to the Fund with the occurrence of a credit event. When the Fund sells a credit default swap, it will cover its commitment. This may be achieved by, among other methods, maintaining cash or liquid assets equal to the aggregate notional value of the reference entities for all outstanding credit default swaps sold by the Fund. For the year ended December 31, 2013, the Fund entered into credit default swap agreements to gain exposure to the underlying issuer's credit quality characteristics.

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

A summary of the open credit default swap contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in credit default swap contracts sold had a total notional value generally indicative of a range from $415,000 to $2,195,000.

Options. An option contract is a contract in which the writer (seller) of the option grants the buyer of the option, upon payment of a premium, the right to purchase from (call option), or sell to (put option), the writer a designated instrument at a specified price within a specified period of time. The Fund may write or purchase interest rate swaption agreements which are options to enter into a pre-defined swap agreement. The interest rate swaption agreement will specify whether the buyer of the swaption will be a fixed-rate receiver or a fixed-rate payer upon exercise. Certain options, including options on indices, will require cash settlement by the Fund if the option is exercised. For the year ended December 31, 2013, the Fund entered into options on interest rate futures and on interest rates swaps in order to hedge against potential adverse interest rate movements of portfolio assets.

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

A summary of the open purchased option contracts as of December 31, 2013 is included in the Fund's Investment Portfolio. A summary of open written option contracts is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in written option contracts had a total value generally indicative of a range from approximately $224,000 to $561,000, and purchased option contracts had a total value generally indicative of a range from approximately $251,000 to $423,000.

Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). For the year ended December 31, 2013, the Fund entered into interest rate futures to gain exposure to different parts of the yield curve while managing overall duration and for non-hedging purposes to seek to enhance potential gains.

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

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

A summary of the open futures contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in futures contracts purchased had a total notional value generally indicative of a range from approximately $4,855,000 to $7,631,000, and the investment in futures contracts sold had a total notional value generally indicative of a range from approximately $2,488,000 to $28,086,000.

Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange contract ("forward currency contract") is a commitment to purchase or sell a foreign currency at the settlement date at a negotiated rate. For the year ended December 31, 2013, the Fund entered into forward currency contracts in order to hedge against anticipated currency market changes and for non-hedging purposes to seek to enhance potential gains.

Forward currency contracts are valued at the prevailing forward exchange rate of the underlying currencies and unrealized gain (loss) is recorded daily. On the settlement date of the forward currency contract, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value of the contract at the time it was closed. Certain risks may arise upon entering into forward currency contracts from the potential inability of counterparties to meet the terms of their contracts. The maximum counterparty credit risk to the Fund is measured by the unrealized gain on appreciated contracts. Additionally, when utilizing forward currency contracts to hedge, the Fund gives up the opportunity to profit from favorable exchange rate movements during the term of the contract.

A summary of the open forward currency contracts as of December 31, 2013 is included in a table following the Fund's Investment Portfolio. For the year ended December 31, 2013, the investment in forward currency contracts short vs. U.S. dollars had a total contract value generally indicative of a range from approximately $6,896,000 to $19,799,000, and the investment in forward currency contracts long vs. U.S. dollars had a total contract value generally indicative of a range from approximately $2,431,000 to $14,678,000. The investment in forward currency contracts long vs. other foreign currencies sold had a total contract value generally indicative of a range from $0 to approximately $4,795,000.

The following tables summarize the value of the Fund's derivative instruments held as of December 31, 2013 and the related location in the accompanying Statement of Assets and Liabilities, presented by primary underlying risk exposure:

Asset Derivatives	Purchased Options		Forward Contracts		Swap Contracts		Futures Contracts		Total
Interest Rate Contracts (a) (b)	$	275,697	$	—	$	6,250	$	30,800	$	312,747
Credit Contracts (b)		—		—		45,821		—		45,821
Foreign Exchange Contracts (c)		—		275,103		—		—		275,103
	$	275,697	$	275,103	$	52,071	$	30,800	$	633,671
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative appreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Investments in securities, at value (includes purchased options) and unrealized appreciation on swap contracts, respectively (c) Unrealized appreciation on forward foreign currency exchange contracts

Liability Derivatives	Written Options			Forward Contracts			Swap Contracts			Futures Contracts			Total
Interest Rate Contracts (a) (b)	$	(237,700	)	$	—		$	(2,746	)	$	(34,917	)	$	(275,363	)
Foreign Exchange Contracts (c)		—			(33,000	)		—			—			(33,000	)
	$	(237,700	)	$	(33,000	)	$	(2,746	)	$	(34,917	)	$	(308,363	)
Each of the above derivatives is located in the following Statement of Assets and Liabilities accounts: (a) Includes cumulative depreciation of futures and centrally cleared swap contracts as disclosed in the Investment Portfolio. Unsettled variation margin is disclosed separately within the Statement of Assets and Liabilities. (b) Options written, at value (c) Unrealized depreciation on forward foreign currency exchange contracts

Additionally, the amount of unrealized and realized gains and losses on derivative instruments recognized in Fund earnings during the year ended December 31, 2013 and the related location in the accompanying Statement of Operations is summarized in the following tables by primary underlying risk exposure:

Realized Gain (Loss)	Purchased Options			Written Options		Forward Contracts			Swap Contracts		Futures Contracts			Total
Interest Rate Contracts (a)	$	(5,551	)	$	65,881	$	—		$	133,959	$	(909,441	)	$	(715,152	)
Credit Contracts (a)		—			—		—			102,255		—			102,255
Foreign Exchange Contracts (b)		—			—		(193,142	)		—		—			(193,142	)
	$	(5,551	)	$	65,881	$	(193,142	)	$	236,214	$	(909,441	)	$	(806,039	)
Each of the above derivatives is located in the following Statement of Operations accounts: (a)Net realized gain (loss) from investments (includes purchased options), written options, swap contracts and futures, respectively (b) Net realized gain (loss) from foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

Change in Net Unrealized Appreciation (Depreciation)	Purchased Options		Written Options			Forward Contracts		Swap Contracts			Futures Contracts		Total
Interest Rate Contracts (a)	$	133,856	$	(129,472	)	$	—	$	(75,983	)	$	27,844	$	(43,755	)
Credit Contracts (a)		—		—			—		(30,931	)		—		(30,931	)
Foreign Exchange Contracts (b)		—		—			248,763		—			—		248,763
	$	133,856	$	(129,472	)	$	248,763	$	(106,914	)	$	27,844	$	174,077
Each of the above derivatives is located in the following Statement of Operations accounts: (a)Change in net unrealized appreciation (depreciation) on investments (includes purchased options), written options, swap contracts and futures, respectively (b) Change in net unrealized appreciation (depreciation) on foreign currency (Statement of Operations includes both forward currency contracts and foreign currency transactions)

As of December 31, 2013, the Fund has transactions subject to enforceable master netting agreements. A reconciliation of the gross amounts on the Statement of Assets and Liabilities to the net amounts by derivative type, including any collateral exposure, is included in the following tables:

Counterparty	Gross Amounts of Assets Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Received		Net Amount of Derivative Assets
Australia & New Zealand Banking Group Ltd.	$	205	$	—		$	—	$	205
Bank of America		14,697		—			—		14,697
Barclays Bank PLC		73,685		—			—		73,685
BNP Paribas		88,527		(87,581	)		—		946
Citigroup, Inc.		24,776		(252	)		—		24,524
Commonwealth Bank of Australia		8,572		(3,397	)		—		5,175
Credit Suisse		7,740		—			—		7,740
JPMorgan Chase Securities, Inc.		124,729		(91,104	)		—		33,625
Nomura International PLC		86,361		(86,361	)		—		—
The Goldman Sachs & Co.		6,957		—			—		6,957
UBS AG		160,372		—			—		160,372
Exchange Traded Futures and Swaps (b)		37,050		—			—		37,050
	$	633,671	$	(268,695	)	$	—	$	364,976
Counterparty	Gross Amounts of Liabilities Presented in the Statement of Assets and Liabilities (a)		Financial Instruments and Derivatives Available for Offset			Collateral Pledged		Net Amount of Derivative Liabilities
BNP Paribas	$	87,581	$	(87,581	)	$	—	$	—
Citigroup, Inc.		252		(252	)		—		—
Commonwealth Bank of Australia		3,397		(3,397	)		—		—
JPMorgan Chase Securities, Inc.		91,104		(91,104	)		—		—
Nomura International PLC		88,366		(86,361	)		—		2,005
Exchange Traded Futures and Swaps (b)		37,663		—			—		37,663
	$	308,363	$	(268,695	)	$	—	$	39,668

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

(b) Includes financial instruments (futures and centrally cleared swaps) which are not subject to a master netting arrangement, or another similar arrangement.

C. Purchases and Sales of Securities

During the year ended December 31, 2013, purchases and sales of investment transactions (excluding short-term investments and U.S. Treasury obligations) aggregated $122,597,564 and $135,882,746, respectively. Purchases and sales of U.S. Treasury obligations aggregated $1,324,213 and $3,843,643, respectively.

For the year ended December 31, 2013, transactions for written options on futures contracts and interest rate swap contracts were as follows:

	Contracts/ Contract Amount			Premiums
Outstanding, beginning of period		10,800,020		$	416,526
Options written		60			50,475
Options closed		(6,700,000	)		(160,350	)
Options expired		(80	)		(58,244	)
Outstanding, end of period		4,100,000		$	248,407

D. Related Parties

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

QS Investors, LLC ("QS Investors") acted as an investment subadvisor to the Fund and managed the portion of assets allocated from time to time to the Fund's global tactical asset allocation ("GTAA") overlay strategy. QS Investors was paid by the Advisor for the services QS Investors provided to the Fund. Effective on or about May 31, 2013, QS Investors no longer serves as subadvisor to the Fund, and the Fund no longer utilizes the GTAA strategy.

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

First $250 million	.550	%
Next $750 million	.520	%
Next $1.5 billion	.500	%
Next $2.5 billion	.480	%
Next $2.5 billion	.450	%
Next $2.5 billion	.430	%
Next $2.5 billion	.410	%
Over $12.5 billion	.390	%

For the period from January 1, 2013 through September 30, 2013, the Advisor had contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) at 0.73%.

Effective October 1, 2013 through April 30, 2014, the Advisor has contractually agreed to waive its fee and/or reimburse certain operating expenses to the extent necessary to maintain the operating expenses (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest expense) at 0.76%.

Accordingly, for the year ended December 31, 2013, the Advisor waived a portion of its management fee pursuant to the Investment Management Agreement aggregating $198,544, and the amount charged aggregated $186,441, which was equivalent to an annual effective rate of 0.27% of the Fund's average daily net assets.

Administration Fee. Pursuant to an Administrative Services Agreement, DIMA provides most administrative services to the Fund. For all services provided under the Administrative Services Agreement, the Fund pays DIMA an annual fee ("Administration Fee") of 0.10% of the Fund's average daily net assets, computed and accrued daily and payable monthly. For the year ended December 31, 2013, the Administration Fee was $69,997, of which $5,205 is unpaid.

Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent for the Fund. Pursuant to a sub-transfer agency agreement between DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend-paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee it receives from the Fund. For the year ended December 31, 2013, the amounts charged to the Fund by DISC aggregated $148, all of which was waived.

Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Fund. For the year ended December 31, 2013, the amount charged to the Fund by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $21,976, of which $7,196 is unpaid.

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

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

Security Lending Fees. Deutsche Bank AG serves as securities lending agent for the Fund. For the year ended December 31, 2013, the Fund incurred securities lending agent fees to Deutsche Bank AG in the amount of $431.

E. Investing in High-Yield Securities

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

F. Investing in Emerging Markets

Investing in emerging markets may involve special risks and considerations not typically associated with investing in developed markets. These risks include revaluation of currencies, high rates of inflation or deflation, repatriation restrictions on income and capital, and future adverse political, social and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls or delayed settlements, and may have prices that are more volatile or less easily assessed than those of comparable securities of issuers in developed markets.

G. Ownership of the Fund

At December 31, 2013, two participating insurance companies were owners of record of 10% or more of the total outstanding Class A shares of the Fund, each owning 64% and 33%.

H. Line of Credit

The Fund and other affiliated funds (the "Participants") share in a $375 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at a rate per annum equal to the sum of the Federal Funds Rate plus 1.25 percent plus if LIBOR exceeds the Federal Funds Rate the amount of such excess. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement. The Fund had no outstanding loans at December 31, 2013.

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of DWS Variable Series II and Shareholders of DWS Unconstrained Income VIP:

We have audited the accompanying statement of assets and liabilities, including the investment portfolio, of DWS Unconstrained Income VIP (the "Fund") (one of the funds constituting DWS Variable Series II), as of December 31, 2013, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013,by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of DWS Unconstrained Income VIP (one of the funds constituting DWS Variable Series II) at December 31, 2013, 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 then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts February 14, 2014

Information About Your Fund's Expenses (Unaudited)

As an investor of the Fund, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees and other Fund expenses. Examples of transaction costs include contract charges and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Fund and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent six-month period, the Fund limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the six-month period and held for the entire period (July 1, 2013 to December 31, 2013).

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

—Actual Fund Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Fund using the Fund's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.

— Hypothetical 5% Fund Return. This helps you to compare your Fund's ongoing expenses (but not transaction costs) with those of other mutual funds using the Fund's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Fund return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.

Expenses and Value of a $1,000 Investment for the six months ended December 31, 2013
Actual Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,029.50
Expenses Paid per $1,000*	$	3.84
Hypothetical 5% Fund Return	Class A
Beginning Account Value 7/1/13	$	1,000.00
Ending Account Value 12/31/13	$	1,021.42
Expenses Paid per $1,000*	$	3.82

* Expenses are equal to the Fund's annualized expense ratio, 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 Ratio	Class A
DWS Variable Series II — DWS Unconstrained Income VIP	.75%

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

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

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

Tax Information (Unaudited)

The Fund paid distributions $0.12 per share from net long-term capital gains during the year ended December 31, 2013.

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 contact your insurance provider.

Proxy Voting

The Trust's policies and procedures for voting proxies for portfolio securities and information about how the Trust voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — sec.gov. To obtain a written copy of the Trust's policies and procedures without charge, upon request, call us toll free at (800) 728-3337.

Advisory Agreement Board Considerations and Fee Evaluation

The Board of Trustees approved the renewal of DWS Unconstrained Income VIP's investment management agreement (the "Agreement") with Deutsche Investment Management Americas Inc. ("DIMA") in September 2013.

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

— In September 2013, all but one of the Fund's Trustees were independent of DIMA and its affiliates.

— The Trustees met frequently during the past year to discuss fund matters and dedicated a substantial amount of time to contract review matters. Over the course of several months, the Board's Contract Committee, in coordination with the Board's Fixed Income and Asset Allocation Oversight Committee, reviewed comprehensive materials received from DIMA, independent third parties and independent counsel. These materials included an analysis of the Fund's performance, fees and expenses, and profitability compiled by a fee consultant retained by the Fund's Independent Trustees (the "Fee Consultant"). The Board also received extensive information throughout the year regarding performance of the Fund.

— The Independent Trustees regularly meet privately with their independent counsel to discuss contract review and other matters. In addition, the Independent Trustees were also 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 distribution agreement, administrative services agreement, transfer agency agreement and other material service agreements.

— Based on its evaluation of the information provided, the Contract Committee presented its findings and recommendations to the Board. The Board then reviewed the Contract Committee's findings and recommendations.

In connection with the contract review process, the Contract Committee and the Board considered the factors discussed below, among others. The Board also considered that DIMA and its predecessors have managed the Fund since its inception, and the Board believes that a long-term relationship with a capable, conscientious advisor is in the best interests of the Fund. The Board considered, generally, that shareholders chose to invest or remain invested in the Fund knowing that DIMA managed the Fund, and that the Agreement was approved by the Fund's shareholders. DIMA is part of Deutsche Bank AG, a major global banking institution that is engaged in a wide range of financial services. The Board believes that there are advantages to being part of a global asset management business that offers a wide range of investing expertise and resources, including hundreds of portfolio managers and analysts with research capabilities in many countries throughout the world.

As part of the contract review process, the Board carefully considered the fees and expenses of each DWS fund overseen by the Board in light of the fund's performance. In many cases, this led to a negotiation with DIMA of lower expense caps as part of the 2012 and 2013 contract review processes than had previously been in place. As part of these negotiations, the Board indicated that it would consider relaxing these new lower caps in future years following sustained improvements in performance, among other considerations.

In June 2012, Deutsche Bank AG ("DB"), DIMA's parent company, announced that DB would combine its Asset Management (of which DIMA was a part) and Wealth Management divisions. DB has advised the Independent Trustees that the U.S. asset management business is a critical and integral part of DB, and that it has, and will continue to, reinvest a significant portion of the substantial savings it expects to realize by combining its Asset Management and Wealth Management divisions into the new Asset and Wealth Management ("AWM") division, including ongoing enhancements to its investment capabilities. DB also has confirmed its commitment to maintaining strong legal and compliance groups within the AWM division.

While shareholders may focus primarily on fund performance and fees, the Fund's Board considers these and many other factors, including the quality and integrity of DIMA's personnel and such other issues as back-office operations, fund valuations, and compliance policies and procedures.

Nature, Quality and Extent of Services. The Board considered the terms of the Agreement, including the scope of advisory services provided under the Agreement. The Board noted that, under the Agreement, DIMA provides portfolio management services to the Fund and that, pursuant to a separate administrative services agreement, DIMA provides administrative services to the Fund. The Board considered the experience and skills of senior management and investment personnel, the resources made available to such personnel, the ability of DIMA to attract and retain high-quality personnel, and the organizational depth and stability of DIMA. The Board reviewed the Fund's performance over short-term and long-term periods and compared those returns to various agreed-upon performance measures, including market indices and a peer universe compiled by the Fee Consultant using information supplied by Morningstar Direct ("Morningstar"), an independent fund data service. The Board also noted that it has put into place a process of identifying "Focus Funds" (e.g., funds performing poorly relative to their benchmark or a peer universe compiled by an independent fund data service), and receives more frequent reporting and information from DIMA regarding such funds, along with DIMA's remedial 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, 2012, the Fund's performance (Class A shares) was in the 2nd quartile, 2nd quartile and 1st quartile, respectively, of the applicable Morningstar universe (the 1st quartile being the best performers and the 4th quartile being the worst performers). The Board also observed that the Fund has outperformed its benchmark in the one-, three- and five-year periods ended December 31, 2012.

Fees and Expenses. The Board considered the Fund's investment management fee schedule, operating expenses and total expense ratios, and comparative information provided by Lipper Inc. ("Lipper") and the Fee Consultant regarding investment management fee rates paid to other investment advisors by similar funds (1st quartile being the most favorable and 4th quartile being the least favorable). With respect to management fees paid to other investment advisors by similar funds, the Board noted that the contractual fee rates paid by the Fund, which include a 0.10% fee paid to DIMA under the Fund's administrative services agreement, were equal to the median of the applicable Lipper peer group (based on Lipper data provided as of December 31, 2012). The Board noted that the Fund's Class A shares total (net) operating expenses were expected to be higher than the median (3rd quartile) of the applicable Lipper expense universe (based on Lipper data provided as of December 31, 2012, and analyzing Lipper expense universe Class A (net) expenses less any applicable 12b-1 fees) ("Lipper Universe Expenses"). The Board considered the Fund's management fee rate as compared to fees charged by DIMA to comparable funds and considered differences between the Fund and the comparable funds. The Board also considered how the Fund's total (net) operating expenses compared to the total (net) operating expenses of a more customized peer group selected by Lipper (based on such factors as asset size). The Board also noted that the expense limitation agreed to by DIMA helped to ensure that the Fund's total (net) operating expenses would remain competitive.

The information considered by the Board as part of its review of management fees included information regarding fees charged by DIMA and its affiliates to similar institutional accounts and to similar funds offered primarily to European investors ("DWS Europe funds"), in each case as applicable. The Board observed that advisory fee rates for institutional accounts generally were lower than the management fees charged by similarly managed DWS U.S. mutual funds ("DWS Funds"), but also took note of the differences in services provided to DWS Funds as compared to institutional accounts. In the case of DWS Europe funds, the Board observed that fee rates for DWS Europe funds generally were higher than for similarly managed DWS Funds, but noted that differences in the types of services provided to DWS Funds relative to DWS Europe funds made it difficult to compare such fees.

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

Profitability. The Board reviewed detailed information regarding revenues received by DIMA under the Agreement. The Board considered the estimated costs and pre-tax profits realized by DIMA from advising the DWS 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 DWS 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 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 DWS fund complex (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 many 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 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 and any fees received by an affiliate of DIMA for distribution services. The Board also considered benefits to DIMA related to brokerage and soft-dollar allocations, including allocating brokerage to pay for research generated by parties other than the executing broker dealers, which pertain primarily to funds investing in equity securities, along with the incidental public relations benefits to DIMA related to DWS Funds advertising and cross-selling opportunities among DIMA products and services. The Board concluded that management fees were reasonable in light of these fallout benefits.

Compliance. The Board considered the significant attention and resources dedicated by DIMA to documenting and enhancing its compliance processes in recent years. The Board noted in particular (i) the experience and seniority of both DIMA's chief compliance officer and the Fund's chief compliance officer; (ii) the large number of DIMA compliance personnel; and (iii) the substantial commitment of resources by DIMA and its affiliates to compliance matters.

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

Board Members and Officers

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 Kenneth C. Froewiss, Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078. 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
Kenneth C. Froewiss (1945) Chairperson since 2013, and Board Member since 2001	Adjunct Professor of Finance, NYU Stern School of Business (September 2009–present; Clinical Professor from 1997–September 2009); Member, Finance Committee, Association for Asian Studies (2002–present); Director, Mitsui Sumitomo Insurance Group (US) (2004–present); prior thereto, Managing Director, J.P. Morgan (investment banking firm) (until 1996)	103	—
William McClayton (1944) Vice Chairperson since 2013, and 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	103	—
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: Stockwell Capital Investments PLC (private equity); First Oak Brook Bancshares, Inc. and Oak Brook Bank; Prisma Energy International	103	Chairman of the Board, Healthways, Inc.2 (provider of disease and care management services) (2003– present); Portland General Electric2 (utility company) (2003– present)
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); North Bennett Street School (Boston); former Directorships: 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	103	Lead Director, Becton Dickinson and Company2 (medical technology company); Lead Director, Belo Corporation2 (media company)
Dawn-Marie Driscoll (1946) Board Member since 1987	President, Driscoll Associates (consulting firm); Emeritus Executive Fellow, Center for Business Ethics, Bentley University; formerly, Partner, Palmer & Dodge (1988–1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978–1988). Directorships: Director of ICI Mutual Insurance Company (since 2007); Advisory Board, Center for Business Ethics, Bentley University; Chairman of the Board of Trustees, Southwest Florida Community Foundation (charitable organization); former Directorships: Sun Capital Advisers Trust (mutual funds) (2007–2012), Investment Company Institute (audit, executive, nominating committees) and Independent Directors Council (governance, executive committees)	103	—
Keith R. Fox, CFA (1954) 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)	103	—
Paul K. Freeman (1950) Board Member since 1993	Consultant, World Bank/Inter-American Development Bank; Executive and Governing Council of the Independent Directors Council (Chairman of Education Committee); formerly: Project Leader, International Institute for Applied Systems Analysis (1998–2001); Chief Executive Officer, The Eric Group, Inc. (environmental insurance) (1986–1998); Directorships: Denver Zoo Foundation (December 2012–present); former Directorships: Prisma Energy International	103	—
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 (since July 2000); Co-Chair, U.S. Shadow Financial Regulatory Committee; Executive Director, Financial Economists Roundtable; formerly: Vice Dean and Director, Wharton Undergraduate Division (July 1995–June 2000); Director, Lauder Institute of International Management Studies (July 2000–June 2006)	103	Director, Japan Equity Fund, Inc. (since September 2007), Thai Capital Fund, Inc. (since 2007), Singapore Fund, Inc. (since September 2007), Independent Director of Barclays Bank Delaware (since September 2010)
Rebecca W. Rimel (1951) Board Member since 1995	President and Chief Executive Officer, The Pew Charitable Trusts (charitable organization) (1994 to 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)	103	Director, Becton Dickinson and Company2 (medical technology company) (2012– present); Director, CardioNet, 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)	103	—
Jean Gleason Stromberg (1943) Board Member since 1997	Retired. Formerly, Consultant (1997–2001); Director, Financial Markets U.S. Government Accountability Office (1996–1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978–1996). Directorships: The William and Flora Hewlett Foundation; former Directorships: Service Source, Inc., Mutual Fund Directors Forum (2002–2004), American Bar Retirement Association (funding vehicle for retirement plans) (1987–1990 and 1994–1996)	103	—
Robert H. Wadsworth (1940) Board Member since 1999	President, Robert H. Wadsworth & Associates, Inc. (consulting firm) (1983 to present); Director, National Horizon, Inc. (non-profit organization); Director and Treasurer, The Phoenix Boys Choir Association	106	—

Officers4
Name, Year of Birth, Position with the Fund and Length of Time Served5	Business Experience and Directorships During the Past Five Years
Brian E. Binder8,9 (1972) President and Chief Executive Officer, 2013–present	Managing Director3 and Head of Fund Administration, Deutsche Asset & Wealth Management (2013–present); formerly: Head of Business Management and Consulting at Invesco, Ltd. (2010–2012); Chief Administrative Officer, Van Kampen Funds Inc. (2008–2010); and Chief Administrative Officer, Morgan Stanley Investment Management Americas Distribution (2003–2008)
John Millette7 (1962) Vice President and Secretary, 1999–present	Director,3 Deutsche Asset & Wealth Management
Paul H. Schubert6 (1963) Chief Financial Officer, 2004–present Treasurer, 2005–present	Managing Director,3 Deutsche Asset & Wealth Management (since July 2004); formerly: Executive Director, Head of Mutual Fund Services and Treasurer for UBS Family of Funds (1998–2004); Vice President and Director of Mutual Fund Finance at UBS Global Asset Management (1994–1998)
Caroline Pearson7 (1962) Chief Legal Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management; formerly: Assistant Secretary for DWS family of funds (1997–2010)
Melinda Morrow6 (1970) Vice President, 2012–present	Director,3 Deutsche Asset & Wealth Management
Hepsen Uzcan7 (1974) Assistant Secretary, 2013–present	Vice President, Deutsche Asset & Wealth Management
Paul Antosca7 (1957) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Jack Clark7 (1967) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
Diane Kenneally7 (1966) Assistant Treasurer, 2007–present	Director,3 Deutsche Asset & Wealth Management
John Caruso6 (1965) Anti-Money Laundering Compliance Officer, 2010–present	Managing Director,3 Deutsche Asset & Wealth Management
Robert Kloby6 (1962) Chief Compliance Officer, 2006–present	Managing Director,3 Deutsche Asset & Wealth Management

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, 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: 60 Wall Street, New York, NY 10005.

7 Address: One Beacon Street, Boston, MA 02108.

8 Address: 222 South Riverside Plaza, Chicago, IL 60606.

9 Effective as of December 1, 2013.

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.

Notes

DWS Investments Distributors, Inc.

222 South Riverside Plaza

Chicago, IL 60606

(800) 621-1148


VS2UI-2 (R-025836-3 2/14)

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 VARIABLE SERIES II

FORM N-CSR DISCLOSURE RE: AUDIT FEES

The following table shows the amount of fees that Ernst & Young LLP (“EY”), the Series' Independent Registered Public Accounting Firm, billed to the Series during the Series’ last two fiscal years.  The Audit Committee approved in advance all audit services and non-audit services that EY provided to the Series.

Services that the Series’ Independent Registered Public Accounting Firm Billed to the Series

Fiscal Year Ended December 31,	Audit Fees Billed to Series		Audit-Related Fees Billed to Series		Tax Fees Billed to Series		All Other Fees Billed to Series
2013	$	628,116	$	0	$	68,848	$	0
2012	$	595,318	$	0	$	76,628	$	0

The above “Tax Fees” were billed for professional services rendered for tax return preparation.

Services that the Series’ Independent Registered Public Accounting Firm Billed to the Adviser and Affiliated Fund Service Providers

The following table shows the amount of fees billed by EY to Deutsche 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 Series (“Affiliated Fund Service Provider”), for engagements directly related to the Series’ operations and financial reporting, during the Series’ last two fiscal years.

Fiscal Year Ended December 31,	Audit-Related Fees Billedto 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
2013	$	0	$	379,516	$	0
2012	$	0	$	359,967	$	0

The above “Tax Fees” were billed in connection with tax compliance services and agreed upon procedures.

Non-Audit Services

The following table shows the amount of fees that EY billed during the Series’ last two fiscal years for non-audit services. The Audit Committee pre-approved all non-audit services that EY provided to the Adviser and any Affiliated Fund Service Provider that related directly to the Series’ operations and financial reporting. The Audit Committee requested and received information from EY about any non-audit services that EY rendered during the Series’ last fiscal year to the Adviser and any Affiliated Fund Service Provider.  The Committee considered this information in evaluating EY’s independence.

Fiscal Year Ended December 31,	Total Non-Audit Fees Billed to Series (A)		Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (engagements related directly to the operations and financial reporting of the Series) (B)		Total Non-Audit Fees billed to Adviser and Affiliated Fund Service Providers (all other engagements) (C)		Total of (A), (B) and (C)
2013	$	68,848	$	379,516	$	715,427	$	1,163,791
2012	$	76,628	$	359,967	$	579,578	$	1,016,173

All other engagement fees were billed for services in connection with agreed upon procedures and tax compliance for DIMA and other related entities that provide support for the operations of the Series.

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 2012 and 2013 financial statements, the Fund entered into an engagement letter with EY.  The terms of the engagement letter required by EY, and agreed to by the Audit Committee, include provisions in which the parties consent to the sole jurisdiction of federal courts in New York, Boston or the Northern District of Illinois, as well as a waiver of right to a trial by jury and an exclusion of punitive damages.

***

ITEM 5.	AUDIT COMMITTEE OF LISTED REGISTRANTS
	Not applicable
ITEM 6.	SCHEDULE OF INVESTMENTS
	Not applicable
ITEM 7.	DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
	Not applicable
ITEM 8.	PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
	Not applicable
ITEM 9.	PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
	Not applicable
ITEM 10.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	There were no material changes to the procedures by which shareholders may recommend nominees to the Fund’s Board. The primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Kenneth C. Froewiss, Independent Chairman, DWS Mutual Funds, P.O. Box 78, Short Hills, NJ 07078.
ITEM 11.	CONTROLS AND PROCEDURES
	(a)	The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
	(b)	There have been no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.
ITEM 12.	EXHIBITS
	(a)(1)	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 Variable Series II
By:	/s/Brian E. Binder Brian E. Binder President
Date:	February 20, 2014

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/Brian E. Binder Brian E. Binder President
Date:	February 20, 2014
By:	/s/Paul Schubert Paul Schubert Chief Financial Officer and Treasurer
Date:	February 20, 2014

EX-99.CODE ETH

DWS Investments

Principal Executive and Principal Financial Officer Code of Ethics

For the Registered Management Investment Companies Listed on Appendix A

Effective Date

[January 31, 2005]

Revised Appendix A

[December 6, 2013]

Table of Contents

Page Number

I.Overview 3

II.Purposes of the Officer Code 3

III.Responsibilities of Covered Officers 4

A.Honest and Ethical Conduct 4

B.Conflicts of Interest 4

C.Use of Personal Fund Shareholder Information 6

D.Public Communications 6

E.Compliance with Applicable Laws, Rules and Regulations 6

IV.Violation Reporting 7

A.Overview 7

B.How to Report 7

C.Process for Violation Reporting to the Fund Board 7

D.Sanctions for Code Violations 7

V.Waivers from the Officer Code 8

VI.Amendments to the Code 8

VII.Acknowledgement and Certification of Adherence to the Officer Code 8

IX.Recordkeeping 9

X.Confidentiality 9

Appendices 10

Appendix A: List of Officers Covered under the Code, by Board 10

Appendix B: Officer Code Acknowledgement and Certification Form 11

Appendix C: Definitions 13

I.

Overview

This Principal Executive Officer and Principal Financial Officer Code of Ethics (“Officer Code”) sets forth the policies, practices, and values expected to be exhibited in the conduct of the Principal Executive Officers and Principal Financial Officers of the investment companies (“Funds”) they serve (“Covered Officers”). A list of Covered Officers and Funds is included on Appendix A. The Boards of the Funds listed on Appendix A have elected to implement the Officer Code, pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 and the SEC’s rules thereunder, to promote and demonstrate honest and ethical conduct in their Covered Officers. Deutsche Asset Management, Inc. or its affiliates (“DeAM”) serves as the investment adviser to each Fund. All Covered Officers are also employees of DeAM or an affiliate. Thus, in addition to adhering to the Officer Code, these individuals must comply with DeAM policies and procedures, such as the DeAM Code of Ethics governing personal trading activities, as adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940.1 In addition, such individuals also must comply with other applicable Fund policies and procedures. The DeAM Compliance Officer, who shall not be a Covered Officer and who shall serve as such subject to the approval of the Fund’s Board (or committee thereof), is primarily responsible for implementing and enforcing this Code. The Compliance Officer has the authority to interpret this Officer Code and its applicability to particular circumstances. Any questions about the Officer Code should be directed to the DeAM Compliance Officer. The DeAM Compliance Officer and his or her contact information can be found in Appendix A.

_________________________

1 The obligations imposed by the Officer Code are separate from, and in addition to, any obligations imposed under codes of ethics adopted pursuant to Rule 17j-1 under the Investment Company Act of 1940, and any other code of conduct applicable to Covered Officers in whatever capacity they serve. The Officer Code does not incorporate any of those other codes and, accordingly, violations of those codes will not necessarily be considered violations of the Officer Code and waivers granted under those codes would not necessarily require a waiver to be granted under this Code. Sanctions imposed under those codes may be considered in determining appropriate sanctions for any violation of this Code.

II. Purposes of the Officer Code

The purposes of the Officer Code are to deter wrongdoing and to:
•	promote honest and ethical conduct among Covered Officers, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

• promote full, fair, accurate, timely and understandable disclosures in reports and documents that the Funds file with or submit to the SEC (and in other public communications from the Funds) and that are within the Covered Officer’s responsibilities;

• promote compliance with applicable laws, rules and regulations;

• encourage the prompt internal reporting of violations of the Officer Code to the DeAM Compliance Officer; and

•	establish accountability for adherence to the Officer Code.
Any questions about the Officer Code should be referred to DeAM’s Compliance Officer.

III. Responsibilities of Covered Officers

A.

Honest and Ethical Conduct

It is the duty of every Covered Officer to encourage and demonstrate honest and ethical conduct, as well as adhere to and require adherence to the Officer Code and any other applicable policies and procedures designed to promote this behavior. Covered Officers must at all times conduct themselves with integrity and distinction, putting first the interests of the Fund(s) they serve. Covered Officers must be honest and candid while maintaining confidentiality of information where required by law, DeAM policy or Fund policy. Covered Officers also must, at all times, act in good faith, responsibly and with due care, competence and diligence, without misrepresenting or being misleading about material facts or allowing their independent judgment to be subordinated. Covered Officers also should maintain skills appropriate and necessary for the performance of their duties for the Fund(s). Covered Officers also must responsibly use and control all Fund assets and resources entrusted to them. Covered Officers may not retaliate against others for, or otherwise discourage the reporting of, actual or apparent violations of the Officer Code or applicable laws or regulations. Covered Officers should create an environment that encourages the exchange of information, including concerns of the type that this Code is designed to address.

B.

Conflicts of Interest

A “conflict of interest” occurs when a Covered Officer’s personal interests interfere with the interests of the Fund for which he or she serves as an officer. Covered Officers may not improperly use their position with a Fund for personal or private gain to themselves, their family, or any other person. Similarly, Covered Officers may not use their personal influence or personal relationships to influence decisions or other Fund business or operational matters where they would benefit personally at the Fund’s expense or to the Fund’s detriment. Covered Officers may not cause the Fund to take action, or refrain from taking action, for their personal benefit at the Fund’s expense or to the Fund’s detriment. Some examples of conflicts of interest follow (this is not an all-inclusive list): being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member who is an employee of a Fund service provider or is otherwise associated with the Fund; or having an ownership interest in, or having any consulting or employment relationship with, any Fund service provider other than DeAM or its affiliates. Certain conflicts of interest covered by this Code arise out of the relationships between Covered Officers and the Fund that already are subject to conflict of interest provisions in the Investment Company Act and the Investment Advisers Act. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as “affiliated persons” of the Fund. Covered Officers must comply with applicable laws and regulations. Therefore, any violations of existing statutory and regulatory prohibitions on individual behavior could be considered a violation of this Code. As to conflicts arising from, or as a result of the advisory relationship (or any other relationships) between the Fund and DeAM, of which the Covered Officers are also officers or employees, it is recognized by the Board that, subject to DeAM’s fiduciary duties to the Fund, the Covered Officers will in the normal course of their duties (whether formally for the Fund or for DeAM, or for both) be involved in establishing policies and implementing decisions which will have different effects on DeAM and the Fund. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contract relationship between the Fund and DeAM, and is consistent with the expectation of the Board of the performance by the Covered Officers of their duties as officers of the Fund. Covered Officers should avoid actual conflicts of interest, and appearances of conflicts of interest, between the Covered Officer’s duties to the Fund and his or her personal interests beyond those contemplated or anticipated by applicable regulatory schemes. If a Covered Officer suspects or knows of a conflict or an appearance of one, the Covered Officer must immediately report the matter to the DeAM Compliance Officer. If a Covered Officer, in lieu of reporting such a matter to the DeAM Compliance Officer, may report the matter directly to the Fund’s Board (or committee thereof), as appropriate (e.g., if the conflict involves the DeAM Compliance Officer or the Covered Officer reasonably believes it would be futile to report the matter to the DeAM Compliance Officer). When actual, apparent or suspected conflicts of interest arise in connection with a Covered Officer, DeAM personnel aware of the matter should promptly contact the DeAM Compliance Officer. There will be no reprisal or retaliation against the person reporting the matter. Upon receipt of a report of a possible conflict, the DeAM Compliance Officer will take steps to determine whether a conflict exists. In so doing, the DeAM Compliance Officer may take any actions he or she determines to be appropriate in his or her sole discretion and may use all reasonable resources, including retaining or engaging legal counsel, accounting firms or other consultants, subject to applicable law.2 The costs associated with such actions may be borne by the Fund, if appropriate, after consultation with the Fund’s Board (or committee thereof). Otherwise, such costs will be borne by DeAM or other appropriate Fund service provider. After full review of a report of a possible conflict of interest, the DeAM Compliance Officer may determine that no conflict or reasonable appearance of a conflict exists. If, however, the DeAM Compliance Officer determines that an actual conflict exists, the Compliance Officer will resolve the conflict solely in the interests of the Fund, and will report the conflict and its resolution to the Fund’s Board (or committee thereof). If the DeAM Compliance Officer determines that the appearance of a conflict exists, the DeAM Compliance Officer will take appropriate steps to remedy such appearance. In lieu of determining whether a conflict exists and/or resolving a conflict, the DeAM Compliance Officer instead may refer the matter to the Fund’s Board (or committee thereof), as appropriate. However, the DeAM Compliance Officer must refer the matter to the Fund’s Board (or committee thereof) if the DeAM Compliance Officer is directly involved in the conflict or under similar appropriate circumstances. After responding to a report of a possible conflict of interest, the DeAM Compliance Officer will discuss the matter with the person reporting it (and with the Covered Officer at issue, if different) for purposes of educating those involved on conflicts of interests (including how to detect and avoid them, if appropriate). Appropriate resolution of conflicts may restrict the personal activities of the Covered Officer and/or his family, friends or other persons. Solely because a conflict is disclosed to the DeAM Compliance Officer (and/or the Board or Committee thereof) and/or resolved by the DeAM Compliance Officer does not mean that the conflict or its resolution constitutes a waiver from the Code’s requirements. Any questions about conflicts of interests, including whether a particular situation might be a conflict or an appearance of one, should be directed to the DeAM Compliance Officer.

_________________________

2 For example, retaining a Fund’s independent accounting firm may require pre-approval by the Fund’s audit committee.

C.	Use of Personal Fund Shareholder Information
	A Covered Officer may not use or disclose personal information about Fund shareholders, except in the performance of his or her duties for the Fund. Each Covered Officer also must abide by the Funds’ and DeAM’s privacy policies under SEC Regulation S-P.

D.

Public Communications

In connection with his or her responsibilities for or involvement with a Fund’s public communications and disclosure documents (e.g., shareholder reports, registration statements, press releases), each Covered Officer must provide information to Fund service providers (within the DeAM organization or otherwise) and to the Fund’s Board (and any committees thereof), independent auditors, government regulators and self-regulatory organizations that is fair, accurate, complete, objective, relevant, timely and understandable. Further, within the scope of their duties, Covered Officers having direct or supervisory authority over Fund disclosure documents or other public Fund communications will, to the extent appropriate within their area of responsibility, endeavor to ensure full, fair, timely, accurate and understandable disclosure in Fund disclosure documents. Such Covered Officers will oversee, or appoint others to oversee, processes for the timely and accurate creation and review of all public reports and regulatory filings. Within the scope of his or her responsibilities as a Covered Officer, each Covered Officer also will familiarize himself or herself with the disclosure requirements applicable to the Fund, as well as the business and financial operations of the Fund. Each Covered Officer also will adhere to, and will promote adherence to, applicable disclosure controls, processes and procedures, including DeAM’s Disclosure Controls and Procedures, which govern the process by which Fund disclosure documents are created and reviewed. To the extent that Covered Officers participate in the creation of a Fund’s books or records, they must do so in a way that promotes the accuracy, fairness and timeliness of those records.

E.

Compliance with Applicable Laws, Rules and Regulations

In connection with his or her duties and within the scope of his or her responsibilities as a Covered Officer, each Covered Officer must comply with governmental laws, rules and regulations, accounting standards, and Fund policies/procedures that apply to his or her role, responsibilities and duties with respect to the Funds (“Applicable Laws”). These requirements do not impose on Covered Officers any additional substantive duties. Additionally, Covered Officers should promote compliance with Applicable Laws. If a Covered Officer knows of any material violations of Applicable Laws or suspects that such a violation may have occurred, the Covered Officer is expected to promptly report the matter to the DeAM Compliance Officer.

IV. Violation Reporting

A.	Overview
	Each Covered Officer must promptly report to the DeAM Compliance Officer, and promote the reporting of, any known or suspected violations of the Officer Code. Failure to report a violation may be a violation of the Officer Code.

Examples of violations of the Officer Code include, but are not limited to, the following:
•	Unethical or dishonest behavior

• Obvious lack of adherence to policies surrounding review and approval of public communications and regulatory filings

• Failure to report violations of the Officer Code

• Known or obvious deviations from Applicable Laws

• Failure to acknowledge and certify adherence to the Officer Code

 The DeAM Compliance Officer has the authority to take any and all action he or she considers appropriate in his or her sole discretion to investigate known or suspected Code violations, including consulting with the Fund’s Board, the independent Board members, a Board committee, the Fund’s legal counsel and/or counsel to the independent Board members. The Compliance Officer also has the authority to use all reasonable resources to investigate violations, including retaining or engaging legal counsel, accounting firms or other consultants, subject to applicable law.3 The costs associated with such actions may be borne by the Fund, if appropriate, after consultation with the Fund’s Board (or committee thereof). Otherwise, such costs will be borne by DeAM.

B.	How to Report
	Any known or suspected violations of the Officer Code must be promptly reported to the DeAM Compliance Officer.

C.	Process for Violation Reporting to the Fund Board
	The DeAM Compliance Officer will promptly report any violations of the Code to the Fund’s Board (or committee thereof).

D.	Sanctions for Code Violations
	Violations of the Code will be taken seriously. In response to reported or otherwise known violations, DeAM and the relevant Fund’s Board may impose sanctions within the scope of their respective authority over the Covered Officer at issue. Sanctions imposed by DeAM could include termination of employment. Sanctions imposed by a Fund’s Board could include termination of association with the Fund.

_________________________

3 For example, retaining a Fund’s independent accounting firm may require pre-approval by the Fund’s audit committee.

V.

Waivers from the Officer Code

A Covered Officer may request a waiver from the Officer Code by transmitting a written request for a waiver to the DeAM Compliance Officer.4 The request must include the rationale for the request and must explain how the waiver would be in furtherance of the standards of conduct described in and underlying purposes of the Officer Code. The DeAM Compliance Officer will present this information to the Fund’s Board (or committee thereof). The Board (or committee) will determine whether to grant the requested waiver. If the Board (or committee) grants the requested waiver, the DeAM Compliance Officer thereafter will monitor the activities subject to the waiver, as appropriate, and will promptly report to the Fund’s Board (or committee thereof) regarding such activities, as appropriate. The DeAM Compliance Officer will coordinate and facilitate any required public disclosures of any waivers granted or any implicit waivers.

_________________________

4 Of course, it is not a waiver of the Officer Code if the Fund’s Board (or committee thereof) determines that a matter is not a deviation from the Officer Code’s requirements or is otherwise not covered by the Code.

VI.

Amendments to the Code

The DeAM Compliance Officer will review the Officer Code from time to time for its continued appropriateness and will propose any amendments to the Fund’s Board (or committee thereof) on a timely basis. In addition, the Board (or committee thereof) will review the Officer Code at least annually for its continued appropriateness and may amend the Code as necessary or appropriate. The DeAM Compliance Officer will coordinate and facilitate any required public disclosures of Code amendments.

VII.

Acknowledgement and Certification of Adherence to the Officer Code

Each Covered Officer must sign a statement upon appointment as a Covered Officer and annually thereafter acknowledging that he or she has received and read the Officer Code, as amended or updated, and confirming that he or she has complied with it (see Appendix B: Acknowledgement and Certification of Obligations Under the Officer Code). Understanding and complying with the Officer Code and truthfully completing the Acknowledgement and Certification Form is each Covered Officer’s obligation. The DeAM Compliance Officer will maintain such Acknowledgements in the Fund’s books and records.

VIII.	Scope of Responsibilities
	A Covered Officer’s responsibilities under the Officer Code are limited to:

(1) Fund matters over which the Officer has direct responsibility or control, matters in which the Officer routinely participates, and matters with which the Officer is otherwise involved (i.e., matters within the scope of the Covered Officer’s responsibilities as a Fund officer); and

(2) Fund matters of which the Officer has actual knowledge.

IX.	Recordkeeping
	The DeAM Compliance Officer will create and maintain appropriate records regarding the implementation and operation of the Officer Code, including records relating to conflicts of interest determinations and investigations of possible Code violations.

X.

Confidentiality

All reports and records prepared or maintained pursuant to this Officer Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Officer Code, such matters shall not be disclosed to anyone other than the DeAM Compliance Officer, the Fund’s Board (or committee thereof), legal counsel, independent auditors, and any consultants engaged by the Compliance Officer.

Appendices

Appendix A:

List of Officers Covered under the Code, by Board:

Fund Board	Principal Executive Officers	Principal Financial Officers	Treasurer
DWS Funds	Brian Binder5	Paul Schubert	Paul Schubert
Germany*	Brian Binder	Paul Schubert	Paul Schubert

* The Central Europe, Russia and Turkey Fund, Inc., The European Equity Fund, Inc. and The New Germany Fund, Inc.

DeAM Compliance Officer:

Joseph S. Yuen

Head of Gifts/Entertainment & the Code of Ethics

212-250-4773

917-512-9286 fax

 As of:   December 6, 2013

_________________________

5 As of December 1, 2013

Appendix B: Acknowledgement and Certification

Initial Acknowledgement and Certification

of Obligations Under the Officer Code

Print Name Department Location Telephone

1. I acknowledge and certify that I am a Covered Officer under the DWS Investments Principal Executive and Financial Officer Code of Ethics (“Officer Code”), and therefore subject to all of its requirements and provisions.

2. I have received and read the Officer Code and I understand the requirements and provisions set forth in the Officer Code.

3. I have disclosed any conflicts of interest of which I am aware to the DeAM Compliance Officer.

4. I will act in the best interest of the Funds for which I serve as an officer and have maintained the confidentiality of personal information about Fund shareholders.

5. I will report any known or suspected violations of the Officer Code in a timely manner to the DeAM Compliance Officer.

 Signature  Date

Annual Acknowledgement and Certification

of Obligations Under the Officer Code

Print Name Department Location Telephone

1. I acknowledge and certify that I am a Covered Officer under the DWS Investments Principal Executive and Financial Officer Code of Ethics (“Officer Code”), and therefore subject to all of its requirements and provisions.

2. I have received and read the Officer Code, and I understand the requirements and provisions set forth in the Officer Code.

3. I have adhered to the Officer Code.

4. I have not knowingly been a party to any conflict of interest, nor have I had actual knowledge about actual or apparent conflicts of interest that I did not report to the DeAM Compliance Officer in accordance with the Officer Code’s requirements.

5. I have acted in the best interest of the Funds for which I serve as an officer and have maintained the confidentiality of personal information about Fund shareholders.

6. With respect to the duties I perform for the Fund as a Fund officer, I believe that effective processes are in place to create and file public reports and documents in accordance with applicable regulations.

7. With respect to the duties I perform for the Fund as a Fund officer, I have complied to the best of my knowledge with all Applicable Laws (as that term is defined in the Officer Code) and have appropriately monitored those persons under my supervision for compliance with Applicable Laws.

8. I have reported any known or suspected violations of the Officer Code in a timely manner to the DeAM Compliance Officer.

 Signature  Date

Appendix C: Definitions

Principal Executive Officer

Individual holding the office of President of the Fund or series of Funds, or a person performing a similar function.

Principal Financial Officer

Individual holding the office of Treasurer of the Fund or series of Funds, or a person performing a similar function.

Registered Investment Management Investment Company

Registered investment companies other than a face-amount certificate company or a unit investment trust.

Waiver

A waiver is an approval of an exemption from a Code requirement.

Implicit Waiver

An implicit waiver is the failure to take action within a reasonable period of time regarding a material departure from a requirement or provision of the Officer Code that has been made known to the DeAM Compliance Officer or the Fund’s Board (or committee thereof).

EX-99.CERT

President

Form N-CSR Certification under Sarbanes Oxley Act

I, Brian E. Binder, certify that:

1.   I have reviewed this report, filed on behalf of DWS Variable Series II, on Form N-CSR;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)   Disclosed in this report any change 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 control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

February 20, 2014	/s/Brian E. Binder
	Brian E. Binder
	President

Chief Financial Officer and Treasurer

Form N-CSR Certification under Sarbanes Oxley Act

I, Paul Schubert, certify that:

1.   I have reviewed this report, filed on behalf of DWS Variable Series II, on Form N-CSR;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d)   Disclosed in this report any change 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 control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

February 20, 2014	/s/Paul Schubert
	Paul Schubert
	Chief Financial Officer and Treasurer

EX-99.906 CERT

President

Section 906 Certification under Sarbanes Oxley Act

I, Brian E. Binder, certify that:

1.   I have reviewed this report, filed on behalf of DWS Variable Series II, on Form N-CSR;

2.   Based on my knowledge and pursuant to 18 U.S.C. § 1350, the periodic report on Form N-CSR (the “Report”) fully complies with the requirements of § 13 (a) or § 15 (d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 20, 2014	/s/Brian E. Binder
	Brian E. Binder
	President

Chief Financial Officer and Treasurer

Section 906 Certification under Sarbanes Oxley Act

I, Paul Schubert, certify that:

1.   I have reviewed this report, filed on behalf of DWS Variable Series II, on Form N-CSR;

2.   Based on my knowledge and pursuant to 18 U.S.C. § 1350, the periodic report on Form N-CSR (the “Report”) fully complies with the requirements of § 13 (a) or § 15 (d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 20, 2014	/s/Paul Schubert
	Paul Schubert
	Chief Financial Officer and Treasurer