Item G.1.a.i – Deutsche DWS Variable Series II (formerly DWS Variable Series II)
On December 7, 2010, Deutsche DWS Variable Series II (formerly DWS Variable Series II) (the “Trust”) was named as a defendant in the First Amended Complaint filed by the Official Committee of Unsecured Creditors in the U.S. Bankruptcy Court for the District of Delaware in the lawsuit styled Official Committee of Unsecured Creditors of Tribune Company, et al., v. Fitzsimons et al. (the “Lawsuit”). The Lawsuit arises out of a leveraged buyout transaction (“LBO”) in 2007 by which loans were made to the Tribune Company to fund the LBO and shares of the Tribune Company held by shareholders were tendered for or were converted to a right to receive cash. Following the completion of the LBO in 2007, the Tribune Company filed for bankruptcy. The Lawsuit seeks to recover all payments made to the shareholders in the LBO. The Lawsuit has been consolidated in a multi-district litigation (the “Tribune MDL”) in the United States District Court for the Southern District of New York, case no. 12-MC-2296 (the “District Court”). On January 6, 2017, the District Court dismissed with prejudice the only claim (for avoidance of alleged intentional fraudulent transfers) asserted against the shareholder defendants named in the Lawsuit.
On April 4, 2019, the plaintiff in the Lawsuit filed a motion to amend his complaint to add constructive fraudulent conveyance claims against shareholder defendants based on an alleged change in governing law resulting from the Supreme Court’s decision in FTI Consulting, Inc. v. Merit Management Group, 830 F.3d 690 (7th Cir. 2016). On April 23, 2019, the District Court denied that motion. On July 15, 2019, the plaintiff in the Lawsuit filed a notice of appeal to the Second Circuit for these District Court rulings in the Lawsuit. On August 20, 2021, the Second Circuit affirmed dismissal of the Trustee’s intentional fraudulent conveyance claims and affirmed the District Court’s denial of the Trustee’s request to amend his complaint. On October 7, 2021, the Second Circuit denied the Trustee’s motion for rehearing en banc before the Second Circuit. On January 5, 2022, the Trustee filed a petition for certiorari, seeking to have the recent appeal heard by the United States Supreme Court (the “Supreme Court”). In connection with the petition, in order to make it more likely that there will be a quorum of the Supreme Court for the petition, the Trustee dismissed the Trust from the litigation.
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of Deutsche DWS Variable Series II:
In planning and performing our audit of the financial statements of DWS Global Income Builder VIP, DWS Small Mid Cap Value VIP, DWS International Growth VIP, DWS High Income VIP, DWS CROCI® U.S. VIP, DWS Government Money Market VIP, DWS Small Mid Cap Growth VIP, and DWS Alternative Asset Allocation VIP (the “Funds”) (eight of the funds comprising Deutsche DWS Variable Series II (the “Trust”)), as of and for the year ended December 31, 2022, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), we considered the Trust’s internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-CEN, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control over financial reporting. Accordingly, we express no such opinion.
The management of the Trust is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Our consideration of the Trust’s internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the PCAOB. However, we noted no deficiencies in the Trust’s internal control over financial reporting and its operation, including controls over safeguarding securities that we consider to be a material weakness as defined above as of December 31, 2022.
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This report is intended solely for the information and use of management and the Board of Trustees of Deutsche DWS Variable Series II and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.
/s/ ERNST & YOUNG, LLP
Boston, Massachusetts
February 13, 2023
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