UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

**FORM N-Q**

**QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED**

**MANAGEMENT INVESTMENT COMPANY**

**_______________________________**

Investment Company Act file number  811-5385

DWS Value Series, Inc.

(Exact name of registrant as specified in charter)

 

345 Park Avenue

New York, NY  10154-0004

(Address of principal executive offices)             (Zip code)

 

Paul Schubert

345 Park Avenue

New York, NY  10154-0004

(Name and address of agent for service)

Registrant's telephone number, including area code:  (212) 454-7190

Date of fiscal year end:  11/30

Date of reporting period: 02/29/08

 

ITEM 1.  SCHEDULE OF INVESTMENTS

 

| Investment Portfolio | **as of February 29, 2008  (Unaudited)** |
|----------------------|------------------------------------------|

 

 

**DWS Dreman High Return Equity Fund**

 

|   | **Shares**              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | **Value ($)** |
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|        |
|   | **Common Stocks 99.8%** |  
**Consumer Discretionary 6.2%**

 
**Multiline Retail 0.7%**

 
Macy's, Inc.  

 

1,981,720 

 

**48,908,850**

**Specialty Retail 5.5%**

 
Borders Group, Inc. (a) (b) 

 

3,452,200 

 

31,967,372 

Lowe's Companies, Inc.  

 

7,028,320 

 

168,468,830 

Staples, Inc. (b) 

 

8,979,600 

 

199,796,100 

 

**400,232,302**

**Consumer Staples 9.3%**

 
**Tobacco**

Altria Group, Inc.  

 

6,755,147 

 

494,071,451 

 

 

 

 

Imperial Tobacco Group PLC (ADR)  

 

701,940 

 

64,894,353 

UST, Inc. (b) 

 

2,245,171 

 

121,890,334 

 

**680,856,138**

**Energy 27.0%**

 
**Oil, Gas & Consumable Fuels**

Anadarko Petroleum Corp.  

 

4,933,640 

 

314,470,214 

Apache Corp.  

 

2,482,295 

 

284,744,059 

Chevron Corp.  

 

2,766,895 

 

239,779,121 

ConocoPhillips (b) 

 

7,427,875 

 

614,359,541 

Devon Energy Corp.  

 

3,710,850 

 

381,178,512 

EnCana Corp.  

 

35,742 

 

2,723,898 

Occidental Petroleum Corp.  

 

1,711,668 

 

132,431,753 

 

**1,969,687,098**

**Financials 29.6%**

 
**Commercial Banks 10.7%**

 
KeyCorp.  

 

7,450,138 

 

164,275,543 

PNC Financial Services Group, Inc.  

 

3,152,724 

 

193,671,835 

US Bancorp.  

 

4,187,010 

 

134,068,060 

Wachovia Corp. (b) 

 

9,377,200 

 

287,129,864 

 

**779,145,302**

**Diversified Financial Services 7.3%**

 
Bank of America Corp.  

 

8,192,134 

 

325,555,405 

CIT Group, Inc.  

 

2,417,955 

 

53,726,960 

Citigroup, Inc.  

 

5,326,400 

 

126,288,944 

JPMorgan Chase & Co.  

 

527,759 

 

21,453,404 

 

**527,024,713**

**Insurance 3.2%**

 
Chubb Corp.  

 

2,526,660 

 

128,606,994 

Hartford Financial Services Group, Inc.  

 

1,190,980 

 

83,249,502 

The Travelers Companies, Inc.  

 

491,760 

 

22,822,582 

 

**234,679,078**

**Thrifts & Mortgage Finance 8.4%**

 
Fannie Mae (b) 

 

4,666,885 

 

129,039,370 

Freddie Mac  

 

7,725,664 

 

194,532,220 

Sovereign Bancorp, Inc. (b) 

 

4,128,242 

 

45,534,509 

Washington Mutual, Inc. (b) 

 

16,554,135 

 

245,001,198 

 

**614,107,297**

**Health Care 16.1%**

 
**Biotechnology 0.7%**

 
Amgen, Inc.*  

 

1,196,790 

 

**54,477,881**

**Health Care Equipment & Supplies 0.1%**

 
Covidien Ltd.  

 

88,743 

 

**3,797,313**

**Health Care Providers & Services 7.1%**

 
Aetna, Inc.  

 

3,642,480 

 

180,667,008 

UnitedHealth Group, Inc.  

 

7,174,130 

 

333,453,562 

 

**514,120,570**

**Pharmaceuticals 8.2%**

 
Eli Lilly & Co.  

 

1,680,480 

 

84,057,610 

Pfizer, Inc.  

 

10,384,818 

 

231,373,745 

Wyeth  

 

6,518,310 

 

284,328,682 

 

**599,760,037**

 

 

 

 

**Industrials 9.5%**

 
**Aerospace & Defense 3.1%**

 
Northrop Grumman Corp.  

 

1,102,080 

 

86,634,509 

 
United Technologies Corp.  

 

2,000,180 

 

141,032,692 

 
 
 

**227,667,201**

 
**Air Freight & Logistics 1.1%**

 
FedEx Corp.  

 

892,107 

 

**78,621,390**

 
**Commercial Services & Supplies 0.2%**

 
Corrections Corp. of America*  

 

351,442 

 

**9,439,732**

 
**Industrial Conglomerates 5.1%**

 
3M Co.  

 

2,658,975 

 

208,463,640 

 
General Electric Co.  

 

4,811,220 

 

159,443,831 

 
Tyco International Ltd.  

 

145,910 

 

5,845,154 

 
 
 

**373,752,625**

 
**Information Technology 0.0%**

 
**Electronic Equipment & Instruments**

 
Tyco Electronics Ltd.  

 

57,861 

 

**1,903,627**

 
**Materials 0.3%**

 
**Chemicals 0.0%**

 
Tronox, Inc. "B"  

 

4,368 

 

**19,263**

 
**Metals & Mining 0.3%**

 
BHP Billiton Ltd. (ADR) (b) 

 

298,200 

 

**21,822,276**

 
**Telecommunication Services 1.8%**

 
**Diversified Telecommunication Services**

 
Verizon Communications, Inc.  

 

3,593,650 

 

**130,521,368**

 
 
**Total Common Stocks** (Cost $6,323,627,676)

 

**7,270,544,061**

 
 

**Securities Lending Collateral 6.0%**

 
Daily Assets Fund Institutional, 3.69%  (c) (d)(Cost $438,763,575)

 

 

438,763,575

 

**438,763,575**

 
 

**Cash Equivalents 0.2%**

 
Cash Management QP Trust, 3.89%  (c)(Cost $14,568,125)

 

 

14,568,125

 

**14,568,125**

 
 

**% of****Net Assets**

 

**Value ($)**

 
 
**Total Investment Portfolio** (Cost $6,776,959,376) †

106.0

 

**7,723,875,761**

 
**Other Assets and Liabilities, Net**(b)

(6.0)

 

**(436,901,900)**

 
 
**Net Assets**

100.0

 

**7,286,973,861**

 
 

*For information on the Fund's policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund's most recent semi-annual or annual financial statements.*

*†*

*The cost for federal income tax purposes was $6,788,294,022.  At February 29, 2008, net unrealized appreciation for all securities based on tax cost was $935,581,739.  This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $1,855,320,057 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $919,738,318.*

 
***

*Non-income producing security.*

 
*(a)*

*Affiliated issuer.  An Affiliate issuer includes any company in which the Fund has ownership of at least 5% of the outstanding voting securities.  A summary of the Fund’s transactions during the three months ended February 29, 2008 with companies which are or were affiliates is as follows:*

 

 
 

 

 

 

 
***Affiliate*****

***Value ($) at***

***11/30/2007*****

***Purchase***

***Cost ($)*****

***Sales***

***Cost ($)*****

***Realized***

***Gain/Loss ($)*****

***Dividend***

***Income***

***($)*****

***Shares at***

***2/29/2008*****

***Value ($) at 2/29/2008*****

 
*Borders Group, Inc.***

*43,733,709***

*-***

*652,544***

*(199,720)***

*384,549***

*3,452,200***

*31,967,372***

*(b)*

*All or a portion of these securities were on loan amounting to $405,301,638. In addition, included in other assets and liabilities, net is a pending sale amounting to $12,413, that is also on loan.  The value of all securities loaned at February 29, 2008 amounted to $405,314,051 which is 5.6% of net assets.*

 
*(c)*

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

 
*(d)*

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

 
*ADR: American Depositary Receipt*

 
 

*The following is a summary of the inputs used as of February 29, 2008 in valuing the Fund’s assets carried at fair value:*

 

***Valuation Inputs*****

***Investments in  Securities at***

***Value*****

*Level 1 - Quoted Prices***

*$ 7,723,875,761***

*Level 2 - Other Significant***

*-***

*Observable Inputs***

*Level 3 - Significant***

*-***

*Unobservable Inputs***

***Total*****

***$ 7,723,875,761*****

 

*The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157"), effective December 1, 2007, which governs the application of generally accepted accounting principles that require fair value measurements of the Fund’s assets and liabilities.  Fair value is an estimate of  the price the Fund would receive upon selling a security in a timely transaction to an independent buyer in the principal or most advantageous market of the security. FAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherentin a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.*

 

*Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels as follows:*

 

 

**•**

*Level 1 – quoted prices in active markets for identical securities*

 

**•**

*Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)*

 

**•**

*Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)*

 

*For Level 1 inputs, the Fund uses unadjusted quoted prices in active markets for assets or liabilities with sufficient frequency and volume to provide pricing information as the most reliable evidence of fair value.  The Fund’s Level 2 valuation techniques include inputs other than quoted prices within Level 1 that are observable for an asset or liability, either directly or indirectly.  Level 2 observable inputs may include quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active in which there are few transactions, the prices are not current, or price quotations vary substantially over time or among market participants.  Inputs that are observable for the asset or liability in Level 2 include such factors as interest rates, yield curves, prepayment speeds, credit risk, and default rates forsimilar liabilities.  For Level 3 valuation techniques, the Fund uses unobservable inputs that reflect assumptions market participants would be expected to use in pricing the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available and are developed based on the best information available under the circumstances.  In developing unobservable inputs, market participant assumptions are used if they are reasonably available without undue cost and effort.*

 

*The Fund may record changes to valuations based on the amount that might reasonably be expected to receive for a security upon its current sale consistent with the fair value measurement objective.  Each determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another.  Examples of such factors may include, but are not limited to the type 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 issue 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 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.   Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value determined upon sale of those investments.*

 

**ITEM 2.**

**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 registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.

 

 

**ITEM 3.**

**EXHIBITS**

 

 

 

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.

 

 

 

**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 Dreman High Return Equity Fund, a series of DWS Value Series, Inc.

 

By:

/s/Michael G. Clark

 

Michael G. Clark

President

 

Date:

April 16, 2008

 

 

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.

 

Registrant: 

DWS Dreman High Return Equity Fund, a series of DWS Value Series, Inc.

 

By:

/s/Michael G. Clark

 

Michael G. Clark

President

 

Date:

April 16, 2008

 

 

By:

/s/Paul Schubert

 

Paul Schubert

Chief Financial Officer and Treasurer

 

Date:                                        April 16, 2008

 

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