<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997
DEAR SHAREHOLDER:
We are pleased to present the annual report on the operations of Dean Witter
Variable Investment Series for the fiscal year ended December 31, 1997.
Nineteen ninety-seven truly proved to be a tale of two markets worldwide. In the
United States the first half of the year was characterized by a strong equity
market versus fixed-income securities, while the second half saw bonds
powerfully outperform all other asset classes. Global markets were characterized
by robust growth during the first six months of the year, only to be rocked by a
currency crisis in Southeast Asia during the latter portion of the year.
GLOBAL ECONOMIC OVERVIEWS
UNITED STATES
Overall, the stock market was very generous to investors in 1997. However, in
August the Dow Jones Industrial Average appeared to have peaked at 8340.
Bellwether multinational corporations such as Coca Cola began to guide earnings
estimates downward for the first time in many years on the basis of slower
growth and the currency impact from the turmoil in Asia. The NASDAQ Composite
and Mid-Cap indexes peaked in early October, while the Standard & Poor's 500
Composite Stock Price Index (S&P 500) peaked in early December as uncertainty
grew regarding earnings outlooks. Despite a flat to down fourth quarter for the
various indexes, the stock market, as measured by the Dow Jones Industrial
Average, increased by more than 20 percent for the third year in a row for the
first time ever. As year-end approached, historically defensive sectors such as
consumer goods and utilities outperformed the overall market, while cyclical
stocks lagged.
Over the past year the U.S. economy exhibited healthy growth with declining
inflation and strong employment growth. In this environment the Federal Reserve
Board periodically expressed concern that inflationary pressures could be on the
rise, however, inflation remains in check. As a result, the Federal Reserve
Board has left interest rates unchanged since March.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
As the summer came to a close the situation in Asia induced an investor
"flight-to-quality." As a result, demand for U.S. Treasury securities and the
U.S. dollar increased. With many of the Southeast Asian economies in turmoil,
1998 may see the United States inherit the deflationary aspect of those markets.
According to many analysts, this would be likely to benefit the disinflationary
trend here.
Real interest rates (market interest rates less inflation) in the United States
remain above historical norms. A realization of this situation by investors,
combined with the probability of a surplus in the U.S. budget (leading to a
reduction in the issuance of U.S. Treasury securities in 1998), could cause
interest rates to continue to decline in the months to come.
EUROPE
Despite sharp falls in October following the currency crisis in Asia, the
European markets generally made a steady recovery during November and December.
Overall, 1997 was characterized by significant improvement in the economic
environment across Europe. In the United Kingdom low interest rates combined
with low inflation resulted in strong economic growth and falling unemployment.
Following the general election in May, the Bank of England tightened monetary
policy on concerns over the possibility of higher inflation, with little effect
on domestic consumer demand. However, the strength of the British pound relative
to the German mark and other European currencies had a negative impact on
British exporters.
Continental Europe experienced a year of economic convergence, partly engineered
in preparation for monetary union in 1999. In Germany the deutschemark's
weakness relative to the U.S. dollar resulted in strong export performance,
which offset relatively subdued domestic consumer demand. In Italy and Spain,
falling short-term interest rates stimulated domestic consumption and investment
demand. Inflation, long-term interest rates and budget deficit levels are now
broadly similar across the Continent. Further convergence of short-term interest
rates is likely during the first half of 1998 and expectations are high that the
unified currency will go ahead as planned in 1999.
ASIA (EXCLUDING JAPAN)
Nineteen ninety-seven was a uniquely difficult year for the markets of the
Pacific Basin. The only markets that were notably weak during the first half
were Japan, Korea and Thailand, all of which were addressing specific economic
difficulties. Performance during the first half of the year provided little hint
of the severe weakness that would overcome the region in the second half.
The economic problems of Thailand proved to be the catalyst for the currency
crisis that has plagued the region since July. By then the uncertain state of
Thailand's economy had been cause for concern for some time. The rigid pegging
of the Thai baht to the U.S. dollar had resulted in significant
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
overinvestment in the Thai economy, particularly in real estate. This
overinvestment was funded by access to cheap U.S.-dollar loans, at interest
rates well below those prevailing locally, without any apparent currency risk.
Thailand had also run a current-account deficit of about 8 percent of gross
domestic product (GDP) in 1997, which made the country's dependence on foreign
capital even more marked.
Although it did not come as a surprise when Thai authorities devalued the
currency on July 2, 1997, it was not initially anticipated that the Thai crisis
would trigger similar developments in the other countries of Southeast Asia,
particularly Indonesia, Malaysia, the Philippines and Singapore. The first three
of these countries have current-account deficits, although theirs are
considerably smaller than that of Thailand relative to their GDP. They had also
seen signs of excessive investment, again particularly in real estate. The
Philippines quickly followed Thailand in devaluation, and Malaysia and Indonesia
continued the trend in August. Even Singapore, which enjoys one of the world's
largest current-account surpluses, has seen its currency come under pressure
because of its role as the financial center of Southeast Asia.
For much of 1997 northeastern Asian markets stood apart from their southeastern
counterparts and produced considerably better performance. Hong Kong, the
largest market in the Pacific Basin outside Japan, performed well through
August, despite the death of Chinese leader Deng Xiaopeng in February and the
handover of Hong Kong to China in July. In August Hong Kong appeared to have
successfully defended its U.S.-dollar-pegged currency rate against speculative
attack. However, pressure reemerged much more severely in October, following a
move by Taiwan to permit a small further depreciation in its currency. The
result was a sharp upward movement in Hong Kong interest rates, which severely
affected the stock market there given its significant exposure to bank and real-
estate-related stocks.
Korea too succumbed to the currency assault during the fourth quarter. The
Korean economy has always been highly leveraged and dominated by a few large,
unfocused conglomerate companies. As a result this market traditionally has been
treated with caution. As 1997 drew to a close it became clear that an unhealthy
proportion of corporate debt was short term in nature and a classic crisis of
confidence ensued. However, new administration of Kim Dae Jung helped turn the
tide by taking a strong line on economic and financial reform. After a period of
great uncertainty over Christmas and New Year's, international banks have now
agreed to roll US$24 billion of short-term debt into longer maturities (1 to 3
years) at favorable interest rates, subject to a Korean sovereign guarantee.
This appears to remove the possibility of default and buys time for Korea to go
forward with reform.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
The last weeks of 1997 also saw a mounting crisis in Indonesia, initially
triggered by concerns about the health of President Suharto and the political
situation in the run up to the Presidential election in March 1998. This
particularly undermined the confidence of the Indonesian Chinese community
(which largely makes up the business leadership) and the ensuing flight of
capital had a severe impact on the currency. The 1998 budget in early January
appeared to be based on unrealistic assumptions regarding growth, inflation and
the exchange rate and impacted confidence further. However, political concerns
remain despite a second International Monetary Fund (IMF) agreement, moves to
address financial system reform, and the temporary suspension of repayments on
corporate foreign currency debt.
JAPAN
The Japanese market peaked in June. Supportive factors included very strong
first-quarter GDP growth, strong corporate profits and a realization that U.S.
interest rates were on hold. As anticipated, fiscal tightening -- including an
increased consumption tax of an additional two percent, the withdrawal of income
tax rebates and the growth of medical costs -- produced a weak second quarter.
In the third quarter evidence emerged that the economic slowdown was worsening.
In fact, this proved to be the weakest quarter the Japanese economy had seen in
nearly 23 years. This recognition further depressed the market and made it
vulnerable to the crisis developing elsewhere in Asia. The dramatic fall of the
Hong Kong market in October triggered the Nikkei's downward trend. Reports that
currency devaluations and market falls throughout Southeast Asia were spreading
to the Northeast added to the overall concern, because Korean and Taiwanese
companies are viewed as more direct competitors to Japan.
These factors provided hedge funds with reasons to short Japan, which pushed the
market to a two-year low and to levels approaching the postcrash bottoms of 1992
and 1995. Subsequently, suggestions that public money would be used to support
Japan's financial infrastructure and reports that the "convoy system" -- whereby
the stronger institutions are expected to carry the weaker -- had been abandoned
resulted in a dramatic rebound of some 10 percent. However, later news that
Yamaichi, the fourth-largest brokerage house in Japan, was to be declared
insolvent reversed much of this move and again raised questions about the
stability of the financial sector. The government and the Bank of Japan moved
rapidly to reassure depositors in the wake of this development.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
LATIN AMERICA
The Latin American equity markets began 1997 on a strong note as robust
corporate earnings growth and attractive valuations prompted strong capital
inflows. The region's markets continued to rally during the second quarter as
macroeconomic and political fundamentals maintained their pace of improvement,
while corporate earnings were generally in line with expectations.
During the second half of the year, however, many Latin American markets,
particularly Brazil and Argentina, suffered under broadly emerging market
volatility. Generally healthy economies and continued privatization programs
nevertheless provided investors with a higher degree of confidence that these
markets would not be fundamentally disturbed by the situation in Asia.
CAPITAL APPRECIATION
From its inception on January 21, 1997, through December 31, 1997, the Capital
Appreciation Portfolio registered a total return of 13.20 percent, versus 26.20
percent for the Standard & Poor's 500
Composite Stock Price Index (S&P 500)
and 16.09 percent for the Lipper
Analytical Services Inc. Variable
Annuity Capital Appreciation Underlying
Funds Average. The accompanying chart
illustrates the performance of a
$10,000 investment in the Portfolio
from inception through the fiscal year
ended December 31, 1997, versus the
performance of similar hypothetical
investments in the issues that comprise
the S&P 500 and the funds that comprise
the Lipper Variable Annuity Capital
Appreciation Underlying Funds Average.
As was the case when we last reported
to shareholders six months ago, the
Portfolio's underperformance is
attributable to its focus on small-cap
stocks during a period when the stocks
of larger companies fared better. We
continue to believe that small-cap
stocks are undervalued and that, long
term, this sector may offer greater
growth potential than the broader
market.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund S&P 500(3) Lipper(4)
<S> <C> <C> <C>
January-21-1997 $10,000 $10,000 $10,000
January-31-1997 $10,010 $10,059 $10,000
February-28-1997 $10,050 $10,134 $9,746
March-31-1997 $8,960 $9,718 $9,230
April-30-1997 $8,900 $10,302 $9,420
May-31-1997 $9,960 $10,922 $10,194
June-30-1997 $10,320 $11,413 $10,595
July-31-1997 $11,320 $12,322 $11,426
August-31-1997 $11,750 $11,632 $11,227
September-30-1997 $12,480 $12,268 $11,889
October-31-1997 $11,730 $11,862 $11,439
November-30-1997 $11,490 $12,408 $11,505
December-31-1997 $11,320(2) $12,820 $11,609
Cumulative Total Return
(Fund)
13.20%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on the net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing Value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(4) The Lipper Variable Annuity Capital Appreciation Underlying Funds Average
tracks the performance of funds which aim at maximum capital appreciation,
frequently by means of 100% or more portfolio turnover, leveraging,
purchasing unregistered securities, purchasing option, etc. The fund may
take large cash positions, as reported by Lipper Analytical Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
While the Portfolio continues to emphasize growth stocks with sound
fundamentals, solid earnings momentum, financial stability and management
strength, it maintains the flexibility to seek opportunities across the whole
market-capitalization spectrum. The Portfolio invests in a wide array of
industries but is most heavily weighted in computer software and services,
commercial services, telecommunications equipment and retailing.
CAPITAL GROWTH
For the fiscal year ended December 31, 1997, the Capital Growth Portfolio posted
a total return of 24.54 percent, versus 33.35 percent for the S&P 500 and 25.36
percent for the Lipper Analytical
Services Inc. Variable Annuity Growth
Underlying Funds Average. The
accompanying chart illustrates the
performance of a $10,000 investment in
the Portfolio from inception on March
1, 1991 through the fiscal year ended
December 31, 1997, versus the
performance of similar hypothetical
investments in the issues that comprise
the S&P 500 and the funds that comprise
the Lipper Variable Annuity Growth
Underlying Funds Average.
During the Fund's 1996 fiscal year the
Portfolio's screens were relaxed in an
effort to provide a larger universe
from which to pick stocks. The screens
now require that companies must have 1)
increasing revenues and earnings in
five out of the previous eight years;
2) increasing revenues and earnings in
the previous three years consecutively;
and 3) projected future short- and
long-term earnings growth of at least
12 percent. The Fund is actively
managed, more research-driven and is no
longer managed purely on a quantitative
basis.
Its diversification into mid- and small-capitalization stocks contributed
heavily to the Portfolio's strong performance during the second half of the
fiscal year. After lagging during the first half, these
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
stocks showed a marked improvement during the third and fourth quarters. At the
end of the fiscal year the Portfolio's capitalization breakdown was 48 percent
large capitalization stocks, 45 percent mid caps and 7 percent small-cap issues.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund S&P 500(3) Lipper(4)
<S> <C> <C> <C>
March-01-1991 $10,000 $10,000 $10,000
December-31-1991 $12,841 $11,563 $11,689
December-31-1992 $13,051 $12,443 $12,640
December-31-1993 $12,139 $13,696 $14,152
December-31-1994 $11,984 $13,876 $14,032
December-31-1995 $15,929 $19,086 $18,580
December-31-1996 $17,768 $23,466 $22,374
December-31-1997 $22,128(2) $31,293 $28,048
Average Annual Total Returns
(Fund)
Life of
1 Year 5 Years Fund
24.54%(1) 11.14%(1) 12.32%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on the net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing Value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(4) The Lipper Variable Annuity Growth Underlying Funds Average tracks the
performance of funds which primarily invest their assets in companies with
long-term earnings expected to grow significantly faster than the earnings
of the stocks represented in the major stock indices, as reported by Lipper
Analytical Services.
In addition, investments in the technology, financial and retail sectors paid
off handsomely during the second half of the year. The Portfolio maintained an
overweighted position in these sectors for much of its fiscal year. At year-end
the Portfolio held 34 percent of its net assets in the consumer/consumer-related
sector, 26 percent in technology/capital goods stocks, 18 percent in
financial/interest-rate-sensitive stocks and 17 percent in the basic
industry/economically sensitive sector. As of December 31, 1997, the Portfolio
owned 48 stocks and its net assets totaled slightly more than $127 million.
DIVIDEND GROWTH
For the fiscal year ended December 31, 1997, the Dividend Growth Portfolio
registered a total return of 25.61 percent versus 33.35 percent for the S&P 500
and 27.21 percent for the Lipper Analytical Services
Inc. Variable Annuity Growth and Income
Underlying Funds Average. The
accompanying chart illustrates the
performance of a $10,000 investment in
the Portfolio from inception on March
1, 1990 through the fiscal year ended
December 31, 1997, versus the
performance of similar hypothetical
investments in the issues that comprise
the S&P 500 and the funds that comprise
the Lipper Variable Annuity Growth and
Income Underlying Funds Average.
In our opinion the Portfolio's
underperformance relative to its
benchmarks is attributable to a lack of
exposure to small capitalization and
high technology stocks, neither of
which has very much, if any, current
yield and would not therefore be
portfolio candidates.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund S&P 500(3) Lipper(4)
<S> <C> <C> <C>
March-01-1990 $10,000 $10,000 $10,000
December-31-1990 $9,219 $10,235 $9,862
December-31-1991 $11,778 $13,347 $12,628
December-31-1992 $12,740 $14,363 $13,752
December-31-1993 $14,567 $15,808 $15,429
December-31-1994 $14,090 $16,017 $15,328
December-31-1995 $19,216 $22,030 $20,218
December-31-1996 $23,821 $27,086 $24,440
December-31-1997 $29,921(2) $36,120 $31,090
Average Annual Total Returns
(Fund)
Life of
1 Year 5 Years Fund
25.61%(1) 18.62%(1) 15.01%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on the net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing Value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(4) The Lipper Variable Annuity Growth and Income Underlying Funds Average
tracks the performance of funds which combine a growth-of-earnings
orientation and an income requirement for level and/or rising dividends, as
reported by Lipper Analytical Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
The Portfolio's net assets totaled more than $1.9 billion on December 31, 1997,
an increase of more than $600 million from the end of 1996. The Portfolio
continued to maintain a relatively fully invested posture during the fiscal
year, with 98 percent of net assets committed to longer-term investments as of
the fiscal year-end. Three new common stock positions were added during the
fiscal year: Consolidated Natural Gas Co., Ryder System, Inc. and Caterpillar,
Inc. One portfolio position was eliminated with the sale of PanEnergy Corp. and
another (CBS Corp.) was substantially sold. The sale of the latter position was
completed shortly after the fiscal year-end. As of December 31 the Portfolio
held 54 equity issues spread among 35 industry groups, as well as five U.S.
Treasury bond and note issues.
EQUITY
For the fiscal year ended December 31, 1997, the Equity Portfolio posted a total
return of 37.43 percent versus 33.35 percent for the S&P 500 and 25.36 percent
for the Lipper Analytical Services Inc.
Variable Annuity Growth Underlying
Funds Average. The accompanying chart
illustrates the performance of a
$10,000 investment in the Portfolio for
the 10 years ended December 31, 1997,
versus the performance of similar
hypothetical investments in the issues
that comprise the S&P 500 and the funds
that comprise the Lipper Variable
Annuity Growth Underlying Funds
Average.
For the fiscal year ended December 31,
1997, the Portfolio ranked #2 out of
121 Variable Annuity Growth Funds (top
2 percent), according to Lipper. For
the five and 10 years ended December
31, the Portfolio ranked #7 out of 53
such funds (top 13 percent) and #10 out
of 34 such funds (top 29 percent),
respectively. (Lipper rankings are
based on total return and do not take
any sales charges into account.)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund S&P 500(3) Lipper(4)
<S> <C> <C> <C>
December-31-1987 $10,000 $10,000 $10,000
December-31-1988 $10,984 $11,655 $11,429
December-31-1989 $13,052 $15,343 $14,727
December-31-1990 $12,580 $14,869 $14,016
December-31-1991 $20,008 $19,390 $19,191
December-31-1992 $20,019 $20,866 $20,753
December-31-1993 $23,967 $22,965 $23,235
December-31-1994 $22,789 $23,268 $23,037
December-31-1995 $32,481 $32,003 $30,504
December-31-1996 $36,496 $39,347 $36,733
December-31-1997 $50,159(2) $52,469 $46,048
Average Annual Total Returns
(Fund)
1 Year 5 Years 10 Years
37.43%(1) 20.17%(1) 17.50%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing Value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(4) The Lipper Variable Annuity Growth Underlying Funds Average tracks the
performance of funds which primarily invest their assets in companies with
long-term earnings expected to grow significantly faster than the earnings
of the stocks represented in the major unmanaged stock indices, as reported
by Lipper Analytical Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
During the first half of 1997, the Portfolio was slightly overweighted in
cyclical stocks, with a focus on industries that were benefiting from growth in
the emerging markets, such as energy and technology. The Portfolio's positioning
changed significantly during the second half of 1997. In response to the events
occurring in Asia, the Portfolio was tilted to an overweighting in defensive
growth stocks. In addition, nearly 9 percent of the Portfolio's net assets was
invested in bonds. Exposure to the energy and aerospace industries was
eliminated. Technology was reduced to a market weighting, with the focus on
software companies. This is because, during prior slowdowns in global economic
growth, software sales have typically held up better than hardware sales.
The Portfolio increased its exposure in electric utilities from zero to a market
weighting that more closely reflects that of the S&P 500. Exposure to telephone
companies also was added. The financial and health care sectors remained market
weighted. Exposure to media was also increased, particularly in names that have
lagged the overall market.
The Portfolio's focus on sector rotation served it well in 1997. As the global
economic outlook and the earnings outlook shifted, the Portfolio's positioning
changed dramatically in order to remain overweighted in those sectors expected
to have the best earnings growth relative to the overall market.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
INCOME BUILDER
From its inception on January 21, 1997, through December 31, 1997, the Income
Builder Portfolio registered a total return of 22.38 percent, versus 26.20
percent for the Standard & Poor's 500
Composite Stock Price Index (S&P 500)
and 24.81 percent for the Lipper
Analytical Services Inc. Variable
Annuity Equity Income Underlying Funds
Average. The accompanying chart
illustrates the performance of a
$10,000 investment in the Portfolio
from inception on January 21, 1997,
through the fiscal year ended December
31, 1997, versus the performance of
similar hypothetical investments in the
issues that comprise the S&P 500 and
the funds that comprise the Lipper
Variable Annuity Equity Income
Underlying Funds Average.
As of December 31, 1997, net assets had
grown to over $55.4 million. The
Portfolio's target asset mix is 40
percent large capitalization stocks, 30
percent convertible securities, 10
percent investment-grade fixed income,
10 percent high-yield bonds and 10
percent Real Estate Investment Trusts
(REITs).
The large-cap segment of the Portfolio
was approximately 99 percent invested
at the end of the fiscal year and has
been relatively fully invested since
inception. Portfolio transactions
completed during the second half of the fiscal year include the sale of
CoreStates Financial Corp., and the purchases of positions in Cyprus Amax
Minerals Co. and Crown Cork & Seal Co., Inc. At fiscal year end, the Portfolio
owned 58 common stocks spread among 32 industry groups.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund S&P 500(3) Lipper(4)
<S> <C> <C> <C>
January-21-1997 $10,000 $10,000 $10,000
January-31-1997 $10,000 $10,059 $10,000
February-28-1997 $10,110 $10,134 $10,152
March-31-1997 $9,830 $9,718 $9,832
April-30-1997 $9,991 $10,302 $10,180
May-31-1997 $10,424 $10,922 $10,767
June-30-1997 $10,801 $11,413 $11,243
July-31-1997 $11,411 $12,322 $12,010
August-31-1997 $11,441 $11,632 $11,606
September-30-1997 $11,885 $12,268 $12,202
October-31-1997 $11,751 $11,862 $11,851
November-30-1997 $12,009 $12,408 $12,230
December-31-1997 $12,238(2) $12,620 $12,481
Cumulative Total Return
(Fund)
22.38%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(4) The Lipper Variable Annuity Equity Income Underlying Funds Average tracks
the performance of funds that seek relatively high current income and growth
of income through investing 60% or more of their portfolio in equities, as
reported by Lipper Analytical Services.
The convertible portion of the Portfolio performed well during the fiscal year
although it lagged the broader market for much of that time period. This is
attributable to the fact that the convertible universe consists of many
small-cap companies that, as a group, underperformed large-caps for much of
1997. The Portfolio's tilt toward yield also dampened relative performance, but
provided significant
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
downside support in a volatile market environment. It is our expectation that
convertible securities can perform well in modestly increasing, stable or
declining equity markets, but will lag during very strong periods.
The REIT portion of the Portfolio also performed well during the period. Our
exposure to this sector is in line with the Portfolio's 10 percent target and is
split between REIT stocks and REIT convertibles.
The Portfolio's fixed-income holdings performed as expected, with fairly low
sensitivity to interest-rate fluctuations. This portion of the Portfolio seeks
to provide maximum current income with low exposure to interest rate movements.
This strategy helped reduce volatility during the fiscal year.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
EUROPEAN GROWTH
For the fiscal year ended December 31, 1997, the European Growth Portfolio
produced a total return of 16.07 percent, versus 14.17 percent for the Morgan
Stanley Capital International (MSCI) World
Index and 5.17 percent for the Lipper
Analytical Services Inc. Variable
Annuity International Underlying Funds
Average. The accompanying chart
illustrates the performance of a
$10,000 investment in the Portfolio
from inception on March 1, 1991,
through the fiscal year ended December
31, 1997, versus the performance of
similar hypothetical investments in the
issues that comprise the MSCI World
Index and the funds that comprise the
Lipper Variable Annuity International
Underlying Funds Average.
For the fiscal year ended December 31,
1997, the Portfolio ranked #7 out of 81
Variable Annuity International Funds
(top 9 percent), according to Lipper.
For the five years ended December 31,
1997, the Portfolio ranked #1 out of 25
such funds. (Lipper rankings are based
on total return and do not take any
sales charges into account.)
Financial stocks in continental Europe
were very strong during the year on
expectations of takeovers and mergers.
Although several large mergers have
materialized, the Portfolio's
sub-adviser, Morgan Grenfell Investment Services Limited, remains wary of the
sharp sector-wide share price rises that may well unwind in time. In the United
Kingdom, financial stocks also performed well. Morgan Grenfell believes that
this outperformance has led to excessive current valuations. As a result, the
Portfolio maintained an underweighted position in financials throughout the
year.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund MSCI(3) Lipper(4)
<S> <C> <C> <C>
March 1991 $10,000 $10,000 $10,000
December 1991 $10,134 $10,399 $10,504
December 1992 $10,539 $9,656 $9,800
December 1993 $14,847 $11,625 $13,079
December 1994 $16,089 $12,016 $13,136
December 1995 $20,254 $14,263 $14,737
December 1996 $26,329 $15,935 $16,893
December 1997 $30,561(2) $18,193 $17,766
Average Annual Total Returns
(Fund)
Life of
1 Year 5 Years Fund
16.07%(1) 23.73%(1) 17.75%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing Value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Morgan Stanley Capital International World Index (MSCI) measures
performance from a diverse range of global stock markets including the U.S.,
Canada, Europe, Australia, New Zealand, and the Far East. The Index does not
include any expenses, fees, or charges, or reinvestment of dividends. The
Index is unmanaged and should not be considered an investment.
(4) The Lipper Variable Annuity International Underlying Funds Average tracks
the performance of the funds which invest their assets in securities with
primary trading markets outside of the United States, as reported by Lipper
Analytical Services.
In 1998, as the economic cycle extends, Morgan Grenfell believes that markets
will turn toward companies delivering high-quality earnings growth and has
positioned the Portfolio accordingly.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
Stocks such as Accor SA (France/hotels/motels), Assa Abloy AB (Series B)
(Sweden/business services), and Tesco PLC (U.K./retail-merchandising) are
examples of the types of growth companies forming the core of the Portfolio.
Although country weightings derive from and are driven by stock decisions, it is
worth noting that the Portfolio currently has an overweighted position in the
Dutch, Swedish and French markets relative to the MSCI World Index. The United
Kingdom remains the largest single country position. The Portfolio currently has
no currency hedges in place given the relatively stable outlook for the U.S.
dollar relative to the European currencies.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
GLOBAL DIVIDEND GROWTH
For the fiscal year ended December 31, 1997, the Global Dividend Growth
Portfolio provided a total return of 12.04 percent, versus 14.17 percent for the
Morgan Stanley Capital International (MSCI)
World Index and 13.24 percent for the
Lipper Analytical Services Inc.
Variable Annuity Global Underlying
Funds Average. The accompanying chart
illustrates the performance of a
$10,000 investment in the Portfolio
from inception on February 23, 1994,
through the fiscal year ended December
31, 1997, versus the performance of
similar hypothetical investments in the
issues that comprise the MSCI World
Index and the funds that comprise the
Lipper Variable Annuity Global
Underlying Funds Average.
The Fund remains fully invested and
well diversified, with 124 equity
issues spread across the world's
largest 14 markets, as defined by
market capitalization. As the world's
largest market, the United States
continues to be the Portfolio's largest
target weighting, with approximately 30
percent of the Portfolio's net assets
spread among 21 stocks. Recent U.S.
additions to the Portfolio include
Fluor Corp. and Crown Cork & Seal Co.,
Inc.
The Portfolio also remains exposed to
Japan, the world's second-largest
market, with a target allocation of
approximately 23 percent of net assets.
While there is still considerable pessimism surrounding Japanese stocks in
general, we are finding many excellent Japanese companies selling at very
attractive prices. We believe these investments may offer significant rewards
for patient and disciplined long-term investors.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund MSCI World IX(3) Lipper(4)
<S> <C> <C> <C>
February-23-1994 $10,000 $10,000 $10,000
December-31-1994 $10,027 $9,925 $9,665
December-31-1995 $12,236 $11,781 $11,227
December-31-1996 $14,388 $13,162 $13,242
December-31-1997 $16,121(2) $15,027 $14,995
Average Annual Total Returns
(Fund)
Life of
1 Year Fund
12.04%(1) 13.20%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Morgan Stanley Capital International World Index (MSCI) measures
performance for a diverse range of global stock markets including the U.S.,
Canada, Europe, Australia, New Zealand, and the Far East. The Index does not
include any expenses, fees or charges, or reinvestment of dividends. The
Index is unmanaged and should not be considered an investment.
(4) The Lipper Variable Annuity Global Underlying Funds Average tracks the
performance of funds which invest at least 25% of their portfolio in
securities traded outside of the United States and that may own U.S.
securities as well, as reported by Lipper Analytical Services.
The Portfolio's target allocation of assets to Europe is 35.5 percent and is
represented by the United Kingdom (10 percent of net assets), France (6.5
percent), Germany (7 percent), Italy (4 percent),
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
The Netherlands (3 percent), Switzerland (2 percent), Spain (1.5 percent) and
Sweden (1.5 percent). We are very optimistic about the long-term growth
potential of high-quality European common stocks, many of which are more
attractively valued than their U.S. counterparts.
In the Pacific Rim, the Portfolio has exposure to Hong Kong (5 percent of net
assets) and Malaysia (1 percent). The dramatic decline witnessed in many Asian
currencies and equity markets has surpassed even the most pessimistic
expectations. The effects from this crisis seem largely contained within the
region, but will have wide-reaching implications for global growth, inflation
and interest rates. As the Portfolio is exposed to only two southeast Asian
countries, it has fared better than many other global equity funds. Our exposure
to the resource-oriented markets of Australia (2.0 percent) and Canada (3
percent) offers risk reduction through diversification, as well as growth
potential in economically stable countries.
The Portfolio will remain sensitive to any factors that would necessitate
changes to its country allocation. We believe that the long-term outlook for the
economies and securities markets of most of the world's major countries is
favorable and that the stocks of well established, large-capitalization
international companies are poised to perform well over the long term.
Consequently, we remain confident, patient and fully invested.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
PACIFIC GROWTH
For the fiscal year ended December 31, 1997, under difficult investing
conditions, the Pacific Growth Portfolio registered a total return of -37.70
percent, versus 14.17 percent for the Morgan Stanley
Capital International (MSCI) World
Index and -31.92 percent for the Lipper
Analytical Services Inc. Variable
Annuity Pacific Region Underlying Funds
Average. Over the same period, the MSCI
Pacific Free Index posted a total
return of -26.67 percent, while the
MSCI All Country Far East (excluding
Japan) Free Index posted a total return
of -45.48 percent. The accompanying
chart illustrates the performance of a
$10,000 investment in the Portfolio
from inception on February 23, 1994,
through the fiscal year ended December
31, 1997, versus the performance of
similar hypothetical investments in the
issues that comprise the MSCI World
Index, the MSCI Pacific Free Index and
the MSCI All Country Far East
(excluding Japan) Free Index, and the
funds that comprise the Lipper Variable
Annuity Pacific Region Underlying Funds
Average.
It is important to note that the
Portfolio invests primarily in
securities of the markets of the
Pacific Rim, while the MSCI World Index
measures the performance of the
European, Asian and American markets.
The MSCI Pacific Free Index measures
the performance of the markets in
Australia, Hong Kong, Japan, Malaysia,
New Zealand and Singapore. Because of
the relative size of the Japanese
market, the MSCI Pacific Free Index is
dominated by the performance of
equities within that country (Japan
currently makes up more than 70 percent
of the Index). The MSCI All Country Far
East Free Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund MSCI World IX(3) MSCI PF(4) MSCI ACFEF(5) Lipper(6)
<S> <C> <C> <C> <C> <C>
February-23-1994 $10,000 $10,000 $10,000 $10,000 $10,000
December-31-1994 $9,327 $9,925 $9,606 $9,242 $9,269
December-31-1995 $9,862 $11,781 $9,995 $9,871 $9,856
December-31-1996 $10,246 $13,162 $9,081 $10,778 $10,977
December-31-1997 $6,383(2) $15,027 $6,659 $5,876 $7,473
Average Annual Total Returns
(Fund)
Life of
1 Year Fund
- -37.70%(1) -11.00%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Morgan Stanley Capital International World Index (MCSI) measures
performance from a diverse range of global stock markets including the U.S.,
Canada, Europe, Australia, New Zealand, and the Far East. The performance of
the Index does not include any expenses, fees, or charges, or reinvestment
of dividends. The Index is unmanaged and should not be considered an
investment.
(4) The Morgan Stanley Capital International Pacific Free Index (MSCI PF)
measures performance of stock markets in Australia, Hong Kong, Japan,
Malaysia, New Zealand and Singapore, and excludes shares that are not
readily purchased by non-local investors. The Index does not include any
expenses, fees, or charges, or reinvestment dividends. The Index is
unmanaged and should not be considered an investment.
(5) The Morgan Stanley Capital International All Country Far East Free
(excluding Japan) Index (MSCI ACFEF) measures performance of both the
developed and the emerging markets of the Far East (excluding Japan), and
excludes shares that are not readily purchased by non-local investors. The
Index does not include any expenses, fees or charges, or reinvestment
dividends. The Index is unmanaged and should not be considered an
investment.
(6) The Lipper Variable Annuity Pacific Region Underlying Funds Average tracks
the performance of funds which concentrate their investments in equity
securities with primary trading markets or operations concentrated in the
Western Pacific Basin region or a single country within this region, as
reported by Lipper Analytical Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
measures the performance of both the developed and emerging markets of the Far
East excluding Japan; these markets are often referred to as the "Tiger"
markets.
The Portfolio underperformed its Lipper benchmark because other funds in the
category have significantly higher weightings in Japan and Australia, which have
performed better than other regional markets as a result of the events described
earlier. The Portfolio's long-term strategy has been to emphasize investment in
the growth economies of Asia. This has led the Portfolio's sub-adviser, Morgan
Grenfell Investment Services Limited, to focus on the equity markets of the
Tiger economies, as opposed to those of the more mature, developed economies of
the region, i.e., Japan and Australia. The sub-adviser continues to believe that
the strategy of emphasizing what are believed to be higher growth areas is an
appropriate long-term course.
At the end of the fiscal year, the Portfolio's largest single country position
continued to be Hong Kong (33.8 percent of net assets). The Portfolio's exposure
to greater China, including Taiwan and direct China exposure, was 7.1 percent.
As the current crisis subsides, we will look for opportunities to refocus the
Portfolio on the markets of Southeast Asia, which in many cases have fallen by
more than 60 percent from their highs in U.S. dollar terms.
Strenuous efforts have been made to obtain exposure to electronic and other
export-related U.S. dollar-earning stocks, which are expected to benefit from
the currency crisis. It is also believed that value is beginning to emerge in
some of the more cyclical areas. For example, some Singapore and Hong Kong banks
appear to have overdiscounted the prospects for rising nonperforming loans,
while some real estate stocks in those nations have fallen to levels that may be
overcompensating for any further declines in real estate prices. The Portfolio's
sub-adviser will continue to seek out well-managed companies with good earnings
visibility and strong balance sheets.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
UTILITIES
The Utilities Portfolio provided a total return of 27.15 percent for the fiscal
year ended December 31, 1997 compared to 33.35 percent for the S&P 500 and 26.13
percent for the Lipper Analytical
Services Inc. Variable Annuity Utility
Underlying Funds Average. The
accompanying chart illustrates the
performance of a $10,000 investment in
the Portfolio from inception on March
1, 1990, through the fiscal year ended
December 31, 1997, versus the
performance of similar hypothetical
investments in the issues that comprise
the S&P 500 and the funds that comprise
the Lipper Variable Annuity Utility
Underlying Funds Average.
For the fiscal year ended December 31,
1997, the Portfolio ranked #3 out of 16
Variable Annuity Utility Funds (top 19
percent), according to Lipper. For the
three and five years ended December 31,
1997 the Portfolio ranked #5 out of 14
such funds and #3 out of 5 such funds,
respectively. (Lipper rankings are
based on total return and do not take
any sales charges into account.)
During 1997, utilities benefited from a
blend of improving industry
fundamentals, a favorable interest rate
environment and ongoing industry-wide
merger and acquisition activity and
speculation. However, a significant
event underpinning the strong performance of the Utilities Portfolio,
particularly during the second-half of 1997, was the economic crisis in
Southeast Asia which prompted a highly defensive investment environment in the
U.S. market. The Portfolio remained fully invested throughout the year,
reflecting this underlying defensive theme. Additionally, investor confidence
continued to strengthen as regulatory concerns abated and more visible growth
fundamentals within these sectors became apparent.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund S&P 500(3) Lipper(4)
<S> <C> <C> <C>
March-01-1990 $10,000 $10,000 $10,000
December-31-1990 $10,452 $10,235 $10,340
December-31-1991 $12,601 $13,347 $12,924
December-31-1992 $14,194 $14,363 $14,029
December-31-1993 $16,422 $15,808 $15,936
December-31-1994 $14,940 $16,017 $14,704
December-31-1995 $19,220 $22,030 $18,734
December-31-1996 $20,889 $27,086 $20,752
December-31-1997 $26,561(2) $36,120 $26,174
Average Annual Total Returns
(Fund)
Life of
1 Year 5 Years Fund
27.15%(1) 13.35%(1) 13.28%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard & Poor's 500 Composite Stock Price Index (S & P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(4) The Lipper Variable Annuity Utility Underlying Funds Average tracks the
performance of funds which invest at least 65% of their equity portfolio in
utility shares, as reported by Lipper Analytical Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
Given this utility-friendly investment environment, electric utilities were a
chief beneficiary of the cautious financial markets with much of the impetus
being a flight to quality and safety. Additionally, electric utilities continued
to witness fair and balanced deregulation initiatives by many state utility
commissions which tempered concerns and strengthened shareholder confidence in
this sector. Electric utility merger and acquisition activity was consistently
evident throughout the year as many companies enhanced their earnings outlook
and expanded their product offerings in preparation for the new competitive
environment. The telecommunications sector also showed very healthy performance
and benefited from numerous merger and acquisition announcements. Furthermore,
the telecom sector overall showed very strong earnings growth fueled by a strong
economy and high growth applications including wireless, data and selective
international investments. While natural gas pricing was adversely impacted by
mild weather patterns toward year-end, the gas pipeline companies showed strong
overall performance during the year, which was attributable to strong growth in
core earnings and anticipation of an acceleration in non-regulated earnings
going forward.
On December 31, 1997, 88 percent of the Portfolio's net assets was allocated to
utility and utility-related equities. Within the equity component, 54 percent
was allocated to electric utilities, 35 percent to telecommunications and 11
percent to natural gas. Enhancing the Portfolio's overall diversification are
selective foreign securities, which represent 9 percent of net assets and are
focused on the growth area of global telecommunications. The Portfolio's
high-quality fixed-income investments accounted for 9 percent of net assets.
Three percent was held in cash and cash equivalents.
The Portfolio will maintain its focus on a well-diversified allocation of
utility and utility-related investments, which is expected to help the Portfolio
meet its overall objectives of current income and long-term growth of income and
capital. Energy and telecommunications should remain the investments of choice
and appeal going forward. The Portfolio is poised to benefit from the resulting
worldwide growth coming from globalization, privatization and strong product
demand.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
STRATEGIST
For the fiscal year ended December 31, 1997, the Strategist Portfolio posted a
total return of 13.71 percent versus 33.35 percent for the S&P 500, 9.76 percent
for the Lehman Brothers Government/
Corporate Bond Index and 18.92 percent
for the Lipper Analytical Services Inc.
Variable Annuity Flexible Portfolio
Underlying Fund Average. The
accompanying chart illustrates the
performance of a $10,000 investment in
the Portfolio for the 10 years ended
December 31, 1997, versus the
performance of similar hypothetical
investments in the issues that comprise
the S&P 500 and the Lehman Brothers
Government/Corporate Bond Index and the
funds that comprise the Lipper Variable
Annuity Flexible Portfolio Underlying
Fund Average.
The Portfolio performed well in the
first half of the fiscal year ended
December 31, 1997, but limited exposure
to bonds held performance back in the
last few months of the year. Overall,
the Portfolio's total return for the
fiscal year exceeded its annualized
rate of return since inception (10.32
percent), but trailed its competitive
universe of variable annuity flexible
portfolios.
At the start of 1997 the Portfolio
featured a slightly overweighted
position in stocks (60 percent, versus
an average or neutrally balanced
weighting of 55 percent), an
underweighted position in bonds (20
percent, versus 35 percent) and a
larger-than-normal cash reserve of 20
percent (versus an average of 5 percent). Greater corporate profitability and a
firming economy led to an increased exposure to equities throughout the year.
The Portfolio entered 1998 with 63 percent of its net assets in stocks, 21
percent in bonds and 16 percent in cash.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund S&P 500(3) Lehman(4) Lipper(5)
<S> <C> <C> <C> <C>
December-31-1987 $10,000 $10,000 $10,000 $10,000
December-31-1988 $11,279 $11,655 $10,758 $11,023
December-31-1989 $12,483 $15,343 $12,289 $13,306
December-31-1990 $12,677 $14,869 $13,306 $13,447
December-31-1991 $16,260 $19,390 $15,453 $16,868
December-31-1992 $17,436 $20,866 $16,624 $18,133
December-31-1993 $19,246 $22,965 $18,458 $20,316
December-31-1994 $20,004 $23,268 $17,810 $19,920
December-31-1995 $21,884 $32,003 $21,236 $24,798
December-31-1996 $25,172 $39,347 $21,852 $28,260
December-31-1997 $28,624(2) $52,469 $23,985 $33,607
Average Annual Total Returns
(Fund)
1 Year 5 Years 10 Years
13.71%(1) 10.42%(1) 11.09%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard & Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(4) The Lehman Brothers Government/Corporate Bond Index tracks the performance
of government and corporate obligations, including U.S. government agency
and U.S. treasury securities and corporate and yankee bonds with maturities
of one to ten years. The performance of the Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
(5) The Lipper Variable Annuity Flexible Portfolio Underlying Funds Average
tracks the performance of funds which allocate their investments across
various asset classes, including domestic common stocks, bonds, and money
market instruments with a focus on total return, as reported by Lipper
Analytical Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
The Portfolio's industry emphasis remained relatively unchanged throughout the
fiscal year and featured heavy exposure to the technology, financial, consumer
goods and services, and energy sectors. Fixed-income investments reflected a
blend of corporate and government issues of various maturities and yields.
HIGH YIELD
For the fiscal year ended December 31, 1997, the High Yield Portfolio posted a
total return of 11.87 percent, versus 12.76 percent for the Lehman Brothers High
Yield Index and 13.41 percent for the
Lipper Analytical Services, Inc.
Variable Annuity High Current Yield
Underlying Funds Average. The
accompanying chart illustrates the
performance of a $10,000 investment in
the Portfolio for the 10 years ended
December 31, 1997, versus the
performance of similar hypothetical
investments in the issues that comprise
the Lehman Brothers High Yield Index
and the funds that comprise the Lipper
Variable Annuity High Current Yield
Underlying Funds Average.
As the economy has continued to expand
over the past few years, the Portfolio
has tended to concentrate on B-rated
issues. In a growing economy it is not
difficult to find undervalued
investments in this sector that provide
attractive yields as well as capital
appreciation potential. We continue to
feel that many of these issues are very
attractive long-term investments.
However, given the lower market yields
available today and the potential for a
modest tightening move by the Federal
Reserve Board down the road, we have
taken some defensive steps, including
an increase of the Portfolio's
allocation to the higher-quality end of the high-yield market (BB-rated issues
or higher). We feel that these issues will better protect shareholders during a
potentially volatile market environment, as well as provide the liquidity and
flexibility needed to take advantage of future opportunities.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund Lehman(3) Lipper(4)
<S> <C> <C> <C>
December-31-1987 $10,000 $10,000 $10,000
December-31-1988 $11,084 $11,253 $11,300
December-31-1989 $9,705 $11,346 $11,508
December-31-1990 $7,226 $10,258 $10,820
December-31-1991 $11,427 $14,996 $14,567
December-31-1992 $13,524 $17,357 $16,910
December-31-1993 $16,787 $20,329 $20,041
December-31-1994 $16,372 $20,120 $19,429
December-31-1995 $18,817 $23,976 $23,020
December-31-1996 $21,071 $26,698 $26,137
December-31-1997 $23,571(2) $30,104 $29,642
Average Annual Total Returns
(Fund)
1 Year 5 Years 10 Years
11.87%(1) 11.75%(1) 8.95%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on the net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Lehman Brothers High Yield Index tracks the performance of all below
investment grade securities which have at least $100 million in outstanding
issuance, are greater than one year to maturity and are issued in fixed rate
U.S. dollar denominations. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
(4) The Lipper Variable Annuity High Current Yield Underlying Funds Average
tracks the performance of funds which aim at high (relative) current yield
from fixed income securities, has no quality or maturity restrictions, and
tends to invest in lower grade debt issues, as reported by Lipper Analytical
Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
In addition, the Portfolio continues to limit its exposure to cyclical
industries and remains focused on more-predictable, recession-resistant or
growth sectors of the economy, such as broadcasting, media, cable,
telecommunications and food and beverages. In some of these sectors, such as
media and telecommunications, we expect to see continued consolidation, which
may bode well for many of the Portfolio's individual holdings.
Over the near term, there could be continued volatility in the financial markets
as investors assess the economy's strength, possible Federal Reserve Board
actions and the ongoing budget debate. However, despite any potential short-term
weakness, we consider today's high-yield market to be an attractive long-term
opportunity for investors.
QUALITY INCOME PLUS
For the fiscal year ended December 31, 1997, the Quality Income Plus Portfolio
posted a total return of 11.09 percent versus 9.65 percent for the Lehman
Brothers Aggregate Bond Index and 9.24
percent for the Lipper Analytical
Services Inc. Variable Annuity
Corporate Debt A-Rated Underlying Funds
Average. The accompanying chart
illustrates the performance of a
$10,000 investment in the Portfolio for
the 10 years ended December 31, 1997,
versus the performance of similar
hypothetical investments in the issues
that comprise the Lehman Brothers
Aggregate Bond Index and the funds that
comprise the Lipper Variable Annuity
Corporate Debt A-Rated Underlying Funds
Average.
For the fiscal year ended December 31,
1997, the Portfolio ranked #2 out of 29
Variable Annuity Corporate Debt A-Rated
Funds, according to Lipper. For the
five and ten years ended December 31,
the Portfolio ranked #3 out of 25 such
funds (top 12%) and #4 out of 16 such
funds (top 25%), respectively. (Lipper
rankings are based on total return and
do not take any sales charges into
account.)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000
($ in Thousands)
Fund Lehman(3) Lipper(4)
<S> <C> <C> <C>
December-31-1987 $10,000 $10,000 $10,000
December-31-1988 $10,732 $10,789 $10,679
December-31-1989 $12,103 $12,357 $12,022
December-31-1990 $12,932 $13,464 $12,973
December-31-1991 $15,356 $15,618 $15,137
December-31-1992 $16,624 $16,774 $16,262
December-31-1993 $18,784 $18,409 $18,044
December-31-1994 $17,539 $17,872 $17,305
December-31-1995 $21,801 $21,173 $20,570
December-31-1996 $22,140 $21,941 $21,084
December-31-1997 $24,597(2) $24,058 $23,015
Average Annual Total Returns
(Fund)
1 Year 5 Years 10 Years
11.09%(1) 8.15%(1) 9.42%(1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on the net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1997 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Lehman Brothers Aggregate Bond Index tracks the performance of all US
Government agency and Treasury securities, investment-grade corporate debt
securities, agency mortgage-backed securities and asset-backed securities.
The Index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(4) The Lipper Variable Annuity Corp Debt A Rated Underlying Funds Average
tracks the performance of funds which invest at least 65% of their assets in
corporate debt issues rated "A" or better or government issues, as reported
by Lipper Analytical Services.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
During 1997, the Portfolio's weighted average maturity ranged from 13.5 to 17.8
years. The portfolio manager's diversified asset allocation strategy, which
focuses principally on corporate bonds, is reviewed on an ongoing basis. The
asset allocation shifts between mortgage-backed securities, U.S. Treasury
instruments and corporate bonds also are reviewed on an ongoing basis to
capitalize on the ever changing investment horizon. In our opinion, the
Portfolio's competitive performance since its inception on March 1, 1987 is
attributable to dynamic asset allocation and sector shifts based on careful
credit reviews and yield curve assessments.
The overweighted sectors most responsible for the Portfolio's exceptional
returns were utilities (15 percent of net assets), long-term, high-quality
industrial bonds (9 percent), insurance (5 percent) and brokerage bonds (nearly
4 percent). Each of these sectors outperformed the corporate market as a whole.
MONEY MARKET
For the fiscal year ended December 31, 1997, the Money Market Portfolio posted a
total return of 5.23 percent; as of December 31, the Portfolio's 30-day
annualized yield was 5.24 percent. Average life was 67 days. At the end of the
fiscal year, the Portfolio had net assets in excess of $335 million, down
slightly from one year ago.
On December 31, 1997, approximately 79 percent of the Portfolio's assets were
invested in high-quality commercial paper, 18 percent in certificates of deposit
and short-term bank notes of major financially strong commercial banks, 2
percent in the bankers' acceptances of such institutions and 1 percent in a
federal agency obligation.
At the end of the fiscal year, approximately 87 percent of the Portfolio's
holdings were scheduled to mature in less than four months. Therefore, the
Portfolio is well positioned for stability of value with a high degree of
liquidity. We continue to manage the Portfolio in a straightforward,
conservative style without "structured" notes or derivatives that could
fluctuate excessively with changing interest rates. As always, the Portfolio
serves as a useful investment for liquidity, preservation of capital and a yield
that is reflective of prevailing money market conditions.
LOOKING AHEAD
We expect U.S. economic growth to remain healthy in early 1998, with the Federal
Reserve Board unlikely to raise interest rates. However, the central bank may
need to reassess its current complacent stance on monetary policy during the
year, should inordinately strong economic growth cause an unacceptable increase
in inflation.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
The reestablishment of currency stability in Asia remains of paramount
importance to the ability of regional stock markets to make a sustainable
recovery. Actions taken in recent months across the region (particularly by
Korea) have reduced downside volatility, and most currencies have rallied to
some extent since about mid-January. Stock markets have bounced back also, but
appear to be somewhat skeptical about the commitment of regional authorities to
reform. The focus going forward will be on how the policy shift is implemented
in coming months. The markets will want to see proof that problems within the
regional banking industry are being addressed. Equally important will be a clear
breaking down of the link between business and politics. The "crony capitalist"
network has severely undermined rational economic judgements in a number of
these countries in recent years.
Morgan Grenfell believes that China will not resort to devaluation, but will
choose to boost its domestic economy via government expenditure on low-cost
housing and infrastructure. The resolution of the Chinese leadership on this
issue is increasingly impressive and may begin to convince the markets of their
commitment. If this occurs it would be a major contribution to regional
stability.
Morgan Grenfell believes the outlook for European equity markets in 1998 is
encouraging. Although the situation in Asia and its impact on European corporate
earnings will continue to be monitored carefully, the underlying fundamentals of
the European markets remain positive. The transition to monetary union and the
introduction of a unified currency, the Euro, begins with the transfer of
monetary policy powers to the European Central Bank on January 2, 1999. Morgan
Grenfell believes that the actual impact of monetary union on equity markets
will be limited. However, the prospect of a single currency has already begun to
stimulate cross-border merger and acquisition activity and should continue to
provide an important boost for the European equity markets. In addition, low and
stable interest rates are likely to increase inflows to equity-based mutual
funds, which should also provide support for markets over the coming year.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1997, CONTINUED
We appreciate your ongoing support of Dean Witter Variable Investment Series and
look forward to continuing to serve your investment needs and objectives.
Sincerely,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
--------------------------
THE NET ASSET VALUES (THE "NAVS") PRESENTED IN THE FINANCIAL STATEMENTS OF DEAN
WITTER VARIABLE INVESTMENT SERIES (THE "FUND") REFLECT THE NAVS OF EACH OF THE
RESPECTIVE PORTFOLIOS. THE FUND IS THE UNDERLYING INVESTMENT FOR VARIOUS
VARIABLE ANNUITY CONTRACTS AND AS SUCH, THE NAVS OF EACH PORTFOLIO ARE NOT
INDICATIVE OF THE UNIT VALUES OF THE INSURANCE COMPANY SEPARATE ACCOUNTS.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER (79.0%)
AUTOMOTIVE - FINANCE (13.3%)
$ 15,685 Chrysler Financial Corp........................... 5.66-5.80 % 01/27/98-03/10/98 $ 15,551,184
8,370 Ford Motor Credit Co.............................. 5.59-5.75 01/05/98-01/15/98 8,358,720
16,000 General Motors Acceptance Corp.................... 5.73-5.82 01/20/98-05/22/98 15,781,179
5,000 Toyota Motor Credit Corp.......................... 5.76 04/27/98 4,908,972
------------
44,600,055
------------
BANK HOLDING COMPANIES (8.9%)
7,125 BankAmerica Corp.................................. 5.68-5.71 01/13/98-02/10/98 7,096,603
13,225 Bankers Trust New York Corp....................... 5.74-5.83 01/29/98-06/30/98 12,968,960
5,000 NationsBank Corp.................................. 5.64 01/28/98 4,979,150
5,000 PNC Funding Corp.................................. 5.84 03/30/98 4,929,722
------------
29,974,435
------------
BANKS - COMMERCIAL (17.8%)
13,975 Abbey National North America Corp................. 5.67-5.71 02/02/98-03/03/98 13,871,712
3,425 ABN-AMRO North America Finance Inc................ 5.69 02/05/98 3,406,586
5,000 Barclays U.S. Funding Corp........................ 5.81 03/12/98 4,944,486
5,000 Dresdner U.S. Finance Inc......................... 5.63 01/08/98 4,994,633
4,700 KfW International Finance Inc..................... 5.69 01/12/98 4,692,058
10,000 National Australia Funding (DE) Inc............... 5.72-5.81 03/11/98-06/01/98 9,828,433
5,000 Rabobank USA Financial Corp....................... 5.76 04/30/98 4,907,114
3,500 Societe Generale N.A., Inc........................ 5.65 04/06/98 3,449,248
5,000 Toronto-Dominion Holdings U.S.A. Inc.............. 5.83 06/10/98 4,874,222
5,000 WestPac Capital Corp.............................. 5.79 04/20/98 4,914,465
------------
59,882,957
------------
ENERGY (1.6%)
5,430 Chevron U.S.A., Inc............................... 6.75 01/02/98 5,428,982
------------
FINANCE - COMMERCIAL (4.1%)
13,950 CIT Group Holdings, Inc........................... 5.65-5.79 02/13/98-05/29/98 13,755,593
------------
FINANCE - CONSUMER (15.0%)
3,750 American Express Credit Corp...................... 5.64 01/22/98 3,737,991
10,000 American General Finance Corp..................... 5.68-5.81 02/06/98-04/14/98 9,890,508
9,425 Avco Financial Services Inc....................... 5.66-5.67 01/26/98-02/19/98 9,372,242
10,000 Beneficial Corp................................... 5.70-5.77 03/05/98-03/31/98 9,880,912
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 13,050 Household Finance Corp............................ 5.61-5.67 % 01/30/98-02/24/98 $ 12,971,743
4,450 Norwest Financial Inc............................. 5.67 03/17/98 4,398,732
------------
50,252,128
------------
FINANCE - CORPORATE (3.5%)
11,775 Ciesco, L.P....................................... 5.63-5.79 01/14/98-04/08/98 11,693,904
------------
FINANCE - DIVERSIFIED (5.0%)
17,100 General Electric Capital Corp..................... 5.67-5.77 01/09/98-03/19/98 16,992,637
------------
INDUSTRIALS (0.7%)
2,375 Caterpillar Financial Services Corp............... 5.64 01/20/98 2,368,093
------------
OFFICE EQUIPMENT (1.5%)
4,950 IBM Credit Corp................................... 5.71 02/11/98 4,918,599
------------
RETAIL (3.5%)
11,815 Sears Roebuck Acceptance Corp..................... 5.62-5.77 01/06/98-02/18/98 11,771,837
------------
UTILITIES - FINANCE (4.1%)
13,825 National Rural Utilities Cooperative Finance
Corp............................................ 5.66-5.81 01/23/98-04/28/98 13,664,035
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $265,303,255)................................................... 265,303,255
------------
SHORT-TERM BANK NOTES (12.6%)
13,950 BankBoston, N.A................................... 5.66-5.72 01/16/98-04/15/98 13,950,000
15,000 F. C.C. National Bank............................. 5.79-5.82 05/08/98-06/17/98 15,000,000
13,500 La Salle National Bank............................ 5.68-5.71 02/20/98-03/09/98 13,500,000
------------
TOTAL SHORT-TERM BANK NOTES
(AMORTIZED COST $42,450,000).................................................... 42,450,000
------------
CERTIFICATES OF DEPOSIT (4.5%)
10,000 Chase Manhattan Bank (USA)........................ 5.75 02/09/98-02/12/98 10,000,000
5,000 Regions Bank of Alabama........................... 5.67 03/04/98 5,000,000
------------
TOTAL CERTIFICATES OF DEPOSIT
(AMORTIZED COST $15,000,000).................................................... 15,000,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BANKERS' ACCEPTANCES (2.4%)
$ 3,000 BankBoston, N.A................................... 5.73 % 01/07/98 $ 2,997,215
5,000 Union Bank of California, N.A..................... 5.78 04/09/98 4,923,097
------------
TOTAL BANKERS' ACCEPTANCES
(AMORTIZED COST $7,920,312)..................................................... 7,920,312
------------
U.S. GOVERNMENT AGENCY (1.4%)
4,754 Federal National Mortgage Assoc.
(AMORTIZED COST $4,719,926)..................... 5.52-5.56 01/21/98-03/20/98 4,719,926
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(AMORTIZED COST $335,393,493) (a)........................................ 99.9% 335,393,493
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES........................... 0.1 184,656
----- ------------
NET ASSETS............................................................... 100.0% $335,578,149
----- ------------
----- ------------
</TABLE>
- ---------------------
(a) Cost is the same for federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (64.0%)
BANKS AND BANK HOLDING COMPANIES (8.9%)
$5,000 Banco Central Hispanoamericano (Cayman Islands)........ 7.50 % 06/15/05 $ 5,215,750
5,000 First Bank N.A......................................... 8.35 11/01/04 5,524,200
5,000 First Bank System...................................... 7.625 05/01/05 5,331,050
3,000 Mellon Bank N.A........................................ 7.625 09/15/07 3,233,880
3,000 Old Kent Financial Corp................................ 6.625 11/15/05 3,011,790
3,145 PNC Funding Corp....................................... 9.875 03/01/01 3,470,004
5,000 Republic New York Corp................................. 7.20 07/15/97 5,227,700
2,000 Santander Financial Issuances (Cayman Islands)......... 7.75 05/15/05 2,122,300
5,000 State Street Boston Corp............................... 5.95 09/15/03 4,921,500
2,000 Swiss Bank Corp........................................ 7.375 07/15/15 2,132,420
2,000 Wachovia Corp.......................................... 6.375 04/15/03 2,014,640
------------
42,205,234
------------
BEVERAGES (0.5%)
2,000 Coca-Cola Enterprises Inc.............................. 8.50 02/01/22 2,400,960
------------
BROKERAGE (3.6%)
2,000 Bear Stearns Companies, Inc............................ 8.75 03/15/04 2,219,060
5,000 Donaldson Lufkin & Jenrette, Inc....................... 6.875 11/01/05 5,073,550
2,000 Lehman Brothers Holdings, Inc.......................... 8.75 03/15/05 2,227,800
5,000 Lehman Brothers Holdings, Inc.......................... 8.50 08/01/15 5,681,950
2,000 Merrill Lynch & Co..................................... 6.56 12/16/07 2,012,220
------------
17,214,580
------------
CONSUMER PRODUCTS (3.4%)
4,000 Becton Dickinson & Co.................................. 8.70 01/15/25 4,537,880
5,000 CPC International, Inc................................. 7.25 12/15/26 5,365,400
1,000 Maytag Corp............................................ 9.75 05/15/02 1,129,590
5,000 Philip Morris Companies, Inc........................... 7.125 10/01/04 5,136,950
------------
16,169,820
------------
DEFENSE (1.8%)
3,000 Lockheed Martin Corp.+................................. 7.70 06/15/08 3,278,010
5,000 Lockheed Martin Corp................................... 7.20 05/01/36 5,319,500
------------
8,597,510
------------
ENERGY (3.1%)
2,000 Anadarko Petroleum Corp................................ 7.73 09/15/96 2,180,380
5,000 Dresser Industries, Inc................................ 7.60 08/15/96 5,541,450
390 Mobil Corp............................................. 9.17 02/29/00 404,469
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$2,000 Petroliam Nasional Berhad - 144A* (Malaysia)........... 7.75 % 08/15/15 $ 1,842,520
1,000 Texaco Capital, Inc.................................... 9.75 03/15/20 1,358,870
3,000 Transocean Offshore Inc................................ 8.00 04/15/27 3,401,370
------------
14,729,059
------------
FINANCIAL SERVICES (3.5%)
3,000 Ford Capital BV........................................ 9.50 06/01/10 3,730,170
5,000 Ford Motor Credit Corp................................. 7.75 03/15/05 5,379,500
3,000 General Motors Acceptance Corp......................... 9.00 10/15/02 3,336,150
4,000 Norwest Financial Inc.................................. 7.875 02/15/02 4,239,960
------------
16,685,780
------------
HEALTHCARE - DIVERSIFIED (0.2%)
1,000 Kaiser Foundation Health Plan, Inc..................... 9.55 07/15/05 1,189,660
------------
INDUSTRIALS (8.5%)
5,000 Barrick Gold Corp...................................... 7.50 05/01/07 5,275,050
5,000 Boeing Co.............................................. 7.95 08/15/24 5,885,850
4,786 Burlington Northern Santa Fe Corp...................... 7.33 06/23/10 5,025,853
4,759 Burlington Northern Santa Fe Corp...................... 7.97 01/01/15 5,221,139
1,000 Caterpillar, Inc....................................... 9.375 07/15/01 1,099,590
3,000 Caterpillar, Inc....................................... 9.375 08/15/11 3,788,190
1,000 Hutchison Whampoa Ltd. (Series B) - 144A* (Hong
Kong)................................................ 7.45 08/01/17 902,720
5,000 ICI Wilmington, Inc.................................... 6.95 09/15/04 5,133,350
3,000 Ikon Office Solutions, Inc............................. 7.30 11/01/27 3,082,590
5,000 Kerr McGee Corp........................................ 7.125 10/15/27 5,254,700
------------
40,669,032
------------
INSURANCE (5.3%)
5,000 Cigna Corp............................................. 7.875 05/15/27 5,424,950
3,000 Jackson National Life Insurance Co. - 144A*............ 8.15 03/15/27 3,323,010
5,000 Liberty Mutual Insurance Co. - 144A*................... 7.875 10/15/26 5,441,650
5,000 Lumbermens Mutual Casualty - 144A*..................... 9.15 07/01/26 5,847,700
5,000 Nationwide Financial Service........................... 8.00 03/01/27 5,358,500
------------
25,395,810
------------
PHARMACEUTICALS (2.6%)
3,500 Amgen, Inc............................................. 6.50 12/01/07 3,526,390
2,000 Bristol-Myers Squibb................................... 6.80 11/15/26 2,081,280
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$5,000 Johnson & Johnson...................................... 8.72 % 11/01/24 $ 5,784,100
665 Marion Merrell Corp.................................... 9.11 08/01/05 735,107
------------
12,126,877
------------
PUBLISHING (1.8%)
5,000 Times Mirror Co........................................ 7.25 11/15/96 5,286,450
3,000 Times Mirror Co........................................ 6.61 09/15/27 3,072,630
------------
8,359,080
------------
REAL ESTATE INVESTMENT TRUST (1.1%)
5,000 Kimco Realty Corp...................................... 6.50 10/01/03 4,991,900
------------
RESTAURANTS (0.3%)
1,000 McDonald's Corp........................................ 8.875 04/01/11 1,224,140
------------
RETAIL (3.8%)
5,000 May Department Stores Co............................... 6.875 11/01/05 5,125,600
5,000 May Department Stores Co............................... 7.625 08/15/13 5,450,150
1,000 Penney (J.C.) Co., Inc................................. 9.75 06/15/21 1,126,580
3,000 Sears Roebuck Acceptance Corp.......................... 6.875 10/15/17 3,008,880
3,000 Wal-Mart Stores, Inc................................... 7.49 06/21/07 3,166,170
------------
17,877,380
------------
TELECOMMUNICATIONS (4.3%)
5,000 AT&T Corp.............................................. 8.35 01/15/25 5,473,000
4,000 Frontier Corp.......................................... 7.25 05/15/04 4,181,160
5,000 GTE Corp............................................... 7.90 02/01/27 5,249,650
5,000 Lucent Technologies Inc................................ 7.25 07/15/06 5,325,300
------------
20,229,110
------------
TRANSPORTATION (1.1%)
4,952 America West Airlines.................................. 6.85 07/02/09 5,027,931
------------
UTILITIES - ELECTRIC (10.2%)
1,000 Chugach Electric Co.................................... 9.14 03/15/22 1,149,960
2,200 Consolidated Edison Co. of New York, Inc............... 8.05 12/15/27 2,311,848
5,000 Florida Power & Light Co............................... 7.05 12/01/26 5,064,050
3,000 Oglethorpe Power Co. 144A*............................. 6.974 06/30/11 3,037,560
3,500 Oklahoma Gas & Electric Co............................. 6.50 07/15/17 3,596,040
5,000 Pennsylvania Power & Light Co.......................... 7.70 10/01/09 5,467,200
5,000 Potomac Electric Power Co.............................. 7.25 07/01/23 5,131,950
4,000 Public Service Electric & Gas Co....................... 7.375 03/01/14 4,180,440
4,000 Puget Sound Energy Co.................................. 7.02 12/01/27 4,052,840
5,000 South Carolina Electric & Gas Co....................... 7.625 06/01/23 5,308,900
3,000 Southern California Edison Co.......................... 7.25 03/01/26 3,070,410
1,000 Tampa Electric Co...................................... 7.75 11/01/22 1,084,340
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$5,000 Virginia Electric Power Co............................. 7.25 % 02/01/23 $ 5,101,150
------------
48,556,688
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $286,250,665)......................................................... 303,650,551
------------
TAXABLE MUNICIPAL BOND (0.2%)
4,000 New Jersey Development Authority
(IDENTIFIED COST $962,408)........................... 0.00 02/15/17 1,146,200
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (32.0%)
18 Federal Home Loan Mortgage Corp........................ 11.50 06/01/11-05/01/19 19,644
9,902 Federal Home Loan Mortgage Corp. PC Gold............... 6.00 10/01/23-11/01/27 9,549,071
2,907 Federal Home Loan Mortgage Corp. PC Gold............... 8.50 01/01/22-12/01/24 3,036,732
10,000 Federal National Mortgage Assoc........................ 0.00 10/09/19 2,607,200
11,061 Federal National Mortgage Assoc........................ 6.00 01/01/26-10/01/27 10,659,794
4,988 Federal National Mortgage Assoc........................ 6.50 02/01/26-09/01/27 4,924,204
7,335 Federal National Mortgage Assoc........................ 7.00 10/01/27 7,388,022
415 Federal National Mortgage Assoc........................ 7.50 05/01/27 424,782
1,225 Federal National Mortgage Assoc........................ 9.00 06/01/21-02/01/25 1,301,345
2,000 Government National Mortgage Assoc. (a)................ 6.50 01/15/28 1,979,375
27,214 Government National Mortgage Assoc..................... 7.00 09/15/27-12/15/27 27,434,655
30,953 Government National Mortgage Assoc..................... 7.50 04/15/24-09/15/27 31,716,959
17,783 Government National Mortgage Assoc..................... 8.00 10/15/24-09/15/26 18,439,161
4,353 Government National Mortgage Assoc..................... 8.50 01/15/17-07/15/26 4,572,054
2,715 Government National Mortgage Assoc..................... 9.00 07/15/24-12/15/24 2,903,533
182 Government National Mortgage Assoc..................... 10.00 05/15/16-04/15/19 198,557
5,000 Tennessee Valley Authority............................. 7.85 06/15/44 5,328,400
5,000 U.S. Treasury Bond..................................... 6.125 11/15/27 5,137,400
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$8,000 U.S. Treasury Bond..................................... 6.375% 08/15/27 $ 8,440,240
1,000 U.S. Treasury Note..................................... 6.875 05/15/06 1,070,130
5,000 U.S. Treasury Note..................................... 7.25 02/15/98 5,008,800
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $148,980,451)......................................................... 152,140,058
------------
CANADIAN GOVERNMENT OBLIGATIONS (2.5%)
5,000 Hydro-Quebec........................................... 9.50 11/15/30 6,642,700
5,000 Province of New Brunswick.............................. 7.625 06/29/04 5,382,550
------------
TOTAL CANADIAN GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $10,380,050).......................................................... 12,025,250
------------
SHORT-TERM INVESTMENT (0.3%)
REPURCHASE AGREEMENT
The Bank of New York
(dated 12/31/97; proceeds $1,377,838) (b)
(IDENTIFIED COST $1,377,542)......................... 3.875 01/02/98 1,377,542
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $447,951,116) (c)........................................................ 99.0 % 470,339,601
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 1.0 4,649,907
------ -------------
NET ASSETS................................................................................ 100.0 % $ 474,989,508
------ -------------
------ -------------
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
+ Securities segregated as collateral for securities purchased on a forward
committment basis.
PC Participation Certificate.
(a) Securities purchased on a forward commitment basis with an approximate
principal amount. The actual principal amount will be determined upon
settlement.
(b) Collateralized by $1,356,763 U.S. Treasury Note 6.125% due 07/31/00 valued
at $1,405,093.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $22,816,874 and the
aggregate gross unrealized depreciation is $428,389, resulting in net
unrealized appreciation of $22,388,485.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (95.9%)
AEROSPACE (0.9%)
$ 3,200 Sabreliner Corp. (Series B).................................................... 12.50 % 04/15/03 $ 3,352,000
------------
AUTOMOTIVE (4.6%)
4,175 APS, Inc. (a).................................................................. 11.875 01/15/06 2,212,750
6,000 General Motors Acceptance Corp................................................. 15.00 03/17/98 6,105,540
8,000 Toyota Motor Credit Corp....................................................... 15.00 09/25/98 8,514,560
------------
16,832,850
------------
BROADCAST MEDIA (7.8%)
3,750 Australis Holdings Ltd. (Australia)............................................ 15.00++ 11/01/02 2,062,500
10,000 Brill Media Co. LLC (Units)++ - 144A*.......................................... 7.50 12/15/07 9,325,000
3,000 Echostar DBS Corp.............................................................. 12.50 07/01/02 3,255,000
5,500 Echostar Satellite Broadcasting................................................ 13.125++ 03/15/04 4,620,000
2,000 Paxson Communications Corp..................................................... 11.625 10/01/02 2,145,000
2,005 Spanish Broadcasting System, Inc............................................... 12.50 06/15/02 2,305,750
7,500 TCI Satellite Entertainment Corp. - 144A*...................................... 12.25++ 02/15/07 5,043,750
------------
28,757,000
------------
BUSINESS SERVICES (5.7%)
5,000 Anacomp, Inc. (Series B)....................................................... 10.875 04/01/04 5,250,000
5,000 Comforce Corp. (Units)++ - 144A*............................................... 15.00+ 12/01/09 5,025,000
2,250 Comforce Operating Inc. - 144A*................................................ 12.00 12/01/07 2,278,125
5,000 Xerox Credit Corp.............................................................. 15.00 06/26/98 5,217,350
3,000 Xerox Credit Corp.............................................................. 15.00 10/07/98 3,202,800
------------
20,973,275
------------
CABLE & TELECOMMUNICATIONS (22.0%)
3,000 Adelphia Communications, Inc. (Series B)....................................... 9.875 03/01/07 3,165,000
3,000 Advanced Radio Telecommunication (Units)++..................................... 14.00 02/15/07 2,880,000
3,100 American Communications Services, Inc.......................................... 12.75++ 04/01/06 2,387,000
5,000 American Communications Services, Inc. - 144A*................................. 13.75 07/15/07 5,950,000
2,350 Cablevision Systems Corp....................................................... 10.50 05/15/16 2,726,000
7,000 Clearnet Communications Inc. (Canada).......................................... 14.75++ 12/15/05 5,573,750
2,000 Esprit Telecom Group PLC (United Kingdom)...................................... 11.50 12/15/07 2,065,000
3,000 FrontierVision Operating Partners, L.P......................................... 11.00 10/15/06 3,330,000
3,000 GST Equipment Funding, Inc. - 144A*............................................ 13.25 05/01/07 3,420,000
8,000 Hyperion Telecommunication, Inc. (Series B).................................... 13.00++ 04/15/03 5,800,000
2,000 Hyperion Telecommunication, Inc. (Series B).................................... 12.25 09/01/04 2,220,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 28,500 In-Flight Phone Corp. (Series B) (a)........................................... 14.00++% 05/15/02 $ 3,990,000
2,000 IXC Communications, Inc. (Series B)............................................ 12.50 10/01/05 2,300,000
2,000 James Cable Partners L.P. (Series B)........................................... 10.75 08/15/04 2,110,000
8,000 McCaw International Ltd........................................................ 13.00++ 04/15/07 4,640,000
4,000 Nextel Communications, Inc. - 144A*............................................ 10.65++ 09/15/07 2,505,000
1,500 Paging Network, Inc............................................................ 10.125 08/01/07 1,560,000
3,000 Paging Network, Inc............................................................ 10.00 10/15/08 3,112,500
2,000 Peoples Telephone Co., Inc..................................................... 12.25 07/15/02 2,100,000
10,000 Price Communications Cellular Holdings (Units)++ - 144A*....................... 13.50++ 08/01/07 6,300,000
7,000 Star Choice Communications (Units)++ (Canada).................................. 13.00 12/15/05 7,210,000
4,000 Transtel Pass-Thru Trust - 144A*............................................... 12.50 11/01/07 3,780,000
2,250 Winstar Communications, Inc.................................................... 14.00++ 10/15/05 1,800,000
------------
80,924,250
------------
COMPUTER EQUIPMENT (1.7%)
6,000 IBM Credit Corp................................................................ 15.00 03/04/98 6,087,300
------------
CONSUMER PRODUCTS (2.5%)
3,000 IHF Holdings Inc. (Series B)................................................... 15.00 11/15/04 2,580,000
3,000 J.B. Williams Holdings, Inc.................................................... 12.00 03/01/04 3,090,000
4,000 Renaissance Cosmetics, Inc..................................................... 11.75 02/15/04 3,680,000
------------
9,350,000
------------
CONTAINERS (1.4%)
2,000 Mail-Well Corp................................................................. 10.50 02/15/04 2,145,000
3,000 Packaging Resources, Inc....................................................... 11.625 05/01/03 3,180,000
------------
5,325,000
------------
ELECTRICAL & ALARM SYSTEMS (1.4%)
6,500 Mosler, Inc.................................................................... 11.00 04/15/03 5,005,000
------------
ENTERTAINMENT/GAMING & LODGING (12.6%)
2,000 AMF Group Inc. (Series B)...................................................... 10.875 03/15/06 2,190,000
2,000 Argosy Gaming Co............................................................... 13.25 06/01/04 2,085,000
7,000 Fitzgerald Gaming Corp. - 144A*................................................ 12.25 12/15/04 7,105,000
5,325 Lady Luck Gaming Finance Corp.................................................. 11.875 03/01/01 5,458,125
8,000 Motels of America, Inc. (Series B)............................................. 12.00 04/15/04 7,780,000
3,000 Players International, Inc..................................................... 10.875 04/15/05 3,232,500
3,400 Plitt Theaters, Inc. (Canada).................................................. 10.875 06/15/04 3,672,000
10,000 Resort At Summer Co. (Units)++ - 144A*......................................... 13.00+ 12/15/07 10,000,000
5,950 Stuart Entertainment, Inc. (Series B).......................................... 12.50 11/15/04 4,879,000
------------
46,401,625
------------
FINANCE (4.5%)
5,000 Commercial Credit Co........................................................... 15.00 07/10/98 5,235,300
3,000 General Electric Capital Corp.................................................. 13.50 01/20/98 3,008,850
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 8,000 Household Finance Corp......................................................... 15.00 % 09/25/98 $ 8,499,760
------------
16,743,910
------------
FOODS & BEVERAGES (9.1%)
5,330 Envirodyne Industries, Inc..................................................... 10.25 12/01/01 5,250,050
2,500 Fleming Companies, Inc......................................................... 10.625 12/15/01 2,653,125
2,000 General Mills, Inc............................................................. 13.50 01/21/98 2,006,260
10,250 PepsiCo, Inc................................................................... 15.00 08/06/98 10,798,272
4,000 Specialty Foods Acquisition Corp. (Series B)................................... 11.25 08/15/03 3,800,000
20,250 Specialty Foods Acquisition Corp. (Series B)................................... 13.00++ 08/15/05 9,011,250
------------
33,518,957
------------
HEALTHCARE (3.6%)
3,500 Unilab Corp.................................................................... 11.00 04/01/06 3,570,000
3,750 Unison Healthcare Corp. - 144A*................................................ 13.00 12/01/99 3,787,500
6,500 Unison Healthcare Corp. - 144A*................................................ 12.25 11/01/06 5,850,000
------------
13,207,500
------------
MANUFACTURING (2.6%)
2,000 Berry Plastics Corp............................................................ 12.25 04/15/04 2,180,000
2,500 Deere John Capital Corp........................................................ 15.00 02/24/98 2,530,225
2,000 International Wire Group, Inc.................................................. 11.75 06/01/05 2,190,000
2,500 Uniroyal Technology Corp....................................................... 11.75 06/01/03 2,600,000
------------
9,500,225
------------
MANUFACTURING - DIVERSIFIED (5.1%)
3,000 Interlake Corp................................................................. 12.00 11/15/01 3,322,500
3,000 Interlake Corp................................................................. 12.125 03/01/02 3,105,000
3,000 J.B. Poindexter & Co., Inc..................................................... 12.50 05/15/04 3,060,000
5,000 Jordan Industries, Inc. (Series B)............................................. 10.375 08/01/07 5,075,000
7,200 Jordan Industries, Inc. (Series B)............................................. 11.75++ 04/01/09 4,320,000
------------
18,882,500
------------
METALS & MINING (2.3%)
3,500 Centaur Mining & Exploration Ltd. - 144A* (Australia).......................... 11.00 12/01/07 3,517,500
5,000 Murrin Murrin Holdings - 144A* (Australia)..................................... 9.375 08/31/07 4,925,000
------------
8,442,500
------------
OIL & GAS (0.6%)
2,500 Key Energy Group Inc. - 144A* (Conv.).......................................... 5.00 09/15/04 2,135,950
------------
PUBLISHING (0.8%)
2,975 United States Banknote Corp.................................................... 10.375 06/01/02 2,945,250
------------
RESTAURANTS (3.8%)
7,750 American Restaurant Group Holdings, Inc........................................ 14.00++ 12/15/05 2,402,500
6,000 Boston Chicken, Inc. (Conv.)................................................... 0.00 06/01/15 877,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 4,000 Carrols Corp................................................................... 11.50 % 08/15/03 $ 4,240,000
5,975 FRD Acquisition Corp. (Series B)............................................... 12.50 07/15/04 6,512,750
------------
14,032,750
------------
RETAIL (1.6%)
10,450 County Seat Stores, Inc. (a)................................................... 12.00 10/01/02 5,747,500
------------
RETAIL - FOOD CHAINS (0.8%)
2,875 Pantry Inc. - 144A*............................................................ 10.25 10/15/07 2,954,063
------------
TEXTILES - APPAREL MANUFACTURERS (0.5%)
4,000 U.S. Leather, Inc. (b)......................................................... 10.25 07/31/03 1,880,000
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $366,330,449)...................................................................... 352,999,405
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
- ---------
<C> <S> <C>
COMMON STOCKS (c) (0.7%)
AUTOMOTIVE (0.0%)
87 Northern Holdings Industrial Corp. *(d)................................................ --
------------
ENTERTAINMENT/GAMING & LODGING (0.0%)
2,000 Motels of America, Inc. - 144A*........................................................ 80,072
71,890 Vagabond Inns, Inc. (Class D) (a)...................................................... --
------------
80,072
------------
FOODS & BEVERAGES (0.0%)
120,000 Specialty Foods Acquisition Corp. - 144A*.............................................. 120,000
------------
MANUFACTURING - DIVERSIFIED (0.7%)
84,072 Thermadyne Holdings Corp. (d).......................................................... 2,375,034
------------
RESTAURANTS (0.0%)
7,750 American Restaurant Group Holdings, Inc. - 144A*....................................... 7,750
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $8,566,039)........................................................... 2,582,856
------------
</TABLE>
<TABLE>
<CAPTION>
EXPIRATION
DATE
----------
<C> <S> <C> <C>
WARRANTS (c) (0.1%)
AEROSPACE (0.0%)
1,500 Sabreliner Corp. - 144A*................................................... 04/15/03 15,000
------------
BROADCAST MEDIA (0.0%)
3,750 Australis Holdings Ltd. - 144A* (Australia)................................ 10/30/01 --
------------
CABLE & TELECOMMUNICATIONS (0.1%)
2,000 Hyperion Telecommunication, Inc. (Series B) - 144A*........................ 04/01/01 180,059
34,400 Price Communications Corp. - 144A*......................................... 08/01/07 344
------------
180,403
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
SHARES DATE VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONTAINERS (0.0%)
2,000 Crown Packaging Holdings Ltd. - 144A*...................................... 11/01/03 --
------------
ENTERTAINMENT/GAMING & LODGING (0.0%)
1,000 Boomtown, Inc. - 144A*..................................................... 11/01/98 --
2,000 Fitzgeralds Gaming Corp.................................................... 12/19/98 $ 9,045
3,500 Fitzgeralds South Inc. - 144A*............................................. 03/15/99 --
------------
9,045
------------
MANUFACTURING (0.0%)
15,000 Uniroyal Technology Corp................................................... 06/01/03 54,375
------------
RETAIL (0.0%)
2,000 County Seat Holdings Co. (a)............................................... 10/15/98 --
------------
TOTAL WARRANTS
(IDENTIFIED COST $270,736)............................................................. 258,823
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENT (3.2%)
REPURCHASE AGREEMENT
$ 11,715 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $11,717,888) (e)
(IDENTIFIED COST $11,715,366)........................................................ 11,715,366
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $386,882,590) (f)........................................................ 99.9 % 367,556,450
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.1 504,821
------ -------------
NET ASSETS................................................................................ 100.0 % $ 368,061,271
------ -------------
------ -------------
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
++ Consists of one or more class of securities traded together as a unit;
bonds or preferred stocks with attached warrants.
+ Payment-in-kind security.
++ Currently a zero coupon bond which will pay interest at the rate shown at a
future specified date.
(a) Non-income producing security; issuer in bankruptcy.
(b) Non-income producing security; bond in default.
(c) Non-income producing securities.
(d) Acquired through exchange offer.
(e) Collateralized by $11,373,869 U.S. Treasury Note 6.125% due 08/15/07 valued
at $11,949,673.
(f) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $14,619,049 and the
aggregate gross unrealized depreciation is $33,945,189, resulting in net
unrealized depreciation of $19,326,140.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER
OF
SHARES VALUE
- ------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (87.8%)
NATURAL GAS (9.5%)
163,625 Burlington Resources, Inc................................... $ 7,332,445
209,930 EEX Corp.*.................................................. 1,902,491
110,230 El Paso Natural Gas Co...................................... 7,330,295
198,250 Enron Corp.................................................. 8,239,766
125,000 Questar Corp................................................ 5,578,125
145,000 Seagull Energy Corp.*....................................... 2,990,625
360,000 Williams Companies, Inc..................................... 10,215,000
------------
43,588,747
------------
TELECOMMUNICATIONS (30.7%)
71,666 360 DEG. Communications Co.*................................ 1,446,757
120,000 Airtouch Communications, Inc.*.............................. 4,987,500
195,000 Alltel Corp................................................. 8,007,187
120,000 AT&T Corp................................................... 7,350,000
200,000 BCE, Inc. (Canada).......................................... 6,662,500
82,160 Bell Atlantic Corp.......................................... 7,476,560
195,000 Cable & Wireless PLC (ADR) (United Kingdom)................. 5,301,562
155,000 Century Telephone Enterprises, Inc.......................... 7,720,937
135,000 Ericsson (L.M.) Telephone Co. (Class B) (ADR) (Sweden)...... 5,037,187
91,100 Esat Telecom Group PLC (ADR)*............................... 1,224,156
150,000 Frontier Corp............................................... 3,609,375
150,000 GTE Corp.................................................... 7,837,500
125,000 LCI International, Inc.*.................................... 3,843,750
16,992 Lucent Technologies, Inc.................................... 1,357,236
105,000 MCI Communications Corp..................................... 4,495,312
142,173 SBC Communications, Inc..................................... 10,414,172
150,000 Southern New England Telecommunications Corp................ 7,546,875
120,000 Sprint Corp................................................. 7,035,000
65,000 Tele Danmark AS (ADR) (Denmark)............................. 2,002,812
120,000 Telecom Corp. of New Zealand Ltd. (ADR) (New Zealand)....... 4,650,000
80,000 Telefonos de Mexico S.A. de C.V. (Series L) (ADR)........... 4,485,000
130,000 Telephone & Data Systems, Inc............................... 6,053,125
45,300 Teleport Communications Group Inc.*......................... 2,485,837
51,500 Telstra Corp., Ltd. (ADR)*.................................. 2,150,125
110,000 U.S. West Communications Group, Inc......................... 4,963,750
115,000 U.S. West Media Group, Inc.*................................ 3,320,625
<CAPTION>
NUMBER
OF
SHARES VALUE
- ------------------------------------------------------------------------------------
<C> <S> <C>
304,500 WorldCom, Inc.*............................................. $ 9,211,125
------------
140,675,965
------------
UTILITIES - ELECTRIC (47.6%)
50,000 AES Corp.*.................................................. 2,331,250
210,000 Baltimore Gas & Electric Co................................. 7,153,125
135,000 Carolina Power & Light Co................................... 5,729,062
135,000 Central & South West Corp................................... 3,653,437
215,865 CINergy Corp................................................ 8,270,328
225,000 CMS Energy Corp............................................. 9,914,062
130,000 Consolidated Edison Co. of New York, Inc.................... 5,330,000
225,000 DPL, Inc.................................................... 6,468,750
212,500 DQE, Inc.................................................... 7,464,063
135,000 DTE Energy Co............................................... 4,682,813
141,216 Duke Energy Corp............................................ 7,819,836
130,000 Edison International........................................ 3,534,375
140,000 Enova Corp.................................................. 3,788,750
215,000 Entergy Corp................................................ 6,436,563
140,000 FPL Group, Inc.............................................. 8,286,250
175,000 GPU, Inc.................................................... 7,371,875
125,000 Hawaiian Electric Industries, Inc........................... 5,109,375
200,000 Houston Industries, Inc..................................... 5,337,500
215,000 Illinova Corp............................................... 5,791,563
225,000 IPALCO Enterprises, Inc..................................... 9,435,938
125,000 Kansas City Power & Light Co................................ 3,695,313
75,000 Montana Power Co............................................ 2,385,938
200,000 New Century Energies, Inc................................... 9,587,500
110,000 New England Electric System................................. 4,702,500
110,000 New York State Electric & Gas Corp.......................... 3,905,000
170,000 NIPSCO Industries, Inc...................................... 8,404,375
285,000 PacifiCorp.................................................. 7,784,063
220,000 Pinnacle West Capital Corp.................................. 9,322,500
60,000 Potomac Electric Power Co................................... 1,548,750
215,000 Public Service Company of New Mexico........................ 5,092,813
115,000 Public Service Enterprise Group, Inc........................ 3,644,063
215,000 SCANA Corp.................................................. 6,436,563
275,000 Southern Co................................................. 7,115,625
161,500 Texas Utilities Co.......................................... 6,712,344
190,000 Western Resources, Inc...................................... 8,170,000
200,000 Wisconsin Energy Corp....................................... 5,750,000
------------
218,166,262
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $264,700,665).............................. 402,430,974
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (9.1%)
NATURAL GAS (1.2%)
$ 3,000 Coastal Corp.
7.75% due 10/15/35............................................................... $ 3,264,630
2,000 Panhandle Eastern Corp.
8.625% due 04/15/25.............................................................. 2,227,600
------------
5,492,230
------------
TELECOMMUNICATIONS (1.9%)
2,000 GTE Corp.
7.90% due 02/01/27............................................................... 2,099,860
2,000 Southwestern Bell Telephone Co.
7.20% due 10/15/26............................................................... 2,049,980
2,000 Sprint Corp.
9.25% due 04/15/22............................................................... 2,556,360
2,000 WorldCom, Inc.
7.75% due 04/01/07............................................................... 2,136,200
------------
8,842,400
------------
UTILITIES - ELECTRIC (6.0%)
1,500 Consolidated Edison Co. of New York, Inc.
8.05% due 12/15/27............................................................... 1,576,260
2,000 Empresa Nacional de Electricidad Chile
8.125% due 02/01/97.............................................................. 2,089,560
2,250 Florida Power & Light Co.
7.05% due 12/01/26............................................................... 2,278,822
3,000 Illinois Power Co.
8.75% due 07/01/21............................................................... 3,199,530
3,000 Indianapolis Power Co.
7.05% due 02/01/24............................................................... 2,990,610
1,500 Long Island Lighting Co.
9.625% due 07/01/24.............................................................. 1,530,000
3,000 Public Service Electric & Gas Co.
7.00% due 09/01/24............................................................... 2,965,380
2,000 South Carolina Electric & Gas Co.
7.625% due 06/01/23.............................................................. 2,123,560
1,000 Southern California Edison Co.
7.25% due 03/01/26............................................................... 1,023,470
2,000 Southwestern Public Service
8.50% due 02/15/25............................................................... 2,295,640
5,000 Wisconsin Electric Power Co.
7.125% due 03/15/16.............................................................. 5,127,500
------------
27,200,332
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $38,986,990)...................................................... 41,534,962
------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY (0.3%)
$ 1,250 Tennessee Valley Authority 8.00% due 03/31/45
(IDENTIFIED COST $1,250,000)..................................................... $ 1,321,875
------------
SHORT-TERM INVESTMENTS (2.4%)
U.S. GOVERNMENT AGENCY (a) (2.4%)
11,000 Federal Home Loan Banks 5.75% due 01/02/98
(AMORITZED COST $10,998,243)..................................................... 10,998,243
------------
REPURCHASE AGREEMENT (0.0%)
189 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97, proceeds $188,930) (b)
(IDENTIFIED COST $188,889)....................................................... 188,889
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $11,187,132)...................................................... 11,187,132
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $316,124,787) (c)........................................................ 99.6 % 456,474,943
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.4 1,659,313
------ -------------
NET ASSETS................................................................................ 100.0 % $ 458,134,256
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $52,218 U.S. Treasury Bond 9.25% due 02/15/16 valued at
$72,633 and by $88,147 U.S. Treasury Bond 9.00% due 11/15/18 valued at
$120,034.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $141,249,536 and the
aggregate gross unrealized depreciation is $899,380, resulting in net
unrealized appreciation of $140,350,156.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (44.8%)
AEROSPACE (0.0%)
433 Raytheon Co. (Class A).................................................................. $ 21,384
-----------
APPAREL (0.9%)
16,700 Kellwood Co............................................................................. 501,000
-----------
AUTO PARTS (0.9%)
10,200 Dana Corp............................................................................... 484,500
-----------
AUTOMOTIVE (2.5%)
12,800 Chrysler Corp........................................................................... 450,400
9,400 Ford Motor Co........................................................................... 457,662
7,400 General Motors Corp..................................................................... 448,625
-----------
1,356,687
-----------
BANKS (4.2%)
11,900 First Security Corp..................................................................... 498,312
6,800 First Tennessee National Corp........................................................... 453,900
6,500 KeyCorp................................................................................. 460,281
14,500 Washington Federal, Inc................................................................. 455,844
7,100 Wilmington Trust Corp................................................................... 438,425
-----------
2,306,762
-----------
BANKS - THRIFT INSTITUTIONS (0.8%)
7,300 Washington Mutual, Inc.................................................................. 465,375
-----------
BUILDING MATERIALS (0.8%)
4,600 Vulcan Materials Co..................................................................... 469,775
-----------
CHEMICALS (3.3%)
4,500 Dow Chemical Co......................................................................... 456,750
9,100 Hercules, Inc........................................................................... 455,569
7,800 PPG Industries, Inc..................................................................... 445,575
5,000 Rohm & Haas Co.......................................................................... 478,750
-----------
1,836,644
-----------
CONGLOMERATES (0.9%)
12,000 Tenneco, Inc............................................................................ 474,000
-----------
CONTAINERS - METAL & GLASS (0.8%)
9,100 Crown Cork & Seal Co., Inc.............................................................. 456,137
-----------
FINANCIAL (1.0%)
2,400 Providian Financial Corp................................................................ 108,450
13,600 TCF Financial Corp...................................................................... 461,550
-----------
570,000
-----------
FINANCIAL - MISCELLANEOUS (1.6%)
8,100 Fannie Mae.............................................................................. 462,206
3,200 SLM Holding Corp........................................................................ 445,200
-----------
907,406
-----------
FOOD PROCESSING (0.9%)
14,400 Hormel Foods Corp....................................................................... 471,600
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE - DRUGS (0.8%)
7,400 Schering-Plough Corp.................................................................... $ 459,725
-----------
INSURANCE (2.5%)
5,900 Jefferson-Pilot Corp.................................................................... 459,462
5,800 Lincoln National Corp................................................................... 453,125
11,300 Torchmark Corp.......................................................................... 475,306
-----------
1,387,893
-----------
LIFE INSURANCE (0.2%)
1,042 Aegon N.V. (ARS) (Netherlands).......................................................... 93,389
-----------
MACHINERY - DIVERSIFIED (0.8%)
9,800 Johnson Controls, Inc................................................................... 467,950
-----------
MANUFACTURING - CONSUMER & INDUSTRIAL PRODUCTS (0.8%)
8,300 Whirlpool Corp.......................................................................... 456,500
-----------
METALS & MINING (0.8%)
30,000 Cyprus Amax Minerals Co................................................................. 461,250
-----------
MISCELLANEOUS (0.9%)
12,500 American Greetings Corp. (Class A)...................................................... 489,062
-----------
MOBIL HOME & RECREATION (0.8%)
11,000 Fleetwood Enterprises, Inc.............................................................. 466,813
-----------
OIL & GAS (0.9%)
9,100 Ashland, Inc............................................................................ 488,556
-----------
REAL ESTATE INVESTMENT TRUST (5.9%)
8,000 American General Hospitality Corp....................................................... 214,000
2,700 Boston Properties, Inc.................................................................. 89,269
9,800 Excel Realty Trust, Inc................................................................. 308,700
15,700 Glenborough Realty Trust Inc............................................................ 465,113
3,750 Healthcare Realty Trust, Inc............................................................ 108,516
19,000 Liberty Property Trust.................................................................. 542,688
27,500 LTC Properties, Inc..................................................................... 570,625
15,000 Reckson Associates Realty Corp.......................................................... 380,625
34,200 Sunstone Hotel Investors, Inc........................................................... 589,950
-----------
3,269,486
-----------
RESTAURANTS (0.8%)
17,000 Sbarro, Inc............................................................................. 447,313
-----------
RETAIL - SPECIALTY APPAREL (0.9%)
18,600 Limited (The), Inc...................................................................... 474,300
-----------
STEEL (0.9%)
16,000 USX-U.S. Steel Group, Inc............................................................... 500,000
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS (1.6%)
4,900 Bell Atlantic Corp...................................................................... $ 445,900
10,200 U.S. West Communications Group, Inc..................................................... 460,275
-----------
906,175
-----------
TELEPHONES (0.8%)
7,400 AT&T Corp............................................................................... 453,250
-----------
TOBACCO (1.7%)
10,000 Philip Morris Companies, Inc............................................................ 453,125
12,700 UST, Inc................................................................................ 469,106
-----------
922,231
-----------
UTILITIES - ELECTRIC (3.4%)
11,300 Consolidated Edison Co. of New York, Inc................................................ 463,300
10,900 New England Electric System............................................................. 465,975
19,000 PECO Energy Co.......................................................................... 460,750
15,000 Public Service Enterprise Group, Inc.................................................... 475,313
-----------
1,865,338
-----------
UTILITIES - TELEPHONE (0.9%)
9,000 GTE Corp................................................................................ 470,250
-----------
WHOLESALE DISTRIBUTOR (0.8%)
10,800 Supervalu, Inc.......................................................................... 452,250
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $21,750,845)........................................................... 24,853,001
-----------
CONVERTIBLE PREFERRED STOCKS (13.9%)
AUTO PARTS (1.2%)
12,000 BTI Capital Trust $3.25 - 144A*......................................................... 583,500
3,700 Walbro Capital Trust $2.00.............................................................. 85,562
-----------
669,062
-----------
BANKS-INTERNATIONAL (1.5%)
15,500 National Australia Bank, Ltd. $1.969 (Australia) (Units)++.............................. 440,781
12,500 Westpak Banking Corp. (STRYPES) $3.135.................................................. 418,750
-----------
859,531
-----------
BROADCAST MEDIA (1.0%)
11,500 Metromedia International Group $3.625................................................... 520,375
4,000 Triathlon Broadcasting Co. $0.945....................................................... 40,500
-----------
560,875
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CABLE & TELECOMMUNICATIONS (0.9%)
10,250 Echostar Communications Corp. (Series C) $3.375......................................... $ 476,625
-----------
FINANCE (2.6%)
6,890 Insignia Financing, Inc. $3.25.......................................................... 360,864
10,440 Merrill Lynch & Co., Inc. (STRYPES) $2.39 (1)........................................... 360,180
10,000 Merrill Lynch & Co., Inc. (STRYPES) $4.087 (2).......................................... 705,000
-----------
1,426,044
-----------
HEALTHCARE (0.7%)
12,600 Kapson Senior Quarters $2.00 - 144A*.................................................... 377,219
-----------
INSURANCE (0.2%)
2,500 American Heritage Life Investment Corp. $4.25........................................... 142,500
-----------
PUBLISHING (0.7%)
29,090 Hollinger International, Inc. $0.951.................................................... 374,534
-----------
REAL ESTATE (0.6%)
7,000 Rouse Co. (Series B) $3.00.............................................................. 350,000
-----------
REAL ESTATE INVESTMENT TRUST (2.3%)
9,000 Equity Residential Properties Trust (Series E) $1.75.................................... 258,750
22,560 FelCor Suite Hotels, Inc. (Series A) $1.95.............................................. 645,780
1,085 Merry Land & Investment Co., Inc. (Series C) $2.15...................................... 30,312
13,700 Oasis Residential, Inc. (Series A) $2.25................................................ 351,063
-----------
1,285,905
-----------
TELECOMMUNICATIONS (1.4%)
12,330 Loral Space & Communications Ltd. (Series C) $3.00 (Bermuda)............................ 759,836
-----------
TEXTILES & APPAREL (0.8%)
10,000 Warnaco Group, Inc. $3.00............................................................... 430,000
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST $7,457,545)............................................................ 7,712,131
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (35.5%)
CONVERTIBLE BONDS (14.4%)
AUTO PARTS (1.1%)
$ 350 MascoTech, Inc.
4.50% due 12/15/03.................................................................... $ 306,908
300 Tower Automotive, Inc. - 144A*
5.00% due 08/01/04.................................................................... 310,875
-----------
617,783
-----------
CABLE/CELLULAR (0.3%)
400 U.S. Cellular Corp.
0.00% due 06/15/15.................................................................... 144,948
-----------
HEALTHCARE (2.2%)
280 Emeritus Corp. - 144A*
6.25% due 01/01/06.................................................................... 240,898
650 Phymatrix Corp.
6.75% due 06/15/03.................................................................... 586,625
600 Physicians Resource Group, Inc. - 144A*
6.00% due 12/01/01.................................................................... 402,054
-----------
1,229,577
-----------
HEALTHCARE - MISCELLANEOUS (0.3%)
225 Pharmaceutical Marketing Services, Inc. (Eurobond)
6.25% due 02/01/03.................................................................... 189,000
-----------
HOTELS/MOTELS (1.0%)
560 Capstar Hotel Corp.
4.75% due 10/15/04.................................................................... 561,993
-----------
MACHINERY (0.4%)
200 Thermo Fibertek, Inc. - 144A*
4.50% due 07/15/04.................................................................... 213,828
-----------
MANUFACTURING - DIVERSIFIED (0.7%)
400 Mark IV Industries, Inc. - 144A*
4.75% due 11/01/04.................................................................... 371,876
-----------
MEDICAL EQUIPMENT (0.7%)
400 ThermoTrex Corp.
3.25% due 11/01/07.................................................................... 394,980
-----------
OFFICE EQUIPMENT & SUPPLIES (3.0%)
550 Danka Business Systems (United Kingdom)
6.75% due 04/01/02.................................................................... 490,171
1,275 U.S. Office Products Co.
5.50% due 05/15/03.................................................................... 1,182,639
-----------
1,672,810
-----------
PUBLISHING (0.5%)
300 Nelson (Thomas), Inc.
5.75% due 11/30/99.................................................................... 296,904
-----------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE INVESTMENT TRUST (1.0%)
$ 575 Capstone Capital Corp.
6.55% due 03/14/02.................................................................... $ 550,085
-----------
RESTAURANTS (0.3%)
160 Boston Chicken, Inc.
4.50% due 02/01/04.................................................................... 77,600
500 Boston Chicken, Inc.
0.00% due 06/01/15.................................................................... 73,125
-----------
150,725
-----------
RETAIL (1.2%)
400 Petsmart, Inc. - 144A*
6.75% due 11/01/04.................................................................... 404,792
300 Saks Holdings, Inc.
5.50% due 09/15/06.................................................................... 258,642
-----------
663,434
-----------
SHOES (1.1%)
405 Nine West Group, Inc.
5.50% due 07/15/03.................................................................... 326,151
350 Nine West Group, Inc. - 144A*
5.50% due 07/15/03.................................................................... 281,858
-----------
608,009
-----------
TELECOMMUNICATIONS (0.6%)
300 SmarTalk TeleServices, Inc. - 144A*
5.75% due 09/15/04.................................................................... 317,991
-----------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST $8,184,404)............................................................ 7,983,943
-----------
NONCONVERTIBLE BONDS (21.1%)
BROADCAST MEDIA (0.4%)
195 Outlet Broadcasting, Inc.
10.875% due 07/15/03.................................................................. 207,925
-----------
BUILDING & CONSTRUCTION (1.2%)
600 Johns Manville International Group
10.875% due 12/15/04.................................................................. 664,500
-----------
BUSINESS SERVICES (3.2%)
1,650 Neodata Services, Inc. (Series B)
12.00% due 05/01/03................................................................... 1,776,208
-----------
CABLE/CELLULAR (3.2%)
1,600 Continental Cablevision, Inc.
11.00% due 06/01/07................................................................... 1,768,288
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HEALTHCARE (1.5%)
$ 750 Magellan Health Services, Inc. (Series A)
11.25% due 04/15/04................................................................... $ 832,500
-----------
INDUSTRIALS (2.7%)
1,500 American Standard Companies, Inc.
10.50%+ due 06/01/05.................................................................. 1,522,500
-----------
PUBLISHING (1.5%)
800 Big Flower Press Holdings, Inc.
8.875% due 07/01/07................................................................... 806,000
-----------
RETAIL (5.9%)
1,600 Barnes & Noble, Inc. (Series B)
11.875% due 01/15/03.................................................................. 1,700,160
1,500 Orchard Supply Hardware Corp.
9.375% due 02/15/02................................................................... 1,550,895
-----------
3,251,055
-----------
SUPERMARKETS (1.5%)
800 Kroger Co.
9.25% due 01/01/05.................................................................... 838,576
-----------
TOTAL NONCONVERTIBLE BONDS
(IDENTIFIED COST $11,753,278)........................................................... 11,667,552
-----------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $19,937,682)........................................................... 19,651,495
-----------
SHORT-TERM INVESTMENTS (6.1%)
U.S. GOVERNMENT AGENCIES (a) (5.4%)
3,000 Federal Home Loan Mortgage Corp. 5.78-6.00% due 01/02/98-01/09/98
(AMORTIZED COST $2,998,383)........................................................... 2,998,383
-----------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.7%)
$ 357 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $357,495) (b)
(IDENTIFIED COST $357,418)............................................................ $ 357,418
-----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $3,355,801)............................................................ 3,355,801
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $52,501,873) (c).......................................................... 100.3 % 55,572,428
LIABILITIES IN EXCESS OF OTHER ASSETS...................................................... (0.3) (149,595)
------ ------------
NET ASSETS................................................................................. 100.0 % $ 55,422,833
------ ------------
------ ------------
</TABLE>
- ---------------------
ARS American Regulatory Share.
STRYPES Structured yield product exchangeable for stock.
* Resale is restricted to qualified institutional investors.
+ Currently a zero coupon bond which will pay interest at the rate shown
at a future specified date.
++ Consists of one or more class of securities traded together as a unit;
stocks with attached warrants.
(1) Convertible into IMC Global, Inc. common stock.
(2) Convertible into SunAmerica, Inc. common stock.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $355,274 U.S. Treasury Note 6.25% due 04/30/01 valued
at $364,567.
(c) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$3,812,018 and the aggregate gross unrealized depreciation is $741,463,
resulting in net unrealized appreciation of $3,070,555.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (95.9%)
AEROSPACE (3.7%)
35,392 Raytheon Co. (Class A).............................................................. $ 1,745,285
686,000 Raytheon Co. (Class B).............................................................. 34,643,000
483,000 United Technologies Corp............................................................ 35,168,437
--------------
71,556,722
--------------
ALUMINUM (1.9%)
505,000 Aluminum Co. of America............................................................. 35,539,375
--------------
AUTO PARTS (1.8%)
657,000 TRW, Inc............................................................................ 35,067,375
--------------
AUTOMOTIVE (3.7%)
745,000 Ford Motor Co....................................................................... 36,272,187
570,000 General Motors Corp................................................................. 34,556,250
--------------
70,828,437
--------------
BANKS (5.6%)
664,000 Banc One Corp....................................................................... 36,063,500
490,000 BankAmerica Corp.................................................................... 35,770,000
499,000 KeyCorp............................................................................. 35,335,437
--------------
107,168,937
--------------
BEVERAGES - SOFT DRINKS (1.9%)
984,000 PepsiCo Inc......................................................................... 35,854,500
--------------
BROADCASTING (0.2%)
122,800 CBS Corp............................................................................ 3,614,925
--------------
CHEMICALS (5.6%)
365,000 Dow Chemical Co..................................................................... 37,047,500
594,000 Eastman Chemical Co................................................................. 35,380,125
606,000 PPG Industries, Inc................................................................. 34,617,750
--------------
107,045,375
--------------
COMPUTERS (1.9%)
339,000 International Business Machines Corp................................................ 35,446,687
--------------
CONGLOMERATES (3.7%)
411,000 Minnesota Mining & Manufacturing Co................................................. 33,727,687
932,000 Tenneco, Inc........................................................................ 36,814,000
--------------
70,541,687
--------------
COSMETICS (1.9%)
359,000 Gillette Co......................................................................... 36,057,062
--------------
DRUGS (5.5%)
527,000 Abbott Laboratories................................................................. 34,551,437
458,000 American Home Products Corp......................................................... 35,037,000
373,000 Bristol-Myers Squibb Co............................................................. 35,295,125
--------------
104,883,562
--------------
ELECTRIC - MAJOR (1.9%)
485,000 General Electric Co................................................................. 35,586,875
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL - MISCELLANEOUS (1.9%)
282,000 Household International, Inc........................................................ $ 35,972,625
--------------
FOODS (3.7%)
668,000 Quaker Oats Company (The)........................................................... 35,237,000
623,000 Sara Lee Corp....................................................................... 35,082,687
--------------
70,319,687
--------------
HOUSEHOLD PRODUCTS (1.8%)
443,000 Procter & Gamble Co................................................................. 35,356,938
--------------
INSURANCE (1.9%)
507,500 Aetna Inc........................................................................... 35,810,469
--------------
MACHINERY - CONSTRUCTION & MATERIALS (1.8%)
720,000 Caterpillar, Inc.................................................................... 34,965,000
--------------
METALS & MINING (1.8%)
560,000 Phelps Dodge Corp................................................................... 34,860,000
--------------
NATURAL GAS (3.8%)
795,000 Burlington Resources, Inc........................................................... 35,625,938
564,000 El Paso Natural Gas Co.............................................................. 37,506,000
--------------
73,131,938
--------------
OFFICE EQUIPMENT (1.9%)
412,000 Pitney Bowes, Inc................................................................... 37,054,250
--------------
OIL - DOMESTIC (3.9%)
704,000 Ashland, Inc........................................................................ 37,796,000
453,000 Atlantic Richfield Co............................................................... 36,296,625
--------------
74,092,625
--------------
OIL INTEGRATED - INTERNATIONAL (5.6%)
584,000 Exxon Corp.......................................................................... 35,733,500
488,000 Mobil Corp.......................................................................... 35,227,500
655,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)....................................... 35,492,813
--------------
106,453,813
--------------
PAPER & FOREST PRODUCTS (3.8%)
830,000 International Paper Co.............................................................. 35,793,750
742,000 Weyerhaeuser Co..................................................................... 36,404,375
--------------
72,198,125
--------------
PHOTOGRAPHY (2.0%)
613,000 Eastman Kodak Co.................................................................... 37,278,063
--------------
RAILROADS (1.8%)
374,000 Burlington Northern Santa Fe Corp................................................... 34,758,625
--------------
RESTAURANTS (0.1%)
91,400 Tricon Global Restaurants, Inc.*.................................................... 2,656,313
--------------
RETAIL - DEPARTMENT STORES (1.9%)
702,000 May Department Stores Co............................................................ 36,986,625
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RETAIL - FOOD CHAINS (1.9%)
1,728,000 American Stores Co.................................................................. $ 35,532,000
--------------
STEEL (1.8%)
1,005,000 Timken Co........................................................................... 34,546,875
--------------
TELECOMMUNICATIONS (5.7%)
400,000 Bell Atlantic Corp.................................................................. 36,400,000
613,000 Sprint Corp......................................................................... 35,937,125
786,000 U.S. West Communications Group, Inc................................................. 35,468,250
--------------
107,805,375
--------------
TOBACCO (1.9%)
783,000 Philip Morris Companies, Inc........................................................ 35,479,688
--------------
TRANSPORTATION (1.9%)
1,091,000 Ryder System, Inc................................................................... 35,730,250
--------------
UTILITIES - ELECTRIC (3.8%)
603,000 FPL Group, Inc...................................................................... 35,690,063
1,180,000 Unicom Corp......................................................................... 36,285,000
--------------
71,975,063
--------------
UTILITIES - GAS (1.9%)
596,900 Consolidated Natural Gas Co......................................................... 36,112,450
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $1,400,630,192).................................................... 1,828,268,316
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ----------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (2.1%)
$ 4,000 U.S. Treasrury Bond
8.00% due 11/15/21........................................................ 4,989,000
5,000 U.S. Treasury Bond
7.125% due 02/15/23....................................................... 5,707,250
17,000 U.S. Treasury Bond
6.25% due 08/15/23........................................................ 17,522,920
7,000 U.S. Treasury Bond
6.00% due 02/15/26........................................................ 6,993,070
5,000 U.S. Treasury Note
6.375% due 01/15/99....................................................... 5,037,550
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $36,992,101)............................................... 40,249,790
--------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- --------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (1.6%)
U.S. GOVERNMENT AGENCY (a) (1.5%)
$ 29,600 Federal Home Loan Mortgage Corp. 6.00% due 01/02/98
(AMORTIZED COST $29,595,067).............................................. $ 29,595,067
--------------
REPURCHASE AGREEMENT (0.1%)
155 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $154,557)
(b)
(IDENTIFIED COST $154,524)................................................ 154,524
--------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $29,749,591)............................................... 29,749,591
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,467,371,884) (c).................................................... 99.6 % 1,898,267,697
OTHER ASSETS IN EXCESS OF LIABILITIES................................................... 0.4 7,638,061
------ ---------------
NET ASSETS.............................................................................. 100.0 % $ 1,905,905,758
------ ---------------
------ ---------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $113,315 U.S. Treasury Bond 9.25% due 02/15/16 valued at
$157,614.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $451,254,905 and the
aggregate gross unrealized depreciation is $20,359,092, resulting in net
unrealized appreciation of $430,895,813.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (99.2%)
BANKING (1.5%)
33,000 State Street Corp...................................................................... $ 1,920,187
------------
BUILDING MATERIALS (1.6%)
35,000 Southdown, Inc......................................................................... 2,065,000
------------
COMMUNICATIONS EQUIPMENT (4.1%)
50,000 ADC Telecommunications, Inc.*.......................................................... 2,087,500
60,000 Tellabs, Inc.*......................................................................... 3,161,250
------------
5,248,750
------------
COMPUTER SOFTWARE (2.5%)
60,000 Computer Associates International, Inc................................................. 3,172,500
------------
COMPUTERS - SYSTEMS (1.6%)
75,000 EMC Corp.*............................................................................. 2,057,812
------------
CONSUMER SERVICES (1.9%)
105,000 AccuStaff, Inc.*....................................................................... 2,415,000
------------
DRUGS (2.8%)
70,000 Elan Corp. PLC (ADR) (Ireland)*........................................................ 3,583,125
------------
ELECTRONICS (0.9%)
30,000 Jabil Circuit, Inc.*................................................................... 1,185,000
------------
ENVIRONMENTAL CONTROL (1.8%)
130,000 Newpark Resources, Inc.*............................................................... 2,275,000
------------
FINANCIAL - MISCELLANEOUS (9.9%)
22,000 Household International, Inc........................................................... 2,806,375
110,000 MBNA Corp.............................................................................. 3,004,375
48,000 MGIC Investment Corp................................................................... 3,192,000
80,000 Providian Financial Corp............................................................... 3,615,000
------------
12,617,750
------------
FINANCIAL SERVICES (5.3%)
80,000 SunAmerica, Inc........................................................................ 3,420,000
62,000 Travelers Group, Inc................................................................... 3,340,250
------------
6,760,250
------------
HEALTHCARE PRODUCTS & SERVICES (2.5%)
53,000 Express Scripts, Inc. (Class A)*....................................................... 3,180,000
------------
HOSPITAL MANAGEMENT (4.0%)
62,000 Quorum Health Group, Inc.*............................................................. 1,619,750
70,000 Universal Health Services, Inc. (Class B)*............................................. 3,526,250
------------
5,146,000
------------
HOUSEHOLD FURNISHINGS & APPLIANCES (1.1%)
35,000 Ethan Allen Interiors, Inc............................................................. 1,349,687
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
LIFE INSURANCE (2.7%)
75,000 Conseco, Inc........................................................................... $ 3,407,813
------------
MACHINERY - DIVERSIFIED (2.0%)
44,000 Deere & Co............................................................................. 2,565,750
------------
MANUFACTURING - DIVERSIFIED (2.9%)
80,000 Tyco International Ltd................................................................. 3,605,000
------------
MEDIA GROUP (3.1%)
50,000 Clear Channel Communications, Inc.*.................................................... 3,971,875
------------
OFFICE EQUIPMENT & SUPPLIES (6.1%)
125,000 Corporate Express, Inc.*............................................................... 1,609,375
115,000 Staples, Inc.*......................................................................... 3,191,250
150,000 U.S. Office Products Co.*.............................................................. 2,906,250
------------
7,706,875
------------
OIL DRILLING & SERVICES (3.4%)
130,000 Global Industries Ltd.*................................................................ 2,210,000
30,000 Pride International, Inc.*............................................................. 757,500
25,000 Tidewater, Inc......................................................................... 1,378,125
------------
4,345,625
------------
OIL EQUIPMENT & SERVICES (2.4%)
30,000 Falcon Drilling Company, Inc.*......................................................... 1,051,875
90,000 Varco International, Inc.*............................................................. 1,929,375
------------
2,981,250
------------
PHARMACEUTICALS (5.3%)
85,000 Medicis Pharmaceutical Corp. (Class A)*................................................ 4,356,250
70,000 Watson Pharmaceuticals, Inc.*.......................................................... 2,270,625
------------
6,626,875
------------
RESTAURANTS (1.5%)
50,000 Starbucks Corp.*....................................................................... 1,918,750
------------
RETAIL - DEPARTMENT STORES (5.5%)
55,000 Dollar General Corp.................................................................... 1,993,750
95,000 Proffitt's, Inc.*...................................................................... 2,701,563
60,000 Stage Stores, Inc.*.................................................................... 2,242,500
------------
6,937,813
------------
RETAIL - DRUG STORES (0.7%)
30,000 Walgreen Co............................................................................ 941,250
------------
RETAIL - FOOD CHAINS (6.2%)
110,000 Kroger Co.*............................................................................ 4,063,125
60,000 Safeway, Inc.*......................................................................... 3,795,000
------------
7,858,125
------------
RETAIL - SPECIALTY (5.2%)
40,000 CompUSA, Inc.*......................................................................... 1,240,000
45,000 Consolidated Stores Corp.*............................................................. 1,977,188
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
100,000 General Nutrition Companies, Inc.*..................................................... $ 3,387,500
------------
6,604,688
------------
SAVINGS & LOAN COMPANIES (1.5%)
30,000 Washington Mutual, Inc................................................................. 1,912,500
------------
TELECOMMUNICATIONS (6.3%)
100,000 Airtouch Communications, Inc.*......................................................... 4,156,250
125,000 LCI International, Inc.*............................................................... 3,843,750
------------
8,000,000
------------
UTILITIES - ELECTRIC (2.9%)
80,000 AES Corp.*............................................................................. 3,730,000
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $104,597,246)......................................................... 126,090,250
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENTS (8.7%)
U.S. GOVERNMENT AGENCY (a) (8.6%)
$ 10,900 Federal Home Loan Banks 5.75% due 01/02/98
(AMORTIZED COST $10,898,259)......................................................... 10,898,259
------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.1%)
$ 191 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $191,148) (b)
(IDENTIFIED COST $191,107)........................................................... $ 191,107
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $11,089,366).......................................................... 11,089,366
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $115,686,612) (c)........................................................ 107.9 % 137,179,616
LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (7.9) (10,079,540)
------ -------------
NET ASSETS................................................................................ 100.0 % $ 127,100,076
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $143,146 U.S. Treasury Note 9.00% due 11/15/18 valued at
$194,929.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $23,512,288 and the
aggregate gross unrealized depreciation is $2,019,284, resulting in net
unrealized appreciation of $21,493,004.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON & PREFERRED STOCKS (99.4%)
AUSTRALIA (2.0%)
BANKING
275,000 Australia & New Zealand Banking Group Ltd......................... $ 1,813,919
------------
BUILDING & CONSTRUCTION
718,000 Pioneer International Ltd......................................... 1,956,977
------------
GOLD
2,140,000 Normandy Mining Ltd............................................... 2,074,184
------------
OIL RELATED
440,000 Santos Ltd........................................................ 1,808,911
------------
PAPER & FOREST PRODUCTS
420,000 Amcor Ltd......................................................... 1,844,168
------------
TOTAL AUSTRALIA................................................... 9,498,159
------------
CANADA (2.6%)
BANKS - COMMERCIAL
81,800 Toronto Dominion Bank............................................. 3,079,018
------------
NATURAL GAS
71,000 IPL Energy, Inc................................................... 3,248,723
143,000 TransCanada Pipelines Ltd......................................... 3,191,562
------------
6,440,285
------------
OIL RELATED
50,000 Imperial Oil Ltd.................................................. 3,218,359
------------
TOTAL CANADA...................................................... 12,737,662
------------
FRANCE (6.6%)
BANKING
20,100 Societe Generale.................................................. 2,736,510
------------
BUILDING & CONSTRUCTION
43,300 Lafarge S.A....................................................... 2,838,979
------------
FINANCIAL SERVICES
34,500 Compagnie Financiere de Paribas (A Shares)........................ 2,995,766
6,700 Societe Eurafrance S.A............................................ 2,725,386
------------
5,721,152
------------
FOODS & BEVERAGES
18,000 Eridania Beghin-Say S.A........................................... 2,812,220
------------
MISCELLANEOUS MATERIALS & COMMODITIES
20,500 Compagnie de Saint Gobain......................................... 2,910,095
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MULTI-INDUSTRY
8,901 Compagnie Generale d'Industrie et de Participations............... $ 3,192,123
------------
OIL INTEGRATED - INTERNATIONAL
24,400 Elf Aquitaine S.A................................................. 2,835,796
27,500 Total S.A. (B Shares)............................................. 2,990,619
------------
5,826,415
------------
TELECOMMUNICATIONS
23,000 Alcatel Alsthom................................................... 2,921,302
------------
TELEVISION
29,000 Societe Television Francaise 1.................................... 2,961,149
------------
TOTAL FRANCE...................................................... 31,919,945
------------
GERMANY (6.8%)
BANKING
61,600 Commerzbank AG.................................................... 2,425,628
------------
BUILDING & CONSTRUCTION
78,000 Bilfinger & Berger Bau AG......................................... 2,420,690
------------
CHEMICALS
68,000 BASF AG........................................................... 2,411,012
66,000 Bayer AG.......................................................... 2,466,741
------------
4,877,753
------------
ELECTRICAL EQUIPMENT
39,000 Siemens AG........................................................ 2,310,067
------------
HEALTH & PERSONAL CARE
70,000 Douglas Holding AG................................................ 2,114,016
------------
MACHINERY - DIVERSIFIED
8,000 M.A.N. AG......................................................... 2,318,131
------------
MULTI-INDUSTRY
8,200 Preussag AG....................................................... 2,503,782
48,000 RWE AG............................................................ 2,576,196
4,700 Viag AG........................................................... 2,532,981
------------
7,612,959
------------
RETAIL - DEPARTMENT STORES
7,100 Karstadt AG....................................................... 2,424,978
------------
STEEL & IRON
10,200 Thyssen AG........................................................ 2,184,093
------------
TEXTILES - APPAREL
1,150 Hugo Boss AG (Pref.).............................................. 1,471,079
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES - ELECTRIC
37,800 VEBA AG........................................................... $ 2,575,361
------------
TOTAL GERMANY..................................................... 32,734,755
------------
HONG KONG (5.0%)
BANKING
159,800 HSBC Holdings PLC................................................. 3,939,669
------------
CONGLOMERATES
735,000 Swire Pacific Ltd. (Class A)...................................... 4,032,050
------------
REAL ESTATE
600,000 Cheung Kong (Holdings) Ltd........................................ 3,930,402
835,000 Henderson Land Development Co., Ltd............................... 3,933,951
------------
7,864,353
------------
TELECOMMUNICATIONS
1,971,800 Hong Kong Telecommunications Ltd.................................. 4,059,506
------------
UTILITIES - ELECTRIC
1,100,000 Hong Kong Electric Holdings Ltd................................... 4,181,457
------------
TOTAL HONG KONG................................................... 24,077,035
------------
ITALY (4.1%)
FINANCIAL SERVICES
336,000 Istituto Mobiliare Italiano SpA................................... 3,989,709
------------
OIL & GAS PRODUCTS
680,000 Ente Nazionale Idrocarburi SpA.................................... 3,856,493
------------
TELECOMMUNICATIONS
638,000 Sirti SpA......................................................... 3,859,998
915,000 Telecom Italia SpA................................................ 4,035,509
------------
7,895,507
------------
TEXTILES - APPAREL
243,000 Benetton Group SpA................................................ 3,977,750
------------
TOTAL ITALY....................................................... 19,719,459
------------
JAPAN (23.5%)
AUTOMOTIVE
158,000 Honda Motor Co.................................................... 5,799,387
206,000 Toyota Motor Corp................................................. 5,903,755
------------
11,703,142
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BREWERS
767,000 Kirin Brewery Co., Ltd............................................ $ 5,583,525
------------
BUILDING & CONSTRUCTION
870,000 Sekisui House Ltd................................................. 5,593,333
------------
COMPUTER SERVICES
583,000 NCR Japan Limited................................................. 1,764,636
------------
ELECTRONICS & ELECTRICAL
790,000 Hitachi, Ltd...................................................... 5,629,885
129,000 Kyocera Corp...................................................... 5,851,954
412,000 Matsushita Electric Industrial Co., Ltd........................... 6,030,038
705,000 Matsushita Electric Works......................................... 6,104,598
2,400,000 Mitsubishi Electric Corp.......................................... 6,142,529
548,000 NEC Corp.......................................................... 5,836,935
880,000 Sharp Corp........................................................ 6,055,479
66,000 Sony Corp......................................................... 5,866,667
78,000 TDK Corp.......................................................... 5,881,379
------------
53,399,464
------------
ENTERTAINMENT & LEISURE TIME
60,000 Nintendo Co., Ltd................................................. 5,885,057
------------
MACHINERY - DIVERSIFIED
1,410,000 Mitsubishi Heavy Industries, Ltd.................................. 5,877,701
------------
PHARMACEUTICALS
230,000 Taisho Pharmaceutical Co., Ltd.................................... 5,868,966
203,000 Takeda Chemical Industries........................................ 5,786,667
------------
11,655,633
------------
TOBACCO
805 Japan Tobacco, Inc................................................ 5,712,107
------------
TRANSPORTATION
438,000 Yamato Transport Co., Ltd......................................... 5,873,563
------------
TOTAL JAPAN....................................................... 113,048,161
------------
MALAYSIA (0.7%)
BANKING
1,351,000 AMMB Holdings Berhad.............................................. 887,900
------------
BUILDING & CONSTRUCTION
1,185,000 United Engineers (Malaysia) Berhad................................ 989,536
------------
CONGLOMERATES
1,595,000 Sime Darby Berhad................................................. 1,537,448
------------
TOTAL MALAYSIA.................................................... 3,414,884
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
NETHERLANDS (3.0%)
APPLIANCES & HOUSEHOLD DURABLES
29,000 Philips Electronics NV............................................ $ 1,740,573
------------
BANKING
92,800 ABN-AMRO Holding NV............................................... 1,809,279
------------
CHEMICALS
19,500 DSM NV............................................................ 1,782,527
------------
INSURANCE
41,950 Fortis Amev NV.................................................... 1,830,395
------------
OIL INTEGRATED - INTERNATIONAL
33,400 Royal Dutch Petroleum Co.......................................... 1,834,857
------------
STEEL & IRON
40,000 Koninklijke Hoogovens NV.......................................... 1,640,671
------------
TELECOMMUNICATIONS
45,700 Koninklijke PTT Nederland NV...................................... 1,908,302
------------
TRANSPORTATION
50,000 KLM Royal Dutch Air Lines NV...................................... 1,850,938
------------
TOTAL NETHERLANDS................................................. 14,397,542
------------
SPAIN (1.5%)
BANKING
35,000 Banco Popular Espanol S.A......................................... 2,445,866
------------
ELECTRIC
130,000 Endesa S.A........................................................ 2,307,415
------------
OIL RELATED
58,000 Repsol S.A........................................................ 2,473,753
------------
TOTAL SPAIN....................................................... 7,227,034
------------
SWEDEN (1.5%)
AUTOMOBILES
89,000 Volvo AB (B Shares)............................................... 2,390,060
------------
BANKING
434,000 Nordbanken Holding AB*............................................ 2,456,831
------------
MACHINERY - DIVERSIFIED
78,600 Sandvik AB (B Shares)............................................. 2,249,508
------------
TOTAL SWEDEN...................................................... 7,096,399
------------
SWITZERLAND (2.1%)
BANKING
10,500 Swiss Bank Corp................................................... 3,261,718
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FOODS & BEVERAGES
2,220 Nestle S.A........................................................ $ 3,325,063
------------
PHARMACEUTICALS
2,060 Novartis AG - Bearer.............................................. 3,347,588
------------
TOTAL SWITZERLAND................................................. 9,934,369
------------
UNITED KINGDOM (9.9%)
BANKING
185,000 National Westminster Bank PLC..................................... 3,085,385
250,000 Royal Bank of Scotland Group PLC.................................. 3,184,760
------------
6,270,145
------------
BREWERS
199,000 Bass PLC.......................................................... 3,097,507
------------
ENERGY
135,000 Energy Group PLC.................................................. 1,495,066
------------
FOODS & BEVERAGES
1,200,000 Hillsdown Holdings PLC............................................ 2,926,848
------------
LEISURE
521,000 Rank Group PLC.................................................... 2,910,681
------------
MULTI-INDUSTRY
300,000 Hanson PLC........................................................ 1,342,914
------------
NATURAL GAS
617,941 BG PLC............................................................ 2,790,325
------------
RETAIL - MERCHANDISING
358,000 Tesco PLC......................................................... 2,920,421
------------
STEEL & IRON
1,300,000 British Steel PLC................................................. 2,795,832
------------
TELECOMMUNICATIONS
377,000 British Telecommunications PLC.................................... 2,972,901
------------
TOBACCO
320,000 B.A.T. Industries PLC............................................. 2,921,574
------------
UTILITIES - ELECTRIC
596,000 National Grid Group PLC........................................... 2,838,581
320,000 National Power PLC................................................ 3,164,160
385,000 Scottish Hydro-Electric PLC....................................... 3,185,090
------------
9,187,831
------------
UTILITIES - WATER
193,000 Hyder PLC......................................................... 3,078,859
121,500 Hyder PLC (Pref.)................................................. 238,777
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
186,000 Severn Trent PLC.................................................. $ 2,997,844
------------
6,315,480
------------
TOTAL UNITED KINGDOM.............................................. 47,947,525
------------
UNITED STATES (30.1%)
AEROSPACE & DEFENSE
61,500 Northrop Grumman Corp............................................. 7,072,500
------------
AUTOMOTIVE
142,500 Ford Motor Co..................................................... 6,937,969
------------
BANKS
94,500 BankAmerica Corp.................................................. 6,898,500
95,500 KeyCorp........................................................... 6,762,594
------------
13,661,094
------------
CHEMICALS
69,000 Dow Chemical Co................................................... 7,003,500
------------
COMPUTERS - SYSTEMS
66,000 International Business Machines Corp.............................. 6,901,125
------------
CONGLOMERATES
80,500 Minnesota Mining & Manufacturing Co............................... 6,606,031
177,000 Tenneco, Inc...................................................... 6,991,500
------------
13,597,531
------------
CONTAINERS - METAL & GLASS
136,000 Crown Cork & Seal Co., Inc........................................ 6,817,000
------------
ENGINEERING & CONSTRUCTION
183,000 Fluor Corp........................................................ 6,839,625
------------
MACHINERY - DIVERSIFIED
121,800 Deere & Co........................................................ 7,102,462
------------
METALS & MINING
108,000 Phelps Dodge Corp................................................. 6,723,000
------------
OIL - DOMESTIC
132,500 Ashland, Inc...................................................... 7,113,594
------------
OIL INTEGRATED - INTERNATIONAL
89,200 Chevron Corp...................................................... 6,868,400
------------
PAPER & FOREST PRODUCTS
158,600 International Paper Co............................................ 6,839,625
------------
PHARMACEUTICALS
73,000 Bristol-Myers Squibb Co........................................... 6,907,625
------------
RETAIL
101,500 Dayton-Hudson Corp................................................ 6,851,250
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
118,500 Sprint Corp....................................................... $ 6,947,062
------------
TIRE & RUBBER GOODS
107,500 Goodyear Tire & Rubber Co......................................... 6,839,688
------------
TOBACCO
152,200 Philip Morris Companies, Inc...................................... 6,896,563
------------
UTILITIES - ELECTRIC
164,400 GPU, Inc.......................................................... 6,925,350
------------
TOTAL UNITED STATES............................................... 144,844,963
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $450,139,081) (a)........................................................ 99.4 % 478,597,892
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.6 3,015,568
------ -------------
NET ASSETS................................................................................ 100.0 % $ 481,613,460
------ -------------
------ -------------
</TABLE>
- ---------------------
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $72,556,822 and the
aggregate gross unrealized depreciation is $44,098,011, resulting in net
unrealized appreciation of $28,458,811.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 1997:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION
RECEIVE EXCHANGE FOR DATE (DEPRECIATION)
- -------------------------------------------------------
<S> <C> <C> <C>
$ 137,568 DEM 247,484 01/02/98 (76)
$ 121,537 DEM 218,596 01/06/98 (40)
$ 137,442 L 83,712 01/07/98 (516)
$ 787,598 Y 102,860,263 01/07/98 (603)
$ 151,368 ITL 267,965,308 01/08/98 (149)
$ 128,343 FRF 771,317 01/30/98 281
-------
Net unrealized
depreciation............. ($1,103)
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
SUMMARY OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- --------------------------------------------------------------------------------------
Aerospace & Defense......................................... $ 7,072,500 1.5%
Appliances & Household Durables............................. 1,740,573 0.4
Automobiles................................................. 2,390,060 0.5
Automotive.................................................. 18,641,111 3.9
Banking..................................................... 28,047,465 5.8
Banks....................................................... 13,661,094 2.8
Banks - Commercial.......................................... 3,079,018 0.6
Brewers..................................................... 8,681,032 1.8
Building & Construction..................................... 13,799,515 2.9
Chemicals................................................... 13,663,780 2.8
Computer Services........................................... 1,764,636 0.4
Computers - Systems......................................... 6,901,125 1.4
Conglomerates............................................... 19,167,029 4.0
Containers - Metal & Glass.................................. 6,817,000 1.4
Electric.................................................... 2,307,415 0.5
Electrical Equipment........................................ 2,310,067 0.5
Electronics & Electrical.................................... 53,399,464 11.1
Energy...................................................... 1,495,066 0.3
Engineering & Construction.................................. 6,839,625 1.4
Entertainment & Leisure Time................................ 5,885,057 1.2
Financial Services.......................................... 9,710,861 2.0
Foods & Beverages........................................... 9,064,131 1.9
Gold........................................................ 2,074,184 0.4
Health & Personal Care...................................... 2,114,016 0.4
Insurance................................................... 1,830,395 0.4
Leisure..................................................... 2,910,681 0.6
Machinery - Diversified..................................... 17,547,802 3.7
Metals & Mining............................................. 6,723,000 1.4
Miscellaneous Materials & Commodities....................... 2,910,095 0.6
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<S> <C> <C>
Multi-Industry.............................................. $ 12,147,996 2.5%
Natural Gas................................................. 9,230,610 1.9
Oil & Gas Products.......................................... 3,856,493 0.8
Oil - Domestic.............................................. 7,113,594 1.5
Oil Integrated - International.............................. 14,529,672 3.0
Oil Related................................................. 7,501,023 1.6
Paper & Forest Products..................................... 8,683,793 1.8
Pharmaceuticals............................................. 21,910,846 4.6
Real Estate................................................. 7,864,353 1.6
Retail...................................................... 6,851,250 1.4
Retail - Department Stores.................................. 2,424,978 0.5
Retail - Merchandising...................................... 2,920,421 0.6
Steel & Iron................................................ 6,620,596 1.4
Telecommunications.......................................... 26,704,580 5.5
Television.................................................. 2,961,149 0.6
Textiles - Apparel.......................................... 5,448,829 1.1
Tire & Rubber Goods......................................... 6,839,688 1.4
Tobacco..................................................... 15,530,244 3.2
Transportation.............................................. 7,724,501 1.6
Utilities - Electric........................................ 22,869,999 4.8
Utilities - Water........................................... 6,315,480 1.4
------------ -----
$478,597,892 99.4%
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- --------------------------------------------------------------------------------------
Common Stocks............................................... $476,888,036 99.0%
Preferred Stocks............................................ 1,709,856 0.4
------------ -----
$478,597,892 99.4%
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS (97.8%)
DENMARK (2.7%)
AIR TRANSPORT
33,093 Kobenhavns Lufthavne AS............................................................... $ 3,986,293
------------
PHARMACEUTICALS
44,800 Novo-Nordisk AS (Series B)............................................................ 6,410,373
------------
TOTAL DENMARK......................................................................... 10,396,666
------------
FINLAND (2.1%)
INSURANCE
51,602 Pohjola Insurance Co. "B"............................................................. 1,914,274
------------
PAPER PRODUCTS
182,000 UPM-Kymmene Oy........................................................................ 3,643,209
------------
TELECOMMUNICATION EQUIPMENT
38,200 Nokia Oyj (A Shares).................................................................. 2,714,941
------------
TOTAL FINLAND......................................................................... 8,272,424
------------
FRANCE (14.8%)
BANKING
72,467 Banque Nationale de Paris............................................................. 3,848,945
------------
BANKS - COMMERCIAL
59,560 Credit Commercial de France........................................................... 4,079,114
------------
ELECTRICAL EQUIPMENT
48,050 Alcatel Alsthom....................................................................... 6,102,980
------------
ELECTRONICS - SEMICONDUCTORS
62,300 SGS-Thomson Microelectronics N.V.*.................................................... 3,853,022
------------
HOTELS/MOTELS
41,330 Accor S.A............................................................................. 7,678,610
------------
HOUSEHOLD PRODUCTS
50,940 Societe BIC S.A....................................................................... 3,715,415
------------
INSURANCE
99,400 AXA-UAP............................................................................... 7,685,635
------------
OIL RELATED
42,700 Elf Aquitaine S.A..................................................................... 4,962,643
42,000 Total S.A. (B Shares)................................................................. 4,567,491
------------
9,530,134
------------
PHARMACEUTICALS
45,850 Sanofi S.A............................................................................ 5,100,365
------------
TELEVISION
28,380 Canal Plus............................................................................ 5,272,658
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TIRE & RUBBER GOODS
20,430 Michelin (C.G.D.E.) (Class B)......................................................... $ 1,027,775
------------
TOTAL FRANCE.......................................................................... 57,894,653
------------
GERMANY (6.5%)
APPAREL MANUFACTURER
1,490 Hugo Boss AG (Pref.).................................................................. 1,906,007
------------
AUTOMOTIVE
4,989 Bayerische Motoren Werke (BMW) AG..................................................... 3,732,038
------------
CHEMICALS
117,000 Hoechst AG............................................................................ 4,099,555
------------
HEALTH & PERSONAL CARE
81 Rhoen-Klinikum AG..................................................................... 7,929
103 Rhoen-Klinikum AG (Pref.)............................................................. 10,025
------------
17,954
------------
STEEL & IRON
33,490 SGL Carbon AG......................................................................... 4,321,290
20,500 Thyssen AG............................................................................ 4,389,600
------------
8,710,890
------------
UTILITIES
101,050 VEBA AG............................................................................... 6,884,663
------------
TOTAL GERMANY......................................................................... 25,351,107
------------
ITALY (3.5%)
HOUSEHOLD FURNISHINGS & APPLIANCES
116,400 Industrie Natuzzi SpA (ADR)........................................................... 2,400,750
------------
TELECOMMUNICATIONS
765,850 Telecom Italia Mobile SpA............................................................. 3,535,758
1,203,500 Telecom Italia SpA.................................................................... 7,689,661
------------
11,225,419
------------
TOTAL ITALY........................................................................... 13,626,169
------------
NETHERLANDS (13.2%)
CHEMICALS
30,560 Akzo Nobel NV......................................................................... 5,273,335
------------
ELECTRICAL EQUIPMENT
109,400 Philips Electronics NV................................................................ 6,566,160
------------
ELECTRONICS - SEMICONDUCTORS
37,175 ASM Lithography Holding NV*........................................................... 2,440,412
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INSURANCE
64,202 Aegon NV.............................................................................. $ 5,719,872
152,079 ING Groep NV.......................................................................... 6,410,438
------------
12,130,310
------------
PUBLISHING
272,000 Ver Ned Uitgev Ver Bezit NV........................................................... 7,679,368
50,293 Wolters Kluwer NV..................................................................... 6,501,351
------------
14,180,719
------------
RECORD & TAPE DISTRIBUTION
95,500 PolyGram NV........................................................................... 4,572,310
------------
RETAIL
188,137 Koninklijke Ahold NV.................................................................. 4,912,363
------------
STEEL & IRON
37,250 Koninklijke Hoogovens NV.............................................................. 1,527,875
------------
TOTAL NETHERLANDS..................................................................... 51,603,484
------------
SPAIN (4.4%)
BANKS
192,283 Banco Bilbao Vizcaya S.A.............................................................. 6,220,179
96,252 Banco Popular Espanol S.A............................................................. 6,726,272
------------
12,946,451
------------
TELECOMMUNICATIONS
151,370 Telefonica de Espana.................................................................. 4,320,600
------------
TOTAL SPAIN........................................................................... 17,267,051
------------
SWEDEN (9.5%)
AUTOMOBILES
208,750 Volvo AB (B Shares)................................................................... 5,605,899
------------
BANKS - COMMERCIAL
200,000 Nordbanken Holding AB*................................................................ 1,132,180
------------
BUSINESS SERVICES
110,000 Assa Abloy AB (Series B).............................................................. 2,912,401
169,000 Securitas AB (Series "B" Free)........................................................ 5,113,723
------------
8,026,124
------------
INSURANCE
157,181 Skandia Forsakrings AB................................................................ 7,421,489
------------
PHARMACEUTICALS
202,667 Astra AB (B Shares)................................................................... 3,411,171
105,600 Astra AB (Series "A" Free)............................................................ 1,830,652
------------
5,241,823
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RETAIL
62,080 Hennes & Mauritz AB (B Shares)........................................................ $ 2,739,422
------------
TELECOMMUNICATION EQUIPMENT
182,270 Ericsson (L.M.) Telephone Co. AB (Series "B" Free).................................... 6,859,599
------------
TOTAL SWEDEN.......................................................................... 37,026,536
------------
SWITZERLAND (7.4%)
BANKING
2,350 UBS - Bearer.......................................................................... 3,395,963
------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
3,790 Nestle S.A............................................................................ 5,676,572
------------
PHARMACEUTICALS
4,850 Novartis AG........................................................................... 7,864,865
1,000 Novartis AG - Bearer.................................................................. 1,625,043
847 Roche Holdings AG..................................................................... 8,406,250
------------
17,896,158
------------
TRANSPORTATION
1,500 Sairgroup*............................................................................ 2,052,686
------------
TOTAL SWITZERLAND..................................................................... 29,021,379
------------
UNITED KINGDOM (33.7%)
AEROSPACE & DEFENSE
133,333 British Aerospace PLC................................................................. 3,812,364
810,000 Rolls-Royce PLC*...................................................................... 3,136,968
104,000 Smiths Industries PLC................................................................. 1,453,404
------------
8,402,736
------------
AIR TRANSPORT
235,500 British Airways PLC................................................................... 2,173,382
------------
AUTOMOTIVE
461,838 BBA Group PLC......................................................................... 3,090,103
------------
BANKING
339,000 Abbey National PLC.................................................................... 6,095,111
159,000 Barclays Bank PLC..................................................................... 4,239,678
290,000 Lloyds TSB Group PLC.................................................................. 3,761,230
------------
14,096,019
------------
BREWERS
145,000 Scottish & Newcastle Breweries PLC.................................................... 1,781,447
171,958 Vaux Group PLC........................................................................ 745,307
------------
2,526,754
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BROADCAST MEDIA
160,000 Flextech PLC*......................................................................... $ 1,376,410
------------
BUILDING & CONSTRUCTION
313,000 Blue Circle Industries PLC............................................................ 1,761,539
------------
BUSINESS SERVICES
196,000 Reuters Holdings PLC.................................................................. 2,148,003
------------
CHEMICALS
306,000 Albright & Wilson PLC................................................................. 731,218
------------
COMPUTER SOFTWARE & SERVICES
200,000 Sage Group (The) PLC.................................................................. 2,745,568
153,454 SEMA Group PLC........................................................................ 3,742,804
------------
6,488,372
------------
CONGLOMERATES
749,000 BTR PLC............................................................................... 2,271,208
415,000 Tomkins PLC........................................................................... 1,990,207
------------
4,261,415
------------
ELECTRICAL EQUIPMENT
306,363 BICC Group (The) PLC.................................................................. 878,502
210,000 General Electric Co. PLC.............................................................. 1,365,286
------------
2,243,788
------------
FINANCIAL SERVICES
20,694 HSBC Holdings PLC..................................................................... 532,018
143,000 Northern Rock PLC*.................................................................... 1,406,914
------------
1,938,932
------------
FOOD PROCESSING
262,000 Associated British Foods PLC.......................................................... 2,288,413
------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
423,000 Guinness PLC.......................................................................... 3,900,297
177,500 Tate & Lyle PLC....................................................................... 1,465,525
------------
5,365,822
------------
HEALTH & PERSONAL CARE
880,000 London International Group PLC........................................................ 2,320,384
------------
INSURANCE
55,000 Britannic Assurance PLC............................................................... 992,508
74,342 Commercial Union PLC.................................................................. 1,040,157
334,200 Prudential Corp. PLC.................................................................. 4,042,590
327,271 Royal & Sun Alliance Insurance Group PLC.............................................. 3,306,170
------------
9,381,425
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
LEISURE
169,000 Granada Group PLC..................................................................... $ 2,590,162
300,654 Ladbroke Group PLC.................................................................... 1,308,061
508,000 Rank Group PLC........................................................................ 2,838,054
------------
6,736,277
------------
MISCELLANEOUS
274,000 Vendome Luxury Group PLC (Units) ++................................................... 2,167,450
------------
NATURAL GAS
347,541 BG PLC*............................................................................... 1,569,328
------------
OIL RELATED
794,000 Lasmo PLC............................................................................. 3,611,493
1,244,000 Shell Transport & Trading Co. PLC..................................................... 9,020,493
------------
12,631,986
------------
PHARMACEUTICALS
115,993 British Biotech PLC*.................................................................. 202,626
319,100 Glaxo Wellcome PLC.................................................................... 7,572,626
340,344 SmithKline Beecham PLC................................................................ 3,494,325
------------
11,269,577
------------
PUBLISHING - NEWSPAPER
198,000 United News & Media PLC............................................................... 2,261,287
------------
REAL ESTATE
203,200 Hammerson PLC......................................................................... 1,573,069
------------
RETAIL
145,200 Great Universal Stores PLC............................................................ 1,835,351
247,000 Morrison (W.M.) Supermarkets PLC...................................................... 936,229
214,000 Next PLC.............................................................................. 2,440,490
------------
5,212,070
------------
RETAIL - DEPARTMENT STORES
201,000 Kingfisher PLC........................................................................ 2,808,983
------------
RETAIL - MERCHANDISING
177,820 Tesco PLC............................................................................. 1,450,584
------------
TELECOMMUNICATIONS
829,000 British Telecommunications PLC........................................................ 6,537,229
474,000 General Cable PLC*.................................................................... 648,356
550,635 Securicor PLC......................................................................... 2,590,760
180,000 Vodafone Group PLC.................................................................... 1,302,250
------------
11,078,595
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES - ELECTRIC
281,000 National Power PLC.................................................................... $ 2,778,528
------------
TOTAL UNITED KINGDOM.................................................................. 132,132,449
------------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $293,301,027)........................................................ 382,591,918
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (2.0%)
U.S. GOVERNMENT AGENCY
$ 7,900 Federal Home Loan Bank 5.75% due 01/02/98
(AMORTIZED COST $7,898,738).......................................... 7,898,738
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $301,199,765) (b)........................................................ 99.8 % 390,490,656
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.2 950,597
------ -------------
NET ASSETS................................................................................ 100.0 % $ 391,441,253
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt
* Non-income producing security.
++ Consists of more than one class of securities traded together as a unit;
stock with attached warrants.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $98,246,618 and the
aggregate gross unrealized depreciation is $8,955,727, resulting in net
unrealized appreciation of $89,290,891.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 1997:
<TABLE>
<CAPTION>
CONTRACTS TO IN DELIVERY UNREALIZED
RECEIVE EXCHANGE FOR DATE DEPRECIATION
- --------------------------------------------------
<S> <C> <C> <C>
L 91,143 $ 152,811 01/02/98 $ (2,607)
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
SUMMARY OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- -----------------------------------------------------------------------------
Aerospace & Defense............................... $ 8,402,736 2.1%
Air Transport..................................... 6,159,675 1.6
Apparel Manufacturer.............................. 1,906,007 0.5
Automobiles....................................... 5,605,899 1.4
Automotive........................................ 6,822,141 1.7
Banking........................................... 21,340,927 5.5
Banks............................................. 12,946,451 3.3
Banks - Commercial................................ 5,211,294 1.3
Brewers........................................... 2,526,754 0.6
Broadcast Media................................... 1,376,410 0.4
Building & Construction........................... 1,761,539 0.5
Business Services................................. 10,174,127 2.6
Chemicals......................................... 10,104,108 2.6
Computer Software & Services...................... 6,488,372 1.7
Conglomerates..................................... 4,261,415 1.1
Electrical Equipment.............................. 14,912,928 3.8
Electronics - Semiconductors...................... 6,293,434 1.6
Financial Services................................ 1,938,932 0.5
Food Processing................................... 2,288,413 0.6
Food, Beverage, Tobacco & Household Products...... 11,042,394 2.9
Health & Personal Care............................ 2,338,338 0.6
Hotels/Motels..................................... 7,678,610 2.0
Household Furnishings & Appliances................ 2,400,750 0.6
Household Products................................ 3,715,415 0.9
Insurance......................................... 38,533,133 9.8
Leisure........................................... 6,736,277 1.7
Miscellaneous..................................... 2,167,450 0.6
Natural Gas....................................... 1,569,328 0.4
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -----------------------------------------------------------------------------
<S> <C> <C>
Oil Related....................................... $ 22,162,120 5.7%
Paper Products.................................... 3,643,209 0.9
Pharmaceuticals................................... 45,918,296 11.7
Publishing........................................ 14,180,719 3.6
Publishing - Newspaper............................ 2,261,287 0.6
Real Estate....................................... 1,573,069 0.4
Record & Tape Distribution........................ 4,572,310 1.2
Retail............................................ 12,863,855 3.3
Retail - Department Stores........................ 2,808,983 0.7
Retail - Merchandising............................ 1,450,584 0.4
Steel & Iron...................................... 10,238,765 2.6
Telecommunication Equipment....................... 9,574,540 2.4
Telecommunications................................ 26,624,614 6.8
Television........................................ 5,272,658 1.3
Tire & Rubber Goods............................... 1,027,775 0.3
Transportation.................................... 2,052,686 0.5
U.S. Government Agency............................ 7,898,738 2.0
Utilities......................................... 6,884,663 1.8
Utilities - Electric.............................. 2,778,528 0.7
------------ -----
$390,490,656 99.8%
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- -----------------------------------------------------------------------------
Common Stocks..................................... $380,675,886 97.3%
Preferred Stocks.................................. 1,916,032 0.5
Short-Term Investments............................ 7,898,738 2.0
------------ -----
$390,490,656 99.8%
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS, WARRANTS, RIGHTS AND BONDS (92.3%)
AUSTRALIA (5.6%)
BANKING
130,000 Westpac Banking Corp., Ltd....................................................... $ 830,090
-----------
COMMERCIAL SERVICES
13,000 Mayne Nickless Ltd............................................................... 68,582
-----------
FOOD, BEVERAGE, TOBACCO, & HOUSEHOLD PRODUCTS
268,000 Fosters Brewing Group Ltd........................................................ 509,055
440,000 Goodman Fielder Ltd.............................................................. 698,377
-----------
1,207,432
-----------
METALS & MINING
60,000 Broken Hill Proprietary Co., Ltd................................................. 556,177
-----------
MULTI-INDUSTRY
240,000 Pacific Dunlop Ltd............................................................... 507,390
-----------
OIL - EXPLORATION & PRODUCTION
94,000 Oil Search Ltd................................................................... 169,622
-----------
RETAIL STORES
100,000 Coles Myer Ltd................................................................... 479,419
-----------
TOTAL AUSTRALIA.................................................................. 3,818,712
-----------
BERMUDA (0.3%)
RETAIL - FOOD CHAINS
200,000 Dairy Farm International Holdings Ltd............................................ 216,000
-----------
CHINA (0.5%)
AUTOMOTIVE
200,000 Qingling Motors Co............................................................... 98,099
-----------
UTILITIES - ELECTRIC
800,000 Zhejiang Southeast Electric Power Co., Ltd. (B Shares)........................... 257,600
-----------
TOTAL CHINA...................................................................... 355,699
-----------
HONG KONG (33.8%)
APPLIANCES & HOUSEHOLD DURABLES
135,000 Guangdong Kelon Elec Holding (Class H)........................................... 138,532
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BANKING
203,000 Dao Heng Bank Group Ltd.......................................................... $ 507,022
50,000 Guoco Group Ltd.................................................................. 122,301
127,500 Hang Seng Bank Ltd............................................................... 1,230,187
28,000 HSBC Holdings PLC................................................................ 690,305
-----------
2,549,815
-----------
BUILDING & CONSTRUCTION
80,000 New World Infrastructure Ltd.*................................................... 180,192
-----------
CONGLOMERATES
43,000 Citic Pacific, Ltd............................................................... 170,950
494,000 Hutchison Whampoa, Ltd........................................................... 3,098,938
54,000 Jardine Matheson Holdings Ltd.................................................... 275,400
99,000 Shanghai Industrial Holdings Ltd................................................. 368,025
160,000 Swire Pacific Ltd. (Class A)..................................................... 877,725
-----------
4,791,038
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
150,000 ASM Pacific Technology Ltd....................................................... 94,872
450,000 Elec & Eltek International Holdings Ltd.......................................... 111,523
98,000 Johnson Electric Holdings, Ltd................................................... 282,085
-----------
488,480
-----------
ENGINEERING & CONSTRUCTION
90,000 Cheung Kong Infrastructure Holdings.............................................. 254,411
150,000 Road King Infrastructure Ltd.*................................................... 137,467
-----------
391,878
-----------
LEISURE
731,000 CDL Hotels International, Ltd.................................................... 221,735
-----------
LIFE INSURANCE
100,000 National Mutual Asia Ltd......................................................... 99,389
-----------
PUBLISHING
400,000 South China Morning Post (Holdings) Ltd.......................................... 281,388
-----------
REAL ESTATE
180,000 Amoy Properties, Ltd............................................................. 157,991
403,000 Cheung Kong (Holdings) Ltd....................................................... 2,639,920
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
115,000 China Resources Enterprise Ltd................................................... $ 256,799
153,000 Great Eagle Holdings Ltd......................................................... 214,275
20,000 Great Eagle Holdings (Warrants due 11/30/98)..................................... 2,582
220,000 Hong Kong Land Holdings Ltd...................................................... 422,400
75,000 Hysan Development Co., Ltd....................................................... 149,568
6,250 Hysan Development Co. Ltd. (Warrants due 04/30/98)*.............................. 40
530,000 New World Development Co., Ltd................................................... 1,833,413
331,000 Sun Hung Kai Properties Ltd...................................................... 2,307,126
228,000 Wharf (Holdings) Ltd............................................................. 500,303
-----------
8,484,417
-----------
RETAIL - SPECIALTY APPAREL
60 Dickson Concepts International Ltd. (New)........................................ 88
-----------
TELECOMMUNICATIONS
1,233,000 Hong Kong Telecommunications Ltd................................................. 2,538,478
-----------
TRANSPORTATION
291,000 Cosco Pacific Ltd................................................................ 236,637
-----------
UTILITIES
197,500 China Light & Power Co., Ltd..................................................... 1,096,188
589,539 Hong Kong & China Gas Co., Ltd................................................... 1,141,441
163,000 Hong Kong Electric Holdings Ltd.................................................. 619,616
-----------
2,857,245
-----------
TOTAL HONG KONG.................................................................. 23,259,312
-----------
INDIA (1.5%)
ALUMINUM
9,000 Hindalco Industries Ltd. (GDR)*.................................................. 173,250
-----------
BANKING
18,000 State Bank of India (GDR)*....................................................... 318,600
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELEPHONES
13,500 Mahanagar Telephone Nigam (GDR)*................................................. $ 205,200
-----------
TEXTILES
38,000 Reliance Industries Ltd. (GDR)................................................... 307,800
-----------
TOTAL INDIA...................................................................... 1,004,850
-----------
INDONESIA (3.6%)
AUTO PARTS
2,300,000 PT Gajah Tunggal................................................................. 223,611
-----------
BANKING
302,000 PT Bank Negara Indonesia......................................................... 29,361
-----------
BUILDING MATERIALS
100,464 PT Mulia Industrindo*............................................................ 11,628
-----------
CONSTRUCTION EQUIPMENT
92,200 PT United Tractors............................................................... 11,098
-----------
CONSTRUCTION PLANT & EQUIPMENT
1,000,000 PT Citra Marga Nusaphala Persada................................................. 111,111
-----------
FOREST PRODUCTS, PAPER & PACKING
259,380 PT Indah Kiat Pulp & Paper Corp.................................................. 46,832
-----------
INVESTMENT COMPANIES
500,000 Peregrine Indonesia Fund Ltd.**.................................................. 477,550
-----------
METALS
290,000 PT Tambang Timah................................................................. 316,852
-----------
OIL & GAS EXPLORATION
19,400 Gulf Indonesia Resources Ltd.*................................................... 426,800
-----------
PHARMACEUTICALS
400,000 PT Kalbe Farma................................................................... 72,222
-----------
PLANTATION
450,000 PT London Sumatra Indonesia...................................................... 260,417
-----------
RETAIL - DEPARTMENT STORES
200,000 PT Ramayana Lestari Sentosa*..................................................... 191,667
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
520,000 PT Telekomunikasi Indonesia...................................................... $ 281,667
-----------
TOTAL INDONESIA.................................................................. 2,460,816
-----------
JAPAN (21.2%)
APPAREL
17,000 Tokyo Style...................................................................... 153,716
4,000 World Co., Ltd................................................................... 88,889
-----------
242,605
-----------
AUTO TRUCKS & PARTS
20,000 NGK Spark Plug Co., Ltd.......................................................... 113,410
6,000 Yasunaga Corp.................................................................... 38,161
-----------
151,571
-----------
AUTOMOTIVE
9,000 Honda Motor Co................................................................... 330,345
10,000 Toyota Motor Corp................................................................ 286,590
-----------
616,935
-----------
BANKING
33,000 Asahi Bank, Ltd.................................................................. 134,023
26,000 Bank of Tokyo-Mitsubishi Ltd..................................................... 358,621
38,000 Mitsui Trust & Banking Co., Ltd.................................................. 73,670
20,000 Sanwa Bank, Ltd.................................................................. 202,299
20,000 Sumitomo Bank.................................................................... 228,352
17,000 Sumitomo Trust & Banking......................................................... 88,322
-----------
1,085,287
-----------
BEVERAGES
6,300 Itoen, Ltd....................................................................... 166,552
-----------
BUILDING & CONSTRUCTION
36,000 Kajima Corp...................................................................... 90,759
8,000 Kaneshita Construction........................................................... 36,169
-----------
126,928
-----------
BUILDING MATERIALS
11,000 Ibiden Co., Ltd.................................................................. 133,180
18,000 Sanwa Shutter.................................................................... 90,483
-----------
223,663
-----------
BUSINESS SERVICES
3,000 Secom Co......................................................................... 191,724
-----------
CHEMICALS
80,000 Mitsubishi Chemical Corp......................................................... 114,636
46,000 Nippon Zeon Co., Ltd............................................................. 95,172
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
9,000 Shin-Etsu Chemical Co............................................................ $ 171,724
20,000 Sumitomo Bakelite Co., Ltd....................................................... 118,774
-----------
500,306
-----------
COMMERCIAL SERVICES
3,000 Nichii Gakkan Co................................................................. 103,448
-----------
COMPUTER SOFTWARE & SERVICES
6,000 Hitachi Software Engineering Co., Ltd............................................ 174,253
5,000 Meitec Corp...................................................................... 140,613
5 NTT Data Communications Systems Corp............................................. 269,349
-----------
584,215
-----------
COMPUTERS
3,000 Nidec Corp....................................................................... 126,437
-----------
ELECTRIC
7,500 Tokyo Electric Power Co.......................................................... 136,782
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
2,800 Advantest Corp................................................................... 158,774
11,000 Aiwa Co., Ltd.................................................................... 277,318
5,000 Canon, Inc....................................................................... 116,475
Y 9,000 K Canon, Inc. 1.00% due 12/20/02 (Conv.)........................................... 137,931
22,000 Fujitsu, Ltd..................................................................... 236,015
16,000 Hitachi, Ltd..................................................................... 114,023
6,000 Mitsui High-Tec.................................................................. 97,471
3,000 Murata Manufacturing Co., Ltd.................................................... 75,402
3,800 Sony Corp........................................................................ 337,778
14,000 Sumitomo Electric Industries..................................................... 190,958
3,000 TDK Corp......................................................................... 226,207
-----------
1,968,352
-----------
ELECTRONIC COMPONENTS
7,000 Mitsumi Electric Co., Ltd........................................................ 99,770
-----------
ELECTRONICS
2,000 Rohm Co., Ltd.................................................................... 203,831
4,000 Tokyo Electron Ltd............................................................... 128,123
-----------
331,954
-----------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS
3,300 Shinko Electric Industries Co., Ltd.............................................. 110,506
3,000 Tokyo Seimitsu................................................................... 67,126
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
10,000 Toshiba Ceramics Co., Ltd........................................................ $ 40,230
-----------
217,862
-----------
ENTERTAINMENT
2,300 H.I.S. Company Ltd............................................................... 40,008
2,000 Nintendo Co., Ltd................................................................ 196,169
4,000 Sony Music Entertainment Inc..................................................... 147,126
-----------
383,303
-----------
FINANCIAL SERVICES
1,900 Nichiei Co., Ltd. (Kyoto)........................................................ 202,375
13,000 Nomura Securities Co. Ltd........................................................ 173,333
10,700 Orix Corp........................................................................ 746,130
-----------
1,121,838
-----------
FOOD, BEVERAGE, TOBACCO, & HOUSEHOLD PRODUCTS
14,000 Nippon Meat Packers, Inc......................................................... 190,958
-----------
HAND TOOLS
4,000 Disco Corp....................................................................... 86,130
-----------
INDUSTRIALS
Y 5,000 K Nippon Densan Corp. 1.00% 09/30/03 (Conv.)....................................... 57,088
-----------
INSURANCE
25,000 Tokio Marine & Fire Insurance Co................................................. 283,525
-----------
MACHINERY
18,000 Daifuku Co., Ltd................................................................. 87,586
10,000 Fuji Machine Manufacturing Co., Ltd.............................................. 241,379
1,300 Keyence Corp..................................................................... 192,261
9,000 Minebea Co., Ltd................................................................. 96,552
Y 19,000 K Minebea Co. Ltd. 0.80% due 03/31/03 (Conv.)...................................... 236,736
43,000 Mitsubishi Heavy Industries, Ltd................................................. 179,249
23,000 OSG Corp......................................................................... 121,609
1,400 Shima Seiki Manufacturing Ltd.................................................... 52,460
-----------
1,207,832
-----------
MANUFACTURING
14,000 Dainippon Screen Manufacturing Co., Ltd.......................................... 64,368
5,000 Nichiha Corp..................................................................... 30,575
-----------
94,943
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MEDICAL SUPPLIES
6,000 Terumo Corp...................................................................... $ 88,276
-----------
MERCHANDISING
4,400 Misumi Corp...................................................................... 71,816
-----------
METALS
2,900 Fujimi Inc....................................................................... 123,333
-----------
METALS & MINING
110,000 Nippon Steel Co.................................................................. 162,682
8,000 Sumitomo Sitix Corp.............................................................. 85,211
6,000 Sumitomo Special Metals.......................................................... 120,460
-----------
368,353
-----------
METALS NON-FERROUS
30,000 Fujikura Ltd..................................................................... 198,621
47,000 Mitsui Mining & Smelting......................................................... 188,720
-----------
387,341
-----------
MULTI-INDUSTRY
23,000 Mitsui & Co...................................................................... 136,061
-----------
NATURAL GAS
61,000 Tokyo Gas Co., Ltd............................................................... 138,360
-----------
OFFICE EQUIPMENT
19,000 Ricoh Company, Ltd............................................................... 235,862
2,000 Riso Kagaku...................................................................... 114,483
-----------
350,345
-----------
PAPER PRODUCTS
2,000 Tomoegawa Paper Co. Ltd.......................................................... 5,517
-----------
PHARMACEUTICALS
7,000 Eisai Co., Ltd................................................................... 106,743
8,000 Takeda Chemical Industries....................................................... 228,046
-----------
334,789
-----------
REAL ESTATE
14,000 Mitsubishi Estate Co., Ltd....................................................... 152,337
15,000 Mitsui Fudosan Co................................................................ 144,828
-----------
297,165
-----------
RETAIL
4,000 Ministop Co., Ltd................................................................ 103,295
1,500 Otsuka Kagu Ltd.................................................................. 51,724
-----------
155,019
-----------
RETAIL - DEPARTMENT STORES
21,000 Hankyu Department Stores......................................................... 116,667
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RETAIL - GENERAL MERCHANDISE
3,000 Circle K Japan Co., Ltd.......................................................... $ 143,678
3,000 Seven - Eleven Japan Co., Ltd.................................................... 212,414
6,000 Shimamura Co. Ltd................................................................ 104,368
-----------
460,460
-----------
RETAIL - SPECIALTY
5,000 Aderans Co., Ltd................................................................. 120,690
-----------
STEEL
68,000 Sumitomo Metal Industries........................................................ 87,019
13,000 Yamato Kogyo Co., Ltd............................................................ 78,199
-----------
165,218
-----------
TELECOMMUNICATIONS
35 DDI Corp......................................................................... 92,529
15,000 Nippon Comsys Corp............................................................... 185,057
34 Nippon Telegraph & Telephone Corp................................................ 291,801
-----------
569,387
-----------
TEXTILES
57,000 Mitsubishi Rayon Co., Ltd........................................................ 139,770
21,000 Nitto Boseki Co., Ltd............................................................ 52,621
-----------
192,391
-----------
TIRE & RUBBER GOODS
6,000 Bridgestone Corp................................................................. 130,115
-----------
TRANSPORTATION
32,000 Tokyu Corp....................................................................... 123,586
-----------
TOTAL JAPAN...................................................................... 14,634,897
-----------
MALAYSIA (4.9%)
AUTOMOTIVE
35,000 Edaran Otomobil Nasional Berhad.................................................. 71,714
87,680 Oriental Holdings Berhad......................................................... 107,566
-----------
179,280
-----------
BANKING
120,000 Commerce Asset Holdings Berhad................................................... 57,526
60,600 Malayan Banking Berhad........................................................... 176,490
163,999 Public Bank Berhad............................................................... 56,639
27,333 Public Bank Berhad (Rights)*..................................................... 1,409
-----------
292,064
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BUILDING & CONSTRUCTION
8,000 Dialog Group Berhad.............................................................. $ 13,814
60,999 Gamuda Berhad.................................................................... 33,958
16,666 Gamuda Berhad (Warrants due 12/29/01)*........................................... 730
135,000 Lingkaran Trans Kota Holdings Berhad*............................................ 86,289
105,000 United Engineers Malaysia Berhad................................................. 87,680
30,250 YTL Corp. Berhad................................................................. 40,931
-----------
263,402
-----------
ELECTRONICS
42,000 Malaysian Pacific Industries Berhad.............................................. 101,211
-----------
INSURANCE
39,400 Malaysian Assurance Alliance Berhad.............................................. 45,290
-----------
LEISURE
40,000 Berjaya Sports Toto Berhad....................................................... 102,577
350,000 Metroplex Berhad................................................................. 89,755
80,000 Resorts World Berhad............................................................. 135,052
-----------
327,384
-----------
MANUFACTURING
19,375 O.Y.L. Industries Berhad......................................................... 45,441
-----------
MULTI-INDUSTRY
110,000 Hong Leong Industries Berhad..................................................... 112,268
-----------
PLANTATION
170,000 Highlands & Lowlands Berhad...................................................... 174,381
360,000 IOI Corporated Berhad............................................................ 116,907
105,500 Kuala Lumpur Kepong Berhad....................................................... 227,043
-----------
518,331
-----------
PUBLISHING
87,000 Star Publications................................................................ 99,557
-----------
TELECOMMUNICATIONS
174,000 Telekom Malaysia Berhad.......................................................... 515,722
-----------
TOBACCO
60,000 RJ Reynolds Berhad............................................................... 98,196
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES
12,000 Prime Utilities Berhad (Warrants due 03/11/01)*.................................. $ 2,041
24,000 Prime Utilities Berhad 1.00% due 03/11/01 (Loan Stock)........................... 3,124
240,000 Tenaga Nasional Berhad........................................................... 513,402
-----------
518,567
-----------
WATER
280,000 Puncak Niaga Holdings Berhad*.................................................... 209,278
-----------
WIRE & CABLE
140,000 Leader Universal Holdings Berhad................................................. 43,299
-----------
TOTAL MALAYSIA................................................................... 3,369,290
-----------
PHILIPPINES (1.0%)
BANKING
7,500 Far East Bank & Trust Co.***..................................................... 9,187
7 Philippine National Bank......................................................... 16
-----------
9,203
-----------
CONGLOMERATES
245,000 First Philippine Holdings Corp. (B Shares)....................................... 192,938
-----------
TELECOMMUNICATIONS
13,000 Philippine Long Distance Telephone Co. (ADR)..................................... 292,500
-----------
UTILITIES
66,900 Manila Electric Co. (B Shares)................................................... 224,115
-----------
TOTAL PHILIPPINES................................................................ 718,756
-----------
SINGAPORE (10.5%)
BANKING
40,000 Development Bank of Singapore, Ltd............................................... 342,653
169,520 Overseas Chinese Banking Corp., Ltd.............................................. 988,278
145,000 Overseas Union Bank, Ltd......................................................... 556,365
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
120,000 United Overseas Bank, Ltd........................................................ $ 667,460
-----------
2,554,756
-----------
COMPUTERS - SYSTEMS
499,471 Singapore Technologies Engineering Ltd.*......................................... 377,352
-----------
CONGLOMERATES
74,000 Jardine Strategic Holdings Ltd................................................... 195,360
107,500 Keppel Corp., Ltd.*.............................................................. 309,518
200,000 Natsteel Ltd..................................................................... 271,267
87,000 Sembawang Corp., Ltd............................................................. 186,318
-----------
962,463
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
40,700 Elec & Eltek International Co., Ltd.............................................. 186,406
145,000 Venture Manufacturing Ltd........................................................ 405,413
-----------
591,819
-----------
ELECTRONICS
30,000 GP Batteries International Ltd................................................... 78,168
-----------
FOOD, BEVERAGE, TOBACCO, & HOUSEHOLD PRODUCTS
600 Fraser & Neave Ltd............................................................... 2,606
-----------
METALS - MISCELLANEOUS
168,000 Amtek Engineering Ltd............................................................ 101,939
-----------
PUBLISHING
32,200 Singapore Press Holdings Ltd..................................................... 404,176
-----------
REAL ESTATE
102,000 City Developments, Ltd........................................................... 473,290
151,000 DBS Land Ltd..................................................................... 231,755
148,000 Straits Steamship Land........................................................... 204,259
204,000 United Overseas Land, Ltd........................................................ 172,326
-----------
1,081,630
-----------
SHIPBUILDING
85,000 Keppel Fels Ltd.................................................................. 237,656
-----------
TELECOMMUNICATIONS
130,000 Singapore Telecommunications, Ltd................................................ 242,832
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TRANSPORTATION
95,000 Singapore Airlines Ltd........................................................... $ 621,654
-----------
TOTAL SINGAPORE.................................................................. 7,257,051
-----------
SOUTH KOREA (0.7%)
COMMUNICATIONS - EQUIPMENT/MANUFACTURERS
1 LG Information & Communication Ltd............................................... 28
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
3,000 Samsung Display Devices Co....................................................... 56,637
4,605 Samsung Electronics Co. (GDR).................................................... 104,326
74 Samsung Electronics Co. (Rights)*................................................ 1,008
-----------
161,971
-----------
INVESTMENT COMPANIES
25,000 Atlantis Korean Smaller Companies*............................................... 87,500
-----------
STEEL & IRON
9,380 Pohang Iron & Steel Co., Ltd..................................................... 254,007
-----------
TOTAL SOUTH KOREA................................................................ 503,506
-----------
TAIWAN (6.6%)
BUILDING MATERIALS
45,532 Asia Cement Corp. (GDR).......................................................... 509,958
-----------
CHEMICALS
$ 205 K Nan Ya Plastics Corp. 1.75% due 07/19/01 (Conv.)................................. 231,650
-----------
COMPUTERS
$ 185 K Compal Electronics 1.00% due 11/21/03 (Conv.).................................... 277,500
-----------
ELECTRONICS - SEMICONDUCTOR/COMPONENTS
$ 210 K Siliconware Precision Industries Co. 0.50% due 07/21/04 (Conv.).................. 199,500
$ 180 K United Microelectronics Corp. 0.25% due 05/16/04 (Conv.)......................... 203,400
-----------
402,900
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INVESTMENT COMPANIES
148 Taipei Fund*..................................................................... $ 1,435,600
-----------
RETAIL
$ 330 K Far Eastern Department Stores - 144A** 3.00% due 07/06/01 (Conv.)................ 293,700
-----------
STEEL & IRON
31,262 China Steel Corp. (GDR).......................................................... 437,668
-----------
TRANSPORTATION
$ 500 K U-Ming Marine Transport 1.50% due 02/07/01 (Conv.)............................... 420,000
$ 504 K Yang Ming Marine Transportation - 144A** 2.00% due 10/06/01 (Conv.).............. 554,400
-----------
974,400
-----------
TOTAL TAIWAN..................................................................... 4,563,376
-----------
THAILAND (2.1%)
BANKING
32,000 Bangkok Bank PCL................................................................. 82,403
-----------
ELECTRIC
37,800 Electricity Generating Public Co. Ltd............................................ 73,004
-----------
ENERGY
10,100 Ban Pu Coal Co., Ltd............................................................. 41,831
-----------
ENTERTAINMENT
15,000 Grammy Entertainment PLC......................................................... 67,597
-----------
OIL RELATED
52,000 PTT Exploration & Production PCL................................................. 618,197
-----------
TELECOMMUNICATIONS
20,000 Advanced Info Service Public Co., Ltd............................................ 99,571
-----------
TELEVISION
25,000 BEC World Public Co., Ltd........................................................ 103,004
-----------
TRANSPORTATION
375,000 Bangkok Expressway Public Co., Ltd.*............................................. 215,263
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
UTILITIES - ELECTRIC
220,000 Cogeneration Public Co.*......................................................... $ 134,549
-----------
TOTAL THAILAND................................................................... 1,435,419
-----------
TOTAL COMMON STOCKS, WARRANTS, RIGHTS AND BONDS
(IDENTIFIED COST $86,796,856).................................................... 63,597,684
-----------
</TABLE>
<TABLE>
<CAPTION>
CURRENCY DESCRIPTION,
AMOUNT IN EXPIRATION DATE
THOUSANDS AND STRIKE PRICE
- ---------------- -------------------------------------
<C> <S> <C>
PURCHASED PUT OPTIONS ON FOREIGN CURRENCY (1.5%)
HKD 24,165 April 24, 1998/HKD 8.055......................................................... 29,400
HKD 32,280 April 24, 1998/HKD 8.07.......................................................... 37,800
Y 603,600 February 10, 1998/
Y 120.72....................................................................... 345,000
Y 718,084 February 10, 1998/
Y 115.82....................................................................... 653,170
-----------
TOTAL PURCHASED PUT OPTIONS ON FOREIGN CURRENCY
(IDENTIFIED COST $524,740)....................................................... 1,065,370
-----------
SHORT-TERM INVESTMENT (a) (5.8%)
U.S. GOVERNMENT AGENCY
$ 4,000 Federal Home Loan Mortgage Corp. 6.00% due 01/02/98
(IDENTIFIED COST $3,999,333)................................................... 3,999,333
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST $91,320,929).................................................... 68,662,387
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
CURRENCY DESCRIPTION,
AMOUNT EXPIRATION DATE
IN THOUSANDS AND STRIKE PRICE VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
WRITTEN OPTIONS ON FOREIGN CURRENCY (-0.4%)
HKD 32,280 April 24, 1998/HKD 8.07.......................................................... $ (154,000)
HKD 24,165 April 24, 1998/HKD 8.055......................................................... (111,000)
-----------
TOTAL WRITTEN PUT OPTIONS ON FOREIGN CURRENCY
(PREMIUM RECEIVED $267,260)...................................................... (265,000)
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $91,320,929) (b).......................................................... 99.6 % 68,662,387
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL WRITTEN OPTIONS OUTSTANDING.......................................................... (0.4) (265,000)
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................. 0.8 506,150
------ ------------
NET ASSETS................................................................................. 100.0 % $ 68,903,537
------ ------------
------ ------------
</TABLE>
- ---------------------
ADR American Depository Receipt
GDR Global Depository Receipt
K In thousands
* Non-income producing security
** Resale is restricted to qualified institutional investors.
*** Partially paid shares.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $3,237,069 and the
aggregate gross unrealized depreciation is $25,895,611, resulting in net
unrealized depreciation of $22,658,542.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
SUMMARY OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ----------------------------------------------------------------------------
Aluminum.......................................... $ 173,250 0.3%
Apparel........................................... 242,605 0.4
Appliances & Household Durables................... 138,532 0.2
Auto Trucks & Parts............................... 375,182 0.5
Automotive........................................ 894,314 1.3
Banking........................................... 7,751,579 11.2
Beverages......................................... 166,552 0.2
Building & Construction........................... 570,522 0.8
Building Materials................................ 745,249 1.1
Business Services................................. 191,724 0.3
Chemicals......................................... 731,956 1.1
Commercial Services............................... 172,030 0.2
Communications - Equipment/Manufacturers.......... 28 0.0
Computer Software & Services...................... 584,215 0.9
Computers......................................... 403,937 0.6
Computers - Systems............................... 377,352 0.6
Conglomerates..................................... 5,946,439 8.6
Construction Equipment............................ 11,098 0.0
Construction Plant & Equipment.................... 111,111 0.2
Currency Options.................................. 1,065,370 1.5
Electric.......................................... 209,786 0.3
Electronic & Electrical Equipment................. 3,210,622 4.7
Electronic Components............................. 99,770 0.1
Electronics....................................... 511,333 0.7
Electronics - Semiconductors/ Components.......... 620,762 0.9
Energy............................................ 41,831 0.1
Engineering & Construction........................ 391,878 0.6
Entertainment..................................... 450,900 0.7
Financial Services................................ 1,121,838 1.6
Food, Beverage, Tobacco & Household Products...... 1,400,996 2.0
Forest Products, Paper Packaging.................. 46,832 0.1
Hand Tools........................................ 86,130 0.1
Industrials....................................... 57,088 0.1
Insurance......................................... 328,815 0.5
Investment Companies.............................. 2,000,650 2.9
Leisure........................................... 549,119 0.8
Life Insurance.................................... 99,389 0.1
Machinery......................................... 1,207,832 1.8
Manufacturing..................................... 140,384 0.2
Medical Supplies.................................. 88,276 0.1
Merchandising..................................... 71,816 0.1
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ----------------------------------------------------------------------------
<S> <C> <C>
Metals............................................ $ 440,185 0.6%
Metals & Mining................................... 924,530 1.3
Metals - Miscellaneous............................ 101,939 0.2
Metals - Non-Ferrous.............................. 387,341 0.6
Multi-Industry.................................... 755,719 1.1
Natural Gas....................................... 138,360 0.2
Office Equipment.................................. 350,345 0.5
Oil & Gas Exploration............................. 426,800 0.6
Oil - Exploration & Production.................... 169,622 0.2
Oil Related....................................... 618,197 0.9
Paper Products.................................... 5,517 0.0
Pharmaceuticals................................... 407,011 0.6
Plantation........................................ 778,748 1.1
Publishing........................................ 785,121 1.1
Real Estate....................................... 9,863,212 14.3
Retail............................................ 448,719 0.7
Retail - Department Stores........................ 308,334 0.5
Retail - Food Chains.............................. 216,000 0.3
Retail - General Merchandising.................... 460,460 0.7
Retail - Specialty................................ 120,778 0.2
Retail Stores..................................... 479,419 0.7
Shipbuilding...................................... 237,656 0.3
Steel............................................. 165,218 0.2
Steel & Iron...................................... 691,675 1.0
Telecommunications................................ 4,540,157 6.6
Telephones........................................ 205,200 0.3
Television........................................ 103,004 0.1
Textiles.......................................... 500,191 0.7
Tire & Rubber Goods............................... 130,115 0.2
Tobacco........................................... 98,196 0.1
Transportation.................................... 2,171,540 3.2
U.S. Government Agency............................ 3,999,333 5.8
Utilities......................................... 3,599,927 5.2
Utilities - Electric.............................. 392,149 0.6
Water............................................. 209,278 0.3
Wire & Cable...................................... 43,299 0.1
------------ -----
$ 68,662,387 99.6%
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ----------------------------------------------------------------------------
Common Stocks..................................... $ 60,977,969 88.5%
Convertible Bonds................................. 2,611,905 3.8
Foreign Currency Put Options...................... 1,065,370 1.5
Rights & Warrants................................. 7,810 0.0
Short-Term Investments............................ 3,999,333 5.8
------------ -----
$ 68,662,387 99.6%
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL APPRECIATION
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (78.5%)
ADVERTISING (0.7%)
6,100 Snyder Communications, Inc.*............................................................ $ 222,650
-----------
AEROSPACE & DEFENSE (1.2%)
15,100 Kellstrom Industries, Inc.*............................................................. 373,725
-----------
AUTO PARTS - ORIGINAL EQUIPMENT (0.6%)
4,600 Tower Automotive, Inc.*................................................................. 193,487
-----------
BIOTECHNOLOGY (2.3%)
6,500 Centocor, Inc.*......................................................................... 216,125
10,000 ESC Medical Systems Ltd................................................................. 386,250
7,200 Guilford Pharmaceuticals, Inc.*......................................................... 144,900
-----------
747,275
-----------
BUSINESS SERVICES (2.1%)
17,000 AccuStaff, Inc.*........................................................................ 391,000
7,200 Metzler Group, Inc.*.................................................................... 284,400
-----------
675,400
-----------
COMMERCIAL SERVICES (3.8%)
7,200 Caribiner International, Inc.*.......................................................... 320,400
14,000 Primark Corp.*.......................................................................... 569,625
9,600 Whittman-Hart, Inc...................................................................... 328,800
-----------
1,218,825
-----------
COMMUNICATIONS - EQUIPMENT & SOFTWARE (0.3%)
6,228 Excel Communications, Inc............................................................... 90,305
-----------
COMPUTER EQUIPMENT (1.0%)
5,300 Storage Technology Corp.*............................................................... 328,269
-----------
COMPUTER SERVICES (0.2%)
3,000 American Business Information, Inc. (A Shares).......................................... 29,250
3,000 American Business Information, Inc. (B Shares).......................................... 30,000
-----------
59,250
-----------
COMPUTER SOFTWARE (3.2%)
5,000 Alladin Knowledge Systems Ltd........................................................... 85,000
8,000 American Software, Inc. (Class A)....................................................... 74,000
2,500 Avant! Corp.*........................................................................... 41,875
10,400 Compuware Corp.*........................................................................ 332,800
10,400 Systems & Computer Technology Corp.*.................................................... 516,100
-----------
1,049,775
-----------
COMPUTER SOFTWARE & SERVICES (7.5%)
14,250 Analysts International Corp............................................................. 491,625
8,300 Harbinger Corp.*........................................................................ 231,362
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
13,400 ISG International Software Group Ltd.* (Israel)......................................... $ 189,275
10,300 Keane, Inc.*............................................................................ 418,437
7,800 Manugistics Group, Inc.*................................................................ 346,125
6,400 PRI Automation, Inc.*................................................................... 184,800
9,200 Scopus Technology, Inc.*................................................................ 110,400
11,000 SMART Modular Technologies, Inc.*....................................................... 250,250
9,300 STB Systems, Inc.*...................................................................... 203,437
-----------
2,425,711
-----------
COMPUTERS (2.3%)
9,000 Data General Corp.*..................................................................... 156,937
8,200 Gulfstream Aerospace Corp.*............................................................. 239,850
10,500 Micron Electronics, Inc.*............................................................... 95,156
5,800 MICROS Systems, Inc.*................................................................... 261,000
-----------
752,943
-----------
CONSUMER SERVICES (0.8%)
11,000 E*TRADE Group, Inc.*.................................................................... 253,000
-----------
DRUGS (1.3%)
8,500 Elan Corp. PLC (ADR)* (Ireland)......................................................... 435,094
-----------
ELECTRICAL EQUIPMENT (0.7%)
10,200 JPM Co.*................................................................................ 211,650
-----------
ELECTRONICS (3.1%)
2,000 Analog Devices, Inc.*................................................................... 55,375
6,600 Sawtek, Inc.*........................................................................... 173,250
12,400 Sipex Corp.*............................................................................ 375,100
6,600 Teradyne, Inc.*......................................................................... 211,200
5,000 Vitesse Semiconductor Corp.*............................................................ 188,750
-----------
1,003,675
-----------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS (1.9%)
6,200 CFM Technologies, Inc.*................................................................. 94,550
5,300 Etec Systems, Inc.*..................................................................... 245,787
6,900 Kulicke & Soffa Industries, Inc.*....................................................... 128,512
6,500 TriQuint Semiconductor, Inc.*........................................................... 131,625
-----------
600,474
-----------
ENVIRONMENTAL CONTROL (1.5%)
5,200 Culligan Water Technologies, Inc.*...................................................... 261,300
5,500 U.S.A Waste Services, Inc.*............................................................. 215,875
-----------
477,175
-----------
FINANCIAL SERVICES (1.5%)
7,000 Arcadia Financial Ltd................................................................... 52,062
12,000 HealthCare Financial Partners*.......................................................... 420,000
-----------
472,062
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL APPRECIATION
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FOOD PROCESSING (0.7%)
8,100 International Multifoods Corp........................................................... $ 229,331
-----------
HEALTH SERVICES (1.2%)
19,500 Assisted Living Concepts, Inc.*......................................................... 385,125
-----------
HEALTHCARE (1.6%)
15,000 Allegiance Corp......................................................................... 531,562
-----------
HEALTHCARE - MISCELLANEOUS (1.1%)
12,100 Superior Consultant Holdings Corp.*..................................................... 356,950
-----------
HOSPITAL RELATED (0.4%)
5,200 Genesis Health Ventures, Inc.*.......................................................... 137,150
-----------
INSURANCE (0.7%)
7,400 Penn Treaty American Corp.*............................................................. 234,950
-----------
LEISURE (0.5%)
12,000 Funco, Inc.*............................................................................ 174,000
-----------
MACHINERY (1.1%)
10,600 National-Oilwell, Inc.*................................................................. 362,387
-----------
MACHINERY - DIVERSIFIED (0.3%)
1,700 Ade Corp................................................................................ 29,537
2,500 Advanced Energy Industries, Inc.*....................................................... 36,563
1,500 Asyst Technologies, Inc.*............................................................... 32,625
-----------
98,725
-----------
MANUFACTURING - DIVERSIFIED (0.1%)
1,800 Safety Components International, Inc.................................................... 21,150
-----------
MEDICAL PRODUCTS & SUPPLIES (1.0%)
19,600 Graham-Field Health Products, Inc....................................................... 327,075
-----------
MISCELLANEOUS (5.5%)
3,500 Advance Paradigm, Inc................................................................... 111,125
7,000 Agribiotech, Inc.*...................................................................... 119,000
15,000 Brunswick Technologies, Inc.*........................................................... 215,625
6,400 Immunex Corp.*.......................................................................... 345,600
4,700 Innovex, Inc............................................................................ 107,806
12,000 ITEQ, Inc.*............................................................................. 137,250
12,500 Mail-Well, Inc.*........................................................................ 506,250
7,400 Scotts Company (The) (Class A)*......................................................... 223,850
-----------
1,766,506
-----------
OIL & GAS (1.5%)
11,800 Lomak Petroleum, Inc.................................................................... 191,750
9,900 Noble Drilling Corp.*................................................................... 303,188
-----------
494,938
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OIL & GAS DRILLING (0.9%)
8,000 Patterson Energy, Inc.*................................................................. $ 309,500
-----------
OIL & GAS EXPLORATION (1.2%)
11,000 St. Mary Land & Exploration Co.......................................................... 378,125
-----------
OIL EQUIPMENT & SERVICES (2.0%)
20,000 Core Laboratories N.V................................................................... 360,000
8,200 ENSCO International, Inc................................................................ 274,700
-----------
634,700
-----------
PHARMACEUTICALS (3.7%)
10,100 Alkermes, Inc.*......................................................................... 198,213
9,500 Dura Pharmaceuticals, Inc.*............................................................. 435,813
9,700 North American Vaccine, Inc............................................................. 241,894
7,600 SangStat Medical Corp.*................................................................. 306,850
-----------
1,182,770
-----------
POLLUTION CONTROL (1.3%)
12,000 American Disposal Services, Inc......................................................... 436,500
-----------
PUBLISHING (0.9%)
7,900 Valassis Communications, Inc.*.......................................................... 292,300
-----------
RETAIL (3.3%)
11,300 Claire's Stores, Inc.................................................................... 219,644
10,900 Michaels Stores, Inc.*.................................................................. 318,825
7,900 Ross Stores, Inc........................................................................ 287,363
8,700 Stein Mart, Inc.*....................................................................... 230,550
-----------
1,056,382
-----------
RETAIL - SPECIALTY (1.6%)
6,500 Cole National Corp. (Class A)*.......................................................... 194,594
7,675 Consolidated Stores Corp.*.............................................................. 337,220
-----------
531,814
-----------
SEMICONDUCTORS (0.8%)
2,500 ATMI, Inc............................................................................... 59,688
5,100 KLA-Tencor Corp.*....................................................................... 196,669
-----------
256,357
-----------
SPECIALIZED SERVICES (0.8%)
7,100 Service Corp. International............................................................. 262,256
-----------
STEEL (1.7%)
12,100 Maverick Tube Corp.*.................................................................... 300,988
15,000 Steel Dynamics, Inc.*................................................................... 240,000
-----------
540,988
-----------
STEEL & IRON (0.7%)
10,000 Tubos de Acero de Mexico S.A. de C.V. (ADR)* (Mexico)................................... 216,250
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL APPRECIATION
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATION EQUIPMENT (3.7%)
2,400 Associated Group, Inc. (Class B)........................................................ $ 69,600
14,400 Davox Corp.*............................................................................ 464,400
15,400 Digital Microwave Corp.*................................................................ 223,300
9,300 DSC Communications Corp.*............................................................... 222,038
12,400 P-COM, Inc.*............................................................................ 213,900
-----------
1,193,238
-----------
TELECOMMUNICATIONS (1.6%)
2,000 Advanced Fibre Communications, Inc.*.................................................... 58,250
7,200 Aerial Communications, Inc.*............................................................ 51,300
8,000 ARC International Corp.................................................................. 50,000
2,900 QUALCOMM, Inc.*......................................................................... 146,450
10,500 Tel-Save Holdings, Inc.*................................................................ 207,375
-----------
513,375
-----------
TRANSPORTATION (0.8%)
2,500 Air Express International Corp.......................................................... 75,313
6,100 Trico Marine Service, Inc.*............................................................. 179,188
-----------
254,501
-----------
TRUCKERS (1.1%)
7,100 Caliber System, Inc..................................................................... 345,681
-----------
WHOLESALE DISTRIBUTOR (0.7%)
15,200 ADFlex Solutions, Inc.*................................................................. 243,200
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $23,974,391)........................................................... 25,358,531
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENTS (21.2%)
U.S. GOVERNMENT AGENCY (a) (20.7%)
$ 6,700 Federal Home Loan Bank 5.75% due 01/02/98 (AMORTIZED COST $6,698,930)................... 6,698,930
-----------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.5%)
$ 151 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $150,574) (b)
(IDENTIFIED COST $150,541)............................................................ $ 150,541
-----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $6,849,471)............................................................ 6,849,471
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $30,823,862) (c).......................................................... 99.7 % 32,208,002
OTHER ASSETS IN EXCESS OF LIABILITIES...................................................... 0.3 97,909
------ ------------
NET ASSETS................................................................................. 100.0 % $ 32,305,911
------ ------------
------ ------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $110,395 U.S. Treasury Bond 9.25% due 02/15/16 valued at
$153,552.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $3,662,201 and the
aggregate gross unrealized depreciation is $2,278,061, resulting in net
unrealized appreciation of $1,384,140.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (88.9%)
AGRICULTURE RELATED (2.1%)
167,000 Archer-Daniels-Midland Co.............................................................. $ 3,621,812
150,000 Dekalb Genetics Corp. (Class B)........................................................ 5,887,500
66,666 Delta & Pine Land Co................................................................... 2,033,313
50,000 Pioneer Hi-Bred International, Inc..................................................... 5,362,500
------------
16,905,125
------------
APPAREL (0.8%)
200,000 Warnaco Group, Inc. (Class A).......................................................... 6,275,000
------------
AUTO RELATED (0.4%)
92,100 Budget Group, Inc. (Class A)*.......................................................... 3,183,206
------------
BANKS (8.8%)
78,000 AmSouth Bancorporation................................................................. 4,236,375
50,000 First Chicago NBD Corp................................................................. 4,175,000
120,000 First of America Bank Corp............................................................. 9,255,000
160,000 First Union Corp....................................................................... 8,200,000
100,000 NationsBank Corp....................................................................... 6,081,250
116,000 Norwest Corp........................................................................... 4,480,500
34,000 State Street Corp...................................................................... 1,978,375
250,000 TCF Financial Corp..................................................................... 8,484,375
74,000 U.S. Bancorp........................................................................... 8,283,375
60,000 Union Planters Corp.................................................................... 4,076,250
26,000 Wells Fargo & Co....................................................................... 8,825,375
40,000 Westamerica Bancorporation............................................................. 4,090,000
------------
72,165,875
------------
BIOTECHNOLOGY (2.8%)
97,000 Alkermes, Inc.*........................................................................ 1,903,625
260,000 BioChem Pharma, Inc. (Canada)*......................................................... 5,411,250
200,000 Centocor, Inc.*........................................................................ 6,650,000
19,000 Gilead Sciences, Inc.*................................................................. 726,750
233,000 IDEC Pharmaceuticals Corp.*............................................................ 8,009,375
------------
22,701,000
------------
CABLE & TELECOMMUNICATIONS (2.0%)
220,000 Cox Communications, Inc. (Class A)*.................................................... 8,813,750
120,000 Time Warner, Inc....................................................................... 7,440,000
------------
16,253,750
------------
COMMUNICATIONS EQUIPMENT (1.1%)
60,000 CIENA Corp.*........................................................................... 3,667,500
120,000 Newbridge Networks Corp. (Canada)*..................................................... 4,185,000
40,000 Tekelec*............................................................................... 1,220,000
------------
9,072,500
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE (8.2%)
100,000 Arbor Software Corp.*.................................................................. $ 4,037,500
210,000 BEA Systems, Inc.*..................................................................... 3,635,625
102,000 Citrix Systems, Inc.*.................................................................. 7,752,000
150,000 Computer Associates International, Inc................................................. 7,931,250
230,000 Compuware Corp.*....................................................................... 7,360,000
40,000 Great Plains Software, Inc.*........................................................... 1,090,000
180,000 Legato Systems, Inc.*.................................................................. 7,875,000
225,000 Manugistics Group, Inc.*............................................................... 9,984,375
240,000 PeopleSoft, Inc.*...................................................................... 9,300,000
171,000 Veritas Software Corp.*................................................................ 8,656,875
------------
67,622,625
------------
CONSTRUCTION (1.1%)
100,000 Kaufman & Broad Home Corp.............................................................. 2,243,750
240,000 Lafarge Corp........................................................................... 7,095,000
------------
9,338,750
------------
CONSUMER - NONCYCLICAL (4.6%)
86,000 Clorox Co.............................................................................. 6,799,375
100,000 Crown Cork & Seal Co., Inc............................................................. 5,012,500
150,000 General Mills, Inc..................................................................... 10,743,750
132,000 Kroger Co.*............................................................................ 4,875,750
78,000 Lance, Inc............................................................................. 2,047,500
10,000 McCormick & Co., Inc. (Non Vtg)........................................................ 280,000
100,000 Procter & Gamble Co.................................................................... 7,981,250
------------
37,740,125
------------
CONSUMER BUSINESS SERVICES (3.4%)
240,310 Cendant Corp.*......................................................................... 8,260,656
200,000 Corrections Corp. of America*.......................................................... 7,412,500
150,000 Interpublic Group of Companies, Inc.................................................... 7,471,875
82,800 Service Corp. International............................................................ 3,058,425
40,000 U.S.A. Waste Services, Inc.*........................................................... 1,570,000
------------
27,773,456
------------
CONSUMER PRODUCTS (3.0%)
30,000 CVS Corp............................................................................... 1,921,875
200,000 Dominick's Supermarkets, Inc.*......................................................... 7,300,000
150,000 Great Atlantic & Pacific Tea Co., Inc.................................................. 4,453,125
80,000 Rite Aid Corp.......................................................................... 4,695,000
100,000 Safeway, Inc.*......................................................................... 6,325,000
------------
24,695,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DRUGS (5.6%)
100,000 ALZA Corp.*............................................................................ $ 3,181,250
90,000 Bristol-Myers Squibb Co................................................................ 8,516,250
59,000 Dura Pharmaceuticals, Inc.*............................................................ 2,706,625
120,000 Lilly (Eli) & Co....................................................................... 8,355,000
70,000 Medicis Pharmaceutical Corp. (Class A)*................................................ 3,587,500
120,000 Pfizer, Inc............................................................................ 8,947,500
68,000 Schering-Plough Corp................................................................... 4,224,500
50,000 Warner-Lambert Co...................................................................... 6,200,000
------------
45,718,625
------------
ENTERTAINMENT (0.5%)
100,000 Electronic Arts, Inc.*................................................................. 3,781,250
------------
FINANCIAL - MISCELLANEOUS (2.5%)
43,700 Affiliated Managers Group, Inc.*....................................................... 1,267,300
30,000 American Express Co.................................................................... 2,677,500
110,000 Associates First Capital Corp. (Class A)............................................... 7,823,750
78,000 Edwards (A.G.), Inc.................................................................... 3,100,500
56,100 Hambrecht & Quist Group*............................................................... 2,047,650
50,000 Merrill Lynch & Co., Inc............................................................... 3,646,875
------------
20,563,575
------------
HEALTHCARE PRODUCTS & SERVICES (3.3%)
217,500 Health Management Associates, Inc. (Class A)*.......................................... 5,491,875
220,000 Healthsouth Corp.*..................................................................... 6,105,000
200,000 Renal Treatment Centers, Inc.*......................................................... 7,225,000
250,000 Tenet Healthcare Corp.*................................................................ 8,281,250
------------
27,103,125
------------
INSURANCE (4.2%)
130,000 Equitable Companies, Inc............................................................... 6,467,500
22,300 Executive Risk, Inc.................................................................... 1,556,819
109,800 Hartford Life, Inc. (Class A).......................................................... 4,975,312
42,000 Marsh & McLennan Companies, Inc........................................................ 3,131,625
32,500 Nationwide Financial Services, Inc. (Class A).......................................... 1,174,062
100,000 Provident Companies, Inc............................................................... 3,862,500
100,000 Torchmark Corp......................................................................... 4,206,250
94,500 Travelers Group, Inc................................................................... 5,091,187
80,000 UNUM Corp.............................................................................. 4,350,000
------------
34,815,255
------------
INTERNET (3.3%)
100,000 America Online, Inc.*.................................................................. 8,918,750
165,000 Check Point Software Technologies Ltd.* (Israel)....................................... 6,723,750
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
200,000 CheckFree Holdings Corp.*.............................................................. $ 5,400,000
250,000 Netscape Communications Corp.*......................................................... 6,062,500
------------
27,105,000
------------
MEDIA GROUP (9.7%)
121,410 CBS Corp............................................................................... 3,574,007
67,500 Chancellor Media Corp.*................................................................ 5,037,188
61,600 Clear Channel Communications, Inc.*.................................................... 4,893,350
200,000 Heftel Broadcasting Corp. (Class A)*................................................... 9,350,000
160,000 Jacor Communications, Inc.*............................................................ 8,500,000
61,000 Lin Television Corp.*.................................................................. 3,324,500
500,000 News Corp., Ltd. (ADR) (Australia)..................................................... 11,156,250
181,687 Outdoor Systems, Inc.*................................................................. 6,972,239
135,000 Tribune Co............................................................................. 8,403,750
33,500 Universal Outdoor Holdings, Inc.*...................................................... 1,742,000
66,600 Univision Communications, Inc. (Class A)*.............................................. 4,649,513
300,000 Viacom, Inc. (Class B)*................................................................ 12,431,250
------------
80,034,047
------------
MEDICAL SUPPLIES (1.1%)
84,000 Guidant Corp........................................................................... 5,229,000
100,000 Mentor Corp............................................................................ 3,650,000
24,000 Somnus Medical Technologies, Inc.*..................................................... 298,500
------------
9,177,500
------------
REAL ESTATE (0.0%)
3,900 LaSalle Partners, Inc.*................................................................ 138,938
8,500 Trammell Crow Co.*..................................................................... 218,875
------------
357,813
------------
RETAIL (10.1%)
53,200 Barnes & Noble, Inc.*.................................................................. 1,775,550
170,000 Costco Companies, Inc.*................................................................ 7,575,625
120,000 Dayton-Hudson Corp..................................................................... 8,100,000
322,500 Family Dollar Stores, Inc.............................................................. 9,453,281
150,000 General Nutrition Companies*........................................................... 5,081,250
225,000 Hasbro, Inc............................................................................ 7,087,500
112,500 Home Depot, Inc........................................................................ 6,623,438
550,000 Kmart Corp.*........................................................................... 6,359,375
320,000 Limited (The), Inc..................................................................... 8,160,000
120,000 Payless ShoeSource, Inc.*.............................................................. 8,055,000
240,000 Proffitt's, Inc.*...................................................................... 6,825,000
200,000 Wal-Mart Stores, Inc................................................................... 7,887,500
------------
82,983,519
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SEMICONDUCTORS (0.1%)
40,000 Vitesse Semiconductor Corp.*........................................................... $ 1,510,000
------------
TELECOMMUNICATIONS (2.4%)
200,000 LCI International, Inc.*............................................................... 6,150,000
150,000 Pacific Gateway Exchange, Inc.*........................................................ 8,062,500
100,000 Teleport Communications Group Inc.*.................................................... 5,487,537
------------
19,700,037
------------
TRANSPORTATION (0.9%)
125,000 US Airways Group Inc.*................................................................. 7,812,500
------------
UTILITIES (6.9%)
210,000 Consolidated Edison Co. of New York, Inc............................................... 8,610,000
150,000 Dominion Resources, Inc................................................................ 6,384,375
160,000 GTE Corp............................................................................... 8,360,000
265,000 New York State Electric & Gas Corp..................................................... 9,407,500
280,000 SCANA Corp............................................................................. 8,382,500
200,000 Texas Utilities Co..................................................................... 8,312,500
180,000 U.S. West Communications Group, Inc.................................................... 8,122,500
------------
57,579,375
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $603,563,479)......................................................... 731,968,033
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS (8.4%)
$ 59,100 U.S. Treasury Bond 6.375% due 08/15/27................................................. 62,352,273
23,500 U.S. Treasury Note 0.00% due 11/15/19.................................................. 6,294,240
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $66,400,693).......................................................... 68,646,513
------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (3.6%)
U.S. GOVERNMENT AGENCY (a) (3.6%)
$ 29,300 Federal Home Loan Mortgage Corp. 6.00% due 01/02/98
(AMORTIZED COST $29,295,117)......................................................... $ 29,295,117
------------
REPURCHASE AGREEMENT (0.0%)
274 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $274,232) (b)
(IDENTIFIED COST $274,173)........................................................... 274,173
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $29,569,290).......................................................... 29,569,290
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $699,533,462) (c)........................................................ 100.9 % 830,183,836
LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (0.9) (7,093,554)
------ -------------
NET ASSETS................................................................................ 100.0 % $ 823,090,282
------ -------------
------ -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $273,473 U.S. Treasury Note 5.875% due 02/28/99 valued at
$279,657.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $142,629,367 and the
aggregate gross unrealized depreciation is $11,978,993, resulting in net
unrealized appreciation of $130,650,374.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (62.5%)
AEROSPACE & DEFENSE (2.0%)
62,000 General Motors Corp. (Class H)......................................................... $ 2,290,125
60,500 Honeywell, Inc......................................................................... 4,144,250
34,868 Raytheon Co. (Class A)................................................................. 1,719,468
63,300 Watkins-Johnson Co..................................................................... 1,641,844
------------
9,795,687
------------
AIRLINES (1.0%)
100,000 Continental Airlines, Inc. (Class B)*.................................................. 4,812,500
------------
ALUMINUM (0.7%)
52,000 Aluminum Co. of America................................................................ 3,659,500
------------
APPLIANCES & HOUSEHOLD DURABLES (0.9%)
125,000 Maytag Corp............................................................................ 4,664,062
------------
AUTOMOTIVE (1.7%)
122,900 Chrysler Corp.......................................................................... 4,324,544
85,000 Ford Motor Co.......................................................................... 4,138,437
------------
8,462,981
------------
BANKS (1.8%)
64,000 NationsBank Corp....................................................................... 3,892,000
14,050 Wells Fargo & Co....................................................................... 4,769,097
------------
8,661,097
------------
BANKS - MONEY CENTER (1.5%)
33,300 Chase Manhattan Corp................................................................... 3,646,350
30,000 Citicorp............................................................................... 3,793,125
------------
7,439,475
------------
BEVERAGES - SOFT DRINKS (0.8%)
104,900 PepsiCo, Inc........................................................................... 3,822,294
------------
CABLE & TELECOMMUNICATIONS (1.0%)
170,000 U.S. West Media Group, Inc.*........................................................... 4,908,750
------------
CHEMICALS (1.8%)
45,800 Dow Chemical Co........................................................................ 4,648,700
104,200 Monsanto Co............................................................................ 4,376,400
------------
9,025,100
------------
COMMUNICATIONS EQUIPMENT (2.4%)
76,650 Cisco Systems, Inc.*................................................................... 4,273,237
46,400 Lucent Technologies, Inc............................................................... 3,706,200
72,100 Tellabs, Inc.*......................................................................... 3,798,769
------------
11,778,206
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER EQUIPMENT (1.1%)
42,500 Dell Computer Corp.*................................................................... $ 3,570,000
104,200 Seagate Technology, Inc.*.............................................................. 2,005,850
------------
5,575,850
------------
COMPUTER SOFTWARE (0.8%)
30,300 Microsoft Corp.*....................................................................... 3,914,381
------------
COMPUTERS (2.4%)
91,600 Diebold, Inc........................................................................... 4,637,250
114,000 Gateway 2000, Inc.*.................................................................... 3,719,250
92,900 Sun Microsystems, Inc.*................................................................ 3,704,387
------------
12,060,887
------------
ELECTRIC - MAJOR (0.9%)
59,200 General Electric Co.................................................................... 4,343,800
------------
ENTERTAINMENT/GAMING (0.7%)
149,000 Mirage Resorts, Inc.*.................................................................. 3,389,750
------------
FINANCIAL SERVICES (2.8%)
50,000 American Express Co.................................................................... 4,462,500
87,300 Fannie Mae............................................................................. 4,981,556
83,850 Travelers Group, Inc................................................................... 4,517,419
------------
13,961,475
------------
FOODS (1.8%)
60,300 General Mills, Inc..................................................................... 4,318,987
95,000 Kellogg Co............................................................................. 4,714,375
------------
9,033,362
------------
HEALTHCARE - HMOS (0.7%)
175,000 Humana, Inc.*.......................................................................... 3,631,250
------------
HOUSEHOLD PRODUCTS (0.9%)
57,800 Colgate-Palmolive Co................................................................... 4,248,300
------------
INSURANCE (2.6%)
41,500 Ace, Ltd. (Bermuda).................................................................... 4,004,750
38,500 American International Group, Inc...................................................... 4,186,875
96,000 Equitable Companies, Inc............................................................... 4,776,000
------------
12,967,625
------------
INTERNET (0.9%)
50,300 America Online, Inc.*.................................................................. 4,486,131
------------
MEDIA GROUP (1.0%)
64,500 Clear Channel Communications, Inc.*.................................................... 5,123,719
------------
OIL - DOMESTIC (0.8%)
48,300 Atlantic Richfield Co.................................................................. 3,870,037
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OIL INTEGRATED - DOMESTIC (1.5%)
68,000 Amerada Hess Corp...................................................................... $ 3,731,500
151,000 Union Pacific Resources Group, Inc..................................................... 3,661,750
------------
7,393,250
------------
OIL INTEGRATED - INTERNATIONAL (3.1%)
64,200 Exxon Corp............................................................................. 3,928,237
55,200 Mobil Corp............................................................................. 3,984,750
72,300 Royal Dutch Petroleum Co. (ADR) (Netherlands).......................................... 3,917,756
65,700 Texaco, Inc............................................................................ 3,572,437
------------
15,403,180
------------
PAPER PRODUCTS (1.3%)
82,400 Bowater, Inc........................................................................... 3,661,650
64,200 Champion International Corp............................................................ 2,909,062
------------
6,570,712
------------
PHARMACEUTICALS (4.3%)
64,300 Abbott Laboratories.................................................................... 4,215,669
56,300 American Home Products Corp............................................................ 4,306,950
68,400 Johnson & Johnson...................................................................... 4,505,850
66,600 Lilly (Eli) & Co....................................................................... 4,637,025
29,100 Warner-Lambert Co...................................................................... 3,608,400
------------
21,273,894
------------
PROPERTY - CASUALTY INSURANCE (0.9%)
58,000 Chubb Corp............................................................................. 4,386,250
------------
RETAIL (0.8%)
77,300 May Department Stores Co............................................................... 4,072,744
------------
RETAIL - DEPARTMENT STORES (0.6%)
265,000 Kmart Corp.*........................................................................... 3,064,062
------------
RETAIL - SPECIALTY (4.5%)
122,400 Bed Bath & Beyond, Inc.*............................................................... 4,697,100
106,000 Costco Companies, Inc.*................................................................ 4,723,625
190,000 Eagle Hardware & Garden, Inc.*......................................................... 3,681,250
76,300 Home Depot, Inc........................................................................ 4,492,163
68,300 Payless ShoeSource, Inc.*.............................................................. 4,584,638
------------
22,178,776
------------
RETAIL - SPECIALTY APPAREL (2.7%)
125,700 Gap, Inc............................................................................... 4,454,494
170,000 Limited (The), Inc..................................................................... 4,335,000
163,000 Wet Seal, Inc. (Class A)*.............................................................. 4,808,500
------------
13,597,994
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SAVINGS & LOAN ASSOCIATIONS (1.7%)
46,000 Golden West Financial Corp............................................................. $ 4,499,375
60,300 Washington Mutual, Inc................................................................. 3,844,125
------------
8,343,500
------------
SEMICONDUCTOR EQUIPMENT (1.9%)
79,000 Altera Corp.*.......................................................................... 2,616,875
80,800 Applied Materials, Inc.*............................................................... 2,429,050
56,500 KLA-Tencor Corp.*...................................................................... 2,178,781
71,700 Teradyne, Inc.*........................................................................ 2,294,400
------------
9,519,106
------------
SEMICONDUCTORS (1.2%)
45,000 Intel Corp............................................................................. 3,158,438
113,000 Micron Technology, Inc.*............................................................... 2,938,000
------------
6,096,438
------------
SHOES (0.6%)
79,500 Nike, Inc. (Class B)................................................................... 3,120,375
------------
STEEL & IRON (0.8%)
78,600 Nucor Corp............................................................................. 3,797,363
------------
TELECOMMUNICATIONS (1.8%)
175,000 Frontier Corp.......................................................................... 4,210,938
191,000 Winstar Communications, Inc.*.......................................................... 4,763,063
------------
8,974,001
------------
TOBACCO (0.9%)
100,000 Philip Morris Companies, Inc........................................................... 4,531,250
------------
TRUCKERS (0.6%)
126,600 Yellow Corp.*.......................................................................... 3,172,913
------------
WHOLESALE DISTRIBUTOR (0.3%)
95,000 CHS Electronics, Inc.*................................................................. 1,591,250
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $277,707,969)......................................................... 310,723,277
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN
THOUSANDS
- --------
<C> <S> <C>
CORPORATE BONDS (10.1%)
AEROSPACE & DEFENSE (0.2%)
$ 1,000 Raytheon Co.
7.20% due 08/15/27.................................................................... 1,045,880
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BANKS (0.8%)
$ 1,000 Central Fidelity Capital I, Inc. (Series A)
6.758%+ due 04/15/27.................................................................. $ 1,018,930
1,000 Norwest Financial, Inc.
6.20% due 02/15/01.................................................................... 1,000,670
2,000 St. Paul Bancorp, Inc.
7.125% due 02/15/04................................................................... 2,047,580
------------
4,067,180
------------
BANKS - REGIONAL (0.4%)
2,000 Firstar Bank Milwaukee
6.25% due 12/01/02.................................................................... 2,005,000
------------
BROKERAGE (1.6%)
2,000 Bear Stearns Co., Inc.
6.75% due 12/15/07.................................................................... 2,010,660
2,000 Lehman Brothers Holdings, Inc. (Series E)
6.50% due 07/18/00.................................................................... 2,010,840
2,000 Paine Webber Group, Inc.
6.79% due 10/04/04.................................................................... 2,029,940
2,000 Salomon, Inc.
6.65% due 07/15/01.................................................................... 2,022,640
------------
8,074,080
------------
CABLE & TELECOMMUNICATIONS (0.2%)
1,000 TCI Communications, Inc.
8.75% due 08/01/15.................................................................... 1,157,910
------------
FINANCE - CONSUMER (0.3%)
1,500 Commercial Credit Co.
6.50% due 06/01/05.................................................................... 1,503,180
------------
FINANCIAL SERVICES (3.1%)
3,000 Advanta National Bank
5.98% due 02/10/98.................................................................... 2,999,460
2,000 Arkwright CSN Trust - 144A**
9.625% due 08/15/26................................................................... 2,345,000
3,000 Centura Capital Trust I - 144A**
8.845% due 06/01/27................................................................... 3,333,750
3,000 Markel Capital Trust I (Series B)
8.71% due 01/01/46.................................................................... 3,269,550
1,000 MBIA Inc.
7.15% due 07/15/27.................................................................... 1,052,760
2,000 Orion Capital Trust I
8.73% due 01/01/37.................................................................... 2,180,000
------------
15,180,520
------------
METALS & MINING (0.4%)
2,000 Placer Dome, Inc. (Canada)
8.50% due 12/31/45.................................................................... 1,897,500
------------
<CAPTION>
PRINCIPAL
AMOUNT
IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MISCELLANEOUS (0.4%)
$ 1,000 Northrop-Grumman Corp.
7.875% due 03/01/26................................................................... $ 1,116,740
1,000 Solutia, Inc.
7.375% due 10/15/27................................................................... 1,034,060
------------
2,150,800
------------
OIL & GAS (0.4%)
2,000 Noble Affiliates, Inc.
7.25% due 08/01/97.................................................................... 2,006,520
------------
OIL INTEGRATED - DOMESTIC (0.4%)
1,950 Mitchell Energy & Development Corp.
6.75% due 02/15/04.................................................................... 1,956,845
------------
REAL ESTATE (0.4%)
2,000 Crescent Real Estate Equities Co. - 144A**
6.625% due 09/15/02................................................................... 1,997,440
------------
RETAIL - DEPARTMENT STORES (0.6%)
2,500 Shopko Stores, Inc.
8.50% due 03/15/02.................................................................... 2,661,600
------------
RETAIL - SPECIALTY (0.4%)
2,000 Staples, Inc.
7.125% due 08/15/07................................................................... 2,041,580
------------
UTILITIES - TELEPHONE (0.3%)
1,000 GTE Corp.
8.75% due 11/01/21.................................................................... 1,201,820
------------
WASTE MANAGEMENT (0.2%)
1,000 USA Waste Services, Inc.
6.50% due 12/15/02.................................................................... 1,000,000
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $48,709,691)........................................................... 49,947,855
------------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS (10.7%)
3,000 Federal Home Loan Mortgage Corp.
6.943% due 03/21/07................................................................... 3,183,570
1,000 U.S. Treasury Bond
6.375% due 08/15/27................................................................... 1,055,030
5,000 U.S. Treasury Bond
6.625% due 02/15/27................................................................... 5,429,200
10,000 U.S. Treasury Note
5.00% due 01/31/98.................................................................... 9,994,500
3,000 U.S. Treasury Note
5.125% due 02/28/98................................................................... 2,997,780
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 4,000 U.S. Treasury Note
5.875% due 02/28/99................................................................... $ 4,011,040
2,000 U.S. Treasury Note
6.375% due 05/15/99................................................................... 2,018,440
500 U.S. Treasury Note
6.50% due 04/30/99.................................................................... 505,470
7,000 U.S. Treasury Note
6.875% due 08/31/99................................................................... 7,131,670
5,000 U.S. Treasury Note
6.875% due 03/31/00................................................................... 5,124,500
11,000 U.S. Treasury Note
6.875% due 05/15/06................................................................... 11,771,430
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $52,998,860)........................................................... 53,222,630
------------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C>
SHORT-TERM INVESTMENTS (16.3%)
U.S. GOVERNMENT AGENCIES (a) (16.2%)
30,000 Federal Home Loan Banks 5.75-5.80% due 01/02/98-01/07/98................................ 29,977,456
50,825 Federal National Mortgage Association 5.72-5.73% due 01/08/98-01/13/98.................. 50,743,012
------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $80,720,468)............................................................ 80,720,468
------------
<CAPTION>
PRINCIPAL
AMOUNT
IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.1%)
$ 461 The Bank of New York 3.875% due 01/02/98 (dated 12/31/97; proceeds $460,749) (b)
(IDENTIFIED COST $460,650)............................................................ $ 460,650
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $81,181,118)........................................................... 81,181,118
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $460,597,638) (C)........................................................ 99.6 % 495,074,880
OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 0.4 1,953,265
------ -------------
NET ASSETS................................................................................ 100.0 % $ 497,028,145
------ -------------
------ -------------
</TABLE>
- ---------------------
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
+ Floating rate security. Coupon rate shown is the rate in effect at December
31, 1997.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) Collateralized by $459,575 U.S. Treasury Note 5.875% due 08/31/99 valued at
$469,863.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $52,453,509 and the
aggregate gross unrealized depreciation is $17,976,267, resulting in net
unrealized appreciation of $34,477,242.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MONEY QUALITY HIGH INCOME
MARKET INCOME PLUS YIELD UTILITIES BUILDER
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at
value *..................... $335,393,493 $ 470,339,601 $ 367,556,450 $ 456,474,943 $55,572,428
Cash.......................... 11,373 -- 2,298,669 25,000 --
Receivable for:
Investments sold.......... -- -- -- -- --
Shares of beneficial
interest sold........... 264,484 108,023 366,216 85,475 223,206
Dividends................. -- -- -- 1,065,120 91,817
Interest.................. 688,162 6,934,333 8,114,681 918,812 404,511
Foreign withholding taxes
reclaimed............... -- -- -- -- --
Receivable from affiliate..... -- -- -- -- 16,403
Prepaid expenses and other
assets...................... 3,212 6,229 4,788 5,905 --
------------ -------------- -------------- -------------- -----------
TOTAL ASSETS............. 336,360,724 477,388,186 378,340,804 458,575,255 56,308,365
------------ -------------- -------------- -------------- -----------
LIABILITIES:
Written call options
outstanding, at value....... -- -- -- -- --
Payable for:
Investments purchased..... -- 1,989,458 10,000,000 -- 831,962
Shares of beneficial
interest repurchased.... 583,989 140,351 76,514 137,901 2,392
Investment management
fee..................... 154,313 213,451 162,642 259,020 30,070
Accrued expenses and other
payables.................... 44,273 55,418 40,377 44,078 21,108
------------ -------------- -------------- -------------- -----------
TOTAL LIABILITIES........ 782,575 2,398,678 10,279,533 440,999 885,532
------------ -------------- -------------- -------------- -----------
NET ASSETS:
Paid-in-capital............... 335,578,084 475,844,420 450,437,980 293,549,661 51,578,863
Accumulated undistributed net
investment income (loss).... 65 148 294,896 53 41
Accumulated undistributed net
realized gain (loss)........ -- (23,243,545) (63,345,465) 24,234,386 773,374
Net unrealized appreciation
(depreciation).............. -- 22,388,485 (19,326,140) 140,350,156 3,070,555
------------ -------------- -------------- -------------- -----------
NET ASSETS............... $335,578,149 $ 474,989,508 $ 368,061,271 $ 458,134,256 $55,422,833
------------ -------------- -------------- -------------- -----------
------------ -------------- -------------- -------------- -----------
*IDENTIFIED COST......... $335,393,493 $ 447,951,116 $ 386,882,590 $ 316,124,787 $52,501,873
------------ -------------- -------------- -------------- -----------
------------ -------------- -------------- -------------- -----------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 335,578,084 44,123,343 60,135,547 24,650,021 4,711,055
------------ -------------- -------------- -------------- -----------
------------ -------------- -------------- -------------- -----------
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $1.00 $10.77 $6.12 $18.59 $11.76
------------ -------------- -------------- -------------- -----------
------------ -------------- -------------- -------------- -----------
- ------------------
** Includes foreign cash of $86,512 and $21,164, respectively.
*** Premiums received $267,260.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1997
GLOBAL
DIVIDEND CAPITAL DIVIDEND EUROPEAN PACIFIC CAPITAL
GROWTH GROWTH GROWTH GROWTH GROWTH APPRECIATION EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at
value *..................... $1,898,267,697 $137,179,616 $478,597,892 $390,490,656 $68,662,387 $32,208,002 $830,183,836
Cash.......................... -- -- 523,453 388,583** 633,493** -- --
Receivable for:
Investments sold.......... 8,697,540 79,847 2,185,527 108,123 18,543 -- 6,472,342
Shares of beneficial
interest sold........... 881,113 96,973 205,562 89,352 17,550 97,011 344,355
Dividends................. 3,448,301 46,525 856,401 445,269 85,864 3,476 269,590
Interest.................. 883,340 22 3,856 6,509 37,726 16 1,423,127
Foreign withholding taxes
reclaimed............... -- -- 394,518 600,133 -- -- --
Receivable from affiliate..... -- -- -- -- -- 18,086 --
Prepaid expenses and other
assets...................... 12,994 948 4,229 506 762 6 4,430
-------------- ------------ ------------ ------------ ----------- ----------- ------------
TOTAL ASSETS............. 1,912,190,985 137,403,931 482,771,438 392,129,131 69,456,325 32,326,597 838,697,680
-------------- ------------ ------------ ------------ ----------- ----------- ------------
LIABILITIES:
Written call options
outstanding, at value....... -- -- -- -- 265,000*** -- --
Payable for:
Investments purchased..... 3,699,280 10,102,470 503,943 150,204 26,579 -- 14,981,760
Shares of beneficial
interest repurchased.... 1,618,588 97,925 196,846 54,746 71,631 2,600 220,523
Investment management
fee..................... 885,557 73,534 323,656 350,605 64,413 -- 357,209
Accrued expenses and other
payables.................... 81,802 29,926 133,533 132,323 125,165 18,086 47,906
-------------- ------------ ------------ ------------ ----------- ----------- ------------
TOTAL LIABILITIES........ 6,285,227 10,303,855 1,157,978 687,878 552,788 20,686 15,607,398
-------------- ------------ ------------ ------------ ----------- ----------- ------------
NET ASSETS:
Paid-in-capital............... 1,289,995,423 96,754,405 405,875,384 266,541,003 116,472,573 30,969,777 579,416,117
Accumulated undistributed net
investment income (loss).... 141 9,662 (74,436) 5,394,724 2,054,796 209,858 --
Accumulated undistributed net
realized gain (loss)........ 185,014,381 8,843,005 47,370,806 30,237,204 (26,966,368) (257,864) 113,023,791
Net unrealized appreciation
(depreciation).............. 430,895,813 21,493,004 28,441,706 89,268,322 (22,657,464) 1,384,140 130,650,374
-------------- ------------ ------------ ------------ ----------- ----------- ------------
NET ASSETS............... $1,905,905,758 $127,100,076 $481,613,460 $391,441,253 $68,903,537 $32,305,911 $823,090,282
-------------- ------------ ------------ ------------ ----------- ----------- ------------
-------------- ------------ ------------ ------------ ----------- ----------- ------------
*IDENTIFIED COST......... $1,467,371,884 $115,686,612 $450,139,081 $301,199,765 $91,320,929 $30,823,862 $699,533,462
-------------- ------------ ------------ ------------ ----------- ----------- ------------
-------------- ------------ ------------ ------------ ----------- ----------- ------------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 88,256,107 6,947,418 34,680,608 16,628,832 11,264,299 2,854,685 24,511,800
-------------- ------------ ------------ ------------ ----------- ----------- ------------
-------------- ------------ ------------ ------------ ----------- ----------- ------------
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $21.60 $18.29 $13.89 $23.54 $6.12 $11.32 $33.58
-------------- ------------ ------------ ------------ ----------- ----------- ------------
-------------- ------------ ------------ ------------ ----------- ----------- ------------
<CAPTION>
STRATEGIST
<S> <C>
- ------------------------------
ASSETS:
Investments in securities, at
value *..................... $495,074,880
Cash.......................... --
Receivable for:
Investments sold.......... --
Shares of beneficial
interest sold........... 107,575
Dividends................. 267,318
Interest.................. 2,016,790
Foreign withholding taxes
reclaimed............... --
Receivable from affiliate..... --
Prepaid expenses and other
assets...................... 6,635
------------
TOTAL ASSETS............. 497,473,198
------------
LIABILITIES:
Written call options
outstanding, at value....... --
Payable for:
Investments purchased..... --
Shares of beneficial
interest repurchased.... 173,615
Investment management
fee..................... 222,817
Accrued expenses and other
payables.................... 48,621
------------
TOTAL LIABILITIES........ 445,053
------------
NET ASSETS:
Paid-in-capital............... 410,247,461
Accumulated undistributed net
investment income (loss).... 62
Accumulated undistributed net
realized gain (loss)........ 52,303,380
Net unrealized appreciation
(depreciation).............. 34,477,242
------------
NET ASSETS............... $497,028,145
------------
------------
*IDENTIFIED COST......... $460,597,638
------------
------------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 33,589,395
------------
------------
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $14.80
------------
------------
</TABLE>
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
QUALITY
MONEY INCOME HIGH INCOME
MARKET PLUS YIELD UTILITIES BUILDER*
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
INCOME
Interest...................... $ 19,856,775 $ 33,318,522 $ 39,904,178 $ 3,537,001 $ 735,605
Dividends..................... -- -- -- 13,784,320** 600,057**
------------- ------------- ------------- ------------- -----------
TOTAL INCOME............. 19,856,775 33,318,522 39,904,178 17,321,321 1,335,662
------------- ------------- ------------- ------------- -----------
EXPENSES
Investment management fee..... 1,764,304 2,301,725 1,539,080 2,710,383 170,282
Professional fees............. 28,271 31,458 29,468 30,153 18,848
Custodian fees................ 20,977 53,009 26,126 28,366 26,715
Shareholder reports and
notices..................... 23,726 25,683 19,691 26,668 5,343
Trustees' fees and expenses... 1,353 3,091 945 1,832 38
Transfer agent fees and
expenses.................... 500 500 500 500 500
Other......................... 4,373 12,525 10,618 7,024 2,107
------------- ------------- ------------- ------------- -----------
TOTAL EXPENSES........... 1,843,504 2,427,991 1,626,428 2,804,926 223,833
Less: amounts
waived/assumed.............. -- -- -- -- (189,050)
------------- ------------- ------------- ------------- -----------
NET EXPENSES............. 1,843,504 2,427,991 1,626,428 2,804,926 34,783
------------- ------------- ------------- ------------- -----------
NET INVESTMENT INCOME.... 18,013,271 30,890,531 38,277,750 14,516,395 1,300,879
------------- ------------- ------------- ------------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... -- 4,211,639 184,126 24,274,209 773,374
Options written........... -- -- -- -- --
Foreign exchange
transactions............ -- -- -- -- --
------------- ------------- ------------- ------------- -----------
NET GAIN (LOSS).......... -- 4,211,639 184,126 24,274,209 773,374
------------- ------------- ------------- ------------- -----------
Net change in unrealized
appreciation/ depreciation
on:
Investments............... -- 12,724,498 (2,939,937) 61,888,240 3,070,555
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. -- -- -- -- --
------------- ------------- ------------- ------------- -----------
NET APPRECIATION
(DEPRECIATION)........... -- 12,724,498 (2,939,937) 61,888,240 3,070,555
------------- ------------- ------------- ------------- -----------
NET GAIN (LOSS).......... -- 16,936,137 (2,755,811) 86,162,449 3,843,929
------------- ------------- ------------- ------------- -----------
NET INCREASE (DECREASE)....... $ 18,013,271 $ 47,826,668 $ 35,521,939 $ 100,678,844 $ 5,144,808
------------- ------------- ------------- ------------- -----------
------------- ------------- ------------- ------------- -----------
- ------------------
* For the period January 21, 1997 (commencement of operations) through
December 31, 1997.
** Net of $129,452, $107, $139,529, $1,492, $1,056,020, $1,203,783, $205,546
and $21,722 foreign withholding tax, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
GLOBAL
DIVIDEND CAPITAL DIVIDEND EUROPEAN PACIFIC CAPITAL
GROWTH GROWTH GROWTH GROWTH GROWTH APPRECIATION*
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
INCOME
Interest...................... $ 3,324,923 $ 434,870 $ 451,996 $ 571,504 $ 180,552 $ 196,097
Dividends..................... 38,767,567** 338,223** 9,977,541** 7,167,296** 2,839,959** 13,761
------------ --------- ------------ ----------- ------------- -------------
TOTAL INCOME............. 42,092,490 773,093 10,429,537 7,738,800 3,020,511 209,858
------------ --------- ------------ ----------- ------------- -------------
EXPENSES
Investment management fee..... 8,563,208 698,171 3,183,049 3,589,371 1,195,454 120,968
Professional fees............. 29,499 27,933 32,299 33,728 32,670 20,713
Custodian fees................ 79,729 26,653 323,336 352,078 453,370 11,870
Shareholder reports and
notices..................... 108,128 5,935 29,232 25,051 12,722 2,911
Trustees' fees and expenses... 5,580 245 1,173 944 465 4
Transfer agent fees and
expenses.................... 500 500 500 500 500 500
Other......................... 10,993 3,674 10,349 19,319 22,168 --
------------ --------- ------------ ----------- ------------- -------------
TOTAL EXPENSES........... 8,797,637 763,111 3,579,938 4,020,991 1,717,349 156,966
Less: amounts
waived/assumed.............. -- -- -- -- -- (156,966)
------------ --------- ------------ ----------- ------------- -------------
NET EXPENSES............. 8,797,637 763,111 3,579,938 4,020,991 1,717,349 --
------------ --------- ------------ ----------- ------------- -------------
NET INVESTMENT INCOME.... 33,294,853 9,982 6,849,599 3,717,809 1,303,162 209,858
------------ --------- ------------ ----------- ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... 187,796,245 9,166,337 48,913,165 31,694,166 (18,184,858) (257,864)
Options written........... -- -- -- -- 67,380 --
Foreign exchange
transactions............ -- -- (68,992) 2,021,800 (272,769) --
------------ --------- ------------ ----------- ------------- -------------
NET GAIN (LOSS).......... 187,796,245 9,166,337 48,844,173 33,715,966 (18,390,247) (257,864)
------------ --------- ------------ ----------- ------------- -------------
Net change in unrealized
appreciation/ depreciation
on:
Investments............... 131,882,494 11,601,734 (13,055,989) 15,515,742 (29,854,379) 1,384,140
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. -- -- (27,162) (28,740) 218 --
------------ --------- ------------ ----------- ------------- -------------
NET APPRECIATION
(DEPRECIATION)........... 131,882,494 11,601,734 (13,083,151) 15,487,002 (29,854,161) 1,384,140
------------ --------- ------------ ----------- ------------- -------------
NET GAIN (LOSS).......... 319,678,739 20,768,071 35,761,022 49,202,968 (48,244,408) 1,126,276
------------ --------- ------------ ----------- ------------- -------------
NET INCREASE (DECREASE)....... $352,973,592 $20,778,053 $ 42,610,621 $52,920,777 $ (46,941,246) $ 1,336,134
------------ --------- ------------ ----------- ------------- -------------
------------ --------- ------------ ----------- ------------- -------------
<CAPTION>
EQUITY STRATEGIST
<S> <C> <C>
- ------------------------------
INVESTMENT INCOME:
INCOME
Interest...................... $ 3,150,825 $ 13,603,014
Dividends..................... 4,283,552** 3,428,837
------------- ------------
TOTAL INCOME............. 7,434,377 17,031,851
------------- ------------
EXPENSES
Investment management fee..... 3,306,222 2,361,054
Professional fees............. 25,700 28,272
Custodian fees................ 50,311 32,189
Shareholder reports and
notices..................... 42,469 25,720
Trustees' fees and expenses... 1,704 1,177
Transfer agent fees and
expenses.................... 500 500
Other......................... 6,838 7,410
------------- ------------
TOTAL EXPENSES........... 3,433,744 2,456,322
Less: amounts
waived/assumed.............. -- --
------------- ------------
NET EXPENSES............. 3,433,744 2,456,322
------------- ------------
NET INVESTMENT INCOME.... 4,000,633 14,575,529
------------- ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... 114,548,760 52,520,724
Options written........... -- --
Foreign exchange
transactions............ -- --
------------- ------------
NET GAIN (LOSS).......... 114,548,760 52,520,724
------------- ------------
Net change in unrealized
appreciation/ depreciation
on:
Investments............... 87,770,605 (8,667,550)
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. -- --
------------- ------------
NET APPRECIATION
(DEPRECIATION)........... 87,770,605 (8,667,550)
------------- ------------
NET GAIN (LOSS).......... 202,319,365 43,853,174
------------- ------------
NET INCREASE (DECREASE)....... $ 206,319,998 $ 58,428,703
------------- ------------
------------- ------------
</TABLE>
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUALITY INCOME PLUS
MONEY MARKET ------------------------------
------------------------------- FOR THE YEAR
FOR THE YEAR FOR THE YEAR ENDED FOR THE YEAR
ENDED DECEMBER ENDED DECEMBER DECEMBER 31, ENDED DECEMBER
31, 1997 31, 1996 1997 31, 1996
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 18,013,271 $ 14,442,540 $ 30,890,531 $ 32,950,563
Net realized gain............. -- -- 4,211,639 (2,603,573)
Net change in unrealized
appreciation/depreciation... -- -- 12,724,498 (24,916,368)
-------------- -------------- ------------- --------------
NET INCREASE............. 18,013,271 14,442,540 47,826,668 5,430,622
-------------- -------------- ------------- --------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (18,013,450) (14,442,318) (30,957,912) (33,491,200)
Net realized gain............. -- -- -- --
-------------- -------------- ------------- --------------
TOTAL.................... (18,013,450) (14,442,318) (30,957,912) (33,491,200)
-------------- -------------- ------------- --------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 186,625,741 199,781,437 20,704,612 18,363,915
Reinvestment of dividends and
distributions............... 18,013,450 14,442,318 30,957,912 33,491,200
Cost of shares repurchased.... (209,298,904) (123,772,522) (68,201,984) (69,712,880)
-------------- -------------- ------------- --------------
NET INCREASE
(DECREASE)............... (4,659,713) 90,451,233 (16,539,460) (17,857,765)
-------------- -------------- ------------- --------------
TOTAL INCREASE
(DECREASE)............... (4,659,892) 90,451,455 329,296 (45,918,343)
NET ASSETS:
Beginning of period........... 340,238,041 249,786,586 474,660,212 520,578,555
-------------- -------------- ------------- --------------
END OF PERIOD............ $ 335,578,149 $ 340,238,041 $474,989,508 $ 474,660,212
-------------- -------------- ------------- --------------
-------------- -------------- ------------- --------------
UNDISTRIBUTED NET INVESTMENT
INCOME........................ $ 65 $ 244 $ 148 $ 67,529
-------------- -------------- ------------- --------------
-------------- -------------- ------------- --------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 186,625,741 199,781,437 1,958,805 1,751,757
Issued in reinvestment of
dividends and
distributions............... 18,013,450 14,442,318 2,970,264 3,241,058
Repurchased................... (209,298,904) (123,772,522) (6,558,494) (6,752,796)
-------------- -------------- ------------- --------------
NET INCREASE (DECREASE)....... (4,659,713) 90,451,233 (1,629,425) (1,759,981)
-------------- -------------- ------------- --------------
-------------- -------------- ------------- --------------
- ------------------
* For the period January 21, 1997 (commencement of operations) through
December 31, 1997.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCOME
HIGH YIELD UTILITIES BUILDER*
--------------------------- --------------------------- ------------- DIVIDEND GROWTH
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ------------------------------
ENDED ENDED ENDED ENDED ENDED FOR THE YEAR FOR THE YEAR
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, ENDED DECEMBER ENDED DECEMBER
1997 1996 1997 1996 1997 31, 1997 31, 1996
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 38,277,750 $ 25,415,550 $ 14,516,395 $ 16,513,033 $ 1,300,879 $ 33,294,853 $ 26,113,139
Net realized gain............. 184,126 (5,282,128) 24,274,209 5,380,515 773,374 187,796,245 76,341,307
Net change in unrealized
appreciation/depreciation... (2,939,937) 2,235,871 61,888,240 14,769,561 3,070,555 131,882,494 126,566,513
------------- ------------- ------------- ------------- ------------- -------------- --------------
NET INCREASE............. 35,521,939 22,369,293 100,678,844 36,663,109 5,144,808 352,973,592 229,020,959
------------- ------------- ------------- ------------- ------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (37,998,064) (25,894,730) (14,516,342) (16,518,454) (1,300,838) (33,294,817) (26,130,248)
Net realized gain............. -- -- (5,380,346) (1,186,573) -- (76,862,062) (25,851,911)
------------- ------------- ------------- ------------- ------------- -------------- --------------
TOTAL.................... (37,998,064) (25,894,730) (19,896,688) (17,705,027) (1,300,838) (110,156,879) (51,982,159)
------------- ------------- ------------- ------------- ------------- -------------- --------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 94,751,829 97,281,752 10,084,184 10,173,470 51,206,002 315,154,387 216,135,874
Reinvestment of dividends and
distributions............... 37,998,064 25,894,730 19,896,688 17,705,027 1,300,838 110,156,879 51,982,159
Cost of shares repurchased.... (21,761,038) (14,412,089) (93,290,638) (85,244,858) (927,977) (50,626,648) (22,169,232)
------------- ------------- ------------- ------------- ------------- -------------- --------------
NET INCREASE
(DECREASE)............... 110,988,855 108,764,393 (63,309,766) (57,366,361) 51,578,863 374,684,618 245,948,801
------------- ------------- ------------- ------------- ------------- -------------- --------------
TOTAL INCREASE
(DECREASE)............... 108,512,730 105,238,956 17,472,390 (38,408,279) 55,422,833 617,501,331 422,987,601
NET ASSETS:
Beginning of period........... 259,548,541 154,309,585 440,661,866 479,070,145 -- 1,288,404,427 865,416,826
------------- ------------- ------------- ------------- ------------- -------------- --------------
END OF PERIOD............ $368,061,271 $259,548,541 $458,134,256 $440,661,866 $ 55,422,833 $1,905,905,758 $1,288,404,427
------------- ------------- ------------- ------------- ------------- -------------- --------------
------------- ------------- ------------- ------------- ------------- -------------- --------------
UNDISTRIBUTED NET INVESTMENT
INCOME........................ $ 294,896 $ 15,210 $ 53 $ -- $ 41 $ 141 $ 105
------------- ------------- ------------- ------------- ------------- -------------- --------------
------------- ------------- ------------- ------------- ------------- -------------- --------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 15,438,103 15,513,116 586,036 688,255 4,681,304 15,299,661 12,705,268
Issued in reinvestment of
dividends and
distributions............... 6,235,666 4,153,525 1,234,020 1,195,247 114,240 5,383,295 3,121,829
Repurchased................... (3,542,834) (2,293,681) (5,905,011) (5,772,285) (84,489) (2,443,929) (1,315,470)
------------- ------------- ------------- ------------- ------------- -------------- --------------
NET INCREASE (DECREASE)....... 18,130,935 17,372,960 (4,084,955) (3,888,783) 4,711,055 18,239,027 14,511,627
------------- ------------- ------------- ------------- ------------- -------------- --------------
------------- ------------- ------------- ------------- ------------- -------------- --------------
</TABLE>
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
CAPITAL GROWTH
----------------------------- GLOBAL DIVIDEND GROWTH
FOR THE YEAR FOR THE YEAR ----------------------------------
ENDED ENDED FOR THE YEAR FOR THE YEAR
DECEMBER 31, DECEMBER 31, ENDED DECEMBER ENDED DECEMBER
1997 1996 31, 1997 31, 1996
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 9,982 $ 406,814 $ 6,849,599 $ 5,178,815
Net realized gain............. 9,166,337 11,957,509 48,844,173 17,454,295
Net change in unrealized
appreciation/depreciation... 11,601,734 (4,318,064) (13,083,151) 21,236,500
------------- ------------- -------------- -----------------
NET INCREASE
(DECREASE)............... 20,778,053 8,046,259 42,610,621 43,869,610
------------- ------------- -------------- -----------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (406,792) (132,322) (7,198,015) (5,251,753)
Net realized gain............. (11,642,832) (1,337,440) (17,705,621) (6,985,312)
------------- ------------- -------------- -----------------
TOTAL.................... (12,049,624) (1,469,762) (24,903,636) (12,237,065)
------------- ------------- -------------- -----------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 33,654,933 21,627,226 124,800,012 90,625,831
Reinvestment of dividends and
distributions............... 12,049,624 1,469,762 24,903,636 12,237,065
Cost of shares repurchased.... (14,195,060) (9,806,505) (20,618,115) (5,413,023)
------------- ------------- -------------- -----------------
NET INCREASE
(DECREASE)............... 31,509,497 13,290,483 129,085,533 97,449,873
------------- ------------- -------------- -----------------
TOTAL INCREASE
(DECREASE)............... 40,237,926 19,866,980 146,792,518 129,082,418
NET ASSETS:
Beginning of period........... 86,862,150 66,995,170 334,820,942 205,738,524
------------- ------------- -------------- -----------------
END OF PERIOD............ $127,100,076 $ 86,862,150 $ 481,613,460 $ 334,820,942
------------- ------------- -------------- -----------------
------------- ------------- -------------- -----------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 9,662 $ 406,472 $ (74,436) $ 348,453
------------- ------------- -------------- -----------------
------------- ------------- -------------- -----------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 1,796,050 1,329,674 8,901,084 7,330,384
Issued in reinvestment of
dividends and
distributions............... 710,054 96,568 1,756,694 1,008,262
Repurchased................... (774,142) (611,382) (1,479,827) (440,583)
------------- ------------- -------------- -----------------
NET INCREASE (DECREASE)....... 1,731,962 814,860 9,177,951 7,898,063
------------- ------------- -------------- -----------------
------------- ------------- -------------- -----------------
- ------------------
* For the period January 21, 1997 (commencement of operations) through
December 31, 1997.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAPITAL
EUROPEAN GROWTH PACIFIC GROWTH APPRECIATION* EQUITY
---------------------------- -------------------------- ------------ --------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
FOR THE YEAR ENDED ENDED ENDED ENDED ENDED ENDED
ENDED DECEMBER DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
31, 1997 1996 1997 1996 1997 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 3,717,809 $ 2,264,492 $ 1,303,162 $ 1,412,599 $ 209,858 $ 4,000,633 $ 2,556,972
Net realized gain............. 33,715,966 19,547,703 (18,390,247) (2,475,077) (257,864) 114,548,760 42,116,968
Net change in unrealized
appreciation/depreciation... 15,487,002 41,074,663 (29,854,161) 3,540,345 1,384,140 87,770,605 5,775,201
-------------- ------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE
(DECREASE)............... 52,920,777 62,886,858 (46,941,246) 2,477,867 1,336,134 206,319,998 50,449,141
-------------- ------------ ------------ ------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (3,760,260) (531,371) (1,891,258) (1,651,362) -- (4,001,396) (2,577,952)
Net realized gain............. (18,466,454) (11,996,632) -- -- -- (43,430,509) (54,814,557)
-------------- ------------ ------------ ------------ ------------ ------------ ------------
TOTAL.................... (22,226,714) (12,528,003) (1,891,258) (1,651,362) -- (47,431,905) (57,392,509)
-------------- ------------ ------------ ------------ ------------ ------------ ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 69,322,769 60,993,831 27,108,335 66,862,929 33,834,119 150,537,439 132,116,853
Reinvestment of dividends and
distributions............... 22,226,714 12,528,003 1,891,258 1,651,362 -- 47,431,905 57,392,509
Cost of shares repurchased.... (33,224,347) (9,578,044) (55,800,009) (23,134,634) (2,864,342) (55,675,579) (20,436,940)
-------------- ------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE
(DECREASE)............... 58,325,136 63,943,790 (26,800,416) 45,379,657 30,969,777 142,293,765 169,072,422
-------------- ------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE
(DECREASE)............... 89,019,199 114,302,645 (75,632,920) 46,206,162 32,305,911 301,181,858 162,129,054
NET ASSETS:
Beginning of period........... 302,422,054 188,119,409 144,536,457 98,330,295 -- 521,908,424 359,779,370
-------------- ------------ ------------ ------------ ------------ ------------ ------------
END OF PERIOD............ $ 391,441,253 $302,422,054 $68,903,537 $144,536,457 $32,305,911 $823,090,282 $521,908,424
-------------- ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 5,394,724 $ 2,259,627 $ 2,054,796 $ 1,663,988 $ 209,858 $ -- $ 763
-------------- ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 3,070,886 3,131,701 3,373,487 6,522,537 3,118,030 4,895,346 4,838,072
Issued in reinvestment of
dividends and
distributions............... 983,918 677,922 188,937 173,462 -- 1,670,194 2,452,920
Repurchased................... (1,452,789) (514,185) (6,804,802) (2,326,246) (263,345) (1,832,698) (770,532)
-------------- ------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE)....... 2,602,015 3,295,438 (3,242,378) 4,369,753 2,854,685 4,732,842 6,520,460
-------------- ------------ ------------ ------------ ------------ ------------ ------------
-------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
STRATEGIST
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
<S> <C> <C>
- ---------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $14,575,529 $13,143,825
Net realized gain............. 52,520,724 9,836,251
Net change in unrealized
appreciation/depreciation... (8,667,550) 32,734,426
------------ ------------
NET INCREASE............. 58,428,703 55,714,502
------------ ------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (14,592,034) (13,174,571)
Net realized gain............. (10,026,602) (3,569,367)
------------ ------------
TOTAL.................... (24,618,636) (16,743,938)
------------ ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 49,903,217 25,629,890
Reinvestment of dividends and
distributions............... 24,618,636 16,743,938
Cost of shares repurchased.... (35,071,627) (46,155,709)
------------ ------------
NET INCREASE
(DECREASE)............... 39,450,226 (3,781,881)
------------ ------------
TOTAL INCREASE........... 73,260,293 35,188,683
NET ASSETS:
Beginning of period........... 423,767,852 388,579,169
------------ ------------
END OF PERIOD............ $497,028,145 $423,767,852
------------ ------------
------------ ------------
UNDISTRIBUTED NET INVESTMENT
INCOME........................ $ 62 $ 16,567
------------ ------------
------------ ------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 3,393,163 1,954,971
Issued in reinvestment of
dividends and
distributions............... 1,704,636 1,285,378
Repurchased................... (2,398,648) (3,573,439)
------------ ------------
NET INCREASE (DECREASE)....... 2,699,151 (333,090)
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Variable Investment Series (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. Investments in the Fund may be made only by (1)
Northbrook Life Insurance Company to fund the benefits under variable annuity
contracts and variable life insurance contracts it issues; (2) Allstate Life
Insurance Company of New York to fund the benefits under variable annuity
contracts it issues; (3) Glenbrook Life and Annuity Company to fund the benefits
under variable annuity contracts and variable life insurance contracts it
issues; and (4) Paragon Life Insurance Company to fund the benefits under
variable life insurance contracts it issues to certain employees of Morgan
Stanley, Dean Witter, Discover & Co., the parent company of Dean Witter
InterCapital Inc. (the "Investment Manager").
The Fund, organized on February 25, 1983 as a Massachusetts business trust,
consists of thirteen Portfolios ("Portfolios") which commenced operations as
follows:
<TABLE>
<CAPTION>
COMMENCEMENT OF COMMENCEMENT OF
PORTFOLIO OPERATIONS PORTFOLIO OPERATIONS
- ------------------------------ ----------------------------------------------- -----------------
<S> <C> <C> <C>
Money Market.................. March 9, 1984 Global Dividend Growth........ February 23, 1994
Quality Income Plus........... March 1, 1987 European Growth............... March 1, 1991
High Yield.................... March 9, 1984 Pacific Growth................ February 23, 1994
Utilities..................... March 1, 1990 Capital Appreciation.......... January 21, 1997
Income Builder................ January 21, 1997 Equity........................ March 9, 1984
Dividend Growth............... March 1, 1990 Strategist.................... March 1, 1987
Capital Growth................ March 1, 1991
</TABLE>
<TABLE>
<CAPTION>
The investment objectives of each Portfolio are as follows:
<S> <C>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE
<S> <C>
Money Market Seeks high current income, preservation of capital and liquidity
by investing in short-term money market instruments.
Quality Income Plus Seeks, as its primary objective, to earn a high level of current
income and, as a secondary objective, capital appreciation, but
only when consistent with its primary objective, by investing
primarily in U.S. Government securities and higher-rated fixed
income securities.
High Yield Seeks, as its primary objective, to earn a high level of current
income and, as a secondary objective, capital appreciation, but
only when consistent with its primary objective, by investing
primarily in lower-rated fixed income securities.
Utilities Seeks to provide current income and long-term growth of income
and capital by investing primarily in equity and fixed income
securities of companies engaged in the public utilities industry.
Income Builder Seeks, as its primary objective, to earn reasonable income and,
as a secondary objective, growth of capital by investing
primarily in income-producing equity securities.
<PAGE>
</TABLE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE
<S> <C>
Dividend Growth Seeks to provide reasonable current income and long-term growth
of income and capital by investing primarily in common stocks of
companies with a record of paying dividends and the potential for
increasing dividends.
Capital Growth Seeks long-term capital growth by investing primarily in common
stocks.
Global Dividend Seeks to provide reasonable current income and long-term growth
Growth of income and capital by investing primarily in common stocks of
companies, issued by issuers worldwide, with a record of paying
dividends and the potential for increasing dividends.
European Growth Seeks to maximize the capital appreciation of its investments by
investing primarily in securities issued by issuers located in
Europe.
Pacific Growth Seeks to maximize the capital appreciation of its investments by
investing primarily in securities issued by issuers located in
Asia, Australia and New Zealand.
Capital Appreciation Seeks long-term capital appreciation by investing primarily in
the common stocks of U.S. companies that offer the potential for
either superior earnings growth and/or appear to be undervalued.
Equity Seeks, as its primary objective, capital growth and, as a
secondary objective, income, but only when consistent with its
primary objective, by investing primarily in common stocks.
Strategist Seeks a high total investment return through a fully managed
investment policy utilizing equity, investment grade fixed income
and money market securities and writing covered options.
</TABLE>
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- Money Market: Securities are valued at amortized
cost which approximates market value. All remaining Portfolios: (1) an equity
security listed or traded on the New York, American or other domestic or foreign
stock exchange is valued at its latest sale price on that exchange prior to the
time when assets are valued; if there were no sales that day, the security is
valued at the latest bid price (in cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated as the
primary market pursuant to procedures adopted by the Trustees); (2) all other
portfolio securities for which over-the-counter market quotations are readily
available are valued at the latest available bid price prior to the time of
valuation; (3) listed options are valued at the latest sale price on the
exchange on which they are listed unless no sales of such options have taken
place that day, in which case they are valued at the mean between their latest
bid and asked price; (4) when market quotations are not readily available,
including circumstances under which it is determined by the Investment Manager
(or, in the case of
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
European Growth and Pacific Growth, by Morgan Grenfell Investment Services
Limited (the "Sub-Adviser")) that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision of the Trustees (valuation of debt securities for which market
quotations are not readily available may also be based upon current market
prices of securities which are comparable in coupon, rating and maturity or an
appropriate matrix utilizing similar factors); (5) certain of the Fund's
portfolio securities may be valued by an outside pricing service approved by the
Trustees. The pricing service may utilize a matrix system incorporating security
quality, maturity and coupon as the evaluation model parameters, and/or research
and evaluations by its staff, including review of broker-dealer market price
quotations in determining what it believes is the fair valuation of the
securities valued by such pricing service; and (6) short-term debt securities
having a maturity date of more than sixty days at the time of purchase are
valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day. Short-term
debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends on foreign securities which are recorded as soon as
the Fund is informed after the ex-dividend date. Interest income is accrued
daily except where collection is not expected. Money Market amortizes premiums
and accretes discounts on securities owned; gains and losses realized upon the
sale of securities are based on amortized cost. Discounts for all other
Portfolios are accreted over the life of the respective securities.
C. ACCOUNTING FOR OPTIONS -- (1) Written options on debt obligations, equities
and foreign currency: When the Fund writes a call or put option, an amount equal
to the premium received is included in the Fund's Statement of Assets and
Liabilities as a liability which is subsequently marked-to-market to reflect the
current market value of the option written. If a written option either expires
or the Fund enters into a closing purchase transaction, the Fund realizes a gain
or loss without regard to any unrealized gain or loss on the underlying security
or currency and the liability related to such option is extinguished. If a
written call option is exercised, the Fund realizes a gain or loss from the sale
of the underlying security or currency and the proceeds from such sale are
increased by the premium originally received. If a put option which the Fund has
written is exercised, the amount of the premium originally received reduces the
cost of the security which the Fund purchases upon
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
exercise of the option; and (2) purchased options on debt obligations, equities
and foreign currency: When the Fund purchases a call or put option, the premium
paid is recorded as an investment and is subsequently marked-to-market to
reflect the current market value. If a purchased option expires, the Fund will
realize a loss to the extent of the premium paid. If the Fund enters into a
closing sale transaction, a gain or loss is realized for the difference between
the proceeds from the sale and the cost of the option. If a put option is
exercised, the cost of the security sold upon exercise will be increased by the
premium originally paid. If a call option is exercised, the cost of the security
purchased upon exercise will be increased by the premium originally paid.
D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Portfolios
investing in foreign currency denominated transactions are translated into U.S.
dollars as follows: (1) the foreign currency market value of investment
securities, other assets and liabilities and forward foreign currency contracts
are translated at the exchange rates prevailing at the end of the period; and
(2) purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are included in the Statement of Operations as realized and
unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal
income tax regulations, certain foreign exchange gains/losses included in
realized and unrealized gain/loss are included in or are a reduction of ordinary
income for federal income tax purposes. The Portfolios do not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the changes in the market prices of the securities.
E. FORWARD FOREIGN CURRENCY CONTRACTS -- Some of the Portfolios may enter into
forward foreign currency contracts which are valued daily at the appropriate
forward exchange rates. The resultant unrealized exchange gains and losses are
included in the Statement of Operations as unrealized gain/ loss on foreign
exchange transactions. The Portfolios record realized gains or losses on
delivery of the currency or at the time the forward contract is extinguished
(compensated) by entering into a closing transaction prior to delivery.
F. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply individually
for each Portfolio with the requirements of the Internal Revenue Code applicable
to regulated investment companies and to distribute all of its taxable income to
its shareholders. Accordingly, no federal income tax provision is required.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the record date. The amount of dividends
and distributions from net investment income and net realized capital gains are
determined in accordance with federal income tax
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
H. EXPENSES -- Direct expenses are charged to the respective Portfolio and
general Fund expenses are allocated on the basis of relative net assets or
equally among the Portfolios.
2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
Pursuant to an Investment Management Agreement (the "Agreement"), the Fund pays
the Investment Manager a management fee, accrued daily and payable monthly, by
applying the following annual rates to each Portfolios' net assets determined at
the close of each business day: Money Market, High Yield and Strategist --
0.50%; Quality Income Plus -- 0.50% to the portion of daily net assets not
exceeding $500 million and 0.45% to the portion of daily net assets exceeding
$500 million; Utilities -- 0.65% to the portion of daily net assets not
exceeding $500 million and 0.55% to the portion of daily net assets exceeding
$500 million; Capital Growth -- 0.65%; Global Dividend Growth, Capital
Appreciation and Income Builder -- 0.75%; European Growth and Pacific Growth --
1.0%; Dividend Growth -- 0.625% to the portion of daily net assets not exceeding
$500 million, 0.50% to the portion of daily net assets exceeding $500 million
but not exceeding $1 billion and 0.475% to the portion of daily net assets
exceeding $1 billion; and Equity -- 0.50% to the portion of daily net assets not
exceeding $1 billion and 0.475% to the portion of daily net assets exceeding $1
billion.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
Under a Sub-Advisory Agreement between the Investment Manager and the
Sub-Adviser, the Sub-Adviser provides European Growth and Pacific Growth with
investment advice and portfolio management relating to the Portfolios'
investments in securities, subject to the overall supervision of the Investment
Manager. As compensation for its services provided pursuant to the Sub-Advisory
Agreement, the Investment Manager pays the Sub-Adviser monthly compensation
equal to 40% of its monthly compensation.
The Investment Manager has undertaken to reimburse all operating expenses and
waive the compensation provided for in its Investment Management Agreement with
Capital Appreciation and Income Builder until such time as the respective
Portfolios have $50 million of net assets or July 31, 1998, whichever occurs
first. Income Builder attained $50 million of net assets on December 3, 1997. At
December 31, 1997, included in the Statements of Assets and Liabilities are
receivables from an affiliate which represent expense reimbursements due to the
Portfolios.
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchases and sales/maturities of portfolio securities, excluding short-term
investments (except for Money Market), for the period ended December 31, 1997
were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES OTHER
---------------------------- --------------------------------
PURCHASES SALES/MATURITIES PURCHASES SALES/MATURITIES
----------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Money Market............................ $19,206,653 $ 14,842,160 $1,322,758,250 $ 1,348,616,023
Quality Income Plus..................... 566,971,703 571,045,359 210,736,397 222,119,300
High Yield.............................. -- -- 389,565,961 275,770,953
Utilities............................... -- -- 52,663,994 125,373,342
Income Builder.......................... 801,583 40,381 57,136,711 9,551,777
Dividend Growth......................... -- 3,296,094 723,066,604 448,622,873
Capital Growth.......................... 650,436 2,538,702 164,592,009 136,594,545
Global Dividend Growth.................. -- -- 312,940,092 198,638,634
European Growth......................... -- -- 201,833,360 154,355,339
Pacific Growth.......................... -- -- 66,481,393 92,660,527
Capital Appreciation.................... -- -- 28,589,857 4,234,692
Equity.................................. 74,242,691 23,113,718 913,474,791 873,139,301
Strategist.............................. 122,501,744 147,959,220 478,265,005 487,919,364
</TABLE>
Included in the payable for investments purchased at December 31, 1997 for
Income Builder, Capital Growth and Global Dividend Growth, are $210,541,
$2,889,990 and $214,463, respectively, for unsettled trades with Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Investment Manager. Included in the
receivable for investments sold at December 31, 1997 for Dividend Growth, Equity
and Global Dividend Growth are $1,726,318, $114,152 and $720,568, respectively,
for unsettled trades with DWR.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
Included in the receivable for investments sold at December 31, 1997 for
Dividend Growth and Global Dividend Growth are $3,795,231 and $622,932,
respectively, for unsettled trades with Morgan Stanley & Co. Inc. ("Morgan
Stanley"), an affiliate of the Investment Manager since May 31, 1997. Included
in the payable for investments purchased at December 31, 1997 for Income Builder
and Capital Growth are $123,823 and $1,110,355, respectively, for unsettled
trades with Morgan Stanley.
For the period ended December 31, 1997, the following Portfolios incurred
brokerage commissions with DWR for portfolio transactions executed on behalf of
the Portfolio:
<TABLE>
<CAPTION>
GLOBAL
INCOME DIVIDEND CAPITAL DIVIDEND CAPITAL
UTILITIES BUILDER GROWTH GROWTH GROWTH APPRECIATION EQUITY STRATEGIST
----------- ------------ -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 35,250 $ 24,982 $ 229,890 $ 45,335 $ 54,004 $ 17,785 $ 158,587 $ 73,880
----------- ------------ -------------- ------------ ------------ ------------ ------------ ------------
----------- ------------ -------------- ------------ ------------ ------------ ------------ ------------
</TABLE>
For the period May 31, 1997 through December 31, 1997, the following Portfolios
incurred brokerage commisions with Morgan Stanley for portfolio transactions
executed on behalf of the Portfolio:
<TABLE>
<CAPTION>
GLOBAL
INCOME DIVIDEND CAPITAL DIVIDEND EUROPEAN PACIFIC
UTILITIES BUILDER GROWTH GROWTH GROWTH GROWTH GROWTH EQUITY STRATEGIST
- --------- ------- -------- ------- -------- -------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,000 $710 $ 73,920 $10,305 $125,186 $4,655 $13,927 $69,900 $34,140
- --------- ------- -------- ------- -------- -------- ------- ------- ----------
- --------- ------- -------- ------- -------- -------- ------- ------- ----------
</TABLE>
For the year ended December 31, 1997, European Growth and Pacific Growth
incurred brokerage commissions of $4,473 and $10,285, respectively, with
affiliates of the Sub-Adviser for portfolio transactions executed on behalf of
the Portfolio.
Dean Witter Trust FSB, an affiliate of the Investment Manager, is the Fund's
transfer agent.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended December 31, 1997
included in Trustees' fees and expenses in the Statement of Operations and the
accrued pension liability included in accrued expenses in the Statement of
Assets and Liabilities are as follows:
<TABLE>
<CAPTION>
AGGREGATE PENSION COST
QUALITY GLOBAL
MONEY INCOME HIGH DIVIDEND CAPITAL DIVIDEND EUROPEAN PACIFIC
MARKET PLUS YIELD UTILITIES GROWTH GROWTH GROWTH GROWTH GROWTH EQUITY STRATEGIST
-------- -------- ------ --------- ---------- ------ -------- -------- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 401 $ 712 $ 187 $ 671 $ 1,084 $ 83 $ 208 $ 155 $ 103 $ 441 $ 587
-------- -------- ------ --------- ---------- ------ -------- -------- ------ --------- ----------
-------- -------- ------ --------- ---------- ------ -------- -------- ------ --------- ----------
ACCRUED PENSION LIABILITY
$ 11,395 $ 7,626 $3,446 $ 5,085 $ 8,469 $ 346 $ 538 $ 725 $ 272 $ 5,226 $ 8,171
-------- -------- ------ --------- ---------- ------ -------- -------- ------ --------- ----------
-------- -------- ------ --------- ---------- ------ -------- -------- ------ --------- ----------
</TABLE>
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
4. FEDERAL INCOME TAX STATUS
At December 31, 1997, the following Portfolios had an approximate net capital
loss carryover which may be used to offset future capital gains to the extent
provided by regulations:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
Available through -------------------------------------------------------------------------
December 31, 1998 1999 2000 2001 2002 2003 2004 2005 TOTAL
- ---------------------------------------- ------- ------ ------ ------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Quality Income Plus..................... -- -- -- -- $20,752 -- $2,491 -- $23,243
High Yield.............................. $34,291 $7,336 $3,057 $4,736 3,256 $2,984 5,521 -- 61,181
Pacific Growth.......................... -- -- -- -- -- 1,939 4,124 $11,428 17,491
</TABLE>
During the year ended December 31, 1997, the following Portfolios utilized
approximate net capital loss carryovers: Quality Income Plus - $4,096,000 and
High Yield - $2,126,000.
Net capital and net foreign currency losses incurred after October 31
("post-October losses") within the taxable year are deemed to arise on the first
business day of the Portfolios' next taxable year. The following Portfolios
incurred and will elect to defer post-October losses during fiscal 1997: Capital
Growth - $389,000; Global Dividend Growth - $4,000; Pacific Growth - $8,545,000;
Capital Appreciation - $30,000.
At December 31, 1997, the primary reason(s) for significant temporary/permanent
book/tax differences were as follows:
<TABLE>
<CAPTION>
TEMPORARY DIFFERENCES PERMANENT DIFFERENCES
---------------------------- -------------------------------
LOSS DEFERRALS FOREIGN EXPIRED
POST-OCTOBER FROM WASH CURRENCY CAPITAL LOSS
LOSSES SALES GAINS/LOSSES CARRYFORWARD
----------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
High Yield.............................. - -
Utilities............................... -
Income Builder.......................... -
Dividend Growth......................... -
Capital Growth.......................... - -
Global Dividend Growth.................. - - -
European Growth......................... - -
Pacific Growth.......................... - - -
Capital Appreciation.................... -
Equity.................................. -
</TABLE>
Additionally, Global Dividend Growth and Pacific Growth had temporary
differences attributable to income from the mark-to-market of passive foreign
investment companies ("PFICs") and European Growth and Pacific Growth had
permanent differences attributable to tax adjustments on PFICs sold by the
Portfolios.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
To reflect reclassifications arising from the permanent differences, the
following accounts were (charged) credited:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED ACCUMULATED
NET UNDISTRIBUTED
INVESTMENT NET REALIZED
INCOME (LOSS) GAIN (LOSS) PAID-IN-CAPITAL
------------- ------------- ---------------
<S> <C> <C> <C>
High Yield.............................. $8,568,648 $ (8,568,648 )
Global Dividend Growth.................. $(74,473 ) 74,473
European Growth......................... 3,177,548 (3,170,048 ) (7,500 )
Pacific Growth.......................... 978,904 (978,904 )
</TABLE>
5. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
Global Dividend Growth, European Growth and Pacific Growth may enter into
forward foreign currency contracts ("forward contracts") to facilitate
settlement of foreign currency denominated portfolio transactions or to manage
foreign currency exposure associated with foreign currency denominated
securities. Such Portfolios may also purchase and write put options on foreign
currencies in which the Portfolios' securities are denominated to protect
against a decline in value of such securities due to currency devaluations.
Forward contracts and over-the-counter put options on foreign currencies involve
elements of market risk in excess of the amounts reflected in the Statement of
Assets and Liabilities. The Portfolios bear the risk of an unfavorable change in
the foreign exchange rates underlying the forward contracts. Risks may also
arise upon entering into these contracts and over-the-counter put options on
foreign currencies from the potential inability of the counterparties to meet
the terms of their contracts.
At December 31, 1997, Global Dividend Growth and European Growth had outstanding
forward contracts used to facilitate settlement of foreign currency denominated
portfolio transactions and to manage foreign currency exposure.
At December 31, 1997, European Growth's investments in securities of issuers in
the United Kingdom represented 33.7% of the Portfolio's net assets. Pacific
Growth's investments in securities of issuers in Hong Kong represented 33.8% of
the Portfolio's net assets. These investments, which involve risks and
considerations not present with respect to U.S. securities, may be affected by
economic or political developments in these regions.
At December 31, 1997, Global Dividend Growth's, European Growth's and Pacific
Growth's cash balances consisted principally of interest bearing deposits with
Chase Manhattan Bank N.A., the custodian of each Portfolio.
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997, CONTINUED
6. COMMITMENTS
As of December 31, 1997, Pacific Growth purchased shares which are subject to
installment payments. At December 31, 1997, the Fund had outstanding commitments
as follows:
<TABLE>
<CAPTION>
OUTSTANDING
ISSUER COMMITMENT INSTALLMENT PAYMENT TERMS
- ------------------------- ------ ----------------------------------------
<C> <C> <S>
Far East Bank & Trust Co. 7,500 Balance payable in one installment upon
notification by the issuer
</TABLE>
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
NET ASSET
VALUE NET NET REALIZED TOTAL FROM DISTRIBUTIONS TOTAL
BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO TO DIVIDENDS AND
YEAR ENDED DECEMBER 31 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET
1988 $ 1.00 $0.070 -- $0.070 $ (0.070) -- $ (0.070)
1989 1.00 0.086 -- 0.086 (0.086) -- (0.086)
1990 1.00 0.076 -- 0.076 (0.076) -- (0.076)
1991 1.00 0.056 -- 0.056 (0.056) -- (0.056)
1992 1.00 0.034 -- 0.034 (0.034) -- (0.034)
1993 1.00 0.027 -- 0.027 (0.027) -- (0.027)
1994 1.00 0.037 -- 0.037 (0.037) -- (0.037)
1995 1.00 0.055 -- 0.055 (0.055) -- (0.055)
1996 1.00 0.050 -- 0.050 (0.050) -- (0.050)
1997 1.00 0.051 -- 0.051 (0.051) -- (0.051)
QUALITY INCOME PLUS
1988 9.61 0.85 $(0.16) 0.69 (0.85) -- (0.85)
1989 9.45 0.88 0.28 1.16 (0.88) -- (0.88)
1990 9.73 0.86 (0.24) 0.62 (0.86) -- (0.86)
1991 9.49 0.85 0.85 1.70 (0.85) -- (0.85)
1992 10.34 0.77 0.05 0.82 (0.77) -- (0.77)
1993 10.39 0.69 0.64 1.33 (0.69) -- (0.69)
1994 11.03 0.69 (1.40) (0.71) (0.69) $ (0.18) (0.87)
1995 9.45 0.72 1.50 2.22 (0.71) -- (0.71)
1996 10.96 0.71 (0.58) 0.13 (0.72) -- (0.72)
1997 10.37 0.70 0.40 1.10 (0.70) -- (0.70)
HIGH YIELD
1988 9.97 1.14 (0.05) 1.09 (1.14) -- (1.14)
1989 9.92 1.30 (2.40) (1.10) (1.30) -- (1.30)
1990 7.52 1.13 (2.91) (1.78) (1.13) (0.06)* (1.19)
1991 4.55 0.70 1.81 2.51 (0.70) (0.11)* (0.81)
1992 6.25 0.96 0.18 1.14 (0.96) -- (0.96)
1993 6.43 0.81 0.68 1.49 (0.81) -- (0.81)
1994 7.11 0.79 (0.95) (0.16) (0.79) -- (0.79)
1995 6.16 0.80 0.08 0.88 (0.78) -- (0.78)
1996 6.26 0.77 (0.06) 0.71 (0.79) -- (0.79)
1997 6.18 0.75 (0.06) 0.69 (0.75) -- (0.75)
UTILITIES
1990(a) 10.00 0.47 (0.04) 0.43 (0.41) -- (0.41)
1991 10.02 0.54 1.45 1.99 (0.54) -- (0.54)
1992 11.47 0.51 0.88 1.39 (0.52) -- (0.52)
1993 12.34 0.49 1.43 1.92 (0.50) (0.02) (0.52)
1994 13.74 0.53 (1.75) (1.22) (0.52) (0.08) (0.60)
1995 11.92 0.53 2.81 3.34 (0.58) -- (0.58)
1996 14.68 0.55 0.70 1.25 (0.55) (0.04) (0.59)
1997 15.34 0.57 3.46 4.03 (0.57) (0.21) (0.78)
INCOME BUILDER
1997(d) 10.00 0.44 1.76 2.20 (0.44) -- (0.44)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
------------------
NET
NET ASSET TOTAL NET ASSETS INVESTMENT PORTFOLIO AVERAGE
VALUE END INVESTMENT END OF PERIOD INCOME TURNOVER COMMISSION
OF PERIOD RETURN+ (000'S) EXPENSES (LOSS) RATE RATE PAID
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET
1988 $ 1.00 7.23% $ 77,304 0.62% 7.04% N/A N/A
1989 1.00 9.05 76,701 0.58 8.67 N/A N/A
1990 1.00 7.89 118,058 0.57 7.60 N/A N/A
1991 1.00 5.75 104,277 0.57 5.62 N/A N/A
1992 1.00 3.43 96,151 0.59 3.38 N/A N/A
1993 1.00 2.75 129,925 0.57 2.71 N/A N/A
1994 1.00 3.81 268,624 0.55 3.93 N/A N/A
1995 1.00 5.66 249,787 0.53 5.52 N/A N/A
1996 1.00 5.11 340,238 0.52 4.97 N/A N/A
1997 1.00 5.23 335,578 0.52 5.10 N/A N/A
QUALITY INCOME PLUS
1988 9.45 7.32 28,037 0.73 8.87 277% N/A
1989 9.73 12.78 48,784 0.70 9.09 242 N/A
1990 9.49 6.84 57,407 0.66 9.09 166 N/A
1991 10.34 18.75 81,918 0.60 8.39 105 N/A
1992 10.39 8.26 163,368 0.58 7.41 148 N/A
1993 11.03 12.99 487,647 0.56 6.17 219 N/A
1994 9.45 (6.63) 414,905 0.54 6.88 254 N/A
1995 10.96 24.30 520,579 0.54 7.07 162 N/A
1996 10.37 1.56 474,660 0.53 6.84 182 N/A
1997 10.77 11.09 474,990 0.53 6.71 171 N/A
HIGH YIELD
1988 9.92 10.83 192,290 0.56 11.06 140 N/A
1989 7.52 (12.44) 96,359 0.55 13.94 54 N/A
1990 4.55 (25.54) 27,078 0.69 17.98 42 N/A
1991 6.25 58.14 34,603 1.01 12.29 300 N/A
1992 6.43 18.35 40,042 0.74 14.05 204 N/A
1993 7.11 24.08 90,200 0.60 11.80 177 N/A
1994 6.16 (2.47) 111,934 0.59 11.71 105 N/A
1995 6.26 14.93 154,310 0.54 12.67 58 N/A
1996 6.18 11.98 259,549 0.51 12.59 57 N/A
1997 6.12 11.87 368,061 0.53 12.44 95 N/A
UTILITIES
1990(a) 10.02 4.52(1) 37,597 0.40(2)(3) 6.38(2) 46(1) --
1991 11.47 20.56 68,449 0.80 5.23 25 --
1992 12.34 12.64 153,748 0.73 4.63 26 --
1993 13.74 15.69 490,934 0.71 3.75 11 --
1994 11.92 (9.02) 382,412 0.68 4.21 15 --
1995 14.68 28.65 479,070 0.68 4.00 13 --
1996 15.34 8.68 440,662 0.67 3.61 9 $ 0.0543
1997 18.59 27.15 458,134 0.67 3.48 13 0.0555
INCOME BUILDER
1997(d) 11.76 22.38(1) 55,423 0.15(2)(6) 5.73(2)(6) 41(1) 0.0529
</TABLE>
<TABLE>
<C> <S>
- ---------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
NET ASSET
VALUE NET NET REALIZED TOTAL FROM DISTRIBUTIONS TOTAL
BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO TO DIVIDENDS AND
YEAR ENDED DECEMBER 31 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIVIDEND GROWTH
1990(a) $ 10.00 $ 0.33 $(1.10) $(0.77) $ (0.30) -- $ (0.30)
1991 8.93 0.36 2.08 2.44 (0.37) -- (0.37)
1992 11.00 0.37 0.51 0.88 (0.37) -- (0.37)
1993 11.51 0.36 1.27 1.63 (0.36) -- (0.36)
1994 12.78 0.38 (0.80) (0.42) (0.37) -- (0.37)
1995 11.99 0.38 3.89 4.27 (0.41) $ (0.26) (0.67)
1996 15.59 0.41 3.22 3.63 (0.41) (0.41) (0.82)
1997 18.40 0.41 4.20 4.61 (0.41) (1.00) (1.41)
CAPITAL GROWTH
1991(b) 10.00 0.15 2.67 2.82 (0.13) -- (0.13)
1992 12.69 0.07 0.13 0.20 (0.08) (0.02) (0.10)
1993 12.79 0.08 (0.98) (0.90) (0.08) -- (0.08)
1994 11.81 0.10 (0.26) (0.16) (0.10) (0.03) (0.13)
1995 11.52 0.10 3.68 3.78 (0.08) -- (0.08)
1996 15.22 0.08 1.65 1.73 (0.03) (0.27) (0.30)
1997 16.65 0.01 3.90 3.91 (0.08) (2.19) (2.27)
GLOBAL DIVIDEND GROWTH
1994(c) 10.00 0.23 (0.20) 0.03 (0.21) -- (0.21)
1995 9.82 0.24 1.90 2.14 (0.26) (0.01) (0.27)
1996 11.69 0.24 1.75 1.99 (0.24) (0.31) (0.55)
1997 13.13 0.22 1.37 1.59 (0.23) (0.60) (0.83)
EUROPEAN GROWTH
1991(b) 10.00 0.25 (0.13) 0.12 (0.23) -- (0.23)
1992 9.89 0.08 0.32 0.40 (0.10) (0.01) (0.11)
1993 10.18 0.12 3.98 4.10 (0.12) (0.13) (0.25)
1994 14.03 0.17 0.96 1.13 (0.16) (0.44) (0.60)
1995 14.56 0.20 3.50 3.70 (0.19)** (0.54) (0.73)
1996 17.53 0.17 4.91 5.08 (0.04) (1.01) (1.05)
1997 21.56 0.21 3.19 3.40 (0.24) (1.18) (1.42)
PACIFIC GROWTH
1994(c) 10.00 0.07 (0.74) (0.67) -- (0.07) (0.07)
1995 9.26 0.12 0.41 0.53 (0.09) -- (0.09)
1996 9.70 0.05 0.32 0.37 (0.11) -- (0.11)
1997 9.96 0.12 (3.82) (3.70) (0.14) -- (0.14)
CAPITAL APPRECIATION
1997(d) 10.00 0.07 1.25 1.32 -- -- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
------------------
NET
NET ASSET TOTAL NET ASSETS INVESTMENT PORTFOLIO AVERAGE
VALUE END INVESTMENT END OF PERIOD INCOME TURNOVER COMMISSION
OF PERIOD RETURN+ (000'S) EXPENSES (LOSS) RATE RATE PAID
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DIVIDEND GROWTH
1990(a) $ 8.93 (7.81)%(1) $ 57,282 0.54%(2)(3) 4.50%(2) 19%(1) --
1991 11.00 27.76 98,023 0.73 3.61 6 --
1992 11.51 8.16 192,551 0.69 3.42 4 --
1993 12.78 14.34 483,145 0.68 3.01 6 --
1994 11.99 (3.27) 572,952 0.64 3.13 20 --
1995 15.59 36.38 865,417 0.61 2.75 24 --
1996 18.40 23.96 1,288,404 0.57 2.46 23 $ 0.0553
1997 21.60 25.61 1,905,906 0.54 2.06 28 0.0552
CAPITAL GROWTH
1991(b) 12.69 28.41(1) 18,400 -- (2)(4) 1.82(2) 32(1) --
1992 12.79 1.64 45,105 0.86 0.62 22 --
1993 11.81 (6.99) 50,309 0.74 0.78 36 --
1994 11.52 (1.28) 45,715 0.77 0.90 37 --
1995 15.22 32.92 66,995 0.74 0.70 34 --
1996 16.65 11.55 86,862 0.73 0.52 98 0.0570
1997 18.29 24.54 127,100 0.71 0.01 139 0.0571
GLOBAL DIVIDEND GROWTH
1994(c) 9.82 0.27(1) 138,486 0.87(2)(5) 2.62(2) 20(1) --
1995 11.69 22.14 205,739 0.88 2.23 55 --
1996 13.13 17.49 334,821 0.85 1.94 39 0.0360
1997 13.89 12.04 481,613 0.84 1.61 48 0.0283
EUROPEAN GROWTH
1991(b) 9.89 1.34(1) 3.653 -- (2)(4) 3.18(2) 77(1) --
1992 10.18 3.99 10,686 1.73 0.74 97 --
1993 14.03 40.88 79,052 1.28 0.97 77 --
1994 14.56 8.36 152,021 1.16 1.49 58 --
1995 17.53 25.89 188,119 1.17 1.25 69 --
1996 21.56 29.99 302,422 1.11 0.97 43 0.0453
1997 23.54 16.07 391,441 1.12 1.04 45 0.0530
PACIFIC GROWTH
1994(c) 9.26 (6.73) (1) 75,425 1.00(2)(5) 0.56(2) 22(1) --
1995 9.70 5.74 98,330 1.44 1.23 53 --
1996 9.96 3.89 144,536 1.37 1.01 50 0.0108
1997 6.12 (37.70) 68,904 1.44 1.09 58 0.0077
CAPITAL APPRECIATION
1997(d) 11.32 13.20(1) 32,306 -- (6) 1.30(2)(6) 25(1) 0.0490
</TABLE>
<TABLE>
<C> <S>
- ---------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
NET ASSET
VALUE NET NET REALIZED TOTAL FROM DISTRIBUTIONS TOTAL
BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO TO DIVIDENDS AND
YEAR ENDED DECEMBER 31 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY
1988 $ 12.49 $ 0.39 $ 0.83 $ 1.22 $ (0.35) -- $ (0.35)
1989 13.36 0.71 1.77 2.48 (0.70) -- (0.70)
1990 15.14 0.48 (1.03) (0.55) (0.49) -- (0.49)
1991 14.10 0.20 8.05 8.25 (0.21) -- (0.21)
1992 22.14 0.23 (0.47) (0.24) (0.24) $ (1.86) (2.10)
1993 19.80 0.15 3.63 3.78 (0.15) (1.28) (1.43)
1994 22.15 0.23 (1.31) (1.08) (0.22) (1.60) (1.82)
1995 19.25 0.22 7.92 8.14 (0.25) -- (0.25)
1996 27.14 0.16 2.70 2.86 (0.16) (3.45) (3.61)
1997 26.39 0.18 9.27 9.45 (0.18) (2.08) (2.26)
STRATEGIST
1988 9.65 0.70 0.51 1.21 (0.64) -- (0.64)
1989 10.22 0.84 0.20 1.04 (0.79) (0.06) (0.85)
1990 10.41 0.61 (0.46) 0.15 (0.67) (0.08) (0.75)
1991 9.81 0.47 2.24 2.71 (0.50) -- (0.50)
1992 12.02 0.44 0.41 0.85 (0.45) (0.13) (0.58)
1993 12.29 0.38 0.86 1.24 (0.38) (0.47) (0.85)
1994 12.68 0.48 0.01 0.49 (0.46) (0.26) (0.72)
1995 12.45 0.62 0.49 1.11 (0.67) (0.44) (1.11)
1996 12.45 0.43 1.39 1.82 (0.43) (0.12) (0.55)
1997 13.72 0.45 1.40 1.85 (0.45) (0.32) (0.77)
</TABLE>
<TABLE>
<C> <S>
- ---------------------
Commencement of operations:
(a) March 1, 1990.
(b) March 1, 1991.
(c) February 23, 1994.
(d) January 21, 1997.
+ Calculated based on the net asset value as of the last business day of the
period.
* Distributions from capital.
** Includes dividends in excess of net investment income of $0.02.
(1) Not annualized.
(2) Annualized.
(3) If the Investment Manager had not assumed all expenses and waived the
management fee for the period March 1, 1990 through August 31, 1990, the
ratio of expenses to average net assets would have been 0.75%.
(4) If the Investment Manager had not assumed all expenses and waived the
management fee for the period March 1, 1991 through December 31, 1991, the
ratio of expenses to average net assets would have been 1.60% for Capital
Growth and 4.12% for European Growth.
(5) If the Investment Manager had not assumed all expenses and waived its
management fee for the period February 23, 1994 through May 12, 1994 for
Global Dividend Growth and February 23, 1994 through August 2, 1994 for
Pacific Growth, the ratio of expenses to average net assets would have been
0.97% for Global Dividend Growth and 1.40% for Pacific Growth.
(6) If the Investment Manager had not assumed all expenses and waived its
management fee for the period January 21, 1997 through December 3, 1997 for
Income Builder and January 21, 1997 through December 31, 1997 for Capital
Appreciation, the ratios of expenses and net investment income to average
net assets would have been 0.99% and 4.89%, respectively, for Income
Builder and 0.97% and 0.33%, respectively, for Capital Appreciation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
------------------
NET
NET ASSET TOTAL NET ASSETS INVESTMENT PORTFOLIO AVERAGE
VALUE END INVESTMENT END OF PERIOD INCOME TURNOVER COMMISSION
OF PERIOD RETURN+ (000'S) EXPENSES (LOSS) RATE RATE PAID
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY
1988 $ 13.36 9.84% $ 39,857 0.65% 2.77% 162% --
1989 15.14 18.83 58,316 0.60 4.85 81 --
1990 14.10 (3.62) 41,234 0.62 3.38 130 --
1991 22.14 59.05 63,524 0.64 1.09 214 --
1992 19.80 0.05 77,527 0.62 1.22 286 --
1993 22.15 19.72 182,828 0.58 0.69 265 --
1994 19.25 (4.91) 225,289 0.57 1.19 299 --
1995 27.14 42.53 359,779 0.54 0.97 269 --
1996 26.39 12.36 521,908 0.54 0.58 279 $ 0.0587
1997 33.58 37.43 823,090 0.52 0.61 145 0.0578
STRATEGIST
1988 10.22 12.79 61,947 0.66 7.29 310 --
1989 10.41 10.67 88,712 0.57 8.38 282 --
1990 9.81 1.56 68,447 0.58 6.10 163 --
1991 12.02 28.26 87,779 0.60 4.34 86 --
1992 12.29 7.24 136,741 0.58 3.74 87 --
1993 12.68 10.38 287,502 0.57 3.11 57 --
1994 12.45 3.94 392,760 0.54 3.93 125 --
1995 12.45 9.48 388,579 0.52 5.03 329 --
1996 13.72 15.02 423,768 0.52 3.30 153 0.0591
1997 14.80 13.71 497,028 0.52 3.09 159 0.0565
</TABLE>
<TABLE>
<C> <S>
- ---------------------
(a) March 1, 1990.
(b) March 1, 1991.
(c) February 23, 1994.
(d) January 21, 1997.
+ Calculated based on the net asset value as of the last business day of the
period.
* Distributions from capital.
** Includes dividends in excess of net investment income of $0.02.
(1) Not annualized.
(2) Annualized.
(3) If the Investment Manager had not assumed all expenses and waived the
management fee for the period March 1, 1990 through August 31, 1990, the
ratio of expenses to average net assets would have been 0.75%.
(4) If the Investment Manager had not assumed all expenses and waived the
management fee for the period March 1, 1991 through December 31, 1991, the
ratio of expenses to average net assets would have been 1.60% for Capital
Growth and 4.12% for European Growth.
(5) If the Investment Manager had not assumed all expenses and waived its
management fee for the period February 23, 1994 through May 12, 1994 for
Global Dividend Growth and February 23, 1994 through August 2, 1994 for
Pacific Growth, the ratio of expenses to average net assets would have been
0.97% for Global Dividend Growth and 1.40% for Pacific Growth.
(6) If the Investment Manager had not assumed all expenses and waived its
management fee for the period January 21, 1997 through December 3, 1997 for
Income Builder and January 21, 1997 through December 31, 1997 for Capital
Appreciation, the ratios of expenses and net investment income to average
net assets would have been 0.99% and 4.89%, respectively, for Income
Builder and 0.97% and 0.33%, respectively, for Capital Appreciation.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER VARIABLE INVESTMENT SERIES
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER VARIABLE INVESTMENT SERIES
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Money Market Portfolio, the
Quality Income Plus Portfolio, the High Yield Portfolio, the Utilities
Portfolio, the Income Builder Portfolio, the Dividend Growth Portfolio, the
Capital Growth Portfolio, the Global Dividend Growth Portfolio, the European
Growth Portfolio, the Pacific Growth Portfolio, the Capital Appreciation
Portfolio, the Equity Portfolio, and the Strategist Portfolio (constituting Dean
Witter Variable Investment Series, hereafter referred to as the "Fund") at
December 31, 1997, the results of each of their operations for the year then
ended, the changes in each of their net assets and the financial highlights for
each of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1997 by correspondence with the
custodians and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
FEBRUARY 13, 1998
<PAGE>
Trustees
----------------------------------------
Michael Bozic Dr.
Manuel H. Johnson
Charles A. Fiumefreddo Michael
E. Nugent
Edwin J. Garn Philip
J. Purcell
John R. Haire John
L. Schroeder
Wayne E. Hedien
Officers
----------------------------------------
Charles A. Fiumefreddo
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Barry Fink
VICE PRESIDENT, SECRETARY AND GENERAL
COUNSEL
Thomas F. Caloia
TREASURER
Transfer Agent Independent Accountants
- -------------------------------------- --------------------------------------
Dean Witter Trust FSB Price Waterhouse LLP
Harborside Financial Center--Plaza Two 1177 Avenue of the Americas
Jersey City, New Jersey 07311 New York, New York 10036
Investment Manager
----------------------------------------
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
Sub-Adviser
(European Growth and Pacific Growth
Portfolio)
----------------------------------------
Morgan Grenfell Investment Services
Limited
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
<PAGE>
DEAN WITTER
VARIABLE INVESTMENT SERIES
ANNUAL REPORT
DECEMBER 31, 1997
[LOGO] DEAN WITTER
NORTHBROOK LIFE INSURANCE COMPANY
P.O. BOX 94040
PALATINE, IL 60094-4040
BULK RATE MAIL
U.S. POSTAGE
PAID
ROCKVILLE CENTER
NY 11570
PERMIT NO. 150
40113A
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DEAN WITTER
VARIABLE INVESTMENT SERIES
ANNUAL REPORT
DECEMBER 31, 1997
[LOGO] DEAN WITTER
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
P.O. BOX 94038
PALATINE, IL 60094-4038
BULK RATE MAIL
U.S. POSTAGE
PAID
ROCKVILLE CENTER
NY 11570
PERMIT NO. 150
40915A
