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MORGAN STANLEY DEAN WITTER
VARIABLE INVESTMENT SERIES
SEMI-ANNUAL REPORT
JUNE 30, 1999
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MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT TWO WORLD TRADE CENTER,
SERIES NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS JUNE 30, 1999
DEAR SHAREHOLDER:
Most of the world's major equity markets posted gains during the six-month
period ended June 30, 1999, as concerns over the Asian financial crisis and its
contagion effects eased. However, volatility remained high throughout the first
half of 1999 as the continued strength of the U.S. economy and investor concern
over the possibility of renewed inflation resulted in higher domestic interest
rates.
MARKET OVERVIEW
U.S. EQUITY MARKET
Over the course of the first half of 1999, the U.S. economic outlook changed and
consequently so did the market leadership. The year began with expectations for
modest, below-trend global economic growth accompanied by continued deceleration
of inflation. Against this backdrop, the same growth stocks that led in 1998
(financials, retail, Internet and technology) outperformed in early 1999.
By the second quarter, however, expectations began to change, as it became
evident that the first-quarter U.S. economic and profit growth had been much
stronger than expected. Also, economies of Asia outside of Japan were rebounding
much more quickly and strongly than anticipated. In Europe, evidence began to
build that the consumer market there was gradually reviving. Given all these
developments, investors began to lift their assumptions of global growth.
Responding to these upward revisions in global economic expectations, commodity
indexes moved upward for the first time in several years, pulling interest rates
up with them. These events together led to a rotation in sector leadership away
from more expensively priced domestic growth stocks to more globally exposed
value and economically sensitive stocks.
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LETTER TO THE SHAREHOLDERS JUNE 30, 1999, CONTINUED
DOMESTIC FIXED-INCOME MARKET
Interest rates in the United States moved steadily higher over the past six
months. Investors grew increasingly uneasy over indications that the U.S.
economy was still growing robustly, raising concerns that higher interest rates
and inflation might be just around the corner. Even though most inflation
indicators remained within tolerable limits, tight labor markets combined with
high levels of consumer spending and confidence to worry investors. A shift in
investors' preferences from U.S. Treasuries toward higher-yielding asset classes
also contributed to the bond market sell-off. Between December 31, 1998 and June
30, 1999, the yield on the benchmark 10-year U.S. Treasury bond rose 114 basis
points.
The market breathed a sigh of relief on June 30 when a widely anticipated 25
basis-point hike in the federal-funds rate occurred and the Federal Reserve
Board announced that it would wait for evidence that inflation was accelerating
before increasing rates again. After rallying briefly on the decision of the
committee to drop their so-called bias toward higher interest rates and return
to a neutral directive, the market resumed its sell-off. Although the tone of
the Federal Open Market Committee's statements and the removal of the supposed
bias lessened the likelihood in August of another rate hike, the possibility
still exists and is considered likely by a growing number of analysts.
HIGH YIELD BOND MARKET OVERVIEW
Late 1998 fears of a worldwide economic slowdown were replaced in early 1999 by
concerns over a rapidly growing economy and the potential for inflationary
pressures to build. As a result of these inflation concerns, interest rates rose
substantially during the first half, resulting in a significant weakness in the
high-quality fixed-income markets. While the threat of inflation and higher
interest rates are clearly also a negative factor for the high-yield market, the
reality of continued economic growth and strong corporate earnings helped to
maintain stability in the high-yield marketplace. As a result, the high-yield
market was one of the best performing fixed-income sectors during the first half
of 1999.
EUROPEAN EQUITY MARKETS
The six-month period ended June 30, 1999 saw the European equity markets
continue their recovery from the sharp falls occasioned by the Asian and
emerging markets crises of mid-1998. The key economic event of the period was
the successful launch of the European Monetary Union (EMU) on January 1. The 11
first-wave members -- Germany, France, Italy, Spain, the Netherlands, Belgium,
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Austria, Luxembourg, Portugal, Ireland and Finland -- successfully transferred
control of their monetary policy to the European Central Bank (ECB). The process
occurred smoothly as the ECB assumed responsibility for interest-rate policy
across the newly created eurozone.
While the economic crises in Asia, Latin America and Russia continued to have a
negative effect on Europe's economies, economic developments within Europe
itself were generally positive and improving. Inflation remains low and stable,
and interest rates have been cut by the ECB and the Bank of England. Consumer
confidence has been improving in most economies and the weakness of the euro
relative to the dollar has been helping export-related companies. Economic
growth is expected to accelerate significantly in late 1999 and 2000.
Against this background, the European equity markets generally performed well.
First-quarter corporate earnings reports were in line with expectations.
Takeover and merger activity continued to be strong, with unprecedented
developments in a number of key industries (e.g., an unsolicited bid by BNP for
Societe Generale and Paribas, and a contested takeover approach by Olivetti for
Telecom Italia). Individual and corporate investors in Europe have continued to
move assets out of bonds and into equities.
ASIAN AND JAPANESE EQUITY MARKETS
All the major Asian markets performed well during the first half of 1999, with
South Korea, Indonesia, China and Thailand leading the way. The Asian markets
have risen for a variety of reasons, but probably the most important single
factor has been the restoration of confidence among domestic and foreign
investors once exchange rates stabilized and economies bottomed after the shock
of the Asian crisis. The currency stability established in the second half of
1998 allowed local governments to ease monetary policy and bring interest rates
down quickly. Lower interest rates have eased the banking crisis in many
countries, reduced government financing costs, lowered the cost of capital for
businesses and encouraged local investors to shift from fixed-income to equity
investments.
The power of high Asian savings rates has been illustrated by the ability of
local retail and institutional investors to subscribe to a heavy calendar of new
corporate equity issues. This new equity has helped many Asian companies repair
their balance sheets and removed the risk of corporate distress, thus enhancing
equity valuations. Asian countries have needed to raise new equity without
incurring additional debt from foreign investors. The absence of heavy bond
financing requirements has in this regard mitigated the negative effects of
rising international bond yields and
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the small U.S. Federal Reserve interest-rate increase. Although the economic
recovery under way in many countries should not be characterized as export led,
an increase in export orders -- particularly for electronic components -- has
been a positive, especially for the economies of Singapore, Taiwan and Malaysia.
Finally, after several years of economies and corporate earnings being
disappointing on the downside, we are now in an environment of rising
expectations, where forecasts of economic activity have been continually revised
upward across most of the region.
The Japanese equity markets continued to rise during the second quarter of 1999.
In part, this growing optimism among investors stemmed from the weakness of the
yen as the Bank of Japan maintained its intervention policy as well as guiding
short-term interest rates to zero. A recovery in the Asian stock markets and
regional economic activity also helped the overall sentiment. Signs of an
improvement in the Japanese fundamentals, including a surprisingly strong
preliminary release of first-quarter GDP at an annualized rate of 7.9 percent,
set investors scrambling to raise their equity allocations to Japan.
AGGRESSIVE EQUITY PORTFOLIO
The Aggressive Equity Portfolio commenced operations on May 4, 1999. The
Portfolio seeks capital growth by investing primarily in equity securities of
companies covered by Morgan Stanley Dean Witter Equity Research that the
Portfolio's management team believes offer superior earnings growth.
The portfolio management team employs a sector-rotation strategy, examining the
domestic and global economic cycles to identify industry groups that have
historically outperformed the overall market under conditions similar to the
current environment. Individual companies are then selected, primarily from the
universe of approximately 2,100 companies analyzed by Morgan Stanley Dean Witter
Equity Research.
The Portfolio has the flexibility to invest in companies that its management
team believes have the best potential for superior earnings growth, regardless
of size, earnings or industry. (MSDW Equity Research has no role in the
selection of the Portfolio's holdings.)
CAPITAL GROWTH PORTFOLIO
For the six-month period ended June 30, 1999, the Capital Growth Portfolio
produced a total return of 7.51 percent versus 12.38 percent for the Standard &
Poor's 500 Composite Stock Price Index
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(S&P 500) and 13.75 percent for the Lipper Variable Annuity Capital Appreciation
Portfolio Underlying Funds Average. The Portfolio had a period of very solid
performance during the first quarter and outperformed the S&P 500 during this
time period.
However, due to perceived market conditions at the end of the first quarter, the
Portfolio then became more heavily concentrated in non-large-cap growth stocks.
The Portfolio overweighted the capital goods, basic industry and energy sectors
and also placed much greater emphasis on mid-cap and value stocks. This
rebalancing was done for two reasons. First, it was expected that the rising-
interest-rate environment would lead to a noticeable correction in the stock
market, causing mid- and small-cap and value stocks to outperform. Second, with
the economy continuing to expand and inflation worries coming back into the
marketplace at the time, it was anticipated that more economically sensitive,
cyclically oriented stocks would show improved performance both on an absolute
basis and relative to large-cap growth stocks. However, neither of these shifts
helped overall performance as the second quarter came to a close, leading
instead to the Portfolio giving up several hundred basis points of performance
relative to the S&P 500. At the beginning of the third quarter the Portfolio
still maintains a fairly defensive posture with higher-than-normal cash reserves
and a tilt toward industrial and cyclical stocks as opposed to being invested
solely in traditional growth stocks.
As of June 30, 1999, the Portfolio was approximately 75 percent invested in
large-cap stocks and 25 percent in mid- and small-cap stocks. Going forward, we
believe that we will not need to make a dramatic shift in the market
capitalization structure of the Portfolio. We believe that portfolio
diversification is important across both industry sectors and capitalization
ranges, so the Portfolio will continue to hold stocks of various market
capitalizations.
At the end of June, approximately 27 percent of the Portfolio was invested in
technology stocks, 14 percent in the capital goods sector, 28 percent in basic
industry and energy stocks, and 36 percent within the consumer/consumer-related
sector, with 14 percent in the consumer cyclical area. Underweighted positions
were held in the financial, health care, and consumer staples sectors.
COMPETITIVE EDGE FUND: "BEST IDEAS" PORTFOLIO
For the six-month period ended June 30, 1999, the Competitive Edge Fund: "Best
Ideas" Portfolio posted a total return of 6.88 percent versus 8.69 percent for
the Morgan Stanley Capital International
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(MSCI) World Index and 11.47 percent for the Lipper Variable Annuity Global
Underlying Funds Average. A higher allocation to large-capitalization global
growth stocks helped the Portfolio in January and February, but caused the
Portfolio to underperform during the second quarter of 1999.
At the end of June, the Portfolio held 40 positions around the globe, with its
U.S. holdings representing just over 50 percent of the Portfolio. In addition,
the Portfolio held positions in Japan, France, Australia, Switzerland, Finland,
Germany, the Netherlands, Hong Kong and Sweden. The Portfolio's five largest
positions at the end of June were Fujitsu, Sony, Microsoft, Halliburton and
Lucent Technologies.
DIVIDEND GROWTH PORTFOLIO
For the six-month period ended June 30, 1999, the Dividend Growth Portfolio
posted a total return of 9.56 percent versus 12.38 percent for the S&P 500 and
11.70 percent for the Lipper Variable Annuity Growth and Income Funds Average.
On June 30 the Portfolio was relatively fully invested. Portfolio transactions
during the period included the re-allocation of assets to reflect more accurate
use of the dividend growth discipline. To implement this use, several positions
were partially liquidated to fund the purchase of additional equity positions by
which to use Portfolio assets more effectively. At the end of the six-month
period, the Portfolio was invested in 102 common stocks spread among 52
different industry groups.
In our opinion, the Portfolio's underperformance of its Lipper benchmark over
this period was largely due to the Portfolio's lack of exposure to
high-technology stocks and an underweighting in the financial sector.
High-technology stocks generally pay little if any dividends and therefore are
not included in the Portfolio. One of the Portfolio's primary investment
objectives is to provide reasonable current yield, an objective of which we
remain mindful. While this Portfolio's tilt toward yield may have dampened its
relative performance, this same prejudice in regard to income provided
significant stability during the volatile markets over the past year, especially
most recently.
EQUITY PORTFOLIO
For the six-month period ended June 30, 1999, the Equity Portfolio posted a
total return of 17.13 percent versus 12.38 percent for the S&P 500 and 12.62
percent for the Lipper Variable Annuity Growth Portfolio Underlying Funds
Average. The Portfolio outperformed due to its overweighting in cyclical stocks,
which benefited in the spring when it became clear that the global economy was
rebounding.
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The Portfolio's focus in the technology sector was on communications-related
stocks. The Portfolio added a slightly overweighted position in basic materials
and energy and a market-weighted position in capital goods as evidence of
improving business trends developed in the first quarter. Health care,
financials and consumer staples were all underweighted. Our concern regarding
health care was that talk of potential legislation to control pharmaceutical
pricing might cause this group to be re-valued downward. Financial services and
consumer staples were underweighted, due to continuing evidence that earnings
momentum for these groups had peaked.
EUROPEAN GROWTH PORTFOLIO
For the six-month period ended June 30, 1999, the European Growth Portfolio
produced a total return of 2.53 percent versus 8.69 percent for the MSCI World
Index and 8.10 percent for the Lipper Variable Annuity International Underlying
Funds Average.
Generally, the Portfolio's heavy exposure to growth sectors such as telecom
operators and equipment suppliers, high-quality financials, media and technology
benefited the Portfolio. However, the markets witnessed strong sector rotation
during the period and such economically sensitive cyclical sectors as steel,
chemicals and pulp and paper (where the Portfolio is underrepresented) also
performed well. Notably underperforming sectors were utilities and insurance,
both of which were reacting to rising bond yields. The Portfolio is heavily
underweighted in both sectors.
According to Morgan Stanley Dean Witter Investment Management Inc., the
Portfolio's sub-advisor, the Portfolio's emphasis remains as always on holding
mid- to large-cap blue-chip growth stocks, with stock selection likely to be the
primary source of the value added relative to the index return. The sub-advisor
believes that in the long term equity investors in Europe will continue to be
prepared to pay a premium for solid, visible earnings growth. This propensity
orients the Portfolio's holdings toward defensive and high-quality sectors of
the market such as telecommunications, pharmaceuticals, technology, media and
selected financials. Given that the Portfolio's investment strategy is driven by
stock selection, its country weightings derive from stock decisions rather than
being specifically targeted. The regional weightings at the end of the period
under review were 44 percent the eurozone, 35 percent in the United Kingdom, 9
percent in Switzerland, 7 percent in Sweden and 5 percent in cash.
During this period, profits were taken in some key positions that had performed
well (notably Nokia, Telecom Italia, Mannesmann and SmithKline Beecham) and
assets raised were re-deployed in a wide
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range of quality growth stocks (such as Banco Popular, Elf Aquitaine, Vodafone,
Philips and Accor). No major sector re-weightings occurred as a result, although
overall exposure to telecoms and health care was reduced.
The sub-advisor believes that the overall outlook for the European equity
markets remains positive. Economic growth in the key economies of Germany,
France and the United Kingdom should accelerate in the second half of 1999 and
into 2000. GDP growth in 2000 should exceed 2.5 percent in most European
countries. Interest rates in the eurozone are very low, at 2.5 percent. The
present high level of merger and acquisition activity should continue, which is
generally supportive for the markets. Earnings growth should average 10 to 12
percent in 1999 (with possible upside surprises) and probably rise again in
2000. The Portfolio is fully invested, with a heavy emphasis on telecoms,
technology, media, retail and quality financial stocks.
GLOBAL DIVIDEND GROWTH PORTFOLIO
For the six-month period ended June 30, 1999, the Global Dividend Growth
Portfolio produced a total return of 10.27 percent versus 8.69 percent for the
MSCI World Index and 11.47 percent for the Lipper Variable Annuity Global
Underlying Funds Average.
The Portfolio's outperformance relative to the MSCI Index can be attributed both
to prudent country allocation and the disciplined, systematic stock selection
process utilized by the Portfolio's managers. Asian equity markets have
generally outperformed most other world markets so far this year. In U.S. dollar
terms, Hong Kong and Japan were the two best-performing developed markets in the
Portfolio's universe, appreciating by 31.5 percent and 20.7 percent,
respectively. The Portfolio benefited from these two markets' performance, as it
has been overweighted there for quite some time. Recently, significant profits
were realized in Hong Kong and Japan as assets targeted there were reduced to
1.5 percent and 15.5 percent, respectively.
Elsewhere in the world, the Portfolio's managers have been much more sanguine
about European equity markets. However, as those markets have largely
underperformed most other world markets, much of what we expected has been
factored into European share prices, leaving excellent buying opportunities in
selected markets. The Portfolio has now targeted 25 percent of its assets toward
European Monetary Union (EMU) member nations, up from 20 percent six months ago.
In addition, the Portfolio is exposed to the United Kingdom (13 percent),
Switzerland (5 percent) and Sweden (2 percent).
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LETTER TO THE SHAREHOLDERS JUNE 30, 1999, CONTINUED
As a global portfolio, the target exposure to the United States -- the world's
largest market and economy -- is the largest at 32 percent of net assets. The
Portfolio's emphasis on high-quality blue-chip stocks and its value orientation
served it well, because value investing seems to have returned to favor thus far
in 1999. Recent domestic portfolio positions initiated include Sears, Conseco
and FPL Group.
HIGH YIELD PORTFOLIO
For the six-month period ended June 30, 1999, the High Yield Portfolio posted a
total return of 4.18 percent versus 2.20 percent for the Lehman Brothers High
Yield Index and 2.95 percent for the Lipper Variable Annuity High Current Yield
Underlying Funds Average.
During the period under review, the Portfolio's significant, long-term core
position in the B-rated sector of the market experienced modest price declines
related to the general weakness in the fixed-income markets. However, these
declines were more than offset by the market's high coupon income during the
first half of 1999.
The Portfolio continues to concentrate on industry sectors that have
historically proven to be more predictable, recession resistant and growth
oriented, such as cable television, cellular, food and beverages, media and
telecommunications. We believe these industry groups are poised to perform well
over the next year given the steady growth prospects of these sectors and the
expected continued consolidation and merger activity within these industries,
which should lead to improved credit quality. We continue to focus primarily on
domestic companies, given the more favorable outlook for the U.S. economy, and
are avoiding the more-volatile emerging foreign high-yield markets.
INCOME BUILDER PORTFOLIO
For the six-month period ended June 30, 1999, the Income Builder Portfolio
posted a total return of 8.99 percent versus 12.38 percent for the S&P 500 and
10.75 percent for the Lipper Variable Annuity Equity Income Underlying Funds
Average.
The convertible portion of the Portfolio underperformed the broader equity
market during the first half of calendar year 1999, primarily due to its focus
on the issues of
small- and mid-cap companies, which lagged large caps as the market rebounded
strongly from its lows last October. The Portfolio's prejudice toward income
also negatively affected its relative performance as equity-sensitive
convertibles outperformed yield-oriented issues. However, the strong performance
of several
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individual issues, boosted by increasing merger and acquisition activity, helped
mitigate these weaknesses. Also, the performance of cyclical and small-cap names
has improved in recent months as investors have taken advantage of undervalued
opportunities. We believe the small-cap convertible market remains highly
attractive from a risk/reward perspective, and the Portfolio is well positioned
to take part in the appreciation of its underlying equities. We continue to
focus on this sector going forward and remain positive on the prospects for
small caps over the long term.
Real estate investment trusts (REITs) rebounded strongly in April from their
March 1999 lows and have leveled off since as investors poured into
high-yielding real estate stocks trading at significant discounts to net asset
value. However, REITs have lagged the broader equity markets during the period
as high-multiple growth stocks have continued to flourish in a strong economic
and low-interest-rate environment. We believe, however, that healthy dividend
yields and strong real estate fundamentals render the REIT market attractive.
The Portfolio currently dedicates 10 percent of net assets to REITs, split
between common stocks and convertible securities.
The fixed-income portion of the Portfolio is structured to provide maximum
current income while minimizing exposure to interest-rate movements. This
portion of the Portfolio performed as expected and helped reduce volatility
during the year.
MONEY MARKET PORTFOLIO
As of June 30, 1999, the Money Market Portfolio had assets in excess of $421
million, up 20 percent from the year earlier. The Portfolio's average life was
66 days and its annualized net investment income ratio for the six-month fiscal
period ended June 30, 1999, was 4.47 percent, while its annualized 30-day moving
average yield for June was 4.44 percent.
On June 30, 1999, approximately 65 percent of the Portfolio's assets was
invested in high-quality commercial paper and 18 percent in federal agency
obligations, with the remaining 17 percent in short-term bank notes and
certificates of deposit issued by major, financially strong commercial banks. At
the end of the fiscal period under review, approximately 91 percent of the
Portfolio's holdings was due to mature in less than four months. Consequently,
the Portfolio is well positioned for stability of value with a very high degree
of liquidity. We always operate the Portfolio in a conservative style, without
the use of derivatives or structured notes that might fluctuate excessively with
changing interest rates. As ever, the Money Market Portfolio serves as a useful
investment for liquidity, preservation of capital and a yield that reflects the
prevailing money market conditions.
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At this time we anticipate some slight moderation in the pace of economic
activity during the second half of 1999, with a slightly higher rate of
inflation than recent levels. The investment yields available to the Portfolio
later in 1999 are likely to be moderately higher than the averages achieved
during the first half of the year.
PACIFIC GROWTH PORTFOLIO
For the six-month period ended June 30, 1999, the Pacific Growth Portfolio
produced a total return of 30.45 percent versus 8.69 percent for the MSCI World
Index and 29.88 percent for the Lipper Variable Annuity Pacific Region
Underlying Funds Average.
If the Federal Reserve maintains its mild tightening position and the Bank of
Japan maintains its zero short-term interest-rate policy, this will allow Japan
to accelerate restructuring and provide a platform for economic recovery. It
will likely become very important for Japan to show concrete economic growth
over the next year, particularly if U.S. growth slows. Morgan Stanley Dean
Witter Investment Management Inc., the Portfolio's sub-advisor, while
increasingly bullish on the prospects for Japan, intends to maintain its current
highly selective stock and sector weightings and believes the "generals" will
lead the charge. In particular, Sony, Fujitsu, Mitsui and TDK have reached
all-time highs and NTT, the largest-capitalized company in Japan, has broken out
from a 10-year trading range, signaling the direction for the next quarter.
Among the Asian risk factors we will be monitoring are the large supply of
upcoming equity offerings and the danger that economic recovery will lessen the
region's will to implement needed economic and corporate-level reforms. External
risk factors include the performance of the Japanese economy, import and
economic growth in Europe and the United States, U.S. monetary policy and global
interest-rate trends, extreme weakness in the euro and the performance of the
Western equity markets. Upside surprises could include better than expected
economic recovery and bank recapitalization in Japan as well as stronger than
expected import demand from the United States and Europe.
The sub-advisor continues to concentrate on identifying companies throughout
Asia that are restructuring and refocusing their businesses around the principle
of improving returns on equity. Many Asian companies have engaged in
restructuring efforts during the past year, and these companies have continued
to perform well in relative and absolute terms. Because restructuring in Japan
could also provide enhanced investment opportunities in non-Japan Asia through
outsourcing,
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the sub-advisor will continue to search out these opportunities. The Portfolio
currently holds significant positions in a number of companies geared to the
recovery in domestic consumption currently under way in most Asian economies.
QUALITY INCOME PLUS PORTFOLIO
For the six-month period ended June 30, 1999, the Quality Income Plus Portfolio
posted a total return of -4.04 percent versus -1.37 percent for the Lehman
Brothers Aggregate Bond Index and -2.20 percent for the Lipper Variable Annuity
Corporate Debt A-Rated Underlying Funds Average.
From February through June we restructured the Portfolio to reflect a more
cautionary stance whereby the asset allocation to U.S. government
mortgage-backed securities was increased and the amount of long-term corporate
bonds reduced by 5 percent. This rebalancing effectively increased the average
coupon in the Portfolio from 7.05 percent in February to 7.20 percent by the end
of the second quarter. We believe this allocation should provide a stronger
level of current income in the future.
Going forward, the Portfolio intends to employ a strategy emphasizing high-grade
corporate bonds blended with AAA-rated mortgage-backed securities and U.S.
government instruments. This asset allocation blend will be monitored to allow
for sector shifts from each asset class in an effort to capitalize on the
constantly changing investment horizon.
SHORT-TERM BOND PORTFOLIO
The Portfolio began operations on May 4, 1999. On June 30, net assets stood at
$936,693. In anticipation of higher interest rates over the next several months,
investments were made gradually, focusing on Treasuries and agencies with
maturities of one to two years. Cash reserves were allowed to accumulate toward
month-end with the expectation that an increase in the federal-funds rate would
be negative for shorter-term interest rates. On June 30 the Portfolio held six
U.S. government issues with an average coupon of 5.64 percent. The average
duration was 1.61 years, the average maturity 1.73 years.
The increase in the federal-funds rate has yet to make an impact on the economy.
While the housing sector may be slowing from its rapid growth rate of the past
twelve months, the manufacturing sector appears to be gaining momentum.
Consumers remain highly confident about the future and are spending freely,
supported by historically low unemployment rates and record-setting stock market
levels. If the Federal Reserve is serious about tempering economic growth to
reduce the threat of
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future inflation, we believe it will have to raise short-term rates. Any such
actions would be likely to put upward pressure on one-to-five-year interest
rates later this year. Therefore, the Portfolio will continue to adopt a
cautionary stance toward investment in new subscriptions, seeking to preserve
capital.
S&P 500 INDEX PORTFOLIO
For the six-month period ended June 30, 1999, the S&P 500 Index Portfolio
produced a total return of 11.91 percent compared to 12.38 percent for the S&P
500 and 12.10 percent for the Lipper Variable Annuity S&P 500 Index Objective
Underlying Funds Index.
The investment objective of the Portfolio is to provide investment results that,
before expenses, correspond to the total return of the S&P 500. In 1998 the
index experienced a period in which small- and mid-cap stocks were eclipsed by
the returns of a narrow list of large-capitalization growth stocks. The past six
months saw a slight reversal of this trend. Concerns over potential inflation
and the status of certain global economies dampened the performance of the
large-cap multinational companies, which constitute a large portion of the top
50 stocks in the S&P 500. Over the past six months, the remaining 450 stocks
outperformed the top 50 issues, indicating a shift in sentiment toward
small- and mid-caps as well as cyclical stocks.
Looking ahead, the question is whether the recent shift in sentiment will prove
to have been a temporary, momentum-driven move or a sustainable shift in
strategy. The recent strength seen in the large-cap financial and technology
stocks would indicate a return to the large-cap-biased investing that has
dominated the market in recent years. Such a scenario would bode well for the
continued success of the Portfolio, because it tracks the large-cap-biased S&P
500.
STRATEGIST PORTFOLIO
For the six-month period ended June 30, 1999, the Strategist Portfolio posted a
total return of 8.51 percent versus 12.38 percent for the S&P 500, -2.28 percent
for the Lehman Brothers Government/ Corporate Bond Index and 5.89 percent for
the Lipper Variable Annuity Flexible Portfolio Underlying Funds Average. In
light of the volatility in the bond and stock markets during the first half of
1999, the performance of the Portfolio was quite satisfactory.
The Portfolio's allocation remained unchanged in this period, as the various
events that influenced market movements were judged peripheral to our asset
allocation decision-making process. The Portfolio ended the period with an asset
allocation target of 70 percent equity exposure, 20 percent
13
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS JUNE 30, 1999, CONTINUED
fixed-income exposure and a 10 percent cash reserve. Based on the weightings of
an average balanced fund, this mix indicates a higher-than-average exposure to
stocks, a lower-than-average exposure to bonds and an equal weighting in cash.
As we saw in the second half of 1998, a blended approach to long-term investing
provides both performance and greater stability during periods of extreme asset
class volatility. At this time, while we do not expect inflation pressures to
prevail, we are cognizant of the high valuations in quality growth stocks as
well as the reasonably attractive yield on the 30-year Treasury bond. Thus, our
strategy of diversification continues to be appropriate as we enter the second
half of the year.
The specific holdings of the stock and bond portfolios changed a bit, in that
the outperformance of our basic material and energy positions caused us to take
profits in a number of holdings. By the end of June we held 78 positions, with
our top sector exposures including technology, retail and consumer products,
financials and health care. Our bond portfolio (69 issues in total) also shifted
a bit during the first half of the year, closing the period with an average
yield of 6.29 percent, an average maturity of 10.5 years and a duration of 5.8
years.
UTILITIES PORTFOLIO
For the six-month period ended June 30, 1999, the Utilities Portfolio produced a
total return of 6.47 percent versus 12.38 percent for the S&P 500 and 6.74 for
the Lipper Variable Annuity Utility Underlying Funds Index.
During the first six months of 1999, the broad equity market produced robust
gains against a backdrop of strong economic growth and low inflation. Utilities
stocks also advanced in this environment as investors were attracted to both the
energy and telecommunications sectors of the market.
During the first half of 1999, the electric utility industry continued to
navigate toward a competitive landscape, with many states passing fair and
balanced restructuring bills. In addition, the electric utility sector remained
focused on share repurchases and consolidation, with many companies continuing
to implement growth initiatives designed to provide good earnings visibility for
shareholders. The telecommunications sector also benefited during the six-month
period as investors were attracted to powerful demand trends occurring across
the entire global telecommunications spectrum. Moreover, telecommunication
companies produced strong earnings buoyed by solid core growth, surging data and
wireless usage worldwide and robust demand for convenience features such
14
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS JUNE 30, 1999, CONTINUED
as Caller ID and Call Waiting. The natural gas sector performed nicely during
the first half of 1999 as pricing of the commodity strengthened due to a
positive supply-and-demand backdrop. The natural gas sector further benefited
from persistent merger and acquisition activity and favorable growth
fundamentals within its diversified business segments.
Widespread diversification remains a key characteristic and strength of the
Portfolio. On June 30, 1999, 90 percent of the Portfolio's net assets was
allocated to utility and utility-related equities, 8 percent to high-quality
fixed-income securities and 2 percent in cash and cash equivalents. Within the
equity component, 48 percent was allocated to telecommunications, with electric
utilities and energy accounting for the balance. Enhancing overall Fund
diversification are selective foreign securities accounting for 11 percent of
net assets primarily focused on the growth area of global telecommunications.
The fixed-income portion of the Portfolio remains well-diversified with a
weighted average credit rating of "Baa" and "BBB+", as measured by Moody's
Investors Service and Standard & Poor's Corporation, respectively.
During the second half of 1999, the Portfolio anticipates maintaining a prudent
balance among electric utilities, telecommunications and energy. Currently, the
Portfolio expects to increase its international telecommunications holdings
modestly while expanding its allocation to the natural gas sector. We believe
that the Portfolio is well positioned to meet its long-term investment
objectives.
On August 4, 1999, the Utilities Portfolio's shareholders approved the following
changes to the Portfolio's investment objective:
CHANGE IN INVESTMENT OBJECTIVE. Shareholders approved changing the Portfolio's
investment objective to: "seek both capital appreciation and current income."
Prior to this change, the Portfolio's objective was "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."
Adoption of this change eliminated long-term growth of income as an objective of
the Portfolio and eliminated the requirement that the Portfolio invest primarily
in the equity and fixed-income securities of companies engaged in the public
utilities industry.
15
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS JUNE 30, 1999, CONTINUED
LOOKING AHEAD
We believe that the global economy will rebound to a more-normalized rate of
growth over the next eighteen months. This should occur as economies in emerging
markets and Japan increasingly stabilize and move ahead. Likewise, we believe
that the European bloc will work its way back to pre-contagion growth rates
driven by an improvement in exports and a revival in consumer spending.
We appreciate your ongoing support of Morgan Stanley Dean Witter Variable
Investment Series and look forward to continuing to serve your investment needs
and objectives.
Very truly yours,
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>
16
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT
SERIES
FUND PERFORMANCE JUNE 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS(1)
- ------------------------------------------------------------------------------------------
DATE OF SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION INCEPTION
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Money Market 4.85% 5.15% 5.13% -- --
Short-Term Bond -- -- -- 5/4/99 (0.27)%
Quality Income Plus (0.16) 7.94 8.20 -- --
High Yield (6.20) 6.38 7.11 -- --
Utilities 19.42 19.11 -- 3/1/90 14.37
Income Builder 7.20 -- -- 1/21/97 14.02
Dividend Growth 13.64 22.23 -- 3/1/90 15.21
Capital Growth 11.45 19.76 -- 3/1/91 13.38
Global Dividend Growth 13.11 14.80 -- 2/23/94 13.84
European Growth 0.67 20.98 -- 3/1/91 17.69
Pacific Growth 50.47 (4.47) -- 2/23/94 (5.33)
Equity 29.60 28.73 20.05 -- --
S&P 500 Index 22.26 -- -- 5/18/98 22.60
Competitive Edge--Best
Ideas 6.34 -- -- 5/18/98 4.33
Aggressive Equity -- -- -- 5/4/99 2.26
Strategist 17.55 15.11 12.62 -- --
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
--------------------
(1) Figures assume reinvestment of all distributions for the underlying fund
based on net asset value (NAV). They do not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
17
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER (65.4%)
BANKING (2.6%)
$ 6,000 Chase Manhattan Corp.............................. 4.90 % 07/29/99 $ 5,977,507
5,000 Wells Fargo & Co.................................. 4.89 08/27/99 4,962,000
------------
10,939,507
------------
DIVERSIFIED FINANCIAL SERVICES (9.8%)
20,000 Associates First Capital Corp..................... 4.94-5.12 09/02/99-09/14/99 19,811,165
21,600 General Electric Capital Corp..................... 4.84-5.04 07/20/99-01/18/00 21,355,203
------------
41,166,368
------------
DIVERSIFIED MANUFACTURING (1.3%)
5,500 Siemens Capital Corp.............................. 5.00 09/30/99 5,431,598
------------
FINANCE - AUTOMOTIVE (13.6%)
6,000 American Honda Finance Corp....................... 4.97 08/10/99 5,967,200
19,000 DaimlerChrylser North America Holding Corp........ 4.87-4.90 07/01/99-08/13/99 18,955,063
12,500 Ford Motor Credit Co.............................. 4.93-5.05 07/30/99-08/17/99 12,435,229
20,000 General Motors Acceptance Corp.................... 4.87-4.94 08/06/99-09/01/99 19,875,872
------------
57,233,364
------------
FINANCE - CONSUMER (5.9%)
5,500 American Express Credit Corp...................... 5.35 07/02/99 5,499,182
13,500 New Center Asset Trust............................ 4.92-4.93 08/25/99-09/17/99 13,379,721
6,000 Norwest Financial Inc............................. 4.90 07/19/99 5,985,540
------------
24,864,443
------------
FINANCE - CORPORATE (1.2%)
5,000 Ciesco, L.P....................................... 5.25 08/12/99 4,969,550
------------
INSURANCE (4.0%)
11,900 American General Corp............................. 4.89-4.90 07/22/99-08/09/99 11,854,744
5,000 Metlife Funding Inc............................... 5.02 07/23/99 4,984,722
------------
16,839,466
------------
INTEGRATED OIL COMPANIES (1.1%)
4,800 BP America Inc.................................... 5.70 07/01/99 4,800,000
------------
INTERNATIONAL BANKS (20.2%)
18,700 Abbey National North America Corp................. 4.87-5.06 07/08/99-09/08/99 18,616,318
6,000 Barclays U.S. Funding Corp........................ 5.00 09/03/99 5,947,307
6,000 CBA (DE) Finance Inc.............................. 4.87 07/14/99 5,989,578
18,500 Deutsche Bank Financial Inc....................... 4.87 07/07/99-08/24/99 18,437,902
6,000 Internationale Nederlanden (U.S.) Funding Corp.... 4.89 07/06/99 5,995,975
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 12,000 Societe Generale N.A., Inc........................ 4.86-4.95% 08/03/99-08/23/99 $ 11,927,606
18,500 UBS Finance (DE) LLC.............................. 4.90-4.96 10/04/99-10/14/99 18,249,291
------------
85,163,977
------------
RENTAL/LEASING COMPANIES (1.6%)
6,500 International Lease Finance Corp.................. 4.88 08/05/99 6,469,667
------------
RETAIL (2.7%)
11,500 Sears Roebuck Acceptance Corp..................... 4.94-5.02 07/16/99-08/16/99 11,448,492
------------
UTILITIES (1.4%)
6,000 National Rural Utilities Cooperative Finance
Corp............................................ 5.22 10/05/99 5,917,760
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $275,244,192)................................................... 275,244,192
------------
U.S. GOVERNMENT AGENCIES (18.0%)
23,500 Federal Farm Credit Bank.......................... 4.72-5.02 11/10/99-04/26/00 22,823,882
11,000 Federal Home Loan Banks........................... 4.97-5.00 03/02/00-03/03/00 10,643,269
37,758 Federal Home Loan Mortgage Corp................... 4.77-5.03 07/08/99-09/09/99 37,509,106
5,000 Federal National Mortgage Assoc................... 4.72 07/09/99 4,994,864
------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $75,971,121).................................................... 75,971,121
------------
SHORT-TERM BANK NOTES (12.2%)
19,000 FCC National Bank................................. 4.89-5.05 08/20/99-10/08/99 19,000,000
12,000 First Union National Bank......................... 4.88-4.90 08/26/99-09/24/99 12,000,000
20,500 NationsBank, N.A.................................. 4.91-5.20 08/18/99-09/27/99 20,500,000
------------
TOTAL SHORT-TERM BANK NOTES
(AMORTIZED COST $51,500,000).................................................... 51,500,000
------------
CERTIFICATES OF DEPOSIT (5.0%)
14,000 Chase Manhattan Bank (USA), N.A................... 4.95 07/12/99-07/26/99 14,000,000
7,000 U.S. Bank, N.A.................................... 5.01 10/21/99 7,000,000
------------
TOTAL CERTIFICATES OF DEPOSIT
(AMORTIZED COST $21,000,000).................................................... 21,000,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(AMORTIZED COST $423,715,313) (a)......................................................... 100.6 % 423,715,313
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS............................................ (0.6) (2,591,932)
------ -------------
NET ASSETS................................................................................ 100.0 % $ 421,123,381
------ -------------
------ -------------
</TABLE>
- ---------------------
(a) Cost is the same for federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - SHORT-TERM BOND
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY & OBLIGATIONS (66.7%)
$ 175 Federal Home Loan Banks............................................... 4.88-5.38% 03/02/01-01/22/02 $$172,463
100 Federal Home Loan Mortgage Corp....................................... 5.75 06/15/01 99,877
350 U.S. Treasury Note.................................................... 5.38-6.50 07/31/00-05/31/01 352,208
--------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $624,958)........................................................................... 624,548
--------
SHORT-TERM INVESTMENT (a)(26.7%)
U.S. GOVERNMENT AGENCY
250 Federal Home Loan Banks (AMORTIZED COST $250,000)..................... 4.60 07/01/99 250,000
--------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $874,958) (B)................................................................ 93.4 % 874,548
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES................................................ 6.6 62,145
------ ---------
NET ASSETS.................................................................................... 100.0 % $ 936,693
------ ---------
------ ---------
</TABLE>
- ---------------------
(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 $368 and the aggregate
gross unrealized depreciation is $778, resulting in net unrealized
depreciation of $410.
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (60.8%)
ACCIDENT & HEALTH INSURANCE (0.6%)
$ 3,000 Jackson National Life Insurance Co. - 144A*........................... 8.15% 03/15/27 $ 3,157,440
------------
AEROSPACE (2.6%)
5,000 Boeing Co............................................................. 7.95 08/15/24 5,388,250
3,000 Lockheed Martin Corp.................................................. 7.70 06/15/08 3,075,180
5,000 United Technologies Corp.............................................. 6.70 08/01/28 4,675,100
------------
13,138,530
------------
AIR FREIGHT/DELIVERY SERVICES (1.0%)
4,929 Federal Express Corp.................................................. 7.50 01/15/18 4,985,336
------------
AIRLINES (1.5%)
4,825 America West Airlines (Class A)....................................... 6.85 07/02/09 4,674,207
3,000 Continental Airlines.................................................. 7.056 09/15/09 2,998,350
------------
7,672,557
------------
ALUMINUM (0.9%)
5,000 Aluminum Co. of America............................................... 6.75 01/15/28 4,622,650
------------
BEVERAGES - NON-ALCOHOLIC (0.4%)
2,000 Coca-Cola Enterprises Inc............................................. 8.50 02/01/22 2,244,700
------------
BUILDING MATERIALS/DIY CHAINS (0.9%)
3,000 Home Depot Real Estate Funding Corp. II - 144A*....................... 5.95 10/15/08 4,593,700
------------
BUILDING PRODUCTS (0.6%)
3,000 Armstrong World Industries, Inc....................................... 7.45 05/15/29 2,916,570
------------
CELLULAR TELEPHONE (1.0%)
5,000 360 DEG. Communications Co............................................ 7.60 04/01/09 5,204,050
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/
TRUCKS (0.7%)
3,000 Caterpillar, Inc...................................................... 9.375 08/15/11 3,531,090
------------
CONSUMER ELECTRONICS/APPLIANCES (0.2%)
1,000 Maytag Corp........................................................... 9.75 05/15/02 1,079,810
------------
CONSUMER SUNDRIES (1.0%)
5,000 CPC International, Inc................................................ 7.25 12/15/26 4,977,300
------------
CONTRACT DRILLING (1.6%)
5,000 Dresser Industries, Inc............................................... 7.60 08/15/96 5,074,200
3,000 Transocean Offshore Inc............................................... 8.00 04/15/27 3,113,280
------------
8,187,480
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
DEPARTMENT STORES (1.3%)
$ 5,000 May Department Stores Co.+............................................ 7.625% 08/15/13 $ 5,202,800
1,000 Penney (J.C.) Co., Inc................................................ 9.75 06/15/21 1,084,080
------------
6,286,880
------------
DISCOUNT CHAINS (0.6%)
2,745 Wal-Mart Stores, Inc.................................................. 7.49 06/21/07 2,858,053
------------
DIVERSIFIED MANUFACTURING (0.9%)
5,000 Tyco International Group S.A. (Luxembourg)............................ 7.00 06/15/28 4,629,750
------------
ELECTRIC UTILITIES (7.8%)
1,000 Chugach Electric Co................................................... 9.14 03/15/22 1,130,500
5,000 FPL Group Capital Inc................................................. 7.375 06/01/09 2,032,760
5,000 Israel Electric Corp. Ltd. - 144A*.................................... 7.75 03/01/09 4,961,750
2,903 Oglethorpe Power Co................................................... 6.974 06/30/11 2,896,613
3,500 Oklahoma Power Co..................................................... 6.50 07/15/17 3,506,790
5,000 Pennsylvania Power & Light Co......................................... 7.70 10/01/09 5,284,800
5,000 Potamac Electric Power Co............................................. 7.25 07/01/23 4,814,550
4,000 Public Service Electric & Gas Co...................................... 7.375 03/01/14 3,929,080
5,000 South Carolina Electric & Gas Co...................................... 7.625 06/01/23 4,938,350
1,000 Tampa Electric Co..................................................... 7.75 11/01/22 990,480
5,000 Virginia Electric Power............................................... 7.25 02/01/23 4,747,300
------------
39,232,973
------------
ELECTRONIC PRODUCTION EQUIPMENT (0.9%)
5,000 Applied Materials, Inc................................................ 7.125 10/15/17 4,753,450
------------
FARMING/SEEDS/MILLING (0.9%)
5,000 Archer Daniels Midland................................................ 6.625 05/01/29 4,598,150
------------
FINANCE - AUTOMOTIVE (1.7%)
3,000 Ford Capital BV....................................................... 9.50 06/01/10 3,499,860
5,000 Ford Motor Credit Corp................................................ 7.75 03/15/05 5,212,250
------------
8,712,110
------------
FINANCE - CONSUMER (1.8%)
5,000 Household Finance Corp................................................ 6.875 03/01/07 4,915,850
4,000 Norwest Financial Inc................................................. 7.875 02/15/02 4,140,960
------------
9,056,810
------------
FINANCE COMPANIES (1.0%)
5,000 Aristar Inc........................................................... 5.85 01/27/04 4,808,700
------------
INTEGRATED OIL COMPANIES (1.6%)
2,000 Conoco Inc............................................................ 6.35 04/15/09 1,918,080
5,000 Kerr McGee Corp....................................................... 7.125 10/15/27 4,622,600
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 166 Mobil Corp............................................................ 9.17% 02/29/00 $ 169,619
1,000 Texaco Capital, Inc................................................... 9.75 03/15/20 1,267,160
------------
7,977,459
------------
INTERNATIONAL BANKS (1.0%)
5,000 Dresdner Funding Trust - 144A*........................................ 8.151 06/30/31 4,819,500
------------
INVESTMENT BANKERS/BROKERS/SERVICES (4.5%)
2,000 Bear Stearns Companies, Inc........................................... 8.75 03/15/04 2,141,720
5,000 Donald Lufkin & Jenrette, Inc......................................... 6.90 10/01/07 4,873,350
5,000 Goldman Sachs Group................................................... 6.65 05/15/09 4,834,000
3,750 Lehman Brothers Holdings, Inc......................................... 8.75 03/15/05 3,983,888
2,000 Lehman Brothers Holdings, Inc......................................... 6.625 02/05/06 1,907,740
5,000 Lehman Brothers Holdings, Inc......................................... 8.50 08/01/15 5,115,100
------------
22,855,798
------------
LIFE INSURANCE (1.9%)
5,000 Allamerica Financial Corp............................................. 7.625 10/15/25 4,991,850
5,000 American General Corp................................................. 6.625 02/15/29 4,526,900
------------
9,518,750
------------
MAJOR BANKS (7.2%)
2,000 Chase Manhattan Corp.................................................. 6.50 01/15/09 1,918,920
5,000 First Bank N.A........................................................ 8.35 11/01/04 5,346,000
5,000 First Bank System..................................................... 7.625 05/01/05 5,186,600
3,000 Mellon Bank N.A....................................................... 7.625 09/15/07 3,106,980
3,000 National City Bank.................................................... 6.25 03/15/11 2,789,820
5,000 NationsBank Corp...................................................... 7.80 09/15/16 5,173,200
3,000 Old Kent Financial Corp............................................... 6.625 11/15/05 2,918,670
5,000 State Street Boston Corp.............................................. 5.95 09/15/03 4,866,750
3,242 Swiss Bank Corp....................................................... 7.375 07/15/15 3,178,489
2,000 Wachovia Corp......................................................... 6.375 04/15/03 1,987,060
------------
36,472,489
------------
MAJOR PHARMACEUTICALS (1.2%)
5,000 Johnson & Johnson..................................................... 8.72 11/01/24 5,570,900
593 Marion Merrell Corp................................................... 9.11 08/01/05 639,253
------------
6,210,153
------------
MAJOR U.S. TELECOMMUNICATIONS (3.0%)
5,000 AT&T Corp............................................................. 8.35 01/15/25 5,223,800
5,000 GTE Corp.............................................................. 7.90 02/01/27 5,062,750
2,000 GTE North, Inc. (Series H)............................................ 5.65 11/15/08 2,757,420
2,000 Illinois Bell Telephone Co............................................ 7.25 03/15/24 1,935,580
------------
14,979,550
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MANAGED HEALTH CARE (0.2%)
$ 1,000 Kaiser Foundation Health Plan, Inc.................................... 9.55% 07/15/05 $ 1,104,910
------------
MEDICAL SPECIALTIES (0.9%)
4,000 Becton Dickinson & Co................................................. 8.70 01/15/25 4,359,160
------------
MULTI-LINE INSURANCE (1.0%)
5,000 Nationwide Financial Services, Inc.................................... 8.00 03/01/27 4,950,850
------------
NATURAL GAS (0.9%)
5,000 ONEOK, Inc............................................................ 6.875 10/01/28 4,582,700
------------
OIL & GAS PRODUCTION (0.4%)
2,000 Anadarko Petroleum Corp............................................... 7.73 09/15/96 1,964,500
------------
OTHER TELECOMMUNICATIONS (0.5%)
2,500 Electric Lightwave, Inc. - 144A*...................................... 6.050 05/15/04 2,421,800
------------
PRECIOUS METALS (1.0%)
5,000 Barrick Gold Corp.+................................................... 7.50 05/01/07 5,084,100
------------
PROPERTY - CASUALTY INSURERS (1.0%)
5,000 Liberty Mutual Insurance Co. - 144A*.................................. 7.875 10/15/26 4,947,650
------------
RAILROADS (1.9%)
4,342 Burlington Northern Santa Fe Corp..................................... 7.33 06/23/10 4,435,755
4,591 Burlington Northern Santa Fe Corp..................................... 7.97 01/01/15 4,923,515
------------
9,359,270
------------
RESTAURANTS (0.2%)
1,000 McDonald's Corp....................................................... 8.875 04/01/11 1,162,020
------------
RETAIL (0.6%)
3,000 Sears Roebuck Acceptance Corp......................................... 6.25 05/01/09 2,819,100
------------
TELECOMMUNICATIONS EQUIPMENT (0.9%)
5,000 Motorola Inc.......................................................... 6.50 11/15/28 4,448,200
------------
TOBACCO (1.0%)
5,000 Philip Morris Companies, Inc.......................................... 7.125 10/01/04 5,033,750
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $309,636,323).................................................................... 306,319,798
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS (33.1%)
$ 5 Federal Home Loan Mortgage Corp....................................... 11.50% 05/01/19 $ 5,387
4,526 Federal Home Loan Mortgage Corp. PC Gold.............................. 6.00 10/01/23-11/01/27 4,275,208
1,243 Federal Home Loan Mortgage Corp. PC Gold.............................. 8.50 01/01/22-12/01/24 1,299,666
12,821 Federal National Mortgage Assoc....................................... 6.00 02/01/27-03/01/29 12,096,168
10,711 Federal National Mortgage Assoc....................................... 6.50 03/01/26-06/01/29 10,376,080
26,791 Federal National Mortgage Assoc. (a).................................. 7.00 08/01/25-07/01/29 26,565,260
5,214 Federal National Mortgage Assoc....................................... 7.50 05/01/27-06/01/29 5,280,654
334 Federal National Mortgage Assoc....................................... 9.00 06/01/21-02/01/25 353,871
9,891 Government National Mortgage Assoc.................................... 6.00 04/15/28-12/15/28 9,294,000
26,790 Government National Mortgage Assoc.................................... 6.50 08/15/27-02/15/29 25,877,200
20,734 Government National Mortgage Assoc.................................... 7.00 01/15/26-10/15/28 20,519,784
11,749 Government National Mortgage Assoc.................................... 7.50 04/15/24-09/15/27 11,896,209
9,370 Government National Mortgage Assoc.................................... 8.00 10/15/24-09/15/26 9,633,756
2,245 Government National Mortgage Assoc.................................... 8.50 01/15/17-03/01/28 2,350,582
1,442 Government National Mortgage Assoc.................................... 9.00 07/15/24-12/15/24 1,531,253
145 Government National Mortgage Assoc.................................... 10.00 05/15/16-04/15/19 158,511
5,000 Tennessee Valley Authority............................................ 7.85 06/15/44 5,272,600
10,000 U.S. Treasury Bond.................................................... 0.00 11/15/15 3,560,000
1,000 U.S. Treasury Bond.................................................... 7.25 05/15/16 1,101,030
2,000 U.S. Treasury Bond.................................................... 5.25 11/15/28 1,771,860
8,500 U.S. Treasury Bond.................................................... 5.25 02/15/29 7,624,755
3,000 U.S. Treasury Note.................................................... 5.50 05/15/09 2,930,160
10,000 U.S. Treasury Note.................................................... 0.00 08/15/19 2,805,400
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $169,680,424).................................................................... 166,579,394
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CANADIAN GOVERNMENT OBLIGATIONS (4.3%)
$ 5,000 Hydro-Quebec.......................................................... 9.50% 11/15/30 $ 6,252,250
5,000 Province of New Brunswick............................................. 7.625 06/29/04 5,252,500
5,000 Province of Quebec.................................................... 7.00 01/30/07 5,033,950
5,000 Province of Manitoba.................................................. 7.75 07/17/16 5,386,200
------------
TOTAL CANADIAN GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $21,117,170)..................................................................... 21,924,900
------------
SHORT-TERM INVESTMENTS (0.7%)
U.S. GOVERNMENT AGENCY (b) (0.4%)
2,000 Federal National Mortgage Assoc. (AMORTIZED COST $1,996,767).......... 4.85 07/13/99 1,996,767
------------
REPURCHASE AGREEMENT (0.3%)
The Bank of New York (dated 06/30/99; proceeds $1,719,508) (c)
(IDENTIFIED COST $1,719,287)........................................ 4.625 07/01/99 1,719,287
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $3,716,054)...................................................................... 3,716,054
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $504,149,971) (d)........................................................ 98.9 % 498,540,146
OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 1.1 5,475,921
------ -------------
NET ASSETS................................................................................ 100.0 % $ 504,016,067
------ -------------
------ -------------
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
+ Securities segregated as collateral for securities purchased on a forward
commitment 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) Security was purchased on a discount basis. The interest rate shown has been
adjusted to reflect a money market equivalent yield.
(c) Collateralized by $1,753,673 U.S. Treasury Bill 0.00% due 07/27/99 valued at
$1,753,673.
(d) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $6,816,705 and the
aggregate gross unrealized depreciation is $12,426,530, resulting in net
unrealized depreciation of $5,609,825.
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (95.9%)
BEVERAGES - NON-ALCOHOLIC (4.9%)
$ 12,400 PepsiCo, Inc................................................................. 15.00 % 08/06/99 $ 12,499,448
5,000 Sparkling Spring Water (Canada).............................................. 11.50 11/15/07 4,100,000
------------
16,599,448
------------
BROADCAST/MEDIA (6.3%)
8,000 Brill Media Co., LLC (Series B).............................................. 7.50 12/15/07 6,400,000
5,000 Jones International Networks Ltd............................................. 11.75 07/01/05 4,250,000
5,028 Mentus Media Corp. (Series B)................................................ 12.00+ 02/01/03 3,771,000
1,855 Spanish Broadcasting System, Inc............................................. 12.50 06/15/02 2,059,050
4,890 Tri-State Outdoor Media Group................................................ 11.00 05/15/08 4,963,350
------------
21,443,400
------------
CABLE TELEVISION (2.7%)
3,750 Australis Holdings Ltd. (Australia) (a)...................................... 15.00++ 11/01/02 56,250
2,000 James Cable Partners L.P. (Series B)......................................... 10.75 08/15/04 2,090,000
3,000 Knology Holdings Inc......................................................... 11.875++ 10/15/07 1,740,000
7,000 Optel Inc. (Series B)........................................................ 11.50 07/01/08 5,180,000
------------
9,066,250
------------
CASINO/GAMBLING (3.2%)
12,250 Aladdin Gaming Holdings/Capital Corp. LLC (Series B)......................... 13.50++ 03/01/10 5,512,500
9,915 Fitzgeralds Gaming Corp. (Series B) (b)...................................... 12.25 12/15/04 5,502,825
------------
11,015,325
------------
CELLULAR TELEPHONE (4.5%)
1,800 American Cellular Corp....................................................... 10.50 05/15/08 1,845,000
1,800 Clearnet Communications Inc. (Canada)........................................ 14.75++ 12/15/05 1,638,000
1,800 Dobson/Sygnet Communications................................................. 12.25 12/15/08 1,872,000
3,500 Dolphin Telecom PLC - 144A* (United Kingdom)................................. 14.00++ 05/15/09 1,680,000
7,920 McCaw International Ltd...................................................... 13.00++ 04/15/07 4,781,700
3,000 Tritel PCS Inc. - 144A*...................................................... 12.75++ 05/15/09 1,635,000
3,000 Triton PCS Inc............................................................... 11.00++ 05/01/08 1,935,000
------------
15,386,700
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/
TRUCKS (0.8%)
3,000 J.B. Poindexter & Co., Inc................................................... 12.50 05/15/04 2,865,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONSUMER ELECTRONICS/APPLIANCES (1.3%)
$ 12,000 International Semi-Tech Microelectronics, Inc. (Canada)...................... 11.50 %++ 08/15/03 $ 2,160,000
2,500 Windmere-Durable Holdings, Inc............................................... 10.00 07/31/08 2,387,500
------------
4,547,500
------------
CONSUMER SPECIALTIES (0.6%)
2,500 Samsonite Corp............................................................... 10.75 06/15/08 2,037,500
------------
CONSUMER/BUSINESS SERVICES (7.9%)
1,800 Anacomp, Inc. (Series B)..................................................... 10.875 04/01/04 1,890,000
4,300 CEX Holdings Inc. (Series B)................................................. 9.625 06/01/08 4,031,250
7,710 Comforce Corp. (Series B).................................................... 15.00+ 12/01/09 7,709,653
3,250 Comforce Operating, Inc...................................................... 12.00 12/01/07 3,087,500
7,700 Entex Information Services, Inc.............................................. 12.50 08/01/06 5,236,000
1,000 MDC Communication Corp. (Canada)............................................. 10.50 12/01/06 1,015,000
5,000 Source Media, Inc............................................................ 12.00 11/01/04 4,000,000
------------
26,969,403
------------
CONTAINERS/PACKAGING (2.5%)
300 Berry Plastics Corp.......................................................... 12.25 04/15/04 309,000
1,500 Berry Plastics Corp. - 144A*................................................. 11.00 07/15/07 1,515,000
6,330 Envirodyne Industries, Inc................................................... 10.25 12/01/01 4,874,100
1,800 Impac Group Inc. (Series B).................................................. 10.125 03/15/08 1,710,000
------------
8,408,100
------------
CONTRACT DRILLING (0.7%)
4,600 Northern Offshore ASA (Series B) (Norway).................................... 10.00 05/15/05 2,530,000
------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.8%)
3,000 High Voltage Engineering, Inc................................................ 10.50 08/15/04 2,790,000
------------
DIVERSIFIED MANUFACTURING (2.4%)
1,800 Eagle-Picher Industries, Inc................................................. 9.375 03/01/08 1,710,000
1,800 Jordan Industries, Inc....................................................... 10.375 08/01/07 1,800,000
7,200 Jordan Industries, Inc. (Series B)........................................... 11.75++ 04/01/09 4,680,000
------------
8,190,000
------------
ELECTRONIC DISTRIBUTORS (1.2%)
6,000 CHS Electronics, Inc......................................................... 9.875 04/15/05 4,200,000
------------
FOOD CHAINS (0.9%)
500 Big V Supermarkets, Inc. (Series B).......................................... 11.00 02/15/04 512,500
2,515 Pueblo Xtra International, Inc. (Series C)................................... 9.50 08/01/03 2,401,825
------------
2,914,325
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FOOD DISTRIBUTORS (0.7%)
$ 2,500 Fleming Companies, Inc. (Series B)........................................... 10.625% 07/31/07 $ 2,325,000
------------
HOTELS/RESORTS (5.7%)
9,000 Epic Resorts LLC............................................................. 13.00 06/15/05 8,325,000
5,000 Motels of America, Inc. (Series B)........................................... 12.00 04/15/04 3,200,000
6,000 Premier Cruises Ltd. - 144A* (b)............................................. 11.00 03/15/08 1,380,000
7,210 Resort At Summerlin (Series B)............................................... 13.00+ 12/15/07 6,561,145
------------
19,466,145
------------
INDUSTRIAL SPECIALTIES (1.7%)
1,325 Indesco International Inc.................................................... 9.75 04/15/08 967,250
1,800 International Wire Group, Inc................................................ 11.75 06/01/05 1,872,000
3,000 Outsourcing Services Group, Inc. (Series B).................................. 10.875 03/01/06 2,850,000
------------
5,689,250
------------
MEDIA CONGLOMERATES (1.4%)
4,500 Disney (Walt) Co............................................................. 13.50 03/10/00 4,753,935
------------
MEDICAL SPECIALTIES (2.1%)
3,600 Mediq Inc./PRN Life Support Services Inc..................................... 11.00 06/01/08 2,808,000
3,000 Universal Hospital Services, Inc............................................. 10.25 03/01/08 2,640,000
2,000 Universal Hospital Services, Inc............................................. 10.25 03/01/08 1,700,000
------------
7,148,000
------------
MEDICAL/NURSING SERVICES (0.4%)
2,500 Pediatric Services of America, Inc. (Series A)............................... 10.00 04/15/08 1,275,000
------------
MILITARY/GOV'T/TECHNICAL (0.5%)
1,800 Loral Space & Communications Ltd............................................. 9.50 01/15/06 1,575,000
------------
OFFICE EQUIPMENT/SUPPLIES (1.1%)
4,500 Mosler, Inc.................................................................. 11.00 04/15/03 3,825,000
------------
OIL REFINING/MARKETING (0.4%)
3,000 Transamerican Refining Corp. (Series B) (b).................................. 16.00 06/30/03 1,425,000
------------
OTHER TELECOMMUNICATIONS (1.1%)
1,800 Esprit Telecom Group PLC (United Kingdom).................................... 11.50 12/15/07 1,953,000
1,800 Versatel Telecom (Netherlands)............................................... 13.25 05/15/08 1,881,000
------------
3,834,000
------------
PACKAGE GOODS/COSMETICS (0.9%)
3,000 J.B. Williams Holdings, Inc.................................................. 12.00 03/01/04 3,090,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PRINTING/FORMS (0.7%)
$ 2,500 Premier Graphics Inc......................................................... 11.50 % 12/01/05 $ 2,350,000
------------
RESTAURANTS (4.2%)
20,351 American Restaurant Group Holdings, Inc. - 144A* (c)......................... 0.00 12/15/05 6,715,929
5,000 FRD Acquisition Corp. (Series B)............................................. 12.50 07/15/04 4,850,000
1,800 Friendly Ice Cream Corp...................................................... 10.50 12/01/07 1,590,750
6,000 Planet Hollywood International, Inc. (b)..................................... 12.00 04/01/05 1,260,000
------------
14,416,679
------------
RETAIL - SPECIALTY (0.9%)
2,875 Pantry, Inc.................................................................. 10.25 10/15/07 2,889,375
------------
SERVICES TO THE HEALTH INDUSTRY (0.6%)
1,800 Unilab Corp.................................................................. 11.00 04/01/06 1,980,000
------------
SPECIALTY FOODS/CANDY (1.3%)
23,750 Specialty Foods Acquisition Corp. (Series B)................................. 13.00++ 08/15/05 4,275,000
------------
TELECOMMUNICATIONS (18.0%)
7,000 21st Century Telecom Group, Inc.............................................. 12.25++ 02/15/08 3,045,000
6,500 Birch Telecom Inc............................................................ 14.00 06/15/08 6,207,500
1,800 Caprock Communications Corp. (Series B)...................................... 12.00 07/15/08 1,854,000
3,680 Covad Communications Group, Inc.............................................. 12.50 02/15/09 3,551,200
3,000 DTI Holdings Inc. - (Series B)............................................... 12.50++ 03/01/08 1,320,000
5,000 e. Spire Communications, Inc................................................. 13.75 07/15/07 4,000,000
5,000 Facilicom International, Inc. (Series B)..................................... 10.50 01/15/08 3,900,000
16,520 Firstworld Communications, Inc............................................... 13.00++ 04/15/08 8,755,600
2,500 Focal Communications, Corp. (Series B)....................................... 12.125++ 02/15/08 1,400,000
3,000 GST Equipment Funding, Inc................................................... 13.25 05/01/07 3,180,000
1,800 Hyperion Telecommunication, Inc. (Series B).................................. 12.25 09/01/04 1,899,000
28,500 In-Flight Phone Corp. (Series B) (b)......................................... 14.00 05/15/02 3,135,000
1,800 Level 3 Communications, Inc.................................................. 9.125 05/01/08 1,775,250
1,800 NEXTLINK Communications, Inc................................................. 9.00 03/15/08 1,701,000
4,000 Onepoint Communications Corp. - 144A*........................................ 14.50 06/01/08 2,160,000
2,500 Pac-West Telecom Inc. - 144A*................................................ 13.50 02/01/09 2,493,750
2,500 Primus Telecommunication Group, Inc. (Series B).............................. 9.875 05/15/08 2,362,500
3,600 Rhythms Netconnections - 144A*............................................... 12.75 04/15/09 3,384,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 4,000 Startec Global Communications Corp........................................... 12.00 % 05/15/08 $ 3,520,000
1,800 Talton Holdings, Inc. - (Series B)........................................... 11.00 06/30/07 1,701,000
------------
61,344,800
------------
TELECOMMUNICATIONS EQUIPMENT (1.6%)
10,500 FWT, Inc. (b)................................................................ 9.875 11/15/07 1,050,000
3,500 SBA Communications Corp...................................................... 12.00++ 03/01/08 2,030,000
3,500 Spectrasite Holdings, Inc. - 144A*........................................... 12.00++ 07/15/08 2,205,000
------------
5,285,000
------------
WIRELESS COMMUNICATIONS (11.9%)
11,375 Advanced Radio Telecom Corp.................................................. 14.00 02/15/07 10,465,000
1,800 AMSC Acquisition Co., Inc. (Series B)........................................ 12.25 04/01/08 1,377,000
900 Arch Escrow Corp. - 144A*.................................................... 13.75 04/15/08 810,000
19,000 Cellnet Data Systems Inc..................................................... 14.00++ 10/01/07 8,360,000
5,000 Globalstar LP/Capital Corp................................................... 10.75 11/01/04 3,300,000
1,800 Orbcomm Global LP/Capital Corp. (Series B)................................... 14.00 08/15/04 1,804,500
3,000 Paging Network, Inc.......................................................... 10.125 08/01/07 2,310,000
2,400 Paging Network, Inc.......................................................... 10.00 10/15/08 1,848,000
4,000 Star Choice Communications, Inc. (Canada).................................... 13.00 12/15/05 4,160,000
4,500 USA Mobile Communications Holdings, Inc...................................... 14.00 11/01/04 4,297,500
1,800 Winstar Equipment Corp....................................................... 12.50 03/15/04 1,890,000
------------
40,622,000
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $390,363,127).................................................................... 326,532,135
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
- -----------
<C> <S> <C>
COMMON STOCKS (d) (1.0%)
CASINO/GAMBLING (0.0%)
2,000 Fitzgerald Gaming Corp............................................................... --
------------
CLOTHING/SHOE/ACCESSORY STORES (0.2%)
1,310,596 County Seat Store Corp. (c).......................................................... 442,981
------------
HOTELS/RESORTS (0.0%)
2,000 Motels of America, Inc. - 144A*...................................................... 2,000
71,890 Vagabond Inns, Inc. (Class D) (a).................................................... --
------------
2,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MEDICAL/NURSING SERVICES (0.7%)
418,663 Raintree Healthcare Corp. (c)........................................................ $ 2,260,780
------------
MOTOR VEHICLES (0.0%)
87 Northern Holdings Industrial Corp. * (c)............................................. --
------------
RESTAURANTS (0.0%)
7,750 American Restaurant Group Holdings, Inc. - 144A*..................................... --
------------
SPECIALTY FOODS/CANDY (0.0%)
120,000 Specialty Foods Acquisition Corp. - 144A*............................................ 60,000
------------
TEXTILES (0.1%)
298,461 U.S. Leather, Inc. (c)............................................................... 447,862
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $24,062,977)........................................................ 3,213,623
------------
PREFERRED STOCKS (0.5%)
OIL REFINING/MARKETING (0.0%)
5,266 Transamerican Refining Corp. (Conv.) (Class B)*...................................... 316
2,896 Transamerican Refining Corp. (Conv.) (Class C)*...................................... 162
7,635 Transamerican Refining Corp. (Conv.) (Class D)*...................................... 405
15,797 Transamerican Refining Corp. (Conv.) (Class E)*...................................... 995
------------
1,878
------------
RESTAURANTS (0.5%)
1,680 American Restaurant Group Holdings, Inc. (Series B).................................. 1,680,000
------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $1,681,863)......................................................... 1,681,878
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE
- ----------- ----------
<C> <S> <C> <C>
WARRANTS (d) (0.4%)
AEROSPACE (0.0%)
1,500 Sabreliner Corp. - 144A*................................................. 04/15/03 15,000
------------
BROADCAST/MEDIA (0.0%)
12,524 Mentus Media Corp. - 144A*............................................... 02/01/08 125
------------
CASINO/GAMBLING (0.0%)
100,000 Aladdin Gaming Enterprises, Inc. - 144A*................................. 03/01/10 1,000
------------
CONSUMER/BUSINESS SERVICES (0.0%)
42,250 Comforce Corp. - 144A*................................................... 12/01/09 10,563
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
HOTELS/RESORTS (0.0%)
9,000 Epic Resorts LLC - 144A*................................................. 06/15/05 $ --
6,000 Resort At Summerlin - 144A*.............................................. 12/15/07 --
------------
--
------------
OIL & GAS PRODUCTION (0.0%)
39,665 Gothic Energy Corp....................................................... 01/00/00 397
------------
OIL REFINING/MARKETING (0.0%)
3,000 Transamerican Refining Corp.............................................. 06/30/03 --
------------
OTHER TELECOMMUNICATIONS (0.0%)
2,500 Versatel Telecom - 144A* (Netherlands)................................... 05/15/08 125,045
------------
RESTAURANTS (0.0%)
1,500 American Restaurant Group Holdings, Inc. - 144A*......................... 08/15/00 --
------------
TELECOMMUNICATIONS (0.3%)
6,500 Birch Telecom Inc. - 144A*............................................... 01/00/00 32,500
15,000 DTI Holdings Inc. - 144A*................................................ 03/01/08 300
16,520 Firstworld Communications, Inc. - 144A*.................................. 04/15/08 826,000
4,000 Onepoint Communications Corp. - 144A*.................................... 06/01/08 4,000
4,000 Startec Global Communications Corp. - 144A*.............................. 05/15/08 4,000
------------
866,800
------------
WIRELESS COMMUNICATIONS (0.1%)
1,800 American Mobile Satellite Corp. - 144A*.................................. 04/01/08 72,000
92,640 Star Choice Communications, Inc. - 144A* (Canada)........................ 12/15/05 223,262
------------
295,262
------------
TOTAL WARRANTS
(IDENTIFIED COST $489,771)........................................................... 1,314,192
------------
</TABLE>
<TABLE>
<C> <S> <C>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- -----------
<C> <S> <C>
SHORT-TERM INVESTMENT (0.4%)
REPURCHASE AGREEMENT (0.4%)
$ 1,361 The Bank of New York 4.63% due 07/01/99 (dated 06/30/99; proceeds $1,361,142) (e)
(IDENTIFIED COST $1,360,967)....................................................... 1,360,967
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $417,958,705) (F)........................................................ 98.2 % 334,102,795
OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 1.8 6,291,182
------ -------------
NET ASSETS................................................................................ 100.0 % $ 340,393,977
------ -------------
------ -------------
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
+ Payment-in-kind security.
++ Currently a zero coupon bond and will pay interest at the rate shown at a
future specified date.
(a) Issuer in bankruptcy.
(b) Non-income producing security; bond in default.
(c) Acquired through exchange offer.
(d) Non-income producing securities.
(e) Collateralized by $1,187,677 U.S. Treasury Bill 0.00% due 07/29/99 valued
at $1,184,789 and $176,149 U.S. Treasury Bond 7.50% due 11/15/24 valued at
$203,398.
(f) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $6,973,403 and the
aggregate gross unrealized depreciation is $90,829,313, resulting in net
unrealized depreciation of $83,855,910.
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (89.4%)
ELECTRIC UTILITIES (37.5%)
85,000 AES Corp.*............................................................................. $ 4,940,625
135,000 Carolina Power & Light Co.............................................................. 5,779,687
130,000 Central & South West Corp.............................................................. 3,038,750
215,865 CINergy Corp........................................................................... 6,907,680
215,000 CMS Energy Corp........................................................................ 9,003,125
130,000 Consolidated Edison, Inc............................................................... 5,882,500
210,000 Constellation Energy Group............................................................. 6,221,250
337,500 DPL, Inc............................................................................... 6,201,562
222,500 DQE, Inc............................................................................... 8,927,812
130,000 DTE Energy Co.......................................................................... 5,200,000
141,216 Duke Energy Corp....................................................................... 7,678,620
140,000 Edison International................................................................... 3,745,000
220,000 Energy East Corp....................................................................... 5,720,000
200,000 Entergy Corp........................................................................... 6,250,000
150,000 FPL Group, Inc......................................................................... 8,193,750
150,000 GPU, Inc............................................................................... 6,328,125
125,000 Hawaiian Electric Industries, Inc...................................................... 4,437,500
215,000 Illinova Corp.......................................................................... 5,858,750
440,000 IPALCO Enterprises, Inc................................................................ 9,322,500
120,000 Kansas City Power & Light Co........................................................... 3,060,000
39,200 Metzler Group, Inc. (The)*............................................................. 1,080,450
135,000 Montana Power Co....................................................................... 9,517,500
195,000 New Century Energies, Inc.............................................................. 7,568,437
115,000 New England Electric System............................................................ 5,764,375
320,000 NiSource Inc........................................................................... 8,260,000
100,000 OGE Energy Corp........................................................................ 2,375,000
225,000 PacifiCorp............................................................................. 4,134,375
220,000 Pinnacle West Capital Corp............................................................. 8,855,000
55,000 Potomac Electric Power Co.............................................................. 1,619,063
210,000 Public Service Company of New Mexico................................................... 4,173,750
115,000 Public Service Enterprise Group, Inc................................................... 4,700,625
200,000 Reliant Energy, Inc.................................................................... 5,525,000
215,000 SCANA Corp............................................................................. 5,025,625
275,000 Southern Co............................................................................ 7,287,500
161,500 Texas Utilities Co..................................................................... 6,661,875
120,000 USEC Inc............................................................................... 1,785,000
190,000 Western Resources, Inc................................................................. 5,058,750
200,000 Wisconsin Energy Corp.................................................................. 5,012,500
------------
217,102,061
------------
ENERGY (9.1%)
153,625 Burlington Resources, Inc.............................................................. 6,644,281
50,000 Columbia Energy Group.................................................................. 3,134,375
230,460 El Paso Energy Corp.................................................................... 8,109,311
183,250 Enron Corp............................................................................. 14,980,688
250,000 Questar Corp........................................................................... 4,781,250
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
120,000 Sempra Energy.......................................................................... $ 2,715,000
295,000 Williams Companies, Inc................................................................ 12,555,938
------------
52,920,843
------------
TELECOMMUNICATIONS (42.8%)
201,932 ALLTEL Corp............................................................................ 14,438,138
243,177 AT&T Corp.............................................................................. 13,572,316
200,000 BCE, Inc. (Canada)..................................................................... 9,862,500
154,320 Bell Atlantic Corp..................................................................... 10,088,670
190,000 Cable & Wireless PLC (ADR) (United Kingdom)............................................ 7,528,750
298,750 CenturyTel Inc......................................................................... 11,875,313
80,000 Cincinnati Bell, Inc................................................................... 1,995,000
260,000 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)..................................... 8,547,500
91,100 Esat Telecom Group PLC (ADR) (Ireland)*................................................ 3,962,850
170,000 Frontier Corp.......................................................................... 10,030,000
55,000 Global Telesystems Group, Inc.*........................................................ 4,451,563
140,000 GTE Corp............................................................................... 10,605,000
67,968 Lucent Technologies Inc................................................................ 4,583,592
259,109 MCI WorldCom, Inc...................................................................... 22,283,374
130,000 MediaOne Group, Inc.*.................................................................. 9,668,750
331,508 Qwest Communications International, Inc.*.............................................. 10,960,483
205,000 RCN Corp.*............................................................................. 8,533,125
318,946 SBC Communications, Inc................................................................ 18,498,868
240,000 Sprint Corp. (FON Group)............................................................... 12,675,000
60,000 Sprint Corp. (PCS Group)*.............................................................. 3,427,500
130,000 Tele Danmark AS (ADR) (Denmark)........................................................ 3,347,500
120,000 Telecom Corp.of New Zealand Ltd. (ADR) (New Zealand)................................... 4,192,500
85,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)..................................... 6,869,063
120,000 Telephone & Data Systems, Inc.......................................................... 8,767,500
51,500 Telstra Corp. Ltd. (ADR) (Australia)................................................... 5,896,750
112,867 U.S. West, Inc......................................................................... 6,630,936
55,000 Vodafone AirTouch PLC (ADR) (United Kingdom)........................................... 10,835,000
20,000 VoiceStream Wireless Corp.*............................................................ 568,750
77,700 Winstar Communications, Inc.*.......................................................... 3,787,875
------------
248,484,166
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $284,479,187)......................................................... 518,507,070
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- --------------------------------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (8.0%)
ELECTRIC UTILITIES (4.9%)
$ 2,250 Consumers Energy Co.
6.875% due 03/01/18.......................................................... $ 2,123,033
2,000 Empresa Nacional de Electricidad Chile 8.125% due 02/01/97..................... 1,610,620
3,000 Indianapolis Power Co.
7.05% due 02/01/24........................................................... 2,774,340
2,500 National Rural Utilities Cooperative Finance Corp. 5.70% due 01/15/10.......... 2,293,450
2,000 National Rural Utilities Cooperative Finance Corp. 5.75% due 11/01/08.......... 1,856,260
2,500 Niagara Mohawk Power Corp. 8.00% due 06/01/04.................................. 2,616,350
1,500 Northern States Power Co. 6.50% due 03/01/28................................... 1,358,505
2,125 Public Service Electric & Gas Co. 6.75% due 01/01/16........................... 2,049,796
3,000 Public Service Electric & Gas Co. 7.00% due 09/01/24........................... 2,804,430
2,000 South Carolina Electric & Gas Co. 7.625% due 06/01/23.......................... 1,975,340
2,000 Southwestern Public Service 8.50% due 02/15/25................................. 2,122,040
5,000 Wisconsin Electric Power Co. 7.125% due 03/15/16............................... 4,737,050
------------
28,321,214
------------
ENERGY (1.0%)
3,000 Coastal Corp.
7.75% due 10/15/35........................................................... 3,003,840
2,000 Panhandle Eastern Corp.
8.625% due 04/15/25.......................................................... 2,126,500
500 Panhandle Holding Co.
7.00 due 07/15/29............................................................ 457,195
------------
5,587,535
------------
TELECOMMUNICATIONS (2.1%)
2,000 360 DEG. Communications Co.
6.65% due 01/15/08........................................................... 1,960,300
2,000 GTE Corp.
7.90% due 02/01/27........................................................... 2,025,100
2,000 GTE North Inc.
5.65% due 11/15/08........................................................... 1,838,280
500 LCI International, Inc.
7.25% due 06/15/07........................................................... 484,990
2,000 Lucent Technologies Inc.
6.45% due 03/15/29........................................................... 1,835,580
2,000 Sprint Capital Corp.
6.875% due 11/15/28.......................................................... 1,824,260
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- --------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 2,000 Sprint Corp.
9.25% due 04/15/22........................................................... $ 2,357,320
------------
12,325,830
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $47,879,843).................................................. 46,234,579
------------
U.S. GOVERNMENT AGENCY (0.2%)
50 Tennessee Valley Authority 8.00% due 03/31/45
(IDENTIFIED COST $1,250,000)................................................. 1,262,500
------------
SHORT-TERM INVESTMENTS (2.0%)
U.S. GOVERNMENT AGENCY (a) (1.9%)
11,300 Federal Home Loan Banks
4.60% due 07/01/99 (AMORTIZED COST $11,300,000).............................. 11,300,000
------------
REPURCHASE AGREEMENT (0.1%)
309 The Bank of New York 4.625% due 07/01/99 (dated 06/30/99; proceeds $308,988)
(b) (IDENTIFIED COST $308,948)............................................... 308,948
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $11,608,948).................................................. 11,608,948
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $345,217,978) (c)........................................................ 99.6 % 577,613,097
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.4 2,510,643
------ -------------
NET ASSETS................................................................................ 100.0 % $ 580,123,740
------ -------------
------ -------------
</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 $318,931 U.S. Treasury Bill 4.71% due 09/30/99 valued at
$315,127.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $238,262,060 and the
aggregate gross unrealized depreciation is $5,866,941, resulting in net
unrealized appreciation of $232,395,119.
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (47.0%)
ACCIDENT & HEALTH INSURANCE (0.8%)
20,400 Torchmark Corp.......................................................................... $ 696,150
-----------
APPAREL (0.8%)
27,000 Kellwood Co............................................................................. 732,375
-----------
AUTO PARTS: O.E.M. (2.4%)
15,500 Dana Corp............................................................................... 713,969
37,140 Delphi Automotive Systems Corp.......................................................... 689,411
10,700 Johnson Controls, Inc................................................................... 741,644
-----------
2,145,024
-----------
BUILDING MATERIALS (0.9%)
15,800 Vulcan Materials Co..................................................................... 762,350
-----------
BUILDING PRODUCTS (0.9%)
13,000 Armstrong World Industries, Inc......................................................... 751,562
-----------
CLOTHING/SHOE/ACCESSORY STORES (0.8%)
15,200 Limited (The), Inc...................................................................... 689,700
-----------
CONSUMER ELECTRONICS/APPLIANCES (0.9%)
10,400 Whirlpool Corp.......................................................................... 769,600
-----------
CONSUMER SUNDRIES (0.9%)
25,000 American Greetings Corp. (Class A)...................................................... 753,125
-----------
CONTAINERS/PACKAGING (0.8%)
23,000 Crown Cork & Seal Co., Inc.............................................................. 655,500
-----------
ELECTRIC UTILITIES (2.4%)
18,000 Public Service Enterprise Group, Inc.................................................... 735,750
23,500 Reliant Energy, Inc..................................................................... 649,187
32,000 TECO Energy, Inc........................................................................ 728,000
-----------
2,112,937
-----------
ELECTRONIC DATA PROCESSING (0.8%)
18,874 Unisys Corp.*........................................................................... 734,923
-----------
FINANCE COMPANIES (2.5%)
17,000 Associates First Capital Corp. (Class A)................................................ 753,312
10,500 Fannie Mae.............................................................................. 717,937
16,000 SLM Holding Corp........................................................................ 733,000
-----------
2,204,249
-----------
FOOD DISTRIBUTORS (0.8%)
28,500 Supervalu, Inc.......................................................................... 732,094
-----------
HOME BUILDING (0.8%)
27,500 Fleetwood Enterprises, Inc.............................................................. 727,031
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INVESTMENT MANAGERS (0.2%)
967 Waddell & Reed Financial, Inc. (Class A)................................................ $ 26,532
4,163 Waddell & Reed Financial, Inc. (Class B)................................................ 112,401
-----------
138,933
-----------
LIFE INSURANCE (2.4%)
23,000 Conseco, Inc............................................................................ 700,062
10,000 Jefferson-Pilot Corp.................................................................... 661,875
14,400 Lincoln National Corp................................................................... 753,300
-----------
2,115,237
-----------
MAJOR BANKS (0.7%)
20,000 KeyCorp................................................................................. 642,500
-----------
MAJOR CHEMICALS (2.5%)
5,600 Dow Chemical Co......................................................................... 710,500
19,000 Hercules, Inc........................................................................... 746,937
16,300 Rohm & Haas Co.......................................................................... 698,862
-----------
2,156,299
-----------
MAJOR PHARMACEUTICALS (0.9%)
15,300 Schering-Plough Corp.................................................................... 810,900
-----------
MAJOR U.S. TELECOMMUNICATIONS (3.5%)
12,550 AT&T Corp............................................................................... 700,447
12,500 Bell Atlantic Corp...................................................................... 817,188
10,400 GTE Corp................................................................................ 787,800
13,000 U.S. West, Inc.......................................................................... 763,750
-----------
3,069,185
-----------
MARINE TRANSPORTATION (0.9%)
26,200 Tidewater, Inc.......................................................................... 799,100
-----------
MEAT/POULTRY/FISH (0.8%)
18,300 Hormel Foods Corp....................................................................... 736,575
-----------
MID - SIZED BANKS (0.7%)
17,000 First Tennessee National Corp........................................................... 651,313
-----------
MOTOR VEHICLES (2.3%)
7,500 DaimlerChrysler AG (Germany)............................................................ 666,563
12,100 Ford Motor Co........................................................................... 682,894
10,500 General Motors Corp..................................................................... 693,000
-----------
2,042,457
-----------
MULTI-SECTOR COMPANIES (0.8%)
29,000 Tenneco, Inc............................................................................ 692,375
-----------
NATURAL GAS (0.8%)
12,200 Consolidated Natural Gas Co............................................................. 741,150
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
NEWSPAPERS (0.3%)
24,002 Hollinger International, Inc. (Class A)................................................. $ 285,024
-----------
OIL REFINING/MARKETING (0.8%)
16,300 Ashland, Inc............................................................................ 654,038
-----------
PAINTS/COATINGS (0.7%)
10,900 PPG Industries, Inc..................................................................... 643,781
-----------
REAL ESTATE INVESTMENT TRUSTS (5.9%)
5,100 Boykin Lodging Co....................................................................... 78,413
10,000 Camden Property Trust................................................................... 277,500
30,000 Equity One, Inc......................................................................... 296,250
10,000 First Industrial Realty Trust, Inc...................................................... 274,375
23,750 Healthcare Realty Trust, Inc............................................................ 498,750
12,600 LTC Properties, Inc..................................................................... 163,800
16,600 Meditrust Corp. (Paired Shares)......................................................... 216,838
26,780 MeriStar Hospitality Corp............................................................... 600,876
79,047 Mid-Atlantic Realty Trust............................................................... 879,398
15,000 Reckson Associates Realty Corp.......................................................... 352,500
74,200 Sunstone Hotel Investors, Inc........................................................... 630,700
19,500 Tanger Factory Outlet Centers, Inc...................................................... 507,000
14,500 TriNet Corporate Realty Trust, Inc...................................................... 401,469
-----------
5,177,869
-----------
RENTAL/LEASING COMPANIES (0.8%)
25,600 Ryder System, Inc....................................................................... 665,600
-----------
SAVINGS & LOAN ASSOCIATIONS (2.3%)
23,800 TCF Financial Corp...................................................................... 663,425
31,800 Washington Federal, Inc................................................................. 711,525
19,000 Washington Mutual, Inc.................................................................. 672,125
-----------
2,047,075
-----------
SMALLER BANKS (0.8%)
12,000 Wilmington Trust Corp................................................................... 688,500
-----------
STEEL/IRON ORE (0.8%)
26,500 USX-U.S. Steel Group.................................................................... 715,500
-----------
TOBACCO (1.6%)
17,300 Philip Morris Companies, Inc............................................................ 695,244
23,500 UST, Inc................................................................................ 687,375
-----------
1,382,619
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $38,641,617)........................................................... 41,322,650
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS (22.9%)
APPAREL (0.4%)
10,000 Warnaco Group, Inc. $3.00............................................................... $ 370,000
-----------
AUTO PARTS: O.E.M. (0.2%)
12,000 BTI Capital Trust $3.25 - 144A**........................................................ 60,000
3,700 Walbro Capital Trust $2.00.............................................................. 98,050
-----------
158,050
-----------
BOOKS/MAGAZINES (1.0%)
25,000 Reader's Digest Association, Inc. $1.93................................................. 925,000
-----------
CABLE TELEVISION (1.6%)
4,400 EchoStar Communications Corp. (Series C) $3.38.......................................... 1,368,400
-----------
COMPUTER SOFTWARE (0.9%)
8,000 Microsoft Corp. (Series A) $2.20........................................................ 799,500
-----------
CONTAINERS/PACKAGING (1.4%)
20,000 Sealed Air Corp. (Series A) $2.00....................................................... 1,250,000
-----------
HOME FURNISHINGS (0.8%)
12,000 Newell Financial Trust I $2.63.......................................................... 667,500
-----------
INDUSTRIAL MACHINERY/COMPONENTS (0.9%)
28,000 Ingersoll-Rand Co. $1.69................................................................ 840,000
-----------
INTERNATIONAL BANKS (1.8%)
30,200 National Australia Bank, Ltd. $1.97 (Australia) (Units)++............................... 917,325
19,500 WBK Strypes Trust $3.14................................................................. 631,312
-----------
1,548,637
-----------
INVESTMENT BANKERS/ BROKERS/SERVICES (0.4%)
15,940 Merrill Lynch & Co., Inc. $2.39 (exchangeable into IMC Global, Inc. common stock)....... 325,774
-----------
LIFE INSURANCE (0.6%)
2,500 American Heritage Life Investment Corp. $4.25........................................... 165,312
15,000 AmerUs Life Holdings, Inc. $2.21........................................................ 408,750
-----------
574,062
-----------
MILITARY/GOV'T/TECHNICAL (0.7%)
12,330 Loral Space & Communications Ltd. (Series C) $3.00 (Bermuda)............................ 621,901
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MOVIES/ENTERTAINMENT (1.1%)
14,000 Premier Parks, Inc. $4.05............................................................... $ 952,000
-----------
OIL REFINING/MARKETING (1.5%)
50,000 Tesoro Petroleum Corp. $1.16............................................................ 787,500
35,000 USX Corp. $1.44 (exchangeable into RTI International Metals, Inc. common stock)......... 520,625
-----------
1,308,125
-----------
OTHER CONSUMER SERVICES (0.8%)
20,000 Cendant Corp. $3.75..................................................................... 688,750
-----------
OTHER TELECOMMUNICATIONS (1.0%)
4,000 Globalstar Telecommunications Ltd. $4.00................................................ 229,752
19,400 Metromedia International Group, Inc. $3.63.............................................. 676,575
-----------
906,327
-----------
PACKAGE GOODS/COSMETICS (1.3%)
13,000 Estee Lauder Co. $3.80.................................................................. 1,121,250
-----------
PROPERTY - CASUALTY INSURERS (0.5%)
40,000 Philadelphia Consolidated Holding Co. $0.70............................................. 415,000
-----------
RAILROADS (0.7%)
11,400 Union Pacific Capital Trust $3.13....................................................... 585,937
-----------
REAL ESTATE INVESTMENT TRUSTS (2.3%)
20,000 Apartment Investment & Management Co. (Series K) $2.00.................................. 538,750
9,000 Equity Residential Properties Trust (Series E) $1.75.................................... 227,250
1,085 Equity Residential Properties Trust (Series J) $2.15.................................... 30,380
14,130 FelCor Lodging Trust, Inc. (Series A) $1.95............................................. 287,016
40,000 SL Green Realty Corp. $2.00............................................................. 907,500
-----------
1,990,896
-----------
SMALLER BANKS (1.0%)
30,000 CNB Capital Trust I $1.50............................................................... 905,625
-----------
TELECOMMUNICATIONS EQUIPMENT (1.0%)
4,500 Qualcomm Financial Trust $2.88.......................................................... 909,562
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
UNREGULATED POWER GENERATION (1.0%)
19,000 CalEnergy Capital Trust III $3.25....................................................... $ 893,000
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST $18,662,901)........................................................... 20,125,296
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
CORPORATE BONDS (24.4%)
CONVERTIBLE BONDS (8.6%)
ASSISTED LIVING SERVICES (0.8%)
$ 680 American Retirement Corp. 5.75% due 10/01/02............................................ 516,800
245 Emeritus Corp. - 144A** 6.25% due 01/01/06.............................................. 162,315
-----------
679,115
-----------
AUTO PARTS: O.E.M. (0.3%)
350 MascoTech, Inc. 4.50% due 12/15/03...................................................... 288,750
-----------
CELLULAR TELEPHONE (0.2%)
400 U.S. Cellular Corp. 0.00% due 06/15/15.................................................. 210,872
-----------
CLOTHING/SHOE/ACCESSORY STORES (1.8%)
890 Genesco Inc. 5.50% due 04/15/05......................................................... 816,023
765 Nine West Group, Inc. 5.50% due 07/15/03................................................ 765,000
-----------
1,581,023
-----------
INDUSTRIAL MACHINERY/COMPONENTS (0.2%)
200 Thermo Fibertek, Inc. - 144A** 4.50% due 07/15/04....................................... 168,000
-----------
MAJOR U.S. TELECOMMUNICATIONS (2.4%)
800 Bell Atlantic Financial Service - 144A** 4.25% due 09/15/05 (exchangeable into Cable &
Wireless Communications common stock)................................................. 808,000
1,300 Bell Atlantic Financial Service - 144A** 5.75% due 04/01/03 (exchangeable into Telecom
Corporation of New Zealand common stock).............................................. 1,334,528
-----------
2,142,528
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PRECISION INSTRUMENTS (0.1%)
$ 100 Thermo Optek Inc. - 144A** 5.00% due 10/15/00........................................... $ 98,750
-----------
REAL ESTATE INVESTMENT TRUSTS (0.9%)
350 Capstar Hotel Corp.
4.75% due 10/15/04.................................................................... 260,971
575 Healthcare Realty Trust
6.55% due 03/14/02.................................................................... 511,842
-----------
772,813
-----------
RENTAL/LEASING COMPANIES (1.1%)
1,000 Financial Federal Corp.
4.50% due 05/01/05.................................................................... 934,520
-----------
SERVICES TO THE HEALTH INDUSTRY (0.8%)
800 Concentra Managed Care, Inc. 4.50% due 03/15/03......................................... 752,496
-----------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST $7,907,625)............................................................ 7,628,867
-----------
NON-CONVERTIBLE BONDS (15.8%)
BROADCASTING (1.9%)
600 EZ Communications, Inc.
9.75% due 12/01/05.................................................................... 650,670
1,000 Young Broadcasting Corp.
11.75% due 11/15/04................................................................... 1,060,000
-----------
1,710,670
-----------
BUILDING MATERIALS (0.6%)
500 USG Corp. (Series B)
9.25% due 09/15/01.................................................................... 526,660
-----------
ELECTRONIC DATA PROCESSING (2.2%)
1,750 Unisys Corp. (Series B)
12.00% due 04/15/03................................................................... 1,911,875
-----------
MEDICAL/NURSING SERVICES (0.8%)
700 Healthsouth Corp.
9.50% due 04/01/01.................................................................... 714,000
-----------
METALS FABRICATIONS (0.7%)
600 Ivaco, Inc. (Canada)
11.50% due 09/15/05................................................................... 618,750
-----------
OTHER METALS/MINERALS (3.0%)
2,500 Cyprus Amax Minerals Co.
10.125% due 04/01/02.................................................................. 2,641,000
-----------
OTHER TELECOMMUNICATIONS (1.5%)
1,150 Sprint Spectrum L.P.
11.00% due 08/15/06................................................................... 1,303,571
-----------
PAPER (1.0%)
800 SD Warren Co. (Series B)
12.00% due 12/15/04................................................................... 858,000
-----------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PRINTING/FORMS (0.8%)
$ 800 Big Flower Press, Inc.
8.875% due 07/01/07................................................................... $ 752,000
-----------
SPECIALTY CHEMICALS (2.3%)
1,875 Huntsman Polymers Corp.
11.75% due 12/01/04................................................................... 1,985,156
-----------
TEXTILES (1.0%)
862 Dan River, Inc.
10.125% due 12/15/03.................................................................. 879,240
-----------
TOTAL NON-CONVERTIBLE BONDS
(IDENTIFIED COST $14,287,020)........................................................... 13,900,922
-----------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $22,194,645)........................................................... 21,529,789
-----------
SHORT-TERM INVESTMENT (a) (4.3%)
U.S. GOVERNMENT AGENCY
3,800 Federal Home Loan Banks 4.60% due 07/01/99 (AMORTIZED COST $3,800,000).................. 3,800,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $83,299,163) (B).......................................................... 98.6 % $ 86,777,735
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................. 1.4 1,189,319
------ ------------
NET ASSETS................................................................................. 100.0 % $ 87,967,054
------ ------------
------ ------------
</TABLE>
- ---------------------
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
++ Consists of one or more class of securities traded together as a unit;
stocks 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 $8,877,148 and the
aggregate gross unrealized depreciation is $5,398,576, resulting in net
unrealized appreciation of $3,478,572.
SEE NOTES TO FINANCIAL STATEMENTS
41
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (75.5%)
AEROSPACE (2.0%)
232,000 Goodrich (B.F.) Co. (The)........................................................... $ 9,860,000
253,000 Lockheed Martin Corp................................................................ 9,424,250
400,000 United Technologies Corp............................................................ 28,675,000
--------------
47,959,250
--------------
ALUMINUM (1.4%)
242,000 Alcan Aluminium Ltd. (Canada)....................................................... 7,728,875
440,000 Alcoa Inc........................................................................... 27,225,000
--------------
34,953,875
--------------
APPAREL (0.2%)
121,100 VF Corp............................................................................. 5,177,025
--------------
AUTO PARTS: O.E.M. (2.7%)
139,300 Dana Corp........................................................................... 6,416,506
1,481,654 Delphi Automotive Systems Corp...................................................... 27,503,202
60,600 Johnson Controls, Inc............................................................... 4,200,337
512,000 TRW Inc............................................................................. 28,096,000
--------------
66,216,045
--------------
AUTOMOTIVE AFTERMARKET (1.1%)
452,300 Goodyear Tire & Rubber Co........................................................... 26,600,894
--------------
BEVERAGES - NON-ALCOHOLIC (1.2%)
22,000 Coca Cola Co........................................................................ 1,375,000
740,000 PepsiCo, Inc........................................................................ 28,628,750
--------------
30,003,750
--------------
BUILDING PRODUCTS (0.2%)
64,200 Armstrong World Industries, Inc..................................................... 3,711,562
--------------
COMPUTER HARDWARE (1.1%)
208,000 International Business Machines Corp................................................ 26,884,000
--------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (2.3%)
463,000 Caterpillar, Inc.................................................................... 27,780,000
742,400 Deere & Co.......................................................................... 29,417,600
--------------
57,197,600
--------------
CONSUMER ELECTRONICS/APPLIANCES (0.5%)
160,000 Whirlpool Corp...................................................................... 11,840,000
--------------
CONTAINERS/PACKAGING (0.2%)
198,700 Crown Cork & Seal Co., Inc.......................................................... 5,662,950
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DEPARTMENT STORES (2.2%)
663,800 May Department Stores Co............................................................ $ 27,132,825
598,500 Sears, Roebuck & Co................................................................. 26,670,656
--------------
53,803,481
--------------
DISCOUNT CHAINS (0.2%)
85,800 Dayton Hudson Corp.................................................................. 5,577,000
--------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.5%)
106,000 Honeywell, Inc...................................................................... 12,282,750
--------------
DIVERSIFIED FINANCIAL SERVICES (0.4%)
105,000 Providian Financial Corp............................................................ 9,817,500
--------------
DIVERSIFIED MANUFACTURING (1.4%)
300,000 Minnesota Mining & Manufacturing Co................................................. 26,081,250
94,000 Tyco International Ltd. (Bermuda)................................................... 8,906,500
--------------
34,987,750
--------------
ELECTRIC UTILITIES (3.1%)
105,500 Dominion Resources, Inc............................................................. 4,569,469
511,000 FPL Group, Inc...................................................................... 27,913,375
271,000 GPU, Inc............................................................................ 11,432,812
199,400 Reliant Energy, Inc................................................................. 5,508,425
705,600 Unicom Corp......................................................................... 27,209,700
--------------
76,633,781
--------------
ENGINEERING & CONSTRUCTION (0.2%)
107,100 Fluor Corp.......................................................................... 4,337,550
--------------
FINANCE COMPANIES (2.8%)
675,000 Associates First Capital Corp. (Class A)............................................ 29,910,937
146,000 Fannie Mae.......................................................................... 9,982,750
591,000 Household International, Inc........................................................ 27,998,625
--------------
67,892,312
--------------
FOOD CHAINS (1.5%)
651,900 Albertson's, Inc.................................................................... 33,613,594
77,400 Winn-Dixie Stores, Inc.............................................................. 2,858,962
--------------
36,472,556
--------------
FOOD DISTRIBUTORS (0.5%)
280,000 Supervalu, Inc...................................................................... 7,192,500
143,300 SYSCO Corp.......................................................................... 4,272,131
--------------
11,464,631
--------------
FOREST PRODUCTS (1.1%)
400,000 Weyerhaeuser Co..................................................................... 27,500,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HOME FURNISHINGS (0.4%)
199,000 Newell Rubbbermaid, Inc............................................................. $ 9,253,500
--------------
INTEGRATED OIL COMPANIES (5.1%)
325,000 Atlantic Richfield Co............................................................... 27,157,812
82,000 BP Amoco PLC (ADR) (United Kingdom)................................................. 8,897,000
340,000 Exxon Corp.......................................................................... 26,222,500
116,500 Kerr-McGee Corp..................................................................... 5,846,844
270,000 Mobil Corp.......................................................................... 26,730,000
478,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)....................................... 28,799,500
--------------
123,653,656
--------------
LIFE INSURANCE (1.1%)
117,000 Aegon N.V. (ARS) (Netherlands)...................................................... 8,658,000
97,000 Jefferson-Pilot Corp................................................................ 6,420,187
226,000 Lincoln National Corp............................................................... 11,822,625
--------------
26,900,812
--------------
MAJOR BANKS (2.5%)
385,000 Bank of America Corp................................................................ 28,225,312
822,000 KeyCorp............................................................................. 26,406,750
45,900 Morgan (J.P.) & Co., Inc............................................................ 6,448,950
--------------
61,081,012
--------------
MAJOR CHEMICALS (3.0%)
210,000 Dow Chemical Co..................................................................... 26,643,750
135,000 Du Pont (E.I.) de Nemours & Co., Inc................................................ 9,222,187
442,500 Eastman Chemical Co................................................................. 22,899,375
120,600 Hercules, Inc....................................................................... 4,741,087
235,000 Monsanto Co......................................................................... 9,267,813
--------------
72,774,212
--------------
MAJOR PHARMACEUTICALS (4.2%)
620,000 Abbott Laboratories................................................................. 28,210,000
515,000 American Home Products Corp......................................................... 29,612,500
409,000 Bristol-Myers Squibb Co............................................................. 28,808,938
178,000 Schering-Plough Corp................................................................ 9,434,000
95,000 Smithkline Beecham PLC (ADR) (United Kingdom)....................................... 6,275,938
--------------
102,341,376
--------------
MAJOR U.S. TELECOMMUNICATIONS (2.8%)
462,000 Bell Atlantic Corp.................................................................. 30,203,250
119,000 GTE Corp............................................................................ 9,014,250
478,000 U.S. West, Inc...................................................................... 28,082,500
--------------
67,300,000
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MANAGED HEALTH CARE (1.1%)
300,000 Aetna Inc........................................................................... $ 26,831,250
--------------
MEAT/POULTRY/FISH (0.2%)
198,400 ConAgra, Inc........................................................................ 5,282,400
--------------
METALS FABRICATIONS (0.6%)
725,700 Timken Co. (The).................................................................... 14,151,150
--------------
MILITARY/GOV'T/TECHNICAL (1.1%)
384,000 Raytheon Co. (Class B).............................................................. 27,024,000
--------------
MOTOR VEHICLES (2.7%)
115,000 DaimlerChrysler AG (Germany)........................................................ 10,220,625
505,000 Ford Motor Co....................................................................... 28,500,938
418,000 General Motors Corp................................................................. 27,588,000
--------------
66,309,563
--------------
MULTI-SECTOR COMPANIES (2.4%)
250,000 General Electric Co................................................................. 28,250,000
1,276,300 Tenneco, Inc........................................................................ 30,471,663
--------------
58,721,663
--------------
NATURAL GAS (1.2%)
469,200 Consolidated Natural Gas Co......................................................... 28,503,900
--------------
OFFICE EQUIPMENT/SUPPLIES (1.6%)
452,200 Pitney Bowes, Inc................................................................... 29,053,850
174,000 Xerox Corp.......................................................................... 10,276,875
--------------
39,330,725
--------------
OIL & GAS PRODUCTION (1.2%)
670,000 Burlington Resources, Inc........................................................... 28,977,500
--------------
OIL REFINING/MARKETING (1.2%)
321,700 Ashland, Inc........................................................................ 12,908,213
160,700 Sunoco, Inc......................................................................... 4,851,131
367,000 USX-Marathon Group.................................................................. 11,950,438
--------------
29,709,782
--------------
OIL/GAS TRANSMISSION (1.8%)
798,600 El Paso Energy Corp................................................................. 28,100,738
142,000 Enron Corp.......................................................................... 11,608,500
121,600 Sonat, Inc.......................................................................... 4,028,000
--------------
43,737,238
--------------
OTHER METALS/MINERALS (1.3%)
500,000 Phelps Dodge Corp................................................................... 30,968,750
--------------
PACKAGE GOODS/COSMETICS (4.1%)
165,000 Avon Products, Inc.................................................................. 9,157,500
650,000 Gillette Co......................................................................... 26,650,000
213,000 International Flavors & Fragrances, Inc............................................. 9,451,875
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
463,000 Kimberly-Clark Corp................................................................. $ 26,391,000
300,000 Procter & Gamble Co................................................................. 26,775,000
--------------
98,425,375
--------------
PACKAGED FOODS (2.2%)
473,600 Quaker Oats Company (The)........................................................... 31,435,200
955,300 Sara Lee Corp....................................................................... 21,673,369
--------------
53,108,569
--------------
PAINTS/COATINGS (1.4%)
591,100 PPG Industries, Inc................................................................. 34,911,844
--------------
PAPER (1.5%)
532,000 International Paper Co.............................................................. 26,866,000
232,000 Mead Corp........................................................................... 9,686,000
--------------
36,552,000
--------------
PHOTOGRAPHIC PRODUCTS (1.1%)
380,000 Eastman Kodak Co.................................................................... 25,745,000
--------------
RAILROADS (1.5%)
867,000 Burlington Northern Santa Fe Corp................................................... 26,877,000
230,000 CSX Corp............................................................................ 10,421,875
--------------
37,298,875
--------------
RECREATIONAL PRODUCTS/TOYS (0.1%)
84,700 Brunswick Corp...................................................................... 2,361,013
--------------
RENTAL/LEASING COMPANIES (1.2%)
1,115,000 Ryder System, Inc................................................................... 28,990,000
--------------
TOBACCO (0.1%)
112,300 UST, Inc............................................................................ 3,284,775
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $1,587,237,179).................................................... 1,840,506,202
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ----------
<C> <S> <C>
SHORT-TERM INVESTMENTS (18.6%)
U.S. GOVERNMENT AGENCIES (a) (18.2%)
$ 138,200 Federal Home Loan Banks 4.60% due 07/01/99.......................................... 138,200,000
305,000 Student Loan Marketing Assoc. 4.60% due 07/01/99.................................... 305,000,000
--------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $443,200,000)....................................................... 443,200,000
--------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.4%)
$ 9,276 The Bank of New York 4.625% due 07/01/99 (dated 06/30/99; proceeds $9,276,697) (b)
(IDENTIFIED COST $9,275,506)...................................................... $ 9,275,506
--------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $452,475,506)...................................................... 452,475,506
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $2,039,712,685) (c).................................................... 94.1 % 2,292,981,708
OTHER ASSETS IN EXCESS OF LIABILITIES................................................... 5.9 142,960,259
------ ---------------
NET ASSETS.............................................................................. 100.0 % $ 2,435,941,967
------ ---------------
------ ---------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
ARS American Registered Share.
(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 $9,647,942 U.S. Treasury Note 5.375% due 06/30/03 valued
at $9,461,016.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $285,069,070 and the
aggregate gross unrealized depreciation is $31,800,047, resulting in net
unrealized appreciation of $253,269,023.
SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (99.2%)
ADVERTISING (1.3%)
8,000 Interpublic Group of Companies, Inc.................................................... $ 693,000
33,000 Valassis Communications, Inc.*......................................................... 1,208,625
------------
1,901,625
------------
ALUMINUM (0.7%)
16,500 Alcoa Inc.............................................................................. 1,020,937
------------
AUTO PARTS: O.E.M. (0.4%)
22,000 Gentex Corp.*.......................................................................... 616,000
------------
AUTOMOTIVE AFTERMARKET (0.9%)
15,000 SPX Corp............................................................................... 1,252,500
------------
BIOTECHNOLOGY (1.8%)
18,000 Amgen Inc.*............................................................................ 1,094,625
22,000 Biogen, Inc.*.......................................................................... 1,414,875
------------
2,509,500
------------
BROADCASTING (0.4%)
7,500 Clear Channel Communications, Inc.*.................................................... 517,031
------------
BUILDING PRODUCTS (1.7%)
50,000 American Standard Companies, Inc.*..................................................... 2,400,000
------------
CELLULAR TELEPHONE (1.5%)
11,000 Vodafone AirTouch PLC (ADR) (United Kingdom)........................................... 2,167,000
------------
CLOTHING/SHOE/ACCESSORY STORES (3.0%)
28,000 Abercrombie & Fitch Co. (Class A)*..................................................... 1,344,000
30,000 American Eagle Outfitters, Inc.*....................................................... 1,365,000
31,500 Intimate Brands, Inc................................................................... 1,492,312
------------
4,201,312
------------
COMPUTER COMMUNICATIONS (3.2%)
40,000 Adaptec, Inc.*......................................................................... 1,410,000
32,000 Cisco Systems, Inc.*................................................................... 2,062,000
38,000 Computer Network Technology Corp.*..................................................... 819,375
1,400 Juniper Networks, Inc.*................................................................ 208,512
------------
4,499,887
------------
COMPUTER HARDWARE (1.5%)
6,500 Hewlett-Packard Co..................................................................... 653,250
12,000 International Business Machines Corp................................................... 1,551,000
------------
2,204,250
------------
COMPUTER SOFTWARE (5.1%)
30,000 Citrix Systems, Inc.*.................................................................. 1,685,625
28,000 Compuware Corp.*....................................................................... 889,000
18,000 Mercury Interactive Corp.*............................................................. 636,750
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
35,000 Microsoft Corp.*....................................................................... $ 3,154,375
25,000 Oracle Corp.*.......................................................................... 928,125
------------
7,293,875
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.4%)
12,500 Manitowoc Co., Inc..................................................................... 520,312
------------
CONTAINERS/PACKAGING (1.4%)
30,000 Sealed Air Corp.*...................................................................... 1,946,250
------------
CONTRACT DRILLING (2.3%)
68,000 ENSCO International Inc................................................................ 1,355,750
100,000 Rowan Companies, Inc.*................................................................. 1,843,750
------------
3,199,500
------------
DEPARTMENT STORES (1.3%)
20,000 Federated Department Stores, Inc.*..................................................... 1,058,750
15,000 Penney (J.C.) Co., Inc................................................................. 728,437
------------
1,787,187
------------
DISCOUNT CHAINS (2.1%)
20,000 BJ's Wholesale Club, Inc.*............................................................. 601,250
10,000 Costco Companies, Inc.*................................................................ 800,000
40,000 Dollar General Corp.................................................................... 1,160,000
10,000 Wal-Mart Stores, Inc................................................................... 482,500
------------
3,043,750
------------
DIVERSIFIED ELECTRONIC PRODUCTS (4.3%)
15,000 Gemstar International Group Ltd. (Virgin Islands)*..................................... 978,750
42,500 Harris Corp............................................................................ 1,665,469
8,000 Honeywell, Inc......................................................................... 927,000
25,000 Rockwell International Corp............................................................ 1,518,750
6,000 Uniphase Corp.*........................................................................ 996,000
------------
6,085,969
------------
DIVERSIFIED FINANCIAL SERVICES (0.8%)
24,000 Citigroup Inc.......................................................................... 1,140,000
------------
DIVERSIFIED MANUFACTURING (3.5%)
30,000 AlliedSignal, Inc...................................................................... 1,890,000
15,000 Pentair, Inc........................................................................... 686,250
25,000 Tyco International Ltd. (Bermuda)...................................................... 2,368,750
------------
4,945,000
------------
DRUGSTORE CHAINS (0.6%)
18,000 CVS Corp............................................................................... 913,500
------------
E.D.P. PERIPHERALS (1.4%)
38,000 Electronics for Imaging, Inc.*......................................................... 1,952,250
------------
ELECTRIC UTILITIES (1.4%)
35,000 AES Corp. (The)*....................................................................... 2,034,375
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL PRODUCTS (1.1%)
80,000 American Power Conversion Corp.*....................................................... $ 1,605,000
------------
ELECTRONIC COMPONENTS (1.9%)
22,000 Flextronics International, Ltd.*....................................................... 1,215,500
22,000 Solectron Corp.*....................................................................... 1,467,125
------------
2,682,625
------------
ELECTRONIC DATA PROCESSING (0.9%)
18,000 Sun Microsystems, Inc.*................................................................ 1,239,750
------------
ENGINEERING & CONSTRUCTION (0.8%)
20,500 Dycom Industries, Inc.*................................................................ 1,148,000
------------
FINANCE COMPANIES (1.2%)
11,000 Capital One Financial Corp............................................................. 612,562
37,500 MBNA Corp.............................................................................. 1,148,437
------------
1,760,999
------------
FLUID CONTROLS (1.0%)
30,000 Parker-Hannifin Corp................................................................... 1,372,500
------------
GENERIC DRUGS (0.5%)
18,000 Barr Laboratories, Inc.*............................................................... 717,750
------------
INDUSTRIAL MACHINERY/COMPONENTS (1.5%)
16,000 Illinois Tool Works Inc................................................................ 1,312,000
12,500 Ingersoll-Rand Co...................................................................... 807,812
------------
2,119,812
------------
INTEGRATED OIL COMPANIES (1.7%)
15,000 Amerada Hess Corp...................................................................... 892,500
18,000 Atlantic Richfield Co.................................................................. 1,504,125
------------
2,396,625
------------
INTERNET SERVICES (1.3%)
10,000 America Online, Inc.*.................................................................. 1,105,000
4,000 Yahoo! Inc.*........................................................................... 688,750
------------
1,793,750
------------
MAJOR BANKS (1.7%)
12,000 Bank of America Corp................................................................... 879,750
35,000 Wells Fargo & Co....................................................................... 1,496,250
------------
2,376,000
------------
MAJOR CHEMICALS (3.1%)
6,000 Dow Chemical Co........................................................................ 761,250
25,000 Du Pont (E.I.) de Nemours & Co., Inc................................................... 1,707,812
44,000 Rohm & Haas Co......................................................................... 1,886,500
------------
4,355,562
------------
MAJOR PHARMACEUTICALS (1.6%)
32,000 Bristol-Myers Squibb Co................................................................ 2,254,000
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR U.S. TELECOMMUNICATIONS (2.4%)
20,000 ALLTEL Corp............................................................................ $ 1,430,000
12,000 AT&T Corp.............................................................................. 669,750
12,000 MCI WorldCom, Inc.*.................................................................... 1,032,000
5,000 Sprint Corp. (FON Group)............................................................... 264,062
------------
3,395,812
------------
MANAGED HEALTH CARE (1.6%)
20,000 United HealthCare Corp................................................................. 1,252,500
12,000 Wellpoint Health Networks, Inc.*....................................................... 1,018,500
------------
2,271,000
------------
MEDIA CONGLOMERATES (1.2%)
50,000 News Corporation Ltd. (The) (ADR) (Australia).......................................... 1,765,625
------------
MEDICAL SPECIALTIES (0.2%)
7,500 Boston Scientific Corp.*............................................................... 329,531
------------
MEDICAL/NURSING SERVICES (0.7%)
65,000 HEALTHSOUTH Corp.*..................................................................... 970,937
------------
MILITARY/GOV'T/TECHNICAL (0.7%)
15,000 General Dynamics Corp.................................................................. 1,027,500
------------
NEWSPAPERS (1.0%)
40,000 New York Times Co. (The) (Class A)..................................................... 1,472,500
------------
OIL & GAS PRODUCTION (0.8%)
30,000 Apache Corp............................................................................ 1,170,000
------------
OIL REFINING/MARKETING (0.8%)
35,000 USX-Marathon Group..................................................................... 1,139,688
------------
OILFIELD SERVICES/EQUIPMENT (2.5%)
40,000 BJ Services Co.*....................................................................... 1,177,500
20,000 Schlumberger, Ltd...................................................................... 1,273,750
25,000 Smith International, Inc.*............................................................. 1,085,938
------------
3,537,188
------------
OTHER PHARMACEUTICALS (1.4%)
10,000 Allergan, Inc.......................................................................... 1,110,000
18,000 Biovail Corporation International (Canada)*............................................ 919,125
------------
2,029,125
------------
PACKAGE GOODS/COSMETICS (1.2%)
30,000 Avon Products, Inc..................................................................... 1,665,000
------------
PAPER (1.2%)
38,000 Willamette Industries, Inc............................................................. 1,750,375
------------
PRECIOUS METALS (0.5%)
38,000 Barrick Gold Corp. (Canada)............................................................ 736,250
------------
PROPERTY - CASUALTY INSURERS (0.6%)
25,000 St. Paul Companies, Inc................................................................ 795,313
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
46
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RESTAURANTS (1.2%)
50,000 Foodmaker, Inc.*....................................................................... $ 1,418,750
5,500 Outback Steakhouse, Inc.*.............................................................. 215,188
------------
1,633,938
------------
RETAIL - SPECIALTY (4.1%)
16,000 Circuit City Stores, Inc.-Circuit City Group........................................... 1,488,000
30,000 Staples, Inc.*......................................................................... 926,250
22,000 Tiffany & Co........................................................................... 2,123,000
35,000 Williams-Sonoma, Inc.*................................................................. 1,218,438
------------
5,755,688
------------
SEMICONDUCTORS (3.5%)
10,000 Analog Devices, Inc.*.................................................................. 501,875
25,000 LSI Logic Corp.*....................................................................... 1,153,125
10,000 Maxim Integrated Products, Inc.*....................................................... 665,000
20,000 STMicroelectronics NV (Netherlands).................................................... 1,387,500
5,500 Texas Instruments, Inc................................................................. 797,500
7,500 Vitesse Semiconductor Corp.*........................................................... 509,063
------------
5,014,063
------------
TELECOMMUNICATIONS (2.5%)
35,000 Cincinnati Bell, Inc................................................................... 872,813
45,000 Frontier Corp.......................................................................... 2,655,000
------------
3,527,813
------------
TELECOMMUNICATIONS EQUIPMENT (8.2%)
22,000 Comverse Technology, Inc.*............................................................. 1,658,250
45,000 General Instrument Corp.*.............................................................. 1,912,500
15,000 Lucent Technologies Inc................................................................ 1,011,563
15,000 Motorola, Inc.......................................................................... 1,421,250
13,000 Nokia Corp. (ADR) (Finland)............................................................ 1,190,313
22,000 Nortel Networks Corp. (Canada)......................................................... 1,909,875
10,000 QUALCOMM Inc.*......................................................................... 1,435,000
15,000 Tellabs, Inc.*......................................................................... 1,013,438
------------
11,552,189
------------
TOBACCO (1.4%)
50,000 Philip Morris Companies, Inc........................................................... 2,009,375
------------
TRUCKING (1.0%)
30,000 USFreightways Corp..................................................................... 1,380,000
------------
UNREGULATED POWER GENERATION (0.6%)
15,000 Calpine Corp.*......................................................................... 810,000
------------
WHOLESALE DISTRIBUTORS (0.6%)
15,000 Grainger (W.W.), Inc................................................................... 807,188
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $131,208,454)......................................................... 140,520,481
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (5.5%)
U.S. GOVERNMENT AGENCY (a) (4.7%)
$ 6,600 Federal Home Loan Banks 4.60% due 07/01/99 (AMORTIZED COST $6,600,000)................. $ 6,600,000
------------
REPURCHASE AGREEMENT (0.8%)
1,109 The Bank of New York 4.625% due 07/01/99 (dated 06/30/99; proceeds $1,109,723) (b)
(IDENTIFIED COST $1,109,580)......................................................... 1,109,580
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $7,709,580)........................................................... 7,709,580
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $138,918,034) (C)........................................................ 104.7 % 148,230,061
LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (4.7) (6,645,711)
------ -------------
NET ASSETS................................................................................ 100.0 % $ 141,584,350
------ -------------
------ -------------
</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 $980,154 U.S. Treasury Bond 7.50% due 11/15/24 valued at
$1,131,771.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $10,283,395 and the
aggregate gross unrealized depreciation is $971,368, resulting in net
unrealized appreciation of $9,312,027.
SEE NOTES TO FINANCIAL STATEMENTS
47
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS (98.9%)
AUSTRALIA (2.6%)
BUILDING MATERIALS
1,050,000 Pioneer International Ltd............................................................. $ 2,694,326
------------
CONTAINERS/PACKAGING
500,000 Amcor Ltd............................................................................. 2,798,633
------------
INTERNATIONAL BANKS
335,000 Australia & New Zealand Banking Group Ltd............................................. 2,480,390
------------
OIL & GAS PRODUCTION
820,000 Santos Ltd............................................................................ 2,705,324
------------
PRECIOUS METALS
3,300,000 Normandy Mining Ltd................................................................... 2,212,647
------------
TOTAL AUSTRALIA....................................................................... 12,891,320
------------
CANADA (2.6%)
ALUMINUM
90,000 Alcan Aluminium Ltd................................................................... 2,874,368
------------
CANADIAN OIL & GAS
135,000 Imperial Oil Ltd...................................................................... 2,582,320
------------
INTERNATIONAL BANKS
46,000 Toronto-Dominion Bank................................................................. 2,097,623
------------
MULTI-SECTOR COMPANIES
175,000 EdperBrascan Corp. (Class A).......................................................... 2,683,939
------------
OIL/GAS TRANSMISSION
115,400 Enbridge Inc.......................................................................... 2,660,712
------------
TOTAL CANADA.......................................................................... 12,898,962
------------
FRANCE (7.3%)
AUTOMOTIVE AFTERMARKET
80,000 Compagnie Generale des Etablissements Michelin (B Shares)............................. 3,279,916
------------
BUILDING MATERIALS
35,000 Lafarge S.A........................................................................... 3,335,104
------------
CONTAINERS/PACKAGING
65,000 Compagnie Generale d'Industrie et de Participations................................... 3,150,625
------------
DIVERSIFIED MANUFACTURING
20,000 Compagnie de Saint-Gobain............................................................. 3,193,515
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL PRODUCTS
26,000 Alcatel............................................................................... $ 3,667,891
------------
FARMING/SEEDS/MILLING
23,000 Eridania Beghin-Say S.A............................................................... 3,304,100
------------
INTEGRATED OIL COMPANIES
23,500 Elf Aquitaine S.A..................................................................... 3,456,076
------------
INTERNATIONAL BANKS
40,000 Banque Nationale de Paris............................................................. 3,340,272
18,500 Societe Generale (Series A)........................................................... 3,267,565
------------
6,607,837
------------
MULTI-SECTOR COMPANIES
5,250 Societe Eurafrance S.A................................................................ 3,266,377
------------
OIL REFINING/MARKETING
26,000 Total S.A. (B Shares)................................................................. 3,361,562
------------
TOTAL FRANCE.......................................................................... 36,623,003
------------
GERMANY (8.0%)
APPAREL
2,000 Hugo Boss AG (Pref.).................................................................. 2,687,100
------------
DIVERSIFIED ELECTRONIC PRODUCTS
44,000 Siemens AG............................................................................ 3,401,455
------------
DIVERSIFIED MANUFACTURING
105,000 MAN AG................................................................................ 3,591,930
------------
ENGINEERING & CONSTRUCTION
110,000 Bilfinger & Berger Bau AG............................................................. 2,722,756
------------
INTERNATIONAL BANKS
110,000 Commerzbank AG........................................................................ 3,348,023
------------
MAJOR CHEMICALS
80,000 BASF AG............................................................................... 3,542,838
80,000 Bayer AG.............................................................................. 3,340,272
------------
6,883,110
------------
MOTOR VEHICLES
37,500 DaimlerChrysler AG.................................................................... 3,255,525
------------
MULTI-SECTOR COMPANIES
80,000 RWE AG................................................................................ 3,711,505
150,000 Thyssen Krupp AG*..................................................................... 3,306,683
60,000 VEBA AG............................................................................... 3,534,570
------------
10,552,758
------------
SHOE MANUFACTURING
34,500 Adidas-Salomon AG..................................................................... 3,431,866
------------
TOTAL GERMANY......................................................................... 39,874,523
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HONG KONG (1.6%)
REAL ESTATE
235,000 Cheung Kong (Holdings) Ltd............................................................ $ 2,089,777
330,000 Henderson Land Development Co., Ltd................................................... 1,896,845
------------
3,986,622
------------
TELECOMMUNICATIONS
800,000 Hong Kong Telecommunications Ltd...................................................... 2,067,224
------------
UTILITIES
400,000 CLP Holdings Ltd...................................................................... 1,943,499
------------
TOTAL HONG KONG....................................................................... 7,997,345
------------
ITALY (2.5%)
INTEGRATED OIL COMPANIES
500,000 Ente Nazionale Idrocarburi SpA........................................................ 2,991,982
------------
INTERNATIONAL BANKS
235,000 Istituto Bancario San Paolo di Torino SpA............................................. 3,205,917
------------
MULTI-SECTOR COMPANIES
2,000,000 Montedison SpA........................................................................ 3,265,860
------------
TELECOMMUNICATIONS
575,000 Telecom Italia SpA.................................................................... 3,125,821
------------
TOTAL ITALY........................................................................... 12,589,580
------------
JAPAN (16.0%)
AIR FREIGHT/DELIVERY SERVICES
280,000 Yamato Transport Co., Ltd............................................................. 4,874,587
------------
ALCOHOLIC BEVERAGES
370,000 Kirin Brewery Co., Ltd................................................................ 4,426,568
------------
CONSUMER ELECTRONICS/APPLIANCES
390,000 Sharp Corp............................................................................ 4,601,485
46,000 Sony Corp............................................................................. 4,952,970
------------
9,554,455
------------
DIVERSIFIED ELECTRONIC PRODUCTS
80,000 Kyocera Corp.......................................................................... 4,686,469
235,000 Matsushita Electric Industrial Co., Ltd............................................... 4,556,518
400,000 NEC Corp.............................................................................. 4,966,997
------------
14,209,984
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRICAL PRODUCTS
470,000 Matsushita Electric Works, Ltd........................................................ $ 4,529,373
------------
ELECTRONIC COMPONENTS
48,000 TDK Corp.............................................................................. 4,384,158
------------
FINANCE COMPANIES
50,000 Acom Co., Ltd......................................................................... 4,311,056
------------
HOME BUILDING
425,000 Sekisui House Ltd..................................................................... 4,579,620
------------
MAJOR PHARMACEUTICALS
105,000 Takeda Chemical Industries............................................................ 4,860,148
------------
MOTOR VEHICLES
110,000 Honda Motor Co........................................................................ 4,655,941
160,000 Toyota Motor Corp..................................................................... 5,056,106
------------
9,712,047
------------
OTHER PHARMACEUTICALS
142,000 Taisho Pharmaceutical Co., Ltd........................................................ 4,686,469
------------
RECREATIONAL PRODUCTS/TOYS
35,000 Nintendo Co., Ltd..................................................................... 4,912,129
------------
TOBACCO
450 Japan Tobacco, Inc.................................................................... 4,975,248
------------
TOTAL JAPAN........................................................................... 80,015,842
------------
NETHERLANDS (4.2%)
AIRLINES
120,000 KLM Royal Dutch Air Lines NV.......................................................... 3,404,349
------------
DIVERSIFIED ELECTRONIC PRODUCTS
36,800 Koninklijke (Royal) Phillips Electronics NV........................................... 3,637,837
------------
INTERNATIONAL BANKS
150,000 ABN-AMRO Holding NV................................................................... 3,255,525
------------
METALS FABRICATIONS
70,000 Koninklijke Hoogovens NV.............................................................. 3,660,657
------------
SPECIALTY CHEMICALS
35,000 DSM NV................................................................................ 3,761,940
------------
TELECOMMUNICATIONS
72,000 KPN NV................................................................................ 3,385,746
------------
TOTAL NETHERLANDS..................................................................... 21,106,054
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
49
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PORTUGAL (0.6%)
TELECOMMUNICATIONS
80,000 Portugal Telecom S.A. (Registered Shares)............................................. $ 3,261,726
------------
SPAIN (1.4%)
ELECTRIC UTILITIES
220,000 Iberdrola S.A......................................................................... 3,358,255
------------
INTERNATIONAL BANKS
50,000 Banco Popular Espanol S.A............................................................. 3,604,331
------------
TOTAL SPAIN........................................................................... 6,962,586
------------
SWEDEN (2.4%)
CONSUMER ELECTRONICS/APPLIANCES
95,000 Electrolux AB (Series B).............................................................. 1,997,519
------------
ENGINEERING & CONSTRUCTION
52,000 Skanska AB (B Shares)................................................................. 1,968,697
------------
INDUSTRIAL MACHINERY/COMPONENTS
80,000 Sandvik AB (B Shares)................................................................. 1,776,623
------------
INTERNATIONAL BANKS
300,000 Nordbanken Holding AB................................................................. 1,761,266
------------
MOTOR VEHICLES
75,000 Volvo AB (B Shares)................................................................... 2,183,864
------------
PACKAGE GOODS/COSMETICS
75,000 Svenska Cellulosa AB.................................................................. 1,949,087
------------
REAL ESTATE
48,000 Drott AB (B Shares)................................................................... 391,235
------------
TOTAL SWEDEN.......................................................................... 12,028,291
------------
SWITZERLAND (4.8%)
ACCIDENT & HEALTH INSURANCE
2,000 Schweizerische Rueckversicherungs-Gesellschaft (Registered Shares).................... 3,817,631
------------
INTERNATIONAL BANKS
13,000 UBS AG (Registered Shares)............................................................ 3,889,856
------------
MAJOR PHARMACEUTICALS
2,550 Novartis AG (Registered Shares)....................................................... 3,732,831
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER TELECOMMUNICATIONS
11,500 Swisscom AG (Registered Shares)....................................................... $ 4,338,363
------------
PACKAGED FOODS
2,150 Nestle S.A. (Registered Shares)....................................................... 3,883,504
------------
TOBACCO
2,200 Compagnie Financiere Richemont AG (Series A).......................................... 4,241,955
------------
TOTAL SWITZERLAND..................................................................... 23,904,140
------------
UNITED KINGDOM (13.0%)
AIRLINES
530,000 British Airways PLC................................................................... 3,658,294
------------
ALCOHOLIC BEVERAGES
250,000 Bass PLC.............................................................................. 3,628,611
------------
CLOTHING/SHOE/ACCESSORY STORES
325,000 Next PLC.............................................................................. 3,948,504
------------
ENVIRONMENTAL SERVICES
1,200,000 Cookson Group PLC..................................................................... 4,049,223
------------
INTERNATIONAL BANKS
175,000 National Westminster Bank PLC......................................................... 3,711,393
180,000 Royal Bank of Scotland Group PLC...................................................... 3,667,006
------------
7,378,399
------------
MOVIES/ENTERTAINMENT
1,028,000 Rank Group PLC........................................................................ 4,088,847
------------
MULTI-SECTOR COMPANIES
400,000 Hanson PLC............................................................................ 3,554,107
------------
NON-U.S. UTILITIES
500,000 National Power PLC.................................................................... 3,642,408
350,000 PowerGen PLC.......................................................................... 3,774,859
300,000 United Utilities PLC.................................................................. 3,647,139
------------
11,064,406
------------
OTHER METALS/MINERALS
260,000 Rio Tinto PLC......................................................................... 4,360,010
------------
PAPER
1,100,000 Arjo Wiggins Appleton PLC............................................................. 3,815,856
------------
STEEL/IRON ORE
1,550,000 British Steel PLC..................................................................... 4,014,336
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TOBACCO
400,000 British American Tobacco PLC.......................................................... $ 3,762,245
------------
WATER SUPPLY
300,000 Hyder PLC............................................................................. 3,571,452
121,500 Hyder PLC (Pref.)..................................................................... 210,260
260,000 Severn Trent PLC...................................................................... 3,839,350
------------
7,621,062
------------
TOTAL UNITED KINGDOM.................................................................. 64,943,900
------------
UNITED STATES (31.9%)
AEROSPACE
85,000 Northrop Grumman Corp................................................................. 5,636,562
------------
ALUMINUM
90,000 Alcoa Inc............................................................................. 5,568,750
------------
AUTOMOTIVE AFTERMARKET
95,000 Goodyear Tire & Rubber Co............................................................. 5,587,187
------------
COMPUTER HARDWARE
48,000 International Business Machines Corp.................................................. 6,204,000
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS
145,000 Deere & Co............................................................................ 5,745,625
------------
CONTAINERS/PACKAGING
185,000 Crown Cork & Seal Co., Inc............................................................ 5,272,500
------------
DEPARTMENT STORES
118,000 Sears, Roebuck & Co................................................................... 5,258,375
------------
DISCOUNT CHAINS
90,000 Dayton-Hudson Corp.................................................................... 5,850,000
------------
DIVERSIFIED MANUFACTURING
63,000 Minnesota Mining & Manufacturing Co................................................... 5,477,062
------------
ELECTRIC UTILITIES
100,000 FPL Group, Inc........................................................................ 5,462,500
133,000 GPU, Inc.............................................................................. 5,610,937
------------
11,073,437
------------
ENGINEERING & CONSTRUCTION
140,000 Fluor Corp............................................................................ 5,670,000
------------
FINANCE COMPANIES
148,000 Associates First Capital Corp. (Class A).............................................. 6,558,250
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FOOD CHAINS
110,000 Albertson's, Inc...................................................................... $ 5,671,875
------------
INTEGRATED OIL COMPANIES
60,500 Chevron Corp.......................................................................... 5,758,844
------------
LIFE INSURANCE
182,000 Conseco, Inc.......................................................................... 5,539,625
------------
MAJOR BANKS
85,000 Bank of America Corp.................................................................. 6,231,563
170,000 KeyCorp............................................................................... 5,461,250
------------
11,692,813
------------
MAJOR CHEMICALS
45,000 Dow Chemical Co....................................................................... 5,709,375
------------
MAJOR PHARMACEUTICALS
83,000 Bristol-Myers Squibb Co............................................................... 5,846,313
------------
MOTOR VEHICLES
100,000 Ford Motor Co......................................................................... 5,643,750
------------
MULTI-SECTOR COMPANIES
228,000 Tenneco, Inc.......................................................................... 5,443,500
------------
NATURAL GAS
99,000 Consolidated Natural Gas Co........................................................... 6,014,250
------------
OIL REFINING/MARKETING
140,000 Ashland, Inc.......................................................................... 5,617,500
------------
OTHER METALS/MINERALS
100,000 Phelps Dodge Corp..................................................................... 6,193,750
------------
PAPER
105,000 International Paper Co................................................................ 5,302,500
------------
PHOTOGRAPHIC PRODUCTS
77,000 Eastman Kodak Co...................................................................... 5,216,750
------------
TOBACCO
145,000 Philip Morris Companies, Inc.......................................................... 5,827,188
------------
TOTAL UNITED STATES................................................................... 159,379,781
------------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $427,187,000)........................................................ 494,477,053
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (0.7%)
U.S. GOVERNMENT AGENCY
$ 3,500 Federal Home Loan Banks 4.60% due 07/01/99 (AMORTIZED COST $3,500,000)................ $ 3,500,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST
$430,687,000) (b)......................................................................... 99.6 % 497,977,053
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.4 2,217,869
------ -------------
NET ASSETS................................................................................ 100.0 % $ 500,194,922
------ -------------
------ -------------
</TABLE>
- ---------------------
* 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) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $83,399,353 and the
aggregate gross unrealized depreciation is $16,109,300, resulting in net
unrealized appreciation of $67,290,053.
SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
SUMMARY OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Accident & Health Insurance....................................................... $ 3,817,631 0.8 %
Aerospace......................................................................... 5,636,563 1.1
Air Freight/Delivery Services..................................................... 4,874,587 1.0
Airlines.......................................................................... 7,062,643 1.4
Alcoholic Beverages............................................................... 8,055,179 1.6
Aluminum.......................................................................... 8,443,118 1.7
Apparel........................................................................... 2,687,100 0.5
Automotive Aftermarket............................................................ 8,867,103 1.8
Building Materials................................................................ 6,029,431 1.2
Canadian Oil & Gas................................................................ 2,582,320 0.5
Clothing/Shoe/Accessory Stores.................................................... 3,948,504 0.8
Computer Hardware................................................................. 6,204,000 1.2
Construction/Agricultural Equipment/Trucks........................................ 5,745,625 1.1
Consumer Electronics/Appliances................................................... 11,551,975 2.3
Containers/Packaging.............................................................. 11,221,758 2.2
Department Stores................................................................. 5,258,375 1.0
Discount Chains................................................................... 5,850,000 1.2
Diversified Electronic Products................................................... 21,249,276 4.2
Diversified Manufacturing......................................................... 12,262,507 2.5
Electric Utilities................................................................ 14,431,692 2.9
Electrical Products............................................................... 8,197,264 1.6
Electronic Components............................................................. 4,384,158 0.9
Engineering & Construction........................................................ 10,361,452 2.1
Environmental Services............................................................ 4,049,222 0.8
Farming/Seeds/Milling............................................................. 3,304,100 0.7
Finance Companies................................................................. 10,869,306 2.2
Food Chains....................................................................... 5,671,875 1.1
Home Building..................................................................... 4,579,620 0.9
Industrial Machinery/Components................................................... 1,776,623 0.4
Integrated Oil Companies.......................................................... 12,206,902 2.4
International Banks............................................................... 37,629,168 7.6
Life Insurance.................................................................... 5,539,625 1.1
Major Banks....................................................................... 11,692,813 2.3
Major Chemicals................................................................... 12,592,485 2.5
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Major Pharmaceuticals............................................................. $ 14,439,291 2.9 %
Metals Fabrications............................................................... 3,660,657 0.7
Motor Vehicles.................................................................... 20,795,185 4.2
Movies/Entertainment.............................................................. 4,088,847 0.8
Multi-Sector Companies............................................................ 28,766,541 5.8
Natural Gas....................................................................... 6,014,250 1.2
Non-U.S. Utilities................................................................ 11,064,406 2.2
Oil & Gas Production.............................................................. 2,705,324 0.6
Oil Refining/Marketing............................................................ 8,979,062 1.8
Oil/Gas Transmission.............................................................. 2,660,712 0.5
Other Metals/Minerals............................................................. 10,553,760 2.1
Other Pharmaceuticals............................................................. 4,686,469 0.9
Other Telecommunications.......................................................... 4,338,363 0.9
Package Goods/Cosmetics........................................................... 1,949,088 0.4
Packaged Foods.................................................................... 3,883,504 0.8
Paper............................................................................. 9,118,356 1.8
Photographic Products............................................................. 5,216,750 1.0
Precious Metals................................................................... 2,212,647 0.4
Real Estate....................................................................... 4,377,857 0.9
Recreational Products/Toys........................................................ 4,912,129 1.0
Shoe Manufacturing................................................................ 3,431,866 0.7
Specialty Chemicals............................................................... 3,761,940 0.8
Steel/Iron Ore.................................................................... 4,014,336 0.8
Telecommunications................................................................ 11,840,516 2.4
Tobacco........................................................................... 18,806,635 3.8
U.S. Government Agency............................................................ 3,500,000 0.7
Utilities......................................................................... 1,943,499 0.4
Water Supply...................................................................... 7,621,063 1.5
------------ ---
$497,977,053 99.6 %
------------ ---
------------ ---
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks..................................................................... $491,579,693 98.3 %
Preferred Stocks.................................................................. 2,897,360 0.6
Short-Term Investments............................................................ 3,500,000 0.7
------------ ---
$497,977,053 99.6 %
------------ ---
------------ ---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
53
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED
STOCKS (96.4%)
FINLAND (2.0%)
TELECOMMUNICATIONS EQUIPMENT
113,750 Nokia Oyj............................................................................. $ 9,992,653
------------
FRANCE (17.8%)
BROADCASTING
26,400 Societe Television Francaise 1........................................................ 6,166,274
------------
BUILDING MATERIALS/DIY CHAINS
10,600 Castorama Dubois Investissement....................................................... 2,519,673
------------
ELECTRICAL PRODUCTS
95,080 Alcatel............................................................................... 13,413,197
------------
FINANCE COMPANIES
22,700 Compagnie Financiere de Paribas....................................................... 2,550,151
------------
FOOD CHAINS
72,000 Carrefour S.A......................................................................... 10,603,710
------------
HOTELS/RESORTS
35,530 Accor S.A............................................................................. 8,941,382
------------
INTEGRATED OIL COMPANIES
79,280 Elf Aquitaine S.A..................................................................... 11,659,476
------------
INTERNATIONAL BANKS
116,305 Banque Nationale de Paris............................................................. 9,712,258
------------
MOTOR VEHICLES
166,050 Renault S.A........................................................................... 7,242,055
------------
MULTI-LINE INSURANCE
52,700 AXA................................................................................... 6,443,263
------------
MULTI-SECTOR COMPANIES
29,900 Vivendi............................................................................... 2,427,325
------------
OTHER PHARMACEUTICALS
67,400 Sanofi-Synthelabo S.A................................................................. 2,866,422
------------
OTHER TELECOMMUNICATIONS
32,200 France Telecom S.A.................................................................... 2,437,665
------------
TOTAL FRANCE.......................................................................... 86,982,851
------------
GERMANY (9.9%)
APPAREL
3,220 Hugo Boss AG (Pref.).................................................................. 4,326,231
------------
BANKING
119,140 Deutsche Bank AG...................................................................... 7,283,210
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE
15,100 SAP AG................................................................................ $ 5,118,719
------------
DIVERSIFIED MANUFACTURING
62,000 Mannesmann AG......................................................................... 9,271,942
------------
MAJOR CHEMICALS
169,180 Hoechst AG............................................................................ 7,675,806
------------
MOTOR VEHICLES
104,341 Volkswagen AG......................................................................... 6,696,642
------------
SHOE MANUFACTURING
29,500 Adidas-Salomon AG..................................................................... 2,934,494
------------
TELECOMMUNICATIONS
125,530 Deutsche Telekom AG................................................................... 5,280,225
------------
TOTAL GERMANY......................................................................... 48,587,269
------------
ITALY (2.4%)
BROADCASTING
605,900 Mediaset SpA.......................................................................... 5,397,824
------------
INTERNATIONAL BANKS
757,800 Unicredito Italiano SpA............................................................... 3,336,374
------------
OFFICE/PLANT AUTOMATION
289,359 Tecnost SpA........................................................................... 716,232
------------
PRINTING/FORMS
1,833,000 Seat Pagine Gialle SpA................................................................ 2,510,087
------------
TOTAL ITALY........................................................................... 11,960,517
------------
NETHERLANDS (7.6%)
BOOKS/MAGAZINES
200,000 VNU NV................................................................................ 8,009,625
------------
COMPUTER SOFTWARE & SERVICES
67,700 Getronics NV.......................................................................... 2,609,805
------------
DIVERSIFIED ELECTRONIC PRODUCTS
145,235 Koninklijke (Royal) Phillips Electronics NV........................................... 14,357,180
------------
DIVERSIFIED FINANCIAL SERVICES
93,389 ING Groep NV.......................................................................... 5,067,170
------------
FINANCIAL PUBLISHING/SERVICES
85,000 Wolters Kluwer NV..................................................................... 3,390,913
------------
FOOD CHAINS
160,200 Laurus NV............................................................................. 3,725,251
------------
TOTAL NETHERLANDS..................................................................... 37,159,944
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SPAIN (4.7%)
INTERNATIONAL BANKS
277,249 Banco Bilbao Vizcaya S.A.............................................................. $ 4,014,381
115,442 Banco Popular Espanol S.A............................................................. 8,321,824
------------
12,336,205
------------
TELECOMMUNICATIONS
223,660 Telefonica S.A........................................................................ 10,797,139
------------
TOTAL SPAIN........................................................................... 23,133,344
------------
SWEDEN (7.3%)
CLOTHING/SHOE/ACCESSORY STORES
93,120 Hennes & Mauritz AB (B Shares)........................................................ 2,309,988
------------
DIVERSIFIED COMMERCIAL SERVICES
624,000 Securitas AB (Series "B" Free)........................................................ 9,361,290
------------
INDUSTRIAL MACHINERY/COMPONENTS
435,600 Assa Abloy AB......................................................................... 4,733,944
------------
INTERNATIONAL BANKS
807,200 Nordbanken Holding AB................................................................. 4,738,980
------------
LIFE INSURANCE
215,100 Skandia Forsakrings AB................................................................ 4,040,033
------------
TELECOMMUNICATIONS EQUIPMENT
333,500 Ericsson (L.M.) Telephone Co. AB (Series "B" Free).................................... 10,735,190
------------
TOTAL SWEDEN.......................................................................... 35,919,425
------------
SWITZERLAND (9.3%)
INTERNATIONAL BANKS
24,460 UBS AG (Registered Shares)............................................................ 7,318,914
------------
MAJOR PHARMACEUTICALS
3,300 Novartis AG (Registered Shares)....................................................... 4,830,722
1,026 Roche Holdings AG..................................................................... 10,572,954
------------
15,403,676
------------
OTHER TELECOMMUNICATIONS
13,090 Swisscom AG (Registered Shares)....................................................... 4,938,189
------------
PACKAGED FOODS
5,657 Nestle S.A............................................................................ 10,218,132
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TOBACCO
3,990 Compagnie Financiere Richemont AG (Series A).......................................... $ 7,693,364
------------
TOTAL SWITZERLAND..................................................................... 45,572,275
------------
UNITED KINGDOM (35.4%)
ADVERTISING
709,400 Aegis Group PLC....................................................................... 1,566,015
------------
AEROSPACE
655,481 British Aerospace PLC................................................................. 4,255,693
340,607 Smiths Industries PLC................................................................. 4,500,639
------------
8,756,332
------------
ALCOHOLIC BEVERAGES
650,900 Allied Domecq PLC..................................................................... 6,281,195
442,407 Diageo PLC............................................................................ 4,621,516
------------
10,902,711
------------
AUTO PARTS: O.E.M.
744,838 BBA Group PLC......................................................................... 5,719,623
------------
BOOKS/MAGAZINES
279,220 EMAP PLC.............................................................................. 4,887,042
------------
BROADCASTING
385,728 Granada Group PLC..................................................................... 7,158,701
------------
CABLE TELEVISION
589,182 TeleWest Communications PLC*.......................................................... 2,643,068
------------
CATALOG/SPECIALTY DISTRIBUTION
490,500 Great Universal Stores PLC............................................................ 5,437,145
------------
CELLULAR TELEPHONE
521,191 Vodafone AirTouch PLC................................................................. 10,272,676
------------
DIVERSIFIED FINANCIAL SERVICES
58,800 HSBC Holdings PLC..................................................................... 2,082,398
110,953 HSBC Holdings PLC..................................................................... 3,931,142
361,700 Lloyds TSB Group PLC.................................................................. 4,904,826
------------
10,918,366
------------
FOOD CHAINS
1,508,400 Morrison (W.M.) Supermarkets PLC...................................................... 3,424,961
------------
INTEGRATED OIL COMPANIES
869,495 BP Amoco PLC.......................................................................... 15,588,494
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTERNATIONAL BANKS
164,500 Abbey National PLC.................................................................... $ 3,089,259
355,600 Barclays PLC.......................................................................... 10,350,709
------------
13,439,968
------------
LIFE INSURANCE
668,700 Prudential Corp. PLC.................................................................. 9,848,154
------------
MAJOR PHARMACEUTICALS
184,529 AstraZeneca PLC....................................................................... 7,215,061
207,700 Glaxo Wellcome PLC.................................................................... 5,773,849
469,774 SmithKline Beecham PLC................................................................ 6,107,398
------------
19,096,308
------------
MOVIES/ENTERTAINMENT
160,000 Flextech PLC*......................................................................... 2,598,882
------------
MULTI-LINE INSURANCE
451,310 Royal & Sun Alliance Insurance Group PLC.............................................. 4,049,150
------------
MULTI-SECTOR COMPANIES
776,400 General Electric Co. PLC.............................................................. 7,920,752
------------
OIL/GAS TRANSMISSION
885,941 BG PLC................................................................................ 5,413,188
------------
OTHER SPECIALTY STORES
292,700 Kingfisher PLC........................................................................ 3,369,164
------------
TELECOMMUNICATIONS
720,000 British Telecommunications PLC........................................................ 12,068,197
615,088 Cable & Wireless PLC.................................................................. 7,841,405
------------
19,909,602
------------
TOTAL UNITED KINGDOM.................................................................. 172,920,302
------------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $376,295,231)........................................................ 472,228,580
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- --------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (3.0%)
U.S. GOVERNMENT AGENCY
$ 14,600 Federal Home Loan Banks 4.60% due 07/01/99
(AMORTIZED COST $14,600,000)............... $ 14,600,000
-------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $390,895,231)............................................................ 99.4 % 486,828,580
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.6 2,864,649
------ -------------
NET ASSETS................................................................................ 100.0 % $ 489,693,229
------ -------------
------ -------------
</TABLE>
- ---------------------
* 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) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $102,504,465 and the
aggregate gross unrealized depreciation is $6,571,116, resulting in net
unrealized appreciation of $95,933,349.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JUNE 30, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION/
RECEIVE EXCHANGE FOR DATE DEPRECIATION
- ------------------------------------------------------------
<S> <C> <C> <C>
$ 654,961 GBP 415,584 07/02/99 ($ 332)
SEK 2,772,000 $ 327,311 07/02/99 135
-----
Net unrealized depreciation................
($ 197)
-----
-----
</TABLE>
CURRENCY ABBREVIATIONS:
<TABLE>
<S> <C>
GBP British Pound.
SEK Swedish Krona.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
SUMMARY OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Advertising....................................................................... $ 1,566,015 0.3 %
Aerospace......................................................................... 8,756,332 2.0
Alcoholic Beverages............................................................... 10,902,711 2.2
Apparel........................................................................... 4,326,231 0.9
Auto Parts: O.E.M................................................................. 5,719,623 1.2
Banking........................................................................... 7,283,210 1.5
Books/Magazines................................................................... 12,896,667 2.6
Broadcasting...................................................................... 18,722,799 3.8
Building Materials/Diy Chains..................................................... 2,519,673 0.5
Cable Television.................................................................. 2,643,068 0.5
Catalog/Specialty Distribution.................................................... 5,437,145 1.1
Cellular Telephone................................................................ 10,272,676 2.1
Clothing/Shoe/Accessory Stores.................................................... 2,309,988 0.5
Computer Software................................................................. 5,118,719 1.0
Computer Software & Services...................................................... 2,609,805 0.5
Diversified Commercial Services................................................... 9,361,290 1.9
Diversified Electronic Products................................................... 14,357,180 2.9
Diversified Financial Services.................................................... 15,985,536 3.3
Diversified Manufacturing......................................................... 9,271,942 1.9
Electrical Products............................................................... 13,413,197 2.7
Finance Companies................................................................. 2,550,151 0.5
Financial Publishing/Services..................................................... 3,390,913 0.7
Food Chains....................................................................... 17,753,922 3.6
Hotels/Resorts.................................................................... 8,941,382 1.8
Industrial Machinery/Components................................................... 4,733,944 1.0
Integrated Oil Companies.......................................................... 27,247,970 5.7
International Banks............................................................... 50,882,699 10.3
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Life Insurance.................................................................... $ 13,888,187 2.8 %
Major Chemicals................................................................... 7,675,806 1.6
Major Pharmaceuticals............................................................. 34,499,984 7.1
Motor Vehicles.................................................................... 13,938,697 2.9
Movies/Entertainment.............................................................. 2,598,882 0.5
Multi-Line Insurance.............................................................. 10,492,413 2.1
Multi-Sector Companies............................................................ 10,348,077 2.1
Office/Plant Automation........................................................... 716,232 0.1
Oil/Gas Transmission.............................................................. 5,413,188 1.1
Other Pharmaceuticals............................................................. 2,866,422 0.6
Other Specialty Stores............................................................ 3,369,164 0.7
Other Telecommunications.......................................................... 7,375,854 1.5
Packaged Foods.................................................................... 10,218,132 2.1
Printing/Forms.................................................................... 2,510,087 0.5
Shoe Manufacturing................................................................ 2,934,494 0.6
Telecommunications................................................................ 35,986,966 7.3
Telecommunications Equipment...................................................... 20,727,843 4.2
Tobacco........................................................................... 7,693,364 1.6
U.S. Government Agency............................................................ 14,600,000 3.0
------------ -----
$486,828,580 99.4 %
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks..................................................................... $467,902,349 95.5 %
Preferred Stocks.................................................................. 4,326,231 0.9
Short-Term Investments............................................................ 14,600,000 3.0
------------ -----
$486,828,580 99.4 %
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
57
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS, RIGHTS, WARRANTS AND BONDS (88.6%)
AUSTRALIA (10.8%)
AIRLINES
109,900 Quantas Airways Ltd.............................................................. $ 365,509
-----------
ALCOHOLIC BEVERAGES
225,300 Fosters Brewing Group Ltd........................................................ 639,392
-----------
DIVERSIFIED COMMERCIAL SERVICES
21,900 Brambles Industries Ltd.......................................................... 580,935
-----------
INTERNATIONAL BANKS
85,900 National Australia Bank Ltd...................................................... 1,431,309
142,650 Westpac Banking Corp., Ltd....................................................... 931,747
-----------
2,363,056
-----------
MEDIA CONGLOMERATES
132,700 News Corp., Ltd. (The)........................................................... 1,140,050
-----------
OTHER METALS/MINERALS
83,712 Broken Hill Proprietary Co., Ltd................................................. 976,396
84,800 Rio Tinto Ltd.................................................................... 1,400,093
-----------
2,376,489
-----------
PRECIOUS METALS
267,900 Normandy Mining Ltd.............................................................. 179,627
-----------
REAL ESTATE
44,650 Lend Lease Corp., Ltd............................................................ 617,296
-----------
TELECOMMUNICATIONS
5,600 Aapt Ltd.*....................................................................... 17,542
98,600 Cable & Wireless Optus Ltd.*..................................................... 226,066
235,450 Telstra Corp. Ltd................................................................ 1,358,521
-----------
1,602,129
-----------
TOTAL AUSTRALIA.................................................................. 9,864,483
-----------
CHINA (0.2%)
COAL MINING
475,000 Yanzhou Coal Mining Co. Ltd...................................................... 168,349
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES
76,000 Shandong International Power Development Co. Ltd................................. $ 17,141
-----------
TOTAL CHINA...................................................................... 185,490
-----------
HONG KONG (12.2%)
AIRLINES
168,400 Cathay Pacific Airways........................................................... 258,269
-----------
BROADCASTING
105,000 Television Broadcasts Ltd........................................................ 492,577
-----------
CELLULAR TELEPHONE
96,200 China Telecom Ltd................................................................ 267,181
117,500 SmarTone Telecommunications Holdings Ltd......................................... 417,955
-----------
685,136
-----------
DIVERSIFIED FINANCIAL SERVICES
178,000 Credit Lyonn HSBC Holdings Inc. (Warrants due 10/13/99).......................... 88,894
-----------
DIVERSIFIED MANUFACTURING
35,600 Johnson Electric Holdings, Ltd................................................... 145,902
-----------
INTERNATIONAL BANKS
87,000 Dao Heng Bank Group Ltd.......................................................... 390,195
-----------
MARINE TRANSPORTATION
325,500 Cosco Pacific Ltd................................................................ 268,481
-----------
MULTI-LINE INSURANCE
212,000 AXA China Region Ltd............................................................. 169,399
-----------
MULTI-SECTOR COMPANIES
264,000 Hutchison Whampoa, Ltd........................................................... 2,390,195
119,700 New World Development Co., Ltd................................................... 358,674
88,200 Swire Pacific Ltd. (Class A)..................................................... 436,499
-----------
3,185,368
-----------
PACKAGE GOODS/COSMETICS
381,800 Hengan International Group Co. Ltd.*............................................. 193,134
-----------
REAL ESTATE
164,000 Cheung Kong (Holdings) Ltd....................................................... 1,458,398
75,000 Kerry Properties Ltd............................................................. 99,076
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
58
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
168,100 Sun Hung Kai Properties Ltd...................................................... $ 1,532,771
-----------
3,090,245
-----------
TELECOMMUNICATIONS
37,000 Asia Satellite Telecommunications Holdings Ltd................................... 86,787
494,200 Hong Kong Telecommunications Ltd................................................. 1,277,027
-----------
1,363,814
-----------
UTILITIES
54,100 CLP Holdings Ltd................................................................. 262,858
-----------
WHOLESALE DISTRIBUTORS
82,400 Citic Pacific Ltd................................................................ 262,836
152,900 Li & Fund Ltd.................................................................... 365,540
-----------
628,376
-----------
TOTAL HONG KONG.................................................................. 11,222,648
-----------
INDIA (3.8%)
COMPUTER HARDWARE
10,000 HCL Infosystems Ltd.............................................................. 82,405
-----------
COMPUTER SOFTWARE
14,700 Aptech Ltd....................................................................... 241,899
15,400 Leading Edge Systems Ltd......................................................... 103,848
18,200 Software Solution Integrated Ltd................................................. 181,351
-----------
527,098
-----------
COMPUTER SOFTWARE & SERVICES
3,300 NIIT Ltd......................................................................... 154,405
10,700 Satyam Computer Service Ltd...................................................... 312,245
-----------
466,650
-----------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS
46,700 Larsen & Toubro Ltd.............................................................. 307,930
5,950 Punjab Tractors Ltd.............................................................. 181,444
-----------
489,374
-----------
E.D.P. SERVICES
2,500 Tata Infotech Ltd................................................................ 61,226
-----------
ELECTRICAL PRODUCTS
36,000 Bharat Heavy Electricals Ltd..................................................... 203,820
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRONIC DATA PROCESSING
20,100 Digital Equipment Ltd............................................................ $ 197,762
-----------
FINANCE COMPANIES
105,250 ICICI Ltd........................................................................ 178,041
-----------
GENERIC DRUGS
4,900 Dr. Reddy's Laboratories Ltd..................................................... 93,951
-----------
MAJOR PHARMACEUTICALS
3,200 Pfizer Ltd....................................................................... 72,558
-----------
MOTOR VEHICLES
7,500 Hero Honda Motors Ltd............................................................ 186,421
-----------
MOVIES/ENTERTAINMENT
13,000 Zee Telefilms Ltd................................................................ 435,328
-----------
PACKAGE GOODS/COSMETICS
3,100 Hindustan Lever Ltd.............................................................. 169,804
-----------
SPECIALTY CHEMICALS
6,450 Hoechst Marion Roussel Ltd....................................................... 81,646
-----------
TELECOMMUNICATIONS
4,000 Videsh Sanchar Nigam Ltd......................................................... 84,143
-----------
TOBACCO
5,000 ITC Limited...................................................................... 126,064
-----------
TOTAL INDIA...................................................................... 3,456,291
-----------
INDONESIA (0.6%)
BUILDING MATERIALS
52,300 PT Semen Gresik (Persero) Tbk.................................................... 114,945
-----------
DEPARTMENT STORES
60,500 PT Ramayana Lestari Sentosa Tbk.................................................. 43,436
-----------
MUTUAL FUNDS
500,000 Batavia Investment Fund Ltd...................................................... --
-----------
TELECOMMUNICATIONS
24,084 PT Telekomunikasi Indonesia (ADR)................................................ 299,545
-----------
TOBACCO
48,000 PT Gudang Garam Tbk.............................................................. 131,516
-----------
TOTAL INDONESIA.................................................................. 589,442
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
59
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
JAPAN (35.6%)
BUILDING PRODUCTS
60,000 Sanwa Shutter Corp............................................................... $ 324,752
JPY 10,000K Sanwa Shutter Corp. 0.90% due 03/31/06 (Conv.)................................... 83,086
-----------
407,838
-----------
CONSUMER ELECTRONICS/APPLIANCES
11,300 Aiwa Co., Ltd.................................................................... 372,937
14,000 Rinnai Corp...................................................................... 321,122
12,000 Sony Corp........................................................................ 1,292,079
-----------
1,986,138
-----------
CONSUMER SPECIALTIES
46,000 Casio Computer Co., Ltd.......................................................... 349,175
-----------
DIVERSIFIED ELECTRONIC PRODUCTS
120,000 Hitachi Ltd...................................................................... 1,123,762
12,600 Kyocera Corp..................................................................... 738,119
51,000 Matsushita Electric Industrial Co., Ltd.......................................... 988,861
89,000 NEC Corp......................................................................... 1,105,157
167,000 Toshiba Corp..................................................................... 1,189,117
-----------
5,145,016
-----------
E.D.P. PERIPHERALS
34,000 Mitsumi Electric Co., Ltd........................................................ 948,185
-----------
ELECTRICAL PRODUCTS
77,000 Furukawa Electric Co., Ltd. (The)................................................ 352,599
-----------
ELECTRONIC COMPONENTS
10,000 TDK Corp......................................................................... 913,366
-----------
ELECTRONIC DATA PROCESSING
60,000 Fujitsu Ltd...................................................................... 1,205,446
-----------
ELECTRONIC DISTRIBUTORS
18,000 Ryosan Co., Ltd.................................................................. 356,436
-----------
FINANCE COMPANIES
30,100 Hitachi Credit Corp.............................................................. 594,798
-----------
FOOD CHAINS
11,000 FamilyMart Co., Ltd.............................................................. 503,713
-----------
HOME BUILDING
54,000 Sekisui Chemical Co., Ltd........................................................ 312,772
51,000 Sekisui House Ltd................................................................ 549,554
-----------
862,326
-----------
HOME FURNISHINGS
6,000 Sangetsu Co., Ltd................................................................ 127,475
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL MACHINERY/COMPONENTS
47,000 Amada Co., Ltd................................................................... $ 331,559
49,000 Daifuku Co., Ltd................................................................. 341,625
51,000 Daikin Industries, Ltd........................................................... 591,213
25,000 Fuji Machine Manufacturing Co., Ltd.............................................. 769,389
51,000 Minebea Co., Ltd................................................................. 568,069
JPY 17,000K Minebea Co., Ltd. 0.80% due 03/31/03 (Conv.)..................................... 225,825
119,000 Mitsubishi Heavy Industries, Ltd................................................. 482,087
25,000 Tsubakimoto Chain Co............................................................. 88,903
-----------
3,398,670
-----------
INDUSTRIAL SPECIALTIES
38,000 Fujitec Co., Ltd................................................................. 359,620
-----------
MOTOR VEHICLES
154,000 Nissan Motor Co., Ltd............................................................ 734,422
34,000 Suzuki Motor Corp................................................................ 540,017
18,000 Toyota Motor Corp................................................................ 568,812
-----------
1,843,251
-----------
OFFICE EQUIPMENT/SUPPLIES
35,000 Canon, Inc....................................................................... 1,004,951
JPY 8,000K Canon, Inc. 1.00% due 12/20/02 (Conv.)........................................... 157,360
31,000 Lintec Corp...................................................................... 311,535
70,000 Ricoh Co., Ltd................................................................... 962,211
-----------
2,436,057
-----------
OTHER PHARMACEUTICALS
21,000 Ono Pharmaceutical Co., Ltd...................................................... 727,723
38,000 Sankyo Co., Ltd.................................................................. 956,271
24,000 Yamanouchi Pharmaceutical Co., Ltd............................................... 916,832
-----------
2,600,826
-----------
PHOTOGRAPHIC PRODUCTS
26,000 Fuji Photo Film Co............................................................... 982,508
-----------
POLLUTION CONTROL EQUIPMENT
19,000 Kurita Water Industries Ltd...................................................... 340,182
-----------
PRINTING/FORMS
31,000 Dai Nippon Printing Co., Ltd..................................................... 494,926
24,000 Nissha Printing Co., Ltd......................................................... 174,257
-----------
669,183
-----------
REAL ESTATE
43,000 Mitsubishi Estate Co., Ltd....................................................... 419,002
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
60
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RECREATIONAL PRODUCTS/TOYS
10,100 Nintendo Co., Ltd................................................................ $ 1,417,500
50,000 Yamaha Corp...................................................................... 600,248
-----------
2,017,748
-----------
SEMICONDUCTORS
4,000 Rohm Co. Ltd..................................................................... 625,413
-----------
SPECIALTY CHEMICALS
100,000 Daicel Chemical Industries, Ltd.................................................. 367,162
83,000 Kaneka Corp...................................................................... 780,693
106,000 Mitsubishi Chemical Corp......................................................... 366,452
35,000 NIFCO Inc........................................................................ 335,850
59,000 Shin-Etsu Polymer Co., Ltd....................................................... 330,536
-----------
2,180,693
-----------
TELECOMMUNICATIONS
89 Nippon Telegraph & Telephone Corp................................................ 1,035,396
-----------
TOTAL JAPAN...................................................................... 32,661,060
-----------
MALAYSIA+ (3.2%)
ALCOHOLIC BEVERAGES
75,000 Carlsberg Brewery Berhad......................................................... 200,495
-----------
BANKING
218,000 Commerce Asset-Holding Berhad.................................................... 507,228
53,000 Malayan Banking Berhad........................................................... 149,554
224,000 Public Bank Berhad............................................................... 160,238
-----------
817,020
-----------
TELECOMMUNICATIONS
342,000 Telekom Malaysia Berhad.......................................................... 1,202,079
-----------
TOBACCO
76,400 Rothmans of Pall Mall Berhad..................................................... 543,688
-----------
WHOLESALE DISTRIBUTORS
129,000 Sime Darby Berhad................................................................ 159,015
-----------
TOTAL MALAYSIA................................................................... 2,922,297
-----------
NEW ZEALAND (0.6%)
AIRLINES
91,500 Air New Zealand Ltd. (Class B)................................................... 190,380
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
89,800 Telecom Corporation of New Zealand Ltd........................................... $ 388,057
-----------
TOTAL NEW ZEALAND................................................................ 578,437
-----------
PHILIPPINES (0.6%)
ALCOHOLIC BEVERAGES
109,120 San Miguel Corp. (Class B)....................................................... 237,404
-----------
BANKING
51,150 Philippine National Bank......................................................... 138,098
-----------
TELECOMMUNICATIONS
4,520 Philippine Long Distance Telephone Co............................................ 137,437
-----------
TOTAL PHILIPPINES................................................................ 512,939
-----------
SINGAPORE (4.8%)
AEROSPACE
130,000 Singapore Technologies Engineering Ltd........................................... 147,501
-----------
BANKING
27,000 Overseas Union Bank Ltd.......................................................... 130,159
-----------
DIVERSIFIED ELECTRONIC PRODUCTS
93,100 Natsteel Electronics Ltd......................................................... 407,757
-----------
ELECTRONIC COMPONENTS
60,000 Gul Technologies................................................................. 57,143
63,600 Venture Manufacturing Ltd........................................................ 489,806
-----------
546,949
-----------
INTERNATIONAL BANKS
15,000 Deutsche Bank (Warrants due 03/28/02)*........................................... 11,199
756,000 Deutsche Bank London (Warrants due 04/09/02)*.................................... 675,555
53,320 Overseas Chinese Banking Corp., Ltd.............................................. 445,117
43,000 United Overseas Bank Ltd......................................................... 300,823
-----------
1,432,694
-----------
MARINE TRANSPORTATION
54,500 Sembcorp Logistics Ltd........................................................... 214,668
-----------
NEWSPAPERS
34,019 Singapore Press Holdings Ltd..................................................... 579,983
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
61
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE
54,400 City Developments Ltd............................................................ $ 348,595
45,000 Parkway Holdings Ltd............................................................. 111,111
-----------
459,706
-----------
TEXTILES
$ 220K Finlayson Global Corp. Ltd. 0.00% due 02/19/04 (Conv.)........................... 348,062
-----------
TOBACCO
21,800 Rothmans Industries Ltd.......................................................... 183,269
-----------
TOTAL SINGAPORE.................................................................. 4,450,748
-----------
SOUTH KOREA (7.6%)
BANKING
11,160 Hana Bank........................................................................ 163,905
7,150 Kookmin Bank..................................................................... 145,162
31,480 Korea Exchange Bank.............................................................. 176,778
-----------
485,845
-----------
CELLULAR TELEPHONE
270 SK Telecom Co. Ltd............................................................... 363,965
61 SK Telecom Co. Ltd. (Rights)*.................................................... 31,796
-----------
395,761
-----------
CONSUMER/BUSINESS SERVICES
6,150 Daewoo Securities Co............................................................. 119,546
-----------
DIVERSIFIED ELECTRONIC PRODUCTS
7,950 LG Electronics................................................................... 219,784
11,227 Samsung Electronics Co........................................................... 1,231,818
-----------
1,451,602
-----------
DIVERSIFIED FINANCIAL SERVICES
15,270 Good Morning Securities Co. Ltd.................................................. 94,324
-----------
ELECTRIC UTILITIES
62,490 Korea Electric Power Corp. (ADR)................................................. 1,281,045
-----------
ELECTRONIC COMPONENTS
8,016 Samsung Electro-Mechanics Co..................................................... 277,011
-----------
INDUSTRIAL SPECIALTIES
3,710 Hankuk Glass Industry Co. Ltd.................................................... 99,361
-----------
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTERNATIONAL BANKS
11,160 Housing & Commercial Bank, Korea................................................. $ 351,914
3,500 Kookmin Bank (GDR)............................................................... 71,750
11,120 Koram Bank....................................................................... 139,300
-----------
562,964
-----------
OIL REFINING/MARKETING
8,830 SK Corp.......................................................................... 254,029
-----------
PAINTS/COATINGS
1,890 Korea Chemical Co., Ltd.......................................................... 169,814
-----------
PROPERTY - CASUALTY INSURERS
500 Samsung Fire & Marine Insurance.................................................. 352,052
-----------
SPECIALTY CHEMICALS
4,920 L.G. Chemical Ltd................................................................ 133,892
-----------
STEEL/IRON ORE
6,420 Pohang Iron & Steel Co., Ltd..................................................... 772,526
-----------
TELECOMMUNICATIONS
7,610 Korea Telecom Corp............................................................... 504,923
700 Korea Telecom Corp. (ADR)*....................................................... 28,000
-----------
532,923
-----------
TOTAL SOUTH KOREA................................................................ 6,982,695
-----------
TAIWAN (6.8%)
COMPUTER HARDWARE
41,250 Acer Inc. (GDR)*................................................................. 515,625
64,540 Asustek Computer Inc. (GDR)...................................................... 929,376
$ 185K Compal Electronics 1.00% due 11/21/03 (Conv.).................................... 625,910
-----------
2,070,911
-----------
DIVERSIFIED COMMERCIAL SERVICES
38,960 ASE Test Ltd.*................................................................... 827,900
-----------
MUTUAL FUNDS
163 Taipei Fund*..................................................................... 1,676,129
-----------
SEMICONDUCTORS
47,250 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)................................ 1,606,500
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
62
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES/PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
STEEL/IRON ORE
6,300 China Steel Corp. (GDR).......................................................... $ 96,390
-----------
TOTAL TAIWAN..................................................................... 6,277,830
-----------
THAILAND (1.8%)
BUILDING MATERIALS
28,566 Siam City Cement Co. PCL......................................................... 117,766
-----------
BUILDING MATERIALS/DIY CHAINS
4,500 Siam Cement Co., Ltd.*........................................................... 136,697
-----------
ELECTRONIC COMPONENTS
19,530 Delta Electronics, Inc........................................................... 164,207
-----------
ELECTRONIC DATA PROCESSING
9,800 Shin Corp. PCL................................................................... 45,717
-----------
INTERNATIONAL BANKS
184,400 Siam Commercial Bank (Warrants due 05/10/02)..................................... 118,782
36,500 Siam Commercial Bank PCL (Conv. Pref.)........................................... 51,973
46,600 Thai Farmers Bank PCL............................................................ 144,085
-----------
314,840
-----------
MOVIES/ENTERTAINMENT
47,700 BEC World PCL.................................................................... 297,559
-----------
OTHER TELECOMMUNICATIONS
29,000 Advanced Info Service PCL........................................................ 393,274
-----------
REAL ESTATE
330,900 Golden Land Property Development Company Ltd..................................... 195,201
-----------
TOTAL THAILAND................................................................... 1,665,261
-----------
TOTAL COMMON AND PREFERRED STOCKS, RIGHTS, WARRANTS AND BONDS
(IDENTIFIED COST $65,458,288).................................................... 81,369,621
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (10.4%)
U.S. GOVERNMENT AGENCY
$ 9,500 Federal Home Loan Mortgage Corp. 4.60% due 07/01/99 (AMORTIZED COST
$9,500,000).................................................................... $ 9,500,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $74,958,288) (B).......................................................... 99.0 % 90,869,621
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................. 1.0 909,578
------ ------------
NET ASSETS................................................................................. 100.0 % $ 91,779,199
------ ------------
------ ------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
K In thousands.
* Non-income producing security.
+ Securities deemed illiquid. The Malaysian Government subjects the proceeds
on sales of securities denominated in Malaysian ringgits to a graduated
exit tax.
(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 $16,914,407 and the
aggregate gross unrealized depreciation is $1,003,074, resulting in net
unrealized appreciation of $15,911,333.
SEE NOTES TO FINANCIAL STATEMENTS
63
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JUNE 30, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION
RECEIVE EXCHANGE FOR DATE (DEPRECIATION)
- ------------------------------------------------------------
<S> <C> <C> <C>
IDR 739,140,410 $ 110,155 07/02/1999 $ (1,856)
THB 51,268 $ 1,388 07/02/1999 2
AUD 1,748,721 $ 1,155,904 07/02/1999 9,618
HKD 6,696,749 $ 863,206 07/02/1999 (133)
HKD 419,216 $ 54,034 07/06/1999 (6)
---------------
Net unrealized appreciation................ $ 7,625
---------------
---------------
</TABLE>
CURRENCY ABBREVIATIONS:
<TABLE>
<S> <C>
AUD Australian Dollar.
HKD Hong Kong Dollar.
IDR Indonesian Rupiah.
JPY Japanese Yen.
THB Thai Baht.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
64
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
SUMMARY OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Aerospace.......................................................................... $ 147,501 0.2 %
Airlines........................................................................... 814,158 0.9
Alcoholic Beverages................................................................ 1,077,291 1.2
Banking............................................................................ 1,571,122 1.7
Broadcasting....................................................................... 492,577 0.5
Building Materials................................................................. 232,711 0.2
Building Materials/DIY Chains...................................................... 136,697 0.1
Building Products.................................................................. 407,838 0.4
Cellular Telephone................................................................. 1,080,897 1.2
Coal Mining........................................................................ 168,349 0.2
Computer Hardware.................................................................. 2,153,316 2.4
Computer Software.................................................................. 527,098 0.6
Computer Software & Services....................................................... 466,650 0.5
Construction/Agricultural Equipment/Trucks......................................... 489,374 0.5
Consumer Electronics/Appliances.................................................... 1,986,138 2.2
Consumer Specialties............................................................... 349,175 0.4
Consumer/Business Services......................................................... 119,546 0.1
Department Stores.................................................................. 43,436 0.0
Diversified Commercial Services.................................................... 1,408,835 1.5
Diversified Electronic Products.................................................... 7,004,375 7.7
Diversified Financial Services..................................................... 183,218 0.2
Diversified Manufacturing.......................................................... 145,902 0.2
E.D.P. Peripherals................................................................. 948,185 1.0
E.D.P. Services.................................................................... 61,226 0.1
Electric Utilities................................................................. 1,298,186 1.4
Electrical Products................................................................ 556,419 0.6
Electronic Components.............................................................. 1,901,533 2.1
Electronic Data Processing......................................................... 1,448,925 1.6
Electronic Distributors............................................................ 356,436 0.4
Finance Companies.................................................................. 772,839 0.8
Food Chains........................................................................ 503,713 0.5
Generic Drugs...................................................................... 93,951 0.1
Home Building...................................................................... 862,326 0.9
Home Furnishings................................................................... 127,475 0.1
Industrial Machinery/Components.................................................... 3,398,670 3.7
Industrial Specialties............................................................. 458,981 0.5
International Banks................................................................ 5,063,749 5.5
Major Pharmaceuticals.............................................................. 72,558 0.1
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Marine Transportation.............................................................. $ 483,149 0.5 %
Media Conglomerates................................................................ 1,140,050 1.2
Motor Vehicles..................................................................... 2,029,672 2.2
Movies/Entertainment............................................................... 732,887 0.8
Multi-Line Insurance............................................................... 169,399 0.2
Multi-Sector Companies............................................................. 3,185,368 3.5
Mutual Funds....................................................................... 1,676,129 1.8
Newspapers......................................................................... 579,983 0.6
Office Equipment/Supplies.......................................................... 2,436,057 2.7
Oil Refining/Marketing............................................................. 254,029 0.3
Other Metals/Minerals.............................................................. 2,376,489 2.6
Other Pharmaceuticals.............................................................. 2,600,826 2.8
Other Telecommunications........................................................... 393,274 0.4
Package Goods/Cosmetics............................................................ 362,938 0.4
Paints/Coatings.................................................................... 169,814 0.2
Photographic Products.............................................................. 982,508 1.1
Pollution Control Equipment........................................................ 340,182 0.4
Precious Metals.................................................................... 179,627 0.2
Printing/Forms..................................................................... 669,183 0.7
Property - Casualty Insurers....................................................... 352,052 0.4
Real Estate........................................................................ 4,781,450 5.2
Recreational Products/Toys......................................................... 2,017,748 2.2
Semiconductors..................................................................... 2,231,913 2.4
Specialty Chemicals................................................................ 2,396,231 2.6
Steel/Iron Ore..................................................................... 868,916 0.9
Telecommunications................................................................. 6,645,523 7.3
Textiles........................................................................... 348,062 0.4
Tobacco............................................................................ 984,537 1.1
U.S. Government Agency............................................................. 9,500,000 10.4
Utilities.......................................................................... 262,858 0.3
Wholesale Distributors............................................................. 787,391 0.9
----------- -----
$90,869,621 99.0 %
----------- -----
----------- -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks...................................................................... $78,951,178 86.0 %
Convertible Bonds.................................................................. 1,440,243 1.6
Convertible Preferred Stock........................................................ 51,973 --
Rights............................................................................. 31,796 --
Short-Term Investment.............................................................. 9,500,000 10.4
Warrants........................................................................... 894,431 1.0
----------- ---
$90,869,621 99.0 %
----------- ---
----------- ---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
65
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (95.0%)
ADVERTISING (1.0%)
115,200 Interpublic Group of Companies, Inc.................................................. $ 9,979,200
11,850 Valassis Communications, Inc.*....................................................... 434,006
100,000 Young & Rubicam, Inc................................................................. 4,543,750
--------------
14,956,956
--------------
AIRLINES (0.9%)
410,100 Southwest Airlines Co................................................................ 12,764,362
--------------
ALCOHOLIC BEVERAGES (1.1%)
140,000 Anheuser-Busch Companies, Inc........................................................ 9,931,250
99,000 LVMH (ADR) (France).................................................................. 5,841,000
--------------
15,772,250
--------------
ALUMINUM (0.9%)
216,000 Alcoa Inc............................................................................ 13,365,000
--------------
AUTO PARTS: O.E.M. (0.3%)
85,000 Lear Corp.*.......................................................................... 4,228,750
--------------
BEVERAGES - NON-ALCOHOLIC (1.0%)
200,000 Coca-Cola Enterprises Inc............................................................ 5,950,000
355,000 Pepsi Bottling Group, Inc............................................................ 8,187,187
--------------
14,137,187
--------------
BIOTECHNOLOGY (1.3%)
90,000 Biogen, Inc.*........................................................................ 5,788,125
440,000 Cephalon, Inc.*...................................................................... 7,480,000
5,000 COR Therapeutics, Inc.*.............................................................. 73,125
10,000 Genset (ADR) (France)*............................................................... 155,000
26,000 IDEC Pharmaceuticals Corp.*.......................................................... 2,002,000
60,000 MedImmune, Inc.*..................................................................... 4,080,000
--------------
19,578,250
--------------
BOOKS/MAGAZINES (0.5%)
185,000 Reader's Digest Assoc., Inc. (Class A)............................................... 7,353,750
--------------
BROADCASTING (3.1%)
325,000 CBS Corp.*........................................................................... 14,117,187
78,000 Chancellor Media Corp.*.............................................................. 4,294,875
165,000 Clear Channel Communications, Inc.*.................................................. 11,374,687
75,000 Grupo Televisa S.A. (GDR) (Mexico)*.................................................. 3,360,937
64,200 Hispanic Broadcasting Corp.*......................................................... 4,867,162
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
53,600 Univision Communications, Inc. (Class A)*............................................ $ 3,537,600
100,000 USA Networks, Inc.*.................................................................. 4,006,250
--------------
45,558,698
--------------
BUILDING MATERIALS/DIY CHAINS (0.9%)
202,000 Home Depot, Inc. (The)............................................................... 13,016,375
--------------
CABLE TELEVISION (1.7%)
300,800 AT&T Corp. - Liberty Media Group (Class A)*.......................................... 11,054,400
75,000 Comcast Corp. (Class A Special)*..................................................... 2,882,812
21,800 Cox Communications, Inc. (Class A)*.................................................. 802,512
55,000 EchoStar Communications Corp. (Class A)*............................................. 8,439,062
18,000 MediaOne Group, Inc.*................................................................ 1,338,750
--------------
24,517,536
--------------
CLOTHING/SHOE/ACCESSORY STORES (1.4%)
15,000 Children's Place Retail Stores, Inc. (The)*.......................................... 605,625
106,800 Gap, Inc. (The)...................................................................... 5,380,050
189,000 Intimate Brands, Inc................................................................. 8,953,875
118,200 Limited (The), Inc................................................................... 5,363,325
--------------
20,302,875
--------------
COMPUTER COMMUNICATIONS (1.2%)
4,000 Aware, Inc.*......................................................................... 183,500
174,000 Cisco Systems, Inc.*................................................................. 11,212,125
24,100 Juniper Networks, Inc.*.............................................................. 3,589,394
15,000 Redback Networks Inc.*............................................................... 1,883,437
--------------
16,868,456
--------------
COMPUTER HARDWARE (1.4%)
70,000 International Business Machines Corp................................................. 9,047,500
112,000 Lexmark International Group, Inc. (Class A)*......................................... 7,399,000
70,000 Sun Microsystems, Inc.*.............................................................. 4,821,250
--------------
21,267,750
--------------
COMPUTER SOFTWARE (5.4%)
34,500 BackWeb Technologies Ltd. (Israel)*.................................................. 935,812
78,000 Citrix Systems, Inc.*................................................................ 4,382,625
65,000 Computer Associates International, Inc............................................... 3,575,000
225,000 Compuware Corp.*..................................................................... 7,143,750
95,900 Great Plains Software, Inc.*......................................................... 4,453,356
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
66
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
175,000 i2 Technologies, Inc.*............................................................... $ 7,525,000
210,000 Microsoft Corp.*..................................................................... 18,926,250
420,000 Oracle Corp.*........................................................................ 15,592,500
150,000 Siebel Systems, Inc.*................................................................ 9,937,500
68,000 Veritas Software Corp.*.............................................................. 6,455,750
--------------
78,927,543
--------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.5%)
54,000 Caterpillar, Inc..................................................................... 3,240,000
68,100 Navistar International Corp.*........................................................ 3,405,000
--------------
6,645,000
--------------
CONSUMER ELECTRONICS/APPLIANCES (0.7%)
95,000 Sony Corp. (ADR) (Japan)............................................................. 10,485,625
--------------
CONTAINERS/PACKAGING (0.5%)
100,000 Temple-Inland, Inc................................................................... 6,825,000
--------------
CONTRACT DRILLING (0.8%)
290,000 ENSCO International Inc.............................................................. 5,781,875
180,000 Global Marine, Inc.*................................................................. 2,778,750
180,000 Rowan Companies, Inc.*............................................................... 3,318,750
--------------
11,879,375
--------------
DEPARTMENT STORES (1.2%)
118,000 Federated Department Stores, Inc.*................................................... 6,246,625
250,000 Sears, Roebuck & Co.................................................................. 11,140,625
--------------
17,387,250
--------------
DISCOUNT CHAINS (2.0%)
150,640 Ames Department Stores, Inc.*........................................................ 6,854,120
109,000 Dayton Hudson Corp................................................................... 7,085,000
230,000 Dollar General Corp.................................................................. 6,670,000
190,000 Wal-Mart Stores, Inc................................................................. 9,167,500
--------------
29,776,620
--------------
DIVERSIFIED COMMERCIAL SERVICES (0.3%)
24,000 CheckFree Holdings Corp.*............................................................ 660,000
65,000 SABRE Group Holdings, Inc.*.......................................................... 4,468,750
--------------
5,128,750
--------------
DIVERSIFIED ELECTRONIC PRODUCTS (1.5%)
20,000 Gemstar International Group Ltd. (Virgin Islands)*................................... 1,305,000
70,000 Honeywell, Inc....................................................................... 8,111,250
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
90,000 Rockwell International Corp.......................................................... $ 5,467,500
39,000 Uniphase Corp.*...................................................................... 6,474,000
--------------
21,357,750
--------------
DIVERSIFIED FINANCIAL SERVICES (1.3%)
110,000 American Express Co.................................................................. 14,313,750
50,000 Equitable Companies, Inc............................................................. 3,350,000
40,000 Fortis (NL) NV (ADR) (Netherlands)................................................... 1,280,000
--------------
18,943,750
--------------
DIVERSIFIED MANUFACTURING (2.8%)
179,400 AlliedSignal, Inc.................................................................... 11,302,200
71,000 Mannesmann AG (ADR) (Germany)........................................................ 10,738,750
64,000 Minnesota Mining & Manufacturing Co.................................................. 5,564,000
145,000 Tyco International Ltd. (Bermuda).................................................... 13,738,750
--------------
41,343,700
--------------
E.D.P. SERVICES (1.6%)
110,000 Electronic Data Systems Corp......................................................... 6,221,875
285,000 First Data Corp...................................................................... 13,947,187
70,000 Unisys Corp.*........................................................................ 2,725,625
--------------
22,894,687
--------------
ELECTRIC UTILITIES (0.4%)
110,000 AES Corp. (The)*..................................................................... 6,393,750
--------------
ELECTRONIC COMPONENTS (0.0%)
7,000 Sanmina Corp.*....................................................................... 531,125
--------------
ELECTRONIC PRODUCTION EQUIPMENT (2.6%)
240,000 Applied Materials, Inc.*............................................................. 17,730,000
151,000 ASM Lithography Holding NV (Netherlands)*............................................ 8,909,000
162,000 Teradyne, Inc.*...................................................................... 11,623,500
--------------
38,262,500
--------------
FINANCE COMPANIES (0.4%)
16,100 E-LOAN, Inc.*........................................................................ 619,850
145,700 MBNA Corp............................................................................ 4,462,062
38,500 NextCard, Inc.*...................................................................... 1,304,187
--------------
6,386,099
--------------
FLUID CONTROLS (0.1%)
38,600 Parker-Hannifin Corp................................................................. 1,765,950
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
67
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FOREST PRODUCTS (1.2%)
270,000 Georgia-Pacific Group................................................................ $ 12,791,250
65,000 Weyerhaeuser Co...................................................................... 4,468,750
--------------
17,260,000
--------------
HOSPITAL/NURSING MANAGEMENT (0.2%)
130,000 Columbia/HCA Healthcare Corp......................................................... 2,965,625
--------------
INDUSTRIAL MACHINERY/COMPONENTS (0.9%)
90,000 Illinois Tool Works Inc.............................................................. 7,380,000
82,000 Ingersoll-Rand Co.................................................................... 5,299,250
--------------
12,679,250
--------------
INSURANCE BROKERS/SERVICES (0.3%)
55,000 Marsh & McLennan Companies, Inc...................................................... 4,152,500
--------------
INTEGRATED OIL COMPANIES (1.3%)
85,000 Atlantic Richfield Co................................................................ 7,102,812
88,300 Exxon Corp........................................................................... 6,810,138
84,000 Texaco, Inc.......................................................................... 5,250,000
--------------
19,162,950
--------------
INTERNATIONAL BANKS (0.3%)
110,000 Argentaria, Caja Postal y Banco Hipotecario de Espana, S.A. (ADR) (Spain)............ 5,060,000
--------------
INTERNET SERVICES (1.9%)
5,400 Ask Jeeves, Inc.*.................................................................... 75,600
100,000 RealNetworks, Inc.*.................................................................. 6,887,500
75,000 VeriSign, Inc.*...................................................................... 6,468,750
80,000 Yahoo! Inc.*......................................................................... 13,775,000
--------------
27,206,850
--------------
INVESTMENT BANKERS/BROKERS/SERVICES (0.4%)
5,800 Goldman Sachs Group, Inc............................................................. 419,050
6,000 Merrill Lynch & Co., Inc............................................................. 479,625
47,000 Schwab (Charles) Corp................................................................ 5,164,125
--------------
6,062,800
--------------
INVESTMENT MANAGERS (0.2%)
75,000 Franklin Resources, Inc.............................................................. 3,046,875
--------------
LIFE INSURANCE (0.3%)
74,200 Lincoln National Corp................................................................ 3,881,588
--------------
MAJOR BANKS (1.9%)
20,000 Bank of New York Co., Inc............................................................ 733,750
175,000 Chase Manhattan Corp................................................................. 15,159,375
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
10,000 First Union Corp..................................................................... $ 470,000
139,000 Huntington Bancshares, Inc........................................................... 4,856,313
110,000 PNC Bank Corp........................................................................ 6,338,750
--------------
27,558,188
--------------
MAJOR CHEMICALS (0.2%)
25,000 Dow Chemical Co...................................................................... 3,171,875
--------------
MAJOR PHARMACEUTICALS (1.8%)
75,000 American Home Products Corp.......................................................... 4,312,500
170,000 Bristol-Myers Squibb Co.............................................................. 11,974,375
102,000 Johnson & Johnson.................................................................... 9,996,000
5,000 Pharmacia & Upjohn, Inc.............................................................. 284,063
6,000 Schering-Plough Corp................................................................. 318,000
3,000 Warner-Lambert Co.................................................................... 208,125
--------------
27,093,063
--------------
MAJOR U.S. TELECOMMUNICATIONS (0.8%)
80,000 AT&T Corp............................................................................ 4,465,000
40,000 MCI WorldCom, Inc.................................................................... 3,440,000
62,000 Sprint Corp. (FON Group)............................................................. 3,274,375
--------------
11,179,375
--------------
MANAGED HEALTH CARE (1.0%)
168,000 United HealthCare Corp............................................................... 10,521,000
48,000 Wellpoint Health Networks, Inc.*..................................................... 4,074,000
--------------
14,595,000
--------------
MEAT/POULTRY/FISH (0.0%)
15,000 ConAgra, Inc......................................................................... 399,375
--------------
MEDIA CONGLOMERATES (1.1%)
115,300 Fox Entertainment Group, Inc. (Series A)*............................................ 3,105,894
82,000 News Corporation Ltd. (The) (ADR) (Australia)........................................ 2,895,625
65,000 Time Warner Inc...................................................................... 4,777,500
10,000 Viacom, Inc. (Class A)*.............................................................. 441,250
108,600 Viacom, Inc. (Class B)*.............................................................. 4,778,400
--------------
15,998,669
--------------
MEDICAL EQUIPMENT & SUPPLIES (0.4%)
8,257 Medtronic, Inc....................................................................... 643,014
232,000 Summit Technology, Inc.*............................................................. 5,104,000
--------------
5,747,014
--------------
MEDICAL SPECIALTIES (2.4%)
55,000 Bausch & Lomb, Inc................................................................... 4,207,500
236,200 Boston Scientific Corp.*............................................................. 10,378,038
109,125 Minimed, Inc.*....................................................................... 8,395,805
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
68
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
90,000 Perclose, Inc.*...................................................................... $ 4,320,000
97,200 St. Jude Medical, Inc.*.............................................................. 3,462,750
60,000 VISX, Inc.*.......................................................................... 4,755,000
--------------
35,519,093
--------------
MEDICAL/DENTAL DISTRIBUTORS (0.0%)
11,250 Cardinal Health, Inc................................................................. 721,406
--------------
MEDICAL/NURSING SERVICES (0.4%)
400,000 HEALTHSOUTH Corp.*................................................................... 5,975,000
--------------
MILITARY/GOV'T/TECHNICAL (1.1%)
143,100 General Motors Corp. (Class H)*...................................................... 8,049,375
117,200 Raytheon Co. (Class B)............................................................... 8,247,950
--------------
16,297,325
--------------
MOVIES/ENTERTAINMENT (1.0%)
49,900 Premier Parks Inc.*.................................................................. 1,833,825
248,400 Seagram Co. Ltd. (Canada)............................................................ 12,513,150
--------------
14,346,975
--------------
MULTI-LINE INSURANCE (1.5%)
117,000 American International Group, Inc.................................................... 13,696,313
100,000 CIGNA Corp........................................................................... 8,900,000
--------------
22,596,313
--------------
MULTI-SECTOR COMPANIES (2.3%)
200,000 General Electric Co.................................................................. 22,600,000
162,000 United Technologies Corp............................................................. 11,613,375
--------------
34,213,375
--------------
NEWSPAPERS (0.4%)
74,400 Tribune Co........................................................................... 6,482,100
--------------
OFFICE EQUIPMENT/SUPPLIES (0.2%)
31,400 Avery Dennison Corp.................................................................. 1,895,775
15,400 Pitney Bowes, Inc.................................................................... 989,450
--------------
2,885,225
--------------
OIL & GAS PRODUCTION (0.5%)
110,000 Apache Corp.......................................................................... 4,290,000
89,000 Noble Affiliates, Inc................................................................ 2,508,688
--------------
6,798,688
--------------
OIL/GAS TRANSMISSION (0.8%)
150,000 Enron Corp........................................................................... 12,262,500
--------------
OILFIELD SERVICES/EQUIPMENT (3.0%)
169,400 Baker Hughes Inc..................................................................... 5,674,900
170,000 BJ Services Co.*..................................................................... 5,004,375
8,000 Coflexip, S.A. (ADR) (France)........................................................ 350,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
120,000 Cooper Cameron Corp.*................................................................ $ 4,447,500
215,000 Halliburton Co....................................................................... 9,728,750
72,000 Schlumberger, Ltd.................................................................... 4,585,500
112,300 Smith International, Inc.*........................................................... 4,878,031
260,000 Weatherford International, Inc.*..................................................... 9,522,500
--------------
44,191,556
--------------
OTHER PHARMACEUTICALS (0.6%)
42,000 Allergan, Inc........................................................................ 4,662,000
64,000 Biovail Corporation International (Canada)*.......................................... 3,268,000
12,000 Elan Corp. PLC (ADR) (Ireland)*...................................................... 333,000
5,000 Watson Pharmaceuticals, Inc.*........................................................ 175,313
--------------
8,438,313
--------------
OTHER TELECOMMUNICATIONS (0.3%)
12,000 McLeodUSA, Inc. (Class A)*........................................................... 658,500
6,000 NEXTLINK Communications, Inc. (Class A)*............................................. 445,875
40,000 NTL Inc.*............................................................................ 3,447,500
--------------
4,551,875
--------------
PACKAGE GOODS/COSMETICS (2.2%)
255,000 Avon Products, Inc................................................................... 14,152,500
95,000 Colgate-Palmolive Co................................................................. 9,381,250
184,000 Estee Lauder Companies, Inc. (Class A)............................................... 9,223,000
--------------
32,756,750
--------------
PACKAGED FOODS (0.0%)
15,000 Aurora Foods, Inc.*.................................................................. 262,500
--------------
PAPER (0.8%)
157,000 International Paper Co............................................................... 7,928,500
68,000 Willamette Industries, Inc........................................................... 3,132,250
--------------
11,060,750
--------------
PROPERTY - CASUALTY INSURERS (0.5%)
100,000 Chubb Corp........................................................................... 6,950,000
5,800 St. Paul Companies, Inc.............................................................. 184,513
--------------
7,134,513
--------------
RAILROADS (0.2%)
54,100 Canadian National Railway Co. (Canada)............................................... 3,624,700
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
69
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RESTAURANTS (0.6%)
230,000 Outback Steakhouse, Inc.*............................................................ $ 8,998,750
--------------
RETAIL - SPECIALTY (3.2%)
180,000 Best Buy Co., Inc.*.................................................................. 12,150,000
155,000 Circuit City Stores, Inc.-Circuit City Group......................................... 14,415,000
238,800 Tandy Corp........................................................................... 11,671,350
54,700 Tiffany & Co......................................................................... 5,278,550
150,000 Toys 'R' Us, Inc.*................................................................... 3,103,125
--------------
46,618,025
--------------
SEMICONDUCTORS (6.8%)
60,000 Applied Micro Circuits Corp.*........................................................ 4,995,000
26,000 Broadcom Corp. (Class A)*............................................................ 3,757,000
52,000 Conexant Systems, Inc.*.............................................................. 3,016,000
10,000 Intel Corp........................................................................... 594,375
95,000 Linear Technology Corp............................................................... 6,388,750
72,200 LSI Logic Corp.*..................................................................... 3,330,225
12,700 Maker Communications, Inc.*.......................................................... 390,525
98,000 Maxim Integrated Products, Inc.*..................................................... 6,517,000
110,000 PMC - Sierra, Inc. (Canada)*......................................................... 6,483,125
252,000 RF Micro Devices, Inc.*.............................................................. 18,805,500
160,000 STMicroelectronics NV (Netherlands).................................................. 11,100,000
210,000 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) (Taiwan)........................... 7,140,000
104,000 Texas Instruments, Inc............................................................... 15,080,000
13,000 TranSwitch Corp.*.................................................................... 615,063
34,000 TriQuint Semiconductor, Inc.......................................................... 1,931,625
50,000 Vitesse Semiconductor Corp.*......................................................... 3,393,750
121,000 Xilinx, Inc.*........................................................................ 6,927,250
--------------
100,465,188
--------------
SERVICES TO THE HEALTH INDUSTRY (0.0%)
10,000 MedQuist Inc.*....................................................................... 436,875
--------------
SHOE MANUFACTURING (0.9%)
200,000 Nike, Inc. (Class B)................................................................. 12,662,500
--------------
SPECIALTY CHEMICALS (0.5%)
51,600 Air Products & Chemicals, Inc........................................................ 2,076,900
105,000 Praxair, Inc......................................................................... 5,138,438
--------------
7,215,338
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS (2.0%)
30,000 British Telecommunications PLC (ADR) (United Kingdom)................................ $ 5,137,500
260,000 Nippon Telegraph & Telephone Corp. (ADR) (Japan)..................................... 16,282,500
90,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)................................... 7,273,125
--------------
28,693,125
--------------
TELECOMMUNICATIONS EQUIPMENT (7.5%)
201,500 Comverse Technology, Inc.*........................................................... 15,188,063
186,024 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)................................... 6,115,539
89,200 General Instrument Corp.*............................................................ 3,791,000
180,000 Lucent Technologies Inc.............................................................. 12,138,750
170,000 Motorola, Inc........................................................................ 16,107,500
205,000 Nokia Corp. (ADR) (Finland).......................................................... 18,770,313
138,000 Nortel Networks Corp. (Canada)....................................................... 11,980,125
120,000 QUALCOMM Inc.*....................................................................... 17,220,000
149,400 Scientific-Atlanta, Inc.............................................................. 5,378,400
46,000 Tellabs, Inc.*....................................................................... 3,107,875
--------------
109,797,565
--------------
TOBACCO (0.0%)
5,000 Philip Morris Companies, Inc......................................................... 200,938
--------------
WIRELESS COMMUNICATIONS (2.3%)
179,000 Nextel Communications, Inc. (Class A)*............................................... 8,983,563
115,000 Sprint Corp. (PCS Group)*............................................................ 6,569,375
30,000 Teligent, Inc. (Class A)*............................................................ 1,792,500
62,500 Vodafone AirTouch PLC (ADR) (United Kingdom)......................................... 12,312,500
34,000 VoiceStream Wireless Corp.*.......................................................... 966,875
34,000 Western Wireless Corp. (Class A)*.................................................... 918,000
47,000 WinStar Communications, Inc.*........................................................ 2,291,250
--------------
33,834,063
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $1,258,213,206)..................................................... 1,394,884,990
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
70
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (6.4%)
U.S. GOVERNMENT AGENCY (a) (6.4%)
$ 93,900 Federal Home Loan Mortgage Corp. 4.60% due 07/01/99 (AMORTIZED COST $93,900,000)..... $ 93,900,000
--------------
REPURCHASE AGREEMENT (0.0%)
132 The Bank of New York 4.625% due 07/01/99 (dated 06/30/99; proceeds $131,550) (b)
(IDENTIFIED COST $131,533)......................................................... 131,533
--------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $94,031,533)........................................................ 94,031,533
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,352,244,739) (C).................................................... 101.4 % 1,488,916,523
LIABILITIES IN EXCESS OF OTHER ASSETS................................................... (1.4) (20,244,926)
------ ---------------
NET ASSETS.............................................................................. 100.0 % $ 1,468,671,597
------ ---------------
------ ---------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
GDR Global 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 $135,783 U.S. Treasury Bill 0.00% due 09/30/99 valued at
$134,163.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $154,387,861 and the
aggregate gross unrealized depreciation is $17,716,077, resulting in net
unrealized appreciation of $136,671,784.
SEE NOTES TO FINANCIAL STATEMENTS
71
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (94.2%)
ACCIDENT & HEALTH INSURANCE (0.2%)
2,671 AFLAC, Inc............................................................................ $ 127,874
1,353 Torchmark Corp........................................................................ 46,171
1,390 UNUM Corp............................................................................. 76,102
------------
250,147
------------
ADVERTISING (0.2%)
1,405 Interpublic Group of Companies, Inc................................................... 121,708
1,788 Omnicom Group, Inc.................................................................... 143,040
------------
264,748
------------
AEROSPACE (0.8%)
9,738 Boeing Co............................................................................. 430,298
744 Goodrich (B.F.) Co. (The)............................................................. 31,620
3,942 Lockheed Martin Corp.................................................................. 146,839
689 Northrop Grumman Corp................................................................. 45,689
4,821 United Technologies Corp.............................................................. 345,605
------------
1,000,051
------------
AIR FREIGHT/DELIVERY SERVICES (0.1%)
2,974 FDX Corp.*............................................................................ 161,339
------------
AIRLINES (0.3%)
1,535 AMR Corp.*............................................................................ 104,764
1,403 Delta Air Lines, Inc.................................................................. 80,848
3,355 Southwest Airlines Co................................................................. 104,424
738 US Airways Group Inc.*................................................................ 32,149
------------
322,185
------------
ALCOHOLIC BEVERAGES (0.3%)
4,756 Anheuser-Busch Companies, Inc......................................................... 337,379
685 Brown-Forman Corp. (Class B).......................................................... 44,653
369 Coors (Adolph) Co. (Class B).......................................................... 18,265
------------
400,297
------------
ALUMINUM (0.3%)
2,259 Alcan Aluminium Ltd. (Canada)......................................................... 72,147
3,695 Alcoa Inc............................................................................. 228,628
645 Reynolds Metals Co.................................................................... 38,055
------------
338,830
------------
APPAREL (0.1%)
721 Fruit of the Loom, Inc. (Class A)*.................................................... 7,030
623 Liz Claiborne, Inc.................................................................... 22,739
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
341 Russell Corp.......................................................................... $ 6,649
1,198 VF Corp............................................................................... 51,214
------------
87,632
------------
AUTO PARTS: O.E.M. (0.3%)
1,659 Dana Corp............................................................................. 76,418
5,648 Delphi Automotive Systems Corp........................................................ 104,841
718 Eaton Corp............................................................................ 66,056
852 Johnson Controls, Inc................................................................. 59,054
1,203 TRW Inc............................................................................... 66,015
------------
372,384
------------
AUTOMOTIVE AFTERMARKET (0.1%)
758 Cooper Tire & Rubber Co............................................................... 17,908
1,790 Genuine Parts Co...................................................................... 62,650
1,559 Goodyear Tire & Rubber Co............................................................. 91,689
------------
172,247
------------
BEVERAGES - NON-ALCOHOLIC (1.9%)
24,669 Coca Cola Co.......................................................................... 1,541,812
4,243 Coca-Cola Enterprises Inc............................................................. 126,229
14,766 PepsiCo, Inc.......................................................................... 571,260
------------
2,239,301
------------
BIOTECHNOLOGY (0.3%)
5,118 Amgen Inc.*........................................................................... 311,238
------------
BOOKS/MAGAZINES (0.0%)
711 Harcourt General, Inc................................................................. 36,661
519 Meredith Corp......................................................................... 17,970
------------
54,631
------------
BROADCASTING (0.5%)
7,117 CBS Corp.*............................................................................ 309,145
3,320 Clear Channel Communications, Inc.*................................................... 228,872
------------
538,017
------------
BUILDING MATERIALS (0.1%)
548 Owens Corning......................................................................... 18,837
1,007 Vulcan Materials Co................................................................... 48,588
------------
67,425
------------
BUILDING MATERIALS/DIY CHAINS (1.0%)
14,813 Home Depot, Inc. (The)................................................................ 954,513
3,712 Lowe's Companies, Inc................................................................. 210,424
------------
1,164,937
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
72
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BUILDING PRODUCTS (0.1%)
400 Armstrong World Industries, Inc....................................................... $ 23,125
3,368 Masco Corp............................................................................ 97,251
------------
120,376
------------
CABLE TELEVISION (0.6%)
7,402 Comcast Corp. (Class A Special)....................................................... 284,514
6,054 MediaOne Group, Inc.*................................................................. 450,266
------------
734,780
------------
CASINO/GAMBLING (0.1%)
1,276 Harrah's Entertainment, Inc.*......................................................... 28,072
1,987 Mirage Resorts, Inc.*................................................................. 33,282
------------
61,354
------------
CELLULAR TELEPHONE (0.3%)
2,959 Nextel Communications, Inc. (Class A)*................................................ 148,505
4,397 Sprint Corp. (PCS Group)*............................................................. 251,179
------------
399,684
------------
CLOTHING/SHOE/ACCESSORY STORES (0.6%)
8,592 Gap, Inc. (The)....................................................................... 432,822
2,131 Limited (The), Inc.................................................................... 96,694
1,420 Nordstrom, Inc........................................................................ 47,570
3,216 TJX Companies, Inc.................................................................... 107,133
------------
684,219
------------
COMPUTER COMMUNICATIONS (1.8%)
3,618 3Com Corp.*........................................................................... 96,329
1,721 Cabletron Systems, Inc.*.............................................................. 22,373
31,934 Cisco Systems, Inc.*.................................................................. 2,057,747
------------
2,176,449
------------
COMPUTER HARDWARE (4.5%)
1,590 Apple Computer, Inc.*................................................................. 73,637
16,995 Compaq Computer Corp.................................................................. 402,569
506 Data General Corp.*................................................................... 7,369
25,354 Dell Computer Corp.*.................................................................. 936,513
1,565 Gateway Inc........................................................................... 92,335
10,147 Hewlett-Packard Co.................................................................... 1,019,773
18,143 International Business Machines Corp.................................................. 2,344,983
7,736 Sun Microsystems, Inc.*............................................................... 532,817
------------
5,409,996
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE (5.0%)
610 Adobe Systems, Inc.................................................................... $ 50,096
589 Autodesk, Inc......................................................................... 17,412
2,357 BMC Software, Inc.*................................................................... 127,131
5,362 Computer Associates International, Inc................................................ 294,910
3,674 Compuware Corp.*...................................................................... 116,649
51,024 Microsoft Corp.*...................................................................... 4,598,538
3,364 Novell, Inc.*......................................................................... 89,146
14,390 Oracle Corp.*......................................................................... 534,229
2,707 Parametric Technology Corp.*.......................................................... 37,560
2,407 PeopleSoft, Inc.*..................................................................... 41,521
------------
5,907,192
------------
COMPUTER/VIDEO CHAINS (0.3%)
2,044 Best Buy Co., Inc.*................................................................... 137,970
1,004 Circuit City Stores, Inc.-Circuit City Group.......................................... 93,372
1,934 Tandy Corp............................................................................ 94,524
------------
325,866
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.4%)
743 Case Corp............................................................................. 35,757
3,557 Caterpillar, Inc...................................................................... 213,420
422 Cummins Engine Co., Inc............................................................... 24,107
2,316 Deere & Co............................................................................ 91,771
82 NACCO Industries, Inc. (Class A)...................................................... 6,027
661 Navistar International Corp.*......................................................... 33,050
782 PACCAR, Inc........................................................................... 41,739
------------
445,871
------------
CONSUMER ELECTRONICS/APPLIANCES (0.1%)
884 Maytag Corp........................................................................... 61,604
753 Whirlpool Corp........................................................................ 55,722
------------
117,326
------------
CONSUMER SPECIALTIES (0.0%)
344 Jostens, Inc.......................................................................... 7,245
------------
CONSUMER SUNDRIES (0.0%)
674 American Greetings Corp. (Class A).................................................... 20,304
------------
CONTAINERS/PACKAGING (0.2%)
306 Ball Corp............................................................................. 12,928
523 Bemis Company, Inc.................................................................... 20,789
1,223 Crown Cork & Seal Co., Inc............................................................ 34,855
</TABLE>
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73
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PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1,558 Owens-Illinois, Inc.*................................................................. $ 50,927
835 Sealed Air Corp.*..................................................................... 54,171
557 Temple-Inland, Inc.................................................................... 38,015
------------
211,685
------------
CONTRACT DRILLING (0.0%)
494 Helmerich & Payne, Inc................................................................ 11,763
830 Rowan Companies, Inc.*................................................................ 15,303
------------
27,066
------------
DEPARTMENT STORES (0.6%)
1,069 Dillard's, Inc. (Class A)............................................................. 37,549
2,085 Federated Department Stores, Inc.*.................................................... 110,375
1,627 Kohl's Corp.*......................................................................... 125,584
3,340 May Department Stores Co.............................................................. 136,522
2,635 Penney (J.C.) Co., Inc................................................................ 127,962
3,808 Sears, Roebuck & Co................................................................... 169,694
------------
707,686
------------
DISCOUNT CHAINS (2.3%)
1,095 Consolidated Stores Corp.*............................................................ 29,565
2,196 Costco Companies, Inc.*............................................................... 175,680
4,426 Dayton Hudson Corp.................................................................... 287,690
2,210 Dollar General Corp................................................................... 64,090
4,949 Kmart Corp.*.......................................................................... 81,349
44,488 Wal-Mart Stores, Inc.................................................................. 2,146,546
------------
2,784,920
------------
DIVERSIFIED COMMERCIAL SERVICES (0.1%)
2,459 Paychex, Inc.......................................................................... 78,073
------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.2%)
797 Harris Corp........................................................................... 31,232
1,261 Honeywell, Inc........................................................................ 146,118
1,903 Rockwell International Corp........................................................... 115,607
------------
292,957
------------
DIVERSIFIED FINANCIAL SERVICES (2.0%)
4,504 American Express Co................................................................... 586,083
33,782 Citigroup, Inc........................................................................ 1,604,645
1,422 Providian Financial Corp.............................................................. 132,957
1,246 Transamerica Corp..................................................................... 93,450
------------
2,417,135
------------
DIVERSIFIED MANUFACTURING (1.5%)
1,927 Allegheny Teledyne Inc................................................................ 43,598
5,525 AlliedSignal, Inc..................................................................... 348,075
944 Cooper Industries, Inc................................................................ 49,088
1,354 Danaher Corp.......................................................................... 78,701
2,152 Dover Corp............................................................................ 75,320
879 ITT Industries, Inc................................................................... 33,512
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
4,025 Minnesota Mining & Manufacturing Co................................................... $ 349,923
1,578 Thermo Electron Corp.*................................................................ 31,659
8,204 Tyco International Ltd. (Bermuda)..................................................... 777,329
------------
1,787,205
------------
DRUGSTORE CHAINS (0.5%)
3,907 CVS Corp.............................................................................. 198,280
393 Longs Drug Stores Corp................................................................ 13,583
2,588 Rite Aid Corp......................................................................... 63,729
10,013 Walgreen Co........................................................................... 294,132
------------
569,724
------------
E.D.P. PERIPHERALS (0.5%)
10,120 EMC Corp.*............................................................................ 556,600
2,226 Seagate Technology, Inc.*............................................................. 57,041
------------
613,641
------------
E.D.P. SERVICES (0.8%)
6,186 Automatic Data Processing, Inc........................................................ 272,184
1,444 Ceridian Corp.*....................................................................... 47,201
1,588 Computer Sciences Corp.*.............................................................. 109,870
4,921 Electronic Data Systems Corp.......................................................... 278,344
4,318 First Data Corp....................................................................... 211,312
------------
918,911
------------
ELECTRIC UTILITIES (2.0%)
1,908 AES Corp. (The)*...................................................................... 110,902
1,372 Ameren Corp........................................................................... 52,650
1,927 American Electric Power Co............................................................ 72,383
1,513 Carolina Power & Light Co............................................................. 64,775
2,126 Central & South West Corp............................................................. 49,695
1,588 CINergy Corp.......................................................................... 50,816
1,173 CMS Energy Corp....................................................................... 49,119
2,272 Consolidated Edison, Inc.............................................................. 102,808
1,495 Constellation Energy Group, Inc....................................................... 44,289
1,919 Dominion Resources, Inc............................................................... 83,117
1,450 DTE Energy Co......................................................................... 58,000
3,641 Duke Energy Corp...................................................................... 197,979
3,471 Edison International.................................................................. 92,849
2,467 Entergy Corp.......................................................................... 77,094
2,346 FirstEnergy Corp...................................................................... 72,726
980 Florida Progress Corp................................................................. 40,486
1,801 FPL Group, Inc........................................................................ 98,380
1,256 GPU, Inc.............................................................................. 52,987
1,149 New Century Energies, Inc............................................................. 44,596
</TABLE>
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74
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MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1,873 Niagara Mohawk Holdings Inc........................................................... $ 30,085
1,536 Northern States Power Co.............................................................. 37,152
2,972 PacifiCorp............................................................................ 54,610
1,918 PECO Energy Co........................................................................ 80,316
3,835 PG & E Corp........................................................................... 124,637
1,576 PP&L Resources, Inc................................................................... 48,462
2,195 Public Service Enterprise Group, Inc.................................................. 89,721
2,962 Reliant Energy, Inc................................................................... 81,825
6,969 Southern Co........................................................................... 184,678
2,806 Texas Utilities Co.................................................................... 115,747
2,171 Unicom Corp........................................................................... 83,719
------------
2,346,603
------------
ELECTRICAL PRODUCTS (0.3%)
4,351 Emerson Electric Co................................................................... 273,569
773 Raychem Corp.......................................................................... 28,601
568 Thomas & Betts Corp................................................................... 26,838
------------
329,008
------------
ELECTRONIC COMPONENTS (0.2%)
823 Andrew Corp.*......................................................................... 15,586
2,522 Solectron Corp.*...................................................................... 168,186
------------
183,772
------------
ELECTRONIC DATA PROCESSING (0.1%)
1,887 Silicon Graphics, Inc.*............................................................... 30,900
2,696 Unisys Corp.*......................................................................... 104,975
------------
135,875
------------
ELECTRONIC PRODUCTION EQUIPMENT (0.3%)
3,729 Applied Materials, Inc.*.............................................................. 275,480
881 KLA-Tencor Corp.*..................................................................... 57,100
------------
332,580
------------
ENGINEERING & CONSTRUCTION (0.0%)
758 Fluor Corp............................................................................ 30,699
407 Foster Wheeler Corp................................................................... 5,749
------------
36,448
------------
ENVIRONMENTAL SERVICES (0.3%)
1,568 Browning-Ferris Industries, Inc....................................................... 67,424
6,089 Waste Management, Inc................................................................. 327,284
------------
394,708
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FARMING/SEEDS/MILLING (0.2%)
5,879 Archer-Daniels-Midland Co............................................................. $ 90,757
2,394 Pioneer Hi-Bred International, Inc.................................................... 93,216
------------
183,973
------------
FINANCE COMPANIES (1.8%)
7,279 Associates First Capital Corp. (Class A).............................................. 322,551
1,975 Capital One Financial Corp............................................................ 109,983
1,127 Countrywide Credit Industries, Inc.................................................... 48,179
10,247 Fannie Mae............................................................................ 700,639
6,950 Freddie Mac........................................................................... 403,100
4,793 Household International, Inc.......................................................... 227,068
8,015 MBNA Corp............................................................................. 245,459
1,628 SLM Holding Corp...................................................................... 74,583
------------
2,131,562
------------
FINANCIAL PUBLISHING/SERVICES (0.2%)
905 Dow Jones & Co., Inc.................................................................. 48,022
1,640 Dun & Bradstreet Corp................................................................. 58,117
1,444 Equifax, Inc.......................................................................... 51,533
1,977 McGraw-Hill Companies, Inc............................................................ 106,634
------------
264,306
------------
FLUID CONTROLS (0.0%)
1,085 Parker-Hannifin Corp.................................................................. 49,639
------------
FOOD CHAINS (0.6%)
4,202 Albertson's, Inc...................................................................... 216,690
383 Great Atlantic & Pacific Tea Co., Inc................................................. 12,950
8,258 Kroger Co.*........................................................................... 230,708
4,965 Safeway Inc.*......................................................................... 245,767
1,486 Winn-Dixie Stores, Inc................................................................ 54,889
------------
761,004
------------
FOOD DISTRIBUTORS (0.1%)
1,192 Supervalu, Inc........................................................................ 30,619
3,309 SYSCO Corp............................................................................ 98,650
------------
129,269
------------
FOREST PRODUCTS (0.2%)
1,716 Georgia-Pacific Group................................................................. 81,295
1,074 Louisiana-Pacific Corp................................................................ 25,507
2,005 Weyerhaeuser Co....................................................................... 137,844
------------
244,646
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
75
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
GENERIC DRUGS (0.0%)
956 Watson Pharmaceuticals, Inc.*......................................................... $ 33,520
------------
HOME BUILDING (0.0%)
595 Centex Corp........................................................................... 22,350
349 Fleetwood Enterprises, Inc............................................................ 9,227
479 Kaufman & Broad Home Corp............................................................. 11,915
432 Pulte Corp............................................................................ 9,963
------------
53,455
------------
HOME FURNISHINGS (0.1%)
2,816 Newell Rubbbermaid, Inc............................................................... 130,944
576 Tupperware Corp....................................................................... 14,688
------------
145,632
------------
HOSPITAL/NURSING MANAGEMENT (0.2%)
5,679 Columbia/HCA Healthcare Corp.......................................................... 129,552
1,110 HCR Manor Care, Inc.*................................................................. 26,848
3,104 Tenet Healthcare Corp.*............................................................... 57,618
------------
214,018
------------
HOTELS/RESORTS (0.4%)
6,130 Carnival Corp. (Class A).............................................................. 297,305
2,582 Hilton Hotels Corp.................................................................... 36,632
2,494 Marriott International, Inc. (Class A)................................................ 93,213
------------
427,150
------------
INDUSTRIAL MACHINERY/COMPONENTS (0.3%)
2,504 Illinois Tool Works Inc............................................................... 205,328
1,659 Ingersoll-Rand Co..................................................................... 107,213
370 Milacron, Inc......................................................................... 6,845
------------
319,386
------------
INDUSTRIAL SPECIALTIES (0.1%)
1,296 Ecolab, Inc........................................................................... 56,538
441 Millipore Corp........................................................................ 17,888
1,246 Pall Corp............................................................................. 27,646
------------
102,072
------------
INSURANCE BROKERS/SERVICES (0.3%)
2,560 AON Corp.............................................................................. 105,600
2,632 Marsh & McLennan Companies, Inc....................................................... 198,716
------------
304,316
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTEGRATED OIL COMPANIES (4.6%)
903 Amerada Hess Corp..................................................................... $ 53,728
3,219 Atlantic Richfield Co................................................................. 268,988
6,552 Chevron Corp.......................................................................... 623,668
24,271 Exxon Corp............................................................................ 1,871,901
862 Kerr-McGee Corp....................................................................... 43,262
7,823 Mobil Corp............................................................................ 774,477
2,524 Phillips Petroleum Co................................................................. 126,989
21,437 Royal Dutch Petroleum Co. (ADR) (Netherlands)......................................... 1,291,579
5,363 Texaco, Inc........................................................................... 335,187
2,421 Unocal Corp........................................................................... 95,932
------------
5,485,711
------------
INTERNET SERVICES (1.0%)
10,862 America Online, Inc.*................................................................. 1,200,251
------------
INVESTMENT BANKERS/BROKERS/SERVICES (1.3%)
1,164 Bear Stearns Companies, Inc........................................................... 54,417
1,188 Lehman Brothers Holdings, Inc......................................................... 73,953
3,678 Merrill Lynch & Co., Inc.............................................................. 294,010
5,704 Morgan Stanley Dean Witter & Co. (Note 4)............................................. 584,660
1,460 Paine Webber Group, Inc............................................................... 68,255
4,081 Schwab (Charles) Corp................................................................. 448,400
------------
1,523,695
------------
INVESTMENT MANAGERS (0.1%)
2,520 Franklin Resources, Inc............................................................... 102,375
1,103 Kansas City Southern Industries, Inc.................................................. 70,385
------------
172,760
------------
LIFE INSURANCE (0.4%)
2,508 American General Corp................................................................. 189,040
3,234 Conseco, Inc.......................................................................... 98,435
1,059 Jefferson-Pilot Corp.................................................................. 70,093
2,002 Lincoln National Corp................................................................. 104,730
------------
462,298
------------
MAJOR BANKS (5.8%)
17,444 Bank of America Corp.................................................................. 1,278,863
7,611 Bank of New York Co., Inc............................................................. 279,229
11,806 Bank One Corp......................................................................... 703,195
2,967 BankBoston Corp....................................................................... 151,688
8,450 Chase Manhattan Corp.................................................................. 731,981
1,562 Comerica, Inc......................................................................... 92,841
9,676 First Union Corp...................................................................... 454,772
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
76
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
6,612 Firstar Corp.......................................................................... $ 185,136
5,702 Fleet Financial Group, Inc............................................................ 253,026
2,100 Huntington Bancshares, Inc............................................................ 73,369
4,477 KeyCorp............................................................................... 143,824
5,209 Mellon Bank Corp...................................................................... 189,477
1,773 Morgan (J.P.) & Co., Inc.............................................................. 249,106
3,147 National City Corp.................................................................... 206,128
3,039 PNC Bank Corp......................................................................... 175,122
1,052 Republic New York Corp................................................................ 71,733
1,673 SouthTrust Corp....................................................................... 64,097
1,610 State Street Corp..................................................................... 137,454
1,712 Summit Bancorp........................................................................ 71,583
3,215 SunTrust Banks, Inc................................................................... 223,242
7,267 U.S. Bancorp.......................................................................... 247,078
2,028 Wachovia Corp......................................................................... 173,521
16,523 Wells Fargo & Co...................................................................... 706,358
------------
6,862,823
------------
MAJOR CHEMICALS (1.3%)
2,196 Dow Chemical Co....................................................................... 278,617
11,276 Du Pont (E.I.) de Nemours & Co., Inc.................................................. 770,292
782 Eastman Chemical Co................................................................... 40,469
1,008 Hercules, Inc......................................................................... 39,627
6,313 Monsanto Co........................................................................... 248,969
2,128 Rohm & Haas Co........................................................................ 91,220
1,329 Union Carbide Corp.................................................................... 64,789
------------
1,533,983
------------
MAJOR PHARMACEUTICALS (8.2%)
15,200 Abbott Laboratories................................................................... 691,600
13,093 American Home Products Corp........................................................... 752,848
19,853 Bristol-Myers Squibb Co............................................................... 1,398,396
13,448 Johnson & Johnson..................................................................... 1,317,904
11,006 Lilly (Eli) & Co...................................................................... 788,305
23,599 Merck & Co., Inc...................................................................... 1,746,326
12,939 Pfizer, Inc........................................................................... 1,420,055
5,066 Pharmacia & Upjohn, Inc............................................................... 287,812
14,717 Schering-Plough Corp.................................................................. 780,001
8,504 Warner-Lambert Co..................................................................... 589,965
------------
9,773,212
------------
MAJOR U.S. TELECOMMUNICATIONS (7.5%)
2,813 ALLTEL Corp........................................................................... 201,130
10,987 Ameritech Corp........................................................................ 807,545
31,811 AT&T Corp............................................................................. 1,775,451
15,518 Bell Atlantic Corp.................................................................... 1,014,489
18,935 BellSouth Corp........................................................................ 887,578
9,714 GTE Corp.............................................................................. 735,836
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
18,601 MCI WorldCom, Inc.*................................................................... $ 1,599,686
19,633 SBC Communications, Inc............................................................... 1,138,714
8,648 Sprint Corp. (FON Group).............................................................. 456,723
5,033 U.S. West, Inc........................................................................ 295,689
------------
8,912,841
------------
MANAGED HEALTH CARE (0.3%)
1,409 Aetna Inc............................................................................. 126,017
1,675 Humana, Inc.*......................................................................... 21,670
1,731 United HealthCare Corp................................................................ 108,404
675 Wellpoint Health Networks, Inc.*...................................................... 57,291
------------
313,382
------------
MEAT/POULTRY/FISH (0.1%)
4,881 ConAgra, Inc.......................................................................... 129,957
------------
MEDIA CONGLOMERATES (1.5%)
20,587 Disney (Walt) Co...................................................................... 634,337
11,925 Time Warner, Inc...................................................................... 876,488
6,902 Viacom, Inc. (Class B)*............................................................... 303,688
------------
1,814,513
------------
MEDICAL EQUIPMENT & SUPPLIES (0.4%)
5,840 Medtronic, Inc........................................................................ 454,790
------------
MEDICAL SPECIALTIES (0.7%)
1,008 ALZA Corp. (Class A)*................................................................. 51,282
517 Bard (C.R.), Inc...................................................................... 24,719
570 Bausch & Lomb, Inc.................................................................... 43,605
2,915 Baxter International, Inc............................................................. 176,722
2,496 Becton, Dickinson & Co................................................................ 74,880
1,124 Biomet, Inc........................................................................... 44,539
3,955 Boston Scientific Corp.*.............................................................. 173,773
3,021 Guidant Corp.......................................................................... 155,393
710 Mallinckrodt, Inc..................................................................... 25,826
842 St. Jude Medical, Inc.*............................................................... 29,996
------------
800,735
------------
MEDICAL/DENTAL DISTRIBUTORS (0.2%)
2,724 Cardinal Health, Inc.................................................................. 174,677
2,769 McKesson HBOC, Inc.................................................................... 88,954
------------
263,631
------------
MEDICAL/NURSING SERVICES (0.1%)
4,146 Healthsouth Corp.*.................................................................... 61,931
------------
METALS FABRICATIONS (0.0%)
619 Timken Co. (The)...................................................................... 12,071
------------
MID - SIZED BANKS (0.5%)
1,761 AmSouth Bancorporation................................................................ 40,833
2,686 Fifth Third Bancorp................................................................... 178,787
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
77
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1,579 Mercantile Bancorporation, Inc........................................................ $ 90,200
1,116 Northern Trust Corp................................................................... 108,252
2,240 Regions Financial Corp................................................................ 85,260
2,710 Synovus Financial Corp................................................................ 53,861
1,426 Union Planters Corp................................................................... 63,724
------------
620,917
------------
MILITARY/GOV'T/TECHNICAL (0.3%)
452 EG & G, Inc........................................................................... 16,103
1,275 General Dynamics Corp................................................................. 87,338
3,360 Raytheon Co. (Class B)................................................................ 236,460
------------
339,901
------------
MOTOR VEHICLES (0.9%)
12,104 Ford Motor Co......................................................................... 683,120
6,482 General Motors Corp................................................................... 427,812
------------
1,110,932
------------
MOVIES/ENTERTAINMENT (0.2%)
707 King World Productions Inc.*.......................................................... 24,612
4,279 Seagram Co. Ltd. (Canada)............................................................. 215,555
------------
240,167
------------
MULTI-LINE INSURANCE (1.8%)
8,067 Allstate Corp......................................................................... 289,404
12,385 American International Group, Inc..................................................... 1,449,819
2,034 CIGNA Corp............................................................................ 181,026
2,269 Hartford Financial Services Group, Inc................................................ 132,311
1,356 Provident Companies, Inc.............................................................. 54,240
1,363 SAFECO Corp........................................................................... 60,142
------------
2,166,942
------------
MULTI-SECTOR COMPANIES (3.4%)
680 Crane Co.............................................................................. 21,378
1,670 Fortune Brands, Inc................................................................... 69,096
32,709 General Electric Co................................................................... 3,696,117
1,097 Loews Corp............................................................................ 86,800
591 McDermott International, Inc.......................................................... 16,696
408 National Service Industries, Inc...................................................... 14,688
1,700 Tenneco, Inc.......................................................................... 40,588
1,507 Textron, Inc.......................................................................... 124,045
------------
4,069,408
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
NATURAL GAS (0.1%)
957 Consolidated Natural Gas Co........................................................... $ 58,138
226 Eastern Enterprises................................................................... 8,984
474 Nicor Inc............................................................................. 18,042
316 ONEOK, Inc............................................................................ 10,033
355 Peoples Energy Corp................................................................... 13,379
2,401 Sempra Energy......................................................................... 54,323
------------
162,899
------------
NEWSPAPERS (0.4%)
2,793 Gannett Co., Inc...................................................................... 199,350
788 Knight-Ridder, Inc.................................................................... 43,291
1,759 New York Times Co. (The) (Class A).................................................... 64,753
719 Times Mirror Co. (Class A)............................................................ 42,601
1,185 Tribune Co............................................................................ 103,243
------------
453,238
------------
OFFICE EQUIPMENT/SUPPLIES (0.5%)
1,137 Avery Dennison Corp................................................................... 68,646
2,685 Pitney Bowes, Inc..................................................................... 172,511
6,611 Xerox Corp............................................................................ 390,462
------------
631,619
------------
OIL & GAS PRODUCTION (0.2%)
1,221 Anardarko Petroleum Corp.............................................................. 44,948
1,118 Apache Corp........................................................................... 43,602
1,773 Burlington Resources, Inc............................................................. 76,682
3,479 Occidental Petroleum Corp............................................................. 73,494
2,521 Union Pacific Resources Group, Inc.................................................... 41,124
------------
279,850
------------
OIL REFINING/MARKETING (0.1%)
731 Ashland, Inc.......................................................................... 29,331
902 Sunoco Inc............................................................................ 27,229
3,086 USX-Marathon Group.................................................................... 100,488
------------
157,048
------------
OIL/GAS TRANSMISSION (0.5%)
2,132 Coastal Corp.......................................................................... 85,280
827 Columbia Energy Group, Inc............................................................ 51,843
3,535 Enron Corp............................................................................ 288,986
1,100 Sonat, Inc............................................................................ 36,438
4,323 Williams Companies, Inc............................................................... 183,998
------------
646,545
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
78
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OILFIELD SERVICES/EQUIPMENT (0.6%)
3,273 Baker Hughes Inc...................................................................... $ 109,646
4,405 Halliburton Co........................................................................ 199,326
5,469 Schlumberger, Ltd..................................................................... 348,307
------------
657,279
------------
OTHER CONSUMER SERVICES (0.2%)
972 Block (H.&R.), Inc.................................................................... 48,600
7,678 Cendant Corp.*........................................................................ 157,399
2,719 Service Corp. International........................................................... 52,341
------------
258,340
------------
OTHER METALS/MINERALS (0.1%)
397 ASARCO, Inc........................................................................... 7,469
904 Cyprus Amax Minerals Co............................................................... 13,730
1,919 Inco Ltd. (Canada).................................................................... 34,542
580 Phelps Dodge Corp..................................................................... 35,924
------------
91,665
------------
OTHER PHARMACEUTICALS (0.1%)
666 Allergan, Inc......................................................................... 73,926
------------
OTHER SPECIALTY STORES (0.3%)
1,496 AutoZone, Inc.*....................................................................... 45,067
3,740 Office Depot, Inc.*................................................................... 82,514
526 Pep Boys-Manny, Moe & Jack............................................................ 11,375
4,646 Staples, Inc.*........................................................................ 143,445
2,485 Toys 'R' Us, Inc.*.................................................................... 51,408
------------
333,809
------------
OTHER TELECOMMUNICATIONS (0.1%)
1,392 CenturyTel Inc........................................................................ 55,332
1,731 Frontier Corp......................................................................... 102,129
------------
157,461
------------
OTHER TRANSPORTATION (0.0%)
3,301 Laidlaw, Inc. (Canada)................................................................ 24,345
------------
PACKAGE GOODS/COSMETICS (2.2%)
563 Alberto-Culver Co. (Class B).......................................................... 14,990
2,618 Avon Products, Inc.................................................................... 145,299
1,180 Clorox Co............................................................................. 126,039
2,921 Colgate-Palmolive Co.................................................................. 288,449
11,088 Gillette Co........................................................................... 454,608
1,060 International Flavors & Fragrances, Inc............................................... 47,038
5,323 Kimberly-Clark Corp................................................................... 303,411
13,281 Procter & Gamble Co................................................................... 1,185,329
------------
2,565,163
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PACKAGED FOODS (1.3%)
2,794 BestFoods............................................................................. $ 138,303
4,361 Campbell Soup Co...................................................................... 202,241
1,528 General Mills, Inc.................................................................... 122,813
3,594 Heinz (H.J.) Co....................................................................... 180,149
4,050 Kellogg Co............................................................................ 133,650
1,348 Quaker Oats Company (The)............................................................. 89,474
3,256 Ralston-Ralston Purina Group.......................................................... 99,105
9,032 Sara Lee Corp......................................................................... 204,914
5,713 Unilever N.V. (Netherlands)........................................................... 398,482
------------
1,569,131
------------
PAINTS/COATINGS (0.1%)
1,737 PPG Industries, Inc................................................................... 102,592
1,700 Sherwin-Williams Co................................................................... 47,175
------------
149,767
------------
PAPER (0.4%)
565 Boise Cascade Corp.................................................................... 24,224
957 Champion International Corp........................................................... 45,816
2,207 Fort James Corp....................................................................... 83,590
4,104 International Paper Co................................................................ 207,252
1,015 Mead Corp............................................................................. 42,376
289 Potlatch Corp......................................................................... 12,698
1,001 Westavaco Corp........................................................................ 29,029
1,113 Willamette Industries, Inc............................................................ 51,268
------------
496,253
------------
PHOTOGRAPHIC PRODUCTS (0.2%)
3,216 Eastman Kodak Co...................................................................... 217,884
442 Polaroid Corp......................................................................... 12,210
------------
230,094
------------
PRECIOUS METALS (0.2%)
3,899 Barrick Gold Corp. (Canada)........................................................... 75,543
2,298 Battle Mountain Gold Co............................................................... 5,601
1,634 Freeport-McMoran Copper & Gold, Inc. (Class B)........................................ 29,310
2,601 Homestake Mining Co................................................................... 21,296
1,674 Newmont Mining Corp................................................................... 33,271
3,254 Placer Dome Inc. (Canada)............................................................. 38,438
------------
203,459
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
79
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PRECISION INSTRUMENTS (0.1%)
510 Pe Corp-Pe Biosystems Group........................................................... $ 58,523
469 Tektronix, Inc........................................................................ 14,158
------------
72,681
------------
PRINTING/FORMS (0.1%)
776 Deluxe Corp........................................................................... 30,216
1,308 Donnelley (R.R.) & Sons Co............................................................ 48,478
------------
78,694
------------
PROPERTY - CASUALTY INSURERS (0.3%)
1,616 Chubb Corp............................................................................ 112,312
1,651 Cincinnati Financial Corp............................................................. 61,809
729 Progressive Corp...................................................................... 105,705
2,274 St. Paul Companies, Inc............................................................... 72,342
------------
352,168
------------
RAILROADS (0.4%)
4,697 Burlington Northern Santa Fe Corp..................................................... 145,607
2,173 CSX Corp.............................................................................. 98,464
3,798 Norfolk Southern Corp................................................................. 114,415
2,477 Union Pacific Corp.................................................................... 144,440
------------
502,926
------------
RECREATIONAL PRODUCTS/TOYS (0.2%)
919 Brunswick Corp........................................................................ 25,617
1,954 Hasbro, Inc........................................................................... 54,590
4,165 Mattel, Inc........................................................................... 110,112
------------
190,319
------------
RENTAL/LEASING COMPANIES (0.0%)
708 Ryder System, Inc..................................................................... 18,408
------------
RESTAURANTS (0.6%)
1,329 Darden Restaurants, Inc............................................................... 28,989
13,576 McDonald's Corp....................................................................... 560,859
1,535 Tricon Global Restaurants, Inc.*...................................................... 83,082
1,234 Wendy's International, Inc............................................................ 34,938
------------
707,868
------------
SAVINGS & LOAN ASSOCIATIONS (0.2%)
561 Golden West Financial Corp............................................................ 54,978
5,947 Washington Mutual, Inc................................................................ 210,375
------------
265,353
------------
SEMICONDUCTORS (2.3%)
1,465 Advanced Micro Devices, Inc.*......................................................... 26,462
33,170 Intel Corp............................................................................ 1,971,542
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
1,430 LSI Logic Corp.*...................................................................... $ 65,959
2,503 Micron Technology, Inc.*.............................................................. 100,902
1,679 National Semiconductor Corp.*......................................................... 42,500
3,919 Texas Instruments, Inc................................................................ 568,255
------------
2,775,620
------------
SERVICES TO THE HEALTH INDUSTRY (0.1%)
3,167 IMS Health Inc........................................................................ 98,969
266 Shared Medical Systems Corp........................................................... 17,357
------------
116,326
------------
SHOE MANUFACTURING (0.2%)
2,812 Nike, Inc. (Class B).................................................................. 178,035
560 Reebok International Ltd. (United Kingdom)*........................................... 10,430
------------
188,465
------------
SMALLER BANKS (0.1%)
3,143 BB&T Corp............................................................................. 115,309
------------
SPECIALTY CHEMICALS (0.3%)
2,292 Air Products & Chemicals, Inc......................................................... 92,253
1,259 Engelhard Corp........................................................................ 28,485
319 FMC Corp.*............................................................................ 21,792
691 Grace (W. R.) & Co.................................................................... 12,697
584 Great Lakes Chemical Corp............................................................. 26,901
658 Nalco Chemical Co..................................................................... 34,134
1,576 Praxair, Inc.......................................................................... 77,126
1,008 Sigma-Aldrich Corp.................................................................... 34,713
------------
328,101
------------
SPECIALTY FOODS/CANDY (0.2%)
1,397 Hershey Foods Corp.................................................................... 82,947
1,162 Wrigley (Wm.) Jr. Co. (Class A)....................................................... 104,580
------------
187,527
------------
SPECIALTY INSURERS (0.1%)
998 MBIA, Inc............................................................................. 64,621
1,090 MGIC Investment Corp.................................................................. 53,001
------------
117,622
------------
SPECIALTY STEELS (0.0%)
872 Nucor Corp............................................................................ 41,366
------------
STEEL/IRON ORE (0.0%)
1,305 Bethlehem Steel Corp.*................................................................ 10,032
883 USX-U.S. Steel Group.................................................................. 23,841
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
80
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
918 Worthington Industries, Inc........................................................... $ 15,032
------------
48,905
------------
TELECOMMUNICATIONS EQUIPMENT (3.1%)
2,440 Corning Inc........................................................................... 171,105
1,726 General Instrument Corp.*............................................................. 73,355
30,390 Lucent Technologies Inc............................................................... 2,049,419
6,028 Motorola, Inc......................................................................... 571,153
6,634 Nortel Networks Corp. (Canada)........................................................ 575,914
747 Scientific-Atlanta, Inc............................................................... 26,892
3,914 Tellabs, Inc.*........................................................................ 264,440
------------
3,732,278
------------
TEXTILES (0.0%)
178 Springs Industries, Inc. (Class A).................................................... 7,765
------------
TOBACCO (0.9%)
3,247 Nabisco Group Holdings Corp........................................................... 63,531
24,120 Philip Morris Companies, Inc.......................................................... 969,323
1,760 UST, Inc.............................................................................. 51,480
------------
1,084,334
------------
TOOLS/HARDWARE (0.1%)
870 Black & Decker Corp................................................................... 54,919
233 Briggs & Stratton Corp................................................................ 13,456
656 Snap-On, Inc.......................................................................... 23,739
887 Stanley Works......................................................................... 28,550
------------
120,664
------------
WHOLESALE DISTRIBUTORS (0.1%)
933 Grainger (W.W.), Inc.................................................................. 50,207
1,487 IKON Office Solutions, Inc............................................................ 22,305
------------
72,512
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $99,555,734)......................................................... 112,281,969
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (4.6%)
U.S. GOVERNMENT AGENCY
$ 5,500 Federal Home Loan Mortgage Corp. 4.60% due 07/01/99 (AMORTIZED COST $5,500,000)....... $ 5,500,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $105,055,734) (B)........................................................ 98.8 % 117,781,969
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 1.2 1,445,970
------ -------------
NET ASSETS................................................................................ 100.0 % $ 119,227,939
------ -------------
------ -------------
</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) The aggregated cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $14,754,718 and the
aggregate gross unrealized depreciation is $2,028,483, resulting in net
unrealized appreciation of $12,726,235.
SEE NOTES TO FINANCIAL STATEMENTS
81
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST
IDEAS"
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS AND RIGHTS (94.7%)
AUSTRALIA (2.2%)
MEDIA CONGLOMERATES
126,160 News Corporation Ltd. (Pref.)........................................................... $ 967,826
-----------
FINLAND (2.2%)
PAPER
32,420 UPM-Kymmene Oyj......................................................................... 931,469
-----------
FRANCE (7.0%)
MULTI-LINE INSURANCE
8,180 Axa..................................................................................... 1,000,112
-----------
OIL REFINING/MARKETING
7,990 Total S.A. (B Shares)................................................................... 1,033,034
-----------
PACKAGED FOODS
3,830 Groupe Danone........................................................................... 989,576
-----------
TOTAL FRANCE............................................................................ 3,022,722
-----------
GERMANY (2.3%)
MOTOR VEHICLES
1,440 Bayerische Motoren Werke (BMW) AG....................................................... 992,656
-----------
HONG KONG (2.5%)
DIVERSIFIED FINANCIAL SERVICES
29,490 HSBC Holdings PLC....................................................................... 1,075,584
-----------
JAPAN (8.3%)
COMPUTER HARDWARE
64,000 Fujitsu Ltd............................................................................. 1,285,809
-----------
CONSUMER ELECTRONICS/APPLIANCES
11,000 Sony Corp. (Japan)...................................................................... 1,184,406
-----------
SPECIALTY CHEMICALS
32,600 Shin-Etsu Chemical Co., Ltd............................................................. 1,089,356
-----------
TOTAL JAPAN............................................................................. 3,559,571
-----------
NETHERLANDS (2.2%)
ALCOHOLIC BEVERAGES
18,730 Heineken N.V............................................................................ 961,098
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SWEDEN (2.5%)
LIFE INSURANCE
57,400 Skandia Forsakrings AB.................................................................. $ 1,078,093
-----------
SWITZERLAND (2.2%)
BUILDING MATERIALS
780 Holderbank Financiere Glarus AG (B Shares).............................................. 923,003
780 Holderbank Financiere Glarus AG (Rights)*............................................... 9,758
-----------
TOTAL SWITZERLAND....................................................................... 932,761
-----------
UNITED KINGDOM (4.3%)
ALCOHOLIC BEVERAGES
86,080 Diageo PLC.............................................................................. 899,217
-----------
INDUSTRIAL MACHINERY/COMPONENTS
202,540 Invensys PLC............................................................................ 958,894
-----------
TOTAL UNITED KINGDOM.................................................................... 1,858,111
-----------
UNITED STATES (59.0%)
AIR FREIGHT/DELIVERY SERVICES
17,080 FDX Corp.*.............................................................................. 926,590
-----------
BEVERAGES - NON-ALCOHOLIC
31,130 Coca-Cola Enterprises Inc............................................................... 926,117
-----------
BROADCASTING
14,780 Clear Channel Communications, Inc.*..................................................... 1,018,896
-----------
COMPUTER COMMUNICATIONS
17,120 Cisco Systems, Inc.*.................................................................... 1,103,170
-----------
COMPUTER HARDWARE
18,500 EMC Corp.*.............................................................................. 1,017,500
-----------
COMPUTER SOFTWARE
12,620 Microsoft Corp.*........................................................................ 1,137,377
-----------
DISCOUNT CHAINS
21,620 Wal-Mart Stores, Inc.................................................................... 1,043,165
-----------
DIVERSIFIED FINANCIAL SERVICES
8,120 American Express Co..................................................................... 1,056,615
-----------
DIVERSIFIED MANUFACTURING
11,690 Tyco International Ltd. (Bermuda)....................................................... 1,107,628
-----------
ELECTRICAL PRODUCTS
14,940 Emerson Electric Co..................................................................... 939,353
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
82
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST
IDEAS"
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTERNET SERVICES
7,310 America Online, Inc.*................................................................... $ 807,755
-----------
MAJOR BANKS
26,850 Bank of New York Co., Inc............................................................... 985,059
-----------
MAJOR CHEMICALS
14,570 Du Pont (E.I.) de Nemours & Co., Inc.................................................... 995,313
-----------
MAJOR PHARMACEUTICALS
16,180 American Home Products Corp............................................................. 930,350
14,000 Lilly (Eli) & Co........................................................................ 1,002,750
-----------
1,933,100
-----------
MAJOR U.S. TELECOMMUNICATIONS
11,700 MCI WorldCom, Inc....................................................................... 1,006,200
-----------
MEDIA CONGLOMERATES
34,670 Disney (Walt) Co........................................................................ 1,068,269
13,200 Time Warner Inc......................................................................... 970,200
-----------
2,038,469
-----------
MEDICAL EQUIPMENT & SUPPLIES
14,370 Medtronic, Inc.......................................................................... 1,119,064
-----------
MULTI-SECTOR COMPANIES
9,250 General Electric Co..................................................................... 1,045,250
-----------
OILFIELD SERVICES/EQUIPMENT
24,900 Halliburton Co.......................................................................... 1,126,725
16,350 Schlumberger, Ltd....................................................................... 1,041,291
-----------
2,168,016
-----------
SEMICONDUCTORS
16,500 Intel Corp.............................................................................. 980,719
-----------
SERVICES TO THE HEALTH INDUSTRY
22,700 Quintiles Transnational Corp.*.......................................................... 951,981
-----------
TELECOMMUNICATIONS EQUIPMENT
16,630 Lucent Technologies Inc................................................................. 1,121,486
-----------
TOTAL UNITED STATES..................................................................... 25,428,823
-----------
TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS
(IDENTIFIED COST $36,221,818)........................................................... 40,808,714
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (a) (5.1%)
U.S. GOVERNMENT AGENCIES
$ 1,700 Federal Home Loan Mortgage Corp. 4.60% due 07/01/99..................................... $ 1,700,000
500 Federal National Mortgage Assoc. 4.86% due 07/06/99..................................... 499,662
-----------
TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $2,199,662)............................................................. 2,199,662
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $38,421,480) (B).......................................................... 99.8 % 43,008,376
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................. 0.2 87,321
------ ------------
NET ASSETS................................................................................. 100.0 % $ 43,095,697
------ ------------
------ ------------
</TABLE>
- ---------------------
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates shown
have 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 $5,430,945 and the
aggregate gross unrealized depreciation is $844,049, resulting in net
unrealized appreciation of $4,586,896.
SEE NOTES TO FINANCIAL STATEMENTS
83
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST
IDEAS"
SUMMARY OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Air Freight/Delivery Services...................................................... $ 926,590 2.2 %
Alcoholic Beverages................................................................ 1,860,315 4.3
Beverages - Non-Alcoholic.......................................................... 926,117 2.1
Broadcasting....................................................................... 1,018,896 2.4
Building Materials................................................................. 932,761 2.2
Computer Communications............................................................ 1,103,170 2.6
Computer Hardware.................................................................. 2,303,309 5.3
Computer Software.................................................................. 1,137,377 2.6
Consumer Electronics/Appliances.................................................... 1,184,406 2.7
Discount Chains.................................................................... 1,043,165 2.4
Diversified Financial Services..................................................... 2,132,199 4.9
Diversified Manufacturing.......................................................... 1,107,628 2.6
Electrical Products................................................................ 939,353 2.2
Industrial Machinery/Components.................................................... 958,894 2.2
Internet Services.................................................................. 807,755 1.9
Life Insurance..................................................................... 1,078,093 2.5
Major Banks........................................................................ 985,059 2.3
Major Chemicals.................................................................... 995,313 2.3
Major Pharmaceuticals.............................................................. 1,933,100 4.5
Major U.S. Telecommunications...................................................... 1,006,200 2.3
Media Conglomerates................................................................ 3,006,295 7.0
Medical Equipment & Supplies....................................................... 1,119,064 2.6
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Motor Vehicles..................................................................... $ 992,656 2.3 %
Multi-Line Insurance............................................................... 1,000,112 2.3
Multi-Sector Companies............................................................. 1,045,250 2.4
Oil Refining/Marketing............................................................. 1,033,034 2.4
Oilfield Services/Equipment........................................................ 2,168,016 5.1
Packaged Foods..................................................................... 989,576 2.3
Paper.............................................................................. 931,469 2.2
Semiconductors..................................................................... 980,719 2.3
Services To The Health Industry.................................................... 951,981 2.2
Specialty Chemicals................................................................ 1,089,356 2.5
Telecommunications Equipment....................................................... 1,121,486 2.6
U.S. Government Agency............................................................. 2,199,662 5.1
----------- -----
$43,008,376 99.8 %
----------- -----
----------- -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks...................................................................... $40,798,956 94.7 %
Rights & Warrants.................................................................. 9,758 0.0
Short-Term Investments............................................................. 2,199,662 5.1
----------- -----
$43,008,376 99.8 %
----------- -----
----------- -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
84
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (65.1%)
ADVERTISING (0.5%)
180 Interpublic Group of Companies, Inc...................................................... $ 15,592
----------
AEROSPACE (0.5%)
240 United Technologies Corp................................................................. 17,205
----------
AIR FREIGHT/DELIVERY SERVICES (0.2%)
125 FDX Corp.*............................................................................... 6,781
----------
AIRLINES (0.4%)
370 Southwest Airlines Co.................................................................... 11,516
----------
ALCOHOLIC BEVERAGES (0.4%)
165 Anheuser-Busch Companies, Inc............................................................ 11,705
15 Coors (Adolph) Co. (Class B)............................................................. 742
----------
12,447
----------
ALUMINUM (0.8%)
400 Alcoa Inc................................................................................ 24,750
----------
APPAREL (0.3%)
110 Jones Apparel Group, Inc.*............................................................... 3,774
80 Tommy Hilfiger Corp.*.................................................................... 5,880
----------
9,654
----------
BEVERAGES - NON-ALCOHOLIC (0.1%)
95 Coca-Cola Enterprises Inc................................................................ 2,826
150 Pepsi Bottling Group, Inc................................................................ 3,459
----------
6,285
----------
BIOTECHNOLOGY (1.6%)
250 Biogen, Inc.*............................................................................ 16,078
340 Cephalon, Inc.*.......................................................................... 5,780
120 COR Therapeutics, Inc.*.................................................................. 1,755
170 IDEC Pharmaceuticals Corp.*.............................................................. 13,090
250 MedImmune, Inc.*......................................................................... 17,000
----------
53,703
----------
BOOKS/MAGAZINES (0.5%)
400 Reader's Digest Assoc., Inc. (Class A)................................................... 15,900
----------
BROADCASTING (3.0%)
650 CBS Corp.*............................................................................... 28,234
350 Clear Channel Communications, Inc.*...................................................... 24,128
210 Grupo Televisa S.A. (GDR) (Mexico)*...................................................... 9,411
275 Hispanic Broadcasting Corp.*............................................................. 20,848
240 Univision Communications, Inc. (Class A)*................................................ 15,840
----------
98,461
----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BUILDING MATERIALS/DIY CHAINS (0.9%)
340 Home Depot, Inc. (The)................................................................... $ 21,909
160 Lowe's Companies, Inc.................................................................... 9,070
----------
30,979
----------
CABLE TELEVISION (2.2%)
145 Adelphia Communications Corp. (Class A)*................................................. 9,343
35 Century Communications Corp. (Class A)*.................................................. 1,610
350 Comcast Corp. (Class A Special)*......................................................... 13,453
300 EchoStar Communications Corp. (Class A)*................................................. 46,031
35 TCA Cable TV, Inc........................................................................ 1,938
----------
72,375
----------
CASINO/GAMBLING (0.2%)
42 Harrah's Entertainment, Inc.*............................................................ 924
114 MGM Grand, Inc.*......................................................................... 5,586
----------
6,510
----------
CELLULAR TELEPHONE (1.3%)
500 Nextel Communications, Inc. (Class A)*................................................... 25,094
140 Sprint Corp. (PCS Group)*................................................................ 7,997
40 Vodafone AirTouch PLC (ADR) (United Kingdom)............................................. 7,880
100 Western Wireless Corp. (Class A)*........................................................ 2,700
----------
43,671
----------
CLOTHING/SHOE/ACCESSORY STORES (0.5%)
130 Abercrombie & Fitch Co. (Class A)*....................................................... 6,240
99 Intimate Brands, Inc..................................................................... 4,726
135 Limited (The), Inc....................................................................... 6,126
----------
17,092
----------
COMPUTER COMMUNICATIONS (1.7%)
10 Aware, Inc.*............................................................................. 459
525 Cisco Systems, Inc.*..................................................................... 33,830
100 Juniper Networks, Inc.*.................................................................. 14,894
38 Redback Networks Inc.*................................................................... 4,771
----------
53,954
----------
COMPUTER SOFTWARE (4.2%)
320 Citrix Systems, Inc.*.................................................................... 17,980
290 Compuware Corp.*......................................................................... 9,207
350 i2 Technologies, Inc.*................................................................... 15,050
260 Microsoft Corp.*......................................................................... 23,432
630 Oracle Corp.*............................................................................ 23,389
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
85
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
240 Rational Software Corp.*................................................................. $ 7,905
400 Siebel Systems, Inc.*.................................................................... 26,500
120 Veritas Software Corp.*.................................................................. 11,392
----------
134,855
----------
COMPUTER/VIDEO CHAINS (2.0%)
400 Best Buy Co., Inc.*...................................................................... 27,000
300 Circuit City Stores, Inc.- Circuit City Group............................................ 27,900
224 Tandy Corp............................................................................... 10,948
----------
65,848
----------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.2%)
95 Manitowoc Co., Inc....................................................................... 3,954
70 Navistar International Corp.*............................................................ 3,500
----------
7,454
----------
CONSUMER ELECTRONICS/APPLIANCES (0.7%)
200 Sony Corp. (ADR) (Japan)................................................................. 22,075
----------
CONTAINERS/PACKAGING (0.4%)
200 Temple-Inland, Inc....................................................................... 13,650
----------
CONTRACT DRILLING (0.2%)
280 ENSCO International Inc.................................................................. 5,582
15 Rowan Companies, Inc.*................................................................... 277
----------
5,859
----------
DEPARTMENT STORES (0.2%)
150 Federated Department Stores, Inc.*....................................................... 7,941
----------
DISCOUNT CHAINS (0.9%)
301 Ames Department Stores, Inc.*............................................................ 13,695
314 Wal-Mart Stores, Inc..................................................................... 15,150
----------
28,845
----------
DIVERSIFIED COMMERCIAL SERVICES (0.8%)
80 CheckFree Holdings Corp.*................................................................ 2,200
200 Concord EFS, Inc.*....................................................................... 8,462
200 Sabre Holdings, Corp.*................................................................... 13,750
----------
24,412
----------
DIVERSIFIED ELECTRONIC PRODUCTS (1.0%)
120 Honeywell, Inc........................................................................... 13,905
200 Rockwell International Corp.............................................................. 12,150
35 Uniphase Corp.*.......................................................................... 5,810
----------
31,865
----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED FINANCIAL SERVICES (0.4%)
60 American Express Co...................................................................... $ 7,807
90 Citigroup Inc............................................................................ 4,275
----------
12,082
----------
DIVERSIFIED MANUFACTURING (2.0%)
420 AlliedSignal, Inc........................................................................ 26,460
100 Mannesmann AG (ADR) (Germany)............................................................ 15,125
60 Minnesota Mining & Manufacturing Co...................................................... 5,216
200 Tyco International Ltd. (Bermuda)........................................................ 18,950
----------
65,751
----------
DRUGSTORE CHAINS (0.6%)
230 CVS Corp................................................................................. 11,672
310 Walgreen Co.............................................................................. 9,106
----------
20,778
----------
E.D.P. PERIPHERALS (0.1%)
40 Lexmark International Group, Inc. (Class A)*............................................. 2,642
----------
E.D.P. SERVICES (1.7%)
390 Electronic Data Systems Corp............................................................. 22,059
660 First Data Corp.......................................................................... 32,299
----------
54,358
----------
ELECTRIC UTILITIES (0.2%)
102 AES Corp. (The)*......................................................................... 5,929
----------
ELECTRONIC COMPONENTS (0.2%)
20 Flextronics International, Ltd.*......................................................... 1,105
100 SanDisk Corp.*........................................................................... 4,494
10 Sanmina Corp.*........................................................................... 759
----------
6,358
----------
ELECTRONIC DATA PROCESSING (0.1%)
100 Unisys Corp.*............................................................................ 3,894
----------
ELECTRONIC PRODUCTION EQUIPMENT (2.5%)
392 Applied Materials, Inc.*................................................................. 28,959
285 ASM Lithography Holding NV (Netherlands)*................................................ 16,815
10 Jabil Circuit, Inc.*..................................................................... 451
350 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) (Taiwan)*.............................. 11,900
300 Teradyne, Inc.*.......................................................................... 21,525
----------
79,650
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
86
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ENVIRONMENTAL SERVICES (0.3%)
180 Waste Management, Inc.................................................................... $ 9,675
----------
FINANCE COMPANIES (0.8%)
200 Capital One Financial Corp............................................................... 11,137
500 MBNA Corp................................................................................ 15,313
----------
26,450
----------
FLUID CONTROLS (0.1%)
75 Parker-Hannifin Corp..................................................................... 3,431
----------
FOREST PRODUCTS (0.8%)
540 Georgia-Pacific Group.................................................................... 25,583
----------
HOTELS/RESORTS (0.4%)
190 Carnival Corp............................................................................ 9,215
112 Four Seasons Hotels, Inc. (Canada)....................................................... 4,935
----------
14,150
----------
INDUSTRIAL MACHINERY/COMPONENTS (0.4%)
85 Illinois Tool Works Inc.................................................................. 6,970
75 Ingersoll-Rand Co........................................................................ 4,847
----------
11,817
----------
INTERNET SERVICES (0.5%)
45 America Online, Inc.*.................................................................... 4,973
100 Ask Jeeves, Inc.*........................................................................ 1,400
60 Yahoo! Inc.*............................................................................. 10,331
----------
16,704
----------
INVESTMENT BANKERS/BROKERS/SERVICES (0.5%)
225 Goldman Sachs Group, Inc................................................................. 16,256
----------
LIFE INSURANCE (0.1%)
92 Lincoln National Corp.................................................................... 4,813
----------
MAJOR BANKS (0.7%)
165 Chase Manhattan Corp..................................................................... 14,293
80 Huntington Bancshares, Inc............................................................... 2,795
40 Morgan (J.P.) & Co., Inc................................................................. 5,620
----------
22,708
----------
MAJOR CHEMICALS (0.0%)
5 Dow Chemical Co.......................................................................... 634
----------
MAJOR PHARMACEUTICALS (0.7%)
200 Bristol-Myers Squibb Co.................................................................. 14,088
75 Pfizer, Inc.............................................................................. 8,231
----------
22,319
----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR U.S. TELECOMMUNICATIONS (0.9%)
200 MCI WorldCom, Inc.*...................................................................... $ 17,200
200 Sprint Corp. (FON Group)................................................................. 10,563
----------
27,763
----------
MANAGED HEALTH CARE (0.8%)
295 United HealthCare Corp................................................................... 18,474
85 Wellpoint Health Networks, Inc.*......................................................... 7,214
----------
25,688
----------
MEDIA CONGLOMERATES (1.1%)
450 Fox Entertainment Group, Inc. (Series A)*................................................ 12,122
130 Time Warner Inc.......................................................................... 9,555
125 Viacom, Inc. (Class A)*.................................................................. 5,516
175 Viacom, Inc. (Class B)*.................................................................. 7,700
----------
34,893
----------
MEDICAL EQUIPMENT & SUPPLIES (0.1%)
175 Summit Technology, Inc.*................................................................. 3,850
----------
MEDICAL SPECIALTIES (1.5%)
80 Bausch & Lomb, Inc....................................................................... 6,120
400 Boston Scientific Corp.*................................................................. 17,575
100 Minimed, Inc.*........................................................................... 7,694
150 St. Jude Medical, Inc.*.................................................................. 5,344
140 VISX, Inc.*.............................................................................. 11,095
----------
47,828
----------
MEDICAL/NURSING SERVICES (0.1%)
75 TLC The Laser Center, Inc. (Canada)*..................................................... 3,591
----------
METALS FABRICATIONS (0.1%)
40 Coflexip, S.A. (ADR) (France)............................................................ 1,750
----------
MID - SIZED BANKS (0.2%)
80 First American Corp...................................................................... 3,325
15 First Virginia Banks, Inc................................................................ 737
30 Northern Trust Corp...................................................................... 2,910
----------
6,972
----------
MILITARY/GOV'T/TECHNICAL (0.5%)
270 General Motors Corp. (Class H)*.......................................................... 15,188
----------
MOVIES/ENTERTAINMENT (0.9%)
250 Premier Parks Inc.*...................................................................... 9,188
375 Seagram Co. Ltd. (Canada)................................................................ 18,891
----------
28,079
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
87
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MULTI-LINE INSURANCE (1.0%)
200 American International Group, Inc........................................................ $ 23,413
93 CIGNA Corp............................................................................... 8,277
----------
31,690
----------
NEWSPAPERS (0.5%)
125 Gannett Co., Inc......................................................................... 8,922
65 Tribune Co............................................................................... 5,663
----------
14,585
----------
OIL & GAS PRODUCTION (0.5%)
400 Apache Corp.............................................................................. 15,600
----------
OIL/GAS TRANSMISSION (1.1%)
350 Enron Corp............................................................................... 28,613
130 Williams Companies, Inc.................................................................. 5,533
----------
34,146
----------
OILFIELD SERVICES/EQUIPMENT (1.1%)
550 Baker Hughes Inc......................................................................... 18,425
120 BJ Services Co.*......................................................................... 3,533
27 Halliburton Co........................................................................... 1,222
325 Weatherford International, Inc.*......................................................... 11,903
----------
35,083
----------
OTHER CONSUMER SERVICES (0.1%)
100 E-LOAN, Inc.*............................................................................ 3,850
----------
OTHER SPECIALTY STORES (0.7%)
220 Tiffany & Co............................................................................. 21,230
----------
OTHER TELECOMMUNICATIONS (0.3%)
4 Nortel Inversora S.A. (ADR) (Argentina).................................................. 70
50 NTL Inc.*................................................................................ 4,309
115 RCN Corp.*............................................................................... 4,787
----------
9,166
----------
PACKAGE GOODS/COSMETICS (2.0%)
600 Avon Products, Inc....................................................................... 33,300
170 Colgate-Palmolive Co..................................................................... 16,788
250 Estee Lauder Companies, Inc. (Class A)................................................... 12,531
60 Kimberly-Clark Corp...................................................................... 3,420
----------
66,039
----------
PAPER (0.9%)
200 International Paper Co................................................................... 10,100
445 Willamette Industries, Inc............................................................... 20,498
----------
30,598
----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PROPERTY - CASUALTY INSURERS (0.3%)
94 Chubb Corp............................................................................... $ 6,533
75 St. Paul Companies, Inc.................................................................. 2,386
----------
8,919
----------
RAILROADS (0.1%)
55 Canadian National Railway Co. (Canada)................................................... 3,685
----------
RESTAURANTS (0.7%)
240 Applebee's International, Inc............................................................ 7,230
240 Darden Restaurants, Inc.................................................................. 5,235
235 Outback Steakhouse, Inc.*................................................................ 9,194
----------
21,659
----------
SEMICONDUCTORS (3.6%)
70 Broadcom Corp. (Class A)*................................................................ 10,115
50 Conexant Systems, Inc.*.................................................................. 2,900
90 Linear Technology Corp................................................................... 6,053
180 LSI Logic Corp.*......................................................................... 8,303
190 Maxim Integrated Products, Inc.*......................................................... 12,635
249 Microchip Technology Inc.*............................................................... 11,796
200 PMC - Sierra, Inc.*...................................................................... 11,788
18 SDL, Inc.*............................................................................... 919
250 STMicroelectronics NV (Netherlands)...................................................... 17,344
150 Texas Instruments, Inc................................................................... 21,750
245 Xilinx, Inc.*............................................................................ 14,026
----------
117,629
----------
SHOE MANUFACTURING (0.8%)
400 Nike, Inc. (Class B)..................................................................... 25,325
----------
SPECIALTY CHEMICALS (0.3%)
80 Air Products & Chemicals, Inc............................................................ 3,220
100 Praxair, Inc............................................................................. 4,894
----------
8,114
----------
TELECOMMUNICATIONS (0.4%)
160 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)....................................... 12,930
----------
TELECOMMUNICATIONS EQUIPMENT (5.1%)
30 Comverse Technology, Inc.*............................................................... 2,261
240 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)....................................... 7,890
270 General Instrument Corp.*................................................................ 11,475
300 Lucent Technologies Inc.................................................................. 20,231
380 Motorola, Inc............................................................................ 36,005
300 Nokia Corp. (ADR) (Finland).............................................................. 27,469
170 Nortel Networks Corp. (Canada)........................................................... 14,758
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
88
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
80 QUALCOMM Inc.*........................................................................... $ 11,480
300 RF Micro Devices, Inc.*.................................................................. 22,388
290 Scientific-Atlanta, Inc.................................................................. 10,440
----------
164,397
----------
WHOLESALE DISTRIBUTORS (0.4%)
260 Grainger (W.W.), Inc..................................................................... 13,991
----------
WIRELESS COMMUNICATIONS (0.2%)
50 VoiceStream Wireless Corp.*.............................................................. 1,422
82 WinStar Communications, Inc.*............................................................ 3,998
----------
5,420
----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $2,002,009)............................................................. 2,105,319
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
- ---------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (51.1%)
U.S. GOVERNMENT AGENCY
$ $1,650 Federal Home Loan Mortgage Corp. 4.60% due 07/01/99 (AMORTIZED COST $1,650,000).......... 1,650,000
----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $3,652,009) (B)............................................................ 116.2 % 3,755,319
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS.............................................. (16.2) (522,428)
------ -----------
NET ASSETS.................................................................................. 100.0 % $ 3,232,891
------ -----------
------ -----------
</TABLE>
- ---------------------
ADR American Depository Receipt.
GDR Global 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) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $129,321 and the
aggregate gross unrealized depreciation is $26,011, resulting in net
unrealized appreciation of $103,310.
SEE NOTES TO FINANCIAL STATEMENTS
89
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (53.7%)
ADVERTISING (0.2%)
20,000 Omnicom Group, Inc.................................................................. $ 1,600,000
2,000 Young & Rubicam, Inc................................................................ 90,875
------------
1,690,875
------------
AEROSPACE (0.4%)
66,000 Cordant Technologies, Inc........................................................... 2,982,375
------------
BIOTECHNOLOGY (0.6%)
83,000 Centocor, Inc.*..................................................................... 3,869,875
------------
BUILDING MATERIALS/DIY CHAINS (1.4%)
152,600 Home Depot, Inc. (The).............................................................. 9,833,162
------------
CABLE TELEVISION (1.1%)
100,000 MediaOne Group, Inc.*............................................................... 7,437,500
------------
CASINO/GAMBLING (0.1%)
40,000 Park Place Entertainment Corp.*..................................................... 387,500
------------
CLOTHING/SHOE/ACCESSORY STORES (0.5%)
68,300 Payless ShoeSource, Inc.*........................................................... 3,654,050
------------
COMPUTER COMMUNICATIONS (2.5%)
229,950 Cisco Systems, Inc.*................................................................ 14,817,403
50,000 Jabil Circuit, Inc.*................................................................ 2,256,250
------------
17,073,653
------------
COMPUTER HARDWARE (4.1%)
340,000 Dell Computer Corp.*................................................................ 12,558,750
34,000 EMC Corp.*.......................................................................... 1,870,000
24,000 Gateway Inc.*....................................................................... 1,416,000
185,800 Sun Microsystems, Inc.*............................................................. 12,796,975
------------
28,641,725
------------
COMPUTER SOFTWARE (1.6%)
121,200 Microsoft Corp.*.................................................................... 10,923,150
15,000 Novell, Inc.*....................................................................... 397,500
------------
11,320,650
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.1%)
10,000 PACCAR, Inc......................................................................... 533,750
------------
CONSUMER ELECTRONICS/APPLIANCES (1.7%)
125,000 Maytag Corp......................................................................... 8,710,937
40,000 Whirlpool Corp...................................................................... 2,960,000
------------
11,670,937
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONTRACT DRILLING (0.1%)
30,000 Diamond Offshore Drilling, Inc...................................................... $ 851,250
------------
DEPARTMENT STORES (0.7%)
115,950 May Department Stores Co............................................................ 4,739,456
------------
DISCOUNT CHAINS (1.8%)
106,000 Costco Companies, Inc.*............................................................. 8,480,000
265,000 Kmart Corp.*........................................................................ 4,355,937
------------
12,835,937
------------
DIVERSIFIED ELECTRONIC PRODUCTS (1.0%)
60,500 Honeywell, Inc...................................................................... 7,010,437
------------
DIVERSIFIED FINANCIAL SERVICES (2.8%)
50,000 American Express Co................................................................. 6,506,250
142,425 Citigroup Inc....................................................................... 6,765,188
96,000 Equitable Companies, Inc............................................................ 6,432,000
------------
19,703,438
------------
DIVERSIFIED MANUFACTURING (0.0%)
2,000 Tyco International Ltd. (Bermuda)................................................... 189,500
------------
ENVIRONMENTAL SERVICES (0.6%)
200,000 Allied Waste Industries, Inc.*...................................................... 3,950,000
------------
FINANCE COMPANIES (0.9%)
87,300 Fannie Mae.......................................................................... 5,969,138
------------
HOTELS/RESORTS (0.2%)
100,000 Hilton Hotels Corp.................................................................. 1,418,750
------------
INTEGRATED OIL COMPANIES (2.0%)
80,600 Atlantic Richfield Co............................................................... 6,735,138
70,200 Mobil Corp.......................................................................... 6,949,800
------------
13,684,938
------------
INTERNET SERVICES (0.4%)
22,400 America Online, Inc.*............................................................... 2,475,200
5,000 Inktomi Corp.*...................................................................... 657,500
------------
3,132,700
------------
MAJOR BANKS (1.2%)
60,000 Mellon Bank Corp.................................................................... 2,182,500
140,500 Wells Fargo & Co.................................................................... 6,006,375
------------
8,188,875
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
90
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR CHEMICALS (1.8%)
67,000 Dow Chemical Co..................................................................... $ 8,500,625
60,000 Du Pont (E.I.) de Nemours & Co., Inc................................................ 4,098,750
------------
12,599,375
------------
MAJOR PHARMACEUTICALS (4.3%)
128,600 Abbott Laboratories................................................................. 5,851,300
112,600 American Home Products Corp......................................................... 6,474,500
68,400 Johnson & Johnson................................................................... 6,703,200
66,600 Lilly (Eli) & Co.................................................................... 4,770,225
87,300 Warner-Lambert Co................................................................... 6,056,438
------------
29,855,663
------------
MAJOR U.S. TELECOMMUNICATIONS (0.8%)
52,500 AT&T Corp........................................................................... 2,930,156
30,000 MCI WorldCom, Inc.*................................................................. 2,580,000
------------
5,510,156
------------
MANAGED HEALTH CARE (0.4%)
30,000 Wellpoint Health Networks, Inc.*.................................................... 2,546,250
------------
MEDIA CONGLOMERATES (0.5%)
114,000 Disney (Walt) Co.................................................................... 3,512,625
------------
MOTOR VEHICLES (2.1%)
95,333 DaimlerChrysler AG (Germany)........................................................ 8,472,720
105,000 Ford Motor Co....................................................................... 5,925,938
------------
14,398,658
------------
MULTI-LINE INSURANCE (1.0%)
57,750 American International Group, Inc................................................... 6,760,359
------------
MULTI-SECTOR COMPANIES (1.0%)
59,200 General Electric Co................................................................. 6,689,600
------------
OFFICE EQUIPMENT/SUPPLIES (0.1%)
15,000 Xerox Corp.......................................................................... 885,938
------------
OILFIELD SERVICES/EQUIPMENT (0.1%)
15,000 Smith International, Inc.*.......................................................... 651,563
------------
OTHER SPECIALTY STORES (3.8%)
244,800 Bed Bath & Beyond, Inc.*............................................................ 9,394,200
282,825 Gap, Inc. (The)..................................................................... 14,247,309
80,000 Williams-Sonoma, Inc.*.............................................................. 2,785,000
------------
26,426,509
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER TELECOMMUNICATIONS (1.2%)
244,000 Qwest Communications International, Inc.*........................................... $ 8,067,250
------------
PACKAGE GOODS/COSMETICS (0.8%)
57,800 Colgate-Palmolive Co................................................................ 5,707,750
------------
PACKAGED FOODS (0.7%)
60,300 General Mills, Inc.................................................................. 4,846,613
------------
PAPER (1.2%)
50,000 Boise Cascade Corp.................................................................. 2,143,750
124,200 Champion International Corp......................................................... 5,946,075
10,000 Willamette Industries, Inc.......................................................... 460,625
------------
8,550,450
------------
PRECISION INSTRUMENTS (1.7%)
47,500 Pe Corp Celera Genomics Group*...................................................... 768,906
95,000 Pe Corp Pe Biosystems Group......................................................... 10,901,250
------------
11,670,156
------------
SAVINGS & LOAN ASSOCIATIONS (1.4%)
32,000 Astoria Financial Corp.............................................................. 1,404,000
30,000 Dime Bancorp, Inc................................................................... 603,750
46,000 Golden West Financial Corp.......................................................... 4,508,000
90,450 Washington Mutual, Inc.............................................................. 3,199,669
------------
9,715,419
------------
SEMICONDUCTORS (2.9%)
90,000 Intel Corp.......................................................................... 5,349,375
248,000 PMC - Sierra, Inc. (Canada)*........................................................ 14,616,500
------------
19,965,875
------------
SPECIALTY INSURERS (0.1%)
20,000 Ace, Ltd. (Bermuda)................................................................. 565,000
------------
TELECOMMUNICATIONS EQUIPMENT (1.8%)
185,600 Lucent Technologies Inc............................................................. 12,516,400
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $199,487,578)...................................................... 372,212,080
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
91
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CORPORATE BONDS (7.1%)
AIRLINES (0.4%)
$ 990 Continental Airlines, Inc. (Series 981A)
6.648% due 03/15/19.................................................................. $ 937,775
1,000 Delta Airlines (Series C) 6.65% due 03/15/04........................................... 981,370
1,000 Northwest Airlines Corp. (Series 992A)
7.575% due 03/01/19.................................................................. 1,002,500
------------
2,921,645
------------
BOOKS/MAGAZINES (0.1%)
1,000 Harcourt General Inc.
7.30% due 08/01/97................................................................... 870,250
------------
BUILDING PRODUCTS (0.1%)
1,000 Armstrong World Industries, Inc.
7.45% due 05/15/29................................................................... 972,190
------------
CABLE TELEVISION (0.3%)
2,000 British Sky Broadcasting Group, PLC (United Kingdom)
6.875% due 02/23/09.................................................................. 1,836,320
------------
CONTAINERS/PACKAGING (0.3%)
2,000 Temple-Inland Inc.
(Series F)
6.75% due 03/01/09................................................................... 1,896,380
------------
DEPARTMENT STORES (0.3%)
1,000 Federated Department Stores, Inc.
6.125% due 09/01/01.................................................................. 996,550
1,000 Federated Department Stores, Inc.
6.30% due 04/01/09................................................................... 940,130
------------
1,936,680
------------
ELECTRIC UTILITIES (0.2%)
1,000 FPL Group Capital Inc. 7.375% due 06/01/09............................................. 1,016,380
------------
FINANCE COMPANIES (1.3%)
1,000 Aristar Inc.
7.25% due 06/15/06................................................................... 1,004,550
1,000 Associates Corp. of North America
6.00% due 07/15/05................................................................... 959,440
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 1,000 Associates Corp. of North America
6.95% due 11/01/18................................................................... $ 950,260
1,000 Commercial Credit Group 7.75% due 03/01/05............................................. 1,038,750
1,000 Finova Capital Corp.
6.75% due 03/09/09................................................................... 964,700
1,000 General Motors Acceptance Corp.
6.15% due 04/05/07................................................................... 954,720
1,000 General Motors Acceptance Corp.
6.85% due 06/17/04................................................................... 1,006,250
1,000 Midamerica Funding LLC - 144A**
6.339% due 03/01/09.................................................................. 949,900
1,000 National Rural Utilities Cooperative Finance Corp. 6.125% due 05/15/05................. 977,890
------------
8,806,460
------------
INTEGRATED OIL COMPANIES (0.2%)
1,000 Atlantic Richfield Co.
9.00% due 05/01/31................................................................... 1,200,590
------------
INTERNATIONAL BANKS (0.1%)
1,000 Credit Suisse First Boston NY - 144A**
6.50% due 05/01/08................................................................... 947,700
------------
INVESTMENT BANKERS/BROKERS/SERVICES (0.7%)
1,000 Bear Stearns Co., Inc.
6.25% due 07/15/05................................................................... 958,800
2,500 Paine Webber Group, Inc.
6.375% due 05/15/04.................................................................. 2,429,900
1,000 Paine Webber Group, Inc.
8.875% due 03/15/05.................................................................. 1,075,280
------------
4,463,980
------------
LIFE INSURANCE (0.3%)
1,000 Conseco, Inc.
6.40% due 06/15/01................................................................... 983,850
1,000 Lumbermens Mutual Casualty Co. - 144A**
8.30% due 12/01/37................................................................... 956,920
------------
1,940,770
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
92
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR BANKS (0.4%)
$ 1,000 National City Corp.
6.875% due 05/15/19.................................................................. $ 936,000
2,000 U.S. Bancorp (Series J)
6.50% due 06/15/04................................................................... 1,978,060
------------
2,914,060
------------
MAJOR CHEMICALS (0.2%)
1,000 Rohm & Haas Co. - 144A** 7.85% due 07/15/29............................................ 1,022,000
------------
MAJOR U.S. TELECOMMUNICATIONS (0.4%)
1,000 GTE California, Inc. (Series G)
5.50% due 01/15/09................................................................... 908,470
1,000 MCI Worldcom Inc.
7.55% due 04/01/04................................................................... 1,030,480
1,000 Sprint Capital Corp.
6.125% due 11/15/08.................................................................. 933,900
------------
2,872,850
------------
MILITARY/GOV'T/TECHNICAL (0.1%)
1,000 Raytheon Co.
7.20% due 08/15/27................................................................... 973,150
------------
OIL & GAS PRODUCTION (0.1%)
1,000 Lasmo USA Inc.
7.30% due 11/15/27................................................................... 913,450
------------
OIL/GAS TRANSMISSION (0.2%)
1,000 Enron Corp.
6.50% due 08/01/02................................................................... 996,560
------------
PROPERTY - CASUALTY INSURERS (0.1%)
1,000 Fairfax Financial Holdings, Ltd. (Canada)
7.375% due 04/15/18.................................................................. 914,630
------------
RAILROADS (0.4%)
1,909 Southern Pacific Transportation Co. (Series B)
7.28% due 04/30/15................................................................... 1,901,876
1,000 Union Pacific Corp.
6.34% due 11/25/03................................................................... 983,530
------------
2,885,406
------------
SMALLER BANKS (0.4%)
2,000 Centura Bank
6.50% due 03/15/09................................................................... 1,870,000
1,000 Wilmington Trust Corp.
6.625% due 05/01/08.................................................................. 955,760
------------
2,825,760
------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS (0.1%)
$ 1,000 Telecom De Puerto Rico - 144A**
6.80% due 05/15/09................................................................... $ 961,250
------------
TELECOMMUNICATIONS EQUIPMENT (0.1%)
1,000 Corning Inc.
6.85% due 03/01/29................................................................... 929,890
------------
UTILITIES (0.3%)
2,000 Arizona Public Service Co.
5.875% due 02/15/04.................................................................. 1,930,020
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $50,669,097).......................................................... 48,948,371
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (13.1%)
3,000 Federal Home Loan Banks
5.375% due 03/02/01.................................................................. 2,981,370
2,000 Federal Home Loan Banks
5.515% due 04/13/04.................................................................. 1,937,860
4,000 Federal Home Loan Mortgage Corp.
5.75% due 03/15/09................................................................... 3,788,200
3,000 Federal National Mortgage Assoc.
5.625% due 05/14/04.................................................................. 2,932,530
2,000 Federal National Mortgage Assoc.
5.75% due 06/15/05................................................................... 1,952,340
2,500 Federal National Mortgage Assoc.
6.25% due 05/15/29................................................................... 2,356,275
4,300 U.S. Treasury Bond
5.50% due 08/15/28................................................................... 3,929,211
6,000 U.S. Treasury Bond
6.00% due 02/15/26................................................................... 5,846,100
3,000 U.S. Treasury Bond
6.125% due 11/15/27.................................................................. 2,975,310
2,400 U.S. Treasury Bond
6.625% due 02/15/27.................................................................. 2,530,272
1,000 U.S. Treasury Note
5.50% due 05/15/09................................................................... 976,720
22,000 U.S. Treasury Note
5.625% due 12/31/99.................................................................. 22,052,580
4,000 U.S. Treasury Note
5.625% due 11/30/00.................................................................. 4,009,440
1,500 U.S. Treasury Note
5.625% due 02/15/06.................................................................. 1,479,555
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
93
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 3,000 U.S. Treasury Note
5.75% due 08/15/03................................................................... $ 3,000,030
1,000 U.S. Treasury Note
5.875% due 11/15/05.................................................................. 1,000,660
12,500 U.S. Treasury Note
6.125% due 08/15/07.................................................................. 12,646,375
2,000 U.S. Treasury Note
6.25% due 01/31/02................................................................... 2,029,600
1,000 U.S. Treasury Note
6.25% due 02/28/02................................................................... 1,014,990
1,000 U.S. Treasury Note
6.25% due 02/15/03................................................................... 1,017,250
4,300 U.S. Treasury Note
6.25% due 02/15/07................................................................... 4,384,065
1,000 U.S. Treasury Note
6.375% due 08/15/02.................................................................. 1,019,750
1,000 U.S. Treasury Note
6.50% due 08/15/05................................................................... 1,032,870
1,000 U.S. Treasury Note
7.25% due 05/15/04................................................................... 1,061,430
2,000 U.S. Treasury Note
7.25% due 08/15/04................................................................... 2,126,460
1,000 U.S. Treasury Note
7.50% due 11/15/01................................................................... 1,039,420
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $93,204,950).......................................................... 91,120,663
------------
SHORT-TERM INVESTMENTS (25.8%)
COMMERCIAL PAPER (a) (6.2%)
FINANCE - CONSUMER (2.9%)
20,000 American Express Credit Corp.
5.06% due 07/07/99................................................................... 19,983,134
------------
MULTI-SECTOR COMPANIES (3.3%)
23,000 General Electric Co.
4.90% due 07/22/99................................................................... 22,934,258
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $42,917,392)........................................................... 42,917,392
------------
U.S. GOVERNMENT AGENCIES (a) (19.5%)
35,000 Federal Home Loan Mortgage Corp.
4.60% due 07/01/99................................................................... 35,000,000
35,000 Federal Home Loan Mortgage Corp.
4.84% due 07/16/99................................................................... 34,929,417
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 25,000 Federal Home Loan Mortgage Corp.
4.86% due 07/12/99................................................................... $ 24,962,875
40,000 Federal National Mortgage Assoc.
4.87% due 07/15/99................................................................... 39,924,244
------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $134,816,536).......................................................... 134,816,536
------------
REPURCHASE AGREEMENT (0.1%)
774 The Bank of New York 4.625% due 07/01/99 (dated 06/30/99; proceeds $773,616) (b)
(IDENTIFIED COST $773,517)........................................................... 773,517
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $178,507,445)......................................................... 178,507,445
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $521,869,070) (C)........................................................ 99.7 % 690,788,559
OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 0.3 2,142,209
------ -------------
NET ASSETS................................................................................ 100.0 % $ 692,930,768
------ -------------
------ -------------
</TABLE>
- ---------------------
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(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 $789,009 U.S. Treasury Bill 0.00% due 07/01/99 valued at
$788,987.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $176,153,364 and the
aggregate gross unrealized depreciation is $7,233,875, resulting in net
unrealized appreciation of $168,919,489.
SEE NOTES TO FINANCIAL STATEMENTS
94
<PAGE>
(This page has been left blank intentionally.)
95
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MONEY SHORT-TERM QUALITY HIGH
MARKET BOND INCOME PLUS YIELD
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at
value *..................... $423,715,313 $ 874,548 $498,540,146 $334,102,795
Cash.......................... 8,659 48,534 -- --
Receivable for:
Investments sold.......... -- -- 8,679,781 1,341,898
Shares of beneficial
interest sold........... 463,811 7,296 185,669 138,124
Dividends................. -- -- -- --
Interest.................. 629,497 6,352 7,545,195 8,134,059
Foreign withholding taxes
reclaimed............... -- -- -- --
Unrealized appreciation on
open forward foreign
currency contracts.......... -- -- -- --
Prepaid expenses and other
assets...................... 4,632 -- 6,740 17,114
Receivable from affiliate..... -- 5,519 -- --
------------ ------------ ------------ ------------
TOTAL ASSETS............. 424,821,912 942,249 514,957,531 343,733,990
------------ ------------ ------------ ------------
LIABILITIES:
Payable for:
Investments purchased..... -- -- 10,362,877 2,561,104
Shares of beneficial
interest repurchased.... 3,465,964 37 311,469 587,797
Investment management
fee..................... 195,340 -- 227,579 153,775
Accrued expenses and other
payables.................... 37,227 5,519 39,539 37,337
------------ ------------ ------------ ------------
TOTAL LIABILITIES........ 3,698,531 5,556 10,941,464 3,340,013
------------ ------------ ------------ ------------
NET ASSETS:
Paid-in-capital............... 421,123,082 938,382 532,193,246 471,099,325
Accumulated undistributed net
investment income (loss).... 299 -- 221 53,582
Accumulated undistributed net
realized gain (loss)........ -- (1,279) (22,567,575) (46,903,020)
Net unrealized appreciation
(depreciation).............. -- (410) (5,609,825) (83,855,910)
------------ ------------ ------------ ------------
NET ASSETS............... $421,123,381 $ 936,693 $504,016,067 $340,393,977
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
*IDENTIFIED COST......... $423,715,313 $ 874,958 $504,149,971 $417,958,705
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 421,123,082 94,292 49,249,216 68,952,702
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $1.00 $9.93 $10.23 $4.94
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
- ------------------
** Includes foreign cash of $13,533 and $516,230, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
96
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, 1999 (UNAUDITED)
GLOBAL
INCOME DIVIDEND CAPITAL DIVIDEND EUROPEAN PACIFIC
UTILITIES BUILDER GROWTH GROWTH GROWTH GROWTH GROWTH
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at
value *..................... $577,613,097 $86,777,735 $2,292,981,708 $148,230,061 $497,977,053 $486,828,580 $90,869,621
Cash.......................... 990,001 77,877 -- -- 401,445 427,511** 801,575**
Receivable for:
Investments sold.......... -- 723,018 352,098,657 7,351,870 723 3,849,409 1,019,405
Shares of beneficial
interest sold........... 357,332 108,840 1,408,672 26,563 354,471 338,558 2,423,412
Dividends................. 1,072,754 151,788 3,961,243 102,770 1,377,600 213,115 102,787
Interest.................. 995,057 401,408 1,192 143 2,731 4,953 12,910
Foreign withholding taxes
reclaimed............... -- 3,074 -- -- 632,210 1,060,780 --
Unrealized appreciation on
open forward foreign
currency contracts.......... -- -- -- -- -- -- 7,625
Prepaid expenses and other
assets...................... 12,976 4,938 37,534 4,402 29,783 118,081 31,878
Receivable from affiliate..... -- -- -- -- -- -- --
------------ ----------- -------------- ------------ ------------ ------------ -----------
TOTAL ASSETS............. 581,041,217 88,248,678 2,650,489,006 155,715,809 500,776,016 492,840,987 95,269,213
------------ ----------- -------------- ------------ ------------ ------------ -----------
LIABILITIES:
Payable for:
Investments purchased..... 215,000 185,661 212,478,578 13,944,302 -- 2,425,416 3,391,946
Shares of beneficial
interest repurchased.... 336,123 24,205 833,209 82,225 167,555 203,333 12,140
Investment management
fee..................... 336,455 58,551 1,113,249 81,583 336,694 421,673 67,464
Accrued expenses and other
payables.................... 29,899 13,207 122,003 23,349 76,845 97,336 18,464
------------ ----------- -------------- ------------ ------------ ------------ -----------
TOTAL LIABILITIES........ 917,477 281,624 214,547,039 14,131,459 581,094 3,147,758 3,490,014
------------ ----------- -------------- ------------ ------------ ------------ -----------
NET ASSETS:
Paid-in-capital............... 329,616,906 84,163,768 1,911,604,061 106,819,831 423,791,318 348,442,164 130,960,175
Accumulated undistributed net
investment income (loss).... 40 2 1,215 11,244 500,018 3,577,679 (145,755)
Accumulated undistributed net
realized gain (loss)........ 18,111,675 324,712 271,067,668 25,441,248 8,624,501 41,649,180 (54,935,531)
Net unrealized appreciation
(depreciation).............. 232,395,119 3,478,572 253,269,023 9,312,027 67,279,085 96,024,206 15,900,310
------------ ----------- -------------- ------------ ------------ ------------ -----------
NET ASSETS............... $580,123,740 $87,967,054 $2,435,941,967 $141,584,350 $500,194,922 $489,693,229 $91,779,199
------------ ----------- -------------- ------------ ------------ ------------ -----------
------------ ----------- -------------- ------------ ------------ ------------ -----------
*IDENTIFIED COST......... $345,217,978 $83,299,163 $2,039,712,685 $138,918,034 $430,687,000 $390,895,231 $74,958,288
------------ ----------- -------------- ------------ ------------ ------------ -----------
------------ ----------- -------------- ------------ ------------ ------------ -----------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 26,492,601 7,367,372 117,266,537 7,397,697 35,697,820 19,602,324 13,770,258
------------ ----------- -------------- ------------ ------------ ------------ -----------
------------ ----------- -------------- ------------ ------------ ------------ -----------
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $21.90 $11.94 $20.77 $19.14 $14.01 $24.98 $6.67
------------ ----------- -------------- ------------ ------------ ------------ -----------
------------ ----------- -------------- ------------ ------------ ------------ -----------
<CAPTION>
EQUITY
<S> <C>
- ------------------------------
ASSETS:
Investments in securities, at
value *..................... $1,488,916,523
Cash.......................... --
Receivable for:
Investments sold.......... 24,684,462
Shares of beneficial
interest sold........... 1,371,257
Dividends................. 609,043
Interest.................. 17
Foreign withholding taxes
reclaimed............... 157,418
Unrealized appreciation on
open forward foreign
currency contracts.......... --
Prepaid expenses and other
assets...................... 21,238
Receivable from affiliate..... --
--------------
TOTAL ASSETS............. 1,515,759,958
--------------
LIABILITIES:
Payable for:
Investments purchased..... 46,053,566
Shares of beneficial
interest repurchased.... 359,340
Investment management
fee..................... 622,443
Accrued expenses and other
payables.................... 53,012
--------------
TOTAL LIABILITIES........ 47,088,361
--------------
NET ASSETS:
Paid-in-capital............... 1,055,687,246
Accumulated undistributed net
investment income (loss).... 2,787,610
Accumulated undistributed net
realized gain (loss)........ 273,524,957
Net unrealized appreciation
(depreciation).............. 136,671,784
--------------
NET ASSETS............... $1,468,671,597
--------------
--------------
*IDENTIFIED COST......... $1,352,244,739
--------------
--------------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 36,748,361
--------------
--------------
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $39.97
--------------
--------------
</TABLE>
97
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED
<TABLE>
<CAPTION>
JUNE 30, 1999 (UNAUDITED)
COMPETITIVE
S&P 500 EDGE AGGRESSIVE
INDEX "BEST IDEAS" EQUITY STRATEGIST
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at
value *..................... $ 117,781,969 $ 43,008,376 $ 3,755,319 $ 690,788,559
Cash.......................... 83,759 96,522 22,134 --
Receivable for:
Investments sold.......... 620,062 -- 60,236 989,043
Shares of beneficial
interest sold........... 822,106 7,551 102,754 516,312
Dividends................. 94,370 10,975 480 119,200
Interest.................. -- -- -- 1,996,373
Foreign withholding taxes
reclaimed............... -- 19,882 -- 39,075
Variation margin.......... 114,832 -- -- --
Prepaid expenses and other
assets...................... 9,396 698 -- 13,370
Receivable from affiliate..... -- 3,577 7,860 --
-------------- --------------- --------------- --------------
TOTAL ASSETS............. 119,526,494 43,147,581 3,948,783 694,461,932
-------------- --------------- --------------- --------------
LIABILITIES:
Payable for:
Investments purchased..... 183,961 -- 697,907 999,270
Shares of beneficial
interest repurchased.... 52,065 15,964 10,125 187,957
Investment management
fee..................... 39,732 24,594 -- 306,917
Accrued expenses and other
payables.................... 22,704 11,232 7,860 37,020
-------------- --------------- --------------- --------------
TOTAL LIABILITIES........ 298,462 51,790 715,892 1,531,164
-------------- --------------- --------------- --------------
NET ASSETS:
Paid-in-capital............... 105,413,472 39,667,273 3,145,199 492,998,866
Accumulated undistributed net
investment income (loss).... 480,678 228,566 -- (6,635)
Accumulated undistributed net
realized gain (loss)........ 417,674 (1,385,798) (15,618) 31,019,048
Net unrealized appreciation... 12,916,208 4,585,750 103,310 168,919,489
-------------- --------------- --------------- --------------
NET ASSETS............... $ 119,228,032 $ 43,095,791 $ 3,232,891 $ 692,930,768
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
*IDENTIFIED COST......... $ 105,055,734 $ 38,421,480 $ 3,652,009 $ 521,869,070
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 9,535,450 4,134,682 316,800 38,799,731
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $12.50 $10.42 $10.20 $17.86
-------------- --------------- --------------- --------------
-------------- --------------- --------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
98
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
QUALITY
MONEY SHORT-TERM INCOME HIGH
MARKET BOND* PLUS YIELD
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME:
INTEREST INCOME............... $ 10,717,779 $ 3,279 $ 17,751,066 $ 24,156,365
------------- ------- ------------- -------------
EXPENSES
Investment management fee..... 1,073,806 320 1,302,800 873,980
Professional fees............. 13,848 5,265 14,986 19,485
Custodian fees................ 11,303 60 25,259 15,977
Shareholder reports and
notices..................... 7,688 100 13,218 12,832
Trustees' fees and expenses... 86 -- 932 471
Transfer agent fees and
expenses.................... 250 78 250 250
Other......................... 3,227 16 7,172 5,509
------------- ------- ------------- -------------
TOTAL EXPENSES........... 1,110,208 5,839 1,364,617 928,504
Less: amounts
waived/reimbursed........... -- (5,839) -- --
------------- ------- ------------- -------------
NET EXPENSES............. 1,110,208 -- 1,364,617 928,504
------------- ------- ------------- -------------
NET INVESTMENT INCOME.... 9,607,571 3,279 16,386,449 23,227,861
------------- ------- ------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss)...... 1,751 (1,279) (6,384,714) (7,091,487)
Net change in unrealized
appreciation/depreciation... -- (410) (31,368,410) (2,178,837)
------------- ------- ------------- -------------
NET GAIN (LOSS).......... 1,751 (1,689) (37,753,124) (9,270,324)
------------- ------- ------------- -------------
NET INCREASE (DECREASE)....... $ 9,609,322 $ 1,590 $ (21,366,675) $ 13,957,537
------------- ------- ------------- -------------
------------- ------- ------------- -------------
- ------------------
* For the period May 4, 1999 (commencement of operations) through June 30,
1999.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
99
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
INCOME DIVIDEND CAPITAL
UTILITIES BUILDER GROWTH GROWTH
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME:
INCOME
Interest...................... $ 2,099,526 $ 1,113,473 $ 765,428 $ 93,781
Dividends..................... 6,986,622** 1,377,191** 26,010,993** 416,723**
------------- ----------- ------------ -------------
TOTAL INCOME............. 9,086,148 2,490,664 26,776,421 510,504
------------- ----------- ------------ -------------
EXPENSES
Investment management fee..... 1,790,683 317,940 5,890,919 451,375
Professional fees............. 13,729 9,725 16,333 14,257
Custodian fees................ 16,143 9,981 63,054 26,145
Shareholder reports and
notices..................... 11,962 3,352 65,124 5,575
Trustees' fees and expenses... 894 57 2,574 101
Transfer agent fees and
expenses.................... 250 250 250 250
Other......................... 4,652 1,583 14,102 1,133
------------- ----------- ------------ -------------
TOTAL EXPENSES........... 1,838,313 342,888 6,052,356 498,836
Less: amounts
waived/reimbursed........... -- -- -- --
------------- ----------- ------------ -------------
NET EXPENSES............. 1,838,313 342,888 6,052,356 498,836
------------- ----------- ------------ -------------
NET INVESTMENT INCOME.... 7,247,835 2,147,776 20,724,065 11,668
------------- ----------- ------------ -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... 18,151,538 1,068,830 281,058,540 29,165,138
Futures contracts......... -- -- -- --
Foreign exchange
transactions............ -- -- -- --
------------- ----------- ------------ -------------
NET GAIN (LOSS).......... 18,151,538 1,068,830 281,058,540 29,165,138
------------- ----------- ------------ -------------
Net change in unrealized
appreciation/depreciation
on:
Investments............... 10,175,326 4,070,556 (88,237,327) (19,178,876)
Futures contracts......... -- -- -- --
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. -- -- -- --
------------- ----------- ------------ -------------
NET APPRECIATION
(DEPRECIATION)........... 10,175,326 4,070,556 (88,237,327) (19,178,876)
------------- ----------- ------------ -------------
NET GAIN................. 28,326,864 5,139,386 192,821,213 9,986,262
------------- ----------- ------------ -------------
NET INCREASE.................. $ 35,574,699 $ 7,287,162 $213,545,278 $ 9,997,930
------------- ----------- ------------ -------------
------------- ----------- ------------ -------------
- ------------------
* For the period May 4, 1999 (commencement of operations) through June 30,
1999.
** Net of $71,132, $1,877, $99,930, $2,143, $721,261, $802,570, $40,137,
$65,520, $9,534, $18,320, $33 and $23,863 foreign withholding tax,
respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
100
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
GLOBAL
DIVIDEND EUROPEAN PACIFIC S&P 500
GROWTH GROWTH GROWTH EQUITY INDEX
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME:
INCOME
Interest...................... $ 268,074 $ 288,713 $ 108,964 $ 3,334,225 $ 144,291
Dividends..................... 7,178,439** 5,997,200** 522,066** 3,880,086** 539,254**
------------ ------------- ------------- ------------- ------------
TOTAL INCOME............. 7,446,513 6,285,913 631,030 7,214,311 683,545
------------ ------------- ------------- ------------- ------------
EXPENSES
Investment management fee..... 1,792,667 2,378,043 295,028 3,235,472 169,055
Professional fees............. 15,777 17,040 20,002 13,559 16,662
Custodian fees................ 150,026 220,627 85,439 40,204 12,158
Shareholder reports and
notices..................... 17,750 21,763 6,020 28,875 2,419
Trustees' fees and expenses... 562 738 98 1,381 26
Transfer agent fees and
expenses.................... 250 250 250 250 250
Other......................... 8,306 10,259 10,689 6,676 5,479
------------ ------------- ------------- ------------- ------------
TOTAL EXPENSES........... 1,985,338 2,648,720 417,526 3,326,417 206,049
Less: amounts
waived/reimbursed........... -- -- -- -- (3,187)
------------ ------------- ------------- ------------- ------------
NET EXPENSES............. 1,985,338 2,648,720 417,526 3,326,417 202,862
------------ ------------- ------------- ------------- ------------
NET INVESTMENT INCOME.... 5,461,175 3,637,193 213,504 3,887,894 480,683
------------ ------------- ------------- ------------- ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... 19,425,911 46,104,341 4,489,440 287,670,319 168,737
Futures contracts......... -- -- -- -- 346,069
Foreign exchange
transactions............ (59,518) (205,859) 185,344 -- --
------------ ------------- ------------- ------------- ------------
NET GAIN (LOSS).......... 19,366,393 45,898,482 4,674,784 287,670,319 514,806
------------ ------------- ------------- ------------- ------------
Net change in unrealized
appreciation/depreciation
on:
Investments............... 22,671,040 (37,348,902) 13,979,891 (89,998,168) 8,649,450
Futures contracts......... -- -- -- -- 92,846
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. (41,184) 55,618 145,874 -- --
------------ ------------- ------------- ------------- ------------
NET APPRECIATION
(DEPRECIATION)........... 22,629,856 (37,293,284) 14,125,765 (89,998,168) 8,742,296
------------ ------------- ------------- ------------- ------------
NET GAIN................. 41,996,249 8,605,198 18,800,549 197,672,151 9,257,102
------------ ------------- ------------- ------------- ------------
NET INCREASE.................. $ 47,457,424 $ 12,242,391 $ 19,014,053 $ 201,560,045 $ 9,737,785
------------ ------------- ------------- ------------- ------------
------------ ------------- ------------- ------------- ------------
<CAPTION>
COMPETITIVE EDGE AGGRESSIVE
"BEST IDEAS" EQUITY* STRATEGIST
<S> <C> <C> <C>
- ------------------------------
NET INVESTMENT INCOME:
INCOME
Interest...................... $ 69,841 $ 7,396 $ 7,253,842
Dividends..................... 214,698** 701** 1,827,750**
----------- ------------- ------------
TOTAL INCOME............. 284,539 8,097 9,081,592
----------- ------------- ------------
EXPENSES
Investment management fee..... 126,446 2,003 1,651,811
Professional fees............. 11,748 5,261 14,494
Custodian fees................ 7,081 500 18,843
Shareholder reports and
notices..................... 1,861 360 12,378
Trustees' fees and expenses... 29 -- 356
Transfer agent fees and
expenses.................... 250 78 250
Other......................... 1,179 89 4,602
----------- ------------- ------------
TOTAL EXPENSES........... 148,594 8,291 1,702,734
Less: amounts
waived/reimbursed........... (92,742) (8,291 ) --
----------- ------------- ------------
NET EXPENSES............. 55,852 -- 1,702,734
----------- ------------- ------------
NET INVESTMENT INCOME.... 228,687 8,097 7,378,858
----------- ------------- ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... (113,553) (15,618 ) 38,060,336
Futures contracts......... -- -- --
Foreign exchange
transactions............ (869) -- --
----------- ------------- ------------
NET GAIN (LOSS).......... (114,422) (15,618 ) 38,060,336
----------- ------------- ------------
Net change in unrealized
appreciation/depreciation
on:
Investments............... 2,591,494 103,310 8,570,418
Futures contracts......... -- -- --
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. (1,268) -- --
----------- ------------- ------------
NET APPRECIATION
(DEPRECIATION)........... 2,590,226 103,310 8,570,418
----------- ------------- ------------
NET GAIN................. 2,475,804 87,692 46,630,754
----------- ------------- ------------
NET INCREASE.................. $ 2,704,491 $ 95,789 $ 54,009,612
----------- ------------- ------------
----------- ------------- ------------
</TABLE>
101
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-TERM
BOND
MONEY MARKET -------------
-------------------------------
FOR THE SIX
FOR THE SIX FOR THE YEAR MONTHS ENDED
MONTHS ENDED ENDED JUNE 30,
JUNE 30, 1999 DECEMBER 31, 1999*
(UNAUDITED) 1998 (UNAUDITED)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 9,607,571 $ 19,436,475 $ 3,279
Net realized gain (loss)...... 1,751 1,854 (1,279)
Net change in unrealized
appreciation/depreciation... -- -- (410)
-------------- -------------- -------------
NET INCREASE
(DECREASE)............... 9,609,322 19,438,329 1,590
-------------- -------------- -------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (9,607,294) (19,436,518) (3,279)
Net realized gain............. (1,751) (1,854) --
-------------- -------------- -------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (9,609,045) (19,438,372) (3,279)
-------------- -------------- -------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 283,412,766 465,453,549 1,412,745
Reinvestment of dividends and
distributions............... 9,609,045 19,438,372 3,279
Cost of shares repurchased.... (313,933,191) (378,435,543) (477,652)
-------------- -------------- -------------
NET INCREASE
(DECREASE)............... (20,911,380) 106,456,378 938,372
-------------- -------------- -------------
TOTAL INCREASE
(DECREASE)............... (20,911,103) 106,456,335 936,683
NET ASSETS:
Beginning of period........... 442,034,484 335,578,149 10
-------------- -------------- -------------
END OF PERIOD............ $ 421,123,381 $ 442,034,484 $ 936,693
-------------- -------------- -------------
-------------- -------------- -------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 299 $ 22 $ --
-------------- -------------- -------------
-------------- -------------- -------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 283,412,766 465,453,549 141,872
Issued in reinvestment of
dividends and
distributions............... 9,609,045 19,438,372 330
Repurchased................... (313,933,191) (378,435,543) (47,910)
-------------- -------------- -------------
NET INCREASE (DECREASE)....... (20,911,380) 106,456,378 94,292
-------------- -------------- -------------
-------------- -------------- -------------
- ------------------
</TABLE>
<TABLE>
<C> <S>
* For the period May 4, 1999 (commencement of operations) through June 30,
1999.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
102
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUALITY INCOME PLUS HIGH YIELD UTILITIES
------------------------------- ------------------------------ -----------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED MONTHS ENDED ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 16,386,449 $ 31,385,103 $ 23,227,861 $ 47,746,756 $ 7,247,835 $ 14,064,617
Net realized gain (loss)...... (6,384,714) 7,060,684 (7,091,487) (10,756,455) 18,151,538 11,183,431
Net change in unrealized
appreciation/depreciation... (31,368,410) 3,370,100 (2,178,837) (62,350,933) 10,175,326 81,869,637
-------------- -------------- -------------- ------------- ------------- -------------
NET INCREASE
(DECREASE)............... (21,366,675) 41,815,887 13,957,537 (25,360,632) 35,574,699 107,117,685
-------------- -------------- -------------- ------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (16,385,928) (31,385,551) (23,326,035) (47,889,896) (7,247,820) (14,064,645)
Net realized gain............. -- -- -- -- (11,183,442) (24,274,238)
-------------- -------------- -------------- ------------- ------------- -------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (16,385,928) (31,385,551) (23,326,035) (47,889,896) (18,431,262) (38,338,883)
-------------- -------------- -------------- ------------- ------------- -------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 37,972,200 145,861,267 27,887,917 150,152,649 45,130,322 107,347,532
Reinvestment of dividends and
distributions............... 16,385,909 31,385,551 23,326,035 47,889,896 18,431,249 38,338,883
Cost of shares repurchased.... (60,172,220) (115,083,881) (65,530,381) (128,774,384) (61,384,101) (111,796,640)
-------------- -------------- -------------- ------------- ------------- -------------
NET INCREASE
(DECREASE)............... (5,814,111) 62,162,937 (14,316,429) 69,268,161 2,177,470 33,889,775
-------------- -------------- -------------- ------------- ------------- -------------
TOTAL INCREASE
(DECREASE)............... (43,566,714) 72,593,273 (23,684,927) (3,982,367) 19,320,907 102,668,577
NET ASSETS:
Beginning of period........... 547,582,781 474,989,508 364,078,904 368,061,271 560,802,833 458,134,256
-------------- -------------- -------------- ------------- ------------- -------------
END OF PERIOD............ $ 504,016,067 $ 547,582,781 $ 340,393,977 $364,078,904 $ 580,123,740 $560,802,833
-------------- -------------- -------------- ------------- ------------- -------------
-------------- -------------- -------------- ------------- ------------- -------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 221 $ (300) $ 53,582 $ 151,756 $ 40 $ 25
-------------- -------------- -------------- ------------- ------------- -------------
-------------- -------------- -------------- ------------- ------------- -------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 3,552,922 13,356,857 5,566,064 26,123,968 2,089,376 5,490,004
Issued in reinvestment of
dividends and
distributions............... 1,547,524 2,881,413 4,704,392 8,453,299 851,373 1,967,479
Repurchased................... (5,645,231) (10,567,612) (13,103,401) (22,927,167) (2,839,324) (5,716,328)
-------------- -------------- -------------- ------------- ------------- -------------
NET INCREASE (DECREASE)....... (544,785) 5,670,658 (2,832,945) 11,650,100 101,425 1,741,155
-------------- -------------- -------------- ------------- ------------- -------------
-------------- -------------- -------------- ------------- ------------- -------------
<CAPTION>
INCOME BUILDER
-----------------------------
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
<S> <C> <C>
- ------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 2,147,776 $ 4,037,661
Net realized gain (loss)...... 1,068,830 936,441
Net change in unrealized
appreciation/depreciation... 4,070,556 (3,662,539)
------------- -------------
NET INCREASE
(DECREASE)............... 7,287,162 1,311,563
------------- -------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (2,162,653) (4,033,908)
Net realized gain............. (1,674,662) (768,186)
------------- -------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (3,837,315) (4,802,094)
------------- -------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 7,858,426 50,649,400
Reinvestment of dividends and
distributions............... 3,837,315 4,802,094
Cost of shares repurchased.... (14,947,668) (19,614,662)
------------- -------------
NET INCREASE
(DECREASE)............... (3,251,927) 35,836,832
------------- -------------
TOTAL INCREASE
(DECREASE)............... 197,920 32,346,301
NET ASSETS:
Beginning of period........... 87,769,134 55,422,833
------------- -------------
END OF PERIOD............ $ 87,967,054 $ 87,769,134
------------- -------------
------------- -------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 2 $ 14,879
------------- -------------
------------- -------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 670,241 4,241,399
Issued in reinvestment of
dividends and
distributions............... 327,894 415,816
Repurchased................... (1,288,473) (1,710,560)
------------- -------------
NET INCREASE (DECREASE)....... (290,338) 2,946,655
------------- -------------
------------- -------------
</TABLE>
103
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
DIVIDEND GROWTH CAPITAL GROWTH
------------------------------ -------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income
(loss)...................... $ 20,724,065 $ 38,849,535 $ 11,668 $ (341,222)
Net realized gain (loss)...... 281,058,540 322,115,886 29,165,138 15,646,625
Net change in unrealized
appreciation/depreciation... (88,237,327) (89,389,463) (19,178,876) 6,997,899
-------------- ------------- -------------- --------------
NET INCREASE
(DECREASE)............... 213,545,278 271,575,958 9,997,930 22,303,302
-------------- ------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (20,723,004) (38,849,522) -- (10,014)
Net realized gain............. (329,147,530) (187,973,609) (17,791,828) (10,080,542)
-------------- ------------- -------------- --------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (349,870,534) (226,823,131) (17,791,828) (10,090,556)
-------------- ------------- -------------- --------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 162,839,366 479,551,623 11,926,894 28,039,255
Reinvestment of dividends and
distributions............... 349,870,534 226,823,131 17,791,827 10,090,556
Cost of shares repurchased.... (190,369,456) (407,106,560) (18,943,583) (38,839,523)
-------------- ------------- -------------- --------------
NET INCREASE
(DECREASE)............... 322,340,444 299,268,194 10,775,138 (709,712)
-------------- ------------- -------------- --------------
TOTAL INCREASE
(DECREASE)............... 186,015,188 344,021,021 2,981,240 11,503,034
NET ASSETS:
Beginning of period........... 2,249,926,779 1,905,905,758 138,603,110 127,100,076
-------------- ------------- -------------- --------------
END OF PERIOD............ $2,435,941,967 $2,249,926,779 $ 141,584,350 $ 138,603,110
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 1,215 $ 154 $ 11,244 $ (424)
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 7,061,859 21,516,674 557,574 1,431,494
Issued in reinvestment of
dividends and
distributions............... 16,813,452 10,521,804 929,562 513,776
Repurchased................... (8,256,321) (18,647,038) (896,436) (2,085,691)
-------------- ------------- -------------- --------------
NET INCREASE (DECREASE)....... 15,618,990 13,391,440 590,700 (140,421)
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
104
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GLOBAL DIVIDEND GROWTH EUROPEAN GROWTH PACIFIC GROWTH
------------------------------- ------------------------------- -------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED MONTHS ENDED ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 5,461,175 $ 8,273,212 $ 3,637,193 $ 3,094,783 $ 213,504 $ 504,743
Net realized gain (loss)...... 19,366,393 29,801,364 45,898,482 43,252,405 4,674,784 (31,801,028)
Net change in unrealized
appreciation/depreciation... 22,629,856 16,207,523 (37,293,284) 44,049,168 14,125,765 24,432,009
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE
(DECREASE)............... 47,457,424 54,282,099 12,242,391 90,396,356 19,014,053 (6,864,276)
-------------- -------------- -------------- -------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (5,481,688) (8,206,088) (3,193,618) (5,476,236) (770,896) (2,947,935)
Net realized gain............. (35,181,150) (52,205,069) (47,361,324) (30,256,754) -- --
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (40,662,838) (60,411,157) (50,554,942) (35,732,990) (770,896) (2,947,935)
-------------- -------------- -------------- -------------- -------------- --------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 20,911,887 75,090,455 97,318,026 190,691,042 121,171,390 65,895,854
Reinvestment of dividends and
distributions............... 40,662,838 60,411,157 50,554,942 35,732,990 770,896 2,947,935
Cost of shares repurchased.... (52,401,953) (126,758,450) (130,504,785) (161,891,054) (101,247,781) (75,093,578)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE
(DECREASE)............... 9,172,772 8,743,162 17,368,183 64,532,978 20,694,505 (6,249,789)
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE
(DECREASE)............... 15,967,358 2,614,104 (20,944,368) 119,196,344 38,937,662 (16,062,000)
NET ASSETS:
Beginning of period........... 484,227,564 481,613,460 510,637,597 391,441,253 52,841,537 68,903,537
-------------- -------------- -------------- -------------- -------------- --------------
END OF PERIOD............ $ 500,194,922 $ 484,227,564 $ 489,693,229 $ 510,637,597 $ 91,779,199 $ 52,841,537
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 500,018 $ 520,531 $ 3,577,679 $ 3,134,104 $ (145,755) $ 411,637
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 1,450,463 5,251,149 3,492,917 7,118,106 21,650,469 13,473,730
Issued in reinvestment of
dividends and
distributions............... 2,904,553 4,451,226 2,023,007 1,290,932 115,750 677,325
Repurchased................... (3,682,783) (9,357,396) (4,698,657) (6,252,813) (18,265,519) (15,145,796)
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE)....... 672,233 344,979 817,267 2,156,225 3,500,700 (994,741)
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
105
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
EQUITY S&P 500 INDEX
------------------------------ -------------------------------
FOR THE SIX FOR THE YEAR FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998*
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 3,887,894 $ 6,924,725 $ 480,683 $ 244,990
Net realized gain (loss)...... 287,670,319 161,754,931 514,806 186,052
Net change in unrealized
appreciation/depreciation... (89,998,168) 89,582,262 8,742,296 4,173,912
-------------- ------------- -------------- --------------
NET INCREASE............. 201,560,045 258,261,918 9,737,785 4,604,954
-------------- ------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (1,094,802) (6,924,673) (244,995) --
Net realized gain............. (168,434,937) (114,146,703) (283,184) --
-------------- ------------- -------------- --------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (169,529,739) (121,071,376) (528,179) --
-------------- ------------- -------------- --------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 234,181,856*** 262,726,068 72,702,103 50,279,637
Reinvestment of dividends and
distributions............... 169,529,739 121,071,376 528,179 --
Cost of shares repurchased.... (105,483,027) (205,665,545) (11,943,824) (6,152,623)
-------------- ------------- -------------- --------------
NET INCREASE............. 298,228,568 178,131,899 61,286,458 44,127,014
-------------- ------------- -------------- --------------
TOTAL INCREASE........... 330,258,874 315,322,441 70,496,064 48,731,968
NET ASSETS:
Beginning of period........... 1,138,412,723 823,090,282 48,731,968 --
-------------- ------------- -------------- --------------
END OF PERIOD............ $1,468,671,597 $1,138,412,723 $ 119,228,032 $ 48,731,968
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 2,787,610 $ (5,165) $ 480,678 $ 244,990
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 4,651,480*** 7,421,841 6,159,937 4,974,649
Issued in reinvestment of
dividends and
distributions............... 5,064,107 3,456,577 42,254 --
Repurchased................... (2,473,008) (5,884,436) (1,010,377) (631,013)
-------------- ------------- -------------- --------------
NET INCREASE.................. 7,242,579 4,993,982 5,191,814 4,343,636
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
- ------------------
</TABLE>
<TABLE>
<C> <S>
* For the period May 18, 1998 (commencement of operations) through December
31, 1998.
** For the period May 4, 1999 (commencement of operations) through June 30,
1999.
*** Includes acquisition of Capital Appreciation of 824,458 shares and
$35,291,368.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
106
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGGRESSIVE
COMPETITIVE EDGE EQUITY
"BEST IDEAS" -------------- STRATEGIST
------------------------------- -------------------------------
FOR THE SIX
FOR THE SIX FOR THE YEAR MONTHS ENDED FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED JUNE 30, MONTHS ENDED ENDED
JUNE 30, 1999 DECEMBER 31, 1999** JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998* (UNAUDITED) (UNAUDITED) 1998
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 228,687 $ 266,358 $ 8,097 $ 7,378,858 $ 12,820,064
Net realized gain (loss)...... (114,422) (1,270,706) (15,618) 38,060,336 (7,041,288)
Net change in unrealized
appreciation/depreciation... 2,590,226 1,995,524 103,310 8,570,418 125,871,829
-------------- -------------- -------------- -------------- --------------
NET INCREASE
(DECREASE)............... 2,704,491 991,176 95,789 54,009,612 131,650,605
-------------- -------------- -------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (267,149) -- (8,097) (7,385,951) (12,819,604)
Net realized gain............. -- -- -- -- (52,303,444)
-------------- -------------- -------------- -------------- --------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (267,149) -- (8,097) (7,385,951) (65,123,048)
-------------- -------------- -------------- -------------- --------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 10,299,399 48,814,147 4,011,141 62,482,291 120,982,104
Reinvestment of dividends and
distributions............... 267,149 -- 8,097 7,385,950 65,123,048
Cost of shares repurchased.... (6,446,879) (13,266,543) (874,049) (57,495,414) (115,726,574)
-------------- -------------- -------------- -------------- --------------
NET INCREASE
(DECREASE)............... 4,119,669 35,547,604 3,145,189 12,372,827 70,378,578
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE
(DECREASE)............... 6,557,011 36,538,780 3,232,881 58,996,488 136,906,135
NET ASSETS:
Beginning of period........... 36,538,780 -- 10 633,934,280 497,028,145
-------------- -------------- -------------- -------------- --------------
END OF PERIOD............ $ 43,095,791 $ 36,538,780 $ 3,232,891 $ 692,930,768 $ 633,934,280
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 228,472 $ 267,028 $ -- $ (6,635) $ 458
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
SHARES ISSUED AND REPURCHASED:
Sold.......................... 1,033,213 5,131,070 403,860 3,593,970 7,783,951
Issued in reinvestment of
dividends and
distributions............... 25,638 -- 794 420,197 4,189,589
Repurchased................... (646,909) (1,408,330) (87,854) (3,312,840) (7,464,531)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE)....... 411,942 3,722,740 316,800 701,327 4,509,009
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
107
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley 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 & Co., the parent company of Morgan Stanley Dean Witter
Advisors Inc. (the "Investment Manager").
The Fund, organized on February 25, 1983 as a Massachusetts business trust,
consists of sixteen 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
Short-Term Bond............... May 4, 1999 European Growth..................... March 1, 1991
Quality Income Plus........... March 1, 1987 Pacific Growth...................... February 23, 1994
High Yield.................... March 9, 1984 Equity.............................. March 9, 1984
Utilities..................... March 1, 1990 S&P 500 Index....................... May 18, 1998
Income Builder................ January 21, 1997 Competitive Edge "Best Ideas"....... May 18, 1998
Dividend Growth............... March 1, 1990 Aggressive Equity................... May 4, 1999
Capital Growth................ March 1, 1991 Strategist.......................... March 1, 1987
</TABLE>
The investment objectives of each Portfolio are as follows:
<TABLE>
<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.
Short-Term Bond Seeks to provide a high level of current income consistent with
the preservation of capital, by investing primarily in bonds
issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities and investment
grade corporate and other types of bonds.
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.
</TABLE>
108
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE
<S> <C>
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.
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.
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.
S&P 500 Index Seeks to provide investment results that, before expenses,
correspond to the total return of the Standards & Poor's 500
Composite Stock Price Index (the "S&P 500 Index") by investing
primarily in common stocks included in the S&P 500 Index.
Competitive Edge Seeks long-term capital growth by investing primarily in the
"Best Ideas" common stock of U.S. and non - U.S. companies included in the
"Best Ideas" list, a research compilation assembled and
maintained by Morgan Stanley Dean Witter Equity Research.
Aggressive Equity Seeks long-term capital growth by investing primarily in the
equity securities of companies covered by Morgan Stanley Dean
Witter Equity Research that offer the potential for superior
earnings growth.
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
109
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
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 European Growth and Pacific Growth, by Morgan Stanley Dean
Witter Investment Management Inc. (the "Sub-Advisor")) 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 AND FUTURES CONTRACTS -- (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
110
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
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 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; (3) Options on futures contracts: the Fund is
required to deposit cash, U.S. Government securities or other liquid portfolio
securities as "initial margin"and "variation margin" with respect to written
call and put options on futures contracts. If a written option expires, the Fund
realizes a gain. If a written call or put option is exercised, the premium
received will decrease or increase the unrealized loss or gain on the futures
contract. If the Fund enters into a closing purchase transaction, the Fund
realized a gain or loss without regard to any unrealized gain or loss on the
underlying futures contract and the liability related to such option is
extinguished; (4) Futures contracts: a futures contract is an agreement between
two parties to buy and sell financial instruments at a set price on a future
date. Upon entering into such a contract, the Fund is required to pledge to the
broker cash, U.S. Government securities or other liquid portfolio securities
equal to the minimum initial margin requirements of the applicable futures
exchange. Pursuant to the contract, the Fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments known as variation margin are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realizes a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
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
111
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
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 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.
112
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
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 -- 0.50% to the portion of daily net assets not exceeding $500
million and effective May 1, 1999 the Agreement was amended to reduce the annual
rate to 0.425% of the portion of daily net assets exceeding $500 million but not
exceeding $750 million, and 0.375% of the portion of daily net assets exceeding
$750 million.
Short-Term Bond -- 0.45%.
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.
High Yield -- 0.50% to the portion of daily net assets not exceeding $500
million and 0.425% of the portion of daily net assets exceeding $500 million.
Utilities -- 0.65% to the portion of daily net assets not exceeding $500
million; 0.55% to the portion of daily net assets exceeding $500 million but not
exceeding $1 billion and effective May 1, 1999 the Agreement was amended to
reduce the annual rate to 0.525% of the portion of daily net assets exceeding $1
billion.
Income Builder -- 0.75%.
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; 0.475% to the portion of daily net assets exceeding $1
billion but not exceeding $2 billion; 0.45% of the portion of daily net assets
exceeding $2 billion but not exceeding $3 billion and effective May 1, 1999 the
Agreement was amended to reduce the annual rate to 0.425% of the portion of
daily net assets exceeding $3 billion.
Capital Growth -- 0.65%.
113
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
Global Dividend Growth -- 0.75% to the portion of daily net assets not exceeding
$1 billion and effective May 1, 1999 the Agreement was amended to reduce the
annual rate to 0.725% of the portion of daily net assets exceeding $1 billion.
European Growth -- 0.95% to the portion of daily net assets not exceeding $500
million and 0.90% of the portion of daily net assets exceeding $500 million.
Pacific Growth -- 0.95%.
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.
S&P 500 Index -- 0.40%.
Competitive Edge "Best Ideas" -- 0.65%.
Aggressive Equity -- 0.75%.
Strategist -- 0.50% to the portion of daily net assets not exceeding $1.5
billion and effective May 1, 1999 the Agreement was amended to reduce the annual
rate to 0.475% of the portion of daily net assets exceeding $1.5 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.
Under a Sub-Advisory Agreement between the Investment Manager and the
Sub-Advisor, the Sub-Advisor 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-Advisor 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
Short-Term Bond and Aggressive Equity until such time as each Portfolio has $50
million of net assets or until November 4, 1999, whichever occurs first. For the
period May 18, 1998 through April 30, 1999, the
114
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
Investment Manager waived its compensation and reimbursed all operating expenses
without limitation for Competitive Edge "Best Ideas". For the period May 18,
1998 through January 5, 1999, the Investment Manager waived its compensation and
reimbursed all operating expenses without limitation for S&P 500 Index.
Commencing January 6, 1999, the Investment Manager has agreed to assume all
operating expenses and to waive its compensation to the extent such expenses and
compensation on an annualized basis exceed 0.50% of the daily net assets of S&P
500 Index. At June 30, 1999, 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 Money Market), for the six months ended June 30, 1999 were
as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES OTHER
---------------------------- --------------------------------
PURCHASES SALES/MATURITIES PURCHASES SALES/MATURITIES
----------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Money Market............................ $87,704,778 $ 107,300,073 $1,421,116,423 $ 1,429,147,900
Short-Term Bond......................... 949,606 323,369 -- --
Quality Income Plus..................... 240,246,249 223,825,906 136,425,484 158,185,313
High Yield.............................. -- -- 104,502,527 119,890,955
Utilities............................... -- -- 39,700,682 34,301,375
Income Builder.......................... 132,453 108,753 15,816,342 21,237,614
Dividend Growth......................... -- -- 654,328,822 1,241,628,842
Capital Growth.......................... -- -- 466,972,740 471,791,012
Global Dividend Growth.................. -- -- 103,842,635 123,370,006
European Growth......................... -- -- 171,393,212 176,404,262
Pacific Growth.......................... -- -- 51,246,330 38,730,250
Equity.................................. 56,476,250 56,242,188 2,564,661,126 2,482,372,020
S&P 500 Index........................... -- -- 59,883,375 965,039
Competitive Edge "Best Ideas"........... -- -- 19,652,739 15,730,655
Aggressive Equity....................... -- -- 2,260,125 243,897
Strategist.............................. 84,932,166 63,046,233 138,380,006 249,270,854
</TABLE>
Included in the payable for investments purchased at June 30, 1999 for Dividend
Growth, Capital Growth, Income Builder, Equity and Aggressive Equity, are
$4,038,606, $1,088,683, $86,036, $1,192,535 and $438,213, respectively, for
unsettled trades with Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager. Included in the receivable for investments sold at June 30,
1999 for Dividend Growth, Capital Growth, and Aggressive Equity are $21,104,550,
$383,312, and $31,914, respectively, for unsettled trades with DWR.
115
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
For the six months ended June 30, 1999, the following Portfolios incurred
brokerage commissions with DWR for portfolio transactions executed on behalf of
the Portfolio:
<TABLE>
<CAPTION>
GLOBAL
INCOME DIVIDEND CAPITAL DIVIDEND AGGRESIVE
UTILITIES BUILDER GROWTH GROWTH GROWTH EQUITY EQUITY STRATEGIST
----------- ------------ -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,000 $ 12,091 $ 55,730 $ 75,760 $ 14,705 $ 142,015 $ 1,365 $ 15,575
----------- ------------ -------------- ------------ ------------ ------------ ------ ------------
----------- ------------ -------------- ------------ ------------ ------------ ------ ------------
</TABLE>
Included in the payable for investments purchased at June 30, 1999 for Capital
Growth, Pacific Growth, Equity and Aggressive Equity are $386,013, $687,211,
$4,434,192 and $3,210, respectively, for unsettled trades with Morgan Stanley &
Co., Inc. ("Morgan Stanley"), an affiliate of the Investment Manager. Included
in the receivable for investment sold at June 30, 1999 for Capital Growth and
Pacific Growth are $1,001,184 and $40,942, respectively, for unsettled trades
with Morgan Stanley.
For the six months ended June 30, 1999, the following Portfolios incurred
brokerage commissions with Morgan Stanley for portfolio transactions executed on
behalf of the Portfolio:
<TABLE>
<CAPTION>
GLOBAL COMPETITIVE
INCOME DIVIDEND CAPITAL DIVIDEND PACIFIC EDGE "BEST AGGRESSIVE
BUILDER GROWTH GROWTH GROWTH GROWTH EQUITY IDEAS" EQUITY STRATEGIST
------- -------- ------- -------- ------- ------- ---------- ----------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1$,240 $164,735 $60,525 $ 79,246 $30,192 $364,690 $19,123 $ 28 $17,605
------- -------- ------- -------- ------- ------- ---------- --- ----------
------- -------- ------- -------- ------- ------- ---------- --- ----------
</TABLE>
Morgan Stanley 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 six months ended June 30, 1999
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 COSTS
QUALTY GLOBAL
MONEY INCOME HIGH INCOME DIVIDEND CAPITAL DIVIDEND EUROPEAN PACIFIC
MARKET PLUS YIELD UTILITIES BUILDER GROWTH GROWTH GROWTH GROWTH GROWTH EQUITY STRATEGIST
------- ------- ------ --------- ------- -------- ------- -------- -------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 158 $ 441 $ 82 $ 459 -- $ 10 $ 46 $ 89 $ 138 $ 78 $ 416 --
------- ------- ------ --------- ------- -------- ------- -------- -------- ------- ------ ----------
------- ------- ------ --------- ------- -------- ------- -------- -------- ------- ------ ----------
ACCRUED PENSION LIABILITY
$10,886 $7,650 $3,624 $ 5,166 $ 59 $ 8,447 $ 412 $ 792 $ 1,111 $ 271 $5,833 $ 7,764
------- ------- ------ --------- ------- -------- ------- -------- -------- ------- ------ ----------
------- ------- ------ --------- ------- -------- ------- -------- -------- ------- ------ ----------
</TABLE>
116
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
4. FEDERAL INCOME TAX STATUS
At December 31, 1998, 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>
AMOUNT IN THOUSANDS
-------------------------------------------------------------------------
Available through December 31, 1999 2000 2001 2002 2003 2004 2005 2006 TOTAL
- ---------------------------------------- ------- ------ ------ ------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Quality Income Plus..................... -- -- -- $12,951 -- $2,491 -- -- $15,442
High Yield.............................. $ 7,336 $3,057 $4,736 3,256 $ 2,984 5,521 -- $2,735 29,625
Pacific Growth.......................... -- -- -- -- 1,939 4,124 $11,428 33,463 50,954
Competitive Edge "Best Ideas"........... -- -- -- -- -- -- -- 853 853
Strategist.............................. -- -- -- -- -- -- -- 6,900 6,900
</TABLE>
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 1998: Quality
Income Plus -- $692,000; High Yield -- $7,991,000; Income Builder -- $346,000;
European Growth -- $4,790,000; Pacific Growth -- $4,534,000; Competitive Edge
"Best Ideas" -- $346,000 and Strategist -- $59,000.
At December 31, 1998, the primary reason(s) for significant temporary book/tax
differences were as follows:
<TABLE>
<CAPTION>
LOSS DEFERRALS
POST-OCTOBER FROM WASH
LOSSES SALES
----------- --------------
<S> <C> <C>
Quality Income Plus..................... - -
High Yield.............................. - -
Utilities............................... -
Income Builder.......................... - -
Dividend Growth......................... -
Capital Growth.......................... -
Global Dividend Growth.................. -
European Growth......................... - -
Pacific Growth.......................... - -
Equity.................................. -
Competitive Edge "Best Ideas"........... - -
Strategist.............................. - -
</TABLE>
Additionally, Global Dividend Growth and Pacific Growth had temporary
differences attributable to income from the mark-to-market of passive foreign
investment companies, High Yield had temporary differences attributable to
interest on bonds in default and S&P 500 Index had temporary differences
attributable to mark-to-market of futures contracts.
117
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
5. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
Global Dividend Growth, European Growth, Pacific Growth and Competitive Edge
"Best Ideas" 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 June 30, 1999, European Growth and Pacific Growth had outstanding forward
contracts.
S&P 500 Index may purchase and sell stock index futures ("futures contacts") for
the following reasons: to simulate full investment in the S&P 500 INDEX while
retaining a cash balance for fund management purposes, to facilitate trading, to
reduce transaction costs or to seek higher investment returns when a futures
contract is priced more attractively than stocks comprising the S&P 500 INDEX.
These futures contracts involve elements of market risk in excess of the amount
reflected in the Statement of Assets and Liabilities. S&P 500 Index bears the
risk of an unfavorable change in the value of the underlying securities.
At June 30, 1999, European Growth's investments in securities of issuers in the
United Kingdom represented 35.4% of the Portfolio's net assets. Pacific Growth's
investments in securities of issuers in Japan represented 35.6% 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 June 30, 1999, Global Dividend Growth's, European Growth's and Pacific
Growth's cash balance consisted principally of interest bearing deposits with
Chase Manhattan Bank N.A., the custodian of each Portfolio.
118
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED) CONTINUED
6. PORTFOLIO MERGER
As of the close of business on March 19, 1999, Equity acquired all the net
assets of Morgan Stanley Dean Witter Variable Investment Series -- Capital
Appreciation ("Capital Appreciation") pursuant to a plan of reorganization
approved by the shareholders of Capital Appreciation on February 24, 1999. The
acquisition was accomplished by a tax-free exchange of 824,458 shares of Equity
at a net asset value of $42.80 per share for 3,210,810 shares of Capital
Appreciation. The net assets of Equity and Capital Appreciation immediately
before the acquisition were $1,300,120,916 and $35,291,368, respectively,
including unrealized appreciation of $6,437,316 for Capital Appreciation.
Immediately after the acquisition the combined net assets of Equity amounted to
$1,335,412,284.
7. SUBSEQUENT EVENT
On August 4, 1999 the shareholders of Utilities approved changing the
Portfolio's investment objective to "seek both capital appreciation and current
income". This change will have the effect of (i) eliminating long-term growth of
income as an objective and (ii) permitting the Portfolio to invest primarily in
the entire utilities industry, as opposed to the more limited public utilities
industry. The new objective was effective on August 5, 1999.
119
<PAGE>
MORGAN STANLEY 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
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)
1998 1.00 0.051 -- 0.051 (0.051) -- (0.051)
1999(a) 1.00 0.022 -- 0.022 (0.022) -- (0.022)
SHORT-TERM BOND
1999(a)(e) 10.00 0.04 $(0.07) (0.03) (0.04) -- (0.04)
QUALITY INCOME PLUS
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)
1998 10.77 0.68 0.23 0.91 (0.68) -- (0.68)
1999(a) 11.00 0.33 (0.77) (0.44) (0.33) -- (0.33)
HIGH YIELD
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)
1998 6.12 0.71 (1.05) (0.34) (0.71) -- (0.71)
1999(a) 5.07 0.33 (0.13) 0.20 (0.33) -- (0.33)
UTILITIES
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)
1998 18.59 0.57 3.68 4.25 (0.57) (1.02) (1.59)
1999(a) 21.25 0.28 1.08 1.36 (0.28) (0.43) (0.71)
INCOME BUILDER
1997(c) 10.00 0.44 1.76 2.20 (0.44) -- (0.44)
1998 11.76 0.56 (0.19) 0.37 (0.56) (0.11) (0.67)
1999(a) 11.46 0.30 0.71 1.01 (0.30) (0.23) (0.53)
DIVIDEND GROWTH
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)
1998 21.60 0.41 2.58 2.99 (0.41) (2.05) (2.46)
1999(a) 22.13 0.21 1.90 2.11 (0.21) (3.26) (3.47)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
120
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET
ASSETS
-----------------------
NET ASSET NET ASSETS AT NET PORTFOLIO
VALUE END END OF PERIOD INVESTMENT TURNOVER
OF PERIOD TOTAL RETURN+ (000'S) EXPENSES INCOME RATE
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MONEY MARKET
1994 $ 1.00 3.81% $ 268,624 0.55% 3.93 % N/A
1995 1.00 5.66 249,787 0.53 5.52 N/A
1996 1.00 5.11 340,238 0.52 4.97 N/A
1997 1.00 5.23 335,578 0.52 5.10 N/A
1998 1.00 5.18 442,034 0.52 5.04 N/A
1999(a) 1.00 2.24(1) 421,123 0.52(2) 4.47 (2) N/A
SHORT-TERM BOND
1999(a)(e) 9.93 (0.27)(1) 937 -- (6) 4.62 (2)(6) 68%(1)
QUALITY INCOME PLUS
1994 9.45 (6.63) 414,905 0.54 6.88 254
1995 10.96 24.30 520,579 0.54 7.07 162
1996 10.37 1.56 474,660 0.53 6.84 182
1997 10.77 11.09 474,990 0.53 6.71 171
1998 11.00 8.67 547,583 0.52 6.23 152
1999(a) 10.23 (4.04)(1) 504,016 0.52(2) 6.26 (2) 72(1)
HIGH YIELD
1994 6.16 (2.47) 111,934 0.59 11.71 105
1995 6.26 14.93 154,310 0.54 12.67 58
1996 6.18 11.98 259,549 0.51 12.59 57
1997 6.12 11.87 368,061 0.53 12.44 95
1998 5.07 (6.20) 364,079 0.53 12.27 93
1999(a) 4.94 4.18(1) 340,394 0.53(2) 13.29 (2) 31(1)
UTILITIES
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
1997 18.59 27.15 458,134 0.67 3.48 13
1998 21.25 23.76 560,803 0.67 2.89 7
1999(a) 21.90 6.47(1) 580,124 0.68(2) 2.58 (2) 6(1)
INCOME BUILDER
1997(c) 11.76 22.38(1) 55,423 0.15(2)(4) 5.73 (2)(4) 41(1)
1998 11.46 3.21 87,769 0.81 5.09 54
1999(a) 11.94 8.99(1) 87,967 0.81(2) 5.07 (2) 19(1)
DIVIDEND GROWTH
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
1997 21.60 25.61 1,905,906 0.54 2.06 28
1998 22.13 14.28 2,249,927 0.53 1.85 45
1999(a) 20.77 9.56(1) 2,435,942 0.52(2) 1.79 (2) 30(1)
</TABLE>
121
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
NET ASSET NET
VALUE INVESTMENT NET REALIZED TOTAL FROM DISTRIBUTIONS TOTAL
BEGINNING INCOME AND UNREALIZED INVESTMENT DIVIDENDS TO TO DIVIDENDS AND
YEAR ENDED DECEMBER 31 OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CAPITAL GROWTH
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)
1998 18.29 (0.05) 3.59 3.54 -- (1.47) (1.47)
1999(a) 20.36 0.00 1.53 1.53 -- (2.75) (2.75)
GLOBAL DIVIDEND GROWTH
1994(b) 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)
1998 13.89 0.24 1.45 1.69 (0.24) (1.52) (1.76)
1999(a) 13.82 0.16 1.27 1.43 (0.17) (1.07) (1.24)
EUROPEAN GROWTH
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)
1998 23.54 0.15 5.53 5.68 (0.31) (1.73) (2.04)
1999(a) 27.18 0.20 0.47 0.67 (0.18) (2.69) (2.87)
PACIFIC GROWTH
1994(b) 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)
1998 6.12 0.06 (0.75) (0.69) (0.28) -- (0.28)
1999(a) 5.15 0.01 1.57 1.58 (0.06) -- (0.06)
EQUITY
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)
1998 33.58 0.25 9.47 9.72 (0.25) (4.47) (4.72)
1999(a) 38.58 0.11 6.49 6.60 (0.03) (5.18) (5.21)
S&P 500 INDEX
1998(d) 10.00 0.06 1.16 1.22 -- -- --
1999(a) 11.22 0.02 1.32 1.34 (0.03) (0.03) (0.06)
COMPETITIVE EDGE "BEST IDEAS"
1998(d) 10.00 0.07 (0.25) (0.18) -- -- --
1999(a) 9.82 0.05 0.62 0.67 (0.07) -- (0.07)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
122
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET
ASSETS
-----------------------
NET
NET ASSET NET ASSETS AT INVESTMENT PORTFOLIO
VALUE END END OF PERIOD INCOME TURNOVER
OF PERIOD TOTAL RETURN+ (000'S) EXPENSES (LOSS) RATE
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL GROWTH
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
1997 18.29 24.54 127,100 0.71 0.01 139
1998 20.36 19.63 138,603 0.70 (0.26 ) 248
1999(a) 19.14 7.51(1) 141,584 0.72(2) 0.02 (2) 344(1)
GLOBAL DIVIDEND GROWTH
1994(b) 9.82 0.27(1) 138,486 0.87(2)(3) 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
1997 13.89 12.04 481,613 0.84 1.61 48
1998 13.82 12.53 484,228 0.84 1.68 52
1999(a) 14.01 10.27(1) 500,195 0.83(2) 2.28 (2) 22(1)
EUROPEAN GROWTH
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
1997 23.54 16.07 391,441 1.12 1.04 45
1998 27.18 23.96 510,638 1.11 0.65 56
1999(a) 24.98 2.53(1) 489,693 1.06(2) 1.45 (2) 35(1)
PACIFIC GROWTH
1994(b) 9.26 (6.73)(1) 75,425 1.00(2)(3) 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
1997 6.12 (37.70) 68,904 1.44 1.09 58
1998 5.15 (11.27) 52,842 1.51 0.91 112
1999(a) 6.67 30.45(1) 91,779 1.34(2) 0.69 (2) 66(1)
EQUITY
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
1997 33.58 37.43 823,090 0.52 0.61 145
1998 38.58 30.45 1,138,413 0.52 0.73 257
1999(a) 39.97 17.13(1) 1,468,672 0.51(2) 0.59 (2) 215(1)
S&P 500 INDEX
1998(d) 11.22 12.20(1) 48,732 -- (5) 1.85 (2)(5) 2(1)
1999(a) 12.50 11.91(1) 119,228 0.48(2)(6) 1.14 (2)(6) 1(1)
COMPETITIVE EDGE "BEST
IDEAS"
1998(d) 9.82 (1.90)(1) 36,539 -- (5) 1.74 (2)(5) 31(1)
1999(a) 10.42 6.88(1) 43,096 0.29(2)(6) 1.18 (2)(6) 42(1)
</TABLE>
123
<PAGE>
MORGAN STANLEY 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>
AGGRESSIVE EQUITY
1999(a)(e) $ 10.00 $ 0.03 $ 0.20 $ 0.23 $ (0.03) -- $ (0.03)
STRATEGIST
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)
1998 14.80 0.36 3.40 3.76 (0.36) (1.56) (1.92)
1999(a) 16.64 0.19 1.22 1.41 (0.19) -- (0.19)
</TABLE>
<TABLE>
<C> <S>
- ---------------------
(a) For the six months ended June 30, 1999 (unaudited)
Commencement of operations:
(b) February 23, 1994.
(c) January 21, 1997.
(d) May 18, 1998.
(e) May 4, 1999.
+ Calculated based on the net asset value as of the last business day of the
period.
* 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 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.
(4) 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, the ratios of expenses and net investment income to average
net assets would have been 0.99% and 4.89%, respectively.
(5) If the Investment Manager had not assumed all expenses and waived its
management fee for the period May 18, 1998 through December 31, 1998 for
Competitive Edge "Best Ideas" and S&P 500 Index, respectively, the ratios
of expenses and net investment income to average net assets would have been
0.91% and 0.82%, respectively, for Competitive Edge "Best Ideas" and 0.59%
and 1.26%, respectively, for S&P 500 Index.
(6) If the Investment Manager had not assumed all expenses and waived its
management fee for the period January 1, 1999 through April 30, 1999 for
Competitive Edge "Best Ideas" and for the period May 4, 1999 through June
30, 1999 for Short-Term Bond and Aggressive Equity and for the period
January 1, 1999 through January 5, 1999 for S&P 500 Index and "capped" the
expenses of S&P 500 Index at 0.50% of its daily net assets for the period
January 6, 1999 through June 30, 1999, the ratio of expenses and net
investment income (loss) to average net assets would have been 0.76% and
0.70%, respectively for Competitive Edge "Best Ideas," 8.22% and (3.60)%,
respectively for Short-Term Bond, 3.10% and (0.07)%, respectively, for
Aggressive Equity and 0.49% and 1.13%, respectively, for S&P 500 Index.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
124
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET
ASSETS
-----------------------
NET ASSET NET ASSETS AT NET PORTFOLIO
VALUE END END OF PERIOD INVESTMENT TURNOVER
OF PERIOD TOTAL RETURN+ (000'S) EXPENSES INCOME RATE
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AGGRESSIVE EQUITY
1999(a)(e) $ 10.20 2.26%(1) $ 3,233 -- (6) 3.03 %(2)(6) 19%(1)
STRATEGIST
1994 12.45 3.94 392,760 0.54% 3.93 125
1995 12.45 9.40 388,579 0.52 5.03 329
1996 13.72 15.02 423,768 0.52 3.30 153
1997 14.80 13.71 497,028 0.52 3.09 159
1998 16.64 26.55 633,934 0.52 2.32 84
1999(a) 17.86 8.51(1) 692,931 0.52(2) 2.23 (2) 44(1)
</TABLE>
125
<PAGE>
Trustees
-------------------------------------------------------
Michael Bozic Dr. Manuel H. Johnson
Charles A. Fiumefreddo Michael E. Nugent
Edwin J. Garn Philip J. Purcell
Wayne E. Hedien John L. Schroeder
Officers
-------------------------------------------------------
Charles A. Fiumefreddo
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mitchell M. Merin
PRESIDENT
Barry Fink
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
Thomas F. Caloia
TREASURER
Transfer Agent Independent Accountants
- -------------------------------------- --------------------------------------
Morgan Stanley Dean Witter Trust FSB PricewaterhouseCoopers LLP
Harborside Financial Center--Plaza Two 1177 Avenue of the Americas
Jersey City, New Jersey 07311 New York, New York 10036
Investment Manager
----------------------------------------
Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048
Sub-Advisor
(European Growth and Pacific Growth
Portfolio)
----------------------------------------
Morgan Stanley Dean Witter Investment
Management Inc.
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they do
not express an opinion thereon.
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.
Read the prospectus carefully before investing.
<PAGE>
#40113A
