<PAGE>
MORGAN STANLEY DEAN WITTER
VARIABLE INVESTMENT SERIES
ANNUAL REPORT
DECEMBER 31, 1999
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to the Shareholders.................................. 1
Portfolio of Investments:
Money Market............................................ 27
Short-Term Bond......................................... 30
Quality Income Plus..................................... 31
High Yield.............................................. 37
Utilities............................................... 45
Income Builder.......................................... 48
Dividend Growth......................................... 52
Capital Growth.......................................... 55
Global Dividend Growth.................................. 58
European Growth......................................... 64
Pacific Growth.......................................... 68
Equity.................................................. 76
S&P 500 Index........................................... 81
Competitive Edge "Best Ideas"........................... 91
Aggressive Equity....................................... 94
Strategist.............................................. 99
Financial Statements:
Statement of Assets and Liabilities..................... 104
Statement of Operations................................. 107
Statement of Changes in Net Assets...................... 110
Notes to Financial Statements............................... 116
Financial Highlights........................................ 128
Report of Independent Accountants........................... 134
</TABLE>
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT TWO WORLD TRADE CENTER,
SERIES NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999
DEAR SHAREHOLDER:
During the 12-month period ended December 31, 1999, many of the world's major
equity markets posted solid gains, while the fixed-income markets suffered
declines as the result of a resurgent global economy and the renewed threat of
inflation.
DOMESTIC EQUITY MARKET OVERVIEW
Calendar year 1999 began much as 1998 ended, with expectations for modest,
below-trend global economic growth accompanied by a continued deceleration of
inflation. Against this backdrop the same growth stocks that had led in 1998
(financial, retail, Internet and technology) outperformed in early 1999.
By the second quarter of the year, however, the markets began to recognize that
the foundation for a synchronized global economic recovery was in place.
Initially this realization sparked a rotation out of the domestic growth stocks
that had led the market for the past two years to long-ignored economically
sensitive groups such as basic cyclicals, energy services and capital goods.
As the third quarter began, it became clearer to the financial markets that the
economic recovery might have been gaining enough traction to warrant a change in
the favorable monetary policy that had graced the capital markets since 1994.
During the summer, the Federal Reserve Board raised interest rates two times,
pressuring the equity and bond markets downward. Industry sectors that were
particularly penalized by the market correction included interest-rate-sensitive
groups, consumer issues and health care. The technology sector suffered only a
mild correction. Economically sensitive groups, which performed well during the
second quarter, declined significantly because of the Federal Reserve's attempts
to temper the economy's strength.
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
Market sentiment shifted again during the fourth quarter as investors assumed
that the Fed would tighten rates only once more in order to achieve its aim of
slowing economic growth. Although the equity markets reacted positively to this
change in sentiment, the market's breadth remained poor, with only the
technology sector skyrocketing ahead.
GLOBAL EQUITY MARKET OVERVIEW
Despite interest-rate increases by the U.S. Federal Reserve, the European
Central Bank and the Bank of England, markets rallied as investors interpreted
the actions to be a "taking back" of the liquidity injection that had occurred
after the near collapse of a major hedge fund in 1998. The interest-rate hikes
were perceived to be a normalization of monetary conditions instead of a new
cycle of tightenings designed to combat inflationary forces. The strong rally in
U.S. technology stocks broadened to become a global technology rally as
high-tech shares advanced in Europe, Japan and Asia.
JAPAN AND ASIA
The strong performance of the Japanese market slowed as investors worried that a
strengthening yen would stall the pace of economic recovery. After two strong
quarterly GDP reports, the Japanese economy appeared to have weakened a bit in
the fourth quarter. The key debate continues to center around whether the
economy has begun a sustainable recovery or if it needs another spark from an
additional government fiscal stimulus. In the meantime, corporations continue to
announce restructuring measures aimed at increasing profitability. The flow of
private investments by large multinationals is an encouraging trend that
illustrates the long-term potential for Japanese assets. In Asia, high-tech
shares performed well as global demand remained firm for semiconductors and
computer components. China remains a key focus as its slumping economy rebounds
and investors try to identify the likely beneficiaries of acceptance into the
World Trade Organization.
EUROPE
European equity markets endured some currency-related volatility as the highly
touted euro slid briefly below parity with the dollar before starting to recoup
its losses during the fourth quarter. Meanwhile, the anemic German economy
started to show some positive momentum as business confidence surveys reflected
increased activity. Anecdotal news reports point to a broadening of economic
recovery across the region. Telecommunications stocks provided excitement as a
series of mergers and acquisitions drove positive sentiment.
2
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
LATIN AMERICA
Latin markets, which had been laggards throughout 1999, started to break out of
their malaise in the fourth quarter. The combination of stronger global economic
growth, receding Y2K fears and firmer commodity prices sparked a rebound in
Latin American equity prices. The region appears poised to perform well in 2000
as global growth accelerates, Brazil rebounds from its economic slump and higher
oil prices improve Mexico's fiscal accounts.
FIXED-INCOME MARKET OVERVIEW
The U.S. economy continued its path of strength throughout 1999, propelled by a
rising stock market, low inflation and unemployment, and a recovery in many
overseas economies. The domestic economy's sustained vitality led to steadily
higher interest rates during the year. With renewed strength in the world
economy and the threat of domestic inflation looming, the Federal Reserve Board
raised the federal-funds rate twice in the third quarter and again in November,
to 5.50 percent. These moves effectively reversed the three-step rate reduction
of the previous year. If the U.S. economy continues to grow and unemployment
remains low in the months ahead, the Fed may feel it needs to continue on its
path of a tighter monetary policy to combat potential inflationary pressures.
Interest rates on long-term U.S. Treasuries were highly volatile over the course
of the year. The yield on the five-year Treasury note rose 180 basis points, to
6.34 percent, while the yield on the 30-year Treasury bond climbed 139 basis
points, to 6.48 percent.
GLOBAL FIXED-INCOME MARKET OVERVIEW
During 1999 the performance of the investment-grade global markets was
disappointing. In contrast to the prior fiscal year, when U.S. bond yields
reached their lowest levels in decades, the U.S. 10-year Treasury-note yield
rose by 180 basis points. Prices in many European bond markets reached new highs
during the first half of the fiscal year but eventually succumbed to
accelerating economic growth. Moreover, the continuing strength of the U.S.
dollar relative to most investment-grade currencies resulted in currency losses
for most nondollar-denominated investments. Emerging markets enjoyed significant
recoveries from the depressed levels reached during the Asian and Russian debt
crises.
The U.S. and other high-grade government markets had been prime beneficiaries of
the flight to quality during the period through early October 1998. As normalcy
returned to the global financial markets and economic growth reaccelerated,
market participants sold their bonds, partly to seek
3
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
higher returns from equities but also out of fear that faster economic growth
would cause inflation to pick up. This fear was accentuated by rising prices for
oil and industrial commodities as the fiscal year progressed. This environment
turned out to be especially favorable for the U.S. dollar and the Japanese yen,
at the expense of investments denominated in other currencies.
There were a few brighter spots in the investment-grade markets. The spreads
between mortgage-bond yields and Treasury-note yields narrowed, as did the
spreads between various European bond yields and German government yields. This
provided a relative performance opportunity to switch into the better-performing
markets. A few of these, most notably the Greek government market and
intermediate-maturity Norwegian notes, went up in price despite the global
trend. Moreover, several of the European currencies held up better than the core
European ones that coalesced into the new euro on January 1, 1999.
AGGRESSIVE EQUITY PORTFOLIO
From its inception on May 4, 1999, through December 31, 1999, the Aggressive
Equity Portfolio posted a return of 46.08 percent, compared to 11.26 percent for
the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index). The
accompanying chart compares the performance of the Portfolio to that of the S&P
500.
As mentioned, the equity market underwent a major rotation during the second
quarter of 1999, leading to steady growth stocks falling out of favor. Groups
such as health care posted declines during this period, while retailers and
financials significantly underperformed the overall market. The Portfolio, which
utilizes a top-down sector rotation discipline to select industries expected to
have the strongest relative earnings based on our economic outlook, reoriented
its portfolio to emphasize groups with
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: AGGRESSIVE EQUITY
($ IN THOUSANDS)
<S> <C> <C>
FUND S&P 500 (3)
May 4 1999 $10,000 $10,000
May 1999 $9,760 $9,788
June 1999 $10,226 $10,330
July 1999 $10,126 $10,008
Aug. 1999 $10,216 $9,958
Sept. 1999 $10,367 $9,686
Oct. 1999 $11,189 $10,298
Nov. 1999 $12,302 $10,508
Dec. 1999 $14,608 (2) $11,126
AVERAGE ANNUAL TOTAL RETURNS*
SINCE INCEPTION
46.08% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S & P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
* For periods of less than one year, the fund quotes its total return on a
non-annualized basis.
4
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
greater global exposure. Given our more favorable outlook for worldwide growth,
we overweighted the Portfolio in basic cyclicals, capital goods and technology
stocks and reduced our commitments to consumer staples, financials and health
care.
While breadth or group participation narrowed sharply during the second quarter
of 1999, the market posted overall positive returns for the period. However,
this was not the case in the third quarter, which ended the period down and
resulted in a further narrowing in market breadth. The market reacted negatively
to the Federal Reserve's shift toward a series of rate hikes in its attempt to
slow the rate of economic growth. Within this context, the Portfolio reduced its
exposure to sectors with less economic sensitivity. The proceeds were not
redeployed until the market had stabilized later in the quarter. This strategy
benefited the Portfolio's relative performance during this period of high market
volatility.
With investors believing that the Federal Reserve would remain on the sidelines
until after the new year, the market rebounded sharply in the fourth quarter,
but within a narrow range. Technology groups -- particularly those related to
the new economy -- far outperformed the broader market. One reason for this
lopsided rebound was the unusual nature of the global economic recovery, which
has yet to accelerate business for the basic cyclical and capital goods
companies that have traditionally benefited during the early stages of a
recovery. Instead, demand has focused on technology products, particularly
companies that sell goods that serve e-commerce and expanding bandwidth needs.
Many of these companies are small and medium-sized ones. Consequently, the
Portfolio ended the fiscal year with approximately 40 percent of its assets
invested in small and mid-sized companies.
5
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
CAPITAL GROWTH PORTFOLIO
For the 12-month period ended December 31, 1999, the Capital Growth Portfolio
produced a total return of 33.29 percent versus 21.04 percent for the S&P 500.
The accompanying chart compares the performance of the Portfolio to that of the
S&P 500.
During the period under review the Portfolio maintained its commitment to
investing in companies of all sizes, representing all of the major sectors of
the S&P 500. We continued to overweight the technology sector, which represented
approximately 38 percent of the Portfolio's invested assets at the close of
1999. Large positions in semiconductor and semiconductor-equipment stocks
contributed positively to performance, as did our exposure to the networking and
computer software industries. Consumer stocks represented the next highest
concentration within the Portfolio, at approximately 21 percent. Within this
sector, retail and media-related stocks have been overweighted for much of the
year.
Financial services and interest-rate-sensitive stocks represented the
third-highest component of the Portfolio, with a combined weighting of 8
percent. After having underweighted this area for much of the fiscal year, we
moved back into these sectors by increasing our positions in the banking,
insurance and diversified financial industries. The Portfolio's health-care
holdings, which represented approximately 6 percent of net assets, focused on
mid- and large-capitalization pharmaceutical and related companies. The balance
of the Portfolio was invested in the energy, capital goods, basic industry and
utility sectors. This blend of growth and value stocks served the Portfolio
fairly well during the fiscal year.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: CAPITAL GROWTH FUND S&P 500 (3)
($ IN THOUSANDS)
<S> <C> <C>
Mar. 1991 $10,000 $10,000
Dec. 1991 $12,841 $11,563
Dec. 1992 $13,051 $12,443
Dec. 1993 $12,139 $13,696
Dec. 1994 $11,984 $13,876
Dec. 1995 $15,929 $19,086
Dec. 1996 $17,768 $23,466
Dec. 1997 $22,128 $31,292
Dec. 1998 $26,473 $40,234
Dec. 1999 $35,287 (2) $48,699
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEP-
1 YEAR 5 YEARS TION
33.29% (1) 24.11% (1) 15.34% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S & P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
As of December 31, 1999, the Portfolio had approximately 49 percent of its net
assets invested in companies with market capitalizations of more than $15
billion and 29 percent in companies with
6
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
capitalizations of $5 billion or less. The Portfolio held 5 percent of its
assets in cash. Going forward we do not anticipate a dramatic shift in the
market capitalization structure of the Portfolio. This strategy is in keeping
with our belief that portfolio diversification is important across both industry
sectors and capitalization ranges.
At the end of the fiscal year, the Portfolio's ten largest holdings were
Microsoft, Cisco, General Electric, Wal-Mart Stores, CBS, Citigroup, Alcoa,
Broadwing, Procter & Gamble and Clear Channel Communications.
COMPETITIVE EDGE "BEST IDEAS" PORTFOLIO
For the 12-month period ended December 31, 1999, the Competitive Edge "Best
Ideas" Portfolio posted a total return of 26.88 percent versus 24.93 percent for
the Morgan Stanley Capital International (MSCI) World Index. The accompanying
chart compares the performance of the Portfolio to that of the MSCI World Index.
Large holdings in Japan and continental Europe, as well as the United States,
helped the Portfolio outpace the MSCI World Index, but the Portfolio's avoidance
of smaller-capitalization markets such as the Pacific Rim and Latin America
prevented it from posting even stronger gains.
The Portfolio invests primarily in stocks compiled by the Morgan Stanley Dean
Witter Equity Research department which they believe demonstrate a long-term
sustainable competitive advantage versus other players in the global arena. This
compilation of approximately 40 companies is referred to as the Competitive Edge
"Best Ideas" List, which is updated continuously. The Portfolio purchases any
security that is added to the list and will generally
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: COMPETITIVE EDGE "BEST IDEAS"
($ IN THOUSANDS)
<S> <C> <C>
FUND MSCI (3)
May 1998 $10,000 $10,000
Dec. 1998 $9,810 $10,891
Dec. 1999 $12,447 (2) $13,607
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION
26.88% (1) 14.46% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Morgan Stanley Capital International World Index (MSCI) measures
performance from a diverse range of global stock markets including the U.S.,
Europe, Australia, New Zealand, and the Far East. The performance of the
Index is listed in U.S. dollars and assumes reinvestment of net dividends.
"Net dividends" reflects a reduction in dividends after taking into account
withholding of taxes by certain foreign countries represented in the index.
The index does not take into account the Fund's expenses, fees, or charges.
The index is unmanaged and should not be considered an investment.
7
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
sell a security that is eliminated from the list as soon as practicable after
the list is updated. The Portfolio's manager then translates these ideas into a
portfolio of equity holdings, investing at least 1 percent and not more than 5
percent of the Portfolio's assets in each company on the list. The Portfolio is
actively managed on a day-to-day basis.
As of year-end, approximately 93 percent of the Portfolio's assets were invested
in 41 equity positions throughout the world. The remaining 7 percent was held in
U.S. Short-Term paper. Equity holdings in the United States accounted for nearly
47 percent of the Portfolio's assets, with the remainder diversified among 11
other countries. In descending order beginning with the largest exposure, these
were Japan, the United Kingdom, France, Sweden, Mexico, Finland, Switzerland,
Germany, Hong Kong, Australia and the Netherlands.
Among the Portfolio's largest equity holdings were America Online (Internet
services), Cisco Systems (computer communications) and EMC Corporation (E.D.P.
peripherals) in the United States, Sony Corp. (consumer electronics/appliances),
Matsushita Electric (electronics) and Tokyo Electron (electronic data
processing) in Japan, Invensys PLC (industrial machinery/components) and British
Telecommunications (Telecommunications) in the United Kingdom, TOTAL Fina (oil
refining/ marketing) and Axa (multiline insurance) in France, Skandia Forsaking
PLC (life insurance) in Sweden and UPM Kymmene (paper) in Finland.
8
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
DIVIDEND GROWTH PORTFOLIO
For the 12-month period ended December 31, 1999, the Dividend Growth Portfolio
posted a total return of -2.39 percent versus 21.04 percent for the S&P 500. The
accompanying chart compares the performance of the Portfolio to that of the S&P
500 Index.
The Portfolio's underperformance relative to its benchmark was largely due to
its limited exposure to high-technology stocks and its underweighting of the
financial sector. The Nasdaq market alone returned 85.59 percent during 1999, of
which high-tech stocks are the primary component. In addition, technology stocks
now constitute 30 percent of the market cap of the S&P 500, while financial
companies comprise 13 percent. The power of the technology sector is further
evidenced in the fact that it accounted for roughly 70 percent of the
performance of the S&P 500, and without it the S&P would have been up only 7.5
percent. 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 income, an objective of
which we remain mindful. While the Portfolio's tilt toward yield may have
dampened relative performance during the period under review, this same
prejudice toward income can provide added stability during volatile markets.
On December 31, 1999, the Portfolio was relatively fully invested. Portfolio
transactions during the period included the reallocation of assets to reflect a
more accurate use of the dividend growth discipline. To implement this
realignment, several positions were partially liquidated to fund the purchase of
additional equity positions. These new positions were added as a means by which
to more effectively use the assets. In an effort to gain some exposure to the
technology sector boom that had boosted the markets this year, positions in
Hewlett-Packard and Intel were initiated, while positions in Atlantic Richfield,
SmithKline Beecham, Tenneco and US West were liquidated. At the end of the
12-month period, the Portfolio was invested in 94 common stocks spread among 49
different industry groups.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: DIVIDEND GROWTH FUND S&P 500 (3)
($ IN THOUSANDS)
<S> <C> <C>
Mar. 1990 $10,000 $10,000
Dec. 1990 $9,219 $10,235
Dec. 1991 $11,778 $13,347
Dec. 1992 $12,740 $14,363
Dec. 1993 $14,567 $15,808
Dec. 1994 $14,090 $16,017
Dec. 1995 $19,216 $22,030
Dec. 1996 $23,821 $27,086
Dec. 1997 $29,921 $36,120
Dec. 1998 $34,192 $46,441
Dec. 1999 $33,375 (2) $56,212
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS SINCE INCEPTION
2.39% (1) 18.82% (1) 13.04% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S & P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
9
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
EQUITY PORTFOLIO
For the 12-month period ended December 31, 1999, the Equity Portfolio posted a
total return of 58.59 percent versus 21.04 percent for the S&P 500. The
accompanying chart compares the performance of the Portfolio to that of the S&P
500. The Portfolio outperformed its benchmark because of its overweighting of
cyclical stocks during the first half of 1999 and of technology issues during
the second half.
The Portfolio benefited from its focus on communications equipment and
communications services companies, as well as its Internet technology holdings.
Health care was underweighted during the year, reflecting our concern about lean
new product pipelines and potential election year chatter regarding
pharmaceutical price controls. Financial services and consumer staples were
underweighted as well, because we consider that their earnings momentum has
peaked.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: EQUITY FUND S&P 500 (3)
($ IN THOUSANDS)
<S> <C> <C>
Dec. 1989 $10,000 $10,000
Dec. 1990 $9,638 $9,691
Dec. 1991 $15,329 $12,637
Dec. 1992 $15,337 $13,599
Dec. 1993 $18,362 $14,968
Dec. 1994 $17,460 $15,165
Dec. 1995 $24,886 $20,858
Dec. 1996 $27,962 $25,645
Dec. 1997 $38,429 $34,199
Dec. 1998 $50,131 $43,971
Dec. 1999 $79,504 (2) $53,222
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
58.59% (1) 35.42% (1) 23.04% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S & P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
10
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
EUROPEAN GROWTH PORTFOLIO
For the 12-month period ended December 31, 1999, the European Growth Portfolio
produced a total return of 29.11 percent versus 24.93 percent for the MSCI World
Index. The accompanying chart compares the performance of the Portfolio to that
of the MSCI World Index.
Toward the end of the second half of 1999, "new economy" stocks such as telecom
operators and equipment suppliers, software, information technology and media
rose strongly as European investors warmed to the technology theme. The
Portfolio benefited from this trend as a result of its overweighting of these
growth-oriented stocks. The weakest sector during the period under review was
food, beverages and tobacco, caused primarily by the relative underperformance
of tobacco stocks.
The Portfolio continues to emphasize blue-chip growth companies. At fiscal year
end, sector overweights included telecom equipment, telecom operators, media and
technology. These overweightings were moderated during December when the
Portfolio took advantage of some of the more excessive gains in these areas to
take profits. The Portfolio is underweighted in such lower growth areas of the
economy as banks, insurance and health-care companies. On December 31, 1999, the
Portfolio's regional asset allocation was Eurozone 48.8 percent, United Kingdom
28.1 percent, Switzerland 8.9 percent, Sweden 6.8 percent and cash 7.4 percent.
The Portfolio's higher than normal cash position reflects December profit taking
and is expected to be reduced to normal levels during January. There were no
currency hedges in the Portfolio and no derivatives were held.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: EUROPEAN GROWTH
($ IN THOUSANDS)
<S> <C> <C>
FUND MSCI WORLD INDEX (3)
Mar. 1991 $10,000 $10,000
Dec. 1991 $10,134 $10,551
Dec. 1992 $10,539 $9,999
Dec. 1993 $14,847 $12,249
Dec. 1994 $16,089 $12,871
Dec. 1995 $20,254 $15,538
Dec. 1996 $26,329 $17,633
Dec. 1997 $30,561 $20,412
Dec. 1998 $37,884 $25,380
Dec. 1999 $48,913 (2) $31,709
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS SINCE INCEPTION
29.11% (1) 24.90% (1) 19.68% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Morgan Stanley Capital International World Index (MSCI) measures
performance from a diverse range of global stock markets including the U.S.,
Europe, Australia, New Zealand, and the Far East. The performance of the
Index is listed in U.S. dollars and assumes reinvestment of net dividends.
"Net dividends" reflects a reduction in dividends after taking into account
withholding of taxes by certain foreign countries represented in the index.
The index does not take into account the Fund's expenses, fees, or charges.
The index is unmanaged and should not be considered an investment.
11
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
During the second half of 1999, profits were taken in a number of companies that
had outperformed strongly during the fiscal year, including Societe Television
Francaise 1, the French media content owner, Seat-Pagine Gialle SpA and
Telefonica Publicidad e Informacion, S.A., the Italian and Spanish yellow pages
producers, as well as telecom equipment companies including Philips in the
Netherlands, Nokia in Finland and Alcatel in France. New positions were created
in a number of initial public offerings, including Terra Networks, Freeserve,
Thus Telecom and Amadeus.
Looking forward, the outlook is positive for the European equity markets going
into 2000. Economic growth in Europe remains buoyant with more likelihood of, if
anything, an upward bias to GDP estimates over the next few months. The equity
markets continue to be supported by the Eurozone liquidity boom, with 1999
setting a new record for net inflows into mutual funds. Restructuring as well as
mergers and acquisitions continue to stimulate the interest of investors in
European companies. The largest potential negative influence on the stock market
over the coming months is any further increase in interest rates by the Federal
Reserve in the United States or by the European central banks, something which a
continued strength in GDP figures does not preclude.
GLOBAL DIVIDEND GROWTH PORTFOLIO
For the 12-month period ended December 31, 1999, the Global Dividend Growth
Portfolio produced a total return of 14.65 percent versus 24.93 percent for the
MSCI World Index. The accompanying chart illustrates the performance of the
Portfolio relative to that of the MSCI World Index.
The Portfolio continues to focus on common stocks of well-established large and
high-quality industry leaders from the world's largest country markets. The
Portfolio's approach favors companies that have a long history of solid
operating results and of delivering shareholder value through capital
appreciation of their common stock as well as providing dividend income. Many of
last year's
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: GLOBAL DIVIDEND GROWTH
($ IN THOUSANDS)
<S> <C> <C>
FUND MSCI WORLD INDEX (3)
Feb. 1994 $10,000 $10,000
Dec. 1994 $10,027 $10,063
Dec. 1995 $12,236 $12,148
Dec. 1996 $14,388 $13,786
Dec. 1997 $16,121 $15,959
Dec. 1998 $18,141 $19,843
Dec. 1999 $20,799 (2) $24,791
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS SINCE INCEPTION
14.65% (1) 15.71% (1) 13.33% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Morgan Stanley Capital International World Index (MSCI) measures
performance from a diverse range of global stock markets including the U.S.,
Europe, Australia, New Zealand, and the Far East. The performance of the
Index is listed in U.S. dollars and assumes reinvestment of net dividends.
"Net dividends" reflects a reduction in dividends after taking into account
withholding of taxes by certain foreign countries represented in the index.
The index does not take into account the Fund's expenses, fees, or charges.
The index is unmanaged and should not be considered an investment.
12
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
market leaders were newly established companies in sectors such as technology
and wireless telecommunications. Although these industries may represent a
significant area of future growth for the world economy, they remain reasonably
new and untested businesses. Because the Portfolio's holdings are geared toward
companies that have proven track records in relatively stable industries, the
Portfolio has limited exposure to technology and telecommunications, which bring
a higher risk profile and little, if any, dividend income. Over the past 12
months, this underweighting was the primary cause of the Portfolio's
underperformance relative to its benchmark.
The largest country market in the Portfolio continues to be the United States,
at 32 percent of net assets. This represents a significant underweighting of the
U.S. relative to its 50 percent weighting in the MSCI World Index. With U.S.
equity valuations near all-time highs on most measures, we have taken the
opportunity to sell some U.S. holdings, further reducing our U.S. exposure. This
move has proved somewhat fortuitous inasmuch as the United States has
underperformed most world markets in 1999. We expect non-U.S. markets to
continue to outperform the United States in the near future.
We continue to remain optimistic about prospects in continental Europe, where
32.5 percent of the Portfolio's net assets are targeted. Following a long period
of weak economic performance, Europe is back on a firm footing and we believe
opportunities exist in many of the Continent's larger and more established
companies to deliver significant profit growth. As Europe's economy gathers
momentum, we expect its currency, the euro, to appreciate versus the U.S.
dollar, further enhancing gains to U.S. investors in European shares. In
addition to continental Europe, the Portfolio had 14 percent of its assets
targeted toward equities in the United Kingdom. Although valuations are not as
attractive there as they were 12 months ago, we remain optimistic about the
long-term prospects for the Portfolio's U.K. equity holdings.
Japan surprised most global investors in 1999, with a 61 percent return (in U.S.
dollars). One year ago, few market participants were optimistic about Japan,
given its dire economic conditions. What those same gloomy conditions created
was a compelling opportunity to own some of Japan's greatest companies at very
attractive valuations. The Portfolio currently has 16.6 percent of its assets
allocated toward Japanese equity investments. As Japan's economy continues to
improve, corporate profits recover and the gloomy expectations dissipate, we
expect the stocks of Japan's highest-quality companies to be driven higher still
by global investors. We believe that the Portfolio is well positioned to benefit
from such circumstances.
13
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
In addition, the Portfolio remains exposed to the resource-oriented countries of
Australia (1.4 percent) and Canada (2.2 percent), as well as the stability found
in the Asian market of Hong Kong (2.5 percent). Overall, we remain optimistic
about the long-term prospects for the world's equity markets and for the large,
high-quality companies sought out by the Global Dividend Growth Portfolio.
HIGH YIELD PORTFOLIO
For the 12-month period ended December 31, 1999, the High Yield Portfolio posted
a total return of -1.33 percent versus 2.39 percent for the Lehman Brothers High
Yield Index. The accompanying chart illustrates the performance of the Portfolio
relative to that of the Lehman Brothers High Yield Index.
The period under review was a difficult one for the high-yield bond market,
beginning with the fixed-income market's dramatic flight to quality during late
1998. In response to concerns about the rapidly escalating foreign-market crisis
and its potential effect on the U.S. economy, investors sought the relative
safety of U.S. government securities over more economically sensitive
investments such as equities and high-yield bonds. This movement resulted in a
sharp correction in the high-yield bond market, where prices declined as much as
15 percent and yields rose from approximately 9 percent to the 12-percent range.
The high-yield market also experienced its own flight to quality during late
1998, with the middle tier of the market (B-rated issues) significantly
underperforming the upper level (BB-rated issues) as a result of investors'
severe risk aversion.
At year-end 1999, the high-yield market had yet to rebound from its woes of late
last year. Fears about
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: HIGH YIELD FUND LEHMAN (3)
($ IN THOUSANDS)
<S> <C> <C>
Dec. 1989 $10,000 $10,000
Dec. 1990 $7,446 $9,041
Dec. 1991 $11,774 $13,216
Dec. 1992 $13,935 $15,299
Dec. 1993 $17,298 $17,917
Dec. 1994 $16,869 $17,733
Dec. 1995 $19,389 $21,133
Dec. 1996 $21,711 $23,532
Dec. 1997 $24,288 $26,535
Dec. 1998 $22,781 $27,030
Dec. 1999 $22,480 (2) $27,677
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
1.33% (1) 5.91% (1) 8.44% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Lehman Brothers High Yield Index tracks the performance of all below
investment grade securities which have at least $100 million in outstanding
issuance, are greater than one year to maturity and are issued in fixed rate
U.S. dollar denominations. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
14
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
the foreign-market crisis have now been replaced by concerns over potential
inflation and ongoing credit-tightening actions by the Federal Reserve.
While the high-yield market held up better than most other fixed-income markets
during 1999, it clearly remains quite weak, because of the depressed bond market
environment that exists today. As a result, yields on lower-rated corporate
bonds are approaching their highest and most attractive levels in nearly a
decade, providing a significant yield advantage over Treasuries.
The Portfolio maintained a position in the more defensive, higher-quality end of
the high-yield market, which held up relatively well in this period's volatile
environment. Despite these defensive holdings, however, the Portfolio's more
significant, long-term core position in the B-rated sector has been adversely
affected by the past year's weak market environment. In terms of investment
strategy we continue to concentrate on industry sectors that have historically
proven to be more predictable, recession resistant or growth oriented, such as
cable television, cellular, food and beverages, media, supermarkets and
telecommunications. We believe that these industry groups are poised to perform
well over the next year. We also expect to see continued consolidation and
merger activity within these industries, which should result in improved credit
quality for many of the industries' players. We continue to focus primarily on
domestic companies, given the favorable outlook for sustained growth in the U.S.
economy.
15
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
INCOME BUILDER PORTFOLIO
For the 12-month period ended December 31, 1999, the Income Builder Portfolio
posted a total return of 7.06 percent versus 21.04 percent for the S&P 500. The
accompanying chart compares the performance of the Portfolio to that of the S&P
500.
We believe that the Portfolio's underperformance relative to its benchmark
resulted largely from its lack of exposure to high-technology stocks and its
value-oriented style of stock selection. Over the past five years, the S&P 500
has adopted a bias toward growth stocks such as Microsoft, Intel, Dell and
Cisco, which carry large weights in the performance of the index.
High-technology stocks generally pay little if any dividends and therefore are
not included in the portfolio. The Portfolio's primary investment objective is
to provide reasonable current income.
On December 31, 1999, the Portfolio's large-capitalization stock segment was 90
percent invested. Transactions during the period included the sale of Aegon
N.V., Providian Financial, Cyprus Amax Minerals Co., First Security Corp,
Keycorp, US West, Wilmington Trust, Fleetwood Enterprises, DaimlerChrysler,
Conseco, Tenneco, TCF Financial, Washington Federal and the purchase of
Tidewater, Ryder Systems, Fluor, Ultramar Diamond Shamrock, Xerox, Air Products
& Chemicals, Albertsons and Emerson Electric.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: INCOME BUILDER
($ IN THOUSANDS)
<S> <C> <C>
FUND S&P 500 (3)
Jan. 1997 $10,000 $10,000
Dec. 1997 $12,238 $12,620
Dec. 1998 $12,632 $16,226
Dec. 1999 $13,524 (2) $19,640
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION
7.06% (1) 10.81% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S&P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
The Portfolio's convertible securities component underperformed the major equity
indexes during the year as its core holdings in yield-oriented cyclical and
small-cap issues lagged equity-sensitive technology names. However, the recent
additions to its technology exposure in the areas of semiconductor capital
equipment and satellite television have benefited from that sector's relative
performance. While new issuance and equity performance continued to favor
technology, we believe
16
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
the Fund's holdings in small caps remain attractive, because current prices do
not adequately reflect strong fundamentals. As technology becomes an
increasingly larger portion of the convertible universe, the Portfolio will
invest in the sector where the underlying equities are appealing.
The fixed-income portion of the Portfolio continues to be 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.
Real estate investment trusts (REITs) continued their poor performance during
the period under review. While growth rates on funds from operations have slowed
from their peaks in the mid 1990s, industry fundamentals have stabilized and are
beginning to improve. Dividends are increasing as companies are forced to pay
out more of their operating income because of their REIT structure and many
companies have stock buyback plans in place. The REIT market is attractively
valued at these levels and the Portfolio has approximately 9 percent of its net
assets committed to this sector. The Portfolio initiated positions in Duke Week
Realty, Boston Properties, Equity Office, JDN Realty and Avalon Bay Communities
and sold positions in LTC Properties, Trinet and Mid Atlantic Realty.
MONEY MARKET PORTFOLIO
As of December 31, 1999, the Money Market Portfolio had assets in excess of $435
million. The Portfolio's average life was 64 days and its annual net investment
income for the 12-month period ended December 31, 1999, was 4.68 percent, while
its annualized yield for December was 5.34 percent.
On December 31, 1999, approximately 71 percent of the Portfolio's assets were
invested in high-quality commercial paper and 17 percent in federal agency
obligations, with the remaining 12 percent in short-term bank notes and
certificates of deposit of major, financially strong commercial banks. At the
end of the fiscal period under review, approximately 90 percent of your
Portfolio's holdings were 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. As always, we continue to operate the Portfolio in a conservative
style without the use of derivatives or "structured notes" which might fluctuate
excessively with changing interest rates. The Money Market Portfolio serves as a
useful investment for liquidity, preservation of capital and a yield that
reflects prevailing money market conditions.
17
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
PACIFIC GROWTH PORTFOLIO
For the 12-month period ended December 31, 1999, the Pacific Growth Portfolio
produced a total return of 66.09 percent versus 24.93 percent for the MSCI World
Index. The accompanying chart compares the performance of the Portfolio to that
of the MSCI World Index.
During 1999 Morgan Stanley Dean Witter Investment Management Inc, the
Portfolio's sub-advisor, increased the Portfolio's exposure to Japan, based on
its belief that restructuring and reform would improve the environment for
Japanese equities. The Portfolio also increased its weighting in Hong Kong,
focusing on the telecommunications, media and property sectors. The Portfolio
reduced its exposure to the banking sector in Hong Kong, reflecting a lackluster
loan growth outlook there. The Portfolio benefited from strong performance by
China Telecom, the leading cellular operator in China, where the company has
consistently exceeded expectations for cellular subscriber growth. In Singapore,
the Portfolio has been overweighted in the electronics sectors, notably stocks
such as Chartered Semiconductor, Natsteel Electronics and Venture Manufacturing.
Within South Korea, the sub-advisor has favored stocks such as Korea Telecom (an
attractively valued telecom stock with a well-developed network and promising
tariff rebalancing). The Portfolio significantly increased its positions in
South Korea, notably Samsung Electronics, which the sub-advisor believes is
benefiting from a cyclical upturn in semiconductors as well as from management
efforts to build solid businesses in high-growth sectors like communications and
digital appliances.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: PACIFIC GROWTH
($ IN THOUSANDS)
<S> <C> <C>
FUND MSCI WORLD INDEX (3)
Feb. 1994 $10,000 $10,000
Dec. 1994 $9,327 $10,063
Dec. 1995 $9,862 $12,148
Dec. 1996 $10,246 $13,786
Dec. 1997 $6,383 $15,958
Dec. 1998 $5,720 $19,843
Dec. 1999 $9,500 (2) $24,790
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS SINCE INCEPTION
66.09% (1) 0.37% (1) 0.87% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Morgan Stanley Capital International World Index (MSCI) measures
performance from a diverse range of global stock markets including the U.S.,
Europe, Australia, New Zealand, and the Far East. The performance of the
Index is listed in U.S. dollars and assumes reinvestment of net dividends.
"Net dividends" reflects a reduction in dividends after taking into account
withholding of taxes by certain foreign countries represented in the index.
The index does not take into account the Fund's expenses, fees, or charges.
The index is unmanaged and should not be considered an investment.
18
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
According to the sub-advisor, Taiwan has shown great acceleration in exports and
is well positioned to benefit from increased outsourcing from Japan. The upturn
in the semiconductor industry and the trend in outsourcing various computer
components bodes well for holdings such as Asustek Computers, Hon Hai Precision
and Taiwan Semiconductor.
During the fiscal year, the Portfolio reduced its weighting in Australia,
because rising bond yields negatively affected returns in that country's banking
sector and equity valuations of growth stocks. However, the Portfolio maintained
an overweighted stance on the resources sector, which outperformed the broader
market as economic recovery in Asia and strengthening lead indicators in the
OECD helped firm commodity prices.
QUALITY INCOME PLUS PORTFOLIO
For the 12-month period ended December 31, 1999, the Quality Income Plus
Portfolio posted a total return of -4.32 percent versus -0.82 percent for the
Lehman Brothers Aggregate Bond Index. The accompanying chart illustrates the
performance of the Portfolio compared to that of the Lehman Index.
Amidst a backdrop of accelerating growth and concerns about the potential for
inflationary pressures emanating from excess demand in the economy, the Federal
Reserve continued to tighten monetary policy throughout the second half of 1999.
This environment motivated corporate treasurers to issue a record amount of
corporate debt before even higher rates could ensue, while the strong housing
market increased mortgage production. This tremendous demand for credit pushed
the overall level of interest rates from 4.64 percent on the benchmark 10-year
U.S. Treasury note on December 31, 1998, to 6.44 percent on December 31, 1999.
This represented a 14.6 percent decline in bond prices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: QUALITY INCOME PLUS FUND LEHMAN (3)
($ IN THOUSANDS)
<S> <C> <C>
Dec. 1989 $10,000 $10,000
Dec. 1990 $10,684 $10,896
Dec. 1991 $12,687 $12,640
Dec. 1992 $13,735 $13,575
Dec. 1993 $15,519 $14,899
Dec. 1994 $14,491 $14,464
Dec. 1995 $18,012 $17,136
Dec. 1996 $18,293 $17,759
Dec. 1997 $20,322 $19,473
Dec. 1998 $22,084 $21,165
Dec. 1999 $21,131 (2) $20,991
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
4.32% (1) 7.84% (1) 7.77% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Lehman Brothers Aggregate Bond Index tracks the performance of all US
Government agency and Treasury securities, investment-grade corporate debt
securities, agency mortgage-backed securities and asset-backed securities.
The performance of the Index does not include any expenses, fees or charges.
The Index is unmanaged and should not be considered an investment.
19
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
The corporate market performance was modestly impeded by Y2K-related issuance of
corporate bonds. Traditionally, the mortgage-backed securities market has
provided a cushion to the rest of the Portfolio of long-dated high-grade
corporate notes and bonds. During 1999, however, this did not occur. The
excessive supply of these instruments relative to investor demand for them
combined with slower prepayments on mortgages, which extended their average
life, to minimize the benefit of this asset class. This circumstance, coupled
with the outperformance of medium-quality credits relative to high-grade
credits, explains why the Portfolio underperformed its benchmark, which is
shorter in maturity and includes lower-rated bonds.
We anticipate maintaining a cautious stance through most of the first six months
of 2000 or until signs of a softening economy emerge. We remain optimistic that
the real levels of interest rates are fundamentally and historically attractive
and that over time the policy of matching long-term investment objectives with
similar maturity assets is the most prudent way to maintain a high level of
current income with minimal credit risk.
20
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
S&P 500 INDEX PORTFOLIO
For the 12-month period ended December 31, 1999, the S&P 500 Index Portfolio
produced a total return of 20.23 percent compared to 21.04 percent for the
S&P 500. The accompanying chart compares the performance of the Portfolio to
that of the S&P 500.
Calendar year 1999 marked the fifth straight year that the S&P 500 Index
generated more than 20 percent returns. Large-cap and small-cap stocks led the
market, outperforming mid-sized companies, which generated a 14.72 percent
return as measured by the S&P MidCap 400 Index. During 1999 only 47 percent of
all mutual funds beat the S&P 500.
Once again, technology led the index's performance by generating a total return
of 75 percent in 1999. This sector, which now represents nearly one third of the
index, accounted for roughly 70 percent of its performance. Transportation was
the lagging sector in 1999, producing a return of -9.6 percent for the year. As
of December 31, 1999, the top five positions in the S&P 500 Index were Microsoft
(4.92 percent), General Electric (4.14 percent), Cisco Systems (2.99 percent),
Wal-Mart Stores (2.51 percent) and Exxon Mobil (2.27 percent).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: S&P 500 INDEX
($ IN THOUSANDS)
<S> <C> <C>
FUND S&P 500 (3)
May 1998 $10,000 $10,000
Dec. 1998 $11,220 $11,218
Dec. 1999 $13,490 (2) $13,579
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION
20.23% (1) 20.29% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S & P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
21
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
SHORT-TERM BOND PORTFOLIO
From its inception on May 4, 1999, through December 31, 1999, the Short-Term
Bond Portfolio posted a return of 1.56 percent, compared to 1.83 percent for the
Lehman Brothers Mutual Fund Short (one- to five-year) Investment Grade Debt
Index. The accompanying chart compares the performance of the Portfolio to that
of the Lehman Index.
During the period, steadily rising interest rates prompted the Portfolio's
managers to gradually invest its assets and to maintain a cash allocation of at
least 15 percent. While this strategy limited income dividends, it served to
preserve principal. Investments in longer-dated securities emphasized maturities
of less than two years. Agencies with a final maturity of three years and
one year of call protection were included in the Portfolio to enhance income
while still incorporating defensive characteristics. These securities
represented just slightly more than 6 percent of net assets on December 31,
1999. U.S. Treasuries and agencies were favored investments, given the
illiquidity of the corporate markets during much of the period under review and
the total asset size of the Portfolio. On December 31, 1999, the Portfolio held
eight U.S. government issues, with an average coupon of 5.99 percent. The
average duration of these securities was 1.40 years, the average maturity
1.51 years. Including cash reserves of slightly more than 15 percent of
investable assets, the average duration and maturity of the Portfolio were
1.18 years and 1.27 years, respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: SHORT-TERM BOND
($ IN THOUSANDS)
<S> <C> <C>
FUND LEHMAN INDEX (3)
May 4 1999 $10,000 $10,000
May 1999 $9,953 $10,000
June 1999 $9,973 $10,027
July 1999 $9,997 $10,014
Aug. 1999 $10,030 $10,027
Sept. 1999 $10,093 $10,121
Oct. 1999 $10,123 $10,161
Nov. 1999 $10,150 $10,188
Dec. 1999 $10,156 (2) $10,183
AVERAGE ANNUAL TOTAL RETURNS*
SINCE INCEPTION
1.56% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index
measures all investment-grade corporate debt securities with maturities of
one to five years. The Index does not include any expenses, fees or charges.
The Index is unmanaged and should not be considered an investment.
* For periods of less than one year, the fund quotes its total return on a
non-annualized basis.
Even after three efforts by the Federal Reserve to subdue domestic economic
growth through a total increase of 75 basis points in the federal funds rate,
domestic production and consumer demand remain robust. Following an uneventful
transition into the new millennium, further tightening is
22
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
likely to occur in the near term. As a result, the Portfolio will continue with
its defensive strategy of investing in shorter maturities and maintaining a
sizable allocation to cash until such time as interest rates appear to
stabilize.
STRATEGIST PORTFOLIO
For the 12-month period ended December 31, 1999, the Strategist Portfolio posted
a total return of 17.35 percent versus 21.04 percent for the S&P 500 and
- -2.15 percent for the Lehman Brothers Government/Corporate Bond Index. The
accompanying chart compares the Portfolio's performance to that of the S&P 500
and Lehman indexes.
The Portfolio maintained a healthy overweighting in stocks throughout 1999 and
in fact held many of the leadership industries that most rewarded investors,
including energy, technology and retailers. Of equal importance, the Portfolio
held a lower-than-average exposure to bonds throughout the year, helping to
avoid the difficult conditions experienced by the fixed-income markets. From
January 1999 through early November, the Portfolio's targeted asset allocation
was 70 percent equities (well above the average weighting of 55 percent),
20 percent bonds (versus the average weighting of 35 percent) and 10 percent
cash (in line with the average weighting).
In November we chose to lower the Portfolio's exposure to the equity markets,
partially as a reaction to the run-up in valuations in 1999 but also to
establish a cash reserve in the unlikely event that the Y2K computer bug proved
troublesome. Thus we closed out the year at an allocation of 55 percent equities
(a neutral weight), 20 percent bonds (still underweighted) and 25 percent cash
(a distinct overweighting).
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: STRATEGIST
($ IN THOUSANDS)
<S> <C> <C> <C>
FUND S&P 500 (3) LEHMAN INDEX (4)
Dec. 1989 $10,000 $10,000 $10,000
Dec. 1990 $10,156 $9,691 $10,828
Dec. 1991 $13,026 $12,637 $12,575
Dec. 1992 $13,968 $13,599 $13,528
Dec. 1993 $15,418 $14,968 $15,020
Dec. 1994 $16,025 $15,165 $14,493
Dec. 1995 $17,531 $20,858 $17,282
Dec. 1996 $20,165 $25,645 $17,784
Dec. 1997 $22,930 $34,199 $19,519
Dec. 1998 $29,018 $43,971 $21,368
Dec. 1999 $34,052 (2) $53,222 $20,909
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
17.35% (1) 16.27% (1) 13.04% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S&P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
(4) The Lehman Brothers Government/Corporate Bond Index tracks the performance
of government and corporate obligations, including U.S. government agency
and U.S. treasury securities and corporate and yankee bonds, with maturities
of one to ten years. The performance of the Index does not include any
expenses, fees or charges. The Index is unmanaged and should not be
considered an investment.
23
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
UTILITIES PORTFOLIO
For the 12-month period ended December 31, 1999, the Utilities Portfolio
produced a total return of 12.71 percent versus 21.04 percent for the S&P 500
Index. The accompanying chart compares the performance of the Portfolio to that
of the S&P 500.
During the twelve-month period ended December 31, 1999, the utilities industry
continued its path toward deregulation as merger and acquisition activity
remained strong and the formation of strategic alliances enhanced the
competitive landscape. The telecommunications sector proved to be among the
stock market's most rewarding industry groups during 1999 as increased demand
for data, Internet and wireless services, as well as strong global
infrastructure sales among broadband equipment suppliers, resulted in
exceptional returns for many companies in this sector. The power-related portion
of the utilities industry continued to restructure in making the transition from
monopoly status to a more market-driven, growth-oriented landscape. Further
enhancing the overall attractiveness of this sector was the growing trend of
many power companies expanding their businesses through selective overseas
investments and by diversifying into telecommunications and natural gas. The
fundamentals of the natural gas industry remained healthy throughout 1999, as
evidenced by a tight balance between supply and demand.
The primary reason the total return of the broad market outdistanced that of the
Portfolio during 1999 was the Portfolio's relative overweighting of the electric
utilities sector. To place this in perspective, rising interest rates and a
buoyant economic environment impeded electric-utility performance during much of
the year. Throughout 1999, however, utilities stocks provided investors with an
added degree of stability, particularly during times of increased market
volatility.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH OF $10,000: UTILITIES FUND S&P 500 (3)
($ IN THOUSANDS)
<S> <C> <C>
Mar. 1990 $10,000 $10,000
Dec. 1990 $10,452 $10,235
Dec. 1991 $12,601 $13,347
Dec. 1992 $14,194 $14,363
Dec. 1993 $16,422 $15,808
Dec. 1994 $14,940 $16,017
Dec. 1995 $19,220 $22,030
Dec. 1996 $20,889 $27,086
Dec. 1997 $26,561 $36,120
Dec. 1998 $32,872 $46,441
Dec. 1999 $37,051 (2) $56,212
AVERAGE ANNUAL TOTAL RETURNS
SINCE INCEP-
1 YEAR 5 YEARS TION
12.71% (1) 19.92 % (1) 14.25% (1)
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS
(1) Figure assumes reinvestment of all distributions for the underlying fund
based on net asset value (NAV). It does not reflect the deduction of
insurance expenses, an annual contract maintenance fee, or surrender
charges.
(2) Closing value on December 31, 1999 for the underlying fund. This figure does
not reflect the deduction of any account fees or sales charges.
(3) The Standard and Poor's 500 Stock Index (S&P 500) is a broad-based index,
the performance of which is based on the average performance of 500 widely
held common stocks. The Index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
24
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
At fiscal year-end, the Portfolio remained well diversified, both globally and
across the utilities sector. On December 31, 1999, 90 percent of the Portfolio's
net assets were allocated to utility and utility-related equities. Within the
equity portfolio, telecommunications represented 56 percent of assets, power
35 percent and energy 9 percent. Adding a further degree of diversification to
the Portfolio was its international holdings (9 percent of its net assets),
which focused on telecommunications infrastructure growth. The Portfolio's
high-quality fixed-income portfolio accounted for 7 percent of net assets, with
the remaining 3 percent held in cash equivalents. The fixed-income portion
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.
On August 4, 1999, a special meeting of the Utilities Portfolio's shareholders
was held for the purpose of voting on the following proposal:
Approval of a change in the Portfolio's investment objective, from an objective
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, to an objective to seek both capital
appreciation and current income:
<TABLE>
<CAPTION>
<S> <C>
For......................................................... 23,853,056.370
Against..................................................... 510,000.931
Abstain..................................................... 1,587,718.402
</TABLE>
25
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
LETTER TO THE SHAREHOLDERS DECEMBER 31, 1999, CONTINUED
LOOKING AHEAD
We believe the global economic recovery will continue into the next year.
However, the early part of 2000 could see some concerns related to excess
inventories that may have been built up for Y2K-related reasons. Continued
strength in the U.S. economy could lead the Federal Reserve to raise interest
rates further. Rising rates could pressure valuations in the first half of 2000.
By the second half of the year, interest rates should subside and economic
growth decelerate to more sustainable levels, positioning the markets for a nice
rebound.
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>
[/S/ CHARLES A. FIUMEFREDDO] [/S/ MITCHELL M. MERIN]
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>
26
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
<C> <S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER (71.1%)
BANKING (12.1%)
$ 10,500 Bank of America Corp.................................................. 6.04-6.08 % 01/05/00-04/12/00 $ 10,412,461
11,500 Citicorp.............................................................. 5.85-5.88 02/04/00-02/10/00 11,432,169
19,000 Morgan (J.P.) & Co. Inc............................................... 5.91-6.06 01/25/00-02/23/00 18,891,038
12,000 Northern Trust Corp................................................... 5.89-6.38 02/07/00-02/16/00 11,917,814
------------
52,653,482
------------
DIVERSIFIED FINANCIAL SERVICES (8.6%)
5,500 Associates Corp. of North America..................................... 5.87 01/31/00 5,473,692
10,820 Associates First Capital Corp......................................... 6.04-6.06 01/07/00-03/10/00 10,753,848
21,500 General Electric Capital Corp......................................... 5.04-5.80 01/18/00-02/01/00 21,422,684
------------
37,650,224
------------
FINANCE - AUTOMOTIVE (5.7%)
19,000 DaimlerChrylser North America Holding Corp............................ 5.93-6.08 01/21/00-03/07/00 18,873,442
6,000 General Motors Acceptance Corp........................................ 6.57 01/13/00 5,986,900
------------
24,860,342
------------
FINANCE - CONSUMER (8.3%)
5,000 American Express Credit Corp.......................................... 6.07 02/09/00 4,967,771
19,500 New Center Asset Trust................................................ 5.90-6.04 03/03/00-03/21/00 19,328,633
12,000 Norwest Financial Inc................................................. 5.93-6.10 02/08/00-02/18/00 11,915,110
------------
36,211,514
------------
FINANCE - CORPORATE (1.2%)
5,030 Ciesco, L.P........................................................... 5.93 02/14/00 4,994,036
------------
INSURANCE (6.5%)
20,700 American General Corp................................................. 5.99-6.01 02/15/00-03/08/00 20,509,717
7,950 Prudential Funding Corp............................................... 5.57 02/16/00 7,893,824
------------
28,403,541
------------
INTERNATIONAL BANKS (23.0%)
18,000 ANZ (DE) Inc.......................................................... 6.07-6.08 01/12/00-03/23/00 17,894,313
18,000 Abbey National North America Corp..................................... 5.98-6.03 01/04/00-03/13/00 17,920,945
6,500 Canadian Imperial Holdings Inc........................................ 6.50 01/03/00 6,497,659
5,000 CBA (Delaware) Finance Inc............................................ 5.91 02/14/00 4,964,433
11,000 Cregem North America Inc.............................................. 5.91-5.98 01/10/00-01/19/00 10,976,515
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
27
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
ANNUALIZED
PRINCIPAL YIELD
AMOUNT IN ON DATE OF MATURITY
THOUSANDS PURCHASE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 6,000 Deutsche Bank Financial Inc........................................... 5.89 % 02/24/00 $ 5,947,800
6,000 Dresdner U.S. Finance Inc............................................. 6.25 01/05/00 5,995,860
7,000 KFW International Finance Inc......................................... 5.99 04/05/00 6,891,568
13,460 National Australia Funding (DE) Inc................................... 5.86-6.68 01/14/00-01/26/00 13,416,633
5,000 UBS Finance (Delaware) LLC............................................ 6.07 05/19/00 4,885,711
5,000 WestPac Capital Corp.................................................. 6.14 01/27/00 4,978,189
------------
100,369,626
------------
INVESTMENT BANKERS/BROKERS/SERVICES (4.3%)
19,000 Goldman Sachs Group Inc............................................... 6.06-6.51 01/13/00-02/25/00 18,895,520
------------
UTILITIES (1.4%)
6,000 Duke Energy Corp...................................................... 5.87 02/14/00 5,957,613
------------
TOTAL COMMERCIAL PAPER
(AMORTIZED COST $309,995,898)............................................................................ 309,995,898
------------
<CAPTION>
MATURITY
DATE
-----------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (16.6%)
17,000 Federal Farm Credit Bank.............................................. 4.99-6.16 03/17/00-11/17/00 16,605,790
30,220 Federal Home Loan Banks............................................... 4.97-6.14 02/25/00-12/21/00 29,597,102
4,500 Federal Home Loan Mortgage Corp....................................... 6.02 09/01/00 4,323,710
22,519 Federal National Mortgage Assoc....................................... 5.76-6.05 04/06/00-12/05/00 21,629,248
------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $72,155,850)............................................................................. 72,155,850
------------
CERTIFICATES OF DEPOSIT (10.6%)
14,000 Chase Manhattan Bank (USA) N.A........................................ 5.83-5.85 01/19/00-01/20/00 14,000,000
6,000 First Union National Bank............................................. 5.84 01/11/00 6,000,000
6,000 Fleet National Bank................................................... 6.08 02/22/00 6,000,000
20,000 U.S. Bank, N.A........................................................ 5.92-6.04 01/28/00-04/17/00 20,000,000
------------
TOTAL CERTIFICATES OF DEPOSIT
(AMORTIZED COST $46,000,000)............................................................................. 46,000,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
28
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
ANNUALIZED MATURITY
PRINCIPAL YIELD
AMOUNT IN ON DATE OF
THOUSANDS PURCHASE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM BANK NOTE (1.6%)
$ 7,000 First USA Bank, N.A.
(AMORTIZED COST $7,000,000)......................................... 5.88 % 02/11/00 $ 7,000,000
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(AMORTIZED COST $435,151,748) (a)......................................................... 99.9% 435,151,748
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.1 491,363
----- -------------
NET ASSETS................................................................................ 100.0% $ 435,643,111
----- -------------
----- -------------
</TABLE>
- ---------------------
(a) Cost is the same for federal income tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
29
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - SHORT-TERM BOND
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (83.8%)
$ 575 Federal Home Loan Banks................................ 4.88-5.38% 03/02/01-01/22/02 $ 565,822
500 Federal Home Loan Mortgage Corp........................ 5.75 06/15/01 495,210
200 Federal National Mortgage Assoc........................ 6.31 07/17/02 196,880
1,400 U.S. Treasury Notes.................................... 5.88-6.50 09/30/00-10/31/01 1,402,237
----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $2,677,195).................................................................... 2,660,149
----------
SHORT-TERM INVESTMENT (a) (15.1%)
U.S. GOVERNMENT AGENCY
480 Federal Home Loan Mortgage Corp.
(AMORTIZED COST $479,960)............................ 1.50 01/03/00 479,960
----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $3,157,155) (B)....................................................... 98.9% 3,140,109
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES......................................... 1.1 34,480
----- -----------
NET ASSETS............................................................................. 100.0% $ 3,174,589
----- -----------
----- -----------
</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 and net unrealized depreciation is $17,046.
SEE NOTES TO FINANCIAL STATEMENTS
30
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (62.8%)
ACCIDENT & HEALTH INSURANCE (0.6%)
$ 3,000 Jackson National Life Insurance Co. - 144A*........................... 8.15% 03/15/27 $ 2,952,990
------------
AEROSPACE (2.2%)
5,000 Boeing Co............................................................. 7.95 08/15/24 5,139,700
5,000 United Technologies Corp.............................................. 7.50 09/15/29 4,886,450
------------
10,026,150
------------
AIR FREIGHT/DELIVERY SERVICES (1.0%)
4,887 Federal Express Corp.................................................. 7.50 01/15/18 4,662,234
------------
AIRLINES (1.6%)
4,729 America West Airlines (Class A)....................................... 6.85 07/02/09 4,416,871
3,000 Continental Airlines, Inc............................................. 7.056 09/15/09 2,850,780
------------
7,267,651
------------
ALUMINUM (0.9%)
5,000 Aluminum Co. of America............................................... 6.75 01/15/28 4,332,900
------------
AUTO PARTS: O.E.M. (0.6%)
3,000 Eaton Corp............................................................ 7.65 11/15/29 2,860,020
------------
BEVERAGES - NON-ALCOHOLIC (0.5%)
2,000 Coca-Cola Enterprises Inc............................................. 8.50 02/01/22 2,143,000
------------
BUILDING MATERIALS/DIY CHAINS (1.0%)
5,000 Home Depot Real Estate Funding Corp. II - 144A*....................... 5.95 10/15/08 4,464,750
------------
BUILDING PRODUCTS (0.6%)
3,000 Armstrong World Industries, Inc....................................... 7.45 05/15/29 2,677,470
------------
CELLULAR TELEPHONE (1.1%)
5,000 360 DEG. Communications Co............................................ 7.60 04/01/09 5,007,500
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/
TRUCKS (0.7%)
3,000 Caterpillar, Inc...................................................... 9.375 08/15/11 3,369,810
------------
CONSUMER ELECTRONICS/APPLIANCES (0.2%)
1,000 Maytag Corp........................................................... 9.75 05/15/02 1,052,530
------------
CONSUMER SUNDRIES (1.0%)
5,000 CPC International, Inc................................................ 7.25 12/15/26 4,748,800
------------
CONTRACT DRILLING (0.8%)
3,000 Transocean Offshore Inc............................................... 8.00 04/15/27 3,018,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
31
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, 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 $ 4,970,500
1,000 Penney (J.C.) Co., Inc................................................ 9.75 06/15/21 1,043,280
------------
6,013,780
------------
DISCOUNT CHAINS (1.2%)
2,745 Wal-Mart Stores, Inc.................................................. 7.49 06/21/07 2,748,994
3,000 Wal-Mart Stores, Inc.................................................. 6.875 08/10/09 2,922,030
------------
5,671,024
------------
DIVERSIFIED FINANCIAL SERVICES (0.7%)
3,000 Abbey National PLC (United Kingdom)................................... 7.95 10/26/29 2,994,630
------------
DIVERSIFIED MANUFACTURING (2.0%)
5,000 Dresser Industries, Inc............................................... 7.60 08/15/96 4,752,950
5,000 Tyco International Group S.A. (Luxembourg)............................ 6.875 01/15/29 4,258,650
------------
9,011,600
------------
E.D.P. SERVICES (0.5%)
2,500 Electronic Data Systems............................................... 7.125 10/15/09 2,438,075
------------
ELECTRIC UTILITIES (6.6%)
1,000 Chugach Electric Co................................................... 9.14 03/15/22 1,074,300
5,000 Duke Capital Corp..................................................... 8.00 10/01/19 5,036,500
1,000 FPL Group Capital, Inc................................................ 7.375 06/01/09 985,340
2,500 FPL Group Capital, Inc................................................ 7.625 09/15/06 2,508,750
5,000 Israel Electric Co., Ltd. - 144A*..................................... 7.75 03/01/09 4,826,950
2,732 Oglethorpe Power Co................................................... 6.974 06/30/11 2,583,569
3,500 Oklahoma Gas & Electric Co............................................ 6.50 07/15/17 3,399,060
5,000 Potomac Electric Power Co............................................. 7.25 07/01/23 4,511,150
4,000 Public Service Electric & Gas Co...................................... 7.375 03/01/14 3,807,920
1,000 Tampa Electric Co..................................................... 7.75 11/01/22 939,640
------------
29,673,179
------------
ELECTRONIC PRODUCTION EQUIPMENT (1.0%)
5,000 Applied Materials, Inc................................................ 7.125 10/15/17 4,603,750
------------
FARMING/SEEDS/MILLING (0.9%)
5,000 Archer Daniels Midland Co............................................. 6.625 05/01/29 4,278,450
------------
FINANCE COMPANIES (3.8%)
5,000 Aristar Inc........................................................... 5.85 01/27/04 4,717,250
3,000 Ford Capital B.V...................................................... 9.50 06/01/10 3,371,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
32
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 5,000 Ford Motor Credit Corp................................................ 7.75% 03/15/05 $ 5,074,500
4,000 Norwest Financial Inc................................................. 7.875 02/15/02 4,068,560
------------
17,231,560
------------
FINANCIAL SERVICES (1.0%)
5,000 Allamerica Financial Corp............................................. 7.625 10/15/25 4,670,350
------------
INTEGRATED OIL COMPANIES (3.0%)
3,000 Atlantic Richfield Co................................................. 9.00 05/01/31 3,440,880
5,000 Kerr McGee Corp....................................................... 7.125 10/15/27 4,392,300
76 Mobil Corp............................................................ 9.17 02/29/00 76,123
5,000 Murphy Oil Corp....................................................... 7.05 05/01/29 4,478,250
1,000 Texaco Capital, Inc................................................... 9.75 03/15/20 1,202,950
------------
13,590,503
------------
INTERNATIONAL BANKS (1.7%)
5,000 Dresdner Funding Trust - 144A*........................................ 8.151 06/30/31 4,683,650
3,242 Swiss Bank Corp....................................................... 7.375 07/15/15 3,092,738
------------
7,776,388
------------
INVESTMENT BANKERS/BROKERS/SERVICES (3.1%)
2,000 Bear Stearns Companies, Inc........................................... 8.75 03/15/04 2,088,980
3,000 Bear Stearns Companies, Inc........................................... 7.625 12/07/09 2,942,850
3,750 Lehman Brothers Holdings, Inc......................................... 8.75 03/15/05 3,907,912
5,000 Lehman Brothers Holdings, Inc......................................... 8.50 08/01/15 5,110,550
------------
14,050,292
------------
LIFE INSURANCE (0.9%)
5,000 American General Corp................................................. 6.625 02/15/29 4,305,100
------------
MAJOR BANKS (5.5%)
5,000 First Bank N.A........................................................ 8.35 11/01/04 5,177,150
5,000 First Bank System Inc................................................. 7.625 05/01/05 5,009,900
3,000 Mellon Bank N.A....................................................... 7.625 09/15/07 3,013,440
5,000 NationsBank Corp...................................................... 7.80 09/15/16 5,001,800
5,000 State Street Boston Corp.............................................. 5.95 09/15/03 4,795,900
2,000 Wachovia Corp......................................................... 6.375 04/15/03 1,957,420
------------
24,955,610
------------
MAJOR PHARMACEUTICALS (1.3%)
5,000 Johnson & Johnson..................................................... 8.72 11/01/24 5,210,750
519 Marion Merrell Corp................................................... 9.11 08/01/05 540,647
------------
5,751,397
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
33
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MAJOR U.S. TELECOMMUNICATIONS (2.2%)
$ 5,000 AT&T Corp............................................................. 8.35% 01/15/25 $ 4,935,700
5,000 GTE Corp.............................................................. 7.90 02/01/27 4,788,200
------------
9,723,900
------------
MANAGED HEALTH CARE (0.2%)
1,000 Kaiser Foundation Health Plan, Inc.................................... 9.55 07/15/05 1,074,730
------------
MEDICAL SPECIALTIES (1.8%)
5,000 Baxter International, Inc............................................. 6.625 02/15/28 4,247,400
4,000 Becton Dickinson & Co................................................. 8.70 01/15/25 4,043,080
------------
8,290,480
------------
MID-SIZED BANKS (0.7%)
3,000 Old Kent Financial Corp............................................... 6.625 11/15/05 2,858,640
------------
MOTOR VEHICLES (1.1%)
5,000 DaimlerChrysler North American Holdings Corp.......................... 7.20 09/01/09 4,909,450
------------
MULTI-LINE INSURANCE (1.0%)
5,000 Nationwide Financial Services, Inc.................................... 8.00 03/01/27 4,639,450
------------
OIL & GAS PRODUCTION (1.0%)
2,000 Anadarko Petroleum Corp............................................... 7.73 09/15/96 1,926,800
3,000 Burlington Resources, Inc............................................. 7.375 03/01/29 2,806,770
------------
4,733,570
------------
OTHER TELECOMMUNICATIONS (0.6%)
2,500 Electric Lightwave, Inc. - 144A*...................................... 6.05 05/15/04 2,357,475
------------
PACKAGE GOODS/COSMETICS (0.7%)
3,500 Avon Products Inc. - 144A*............................................ 7.15 11/15/09 3,364,760
------------
PRECIOUS METALS (1.1%)
5,000 Barrick Gold Corp..................................................... 7.50 05/01/07 4,940,100
------------
RAILROADS (1.9%)
4,183 Burlington Northern Santa Fe Corp..................................... 7.33 06/23/10 4,098,223
4,437 Burlington Northern Santa Fe Corp..................................... 7.97 01/01/15 4,488,093
------------
8,586,316
------------
RESTAURANTS (0.2%)
1,000 McDonald's Corp....................................................... 8.875 04/01/11 1,109,080
------------
SPECIALTY CHEMICALS (1.0%)
5,000 Great Lakes Chemicals Corp............................................ 7.00 07/15/09 4,784,650
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
34
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TELECOMMUNICATIONS EQUIPMENT (0.9%)
$ 5,000 Motorola Inc.......................................................... 6.50% 11/15/28 $ 4,306,100
------------
TOBACCO (1.1%)
5,000 Philip Morris Companies, Inc.......................................... 7.125 10/01/04 4,799,600
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $298,508,615)................................................................... 286,077,794
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (29.3%)
5 Federal Home Loan Mortgage Corp....................................... 11.50 05/01/19 5,164
4,414 Federal Home Loan Mortgage Corp. PC Gold.............................. 6.00 10/01/23-11/01/27 4,044,167
1,076 Federal Home Loan Mortgage Corp. PC Gold.............................. 8.50 01/01/22-12/01/24 1,104,185
12,519 Federal National Mortgage Assoc....................................... 6.00 07/01/27-03/01/29 11,458,556
15,317 Federal National Mortgage Assoc....................................... 6.50 03/01/26-08/01/29 14,435,988
20,146 Federal National Mortgage Assoc....................................... 7.00 03/01/17-07/01/29 19,478,712
9,434 Federal National Mortgage Assoc....................................... 7.50 08/01/27-09/01/29 9,330,676
282 Federal National Mortgage Assoc....................................... 9.00 06/01/21-02/01/25 293,747
9,687 Government National Mortgage Assoc.................................... 6.00 04/15/28-12/15/28 8,818,397
16,081 Government National Mortgage Assoc.................................... 6.50 08/15/27-02/15/29 15,101,425
11,516 Government National Mortgage Assoc.................................... 7.00 03/15/26-01/01/30 11,123,781
5,000 Government National Mortgage Assoc.................................... 7.00 (a) 4,829,688
18 Government National Mortgage Assoc.................................... 7.50 04/15/24-09/15/27 18,125
13,239 Government National Mortgage Assoc.................................... 8.00 10/15/24-11/15/29 13,366,958
1,767 Government National Mortgage Assoc.................................... 8.50 01/15/17-03/01/28 1,816,725
1,298 Government National Mortgage Assoc.................................... 9.00 08/15/24-12/15/24 1,357,587
129 Government National Mortgage Assoc.................................... 10.00 05/15/16-04/15/19 139,932
5,000 Tennessee Valley Authority............................................ 7.85 06/15/44 5,033,550
5,000 U.S. Treasury Note.................................................... 6.00 08/15/09 4,842,200
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
35
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 5,000 U.S. Treasury Bond.................................................... 6.125% 08/15/29 $ 4,766,400
10,000 U.S. Treasury Note Strips............................................. 0.00 08/15/19 2,638,200
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $139,600,543)................................................................... 134,004,163
------------
FOREIGN GOVERNMENT OBLIGATIONS (4.6%)
5,000 Hydro-Quebec.......................................................... 9.50 11/15/30 5,922,950
5,000 Province of New Brunswick............................................. 7.625 06/29/04 5,065,250
5,000 Province of Manitoba.................................................. 7.75 07/17/16 5,110,350
5,000 Province of Quebec.................................................... 7.50 07/15/23 4,852,800
------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $20,919,200).................................................................... 20,951,350
------------
SHORT-TERM INVESTMENTS (b) (2.7%)
U.S. GOVERNMENT AGENCY
12,550 Federal Home Loan Mortgage Corp. (AMORTIZED COST $12,548,954)......... 1.50 01/03/00 12,548,954
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $471,577,312) (c)...................................................... 99.4% 453,582,261
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 0.6 2,549,590
----- -------------
NET ASSETS.............................................................................. 100.0% $ 456,131,851
----- -------------
----- -------------
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
PC Participation Certificate.
(a) Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date; the actual principal amount
and maturity date 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) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $2,150,347 and the
aggregate gross unrealized depreciation is $20,145,398, resulting in net
unrealized depreciation of $17,995,051.
SEE NOTES TO FINANCIAL STATEMENTS
36
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (93.4%)
BEVERAGES - NON-ALCOHOLIC (1.4%)
$ 5,000 Sparkling Spring Water (Canada)................... 11.50% 11/15/07 $ 3,950,000
------------
BROADCAST/MEDIA (3.5%)
8,000 Brill Media Co., LLC (Series B)................... 7.50++ 12/15/07 4,400,000
5,329 Mentus Media Corp. (Series B)..................... 12.00+ 02/01/03 532,900
4,890 Tri-State Outdoor Media Group..................... 11.00 05/15/08 4,816,650
------------
9,749,550
------------
CABLE TELEVISION (6.7%)
7,000 21st Century Telecom Group, Inc................... 12.25++ 02/15/08 4,690,000
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 2,040,000
3,000 Knology Holdings Inc.............................. 11.875++ 10/15/07 2,010,000
1,500 Optel Inc. (Series B) (a)......................... 13.00 02/15/05 1,110,000
12,250 Optel Inc. (a)(b)................................. 11.50 07/01/08 8,820,000
------------
18,726,250
------------
CASINO/GAMBLING (3.7%)
12,250 Aladdin Gaming Holdings/Capital Corp. LLC
(Series B)...................................... 13.50++ 03/01/10 4,961,250
9,915 Fitzgeralds Gaming Corp. (Series B) (b)........... 12.25 12/15/04 5,453,250
------------
10,414,500
------------
CELLULAR TELEPHONE (5.0%)
1,800 American Cellular Corp............................ 10.50 05/15/08 1,984,500
800 Clearnet Communications Inc. (Canada)............. 14.75++ 12/15/05 788,000
1,800 Dobson/Sygnet Communications...................... 12.25 12/15/08 1,980,000
3,500 Dolphin Telecom PLC (United Kingdom).............. 14.00++ 05/15/09 1,610,000
7,920 McCaw International Ltd........................... 13.00++ 04/15/07 5,535,763
1,500 Tritel PCS Inc. - 144A*........................... 12.75++ 05/15/09 945,000
1,500 Triton PCS Inc.................................... 11.00++ 05/01/08 1,065,000
------------
13,908,263
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (1.0%)
3,000 J.B. Poindexter & Co., Inc........................ 12.50 05/15/04 2,865,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
37
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONSUMER ELECTRONICS/APPLIANCES (1.1%)
$ 12,000 International Semi-Tech Microelectronics, Inc.
(Canada)(a)..................................... 11.50++% 08/15/03 $ 600,000
2,500 Windmere-Durable Holdings, Inc.................... 10.00 07/31/08 2,437,500
------------
3,037,500
------------
CONSUMER SPECIALTIES (0.8%)
2,500 Samsonite Corp.................................... 10.75 06/15/08 2,187,500
------------
CONSUMER/BUSINESS SERVICES (4.9%)
1,800 Anacomp, Inc. (Series B).......................... 10.875 04/01/04 1,795,500
8,288 Comforce Corp. (Series B)......................... 15.00+ 12/01/09 5,387,119
3,250 Comforce Operating, Inc........................... 12.00 12/01/07 2,112,500
7,700 Entex Information Services, Inc................... 12.50 08/01/06 3,465,000
1,000 MDC Communication Corp. (Canada).................. 10.50 12/01/06 987,500
------------
13,747,619
------------
CONTAINERS/PACKAGING (2.5%)
300 Berry Plastics Corp............................... 12.25 04/15/04 307,500
1,500 Berry Plastics Corp. - 144A*...................... 11.00 07/15/07 1,522,500
6,330 Envirodyne Industries, Inc........................ 10.25 12/01/01 3,544,800
1,800 Impac Group Inc. (Series B)....................... 10.125 03/15/08 1,638,000
------------
7,012,800
------------
CONTRACT DRILLING (1.0%)
4,600 Northern Offshore ASA (Series B) (Norway)......... 10.00 05/15/05 2,806,000
------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.9%)
3,000 High Voltage Engineering, Inc..................... 10.75++ 08/15/04 2,565,000
------------
DIVERSIFIED MANUFACTURING (2.9%)
1,800 Eagle-Picher Industries, Inc...................... 9.375 03/01/08 1,575,000
1,800 Jordan Industries, Inc. (Series D)................ 10.375 08/01/07 1,800,000
7,200 Jordan Industries, Inc. (Series B)................ 11.75++ 04/01/09 4,824,000
------------
8,199,000
------------
ELECTRONIC DISTRIBUTORS (0.3%)
6,000 CHS Electronics, Inc.............................. 9.875 04/15/05 720,000
------------
FOOD CHAINS (0.5%)
2,515 Pueblo Xtra International, Inc. (Series C)........ 9.50 08/01/03 1,509,000
------------
FOOD DISTRIBUTORS (0.8%)
2,500 Fleming Companies, Inc. (Series B)................ 10.625 07/31/07 2,256,250
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
38
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
HOTELS/RESORTS (4.4%)
$ 9,000 Epic Resorts LLC (Series B)....................... 13.00% 06/15/05 $ 7,200,000
7,210 Resort At Summerlin (Series B).................... 13.00+ 12/15/07 5,047,035
------------
12,247,035
------------
INDUSTRIAL SPECIALTIES (1.7%)
1,325 Indesco International Inc......................... 9.75 04/15/08 596,250
1,500 International Wire Group, Inc..................... 11.75 06/01/05 1,548,750
3,000 Outsourcing Services Group, Inc. (Series B)....... 10.875 03/01/06 2,670,000
------------
4,815,000
------------
MEDICAL SPECIALTIES (2.0%)
5,100 Mediq Inc./PRN Life Support Services Inc.......... 11.00 06/01/08 2,040,000
3,000 Universal Hospital Services, Inc. (issued
02/25/98)....................................... 10.25 03/01/08 2,085,000
2,000 Universal Hospital Services, Inc. (issued
02/26/99)....................................... 10.25 03/01/08 1,340,000
------------
5,465,000
------------
MEDICAL/NURSING SERVICES (0.4%)
2,500 Pediatric Services of America, Inc. (Series A).... 10.00 04/15/08 1,150,000
------------
MILITARY/GOV'T/TECHNICAL (0.6%)
1,800 Loral Space & Communications Ltd.................. 9.50 01/15/06 1,638,000
------------
OFFICE EQUIPMENT/SUPPLIES (1.4%)
6,500 Mosler, Inc....................................... 11.00 04/15/03 3,835,000
------------
OIL REFINING/MARKETING (0.0%)
3,000 Transamerican Refining Corp. (Series B) (b)....... 16.00 06/30/03 45,000
------------
OTHER TELECOMMUNICATIONS (11.9%)
6,500 Birch Telecom Inc................................. 14.00 06/15/08 6,565,000
3,000 DTI Holdings Inc. - (Series B).................... 12.50++ 03/01/08 1,110,000
1,800 Esprit Telecom Group PLC (United Kingdom)......... 11.50 12/15/07 1,827,000
16,520 Firstworld Communications, Inc.................... 13.00++ 04/15/08 9,912,000
1,800 Globenet Comm Group Ltd. - 144A* (Bermuda)........ 13.00 07/15/07 1,827,000
1,500 Pac-West Telecom Inc. (Series B).................. 13.50 02/01/09 1,552,500
2,500 Primus Telecommunication Group, Inc.
(Series B)...................................... 9.875 05/15/08 2,300,000
1,800 Versatel Telecom International NV (Netherlands)... 13.25 05/15/08 1,917,000
5,000 World Access, Inc. (c)............................ 13.25 01/15/08 4,500,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
39
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 1,800 Worldwide Fiber Inc. (Canada) - 144A*............. 12.00% 08/01/09 $ 1,858,500
------------
33,369,000
------------
PACKAGE GOODS/COSMETICS (1.1%)
3,000 J.B. Williams Holdings, Inc....................... 12.00 03/01/04 3,003,750
------------
PRINTING/FORMS (0.6%)
2,500 Premier Graphics Inc.............................. 11.50 12/01/05 1,750,000
------------
RESTAURANTS (3.9%)
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 2,550,000
1,800 Friendly Ice Cream Corp........................... 10.50 12/01/07 1,548,000
------------
10,813,929
------------
RETAIL - SPECIALTY (1.0%)
2,875 Pantry, Inc....................................... 10.25 10/15/07 2,803,125
------------
SPECIALTY FOODS/CANDY (2.3%)
43,678 SFAC New Holdings Inc. (c)........................ 13.00++ 06/15/09 6,551,723
------------
TELECOMMUNICATIONS (12.4%)
1,800 Caprock Communications Corp. (Series B)........... 12.00 07/15/08 1,863,000
1,500 Covad Communications Group, Inc................... 12.50 02/15/09 1,560,000
5,000 e. Spire Communications, Inc...................... 13.75 07/15/07 3,550,000
2,500 Focal Communications, Corp. (Series B)............ 12.125++ 02/15/08 1,650,000
1,800 GST Equipment Funding, Inc........................ 13.25 05/01/07 1,782,000
1,800 Hyperion Telecommunication, Inc. (Series B)....... 12.25 09/01/04 1,948,500
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 1,703,250
1,800 NEXTLINK Communications, Inc...................... 9.00 03/15/08 1,714,500
4,000 Onepoint Communications Corp...................... 14.50 06/01/08 2,600,000
5,400 Rythms Netconnections, Inc........................ 12.75 04/15/09 5,211,000
4,000 Startec Global Communications Corp................ 12.00 05/15/08 3,240,000
3,000 Talton Holdings, Inc. - (Series B)................ 11.00 06/30/07 2,850,000
1,800 Viatel Inc........................................ 11.25 04/15/08 1,809,000
------------
34,616,250
------------
TELECOMMUNICATIONS EQUIPMENT (1.8%)
10,500 FWT, Inc. (b)..................................... 9.875 11/15/07 840,000
3,500 SBA Communications Corp........................... 12.00++ 03/01/08 2,135,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
40
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
$ 3,500 Spectrasite Holdings, Inc......................... 12.00++% 07/15/08 $ 2,082,500
------------
5,057,500
------------
WIRELESS COMMUNICATIONS (10.9%)
11,375 Advanced Radio Telecom Corp....................... 14.00 02/15/07 10,351,250
1,800 AMSC Acquisition Co., Inc. (Series B)............. 12.25 04/01/08 1,417,500
900 Arch Escrow Corp.................................. 13.75 04/15/08 729,000
19,000 Cellnet Data Systems Inc.......................... 14.00++ 10/01/07 2,280,000
1,100 Cellnet Data Systems Inc.......................... 15.00 01/07/00 1,100,000
3,000 Globalstar LP/Capital Corp........................ 10.75 11/01/04 1,995,000
3,300 Orbcomm Global LP/Capital Corp. (Series B)........ 14.00 08/15/04 2,277,000
5,040 Paging Network, Inc............................... 10.125 08/01/07 1,562,400
6,400 Paging Network, Inc............................... 10.00 10/15/08 1,984,000
1,000 Star Choice Communications, Inc. (Canada)......... 13.00 12/15/05 1,010,000
4,500 USA Mobile Communications Holdings, Inc........... 14.00 11/01/04 4,095,000
1,500 Winstar Equipment Corp............................ 12.50 03/15/04 1,620,000
------------
30,421,150
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $362,178,459)........................................................ 261,235,694
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
<C> <S> <C>
- -----------
COMMON STOCKS (d) (0.8%)
CASINO/GAMBLING (0.0%)
2,000 Fitzgerald Gaming Corp............................................................... 2
------------
CLOTHING/SHOE/ACCESSORY STORES (0.0%)
1,310,596 County Seat Store Corp. (c).......................................................... 11,795
------------
HOTELS/RESORTS (0.6%)
2,000 Motels of America, Inc. - 144A*...................................................... 500
444,351 Premier Holdings Inc. (c)............................................................ 1,499,685
71,890 Vagabond Inns, Inc. (Class D) (a).................................................... 72
------------
1,500,257
------------
MEDICAL/NURSING SERVICES (0.1%)
418,663 Raintree Healthcare Corp. (c)........................................................ 376,797
------------
MOTOR VEHICLES (0.0%)
87 Northern Holdings Industrial Corp. * (c)............................................. --
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
41
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
RESTAURANTS (0.0%)
7,750 American Restaurant Group Holdings, Inc. - 144A*..................................... $ 1,937
------------
SPECIALTY FOODS/CANDY (0.0%)
2,375 SFAC New Holdings Inc. (c)........................................................... 594
120,000 Specialty Foods Acquisition Corp. - 144A*............................................ 30,000
------------
30,594
------------
TELECOMMUNICATIONS EQUIPMENT (0.1%)
15,711 World Access, Inc. (c)............................................................... 304,401
------------
TEXTILES (0.0%)
298,461 U.S. Leather, Inc. (c)............................................................... 2,686
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $29,856,249)........................................................ 2,228,469
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE
<C> <S> <C> <C> <C>
- ----------- ------------------------ --------
CONVERTIBLE BONDS (0.1%)
HOTELS/RESORTS (0.1%)
$ 370 Premier Cruises Ltd. (IDENTIFIED COST $370,000)... 7.00% 8/15/05 362,600
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
<C> <S> <C>
- -----------
PREFERRED STOCKS (0.5%)
OIL REFINING/MARKETING (0.0%)
5,266 Transamerica Refining Corp. (Conv.) (Class B)*....................................... 53
2,896 Transamerica Refining Corp. (Conv.) (Class C)*....................................... 29
7,635 Transamerica Refining Corp. (Conv.) (Class D)*....................................... 76
15,797 Transamerica Refining Corp. (Conv.) (Class E)*....................................... 158
------------
316
------------
RESTAURANTS (0.5%)
1,780 American Restaurant Group Holdings, Inc. (Series B).................................. 1,424,000
------------
TOTAL PREFERRED STOCKS
(IDENTIFIED COST $1,781,863)......................................................... 1,424,316
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
42
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
<C> <S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
WARRANTS (d) (1.4%)
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
------------
HOTELS/RESORTS (0.0%)
9,000 Epic Resorts LLC - 144A*................................................. 06/15/05 90
6,000 Resort At Summerlin - 144A*.............................................. 12/15/07 60
------------
150
------------
OIL & GAS PRODUCTION (0.0%)
39,665 Gothic Energy Corp. - 144A*.............................................. 05/01/05 40
------------
OIL REFINING/MARKETING (0.0%)
3,000 Transamerican Refining Corp. - 144A*..................................... 06/30/03 3
------------
OTHER TELECOMMUNICATIONS (1.2%)
6,500 Birch Telecom Inc. - 144A*............................................... 06/15/08 357,500
15,000 DTI Holdings Inc. - 144A*................................................ 03/01/08 150
16,520 Firstworld Communications, Inc. - 144A*.................................. 04/15/08 1,982,400
2,500 Versatel Telecom - 144A* (Netherlands)................................... 05/15/08 1,000,000
------------
3,340,050
------------
RESTAURANTS (0.0%)
1,500 American Restaurant Group Holdings, Inc. - 144A*........................ 08/15/08 15
------------
TELECOMMUNICATIONS (0.0%)
4,000 Onepoint Communications Corp. - 144A*.................................... 06/01/08 40,000
4,000 Startec Global Communications Corp. - 144A*.............................. 05/15/08 40,000
------------
80,000
------------
WIRELESS COMMUNICATIONS (0.2%)
1,800 American Mobile Satellite Corp. - 144A*.................................. 04/01/08 72,000
92,640 Star Choice Communications, Inc. - 144A* (Canada)........................ 12/15/05 324,240
------------
396,240
------------
TOTAL WARRANTS
(IDENTIFIED COST $489,771)........................................................... 3,843,186
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
43
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (1.6%)
U.S. GOVERNMENT AGENCY (e) (1.4%)
$ 3,900 Federal Home Loan Mortgage Corp. (AMORTIZED COST
$3,899,675)..................................... 1.50% 01/03/00 $ 3,899,675
------------
REPURCHASE AGREEMENT (0.2%)
574 The Bank of New York (dated 12/31/99; proceeds
$573,787) (f) (IDENTIFIED COST $573,715)........ 1.50 01/03/00 573,715
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $4,473,390).......................................................... 4,473,390
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $399,149,732) (G)............................................ 97.8% 273,567,655
OTHER ASSETS IN EXCESS OF LIABILITIES......................................... 2.2 6,115,817
----- -------------
NET ASSETS.................................................................... 100.0% $ 279,683,472
----- -------------
----- -------------
</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) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(f) Collateralized by $402,420 U.S. Treasury Bond 11.25% due 02/15/15 valued
at $585,646.
(g) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $8,763,793 and the
aggregate gross unrealized depreciation is $134,345,870, resulting in net
unrealized depreciation of $125,582,077.
SEE NOTES TO FINANCIAL STATEMENTS
44
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (90.0%)
ELECTRIC UTILITIES (31.2%)
115,000 AES Corp.*............................................................................. $ 8,596,250
135,000 Carolina Power & Light Co.............................................................. 4,109,062
110,000 Central & South West Corp.............................................................. 2,200,000
215,865 Cinergy Corp........................................................................... 5,207,743
205,000 CMS Energy Corp........................................................................ 6,393,437
130,000 Consolidated Edison, Inc............................................................... 4,485,000
200,000 Constellation Energy Group............................................................. 5,800,000
337,500 DPL, Inc............................................................................... 5,842,969
232,500 DQE, Inc............................................................................... 8,050,312
130,000 DTE Energy Co.......................................................................... 4,078,750
141,216 Duke Energy Corp....................................................................... 7,078,452
140,000 Edison International................................................................... 3,666,250
220,000 Energy East Corp....................................................................... 4,578,750
200,000 Entergy Corp........................................................................... 5,150,000
150,000 FPL Group, Inc......................................................................... 6,421,875
140,000 GPU, Inc............................................................................... 4,191,250
120,000 Hawaiian Electric Industries, Inc...................................................... 3,465,000
215,000 Illinova Corp.......................................................................... 7,471,250
420,000 IPALCO Enterprises, Inc................................................................ 7,166,250
115,000 Kansas City Power & Light Co........................................................... 2,537,187
315,000 Montana Power Co....................................................................... 11,359,687
195,000 New Century Energies, Inc.............................................................. 5,923,125
115,000 New England Electric System............................................................ 5,951,250
280,000 NiSource Inc........................................................................... 5,005,000
100,000 OGE Energy Corp........................................................................ 1,900,000
195,000 Pinnacle West Capital Corp............................................................. 5,959,687
55,000 Potomac Electric Power Co.............................................................. 1,261,562
200,000 Public Service Company of New Mexico................................................... 3,250,000
115,000 Public Service Enterprise Group, Inc................................................... 4,003,437
200,000 Reliant Energy, Inc.................................................................... 4,575,000
215,000 SCANA Corp............................................................................. 5,778,125
130,500 Scottish Power PLC (ADR) (United Kingdom).............................................. 3,654,000
275,000 Southern Co............................................................................ 6,462,500
161,500 Texas Utilities Co..................................................................... 5,743,344
200,000 Wisconsin Energy Corp.................................................................. 3,850,000
------------
181,166,504
------------
ENERGY (7.8%)
153,625 Burlington Resources, Inc.............................................................. 5,079,227
50,000 Columbia Energy Group.................................................................. 3,162,500
230,460 El Paso Energy Corp.................................................................... 8,944,729
311,500 Enron Corp............................................................................. 13,822,812
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
245,000 Questar Corp........................................................................... $ 3,675,000
100,000 Sempra Energy*......................................................................... 1,737,500
290,000 Williams Companies, Inc................................................................ 8,863,125
------------
45,284,893
------------
TELECOMMUNICATIONS (51.0%)
161,932 ALLTEL Corp............................................................................ 13,389,752
278,177 AT&T Corp.............................................................................. 14,117,483
185,000 BCE, Inc. (Canada)..................................................................... 16,684,688
154,320 Bell Atlantic Corp..................................................................... 9,500,325
110,000 Broadwing Inc.......................................................................... 4,056,250
190,000 Cable & Wireless PLC (ADR) (United Kingdom)............................................ 10,058,125
288,750 CenturyTel, Inc........................................................................ 13,679,531
240,000 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)..................................... 15,750,000
91,100 Esat Telecom Group PLC (ADR) (Ireland)*................................................ 8,335,650
333,250 Global Crossing Ltd. (Bermuda)*........................................................ 16,641,672
110,000 Global Telesystems Group, Inc.*........................................................ 3,808,750
140,000 GTE Corp............................................................................... 9,878,750
67,968 Lucent Technologies Inc................................................................ 5,084,856
246,163 MCI WorldCom, Inc.*.................................................................... 13,046,666
125,000 MediaOne Group, Inc.*.................................................................. 9,601,563
30,000 Nextel Communications, Inc. (Class A)*................................................. 3,091,875
331,508 Qwest Communications International, Inc.*.............................................. 14,234,125
205,000 RCN Corp.*............................................................................. 9,929,688
298,946 SBC Communications, Inc................................................................ 14,573,618
215,000 Sprint Corp. (FON Group)............................................................... 14,472,188
50,000 Sprint Corp. (PCS Group)*.............................................................. 5,125,000
130,000 Tele Danmark AS (ADR) (Denmark)........................................................ 4,907,500
120,000 Telecom Corp. of New Zealand Ltd. (ADR) (New Zealand).................................. 4,620,000
80,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)..................................... 9,000,000
100,000 Telephone & Data Systems, Inc.......................................................... 12,600,000
206,000 Telstra Corp. Ltd. (ADR) (Australia)................................................... 5,613,500
112,867 U.S. West, Inc......................................................................... 8,126,424
245,000 Vodafone AirTouch PLC (ADR) (United Kingdom)........................................... 12,127,500
55,000 Voicestream Wireless Corp.*............................................................ 7,803,125
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
45
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
82,700 WinStar Communications, Inc.*.......................................................... $ 6,212,838
------------
296,071,442
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $277,628,153)......................................................... 522,522,839
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
<C> <S> <C>
- --------
CORPORATE BONDS (6.9%)
ELECTRIC UTILITIES (4.0%)
$ 2,250 Consumers Energy Co. 6.875% due 03/01/18............................................... 1,952,707
2,000 Empresa Nacional de Electricidad Chile, (Chile)
8.125% due 02/01/97.................................................................. 1,617,640
3,000 Indianapolis Power Co.
7.05% due 02/01/24................................................................... 2,627,340
2,500 Niagara Mohawk Power Corp. 8.00% due 06/01/04.......................................... 2,549,825
1,500 Northern States Power Co. 6.50% due 03/01/28........................................... 1,284,165
2,125 Public Service Electric & Gas Co. 6.75% due 01/01/16................................... 1,915,178
3,000 Public Service Electric & Gas Co. 7.00% due 09/01/24................................... 2,710,140
2,000 South Carolina Electric & Gas Co. 7.625% due 06/01/23.................................. 1,862,500
2,000 Southwestern Public Service
8.50% due 02/15/25................................................................... 1,970,320
5,000 Wisconsin Electric Power Co.
7.125% due 03/15/16.................................................................. 4,629,600
------------
23,119,415
------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ENERGY (1.3%)
500 CMS Panhandle Holding Co. 7.00% due 07/15/29........................................... 438,860
3,000 Coastal Corp.
7.75% due 10/15/35................................................................... 2,846,010
$ 2,000 Northern Border Pipeline 7.75% due 09/01/09**.......................................... $ 1,993,660
2,000 Panhandle Eastern Corp. 8.625% due 04/15/25............................................ 1,985,500
------------
7,264,030
------------
TELECOMMUNICATIONS (1.6%)
2,000 360 DEG. Communications Co. 6.65% due 01/15/08......................................... 1,890,240
2,000 GTE Corp.
7.90% due 02/01/27................................................................... 1,915,280
2,000 GTE North Inc.
5.65% due 11/15/08................................................................... 1,769,960
500 LCI International, Inc.
7.25% due 06/15/07................................................................... 481,545
1,000 Sprint Capital Corp.
6.875% due 11/15/28.................................................................. 889,730
2,000 Sprint Corp.
9.25% due 04/15/22................................................................... 2,281,860
------------
9,228,615
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $42,396,993).......................................................... 39,612,060
------------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C>
U.S. GOVERNMENT AGENCY (0.2%)
50 Tennessee Valley Authority 8.00% due 03/31/45 (IDENTIFIED COST $1,250,000)............. 1,228,125
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
46
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (a) (2.8%)
U.S. GOVERNMENT AGENCY
$ 16,300 Federal Home Loan Mortgage Corp.
1.50% due 01/03/00 (AMORTIZED COST $16,298,642)...................................... $ 16,298,642
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $337,573,788) (B)..................................................... 99.9% 579,661,666
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES......................................... 0.1 825,286
----- -------------
NET ASSETS............................................................................. 100.0% $ 580,486,952
----- -------------
----- -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(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 $254,648,918 and the
aggregate gross unrealized depreciation is $12,561,040, resulting in net
unrealized appreciation of $242,087,878.
SEE NOTES TO FINANCIAL STATEMENTS
47
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (42.3%)
AUTO PARTS: O.E.M. (1.8%)
45,500 Delphi Automotive Systems Corp.......................................................... $ 716,625
13,300 Johnson Controls, Inc................................................................... 756,437
-----------
1,473,062
-----------
BUILDING MATERIALS (0.8%)
17,000 Vulcan Materials Co..................................................................... 678,937
-----------
CLOTHING/SHOE/ACCESSORY STORES (0.9%)
16,800 Limited (The), Inc...................................................................... 727,650
-----------
CONSUMER ELECTRONICS/APPLIANCES (0.9%)
11,300 Whirlpool Corp.......................................................................... 735,206
-----------
CONTAINERS/PACKAGING (0.9%)
32,000 Crown Cork & Seal Co., Inc.............................................................. 716,000
-----------
ELECTRIC UTILITIES (2.4%)
20,200 Public Service Enterprise Group, Inc.................................................... 703,212
28,000 Reliant Energy, Inc..................................................................... 640,500
34,000 TECO Energy, Inc........................................................................ 631,125
-----------
1,974,837
-----------
ELECTRICAL PRODUCTS (0.9%)
12,500 Emerson Electric Co..................................................................... 717,187
-----------
ENGINEERING & CONSTRUCTION (0.9%)
16,600 Fluor Corp.............................................................................. 761,525
-----------
FINANCE COMPANIES (2.4%)
22,200 Associates First Capital Corp. (Class A)................................................ 609,112
10,900 Fannie Mae.............................................................................. 680,569
15,200 SLM Holding Corp........................................................................ 642,200
-----------
1,931,881
-----------
FOOD CHAINS (0.9%)
22,000 Albertson's, Inc........................................................................ 709,500
-----------
FOOD DISTRIBUTORS (0.9%)
38,500 Supervalu, Inc.......................................................................... 770,000
-----------
INVESTMENT MANAGERS (0.2%)
967 Waddell & Reed Financial, Inc. (Class A)................................................ 26,230
4,163 Waddell & Reed Financial, Inc. (Class B)................................................ 104,595
-----------
130,825
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
LIFE INSURANCE (1.7%)
10,500 Jefferson-Pilot Corp.................................................................... $ 716,625
17,700 Lincoln National Corp................................................................... 708,000
-----------
1,424,625
-----------
MAJOR BANKS (0.9%)
14,300 Bank of America Corp.................................................................... 717,681
-----------
MAJOR CHEMICALS (2.8%)
5,500 Dow Chemical Co......................................................................... 734,937
28,500 Hercules Inc............................................................................ 794,437
19,000 Rohm & Haas Co.......................................................................... 773,062
-----------
2,302,436
-----------
MAJOR PHARMACEUTICALS (0.8%)
16,200 Schering-Plough Corp.................................................................... 683,437
-----------
MAJOR U.S. TELECOMMUNICATIONS (2.4%)
13,200 AT&T Corp............................................................................... 669,900
10,400 Bell Atlantic Corp...................................................................... 640,250
9,000 GTE Corp................................................................................ 635,063
-----------
1,945,213
-----------
MARINE TRANSPORTATION (0.9%)
20,300 Tidewater, Inc.......................................................................... 730,800
-----------
MEAT/POULTRY/FISH (1.7%)
30,000 ConAgra, Inc............................................................................ 676,875
16,500 Hormel Foods Corp....................................................................... 670,313
-----------
1,347,188
-----------
MOTOR VEHICLES (1.7%)
13,500 Ford Motor Co........................................................................... 721,406
9,000 General Motors Corp..................................................................... 654,188
-----------
1,375,594
-----------
NATURAL GAS (0.8%)
10,500 Consolidated Natural Gas Co............................................................. 681,844
-----------
NEWSPAPERS (0.4%)
24,002 Hollinger International, Inc. (Class A)................................................. 310,526
-----------
OFFICE EQUIPMENT/SUPPLIES (0.8%)
30,500 Xerox Corp.............................................................................. 691,969
-----------
OIL REFINING/MARKETING (1.7%)
21,500 Ashland, Inc............................................................................ 708,156
29,000 Ultramar Diamond Shamrock Corp.......................................................... 657,938
-----------
1,366,094
-----------
PAINTS/COATINGS (0.9%)
11,500 PPG Industries, Inc..................................................................... 719,469
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
48
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE INVESTMENT TRUSTS (5.9%)
12,200 Avalonbay Communities, Inc.............................................................. $ 418,613
17,500 Boston Properties, Inc.................................................................. 544,688
10,000 Camden Property Trust................................................................... 273,750
21,200 Duke-Weeks Realty Corp.................................................................. 413,400
18,500 Equity Office Properties Trust.......................................................... 455,563
30,000 Equity One, Inc......................................................................... 313,125
14,000 First Industrial Realty Trust, Inc...................................................... 384,125
22,000 Healthcare Realty Trust, Inc............................................................ 343,750
22,300 JDN Realty Corp......................................................................... 359,588
16,600 Meditrust Corp. (Paired Stock).......................................................... 91,300
26,780 MeriStar Hospitality Corp............................................................... 428,480
21,000 Reckson Associates Realty Corp.......................................................... 430,500
18,000 Tanger Factory Outlet Centers, Inc...................................................... 373,500
-----------
4,830,382
-----------
RENTAL/LEASING COMPANIES (0.9%)
29,100 Ryder System, Inc....................................................................... 711,131
-----------
SAVINGS & LOAN ASSOCIATIONS (0.8%)
26,500 Washington Mutual, Inc.................................................................. 689,000
-----------
SPECIALTY CHEMICALS (0.9%)
22,600 Air Products & Chemicals, Inc........................................................... 758,513
-----------
STEEL/IRON ORE (1.0%)
25,000 USX-U.S. Steel Group.................................................................... 825,000
-----------
TOBACCO (1.4%)
29,000 Philip Morris Companies, Inc............................................................ 672,438
17,200 UST, Inc................................................................................ 433,225
-----------
1,105,663
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $35,230,670)........................................................... 34,543,175
-----------
CONVERTIBLE PREFERRED STOCKS (22.3%)
APPAREL (0.3%)
10,000 Designer Financial Trust $3.00.......................................................... 245,000
-----------
AUTO PARTS: O.E.M. (0.0%)
12,000 BTI Capital Trust $3.25 - 144A*......................................................... 1,500
-----------
BOOKS/MAGAZINES (0.8%)
25,000 Reader's Digest Association, Inc. $1.93................................................. 678,125
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONTAINERS/PACKAGING (1.2%)
20,000 Sealed Air Corp. (Series A) $2.00....................................................... $ 1,010,000
-----------
HOME FURNISHINGS (0.6%)
12,000 Newell Financial Trust I $2.63.......................................................... 461,244
-----------
INDUSTRIAL MACHINERY/COMPONENTS (0.9%)
28,000 Ingersoll-Rand Co. $1.69................................................................ 714,000
-----------
INTERNATIONAL BANKS (1.8%)
30,200 National Australia Bank, Ltd. $1.97 (Australia) (Units)++............................... 834,275
19,500 WBK Strypes Trust $3.14................................................................. 625,219
-----------
1,459,494
-----------
INVESTMENT BANKERS/BROKERS/
SERVICES (0.3%)
15,940 Merrill Lynch & Co., Inc. $2.39 (exchangeable into IMC Global, Inc. common stock)....... 284,927
-----------
LIFE INSURANCE (0.7%)
2,500 American Heritage Life Investment Corp. $4.25........................................... 216,719
15,000 AmerUs Life Holdings, Inc. $2.21........................................................ 341,250
-----------
557,969
-----------
MILITARY/GOV'T/TECHNICAL (0.6%)
7,530 Loral Space & Communications Ltd. (Series C) $3.00 (Bermuda)............................ 468,742
-----------
MOVIES/ENTERTAINMENT (0.9%)
14,000 Premier Parks, Inc. $4.05............................................................... 756,000
-----------
OIL REFINING/MARKETING (1.0%)
50,000 Tesoro Petroleum Corp. $1.16............................................................ 600,000
35,000 USX Corp. $1.44 (exchangeable into RTI International Metals, Inc. common stock)......... 262,500
-----------
862,500
-----------
OTHER CONSUMER SERVICES (0.7%)
15,500 Cendant Corp. $3.75..................................................................... 579,312
-----------
PACKAGE GOODS/COSMETICS (1.4%)
13,000 Estee Lauder Co. $3.80.................................................................. 1,125,313
-----------
RAILROADS (0.6%)
11,400 Union Pacific Capital Trust $3.13....................................................... 468,848
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
49
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE INVESTMENT TRUSTS (2.1%)
20,000 Apartment Investment & Management Co. (Series K) $2.00.................................. $ 490,000
9,000 Equity Residential Properties Trust (Series E) $1.75.................................... 212,625
1,085 Equity Residential Properties Trust (Series J) $2.15.................................... 28,278
40,000 SL Green Realty Corp. $2.00............................................................. 950,000
-----------
1,680,903
-----------
SMALLER BANKS (1.3%)
30,000 CNB Capital Trust I $1.50............................................................... 1,042,500
-----------
TELECOMMUNICATION EQUIPMENT (5.0%)
4,000 Qualcomm Financial Trust $2.875......................................................... 4,080,000
-----------
TOOLS/HARDWARE (0.7%)
19,400 Metromedia International Group, Inc. $3.63.............................................. 582,000
-----------
UNREGULATED POWER GENERATION (0.9%)
19,000 CalEnergy Capital Trust III $3.25....................................................... 731,500
-----------
WIRELESS COMMUNICATIONS (0.5%)
4,000 Globalstar Telecommunications Ltd. $4.00................................................ 405,500
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST $16,274,882)........................................................... 18,195,377
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
<C> <S> <C>
-------
CORPORATE BONDS (26.9%)
CONVERTIBLE BONDS (11.0%)
ASSISTED LIVING SERVICES (0.1%)
$ 220 Emeritus Corp. - 144A* 6.25% due 01/01/06............................................... 88,000
-----------
AUTO PARTS: O.E.M. (1.4%)
1,000 Magna International, Inc. 4.875% due 02/15/05........................................... 854,240
350 MascoTech, Inc. 4.50% due 12/15/03...................................................... 256,812
-----------
1,111,052
-----------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CABLE TELEVISION (2.1%)
$ 1,400 EchoStar Communications - 144A* 4.875% due 01/01/07..................................... $ 1,706,082
-----------
CELLULAR TELEPHONE (0.5%)
400 U.S. Cellular Corp. 0.00% due 06/15/15.................................................. 384,756
-----------
CLOTHING/SHOE/ACCESSORY STORES (0.9%)
890 Genesco Inc. 5.50% due 04/15/05......................................................... 753,100
-----------
ELECTRONIC COMPONENTS (0.9%)
610 Photronics Inc. 6.00% due 06/01/04...................................................... 712,938
-----------
INDUSTRIAL MACHINERY/COMPONENTS (0.3%)
200 Thermo Fibertek, Inc. - 144A* 4.50% due 07/15/04........................................ 160,156
100 Thermo Optek Inc. - 144A* 5.00% due 10/15/00............................................ 97,186
-----------
257,342
-----------
MAJOR U.S. TELECOMMUNICATIONS (2.8%)
800 Bell Atlantic Financial Service - 144A* (exchangeable into Cable & Wireless
Communications common stock) 4.25% due 09/15/05....................................... 994,384
1,300 Bell Atlantic Financial Service - 144A* (exchangeable into Telecom Corporation of New
Zealand common stock) 5.75% due 04/01/03.............................................. 1,313,650
-----------
2,308,034
-----------
REAL ESTATE INVESTMENT TRUSTS (0.9%)
305 Capstar Hotel Corp. 4.75% due 10/15/04.................................................. 223,413
575 Healthcare Realty Trust 6.55% due 03/14/02.............................................. 492,660
-----------
716,073
-----------
RENTAL/LEASING COMPANIES (1.1%)
1,000 Financial Federal Corp. 4.50% due 05/01/05.............................................. 946,460
-----------
TOTAL CONVERTIBLE BONDS
(IDENTIFIED COST $8,817,394)............................................................ 8,983,837
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
50
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
NON-CONVERTIBLE BONDS (15.9%)
BROADCASTING (2.1%)
$ 600 EZ Communications, Inc. 9.75% due 12/01/05.............................................. $ 641,262
1,000 Young Broadcasting Corp. 11.75% due 11/15/04............................................ 1,043,750
-----------
1,685,012
-----------
BUILDING MATERIALS (0.6%)
500 USG Corp. (Series B) 9.25% due 09/15/01................................................. 513,055
-----------
ELECTRONIC DATA PROCESSING (2.3%)
1,750 Unisys Corp. (Series B) 12.00% due 04/15/03............................................. 1,868,125
-----------
MANAGED HEALTH CARE (0.9%)
700 Healthsouth Corp. 9.50% due 04/01/01.................................................... 693,000
-----------
METALS FABRICATIONS (0.8%)
600 Ivaco, Inc. (Canada) 11.50% due 09/15/05................................................ 649,500
-----------
OTHER METALS/MINERALS (3.2%)
2,500 Cyprus Amax Minerals Inc. 10.125% due 04/01/02.......................................... 2,610,325
-----------
OTHER TELECOMMUNICATIONS (1.6%)
1,150 Sprint Spectrum L.P. 11.00% due 08/15/06................................................ 1,269,807
-----------
PAPER (1.0%)
800 SD Warren Co. (Series B) 12.00% due 12/15/04............................................ 837,000
-----------
SPECIALTY CHEMICALS (2.4%)
1,875 Huntsman Polymers Corp. 11.75% due 12/01/04............................................. 1,959,375
-----------
TEXTILES (1.0%)
862 Dan River, Inc. 10.125% due 12/15/03.................................................... 844,760
-----------
TOTAL NON-CONVERTIBLE BONDS
(IDENTIFIED COST $13,494,020)........................................................... 12,929,959
-----------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $22,311,414)........................................................... 21,913,796
-----------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (11.8%)
U.S. GOVERNMENT AGENCY
$ 9,650 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $9,649,196)......... $ 9,649,196
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $83,466,162) (B).......................................................... 103.3% 84,301,544
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS............................................. (3.3) (2,685,208)
----- ------------
NET ASSETS................................................................................. 100.0% $ 81,616,336
----- ------------
----- ------------
</TABLE>
- ---------------------
* Resale is restricted to qualified institutional investors.
++ Consist 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 $8,794,892 and the
aggregate gross unrealized depreciation is $7,959,510, resulting in net
unrealized appreciation of $835,382.
SEE NOTES TO FINANCIAL STATEMENTS
51
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (97.3%)
AEROSPACE (3.4%)
830,000 Goodrich (B.F.) Co. (The)........................................................... $ 22,825,000
1,050,000 Lockheed Martin Corp................................................................ 22,968,750
350,000 United Technologies Corp............................................................ 22,750,000
--------------
68,543,750
--------------
ALUMINUM (2.2%)
555,000 Alcan Aluminium Ltd. (Canada)....................................................... 22,859,062
272,500 Alcoa, Inc.......................................................................... 22,617,500
--------------
45,476,562
--------------
APPAREL (1.0%)
695,500 VF Corp............................................................................. 20,865,000
--------------
AUTO PARTS: O.E.M. (4.2%)
750,000 Dana Corp........................................................................... 22,453,125
1,380,000 Delphi Automotive Systems Corp...................................................... 21,735,000
375,000 Johnson Controls, Inc............................................................... 21,328,125
405,000 TRW Inc............................................................................. 21,034,687
--------------
86,550,937
--------------
AUTOMOTIVE AFTERMARKET (1.0%)
715,000 Goodyear Tire & Rubber Co........................................................... 20,154,062
--------------
BEVERAGES - NON-ALCOHOLIC (2.0%)
343,000 Coca Cola Co........................................................................ 19,979,750
580,000 PepsiCo, Inc........................................................................ 20,445,000
--------------
40,424,750
--------------
BUILDING PRODUCTS (1.1%)
673,500 Armstrong World Industries, Inc..................................................... 22,478,062
--------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (2.1%)
435,000 Caterpillar, Inc.................................................................... 20,472,187
523,000 Deere & Co.......................................................................... 22,685,125
--------------
43,157,312
--------------
CONSUMER ELECTRONICS/APPLIANCES (1.1%)
335,000 Whirlpool Corp...................................................................... 21,795,937
--------------
CONTAINERS/PACKAGING (1.1%)
1,020,000 Crown Cork & Seal Co., Inc.......................................................... 22,822,500
--------------
DEPARTMENT STORES (2.1%)
665,000 May Department Stores Co............................................................ 21,446,250
682,000 Sears, Roebuck & Co................................................................. 20,758,375
--------------
42,204,625
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DISCOUNT CHAINS (1.0%)
275,000 Dayton Hudson Corp.................................................................. $ 20,195,312
--------------
DIVERSIFIED FINANCIAL SERVICES (1.1%)
240,000 Providian Financial Corp............................................................ 21,855,000
--------------
DIVERSIFIED MANUFACTURING (3.3%)
369,375 Honeywell International Inc......................................................... 21,308,320
220,000 Minnesota Mining & Manufacturing Co................................................. 21,532,500
650,000 Tyco International Ltd. (Bermuda)................................................... 25,268,750
--------------
68,109,570
--------------
ELECTRIC UTILITIES (5.0%)
490,000 Dominion Resources, Inc............................................................. 19,232,500
475,000 FPL Group, Inc...................................................................... 20,335,937
685,000 GPU, Inc............................................................................ 20,507,187
860,000 Reliant Energy, Inc................................................................. 19,672,500
620,000 Unicom Corp......................................................................... 20,770,000
--------------
100,518,124
--------------
ELECTRONIC DATA PROCESSING (2.1%)
185,000 Hewlett-Packard Co.................................................................. 21,078,437
190,000 International Business Machines Corp................................................ 20,520,000
--------------
41,598,437
--------------
ENGINEERING & CONSTRUCTION (1.1%)
495,000 Fluor Corp.......................................................................... 22,708,125
--------------
FINANCE COMPANIES (2.9%)
690,000 Associates First Capital Corp. (Class A)............................................ 18,931,875
335,500 Fannie Mae.......................................................................... 20,947,781
525,000 Household International, Inc........................................................ 19,556,250
--------------
59,435,906
--------------
FOOD CHAINS (2.0%)
645,000 Albertson's, Inc.................................................................... 20,801,250
845,000 Winn-Dixie Stores, Inc.............................................................. 20,227,188
--------------
41,028,438
--------------
FOOD DISTRIBUTORS (2.2%)
1,145,000 Supervalu, Inc...................................................................... 22,900,000
575,000 SYSCO Corp.......................................................................... 22,748,438
--------------
45,648,438
--------------
FOREST PRODUCTS (1.1%)
300,000 Weyerhaeuser Co..................................................................... 21,543,750
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
52
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
HOME FURNISHINGS (1.0%)
680,000 Newell Rubbermaid, Inc.............................................................. $ 19,720,000
--------------
INTEGRATED OIL COMPANIES (4.1%)
345,000 BP Amoco PLC (ADR) (United Kingdom)................................................. 20,462,813
251,073 Exxon Mobil Corp.................................................................... 20,227,069
345,000 Kerr-McGee Corp..................................................................... 21,390,000
349,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)....................................... 21,092,688
--------------
83,172,570
--------------
LIFE INSURANCE (3.1%)
217,500 Aegon N.V. (ARS) (Netherlands)...................................................... 20,771,250
315,000 Jefferson-Pilot Corp................................................................ 21,498,750
505,000 Lincoln National Corp............................................................... 20,200,000
--------------
62,470,000
--------------
MAJOR BANKS (2.9%)
390,000 Bank of America Corp................................................................ 19,573,125
900,000 KeyCorp............................................................................. 19,912,500
160,000 Morgan (J.P.) & Co., Inc............................................................ 20,260,000
--------------
59,745,625
--------------
MAJOR CHEMICALS (4.2%)
160,000 Dow Chemical Co..................................................................... 21,380,000
320,000 Du Pont (E.I.) de Nemours & Co., Inc................................................ 21,080,000
830,000 Hercules, Inc....................................................................... 23,136,250
535,000 Monsanto Co......................................................................... 19,059,375
--------------
84,655,625
--------------
MAJOR PHARMACEUTICALS (3.8%)
560,000 Abbott Laboratories................................................................. 20,335,000
460,000 American Home Products Corp......................................................... 18,141,250
310,000 Bristol-Myers Squibb Co............................................................. 19,898,125
460,000 Schering-Plough Corp................................................................ 19,406,250
--------------
77,780,625
--------------
MAJOR U.S. TELECOMMUNICATIONS (1.9%)
312,000 Bell Atlantic Corp.................................................................. 19,207,500
277,000 GTE Corp............................................................................ 19,545,813
--------------
38,753,313
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MANAGED HEALTH CARE (1.1%)
381,500 Aetna Inc........................................................................... $ 21,292,469
--------------
MEAT/POULTRY/FISH (1.0%)
920,000 ConAgra, Inc........................................................................ 20,757,500
--------------
MILITARY/GOV'T/TECHNICAL (1.0%)
730,000 Raytheon Co. (Class B).............................................................. 19,390,625
--------------
MOTOR VEHICLES (3.1%)
285,000 DaimlerChrysler AG (Germany)........................................................ 22,301,250
395,000 Ford Motor Co....................................................................... 21,107,813
280,000 General Motors Corp................................................................. 20,352,500
--------------
63,761,563
--------------
MULTI-SECTOR COMPANIES (1.0%)
130,000 General Electric Co................................................................. 20,117,500
--------------
NATURAL GAS (1.1%)
355,000 Consolidated Natural Gas Co......................................................... 23,052,813
--------------
OFFICE EQUIPMENT/SUPPLIES (2.1%)
460,000 Pitney Bowes, Inc................................................................... 22,223,750
900,000 Xerox Corp.......................................................................... 20,418,750
--------------
42,642,500
--------------
OIL & GAS PRODUCTION (1.1%)
665,000 Burlington Resources, Inc........................................................... 21,986,563
--------------
OIL REFINING/MARKETING (2.0%)
865,000 Sunoco, Inc......................................................................... 20,327,500
810,000 USX-Marathon Group.................................................................. 19,996,875
--------------
40,324,375
--------------
OIL/GAS TRANSMISSION (2.1%)
545,000 El Paso Energy Corp................................................................. 21,152,813
515,000 Enron Corp.......................................................................... 22,853,125
--------------
44,005,938
--------------
OTHER METALS/MINERALS (1.2%)
350,000 Phelps Dodge Corp................................................................... 23,493,750
--------------
PACKAGE GOODS/COSMETICS (5.1%)
630,000 Avon Products, Inc.................................................................. 20,790,000
490,000 Gillette Co......................................................................... 20,181,875
560,000 International Flavors & Fragrances, Inc............................................. 21,140,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
53
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
330,000 Kimberly-Clark Corp................................................................. $ 21,532,500
190,000 Procter & Gamble Co................................................................. 20,816,875
--------------
104,461,250
--------------
PACKAGED FOODS (1.0%)
320,000 Quaker Oats Company (The)........................................................... 21,000,000
--------------
PAINTS/COATINGS (1.1%)
355,000 PPG Industries, Inc................................................................. 22,209,688
--------------
PAPER (2.2%)
385,000 International Paper Co.............................................................. 21,728,438
524,000 Mead Corp........................................................................... 22,761,250
--------------
44,489,688
--------------
PHOTOGRAPHIC PRODUCTS (1.1%)
323,000 Eastman Kodak Co.................................................................... 21,398,750
--------------
RAILROADS (1.9%)
770,000 Burlington Northern Santa Fe Corp................................................... 18,672,500
645,000 CSX Corp............................................................................ 20,236,875
--------------
38,909,375
--------------
RECREATIONAL PRODUCTS/TOYS (1.0%)
950,000 Brunswick Corp...................................................................... 21,137,500
--------------
RENTAL/LEASING COMPANIES (1.0%)
860,000 Ryder System, Inc................................................................... 21,016,250
--------------
SEMICONDUCTORS (1.0%)
250,000 Intel Corp.......................................................................... 20,562,500
--------------
TOBACCO (1.0%)
810,000 UST, Inc............................................................................ 20,401,875
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $2,079,697,541).................................................... 1,979,824,827
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (a) (2.6%)
U.S. GOVERNMENT AGENCY
$ 52,400 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $52,395,633).... $ 52,395,633
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $2,132,093,174) (B).................................................... 99.9% 2,032,220,460
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 0.1 1,593,467
----- ---------------
NET ASSETS.............................................................................. 100.0% $ 2,033,813,927
----- ---------------
----- ---------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
ARS American Registered Shares.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $161,022,014 and the
aggregate gross unrealized depreciation is $260,894,728, resulting in net
unrealized depreciation of $99,872,714.
SEE NOTES TO FINANCIAL STATEMENTS
54
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (95.0%)
ADVERTISING (1.3%)
10,000 Omnicom Group, Inc..................................................................... $ 1,000,000
28,000 True North Communications, Inc......................................................... 1,251,250
------------
2,251,250
------------
ALUMINUM (1.9%)
40,000 Alcoa, Inc............................................................................. 3,320,000
------------
BEVERAGES - NON-ALCOHOLIC (0.6%)
30,000 PepsiCo, Inc........................................................................... 1,057,500
------------
BIOTECHNOLOGY (0.9%)
25,000 Amgen Inc.*............................................................................ 1,500,000
------------
BROADCASTING (5.7%)
40,500 CBS Corp.*............................................................................. 2,589,469
30,000 Clear Channel Communications, Inc.*.................................................... 2,677,500
55,000 Infinity Broadcasting Corp. (Series A)*................................................ 1,990,312
10,000 Radio One, Inc.*....................................................................... 920,000
15,000 Univision Communications, Inc. (Class A)*.............................................. 1,532,812
------------
9,710,093
------------
BUILDING MATERIALS/D I Y CHAINS (1.5%)
37,500 Home Depot, Inc. (The)................................................................. 2,571,094
------------
CABLE TELEVISION (2.8%)
50,000 Comcast Corp. (Class A Special)*....................................................... 2,525,000
45,000 Cox Communications, Inc. (Class A)*.................................................... 2,317,500
------------
4,842,500
------------
COMPUTER COMMUNICATIONS (3.0%)
30,000 Cisco Systems, Inc.*................................................................... 3,211,875
25,000 Xircom, Inc.*.......................................................................... 1,875,000
------------
5,086,875
------------
COMPUTER SOFTWARE (9.5%)
3,000 Check Point Software Technologies Ltd. (Israel)*....................................... 595,875
5,000 Citrix Systems, Inc.*.................................................................. 614,687
15,000 Computer Associates International, Inc................................................. 1,049,062
50,000 Compuware Corp.*....................................................................... 1,859,375
35,000 Documentum, Inc.*...................................................................... 2,095,625
7,000 Legato Systems, Inc.*.................................................................. 481,250
6,000 Mercury Interactive Corp.*............................................................. 647,625
32,000 Microsoft Corp.*....................................................................... 3,734,000
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
7,500 Oracle Corp.*.......................................................................... $ 840,000
90,000 Saga Systems, Inc.*.................................................................... 1,794,375
15,000 Symantec Corp.*........................................................................ 879,375
5,000 Veritas Software Corp.*................................................................ 715,312
25,000 Wind River Systems, Inc.*.............................................................. 915,625
------------
16,222,186
------------
CONTRACT DRILLING (0.9%)
50,000 Noble Drilling Corp.*.................................................................. 1,637,500
------------
DISCOUNT CHAINS (4.0%)
32,000 BJ's Wholesale Club, Inc.*............................................................. 1,168,000
15,000 Costco Wholesale Corp.*................................................................ 1,367,812
22,000 Dayton Hudson Corp.*................................................................... 1,615,625
40,000 Wal-Mart Stores, Inc................................................................... 2,765,000
------------
6,916,437
------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.6%)
6,000 JDS Uniphase Corp.*.................................................................... 967,500
------------
DIVERSIFIED FINANCIAL SERVICES (2.9%)
10,000 American Express Co.................................................................... 1,662,500
60,000 Citigroup, Inc......................................................................... 3,333,750
------------
4,996,250
------------
DIVERSIFIED MANUFACTURING (2.2%)
50,000 Dover Corp............................................................................. 2,268,750
25,000 Honeywell International Inc............................................................ 1,442,187
------------
3,710,937
------------
E.D.P. PERIPHERALS (3.1%)
25,000 Advanced Digital Information Corp.*.................................................... 1,215,625
15,000 EMC Corp.*............................................................................. 1,638,750
10,000 Network Appliance, Inc.*............................................................... 830,000
10,000 QLogic Corp.*.......................................................................... 1,598,750
------------
5,283,125
------------
E.D.P. SERVICES (0.3%)
15,000 CSG Systems International, Inc.*....................................................... 589,687
------------
ELECTRIC UTILITIES (1.5%)
40,000 Calpine Corp.*......................................................................... 2,560,000
------------
ELECTRONIC COMPONENTS (2.2%)
5,000 CTS Corp............................................................................... 376,875
55,000 Kemet Corp.*........................................................................... 2,478,437
30,000 Vishay Intertechnology, Inc.*.......................................................... 948,750
------------
3,804,062
------------
ELECTRONIC DATA PROCESSING (2.5%)
40,000 Compaq Computer Corp................................................................... 1,082,500
25,000 Dell Computer Corp.*................................................................... 1,273,438
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
55
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
25,000 Sun Microsystems, Inc.*................................................................ $ 1,934,375
------------
4,290,313
------------
ELECTRONIC PRODUCTION EQUIPMENT (5.5%)
12,000 Applied Materials, Inc.*............................................................... 1,519,500
30,000 Celestica, Inc.*....................................................................... 1,665,000
25,000 Cognex Corp.*.......................................................................... 973,438
15,000 Lam Research Corp.*.................................................................... 1,673,438
20,000 Orbotech, Ltd.*........................................................................ 1,550,000
30,000 PRI Automation, Inc.*.................................................................. 1,998,750
------------
9,380,126
------------
FOOD DISTRIBUTORS (0.7%)
30,000 SYSCO Corp............................................................................. 1,186,875
------------
GENERIC DRUGS (0.7%)
50,000 Ivax Corp.*............................................................................ 1,287,500
------------
HOSPITAL/NURSING MANAGEMENT (0.7%)
40,000 Columbia/HCA Healthcare Corp........................................................... 1,172,500
------------
INSURANCE BROKERS/SERVICES (1.1%)
20,000 Marsh & McLennan Companies, Inc........................................................ 1,913,750
------------
INTEGRATED OIL COMPANIES (2.4%)
30,000 Exxon Mobil Corp....................................................................... 2,416,875
30,000 Murphy Oil Corp........................................................................ 1,721,250
------------
4,138,125
------------
INTERNET SERVICES (2.0%)
30,000 America Online, Inc.*.................................................................. 2,263,125
2,500 Yahoo! Inc.*........................................................................... 1,081,719
------------
3,344,844
------------
INVESTMENT BANKERS/BROKERS/SERVICES (1.3%)
12,000 Edwards (A.G.), Inc.................................................................... 384,750
12,000 Lehman Brothers Holdings, Inc.......................................................... 1,016,250
10,000 Merrill Lynch & Co., Inc............................................................... 835,000
------------
2,236,000
------------
MAJOR BANKS (1.0%)
500 Chase Manhattan Corp. (The)............................................................ 38,844
40,000 Wells Fargo & Co....................................................................... 1,617,500
------------
1,656,344
------------
MAJOR PHARMACEUTICALS (2.2%)
14,000 Johnson & Johnson...................................................................... 1,303,750
30,000 Warner-Lambert Co...................................................................... 2,458,125
------------
3,761,875
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR U.S. TELECOMMUNICATIONS (0.8%)
7,500 ALLTEL Corp............................................................................ $ 620,156
15,000 MCI WorldCom, Inc.*.................................................................... 795,000
------------
1,415,156
------------
MARINE TRANSPORTATION (0.8%)
40,000 Tidewater, Inc......................................................................... 1,440,000
------------
MEDIA CONGLOMERATES (1.1%)
25,000 Time Warner Inc........................................................................ 1,810,938
------------
MEDICAL SPECIALTIES (0.7%)
7,000 Bard (C.R.), Inc....................................................................... 371,000
30,000 Cooper Companies, Inc.................................................................. 903,750
------------
1,274,750
------------
MULTI-LINE INSURANCE (1.3%)
20,000 American International Group, Inc...................................................... 2,162,500
------------
MULTI-SECTOR COMPANIES (1.8%)
20,000 General Electric Co.................................................................... 3,095,000
------------
OIL & GAS PRODUCTION (1.0%)
75,000 Marine Drilling Company, Inc.*......................................................... 1,682,813
------------
OILFIELD SERVICES/EQUIPMENT (1.5%)
27,000 Cooper Cameron Corp.*.................................................................. 1,321,313
30,000 Weatherford International, Inc.*....................................................... 1,198,125
------------
2,519,438
------------
OTHER PHARMACEUTICALS (0.5%)
31,280 Shire Pharmaceuticals Group PLC (ADR) (United Kingdom)*................................ 903,210
------------
OTHER SPECIALTY STORES (1.3%)
15,000 Tiffany & Co........................................................................... 1,338,750
19,000 Zale Corp.*............................................................................ 919,125
------------
2,257,875
------------
OTHER TELECOMMUNICATIONS (2.6%)
85,000 Broadwing Inc.......................................................................... 3,134,375
10,000 Telephone & Data Systems, Inc.......................................................... 1,260,000
------------
4,394,375
------------
PACKAGE GOODS/COSMETICS (1.6%)
25,000 Procter & Gamble Co.................................................................... 2,739,063
------------
RESTAURANTS (0.2%)
15,000 Starbucks Corp.*....................................................................... 363,750
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
56
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SEMICONDUCTORS (6.9%)
13,000 Analog Devices, Inc.*.................................................................. $ 1,209,000
54,000 Atmel Corp.*........................................................................... 1,596,375
60,000 Cypress Semiconductor Corp.*........................................................... 1,942,500
50,000 Integrated Device Technology, Inc.*.................................................... 1,446,875
50,000 International Rectifier Corp.*......................................................... 1,300,000
30,000 Lattice Semiconductor Corp.*........................................................... 1,415,625
20,000 LSI Logic Corp.*....................................................................... 1,350,000
10,000 STMicroelectronics NV (Netherlands).................................................... 1,514,375
------------
11,774,750
------------
SPECIALTY INSURERS (0.7%)
20,000 MGIC Investment Corp................................................................... 1,203,750
------------
TELECOMMUNICATIONS EQUIPMENT (7.2%)
33,000 Advanced Fibre Communications, Inc.*................................................... 1,476,750
15,000 Antec Corp.*........................................................................... 547,500
6,000 Comverse Technology, Inc.*............................................................. 868,125
10,000 Corning Inc............................................................................ 1,289,375
30,000 General Instrument Corp.*.............................................................. 2,550,000
15,000 Lucent Technologies Inc................................................................ 1,122,188
10,000 Nokia Corp. (ADR) (Finland)............................................................ 1,900,000
25,000 Nortel Networks Corp. (Canada)......................................................... 2,525,000
------------
12,278,938
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $125,555,703)......................................................... 162,711,554
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (a) (5.0%)
U.S. GOVERNMENT AGENCY
$ 8,500 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $8,499,292)........ $ 8,499,292
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $134,054,995) (B)........................................................ 100.0% 171,210,846
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.0 40,570
----- -------------
NET ASSETS................................................................................ 100.0% $ 171,251,416
----- -------------
----- -------------
</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 aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $37,757,636 and the
aggregate gross unrealized depreciation is $601,785, resulting in net
unrealized appreciation of $37,155,851.
SEE NOTES TO FINANCIAL STATEMENTS
57
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS (97.2%)
AUSTRALIA (1.4%)
BUILDING MATERIALS
500,000 Pioneer International Ltd............................................................. $ 1,505,520
------------
CONTAINERS/PACKAGING
235,000 Amcor Ltd............................................................................. 1,099,778
------------
INTERNATIONAL BANKS
250,000 Australia & New Zealand Banking Group Ltd............................................. 1,817,284
------------
OIL & GAS PRODUCTION
550,000 Santos Ltd............................................................................ 1,497,320
------------
PRECIOUS METALS
2,000,000 Normandy Mining Ltd................................................................... 1,416,960
------------
TOTAL AUSTRALIA....................................................................... 7,336,862
------------
BELGIUM (0.7%)
DIVERSIFIED FINANCIAL SERVICES
105,000 Fortis (B)............................................................................ 3,782,914
------------
CANADA (2.2%)
ALUMINUM
63,000 Alcan Aluminium Ltd................................................................... 2,586,536
------------
CANADIAN OIL & GAS
93,000 Imperial Oil Ltd...................................................................... 1,992,673
------------
INTERNATIONAL BANKS
92,000 Toronto-Dominion Bank................................................................. 2,464,059
------------
MULTI-SECTOR COMPANIES
145,000 EdperBrascan Corp. (Class A).......................................................... 1,914,224
------------
OIL/GAS TRANSMISSION
108,400 Enbridge Inc.......................................................................... 2,146,572
------------
TOTAL CANADA.......................................................................... 11,104,064
------------
FRANCE (7.7%)
AUTOMOTIVE AFTERMARKET
75,000 Compagnie Generale des Etablissements Michelin (B Shares)............................. 2,941,965
------------
BUILDING MATERIALS
34,500 Lafarge S.A........................................................................... 4,011,332
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONTAINERS/PACKAGING
66,000 Compagnie Generale d'Industrie et de Participations................................... $ 4,314,882
------------
DIVERSIFIED MANUFACTURING
20,000 Compagnie de Saint Gobain............................................................. 3,755,657
------------
FARMING/SEEDS/MILLING
27,500 Eridania Beghin-Say S.A............................................................... 2,954,035
------------
INTERNATIONAL BANKS
40,000 Banque Nationale de Paris............................................................. 3,685,251
15,000 Societe Generale (Series A)........................................................... 3,485,097
------------
7,170,348
------------
MULTI-LINE INSURANCE
62,000 Assurances Generales de France........................................................ 3,354,946
------------
MULTI-SECTOR COMPANIES
5,250 Societe Eurafrance S.A................................................................ 3,157,709
------------
OIL REFINING/MARKETING
26,000 Total S.A. (B Shares)................................................................. 3,464,981
------------
TELECOMMUNICATION EQUIPMENT
17,000 Alcatel............................................................................... 3,898,481
------------
TOTAL FRANCE.......................................................................... 39,024,336
------------
GERMANY (7.6%)
APPAREL
22,000 Hugo Boss AG (Pref.).................................................................. 2,810,205
------------
DIVERSIFIED ELECTRONIC PRODUCTS
31,000 Siemens AG (Registered Shares)........................................................ 3,938,009
------------
DIVERSIFIED MANUFACTURING
105,000 MAN AG................................................................................ 3,939,216
------------
INTERNATIONAL BANKS
100,000 Commerzbank AG........................................................................ 3,666,141
------------
MAJOR CHEMICALS
70,000 BASF AG............................................................................... 3,590,706
80,000 Bayer AG.............................................................................. 3,781,808
------------
7,372,514
------------
MOTOR VEHICLES
45,000 DaimlerChrysler AG.................................................................... 3,494,149
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
58
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MULTI-SECTOR COMPANIES
80,000 RWE AG................................................................................ $ 3,130,050
110,000 Thyssen Krupp AG...................................................................... 3,346,799
75,000 VEBA AG............................................................................... 3,639,739
------------
10,116,588
------------
SHOE MANUFACTURING
45,000 Adidas-Salomon AG..................................................................... 3,371,944
------------
TOTAL GERMANY......................................................................... 38,708,766
------------
HONG KONG (2.5%)
DIVERSIFIED FINANCIAL SERVICES
199,800 HSBC Holdings PLC..................................................................... 2,801,415
------------
REAL ESTATE
220,000 Cheung Kong (Holdings) Ltd............................................................ 2,780,422
400,000 Henderson Land Development Co., Ltd................................................... 2,572,678
------------
5,353,100
------------
TELECOMMUNICATIONS
900,000 Cable & Wireless HKT Ltd.............................................................. 2,599,048
------------
UTILITIES
475,000 CLP Holdings Ltd...................................................................... 2,187,420
------------
TOTAL HONG KONG....................................................................... 12,940,983
------------
ITALY (2.7%)
INTEGRATED OIL COMPANIES
550,000 Ente Nazionale Idrocarburi SpA........................................................ 3,020,417
------------
INTERNATIONAL BANKS
257,000 Istituto Bancario San Paolo di Torino SpA............................................. 3,487,038
------------
SPECIALTY FOODS/CANDY
2,000,000 Montedison SpA........................................................................ 3,268,850
------------
TELECOMMUNICATIONS
620,000 Telecom Italia SpA.................................................................... 3,772,756
------------
TOTAL ITALY........................................................................... 13,549,061
------------
JAPAN (16.6%)
AIR FREIGHT/DELIVERY SERVICES
145,000 Yamato Transport Co., Ltd............................................................. 5,617,296
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ALCOHOLIC BEVERAGES
425,000 Kirin Brewery Co., Ltd................................................................ $ 4,469,526
------------
CONSUMER ELECTRONICS/APPLIANCES
215,000 Sharp Corp............................................................................ 5,500,147
25,000 Sony Corp............................................................................. 7,410,487
------------
12,910,634
------------
DIVERSIFIED ELECTRONIC PRODUCTS
31,000 Kyocera Corp.......................................................................... 8,036,588
180,000 Matsushita Electric Industrial Co., Ltd............................................... 4,983,369
195,000 NEC Corp.............................................................................. 4,645,128
------------
17,665,085
------------
ELECTRICAL PRODUCTS
460,000 Matsushita Electric Works, Ltd........................................................ 4,545,099
------------
ELECTRONIC COMPONENTS
34,000 TDK Corp.............................................................................. 4,693,211
------------
FINANCE COMPANIES
42,000 Acom Co., Ltd......................................................................... 4,112,894
------------
HOME BUILDING
450,000 Sekisui House Ltd..................................................................... 3,984,054
------------
MAJOR PHARMACEUTICALS
80,000 Takeda Chemical Industries, Ltd....................................................... 3,952,260
------------
MOTOR VEHICLES
120,000 Honda Motor Co........................................................................ 4,460,966
115,000 Toyota Motor Corp..................................................................... 5,568,871
------------
10,029,837
------------
OTHER PHARMACEUTICALS
135,000 Taisho Pharmaceutical Co., Ltd........................................................ 3,962,043
------------
RECREATIONAL PRODUCTS/TOYS
26,500 Nintendo Co., Ltd..................................................................... 4,401,976
------------
TOBACCO
506 Japan Tobacco, Inc.................................................................... 3,870,984
------------
TOTAL JAPAN........................................................................... 84,214,899
------------
NETHERLANDS (4.2%)
AIRLINES
110,000 Koninklijke Luchtvaart Maatschappi NV................................................. 2,821,269
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
59
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED ELECTRONIC PRODUCTS
26,500 Koninklijke (Royal) Philips Electronics NV............................................ $ 3,598,249
------------
DIVERSIFIED FINANCIAL SERVICES
55,000 ING Groep NV.......................................................................... 3,315,821
------------
INTERNATIONAL BANKS
150,000 ABN-AMRO Holding NV................................................................... 3,741,576
------------
SPECIALTY CHEMICALS
93,000 DSM NV................................................................................ 3,722,868
------------
TELECOMMUNICATIONS
40,000 KPN NV................................................................................ 3,898,481
------------
TOTAL NETHERLANDS..................................................................... 21,098,264
------------
PORTUGAL (0.7%)
TELECOMMUNICATIONS
325,000 Portugal Telecom S.A. (Registered Shares)............................................. 3,559,778
------------
SPAIN (1.3%)
ELECTRIC UTILITIES
250,000 Iberdrola S.A......................................................................... 3,459,952
------------
INTERNATIONAL BANKS
50,000 Banco Popular Espanol S.A............................................................. 3,256,278
------------
TOTAL SPAIN........................................................................... 6,716,230
------------
SWEDEN (1.6%)
CONSUMER ELECTRONICS/APPLIANCES
95,000 Electrolux AB (Series B).............................................................. 2,385,982
------------
ENGINEERING & CONSTRUCTION
52,000 Skanska AB (B Shares)................................................................. 1,934,606
------------
INDUSTRIAL MACHINERY/COMPONENTS
60,000 Sandvik AB (B Shares)................................................................. 1,908,316
------------
INTERNATIONAL BANKS
300,000 Nordbanken Holding AB................................................................. 1,760,440
------------
TOTAL SWEDEN.......................................................................... 7,989,344
------------
SWITZERLAND (5.9%)
INTERNATIONAL BANKS
17,500 UBS AG (Registered Shares)............................................................ 4,723,792
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR PHARMACEUTICALS
3,300 Novartis AG (Registered Shares)....................................................... $ 4,843,314
------------
OTHER TELECOMMUNICATIONS
13,000 Swisscom AG (Registered Shares)....................................................... 5,255,493
------------
PACKAGED FOODS
2,700 Nestle S.A. (Registered Shares)....................................................... 4,944,068
------------
PROPERTY - CASUALTY INSURERS
2,400 Schweizerische Rueckversicherungs-Gesellschaft (Registered Shares).................... 4,928,060
------------
TOBACCO
2,100 Compagnie Financiere Richemont AG (Series A).......................................... 5,009,416
------------
TOTAL SWITZERLAND..................................................................... 29,704,143
------------
UNITED KINGDOM (12.7%)
AEROSPACE
1,000,000 Rolls-Royce PLC....................................................................... 3,454,388
------------
AIRLINES
560,000 British Airways PLC................................................................... 3,651,966
------------
ALCOHOLIC BEVERAGES
330,000 Bass PLC.............................................................................. 4,104,346
------------
BUILDING MATERIALS
450,000 Hanson PLC............................................................................ 3,769,964
------------
CLOTHING/SHOE/ACCESSORY STORES
400,000 Next PLC.............................................................................. 3,835,339
------------
DIVERSIFIED FINANCIAL SERVICES
220,000 Abbey National PLC.................................................................... 3,515,728
------------
ELECTRONIC COMPONENTS
975,000 Cookson Group PLC..................................................................... 3,934,612
------------
INTERNATIONAL BANKS
160,000 National Westminster Bank PLC......................................................... 3,435,018
185,000 Royal Bank of Scotland Group PLC...................................................... 3,278,924
------------
6,713,942
------------
MOVIES/ENTERTAINMENT
1,050,000 Rank Group PLC........................................................................ 3,322,024
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
60
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
NON - U.S. UTILITIES
550,000 National Power PLC.................................................................... $ 3,182,799
455,000 PowerGen PLC.......................................................................... 3,268,351
370,000 United Utilities PLC.................................................................. 3,843,329
------------
10,294,479
------------
PAPER
1,150,000 Arjo Wiggins Appleton PLC............................................................. 4,176,743
------------
SPECIALTY STEELS
1,500,000 Corus Group PLC....................................................................... 3,898,293
------------
TOBACCO
575,000 British American Tobacco PLC.......................................................... 3,264,820
------------
WATER SUPPLY
619,500 Hyder PLC............................................................................. 2,899,991
121,500 Hyder PLC (Pref.)..................................................................... 172,100
327,000 Severn Trent PLC...................................................................... 3,246,237
------------
6,318,328
------------
TOTAL UNITED KINGDOM.................................................................. 64,254,972
------------
UNITED STATES (29.4%)
AEROSPACE
90,000 Northrop Grumman Corp................................................................. 4,865,625
------------
ALUMINUM
66,000 Alcoa, Inc............................................................................ 5,478,000
------------
AUTOMOTIVE AFTERMARKET
165,000 Goodyear Tire & Rubber Co............................................................. 4,650,937
------------
CONSTRUCTION/AGRICULTURAL
EQUIPMENT/TRUCKS
120,000 Deere & Co............................................................................ 5,205,000
------------
CONTAINERS/PACKAGING
220,000 Crown Cork & Seal Co., Inc............................................................ 4,922,500
------------
DEPARTMENT STORES
150,000 Sears, Roebuck & Co................................................................... 4,565,625
------------
DISCOUNT CHAINS
72,000 Dayton-Hudson Corp.................................................................... 5,287,500
------------
DIVERSIFIED MANUFACTURING
50,000 Minnesota Mining & Manufacturing Co................................................... 4,893,750
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES
110,000 FPL Group, Inc........................................................................ $ 4,709,375
156,800 GPU, Inc.............................................................................. 4,694,200
------------
9,403,575
------------
ELECTRONIC DATA PROCESSING
50,000 Hewlett-Packard Co.................................................................... 5,696,875
43,500 International Business Machines Corp.................................................. 4,698,000
------------
10,394,875
------------
ENGINEERING & CONSTRUCTION
120,000 Fluor Corp............................................................................ 5,505,000
------------
FINANCE COMPANIES
160,000 Associates First Capital Corp. (Class A).............................................. 4,390,000
------------
FOOD CHAINS
150,000 Albertson's, Inc...................................................................... 4,837,500
------------
INTEGRATED OIL COMPANIES
55,000 Chevron Corp.......................................................................... 4,764,375
------------
LIFE INSURANCE
250,000 Conseco, Inc.......................................................................... 4,468,750
------------
MAJOR BANKS
90,000 Bank of America Corp.................................................................. 4,516,875
215,000 KeyCorp............................................................................... 4,756,875
------------
9,273,750
------------
MAJOR CHEMICALS
40,000 Dow Chemical Co....................................................................... 5,345,000
------------
MAJOR PHARMACEUTICALS
68,000 Bristol-Myers Squibb Co............................................................... 4,364,750
------------
MOTOR VEHICLES
93,500 Ford Motor Co......................................................................... 4,996,406
------------
NATURAL GAS
80,000 Consolidated Natural Gas Co........................................................... 5,195,000
------------
OIL REFINING/MARKETING
150,000 Ashland, Inc.......................................................................... 4,940,625
------------
OTHER METALS/MINERALS
90,000 Phelps Dodge Corp..................................................................... 6,041,250
------------
PAPER
95,000 International Paper Co................................................................ 5,361,563
------------
PHOTOGRAPHIC PRODUCTS
77,000 Eastman Kodak Co...................................................................... 5,101,250
------------
SAVINGS & LOAN COMPANIES
185,000 Washington Mutual, Inc................................................................ 4,810,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
61
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SEMICONDUCTORS
65,000 Intel Corp............................................................................ $ 5,346,250
------------
TOBACCO
190,000 Philip Morris Companies, Inc.......................................................... 4,405,625
------------
TOTAL UNITED STATES................................................................... 148,814,481
------------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $433,137,625)........................................................ 492,799,097
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
<C> <S> <C>
- ----------
SHORT-TERM INVESTMENT (a) (2.6%)
U.S. GOVERNMENT AGENCY
$ 12,900 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $12,898,925)...... 12,898,925
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST
$446,036,550) (B)......................................................................... 99.8% 505,698,022
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.2 1,231,468
----- -------------
NET ASSETS................................................................................ 100.0% $ 506,929,490
----- -------------
----- -------------
</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 $103,718,643 and the
aggregate gross unrealized depreciation is $44,057,171, resulting in net
unrealized appreciation of $59,661,472.
SEE NOTES TO FINANCIAL STATEMENTS
62
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH
SUMMARY OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Aerospace......................................................................... $ 8,320,013 1.6%
Air Freight/Delivery Services..................................................... 5,617,296 1.1
Airlines.......................................................................... 6,473,235 1.3
Alcoholic Beverages............................................................... 8,573,872 1.7
Aluminum.......................................................................... 8,064,536 1.6
Apparel........................................................................... 2,810,205 0.6
Automotive Aftermarket............................................................ 7,592,902 1.5
Building Materials................................................................ 9,286,816 1.8
Canadian Oil & Gas................................................................ 1,992,673 0.4
Clothing/Shoe/Accessory Stores.................................................... 3,835,339 0.8
Construction/Agricultural Equipment/Trucks........................................ 5,205,000 1.0
Consumer Electronics/Appliances................................................... 15,296,616 3.0
Containers/Packaging.............................................................. 10,337,159 2.0
Department Stores................................................................. 4,565,625 0.9
Discount Chains................................................................... 5,287,500 1.0
Diversified Electronic Products................................................... 25,201,343 5.0
Diversified Financial Services.................................................... 13,415,878 2.6
Diversified Manufacturing......................................................... 12,588,623 2.5
Electric Utilities................................................................ 12,863,527 2.5
Electrical Products............................................................... 4,545,099 0.9
Electronic Components............................................................. 8,627,823 1.7
Electronic Data Processing........................................................ 10,394,875 2.1
Engineering & Construction........................................................ 7,439,606 1.5
Farming/Seeds/Milling............................................................. 2,954,035 0.6
Finance Companies................................................................. 8,502,894 1.7
Food Chains....................................................................... 4,837,500 1.0
Home Building..................................................................... 3,984,054 0.8
Industrial Machinery/Components................................................... 1,908,316 0.4
Integrated Oil Companies.......................................................... 7,784,792 1.5
International Banks............................................................... 38,800,897 7.6
Life Insurance.................................................................... 4,468,750 0.9
Major Banks....................................................................... 9,273,750 1.8
Major Chemicals................................................................... 12,717,514 2.5
Major Pharmaceuticals............................................................. 13,160,324 2.6
Motor Vehicles.................................................................... 18,520,393 3.7
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Movies/Entertainment.............................................................. $ 3,322,024 0.7%
Multi-Line Insurance.............................................................. 3,354,946 0.7
Multi-Sector Companies............................................................ 15,188,521 3.0
Natural Gas....................................................................... 5,195,000 1.0
Non-U.S. Utilities................................................................ 10,294,480 2.0
Oil & Gas Production.............................................................. 1,497,320 0.3
Oil Refining/Marketing............................................................ 8,405,606 1.7
Oil/Gas Transmission.............................................................. 2,146,572 0.4
Other Metals/Minerals............................................................. 6,041,250 1.2
Other Pharmaceuticals............................................................. 3,962,043 0.8
Other Telecommunications.......................................................... 5,255,493 1.0
Packaged Foods.................................................................... 4,944,068 1.0
Paper............................................................................. 9,538,305 1.9
Photographic Products............................................................. 5,101,250 1.0
Precious Metals................................................................... 1,416,960 0.3
Property - Casualty Insurers...................................................... 4,928,060 1.0
Real Estate....................................................................... 5,353,100 1.1
Recreational Products/Toys........................................................ 4,401,976 0.9
Savings & Loan Companies.......................................................... 4,810,000 0.9
Semiconductors.................................................................... 5,346,250 1.1
Shoe Manufacturing................................................................ 3,371,945 0.7
Specialty Chemicals............................................................... 3,722,868 0.7
Specialty Foods/Candy............................................................. 3,268,850 0.6
Specialty Steels.................................................................. 3,898,293 0.8
Telecommunication Equipment....................................................... 3,898,481 0.8
Telecommunications................................................................ 13,830,062 2.7
Tobacco........................................................................... 16,550,846 3.2
U.S. Government Agency............................................................ 12,898,925 2.5
Utilities......................................................................... 2,187,420 0.4
Water Supply...................................................................... 6,318,328 1.2
------------ -----
$505,698,022 99.8%
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks..................................................................... $489,816,792 96.6%
Preferred Stocks.................................................................. 2,982,305 0.6
Short-Term Investment............................................................. 12,898,925 2.6
------------ -----
$505,698,022 99.8%
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
63
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS AND BONDS (93.2%)
FINLAND (3.9%)
TELECOMMUNICATION EQUIPMENT
123,900 Nokia Oyj (A Shares)............................................................... $ 22,431,352
------------
FRANCE (19.5%)
BROADCASTING
9,485 Societe Television Francaise 1..................................................... 4,960,807
------------
BUILDING MATERIALS/D I Y CHAINS
15,000 Castorama Dubois Investissement.................................................... 4,556,274
------------
CONSUMER ELECTRONICS/APPLIANCES
70,340 Thomson Multimedia*................................................................ 3,785,016
------------
E.D.P. SERVICES
29,640 Cap Gemini S.A..................................................................... 7,512,602
------------
FOOD CHAINS
58,000 Carrefour S.A...................................................................... 10,681,395
------------
INTERNATIONAL BANKS
120,420 Banque Nationale de Paris.......................................................... 11,094,449
------------
MAJOR PHARMACEUTICALS
165,026 Aventis S.A........................................................................ 9,544,031
67,400 Sanofi-Synthelabo S.A.*............................................................ 2,802,477
------------
12,346,508
------------
MOTOR VEHICLES
85,840 Renault S.A........................................................................ 4,132,130
------------
MULTI-LINE INSURANCE
53,200 AXA................................................................................ 7,405,585
------------
MULTI-SECTOR COMPANIES
73,350 Vivendi............................................................................ 6,613,967
------------
OIL REFINING/MARKETING
115,862 Total S.A. (B Shares).............................................................. 15,440,755
------------
OTHER TELECOMMUNICATIONS
83,800 France Telecom S.A................................................................. 11,066,757
------------
TELECOMMUNICATION EQUIPMENT
58,205 Alcatel............................................................................ 13,347,710
------------
TOTAL FRANCE....................................................................... 112,943,955
------------
GERMANY (9.5%)
APPAREL
37,506 Hugo Boss AG (Pref.)............................................................... 4,790,889
------------
COMPUTER SOFTWARE
19,620 SAP AG............................................................................. 9,649,826
42,153 Software AG*....................................................................... 2,565,048
------------
12,214,874
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTERNATIONAL BANKS
80,460 Deutsche Bank AG (Registered Shares)............................................... $ 6,785,701
------------
OTHER TELECOMMUNICATIONS
61,735 Mannesmann AG (Germany)............................................................ 14,871,289
------------
SHOE MANUFACTURING
30,400 Adidas-Salomon AG.................................................................. 2,277,936
------------
SPECIALTY FOODS/CANDY
9,647 Kamps AG........................................................................... 664,652
15,102 Kamps AG (New)*.................................................................... 1,005,551
------------
1,670,203
------------
TELECOMMUNICATIONS
177,530 Deutsche Telekom AG................................................................ 12,624,169
------------
TOTAL GERMANY...................................................................... 55,235,061
------------
ITALY (3.2%)
BROADCASTING
343,650 Mediaset SpA....................................................................... 5,336,731
------------
INTERNATIONAL BANKS
434,900 Unicredito Italiano SpA............................................................ 2,134,621
------------
PRINTING/FORMS
795,860 Seat-Pagine Gialle SpA............................................................. 2,609,552
------------
TELECOMMUNICATIONS
609,460 Telecom Italia SpA................................................................. 8,581,928
------------
TOTAL ITALY........................................................................ 18,662,832
------------
NETHERLANDS (6.3%)
ALCOHOLIC BEVERAGES
52,800 Heineken NV........................................................................ 2,571,404
------------
DIVERSIFIED ELECTRONIC PRODUCTS
95,365 Koninklijke (Royal) Philips Electronics NV......................................... 12,948,946
------------
DIVERSIFIED FINANCIAL SERVICES
145,800 Fortis (NL) NV..................................................................... 5,242,582
------------
E.D.P. SERVICES
90,200 Getronics NV....................................................................... 7,185,274
------------
FINANCIAL PUBLISHING/SERVICES
172,600 Wolters Kluwer NV.................................................................. 5,832,996
------------
FOOD CHAINS
163,100 Laurus NV.......................................................................... 2,936,423
------------
TOTAL NETHERLANDS.................................................................. 36,717,625
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
64
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SPAIN (6.4%)
ADVERTISING
53,700 Telefonica Publicidad e Informacion, S.A.*......................................... $ 2,606,053
------------
INTERNATIONAL BANKS
205,200 Argentaria, Caja Postal y Banco Hipotecario de Espana, S.A......................... 4,815,083
53,342 Banco Popular Espanol S.A.......................................................... 3,473,927
------------
8,289,010
------------
INTERNET SERVICES
17,900 Terra Networks, S.A.*.............................................................. 976,707
------------
OIL REFINING/MARKETING
163,000 Repsol-YPF, S.A.................................................................... 3,774,023
------------
OTHER CONSUMER SERVICES
298,600 Amadeus Global Travel Distribution S.A. (A Shares)*................................ 4,730,227
------------
TELECOMMUNICATIONS
662,903 Telefonica S.A.*................................................................... 16,535,346
------------
TOTAL SPAIN........................................................................ 36,911,366
------------
SWEDEN (6.8%)
CLOTHING/SHOE/ACCESSORY STORES
94,920 Hennes & Mauritz AB (B Shares)..................................................... 3,174,917
------------
DIVERSIFIED COMMERCIAL SERVICES
498,990 Securitas AB (Series "B" Free)..................................................... 9,018,668
------------
INDUSTRIAL MACHINERY/COMPONENTS
490,900 Assa Abloy AB (Series B)........................................................... 6,884,791
------------
INTERNATIONAL BANKS
807,200 Nordbanken Holding AB.............................................................. 4,736,755
------------
LIFE INSURANCE
102,400 Skandia Forsakrings AB............................................................. 3,088,609
------------
TELECOMMUNICATIONS EQUIPMENT
194,110 Ericsson (L.M.) Telephone Co. AB (Series "B" Free)................................. 12,461,349
------------
TOTAL SWEDEN....................................................................... 39,365,089
------------
SWITZERLAND (8.9%)
DIVERSIFIED COMMERCIAL SERVICES
6,790 Adecco S.A. (Registered Shares).................................................... 5,285,373
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTERNATIONAL BANKS
25,060 UBS AG (Registered Shares)......................................................... $ 6,764,470
------------
MAJOR PHARMACEUTICALS
3,400 Novartis AG (Registered Shares).................................................... 4,990,082
1,208 Roche Holdings AG.................................................................. 14,332,203
------------
19,322,285
------------
PACKAGED FOODS
5,757 Nestle S.A......................................................................... 10,541,851
------------
TOBACCO
3,990 Compagnie Financiere Richemont AG (Series A)....................................... 9,517,891
------------
TOTAL SWITZERLAND.................................................................. 51,431,870
------------
UNITED KINGDOM (28.1%)
ADVERTISING
550,300 Aegis Group PLC.................................................................... 1,998,662
------------
AEROSPACE
996,800 British Aerospace PLC.............................................................. 6,597,042
107,801 British Aerospace PLC (Loan Stock)................................................. 169,662
572,400 Marconi PLC........................................................................ 10,122,070
352,407 Smiths Industries PLC.............................................................. 5,261,912
------------
22,150,686
------------
ALCOHOLIC BEVERAGES
885,400 Allied Domecq PLC.................................................................. 4,373,391
58,500 Bass PLC........................................................................... 727,588
------------
5,100,979
------------
AUTO PARTS: O.E.M.
620,138 BBA Group PLC...................................................................... 5,005,134
------------
BOOKS/MAGAZINES
344,120 EMAP PLC........................................................................... 7,110,125
895,900 Reed International PLC............................................................. 6,702,960
------------
13,813,085
------------
CABLE TELEVISION
187,526 TeleWest Communications PLC*....................................................... 999,681
------------
CATALOG/SPECIALTY DISTRIBUTION
501,400 Great Universal Stores PLC......................................................... 2,929,883
------------
CELLULAR TELEPHONE
1,597,900 Vodafone AirTouch PLC.............................................................. 7,912,095
------------
DIVERSIFIED FINANCIAL SERVICES
394,100 HSBC Holdings PLC.................................................................. 5,490,028
286,300 Lloyds TSB Group PLC............................................................... 3,579,317
------------
9,069,345
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
65
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTEGRATED OIL COMPANIES
1,772,290 BP Amoco PLC....................................................................... $ 17,808,670
------------
INTERNATIONAL BANKS
307,100 Barclays PLC....................................................................... 8,833,745
------------
INTERNET SERVICES
143,100 Freeserve PLC*..................................................................... 1,362,853
189,300 Thus PLC*.......................................................................... 1,194,771
------------
2,557,624
------------
LIFE INSURANCE
675,400 Prudential Corp.................................................................... 13,300,814
------------
MAJOR PHARMACEUTICALS
193,774 AstraZeneca PLC.................................................................... 8,187,057
144,300 Glaxo Wellcome PLC................................................................. 4,076,259
416,949 SmithKline Beecham PLC............................................................. 5,317,009
------------
17,580,325
------------
MOVIES/ENTERTAINMENT
171,600 Flextech PLC*...................................................................... 3,185,462
------------
OIL/GAS TRANSMISSION
1,037,866 BG Group PLC....................................................................... 6,701,293
GBP 148,000 BG Transco Holdings PLC 7.06% due 12/14/09......................................... 240,192
GBP 148,000 BG Transco Holdings PLC 4.19% due 12/14/22......................................... 239,738
GBP 148,000 BG Transco Holdings PLC 7.00% due 12/16/24......................................... 232,380
------------
7,413,603
------------
OTHER SPECIALTY STORES
296,800 Kingfisher PLC..................................................................... 3,291,380
------------
RESTAURANTS
889,556 Granada Group PLC.................................................................. 9,010,406
------------
TELECOMMUNICATIONS
447,200 British Telecommunications PLC..................................................... 10,921,897
------------
TOTAL UNITED KINGDOM............................................................... 162,883,476
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
UNITED STATES (0.6%)
OTHER TELECOMMUNICATIONS
28,200 NTL Inc.*.......................................................................... $ 3,510,900
------------
TOTAL COMMON AND PREFERRED STOCKS AND BONDS
(IDENTIFIED COST $367,376,100)..................................................... 540,093,526
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
<C> <S> <C>
- ----------
SHORT-TERM INVESTMENT (a) (6.5%)
U.S. GOVERNMENT AGENCY
$ 37,900 Federal Home Loan Mortgage Corp. 1.50% due
01/03/00 (AMORTIZED COST $37,896,842)...... 37,896,842
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $405,272,942) (B)........................................................ 99.7% 577,990,368
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.3 1,714,399
----- -------------
NET ASSETS................................................................................ 100.0% $ 579,704,767
----- -------------
----- -------------
</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 $180,597,802 and the
aggregate gross unrealized depreciation is $7,880,376, resulting in net
unrealized appreciation of $172,717,426.
CURRENCY ABBREVIATION:
<TABLE>
<S> <C>
GBP British Pound.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
66
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH
SUMMARY OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Advertising....................................................................... $ 4,604,715 0.8%
Aerospace......................................................................... 22,150,686 3.8
Alcoholic Beverages............................................................... 7,672,384 1.3
Apparel........................................................................... 4,790,889 0.8
Auto Parts: O.E.M................................................................. 5,005,134 0.9
Books/Magazines................................................................... 13,813,085 2.4
Broadcasting...................................................................... 10,297,537 1.8
Building Materials/D I Y Chains................................................... 4,556,274 0.8
Cable Television.................................................................. 999,682 0.2
Catalog/Specialty Distribution.................................................... 2,929,883 0.5
Cellular Telephone................................................................ 7,912,095 1.4
Clothing/Shoe/Accessory Stores.................................................... 3,174,917 0.5
Computer Software................................................................. 12,214,874 2.1
Consumer Electronics/Appliances................................................... 3,785,017 0.7
Diversified Commercial Services................................................... 14,304,041 2.5
Diversified Electronic Products................................................... 12,948,946 2.2
Diversified Financial Services.................................................... 14,311,926 2.5
E.D.P. Services................................................................... 14,697,876 2.5
Financial Publishing/Services..................................................... 5,832,996 1.0
Food Chains....................................................................... 13,617,818 2.3
Industrial Machinery/Components................................................... 6,884,791 1.2
Integrated Oil Companies.......................................................... 17,808,670 3.1
International Banks............................................................... 48,638,751 8.4
Internet Services................................................................. 3,534,331 0.6
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Life Insurance.................................................................... $ 16,389,423 2.8%
Major Pharmaceuticals............................................................. 49,249,117 8.5
Motor Vehicles.................................................................... 4,132,131 0.7
Movies/Entertainment.............................................................. 3,185,462 0.5
Multi-Line Insurance.............................................................. 7,405,585 1.3
Multi-Sector Companies............................................................ 6,613,967 1.1
Oil Refining/Marketing............................................................ 19,214,778 3.3
Oil/Gas Transmission.............................................................. 7,413,602 1.3
Other Consumer Services........................................................... 4,730,227 0.8
Other Specialty Stores............................................................ 3,291,380 0.6
Other Telecommunications.......................................................... 29,448,946 5.1
Packaged Foods.................................................................... 10,541,851 1.8
Printing/Forms.................................................................... 2,609,552 0.5
Restaurants....................................................................... 9,010,406 1.6
Shoe Manufacturing................................................................ 2,277,936 0.4
Specialty Foods/Candy............................................................. 1,670,203 0.3
Telecommunication Equipment....................................................... 48,240,411 8.3
Telecommunications................................................................ 48,663,340 8.4
Tobacco........................................................................... 9,517,891 1.6
U.S. Government Agency............................................................ 37,896,842 6.5
------------ -----
$577,990,368 99.7%
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks..................................................................... $534,590,327 92.2%
Corporate Bonds................................................................... 712,310 0.2
Preferred Stocks.................................................................. 4,790,889 0.8
Short-Term Investment............................................................. 37,896,842 6.5
------------ -----
$577,990,368 99.7%
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
67
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS AND WARRANTS (96.2%)
AUSTRALIA (8.6%)
AIRLINES
116,000 Quantas Airways Ltd.................................................................... $ 289,165
------------
ALCOHOLIC BEVERAGES
166,400 Fosters Brewing Group Ltd.............................................................. 477,022
------------
BEVERAGES - NON-ALCOHOLIC
57,400 Coca-Cola Amatil Ltd................................................................... 156,642
------------
DIVERSIFIED COMMERCIAL SERVICES
13,600 Brambles Industries Ltd................................................................ 375,805
------------
INTERNATIONAL BANKS
58,100 Commonwealth Bank of Australia......................................................... 999,720
46,500 National Australia Bank Ltd............................................................ 710,743
109,800 Westpac Banking Corp., Ltd............................................................. 756,807
------------
2,467,270
------------
MEDIA CONGLOMERATES
109,900 News Corp., Ltd. (The)................................................................. 1,066,276
------------
MULTI-SECTOR COMPANIES
82,762 Broken Hill Proprietary Co., Ltd....................................................... 1,085,892
------------
OTHER METALS/MINERALS
75,850 Rio Tinto Ltd.......................................................................... 1,628,118
------------
OTHER TELECOMMUNICATIONS
88,400 Aapt Ltd.*............................................................................. 302,130
180,300 Telstra Corp. Ltd...................................................................... 979,332
81,400 Telstra Corp. Ltd. (New)*.............................................................. 286,749
------------
1,568,211
------------
PRECIOUS METALS
311,200 Normandy Mining Ltd.................................................................... 220,479
------------
REAL ESTATE
30,650 Lend Lease Corp., Ltd.................................................................. 429,071
------------
TELECOMMUNICATIONS
127,500 Macquarie Corporate Telecommunications Holdings Ltd.*.................................. 207,427
------------
TOTAL AUSTRALIA........................................................................ 9,971,378
------------
CHINA (0.4%)
COAL MINING
634,000 Yanzhou Coal Mining Co. Ltd. (Class H)................................................. 175,341
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRIC UTILITIES
234,000 Huaneng Power International, Inc. (Class H)............................................ $ 55,685
------------
ELECTRONIC COMPONENTS
135,000 Great Wall Technology Co. (Class H)*................................................... 131,110
------------
OTHER TRANSPORTATION
412,000 Zhejiang Expressway Co. Ltd............................................................ 62,537
------------
TOTAL CHINA............................................................................ 424,673
------------
HONG KONG (10.3%)
AIRLINES
115,000 Cathay Pacific Airways................................................................. 204,882
------------
BROADCASTING
61,000 Television Broadcasts Ltd.............................................................. 415,873
------------
CELLULAR TELEPHONE
150,200 China Telecom Ltd.*.................................................................... 937,060
23,500 SmarTone Telecommunications Holdings Ltd............................................... 113,359
------------
1,050,419
------------
DIVERSIFIED MANUFACTURING
33,600 Johnson Electric Holdings, Ltd......................................................... 215,673
------------
E.D.P. SERVICES
174,000 Timeless Software Ltd.*................................................................ 99,601
------------
INTERNATIONAL BANKS
28,000 Hang Seng Bank Ltd..................................................................... 319,655
61,000 Wing Hang Bank Ltd..................................................................... 208,721
------------
528,376
------------
MULTI-SECTOR COMPANIES
189,000 Hutchison Whampoa, Ltd................................................................. 2,747,234
94,700 New World Development Co., Ltd......................................................... 213,179
85,700 Swire Pacific Ltd. (Class A)........................................................... 505,998
------------
3,466,411
------------
NATURAL GAS
227,000 Hong Kong & China Gas Co., Ltd......................................................... 310,979
------------
OTHER SPECIALTY STORES
89,000 Jardine International Motor Holdings Ltd............................................... 44,649
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
68
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER TELECOMMUNICATIONS
75,000 Asia Satellite Telecommunications Holdings Ltd......................................... $ 236,847
------------
PACKAGE GOODS/COSMETICS
281,800 Hengan International Group Co. Ltd..................................................... 77,935
------------
REAL ESTATE
157,000 Cheung Kong (Holdings) Ltd............................................................. 1,984,210
71,000 Hong Kong Land Holdings Ltd............................................................ 105,080
73,000 Kerry Properties Ltd................................................................... 102,354
454,000 New World China Land Ltd.*............................................................. 167,899
360,000 Sino Land Co., Ltd..................................................................... 207,229
114,100 Sun Hung Kai Properties Ltd............................................................ 1,188,848
------------
3,755,620
------------
SHOE MANUFACTURING
38,000 Yue Yuen Industrial Holdings........................................................... 90,919
------------
TELECOMMUNICATIONS
374,400 Cable & Wireless HKT Ltd............................................................... 1,081,204
------------
WHOLESALE DISTRIBUTORS
139,800 Li & Fung Ltd.......................................................................... 350,669
------------
TOTAL HONG KONG........................................................................ 11,930,057
------------
INDIA (6.5%)
ALUMINUM
12,500 Hindalco Industries Ltd................................................................ 231,269
------------
BUILDING MATERIALS
28,498 Gujarat Ambuja Cements Ltd............................................................. 213,522
------------
COMPUTER SOFTWARE
12,700 Aptech Ltd............................................................................. 515,764
4,250 HCL Technologies Ltd.*................................................................. 56,654
600 Leading Edge Systems Ltd............................................................... 25,506
3,650 NIIT Ltd............................................................................... 278,137
18,200 Software Solution Integrated Ltd....................................................... 923,344
------------
1,799,405
------------
CONSTRUCTION/AGRICULTURAL
EQUIPMENT/TRUCKS
36,200 Larsen & Toubro Ltd.................................................................... 462,505
20,000 Mahindra & Mahindra Ltd................................................................ 193,059
6,650 Punjab Tractors Ltd.................................................................... 158,814
------------
814,378
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED ELECTRONIC PRODUCTS
200 Satyam Computer Service Ltd............................................................ $ 10,108
------------
DIVERSIFIED MANUFACTURING
26,000 Grasim Industries Ltd.................................................................. 243,806
4,050 Grasim Industries Ltd. (Bonus Shares)*................................................. 37,349
------------
281,155
------------
E.D.P. PERIPHERALS
21,500 Moser-Baer India Ltd................................................................... 172,455
------------
E.D.P. SERVICES
1,500 Infosys Technologies Ltd............................................................... 500,445
------------
ELECTRICAL PRODUCTS
54,274 Bharat Heavy Electricals Ltd........................................................... 261,952
------------
GENERIC DRUGS
7,000 Dr. Reddy's Laboratories Ltd........................................................... 231,993
------------
HOTELS/RESORTS
13,500 Indian Hotels Co., Ltd................................................................. 98,357
------------
INTERNATIONAL BANKS
68,272 Bank of Baroda......................................................................... 100,188
41,600 Corporation Bank....................................................................... 106,127
29,500 State Bank of India.................................................................... 152,382
------------
358,697
------------
MAJOR PHARMACEUTICALS
6,450 Hoechst Marion Roussel Ltd............................................................. 153,616
------------
MOTOR VEHICLES
7,500 Hero Honda Motors Ltd.................................................................. 194,610
------------
MULTI-SECTOR COMPANIES
3,650 Wipro Ltd.............................................................................. 218,178
------------
NATURAL GAS
20,000 Gas Authority of India Ltd. (GDR)*..................................................... 185,000
------------
OIL REFINING/MARKETING
17,000 Hindustan Petroleum Corp., Ltd......................................................... 71,501
------------
OTHER PHARMACEUTICALS
9,500 Glaxo India Ltd........................................................................ 159,552
2,400 Wockhardt Life Sciences Ltd............................................................ 52,959
------------
212,511
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
69
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER TELECOMMUNICATIONS
43,100 Mahanagar Telephone Nigam Ltd.......................................................... $ 191,181
7,390 Videsh Sanchar Nigam Ltd............................................................... 307,251
------------
498,432
------------
PACKAGE GOODS/COSMETICS
4,950 Hindustan Lever Ltd.................................................................... 255,976
10,000 Reckitt & Coleman of India Ltd......................................................... 73,546
------------
329,522
------------
SPECIALTY CHEMICALS
129,600 Indo Gulf Corp. Ltd.................................................................... 187,653
36,500 Reliance Industries Ltd................................................................ 196,048
------------
383,701
------------
TOBACCO
17,500 ITC Ltd................................................................................ 267,467
------------
TOTAL INDIA............................................................................ 7,488,274
------------
INDONESIA (0.5%)
BUILDING MATERIALS
36,300 PT Semen Gresik (Persero) Tbk.......................................................... 57,432
------------
MUTUAL FUNDS
500,000 Batavia Investment Fund Ltd.*.......................................................... --
------------
SPECIALTY FOODS/CANDY
88,000 PT Indofood Sukses Makmur Tbk.......................................................... 110,000
------------
TELECOMMUNICATIONS
28,684 PT Telekomunikasi Indonesia (ADR)...................................................... 315,524
------------
TOBACCO
40,500 PT Gudang Garam Tbk.................................................................... 108,771
------------
TOTAL INDONESIA........................................................................ 591,727
------------
JAPAN (44.4%)
BUILDING PRODUCTS
81,000 Sanwa Shutter Corp..................................................................... 301,115
------------
CONSUMER ELECTRONICS/APPLIANCES
15,200 Aiwa Co., Ltd.......................................................................... 315,242
20,700 Rinnai Corp............................................................................ 384,758
11,700 Sony Corp.............................................................................. 3,468,108
------------
4,168,108
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONSUMER SPECIALTIES
66,000 Casio Computer Co., Ltd................................................................ $ 548,816
------------
DIVERSIFIED ELECTRONIC PRODUCTS
106,000 Hitachi Ltd............................................................................ 1,700,646
10,700 Kyocera Corp........................................................................... 2,773,919
59,000 Matsushita Electric Industrial Co., Ltd................................................ 1,633,438
84,000 NEC Corp............................................................................... 2,000,978
178,000 Toshiba Corp........................................................................... 1,358,247
------------
9,467,228
------------
E.D.P. PERIPHERALS
38,000 Mitsumi Electric Co., Ltd.............................................................. 1,189,591
------------
ELECTRICAL PRODUCTS
66,000 Furukawa Electric Co................................................................... 1,000,783
------------
ELECTRONIC COMPONENTS
11,000 TDK Corp............................................................................... 1,518,392
------------
ELECTRONIC DATA PROCESSING
60,000 Fujitsu Ltd............................................................................ 2,735,277
------------
ELECTRONIC DISTRIBUTORS
20,000 Ryosan Co., Ltd........................................................................ 496,967
------------
FINANCE COMPANIES
39,600 Hitachi Credit Corp.................................................................... 803,854
------------
FOOD CHAINS
12,900 FamilyMart Co., Ltd.................................................................... 858,149
------------
HOME BUILDING
75,000 Sekisui Chemical Co., Ltd.............................................................. 332,371
67,000 Sekisui House Ltd...................................................................... 593,181
------------
925,552
------------
HOME FURNISHINGS
6,000 Sangetsu Co., Ltd...................................................................... 126,198
------------
INDUSTRIAL MACHINERY/COMPONENTS
73,000 Amada Co., Ltd......................................................................... 399,208
62,000 Daifuku Co., Ltd....................................................................... 357,856
71,000 Daikin Industries, Ltd................................................................. 965,467
24,000 Fuji Machine Manufacturing Co., Ltd.................................................... 1,934,651
61,000 Minebea Co., Ltd....................................................................... 1,046,106
188,000 Mitsubishi Heavy Industries, Ltd....................................................... 627,157
82,000 Tsubakimoto Chain Co................................................................... 300,822
------------
5,631,267
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
70
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SPECIALTIES
46,000 Fujitec Co., Ltd....................................................................... $ 461,260
42,000 Lintec Corp............................................................................ 456,075
------------
917,335
------------
INTERNATIONAL BANKS
16,000 Bank of Tokyo-Mitsubishi, Ltd.......................................................... 222,892
------------
MAJOR PHARMACEUTICALS
44,000 Sankyo Co., Ltd........................................................................ 903,933
------------
MARINE TRANSPORTATION
15,000 Mitsubishi Logistic Corp............................................................... 95,676
------------
MEAT/POULTRY/FISH
17,000 Nippon Meat Packers, Inc............................................................... 220,358
------------
MOTOR VEHICLES
150,000 Nissan Motor Co., Ltd.................................................................. 589,904
45,000 Suzuki Motor Corp...................................................................... 656,378
26,000 Toyota Motor Corp...................................................................... 1,259,049
------------
2,505,331
------------
OFFICE EQUIPMENT/SUPPLIES
43,000 Canon, Inc............................................................................. 1,707,885
77,000 Ricoh Co., Ltd......................................................................... 1,450,812
------------
3,158,697
------------
OTHER PHARMACEUTICALS
22,000 Ono Pharmaceutical Co., Ltd............................................................ 589,708
26,000 Yamanouchi Pharmaceutical Co., Ltd..................................................... 908,042
------------
1,497,750
------------
PHOTOGRAPHIC PRODUCTS
31,000 Fuji Photo Film Co..................................................................... 1,131,188
------------
POLLUTION CONTROL EQUIPMENT
28,000 Kurita Water Industries Ltd............................................................ 444,844
------------
PRINTING/FORMS
42,000 Dai Nippon Printing Co., Ltd........................................................... 669,732
24,000 Nissha Printing Co., Ltd............................................................... 143,221
------------
812,953
------------
REAL ESTATE
48,000 Mitsubishi Estate Co., Ltd............................................................. 468,167
------------
RECREATIONAL PRODUCTS/TOYS
10,900 Nintendo Co., Ltd...................................................................... 1,810,624
57,000 Yamaha Corp............................................................................ 370,260
------------
2,180,884
------------
SEMICONDUCTORS
4,000 Rohm Co. Ltd........................................................................... 1,643,514
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SPECIALTY CHEMICALS
110,000 Daicel Chemical Industries, Ltd........................................................ $ 306,691
93,000 Kaneka Corp............................................................................ 1,189,112
101,000 Mitsubishi Chemical Corp............................................................... 355,703
41,000 NIFCO Inc.............................................................................. 489,337
69,000 Shin-Etsu Polymer Co., Ltd............................................................. 405,009
------------
2,745,852
------------
SPECIALTY FOODS/CANDY
15,000 House Foods Corp....................................................................... 227,451
------------
TELECOMMUNICATIONS
107 Nippon Telegraph & Telephone Corp...................................................... 1,831,833
------------
UTILITIES
15,900 Tokyo Electric Power Co................................................................ 426,198
------------
WHOLESALE DISTRIBUTORS
18,000 Nissei Sangyo Co., Ltd................................................................. 248,288
------------
TOTAL JAPAN............................................................................ 51,454,441
------------
MALAYSIA (2.4%)
ALCOHOLIC BEVERAGES
75,000 Carlsberg Brewery (Malaysia) Berhad.................................................... 230,909
------------
CASINO/GAMBLING
97,000 Tanjong PLC............................................................................ 214,410
------------
INTERNATIONAL BANKS
144,000 Malayan Banking Berhad................................................................. 511,552
533,000 Public Bank Berhad..................................................................... 465,649
------------
977,201
------------
TELECOMMUNICATIONS
102,000 Telekom Malaysia Berhad................................................................ 394,558
------------
TOBACCO
76,400 British American Tobacco............................................................... 583,022
------------
WHOLESALE DISTRIBUTORS
320,000 Sime Darby Berhad...................................................................... 405,873
------------
TOTAL MALAYSIA......................................................................... 2,805,973
------------
NEW ZEALAND (0.4%)
AIRLINES
91,500 Air New Zealand Ltd. (Class B)......................................................... 134,044
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
71
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS
73,600 Telecom Corporation of New Zealand Ltd................................................. $ 346,568
------------
TOTAL NEW ZEALAND...................................................................... 480,612
------------
PHILIPPINES (0.4%)
ALCOHOLIC BEVERAGES
92,770 San Miguel Corp. (Class B)............................................................. 130,888
------------
BROADCASTING
98,400 ABS-CBN Broadcasting Corp.*............................................................ 121,782
------------
TELECOMMUNICATIONS
8,520 Philippine Long Distance Telephone Co.................................................. 216,164
------------
TOTAL PHILIPPINES...................................................................... 468,834
------------
SINGAPORE (4.9%)
AEROSPACE
149,000 Singapore Technologies Engineering Ltd................................................. 230,606
------------
AIRLINES
56,000 Singapore Airlines Ltd................................................................. 634,913
------------
DIVERSIFIED ELECTRONIC PRODUCTS
66,100 Natsteel Electronics Ltd............................................................... 348,938
------------
ELECTRONIC COMPONENTS
137,000 Gul Technologies....................................................................... 151,218
74,000 Omni Industries Ltd.................................................................... 134,061
36,600 Venture Manufacturing Ltd.............................................................. 419,352
------------
704,631
------------
INTERNATIONAL BANKS
49,182 DBS Group Holdings Ltd................................................................. 805,440
75,086 Overseas - Chinese Banking Corp., Ltd.................................................. 689,152
44,544 Overseas Union Bank Ltd................................................................ 260,530
36,632 United Overseas Bank Ltd............................................................... 323,030
------------
2,078,152
------------
MARINE TRANSPORTATION
85,000 Neptune Orient Lines Ltd............................................................... 113,707
54,500 Sembcorp Logistics Ltd................................................................. 220,681
------------
334,388
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
NEWSPAPERS
22,019 Singapore Press Holdings Ltd........................................................... $ 476,836
------------
REAL ESTATE
36,400 City Developments Ltd.................................................................. 212,898
55,000 DBS Land Ltd........................................................................... 108,218
------------
321,116
------------
SEMICONDUCTORS
44,000 Chartered Semiconductor Manufacturing Ltd.*............................................ 240,192
------------
TELECOMMUNICATIONS
174,000 Singapore Telecommunications Ltd....................................................... 359,064
------------
TOTAL SINGAPORE........................................................................ 5,728,836
------------
SOUTH KOREA (8.4%)
CELLULAR TELEPHONE
4,880 Pantech Co., Ltd....................................................................... 109,542
26,600 SK Telecom Co., Ltd. (ADR)............................................................. 1,020,775
------------
1,130,317
------------
COMPUTER COMMUNICATIONS
2,620 Insung Information*.................................................................... 89,486
------------
COMPUTER SOFTWARE
7,190 Dae Duck Electronics Co................................................................ 85,445
------------
DIVERSIFIED ELECTRONIC PRODUCTS
14,267 Samsung Electronics Co................................................................. 3,340,688
------------
DIVERSIFIED FINANCIAL SERVICES
5,760 Korea Technology Banking Co............................................................ 55,775
------------
ELECTRIC UTILITIES
42,690 Korea Electric Power Corp. (ADR)....................................................... 715,057
------------
ELECTRONIC COMPONENTS
14,590 Mirae Co............................................................................... 113,406
3,986 Samsung Electro-Mechanics Co........................................................... 264,915
------------
378,321
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
72
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL SPECIALTIES
3,300 Hankuk Glass Industry Co. Ltd.......................................................... $ 62,456
------------
INTERNATIONAL BANKS
12,310 Hana Bank.............................................................................. 95,901
11,800 H & cb................................................................................. 373,944
27,558 Kookmin Bank........................................................................... 431,807
------------
901,652
------------
INVESTMENT BANKERS/BROKERS/SERVICES
5,170 Dongwon Securities Co.................................................................. 111,501
21,990 Good Morning Securities Co. Ltd........................................................ 105,111
------------
216,612
------------
MOTOR VEHICLES
53,760 Hyundai Motor Co., Ltd. (GDR) - 144A*+................................................. 581,952
------------
PAINTS/COATINGS
1,720 Korea Chemical Co., Ltd................................................................ 112,042
------------
SEMICONDUCTORS
9,439 Hyundai Electronics Industries Co...................................................... 200,246
------------
SPECIALTY CHEMICALS
7,610 L.G. Chemical Ltd...................................................................... 240,492
------------
SPECIALTY FOODS/CANDY
2,040 Cheil Jedang Corp...................................................................... 235,246
------------
STEEL/IRON ORE
18,000 Pohang Iron & Steel Co., Ltd. (ADR).................................................... 630,000
------------
TELECOMMUNICATIONS
9,280 Korea Telecom Corp. (ADR)*............................................................. 693,680
------------
TELECOMMUNICATIONS EQUIPMENT
6,180 Humax Co., Ltd.*....................................................................... 104,451
------------
TOTAL SOUTH KOREA...................................................................... 9,773,918
------------
TAIWAN (7.6%)
DIVERSIFIED COMMERCIAL SERVICES
38,960 ASE Test Ltd.*......................................................................... 920,430
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
E.D.P. PERIPHERALS
8,832 Acer Peripherals - 144A*+.............................................................. $ 365,733
------------
ELECTRONIC COMPONENTS
13,700 Ritek Corp. (GDR)*..................................................................... 158,578
------------
ELECTRONIC DATA PROCESSING
47,437 Acer Inc. (GDR)*....................................................................... 675,977
56,540 Asustek Computer Inc. (GDR)............................................................ 787,319
67 Asustek Computer Inc. (GDR) - 144A*+................................................... 933
11,800 Hon Hai Precision Industry Co., Ltd. (GDR)*............................................ 228,035
------------
1,692,264
------------
ELECTRONIC PRODUCTION EQUIPMENT
38,314 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR)*..................................... 1,724,130
------------
MUTUAL FUNDS
299 Taipei Fund*........................................................................... 2,992,093
------------
STEEL/IRON ORE
6,300 China Steel Corp. (GDR)................................................................ 94,343
------------
TEXTILES
32,600 Far East Textile Ltd. (GDR) - 144A*+................................................... 787,290
------------
TOTAL TAIWAN........................................................................... 8,734,861
------------
THAILAND (1.4%)
BUILDING MATERIALS
28,566 Siam City Cement Co. PCL............................................................... 153,466
------------
CELLULAR TELEPHONE
30,000 Advanced Info Service PCL.............................................................. 504,255
------------
ELECTRONIC COMPONENTS
19,530 Delta Electronics, Inc................................................................. 232,698
------------
INTERNATIONAL BANKS
192,100 Siam Commercial Bank (Warrants due 05/10/02)*.......................................... 89,408
188,200 Thai Farmers Bank PCL.................................................................. 315,335
------------
404,743
------------
MOVIES/ENTERTAINMENT
24,000 BEC World PCL.......................................................................... 159,575
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
73
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE
301,800 Golden Land Property Development Company Ltd........................................... $ 156,519
------------
TOTAL THAILAND......................................................................... 1,611,256
------------
TOTAL COMMON STOCKS AND WARRANTS
(IDENTIFIED COST $81,085,475).......................................................... 111,464,840
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
<C> <S> <C>
- ----------
SHORT-TERM INVESTMENT (a) (3.7%)
U.S. GOVERNMENT AGENCY
$ 4,300 Federal Home Loan Mortgage Corp. 1.50% due
01/03/00 (AMORTIZED COST $4,299,642)....... 4,299,642
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $85,385,117) (B)......................................................... 99.9% 115,764,482
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.1 162,902
----- -------------
NET ASSETS................................................................................ 100.0% $ 115,927,384
----- -------------
----- -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
* Non-income producing security.
+ Resale is restricted to qualified institutional investors.
(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 $33,093,961 and the
aggregate gross unrealized depreciation is $2,714,596, resulting in net
unrealized appreciation of $30,379,365.
SEE NOTES TO FINANCIAL STATEMENTS
74
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH
SUMMARY OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Aerospace......................................................................... $ 230,606 0.2%
Airlines.......................................................................... 1,263,003 1.1
Alcoholic Beverages............................................................... 838,820 0.7
Aluminum.......................................................................... 231,269 0.2
Beverages - Non-Alcoholic......................................................... 156,642 0.1
Broadcasting...................................................................... 537,656 0.5
Building Materials................................................................ 424,420 0.4
Building Products................................................................. 301,115 0.3
Casino/Gambling................................................................... 214,410 0.2
Cellular Telephone................................................................ 2,684,991 2.3
Coal Mining....................................................................... 175,341 0.2
Computer Communications........................................................... 89,486 0.1
Computer Software................................................................. 1,884,849 1.6
Construction/Agricultural Equipment/Trucks........................................ 814,378 0.7
Consumer Electronics/Appliances................................................... 4,168,108 3.6
Consumer Specialties.............................................................. 548,816 0.5
Diversified Commercial Services................................................... 1,296,235 1.1
Diversified Electronic Products................................................... 13,166,962 11.4
Diversified Financial Services.................................................... 55,775 0.0
Diversified Manufacturing......................................................... 496,828 0.4
E.D.P. Peripherals................................................................ 1,727,779 1.5
E.D.P. Services................................................................... 600,047 0.5
Electric Utilities................................................................ 770,743 0.7
Electrical Products............................................................... 1,262,735 1.1
Electronic Components............................................................. 3,123,729 2.7
Electronic Data Processing........................................................ 4,427,542 3.8
Electronic Distributors........................................................... 496,967 0.4
Electronic Production Equipment................................................... 1,724,130 1.5
Finance Companies................................................................. 803,854 0.7
Food Chains....................................................................... 858,149 0.7
Generic Drugs..................................................................... 231,993 0.2
Home Building..................................................................... 925,553 0.8
Home Furnishings.................................................................. 126,198 0.1
Hotels/Resorts.................................................................... 98,357 0.1
Industrial Machinery/Components................................................... 5,631,266 4.9
Industrial Specialties............................................................ 979,791 0.8
International Banks............................................................... 7,938,982 6.8
Investment Bankers/Brokers/Services............................................... 216,612 0.2
Major Pharmaceuticals............................................................. 1,057,548 0.9
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Marine Transportation............................................................. $ 430,064 0.4%
Meat/Poultry/Fish................................................................. 220,358 0.2
Media Conglomerates............................................................... 1,066,276 0.9
Motor Vehicles.................................................................... 3,281,894 2.8
Movies/Entertainment.............................................................. 159,574 0.1
Multi-Sector Companies............................................................ 4,770,481 4.1
Mutual Funds...................................................................... 2,992,093 2.6
Natural Gas....................................................................... 495,979 0.4
Newspapers........................................................................ 476,836 0.4
Office Equipment/Supplies......................................................... 3,158,697 2.7
Oil Refining/Marketing............................................................ 71,501 0.1
Other Metals/Minerals............................................................. 1,628,118 1.4
Other Pharmaceuticals............................................................. 1,710,261 1.5
Other Specialty Stores............................................................ 44,649 0.0
Other Telecommunications.......................................................... 2,303,491 2.0
Other Transportation.............................................................. 62,537 0.1
Package Goods/Cosmetics........................................................... 407,458 0.3
Paints/Coatings................................................................... 112,042 0.1
Photographic Products............................................................. 1,131,188 1.0
Pollution Control Equipment....................................................... 444,844 0.4
Precious Metals................................................................... 220,479 0.2
Printing/Forms.................................................................... 812,952 0.7
Real Estate....................................................................... 5,130,492 4.4
Recreational Products/Toys........................................................ 2,180,884 1.9
Semiconductors.................................................................... 2,083,952 1.8
Shoe Manufacturing................................................................ 90,918 0.1
Specialty Chemicals............................................................... 3,370,046 2.9
Specialty Foods/Candy............................................................. 572,697 0.5
Steel/Iron Ore.................................................................... 724,343 0.6
Telecommunications................................................................ 5,446,022 4.7
Telecommunications Equipment...................................................... 104,451 0.1
Textiles.......................................................................... 787,290 0.7
Tobacco........................................................................... 959,260 0.8
U.S. Government Agency............................................................ 4,299,642 3.7
Utilities......................................................................... 426,198 0.4
Wholesale Distributors............................................................ 1,004,830 0.9
------------ -----
$115,764,482 99.9%
------------ -----
------------ -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks..................................................................... $111,375,432 96.2%
Short-Term Investment............................................................. 4,299,642 3.7
Warrants.......................................................................... 89,408 0.0
------------ -----
$115,764,482 99.9%
------------ -----
------------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
75
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (94.2%)
ADVERTISING (2.9%)
70,000 DoubleClick Inc.*.................................................................... $ 17,714,375
230,400 Interpublic Group of Companies, Inc.................................................. 13,291,200
51,700 True North Communications, Inc....................................................... 2,310,344
11,850 Valassis Communications, Inc.*....................................................... 500,662
246,000 WPP Group PLC (ADR) (United Kingdom)................................................. 20,325,750
100,000 Young & Rubicam, Inc................................................................. 7,075,000
--------------
61,217,331
--------------
ALCOHOLIC BEVERAGES (0.5%)
99,000 LVMH (Louis Vuitton Moet Hennessy) (ADR) (France).................................... 8,835,750
--------------
ALUMINUM (1.7%)
244,900 Alcan Aluminium, Ltd. (Canada)....................................................... 10,086,819
280,000 Alcoa, Inc........................................................................... 23,240,000
--------------
33,326,819
--------------
BIOTECHNOLOGY (2.2%)
350,000 Amgen Inc.*.......................................................................... 21,000,000
125,000 Chiron Corp.*........................................................................ 5,289,062
23,000 COR Therapeutics, Inc.*.............................................................. 618,125
84,000 Genentech, Inc.*..................................................................... 11,298,000
10,000 Genset (ADR) (France)*............................................................... 191,250
30,000 Human Genome Sciences, Inc.*......................................................... 4,575,000
20,000 MedImmune, Inc.*..................................................................... 3,315,000
--------------
46,286,437
--------------
BROADCASTING (4.1%)
26,800 AMFM, Inc.*.......................................................................... 2,097,100
325,000 CBS Corp.*........................................................................... 20,779,687
140,000 Citadel Communications Corp.*........................................................ 9,065,000
290,000 Clear Channel Communications, Inc.*.................................................. 25,882,500
75,000 Grupo Televisa S.A. (GDR) (Mexico)*.................................................. 5,118,750
64,200 Hispanic Broadcasting Corp.*......................................................... 5,906,400
68,600 Univision Communications, Inc. (Class A)*............................................ 7,010,062
185,000 USA Networks, Inc.*.................................................................. 10,209,687
--------------
86,069,186
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
BUILDING MATERIALS/D I Y CHAINS (1.0%)
307,500 Home Depot, Inc. (The)............................................................... $ 21,082,969
--------------
CABLE TELEVISION (3.8%)
255,800 AT&T Corp. - Liberty Media Group (Class A)*.......................................... 14,516,650
375,000 Comcast Corp. (Class A Special)*..................................................... 18,937,500
350,000 Cox Communications, Inc. (Class A)*.................................................. 18,025,000
217,000 EchoStar Communications Corp. (Class A)*............................................. 21,103,250
40,400 United Pan-Europe Communications NV (ADR) (Netherlands)*............................. 5,130,800
--------------
77,713,200
--------------
CASINO/GAMBLING (0.1%)
100,000 Mirage Resorts, Inc.*................................................................ 1,531,250
--------------
CATALOG/SPECIALTY DISTRIBUTION (0.2%)
53,500 eToys, Inc.*......................................................................... 1,404,375
18,500 ShopNow.com Inc.*.................................................................... 349,187
123,500 Webvan Group Inc.*................................................................... 1,999,156
--------------
3,752,718
--------------
CELLULAR TELEPHONE (2.6%)
180,000 Nextel Communications, Inc. (Class A)*............................................... 18,551,250
115,000 Sprint Corp. (PCS Group)*............................................................ 11,787,500
200,000 Vodafone AirTouch PLC (ADR) (United Kingdom)......................................... 9,900,000
85,000 Voicestream Wireless Corp.*.......................................................... 12,059,375
34,000 Western Wireless Corp. (Class A)*.................................................... 2,265,250
--------------
54,563,375
--------------
CLOTHING/SHOE/ACCESSORY STORES (0.7%)
100,000 Ann Taylor Stores Corp.*............................................................. 3,443,750
240,000 Gap, Inc. (The)...................................................................... 11,040,000
--------------
14,483,750
--------------
COMPUTER COMMUNICATIONS (2.7%)
120,000 Applied Micro Circuits Corp.*........................................................ 15,240,000
6,600 CacheFlow Inc.*...................................................................... 862,537
196,000 Cisco Systems, Inc.*................................................................. 20,984,250
40,000 Emulex Corp.*........................................................................ 4,517,500
34,000 Extreme Networks, Inc.*.............................................................. 2,839,000
14,300 Finisar Corp.*....................................................................... 1,274,487
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
76
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
34,000 Juniper Networks, Inc.*.............................................................. $ 11,534,500
--------------
57,252,274
--------------
COMPUTER SOFTWARE (7.3%)
51,700 Check Point Software Technologies Ltd. (Israel)*..................................... 10,268,912
50,000 Citrix Systems, Inc.*................................................................ 6,146,875
82,000 Computer Associates International, Inc............................................... 5,734,875
31,600 E.piphany, Inc.*..................................................................... 7,031,000
95,900 Great Plains Software, Inc.*......................................................... 7,168,525
145,000 Intuit Inc.*......................................................................... 8,681,875
107,000 Macromedia, Inc.*.................................................................... 7,824,375
58,000 Mercury Interactive Corp.*........................................................... 6,260,375
5,000 Micromuse Inc.*...................................................................... 850,000
80,000 Microsoft Corp.*..................................................................... 9,335,000
570,000 Oracle Corp.*........................................................................ 63,840,000
200,000 Parametric Technology Corp.*......................................................... 5,400,000
10,000 Red Hat, Inc.*....................................................................... 2,110,625
85,000 Sapient Corp.*....................................................................... 11,974,375
--------------
152,626,812
--------------
CONSUMER ELECTRONICS/APPLIANCES (0.5%)
33,200 Sony Corp. (ADR) (Japan)............................................................. 9,453,700
--------------
CONTRACT DRILLING (0.7%)
364,340 Rowan Companies, Inc.*............................................................... 7,901,624
195,000 Transocean Sedco Forex Inc........................................................... 6,569,062
--------------
14,470,686
--------------
DISCOUNT CHAINS (3.4%)
135,000 Costco Wholesale Corp.*.............................................................. 12,310,312
250,000 Dayton Hudson Corp................................................................... 18,359,375
580,000 Wal-Mart Stores, Inc................................................................. 40,092,500
--------------
70,762,187
--------------
DIVERSIFIED COMMERCIAL SERVICES (0.8%)
131,500 CheckFree Holdings Corp.*............................................................ 13,741,750
6,000 Freemarkets, Inc.*................................................................... 2,047,875
13,000 Wireless Facilities, Inc.*........................................................... 565,500
--------------
16,355,125
--------------
DIVERSIFIED ELECTRONIC PRODUCTS (1.2%)
40,000 Gemstar International Group Ltd.*.................................................... 2,845,000
100,000 JDS Uniphase Corp.*.................................................................. 16,125,000
45,000 Koninklijke (Royal) Philips Electronics NV (Netherlands)............................. 6,075,000
--------------
25,045,000
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED FINANCIAL SERVICES (2.9%)
110,000 American Express Co.................................................................. $ 18,287,500
748,000 Citigroup, Inc....................................................................... 41,560,750
--------------
59,848,250
--------------
DIVERSIFIED MANUFACTURING (0.4%)
79,000 Minnesota Mining & Manufacturing Co.................................................. 7,732,125
--------------
E.D.P. PERIPHERALS (0.1%)
10,600 QLogic Corp.*........................................................................ 1,694,675
--------------
E.D.P. SERVICES (1.1%)
77,000 Automatic Data Processing, Inc....................................................... 4,148,375
119,000 BEA Systems, Inc.*................................................................... 8,330,000
20,000 Razorfish, Inc.*..................................................................... 1,900,000
160,000 Whittman-Hart, Inc.*................................................................. 8,580,000
--------------
22,958,375
--------------
ELECTRONIC COMPONENTS (0.3%)
45,300 E-Tek Dynamics, Inc.*................................................................ 6,081,525
--------------
ELECTRONIC DATA PROCESSING (2.0%)
79,500 Apple Computer, Inc.*................................................................ 8,168,625
445,000 Sun Microsystems, Inc.*.............................................................. 34,431,875
--------------
42,600,500
--------------
ELECTRONIC PRODUCTION EQUIPMENT (2.2%)
132,400 Applied Materials, Inc.*............................................................. 16,765,150
159,100 ASM Lithography Holding NV (Netherlands)*............................................ 17,958,413
35,000 KLA-Tencor Corp.*.................................................................... 3,895,937
15,950 Rudolph Technologies, Inc.*.......................................................... 526,350
153,370 Taiwan Semiconductor Manufacturing Co. Ltd. (ADR) (Taiwan)........................... 6,901,650
--------------
46,047,500
--------------
FLUID CONTROLS (0.2%)
94,300 Parker-Hannifin Corp................................................................. 4,838,769
--------------
FOREST PRODUCTS (0.3%)
90,100 Weyerhaeuser Co...................................................................... 6,470,306
--------------
GENERIC DRUGS (0.0%)
5,000 Watson Pharmaceuticals, Inc.*........................................................ 179,062
--------------
INTEGRATED OIL COMPANIES (0.1%)
21,300 Kerr-McGee Corp...................................................................... 1,320,600
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
77
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTERNATIONAL BANKS (0.8%)
150,000 Asahi Bank, Ltd. (ADR) (Japan)....................................................... $ 9,243,750
111,990 Sakura Bank, Ltd. (ADR) (Japan)...................................................... 6,488,421
--------------
15,732,171
--------------
INTERNET SERVICES (11.1%)
24,300 Agency.com, Inc.*.................................................................... 1,248,412
17,000 Akamai Technologies, Inc.*........................................................... 5,569,625
31,000 Allaire Corp.*....................................................................... 4,535,687
172,000 America Online, Inc.*................................................................ 12,975,250
62,000 AppNet, Inc.*........................................................................ 2,708,625
30,000 Art Technology Group, Inc.*.......................................................... 3,901,875
125,938 BroadVision, Inc.*................................................................... 21,417,331
11,600 C-Bridge Internet Solutions, Inc.*................................................... 574,200
84,100 Calico Commerce, Inc.*............................................................... 4,446,787
40,000 Inktomi Corp.*....................................................................... 3,545,000
42,000 Kana Communications, Inc.*........................................................... 8,581,125
152,300 Lycos, Inc.*......................................................................... 12,117,369
99,000 NBC Internet, Inc. (Class A)*........................................................ 7,647,750
20,000 OnDisplay, Inc.*..................................................................... 1,810,000
47,000 Portal Software, Inc.*............................................................... 4,817,500
50,000 RealNetworks, Inc.*.................................................................. 6,015,625
50,000 Scient Corp.*........................................................................ 4,287,500
210,000 USWeb Corp.*......................................................................... 9,331,875
230,000 VeriSign, Inc.*...................................................................... 43,958,750
147,200 Vignette Corp.*...................................................................... 23,984,400
108,000 Yahoo! Inc.*......................................................................... 46,730,250
--------------
230,204,936
--------------
INVESTMENT BANKERS/BROKERS/SERVICES (3.8%)
440,000 Donaldson, Lufkin & Jenrette, Inc.................................................... 21,285,000
279,000 Goldman Sachs Group, Inc. (The)...................................................... 26,278,312
35,000 Legg Mason, Inc...................................................................... 1,268,750
214,200 Lehman Brothers Holdings, Inc........................................................ 18,140,063
146,000 Merrill Lynch & Co., Inc............................................................. 12,191,000
--------------
79,163,125
--------------
LIFE INSURANCE (0.1%)
70,000 ReliaStar Financial Corp............................................................. 2,743,125
--------------
MAJOR BANKS (1.4%)
20,000 Bank of New York Co., Inc............................................................ 800,000
190,000 Chase Manhattan Corp. (The).......................................................... 14,760,625
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
10,000 First Union Corp..................................................................... $ 328,125
321,900 Wells Fargo & Co..................................................................... 13,016,831
--------------
28,905,581
--------------
MAJOR PHARMACEUTICALS (1.3%)
85,000 Johnson & Johnson.................................................................... 7,915,625
25,000 Merck & Co., Inc..................................................................... 1,676,563
5,000 Pharmacia & Upjohn, Inc.............................................................. 225,000
6,000 Schering-Plough Corp................................................................. 253,125
215,000 Warner-Lambert Co.................................................................... 17,616,563
--------------
27,686,876
--------------
MAJOR U.S. TELECOMMUNICATIONS (0.7%)
270,000 MCI WorldCom, Inc.*.................................................................. 14,310,000
--------------
MARINE TRANSPORTATION (0.1%)
80,400 Tidewater, Inc....................................................................... 2,894,400
--------------
MEAT/POULTRY/FISH (0.0%)
15,000 ConAgra, Inc......................................................................... 338,438
--------------
MEDIA CONGLOMERATES (0.7%)
115,300 Fox Entertainment Group, Inc. (Series A)*............................................ 2,875,294
145,465 News Corporation Ltd. (The) (ADR) (Australia)........................................ 5,564,036
10,000 Viacom, Inc. (Class A)*.............................................................. 604,375
108,600 Viacom, Inc. (Class B)*.............................................................. 6,563,513
--------------
15,607,218
--------------
MEDICAL EQUIPMENT & SUPPLIES (0.0%)
16,514 Medtronic, Inc....................................................................... 601,729
--------------
MEDICAL SPECIALTIES (0.2%)
75,000 Cytyc Corp.*......................................................................... 4,584,375
--------------
MEDICAL/DENTAL DISTRIBUTORS (0.0%)
11,250 Cardinal Health, Inc................................................................. 538,594
--------------
METALS FABRICATIONS (0.0%)
8,000 Coflexip, S.A. (ADR) (France)........................................................ 300,000
--------------
MID-SIZED BANKS (0.8%)
304,600 Northern Trust Corp.................................................................. 16,258,025
--------------
MILITARY/GOV'T/TECHNICAL (1.1%)
230,000 General Motors Corp. (Class H)*...................................................... 22,080,000
--------------
MOVIES/ENTERTAINMENT (0.3%)
70,000 Westwood One, Inc.*.................................................................. 5,320,000
--------------
MULTI-LINE INSURANCE (1.0%)
197,000 American International Group, Inc.................................................... 21,300,625
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
78
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MULTI-SECTOR COMPANIES (1.7%)
233,000 General Electric Co.................................................................. $ 36,056,750
--------------
NEWSPAPERS (1.0%)
54,505 Knight-Ridder, Inc................................................................... 3,243,048
130,000 New York Times Co. (The) (Class A)................................................... 6,386,250
200,000 Tribune Co........................................................................... 11,012,500
--------------
20,641,798
--------------
OFFICE EQUIPMENT/SUPPLIES (0.2%)
43,100 Avery Dennison Corp.................................................................. 3,140,913
--------------
OIL & GAS PRODUCTION (0.4%)
70,000 Devon Energy Corp.................................................................... 2,301,250
225,000 EOG Resources, Inc................................................................... 3,951,563
145,000 Union Pacific Resources Group, Inc................................................... 1,848,750
--------------
8,101,563
--------------
OIL/GAS TRANSMISSION (0.6%)
300,000 Enron Corp........................................................................... 13,312,500
--------------
OILFIELD SERVICES/EQUIPMENT (0.7%)
130,000 BJ Services Co.*..................................................................... 5,435,625
100,000 Cooper Cameron Corp.*................................................................ 4,893,750
79,320 Smith International, Inc.*........................................................... 3,941,213
--------------
14,270,588
--------------
OTHER CONSUMER SERVICES (1.1%)
275,000 Preview Travel, lnc.*................................................................ 14,334,375
245,000 Ticketmaster Online-CitySearch, Inc. (Series B)*..................................... 9,417,188
--------------
23,751,563
--------------
OTHER METALS/MINERALS (0.2%)
194,220 Inco Ltd. (Canada)*.................................................................. 4,564,170
--------------
OTHER PHARMACEUTICALS (1.0%)
100,000 Biovail Corporation International (Canada)*.......................................... 9,375,000
12,000 Elan Corp. PLC (ADR) (Ireland)*...................................................... 354,000
65,000 Forest Laboratories, Inc.*........................................................... 3,993,438
100,000 Teva Pharmaceutical Industries Ltd. (ADR) (Israel)................................... 7,150,000
--------------
20,872,438
--------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER SPECIALTY STORES (0.6%)
113,000 Tiffany & Co......................................................................... $ 10,085,250
58,200 Zale Corp.*.......................................................................... 2,815,425
--------------
12,900,675
--------------
OTHER TELECOMMUNICATIONS (4.6%)
26,700 COLT Telecom Group PLC (ADR) (United Kingdom)*....................................... 5,443,463
70,000 Japan Telecom Co., Ltd. (ADR) (Japan)*............................................... 5,617,500
70,000 Mannesmann AG (ADR) (Germany)........................................................ 16,940,000
150,000 McLeodUSA, Inc. (Class A)*........................................................... 8,812,500
260,000 Nippon Telegraph & Telephone Corp. (ADR) (Japan)..................................... 22,392,500
50,000 NTL Inc.*............................................................................ 6,225,000
70,000 PanAmSat Corp.*...................................................................... 4,134,375
100,000 RCN Corp.*........................................................................... 4,843,750
170,000 Sonera Corp. (ADR) (Finland)*........................................................ 11,772,500
90,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)................................... 10,125,000
--------------
96,306,588
--------------
PACKAGE GOODS/COSMETICS (1.3%)
238,600 Colgate-Palmolive Co................................................................. 15,509,000
110,000 Procter & Gamble Co.................................................................. 12,051,875
--------------
27,560,875
--------------
PACKAGED FOODS (0.0%)
15,000 Aurora Foods, Inc.*.................................................................. 139,688
--------------
PAPER (0.6%)
47,030 Champion International Corp.......................................................... 2,912,921
160,000 International Paper Co............................................................... 9,030,000
--------------
11,942,921
--------------
PRECISION INSTRUMENTS (0.2%)
40,000 PE Corporation-PE Biosystems Group................................................... 4,812,500
--------------
SEMICONDUCTORS (2.3%)
80,000 Broadcom Corp. (Class A)*............................................................ 21,785,000
250,000 Conexant Systems, Inc.*.............................................................. 16,515,625
10,000 Intel Corp........................................................................... 822,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
79
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
30,000 SDL, Inc.*........................................................................... $ 6,540,000
16,000 TriQuint Semiconductor, Inc.......................................................... 1,777,000
--------------
47,440,125
--------------
SERVICES TO THE HEALTH INDUSTRY (0.0%)
10,000 MedQuist Inc.*....................................................................... 256,250
--------------
TELECOMMUNICATIONS EQUIPMENT (8.3%)
81,752 Alcatel (ADR) (France)............................................................... 3,678,840
40,000 CIENA Corp.*......................................................................... 2,300,000
201,500 Comverse Technology, Inc.*........................................................... 29,154,531
150,000 Corning Inc.......................................................................... 19,340,625
381,024 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)................................... 25,004,700
115,000 General Instrument Corp.*............................................................ 9,775,000
152,100 Motorola, Inc........................................................................ 22,396,725
12,300 Next Level Communications, Inc.*..................................................... 921,731
120,000 Nokia Corp. (ADR) (Finland).......................................................... 22,800,000
106,800 Nortel Networks Corp. (Canada)....................................................... 10,786,800
198,800 RF Micro Devices, Inc.*.............................................................. 13,568,100
160,900 Scientific-Atlanta, Inc.............................................................. 8,950,063
14,000 Sycamore Networks, Inc.*............................................................. 4,250,750
--------------
172,927,865
--------------
TOBACCO (0.0%)
5,000 Philip Morris Companies, Inc......................................................... 115,938
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $1,305,761,518)..................................................... 1,962,285,182
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
<C> <S> <C>
- --------
SHORT-TERM INVESTMENTS (5.8%)
U.S. GOVERNMENT AGENCY (a) (5.8%)
$121,200 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $121,189,900).... 121,189,900
--------------
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.0%)
$ 160 The Bank of New York 1.50% due 01/03/00 (dated 12/31/99; proceeds $160,119) (b)
(IDENTIFIED COST $160,099)......................................................... $ 160,099
--------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $121,349,999)....................................................... 121,349,999
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,427,111,517) (C).................................................... 100.0% 2,083,635,181
LIABILITIES IN EXCESS OF OTHER ASSETS................................................... 0.0 (563,796)
----- ---------------
NET ASSETS.............................................................................. 100.0% $ 2,083,071,385
----- ---------------
----- ---------------
</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 $112,298 U.S. Treasury Bond 11.25% due 02/15/15 valued at
$163,429.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $673,009,775 and the
aggregate gross unrealized depreciation is $16,486,111, resulting in net
unrealized appreciation of $656,523,664.
SEE NOTES TO FINANCIAL STATEMENTS
80
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (95.9%)
ACCIDENT & HEALTH INSURANCE (0.2%)
3,854 AFLAC, Inc........................................................................... $ 181,861
1,905 Torchmark Corp....................................................................... 55,364
3,476 UNUMProvident Corp................................................................... 111,449
------------
348,674
------------
ADVERTISING (0.3%)
4,064 Interpublic Group of Companies, Inc.................................................. 234,442
2,570 Omnicom Group, Inc................................................................... 257,000
------------
491,442
------------
AEROSPACE (0.7%)
13,533 Boeing Co............................................................................ 562,465
1,595 Goodrich (B.F.) Co. (The)............................................................ 43,862
5,734 Lockheed Martin Corp................................................................. 125,432
1,006 Northrop Grumman Corp................................................................ 54,387
6,933 United Technologies Corp............................................................. 450,645
------------
1,236,791
------------
AIR FREIGHT/DELIVERY SERVICES (0.1%)
4,324 FDX Corp.*........................................................................... 177,014
------------
AIRLINES (0.2%)
2,144 AMR Corp.*........................................................................... 143,648
1,923 Delta Air Lines, Inc................................................................. 95,789
7,305 Southwest Airlines Co................................................................ 118,250
1,035 US Airways Group Inc.*............................................................... 33,185
------------
390,872
------------
ALCOHOLIC BEVERAGES (0.3%)
6,738 Anheuser-Busch Companies, Inc........................................................ 477,556
992 Brown-Forman Corp. (Class B)......................................................... 56,792
534 Coors (Adolph) Co. (Class B)......................................................... 28,035
------------
562,383
------------
ALUMINUM (0.4%)
3,174 Alcan Aluminium, Ltd. (Canada)....................................................... 130,729
5,306 Alcoa, Inc........................................................................... 440,398
916 Reynolds Metals Co................................................................... 70,188
------------
641,315
------------
APPAREL (0.1%)
856 Liz Claiborne, Inc................................................................... 32,207
479 Russell Corp......................................................................... 8,023
1,711 VF Corp.............................................................................. 51,330
------------
91,560
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
AUTO PARTS: O.E.M. (0.2%)
2,382 Dana Corp............................................................................ $ 71,311
8,182 Delphi Automotive Systems Corp....................................................... 128,866
1,066 Eaton Corp........................................................................... 77,418
1,236 Johnson Controls, Inc................................................................ 70,297
1,761 TRW Inc.............................................................................. 91,462
------------
439,354
------------
AUTOMOTIVE AFTERMARKET (0.1%)
1,098 Cooper Tire & Rubber Co.............................................................. 17,088
2,575 Genuine Parts Co..................................................................... 63,892
2,264 Goodyear Tire & Rubber Co............................................................ 63,816
------------
144,796
------------
BEVERAGES - NON-ALCOHOLIC (1.6%)
35,769 Coca-Cola Co......................................................................... 2,083,544
6,161 Coca-Cola Enterprises Inc............................................................ 123,990
21,080 PepsiCo, Inc......................................................................... 743,070
------------
2,950,604
------------
BIOTECHNOLOGY (0.5%)
14,793 Amgen Inc.*.......................................................................... 887,580
------------
BOOKS/MAGAZINES (0.0%)
1,030 Harcourt General, Inc................................................................ 41,457
748 Meredith Corp........................................................................ 31,182
------------
72,639
------------
BROADCASTING (0.6%)
11,040 CBS Corp.*........................................................................... 705,870
4,902 Clear Channel Communications, Inc.*.................................................. 437,503
------------
1,143,373
------------
BUILDING MATERIALS (0.0%)
794 Owens Corning........................................................................ 15,334
1,449 Vulcan Materials Co.................................................................. 57,869
------------
73,203
------------
BUILDING MATERIALS/D I Y CHAINS (1.4%)
33,341 Home Depot, Inc. (The)............................................................... 2,285,908
5,534 Lowe's Companies, Inc................................................................ 330,656
------------
2,616,564
------------
BUILDING PRODUCTS (0.1%)
580 Armstrong World Industries, Inc...................................................... 19,357
6,473 Masco Corp........................................................................... 164,252
------------
183,609
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
81
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CABLE TELEVISION (0.7%)
10,885 Comcast Corp. (Class A Special)*..................................................... $ 549,692
8,862 MediaOne Group, Inc.*................................................................ 680,712
------------
1,230,404
------------
CASINO/GAMBLING (0.1%)
1,862 Harrah's Entertainment, Inc.*........................................................ 49,227
2,798 Mirage Resorts, Inc.*................................................................ 42,844
------------
92,071
------------
CELLULAR TELEPHONE (0.6%)
5,263 Nextel Communications, Inc. (Class A)*............................................... 542,418
6,241 Sprint Corp. (PCS Group)*............................................................ 639,702
------------
1,182,120
------------
CLOTHING/SHOE/ACCESSORY STORES (0.5%)
12,399 Gap, Inc. (The)...................................................................... 570,354
3,109 Limited (The), Inc................................................................... 134,659
2,006 Nordstrom, Inc....................................................................... 52,532
4,490 TJX Companies, Inc................................................................... 91,764
------------
849,309
------------
COMPUTER COMMUNICATIONS (2.9%)
4,996 3Com Corp.*.......................................................................... 234,500
1,479 Adaptec, Inc.*....................................................................... 73,673
2,615 Cabletron Systems, Inc.*............................................................. 67,990
47,368 Cisco Systems, Inc.*................................................................. 5,071,336
------------
5,447,499
------------
COMPUTER SOFTWARE (6.8%)
1,741 Adobe Systems, Inc................................................................... 117,082
883 Autodesk, Inc........................................................................ 29,746
3,510 BMC Software, Inc.*.................................................................. 280,361
1,298 Citrix Systems, Inc.*................................................................ 159,573
7,806 Computer Associates International, Inc............................................... 545,932
5,182 Compuware Corp.*..................................................................... 192,706
74,724 Microsoft Corp.*..................................................................... 8,719,357
4,823 Novell, Inc.*........................................................................ 192,317
20,617 Oracle Corp.*........................................................................ 2,309,104
3,899 Parametric Technology Corp.*......................................................... 105,273
3,557 PeopleSoft, Inc.*.................................................................... 75,586
------------
12,727,037
------------
COMPUTER/VIDEO CHAINS (0.2%)
2,973 Best Buy Co., Inc.*.................................................................. 149,207
2,945 Circuit City Stores, Inc.-Circuit City Group......................................... 132,709
2,799 Tandy Corp........................................................................... 137,676
------------
419,592
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.3%)
5,149 Caterpillar, Inc..................................................................... $ 242,325
600 Cummins Engine Co., Inc.............................................................. 28,987
3,384 Deere & Co........................................................................... 146,781
118 NACCO Industries, Inc. (Class A)..................................................... 6,556
921 Navistar International Corp.*........................................................ 43,632
1,134 PACCAR, Inc.......................................................................... 50,179
------------
518,460
------------
CONSUMER ELECTRONICS/APPLIANCES (0.1%)
1,223 Maytag Corp.......................................................................... 58,704
1,078 Whirlpool Corp....................................................................... 70,137
------------
128,841
------------
CONSUMER SPECIALTIES (0.0%)
483 Jostens, Inc......................................................................... 11,743
------------
CONSUMER SUNDRIES (0.0%)
934 American Greetings Corp. (Class A)................................................... 22,066
------------
CONTAINERS/PACKAGING (0.2%)
438 Ball Corp............................................................................ 17,246
758 Bemis Company, Inc................................................................... 26,435
1,765 Crown Cork & Seal Co., Inc........................................................... 39,492
2,174 Owens-Illinois, Inc.*................................................................ 54,486
2,481 Pactiv Corp.......................................................................... 26,361
1,209 Sealed Air Corp.*.................................................................... 62,641
809 Temple-Inland, Inc................................................................... 53,343
------------
280,004
------------
CONTRACT DRILLING (0.0%)
717 Helmerich & Payne, Inc............................................................... 15,640
1,206 Rowan Companies, Inc.*............................................................... 26,155
------------
41,795
------------
DEPARTMENT STORES (0.4%)
1,555 Dillard's, Inc. (Class A)............................................................ 31,392
3,040 Federated Department Stores, Inc.*................................................... 153,710
2,360 Kohl's Corp.*........................................................................ 170,362
4,839 May Department Stores Co............................................................. 156,058
3,768 Penney (J.C.) Co., Inc............................................................... 75,124
5,473 Sears, Roebuck & Co.................................................................. 166,584
------------
753,230
------------
DISCOUNT CHAINS (2.9%)
1,603 Consolidated Stores Corp.*........................................................... 26,049
3,212 Costco Wholesale Corp.*.............................................................. 292,894
6,381 Dayton Hudson Corp................................................................... 468,605
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
82
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
3,852 Dollar General Corp.................................................................. $ 87,633
7,149 Kmart Corp.*......................................................................... 71,937
64,444 Wal-Mart Stores, Inc................................................................. 4,454,691
------------
5,401,809
------------
DIVERSIFIED COMMERCIAL SERVICES (0.1%)
3,571 Paychex, Inc......................................................................... 142,617
------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.1%)
2,755 Rockwell International Corp.......................................................... 131,896
------------
DIVERSIFIED FINANCIAL SERVICES (2.0%)
6,483 American Express Co.................................................................. 1,077,799
48,826 Citigroup, Inc....................................................................... 2,712,895
------------
3,790,694
------------
DIVERSIFIED MANUFACTURING (1.4%)
1,364 Cooper Industries, Inc............................................................... 55,157
2,061 Danaher Corp......................................................................... 99,443
2,949 Dover Corp........................................................................... 133,811
11,464 Honeywell International Inc.......................................................... 661,329
1,273 ITT Industries, Inc.................................................................. 42,566
5,812 Minnesota Mining & Manufacturing Co.................................................. 568,849
2,291 Thermo Electron Corp.*............................................................... 34,365
24,455 Tyco International Ltd. (Bermuda).................................................... 950,688
------------
2,546,208
------------
DRUGSTORE CHAINS (0.4%)
5,675 CVS Corp............................................................................. 226,645
569 Longs Drug Stores Corp............................................................... 14,687
3,750 Rite Aid Corp........................................................................ 41,953
14,532 Walgreen Co.......................................................................... 425,061
------------
708,346
------------
E.D.P. PERIPHERALS (1.1%)
14,735 EMC Corp.*........................................................................... 1,609,799
1,850 Lexmark International Group, Inc. (Class A)*......................................... 167,425
2,162 Network Appliance, Inc.*............................................................. 179,446
3,051 Seagate Technology, Inc.*............................................................ 142,062
------------
2,098,732
------------
E.D.P. SERVICES (0.8%)
9,052 Automatic Data Processing, Inc....................................................... 487,676
2,095 Ceridian Corp.*...................................................................... 45,173
2,411 Computer Sciences Corp.*............................................................. 228,141
6,818 Electronic Data Systems Corp......................................................... 456,380
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
6,069 First Data Corp...................................................................... $ 299,278
------------
1,516,648
------------
ELECTRIC UTILITIES (1.5%)
2,989 AES Corp. (The)*..................................................................... 223,428
1,987 Ameren Corp.......................................................................... 65,074
2,811 American Electric Power Co........................................................... 90,303
2,311 Carolina Power & Light Co............................................................ 70,341
3,079 Central & South West Corp............................................................ 61,580
2,301 Cinergy Corp......................................................................... 55,512
1,677 CMS Energy Corp...................................................................... 52,301
3,201 Consolidated Edison, Inc............................................................. 110,434
2,166 Constellation Energy Group, Inc...................................................... 62,814
2,763 Dominion Resources, Inc.............................................................. 108,448
2,100 DTE Energy Co........................................................................ 65,887
5,296 Duke Energy Corp..................................................................... 265,462
5,028 Edison International................................................................. 131,671
3,574 Entergy Corp......................................................................... 92,030
3,374 FirstEnergy Corp..................................................................... 76,548
1,422 Florida Progress Corp................................................................ 60,168
2,596 FPL Group, Inc....................................................................... 111,141
1,719 GPU, Inc............................................................................. 51,463
1,673 New Century Energies, Inc............................................................ 50,817
2,712 Niagara Mohawk Holdings Inc.......................................................... 37,798
2,242 Northern States Power Co............................................................. 43,719
2,690 PECO Energy Co....................................................................... 93,477
5,561 PG & E Corp.......................................................................... 114,000
1,227 Pinnacle West Capital Corp........................................................... 37,500
2,161 PP&L Resources, Inc.................................................................. 49,433
3,165 Public Service Enterprise Group, Inc................................................. 110,182
4,282 Reliant Energy, Inc.................................................................. 97,951
9,747 Southern Co.......................................................................... 229,054
4,003 Texas Utilities Co................................................................... 142,357
3,150 Unicom Corp.......................................................................... 105,525
------------
2,866,418
------------
ELECTRICAL PRODUCTS (0.3%)
6,292 Emerson Electric Co.................................................................. 361,003
2,270 Molex Inc............................................................................ 128,539
837 Thomas & Betts Corp.................................................................. 26,679
------------
516,221
------------
ELECTRONIC COMPONENTS (0.2%)
1,188 Andrew Corp.*........................................................................ 22,423
4,242 Solectron Corp.*..................................................................... 403,520
------------
425,943
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
83
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRONIC DATA PROCESSING (5.1%)
2,330 Apple Computer, Inc.*................................................................ $ 239,407
24,618 Compaq Computer Corp................................................................. 666,225
36,795 Dell Computer Corp.*................................................................. 1,874,245
4,584 Gateway, Inc......................................................................... 330,334
14,756 Hewlett-Packard Co................................................................... 1,681,262
26,104 International Business Machines Corp................................................. 2,819,232
2,662 Silicon Graphics, Inc.*.............................................................. 26,121
22,621 Sun Microsystems, Inc.*.............................................................. 1,750,300
4,488 Unisys Corp.*........................................................................ 143,335
------------
9,530,461
------------
ELECTRONIC PRODUCTION EQUIPMENT (0.5%)
5,480 Applied Materials, Inc.*............................................................. 693,905
1,303 KLA-Tencor Corp.*.................................................................... 145,040
2,476 Teradyne, Inc.*...................................................................... 163,416
------------
1,002,361
------------
ENGINEERING & CONSTRUCTION (0.0%)
1,100 Fluor Corp........................................................................... 50,462
590 Foster Wheeler Corp.................................................................. 5,236
------------
55,698
------------
ENVIRONMENTAL SERVICES (0.1%)
8,973 Waste Management, Inc................................................................ 154,223
------------
FARMING/SEEDS/MILLING (0.1%)
8,810 Archer-Daniels-Midland Co............................................................ 107,372
------------
FINANCE COMPANIES (1.4%)
10,546 Associates First Capital Corp. (Class A)............................................. 289,356
2,855 Capital One Financial Corp........................................................... 137,575
1,639 Countrywide Credit Industries, Inc................................................... 41,385
14,843 Fannie Mae........................................................................... 926,760
10,067 Freddie Mac.......................................................................... 473,778
6,808 Household International, Inc......................................................... 253,598
11,611 MBNA Corp............................................................................ 316,400
2,304 SLM Holding Corp..................................................................... 97,344
------------
2,536,196
------------
FINANCIAL PUBLISHING/SERVICES (0.2%)
2,330 Dun & Bradstreet Corp................................................................ 68,735
2,048 Equifax, Inc......................................................................... 48,256
2,840 McGraw-Hill Companies, Inc........................................................... 175,015
------------
292,006
------------
FLUID CONTROLS (0.1%)
1,622 Parker-Hannifin Corp................................................................. 83,229
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
FOOD CHAINS (0.4%)
6,134 Albertson's, Inc..................................................................... $ 197,821
556 Great Atlantic & Pacific Tea Co., Inc................................................ 15,498
12,048 Kroger Co.*.......................................................................... 227,406
7,368 Safeway Inc.*........................................................................ 262,024
2,152 Winn-Dixie Stores, Inc............................................................... 51,514
------------
754,263
------------
FOOD DISTRIBUTORS (0.1%)
2,022 Supervalu, Inc....................................................................... 40,440
4,770 SYSCO Corp........................................................................... 188,713
------------
229,153
------------
FOREST PRODUCTS (0.2%)
2,476 Georgia-Pacific Corp................................................................. 125,657
1,541 Louisiana-Pacific Corp............................................................... 21,959
3,401 Weyerhaeuser Co...................................................................... 244,234
------------
391,850
------------
GENERIC DRUGS (0.0%)
1,390 Watson Pharmaceuticals, Inc.*........................................................ 49,779
------------
HOME BUILDING (0.0%)
858 Centex Corp.......................................................................... 21,182
473 Fleetwood Enterprises, Inc........................................................... 9,756
691 Kaufman & Broad Home Corp............................................................ 16,714
626 Pulte Corp........................................................................... 14,085
------------
61,737
------------
HOME FURNISHINGS (0.1%)
2,842 Leggett & Platt, Inc................................................................. 60,925
4,084 Newell Rubbermaid, Inc............................................................... 118,436
835 Tupperware Corp...................................................................... 14,143
------------
193,504
------------
HOSPITAL/NURSING MANAGEMENT (0.2%)
8,157 Columbia/HCA Healthcare Corp......................................................... 239,102
1,492 Manor Care, Inc...................................................................... 23,872
4,509 Tenet Healthcare Corp.*.............................................................. 105,962
------------
368,936
------------
HOTELS/RESORTS (0.3%)
8,934 Carnival Corp. (Class A)............................................................. 427,157
5,341 Hilton Hotels Corp................................................................... 51,407
3,603 Marriott International, Inc. (Class A)............................................... 113,720
------------
592,284
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
84
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INDUSTRIAL MACHINERY/COMPONENTS (0.2%)
4,351 Illinois Tool Works Inc.............................................................. $ 293,964
2,369 Ingersoll-Rand Co.................................................................... 130,443
536 Milacron, Inc........................................................................ 8,241
------------
432,648
------------
INDUSTRIAL SPECIALTIES (0.1%)
1,876 Ecolab, Inc.......................................................................... 73,399
655 Millipore Corp....................................................................... 25,299
1,798 Pall Corp............................................................................ 38,769
------------
137,467
------------
INSURANCE BROKERS/SERVICES (0.3%)
3,716 AON Corp............................................................................. 148,640
3,864 Marsh & McLennan Companies, Inc...................................................... 369,737
------------
518,377
------------
INTEGRATED OIL COMPANIES (4.4%)
1,313 Amerada Hess Corp.................................................................... 74,513
4,674 Atlantic Richfield Co................................................................ 404,301
9,504 Chevron Corp......................................................................... 823,284
9,069 Conoco, Inc. (Class B)............................................................... 225,591
50,012 Exxon Mobil Corp..................................................................... 4,029,092
1,252 Kerr-McGee Corp...................................................................... 77,624
3,668 Phillips Petroleum Co................................................................ 172,396
31,052 Royal Dutch Petroleum Co. (ADR) (Netherlands)........................................ 1,876,705
8,009 Texaco, Inc.......................................................................... 434,989
3,511 Unocal Corp.......................................................................... 117,838
------------
8,236,333
------------
INTERNET SERVICES (2.2%)
32,373 America Online, Inc.*................................................................ 2,442,138
3,812 Yahoo! Inc.*......................................................................... 1,649,405
------------
4,091,543
------------
INVESTMENT BANKERS/BROKERS/SERVICES (1.3%)
1,726 Bear Stearns Companies, Inc.......................................................... 73,787
1,738 Lehman Brothers Holdings, Inc........................................................ 147,187
5,368 Merrill Lynch & Co., Inc............................................................. 448,228
8,066 Morgan Stanley Dean Witter & Co. (Note 3)............................................ 1,151,422
2,067 Paine Webber Group, Inc.............................................................. 80,225
11,874 Schwab (Charles) Corp................................................................ 455,665
------------
2,356,514
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INVESTMENT MANAGERS (0.1%)
3,651 Franklin Resources, Inc.............................................................. $ 117,060
1,733 Price (T.) Rowe Associates, Inc...................................................... 63,796
------------
180,856
------------
LIFE INSURANCE (0.3%)
3,579 American General Corp................................................................ 271,557
4,737 Conseco, Inc......................................................................... 84,674
1,517 Jefferson-Pilot Corp................................................................. 103,535
2,831 Lincoln National Corp................................................................ 113,240
------------
573,006
------------
MAJOR BANKS (4.1%)
24,722 Bank of America Corp................................................................. 1,240,735
10,664 Bank of New York Co., Inc............................................................ 426,560
16,608 Bank One Corp........................................................................ 532,494
4,793 BB&T Corp............................................................................ 131,208
11,944 Chase Manhattan Corp. (The).......................................................... 927,900
2,265 Comerica, Inc........................................................................ 105,747
14,304 First Union Corp..................................................................... 469,350
13,259 FleetBoston Financial Corp........................................................... 461,579
3,327 Huntington Bancshares, Inc........................................................... 79,224
6,478 KeyCorp.............................................................................. 143,326
7,366 Mellon Financial Corp................................................................ 250,904
2,507 Morgan (J.P.) & Co., Inc............................................................. 317,449
8,929 National City Corp................................................................... 211,506
4,257 PNC Bank Corp........................................................................ 189,437
1,517 Republic New York Corp............................................................... 109,224
2,430 SouthTrust Corp...................................................................... 91,733
2,317 State Street Corp.................................................................... 169,286
2,531 Summit Bancorp....................................................................... 77,512
4,634 SunTrust Banks, Inc.................................................................. 318,877
10,537 U.S. Bancorp......................................................................... 250,912
2,936 Wachovia Corp........................................................................ 199,648
23,783 Wells Fargo & Co..................................................................... 961,725
------------
7,666,336
------------
MAJOR CHEMICALS (1.1%)
3,176 Dow Chemical Co...................................................................... 424,393
15,126 Du Pont (E.I.) de Nemours & Co., Inc................................................. 996,425
1,133 Eastman Chemical Co.................................................................. 54,030
1,540 Hercules Inc......................................................................... 42,928
9,190 Monsanto Co.......................................................................... 327,394
3,170 Rohm & Haas Co....................................................................... 128,979
1,938 Union Carbide Corp................................................................... 129,362
------------
2,103,511
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
85
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR PHARMACEUTICALS (6.8%)
22,262 Abbott Laboratories.................................................................. $ 808,389
18,909 American Home Products Corp.......................................................... 745,724
28,726 Bristol-Myers Squibb Co.............................................................. 1,843,850
20,137 Johnson & Johnson.................................................................... 1,875,258
15,792 Lilly (Eli) & Co..................................................................... 1,050,168
33,849 Merck & Co., Inc.*................................................................... 2,269,999
56,061 Pfizer, Inc.......................................................................... 1,818,479
7,509 Pharmacia & Upjohn, Inc.............................................................. 337,905
21,274 Schering-Plough Corp................................................................. 897,497
12,435 Warner-Lambert Co.................................................................... 1,018,893
------------
12,666,162
------------
MAJOR U.S. TELECOMMUNICATIONS (6.6%)
4,546 ALLTEL Corp.......................................................................... 375,897
46,273 AT&T Corp............................................................................ 2,348,355
22,486 Bell Atlantic Corp................................................................... 1,384,294
27,258 BellSouth Corp....................................................................... 1,276,015
14,073 GTE Corp............................................................................. 993,026
41,103 MCI WorldCom, Inc.*.................................................................. 2,178,459
49,401 SBC Communications, Inc.............................................................. 2,408,299
12,620 Sprint Corp. (FON Group)............................................................. 849,484
7,317 U.S. West, Inc....................................................................... 526,824
------------
12,340,653
------------
MANAGED HEALTH CARE (0.2%)
2,167 Aetna Inc............................................................................ 120,946
2,426 Humana, Inc.*........................................................................ 19,863
2,458 United HealthCare Corp............................................................... 130,581
922 Wellpoint Health Networks, Inc.*..................................................... 60,794
------------
332,184
------------
MEAT/POULTRY/FISH (0.1%)
7,129 ConAgra, Inc......................................................................... 160,848
------------
MEDIA CONGLOMERATES (1.5%)
29,865 Disney (Walt) Co..................................................................... 873,551
18,630 Time Warner, Inc..................................................................... 1,349,511
10,093 Viacom, Inc. (Class B)*.............................................................. 609,996
------------
2,833,058
------------
MEDICAL EQUIPMENT & SUPPLIES (0.3%)
17,309 Medtronic, Inc....................................................................... 630,697
------------
MEDICAL SPECIALTIES (0.5%)
1,479 ALZA Corp. (Class A)*................................................................ 51,210
741 Bard (C.R.), Inc..................................................................... 39,273
836 Bausch & Lomb, Inc................................................................... 57,214
4,213 Baxter International, Inc............................................................ 264,629
3,625 Becton, Dickinson & Co............................................................... 96,969
1,634 Biomet, Inc.......................................................................... 65,258
6,005 Boston Scientific Corp.*............................................................. 131,359
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
4,451 Guidant Corp......................................................................... $ 209,197
1,008 Mallinckrodt, Inc.................................................................... 32,067
1,219 St. Jude Medical, Inc.*.............................................................. 37,408
------------
984,584
------------
MEDICAL/DENTAL DISTRIBUTORS (0.2%)
4,058 Cardinal Health, Inc................................................................. 194,277
4,078 McKesson HBOC, Inc................................................................... 92,010
------------
286,287
------------
MEDICAL/NURSING SERVICES (0.0%)
5,685 Healthsouth Corp.*................................................................... 30,557
------------
METALS FABRICATIONS (0.0%)
897 Timken Co. (The)..................................................................... 18,332
------------
MID-SIZED BANKS (0.7%)
5,663 AmSouth Bancorporation............................................................... 109,367
4,470 Fifth Third Bancorp.................................................................. 327,707
14,194 Firstar Corp......................................................................... 299,848
3,223 Northern Trust Corp.................................................................. 172,028
1,705 Old Kent Financial Corp.............................................................. 60,314
3,166 Regions Financial Corp............................................................... 79,348
4,052 Synovus Financial Corp............................................................... 80,534
2,042 Union Planters Corp.................................................................. 80,531
------------
1,209,677
------------
MILITARY/GOV'T/TECHNICAL (0.2%)
2,910 General Dynamics Corp................................................................ 153,503
669 PerkinElmer, Inc..................................................................... 27,889
4,901 Raytheon Co. (Class B)............................................................... 130,183
------------
311,575
------------
MOTOR VEHICLES (0.9%)
17,492 Ford Motor Co........................................................................ 934,729
9,271 General Motors Corp.................................................................. 673,886
------------
1,608,615
------------
MOVIES/ENTERTAINMENT (0.2%)
6,278 Seagram Co. Ltd. (Canada)............................................................ 282,118
------------
MULTI-LINE INSURANCE (1.7%)
11,663 Allstate Corp. (Note 3).............................................................. 279,912
22,421 American International Group, Inc.................................................... 2,424,271
2,728 CIGNA Corp........................................................................... 219,775
3,209 Hartford Financial Services Group, Inc............................................... 152,026
1,883 SAFECO Corp.......................................................................... 46,722
------------
3,122,706
------------
MULTI-SECTOR COMPANIES (4.1%)
954 Crane Co............................................................................. 18,961
2,376 Fortune Brands, Inc.................................................................. 78,557
47,513 General Electric Co.**............................................................... 7,352,637
862 McDermott International, Inc......................................................... 7,812
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
86
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
589 National Service Industries, Inc..................................................... $ 17,376
2,154 Textron, Inc......................................................................... 165,185
------------
7,640,528
------------
NATURAL GAS (0.1%)
1,389 Consolidated Natural Gas Co.......................................................... 90,198
391 Eastern Enterprises.................................................................. 22,458
681 Nicor Inc............................................................................ 22,133
458 ONEOK, Inc........................................................................... 11,507
514 Peoples Energy Corp.................................................................. 17,219
3,481 Sempra Energy*....................................................................... 60,482
------------
223,997
------------
NEWSPAPERS (0.5%)
1,296 Dow Jones & Co., Inc................................................................. 88,128
4,037 Gannett Co., Inc..................................................................... 329,268
1,216 Knight-Ridder, Inc................................................................... 72,352
2,480 New York Times Co. (The) (Class A)................................................... 121,830
869 Times Mirror Co. (Class A)........................................................... 58,223
3,441 Tribune Co........................................................................... 189,470
------------
859,271
------------
OFFICE EQUIPMENT/SUPPLIES (0.3%)
1,632 Avery Dennison Corp.................................................................. 118,932
3,841 Pitney Bowes, Inc.................................................................... 185,568
9,619 Xerox Corp........................................................................... 218,231
------------
522,731
------------
OIL & GAS PRODUCTION (0.2%)
1,847 Anardarko Petroleum Corp............................................................. 63,029
1,652 Apache Corp.......................................................................... 61,021
3,150 Burlington Resources, Inc............................................................ 104,147
5,323 Occidental Petroleum Corp............................................................ 115,110
3,650 Union Pacific Resources Group, Inc................................................... 46,538
------------
389,845
------------
OIL REFINING/MARKETING (0.1%)
1,045 Ashland, Inc......................................................................... 34,420
1,307 Sunoco Inc........................................................................... 30,715
2,088 Tosco Corp........................................................................... 56,768
4,500 USX-Marathon Group................................................................... 111,094
------------
232,997
------------
OIL/GAS TRANSMISSION (0.5%)
3,093 Coastal Corp......................................................................... 109,608
1,177 Columbia Energy Group, Inc........................................................... 74,445
3,306 El Paso Energy Corp.................................................................. 128,314
10,363 Enron Corp........................................................................... 459,858
6,296 Williams Companies, Inc.............................................................. 192,422
------------
964,647
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OILFIELD SERVICES/EQUIPMENT (0.5%)
4,767 Baker Hughes Inc..................................................................... $ 100,405
6,397 Halliburton Co....................................................................... 257,479
7,962 Schlumberger Ltd..................................................................... 447,863
1,541 Transocean Sedco Forex Inc........................................................... 51,927
------------
857,674
------------
OTHER CONSUMER SERVICES (0.2%)
1,417 Block (H.&R.), Inc................................................................... 61,994
10,297 Cendant Corp.*....................................................................... 273,514
3,940 Service Corp. International.......................................................... 27,334
------------
362,842
------------
OTHER METALS/MINERALS (0.2%)
1,355 Allegheny Technologies Inc........................................................... 30,403
2,780 Inco Ltd. (Canada)................................................................... 65,330
1,208 Phelps Dodge Corp.................................................................... 81,087
2,056 Providian Financial Corp............................................................. 187,225
------------
364,045
------------
OTHER PHARMACEUTICALS (0.1%)
1,904 Allergan, Inc........................................................................ 94,724
------------
OTHER SPECIALTY STORES (0.2%)
2,090 AutoZone, Inc.*...................................................................... 67,533
2,025 Bed Bath & Beyond Inc.*.............................................................. 70,116
5,135 Office Depot, Inc.*.................................................................. 56,164
762 Pep Boys-Manny, Moe & Jack........................................................... 6,953
6,726 Staples, Inc.*....................................................................... 138,724
3,545 Toys 'R' Us, Inc.*................................................................... 50,738
------------
390,228
------------
OTHER TELECOMMUNICATIONS (0.3%)
2,023 CenturyTel, Inc...................................................................... 95,840
10,990 Global Crossing Ltd. (Bermuda)*...................................................... 548,813
------------
644,653
------------
PACKAGE GOODS/COSMETICS (2.2%)
808 Alberto-Culver Co. (Class B)......................................................... 20,857
3,573 Avon Products, Inc................................................................... 117,909
3,423 Clorox Co............................................................................ 172,434
8,437 Colgate-Palmolive Co................................................................. 548,405
15,533 Gillette Co.......................................................................... 639,765
1,522 International Flavors & Fragrances, Inc.............................................. 57,456
7,883 Kimberly-Clark Corp.................................................................. 514,366
19,031 Procter & Gamble Co.................................................................. 2,085,084
------------
4,156,276
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
87
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PACKAGED FOODS (1.1%)
4,039 BestFoods............................................................................ $ 212,300
6,196 Campbell Soup Co..................................................................... 239,708
4,400 General Mills, Inc................................................................... 157,300
5,190 Heinz (H.J.) Co...................................................................... 206,627
5,871 Kellogg Co........................................................................... 180,900
1,937 Quaker Oats
Company (The)...................................................................... 127,116
4,684 Ralston-Ralston Purina Group......................................................... 130,567
13,159 Sara Lee Corp........................................................................ 290,320
8,277 Unilever N.V.
(Netherlands)...................................................................... 450,579
------------
1,995,417
------------
PAINTS/COATINGS (0.1%)
2,517 PPG Industries, Inc.................................................................. 157,470
2,402 Sherwin-Williams Co.................................................................. 50,442
------------
207,912
------------
PAPER (0.4%)
827 Boise Cascade Corp................................................................... 33,494
1,393 Champion International Corp.......................................................... 86,279
3,133 Fort James Corp...................................................................... 85,766
5,996 International Paper Co............................................................... 338,399
1,486 Mead Corp............................................................................ 64,548
419 Potlatch Corp........................................................................ 18,698
1,453 Westavaco Corp....................................................................... 47,404
1,616 Willamette Industries, Inc........................................................... 75,043
------------
749,631
------------
PHOTOGRAPHIC PRODUCTS (0.2%)
4,570 Eastman Kodak Co..................................................................... 302,763
645 Polaroid Corp........................................................................ 12,134
------------
314,897
------------
POLLUTION CONTROL EQUIPMENT (0.0%)
2,735 Allied Waste Industries, Inc.*....................................................... 24,102
------------
PRECIOUS METALS (0.2%)
5,710 Barrick Gold Corp. (Canada).......................................................... 100,996
2,367 Freeport-McMoran Copper & Gold, Inc. (Class B)....................................... 50,003
3,769 Homestake Mining Co.................................................................. 29,445
2,427 Newmont Mining Corp.................................................................. 59,462
4,715 Placer Dome Inc. (Canada)............................................................ 50,686
------------
290,592
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PRECISION INSTRUMENTS (0.1%)
1,493 PE Corporation-PE Biosystems Group................................................... $ 179,627
684 Tektronix, Inc....................................................................... 26,591
------------
206,218
------------
PRINTING/FORMS (0.0%)
1,063 Deluxe Corp.......................................................................... 29,166
1,831 Donnelley (R.R.) & Sons Co........................................................... 45,432
------------
74,598
------------
PROPERTY - CASUALTY INSURERS (0.3%)
2,548 Chubb Corp........................................................................... 143,484
2,377 Cincinnati Financial Corp............................................................ 73,687
1,536 Loews Corp........................................................................... 93,216
1,059 Progressive Corp..................................................................... 77,439
3,291 St. Paul Companies, Inc.............................................................. 110,866
------------
498,692
------------
RAILROADS (0.3%)
6,617 Burlington Northern Santa Fe Corp.................................................... 160,462
3,162 CSX Corp............................................................................. 99,208
1,601 Kansas City Southern Industries, Inc................................................. 119,475
5,512 Norfolk Southern Corp................................................................ 112,996
3,600 Union Pacific Corp................................................................... 157,050
------------
649,191
------------
RECREATIONAL PRODUCTS/TOYS (0.1%)
1,330 Brunswick Corp....................................................................... 29,593
2,806 Hasbro, Inc.......................................................................... 53,489
6,093 Mattel, Inc.......................................................................... 79,971
------------
163,053
------------
RENTAL/LEASING COMPANIES (0.0%)
930 Ryder System, Inc.................................................................... 22,727
------------
RESTAURANTS (0.5%)
1,903 Darden Restaurants, Inc.............................................................. 34,492
19,608 McDonald's Corp...................................................................... 790,448
2,223 Tricon Global Restaurants, Inc.*..................................................... 85,863
1,732 Wendy's International, Inc........................................................... 35,723
------------
946,526
------------
SAVINGS & LOAN ASSOCIATIONS (0.2%)
2,340 Golden West Financial Corp........................................................... 78,390
8,360 Washington Mutual, Inc............................................................... 217,360
------------
295,750
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
88
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SEMICONDUCTORS (3.3%)
2,132 Advanced Micro Devices, Inc.*........................................................ $ 61,695
2,526 Analog Devices, Inc.*................................................................ 234,918
48,382 Intel Corp........................................................................... 3,979,420
2,154 LSI Logic Corp.*..................................................................... 145,395
3,908 Micron Technology, Inc.*............................................................. 303,847
2,484 National Semiconductor Corp.*........................................................ 106,346
11,614 Texas Instruments, Inc............................................................... 1,125,106
4,618 Xilinx, Inc.*........................................................................ 209,830
------------
6,166,557
------------
SERVICES TO THE HEALTH INDUSTRY (0.1%)
4,459 IMS Health Inc....................................................................... 121,229
1,665 Quintiles Transnational Corp.*....................................................... 31,011
390 Shared Medical Systems Corp.......................................................... 19,866
------------
172,106
------------
SHOE MANUFACTURING (0.1%)
4,055 Nike, Inc. (Class B)................................................................. 200,976
815 Reebok International Inc. (United Kingdom)*.......................................... 6,673
------------
207,649
------------
SPECIALTY CHEMICALS (0.2%)
3,321 Air Products & Chemicals, Inc........................................................ 111,461
1,822 Engelhard Corp....................................................................... 34,390
443 FMC Corp.*........................................................................... 25,389
1,040 Grace (W. R.) & Co................................................................... 14,430
833 Great Lakes Chemical Corp............................................................ 31,810
2,302 Praxair, Inc......................................................................... 115,819
1,461 Sigma-Aldrich Corp................................................................... 43,830
------------
377,129
------------
SPECIALTY FOODS/CANDY (0.1%)
2,004 Hershey Foods Corp................................................................... 95,190
1,676 Wrigley (Wm.) Jr. Co. (Class A)...................................................... 139,003
------------
234,193
------------
SPECIALTY INSURERS (0.1%)
1,442 MBIA, Inc............................................................................ 76,156
1,531 MGIC Investment Corp................................................................. 92,147
------------
168,303
------------
SPECIALTY STEELS (0.0%)
1,263 Nucor Corp........................................................................... 69,228
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
STEEL/IRON ORE (0.0%)
1,899 Bethlehem Steel Corp.*............................................................... $ 15,904
1,280 USX-U.S. Steel Group................................................................. 42,240
1,290 Worthington Industries, Inc.......................................................... 21,285
------------
79,429
------------
TELECOMMUNICATIONS EQUIPMENT (5.2%)
2,166 ADC Telecommunications, Inc.*........................................................ 157,035
1,032 Comverse Technology, Inc.*........................................................... 149,318
3,545 Corning Inc.......................................................................... 457,083
2,520 General Instrument Corp.*............................................................ 214,200
45,371 Lucent Technologies Inc.............................................................. 3,394,318
8,820 Motorola, Inc........................................................................ 1,298,745
19,341 Nortel Networks Corp. (Canada)....................................................... 1,953,441
9,556 QUALCOMM Inc.*....................................................................... 1,682,453
1,138 Scientific-Atlanta, Inc.............................................................. 63,301
5,825 Tellabs, Inc.*....................................................................... 373,528
------------
9,743,422
------------
TEXTILES (0.0%)
259 Springs Industries, Inc. (Class A)................................................... 10,344
------------
TOBACCO (0.5%)
4,723 Nabisco Group Holdings Corp.......................................................... 50,182
34,265 Philip Morris Companies, Inc......................................................... 794,520
2,478 UST, Inc............................................................................. 62,415
------------
907,117
------------
TOOLS/HARDWARE (0.1%)
1,258 Black & Decker Corp.................................................................. 65,731
335 Briggs & Stratton Corp............................................................... 17,964
899 Snap-On, Inc......................................................................... 23,880
1,295 Stanley Works........................................................................ 39,012
------------
146,587
------------
WHOLESALE DISTRIBUTORS (0.0%)
1,352 Grainger (W.W.), Inc................................................................. 64,643
2,160 IKON Office Solutions, Inc........................................................... 14,715
------------
79,358
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $153,630,667)....................................................... 178,324,358
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
89
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (a) (3.9%)
U.S. GOVERNMENT AGENCY
$ 7,200 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $7,199,400)...... $ 7,199,400
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $160,830,067) (B)........................................................ 99.8% 185,523,758
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................ 0.2 439,062
----- -------------
NET ASSETS................................................................................ 100.0% $ 185,962,820
----- -------------
----- -------------
</TABLE>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
** Some or all of these securities are segregated in connection with open
futures contracts.
(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 $34,695,817 and the
aggregate gross unrealized depreciation is $10,002,126, resulting in net
unrealized appreciation of $24,693,691.
FUTURES CONTRACTS OPEN AT DECEMBER 31, 1999:
<TABLE>
<CAPTION>
DESCRIPTION, UNDERLYING
NUMBER OF DELIVERY MONTH, FACE AMOUNT UNREALIZED
CONTRACTS AND YEAR AT VALUE GAIN
- ----------------------------------------------------------------
<S> <C> <C> <C>
18 S&P 500 Index
March/2000
$6,678,900 $ 170,263
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
90
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST
IDEAS"
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS (92.8%)
AUSTRALIA (2.1%)
MEDIA CONGLOMERATES
157,600 News Corporation Ltd. (Pref.)........................................................... $ 1,349,182
-----------
FINLAND (2.6%)
PAPER
40,300 UPM-Kymmene Oyj......................................................................... 1,621,350
-----------
FRANCE (6.2%)
MULTI-LINE INSURANCE
9,205 Axa*.................................................................................... 1,281,361
-----------
OIL REFINING/MARKETING
10,500 Total S.A. (B Shares)................................................................... 1,399,319
-----------
PACKAGED FOODS
5,000 Groupe Danone........................................................................... 1,176,786
-----------
TOTAL FRANCE............................................................................ 3,857,466
-----------
GERMANY (2.3%)
MOTOR VEHICLES
46,660 Bayerische Motoren Werke (BMW) AG....................................................... 1,421,998
-----------
HONG KONG (2.2%)
DIVERSIFIED FINANCIAL SERVICES
99,670 HSBC Holdings PLC....................................................................... 1,397,483
-----------
JAPAN (13.7%)
CONSUMER ELECTRONICS/APPLIANCES
7,410 Sony Corp............................................................................... 2,196,469
-----------
DIVERSIFIED ELECTRONIC PRODUCTS
60,000 Matsushita Electric Industrial Co., Ltd................................................. 1,661,123
-----------
ELECTRONIC DATA PROCESSING
35,900 Fujitsu Ltd............................................................................. 1,636,607
14,000 Tokyo Electron Ltd...................................................................... 1,917,433
-----------
3,554,040
-----------
SPECIALTY CHEMICALS
26,050 Shin-Etsu Chemical Co., Ltd............................................................. 1,121,307
-----------
TOTAL JAPAN............................................................................. 8,532,939
-----------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MEXICO (2.6%)
TELECOMMUNICATIONS
14,700 Telefonos de Mexico S.A. (Series L) (ADR)............................................... $ 1,653,750
-----------
NETHERLANDS (2.0%)
ALCOHOLIC BEVERAGES
25,100 Heineken N.V............................................................................ 1,222,391
-----------
SWEDEN (3.0%)
LIFE INSURANCE
61,700 Skandia Forsakrings AB.................................................................. 1,861,007
-----------
SWITZERLAND (2.4%)
BUILDING MATERIALS
1,080 Holderbank Financiere Glarus AG (B Shares).............................................. 1,477,966
-----------
UNITED KINGDOM (6.7%)
ALCOHOLIC BEVERAGES
120,600 Diageo PLC.............................................................................. 969,469
-----------
INDUSTRIAL MACHINERY/COMPONENTS
264,400 Invensys PLC............................................................................ 1,438,297
-----------
TELECOMMUNICATIONS
71,500 British Telecommunications PLC.......................................................... 1,746,234
-----------
TOTAL UNITED KINGDOM.................................................................... 4,154,000
-----------
UNITED STATES (47.0%)
AIR FREIGHT/DELIVERY SERVICES
26,100 FDX Corp.*.............................................................................. 1,068,469
-----------
BEVERAGES - NON-ALCOHOLIC
46,700 Coca-Cola Enterprises Inc............................................................... 939,837
-----------
BROADCASTING
17,600 Clear Channel Communications, Inc.*..................................................... 1,570,800
-----------
COMPUTER COMMUNICATIONS
19,390 Cisco Systems, Inc.*.................................................................... 2,075,942
-----------
COMPUTER SOFTWARE
13,500 Microsoft Corp.*........................................................................ 1,575,281
-----------
CONTRACT DRILLING
3,678 Transocean Sedco Forex Inc.............................................................. 123,916
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
91
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST
IDEAS"
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DISCOUNT CHAINS
24,500 Wal-Mart Stores, Inc.................................................................... $ 1,693,562
-----------
DIVERSIFIED FINANCIAL SERVICES
9,080 American Express Co..................................................................... 1,509,550
-----------
E.D.P. PERIPHERALS
19,500 EMC Corp.*.............................................................................. 2,130,375
-----------
ELECTRICAL PRODUCTS
19,500 Emerson Electric Co..................................................................... 1,118,813
-----------
INTERNET SERVICES
23,800 America Online, Inc.*................................................................... 1,795,413
-----------
MAJOR BANKS
32,800 Bank of New York Co., Inc............................................................... 1,312,000
-----------
MAJOR CHEMICALS
16,700 Du Pont (E.I.) de Nemours & Co., Inc.................................................... 1,100,113
-----------
MAJOR PHARMACEUTICALS
25,200 American Home Products Corp............................................................. 993,825
-----------
MAJOR U.S. TELECOMMUNICATIONS
22,545 MCI WorldCom, Inc.*..................................................................... 1,194,885
-----------
MEDIA CONGLOMERATES
18,300 Time Warner Inc......................................................................... 1,325,606
-----------
MEDICAL EQUIPMENT & SUPPLIES
34,000 Medtronic, Inc.......................................................................... 1,238,875
-----------
MULTI-SECTOR COMPANIES
11,000 General Electric Co..................................................................... 1,702,250
-----------
OILFIELD SERVICES/EQUIPMENT
27,500 Halliburton Co.......................................................................... 1,106,875
19,000 Schlumberger Ltd........................................................................ 1,068,750
-----------
2,175,625
-----------
SEMICONDUCTORS
15,040 Intel Corp.............................................................................. 1,237,040
-----------
TELECOMMUNICATIONS EQUIPMENT
18,700 Lucent Technologies Inc................................................................. 1,398,994
-----------
TOTAL UNITED STATES..................................................................... 29,281,171
-----------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $43,993,480)........................................................... 57,830,703
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT (a) (7.1%)
U.S. GOVERNMENT AGENCY
$ 4,400 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $4,399,633)......... $ 4,399,633
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $48,393,113) (B).......................................................... 99.9% 62,230,336
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................. 0.1 64,466
----- ------------
NET ASSETS................................................................................. 100.0% $ 62,294,802
----- ------------
----- ------------
</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 aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $15,281,970 and the
aggregate gross unrealized depreciation is $1,444,747, resulting in net
unrealized appreciation of $13,837,223.
SEE NOTES TO FINANCIAL STATEMENTS
92
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST
IDEAS"
SUMMARY OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Air Freight/Delivery Services...................................................... $ 1,068,469 1.7%
Alcoholic Beverages................................................................ 2,191,860 3.5
Beverages - Non-Alcoholic.......................................................... 939,837 1.5
Broadcasting....................................................................... 1,570,800 2.5
Building Materials................................................................. 1,477,966 2.4
Computer Communications............................................................ 2,075,942 3.3
Computer Software.................................................................. 1,575,281 2.5
Consumer Electronics/Appliances.................................................... 2,196,469 3.5
Contract Drilling.................................................................. 123,916 0.2
Discount Chains.................................................................... 1,693,562 2.7
Diversified Electronic Products.................................................... 1,661,123 2.7
Diversified Financial Services..................................................... 2,907,033 4.7
E.D.P. Peripherals................................................................. 2,130,375 3.4
Electrical Products................................................................ 1,118,813 1.8
Electronic Data Processing......................................................... 3,554,040 5.7
Industrial Machinery/Components.................................................... 1,438,297 2.3
Internet Services.................................................................. 1,795,413 2.9
Life Insurance..................................................................... 1,861,007 3.0
Major Banks........................................................................ 1,312,000 2.1
Major Chemicals.................................................................... 1,100,113 1.8
Major Pharmaceuticals.............................................................. 993,825 1.6
Major U.S. Telecommunications...................................................... 1,194,885 1.9
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Media Conglomerates................................................................ $ 2,674,788 4.3%
Medical Equipment & Supplies....................................................... 1,238,875 2.0
Motor Vehicles..................................................................... 1,421,998 2.3
Multi-Line Insurance............................................................... 1,281,361 2.1
Multi-Sector Companies............................................................. 1,702,250 2.7
Oil Refining/Marketing............................................................. 1,399,319 2.2
Oilfield Services/Equipment........................................................ 2,175,625 3.5
Packaged Foods..................................................................... 1,176,786 1.9
Paper.............................................................................. 1,621,350 2.6
Semiconductors..................................................................... 1,237,040 2.0
Specialty Chemicals................................................................ 1,121,307 1.8
Telecommunications................................................................. 3,399,984 5.5
Telecommunications Equipment....................................................... 1,398,994 2.2
U.S. Government Agency............................................................. 4,399,633 7.1
----------- -----
$62,230,336 99.9%
----------- -----
----------- -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks...................................................................... $56,481,521 90.7%
Preferred Stocks................................................................... 1,349,182 2.2
Short-Term Investment.............................................................. 4,399,633 7.1
----------- -----
$62,230,336 99.9%
----------- -----
----------- -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
93
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (86.0%)
ADVERTISING (3.0%)
700 DoubleClick Inc.*....................................................................... $ 177,144
3,400 Interpublic Group of Companies, Inc..................................................... 196,137
900 Lamar Advertising Co.*.................................................................. 54,337
3,800 Omnicom Group, Inc...................................................................... 380,000
600 True North Communications, Inc.......................................................... 26,812
1,940 WPP Group PLC (ADR) (United Kingdom).................................................... 160,292
2,300 Young & Rubicam, Inc.................................................................... 162,725
-----------
1,157,447
-----------
ALCOHOLIC BEVERAGES (1.0%)
350 Anheuser-Busch Companies, Inc........................................................... 24,806
3,000 Coors (Adolph) Co. (Class B)............................................................ 157,500
2,300 LVMH (Louis Vuitton Moet Hennessy) (ADR) (France)....................................... 205,275
-----------
387,581
-----------
ALUMINUM (1.8%)
7,800 Alcan Aluminium, Ltd. (Canada).......................................................... 321,262
4,300 Alcoa, Inc.............................................................................. 356,900
-----------
678,162
-----------
BIOTECHNOLOGY (2.3%)
2,000 Alkermes, Inc.*......................................................................... 98,000
4,000 Amgen Inc.*............................................................................. 240,000
600 COR Therapeutics, Inc.*................................................................. 16,125
2,400 Genentech, Inc.*........................................................................ 322,800
500 Human Genome Sciences, Inc.*............................................................ 76,250
700 MedImmune, Inc.*........................................................................ 116,025
-----------
869,200
-----------
BROADCASTING (4.2%)
6,500 CBS Corp.*.............................................................................. 415,594
2,700 Citadel Communications Corp.*........................................................... 174,825
3,500 Clear Channel Communications, Inc.*..................................................... 312,375
600 Cox Radio, Inc. (Class A)*.............................................................. 59,850
1,500 Entercom Communications Corp.*.......................................................... 99,000
1,375 Hispanic Broadcasting Corp.*............................................................ 126,500
1,850 Infinity Broadcasting Corp. (Series A)*................................................. 66,947
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
400 Radio One, Inc.*........................................................................ $ 36,800
2,000 Univision Communications, Inc. (Class A)*............................................... 204,375
1,750 USA Networks, Inc.*..................................................................... 96,578
-----------
1,592,844
-----------
BUILDING MATERIALS/D I Y CHAINS (1.2%)
6,450 Home Depot, Inc. (The).................................................................. 442,228
-----------
CABLE TELEVISION (2.9%)
3,000 AT&T Corp. - Liberty Media Group (Class A)*............................................. 170,250
3,025 Comcast Corp. (Class A Special)*........................................................ 152,762
6,500 Cox Communications, Inc. (Class A)*..................................................... 334,750
4,000 EchoStar Communications Corp. (Class A)*................................................ 389,000
400 United Pan-Europe Communications NV (ADR) (Netherlands)*................................ 50,800
-----------
1,097,562
-----------
CASINO/GAMBLING (0.6%)
1,200 MGM Grand, Inc.......................................................................... 60,375
6,000 Mirage Resorts, Inc.*................................................................... 91,875
5,000 Park Place Entertainment Corp.*......................................................... 62,500
-----------
214,750
-----------
CELLULAR TELEPHONE (1.9%)
1,000 Crown Castle International Corp.*....................................................... 32,000
2,300 Nextel Communications, Inc. (Class A)*.................................................. 237,044
800 Sprint Corp. (PCS Group)*............................................................... 82,000
600 United States Cellular Corp.*........................................................... 60,562
1,900 Vodafone AirTouch PLC (ADR) (United Kingdom)............................................ 94,050
1,000 Voicestream Wireless Corp.*............................................................. 141,875
1,000 Western Wireless Corp. (Class A)*....................................................... 66,625
-----------
714,156
-----------
CLOTHING/SHOE/ACCESSORY STORES (0.8%)
3,310 Gap, Inc. (The)......................................................................... 152,260
3,600 Talbot's, Inc. (The).................................................................... 160,650
-----------
312,910
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
94
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER COMMUNICATIONS (2.0%)
300 Brocade Communications Systems, Inc.*................................................... $ 52,725
100 CacheFlow Inc.*......................................................................... 13,069
3,100 Cisco Systems, Inc.*.................................................................... 331,894
140 Cobalt Networks, Inc.*.................................................................. 14,980
800 Emulex Corp.*........................................................................... 90,350
300 Finisar Corp.*.......................................................................... 26,737
200 Foundry Networks, Inc.*................................................................. 60,300
200 Juniper Networks, Inc.*................................................................. 67,850
500 Redback Networks, Inc.*................................................................. 88,344
-----------
746,249
-----------
COMPUTER SOFTWARE (9.1%)
950 Check Point Software Technologies Ltd. (Israel)*........................................ 188,694
600 Citrix Systems, Inc.*................................................................... 73,762
100 Digimarc Corp.*......................................................................... 5,000
550 E.piphany, Inc.*........................................................................ 122,375
1,100 i2 Technologies, Inc.*.................................................................. 214,087
4,200 Intuit Inc.*............................................................................ 251,475
900 Legato Systems, Inc.*................................................................... 61,875
1,800 Macromedia, Inc.*....................................................................... 131,625
1,100 Mercury Interactive Corp.*.............................................................. 118,731
100 Metasolv Software, Inc.*................................................................ 8,225
4,000 Microsoft Corp.*........................................................................ 466,750
400 MicroStrategy Inc.*..................................................................... 84,000
600 OpenTV Corp.*........................................................................... 48,150
6,000 Oracle Corp.*........................................................................... 672,000
5,300 Parametric Technology Corp.*............................................................ 143,100
1,000 Rational Software Corp.*................................................................ 49,125
100 Red Hat, Inc.*.......................................................................... 21,106
600 Remedy Corp.*........................................................................... 28,500
1,600 Sapient Corp.*.......................................................................... 225,400
2,000 Siebel Systems, Inc.*................................................................... 168,500
900 TSI International Software Ltd.*........................................................ 50,850
2,400 Veritas Software Corp.*................................................................. 343,350
-----------
3,476,680
-----------
CONSUMER ELECTRONICS/APPLIANCES (0.3%)
400 Sony Corp. (ADR) (Japan)................................................................ 113,900
-----------
CONTRACT DRILLING (2.3%)
14,500 ENSCO International Inc................................................................. 331,687
1,900 Nabors Industries, Inc.*................................................................ 58,781
10,500 R&B Falcon Corp.*....................................................................... 139,125
5,460 Rowan Companies, Inc.*.................................................................. 118,414
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
850 Santa Fe International Corp............................................................. $ 21,994
5,761 Transocean Sedco Forex Inc.............................................................. 194,089
-----------
864,090
-----------
DISCOUNT CHAINS (3.4%)
3,200 Costco Wholesale Corp.*................................................................. 291,800
4,100 Dayton Hudson Corp...................................................................... 301,094
10,000 Wal-Mart Stores, Inc.................................................................... 691,250
-----------
1,284,144
-----------
DIVERSIFIED COMMERCIAL SERVICES (0.7%)
1,600 CheckFree Holdings Corp.*............................................................... 167,200
2,000 Concord EFS, Inc.*...................................................................... 51,375
100 Freemarkets, Inc.*...................................................................... 34,131
300 Jupiter Communications, Inc.*........................................................... 9,037
300 Wireless Facilities, Inc.*.............................................................. 13,050
-----------
274,793
-----------
DIVERSIFIED ELECTRONIC PRODUCTS (1.1%)
2,000 JDS Uniphase Corp.*..................................................................... 322,500
750 Koninklijke (Royal) Philips Electronics NV (Netherlands)................................ 101,250
-----------
423,750
-----------
DIVERSIFIED FINANCIAL SERVICES (2.0%)
2,075 American Express Co..................................................................... 344,969
1,600 AXA Financial, Inc...................................................................... 54,200
6,905 Citigroup, Inc.......................................................................... 383,659
-----------
782,828
-----------
E.D.P. PERIPHERALS (0.6%)
1,600 Network Appliance, Inc.*................................................................ 132,800
210 QLogic Corp.*........................................................................... 33,574
1,400 Seagate Technology, Inc.*............................................................... 65,187
-----------
231,561
-----------
E.D.P. SERVICES (0.9%)
770 Amdocs Ltd.*............................................................................ 26,565
3,270 BEA Systems, Inc.*...................................................................... 228,900
420 Razorfish, Inc.*........................................................................ 39,900
1,200 Whittman-Hart, Inc.*.................................................................... 64,350
-----------
359,715
-----------
ELECTRIC UTILITIES (0.3%)
1,500 Calpine Corp.*.......................................................................... 96,000
-----------
ELECTRONIC COMPONENTS (0.2%)
500 E-Tek Dynamics, Inc.*................................................................... 67,125
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
95
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
ELECTRONIC DATA PROCESSING (1.5%)
850 Apple Computer, Inc.*................................................................... $ 87,337
6,200 Sun Microsystems, Inc.*................................................................. 479,725
-----------
567,062
-----------
ELECTRONIC PRODUCTION EQUIPMENT (1.4%)
1,820 Applied Materials, Inc.*................................................................ 230,457
2,400 ASM Lithography Holding NV (Netherlands)*............................................... 270,900
310 Lam Research Corp.*..................................................................... 34,584
250 Rudolph Technologies, Inc.*............................................................. 8,250
-----------
544,191
-----------
FLUID CONTROLS (0.2%)
1,800 Parker-Hannifin Corp.................................................................... 92,362
-----------
FOOD DISTRIBUTORS (0.1%)
1,100 SYSCO Corp.............................................................................. 43,519
-----------
FOREST PRODUCTS (0.9%)
5,000 Weyerhaeuser Co......................................................................... 359,062
-----------
GENERIC DRUGS (0.2%)
2,500 Mylan Laboratories, Inc................................................................. 62,969
-----------
HOTELS/RESORTS (0.2%)
1,500 Royal Caribbean Cruises Ltd............................................................. 73,969
-----------
INTEGRATED OIL COMPANIES (1.9%)
4,850 BP Amoco PLC (ADR) (United Kingdom)..................................................... 287,666
3,510 Exxon Mobil Corp........................................................................ 282,774
210 Kerr-McGee Corp......................................................................... 13,020
2,500 Royal Dutch Petroleum Co. (ADR) (Netherlands)........................................... 151,094
-----------
734,554
-----------
INTERNATIONAL BANKS (0.3%)
650 Asahi Bank, Ltd. (ADR) (Japan)*......................................................... 40,056
300 Fuji Bank, Ltd. (ADR) (Japan)........................................................... 29,147
900 Sakura Bank, Ltd. (ADR) (Japan)*........................................................ 52,144
-----------
121,347
-----------
INTERNET SERVICES (9.1%)
300 Agency.com, Inc.*....................................................................... 15,412
300 Akamai Technologies, Inc.*.............................................................. 98,287
500 Allaire Corp.*.......................................................................... 73,156
3,300 America Online, Inc.*................................................................... 248,944
800 Ariba, Inc.*............................................................................ 141,600
700 Art Technology Group, Inc.*............................................................. 91,044
550 Broadbase Software, Inc.*............................................................... 61,050
1,400 BroadVision, Inc.*...................................................................... 238,087
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
100 C-Bridge Internet Solutions, Inc.*...................................................... $ 4,950
800 Calico Commerce, Inc.*.................................................................. 42,300
400 iManage, Inc.*.......................................................................... 13,050
600 Inktomi Corp.*.......................................................................... 53,175
80 Internet Capital Group, Inc.*........................................................... 13,565
700 Kana Communications, Inc.*.............................................................. 143,019
100 Liberate Technologies, Inc.*............................................................ 25,625
1,641 Lycos, Inc.*............................................................................ 130,562
300 OnDisplay, Inc.*........................................................................ 27,150
1,000 Portal Software, Inc.*.................................................................. 102,500
380 Preview Systems, Inc.*.................................................................. 24,320
600 Quest Software, Inc.*................................................................... 59,775
650 RealNetworks, Inc.*..................................................................... 78,203
800 Scient Corp.*........................................................................... 68,600
2,050 USWeb Corp.*............................................................................ 91,097
3,400 VeriSign, Inc.*......................................................................... 649,825
2,000 Vignette Corp.*......................................................................... 325,875
1,500 Yahoo! Inc.*............................................................................ 649,031
-----------
3,470,202
-----------
INVESTMENT BANKERS/BROKERS/SERVICES (1.8%)
2,310 Donaldson, Lufkin & Jenrette, Inc....................................................... 111,746
2,850 Goldman Sachs Group, Inc. (The)......................................................... 268,434
2,300 Lehman Brothers Holdings, Inc........................................................... 194,781
800 Merrill Lynch & Co., Inc................................................................ 66,800
875 Paine Webber Group, Inc................................................................. 33,961
-----------
675,722
-----------
LIFE INSURANCE (0.1%)
700 Lincoln National Corp................................................................... 28,000
-----------
MAJOR BANKS (0.8%)
2,500 Bank of New York Co., Inc............................................................... 100,000
2,800 Chase Manhattan Corp. (The)............................................................. 217,525
-----------
317,525
-----------
MAJOR PHARMACEUTICALS (1.3%)
3,150 American Home Products Corp............................................................. 124,228
1,300 Merck & Co., Inc.*...................................................................... 87,181
3,575 Warner-Lambert Co....................................................................... 292,927
-----------
504,336
-----------
MAJOR U.S. TELECOMMUNICATIONS (0.1%)
1,050 MCI WorldCom, Inc.*..................................................................... 55,650
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
96
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MARINE TRANSPORTATION (0.3%)
2,800 Tidewater, Inc.......................................................................... $ 100,800
-----------
MEDIA CONGLOMERATES (0.6%)
2,000 News Corporation Ltd. (The) (ADR) (Australia)........................................... 76,500
125 Viacom, Inc. (Class A)*................................................................. 7,555
2,375 Viacom, Inc. (Class B)*................................................................. 143,539
-----------
227,594
-----------
MEDICAL SPECIALTIES (0.7%)
1,400 Cytyc Corp.*............................................................................ 85,575
4,500 Inhale Therapeutic Systems, Inc.*....................................................... 191,531
-----------
277,106
-----------
MEDICAL/DENTAL DISTRIBUTORS (0.1%)
300 SciQuest.com, Inc.*..................................................................... 23,850
-----------
MID - SIZED BANKS (0.1%)
1,060 Northern Trust Corp..................................................................... 56,577
-----------
MILITARY/GOV'T/TECHNICAL (0.6%)
2,200 General Motors Corp. (Class H)*......................................................... 211,200
-----------
MOVIES/ENTERTAINMENT (0.3%)
1,500 Westwood One, Inc.*..................................................................... 114,000
-----------
MULTI-LINE INSURANCE (0.7%)
2,550 American International Group, Inc....................................................... 275,719
-----------
NEWSPAPERS (0.6%)
1,270 Dow Jones & Co., Inc.................................................................... 86,360
2,000 New York Times Co. (The) (Class A)...................................................... 98,250
1,050 Tribune Co.............................................................................. 57,816
-----------
242,426
-----------
OFFICE EQUIPMENT/SUPPLIES (0.5%)
2,400 Avery Dennison Corp..................................................................... 174,900
-----------
OIL & GAS PRODUCTION (0.4%)
1,900 Devon Energy Corp....................................................................... 62,463
3,100 EOG Resources, Inc...................................................................... 54,444
2,930 Union Pacific Resources Group, Inc...................................................... 37,358
-----------
154,265
-----------
OIL/GAS TRANSMISSION (0.5%)
4,000 Enron Corp.............................................................................. 177,500
-----------
OILFIELD SERVICES/EQUIPMENT (2.3%)
3,500 BJ Services Co.*........................................................................ 146,344
2,800 Cooper Cameron Corp.*................................................................... 137,025
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
4,200 Halliburton Co.......................................................................... $ 169,050
2,900 Schlumberger Ltd........................................................................ 163,125
2,380 Smith International, Inc.*.............................................................. 118,256
3,800 Weatherford International, Inc.*........................................................ 151,763
-----------
885,563
-----------
OTHER CONSUMER SERVICES (0.4%)
1,600 Preview Travel, lnc.*................................................................... 83,400
1,400 Ticketmaster Online-CitySearch, Inc. (Series B)*........................................ 53,813
-----------
137,213
-----------
OTHER METALS/MINERALS (0.4%)
6,470 Inco Ltd. (Canada)*..................................................................... 152,045
-----------
OTHER PHARMACEUTICALS (1.1%)
700 Biovail Corporation International (Canada)*............................................. 65,625
4,240 Forest Laboratories, Inc.*.............................................................. 260,495
1,500 Teva Pharmaceutical Industries Ltd. (ADR) (Israel)...................................... 107,250
-----------
433,370
-----------
OTHER SPECIALTY STORES (0.8%)
2,600 Tiffany & Co............................................................................ 232,050
1,820 Zale Corp.*............................................................................. 88,043
-----------
320,093
-----------
OTHER TELECOMMUNICATIONS (2.9%)
1,100 Aerial Communications, Inc.*............................................................ 66,894
1,000 COLT Telecom Group PLC (ADR) (United Kingdom)*.......................................... 203,875
1,550 Covad Communications Group, Inc.*....................................................... 86,219
600 Mannesmann AG (ADR) (Germany)........................................................... 145,200
3,000 McLeodUSA, Inc. (Class A)*.............................................................. 176,250
125 NTL Inc.*............................................................................... 15,563
2,900 PanAmSat Corp.*......................................................................... 171,281
600 Qwest Communications International, Inc.*............................................... 25,763
1,400 RCN Corp.*.............................................................................. 67,813
1,975 Sonera Corp. (ADR) (Finland)*........................................................... 136,769
-----------
1,095,627
-----------
PACKAGE GOODS/COSMETICS (0.3%)
2,000 Colgate-Palmolive Co.................................................................... 130,000
-----------
PAPER (0.3%)
1,900 Champion International Corp............................................................. 117,681
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
97
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PRECISION INSTRUMENTS (0.2%)
600 PE Corporation-PE Biosystems Group...................................................... $ 72,188
-----------
RECREATIONAL PRODUCTS/TOYS (0.4%)
2,000 Electronic Arts Inc.*................................................................... 168,000
-----------
SEMICONDUCTORS (1.4%)
700 Broadcom Corp. (Class A)*............................................................... 190,619
2,380 Conexant Systems, Inc.*................................................................. 157,229
418 SDL, Inc.*.............................................................................. 91,124
520 STMicroelectronics NV (Netherlands)..................................................... 78,748
-----------
517,720
-----------
TELECOMMUNICATIONS (0.8%)
500 Japan Telecom Co., Ltd. (ADR) (Japan)................................................... 40,125
2,050 Nippon Telegraph & Telephone Corp. (ADR) (Japan)........................................ 176,556
850 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico)...................................... 95,625
-----------
312,306
-----------
TELECOMMUNICATIONS EQUIPMENT (6.8%)
1,700 Alcatel (ADR) (France).................................................................. 76,500
2,000 American Tower Corp. (Class A)*......................................................... 61,125
710 CIENA Corp.*............................................................................ 40,825
1,400 Comverse Technology, Inc.*.............................................................. 202,563
2,800 Corning Inc............................................................................. 361,025
5,300 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden)...................................... 347,813
1,050 General Instrument Corp.*............................................................... 89,250
1,400 Harmonic, Inc.*......................................................................... 132,650
2,600 Motorola, Inc........................................................................... 382,850
100 Next Level Communications, Inc.*........................................................ 7,494
2,300 Nokia Corp. (ADR) (Finland)............................................................. 437,000
1,600 Nortel Networks Corp. (Canada).......................................................... 161,600
2,400 RF Micro Devices, Inc.*................................................................. 163,800
2,100 Scientific-Atlanta, Inc................................................................. 116,813
200 Sycamore Networks, Inc.*................................................................ 60,726
-----------
2,642,034
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $25,476,009)........................................................... $32,857,922
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (12.8%)
U.S. GOVERNMENT AGENCY (a) (12.3%)
$ 4,700 Federal Home Mortgage Corp. 1.50% due 01/03/00 (AMORTIZED COST $4,699,608).............. $ 4,699,608
-----------
REPURCHASE AGREEMENT (0.5%)
185 The Bank of New York 1.50% due 01/03/00 (dated 12/31/99; proceeds $185,292) (b)
(IDENTIFIED COST $185,269)............................................................ 185,269
-----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $4,884,877)............................................................ 4,884,877
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $30,360,886) (C).......................................................... 98.8% 37,742,799
OTHER ASSETS IN EXCESS OF LIABILITIES...................................................... 1.2 454,577
----- ------------
NET ASSETS................................................................................. 100.0% $ 38,197,376
----- ------------
----- ------------
</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 $129,953 U.S. Treasury Bond 11.25% due 02/15/15 valued
at $189,122.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $7,598,493 and the
aggregate gross unrealized depreciation is $216,580, resulting in net
unrealized appreciation of $7,381,913.
SEE NOTES TO FINANCIAL STATEMENTS
98
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
<C> <S> <C>
- ----------------------------------------------------------------------------------------------------------------
COMMON STOCKS (67.0%)
ADVERTISING (1.4%)
140,000 Young & Rubicam, Inc................................................................... $ 9,905,000
------------
BIOTECHNOLOGY (0.1%)
7,500 PE Corp-Celera Genomics Group*......................................................... 1,117,500
------------
BUILDING MATERIALS/D I Y CHAINS (1.5%)
162,150 Home Depot, Inc. (The)................................................................. 11,117,409
------------
CABLE TELEVISION (1.0%)
94,300 MediaOne Group, Inc.*.................................................................. 7,243,419
------------
CASINO/GAMBLING (0.5%)
322,000 Park Place Entertainment Corp.*........................................................ 4,025,000
------------
CATALOG/SPECIALTY DISTRIBUTION (0.1%)
56,400 Webvan Group Inc.*..................................................................... 912,975
------------
CLOTHING/SHOE/ACCESSORY STORES (1.2%)
192,825 Gap, Inc. (The)........................................................................ 8,869,950
------------
COMPUTER COMMUNICATIONS (1.5%)
105,500 Cisco Systems, Inc.*................................................................... 11,295,094
------------
COMPUTER SOFTWARE (4.0%)
140,000 Adobe Systems, Inc..................................................................... 9,415,000
78,500 Microsoft Corp.*....................................................................... 9,159,969
260,100 Novell, Inc.*.......................................................................... 10,371,487
------------
28,946,456
------------
CONSTRUCTION/AGRICULTURAL EQUIPMENT/TRUCKS (0.7%)
120,000 PACCAR, Inc............................................................................ 5,310,000
------------
CONSUMER ELECTRONICS/
APPLIANCES (1.5%)
100,100 Maytag Corp............................................................................ 4,804,800
94,200 Whirlpool Corp......................................................................... 6,128,887
------------
10,933,687
------------
CONTRACT DRILLING (0.7%)
169,000 Diamond Offshore Drilling, Inc......................................................... 5,165,062
------------
DISCOUNT CHAINS (1.1%)
84,500 Costco Wholesale Corp.*................................................................ 7,705,344
------------
DIVERSIFIED ELECTRONIC PRODUCTS (0.7%)
109,000 Rockwell International Corp............................................................ 5,218,375
------------
DIVERSIFIED FINANCIAL SERVICES (3.1%)
48,400 American Express Co.................................................................... 8,046,500
210,600 AXA Financial, Inc..................................................................... 7,134,075
141,200 Citigroup, Inc......................................................................... 7,845,425
------------
23,026,000
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
DIVERSIFIED MANUFACTURING (1.5%)
107,250 Honeywell International Inc............................................................ $ 6,186,984
129,400 Tyco International Ltd. (Bermuda)...................................................... 5,030,425
------------
11,217,409
------------
E.D.P. PERIPHERALS (1.7%)
110,800 EMC Corp.*............................................................................. 12,104,900
------------
ELECTRONIC DATA PROCESSING (2.9%)
148,000 Dell Computer Corp.*................................................................... 7,538,750
178,200 Sun Microsystems, Inc.*................................................................ 13,788,225
------------
21,326,975
------------
ELECTRONIC PRODUCTION EQUIPMENT (1.6%)
160,700 Jabil Circuit, Inc.*................................................................... 11,731,100
------------
ENVIRONMENTAL SERVICES (0.2%)
126,500 Allied Waste Industries, Inc.*......................................................... 1,114,781
------------
INTEGRATED OIL COMPANIES (3.5%)
71,800 Atlantic Richfield Co.................................................................. 6,210,700
82,245 Exxon Mobil Corp....................................................................... 6,625,863
114,000 Kerr-McGee Corp........................................................................ 7,068,000
160,700 Unocal Corp............................................................................ 5,393,494
------------
25,298,057
------------
INTERNET SERVICES (2.8%)
135,800 America Online, Inc.*.................................................................. 10,244,412
115,200 Inktomi Corp.*......................................................................... 10,209,600
------------
20,454,012
------------
INVESTMENT BANKERS/BROKERS/
SERVICES (1.0%)
83,800 Merrill Lynch & Co., Inc............................................................... 6,997,300
------------
MAJOR BANKS (2.7%)
79,500 Chase Manhattan Corp. (The)............................................................ 6,176,156
197,500 Mellon Financial Corp.................................................................. 6,727,344
159,700 Wells Fargo & Co....................................................................... 6,457,869
------------
19,361,369
------------
MAJOR CHEMICALS (1.8%)
51,900 Dow Chemical Co........................................................................ 6,935,138
92,700 Du Pont (E.I.) de Nemours & Co., Inc................................................... 6,106,613
------------
13,041,751
------------
MAJOR PHARMACEUTICALS (4.4%)
156,800 Abbott Laboratories.................................................................... 5,693,800
121,437 Johnson & Johnson...................................................................... 11,308,821
101,200 Merck & Co., Inc....................................................................... 6,786,725
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
99
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
102,800 Warner-Lambert Co...................................................................... $ 8,423,175
------------
32,212,521
------------
MAJOR U.S. TELECOMMUNICATIONS (1.9%)
136,100 AT&T Corp.............................................................................. 6,907,075
128,850 MCI WorldCom, Inc.*.................................................................... 6,829,050
------------
13,736,125
------------
MANAGED HEALTH CARE (1.3%)
300,000 Oxford Health Plans, Inc.*............................................................. 3,806,250
85,600 Wellpoint Health Networks, Inc.*....................................................... 5,644,250
------------
9,450,500
------------
MEDIA CONGLOMERATES (1.4%)
341,500 Disney (Walt) Co....................................................................... 9,988,875
------------
MULTI-LINE INSURANCE (1.0%)
70,000 American International Group, Inc...................................................... 7,568,750
------------
MULTI-SECTOR COMPANIES (1.3%)
59,200 General Electric Co.................................................................... 9,161,200
------------
OFFICE EQUIPMENT/SUPPLIES (0.4%)
132,000 Xerox Corp............................................................................. 2,994,750
------------
OILFIELD SERVICES/EQUIPMENT (0.9%)
136,000 Smith International, Inc.*............................................................. 6,757,500
------------
OTHER SPECIALTY STORES (1.8%)
219,800 Bed Bath & Beyond Inc.*................................................................ 7,610,575
120,000 Williams-Sonoma, Inc.*................................................................. 5,520,000
------------
13,130,575
------------
PACKAGE GOODS/COSMETICS (1.2%)
134,700 Colgate-Palmolive Co................................................................... 8,755,500
------------
PACKAGED FOODS (0.8%)
158,800 General Mills, Inc..................................................................... 5,677,100
------------
PAPER (2.5%)
161,200 Boise Cascade Corp..................................................................... 6,528,600
111,100 Champion International Corp............................................................ 6,881,256
110,000 Willamette Industries, Inc............................................................. 5,108,125
------------
18,517,981
------------
PRECIOUS METALS (1.8%)
251,000 Barrick Gold Corp. (Canada)............................................................ 4,439,563
216,000 Homestake Mining Co.................................................................... 1,687,500
150,000 Newmont Mining Corp.................................................................... 3,675,000
293,000 Placer Dome Inc. (Canada).............................................................. 3,149,750
------------
12,951,813
------------
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PRECISION INSTRUMENTS (2.8%)
170,000 PE Corp. PE Biosystems Group........................................................... $ 20,453,125
------------
SAVINGS & LOAN ASSOCIATIONS (0.9%)
203,700 Golden West Financial Corp............................................................. 6,823,950
------------
SEMICONDUCTORS (2.0%)
84,600 Intel Corp............................................................................. 6,958,350
46,700 PMC - Sierra, Inc. (Canada)*........................................................... 7,483,675
------------
14,442,025
------------
TELECOMMUNICATIONS EQUIPMENT (1.8%)
60,000 General Instrument Corp.*.............................................................. 5,100,000
104,300 Lucent Technologies Inc................................................................ 7,802,944
------------
12,902,944
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $315,890,283)......................................................... 488,964,159
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS
<C> <S> <C>
-------
CORPORATE BONDS (6.9%)
AEROSPACE (0.3%)
$ 2,000 Lockheed Martin Corp.
8.20% due 12/01/09................................................................... 1,992,380
------------
DISCOUNT CHAINS (0.3%)
2,500 Wal-Mart Stores, Inc.
6.875% due 08/10/09.................................................................. 2,435,025
------------
DIVERSIFIED FINANCIAL SERVICES (0.5%)
1,000 General Electric Capital Corp.
6.52% due 10/08/02................................................................... 988,670
1,000 General Motors Acceptance Corp.
6.75% due 12/10/02................................................................... 988,670
1,000 IBM Credit Corp.
6.64% due 10/29/01................................................................... 996,640
1,000 Textron Financial Corp.
7.125% due 12/09/04.................................................................. 987,640
------------
3,961,620
------------
ELECTRIC UTILITIES (0.4%)
1,000 FPL Group Capital, Inc.
7.375% due 06/01/09.................................................................. 985,340
1,000 Public Service Electric & Gas Co.
6.00% due 05/01/00................................................................... 998,260
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
100
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 1,000 Utilicorp United Inc.
7.00% due 07/15/04................................................................... $ 963,750
------------
2,947,350
------------
FINANCE COMPANIES (0.8%)
1,000 Finova Capital Corp.
7.625% due 09/21/09.................................................................. 981,790
1,000 Ford Motor Credit Co.
6.375% due 11/05/08.................................................................. 924,240
1,000 Heller Financial Inc.
5.75% due 09/25/01................................................................... 978,410
2,000 Household Finance Corp.
6.50% due 11/15/08................................................................... 1,850,760
1,500 Norwest Financial, Inc.
6.375% due 07/16/02.................................................................. 1,478,610
------------
6,213,810
------------
FOOD DISTRIBUTORS (0.2%)
1,460 Shoppers Food Warehouse Corp.
9.75% due 06/15/04................................................................... 1,563,835
------------
INTEGRATED OIL COMPANIES (0.4%)
1,000 Amerada Hess Corp.
7.875% due 10/01/29.................................................................. 977,480
2,000 Conoco Inc.
6.95% due 04/15/29................................................................... 1,801,940
------------
2,779,420
------------
INVESTMENT BANKERS/BROKERS/ SERVICES (0.3%)
1,000 Paine Webber Group, Inc.
8.875% due 03/15/05.................................................................. 1,038,740
1,000 Paine Webber Group, Inc.
7.625% due 12/01/09.................................................................. 973,620
------------
2,012,360
------------
MAJOR BANKS (0.9%)
1,000 Banc One Corp.
8.74% due 09/15/03................................................................... 1,041,640
1,000 BankAmerica Institutional-144A**
8.07% due 12/31/26................................................................... 940,320
1,000 Fleet Boston Corp.
7.375% due 12/01/09.................................................................. 978,750
1,000 Keycorp Capital III
7.75% due 07/15/29................................................................... 928,970
1,000 Society Corp.
8.125% due 06/15/02.................................................................. 1,019,850
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$ 1,500 U.S. Bancorp
6.75% due 10/15/05................................................................... $ 1,448,850
------------
6,358,380
------------
MAJOR CHEMICALS (0.1%)
1,000 Du Pont (E.I.) De Nemours & Co., Inc.
6.875% due 10/15/09.................................................................. 967,540
------------
MAJOR PHARMACEUTICALS (0.3%)
1,000 Abbott Laboratories
6.40% due 12/01/06................................................................... 960,950
1,000 Johnson & Johnson
6.95% due 09/01/29................................................................... 943,350
------------
1,904,300
------------
MAJOR U.S. TELECOMMUNICATIONS (0.4%)
1,000 MCI WorldCom, Inc.
6.125% due 08/15/01.................................................................. 987,910
1,000 MCI WorldCom, Inc.
7.55% due 04/01/04................................................................... 1,013,250
1,000 Sprint Capital Corp.
6.875% due 11/15/28.................................................................. 889,730
------------
2,890,890
------------
MID-SIZED BANKS (0.1%)
1,000 Compass Bank
8.10% due 08/15/09................................................................... 1,010,200
------------
OIL/GAS TRANSMISSION (0.4%)
1,000 Enron Corp.
7.125% due 05/15/07.................................................................. 964,520
1,000 Williams Companies, Inc. (The)
7.625% due 07/15/19.................................................................. 959,980
1,000 Yosemite Securities Trust I - 144A**
8.25% due 11/15/04................................................................... 985,890
------------
2,910,390
------------
OTHER TELECOMMUNICATIONS (0.3%)
1,000 U.S. West Capital Funding, Inc.
6.875% due 07/15/28.................................................................. 875,930
1,000 U.S. West Capital Funding, Inc.- 144A**
6.875% due 08/15/01.................................................................. 995,840
------------
1,871,770
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
101
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PACKAGE GOODS/COSMETICS (0.3%)
$ 1,000 Proctor & Gamble Co.
6.60% due 12/15/04................................................................... $ 985,000
1,000 Proctor & Gamble Co.
6.45% due 01/15/26................................................................... 881,170
------------
1,866,170
------------
RAILROADS (0.6%)
1,000 Norfolk Southern Corp.
6.70% due 05/01/00................................................................... 1,000,570
1,909 Southern Pacific Transportation Co. (Series B)
7.28% due 04/30/15................................................................... 1,821,789
1,000 Union Pacific Corp.
6.34% due 11/25/03................................................................... 958,700
1,000 Union Pacific Corp.
6.79% due 11/09/07................................................................... 946,220
------------
4,727,279
------------
UTILITIES (0.3%)
2,000 Arizona Public Service Co.
5.875% due 02/15/04.................................................................. 1,894,120
------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $51,354,835).......................................................... 50,306,839
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (13.1%)
2,500 Federal Farm Credit Bank
6.00% due 10/01/01................................................................... 2,479,225
3,000 Federal Home Loan Banks
4.875% due 01/22/02.................................................................. 2,903,730
4,000 Federal Home Loan Mortgage Corp.
5.125% due 10/15/08.................................................................. 3,494,680
4,000 Federal Home Loan Mortgage Corp.
6.625% due 09/15/09.................................................................. 3,878,880
4,000 Federal Home Loan Mortgage Corp.
6.75% due 09/15/29................................................................... 3,784,880
3,000 Federal National Mortgage Assoc.
5.625% due 05/14/04.................................................................. 2,860,680
4,500 Federal National Mortgage Assoc.
6.16% due 08/07/28................................................................... 3,906,000
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$20,100 U.S. Treasury Bond
6.25% due 08/15/23................................................................... $ 18,950,481
2,500 U.S. Treasury Bond
7.25% due 05/15/16................................................................... 2,610,500
18,500 U.S. Treasury Note
4.00% due 10/31/00................................................................... 18,200,300
7,000 U.S. Treasury Note
5.375% due 02/15/01.................................................................. 6,942,810
1,000 U.S. Treasury Note
5.625% due 11/30/00.................................................................. 996,010
1,000 U.S. Treasury Note
6.00% due 08/15/09................................................................... 968,440
2,000 U.S. Treasury Note
6.25% due 01/31/02................................................................... 1,999,820
1,000 U.S. Treasury Note
6.25% due 08/31/02................................................................... 998,830
1,000 U.S. Treasury Note
6.25% due 02/15/03................................................................... 997,070
1,000 U.S. Treasury Note
6.375% due 08/15/02.................................................................. 1,001,220
5,000 U.S. Treasury Note
6.50% due 08/15/05................................................................... 4,998,100
3,000 U.S. Treasury Note
6.50% due 10/15/06................................................................... 2,988,300
1,000 U.S. Treasury Note
6.625% due 05/15/07.................................................................. 1,003,570
3,300 U.S. Treasury Note
7.00% due 07/15/06................................................................... 3,377,121
1,000 U.S. Treasury Note
7.25% due 05/15/04................................................................... 1,030,070
2,000 U.S. Treasury Note
7.25% due 08/15/04................................................................... 2,062,160
3,000 U.S. Treasury Note
7.875% due 11/15/04.................................................................. 3,170,880
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $97,183,055).......................................................... 95,603,757
------------
SHORT-TERM INVESTMENTS (a) (12.6%)
U.S. GOVERNMENT AGENCIES
17,300 Federal Home Loan Mortgage Corp. 1.50% due 01/03/00.................................... 17,298,558
25,000 Federal Home Loan Mortgage Corp. 4.75% due 01/21/00.................................... 24,934,028
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
102
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
$50,000 Federal Home Loan Mortgage Corp. 5.75% due 01/14/00.................................... $ 49,896,181
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $92,128,767).......................................................... 92,128,767
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $556,556,940) (B)........................................................ 99.6% 727,003,522
OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 0.4 2,697,154
----- -------------
NET ASSETS................................................................................ 100.0% $ 729,700,676
----- -------------
----- -------------
</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) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $186,481,408 and the
aggregate gross unrealized depreciation is $16,034,826, resulting in net
unrealized appreciation of $170,446,582.
SEE NOTES TO FINANCIAL STATEMENTS
103
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY SHORT-TERM QUALITY HIGH
MARKET BOND INCOME PLUS YIELD
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at
value*...................... $435,151,748 $3,140,109 $453,582,261 $ 273,567,655
Cash.......................... 26,264 14,682 61,775 --
Receivable for:
Shares of beneficial
interest sold........... 616,881 -- 72,932 95,427
Dividends................. -- -- -- --
Interest.................. 922,000 26,482 7,681,690 6,603,942
Foreign withholding taxes
reclaimed............... -- -- -- --
Prepaid expenses and other
assets...................... 3,770 13 5,356 10,946
Receivable from affiliate..... -- 14,713 -- --
------------ ---------- ------------ -------------
TOTAL ASSETS............. 436,720,663 3,195,999 461,404,014 280,277,970
------------ ---------- ------------ -------------
LIABILITIES:
Payable for:
Investments purchased..... -- -- 4,899,896 --
Shares of beneficial
interest repurchased.... 846,256 126 116,747 192,582
Investment management
fee..................... 184,663 1,230 196,851 119,307
Foreign taxes............. -- -- -- --
Payable to bank............... -- -- -- 240,010
Accrued expenses and other
payables.................... 46,633 20,054 58,669 42,599
------------ ---------- ------------ -------------
TOTAL LIABILITIES........ 1,077,552 21,410 5,272,163 594,498
------------ ---------- ------------ -------------
NET ASSETS:
Paid-in-capital............... 435,642,922 3,194,562 502,150,505 444,739,170
Accumulated undistributed net
investment income (loss).... 189 -- 47,349 21,347
Accumulated undistributed net
realized gain (loss)........ -- (2,927) (28,070,952) (39,494,968)
Net unrealized appreciation
(depreciation).............. -- (17,046) (17,995,051) (125,582,077)
------------ ---------- ------------ -------------
NET ASSETS............... $435,643,111 $3,174,589 $456,131,851 $ 279,683,472
============ ========== ============ =============
*IDENTIFIED COST......... $435,151,748 $3,157,155 $471,577,312 $ 399,149,732
============ ========== ============ =============
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 435,642,922 321,327 46,275,518 64,650,109
============ ========== ============ =============
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $1.00 $9.88 $9.86 $4.33
============ ========== ============ =============
- ------------------
</TABLE>
<TABLE>
<C> <S>
** Includes foreign cash of $231,474.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
104
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
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*...................... $579,661,666 $84,301,544 $2,032,220,460 $171,210,846 $505,698,022 $577,990,368 $115,764,482
Cash.......................... 78,696 63,133 34,463 94,005 115,446 147,307 402,221**
Receivable for:
Shares of beneficial
interest sold........... 326,622 3,415 322,849 92,832 294,277 1,257,928 187,713
Dividends................. 925,047 178,599 3,236,760 37,100 910,755 165,349 69,576
Interest.................. 934,167 354,409 -- -- 8,370 7,625 8,593
Foreign withholding taxes
reclaimed............... -- -- -- -- 418,952 742,120 --
Prepaid expenses and other
assets...................... 4,972 2,976 10,454 866 3,635 3,202 1,621
Receivable from affiliate..... -- -- -- -- -- -- --
------------ ----------- -------------- ------------ ------------ ------------ ------------
TOTAL ASSETS............. 581,931,170 84,904,076 2,035,824,986 171,435,649 507,449,457 580,313,899 116,434,206
------------ ----------- -------------- ------------ ------------ ------------ ------------
LIABILITIES:
Payable for:
Investments purchased..... -- -- -- -- -- -- --
Shares of beneficial
interest repurchased.... 1,086,854 3,218,681 1,025,158 60,327 157,168 111,920 138,588
Investment management
fee..................... 309,984 50,249 888,267 88,628 312,366 444,550 90,029
Foreign taxes............. -- -- -- -- -- -- 227,152
Payable to bank............... -- -- -- -- -- -- --
Accrued expenses and other
payables.................... 47,380 18,810 97,634 35,278 50,433 52,662 51,053
------------ ----------- -------------- ------------ ------------ ------------ ------------
TOTAL LIABILITIES........ 1,444,218 3,287,740 2,011,059 184,233 519,967 609,132 506,822
------------ ----------- -------------- ------------ ------------ ------------ ------------
NET ASSETS:
Paid-in-capital............... 304,719,624 81,516,823 1,797,142,512 103,542,597 415,510,169 318,747,452 129,299,287
Accumulated undistributed net
investment income (loss).... (19) 107,871 112 31,127 900,043 3,279,390 503,902
Accumulated undistributed net
realized gain (loss)........ 33,679,469 (843,740) 336,544,017 30,521,841 30,870,449 84,991,832 (44,030,449)
Net unrealized appreciation
(depreciation).............. 242,087,878 835,382 (99,872,714) 37,155,851 59,648,829 172,686,093 30,154,644
------------ ----------- -------------- ------------ ------------ ------------ ------------
NET ASSETS............... $580,486,952 $81,616,336 $2,033,813,927 $171,251,416 $506,929,490 $579,704,767 $115,927,384
============ =========== ============== ============ ============ ============ ============
*IDENTIFIED COST......... $337,573,788 $83,466,162 $2,132,093,174 $134,054,995 $446,036,550 $405,272,942 $ 85,385,117
============ =========== ============== ============ ============ ============ ============
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 25,350,647 7,134,358 111,002,887 7,216,296 35,107,218 18,423,170 13,698,224
============ =========== ============== ============ ============ ============ ============
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $22.90 $11.44 $18.32 $23.73 $14.44 $31.47 $8.46
============ =========== ============== ============ ============ ============ ============
<CAPTION>
EQUITY
<S> <C>
--------------
- ------------------------------
ASSETS:
Investments in securities, at
value*...................... $2,083,635,181
Cash.......................... --
Receivable for:
Shares of beneficial
interest sold........... 1,187,700
Dividends................. 331,468
Interest.................. --
Foreign withholding taxes
reclaimed............... 61,903
Prepaid expenses and other
assets...................... 2,921
Receivable from affiliate..... --
--------------
TOTAL ASSETS............. 2,085,219,173
--------------
LIABILITIES:
Payable for:
Investments purchased..... --
Shares of beneficial
interest repurchased.... 1,287,923
Investment management
fee..................... 793,561
Foreign taxes............. --
Payable to bank............... --
Accrued expenses and other
payables.................... 66,304
--------------
TOTAL LIABILITIES........ 2,147,788
--------------
NET ASSETS:
Paid-in-capital............... 1,138,756,520
Accumulated undistributed net
investment income (loss).... 2
Accumulated undistributed net
realized gain (loss)........ 287,791,199
Net unrealized appreciation
(depreciation).............. 656,523,664
--------------
NET ASSETS............... $2,083,071,385
==============
*IDENTIFIED COST......... $1,427,111,517
==============
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 38,662,789
==============
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $53.88
==============
</TABLE>
105
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF ASSETS AND LIABILITIES, CONTINUED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMPETITIVE
S&P 500 EDGE AGGRESSIVE
INDEX "BEST IDEAS" EQUITY STRATEGIST
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at
value*...................... $185,523,758 $ 62,230,336 $ 37,742,799 $727,003,522
Cash.......................... 71,453 35,873 -- 48,473
Receivable for:
Investments sold.......... -- -- 39,938 --
Shares of beneficial
interest sold........... 300,216 47,209 1,503,178 221,642
Dividends................. 154,605 28,354 2,957 613,893
Interest.................. -- -- -- 2,496,816
Foreign withholding taxes
reclaimed............... -- 19,874 130 --
Variation margin.......... 15,300 -- -- --
Prepaid expenses and other
assets...................... 936 722 80 7,731
Receivable from affiliate..... -- 325 20,144 --
------------ ------------- ------------- ------------
TOTAL ASSETS............. 186,066,268 62,362,693 39,309,226 730,392,077
------------ ------------- ------------- ------------
LIABILITIES:
Payable for:
Investments purchased..... -- -- 1,050,031 --
Shares of beneficial
interest repurchased.... 8,946 10,224 16,634 338,659
Investment management
fee..................... 59,690 31,938 18,555 302,423
Accrued expenses and other
payables.................... 34,812 25,729 26,630 50,319
------------ ------------- ------------- ------------
TOTAL LIABILITIES........ 103,448 67,891 1,111,850 691,401
------------ ------------- ------------- ------------
NET ASSETS:
Paid-in-capital............... 159,038,798 49,642,862 30,947,469 482,451,455
Accumulated undistributed net
investment income........... 1,179,906 316,203 49,886 36
Accumulated undistributed net
realized gain (loss)........ 880,162 (1,500,684) (181,892) 76,802,603
Net unrealized appreciation... 24,863,954 13,836,421 7,381,913 170,446,582
------------ ------------- ------------- ------------
NET ASSETS............... $185,962,820 $ 62,294,802 $ 38,197,376 $729,700,676
============ ============= ============= ============
*IDENTIFIED COST......... $160,830,067 $ 48,393,113 $ 30,360,886 $556,556,940
============ ============= ============= ============
SHARES OF BENEFICIAL
INTEREST OUTSTANDING..... 13,846,751 5,036,100 2,621,778 38,207,752
============ ============= ============= ============
NET ASSET VALUE PER SHARE
(UNLIMITED AUTHORIZED SHARES
OF $.01 PAR VALUE)............ $13.43 $12.37 $14.57 $19.10
============ ============= ============= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
106
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
QUALITY
MONEY SHORT-TERM INCOME HIGH
MARKET BOND* PLUS YIELD
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
NET INVESTMENT INCOME:
INTEREST INCOME............... $22,650,441 $ 65,414 $ 35,251,264 $48,360,043
----------- ------------- ------------ -----------
EXPENSES
Investment management fee..... 2,177,536 5,402 2,519,733 1,657,944
Professional fees............. 30,313 20,698 33,243 43,946
Custodian fees................ 22,449 1,462 50,636 15,838
Shareholder reports and
notices..................... 12,057 91 30,115 27,656
Trustees' fees and expenses... 580 -- 1,477 895
Transfer agent fees and
expenses.................... 500 500 500 500
Other......................... 4,960 390 12,288 11,664
----------- ------------- ------------ -----------
TOTAL EXPENSES........... 2,248,395 28,543 2,647,992 1,758,443
Less: amounts
waived/reimbursed........... -- (21,062) -- --
----------- ------------- ------------ -----------
NET EXPENSES............. 2,248,395 7,481 2,647,992 1,758,443
----------- ------------- ------------ -----------
NET INVESTMENT INCOME.... 20,402,046 57,933 32,603,272 46,601,600
----------- ------------- ------------ -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss)...... 1,751 (2,927) (11,840,632) (7,019,312)
Net change in unrealized
appreciation/depreciation... -- (17,046) (43,753,636) (43,905,004)
----------- ------------- ------------ -----------
NET GAIN (LOSS).......... 1,751 (19,973) (55,594,268) (50,924,316)
----------- ------------- ------------ -----------
NET INCREASE (DECREASE)....... $20,403,797 $ 37,960 $(22,990,996) $(4,322,716)
=========== ============= ============ ===========
- ------------------
</TABLE>
<TABLE>
<C> <S>
* For the period May 4, 1999 (commencement of operations) through
December 31, 1999.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
107
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INCOME DIVIDEND CAPITAL
UTILITIES BUILDER GROWTH GROWTH
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME:
INCOME
Interest...................... $ 4,197,616 $2,216,605 $ 1,620,114 $ 316,122
Dividends..................... 13,715,767** 2,662,275** 51,906,938** 737,148**
----------- ---------- ----------- ------------
TOTAL INCOME............. 17,913,383 4,878,880 53,527,052 1,053,270
----------- ---------- ----------- ------------
EXPENSES
Investment management fee..... 3,606,185 632,479 11,638,694 922,721
Professional fees............. 37,192 21,699 32,059 31,298
Custodian fees................ 29,490 11,604 125,753 48,770
Shareholder reports and
notices..................... 74,712 10,619 112,969 17,205
Trustees' fees and expenses... 1,608 93 4,979 224
Transfer agent fees and
expenses.................... 500 500 500 500
Other......................... 6,430 2,631 18,157 1,001
----------- ---------- ----------- ------------
TOTAL EXPENSES........... 3,756,117 679,625 11,933,111 1,021,719
Less: amounts
waived/reimbursed........... -- -- -- --
----------- ---------- ----------- ------------
NET EXPENSES............. 3,756,117 679,625 11,933,111 1,021,719
----------- ---------- ----------- ------------
NET INVESTMENT INCOME.... 14,157,266 4,199,255 41,593,941 31,551
----------- ---------- ----------- ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... 33,719,313 (99,594) 346,534,889 34,213,226
Futures contracts......... -- -- -- --
Foreign exchange
transactions............ -- -- -- --
----------- ---------- ----------- ------------
NET GAIN (LOSS).......... 33,719,313 (99,594) 346,534,889 34,213,226
----------- ---------- ----------- ------------
Net change in unrealized
appreciation/depreciation
on:
Investments............... 19,868,085 1,427,366 (441,379,064) 8,664,948
Futures contracts......... -- -- -- --
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. -- -- -- --
----------- ---------- ----------- ------------
NET APPRECIATION
(DEPRECIATION)........... 19,868,085 1,427,366 (441,379,064) 8,664,948
----------- ---------- ----------- ------------
NET GAIN (LOSS).......... 53,587,398 1,327,772 (94,844,175) 42,878,174
----------- ---------- ----------- ------------
NET INCREASE (DECREASE)....... $67,744,664 $5,527,027 $(53,250,234) $ 42,909,725
=========== ========== =========== ============
- ------------------
* For the period May 4, 1999 (commencement of operations) through
December 31, 1999.
** Net of $145,166, $1,961, $233,289, $2,398, $1,105,036, $1,072,606, $74,707,
$132,091, $13,202, $31,377, $323 and $29,389 foreign withholding tax,
respectively.
+ Net of foreign taxes of $358,642.
++ Net of deferred foreign taxes of $227,152.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
108
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
GLOBAL
DIVIDEND EUROPEAN PACIFIC S&P 500
GROWTH GROWTH GROWTH EQUITY INDEX
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME:
INCOME
Interest...................... $ 393,946 $ 783,163 $ 297,147 $ 6,885,294 $ 335,970
Dividends..................... 12,957,288** 8,803,062** 1,507,032** 8,369,145** 1,387,842**
----------- ------------ ------------ ------------- -----------
TOTAL INCOME............. 13,351,234 9,586,225 1,804,179 15,254,439 1,723,812
----------- ------------ ------------ ------------- -----------
EXPENSES
Investment management fee..... 3,669,864 4,749,793 754,955 7,156,661 457,843
Professional fees............. 36,132 39,384 39,988 30,846 31,673
Custodian fees................ 273,291 365,495 287,368 88,088 34,275
Shareholder reports and
notices..................... 53,451 60,724 23,033 81,064 1,511
Trustees' fees and expenses... 1,075 1,187 130 3,214 111
Transfer agent fees and
expenses.................... 500 500 500 500 688
Other......................... 14,949 12,487 24,278 9,136 24,701
----------- ------------ ------------ ------------- -----------
TOTAL EXPENSES........... 4,049,262 5,229,570 1,130,252 7,369,509 550,802
Less: amounts
waived/reimbursed........... -- -- -- -- (6,902)
----------- ------------ ------------ ------------- -----------
NET EXPENSES............. 4,049,262 5,229,570 1,130,252 7,369,509 543,900
----------- ------------ ------------ ------------- -----------
NET INVESTMENT INCOME.... 9,301,972 4,356,655 673,927 7,884,930 1,179,912
----------- ------------ ------------ ------------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... 42,478,449 89,548,742 15,660,462+ 301,936,561 213,568
Futures contracts......... -- -- -- -- 763,726
Foreign exchange
transactions............ (43,846) (534,144) 115,262 (335) --
----------- ------------ ------------ ------------- -----------
NET GAIN (LOSS).......... 42,434,603 89,014,598 15,775,724 301,936,226 977,294
----------- ------------ ------------ ------------- -----------
Net change in unrealized
appreciation/depreciation
on:
Investments............... 15,042,460 39,435,175 28,220,772++ 429,853,712 20,616,906
Futures contracts......... -- -- -- -- 73,136
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. (42,860) (66,572) 159,327 -- --
----------- ------------ ------------ ------------- -----------
NET APPRECIATION
(DEPRECIATION)........... 14,999,600 39,368,603 28,380,099 429,853,712 20,690,042
----------- ------------ ------------ ------------- -----------
NET GAIN (LOSS).......... 57,434,203 128,383,201 44,155,823 731,789,938 21,667,336
----------- ------------ ------------ ------------- -----------
NET INCREASE (DECREASE)....... $66,736,175 $132,739,856 $ 44,829,750 $ 739,674,868 $22,847,248
=========== ============ ============ ============= ===========
<CAPTION>
COMPETITIVE EDGE AGGRESSIVE
"BEST IDEAS" EQUITY* STRATEGIST
<S> <C> <C> <C>
- ------------------------------
NET INVESTMENT INCOME:
INCOME
Interest...................... $ 162,274 $ 76,001 $14,632,265
Dividends..................... 405,489** 16,939** 4,109,970**
----------- ------------- -----------
TOTAL INCOME............. 567,763 92,940 18,742,235
----------- ------------- -----------
EXPENSES
Investment management fee..... 287,991 50,317 3,399,095
Professional fees............. 31,701 22,186 31,063
Custodian fees................ 17,597 19,370 41,206
Shareholder reports and
notices..................... 1,254 1,438 32,466
Trustees' fees and expenses... 30 -- 1,210
Transfer agent fees and
expenses.................... 687 500 500
Other......................... 2,447 459 9,499
----------- ------------- -----------
TOTAL EXPENSES........... 341,707 94,270 3,515,039
Less: amounts
waived/reimbursed........... (92,742) (59,313) --
----------- ------------- -----------
NET EXPENSES............. 248,965 34,957 3,515,039
----------- ------------- -----------
NET INVESTMENT INCOME.... 318,798 57,983 15,227,196
----------- ------------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized gain (loss) on:
Investments............... (229,308) (181,892) 83,843,891
Futures contracts......... -- -- --
Foreign exchange
transactions............ (2,474) -- --
----------- ------------- -----------
NET GAIN (LOSS).......... (231,782) (181,892) 83,843,891
----------- ------------- -----------
Net change in unrealized
appreciation/depreciation
on:
Investments............... 11,841,821 7,381,913 10,097,511
Futures contracts......... -- -- --
Translation of forward
foreign currency
contracts, other assets
and liabilities
denominated in foreign
currencies.............. (924) -- --
----------- ------------- -----------
NET APPRECIATION
(DEPRECIATION)........... 11,840,897 7,381,913 10,097,511
----------- ------------- -----------
NET GAIN (LOSS).......... 11,609,115 7,200,021 93,941,402
----------- ------------- -----------
NET INCREASE (DECREASE)....... $11,927,913 $ 7,258,004 $109,168,598
=========== ============= ===========
</TABLE>
109
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SHORT-TERM
MONEY MARKET BOND
------------------------------- -------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999*
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income
(loss)...................... $ 20,402,046 $ 19,436,475 $ 57,933
Net realized gain (loss)...... 1,751 1,854 (2,927)
Net change in unrealized
appreciation/depreciation... -- -- (17,046)
------------- ------------- ------------
NET INCREASE
(DECREASE)............... 20,403,797 19,438,329 37,960
------------- ------------- ------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (20,401,879) (19,436,518) (57,933)
Net realized gain............. (1,751) (1,854) --
Paid-in-capital............... -- -- --
------------- ------------- ------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (20,403,630) (19,438,372) (57,933)
------------- ------------- ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 560,245,244 465,453,549 5,606,552
Reinvestment of dividends and
distributions............... 20,403,630 19,438,372 57,933
Cost of shares repurchased.... (587,040,414) (378,435,543) (2,469,923)
------------- ------------- ------------
NET INCREASE
(DECREASE)............... (6,391,540) 106,456,378 3,194,562
------------- ------------- ------------
TOTAL INCREASE
(DECREASE)............... (6,391,373) 106,456,335 3,174,589
NET ASSETS:
Beginning of period........... 442,034,484 335,578,149 --
------------- ------------- ------------
END OF PERIOD............ $ 435,643,111 $ 442,034,484 $ 3,174,589
============= ============= ============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 189 $ 22 $ --
============= ============= ============
SHARES ISSUED AND REPURCHASED:
Sold.......................... 560,245,244 465,453,549 564,039
Issued in reinvestment of
dividends and
distributions............... 20,403,630 19,438,372 5,845
Repurchased................... (587,040,414) (378,435,543) (248,557)
------------- ------------- ------------
NET INCREASE (DECREASE)....... (6,391,540) 106,456,378 321,327
============= ============= ============
</TABLE>
- ------------------
<TABLE>
<S> <C>
* For the period May 4, 1999 (commencement of operations) through
December 31, 1999.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
110
<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 YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income
(loss)...................... $ 32,603,272 $ 31,385,103 $ 46,601,600 $ 47,746,756 $ 14,157,266 $ 14,064,617
Net realized gain (loss)...... (11,840,632) 7,060,684 (7,019,312) (10,756,455) 33,719,313 11,183,431
Net change in unrealized
appreciation/depreciation... (43,753,636) 3,370,100 (43,905,004) (62,350,933) 19,868,085 81,869,637
------------- ------------- ------------- ------------ ------------ ------------
NET INCREASE
(DECREASE)............... (22,990,996) 41,815,887 (4,322,716) (25,360,632) 67,744,664 107,117,685
------------- ------------- ------------- ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (32,603,082) (31,385,551) (46,732,009) (47,889,896) (14,157,310) (14,064,645)
Net realized gain............. -- -- -- -- (11,183,423) (24,274,238)
Paid-in-capital............... -- -- -- -- -- --
------------- ------------- ------------- ------------ ------------ ------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (32,603,082) (31,385,551) (46,732,009) (47,889,896) (25,340,733) (38,338,883)
------------- ------------- ------------- ------------ ------------ ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 62,145,724 145,861,267 69,363,729 150,152,649 75,775,422 107,347,532
Reinvestment of dividends and
distributions............... 32,603,082 31,385,551 46,732,009 47,889,896 25,340,733 38,338,883
Cost of shares repurchased.... (130,605,658) (115,083,881) (149,436,445) (128,774,384) (123,835,967) (111,796,640)
------------- ------------- ------------- ------------ ------------ ------------
NET INCREASE
(DECREASE)............... (35,856,852) 62,162,937 (33,340,707) 69,268,161 (22,719,812) 33,889,775
------------- ------------- ------------- ------------ ------------ ------------
TOTAL INCREASE
(DECREASE)............... (91,450,930) 72,593,273 (84,395,432) (3,982,367) 19,684,119 102,668,577
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............ $ 456,131,851 $ 547,582,781 $ 279,683,472 $364,078,904 $580,486,952 $560,802,833
============= ============= ============= ============ ============ ============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 47,349 $ (300) $ 21,347 $ 151,756 $ (19) $ 25
============= ============= ============= ============ ============ ============
SHARES ISSUED AND REPURCHASED:
Sold.......................... 5,941,824 13,356,857 14,733,336 26,123,968 3,501,422 5,490,004
Issued in reinvestment of
dividends and
distributions............... 3,166,433 2,881,413 9,920,699 8,453,299 1,169,927 1,967,479
Repurchased................... (12,626,740) (10,567,612) (31,789,573) (22,927,167) (5,711,878) (5,716,328)
------------- ------------- ------------- ------------ ------------ ------------
NET INCREASE (DECREASE)....... (3,518,483) 5,670,658 (7,135,538) 11,650,100 (1,040,529) 1,741,155
============= ============= ============= ============ ============ ============
<CAPTION>
INCOME BUILDER
-----------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
<S> <C> <C>
- ------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income
(loss)...................... $ 4,199,255 $ 4,037,661
Net realized gain (loss)...... (99,594) 936,441
Net change in unrealized
appreciation/depreciation... 1,427,366 (3,662,539)
------------ ------------
NET INCREASE
(DECREASE)............... 5,527,027 1,311,563
------------ ------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (4,106,298) (4,033,908)
Net realized gain............. (1,674,655) (768,186)
Paid-in-capital............... (120,208) --
------------ ------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (5,901,161) (4,802,094)
------------ ------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 17,298,775 50,649,400
Reinvestment of dividends and
distributions............... 5,901,161 4,802,094
Cost of shares repurchased.... (28,978,600) (19,614,662)
------------ ------------
NET INCREASE
(DECREASE)............... (5,778,664) 35,836,832
------------ ------------
TOTAL INCREASE
(DECREASE)............... (6,152,798) 32,346,301
NET ASSETS:
Beginning of period........... 87,769,134 55,422,833
------------ ------------
END OF PERIOD............ $ 81,616,336 $ 87,769,134
============ ============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 107,871 $ 14,879
============ ============
SHARES ISSUED AND REPURCHASED:
Sold.......................... 1,493,695 4,241,399
Issued in reinvestment of
dividends and
distributions............... 512,121 415,816
Repurchased................... (2,529,168) (1,710,560)
------------ ------------
NET INCREASE (DECREASE)....... (523,352) 2,946,655
============ ============
</TABLE>
111
<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 YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income
(loss)...................... $ 41,593,941 $ 38,849,535 $ 31,551 $ (341,222)
Net realized gain (loss)...... 346,534,889 322,115,886 34,213,226 15,646,625
Net change in unrealized
appreciation/depreciation... (441,379,064) (89,389,463) 8,664,948 6,997,899
------------- ------------ ------------- -------------
NET INCREASE
(DECREASE)............... (53,250,234) 271,575,958 42,909,725 22,303,302
------------- ------------ ------------- -------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (41,593,983) (38,849,522) -- (10,014)
Net realized gain............. (329,147,530) (187,973,609) (17,791,828) (10,080,542)
------------- ------------ ------------- -------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (370,741,513) (226,823,131) (17,791,828) (10,090,556)
------------- ------------ ------------- -------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 280,502,535 479,551,623 25,586,183 28,039,255
Reinvestment of dividends and
distributions............... 370,741,513 226,823,131 17,791,828 10,090,556
Cost of shares repurchased.... (443,365,153) (407,106,560) (35,847,602) (38,839,523)
------------- ------------ ------------- -------------
NET INCREASE
(DECREASE)............... 207,878,895 299,268,194 7,530,409 (709,712)
------------- ------------ ------------- -------------
TOTAL INCREASE
(DECREASE)............... (216,112,852) 344,021,021 32,648,306 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............ $2,033,813,927 $2,249,926,779 $ 171,251,416 $ 138,603,110
============= ============ ============= =============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 112 $ 154 $ 31,127 $ (424)
============= ============ ============= =============
SHARES ISSUED AND REPURCHASED:
Sold.......................... 13,098,987 21,516,674 1,226,447 1,431,494
Issued in reinvestment of
dividends and
distributions............... 17,950,387 10,521,804 929,562 513,776
Repurchased................... (21,694,034) (18,647,038) (1,746,710) (2,085,691)
------------- ------------ ------------- -------------
NET INCREASE (DECREASE)....... 9,355,340 13,391,440 409,299 (140,421)
============= ============ ============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
112
<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 YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income
(loss)...................... $ 9,301,972 $ 8,273,212 $ 4,356,655 $ 3,094,783 $ 673,927 $ 504,743
Net realized gain (loss)...... 42,434,603 29,801,364 89,014,598 43,252,405 15,775,724 (31,801,028)
Net change in unrealized
appreciation/depreciation... 14,999,600 16,207,523 39,368,603 44,049,168 28,380,099 24,432,009
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE
(DECREASE)............... 66,736,175 54,282,099 132,739,856 90,396,356 44,829,750 (6,864,276)
------------- ------------- ------------- ------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (9,852,158) (8,206,088) (3,407,759) (5,476,236) (770,896) (2,947,935)
Net realized gain............. (35,181,150) (52,205,069) (47,147,183) (30,256,754) -- --
------------- ------------- ------------- ------------- ------------- -------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (45,033,308) (60,411,157) (50,554,942) (35,732,990) (770,896) (2,947,935)
------------- ------------- ------------- ------------- ------------- -------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 52,898,642 75,090,455 151,803,640 190,691,042 233,462,939 65,895,854
Reinvestment of dividends and
distributions............... 45,033,308 60,411,157 50,554,942 35,732,990 770,896 2,947,935
Cost of shares repurchased.... (96,932,891) (126,758,450) (215,476,326) (161,891,054) (215,206,842) (75,093,578)
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE
(DECREASE)............... 999,059 8,743,162 (13,117,744) 64,532,978 19,026,993 (6,249,789)
------------- ------------- ------------- ------------- ------------- -------------
TOTAL INCREASE
(DECREASE)............... 22,701,926 2,614,104 69,067,170 119,196,344 63,085,847 (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............ $ 506,929,490 $ 484,227,564 $ 579,704,767 $ 510,637,597 $ 115,927,384 $ 52,841,537
============= ============= ============= ============= ============= =============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 900,043 $ 520,531 $ 3,279,390 $ 3,134,104 $ 503,902 $ 411,637
============= ============= ============= ============= ============= =============
SHARES ISSUED AND REPURCHASED:
Sold.......................... 3,735,961 5,251,149 5,542,879 7,118,106 37,338,181 13,473,730
Issued in reinvestment of
dividends and
distributions............... 3,214,043 4,451,226 2,023,007 1,290,932 115,750 677,325
Repurchased................... (6,868,373) (9,357,396) (7,927,773) (6,252,813) (34,025,265) (15,145,796)
------------- ------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE)....... 81,631 344,979 (361,887) 2,156,225 3,428,666 (994,741)
============= ============= ============= ============= ============= =============
</TABLE>
113
<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 YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998*
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income......... $ 7,884,930 $ 6,924,725 $ 1,179,912 $ 244,990
Net realized gain (loss)...... 301,936,226 161,754,931 977,294 186,052
Net change in unrealized
appreciation/depreciation... 429,853,712 89,582,262 20,690,042 4,173,912
------------- ------------ ------------- -------------
NET INCREASE............. 739,674,868 258,261,918 22,847,248 4,604,954
------------- ------------ ------------- -------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (7,879,428) (6,924,673) (244,996) --
Net realized gain............. (168,434,937) (114,146,703) (283,184) --
------------- ------------ ------------- -------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (176,314,365) (121,071,376) (528,180) --
------------- ------------ ------------- -------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 428,695,184*** 262,726,068 140,040,634 50,279,637
Reinvestment of dividends and
distributions............... 176,314,365 121,071,376 528,180 --
Cost of shares repurchased.... (223,711,390) (205,665,545) (25,657,030) (6,152,623)
------------- ------------ ------------- -------------
NET INCREASE............. 381,298,159 178,131,899 114,911,784 44,127,014
------------- ------------ ------------- -------------
TOTAL INCREASE........... 944,658,662 315,322,441 137,230,852 48,731,968
NET ASSETS:
Beginning of period........... 1,138,412,723 823,090,282 48,731,968 --
------------- ------------ ------------- -------------
END OF PERIOD............ $2,083,071,385 $1,138,412,723 $ 185,962,820 $ 48,731,968
============= ============ ============= =============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 2 $ (5,165) $ 1,179,906 $ 244,990
============= ============ ============= =============
SHARES ISSUED AND REPURCHASED:
Sold.......................... 10,020,241*** 7,421,841 11,576,170 4,974,649
Issued in reinvestment of
dividends and
distributions............... 4,406,556 3,456,577 42,255 --
Repurchased................... (5,269,790) (5,884,436) (2,115,310) (631,013)
------------- ------------ ------------- -------------
NET INCREASE.................. 9,157,007 4,993,982 9,503,115 4,343,636
============= ============ ============= =============
</TABLE>
- ------------------
<TABLE>
<S> <C>
* For the period May 18, 1998 (commencement of operations) through
December 31, 1998.
** For the period May 4, 1999 (commencement of operations) through
December 31, 1999.
*** Includes acquisition of Capital Appreciation of 824,458 shares and
$35,291,368.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
114
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL STATEMENTS, CONTINUED
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
COMPETITIVE EDGE AGGRESSIVE
"BEST IDEAS" EQUITY STRATEGIST
------------------------------- -------------- -------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998* 1999** 1999 1998
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS:
Net investment income
(loss)...................... $ 318,798 $ 266,358 $ 57,983 $ 15,227,196 $ 12,820,064
Net realized gain (loss)...... (231,782) (1,270,706) (181,892) 83,843,891 (7,041,288)
Net change in unrealized
appreciation/depreciation... 11,840,897 1,995,524 7,381,913 10,097,511 125,871,829
------------- ------------- ------------- ------------- -------------
NET INCREASE
(DECREASE)............... 11,927,913 991,176 7,258,004 109,168,598 131,650,605
------------- ------------- ------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS
FROM:
Net investment income......... (267,149) -- (8,097) (15,227,618) (12,819,604)
Net realized gain............. -- -- -- -- (52,303,444)
------------- ------------- ------------- ------------- -------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS............ (267,149) -- (8,097) (15,227,618) (65,123,048)
------------- ------------- ------------- ------------- -------------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Net proceeds from sales....... 25,976,215 48,814,147 41,217,608 110,695,004 120,982,104
Reinvestment of dividends and
distributions............... 267,149 -- 8,097 15,227,618 65,123,048
Cost of shares repurchased.... (12,148,106) (13,266,543) (10,278,236) (124,097,206) (115,726,574)
------------- ------------- ------------- ------------- -------------
NET INCREASE
(DECREASE)............... 14,095,258 35,547,604 30,947,469 1,825,416 70,378,578
------------- ------------- ------------- ------------- -------------
TOTAL INCREASE
(DECREASE)............... 25,756,022 36,538,780 38,197,376 95,766,396 136,906,135
NET ASSETS:
Beginning of period........... 36,538,780 -- -- 633,934,280 497,028,145
------------- ------------- ------------- ------------- -------------
END OF PERIOD............ $ 62,294,802 $ 36,538,780 $ 38,197,376 $ 729,700,676 $ 633,934,280
============= ============= ============= ============= =============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS)................. $ 316,203 $ 267,028 $ 49,886 $ 36 $ 458
============= ============= ============= ============= =============
SHARES ISSUED AND REPURCHASED:
Sold.......................... 2,453,400 5,131,070 3,507,417 6,274,928 7,783,951
Issued in reinvestment of
dividends and
distributions............... 25,638 -- 794 851,314 4,189,589
Repurchased................... (1,165,678) (1,408,330) (886,433) (7,016,894) (7,464,531)
------------- ------------- ------------- ------------- -------------
NET INCREASE (DECREASE)....... 1,313,360 3,722,740 2,621,778 109,348 4,509,009
============= ============= ============= ============= =============
</TABLE>
115
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
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>
<TABLE>
<CAPTION>
The investment objectives of each Portfolio are as follows:
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>
116
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
<TABLE>
<CAPTION>
PORTFOLIO INVESTMENT OBJECTIVE
<S> <C>
Utilities* Seek both capital appreciation and current income by investing in
equity and fixed income securities of companies engaged in the
utilities industry. Prior to August 5, 1999 the investment
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.
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>
* ON AUGUST 4, 1999, SHAREHOLDERS APPROVED A CHANGE IN THE INVESTMENT OBJECTIVE.
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
117
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
that exchange prior to the time when assets are valued; if there were no sales
that day, the security is valued at the latest bid price (in cases where
securities are traded on more than one exchange, the securities are valued on
the exchange designated as the primary market pursuant to procedures adopted by
the Trustees); (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest available bid
price prior to the time of valuation; (3) listed options are valued at the
latest sale price on the exchange on which they are listed unless no sales of
such options have taken place that day, in which case they are valued at the
mean between their latest bid and asked price; (4) when market quotations are
not readily available, including circumstances under which it is determined by
the Investment Manager (or, in the case of 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 received is included in the Fund's
Statement of Assets and Liabilities as a liability which is
118
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
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; (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 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 realizes 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; and
(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 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,
119
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
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.
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.
120
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
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%.
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%.
121
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
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.
For the period May 4, 1999 through November 4, 1999, the Investment Manager
reimbursed all operating expenses and waived the compensation provided for in
its Investment Management Agreement with Short-Term Bond and Aggressive Equity.
For the period May 18, 1998 through April 30, 1999, the Investment Manager
waived its compensation and reimbursed all operating expenses 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
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 December 31, 1999, included in the Statements of
Assets and Liabilities are receivables from an affiliate which represent expense
reimbursements due to the Portfolios.
122
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
3. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
Purchases and sales/maturities of portfolio securities, excluding short-term
investments (except Money Market), for the year ended December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES OTHER
------------------------------- --------------------------------
PURCHASES SALES/MATURITIES PURCHASES SALES/MATURITIES
-------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Money Market............................ $ 180,807,008 $ 205,802,906 $3,304,320,547 $ 3,305,653,918
Short-Term Bond......................... 3,552,804 872,682 -- --
Quality Income Plus..................... 364,503,475 385,304,831 228,268,039 248,623,785
High Yield.............................. -- -- 152,296,394 199,457,484
Utilities............................... -- -- 52,513,585 75,015,937
Income Builder.......................... 132,453 314,579 35,568,239 45,350,590
Dividend Growth......................... -- -- 1,775,253,646 1,935,479,726
Capital Growth.......................... -- -- 780,344,500 795,863,613
Global Dividend Growth.................. -- -- 203,585,769 239,363,299
European Growth......................... -- -- 266,663,796 323,799,920
Pacific Growth.......................... -- -- 94,005,220 77,396,625
Equity.................................. 56,476,250 56,242,188 4,320,348,355 4,204,777,181
S&P 500 Index........................... -- -- 114,611,734 1,414,471
Competitive Edge "Best Ideas"........... -- -- 34,434,155 22,624,654
Aggressive Equity....................... -- -- 36,673,196 11,015,296
Strategist.............................. 206,541,469 173,358,861 440,335,201 485,401,288
</TABLE>
Included in the aforementioned purchases of portfolio securities of S&P 500
Index are purchases of Morgan Stanley Dean Witter & Co., an affiliate of the
Investment Manager, of $538,154 and purchases of Allstate Corp., an affiliate of
the Fund, of $277,160.
Included in the payable for investments purchased at December 31, 1999 for
Aggressive Equity is $864,031 for unsettled trades with Dean Witter Reynolds
Inc. ("DWR"), an affiliate of the Investment Manager.
For the year ended December 31, 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 COMPETIVE EDGE AGGRESIVE
UTILITIES BUILDER GROWTH GROWTH GROWTH "BEST IDEAS" EQUITY EQUITY
----------- ------------ -------------- ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 8,450 $ 30,496 $ 167,890 $ 120,251 $ 30,930 $ 25 $ 218,335 $ 21,397
========== =========== ============= =========== =========== ============= =========== ===========
<CAPTION>
HIGH
UTILITIES STRATEGIST YIELD
----------- ------------ ------------
<S> <C> <C>
$ 8,450 $ 27,241 $ 10,498
========== =========== ===========
</TABLE>
For the year ended December 31, 1999, the following Portfolios incurred
brokerage commissions with Morgan Stanley & Co., Inc, an affiliate of the
Investment Manager, 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>
2$,555 $255,110 $83,995 $145,785 $55,994 $637,848 $39,371 $ 671 $26,580
==== ======= ======= ======== ======= ======= ======= ========= =======
</TABLE>
123
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
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 year ended December 31, 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 S&P 500
MARKET PLUS YIELD UTILITIES BUILDER GROWTH GROWTH GROWTH GROWTH GROWTH EQUITY INDEX STRATEGIST
------- ------- ------ --------- ------- -------- ------- -------- -------- ------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 329 $ 654 $ 224 $ 687 $ 28 $ 935 $ 106 $ 280 $ 342 $ 106 $ 999 $ 49 $ 88
======= ======= ====== ========= ======= ======== ======= ======== ======== ======= ====== ========== ==========
ACCRUED PENSION LIABILITY
$10,966 $7,716 $3,786 $ 5,253 $ 88 $ 9,215 $ 449 $ 955 $ 1,246 $ 264 $6,260 $ 35 $ 7,917
======= ======= ====== ========= ======= ======== ======= ======== ======== ======= ====== ========== ==========
</TABLE>
4. FEDERAL INCOME TAX STATUS
At December 31, 1999, the following Portfolios had an approximate net capital
loss carryover which may be used to offset future capital gains to the extent
provided by regulations:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
-------------------------------------------------------------------------
Available through December 31, 2000 2001 2002 2003 2004 2005 2006 2007 TOTAL
- ---------------------------------------- ------- ------ ------ ------ ------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short-Term Bond......................... -- -- -- -- -- -- -- $ 3 $ 3
Quality Income Plus..................... -- -- $12,983 -- $ 2,491 -- -- 10,571 26,045
High Yield.............................. $ 3,057 $4,736 3,256 $2,984 5,521 -- $2,735 10,786 33,075
Income Builder.......................... -- -- -- -- -- -- -- 229 229
Pacific Growth.......................... -- -- -- -- -- $9,352 33,536 -- 42,888
Equity.................................. -- -- -- -- -- 5,006 14 -- 5,020
Competitive Edge "Best Ideas"........... -- -- -- -- -- -- 853 544 1,397
Aggressive Equity....................... -- -- -- -- -- -- -- 68 68
</TABLE>
As part of the Equity's acquisition of the assets of the Capital Appreciation
Portfolio ("Capital Appreciation"), Equity obtained a net capital loss carryover
of approximately $6,329,000 from Capital Appreciation. Utilization of this
carryover is subject to limitations imposed by the Internal Revenue Code and
Treasury Regulations. During the year ended December 31, 1999, Equity utilized
approximately $1,309,000 of this carryover. The following Portfolios also
utilized approximate net capital loss carryovers: Pacific Growth - $8,180,000;
Strategist - $6,900,000.
Net capital and net foreign currency losses incurred after October 31
("post-October losses") within the taxable year are deemed to arise on the first
business day of the Portfolios' next taxable year.
124
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, CONTINUED
The following Portfolios incurred and will elect to defer post-October losses
during fiscal 1999: Quality Income Plus - $1,864,000; High Yield - $4,391,000;
Income Builder - $197,000; Competitive Edge "Best Ideas" - $1,000; Strategist -
$8,855,000.
At December 31, 1999, the primary reason(s) for significant temporary/permanent
book/tax differences were as follows:
<TABLE>
<CAPTION>
TEMPORARY DIFFERENCES PERMANENT DIFFERENCES
---------------------------- ----------------------------
POST- LOSS FOREIGN EXPIRED
OCTOBER DEFERRALS FROM CURRENCY CAPITAL LOSS
LOSSES WASH SALES GAINS/LOSSES CARRYFORWARD
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Quality Income Plus..................... - -
High Yield.............................. - - -
Utilities............................... -
Income Builder.......................... - -
Dividend Growth......................... -
Capital Growth.......................... -
Global Dividend Growth.................. - -
European Growth......................... - -
Pacific Growth.......................... - -
Equity.................................. -
S&P 500 Index........................... -
Competitive Edge "Best Ideas"........... - - -
Aggressive Equity....................... -
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 ("PFICs"), S&P 500 Index had temporary differences
attributable to the mark-to-market of futures contracts and High Yield had
temporary differences attributable to interest on bonds in default. Global
Dividend Growth and Pacific Growth had permanent differences attributable to tax
adjustments on PFICs sold by the Portfolios.
To reflect reclassifications arising from the permanent differences, the
following accounts were (charged) credited:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
NET ACCUMULATED
INVESTMENT UNDISTRIBUTED
INCOME NET REALIZED
(LOSS) GAIN (LOSS) PAID-IN-CAPITAL
----------- -------------- -----------
<S> <C> <C> <C>
Quality Income Plus..................... $ 47,459 $ (47,459) --
High Yield.............................. -- 7,335,877 $(7,335,877)
Global Dividend Growth.................. 929,698 (822,262) (107,436)
European Growth......................... (803,610) 12,395 791,215
Pacific Growth.......................... 189,234 (195,858) 6,624
Equity.................................. (18) 335 (317)
Competitive Edge "Best Ideas"........... (2,474) 2,474 --
</TABLE>
125
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, 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 ("options") in which the Portfolios' securities
are denominated to protect against a decline in value of such securities due to
currency devaluations.
Forward contracts and options 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 forward
contracts and options from the potential inability of the counterparties to meet
the terms of their 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 December 31, 1999, European Growth's investments in securities of issuers in
the United Kingdom represented 28.1% of the Portfolio's net assets. Pacific
Growth's investments in securities of issuers in Japan represented 44.4% of the
Portfolio's net assets. These investments, which involve risks and
considerations not present with respect to U.S. securities, may be affected by
economic or political developments in these regions.
At December 31, 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.
126
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999, 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.
127
<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 TOTAL
VALUE NET NET REALIZED TOTAL FROM DISTRIBUTIONS DIVIDENDS
YEAR ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO TO AND
DECEMBER 31 OF PERIOD INCOME GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
MONEY MARKET
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 1.00 0.047 -- 0.047 (0.047) -- (0.047)
SHORT-TERM BOND
1999(c) 10.00 0.27 $ (0.12) 0.15 (0.27) -- (0.27)
QUALITY INCOME PLUS
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 11.00 0.67 (1.14) (0.47) (0.67) -- (0.67)
HIGH YIELD
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 5.07 0.68 (0.74) (0.06) (0.68) -- (0.68)
UTILITIES
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 21.25 0.55 2.08 2.63 (0.55) (0.43) (0.98)
INCOME BUILDER
1997(a) 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 11.46 0.58 0.21 0.79 (0.56) (0.25)++ (0.81)
DIVIDEND GROWTH
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 22.13 0.39 (0.55) (0.16) (0.39) (3.26) (3.65)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
128
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
NET ASSET NET ASSETS ----------------------------
VALUE END OF NET PORTFOLIO
END OF TOTAL PERIOD INVESTMENT TURNOVER
PERIOD RETURN+ (000'S) EXPENSES INCOME RATE
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
MONEY MARKET
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 1.00 4.80 435,643 0.52 4.68 N/A
SHORT-TERM BOND
1999(c) 9.88 1.56(1) 3,175 0.62(2)(5) 4.83(2)(5) 56%(1)
QUALITY INCOME PLUS
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 9.86 (4.32) 456,132 0.52 6.45 119
HIGH YIELD
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 4.33 (1.33) 279,683 0.53 14.05 48
UTILITIES
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 22.90 12.71 580,487 0.67 2.51 10
INCOME BUILDER
1997(a) 11.76 22.38(1) 55,423 0.15(2)(3) 5.73(2)(3) 41(1)
1998 11.46 3.21 87,769 0.81 5.09 54
1999 11.44 7.06 81,616 0.81 4.98 43
DIVIDEND GROWTH
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 18.32 (2.39) 2,033,814 0.52 1.82 81
</TABLE>
129
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
NET ASSET NET TOTAL
VALUE INVESTMENT NET REALIZED TOTAL FROM DISTRIBUTIONS DIVIDENDS
YEAR ENDED BEGINNING INCOME AND UNREALIZED INVESTMENT DIVIDENDS TO TO AND
DECEMBER 31 OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
CAPITAL GROWTH
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 20.36 -- 6.12 6.12 -- (2.75) (2.75)
GLOBAL DIVIDEND GROWTH
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 13.82 0.27 1.71 1.98 (0.29) (1.07) (1.36)
EUROPEAN GROWTH
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 27.18 0.25 6.91 7.16 (0.19) (2.68) (2.87)
PACIFIC GROWTH
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 5.15 0.04 3.33 3.37 (0.06) -- (0.06)
EQUITY
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 38.58 0.22 20.48 20.70 (0.22) (5.18) (5.40)
S&P 500 INDEX
1998(b) 10.00 0.06 1.16 1.22 -- -- --
1999 11.22 0.06 2.21 2.27 (0.03) (0.03) (0.06)
COMPETITIVE EDGE "BEST IDEAS"
1998(b) 10.00 0.07 (0.25) (0.18) -- -- --
1999 9.82 0.06 2.56 2.62 (0.07) -- (0.07)
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
130
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
----------------------------
NET ASSET NET ASSETS NET
VALUE END OF INVESTMENT PORTFOLIO
END OF TOTAL PERIOD INCOME TURNOVER
PERIOD RETURN+ (000'S) EXPENSES (LOSS) RATE
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
CAPITAL GROWTH
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 23.73 33.29 171,251 0.72 0.02 575
GLOBAL DIVIDEND GROWTH
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 14.44 14.65 506,929 0.83 1.90 43
EUROPEAN GROWTH
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 31.47 29.11 579,705 1.04 0.87 55
PACIFIC GROWTH
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 (10.40) 52,842 1.51 0.91 112
1999 8.46 66.09 115,927 1.42 0.85 105
EQUITY
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 53.88 58.59 2,083,071 0.51 0.54 323
S&P 500 INDEX
1998(b) 11.22 12.20(1) 48,732 --(4) 1.85(2)(4) 2(1)
1999 13.43 20.23 185,963 0.48(5) 1.03(5) 1
COMPETITIVE EDGE "BEST
IDEAS"
1998(b) 9.82 (1.90)(1) 36,539 --(4) 1.74(2)(4) 31(1)
1999 12.37 26.88 62,295 0.56(5) 0.72(5) 54
</TABLE>
131
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
NET ASSET TOTAL
VALUE NET NET REALIZED TOTAL FROM DISTRIBUTIONS DIVIDENDS
YEAR ENDED BEGINNING INVESTMENT AND UNREALIZED INVESTMENT DIVIDENDS TO TO AND
DECEMBER 31 OF PERIOD INCOME GAIN OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
AGGRESSIVE EQUITY
1999(c) $10.00 $ 0.05 $ 4.55 $ 4.60 $ (0.03) -- $ (0.03)
STRATEGIST
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(c) 16.64 0.40 2.46 2.86 (0.40) -- (0.40)
</TABLE>
<TABLE>
<C> <S>
- --------------------------------------------------------------------------------
Commencement of operations:
(a) January 21, 1997.
(b) May 18, 1998.
(c) May 4, 1999.
+ Calculated based on the net asset value as of the last business day of the
period.
++ Includes distributions from paid-in-capital of $0.02.
* 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 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.
(4) 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, the ratios of expenses and
net investment income to average net assets would have been 0.92% and
0.83%, respectively, for Competitive Edge "Best Ideas" and 0.59% and 1.26%,
respectively, for S&P 500 Index.
(5) 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
November 4, 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 December 31, 1999, the ratio of expenses
and net investment income (loss) to average net assets would have been
0.77% and 0.51%, respectively, for Competitive Edge "Best Ideas", 2.38% and
3.07%, respectively, for Short-Term Bond, 1.41% and (0.02%), respectively,
for Aggressive Equity and 0.48% and 1.02%, respectively, for S&P 500 Index.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
132
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
NET ASSET NET ASSETS ----------------------------
VALUE END OF NET PORTFOLIO
END OF TOTAL PERIOD INVESTMENT TURNOVER
PERIOD RETURN+ (000'S) EXPENSES INCOME RATE
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------
AGGRESSIVE EQUITY
1999(c) $14.57 46.08%(1) $ 38,197 0.52%(2)(5) 0.86%(2)(5) 108%(1)
STRATEGIST
1995 12.45 9.48 388,579 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(c) 19.10 17.35 729,701 0.52 2.24 120
</TABLE>
133
<PAGE>
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Money Market Portfolio, the
Quality Income Plus Portfolio, the High Yield Portfolio, the Utilities
Portfolio, the Income Builder Portfolio, the Dividend Growth Portfolio, the
Capital Growth Portfolio, the Global Dividend Growth Portfolio, the European
Growth Portfolio, the Pacific Growth Portfolio, the Equity Portfolio, the
S&P 500 Index Portfolio, the Competitive Edge "Best Ideas" Portfolio, the
Strategist Portfolio, the Aggressive Equity Portfolio and the Short-Term Bond
Portfolio (constituting Morgan Stanley Dean Witter Variable Investment Series,
hereafter referred to as the "Fund") at December 31, 1999, the results of each
of their operations for the year or period then ended, the changes in each of
their net assets and the financial highlights for each of the periods presented,
in conformity with accounting principles generally accepted in the United
States. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1999 by correspondence with the
custodians and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
FEBRUARY 18, 2000
134
<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.
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
