-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U97t5aKrMCJ0fvvXzzP2N7dqNWRybXEN7jIOypjrHV+9fAPBkbO9Y2alzTax3Z/V 87oye01+Aht7CCe1LB7W5g== 0000912057-01-502945.txt : 20010312 0000912057-01-502945.hdr.sgml : 20010312 ACCESSION NUMBER: 0000912057-01-502945 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES CENTRAL INDEX KEY: 0000716716 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133178476 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-03692 FILM NUMBER: 1563360 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CTR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123922550 FORMER COMPANY: FORMER CONFORMED NAME: DEAN WITTER VARIABLE INVESTMENT SERIES DATE OF NAME CHANGE: 19930209 FORMER COMPANY: FORMER CONFORMED NAME: WITTER DEAN VARIABLE INVESTMENT SERIES DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WITTER DEAN VARIABLE ANNUITY INVESTMENT SERIES DATE OF NAME CHANGE: 19880229 N-30D 1 a2038620zn-30d.txt N-30D - -------------------------------------------------------------------------------- MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - -------------------------------------------------------------------------------- ANNUAL REPORT - -------------------------------------------------------------------------------- DECEMBER 31, 2000 - -------------------------------------------------------------------------------- MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES TABLE OF CONTENTS Letter to the Shareholders.................................. 1 Portfolio of Investments: Money Market............................................ 25 Short-Term Bond......................................... 28 Quality Income Plus..................................... 30 High Yield.............................................. 36 Utilities............................................... 44 Income Builder.......................................... 46 Dividend Growth......................................... 49 Capital Growth.......................................... 52 Global Dividend Growth.................................. 55 European Growth......................................... 61 Pacific Growth.......................................... 65 Equity.................................................. 72 S&P 500 Index........................................... 76 Competitive Edge "Best Ideas"........................... 85 Aggressive Equity....................................... 88 Information............................................. 92 Strategist.............................................. 94 Financial Statements: Statements of Assets and Liabilities.................... 100 Statements of Operations................................ 103 Statements of Changes in Net Assets..................... 106 Notes to Financial Statements............................... 118 Financial Highlights........................................ 132 Independent Auditors' Report................................ 140
MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES TWO WORLD TRADE CENTER, LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000 NEW YORK, NEW YORK 10048 DEAR SHAREHOLDER: Calendar year 2000 began with technology and high-multiple, new-economy stocks outperforming the broad markets, fueled by liquidity the Federal Reserve Board had injected into the system ahead of Y2K. It soon became clear, however, that first-quarter economic growth would exceed sustainable levels. During the second quarter, wage inflation exceeded 4 percent, while unemployment fell below 4 percent and energy prices reached heights not seen since the Gulf War. These factors led the Fed to raise interest rates by 100 basis points during the first half of 2000. As concern grew that slower earnings and economic growth might lie ahead, the markets underwent a sharp rotation out of high-multiple stocks and into long-ignored old-economy issues. The Federal Reserve's interest-rate hikes pricked the price-earnings bubble that had been ballooning for some time. This action roiled the financial markets and cut off funding for many new-technology companies. During the late 1990s, these new companies had spurred old-economy companies to increase their capital spending in order to become "Webified." This increase in capital spending on information technology accounted for nearly one third of gross domestic product growth. During the second half of 2000, however, what had been a self- perpetuating cycle of accelerating growth, strong productivity gains and new-technology spending slowly began to reverse. As a result, we expect that spending on technology will continue to falter in the first half of 2001. FIXED-INCOME OVERVIEW The double-digit returns of the fixed-income market in the year 2000 caught many investors by surprise, particularly when viewed within the context of the Federal Reserve's 100 basis point tightening in the first half of the year. Volatile equity markets and a slowing economy caused the fixed-income market to rally throughout the year. Interest rates fell to a 10-month low in early April during a flight-to-quality from plunging MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED technology stocks, and then rebounded higher on reports of rising inflationary pressures, tight labor markets and robust economic conditions. The Federal Reserve's 50 basis point rate hike in May brought the federal funds rate up to 6.50 percent, a nine-year high. The bond market rallied after the May rate hike, as equity markets declined. This time the rally gained momentum as the long awaited evidence of slowing economic growth emerged. By August 24, the yield on the 30-year benchmark U.S. Treasury bond had fallen to 5.66 percent, but rising oil prices and a heavy new issue calendar in the corporate sector soon caused yields to rise. By the middle of September, the yield on the 30-year Treasury had risen to 5.95 percent. Reports of slowing economic growth and plummeting equity values fueled further rate declines in the final quarter of the year, that brought interest rates down to levels last seen in early 1999. By year end, yields on 10 and 30-year U.S. Treasuries had fallen 133 and 102 basis points, respectively, to 5.11 percent and 5.46 percent, while the yield on the 2-year Treasury stood at 5.09 percent, 115 basis points below its close on December 31, 1999. INTERNATIONAL OVERVIEW The year was a difficult one for global equity markets, with investors becoming concerned about corporate profits against a backdrop of slowing global economic growth. The uncertainty associated with these concerns resulted in the worst year for global stocks since 1990. Recent economic data continues to point toward a slowdown in the global economic cycle. The Office for Economic Cooperation and Development's leading indicator of industrial production has weakened dramatically, portending a sharp deceleration in economic growth. The United States appears to be the most affected so far, as evidenced by plunging business confidence, weak personal consumption and dramatically lower GDP growth. CLASSES OF SHARES On June 6, 2000, Morgan Stanley Dean Witter Variable Investment Series began offering Class Y shares of each Portfolio. All shares issued prior to May 1, 2000 were designated Class X shares. The performance figures shown below for each Portfolio are for its Class X shares. For each Portfolio, the Class Y shares' performance will vary somewhat from that of the Class X shares because they have different expenses. The Class Y shares' performance is shown in the accompanying table. 2 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED AGGRESSIVE EQUITY PORTFOLIO For the 12-month period ended December 31, 2000, Aggressive Equity Portfolio's Class X shares posted a total return of - -1.75 percent compared to - -9.10 percent for the Standard & Poor's 500 Stock Index (S&P 500). The accompanying chart compares the Portfolio's performance to that of the S&P 500. The Portfolio began the year significantly overweighted toward the technology and biotechnology sectors. However, as it became clear that the Federal Reserve Board's actions during the first half of 2000 were going to lead to slower earnings growth and lower multiples for those particular high-beta issues, the Portfolio shifted its emphasis to steady growth stocks that the managers believe will outperform in a decelerating environment. These included stocks in the health care, financial services, electric utility and consumer-staples sectors. Given our outlook for a significant economic slowdown, the Portfolio is currently invested in a blend of steady growth stocks, which we believe may achieve the best earnings momentum over the short term, and early-cycle issues, particularly those related to the consumer (e.g., retailing, media and air transport). In our view, retailing, which consists of relatively low-ticket items, is likely to rebound before durable goods such as automobiles and housing. Cable companies should benefit from new spending on such digital services as video on demand and cable modems. Finally, air transport should benefit from declining fuel prices and industry consolidation. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: AGGRESSIVE EQUITY -- CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) May. 1999 $10,000 $10,000 May. 1999 $9,760 $9,788 Jun. 1999 $10,226 $10,330 Sep. 1999 $10,367 $9,686 Dec. 1999 $14,608 $11,126 Mar. 2000 $15,951 $11,381 Jun. 2000 $15,065 $11,079 Sep. 2000 $16,519 $10,971 Dec. 2000 $14,353(2) $10,114
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR SINCE INCEPTION CLASS X 1.75%(1) 24.29%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 3 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED As we enter into the new year, the Portfolio is approximately market weighted in technology. This sector, which became oversold in 2000, may benefit in the short term from declining global interest rates and potential tax cuts in the United States. In addition, there are a few exciting new-product cycles expected to be more broadly deployed in 2002, including wireless data and home networking. However, we remain somewhat cautious toward the sector, because corporate technology spending levels have far exceeded historical norms and the ensuing goods overhang in technology may depress any potential rebound. CAPITAL GROWTH PORTFOLIO For the 12-month period ended December 31, 2000, Capital Growth Portfolio's Class X shares produced a total return of 1.28 percent versus - -9.10 percent for the S&P 500. The accompanying chart compares the Portfolio's performance to that of the S&P 500. The Portfolio continued to invest in companies across the market-capitalization spectrum as well as in all major sectors of the S&P 500. At the beginning of the year the Portfolio was invested fairly aggressively, with significant exposure to the technology sector in particular and growth stocks in general. However, as technology stocks' valuations became extreme, the Portfolio moved to an approach more balanced between growth and value, redeploying assets from technology into financial services, utilities and health care. This blend between the two investing disciplines served the Portfolio well. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: CAPITAL GROWTH --CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) Mar. 1991 $10,000 $10,000 Mar. 1991 $10,220 $10,153 Jun. 1991 $10,446 $10,130 Sep. 1991 $10,973 $10,671 Dec. 1991 $12,841 $11,563 Mar. 1992 $11,937 $11,272 Jun. 1992 $11,340 $11,486 Sep. 1992 $11,780 $11,848 Dec. 1992 $13,051 $12,443 Mar. 1993 $12,219 $12,987 Jun. 1993 $11,403 $13,049 Sep. 1993 $11,472 $13,386 Dec. 1993 $12,139 $13,696 Mar. 1994 $11,789 $13,177 Jun. 1994 $11,553 $13,232 Sep. 1994 $12,011 $13,879 Dec. 1994 $11,984 $13,876 Mar. 1995 $13,223 $15,226 Jun. 1995 $13,826 $16,678 Sep. 1995 $14,579 $18,002 Dec. 1995 $15,929 $19,086 Mar. 1996 $16,954 $20,110 Jun. 1996 $17,310 $21,011 Sep. 1996 $17,768 $21,661 Dec. 1996 $17,768 $23,466 Mar. 1997 $17,608 $24,097 Jun. 1997 $20,531 $28,300 Sep. 1997 $23,725 $30,419 Dec. 1997 $22,128 $31,292 Mar. 1998 $25,600 $35,654 Jun. 1998 $25,536 $36,831 Sep. 1998 $21,974 $33,174 Dec. 1998 $26,473 $40,234 Mar. 1999 $28,267 $42,238 Jun. 1999 $28,461 $45,215 Sep. 1999 $27,643 $42,394 Dec. 1999 $35,287 $48,699 Mar. 2000 $38,647 $49,814 Jun. 2000 $36,450 $48,491 Sep. 2000 $38,427 $48,021 Dec. 2000 $35,737(2) $44,266
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEAR SINCE INCEPTION CLASS X 1.28%(1) 17.54%(1) 13.82%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 4 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED As of December 31, 2000, financial services stocks and other interest-rate-sensitive issues represented the largest component of the Portfolio, with a combined weighting of approximately 30 percent. Health-care companies made up slightly more than 20 percent of the Portfolio, with consumer staples accounting for 8 percent and the balance invested primarily in the energy and capital goods industries. At the end of the year the Portfolio's ten largest holdings were Everest Re Group, Oxford Health Plans, HCA, Kroger, Philip Morris, Golden West Financial, American International Group, Exxon Mobil, Boeing and AXA Financial. COMPETITIVE EDGE "BEST IDEAS" PORTFOLIO For the 12-month period ended December 31, 2000, Competitive Edge "Best Ideas" Portfolio's Class X shares posted a total return of -17.39 percent versus - -13.18 percent for the Morgan Stanley Capital International (MSCI) World Index. The accompanying chart compares the Portfolio's performance to that of the MSCI World Index. The Portfolio's large holdings in U.S. technology stocks as well as euro-based telecommunications companies led to its underperformance versus the MSCI World Index for the fiscal year. The Portfolio invests primarily in stocks compiled by the Morgan Stanley Dean Witter Equity Research department that they believe demonstrate a long-term sustainable "competitive edge" versus other players in the global arena. As of December 31, 2000, approximately 97 percent of the Portfolio's assets were invested in 40 equity positions throughout the world. The remaining 3 percent was held in cash equivalents. Equity holdings in the United States accounted for EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: COMPETITIVE EDGE "BEST IDEAS" -- CLASS X SHARES ($ in Thousands)
FUND MSCI(3) May. 1998 $10,000 $10,000 May. 1998 $9,830 $9,982 Jun. 1998 $9,860 $10,217 Sep. 1998 $8,290 $8,993 Dec. 1998 $9,810 $10,891 Mar. 1999 $9,980 $11,280 Jun. 1999 $10,485 $11,818 Sep. 1999 $10,495 $11,643 Dec. 1999 $12,447 $13,607 Mar. 2000 $12,779 $13,747 Jun. 2000 $12,101 $13,259 Sep. 2000 $11,637 $12,593 Dec. 2000 $10,283(2) $11,814
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR SINCE INCEPTION CLASS X 17.39%(1) 1.07%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 for the underlying fund. This figure does not reflect the deduction of any account fees or sales charges. (3) The Morgan Stanley Capital International (MSCI) World Index measures performance from a diverse range of global stock markets including securities representative of the market structure of 22 developed market countries in North America, Europe, and the Asia/Pacific region. 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 include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 5 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED nearly 59.3 percent of the Portfolio's assets, with the remainder diversified among eight other countries. In descending order, beginning with the greatest exposure, these were France, Japan, the United Kingdom, the Netherlands, Finland, Sweden, Germany and Australia. Among the Portfolio's key equity positions were FedEx Corporation (air freight/couriers), American Home Products Corp. (pharmaceuticals: major), Wal-Mart Stores (discount stores), Medtronic Inc. (medical specialties), Bank of New York Co., Inc. (major banks) and United Technologies Corp. (industrial conglomerates) in the United States; Heineken NV (beverages: alcoholic) in the Netherlands; UPM-Kymenne Oyj (pulp & paper) in Finland; and Suez Lyonnaise des Eaux (engineering & construction) and AXA (multi-line insurance) in France. DIVIDEND GROWTH PORTFOLIO For the 12-month period ended December 31, 2000, Dividend Growth Portfolio's Class X shares posted a total return of 5.30 percent versus - -9.10 percent for the S&P 500. The accompanying chart compares the Portfolio's performance to that of the S&P 500. The Portfolio's outperformance relative to the S&P 500 can be attributed in part to its limited exposure to high-technology and high price-to-earnings stocks, many of which underperformed during the period. Instead, the Portfolio's screening process led to overweightings of basic materials, capital goods, energy and utilities stocks, which typically enjoy strong cash flows and attractive dividend yields. While maintaining its commitment to its value-oriented investment methodology, the Portfolio has shifted its emphasis toward traditional companies that have made serious commitments to e-commerce, allowing for the growing role that the Internet and EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: DIVIDEND GROWTH --CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) Dec. 1990 $10,000 $10,000 Dec. 1991 $12,776 $13,041 Dec. 1992 $13,818 $14,033 Dec. 1993 $15,801 $15,445 Dec. 1994 $15,283 $15,649 Dec. 1995 $20,844 $21,524 Dec. 1996 $25,839 $26,464 Dec. 1997 $32,455 $35,291 Dec. 1998 $37,088 $45,375 Dec. 1999 $36,201 $54,921 Dec. 2000 $38,119(2) $49,922
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS 10 YEARS CLASS X 5.30%(1) 12.83%(1) 14.32%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 6 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED e-commerce now play in the global economy. These considerations resulted in the following equities being liquidated from the Fund's portfolio during the period: Abbott Laboratories, Armstrong World Industries, Brunswick, Burlington Resources, Conagra, Crown Cork & Seal, Fluor, Gillette, Hercules, International Flavors and Fragrances, Lockheed Martin, May Department Stores, Raytheon, U.S. Tobacco and Winn-Dixie Stores. Positions in Xerox and Goodyear Tire and Rubber Co. were also liquidated during the period. A new portfolio position was initiated in Electronic Data Systems. During the period, some of the Portfolio's holdings completed mergers: Exelon Corporation acquired Unicom Corporation, Citigroup merged with Associates First Capital, and JP Morgan merged with Chase. At the end of the period the Portfolio was invested in 74 equity issues spread among 37 different industry groups. EQUITY PORTFOLIO For the 12-month period ended December 31, 2000, Equity Portfolio's Class X shares posted a total return of -12.35 percent versus -9.10 percent for the S&P 500. The accompanying chart compares the Portfolio's performance to that of the S&P 500. The Portfolio's performance lagged that of its benchmark primarily because of its exposure to high-growth stocks in the technology and biotechnology sectors. As the year progressed, the Portfolio's focus was shifted to more traditional growth sectors like health care, consumer staples and select segments of financial services. Although we believe that health-care and consumer-staples stocks have the potential to produce the best earnings growth in the near term, we have reduced the weighting of these stocks in the portfolio to add EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: EQUITY -- CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) Dec. 1990 $10,000 $10,000 Dec. 1991 $15,905 $13,041 Dec. 1992 $15,913 $14,033 Dec. 1993 $19,051 $15,445 Dec. 1994 $18,115 $15,649 Dec. 1995 $25,820 $21,524 Dec. 1996 $29,012 $26,464 Dec. 1997 $39,872 $35,291 Dec. 1998 $52,012 $45,375 Dec. 1999 $82,489 $54,921 Dec. 2000 $72,298(2) $49,922
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS 10 YEARS CLASS X 12.35%(1) 22.87%(1) 21.87%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 7 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED exposure to early-cycle stocks that are likely to benefit from interest-rate reductions, including retailing and media issues. Most of our media exposure is to areas that are not purely economically sensitive. For example, we expect the cable industry to have healthy results this year, driven by digital services like video on demand and the now-profitable cable modems. We have also increased the Portfolio's exposure to technology and select investment banking and brokerage stocks. While we look for earnings growth to remain weak in the short term for the S&P 500 and these companies in particular, we believe that the outlook will improve in the second half of 2001. EUROPEAN GROWTH PORTFOLIO For the 12-month period ended December 31, 2000, European Growth Portfolio's Class X shares produced a total return of - -4.92 percent versus - -13.18 percent for the MSCI World Index. The accompanying chart compares the Portfolio's performance to that of the MSCI World Index. The difficult conditions that beset the European stock markets during the second quarter of 2000 continued throughout the second half of the year, with the technology, media and telecommunications sectors continuing to underperform. Fortunately, the Portfolio's sub-advisor, Morgan Stanley Dean Witter Investment Management Inc., began trimming the Portfolio's new-economy exposure in December 1999 and continued to do so during 2000. The Portfolio reinvested these assets in companies in the pharmaceuticals, food and beverage, and EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: EUROPEAN GROWTH -- CLASS X SHARES ($ in Thousands)
FUND MSCI(3) Mar. 1991 $10,000 $10,000 Mar. 1991 $9,640 $9,795 Jun. 1991 $9,169 $9,463 Sep. 1991 $10,044 $10,128 Dec. 1991 $10,134 $10,551 Mar. 1992 $10,148 $9,688 Jun. 1992 $11,183 $9,863 Sep. 1992 $10,560 $10,026 Dec. 1992 $10,539 $10,000 Mar. 1993 $11,339 $10,857 Jun. 1993 $11,938 $11,515 Sep. 1993 $13,299 $12,056 Dec. 1993 $14,847 $12,250 Mar. 1994 $15,112 $12,325 Jun. 1994 $14,985 $12,694 Sep. 1994 $16,003 $12,967 Dec. 1994 $16,089 $12,872 Mar. 1995 $16,859 $13,474 Jun. 1995 $18,652 $14,049 Sep. 1995 $19,838 $14,834 Dec. 1995 $20,254 $15,539 Mar. 1996 $21,826 $16,171 Jun. 1996 $22,993 $16,640 Sep. 1996 $23,825 $16,861 Dec. 1996 $26,329 $17,633 Mar. 1997 $27,037 $17,684 Jun. 1997 $29,327 $20,345 Sep. 1997 $31,119 $20,928 Dec. 1997 $30,561 $20,413 Mar. 1998 $36,702 $23,336 Jun. 1998 $38,581 $23,811 Sep. 1998 $32,518 $20,956 Dec. 1998 $37,884 $25,381 Mar. 1999 $38,051 $26,287 Jun. 1999 $38,841 $27,541 Sep. 1999 $39,074 $27,132 Dec. 1999 $48,913 $31,709 Mar. 2000 $50,141 $32,034 Jun. 2000 $48,981 $30,899 Sep. 2000 $45,132 $29,347 Dec. 2000 $46,506(2) $27,531
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS SINCE INCEPTION CLASS X 4.92%(1) 18.09%(1) 16.91%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 for the underlying fund. This figure does not reflect the deduction of any account fees or sales charges. (3) The Morgan Stanley Capital International (MSCI) World Index measures performance from a diverse range of global stock markets including securities representative of the market structure of 22 developed market countries in North America, Europe, and the Asia/Pacific region. 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 include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 8 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED tobacco sectors, which offered cheaper valuations and clearer earnings visibility. After falling to an all-time low versus the U.S. dollar in the third quarter of 2000, the euro has rallied strongly, buoyed by the intervention of the European Central Bank to help stabilize the currency. The sub-advisor will be looking for solid growth businesses at reasonable valuations in 2001, believing that in the current market environment, stock selection within sectors will prove more important than broad themes like growth versus value or new versus old economy. At the end of December, the Portfolio's regional weightings were 44.3 percent in the eurozone, 10.6 percent in Switzerland, 3.3 percent in Sweden and 38.3 percent in the United Kingdom. The remaining 3.5 percent was invested in cash. GLOBAL DIVIDEND GROWTH PORTFOLIO For the 12-month period ended December 31, 2000, Global Dividend Growth Portfolio's Class X shares produced a total return of -2.50 percent versus - -13.18 percent for the MSCI World Index. The accompanying chart compares the Portfolio's performance to that of the MSCI World Index. Consistent with our expectation of continued weakness in the U.S. equity markets, we are targeting 33 percent of the Portfolio's net assets toward U.S. equities, a significant underweighting versus the MSCI World Index (50.6 percent). The managers believe that the dramatic decline experienced by technology and telecommunications stocks this year has presented some attractive opportunities in those industries. Recent additions to the Portfolio include Verizon Communications, SBC Communications, Honeywell International, Compaq Computer, Electronic Data Systems, Computer Associates and Sprint. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: GLOBAL DIVIDEND GROWTH -- CLASS X SHARES ($ in Thousands)
FUND MSCI(3) Feb. 1994 $10,000 $10,000 Feb. 1994 $10,020 $10,072 Mar. 1994 $9,576 $9,636 Jun. 1994 $10,031 $9,925 Sep. 1994 $10,224 $10,138 Dec. 1994 $10,027 $10,063 Mar. 1995 $10,565 $10,534 Jun. 1995 $11,126 $10,984 Sep. 1995 $11,645 $11,597 Dec. 1995 $12,236 $12,148 Mar. 1996 $12,784 $12,643 Jun. 1996 $13,258 $13,009 Sep. 1996 $13,529 $13,183 Dec. 1996 $14,388 $13,786 Mar. 1997 $14,442 $13,825 Jun. 1997 $16,399 $15,906 Sep. 1997 $16,913 $16,362 Dec. 1997 $16,121 $15,960 Mar. 1998 $17,898 $18,245 Jun. 1998 $17,685 $18,616 Sep. 1998 $15,486 $16,384 Dec. 1998 $18,141 $19,844 Mar. 1999 $18,162 $20,552 Jun. 1999 $20,003 $21,533 Sep. 1999 $19,742 $21,213 Dec. 1999 $20,799 $24,791 Mar. 2000 $19,784 $25,045 Jun. 2000 $19,627 $24,158 Sep. 2000 $18,942 $22,944 Dec. 2000 $20,280(2) $21,525
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS SINCE INCEPTION CLASS X 2.50%(1) 10.63%(1) 10.87%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 for the underlying fund. This figure does not reflect the deduction of any account fees or sales charges. (3) The Morgan Stanley Capital International (MSCI) World Index measures performance from a diverse range of global stock markets including securities representative of the market structure of 22 developed market countries in North America, Europe, and the Asia/Pacific region. 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 include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 9 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED In Japan, economic growth is still anemic, constrained in part by its dependence on high-priced imported oil. Despite the negative effects of high oil prices, sentiment among large manufacturers appears to be improving. This trend favors the Portfolio's strategy of investing in large Japanese manufacturers, particularly in the automobile and consumer electronics areas. We are currently targeting 10 percent of the Portfolio's net assets toward Japan, slightly less than that market's 10.7 percent weighting in the MSCI World Index. We are currently more optimistic about Europe than any other region. Despite economic growth projected to slow to just under 3 percent this year, we believe that the outlook for Europe is stable relative to that for the United States and Asia. Tax cuts set to take effect in Germany, France and Italy are likely to result in increased consumer spending, which could offset an expected weakness in exports caused by a slowing U.S. economy. Should inflation remain benign and the euro maintain its strength, we believe that European equity markets may enjoy a period of sustainable outperformance. Based on this expectation, we are targeting 34 percent of the Portfolio's net assets toward continental Europe, versus 24.2 percent for the MSCI World Index, and an additional 11 percent of the Portfolio toward the United Kingdom. At fiscal year-end, we are targeting a relatively small portion of the Portfolio's assets (4.0 percent) toward the interest-rate-sensitive markets of Hong Kong and Singapore. We believe that these markets may outperform if interest rates fall around the world in response to weak global growth. The Portfolio also remains exposed to the resource-oriented markets of Australia (4.0 percent) and Canada (3.0 percent), where economic fundamentals continue to be strong. 10 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED HIGH YIELD PORTFOLIO For the 12-month period ended December 31, 2000, High Yield Portfolio's Class X shares posted a total return of -32.22 percent versus -5.86 percent for the Lehman Brothers High Yield Index. The accompanying chart compares the Portfolio's performance to that of the Lehman index. During the fiscal year the high-yield market remained mired in a slump, having been hit hard by a flight to quality in the fixed-income markets amid the higher-interest-rate environment created by the actions of the Federal Reserve Board. On December 31, 2000, the yield spread between high-yield bonds and comparable U.S. government securities was approaching its widest margin in history. Spreads have also broadened between the different tiers within the high-yield sector as investors have gravitated toward the highest-quality end of the marketplace. As a result of this trend, the high-yield market's woes have taken their worst toll on the B-rated sector, the market's largest area. With yields on many high-yield issues at or near 10-year highs and currently trading at significant discounts to their stated maturity value, we currently view the high-yield sector as extremely undervalued, though the timing of a recovery is still uncertain at this point. Given today's substantially higher yields, near-record yield spreads over U.S. government bonds and significantly discounted bond prices, we view the high-yield market as a potentially rewarding long-term investment opportunity. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: HIGH YIELD -- CLASS X SHARES ($ in Thousands)
FUND LEHMAN (3) Dec. 1990 $10,000 $10,000 Dec. 1991 $15,814 $14,619 Dec. 1992 $18,716 $16,921 Dec. 1993 $23,232 $19,817 Dec. 1994 $22,658 $19,614 Dec. 1995 $26,041 $23,374 Dec. 1996 $29,161 $26,028 Dec. 1997 $32,622 $29,349 Dec. 1998 $30,599 $29,897 Dec. 1999 $30,192 $30,612 Dec. 2000 $20,463(2) $28,819
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS 10 YEARS CLASS X 32.22%(1) 4.71%(1) 7.42%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 for the underlying fund. This figure does not reflect the deduction of any account fees or sales charges. (3) The Lehman Brothers U.S. Corporate High Yield Index tracks the performance of all below investment-grade securities which have at least $100 million in outstanding issuance, a maturity greater than one year, 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. 11 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED On January 8, 2001, Steven F. Esser, Robert E. Angevine, Gordon W. Loery and Deanna L. Loughnane became the primary portfolio managers of the Portfolio. Mr. Esser is a Managing Director of the Investment Manager as well as a Managing Director of Miller Anderson & Sherrerd, LLP (MAS), an affiliate of the Investment Manager. Mr. Angevine is a Principal of the Investment Manager and MAS. Mr. Loery is also a Principal of the Investment Manager and MAS. Messrs. Esser, Angevine and Loery have been managing portfolios for MAS and its investment advisory affiliates for more than five years. Ms. Loughnane is a Principal of the Investment Manager and MAS. She has been managing portfolios for MAS and its investment advisory affiliates since 1997, prior to which she was a Vice President and Senior Corporate Bond Analyst for Putnam Investments (1993-1997). INCOME BUILDER PORTFOLIO For the 12-month period ended December 31, 2000, Income Builder Portfolio's Class X shares posted a total return of 0.17 percent versus -9.10 percent for the S&P 500. The accompanying chart compares the Portfolio's performance to that of the S&P 500. The Portfolio outperformed its benchmark index primarily because of its value-oriented investment style and lack of exposure to technology and biotechnology companies. In addition, the Portfolio's position in convertible securities outperformed the broader equity markets, owing mainly to the defensive nature of convertibles. Real estate investment trusts (REITs), utilities and financial companies were also positive contributors to the Portfolio's performance, while overexposure to basic materials and capital goods detracted from it. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: INCOME BUILDER --CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) Jan. 1997 $10,000 $10,000 Jan. 1997 $10,000 $10,055 Mar. 1997 $9,830 $9,718 Jun. 1997 $10,801 $11,413 Sep. 1997 $11,885 $12,268 Dec. 1997 $12,238 $12,620 Mar. 1998 $12,977 $14,379 Jun. 1998 $12,843 $14,854 Sep. 1998 $11,499 $13,379 Dec. 1998 $12,632 $16,226 Mar. 1999 $12,442 $17,034 Jun. 1999 $13,767 $18,235 Sep. 1999 $12,794 $17,097 Dec. 1999 $13,524 $19,640 Mar. 2000 $13,166 $20,090 Jun. 2000 $12,970 $19,556 Sep. 2000 $13,248 $19,366 Dec. 2000 $13,547(2) $17,852
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR SINCE INCEPTION CLASS X 0.17%(1) 8.00%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. On December 31, 2000, the Portfolio's large-cap stock segment was relatively fully invested, as it has been since its inception. Holdings sold during the period included Air Products, Associates First 12 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED Capital, U.S. Tobacco, Jefferson Pilot, Camden Property, JDN Realty, General Motors, U.S. Steel, Xerox, Albertson's and First Industrial. Purchases made during the period included Rockwell, Vornado, Kerr-McGee, Florida Power and Light, Simon Property, Rouse, Merck and Anheuser-Busch. INFORMATION PORTFOLIO The Information Portfolio was introduced on November 6, 2000. The Portfolio seeks long-term capital appreciation by investing in common stocks issued by domestic and foreign companies involved in all areas of the communications and information industry. The Portfolio targets companies that not only develop essential technologies but also utilize, service, support and incorporate these technologies as they vie for market share. Information Age industries that the Portfolio may invest in include telephone companies, cable television providers, broadcasters and the Internet, to name a few. Among the Portfolio's largest holdings were TXU Corporation, PPL Corporation, Comverse Technology, Bea Systems and Comcast. MONEY MARKET PORTFOLIO As of December 31, 2000, Money Market Portfolio had net assets in excess of $372 million. The average maturity of Class X was 68 days and its net investment income ratio for the 12-month period ended December 31, 2000 was 5.83 percent. For the seven-day period ended December 31, 2000, the Class X provided an effective yield of 6.38 percent and a current yield of 6.19 percent, while its 30-day current yield for December was 6.17 percent. Yields available from money-market securities reached their highest levels in recent years during the third calendar quarter of 2000, then declined moderately in the fourth quarter. By December, it became clear that the pace of economic activity was slowing significantly from the robust rates achieved during the first three quarters. Yield levels began to fall in anticipation of future reductions in the Federal Open Market Committee's target rate for federal funds. In fact, on January 3, 2001, the committee announced what could potentially be the first in a series of cuts in the federal funds target rate, lowering it from 6.50 percent to 6.00 percent. On December 31, 2000, approximately 69 percent of the Portfolio was invested in high-quality commercial paper, 20 percent in federal agency obligations, and the remaining 11 percent in short-term bank notes and certificates of deposit issued by financially strong commercial banks. At the end 13 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED of the fiscal period, approximately 79 percent of the 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 try to operate the Portfolio in a conservative manner, without the use of derivatives or structured notes that might fluctuate excessively with changing interest rates. We believe that the Portfolio continues to serve as a useful investment for liquidity, preservation of capital and a yield that reflects prevailing money-market conditions. We expect that the pace of economic activity will continue to slow in the first six months of 2001 and anticipate that the Fed will most likely take further steps to reduce short-term interest rates during that time. As a result, the net yield results that can be achieved for the first half of 2001 are likely to be lower than those realized during the preceding six months. PACIFIC GROWTH PORTFOLIO For the 12-month period ended December 31, 2000, Pacific Growth Portfolio's Class X shares produced a total return of - -33.46 percent compared to - -13.18 percent for the MSCI World Index. The accompanying chart compares the Portfolio's performance to that of the MSCI World Index. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: PACIFIC GROWTH --CLASS X SHARES ($ in Thousands)
FUND MSCI(3) Feb. 1994 $10,000 $10,000 Feb. 1994 $9,920 $10,072 Mar. 1994 $8,984 $9,636 Jun. 1994 $9,380 $9,925 Sep. 1994 $10,211 $10,138 Dec. 1994 $9,327 $10,063 Mar. 1995 $9,007 $10,534 Jun. 1995 $9,701 $10,984 Sep. 1995 $9,801 $11,597 Dec. 1995 $9,862 $12,148 Mar. 1996 $10,513 $12,643 Jun. 1996 $10,554 $13,009 Sep. 1996 $10,184 $13,183 Dec. 1996 $10,246 $13,786 Mar. 1997 $9,762 $13,825 Jun. 1997 $10,440 $15,906 Sep. 1997 $8,813 $16,362 Dec. 1997 $6,383 $15,960 Mar. 1998 $6,529 $18,245 Jun. 1998 $4,958 $18,616 Sep. 1998 $4,553 $16,384 Dec. 1998 $5,720 $19,844 Mar. 1999 $6,119 $20,552 Jun. 1999 $7,461 $21,533 Sep. 1999 $7,819 $21,213 Dec. 1999 $9,500 $24,791 Mar. 2000 $9,578 $25,045 Jun. 2000 $8,902 $24,158 Sep. 2000 $7,572 $22,944 Dec. 2000 $6,321(2) $21,525
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS SINCE INCEPTION CLASS X 33.46%(1) 8.51%(1) 6.47%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 for the underlying fund. This figure does not reflect the deduction of any account fees or sales charges. (3) The Morgan Stanley Capital International (MSCI) World Index measures performance from a diverse range of global stock markets including securities representative of the market structure of 22 developed market countries in North America, Europe, and the Asia/Pacific region. 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 include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. - ---------------- * An investment in the Money Market Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Portfolio seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Portfolio. 14 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED During the second half of 2000, Morgan Stanley Dean Witter Investment Management Inc., the Portfolio's sub-advisor, decreased the Portfolio's exposure to Japan. Equities in Japan have been weighed down by Nasdaq volatility, investor skittishness surrounding possible changes that could negatively affect Japan's weighting in the MSCI indexes, and a tense political outlook for the near term. Within Japan, the sub-advisor continues to favor select technology companies as well as economically sensitive and cyclical stocks, focusing on valuations and earnings-growth potential. South Korea and Taiwan are among the Portfolio's largest market weightings in developing Asia. South Korean equities have been weighed down by global volatility, concerns over restructuring and semiconductor companies' financial results. However, the sub-advisor believes the corporate and banking sectors will be successfully restructured, benefiting the economy in the longer term. Equities in Taiwan were pulled down by instability in the banking sector and concerns that the bellwether technology sector might be facing a long-lived slowdown. On a more promising note, the Taiwanese government passed a law relating to mergers and acquisitions within the banking sector that could set the stage for future consolidation benefiting that industry. Hong Kong, one of the Portfolio's largest market positions, was one of the better-performing Asian markets in 2000. Although Hong Kong remains vulnerable to further weakness in global telecommunications stocks, the sub-advisor believes that equities should benefit in the near term from rapid reform and overseas expansion of many companies. Equities in Hong Kong are also likely to gain support from falling interest rates and China's entry into the World Trade Organization. Equities in China fell during the year, hurt by concerns about the potential negative impact of an anticipated global growth slowdown. Rising oil prices and heightened tensions in Taiwan also negatively affected China's equity market. Economic growth prospects, however, remain vibrant, and domestic demand continues to recover. During the second half of 2000 the sub-advisor trimmed the Portfolio's holdings in Australia, because profitability indicators there have continued to deteriorate. The sub-advisor has also reduced the Portfolio's exposure to India, where equities' price performance has been dampened by high oil prices and turmoil in technology-related stocks. 15 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED QUALITY INCOME PLUS PORTFOLIO For the 12-month period ended December 31, 2000, Quality Income Plus Portfolio's Class X shares posted a total return of 11.09 percent versus 11.63 percent for the Lehman Brothers Aggregate Bond Index. The accompanying chart compares the Portfolio's performance to that of the Lehman index. In the first half of the year, corporate treasurers issued $177 billion in investment-grade bonds against the backdrop of an inverted U.S. Treasury yield curve, a restrictive monetary policy and strong credit demands. Once the yield curve began to invert, long-term corporate bonds started to underperform other asset categories. The Portfolio's focus on long-term corporate bonds thus hindered its performance for the first half of the period. The Portfolio's managers employed several strategies to take advantage of the unique fixed-income environment. First, we sold several long-term bonds in the insurance and financial areas, because those sectors generally underperform in inverted-yield-curve environments. This move proved beneficial in that this market segment significantly underperformed the general corporate market. Second, as the mortgage market came under pressure during the first quarter, we sold some corporate notes and used the proceeds to purchase GNMAs. During the second quarter, we sold GNMAs to purchase AA-rated noncallable corporate 10-year notes. This sector provided positively to the Portfolio's return in the second half of 2000. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: QUALITY INCOME PLUS -- CLASS X SHARES ($ in Thousands)
FUND LEHMAN (3) Dec. 1990 $10,000 $10,000 Dec. 1991 $11,875 $11,600 Dec. 1992 $12,856 $12,459 Dec. 1993 $14,525 $13,674 Dec. 1994 $13,563 $13,274 Dec. 1995 $16,858 $15,727 Dec. 1996 $17,121 $16,298 Dec. 1997 $19,020 $17,872 Dec. 1998 $20,670 $19,424 Dec. 1999 $19,778 $19,265 Dec. 2000 $21,971(2) $21,504
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS 10 YEARS CLASS X 11.09%(1) 5.44%(1) 8.19%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 for the underlying fund. This figure does not reflect the deduction of any account fees or sales charges. (3) The Lehman Brothers U.S. Aggregate Index tracks the performance of all U.S. government agency and Treasury securities, investment-grade corporate debt securities, agency mortgage-backed securities, asset-backed securities and commercial mortgage-based securities. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 16 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED During the second half of 2000 we emphasized AA-rated sovereign credits and U.S.-dollar-based foreign corporates issued by established companies in the telephone sector, which were yielding considerably more than their domestic counterparts. We also purchased AA- and AAA-rated 30-year corporate bonds, believing that these securities were the best long-term opportunity available in terms of relative value. During December, high-grade corporate bonds provided competitive returns. We believe that this trend is likely to continue in 2001. We continue to believe that 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. As of February 12, 2001, Angelo Manioudakis and Charles Moon became the Portfolio's primary managers. Mr. Manioudakis is a Principal of the Investment Manager and Miller Anderson & Sherrerd, LLP (MAS), an affiliate of the Investment Manager, and has been managing portfolios for MAS and its investment advisory affiliates for more than five years. Mr. Moon is a Vice President of the Investment Manager and MAS (since 1999). Prior thereto he was a Vice President and Global Banks Analyst for Citigroup (1993-1999). S&P 500 INDEX PORTFOLIO For the 12-month period ended December 31, 2000, S&P 500 Index Portfolio's Class X shares produced a total return of - -9.38 percent compared to - -9.10 percent for the S&P 500. The accompanying chart compares the Portfolio's performance to that of the S&P 500. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: S&P 500 INDEX --CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) May. 1998 $10,000 $10,000 May. 1998 $9,880 $9,869 Jun. 1998 $10,270 $10,270 Sep. 1998 $9,250 $9,250 Dec. 1998 $11,220 $11,218 Mar. 1999 $11,750 $11,777 Jun. 1999 $12,556 $12,607 Sep. 1999 $11,762 $11,821 Dec. 1999 $13,490 $13,579 Mar. 2000 $13,802 $13,890 Jun. 2000 $13,411 $13,521 Sep. 2000 $13,269 $13,390 Dec. 2000 $12,224(2) $12,343
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR SINCE INCEPTION CLASS X 9.38%(1) 7.96%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 17 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED In 2000, the S&P 500 posted its worst calendar-year performance in more than 20 years. Technology, the index's best-performing sector in 1999, was its worst-performing one in 2000, posting a decline of -40 percent. As of December 31, 2000, the top five positions in the S&P 500 were General Electric, Exxon Mobil, Pfizer, Cisco and Citigroup. The S&P 500 Index closed out the year on a sour note, posting the worst fourth-quarter decline (-7.8 percent) since 1987. Widespread fears of a major economic slowdown and disappointing corporate earnings became the primary influences on investment behavior, keeping the index in a slump. Despite several factors, including the Federal Reserve Board's decision to change its bias from tightening to neutral and the final resolution of the presidential election, the market failed to find the year-end relief investors were hoping for. However, aggressive interest-rate cuts by the Fed in early January have helped allay many of these fears. The market will be looking for additional Fed easings in the near future to offset the expected diminishing of corporate earnings, though there is no guarantee this will occur. SHORT-TERM BOND PORTFOLIO For the 12-month period ended December 31, 2000, Short-Term Bond Portfolio's Class X shares posted a total return of 5.85 percent compared to 8.48 percent for the Lehman Brothers U.S. Credit Index (1-5 Year)(formerly the Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index). The accompanying chart compares the Portfolio's performance to that of the Lehman index. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: SHORT TERM BOND --CLASS X SHARES ($ in Thousands)
FUND LEHMAN (3) May 1999 $10,000 $10,000 May 1999 $9,953 $10,000 Jun. 1999 $9,973 $10,027 Sep. 1999 $10,093 $10,121 Dec. 1999 $10,156 $10,184 Mar. 2000 $10,261 $10,300 Jun. 2000 $10,397 $10,459 Sep. 2000 $10,582 $10,769 Dec. 2000 $10,749(2) $11,047
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR SINCE INCEPTION CLASS X 5.85%(1) 4.44%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 for the underlying fund. This figure does not reflect the deduction of any account fees or sales charges. (3) The Lehman Brothers U.S. Credit Index (1-5 Year) (formerly Lehman Brother Mutual Fund Short (1-5) Investment Grade Debt Index) includes U.S. corporate and specified foreign debentures and secured notes 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. 18 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED The Portfolio's underperformance relative to its benchmark can be attributed partly to our decision not to extend the Portfolio's duration significantly before interest rates began to drop, because we preferred to maintain a higher dividend level instead of locking in the lower yields that would result from the negatively sloped yield curve. With the consensus outlook favoring higher interest rates as 2000 began, we held close to 15 percent of the Portfolio's assets in cash reserves through early March. As the period progressed, we reduced the Portfolio's cash reserves to purchase U.S. government agency securities and corporate bonds, which were providing historically attractive yields. After the Portfolio's cash reserves hit a low of slightly less than 9 percent in August, we let them accumulate once again as yields on longer-maturity government securities fell substantially below those available on the shorter-dated securities. The increasing likelihood of a sharp economic slowdown as the year progressed prompted us to focus on longer-maturity issues toward year-end. On December 31, 2000, corporates made up 17.5 percent of the Portfolio, with U.S. government agency securities accounting for 40.5 percent. U.S. Treasury securities, providing the least yield incentive as a sector, fell to 26.8 percent from nearly 45 percent a year earlier. Cash reserves represented 15.2 percent of investable assets. With the Federal Reserve Board in the process of lowering short-term interest rates, the markets are aggressively discounting possible future rate cuts. Treasuries with maturities from one to five years are currently yielding more than one percentage point less than the current federal funds rate of 6.00 percent. As long as money-market rates offer significantly higher yields than government securities, we prefer to emphasize income, given today's low-interest-rate environment. Effective February 1, 2001, David S. Horowitz and Charles Moon became the Portfolio's primary managers. Mr. Horowitz is a Vice President of the Investment Manager and Miller Anderson & Sherrerd, LLP (MAS), an affiliate of the Investment Manager. He has been managing portfolios for MAS and its investment advisory affiliates for more than five years. Mr. Moon is a Vice President of the Investment Manager and MAS (since 1999). Prior thereto, he was a Vice President and Global Banks Analyst for Citigroup (1993-1999). 19 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED STRATEGIST PORTFOLIO For the 12-month period ended December 31, 2000, Strategist Portfolio's Class X shares posted a total return of 1.64 percent versus -9.10 percent for the S&P 500 and 11.85 percent for the Lehman Brothers Government/Credit Index. The accompanying chart compares the Portfolio's performance to that of both the S&P 500 and Lehman indexes. Throughout 2000, the Portfolio maintained 55 percent of its assets in equities, a neutral weighting, with 20 percent in bonds, an underweighted position, and an above-average 25 percent in cash. The equity portion of the Portfolio continues to focus on sectors that we believe have outstanding earnings growth potential: technology, including software, hardware and telecommunications; financial services, including insurance and banking; healthcare, with a specific emphasis on biotechnology; and energy, including oil services and diversified refiners. The fixed-income portion held 85 issues at year-end, with U.S. government-issued and government-agency bonds representing 59 percent and corporate-issued paper accounting for 41 percent. The Portfolio's average yield was 6.1 percent, the average maturity 9.4 years. Average duration, a measurement of bond price volatility relative to interest-rate movement, was 5.6 years. EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: STRATEGIST -- CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) LEHMAN(4) Dec. 1990 $10,000 $10,000 $10,000 Dec. 1991 $12,826 $13,041 $11,613 Dec. 1992 $13,754 $14,033 $12,493 Dec. 1993 $15,182 $15,445 $13,871 Dec. 1994 $15,780 $15,649 $13,384 Dec. 1995 $17,263 $21,524 $15,960 Dec. 1996 $19,856 $26,464 $16,423 Dec. 1997 $22,579 $35,291 $18,026 Dec. 1998 $28,573 $45,375 $19,733 Dec. 1999 $33,531 $54,921 $19,310 Dec. 2000 $34,082(2) $49,922 $21,598
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS 10 YEARS CLASS X 1.64%(1) 14.57%(1) 13.05%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. 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 U.S. Government/Credit Index (formerly Lehman Brothers Government/Corporate Index) tracks the performance of government and corporate obligations, including U.S. government agency and Treasury securities and corporate and Yankee bonds. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. On February 1, 2001, Angelo Manioudakis and Charles Moon joined Mark Bavoso as primary managers of the Portfolio. Mr. Bavoso is responsible for overall asset allocation and investment of the 20 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED Portfolio's equity portion, while Mr. Manioudakis and Mr. Moon are responsible for managing the fixed-income portion of the Portfolio. Mr. Bavoso is a Managing Director of the Investment Manager and has been the primary portfolio manager since January 1994. He has been managing portfolios with the Investment Manager for more than five years. Mr. Manioudakis is a Principal of the Investment Manager and of Miller Anderson & Sherrerd LLP (MAS), an affiliate of the Investment Manager. He has been managing portfolios for MAS and its investment advisory affiliates for more than five years. Mr. Moon is a Vice President of the Investment Manager and MAS (since 1999). Prior thereto, he was a Vice President and Global Banks Analyst for Citigroup (1993-1999). UTILITIES PORTFOLIO For the 12-month period ended December 31, 2000, Utilities Portfolio's Class X shares produced a total return of 3.03 percent versus - -9.10 percent for the S&P 500 Index. Robust returns within the electric power and natural gas sectors resulted in strong relative performance for the Portfolio. The accompanying chart compares the Portfolio's performance to that of the S&P 500. The electric power sector experienced a dramatic resurgence during the 12-month period under review as investors favored the group's defensive appeal as well as its accelerating earnings growth profile and successful diversification efforts. In addition, independent power producers benefited from a rising demand for power, resulting in their posting exceptionally strong returns during the calendar year. The global telecommunications sector posted disappointing performance results EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000: UTILITIES -- CLASS X SHARES ($ in Thousands)
FUND S&P 500(3) Dec. 1990 $10,000 $10,000 Dec. 1991 $12,056 $13,041 Dec. 1992 $13,581 $14,033 Dec. 1993 $15,712 $15,445 Dec. 1994 $14,294 $15,649 Dec. 1995 $18,389 $21,524 Dec. 1996 $19,986 $26,464 Dec. 1997 $25,412 $35,291 Dec. 1998 $31,450 $45,375 Dec. 1999 $35,449 $54,921 Dec. 2000 $36,524(2) $49,922
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS 10 YEARS CLASS X 3.03%(1) 14.71%(1) 13.83%(1)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH LESS THAN THEIR ORIGINAL COST. PERFORMANCE FOR CLASS Y SHARES WILL VARY FROM THE PERFORMANCE OF CLASS X SHARES SHOWN ABOVE DUE TO DIFFERENCES IN EXPENSES. (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, 2000 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 Index (S&P 500-Registered Trademark-) is a broad-based index, the performance of which is based on the performance of 500 widely-held common stocks chosen for market size, liquidity and industry group representation. The Index does not include any expenses, fees or charges. The Index is unmanaged and should not be considered an investment. 21 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED during the fiscal year, following its strong performance in 1999. Various issues ranging from increased competition in voice long distance to the extent of future telecom equipment spending resulted in the group's lackluster performance during much of 2000. Toward the end of the year, however, a modest recovery ensued among some telecom companies, including the regional Bells, which continue to see strong data and wireless growth. We believe these companies should benefit in the months ahead, because they typically outperform in a slowing economic environment. The natural gas sector benefited from increased demand during 2000 as well as from strong growth among such new ventures as gas marketing and power generation. The electric utility industry faced a regional energy shortfall at the end of 2000, as California's deregulation plan showed its structural weakness. These events led to deteriorating financial conditions for the major California-based electric companies. Thus far, this situation has had little effect on the Portfolio's performance, given its limited exposure to these California-based companies (less than 1 percent of total assets). While it may take some time for the crisis to subside, we believe that the condition will ultimately be resolved. On December 31, 2000, 86 percent of the Portfolio's net assets were allocated to utility and utility-related equities. Within this equity component, 47 percent was allocated to electric power, 33 percent to telecommunications and 20 percent to natural gas. Adding a further degree of diversification to the Portfolio was its international holdings (10 percent of its net assets), which focused on the telecommunications sector. The Portfolio's high-quality fixed-income component accounted for 6 percent of net assets, with the remaining 8 percent held in cash and cash equivalents. The fixed-income portion of the Portfolio remains well diversified, with a weighted average credit rating of Baa1 and BBB+ as measured by Moody's Investors Service and Standard & Poor's Corporation, respectively. New positions added to the Portfolio during the second half of 2000 included Kinder Morgan Inc. and Northeast Utilities. Going forward, the Portfolio will continue to seek to provide competitive returns by maintaining a well-diversified, high-quality portfolio of energy and communications companies. We will continue to focus on companies with clearly defined growth strategies that enjoy strong product demand and have solid earnings visibility. Furthermore, in an effort to capitalize on several attractively valued 22 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES LETTER TO THE SHAREHOLDERS DECEMBER 31, 2000, CONTINUED growth opportunities, both within the United States and abroad, we anticipate expanding the Portfolio's telecommunications component modestly while maintaining a healthy complement of electric power and natural gas equities. LOOKING AHEAD We believe that the Federal Reserve Board will continue to lower interest rates during the first half of 2001. However, this easing of interest rates, if it takes place, may take longer than usual to have a positive impact on the economy, because corporate debt levels need to be pared and excess inventories reduced before capital spending can rebound. In addition, high levels of consumer spending have impaired the consumer balance sheets. Therefore, debt levels here will also need to be reduced before spending can resume in force. We appreciate your ongoing support of Morgan Stanley Dean Witter Variable Investment Series and look forward to continuing to serve your investment needs. Very truly yours, /s/ Charles A. Fiumefreddo /s/ Mitchell M. Merin CHARLES A. FIUMEFREDDO MITCHELL M. MERIN CHAIRMAN OF THE BOARD PRESIDENT
23 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FUND PERFORMANCE DECEMBER 31, 2000
AVERAGE ANNUAL TOTAL RETURNS(1) ------------------------------------ SINCE CLASS Y SHARES: INCEPTION --------------- --------- Aggressive Equity........ (2.48)% Capital Growth........... (2.24) Competitive Edge Fund -- "Best Ideas"............ (15.22) Dividend Growth.......... 7.65 Equity................... (3.99) European Growth.......... (7.39) Global Dividend Growth... 0.07 High Yield............... (30.02) Income Builder........... 1.06 Money Market............. 3.37 Pacific Growth........... (26.72) Quality Income Plus...... 8.31 S&P 500 Index............ (9.73) Short-Term Bond.......... 3.82 Strategist............... (0.02) Utilities................ 2.07
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. -------------------- (1) Figure shown assumes reinvestment of all distributions for the underlying fund based on net asset value (NAV). They do not reflect the deduction of insurance expenses, an annual contract maintenance fee, or surrender charges. 24 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
ANNUALIZED PRINCIPAL YIELD AMOUNT IN ON DATE OF MATURITY THOUSANDS PURCHASE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------ COMMERCIAL PAPER (67.9%) ACCIDENT & HEALTH INSURANCE (1.3%) $ 5,000 AIG Funding Inc................................... 6.64% 02/02/01 $ 4,969,353 ------------ BANKING (2.7%) 4,925 Bank One Corp..................................... 6.72 01/10/01 4,914,962 5,000 Morgan (J.P.) & Co., Inc.......................... 6.61 02/16/01 4,956,667 ------------ 9,871,629 ------------ FINANCE -- AUTOMOTIVE (2.6%) 6,000 Ford Motor Credit Co.............................. 6.64 01/02/01 5,996,690 3,600 General Motors Acceptance Corp.................... 6.63 01/19/01 3,586,800 ------------ 9,583,490 ------------ FINANCE -- CONSUMER (9.3%) 6,000 American Express Credit Corp...................... 6.55 03/06/01 5,929,160 11,500 New Center Asset Trust............................ 6.59 - 6.66 02/06/01 - 02/08/01 11,419,006 17,500 Wells Fargo Financial Inc......................... 6.45 - 6.64 02/07/01 - 03/16/01 17,312,967 ------------ 34,661,133 ------------ FINANCE -- CORPORATE (1.6%) 6,000 Ciesco, L.P....................................... 6.65 01/04/01 5,994,500 ------------ FINANCE/RENTAL/LEASING (2.9%) 11,000 International Lease Finance Corp.................. 6.60 03/02/01 - 04/19/01 10,826,715 ------------ FINANCIAL CONGLOMERATES (7.8%) 11,000 Associates Corp. of North America................. 6.67 - 6.68 01/18/01 - 01/31/01 10,947,915 18,500 General Electric Capital Corp..................... 6.25 - 7.16 02/09/01 - 06/12/01 18,187,059 ------------ 29,134,974 ------------ INTERNATIONAL BANKS (32.2%) 10,000 ANZ (DE) Inc...................................... 6.55 - 6.66 01/08/01 - 03/07/01 9,931,835 18,000 Abbey National North America Corp................. 6.63 - 6.65 01/16/01 - 02/20/01 17,892,968 6,000 CBA (Delaware) Finance Inc........................ 6.61 02/21/01 5,942,583 11,000 Cregem North America Inc.......................... 6.72 - 6.73 01/19/01 - 01/26/01 10,952,376
SEE NOTES TO FINANCIAL STATEMENTS 25 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
ANNUALIZED PRINCIPAL YIELD AMOUNT IN ON DATE OF MATURITY THOUSANDS PURCHASE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------ $ 6,000 Deutsche Bank Financial Inc....................... 6.61% 05/11/01 $ 5,859,200 17,500 Dresdner U.S. Finance Inc......................... 6.63 - 6.66 01/10/01 - 02/13/01 17,407,966 15,000 Halifax PLC....................................... 6.64 - 6.71 01/05/01 - 02/01/01 14,954,977 7,000 National Australia Funding (DE) Inc............... 6.67 01/05/01 6,992,242 17,500 Societe Generale N.A. Inc......................... 6.45 - 6.61 02/16/01 - 03/13/01 17,305,538 12,920 UBS Finance (Delaware) LLC........................ 6.51 - 6.62 01/02/01 - 03/14/01 12,849,213 ------------ 120,088,898 ------------ INSURANCE (1.6%) 6,000 American General Corp............................. 6.63 01/17/01 5,980,470 ------------ INVESTMENT BANKERS/BROKERS/SERVICES (3.2%) 12,000 Goldman Sachs Group Inc........................... 6.53 - 6.62 02/14/01 - 02/15/01 11,899,634 ------------ MAJOR TELECOMMUNICATIONS (0.9%) 3,300 Verizon Global Funding Inc........................ 6.65 02/07/01 3,276,512 ------------ UTILITIES (1.8%) 6,820 Duke Energy Corp.................................. 6.46 02/09/01 6,770,290 ------------ TOTAL COMMERCIAL PAPER (COST $253,057,598)................................................................................. 253,057,598 ------------ U.S. GOVERNMENT AGENCIES (19.3%) 5,000 Federal Farm Credit Banks......................... 6.03 06/20/01 4,860,011 11,000 Federal Home Loan Banks........................... 5.97 -5.98 06/20/01 - 07/20/01 10,675,276 15,230 Federal Home Loan Mortgage Corp................... 6.11 - 6.84 04/26/01 - 07/19/01 14,864,293 42,700 Federal National Mortgage Assoc................... 6.00 - 6.87 02/01/01 - 08/07/01 41,617,417 ------------ TOTAL U.S. GOVERNMENT AGENCIES (COST $72,016,997).................................................................................. 72,016,997 ------------
SEE NOTES TO FINANCIAL STATEMENTS 26 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - MONEY MARKET PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
ANNUALIZED PRINCIPAL YIELD AMOUNT IN ON DATE OF MATURITY THOUSANDS PURCHASE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM BANK NOTES (6.1%) $ 6,000 Bank of America, N.A.............................. 6.67% 02/05/01 $ 6,000,000 6,000 Harris Trust & Savings Bank....................... 6.52 02/12/01 6,000,000 10,500 LaSalle Bank N.A.................................. 6.21 - 6.23 05/23/01 - 05/24/01 10,500,000 ------------ TOTAL SHORT-TERM BANK NOTES (COST $22,500,000).................................................................................. 22,500,000 ------------ CERTIFICATES OF DEPOSIT (5.1%) 7,000 Chase Manhattan Bank (USA) N.A.................... 6.68 01/22/01 7,000,000 6,000 Firstar Bank N.A.................................. 6.66 01/09/01 6,000,000 6,000 Fleet National Bank............................... 6.63 01/25/01 6,000,000 ------------ TOTAL CERTIFICATES OF DEPOSIT (COST $19,000,000).................................................................................. 19,000,000 ------------
TOTAL INVESTMENTS (COST $366,574,595) (a)................................................................................. 98.4% 366,574,595 OTHER ASSETS IN EXCESS OF LIABILITIES................................................................... 1.6 6,031,588 ----- ------------ NET ASSETS.............................................................................................. 100.0% $372,606,183 ----- ------------ ----- ------------
- --------------------- (a) Cost is the same for federal income tax purposes. SEE NOTES TO FINANCIAL STATEMENTS 27 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - SHORT-TERM BOND PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT & AGENCY OBLIGATIONS (67.3%) $ 500 Federal Farm Credit Banks............... 5.57-5.875% 03/23/01-07/02/01 $ 499,308 975 Federal Home Loan Banks................. 4.87-6.75 03/02/01-05/01/02 979,086 1,000 Federal Home Loan Mortgage Corp......... 5.75 06/15/01 998,380 700 Federal National Mortgage Assoc......... 5.625-6.625 03/15/01-07/17/02 702,572 2,100 U.S. Treasury Notes..................... 5.375-6.50 02/15/01-01/31/02 2,105,810 ---------- TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (COST $5,257,481)............................................................................ 5,285,156 ---------- CORPORATE BONDS (17.5%) AEROSPACE & DEFENSE (2.0%) 160 Lockheed Martin Corp.................... 6.50 04/15/03 160,614 ---------- BROADCASTING (1.3%) 100 Clear Channel Communications Corp....... 7.25 09/15/03 101,043 ---------- COMPUTER PROCESSING HARDWARE (1.3%) 100 Compaq Computer Corp.................... 7.45 08/01/02 100,207 ---------- ELECTRIC UTILITIES (2.4%) 100 Public Service Electric & Gas Co........ 7.19 09/06/02 101,204 100 Southern California Edison Co........... 7.20 11/03/03 85,251 ---------- 186,455 ---------- FINANCE/RENTAL/LEASING (2.6%) 100 Associates Corp. of North America....... 6.50 07/15/02 100,185 100 IBM Credit Corp......................... 7.00 01/28/02 100,696 ---------- 200,881 ---------- FOOD RETAIL (1.2%) 100 Kroger Co............................... 6.34 06/01/01 99,731 ---------- FOOD: MAJOR DIVERSIFIED (1.3%) 100 Unilever Capital Corp................... 6.75 11/01/03 101,712 ---------- LIFE/HEALTH INSURANCE (1.3%) 100 MONY Group, Inc. (The)................................. 7.45 12/15/05 101,288 ---------- MAJOR BANKS (1.3%) 100 First Union Corp........................ 8.00 11/15/02 102,227 ----------
SEE NOTES TO FINANCIAL STATEMENTS 28 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - SHORT-TERM BOND PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------- RAILROADS (1.2%) $ 100 Union Pacific Corp...................... 7.375% 05/15/01 $ 100,151 ---------- REGIONAL BANKS (1.6%) 124 Long Island Savings Bank................ 6.20 04/02/01 123,835 ---------- TOTAL CORPORATE BONDS (COST $1,374,083)............................................................................ 1,378,144 ---------- SHORT-TERM INVESTMENTS (18.3%) U.S. GOVERNMENT AGENCY (a) (13.3%) 1,050 Federal National Mortgage Assoc. (COST $1,049,497)..................... 5.75 01/02/01 1,049,832 ---------- REPURCHASE AGREEMENT (5.0%) 390 The Bank of New York (dated 12/29/00; proceeds $390,606) (b) (COST $390,444)....................... 3.75 01/02/01 390,444 ---------- TOTAL SHORT-TERM INVESTMENTS (COST $1,439,941)............................................................................ 1,440,276 ----------
TOTAL INVESTMENTS (COST $8,071,841) (c)...................................................................... 103.1% 8,103,576 LIABILITIES IN EXCESS OF OTHER ASSETS...................................................... (3.1) (246,877) ----- ---------- NET ASSETS................................................................................. 100.0% $7,856,699 ----- ---------- ----- ----------
- --------------------- (a) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield. (b) Collateralized by $371,679 Federal Home Loan Mortgage Corp. 6.875% due 01/15/05 valued at $398,258. (c) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $52,366, and the aggregate gross unrealized depreciation is $20,631, resulting in net unrealized appreciation of $31,735. SEE NOTES TO FINANCIAL STATEMENTS 29 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------------ CORPORATE BONDS (59.4%) AEROSPACE & DEFENSE (1.4%) $ 5,000 Boeing Co............................................................. 7.95% 08/15/24 $ 5,630,000 ------------ AIR FREIGHT/COURIERS (1.2%) 4,785 Federal Express Corp.................................................. 7.50 01/15/18 5,030,333 ------------ AIRLINES (1.8%) 4,640 America West Airlines (Class A)....................................... 6.85 07/02/09 4,614,256 3,000 Continental Airlines, Inc............................................. 7.056 09/15/09 2,994,630 ------------ 7,608,886 ------------ ALUMINUM (1.1%) 5,000 Aluminum Co. of America............................................... 6.75 01/15/28 4,675,350 ------------ AUTO PARTS: O.E.M. (1.1%) 5,000 Eaton Corp............................................................ 7.65 11/15/29 4,801,300 ------------ COMPUTER PROCESSING HARDWARE (0.8%) 3,000 Hewlett-Packard Co.................................................... 7.15 06/15/05 3,089,880 ------------ CONTRACT DRILLING (0.8%) 3,000 Transocean Offshore Inc............................................... 8.00 04/15/27 3,126,840 ------------ DISCOUNT CHAINS (0.6%) 2,522 Wal-Mart Stores, Inc.................................................. 7.49 06/21/07 2,621,122 ------------ ELECTRONIC DISTRIBUTORS (1.9%) 3,000 Arrow Electronics Inc. - 144A*........................................ 8.20 10/01/03 3,063,750 5,000 Avnet Inc............................................................. 7.875 02/15/05 4,929,150 ------------ 7,992,900 ------------ ELECTRONIC PRODUCTION EQUIPMENT (1.1%) 5,000 Applied Materials, Inc................................................ 7.125 10/15/17 4,662,650 ------------ ELECTRONIC UTILITIES (4.1%) 2,000 Allegheny Energy Inc.................................................. 7.75 08/01/05 2,073,160 1,000 Chugach Electric Co................................................... 9.14 03/15/22 1,090,620 5,000 Consolidated Edison Co................................................ 7.50 09/01/10 5,179,150 3,500 Oklahoma Gas & Electric Co............................................ 6.50 07/15/17 3,481,240 2,500 Public Service Electric & Gas Co...................................... 6.75 03/01/06 2,526,950 2,000 Southern California Edison Co......................................... 7.625 01/15/10 1,608,660 1,000 Tampa Electric Co..................................................... 7.75 11/01/22 999,460 ------------ 16,959,240 ------------
SEE NOTES TO FINANCIAL STATEMENTS 30 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL CONGLOMERATES (0.8%) $ 3,000 Abbey National PLC (United Kingdom)................................... 7.95% 10/26/29 $ 3,152,910 ------------ FINANCE/RENTAL/LEASING (3.4%) 3,000 Ford Capital B.V...................................................... 9.50 06/01/10 3,445,050 5,000 General Electric Capital Corp......................................... 7.375 01/19/10 5,383,300 5,000 Household Finance Corp................................................ 8.00 05/09/05 5,234,350 ------------ 14,062,700 ------------ FOOD: MAJOR DIVERSIFIED (0.8%) 3,000 Unilever Capital Corp................................................. 7.125 11/01/10 3,142,620 ------------ GAS DISTRIBUTORS (0.9%) 1,000 Keyspan Corp.......................................................... 7.625 11/15/10 1,063,540 2,500 Sempra Energy......................................................... 7.95 03/01/10 2,473,800 ------------ 3,537,340 ------------ HOME IMPROVEMENT CHAINS (1.1%) 5,000 Home Depot Real Estate Funding Corp. II - 144A*....................... 5.95 10/15/08 4,581,300 ------------ INDUSTRIAL CONGLOMERATES (1.1%) 5,000 Tyco International Group S.A. (Luxembourg)............................ 6.875 01/15/29 4,672,650 ------------ INTEGRATED OIL (2.2%) 3,000 BP Amaco PLC (United Kingdom)......................................... 5.90 04/15/09 2,928,510 5,000 Murphy Oil Corp....................................................... 7.05 05/01/29 4,712,250 1,000 Texaco Capital Inc.................................................... 9.75 03/15/20 1,298,790 ------------ 8,939,550 ------------ INVESTMENT BANKS/BROKERS (2.3%) 3,750 Lehman Brothers Holdings, Inc......................................... 8.75 03/15/05 4,014,675 5,000 Lehman Brothers Holdings, Inc......................................... 8.50 08/01/15 5,290,500 ------------ 9,305,175 ------------ MAJOR BANKS (7.0%) 2,000 Dresdner Funding Trust - 144A*........................................ 8.151 06/30/31 1,812,400 5,000 First Bank System Inc................................................. 7.625 05/01/05 5,151,350 5,000 First Union National Bank............................................. 7.80 08/18/10 5,141,650 3,000 Mellon Bank N.A....................................................... 7.625 09/15/07 3,137,220 3,000 State Street Boston Corp.............................................. 7.65 06/15/10 3,183,690 5,000 State Street Boston Corp.............................................. 5.95 09/15/03 4,955,600
SEE NOTES TO FINANCIAL STATEMENTS 31 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------------ $ 5,000 Wells Fargo & Co...................................................... 7.55% 06/21/10 $ 5,293,550 ------------ 28,675,460 ------------ MAJOR TELECOMMUNICATIONS (4.2%) 5,000 British Telecommunications PLC (United Kingdom)....................... 8.125 12/15/10 5,072,050 2,000 Deutsche Telekom International Finance Corp........................... 8.25 06/15/30 1,966,520 5,000 Telefonica Europe BV (Netherlands).................................... 7.75 09/15/10 5,080,300 3,000 Verizon Global Funding Corp - 144A*................................... 7.75 12/01/30 3,040,770 2,000 WorldCom, Inc......................................................... 8.00 05/15/06 2,037,500 ------------ 17,197,140 ------------ MANAGED HEALTH CARE (0.3%) 1,000 Kaiser Foundation Health Plan, Inc.................................... 9.55 07/15/05 1,098,140 ------------ MEDICAL SPECIALTIES (1.0%) 4,000 Becton Dickinson & Co................................................. 8.70 01/15/25 4,206,760 ------------ MISCELLANEOUS MANUFACTURING (1.2%) 5,000 Dresser Industries, Inc............................................... 7.60 08/15/96 4,932,200 ------------ MOTOR VEHICLES (1.1%) 5,000 Ford Motor Co......................................................... 7.45 07/16/31 4,658,650 ------------ MULTI-LINE INSURANCE (2.1%) 3,000 AXA SA................................................................ 8.60 12/15/30 3,087,330 1,000 Hartford Financial Services Group, Inc................................ 7.90 06/15/10 1,065,540 5,000 Nationwide Financial Services, Inc.................................... 8.00 03/01/27 4,662,600 ------------ 8,815,470 ------------ OIL & GAS PRODUCTION (2.9%) 2,000 Anadarko Petroleum Corp............................................... 7.73 09/15/96 2,081,300 5,000 Burlington Resources, Inc............................................. 7.375 03/01/29 4,994,200 5,000 Kerr-McGee Corp....................................................... 7.125 10/15/27 4,782,000 ------------ 11,857,500 ------------ PHARMACEUTICALS: MAJOR (2.6%) 5,000 Johnson & Johnson..................................................... 8.72 11/01/24 5,596,100 441 Marion Merrell Corp................................................... 9.11 08/01/05 472,316
SEE NOTES TO FINANCIAL STATEMENTS 32 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------------ $ 5,000 Merck & Co. Inc....................................................... 5.95% 12/01/28 $ 4,573,650 ------------ 10,642,066 ------------ PRECIOUS METALS (1.2%) 5,000 Barrick Gold Corp..................................................... 7.50 05/01/07 5,046,250 ------------ PROPERTY-CASUALTY INSURERS (0.8%) 3,000 Everest Reinsurance Holdings Corp..................................... 8.50 03/15/05 3,178,380 ------------ RAILROADS (1.1%) 4,264 Burlington Northern Santa Fe Corp..................................... 7.97 01/01/15 4,468,269 ------------ REGIONAL BANKS (0.5%) 2,000 M&T Bank Corp......................................................... 8.00 10/01/10 2,087,340 ------------ TELECOMMUNICATION EQUIPMENT (1.5%) 5,000 Motorola Inc.......................................................... 6.50 11/15/28 4,204,100 2,000 Motorola Inc.......................................................... 7.625 11/15/10 2,071,620 ------------ 6,275,720 ------------ TOBACCO (1.2%) 5,000 Philip Morris Companies, Inc.......................................... 7.125 10/01/04 4,999,850 ------------ TRUCKS/CONSTRUCTION/FARM MACHINERY (0.9%) 3,000 Caterpillar Inc....................................................... 9.375 08/15/11 3,561,480 ------------ WIRELESS COMMUNICATIONS (1.3%) 5,000 Vodafone AirTouch PLC (United Kingdom)................................ 7.75 02/15/10 5,160,100 ------------ TOTAL CORPORATE BONDS (COST $240,980,075)........................................................................................ 244,453,521 ------------ U.S. GOVERNMENT & AGENCY OBLIGATIONS (32.2%) 5 Federal Home Loan Mortgage Corp....................................... 11.50 05/01/19 5,074 3,984 Federal Home Loan Mortgage Corp. PC Gold.............................. 6.00 10/01/23 - 11/01/27 3,856,126 971 Federal Home Loan Mortgage Corp. PC Gold.............................. 8.50 01/01/22 - 12/01/24 999,994 11,520 Federal National Mortgage Assoc....................................... 6.00 02/01/27 - 04/01/29 11,141,821 21,097 Federal National Mortgage Assoc....................................... 6.50 03/01/26 - 01/01/30 20,793,916
SEE NOTES TO FINANCIAL STATEMENTS 33 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------------ $ 1,312 Federal National Mortgage Assoc....................................... 7.00% 11/01/26 - 10/01/29 $ 1,312,558 2,224 Federal National Mortgage Assoc....................................... 7.50 06/01/28 - 09/01/29 2,254,187 6,919 Federal National Mortgage Assoc....................................... 8.00 07/01/29 - 03/01/30 7,077,247 275 Federal National Mortgage Assoc....................................... 9.00 06/01/21 - 02/01/25 284,033 9,064 Government National Mortgage Assoc.................................... 6.00 04/15/28 - 12/15/28 8,798,151 19,336 Government National Mortgage Assoc.................................... 6.50 08/15/27 - 07/15/29 19,124,677 20,441 Government National Mortgage Assoc.................................... 7.00 03/15/26 - 02/15/30 20,523,865 16 Government National Mortgage Assoc.................................... 7.50 04/15/24 - 09/15/27 16,055 11,771 Government National Mortgage Assoc.................................... 8.00 10/15/24 - 11/15/29 12,057,835 1,380 Government National Mortgage Assoc.................................... 8.50 01/15/17 - 03/01/28 1,420,771 1,234 Government National Mortgage Assoc.................................... 9.00 07/15/24 - 12/15/24 1,279,904 110 Government National Mortgage Assoc.................................... 10.00 05/15/16 - 04/15/19 115,136 5,000 Tennessee Valley Authority............................................ 7.85 06/15/44 5,250,900 7,000 U.S. Treasury Bond.................................................... 6.25 08/15/23 - 05/15/30 7,744,470 3,000 U.S. Treasury Note.................................................... 7.00 07/15/06 3,264,750 15,000 U.S. Treasury Note Strips............................................. 0.00 02/15/19 - 08/15/19 5,297,800 ------------ TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (COST $130,511,220)........................................................................................ 132,619,270 ------------ FOREIGN GOVERNMENT OBLIGATIONS (4.2%) 5,000 Hydro-Quebec.......................................................... 9.50 11/15/30 6,514,550 5,000 Province of New Brunswick............................................. 7.625 06/29/04 5,255,950 5,000 Province of Manitoba.................................................. 7.75 07/17/16 5,551,450 ------------ TOTAL FOREIGN GOVERNMENT OBLIGATIONS (COST $15,896,050)......................................................................................... 17,321,950 ------------
SEE NOTES TO FINANCIAL STATEMENTS 34 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - QUALITY INCOME PLUS PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENT (a) (2.8%) U.S. GOVERNMENT AGENCY $ 11,400 Federal National Mortgage Assoc. (COST $11,398,179).................................................. 5.75% 01/02/01 $ 11,398,179 ------------
TOTAL INVESTMENTS (COST $398,785,524) (b)................................................................... 98.6% 405,792,920 OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 1.4 5,891,705 ----- ------------- NET ASSETS................................................................................ 100.0% $ 411,684,625 ----- ------------- ----- -------------
- --------------------- * Resale is restricted to qualified institutional investors. PC Participation Certificate. (a) 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $11,238,822 and the aggregate gross unrealized depreciation is $4,231,426, resulting in net unrealized appreciation of $7,007,396. SEE NOTES TO FINANCIAL STATEMENTS 35 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------ CORPORATE BONDS (89.6%) AEROSPACE & DEFENSE (0.7%) $ 1,300 Loral Space & Communications Ltd......................... 9.50% 01/15/06 $ 871,000 ------------ BEVERAGES: NON-ALCOHOLIC (2.3%) 5,000 Sparkling Spring Water (Canada).......................... 11.50 11/15/07 3,050,000 ------------ BROADCAST/MEDIA (4.4%) 5,986 Mentus Media Corp. (Series B)............................ 12.00+ 02/01/03 2,813,420 3,890 Tri-State Outdoor Media Group, Inc....................... 11.00 05/15/08 2,956,400 ------------ 5,769,820 ------------ BROADCASTING (0.5%) 1,200 XM Satellite Radio Holdings Inc. (Class A)............... 14.00 03/15/10 636,000 ------------ CABLE/SATELLITE TV (0.5%) 3,750 Australis Holdings Ltd. (Australia) (a) (b).............. 15.00 11/01/02 375 3,000 Knology Holdings, Inc.................................... 11.875++ 10/15/07 600,000 ------------ 600,375 ------------ CASINO/GAMING (8.8%) 11,250 Aladdin Gaming Holdings/Capital Corp. (Series B)......... 13.50++ 03/01/10 4,781,250 9,915 Fitzgeralds Gaming Corp. (Series B) (b).................. 12.25 12/15/04 5,949,000 7,210 Resort At Summerlin (Series B) (a) (b)..................................... 13.00 12/15/07 721,005 ------------ 11,451,255 ------------ CELLULAR TELEPHONE (4.9%) 800 Dobson/Sygnet Communications............................. 12.25 12/15/08 788,000 5,500 Dolphin Telecom PLC (Series B) (United Kingdom).......... 14.00++ 05/15/09 605,000 7,920 McCaw International Ltd.................................. 13.00++ 04/15/07 5,068,800 ------------ 6,461,800 ------------ COMMERCIAL PRINTING/FORMS (0.1%) 2,500 Premier Graphics Inc. (b)................................ 11.50 12/01/05 175,000 ------------ CONSUMER/BUSINESS SERVICES (4.3%) 500 Anacomp, Inc. (b)........................................ 10.875 04/01/04 65,000 1,800 Anacomp, Inc. (Series B) (b)............................. 10.875 04/01/04 234,000 8,909 Comforce Corp. (Series B)................................ 15.00+ 12/01/09 2,672,840 3,250 Comforce Operating, Inc.................................. 12.00 12/01/07 1,690,000
SEE NOTES TO FINANCIAL STATEMENTS 36 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------ $ 1,000 MDC Communication Corp. (Canada)......................... 10.50% 12/01/06 $ 910,000 ------------ 5,571,840 ------------ CONTAINERS/PACKAGING (1.4%) 1,100 Berry Plastics Corp...................................... 11.00 07/15/07 792,000 1,330 Envirodyne Industries, Inc............................... 10.25 12/01/01 1,024,100 ------------ 1,816,100 ------------ DIVERSIFIED MANUFACTURING (4.3%) 800 Eagle-Picher Industries, Inc............................. 9.375 03/01/08 552,000 1,800 Jordan Industries, Inc. (Class D)........................ 10.375 08/01/07 1,530,000 7,200 Jordan Industries, Inc. (Series B)....................... 11.75++ 04/01/09 3,600,000 ------------ 5,682,000 ------------ DRUGSTORE CHAINS (0.2%) 1,000 Rite Aid Corp............................................ 7.70 02/15/27 275,000 ------------ ELECTRONIC DISTRIBUTORS (0.1%) 6,000 CHS Electronics, Inc. (a) (b)............................ 9.875 04/15/05 120,000 ------------ ELECTRONIC EQUIPMENT/INSTRUMENTS (1.5%) 3,000 High Voltage Engineering, Inc............................ 10.75 08/15/04 1,950,000 ------------ ELECTRONICS/APPLIANCES (1.0%) 12,000 International Semi-Tech Microelectronics, Inc. (Canada) (a) (b)....................................... 11.50 08/15/03 120,000 1,400 Windmere-Durable Holdings, Inc........................... 10.00 07/31/08 1,190,000 ------------ 1,310,000 ------------ FOOD DISTRIBUTORS (1.2%) 1,300 Fleming Companies, Inc. (Series B)....................... 10.625 07/31/07 890,500 800 Volume Services America, Inc............................. 11.25 03/01/09 696,000 ------------ 1,586,500 ------------ FOOD RETAIL (0.4%) 1,190 Pueblo Xtra International, Inc. (Series C)............... 9.50 08/01/03 523,600 ------------ FOOD: SPECIALTY/CANDY (0.3%) 43,678 SFAC New Holdings Inc. (a) (c)........................... 13.00++ 06/15/09 436,781 ------------ HOTELS/RESORTS/CRUISELINES (2.1%) 9,000 Epic Resorts LLC (Series B).............................. 13.00 06/15/05 2,700,000 ------------ HOUSEHOLD/PERSONAL CARE (1.8%) 2,419 J.B. Williams Holdings, Inc.............................. 12.00 03/01/04 2,370,620 ------------
SEE NOTES TO FINANCIAL STATEMENTS 37 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------ INDUSTRIAL SPECIALTIES (2.3%) $ 1,650 Indesco International Inc. (b)........................... 9.75% 04/15/08 $ 313,500 800 International Wire Group, Inc............................ 11.75 06/01/05 780,000 3,000 Outsourcing Services Group, Inc. (Series B).............. 10.875 03/01/06 1,890,000 ------------ 2,983,500 ------------ INTERNET SOFTWARE/SERVICES (0.7%) 1,000 Globix Corp.............................................. 12.50 02/01/10 400,000 1,700 PSINet, Inc.............................................. 11.00 08/01/09 476,000 ------------ 876,000 ------------ MEDICAL SPECIALTIES (2.6%) 5,100 Mediq Inc./PRN Life Support Services, Inc. (b)........... 11.00 06/01/08 51,000 3,000 Universal Hospital Services, Inc. (issued 02/25/98)...... 10.25 03/01/08 2,040,000 2,000 Universal Hospital Services, Inc. (issued 01/26/99)...... 10.25 03/01/08 1,360,000 ------------ 3,451,000 ------------ MEDICAL/NURSING SERVICES (1.4%) 2,500 Pediatric Services of America, Inc. (Series A)........... 10.00 04/15/08 1,800,000 ------------ OFFICE EQUIPMENT/SUPPLIES (2.7%) 6,500 Mosler, Inc.............................................. 11.00 04/15/03 3,575,000 ------------ OTHER CONSUMER SPECIALTIES (1.3%) 2,500 Samsonite Corp........................................... 10.75 06/15/08 1,662,500 ------------ PUBLISHING: NEWSPAPERS (3.4%) 8,000 Brill Media Co., LLC (Series B).......................... 12.00 12/15/07 4,400,000 ------------ RESTAURANTS (3.5%) 20,351 American Restaurant Group Holdings, Inc. - 144A* (c)..... 0.00 12/15/05 2,035,130 5,000 FRD Acquisition Corp. (Series B)......................... 12.50 07/15/04 1,800,000 1,300 Friendly Ice Cream Corp.................................. 10.50 12/01/07 754,000 ------------ 4,589,130 ------------ RETAIL - SPECIALTY (0.6%) 775 Pantry, Inc.............................................. 10.25 10/15/07 724,625 ------------ SPECIALTY TELECOMMUNICATIONS (12.3%) 6,500 Birch Telecom Inc........................................ 14.00 06/15/08 3,900,000 3,000 DTI Holdings, Inc. (Series B)............................ 12.50++ 03/01/08 840,000 3,000 Esprit Telecom Group PLC (United Kingdom)................ 11.50 12/15/07 90,000 1,800 Esprit Telecom Group PLC (United Kingdom)................ 10.875 06/15/08 54,000
SEE NOTES TO FINANCIAL STATEMENTS 38 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------ $ 16,520 Firstworld Communications, Inc........................... 13.00++% 04/15/08 $ 1,899,800 700 McLeodUSA, Inc........................................... 11.50 05/01/09 696,500 1,500 Pac-West Telecom Inc. (Series B)......................... 13.50 02/01/09 1,245,000 2,500 Primus Telecommunication Group, Inc. (Series B).......... 9.875 05/15/08 700,000 1,000 Primus Telecommunications Group, Inc..................... 12.75 10/15/09 280,000 1,300 Versatel Telecom International NV (Netherlands).......... 13.25 05/15/08 819,000 3,031 Viatel Inc............................................... 11.25 04/15/08 939,610 800 Viatel Inc............................................... 11.50 03/15/09 248,000 5,000 World Access, Inc. (c)................................... 13.25 01/15/08 3,400,000 1,300 Worldwide Fiber Inc. (Canada)............................ 12.00 08/01/09 988,000 ------------ 16,099,910 ------------ TELECOMMUNICATIONS (9.2%) 1,000 Covad Communications Group, Inc.......................... 12.50 02/15/09 270,000 5,500 e. Spire Communications, Inc............................. 13.75 07/15/07 2,090,000 1,500 Focal Communications, Corp. (Series B)................... 12.125++ 02/15/08 660,000 1,300 Hyperion Telecommunication, Inc. (Series B).............. 12.25 09/01/04 1,040,000 28,500 In-Flight Phone Corp. (Series B) (a) (b)..................................... 14.00 05/15/02 1,425,000 1,300 Level 3 Communications, Inc.............................. 9.125 05/01/08 1,053,000 1,000 MGC Communications, Inc.................................. 13.00 04/01/10 460,000 800 NEXTLINK Communications, Inc............................. 9.00 03/15/08 614,000 5,400 Rhythms Netconnections, Inc.............................. 12.75 04/15/09 1,512,000 1,200 Startec Global Communications Corp....................... 12.00 05/15/08 720,000 3,000 Talton Holdings, Inc. (Series B)......................... 11.00 06/30/07 2,190,000 ------------ 12,034,000 ------------ TRUCKS/CONSTRUCTION/FARM MACHINERY (2.1%) 3,000 J.B. Poindexter & Co., Inc............................... 12.50 05/15/04 2,700,000 ------------ WIRELESS COMMUNICATIONS (6.7%) 11,375 Advanced Radio Telecom Corp.............................. 14.00 02/15/07 4,322,500 1,000 AMSC Acquisition Co., Inc. (Series B).................... 12.25 04/01/08 350,000 900 Arch Escrow Corp......................................... 13.75 04/15/08 315,000 19,000 CellNet Data Systems, Inc. (a) (b)....................... 14.00++ 10/01/07 95,000 3,000 Globalstar LP/Capital Corp............................... 10.75 11/01/04 390,000 3,300 Orbcomm Global LP/Capital Corp. (Series B) (b)........... 14.00 08/15/04 330,000
SEE NOTES TO FINANCIAL STATEMENTS 39 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - ------------------------------------------------------------------------------------------------------------------------ $ 4,500 USA Mobile Communications Holdings, Inc.................. 14.00% 11/01/04 $ 2,250,000 1,000 WinStar Communications, Inc.............................. 12.75 04/15/10 700,000 ------------ 8,752,500 ------------ TOTAL CORPORATE BONDS (COST $298,808,177).......................................................................... 117,005,856 ------------
NUMBER OF SHARES - ----------- COMMON STOCKS (d) (0.7%) APPAREL/FOOTWEAR RETAIL (0.0%) 1,310,596 County Seat Store Corp. (c)................................................... 11,795 ------------ CASINO/GAMING (0.0%) 2,000 Fitzgerald Gaming Corp........................................................ 2 ------------ ENTERTAINMENT & LEISURE (0.0%) 444,351 Premier Holdings Inc. (c)..................................................... 444 ------------ FOOD: SPECIALTY/CANDY (0.0%) 2,375 SFAC New Holdings Inc. (c).................................................... 594 120,000 Specialty Foods Acquisition Corp. - 144A*..................................... 1,200 ------------ 1,794 ------------ HOTELS/RESORTS/CRUISELINES (0.0%) 2,000 Motels of America, Inc. - 144A*............................................... 500 71,890 Vagabond Inns, Inc. (Class D) (a)............................................. 72 ------------ 572 ------------ MEDICAL/NURSING SERVICES (0.0%) 418,663 Raintree Healthcare Corp. (c)................................................. 3,768 ------------ MOTOR VEHICLES (0.0%) 87 Northern Holdings Industrial Corp. * (c)...................................... -- ------------ RESTAURANTS (0.0%) 7,750 American Restaurant Group Holdings, Inc. - 144A*.............................. 1,938 ------------ SPECIALTY TELECOMMUNICATIONS (0.3%) 33,335 Versatel Telecom International NV (ADR) (Netherlands)......................... 287,514 15,710 World Access, Inc. (c)........................................................ 37,802 ------------ 325,316 ------------ TELECOMMUNICATION EQUIPMENT (0.0%) 196,000 FWT Inc. (Class A) (c)........................................................ 1,960 ------------ TEXTILES (0.0%) 298,461 U.S. Leather, Inc. (c)........................................................ 2,985 ------------
SEE NOTES TO FINANCIAL STATEMENTS 40 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - --------------------------------------------------------------------------------------------------------- WIRELESS COMMUNICATIONS (0.4%) 809,424 Arch Wireless, Inc. (c)....................................................... $ 505,890 38,444 Vast Solutions, Inc. (Class B1) (c)........................................... 385 38,444 Vast Solutions, Inc. (Class B2) (c)........................................... 385 38,444 Vast Solutions, Inc. (Class B3) (c)........................................... 384 ------------ 507,044 ------------ TOTAL COMMON STOCKS (COST $37,614,230)............................................................ 857,618 ------------
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE - ----------- ------ -------- CONVERTIBLE BOND (0.0%) HOTELS/RESORTS/CRUISELINES $ 742 Premier Cruises Ltd. (COST $742,000).......................................... 10.00+% 08/15/05 74 ------------
NUMBER OF SHARES - ----------- PREFERRED STOCKS (0.2%) RESTAURANTS (0.2%) 1,886 American Restaurant Group Holdings, Inc. (Series B)........................... 188,600 ------------ TELECOMMUNICATION EQUIPMENT (0.0%) 1,960,000 FWT Inc. (Series A) (c)....................................................... 19,600 ------------ TOTAL PREFERRED STOCKS (COST $9,659,277)............................................................. 208,200 ------------
NUMBER OF EXPIRATION WARRANTS DATE - ----------- ---------- WARRANTS (d) (1.0%) ADVERTISING/MARKETING SERVICE (0.0%) 12,524 Next Generation Network, Inc. - 144A*............................... 02/01/08 125 ------------ AEROSPACE & DEFENSE (0.0%) 1,500 Sabreliner Corp. - 144A*............................................ 04/15/03 15,000 ------------ BROADCASTING (0.0%) 1,200 XM Satellite Radio Holdings Inc. - 144A*............................ 03/15/10 30,000 ------------
SEE NOTES TO FINANCIAL STATEMENTS 41 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF EXPIRATION WARRANTS DATE VALUE - ----------------------------------------------------------------------------------------------------------- CASINO/GAMING (0.0%) 90,000 Aladdin Gaming Enterprises, Inc. - 144A*............................ 03/01/10 $ 900 6,000 Resort At Summerlin - 144A*......................................... 12/15/07 60 ------------ 960 ------------ CONSUMER/BUSINESS SERVICES (0.0%) 42,250 Comforce Corp. - 144A*.............................................. 12/01/09 4,225 ------------ HOTELS/RESORTS/CRUISELINES (0.0%) 9,000 Epic Resorts LLC - 144A*............................................ 06/15/05 90 ------------ OIL & GAS PRODUCTION (0.0%) 39,665 Gothic Energy Corp. - 144A*......................................... 05/01/05 40 ------------ RESTAURANTS (0.0%) 1,500 American Restaurant Group Holdings, Inc. - 144A*.................... 08/15/08 15 ------------ SPECIALTY TELECOMMUNICATIONS (0.4%) 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*............................. 04/15/08 148,680 ------------ 506,330 ------------ TELECOMMUNICATION EQUIPMENT (0.6%) 92,640 Star Choice Communications, Inc. - 144A* (Canada)................... 12/15/05 764,280 ------------ TELECOMMUNICATIONS (0.0%) 1,200 Startec Global Communications Corp. - 144A*......................... 05/15/08 780 ------------ WIRELESS COMMUNICATIONS (0.0%) 1,000 Motient Corp. - 144A*............................................... 04/01/08 10,000 ------------ TOTAL WARRANTS (COST $723,765)................................................................. 1,331,845 ------------
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE - ----------- ------------------------ ---------- SHORT-TERM INVESTMENTS (5.2%) U.S. GOVERNMENT AGENCY (e) (4.9%) $ 6,450 Federal National Mortgage Assoc. (COST $6,448,970)...................................... 5.75% 01/02/01 6,448,970 ------------
SEE NOTES TO FINANCIAL STATEMENTS 42 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - HIGH YIELD PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN COUPON MATURITY THOUSANDS RATE DATE VALUE - -------------------------------------------------------------------------------------------------------------------------- REPURCHASE AGREEMENT (0.3%) $ 399 The Bank of New York (dated 12/29/00; proceeds $399,138) (f) (COST $398,972)........................................ 3.75% 01/02/01 $ 398,972 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $6,847,942).............................................................................. 6,847,942 ------------
TOTAL INVESTMENTS (COST $354,395,391) (g)................................................................... 96.7% 126,251,535 OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 3.3 4,340,802 ----- ------------- NET ASSETS................................................................................ 100.0% $ 130,592,337 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. * Resale is restricted to qualified institutional investors. + Payment-in-kind security. ++ Currently a zero coupon bond that 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) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield. (f) Collateralized by $379,798 Federal Home Loan Mortgage Corp. Note 6.875% due 01/15/05 valued at $406,957. (g) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $1,672,701 and the aggregate gross unrealized depreciation is $229,816,557, resulting in net unrealized depreciation of $228,143,856. SEE NOTES TO FINANCIAL STATEMENTS 43 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ----------------------------------------------------------------------------------------------- COMMON STOCKS (85.3%) ELECTRIC UTILITIES (39.7%) 250,000 AES Corp.*............................................................ $ 13,843,750 260,000 Calpine Corp.*........................................................ 11,716,250 205,865 Cinergy Corp.......................................................... 7,231,008 160,000 CMS Energy Corp....................................................... 5,070,000 125,000 Consolidated Edison, Inc.............................................. 4,812,500 200,000 Constellation Energy Group............................................ 9,012,500 337,500 DPL, Inc.............................................................. 11,200,781 232,500 DQE, Inc.............................................................. 7,614,375 140,000 DTE Energy Co......................................................... 5,451,250 141,216 Duke Energy Corp...................................................... 12,038,664 140,000 Edison International.................................................. 2,187,500 220,000 Energy East Corp...................................................... 4,331,250 200,000 Entergy Corp.......................................................... 8,462,500 84,000 Exelon Corp........................................................... 5,897,640 190,000 FPL Group, Inc........................................................ 13,632,500 135,000 GPU, Inc.............................................................. 4,969,687 75,000 Hawaiian Electric Industries, Inc..................................... 2,789,062 400,000 IPALCO Enterprises, Inc............................................... 9,675,000 305,000 Montana Power Co...................................................... 6,328,750 200,000 Northeast Utilities................................................... 4,850,000 190,000 NRG Energy, Inc.*..................................................... 5,284,375 195,000 Pinnacle West Capital Corp............................................ 9,286,875 150,000 Public Service Company of New Mexico.................................. 4,021,875 175,000 Public Service Enterprise Group, Inc.................................. 8,509,375 200,000 Reliant Energy, Inc................................................... 8,662,500 215,000 SCANA Corp............................................................ 6,355,937 265,000 Southern Co. (The).................................................... 8,811,250 74,000 Southern Energy, Inc.*................................................ 2,095,125 221,500 TXU Corp.............................................................. 9,815,219 200,000 Wisconsin Energy Corp................................................. 4,512,500 302,250 Xcel Energy, Inc...................................................... 8,784,141 ------------ 227,254,139 ------------ ENERGY (16.8%) 143,625 Burlington Resources, Inc............................................. 7,253,062 410,000 Dynegy, Inc. (Class A)................................................ 22,985,625 230,460 El Paso Energy Corp................................................... 16,506,697 226,500 Enron Corp............................................................ 18,827,812 100,000 Kinder Morgan, Inc.................................................... 5,218,750 280,000 NiSource Inc.......................................................... 8,610,000 155,000 Questar Corp.......................................................... 4,659,687 290,000 Williams Companies, Inc............................................... 11,581,875 ------------ 95,643,508 ------------ NUMBER OF SHARES VALUE - ----------------------------------------------------------------------------------------------- TELECOMMUNICATIONS (28.8%) 171,932 ALLTEL Corp........................................................... $ 10,735,004 335,634 AT&T Corp............................................................. 5,810,664 170,000 BCE, Inc. (Canada).................................................... 4,919,375 130,000 BroadWing Inc.*....................................................... 2,965,625 185,000 Cable & Wireless PLC (ADR) (United Kingdom)........................... 7,376,875 288,750 CenturyTel, Inc....................................................... 10,322,813 740,000 Ericsson (L.M.) Telefonaktiebolaqet (ADR) (Sweden).................... 8,278,750 303,250 Global Crossing Ltd. (Bermuda)*....................................... 4,340,266 140,000 Nextel Communications, Inc. (Class A)*................................ 3,465,000 100,000 Nokia Corp. (ADR) (Finland)........................................... 4,350,000 251,965 Nortel Networks Corp. (Canada)........................................ 8,078,628 431,691 Qwest Communications International, Inc.*............................. 17,699,331 288,946 SBC Communications, Inc............................................... 13,797,172 215,000 Sprint Corp. (FON Group).............................................. 4,367,188 100,000 Sprint Corp. (PCS Group)*............................................. 2,043,750 125,000 Tele Danmark AS (ADR) (Denmark)....................................... 2,539,063 160,000 Telefonos de Mexico S.A. (Series L) (ADR) (Mexico).................... 7,220,000 100,000 Telephone & Data Systems, Inc......................................... 9,000,000 113,900 TyCom, Ltd.*.......................................................... 2,548,513 315,120 Verizon Communications Inc............................................ 15,795,390 230,000 Vodafone Group PLC (ADR) (United Kingdom)............................. 8,236,875 55,000 Voicestream Wireless Corp.*........................................... 5,534,375 124,050 WinStar Communications, Inc.*......................................... 1,449,834 236,163 WorldCom, Inc.*....................................................... 3,306,282 ------------ 164,180,773 ------------ TOTAL COMMON STOCKS (COST $261,750,381)................................................... 487,078,420 ------------
SEE NOTES TO FINANCIAL STATEMENTS 44 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - UTILITIES PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- CORPORATE BONDS (6.3%) ELECTRIC UTILITIES (3.4%) $ 1,000 Aes Drax Holdings Ltd. (United Kingdom) 10.41% due 12/31/20 - 144A**................... $ 1,043,720 1,000 Arizona Public Service Co. 7.625% due 08/01/05......................................... 1,032,510 2,250 Consumers Energy Co. 6.875% due 03/01/18............................................... 2,024,572 2,000 Empresa Nacional de Electricidad (Chile) 8.125% due 02/01/97........................... 1,517,940 3,000 Indianapolis Power Co. 7.05% due 02/01/24.............................................. 2,780,610 1,500 Northern States Power Co. 6.50% due 03/01/28........................................... 1,329,465 2,125 Public Service Electric & Gas Co. 6.75% due 01/01/16................................... 1,994,993 3,000 Public Service Electric & Gas Co. 7.00% due 09/01/24................................... 2,747,160 5,000 Wisconsin Electric Power Co. 7.125% due 03/15/16....................................... 4,721,400 ------------ 19,192,370 ------------ ENERGY (1.7%) 500 CMS Panhandle Holding Co. 7.00% due 07/15/29........................................... 436,475 3,000 Coastal Corp. 7.75% due 10/15/35....................................................... 2,945,070 2,000 Northern Border Pipeline 7.75% due 09/01/09............................................ 2,061,680 2,000 Panhandle Eastern Corp. 8.625% due 04/15/25............................................ 2,260,760 2,000 Sempra Energy Corp. 7.95% due 03/01/10................................................. 1,979,040 ------------ 9,683,025 ------------ TELECOMMUNICATIONS (1.2%) 2,000 GTE Corp. 7.90% due 02/01/27........................................................... 1,977,260 500 LCI International, Inc. 7.25% due 06/15/07............................................. 499,675 2,000 Sprint Corp. 9.25% due 04/15/22........................................................ 2,094,620 $ 2,000 Telefonica Europe BV (Netherlands) 7.75% due 09/15/10.................................. 2,032,120 ------------ 6,603,675 ------------ TOTAL CORPORATE BONDS (COST $36,638,428)..................................................................... 35,479,070 ------------ PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY (0.2%) $ 50 Tennessee Valley Authority 8.00% due 03/31/45 (COST $1,250,000).................................................................... $ 1,271,875 ------------ SHORT-TERM INVESTMENTS (8.0%) U.S. GOVERNMENT AGENCY (a) (8.0%) 45,500 Federal National Mortgage Association 5.75% due 01/02/01 (COST $45,492,733)................................................................... 45,492,733 ------------ REPURCHASE AGREEMENT (0.0%) 113 The Bank of New York 3.75% due 01/02/01 (dated 12/29/00; proceeds $112,790) (b) (COST $112,743)...................................................................... 112,743 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $45,605,476)..................................................................... 45,605,476 ------------
TOTAL INVESTMENTS (COST $345,244,285) (c)................................................................... 99.8% 569,434,842 OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 0.2 1,368,724 ----- ------------- NET ASSETS................................................................................ 100.0% $ 570,803,566 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. ** Resale is restricted to qualified institutional investors. (a) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield. (b) Collateralized by $111,651 Federal Home Loan Banks 6.875% due 01/15/05 valued at $115,000. (c) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $238,473,777 and the aggregate gross unrealized depreciation is $14,283,220, resulting in net unrealized appreciation of $224,190,557. SEE NOTES TO FINANCIAL STATEMENTS 45 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON STOCKS (48.0%) AUTO PARTS: O.E.M. (2.2%) 60,000 Delphi Automotive Systems Corp.......................................................... $ 675,000 12,500 Johnson Controls, Inc................................................................... 650,000 ----------- 1,325,000 ----------- BEVERAGES: ALCOHOLIC (1.1%) 15,000 Anheuser-Busch Companies, Inc........................................................... 682,500 ----------- CHEMICALS: MAJOR DIVERSIFIED (1.2%) 20,000 Dow Chemical Co......................................................................... 732,500 ----------- ELECTRIC UTILITIES (5.1%) 12,000 Dominion Resources, Inc................................................................. 804,000 11,000 FPL Group, Inc.......................................................................... 789,250 15,000 Reliant Energy, Inc..................................................................... 649,687 25,000 TECO Energy, Inc........................................................................ 809,375 ----------- 3,052,312 ----------- ELECTRICAL PRODUCTS (1.2%) 9,000 Emerson Electric Co..................................................................... 709,312 ----------- ELECTRONIC EQUIPMENT/INSTRUMENTS (1.4%) 18,000 Rockwell International Corp............................................................. 857,250 ----------- ELECTRONICS/APPLIANCES (1.2%) 14,500 Whirlpool Corp.......................................................................... 691,469 ----------- FINANCE/RENTAL/LEASING (2.2%) 9,000 Fannie Mae.............................................................................. 780,750 31,000 Ryder System, Inc....................................................................... 515,375 ----------- 1,296,125 ----------- FOOD DISTRIBUTORS (0.9%) 40,000 Supervalu, Inc.......................................................................... 555,000 ----------- FOOD: MAJOR DIVERSIFIED (1.2%) 30,000 Sara Lee Corp........................................................................... 736,875 ----------- FOOD: MEAT/FISH/DAIRY (1.2%) 27,000 ConAgra, Inc............................................................................ 702,000 ----------- INDUSTRIAL CONGLOMERATES (1.2%) 15,000 Honeywell International, Inc............................................................ 709,687 ----------- INDUSTRIAL SPECIALTIES (1.3%) 17,000 PPG Industries, Inc..................................................................... 787,313 ----------- LIFE/HEALTH INSURANCE (1.1%) 14,500 Lincoln National Corp................................................................... 686,031 ----------- MAJOR BANKS (4.6%) 16,000 Bank of America Corp.................................................................... 734,000 17,000 Chase Manhattan Corp. (The)............................................................. 772,437 20,000 FleetBoston Financial Corp.............................................................. 751,250 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 14,625 Westpac Banking (ADR) (Australia)....................................................... $ 538,383 ----------- 2,796,070 ----------- MAJOR TELECOMMUNICATIONS (2.3%) 35,000 AT&T Corp............................................................................... 605,937 15,000 Verizon Communications Inc.............................................................. 751,875 ----------- 1,357,812 ----------- MOTOR VEHICLES (1.0%) 26,500 Ford Motor Co........................................................................... 621,094 ----------- OIL & GAS PRODUCTION (1.2%) 11,000 Kerr-McGee Corp......................................................................... 736,312 ----------- OIL REFINING/MARKETING (2.5%) 21,000 Ashland, Inc............................................................................ 753,690 25,000 Ultramar Diamond Shamrock Corp.......................................................... 771,875 ----------- 1,525,565 ----------- PHARMACEUTICALS: MAJOR (2.3%) 8,000 Merck & Co., Inc........................................................................ 749,000 11,000 Schering-Plough Corp.................................................................... 624,250 ----------- 1,373,250 ----------- REAL ESTATE INVESTMENT TRUSTS (9.1%) 17,000 Archstone Communities Trust............................................................. 437,750 10,000 Avalonbay Communities, Inc.............................................................. 501,250 10,000 Boston Properties, Inc.................................................................. 435,000 18,000 Duke-Weeks Realty Corp.................................................................. 443,250 14,000 Equity Office Properties Trust.......................................................... 456,750 5,000 Equity Residential Properties Trust..................................................... 276,563 12,000 First Industrial Realty Trust, Inc...................................................... 408,000 5,000 General Growth Properties, Inc.......................................................... 180,938 20,000 Healthcare Realty Trust, Inc............................................................ 425,000 17,000 Mack-Cali Realty Corp................................................................... 485,563 17,500 Reckson Associates Realty Corp.......................................................... 438,594 5,000 Rouse Co. (The)......................................................................... 127,500 18,000 Simon Property Group, Inc............................................................... 432,000 11,000 Vornado Realty Trust.................................................................... 421,438 ----------- 5,469,596 ----------- SAVINGS BANKS (1.2%) 14,000 Washington Mutual, Inc.................................................................. 742,875 ----------- TOBACCO (1.3%) 18,000 Philip Morris Companies, Inc............................................................ 792,000 -----------
SEE NOTES TO FINANCIAL STATEMENTS 46 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- WIRELESS COMMUNICATIONS (0.0%) 688 Leap Wireless International, Inc.*...................................................... $ 17,200 ----------- TOTAL COMMON STOCKS (COST $26,143,263)...................................................................... 28,955,148 ----------- CONVERTIBLE PREFERRED STOCKS (14.2%) AUTO PARTS: O.E.M. (0.0%) 12,000 BTI Capital Trust $3.25 - 144A**........................................................ 1,500 ----------- CONTAINERS/PACKAGING (1.9%) 36,000 Sealed Air Corp. (Series A) $2.00....................................................... 1,161,000 ----------- HOUSEHOLD/PERSONAL CARE (1.6%) 13,000 Estee Lauder Co. $3.81.................................................................. 988,000 ----------- INDUSTRIAL MACHINERY (1.0%) 28,000 Ingersoll-Rand Co. $1.69................................................................ 596,750 ----------- INVESTMENT BANKS/BROKERS (0.4%) 15,940 Merrill Lynch & Co., Inc. $2.39 (exchangeable into IMC Global, Inc. common stock)....... 245,077 ----------- MAJOR BANKS (1.4%) 30,200 National Australia Bank, Ltd. $1.97 (Australia) (Units)++............................... 864,475 ----------- MOVIES/ENTERTAINMENT (1.2%) 21,000 Six Flags, Inc. $4.05................................................................... 742,875 ----------- OIL REFINING/MARKETING (1.0%) 50,000 Tesoro Petroleum Corp. $1.16............................................................ 600,000 ----------- PUBLISHING: BOOKS/MAGAZINE (1.4%) 25,000 Reader's Digest Association, Inc. $1.93................................................. 870,312 ----------- RAILROADS (0.6%) 7,400 Union Pacific Capital Trust $3.13....................................................... 339,667 ----------- REAL ESTATE INVESTMENT TRUSTS (1.1%) 9,000 Equity Residential Properties Trust (Series E) $1.75.................................... 282,938 13,000 SL Green Realty Corp. $2.00............................................................. 394,063 ----------- 677,001 ----------- REGIONAL BANKS (2.1%) 30,000 CNB Capital Trust I $1.50............................................................... 1,237,500 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- TOOLS/HARDWARE (0.5%) 19,400 Metromedia International Group, Inc. $3.63.............................................. $ 269,660 ----------- TOTAL CONVERTIBLE PREFERRED STOCKS (COST $10,206,213)...................................................................... 8,593,817 -----------
PRINCIPAL AMOUNT IN THOUSANDS - --------- CORPORATE BONDS (35.6%) CONVERTIBLE BONDS (17.2%) APPAREL/FOOTWEAR RETAIL (1.6%) $ 790 Genesco Inc. 5.50% due 04/15/05......................................................... 955,782 ----------- AUTO PARTS: O.E.M. (0.3%) 350 MascoTech, Inc. 4.50% due 12/15/03...................................................... 203,000 ----------- CABLE/SATELLITE TV (0.5%) 445 EchoStar Communications Corp. 4.875% due 01/01/07....................................... 330,706 ----------- ELECTRONIC EQUIPMENT/INSTRUMENTS (2.6%) 2,000 SCI Systems, Inc. 3.00% due 03/15/07.................................................... 1,598,160 ----------- ELECTRONIC PRODUCTION EQUIPMENT (0.8%) 460 Photronics Inc. 6.00% due 06/01/04...................................................... 486,629 ----------- FINANCIAL PUBLISHING/SERVICES (1.7%) 1,750 Aether Systems, Inc. 6.00% due 03/22/05................................................. 1,004,343 ----------- HOSPITAL/NURSING MANAGEMENT (0.1%) 120 Emeritus Corp. - 144A** 6.25% due 01/01/06.............................................. 33,818 ----------- INDUSTRIAL MACHINERY (0.3%) 200 Thermo Fibertek, Inc. - 144A** 4.50% due 07/15/04....................................... 170,452 ----------- INTERNET SOFTWARE/SERVICES (2.6%) 5,000 AT Home Corp. 0.525% due 12/28/18....................................................... 1,562,214 -----------
SEE NOTES TO FINANCIAL STATEMENTS 47 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INCOME BUILDER PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- MAJOR TELECOMMUNICATIONS (3.5%) $ 800 Bell Atlantic Financial Service - 144A** (exchangeable into Cable & Wireless Communications common stock) 4.25% due 09/15/05....................................... $ 828,000 1,300 Bell Atlantic Financial Service - 144A** (exchangeable into Telecom Corporation of New Zealand common stock) 5.75% due 04/01/03.............................................. 1,270,750 ----------- 2,098,750 ----------- SPECIALTY TELECOMMUNICATIONS (1.6%) 2,000 Efficient Networks, Inc. 5.00% due 03/15/05............................................. 994,660 ----------- TELECOMMUNICATION EQUIPMENT (1.6%) 1,100 RF Micro Systems Devices - 144A** 3.75% due 08/15/05.................................... 959,277 ----------- TOTAL CONVERTIBLE BONDS (COST $12,204,115)...................................................................... 10,397,791 ----------- NON-CONVERTIBLE BONDS (18.4%) ADVERTISING/MARKETING SERVICES (3.5%) 2,000 Outdoor Systems, Inc. 8.875% due 06/15/07............................................... 2,080,000 ----------- BROADCASTING (4.2%) 2,500 Young Broadcasting Corp. 11.75% due 11/15/04............................................ 2,521,875 ----------- CHEMICALS: SPECIALTY (2.5%) 1,875 Huntsman Polymers Corp. 11.75% due 12/01/04............................................. 1,537,500 ----------- CONSTRUCTION MATERIALS (0.8%) 500 USG Corp. (Series B) 9.25% due 09/15/01................................................. 462,500 ----------- MAJOR TELECOMMUNICATIONS (2.0%) 1,150 Sprint Spectrum L.P. 11.00% due 08/15/06................................................ 1,236,526 ----------- OTHER METALS/MINERALS (4.3%) 2,500 Cyprus Amax Minerals Inc. 10.125% due 04/01/02.......................................... 2,593,125 ----------- PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- TEXTILES (1.1%) $ 862 Dan River, Inc. 10.125% due 12/15/03.................................................... $ 663,740 ----------- TOTAL NON-CONVERTIBLE BONDS (COST $12,261,708)...................................................................... 11,095,266 ----------- TOTAL CORPORATE BONDS (COST $24,465,823)...................................................................... 21,493,057 ----------- SHORT-TERM INVESTMENT (1.2%) REPURCHASE AGREEMENT 723 The Bank of New York 3.75% due 01/02/01 (dated 12/29/00; proceeds $723,741) (a) (COST $723,439)....................................................................... 723,439 -----------
TOTAL INVESTMENTS (COST $61,538,738) (b) .................................................................... 99.0% 59,765,461 OTHER ASSETS IN EXCESS OF LIABILITIES...................................................... 1.0 581,719 ----- ------------ NET ASSETS................................................................................. 100.0% $ 60,347,180 ----- ------------ ----- ------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. ** Resale is restricted to qualified institutional investors. ++ Consists of more than one class of securities traded together as a unit; stocks with attached warrants. (a) Collateralized by $716,432 Federal Home Loan Mortgage Corp. 6.875% due 01/15/05 valued at $737,918. (b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $6,242,422 and the aggregate gross unrealized depreciation is $8,015,699, resulting in net unrealized depreciation of $1,773,277. SEE NOTES TO FINANCIAL STATEMENTS 48 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON STOCKS (99.4%) AEROSPACE & DEFENSE (1.3%) 565,000 Goodrich (B.F.) Co. (The)........................................................... $ 20,551,875 -------------- ALUMINUM (2.7%) 615,000 Alcan Aluminium, Ltd. (Canada)...................................................... 21,025,312 640,000 Alcoa, Inc.......................................................................... 21,440,000 -------------- 42,465,312 -------------- APPAREL/FOOTWEAR (1.4%) 600,000 VF Corp............................................................................. 21,744,000 -------------- AUTO PARTS: O.E.M. (5.4%) 1,400,000 Dana Corp........................................................................... 21,437,500 1,750,000 Delphi Automotive Systems Corp...................................................... 19,687,500 390,000 Johnson Controls, Inc............................................................... 20,280,000 595,000 TRW Inc............................................................................. 23,056,250 -------------- 84,461,250 -------------- BEVERAGES: NON-ALCOHOLIC (2.7%) 335,000 Coca-Cola Co........................................................................ 20,414,062 430,000 PepsiCo, Inc........................................................................ 21,311,875 -------------- 41,725,937 -------------- CHEMICALS: MAJOR DIVERSIFIED (2.8%) 595,000 Dow Chemical Co..................................................................... 21,791,875 470,000 Du Pont (E.I.) de Nemours & Co., Inc................................................ 22,706,875 -------------- 44,498,750 -------------- COMPUTER PROCESSING HARDWARE (2.5%) 625,000 Hewlett-Packard Co.................................................................. 19,726,562 235,000 International Business Machines Corp................................................ 19,975,000 -------------- 39,701,562 -------------- DEPARTMENT STORES (1.4%) 610,000 Sears, Roebuck & Co................................................................. 21,197,500 -------------- DISCOUNT STORES (1.4%) 695,000 Target Corp......................................................................... 22,413,750 -------------- ELECTRIC UTILITIES (6.9%) 335,000 Dominion Resources, Inc............................................................. 22,445,000 320,000 Exelon Corp......................................................................... 22,467,200 300,000 FPL Group, Inc...................................................................... 21,525,000 590,000 GPU, Inc............................................................................ 21,719,375 475,000 Reliant Energy, Inc................................................................. 20,573,437 -------------- 108,730,012 -------------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- ELECTRONICS/APPLIANCES (1.4%) 475,000 Whirlpool Corp...................................................................... $ 22,651,562 -------------- FINANCE/RENTAL/LEASING (5.5%) 245,000 Fannie Mae.......................................................................... 21,253,750 415,000 Household International, Inc........................................................ 22,825,000 450,000 Providian Financial Corp............................................................ 25,875,000 975,000 Ryder System, Inc................................................................... 16,209,375 -------------- 86,163,125 -------------- FINANCIAL CONGLOMERATES (1.3%) 403,370 Citigroup, Inc...................................................................... 20,597,081 -------------- FOOD DISTRIBUTORS (2.9%) 1,550,000 Supervalu, Inc...................................................................... 21,506,250 770,000 SYSCO Corp.......................................................................... 23,100,000 -------------- 44,606,250 -------------- FOOD: MAJOR DIVERSIFIED (1.3%) 215,000 Quaker Oats Company (The)........................................................... 20,935,625 -------------- FOREST PRODUCTS (1.4%) 435,000 Weyerhaeuser Co..................................................................... 22,076,250 -------------- HOUSEHOLD/PERSONAL CARE (4.1%) 445,000 Avon Products, Inc.................................................................. 21,304,375 310,000 Kimberly-Clark Corp................................................................. 21,913,900 280,000 Procter & Gamble Co. (The).......................................................... 21,962,500 -------------- 65,180,775 -------------- INDUSTRIAL CONGLOMERATES (6.7%) 400,000 General Electric Co................................................................. 19,175,000 400,000 Honeywell International, Inc........................................................ 18,925,000 188,000 Minnesota Mining & Manufacturing Co................................................. 22,654,000 390,000 Tyco International Ltd. (Bermuda)................................................... 21,645,000 290,000 United Technologies Corp............................................................ 22,801,250 -------------- 105,200,250 -------------- INDUSTRIAL SPECIALTIES (1.3%) 455,000 PPG Industries, Inc................................................................. 21,072,187 -------------- INFORMATION TECHNOLOGY SERVICES (1.3%) 365,000 Electronic Data Systems Corp........................................................ 21,078,750 --------------
SEE NOTES TO FINANCIAL STATEMENTS 49 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- INTEGRATED OIL (3.8%) 400,000 BP Amoco PLC (ADR) (United Kingdom)................................................. $ 19,150,000 230,000 Exxon Mobil Corp.................................................................... 19,995,625 330,000 Royal Dutch Petroleum Co. (ADR) (Netherlands)....................................... 19,985,625 -------------- 59,131,250 -------------- LIFE/HEALTH INSURANCE (4.1%) 510,000 Aegon N.V. (ARS) (Netherlands)...................................................... 21,133,125 295,000 Jefferson-Pilot Corp................................................................ 22,051,250 435,000 Lincoln National Corp............................................................... 20,580,937 -------------- 63,765,312 -------------- MAJOR BANKS (4.1%) 480,000 Bank of America Corp................................................................ 22,020,000 760,000 KeyCorp............................................................................. 21,280,000 130,000 Morgan (J.P.) & Co., Inc............................................................ 21,515,000 -------------- 64,815,000 -------------- MAJOR TELECOMMUNICATIONS (1.2%) 385,000 Verizon Communications Inc.......................................................... 19,298,125 -------------- MANAGED HEALTH CARE (0.8%) 320,000 Aetna Inc.*......................................................................... 13,140,000 -------------- MOTOR VEHICLES (3.8%) 495,000 DaimlerChrysler AG (Germany)........................................................ 20,394,000 825,000 Ford Motor Co....................................................................... 19,335,938 385,000 General Motors Corp................................................................. 19,610,938 -------------- 59,340,876 -------------- OFFICE EQUIPMENT/SUPPLIES (1.4%) 650,000 Pitney Bowes, Inc................................................................... 21,531,250 -------------- OIL & GAS PIPELINES (2.8%) 310,000 El Paso Energy Corp................................................................. 22,203,750 265,000 Enron Corp.......................................................................... 22,028,125 -------------- 44,231,875 -------------- OIL & GAS PRODUCTION (1.3%) 295,000 Kerr-McGee Corp..................................................................... 19,746,563 -------------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- OIL REFINING/MARKETING (2.7%) 685,000 Sunoco, Inc......................................................................... $ 23,075,938 690,000 USX-Marathon Group.................................................................. 19,147,500 -------------- 42,223,438 -------------- OTHER METALS/MINERALS (1.4%) 400,000 Phelps Dodge Corp................................................................... 22,325,000 -------------- PHARMACEUTICALS: MAJOR (5.5%) 335,000 American Home Products Corp......................................................... 21,289,250 305,000 Bristol-Myers Squibb Co............................................................. 22,550,938 340,000 Pharmacia Corp...................................................................... 20,740,000 370,000 Schering-Plough Corp................................................................ 20,997,500 -------------- 85,577,688 -------------- PULP & PAPER (2.8%) 540,000 International Paper Co.............................................................. 22,038,750 710,000 Mead Corp........................................................................... 22,276,250 -------------- 44,315,000 -------------- RAILROADS (2.7%) 780,000 Burlington Northern Santa Fe Corp................................................... 22,083,750 805,000 CSX Corp............................................................................ 20,879,688 -------------- 42,963,438 -------------- RECREATIONAL PRODUCTS (1.3%) 510,000 Eastman Kodak Co.................................................................... 20,081,250 -------------- SEMICONDUCTORS (1.1%) 585,000 Intel Corp.......................................................................... 17,696,250 -------------- TRUCKS/CONSTRUCTION/FARM MACHINERY (2.9%) 470,000 Caterpillar, Inc.................................................................... 22,236,875 490,000 Deere & Co.......................................................................... 22,448,125 -------------- 44,685,000 -------------- TOTAL COMMON STOCKS (COST $1,405,823,643)............................................................... 1,561,919,118 --------------
SEE NOTES TO FINANCIAL STATEMENTS 50 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENT (a) (0.8%) U.S. GOVERNMENT AGENCY $ 12,250 Federal National Mortgage Assoc. 5.75% due 01/02/01 (COST 12,248,044)................................................................. $ 12,248,044 --------------
TOTAL INVESTMENTS (COST $1,418,071,687) (b) .............................................................. 100.2% 1,574,167,162 LIABILITIES IN EXCESS OF OTHER ASSETS................................................... (0.2) (2,360,309) ----- --------------- NET ASSETS.............................................................................. 100.0% $ 1,571,806,853 ----- --------------- ----- ---------------
- --------------------- ADR American Depository Receipt. ARS American Registered Shares. * Non-income producing security. (a) 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $278,802,550 and the aggregate gross unrealized depreciation is $122,707,075, resulting in net unrealized appreciation of $156,095,475. SEE NOTES TO FINANCIAL STATEMENTS 51 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON STOCKS (95.0%) AEROSPACE & DEFENSE (2.1%) 60,000 Boeing Co. ............................................................................ $ 3,960,000 ------------ AIRLINES (1.7%) 40,000 AMR Corp.*............................................................................. 1,567,500 50,000 Southwest Airlines Co.................................................................. 1,676,500 ------------ 3,244,000 ------------ ALTERNATIVE POWER GENERATION (0.7%) 30,000 Calpine Corp.*......................................................................... 1,351,875 ------------ APPAREL/FOOTWEAR (1.1%) 30,000 Jones Apparel Group, Inc.*............................................................. 965,625 15,000 Timberland Co. (Class A)*.............................................................. 1,003,125 ------------ 1,968,750 ------------ APPAREL/FOOTWEAR RETAIL (0.2%) 15,000 TJX Companies, Inc. (The).............................................................. 416,250 ------------ BEVERAGES: NON-ALCOHOLIC (1.1%) 50,000 Pepsi Bottling Group, Inc. (The)....................................................... 1,996,875 ------------ BIOTECHNOLOGY (2.6%) 25,000 Genzyme Corp. (General Division)*...................................................... 2,248,437 30,000 Invitrogen Corp.*...................................................................... 2,591,250 ------------ 4,839,687 ------------ COMPUTER PERIPHERALS (2.2%) 125,000 Advanced Digital Information Corp.*.................................................... 2,875,000 25,000 Mercury Computer Systems, Inc.......................................................... 1,160,937 ------------ 4,035,937 ------------ DRUGSTORE CHAINS (1.1%) 50,000 Walgreen Co. .......................................................................... 2,090,625 ------------ FINANCE/RENTAL/LEASING (0.7%) 50,000 AmeriCredit Corp.*..................................................................... 1,362,500 ------------ FINANCIAL CONGLOMERATES (3.3%) 75,000 AXA Financial, Inc. ................................................................... 4,190,625 40,000 Citigroup, Inc......................................................................... 2,042,500 ------------ 6,233,125 ------------ FINANCIAL PUBLISHING/SERVICES (1.0%) 40,000 Sungard Data Systems Inc.*............................................................. 1,885,000 ------------ FOOD RETAIL (3.9%) 150,000 Kroger Co.*............................................................................ 4,059,375 50,000 Safeway Inc.*.......................................................................... 3,125,000 ------------ 7,184,375 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- GAS DISTRIBUTORS (1.4%) 40,000 Equitable Resources, Inc............................................................... $ 2,670,000 ------------ HOME BUILDING (1.6%) 90,000 Kaufman & Broad Home Corp.............................................................. 3,031,875 ------------ HOSPITAL/NURSING MANAGEMENT (3.6%) 100,000 HCA-The Healthcare Corp. .............................................................. 4,401,000 50,000 Tenet Healthcare Corp.*................................................................ 2,221,875 ------------ 6,622,875 ------------ HOUSEHOLD/PERSONAL CARE (1.5%) 60,000 Avon Products, Inc..................................................................... 2,872,500 ------------ INDUSTRIAL CONGLOMERATES (5.2%) 40,000 General Electric Co.................................................................... 1,917,500 70,000 Tyco International Ltd. (Bermuda)...................................................... 3,885,000 50,000 United Technologies Corp............................................................... 3,931,250 ------------ 9,733,750 ------------ INFORMATION TECHNOLOGY SERVICES (2.5%) 125,000 Citrix Systems, Inc.*.................................................................. 2,812,500 5,000 Documentum, Inc.*...................................................................... 248,437 20,000 Henry (Jack) & Associates, Inc. ....................................................... 1,242,500 25,000 J.D. Edwards & Co.*.................................................................... 445,312 ------------ 4,748,749 ------------ INSURANCE BROKERS/SERVICES (0.2%) 3,000 Marsh & McLennan Companies, Inc........................................................ 351,000 ------------ INTEGRATED OIL (2.3%) 50,000 Exxon Mobil Corp. ..................................................................... 4,346,875 ------------ INVESTMENT BANKS/BROKERS (0.3%) 12,500 Edwards (A.G.), Inc. .................................................................. 592,969 ------------ MAJOR BANKS (2.7%) 30,000 PNC Financial Services Group, Inc...................................................... 2,191,875 50,000 Wells Fargo & Co....................................................................... 2,784,375 ------------ 4,976,250 ------------ MANAGED HEALTH CARE (4.6%) 150,000 Oxford Health Plans, Inc.*............................................................. 5,925,000 20,000 Trigon Healthcare, Inc.*............................................................... 1,556,250 10,000 Wellpoint Health Networks, Inc.*....................................................... 1,152,500 ------------ 8,633,750 ------------
SEE NOTES TO FINANCIAL STATEMENTS 52 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- MEDICAL DISTRIBUTORS (2.9%) 60,000 AmeriSource Health Corp. (Class A)*.................................................... $ 3,030,000 70,000 Henry Schein, Inc.*.................................................................... 2,423,750 ------------ 5,453,750 ------------ MEDICAL SPECIALTIES (0.7%) 30,000 Cooper Companies, Inc. ................................................................ 1,196,250 ------------ MEDICAL/NURSING SERVICES (0.3%) 8,000 Lincare Holdings, Inc.*................................................................ 456,500 ------------ METAL FABRICATIONS (1.3%) 50,000 Shaw Group Inc. (The)*................................................................. 2,500,000 ------------ MISCELLANEOUS COMMERCIAL SERVICES (2.7%) 25,000 Concord EFS, Inc.*..................................................................... 1,098,438 90,000 Sabre Holdings Corp. *................................................................. 3,881,250 ------------ 4,979,688 ------------ MISCELLANEOUS MANUFACTURING (1.9%) 120,000 Thermo Electron Corp. *................................................................ 3,570,000 ------------ MULTI-LINE INSURANCE (2.1%) 40,000 American International Group, Inc...................................................... 3,942,500 ------------ OIL & GAS PIPELINES (3.7%) 40,000 Coastal Corp. (The).................................................................... 3,532,500 60,000 Dynegy, Inc. (Class A)................................................................. 3,363,750 ------------ 6,896,250 ------------ OIL & GAS PRODUCTION (1.5%) 15,000 Anardarko Petroleum Corp. ............................................................. 1,066,200 15,000 Newfield Exploration Co. *............................................................. 711,563 20,000 Noble Affiliates, Inc. ................................................................ 920,000 ------------ 2,697,763 ------------ OIL REFINING/MARKETING (1.0%) 50,000 Valero Refining and Marketing Corp..................................................... 1,859,375 ------------ PACKAGED SOFTWARE (2.0%) 135,000 Cadence Design Systems, Inc.*.......................................................... 3,712,500 ------------ PHARMACEUTICALS: GENERIC DRUGS (1.0%) 50,000 IVAX Corp.*............................................................................ 1,915,000 ------------ PHARMACEUTICALS: MAJOR (5.2%) 50,000 American Home Products Corp............................................................ 3,177,500 40,000 Merck & Co., Inc....................................................................... 3,745,000 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 60,000 Pfizer Inc............................................................................. $ 2,760,000 ------------ 9,682,500 ------------ PHARMACEUTICALS: OTHER (1.3%) 15,000 Forest Laboratories, Inc.*............................................................. 1,993,125 7,000 Shire Pharmaceuticals Group PLC (ADR) (United Kingdom)*................................ 322,438 ------------ 2,315,563 ------------ PROPERTY - CASUALTY INSURERS (6.1%) 85,000 ACE, Ltd. (Bermuda).................................................................... 3,607,188 40,000 Chubb Corp. (The)...................................................................... 3,460,000 60,000 Everest Re Group, Ltd. (Bermuda)....................................................... 4,297,500 ------------ 11,364,688 ------------ REIT - INDUSTRIAL/OFFICE (0.4%) 15,000 Boston Properties, Inc................................................................. 652,500 ------------ RESTAURANTS (1.2%) 85,000 Wendy's International, Inc............................................................. 2,231,250 ------------ SAVINGS BANKS (2.5%) 70,000 Golden West Financial Corp. ........................................................... 4,725,000 ------------ SERVICES TO THE HEALTH INDUSTRY (0.7%) 50,000 IMS Health Inc......................................................................... 1,350,000 ------------ SPECIALTY INSURANCE (4.3%) 50,000 Fidelity National Financial, Inc....................................................... 1,846,875 40,000 MGIC Investment Corp................................................................... 2,697,500 40,000 XL Capital Ltd. (Class A) (Bermuda).................................................... 3,495,000 ------------ 8,039,375 ------------ TELECOMMUNICATION EQUIPMENT (2.3%) 10,000 Comverse Technology, Inc.*............................................................. 1,086,250 40,000 QUALCOMM Inc.*......................................................................... 3,287,500 ------------ 4,373,750 ------------ TOBACCO (2.3%) 100,000 Philip Morris Companies, Inc........................................................... 4,400,000 ------------ TOTAL COMMON STOCKS (COST $148,062,288).................................................................... 177,463,794 ------------
SEE NOTES TO FINANCIAL STATEMENTS 53 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - CAPITAL GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENT (a) (5.7%) U.S. GOVERNMENT AGENCY $10,600 Federal National Mortgage Assoc. 5.75% due 01/02/01 (COST $10,598,307)................................................................... $ 10,598,307 ------------
TOTAL INVESTMENTS (COST $158,660,595) (b) .................................................................. 100.7% 188,062,101 LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (0.7) (1,359,638) ----- ------------- NET ASSETS................................................................................ 100.0% $ 186,702,463 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $31,471,593 and the aggregate gross unrealized depreciation is $2,070,087, resulting in net unrealized appreciation of $29,401,506. SEE NOTES TO FINANCIAL STATEMENTS 54 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ COMMON STOCKS (95.8%) AUSTRALIA (3.2%) AIRLINES 1,050,000 Qantas Airways Ltd.................................................... $ 2,080,636 ------------ CONTAINERS/PACKAGING 700,000 Amcor Ltd............................................................. 2,050,533 ------------ MAJOR BANKS 250,000 Australia & New Zealand Banking Group Ltd............................. 2,007,807 125,000 Commonwealth Bank of Australia........................................ 2,157,485 ------------ 4,165,292 ------------ MAJOR TELECOMMUNICATIONS 575,000 Telstra Corp., Ltd.................................................... 2,062,666 ------------ OIL & GAS PRODUCTION 550,000 Santos Ltd............................................................ 1,849,194 ------------ TOTAL AUSTRALIA....................................................... 12,208,321 ------------ BELGIUM (0.8%) FINANCIAL CONGLOMERATES 95,000 Fortis (B Shares)..................................................... 3,096,354 ------------ CANADA (2.8%) ALUMINUM 60,000 Alcan Aluminium Ltd................................................... 2,054,411 ------------ FINANCIAL CONGLOMERATES 155,000 EdperBrascan Corp. (Class A).......................................... 2,268,620 ------------ MAJOR BANKS 70,000 Toronto-Dominion Bank................................................. 2,028,072 ------------ MAJOR TELECOMMUNICATIONS 75,000 Telus Corp. (Non-Voting).............................................. 1,962,893 ------------ OIL & GAS PIPELINES 80,000 Enbridge Inc.......................................................... 2,331,133 ------------ TOTAL CANADA.......................................................... 10,645,129 ------------ FINLAND (1.4%) INFORMATION TECHNOLOGY SERVICES 100,000 Tietoenator Oyj....................................................... 2,854,260 ------------ NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ TELECOMMUNICATION EQUIPMENT 55,000 Nokia Oyj............................................................. $ 2,460,975 ------------ TOTAL FINLAND......................................................... 5,315,235 ------------ FRANCE (6.3%) AUTOMOTIVE AFTERMARKET 85,000 Compagnie Generale des Etablissements Michelin (B Shares)............. 3,086,698 ------------ CONSTRUCTION MATERIALS 34,500 Lafarge S.A........................................................... 2,902,161 ------------ CONTAINERS/PACKAGING 20,000 Compagnie de Saint-Gobain............................................. 3,151,932 ------------ MAJOR BANKS 32,000 BNP Paribas S.A....................................................... 2,818,464 50,000 Societe Generale (Series A)........................................... 3,118,020 ------------ 5,936,484 ------------ MISCELLANEOUS MANUFACTURING 55,000 Compagnie Generale d'Industrie et de Participations................... 2,616,405 ------------ MULTI-LINE INSURANCE 45,000 Assurances Generales de France........................................ 3,136,860 ------------ OIL REFINING/MARKETING 20,000 Total Fina Elf S.A.................................................... 2,984,256 ------------ TOTAL FRANCE.......................................................... 23,814,796 ------------ GERMANY (5.3%) APPAREL/FOOTWEAR 50,000 Adidas-Salomon AG..................................................... 3,108,600 ------------ CHEMICALS: MAJOR DIVERSIFIED 70,000 BASF AG............................................................... 3,194,793 60,000 Bayer AG.............................................................. 3,170,772 ------------ 6,365,565 ------------ INDUSTRIAL CONGLOMERATES 50,000 E. ON AG.............................................................. 3,052,080 100,000 MAN AG................................................................ 2,543,400 20,000 Siemens AG............................................................ 2,623,470 ------------ 8,218,950 ------------
SEE NOTES TO FINANCIAL STATEMENTS 55 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ MOTOR VEHICLES 55,000 DaimlerChrysler AG.................................................... $ 2,341,812 ------------ TOTAL GERMANY......................................................... 20,034,927 ------------ HONG KONG (2.0%) ELECTRIC UTILITIES 475,000 CLP Holdings Ltd...................................................... 2,368,849 ------------ REAL ESTATE DEVELOPMENT 180,000 Cheung Kong (Holdings) Ltd............................................ 2,301,864 275,000 Sun Hung Kai Properties Ltd........................................... 2,741,116 ------------ 5,042,980 ------------ TOTAL HONG KONG....................................................... 7,411,829 ------------ IRELAND (0.8%) MAJOR BANKS 250,000 Allied Irish Banks PLC................................................ 2,920,200 ------------ ITALY (2.9%) COMMERCIAL PRINTING/FORMS 26,040 Seat-Pagine Gialle SpA................................................ 58,258 ------------ MAJOR BANKS 175,000 San Paolo -- IMI SpA.................................................. 2,838,717 500,000 Unicredito Italiano SpA............................................... 2,623,470 ------------ 5,462,187 ------------ MAJOR TELECOMMUNICATIONS 465,000 Telecom Italia SpA.................................................... 2,803,392 ------------ WIRELESS COMMUNICATIONS 550,000 Telecom Italia Mobile SpA............................................. 2,409,165 ------------ TOTAL ITALY........................................................... 10,733,002 ------------ JAPAN (10.1%) BEVERAGES: ALCOHOLIC 270,000 Kirin Brewery Co., Ltd................................................ 2,413,368 ------------ DEPARTMENT STORES 180,000 Marui Co., Ltd........................................................ 2,712,975 ------------ ELECTRICAL PRODUCTS 200,000 Matsushita Electric Works, Ltd........................................ 2,266,492 ------------ NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ ELECTRONIC COMPONENTS 22,000 TDK Corp.............................................................. $ 2,137,527 ------------ ELECTRONIC EQUIPMENT/INSTRUMENTS 17,000 Kyocera Corp.......................................................... 1,852,250 85,000 Matsushita Electric Industrial Co., Ltd............................... 2,027,523 115,000 NEC Corp.............................................................. 2,100,044 ------------ 5,979,817 ------------ ELECTRONICS/APPLIANCES 190,000 Sharp Corp............................................................ 2,287,636 32,000 Sony Corp............................................................. 2,208,825 ------------ 4,496,461 ------------ FINANCE/RENTAL/LEASING 30,000 Acom Co., Ltd......................................................... 2,209,699 ------------ MOTOR VEHICLES 70,000 Honda Motor Co........................................................ 2,605,505 60,000 Toyota Motor Corp..................................................... 1,913,499 ------------ 4,519,004 ------------ PHARMACEUTICALS: MAJOR 40,500 Takeda Chemical Industries, Ltd....................................... 2,392,136 ------------ PHARMACEUTICALS: OTHER 90,000 Taisho Pharmaceutical Co., Ltd........................................ 2,429,882 ------------ RECREATIONAL PRODUCTS 14,000 Nintendo Co., Ltd..................................................... 2,200,612 ------------ TOBACCO 320 Japan Tobacco, Inc.................................................... 2,477,239 ------------ WIRELESS COMMUNICATIONS 90 NTT DoCoMo, Inc....................................................... 1,549,148 ------------ TOTAL JAPAN........................................................... 37,784,360 ------------ NETHERLANDS (3.8%) CHEMICALS: SPECIALTY 90,000 DSM NV................................................................ 3,163,142 ------------ ELECTRONIC EQUIPMENT/INSTRUMENTS 63,050 Koninklijke (Royal) Philips Electronics NV............................ 2,317,519 ------------ FINANCIAL CONGLOMERATES 35,000 ING Groep NV.......................................................... 2,805,087 ------------ FINANCIAL PUBLISHING/SERVICES 110,000 Wolters Kluwer NV..................................................... 3,009,125 ------------
SEE NOTES TO FINANCIAL STATEMENTS 56 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ FOOD: MAJOR DIVERSIFIED 45,000 Unilever NV........................................................... $ 2,857,086 ------------ TOTAL NETHERLANDS..................................................... 14,151,959 ------------ PORTUGAL (0.7%) MAJOR TELECOMMUNICATIONS 295,000 Portugal Telecom S.A. (Registered Shares)............................. 2,706,649 ------------ SINGAPORE (1.2%) AIRLINES 240,000 Singapore Airlines Ltd................................................ 2,380,623 ------------ MAJOR BANKS 200,000 DBS Group Holdings Ltd................................................ 2,260,669 ------------ TOTAL SINGAPORE....................................................... 4,641,292 ------------ SPAIN (2.2%) ELECTRIC UTILITIES 225,000 Iberdrola S.A......................................................... 2,829,533 ------------ MAJOR BANKS 275,000 Banco Santander Central Hispano, S.A.................................. 2,953,170 ------------ OIL REFINING/MARKETING 150,000 Repsol-YPF, S.A....................................................... 2,404,926 ------------ TOTAL SPAIN........................................................... 8,187,629 ------------ SWEDEN (2.7%) ELECTRONICS/APPLIANCES 175,000 Electrolux AB (Series B).............................................. 2,275,743 ------------ ENGINEERING & CONSTRUCTION 62,000 Skanska AB (B Shares)................................................. 2,566,879 ------------ INDUSTRIAL MACHINERY 115,000 Sandvik AB (B Shares)................................................. 2,771,231 ------------ REGIONAL BANKS 350,000 Nordea AB............................................................. 2,656,582 ------------ TOTAL SWEDEN.......................................................... 10,270,435 ------------ SWITZERLAND (6.5%) CHEMICALS: AGRICULTURAL 2,500 Syngenta AG*.......................................................... 134,876 ------------ NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ FOOD: MAJOR DIVERSIFIED 1,800 Nestle S.A. (Registered Shares)....................................... $ 4,219,273 ------------ MAJOR BANKS 25,000 UBS AG (Registered Shares)............................................ 4,100,521 ------------ MAJOR TELECOMMUNICATIONS 15,000 Swisscom AG (Registered Shares)....................................... 3,920,687 ------------ OTHER CONSUMER SPECIALTIES 1,300 Compagnie Financiere Richemont AG (Series A).......................... 3,494,667 ------------ PHARMACEUTICALS: MAJOR 2,300 Novartis AG (Registered Shares)....................................... 4,086,258 ------------ PROPERTY -- CASUALTY INSURERS 1,780 Swiss Re.............................................................. 4,288,292 ------------ TOTAL SWITZERLAND..................................................... 24,244,574 ------------ UNITED KINGDOM (12.0%) AEROSPACE & DEFENSE 450,000 BAE Systems PLC....................................................... 2,570,077 ------------ AIRLINES 495,000 British Airways PLC................................................... 2,889,991 ------------ APPAREL/FOOTWEAR RETAIL 250,000 Next PLC.............................................................. 3,008,889 ------------ BEVERAGES: ALCOHOLIC 290,000 Bass PLC.............................................................. 3,160,791 275,000 Diageo PLC............................................................ 3,083,644 ------------ 6,244,435 ------------ CONSTRUCTION MATERIALS 430,000 Hanson PLC............................................................ 2,950,879 ------------ ELECTRIC UTILITIES 325,000 PowerGen PLC.......................................................... 3,070,935 285,000 United Utilities PLC.................................................. 2,833,588 ------------ 5,904,523 ------------ ELECTRONIC COMPONENTS 850,000 Cookson Group PLC..................................................... 2,236,669 ------------ FINANCIAL CONGLOMERATES 150,000 HSBC Holdings PLC..................................................... 2,221,097 ------------
SEE NOTES TO FINANCIAL STATEMENTS 57 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ MAJOR BANKS 130,000 Royal Bank of Scotland Group PLC...................................... $ 3,074,823 ------------ MAJOR TELECOMMUNICATIONS 250,000 British Telecommunications PLC........................................ 2,137,993 ------------ MOVIES/ENTERTAINMENT 1,150,000 Rank Group PLC........................................................ 3,008,889 ------------ STEEL 2,850,000 Corus Group PLC....................................................... 3,004,030 ------------ TOBACCO 365,000 British American Tobacco PLC.......................................... 2,781,764 ------------ WATER UTILITIES 257,000 Severn Trent PLC...................................................... 2,858,751 ------------ TOTAL UNITED KINGDOM.................................................. 44,892,810 ------------ UNITED STATES (31.1%) ALUMINUM 110,000 Alcoa, Inc............................................................ 3,685,000 ------------ CHEMICALS: MAJOR DIVERSIFIED 110,000 Dow Chemical Co....................................................... 4,028,750 ------------ COAL 90,000 Massey Energy Co...................................................... 1,147,500 ------------ COMPUTER PROCESSING HARDWARE 200,000 Compaq Computer Corp.................................................. 3,010,000 95,000 Hewlett-Packard Co.................................................... 2,998,437 35,000 International Business Machines Corp.................................. 2,975,000 ------------ 8,983,437 ------------ DEPARTMENT STORES 105,000 Sears, Roebuck & Co................................................... 3,648,750 ------------ DISCOUNT STORES 115,000 Target Corp........................................................... 3,708,750 10,474 Visteon Corp.......................................................... 120,451 ------------ 3,829,201 ------------ ELECTRIC UTILITIES 55,000 FPL Group, Inc........................................................ 3,946,250 105,000 GPU, Inc.............................................................. 3,865,312 ------------ 7,811,562 ------------ ELECTRONIC EQUIPMENT/INSTRUMENTS 12,586 Agilent Technologies, Inc.*........................................... 689,083 ------------ NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ ENGINEERING & CONSTRUCTION 90,000 Fluor Corp.*.......................................................... $ 2,975,625 ------------ FINANCIAL CONGLOMERATES 66,006 Citigroup, Inc........................................................ 3,370,431 ------------ FOOD RETAIL 125,000 Albertson's, Inc...................................................... 3,312,500 ------------ INDUSTRIAL CONGLOMERATES 70,000 Honeywell International, Inc.......................................... 3,311,875 30,000 Minnesota Mining & Manufacturing Co................................... 3,615,000 ------------ 6,926,875 ------------ INFORMATION TECHNOLOGY SERVICES 60,000 Electronic Data Systems Corp.......................................... 3,465,000 ------------ INTEGRATED OIL 45,000 Chevron Corp.......................................................... 3,799,688 ------------ MAJOR BANKS 85,000 Bank of America Corp.................................................. 3,899,375 135,000 KeyCorp............................................................... 3,780,000 ------------ 7,679,375 ------------ MAJOR TELECOMMUNICATIONS 65,000 SBC Communications, Inc............................................... 3,103,750 140,000 Sprint Corp. (FON Group).............................................. 2,843,750 62,000 Verizon Communications Inc............................................ 3,107,750 ------------ 9,055,250 ------------ MOTOR VEHICLES 139,854 Ford Motor Co......................................................... 3,277,828 ------------ OIL REFINING/MARKETING 110,000 Ashland, Inc.......................................................... 3,947,900 130,000 USX-Marathon Group.................................................... 3,607,500 ------------ 7,555,400 ------------ OTHER METALS/MINERALS 67,000 Phelps Dodge Corp..................................................... 3,739,438 ------------ PACKAGED SOFTWARE 170,000 Computer Associates International, Inc................................ 3,315,000 ------------ PHARMACEUTICALS: MAJOR 50,000 Bristol-Myers Squibb Co............................................... 3,696,875 ------------ PULP & PAPER 90,000 International Paper Co................................................ 3,673,125 ------------
SEE NOTES TO FINANCIAL STATEMENTS 58 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - GLOBAL DIVIDEND GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ RECREATIONAL PRODUCTS 80,000 Eastman Kodak Co...................................................... $ 3,150,000 ------------ SAVINGS BANKS 75,000 Washington Mutual, Inc................................................ 3,979,688 ------------ SEMICONDUCTORS 90,000 Intel Corp............................................................ 2,722,500 ------------ TOBACCO 85,000 Philip Morris Companies, Inc.......................................... 3,740,000 ------------ TRUCKS/CONSTRUCTION/FARM MACHINERY 83,000 Deere & Co............................................................ 3,802,437 ------------ TOTAL UNITED STATES................................................... 117,060,318 ------------ TOTAL COMMON STOCKS (COST $334,241,946)................................................... 360,119,819 ------------
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENT (a) (3.6%) U.S. GOVERNMENT AGENCY $ 13,500 Federal National Mortgage Assoc. 5.75% due 01/02/01 (COST $13,497,844).................................................. $ 13,497,844 ------------
TOTAL INVESTMENTS (COST $347,739,790) (b) .................................................................. 99.4% 373,617,663 OTHER ASSETS IN EXCESS OF LIABILITIES .................................................... 0.6 2,362,989 ----- ------------- NET ASSETS................................................................................ 100.0% $ 375,980,652 ----- ------------- ----- -------------
- --------------------- * Non-income producing security. (a) 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $56,079,400 and the aggregate gross unrealized depreciation is $30,201,527, resulting in net unrealized appreciation of $25,877,873. FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 2000:
CONTRACTS TO IN EXCHANGE DELIVERY UNREALIZED DELIVER FOR DATE DEPRECIATION - ----------------------------------------------------- GBP 271,593 $401,333 01/02/2001 $ (4,726) GBP 632,928 $937,215 01/03/2001 (9,076) -------- Net unrealized depreciation..... $(13,802) ========
CURRENCY ABBREVIATION: - ------------------------ GBP British Pound.
SEE NOTES TO FINANCIAL STATEMENTS 59 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES - GLOBAL DIVIDEND GROWTH SUMMARY OF INVESTMENTS DECEMBER 31, 2000
PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Aerospace & Defense............................................................... $ 2,570,077 0.7% Airlines.......................................................................... 7,351,250 2.0 Aluminum.......................................................................... 5,739,411 1.5 Apparel/Footwear.................................................................. 3,108,600 0.8 Apparel/Footwear Retail........................................................... 3,008,889 0.8 Automotive Aftermarket............................................................ 3,086,698 0.8 Beverages: Alcoholic.............................................................. 8,657,803 2.3 Chemicals: Agricultural........................................................... 134,875 0.0 Chemicals: Major Diversified...................................................... 10,394,315 2.8 Chemicals: Specialty.............................................................. 3,163,142 0.8 Coal.............................................................................. 1,147,500 0.3 Commercial Printing/Forms......................................................... 58,258 0.0 Computer Processing Hardware...................................................... 8,983,437 2.4 Construction Materials............................................................ 5,853,040 1.6 Containers/Packaging.............................................................. 5,202,465 1.4 Department Stores................................................................. 6,361,725 1.7 Discount Stores................................................................... 3,829,201 1.0 Electric Utilities................................................................ 18,914,468 5.0 Electrical Products............................................................... 2,266,492 0.6 Electronic Components............................................................. 4,374,197 1.2 Electronic Equipment/Instruments.................................................. 8,986,419 2.4 Electronics/Appliances............................................................ 6,772,204 1.8 Engineering & Construction........................................................ 5,542,504 1.5 Finance/Rental/Leasing............................................................ 2,209,699 0.6 Financial Conglomerates........................................................... 13,761,590 3.7 Financial Publishing/Services..................................................... 3,009,125 0.8 Food Retail....................................................................... 3,312,500 0.9 Food: Major Diversified........................................................... 7,076,359 1.9 Industrial Conglomerates.......................................................... 15,145,825 4.0 Industrial Machinery.............................................................. 2,771,231 0.7 Information Technology Services................................................... 6,319,260 1.7 Integrated Oil.................................................................... 3,799,687 1.0 Major Banks....................................................................... 40,580,794 10.8 Major Telecommunications.......................................................... 24,649,529 6.6 PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Motor Vehicles.................................................................... $ 10,138,644 2.7% Movies/Entertainment.............................................................. 3,008,889 0.8 Multi-Line Insurance.............................................................. 3,136,860 0.8 Miscellaneous Manufacturing....................................................... 2,616,405 0.7 Oil & Gas Pipelines............................................................... 2,331,133 0.6 Oil & Gas Production.............................................................. 1,849,193 0.5 Oil Refining/Marketing............................................................ 12,944,582 3.4 Other Consumer Specialties........................................................ 3,494,667 0.9 Other Metals/Minerals............................................................. 3,739,437 1.0 Packaged Software................................................................. 3,315,000 0.9 Pharmaceuticals: Major............................................................ 10,175,270 2.7 Pharmaceuticals: Other............................................................ 2,429,882 0.6 Property - Casualty Insurers...................................................... 4,288,292 1.1 Pulp & Paper...................................................................... 3,673,125 1.0 Real Estate Development........................................................... 5,042,980 1.3 Recreational Products............................................................. 5,350,612 1.4 Regional Banks.................................................................... 2,656,582 0.7 Savings Banks..................................................................... 3,979,688 1.1 Semiconductors.................................................................... 2,722,500 0.7 Steel............................................................................. 3,004,030 0.8 Telecommunication Equipment....................................................... 2,460,975 0.7 Tobacco........................................................................... 8,999,003 2.4 Trucks/Construction/Farm Machinery................................................ 3,802,437 1.0 U.S. Government Agency............................................................ 13,497,844 3.6 Water Utilities................................................................... 2,858,751 0.8 Wireless Communications........................................................... 3,958,313 1.1 ------------ ----- $373,617,663 99.4% ------------ ----- ------------ -----
PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Common Stocks..................................................................... $360,119,819 95.8% Short-Term Investment............................................................. 13,497,844 3.6 ------------ ----- $373,617,663 99.4% ------------ ----- ------------ -----
SEE NOTES TO FINANCIAL STATEMENTS 60 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ COMMON AND PREFERRED STOCKS (96.5%) DENMARK (0.4%) SPECIALTY TELECOMMUNICATIONS 49,770 Tele Danmark AS....................................................... $ 2,036,508 ------------ FINLAND (4.7%) TELECOMMUNICATION EQUIPMENT 545,780 Nokia Oyj............................................................. 24,420,926 ------------ FRANCE (12.2%) ELECTRONICS/APPLIANCES 35,882 Thomson Multimedia*................................................... 1,684,634 ------------ HOME IMPROVEMENT CHAINS 28,610 Castorama Dubois Investissement....................................... 7,438,371 ------------ MAJOR BANKS 98,420 BNP Paribas S.A....................................................... 8,668,538 ------------ MULTI-LINE INSURANCE 81,096 AXA................................................................... 11,764,435 ------------ OIL REFINING/MARKETING 58,512 Total Fina Elf........................................................ 8,730,740 ------------ PHARMACEUTICALS: MAJOR 167,186 Aventis S.A........................................................... 14,725,241 ------------ SEMICONDUCTORS 160,340 STMicroelectronics NV................................................. 7,023,373 ------------ TELECOMMUNICATION EQUIPMENT 55,185 Alcatel............................................................... 3,145,048 ------------ TOTAL FRANCE.......................................................... 63,180,380 ------------ GERMANY (5.2%) AIR FREIGHT/COURIERS 225,113 Deutsche Post AG*..................................................... 4,858,213 ------------ APPAREL/FOOTWEAR 8,674 Hugo Boss AG (Pref.).................................................. 2,328,709 ------------ CHEMICALS: MAJOR DIVERSIFIED 59,943 Bayer AG.............................................................. 3,167,760 ------------ MAJOR BANKS 70,985 Deutsche Bank AG (Registered Shares).................................. 5,937,867 182,523 Dresdner Bank AG...................................................... 7,960,668 ------------ 13,898,535 ------------ NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ PACKAGED SOFTWARE 23,666 SAP AG................................................................ $ 2,759,919 ------------ TOTAL GERMANY......................................................... 27,013,136 ------------ ITALY (5.8%) CONSUMER SUNDRIES 132,400 Luxottica Group SpA (ADR)............................................. 1,820,500 ------------ INTEGRATED OIL 1,915,480 ENI SpA*.............................................................. 12,269,798 ------------ MAJOR BANKS 1,219,400 Banca Intesa SpA...................................................... 5,881,215 917,420 Unicredito Italiano SpA............................................... 4,813,648 ------------ 10,694,863 ------------ MAJOR TELECOMMUNICATIONS 456,760 Telecom Italia SpA.................................................... 5,068,556 ------------ TOTAL ITALY........................................................... 29,853,717 ------------ NETHERLANDS (11.8%) APPAREL/FOOTWEAR 56,260 Gucci Group NV........................................................ 4,902,215 ------------ ELECTRONIC EQUIPMENT/INSTRUMENTS 503,905 Koninklijke (Royal) Philips Electronics NV............................ 18,521,956 ------------ ELECTRONIC PRODUCTION EQUIPMENT 305,540 ASM Lithography Holding NV*........................................... 6,962,334 ------------ FINANCIAL CONGLOMERATES 224,370 Fortis (NL) NV........................................................ 7,312,936 ------------ FOOD RETAIL 261,413 Koninklijke Ahold NV.................................................. 8,461,186 ------------ INFORMATION TECHNOLOGY SERVICES 464,810 Getronics NV.......................................................... 2,740,947 ------------ INTEGRATED OIL 198,930 Royal Dutch Petroleum Co.............................................. 12,229,206 ------------ TOTAL NETHERLANDS..................................................... 61,130,780 ------------ PORTUGAL (0.5%) MAJOR TELECOMMUNICATIONS 288,200 Portugal Telecom, S.A. (Registered Shares)............................ 2,644,258 ------------
SEE NOTES TO FINANCIAL STATEMENTS 61 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ SPAIN (3.7%) MAJOR BANKS 409,665 Banco Bilbao Vizcaya Argentaria, S.A.................................. $ 6,116,585 ------------ MAJOR TELECOMMUNICATIONS 454,463 Telefonica S.A. *..................................................... 7,534,633 ------------ OTHER CONSUMER SERVICES 748,600 Amadeus Global Travel Distribution S.A. (A Shares).................... 5,570,932 ------------ TOTAL SPAIN........................................................... 19,222,150 ------------ SWEDEN (3.3%) INDUSTRIAL MACHINERY 363,591 Assa Abloy AB (Series B).............................................. 7,121,289 ------------ REGIONAL BANKS 1,353,770 Nordea AB............................................................. 10,275,430 ------------ TOTAL SWEDEN.......................................................... 17,396,719 ------------ SWITZERLAND (10.6%) CHEMICALS: AGRICULTURAL 46,529 Syngenta AG*.......................................................... 2,510,222 ------------ FOOD: MAJOR DIVERSIFIED 5,547 Nestle S.A. (Registered Shares)....................................... 13,002,394 ------------ MAJOR BANKS 69,920 UBS AG (Registered Shares)............................................ 11,468,337 ------------ OTHER CONSUMER SPECIALTIES 1,879 Compagnie Financiere Richemont AG (Series A).......................... 5,051,138 ------------ PERSONNEL SERVICES 6,460 Adecco S.A. (Registered Shares)....................................... 4,086,072 ------------ PHARMACEUTICALS: MAJOR 8,841 Novartis AG (Registered Shares)....................................... 15,707,221 329 Roche Holdings AG..................................................... 3,368,343 ------------ 19,075,564 ------------ TOTAL SWITZERLAND..................................................... 55,193,727 ------------ NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ UNITED KINGDOM (38.3%) ADVERTISING/MARKETING SERVICES 466,890 WPP Group PLC......................................................... $ 6,086,972 ------------ BEVERAGES: ALCOHOLIC 852,570 Allied Domecq PLC..................................................... 5,634,074 678,670 Diageo PLC............................................................ 7,610,096 ------------ 13,244,170 ------------ CATALOG/SPECIALTY DISTRIBUTION 849,700 Great Universal Stores PLC............................................ 6,675,881 ------------ FOOD RETAIL 1,164,844 Tesco PLC............................................................. 4,750,100 ------------ FOOD: SPECIALTY/CANDY 1,062,800 Cadbury Schweppes PLC................................................. 7,357,034 ------------ GAS DISTRIBUTORS 585,376 Lattice Group PLC*.................................................... 1,321,546 ------------ INDUSTRIAL CONGLOMERATES 661,292 Smiths Group PLC...................................................... 7,988,677 ------------ INTEGRATED OIL 958,560 BP Amoco PLC.......................................................... 7,738,973 ------------ LIFE/HEALTH INSURANCE 864,520 Prudential Corp....................................................... 13,920,697 ------------ MAJOR BANKS 339,260 Barclays PLC.......................................................... 10,509,756 ------------ MAJOR TELECOMMUNICATIONS 1,662,350 British Telecommunications PLC........................................ 14,216,371 ------------ MISCELLANEOUS COMMERCIAL SERVICES 2,187,800 Rentokil Initial PLC.................................................. 7,555,963 ------------ OIL & GAS PIPELINES 569,476 BG Group PLC.......................................................... 2,230,730 ------------ PHARMACEUTICALS: MAJOR 207,034 AstraZeneca Group PLC................................................. 10,329,722 756,262 GlaxoSmithKline PLC*.................................................. 21,369,987 ------------ 31,699,709 ------------ PUBLISHING: BOOKS/MAGAZINES 254,650 EMAP PLC.............................................................. 3,247,603 901,901 Reed International PLC................................................ 9,439,025 ------------ 12,686,628 ------------ REGIONAL BANKS 1,640,410 Egg PLC*.............................................................. 2,992,144 ------------ RESTAURANTS 1,039,971 Granada Compass PLC*.................................................. 11,327,160 ------------
SEE NOTES TO FINANCIAL STATEMENTS 62 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ------------------------------------------------------------------------------------------------ TOBACCO 253,500 Imperial Tobacco Group PLC............................................ $ 2,639,790 ------------ WIRELESS COMMUNICATIONS 9,164,953 Vodafone AirTouch PLC................................................. 33,639,690 ------------ TOTAL UNITED KINGDOM.................................................. 198,581,991 ------------ TOTAL COMMON AND PREFERRED STOCKS (COST $434,522,847)................................................... 500,674,292 ------------
PRINCIPAL AMOUNT IN THOUSANDS - ---------- SHORT-TERM INVESTMENT (a) (3.0%) U.S. GOVERNMENT AGENCY $ 15,500 Federal National Mortgage Assoc. 5.75% due 01/02/01 (COST $15,497,524).................................................. 15,497,524 ------------
TOTAL INVESTMENTS (COST $450,020,371) (b)................................................................... 99.5% 516,171,816 OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 0.5 2,773,315 ----- ------------- NET ASSETS................................................................................ 100.0% $ 518,945,131 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $87,343,682 and the aggregate gross unrealized depreciation is $21,192,237, resulting in net unrealized appreciation of $66,151,445. FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 2000:
UNREALIZED CONTRACTS TO IN EXCHANGE DELIVERY APPRECIATION/ DELIVER FOR DATE DEPRECIATION - ------------------------------------------------------- EUR 2,925,765 SEK 25,000,000 01/05/01 $(101,730) EUR 4,112,808 SEK 35,000,000 01/05/01 (158,195) EUR 3,994,195 CHF 6,000,000 01/05/01 (40,713) SEK 124,000,000 EUR 14,269,702 01/05/01 276,453 GBP 17,000,000 EUR 27,801,718 01/05/01 778,427 CHF 8,500,000 EUR 5,649,492 01/05/01 49,242 EUR 2,913,617 SEK 25,000,000 01/05/01 (90,283) EUR 4,413,762 SEK 39,000,000 01/05/01 (16,944) EUR 27,243,590 GBP 17,000,000 01/05/01 (252,488) EUR 1,641,928 CHF 2,500,000 01/05/01 4,069 SEK 80,000,000 EUR 9,058,894 02/02/01 33,832 CHF 4,000,000 EUR 2,629,935 02/02/01 (6,842) GBP 12,300,000 EUR 19,694,968 02/02/01 182,715 --------- Net unrealized appreciation....... $ 657,543 =========
CURRENCY ABBREVIATIONS: - ------------------------ GBP British Pound. EUR Euro. SEK Swedish Krona. CHF Swiss Franc.
SEE NOTES TO FINANCIAL STATEMENTS 63 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EUROPEAN GROWTH SUMMARY OF INVESTMENTS DECEMBER 31, 2000
PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Advertising/Marketing Services.................................................... $ 6,086,972 1.2% Air Freight/Couriers.............................................................. 4,858,213 0.9 Apparel/Footwear.................................................................. 7,230,924 1.4 Beverages: Alcoholic.............................................................. 13,244,171 2.6 Catalog/Specialty Distribution.................................................... 6,675,881 1.3 Chemicals: Agricultural........................................................... 2,510,222 0.5 Chemicals: Major Diversified...................................................... 3,167,760 0.6 Consumer Sundries................................................................. 1,820,500 0.4 Electronic Equipment/Instruments.................................................. 18,521,956 3.6 Electronic Production Equipment................................................... 6,962,334 1.3 Electronics/Appliances............................................................ 1,684,634 0.3 Financial Conglomerates........................................................... 7,312,936 1.4 Food Retail....................................................................... 13,211,286 2.5 Food: Major Diversified........................................................... 13,002,394 2.5 Food: Specialty/Candy............................................................. 7,357,034 1.4 Gas Distributors.................................................................. 1,321,545 0.3 Home Improvement Chains........................................................... 7,438,371 1.4 Industrial Conglomerates.......................................................... 7,988,677 1.5 Industrial Machinery.............................................................. 7,121,289 1.4 Information Technology Services................................................... 2,740,947 0.5 Integrated Oil.................................................................... 32,237,977 6.2 Life/Health Insurance............................................................. 13,920,697 2.7 Major Banks....................................................................... 61,356,614 11.8 Major Telecommunications.......................................................... 29,463,818 5.7 Miscellaneous Commercial Services................................................. 7,555,963 1.5 PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Multi-Line Insurance.............................................................. $ 11,764,435 2.3% Oil & Gas Pipelines............................................................... 2,230,730 0.4 Oil Refining/Marketing............................................................ 8,730,739 1.7 Other Consumer Services........................................................... 5,570,932 1.1 Other Consumer Specialties........................................................ 5,051,138 1.0 Packaged Software................................................................. 2,759,919 0.5 Personnel Services................................................................ 4,086,072 0.8 Pharmaceuticals: Major............................................................ 65,500,515 12.6 Publishing: Books/Magazines....................................................... 12,686,628 2.4 Regional Banks.................................................................... 13,267,574 2.6 Restaurants....................................................................... 11,327,160 2.2 Semiconductors.................................................................... 7,023,373 1.3 Specialty Telecommunications...................................................... 2,036,508 0.4 Telecommunication Equipment....................................................... 27,565,974 5.3 Tobacco........................................................................... 2,639,790 0.5 U.S. Government Agency............................................................ 15,497,524 3.0 Wireless Communications........................................................... 33,639,690 6.5 ------------ ----- $516,171,816 99.5% ------------ ----- ------------ -----
PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Common Stocks..................................................................... $498,345,583 96.0% Preferred Stock................................................................... 2,328,709 0.5 Short-Term Investment............................................................. 15,497,524 3.0 ------------ ----- $516,171,816 99.5% ------------ ----- ------------ -----
SEE NOTES TO FINANCIAL STATEMENTS 64 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON AND PREFERRED STOCKS AND WARRANTS (97.8%) AUSTRALIA (5.9%) AIRLINES 70,400 Qantas Airways Ltd...................................................................... $ 139,502 ----------- BEVERAGES: ALCOHOLIC 67,900 Foster's Brewing Group Ltd.............................................................. 178,992 ----------- ELECTRONIC EQUIPMENT/INSTRUMENTS 52,731 ERG Ltd................................................................................. 80,664 ----------- INFORMATION TECHNOLOGY SERVICES 19,850 Solution 6 Holdings Ltd................................................................. 12,206 ----------- MAJOR BANKS 10,250 Commonwealth Bank of Australia.......................................................... 176,914 25,550 National Australia Bank Ltd............................................................. 411,109 41,700 Westpac Banking Corp., Ltd.............................................................. 307,281 ----------- 895,304 ----------- MAJOR TELECOMMUNICATIONS 121,550 Telstra Corp. Ltd....................................................................... 436,030 ----------- MEDIA CONGLOMERATES 66,650 News Corp., Ltd. (The).................................................................. 521,136 ----------- MEDICAL/NURSING SERVICES 16,150 Sonic Healthcare Ltd.................................................................... 79,013 ----------- MISCELLANEOUS COMMERCIAL SERVICES 7,600 Brambles Industries Ltd................................................................. 178,273 ----------- OTHER METALS/MINERALS 43,412 Broken Hill Proprietary Co., Ltd........................................................ 459,600 27,200 Rio Tinto Ltd........................................................................... 447,183 ----------- 906,783 ----------- PHARMACEUTICALS: OTHER 8,850 CSL Limited............................................................................. 193,063 ----------- PRECIOUS METALS 137,900 Normandy Mining Ltd..................................................................... 74,707 ----------- REAL ESTATE DEVELOPMENT 14,100 Lend Lease Corp., Ltd................................................................... 131,825 ----------- SPECIALTY TELECOMMUNICATIONS 56,500 Davnet Limited.......................................................................... 14,989 ----------- TOTAL AUSTRALIA......................................................................... 3,842,487 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- CHINA (1.2%) CHEMICALS: SPECIALTY 850,000 China Petroleum & Chemical Corp.*....................................................... $ 132,945 ----------- ELECTRONIC COMPONENTS 381,000 Great Wall Technology Co. (Class H)..................................................... 124,555 ----------- INTEGRATED OIL 522,000 PetroChina Co. Ltd...................................................................... 86,998 ----------- MAJOR TELECOMMUNICATIONS 276,000 China Unicom Ltd.*...................................................................... 422,835 ----------- TOTAL CHINA............................................................................. 767,333 ----------- HONG KONG (13.2%) AIRLINES 164,000 Cathay Pacific Airways, Ltd............................................................. 302,761 ----------- BROADCASTING 41,000 Television Broadcasts Ltd............................................................... 215,507 ----------- COMPUTER PROCESSING HARDWARE 245,000 Legend Holdings Ltd..................................................................... 153,906 ----------- ELECTRONIC PRODUCTION EQUIPMENT 36,000 ASM Pacific Technology Ltd.............................................................. 51,229 ----------- GAS DISTRIBUTORS 216,200 Hong Kong & China Gas Co., Ltd.......................................................... 317,362 ----------- INDUSTRIAL CONGLOMERATES 177,900 Hutchison Whampoa, Ltd.................................................................. 2,217,992 79,700 Swire Pacific Ltd. (Class A)............................................................ 572,190 ----------- 2,790,182 ----------- INDUSTRIAL SPECIALTIES 183,000 China Merchants Holdings International Co., Ltd......................................... 132,554 ----------- INTERNET SOFTWARE/SERVICES 150,000 Timeless Software Ltd.*................................................................. 19,230 ----------- MAJOR BANKS 24,300 Hang Seng Bank Ltd...................................................................... 327,107 ----------- MISCELLANEOUS COMMERCIAL SERVICES 207,000 Cosco Pacific Ltd....................................................................... 160,554 ----------- MISCELLANEOUS MANUFACTURING 117,400 Johnson Electric Holdings Ltd........................................................... 179,858 -----------
SEE NOTES TO FINANCIAL STATEMENTS 65 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- REAL ESTATE DEVELOPMENT 67,000 Cheung Kong (Holdings) Ltd.............................................................. $ 856,805 15,000 Henderson Land Development Co., Ltd..................................................... 76,344 61,000 Hong Kong Land Holdings Ltd............................................................. 135,420 74,100 Sun Hung Kai Properties Ltd............................................................. 738,606 ----------- 1,807,175 ----------- REGIONAL BANKS 22,000 Dao Heng Bank Group Ltd................................................................. 125,510 ----------- SPECIALTY TELECOMMUNICATIONS 65,000 Asia Satellite Telecommunications Holdings Ltd.......................................... 134,997 158,944 Pacific Century CyberWorks Ltd.*........................................................ 101,885 ----------- 236,882 ----------- WHOLESALE DISTRIBUTORS 60,000 Citic Pacific Ltd....................................................................... 212,687 237,600 Li & Fung Ltd........................................................................... 431,020 ----------- 643,707 ----------- WIRELESS COMMUNICATIONS 194,200 China Mobile Ltd.*...................................................................... 1,060,604 20,500 SmarTone Telecommunications Holdings Ltd................................................ 29,567 ----------- 1,090,171 ----------- TOTAL HONG KONG......................................................................... 8,553,695 ----------- INDIA (4.6%) CHEMICALS: SPECIALTY 20,000 Reliance Industries Ltd................................................................. 145,027 ----------- COMPUTER PROCESSING HARDWARE 15,000 Digital Equipment Ltd................................................................... 153,401 ----------- ELECTRICAL PRODUCTS 30,500 Sterlite Industries Ltd................................................................. 100,308 ----------- ELECTRONIC EQUIPMENT/INSTRUMENTS 1,000 Satyam Computer Service Ltd............................................................. 6,914 ----------- INFORMATION TECHNOLOGY SERVICES 6,300 HCL Technologies Ltd.*.................................................................. 72,359 3,900 Infosys Technologies Ltd................................................................ 475,971 ----------- 548,330 ----------- MAJOR TELECOMMUNICATIONS 30,270 Videsh Sanchar Nigam Ltd................................................................ 193,825 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- MISCELLANEOUS COMMERCIAL SERVICES 25,400 Aptech Ltd.............................................................................. $ 203,743 4,760 ASE Test Ltd. (ADR)*.................................................................... 40,460 6,450 NIIT Ltd................................................................................ 219,410 ----------- 463,613 ----------- MOTOR VEHICLES 7,500 Hero Honda Motors Ltd................................................................... 140,206 ----------- PACKAGED SOFTWARE 4,000 PSI Data Systems Ltd.................................................................... 23,850 1,000 Ramco Systems Ltd.*..................................................................... 17,127 9,600 Software Solution Integrated Ltd........................................................ 293,914 ----------- 334,891 ----------- PHARMACEUTICALS: GENERIC DRUGS 7,000 Dr. Reddy's Laboratories Ltd............................................................ 190,565 ----------- SPECIALTY TELECOMMUNICATIONS 29,700 Mahanagar Telephone Nigam Ltd........................................................... 113,781 30,500 Sterlite Optical Technologies Ltd.*..................................................... 518,370 ----------- 632,151 ----------- TRUCKS/CONSTRUCTION/FARM MACHINERY 23,500 Escorts Ltd............................................................................. 67,811 ----------- TOTAL INDIA............................................................................. 2,977,042 ----------- INDONESIA (0.0%) INVESTMENT TRUSTS/MUTUAL FUNDS 500,000 Batavia Investment Fund Ltd.*........................................................... -- ----------- JAPAN (53.1%) BUILDING PRODUCTS 65,000 Sanwa Shutter Corp...................................................................... 130,057 ----------- CHEMICALS: SPECIALTY 136,000 Daicel Chemical Industries, Ltd......................................................... 412,337 100,000 Denki Kagaku Kogyo Kabushiki Kaisha..................................................... 343,381 85,000 Kaneka Corp............................................................................. 802,840 129,000 Mitsubishi Chemical Corp................................................................ 339,266 40,000 NIFCO Inc............................................................................... 373,962 64,000 Shin-Etsu Polymer Co., Ltd.............................................................. 347,820 ----------- 2,619,606 -----------
SEE NOTES TO FINANCIAL STATEMENTS 66 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMERCIAL PRINTING/FORMS 41,000 Dai Nippon Printing Co., Ltd............................................................ $ 609,358 14,000 Nissha Printing Co., Ltd................................................................ 71,315 ----------- 680,673 ----------- COMPUTER PERIPHERALS 35,000 Mitsumi Electric Co., Ltd............................................................... 580,734 ----------- COMPUTER PROCESSING HARDWARE 73,000 Fujitsu Ltd............................................................................. 1,074,111 ----------- ELECTRIC UTILITIES 14,500 Tokyo Electric Power Co................................................................. 359,174 ----------- ELECTRICAL PRODUCTS 24,000 Furukawa Electric Co.................................................................... 418,349 ----------- ELECTRONIC COMPONENTS 10,000 TDK Corp................................................................................ 971,603 ----------- ELECTRONIC DISTRIBUTORS 21,000 Ryosan Co., Ltd......................................................................... 357,798 ----------- ELECTRONIC EQUIPMENT/INSTRUMENTS 30,000 Canon, Inc.............................................................................. 1,048,493 9,400 Kyocera Corp............................................................................ 1,024,185 49,000 Matsushita Electric Industrial Co., Ltd................................................. 1,168,807 60,000 NEC Corp................................................................................ 1,095,675 60,000 Ricoh Co., Ltd.......................................................................... 1,106,160 165,000 Toshiba Corp............................................................................ 1,101,442 ----------- 6,544,762 ----------- ELECTRONICS/APPLIANCES 15,400 Aiwa Co., Ltd........................................................................... 117,737 65,000 Casio Computer Co., Ltd................................................................. 548,056 17,900 Rinnai Corp............................................................................. 295,596 17,500 Sony Corp............................................................................... 1,207,951 ----------- 2,169,340 ----------- FINANCE/RENTAL/LEASING 38,800 Hitachi Capital Corp. .................................................................. 737,353 ----------- FOOD RETAIL 17,000 FamilyMart Co., Ltd..................................................................... 428,528 ----------- FOOD: MEAT/FISH/DAIRY 26,000 Nippon Meat Packers, Inc................................................................ 353,482 ----------- FOOD: SPECIALTY/CANDY 18,000 House Foods Corp........................................................................ 234,338 ----------- HOME BUILDING 70,000 Sekisui Chemical Co., Ltd............................................................... 198,777 56,000 Sekisui House Ltd....................................................................... 511,315 ----------- 710,092 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- HOME FURNISHINGS 6,000 Sangetsu Co., Ltd....................................................................... $ 79,161 ----------- INDUSTRIAL CONGLOMERATES 120,000 Hitachi Ltd............................................................................. 1,067,366 ----------- INDUSTRIAL MACHINERY 81,000 Amada Co., Ltd.......................................................................... 601,573 80,000 Daifuku Co., Ltd........................................................................ 466,929 44,000 Daikin Industries, Ltd.................................................................. 845,784 27,000 Fuji Machine Manufacturing Co., Ltd..................................................... 721,887 60,000 Minebea Co., Ltd........................................................................ 554,653 135,000 Mitsubishi Heavy Industries, Ltd........................................................ 587,418 105,000 Tsubakimoto Chain Co.................................................................... 315,596 ----------- 4,093,840 ----------- INDUSTRIAL SPECIALTIES 30,000 Fujitec Co., Ltd........................................................................ 145,478 43,000 Lintec Corp............................................................................. 384,351 ----------- 529,829 ----------- MAJOR BANKS 16,000 Bank of Tokyo-Mitsubishi, Ltd........................................................... 158,952 ----------- MAJOR TELECOMMUNICATIONS 130 Nippon Telegraph & Telephone Corp....................................................... 934,819 ----------- MARINE SHIPPING 20,000 Mitsubishi Logistics Corp............................................................... 174,749 ----------- MISCELLANEOUS MANUFACTURING 46,000 Kurita Water Industries Ltd............................................................. 600,874 ----------- MOTOR VEHICLES 116,000 Nissan Motor Co., Ltd.*................................................................. 666,911 56,000 Suzuki Motor Corp....................................................................... 596,942 21,300 Toyota Motor Corp....................................................................... 679,292 ----------- 1,943,145 ----------- PHARMACEUTICALS: MAJOR 32,000 Sankyo Co., Ltd......................................................................... 766,099 ----------- PHARMACEUTICALS: OTHER 19,000 Ono Pharmaceutical Co., Ltd............................................................. 742,071 20,000 Yamanouchi Pharmaceutical Co., Ltd...................................................... 863,259 ----------- 1,605,330 ----------- REAL ESTATE DEVELOPMENT 42,000 Mitsubishi Estate Co., Ltd.............................................................. 447,706 -----------
SEE NOTES TO FINANCIAL STATEMENTS 67 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- RECREATIONAL PRODUCTS 25,000 Fuji Photo Film Co., Ltd................................................................ $ 1,044,124 7,800 Nintendo Co., Ltd....................................................................... 1,226,055 44,000 Yamaha Corp............................................................................. 430,581 ----------- 2,700,760 ----------- SEMICONDUCTORS 3,700 Rohm Co. Ltd............................................................................ 701,529 ----------- WHOLESALE DISTRIBUTORS 36,000 Nagase & Co., Ltd....................................................................... 133,683 18,000 Nissei Sangyo Co., Ltd.................................................................. 193,447 ----------- 327,130 ----------- TOTAL JAPAN............................................................................. 34,501,289 ----------- MALAYSIA (2.1%) BEVERAGES: ALCOHOLIC 37,000 Carlsberg Brewery (Malaysia) Berhad..................................................... 107,091 ----------- CASINO/GAMING 42,000 Tanjong PLC............................................................................. 79,016 ----------- ELECTRIC UTILITIES 54,000 Tenaga Nasional Berhad.................................................................. 164,820 ----------- MAJOR BANKS 92,000 Malayan Banking Berhad.................................................................. 326,799 ----------- MAJOR TELECOMMUNICATIONS 65,000 Digi.com Berhad*........................................................................ 83,121 76,000 Telekom Malaysia Berhad................................................................. 225,970 ----------- 309,091 ----------- REGIONAL BANKS 38,000 Commerce Asset-Holdings Berhad.......................................................... 81,489 85,000 Public Bank Berhad...................................................................... 65,755 ----------- 147,244 ----------- TOBACCO 25,400 British American Tobacco (Malaysia) Berhad.............................................. 233,917 ----------- TOTAL MALAYSIA.......................................................................... 1,367,978 ----------- SINGAPORE (5.2%) AIRLINES 45,000 Singapore Airlines Ltd.................................................................. 446,367 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- ELECTRONIC COMPONENTS 39,600 Venture Manufacturing Ltd............................................................... $ 264,914 ----------- FINANCIAL CONGLOMERATES 54,000 Keppel Corp., Ltd....................................................................... 105,260 ----------- MAJOR BANKS 64,182 DBS Group Holdings Ltd.................................................................. 725,471 ----------- MARINE SHIPPING 71,000 Neptune Orient Lines Ltd.*.............................................................. 55,686 40,500 Sembcorp Logistics Ltd.................................................................. 224,221 ----------- 279,907 ----------- MISCELLANEOUS COMMERCIAL SERVICES 66,000 SIA Engineering Co., Ltd.*.............................................................. 51,003 ----------- MISCELLANEOUS MANUFACTURING 60,000 Omni Industries Ltd..................................................................... 88,235 ----------- PROPERTY - CASUALTY INSURERS 59,000 Pacific Century Region Developments Ltd.*............................................... 30,112 ----------- PUBLISHING: NEWSPAPERS 21,019 Singapore Press Holdings Ltd............................................................ 310,315 ----------- REAL ESTATE DEVELOPMENT 64,000 Capitaland Ltd.*........................................................................ 110,727 30,400 City Developments Ltd................................................................... 141,130 ----------- 251,857 ----------- REGIONAL BANKS 51,086 Overseas - Chinese Banking Corp., Ltd................................................... 380,052 35,544 Overseas Union Bank Ltd................................................................. 166,036 22,000 United Overseas Bank Ltd................................................................ 164,937 ----------- 711,025 ----------- SEMICONDUCTORS 32,000 Chartered Semiconductor Manufacturing Ltd.*............................................. 87,474 ----------- TOTAL SINGAPORE......................................................................... 3,351,940 ----------- SOUTH KOREA (6.8%) ADVERTISING/MARKETING SERVICES 2,020 Cheil Communications Inc................................................................ 98,848 ----------- CATALOG/SPECIALTY DISTRIBUTION 1,490 LG Home Shopping Inc.................................................................... 32,693 ----------- DEPARTMENT STORES 2,070 CJ39 Shopping Corp...................................................................... 23,036 -----------
SEE NOTES TO FINANCIAL STATEMENTS 68 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- ELECTRIC UTILITIES 4,940 Korea Electric Power Corp............................................................... $ 92,016 17,190 Korea Electric Power Corp. (ADR)........................................................ 176,198 ----------- 268,214 ----------- ELECTRONIC COMPONENTS 4,046 Samsung Electro-Mechanics Co.*.......................................................... 109,533 ----------- ELECTRONICS/APPLIANCES 10,387 Samsung Electronics Co.................................................................. 1,295,301 1,440 Samsung Electronics Ltd. (Pref.)........................................................ 78,421 ----------- 1,373,722 ----------- FOOD: SPECIALTY/CANDY 3,970 Tong Yang Confectionery Corp............................................................ 53,268 ----------- MAJOR BANKS 16,488 Kookmin Bank............................................................................ 193,900 ----------- MAJOR TELECOMMUNICATIONS 310 Korea Telecom Corp...................................................................... 16,393 9,280 Korea Telecom Corp. (ADR)............................................................... 287,680 ----------- 304,073 ----------- MOTOR VEHICLES 6,010 Hyundai Motor Co., Ltd.................................................................. 57,396 ----------- REGIONAL BANKS 12,130 H&CB.................................................................................... 274,768 33,640 Shinhan Bank............................................................................ 276,129 ----------- 550,897 ----------- SEMICONDUCTORS 22,729 Hyundai Electronics Industries Co.*..................................................... 72,205 ----------- SPECIALTY TELECOMMUNICATIONS 1,820 Korea Telecom Freetel*.................................................................. 47,188 ----------- STEEL 9,300 Pohang Iron & Steel Co., Ltd. (ADR)..................................................... 144,731 ----------- TELECOMMUNICATION EQUIPMENT 9,040 Communication Network Interface Inc.*................................................... 15,197 11,090 Humax Co., Ltd.*........................................................................ 91,906 ----------- 107,103 ----------- WIRELESS COMMUNICATIONS 780 SK Telecom Co., Ltd..................................................................... 155,754 32,500 SK Telecom Co., Ltd. (ADR).............................................................. 765,781 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 11,250 Telson Electronics Co., Ltd............................................................. $ 48,126 ----------- 969,661 ----------- TOTAL SOUTH KOREA....................................................................... 4,406,468 ----------- TAIWAN (4.6%) CHEMICALS: SPECIALTY 26,000 Nan Ya Plastic Corp..................................................................... 29,080 ----------- COMPUTER PERIPHERALS 9,000 Ambit Microsystems Corp................................................................. 38,122 13,230 Hon Hai Precision Industry Co., Ltd. (GDR)*............................................. 157,106 23,000 Hon Hai Precison Industry Co., Ltd...................................................... 116,491 ----------- 311,719 ----------- COMPUTER PROCESSING HARDWARE 23,000 Advantech Co., Ltd...................................................................... 72,807 68,850 Asustek Computer Inc. (GDR)............................................................. 208,271 91 Asustek Computer Inc. (GDR) - 144A* +................................................... 275 50,000 Compal Electronics Inc.................................................................. 67,682 16,930 Compal Electronics Inc. (GDS)........................................................... 122,742 6,535 D-Link Corp. (GDR)...................................................................... 28,591 20,000 Quanta Computer Inc..................................................................... 52,457 ----------- 552,825 ----------- ELECTRONIC COMPONENTS 83,000 Yageo Corp.*............................................................................ 65,309 ----------- ELECTRONIC EQUIPMENT/INSTRUMENTS 38,000 Delta Electronics, Inc.................................................................. 118,571 13,000 Zinwell Corp............................................................................ 18,068 ----------- 136,639 ----------- ELECTRONIC PRODUCTION EQUIPMENT 258,000 Taiwan Semiconductor Manufacturing Co. Ltd. *........................................... 618,360 ----------- FOOD RETAIL 31,000 President Chain Store Corp.............................................................. 81,308 ----------- FOOD: SPECIALTY/CANDY 83,000 Uni-President Enterprises Corp.......................................................... 55,050 ----------- REGIONAL BANKS 117,000 China Trust Commercial Bank*............................................................ 70,193 151,000 Taishin International Bank*............................................................. 61,456 ----------- 131,649 -----------
SEE NOTES TO FINANCIAL STATEMENTS 69 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- SEMICONDUCTORS 20,554 Advanced Semiconductor Engineering, Inc. (GDR)*......................................... $ 62,945 11,289 Macronix International Co., Ltd. (ADR).................................................. 132,646 103,000 Powerchip Semiconductor Corp.*.......................................................... 51,236 26,000 Promos Technologies Inc.*............................................................... 22,888 9,000 Realtek Semiconductor Corp.............................................................. 24,420 166,000 Siliconware Precision Industries Co.*................................................... 92,083 30,900 Siliconware Precision Industries Co. (ADR)*............................................. 77,250 265,000 United Microelectronics Corp., Ltd.*.................................................... 384,278 11,129 Winbond Electronics Corp. (GDR)*........................................................ 104,334 ----------- 952,080 ----------- TEXTILES 2,233 Far Eastern Textiles Ltd. (GDS)......................................................... 15,637 9,108 Far Eastern Textiles Ltd. (GDS) - 144A* +............................................... 63,756 ----------- 79,393 ----------- TOTAL TAIWAN............................................................................ 3,013,412 ----------- THAILAND (1.1%) CONSTRUCTION MATERIALS 30,666 Siam City Cement Co. PCL*............................................................... 88,222 ----------- ELECTRONIC COMPONENTS 26,433 Delta Electronics Public Co., Ltd....................................................... 112,546 ----------- MOVIES/ENTERTAINMENT 26,600 BEC World PCL........................................................................... 132,235 ----------- REAL ESTATE DEVELOPMENT 301,800 Golden Land Property Development Company Ltd.*.......................................... 28,478 ----------- REGIONAL BANKS 150,700 Siam Commercial Bank (Warrants due 05/10/02)*........................................... 9,365 202,100 Thai Farmers Bank PCL................................................................... 100,003 ----------- 109,368 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- WIRELESS COMMUNICATIONS 20,700 Advanced Info Service PCL*.............................................................. $ 200,092 27,400 Total Access Communication PCL.......................................................... 73,706 ----------- 273,798 ----------- TOTAL THAILAND.......................................................................... 744,647 -----------
TOTAL INVESTMENTS (COST $70,654,296) (a)..................................................................... 97.8% 63,526,291 OTHER ASSETS IN EXCESS OF LIABILITIES...................................................... 2.2 1,411,312 ----- ------------ NET ASSETS................................................................................. 100.0% $ 64,937,603 ----- ------------ ----- ------------
- --------------------- ADR American Depository Receipt. GDR Global Depository Receipt. GDS Global Depository Shares. * Non-income producing security. + Resale is restricted to qualified institutional investors. (a) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $5,598,719 and the aggregate gross unrealized depreciation is $12,726,724, resulting in net unrealized depreciation of $7,128,005. FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT DECEMBER 31, 2000:
UNREALIZED CONTRACTS TO IN EXCHANGE DELIVERY APPRECIATION DELIVER FOR DATE (DEPRECIATION) - ------------------------------------------------------- HKD 7,300,604 $ 935,999 01/02/01 $ 48 AUD 1,688,399 $ 933,685 01/03/01 (9,286) SGD 1,086,824 $ 626,773 01/03/01 -- THB 175,194 $ 4,117 01/03/01 85 JPY 272,164,203 $2,376,980 01/04/01 (1,038) JPY 111,987,135 $ 973,886 01/05/01 (4,595) -------- Net unrealized depreciation...... $(14,787) ========
CURRENCY ABBREVIATIONS: - ------------------------ AUD Australian Dollar. HKD Hong Kong Dollar. JPY Japanese Yen. SGD Singapore Dollar. THB Thai Bat.
SEE NOTES TO FINANCIAL STATEMENTS 70 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - PACIFIC GROWTH SUMMARY OF INVESTMENTS DECEMBER 31, 2000
PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Advertising/Marketing Services..................................................... $ 98,848 0.2% Airlines........................................................................... 888,630 1.4 Beverages: Alcoholic............................................................... 286,083 0.4 Broadcasting....................................................................... 215,507 0.3 Building Products.................................................................. 130,057 0.2 Casino/Gaming...................................................................... 79,016 0.1 Catalog/Specialty Distribution..................................................... 32,693 0.1 Chemicals: Specialty............................................................... 2,926,658 4.5 Commercial Printing/Forms.......................................................... 680,673 1.1 Computer Peripherals............................................................... 892,453 1.4 Computer Processing Hardware....................................................... 1,934,243 3.0 Construction Materials............................................................. 88,222 0.1 Department Stores.................................................................. 23,036 0.0 Electric Utilities................................................................. 792,208 1.2 Electrical Products................................................................ 518,657 0.8 Electronic Components.............................................................. 1,648,460 2.5 Electronic Distributors............................................................ 357,798 0.6 Electronic Equipment/Instruments............................................................ 6,768,979 10.4 Electronic Production Equipment.................................................... 669,589 1.0 Electronics/Appliances............................................................. 3,543,062 5.5 Finance/Rental/Leasing............................................................. 737,353 1.1 Financial Conglomerates............................................................ 105,260 0.2 Food Retail........................................................................ 509,836 0.8 Food: Meat/Fish/Dairy.............................................................. 353,482 0.5 Food: Specialty/Candy.............................................................. 342,656 0.5 Gas Distributors................................................................... 317,362 0.6 Home Building...................................................................... 710,092 1.1 Home Furnishings................................................................... 79,161 0.1 Industrial Conglomerates........................................................... 3,857,548 5.9 Industrial Machinery............................................................... 4,093,840 6.3 Industrial Specialties............................................................. 662,383 1.0 Information Technology Services.................................................... 560,536 0.9 Integrated Oil..................................................................... 86,998 0.1 Internet Software/Services......................................................... 19,230 0.0 Major Banks........................................................................ 2,627,533 4.1 Major Telecommunications........................................................... 2,600,673 4.0 PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Marine Shipping.................................................................... $ 454,656 0.7% Media Conglomerates................................................................ 521,136 0.8 Medical/Nursing Services........................................................... 79,013 0.1 Miscellaneous Commercial Services.................................................. 853,443 1.3 Miscellaneous Manufacturing........................................................ 868,967 1.3 Motor Vehicles..................................................................... 2,140,747 3.3 Movies/Entertainment............................................................... 132,235 0.2 Other Metals/Minerals.............................................................. 906,783 1.4 Packaged Software.................................................................. 334,891 0.5 Pharmaceuticals: Generic Drugs..................................................... 190,565 0.3 Pharmaceuticals: Major............................................................. 766,099 1.2 Pharmaceuticals: Other............................................................. 1,798,393 2.8 Precious Metals.................................................................... 74,707 0.1 Property - Casualty Insurers....................................................... 30,112 0.0 Publishing: Newspapers............................................................. 310,315 0.5 Real Estate Development............................................................ 2,667,041 4.1 Recreational Products.............................................................. 2,700,760 4.2 Regional Banks..................................................................... 1,775,693 2.7 Semiconductors..................................................................... 1,813,288 2.8 Specialty Telecommunications....................................................... 931,210 1.4 Steel.............................................................................. 144,731 0.2 Telecommunication Equipment........................................................ 107,103 0.2 Textiles........................................................................... 79,393 0.1 Tobacco............................................................................ 233,917 0.4 Trucks/Construction/Farm Machinery................................................. 67,811 0.1 Wholesale Distributors............................................................. 970,837 1.5 Wireless Communications............................................................ 2,333,630 3.6 ----------- ----- $63,526,291 97.8% ----------- ----- ----------- -----
PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Common Stocks...................................................................... $63,438,505 97.7% Preferred Stocks................................................................... 78,421 0.1 Warrants........................................................................... 9,365 0.0 ----------- ----- $63,526,291 97.8% ----------- ----- ----------- -----
SEE NOTES TO FINANCIAL STATEMENTS 71 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON STOCKS (89.6%) ADVERTISING/MARKETING SERVICES (1.9%) 214,000 Interpublic Group of Companies, Inc.................................................. $ 9,108,375 105,000 Omnicom Group, Inc................................................................... 8,701,875 290,000 WPP Group PLC (ADR) (United Kingdom)................................................. 18,215,625 -------------- 36,025,875 -------------- AEROSPACE & DEFENSE (0.2%) 62,300 Boeing Co............................................................................ 4,111,800 -------------- AIR FREIGHT/COURIERS (0.8%) 175,800 CNF Transportation, Inc.............................................................. 5,944,237 150,000 United Parcel Service, Inc. (Class B)................................................ 8,821,875 -------------- 14,766,112 -------------- AIRLINES (0.2%) 100,000 AMR Corp.*........................................................................... 3,918,750 -------------- ALUMINUM (0.3%) 182,140 Alcoa, Inc........................................................................... 6,101,690 -------------- APPAREL/FOOTWEAR (0.3%) 84,000 Nike, Inc. (Class B)................................................................. 4,688,250 -------------- APPAREL/FOOTWEAR RETAIL (1.0%) 175,000 Gap, Inc. (The)...................................................................... 4,462,500 832,690 Limited, Inc. (The).................................................................. 14,207,773 -------------- 18,670,273 -------------- BEVERAGES: ALCOHOLIC (1.5%) 593,700 Anheuser-Busch Companies, Inc........................................................ 27,013,350 -------------- BEVERAGES: NON-ALCOHOLIC (2.1%) 149,000 Coca-Cola Co......................................................................... 9,079,687 604,000 PepsiCo, Inc......................................................................... 29,935,750 -------------- 39,015,437 -------------- BIOTECHNOLOGY (5.2%) 225,000 Genentech, Inc.*..................................................................... 18,337,500 233,469 Genzyme Corp. (General Division)*.................................................... 20,997,591 85,000 IDEC Pharmaceuticals Corp.*.......................................................... 16,112,812 239,200 Invitrogen Corp.*.................................................................... 20,660,900 111,000 Medarex, Inc.*....................................................................... 4,523,250 174,000 Myriad Genetics, Inc.*............................................................... 14,398,500 26,000 Protein Design Labs, Inc.*........................................................... 2,258,750 -------------- 97,289,303 -------------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- CABLE/SATELLITE TV (3.7%) 350,870 Adelphia Communications Corp. (Class A)*............................................. $ 18,113,664 12,700 Cablevision Systems Corp. (Class A)*................................................. 1,078,706 898,500 Charter Communications, Inc. (Class A)*.............................................. 20,384,719 450,000 Comcast Corp. (Class A Special)*..................................................... 18,787,500 207,000 Cox Communications, Inc. (Class A)*.................................................. 9,638,437 -------------- 68,003,026 -------------- COMPUTER COMMUNICATIONS (2.0%) 236,600 Brocade Communications Systems, Inc.*................................................ 21,722,837 53,500 Extreme Networks, Inc.*.............................................................. 2,093,187 61,000 Juniper Networks, Inc.*.............................................................. 7,689,812 125,000 Proxim, Inc.*........................................................................ 5,375,000 -------------- 36,880,836 -------------- COMPUTER PERIPHERALS (0.7%) 134,000 EMC Corp.*........................................................................... 8,911,000 59,000 QLogic Corp.*........................................................................ 4,543,000 -------------- 13,454,000 -------------- COMPUTER PROCESSING HARDWARE (0.5%) 108,000 Palm, Inc.*.......................................................................... 3,057,750 238,000 Sun Microsystems, Inc.*.............................................................. 6,634,250 -------------- 9,692,000 -------------- DATA PROCESSING SERVICES (0.7%) 195,000 Automatic Data Processing, Inc....................................................... 12,345,937 -------------- DISCOUNT STORES (1.2%) 140,000 Target Corp.......................................................................... 4,515,000 338,000 Wal-Mart Stores, Inc................................................................. 17,956,250 -------------- 22,471,250 -------------- DRUGSTORE CHAINS (1.1%) 345,000 CVS Corp............................................................................. 20,678,437 -------------- ELECTRIC UTILITIES (2.8%) 73,000 Dominion Resources, Inc.............................................................. 4,891,000 254,100 Duke Energy Corp..................................................................... 21,662,025 189,000 Exelon Corp.......................................................................... 13,269,690 69,000 FPL Group, Inc....................................................................... 4,950,750 224,000 Southern Co. (The)................................................................... 7,448,000 -------------- 52,221,465 -------------- ELECTRONIC COMPONENTS (0.6%) 239,200 Sawtek, Inc.*........................................................................ 11,048,050 --------------
SEE NOTES TO FINANCIAL STATEMENTS 72 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- ELECTRONIC PRODUCTION EQUIPMENT (0.5%) 125,200 Cymer, Inc.*......................................................................... $ 3,221,944 4,800 Photronics, Inc.*.................................................................... 112,500 148,000 Teradyne, Inc.*...................................................................... 5,513,000 -------------- 8,847,444 -------------- FINANCE/RENTAL/LEASING (2.6%) 220,000 Countrywide Credit Industries, Inc................................................... 11,055,000 215,000 Fannie Mae........................................................................... 18,651,250 275,000 Freddie Mac.......................................................................... 18,940,625 -------------- 48,646,875 -------------- FINANCIAL CONGLOMERATES (1.5%) 386,200 Citigroup, Inc....................................................................... 19,720,337 217,000 Hancock (John) Financial Services.................................................... 8,164,625 -------------- 27,884,962 -------------- FOOD RETAIL (0.8%) 563,000 Kroger Co.*.......................................................................... 15,236,187 -------------- FOOD: MAJOR DIVERSIFIED (2.9%) 252,920 Groupe Danone (ADR) (France)......................................................... 7,764,644 174,000 Heinz (H.J.) Co...................................................................... 8,254,125 389,000 Sara Lee Corp........................................................................ 9,554,812 451,500 Unilever N.V. (Netherlands).......................................................... 28,416,281 -------------- 53,989,862 -------------- FOOD: MEAT/FISH/DAIRY (0.2%) 147,000 ConAgra, Inc......................................................................... 3,822,000 -------------- FOOD: SPECIALTY/CANDY (1.1%) 320,000 Hershey Foods Corp................................................................... 20,600,000 -------------- HOME IMPROVEMENT CHAINS (0.2%) 93,530 Home Depot, Inc. (The)............................................................... 4,273,152 -------------- HOSPITAL/NURSING MANAGEMENT (2.8%) 480,000 HCA-The Healthcare Corp.............................................................. 21,124,800 480,000 Tenet Healthcare Corp.*.............................................................. 21,330,000 76,000 Universal Health Services, Inc. (Class B)*........................................... 8,493,000 -------------- 50,947,800 -------------- HOUSEHOLD/PERSONAL CARE (2.8%) 367,100 Avon Products, Inc................................................................... 17,574,912 144,000 Colgate-Palmolive Co................................................................. 9,295,200 346,000 Kimberly-Clark Corp.................................................................. 24,458,740 -------------- 51,328,852 -------------- INDUSTRIAL CONGLOMERATES (1.8%) 180,000 General Electric Co.................................................................. 8,628,750 114,000 Minnesota Mining & Manufacturing Co.................................................. 13,737,000 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 133,000 United Technologies Corp............................................................. $ 10,457,125 -------------- 32,822,875 -------------- INFORMATION TECHNOLOGY SERVICES (0.5%) 116,000 Electronic Data Systems Corp......................................................... 6,699,000 67,600 PeopleSoft, Inc.*.................................................................... 2,513,875 -------------- 9,212,875 -------------- INTEGRATED OIL (1.5%) 325,000 Exxon Mobil Corp..................................................................... 28,254,687 -------------- INTERNET SOFTWARE/SERVICES (1.2%) 253,200 BEA Systems, Inc.*................................................................... 17,043,525 49,700 Openwave Systems Inc.*............................................................... 2,382,494 59,100 WatchGuard Technologies, Inc.*....................................................... 1,869,037 -------------- 21,295,056 -------------- INVESTMENT BANKS/BROKERS (4.2%) 156,470 Goldman Sachs Group, Inc. (The)...................................................... 16,732,511 189,000 Legg Mason, Inc...................................................................... 10,300,500 266,600 Lehman Brothers Holdings, Inc........................................................ 18,028,825 339,600 Merrill Lynch & Co., Inc............................................................. 23,156,475 297,000 Schwab (Charles) Corp................................................................ 8,427,375 -------------- 76,645,686 -------------- INVESTMENT MANAGERS (1.0%) 305,000 Amvescap PLC (ADR) (United Kingdom).................................................. 13,267,500 168,000 W.P. Stewart & Co. Ltd............................................................... 4,368,000 -------------- 17,635,500 -------------- LIFE/HEALTH INSURANCE (0.6%) 294,000 Torchmark Corp....................................................................... 11,300,625 -------------- MAJOR BANKS (2.7%) 175,000 Bank of New York Co., Inc............................................................ 9,657,812 278,600 Chase Manhattan Corp. (The)*......................................................... 12,658,888 131,000 PNC Financial Services Group, Inc.................................................... 9,571,188 329,000 Wells Fargo & Co..................................................................... 18,321,188 -------------- 50,209,076 -------------- MAJOR TELECOMMUNICATIONS (1.5%) 395,000 SBC Communications, Inc.............................................................. 18,861,250 167,600 Verizon Communications Inc........................................................... 8,400,950 -------------- 27,262,200 --------------
SEE NOTES TO FINANCIAL STATEMENTS 73 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- MEDICAL SPECIALTIES (2.6%) 404,600 ALZA Corp.*.......................................................................... $ 17,195,500 243,000 Baxter International, Inc............................................................ 21,459,938 231,600 Biomet, Inc.......................................................................... 9,191,625 -------------- 47,847,063 -------------- MEDICAL/NURSING SERVICES (0.2%) 275,000 Healthsouth Corp.*................................................................... 4,485,938 -------------- METAL FABRICATIONS (0.0%) 5,000 Coflexip, S.A. (ADR) (France)........................................................ 314,375 -------------- MISCELLANEOUS COMMERCIAL SERVICES (0.3%) 138,000 CheckFree Corp.*..................................................................... 5,942,625 -------------- MULTI-LINE INSURANCE (2.4%) 438,000 American International Group, Inc.................................................... 43,170,375 10,800 Hartford Financial Services Group, Inc. (The)........................................ 762,750 -------------- 43,933,125 -------------- OIL & GAS PRODUCTION (0.1%) 28,975 Anardarko Petroleum Corp............................................................. 2,059,543 -------------- PACKAGED SOFTWARE (2.7%) 157,200 Check Point Software Technologies Ltd. (Israel)*..................................... 20,996,025 62,300 i2 Technologies, Inc.*............................................................... 3,387,563 86,800 Mercury Interactive Corp.*........................................................... 7,833,700 51,200 NetIQ Corp.*......................................................................... 4,473,600 283,620 Oracle Corp.*........................................................................ 8,242,706 78,000 Siebel Systems, Inc.*................................................................ 5,274,750 -------------- 50,208,344 -------------- PHARMACEUTICALS: MAJOR (8.1%) 697,000 Abbott Laboratories.................................................................. 33,760,938 463,000 American Home Products Corp.......................................................... 29,423,650 180,000 Astrazeneca PLC (ADR) (United Kingdom)............................................... 9,270,000 280,000 Bristol-Myers Squibb Co.............................................................. 20,702,500 101,000 Lilly (Eli) & Co..................................................................... 9,399,313 192,000 Merck & Co., Inc..................................................................... 17,976,000 96,000 Pharmacia Corp....................................................................... 5,856,000 396,000 Schering-Plough Corp................................................................. 22,473,000 -------------- 148,861,401 -------------- PHARMACEUTICALS: OTHER (4.6%) 194,900 Allergan, Inc........................................................................ 18,868,756 426,642 Biovail Corp. (Canada)*.............................................................. 16,570,775 137,200 Forest Laboratories, Inc.*........................................................... 18,230,450 355,000 King Pharmaceuticals, Inc............................................................ 18,349,063 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 183,650 Teva Pharmaceutical Industries Ltd. (ADR) (Israel)................................... $ 13,452,363 -------------- 85,471,407 -------------- PROPERTY - CASUALTY INSURERS (2.0%) 533,000 Allstate Corp. (The) (Note 4)........................................................ 23,218,813 196,000 Everest Re Group, Ltd. (Bermuda)..................................................... 14,038,500 -------------- 37,257,313 -------------- PULP & PAPER (0.3%) 133,000 International Paper Co............................................................... 5,428,063 -------------- REGIONAL BANKS (0.6%) 197,000 Fifth Third Bancorp.................................................................. 11,770,750 -------------- RESTAURANTS (0.5%) 52,000 Brinker International, Inc.*......................................................... 2,197,000 90,000 Darden Restaurants, Inc.............................................................. 2,058,750 107,000 Starbucks Corp.*..................................................................... 4,734,750 -------------- 8,990,500 -------------- SAVINGS BANKS (1.2%) 317,700 Golden West Financial Corp........................................................... 21,444,750 -------------- SEMICONDUCTORS (1.4%) 118,900 Alpha Industries, Inc.*.............................................................. 4,399,300 104,400 Altera Corp.*........................................................................ 2,747,025 360,200 Micron Technology, Inc.*............................................................. 12,787,100 107,600 Xilinx, Inc.*........................................................................ 4,963,050 -------------- 24,896,475 -------------- SPECIALTY INSURANCE (1.7%) 135,000 MGIC Investment Corp................................................................. 9,104,063 154,000 PMI Group, Inc....................................................................... 10,423,875 157,000 Radian Group, Inc.................................................................... 11,784,813 -------------- 31,312,751 -------------- TELECOMMUNICATION EQUIPMENT (3.3%) 111,900 Comverse Technology, Inc.*........................................................... 12,155,138 449,000 Motorola, Inc........................................................................ 9,092,250 520,000 Nokia Oyj (ADR) (Finland)............................................................ 22,620,000 215,000 Powerwave Technologies, Inc.*........................................................ 12,577,500 147,700 Tekelec*............................................................................. 4,431,000 -------------- 60,875,888 -------------- WIRELESS COMMUNICATIONS (0.4%) 226,957 Vodafone Group PLC (ADR) (United Kingdom)............................................ 8,127,898 -------------- TOTAL COMMON STOCKS (COST $1,527,414,494)................................................................ 1,657,839,764 --------------
SEE NOTES TO FINANCIAL STATEMENTS 74 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS (13.5%) U.S. GOVERNMENT AGENCY (a) (13.5%) $249,500 Federal National Mortgage Assoc. 5.75% due 01/02/01 (COST $249,460,150)................................................................ $ 249,460,150 -------------- REPURCHASE AGREEMENT (0.0%) 215 The Bank of New York 3.75% due 01/02/01 (dated 12/29/00; proceeds $215,193) (b) (COST $215,103).................................................................... 215,103 -------------- TOTAL SHORT-TERM INVESTMENTS (COST $249,675,253).................................................................. 249,675,253 --------------
TOTAL INVESTMENTS (COST $1,777,089,746) (c)............................................................... 103.1% 1,907,515,017 LIABILITIES IN EXCESS OF OTHER ASSETS................................................... (3.1) (57,478,271) ----- --------------- NET ASSETS.............................................................................. 100.0% $ 1,850,036,746 ----- --------------- ----- ---------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) Purchased on a discount basis. The interest rate shown has been adjusted to reflect a money market equivalent yield. (b) Collateralized by $204,765 Federal Home Loan Mortgage Corp. 6.875% due 01/15/05 valued at $219,408. (c) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $184,004,925 and the aggregate gross unrealized depreciation is $53,579,654, resulting in net unrealized appreciation of $130,425,271. SEE NOTES TO FINANCIAL STATEMENTS 75 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON STOCKS (98.7%) ADVERTISING/MARKETING SERVICES (0.2%) 5,787 Interpublic Group of Companies, Inc................................................... $ 246,309 3,330 Omnicom Group, Inc.................................................................... 275,974 ------------ 522,283 ------------ AEROSPACE & DEFENSE (1.1%) 16,709 Boeing Co............................................................................. 1,102,794 3,747 General Dynamics Corp................................................................. 292,266 1,887 Goodrich (B.F.) Co. (The)............................................................. 68,640 8,101 Lockheed Martin Corp.................................................................. 275,029 1,351 Northrop Grumman Corp................................................................. 112,133 6,392 Raytheon Co. (Class B)................................................................ 198,551 2,675 Textron, Inc.......................................................................... 124,387 ------------ 2,173,800 ------------ AGRICULTURAL COMMODITIES/MILLING (0.2%) 11,909 Archer-Daniels-Midland Co............................................................. 178,635 ------------ AIR FREIGHT/COURIERS (0.1%) 5,361 FedEx Corp.*.......................................................................... 214,226 ------------ AIRLINES (0.3%) 2,834 AMR Corp.*............................................................................ 111,057 2,312 Delta Air Lines, Inc.................................................................. 116,033 9,438 Southwest Airlines Co................................................................. 316,456 1,261 US Airways Group, Inc.*............................................................... 51,149 ------------ 594,695 ------------ ALTERNATIVE POWER GENERATION (0.3%) 8,625 AES Corp. (The)*...................................................................... 477,609 5,299 Calpine Corp.*........................................................................ 238,786 ------------ 716,395 ------------ ALUMINUM (0.3%) 6,078 Alcan Aluminium, Ltd. (Canada)........................................................ 207,792 16,267 Alcoa, Inc............................................................................ 544,944 ------------ 752,736 ------------ APPAREL/FOOTWEAR (0.3%) 983 Liz Claiborne, Inc.................................................................... 40,917 5,080 Nike, Inc. (Class B).................................................................. 283,527 1,050 Reebok International Inc. (United Kingdom)*........................................... 28,707 2,113 VF Corp............................................................................... 76,575 ------------ 429,726 ------------ APPAREL/FOOTWEAR RETAIL (0.3%) 15,980 Gap, Inc. (The)....................................................................... 407,490 7,964 Limited, Inc. (The)................................................................... 135,886 2,367 Nordstrom, Inc........................................................................ 43,050 5,290 TJX Companies, Inc. (The)............................................................. 146,797 ------------ 733,223 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- AUTO PARTS: O.E.M. (0.3%) 2,755 Dana Corp............................................................................. $ 42,186 10,528 Delphi Automotive Systems Corp........................................................ 118,440 1,316 Eaton Corp............................................................................ 98,947 1,615 Johnson Controls, Inc................................................................. 83,980 2,338 TRW Inc............................................................................... 90,597 2,413 Visteon Corp.......................................................................... 27,749 ------------ 461,899 ------------ AUTOMOTIVE AFTERMARKET (0.1%) 1,298 Cooper Tire & Rubber Co............................................................... 13,791 3,228 Genuine Parts Co...................................................................... 84,533 2,963 Goodyear Tire & Rubber Co. (The)...................................................... 68,119 ------------ 166,443 ------------ BEVERAGES: ALCOHOLIC (0.4%) 16,964 Anheuser-Busch Companies, Inc......................................................... 771,862 1,287 Brown-Forman Corp. (Class B).......................................................... 85,585 681 Coors (Adolph) Co. (Class B).......................................................... 54,693 ------------ 912,140 ------------ BEVERAGES: NON-ALCOHOLIC (1.9%) 46,636 Coca Cola Co.......................................................................... 2,841,881 7,858 Coca-Cola Enterprises Inc............................................................. 149,302 27,149 PepsiCo, Inc.......................................................................... 1,345,572 ------------ 4,336,755 ------------ BIOTECHNOLOGY (0.8%) 19,427 Amgen Inc.*........................................................................... 1,242,114 2,782 Biogen, Inc.*......................................................................... 167,094 3,602 Chiron Corp.*......................................................................... 160,289 3,962 MedImmune, Inc.*...................................................................... 188,938 ------------ 1,758,435 ------------ BROADCASTING (0.2%) 10,997 Clear Channel Communications, Inc.*................................................... 532,667 ------------ BUILDING PRODUCTS (0.1%) 8,434 Masco Corp............................................................................ 216,648 ------------ CABLE/SATELLITE TV (0.3%) 16,979 Comcast Corp. (Class A Special)*...................................................... 708,873 ------------ CASINO/GAMING (0.0%) 2,195 Harrah's Entertainment, Inc.*......................................................... 57,893 ------------ CHEMICALS: MAJOR DIVERSIFIED (0.8%) 12,759 Dow Chemical Co....................................................................... 467,298 19,614 Du Pont (E.I.) de Nemours & Co., Inc.................................................. 947,601 1,444 Eastman Chemical Co................................................................... 70,395 1,982 Hercules Inc.......................................................................... 37,782
SEE NOTES TO FINANCIAL STATEMENTS 76 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 4,132 Rohm & Haas Co........................................................................ $ 150,043 2,543 Union Carbide Corp.................................................................... 136,845 ------------ 1,809,964 ------------ CHEMICALS: SPECIALTY (0.2%) 4,312 Air Products & Chemicals, Inc......................................................... 176,792 2,356 Engelhard Corp........................................................................ 48,003 561 FMC Corp.*............................................................................ 40,217 957 Great Lakes Chemical Corp............................................................. 35,588 2,983 Praxair, Inc.......................................................................... 132,371 1,452 Sigma-Aldrich Corp.................................................................... 57,082 ------------ 490,053 ------------ COAL (0.0%) 1,423 Massey Energy Company................................................................. 18,143 ------------ COMMERCIAL PRINTING/FORMS (0.0%) 1,335 Deluxe Corp........................................................................... 33,735 2,295 Donnelley (R.R.) & Sons Co............................................................ 61,965 ------------ 95,700 ------------ COMPUTER COMMUNICATIONS (2.4%) 1,828 Adaptec, Inc.*........................................................................ 18,737 5,233 Avaya Inc............................................................................. 53,976 3,466 Cabletron Systems, Inc.*.............................................................. 52,207 135,352 Cisco Systems, Inc.*.................................................................. 5,177,214 ------------ 5,302,134 ------------ COMPUTER PERIPHERALS (1.5%) 41,149 EMC Corp.*............................................................................ 2,736,408 2,391 Lexmark International Group, Inc.*.................................................... 105,951 5,944 Network Appliance, Inc.*.............................................................. 381,809 1,721 QLogic Corp.*......................................................................... 132,517 2,753 Symbol Technologies, Inc.............................................................. 99,108 ------------ 3,455,793 ------------ COMPUTER PROCESSING HARDWARE (3.4%) 6,111 Apple Computer, Inc.*................................................................. 90,901 31,971 Compaq Computer Corp.................................................................. 481,164 48,650 Dell Computer Corp.*.................................................................. 848,334 6,081 Gateway, Inc.*........................................................................ 109,397 37,188 Hewlett-Packard Co.................................................................... 1,173,746 32,994 International Business Machines Corp.................................................. 2,804,490 1,814 NCR Corp.*............................................................................ 89,113 10,642 Palm, Inc.*........................................................................... 301,302 60,556 Sun Microsystems, Inc.*............................................................... 1,687,998 ------------ 7,586,445 ------------ CONSTRUCTION MATERIALS (0.0%) 1,899 Vulcan Materials Co................................................................... 90,915 ------------ CONSUMER SUNDRIES (0.0%) 1,189 American Greetings Corp. (Class A).................................................... 11,221 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- CONTAINERS/PACKAGING (0.1%) 525 Ball Corp............................................................................. $ 24,183 981 Bemis Company, Inc.................................................................... 32,925 2,972 Pactiv Corp.*......................................................................... 36,778 1,546 Sealed Air Corp.*..................................................................... 47,153 922 Temple-Inland, Inc.................................................................... 49,442 ------------ 190,481 ------------ CONTRACT DRILLING (0.2%) 2,763 Nabors Industries, Inc.*.............................................................. 163,431 1,740 Rowan Companies, Inc.*................................................................ 46,980 3,963 Transocean Sedco Forex Inc............................................................ 182,298 ------------ 392,709 ------------ DATA PROCESSING SERVICES (0.7%) 11,870 Automatic Data Processing, Inc........................................................ 751,519 2,739 Ceridian Corp.*....................................................................... 54,609 7,429 First Data Corp....................................................................... 391,415 7,001 Paychex, Inc.......................................................................... 340,424 ------------ 1,537,967 ------------ DEPARTMENT STORES (0.4%) 1,727 Dillard's, Inc. (Class A)............................................................. 20,400 3,797 Federated Department Stores, Inc.*.................................................... 132,895 6,238 Kohl's Corp.*......................................................................... 380,518 5,600 May Department Stores Co.............................................................. 183,400 4,826 Penney (J.C.) Co., Inc................................................................ 52,483 6,285 Sears, Roebuck & Co................................................................... 218,404 ------------ 988,100 ------------ DISCOUNT STORES (2.5%) 2,055 Consolidated Stores Corp.*............................................................ 21,834 8,412 Costco Wholesale Corp.*............................................................... 335,954 6,196 Dollar General Corp................................................................... 116,949 9,091 Kmart Corp.*.......................................................................... 48,296 16,845 Target Corp........................................................................... 543,251 84,002 Wal-Mart Stores, Inc.................................................................. 4,462,606 ------------ 5,528,890 ------------ DRUGSTORE CHAINS (0.6%) 7,368 CVS Corp.............................................................................. 441,619 683 Longs Drug Stores Corp................................................................ 16,477 19,052 Walgreen Co........................................................................... 796,612 ------------ 1,254,708 ------------ ELECTRIC UTILITIES (2.3%) 2,077 Allegheny Energy, Inc................................................................. 100,085 2,581 Ameren Corp........................................................................... 119,533 6,056 American Electric Power Co., Inc...................................................... 281,604 2,990 Cinergy Corp.......................................................................... 105,024 2,273 CMS Energy Corp....................................................................... 72,026 3,987 Consolidated Edison, Inc.............................................................. 153,499 2,831 Constellation Energy Group, Inc....................................................... 127,572
SEE NOTES TO FINANCIAL STATEMENTS 77 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 4,497 Dominion Resources, Inc............................................................... $ 301,299 2,683 DTE Energy Co......................................................................... 104,469 6,936 Duke Energy Corp...................................................................... 591,294 6,127 Edison International.................................................................. 95,734 4,192 Entergy Corp.......................................................................... 177,374 5,989 Exelon Corp........................................................................... 420,488 4,218 FirstEnergy Corp...................................................................... 133,131 3,327 FPL Group, Inc........................................................................ 238,712 2,282 GPU, Inc.............................................................................. 84,006 2,960 Niagara Mohawk Holdings Inc.*......................................................... 49,395 3,833 NiSource Inc.......................................................................... 117,865 7,280 PG & E Corp........................................................................... 145,600 1,593 Pinnacle West Capital Corp............................................................ 75,867 2,726 PPL Corp.............................................................................. 123,181 3,865 Progress Energy, Inc.................................................................. 190,110 4,032 Public Service Enterprise Group, Inc.................................................. 196,056 5,543 Reliant Energy, Inc................................................................... 240,081 12,711 Southern Co. (The).................................................................... 422,641 4,873 TXU Corp.............................................................................. 215,935 6,405 Xcel Energy, Inc...................................................................... 186,145 ------------ 5,068,726 ------------ ELECTRICAL PRODUCTS (0.1%) 3,590 American Power Conversion Corp.*...................................................... 44,426 1,755 Cooper Industries, Inc................................................................ 80,620 752 National Service Industries, Inc...................................................... 19,317 1,476 Power-One, Inc.*...................................................................... 58,025 1,070 Thomas & Betts Corp................................................................... 17,321 ------------ 219,709 ------------ ELECTRONIC COMPONENTS (0.3%) 2,847 Sanmina Corp.*........................................................................ 218,151 11,971 Solectron Corp.*...................................................................... 405,817 ------------ 623,968 ------------ ELECTRONIC EQUIPMENT/INSTRUMENTS (0.7%) 8,520 Agilent Technologies, Inc.*........................................................... 466,470 18,083 JDS Uniphase Corp.*................................................................... 753,835 939 PerkinElmer, Inc...................................................................... 98,595 3,451 Rockwell International Corp........................................................... 164,354 1,774 Tektronix, Inc.*...................................................................... 59,762 12,552 Xerox Corp............................................................................ 58,053 ------------ 1,601,069 ------------ ELECTRONIC PRODUCTION EQUIPMENT (0.4%) 15,255 Applied Materials, Inc.*.............................................................. 582,550 3,498 KLA-Tencor Corp.*..................................................................... 117,839 2,472 Novellus Systems, Inc.*............................................................... 88,837 3,281 Teradyne, Inc.*....................................................................... 122,217 ------------ 911,443 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- ELECTRONICS/APPLIANCE STORES (0.1%) 3,904 Best Buy Co., Inc.*................................................................... $ 115,412 3,788 Circuit City Stores, Inc.-Circuit City Group.......................................... 43,562 3,496 RadioShack Corp....................................................................... 149,672 ------------ 308,646 ------------ ELECTRONICS/APPLIANCES (0.0%) 1,431 Maytag Corp........................................................................... 46,239 1,251 Whirlpool Corp........................................................................ 59,657 ------------ 105,896 ------------ ENGINEERING & CONSTRUCTION (0.0%) 1,423 Fluor Corp.*.......................................................................... 47,048 ------------ ENVIRONMENTAL SERVICES (0.2%) 3,631 Allied Waste Industries, Inc.*........................................................ 52,876 11,691 Waste Management, Inc................................................................. 324,425 ------------ 377,301 ------------ FINANCE/RENTAL/LEASING (2.1%) 3,704 Capital One Financial Corp............................................................ 243,769 4,926 CIT Group, Inc. (The) (Class A)....................................................... 99,136 2,147 Countrywide Credit Industries, Inc.................................................... 107,887 18,945 Fannie Mae............................................................................ 1,643,479 13,072 Freddie Mac........................................................................... 900,334 8,855 Household International, Inc.......................................................... 487,025 16,019 MBNA Corp............................................................................. 591,702 5,376 Providian Financial Corp.............................................................. 309,120 1,100 Ryder System, Inc..................................................................... 18,287 3,085 USA Education Inc..................................................................... 209,780 ------------ 4,610,519 ------------ FINANCIAL CONGLOMERATES (2.8%) 25,012 American Express Co................................................................... 1,374,097 94,536 Citigroup, Inc........................................................................ 4,827,244 6,118 Conseco, Inc.......................................................................... 80,681 ------------ 6,282,022 ------------ FINANCIAL PUBLISHING/SERVICES (0.2%) 2,663 Equifax, Inc.......................................................................... 76,395 3,675 McGraw-Hill Companies, Inc............................................................ 215,447 3,056 Moody's Corporation................................................................... 78,501 ------------ 370,343 ------------ FOOD DISTRIBUTORS (0.2%) 2,442 Supervalu, Inc........................................................................ 33,883 12,572 SYSCO Corp............................................................................ 377,160 ------------ 411,043 ------------ FOOD RETAIL (0.6%) 7,918 Albertson's, Inc...................................................................... 209,827 15,478 Kroger Co.*........................................................................... 418,873
SEE NOTES TO FINANCIAL STATEMENTS 78 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 9,424 Safeway Inc.*......................................................................... $ 589,000 2,625 Winn-Dixie Stores, Inc................................................................ 50,859 ------------ 1,268,559 ------------ FOOD: MAJOR DIVERSIFIED (1.1%) 7,920 Campbell Soup Co...................................................................... 274,230 5,315 General Mills, Inc.................................................................... 236,850 6,523 Heinz (H.J.) Co....................................................................... 309,435 7,629 Kellogg Co............................................................................ 200,261 2,465 Quaker Oats Company (The)............................................................. 240,029 5,773 Ralston-Ralston Purina Group.......................................................... 150,820 15,680 Sara Lee Corp......................................................................... 385,140 10,749 Unilever N.V. (Netherlands)........................................................... 676,515 ------------ 2,473,280 ------------ FOOD: MEAT/FISH/DAIRY (0.1%) 10,031 ConAgra, Inc.......................................................................... 260,806 ------------ FOOD: SPECIALTY/CANDY (0.2%) 2,560 Hershey Foods Corp.................................................................... 164,800 2,123 Wrigley (Wm.) Jr. Co.................................................................. 203,410 ------------ 368,210 ------------ FOREST PRODUCTS (0.1%) 1,923 Louisiana-Pacific Corp................................................................ 19,470 4,121 Weyerhaeuser Co....................................................................... 209,141 ------------ 228,611 ------------ GAS DISTRIBUTORS (0.2%) 2,532 KeySpan Corp.......................................................................... 107,293 2,152 Kinder Morgan, Inc.................................................................... 112,307 847 Nicor Inc............................................................................. 36,580 539 ONEOK, Inc............................................................................ 25,939 651 Peoples Energy Corp................................................................... 29,132 3,846 Sempra Energy......................................................................... 89,420 ------------ 400,671 ------------ HOME BUILDING (0.0%) 1,086 Centex Corp........................................................................... 40,793 806 Kaufman & Broad Home Corp............................................................. 27,152 765 Pulte Corp............................................................................ 32,273 ------------ 100,218 ------------ HOME FURNISHINGS (0.1%) 3,689 Leggett & Platt, Inc.................................................................. 69,860 5,013 Newell Rubbermaid, Inc................................................................ 114,046 1,065 Tupperware Corp....................................................................... 21,766 ------------ 205,672 ------------ HOME IMPROVEMENT CHAINS (1.0%) 43,554 Home Depot, Inc. (The)................................................................ 1,989,873 7,200 Lowe's Companies, Inc................................................................. 320,400 ------------ 2,310,273 ------------ HOSPITAL/NURSING MANAGEMENT (0.3%) 10,389 HCA-The Healthcare Corp............................................................... 457,220 1,887 Manor Care, Inc.*..................................................................... 38,919 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 5,963 Tenet Healthcare Corp.*............................................................... $ 264,981 ------------ 761,120 ------------ HOTELS/RESORTS/CRUISELINES (0.3%) 10,992 Carnival Corp.*....................................................................... 338,691 6,928 Hilton Hotels Corp.................................................................... 72,744 4,513 Marriott International, Inc. (Class A)................................................ 190,674 3,632 Starwood Hotels & Resorts Worldwide, Inc.............................................. 128,028 ------------ 730,137 ------------ HOUSEHOLD/PERSONAL CARE (2.0%) 1,030 Alberto-Culver Co. (Class B).......................................................... 44,097 4,474 Avon Products, Inc.................................................................... 214,193 4,431 Clorox Co............................................................................. 157,301 10,762 Colgate-Palmolive Co.................................................................. 694,687 19,809 Gillette Co........................................................................... 715,600 1,808 International Flavors & Fragrances, Inc............................................... 36,725 10,041 Kimberly-Clark Corp................................................................... 709,798 24,519 Procter & Gamble Co. (The)............................................................ 1,923,209 ------------ 4,495,610 ------------ INDUSTRIAL CONGLOMERATES (5.8%) 186,349 General Electric Co................................................................... 8,933,105 14,998 Honeywell International, Inc.......................................................... 709,593 7,418 Minnesota Mining & Manufacturing Co................................................... 893,869 32,893 Tyco International Ltd. (Bermuda)..................................................... 1,825,562 8,808 United Technologies Corp.............................................................. 692,529 ------------ 13,054,658 ------------ INDUSTRIAL MACHINERY (0.3%) 5,682 Illinois Tool Works Inc............................................................... 338,434 3,019 Ingersoll-Rand Co..................................................................... 126,421 1,034 McDermott International, Inc.*........................................................ 11,116 2,190 Parker-Hannifin Corp.................................................................. 96,634 ------------ 572,605 ------------ INDUSTRIAL SPECIALTIES (0.2%) 2,389 Ecolab, Inc........................................................................... 103,175 854 Millipore Corp........................................................................ 53,802 3,174 PPG Industries, Inc................................................................... 146,996 3,001 Sherwin-Williams Co................................................................... 78,964 ------------ 382,937 ------------ INFORMATION TECHNOLOGY SERVICES (0.5%) 3,484 Citrix Systems, Inc.*................................................................. 78,390 3,167 Computer Sciences Corp.*.............................................................. 190,416 8,794 Electronic Data Systems Corp.......................................................... 507,854 5,368 PeopleSoft, Inc.*..................................................................... 199,623
SEE NOTES TO FINANCIAL STATEMENTS 79 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 2,282 Sapient Corp.*........................................................................ $ 27,241 5,887 Unisys Corp.*......................................................................... 86,097 ------------ 1,089,621 ------------ INSURANCE BROKERS/SERVICES (0.3%) 4,816 AON Corp.............................................................................. 164,948 5,173 Marsh & McLennan Companies, Inc....................................................... 605,241 ------------ 770,189 ------------ INTEGRATED OIL (4.8%) 1,662 Amerada Hess Corp..................................................................... 121,430 12,070 Chevron Corp.......................................................................... 1,019,161 11,720 Conoco, Inc. (Class B)................................................................ 339,148 65,374 Exxon Mobil Corp...................................................................... 5,683,452 4,801 Phillips Petroleum Co................................................................. 273,057 40,326 Royal Dutch Petroleum Co. (ADR) (Netherlands)......................................... 2,442,243 10,346 Texaco, Inc........................................................................... 642,745 4,569 Unocal Corp........................................................................... 176,763 ------------ 10,697,999 ------------ INTERNET SOFTWARE/SERVICES (0.9%) 43,931 America Online, Inc.*................................................................. 1,528,799 5,062 BroadVision, Inc.*.................................................................... 59,795 10,502 Yahoo! Inc.*.......................................................................... 316,865 ------------ 1,905,459 ------------ INVESTMENT BANKS/BROKERS (1.7%) 2,007 Bear Stearns Companies, Inc........................................................... 101,730 4,480 Lehman Brothers Holdings, Inc......................................................... 302,960 15,235 Merrill Lynch & Co., Inc.............................................................. 1,038,837 21,077 Morgan Stanley Dean Witter & Co. (Note 4)............................................. 1,670,352 26,022 Schwab (Charles) Corp................................................................. 738,374 ------------ 3,852,253 ------------ INVESTMENT MANAGERS (0.2%) 4,582 Franklin Resources, Inc............................................................... 174,574 4,182 Stilwell Financial, Inc............................................................... 164,928 2,281 T. Rowe Price Group Inc............................................................... 96,408 ------------ 435,910 ------------ LIFE/HEALTH INSURANCE (0.8%) 4,988 AFLAC, Inc............................................................................ 360,071 4,729 American General Corp................................................................. 385,414 1,939 Jefferson-Pilot Corp.................................................................. 144,940 3,603 Lincoln National Corp................................................................. 170,467 14,379 MetLife, Inc.......................................................................... 503,265 2,353 Torchmark Corp........................................................................ 90,443 4,530 UnumProvident Corp.................................................................... 121,744 ------------ 1,776,344 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- MACHINE TOOLS (0.3%) 8,033 Emerson Electric Co................................................................... $ 633,101 3,678 Molex Inc............................................................................. 130,569 ------------ 763,670 ------------ MAJOR BANKS (5.0%) 30,608 Bank of America Corp.................................................................. 1,404,142 13,925 Bank of New York Co., Inc............................................................. 768,486 21,757 Bank One Corp......................................................................... 796,850 7,458 BB&T Corp............................................................................. 278,277 24,643 Chase Manhattan Corp. (The)........................................................... 1,119,716 2,948 Comerica, Inc......................................................................... 175,038 18,423 First Union Corp...................................................................... 512,390 17,021 FleetBoston Financial Corp............................................................ 639,351 4,718 Huntington Bancshares, Inc............................................................ 76,373 8,008 KeyCorp............................................................................... 224,224 9,177 Mellon Financial Corp................................................................. 451,394 3,010 Morgan (J.P.) & Co., Inc.............................................................. 498,155 11,442 National City Corp.................................................................... 328,958 5,435 PNC Financial Services Group, Inc..................................................... 397,095 3,164 SouthTrust Corp....................................................................... 128,735 3,037 State Street Corp..................................................................... 377,226 3,278 Summit Bancorp........................................................................ 125,179 5,571 SunTrust Banks, Inc................................................................... 350,973 14,165 U.S. Bancorp.......................................................................... 413,441 3,826 Wachovia Corp......................................................................... 222,386 32,144 Wells Fargo & Co...................................................................... 1,790,019 ------------ 11,078,408 ------------ MAJOR TELECOMMUNICATIONS (4.3%) 5,880 ALLTEL Corp........................................................................... 367,133 70,588 AT&T Corp............................................................................. 1,222,055 35,132 BellSouth Corp........................................................................ 1,438,216 63,659 SBC Communications, Inc............................................................... 3,039,717 16,630 Sprint Corp. (FON Group).............................................................. 337,797 50,760 Verizon Communications Inc............................................................ 2,544,345 54,145 WorldCom, Inc.*....................................................................... 758,030 ------------ 9,707,293 ------------ MANAGED HEALTH CARE (0.5%) 2,658 Aetna Inc.*........................................................................... 109,144 2,887 CIGNA Corp............................................................................ 381,950 3,181 Humana, Inc.*......................................................................... 48,510 5,996 UnitedHealth Group Inc................................................................ 368,005 1,177 Wellpoint Health Networks, Inc.*...................................................... 135,649 ------------ 1,043,258 ------------ MEDIA CONGLOMERATES (1.7%) 39,204 Disney (Walt) Co. (The)............................................................... 1,134,466 24,966 Time Warner, Inc...................................................................... 1,304,224
SEE NOTES TO FINANCIAL STATEMENTS 80 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 28,455 Viacom, Inc. (Class B) (Non-Voting)*.................................................. $ 1,330,271 ------------ 3,768,961 ------------ MEDICAL DISTRIBUTORS (0.3%) 5,249 Cardinal Health, Inc.................................................................. 522,932 5,340 McKesson HBOC, Inc.................................................................... 191,653 ------------ 714,585 ------------ MEDICAL SPECIALTIES (1.6%) 4,451 ALZA Corp.*........................................................................... 189,168 3,956 Applera Corp. - Applied Biosystems Group.............................................. 372,111 937 Bard (C.R.), Inc...................................................................... 43,629 984 Bausch & Lomb, Inc.................................................................... 39,791 5,532 Baxter International, Inc............................................................. 488,545 4,762 Becton, Dickinson & Co................................................................ 164,884 3,353 Biomet, Inc........................................................................... 133,072 7,622 Boston Scientific Corp.*.............................................................. 104,326 5,787 Guidant Corp.*........................................................................ 312,136 22,595 Medtronic, Inc........................................................................ 1,364,173 2,277 Pall Corp............................................................................. 48,529 1,599 St. Jude Medical, Inc.*............................................................... 98,239 3,678 Stryker Corp.......................................................................... 186,070 ------------ 3,544,673 ------------ MEDICAL/NURSING SERVICES (0.1%) 7,265 Healthsouth Corp.*.................................................................... 118,510 ------------ METAL FABRICATIONS (0.0%) 1,075 Timken Co. (The)...................................................................... 16,259 ------------ MISCELLANEOUS COMMERCIAL SERVICES (0.1%) 2,901 Convergys Corp.*...................................................................... 131,452 2,432 Sabre Holdings Corp.*................................................................. 104,880 ------------ 236,332 ------------ MISCELLANEOUS MANUFACTURING (0.2%) 1,121 Crane Co.............................................................................. 31,878 2,668 Danaher Corp.......................................................................... 182,425 3,819 Dover Corp............................................................................ 154,908 1,653 ITT Industries, Inc.*................................................................. 64,054 3,385 Thermo Electron Corp.*................................................................ 100,704 ------------ 533,969 ------------ MOTOR VEHICLES (0.7%) 35,247 Ford Motor Co......................................................................... 826,102 10,625 General Motors Corp................................................................... 541,211 5,699 Harley-Davidson, Inc.................................................................. 226,535 ------------ 1,593,848 ------------ MULTI-LINE INSURANCE (2.1%) 43,776 American International Group, Inc..................................................... 4,314,672 4,241 Hartford Financial Services Group, Inc. (The)......................................... 299,521 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 2,400 Safeco Corp........................................................................... $ 78,900 ------------ 4,693,093 ------------ OFFICE EQUIPMENT/SUPPLIES (0.1%) 2,058 Avery Dennison Corp................................................................... 112,933 4,710 Pitney Bowes, Inc..................................................................... 156,019 ------------ 268,952 ------------ OIL & GAS PIPELINES (1.1%) 4,048 Coastal Corp. (The)................................................................... 357,489 6,078 Dynegy, Inc. (Class A)................................................................ 340,748 4,368 El Paso Energy Corp................................................................... 312,858 14,040 Enron Corp............................................................................ 1,167,075 8,275 Williams Companies, Inc. (The)........................................................ 330,483 ------------ 2,508,653 ------------ OIL & GAS PRODUCTION (0.6%) 4,679 Anardarko Petroleum Corp.............................................................. 332,583 2,323 Apache Corp........................................................................... 162,755 4,050 Burlington Resources, Inc............................................................. 204,525 2,414 Devon Energy Corp..................................................................... 147,182 2,198 EOG Resources, Inc.................................................................... 120,203 1,774 Kerr-McGee Corp....................................................................... 118,747 6,947 Occidental Petroleum Corp............................................................. 168,465 ------------ 1,254,460 ------------ OIL REFINING/MARKETING (0.2%) 1,290 Ashland, Inc.......................................................................... 46,298 1,607 Sunoco Inc............................................................................ 54,136 2,721 Tosco Corp............................................................................ 92,344 5,839 USX-Marathon Group.................................................................... 162,032 ------------ 354,810 ------------ OILFIELD SERVICES/EQUIPMENT (0.6%) 6,244 Baker Hughes Inc...................................................................... 259,516 8,320 Halliburton Co........................................................................ 301,600 10,768 Schlumberger Ltd...................................................................... 860,767 ------------ 1,421,883 ------------ OTHER CONSUMER SERVICES (0.1%) 1,721 Block (H.&R.), Inc.................................................................... 71,206 13,709 Cendant Corp.*........................................................................ 131,949 ------------ 203,155 ------------ OTHER CONSUMER SPECIALTIES (0.0%) 2,895 Fortune Brands, Inc................................................................... 86,850 ------------ OTHER METALS/MINERALS (0.1%) 3,417 Inco Ltd. (Canada)*................................................................... 57,269 1,480 Phelps Dodge Corp..................................................................... 82,603 ------------ 139,872 ------------ PACKAGED SOFTWARE (4.3%) 4,520 Adobe Systems, Inc.................................................................... 263,008 1,063 Autodesk, Inc......................................................................... 28,635 4,617 BMC Software, Inc.*................................................................... 64,638 10,904 Computer Associates International, Inc................................................ 212,628
SEE NOTES TO FINANCIAL STATEMENTS 81 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 6,733 Compuware Corp.*...................................................................... $ 42,081 3,879 Intuit Inc.*.......................................................................... 152,978 1,521 Mercury Interactive Corp.*............................................................ 137,270 100,282 Microsoft Corp.*...................................................................... 4,349,732 6,172 Novell, Inc.*......................................................................... 32,210 105,268 Oracle Corp.*......................................................................... 3,059,351 5,121 Parametric Technology Corp.*.......................................................... 68,813 8,078 Siebel Systems, Inc.*................................................................. 546,275 7,334 Veritas Software Corp.*............................................................... 641,693 ------------ 9,599,312 ------------ PERSONNEL SERVICES (0.0%) 3,342 Robert Half International, Inc.*...................................................... 88,563 ------------ PHARMACEUTICALS: GENERIC DRUGS (0.0%) 1,933 Watson Pharmaceuticals, Inc.*......................................................... 98,945 ------------ PHARMACEUTICALS: MAJOR (10.3%) 29,089 Abbott Laboratories................................................................... 1,408,998 24,647 American Home Products Corp........................................................... 1,566,317 36,773 Bristol-Myers Squibb Co............................................................... 2,718,904 26,141 Johnson & Johnson..................................................................... 2,746,439 21,200 Lilly (Eli) & Co...................................................................... 1,972,925 43,370 Merck & Co., Inc...................................................................... 4,060,516 118,650 Pfizer, Inc........................................................................... 5,457,900 24,254 Pharmacia Corp........................................................................ 1,479,494 27,496 Schering-Plough Corp.................................................................. 1,560,398 ------------ 22,971,891 ------------ PHARMACEUTICALS: OTHER (0.3%) 2,473 Allergan, Inc......................................................................... 239,417 1,648 Forest Laboratories, Inc.*............................................................ 218,978 3,175 King Pharmaceuticals, Inc............................................................. 164,108 ------------ 622,503 ------------ PRECIOUS METALS (0.1%) 7,444 Barrick Gold Corp. (Canada)........................................................... 121,933 2,813 Freeport-McMoRan Copper & Gold, Inc. (Class B)*....................................... 24,086 4,855 Homestake Mining Co................................................................... 20,330 3,101 Newmont Mining Corp................................................................... 52,911 6,159 Placer Dome Inc. (Canada)............................................................. 59,280 ------------ 278,540 ------------ PROPERTY - CASUALTY INSURERS (0.7%) 13,753 Allstate Corp. (The) (Note 4)......................................................... 599,115 3,288 Chubb Corp. (The)..................................................................... 284,412 3,025 Cincinnati Financial Corp............................................................. 119,677 1,855 Loews Corp............................................................................ 192,108 1,381 Progressive Corp...................................................................... 143,106 4,094 St. Paul Companies, Inc............................................................... 222,355 ------------ 1,560,773 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- PUBLISHING-BOOKS/MAGAZINES (0.0%) 1,376 Harcourt General, Inc................................................................. $ 78,707 935 Meredith Corp......................................................................... 30,095 ------------ 108,802 ------------ PUBLISHING-NEWSPAPERS (0.4%) 1,646 Dow Jones & Co., Inc.................................................................. 93,205 4,959 Gannett Co., Inc...................................................................... 312,727 1,396 Knight-Ridder, Inc.................................................................... 79,398 3,081 New York Times Co. (The) (Class A).................................................... 123,433 5,687 Tribune Co............................................................................ 240,276 ------------ 849,039 ------------ PULP & PAPER (0.3%) 1,058 Boise Cascade Corp.................................................................... 35,575 4,226 Georgia-Pacific Group................................................................. 131,534 9,053 International Paper Co................................................................ 369,476 1,893 Mead Corp............................................................................. 59,393 503 Potlatch Corp......................................................................... 16,882 1,857 Westvaco Corp......................................................................... 54,201 2,054 Willamette Industries, Inc............................................................ 96,410 ------------ 763,471 ------------ RAILROADS (0.3%) 7,459 Burlington Northern Santa Fe Corp..................................................... 211,183 4,081 CSX Corp.............................................................................. 105,851 7,215 Norfolk Southern Corp................................................................. 96,050 4,661 Union Pacific Corp.................................................................... 236,546 ------------ 649,630 ------------ RECREATIONAL PRODUCTS (0.2%) 1,611 Brunswick Corp........................................................................ 26,481 5,645 Eastman Kodak Co...................................................................... 222,272 3,179 Hasbro, Inc........................................................................... 33,777 8,026 Mattel, Inc........................................................................... 115,895 ------------ 398,425 ------------ REGIONAL BANKS (0.8%) 7,059 AmSouth Bancorporation................................................................ 107,650 8,687 Fifth Third Bancorp................................................................... 519,048 17,868 Firstar Corp.......................................................................... 415,431 4,171 Northern Trust Corp................................................................... 340,197 2,603 Old Kent Financial Corp............................................................... 113,881 4,167 Regions Financial Corp................................................................ 113,811 5,346 Synovus Financial Corp................................................................ 144,008 2,534 Union Planters Corp................................................................... 90,591 ------------ 1,844,617 ------------ RESTAURANTS (0.5%) 2,255 Darden Restaurants, Inc............................................................... 51,583 24,661 McDonald's Corp....................................................................... 838,474 3,518 Starbucks Corp.*...................................................................... 155,672 2,751 Tricon Global Restaurants, Inc.*...................................................... 90,783
SEE NOTES TO FINANCIAL STATEMENTS 82 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 2,139 Wendy's International, Inc.*.......................................................... $ 56,149 ------------ 1,192,661 ------------ SAVINGS BANKS (0.4%) 3,909 Charter One Financial, Inc............................................................ 112,872 2,976 Golden West Financial Corp............................................................ 200,880 10,142 Washington Mutual, Inc................................................................ 538,160 ------------ 851,912 ------------ SEMICONDUCTORS (3.6%) 5,894 Advanced Micro Devices, Inc.*......................................................... 81,411 7,455 Altera Corp.*......................................................................... 196,160 6,725 Analog Devices, Inc.*................................................................. 344,236 4,423 Broadcom Corp. (Class A)*............................................................. 373,744 4,285 Conexant Systems, Inc.*............................................................... 65,882 126,567 Intel Corp............................................................................ 3,828,652 5,956 Linear Technology Corp................................................................ 275,465 6,005 LSI Logic Corp.*...................................................................... 102,625 5,345 Maxim Integrated Products, Inc.*...................................................... 255,558 10,669 Micron Technology, Inc.*.............................................................. 378,750 3,359 National Semiconductor Corp.*......................................................... 67,600 32,534 Texas Instruments, Inc................................................................ 1,541,298 3,378 Vitesse Semiconductor Corp.*.......................................................... 186,846 6,200 Xilinx, Inc.*......................................................................... 285,975 ------------ 7,984,202 ------------ SERVICES TO THE HEALTH INDUSTRY (0.1%) 5,523 IMS Health Inc........................................................................ 149,121 2,133 Quintiles Transnational Corp.*........................................................ 44,660 ------------ 193,781 ------------ SPECIALTY INSURANCE (0.2%) 1,979 Ambac Financial Group, Inc............................................................ 115,403 1,850 MBIA, Inc............................................................................. 137,131 2,008 MGIC Investment Corp.................................................................. 135,415 ------------ 387,949 ------------ SPECIALTY STORES (0.2%) 2,397 AutoZone, Inc.*....................................................................... 68,315 5,323 Bed Bath & Beyond Inc.*............................................................... 119,102 5,559 Office Depot, Inc.*................................................................... 39,608 8,540 Staples, Inc.*........................................................................ 100,879 2,743 Tiffany & Co.......................................................................... 86,747 3,837 Toys 'R' Us, Inc.*.................................................................... 64,030 ------------ 478,681 ------------ SPECIALTY TELECOMMUNICATIONS (0.7%) 2,645 CenturyTel, Inc....................................................................... 94,559 16,656 Global Crossing Ltd. (Bermuda)*....................................................... 238,389 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 31,145 Qwest Communications International, Inc.*............................................. $ 1,276,945 ------------ 1,609,893 ------------ STEEL (0.1%) 1,463 Allegheny Technologies Inc............................................................ 23,225 1,464 Nucor Corp............................................................................ 58,103 1,636 USX-U.S. Steel Group.................................................................. 29,448 1,516 Worthington Industries, Inc........................................................... 12,223 ------------ 122,999 ------------ TELECOMMUNICATION EQUIPMENT (3.0%) 14,518 ADC Telecommunications, Inc.*......................................................... 263,139 1,497 Andrew Corp.*......................................................................... 32,560 3,096 Comverse Technology, Inc.*............................................................ 336,303 17,295 Corning Inc........................................................................... 913,392 62,804 Lucent Technologies Inc............................................................... 847,854 41,080 Motorola, Inc......................................................................... 831,870 58,252 Nortel Networks Corp. (Canada)........................................................ 1,867,705 14,061 QUALCOMM Inc.*........................................................................ 1,155,638 3,030 Scientific-Atlanta, Inc............................................................... 98,664 7,720 Tellabs, Inc.*........................................................................ 436,180 ------------ 6,783,305 ------------ TOBACCO (0.9%) 41,817 Philip Morris Companies, Inc.......................................................... 1,839,948 3,064 UST, Inc.............................................................................. 85,984 ------------ 1,925,932 ------------ TOOLS/HARDWARE (0.1%) 1,537 Black & Decker Corp................................................................... 60,327 399 Briggs & Stratton Corp................................................................ 17,706 1,084 Snap-On, Inc.......................................................................... 30,217 1,592 Stanley Works......................................................................... 49,651 ------------ 157,901 ------------ TRUCKS/CONSTRUCTION/FARM MACHINERY (0.3%) 6,465 Caterpillar, Inc...................................................................... 305,875 766 Cummins Engine Co., Inc............................................................... 29,060 4,412 Deere & Co............................................................................ 202,125 1,097 Navistar International Corp.*......................................................... 28,728 1,438 PACCAR, Inc........................................................................... 70,822 ------------ 636,610 ------------ WHOLESALE DISTRIBUTORS (0.0%) 1,767 Grainger (W.W.), Inc.................................................................. 64,496 ------------
SEE NOTES TO FINANCIAL STATEMENTS 83 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - S&P 500 INDEX PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- WIRELESS COMMUNICATIONS (0.3%) 14,327 Nextel Communications, Inc. (Class A)*................................................ $ 354,593 17,533 Sprint Corp. (PCS Group)*............................................................. 358,330 ------------ 712,923 ------------ TOTAL COMMON STOCKS (COST $218,670,737)................................................................... 220,288,820 ------------
PRINCIPAL AMOUNT IN THOUSANDS - ---------- SHORT-TERM INVESTMENT (1.3%) REPURCHASE AGREEMENT $ 2,888 The Bank of New York 3.75% due 01/02/01 (dated 12/29/00; proceeds $2,888,870) (a) (COST $2,887,666)................................................................... 2,887,666 ------------
TOTAL INVESTMENTS (COST $221,558,403) (b)................................................................... 100.0% 223,176,486 OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 0.0 77,262 ----- ------------- NET ASSETS................................................................................ 100.0% $ 223,253,748 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) Collateralized by $2,748,883 Federal Home Loan Mortgage Corp. 6.875% due 01/15/05 valued at $2,945,458. (b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $32,508,366 and the aggregate gross unrealized depreciation is $30,890,283, resulting in net unrealized appreciation of $1,618,083. FUTURES CONTRACTS OPEN AT DECEMBER 31, 2000:
DESCRIPTION, UNDERLYING NUMBER OF DELIVERY MONTH, FACE AMOUNT UNREALIZED CONTRACTS AND YEAR AT VALUE LOSS - ---------------------------------------------------------------- 7 S&P 500 Index March/2001 $2,336,250 $ (83,188) ==============
SEE NOTES TO FINANCIAL STATEMENTS 84 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST IDEAS" PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON AND PREFERRED STOCKS (96.7%) AUSTRALIA (2.3%) MEDIA CONGLOMERATES 242,400 News Corporation Ltd. (Pref.)........................................................... $ 1,732,869 ----------- FINLAND (2.7%) PULP & PAPER 58,400 UPM-Kymmene Oyj......................................................................... 2,010,718 ----------- FRANCE (10.8%) ENGINEERING & CONSTRUCTION 12,000 Suez Lyonnaise des Eaux................................................................. 2,198,628 ----------- FOOD: MAJOR DIVERSIFIED 12,700 Groupe Danone........................................................................... 1,921,322 ----------- MULTI-LINE INSURANCE 13,800 AXA..................................................................................... 2,001,938 ----------- OIL REFINING/MARKETING 12,700 Total Fina Elf.......................................................................... 1,895,003 ----------- TOTAL FRANCE............................................................................ 8,016,891 ----------- GERMANY (2.3%) MOTOR VEHICLES 52,900 Bayerische Motoren Werke (BMW) AG....................................................... 1,734,147 ----------- JAPAN (9.1%) CHEMICALS: SPECIALTY 47,900 Shin-Etsu Chemical Co., Ltd............................................................. 1,841,503 ----------- ELECTRONIC EQUIPMENT/INSTRUMENTS 77,900 Matsushita Electric Industrial Co., Ltd................................................. 1,858,165 ----------- ELECTRONIC PRODUCTION EQUIPMENT 24,900 Tokyo Electron Ltd...................................................................... 1,366,291 ----------- ELECTRONICS/APPLIANCES 24,810 Sony Corp............................................................................... 1,712,529 ----------- TOTAL JAPAN............................................................................. 6,778,488 ----------- NETHERLANDS (2.8%) BEVERAGES: ALCOHOLIC 34,300 Heineken NV............................................................................. 2,082,418 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- SWEDEN (2.4%) LIFE/HEALTH INSURANCE 112,000 Skandia Forsakrings AB.................................................................. $ 1,825,053 ----------- UNITED KINGDOM (5.0%) BEVERAGES: ALCOHOLIC 173,200 Diageo PLC.............................................................................. 1,942,135 ----------- INTEGRATED OIL 36,800 BP Amoco PLC (ADR)...................................................................... 1,761,800 ----------- TOTAL UNITED KINGDOM.................................................................... 3,703,935 ----------- UNITED STATES (59.3%) AIR FREIGHT/COURIERS 54,600 FedEx Corp.*............................................................................ 2,181,816 ----------- BROADCASTING 35,900 Clear Channel Communications, Inc.*..................................................... 1,738,906 ----------- CHEMICALS: MAJOR DIVERSIFIED 40,300 Du Pont (E.I.) de Nemours & Co., Inc.................................................... 1,946,994 ----------- COMPUTER COMMUNICATIONS 41,400 Cisco Systems, Inc.*.................................................................... 1,583,550 ----------- COMPUTER PERIPHERALS 27,400 EMC Corp.*.............................................................................. 1,822,100 ----------- DATA PROCESSING SERVICES 29,400 Automatic Data Processing, Inc.......................................................... 1,861,387 ----------- DISCOUNT STORES 38,300 Wal-Mart Stores, Inc.................................................................... 2,034,688 ----------- ELECTRICAL PRODUCTS 24,700 Emerson Electric Co..................................................................... 1,946,669 ----------- FINANCIAL CONGLOMERATES 32,300 American Express Co..................................................................... 1,774,481 ----------- INDUSTRIAL CONGLOMERATES 40,300 General Electric Co..................................................................... 1,931,881 25,000 United Technologies Corp................................................................ 1,965,625 ----------- 3,897,506 ----------- INTERNET SOFTWARE/SERVICES 40,500 America Online, Inc.*................................................................... 1,409,400 54,100 Exodus Communications, Inc.*............................................................ 1,082,000 ----------- 2,491,400 -----------
SEE NOTES TO FINANCIAL STATEMENTS 85 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST IDEAS" PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- MAJOR BANKS 38,100 Bank of New York Co., Inc............................................................... $ 2,102,644 ----------- MEDIA CONGLOMERATES 27,900 Time Warner Inc......................................................................... 1,457,496 ----------- MEDICAL SPECIALTIES 33,200 Medtronic, Inc.......................................................................... 2,004,450 ----------- OIL & GAS PIPELINES 21,900 Enron Corp.............................................................................. 1,820,438 ----------- OILFIELD SERVICES/EQUIPMENT 43,200 Halliburton Co.......................................................................... 1,566,000 22,400 Schlumberger Ltd........................................................................ 1,790,600 ----------- 3,356,600 ----------- PACKAGED SOFTWARE 39,400 Microsoft Corp.*........................................................................ 1,708,975 ----------- PHARMACEUTICALS: MAJOR 34,200 American Home Products Corp............................................................. 2,173,410 30,900 Schering-Plough Corp.................................................................... 1,753,575 ----------- 3,926,985 ----------- SEMICONDUCTORS 16,800 Broadcom Corp. (Class A)*............................................................... 1,419,600 ----------- TELECOMMUNICATION EQUIPMENT 107,000 Lucent Technologies Inc................................................................. 1,444,500 82,800 Motorola, Inc........................................................................... 1,676,700 ----------- 3,121,200 ----------- TOTAL UNITED STATES..................................................................... 44,197,885 ----------- TOTAL COMMON AND PREFERRED STOCKS (COST $78,938,124)...................................................................... 72,082,404 -----------
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENT (3.3%) REPURCHASE AGREEMENT $ 2,472 The Bank of New York 3.75% due 01/02/01 (dated 12/29/00; proceeds $2,472,776) (a) (COST $2,471,746)..................................................................... $ 2,471,746 -----------
TOTAL INVESTMENTS (COST $81,409,870) (b)..................................................................... 100.0% 74,554,150 LIABILITIES IN EXCESS OF OTHER ASSETS...................................................... 0.0 (6,041) ----- ------------ NET ASSETS................................................................................. 100.0% $ 74,548,109 ----- ------------ ----- ------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) Collateralized by $2,352,952 Freddie Mac 6.875% due 01/15/05 valued at $2,521,214. (b) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $6,129,358 and the aggregate gross unrealized depreciation is $12,985,078, resulting in net unrealized depreciation of $6,855,720. SEE NOTES TO FINANCIAL STATEMENTS 86 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - COMPETITIVE EDGE "BEST IDEAS" SUMMARY OF INVESTMENTS DECEMBER 31, 2000
PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Air Freight/Couriers............................................................... $ 2,181,816 2.9% Beverages: Alcoholic............................................................... 4,024,553 5.4 Broadcasting....................................................................... 1,738,906 2.3 Chemicals: Major Diversified....................................................... 1,946,994 2.6 Chemicals: Specialty............................................................... 1,841,503 2.5 Computer Communications............................................................ 1,583,550 2.1 Computer Peripherals............................................................... 1,822,100 2.5 Data Processing Services........................................................... 1,861,387 2.5 Discount Stores.................................................................... 2,034,688 2.7 Electrical Products................................................................ 1,946,669 2.6 Electronic Equipment/Instruments................................................... 1,858,165 2.5 Electronic Production Equipment.................................................... 1,366,291 1.8 Electronics/Appliances............................................................. 1,712,529 2.3 Engineering & Construction......................................................... 2,198,628 2.9 Financial Conglomerates............................................................ 1,774,481 2.4 Food: Major Diversified............................................................ 1,921,322 2.6 Industrial Conglomerates........................................................... 3,897,506 5.2 Integrated Oil..................................................................... 1,761,800 2.4 Internet Software/Services......................................................... 2,491,400 3.3 Life/Health Insurance.............................................................. 1,825,053 2.5 Major Banks........................................................................ 2,102,644 2.8 PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Media Conglomerates................................................................ $ 3,190,365 4.3% Medical Specialties................................................................ 2,004,450 2.7 Motor Vehicles..................................................................... 1,734,147 2.3 Multi-Line Insurance............................................................... 2,001,938 2.7 Oil & Gas Pipelines................................................................ 1,820,438 2.5 Oil Refining/Marketing............................................................. 1,895,003 2.5 Oilfield Services/Equipment........................................................ 3,356,600 4.5 Packaged Software.................................................................. 1,708,975 2.3 Pharmaceuticals: Major............................................................. 3,926,985 5.3 Pulp & Paper....................................................................... 2,010,718 2.7 Semiconductors..................................................................... 1,419,600 1.9 Telecommunication Equipment........................................................ 3,121,200 4.2 Repurchase Agreement............................................................... 2,471,746 3.3 ----------- ----- $74,554,150 100.0% ----------- ----- ----------- -----
PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Common Stocks...................................................................... $70,349,535 94.4% Preferred Stock.................................................................... 1,732,869 2.3 Short-Term Investment.............................................................. 2,471,746 3.3 ----------- ----- $74,554,150 100.0% ----------- ----- ----------- -----
SEE NOTES TO FINANCIAL STATEMENTS 87 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON STOCKS (92.2%) ADVERTISING/MARKETING SERVICES (1.0%) 12,710 Interpublic Group of Companies, Inc..................................................... $ 540,969 8,500 Omnicom Group, Inc...................................................................... 704,437 4,700 WPP Group PLC (ADR) (United Kingdom).................................................... 295,219 ----------- 1,540,625 ----------- AEROSPACE & DEFENSE (0.5%) 9,980 General Dynamics Corp................................................................... 778,440 ----------- AIR FREIGHT/COURIERS (0.2%) 6,400 FedEx Corp.*............................................................................ 255,744 ----------- AIRLINES (0.2%) 8,100 AMR Corp.*.............................................................................. 317,419 ----------- ALUMINUM (0.5%) 22,370 Alcoa, Inc.............................................................................. 749,395 ----------- APPAREL/FOOTWEAR (0.2%) 5,400 Nike, Inc. (Class B).................................................................... 301,387 ----------- APPAREL/FOOTWEAR RETAIL (0.5%) 10,700 Abercrombie & Fitch Co. (Class A)*...................................................... 214,000 6,640 Gap, Inc. (The)......................................................................... 169,320 25,190 Limited, Inc. (The)..................................................................... 429,804 ----------- 813,124 ----------- BEVERAGES: ALCOHOLIC (2.3%) 47,160 Anheuser-Busch Companies, Inc........................................................... 2,145,780 16,100 Coors (Adolph) Co. (Class B) (Non-Voting)............................................... 1,293,031 ----------- 3,438,811 ----------- BEVERAGES: NON-ALCOHOLIC (2.1%) 12,100 Coca-Cola Co............................................................................ 737,344 48,990 PepsiCo, Inc............................................................................ 2,428,067 ----------- 3,165,411 ----------- BIOTECHNOLOGY (4.3%) 3,180 Abgenix, Inc.*.......................................................................... 187,819 3,380 COR Therapeutics, Inc.*................................................................. 118,934 4,000 CV Therapeutics, Inc.*.................................................................. 283,000 3,430 Enzon, Inc.*............................................................................ 212,874 19,700 Genentech, Inc.*........................................................................ 1,605,550 6,000 Genzyme Corp. (General Division)*....................................................... 539,625 13,410 Human Genome Sciences, Inc.*............................................................ 929,481 7,620 IDEC Pharmaceuticals Corp.*............................................................. 1,444,466 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 2,060 Invitrogen Corp.*....................................................................... $ 177,932 14,670 Millennium Pharmaceuticals, Inc.*....................................................... 907,706 2,080 Protein Design Labs, Inc.*.............................................................. 180,700 ----------- 6,588,087 ----------- CABLE/SATELLITE TV (2.4%) 5,110 Adelphia Communications Corp. (Class A)*................................................ 263,804 3,600 Cablevision Systems Corp. (Class A)*.................................................... 305,775 45,000 Charter Communications, Inc. (Class A)*................................................. 1,020,937 40,200 Comcast Corp. (Class A Special)*........................................................ 1,678,350 7,380 Cox Communications, Inc. (Class A)*..................................................... 343,631 ----------- 3,612,497 ----------- COMPUTER COMMUNICATIONS (2.0%) 20,720 Brocade Communications Systems, Inc.*................................................... 1,902,355 14,000 Cisco Systems, Inc.*.................................................................... 535,500 510 Extreme Networks, Inc.*................................................................. 19,954 5,000 Juniper Networks, Inc.*................................................................. 630,312 ----------- 3,088,121 ----------- COMPUTER PERIPHERALS (0.7%) 11,300 EMC Corp.*.............................................................................. 751,450 4,610 QLogic Corp.*........................................................................... 354,970 ----------- 1,106,420 ----------- COMPUTER PROCESSING HARDWARE (0.4%) 3,210 Palm, Inc.*............................................................................. 90,883 19,400 Sun Microsystems, Inc.*................................................................. 540,775 ----------- 631,658 ----------- CONTRACT DRILLING (1.5%) 51,550 ENSCO International Inc................................................................. 1,755,922 9,460 Nabors Industries, Inc.*................................................................ 559,559 ----------- 2,315,481 ----------- DATA PROCESSING SERVICES (1.3%) 10,180 Automatic Data Processing, Inc.......................................................... 644,521 8,500 Bisys Group, Inc. (The)*................................................................ 443,062 6,600 DST Systems, Inc.*...................................................................... 442,200 7,890 Paychex, Inc............................................................................ 383,651 ----------- 1,913,434 -----------
SEE NOTES TO FINANCIAL STATEMENTS 88 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- DEPARTMENT STORES (0.5%) 12,500 Kohl's Corp.*........................................................................... $ 762,500 ----------- DISCOUNT STORES (1.4%) 22,300 Target Corp............................................................................. 719,175 27,000 Wal-Mart Stores, Inc.................................................................... 1,434,375 ----------- 2,153,550 ----------- DRUGSTORE CHAINS (0.7%) 11,600 CVS Corp................................................................................ 695,275 9,900 Walgreen Co............................................................................. 413,944 ----------- 1,109,219 ----------- ELECTRIC UTILITIES (2.6%) 10,490 Constellation Energy Group, Inc......................................................... 472,706 15,000 Dominion Resources, Inc................................................................. 1,005,000 13,740 Duke Energy Corp........................................................................ 1,171,335 13,190 Exelon Corp............................................................................. 926,070 5,000 FPL Group, Inc.......................................................................... 358,750 ----------- 3,933,861 ----------- ELECTRICAL PRODUCTS (0.3%) 6,400 Emerson Electric Co..................................................................... 504,400 ----------- ELECTRONIC COMPONENTS (0.2%) 7,980 Sawtek, Inc.*........................................................................... 368,576 ----------- FINANCE/RENTAL/LEASING (3.3%) 27,820 Countrywide Credit Industries, Inc...................................................... 1,397,955 17,500 Fannie Mae.............................................................................. 1,518,125 22,440 Freddie Mac............................................................................. 1,545,555 6,800 USA Education Inc....................................................................... 462,400 ----------- 4,924,035 ----------- FINANCIAL CONGLOMERATES (1.4%) 40,513 Citigroup, Inc.......................................................................... 2,068,695 ----------- FOOD RETAIL (1.6%) 36,070 Kroger Co.*............................................................................. 976,144 24,420 Safeway Inc.*........................................................................... 1,526,250 ----------- 2,502,394 ----------- FOOD: MAJOR DIVERSIFIED (1.9%) 27,300 Groupe Danone (ADR) (France)............................................................ 838,110 22,570 Ralston-Ralston Purina Group............................................................ 589,641 17,420 Sara Lee Corp........................................................................... 427,879 17,132 Unilever N.V. (Netherlands)............................................................. 1,078,245 ----------- 2,933,875 ----------- FOOD: MEAT/FISH/DAIRY (0.3%) 14,760 ConAgra, Inc............................................................................ 383,760 ----------- NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- FOOD: SPECIALTY/CANDY (0.5%) 12,940 Hershey Foods Corp...................................................................... $ 833,012 ----------- HOME IMPROVEMENT CHAINS (0.5%) 14,830 Home Depot, Inc. (The).................................................................. 677,546 ----------- HOSPITAL/NURSING MANAGEMENT (3.2%) 49,820 HCA-The Healthcare Corp................................................................. 2,192,578 29,000 Health Management Associates, Inc. (Class A)*........................................... 601,750 43,100 Tenet Healthcare Corp.*................................................................. 1,915,256 1,290 Universal Health Services, Inc. (Class B)*.............................................. 144,157 ----------- 4,853,741 ----------- HOUSEHOLD/PERSONAL CARE (1.5%) 14,250 Avon Products, Inc...................................................................... 682,219 22,200 Kimberly-Clark Corp..................................................................... 1,569,318 ----------- 2,251,537 ----------- INDUSTRIAL CONGLOMERATES (3.0%) 32,830 General Electric Co..................................................................... 1,573,788 9,200 Minnesota Mining & Manufacturing Co..................................................... 1,108,600 18,600 Tyco International Ltd. (Bermuda)....................................................... 1,032,300 10,700 United Technologies Corp................................................................ 841,287 ----------- 4,555,975 ----------- INFORMATION TECHNOLOGY SERVICES (0.7%) 9,400 Electronic Data Systems Corp............................................................ 542,850 14,850 PeopleSoft, Inc.*....................................................................... 552,234 ----------- 1,095,084 ----------- INSURANCE BROKERS/SERVICES (0.8%) 10,000 Marsh & McLennan Companies, Inc......................................................... 1,170,000 ----------- INTEGRATED OIL (1.3%) 20,730 Exxon Mobil Corp........................................................................ 1,802,214 3,350 Royal Dutch Petroleum Co. (Netherlands)................................................. 202,884 ----------- 2,005,098 ----------- INTERNET SOFTWARE/SERVICES (1.1%) 21,710 BEA Systems, Inc.*...................................................................... 1,461,354 6,390 WatchGuard Technologies, Inc.*.......................................................... 202,084 ----------- 1,663,438 -----------
SEE NOTES TO FINANCIAL STATEMENTS 89 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- INVESTMENT BANKS/BROKERS (3.1%) 13,750 Goldman Sachs Group, Inc. (The)......................................................... $ 1,470,391 21,950 Lehman Brothers Holdings, Inc........................................................... 1,484,369 25,260 Merrill Lynch & Co., Inc................................................................ 1,722,416 ----------- 4,677,176 ----------- INVESTMENT MANAGERS (0.9%) 13,775 Amvescap PLC (ADR) (United Kingdom)..................................................... 599,212 12,300 Federated Investors, Inc. (Class B)..................................................... 358,237 10,500 Stilwell Financial, Inc................................................................. 414,094 ----------- 1,371,543 ----------- LIFE/HEALTH INSURANCE (0.5%) 10,900 AFLAC, Inc.............................................................................. 786,844 ----------- MAJOR BANKS (3.4%) 15,520 Bank of New York Co., Inc............................................................... 856,510 13,100 BB&T Corp............................................................................... 488,794 8,000 Chase Manhattan Corp. (The)*............................................................ 363,500 8,830 Mellon Financial Corp................................................................... 434,326 10,600 PNC Financial Services Group, Inc....................................................... 774,463 4,620 State Street Corp....................................................................... 573,850 7,030 U.S. Bancorp............................................................................ 205,188 27,000 Wells Fargo & Co........................................................................ 1,503,563 ----------- 5,200,194 ----------- MAJOR TELECOMMUNICATIONS (1.1%) 16,000 SBC Communications, Inc................................................................. 764,000 18,520 Verizon Communications.................................................................. 928,315 ----------- 1,692,315 ----------- MANAGED HEALTH CARE (0.5%) 5,800 CIGNA Corp.............................................................................. 767,340 ----------- MEDIA CONGLOMERATES (0.7%) 31,000 Fox Entertainment Group, Inc. (Class A)*................................................ 554,125 10,340 Viacom, Inc. (Class B) (Non-Voting)*.................................................... 483,395 ----------- 1,037,520 ----------- MEDICAL DISTRIBUTORS (1.1%) 16,300 Cardinal Health, Inc.................................................................... 1,623,888 ----------- MEDICAL SPECIALTIES (3.1%) 32,750 ALZA Corp. *............................................................................ 1,391,875 20,000 Baxter International, Inc............................................................... 1,766,250 7,000 Beckman Coulter, Inc.................................................................... 293,563 12,995 Biomet, Inc............................................................................. 515,739 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 8,000 Inhale Therapeutic Systems, Inc.*....................................................... $ 404,000 6,600 St. Jude Medical, Inc.*................................................................. 405,488 ----------- 4,776,915 ----------- MEDICAL/NURSING SERVICES (0.2%) 22,000 Healthsouth Corp.*...................................................................... 358,875 ----------- MULTI-LINE INSURANCE (2.9%) 32,830 American International Group, Inc....................................................... 3,235,807 15,510 Hartford Financial Services Group, Inc. (The)........................................... 1,095,394 ----------- 4,331,201 ----------- OIL & GAS PIPELINES (1.0%) 20,480 El Paso Energy Corp..................................................................... 1,466,880 ----------- OILFIELD SERVICES/EQUIPMENT (0.2%) 10,200 UTI Energy Corp.*....................................................................... 335,325 ----------- PACKAGED SOFTWARE (2.3%) 13,010 Check Point Software Technologies Ltd. (Israel)*........................................ 1,737,648 6,360 i2 Technologies, Inc.*.................................................................. 345,825 3,810 Mercury Interactive Corp.*.............................................................. 343,853 23,000 Oracle Corp.*........................................................................... 668,438 6,410 Siebel Systems, Inc.*................................................................... 433,476 ----------- 3,529,240 ----------- PHARMACEUTICALS: GENERIC DRUGS (0.2%) 6,200 Watson Pharmaceuticals, Inc.*........................................................... 317,363 ----------- PHARMACEUTICALS: MAJOR (7.9%) 57,210 Abbott Laboratories..................................................................... 2,771,109 36,800 American Home Products Corp............................................................. 2,338,640 7,800 Lilly (Eli) & Co........................................................................ 725,888 19,600 Merck & Co., Inc........................................................................ 1,835,050 16,990 Pfizer Inc.............................................................................. 781,540 29,900 Pharmacia Corp.......................................................................... 1,823,900 30,000 Schering-Plough Corp.................................................................... 1,702,500 ----------- 11,978,627 ----------- PHARMACEUTICALS: OTHER (3.4%) 8,450 Allergan, Inc........................................................................... 818,066 12,210 Forest Laboratories, Inc.*.............................................................. 1,622,404 24,600 King Pharmaceuticals, Inc.*............................................................. 1,271,513 19,300 Teva Pharmaceutical Industries Ltd. (ADR) (Israel)...................................... 1,413,725 ----------- 5,125,708 ----------- PROPERTY - CASUALTY INSURERS (2.9%) 12,800 ACE, Ltd. (Bermuda)..................................................................... 543,200 26,100 Allstate Corp. (The) (Note 4)........................................................... 1,136,981
SEE NOTES TO FINANCIAL STATEMENTS 90 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - AGGRESSIVE EQUITY PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 9,300 Chubb Corp. (The)....................................................................... $ 804,450 14,400 Everest Re Group, Ltd. (Bermuda)........................................................ 1,031,400 6,100 PartnerRe Ltd. (Bermuda)................................................................ 372,100 9,500 St. Paul Companies, Inc................................................................. 515,969 ----------- 4,404,100 ----------- PULP & PAPER (0.5%) 9,900 Georgia-Pacific Corp.................................................................... 308,138 10,800 International Paper Co.................................................................. 440,775 ----------- 748,913 ----------- REGIONAL BANKS (1.2%) 11,000 Fifth Third Bancorp..................................................................... 657,250 14,160 Northern Trust Corp..................................................................... 1,154,925 ----------- 1,812,175 ----------- RESTAURANTS (0.7%) 4,100 Brinker International, Inc.*............................................................ 173,225 7,100 Darden Restaurants, Inc................................................................. 162,413 15,900 Starbucks Corp.*........................................................................ 703,575 ----------- 1,039,213 ----------- SAVINGS BANKS (1.0%) 6,500 Golden West Financial Corp.............................................................. 438,750 19,700 Washington Mutual, Inc.................................................................. 1,045,331 ----------- 1,484,081 ----------- SEMICONDUCTORS (1.5%) 8,350 Altera Corp.*........................................................................... 219,709 24,960 Micron Technology, Inc.*................................................................ 886,080 17,300 Texas Instruments, Inc.................................................................. 819,588 8,810 Xilinx, Inc.*........................................................................... 406,361 ----------- 2,331,738 ----------- SPECIALTY INSURANCE (1.1%) 6,770 MGIC Investment Corp.................................................................... 456,552 6,410 PMI Group, Inc.......................................................................... 433,877 4,460 Radian Group, Inc....................................................................... 334,779 5,300 XL Capital Ltd. (Class A) (Bermuda)..................................................... 463,088 ----------- 1,688,296 ----------- TELECOMMUNICATION EQUIPMENT (3.2%) 8,200 CIENA Corp.*............................................................................ 667,275 15,250 Comverse Technology, Inc.*.............................................................. 1,656,531 14,300 Motorola, Inc........................................................................... 289,575 31,568 Nokia Oyj (ADR) (Finland)............................................................... 1,373,208 9,050 Powerwave Technologies, Inc.*........................................................... 529,425 NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 12,800 Tekelec*................................................................................ $ 384,000 ----------- 4,900,014 ----------- TOBACCO (0.4%) 13,370 Philip Morris Companies, Inc............................................................ 588,280 ----------- WIRELESS COMMUNICATIONS (0.3%) 11,817 Vodafone Group PLC (ADR) (United Kingdom)............................................... 423,196 ----------- TOTAL COMMON STOCKS (COST $128,758,675)..................................................................... 140,163,310 -----------
PRINCIPAL AMOUNT IN THOUSANDS - --------- SHORT-TERM INVESTMENT (a) (8.5%) U.S. GOVERNMENT AGENCY $ 12,950 Federal National Mortgage Assoc. 5.75% due 01/02/01 (COST $12,947,932)................................................................... 12,947,932 ------------
TOTAL INVESTMENTS (COST $141,706,607) (b) .................................................................. 100.8% 153,111,242 LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (0.8) (1,061,861) ----- ------------- NET ASSETS................................................................................ 100.0% $ 152,049,381 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $14,453,637 and the aggregate gross unrealized depreciation is $3,049,002, resulting in net unrealized appreciation of $11,404,635. SEE NOTES TO FINANCIAL STATEMENTS 91 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INFORMATION PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - --------------------------------------------------------------------------------------------- COMMON STOCKS (87.6%) AEROSPACE & DEFENSE (1.4%) 820 General Dynamics Corp................................................. $ 63,960 ---------- CABLE/SATELLITE TV (5.1%) 3,400 Charter Communications, Inc. (Class A)*............................... 77,138 2,035 Comcast Corp. (Class A Special)*...................................... 84,961 1,600 Cox Communications, Inc. (Class A)*................................... 74,500 ---------- 236,599 ---------- COMPUTER COMMUNICATIONS (5.2%) 300 Avocent Corp.*........................................................ 8,100 1,340 Cisco Systems, Inc.*.................................................. 51,255 690 Emulex Corp.*......................................................... 55,157 360 Extreme Networks, Inc.*............................................... 14,085 755 Finisar Corp.*........................................................ 21,895 950 Foundry Networks, Inc.*............................................... 14,250 575 Juniper Networks, Inc.*............................................... 72,486 ---------- 237,228 ---------- COMPUTER PERIPHERALS (4.3%) 1,130 EMC Corp.*............................................................ 75,145 1,150 Network Appliance, Inc.*.............................................. 73,870 630 QLogic Corp.*......................................................... 48,510 ---------- 197,525 ---------- COMPUTER PROCESSING HARDWARE (3.2%) 1,410 Compaq Computer Corp.................................................. 21,220 550 Gateway, Inc.*........................................................ 9,894 710 International Business Machines Corp.................................. 60,350 2,000 Sun Microsystems, Inc.*............................................... 55,750 ---------- 147,214 ---------- DATA PROCESSING SERVICES (1.1%) 770 Automatic Data Processing, Inc........................................ 48,751 ---------- ELECTRIC UTILITIES (10.2%) 1,235 American Electric Power Co., Inc...................................... 57,427 900 Dominion Resources, Inc............................................... 60,300 3,900 PPL Corp.............................................................. 176,231 4,000 TXU Corp.............................................................. 177,250 ---------- 471,208 ---------- ELECTRONIC COMPONENTS (5.1%) 670 Anaren Microwave Inc.*................................................ 45,016 1,500 Cree Research, Inc.*.................................................. 53,297 1,705 Flextronics International, Ltd. (Singapore)*.......................... 48,592 700 Sanmina Corp.*........................................................ 53,637 NUMBER OF SHARES VALUE - --------------------------------------------------------------------------------------------- 1,900 Stratos Lightwave, Inc.*.............................................. $ 32,419 ---------- 232,961 ---------- ELECTRONIC EQUIPMENT/INSTRUMENTS (1.1%) 475 PerkinElmer, Inc...................................................... 49,875 ---------- ELECTRONIC PRODUCTION EQUIPMENT (0.2%) 290 Applied Materials, Inc.*.............................................. 11,074 ---------- ELECTRONICS/APPLIANCES (0.7%) 450 Sony Corp. (ADR) (Japan).............................................. 31,387 ---------- FINANCE/RENTAL/LEASING (1.1%) 900 Providian Financial Corp.............................................. 51,750 ---------- FINANCIAL PUBLISHING/SERVICES (1.2%) 1,180 SunGard Data Systems Inc.*............................................ 55,607 ---------- INDUSTRIAL CONGLOMERATES (3.0%) 1,060 Tyco International Ltd. (Bermuda)..................................... 58,830 1,020 United Technologies Corp.............................................. 80,197 ---------- 139,027 ---------- INFORMATION TECHNOLOGY SERVICES (1.0%) 1,300 PeopleSoft, Inc.*..................................................... 48,344 ---------- INTERNET SOFTWARE/SERVICES (6.0%) 980 America Online, Inc.*................................................. 34,104 740 Ariba, Inc.*.......................................................... 39,775 1,030 Art Technology Group, Inc.*........................................... 31,479 1,400 BEA Systems, Inc.*.................................................... 94,237 450 BroadVision, Inc.*.................................................... 5,316 170 Exodus Communications, Inc.*.......................................... 3,400 115 Kana Communications, Inc.*............................................ 1,322 1,200 Openwave Systems Inc.*................................................ 57,525 115 VeriSign, Inc.*....................................................... 8,532 ---------- 275,690 ---------- MAJOR TELECOMMUNICATIONS (2.9%) 1,450 SBC Communications, Inc............................................... 69,237 1,300 Verizon Communications Inc............................................ 65,163 ---------- 134,400 ---------- MEDIA CONGLOMERATES (0.3%) 550 Disney (Walt) Co. (The)............................................... 15,916 ---------- OILFIELD SERVICES/EQUIPMENT (1.5%) 670 Schlumberger Ltd...................................................... 53,558 440 Veritas DGC Inc.*..................................................... 14,212 ---------- 67,770 ---------- PACKAGED SOFTWARE (8.4%) 155 Actuate Software Corp.*............................................... 2,964 400 Check Point Software Technologies Ltd. (Israel)*...................... 53,425 1,250 i2 Technologies, Inc.*................................................ 67,969
SEE NOTES TO FINANCIAL STATEMENTS 92 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - INFORMATION PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - --------------------------------------------------------------------------------------------- 820 Mercury Interactive Corp.*............................................ $ 74,005 725 Micromuse Inc.*....................................................... 43,761 800 Microsoft Corp.*...................................................... 34,700 1,600 Oracle Corp.*......................................................... 46,500 750 Veritas Software Corp.*............................................... 65,625 ---------- 388,949 ---------- PHARMACEUTICALS: MAJOR (1.4%) 1,400 Pfizer, Inc........................................................... 64,400 ---------- RECREATIONAL PRODUCTS (0.5%) 510 Electronic Arts Inc.*................................................. 21,739 ---------- SEMICONDUCTORS (8.7%) 740 Analog Devices, Inc.*................................................. 37,879 305 Applied Micro Circuits Corp.*......................................... 22,889 160 Broadcom Corp. (Class A)*............................................. 13,520 725 Conexant Systems, Inc.*............................................... 11,147 580 GlobeSpan, Inc.*...................................................... 15,950 1,200 Intel Corp............................................................ 36,300 660 Maxim Integrated Products, Inc.*...................................... 31,556 75 Micron Technology, Inc.*.............................................. 2,663 500 SDL, Inc.*............................................................ 74,094 950 STMicroelectronics NV (France)........................................ 40,672 1,000 Texas Instruments, Inc................................................ 47,375 1,280 TranSwitch Corp.*..................................................... 50,080 265 Vitesse Semiconductor Corp.*.......................................... 14,658 ---------- 398,783 ---------- SPECIALTY TELECOMMUNICATIONS (0.7%) 800 Qwest Communications International, Inc.*............................. 32,800 ---------- TELECOMMUNICATION EQUIPMENT (10.8%) 2,900 ADC Telecommunications, Inc.*......................................... 52,563 635 CIENA Corp.*.......................................................... 51,673 920 Comverse Technology, Inc.*............................................ 99,935 1,160 Corning Inc........................................................... 61,263 1,360 Motorola, Inc......................................................... 27,540 1,010 New Focus, Inc.*...................................................... 35,098 1,730 Nokia Corp. (ADR) (Finland)........................................... 75,255 1,550 Nortel Networks Corp. (Canada)........................................ 49,697 970 Scientific-Atlanta, Inc............................................... 31,586 300 Sycamore Networks, Inc.*.............................................. 11,175 ---------- 495,785 ---------- NUMBER OF SHARES VALUE - --------------------------------------------------------------------------------------------- WIRELESS COMMUNICATIONS (2.5%) 1,600 Nextel Communications, Inc. (Class A)*................................ $ 39,600 725 Vodafone Group PLC (ADR) (United Kingdom)............................. 25,964 485 Voicestream Wireless Corp.*........................................... 48,803 ---------- 114,367 ---------- TOTAL COMMON STOCKS (COST $4,318,713)..................................................... 4,033,109 ----------
PRINCIPAL AMOUNT IN THOUSANDS - --------- SHORT-TERM INVESTMENT (a) (12.2%) U.S. GOVERNMENT AGENCY $ 560 Federal National Mortgage Assoc. 5.75% due 01/02/01 (COST $559,911)..................................................... 559,911 ----------
TOTAL INVESTMENTS (COST $4,878,624) (b)....................................................................... 99.8% 4,593,020 OTHER ASSETS IN EXCESS OF LIABILITIES....................................................... 0.2 8,480 ----- ----------- NET ASSETS.................................................................................. 100.0% $ 4,601,500 ----- ----------- ----- -----------
- --------------------- ADR American Depository Receipt. * Non-income producing security. (a) 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $86,160 and the aggregate gross unrealized depreciation is $371,764, resulting in net unrealized depreciation of $285,604. SEE NOTES TO FINANCIAL STATEMENTS 93 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON STOCKS (55.0%) AEROSPACE & DEFENSE (1.0%) 20,000 General Dynamics Corp.................................................................. $ 1,560,000 83,000 Lockheed Martin Corp................................................................... 2,817,850 89,000 Raytheon Co. (Class B)................................................................. 2,764,562 ------------ 7,142,412 ------------ AIRLINES (1.2%) 150,000 AMR Corp.*............................................................................. 5,878,125 50,000 Continental Airlines, Inc. (Class B)*.................................................. 2,581,250 ------------ 8,459,375 ------------ APPAREL/FOOTWEAR RETAIL (1.2%) 192,825 Gap, Inc. (The)........................................................................ 4,917,037 50,000 Payless ShoeSource, Inc.*.............................................................. 3,537,500 ------------ 8,454,537 ------------ BEVERAGES: NON-ALCOHOLIC (0.2%) 34,000 PepsiCo, Inc........................................................................... 1,685,125 ------------ BIOTECHNOLOGY (3.0%) 115,000 Applera Corp. - Celera Genomics Group*................................................. 4,132,812 72,000 COR Therapeutics, Inc.*................................................................ 2,533,500 111,300 Enzon, Inc.*........................................................................... 6,907,556 60,000 Human Genome Sciences, Inc.*........................................................... 4,158,750 8,500 Myriad Genetics, Inc.*................................................................. 703,375 16,000 QLT PhotoTherapeutics Inc. (Canada)*................................................... 448,000 38,000 Techne Corp.*.......................................................................... 1,370,375 28,000 Trimeris, Inc.*........................................................................ 1,536,500 ------------ 21,790,868 ------------ CABLE/SATELLITE TV (0.2%) 80,000 EchoStar Communications Corp. (Class A)*............................................... 1,820,000 ------------ CHEMICALS: MAJOR DIVERSIFIED (1.0%) 200,800 Dow Chemical Co........................................................................ 7,354,300 ------------ COMPUTER COMMUNICATIONS (1.1%) 211,000 Cisco Systems, Inc.*................................................................... 8,070,750 ------------ COMPUTER PERIPHERALS (2.0%) 221,600 EMC Corp.*............................................................................. 14,736,400 ------------ COMPUTER PROCESSING HARDWARE (0.6%) 152,400 Sun Microsystems, Inc.*................................................................ 4,248,150 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- CONTRACT DRILLING (1.6%) 169,000 Diamond Offshore Drilling, Inc......................................................... $ 6,760,000 100,000 Transocean Sedco Forex Inc............................................................. 4,600,000 ------------ 11,360,000 ------------ DISCOUNT STORES (0.9%) 169,000 Costco Wholesale Corp.*................................................................ 6,749,438 ------------ ELECTRONIC EQUIPMENT/INSTRUMENT (0.3%) 56,000 Tektronix, Inc.*....................................................................... 1,886,500 ------------ ENVIRONMENTAL SERVICES (0.8%) 200,000 Allied Waste Industries, Inc.*......................................................... 2,912,500 100,000 Waste Management, Inc.................................................................. 2,775,000 ------------ 5,687,500 ------------ FINANCE/RENTAL/LEASING (2.1%) 85,500 Fannie Mae............................................................................. 7,417,125 113,000 Freddie Mac............................................................................ 7,782,875 ------------ 15,200,000 ------------ FINANCIAL CONGLOMERATES (2.4%) 145,200 American Express Co.................................................................... 7,976,925 188,266 Citigroup, Inc......................................................................... 9,613,333 ------------ 17,590,258 ------------ FOOD: MAJOR DIVERSIFIED (1.0%) 158,800 General Mills, Inc..................................................................... 7,076,525 ------------ INDUSTRIAL CONGLOMERATES (1.2%) 177,600 General Electric Co.................................................................... 8,513,700 ------------ INTERNET SOFTWARE/SERVICES (3.0%) 135,800 America Online, Inc.*.................................................................. 4,725,840 356,200 Art Technology Group, Inc.*............................................................ 10,886,363 93,000 BEA Systems, Inc.*..................................................................... 6,260,063 ------------ 21,872,266 ------------ INVESTMENT BANKS/BROKERS (1.6%) 167,600 Merrill Lynch & Co., Inc............................................................... 11,428,225 ------------ MAJOR BANKS (3.5%) 125,600 Bank of New York Co., Inc.............................................................. 6,931,550 197,500 Mellon Financial Corp.................................................................. 9,714,531 159,700 Wells Fargo & Co....................................................................... 8,893,294 ------------ 25,539,375 ------------ MANAGED HEALTH CARE (1.4%) 120,000 Oxford Health Plans, Inc.*............................................................. 4,740,000 86,000 UnitedHealth Group Inc................................................................. 5,278,250 ------------ 10,018,250 ------------ MEDIA CONGLOMERATES (1.4%) 341,500 Disney (Walt) Co. (The)................................................................ 9,882,156 ------------
SEE NOTES TO FINANCIAL STATEMENTS 94 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- MEDICAL SPECIALTIES (4.4%) 280,000 Applera Corp. - Applied Biosystems Group............................................... $ 26,337,500 60,000 Baxter International, Inc.............................................................. 5,298,750 ------------ 31,636,250 ------------ MULTI-LINE INSURANCE (1.4%) 105,000 American International Group, Inc...................................................... 10,349,063 ------------ OIL & GAS PRODUCTION (1.1%) 114,000 Kerr-McGee Corp........................................................................ 7,630,875 ------------ OILFIELD SERVICES/EQUIPMENT (1.5%) 11,500 Schlumberger Ltd....................................................................... 919,281 136,000 Smith International, Inc.*............................................................. 10,140,500 ------------ 11,059,781 ------------ PACKAGED SOFTWARE (1.5%) 78,500 Microsoft Corp.*....................................................................... 3,404,937 82,100 Mercury Interactive Corp.*............................................................. 7,409,525 ------------ 10,814,462 ------------ PHARMACEUTICALS: MAJOR (5.5%) 121,437 Johnson & Johnson...................................................................... 12,758,475 101,200 Merck & Co., Inc....................................................................... 9,474,850 315,200 Pfizer, Inc............................................................................ 14,499,200 57,000 Schering-Plough Corp................................................................... 3,234,750 ------------ 39,967,275 ------------ PRECIOUS METALS (1.3%) 251,000 Barrick Gold Corp. (Canada)............................................................ 4,111,380 150,000 Newmont Mining Corp.................................................................... 2,559,375 293,000 Placer Dome Inc. (Canada).............................................................. 2,820,125 ------------ 9,490,880 ------------ PROPERTY - CASUALTY INSURERS (1.9%) 124,000 ACE, Ltd. (Bermuda).................................................................... 5,262,250 200,000 Allstate Corp. (The) (Note 4).......................................................... 8,712,500 ------------ 13,974,750 ------------ REGIONAL BANKS (0.3%) 64,000 Union Planters Corp.................................................................... 2,288,000 ------------ SAVINGS BANKS (1.9%) 203,700 Golden West Financial Corp............................................................. 13,749,750 ------------ SPECIALTY STORES (1.3%) 439,600 Bed Bath & Beyond Inc.*................................................................ 9,836,050 ------------ NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- TELECOMMUNICATION EQUIPMENT (0.2%) 31,000 Sycamore Networks, Inc.*............................................................... $ 1,154,750 ------------ TOTAL COMMON STOCKS (COST $267,843,757).................................................................... 398,517,996 ------------
PRINCIPAL AMOUNT IN THOUSANDS - --------- CORPORATE BONDS (9.5%) AEROSPACE & DEFENSE (0.4%) $ 1,400 Boeing Co. 8.10% due 11/15/06................................................................... 1,529,542 1,000 Raytheon Co. 6.45% due 08/15/02................................................................... 999,120 ------------ 2,528,662 ------------ AIRLINES (0.1%) 1,000 Continental Airlines, Inc. 8.307% due 04/02/18.................................................................. 1,023,510 ------------ BEVERAGES: ALCOHOLIC (0.2%) 1,000 Anheuser-Busch Companies, Inc. 7.55% due 10/01/03................................................................... 1,094,560 ------------ CABLE/SATELLITE TV (0.1%) 1,006 Continental Cablevision Inc. 8.50% due 09/15/01................................................................... 1,014,450 ------------ COMPUTER PROCESSING HARDWARE (0.2%) 1,500 Hewlett-Packard Co. 7.15% due 06/15/05................................................................... 1,544,940 ------------ ELECTRIC UTILITIES (1.6%) 1,000 Alabama Power Co. 7.85% due 05/15/03................................................................... 1,029,250 2,000 Arizona Public Service Co. 5.875% due 02/15/04.................................................................. 1,962,780 1,000 Commonwealth Edison Co. 8.375% due 09/15/22.................................................................. 1,006,920 1,000 Connecticut Light & Power Co. 7.75% due 06/01/02................................................................... 1,017,560 2,000 NSTAR 8.00% due 02/15/10................................................................... 2,110,580 1,000 South Carolina Electric & Gas Co. 7.50% due 06/15/05................................................................... 1,045,690
SEE NOTES TO FINANCIAL STATEMENTS 95 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- $ 1,000 Southern Energy Mid-Atlantic - 144A** 10.06% due 12/30/28.................................................................. $ 1,005,090 1,000 Texas Utilities Electric Co. 8.25% due 04/01/04................................................................... 1,050,400 1,000 Texas Utilities Electric Co. 8.125% due 02/01/02.................................................................. 1,015,170 ------------ 11,243,440 ------------ FINANCE/RENTAL/LEASING (0.4%) 1,000 Household Finance Corp. 7.875% due 03/01/07.................................................................. 1,034,150 1,500 Norwest Financial, Inc. 6.375% due 07/16/02.................................................................. 1,501,155 ------------ 2,535,305 ------------ FINANCIAL CONGLOMERATES (0.3%) 1,500 Associates Corporation of North America 6.10% due 01/15/05................................................................... 1,480,830 1,000 Textron Financial Corp. 7.125% due 12/09/04.................................................................. 1,023,700 ------------ 2,504,530 ------------ FOOD: MAJOR DIVERSIFIED (0.3%) 1,000 Bestfoods 6.625% due 04/15/28.................................................................. 924,490 1,000 Unilever Capital Corp. 7.125% due 11/01/10.................................................................. 1,047,540 ------------ 1,972,030 ------------ HOUSEHOLD/PERSONAL CARE (0.3%) 1,000 Proctor & Gamble Co. 6.45% due 01/15/26................................................................... 963,540 1,000 Proctor & Gamble Co. 6.60% due 12/15/04................................................................... 1,025,540 ------------ 1,989,080 ------------ INDUSTRIAL CONGLOMERATES (0.6%) 2,000 General Electric Capital Corp. 6.80% due 11/01/05................................................................... 2,063,880 1,000 Honeywell, Inc. 6.625% due 06/15/28.................................................................. 941,350 1,000 Honeywell International, Inc. 7.50% due 03/01/10................................................................... 1,081,580 ------------ 4,086,810 ------------ PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- INTEGRATED OIL (0.4%) $ 1,000 BP Amoco PLC 5.90% due 04/15/09................................................................... $ 976,170 1,000 Conoco Inc. 6.95% due due 04/15/29............................................................... 980,040 1,000 Phillips Pete Co. 8.75% due 05/25/10................................................................... 1,140,210 ------------ 3,096,420 ------------ INVESTMENT BANKS/BROKERS (0.7%) 1,000 Bear Stearns Companies, Inc. 7.625% due 12/07/09.................................................................. 1,014,970 2,000 KFW International Finance Co. 7.125% due 02/15/05.................................................................. 2,076,020 1,000 Lehman Brothers Holdings Corp. 7.875% due 08/15/10.................................................................. 1,031,342 1,000 Lehman Brothers Holdings Corp. 8.25% due 06/15/07................................................................... 1,056,030 ------------ 5,178,362 ------------ LIFE/HEALTH INSURANCE (0.1%) 1,000 MONY Group, Inc. (The) 7.45% due 12/15/05................................................................... 1,012,880 ------------ MAJOR BANKS (0.3%) 500 Bank One Corp. 7.625% due 08/01/05.................................................................. 519,230 1,000 First Union Corp. 6.55% due 10/15/35................................................................... 974,960 1,000 Westdeutsche Landesbank NY 6.05% due 01/15/09................................................................... 951,080 ------------ 2,445,270 ------------ MAJOR TELECOMMUNICATIONS (0.5%) 2,000 Sprint Capital Corp. 6.90% due 05/01/09................................................................... 1,699,600 2,000 Worldcom, Inc. - 144A** 7.375% due 01/15/06.................................................................. 1,994,760 ------------ 3,694,360 ------------ MEDIA CONGLOMERATES (0.6%) 1,000 News America Holdings, Inc. 7.75% due 12/01/45................................................................... 826,860 1,000 Time Warner Inc. 8.18% due 08/15/07................................................................... 1,071,780 2,000 Time Warner Inc. 9.15% due 02/01/23................................................................... 2,316,320 ------------ 4,214,960 ------------
SEE NOTES TO FINANCIAL STATEMENTS 96 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- MOTOR VEHICLES (0.3%) $ 1,000 Daimler Chrysler North American Holding Co. 8.00% due 06/15/10................................................................... $ 1,009,030 1,000 Ford Motor Credit Corp. 7.60% due 08/01/05................................................................... 1,027,590 ------------ 2,036,620 ------------ MOVIES/ENTERTAINMENT (0.3%) 1,900 Paramount Communications, Inc. 7.50% due 01/15/02................................................................... 1,910,735 ------------ OIL & GAS PIPELINES (0.3%) 1,000 Coastal Corp. 7.625% due 09/01/08.................................................................. 1,035,740 1,000 Enron Corp. - 144A** 8.00% due 08/15/05................................................................... 1,059,500 ------------ 2,095,240 ------------ PHARMACEUTICALS: MAJOR (0.3%) 1,000 Abbott Laboratories 6.40% due 12/01/06................................................................... 1,010,130 1,000 Johnson & Johnson 6.95% due 09/01/29................................................................... 1,038,910 ------------ 2,049,040 ------------ PROPERTY - CASUALTY INSURERS (0.1%) 1,000 ACE INA Holdings 8.30% due 08/15/06................................................................... 1,064,080 ------------ RAILROADS (0.5%) 1,847 Southern Pacific Transportation Co. (Series B) 7.28% due 04/30/15................................................................... 1,825,958 1,000 Union Pacific Corp. 6.34% due 11/25/03................................................................... 994,680 1,000 Union Pacific Corp. 6.625% due 02/01/08.................................................................. 989,590 ------------ 3,810,228 ------------ SAVINGS BANKS (0.2%) 1,500 Washington Mutual Financial Corp. 8.25% due 06/15/05................................................................... 1,581,330 ------------ PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- SPECIALTY TELECOMMUNICATIONS (0.3%) $ 1,000 Qwest Capital Funding - 144A** 7.90% due 08/15/10................................................................... $ 1,033,040 1,000 U.S. West Capital Funding, Inc. 6.875% due 08/15/01.................................................................. 1,000,450 ------------ 2,033,490 ------------ WIRELESS COMMUNICATIONS (0.1%) 1,000 Vodaphone Group PLC (United Kingdom) 7.50% due 07/15/06................................................................... 1,031,100 ------------ TOTAL CORPORATE BONDS (COST $67,362,370)..................................................................... 68,791,432 ------------ FOREIGN GOVERNMENT OBLIGATIONS (0.5%) 1,000 Manitoba (Province of) (Canada) 5.50% due 10/01/08................................................................... 958,450 2,000 Quebec (Provice of) (Canada) 7.50% due 07/15/23................................................................... 2,140,040 1,000 New Brunswick (Province of) (Canada) 7.625% due 6/29/04................................................................... 1,051,190 ------------ TOTAL FOREIGN GOVERNMENT OBLIGATIONS (COST $3,902,470)...................................................................... 4,149,680 ------------ U.S. GOVERNMENT & AGENCY OBLIGATIONS (13.2%) 3,000 Federal Home Loan Banks 4.875% due 01/22/02.................................................................. 2,973,000 4,000 Federal Home Loan Mortgage Corp. 5.125% due 10/15/08.................................................................. 3,793,560 5,500 Federal Home Loan Mortgage Corp. 7.375% due 05/15/03.................................................................. 5,709,825 4,000 Federal National Mortgage Assoc. 5.625% due 05/14/04.................................................................. 3,990,680 2,000 Federal National Mortgage Assoc. 7.125% due 02/15/05.................................................................. 2,100,200
SEE NOTES TO FINANCIAL STATEMENTS 97 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES - STRATEGIST PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000, CONTINUED
PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- $ 1,500 U.S. Treasury Bond 6.00% due 02/15/26................................................................... $ 1,580,640 4,250 U.S. Treasury Bond 6.125% due 08/15/29.................................................................. 4,628,080 17,100 U.S. Treasury Bond 6.25% due 08/15/23................................................................... 18,495,531 1,000 U.S. Treasury Bond 6.25% due 05/15/30................................................................... 1,116,250 5,000 U.S. Treasury Note 5.375% due 02/15/01.................................................................. 4,997,050 12,500 U.S. Treasury Note 5.50% due 08/31/01................................................................... 12,484,625 2,500 U.S. Treasury Note 5.50% due 05/15/09................................................................... 2,552,250 1,100 U.S. Treasury Note 5.75% due 08/15/10................................................................... 1,152,767 6,600 U.S. Treasury Note 5.875% due 11/15/04.................................................................. 6,772,062 1,500 U.S. Treasury Note 6.00% due 08/15/09................................................................... 1,583,175 3,000 U.S. Treasury Note 6.125% due 08/15/07.................................................................. 3,159,090 5,000 U.S. Treasury Note 6.25% due 01/31/02................................................................... 5,040,650 1,000 U.S. Treasury Note 6.25% due 02/15/03................................................................... 1,021,540 1,000 U.S. Treasury Note 6.25% due 02/15/07................................................................... 1,056,720 1,000 U.S. Treasury Note 6.50% due 08/15/05................................................................... 1,057,630 2,500 U.S. Treasury Note 6.50% due 02/15/10................................................................... 2,735,650 4,000 U.S. Treasury Note 6.625% due 05/15/07.................................................................. 4,314,560 1,000 U.S. Treasury Note 6.75% due 05/15/05................................................................... 1,064,940 1,000 U.S. Treasury Note 6.875% due 05/15/06.................................................................. 1,081,630 1,000 U.S. Treasury Note 7.25% due 05/15/04................................................................... 1,064,230 ------------ TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (COST $91,588,667)..................................................................... 95,526,335 ------------ PRINCIPAL AMOUNT IN THOUSANDS VALUE - ---------------------------------------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS (a) (22.8%) U.S. GOVERNMENT AGENCIES $63,000 Federal Home Loan Banks 6.21% due 01/24/01................................................................... $ 62,750,048 50,000 Federal Home Loan Mortgage Corp. 6.42% due 01/09/01................................................................... 49,928,666 7,400 Federal National Mortgage Assoc. 5.75% due 01/02/01................................................................... 7,398,818 45,000 Federal National Mortgage Assoc. 6.34% due 01/17/01................................................................... 44,873,200 ------------ TOTAL SHORT-TERM INVESTMENTS (COST $164,950,732).................................................................... 164,950,732 ------------
TOTAL INVESTMENTS (COST $595,647,996) (b)................................................................... 101.0% 731,936,175 LIABILITIES IN EXCESS OF OTHER ASSETS..................................................... (1.0) (7,266,698) ----- ------------- NET ASSETS................................................................................ 100.0% $ 724,669,477 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. * 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 the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $149,739,073 and the aggregate gross unrealized depreciation is $13,450,894 resulting in net unrealized appreciation of $136,288,179. SEE NOTES TO FINANCIAL STATEMENTS 98 (This page has been left blank intentionally.) 99 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2000
MONEY SHORT-TERM QUALITY HIGH MARKET BOND INCOME PLUS YIELD UTILITIES - -------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value *..................... $366,574,595 $8,103,576 $405,792,920 $ 126,251,535 $569,434,842 Cash.......................... 8,876 135,868 34,335 -- -- Receivable for: Investments sold.......... -- -- -- -- -- Shares of beneficial interest sold........... 9,017,284 42,958 88,207 77,731 210,729 Dividends................. -- -- -- -- 839,277 Interest.................. 478,407 94,930 6,095,784 4,871,556 922,277 Foreign withholding taxes reclaimed............... -- -- -- -- -- Unrealized appreciation on forward foreign currency contracts................... -- -- -- -- -- Prepaid expenses and other assets...................... 702 -- 402 1,539 -- ------------ ---------- ------------ ------------- ------------ TOTAL ASSETS............. 376,079,864 8,377,332 412,011,648 131,202,361 571,407,125 ------------ ---------- ------------ ------------- ------------ LIABILITIES: Payable for: Investments purchased..... -- 500,456 -- -- -- Shares of beneficial interest repurchased.... 3,278,710 416 89,565 32,954 212,540 Plan of distribution fee (Class Y)............... 2,350 269 933 409 3,750 Investment management fee..................... 144,933 2,876 173,302 58,189 303,170 Payable to bank............... -- -- -- 468,653 -- Unrealized depreciation on forward foreign currency contracts................... -- -- -- -- -- Accrued expenses and other payables.................... 47,688 16,616 63,223 49,819 84,099 ------------ ---------- ------------ ------------- ------------ TOTAL LIABILITIES........ 3,473,681 520,633 327,023 610,024 603,559 ------------ ---------- ------------ ------------- ------------ NET ASSETS: Paid-in-capital............... 372,605,899 7,827,062 443,117,606 398,122,505 323,610,694 Accumulated undistributed net investment income (loss).... 284 2,364 170,211 183,893 9,160 Accumulated undistributed net realized gain (loss)........ -- (4,461) (38,610,588) (39,570,205) 22,993,155 Net unrealized appreciation (depreciation).............. -- 31,734 7,007,396 (228,143,856) 224,190,557 ------------ ---------- ------------ ------------- ------------ NET ASSETS............... $372,606,183 $7,856,699 $411,684,625 $ 130,592,337 $570,803,566 ============ ========== ============ ============= ============ *IDENTIFIED COST......... $366,574,595 $8,071,841 $398,785,524 $ 354,395,391 $345,244,285 ============ ========== ============ ============= ============ CLASS X SHARES: Net Assets.................... $358,793,358 $6,426,579 $406,508,445 $ 128,645,634 $551,734,115 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 358,793,055 645,177 39,765,490 52,896,806 25,442,824 NET ASSET VALUE PER SHARE................... $1.00 $9.96 $10.22 $2.43 $21.69 ============ ========== ============ ============= ============ CLASS Y SHARES: Net Assets.................... $13,812,825 $1,430,120 $5,176,180 $1,946,703 $19,069,451 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 13,812,844 143,718 506,767 799,540 879,677 NET ASSET VALUE PER SHARE................... $1.00 $9.95 $10.21 $2.43 $21.68 ============ ========== ============ ============= ============
- ------------------ ** Foreign cash. SEE NOTES TO FINANCIAL STATEMENTS 100 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2000
GLOBAL INCOME DIVIDEND CAPITAL DIVIDEND EUROPEAN PACIFIC BUILDER GROWTH GROWTH GROWTH GROWTH GROWTH - --------------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value *..................... $59,765,461 $1,574,167,162 $188,062,101 $373,617,663 $516,171,816 $ 63,526,291 Cash.......................... -- 64,962 84,057 147,808 411,370 408,887** Receivable for: Investments sold.......... 155,873 -- 168,744 2,105,909 -- 6,481,448 Shares of beneficial interest sold........... 8,073 617,299 63,590 457,273 1,340,397 1,154,073 Dividends................. 184,514 1,854,335 113,795 487,242 642,578 17,623 Interest.................. 348,721 -- -- 2,679 6,590 9,447 Foreign withholding taxes reclaimed............... -- -- -- 448,690 746,700 15,838 Unrealized appreciation on forward foreign currency contracts................... -- -- -- -- 657,543 -- Prepaid expenses and other assets...................... 1,897 359,947 41 58 9,682 -- ----------- -------------- ------------ ------------ ------------ ------------ TOTAL ASSETS............. 60,464,539 1,577,063,705 188,492,328 377,267,322 519,986,676 71,613,607 ----------- -------------- ------------ ------------ ------------ ------------ LIABILITIES: Payable for: Investments purchased..... -- 3,800,802 -- 481,290 257,721 -- Shares of beneficial interest repurchased.... 59,346 662,932 1,656,484 477,998 272,821 157,207 Plan of distribution fee (Class Y)............... 173 3,603 677 432 2,042 157 Investment management fee..................... 37,675 683,207 99,931 233,590 404,148 59,611 Payable to bank............... -- -- -- -- -- 6,351,948 Unrealized depreciation on forward foreign currency contracts................... -- -- -- 13,802 -- 14,787 Accrued expenses and other payables.................... 20,165 106,308 32,773 79,558 104,813 92,294 ----------- -------------- ------------ ------------ ------------ ------------ TOTAL LIABILITIES........ 117,359 5,256,852 1,789,865 1,286,670 1,041,545 6,676,004 ----------- -------------- ------------ ------------ ------------ ------------ NET ASSETS: Paid-in-capital............... 64,168,115 1,682,565,884 149,085,633 343,721,640 373,063,025 112,210,212 Accumulated undistributed net investment income (loss).... 29,137 (9,695) 800,627 6,759,117 4,054,954 (45,639) Accumulated undistributed net realized gain (loss)........ (2,076,795) (266,844,811) 7,414,697 (383,132) 75,018,381 (40,084,367) Net unrealized appreciation (depreciation).............. (1,773,277) 156,095,475 29,401,506 25,883,027 66,808,771 (7,142,603) ----------- -------------- ------------ ------------ ------------ ------------ NET ASSETS............... $60,347,180 $1,571,806,853 $186,702,463 $375,980,652 $518,945,131 $ 64,937,603 =========== ============== ============ ============ ============ ============ *IDENTIFIED COST......... $61,538,738 $1,418,071,687 $158,660,595 $347,739,790 $450,020,371 $ 70,654,296 =========== ============== ============ ============ ============ ============ CLASS X SHARES: Net Assets.................... $59,382,584 $1,552,724,301 $183,151,088 $373,769,508 $508,365,559 $ 64,209,126 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 5,468,583 107,074,572 9,131,423 29,366,736 20,039,706 11,549,108 NET ASSET VALUE PER SHARE................... $10.86 $14.50 $20.06 $12.73 $25.37 $5.56 =========== ============== ============ ============ ============ ============ CLASS Y SHARES: Net Assets.................... $964,596 $19,082,552 $3,551,375 $2,211,144 $10,579,572 $728,477 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 88,914 1,317,242 177,335 173,972 417,657 131,096 NET ASSET VALUE PER SHARE................... $10.85 $14.49 $20.03 $12.71 $25.33 $5.56 =========== ============== ============ ============ ============ ============ EQUITY S&P 500 INDEX - ------------------------------ -------------------------------- ASSETS: Investments in securities, at value *..................... $1,907,515,017 $223,176,486 Cash.......................... -- 74 Receivable for: Investments sold.......... 32,812,359 582 Shares of beneficial interest sold........... 2,061,898 122,060 Dividends................. 1,030,524 181,883 Interest.................. 67 602 Foreign withholding taxes reclaimed............... 11,356 -- Unrealized appreciation on forward foreign currency contracts................... -- -- Prepaid expenses and other assets...................... 561 -- -------------- ------------ TOTAL ASSETS............. 1,943,431,782 223,481,687 -------------- ------------ LIABILITIES: Payable for: Investments purchased..... 91,944,068 -- Shares of beneficial interest repurchased.... 586,979 78,739 Plan of distribution fee (Class Y)............... 6,302 2,535 Investment management fee..................... 760,595 75,820 Payable to bank............... -- -- Unrealized depreciation on forward foreign currency contracts................... -- -- Accrued expenses and other payables.................... 97,092 70,845 -------------- ------------ TOTAL LIABILITIES........ 93,395,036 227,939 -------------- ------------ NET ASSETS: Paid-in-capital............... 1,500,498,071 220,535,360 Accumulated undistributed net investment income (loss).... 28,983 1,936,461 Accumulated undistributed net realized gain (loss)........ 219,084,421 (752,970) Net unrealized appreciation (depreciation).............. 130,425,271 1,534,897 -------------- ------------ NET ASSETS............... $1,850,036,746 $223,253,748 ============== ============ *IDENTIFIED COST......... $1,777,089,746 $221,558,403 ============== ============ CLASS X SHARES: Net Assets.................... $1,818,134,159 $210,529,738 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 45,825,382 17,466,432 NET ASSET VALUE PER SHARE................... $39.68 $12.05 ============== ============ CLASS Y SHARES: Net Assets.................... $31,902,587 $12,724,010 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 804,486 1,057,247 NET ASSET VALUE PER SHARE................... $39.66 $12.04 ============== ============
101 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF ASSETS AND LIABILITIES, CONTINUED DECEMBER 31, 2000
COMPETITIVE EDGE AGGRESSIVE "BEST IDEAS" EQUITY INFORMATION STRATEGIST - --------------------------------------------------------------------------------------------------------- ASSETS: Investments in securities, at value *..................... $74,554,150 $153,111,242 $4,593,020 $731,936,175 Cash.......................... -- 60,527 8,887 62,697 Receivable for: Investments sold.......... 169,898 832,109 1,356 -- Shares of beneficial interest sold........... 40,784 266,846 18,423 413,775 Dividends................. 18,801 89,039 200 325,812 Interest.................. 772 -- -- 2,965,467 Foreign withholding taxes reclaimed............... 30,526 116 -- -- Prepaid expenses and other assets...................... 322 4,329 -- 776 Receivable from affiliate..... -- -- 4,309 -- ----------- ------------ ---------- ------------ TOTAL ASSETS............. 74,815,253 154,364,208 4,626,195 735,704,702 ----------- ------------ ---------- ------------ LIABILITIES: Payable for: Investments purchased..... 149,358 2,087,347 19,865 10,287,637 Shares of beneficial interest repurchased.... 54,309 101,215 201 377,573 Plan of distribution fee (Class Y)............... 968 2,661 320 4,616 Investment management fee..................... 41,757 94,941 -- 304,755 Accrued expenses and other payables.................... 20,752 28,663 4,309 60,644 ----------- ------------ ---------- ------------ TOTAL LIABILITIES........ 267,144 2,314,827 24,695 11,035,225 ----------- ------------ ---------- ------------ NET ASSETS: Paid-in-capital............... 77,156,807 156,934,246 4,888,398 570,810,419 Accumulated undistributed net investment income (loss).... 380,569 390,018 15,281 149,692 Accumulated undistributed net realized gain (loss)........ 3,865,909 (16,679,518) (16,575) 17,421,187 Net unrealized appreciation (depreciation).............. (6,855,176) 11,404,635 (285,604) 136,288,179 ----------- ------------ ---------- ------------ NET ASSETS............... $74,548,109 $152,049,381 $4,601,500 $724,669,477 =========== ============ ========== ============ *IDENTIFIED COST......... $81,409,870 $141,706,607 $4,878,624 $595,647,996 =========== ============ ========== ============ CLASS X SHARES: Net Assets.................... $69,881,932 $138,657,186 $2,686,232 $701,294,178 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 6,865,118 9,690,743 288,585 42,099,800 NET ASSET VALUE PER SHARE................... $10.18 $14.31 $9.31 $16.66 =========== ============ ========== ============ CLASS Y SHARES: Net Assets.................... $4,666,177 $13,392,195 $1,915,268 $23,375,299 Shares Outstanding (UNLIMITED AUTHORIZED SHARES OF $.01 PAR VALUE).................. 459,255 937,137 205,793 1,404,165 NET ASSET VALUE PER SHARE................... $10.16 $14.29 $9.31 $16.65 =========== ============ ========== ============
SEE NOTES TO FINANCIAL STATEMENTS 102 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000+
QUALITY MONEY SHORT-TERM INCOME HIGH MARKET BOND PLUS YIELD UTILITIES - -------------------------------------------------------------------------------------------------- INVESTMENT INCOME: INCOME Interest...................... $24,562,933 $330,229 $ 30,920,850 $ 39,235,682 $ 4,931,047 Dividends..................... -- -- -- -- 11,380,605* ----------- -------- ------------ ------------- ------------ TOTAL INCOME............. 24,562,933 330,229 30,920,850 39,235,682 16,311,652 ----------- -------- ------------ ------------- ------------ EXPENSES Investment management fee..... 1,929,020 24,424 2,076,692 1,093,003 3,671,048 Professional fees............. 27,513 22,866 30,323 31,496 29,894 Custodian fees................ 20,500 5,234 40,785 18,700 28,314 Shareholder reports and notices..................... 13,950 189 28,694 28,014 59,174 Plan of distribution fee (Class Y shares)............ 7,663 773 2,586 1,873 10,436 Trustees' fees and expenses... 943 -- 1,131 622 1,342 Transfer agent fees and expenses.................... 500 500 500 500 500 Other......................... 2,702 1,925 8,043 9,561 4,813 ----------- -------- ------------ ------------- ------------ TOTAL EXPENSES........... 2,002,791 55,911 2,188,754 1,183,769 3,805,521 Less: expense offset.......... -- (2,113) -- -- -- ----------- -------- ------------ ------------- ------------ NET EXPENSES............. 2,002,791 53,798 2,188,754 1,183,769 3,805,521 ----------- -------- ------------ ------------- ------------ NET INVESTMENT INCOME.... 22,560,142 276,431 28,732,096 38,051,913 12,506,131 ----------- -------- ------------ ------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments............... 2,431 (1,534) (10,516,981) (3,132,579) 22,995,021 Futures contracts......... -- -- -- -- -- Foreign exchange transactions............ -- -- -- -- -- ----------- -------- ------------ ------------- ------------ NET GAIN (LOSS).......... 2,431 (1,534) (10,516,981) (3,132,579) 22,995,021 ----------- -------- ------------ ------------- ------------ Net change in unrealized appreciation/ depreciation on: Investments............... -- 48,780 25,002,447 (102,561,779) (17,897,321) Futures contracts......... -- -- -- -- -- Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies.............. -- -- -- -- -- ----------- -------- ------------ ------------- ------------ NET APPRECIATION (DEPRECIATION)........... -- 48,780 25,002,447 (102,561,779) (17,897,321) ----------- -------- ------------ ------------- ------------ NET GAIN (LOSS).......... 2,431 47,246 14,485,466 (105,694,358) 5,097,700 ----------- -------- ------------ ------------- ------------ NET INCREASE (DECREASE)....... $22,562,573 $323,677 $ 43,217,562 $ (67,642,445) $ 17,603,831 =========== ======== ============ ============= ============
- ------------------ + Class Y shares were issued June 6, 2000. * Net of $111,279 foreign withholding tax. SEE NOTES TO FINANCIAL STATEMENTS 103 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF OPERATIONS, CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2000+
GLOBAL INCOME DIVIDEND CAPITAL DIVIDEND BUILDER GROWTH GROWTH GROWTH - ----------------------------------------------------------------------------------------- INVESTMENT INCOME: INCOME Interest...................... $ 1,846,970 $ 1,437,182 $ 1,121,185 $ 908,053 Dividends..................... 2,058,022 40,757,691* 985,834* 10,282,028* ----------- ------------- ----------- ------------ TOTAL INCOME............. 3,904,992 42,194,873 2,107,019 11,190,081 ----------- ------------- ----------- ------------ EXPENSES Investment management fee..... 497,794 8,539,459 1,225,512 3,118,294 Professional fees............. 21,203 29,866 30,432 38,136 Custodian fees................ 11,742 83,527 34,762 119,769 Shareholder reports and notices..................... 5,988 79,346 10,660 30,912 Plan of distribution fee (Class Y shares)............ 496 10,191 2,595 1,533 Trustees' fees and expenses... 115 4,569 409 1,007 Transfer agent fees and expenses.................... 500 500 500 500 Other......................... 2,203 12,611 1,072 12,489 ----------- ------------- ----------- ------------ TOTAL EXPENSES........... 540,041 8,760,069 1,305,942 3,322,640 Less: amounts waived/reimbursed........... -- -- -- -- ----------- ------------- ----------- ------------ NET EXPENSES............. 540,041 8,760,069 1,305,942 3,322,640 ----------- ------------- ----------- ------------ NET INVESTMENT INCOME.... 3,364,951 33,434,804 801,077 7,867,441 ----------- ------------- ----------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments............... (1,439,206) (247,633,286) 8,578,573 7,706,833 Futures contracts......... -- -- -- -- Foreign exchange transactions............ -- -- -- (18,132) ----------- ------------- ----------- ------------ NET GAIN (LOSS).......... (1,439,206) (247,633,286) 8,578,573 7,688,701 ----------- ------------- ----------- ------------ Net change in unrealized appreciation/depreciation on: Investments............... (2,608,659) 255,968,189 (7,754,345) (33,783,599) Futures contracts......... -- -- -- -- Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies.............. -- -- -- 17,797 ----------- ------------- ----------- ------------ NET APPRECIATION (DEPRECIATION)........... (2,608,659) 255,968,189 (7,754,345) (33,765,802) ----------- ------------- ----------- ------------ NET GAIN (LOSS).......... (4,047,865) 8,334,903 824,228 (26,077,101) ----------- ------------- ----------- ------------ NET INCREASE (DECREASE)....... $ (682,914) $ 41,769,707 $ 1,625,305 $(18,209,660) =========== ============= =========== ============
- ------------------ + Class Y shares were issued June 6, 2000. ++ For the period November 6, 2000 (commencement of operations) through December 31, 2000. * Net of $236,913, $3,388, $781,657, $992,158, $123,742, $193,365, $11,385, $51,906, $2,690, and $18,094 foreign withholding tax, respectively. ** Net of foreign taxes of $51,952. SEE NOTES TO FINANCIAL STATEMENTS 104 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF OPERATIONS, CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2000+
COMPETITIVE EUROPEAN PACIFIC S&P 500 EDGE GROWTH GROWTH EQUITY INDEX "BEST IDEAS" - -------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: INCOME Interest...................... $ 1,127,490 $ 253,564 $ 14,721,863 $ 527,026 $ 295,815 Dividends..................... 7,094,247* 996,217* 8,527,590* 2,414,078* 643,806* ------------- ------------ ------------- ------------ ------------ TOTAL INCOME............. 8,221,737 1,249,781 23,249,453 2,941,104 939,621 ------------- ------------ ------------- ------------ ------------ EXPENSES Investment management fee..... 5,308,859 969,734 10,048,377 880,891 504,726 Professional fees............. 37,266 36,578 30,623 14,021 15,800 Custodian fees................ 227,414 192,856 139,911 67,403 24,306 Shareholder reports and notices..................... 31,870 12,415 55,797 7,328 2,460 Plan of distribution fee (Class Y shares)............ 8,389 716 23,340 10,061 3,666 Trustees' fees and expenses... 1,245 150 4,534 298 145 Transfer agent fees and expenses.................... 500 500 500 500 500 Other......................... 11,594 18,724 13,220 24,094 1,245 ------------- ------------ ------------- ------------ ------------ TOTAL EXPENSES........... 5,627,137 1,231,673 10,316,302 1,004,596 552,848 Less: amounts waived/reimbursed........... -- -- -- -- -- ------------- ------------ ------------- ------------ ------------ NET EXPENSES............. 5,627,137 1,231,673 10,316,302 1,004,596 552,848 ------------- ------------ ------------- ------------ ------------ NET INVESTMENT INCOME.... 2,594,600 18,108 12,933,151 1,936,508 386,773 ------------- ------------ ------------- ------------ ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments............... 75,113,926 4,992,878** 241,612,765 (244,335) 5,366,593 Futures contracts......... -- -- -- (325,139) -- Foreign exchange transactions............ 1,484,701 (68,573) -- -- (5,520) ------------- ------------ ------------- ------------ ------------ NET GAIN (LOSS).......... 76,598,627 4,924,305 241,612,765 (569,474) 5,361,073 ------------- ------------ ------------- ------------ ------------ Net change in unrealized appreciation/depreciation on: Investments............... (106,565,981) (37,507,370) (526,098,393) (23,075,606) (20,692,943) Futures contracts......... -- -- -- (253,451) -- Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies.............. 688,659 210,123 -- -- 1,346 ------------- ------------ ------------- ------------ ------------ NET APPRECIATION (DEPRECIATION)........... (105,877,322) (37,297,247) (526,098,393) (23,329,057) (20,691,597) ------------- ------------ ------------- ------------ ------------ NET GAIN (LOSS).......... (29,278,695) (32,372,942) (284,485,628) (23,898,531) (15,330,524) ------------- ------------ ------------- ------------ ------------ NET INCREASE (DECREASE)....... $ (26,684,095) $(32,354,834) $(271,552,477) $(21,962,023) $(14,943,751) ============= ============ ============= ============ ============ AGGRESSIVE EQUITY INFORMATION++ STRATEGIST - ------------------------------ ------------------------------------------------- INVESTMENT INCOME: INCOME Interest...................... $ 893,342 $ 14,965 $ 20,366,969 Dividends..................... 490,921* 316 3,231,232* ------------ --------- ------------ TOTAL INCOME............. 1,384,263 15,281 23,598,201 ------------ --------- ------------ EXPENSES Investment management fee..... 901,980 3,008 3,679,250 Professional fees............. 20,048 2,611 30,894 Custodian fees................ 57,556 1,611 39,755 Shareholder reports and notices..................... 3,892 6 31,777 Plan of distribution fee (Class Y shares)............ 9,957 409 14,343 Trustees' fees and expenses... 70 3 1,688 Transfer agent fees and expenses.................... 500 77 500 Other......................... 236 -- 11,740 ------------ --------- ------------ TOTAL EXPENSES........... 994,239 7,725 3,809,947 Less: amounts waived/reimbursed........... -- (7,316) -- ------------ --------- ------------ NET EXPENSES............. 994,239 409 3,809,947 ------------ --------- ------------ NET INVESTMENT INCOME.... 390,024 14,872 19,788,254 ------------ --------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on: Investments............... (16,497,626) (16,575) 26,318,018 Futures contracts......... -- -- -- Foreign exchange transactions............ -- -- -- ------------ --------- ------------ NET GAIN (LOSS).......... (16,497,626) (16,575) 26,318,018 ------------ --------- ------------ Net change in unrealized appreciation/depreciation on: Investments............... 4,022,722 (285,604) (34,158,403) Futures contracts......... -- -- -- Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies.............. -- -- -- ------------ --------- ------------ NET APPRECIATION (DEPRECIATION)........... 4,022,722 (285,604) (34,158,403) ------------ --------- ------------ NET GAIN (LOSS).......... (12,474,904) (302,179) (7,840,385) ------------ --------- ------------ NET INCREASE (DECREASE)....... $(12,084,880) $(287,307) $ 11,947,869 ============ ========= ============
105 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS
MONEY MARKET SHORT-TERM BOND ------------------------------------- -------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999 DECEMBER 31, 2000+ DECEMBER 31, 1999* - ------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... $ 22,560,142 $ 20,402,046 $ 276,431 $ 57,933 Net realized gain (loss)...... 2,431 1,751 (1,534) (2,927) Net change in unrealized appreciation/depreciation... -- -- 48,780 (17,046) ------------ ------------ ---------- ---------- NET INCREASE (DECREASE)............... 22,562,573 20,403,797 323,677 37,960 ------------ ------------ ---------- ---------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (22,379,796) (20,401,879) (256,046) (57,933) Class Y Shares............ (180,251) -- (18,021) -- Net realized gain Class X Shares............ (2,394) (1,751) -- -- Class Y Shares............ (37) -- -- -- Paid-in-capital Class X Shares............ -- -- -- -- Class Y Shares............ -- -- -- -- ------------ ------------ ---------- ---------- TOTAL DIVIDENDS AND DISTRIBUTIONS............ (22,562,478) (20,403,630) (274,067) (57,933) ------------ ------------ ---------- ---------- Net increase (decrease) from transactions in shares of beneficial interest......... (63,037,023) (6,391,540) 4,632,500 3,194,562 ------------ ------------ ---------- ---------- TOTAL INCREASE (DECREASE)............... (63,036,928) (6,391,373) 4,682,110 3,174,589 NET ASSETS: Beginning of period........... 435,643,111 442,034,484 3,174,589 -- ------------ ------------ ---------- ---------- END OF PERIOD............ $372,606,183 $435,643,111 $7,856,699 $3,174,589 ============ ============ ========== ========== UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)................. $ 284 $ 189 $ 2,364 $ -- ============ ============ ========== ==========
- ------------------ + Class Y shares were issued June 6, 2000. * For the period May 4, 1999 (commencement of operations) through December 31, 1999. SEE NOTES TO FINANCIAL STATEMENTS 106 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS
QUALITY INCOME PLUS HIGH YIELD ------------------------------------- ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999 DECEMBER 31, 2000+ DECEMBER 31, 1999 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... $ 28,732,096 $ 32,603,272 $ 38,051,913 $ 46,601,600 Net realized gain (loss)...... (10,516,981) (11,840,632) (3,132,579) (7,019,312) Net change in unrealized appreciation/depreciation... 25,002,447 (43,753,636) (102,561,779) (43,905,004) ------------ ------------ ------------- ------------ NET INCREASE (DECREASE)............... 43,217,562 (22,990,996) (67,642,445) (4,322,716) ------------ ------------ ------------- ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (28,551,058) (32,603,082) (37,708,110) (46,732,009) Class Y Shares............ (80,831) -- (181,257) -- Net realized gain Class X Shares............ -- -- -- -- Class Y Shares............ -- -- -- -- Paid-in-capital Class X Shares............ -- -- -- -- Class Y Shares............ -- -- -- -- ------------ ------------ ------------- ------------ TOTAL DIVIDENDS AND DISTRIBUTIONS............ (28,631,889) (32,603,082) (37,889,367) (46,732,009) ------------ ------------ ------------- ------------ Net increase (decrease) from transactions in shares of beneficial interest......... (59,032,899) (35,856,852) (43,559,323) (33,340,707) ------------ ------------ ------------- ------------ TOTAL INCREASE (DECREASE)............... (44,447,226) (91,450,930) (149,091,135) (84,395,432) NET ASSETS: Beginning of period........... 456,131,851 547,582,781 279,683,472 364,078,904 ------------ ------------ ------------- ------------ END OF PERIOD............ $411,684,625 $456,131,851 $ 130,592,337 $279,683,472 ============ ============ ============= ============ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)................. $ 170,211 $ 47,349 $ 183,893 $ 21,347 ============ ============ ============= ============ UTILITIES INCOME BUILDER ------------------------------------- ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999 DECEMBER 31, 2000+ DECEMBER 31, 1999 - ------------------------------ ---------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... $ 12,506,131 $ 14,157,266 $ 3,364,951 $ 4,199,255 Net realized gain (loss)...... 22,995,021 33,719,313 (1,439,206) (99,594) Net change in unrealized appreciation/depreciation... (17,897,321) 19,868,085 (2,608,659) 1,427,366 ------------ ------------ ------------ ----------- NET INCREASE (DECREASE)............... 17,603,831 67,744,664 (682,914) 5,527,027 ------------ ------------ ------------ ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (12,359,196) (14,157,310) (3,258,344) (4,106,298) Class Y Shares............ (137,756) -- (16,825) -- Net realized gain Class X Shares............ (33,661,404) (11,183,423) -- (1,674,655) Class Y Shares............ (57,888) -- -- -- Paid-in-capital Class X Shares............ -- -- (188,897) (120,208) Class Y Shares............ -- -- (975) -- ------------ ------------ ------------ ----------- TOTAL DIVIDENDS AND DISTRIBUTIONS............ (46,216,244) (25,340,733) (3,465,041) (5,901,161) ------------ ------------ ------------ ----------- Net increase (decrease) from transactions in shares of beneficial interest......... 18,929,027 (22,719,812) (17,121,201) (5,778,664) ------------ ------------ ------------ ----------- TOTAL INCREASE (DECREASE)............... (9,683,386) 19,684,119 (21,269,156) (6,152,798) NET ASSETS: Beginning of period........... 580,486,952 560,802,833 81,616,336 87,769,134 ------------ ------------ ------------ ----------- END OF PERIOD............ $570,803,566 $580,486,952 $ 60,347,180 $81,616,336 ============ ============ ============ =========== UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)................. $ 9,160 $ (19) $ 26,859 $ 107,871 ============ ============ ============ ===========
107 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
DIVIDEND GROWTH CAPITAL GROWTH ------------------------------------- ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999 DECEMBER 31, 2000+ DECEMBER 31, 1999 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... $ 33,434,804 $ 41,593,941 $ 801,077 $ 31,551 Net realized gain (loss)...... (247,633,286) 346,534,889 8,578,573 34,213,226 Net change in unrealized appreciation/depreciation... 255,968,189 (441,379,064) (7,754,345) 8,664,948 -------------- -------------- ------------ ------------ NET INCREASE (DECREASE)............... 41,769,707 (53,250,234) 1,625,305 42,909,725 -------------- -------------- ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (33,410,710) (41,593,983) (16,143) -- Class Y Shares............ (116,132) -- (51) -- Net realized gain Class X Shares............ (355,389,540) (329,147,530) (31,601,359) (17,791,828) Class Y Shares............ (366,002) -- (99,741) -- -------------- -------------- ------------ ------------ TOTAL DIVIDENDS AND DISTRIBUTIONS............ (389,282,384) (370,741,513) (31,717,294) (17,791,828) -------------- -------------- ------------ ------------ Net increase (decrease) from transactions in shares of beneficial interest......... (114,494,397) 207,878,895 45,543,036 7,530,409 -------------- -------------- ------------ ------------ TOTAL INCREASE (DECREASE)............... (462,007,074) (216,112,852) 15,451,047 32,648,306 NET ASSETS: Beginning of period........... 2,033,813,927 2,249,926,779 171,251,416 138,603,110 -------------- -------------- ------------ ------------ END OF PERIOD............ $1,571,806,853 $2,033,813,927 $186,702,463 $171,251,416 ============== ============== ============ ============ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)................. $ (9,695) $ 112 $ 800,627 $ 31,127 ============== ============== ============ ============
- ------------------ + Class Y shares were issued June 6, 2000. SEE NOTES TO FINANCIAL STATEMENTS 108 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS
GLOBAL DIVIDEND GROWTH EUROPEAN GROWTH ------------------------------------- ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999 DECEMBER 31, 2000+ DECEMBER 31, 1999 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... $ 7,867,441 $ 9,301,972 $ 2,594,600 $ 4,356,655 Net realized gain (loss)...... 7,688,701 42,434,603 76,598,627 89,014,598 Net change in unrealized appreciation/depreciation... (33,765,802) 14,999,600 (105,877,322) 39,368,603 ------------- ------------ ------------- ------------ NET INCREASE (DECREASE)............... (18,209,660) 66,736,175 (26,684,095) 132,739,856 ------------- ------------ ------------- ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (2,796,221) (9,852,158) (3,290,821) (3,407,759) Class Y Shares............ -- -- (8,172) -- Net realized gain Class X Shares............ (38,145,152) (35,181,150) (84,881,334) (47,147,183) Class Y Shares............ (20,655) -- (210,787) -- ------------- ------------ ------------- ------------ TOTAL DIVIDENDS AND DISTRIBUTIONS............ (40,962,028) (45,033,308) (88,391,114) (50,554,942) ------------- ------------ ------------- ------------ Net increase (decrease) from transactions in shares of beneficial interest......... (71,777,150) 999,059 54,315,573 (13,117,744) ------------- ------------ ------------- ------------ TOTAL INCREASE (DECREASE)............... (130,948,838) 22,701,926 (60,759,636) 69,067,170 NET ASSETS: Beginning of period........... 506,929,490 484,227,564 579,704,767 510,637,597 ------------- ------------ ------------- ------------ END OF PERIOD............ $ 375,980,652 $506,929,490 $ 518,945,131 $579,704,767 ============= ============ ============= ============ UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)................. $ 6,759,117 $ 900,043 $ 4,054,954 $ 3,279,390 ============= ============ ============= ============ PACIFIC GROWTH EQUITY ------------------------------------- ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999 DECEMBER 31, 2000+ DECEMBER 31, 1999 - ------------------------------ ---------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... 18,108 $ 673,927 $ 12,933,151 $ 7,884,930 Net realized gain (loss)...... 4,924,305 15,775,724 241,612,765 301,936,226 Net change in unrealized appreciation/depreciation... (37,297,247) 28,380,099 (526,098,393) 429,853,712 ------------ ------------ -------------- -------------- NET INCREASE (DECREASE)............... (32,354,834) 44,829,750 (271,552,477) 739,674,868 ------------ ------------ -------------- -------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (1,544,980) (770,896) (12,785,786) (7,879,428) Class Y Shares............ (892) -- (118,384) -- Net realized gain Class X Shares............ -- -- (309,799,810) (168,434,937) Class Y Shares............ -- -- (519,733) -- ------------ ------------ -------------- -------------- TOTAL DIVIDENDS AND DISTRIBUTIONS............ (1,545,872) (770,896) (323,223,713) (176,314,365) ------------ ------------ -------------- -------------- Net increase (decrease) from transactions in shares of beneficial interest......... (17,089,075) 19,026,993 361,741,551 381,298,159 ------------ ------------ -------------- -------------- TOTAL INCREASE (DECREASE)............... (50,989,781) 63,085,847 (233,034,639) 944,658,662 NET ASSETS: Beginning of period........... 115,927,384 52,841,537 2,083,071,385 1,138,412,723 ------------ ------------ -------------- -------------- END OF PERIOD............ $ 64,937,603 $115,927,384 $1,850,036,746 $2,083,071,385 ============ ============ ============== ============== UNDISTRIBUTED NET INVESTMENT INCOME (LOSS)................. $ (45,639) $ 503,902 $ 28,983 $ 2 ============ ============ ============== ==============
109 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
S&P 500 INDEX COMPETITIVE EDGE "BEST IDEAS" ------------------------------------- ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999 DECEMBER 31, 2000+ DECEMBER 31, 1999 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... $ 1,936,508 $ 1,179,912 $ 386,773 $ 318,798 Net realized gain (loss)...... (569,474) 977,294 5,361,073 (231,782) Net change in unrealized appreciation/depreciation... (23,329,057) 20,690,042 (20,691,597) 11,840,897 ------------ ------------ ------------ ----------- NET INCREASE (DECREASE)............... (21,962,023) 22,847,248 (14,943,751) 11,927,913 ------------ ------------ ------------ ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (1,171,429) (244,996) (314,559) (267,149) Class Y Shares............ (8,524) -- (2,328) -- Net realized gain Class X Shares............ (1,055,974) (283,184) -- -- Class Y Shares............ (7,684) -- -- -- ------------ ------------ ------------ ----------- TOTAL DIVIDENDS AND DISTRIBUTIONS............ (2,243,611) (528,180) (316,887) (267,149) ------------ ------------ ------------ ----------- Net increase from transactions in shares of beneficial interest.................... 61,496,562 114,911,784 27,513,945 14,095,258 ------------ ------------ ------------ ----------- TOTAL INCREASE (DECREASE)............... 37,290,928 137,230,852 12,253,307 25,756,022 NET ASSETS: Beginning of period........... 185,962,820 48,731,968 62,294,802 36,538,780 ------------ ------------ ------------ ----------- END OF PERIOD............ $223,253,748 $185,962,820 $ 74,548,109 $62,294,802 ============ ============ ============ =========== UNDISTRIBUTED NET INVESTMENT INCOME........................ $ 1,936,461 $ 1,179,906 $ 380,569 $ 316,203 ============ ============ ============ ===========
- ------------------ + Class Y shares were issued June 6, 2000. ++ For the period November 6, 2000 (commencement of operations) through December 31, 2000. * For the period May 4, 1999 (commencement of operations) through December 31, 1999. SEE NOTES TO FINANCIAL STATEMENTS 110 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS
AGGRESSIVE EQUITY INFORMATION STRATEGIST -------------------------------------- ------------------- ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED ENDED DECEMBER 31, 2000+ DECEMBER 31, 1999* DECEMBER 31, 2000++ DECEMBER 31, 2000+ DECEMBER 31, 1999 - ---------------------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......... $ 390,024 $ 57,983 $ 14,872 $ 19,788,254 $ 15,227,196 Net realized gain (loss)...... (16,497,626) (181,892) (16,575) 26,318,018 83,843,891 Net change in unrealized appreciation/depreciation... 4,022,722 7,381,913 (285,604) (34,158,403) 10,097,511 ------------ ----------- ---------- ------------- ------------ NET INCREASE (DECREASE)............... (12,084,880) 7,258,004 (287,307) 11,947,869 109,168,598 ------------ ----------- ---------- ------------- ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Class X Shares............ (49,395) (8,097) -- (19,395,713) (15,227,618) Class Y Shares............ (497) -- -- (245,565) -- Net realized gain Class X Shares............ -- -- -- (85,487,009) -- Class Y Shares............ -- -- -- (209,745) -- ------------ ----------- ---------- ------------- ------------ TOTAL DIVIDENDS AND DISTRIBUTIONS............ (49,892) (8,097) -- (105,338,032) (15,227,618) ------------ ----------- ---------- ------------- ------------ Net increase from transactions in shares of beneficial interest.................... 125,986,777 30,947,469 4,888,807 88,358,964 1,825,416 ------------ ----------- ---------- ------------- ------------ TOTAL INCREASE (DECREASE)............... 113,852,005 38,197,376 4,601,500 (5,031,199) 95,766,396 NET ASSETS: Beginning of period........... 38,197,376 -- -- 729,700,676 633,934,280 ------------ ----------- ---------- ------------- ------------ END OF PERIOD............ $152,049,381 $38,197,376 $4,601,500 $ 724,669,477 $729,700,676 ============ =========== ========== ============= ============ UNDISTRIBUTED NET INVESTMENT INCOME........................ $ 390,018 $ 49,886 $ 15,281 $ 149,692 $ 36 ============ =========== ========== ============= ============
111 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED SUMMARY OF TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
MONEY MARKET SHORT-TERM BOND ------------------------------------ ------------------------------------- FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 1999* - ----------------------------------------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 934,549,163 560,245,244 733,662 564,039 Reinvestment of dividends and distributions............... 22,382,190 20,403,630 25,864 5,845 Redeemed...................... (1,033,781,220) (587,040,414) (435,676) (248,557) --------------- ------------- ----------- ----------- NET INCREASE (DECREASE) - CLASS X.................. (76,849,867) (6,391,540) 323,850 321,327 --------------- ------------- ----------- ----------- AMOUNT Sold.......................... $ 934,549,163 $ 560,245,244 $ 7,265,518 $ 5,606,552 Reinvestment of dividends and distributions............... 22,382,190 20,403,630 256,046 57,933 Redeemed...................... (1,033,781,220) (587,040,414) (4,317,357) (2,469,923) --------------- ------------- ----------- ----------- NET INCREASE (DECREASE) - CLASS X.................. $ (76,849,867) $ (6,391,540) $ 3,204,207 $ 3,194,562 --------------- ------------- ----------- ----------- CLASS Y SHARES+ SHARES Sold.......................... 21,834,091 -- 152,198 -- Reinvestment of dividends and distributions............... 180,288 -- 1,815 -- Redeemed...................... (8,201,535) -- (10,295) -- --------------- ------------- ----------- ----------- NET INCREASE - CLASS Y... 13,812,844 -- 143,718 -- --------------- ------------- ----------- ----------- AMOUNT Sold.......................... $ 21,834,091 -- $ 1,512,471 -- Reinvestment of dividends and distributions............... 180,288 -- 18,021 -- Redeemed...................... (8,201,535) -- (102,199) -- --------------- ------------- ----------- ----------- NET INCREASE - CLASS Y... $ 13,812,844 -- $ 1,428,293 -- --------------- ------------- ----------- -----------
- ------------------ + For the period June 6, 2000 (issue date) through December 31, 2000. * For the period May 4, 1999 (commencement of operations) through December 31, 1999. SEE NOTES TO FINANCIAL STATEMENTS 112 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED SUMMARY OF TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST, CONTINUED
QUALITY INCOME PLUS HIGH YIELD ------------------------------------ ------------------------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 1999 - ---------------------------------------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 5,308,884 5,941,824 7,327,491 14,733,336 Reinvestment of dividends and distributions............... 2,888,463 3,166,433 10,699,948 9,920,699 Redeemed...................... (14,707,375) (12,626,740) (29,780,742) (31,789,573) ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) - CLASS X.................. (6,510,028) (3,518,483) (11,753,303) (7,135,538) ------------- ------------- ------------- ------------- AMOUNT Sold.......................... $ 52,461,632 $ 62,145,724 $ 26,691,531 $ 69,363,729 Reinvestment of dividends and distributions............... 28,551,058 32,603,082 37,708,109 46,732,009 Redeemed...................... (145,125,419) (130,605,658) (110,680,449) (149,436,445) ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) - CLASS X.................. $ (64,112,729) $ (35,856,852) $ (46,280,809) $ (33,340,707) ------------- ------------- ------------- ------------- CLASS Y SHARES+ SHARES Sold.......................... 521,019 -- 838,148 -- Reinvestment of dividends and distributions............... 8,045 -- 62,141 -- Redeemed...................... (22,297) -- (100,749) -- ------------- ------------- ------------- ------------- NET INCREASE - CLASS Y... 506,767 -- 799,540 -- ------------- ------------- ------------- ------------- AMOUNT Sold.......................... $ 5,222,238 -- $ 2,862,807 -- Reinvestment of dividends and distributions............... 80,830 -- 181,257 -- Redeemed...................... (223,238) -- (322,578) -- ------------- ------------- ------------- ------------- NET INCREASE - CLASS Y... $ 5,079,830 -- $ 2,721,486 -- ------------- ------------- ------------- ------------- UTILITIES INCOME BUILDER ------------------------------------ ------------------------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 1999 - ------------------------------ -------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 3,339,684 3,501,422 596,272 1,493,695 Reinvestment of dividends and distributions............... 2,132,995 1,169,927 318,465 512,121 Redeemed...................... (5,380,502) (5,711,878) (2,580,512) (2,529,168) ------------- ------------- ------------ ------------ NET INCREASE (DECREASE) - CLASS X.................. 92,177 (1,040,529) (1,665,775) (523,352) ------------- ------------- ------------ ------------ AMOUNT Sold.......................... $ 75,452,968 $ 75,775,422 $ 6,501,915 $ 17,298,775 Reinvestment of dividends and distributions............... 46,020,620 25,340,733 3,447,241 5,901,161 Redeemed...................... (121,835,075) (123,835,967) (28,033,361) (28,978,600) ------------- ------------- ------------ ------------ NET INCREASE (DECREASE) - CLASS X.................. $ (361,487) $ (22,719,812) $(18,084,205) $ (5,778,664) ------------- ------------- ------------ ------------ CLASS Y SHARES+ SHARES Sold.......................... 911,424 -- 96,113 -- Reinvestment of dividends and distributions............... 8,984 -- 1,646 -- Redeemed...................... (40,731) -- (8,845) -- ------------- ------------- ------------ ------------ NET INCREASE - CLASS Y... 879,677 -- 88,914 -- ------------- ------------- ------------ ------------ AMOUNT Sold.......................... $ 19,996,170 -- $ 1,040,551 -- Reinvestment of dividends and distributions............... 195,644 -- 17,800 -- Redeemed...................... (901,300) -- (95,347) -- ------------- ------------- ------------ ------------ NET INCREASE - CLASS Y... $ 19,290,514 -- $ 963,004 -- ------------- ------------- ------------ ------------
113 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED SUMMARY OF TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST, CONTINUED
DIVIDEND GROWTH CAPITAL GROWTH ------------------------------------ ------------------------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 1999 - ---------------------------------------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 6,915,502 13,098,987 2,339,000 1,226,447 Reinvestment of dividends and distributions............... 29,902,455 17,950,387 1,544,543 929,562 Redeemed...................... (40,746,272) (21,694,034) (1,968,416) (1,746,710) ------------- ------------- ------------ ------------ NET INCREASE (DECREASE) - CLASS X.................. (3,928,315) 9,355,340 1,915,127 409,299 ------------- ------------- ------------ ------------ AMOUNT Sold.......................... $ 107,878,599 $ 280,502,535 $ 53,795,246 $ 25,586,183 Reinvestment of dividends and distributions............... 379,049,270 370,741,513 31,601,539 17,791,828 Redeemed...................... (619,548,550) (443,365,153) (43,563,364) (35,847,602) ------------- ------------- ------------ ------------ NET INCREASE (DECREASE) - CLASS X.................. $(132,620,681) $ 207,878,895 $ 41,833,241 $ 7,530,409 ------------- ------------- ------------ ------------ CLASS Y SHARES+ SHARES Sold.......................... 1,340,964 -- 186,139 -- Reinvestment of dividends and distributions............... 37,255 -- 4,877 -- Redeemed...................... (60,977) -- (13,681) -- ------------- ------------- ------------ ------------ NET INCREASE - CLASS Y... 1,317,242 -- 177,335 -- ------------- ------------- ------------ ------------ AMOUNT Sold.......................... $ 18,463,831 -- $ 3,889,764 -- Reinvestment of dividends and distributions............... 482,134 -- 99,741 -- Redeemed...................... (819,681) -- (279,710) -- ------------- ------------- ------------ ------------ NET INCREASE - CLASS Y... $ 18,126,284 -- $ 3,709,795 -- ------------- ------------- ------------ ------------
- ------------------ + For the period June 6, 2000 (issue date) through December 31, 2000. ** Includes acquisition of Capital Appreciation Portfolio of 824,458 shares and $35,291,368. SEE NOTES TO FINANCIAL STATEMENTS 114 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED SUMMARY OF TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST, CONTINUED
GLOBAL DIVIDEND GROWTH EUROPEAN GROWTH ------------------------------------ ------------------------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 1999 - ---------------------------------------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 2,246,998 3,735,961 9,230,245 5,542,879 Reinvestment of dividends and distributions............... 3,301,049 3,214,043 3,299,856 2,023,007 Redeemed...................... (11,288,529) (6,868,373) (10,913,565) (7,927,773) ------------- ------------ ------------- ------------- NET INCREASE (DECREASE) - CLASS X.................. (5,740,482) 81,631 1,616,536 (361,887) ------------- ------------ ------------- ------------- AMOUNT Sold.......................... $ 28,967,660 $ 52,898,642 $ 272,639,151 $ 151,803,640 Reinvestment of dividends and distributions............... 40,941,373 45,033,308 88,172,155 50,554,942 Redeemed...................... (143,825,063) (96,932,891) (317,442,661) (215,476,326) ------------- ------------ ------------- ------------- NET INCREASE (DECREASE) - CLASS X.................. $ (73,916,030) $ 999,059 $ 43,368,645 $ (13,117,744) ------------- ------------ ------------- ------------- CLASS Y SHARES+ SHARES Sold.......................... 186,212 -- 468,981 -- Reinvestment of dividends and distributions............... 1,677 -- 8,195 -- Redeemed...................... (13,917) -- (59,519) -- ------------- ------------ ------------- ------------- NET INCREASE - CLASS Y... 173,972 -- 417,657 -- ------------- ------------ ------------- ------------- AMOUNT Sold.......................... $ 2,287,280 -- $ 12,215,627 -- Reinvestment of dividends and distributions............... 20,655 -- 218,959 -- Redeemed...................... (169,055) -- (1,487,658) -- ------------- ------------ ------------- ------------- NET INCREASE - CLASS Y... $ 2,138,880 -- $ 10,946,928 -- ------------- ------------ ------------- ------------- PACIFIC GROWTH EQUITY ------------------------------------ ------------------------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 1999 - ------------------------------ -------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 51,041,243 37,338,181 7,164,752 10,020,241** Reinvestment of dividends and distributions............... 197,316 115,750 7,535,790 4,406,556 Redeemed...................... (53,387,675) (34,025,265) (7,537,949) (5,269,790) ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) - CLASS X.................. (2,149,116) 3,428,666 7,162,593 9,157,007 ------------- ------------- ------------- ------------- AMOUNT Sold.......................... $ 359,491,480 $ 233,462,939 $ 363,241,322 $ 428,695,184** Reinvestment of dividends and distributions............... 1,544,980 770,896 319,231,351 176,314,365 Redeemed...................... (379,056,684) (215,206,842) (355,434,066) (223,711,390) ------------- ------------- ------------- ------------- NET INCREASE (DECREASE) - CLASS X.................. $ (18,020,224) $ 19,026,993 $ 327,038,607 $ 381,298,159 ------------- ------------- ------------- ------------- CLASS Y SHARES+ SHARES Sold.......................... 142,556 -- 829,761 -- Reinvestment of dividends and distributions............... 114 -- 14,864 -- Redeemed...................... (11,574) -- (40,139) -- ------------- ------------- ------------- ------------- NET INCREASE - CLASS Y... 131,096 -- 804,486 -- ------------- ------------- ------------- ------------- AMOUNT Sold.......................... $ 1,009,590 -- $ 35,773,057 -- Reinvestment of dividends and distributions............... 892 -- 623,947 -- Redeemed...................... (79,333) -- (1,694,060) -- ------------- ------------- ------------- ------------- NET INCREASE - CLASS Y... $ 931,149 -- $ 34,702,944 -- ------------- ------------- ------------- -------------
115 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED SUMMARY OF TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST, CONTINUED
S&P 500 INDEX COMPETITIVE EDGE "BEST IDEAS" ------------------------------------ ------------------------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 2000 DECEMBER 31, 1999 - ---------------------------------------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 6,860,524 11,576,170 3,173,771 2,453,400 Reinvestment of dividends and distributions............... 168,487 42,255 26,257 25,638 Redeemed...................... (3,409,330) (2,115,310) (1,371,010) (1,165,678) ------------ ------------ ------------ ------------ NET INCREASE - CLASS X... 3,619,681 9,503,115 1,829,018 1,313,360 ------------ ------------ ------------ ------------ AMOUNT Sold.......................... $ 89,722,478 $140,040,634 $ 37,675,407 $ 25,976,215 Reinvestment of dividends and distributions............... 2,227,401 528,180 314,559 267,149 Redeemed...................... (44,290,749) (25,657,030) (15,717,456) (12,148,106) ------------ ------------ ------------ ------------ NET INCREASE - CLASS X... $ 47,659,130 $114,911,784 $ 22,272,510 $ 14,095,258 ------------ ------------ ------------ ------------ CLASS Y SHARES+ SHARES Sold.......................... 1,162,112 -- 508,335 -- Reinvestment of dividends and distributions............... 1,226 -- 194 -- Redeemed...................... (106,091) -- (49,274) -- ------------ ------------ ------------ ------------ NET INCREASE - CLASS Y... 1,057,247 -- 459,255 -- ------------ ------------ ------------ ------------ AMOUNT Sold.......................... $ 15,208,446 -- $ 5,807,167 -- Reinvestment of dividends and distributions............... 16,208 -- 2,328 -- Redeemed...................... (1,387,222) -- (568,060) -- ------------ ------------ ------------ ------------ NET INCREASE - CLASS Y... $ 13,837,432 -- $ 5,241,435 -- ------------ ------------ ------------ ------------
- ------------------ + For the period June 6, 2000 (issue date) through December 31, 2000. ++ For the period November 6, 2000 (commencement of operations) through December 31, 2000. * For the period May 4, 1999 (commencement of operations) through December 31, 1999. SEE NOTES TO FINANCIAL STATEMENTS 116 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL STATEMENTS, CONTINUED STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED SUMMARY OF TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
AGGRESSIVE EQUITY INFORMATION STRATEGIST ------------------------------------- ------------------- ------------------------------------ FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR ENDED ENDED ENDED ENDED ENDED DECEMBER 31, 2000 DECEMBER 31, 1999* DECEMBER 31, 2000++ DECEMBER 31, 2000 DECEMBER 31, 1999 - -------------------------------------------------------------------------------------------------------------------------------- CLASS X SHARES SHARES Sold.......................... 9,387,514 3,507,417 302,730 5,636,054 6,274,928 Reinvestment of dividends and distributions............... 3,288 794 -- 6,205,199 851,314 Redeemed...................... (2,321,837) (886,433) (14,145) (7,949,205) (7,016,894) ------------ ------------ ---------- ------------- ------------- NET INCREASE - CLASS X... 7,068,965 2,621,778 288,585 3,892,048 109,348 ------------ ------------ ---------- ------------- ------------- AMOUNT Sold.......................... $146,383,257 $ 41,217,608 $2,991,621 $ 102,563,826 $ 110,695,004 Reinvestment of dividends and distributions............... 49,395 8,097 -- 104,882,722 15,227,618 Redeemed...................... (34,737,951) (10,278,236) (128,569) (143,279,933) (124,097,206) ------------ ------------ ---------- ------------- ------------- NET INCREASE - CLASS X... $111,694,701 $ 30,947,469 $2,863,052 $ 64,166,615 $ 1,825,416 ------------ ------------ ---------- ------------- ------------- CLASS Y SHARES+ SHARES Sold.......................... 1,003,354 -- 210,137 1,463,098 -- Reinvestment of dividends and distributions............... 33 -- -- 27,045 -- Redeemed...................... (66,250) -- (4,344) (85,978) -- ------------ ------------ ---------- ------------- ------------- NET INCREASE - CLASS Y... 937,137 -- 205,793 1,404,165 -- ------------ ------------ ---------- ------------- ------------- AMOUNT Sold.......................... $ 15,298,277 -- $2,068,622 $ 25,207,978 -- Reinvestment of dividends and distributions............... 497 -- -- 455,311 -- Redeemed...................... (1,006,698) -- (42,867) (1,470,940) -- ------------ ------------ ---------- ------------- ------------- NET INCREASE - CLASS Y... $ 14,292,076 -- $2,025,755 $ 24,192,349 -- ------------ ------------ ---------- ------------- -------------
117 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 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 (the "Act"), 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 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 seventeen Portfolios ("Portfolios") which commenced operations as follows:
COMMENCEMENT OF COMMENCEMENT OF PORTFOLIO OPERATIONS PORTFOLIO OPERATIONS - --------- ------------------- --------- ------------------- Money Market.................. March 9, 1984 European Growth .................... March 1, 1991 Short-Term Bond............... May 4, 1999 Pacific Growth ..................... February 23, 1994 Quality Income Plus........... March 1, 1987 Equity ............................. March 9, 1984 High Yield.................... March 9, 1984 S&P 500 Index ...................... May 18, 1998 Utilities..................... March 1, 1990 Competitive Edge "Best Ideas" ...... May 18, 1998 Income Builder................ January 21, 1997 Aggressive Equity .................. May 4, 1999 Dividend Growth............... March 1, 1990 Information ........................ November 6, 2000 Capital Growth................ March 1, 1991 Strategist ......................... March 1, 1987 Global Dividend Growth........ February 23, 1994
On June 6, 2000, the Fund commenced offering one additional class of shares (Class Y shares), with all Portfolio shares issued prior to May 1, 2000 designated Class X shares. The two classes are identical except that Class Y shares incur distribution expenses. Class X shares are generally available to holders of contracts offered by Paragon Life Insurance Company and other contracts offered before May 1, 2000. Class Y shares are available to holders of contracts offered by Northbrook Life Insurance Company, Allstate Life Insurance Company, and Glenbrook Life and Annuity Company offered on or after June 6, 2000. 118 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED The investment objectives of each Portfolio are as follows:
PORTFOLIO INVESTMENT OBJECTIVE 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 Seeks, as its primary objective, to earn a high level of current Plus income and, as a secondary objective, capital appreciation, but only when consistent with its primary objective, by investing primarily in U.S. Government securities and higher-rated fixed income securities. High Yield Seeks, as its primary objective, to earn a high level of current income and, as a secondary objective, capital appreciation, but only when consistent with its primary objective, by investing primarily in lower-rated fixed income securities. Utilities Seek both capital appreciation and current income by investing in equity and fixed income securities of companies engaged in the 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. -- Information Seeks long-term capital appreciation by investing primarily in common stocks and investment grade convertible securities of companies throughout the world that are engaged in the communication and information industry.
119 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED
PORTFOLIO INVESTMENT OBJECTIVE Aggressive Equity* Seeks long-term capital growth by investing primarily in equity securities of companies that offer the potential for superior earnings growth. Prior to March 15, 2000, the investment policy was to invest primarily in 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.
* ON MARCH 15, 2000, 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 portfolio security listed or traded on the New York or American Stock Exchange, NASDAQ, or other exchange is valued at its latest sale price, 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; (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 120 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED 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, the premium received is recorded as an asset and is also included in the Fund's Statement of Assets and Liabilities as a liability which is subsequently marked-to-market to reflect the current market value of the option written. If a written option either expires or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying security or currency and the liability related to such option is extinguished. If a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security or currency and the proceeds from such sale are increased by the premium originally received. If a put option which the Fund has written is exercised, the amount of the premium originally received reduces the cost of the security which the Fund purchases upon exercise of the option; (2) Purchased options on debt obligations, equities and foreign currency: when the Fund purchases a call or put option, the premium paid is recorded as an investment and is subsequently marked-to-market to reflect the current market value. If a purchased option expires, the Fund will realize a loss to the extent of the premium paid. If the Fund enters into a closing sale transaction, a gain or loss is realized for the difference between the proceeds from the sale and the cost of the option. If a put option is exercised, the cost of the security sold upon exercise will be increased by the premium originally paid. If a call option is exercised, the cost of the security purchased upon exercise will be increased by the premium originally paid; (3) Options on futures contracts: the Fund is required to deposit cash, U.S. Government securities or other liquid portfolio securities as "initial margin" and "variation margin" with respect to written call and put options on futures contracts. If a written option expires, the Fund realizes a gain. If a written call or put option is exercised, the premium received will decrease or increase the unrealized loss or gain on the futures contract. If the Fund enters into a closing 121 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED 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; (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 ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are included in the Statement of Operations as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The Portfolios do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. E. FORWARD FOREIGN CURRENCY CONTRACTS -- Some of the Portfolios may enter into forward 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 122 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED 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 tax purposes 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. The expense offset represents a reduction of the custodian fees for earnings on cash balances maintained by a Portfolio. 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; 0.425% to the portion of daily net assets exceeding $500 million but not exceeding $750 million, and 0.375% to 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% to 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 0.525% to 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% to the portion of daily net assets exceeding $2 billion but not exceeding $3 billion and 0.425% to the portion of daily net assets exceeding $3 billion. Capital Growth -- 0.65%. 123 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED Global Dividend Growth -- 0.75% to the portion of daily net assets not exceeding $1 billion and 0.725% to 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% to the portion of daily net assets exceeding $500 million. Pacific Growth -- 0.95%. Equity -- 0.50% to the portion of daily net assets not exceeding $1 billion and 0.475% to the portion of daily net assets exceeding $1 billion; and effective May 1, 2000 the Agreement was amended to reduce the annual rate to 0.45% of the portion of daily net assets exceeding $2 billion. S&P 500 Index -- 0.40%. Competitive Edge "Best Ideas" -- 0.65%. Information -- 0.75% Aggressive Equity -- 0.75%. Strategist -- 0.50% to the portion of daily net assets not exceeding $1.5 billion and 0.475% to the portion of daily net assets exceeding $1.5 billion. Under a Sub-Advisory Agreement between the Investment Manager and the Sub-Advisor, the Sub-Advisor provides European Growth and Pacific Growth with investment advice and portfolio management relating to the Portfolios' investments in securities, subject to the overall supervision of the Investment Manager. As compensation for its services provided pursuant to the Sub-Advisory Agreement, the Investment Manager pays the Sub-Advisor monthly compensation equal to 40% of its monthly compensation. The Investment Manager has agreed to assume all operating expenses (except for Plan of Distribution fees) and to waive its compensation to the extent that such expenses and compensation on an annualized basis exceed 0.50% of the daily net assets of S&P 500 Index. The Investment Manager has agreed to waive its fee and reimburse all operating expenses (except for Plan of Distribution fees) for Information until such time the Portfolio has $50 million of net assets or May 6, 2001, whichever occurs first. At December 31, 2000, included in the Statement of Assets and Liabilities is a receivable from affiliate, which represents expense reimbursements due to the Portfolio. 3. PLAN OF DISTRIBUTION Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager and Sub-Advisor. The Fund has adopted a Plan 124 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act. Under the Plan, Class Y shares of each Portfolio bear a distribution fee which is accrued daily and paid monthly at the annual rate of 0.25% of the average daily net assets of the class. 4. 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, 2000 were as follows:
U.S. GOVERNMENT SECURITIES OTHER ------------------------------- -------------------------------- PURCHASES SALES/MATURITIES PURCHASES SALES/MATURITIES ------------- ---------------- -------------- ---------------- Money Market............................ $171,082,401 $181,001,035 $4,377,146,048 $4,458,449,366 Short-Term Bond......................... 4,654,413 698,533 -- -- Quality Income Plus..................... 242,572,064 252,136,409 187,439,270 239,553,340 High Yield.............................. -- -- 19,593,505 78,572,096 Utilities............................... 6,299,102 6,319,688 63,184,352 107,795,124 Income Builder.......................... 247,899 668,333 31,427,432 42,369,333 Dividend Growth......................... -- -- 547,205,397 960,669,782 Capital Growth.......................... -- -- 598,888,261 584,960,250 Global Dividend Growth.................. -- -- 160,460,092 267,005,612 European Growth......................... -- -- 419,009,044 426,601,588 Pacific Growth.......................... -- -- 43,945,760 59,421,769 Equity.................................. 58,797,016 58,072,836 7,255,285,882 7,275,948,211 S&P 500 Index........................... -- -- 71,422,421 6,128,114 Competitive Edge "Best Ideas"........... -- -- 80,529,179 50,951,129 Aggressive Equity....................... 9,391,123 4,365,122 556,699,499 441,944,966 Information............................. -- -- 4,368,643 33,354 Strategist.............................. 164,723,802 179,821,420 547,834,916 595,398,244
Included in the aforementioned purchases and sales of portfolio securities of S&P 500 Index are purchases of Morgan Stanley Dean Witter & Co., an affiliate of the Investment Manager, Sub-Advisor and Distributor, of $1,116,184, and purchases and sales of Allstate Corp., an affiliate of the Fund, of $513,414 and $43,796, respectively, including realized losses of $23,177. Included in the purchases of Equity, Aggressive Equity, and Strategist are purchases of Allstate Corp. of $35,874,184, $1,869,951, and $3,862,000, respectively. Included in the sales of portfolio securities of Equity and Aggressive Equity are sales of Allstate Corp. of $16,067,852 and $886,464, respectively, including net realized losses of $2,878,373 and $58,521, respectively. Included in the payable for investments purchased at December 31, 2000 for Dividend Growth and Aggressive Equity, are $1,294,175 and $360,222, respectively, for unsettled trades with Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager, Sub-Advisor and Distributor. Included in the receivable for investments sold at December 31, 2000 for Income Builder and Global Dividend Growth, are $120,977 and $343,914, respectively, for unsettled trades with DWR. 125 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED For the year ended December 31, 2000, the following Portfolios incurred brokerage commissions with DWR for portfolio transactions executed on behalf of the Portfolio:
GLOBAL INCOME DIVIDEND CAPITAL DIVIDEND AGGRESSIVE UTILITIES BUILDER GROWTH GROWTH GROWTH EQUITY EQUITY INFORMATION STRATEGIST ----------- ------------ -------------- ------------ ------------ -------------- ------------ ------------ ------------ $ 8,430 $ 25,664 $ 194,380 $ 71,774 $ 44,090 $ 128,355 $ 100,823 $ 1,271 $ 13,969 ========== =========== ============= =========== =========== ============= =========== =========== ===========
Included in the payable for investments purchased at December 31, 2000 for Global Dividend Growth, Equity, Competitive Edge "Best Ideas" and Aggressive Equity are $481,290, $9,415,261, $149,358 and $300,090, respectively, for unsettled trades with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager, Sub-Advisor and Distributor. Included in the receivable for investments sold at December 31, 2000 for Pacific Growth, Equity, Competitive Edge "Best Ideas" and Aggressive Equity are $452,052, $7,846,451, $169,898 and $80,267, respectively, for unsettled trades with Morgan Stanley & Co., Inc. For the year ended December 31, 2000, the following Portfolios incurred brokerage commissions with Morgan Stanley & Co., for portfolio transactions executed on behalf of the Portfolio:
GLOBAL INCOME DIVIDEND CAPITAL DIVIDEND PACIFIC S&P 500 COMPETITIVE EDGE AGGRESSIVE UTILITIES BUILDER GROWTH GROWTH GROWTH GROWTH EQUITY INDEX "BEST IDEAS" EQUITY STRATEGIST --------- ------- -------- ------- -------- ------- --------- -------- ---------------- ---------- ---------- $3,959 $2,101 $125,914 $41,710 $156,221 $9,323 $765,135 $869 $89,859 $37,119 $23,955 ====== ====== ======== ======= ======== ====== ======== ==== ======= ======= =======
For the year ended December 31, 2000, Pacific Growth incurred brokerage commissions of $432 with China International Capital Corp., an affiliate of the Investment Manager, Sub-Advisor and Distributor, for portfolio transactions executed on behalf of the Fund. Included in the payable for investments purchased at December 31, 2000 for Information are unsettled trades with Morgan Stanley Dean Witter Aggressive Equity Fund, an affiliate of the Fund, for $2,488. Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager, Sub-Advisor and Distributor, 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 126 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED the last five years of service. Aggregate pension costs for the year ended December 31, 2000 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:
AGGREGATE PENSION COSTS QUALTY MONEY INCOME HIGH INCOME DIVIDEND CAPITAL MARKET PLUS YIELD UTILITIES BUILDER GROWTH GROWTH ------- ------- ------ --------- ------- -------- ------- $339 $435 $282 $454 $66 $1,841 $233 ==== ==== ==== ==== === ====== ====
GLOBAL COMPETITIVE DIVIDEND EUROPEAN PACIFIC EDGE S&P 500 GROWTH GROWTH GROWTH EQUITY "BEST IDEAS" INDEX STRATEGIST -------- -------- ------- --------- -------------- -------- ---------- $381 $406 $55 $1,160 $140 $73 $549 ==== ==== === ====== ==== === ====
ACCRUED PENSION LIABILITY QUALTY MONEY INCOME HIGH INCOME DIVIDEND CAPITAL MARKET PLUS YIELD UTILITIES BUILDER GROWTH GROWTH ------- ------- ------ --------- ------- -------- ------- $10,939 $7,562 $3,879 $5,139 $133 $9,695 $590 ======= ====== ====== ====== ==== ====== ====
GLOBAL COMPETITIVE DIVIDEND EUROPEAN PACIFIC EDGE S&P 500 GROWTH GROWTH GROWTH EQUITY "BEST IDEAS" INDEX STRATEGIST -------- -------- ------- --------- -------------- -------- ---------- $1,028 $1,316 $227 $6,821 $131 $87 $7,916 ====== ====== ==== ====== ==== === ======
5. FEDERAL INCOME TAX STATUS At December 31, 2000, 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:
AMOUNT IN THOUSANDS ----------------------------------------------------------------------------- AVAILABLE THROUGH DECEMBER 31, 2001 2002 2003 2004 2005 2006 2007 2008 TOTAL - ---------------------------------------- ------ ------- ------ ------- ------ ------- ------- -------- ------- Short-Term Bond......................... -- -- -- -- -- -- $ 3 $ 1 $ 4 Quality Income Plus..................... -- $12,983 -- $2,491 -- -- 10,670 10,496 36,640 High Yield.............................. $4,736 3,256 $2,984 5,521 -- $ 2,735 10,786 7,523 37,541 Income Builder.......................... -- -- -- -- -- -- 180 1,618 1,798 Dividend Growth......................... -- -- -- -- -- -- -- 235,564 235,564 Pacific Growth.......................... -- -- -- -- $5,427 33,536 -- -- 38,963 Equity.................................. -- -- -- -- 3,342 14 -- -- 3,356 S&P 500 Index........................... -- -- -- -- -- -- -- 177 177 Competitive Edge "Best Ideas"........... -- -- -- -- -- 853 544 -- 1,397 Aggressive Equity....................... -- -- -- -- -- -- 68 11,560 11,628
As part of the Equity Portfolio's acquisition of the assets of 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 127 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED Code and Treasury Regulations. During the year ended December 31, 2000, Equity utilized approximately $1,665,000 of this carryover. The following Portfolios also utilized approximate net capital loss carryovers: Pacific Growth - $4,217,000; Competitive Edge "Best Ideas" - $1,397,000. Net capital and net foreign currency losses incurred after October 31 ("post-October losses") within the taxable year are deemed to arise on the first business day of the Portfolios' next taxable year. The following Portfolios incurred and will elect to defer post-October losses during fiscal 2000: Quality Income Plus - $1,971,000; Utilities - $6,056,000; Capital Growth - $1,082,000; Global Dividend Growth - $10,000; Pacific Growth - $377,000; Equity - $58,282,000; S&P 500 Index - $643,000; Competitive Edge "Best Ideas" - $409,000; Aggressive Equity - $4,937,000; Information - $16,000; Strategist - $9,909,000. At December 31, 2000, the primary reason(s) for significant temporary/permanent book/tax differences were as follows:
TEMPORARY DIFFERENCES PERMANENT DIFFERENCES --------------------------- ---------------------------- POST- LOSS FOREIGN EXPIRED OCTOBER DEFERRALS FROM CURRENCY CAPITAL LOSS LOSSES WASH SALES GAINS/LOSSES CARRYFORWARD ----------- -------------- ------------ -------------- Short-Term Bond......................... - 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....................... - - Information............................. - - Strategist.............................. - -
Additionally, the following Portfolios had other temporary differences: Global Dividend Growth and Pacific Growth - income from the mark-to-market of passive foreign investment companies ("PFICs"); European Growth - income from mark-to-market of forward foreign currency contracts; S&P 500 Index - capital loss from the mark-to-market of futures contracts; High Yield - interest on bonds in default. Global Dividend Growth and Pacific Growth had permanent differences attributable to tax adjustments on PFICs sold by the Portfolios. 128 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED To reflect reclassifications arising from the permanent differences, the following accounts were (charged) credited:
ACCUMULATED ACCUMULATED UNDISTRIBUTED UNDISTRIBUTED NET INVESTMENT INCOME NET REALIZED GAIN PAID-IN- (LOSS) (LOSS) CAPITAL --------------------- ----------------- ----------- Quality Income Plus..................... $ 22,655 $ (22,655) -- High Yield.............................. -- 3,057,342 ($3,057,342) Utilities............................... -- 37,957 (37,957) Income Builder.......................... (168,516) 206,151 (37,635) Dividend Growth......................... 82,231 -- (82,231) Capital Growth.......................... (15,383) 15,383 -- Global Dividend Growth.................. 787,854 (776,475) (11,379) European Growth......................... 1,479,957 (1,479,957) -- Pacific Growth.......................... 978,223 (978,223) -- Competitive Edge "Best Ideas"........... (5,520) 5,520 -- Information............................. 409 -- (409) Strategist.............................. 2,680 (2,680) --
6. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS Global Dividend Growth, European Growth, Pacific Growth, Competitive Edge "Best Ideas" and Aggressive Equity may enter into forward contracts to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities. European Growth and Pacific Growth 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. At December 31, 2000, European Growth and Global Dividend Growth had outstanding forward contracts. S&P 500 Index may purchase and sell stock index futures ("futures contacts") for the following reasons: to simulate full investment in the S&P 500 INDEX while retaining a cash balance for fund 129 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENTS SERIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000, CONTINUED 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, 2000, S&P 500 Index had outstanding futures contracts. At December 31, 2000, European Growth's investments in securities of issuers in the United Kingdom represented 38.3% of the Portfolio's net assets. Pacific Growth's investments in securities of issuers in Japan represented 53.1% 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, 2000, Global Dividend Growth's, European Growth's, Pacific Growth's and Information's cash balance consisted principally of interest bearing deposits with Chase Manhattan Bank N.A., the custodian of each Portfolio. 7. CHANGE IN ACCOUNTING POLICY Effective January 1, 2001, the Fund will adopt the provisions of the AICPA Audit and Accounting Guide for Investment Companies, as revised, and as required, begin amortizing premiums on debt securities. The cumulative effect of this accounting change will have no impact on the net assets of the Fund, but will result in a decrease in the cost of securities and a corresponding increase to unrealized appreciation/depreciation based on securities held at December 31, 2000. 8. 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. 130 (This page has been left blank intentionally.) 131 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*:
NET ASSET NET TOTAL YEAR VALUE INVESTMENT NET REALIZED TOTAL FROM DIVIDENDS DISTRIBUTIONS DIVIDENDS ENDED BEGINNING INCOME AND UNREALIZED INVESTMENT TO TO AND DECEMBER 31 OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS - ------------------------------------------------------------------------------------------------------------------------- MONEY MARKET CLASS X SHARES 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) 2000(a) 1.00 0.058 -- 0.058 (0.058) -- (0.058) CLASS Y SHARES 2000(b) 1.00 0.033 -- 0.033 (0.033) -- (0.033) SHORT-TERM BOND CLASS X SHARES 1999(e) 10.00 0.27 $(0.12) 0.15 (0.27) -- (0.27) 2000(a) 9.88 0.51 0.05 0.56 (0.48) -- (0.48) CLASS Y SHARES 2000(b) 9.86 0.28 0.09 0.37 (0.28) -- (0.28) QUALITY INCOME PLUS CLASS X SHARES 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) 2000(a) 9.86 0.68 0.37 1.05 (0.69) -- (0.69) CLASS Y SHARES 2000(b) 9.80 0.38 0.42 0.80 (0.39) -- (0.39) HIGH YIELD CLASS X SHARES 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) 2000(a) 4.33 0.66 (1.90) (1.24) (0.66) -- (0.66) CLASS Y SHARES 2000(b) 3.92 0.37 (1.48) (1.11) (0.38) -- (0.38) UTILITIES CLASS X SHARES 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) 2000(a) 22.90 0.49 0.17 0.66 (0.49) (1.38) (1.87) CLASS Y SHARES 2000(b) 22.98 0.24 0.19 0.43 (0.35) (1.38) (1.73)
SEE NOTES TO FINANCIAL STATEMENTS 132
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 - ------------------------------------------------------------------------------------------------------------------ MONEY MARKET CLASS X SHARES 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 2000(a) 1.00 6.01 358,793 0.52 5.83 N/A CLASS Y SHARES 2000(b) 1.00 3.37(1) 13,813 0.77(2) 5.86(2) N/A SHORT-TERM BOND CLASS X SHARES 1999(e) 9.88 1.56(1) 3,175 0.62(2)(5) 4.83(2)(5) 56%(1) 2000(a) 9.96 5.85 6,427 0.98 5.08 16 CLASS Y SHARES 2000(b) 9.95 3.82(1) 1,430 1.17(2) 5.00(2) 16 QUALITY INCOME PLUS CLASS X SHARES 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 2000(a) 10.22 11.09 406,508 0.52 6.90 105 CLASS Y SHARES 2000(b) 10.21 8.31(1) 5,176 0.77(2) 6.53(2) 105 HIGH YIELD CLASS X SHARES 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 2000(a) 2.43 (32.22) 128,646 0.54 17.40 9 CLASS Y SHARES 2000(b) 2.43 (30.02)(1) 1,947 0.79(2) 20.95(2) 9 UTILITIES CLASS X SHARES 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 2000(a) 21.69 3.03 551,734 0.66 2.16 13 CLASS Y SHARES 2000(b) 21.68 2.07(1) 19,069 0.91(2) 1.93(2) 13
133 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL HIGHLIGHTS, CONTINUED
NET ASSET NET TOTAL YEAR VALUE INVESTMENT NET REALIZED TOTAL FROM DIVIDENDS DISTRIBUTIONS DIVIDENDS ENDED BEGINNING INCOME AND UNREALIZED INVESTMENT TO TO AND DECEMBER 31 OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS - ------------------------------------------------------------------------------------------------------------------------- INCOME BUILDER CLASS X SHARES 1997(c) $10.00 $ 0.44 $ 1.76 $ 2.20 $ (0.44) -- $ (0.44) 1998 11.76 0.56 (0.19) 0.37 (0.56) $ (0.11) (0.67) 1999 11.46 0.58 0.21 0.79 (0.56) (0.25)++ (0.81) 2000(a) 11.44 0.55 (0.54) 0.01 (0.56) (0.03)++ (0.59) CLASS Y SHARES 2000(b) 11.15 0.32 (0.21) 0.11 (0.39) (0.02)++ (0.41) DIVIDEND GROWTH CLASS X SHARES 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) 2000(a) 18.32 0.31 0.02 0.33 (0.33) (3.82) (4.15) CLASS Y SHARES 2000(b) 17.79 0.12 0.62 0.74 (0.22) (3.82) (4.04) CAPITAL GROWTH CLASS X SHARES 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) 2000(a) 23.73 0.10 0.28 0.38 -- (4.05) (4.05) CLASS Y SHARES 2000(b) 24.55 0.03 (0.50) (0.47) -- (4.05) (4.05) GLOBAL DIVIDEND GROWTH CLASS X SHARES 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) 2000(a) 14.44 0.24 (0.64) (0.40) (0.09) (1.22) (1.31) CLASS Y SHARES 2000(b) 13.96 0.08 (0.11) (0.03) -- (1.22) (1.22) EUROPEAN GROWTH CLASS X SHARES 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) 2000(a) 31.47 0.13 (1.43) (1.30) (0.18) (4.62) (4.80) CLASS Y SHARES 2000(b) 32.26 (0.03) (2.10) (2.13) (0.18) (4.62) (4.80)
SEE NOTES TO FINANCIAL STATEMENTS 134
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 - ------------------------------------------------------------------------------------------------------------------ INCOME BUILDER CLASS X SHARES 1997(c) $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 2000(a) 10.86 0.17 59,383 0.81 5.07 51 CLASS Y SHARES 2000(b) 10.85 1.06(1) 965 1.06(2) 5.17(2) 51 DIVIDEND GROWTH CLASS X SHARES 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 2000(a) 14.50 5.30 1,552,724 0.54 2.07 34 CLASS Y SHARES 2000(b) 14.49 7.65(1) 19,083 0.79(2) 1.59(2) 34 CAPITAL GROWTH CLASS X SHARES 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 2000(a) 20.06 1.28 183,151 0.69 0.43 349 CLASS Y SHARES 2000(b) 20.03 (2.24)(1) 3,551 0.94(2) 0.30(2) 349 GLOBAL DIVIDEND GROWTH CLASS X SHARES 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 2000(a) 12.73 (2.50) 373,770 0.80 1.88 40 CLASS Y SHARES 2000(b) 12.71 0.07(1) 2,211 1.05(2) 1.14(2) 40 EUROPEAN GROWTH CLASS X SHARES 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 2000(a) 25.37 (4.92) 508,366 1.00 0.46 78 CLASS Y SHARES 2000(b) 25.33 (7.39)(1) 10,580 1.25(2) (0.18)(2) 78
135 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL HIGHLIGHTS, CONTINUED
NET ASSET NET TOTAL YEAR VALUE INVESTMENT NET REALIZED TOTAL FROM DIVIDENDS DISTRIBUTIONS DIVIDENDS ENDED BEGINNING INCOME AND UNREALIZED INVESTMENT TO TO AND DECEMBER 31 OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS - ------------------------------------------------------------------------------------------------------------------------- PACIFIC GROWTH CLASS X SHARES 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) 2000(a) 8.46 -- (2.78) (2.78) (0.12) -- (0.12) CLASS Y SHARES 2000(b) 7.70 (0.01) (2.01) (2.02) (0.12) -- (0.12) EQUITY CLASS X SHARES 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) 2000(a) 53.88 0.30 (6.46) (6.16) (0.29) (7.75) (8.04) CLASS Y SHARES 2000(b) 49.12 0.21 (1.68) (1.47) (0.24) (7.75) (7.99) S&P 500 INDEX CLASS X SHARES 1998(d) 10.00 0.06 1.16 1.22 -- -- -- 1999 11.22 0.06 2.21 2.27 (0.03) (0.03) (0.06) 2000(a) 13.43 0.12 (1.37) (1.25) (0.07) (0.06) (0.13) CLASS Y SHARES 2000(b) 13.47 0.04 (1.34) (1.30) (0.07) (0.06) (0.13) COMPETITIVE EDGE "BEST IDEAS" CLASS X SHARES 1998(d) 10.00 0.07 (0.25) (0.18) -- -- -- 1999 9.82 0.06 2.56 2.62 (0.07) -- (0.07) 2000(a) 12.37 0.06 (2.20) (2.14) (0.05) -- (0.05) CLASS Y SHARES 2000(b) 12.03 -- (1.82) (1.82) (0.05) -- (0.05) AGGRESSIVE EQUITY CLASS X SHARES 1999(e) 10.00 0.05 4.55 4.60 (0.03) -- (0.03) 2000(a) 14.57 0.05 (0.30) (0.25) (0.01) -- (0.01) CLASS Y SHARES 2000(b) 14.66 0.03 (0.39) (0.36) (0.01) -- (0.01) INFORMATION FUND CLASS X SHARES 2000(f) 10.00 0.06 (0.75) (0.69) -- -- -- CLASS Y SHARES 2000(f) 10.00 0.05 (0.74) (0.69) -- -- --
SEE NOTES TO FINANCIAL STATEMENTS 136
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 - ------------------------------------------------------------------------------------------------------------------ PACIFIC GROWTH CLASS X SHARES 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 2000(a) 5.56 (33.46) 64,209 1.21 0.01 46 CLASS Y SHARES 2000(b) 5.56 (26.72)(1) 728 1.46(2) (0.20)(2) 46 EQUITY CLASS X SHARES 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 2000(a) 39.68 (12.35) 1,818,134 0.50 0.62 402 CLASS Y SHARES 2000(b) 39.66 (3.99)(1) 31,903 0.75(2) 0.85(2) 402 S&P 500 INDEX CLASS X SHARES 1998(d) 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 2000(a) 12.05 (9.38) 210,530 0.45 0.88 3 CLASS Y SHARES 2000(b) 12.04 (9.73)(1) 12,724 0.71(2) 0.60(2) 3 COMPETITIVE EDGE "BEST IDEAS" CLASS X SHARES 1998(d) 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 2000(a) 10.18 (17.39) 69,882 0.71 0.50 70 CLASS Y SHARES 2000(b) 10.16 (15.22)(1) 4,666 0.96 0.06 70 AGGRESSIVE EQUITY CLASS X SHARES 1999(e) 14.57 46.08(1) 38,197 0.52(2)(5) 0.86(2)(5) 108(1) 2000(a) 14.31 (1.75) 138,657 0.82 0.32 414 CLASS Y SHARES 2000(b) 14.29 (2.48)(1) 13,392 1.05(2) 0.32(2) 414 INFORMATION FUND CLASS X SHARES 2000(f) 9.31 (6.90)(1) 2,686 -- (6) 3.80(2)(6) 1(1) CLASS Y SHARES 2000(f) 9.31 (6.90)(1) 1,915 0.25(2)(6) 3.55(2)(6) 1(1)
137 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES FINANCIAL HIGHLIGHTS, CONTINUED
NET ASSET NET TOTAL YEAR VALUE INVESTMENT NET REALIZED TOTAL FROM DIVIDENDS DISTRIBUTIONS DIVIDENDS ENDED BEGINNING INCOME AND UNREALIZED INVESTMENT TO TO AND DECEMBER 31 OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS SHAREHOLDERS SHAREHOLDERS DISTRIBUTIONS - ------------------------------------------------------------------------------------------------------------------------- STRATEGIST CLASS X SHARES 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 16.64 0.40 2.46 2.86 (0.40) -- (0.40) 2000(a) 19.10 0.50 (0.20) 0.30 (0.48) (2.26) (2.74) CLASS Y SHARES 2000(b) 19.29 0.49 (0.51) (0.02) (0.36) (2.26) (2.62)
- -------------------------------------------------------------------------------- (a) Prior to June 6, 2000, the Fund issued one class of shares. All shares of the Fund held prior to May 1, 2000 have been designated Class X shares. (b) For the period June 6, 2000 (issued date) through December 31, 2000. Commencement of operations: (c) January 21, 1997. (d) May 18, 1998. (e) May 4, 1999. (f) November 6, 2000. * For the period ending December 31, 2000, the per share amounts were computed using an average number of shares outstanding during the period. + Calculated based on the net asset value as of the last business day of the period. ++ Distribution from paid-in-capital. ++ Includes distributions from paid-in-capital 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 asset for the period January 6, 1999 through December 31, 1999, the ratios of expenses and net 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. (6) If the Investment Manager had not assumed all expenses (except for Plan of Distribution fees) and waived its management fee for the period November 6, 2000 through December 31, 2000 for Information, the ratios of expenses and net investment income to average net assets would have been 1.82% and 1.98%, respectively, for Class X shares and 2.07% and 1.73%, respectively, for Class Y shares.
SEE NOTES TO FINANCIAL STATEMENTS 138
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 - ------------------------------------------------------------------------------------------------------------------ STRATEGIST CLASS X SHARES 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 19.10 17.35 729,701 0.52 2.24 120 2000(a) 16.66 1.64 701,294 0.52 2.68 126 CLASS Y SHARES 2000(b) 16.65 (0.02)(1) 23,375 0.77(2) 2.77(2) 126
139 MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES: We have audited the accompanying statements of assets and liabilities of Morgan Stanley Dean Witter Variable Investment Series (the "Fund"), comprising, respectively, the Money Market Portfolio, the Short-Term Bond 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 Aggressive Equity Portfolio, the Information Portfolio and the Strategist Portfolio (the "Portfolios"), including the portfolios of investments, as of December 31, 2000, and the related statements of operations and changes in net assets, and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statement of changes in net assets for the year ended December 31, 1999 and the financial highlights for each of the respective stated periods ended December 31, 1999 were audited by other independent accountants whose report, dated February 18, 2000, expressed an unqualified opinion on that statement and financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Portfolios constituting Morgan Stanley Dean Witter Variable Investment Series as of December 31, 2000, the results of its operations, the changes in its net assets, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP NEW YORK, NEW YORK FEBRUARY 16, 2001 140 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 James F. Higgins 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 Auditors - -------------------------------------- -------------------------------------- Morgan Stanley Dean Witter Trust FSB Deloitte & Touche LLP Harborside Financial Center--Plaza Two Two World Financial Center Jersey City, New Jersey 07311 New York, New York 10281 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. 1221 Avenue of the Americas New York, New York 10020 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. Morgan Stanley Dean Witter Distributors Inc., member NASD. - -------------------------------------------------------------------------------- #40113A - --------------------------------------------------------------------------------
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