UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM N-CSRS
Investment Company Act file number 811-07507
DWS Investments VIT Funds
(Exact Name of Registrant as Specified in Charter)
345 Park Avenue
New York, NY 10154-0004
(Address of principal executive offices) (Zip code)
Registrant’s Telephone Number, including Area Code: (212) 454-7190
Paul Schubert
345 Park Avenue
New York, NY 10154-0004
(Name and Address of Agent for Service)
Date of fiscal year end: | 12/31 |
Date of reporting period: | 06/30/08 |
ITEM 1. REPORT TO STOCKHOLDERS
June 30, 2008
SEMIANNUAL REPORT
DWS INVESTMENTS VIT FUNDS
DWS Equity 500 Index VIP
Contents
click here Performance Summary click here Information About Your Portfolio's Expenses click here Management Summary click here Portfolio Summary click here Investment Portfolio click here Financial Statements click here Financial Highlights click here Notes to Financial Statements click here Proxy Voting click here Summary of Management Fee Evaluation by Independent Fee Consultant |
This report must be preceded or accompanied by a prospectus. To obtain an additional prospectus, call (800) 778-1482 or your financial representative. We advise you to consider the portfolio's objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information about the portfolio. Please read the prospectus carefully before you invest.
The Portfolio may not be able to mirror the S&P 500® closely enough to track its performance for several reasons, including the Portfolio's cost to buy and sell securities, the flow of money into and out of the Portfolio, and the potential underperformance of stocks selected. This Portfolio is subject to stock market risk, meaning stocks in the Portfolio may decline in value for extended periods due to the activities and financial prospects of individual companies, or due to general market and economic conditions. Additionally, derivatives may be more volatile and less liquid than traditional securities, and the Portfolio could suffer losses on its derivatives positions. All of these factors may result in greater share price volatility. Please read the prospectus for specific details regarding the Portfolio's risk profile.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500" and "500" are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by the Portfolio's advisor. DWS Equity 500 Index VIP is not sponsored, endorsed, sold, nor promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of investing in the Portfolio. There is no guarantee that the Portfolio will be able to mirror the S&P 500 index closely enough to track its performance.
DWS Investments is part of Deutsche Bank's Asset Management division and, within the US, represents the retail asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment Management Americas Inc. and DWS Trust Company.
NOT FDIC/NCUA INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Performance Summary June 30, 2008
All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when sold, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please contact your participating insurance company for the Portfolio's most recent month-end performance. Performance figures for Classes A, B and B2 differ because each class maintains a distinct expense structure. Performance doesn't reflect charges and fees ("contract charges") associated with the separate account that invests in the Portfolio or any variable life insurance policy or variable annuity contract for which the Portfolio is an investment option. These charges and fees will reduce returns.
The total annual portfolio operating expense ratios, gross of any fee waivers or expense reimbursements, as stated in the fee table of the prospectus dated May 1, 2008 are 0.31%, 0.56% and 0.71% for Class A, Class B and Class B2 shares, respectively. Please see the Information About Your Portfolio's Expenses, the Financial Highlights and Notes to the Financial Statements (Note C, Related Parties) sections of this report for gross and net expense related disclosure for the period ended June 30, 2008.
Portfolio returns during all periods shown reflect a fee waiver/and or reimbursement. Without this waiver/reimbursement, returns would have been lower.
Growth of an Assumed $10,000 Investment | ||
[] DWS Equity 500 Index VIP — Class A [] S&P 500® Index | The Standard & Poor's (S&P) 500® Index is an unmanaged, capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Index returns assume reinvestment of dividends and, unlike portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index. | |
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Yearly periods ended June 30 | |
Comparative Results (as of June 30, 2008) | ||||||
DWS Equity 500 Index VIP | 6-Month‡ | 1-Year | 3-Year | 5-Year | 10-Year | |
Class A | Growth of $10,000 | $8,792 | $8,664 | $11,298 | $14,226 | $12,895 |
Average annual total return | -12.08% | -13.36% | 4.15% | 7.30% | 2.58% | |
S&P 500 Index | Growth of $10,000 | $8,809 | $8,688 | $11,381 | $14,413 | $13,287 |
Average annual total return | -11.91% | -13.12% | 4.41% | 7.58% | 2.88% | |
DWS Equity 500 Index VIP | 6-Month‡ | 1-Year | 3-Year | 5-Year | Life of Class* | |
Class B | Growth of $10,000 | $8,782 | $8,643 | $11,221 | $14,057 | $12,904 |
Average annual total return | -12.18% | -13.57% | 3.91% | 7.05% | 4.22% | |
S&P 500 Index | Growth of $ | $8,809 | $8,688 | $11,381 | $14,413 | $13,321 |
Average annual total return | -11.91% | -13.12% | 4.41% | 7.58% | 4.76% | |
DWS Equity 500 Index VIP | 6-Month‡ | 1-Year | 3-Year | 5-Year | Life of Class** | |
Class B2 | Growth of $10,000 | $8,785 | $8,641 | N/A | N/A | $10,735 |
Average annual total return | -12.15% | -13.59% | N/A | N/A | 2.58% | |
S&P 500 Index | Growth of $10,000 | $8,809 | $8,688 | N/A | N/A | $10,985 |
Average annual total return | -11.91% | -13.12% | N/A | N/A | 3.47% |
The growth of $10,000 is cumulative.
‡ Total returns shown for periods less than one year are not annualized.* The Portfolio commenced offering Class B shares on April 30, 2002. Index returns began on April 30, 2002.
** The Portfolio commenced offering Class B2 shares on September 16, 2005. Index returns began on September 30, 2005.
Information concerning portfolio holdings of the Portfolio as of a month end will be posted to www.dws-investments.com on or after the last day of the following month.
Information About Your Portfolio's Expenses
As an investor of the Portfolio, you incur two types of costs: ongoing expenses and transaction costs. Ongoing expenses include management fees, distribution and service (12b-1) fees and other Portfolio expenses. Examples of transaction costs include contract charges, redemption fees and account maintenance fees, which are not shown in this section. The following tables are intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to help you compare these expenses with the ongoing expenses of investing in other mutual funds. In the most recent period, the Portfolio limited these expenses; had it not done so, expenses would have been higher. The example in the table is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (January 1, 2008 to June 30, 2008).
The tables illustrate your Portfolio's expenses in two ways:
• Actual Portfolio Return. This helps you estimate the actual dollar amount of ongoing expenses (but not transaction costs) paid on a $1,000 investment in the Portfolio using the Portfolio's actual return during the period. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the "Expenses Paid per $1,000" line under the share class you hold.
• Hypothetical 5% Portfolio Return. This helps you to compare your Portfolio's ongoing expenses (but not transaction costs) with those of other mutual funds using the Portfolio's actual expense ratio and a hypothetical rate of return of 5% per year before expenses. Examples using a 5% hypothetical Portfolio return may be found in the shareholder reports of other mutual funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Please note that the expenses shown in these tables are meant to highlight your ongoing expenses only and do not reflect any transaction costs. The "Expenses Paid per $1,000" line of the tables is useful in comparing ongoing expenses only and will not help you determine the relative total expense of owning different funds. If these transaction costs had been included, your costs would have been higher.
Expenses and Value of a $1,000 Investment for the six months ended June 30, 2008 | ||||||
Actual Portfolio Return | Class A |
| Class B |
| Class B2 |
|
Beginning Account Value 1/1/08 | $ 1,000.00 |
| $ 1,000.00 |
| $ 1,000.00 |
|
Ending Account Value 6/30/08 | $ 879.20 |
| $ 878.20 |
| $ 878.50 |
|
Expenses Paid per $1,000* | $ 1.31 |
| $ 2.48 |
| $ 2.94 |
|
Hypothetical 5% Portfolio Return | Class A |
| Class B |
| Class B2 |
|
Beginning Account Value 1/1/08 | $ 1,000.00 |
| $ 1,000.00 |
| $ 1,000.00 |
|
Ending Account Value 6/30/08 | $ 1,023.47 |
| $ 1,022.23 |
| $ 1,021.73 |
|
Expenses Paid per $1,000* | $ 1.41 |
| $ 2.66 |
| $ 3.17 |
|
Annualized Expense Ratios | Class A |
| Class B |
| Class B2 |
|
DWS Equity 500 Index VIP | 0.28% |
| 0.53% |
| 0.63% |
|
For more information, please refer to the Portfolio's prospectus.
These tables do not reflect charges and fees ("contract charges") associated with the separate account that invests in the Portfolio or any variable life insurance policy or variable annuity contract for which the Portfolio is an investment option.
Management Summary June 30, 2008
The first half of 2008 was a period of considerable economic uncertainty and significant turmoil throughout the capital markets. At mid-year 2008, the US economy is experiencing a number of interrelated problems including liquidity issues in financial markets, increased concern about rising prices for energy and food, and rising unemployment.
Essentially all equity indices posted negative returns for the six months ended June 30, 2008. The Russell 3000® Index, which is generally regarded as a good indicator of the broad stock market, had a total return of -11.05% for the six months ended June 2008. The Standard & Poor's 500® (the S&P 500) Index returned - -11.91% for this period. The only industry sectors within the S&P 500 with positive returns for this period were energy, materials and utilities; the weakest sector by far was financials.
The Portfolio returned -12.08% (Class A shares, unadjusted for contract charges). Since the Portfolio's investment strategy is to replicate, as closely as possible, before the deduction of expenses, the performance of the S&P 500 Index, the Portfolio's return is normally close to the return of the index.
The top two contributors to the return of the index and the Portfolio were Wal-Mart Stores, Inc. and International Business Machines Corp. Many of the stocks that contributed strongly to the return of the index and Portfolio were energy companies; these included Devon Energy Corp., Halliburton Co., Chevron Corp. and Chesapeake Energy Corp. The greatest detractor from performance for the index and Portfolio was General Electric Co., which has a weight of more than 2% in the index. Most of the other strong detractors for the index and Portfolio were in the financials sector; these included American International Group, Inc., Bank of America Corp. and Citigroup, Inc.
Brent Reeder
Vice President
Northern Trust Investments, N.A. (NTI), Subadvisor to the Portfolio
All performance shown is historical, assumes reinvestment of all dividend and capital gain distributions, and does not guarantee future results. Investment return and principal value fluctuate with changing market conditions so that, when sold, shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Please contact your participating insurance company for the Portfolio's most recent month-end performance. Performance figures for Classes A and B differ because each class maintains a distinct expense structure. Performance doesn't reflect charges and fees ("contract charges") associated with the separate account that invests in the Portfolio or any variable life insurance policy or variable annuity contract for which the Portfolio is an investment option. These charges and fees will reduce returns.
Risk Considerations
The Portfolio may not be able to mirror the S&P 500® closely enough to track its performance for several reasons, including the Portfolio's cost to buy and sell securities, the flow of money into and out of the Portfolio, and the potential underperformance of stocks selected. This Portfolio is subject to stock market risk, meaning stocks in the Portfolio may decline in value for extended periods due to the activities and financial prospects of individual companies, or due to general market and economic conditions. Additionally, derivatives may be more volatile and less liquid than traditional securities, and the Portfolio could suffer losses on its derivatives positions. All of these factors may result in greater share price volatility. Please read the prospectus for specific details regarding the Portfolio's risk profile.
The Russell 3000 Index measures the performance of the 3,000 largest US companies based on total market capitalization, which represents approximately 98% of the investable US equity market.
The Standard & Poor's 500 (S&P 500) Index is an unmanaged, capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500" and "500" are trademarks of The McGraw-Hill Companies, Inc., and have been licensed for use by the Portfolio's advisor. DWS Equity 500 Index VIP is not sponsored, endorsed, sold, nor promoted by Standard & Poor's, and Standard & Poor's makes no representation regarding the advisability of investing in the Portfolio. There is no guarantee that the Portfolio will be able to mirror the S&P 500 index closely enough to track its performance.
Index returns assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
Portfolio management market commentary is as of June 30, 2008, and may not come to pass. This information is subject to change at any time based on market and other conditions and should not be construed as a recommendation. Past performance does not guarantee future results.
Asset Allocation (As a % of Investment Portfolio excluding Securities Lending Collateral) | 6/30/08 | 12/31/07 |
|
|
|
Common Stocks | 99% | 99% |
Cash Equivalents | 1% | 1% |
| 100% | 100% |
Sector Diversification (As a % of Common Stocks) | 6/30/08 | 12/31/07 |
|
|
|
Information Technology | 17% | 17% |
Energy | 16% | 13% |
Financials | 14% | 18% |
Health Care | 12% | 12% |
Industrials | 11% | 11% |
Consumer Staples | 11% | 10% |
Consumer Discretionary | 8% | 8% |
Utilities | 4% | 4% |
Materials | 4% | 3% |
Telecommunication Services | 3% | 4% |
| 100% | 100% |
Ten Largest Equity Holdings (19.3% of Net Assets) | |
1. ExxonMobil Corp. Explorer and producer of oil and gas | 4.1% |
2. General Electric Co. Manufactures, distributes and markets electrical products | 2.4% |
3. Microsoft Corp. Developer of computer software | 2.0% |
4. Chevron Corp. Operator of petroleum exploration, delivery and refining facilities | 1.8% |
5. AT&T, Inc. Provider of communications services | 1.8% |
6. Procter & Gamble Co. Manufacturer of diversified consumer products | 1.6% |
7. Johnson & Johnson Provider of health care products | 1.6% |
8. International Business Machines Corp. Manufacturer of computers and provider of information processing services | 1.4% |
9. Apple, Inc. Manufacturer of personal computers and related personal computing and communication solutions | 1.3% |
10. ConocoPhillips Producer of petroleum and other natural gases | 1.3% |
Asset allocation, sector diversification, and holdings are subject to change.
For more complete details about the Portfolio's investment portfolio, see page 7. Information concerning portfolio holdings of the Portfolio as of month end will be posted to www.dws-investments.com on or after the last day of the following month. In addition, the Portfolio's top ten holdings and other information about the Portfolio is posted on www.dws-investments.com as of the calendar quarter-end on or after the 15th day following quarter-end.
Following the Portfolio's fiscal first and third quarter-end, a complete portfolio holdings listing is filed with the SEC on Form N-Q. The form will be available on the SEC's Web site at www.sec.gov, and it also may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on the operation of the SEC's Public Reference Room may be obtained by calling (800) SEC-0330.
Investment Portfolio June 30, 2008 (Unaudited)
|
| Value ($) |
|
| |
Common Stocks 98.8% | ||
Consumer Discretionary 8.0% | ||
Auto Components 0.2% | ||
Goodyear Tire & Rubber Co.* | 20,394 | 363,625 |
Johnson Controls, Inc. | 50,238 | 1,440,826 |
| 1,804,451 | |
Automobiles 0.2% | ||
Ford Motor Co.* (a) | 185,962 | 894,477 |
General Motors Corp. (a) | 47,966 | 551,609 |
Harley-Davidson, Inc. | 19,986 | 724,693 |
| 2,170,779 | |
Distributors 0.1% | ||
Genuine Parts Co. | 13,909 | 551,909 |
Diversified Consumer Services 0.1% | ||
Apollo Group, Inc. "A"* | 11,644 | 515,364 |
H&R Block, Inc. | 27,596 | 590,554 |
| 1,105,918 | |
Hotels Restaurants & Leisure 1.2% | ||
Carnival Corp. (Unit) | 37,046 | 1,221,036 |
Darden Restaurants, Inc. | 11,854 | 378,617 |
International Game Technology | 26,256 | 655,875 |
Marriott International, Inc. "A" | 25,440 | 667,545 |
McDonald's Corp. | 96,091 | 5,402,236 |
Starbucks Corp.* | 61,728 | 971,599 |
Starwood Hotels & Resorts Worldwide, Inc. | 15,825 | 634,108 |
Wendy's International, Inc. | 7,411 | 201,727 |
Wyndham Worldwide Corp. | 14,937 | 267,522 |
Yum! Brands, Inc. | 40,216 | 1,411,179 |
| 11,811,444 | |
Household Durables 0.4% | ||
Black & Decker Corp. | 5,122 | 294,566 |
Centex Corp. | 10,635 | 142,190 |
D.R. Horton, Inc. (a) | 23,500 | 254,975 |
Fortune Brands, Inc. | 13,055 | 814,762 |
Harman International Industries, Inc. | 4,900 | 202,811 |
KB HOME | 7,792 | 131,919 |
Leggett & Platt, Inc. | 14,064 | 235,853 |
Lennar Corp. "A" (a) | 12,000 | 148,080 |
Newell Rubbermaid, Inc. | 23,497 | 394,515 |
Pulte Homes, Inc. | 18,382 | 177,019 |
Snap-on, Inc. | 4,893 | 254,485 |
The Stanley Works | 6,656 | 298,388 |
Whirlpool Corp. | 6,388 | 394,331 |
| 3,743,894 | |
Internet & Catalog Retail 0.3% | ||
Amazon.com, Inc.* | 26,228 | 1,923,299 |
Expedia, Inc.* | 17,753 | 326,300 |
IAC/InterActiveCorp.* | 15,400 | 296,912 |
| 2,546,511 | |
Leisure Equipment & Products 0.1% | ||
Eastman Kodak Co. | 24,407 | 352,193 |
Hasbro, Inc. | 11,686 | 417,424 |
Mattel, Inc. | 30,698 | 525,550 |
| 1,295,167 | |
|
| Value ($) |
|
| |
Media 2.8% | ||
CBS Corp. "B" | 57,687 | 1,124,320 |
Clear Channel Communications, Inc. | 42,152 | 1,483,751 |
Comcast Corp. "A" | 250,987 | 4,761,223 |
E.W. Scripps Co. "A" | 7,500 | 311,550 |
Gannett Co., Inc. | 19,442 | 421,308 |
Interpublic Group of Companies, Inc.* | 39,697 | 341,394 |
McGraw-Hill Companies, Inc. | 27,264 | 1,093,832 |
Meredith Corp. | 3,224 | 91,207 |
New York Times Co. "A" (a) | 12,310 | 189,451 |
News Corp. "A" | 195,254 | 2,936,620 |
Omnicom Group, Inc. | 27,132 | 1,217,684 |
The DIRECTV Group, Inc.* | 60,200 | 1,559,782 |
Time Warner, Inc. | 303,230 | 4,487,804 |
Viacom, Inc. "B"* | 53,687 | 1,639,601 |
Walt Disney Co. (a) | 161,380 | 5,035,056 |
Washington Post Co. "B" | 518 | 304,014 |
| 26,998,597 | |
Multiline Retail 0.7% | ||
Big Lots, Inc.* (a) | 6,892 | 215,306 |
Dillard's, Inc. "A" (a) | 4,851 | 56,126 |
Family Dollar Stores, Inc. | 11,870 | 236,688 |
J.C. Penney Co., Inc. | 18,822 | 683,050 |
Kohl's Corp.* | 25,978 | 1,040,159 |
Macy's, Inc. | 35,608 | 691,507 |
Nordstrom, Inc. (a) | 14,848 | 449,895 |
Sears Holdings Corp.* (a) | 5,943 | 437,761 |
Target Corp. (a) | 66,010 | 3,068,805 |
| 6,879,297 | |
Specialty Retail 1.5% | ||
Abercrombie & Fitch Co. "A" | 7,400 | 463,832 |
AutoNation, Inc.* | 11,351 | 113,737 |
AutoZone, Inc.* | 3,691 | 446,648 |
Bed Bath & Beyond, Inc.* | 21,916 | 615,840 |
Best Buy Co., Inc. | 29,336 | 1,161,706 |
GameStop Corp. "A"* | 13,700 | 553,480 |
Home Depot, Inc. | 143,785 | 3,367,445 |
Limited Brands, Inc. | 25,370 | 427,484 |
Lowe's Companies, Inc. | 124,000 | 2,573,000 |
Office Depot, Inc.* | 23,203 | 253,841 |
RadioShack Corp. | 11,145 | 136,749 |
Staples, Inc. | 59,489 | 1,412,864 |
The Gap, Inc. | 38,032 | 633,993 |
The Sherwin-Williams Co. | 8,389 | 385,307 |
Tiffany & Co. | 10,700 | 436,025 |
TJX Companies, Inc. | 36,058 | 1,134,745 |
| 14,116,696 | |
Textiles, Apparel & Luxury Goods 0.4% | ||
Coach, Inc.* | 28,900 | 834,632 |
Jones Apparel Group, Inc. | 7,294 | 100,292 |
Liz Claiborne, Inc. | 8,024 | 113,540 |
NIKE, Inc. "B" | 32,150 | 1,916,461 |
Polo Ralph Lauren Corp. | 4,900 | 307,622 |
VF Corp. | 7,387 | 525,807 |
| 3,798,354 | |
|
| Value ($) |
|
| |
Consumer Staples 10.6% | ||
Beverages 2.4% | ||
Anheuser-Busch Companies, Inc. | 60,409 | 3,752,607 |
Brown-Forman Corp. "B" | 7,080 | 535,035 |
Coca-Cola Co. | 169,314 | 8,800,942 |
Coca-Cola Enterprises, Inc. | 24,350 | 421,255 |
Constellation Brands, Inc. "A"* | 16,600 | 329,676 |
Molson Coors Brewing Co. "B" | 11,784 | 640,225 |
Pepsi Bottling Group, Inc. | 11,411 | 318,595 |
PepsiCo, Inc. | 134,446 | 8,549,421 |
| 23,347,756 | |
Food & Staples Retailing 2.7% | ||
Costco Wholesale Corp. | 36,745 | 2,577,294 |
CVS Caremark Corp. | 121,190 | 4,795,488 |
Kroger Co. | 56,463 | 1,630,087 |
Safeway, Inc. | 37,127 | 1,059,976 |
SUPERVALU, Inc. | 18,148 | 560,592 |
Sysco Corp. | 50,857 | 1,399,076 |
Wal-Mart Stores, Inc. | 197,227 | 11,084,158 |
Walgreen Co. | 83,896 | 2,727,459 |
Whole Foods Market, Inc. (a) | 12,000 | 284,280 |
| 26,118,410 | |
Food Products 1.5% | ||
Archer-Daniels-Midland Co. | 54,607 | 1,842,986 |
Campbell Soup Co. | 18,285 | 611,816 |
ConAgra Foods, Inc. | 41,305 | 796,360 |
Dean Foods Co.* | 11,500 | 225,630 |
General Mills, Inc. | 28,428 | 1,727,570 |
H.J. Heinz Co. | 26,679 | 1,276,590 |
Kellogg Co. | 21,532 | 1,033,967 |
Kraft Foods, Inc. "A" | 128,482 | 3,655,313 |
McCormick & Co., Inc. | 11,714 | 417,721 |
Sara Lee Corp. | 59,839 | 733,028 |
The Hershey Co. | 14,246 | 466,984 |
Tyson Foods, Inc. "A" | 22,800 | 340,632 |
Wm. Wrigley Jr. Co. | 18,233 | 1,418,163 |
| 14,546,760 | |
Household Products 2.2% | ||
Clorox Co. | 11,630 | 607,086 |
Colgate-Palmolive Co. | 43,021 | 2,972,751 |
Kimberly-Clark Corp. | 35,447 | 2,119,022 |
Procter & Gamble Co. | 258,755 | 15,734,891 |
| 21,433,750 | |
Personal Products 0.2% | ||
Avon Products, Inc. | 36,170 | 1,302,843 |
Estee Lauder Companies, Inc. "A" | 9,700 | 450,565 |
| 1,753,408 | |
Tobacco 1.6% | ||
Altria Group, Inc. | 177,470 | 3,648,783 |
Lorillard, Inc.* | 14,702 | 1,016,790 |
Philip Morris International, Inc.* | 178,770 | 8,829,450 |
Reynolds American, Inc. | 14,528 | 678,022 |
UST, Inc. | 12,535 | 684,537 |
| 14,857,582 | |
Energy 16.0% | ||
Energy Equipment & Services 3.6% | ||
Baker Hughes, Inc. | 26,171 | 2,285,775 |
BJ Services Co. | 24,886 | 794,859 |
Cameron International Corp.* | 18,400 | 1,018,440 |
|
| Value ($) |
|
| |
ENSCO International, Inc. | 12,200 | 985,028 |
Halliburton Co. | 73,973 | 3,925,747 |
Nabors Industries Ltd.* | 23,796 | 1,171,477 |
National-Oilwell Varco, Inc.* (a) | 35,200 | 3,122,944 |
Noble Corp. | 22,790 | 1,480,438 |
Rowan Companies, Inc. | 9,482 | 443,283 |
Schlumberger Ltd. (a) | 101,118 | 10,863,107 |
Smith International, Inc. | 17,000 | 1,413,380 |
Transocean, Inc.* | 26,999 | 4,114,378 |
Weatherford International Ltd.* | 57,588 | 2,855,789 |
| 34,474,645 | |
Oil, Gas & Consumable Fuels 12.4% | ||
Anadarko Petroleum Corp. | 39,714 | 2,972,196 |
Apache Corp. | 28,253 | 3,927,167 |
Cabot Oil & Gas Corp. | 8,400 | 568,932 |
Chesapeake Energy Corp. | 40,700 | 2,684,572 |
Chevron Corp. (a) | 175,282 | 17,375,705 |
ConocoPhillips | 130,742 | 12,340,737 |
CONSOL Energy, Inc. | 15,500 | 1,741,735 |
Devon Energy Corp. | 37,792 | 4,541,087 |
El Paso Corp. | 59,554 | 1,294,704 |
EOG Resources, Inc. | 21,057 | 2,762,678 |
ExxonMobil Corp. (a) | 447,804 | 39,464,967 |
Hess Corp. | 23,850 | 3,009,631 |
Marathon Oil Corp. | 59,942 | 3,109,192 |
Massey Energy Co. | 6,600 | 618,750 |
Murphy Oil Corp. | 16,100 | 1,578,605 |
Noble Energy, Inc. | 14,700 | 1,478,232 |
Occidental Petroleum Corp. | 69,588 | 6,253,178 |
Peabody Energy Corp. | 23,200 | 2,042,760 |
Range Resources Corp. | 12,368 | 810,599 |
Southwestern Energy Co.* | 29,600 | 1,409,256 |
Spectra Energy Corp. | 53,691 | 1,543,079 |
Sunoco, Inc. | 9,916 | 403,482 |
Tesoro Corp. (a) | 12,600 | 249,102 |
Valero Energy Corp. | 44,772 | 1,843,711 |
Williams Companies, Inc. | 49,487 | 1,994,821 |
XTO Energy, Inc. | 43,285 | 2,965,455 |
| 118,984,333 | |
Financials 14.1% | ||
Capital Markets 2.8% | ||
American Capital Strategies Ltd. | 16,100 | 382,697 |
Ameriprise Financial, Inc. | 18,805 | 764,799 |
Bank of New York Mellon Corp. | 96,948 | 3,667,543 |
Charles Schwab Corp. | 78,663 | 1,615,738 |
E*TRADE Financial Corp.* (a) | 39,900 | 125,286 |
Federated Investors, Inc. "B" | 7,200 | 247,824 |
Franklin Resources, Inc. | 13,252 | 1,214,546 |
Janus Capital Group, Inc. | 12,371 | 327,460 |
Legg Mason, Inc. | 11,500 | 501,055 |
Lehman Brothers Holdings, Inc. (a) | 59,842 | 1,185,470 |
Merrill Lynch & Co., Inc. | 84,172 | 2,669,094 |
Morgan Stanley | 93,840 | 3,384,809 |
Northern Trust Corp. | 16,549 | 1,134,765 |
State Street Corp. | 36,165 | 2,314,198 |
T. Rowe Price Group, Inc. | 22,020 | 1,243,470 |
The Goldman Sachs Group, Inc. | 33,433 | 5,847,432 |
| 26,626,186 | |
Commercial Banks 2.2% | ||
BB&T Corp. (a) | 46,334 | 1,055,025 |
Comerica, Inc. (a) | 13,137 | 336,701 |
|
| Value ($) |
|
| |
Fifth Third Bancorp. | 46,406 | 472,413 |
First Horizon National Corp. | 10,698 | 79,486 |
Huntington Bancshares, Inc. | 31,660 | 182,678 |
KeyCorp. | 41,429 | 454,890 |
M&T Bank Corp. (a) | 6,450 | 454,983 |
Marshall & Ilsley Corp. | 21,852 | 334,991 |
National City Corp. (a) | 56,976 | 271,776 |
PNC Financial Services Group, Inc. | 29,226 | 1,668,805 |
Regions Financial Corp. | 58,861 | 642,174 |
SunTrust Banks, Inc. | 29,871 | 1,081,928 |
US Bancorp. | 147,554 | 4,115,281 |
Wachovia Corp. | 183,899 | 2,855,951 |
Wells Fargo & Co. | 279,948 | 6,648,765 |
Zions Bancorp. | 9,111 | 286,905 |
| 20,942,752 | |
Consumer Finance 0.6% | ||
American Express Co. | 98,125 | 3,696,369 |
Capital One Financial Corp. | 31,802 | 1,208,794 |
Discover Financial Services | 40,570 | 534,307 |
SLM Corp.* | 40,278 | 779,379 |
| 6,218,849 | |
Diversified Financial Services 3.3% | ||
Bank of America Corp. (a) | 377,386 | 9,008,204 |
CIT Group, Inc. | 24,624 | 167,689 |
Citigroup, Inc. | 459,731 | 7,705,092 |
CME Group, Inc. | 4,600 | 1,762,674 |
IntercontinentalExchange, Inc.* | 6,000 | 684,000 |
JPMorgan Chase & Co. | 292,691 | 10,042,228 |
Leucadia National Corp. | 14,500 | 680,630 |
Moody's Corp. (a) | 17,252 | 594,159 |
NYSE Euronext | 22,500 | 1,139,850 |
| 31,784,526 | |
Insurance 3.5% | ||
ACE Ltd. | 28,276 | 1,557,725 |
Aflac, Inc. | 40,237 | 2,526,884 |
Allstate Corp. | 46,656 | 2,127,047 |
American International Group, Inc. | 227,881 | 6,029,731 |
Aon Corp. | 25,283 | 1,161,501 |
Assurant, Inc. | 8,100 | 534,276 |
Chubb Corp. | 30,970 | 1,517,840 |
Cincinnati Financial Corp. | 14,509 | 368,529 |
Genworth Financial, Inc. "A" | 36,700 | 653,627 |
Hartford Financial Services Group, Inc. | 26,634 | 1,719,757 |
Lincoln National Corp. | 21,969 | 995,635 |
Loews Corp. | 30,682 | 1,438,986 |
Marsh & McLennan Companies, Inc. | 43,313 | 1,149,960 |
MBIA, Inc. (a) | 17,264 | 75,789 |
MetLife, Inc. | 60,232 | 3,178,443 |
Principal Financial Group, Inc. | 21,911 | 919,605 |
Progressive Corp. | 57,456 | 1,075,576 |
Prudential Financial, Inc. | 36,963 | 2,208,170 |
Safeco Corp. | 7,618 | 511,625 |
The Travelers Companies, Inc. | 51,271 | 2,225,161 |
Torchmark Corp. | 7,610 | 446,326 |
Unum Group | 30,165 | 616,874 |
XL Capital Ltd. "A" | 15,377 | 316,151 |
| 33,355,218 | |
|
| Value ($) |
|
| |
Real Estate Investment Trusts 1.2% | ||
Apartment Investment & Management Co. "A" (REIT) | 7,938 | 270,368 |
AvalonBay Communities, Inc. (REIT) | 6,500 | 579,540 |
Boston Properties, Inc. (REIT) | 10,200 | 920,244 |
Developers Diversified Realty Corp. (REIT) | 10,200 | 354,042 |
Equity Residential (REIT) | 23,130 | 885,185 |
General Growth Properties, Inc. (REIT) | 22,900 | 802,187 |
HCP, Inc. (REIT) | 18,900 | 601,209 |
Host Hotels & Resorts, Inc. (REIT) | 44,800 | 611,520 |
Kimco Realty Corp. (REIT) | 21,000 | 724,920 |
Plum Creek Timber Co., Inc. (REIT) | 14,500 | 619,295 |
ProLogis (REIT) | 22,100 | 1,201,135 |
Public Storage (REIT) | 10,446 | 843,932 |
Simon Property Group, Inc. (REIT) | 19,041 | 1,711,596 |
Vornado Realty Trust (REIT) | 11,500 | 1,012,000 |
| 11,137,173 | |
Real Estate Management & Development 0.0% | ||
CB Richard Ellis Group, Inc. "A"* | 14,900 | 286,080 |
Thrifts & Mortgage Finance 0.5% | ||
Countrywide Financial Corp. | 55,238 | 234,762 |
Fannie Mae (a) | 90,150 | 1,758,826 |
Freddie Mac | 54,763 | 898,113 |
Hudson City Bancorp., Inc. | 44,000 | 733,920 |
MGIC Investment Corp. | 7,942 | 48,526 |
Sovereign Bancorp., Inc. | 40,598 | 298,801 |
Washington Mutual, Inc. (a) | 90,243 | 444,898 |
| 4,417,846 | |
Health Care 11.8% | ||
Biotechnology 1.4% | ||
Amgen, Inc.* | 92,216 | 4,348,907 |
Biogen Idec, Inc.* | 24,860 | 1,389,425 |
Celgene Corp.* | 37,000 | 2,363,190 |
Genzyme Corp.* | 22,703 | 1,635,070 |
Gilead Sciences, Inc.* | 78,172 | 4,139,207 |
| 13,875,799 | |
Health Care Equipment & Supplies 2.1% | ||
Baxter International, Inc. | 53,203 | 3,401,800 |
Becton, Dickinson & Co. | 20,678 | 1,681,121 |
Boston Scientific Corp.* | 114,165 | 1,403,088 |
C.R. Bard, Inc. | 8,398 | 738,604 |
Covidien Ltd. | 42,288 | 2,025,172 |
Hospira, Inc.* | 13,420 | 538,276 |
Intuitive Surgical, Inc.* | 3,300 | 889,020 |
Medtronic, Inc. | 95,125 | 4,922,719 |
St. Jude Medical, Inc.* | 28,688 | 1,172,766 |
Stryker Corp. | 20,282 | 1,275,332 |
Varian Medical Systems, Inc.* | 10,600 | 549,610 |
Zimmer Holdings, Inc.* | 19,684 | 1,339,496 |
| 19,937,004 | |
Health Care Providers & Services 1.8% | ||
Aetna, Inc. | 41,072 | 1,664,648 |
AmerisourceBergen Corp. | 13,882 | 555,141 |
Cardinal Health, Inc. | 30,200 | 1,557,716 |
CIGNA Corp. | 23,805 | 842,459 |
Coventry Health Care, Inc.* | 12,795 | 389,224 |
Express Scripts, Inc.* | 21,268 | 1,333,929 |
Humana, Inc.* | 14,375 | 571,694 |
|
Shares | Value ($) |
|
| |
Laboratory Corp. of America Holdings* | 9,391 | 653,895 |
McKesson Corp. | 23,515 | 1,314,724 |
Medco Health Solutions, Inc.* | 42,928 | 2,026,202 |
Patterson Companies, Inc.* | 11,000 | 323,290 |
Quest Diagnostics, Inc. | 13,316 | 645,426 |
Tenet Healthcare Corp.* | 40,600 | 225,736 |
UnitedHealth Group, Inc. | 104,108 | 2,732,835 |
WellPoint, Inc.* | 44,588 | 2,125,064 |
| 16,961,983 | |
Health Care Technology 0.0% | ||
IMS Health, Inc. | 16,930 | 394,469 |
Life Sciences Tools & Services 0.4% | ||
Applera Corp. — Applied Biosystems Group | 14,329 | 479,735 |
Millipore Corp.* | 4,615 | 313,174 |
PerkinElmer, Inc. | 10,036 | 279,503 |
Thermo Fisher Scientific, Inc.* | 35,421 | 1,974,012 |
Waters Corp.* | 8,500 | 548,250 |
| 3,594,674 | |
Pharmaceuticals 6.1% | ||
Abbott Laboratories | 130,782 | 6,927,523 |
Allergan, Inc. | 26,024 | 1,354,549 |
Barr Pharmaceuticals, Inc.* | 9,200 | 414,736 |
Bristol-Myers Squibb Co. (a) | 167,762 | 3,444,154 |
Eli Lilly & Co. | 83,837 | 3,869,916 |
Forest Laboratories, Inc.* | 26,395 | 916,962 |
Johnson & Johnson | 238,834 | 15,366,580 |
King Pharmaceuticals, Inc.* | 21,286 | 222,864 |
Merck & Co., Inc. | 181,959 | 6,858,035 |
Mylan, Inc. (a) | 26,936 | 325,118 |
Pfizer, Inc. | 573,389 | 10,017,106 |
Schering-Plough Corp. | 137,450 | 2,706,390 |
Watson Pharmaceuticals, Inc.* | 9,055 | 246,024 |
Wyeth | 112,976 | 5,418,329 |
| 58,088,286 | |
Industrials 11.0% | ||
Aerospace & Defense 2.6% | ||
Boeing Co. | 63,708 | 4,186,890 |
General Dynamics Corp. | 33,734 | 2,840,403 |
Goodrich Corp. | 10,561 | 501,225 |
Honeywell International, Inc. | 62,847 | 3,159,947 |
L-3 Communications Holdings, Inc. | 10,400 | 945,048 |
Lockheed Martin Corp. | 28,593 | 2,820,985 |
Northrop Grumman Corp. | 28,931 | 1,935,484 |
Precision Castparts Corp. | 11,800 | 1,137,166 |
Raytheon Co. | 35,796 | 2,014,599 |
Rockwell Collins, Inc. | 13,631 | 653,743 |
United Technologies Corp. | 82,500 | 5,090,250 |
| 25,285,740 | |
Air Freight & Logistics 0.9% | ||
C.H. Robinson Worldwide, Inc. | 14,500 | 795,180 |
Expeditors International of Washington, Inc. | 18,100 | 778,300 |
FedEx Corp. | 26,265 | 2,069,420 |
United Parcel Service, Inc. "B" | 86,558 | 5,320,720 |
| 8,963,620 | |
Airlines 0.1% | ||
Southwest Airlines Co. | 61,995 | 808,415 |
|
| Value ($) |
|
| |
Building Products 0.1% | ||
Masco Corp. | 31,265 | 491,798 |
Commercial Services & Supplies 0.5% | ||
Allied Waste Industries, Inc.* | 25,075 | 316,447 |
Avery Dennison Corp. | 8,886 | 390,362 |
Cintas Corp. | 11,542 | 305,978 |
Equifax, Inc. | 10,991 | 369,517 |
Monster Worldwide, Inc.* | 10,585 | 218,157 |
Pitney Bowes, Inc. | 17,646 | 601,729 |
R.R. Donnelley & Sons Co. | 18,229 | 541,219 |
Robert Half International, Inc. | 13,600 | 325,992 |
Waste Management, Inc. | 42,069 | 1,586,422 |
| 4,655,823 | |
Construction & Engineering 0.2% | ||
Fluor Corp. | 7,525 | 1,400,252 |
Jacobs Engineering Group, Inc.* | 10,300 | 831,210 |
| 2,231,462 | |
Electrical Equipment 0.5% | ||
Cooper Industries Ltd. "A" | 14,728 | 581,756 |
Emerson Electric Co. | 66,204 | 3,273,788 |
Rockwell Automation, Inc. | 12,447 | 544,307 |
| 4,399,851 | |
Industrial Conglomerates 3.1% | ||
3M Co. | 59,736 | 4,157,028 |
General Electric Co. (a) | 844,832 | 22,548,566 |
Textron, Inc. | 21,182 | 1,015,253 |
Tyco International Ltd. | 40,888 | 1,637,156 |
| 29,358,003 | |
Machinery 1.9% | ||
Caterpillar, Inc. | 52,136 | 3,848,680 |
Cummins, Inc. | 17,212 | 1,127,730 |
Danaher Corp. | 21,465 | 1,659,244 |
Deere & Co. | 36,524 | 2,634,476 |
Dover Corp. | 16,002 | 774,017 |
Eaton Corp. | 13,905 | 1,181,508 |
Illinois Tool Works, Inc. | 33,694 | 1,600,802 |
Ingersoll-Rand Co., Ltd. "A" | 26,840 | 1,004,621 |
ITT Corp. | 15,394 | 974,902 |
Manitowoc Co., Inc. | 11,000 | 357,830 |
PACCAR, Inc. | 30,901 | 1,292,589 |
Pall Corp. | 10,153 | 402,871 |
Parker Hannifin Corp. | 14,268 | 1,017,594 |
Terex Corp.* | 8,500 | 436,645 |
| 18,313,509 | |
Road & Rail 1.1% | ||
Burlington Northern Santa Fe Corp. | 24,838 | 2,481,068 |
CSX Corp. | 34,348 | 2,157,398 |
Norfolk Southern Corp. | 31,786 | 1,992,028 |
Ryder System, Inc. | 4,852 | 334,206 |
Union Pacific Corp. | 43,762 | 3,304,031 |
| 10,268,731 | |
Trading Companies & Distributors 0.0% | ||
W.W. Grainger, Inc. | 5,509 | 450,636 |
Information Technology 16.2% | ||
Communications Equipment 2.5% | ||
Ciena Corp.* (a) | 8,765 | 203,085 |
Cisco Systems, Inc.* | 500,695 | 11,646,166 |
Corning, Inc. | 133,422 | 3,075,377 |
JDS Uniphase Corp.* | 18,978 | 215,590 |
|
| Value ($) |
|
| |
Juniper Networks, Inc.* | 44,500 | 987,010 |
Motorola, Inc. | 193,180 | 1,417,941 |
QUALCOMM, Inc. | 137,220 | 6,088,452 |
Tellabs, Inc.* | 35,416 | 164,684 |
| 23,798,305 | |
Computers & Peripherals 4.6% | ||
Apple, Inc.* | 74,762 | 12,518,149 |
Dell, Inc.* | 171,309 | 3,748,241 |
EMC Corp.* | 175,267 | 2,574,672 |
Hewlett-Packard Co. | 209,027 | 9,241,084 |
International Business Machines Corp. | 116,402 | 13,797,129 |
Lexmark International, Inc. "A"* | 8,068 | 269,713 |
NetApp, Inc.* | 29,084 | 629,960 |
QLogic Corp.* | 11,218 | 163,671 |
SanDisk Corp.* | 19,100 | 357,170 |
Sun Microsystems, Inc.* | 66,245 | 720,748 |
Teradata Corp.* | 15,251 | 352,908 |
| 44,373,445 | |
Electronic Equipment & Instruments 0.3% | ||
Agilent Technologies, Inc.* | 31,097 | 1,105,188 |
Jabil Circuit, Inc. | 16,647 | 273,177 |
Molex, Inc. | 12,017 | 293,335 |
Tyco Electronics Ltd. | 40,488 | 1,450,280 |
| 3,121,980 | |
Internet Software & Services 1.7% | ||
Akamai Technologies, Inc.* | 14,300 | 497,497 |
eBay, Inc.* | 93,668 | 2,559,947 |
Google, Inc. "A"* (a) | 19,753 | 10,398,374 |
VeriSign, Inc.* | 16,500 | 623,700 |
Yahoo!, Inc.* | 115,188 | 2,379,784 |
| 16,459,302 | |
IT Services 1.0% | ||
Affiliated Computer Services, Inc. "A"* | 8,173 | 437,174 |
Automatic Data Processing, Inc. | 43,908 | 1,839,745 |
Cognizant Technology Solutions Corp. "A"* | 24,500 | 796,495 |
Computer Sciences Corp.* | 12,844 | 601,613 |
Convergys Corp.* | 10,872 | 161,558 |
Electronic Data Systems Corp. | 42,591 | 1,049,442 |
Fidelity National Information Services, Inc. | 14,600 | 538,886 |
Fiserv, Inc.* | 13,842 | 628,012 |
Paychex, Inc. | 27,211 | 851,160 |
Total System Services, Inc. | 15,461 | 343,543 |
Unisys Corp.* | 27,480 | 108,546 |
Western Union Co. | 62,712 | 1,550,241 |
| 8,906,415 | |
Office Electronics 0.1% | ||
Xerox Corp. | 76,188 | 1,033,109 |
Semiconductors & Semiconductor Equipment 2.5% | ||
Advanced Micro Devices, Inc.* (a) | 50,960 | 297,097 |
Altera Corp. | 25,386 | 525,490 |
Analog Devices, Inc. | 24,535 | 779,477 |
Applied Materials, Inc. | 114,830 | 2,192,105 |
Broadcom Corp. "A"* | 37,921 | 1,034,864 |
Intel Corp. | 485,445 | 10,427,358 |
KLA-Tencor Corp. | 14,445 | 588,056 |
Linear Technology Corp. | 18,814 | 612,772 |
LSI Corp.* (a) | 54,013 | 331,640 |
|
| Value ($) |
|
| |
MEMC Electronic Materials, Inc.* | 19,300 | 1,187,722 |
Microchip Technology, Inc. | 15,700 | 479,478 |
Micron Technology, Inc.* | 64,520 | 387,120 |
National Semiconductor Corp. | 18,326 | 376,416 |
Novellus Systems, Inc.* (a) | 8,514 | 180,412 |
NVIDIA Corp.* | 47,021 | 880,233 |
Teradyne, Inc.* | 14,604 | 161,666 |
Texas Instruments, Inc. | 112,079 | 3,156,145 |
Xilinx, Inc. | 23,646 | 597,061 |
| 24,195,112 | |
Software 3.5% | ||
Adobe Systems, Inc.* | 45,110 | 1,776,883 |
Autodesk, Inc.* | 18,948 | 640,632 |
BMC Software, Inc.* | 16,206 | 583,416 |
CA, Inc. | 33,059 | 763,332 |
Citrix Systems, Inc.* | 15,498 | 455,796 |
Compuware Corp.* | 22,146 | 211,273 |
Electronic Arts, Inc.* | 26,958 | 1,197,744 |
Intuit, Inc.* | 27,170 | 749,077 |
Microsoft Corp. | 678,871 | 18,675,741 |
Novell, Inc.* | 30,136 | 177,501 |
Oracle Corp.* | 336,178 | 7,059,738 |
Symantec Corp.* | 71,252 | 1,378,726 |
| 33,669,859 | |
Materials 3.8% | ||
Chemicals 2.1% | ||
Air Products & Chemicals, Inc. | 17,839 | 1,763,564 |
Ashland, Inc. | 4,808 | 231,746 |
Dow Chemical Co. (a) | 78,861 | 2,753,037 |
E.I. du Pont de Nemours & Co. | 76,312 | 3,273,022 |
Eastman Chemical Co. | 6,830 | 470,314 |
Ecolab, Inc. | 14,866 | 639,089 |
Hercules, Inc. | 10,007 | 169,419 |
International Flavors & Fragrances, Inc. | 6,543 | 255,570 |
Monsanto Co. | 46,516 | 5,881,483 |
PPG Industries, Inc. | 13,850 | 794,574 |
Praxair, Inc. | 26,585 | 2,505,370 |
Rohm & Haas Co. | 10,694 | 496,629 |
Sigma-Aldrich Corp. | 10,940 | 589,228 |
| 19,823,045 | |
Construction Materials 0.1% | ||
Vulcan Materials Co. (a) | 8,825 | 527,559 |
Containers & Packaging 0.1% | ||
Ball Corp. | 8,236 | 393,187 |
Bemis Co., Inc. | 7,872 | 176,490 |
Pactiv Corp.* | 11,119 | 236,056 |
Sealed Air Corp. | 13,996 | 266,064 |
| 1,071,797 | |
Metals & Mining 1.4% | ||
AK Steel Holding Corp. | 9,500 | 655,500 |
Alcoa, Inc. | 69,081 | 2,460,665 |
Allegheny Technologies, Inc. | 8,617 | 510,816 |
Freeport-McMoRan Copper & Gold, Inc. | 32,499 | 3,808,558 |
Newmont Mining Corp. | 38,432 | 2,004,613 |
Nucor Corp. | 26,530 | 1,980,995 |
Titanium Metals Corp. | 7,600 | 106,324 |
United States Steel Corp. | 9,959 | 1,840,224 |
| 13,367,695 | |
|
| Value ($) |
|
| |
Paper & Forest Products 0.2% | ||
International Paper Co. (a) | 36,272 | 845,138 |
MeadWestvaco Corp. | 14,759 | 351,854 |
Weyerhaeuser Co. | 17,898 | 915,304 |
| 2,112,296 | |
Telecommunication Services 3.3% | ||
Diversified Telecommunication Services 2.9% | ||
AT&T, Inc. | 503,536 | 16,964,128 |
CenturyTel, Inc. | 8,919 | 317,427 |
Citizens Communications Co. | 27,490 | 311,737 |
Embarq Corp. | 12,498 | 590,780 |
Qwest Communications International, Inc. (a) | 128,940 | 506,734 |
Verizon Communications, Inc. (a) | 241,629 | 8,553,667 |
Windstream Corp. | 37,859 | 467,180 |
| 27,711,653 | |
Wireless Telecommunication Services 0.4% | ||
American Tower Corp. "A"* | 33,600 | 1,419,600 |
Sprint Nextel Corp. | 241,668 | 2,295,846 |
| 3,715,446 | |
Utilities 3.9% | ||
Electric Utilities 2.3% | ||
Allegheny Energy, Inc. | 14,110 | 707,052 |
American Electric Power Co., Inc. | 34,016 | 1,368,464 |
Duke Energy Corp. | 107,183 | 1,862,840 |
Edison International | 27,667 | 1,421,530 |
Entergy Corp. | 16,256 | 1,958,523 |
Exelon Corp. | 55,642 | 5,005,554 |
FirstEnergy Corp. | 25,854 | 2,128,560 |
FPL Group, Inc. | 34,584 | 2,268,019 |
Pepco Holdings, Inc. | 17,300 | 443,745 |
Pinnacle West Capital Corp. | 7,608 | 234,098 |
PPL Corp. | 31,628 | 1,653,196 |
Progress Energy, Inc. | 21,831 | 913,191 |
Southern Co. | 65,004 | 2,269,940 |
| 22,234,712 | |
Gas Utilities 0.1% | ||
Nicor, Inc. | 3,884 | 165,419 |
Questar Corp. | 14,700 | 1,044,288 |
| 1,209,707 | |
Independent Power Producers & Energy Traders 0.3% | ||
AES Corp.* (a) | 56,948 | 1,093,971 |
Constellation Energy Group, Inc. | 15,110 | 1,240,531 |
Dynegy, Inc. "A"* | 39,872 | 340,906 |
| 2,675,408 | |
|
| Value ($) |
|
| |
Multi-Utilities 1.2% | ||
Ameren Corp. | 17,369 | 733,493 |
CenterPoint Energy, Inc. | 26,021 | 417,637 |
CMS Energy Corp. | 22,772 | 339,303 |
Consolidated Edison, Inc. | 23,122 | 903,839 |
Dominion Resources, Inc. | 48,958 | 2,325,015 |
DTE Energy Co. | 15,157 | 643,263 |
Integrys Energy Group, Inc. | 6,800 | 345,644 |
NiSource, Inc. | 23,708 | 424,847 |
PG&E Corp. | 30,249 | 1,200,583 |
Public Service Enterprise Group, Inc. (a) | 43,050 | 1,977,287 |
Sempra Energy | 21,187 | 1,196,006 |
TECO Energy, Inc. | 17,800 | 382,522 |
Xcel Energy, Inc. | 34,057 | 683,524 |
| 11,572,963 | |
Total Common Stocks (Cost $847,352,067) | 946,767,902 |
| Principal Amount ($) | Value ($) |
|
| |
Government & Agency Obligation 0.1% | ||
US Treasury Obligation | ||
US Treasury Bill, 2.173%**, 12/4/2008 (b) (Cost $871,812) | 880,000 | 872,061 |
|
| Value ($) |
|
| |
Securities Lending Collateral 12.4% | ||
Daily Assets Fund Institutional, 2.74% (c) (d) (Cost $119,328,136) | 119,328,136 | 119,328,136 |
| ||
Cash Equivalents 1.2% | ||
Cash Management QP Trust, 2.49% (c) (Cost $11,223,422) | 11,223,422 | 11,223,422 |
| % of Net Assets | Value ($) |
|
| |
Total Investment Portfolio (Cost $978,775,437)+ | 112.5 | 1,078,191,521 |
Other Assets and Liabilities, Net | (12.5) | (119,480,094) |
Net Assets | 100.0 | 958,711,427 |
** Annualized yield at time of purchase; not a coupon rate.
+ The cost for federal income tax purposes was $998,948,415. At June 30, 2008, net unrealized appreciation for all securities based on tax cost was $79,243,106. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $229,525,596 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $150,282,490.
(a) All or a portion of these securities were on loan (see Notes to Financial Statements). The value of all securities loaned at June 30, 2008 amounted to $117,421,917 which is 12.2% of net assets.
(b) At June 30, 2008, this security has been pledged, in whole or in part, to cover initial margin requirements for open futures contracts.
(c) Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
(d) Represents collateral held in connection with securities lending. Income earned by the Portfolio is net of borrower rebates.
REIT: Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
At June 30, 2008, open futures contracts purchased were as follows:
Futures | Expiration Date | Contracts | Aggregate Face Value ($) | Value ($) | Unrealized Depreciation ($) |
S&P 500 Index | 9/18/2008 | 40 | 13,205,220 | 12,811,000 | (394,220) |
The following is a summary of the inputs used as of June 30, 2008 in valuing the Fund's assets carried at fair value:
Valuation Inputs | Investments in Securities at Value | Net Unrealized Depreciation on Other Financial Instruments++ |
Level 1 — Quoted Prices | $ 1,077,319,460 | $ (394,220) |
Level 2 — Other Significant Observable Inputs | 872,061 | — |
Level 3 — Significant Unobservable Inputs | — | — |
Total | $ 1,078,191,521 | $ (394,220) |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of June 30, 2008 (Unaudited) | |
Assets | |
Investments: Investments in securities, at value (cost $848,223,879) — including $117,421,917 of securities loaned | $ 947,639,963 |
Investment in Daily Assets Fund Institutional (cost $119,328,136)* | 119,328,136 |
Investment in Cash Management QP Trust (cost $11,223,422) | 11,223,422 |
Total investments, at value (cost $978,775,437) | 1,078,191,521 |
Cash | 35,673 |
Dividends receivable | 1,235,384 |
Receivable for investments sold | 259,408 |
Interest receivable | 51,625 |
Receivable for Portfolio shares sold | 223,979 |
Receivable for daily variation margin on open futures contracts | 10,987 |
Other assets | 37,683 |
Total assets | 1,080,046,260 |
Liabilities | |
Payable upon return of securities loaned | 119,328,136 |
Payable for investments purchased | 872,117 |
Payable for Portfolio shares redeemed | 783,922 |
Accrued management fee | 139,285 |
Other accrued expenses and payables | 211,373 |
Total liabilities | 121,334,833 |
Net assets, at value | $ 958,711,427 |
Net Assets Consist of | |
Undistributed net investment income | 9,296,150 |
Net unrealized appreciation (depreciation) on: Investments | 99,416,084 |
Futures | (394,220) |
Accumulated net realized gain (loss) | (23,745,315) |
Paid-in capital | 874,138,728 |
Net assets, at value | $ 958,711,427 |
Class A Net Asset Value, offering and redemption price per share ($877,157,618 ÷ 65,634,610 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 13.36 |
Class B Net Asset Value, offering and redemption price per share ($53,413,273 ÷ 3,994,186 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 13.37 |
Class B2 Net Asset Value, offering and redemption price per share ($28,140,536 ÷ 2,103,919 outstanding shares of beneficial interest, $.001 par value, unlimited number of shares authorized) | $ 13.38 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the six months ended June 30, 2008 (Unaudited) | |
Investment Income | |
Income: Dividends | $ 10,526,189 |
Interest | 12,287 |
Interest — Cash Management QP Trust | 87,546 |
Securities lending income, including income from Daily Assets Fund Institutional, net of borrower rebates | 177,703 |
Total Income | 10,803,725 |
Expenses: Management fee | 1,031,646 |
Administration fee | 518,590 |
Custodian fee | 25,947 |
Distribution service fees (Class B and Class B2) | 120,108 |
Record keeping fee (Class B2) | 26,887 |
Services to shareholders | 1,063 |
Professional fees | 39,312 |
Trustees' fees and expenses | 21,431 |
Reports to shareholders | 19,170 |
Other | 33,134 |
Total expenses before expense reductions | 1,837,288 |
Expense reductions | (243,101) |
Total expenses after expense reductions | 1,594,187 |
Net investment income (loss) | 9,209,538 |
Realized and Unrealized Gain (Loss) on Investment Transactions | |
Net realized gain (loss) from: Investments | 14,332,282 |
Futures | (495,440) |
| 13,836,842 |
Change in net unrealized appreciation (depreciation) Investments | (157,714,913) |
Futures | (443,522) |
| (158,158,435) |
Net gain (loss) | (144,321,593) |
Net increase (decrease) in net assets resulting from operations | $ (135,112,055) |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets | ||
Increase (Decrease) in Net Assets | Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 |
Operations: Net investment income (loss) | $ 9,209,538 | $ 22,969,195 |
Net realized gain (loss) | 13,836,842 | 113,424,087 |
Change in net unrealized appreciation (depreciation) | (158,158,435) | (54,265,444) |
Net increase (decrease) in net assets resulting from operations | (135,112,055) | 82,127,838 |
Distributions to shareholders from: | ||
Net investment income: Class A | (20,754,466) | (21,156,472) |
Class B | (1,112,015) | (1,115,985) |
Class B2 | (765,628) | (629,996) |
Total Distributions | (22,632,109) | (22,902,453) |
Portfolio share transactions: Class A Proceeds from shares sold | 36,545,380 | 142,014,066 |
Reinvestment of distributions | 20,754,466 | 21,156,472 |
Cost of shares redeemed | (82,578,262) | (285,852,359) |
In-kind redemptions | — | (297,115,219) |
Net increase (decrease) in net assets from Class A share transactions | (25,278,416) | (419,797,040) |
Class B Proceeds from shares sold | 1,488,386 | 14,114,550 |
Reinvestment of distributions | 1,112,015 | 1,115,985 |
Cost of shares redeemed | (5,218,118) | (37,769,157) |
Net increase (decrease) in net assets from Class B share transactions | (2,617,717) | (22,538,622) |
Class B2 Proceeds from shares sold | 1,116,839 | 3,660,238 |
Reinvestment of distributions | 765,628 | 629,996 |
Cost of shares redeemed | (16,507,763) | (15,637,931) |
Net increase (decrease) in net assets from Class B2 share transactions | (14,625,296) | (11,347,697) |
Increase (decrease) in net assets | (200,265,593) | (394,457,974) |
Net assets at beginning of period | 1,158,977,020 | 1,553,434,994 |
Net assets at end of period (including undistributed net investment income of $9,296,150 and $22,718,721, respectively) | $ 958,711,427 | $ 1,158,977,020 |
Statement of Changes in Net Assets (continued) | ||
Other Information | Six Months Ended June 30, 2008 (Unaudited) | Year Ended December 31, 2007 |
Class A Shares outstanding at beginning of period | 67,350,398 | 94,305,191 |
Shares sold | 2,580,733 | 9,198,622 |
Shares issued to shareholders in reinvestment of distributions | 1,446,304 | 1,366,697 |
Shares redeemed | (5,742,825) | (18,652,060) |
In-kind redemptions | — | (18,868,052) |
Net increase (decrease) in Class A shares | (1,715,788) | (26,954,793) |
Shares outstanding at end of period | 65,634,610 | 67,350,398 |
Class B Shares outstanding at beginning of period | 4,176,782 | 5,613,107 |
Shares sold | 104,325 | 915,083 |
Shares issued to shareholders in reinvestment of distributions | 77,384 | 72,046 |
Shares redeemed | (364,305) | (2,423,454) |
Net increase (decrease) in Class B shares | (182,596) | (1,436,325) |
Shares outstanding at end of period | 3,994,186 | 4,176,782 |
Class B2 Shares outstanding at beginning of period | 3,113,678 | 3,841,811 |
Shares sold | 78,070 | 240,022 |
Shares issued to shareholders in reinvestment of distributions | 53,280 | 40,645 |
Shares redeemed | (1,141,109) | (1,008,800) |
Net increase (decrease) in Class B2 shares | (1,009,759) | (728,133) |
Shares outstanding at end of period | 2,103,919 | 3,113,678 |
The accompanying notes are an integral part of the financial statements.
Class A Years Ended December 31, | 2008a | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per Share Data | ||||||
Net asset value, beginning of period | $ 15.53 | $ 14.97 | $ 13.11 | $ 12.73 | $ 11.64 | $ 9.20 |
Income (loss) from investment operations: Net investment income (loss)b | .13 | .27 | .24 | .21 | .21 | .15 |
Net realized and unrealized gain (loss) | (1.98) | .52 | 1.78 | .37 | 1.01 | 2.41 |
Total from investment operations | (1.85) | .79 | 2.02 | .58 | 1.22 | 2.56 |
Less distributions from: Net investment income | (.32) | (.23) | (.16) | (.20) | (.13) | (.12) |
Net asset value, end of period | $ 13.36 | $ 15.53 | $ 14.97 | $ 13.11 | $ 12.73 | $ 11.64 |
Total Return (%) | (12.08)c** | 5.30c | 15.52c | 4.68 | 10.59c | 28.16c |
Ratios to Average Net Assets and Supplemental Data | ||||||
Net assets, end of period ($ millions) | 877 | 1,046 | 1,412 | 1,102 | 790 | 627 |
Ratio of expenses before expense reductions and/or recoupments (%) | .33* | .33 | .28 | .27 | .28 | .30 |
Ratio of expenses after expense reductions and/or recoupments (%) | .28* | .30 | .27 | .27 | .29 | .30 |
Ratio of net investment income (loss) (%) | 1.80* | 1.71 | 1.73 | 1.62 | 1.76 | 1.50 |
Portfolio turnover rate (%) | 3** | 7d | 9 | 15 | 1 | 1 |
a For the six months ended June 30, 2008 (Unaudited). b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d Excludes portfolio securities delivered as a result of processing redemption in-kind transactions. * Annualized ** Not annualized |
Class B Years Ended December 31, | 2008a | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per Share Data | ||||||
Net asset value, beginning of period | $ 15.52 | $ 14.96 | $ 13.10 | $ 12.72 | $ 11.63 | $ 9.20 |
Income (loss) from investment operations: Net investment income (loss)b | .11 | .23 | .21 | .17 | .20 | .14 |
Net realized and unrealized gain (loss) | (1.98) | .52 | 1.78 | .38 | .99 | 2.40 |
Total from investment operations | (1.87) | .75 | 1.99 | .55 | 1.19 | 2.54 |
Less distributions from: Net investment income | (.28) | (.19) | (.13) | (.17) | (.10) | (.11) |
Net asset value, end of period | $ 13.37 | $ 15.52 | $ 14.96 | $ 13.10 | $ 12.72 | $ 11.63 |
Total Return (%) | (12.18)c** | 5.03c | 15.24c | 4.42 | 10.32c | 27.83 |
Ratios to Average Net Assets and Supplemental Data | ||||||
Net assets, end of period ($ millions) | 53 | 65 | 84 | 68 | 53 | 17 |
Ratio of expenses before expense reductions and/or recoupments (%) | .58* | .58 | .53 | .52 | .53 | .55 |
Ratio of expenses after expense reductions and/or recoupments (%) | .53* | .55 | .52 | .52 | .54 | .55 |
Ratio of net investment income (loss) (%) | 1.55* | 1.46 | 1.48 | 1.37 | 1.71 | 1.29 |
Portfolio turnover rate (%) | 3** | 7d | 9 | 15 | 1 | 1 |
a For the six months ended June 30, 2008 (Unaudited). b Based on average shares outstanding during the period. c Total return would have been lower had certain expenses not been reduced. d Excludes portfolio securities delivered as a result of processing redemption in-kind transactions. * Annualized ** Not annualized |
Class B2 Years Ended December 31, | 2008a | 2007 | 2006 | 2005b |
Selected Per Share Data | ||||
Net asset value, beginning of period | $ 15.51 | $ 14.96 | $ 13.09 | $ 12.94 |
Income (loss) from investment operations: Net investment income (loss)c | .10 | .21 | .19 | .05 |
Net realized and unrealized gain (loss) | (1.97) | .52 | 1.79 | .10 |
Total from investment operations | (1.87) | .73 | 1.98 | .15 |
Less distributions from: Net investment income | (.26) | (.18) | (.11) | — |
Net asset value, end of period | $ 13.38 | $ 15.51 | $ 14.96 | $ 13.09 |
Total Return (%)d | (12.15)** | 4.85 | 15.20 | 1.16** |
Ratios to Average Net Assets and Supplemental Data | ||||
Net assets, end of period ($ millions) | 28 | 48 | 57 | 59 |
Ratio of expenses before expense reductions (%) | .72* | .72 | .67 | .66* |
Ratio of expenses after expense reductions (%) | .63* | .65 | .63 | .63* |
Ratio of net investment income (loss) (%) | 1.45* | 1.36 | 1.37 | 1.34* |
Portfolio turnover rate (%) | 3** | 7e | 9 | 15 |
a For the six months ended June 30, 2008 (Unaudited). b For the period September 16, 2005 (commencement of operations) to December 31, 2005. c Based on average shares outstanding during the period. d Total return would have been lower had certain expenses not been reduced. e Excludes portfolio securities delivered as a result of processing redemption in-kind transactions. * Annualized ** Not annualized |
Notes to Financial Statements (Unaudited)
A. Significant Accounting Policies
DWS Investments VIT Funds (the "Trust") is registered under the Investment Company Act of 1940 as amended, (the "1940 Act"), as a diversified, open-end management investment company. The Trust is organized as a Massachusetts business trust. The Trust is comprised of several portfolios. DWS Equity 500 Index VIP (the "Portfolio") is one of the series the Trust offers to investors. The Portfolio is an underlying investment vehicle for variable annuity contracts and variable life insurance policies to be offered by the separate accounts of certain life insurance companies ("Participating Insurance Companies").
Multiple Classes of Shares of Beneficial Interest. The Portfolio offers three classes of shares to investors: Class A shares, Class B shares and Class B2 shares. Class B and Class B2 shares are subject to Rule 12b-1 distribution fees under the 1940 Act equal to an annual rate up to 0.25% of Class B and Class B2 shares average daily net assets. In addition, Class B2 shares are subject to record keeping fees equal to an annual rate of up to 0.15% of average daily net assets. Class A shares are not subject to such fees.
Investment income, realized and unrealized gains and losses, and certain Portfolio-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class (including the applicable 12b-1 distribution fees and record keeping fees). Differences in class-level expenses may result in payment of different per share dividends by class. All shares have equal rights with respect to voting subject to class-specific arrangements.
The Portfolio's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Portfolio in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Equity securities are valued at the most recent sale price or official closing price reported on the exchange (US or foreign) or over-the-counter market on which the security is traded most extensively. Securities for which no sales are reported are valued at the calculated mean between the most recent bid and asked quotations on the relevant market or, if a mean cannot be determined, at the most recent bid quotation.
Money market instruments purchased with an original or remaining maturity of sixty days or less, maturing at par, are valued at amortized cost. Investments in open-end investment companies and Cash Management QP Trust are valued at their net asset value each business day.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees.
The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), which governs the application of generally accepted accounting principles that require fair value measurements of the Fund's assets and liabilities. Fair value is an estimate of the price the Fund would receive upon selling a security in a timely transaction to an independent buyer in the principal or most advantageous market of the security. FAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in the three broad levels as follows:
• Level 1 — quoted prices in active markets for identical securities
• Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 — significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
For Level 1 inputs, the Fund uses unadjusted quoted prices in active markets for assets or liabilities with sufficient frequency and volume to provide pricing information as the most reliable evidence of fair value. The Fund's Level 2 valuation techniques include inputs other than quoted prices within Level 1 that are observable for an asset or liability, either directly or indirectly. Level 2 observable inputs may include quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active in which there are few transactions, the prices are not current, or price quotations vary substantially over time or among market participants. Inputs that are observable for the asset or liability in Level 2 include such factors as interest rates, yield curves, prepayment speeds, credit risk, and default rates for similar liabilities. For Level 3 valuation techniques, the Fund uses unobservable inputs that reflect assumptions market participants would be expected to use in pricing the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available and are developed based on the best information available under the circumstances. In developing unobservable inputs, market participant assumptions are used if they are reasonably available without undue cost and effort.
The Fund may record changes to valuations based on the amount that might reasonably be expected to receive for a security upon its current sale consistent with the fair value measurement objective. Each determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to the type of the security, the existence of any contractual restrictions on the security's disposition, the price and extent of public trading in similar securities of the issue or of comparable companies, quotations or evaluated prices from broker-dealers and/or pricing services, information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities), an analysis of the company's financial statements, an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold, and with respect to debt securities, the maturity, coupon, creditworthiness, currency denomination, and the movement of the market in which the security is normally traded. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value determined upon sale of those investments.
New Accounting Pronouncements. In March 2008, FASB issued Statement of Financial Accounting Standards No. 161 ("FAS 161") Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133. FAS 161 requires enhanced disclosure about an entity's derivative and hedging activities. FAS 161 is effective for fiscal years beginning after November 15, 2008. Management is currently evaluating the impact the adoption of FAS 161 will have on the Portfolio's financial statement disclosures.
Securities Lending. The Portfolio may lend securities to financial institutions. The Portfolio retains beneficial ownership of the securities it has loaned and continues to receive interest and dividends paid by the issuer of securities and to participate in any changes in their market value. The Portfolio requires the borrowers of the securities to maintain collateral with the Portfolio consisting of liquid, unencumbered assets having a value at least equal to the value of the securities loaned. The Portfolio may invest the cash collateral into a joint trading account in an affiliated money market fund pursuant to Exemptive Orders issued by the SEC. The Portfolio receives compensation for lending its securities either in the form of fees or by earning interest on invested cash collateral net of fees paid to a lending agent. Either the Portfolio or the borrower may terminate the loan. The Portfolio is subject to all investment risks associated with the value of any cash collateral received, including, but not limited to, interest rate, credit and liquidity risk associated with such investments.
Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). The Portfolio invests in futures to keep cash on hand to meet shareholder redemptions or other needs while maintaining exposure to the stock market.
Upon entering into a futures contract, the Portfolio is required to deposit with a financial intermediary an amount ("initial margin") equal to a certain percentage of the face value indicated in the futures contract. Subsequent payments ("variation margin") are made or received by the Portfolio depending upon the daily fluctuations in the value of the underlying security and are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. When entering into a closing transaction, the Portfolio will realize a gain or loss equal to the difference between the value of the futures contract to sell and the futures contract to buy. Futures contracts are valued at the most recent settlement price.
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid secondary market will limit the Portfolio's ability to close out a futures contract prior to the settlement date and that a change in the value of a futures contract may not correlate exactly with the changes in the value of the securities hedged. When utilizing futures contracts to hedge, the Portfolio gives up the opportunity to profit from favorable price movements in the hedged positions during the term of the contract.
Federal Income Taxes. The Portfolio's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies, and to distribute all of its taxable and tax-exempt income to its shareholders.
At December 31, 2007, DWS Equity 500 Index VIP had a net tax basis capital loss carryforward of approximately $17,360,000 which may be applied against any realized net taxable capital gains of each succeeding year until fully utilized or until December 31, 2012, whichever occurs first. During the year ended December 31, 2007, the Portfolio utilized $42,684,000 of its prior year capital loss carryforward.
The Portfolio has reviewed the tax positions for the open tax years as of December 31, 2007 and has determined that no provision for income tax is required in the Portfolio's financial statements. The Portfolio's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
Distribution of Income and Gains. Net investment income of the Portfolio, if any, is declared and distributed to shareholders annually. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Portfolio if not distributed, and, therefore, will be distributed to shareholders at least annually.
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to in-kind redemptions, investments in futures contracts and certain securities sold at a loss. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Portfolio may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Portfolio.
The tax character of current year distributions will be determined at the end of the current fiscal year.
Contingencies. In the normal course of business, the Portfolio may enter into contracts with service providers that contain general indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet been made. However, based on experience, the Portfolio expects the risk of loss to be remote.
Expenses. Expenses of the Trust arising in connection with a specific portfolio are allocated to that portfolio. Other Trust expenses which cannot be directly attributed to a portfolio are apportioned among the portfolios in the Trust.
Other. Investment transactions are accounted for on a trade date plus one basis for daily net asset valuation calculations. However, for financial reporting purposes, investment security transactions are reported on trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date net of foreign withholding taxes. Certain dividends from foreign securities may be recorded subsequent to the ex-dividend as soon as the Portfolio is informed of such dividends. Realized gains and losses from investment transactions are recorded on an identified cost basis.
B. Purchases and Sales of Securities
During the six months ended June 30, 2008, purchases and sales of investment securities (excluding short-term investments) aggregated $27,301,208 and $87,335,529, respectively.
C. Related Parties
Management Agreement. Under the Investment Management Agreement with Deutsche Investment Management Americas Inc. ("DIMA" or the "Advisor"), an indirect, wholly owned subsidiary of Deutsche Bank AG, the Advisor directs the investments of the Portfolio in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold, or entered into by the Portfolio or delegates such responsibility to the Portfolio's subadvisor. Pursuant to the Investment Management Agreement with the Advisor, the Portfolio pays an annual management fee based on the Portfolio's average daily net assets, accrued daily and payable monthly, at the following annual rates:
First $1 billion of the Portfolio's average daily net assets | .200% |
Next $1 billion of such net assets | .175% |
Over $2 billion of such net assets | .150% |
Northern Trust Investments, N.A. ("NTI") acts as investment sub-advisor for the Portfolio. As the Portfolio's investment sub-advisor, NTI makes the Portfolio's investment decisions. It buys and sells securities for the Portfolio and conducts the research that leads to these purchase and sale decisions. NTI is paid by the Advisor for its services.
For the period from January 1, 2008 through April 30, 2009, the Advisor contractually agreed to waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Portfolio to the extent necessary to maintain operating expenses of each class (excluding certain expenses such as extraordinary expenses, taxes, brokerage and interest) as follows:
Class A | .28% |
Class B | .53% |
Class B2 | .63% |
Accordingly, for the six months ended June 30, 2008, the Advisor waived a portion of its management fee aggregating $229,009 and the amount charged aggregated $802,637, which was equivalent to an annualized effective rate of 0.15% of the Portfolio's average daily net assets.
In addition, the Advisor reimbursed the Portfolio $7,840 of record keeping fees for Class B2 shares for the six months ended June 30, 2008.
Administration Fee. Pursuant to the Administrative Services Agreement, DIMA provides most administrative services to the Portfolio. For all services provided under the Administrative Services Agreement, the Portfolio pays DIMA an annual fee ("Administration fee") of 0.10% of the Portfolio's average daily net assets, computed and accrued daily and payable monthly. For the six months ended June 30, 2008, DIMA received an Administration fee of $518,590, of which $83,013 is unpaid.
Distribution Service Agreement. DWS Investments Distributors, Inc. ("DIDI"), an affiliate of the Advisor, is the Portfolio's distributor. In accordance with the Distribution Plan, DIDI receives 12b-1 fees of 0.25% of average daily net assets of Class B and B2 shares. For the six months ended June 30, 2008, the Distribution Service Fees were as follows:
Distribution Service Fees | Total Aggregated | Unpaid at June 30, 2008 |
Class B | $ 72,317 | $ 15,335 |
Class B2 | 47,791 | 6,628 |
| $ 120,108 | $ 21,963 |
Service Provider Fees. DWS Investments Service Company ("DISC"), an affiliate of the Advisor, is the transfer agent, dividend-paying agent and shareholder service agent of the Portfolio. Pursuant to a sub-transfer agency agreement among DISC and DST Systems, Inc. ("DST"), DISC has delegated certain transfer agent, dividend paying agent and shareholder service agent functions to DST. DISC compensates DST out of the shareholder servicing fee they receive from the Portfolio. For the six months ended June 30, 2008, the amounts charged to the Portfolio by DISC were as follows:
Services to Shareholders | Total Aggregated | Waived | Unpaid at June 30, 2008 |
Class A | $ 446 | $ 446 | $ — |
Class B | 67 | 63 | 4 |
Class B2 | 69 | 69 | — |
| $ 582 | $ 578 | $ 4 |
Typesetting and Filing Service Fees. Under an agreement with DIMA, DIMA is compensated for providing typesetting and certain regulatory filing services to the Portfolio. For the six months ended June 30, 2008, the amount charged to the Portfolio by DIMA included in the Statement of Operations under "reports to shareholders" aggregated $4,073, of which $1,784 is unpaid.
Trustees' Fees and Expenses. The Portfolio paid each Trustee not affiliated with the Advisor retainer fees plus specified amounts for various committee services and for the Board Chairperson and Vice Chairperson.
In connection with the board consolidation on April 1, 2008, of the two DWS Portfolio Boards of Directors, certain Independent Board Members retired prior to their normal retirement date, and received a one-time retirement benefit. DIMA has agreed to reimburse the Portfolios for the cost of this benefit. For the six months ended June 30, 2008, the Portfolio paid its allocated portion of the retirement benefit of $5,450 to the non-continuing Independent Board Members, and the Portfolio was reimbursed by DIMA for this payment.
Cash Management QP Trust. Pursuant to an Exemptive Order issued by the SEC, the Portfolio may invest in the Cash Management QP Trust (the "QP Trust") and other affiliated funds managed by the Manager or Advisor. The QP Trust seeks to provide as high a level of current income as is consistent with the preservation of capital and the maintenance of liquidity. The QP Trust does not pay the Manager or Advisor a management fee for the affiliated funds' investments in the QP Trust.
D. Fee Reductions
The Portfolio has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Portfolio's custodian expenses. During the six months ended June 30, 2008, the Portfolio's custodian fee was reduced by $224 for custody credits earned.
E. Line of Credit
The Fund and other affiliated funds (the "Participants") share in a $490 million revolving credit facility provided by a syndication of banks. The Fund may borrow for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated based on net assets, among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.35 percent. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
F. Ownership of the Portfolio
At June 30, 2008, two participating insurance companies were beneficial owners of record of 10% or more of the total outstanding Class A shares of the Portfolio, each owning 54% and 17%, respectively. At June 30, 2008, one participating insurance company was a beneficial owner of record of 10% or more of the total outstanding Class B shares of the Portfolio, owning 83%.
The Portfolio's policies and procedures for voting proxies for portfolio securities and information about how the Portfolio voted proxies related to its portfolio securities during the 12-month period ended June 30 are available on our Web site — www.dws-investments.com (click on "proxy voting" at the bottom of the page) — or on the SEC's Web site — www.sec.gov. To obtain a written copy of the Portfolio's policies and procedures without charge, upon request, call us toll free at (800) 778-1482.
Summary of Management Fee Evaluation by Independent Fee Consultant
October 26, 2007
Pursuant to an Order entered into by Deutsche Investment Management Americas and affiliates (collectively, "DeAM") with the Attorney General of New York, I, Thomas H. Mack, have been appointed the Independent Fee Consultant for the DWS Scudder Funds. My duties include preparing an annual written evaluation of the management fees DeAM charges the Funds, considering among other factors the management fees charged by other mutual fund companies for like services, management fees DeAM charges other clients for like services, DeAM's costs of supplying services under the management agreements and related profit margins, possible economies of scale if a Fund grows larger, and the nature and quality of DeAM's services, including fund performance. This report summarizes my evaluation for 2007, including my qualifications, the evaluation process for each of the DWS Scudder Funds, consideration of certain complex-level factors, and my conclusions.
Qualifications
For more than 30 years I have served in various professional capacities within the investment management business. I have held investment analysis and advisory positions, including securities analyst, portfolio strategist and director of investment policy with a large investment firm. I have also performed business management functions, including business development, financial management and marketing research and analysis.
Since 1991, I have been an independent consultant within the asset management industry. I have provided services to over 125 client organizations, including investment managers, mutual fund boards, product distributors and related organizations. Over the past several years I have completed a number of assignments for mutual fund boards, specifically including assisting boards with management contract renewal.
I hold a Master of Business Administration degree, with highest honors, from Harvard University; and Master of Science and Bachelor of Science (highest honors) degrees from the University of California at Berkeley. I am an independent director and audit committee financial expert for two closed-end mutual funds, serve on the board of directors of a private market research company, and have served in various leadership and financial oversight capacities with non-profit organizations.
Evaluation of Fees for each DWS Scudder Fund
My work focused primarily on evaluating, fund-by-fund, the fees charged to each of the 136 Fund portfolios in the DWS Scudder Fund family. For each Fund, I considered each of the key factors mentioned above, as well as any other relevant information. In doing so I worked closely with the Funds' Independent Directors in their annual contract renewal process, as well as in their approval of contracts for several new funds (documented separately).
In evaluating each Fund's fees, I reviewed comprehensive materials provided by or on behalf of DeAM, including expense information prepared by Lipper Analytical, comparative performance information, profitability data, manager histories, and other materials. I also accessed certain additional information from the Lipper, Strategic Insight, and Morningstar databases and drew on my industry knowledge and experience.
To facilitate evaluating this considerable body of information, I prepared for each Fund a document summarizing the key data elements in each area as well as additional analytics discussed below. This made it possible to consider each key data element in the context of the others.
In the course of contract renewal, DeAM agreed to implement a number of fee and expense adjustments requested by the Independent Directors which will favorably impact future fees and expenses, and my evaluation includes the effects of these changes.
Fees and Expenses Compared with Other Funds
The competitive fee and expense evaluation for each fund focused on two primary comparisons:
The Fund's contractual management fee (the advisory fee plus the administration fee where applicable) compared with those of a group of typically 12-15 funds in the same Lipper investment category (e.g. Large Capitalization Growth) having similar distribution arrangements and being of similar size.
The Fund's total expenses compared with a broader universe of funds from the same Lipper investment category and having similar distribution arrangements.
These two comparisons provide a view of not only the level of the fee compared with funds of similar scale but also the total expense the Fund bears for all the services it receives, in comparison with the investment choices available in the Fund's investment category and distribution channel. The principal figure-of-merit used in these comparisons was the subject Fund's percentile ranking against peers.
DeAM's Fees for Similar Services to Others
DeAM provided management fee schedules for all of its US domiciled fund and non-fund investment management accounts in any of the investment categories where there is a DWS Scudder Fund. These similar products included the other DWS Scudder Funds, non-fund pooled accounts, institutional accounts and sub-advisory accounts. Using this information, I calculated for each Fund the fee that would be charged to each similar product, at the subject Fund's asset level.
Evaluating information regarding non-fund products is difficult because there are varying levels of services required for different types of accounts, with mutual funds generally requiring considerably more regulatory and administrative types of service as well as having more frequent cash flows than other types of accounts. Also, while mutual fund fees for similar fund products can be expected to be similar, there will be some differences due to different pricing conditions in different distribution channels (e.g. retail funds versus those used in variable insurance products), differences in underlying investment processes and other factors.
Costs and Profit Margins
DeAM provided a detailed profitability analysis for each Fund. After making some adjustments so that the presentation would be more comparable to the available industry figures, I reviewed profit margins from investment management alone, from investment management plus other fund services (excluding distribution) provided to the Funds by DeAM (principally shareholder services), and DeAM profits from all sources, including distribution. A later section comments on overall profitability.
Economies of Scale
Economies of scale — an expected decline in management cost per dollar of fund assets as fund assets grow — are very rarely quantified and documented because of inherent difficulties in collecting and analyzing relevant data. However, in virtually every investment category that I reviewed, larger funds tend to have lower fees and lower total expenses than smaller funds. To see how each DWS Scudder Fund compares with this industry observation, I reviewed:
The trend in Fund assets over the last five years and the accompanying trend in total expenses. This shows if the Fund has grown and, if so, whether total expense (management fees as well as other expenses) have declined as a percent of assets.
Whether the Fund has break-points in its management fee schedule, the extent of the fee reduction built into the schedule and the asset levels where the breaks take effect, and in the case of a sub-advised Fund how the Fund's break-points compare with those of the sub-advisory fee schedule.
How the Fund's contractual fee schedule compares with trends in the industry data. To accomplish this, I constructed a chart showing how actual latest-fiscal-year contractual fees of the Fund and of other similar funds relate to average fund assets, with the subject Fund's contractual fee schedule superimposed.
Quality of Service — Performance
The quality-of-service evaluation focused on investment performance, which is the principal result of the investment management service. Each Fund's performance was reviewed over the past 1, 3, 5 and 10 years, as applicable, and compared with that of other funds in the same investment category and with a suitable market index.
In addition, I calculated and reviewed risk-adjusted returns relative to an index of similar mutual funds' returns and a suitable market index. The risk-adjusted returns analysis provides a way of determining the extent to which the Fund's return comparisons are mainly the product of investment value-added (or lack thereof) or alternatively taking considerably more or less risk than is typical in its investment category.
I also received and considered the history of portfolio manager changes for each Fund, as this provided an important context for evaluating the performance results.
Complex-Level Considerations
While this evaluation was conducted mainly at the individual fund level, there are some issues relating to the reasonableness of fees that can alternatively be considered across the whole fund complex:
I reviewed DeAM's profitability analysis for all DWS Scudder funds, with a view toward determining if the allocation procedures used were reasonable and how profit levels compared with public data for other investment managers.
I considered whether DeAM and affiliates receive any significant ancillary or "fall-out" benefits that should be considered in interpreting the direct profitability results. These would be situations where serving as the investment manager of the Funds is beneficial to another part of the Deutsche Bank organization.
I considered how aggregated DWS Scudder Fund expenses had varied over the years, by asset class and in the context of trends in asset levels.
I reviewed the structure of the DeAM organization, trends in staffing levels, and information on compensation of investment management and other professionals compared with industry data.
Findings
Based on the process and analysis discussed above, which included reviewing a wide range of information from management and external data sources and considering among other factors the fees DeAM charges other clients, the fees charged by other fund managers, DeAM's costs and profits associated with managing the Funds, economies of scale, possible fall-out benefits, and the nature and quality of services provided, in my opinion the management fees charged the DWS Scudder Funds are reasonable.
Thomas H. Mack
Deutsche Investment Management Americas Inc. ("DIMA"), an indirect, wholly owned subsidiary of Deutsche Bank AG, is the Portfolio's Advisor.
DWS Investments is part of Deutsche Bank's Asset Management division and, within the US, represents the retail asset management activities of Deutsche Bank AG, Deutsche Bank Trust Company Americas, Deutsche Investment Management Americas Inc. and DWS Trust Company.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
This information must be preceded or accompanied by a current prospectus.
Portfolio changes should not be considered recommendations for action by individual investors.
DWS Investments Distributors, Inc.
222 South Riverside Plaza
Chicago, IL 60606
(800) 778-1482
vit-equ500-3 (R-4303-1 8/08)
ITEM 2. | CODE OF ETHICS |
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| Not applicable. |
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ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT |
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| Not applicable. |
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ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
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| Not applicable. |
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS |
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| Not Applicable |
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ITEM 6. | SCHEDULE OF INVESTMENTS |
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| Not Applicable |
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ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
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| Not applicable. |
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ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
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| Not applicable. |
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS |
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| Not Applicable. |
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
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| The primary function of the Nominating and Governance Committee is to identify and recommend individuals for membership on the Board and oversee the administration of the Board Governance Guidelines. Shareholders may recommend candidates for Board positions by forwarding their correspondence by U.S. mail or courier service to Chairman of the Board, P.O. Box 100176, Cape Coral, FL 33910. |
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ITEM 11. | CONTROLS AND PROCEDURES |
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| (a) The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. |
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| (b) There have been no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting. |
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ITEM 12. | EXHIBITS |
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| (a)(1) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
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| (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
Form N-CSRS Item F
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | DWS Equity 500 Index VIP, a series of DWS Investments VIT Funds |
By: | /s/Michael G. Clark |
| Michael G. Clark |
President
Date: | August 19, 2008 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Registrant: | DWS Equity 500 Index VIP, a series of DWS Investments VIT Funds |
By: | /s/Michael G. Clark |
| Michael G. Clark |
President
Date: | August 19, 2008 |
By: | /s/Paul Schubert |
| Paul Schubert |
Chief Financial Officer and Treasurer
Date: August 19, 2008