<PAGE>
[LOGO OF TCW(R)] TCW CONVERTIBLE
SECURITIES FUND, INC.
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DIRECTORS AND OFFICERS
Ernest O. Ellison Coleman W. Morton
President and Director Director
John C. Argue Charles A. Parker
Director Director
Norman Barker, Jr. Lawrence J. Sheehan
Director Director
Richard W. Call Robert G. Sims
Director Director
Ronald E. Robison Alvin R. Albe, Jr.
Senior Vice President and Principal Accounting
Chief Operating Officer Officer, Treasurer and
Robert M. Hanisee Assistant Secretary
Senior Vice President Philip K. Holl
Kevin A. Hunter Secretary
Senior Vice President Marie M. Bender
Thomas E. Larkin, Jr. Assistant Secretary
Senior Vice President Michael E. Cahill
Hilary G.D. Lord General Counsel and
Senior Vice President Assistant Secretary
and Assistant Secretary Peter C. DiBona
Assistant Treasurer
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SHAREHOLDER INFORMATION
INVESTMENT ADVISER
TCW Funds Management, Inc.
865 South Figueroa Street
Los Angeles, California 90017
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TRANSFER AGENT, DIVIDEND REINVESTMENT
AND DISBURSING AGENT AND REGISTRAR
The Bank of New York
Church Street Station
P.O. Box #11002
New York, New York 10277-0770
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CUSTODIAN
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540
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INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017
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LEGAL COUNSEL
O'Melveny & Myers LLP
400 S. Hope Street
Los Angeles, California 90071
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TCW CONVERTIBLE SECURITIES FUND, INC.
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SEMI-ANNUAL REPORT
JUNE 30, 1998
[LOGO TCW(R)]
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<PAGE>
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
The President's Letter
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DEAR SHAREHOLDER:
During the first half of 1998, equity prices were buffeted by investor
concerns about economic problems in Asia and weakening U.S. corporate profits.
Despite these worries, many large capitalization stocks posted significant
gains while mid and small capitalization issues languished. Bonds posted
excellent returns as interest rates moved lower. This environment was mixed
for convertibles as the benefit of lower interest rates was somewhat offset by
the poor equity performance of mid and small capitalization companies which
make up a significant portion of the convertible market.
PERFORMANCE OF THE FUND'S SHARES
During the first six months of 1998, the Fund's return on Net Asset Value
was 8.1%. The Fund's shareholders realized a return of 3.0%. This resulted
from a decline in the per share market value of the Funds shares from $9.625
on December 31, 1997 to $9.50 on June 30, 1998 and the distribution of $0.42
in dividends. The decline in the Fund's share price combined with the increase
in NAV led to the Fund selling at a 0.42% discount to NAV on June 30, 1998.
THE CONVERTIBLE MARKET
During the last few quarters, we believed that the terms in both the new
issue and secondary markets had become expensive. We are pleased to report
that in the second quarter of 1998, this trend began to reverse itself. As
investors became more cautious about the prospects for the financial markets,
they demanded more reasonable terms on new issues. This was most evident near
the end of the second quarter and resulted in several deals being priced very
attractively. In the secondary market, the expansion of non-investment grade
credit spreads caused convertible hedge funds to sell some of their positions.
This resulted from their inability to hedge against widening spreads. As these
losses were magnified by leverage, hedge funds were forced to sell securities
quickly. This process placed pressure on the prices of many convertibles
causing a compression in conversion premiums and an overall cheapening of the
convertibles market.
The convertible new issue market was very active during the first half of
1998. In total, 103 new issues with a net value of $26.5 billion came to
market. This exceeded significantly the 66 issues with a net value of $11.7
billion, which were brought to market in the first half of 1997. The robust
demand from investors for convertibles kept terms at relatively aggressive
levels particularly for speculative issuers. As a result, the Fund
participated in only about one of every five issues brought to market.
FUND PERFORMANCE AND STRATEGY
The Fund's performance was well ahead of the convertible benchmarks during
the first half of the year. The Table below recaps the Fund's performance and
compares it to the relevant benchmarks.
TABLE 1
PERFORMANCE
<TABLE>
<CAPTION>
Total Returns
First Half
-------------
<S> <C>
TCW Convertible Securities Fund, Inc.............................. 8.1%*
First Boston Convertible Index.................................... 6.6%
Lipper average of convertible mutual funds........................ 5.8%*
Standard & Poors 500 Index (with Income).......................... 17.7%
Russell 2000 Index (with income).................................. 4.9%
Lehman Gov't/Corp Bond Index...................................... 4.2%
</TABLE>
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*-After management fees and expenses.
The Fund began 1998 most heavily weighted in the consumer staples and
capital goods sectors. The emphasis in these sectors is in the retail,
healthcare, media, telecommunications and pollution control industries. The
Fund continues to be under weighted in consumer cyclicals and basic
industries. The basic industrial sector generally continues to suffer from too
much capacity and low pricing leverage and thus, we see
1
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
The President's Letter (continued)
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limited opportunities for investment. This situation has been exacerbated by
the Asian crisis which shows few signs of stabilizing. Within the credit
sensitive sector, the emphasis continues to be on niche financial services
companies.
TABLE 2
FUND SECTOR ALLOCATION*
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ --------
<S> <C> <C>
Consumer Staples.......................................... 56.1% 56.5%
Capital Goods............................................. 26.3% 27.5%
Consumer Cyclicals........................................ 1.2% 2.2%
Basic Industries.......................................... 7.2% 6.6%
Credit Sensitive.......................................... 6.6% 8.2%
</TABLE>
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* As a percentage of net assets.
During the first half of 1998, the Fund benefited from its holdings in me-
dia, healthcare and retailing and its under weighting in technology and ener-
gy. In the media area, AT&T's acquisition of Telecommunications, Inc. helped
drive the stock prices of cable companies to record levels. The Fund's hold-
ings in Telecommunications; Media One Group, Cox Communications and Time
Warner all appreciated significantly. In addition, holdings in the radio in-
dustry, Chancellor Broadcasting and Clear Channel Communications also did
well. In the healthcare sector the Fund's positions in Elan Corp., Omnicare,
and Sepracor all appreciated significantly. Perhaps the greatest gains for any
single sector were in retail. Driven by robust consumer spending, retail sales
have been strong for the past several months and this has been reflected in
higher stock prices. Some of the best performance was generated by retailers
who have dominant positions within their niches; these included the Funds
holdings in Costco Companies, Home Depot, Staples and Rite Aid Corp.
The positive performance of the Fund's holdings in media and retail were
somewhat offset by declines in our holding of Cendant, Motorola and our
positions in the assisted living industry. Cendant stock declined when
accounting problems were found at the former CUC International. While the
problems are serious, we believe they are reflected in Cendant's valuation and
have retained our position. The company is a high quality credit with $1.3
billion in cash and generates significant free cash flow. We also continue to
believe in the long-term growth of the assisted living industry and added
slightly to our holding in Sunrise Assisted Living. Motorola's problems appear
relatively long-term in nature and thus we liquidated this position.
The U.S. economy appears to be entering a period of transition from above-
trend to below-trend growth. After growing at a 5.4% rate in the first
quarter, real GDP growth should decelerate to 2% or less. This decline is
being led by the corporate sector, which is easing the rate of inventory
accumulation. In addition, capital spending should also slow now that
corporate profitability is under pressure. The slowdown in the corporate
sector should be mitigated by continued strong consumer demand as long as the
stock market does not fall significantly. Therefore, we believe that real GDP
growth, although slowing, will remain positive through year-end.
The Asian crisis has significantly reduced GDP growth in that region. This
has contributed to significantly lower commodity prices and placed further
downward pressure on U.S. inflation. Combined with lower projected U.S. real
GDP growth, this allowed interest rates to fall in the first half. Despite the
good news on inflation, we remain somewhat concerned about accelerating wage
rates and the overall increase in service sector prices. If the Asian econo-
mies begin to stabilize, the downward trend in inflation and interest rates
could come to an end.
2
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
The President's Letter (continued)
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The Standard and Poors 500 Index ("S&P 500") continues to set new highs even
as many mid and small capitalization stocks continue to languish. (See chart
below.)
TABLE 3
COMMON EQUITY PRICE PERFORMANCE*
<TABLE>
<CAPTION>
AVERAGE 1H1998
DECLINE FROM Unweighted Number
By Capitalization 52 WEEK HIGH Performance of Issues
----------------- ------------- ----------- ----------
<S> <C> <C> <C>
Less than 250 Million...................... 40.27% (1.95%) 5,309
250 Million - 2 Billion.................... 20.48% 1.11% 2,017
2 Billion - 5 Billion...................... 15.27% 3.59% 414
5 Billion - 20 Billion..................... 11.74% 8.98% 280
Greater than 20 Billion.................... 9.23% 16.6% 112
</TABLE>
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* Source: Smith Barney Inc./Salomon Brothers, Inc.
With the S&P 500 selling at lofty valuations, household equity exposure at
high levels, and no end in sight to the Asian crisis, we believe it is prudent
to remain cautious. We will continue to follow the course charted at the
beginning of the year by realizing profits on our positions that have
appreciated significantly and investing the proceeds in more defensive
convertibles. Thus, we have liquidated or reduced the Fund's position in
Omnicom, Sandoz, Chancellor Broadcasting, Staples, Home Depot and Cisco. The
proceeds from these sales are being invested in selected securities primarily
in the consumer staples and capital goods sectors. While we remain tentative in
regards to investing in technology and energy, we believe valuations are
attractive and have begun to selectively add positions in these sectors.
RIGHTS OFFERING
The Fund launched a rights offering in June. The offering was well
subscribed. The Fund received the proceeds of $30 million at the beginning of
August. These proceeds were invested promptly on behalf of the Fund's
shareholders.
DIVIDEND REINVESTMENT PLAN
Shareholders who wish to add to their investment may do so through the
Dividend Reinvestment Plan. Under the Plan, your dividend is used to purchase
shares on the open market whenever shares and the related sales commission are
selling below the per share Net Asset Value. If the market price, including
commission on the share, is selling above the Net Asset Value, you will receive
shares at a price equal to the higher of the Net Asset Value per share on the
payment date or 95% of the closing market price.
To enroll in the Plan, if your shares are registered in your name, write to
the Bank of New York, Church Street Station, P.O. Box #11002, New York, New
York, 10277-0770, or call their toll free number (800) 524-4458. If your shares
are held by a brokerage firm, please call your broker. If, however, you need
assistance please call our investor relations department at (800) 386-3829. As
always, we would be pleased to accommodate your investment needs.
Sincerely,
/s/ Ernest O. Ellison
Ernest O. Ellison
President and Director
August 6, 1998
3
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Schedule of Investments (Unaudited)
June 30, 1998
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<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
CONSUMER STAPLES (56.5% OF NET ASSETS)
DRUGS AND HOSPITAL SUPPLY (3.3%)
$ 3,045,000 Centocor, Inc., 4.75%, due 02/15/05................ $ 3,041,194*
$ 4,370,000 Dura Pharmaceuticals, Inc., 3.5%, due 07/15/02..... 3,659,875
$ 5,000 Sandoz Capital BVI, Ltd. (Switzerland), 2%, due
10/06/02.......................................... 7,919*
$ 5,075,000 Sepracor, Inc., 6.25%, due 02/15/05................ 5,673,850*
-----------
Total Drugs and Hospital Supply.................... 12,382,838
-----------
ENTERTAINMENT, LEISURE AND MEDIA (15.5%)
$13,590,000 Clear Channel Communications, Inc., 2.625%, due
04/01/03.......................................... 14,694,188
207,000 Houston Industries, Inc., Exchangeable Time Warner,
$3.215 Convertible Preferred...................... 15,421,500
70,600 MediaOne Group, Inc., $2.25 Convertible Preferred.. 6,349,588
137,200 Merrill Lynch & Company, Inc., Exchangeable Cox
Communications, Inc., $1.3725 Convertible
Preferred......................................... 5,505,150
$ 6,885,000 News America Holdings, Inc. (Australia), 0%, due
03/11/13.......................................... 4,539,797
149,400 Reader's Digest Association, Inc., $1.93
Convertible Preferred............................. 3,847,050
$ 2,980,000 Speedway Motorsports, Inc., 5.75%, due 09/30/03.... 3,177,425
16,700 TCI Pacific Communications, Inc., $5.00 Convertible
Preferred......................................... 3,498,650
-----------
Total Entertainment, Leisure and Media............. 57,033,348
-----------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
FOODS, HOTELS AND RESTAURANTS (2.9%)
65,100 Apple South, Inc., $3.50 Convertible Preferred...... $ 3,556,088*
63,500 Host Marriott Financial Trust, $3.375 Convertible
Preferred.......................................... 3,341,688*
77,600 Suiza Foods Corp., $2.75 Convertible Preferred...... 3,821,800*
-----------
Total Foods, Hotels and Restaurants................. 10,719,576
-----------
HEALTHCARE (15.2%)
$5,900,000 Alternative Living Services, Inc., 5.25%, due
12/15/02........................................... 6,608,000
$4,330,000 Assisted Living Concepts, Inc., 5.625%, due
05/01/03........................................... 4,026,900*
$4,095,000 Assisted Living Concepts, Inc., 6%,
due 11/01/02....................................... 4,013,100
$9,595,000 Athena Neurosciences, Inc., Exchangeable Elan Corp.
PLC (Ireland), 4.75%, due 11/15/04................. 11,214,156*
$7,410,000 Concentra Managed Care, Inc., 4.5%, due 03/15/03.... 6,687,525*
70,000 Laboratory Corp. of America Holdings, $4.25
Convertible Preferred.............................. 3,780,000
$3,020,000 Morgan Stanley Group, Inc., Exchangeable Johnson &
Johnson, 2%, due 03/29/02.......................... 4,110,975
$6,380,000 Omnicare, Inc., 5%, due 12/01/07.................... 7,504,475*
$ 510,000 Quintiles Transnational Corp., 4.25%, due 05/31/00.. 663,638
$2,880,000 Quintiles Transnational Corp., 4.25%, due 05/31/00.. 3,747,600*
$1,385,000 Sunrise Assisted Living, Inc., 5.5%, due 06/15/02... 1,495,800
$2,215,000 Sunrise Assisted Living, Inc., 5.5%, due 06/15/02... 2,392,200*
-----------
Total Healthcare.................................... 56,244,369
-----------
</TABLE>
* Restricted security. (See Note 8)
See accompanying Notes to Financial Statements.
4
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Schedule of Investments (Unaudited) (continued)
June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
RETAIL (8.6%)
$ 2,195,000 Action Performance Companies, Inc., 4.75%, due
04/01/05.......................................... $ 2,074,275*
$12,250,000 Costco Companies, Inc., 0%,
due 08/19/17...................................... 9,386,563*
84,200 Dollar General Corp., $3.3524 Convertible
Preferred......................................... 3,310,113
$ 3,365,000 Home Depot, Inc., 3.25%, due 10/01/01.............. 6,170,569
62,200 Kmart Corp., $3.875 Convertible Preferred.......... 4,354,000
$ 3,180,000 Staples, Inc., 4.5%, due 10/01/00.................. 6,292,425*
-----------
Total Retail....................................... 31,587,945
-----------
RETAIL FOOD AND DRUG (2.1%)
$ 6,250,000 Rite Aid Corp, 5.25%, due 09/15/02................. 7,750,000*
-----------
SERVICES-BUSINESS (8.9%)
68,900 Budget Group, Inc., $3.125 Convertible Preferred... 4,047,875*
47,600 Cendant Corp., $3.43 Convertible Preferred......... 1,383,375
300,800 Cendant Corp., $3.75 Convertible Preferred......... 11,242,400
$ 3,930,000 Corestaff, Inc., 2.94%, due 08/15/04............... 3,846,488
$ 565,000 CUC International, Inc., 3%, due 02/15/02.......... 552,994
$ 3,505,000 CUC International, Inc., 3%, due 02/15/02.......... 3,430,519*
$ 3,565,000 Interim Services, Inc., 4.25%, due 06/01/05........ 3,859,113
$ 965,000 SmarTalk Teleservices, Inc., 5.75%, due 09/15/04... 809,394
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
SERVICES-BUSINESS (CONTINUED)
$3,295,000 SmarTalk Teleservices, Inc., 5.75%, due 09/15/04.. $ 2,763,681*
10,000 Vanstar Corp., $3.375 Convertible Preferred....... 405,600
15,000 Vanstar Corp., $3.375 Convertible Preferred....... 608,400*
------------
Total Services-Business........................... 32,949,839
------------
TOTAL CONSUMER STAPLES (Cost: $175,702,273)....... 208,667,915
------------
CONSUMER CYCLICALS
(COST: $7,465,000) (2.2%)
AUTOMOTIVE (2.2%)
$3,500,000 Magna International, Inc. (Canada), 4.875%, due
02/15/05......................................... 3,867,500*
$3,965,000 Tower Automotive, Inc., 5%, due 08/01/04.......... 4,098,819*
------------
TOTAL CONSUMER CYCLICALS (Cost: $7,465,000)....... 7,966,319
------------
CAPITAL GOODS (27.5%)
AEROSPACE AND CONGLOMERATES (3.8%)
115,300 Cooper Industries, Inc., Exchangeable Wyman-
Gordon, $0.81 Convertible Preferred 2,032,163
$3,945,000 Morgan Stanley Group, Inc., Exchangeable Boeing
Company, 0%, due 09/30/00........................ 4,088,006
$3,145,000 Hexcel Corp., 7%, due 08/01/03.................... 5,090,969
467,600 The Titan Corp., Common Stock..................... 2,805,600**
------------
Total Aerospace and Conglomerates................. 14,016,738
------------
</TABLE>
* Restricted security. (See Note 8)
** Non-income producing.
See accompanying Notes to Financial Statements.
5
<PAGE>
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Schedule of Investments (Unaudited) (continued)
June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
ELECTRONICS (5.3%)
$12,400,000 Adaptec, Inc., 4.75%, due 02/04/04................. $ 957,900
$ 3,000,000 Adaptec, Inc., 4.75%, due 02/04/04................. 2,317,500*
$ 2,545,000 Analog Devices, Inc., 3.5%, due 12/01/00........... 3,225,788
$ 3,260,000 Level One Communications, Inc., 4%, due 09/01/04... 3,573,775
93,500 Morgan Stanley Group, Inc., Exchangeable Applied
Materials, Inc., $3.00 Convertible Preferred...... 3,155,625
$ 4,470,000 SGS-Thompson Microelectronics N.V. (Netherlands),
0%, due 06/10/08.................................. 3,805,088
$ 2,510,000 Thermo Instrument Systems, Inc., 4%, due 01/15/05.. 2,535,100
-----------
Total Electronics.................................. 19,570,776
-----------
INFORMATION PROCESSING (8.0%)
$ 1,175,000 Arbor Software Corp., 4.5%, due 03/15/05........... 1,029,594*
$ 4,280,000 Merrill Lynch & Company, Inc., Exchangeable
Technology Basket, 0%, due 02/02/05............... 4,643,800*
70,000 Morgan Stanley Group, Inc., Exchangeable Cisco
Systems, Inc., $4.00 Convertible Preferred........ 7,761,250
$10,205,000 Network Associates, Inc., 0%, due 02/13/18......... 4,770,838*
$ 3,245,000 QuadraMed Corp., 5.25%, due 05/01/05............... 3,366,688*
$ 5,500,000 Safeguard Scientifics, Inc., 6%, due 02/01/06...... 7,851,250*
-----------
Total Information Processing....................... 29,423,420
-----------
OFFICE EQUIPMENT AND SUPPLIES (1.1%)
$ 3,550,000 Xerox Corp., 2.875%, due 07/01/02.................. 4,073,625
-----------
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
POLLUTION CONTROL (6.4%)
8,300 Laidlaw One, Inc., Exchangeable United States
Filter Corp., $1.22 Convertible Preferred......... $ 296,725
$3,530,000 Thermo Electron Corp., 4.25%, due 01/01/03......... 3,761,656*
$1,100,000 United States Filter Corp., 4.5%, due 12/15/01..... 11,274,992
$6,700,000 USA Waste Systems, Inc., 4%, due 02/01/02.......... 8,425,250
------------
Total Pollution Control............................ 23,758,623
------------
TELECOMMUNICATIONS (2.9%)
$5,330,000 Bell Atlantic Corp., 5.75%, due 04/01/03........... 5,466,581*
$3,315,000 Comverse Technology, Inc., 4.5%, due 07/01/05...... 3,381,300*
$3,000,000 Premiere Technologies Group, Inc., 5.75%, due
07/01/04.......................................... 1,912,500*
------------
Total Telecommunications........................... 10,760,381
------------
TOTAL CAPITAL GOODS (Cost:$92,194,032)............. 101,603,563
------------
BASIC INDUSTRIES (6.6%)
ENERGY AND OIL SERVICES (1.2%)
$3,765,000 Diamond Offshore Drill, 3.75%, due 02/15/07........ 4,376,813
------------
OIL AND GAS-INTERNATIONAL (2.8%)
48,600 Occidental Petroleum Corp., Exchangeable Canadian
Occidental Petroleum (Canada), $3.00 Convertible
Preferred......................................... 3,839,400
$6,465,000 Swiss Life Finance, Ltd., Exchangeable Royal Dutch
Petroleum Co. (Great Britain), 2%, due 05/20/05... 6,610,463*
------------
Total Oil and Gas-International.................... 10,449,863
------------
</TABLE>
* Restricted security. (See Note 8)
See accompanying Notes to Financial Statements.
6
<PAGE>
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Schedule of Investments (Unaudited) (continued)
June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
PAPER AND PACKAGING (1.0%)
83,500 Sealed Air Corp., $2.00 Convertible Preferred...... $ 3,507,000
-----------
TRANSPORTATION (1.6%)
130,000 Union Pacific Corp., $3.125 Convertible Preferred.. 6,077,500*
-----------
TOTAL BASIC INDUSTRIES (Cost:$25,883,451).......... 24,411,176
-----------
CREDIT SENSITIVE (8.2%)
BUILDING, REAL ESTATE AND REIT'S (0.7%)
$ 2,365,000 LTC Properties, Inc., 8.25%, due 07/01/01 ......... 2,545,331
-----------
INSURANCE (2.3%)
$ 2,800,000 American International Group, Inc., 2.25%, due
07/30/04.......................................... 3,528,000
49,300 Life Re Corp., $3.96 Convertible Preferred......... 3,759,125
110,900 Philadelphia Consolidated Holding Company, $0.70
Convertible Preferred............................. 1,143,656
-----------
Total Insurance.................................... 8,430,781
-----------
SERVICES-FINANCIAL, BANKING AND MISCELLANEOUS
(5.2%)
127,300 CNB Bancshares, Inc., $1.50 Convertible Preferred.. 3,337,647
$ 4,000,000 Security Capital U.S. Real Estate (Luxembourg), 2%,
due 05/22/03...................................... 3,372,500*
64,000 St. George Bank Ltd., $4.50 Convertible Preferred.. 3,072,000*
82,500 SunAmerica Corp., $3.188 Convertible Preferred..... 3,960,000
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal
Amount Value
--------- -----
<C> <S> <C>
SERVICES-FINANCIAL, BANKING AND MISCELLANEOUS
(CONTINUED)
182,700 Westpac Holdings Corp., Ltd., (Australia) $3.135
Convertible Preferred............................ $ 5,515,256
------------
Total Services-Financial, Banking and
Miscellaneous.................................... 19,257,403
------------
TOTAL CREDIT SENSITIVE (Cost:$28,082,277)......... 30,233,515
------------
REPURCHASE AGREEMENTS (3.8%)
$ 3,327,330 Stock Loan Repurchase, Bear Stearns & Co., Inc.,
dated 06/30/98, 3.125%, due 07/01/98
(collateralized by $3,345,000 U.S. Treasury Note,
valued at $3,398,936)............................ 3,327,330
$ 9,945,090 Stock Loan Repurchase, Bear Stearns & Co., Inc.,
dated 06/30/98, 6.375%, due 07/01/98
(collateralized by $9,985,000 U.S. Treasury Note,
valued at $10,146,003)........................... 9,945,090
$ 580,649 Cash Repurchase Agreement, Bear Stearns & Co.,
Inc., dated 06/30/98, 5.8%, due 07/01/98
(collateralized by $585,000 U.S. Treasury Note,
valued at $594,433).............................. 580,649
------------
TOTAL REPURCHASE AGREEMENTS (COST: $13,853,069)... 13,853,069
------------
TOTAL INVESTMENTS (104.8%) (COST: $343,180,102)... 386,735,557
EXCESS OF LIABILITIES OVER OTHER ASSETS (-4.8%)... (17,740,712)
------------
NET ASSETS (100%)................................. $368,994,845
============
</TABLE>
* Restricted security. (See Note 8)
See accompanying Notes to Financial Statements.
7
<PAGE>
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[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Statement of Assets and Liabilities (Unaudited)
June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at Value (Cost $343,180,102) (Note 1)............... $386,735,557
Receivable for Securities Sold.................................. 3,889,306
Interest and Dividends Receivable............................... 2,659,453
------------
Total Assets.................................................. 393,284,316
------------
LIABILITIES:
Payable for Securities Purchased................................ 2,370,700
Payable upon Return of Securities Loaned (Note 5)............... 13,272,420
Distributions Payable........................................... 8,124,339
Accrued Investment Advisory and Service Fees (Note 3)........... 359,422
Accounts Payable................................................ 162,590
------------
Total Liabilities............................................. 24,289,471
------------
NET ASSETS........................................................ $368,994,845
============
Net Assets were comprised of:
Common Stock, par value $0.01 per share, (50,000,000 shares au-
thorized, 38,687,329 shares issued and outstanding)............ $ 386,874
Paid-in Capital................................................. 309,138,408
Net Unrealized Appreciation of Investments...................... 43,555,455
Undistributed Net Realized Gains on Investments................. 15,914,108
------------
NET ASSETS........................................................ $368,994,845
============
NET ASSET VALUE PER SHARE......................................... $ 9.54
============
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Statement of Operations (Unaudited)
For the Six Months Ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest (Note 1) (including security lending fees of $14,000)... $ 5,046,392
Dividends (Note 1)............................................... 2,746,062
-----------
Total Investment Income........................................ 7,792,454
-----------
EXPENSES:
Investment Advisory Fees (Note 3)................................ 1,070,601
Custodian Fees................................................... 57,499
Directors' Fees and Expenses (Note 6)............................ 37,564
Printing and Distribution Costs.................................. 29,846
Listing Fees..................................................... 20,199
Transfer Agent Fees.............................................. 17,240
Accounting and Other Service Fees (Note 3)....................... 12,397
Insurance Costs.................................................. 8,516
Audit and Tax Service Fees....................................... 6,454
Business Tax Fees................................................ 6,374
Proxy Costs...................................................... 4,068
Legal Fees (Note 6).............................................. 1,550
Miscellaneous.................................................... 1,766
-----------
Total Expenses................................................. 1,274,074
-----------
Net Investment Income.......................................... 6,518,380
-----------
NET REALIZED GAINS AND CHANGE IN UNREALIZED (DEPRECIATION)
OF INVESTMENTS:
Net Realized Gains on Investments................................ 24,815,837
Change in Unrealized (Depreciation) of Investments............... (2,357,492)
-----------
Net Realized Gains and Change in Unrealized
(Depreciation) of Investments................................. 22,458,345
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $28,976,725
===========
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended June
30, 1998 Year Ended
(Unaudited) December 31, 1997
------------ -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net Investment Income........................ $ 6,518,380 $ 12,644,813
Net Realized Gains on Investments............ 24,815,837 19,760,433
Change in Unrealized Appreciation
(Depreciation) of Investments............... (2,357,492) 29,491,278
------------ ------------
Increase in Net Assets Resulting from
Operations................................ 28,976,725 61,896,524
------------ ------------
Distributions to Shareholders:
From Net Investment Income................... (6,518,380) (12,644,813)
From Net Realized Gains on Investments....... (9,719,138) (19,482,548)
------------ ------------
Total Distributions to Shareholders........ (16,237,518) (32,127,361)
------------ ------------
Capital Share Transactions:
Shares Issued through Exercise of Common
Stock Subscription Rights (6,396,283) (Note
9).......................................... -- 51,583,087
Shares Issued in Reinvestment of Dividends
(126,050 for the six months ended June 30,
1998 and 270,747 for the year ended December
31, 1997)................................... 1,194,367 2,442,324
------------ ------------
Total Increase in Net Assets............... 13,933,574 83,794,574
NET ASSETS:
Beginning of Period............................ 355,061,271 271,266,697
------------ ------------
End of Period.................................. $368,994,845 $355,061,271
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
- -------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Notes to Financial Statements (Unaudited)
- -------------------------------------------------------------------------------
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES:
TCW Convertible Securities Fund, Inc. (the "Fund") was incorporated in Mary-
land on January 13, 1987 as a diversified, closed-end management investment
company and is registered under the Investment Company Act of 1940, as amend-
ed. The Fund commenced operations on March 5, 1987. The Fund's investment ob-
jective is to seek a total investment return, comprised of current income and
capital appreciation through investment principally in convertible securities.
The preparation of the accompanying financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates.
The following is a summary of the significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
SECURITY VALUATION: Securities traded on national exchanges are valued at the
last reported sales price or the mean of the current bid and asked prices if
there are no sales in the trading period immediately preceding the time of de-
termination. Other securities which are traded on the over-the-counter market
are valued at the mean of the current bid and asked prices. Short-term debt
securities with maturities of 60 days or less at the time of purchase are val-
ued at amortized cost. Securities for which quotations are not readily avail-
able and unregistered securities are valued at fair value as determined in
good faith by, or under the direction of, the Board of Directors.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend
date, while interest income is recorded on the accrual basis. Original issue
discount is accreted as interest income using a constant yield to maturity.
Discounts on securities purchased are recognized as interest income at the
time the security is sold using a constant yield to maturity. Premiums on
securities purchased are not amortized. Realized and unrealized gains and
losses on investments are recorded on the basis of identified cost.
DISTRIBUTIONS: The Fund's Board of Directors has adopted a policy under which
it has declared quarterly dividends of $0.21 per share. Payments to sharehold-
ers under the distribution policy are reflected in the financial statements in
the following order; first from net investment income and, depending upon the
results achieved each year, secondly from net realized capital gains, thirdly
as a distribution in excess of net investment income or capital gains which
may become taxable to shareholders in the subsequent year and, lastly, as a
return of capital which is not taxable to shareholders.
Income and capital gain distributions are determined in accordance with in-
come tax regulations which may differ from generally accepted accounting prin-
ciples. These differences are primarily due to differing treatments for losses
deferred due to wash sales and spillover distributions. Permanent book and tax
basis differences relating to shareholder distributions will result in reclas-
sifications to paid in capital and may affect net investment income per share.
REPURCHASE AGREEMENT: The Fund may invest in repurchase agreements secured by
U.S. Government Securities. A repurchase agreement arises when the Fund pur-
chases a security and simultaneously agrees to resell it to the seller at an
agreed upon future date. The Fund requires the seller to maintain the value of
the securities, marked to market daily, at not less than the repurchase price.
If the seller defaults on its repurchase obligation, the Fund could suffer de-
lays, collection expenses and losses to the extent that the proceeds from the
sale of the collateral are less than the repurchase price.
11
<PAGE>
- -------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Notes to Financial Statements (Unaudited) (continued)
- -------------------------------------------------------------------------------
NOTE 2-FEDERAL INCOME TAXES:
It is the policy of the Fund to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and distribute all
of its net taxable income, including any net realized gains on investments, to
its shareholders. Therefore, no federal income tax provision is required.
During the six months ended June 30, 1998, the Fund realized on a tax basis
net realized gains of $24,815,837 on security transactions.
As of June 30, 1998, net unrealized appreciation (depreciation) for federal
income tax purposes is comprised of the following components:
<TABLE>
<S> <C>
Appreciated securities............................................ $ 52,177,270
Depreciated securities............................................ (8,621,815)
------------
Net unrealized appreciation....................................... $ 43,555,455
============
Cost of securities for federal income tax purposes................ $343,180,102
============
</TABLE>
NOTE 3-INVESTMENT ADVISORY AND SERVICE FEES:
TCW Funds Management, Inc. is the Investment Adviser of the Fund and also
furnishes the Fund with accounting and other services and office space. As
compensation for the services rendered, facilities provided, and expenses
borne, the Adviser is paid a monthly fee by the Fund computed at the annual
rate of 0.75% of the first $100 million of the Fund's average net assets and
0.50% of the Fund's average net assets in excess of $100 million. In addition,
the Fund reimburses the Adviser for the costs of providing accounting services
to the Fund (up to a maximum of $25,000 per year).
NOTE 4-PURCHASES AND SALES OF SECURITIES:
For the six months ended June 30, 1998, purchases and sales or maturities of
investment securities (excluding short-term investments) aggregated
$251,255,051 and $246,865,751, respectively. There were no purchases or sales
of U.S. Government securities for the six months ended June 30, 1998.
NOTE 5-SECURITY LENDING:
During the six months ended June 30, 1998, the Fund lent securities to a bro-
ker. The broker provided collateral, which must be maintained at not less than
100% of the value of the loaned securities, to secure the obligation. At June
30, 1998, the cash received from the borrowing broker was invested in over-
night repurchase agreements issued by the borrowing broker which, in turn,
were collateralized by U.S. Treasury securities valued at $13,544,939, or
102%, of the value of the loaned securities.
NOTE 6-DIRECTORS' AND LEGAL FEES:
Directors who are not affiliated with the Investment Adviser received, as a
group, aggregate fees and expenses of $37,564 from the Fund for the six months
ended June 30, 1998. Legal fees totaled $1,550 of which $1,413 were paid to
O'Melveny & Myers, of which an individual who is of counsel, serves as a di-
rector of the Fund. Certain officers and/or directors of the Fund are also of-
ficers and/or directors of the Investment Adviser.
NOTE 7-COMMON STOCK SUBSCRIPTION RIGHTS:
Non-transferable rights to subscribe to shares of the Fund's common stock
were issued to shareholders of record on June 29, 1998. The rights entitled
the shareholders to acquire one share of newly issued common stock for each
five rights held.
NOTE 8-RESTRICTED SECURITIES:
The following restricted securities held by the Fund at June 30, 1998 were
valued both at the date of acquisition and June 30, 1998, in accordance with
the Security Valuation policy of the Fund described in Note 1. The restricted
securities were purchased in private placement transactions without
registration under the Securities Act of 1933. Such securities generally may
be sold only in a privately negotiated transaction with a limited number of
purchasers, in a
12
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
public offering registered under the Securities Act of 1933 (the "1933 Act") or
in accordance with Rule 144A under the 1933 Act. The Fund may classify a
Rule 144A security as liquid if it can be reasonably expected that the Fund
would be able to dispose of the security within seven days in the ordinary
course of business at approximately its carrying value. Rule 144A securities
for which such a determination is not made and other restricted securities are
deemed illiquid and are subject to an aggregate limitation of no more than 15%
of the Fund's investment portfolio. The Fund will bear any costs incurred in
connection with the disposition of restricted securities. The total value of
restricted securities at June 30, 1998 is $156,969,622, which represents 42.5%
of the Fund's net assets.
13
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Notes to Financial Statements (Unaudited) (continued)
June 30,1998
- --------------------------------------------------------------------------------
NOTE 8-RESTRICTED SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
Number of
Shares or
Principal Date of
Amount Acquisition Cost
--------- ----------- ----------
<C> <S> <C> <C>
$2,195,000 Action Performance Companies, Inc., 4.75%,
due 04/01/05............................... 03/19/98 $2,195,000
$3,000,000 Adaptec, Inc., 4.75%, due 02/04/04.......... 01/28/97 3,006,250
65,100 Apple South, Inc., $3.50 Convertible
Preferred.................................. 03/06/97 3,336,000
$1,175,000 Arbor Software Corp., 4.5%, due 03/15/05.... 03/11/98 1,175,000
$4,330,000 Assisted Living Concepts, Inc., 5.625%, due
05/01/03................................... 04/07/98 4,271,501
$9,595,000 Athena Neurosciences, Inc., Exchangeable
Elan Corp. PLC (Ireland), 4.75%, due
11/15/04................................... 11/05/97 9,595,000
$5,330,000 Bell Atlantic Corp., 5.75%, due 04/01/03.... 02/12/98 5,330,000
68,900 Budget Group, Inc., $3.125 Convertible
Preferred.................................. 06/16/98 3,445,000
$3,045,000 Centocor, Inc., 4.75%, due 02/15/05......... 02/13/98 3,045,000
$3,315,000 Comverse Technology, Inc., 4.5%, due 07/01/05. 06/25/98 3,315,000
$7,410,000 Concentra Managed Care, Inc., 4.5%,
due 03/15/03............................... 03/11/98 7,410,000
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal Date of
Amount Acquisition Cost
--------- ----------- ----------
<C> <S> <C> <C>
$12,250,000 Costco Companies, Inc., 0%, due 08/19/17.. 08/14/97 $6,306,490
$ 3,505,000 CUC International, Inc., 3%, due 02/15/02. 02/05/97 3,513,962
63,500 Host Marriott Financial Trust, $3.375
Convertible Preferred.................... 11/25/96 3,248,625
$ 3,500,000 Magna International Inc. (Canada), 4.875%,
due 02/15/05............................. 02/10/98 3,500,000
$ 4,280,000 Merrill Lynch & Company, Inc.,
Exchangeable Technology Basket, 0%, due
02/02/05................................. 02/02/98 4,280,000
$10,205,000 Network Associates, Inc., 0%, due
02/13/18................................. 02/10/98 4,062,230
$ 6,380,000 Omnicare, Inc., 5%, due 12/01/07.......... 12/04/97 6,380,000
$ 3,000,000 Premiere Technologies, Inc., 5.75%, due
07/01/04................................. 06/25/97 3,007,700
$ 3,245,000 QuadraMed Corp., 5.25%, due 05/01/05...... 04/27/98 3,283,700
$ 2,880,000 Quintiles Transnational Corp., 4.25%, due
05/31/00................................. 04/23/96 2,885,900
$ 6,250,000 Rite Aid Corp., 5.25%, due 09/15/02....... 09/04/97 6,250,000
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Notes to Financial Statements (Unaudited) (continued)
June 30, 1998
- --------------------------------------------------------------------------------
NOTE 8-RESTRICTED SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
Number of
Shares or
Principal Date of
Amount Acquisition Cost
--------- ----------- ----------
<C> <S> <C> <C>
$5,500,000 Safeguard Scientifics, Inc., 6%, due
02/01/06................................. 01/17/97 $5,190,897
$ 5,000 Sandoz Capital BVI, Ltd., (Switzerland),
2%, due 10/06/02......................... 05/12/97 6,556
$4,000,000 Security Capital U.S. Real Estate
(Luxembourg), 2%, due 05/22/03........... 05/14/98 3,219,547
$5,075,000 Sepracor, Inc., 6.25%, due 02/15/05....... 02/05/98 5,112,275
$3,295,000 SmarTalk Teleservices, Inc., 5.75%, due
09/15/04................................. 09/12/97 3,295,000
64,000 St. George Bank Ltd., $4.50 Convertible
Preferred................................ 05/21/98 3,200,000
$3,180,000 Staples, Inc., 4.5%, due 10/01/00......... 09/12/95 3,380,775
77,600 Suiza Foods Corp., $2.75 Convertible
Preferred................................ 03/19/98 3,880,000
$2,215,000 Sunrise Assisted Living, Inc., 5.5%, due
06/15/02................................. 06/03/97 2,228,181
$6,465,000 Swiss Life Finance, Ltd., Exchangeable
Royal Dutch Petroleum Co. (Great
Britain), 2%, due 05/20/05............... 04/08/98 6,519,464
$3,530,000 Thermo Electron Corp., 4.25%, due
01/01/03................................. 02/27/96 3,908,161
$3,965,000 Tower Automotive, Inc., 5%, due 08/01/04.. 07/24/97 3,965,000
</TABLE>
<TABLE>
<CAPTION>
Number of
Shares or
Principal Date of
Amount Acquisition Cost
--------- ----------- ----------
<C> <S> <C> <C>
130,000 Union Pacific Corp., $3.125 Convertible
Preferred.................................. 03/27/98 $6,500,000
15,000 Vanstar Corp., $3.375 Convertible Preferred. 01/17/97 639,372
</TABLE>
NOTE 9-SUBSEQUENT EVENT-REPORT OF ANNUAL MEETING OF SHAREHOLDERS:
The Annual Meeting of Shareholders of the Fund was held on July 30, 1998. At
the meeting, the following matters were submitted to a shareholder vote and ap-
proved by a vote of a majority of the Fund's outstanding voting securities: (i)
the election of Ernest O. Ellison, John C. Argue, Norman Barker, Jr., Richard
W. Call, Coleman W. Morton, Charles A. Parker, Lawrence J. Sheehan and Robert
G. Sims as Directors to serve until the next annual meeting of the Fund's
shareholders and until their successors are elected and qualify (each Director
received 33,746,702 affirmative votes; votes opposed 340,832 and votes withheld
156,954); (ii) Renewal of the Investment Advisory and Management Agreement for
another annual period (votes for: 33,393,700; votes against 384,496 and absten-
tions 466,292); (iii) the ratification of the selection of Deloitte & Touche
LLP as independent auditors of the Fund for the fiscal year ending December 31,
1998 (votes for: 33,654,937; votes against 205,816 and abstentions 383,735) and
(iv) Amendment to the Fund's Articles of Incorporation to increase the number
of authorized shares of Common Stock (votes for: 31,721,610; votes against
1,721,077 and abstentions 801,801). 38,687,329 shares were outstanding on the
record date for this meeting and 34,244,488 shares entitled to vote were pres-
ent in person or by proxy at the meeting.
15
<PAGE>
- -------------------------------------------------------------------------------
[LOGO OF TCW] TCW CONVERTIBLE SECURITIES FUND, INC.
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended June
30, 1998
(Unaudited)
-----------
<S> <C>
Net Asset Value Per
Share, Beginning
of Period......... $ 9.21
--------
Income from Opera-
tions:
Net Investment
Income............ 0.17
Impact to Capital
for Shares
Issued............ --
Net Realized and
Unrealized Gains
(Losses) on
Securities........ 0.58
--------
Total from
Investment
Operations..... 0.75
Less Distributions:
Distributions from
Net Investment
Income............ (0.17)
Distributions from
Net Realized
Gains............. (0.25)
Distributions in
Excess of
Net Realized
Gains............. --
Return of Capital
.................. --
--------
Total
Distributions.. (0.42)
--------
Net Asset Value Per
Share, End of
Period............ $ 9.54
========
Total Investment
Return (1)........ 2.97%(4)
Net Asset Value
Total Return (2).. 8.07%(4)
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, End of
Period
(in thousands).... $368,995
Ratio of Expenses
to Average
Net Assets........ 0.69%(5)
Ratio of Net
Investment Income
to Average Net
Assets............ 3.53%(5)
Portfolio Turnover
Rate.............. 67.22%(4)
Average Commission
Rate Paid by the
Fund (3).......... $ 0.06
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
--------- --------- --------- ---------- --------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per
Share, Beginning
of Period......... $ 8.51 $ 8.36 $ 7.47 $ 8.79 $ 8.36 $ 8.09 $ 6.85 $ 8.36 $ 7.99 $ 7.76
--------- --------- --------- ---------- --------- --------- --------- ---------- --------- ---------
Income from Opera-
tions:
Net Investment
Income............ 0.35 0.36 0.37 0.38 0.40 0.41 0.43 0.46 0.50 0.55
Impact to Capital
for Shares
Issued............ (0.01) -- -- -- (0.01) (0.01) -- -- -- --
Net Realized and
Unrealized Gains
(Losses) on
Securities........ 1.23 0.77 1.36 (0.86) 1.25 0.71 1.65 (1.13) 0.71 0.44
--------- --------- --------- ---------- --------- --------- --------- ---------- --------- ---------
Total from
Investment
Operations..... 1.57 1.13 1.73 (0.48) 1.64 1.11 2.08 (0.67) 1.21 0.99
Less Distributions:
Distributions from
Net Investment
Income............ (0.35) (0.36) (0.37) (0.38) (0.40) (0.41) (0.43) (0.46) (0.50) (0.55)
Distributions from
Net Realized
Gains............. (0.52) (0.62) (0.33) (0.30) (0.81) (0.07) -- -- (0.06) --
Distributions in
Excess of
Net Realized
Gains............. -- -- (0.14) (0.16) -- -- -- -- -- --
Return of Capital
.................. -- -- -- -- -- (0.36) (0.41) (0.38) (0.28) (0.21)
--------- --------- --------- ---------- --------- --------- --------- ---------- --------- ---------
Total
Distributions.. (0.87) (0.98) (0.84) (0.84) (1.21) (0.84) (0.84) (0.84) (0.84) (0.76)
--------- --------- --------- ---------- --------- --------- --------- ---------- --------- ---------
Net Asset Value Per
Share, End of
Period............ $ 9.21 $ 8.51 $ 8.36 $ 7.47 $ 8.79 $ 8.36 $ 8.09 $ 6.85 $ 8.36 $ 7.99
========= ========= ========= ========== ========= ========= ========= ========== ========= =========
Total Investment
Return (1)........ 12.98% 11.75% 33.60% (7.43)% 13.77% 15.90% 41.38% (3.78)% 20.23% 24.79%
Net Asset Value
Total Return (2).. 19.10% 13.94% 24.00% (5.70)% 16.12% 13.35% 31.20% (8.25)% 15.97% 13.24%
RATIOS/SUPPLEMENTAL
DATA:
Net Assets, End of
Period
(in thousands).... $355,061 $271,267 $264,608 $234,686 $273,230 $215,208 $172,331 $144,593 $175,732 $167,797
Ratio of Expenses
to Average
Net Assets........ 0.74% 0.77% 0.81% 0.79% 0.80% 0.88% 0.94% 0.94% 0.95% 0.94%
Ratio of Net
Investment Income
to Average Net
Assets............ 3.95% 4.12% 4.60% 4.66% 4.48% 5.04% 5.68% 5.93% 5.90% 6.66%
Portfolio Turnover
Rate.............. 132.99% 125.72% 108.98% 110.04% 173.79% 139.39% 114.13% 99.53% 84.17% 70.62%
Average Commission
Rate Paid by the
Fund (3).......... $ 0.06 $ 0.06 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
(1) Based on market value per share, adjusted for reinvestment of distribu-
tions.
(2) Based on net asset value per share, adjusted for reinvestment of distribu-
tions.
(3) For fiscal years beginning on or after September 1, 1995, a fund is re-
quired to disclose its average commission rate per share for security
trades on which commissions are charged. This amount may vary from period
to period and fund to fund depending on the mix of trades executed in var-
ious markets where trading practices and commission rate structures may
differ.
(4) For the six months ended June 30, 1998 and not indicative of a full year's
operating results.
(5) Annualized.
See accompanying Notes to Financial Statements.
16
<PAGE>
[LOGO OF TCW(R)]
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 343,180
<INVESTMENTS-AT-VALUE> 386,736
<RECEIVABLES> 6,548
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 393,284
<PAYABLE-FOR-SECURITIES> 2,371
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 21,918
<TOTAL-LIABILITIES> 24,289
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 309,525
<SHARES-COMMON-STOCK> 38,687
<SHARES-COMMON-PRIOR> 38,561
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,914
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 43,556
<NET-ASSETS> 368,995
<DIVIDEND-INCOME> 2,746
<INTEREST-INCOME> 5,046
<OTHER-INCOME> 0
<EXPENSES-NET> 1,274
<NET-INVESTMENT-INCOME> 6,518
<REALIZED-GAINS-CURRENT> 24,816
<APPREC-INCREASE-CURRENT> (2,357)
<NET-CHANGE-FROM-OPS> 28,977
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,518
<DISTRIBUTIONS-OF-GAINS> 9,719
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 126
<NET-CHANGE-IN-ASSETS> 13,934
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 817
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,071
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<AVERAGE-NET-ASSETS> 370,471
<PER-SHARE-NAV-BEGIN> 9.21
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> .58
<PER-SHARE-DIVIDEND> .17
<PER-SHARE-DISTRIBUTIONS> .25
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<PER-SHARE-NAV-END> 9.54
<EXPENSE-RATIO> .69
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</TABLE>
