<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
SEMI-ANNUAL REPORT
APRIL 30, 1998
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
TABLE OF CONTENTS
- -----------------
<TABLE>
<S> <C>
Letter to Shareholders............................................... 2
Performance Summary.................................................. 3
Schedules of Investments:
TCW Galileo Money Market Fund....................................... 4
TCW Galileo Core Fixed Income Fund.................................. 6
TCW Galileo High Yield Bond Fund.................................... 11
TCW Galileo Mortgage Backed Securities Fund......................... 18
TCW Galileo Long-Term Mortgage Backed Securities Fund............... 20
Statements of Assets and Liabilities................................. 22
Statements of Operations............................................. 24
Statements of Changes in Net Assets.................................. 26
Notes to Financial Statements........................................ 31
Financial Highlights................................................. 38
Shareholder Information.............................................. 44
</TABLE>
1
<PAGE>
TO OUR SHAREHOLDERS
- -------------------
We are pleased to submit the April 30, 1998 Semi-Annual Reports for the TCW
Galileo Funds. In our new format, we have separated our reports into three
categories; 1) U.S. Equities Funds, 2) U.S. Fixed Income Funds, and 3)
International Funds to provide more focused information to our shareholders. On
the next page is a summary of each category's respective funds' net asset value
and performance data through April 30, 1998.
TCW is committed to providing you with superior professional investment
management and distinctive personal service through the TCW Galileo Funds. The
Galileo Mutual Funds continue to provide our clients with targeted investment
strategies featuring daily liquidity, competitive management fees and no front
end loads, 12b-1 or deferred sales charges.
On June 1, 1998, we started four new Galileo Mutual Funds; TCW Galileo Large Cap
Growth Fund, TCW Galileo Large Cap Value Fund, TCW Galileo Enhanced 500 Fund and
TCW Galileo Emerging Markets Income Fund. A fifth new Galileo Fund, TCW Galileo
Small Cap Value Fund will commence operations in the next few months. With a
total of 22 Galileo Funds, our shareholders have a wide diversity of Funds to
accomplish their investment objectives.
Please call your Account Representative or our Investor Relations Department at
(800) FUND TCW [(800) 386-3829 if you have any questions or would like further
information on the TCW Galileo Funds.
/s/ Marc I. Stern
- -----------------
Marc I. Stern
Chairman of the Board
June 3, 1998
2
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
April 30, 1998
PERFORMANCE SUMMARY (UNAUDITED)
- -------------------------------
<TABLE>
<CAPTION>
Net Asset Value Total Return - Annualized
per Share As of April 30, 1998
--------------- ------------------------------------------------------------------------
Latest Twelve
April 30, Months Ended Latest Since Inception
1998 April 30, 1998 5 Years Inception Date
--------------- ----------------- ---------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
TCW Galileo Money Market Fund $ 1.00 5.38% 4.77% 5.71% /(1)/ 07/14/88 /(2)/
TCW Galileo Core Fixed Income
Fund $ 9.64 10.30% 5.40% 7.47% /(1)/ 01/01/90 /(2)/
TCW Galileo High Yield Bond
Fund $10.02 13.46% 10.22% 11.28% /(1)/ 02/01/89 /(2)/
TCW Galileo Mortgage Backed
Securities Fund $ 9.66 6.26% 5.77% 6.94% /(1)/ 02/01/90 /(2)/
TCW Galileo Long-Term Mortgage
Backed Securities Fund $ 9.71 12.58% N/A 7.17% 06/17/93
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Funds' registration became
effective. The predecessor limited partnerships were not registered under
the Investment Company Act of 1940, as amended ("1940 Act"), and, therefore
were not subject to certain investment restrictions that are imposed by the
1940 Act. If the limited partnerships had been registered under the 1940
Act, the limited partnership's performance may have been lower.
(2) Inception date of predecessor limited partnership.
3
<PAGE>
TCW GALILEO MONEY MARKET FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
<TABLE>
<CAPTION>
Principal
Amount INVESTMENTS Value
- --------------- ----------- -------------
<S> <C> <C>
AGENCY FIXED INCOME SECURITIES (35.7% OF NET ASSETS)
$ 4,500,000 Federal Farm Credit Bank, 5.7%, due 09/02/98 $ 4,500,528
7,500,000 Federal Home Loan Bank, 5.43%, due 03/11/99 7,490,767
5,000,000 Federal Home Loan Bank, 5.605%, due 03/12/99 5,002,683
4,000,000 Federal Home Loan Bank, 5.71%, due 06/23/98 4,000,184
5,000,000 Federal Home Loan Bank, 5.81%, due 11/04/98 5,000,807
7,423,000 Federal Home Loan Mortgage Corp., 5.27%, due 08/04/98 7,319,769
5,000,000 Federal Home Loan Mortgage Corp., 5.605%, 03/12/99 4,999,885
10,000,000 Federal National Mortgage Association, 5.41%, due 02/23/99 9,985,137
8,200,000 Federal National Mortgage Association, 5.46%, due 01/21/99 8,197,023
3,000,000 Federal National Mortgage Association, 5.71%, due 09/09/98 2,999,018
5,000,000 Federal National Mortgage Association, 7.00%, due 07/13/98 5,011,775
6,500,000 Student Loan Marketing Association, 5.42%, due 05/21/98 6,500,000
------------
TOTAL AGENCY FIXED INCOME SECURITIES (COST: $ 71,007,577) 71,007,577
------------
COMMERCIAL PAPER (54.4%)
4,900,000 American Express Credit Corp., 5.5%, due 05/08/98 4,894,760
5,000,000 Becton Dickinson & Co., 5.48%, due 05/07/98 4,995,433
4,900,000 CIT Group Holdings Inc., 5.5%, due 05/05/98 4,897,006
6,250,000 Du Pont (E.I.) De Nemours & Co., 5.49%, due 05/07/98 6,244,281
1,450,000 Du Pont (E.I.) De Nemours & Co., 5.5%, due 05/04/98 1,449,335
5,000,000 Ford Motor Credit Corp., 5.5%, due 05/05/98 4,996,944
5,000,000 Ford Motor Credit Corp., 5.5%, due 05/06/98 4,996,181
5,000,000 General Electric Capital Corp., 5.51%, due 05/04/98 4,997,704
10,000,000 General Motors Acceptance Corp., 5.51%, due 05/06/98 9,992,347
10,000,000 Goldman Sachs & Co., 5.55%, due 05/05/98 9,993,833
5,000,000 John Deere & Co., 5.5%, due 05/06/98 4,996,181
5,000,000 Metlife Funding Inc., 5.5%, due 05/07/98 4,995,417
7,800,000 Morgan Stanley/Dean Witter, Discover, 5.5%, due 05/26/98 7,770,208
3,400,000 Prudential Funding Corp., 5.55%, due 05/20/98 3,390,041
5,600,000 Toyota Motor Credit Corp., 5.5%, due 05/15/98 5,588,022
2,900,000 Toyota Motor Credit Corp., 5.5%, due 05/21/98 2,891,139
5,100,000 Toys R Us, Inc., 5.47%, due 05/08/98 5,094,576
6,000,000 United Parcel Service, 5.29%, due 09/30/98 5,865,987
10,000,000 USAA Capital Corp., 5.5%, due 05/04/98 9,995,417
------------
TOTAL COMMERCIAL PAPER (Cost: $108,044,811) 108,044,811
------------
CORPORATE FIXED INCOME SECURITIES (10.1%)
10,000,000 Chevron Oil Finance Co., 5.52%, due 05/01/98 10,000,000
10,000,000 Merrill Lynch & Company, Inc., 5.5%, due 05/01/98 10,000,000
------------
TOTAL CORPORATE FIXED INCOME SECURITIES (Cost: $20,000,000) 20,000,000
------------
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
<TABLE>
<CAPTION>
April 30, 1998
Principal
Amount INVESTMENTS Value
- --------------- ----------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENT (COST: $13,385) (0.0%)
--------------------------------------------
$ 13,385 Bank of New York Depository Reserve, 4.6%, due 05/01/98 $ 13,385
------------
TOTAL INVESTMENTS (COST: $199,065,773) (100.2%) 199,065,773
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.2%) (352,554)
------------
NET ASSETS (100%) $198,713,219
============
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
TCW GALILEO CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -----------------------------------
<TABLE>
<CAPTION>
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
---------- --------------------------------- -------
<S> <C> <C>
BASIC INDUSTRIES (9.8% OF NET ASSETS)
$100,000 AMR Corp., 9.5%, due 05/15/01 $ 108,750
50,000 American Pad & Paper Co., 13%, due 11/15/05 51,250
50,000 BE Aerospace, Inc., (144A), 8%, due 03/01/08 49,375 *
25,000 Consumers International, (144A), 10.25%, due 04/01/05 27,500 *
100,000 Desa International, Inc., (144A), 9.875%, due 12/15/07 102,000 *
150,000 Du Pont (E.I.) De Nemours & Co., 6.75%, due 09/01/07 154,875
50,000 GSI Group, Inc., (144A), 10.25%, due 11/01/07 52,500 *
150,000 General American Transportation Co., 6.75%, due 03/01/06 151,500
25,000 Globalstar LP/Capital, 11.25%, due 06/15/04 25,625
50,000 Graham Packaging Co., (144A), 8.75%, due 01/15/08 50,000 *
50,000 Grove Worldwide, LLC, (144A), 9.25%, due 05/01/08 50,000 *
50,000 Intermedia Communications, Inc., 8.5%, due 01/15/08 50,500
150,000 International Business Machines Corp., 7%, due 10/30/25 155,625
50,000 Iron Mountain, Inc., 10.125%, due 10/01/06 54,875
25,000 Jordan Telecommunications Products, Inc., 9.875%, due 08/01/07 26,313
75,000 Kaiser Aluminum & Chemical Corp., 10.875%, due 10/15/06 81,750
100,000 Level 3 Communications, Inc., (144A), 9.125%, due 05/01/08 98,750 *
600,000 Litton Industries, Inc., 6.05%, due 04/05/03 592,500
25,000 MDC Holdings, Inc., 8.375%, due 02/01/08 25,063
100,000 Mastec, Inc., (144A), 7.75%, due 02/01/08 99,000 *
100,000 Merck & Company, Inc., 6.4%, due 03/01/28 99,250
100,000 Minnesota Mining & Manufacturing Co., 6.375%, due 02/15/28 98,000
50,000 Morris Materials Handling, Inc., (144A), 9.5%, due 04/01/08 49,750 *
20,000 National Energy Group, Inc., 10.75%, due 11/01/06 18,800
500,000 Occidental Petroleum Corp., 6.4%, due 04/01/03 496,875
50,000 Packaged Ice, Inc., (144A), 9.75%, due 02/01/05 50,500 *
50,000 Pierce Leahy Corp., (144A), 8.125%, due 05/15/08 49,875 *
150,000 Pitney Bowes, Inc., 5.95%, due 02/01/05 148,688
50,000 Polymer Group, Inc., (144A), 8.75%, due 03/01/08 50,750 *
200,000 Praxair, Inc., 6.15%, due 04/15/03 198,750
100,000 Praxair, Inc., 6.75%, due 04/15/03 101,625
100,000 Raytheon Co., 6.45%, due 08/15/02 100,750
150,000 Southwest Airlines, Inc., 7.375%, due 03/01/27 160,688
225,000 Southwest Airlines, Inc., 8%, due 03/01/05 245,250
100,000 Tosco Corp., 7.625%, due 05/15/06 106,750
50,000 Transamerica Energy, Inc., 11.5%, due 06/15/02 49,250
40,000 Trico Marine Services, Inc., Series B, 8.5%, due 08/01/05 40,300
50,000 U. S. Can Corp., Series B, 10.125%, due 10/15/06 52,375
75,000 Viasystems, Inc., 9.75%, due 06/01/07 77,626
50,000 Wheeling-Pittsburgh Corp., (144A), 9.25%, due 11/15/07 51,062 *
50,000 Wyman-Gordon Co., 8%, due 12/15/07 50,500
-----------
TOTAL BASIC INDUSTRIES (Cost: $4,299,593) 4,305,165
-----------
</TABLE>
* Restricted security. (See Note 6)
See accompanying Notes to Financial Statements.
6
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
<TABLE>
<CAPTION>
April 30, 1998
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
---------- --------------------------------- ----------
<S> <C> <C>
CONSUMER CYCLICALS (3.9%)
$ 50,000 American Restaurant Group, Inc., (144A), 11.5%, due 02/15/03 $ 51,250 *
25,000 Atlas Air, Inc., 10.75%, due 08/01/05 26,563
100,000 Boyd Gaming Corp., 9.25%, due 10/01/03 105,750
100,000 Campbell Soup Co., 6.15%, due 12/01/02 100,500
50,000 Chancellor Media Corp., (144A), 8.125%, due 12/15/07 50,250 *
150,000 Coca-Cola Enterprises, Inc., 6.375%, due 08/01/01 151,688
50,000 Delco Remy International, Inc., 8.625%, due 12/15/07 51,250
75,000 Eagle-Picher Industries, Inc., (144A), 9.375%, due 03/01/08 76,313 *
50,000 Finlay Fine Jewelry Corp., 8.375%, due 05/01/08 50,000
50,000 Grand Casinos, Inc., 10.125%, due 12/01/03 53,937
125,000 Hard Rock Hotel, Inc., (144A), 9.25%, due 04/01/05 127,500 *
100,000 J.C. Penney Company, Inc., 9.05%, due 03/01/01 106,875
50,000 Jacor Communications, Inc., 8%, due 02/15/10 49,750
90,000 May Department Stores Co., 9.75%, due 02/15/21 116,775
50,000 Navistar International Corp., Series B, 8%, due 02/01/08 49,625
25,000 Outdoor Communications, Inc., 9.25%, due 08/15/07 26,063
10,000 Outdoor Systems, Inc., 8.875%, due 06/15/07 10,400
50,000 Perkins Family Restaurants, L.P., (144A), 10.125%,due 12/15/07 53,000 *
50,000 Primedia, Inc., (144A), 7.625%, due 04/01/08 49,250 *
25,000 STC Broadcasting, Inc., Series B, 11%, due 03/15/07 27,438
50,000 Signature Resorts, Inc., (144A), 9.25%, due 05/15/06 49,750 *
25,000 Signature Resorts, Inc., 9.75%, due 10/01/07 24,500
50,000 Six Flags Entertainment Corp., 8.875%, due 04/01/06 50,813
75,000 Starwood Hotels & Resorts, Inc., 7.375%, due 11/15/15 69,283
150,000 Time Warner Entertainment, Inc., 8.375%, due 03/15/23 171,188
25,000 Von Hoffman Press, Inc., (144A), 10.375%, due 05/15/07 26,625 *
-----------
TOTAL CONSUMER CYCLICALS (Cost: $1,684,337) 1,726,336
-----------
CONSUMER NON-CYCLICALS (2.1%)
50,000 Adelphia Communications Corp., 8.375%, due 02/01/08 49,500
50,000 Boyds Collection, Ltd., (144A), 9%, due 05/15/08 50,125 *
25,000 CSC Holdings, Inc., Series B, 8.125%, due 08/15/09 26,187
25,000 Century Communications Corp., 8.75%, due 10/01/07 25,813
50,000 Century Communications Corp., 9.5%, due 03/01/05 53,500
50,000 Conmed Corp., (144A), 9%, due 03/15/08 50,375 *
10,000 Dade International, Inc., Series B, 11.125%, due 05/01/06 11,100
100,000 Doskocil Manufacturing Company, Inc., 10.125%, due 09/15/07 106,750
50,000 Extendicare Health Services, Inc., (144A), 9.35%, due 12/15/07 51,375 *
75,000 Fred Meyer, Inc., 7.45%, due 03/01/08 74,156
100,000 Holmes Products Corp., (144A), 9.875%, due 11/15/07 103,375 *
50,000 Jackson Products, Inc., (144A), 9.5%, due 04/15/05 50,500 *
50,000 Magellan Health Services, Inc., (144A), 9%, due 02/15/08 49,750 *
</TABLE>
* Restricted security. (See Note 6)
See accompanying Notes to Financial Statements.
7
<PAGE>
TCW GALILEO CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- -----------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- --------------- --------------------------------- ---------
<S> <C> <C>
CONSUMER NON-CYCLICALS (CONTINUED)
$ 75,000 Prime Medical Services, Inc., (144A), 8.75%, due 04/01/08 $ 74,250 *
50,000 Revlon Consumer Products Corp., (144A), 8.125%, due 02/01/06 49,688 *
50,000 Revlon Consumer Products Corp., (144A), 8.625%, due 02/01/08 50,125 *
50,000 Rural/Metro Corp., (144A), 7.875%, due 03/15/08 50,000 *
---------
TOTAL CONSUMER NON-CYCLICALS (Cost: $922,260) 926,569
---------
FINANCIAL (5.2%)
100,000 Ahmanson (H.F.) & Co., 8.25%, due 10/01/02 106,875
150,000 American General Finance Corp., 6.25%, due 12/18/02 149,437
150,000 Bank One Corp., 7.6%, due 05/01/07 161,813
150,000 Bear Stearns Companies, Inc., 6.75%, due 12/15/07 151,688
150,000 CIT Group Holdings, Inc., 6.125%, due 12/15/00 150,000
100,000 Citicorp, 6.375%, due 01/15/06 99,500
100,000 Comdisco, Inc., 6.375%, due 11/30/01 100,500
100,000 Comdisco, Inc., 6.5%, due 04/30/99 100,375
200,000 Ford Motor Credit Corp., 6%, due 01/14/03 198,500
100,000 Forest City Enterprises, Inc., 8.5%, due 03/15/08 100,250
200,000 Hartford Life Inc., 7.65%, due 06/15/27 216,750
200,000 International Lease Finance Corp., 5.75%, due 01/15/03 196,848
100,000 Lehman Brothers, Inc., 7.125%, due 07/15/02 102,750
100,000 NationsBank Corp., 7.5%, due 09/15/06 107,000
50,000 Nationwide Credit, Inc., (144A), 10.25%, due 01/15/08 51,000 *
200,000 Republic NY Corp., 7.75%, due 05/15/02 210,000
60,000 Security Pacific Corp., 11.5%, due 11/15/00 67,425
---------
TOTAL FINANCIAL (Cost: $2,256,862) 2,270,711
---------
MISCELLANEOUS (2.1%)
200,000 Abbey National PLC (Yankee), 6.69%, due 10/17/05 204,500
150,000 Hydro-Quebec (Yankee), 9.4%, due 02/01/21 192,937
100,000 Laidlaw, Inc. (Yankee), 7.7%, due 08/15/02 104,375
150,000 Manitoba Province (Yankee), 6.875%, due 09/15/02 154,125
150,000 Ontario Province (Yankee), 8%, due 10/17/01 158,813
100,000 Trans-Canada Pipelines (Yankee), 7.06%, due 10/14/25 102,375
---------
TOTAL MISCELLANEOUS (Cost: $ 902,626) 917,125
---------
</TABLE>
/*/ Restricted security. (See Note 6)
See accompanying Notes to Financial Statements.
8
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Fixed Income)
<TABLE>
<CAPTION>
April 30, 1998
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- ------------------- --------------------------------- -------------
<S> <C> <C>
UTILITIES (3.7%)
$ 200,000 Ameritech Capital Funding Corp., 6.15%, due $ 198,250
01/15/08
100,000 Enron Corp., 6.45%, due 11/15/01 100,625
100,000 Florida Power & Light Co., 5.5%, due 07/01/99 99,500
100,000 Northern Telecom Capital Corp., 7.4%, due 06/15/06 106,625
100,000 PacifiCorp., 6.75%, due 04/01/05 102,750
150,000 Sonat, Inc., 6.75%, due 10/01/07 151,125
200,000 Transcontinental Gas Pipelines, 6.25%, due 01/15/08 195,000
150,000 Virginia Electric Power, 7.375%, due 07/01/02 156,000
500,000 Western Resources, Inc., 7.25%, due 08/15/02 517,500
-----------
1,627,375
TOTAL UTILITIES (Cost: $1,628,965) -----------
TOTAL CORPORATE FIXED INCOME SECURITIES
(COST: $11,694,643) (26.8%) 11,773,281
-----------
ASSET BACKED SECURITIES (4.6%)
500,000 Citibank Credit Card Master Trust I (97-7-A), 503,605
6.35%, due 08/15/02
500,000 Contimortgage Home Equity Loan Trust (98-1-A3), 499,920
6.22%, due 01/15/13
400,000 EQCC Home Equity Loan Trust (98-1-A2F), 6.14%, due 399,376
04/15/09
300,000 Southern Pacific Secured Assets Corporation 301,686
(97-3-A4), 6.66%, due 06/25/24
300,000 The Money Store Home Equity Trust (97-C-AF3), 301,017
6.307%, due 08/15/12 -----------
2,005,604
TOTAL ASSET BACKED SECURITIES (Cost: $2,007,129) -----------
COLLATERALIZED MORTGAGE OBLIGATIONS - FIXED RATE (21.4%)
400,000 Bear Stearns Mortgage Securities Inc. (97-2-A2), 390,396
6.5%, due 04/28/24
145,964 Bear Stearns Mortgage Securities Inc. (97-2-A5), 143,073
6.875%, due 01/28/24
1,000,000 Carco Auto Loan Master Trust (97-1-A), 6.689%, due 1,004,220
08/15/04
665,000 Countrywide Home Loans (97-8-A1), 6.75%, due 670,818
01/25/28
781,000 Federal Home Loan Mortgage Corp. (1588-QD), 6.5%, 775,173
due 09/15/23
1,000,000 Federal Home Loan Mortgage Corp. (2018-H), 6.5%, 994,640
due 01/15/28
462,882 Federal Home Loan Mortgage Corp. (1578-O), 7%, due 456,947
09/15/23
450,000 Federal Home Loan Mortgage Corp. (1944-GB), 7.5%, 466,659
due 04/17/24
442,958 Federal Home Loan Mortgage Corp. (2007-D), 7.5%, 447,086
due 05/15/26
295,857 Federal Home Loan Mortgage Corp. - Government National Mortgage
Association (41-K), 8%, due 04/25/24 305,640
1,000,000 Federal National Mortgage Association (95-22-J), 1,000,000
6.5%, due 04/25/23
928,228 Federal National Mortgage Association (94-2-N), 876,479
6.5%, due 01/25/24
400,000 Residential Funding Mortgage Securities I 380,624
(98-S8-A3), 6.5%, due 04/25/28
350,000 Residential Funding Mortgage Securities I 350,000
(97-S20-A7), 7%, due 12/25/27
600,000 Residential Funding Mortgage Securities I 606,774
(97-S5-A2), 7.5%, due 04/25/27
495,498 Residential Funding Mortgage Securities I 501,027
(97-S5-A5), 7.5%, due 04/25/27 ----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS -
FIXED RATE (Cost: $9,267,637) 9,369,556
----------
</TABLE>
See accompanying Notes to Financial Statements.
9
<PAGE>
TCW GALILEO CORE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- -----------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount FIXED INCOME SECURITIES Value
- ------------- ----------------------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -
FIXED RATE PASS-THROUGH SECURITIES (7.1%)
$ 293,458 Federal Home Loan Mortgage Corp., Pool #C00581, 7%, due 02/01/28 $ 296,945
1,190,509 Federal Home Loan Mortgage Corp., Pool #E20246, 7.5%, due 06/01/11 1,225,855
494,399 Federal National Mortgage Association, Pool #405532, 6.5%, due 11/01/17 495,481
808,326 Government National Mortgage Association, Pool #422688, 7%, due 05/15/26 818,430
295,657 Government National Mortgage Association, Pool #462384, 7%, due 11/15/27 299,169
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS-
FIXED RATE PASS-THROUGH SECURITIES (Cost: $3,046,149) 3,135,880
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS (13.1%)
530,000 Federal Home Loan Mortgage Corp., 6.645%, due 03/10/04 550,055
555,000 Federal National Mortgage Association, 6.3%, due 09/25/02 557,514
1,250,000 Federal National Mortgage Association, 6.34%, due 02/04/08 1,247,138
400,000 Federal National Mortgage Association, 6.4%, due 10/24/02 403,260
600,000 Federal National Mortgage Association, 6.48%, due 06/28/04 617,688
1,245,000 Federal National Mortgage Association, 6.55%, due 09/12/05 1,288,139
480,000 Federal National Mortgage Association, 6.74%, due 05/13/04 500,203
520,000 Federal National Mortgage Association, 7.4%, due 07/01/04 559,764
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost: 5,711,101) 5,723,761
-----------
U.S. TREASURY OBLIGATIONS (22.6%)
1,375,000 United States Treasury Bonds, 7.5%, due 11/15/24 1,638,794
1,650,000 United States Treasury Bonds, 12%, due 08/15/13 2,419,313
3,035,000 United States Treasury Notes, 5%, due 02/15/99 3,023,133
190,000 United States Treasury Notes, 5.875%, due 01/31/99 190,494
705,000 United States Treasury Notes, 6.625%, due 06/30/01 724,782
1,535,000 United States Treasury Notes, 8%, due 11/15/21 1,908,020
-----------
TOTAL U. S. TREASURY OBLIGATIONS
(Cost: $9,833,625) 9,904,536
-----------
TOTAL FIXED INCOME SECURITIES
(COST: $41,560,284) (95.6%) 41,912,618
-----------
SHORT-TERM INVESTMENT (COST: $1,245,530) (2.8%)
-----------------------------------------------
1,245,530 Bank of New York Depository Reserve, 4.6%, due 05/01/98 1,245,530
-----------
TOTAL INVESTMENTS (COST: $42,805,814) (98.4%) 43,158,148
EXCESS OF OTHER ASSETS OVER LIABILITIES (1.6%) 700,628
-----------
NET ASSETS (100%) $43,858,776
===========
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
TCW GALILEO HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
April 30, 1998
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -----------------------------------
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- ------------- --------------------------------- -----------
<S> <C> <C>
BASIC MATERIALS (15.9% OF NET ASSETS)
AEROSPACE/CONGLOMERATES (0.5%)
$ 900,000 Wyman-Gordon Co., 8%, due 12/15/07 $ 909,000
-----------
CHEMICALS (2.4%)
820,000 Borden Chemical and Plastics, L.P., 9.5%, due 05/01/05 856,900
725,000 Foamex L.P., 9.875%, due 06/15/07 783,000
875,000 ISP Holdings Inc., 9%, due 10/15/03 914,375
915,000 NL Industries, Inc., 11.75%, due 10/15/03 1,014,506
250,000 Polymer Group, Inc., (144A), 8.75%, due 03/01/08 253,750 *
900,000 Texas Petrochemical Corp., 11.125%, due 07/01/06 990,000
-----------
Total Chemicals 4,812,531
-----------
ENERGY (3.7%)
225,000 Abraxas Petroleum Corp., 11.5%, due 11/01/04 235,125
1,250,000 Forman Petroleum Corp., 13.5%, due 06/01/04 1,275,000
1,450,000 Magnum Hunter Resources, Inc., 10%, due 06/01/07 1,471,750
650,000 National Energy Group, Inc., 10.75%, due 11/01/06 611,000
2,725,000 Transamerica Energy, Inc., 11.5%, due 06/15/02 2,684,125
650,000 Trico Marine Services, Inc., Series B, 8.5%, due 08/01/05 654,875
425,000 Trico Marine Services, Inc., Series D, 8.5%, due 08/01/05 428,188
-----------
Total Energy 7,360,063
-----------
FOREST PRODUCTS & PAPER (4.5%)
750,000 Fibermark, Inc., Series B, 9.375%, due 10/15/06 796,875
1,900,000 Riverwood International Corp., 10.625%, due 08/01/07 1,999,750
1,250,000 SD Warren Co., Series B, 12%, due 12/15/04 1,379,688
1,300,000 Stone Container Corp., 10.75%, due 10/01/02 1,394,250
1,000,000 Stone Container Corp., 12.25%, due 04/01/02 1,027,500
2,130,000 Tembec Finance Corp., 9.875%, due 09/30/05 2,252,475
-----------
Total Forest Products & Paper 8,850,538
-----------
METALS & MINING (4.8%)
1,725,000 AK Steel Corp., 9.125%, due 12/15/06 1,828,500
550,000 Great Lakes Carbon Corp., 10%, due 01/01/06 627,000
2,500,000 Kaiser Aluminum & Chemical Corp., 10.875%, due 10/15/06 2,725,000
1,550,000 Ryerson Tull, Inc., 9.125%, due 07/15/06 1,720,500
1,250,000 WCI Steel Inc., 10%, due 12/01/04 1,303,125
1,400,000 Wheeling-Pittsburgh Corp., (144A), 9.25%, due 11/15/07 1,429,750 *
-----------
Total Metals & Mining 9,633,875
-----------
TOTAL BASIC MATERIALS (Cost: $31,105,804) 31,566,007
-----------
</TABLE>
* Restricted security (See Note 6)
See accompanying Notes to Financial Statements.
11
<PAGE>
TCW GALILEO HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- -----------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- ------------- --------------------------------- -----------
<S> <C> <C>
CONSUMER CYCLICALS (24.5%)
Auto Parts (2.6%)
$ 1,250,000 Blue Bird Body Co., Series B, 10.75%, due 11/15/06 $ 1,384,375
450,000 Delco Remy International, Inc., 8.625%, due 12/15/07 461,250
575,000 Eagle-Picher Industries, Inc., (144A), 9.375%, due 03/01/08 585,063 *
500,000 Hayes Wheels International, Inc., 9.125%, due 07/15/07 527,500
2,000,000 Hayes Wheels International, Inc., 11%, due 07/15/06 2,260,000
-----------
Total Auto Parts 5,218,188
-----------
ENTERTAINMENT & LEISURE (1.4%)
1,150,000 Cinemark, USA Inc., 9.625%, due 08/01/08 1,201,750
525,000 Regal Cinemas, Inc., 8.5%, due 10/01/07 574,875
900,000 Six Flags Entertainment Corp., 8.875%, due 04/01/06 914,625
-----------
Total Entertainment & Leisure 2,691,250
-----------
GAMING (2.3%)
600,000 Boyd Gaming Corp., 9.25%, due 10/01/03 634,500
975,000 Grand Casinos, Inc., 10.125%, due 12/01/03 1,051,782
1,175,000 Hard Rock Hotel, Inc., (144A), 9.25%, due 04/01/05 1,198,500 *
1,700,000 Hollywood Park, Inc., 9.5%, due 08/01/07 1,785,000
-----------
Total Gaming 4,669,782
-----------
LODGING (1.3%)
500,000 HMC Acquisition Properties, Inc., Series B, 9%, due 12/15/07 542,500
488,000 John Q. Hammons Hotels, L.P., 8.875%, due 02/15/04 489,220
450,000 Signature Resorts, Inc., (144A), 9.25%, due 05/15/06 447,750 *
550,000 Signature Resorts, Inc., 9.75%, due 10/01/07 539,000
625,000 Starwood Hotels & Resorts, Inc., 7.375%, due 11/15/15 577,357
-----------
Total Lodging 2,595,827
-----------
MEDIA (6.3%)
2,000,000 Adams Outdoor Advertising, L.P., 10.75%, due 03/15/06 2,190,000
1,250,000 Chancellor Media Corp., (144A), 8.125%, due 12/15/07 1,256,250 *
810,000 Chancellor Media Corp., 9.375%, due 10/01/04 841,388
525,000 Heritage Media Services Corp., 11%, due 06/15/02 544,688
325,000 Jacor Communications, Inc., 8%, due 02/15/10 323,375
1,400,000 Jacor Communications, Inc., 9.75%, due 12/15/06 1,519,000
1,100,000 JCAC, Inc., 10.125%, due 06/15/06 1,199,000
850,000 Outdoor Communications, Inc., 9.25%, due 08/15/07 886,125
450,000 Outdoor Systems, Inc., 8.875%, due 06/15/07 468,000
800,000 Outdoor Systems, Inc., 9.375%, due 10/15/06 848,000
2,225,000 STC Broadcasting, Inc., Series B, 11%, due 03/15/07 2,441,938
-----------
Total Media 12,517,764
-----------
</TABLE>
* Restricted security. (See Note 6)
See accompanying Notes to Financial Statements.
12
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
April 30, 1998
<TABLE>
<CAPTION>
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- ------------- --------------------------------- -----------
<S> <C> <C>
PUBLISHING (2.6%)
$ 1,075,000 American Media Operations, 11.625%, due 11/15/04 $ 1,163,688
300,000 Garden State Newspapers Co., Series B, 8.75%, due 10/01/09 307,500
250,000 Hollinger International Publishing, 8.625%, due 03/15/05 263,125
550,000 K-III Communications Corp., 10.25%, due 06/01/04 587,125
900,000 Perry/Judd's, Inc., (144A), 10.625%, due 12/15/07 954,000 *
350,000 Primedia, Inc., (144A), 7.625%, due 04/01/08 344,750 *
675,000 U. S. Banknote Corp., 10.375%, due 06/01/02 695,250
825,000 Von Hoffman Press, Inc., (144A), 10.375%, due 05/15/07 878,625 *
-----------
Total Publishing 5,194,063
-----------
RESTAURANTS (1.1%)
750,000 American Restaurant Group, Inc., (144A), 11.5%, due 02/15/03 768,750 *
675,000 Foodmaker, 1993A Corp., Series B, 9.75%, due 11/01/03 707,063
650,000 Perkins Family Restaurants, L.P., (144A), 10.125%, due 12/15/07 689,000 *
-----------
Total Restaurants 2,164,813
-----------
RETAILERS (5.4%)
850,000 Cole National Corp., 8.625%, due 08/15/07 867,000
2,000,000 County Seat Stores, Inc., (144A), 12.75%, due 11/01/04 2,020,000 *
300,000 Finlay Fine Jewelry Corp., 8.375%, due 05/01/08 300,000
2,343,000 Guitar Center Management, Inc., 11%, due 07/01/06 2,589,015
475,000 Leslie's Poolmart, 10.375%, due 07/15/04 498,750
2,150,000 Michael's Stores, Inc., 10.875%, due 06/15/06 2,386,500
450,000 Specialty Retailers, Inc., 8.5%, due 07/15/05 462,375
1,650,000 Zale Corp., 8.5%, due 10/01/07 1,674,750
-----------
Total Retailers 10,798,390
-----------
TRANSPORTATION (1.5%)
500,000 Atlas Air, Inc., 10.75%, due 08/01/05 531,250
810,000 International Shipholding Corp., 9%, due 07/01/03 834,300
680,000 Moran Transportation Company, Inc., 11.75%, due 07/15/04 759,900
900,000 Navistar International Corp., Series B, 8%, due 02/01/08 893,250
-----------
Total Transportation 3,018,700
-----------
TOTAL CONSUMER CYCLICALS (Cost: $47,010,571) 48,868,777
-----------
CONSUMER NON-CYCLICALS (15.3%)
CABLE (4.0%)
1,000,000 Adelphia Communications Corp., 8.375%, due 02/01/08 990,000
1,000,000 Adelphia Communications Corp., 9.25%, due 10/01/02 1,035,000
425,000 Century Communications Corp., 8.75%, due 10/01/07 438,813
175,000 Century Communications Corp., 9.5%, due 08/15/00 182,219
250,000 Century Communications Corp., 9.5%, due 03/01/05 267,500
</TABLE>
* Restricted security (See Note 6)
See accompanying Notes to Financial Statements.
13
<PAGE>
TCW GALILEO HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)(CONTINUED)
- ----------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
--------------- ---------------------------------- -----------
<S> <C> <C>
CABLE (CONTINUED)
$ 500,000 Comcast Corp., 9.125%, due 10/15/06 $ 524,375
400,000 Comcast Corp., 9.375%, due 05/15/05 424,000
325,000 CSC Holdings, Inc., Series B, 8.125%, due 08/15/09 340,438
1,175,000 CSC Holdings, Inc., 9.875%, due 05/15/06 1,280,750
975,000 Jones Intercable, Inc., 8.875%, due 04/01/07 1,032,281
600,000 Rogers Cablesystems of America, Inc., Series B, 10%, due 03/15/05 660,000
750,000 Rogers Communications, Inc., 8.875%, due 07/15/07 751,875
-----------
Total Cable 7,927,251
-----------
FOOD & DRUG RETAILERS (1.7%)
1,350,000 Fred Meyer, Inc., 7.45%, due 03/01/08 1,334,813
1,100,000 Jitney Jungle Stores, Inc., 10.375%, due 09/15/07 1,144,000
500,000 Jitney Jungle Stores, Inc., 12%, due 03/01/06 560,000
375,000 Stater Brothers Holdings, Inc., 9%, due 07/01/04 386,250
-----------
Total Food & Drug Retailers 3,425,063
-----------
HEALTH & HOSPITAL MANAGEMENT (5.0%)
1,000,000 Alliance Imaging, Inc., 9.625%, due 12/15/05 1,030,000
300,000 Conmed Corp., (144A), 9%, due 03/15/08 302,250 *
1,275,000 Dade International, Inc., Series B, 11.125%, due 05/01/06 1,415,250
200,000 Extendicare Health Services, Inc., (144A), 9.35%, due 12/15/07 205,500 *
1,100,000 Integrated Health Services, Inc., 9.5%, due 09/15/07 1,155,000
750,000 Magellan Health Services, Inc., (144A), 9%, due 02/15/08 746,250 *
1,075,000 Prime Medical Services, Inc., (144A), 8.75%, due 04/01/08 1,064,250 *
900,000 Rural/Metro Corp., (144A), 7.875%, due 03/15/08 900,000 *
2,000,000 Tenet Healthcare Corp., 8.625%, due 01/15/07 2,060,000
1,000,000 Vencor, Inc., 8.625%, due 07/15/07 1,127,500
-----------
Total Health & Hospital Management 10,006,000
-----------
OTHER CONSUMER NON-CYCLICALS (4.6%)
255,000 American Safety Razor Co., Series B, 9.875%,due 08/01/05 274,763
500,000 Boyds Collection, Ltd., (144A), 9%, due 05/15/08 501,250 *
845,000 Cott Corp., 9.375%, due 07/01/05 868,238
875,000 Doskocil Manufacturing Company, Inc., 10.125%, due 09/15/07 934,063
1,000,000 Holmes Products Corp., (144A), 9.875%, due 11/15/07 1,033,750 *
2,225,000 International Home Foods, Inc., 10.375%, due 11/01/06 2,453,063
400,000 Jackson Products, Inc., (144A), 9.5%, due 04/15/05 404,000 *
750,000 Revlon Consumer Products Corp., (144A), 8.125%, due 02/01/06 745,313 *
1,800,000 Revlon Consumer Products Corp., (144A), 8.625%, due 02/01/08 1,804,500 *
-----------
Total Other Consumer Non-Cyclicals 9,018,940
-----------
TOTAL CONSUMER NON-CYCLICALS (Cost: $29,700,034) 30,377,254
-----------
</TABLE>
* Restricted security. (See Note 6)
See accompanying Notes to Financial Statements.
14
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
April 30, 1998
<TABLE>
<CAPTION>
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- ------------------ --------------------------------- -----------
<S> <C> <C>
CREDIT SENSITIVE (6.1%)
FINANCIAL SERVICES (3.8%)
$ 325,000 Chevy Chase Savings Bank, 9.25%, due 12/01/05 $ 331,500
625,000 Chevy Chase Savings Bank, 9.25%, due 12/01/08 637,500
1,525,000 First Nationwide Holdings, 10.625%, due 10/01/03 1,696,563
1,630,000 First Nationwide Holdings, 12.25%, due 05/15/01 1,793,000
2,000,000 Forest City Enterprises, Inc., 8.5%, due 03/15/08 2,005,000
700,000 Nationwide Credit, Inc., (144A), 10.25%, due 01/15/08 714,000 *
380,000 Reliance Group Holdings, Inc., 9%, due 11/15/00 399,000
-----------
Total Financial Services 7,576,563
-----------
UTILITIES (2.3%)
1,850,000 California Energy Company, Inc., 9.5%, due 09/15/06 2,002,625
2,444,989 Panda Funding Corp., 11.625%, due 08/20/12 2,665,039
-----------
Total Utilities 4,667,664
-----------
TOTAL CREDIT SENSITIVE (Cost: $11,980,588) 12,244,227
-----------
INDUSTRIALS (36.3%)
BUILDING MATERIALS & CONSTRUCTION (2.9%)
1,250,000 American Standard Companies, Inc., 7.375%, due 02/01/08 1,203,125
500,000 Atrium Companies, Inc., 10.5%, due 11/15/06 530,000
1,750,000 Johns Manville Corp., 10.875%, due 12/15/04 1,960,000
450,000 MDC Holdings, Inc., 8.375%, due 02/01/08 451,125
1,250,000 Standard Pacific Corp., (144A), 8%, due 02/15/08 1,237,500 *
300,000 Standard Pacific Corp., 8.5%, due 06/15/07 306,000
160,000 Trizec Finance Corp., 10.875%, due 10/15/05 179,600
-----------
Total Building Materials & Construction 5,867,350
-----------
BUSINESS SERVICES & DISTRIBUTION (5.5%)
500,000 Allied Waste of North America, 10.25%, due 12/01/06 551,250
3,150,000 American Pad & Paper Co., 13%, due 11/15/05 3,228,750
1,725,000 Coinmach Laundry Corp., 11.75%, due 11/15/05 1,923,375
1,000,000 Federal Data Corp., 10.125%, due 08/01/05 1,035,000
2,125,000 Iron Mountain, Inc., 10.125%, due 10/01/06 2,332,188
1,265,000 Mid-American Waste Systems, Inc., 12.25%, due 02/15/03 411,125 **
750,000 Pierce Leahy Corp., (144A), 8.125%, due 05/15/08 748,125 *
725,000 Williams Scotsman, Inc., 9.875%, due 06/01/07 761,250
-----------
Total Business Services & Distribution 10,991,063
-----------
</TABLE>
* Restricted security. (See Note 6)
** Non-income producing.
See accompanying Notes to Financial Statements.
15
<PAGE>
TCW GALILEO HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- -----------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- ------------ --------------------------------- ------------
<S> <C> <C>
COMMUNICATION SERVICES (12.6%)
$ 1,600,000 Comcast Cellular Holdings, Inc., 9.5%, due 05/01/07 $ 1,660,000
1,000,000 Flag, Ltd., (144A), 8.25%, due 01/30/08 1,015,000 *
275,000 Globalstar LP/Capital, 10.75%, due 11/01/04 277,750
950,000 Globalstar LP/Capital, 11.25%, due 06/15/04 973,750
1,725,000 Intermedia Communications, Inc., 8.5%, due 01/15/08 1,742,250
900,000 Intermedia Communications, Inc., Series B, 8.875%, due 11/01/07 929,250
750,000 IXC Communications, Inc., (144A), 9%, due 04/15/08 751,875 *
1,750,000 Level 3 Communications, Inc., (144A), 9.125%, due 05/01/08 1,728,125 *
1,750,000 Mastec, Inc., (144A), 7.75%, due 02/01/08 1,732,500 *
2,000,000 Mobile Telecommunications Technologies Corp., 13.5%, due 12/15/02 2,335,000
3,125,000 Nextlink Communications, 9.625%, due 10/01/07 3,289,063
1,525,000 Paging Network, Inc., 10%, due 10/15/08 1,589,813
350,000 Paging Network, Inc., 10.125%, due 08/01/07 367,938
1,600,000 RCN Corp., 10%, due 10/15/07 1,696,000
400,000 Rogers Cantel, Inc., 9.375%, due 06/01/08 416,000
1,250,000 Sprint Spectrum, L.P., 11%, due 08/15/06 1,425,000
3,000,000 Verio, Inc., (144A), 10.375%, due 04/01/05 3,127,500 *
-----------
Total Communication Services 25,056,814
-----------
CONTAINERS & PACKAGING (5.5%)
550,000 Bway Corp., 10.25%, due 04/15/07 599,500
2,050,000 Consumers International, (144A), 10.25%, due 04/01/05 2,255,000 *
775,000 Graham Packaging Co., (144A), 8.75%, due 01/15/08 775,000 *
550,000 Huntsman Packaging Corp., 9.125%, due 10/01/07 563,750
500,000 Owens-Illinois, Inc., 8.1%, due 05/15/07 529,655
900,000 Paperboard Industries International, Inc., 8.375%, due 09/15/07 915,750
1,000,000 Plastic Containers, Inc., Series B, 10%, due 12/15/06 1,087,500
2,360,000 Sweetheart Cup Corp., 9.625%, due 09/01/00 2,360,000
1,725,000 U.S. Can Corp., Series B, 10.125%, due 10/15/06 1,806,938
-----------
Total Containers & Packaging 10,893,093
-----------
MISCELLANEOUS MANUFACTURING (9.8%)
1,000,000 AGCO Corp., 8.5%, due 03/15/06 1,045,060
1,500,000 BE Aerospace, Inc., (144A), 8%, due 03/01/08 1,481,250 *
2,570,000 Communications and Power Industries, Inc., Series B, 12%, due 08/01/05 2,878,400
950,000 Desa International, Inc., (144A), 9.875%, due 12/15/07 969,000 *
450,000 Grove Worldwide, LLC, (144A), 9.25%, due 05/01/08 450,000 *
1,450,000 GSI Group, Inc., (144A), 10.25%, due 11/01/07 1,522,500 *
500,000 International Wire Group, 11.75%, due 06/01/05 550,000
1,500,000 Jordan Industries, Inc., 0%, due 04/01/09 982,500
250,000 Jordan Telecommunications Products, Inc., 0%, due 08/01/07 212,500
</TABLE>
* Restricted security. (See Note 6)
See accompanying Notes to Financial Statements.
16
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
<TABLE>
<CAPTION>
April 30, 1998
Principal
Amount CORPORATE FIXED INCOME SECURITIES Value
- ------------ --------------------------------- -------------
<S> <C> <C>
MISCELLANEOUS MANUFACTURING (CONTINUED)
$ 2,000,000 Jordan Telecommunications Products, Inc., 9.875%, due 08/01/07 $ 2,105,000
850,000 Morris Materials Handling, Inc., (144A), 9.5%, due 04/01/08 845,750 *
850,000 Neenah Corp., Series B, 11.125%, due 05/01/07 935,000
1,350,000 Packaged Ice, Inc., (144A), 9.75%, due 02/01/05 1,363,500 *
1,400,000 Terex Corp., (144A), 8.875%, due 04/01/08 1,386,000 *
775,000 United Defense Industries, Inc., 8.75%, due 11/15/07 786,625
1,350,000 Viasystems, Inc., 9.75%, due 06/01/07 1,397,250
575,000 Wavetek Corp., 10.125%, due 06/15/07 598,000
-------------
Total Miscellaneous Manufacturing 19,508,335
-------------
TOTAL INDUSTRIALS (Cost: $71,800,150) 72,316,655
-------------
TOTAL CORPORATE FIXED INCOME SECURITIES
(COST: $191,597,147)(98.1%) 195,372,920
-------------
Number of
Rights or
Warrants EQUITY SECURITIES
- ------------ -----------------
6,969 Fitzgerald Gaming Corp., Warrants, expire 12/19/98 13,938 **
2,920 Terex Corp., Stock Appreciation Rights, expire 05/15/02 58,400 **
-------------
TOTAL EQUITY SECURITIES (COST: $31,492) (0.0%) 72,338
-------------
TOTAL INVESTMENTS (COST: $191,628,639) (98.1%) 195,445,258
EXCESS OF OTHER ASSETS OVER LIABILITIES (1.9%) 3,692,507
-------------
NET ASSETS (100%) $ 199,137,765
=============
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
17
<PAGE>
TCW GALILEO MORTGAGE BACKED SECURITIES FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -----------------------------------
<TABLE>
<CAPTION>
Principal
Amount FIXED INCOME SECURITIES Value
- ------------- ----------------------- ------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS FIXED RATE (21.2% OF NET ASSETS)
$ 1,938 CMO Mortgage Investors Trust (6-J), 1752.4%, due 02/22/21, (I/O) $ 4,809
1,465,599 Federal Home Loan Mortgage Corp. (1899-D), 7.25%, due 09/15/23 1,478,614
2,882,464 Federal Home Loan Mortgage Corp. (2021-AD), 7.5%, due 08/15/24 2,911,288
2,929,812 Federal Home Loan Mortgage Corp. (2023-AU), 7.5%, due 02/15/27 2,954,540
248,653 Federal Home Loan Mortgage Corp. (1087-G), 8.5%, due 08/15/20, (PAC) 249,618
1,849,246 Salomon Brothers Mortgage Securities VII (96-2-A1), 7.5%, due 05/25/26 1,865,353
945,387 Sears Mortgage Securities (88-A-A2), 0.796%, due 05/25/18, (I/O) 9,643
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS - FIXED RATE (Cost: $9,987,494) 9,473,865
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - VARIABLE RATE (12.5%)
684 Federal National Mortgage Association (91-130-SQ), 6,707.24%, due 09/25/21,
(I/O) (I/F) 90,988
56,858 Guardian Savings and Loan Association (88-1-A), 6.6671%, due 07/25/18 48,329
182,914 Guardian Savings and Loan Association (88-3-A), 6.9502%, due 11/25/18 155,477
170,921 Guardian Savings and Loan Association (89-3-A), 7.6755%, due 05/25/19 145,283
842,537 Guardian Savings and Loan Association (89-4-A), 7.8692%, due 07/25/19 800,410
1,071,533 Guardian Savings and Loan Association (89-5-A), 8.0046%, due 07/25/19 1,017,957
293,175 Residential Funding Mortgage Securities I (89-4B-B), 6.8453%, due 07/25/19 285,937
2,035 Resolution Trust Corp. (91-6-D2), 3,084.25%, due 08/25/20, (I/O) 74,707
3,855 Resolution Trust Corp. (91-6-C2), 3,351.98%, due 09/25/28, (I/O) 155,386
2,664,294 Resolution Trust Corp. (92-M4-A3), 7.94%, due 09/25/21 2,689,285
108,696 Western Federal Savings and Loan Association (88-9-A), 6.695%, due 12/25/18 108,662
-------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS - VARIABLE RATE (Cost: $6,332,874) 5,572,421
-------------
NON-AGENCY VARIABLE RATE PASS-THROUGH SECURITIES (COST: $875,096) (1.9%)
883,824 Greenwich Capital Acceptance, Inc. (91-03), (Private Placement),
8.1692%, due 08/25/19 855,100 *
-------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - FIXED RATE PASS-THROUGH SECURITIES (1.1%)
76,317 Federal Home Loan Mortgage Corp., Pool #212346, 9.5%, due 08/01/01 79,107
411,484 Federal National Mortgage Association, Pool #163492, 8.5%, due 05/01/16 430,256
-------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS -
FIXED RATE PASS-THROUGH SECURITIES (Cost: $ 506,001) 509,363
-------------
</TABLE>
I/O - interest Only security. PAC - Planned Amortization Class.
I/F - Inverse floating rate security whose interest rate moves in the opposite
direction of prevailing interest rates.
* Restricted security. (See Note 6)
See accompanying Notes to Financial Statements.
18
<PAGE>
TCW GALILEO FUNDS, INC,
(U.S. FIXED INCOME)
<TABLE>
<CAPTION>
April 30, 1998
Principal
Amount FIXED INCOME SECURITIES Value
- ----------- ----------------------- ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS - VARIABLE RATE
PASS-THROUGH SECURITIES (47.7%)
$ 1,098,046 Federal Home Loan Mortgage Corp., Pool #785630, 6.849%, due 07/01/26 $ 1,108,510
90,887 Federal Home Loan Mortgage Corp., Pool #770584, 7.125%, due 05/01/19 92,536
580,626 Federal Home Loan Mortgage Corp., Pool #410013, 7.744%, due 12/01/24 591,118
317,603 Federal Home Loan Mortgage Corp., Pool #865275, 8.234%, due 02/01/19 332,844
207,948 Federal Home Loan Mortgage Corp., Pool #865270, 8.322%, due 12/01/18 216,805
115,071 Federal Home Loan Mortgage Corp., Pool #865009, 8.347%, due 11/01/18 120,577
152,738 Federal Home Loan Mortgage Corp., Pool #865006, 8.529%, due 08/01/18 160,585
682,696 Federal Home Loan Mortgage Corp., Pool #310005, 8.665%, due 11/01/19 701,471
2,347,932 Federal National Mortgage Association, Pool #313920, 5.365%, due 11/01/27 2,378,901
1,938,698 Federal National Mortgage Association, Pool #394996, 5.711%, due 08/01/27 1,971,191
1,811,025 Federal National Mortgage Association, Pool #397897, 5.75%, due 08/01/27 1,852,099
1,509,417 Federal National Mortgage Association, Pool #284916, 5.792%, due 06/01/27 1,537,190
1,453,212 Federal National Mortgage Association, Pool #393943, 5.872%, due 07/01/27 1,490,240
1,474,520 Federal National Mortgage Association, Pool #376663, 5.941%, due 06/01/27 1,488,734
1,177,342 Federal National Mortgage Association, Pool #392275, 6%, due 06/01/27 1,206,305
1,443,555 Federal National Mortgage Association, Pool #400472 6%, due 09/01/27 1,480,626
572,217 Federal National Mortgage Association, Pool #394575, 7.539%, due 07/01/27 585,498
1,900,667 Federal National Mortgage Association, Pool #369080, 7.609%, due 04/01/27 1,942,044
820,915 Federal National Mortgage Association, Pool #358869, 7.706%, due 09/01/26 837,891
688,954 Federal National Mortgage Association, Pool #303334, 7.795%, due 04/01/25 706,150
374,424 Federal National Mortgage Association, Pool #111365, 7.909%, due 09/01/19 390,011
121,842 Federal National Mortgage Association, Pool #096193, 8.246%, due 09/01/18 127,532
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS -
VARIABLE RATE PASS-THROUGH SECURITIES (Cost: $21,158,507) 21,318,858
------------
TOTAL FIXED INCOME SECURITIES (COST: $38,859,972) (84.4%) 37,729,607
------------
SHORT-TERM INVESTMENT (COST: $6,723,893) (15.1%)
------------------------------------------------
6,723,893 Repurchase Agreement, Goldman Sachs, dated 04/30/98,
5.51%, due 05/01/98 (Collateralized by $6,785,462 current face
Federal Home Loan Mortgage Corp. Pool #G00880, 7%,
due 02/01/28, valued at $6,869,222) 6,723,893
------------
TOTAL INVESTMENTS (COST: $45,583,865) (99.5%) 44,453,500
EXCESS OF OTHER ASSETS OVER LIABILITIES (0.5%) 221,517
------------
NET ASSETS (100%) $ 44,675,017
============
</TABLE>
See accompanying Notes to Financial Statements.
19
<PAGE>
TCW GALILEO LONG-TERM MORTGAGE BACKED SECURITIES FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
- -----------------------------------
<TABLE>
<CAPTION>
Principal
Amount FIXED INCOME SECURITIES Value
- -------------- ----------------------- -----------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -
FIXED RATE (44.8% OF NET ASSETS)
$ 2,400,000 Bear Stearns Mortgage Securities, Inc. (97-2-A5), 6.875%, due 01/28/24 $2,352,480
2,000,000 CMC Securities Corporation III (94-A-A12), 6.75%, due 02/25/24, (PAC) 1,999,340
103,716 Citicorp Mortgage Securities, Inc. (95-2-A1), 7.5%, due 04/25/25 103,442
1,559,358 Federal Home Loan Mortgage Corp. (1796-A-E), 6%, due 09/15/08 1,541,066
3,357,000 Federal Home Loan Mortgage Corp. (1629-PB), 6%, due 05/15/23 3,061,920
1,782,000 Federal Home Loan Mortgage Corp. (1662-N), 6.25%, due 01/15/09 1,744,115
1,000,000 Federal Home Loan Mortgage Corp. (1844 E), 6.5%, due 10/15/13 981,030
401,329 Federal Home Loan Mortgage Corp. (1541-J), 6.5% , due 07/15/23 402,117
3,144,107 Federal Home Loan Mortgage Corp. (1717-MA), 6.5%, due 04/15/24 3,128,826
232,519 Federal Home Loan Mortgage Corp. (1175-C), 8%, due 01/15/21, (TAC) 236,747
1,722,137 Federal Home Loan Mortgage Corp. - Government National Mortgage
Association (43-OA), 6.5%, due 07/17/23 1,711,804
2,000,000 Federal National Mortgage Association (93-X-130A-NA), 6.5%, due 05/25/23 2,000,180
1,894,734 Federal National Mortgage Association (93-223-EA), 6.5%, due 12/25/23, (PAC) 1,867,791
455,271 Federal National Mortgage Association (93-2-B), 7.2%, due 11/25/03 467,677
1,000,000 Federal National Mortgage Association (92-215-PL), 7.25%, due 11/25/21, (PAC) 1,023,530
4,000,000 Federal National Mortgage Association (G92-29-J), 8%, due 07/25/22 4,176,640
4,000,000 GE Capital Mortgage Services, Inc. (97-5-A2), 7.5%, due 06/25/27 4,042,400
4,313,844 Government National Mortgage Association (94-2-Z), 7.99125%, due 07/16/24 4,344,989
1,500,000 Residential Funding Mortgage Securities I (95-S7-A9), 8%, due 05/25/10, (I/O) 167,400
1,232,831 Salomon Brothers Mortgage Securities VII (96-2-A1), 7.5%, due 05/26/26 1,243,569
1,551,834 Securitized Asset Sales, Inc. (95-B-A2), 7.41%, due 09/25/24 1,556,893
2,000,000 Superior Wholesale Inventory Financing Trust (97-A), 6.346%, due 11/15/04 2,001,160
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS -
FIXED RATE (Cost: $40,240,694) 40,155,116
----------
COLLATERALIZED MORTGAGE OBLIGATIONS -
VARIABLE RATE (11.7%)
1,500,000 CMC Securities Corporation III (94-A-A22), 7.01%, due 02/25/24, (I/F) 1,229,535
2,000,000 Federal Home Loan Mortgage Corp. (1422-SA), 8.9179%, due 11/15/07, (I/F) 1,873,440
2,000,000 Federal Home Loan Mortgage Corp. (1620-SB), 10%, due 11/15/23, (I/F) 1,850,640
2,288,691 Federal National Mortgage Association (93-189-S), 7.21932%, due 10/25/23, (I/F) 2,034,898
3,000,000 Federal National Mortgage Association (94-40 SA), 7.56875%, due 3/25/24, (I/F) 2,568,450
1,000,000 Federal National Mortgage Association (93-202-SZ), 10%, due 11/25/23, (I/F) (PAC) 955,220
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS -
VARIABLE RATE (Cost: $8,611,382) 10,512,183
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -
FIXED RATE PASS-THROUGH SECURITIES (27.8%)
1,352,348 FHA (#000-13002), 7.125%, due 03/01/04 1,359,110
2,851,723 FHA (#012-11216), 7.185%, due 05/01/29 2,876,675
1,894,415 FHA (#044-10592), 7.625%, due 09/01/22 1,948,880
1,345,798 FHA (#081-11017), 7.75%, due 04/01/24 1,384,490
2,551,575 FHA (#112-43055), 9.25%, due 05/25/32 2,675,964
5,832 Federal Home Loan Mortgage Corp., Pool #250685, 6.5%, due 10/01/99 5,848
1,133,028 Federal National Mortgage Association, Pool #310001, 6%, due 09/01/00 1,130,547
I/O -Interest Only security. Pac -Planned Amortization Class TAC -Target Amortization Class.
I/F -Inverse floating rate security whose interest rate moves in the opposite direction of prevailing interest rates.
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
<TABLE>
<CAPTION>
April 30, 1998
Principal
Amount FIXED INCOME SECURITIES Value
- --------------- ----------------------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -
FIXED RATE PASS-THROUGH SECURITIES (CONTINUED))
$ 4,609,364 Federal National Mortgage Association, Pool #406796, 6.5%, due 03/01/18 $ 4,619,459
4,861,445 Federal National Mortgage Association, Pool #413618, 6.5%, due 03/01/18 4,872,092
9,453 Federal National Mortgage Association, Pool #62420, 7.5%, due 03/01/06 9,704
934,882 Federal National Mortgage Association, Pool #303786, 7.5%, due 02/01/11 962,050
15,139 Federal National Mortgage Association, Pool #29542, 8.75%, due 07/01/09 16,036
1,411,874 Government National Mortgage Association, Pool #365618, 7%, due 10/15/33 1,400,409
1,549,103 Government National Mortgage Association, Pool #351003, 7.5%, due 07/15/28 1,560,721
4,414 Government National Mortgage Association, Pool #176192, 8.25%, due 12/15/01 4,535
47,952 Government National Mortgage Association, Pool #3933, 8.25%, due 07/15/04 49,743
7,558 Government National Mortgage Association, Pool #217350, 9.25%, due 08/15/00 7,748
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS -
FIXED RATE PASS-THROUGH SECURITIES (Cost: $24,712,287) 24,884,011
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -
VARIABLE RATE PASS-THROUGH SECURITIES (8.6%)
921,211 Federal Home Loan Mortgage Corp., Pool #846317, 7.661%, due 08/01/26 937,903
1,691,774 Federal Home Loan Mortgage Corp., Pool #846510, 7.832%, due 04/01/25 1,731,124
651,053 Federal Home Loan Mortgage Corp., Pool #755183, 8.02%, due 12/01/15 670,995
1,174,611 Federal National Mortgage Association, Pool #348025, 7.4%, due 06/01/26 1,194,862
1,408,756 Federal National Mortgage Association, Pool #347216, 7.504%, due 09/01/00 1,442,144
385,955 Federal National Mortgage Association, Pool #137064, 7.541%, due 03/01/19 400,007
1,300,641 Federal National Mortgage Association, Pool #124410, 7.731%, due 07/01/22 1,332,220
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS - VARIABLE RATE
PASS-THROUGH SECURITIES (Cost: $7,636,753) 7,709,255
-----------
U.S. TREASURY SECURITIES (0.4%)
197,000 Certificate Accrual Treasury Strip, 0%, due 08/15/01 163,354
177,000 Certificate Accrual Treasury Strip, 0%, due 05/15/06 110,653
112,000 Certificate Accrual Treasury Strip, 0%, due 08/15/08 60,893
TOTAL U.S. TREASURY SECURITIES
(Cost: $317,505) 334,900
-----------
TOTAL FIXED INCOME SECURITIES (COST: $81,518,621) (93.3%) 83,595,465
-----------
SHORT-TERM INVESTMENTS (COST: $9,044,486) (10.1%)
5,979,684 Repurchase Agreement, Goldman Sachs, dated 04/30/98, 5.51%, due 05/01/98,
(Collateralized by $6,034,475 current face Federal Home Loan Mortgage Corp.,
Pool #G00880, 7%, due 02/01/28, valued at $6,108,964) 5,979,684
3,064,802 Bank of New York Depository Reserve, 4.6%, due 05/01/98 3,064,802
-----------
9,044,486
-----------
TOTAL INVESTMENTS (COST: $90,563,107) (103.4%) 92,639,951
LIABILITIES IN EXCESS OF OTHER ASSETS (-3.4%) (3,079,942)
-----------
NET ASSETS (100%) $89,560,009
===========
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
- ------------------------------------------------
<TABLE>
<CAPTION>
TCW GALILEO
MONEY MARKET
FUND
-------------
<S> <C>
ASSETS
Investments, at Value /(1)/ $ 199,066
Receivable for FundShares Sold -
Receivables for Securities Sold -
Accrued Interest Receivable 803
-------------
Total Assets 199,869
-------------
LIABILITIES
Payables for Fund Shares Redeemed -
Distributions Payable 1,030
Payables for Securities Purchased -
Management Fees and Other Accrued Expenses 126
Total Liabilities 1,156
-------------
NET ASSETS $ 198,713
-------------
NET ASSETS CONSIST OF:
Paid-in Capital $ 198,713
Undistributed Net Realized Gain (Loss) on Investments -
Unrealized Appreciation (Depreciation) on Investments -
Undistributed (Overdistributed) Net Investment Income -
-------------
NET ASSETS $ 198,713
=============
=============
CAPITAL SHARES OUTSTANDING 198,713,219
=============
NET ASSET VALUE PER SHARE $ 1.00
=============
</TABLE>
(1) The identified cost for the TCW Galileo Money Market Fund, the TCW Galileo
Core Fixed Income Fund, the TCW Galileo High Yield Bond Fund, the TCW
Galileo Mortgage Backed Securities Fund, and the TCW Galileo Long-Term
Mortgage Backed Securities Fund at April 30, 1998, was $199,066, $42,806,
$191,629, $45,584, and $90,563, respectively.
22
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
Dollar Amounts in Thousands
(Except per Share Amounts)
April 30, 1998
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO LONG-TERM
CORE FIXED INCOME HIGH YIELD BOND MORTGAGE BACKED MORTGAGE BACKED
FUND FUND SECURITIES FUND SECURITIES FUND
----------------- --------------- --------------- ---------------------
<S> <C> <C> <C>
$ 43,158 $ 195,445 $ 44,454 $ 92,640
- 25 - -
458 1,218 258 161
561 4,921 258 548
----------- ----------- ----------- -----------
44,177 201,609 44,970 93,349
----------- ----------- ----------- -----------
5 66 - -
227 1,540 220 646
22 618 - 3,049
64 247 75 94
----------- ----------- ----------- -----------
318 2,471 295 3,789
----------- ----------- ----------- -----------
$ 43,859 $ 199,138 $ 44,675 89,560
=========== =========== =========== ===========
$ 45,994 $ 192,993 $ $52,928 87,306
(3,003) 2,543 (5,469) (166)
352 3,816 (1,130) 2,077
516 (214) (1,654) 343
----------- ----------- ----------- -----------
$ 43,859 $ 199,138 $ 44,675 89,560
=========== =========== =========== ===========
4,549,219 19,869,989 4,626,136 9,222,163
=========== =========== =========== ===========
$ 9.64 $ 10.02 $ 9.66 $ 9.71
=========== =========== =========== ===========
</TABLE>
23
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
- ------------------------------------
<TABLE>
<CAPTION>
TCW GALILEO
MONEY MARKET
FUND
----------------
<S> <C>
INVESTMENT INCOME
Income:
Interest $7,657
------
Expenses:
Management Fees 339
Accounting Service Fees 136
Custodian Fees 18
Transfer Agent Fees 17
Registration Fees 7
Directors' Fees and Expenses 4
Audit and Tax Fees 9
Amortization of Deferred Organization Cos -
Other 12
------
Total Expenses 542
Less Expenses Borne by Investment Adviser 7
------
Net Expenses 535
------
Net Investment Income 7,122
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on Investments During the Period -
Change in Unrealized Appreciation (Depreciation)
on Investments During the Period -
------
Net Realized and Unrealized Gain (Loss) on Investments
During the Period -
------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $7,122
======
</TABLE>
See accompanying Notes to Financial Statements.
24
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
Dollar Amounts in Thousands
Six Months Ended April 30, 1998
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO LONG-TERM
CORE FIXED INCOME HIGH YIELD BOND MORTGAGE BACKED MORTGAGE BACKED
FUND FUND SECURITIES FUND SECURITIES FUND
- ----------------- --------------- --------------- ---------------------
<S> <C> <C> <C>
$ 1,240 $ 10,065 $ 1,357 $ 4,020
------- -------- ------- -------
65 772 133 207
17 17 17 17
5 12 10 6
18 20 18 18
4 4 4 4
5 5 4 4
9 9 12 13
3 3 3 6
6 20 6 5
------- -------- ------- -------
132 862 207 280
- - - -
------- -------- ------- -------
132 862 207 280
------- -------- ------- -------
1,108 9,203 1,150 3,740
------- -------- ------- -------
214 2,556 (14) (204)
(93) (724) 205 (1,066)
------- -------- ------- -------
121 1,832 191 (1,270)
------- -------- ------- -------
$ 1,229 $ 11,035 $ 1,341 $ 2,470
======= ======== ======= =======
</TABLE>
25
<PAGE>
TCW GALILEO MONEY MARKET FUND
Dollar Amounts in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1998 Year Ended
(UNAUDITED) October 31, 1997
---------------- ----------------
<S> <C> <C>
OPERATIONS
Net Investment Income $ 7,122 $ 12,230
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income (7,122) (12,230)
------------ -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(1,195,920,332 shares in 1998 and 1,234,945,155 shares in 1997) 1,195,920 1,234,945
Proceeds from Shares Issued Upon Reinvestment of Dividends
(4,436,309 shares in 1998 and 5,434,998 shares in 1997) 4,436 5,435
Cost of Shares Redeemed
(1,224,414,455 shares in 1998 and 1,251,280,223 shares in 1997) (1,224,414) (1,251,280)
------------ -----------
(Decrease) in Net Assets Resulting from Capital
Share Transactions (24,058) (10,900)
------------ -----------
(Decrease) in Net Assets (24,058) (10,900)
NET ASSETS
Beginning of Period 222,771 233,671
------------ -----------
End of Period $ 198,713 $ 222,771
============ ===========
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
TCW GALILEO CORE FIXED INCOME FUND
Dollar Amounts in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1998 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1997
---------------- ----------------
<S> <C> <C>
OPERATIONS
Net Investment Income $ 1,108 $ 1,354
Net Realized Gain on Investments 214 241
Change in Unrealized Appreciation (Depreciation)
on Investments (93) 42
---------- --------
Increase in Net Assets Resulting from Operations 1,229 1,637
---------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income (1,165) (1,373)
---------- --------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(3,451,364 shares in 1998 and 717,575 shares in 1997) 33,294 6,812
Proceeds from Shares Issued Upon Reinvestment of Dividends
(68,377 shares in 1998 and 138,935 shares in 1997) 659 1,310
Cost of Shares Redeemed
(983,488 shares in 1998 and 1,490,800 shares in 1997 (9,526) (14,024)
---------- --------
Increase (Decrease) in Net Assets Resulting from Capital
Share Transactions 24,427 (5,902)
---------- --------
Increase in Net Assets 24,491 5,638
---------- --------
NET ASSETS
Beginning of Period 19,368 25,006
---------- --------
End of Period $ 43,859 19,368
========== ========
</TABLE>
See accompanying Notes to Financial Statements.
27
<PAGE>
TCW GALILEO HIGH YEILD BOND FUND
Dollar Amounts in Thousands
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
Six Months Ended
April 30, 1998 Year Ended
(Unaudited) October 31, 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS
Net Investment Income $ 9,203 $ 19,571
Net Realized Gain on Investments 2,556 5,556
Change in Unrealized Appreciation (Depreciation)
on Investments (724) 804
---------------- -----------------
Increase in Net Assets Resulting from Operations 11,035 25,931
---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income (9,499) (19,383)
Distributions in Excess of Net Investment Income (214) _
Distributions from Net Realized Gains (2,884) _
---------------- -----------------
Total Distributions to Shareholders (12,597) (19,383)
---------------- -----------------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(4,598,322 shares in 1998 and 13,039,199 shares in 1997) 46,425 130,756
Proceeds from Shares Issued upon Reinvestment of Dividends
(1,130,282 shares in 1998 and 1,688,689 shares in 1997) 11,394 16,818
Cost of Shares Redeeme
(6,505,483 shares in 1998 and 12,886,525 shares in 1997) (65,880) (129,176)
---------------- -----------------
Increase (Decrease)in Net Assets Resulting from
Capital Share Transactions (8,061) 18,398
---------------- -----------------
Increase (Decrease) in Net Assets (9,623) 24,946
NET ASSETS
Beginning of Period 208,761 183,815
---------------- -----------------
End of Period $ 199,138 $ 208,761
================ =================
</TABLE>
See accompanying Notes to Financial Statements.
28
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
TCW GALILEO MORTGAGE BACKED SECURITIES FUND
Dollar Amounts in Thousands
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
Six Months Ended
April 30, 1998 Year Ended
(Unaudited) October 31, 1997
------------------ ------------------
<S> <C> <C>
OPERATIONS
Net Investment Income $ 1,150 $ 3,205
Net Realized (Loss) on Investments (14) (78)
Change in Unrealized Appreciation on Investments 205 248
------------- ---------------
Increase in Net Assets Resulting from Operations 1,341 3,375
------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income (1,150) (2,046)
Distributions in Excess of Net Investment Income (435) (1,219)
------------- ---------------
Total Distributions to Shareholders (1,585) (3,265)
------------- ---------------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(1,605,549 shares in 1998 and 8,709,536 shares in 1997) 15,612 84,756
Proceeds from Shares Issued upon Reinvestment of Dividends
(154,826 shares in 1998 and 321,824 shares in 1997) 1,499 3,115
Cost of Shares Redeemed
(2,835,359 shares in 1998 and 9,728,007 shares in 1997) (27,499) (94,509)
------------- ---------------
(Decrease) in Net Assets Resulting from
Capital Share Transactions (10,388) (6,638)
------------- ---------------
(Decrease) in Net Assets (10,632) (6,528)
------------- ---------------
NET ASSETS
Beginning of Period 55,307 (61,835)
------------- ---------------
End of Period $ 44,675 $ 55,307
============= ===============
</TABLE>
See accompanying Notes to Financial Statements.
29
<PAGE>
TCW GALILEO LONG-TERM MORTGAGE BACKED SECURITIES FUND
Dollar Amounts in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998 Year Ended
(Unaudited) October 31, 1997
------------------ -------------------
<S> <C> <C>
OPERATIONS
Net Investment Income $ 3,740 $ 7,975
Net Realized Gain (Loss) on Investments (204) 569
Change in Unrealized Appreciation (Depreciation)
on Investments (1,066) 1,875
-------------- ---------------
Increase in Net Assets Resulting from Operations 2,470 10,419
-------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income (3,684) (7,476)
Distributions from Net Realized Gains (435) _
-------------- ---------------
Total Distributions to Shareholders (4,119) (7,476)
-------------- ---------------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(1,257,005 shares in 1998 and 516,324 shares in 1997) 12,289 4,947
Proceeds from Shares Issued upon Reinvestment of Dividends
(401,557 shares in 1998 and 758,014 shares in 1997) 3,946 7,257
Cost of Shares Redeemed
(655,272 shares in 1998 and 4,796,056 shares in 1997) (6,468) (45,965)
-------------- ---------------
Increase in Net Assets Resulting from
Capital Share Transactions 9,767 (33,761)
-------------- ---------------
Increase (Decrease) in Net Assets 8,118 (30,818)
-------------- ---------------
NET ASSETS
Beginning of Period 81,442 112,260
-------------- ---------------
End of Period $ 89,560 $ 81,442
============== ===============
</TABLE>
See accompanying Notes to Financial Statements.
30
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
April 30, 1998
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- -----------------------------------------
NOTE 1 - ORGANIZATION
TCW Galileo Funds, Inc., a Maryland corporation (the "Company"), is an open-end
management investment company registered under the Investment Company Act of
1940, as amended, that currently offers a selection of 17 no-load mutual funds
known as the TCW Galileo Funds (the "Funds"). TCW Funds Management, Inc. (the
"Adviser") is the investment adviser to the Funds, as well as the administrator
of their day-to-day operations. TCW Asia Limited and TCW London International,
Limited are sub-advisers for the TCW Galileo Emerging Markets Fund, TCW London
International, Limited is a sub-adviser to the TCW Galileo International
Equities Fund, TCW Galileo European Equities Fund and TCW Galileo Japanese
Equities Fund. TCW Asia Limited is a sub-adviser to the TCW Galileo Asia Pacific
Equity Fund. The advisers are registered under the Investment Advisers Act of
1940. Each Fund has distinct investment objectives and policies. There is one
diversified money market fund (the TCW Galileo Money Market Fund), four
diversified fixed income funds (the TCW Galileo Core Fixed Income Fund, the TCW
Galileo High Yield Bond Fund, the TCW Galileo Mortgage Backed Securities Fund
and the TCW Galileo Long-Term Mortgage Backed Securities Fund), a convertible
securities fund (the TCW Galileo Convertible Securities Fund), and eleven non-
diversified equity funds (the TCW Galileo Core Equities Fund, the TCW Galileo
Earnings Momentum Fund, the TCW Galileo Mid-Cap Growth Fund, the TCW Galileo
Small Cap Growth Fund, the TCW Galileo Asia Pacific Equity Fund, the TCW Galileo
Emerging Markets Fund, the TCW Galileo Latin America Equity Fund, the TCW
Galileo International Equities Fund, the TCW Galileo European Equities Fund, the
TCW Galileo Japanese Equities Fund and the TCW Galileo Value Opportunities Fund)
currently offered by the Company. On November 3, 1997, TCW Galileo International
Equities Fund, TCW Galileo Japanese Equities Fund and TCW Galileo Value
Opportunities Fund commenced operations resulting from the exchange of Limited
Partnership interests. The assets and liabilities were transferred at historical
cost from the respective predecessor limited partnerships to the Funds on
November 3, 1997, and the fair values of which were exchanged for commons shares
of the Funds. The transfers were treated as tax-free exchanges in accordance
with the Internal Revenue Code. The TCW Galileo European Equities Fund commenced
operations on November 3, 1997, as a new Galileo Fund.
The primary investment objective of each Fund follows: (1) the TCW Galileo Money
Market Fund seeks current income, preservation of capital and liquidity by
investing in short-term money market securities; (2) the TCW Galileo Core Fixed
Income Fund seeks capital appreciation and income through investment principally
in Core fixed income securities emphasizing high quality and liquid investments;
(3) the TCW Galileo High Yield Bond Fund seeks high current income through
investment principally in high yield fixed income securities; (4) the TCW
Galileo Mortgage Backed Securities Fund seeks income by investing primarily in
short-term mortgage backed securities; (5) the TCW Galileo Long-Term Mortgage
Backed Securities Fund seeks income by investing primarily in long-term mortgage
backed securities; (6) the TCW Convertible Securities Fund seeks high total
return from current income and capital appreciation through investment
principally in convertible securities; (7) the TCW Galileo Core Equities Fund
(formerly TCW Galileo Core Equity Fund) emphasizes capital appreciation and
preservation with focus on long-term results; (8) the TCW Galileo Earnings
Momentum Fund seeks capital appreciation through investment primarily in
publicly-traded equity securities of companies experiencing or expected to
experience accelerating earnings growth; (9) the TCW Galileo Mid-Cap Growth Fund
seeks long-term capital appreciation, primarily by investing in publicly-traded
equity securities of medium capitalization companies; (10) the TCW Galileo Small
Cap Growth Fund seeks long-term capital appreciation, primarily by investing in
publicly-traded equity securities of smaller capitalization companies; (11) the
TCW Galileo Asia Pacific Equity Fund seeks long-term capital appreciation,
primarily by investing in equity securities of companies in the Asia Pacific
region; (12) the TCW Galileo Emerging Markets Fund seeks long-term capital
appreciation by investing in equity securities of companies in emerging market
countries around the world; (13) the TCW Galileo Latin America Equity Fund seeks
long-term capital appreciation, primarily by investing in Latin American equity
securities; (14) the TCW Galileo International Equities Fund seeks long-term
capital appreciation by investing in a mix of underlying TCW Galileo Funds; (15)
the TCW Galileo European Equities Fund seeks long-term capital appreciation by
investing primarily in the securities of issuers located in Europe; (16) the
TCW Galileo Japanese Equities Fund seeks long-term capital appreciation by
investing primarily in Japanese equity securities; and (17) the
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- ------------------------------------------------------
TCW Galileo Value Opportunities Fund seeks capital appreciation by investing at
least 65% of its total assets, under normal circumstances, in publicly traded
equity securities issued by small and medium companies with market
capitalization at the time of purchase between $500 million and $2.5 billion.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF ACCOUNTING: The Funds use the accrual method of accounting for
financial reporting purposes.
SECURITY VALUATIONS: The value of securities held in the TCW Galileo Money
Market Fund is determined by using the amortized cost method applied to each
individual security unless, due to special circumstances, the use of such a
method would result in a valuation that does not approximate fair market value.
All other securities, including the bond fund securities, for which over-the-
counter market quotations are readily available, are valued at the latest bid
price prior to the time of valuation.
Securities for which market quotations are not readily available, including
circumstances under which it is determined by the Adviser that sale or bid
prices are not reflective of a security's market value, are valued at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Company's Board of Directors.
For Funds other than TCW Galileo Money Market Fund, short-term debt securities
with remaining maturities of 60 days or less at the time of purchase are valued
at amortized cost. Other short-term debt securities are valued on a marked-to-
market basis until such time as they reach a remaining maturity of 60 days,
whereupon they will be valued at amortized value using their value on the 61st
day prior to maturity.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions are
recorded as of the trade date. Interest income is recorded on the accrual basis.
Original issue discount is accreted as interest income using a constant yield to
maturity method. The TCW Galileo High Yield Bond Fund recognizes as interest
income discounts on securities purchased at the time the security is sold. The
TCW Galileo Core Fixed Income Fund recognizes as interest income discounts on
securities purchased using a constant yield to maturity accretion method and
also amortizes premiums as a reduction to interest for securities purchased in
excess of par value on a constant yield to maturity amortization method. For all
other Funds, premiums on securities purchased are not amortized, except for
mortgage backed obligations for which amortization has been elected as allowed
by federal income tax regulations. Realized and unrealized gains and losses on
investments are recorded on the basis of specific identification.
DOLLAR ROLL TRANSACTIONS: The Funds may enter into dollar roll transactions with
financial institutions to take advantage of opportunities in the mortgage backed
securities market. A dollar roll transaction involves a simultaneous sale by the
Fund of securities that it holds with an agreement to repurchase substantially
similar securities at an agreed upon price and date, but generally will be
collateralized at time of delivery by different pools of mortgages with
different prepayment histories than those securities sold. These transactions
are accounted for as financing transactions as opposed to sales and purchases.
The differential between the sale price and the repurchase price is recorded as
deferred income and recognized between the settlement dates of the sale and
repurchase. During the period between the sale and repurchase, the Fund will not
be entitled to receive interest and principal payments on the securities sold.
Dollar roll transactions involve risk that the market value of the security sold
by the Fund may decline below the repurchase price of the security. There were
no such transactions outstanding as of April 30, 1998.
32
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Fixed Income)
April 30, 1998
REPURCHASE AGREEMENTS: The Funds may invest in repurchase agreements secured by
U.S. Government obligations and in other securities. Securities pledged as
collateral for repurchase agreements are held by the Funds' custodian bank until
maturity of the repurchase agreements. Provisions of the agreements ensure that
the market value of the collateral is sufficient in the event of default;
however, in the event of default or bankruptcy by the other party to the
agreements, realization and/or retention of the collateral may be subject to
legal proceedings.
DEFERRED ORGANIZATION COSTS: Organization costs of $50,000 per Fund have been
deferred and were being amortized on a straight line basis over a five-year
period from the commencement of operations of each Fund. Deferred organization
costs have been completely amortized as of April 30, 1998.
EXPENSE ALLOCATION: Common expenses incurred by the Company are allocated among
the Funds based upon the ratio of net assets of each Fund to the combined net
assets of all the Funds. All other expenses are charged to each Fund as incurred
on a specific identification basis.
NET ASSET VALUE: The Net Asset Value of each Fund's shares is determined by
dividing the net assets of the Fund by the number of issued and outstanding
shares on each business day as of 9:00 A.M. Pacific Time for the TCW Galileo
Money Market Fund and as of 1:00 P.M. Pacific Time for the other Funds.
DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income of the TCW
Galileo Money Market Fund are declared each business day. The other fixed income
funds declare and pay, or reinvest, dividends from net investment income
monthly. Distribution of any net long-term and net short-term capital gains
earned by a Fund will be distributed at least annually.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, market discount, losses deferred to wash sales and excise tax
regulations. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may affect
net investment income per share. Undistributed net investment income may include
temporary book and tax basis differences which will reverse in a subsequent
period. Any taxable income or gain remaining at fiscal year end is distributed
in the following year.
USE OF ESTIMATES: The preparation of the accompanying financial statements
requires management to make estimates and assumptions that effect the reported
amount 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 these estimates.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
- -----------------------------------------------------
NOTE 3 - FEDERAL INCOME TAXES
It is the policy of each Fund to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to 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. At
April 30, 1998, net unrealized appreciation (depreciation) on investments for
federal income tax purposes was as follows:
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO LONG-TERM
CORE FIXED HIGH YIELD MORTGAGE BACKED MORTGAGE BACKED
INCOME FUND BOND FUND SECURITIES FUND SECURITIES FUND
----------- ------------- --------------- -------------------
<S> <C> <C> <C> <C>
Unrealized Appreciation $ 483,080 $ 5,414,203 $ 245,869 $ 3,963,132
Unrealized (Depreciation) (130,746) (1,597,584) (1,376,234) (1,886,288)
----------- ------------ -------------- -------------------
Net Unrealized Appreciation
(Depreciation) $ 352,334 $ 3,816,619 $ (1,130,365) $ 2,076,844
=========== ============ ============== ===================
Cost of Investments for
Federal Income Tax Purposes $42,805,814 $191,628,639 $ 45,583,865 $ 90,563,107
=========== ============ ============== ===================
</TABLE>
At April 30, 1998, the following Funds had net realized loss carryforwards for
federal income tax purposes:
<TABLE>
<CAPTION>
Expiring in
-----------------------------------------------
2002 2003 2004 2005
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
TCW Galileo Core Fixed Income Fund $1,977,000 $ 644,000 $ - $ -
TCW Galileo Mortgage Backed Securities Fund 446,000 4,070,000 861,000 73,000
</TABLE>
Note 4 - INVESTMENT ADVISORY AND ACCOUNTING SERVICE FEES
The Funds pay to the Adviser, as compensation for services rendered, facilities
furnished and expenses borne by it, the following annual management fees:
TCW Galileo Money Market Fund 0.25%
TCW Galileo Core Fixed Income Fund 0.35%
TCW Galileo High Yield Bond Fund 0.75%
TCW Galileo Mortgage Backed Securities Fund 0.50%
TCW Galileo Long-Term Mortgage Backed Securities Fund 0.50%
34
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Fixed Income)
April 30, 1998
The TCW Galileo Money Market Fund reimburses the Adviser for the costs of
providing accounting services to the Fund in an amount not exceeding an annual
rate of 0.10% of the Fund's average daily net assets. Each bond Fund also
reimburses the Adviser for the cost of providing accounting services to the Fund
in an amount not exceeding $35,000 for any fiscal year. The ordinary operating
expenses of the TCW Galileo Money Market Fund are limited to 0.40% of the Fund's
daily net assets.
Certain officers and/or directors of the Company are officers and/or directors
of the Adviser.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
Investment transactions (excluding short-term investments) for the six months
ended April 30, 1998 were as follows:
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO LONG-TERM
CORE FIXED HIGH YIELD MORTGAGE BACKED MORTGAGE BACKED
INCOME FUND BOND FUND SECURITIES FUND SECURITIES FUND
------------ ------------ --------------- ---------------------
<S> <C> <C> <C> <C>
Purchases at Cost $14,997,733 $110,198,339 $ 3,865,637 $ 8,427,250
=========== ============ =========== ===========
Sales Proceeds $ 972,451 $118,242,918 $ 9,326,264 $ 8,206,001
=========== ============ =========== ===========
U.S. Government
Purchases at
Cost $35,183,919 $ - $10,399,655 $12,694,608
=========== ============ =========== ===========
U.S. Government $25,116,849 $ - $18,730,666 $ 6,711,875
=========== ============ =========== ===========
</TABLE>
NOTE 6 - RESTRICTED SECURITIES
The following restricted securities held by the Funds as of April 30, 1998, were
valued both at the date of acquisition and April 30, 1998, in accordance with
the security valuation policy of the Funds described in Note 2. The restricted
securities include securities purchased in private placement transactions
without registration under the Securities Act of 1933, as well as Rule 144A
securities. Such securities generally may be sold only in a privately
negotiated transaction with a limited number of purchasers or in a public
offering registered under the Securities Act of 1933. Each Fund will bear any
costs incurred in connection with the disposition of such securities.
<TABLE>
<CAPTION>
TCW GALILEO CORE FIXED INCOME FUND:
PRINCIPAL DATE OF
AMOUNT INVESTMENT ACQUISITION COST
- ------------ --------------------------------------------------------------- -------------- --------
<S> <C> <C> <C>
$ 50,000 American Restaurant Group, Inc., (144A), 11.5%, due 02/15/03 02/13/98 $ 50,000
50,000 BE Aerospace, Inc., (144A), 8%, due 03/01/08 02/06/98 49,877
50,000 Boyds Collection, Ltd., (144A), 9%, due 05/15/08 04/16/98 50,000
50,000 Chancellor Media Corp., (144A), 8.125%, due 12/15/07 12/15/97 49,609
50,000 Conmed Corp., (144A), 9%, due 03/15/08 02/26/98 50,000
25,000 Consumers International, (144A), 10.25%, due 04/01/05 04/10/97 25,000
100,000 Desa International, Inc., (144A), 9.875%, due 12/15/07 11/21/97 101,500
75,000 Eagle-Picher Industries, Inc., (144A), 9.375%, due 03/01/08 02/19/98 75,284
50,000 Extendicare Health Services, Inc., (144A), 9.35%, due 12/15/07 11/25/97 50,000
50,000 GSI Group, Inc., (144A), 10.25%, due 11/01/07 10/30/97 49,627
</TABLE>
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- -----------------------------------------------------
NOTE 6 - RESTRICTED SECURITIES (CONTINUED)
TCW GALILEO CORE FIXED INCOME FUND (CONTINUED):
<TABLE>
<CAPTION>
PRINCIPAL DATE OF
AMOUNT INVESTMENT ACQUISITION COST
- -------------- ------------------------------------------------------------- ----------- --------
<S> <C> <C> <C>
$ 50,000 Graham Packaging Co., (144A), 8.75%, due 01/15/08 01/23/98 $ 50,000
50,000 Grove Worldwide, LLC, (144A), 9.25%, due 05/01/08 04/22/98 50,250
125,000 Hard Rock Hotel, Inc., (144A), 9.25%, due 04/01/05 03/17/98 126,438
100,000 Holmes Products Corp., (144A), 9.875%, due 11/15/07 11/19/97 101,844
50,000 Jackson Products, Inc., (144A), 9.5%, due 04/15/05 04/16/98 49,686
100,000 Level 3 Communications, Inc., (144A), 9.125%, due 05/01/08 04/23/98 99,579
50,000 Magellan Health Services, Inc., (144A), 9%, due 02/15/08 02/05/98 50,000
100,000 Mastec, Inc., (144A), 7.75%, due 02/01/08 01/30/98 99,623
50,000 Morris Materials Handling, Inc., (144A), 9.5%, due 04/01/08 03/23/98 50,000
50,000 Nationwide Credit, Inc., (144A), 10.25%, due 01/15/08 01/23/98 50,000
50,000 Packaged Ice, Inc., (144A), 9.75%, due 02/01/05 01/22/98 49,696
50,000 Perkins Family Restaurants, L.P., (144A), 10.125%, due 12/15/07 12/17/97 50,000
50,000 Pierce Leahy Corp., (144A), 8.125%, due 05/15/08 04/02/98 49,821
50,000 Polymer Group, Inc., (144A), 8.75%, due 03/01/08 02/27/98 50,000
75,000 Prime Medical Services, Inc., (144A), 8.75%, due 04/01/08 03/24/98 74,783
50,000 Primedia, Inc., (144A), 7.625%, due 04/01/08 02/11/98 49,716
50,000 Revlon Consumer Products Corp., (144A), 8.125%, due 02/01/06 01/28/98 49,844
50,000 Revlon Consumer Products Corp., (144A), 8.625%, due 02/01/08 01/28/98 49,983
50,000 Rural/Metro Corp., (144A), 7.875%, due 03/15/08 03/11/98 49,915
50,000 Signature Resorts, Inc., (144A), 9.25%, due 05/15/06 04/09/98 50,000
25,000 Von Hoffman Press, Inc., (144A), 10.375%, due 05/15/07 10/03/97 27,113
50,000 Wheeling-Pittsburgh Corp., (144A), 9.25%, due 11/15/07 11/20/97 49,816
</TABLE>
The total value of restricted securities is $1,895,563, which represents 4.3% of
net assets of the Fund at April 30, 1998.
TCW GALILEO HIGH YIELD BOND FUND:
<TABLE>
<CAPTION>
PRINCIPAL DATE OF
AMOUNT INVESTMENT ACQUISITION COST
- ---------------- ------------------------------------------------------------ ----------- ----------
<S> <C> <C> <C>
$ 750,000 American Restaurant Group, Inc., (144A), 11.5%, due 02/15/03 02/13/98 $ 750,000
1,500,000 BE Aerospace, Inc., (144A), 8%, due 03/01/08 02/06/98 1,496,301
500,000 Boyds Collection, Ltd., (144A), 9%, due 05/15/08 04/16/98 500,000
1,250,000 Chancellor Media Corp., (144A), 8.125%, due 12/15/07 12/15/97 1,253,311
300,000 Conmed Corp., (144A), 9%, due 03/15/08 02/26/98 300,000
2,050,000 Consumers International, (144A), 10.25%, due 04/01/05 04/10/97 2,083,000
2,000,000 County Seat Stores, Inc., (144A), 12.75%, due 11/01/04 10/23/97 2,000,000
950,000 Desa International, Inc., (144A), 9.875%, due 12/15/07 11/21/97 957,500
575,000 Eagle-Picher Industries, Inc., (144A), 9.375%, due 03/01/08 02/19/98 576,388
200,000 Extendicare Health Services, Inc., (144A), 9.35%, due 12/15/07 11/25/97 200,000
1,000,000 Flag, Ltd., (144A), 8.25%, due 01/30/08 01/23/98 1,000,000
1,450,000 GSI Group, Inc., (144A), 10.25%, due 11/01/07 10/30/97 1,456,039
775,000 Graham Packaging Co., (144A), 8.75%, due 01/15/08 01/23/98 775,000
450,000 Grove Worldwide, LLC, (144A), 9.25%, due 05/01/08 04/22/98 451,250
1,175,000 Hard Rock Hotel, Inc., (144A), 9.25%, due 04/01/05 03/17/98 1,183,875
1,000,000 Holmes Products Corp., (144A), 9.875%, due 11/15/07 11/19/97 1,011,094
750,000 IXC Communications, Inc., (144A), 9%, due 04/15/08 04/16/98 750,000
</TABLE>
36
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
April 30, 1998
TCW GALILEO HIGH YIELD BOND FUND (CONTINUED):
<TABLE>
<CAPTION>
PRINCIPAL DATE OF
AMOUNT INVESTMENT ACQUISITION COST
- ---------------- --------------------------------------------------------------- ----------- ----------
<S> <C> <C> <C>
$ 400,000 Jackson Products, Inc., (144A), 9.5%, due 04/15/05 04/16/98 $ 397,490
1,750,000 Level 3 Communications, Inc., (144A), 9.125%, due 05/01/08 04/23/98 1,742,636
750,000 Magellan Health Services, Inc., (144A), 9%, due 02/15/08 02/05/98 750,000
1,750,000 Mastec, Inc., (144A), 7.75%, due 02/01/08 01/30/98 1,743,059
850,000 Morris Materials Handling, Inc. (144A), 9.5%, due 04/01/08 03/23/98 850,000
700,000 Nationwide Credit, Inc., (144A), 10.25%, due 01/15/08 01/23/98 700,000
1,350,000 Packaged Ice, Inc., (144A), 9.75%, due 02/01/05 04/23/98 1,356,750
650,000 Perkins Family Restaurants, L.P., (144A), 10.125%, due 12/15/07 12/17/97 650,000
900,000 Perry/Judd's, Inc., (144A), 10.625%, due 12/15/07 12/10/97 900,000
750,000 Pierce Leahy Corp., (144A), 8.125%, due 05/15/08 04/02/98 747,319
250,000 Polymer Group, Inc., (144A), 8.75%, due 03/01/08 02/27/98 250,000
1,075,000 Prime Medical Services, Inc., (144A), 8.75%, due 04/01/08 03/24/98 1,073,547
350,000 Primedia, Inc., (144A), 7.625%, due 04/01/08 02/11/98 348,014
750,000 Revlon Consumer Products Corp., (144A), 8.125%, due 02/01/06 01/28/98 747,660
1,800,000 Revlon Consumer Products Corp., (144A), 8.625%, due 02/01/08 01/28/98 1,799,398
900,000 Rural/Metro Corp., (144A), 7.875%, due 03/15/08 03/11/98 898,465
450,000 Signature Resorts, Inc., (144A), 9.25%, due 05/15/06 04/09/98 450,000
1,250,000 Standard Pacific Corp., (144A), 8%, due 02/15/08 02/05/98 1,239,927
1,400,000 Terex Corp., (144A), 8.875%, due 04/01/08 03/24/98 1,395,766
3,000,000 Verio, Inc., (144A), 10.375%, due 04/01/05 03/19/98 3,080,688
825,000 Von Hoffman Press, Inc., (144A), 10.375%, due 05/15/07 10/03/97 894,781
1,400,000 Wheeling-Pittsburgh Corp., (144A), 9.25%, due 11/15/07 11/20/97 1,394,838
</TABLE>
The total value of restricted securities is $40,635,876, which represents 20.4%
of net assets of the Fund at April 30, 1998.
TCW GALILEO MORTGAGE BACKED SECURITIES FUND:
<TABLE>
<CAPTION>
PRINCIPAL DATE OF
AMOUNT INVESTMENT ACQUISITION COST
- ---------------- ------------------------------------------------- ----------- ----------
<S> <C> <C> <C>
$883,824 Greenwich Capital Acceptance, Inc. (91-03),
(Private Placement), 8.1692%, due 08/25/19 03/21/91 $875,096 *
</TABLE>
The total value of restricted securities is $855,100, which represents 1.9% of
net assets of the Fund at April 30, 1998.
NOTE 7 - SUBSEQUENT EVENT
On October 24, 1997, the Board of Directors of the Company approved the exchange
of four limited partnerships into the TCW Galileo Enhanced 500 Fund, TCW Galileo
Large Cap Growth Fund, TCW Galileo Large Cap Value Fund and TCW Galileo Emerging
Markets Income Fund and the organization of a new fund, the TCW Galileo Small
Cap Value Fund. The transfers will be treated as tax-free exchanges in
accordance with the Internal Revenue Code. The assets and liabilities will be
transferred at historical cost from the respective predecessor limited
partnerships to the Funds on June 1, 1998 and the fair values of which will be
exchanged for common shares of the Funds.
37
<PAGE>
TCW GALILEO MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
Six Months
Ended
April 30, 1998 Year Ended October 31,
---------------------------------------
(Unaudited) 1997 1996 1995
-------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income (Loss) from Investment Operations:
Net Investment Income 0.0260 0.0516 0.0509 0.0549
Less Distributions:
Distributions from Net Investment Income (0.0260) (0.0516) (0.0509) (0.0549)
---------- ---------- ---------- ----------
Net Asset Value per Share, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ==========
Total Return 2.63% /(3)/ 5.29% 5.21% 5.67%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $198,713 $222,771 $233,671 $ 86,302
Ratio of Net Expenses to Average Net Assets /(5)/ 0.40% /(4)/ 0.40% 0.40% 0.40%
Ratio of Net Investment Income to
Average Net Assets 5.25% /(4)/ 5.17% 5.04% 5.49%
</TABLE>
(1) For the ten months ended October 31, 1994 and not indicative of a full
year's operating results.
(2) For the period July 14, 1988 (commencement of operations) to December 31,
1988 and not indicative of a full year's operating results.
(3) For the six months ended April 30, 1998 and not indicative of a full year's
operating results.
(4) Annualized.
(5) The Investment Adviser has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund to 0.40% of net assets as
disclosed in Note 4 of the Notes to Financial Statements. Had such action
not been taken, total annualized operating expenses as a percentage of
average net assets would have been 0.40% for the six months ended April 30,
1998, 0.40%, 0.44%, and 0.46% for the fiscal years ended October 31, 1997,
1996 and 1995, respectively, 0.68% for the ten months ended October 31,
1994, 0.52%, 0.49%, 0.47%, 0.51% and 0.71% for the years ended December 31,
1993 through 1989, respectively, and 0.47% for the period July 14, 1988
(commencement of operations) through December 31, 1988.
38
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
<TABLE>
<CAPTION>
July 14, 1988
Ten Months (Commencement
Ended Year Ended December 31, of Operations)
----------------------------------------------------------
October 31, 1994 1993 1992 1991 1990 1989 December 31, 1988
- ---------------- ----------- ---------- ----------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
0.0304 0.0293 0.0381 0.0620 0.0800 0.0882 0.0379
(0.0304) (0.0293) (0.0381) (0.0620) (0.0800) (0.0882) (0.0379)
- ---------------- ---------- --------- ----------- --------- --------- -----------------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
================ ========== ========= =========== ========= ========= =================
3.04% /(1)/ 2.97% 3.92% 6.35% 8.18% 9.22% 7.68% /(2)/
$ 124,392 $ 81,204 $ 183,465 $ 140,987 $167,572 $ 88,620 $ 63,703
0.40% /(4)/ 0.40% 0.40% 0.40% 0.40% 0.40% 0.40% /(4)/
3.65% /(4)/ 2.93% 3.81% 6.20% 8.00% 8.82% 8.08% /(4)/
</TABLE>
39
<PAGE>
TCW GALILEO CORE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
Six Months Ten Months March 1, 1993
Ended Ended (Commencement of
April 30, 1998 Year Ended October 31, October 31, Operations) through
--------------------------
(Unaudited) 1997 1996 1995 1994 December 31, 1993
-------------- ------- ------- ------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 9.62 $ 9.45 $ 9.61 $ 8.94 $ 10.04 $ 10.00
--------- ------- ------- ------- -------- ---------
Income (Loss) from Investment Operations:
Net Investment Income 0.28 0.58 0.55 0.58 0.44 0.45
Net Realized and Unrealized Gain (Loss)
on Investments 0.04 0.19 0.16 0.62 (1.16) 0.19
--------- ------- ------- ------- -------- ---------
Total from Investment Operations 0.32 0.77 0.39 1.20 (0.72) 0.64
--------- ------- ------- ------- -------- ---------
Less Distributions:
Distributions from Net Investment Income (0.30) (0.60) (0.55) (0.53) (0.38) (0.45)
Distributions from Net Realized Gains - - - - - (0.14)
Distributions in Excess of Net Realized Gains - - - - - (0.01)
--------- ------- ------- ------- -------- ---------
Total Distributions (0.30) (0.60) (0.55) (0.53) (0.38) (0.60)
--------- ------- ------- ------- -------- ---------
Net Asset Value per Share, End of Period $ 9.64 $ 9.62 $ 9.45 $ 9.61 $ 8.94 $ 10.04
========= ======= ======= ======= ======== =========
Total Return 3.33% /(3)/ 8.45% 4.26% 13.92% 7.24% /(1)/ 6.54% /(2)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 43,859 $19,368 $25,006 $36,236 $150,153 $ 33,328
Ratio of Expenses to Average Net Assets 0.70% /(4)/ 0.93% 0.76% 0.68% 0.50% /(4)/ 0.50% /(4)/
/(5)/
Ratio of Net Investment Income to
Average Net Assets 5.91% /(4)/ 6.13% 5.85% 6.38% 6.11% /(4)/ 5.24% /(4)/
Portfolio Turnover Rate 79.42% /(3)/ 142.96% 238.73% 223.78% 208.63% /(1)/ 149.96% /(2)/
</TABLE>
(1) For the ten months ended October 31, 1994 and not indicative of a full
year's operating results.
(2) For the period March 1, 1993 (commencement of operations) to December 31,
1993 and not indicative of a full year's operating results.
(3) For the six months ended April 30, 1998 and not indicative of a full year's
operating results.
(4) Annualized.
(5) The Investment Adviser has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund to 0.50% of net assets
through December 31, 1994. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
0.72% for the fiscal year ended October 31, 1995, 0.68% for the ten months
ended October 31, 1994 and 0.89% for the period March 1, 1993 (commencement
of operations) through December 31, 1993.
40
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
TCW GALILEO HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
Six Months Ten Months March 1, 1993
Ended Ended (Commencement of
April 30, 1998 Year Ended October 31, October 31, Operations) through
----------------------------
(Unaudited) 1997 1996 1995 1994 December 31, 1993
-------------- -------- -------- ------- ------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 10.11 $ 9.77 $ 9.74 $ 9.43 $ 10.12 $ 10.00
---------- -------- -------- ------- ------- -------
Income (Loss) from Investment Operations:
Net Investment Income 0.45 0.91 0.89 0.92 0.73 0.74
Net Realized and Unrealized Gain (Loss)
on Investments 0.09 0.34 0.03 0.39 (0.77) 0.27
---------- -------- -------- ------- ------- -------
Total from Investment Operations 0.54 1.25 0.92 1.31 (0.04) 1.01
---------- -------- -------- ------- ------- -------
Less Distributions:
Distributions from Net Investment Income (0.47) (0.91) (0.89) (1.00) (0.65) (0.74)
Distributions in Excess of Net Investment
Income (0.01) - - - - -
Distributions from Net Realized Gains (0.15) - - - - (0.15)
---------- -------- -------- ------- ------- -------
Total Distributions (0.63) (0.91) (0.89) (1.00) (0.65) (0.89)
---------- -------- -------- ------- ------- -------
Net Asset Value per Share, End of Period $ 10.02 $ 10.11 $ 9.77 $ 9.74 $ 9.43 $ 10.12
========== ======== ======== ======= ======= =======
Total Return 5.42% /(3)/ 13.26% 9.92% 14.65% (0.34)% /(1)/ 10.47% /(2)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 199,138 $208,761 $183,815 $92,652 $90,577 $73,737
Ratio of Expenses to Average Net Assets 0.84% /(4)/ 0.83% 0.90% 0.87% 0.79% /(4)//(5)/ 0.79% /(4)//(5)/
Ratio of Net Investment Income to
Average Net Assets 8.94% /(4)/ 9.10% 9.21% 9.60% 9.18% /(4)/ 8.60% /(4)/
Portfolio Turnover Rate 55.25% /(3)/ 109.45% 82.56% 36.32% 34.01% /(1)/ 47.60% /(2)/
</TABLE>
(1) For the ten months ended October 31, 1994 and not indicative of a full years
operating results.
(2) For the period March 1, 1993 (commencement of operations) to December 31,
1993 and not indicative of a full year's operating results.
(3) For the six months ended April 30, 1998 and not indicative of a full year's
operating results.
(4) Annualized.
(5) The Investment Adviser has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund to 0.79% of net assets
through December 31, 1994. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
0.88% for the fiscal year ended October 31, 1995, 0.91% for the ten months
ended October 31, 1994 and 0.96% for the period March 1, 1993 (commencement
of operations) through December 31, 1993.
41
<PAGE>
TCW GALILEO MORTGAGE BACKED SECURITIES FUND
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- --------------------
Six Months Ten Months March 1, 1993
Ended Ended (Commencement of
APRIL 30, 1998 Year Ended October 31, October 31, Operations) through
----------------------------
(UNAUDITED) 1997 1996 1995 1994 December 31, 1993
-------------- ------- ------- ------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 9.70 $ 9.67 $ 9.58 $ 9.41 $ 9.86 $10.00
-------------- ------- ------- ------- ----------- ------------
Income (Loss) from Investment Operations:
Net Investment Income 0.21 0.58 0.51 0.67 0.42 0.50
Net Realized and Unrealized Gain (Loss)
on Investments 0.04 0.05 0.22 0.25 (0.48) (0.12)
-------------- ------- ------- ------- ----------- -------------
Total from Investment Operations 0.25 0.63 0.73 0.92 (0.06) 0.38
-------------- ------- ------- ------- ----------- -------------
Less Distributions:
Distributions from Net Investment Income (0.21) (0.38) (0.46) (0.71) (0.39) (0.50)
Distributions in Excess of Net Investment
Income (0.08) (0.22) (0.18) (0.04) - -
Distributions from Net Realized Gains - - - - - (0.02)
-------------- ------- ------- ------- ----------- -------------
Total Distributions (0.29) (0.60) (0.64) (0.75) (0.39) (0.52)
-------------- ------- ------- ------- ----------- -------------
Net Asset Value per Share, End of Period $ 9.66 $ 9.70 $ 9.67 $ 9.58 $ 9.41 $ 9.86
============== ======= ======= ======= =========== =============
Total Return 2.61%/(3)/ 6.71% 7.86% 10.16% (0.61)%/(1)/ 3.89%/(2)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 44,675 $55,307 $61,835 $81,366 $ 134,948 $ 147,666
Ratio of Expenses to Average Net Assets 0.78%/(4)/ 0.77% 0.69% 0.61% 0.55%/(4)/ 0.55%/(4)//(5)/
Ratio of Net Investment Income to
Average Net Assets 4.34%/(4)/ 6.00% 5.34% 7.13% 5.18%/(4)/ 5.98%/(4)/
Portfolio Turnover Rate 30.28%/(3)/ 109.91% 54.10% 37.83% 65.64%/(1)/ 70.44%/(2)/
</TABLE>
(1) For the ten months ended October 31, 1994 and not indicative of a full
year's operating results.
(2) For the period March 1, 1993 (commencement of operations) to December 31,
1993 and not indicative of a full year's operating results.
(3) For the six months ended April 30, 1998 and not indicative of a full year's
operating results.
(4) Annualized.
(5) The Investment Adviser has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund to 0.55% of net assets
through December 31, 1994. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
0.63% for the fiscal year ended October 31, 1995, 0.62% for the ten months
ended October 31, 1994 and 0.70% for the period March 1, 1993 (commencement
of operations) through December 31, 1993.
42
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
TCW GALILEO LONG-TERM MORTGAGE BACKED SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
SIX MONTHS Ten Months June 17, 1993
ENDED Ended (Commencement of
APRIL 30, 1998 Year Ended October 31, October 31, Operations) through
----------------------
(UNAUDITED) 1997 1996 1995 1994 December 31, 1993
----------- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 9.91 $ 9.56 $ 9.56 $ 8.95 $ 10.07 $ 10.00
-------- ------ ------- ------ --------- ---------
Income (Loss) from Investment Operations:
Net Investment Income 0.44 0.75 0.68 0.72 0.63 0.28
Net Realized and Unrealized Gain (Loss)
on Investments (0.16) 0.32 0.02 0.71 (1.26) 0.07
-------- ------ ------- ------ --------- ---------
Total from Investment Operations 0.28 1.07 0.70 1.43 (0.63) 0.35
-------- ------ ------- ------ --------- ---------
Less Distributions:
Distributions from Net Investment Income (0.43) (0.72) (0.68) (0.82) (0.49) (0.28)
Distributions in Excess of Net Investment
Income -- -- (0.02) -- -- --
Distributions from Net Realized Gains (0.05) -- -- -- -- --
-------- ------ ------- ------ --------- ---------
Total Distributions (0.48) (0.72) (0.70) (0.82) (0.49) (0.28)
-------- ------ ------- ------ --------- ---------
Net Asset Value per Share, End of Period $9.71 $9.91 $9.56 $9.56 $8.95 $10.07
======== ====== ======= ===== ========= =========
Total Return 2.93% (3) 11.66% 7.69% 16.84% (6.39)% (1) 3.51% (2)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 89,560 $81,442 $112,260 $80,159 $ 66,632 $ 25,215
Ratio of Expenses to Average Net Assets 0.68% (4) 0.67% 0.68% 0.68% 0.65% (4)(5) 0.65% (4)(5)
Ratio of Net Investment Income (Loss) to
Average Net Assets 9.03% (4) 7.77% 7.15% 7.88% 8.03% (4) 5.37% (4)
Portfolio Turnover Rate 19.07% (3) 16.01% 39.28% 23.76% 36.71% (1) 44.47% (2)
</TABLE>
(1) For the ten months ended October 31, 1994 and not indicative of a full
year's operating results.
(2) For the period June 17, 1993 (commencement of operations) to December 31,
1993 and not indicative of a full year's operating results.
(3) For the six months ended April 30, 1998 and not indicative of a full year's
operating results.
(4) Annualized.
(5) The Investment Adviser has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund to 0.65% of net assets
through December 31, 1994. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
0.69% for the fiscal year ended October 31, 1995, 0.78% for the ten months
ended October 31, 1994 and 1.13% for the period June 17, 1993 (commencement
of operations) through December 31, 1993.
43
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. FIXED INCOME)
SHAREHOLDER INFORMATION
- -----------------------
DIRECTORS AND OFFICERS INVESTMENT ADVISER
Marc I. Stern TCW Funds Management, Inc.
Director and Chairman of the Board 865 South Figueroa Street
Los Angeles, California 90017
(213) 244-0000
Thomas E. Larkin, Jr.
Director and President
John C. Argue CUSTODIAN
Director
BNY Western Trust Company
700 South Flower Street
Norman Barker, Jr. Suite 200
Director Los Angeles, California 90017
Richard W. Call
Director TRANSFER AGENT
DST Systems, Inc.
Alvin R. Albe, Jr. 811 Main Street
Senior Vice President and Treasurer Kansas City, Missouri 64105
Michael E. Cahill
Senior Vice President,
General Counsel and Assistant Secretary DISTRIBUTOR
TCW Brokerage Services
Ronald E. Robison 865 South Figueroa Street
Senior Vice President Los Angeles, California 90017
(213) 244-0000
Philip K. Holl
Secretary
INDEPENDENT AUDITORS
Marie M. Bender
Assistant Secretary Deloitte & Touche llp
1000 Wilshire Boulevard
Hilary G.D. Lord Los Angeles, California 90017
Assistant Secretary
Peter C. DiBona
Assistant Treasurer
44
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 10
<NAME> TCW GALILEO MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 199,066
<INVESTMENTS-AT-VALUE> 199,066
<RECEIVABLES> 803
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 199,869
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,156
<TOTAL-LIABILITIES> 1,156
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 198,713
<SHARES-COMMON-STOCK> 198,713
<SHARES-COMMON-PRIOR> 222,771
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 198,713
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,657
<OTHER-INCOME> 0
<EXPENSES-NET> 535
<NET-INVESTMENT-INCOME> 7,122
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,122
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,122
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,195,920
<NUMBER-OF-SHARES-REDEEMED> 1,224,414
<SHARES-REINVESTED> 4,436
<NET-CHANGE-IN-ASSETS> (24,058)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 339
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 542
<AVERAGE-NET-ASSETS> 273,524
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .026
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .026
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> TCW GALILEO CORE FIXED INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 42,806
<INVESTMENTS-AT-VALUE> 43,158
<RECEIVABLES> 1,019
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 44,177
<PAYABLE-FOR-SECURITIES> 22
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 296
<TOTAL-LIABILITIES> 318
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,994
<SHARES-COMMON-STOCK> 4,549
<SHARES-COMMON-PRIOR> 2,013
<ACCUMULATED-NII-CURRENT> 516
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3,003)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 352
<NET-ASSETS> 43,859
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,240
<OTHER-INCOME> 0
<EXPENSES-NET> 132
<NET-INVESTMENT-INCOME> 1,108
<REALIZED-GAINS-CURRENT> 214
<APPREC-INCREASE-CURRENT> (93)
<NET-CHANGE-FROM-OPS> 1,229
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,165
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,451
<NUMBER-OF-SHARES-REDEEMED> 983
<SHARES-REINVESTED> 68
<NET-CHANGE-IN-ASSETS> 24,491
<ACCUMULATED-NII-PRIOR> 573
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 3,217
<GROSS-ADVISORY-FEES> 65
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 132
<AVERAGE-NET-ASSETS> 35,476
<PER-SHARE-NAV-BEGIN> 9.62
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> 0.30
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.64
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> TCW GALILEO HIGH YIELD BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 191,629
<INVESTMENTS-AT-VALUE> 195,445
<RECEIVABLES> 6,164
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 201,609
<PAYABLE-FOR-SECURITIES> 618
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,853
<TOTAL-LIABILITIES> 2,471
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 192,993
<SHARES-COMMON-STOCK> 19,870
<SHARES-COMMON-PRIOR> 20,647
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 214
<ACCUMULATED-NET-GAINS> 2,543
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,816
<NET-ASSETS> 199,138
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,065
<OTHER-INCOME> 0
<EXPENSES-NET> 862
<NET-INVESTMENT-INCOME> 9,203
<REALIZED-GAINS-CURRENT> 2,556
<APPREC-INCREASE-CURRENT> (724)
<NET-CHANGE-FROM-OPS> 11,035
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,499
<DISTRIBUTIONS-OF-GAINS> 2,884
<DISTRIBUTIONS-OTHER> 214
<NUMBER-OF-SHARES-SOLD> 4,598
<NUMBER-OF-SHARES-REDEEMED> 6,505
<SHARES-REINVESTED> 1,130
<NET-CHANGE-IN-ASSETS> (9,623)
<ACCUMULATED-NII-PRIOR> 296
<ACCUMULATED-GAINS-PRIOR> 2,871
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 772
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 862
<AVERAGE-NET-ASSETS> 205,987
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> 0.48
<PER-SHARE-DISTRIBUTIONS> 0.15
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.02
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> TCW GALILEO MORTGAGE BACKED SECURITIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1998
<INVESTMENTS-AT-COST> 45,584
<INVESTMENTS-AT-VALUE> 44,454
<RECEIVABLES> 516
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 44,970
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 295
<TOTAL-LIABILITIES> 295
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,928
<SHARES-COMMON-STOCK> 4,626
<SHARES-COMMON-PRIOR> 5,701
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 1,654
<ACCUMULATED-NET-GAINS> (5,469)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,130)
<NET-ASSETS> 44,675
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,357
<OTHER-INCOME> 0
<EXPENSES-NET> 207
<NET-INVESTMENT-INCOME> 1,150
<REALIZED-GAINS-CURRENT> (14)
<APPREC-INCREASE-CURRENT> 205
<NET-CHANGE-FROM-OPS> 1,341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,150
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 435
<NUMBER-OF-SHARES-SOLD> 1,605
<NUMBER-OF-SHARES-REDEEMED> 2,835
<SHARES-REINVESTED> 155
<NET-CHANGE-IN-ASSETS> (10,632)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 1,219
<OVERDIST-NET-GAINS-PRIOR> 5,455
<GROSS-ADVISORY-FEES> 133
<INTEREST-EXPENSE> 0
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<TABLE> <S> <C>
<PAGE>
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<SERIES>
<NUMBER> 6
<NAME> TCW GALILEO LONG TERM MORTGAGE BACKED SECURITIES FUND
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<S> <C>
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