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Previous: TCW GALILEO FUNDS INC, NSAR-B/A, 1998-12-31 |
Next: TCW GALILEO FUNDS INC, N-30D, 1998-12-31 |
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
ANNUAL REPORT
OCTOBER 31, 1998
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
TABLE OF CONTENTS
- -----------------
<TABLE>
<S> <C>
Letter to Shareholders.................................................. 3
Management Discussions.................................................. 4
Schedules of Investments:
TCW Galileo Convertible Securities Fund................................ 13
TCW Galileo Core Equities Fund......................................... 18
TCW Galileo Earnings Momentum Fund..................................... 21
TCW Galileo Enhanced 500 Fund.......................................... 24
TCW Galileo Large Cap Growth Fund...................................... 33
TCW Galileo Large Cap Value Fund....................................... 36
TCW Galileo Mid-Cap Growth Fund........................................ 40
TCW Galileo Small Cap Growth Fund...................................... 43
TCW Galileo Value Opportunities Fund................................... 47
Statements of Assets and Liabilities.................................... 51
Statements of Operations................................................ 54
Statements of Changes in Net Assets..................................... 57
Notes to Financial Statements........................................... 66
Financial Highlights.................................................... 73
Independent Auditors' Report............................................ 82
Shareholder Information................................................. 83
Tax Information Notice.................................................. 84
</TABLE>
1
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK.
2
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
TO OUR SHAREHOLDERS
- -------------------
We are pleased to submit the October 31, 1998 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. In addition, we have
incorporated in this report a discussion and analysis of how the Fund's
performance over the last fiscal year has compared to the benchmark as well as a
graphical analysis of each Fund's performance since inception.
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.
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.
Sincerely,
/s/ Marc I. Stern
Marc I. Stern
Chairman of the Board
December 10, 1998
3
<PAGE>
MANAGEMENT DISCUSSIONS
- ----------------------
TCW GALILEO CONVERTIBLE SECURITIES FUND
- ---------------------------------------
The Fund achieved return of 2.7% for the fiscal year ended October 31, 1998.
The Fund outperformed its benchmark, the First Boston Convertible Securities
Index, which returned a negative 3.8% for the same period.
The Fund benefited from its over weighted position in the healthcare services
and industries and its low exposure to technology and energy. In particular,
holdings in cable and radio did extremely well as did the majority of the Fund's
healthcare holdings. These included Time Warner, Cox Communications, Chancellor
Broadcasting, U.S. West Media, Sepracor, Elan and Quintiles. In addition, many
of the Fund's holdings in retail such as Home Deport, Staples, and Costco did
well. Although the Fund had some exposure to technology, its relative
underweighting in this area was a benefit. The companies in which the Fund did
have holdings such as Cisco, Microsoft and Intel did well. During the last year,
the Fund had very little exposure to the energy area. Because of lower oil
prices, this area has performed poorly and the Fund's low exposure benefited
relative performance.
During the past year, the Fund shifted many of its holdings from non-investment
grade to investment grade companies. This shift was a benefit to performance as
non-investment grade securities suffered significant declines in late summer as
credit spreads widened substantially. In addition, the Fund's focus on
convertible bonds with short maturities or other protective features helped
insulate the portfolio from the full force of the market's decline.
The Fund seeks to invest in a balanced portfolio of convertible securities which
will capture a greater proportion of the upside of their underlying equities
than of their downside. In addition, the Fund attempts to purchase convertibles
in companies which have superior management and good fundamental business
prospects. In a slowing economy characterized by little power and intense
competition, the Fund is focusing on companies which have good unit growth
characteristics and have the ability to generate above average earnings growth.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
2.7% 13.2% 10.1% 12.5%
-----------------------------------------------
FIRST BOSTON
TCW CONVERTIBLE SECURITIES
---------- ----------------------
<S> <C> <C>
INITIAL VALUE 250,000.00 250,000.00
1989 JAN 261,112.50 261,225.00
FEB 261,313.56 261,172.76
MAR 264,039.06 264,568.00
APR 272,839.48 273,457.49
MAY 278,290.81 279,008.67
JUNE 277,467.07 276,971.91
JUL 286,143.47 284,921.00
AUG 295,131.23 291,189.27
SEP 294,169.10 288,655.92
OCT 284,943.96 279,534.39
NOV 288,343.34 284,090.80
DEC 290,543.40 284,403.30
1990 JAN 277,268.47 273,084.05
FEB 278,818.41 276,688.76
MAR 283,218.16 280,922.10
APR 276,942.05 274,657.54
MAY 294,716.19 287,978.43
JUNE 295,541.39 287,632.85
JUL 294,867.56 285,072.92
AUG 280,967.50 268,652.72
SEP 265,691.30 256,912.60
OCT 249,391.14 247,304.06
NOV 265,591.58 259,397.23
DEC 272,842.23 264,818.64
1991 JAN 286,566.20 276,708.99
FEB 306,640.16 293,228.52
MAR 312,628.84 300,412.62
APR 316,267.84 303,446.78
MAY 325,268.83 312,428.81
JUNE 316,818.34 303,712.05
JUL 329,842.74 315,253.10
AUG 341,143.16 327,012.04
SEP 340,068.56 326,423.42
OCT 347,043.36 331,123.92
NOV 341,917.53 323,143.83
DEC 363,629.29 341,918.49
1992 JAN 368,592.83 351,799.93
FEB 376,893.54 360,770.83
MAR 371,944.93 358,173.28
APR 373,380.64 362,507.18
MAY 380,291.92 368,814.80
JUNE 377,515.78 367,118.26
JUL 387,542.60 376,259.50
AUG 386,015.69 373,889.07
SEP 392,879.04 381,366.85
OCT 394,890.59 382,282.13
NOV 407,791.66 393,330.08
DEC 416,591.81 402,062.01
1993 JAN 429,785.27 414,606.34
FEB 430,103.31 416,016.01
MAR 445,101.01 431,491.80
APR 443,494.20 431,362.35
MAY 453,517.17 438,911.19
JUNE 457,417.41 443,080.85
JUL 457,874.83 447,644.58
AUG 475,594.59 459,910.05
SEPT 479,779.82 465,107.03
OCT 492,110.16 476,083.55
NOV 485,658.60 468,894.69
DEC 500,325.49 476,631.46
1994 JAN 517,436.62 490,310.78
FEB 511,253.25 482,514.84
MAR 487,807.18 462,828.23
APR 479,982.75 454,404.76
MAY 480,069.15 455,404.45
JUNE 472,296.83 450,258.38
JUL 478,521.70 462,955.66
AUG 492,685.94 472,075.89
SEP 488,458.69 463,720.15
OCT 486,363.21 467,708.14
NOV 472,881.22 450,730.34
DEC 466,757.41 454,155.89
1995 JAN 467,784.27 453,565.48
FEB 478,529.28 468,397.07
MAR 493,363.69 480,762.76
APR 505,993.80 491,676.07
MAY 516,316.07 506,180.52
JUNE 532,925.96 524,605.49
JUL 554,775.92 543,228.98
AUG 557,327.89 548,932.89
SEP 565,392.43 557,111.99
OCT 548,984.74 540,008.65
NOV 569,736.36 558,800.95
DEC 572,300.17 561,874.35
1996 JAN 583,860.64 574,291.78
FEB 599,041.01 589,740.23
MAR 600,358.90 594,694.04
APR 611,801.75 608,550.42
MAY 621,725.17 622,121.09
JUN 610,981.76 607,376.82
JUL 585,234.99 583,689.12
AUG 613,478.43 605,402.36
SEP 638,637.18 621,203.36
OCT 631,094.87 625,054.82
NOV 656,464.89 644,556.53
DEC 658,276.73 639,657.90
1997 JAN 676,050.20 659,999.02
FEB 661,569.21 656,567.03
MAR 645,770.93 642,976.09
APR 648,431.51 649,470.15
MAY 680,321.37 679,540.62
JUN 715,534.81 699,315.25
JUL 747,111.36 737,637.73
AUG 748,456.16 738,227.84
SEP 785,407.44 769,381.05
OCT 774,545.25 748,300.01
NOV 776,582.31 743,810.21
DEC 785,062.59 747,975.55
1998 JAN 792,434.32 747,751.15
FEB 838,870.97 781,175.63
MAR 865,404.46 809,376.07
APR 863,915.97 816,579.52
MAY 846,084.74 793,062.03
JUN 854,257.92 797,185.95
JUL 848,269.57 779,010.11
AUG 745,696.82 683,425.57
SEP 765,912.66 694,633.75
OCT 795,369.66 719,571.10
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Convertible Securities Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
4
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
TCW GALILEO CORE EQUITIES FUND
- ------------------------------
The Fund generated a strong total return of 23.8% for the fiscal year ended
October 31, 1998 compared with a total return of 22.0% for the S&P 500. The
Fund's strong performance was substantially above the Lipper Growth Fund Index
which returned 13.9%
The Fund experienced strong performance across a broad spectrum of securities.
In the technology area Lucent Technologies, Cisco Systems, and Microsoft each
generated substantial gains; in the health care sector Warner Lambert and Pfizer
strongly outperformed the market averages; and consumer related companies, Time
Warner and Home Depot were strong contributors to the overall excellent
performance for the year.
In May of 1998, Glen Bickerstaff became the portfolio manager for the Fund.
Specific changes in the holdings of the Fund since that time have yielded
positive results and were additive to the level of outperformance for the year.
Of particular note, Dell Computer, Progressive Corp. and Charles Schwab Corp.
appreciated significantly following their purchase in the Fund.
The Fund remains committed to investing in high quality, large capitalization
companies with strong and enduring business models, inherent advantages over
their competitors, and unique business franchise characteristics. Companies
targeted for investment have superior management, strong growth prospects, and
leading market share positions. Specific investments have been made in companies
that are also well positioned to capitalize on broad investment and economic
trends. Fund holdings currently reflect emphasized areas of opportunities in the
technology, financial services, health care, business services and consumer
sectors.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
23.8% 21.1% 16.1% 17.4%
-----------------------------------------------
TCW S&P 500
------------ --------------
<S> <C> <C>
INITIAL VALUE 250,000.00 250,000.00
1991 JULY 257,372.20 261,652.74
AUG 266,007.22 267,850.79
SEPT 263,196.95 263,369.77
OCT 272,748.37 266,908.52
NOV 258,669.20 256,153.55
DEC 288,532.23 285,450.30
1992 JAN 293,776.68 280,131.71
FEB 298,307.29 283,759.45
MAR 289,356.37 278,239.32
APR 289,722.64 286,405.66
MAY 291,713.52 287,808.59
JUN 280,186.47 283,526.50
JULY 291,044.56 295,108.57
AUG 283,232.86 289,067.57
SEPT 290,277.08 292,464.98
OCT 298,719.53 293,472.68
NOV 313,714.27 303,465.98
DEC 319,831.70 307,190.57
1993 JAN 93 331,857.37 309,758.26
FEB 332,023.30 313,980.15
MAR 346,964.35 320,604.83
APR 340,989.62 312,854.66
MAY 352,610.55 321,222.54
JUN 363,566.16 322,164.81
JULY 357,589.13 320,869.19
AUG 375,851.21 333,042.80
SEPT 376,847.21 330,488.20
OCT 385,480.78 337,324.89
NOV 379,170.46 334,110.71
DEC 393,158.06 338,149.38
1994 JAN 416,130.29 349,647.70
FEB 411,136.72 340,159.56
MAR 388,499.53 325,329.27
APR 384,171.65 329,498.82
MAY 392,162.42 334,906.40
JUN 368,860.13 326,698.18
JULY 378,513.20 337,426.97
AUG 393,161.66 351,262.64
SEPT 379,511.09 342,674.90
OCT 385,169.60 350,375.34
NOV 369,188.91 337,615.43
DEC 365,489.64 342,622.55
1995 JAN 358,132.33 351,506.06
FEB 374,183.82 365,203.01
MAR 383,882.67 375,978.91
APR 400,600.76 387,050.59
MAY 412,306.31 402,522.14
JUN 436,380.88 411,871.56
JULY 460,124.36 425,529.24
AUG 458,785.40 426,597.15
SEPT 466,139.73 444,599.74
OCT 457,781.84 443,013.59
NOV 468,480.20 462,461.00
DEC 462,174.46 471,368.07
1996 JAN 464,522.31 487,412.84
FEB 482,982.42 491,930.50
MAR 493,385.86 496,668.03
APR 511,843.43 503,988.94
MAY 531,979.35 516,987.04
JUN 516,876.46 518,957.95
JUL 483,310.50 496,029.38
AUG 502,439.93 506,491.20
SEP 532,646.62 534,997.49
OCT 534,660.02 549,751.87
NOV 577,283.12 591,308.60
DEC 557,309.12 579,595.66
1997 JAN 582,471.63 615,820.39
FEB 563,768.47 620,623.79
MAR 530,105.85 595,054.09
APR 569,211.76 630,578.82
MAY 611,037.44 668,981.07
JUN 626,337.82 698,951.42
JUL 693,982.30 754,587.95
AUG 653,870.12 712,331.03
SEP 675,970.93 751,366.77
OCT 655,894.60 726,271.12
NOV 676,292.92 759,897.47
DEC 683,799.77 772,967.71
1998 JAN 692,005.37 781,547.65
FEB 740,584.14 837,897.23
MAR 768,955.92 880,797.57
APR 782,420.34 889,693.63
MAY 758,376.56 874,390.90
JUN 813,199.61 909,891.17
JUL 831,008.68 900,155.33
AUG 693,975.35 769,992.87
SEP 759,347.82 819,349.41
OCT 812,274.37 885,962.52
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Core Equities Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
5
<PAGE>
MANAGEMENT DISCUSSIONS (CONTINUED)
- ----------------------------------
TCW GALILEO ENHANCED 500 FUND
- -----------------------------
The Galileo Enhanced 500 Fund gained 20.3% for the fiscal year ended ended
October 31, 1998, compared to the 22.0% gain by the S&P 500 Common Stock Index.
During the year, our strategy successfully dealt with several of the market's
dramatic changes. In April our tracking models detected slower earnings growth,
which favors stocks with recent success in the market. Our portfolio's shift
this summer to favor recently-successful stocks capitalized effectively on this
information. Similarly, our tracking of interest rates and industrial production
led to an emphasis on financials which proved effective. Also of note, various
measures we track (including earnings multiples and the yield curve) led us to
bias the portfolio away from value companies and towards growth companies,
although not so aggressively that we gained a large advantage.
However, our analysis of the energy stocks did not sufficiently factor in the
weak international demand, nor did we anticipate the relative strength of the
consumer sector in this country. On balance, the portfolios did not over-
emphasize the few stocks in the index which brought up the index average.
The fund seeks to enhance the S&P 500 index returns by lessening the index
holdings of stocks with poor performance potential, by definition over-weighting
those with index-like or better potential. During 1998, we have strengthened our
tracking systems - such as those that positioned us effectively on recent
success and growth/value names - and have improved our ability to track the
ingredients for success, especially in the consumer and other areas.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
20.3% N/A N/A 24.8%
-----------------------------------------------
TCW S&P 500
-------------- --------------
<S> <C> <C>
INITIAL VALUE 250,000.00 250,000.00
1996 JUNE 21-30 251,675.00 250,953.08
JUL 241,036.70 239,865.48
AUG 246,190.06 244,924.51
SEPT 260,474.01 258,709.33
OCT 268,285.63 265,844.13
NOV 288,527.78 285,939.76
DEC 283,054.40 280,275.72
1997 JAN 299,468.73 297,792.95
FEB 301,145.75 300,115.74
MAR 289,617.89 287,750.97
APR 305,868.35 304,929.70
MAY 323,884.00 323,499.92
JUNE 338,912.22 337,992.72
JUL 365,330.43 364,896.94
AUG 342,807.80 344,462.71
SEP 362,289.57 363,339.27
OCT 350,493.42 351,203.74
NOV 365,505.06 367,464.47
DEC 370,095.80 373,784.86
1998 JAN 374,888.54 377,933.87
FEB 402,184.18 405,182.90
MAR 421,694.13 425,928.27
APR 426,020.71 430,230.14
MAY 418,446.06 422,830.18
JUNE 435,602.35 439,997.09
JULY 428,907.14 435,289.12
AUG 366,977.24 372,346.31
SEP 393,340.89 396,213.71
OCT 421,795.17 428,425.89
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Enhanced 500 Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
6
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
TCW GALILEO EARNINGS MOMENTUM FUND
- ----------------------------------
Performance for the fiscal year ended October 31, 1998 was disappointing. After
performing in line with the small cap benchmarks in the strong first quarter of
1998 and outperforming in the weak second quarter, we were unable to avoid the
carnage in the small cap sector in July and August. Even with a strong September
the portfolio declined sharply in the third quarter. The fiscal year ended with
a 16% drop in the NASDAQ Composite in the first eight days of October, followed
by a 24% rebound between then and month's end. For the year ended October 31,
1998, the Fund declined 17.8%. This compares with a decline of 11.9% in the
Russell 2000 and 15.9% for the Russell Growth Index.
The best performing industry groups for the fiscal year were leisure, consumer
services and retail. Groups that penalized performance in the year included
restaurants, household products, auto parts and electrical equipment. Technology
performed better than many other industries. This is surprising because it is
usually one of the worst groups in market downturns. Few areas were spared in
the third quarter. The only industry groups in the fund with positive
performance in the quarter were leisure and consumer services.
A number of exogenous forces led to intense selling pressure on small cap stocks
in August and again in the first week of October. Problems in the emerging
markets came to a head with the collapse of the Russian financial markets and
the repercussions rocked everything from Latin America to high yield and
mortgage-backed bonds. In September, mutual fund managers found themselves with
large capital gains realized earlier in the year, even though they faced
declines for the fiscal year ending in October. Tax loss selling to erase these
realized gains occurred and it coincided with the wave of selling caused by the
demise of a number of hedge funds. The rebound later in October and the strong
third quarter GDP report indicate that the unusual selling pressure occurred for
emotional rather than fundamental reasons.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
(17.8)% 2.7% 4.8% 7.8%
-----------------------------------------------
TCW RUSSELL 2000
-------------------------------------
<S> <C> <C>
INITIAL VALUE 250,000.00 250,000.00
1993 MAY 254,737.50 261,062.31
JUNE 259,638.65 262,690.91
JUL 266,609.95 266,317.79
AUG 282,881.15 277,823.10
SEPT 291,226.15 285,663.29
OCT 299,048.48 293,015.86
NOV 287,977.71 283,371.79
DEC 309,881.29 293,060.48
1994 JAN 329,131.12 302,248.80
FEB 326,419.08 301,155.63
MAR 307,134.24 285,255.35
APR 299,664.73 286,950.87
MAY 294,450.57 283,728.74
JUNE 274,195.31 274,094.24
JUL 273,789.50 278,597.56
AUG 298,518.17 294,121.77
SEP 298,165.92 293,136.97
OCT 304,561.58 291,980.06
NOV 288,419.81 280,187.91
DEC 292,224.07 287,715.76
1995 JAN 284,909.70 284,085.69
FEB 299,232.11 295,903.34
MAR 305,934.91 300,999.46
APR 308,676.09 307,692.31
MAY 312,333.90 312,982.84
JUNE 333,969.27 329,217.77
JUL 357,433.95 348,184.01
AUG 356,518.92 355,386.78
SEP 369,620.99 361,732.24
OCT 349,509.91 345,554.68
NOV 364,440.98 360,071.77
DEC 369,462.97 369,572.42
1996 JAN 368,853.36 369,177.23
FEB 391,449.32 380,682.54
MAR 410,074.47 388,430.31
APR 457,708.73 409,200.43
MAY 485,189.56 425,326.99
JUN 454,656.58 407,861.86
JUL 387,999.38 372,236.81
AUG 414,030.26 393,848.32
SEP 428,115.56 409,241.86
OCT 398,412.91 402,934.65
NOV 399,942.81 419,536.09
DEC 408,473.59 430,531.48
1997 JAN 413,105.68 439,142.10
FEB 376,723.47 428,514.87
MAR 329,425.83 408,288.96
APR 331,079.55 409,432.17
MAY 392,597.44 454,961.03
JUN 421,704.62 474,478.86
JUL 431,416.48 496,542.13
AUG 438,716.04 507,912.94
SEP 485,176.07 545,092.17
OCT 460,286.54 521,162.62
NOV 455,310.84 517,775.07
DEC 449,077.64 526,836.13
1998 JAN 449,077.64 518,512.12
FEB 468,010.75 556,830.16
MAR 495,520.42 579,771.57
APR 505,168.20 582,960.31
MAY 471,225.95 551,538.75
JUN 495,164.23 552,696.98
JUL 443,776.09 507,983.79
AUG 331,576.18 409,333.34
SEP 372,797.73 441,384.14
OCT 378,531.36 459,392.62
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Earnings Momentum Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
7
<PAGE>
MANAGEMENT DISCUSSIONS (CONTINUED)
- ----------------------------------
TCW GALILEO LARGE CAP GROWTH FUND
- ---------------------------------
The TCW Galileo Large Cap Growth Fund achieved a return of 36.1% for the fiscal
year ended October 31, 1998. The Fund outperformed its benchmarks, the S&P/Barra
Growth Index, as well as the S&P 500, which returned 32.1% and 22.0%,
respectively for the same time period.
The Fund's outperformance benefited from the continued relative strength of the
large cap growth universe. In addition, the Fund's sector selection continues to
dramatically outperform the broad market. The technology, health care and
consumer staples sectors contributed to positive performance. Specific
outperformers include, Dell, Cisco, Microsoft, Eli Lilly, and Warner Lambert.
Within the media sector, the Fund benefited from positions in Clear Channel, Cox
Communications, Liberty Media, and Time Warner. At October 31, 1998, the Fund's
internet companies, specifically, America Online, Amazon, Yahoo and At Home,
were up as much as several hundred percent.
The TCW Galileo Large Cap Growth Fund seeks to purchase securities with above-
average, sustainable growth prospects with superior returns on equity. We buy
securities when we believe business prospects are not properly estimated by
consensus research. We strongly believe in the value of bottom-up fundamental
research, and the Fund is designed to capitalize on this expertise. Our
quantitative portfolio construction process supplements fundamental research
insight through risk control and optimization tools. The quantitative analysis
yields guidelines for portfolio security weighting and helps to eliminate
sources of inadvertent risk. A combination of fundamental and quantitative
analysis aids in generating consistency of returns.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
36.1% N/A N/A 30.3%
-----------------------------------------------
TCW S&P/BARRA GROWTH
----------------------------------------
<S> <C> <C>
INITIAL VALUE 250,000.00 250,000.00
1997 JUN 19-30 251,125.00 250,600.00
JUL 270,474.18 270,447.52
AUG 253,693.96 252,462.76
SEP 265,866.20 265,338.36
OCT 258,134.81 257,351.68
NOV 270,556.26 271,325.87
DEC 271,857.63 274,663.18
1998 JAN 277,998.90 283,891.86
FEB 297,422.68 303,622.35
MAR 311,356.93 319,319.62
APR 321,298.56 322,001.91
MAY 314,204.29 315,529.67
JUN 347,195.74 338,026.93
JUL 349,709.43 337,824.12
AUG 300,064.68 293,873.20
SEP 333,999.00 313,533.32
OCT 351,280.11 339,838.76
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Large Cap Growth Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
8
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
TCW GALILEO LARGE CAP VALUE FUND
- --------------------------------
The TCW Galileo Large Cap Value Fund achieved a return of 10.7% for the eleven-
month period beginning December 1, 1997. During this period, the Fund
outperformed the S&P/BARRA Value benchmark, which was up 7.6% over the same
period.
Over the past 12 months, the Fund gradually increased positions in semiconductor
and fast food restaurant stocks. The Fund benefited from strong performance in
fast-food restaurants (Tricon and McDonald's) and semiconductors (Applied
Materials, Texas Instruments, Motorola and Intel). Food-retailing stocks have
been undervalued and continue to perform well due to industry consolidation and
improving financial results. Large positions in food retailing stocks, (Fred
Meyer, Albertson's and Supervalu) also provided excellent investment returns.
Despite the strong recovery in the stock market averages since the low on
October 8, 1998; many sectors and stocks remain near their lows for the year.
Our valuation screening process shows many outstanding companies at very
attractive prices. We are gradually increasing our investments in transportation
(railroads, airlines) and energy (international oil, oil service) companies. As
we head into 1999 we are excited about the opportunities to build positions in
many out of favor sectors and companies.
The Large Cap Value Fund focuses on a company's return on invested capital. The
Fund selects undervalued stocks where the return on invested capital is
improving. Just as important to our stock section is valuation. Historical
relative valuation is one consideration. We look for stocks that are trading at
the lower end of their historical trading ranges as measured by price/cash flow,
price/book value and price/sales. Based on the normalized returns on invested
capital, we project a "fair value" for the company. If the stock sells at a
significant discount to that value, we may choose to buy the stock.
<TABLE>
<CAPTION>
-----------------
TOTAL RETURN(1)
SINCE INCEPTION
10.7%
----------------
TCW S&P/BARRA VALUE
----------------------------------------
<S> <C> <C>
INITIAL VALUE 250,000.00 250,000.00
1997 DEC 252,350.00 255,550.00
1998 JAN 252,753.76 252,406.74
FEB 267,696.56 271,337.24
MAR 279,293.18 285,094.04
APR 280,725.95 288,458.15
MAY 273,547.79 284,390.89
JUN 277,377.46 286,552.26
JUL 272,454.01 280,334.07
AUG 230,874.80 235,256.36
SEP 248,382.04 249,559.94
OCT 276,831.72 269,100.49
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Large Cap Value Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
9
<PAGE>
MANAGEMENT DISCUSSIONS (CONTINUED)
- ----------------------------------
TCW GALILEO MID-CAP GROWTH FUND
- -------------------------------
The TCW Galileo Mid Cap Growth Fund achieved a return of 20.7% for the fiscal
year ended October 31, 1998. The past year saw the fund enjoy strong out
performance with the S&P 400 benchmark up 6.7% over the same time period.
The Fund benefited from large positions in several emerging growth sectors.
These include the Internet where holdings such as Yahoo!, Amazon.com and At Home
all enjoyed triple digit gains over 1998. Also contributing to the strong
performance were media with Cablevision and TCA Cable both up substantially and
retail where successful positions included Best Buy and Bed, Bath & Beyond. Our
policy of under weighting or avoiding financials as well as most cyclical
industries allowed us to avoid some of the pitfalls associated with interest
rate movements and the macroeconomic cycle.
Looking forward, the Fund has increased its exposure to growth sectors of the
economy with particular emphasis on the Internet and communications. We believe
a fundamental long term shift is occurring on a global basis which is changing
the way people interact and transact with each other. To take advantage of this
transition, we are positioning the Fund by purchasing companies that are
providing key pieces of the developing technology and infrastructure as well as
those that provide a forum for people communicate in new ways. Our companies
should be able to continue their strong growth irrespective of the vicissitudes
of the greater economy.
The Fund seeks to invest in companies whose long term growth rate is not
adequately discounted in their stock price or whose earnings potential is
underestimated by Wall Street. We believe strongly that strong fundamental
research such as company visits and extensive financial modeling can uncover
investment ideas which fit our high growth profile. Our strategy is to own these
companies over a long period of time as long as they continue to prove their
ability to grow at above average rates. This is a time tested, albeit volatile
strategy, that has consistently rewarded long term investors with superior
capital appreciation.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
20.7% 15.7% N/A 24.1%
-----------------------------------------------
TCW S&P 400 MIDCAP
----------------------------------------
<S> <C> <C>
INTIAL VALUE 250,000.00 250,000.00
1994 NOV 243,427.50 238,727.09
DEC 256,049.22 240,916.61
1995 JAN 252,459.41 243,422.67
FEB 264,809.72 256,181.63
MAR 276,270.68 260,622.21
APR 274,480.45 265,854.17
MAY 278,207.90 272,273.22
JUNE 305,169.02 283,361.47
JUL 337,983.85 298,142.87
AUG 346,152.92 303,656.22
SEP 365,551.33 311,016.14
OCT 381,935.34 303,014.32
NOV 396,964.49 316,248.11
DEC 411,366.36 315,456.72
1996 JAN 417,578.00 320,037.99
FEB 429,909.07 330,888.82
MAR 451,959.11 334,854.56
APR 501,010.23 345,081.07
MAY 521,777.11 349,750.27
JUN 497,775.36 344,500.72
JUL 439,859.20 321,198.69
AUG 461,772.98 339,726.00
SEP 498,821.03 354,533.78
OCT 479,516.65 355,562.59
NOV 482,125.23 375,593.54
DEC 462,295.41 376,006.82
1997 JAN 477,426.34 390,107.08
FEB 420,550.54 390,107.08
MAR 369,937.29 373,488.52
APR 378,286.77 383,161.87
MAY 435,158.40 416,650.22
JUN 456,550.79 428,358.09
JUL 502,466.10 470,765.54
AUG 489,422.08 470,200.62
SEP 531,164.89 497,237.16
OCT 490,467.04 475,607.34
NOV 490,986.93 482,646.33
DEC 520,726.01 501,373.01
1998 JAN 509,769.94 491,846.92
FEB 562,469.95 532,571.84
MAR 603,687.75 556,590.83
APR 611,511.54 566,720.79
MAY 574,985.96 541,218.35
JUN 654,817.01 544,628.03
JUL 634,465.30 523,496.46
AUG 499,850.80 426,073.77
SEP 575,508.21 465,869.06
OCT 592,203.71 507,517.75
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Mid Cap Growth Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
10
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
TCW GALILEO SMALL CAP GROWTH FUND
- ---------------------------------
Performance for the Galileo Small Cap Growth Fund in the fiscal year ended
October 31, 1998 was disappointing. Although the Fund experienced a decline of
6.0% in the fiscal year, these results compare favorably with the 11.9% drop in
the Russell 2000 and the 15.9% fall in the Russell Growth Index over the same
period. After performing in line with the small cap benchmarks in the strong
first quarter of 1998 and outperforming in the weak second quarter, we were
unable to avoid the carnage in the small cap sector in July and August. Even
with a strong September the portfolio declined sharply in the third quarter. The
fiscal year ended with a 16% drop in the NASDAQ Composite in the first eight
days of October, followed by a 24% rebound between then and month's end.
The best performing industry groups for the fiscal year were consumer services,
information processing, leisure and retail. Groups that penalized performance in
the year included energy, electrical equipment, auto parts and financial
services. Technology performed better than many other industries. This is
surprising because it is usually one of the worst groups in market downturns.
Few areas were spared in the third quarter. The only industry groups in the fund
with positive performance in the quarter were consumer services and information
processing.
A number of exogenous forces led to intense selling pressure on small cap stocks
in August and again in the first week of October. Problems in the emerging
markets came to a head with the collapse of the Russian financial markets and
the repercussions rocked everything from Latin America to high yield and
mortgage-backed bonds. In September, mutual fund managers found themselves with
large capital gains realized earlier in the year, even though they faced
declines for the fiscal year ending in October. Tax loss selling to erase these
realized gains occurred and it coincided with the wave of selling caused by the
demise of a number of hedge funds. The rebound later in October and the strong
third quarter GDP report indicate that the unusual selling pressure occurred for
emotional rather than fundamental reasons.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
(6.0)% 10.4% 13.0% 16.0%
-----------------------------------------------
TCW RUSSELL 2000
------------------------------
<S> <C> <C>
INITIAL MONTH 250,000.00 250,000.00
1989 DEC 259,590.00 250,953.25
1990 JAN 243,599.26 229,046.57
FEB 250,081.43 236,148.51
MAR 258,336.62 245,405.42
APR 257,055.27 237,381.86
MAY 277,416.62 254,187.98
JUN 277,017.14 254,847.57
JULY 271,274.57 243,684.15
AUG 239,030.88 211,079.39
SEP 224,772.69 192,312.56
OCT 215,138.93 180,561.83
NOV 225,011.65 194,341.04
DEC 229,777.40 201,980.59
1991 JAN 246,797.01 220,178.18
FEB 270,699.30 244,881.36
MAR 290,205.90 262,048.90
APR 279,233.21 261,366.72
MAY 304,738.37 273,808.66
JUN 278,997.12 257,982.90
JULY 310,727.46 267,013.93
AUG 335,511.09 276,867.20
SEP 341,134.25 278,999.58
OCT 376,874.89 286,363.55
NOV 351,831.55 273,103.89
DEC 416,097.10 295,119.00
1992 JAN 436,219.56 319,031.57
FEB 432,167.08 328,338.18
MAR 394,002.40 317,224.46
APR 350,606.98 306,110.74
MAY 351,252.10 310,181.25
JUN 330,872.45 295,512.04
JULY 338,598.32 305,794.50
AUG 325,789.15 297,165.55
SEP 342,808.37 304,019.01
OCT 363,544.85 313,682.53
NOV 407,184.77 337,685.45
DEC 427,515.51 349,449.74
1993 JAN 425,292.43 361,277.26
FEB 379,037.62 352,932.94
MAR 396,617.39 364,385.49
APR 391,576.38 354,383.14
MAY 423,967.58 370,064.33
JUN 431,179.27 372,372.92
JULY 438,668.85 377,514.14
AUG 472,354.24 393,823.30
SEP 493,794.39 404,937.02
OCT 508,805.74 415,359.52
NOV 466,091.50 401,688.74
DEC 483,430.11 415,422.77
1994 JAN 504,846.06 428,447.51
FEB 493,941.38 426,897.92
MAR 454,426.07 404,358.75
APR 444,546.85 406,762.20
MAY 429,730.10 402,194.73
JUN 404,045.14 388,537.51
JULY 411,948.26 394,921.12
AUG 443,561.17 416,927.19
SEP 450,476.29 415,531.20
OCT 463,814.89 413,891.25
NOV 444,552.66 397,175.49
DEC 462,334.76 407,846.47
1995 JAN 443,563.97 402,700.72
FEB 473,695.27 419,452.63
MAR 509,260.31 426,676.55
APR 510,742.26 436,163.87
MAY 522,596.59 443,663.37
JUN 584,341.38 466,676.91
JULY 639,170.13 493,562.17
AUG 651,026.73 503,772.34
SEP 684,938.72 512,767.23
OCT 695,212.80 489,835.01
NOV 735,291.81 510,413.47
DEC 759,563.80 523,880.95
1996 JAN 760,611.99 523,320.74
FEB 797,881.98 539,629.90
MAR 861,919.99 550,612.61
APR 977,400.03 580,054.94
MAY 1,032,515.62 602,914.87
JUN 967,952.42 578,157.47
JUL 814,735.23 527,657.81
AUG 891,426.26 558,292.82
SEP 956,562.77 580,113.67
OCT 901,933.47 571,172.99
NOV 900,887.23 594,706.07
DEC 893,472.93 610,292.39
1997 JAN 901,898.38 622,498.24
FEB 789,161.08 607,433.78
MAR 707,506.58 578,762.91
APR 710,669.14 580,383.44
MAY 848,695.30 644,922.08
JUN 905,591.83 672,589.24
JUL 958,369.72 703,864.64
AUG 948,805.19 719,983.14
SEP 1,034,339.98 772,685.90
OCT 995,562.57 738,764.99
NOV 984,939.92 733,963.02
DEC 1,021,835.77 746,807.37
1998 JAN 1,012,782.31 735,007.82
FEB 1,098,220.62 789,324.89
MAR 1,173,470.70 821,845.08
APR 1,166,113.04 826,365.23
MAY 1,082,945.86 781,824.14
JUN 1,203,466.90 783,465.97
JUL 1,111,546.10 720,083.58
AUG 845,164.08 580,243.35
SEP 934,903.60 625,676.40
OCT 936,044.18 651,204.00
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Small Cap Growth Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
11
<PAGE>
MANAGEMENT DISCUSSIONS (CONTINUED)
- ----------------------------------
TCW GALILEO VALUE OPPORTUNITIES FUND
- ------------------------------------
Over the past twelve months the Fund held its own in our extremely volatile
environment. The Fund declined 7.5% for the period, bettering the Russell 2000
Index, which declined 11.9%, but lagging the Wilshire Midcap 750 Index, which
declined 3.9%.
The Fund is well diversified across many industries. The stock market weakness
of the August and September period afforded us the opportunity to buy some
quality growth stocks that had suffered short term earnings trauma and whose
prices declined to value levels. These companies include the likes of Warnaco,
General Nutrition, Jones Apparel and Mallinkrodt. The technology weighting in
our portfolio is somewhat higher than it has been historically. The reason for
this is the attractive valuations of these stocks, selling at price/earnings
multiples half their growth rates; technological leaders with clean balance
sheets and dominant market positions. Companies like KLA-Tencor, Read Rite and
International Rectifier. We continue to invest in these depressed stocks. This
sector has now turned as expected and the Fund is beginning to reap the rewards
of the positive momentum.
Our view is that the Fund is well positioned to provide superior returns over
the next market cycle.
<TABLE>
<CAPTION>
-----------------------------------------------
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEARS 5-YEARS SINCE INCEPTION
(7.5)% N/A N/A 8.3%
-----------------------------------------------
TCW WILSHIRE 750
-----------------------------
<S> <C> <C>
INITIAL VALUE 250,000.00 250,000.00
1996 NOV 269,110.00 263,350.00
DEC 271,314.01 263,297.33
1997 JAN 281,092.17 269,932.42
FEB 278,947.43 267,476.04
MAR 269,368.38 255,038.40
APR 271,332.08 260,113.67
MAY 296,601.23 282,509.45
JUN 309,307.63 292,905.80
JUL 329,505.42 312,911.27
AUG 336,497.52 314,726.15
SEP 346,030.50 333,137.63
OCT 316,967.39 318,013.18
NOV 313,480.75 319,953.06
DEC 317,650.05 326,768.06
1998 JAN 315,108.85 321,605.13
FEB 337,954.24 347,108.42
MAR 344,936.37 363,005.98
APR 348,744.47 367,942.86
MAY 332,876.60 351,532.61
JUN 313,836.06 354,309.72
JUL 288,760.55 331,740.19
AUG 237,361.18 269,572.08
SEP 247,828.80 286,878.61
OCT 293,206.26 305,583.09
</TABLE>
(1) Performance data includes the performance of the predecessor limited
partnership for periods before the TCW Galileo Value Opportunities Fund's
registration became effective. The predecessor limited partnership was not
registered under the Investment Company Act of 1940, as amended ("1940
Act"), and, therefore was not subject to certain investment restrictions
that are imposed by the 1940 Act. If the limited partnership had been
registered under the 1940 Act, the limited partnership's performance may
have been lower.
12
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO CONVERTIBLE SECURITIES FUND
October 31, 1998
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number of
Shares or Principal
Amount FIXED INCOME AND EQUITY SECURITIES Value
- ------------------ ---------------------------------- -------------
<S> <C> <C>
BASIC INDUSTRIES (4.8% OF NET ASSETS)
OIL & GAS (2.7%)
$ 430,000 Diamond Offshore Drilling, 3.75%, due 02/15/07 $ 437,525
$ 295,000 Swiss Life Finance, Ltd., Exchangeable Royal Dutch Petroleum Co.
(Netherlands), (144A), 2%, due 05/20/05 293,525 *
-------------
Total Oil &Gas 731,050
-------------
TRANSPORTATION (2.1%)
4,600 Laidlaw One, Inc., $1.222 Convertible Preferred 119,600
2,000 Union Pacific Capital Trust, $3.13 Convertible Preferred 92,500
8,200 Union Pacific Capital Trust, (144A), $3.13 Convertible Preferred 379,250 *
-------------
Total Transportation 591,350
-------------
TOTAL BASIC INDUSTRIES (Cost: $1,452,067) 1,322,400
-------------
CAPITAL GOODS (27.1%)
AEROSPACE & CONGLOMERATES (3.5%)
$ 335,000 Hexcel Corp., 7%, due 08/01/03 309,456
6,500 Loral Space and Communication, Ltd., $3.00 Convertible Preferred 347,750
$ 315,000 Morgan Stanley Group Inc., Exchangeable Boeing Co., 0%,
due 09/30/00 301,061
-------------
Total Aerospace & Conglomerates 958,267
-------------
ELECTRICAL EQUIPMENT (2.3%)
$ 90,000 AES Corp., 4.5%, due 08/15/05 86,625
$ 340,000 Comverse Technology, Inc., (144A), 4.5%, due 07/01/05 315,775 *
$ 310,000 SGS-Thompson Microelectronics, N.V. (Netherlands),
0%, due 06/10/08 236,375
-------------
Total Electrical Equipment 638,775
-------------
ELECTRONICS (3.9%)
$ 135,000 Adaptec, Inc., 4.75%, due 02/01/04 104,456
$ 185,000 Adaptec, Inc., (144A), 4.75%, due 02/01/04 143,144 *
$ 310,000 Analog Devices, Inc., 3.5%, due 12/01/00 328,600
11,925 Morgan Stanley Group, Inc., Exchangeable Applied Materials, Inc.,
$3.00 Convertible Preferred 417,375
$ 160,000 Premiere Technologies, Inc., (144A), 5.75%, due 07/01/04 84,800 *
-------------
Total Electronics 1,078,375
-------------
</TABLE>
* Restricted Security. (See Note 6)
See accompanying Notes to Financial Statements.
13
<PAGE>
TCW GALILEO CONVERTIBLE SECURITIES FUND
October 31, 1998
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares or Principal
Amount FIXED INCOME AND EQUITY SECURITIES Value
- ------------------ ---------------------------------- -------------
<S> <C> <C>
INFORMATION PROCESSING (6.8%)
$ 330,000 Merrill Lynch & Company, Inc., Exchangeable Technology
Basket, (144A), 0%, due 02/02/05 $ 367,125 *
$ 180,000 Morgan Stanley Group, Inc., Exchangeable Cisco Systems, Inc.,
0%, due 07/29/05 172,382
2,100 Morgan Stanley Group, Inc., Exchangeable Cisco Systems, Inc.,
$4.00 Convertible Preferred 188,126
$ 350,000 Network Associates, Inc., 0%, due 02/13/18 151,375
$ 665,000 Network Associates, Inc., (144A), 0%, due 02/13/18 287,613 *
$ 45,000 QuadraMed Corp., 5.25%, due 05/01/05 38,138
$ 250,000 QuadraMed Corp., (144A), 5.25%, due 05/01/05 206,195 *
$ 445,000 Safeguard Scientifics, Inc., (144A), 6%, due 02/01/06 449,450 *
-------------
Total Information Processing 1,860,404
-------------
MACHINERY/INFRASTRUCTURE (1.4%)
9,800 United Rentals, Inc., (144A), $3.25 Convertible Preferred 383,425 *
-------------
OFFICE EQUIPMENT & SUPPLIES (1.1%)
$ 265,000 Xerox Corp., 2.875%, due 07/01/02 305,744
-------------
POLLUTION CONTROL (3.4%)
$ 240,000 United States Filter Corp., 4.5%, due 12/15/01 223,800
$ 600,000 USA Waste Systems, Inc., 4%, due 02/01/02 697,500
-------------
Total Pollution Control 921,300
-------------
TELECOMMUNICATION EQUIPMENT (4.7%)
$ 520,000 Bell Atlantic Financial Services, (144A), 4.25%, due 09/15/05 515,611 *
$ 435,000 Level One Communications, Inc., 4%, due 09/01/04 496,988
5,000 MediaOne Group, Inc., Exchangeable AirTouch Communications, Inc.,
$3.633 Convertible Preferred 269,375
-------------
Total Telecommunication Equipment 1,281,974
-------------
TOTAL CAPITAL GOODS (Cost: $7,662,348) 7,428,264
-------------
CONSUMER CYCLICALS (2.2%)
AUTOMOTIVE (2.2%)
$ 45,000 Magna International, Inc., 4.875%, due 02/15/05 46,013
$ 250,000 Magna International, Inc., (144A), 4.875%, due 02/15/05 255,625 *
$ 40,000 Tower Automotive, Inc., 5%, due 08/01/04 41,000
$ 240,000 Tower Automotive, Inc., (144A), 5%, due 08/01/04 249,900 *
-------------
TOTAL CONSUMER CYCLICALS (Cost : $575,192) 592,538
-------------
</TABLE>
* Restricted Security. (See Note 6)
See accompanying Notes to Financial Statements.
14
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number of
Shares or Principal
Amount FIXED INCOME AND EQUITY SECURITIES Value
- ------------------ ---------------------------------- --------------
<S> <C> <C>
CONSUMER STAPLES (55.5%)
DRUGS & HOSPITAL SUPPLY (4.8%)
$ 130,000 Centocor, Inc., 4.75%, due 02/15/05 $ 139,263
$ 185,000 Centocor, Inc., (144A), 4.75%, due 02/15/05 198,181 *
$ 400,000 Dura Pharmaceuticals, Inc., 3.5%, due 07/15/02 284,000
$ 65,000 Sepracor, Inc., 6.25%, due 02/15/05 103,919
$ 370,000 Sepracor, Inc., (144A), 6.25%, due 02/15/05 591,538 *
-------------
Total Drugs & Hospital Supply 1,316,901
-------------
ENtERTAINMENT, LEISURE & MEDIA (18.7%)
$ 1,405,000 Clear Channel Communications, 5.625%, due 04/01/03 1,373,388
20,500 Houston Industries, Inc., Exchangeable Time Warner, Inc.,
$3.215 Convertible Preferred 1,661,781
5,600 MediaOne Group, Inc., $2.25 Convertible Preferred 486,150
10,300 Merrill Lynch & Company, Inc., Exchangeable Cox
Communications, Inc., $1.3725 Convertible Preferred 464,787
$ 480,000 News America Holdings, Inc., Exchangeable News Corp. (Australia),
0%, due 03/11/13 273,600
13,500 Readers Digest Association, $1.93 Convertible Preferred 308,812
$ 235,000 Speedway Motorsports, Inc., 5.75%, due 09/30/03 224,425
$ 300,000 Tele-Communications International, Inc., 4.5%, due 02/15/06 312,375
-------------
Total Entertainment, Leisure & Media 5,105,318
-------------
FOODS, HOTELS & RESTAURANTS (2.1%)
9,000 Host Marriott Financial Trust, $3.375 Convertible Preferred 376,317
900 Suiza Capital Trust, $2.75 Convertible Preferred 29,797
5,300 Suiza Capital Trust, (144A), $2.75 Convertible Preferred 175,472 *
-------------
Total Foods, Hotels & Restaurants 581,586
-------------
HEALTHCARE (16.9%)
$ 555,000 Alternative Living, 5.25%, due 12/15/02 579,975
$ 55,000 Assisted Living Concepts, Inc., 5.625%, due 05/01/03 42,900
$ 305,000 Assisted Living Concepts, Inc., (144A), 5.625%, due 05/01/03 226,844 *
$ 295,000 Assisted Living Concepts, Inc., 6%, due 11/01/02 240,425
$ 120,000 Athena Neurosciences, Inc., 4.75%, due 11/15/04 145,800
$ 665,000 Athena Neurosciences, Inc., (144A), 4.75%, due 11/15/04 807,975 *
$ 95,000 Concentra Managed Care, Inc., 4.5%, due 03/15/03 68,994
$ 525,000 Concentra Managed Care, Inc., (144A), 4.5%, due 03/15/03 381,281 *
6,500 Laboratory Corp. of America, $4.25 Convertible Preferred 299,000
$ 425,000 Omnicare, Inc., 5%, due 12/01/07 459,000
$ 235,000 Omnicare, Inc., (144A), 5%, due 12/01/07 253,800 *
$ 595,000 Quintiles Transnational Corp., (144AI, Reg D), 4.25%, due 05/31/0 725,900 *
$ 185,000 Sunrise Assisted Living, Inc., 5.5%, due 06/15/02 228,012
$ 145,000 Sunrise Assisted Living, Inc., (144A), 5.5%, due 06/15/02 178,712 *
-------------
Total Healthcare 4,638,618
-------------
</TABLE>
*Restricted Security. (See Note 6)
See accompanying Notes to Financial Statements.
15
<PAGE>
TCW Galileo Convertible Securities Fund
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares or Principal
Amount FIXED INCOME AND EQUITY SECURITIES Value
- ------------------ ---------------------------------- --------------
<S> <C> <C>
RETAIL (8.0%)
$ 25,000 Action Performance Companies, Inc., 4.75%, due 04/01/05 $ 21,185
$ 145,000 Action Performance Companies, Inc., (144A), 4.75%, due 04/01/05 122,873 *
$ 145,000 Costco Companies, Inc., 0%, due 08/19/17 102,406
$ 810,000 Costco Companies, Inc., (144A), 0%, due 08/19/17 572,063 *
11,100 Dollar General Corp., $3.3524 Convertible Preferred 369,769
7,400 Kmart Corp., $3.875 Convertible Preferred 410,238
$ 70,000 Rite Aid Corp., 5.25%, due 09/15/02 88,725
$ 390,000 Rite Aid Corp., (144A), 5.25%, due 09/15/02 494,325 *
-------------
Total Retail 2,181,584
-------------
SERVICES - BUSINESS (5.0%)
3,500 Cendant Corp., $3.43 Convertible Preferred 68,469
24,300 Cendant Corp., $3.75 Convertible Preferred 602,944
$ 295,000 Interim Services, Inc., 4.5%, due 06/01/05 251,856
$ 315,000 Metamor Worldwide, 2.94%, due 08/15/04 254,756
7,000 Vanstar Financial Trust Corp., $3.375 Convertible Preferred 196,777
-------------
Total Services - Business 1,374,802
-------------
TOTAL CONSUMER STAPLES (Cost: $14,444,635) 15,198,809
-------------
CREDIT SENSITIVE (9.6%)
INSURANCE (1.7%)
$ 305,000 American International Group, 2.25%, due 07/30/04 372,673
9,300 Philadelphia Consolidated, $0.70 Convertible Preferred 95,325
-------------
Total Insurance 467,998
-------------
FINANCIAL SERVICES (7.9%)
$ 745,000 Berkshire Hathaway, Inc., 1%, due 12/02/01 1,083,044
10,300 CNB Bankshares, Inc., $1.50 Convertible Preferred 265,225
9,900 National Australia Bank, $1.96875 Convertible Preferred 261,731
$ 360,000 Security Capital Group, Inc., 2%, due 05/22/03 270,900
9,600 Westpac Banking Corp., Ltd., $3.135 Convertible Preferred 275,400
-------------
Total Financial Services 2,156,300
-------------
TOTAL CREDIT SENSITIVE (Cost: $2,449,074) 2,624,298
-------------
TOTAL FIXED INCOME AND EQUITY SECURITIES
(COST: $26,583,316) (99.2%) 27,166,309
-------------
</TABLE>
*Restricted Security. (See Note 6)
See accompanying Notes to Financial Statements.
16
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT (COST: $157,315) (0.6%) Value
- ------------ --------------------------------------------- -------------
<S> <C> <C>
$ 157,315 Bank of New York Depository Reserve, 4%, due 11/02/98 $ 157,315
-------------
TOTAL INVESTMENTS (COST: $26,740,631) (99.8%) 27,323,624
EXCESS OF OTHER ASSETS OVER LIABILITIES (0.2%) 64,392
-------------
NET ASSETS (100%) $ 27,388,016
=============
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE>
TCW GALILEO CORE EQUITIES FUND
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
--------------- ----------------- -------------
<S> <C> <C>
BASIC INDUSTRIES (7.8% OF NET ASSETS)
CHEMICALS (3.1%)
139,900 Monsanto Co. $ 5,683,438
-------------
ENERGY & OIL SERVICES (2.4%)
84,400 Enron Corp. 4,452,100
-------------
TRANSPORTATION (2.3%)
41,200 Delta Air Lines, Inc. 4,349,175
-------------
TOTAL BASIC INDUSTRIES (Cost: $15,337,710) 14,484,713
-------------
CAPITAL GOODS (36.9%)
AEROSPACE (1.6%)
80,200 Boeing Co. 3,007,500
-------------
ELECTRONICS, SEMICONDUCTORS & INSTRUMENTS (8.8%)
238,900 Applied Materials, Inc. 8,286,844 **
89,900 Intel Corp. 8,017,956
-------------
Total Electronics, Semiconductors & Instruments 16,304,800
-------------
INFORMATION PROCESSING (14.8%)
98,600 Computer Sciences Corp. 5,201,150 **
213,600 Dell Computer Corp. 14,017,500 **
76,100 Microsoft Corp. 8,057,088 **
-------------
Total Information Processing 27,275,738
-------------
SERVICES (3.9%)
150,000 Pixar, Inc. 7,125,000 **
-------------
TELECOMMUNICATIONS EQUIPMENT (7.8%)
170,025 Cisco Systems, Inc. 10,711,575 **
47,200 Lucent Technologies, Inc. 3,784,850
-------------
Total Telecommunications Equipment 14,496,425
-------------
TOTAL CAPITAL GOODS (Cost: $43,658,484) 68,209,463
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
18
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
-------------- ----------------- -------------
<S> <C>
CONSUMER STAPLES (37.9%)
COSMETICS & HOUSEHOLD PRODUCTS (3.1%)
63,700 Procter & Gamble Co. $ 5,661,337
-------------
FOODS, HOTELS, &RESTAURANTS (11.7%)
20,700 Coca-Cola Co. 1,399,837
643,100 Mirage Resorts, Inc. 10,892,506 **
291,000 Sodexho Marriott Services, Inc. 9,384,750 **
-------------
Total Foods, Hotels, &Restaurants 21,677,093
-------------
HEALTHCARE (6.1%)
41,600 Pfizer, Inc. 4,464,200
86,100 Warner-Lambert Co. 6,748,088
-------------
Total Healthcare 11,212,288
-------------
LEISURE, ENTERTAINMENT, PHOTO &MEDIA (5.4%)
81,200 Cox Communications, Inc. 4,455,850 **
60,400 Time Warner, Inc. 5,605,875
-------------
Total Leisure, Entertainment, Photo & Media 10,061,725
-------------
RETAIL (9.9%)
67,500 Fred Meyer, Inc. 3,598,594 **
193,898 Home Depot, Inc. 8,434,563
43,600 Nike, Inc. 1,904,775
89,700 Tandy Corp. 4,445,756
-------------
Total Retail 18,383,688
-------------
SERVICES - BUSINESS (1.7%)
76,000 Robert Half International, Inc. 3,049,500 **
-------------
TOTAL CONSUMER STAPLES (Cost: $58,515,959) 70,045,631
-------------
CREDIT SENSITIVE (15.6%)
FINANCIAL SERVICES (12.2%)
50,200 Associates First Capital Corp., Class A 3,539,100
161,500 Charles Schwab Corp. 7,741,906
53,200 Merrill Lynch & Company, Inc. 3,152,100
227,300 T. Rowe Price Associates, Inc. 8,083,356
-------------
Total Financial Services 22,516,462
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
19
<PAGE>
TCW GALILEO CORE EQUITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- ---------------- ----------------- --------------
<S> <C> <C>
INSURANCE (3.4%)
43,100 Progressive Corp. $ 6,346,475
--------------
TOTAL CREDIT SENSITIVE (Cost: $22,886,855) 28,862,937
--------------
TOTAL EQUITY SECURITIES (COST: $140,399,008) (98.2%) 181,602,744
--------------
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT (COST: $3,406,801) (1.9%)
- ---------------- -----------------------------------------------
<S> <C> <C>
$ 3,406,801 Bank of New York Depository Reserve, 4%, due 11/02/98 3,406,801
--------------
TOTAL INVESTMENTS (COST:$143,805,809) (100.1%) 185,009,545
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.1%) (144,711)
--------------
NET ASSETS (100.0%) $ 184,864,834
==============
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO EARNINGS MOMENTUM FUND
October 31, 1998
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ------------------ --------------
<S> <C> <C>
CAPITAL GOODS (30.2% OF NET ASSETS)
COMPUTER SOFTWARE & SERVICES (8.9%)
32,200 Ciber, Inc. $ 631,925 **
28,200 Legato Systems, Inc. 1,103,325 **
8,000 New Era of Networks, Inc. 394,000 **
6,500 VeriSign, Inc. 199,469 **
35,000 Xylan Corp. 560,000
-------------
Total Computer Software & Services 2,888,719
-------------
CONSTRUCTION MATERIAL (1.2%)
43,000 Dal-Tile International, Inc. 384,313 **
-------------
ELECTRONICS (4.6%)
65,800 Anicom, Inc. 588,087 **
31,300 Bolder Technologies Corp. 313,000 **
15,500 Concord Communications, Inc. 575,437 **
-------------
Total Electronics 1,476,524
-------------
INFORMATION PROCESSING (10.8%)
28,250 Citrix Systems, Inc. 2,002,219 **
1,800 Microstrategy, Inc. 43,875 **
12,000 National Computer Systems, Inc. 336,000
40,200 Saville Systems, PLC (ADR) (Ireland) 678,375 **
10,000 Wind River Systems, Inc. 438,125 **
-------------
Total Information Processing 3,498,594
-------------
OFFICE EQUIPMENT & SUPPLIES (1.8%)
39,500 Daisytek International Corp. 594,969 **
-------------
POLLUTION CONTROL (2.9%)
45,625 Tetra Tech, Inc. 926,758 **
-------------
TOTAL CAPITAL GOODS (Cost: $7,014,225) 9,769,877
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
21
<PAGE>
TCW GALILEO EARNINGS MOMENTUM FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ------------------- --------------
<S> <C> <C>
CONSUMER STAPLES (59.2%)
DRUGS & HOSPITAL SUPPLY (2.9%)
44,000 BioChem Pharma, Inc. (Canada) $ 954,250 **
-------------
FOODS, HOTELS & RESTAURANTS (3.5%)
52,200 O'Charley's, Inc. 626,400 **
17,900 United Natural Foods, Inc. 498,963 **
-------------
Total Foods, Hotels & Restaurants 1,125,363
-------------
HEALTHCARE (9.9%)
14,000 Barr Laboratories, Inc. 478,625 **
10,800 Gilead Sciences, Inc. 306,450 **
24,900 K-V Pharmaceutical Co. 563,363 **
32,600 Ocular Sciences, Inc. 819,075 **
42,533 Total Renal Care Holdings, Inc. 1,042,059 **
-------------
Total Healthcare 3,209,572
-------------
LEISURE, ENTERTAINMENT, PHOTO & MEDIA (11.3%)
43,900 Gemstar International Group, Ltd. 2,398,038 **
27,600 Macrovision Corp. 853,875 **
10,700 Metro Networks, Inc. 391,888 **
-------------
Total Leisure, Entertainment, Photo & Media 3,643,801
-------------
RETAIL (10.5%)
34,900 Guitar Center, Inc. 597,662 **
55,150 Just for Feet, Inc. 934,103 **
55,100 Marks Brothers Jewelers, Inc. 633,650 **
21,000 St. John Knits, Inc. 423,937
26,000 Trans World Entertainment Corp. 536,250 **
12,700 Travel Services International, Inc. 257,175 **
-------------
Total Retail 3,382,777
-------------
SERVICES - BUSINESS (21.1%)
20,100 Administaff, Inc. 659,531 **
29,600 CSG Systems International, Inc. 1,613,200 **
1,800 Forrester Research, Inc. 58,050 **
12,900 Information Holdings, Inc. 132,225 **
27,500 MAXIMUS, Inc. 797,500 **
16,400 Nova Corp. 473,550 **
52,500 Pegasus Systems, Inc. 912,187 **
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
22
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
--------- ----------------- -------------
<S> <C> <C>
SERVICES - BUSINESS (CONTINUED)
43,500 Stericycle, Inc. $ 842,812 **
30,500 USWeb Corp. 438,437 **
36,100 Wilmar Industries, Inc. 893,475 **
-------------
Total Services - Business 6,820,967
-------------
TOTAL CONSUMER STAPLES (Cost: $13,241,245) 19,136,730
-------------
CREDIT SENSITIVE (4.1%)
BANKS & FINANCIAL SERVICES (4.1%)
20,500 Profit Recovery Group International, Inc. 629,094 **
31,700 Trammell Crow Co. 685,512 **
-------------
TOTAL CREDIT SENSITIVE (Cost: $1,217,838) 1,314,606
-------------
TOTAL EQUITY SECURITIES (COST: $21,473,308) (93.5%) 30,221,213
-------------
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT (COST: $2,154,064) (6.7%)
--------- -----------------------------------------------
<S> <C> <C>
$ 2,154,064 Bank of New York Depository Reserve, 4%, due 11/02/98 2,154,064
-------------
TOTAL INVESTMENTS (COST: $23,627,372) (100.2%) 32,375,277
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.2%) (76,253)
-------------
NET ASSETS (100.0%) $ 32,299,024
=============
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements
23
<PAGE>
TCW GALILEO ENHANCED 500 FUND
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- --------------- ----------------- ---------------
<S> <C> <C>
BASIC INDUSTRIES (12.0% OF NET ASSETS)
CHEMICALS (1.6%)
5,700 Du Pont (E.I.) de Nemours &Co. $ 327,750
2,350 Minnesota Mining & Manufacturing Co. 188,000
5,800 Monsanto Co. 235,625 **
250 Praxair, Inc. 10,063
2,000 Sigma-Aldrich Corp. 61,812
---------------
Total Chemicals 823,250
---------------
CONTAINERS &PACKAGING (0.2%)
3,400 Owens-Illinois, Inc. 103,912 **
---------------
ENERGY & OIL SERVICES (9.6%)
300 Amerada Hess Corp. 16,575
6,200 Amoco Corp. 347,975
800 Anadarko Petroleum Corp. 27,100
2,200 Atlantic Richfield Co. 151,525
4,250 Chevron Corp. 346,375
4,000 Coastal Corp. 141,000
1,900 Columbia Energy Group 109,962
2,350 Enron Corp. 123,962
300 Entergy Corp. 8,625
18,600 Exxon Corp. 1,325,250
2,900 Halliburton Co. 104,219
1,100 Helmerich & Payne, Inc. 26,194
200 Kerr-McGee Corp. 7,975
6,500 Mobil Corp. 491,969
1,100 Nicor, Inc. 46,613
3,900 Occidental Petroleum Corp. 77,513
700 ONEOK, Inc. 23,975
2,100 Oryx Energy Co. 29,400 **
800 People's Energy Corp. 29,500
1,200 Phillips Petroleum Co. 51,900
200 PP & L Resources, Inc. 5,425
2,000 Rowan Companies, Inc. 29,125 **
13,800 Royal Dutch Petroleum Co. (Netherlands) 679,650
3,700 Schlumberger, Ltd. (Netherlands) 194,250
900 Sonat, Inc. 27,281
5,000 Texaco, Inc. 296,563
5,400 USX-Marathon Group 176,513
---------------
Total Energy & Oil Services 4,896,414
---------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
24
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- -------------- ----------------- ----------------
<S> <C> <C>
METALS (0.1%)
600 Crane Co. $ 17,288
400 Eastern Enterprises 16,425
100 Nacco Industries, Inc., Class A 9,200
----------------
Total Metals 42,913
----------------
PAPER & FOREST PRODUCTS (0.2%)
300 Ball Corp. 12,656
500 Fort James Corp. 20,156
1,400 Georgia-Pacific Corp. 72,450
500 Willamette Industries, Inc. 15,500
----------------
Total Paper & Forest Products 120,762
----------------
TRANSPORTATION (0.3%)
600 AMR Corp. 40,200 **
900 Burlington Northern Santa Fe Corp. 27,787
300 Laidlaw, Inc. 2,831
900 US Airways Group, Inc. 50,906 **
----------------
Total Transportation 121,724
----------------
TOTAL BASIC INDUSTRIES (Cost: $6,361,336) 6,108,975
----------------
CAPITAL GOODS (25.2%)
AEROSPACE/DEFENSE (1.2%)
1,400 AlliedSignal, Inc. 54,512
2,716 Boeing Co. 101,850
1,250 Lockheed Martin Corp. 139,219
500 Northrop Grumman Corp. 39,875
1,500 Textron, Inc. 111,563
1,800 United Technologies Corp. 171,450
----------------
Total Aerospace/Defense 618,469
----------------
ELECTRICAL EQUIPMENT (3.8%)
20,100 General Electric Co. 1,758,750
3,600 General Instrument Corp. 92,475 **
300 Harris Corp. 10,519
800 Honeywell, Inc. 63,900
----------------
Total Electrical Equipment 1,925,644
----------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
25
<PAGE>
TCW GALILEO ENHANCED 500 FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- --------------- ----------------- ---------------
<S> <C> <C>
ELECTRONICS (2.8%)
1,000 EG&G, Inc. $ 25,125
2,600 Gannett Co. 160,875
10,400 Intel Corp. 927,550 **
2,000 Johnson Controls, Inc. 112,500
2,000 Tellabs, Inc. 110,000 **
1,400 Texas Instruments, Inc. 89,513 **
----------------
Total Electronics 1,425,563
----------------
INFORMATION PROCESSING (10.2%)
2,300 Automatic Data Processing, Inc. 178,969
10,800 Compaq Computer Corp. 341,550 **
1,900 Computer Associates International, Inc. 74,812 **
600 Computer Sciences Corp. 31,650 **
11,100 Dell Computer Corp. 728,438 **
2,300 Gateway 2000, Inc. 128,369 **
5,700 HBO & Co. 149,625 **
4,050 Hewlett-Packard Co. 243,759
5,600 International Business Machines Corp. 831,250
16,400 Microsoft Corp. 1,736,350 **
3,750 Oracle Corp. 110,859 **
2,500 Pitney Bowes, Inc. 137,656
3,400 Sun Microsystems, Inc. 198,050 **
2,700 Unisys Corp. 71,887 **
2,300 Xerox Corp. 222,813
----------------
Total Information Processing 5,186,037
----------------
MACHINERY (DIVERSIFIED) (1.3%)
1,500 Caterpillar, Inc. 67,500
2,800 Dover Corp. 88,900
200 Eaton Corp. 13,538
1,200 Illinois Tool Works, Inc. 76,950
775 Snap-On, Inc. 27,464
6,300 Tyco International, Ltd. 390,206 **
----------------
Total Machinery (Diversified) 664,558
----------------
OFFICE EQUIPMENT & SUPPLIES (0.7%)
2,500 Avery Dennison Corp. 103,594
3,600 EMC Corp. (MA) 231,750 **
----------------
Total Office Equipment & Supplies 335,344
----------------
POLLUTION CONTROL (0.1%)
2,200 Ecolab, Inc. 65,725
----------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
26
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- ------------- ------------------ --------------
<S> <C> <C>
TELECOMMUNICATIONS (5.1%)
1,500 AirTouch Communications, Inc. $ 84,000 **
11,700 Cisco Systems, Inc. 737,100 **
11,282 Lucent Technologies, Inc. 904,675 **
12,268 MCI Worldcom, Inc. 677,807 **
800 Northern Telecom, Ltd. (Canada) 34,250
3,187 U.S. West Inc. 182,854 **
--------------
Total Telecommunications 2,620,686
--------------
TOTAL CAPITAL GOODS (Cost: $10,011,094) 12,842,026
--------------
CONSUMER CYCLICALS (2.7%)
AUTOMOBILES & AUTO PARTS (2.5%)
6,900 Chrysler Corp. 332,062
9,800 Ford Motor Co. 531,650
5,700 General Motors Corp. 359,456
800 Timken Co. 14,250
--------------
Total Automobiles & Auto Parts 1,237,418
--------------
HOUSEHOLD FURNITURE & EQUIPMENT (0.1%)
1,200 Black & Decker Corp. 62,025
--------------
PHOTOGRAPHY (0.1%)
700 Eastman Kodak Co. 54,250
--------------
TOTAL CONSUMER CYCLICALS (Cost: $1,211,643) 1,353,693
--------------
CONSUMER STAPLES (34.2%)
BEVERAGES, DISTRIBUTIONS & RESTAURANTS (3.5%)
800 Adolph Coors Co., Class B 40,000
1,600 Anheuser-Busch Co. 95,100
12,900 Coca-Cola Co. 872,363
900 Brown Forman Corp., Class B 61,144
800 Darden Restaurants, Inc. 13,200 **
3,550 McDonald's Corp. 237,406 **
9,650 PepsiCo, Inc. 325,688
200 Seagram Co., Ltd. (Canada) 6,575
2,725 Tricon Global Restaurants, Inc. 118,537 **
--------------
Total Beverages, Distributions & Restaurants 1,770,013
--------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
27
<PAGE>
TCW GALILEO ENHANCED 500 FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- -------------- ------------------ --------------
<S> <C> <C>
FOODS, TOBACCOS AND HOTELS (3.4%)
1,900 Bestfoods $ 103,550
2,700 Campbell Soup Co. 143,944
2,100 Hershey Foods Corp. 142,406
2,000 H.J. Heinz Co. 116,250
16,250 Philip Morris Companies, Inc. 830,781
4,300 Pioneer Hi-Bred International, Inc. 120,400
1,900 Quaker Oats Co. 112,219
1,800 Sara Lee Corp. 107,438
900 William Wrigley, Jr. Co. 72,844
--------------
Total Foods, Tobaccos and Hotels 1,749,832
--------------
HEALTHCARE (14.3%)
8,700 Abbott Laboratories 408,356
600 Allergan, Inc. 37,462
7,400 American Home Products Corp. 360,750
450 Amgen, Inc. 35,353 **
3,400 Becton, Dickson & Co. 143,225
2,000 Biomet, Inc. 67,875 **
1,100 Boston Scientific Corp. 59,881 **
7,200 Bristol-Myers Squibb Co. 796,050
1,100 Cardinal Health, Inc. 104,018 **
8,500 Eli Lilly & Co. 687,969
3,200 Guidant Corp. 244,800 **
7,250 Johnson & Johnson 590,875
3,700 Medtronic, Inc. 240,500 **
6,850 Merck & Co., Inc. 926,463
10,800 Pfizer, Inc. 1,158,975
1,700 Pharmacia & Upjohn, Inc. 89,994
6,000 Schering-Plough Corp. 617,250
8,700 Warner-Lambert Co. 681,863
--------------
Total Healthcare 7,251,659
--------------
HOUSEHOLD PRODUCTS (3.1%)
700 Alberto-Culver, Class B 18,594
2,200 Avon Products, Inc. 87,312
1,300 Clorox Co. 142,025
2,000 Fortune Brands, Inc. 66,125
5,400 Gillette Co. 242,662
2,900 Kimberly-Clark Corp. 139,925
7,300 Procter & Gamble Co. 648,788
3,200 Unilever N.V. (Netherlands) 240,800
--------------
Total Household Products 1,586,231
--------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
28
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- ------------- ------------------ --------------
<S> <C> <C>
LEISURE, ENTERTAINMENT, PHOTO & MEDIA (2.7%)
500 American Greetings, Class A $ 20,062
300 CBS, Inc. 8,381 **
5,900 Clear Channel Communications, Inc. 268,819 **
1,700 Comcast Corp., Special Class A 83,937 **
900 Interpublic Group of Companies, Inc. 52,650
400 King World Productions, Inc. 10,500 **
1,900 McGraw-Hill Companies, Inc. 170,881
4,100 MediaOne Group, Inc. 173,481
900 Meredith Corp. 33,300
2,600 New York Times Co., Class A 73,450
2,200 Tele-Communications, Inc. 92,675 **
1,500 The Times Mirror Co., Class A 83,156
1,400 Time Warner, Inc. 129,937 **
1,100 Tribune Co. 63,387
4,100 Walt Disney Co. 110,444
--------------
Total Leisure, Entertainment, Photo & Media 1,375,060
--------------
RETAIL (4.8%)
2,000 Consolidated Stores Corp. 32,875 **
3,300 Costco Companies, Inc. 187,275 **
3,800 Dayton Hudson Corp. 161,025
200 Deluxe Corp. 6,475
800 Dillard's, Inc., Class A 24,850 **
5,175 Gap, Inc. 311,147 **
3,100 Hasbro, Inc. 108,694
7,800 Home Depot, Inc. 339,300 **
550 J.C. Penney Company, Inc. 26,125
1,400 Lowe's Co. 47,163 **
800 May Department Stores Co. 48,800
2,300 Service Corp. International 81,937
800 Tandy Corp. 39,650
7,400 TJX Companies, Inc. 140,137
1,100 VF Corp. 45,994
12,300 Wal-Mart Stores, Inc. 848,700 **
--------------
Total Retail 2,450,147
--------------
RETAIL - FOOD & DRUG (2.2%)
1,050 Albertson's, Inc. 58,341
5,300 American Stores Co. 172,581
3,900 CVS Corp. 178,181 **
5,600 Kroger Co. 310,800 **
900 Longs Drugs Stores Corp. 35,156
2,600 Rite Aid Corp. 103,187
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
29
<PAGE>
TCW GALILEO ENHANCED 500 FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- -------------- ------------------ ---------------
<S> <C> <C>
RETAIL - FOOD & DRUG (CONTINUED)
1,800 Sysco Corp. $ 48,487
4,000 Walgreen Co. 194,750 **
700 Winn-Dixie Stores, Inc. 23,756
--------------
Total Retail - Food & Drug 1,125,239
--------------
SERVICES - BUSINESS (0.2%)
2,200 Omnicom Group, Inc. 108,763
--------------
TOTAL CONSUMER STAPLES (Cost: $14,370,804) 17,416,944
--------------
CREDIT SENSITIVE (25.8%)
BANKS & FINANCIAL SERVICES (12.5%)
1,700 American Express Co. 150,237
1,913 Associates First Capital Corp., Class A 134,866
3,785 Banc One Corp. 184,992
5,600 Bank of New York Company, Inc. 176,750
9,506 BankAmerica Corp. 546,001
1,600 BankBoston Corp. 58,900
4,400 BB & T Corp. 157,025
500 Charles Schwab Corp. 23,969 **
6,200 Chase Manhattan Corp. 352,237
3,900 Cincinnati Financial Corp. 145,519
12,301 Citigroup, Inc. 578,916
1,800 Comerica, Inc. 116,100
1,500 Countrywide Credit Industries, Inc. 64,781
1,000 Equifax, Inc. 38,687
6,200 Federal Home Loan Mortgage Corp. 356,500
7,150 Federal National Mortgage Association 506,309
2,325 Fifth Third Bancorp 154,031
4,162 First Union Corp. 241,396
700 Fleet Financial Group, Inc. 27,956
100 Franklin Resources, Inc. 3,781 **
300 Golden West Financial Corp. 27,206
1,706 Household International, Inc. 62,376
1,870 Huntington Bancshares, Inc. 53,762
550 J.P. Morgan & Company, Inc. 51,837
2,700 KeyCorp 81,844
1,650 MBNA Corp. 37,641
2,400 Mellon Bank Corp. 144,300
1,800 Merrill Lynch & Company, Inc. 106,650
1,902 Morgan Stanley Dean Witter & Co. 123,155
1,250 National City Corp. 80,391
2,600 Northern Trust Corp. 191,750
4,000 Norwest Corp. 148,750
2,050 PNC Bank Corp. 102,500
</TABLE>
** Non-income producing
See accompanying Notes to Financial Statements.
30
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- -------------- ------------------ --------------
<S> <C> <C>
BANKS & FINANCIAL SERVICES (CONTINUED)
2,100 Providian Financial Corp. $ 166,688 **
1,400 Republic New York Corp. 58,537
1,500 State Street Corp. 93,563
1,600 Summit Bancorp. 60,700
2,900 Synovus Financial Corp. 67,244
750 Transamerica Corp. 78,000
5,518 US Bancorp 201,407
650 Wachovia Corp. 59,069
4,386 Washington Mutual, Inc. 164,201
600 Wells Fargo & Co. 222,000 **
--------------
Total Banks & Financial Services 6,402,524
--------------
INSURANCE (4.2%)
6,600 Allstate Corp. 284,213
900 American General Corp. 61,650
5,312 American International Group, Inc. 452,848 **
3,900 Aon Corp. 241,800
850 Chubb Corp. 52,275
1,200 CIGNA Corp. 87,525
3,504 Conseco, Inc. 121,545
700 General Re Corp. 153,781
700 Hartford Financial Services Group, Inc. 37,188
1,900 Jefferson-Pilot Corp. 115,425
650 Lincoln National Corp. 49,319
1,300 MBIA, Inc. 79,462
400 MGIC Investment Corp. 15,600 **
400 Progressive Corp. 58,900 **
900 Safeco Corp. 38,981
2,800 SunAmerica Corp. 197,400
600 Torchmark Corp. 26,250
1300 Unum Corp. 57,769
--------------
Total Insurance 2,131,931
--------------
UTILITIES (9.1%)
1,300 ALLTEL Corp. 60,856
3,200 Ameren Corp. 127,800
7,100 Ameritech Corp. 382,956
8,650 AT&T Corp. 538,462
1,700 Baltimore Gas & Electric 53,338
7,430 Bell Atlantic Corp. 394,719
6,500 Bellsouth Corp. 518,781
1,000 Carolina Power & Light Co. 45,875
200 Central & South West Corp. 5,563
1,300 Cinergy Corp. 44,850
2,350 Consolidated Edison, Inc. 117,794
100 DTE Energy Co. 4,263
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
31
<PAGE>
TCW GALILEO ENHANCED 500 FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- --------------- ------------------ --------------
<S> <C> <C>
UTILITIES (CONTINUED)
600 Duke Energy Corp. $ 38,813
3,900 Edison International 102,863
5,400 FirstEnergy Corp. 162,000
900 FPL Group, Inc. 56,306
8,150 GTE Corp. 478,303
2,600 Houston Industries, Inc. 80,763
3,000 Northern States Power Co. 81,000
1,500 PacifiCorp 28,594
5,300 Peco Energy Co. 205,044
950 Public Service Enterprise Group, Inc. 36,100
7,944 SBC Communications, Inc. 367,907
600 Southern Co. 16,913
3,700 Sprint Corp. 283,975
700 Texas Utilities Co. 30,625
2,500 Unicom Corp. 94,219
10,000 Williams Companies, Inc. 274,375
--------------
Total Utilities 4,633,057
--------------
TOTAL CREDIT SENSITIVE (Cost: $11,649,645) 13,167,512
--------------
TOTAL EQUITY SECURITIES (COST: $43,604,522) (99.9%) 50,889,150
--------------
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT (COST: $42,321) (0.1%)
- -------------- --------------------------------------------
<S> <C> <C>
$ 42,321 Bank of New York Depository Reserve, 4%, due 11/02/98 42,321
--------------
TOTAL INVESTMENTS (COST: $43,646,843) (100%) 50,931,471
EXCESS OF OTHER ASSETS OVER LIABILITIES (0.0%) 5,026
--------------
NET ASSETS (100%) $ 50,936,497
==============
</TABLE>
See accompanying Notes to Financial Statements.
32
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO LARGE CAP GROWTH FUND
October 31, 1998
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
--------- ------------------ -------------
<S> <C> <C>
CAPITAL GOODS (34.8% OF NET ASSETS)
ELECTRICAL EQUIPMENT (6.8%)
6,100 General Electric Co. $ 533,750
-------------
ELECTRONICS (8.4%)
3,000 3Com Corp. 108,188 **
3,600 Intel Corp. 321,075
3,300 Maxim Integrated Products, Inc. 117,769 **
2,400 XILINX, Inc. 107,175 **
-------------
Total Electronics 654,207
-------------
INFORMATION PROCESSING (14.0%)
1,300 America Online, Inc. 165,181 **
2,600 Dell Computer Corp. 170,625 **
600 IMS Health, Inc. 39,900
4,600 Microsoft Corp. 487,025 **
6,000 Siebel Systems, Inc. 122,625 **
800 Yahoo!, Inc. 104,675 **
-------------
Total Information Processing 1,090,031
-------------
POLLUTION CONTROL (0.5%)
1,200 Ecolab, Inc. 35,850
-------------
TELECOMMUNICATIONS EQUIPMENT (5.1%)
2,700 AirTouch Communications, Inc. 151,200 **
3,950 Cisco Systems, Inc. 248,850 **
-------------
Total Telecommunications Equipment 400,050
-------------
TOTAL CAPITAL GOODS (Cost: $1,883,616) 2,713,888
-------------
CONSUMER STAPLES (52.0%)
FOODS, HOTELS & RESTAURANTS (5.7%)
3,400 Bestfoods 185,300
1,200 Hershey Foods Corp. 81,375
10,400 Mirage Resorts, Inc. 176,150 **
-------------
Total Foods, Hotels & Restaurants 442,825
-------------
</TABLE>
** Non-income producing
See accompanying Notes to Financial Statements
33
<PAGE>
TCW GALILEO LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
--------- ----------------- -------------
<S> <C> <C>
HEALTHCARE (18.7%)
600 Amgen, Inc. $ 47,138 **
1,200 Bristol-Myers Squibb Co. 132,675
2,300 Eli Lilly & Co. 186,156
2,100 Johnson & Johnson 171,150
2,700 Pfizer, Inc. 289,744
1,500 Pharmacia & Upjohn, Inc. 79,406
1,600 Schering-Plough Corp. 164,600
5,000 Warner-Lambert Co. 391,875
-------------
Total Healthcare 1,462,744
-------------
LEISURE, ENTERTAINMENT, PHOTO & MEDIA (10.1%)
2,100 At Home Corp. 92,925 **
3,900 Clear Channel Communications, Inc. 177,694 **
4,400 Cox Communications, Inc. 241,450 **
3,200 Tele-Communications, Inc. 121,800 **
1,700 Time Warner, Inc. 157,781
-------------
Total Leisure, Entertainment, Photo & Media 791,650
-------------
RETAIL (7.4%)
600 Amazon.com, Inc. 75,863 **
3,600 Home Depot, Inc. 156,600
5,000 Wal-Mart Stores, Inc. 345,000
-------------
Total Retail 577,463
-------------
SERVICES - BUSINESS (2.4%)
6,600 Corporate Express, Inc. 77,138 **
2,700 Robert Half International, Inc. 108,337 **
-------------
Total Services - Business 185,475
-------------
TOBACCO (7.7%)
11,700 Philip Morris Companies, Inc. 598,162
-------------
TOTAL CONSUMER STAPLES (Cost: $2,960,124) 4,058,319
-------------
CREDIT SENSITIVE (11.6%)
FINANCIAL SERVICES (5.0%)
3,600 Charles Schwab Corp. 172,575
3,900 Marsh & McLennan Companies, Inc. 216,450
-------------
Total Financial Services 389,025
-------------
</TABLE>
** Non-income producing
See accompanying Notes to Financial Statements.
34
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
------------ ----------------- --------------
<S> <C> <C>
INSURANCE (2.7%)
1,050 American International Group, Inc. $ 89,512
800 Progressive Corp. 117,800
--------------
Total Insurance 207,312
--------------
UTILITIES (3.9%)
2,600 Bell Atlantic Corp. 138,125
2,100 Bellsouth Corp. 167,606
--------------
Total Utilities 305,731
--------------
TOTAL CREDIT SENSITIVE (Cost: $730,986) 902,068
--------------
TOTAL EQUITY SECURITIES (COST: $5,574,726) (98.4%) 7,674,275
--------------
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT (COST: $144,275) (1.8%)
-------------- ---------------------------------------------
<S> <C> <C>
$ 144,275 Bank of New York Depository Reserve, 4%, due 11/02/98 144,275
--------------
TOTAL INVESTMENTS (COST: $5,719,001) (100.2%) 7,818,550
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.2%) (18,914)
--------------
NET ASSETS (100.0%) $ 7,799,636
==============
</TABLE>
See accompanying Notes to Financial Statements.
35
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ------------------ --------------
<S> <C> <C>
BASIC INDUSTRIES (23.2% OF NET ASSETS)
CHEMICALS (0.9%)
530 Dow Chemical Co. $ 49,620
385 Union Carbide Corp. 14,823
--------------
Total Chemicals 64,443
--------------
ENERGY & OIL SERVICES (18.0%)
1,860 Amoco Corp. 104,393
4,900 Baker Hughes, Inc. 108,106
1,250 Chevron Corp. 101,875
1,450 Enron Corp. 76,488
4,710 Exxon Corp. 335,588
5,950 Halliburton Co. 213,828
1,620 Mobil Corp. 122,613
4,385 Royal Dutch Petroleum Co. (Netherlands) 215,961
1,225 Texaco, Inc. 72,658
--------------
Total Energy & Oil Services 1,351,510
--------------
METALS (1.0%)
515 Aluminum Company Of America 40,813
665 Phelps Dodge Corp. 38,321
--------------
Total Metals 79,134
--------------
PAPER & FOREST PRODUCTS (3.2%)
160 Champion International Corp. 5,110
5,430 Fort James Corp. 218,897
305 Weyerhaeuser Co. 14,278
--------------
Total Paper & Forest Products 238,285
--------------
TRANSPORTATION (0.1%)
250 Burlington Northern Santa Fe Corp. 7,719
--------------
TOTAL BASIC INDUSTRIES (Cost: $1,638,563) 1,741,091
--------------
CAPITAL GOODS (22.7%)
AEROSPACE/DEFENSE (9.3%)
5,160 Boeing Co. 193,500
4,920 Coltec Industries, Inc. 82,103 **
1,850 Lockheed Martin Corp. 206,043
2,550 Northrop Grumman Corp. 203,362
185 Raytheon Co., Class B 10,742
--------------
Total Aerospace/Defense 695,750
--------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
36
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
-------------- ----------------- --------------
<S> <C> <C>
ELECTRONICS (13.3%)
7,550 Applied Materials, Inc. $ 261,891 **
160 Emerson Electric Co. 10,560
280 Hewlett Packard Co. 16,853
125 Honeywell, Inc. 9,984
3,035 Intel Corp. 270,684
3,200 Motorola, Inc. 166,400
4,145 Texas Instruments, Inc. 265,021
--------------
Total Electronics 1,001,393
--------------
MACHINERY (DIVERSIFIED) (0.1%)
250 American Standard Co. 7,984 **
--------------
TOTAL CAPITAL GOODS (Cost: $1,548,133) 1,705,127
--------------
CONSUMER CYCLICALS (1.5%)
AUTOMOBILES (1.4%)
305 Chrysler Corp. 14,678
1,425 Ford Motor Co. 77,306
155 General Motors Corp. 9,775
--------------
Total Automobiles 101,759
--------------
PUBLISHING (0.1%)
150 Tribune Co. 8,644
--------------
TOTAL CONSUMER CYCLICALS (Cost: $94,269) 110,403
--------------
CONSUMER STAPLES (19.7%)
FOODS, HOTELS & RESTAURANTS (9.5%)
2,125 McDonald's Corp. 142,109
13,150 Mirage Resorts, Inc. 222,728
4,480 PepsiCo, Inc. 151,200
4,585 Tricon Global Restaurants, Inc. 199,448 **
--------------
Total Foods, Hotels & Restaurants 715,485
--------------
HEALTHCARE (2.1%)
2,030 Amgen, Inc. 159,482 **
--------------
LEISURE, ENTERTAINMENT, PHOTO & MEDIA (2.8%)
275 Brunswick Corp. 5,345
2,180 Time Warner, Inc. 202,331
--------------
Total Leisure, Entertainment, Photo & Media 207,676
--------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
37
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ------------------ ---------------
<S> <C> <C>
RETAIL (5.3%)
3,200 Albertson's, Inc. $ 177,800
400 Fred Meyer, Inc. 21,325 **
8,280 Supervalu, Inc. 198,720
---------------
Total Retail 397,845
---------------
TOTAL CONSUMER STAPLES (Cost: $1,350,686) 1,480,488
---------------
CREDIT SENSITIVE (26.3%)
BANKS & FINANCIAL SERVICES (18.4%)
2,225 Associates First Capital Corp., Class A 156,863
530 Bank One Corp. 25,904
2,670 BankAmerica Corp. 153,358
4,262 Citigroup, Inc. 200,580
720 Federal Home Loan Mortgage Corp. 41,400
895 Federal National Mortgage Association 63,377
685 Golden West Financial Corp. 62,121
1,150 J.P. Morgan & Company, Inc. 108,388
1,357 Marsh & McLennan Companies, Inc. 75,315
2,175 Merrill Lynch & Company, Inc. 128,869
1,885 Morgan Stanley Dean Witter & Co. 122,053
342 Washington Mutual, Inc. 12,803
620 Wells Fargo & Co. 229,400
---------------
Total Banks & Financial Services 1,380,431
---------------
INSURANCE (2.8%)
780 Allstate Corp. 33,589
1,200 Progressive Corp. 176,700
---------------
Total Insurance 210,289
---------------
UTILITIES (5.1%)
230 American Electric Power Co., Inc. 11,255
370 Ameritech Corp. 19,956
330 AT&T Corp. 20,542
680 Bell Atlantic Corp. 36,125
1,180 Bellsouth Corp. 94,179
640 Consolidated Edison, Inc. 32,080
520 Duke Energy Corp. 33,638
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
38
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ----------------- --------------
<S> <C> <C>
UTILITIES (CONTINUED)
360 Southern Co. $ 10,148
1,440 Sprint Corp. 110,520
285 Utilicorp United, Inc. 10,242
--------------
Total Utilities 378,685
--------------
TOTAL CREDIT SENSITIVE (Cost: $1,978,240) 1,969,405
--------------
TOTAL EQUITY SECURITIES (COST: $6,609,891) (93.4%) 7,006,514
--------------
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT (COST: $511,046) (6.8%)
- ---------------- ---------------------------------------------
<S> <C> <C>
$ 511,046 Bank of New York Depository Reserve, 4%, due 11/02/98 511,046
--------------
TOTAL INVESTMENTS (COST: $7,120,937) (100.2%) 7,517,560
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.2%) (12,829)
--------------
NET ASSETS (100%) $ 7,504,731
==============
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
39
<PAGE>
TCW GALILEO MID-CAP GROWTH FUND
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- ------------- ------------------ -------------
<S> <C> <C>
CAPITAL GOODS (33.2% OF NET ASSETS)
COMPUTER SOFTWARE & SERVICES (3.4%)
72,400 Cerner Corp. $ 1,619,950 **
42,000 VeriSign, Inc. 1,288,875 **
-------------
Total Computer Software & Services 2,908,825
-------------
ELECTRONICS (8.9%)
57,700 Global Crossing, Ltd. 1,658,875 **
78,800 Maxim Integrated Products, Inc. 2,812,175 **
96,300 Pairgain Technologies, Inc. 791,466 **
51,600 XILINX, Inc. 2,304,263 **
-------------
Total Electronics 7,566,779
-------------
INFORMATION PROCESSING (18.2%)
43,500 Alteria Corp. 1,810,687 **
45,900 Documentum, Inc. 1,560,600 **
33,100 GeoCities 974,381 **
57,800 Microchip Technology, Inc. 1,564,213 **
155,700 Siebel Systems, Inc. 3,182,119 **
48,400 Yahoo!, Inc. 6,332,837 **
-------------
Total Information Processing 15,424,837
-------------
MACHINERY (2.7%)
102,800 American Tower Corp. 2,248,750 **
-------------
TOTAL CAPITAL GOODS (Cost: $21,079,480) 28,149,191
-------------
CONSUMER STAPLES (58.3%)
DRUGS & HOSPITAL SUPPLIES (1.9%)
72,200 Safeskin Corp. 1,597,425 **
-------------
HEALTHCARE (4.2%)
22,900 Biogen, Inc. 1,591,550 **
110,325 Health Management Associates, Inc., Class A 1,965,164 **
-------------
Total Healthcare 3,556,714
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
40
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- -------------- ------------------ -------------
<S> <C> <C>
LEISURE, ENTERTAINMENT, PHOTO & MEDIA (15.6%)
51,200 At Home Corp. $ 2,265,600 **
26,500 Broadcast.Com, Inc. 1,321,688 **
82,400 Cablevision Systems Corp. 3,975,800 **
85,800 Clear Channel Communications, Inc. 3,909,263 **
17,300 Playboy Enterprises, Inc. 248,688 **
56,000 TCA Cable TV, Inc. 1,550,500
-------------
Total Leisure, Entertainment, Photo & Media 13,271,539
-------------
RETAIL (17.1%)
36,500 Amazon.com, Inc. 4,614,969 **
83,200 Bed, Bath & Beyond, Inc. 2,293,200 **
83,100 Best Buy Company, Inc. 3,988,800 **
28,100 Ebay, Inc. 2,335,812 **
180,200 Petsmart, Inc. 1,295,187 **
-------------
Total Retail 14,527,968 **
-------------
SERVICES-BUSINESS (19.5%)
46,562 Apollo Group, Inc., Class A 1,495,804 **
157,600 Corporate Express, Inc. 1,841,950 **
119,600 Outdoor Systems, Inc. 2,638,675 **
81,775 Paychex, Inc. 4,068,306
61,950 Robert Half International, Inc. 2,485,744 **
132,900 Romac International, Inc. 2,325,750 **
83,800 Whittman-Hart, Inc. 1,665,525 **
-------------
Total Services-Business 16,521,754
-------------
TOTAL CONSUMER STAPLES (Cost: $30,079,704) 49,475,400
-------------
CREDIT SENSITIVE (5.5%)
BANKS &FINANCIAL SERVICES (4.0%)
38,900 Hartford Life, Inc. 1,799,125
8,300 Trammell Crow Co. 179,487 **
40,900 T. Rowe Price Associates 1,454,506
-------------
Total Banks & Financial Services 3,433,118
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
41
<PAGE>
TCW GALILEO MID-CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ------------------ -------------
<S> <C> <C>
TELECOMMUNICATIONS (1.5%)
56,500 MetroNet Communications Corp. (Canada) $ 1,299,500 **
-------------
TOTAL CREDIT SENSITIVE (Cost: $4,095,953) 4,732,618
-------------
TOTAL EQUITY SECURITIES (COST: $55,255,137) (97.0%) 82,357,209
-------------
<CAPTION>
Principal
Amount SHORT-TERM INVESTMENT (COST: $3,060,149) (3.6%)
- -------------- -----------------------------------------------
<S> <C> <C>
$ 3,060,149 Bank of New York Depository Reserve, 4%, due 11/02/98 3,060,149
-------------
TOTAL INVESTMENTS (COST: $58,315,286) (100.6%) 85,417,358
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.6%) (513,739)
-------------
NET ASSETS (100.0%) $ 84,903,619
=============
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
42
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO SMALL CAP GROWTH FUND
October 31, 1998
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number of
Shares or
Warrants EQUITY SECURITIES Value
- ------------- ----------------- --------------
<S> <C> <C>
BASIC INDUSTRIES (COST: $676,496) (0.5% OF NET ASSETS)
TRANSPORTATION (0.5%)
26,200 Atlantic Coast Airlines Holdings, Inc. $ 628,800 **
--------------
CAPITAL GOODS (42.6%)
COMPUTER SOFTWARE & SERVICES (12.5%)
68,200 Applied Graphics Technologies, Inc. 814,138 **
54,600 Aspect Development, Inc. 1,725,019 **
19,400 Brio Technology, Inc. 160,050 **
33,300 Cerner Corp. 745,088 **
77,500 Ciber, Inc. 1,520,938 **
20,600 Engineering Animation, Inc. 902,537 **
43,700 Exodus Communications, Inc. 1,387,474 **
26,500 International Network Services 1,126,250 **
73,500 Legato Systems, Inc. 2,875,687 **
13,700 Mercury Interactive Corp. 568,550 **
100 ModaCAD, Inc. 1,400 **
42,100 New Era of Networks, Inc. 2,073,425 **
21,000 VeriSign, Inc. 644,437 **
--------------
Total Computer Software & Services 14,544,993
--------------
ELECTRONICS (6.1%)
3,384 American Satellite Network, Inc., Warrants, expire 06/30/99 3 **
1,000 ATMI, Inc. 13,750 **
2,400 Concord Communications, Inc. 89,100 **
32,600 Level One Communications, Inc. 857,785 **
72,600 Maxim Integrated Products, Inc. 2,590,912 **
21,800 Micrel, Inc. 716,675 **
40,700 MIPS Technologies, Inc. 941,188 **
34,400 Semtech Corp. 819,150 **
37,100 SIPEX Corp. 1,029,525 **
--------------
Total Electronics 7,058,088
--------------
INFORMATION PROCESSING (23.5%)
98,850 Citrix Systems, Inc. 7,005,994 **
57,300 Documentum, Inc. 1,948,200 **
40,000 Genesys Telecommunications Laboratories, Inc. 1,050,000 **
90,800 GeoTel Communications Corp. 2,360,800 **
45,000 HNC Software, Inc. 1,513,125 **
53,900 International Integration, Inc. 808,500 **
32,100 Lycos, Inc. 1,304,062 **
46,800 Macromedia, Inc. 936,000 **
54,400 Micromuse, Inc. 928,200 **
13,400 Network Appliance, Inc. 733,650 **
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
43
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ----------------- ---------------
<S> <C> <C>
INFORMATION PROCESSING (CONTINUED)
75,018 Saville Systems, PLC (ADR) (Ireland) $ 1,265,929 **
78,000 Siebel Systems, Inc. 1,594,125 **
36,900 Software.Net Corp. 341,325 **
41,700 Yahoo!, Inc. 5,456,184 **
--------------
Total Information Processing 27,246,094
--------------
POLLUTION CONTROL (0.5%)
30,600 Tetra Tech, Inc. 621,563 **
--------------
TOTAL CAPITAL GOODS (Cost: $28,178,557) 49,470,738
--------------
CONSUMER STAPLES (45.1%)
DRUGS & HOSPITAL SUPPLY (1.4%)
71,000 Safeskin Corp. 1,570,875 **
--------------
HEALTHCARE (8.2%)
17,500 Balance Bar Co. 170,625 **
153,200 Dendrite International, Inc. 3,159,750 **
69,300 Diametrics Medical, Inc. 246,881 **
64,300 Hanger Orthopedic Group, Inc. 1,269,925 **
23,800 IMPATH, Inc. 728,875 **
88,200 Ocular Sciences, Inc. 2,216,025 **
84,700 QuadraMed Corp. 1,736,350 **
--------------
Total Healthcare 9,528,431
--------------
LEISURE, ENTERTAINMENT, PHOTO & MEDIA (10.0%)
12,300 Broadcast.com, Inc. 613,463 **
77,200 Clear Channel Communications, Inc. 3,517,425 **
62,800 Gemstar International Group, Ltd. 3,430,450 **
62,900 Hollywood Entertainment Corp. 959,225 **
24,700 SFX Entertainment, Inc. 781,138 **
47,400 Snyder Communications, Inc. 1,691,587 **
36,200 Westwood One, Inc. 651,600 **
--------------
Total Leisure, Entertainment, Photo & Media 11,644,888
--------------
RETAIL (7.3%)
25,300 AnnTaylor Stores, Inc. 733,700 **
77,000 Bed, Bath & Beyond, Inc. 2,122,313 **
40,000 Cost Plus, Inc. 1,200,000 **
30,525 Dollar Tree Stores, Inc. 1,177,120 **
50,300 Guitar Center, Inc. 861,388 **
46,850 Just for Feet, Inc. 793,522 **
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
44
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number of
Shares EQUITY SECURITIES Value
- -------------- ----------------- ----------------
<S> <C> <C>
RETAIL (CONTINUED)
14,700 Linens 'N Things, Inc. $ 454,781 **
11,100 Men's Wearhouse, Inc. 269,175 **
79,900 Petsmart, Inc. 574,281 **
15,000 Restoration Hardware, Inc. 301,875 **
--------------
Total Retail 8,488,155
--------------
SERVICES - BUSINESS (18.2%)
74,200 Administaff, Inc. 2,434,688 **
49,492 CSG Systems International, Inc. 2,697,314 **
22,800 ECsoft Group PLC (ADR) (United Kingdom) 501,600 **
45,100 Envoy Corp. 1,330,450 **
19,500 Ha Lo Industries, Inc. 550,875 **
2,200 ICON PLC (ADR) (United Kingdom) 61,600 **
71,500 MAXIMUS, Inc. 2,073,500 **
171,225 Outdoor Systems, Inc. 3,777,652 **
45,300 Pegasus Systems, Inc. 787,087 **
4,200 ProBusiness Services, Inc. 153,562 **
52,050 Robert Half International, Inc. 2,088,506 **
102,000 Romac International, Inc. 1,785,000 **
27,400 Steiner Leisure, Ltd. 667,875 **
2,300 Superior Consultant Holdings Corp. 85,100 **
9,000 TMP Worldwide, Inc. 270,000 **
90,400 Whittman-Hart, Inc. 1,796,700 **
--------------
Total Services - Business 21,061,509
--------------
TOTAL CONSUMER STAPLES (Cost: $33,724,821) 52,293,858
--------------
CREDIT SENSITIVE (2.3%)
BANKS & FINANCIAL SERVICES (1.7%)
3,750 Bank of Granite Corp. 125,625
17,200 Healthcare Financial Partners, Inc. 526,750 **
64,100 Trammell Crow Co. 1,386,162 **
--------------
Total Banks & Financial Services 2,038,537
--------------
TELECOMMUNICATIONS (0.6%)
29,000 MetroNet Communications Corp. (Canada) 667,000 **
--------------
TOTAL CREDIT SENSITIVE (Cost: $3,105,047) 2,705,537
--------------
TOTAL EQUITY SECURITIES (COST: $65,684,921) (90.5%) 105,098,933
--------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
45
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Principal
Amount OTHER INVESTMENTS Value
- -------------- ----------------- ----------------
<S> <C> <C>
SHORT-TERM INVESTMENT (COST: $9,722,185) (8.4%)
-----------------------------------------------
$ 9,722,185 Bank of New York Depository Reserve, 4%, due 11/02/98 $ 9,722,185
----------------
TOTAL INVESTMENTS (COST: $75,407,106) (98.9%) 114,821,118
EXCESS OF OTHER ASSETS OVER LIABILITIES (1.1%) 1,229,360
----------------
NET ASSETS (100.0%) $ 116,050,478
================
</TABLE>
See accompanying Notes to Financial Statements.
46
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO VALUE OPPORTUNITIES FUND
October 31, 1998
SCHEDULE OF INVESTMENTS
- -----------------------
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- --------------- ----------------- ---------------
<S> <C> <C>
BASIC INDUSTRIES (16.7% OF NET ASSETS)
CHEMICALS (6.8%)
15,800 Crompton & Knowles Corp. $ 253,787 **
13,600 Cytec Industries, Inc. 326,400 **
13,000 Ferro Corp. 331,500
17,600 Mallinckrodt, Inc. 501,600
17,600 Raychem Corp. 537,900
-------------
Total Chemicals 1,951,187
-------------
CONSTRUCTION (1.6%)
35,000 Johns Manville Corp. 459,375
-------------
ENERGY & OIL SERVICES (5.6%)
20,000 Devon Energy Corp. 677,500
50,600 Pride International, Inc. 588,225 **
15,300 Talisman Energy, Inc. 336,600 **
-------------
Total Energy & Oil Services 1,602,325
-------------
METALS (1.6%)
22,500 Allegheny Teledyne, Inc. 462,656
-------------
PAPER & FOREST PRODUCTS (1.1%)
17,054 Albany International Corp., Class A 311,236
-------------
TOTAL BASIC INDUSTRIES (Cost: $5,168,803) 4,786,779
-------------
CAPITAL GOODS (36.0%)
ELECTRONICS (18.3%)
25,800 Anixter International, Inc. 398,288 **
80,600 Commscope, Inc. 1,123,362 **
63,000 Cypress Semiconductor Corp. 700,875 **
10,000 EG & G, Inc. 251,250
11,000 General Instrument Corp. 282,563 **
49,500 International Rectifier Corp. 445,500 **
28,500 KLA-Tencor Corp. 1,050,937 **
13,000 Teradyne, Inc. 422,500 **
37,700 Vishay Intertechnology, Inc. 570,213 **
-------------
Total Electronics 5,245,488
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
47
<PAGE>
TCW GALILEO VALUE OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- -------------- ------------------ --------------
<S> <C> <C>
INFORMATION PROCESSING (14.8%)
24,000 Adaptec, Inc. $ 388,500 **
41,500 Data General Corp. 705,500 **
52,000 Mentor Graphics Corp. 419,250 **
13,000 NCR Corp. 437,125 **
91,000 Read Rite Corp. 978,250 **
16,000 The Learning Company, Inc. 413,000 **
16,200 Wang Laboratories, Inc. 346,275**
52,800 Western Digital Corp. 554,400 **
-------------
Total Information Processing 4,242,300
-------------
MANUFACTURING (2.9%)
9,000 ITT Industries, Inc. 321,750
19,800 Millipore Corp. 487,575
-------------
Total Manufacturing 809,325
-------------
TOTAL CAPITAL GOODS (Cost: $10,568,926) 10,297,113
-------------
CONSUMER STAPLES (33.9%)
FOOD, HOTELS, & RESTAURANTS (5.6%)
7,000 Corn Products International, Inc. 199,500
16,100 Interstate Bakeries Corp. 403,506
13,500 Mirage Resorts, Inc. 228,656 **
40,900 Vlastic Foods International, Inc. 764,319 **
-------------
Total Foods, Hotels, & Restaurants 1,595,981
-------------
HEALTHCARE (1.3%)
5,500 Beckman Coulter, Inc. 258,500
19,000 Beverly Enterprises, Inc. 128,250 **
-------------
Total Healthcare 386,750
-------------
LEISURE, ENTERTAINMENT, PHOTO & MEDIA (10.6%)
16,000 Banta Corp. 398,000
24,000 Houghton Mifflin Co. 936,000
45,400 King World Productions, Inc. 1,191,750 **
23,000 Reader's Digest Association, Inc., Class A 500,250
-------------
Total Leisure, Entertainment, Photo & Media 3,026,000
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
48
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
<TABLE>
<CAPTION>
Number
of Shares EQUITY SECURITIES Value
- -------------- ----------------- --------------
<S> <C> <C>
RETAIL (10.8%)
20,000 General Nutrition Companies, Inc. $ 291,250 **
54,700 Heilig-Meyers Co. 420,506
32,000 Jones Apparel Group, Inc. 552,000 **
40,000 Pep Boys-Manny, Moe, and Jack, Inc. 625,000
30,700 Reebok International, Ltd. 510,388 **
13,000 R.H. Donnelley Corp. 182,000
19,900 Venator Group, Inc. 167,906 **
13,500 Warnaco Group, Inc., Class A 345,094
-------------
Total Retail 3,094,144
-------------
SERVICES - BUSINESS (5.6%)
14,000 Dunn & Bradstreet Corp. 397,250
7,500 H & R Block, Inc. 336,094
94,800 Olsten Corp. 870,975
-------------
Total Services - Business 1,604,319
-------------
TOTAL CONSUMER STAPLES (Cost: $10,957,792) 9,707,194
-------------
CREDIT SENSITIVE (8.9%)
FINANCIAL SERVICES, BUILDING & REAL ESTATE (5.3%)
11,000 Gatx Corp. 379,500
33,900 New Plan Excel Realty Trust, Inc. 771,225
12,000 Simon Debartolo Group, Inc. 359,250
-------------
Total Financial Services, Building & Real Estate 1,509,975
-------------
INSURANCE (3.6%)
10,500 American Financial Group, Inc. 368,156
8,000 NAC Re Corp. 387,500
15,000 Old Republic International Corp. 285,000
-------------
Total Insurance 1,040,656
-------------
TOTAL CREDIT SENSITIVE (Cost: $2,563,187) 2,550,631
-------------
TOTAL EQUITY SECURITIES (COST: $29,258,708) (95.5%) 27,341,717
-------------
</TABLE>
** Non-income producing.
See accompanying Notes to Financial Statements.
49
<PAGE>
TCW GALILEO VALUE OPPORTUNITIES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------
<TABLE>
<CAPTION>
Principal
Amount OTHER INVESTMENT Value
- -------------- ----------------- -------------
<S> <C> <C>
SHORT-TERM INVESTMENT (COST: $1,329,494) (4.6%)
-----------------------------------------------
$ 1,329,494 Bank of New York Depository Reserve, 4%, due 11/02/98 $ 1,329,494
-------------
TOTAL INVESTMENTS (COST: $30,588,202) (100.1%) 28,671,211
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.1%) (37,248)
-------------
NET ASSETS (100%) $ 28,633,963
=============
</TABLE>
See accompanying Notes to Financial Statements.
50
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Equities)
Dollar Amounts in Thousands
(Except per Share Amounts)
October 31, 1998
STATEMENTS OF ASSETS AND LIABILITIES
- ------------------------------------
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
CONVERTIBLE SECURITIES CORE EQUITIES
FUND FUND
----------------------- ----------------
<S> <C> <C>
ASSETS
Investments, at Value /(1)/ $ 27,324 $ 185,010
Receivable for Fund Shares Sold - 26
Receivable for Securities Sold 41 -
Accrued Interest and Dividends
Receivable 231 36
Deferred Organization Costs 2 -
---------------- ---------------
Total Assets 27,598 185,072
---------------- ---------------
LIABILITIES
Payables for Fund Shares Redeemed 1 35
Payable for Securities Purchased 156 -
Management Fees and Other Accrued Expenses 53 172
---------------- ---------------
Total Liabilities 210 207
---------------- ---------------
NET ASSETS $ 27,388 $ 184,865
================ ===============
NET ASSETS CONSIST OF:
Paid-in Capital $ 23,724 $ 81,673
Undistributed Net Realized Gain on Investments 3,184 62,038
Unrealized Appreciation on Investments 583 41,204
Undistributed (Overdistributed) Net Investment Income (103) -
Net Investment (Loss) - (50)
---------------- ---------------
NET ASSETS $ 27,388 $ 184,865
================ ===============
CAPITAL SHARES OUTSTANDING 2,599,728 10,946,641
================ ===============
NET ASSET VALUE PER SHARE $ 10.53 $ 16.89
================ ===============
</TABLE>
(1) The identified cost for the TCW Galileo Convertible Securities Fund, and the
TCW Galileo Core Equities Fund, at October 31, 1998, was $26,741, and
$143,806, respectively.
See accompanying Notes to Financial Statements.
51
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
- ------------------------------------------------
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
EARNINGS MOMENTUM ENHANCED 500
FUND FUND
----------------- ------------
<S> <C> <C>
ASSETS
Investments, at Value /(1)/ $ 32,375 $ 50,931
Receivables for Fund Shares Sold - -
Receivables for Securities Sold - -
Accrued Interest and Dividends
Receivable 6 49
Deferred Organization Costs - -
------------ -------------
Total Assets 32,381 50,980
------------ -------------
LIABILITIES
Payable for Fund Shares Redeemed - -
Payables for Securities Purchased - -
Management Fees and Other Accrued Expenses 82 44
------------ -------------
Total Liabilities 82 44
------------ -------------
NET ASSETS $ 32,299 $ 50,936
============ =============
NET ASSETS CONSIST OF:
Paid-in Capital $ 19,681 $ 41,326
Undistributed Net Realized Gain (Loss) on Investments 6,090 2,138
Unrealized Appreciation (Depreciation) on Investments 8,748 7,285
Undistributed (Overdistributed) Net Investment Income - 187
Net Investment (Loss) (2,220) -
------------ -------------
NET ASSETS $ 32,299 $ 50,936
============ =============
CAPITAL SHARES OUTSTANDING 3,057,474 5,054,017
============ =============
NET ASSET VALUE PER SHARE $ 10.56 $ 10.08
============ =============
</TABLE>
(1) The identified cost for the TCW Galileo Earnings Momentum Fund, the TCW
Galileo Enhanced 500 Fund, The TCW Galileo Large Cap Growth Fund, the TCW
Galileo Large Cap Value Fund, the TCW Galileo Mid-Cap Growth Fund, the TCW
Galileo Small Cap Growth Fund, and the TCW Galileo Value Opportunities Fund
at October 31, 1998, was $23,627, $43,646, $5,719, $7,121, $58,315, $75,407
and $30,588, respectively.
See accompany Notes to Financial Statements.
52
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Equities)
Dollar Amounts in Thousands
(Except per Share Amounts)
October 31, 1998
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO
LARGE CAP GROWTH LARGE CAP VALUE MID-CAP GROWTH SMALL CAP GROWTH VALUE OPPORTUNITIES
FUND FUND FUND FUND FUND
- ---------------- --------------- -------------- ----------------- -------------------
<S> <C> <C> <C> <C>
$ 7,819 $ 7,518 $ 85,417 $ 114,821 $ 28,671
- - - 3 17
- - 408 1,870 -
4 6 18 35 10
- - 1 1 4
- ---------------- --------------- -------------- ----------------- -------------------
7,823 7,524 85,844 116,730 28,702
- ---------------- --------------- -------------- ----------------- -------------------
- - - 5 -
- - 819 527 -
23 19 121 148 68
- ---------------- --------------- -------------- ----------------- -------------------
23 19 940 680 68
- ---------------- --------------- -------------- ----------------- -------------------
$ 7,800 $ 7,505 $ 84,904 $ 116,050 $ 28,634
================ =============== ============== ================= ===================
$ 5,251 $ 7,358 $ 44,900 $ 76,892 $ 31,157
451 (286) 15,144 3,482 (581)
2,100 397 27,102 39,414 (1,917)
- 36 - - (25)
(2) - (2,242) (3,738) -
- ---------------- -------------- -------------- ----------------- -------------------
$ 7,800 $ 7,505 $ 84,904 $ 116,050 $ 28,634
================ ============== ============== ================ ===================
697,882 741,625 7,479,706 7,044,015 3,099,451
================ ============== ============== ================ ===================
$ 11.18 $ 10.12 $ 11.35 $ 16.48 $ 9.24
================ ============== ============== ================ ===================
</TABLE>
53
<PAGE>
STATEMENTS OF OPERATIONS
- ------------------------
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
CONVERTIBLE SECURITIES CORE EQUITIES
FUND FUND
---------------------- ---------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 498 $ 986
Interest 891 119
--------------------- ---------------
Total 1,389 1,105
Expenses:
Management Fees 237 1,150
Accounting Service Fees 35 35
Custodian Fees 14 19
Transfer Agent Fees 20 42
Registration Fees 26 29
Directors' Fees and Expenses 6 6
Audit and Tax Fees 21 23
Amortization of Deferred Organization Costs 1 3
Other 7 13
--------------------- ---------------
Total Expenses 367 1,320
Less Expenses Borne by Investment Advisor 35 -
--------------------- ---------------
Net Expenses 332 1,320
--------------------- ---------------
Net Investment Income (Loss) 1,057 (215)
--------------------- ---------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net Realized Gain (Loss) on Investments During the Period 2,821 40,589
Change in Unrealized Appreciation (Depreciation)
on Investments During the Period (2,652) (9,408)
--------------------- ---------------
Net Realized and Unrealized Gain (Loss) on Investments
During the Period 169 31,181
--------------------- ---------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,226 $ 30,966
===================== ===============
</TABLE>
(1) For the period June 3, 1998 (commencement of operations) through October 31,
1998.
See acompanying Notes to Financial Statements.
54
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Equities)
Dollar Amounts in Thousands
Year Ended October 31, 1998
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO
EARNINGS MOMENTUM ENHANCED 500 LARGE CAP GROWTH LARGE CAP VALUE MID-CAP GROWTH
FUND FUND/(1)/ FUND/(1)/ FUND/(1)/ FUND
----------------- ------------ ---------------- --------------- --------------
<S> <C> <C> <C> <C>
$ 73 $ 285 $ 24 $ 48 $ 117
27 1 2 7 29
------------- ----------- ------------ ---------- ----------
100 286 26 55 146
------------- ----------- ------------ ---------- ----------
594 52 17 19 1,002
35 15 15 15 35
24 11 1 4 25
33 8 5 5 37
26 22 22 24 25
6 2 2 2 6
21 11 11 11 22
1 - - - 1
10 8 5 6 20
------------- ----------- ------------ ---------- ----------
750 129 78 86 1,173
- 30 50 67 -
------------- ----------- ------------ ---------- ----------
750 99 28 19 1,173
------------- ----------- ------------ ---------- ----------
(650) 187 (2) 36 (1,027)
------------- ----------- ------------ ---------- ----------
4,544 2,138 451 (286) 26,267
(11,629) (2,421) 345 159 (5,470)
------------- ----------- ------------ ---------- ----------
(7,085) (283) 796 (127) 20,797
------------- ----------- ------------ ---------- ----------
$ (7,735) $ (96) $ 794 $ (91) $ 19,770
============= =========== ============ ========== ==========
</TABLE>
55
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Equities)
Dollar Amounts in Thousands
Year Ended October 31, 1998
STATEMENTS OF OPERATIONS (CONTINUED)
- ------------------------------------
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
SMALL CAP GROWTH VALUE OPPORTUNITIES
FUND FUND/(1)/
---------------- -------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 103 $ 343
Interest 132 71
---------------- -------------------
Total 235 414
---------------- -------------------
Expenses:
Management Fees 1,313 274
Accounting Service Fees 35 35
Custodian Fees 27 11
Transfer Agent Fees 41 14
Registration Fees 16 28
Directors' Fees and Expenses 6 6
Audit and Tax Fees 23 21
Amortization of Deferred Organization Costs 2 1
Other 17 8
---------------- -------------------
Total Expenses 1,480 398
---------------- -------------------
Net Investment Income (Loss) (1,245) 16
---------------- -------------------
NET REALIZED AND UNREALIZED (LOSS) ON
INVESTMENTS
Net Realized Gain (Loss) on Investments During the Period 1,477 (581)
Change in Unrealized (Depreciation) on Investments
During the Period (7,110) (2,809)
---------------- -------------------
Net Realized and Unrealized (Loss) on Investments
During the Period (5,633) (3,390)
---------------- -------------------
(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ (6,878) $ (3,374)
================ ===================
</TABLE>
(1) For the period November 3, 1997 (commencement of operations) through October
31, 1998.
See accompanying Notes to Financial Statements.
56
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO CONVERTIBLE SECURITIES FUND
Dollar Amounts in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
JANUARY 2, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1998 OCTOBER 31, 1997
---------------- -------------------
<S> <C> <C>
OPERATIONS
Net Investment Income $ 1,057 $ 939
Net Realized Gain on Investments 2,821 2,477
Change in Unrealized Appreciation
(Depreciation) on Investments (2,652) 1,623
---------------- ----------------
Increase in Net Assets Resulting from Operations 1,226 5,039
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income (1,059) (937)
Distribution in Excess of Net Investment Income (103) -
Distribution from Net Realized Gains (2,114) -
---------------- ----------------
Total Distributions to Shareholders (3,276) (937)
---------------- ----------------
CAPITAL SHARE TRANSACTIONS
Shares Issued Upon Exchange of Limited Partnership
Interests (2,485,514 shares in 1997) - 24,855
Proceeds from Shares Sold
(703,651 shares in 1998 and 1,575,745 shares in 1997) 7,530 16,632
Proceeds from Shares Issued Upon Reinvestment of
Dividends (259,441 shares in 1998 and 62,882 shares in 1997) 2,773 672
Cost of Shares Redeemed
(1,596,336 shares in 1998 and 891,169 shares in 1997) (17,755) (9,371)
---------------- ----------------
Increase (Decrease) in Net Assets Resulting from Capital
Share Transactions (7,452) 32,788
---------------- ----------------
Increase (Decrease) in Net Assets (9,502) 36,890
NET ASSETS
Beginning of Period 36,890 -
---------------- ----------------
End of Period $ 27,388 $ 36,890
================ ================
</TABLE>
See accompanying Notes to Financial Statements.
57
<PAGE>
TCW GALILEO CORE EQUITIES FUND
Dollar Amounts in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
------------------ ------------------
<S> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ (215) $ 181
Net Realized Gain on Investments 40,589 58,507
Change in Unrealized (Depreciation) on Investments (9,408) (9,558)
--------------- -------------
Increase in Net Assets Resulting from Operations 30,966 49,130
--------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income - (291)
Distributions from Net Realized Gains (37,055) (2,817)
--------------- -------------
Total Distributions to Shareholders (37,055) (3,108)
--------------- -------------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(5,447,733 shares in 1998 and 916,772 shares in 1997) 85,536 15,783
Proceeds from Shares Issued Upon Reinvestment of Dividends
(2,586,870 shares in 1998 and 178,643 shares in 1997) 35,957 2,971
Cost of Shares Redeemed
(5,179,280 shares in 1998 and 7,520,587 shares in 1997) (86,652) (139,965)
--------------- -------------
Increase (Decrease) in Net Assets Resulting from Capital
Share Transactions 34,841 (121,211)
--------------- -------------
Increase (Decrease) in Net Assets 28,752 (75,189)
NET ASSETS
Beginning of Year 156,113 231,302
--------------- -------------
End of Year $ 184,865 $ 156,113
=============== =============
</TABLE>
See accompanying Notes to Financial Statements.
58
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Equities)
TCW GALILEO EARNINGS MOMENTUM FUND
Dollar Amounts in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
------------------ ------------------
<S> <C> <C>
OPERATIONS
Net Investment (Loss) $ (650) $ (794)
Net Realized Gain on Investments 4,544 7,257
Change in Unrealized Appreciation (Depreciation)
on Investments (11,629) 8,786
----------- -----------
Increase (Decrease) in Net Assets Resulting from Operations (7,735) 15,249
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Realized Gains (6,319) (5,829)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(106,293 shares in 1998 and 2,696,542 shares in 1997) 1,100 31,271
Proceeds from Shares Issued upon Reinvestment of Dividends
(517,955 shares in 1998 and 458,342 shares in 1997) 6,240 5,474
Cost of Shares Redeemed
(4,894,267 shares in 1998 and 1,821,359 shares in 1997) (62,654) (22,492)
----------- -----------
Increase (Decrease) in Net Assets Resulting from
Capital Share Transactions (55,314) 14,253
----------- -----------
Increase (Decrease) in Net Assets (69,368) 23,673
NET ASSETS
Beginning of Year 101,667 77,994
----------- -----------
End of Year $ 32,299 $ 101,667
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
59
<PAGE>
TCW GALILEO ENHANCED 500 FUND
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
JUNE 3, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
--------------------
<S> <C>
OPERATIONS
Net Investment Income $ 187
Net Realized Gain on Investments 2,138
Change in Unrealized (Depreciation) on Investments (2,421)
-------------
(Decrease) in Net Assets Resulting from Operations (96)
-------------
CAPITAL SHARE TRANSACTIONS
Shares Issued Upon Exchange of Limited Partnership
Interests (5,403,967 shares) (Note 1) 54,040
Proceeds from Shares Sold (632,174 shares) 6,665
Cost of Shares Redeemed (982,124 shares) (9,673)
-------------
Increase in Net Assets Resulting from Capital
Share Transactions 51,032
-------------
Increase in Net Assets 50,936
NET ASSETS
Beginning of Period _
-------------
End of Period $ 50,936
=============
</TABLE>
See accompanying Notes to Financial Statements.
60
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO LARGE CAP GROWTH FUND
Dollar Amounts in Thousands
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
<TABLE>
<CAPTION>
JUNE 3, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
OPERATIONS
Net Investment (Loss) $ (2)
Net Realized Gain on Investments 451
Change in Unrealized Appreciation on Investments 345
-------------------
Increase in Net Assets Resulting from Operations 794
-------------------
CAPITAL SHARE TRANSACTIONS
Shares Issued Upon Exchange of Limited Partnership
Interest (721,349 shares) (Note 1) 7,213
Proceeds from Shares Sold (17,315 shares) 201
Cost of Shares Redeemed (40,782 shares) (408)
-------------------
Interest in Net Assets Resulting from Capital
Share Transactions 7,006
-------------------
Increase in Net Assets 7,800
NET ASSETS
Beginning of Period -
-------------------
End of Period $ 7,800
===================
</TABLE>
See accompanying Notes to Financial Statements.
61
<PAGE>
TCW Galileo Large Cap Value Fund
Dollar Amounts in Thousands
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
<TABLE>
<CAPTION>
JUNE 3, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
OPERATIONS
Net Investment Income $ 36
Net Realized (Loss) on Investments
Change in Unrealized Appreciation on Investments (286)
159
(Decrease) in Net Assets Resulting from Operations -------------------
(91)
-------------------
CAPITAL SHARE TRANSACTIONS
Shares Issued Upon Exchange of Limited Partnership
Interests (815,447 shares) (Note 1) 8,154
Proceeds from Shares Sold (224,593 shares) 2,280
Cost of Shares Redeemed (298,415 shares) (2,838)
-------------------
Increase in Net Assets Resulting from Capital
Share Transactions 7,596
-------------------
Increase in Net Assets 7,505
NET ASSETS
Beginning of Period _
-------------------
End of Period $ 7,505
===================
</TABLE>
See accompanying Notes to Financial Statements
62
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Equities)
TCW Galileo Mid-Cap Growth Fund
Dollar Amounts in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
----------------- ----------------
<S> <C> <C>
OPERATIONS
Net Investment (Loss) $ (1,027) $ (944)
Net Realized Gain (Loss) on Investments 26,267 (8,474)
Change in Unrealized Appreciation (Depreciation)
on Investments (5,470) 12,646
----------------- ----------------
Increase in Net Assets Resulting from Operations 19,770 3,228
----------------- ----------------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(1,103,927 shares in 1998 and 7,109,713 shares in 1997) 12,278 63,202
Cost of Shares Redeemed
(8,075,267 shares in 1998 and 2,719,048 shares in 1997) (82,994) (23,010)
----------------- ----------------
Increase (Decrease) in Net Assets Resulting from
Capital Share Transactions (70,716) 40,192
----------------- ----------------
Increase (Decrease) in Net Assets (50,946) 43,420
NET ASSETS
Beginning of Year 135,850 92,430
----------------- ----------------
End of Year $ 84,904 $ 135,850
================= ================
</TABLE>
See acompanying Notes to Financial Statements
63
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
Dollars Amount in Thousands
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1998 OCTOBER 31, 1998
----------------- ------------------
<S> <C> <C>
OPERATIONS
- ----------
Net Investment (Loss) $ (1,245) $ (1,151)
Net Realized Gain on Investments 1,477 10,965
Change in Unrealized Appreciation (Depreciation)
on Investments (7,110) 2,818
----------------- ------------------
Increase (Decrease) in Net Assets Resulting from Operations (6,878) 12,632
----------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Realized Gains (9,228) (1,426)
----------------- ------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold
(2,331,443 shares in 1998 and 2,161,818 shares in 1997) 43,092 35,977
Proceeds from Shares Issued upon Reinvestment of Dividends
(522,318 shares in 1998 and 80,731 shares in 1997) 8,940 1,386
Cost of Shares Redeemed
(3,533,964 shares in 1998 and 2,231,297 shares in 1997 (64,632) (36,257)
----------------- ------------------
Increase (Decrease) in Net Assets Resulting from
Capital Share Transactions (12,600) 1,106
----------------- ------------------
Increase (Decrease) in Net Assets (28,706) 12,312
NET ASSETS
Beginning of Year 144,756 132,444
----------------- ------------------
End of Year $ 116,050 $ 144,756
================= ==================
</TABLE>
64
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. Equities)
TCW GALILEO VALUE OPPORTUNITIES FUND
Dollar Amounts in Thousands
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------
<TABLE>
<CAPTION>
NOVEMBER 3, 1997
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
------------------
<S> <C>
OPERATIONS
Net Investment Income $ 16
Net Realized (Loss) on Investments (581)
Change in Unrealized (Depreciation) on Investments (2,809)
------------------
(Decrease) in Net Assets Resulting from Operations (3,374)
------------------
DISTRIBUTIONS TO SHAREHOLDERS
Distribution from Net Investment Income (16)
Distribution in Excess of Net Investment Income (25)
------------------
Total Distribution to Shareholders (41)
------------------
CAPITAL SHARE TRANSACTIONS
Shares Issued Upon Exchange of Limited Partnership
Interests (2,356,794 shares) (Note 1) 23,568
Proceeds from Shares Sold (2,590,325 shares) 26,409
Proceeds from Shares Issued upon Reinvestment of Dividends
(3,727 shares) 37
Cost of Shares Redeemed (1,851,395 shares) (17,965)
------------------
Increase in Net Assets Resulting from Capital
Share Transactions 32,049
------------------
Increase in Net Assets 28,634
NET ASSETS
Beginning of Period _
------------------
End of Period $ 28,634
==================
</TABLE>
See accompanying Notes to Financial Statements.
65
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
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 21 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 Equities Fund.
TCW London International, Limited is also 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 Equities Fund. Berkeley Quantitative Advisors is sub-adviser to the
TCW Galileo Enhanced 500 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), one non-
diversified fixed income fund (the TCW Galileo Emerging Markets Income Fund), a
convertible securities fund (the TCW Galileo Convertible Securities Fund), and
fourteen 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 Enhanced 500 Fund, the
TCW Galileo Large Cap Growth Fund, the TCW Galileo Large Cap Value Fund, the TCW
Galileo Emerging Markets Income Fund, the TCW Galileo Asia Pacific Equities
Fund, the TCW Galileo Emerging Markets Equities Fund, the TCW Galileo Latin
America Equities 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. On June 3, 1998,
four additional Galileo Funds (the TCW Galileo Enhanced 500 Fund, the TCW
Galileo Large Cap Growth Fund, the TCW Galileo Large Cap Value Fund, and the TCW
Galileo Emerging Markets Income Fund) also 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 those dates, 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 Galileo 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 Equities 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 Equities Fund seeks long-term
capital appreciation by
66
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
investing in equity securities of companies in emerging market countries around
the world; (13) the TCW Galileo Latin America Equities 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; (17) the 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; (18) the TCW Galileo Emerging
Markets Income Fund seeks high total return from capital appreciation and
current income by investing at least 65% of its total assets in debt securities
issued or guaranteed by companies, financial institutions, and government
entities in emerging market countries; (19) the TCW Galileo Enhanced 500 Fund
seeks to achieve a high level of total return through a combination of capital
appreciation and current income by investing at least 65% of its total assets in
a broadly diversified portfolio of common stock of companies which are included
in the Standard &~Poor's 500 Composite Stock Price Index; (20) the TCW Galileo
Large Cap Growth Fund seeks long-term appreciation by investing primarily in
publicly traded equity securities of large capitalization U.S. companies with
above average earnings prospects; and (21) the TCW Galileo Large Cap Value Fund
seeks long-term capital appreciation by investing primarily in publicly traded
equity securities of large capitalization companies.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF ACCOUNTING: The Funds use the accrual method of accounting for
financial reporting purposes.
SECURITY VALUATIONS: Equity fund securities listed or traded on the New York,
American or other stock exchanges are valued at the latest sale price on that
exchange (if there were no sales that day, the security is valued at the latest
bid price). All other 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.
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. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. Realized and unrealized
gains and losses on investments are recorded on the basis of specific
identification.
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.
67
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -----------------------------------------
OPTIONS: Premiums received from call options written are recorded as a
liability. The amount of the liability is subsequently adjusted to reflect the
current market value of the option written. If the option expires unexercised,
premiums received are realized as a gain at expiration date. If the position is
closed prior to expiration, a gain or loss is realized based on premiums
received, less the cost to close the option. When an option is exercised,
premiums received are added to the proceeds from the sale of the underlying
securities and a gain or loss is realized. Call options purchased are accounted
for in the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. There were
no option contracts entered into during the year ended October 31, 1998.
DEFERRED ORGANIZATION COSTS: Organizational costs of approximately $4,000,
$2,000, $10,000 and $5,000 for the TCW Galileo Convertible Securities Fund, the
TCW Galileo Mid-Cap Growth Fund, the TCW Galileo Small Cap Growth Fund, and the
TCW Galileo Value Opportunities Fund, respectively, have been deferred and are
being amortized on a straight line basis over a five year period from the
commencement of operations. The deferred organization costs of $50,000 and
$3,800 for the TCW~Galileo Core Equities Fund and the TCW Galileo Earnings
Momentum Fund, respectively, have been completely amortized as of October 31,
1998. Organizational costs for the funds that commenced operations on June 3,
1998, were de minimus and therefore, were not deferred. Those costs were
expensed as incurred.
Upon formation of the Funds, the Company sold and issued to the Adviser 10,008
shares of common stock (one share each of the TCW Galileo Convertible Securities
Fund, the TCW Galileo Mid-Cap Growth Fund, the TCW Galileo Small Cap Growth
Fund, and the TCW Galileo Value Opportunities Fund, and 2,000 shares each of the
other two Funds, collectively the "Initial Shares"). In the event the Adviser
redeems any of its Initial Shares from one or more of the Funds prior to the end
of the five-year period, the proceeds of the redemption payable in respect of
such shares will be reduced by any unamortized organization costs in the same
ratio as the number of Initial Shares being redeemed bears to the number of
Initial Shares outstanding at the time of the redemption.
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 1:00 P.M. Pacific Time.
DIVIDENDS AND DISTRIBUTIONS: The TCW Galileo Convertible Securities Fund
declares and pays, or reinvests dividends from net investment income quarterly.
The other equity funds declare and pay, or reinvest, dividends from net
investment income annually. 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, excise tax
regulations and employing equalization in determining amounts to be distributed
to Fund shareholders. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassifications to paid-in-capital
and may impact 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 affect 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.
68
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
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
October 31, 1998, net unrealized appreciation (depreciation) on investments for
federal income tax purposes was as follows:
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
CONVERTIBLE SECURITIES CORE EQUITIES EARNINGS MOMENTUM
FUND FUND FUND
---------------------- ------------- -----------------
<S> <C> <C> <C>
Unrealized Appreciation $ 2,217,358 $ 48,204,159 $ 9,005,701
Unrealized (Depreciation) (1,693,832) (7,017,633) (439,705)
----------- ------------ -----------
Net Unrealized Appreciation $ 523,526 $ 41,186,526 $ 8,565,996
=========== ============ ===========
Cost of Investments for Federal
Income Tax Purposes $26,800,098 $143,823,019 $23,809,281
=========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
ENHANCED 500 LARGE CAP GROWTH LARGE CAP VALUE
GROWTH FUND FUND FUND
----------- ---------------- ---------------
<S> <C> <C> <C>
Unrealized Appreciation $ 8,461,527 $2,123,854 $ 535,421
Unrealized (Depreciation) (1,224,990) (24,305) (414,305)
----------- ----------- -----------
Net Unrealized Appreciation $ 7,236,537 $2,099,549 $ 121,116
=========== =========== ===========
Cost of Investments for Federal
Income Tax Purposes $43,694,934 $5,719,001 $7,396,444
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
MID-CAP GROWTH SMALL CAP GROWTH VALUE OPPORTUNITIES
FUND FUND FUND
-------------- ---------------- -------------------
<S> <C> <C> <C>
Unrealized Appreciation $28,497,871 $41,221,234 $ 1,835,720
Unrealized (Depreciation) (1,459,433) (2,381,470) (3,807,646)
----------- ----------- -----------
Net Unrealized Appreciation (Depreciation) $27,038,438 $38,839,764 $(1,971,926)
=========== =========== ===========
Cost of Investments for Federal
Income Tax Purposes $58,378,920 $75,981,354 $30,643,137
=========== =========== ===========
</TABLE>
At October 31, 1998, the following Funds had net realized loss carryforwards for
federal income tax purposes (in thousands):
Expiring in 2006
----------------
TCW Galileo Large Cap Value Fund $11
TCW Galileo Value Opportunities Fund 526
69
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -----------------------------------------
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 Convertible Securities Fund 0.75%
TCW Galileo Core Equities Fund 0.75%
TCWGalileo Earnings Momentum Fund 1.00%
TCWGalileo Enhanced 500 Fund 0.25%
TCWGalileo Large Cap Growth Fund 0.55%
TCWGalileo Large Cap Value Fund 0.55%
TCWGalileo Mid-Cap Growth Fund 1.00%
TCWGalileo Small Cap Growth Fund 1.00%
TCW Galileo Value Opportunities Fund 0.80%
Each equity 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 Convertible
Securities Fund, the TCW Galileo Enhanced 500 Fund, the TCW Galileo Large Cap
Growth Fund, the TCW Galileo Large Cap Value Fund, and the TCWGalileo Value
Opportunities Fund are limited to 1.05%, 0.47%, 0.91%, 0.55%, and 1.36%,
respectively, 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 year ended
October 31, 1998 were as follows:
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
CONVERTIBLE SECURITIES CORE EQUITIES EARNINGS MOMENTUM
FUND FUND FUND
---------------------- ------------ -----------------
<S> <C> <C> <C>
Purchases at Cost $43,531,701 $156,846,015 $30,405,287
=========== ============ ===========
Sales Proceeds $51,990,804 $162,419,220 $90,781,682
=========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
ENHANCED 500 LARGE CAP GROWTH LARGE CAP VALUE
GROWTH FUND FUND FUND
------------- ---------------- ---------------
<S> <C> <C> <C>
Purchases at Cost $22,462,469 $3,669,915 $6,366,118
=========== ============ ===========
Sales Proceeds $25,132,752 $3,907,157 $7,093,197
=========== ============ ===========
</TABLE>
70
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
October 31, 1998
NOTE 5 - PURCHASES AND SALES OF SECURITIES (CONTINUED)
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCWGALILEO
MID-CAP GROWTH SMALL CAP GROWTH VALUE OPPORTUNITIES
FUND FUND FUND
------------- --------------- -------------------
<S> <C> <C> <C>
Purchases at Cost $ 55,222,340 $ 81,332,164 $40,235,412
============ ============ ===========
Sales Proceeds $130,123,436 $107,923,575 $31,330,494
============ ============ ===========
</TABLE>
There were no purchases or sales of U.S. Government Securities for the year
ended October 31, 1998.
NOTE 6 - RESTRICTED SECURITIES
The following restricted securities held by the Funds as of October 31, 1998,
were valued both at the date of acquisition and October 31, 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.
TCW GALILEO CONVERTIBLE SECURITIES FUND:
<TABLE>
<CAPTION>
DATE OF
PRINCIPAL AMOUNT INVESTMENT ACQUISITION COST
- ---------------- --------------------------------------------------------------- ----------- -------
<S> <C> <C> <C>
$145,000 Action Performance Companies, Inc., (144A), 4.75%, due 04/01/05 03/19/98 $145,000
185,000 Adaptec, Inc., (144A), 4.75%, due 02/01/04 01/28/97 185,000
305,000 Assisted Living Concepts, Inc., (144A), 5.625%, due 05/01/03 04/07/98 299,984
665,000 Athena Neurosciences, Inc., (144A), 4.75%, due 11/15/04 11/05/97 665,000
520,000 Bell Atlantic Financial Services, (144A), 4.25%, due 09/15/05 08/06/98 516,659
185,000 Centocor, Inc., (144A), 4.75%, due 02/15/05 02/13/98 185,000
340,000 Comverse Technology, Inc., (144A), 4.5%, due 07/01/05 06/25/98 321,414
525,000 Concentra Managed Care, Inc., (144A), 4.5%, due 03/15/03 04/08/97 525,500
810,000 Costco Companies, Inc., (144A), 0%, due 08/19/17 08/14/97 421,897
250,000 Magna International, Inc., (144A), 4.875%, due 02/15/05 02/10/98 250,000
330,000 Merrill Lynch & Company, Inc., Exchangeable Technology
Basket, (144A), 0%, due 02/02/05 02/02/98 336,500
665,000 Network Associates, Inc., (144A), 0%, due 02/13/18 02/10/98 268,936
235,000 Omnicare, Inc., (144A), 5%, due 12/01/07 12/04/97 245,048
160,000 Premiere Technologies, Inc., (144A), 5.75%, due 07/01/04 06/25/97 163,850
</TABLE>
71
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -----------------------------------------
NOTE 6 - RESTRICTED SECURITIES (CONTINUED)
TCW GALILEO CONVERTIBLE SECURITIES FUND (CONTINUED):
<TABLE>
<CAPTION>
NUMBER OF DATE OF
SHARES OR DATE OF
PRINCIPAL AMOUNT INVESTMENT ACQUISITION COST
---------------- ------------------------------------------------------------------ ----------- --------
<S> <C> <C> <C>
$ 250,000 QuadraMed Corp., (144A), 5.25%, due 05/01/05 04/28/98 $251,125
$ 595,000 Quintiles Transnational Corp., (144AI, Reg D), 4.25%, due 05/31/00 04/23/96 655,239
$ 390,000 Rite Aid Corp., (144A), 5.25%, due 09/15/02 04/23/96 390,000
$ 445,000 Safeguard Scientifics, Inc., (144A), 6%, due 02/01/06 01/07/97 446,900
$ 370,000 Sepracor, Inc., Euro, (144A), 6.25%, due 02/15/05 02/05/98 381,038
5,300 Suiza Capital Trust, (144A), $2.75 Convertible Preferred 03/19/98 265,125
$ 145,000 Sunrise Assisted Living, Inc., (144A), 5.5%, due 06/15/02 06/03/97 149,988
$ 295,000 Swiss Life Finance, Ltd., Exchangeable Royal Dutch Petroleum Co.
(Netherlands), (144A), 2%, due 05/20/05 04/08/98 295,421
$ 240,000 Tower Automotive, Inc., (144A), 5%, due 08/01/04 07/24/97 240,000
8,200 Union Pacific Capital Trust, (144A), $3.13 Convertible Preferred 03/27/98 414,500
9,800 United Rentals, Inc., (144A), $3.25 Convertible Preferred 07/30/98 419,188
</TABLE>
The total value of restricted securities is $8,660,402, which represents 31.6%
of net assets of the Fund at October 31, 1998.
72
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
JANUARY 2, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) THROUGH
OCTOBER 31, 1998 OCTOBER 31, 1997
---------------- -------------------
<S> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 11.41 $ 10.00
------------- -----------------
Income from Investment Operations:
Net Investment Income 0.37 0.31
Net Realized and Unrealized Gain (Loss)
on Investments (0.08) 1.43
------------- -----------------
Total from Investment Operations 0.29 1.74
------------- -----------------
Less Distributions:
Distributions from Net Investment Income (0.37) (0.33)
Distributions in Excess of Net Investment Income (0.05) -
Distributions from Net Realized Gains (0.75) -
------------- -----------------
Total Distributions (1.17) (0.33)
------------- -----------------
Net Asset Value per Share, End of Period $ 10.53 $ 11.41
============= =================
Total Return 2.69% 17.66% /(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 27,388 $ 36,890
Ratio of Net Expenses to Average Net Assets 1.05% /(3)/ 0.95% /(2)(3)/
Ratio of Net Investment Income to
Average Net Assets 3.34% 3.54% /(2)/
Portfolio Turnover Rate 139.65% 141.43% /(1)/
</TABLE>
(1) For the period January 2, 1997 (commencement of operations) through October
31, 1997 and not indicative of a full year's operating results.
(2) Annualized.
(3) The Investment Adviser had 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 0.95% of Net Assets
through October 31, 1997 and 1.05% of Net Assets through December 31, 1998.
Had such action not been taken, total annualized operating expenses as a
percentage of average net assets would have been 1.51% for the period
January 2, 1997 (commencement of operations) through October 31, 1997 and
1.16% for the year ended October 31, 1998.
73
<PAGE>
TCW GALILEO CORE EQUITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
Ten Months
Year Ended October 31, Ended
------------------------------------------ October 31,
1998 1997 1996 1995 1994
--------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 19.29 $ 15.93 $ 13.69 $ 11.57 $ 11.81
--------- --------- -------- -------- ----------
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (0.02) 0.01 0.11 0.06 0.04
Net Realized and Unrealized Gain (Loss)
on Investments 3.38 3.57 2.18 2.11 (0.28)
--------- --------- -------- -------- ----------
Total from Investment Operations 3.36 3.58 2.29 2.17 (0.24)
--------- --------- -------- -------- ----------
Less Distributions:
Distributions from Net Investment Income - (0.02) (0.05) (0.05) -
Distributions from Net Realized Gains (5.76) (0.20) - - -
--------- --------- -------- -------- ----------
Total Distributions (5.76) (0.22) (0.05) (0.05) -
--------- --------- -------- -------- ----------
Net Asset Value per Share, End of Period $ 16.89 $ 19.29 $ 15.93 $ 13.69 $ 11.57
========= ========= ======== ======== ==========
Total Return 23.83% 22.68% 16.79% 18.85% (2.03)%/(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 184,865 $ 156,113 $ 231,302 $ 197,721 $ 136,122
Ratio of Expenses to Average Net Assets 0.86% 0.83% 0.82% 0.85% 0.91% /(3)/
Ratio of Net Investment Income (Loss) to
Average Net Assets (0.14)% 0.08% 0.18% 0.48% 0.44% /(3)/
Portfolio Turnover Rate 103.51% 39.22% 39.58% 53.77% 23.53% /(1)/
</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) through December
31, 1993 and not indicative of a full year's operating results.
(3) Annualized.
74
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO EARNINGS MOMENTUM FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
November 1, 1994
Year Ended October 31, (Commencement of
-------------------------------------- Operations) through
1998 1997 1996 October 31, 1995
------- -------- ------- -------------------
<S> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 13.87 $ 13.01 $ 11.47 $ 10.00
------- -------- ------- ---------------
Income (Loss) from Investment Operations:
Net Investment (Loss) (0.14) (0.12) (0.11) (0.03)
Net Realized and Unrealized Gain (Loss)
on Investments (2.20) 1.98 1.72 1.51
------- -------- ------- ---------------
Total from Investment Operations (2.34) 1.86 1.61 1.48
------- -------- ------- ---------------
Less Distributions:
Distributions in Excess of Net
Investment Income - - - (0.01)
Distributions from Net Realized Gains (0.97) (1.00) (0.07) -
------- -------- ------- ---------------
Total Distributions (0.97) (1.00) (0.07) (0.01)
------- -------- ------- ---------------
Net Asset Value per Share, End of Period $ 10.56 $ 13.87 $ 13.01 $ 11.47
======= ======== ======= ===============
Total Return (17.76)% 15.53% 13.99% 14.76%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $32,299 $101,667 $77,994 $ 63,411
Ratio of Expenses to Average Net Assets 1.27% 1.17% 1.13% 1.14% /(1)/
Ratio of Net Investment (Loss) to
Average Net Assets (1.10)% (0.96)% (0.82)% (0.28)%
Portfolio Turnover Rate 51.25% 93.06% 99.03% 85.91%
</TABLE>
(1) The Investment Adviser had 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 1.14% of net assets
through December 31, 1995. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
1.14% for the year ended October 31, 1996 and November 1, 1994 (commencement
of operations) through October 31, 1995.
75
<PAGE>
TCW GALILEO ENHANCED 500 FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
JUNE 3, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
Net Asset Value per Share, Beginning of Period $ 10.00
------------
Income from Investment Operations:
Net Investment Income 0.04
Net Realized and Unrealized Gain
on Investments 0.04
------------
Total from Investment Operations 0.08
------------
Net Asset Value per Share, End of Period $ 10.08
============
Total Return 0.80%/(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in Thousands) $ 50,936
Ratio of Net Expenses to Average Net Assets 0.47%/(2)(3)/
Ratio of Net Investment Income to
Average Net Assets 0.90%/(2)/
Portfolio Turnover Rate 45.82%/(1)/
</TABLE>
(1) For the period June 3, 1998 (commencement of operations) through October 31,
1998 and not indicative of a full year's operating results.
(2) Annualized.
(3) The Investment Adviser had 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 0.47% of net assets
through December 31, 1998. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
0.62% for the period June 3, 1998 (commencement of operations) through
October 31, 1998.
76
<PAGE>
TCW GALILEO FUNDS, INC.
TCW GALILEO LARGE CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
JUNE 3, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
Net Asset Value per Share, Beginning of Period $ 10.00
--------
Income from Investment Operations:
Net Investment Income --
Net Realized and Unrealized Gain
on Investments 1.18
--------
Total from Investment Operations 1.18
--------
Net Asset Value per Share, End of Period $ 11.18
========
Total Return 11.80% /(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in Thousands) $ 7,800
Ratio of Net Expenses to Average Net Assets 0.91%/(2)(3)/
Ratio of Net Investment (Loss) to
Average Net Assets (0.07)%/(2)/
Portfolio Turnover Rate 50.76%/(1)/
</TABLE>
(1) For the period June 3, 1998 (commencement of operations) through October 31,
1998 and not indicative of a full yearOs operating results.
(2) Annualized.
(3) The Investment Adviser had 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 0.91% of net assets
through December 31, 1998. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
2.53% for the period June 3, 1998 (commencement of operations) through
October 31, 1998.
77
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
JUNE 3, 1998
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
Net Asset Value per Share, Beginning of Period $ 10.00
---------
Income from Investment Operations:
Net Investment Income 0.04
Net Realized and Unrealized Gain
on Investments 0.08
---------
Total from Investment Operations 0.12
---------
Net Asset Value per Share, End of Period $ 10.12
=========
Total Return 1.20% /(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in Thousands) $ 7,505
Ratio of Net Expenses to Average Net Assets 0.55% /(2)(3)/
Ratio of Net Investment Income to
Average Net Assets 1.04% /(2)/
Portfolio Turnover Rate 83.84% /(1)/
</TABLE>
(1) For the period June 3, 1998 (commencement of operations) through October 31,
1998 and not indicative of a full yearOs operating results.
(2) Annualized.
(3) The Investment Adviser had 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, 1998. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
2.48% for the period June 3, 1998 (commencement of operations) through
October 31, 1998.
78
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO MID-CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
June 3, 1996
Year Ended October 31, (Commencement of
------------------------ Operations) through
1998 1997 October 31, 1996
---------- ------------ -------------------
<S> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $ 9.40 $ 9.19 $ 10.00
-------- ---------- ------------
Income (Loss) from Investment Operations:
Net Investment (Loss) (0.11) (0.08) (0.03)
Net Realized and Unrealized Gain (Loss)
on Investments 2.06 0.29 (0.78)
-------- ---------- ------------
Total from Investment Operations 1.95 0.21 (0.81)
-------- ---------- ------------
Net Asset Value per Share, End of Period $ 11.35 $ 9.40 $ 9.19
Total Return 20.74% 2.28% (8.10)% /(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 84,904 $ 135,850 $ 92,430
Ratio of Expenses to Average Net Assets 1.17% 1.12% 1.20% /(2)(3)/
Ratio of Net Investment (Loss) to
Average Net Assets (1.03)% (0.86)% (0.80)% /(2)/
Portfolio Turnover Rate 55.36% 50.45% 19.19% /(1)/
</TABLE>
(1) For the period June 3, 1996 (commencement of operations) through October 31,
1996 and not indicative of a full year's operating results.
(2) Annualized.
(3) The Investment Adviser had 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 1.20% of net assets
through December 31, 1996. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
1.27% for the period June 3, 1996 (commencement of operations) through
October 31, 1996.
79
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
March 1, 1994
Year Ended October 31, (Commencement of
------------------------------------------------------------ Operations)through
1998 1997 1996 1995 October 31, 1994
------- ------- ------- ------- --------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Period $18.74 $17.17 $13.53 $9.39 $ 10.00
------- ------- ------- ------- --------------------
Income (Loss) from Investment Operations:
Net Investment (Loss) (0.18) (0.15) (0.13) (0.07) (0.04)
Net Realized and Unrealized Gain (Loss)
on Investments (0.90) 1.91 4.08 4.72 (0.57)
------- ------- ------- ------- -------------------
Total from Investment Operations (1.08) 1.76 3.95 4.65 (0.61)
------- ------- ------- ------- -------------------
Less Distributions:
Distributions from Net Investment Income - - (0.01) - -
Distributions from Net Realized Gains (1.18) (0.19) (0.30) (0.51) -
------- ------- ------- ------- -------------------
Total Distributions (1.18) (0.19) (0.31) (0.51) -
------- ------- ------- ------- -------------------
Net Asset Value per Share, End of Period $16.48 $18.74 $17.17 $13.53 $ 9.39
======= ======= ======= ======= ===================
Total Return (5.98)% 10.38% 29.73% 49.89% (6.10)% /(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $116,050 $144,756 $132,444 $66,056 $51,089
Ratio of Expenses to Average Net Assets 1.13% 1.14% 1.14% 1.21% /(3)/ 1.09% /(2)(3)/
Ratio of Net Investment (Loss) to
Average Net Assets (0.95)% (0.89)% (0.76)% (0.61)% (0.59)% /(2)/
Portfolio Turnover Rate 63.67% 60.52% 45.43% 89.73% 88.63% /(1)/
</TABLE>
(1) For the period March 1, 1994 (commencement of operations) through October
31, 1994 and not indicative of a full year's operating results.
(2) Annualized.
(3) The Investment Adviser had 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 1.09% of net assets
through December 31, 1996. Had such action not been taken, total annualized
operating expenses as a percentage of average net assets would have been
1.24% for the period ended October 31, 1995 and 1.39% for the period March
1, 1994 (commencement of operations) through October 31, 1994.
80
<PAGE>
TCW GALILEO FUNDS, INC.
(U.S. EQUITIES)
TCW GALILEO VALUE OPPORTUNITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------
<TABLE>
<CAPTION>
NOVEMBER 3, 1997
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 1998
-------------------
<S> <C>
Net Asset Value per Share, Beginning
of Period $ 10.00
-----------------
Income (Loss) from Investment Operations:
Net Investment Income -
Net Realized and Unrealized (Loss)
on Investments (0.75)
-----------------
Total from Investment Operations (0.75)
-----------------
Less Distributions:
Distributions from Net Investment Income -
Distributions in Excess of Net Investment
Income (0.01)
-----------------
Net Asset Value per Share, End of Period $ 9.24
=================
Total Return (7.49)% /(1)/
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 28,634
Ratio of Expenses to Average Net Assets 1.16% /(2)/
Ratio of Net Investment Income to
Average Net Assets 0.05% /(2)/
Portfolio Turnover Rate 97.30% /(1)/
</TABLE>
(1) For the period November 3, 1997 (commencement of operations) through October
31, 1998 and not indicative of a full year's operating results.
(2) Annualized.
81
<PAGE>
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Board of Directors and Shareholders of TCW Galileo Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of TCW Galileo Convertible Securities Fund, TCW
Galileo Core Equities Fund, TCW Galileo Earnings Momentum Fund, TCW Galileo
Enhanced 500 Fund, TCW Large Cap Growth Fund, TCW Large Cap Value Fund, TCW Mid-
Cap Growth Fund, TCW Small Cap Growth Fund, and TCW Value Opportunities Fund
(the "Galileo U.S. Equities Funds")(nine of twenty-one funds comprising TCW
Galileo Funds, Inc.) as of October 31, 1998 and related statements of operations
for the periods then ended, the statements of changes in net assets for each of
the periods ended October 31, 1998 and 1997, and the financial highlights for
each of the respective periods in the periods ended October 31, 1998. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1998 by correspondence with the custodians and brokers. Where
confirmations were not received, we performed alternative procedures. An audit
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Galileo U.S. Equities Funds as of October 31, 1998 and the
results of their operations, the changes in their net assets, the financial
highlights for the respective stated periods in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
December 22, 1998
Los Angeles, California
82
<PAGE>
TCW GALILEO FUNDS, INC.
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
SUB-ADVISER
John C. Argue Berkeley Quantitative Advisors
Director 1995 University Avenue, Suite 225
Berkeley, California 94704
Norman Barker, Jr.
Director
CUSTODIAN
Richard W. Call BNY Western Trust Company
Director 700 South Flower Street
Suite 200
Los Angeles, California 90017
Alvin R. Albe, Jr.
Senior Vice President
Michael E. Cahill TRANSFER AGENT
Senior Vice President,
General Counsel and Assistant Secretary DST Systems, Inc.
811 Main Street
Kansas City, Missouri 64105
Philip K. Holl
Secretary
Marie M. Bender DISTRIBUTOR
Assistant Secretary
TCW Brokerage Services
865 South Figueroa Street
Los Angeles, California 90017
Hilary G.D. Lord (213) 244-0000
Assistant Secretary
Peter C. DiBona
Treasurer INDEPENDENT AUDITORS
Deloitte & Touche llp
1000 Wilshire Boulevard
Los Angeles, California 90017
83
<PAGE>
TAX INFORMATION NOTICE (UNAUDITED)
----------------------------------
On account of the year ended October 31, 1998, the following funds paid capital
gain distributions within the meaning of Section 852 (b)(3)(c) of the Internal
Revenue Code. The Funds also designate as a capital gain distribution a portion
of earnings and profits paid to shareholders in redemption of their shares.
<TABLE>
<CAPTION>
AMOUNT PER
FUND SHARE
- ----------------------------------------- -----------
<S> <C>
TCW Galileo Convertible Securities Fund $ 0.66
TCW Galileo Core Equities Fund 3.27
TCW Galileo Earnings Momentum Fund 3.25
TCW Galileo Enhanced 500 Fund 0.56
TCW Galileo Large Cap Growth Fund 0.34
TCW Galileo Mid Cap Growth Fund 3.72
TCW Galileo Small Cap Growth Fund 2.02
</TABLE>
This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. For income tax preparation purposes, please refer to the calendar year
end information you will receive from the Funds' transfer agent in January 1999.
84
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> TCW GALILEO CORE EQUITIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 143,806
<INVESTMENTS-AT-VALUE> 185,010
<RECEIVABLES> 62
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185,072
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 207
<TOTAL-LIABILITIES> 207
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 81,673
<SHARES-COMMON-STOCK> 10,947
<SHARES-COMMON-PRIOR> 8,091
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 50
<ACCUMULATED-NET-GAINS> 62,038
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41,204
<NET-ASSETS> 184,865
<DIVIDEND-INCOME> 986
<INTEREST-INCOME> 119
<OTHER-INCOME> 0
<EXPENSES-NET> 1,320
<NET-INVESTMENT-INCOME> (215)
<REALIZED-GAINS-CURRENT> 40,589
<APPREC-INCREASE-CURRENT> (9,408)
<NET-CHANGE-FROM-OPS> 30,966
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (37,055)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,448
<NUMBER-OF-SHARES-REDEEMED> 5,179
<SHARES-REINVESTED> 2,587
<NET-CHANGE-IN-ASSETS> 28,752
<ACCUMULATED-NII-PRIOR> 165
<ACCUMULATED-GAINS-PRIOR> 58,504
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,150
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,320
<AVERAGE-NET-ASSETS> 153,460
<PER-SHARE-NAV-BEGIN> 19.29
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 3.38
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 5.76
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.89
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> TCW GALILEO SMALL CAP GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 75,407
<INVESTMENTS-AT-VALUE> 114,821
<RECEIVABLES> 1,908
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 116,730
<PAYABLE-FOR-SECURITIES> 527
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 153
<TOTAL-LIABILITIES> 680
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 76,892
<SHARES-COMMON-STOCK> 7,044
<SHARES-COMMON-PRIOR> 7,724
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 3,738
<ACCUMULATED-NET-GAINS> 3,482
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 39,414
<NET-ASSETS> 116,050
<DIVIDEND-INCOME> 103
<INTEREST-INCOME> 132
<OTHER-INCOME> 0
<EXPENSES-NET> 1,480
<NET-INVESTMENT-INCOME> (1,245)
<REALIZED-GAINS-CURRENT> 1,477
<APPREC-INCREASE-CURRENT> (7,110)
<NET-CHANGE-FROM-OPS> (6,878)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 9,228
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,331
<NUMBER-OF-SHARES-REDEEMED> 3,534
<SHARES-REINVESTED> 523
<NET-CHANGE-IN-ASSETS> (28,706)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 11,233
<OVERDISTRIB-NII-PRIOR> 2,493
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,313
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,480
<AVERAGE-NET-ASSETS> 130,299
<PER-SHARE-NAV-BEGIN> 18.74
<PER-SHARE-NII> (0.18)
<PER-SHARE-GAIN-APPREC> (0.90)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.18
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.48
<EXPENSE-RATIO> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<NAME> TCW GALILEO EARNINGS MOMENTUM FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 23,627
<INVESTMENTS-AT-VALUE> 32,375
<RECEIVABLES> 6
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,381
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 82
<TOTAL-LIABILITIES> 82
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,681
<SHARES-COMMON-STOCK> 3,057
<SHARES-COMMON-PRIOR> 7,327
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,220
<ACCUMULATED-NET-GAINS> 6,090
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,748
<NET-ASSETS> 32,299
<DIVIDEND-INCOME> 73
<INTEREST-INCOME> 27
<OTHER-INCOME> 0
<EXPENSES-NET> 750
<NET-INVESTMENT-INCOME> (650)
<REALIZED-GAINS-CURRENT> 4,544
<APPREC-INCREASE-CURRENT> (11,629)
<NET-CHANGE-FROM-OPS> (7,735)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 6,319
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 106
<NUMBER-OF-SHARES-REDEEMED> 4,894
<SHARES-REINVESTED> 518
<NET-CHANGE-IN-ASSETS> (69,368)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 7,865
<OVERDISTRIB-NII-PRIOR> 1,570
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 594
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 750
<AVERAGE-NET-ASSETS> 57,133
<PER-SHARE-NAV-BEGIN> 13.87
<PER-SHARE-NII> (0.14)
<PER-SHARE-GAIN-APPREC> (2.20)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.97
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.56
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 12
<NAME> TCW GALILEO MID CAP GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 58,315
<INVESTMENTS-AT-VALUE> 85,417
<RECEIVABLES> 426
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 85,844
<PAYABLE-FOR-SECURITIES> 819
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 121
<TOTAL-LIABILITIES> 940
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44,900
<SHARES-COMMON-STOCK> 7,480
<SHARES-COMMON-PRIOR> 14,451
<ACCUMULATED-NII-CURRENT> (2,242)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,144
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,102
<NET-ASSETS> 84,904
<DIVIDEND-INCOME> 117
<INTEREST-INCOME> 29
<OTHER-INCOME> 0
<EXPENSES-NET> 1,173
<NET-INVESTMENT-INCOME> (1,027)
<REALIZED-GAINS-CURRENT> 26,267
<APPREC-INCREASE-CURRENT> (5,470)
<NET-CHANGE-FROM-OPS> 19,770
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,104
<NUMBER-OF-SHARES-REDEEMED> 8,075
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (50,946)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 1,215
<OVERDIST-NET-GAINS-PRIOR> 11,123
<GROSS-ADVISORY-FEES> 1,002
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,173
<AVERAGE-NET-ASSETS> 97,719
<PER-SHARE-NAV-BEGIN> 9.40
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> 2.06
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.35
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 13
<NAME> TCW GALILEO CONVERTIBLE SECURITIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 26,741
<INVESTMENTS-AT-VALUE> 27,324
<RECEIVABLES> 272
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,598
<PAYABLE-FOR-SECURITIES> 156
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 54
<TOTAL-LIABILITIES> 210
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,724
<SHARES-COMMON-STOCK> 2,600
<SHARES-COMMON-PRIOR> 3,233
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 103
<ACCUMULATED-NET-GAINS> 3,184
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 583
<NET-ASSETS> 27,388
<DIVIDEND-INCOME> 498
<INTEREST-INCOME> 891
<OTHER-INCOME> 0
<EXPENSES-NET> 367
<NET-INVESTMENT-INCOME> 1,057
<REALIZED-GAINS-CURRENT> 2,821
<APPREC-INCREASE-CURRENT> (2,652)
<NET-CHANGE-FROM-OPS> 1,226
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,059
<DISTRIBUTIONS-OF-GAINS> 2,114
<DISTRIBUTIONS-OTHER> 103
<NUMBER-OF-SHARES-SOLD> 704
<NUMBER-OF-SHARES-REDEEMED> 1,596
<SHARES-REINVESTED> 259
<NET-CHANGE-IN-ASSETS> (9,502)
<ACCUMULATED-NII-PRIOR> 2
<ACCUMULATED-GAINS-PRIOR> 2,477
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 237
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 367
<AVERAGE-NET-ASSETS> 31,269
<PER-SHARE-NAV-BEGIN> 11.41
<PER-SHARE-NII> 0.37
<PER-SHARE-GAIN-APPREC> (0.08)
<PER-SHARE-DIVIDEND> 0.42
<PER-SHARE-DISTRIBUTIONS> 0.75
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.53
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 17
<NAME> TCW GALILEO VALUE OPPORTUNITIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 30,588
<INVESTMENTS-AT-VALUE> 28,671
<RECEIVABLES> 27
<ASSETS-OTHER> 4
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,702
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68
<TOTAL-LIABILITIES> 68
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,157
<SHARES-COMMON-STOCK> 3,099
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 25
<ACCUMULATED-NET-GAINS> (581)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,917)
<NET-ASSETS> 28,634
<DIVIDEND-INCOME> 343
<INTEREST-INCOME> 71
<OTHER-INCOME> 0
<EXPENSES-NET> 398
<NET-INVESTMENT-INCOME> 16
<REALIZED-GAINS-CURRENT> (581)
<APPREC-INCREASE-CURRENT> (2,809)
<NET-CHANGE-FROM-OPS> (3,374)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 25
<NUMBER-OF-SHARES-SOLD> 4,947
<NUMBER-OF-SHARES-REDEEMED> 1,851
<SHARES-REINVESTED> 3
<NET-CHANGE-IN-ASSETS> 28,634
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 274
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 398
<AVERAGE-NET-ASSETS> 34,467
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (0.75)
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.24
<EXPENSE-RATIO> 1.16
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 18
<NAME> TCW GALILEO LARGE CAP GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> JUN-01-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 5,719
<INVESTMENTS-AT-VALUE> 7,819
<RECEIVABLES> 4
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,823
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 23
<TOTAL-LIABILITIES> 23
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,251
<SHARES-COMMON-STOCK> 698
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2
<ACCUMULATED-NET-GAINS> 451
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,100
<NET-ASSETS> 7,800
<DIVIDEND-INCOME> 24
<INTEREST-INCOME> 2
<OTHER-INCOME> 0
<EXPENSES-NET> 28
<NET-INVESTMENT-INCOME> (2)
<REALIZED-GAINS-CURRENT> 451
<APPREC-INCREASE-CURRENT> 345
<NET-CHANGE-FROM-OPS> 794
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 739
<NUMBER-OF-SHARES-REDEEMED> 41
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,800
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 78
<AVERAGE-NET-ASSETS> 7,374
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.18
<EXPENSE-RATIO> 0.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 19
<NAME> TCW GALILEO LARGE CAP VALUE FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> JUN-01-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 7,121
<INVESTMENTS-AT-VALUE> 7,518
<RECEIVABLES> 6
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,524
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19
<TOTAL-LIABILITIES> 19
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,358
<SHARES-COMMON-STOCK> 742
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 36
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (286)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 397
<NET-ASSETS> 7,505
<DIVIDEND-INCOME> 48
<INTEREST-INCOME> 7
<OTHER-INCOME> 0
<EXPENSES-NET> 19
<NET-INVESTMENT-INCOME> 36
<REALIZED-GAINS-CURRENT> (286)
<APPREC-INCREASE-CURRENT> 159
<NET-CHANGE-FROM-OPS> (91)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,040
<NUMBER-OF-SHARES-REDEEMED> 298
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,505
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 86
<AVERAGE-NET-ASSETS> 8,190
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.08
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 20
<NAME> TCW GALILEO ENHANCED 500 FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> JUN-01-1998
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 43,646
<INVESTMENTS-AT-VALUE> 50,931
<RECEIVABLES> 49
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50,980
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44
<TOTAL-LIABILITIES> 44
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,326
<SHARES-COMMON-STOCK> 5,054
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 187
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,138
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,285
<NET-ASSETS> 50,936
<DIVIDEND-INCOME> 285
<INTEREST-INCOME> 1
<OTHER-INCOME> 0
<EXPENSES-NET> 99
<NET-INVESTMENT-INCOME> 187
<REALIZED-GAINS-CURRENT> 2,138
<APPREC-INCREASE-CURRENT> (2,421)
<NET-CHANGE-FROM-OPS> (96)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,036
<NUMBER-OF-SHARES-REDEEMED> 982
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 50,936
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 52
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 129
<AVERAGE-NET-ASSETS> 49,134
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.04
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.08
<EXPENSE-RATIO> 0.47
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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