<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
U.S. Fixed Income
Table of Contents October 31, 1999
<TABLE>
<S> <C>
Letter To Shareholders...................................................... 1
Management Discussions...................................................... 2
Schedules of Investments:
TCW Galileo Money Market Fund............................................. 10
TCW Galileo Core Fixed Income Fund........................................ 12
TCW Galileo High Yield Bond Fund.......................................... 20
TCW Galileo Mortgage-Backed Securities Fund............................... 28
TCW Galileo Total Return Mortgage-Backed Securities Fund.................. 31
Statements of Assets and Liabilities........................................ 34
Statements of Operations.................................................... 35
Statements of Changes in Net Assets......................................... 36
Notes to Financial Statements............................................... 39
Financial Highlights........................................................ 50
Independent Auditors' Report................................................ 58
</TABLE>
[LOGO] TCW GALILEO FUNDS INC.
THE POWER OF INDEPENDENT THINKING(TM)
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
To Our Shareholders
We are pleased to submit the October 31, 1999 Annual Reports for the TCW Gali-
leo Funds. In this report we have incorporated a discussion and analysis of how
each Fund's performance over the last 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 manage-
ment and distinctive personal service through the TCW Galileo Funds. On March
1, 1999, we created an additional class of shares (N class) on nine of our Gal-
ileo Funds.
Now individuals can purchase our Select Equities Fund, Aggressive Growth Equi-
ties Fund, Large Cap Growth Fund, Large Cap Value Fund, Small Cap Growth Fund,
European Equities Fund, Core Fixed Income Fund, High Yield Bond Fund or Total
Return Mortgage-Backed Securities Fund with a low initial investment of $2,000.
The Galileo Mutual Funds continue to provide our clients with targeted invest-
ment strategies featuring daily liquidity, competitive management fees and no
front end loads, or deferred sales charges.
Please call our Shareholder Services Department at (800) FUND-TCW [(800) 386-
3829] if you have any questions or would like further information on the TCW
Galileo Funds.
/s/ Marc I. Stern
Marc I. Stern
Chairman of the Board
December 6, 1999
1
<PAGE>
TCW Galileo Core Fixed Income Fund
- --------------------------------------------------------------------------------
Management Discussions
For the year ended October 31, 1999, the TCW Galileo Core Fixed Income Fund
(the "Fund") returned 0.69% on its Institutional ("I") Class shares versus
0.53% for the Lehman Brothers Aggregate Bond Index. For the Advisory ("N")
Class shares, the performance for the period March 1, 1999 (Commencement of
offering Advisory Class shares) through October 31, 1999 was 0.17% versus the
benchmark return of 0.72%. The performance of the Fund's two classes varies
because of timing and differing expenses.
Interest rates moved steadily higher during the year, continuing the relentless
move upward that began in October of last year. The yield on 10-year U.S.
Treasuries has risen 130 basis points so far this year, sufficient to make the
first three quarters of 1999 the second worst period in terms of the total
return of the Lehman Aggregate Bond Index since the inception of that index.
During the third quarter, the interest rate rise was caused in part by a
technical supply bulge in the corporate bond market relating to Y2K fears,
particularly when set against a still fundamentally bearish economic
background. Robust economic growth and a tight labor market both remain firmly
in tact, continuing to suggest the potential for increased inflation. As a
preemptive strike, the Federal Reserve Board increased two key interest rates
25 basis points in late August which negatively impacted the bond market.
Financial markets focused particularly on the tone of the Federal Reserve's
directive rather than the move itself, in an attempt to discern the likelihood
of still further rate hikes. The Federal Reserve Board's indication that they
had adopted a neutral stance eased market tensions briefly, but when fears of
an overheated economy and rising rates of inflation returned, the bond market
sell-off resumed.
Spread volatility this year has been extremely high. By early August, spreads
in most fixed income bond sectors had widened to the same levels seen during
last year's global financial crisis. In addition, correlations among the
various spread products have been very high; mortgages, corporates, and agency
debentures have all widened and tightened in tandem. One of the reasons that
general spread levels and correlations have increased is that Treasury
securities have become increasingly scarce. The budget surpluses of 1998-1999
have been the first back-to-back budget surpluses in 42 years. These surpluses
reduce the amount of outstanding Treasuries and, on the margin, make Treasury
securities expensive relative to competing spread products. Diminishing
Treasury supply has had a significant (though widely ignored) impact on the
composition of the Lehman Brothers Aggregate Index, down from 45% at the end of
1996. Over the same period of time mortgages rose to 34% from 30% and
corporates grew to 20% from 18% of the total index.
Other conditions in the marketplace also contributed to the widening of
spreads. A large volume of new issues in the corporate sector, fueled in part
by Y2K concerns, overwhelmed the market's demand for product and put pressure
on all fixed income securities. The market's equilibrium was thrown further off
balance when the underwriters and issuers of corporate bonds sold fixed rate
interest rate swaps to hedge their market exposure. This hedging activity
caused spreads on swaps to widen to historic levels which in turn led to wider
yield spreads on other fixed income products. Securities dealers further
contributed to the market's woes by maintaining lower levels of bond
inventories, a defensive business practice which led to fewer trades, made
price levels more difficult to gauge and ultimately widened bid-ask spreads in
almost all types of bonds. Thin trading volume also led to exaggerated market
movements and kept volatility high.
2
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
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TCW Galileo Core Fixed Income Fund - I Class
[PERFORMANCE GRAPH APPEARS HERE]
Average Annualized Total Return /(1)/
<TABLE>
<CAPTION>
1-Year 3-Year 5-Year Since Inception
- ------ ------ ------ ---------------
<S> <C> <C> <C>
0.69% 5.98% 7.17% 6.95%
</TABLE>
Initial Value: $250,000
<TABLE>
<CAPTION>
SALOMON LEHMAN
BROAD AGGREGATE
YEAR MONTH FUND INDEX INDEX
- ---- ----- ---- ------- ---------
<S> <C> <C> <C> <C>
1990 JAN 246,935.00 247,151.40 247,029.20
FEB 247,263.42 247,595.03 247,828.55
MAR 248,079.39 248,100.93 248,011.08
APR 246,298.18 245,906.11 245,738.92
MAY 252,635.44 252,910.87 253,014.85
JUN 256,013.17 257,043.68 257,074.52
JUL 260,053.06 260,701.72 260,630.66
AUG 256,854.41 257,316.09 257,150.05
SEP 258,403.24 259,557.61 259,277.44
OCT 260,677.19 262,818.72 262,569.23
NOV 265,645.69 268,445.88 268,221.30
DEC 269,561.31 272,718.78 272,400.55
1991 JAN 272,663.96 276,018.80 275,767.88
FEB 274,439.00 277,832.26 278,121.85
MAR 276,115.83 279,894.77 280,035.25
APR 278,923.92 283,272.63 283,068.98
MAY 280,636.52 284,883.72 284,724.32
JUN 280,257.66 284,922.64 284,579.56
JUL 284,083.18 288,923.13 288,525.93
AUG 290,244.94 294,993.93 294,769.64
SEP 296,688.38 301,158.12 300,742.70
OCT 299,076.72 304,240.22 304,091.14
NOV 301,789.34 307,112.17 306,879.41
DEC 312,952.53 316,303.98 315,993.20
1992 JAN 306,834.31 312,256.78 311,695.69
FEB 308,420.64 314,288.16 313,722.39
MAR 306,637.97 312,638.16 311,953.75
APR 307,790.93 315,019.77 314,207.03
MAY 314,149.89 320,779.24 320,136.06
JUN 319,257.97 325,340.12 324,541.92
JUL 327,070.21 331,768.94 331,163.30
AUG 329,588.65 335,450.33 334,518.05
SEP 332,426.41 339,357.43 338,483.32
OCT 328,061.65 334,936.65 333,995.64
NOV 328,632.48 335,068.96 334,071.17
DEC 333,598.12 340,275.83 339,383.38
1993 JAN 339,999.86 347,163.85 345,891.46
FEB 346,456.46 353,063.42 351,946.37
MAR 349,065.28 354,456.59 353,412.89
APR 350,629.09 357,258.49 355,873.88
MAY 348,707.64 357,484.20 356,327.05
JUN 356,522.18 364,271.04 362,784.79
JUL 358,814.62 366,356.90 364,836.66
AUG 367,494.34 372,630.06 371,231.45
SEP 369,096.62 373,883.13 372,251.09
OCT 370,259.27 375,058.37 373,642.08
NOV 366,401.17 371,921.80 370,463.57
DEC 369,116.21 374,015.44 372,471.38
1994 JAN 372,884.88 379,066.65 377,500.36
FEB 363,749.20 372,770.15 370,941.92
MAR 352,345.66 363,523.86 361,796.61
APR 345,175.43 360,784.22 358,907.63
MAY 343,587.62 360,753.09 358,857.28
JUN 343,116.91 359,982.57 358,064.22
JUL 349,811.12 366,800.54 365,176.54
AUG 349,905.57 367,213.04 365,629.71
SEP 343,526.79 361,920.55 360,248.27
OCT 342,379.41 361,570.31 259,927.27
NOV 340,848,97 360,612.99 359,127.92
DEC 340,589.93 363,368.20 361,607.79
1995 JAN 346,052.99 370,886.65 368,764.17
FEB 353,500.05 379,549.20 377,531.83
MAR 355,073.13 381,751.81 379,848.05
APR 359,028.64 386,966.47 385,153.97
MAY 374,319.67 402,314.69 400,058.36
JUN 376,112.66 405,132.16 402,991.40
JUL 373,513.72 404,314.93 402,091.35
AUG 380,543.25 408,953.64 406,944.09
SEP 384,371.52 412,790.70 410,903.07
OCT 390,037.15 418,308.89 416,246.75
NOV 395,720.00 424,823.32 422,484.19
DEC 402,162.32 430,691.76 428,413.21
1996 JAN 403,187.83 433,625.98 431,258.14
FEB 393,922.57 426,255.41 423,761.88
MAR 389,991.23 423,165.53 420,816.25
APR 387,705.88 420,052.30 418,449.68
MAY 386,662.95 419,818.81 417,599.98
JUN 390,231.85 425,243.61 423,208.01
JUL 391,706.93 426,395.50 424,366.12
AUG 391,072.36 425,780.64 423,654.89
SEP 397,251.30 433,190.12 431,037.85
OCT 406,670.13 442,934.53 440,585.97
NOV 413,123.99 450,242.83 448,132.58
DEC 410,310.61 446,273.47 443,965.90
1997 JAN 411,615.40 448,013.93 445,342.19
FEB 412,710.30 448,506.75 446,455.55
MAR 407,654.60 443,976.83 441,499.89
APR 413,174.24 450,325.70 448,122.39
MAY 417,500.17 454,558.76 452,379.55
JUN 422,405.80 459,968.01 457,762.87
JUL 433,616.45 472,433.14 470,122.47
AUG 428,772.95 468,370.22 466,126.43
SEP 435,346.04 475,255.26 472,978.48
OCT 441,049.08 482,098.94 479,836.67
NOV 442,195.80 484,364.80 482,043.92
DEC 446,860.97 489,305.32 486,912.56
1998 JAN 452,419.92 495,617.36 493,145.05
FEB 451,953.93 495,270.43 492,750.53
MAR 452,889.47 497,201.98 494,425.88
APR 455,710.97 499,787.43 496,996.90
MAY 459,967.31 504,585.39 501,718.37
JUN 464,005.83 508,722.99 505,982.97
JUL 464,720.40 509,791.31 507,045.54
AUG 472,634.59 517,591.12 515,310.38
SEP 485,400.45 529,806.27 527,368.64
OCT 480,823.12 527,422.14 524,573.59
NOV 483,861.92 530,333.51 527,563.66
DEC 487,277.99 531,982.85 529,146.35
1999 JAN 489,728.99 535,914.20 532,903.29
FEB 481,359.53 526,519.62 523,577.48
MAR 485,807.29 529,531.32 526,457.16
APR 487,046.10 531,289.36 528,141.82
MAY 482,312.01 526,422.75 523,546.99
JUN 480,561.22 524,606.59 521,871.63
JUL 480,561.22 522,529.15 519,627.59
AUG 479,547.23 522,147.70 519,367.77
SEP 484,122.11 528,397.81 525,392.44
OCT 484,122.11 529,998.86 527,336.39
</TABLE>
TCW Galileo Core Fixed Income Fund - N Class
[PERFORMANCE GRAPH APPEARS HERE]
Total Return /(2)/
Since Inception
0.72%
VALUE: $2,000
<TABLE>
<CAPTION>
SALOMON LEHMAN
BROAD AGGREGATE
YEAR MONTH FUND INDEX INDEX
- ---- ----- ---- ------- ---------
<S> <C> <C> <C> <C>
1999 MAR 2,020.54 2,011.44 2,011.00
APR 2,020.54 2,018.12 2,017.44
MAY 1,995.89 1,999.63 1,993.88
JUN 1,988.70 1,992.73 1,993.48
JUL 1,988.70 1,984.84 1,984.91
AUG 1,984.55 1,983.39 1,983.92
SEP 2,003.30 2,007.13 2,006.93
OCT 2,003.30 2,013.22 2,014.36
</TABLE>
(1) Performance data includes the performance of the predecessor limited part-
nership for periods before the 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 sub-
ject to certain investment restrictions that are imposed by the 1940 Act.
If the limited partnership had been registered under the 1940 Act, the lim-
ited partnership's performance may have been lower.
(2) For the period March 1, 1999 (Commencement of offering of the Advisory
Class shares) through October 31, 1999.
3
<PAGE>
TCW Galileo High Yield Bond Fund
- --------------------------------------------------------------------------------
Management Discussions (Continued)
The TCW Galileo High Yield Bond Fund (the "Fund") returned 4.60% for the year
ended October 31, 1999 for its Institutional ("I") Class shares. The
conservatively structured Galileo High Yield Bond Fund outperformed its bench-
mark, the Salomon Brothers High Yield Cash Pay Index, which returned 2.79% dur-
ing this period. For the Advisory ("N") Class shares, the performance for the
period March 1, 1999 (Commencement of offering Advisory Class shares) through
October 31, 1999 was negative 0.24% versus the benchmark return of negative
1.82%. The performance of the Fund's two classes varies because of timing and
differing expenses.
The Fund is widely diversified consisting of 140 separate issuers within 31
separate industry groups. In the most recent fiscal year, the Fund benefited
from its concentration in the upper-tier of the high yield market as double-B
rated securities significantly outperformed lower rated securities during a pe-
riod of financial market volatility. The Fund's overweighting in the telecommu-
nications and automotive sectors enhanced performance in the latest year. Fur-
thermore, the Fund's underweighting in the healthcare and textiles sectors pos-
itively impacted performance during the period.
The Fund seeks to preserve principal while simultaneously providing a high
level of current income by investing in a well-diversified, upper-tier portfo-
lio of high yield bonds. The Fund emphasizes investments in companies that have
good prospects for improved operating results and debt ratings.
4
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
TCW Galileo High Yield Bond Fund - I Class
[PERFORMANCE GRAPH APPEARS HERE]
Average Annualized Total Return /(1)/
<TABLE>
<CAPTION>
1-Year 3-Year 5-Year Since Inception
- ------ ------ ------ ---------------
<S> <C> <C> <C>
4.60% 6.22% 8.60% 9.67%
</TABLE>
INITIAL VALUE: $250,000
<TABLE>
<CAPTION>
YEAR MONTH FUND INDEX
- ---- ----- ---- -----
<S> <C> <C> <C>
1989 FEB 251,707.50 251,075.00
MAR 250,796.32 251,100.11
APR 251,611.41 252,832.70
MAY 256,107.70 257,130.85
JUN 260,948.14 260,859.25
JULY 262,612.99 262,033.12
AUG 264,461.78 261,011.19
SEP 262,184.77 256,782.81
OCT 259,214.21 250,979.52
NOV 259,971.12 251,908.14
DEC 260,470.26 252,462.34
1990 JAN 257,763.98 244,812.73
FEB 255,075.50 242,119.79
MAR 258,307.31 244,686.26
APR 261,275.26 243,438.36
MAY 266,626.17 249,840.79
JUN 271,500.10 254,487.83
JULY 276,264.93 258,890.47
AUG 269,178.73 248,871.41
SEP 257,063.00 236,104.30
OCT 249,698.14 227,746.21
NOV 254,005.44 232,346.68
DEC 256,525.17 234,693.38
1991 JAN 260,644.96 238,072.97
FEB 276,205.47 254,261.93
MAR 287,154.25 266,847.90
APR 297,913.92 276,828.01
MAY 300,252.55 278,572.02
JUN 306,533.83 284,310.61
JULY 313,038.48 291,702.68
AUG 317,364.67 298,178.48
SEP 321,741.13 300,176.28
OCT 330,424.92 308,371.09
NOV 333,891.08 311,238.94
DEC 335,981.24 315,036.06
1992 JAN 348,022.80 324,109.10
FEB 352,557.54 333,670.32
MAR 356,929.26 338,408.43
APR 357,671.67 341,318.75
MAY 362,507.39 347,974.46
JUN 365,218.94 352,463.33
JULY 371,705.23 358,842.92
AUG 375,898.07 363,723.18
SEP 380,352.46 367,360.41
OCT 375,103.60 363,099.03
NOV 382,909.50 368,436.59
DEC 388,078.78 372,857.83
1993 JAN 397,765.23 381,694.56
FEB 405,672.80 389,175.77
MAR 410,901.92 395,480.42
APR 413,055.05 398,486.07
MAY 418,259.54 403,865.63
JUN 425,595.81 412,993.00
JULY 428,289.83 417,081.63
AUG 429,608.97 421,836.36
SEP 430,163.16 423,017.50
OCT 438,960.00 430,927.93
NOV 442,199.52 432,910.19
DEC 448,155.95 437,585.63
1994 JAN 457,396.93 446,731.16
FEB 456,559.89 444,676.20
MAR 438,968.64 428,667.86
APR 434,780.88 424,295.45
MAY 438,111.30 425,059.18
JUN 440,564.72 425,781.78
JULY 440,978.85 430,380.22
AUG 443,898.13 433,177.69
SEP 445,855.72 432,441.29
OCT 446,631.51 432,916.98
NOV 443,406.83 429,020.72
DEC 446,612.67 433,997.36
1995 JAN 452,883.11 440,594.12
FEB 466,120.88 454,781.25
MAR 469,015.49 459,510.98
APR 478,480.22 469,712.12
MAY 488,011.55 483,662.57
JUN 489,529.27 478,241.68
JULY 498,051.97 492,650.06
AUG 500,103.94 496,049.34
SEP 506,310.23 501,753.91
OCT 512,046.73 505,517.07
NOV 513,096.42 509,965.62
DEC 517,868.22 517,462.11
1996 JAN 527,490.21 524,861.82
FEB 529,916.67 527,591.10
MAR 526,177.17 525,427.98
APR 530,494.46 525,112.72
MAY 533,799.44 528,158.37
JUN 536,575.20 532,647.72
JUL 541,747.78 536,695.84
AUG 549,207.65 541,204.09
SEP 560,131.39 552,785.86
OCT 562,842.43 558,921.78
NOV 571,341.35 569,317.72
DEC 579,785.77 573,587.61
1997 JAN 584,760.33 578,004.23
FEB 594,929.32 587,194.50
MAR 587,950.80 582,496.94
APR 592,289.87 587,389.92
MAY 607,049.74 598,550.33
JUN 612,209.66 608,127.13
JUL 625,494.61 621,505.93
AUG 625,932.45 622,313.88
SEP 636,322.93 632,021.98
OCT 637,404.68 637,394.17
NOV 643,523.77 642,365.84
DEC 650,988.64 648,853.74
1998 JAN 662,511.14 658,839.60
FEB 666,287.45 664,110.31
MAR 670,744.92 670,518.98
APR 671,912.01 674,414.69
MAY 673,591.79 678,535.37
JUN 677,310.02 681,548.06
JUL 680,019.26 685,937.23
AUG 651,934.47 648,251.84
SEP 658,127.84 653,437.86
OCT 644,899.47 645,688.08
NOV 666,452.01 673,904.65
DEC 665,745.57 673,419.44
1999 JAN 676,583.91 682,072.88
FEB 676,049.41 676,009.25
MAR 685,588.47 680,207.27
APR 694,466.84 691,736.78
MAY 683,709.55 682,903.31
JUN 684,625.72 680,820.45
JUL 685,734.81 682,141.24
AUG 677,917.44 674,016.94
SEP 673,416.06 699,103.36
OCT 674,547.40 663,697.00
</TABLE>
TCW Galileo High Yield Bond Fund - N Class
[PERFORMANCE GRAPH APPEARS HERE]
Total Return /(2)/
Since Inception
0.24%
VALUE: $2,000
<TABLE>
<CAPTION>
YEAR MONTH FUND INDEX
- ---- ----- ---- -----
<S> <C> <C> <C>
1999 MAR 2,027.68 2,012.42
APR 2,053.78 2,046.53
MAY 2,024.30 2,020.40
JUN 2,024.85 2,014.23
JUL 2,028.11 2,018.14
AUG 2,005.13 1,994.11
SEP 1,991.12 1,979.57
OCT 1,995.25 1,963.57
</TABLE>
(/1/) Performance data includes the performance of the predecessor limited
partnership for periods before the Fund's registration became effective.
The predecessor limited partnership was not registered under the Invest-
ment 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.
(/2/) For the period March 1, 1999 (Commencement of offering of the Advisory
Class shares) through October 31, 1999.
5
<PAGE>
TCW Galileo Mortgage-Backed Securities Fund
- --------------------------------------------------------------------------------
Management Discussions (Continued)
The TCW Galileo Mortgage-Backed Securities Fund (the "Fund") achieved returns
of 5.36% for the year ended October 31, 1999, outperforming the Salomon Broth-
ers 1-Year Treasury Index return of 4.15%. Interest rates moved steadily higher
over the past year for numerous reasons including Y2K concerns, a heavy new is-
sue calendar, and the weakening dollar and inflation worries. As a preemptive
strike, the Federal Reserve Board increased rates in late June and then again
in late August. The mortgage sector was a top performing, high grade fixed in-
come asset class over the past 12 months in spite of extremely high spread vol-
atility. Mortgage spreads widened along with spreads in swaps and corporate
bonds until early August, when the yield on the current coupon mortgage reached
185 basis points over the yield on the 10-year Treasury, before tightening
slightly. Some of this spread volatility was due to the large volume of new is-
sues in the corporate sector, which put pressure on all fixed income securi-
ties, including mortgages. Bid-ask spreads on bonds also widened and thin trad-
ing volume led to exaggerated market movements, which kept volatility high and
drove yield spreads wider.
The recent decision of the Federal Reserve to accept mortgage pass-throughs as
collateral in repurchase transactions provided a catalyst to the performance of
the mortgage sector. Improving supply and prepayment trends will also play a
positive role in mortgage performance going forward. Nonetheless, we expect the
performance of the mortgage sector to remain choppy over the next several weeks
due to lingering Y2K concerns, a weakening dollar and inflation worries. The
mortgage sector is fundamentally sound however, and mortgages are still cheap
relative to historical valuations. Today's relatively higher yield levels com-
bined with our continued focus on security structure also foster our positive
outlook on the mortgage sector and the performance of your account.
Liquidity constraints typically emerge in the fourth quarter of every year.
This year we are forecasting even more constraints than usual due to Y2K con-
cerns and defensive positioning by many investors. For these reasons, we are
asking our clients to consider their year end cash requirements now so that we
can be notified of any withdrawals or liquidations at the earliest possible
date. We believe execution costs and market inefficiencies have the potential
to increase significantly as the year-end approaches and strongly discourage
last minute sales.
6
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
TCW Galileo Mortgage Backed Securities Fund
[PERFORMANCE GRAPH APPEARS HERE]
Average Annualized Total Return /(1)/
<TABLE>
<CAPTION>
1-Year 3-Year 5-Year Since Inception
- ------ ------ ------ ---------------
<S> <C> <C> <C>
5.36% 5.60% 6.88% 6.63%
</TABLE>
INITIAL VALUE: $250,000
<TABLE>
<CAPTION>
YEAR MONTH FUND INDEX
- ---- ----- ---- -----
<S> <C> <C> <C>
1990 FEB 251,500.00 251,508.85
MAR 253,512.00 252,792.77
APR 255,793.61 254,076.70
MAY 257,584.16 256,625.81
JUN 259,902.42 258,781.30
JUL 261,721.74 261,236.69
AUG 263,553.79 262,717.42
SEP 265,398.67 264,535.54
OCT 267,521.86 266,944.07
NOV 269,929.55 268,696.58
DEC 272,358.92 271,386.26
1991 JAN 274,810.15 273,644.85
FEB 277,008.63 275,219.30
MAR 279,224.70 277,206.10
APR 281,179.27 279,221.02
MAY 283,147.53 280,458.09
JUN 285,412.71 281,610.81
JUL 287,981.42 283,485.16
AUG 290,861.24 286,043.63
SEP 294,060.71 288,030.44
OCT 297,001.32 290,251.54
NOV 299,080.33 292,528.86
DEC 302,669.29 295,134.20
1992 JAN 304,182.64 295,893.31
FEB 306,311.91 296,699.28
MAR 307,537.16 297,355.30
APR 309,074.85 299,117.18
MAY 310,929.30 300,569.80
JUN 313,416.73 302,069.28
JUL 314,983.81 304,281.00
AUG 316,873.72 305,808.59
SEP 318,774.96 307,776.65
OCT 319,093.73 307,467.39
NOV 320,689.20 307,645.45
DEC 322,613.34 309,360.47
1993 JAN 324,000.58 310,991.15
FEB 324,713.38 312,078.27
MAR 327,311.08 313,043.56
APR 329,589.17 314,149.42
MAY 329,589.17 314,149.42
JUN 331,813.90 315,602.04
JUL 330,572.91 316,445.49
AUG 332,982.79 317,879.37
SEP 334,820.85 318,797.80
OCT 335,661.25 319,500.67
NOV 335,493.42 320,091.09
DEC 337,355.41 321,206.33
1994 JAN 338,212.29 322,518.37
FEB 338,039.81 322,190.36
MAR 336,829.62 322,180.99
APR 333,188.50 321,909.21
MAY 332,665.39 322,537.11
JUN 332,841.70 323,661.72
JUL 335,833.95 325,695.38
AUG 336,451.88 326,791.87
SEP 334,234.67 327,326.06
OCT 335,304.22 328,656.85
NOV 333,698.11 328,469.41
DEC 335,867.15 329,650.25
1995 JAN 340,041.98 332,958.46
FEB 343,507.00 335,882.44
MAR 347,172.22 337,859.87
APR 350,126.66 340,184.06
MAY 355,336.54 343,220.50
JUN 358,708.69 345,216.67
JUL 360,975.73 346,912.96
AUG 363,253.48 348,599.87
SEP 366,686.23 350,136.83
OCT 369,370.37 352,095.52
NOV 371,682.63 354,222.90
DEC 374,749.01 356,312.79
1996 JAN 377,286.06 358,608.86
FEB 379,051.76 359,030.59
MAR 380,435.30 360,164.57
APR 382,223.35 361,401.63
MAY 384,619.89 362,882.37
JUN 386,604.53 364,887.91
JUL 389,016.94 366,293.67
AUG 390,635.25 368,064.93
SEP 393,479.07 370,539.06
OCT 397,158.10 373,350.58
NOV 398,802.34 375,262.41
DEC 400,872.12 376,536.96
1997 JAN 402,948.64 378,419.65
FEB 405,035.91 379,781.96
MAR 406,295.57 380,807.37
APR 409,245.28 383,130.29
MAY 412,633.83 385,544.01
JUN 414,763.02 387,818.72
JUL 419,043.38 390,611.02
AUG 419,474.99 391,978.16
SEP 422,071.54 394,094.84
OCT 423,810.48 396,301.77
NOV 425,556.57 397,649.20
DEC 428,190.77 399,518.15
1998 JAN 429,406.83 402,154.97
FEB 430,184.06 403,240.79
MAR 432,747.96 405,256,99
APR 434,877.08 407,121.17
MAY 436,116.47 408,912.51
JUN 438,266.53 410,875.29
JUL 438,836.28 412,888.57
AUG 441,574.61 416,191.68
SEP 444,325.62 419,479.60
OCT 443,863.53 421,702.84
NOV 443,863.53 421,757.66
DEC 445,718.87 423,077.76
1999 JAN 448,981.54 424,706.61
FEB 450,386.85 425,173.79
MAR 454,143.08 427,805.61
APR 455,083.15 429,371.38
MAY 457,449.58 430,569.33
JUN 458,638.95 432,610.23
JUL 460,546.89 434,513.71
AUG 462,588.03 435,795.53
SEP 465,604.11 438,035.52
OCT 467,666.73 439,187.55
</TABLE>
(1) Performance data includes the performance of the predecessor limited part-
nership for periods before the 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 sub-
ject to certain investment restrictions that are imposed by the 1940 Act.
If the limited partnership had been registered under the 1940 Act, the lim-
ited partnership's performance may have been lower.
7
<PAGE>
TCW Galileo Total Return Mortgage-Backed Securities Fund
- -------------------------------------------------------------------------
Management Discussions (continued)
The TCW Galileo Total Return Mortgage-Backed Securities Fund (the "Fund")
achieved returns of 0.20% for the year ended October 31, 1999, underperforming
the Lehman Brothers Mortgage Index return of 2.99% for its institutional ("I")
class shares. For the Advisory ("N") Class shares, the performance for the
period March 1, 1999 (Commencement of offering Advisory Class shares ) through
October 31, 1999 was negative 0.69% versus the benchmark return of positive
1.73%. The performance of the Fund's two classes varies because of timing and
differing expenses.
Interest rates moved steadily higher over the past year for numerous reasons
including Y2K concerns, a heavy new issue calendar, and the weakening dollar
and inflation worries. As a preemptive strike, the Federal Reserve Board
increased rates in late June and then again in late August. The mortgage sector
was a top performing high grade, fixed income asset class over the past year in
spite of extremely high spread volatility. Mortgage spreads widened along with
spreads in swaps and corporate bonds until early August, when the yield on the
current coupon mortgage reached 185 basis points over the yield on the 10-year
Treasury, before tightening slightly. Some of this spread volatility was due to
the large volume of new issues in the corporate sector, which put pressure on
all fixed income securities, including mortgages. Bid-ask spreads on bonds also
widened and thin trading volume led to exaggerated market movements, which kept
volatility high and drove yield spreads wider.
The recent decision of the Federal Reserve to accept mortgage pass-throughs as
collateral in repurchase transactions provided a catalyst to the performance of
the mortgage sector. Improving supply and prepayment trends will also play a
positive role in mortgage performance going forward. Nonetheless, we expect the
performance of the mortgage sector to remain choppy over the next several weeks
due to lingering Y2K concerns, a weakening dollar and inflation worries. The
mortgage sector is fundamentally sound however, and mortgages are still cheap
relative to historical valuations. Today's relatively higher yield levels
combined with our continued focus on security structure also foster our
positive outlook on the mortgage sector and the performance of your account.
Liquidity constraints typically emerge in the fourth quarter of every year.
This year we are forecasting even more constraints than usual due to Y2K
concerns and defensive positioning by many investors. For these reasons, we are
asking our clients to consider their year-end cash requirements now so that we
can be notified of any withdrawals or liquidations at the earliest possible
date. We believe execution costs and market inefficiencies have the potential
to increase significantly as the year-end approaches and strongly discourage
last minute sales.
8
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
TCW Galileo Total Return Mortgage Backed Securities Fund - I Class
[PERFORMANCE GRAPH APPEARS HERE]
Average Annualized Total Return
<TABLE>
<CAPTION>
1-Year 3-Year 5-Year Since Inception
- ------ ------ ------ ---------------
<S> <C> <C> <C>
0.20% 6.58% 6.88% 7.59%
</TABLE>
INITIAL VALUE: $250,000
<TABLE>
<CAPTION>
YEAR MONTH FUND INDEX
- ---- ----- ---- -----
<S> <C> <C> <C>
1993 JUN 18-30 250,000.00 250,900.00
JUL 250,250.00 251,901.63
AUG 253,510.76 253,088.44
SEP 256,154.87 253,307.28
OCT 257,294.76 254,039.56
NOV 257,168.69 253,542.96
DEC 258,768.28 255,596.72
1994 JAN 260,822.90 258,130.26
FEB 261,469.74 256,329.01
MAR 254,329.00 249,654.27
APR 243,754.00 247,815.15
MAY 244,409.70 248,795.73
JUN 242,163.57 248,257.04
JUL 246,282.78 253,227.32
AUG 247,753.08 254,026.94
SEP 243,313.35 250,411.81
OCT 242,230.61 250,268.72
NOV 239,517.62 249,485.93
DEC 242,765.48 251,476.57
1995 JAN 245,962.70 256,859.28
FEB 253,378.48 263,416.17
MAR 255,349.76 264,657.69
APR 259,034.46 268,420.12
MAY 270,729.87 276,883.47
JUN 272,738.68 278,457.46
JUL 271,293.17 278,937.23
AUG 273,911.15 281,824.29
SEP 278,008.86 284,303.11
OCT 283,015.80 286,832.44
NOV 288,047.82 290,110.88
DEC 293,267.24 293,734,43
1996 JAN 295,214.54 295,948.12
FEB 289,038.65 293,490.33
MAR 287,220.60 292,429.79
APR 285,391.00 291,604.91
MAY 286,312.81 290,754.79
JUN 290,945.36 294,757.10
JUL 291,256.67 295,838.70
AUG 290,945.02 295,834.49
SEP 297,243.98 300,787.93
OCT 304,770.20 306,688.29
NOV 311,304.47 311,077.79
DEC 308,178.98 309,449.08
1997 JAN 308,582.69 311,739.01
FEB 308,986.93 312,767.75
MAR 306,459.42 309,827.73
APR 311,129.86 314,753.99
MAY 313,930.03 317,838.58
JUN 319,069.07 321,557.29
JUL 331,257.50 327,602.57
AUG 326,719.28 326,816.32
SEP 334,005.12 330,966.89
OCT 340,317.81 334,640.62
NOV 341,168.61 335,744.94
DEC 344,955.58 338,800.22
1998 JAN 348,474.13 342,154.34
FEB 346,348.43 342,872.86
MAR 348,838.68 344,312.93
APR 350,272.41 346,275.51
MAY 354,601.77 348,560.93
JUN 357,144.27 350,234.02
JUL 357,679.98 352,020.22
AUG 366,729.29 355,223.60
SEP 371,753.48 359,521.81
OCT 368,214.39 359,054.43
NOV 369,157.01 360,842.52
DEC 369,917.48 362,376.10
1999 JAN 371,267.68 364,956.22
FEB 367,963.39 363,510.99
MAR 370,899.74 365,950.15
APR 373,065.80 367,637.18
MAY 369,693.28 365,640.91
JUN 367,593.42 364,295.35
JUL 366,185.54 361,825.43
AUG 365,478.80 361,814.57
SEP 369,243.23 367,686.82
OCT 368,936.76 369,804.70
</TABLE>
TCW Galileo Total Return Mortgage Backed Securities Fund - N Class
[PERFORMANCE GRAPH APPEARS HERE]
Total Return /(1)/
Since Inception
0.69%
VALUE: $2,000
<TABLE>
<CAPTION>
YEAR MONTH FUND INDEX
- ---- ----- ---- -----
<S> <C> <C> <C>
1999 MAR 2,019.14 2,013.42
APR 2,029.78 2,022.70
MAY 2,006.38 2,011.72
JUN 1,987.24 2,004.32
JUL 1,970.21 1,990.73
AUG 1,965.95 1,990.67
SEP 1,985.63 2,022.98
OCT 1,986.17 2,034.63
</TABLE>
(/1/) For the period March 1, 1999 (Commencement of offering of the Advisory
Class shares) through October 31, 1999.
9
<PAGE>
TCW Galileo Money Market Fund
- --------------------------------------------------------------------------------
Schedule of Investments
<TABLE>
<CAPTION>
Principal
Amount Fixed Income Securities Value
- ----------- ----------------------- -----------
<S> <C> <C>
Agency Securities (11.5% of Net Assets)
$10,000,000 Federal Home Loan Bank, Variable Rate Note, 5.605%,
due 04/07/00 $ 9,998,286
10,000,000 Federal Home Loan Mortgage Corp., Variable Rate Note, 5.645%,
due 07/14/00 9,985,249
10,000,000 Student Loan Marketing Association, Variable Rate Note, 5.575%,
due 01/20/00 10,000,000
-----------
Total Agency Securities (Cost: $29,983,535) 29,983,535
-----------
Commercial Paper (64.5%)
7,000,000 Abbott Laboratories Corp., 5.22%, due 11/16/99 6,982,745
2,950,000 Abbott Laboratories Corp., 5.2%, due 11/03/99 2,948,296
3,850,000 American Express Credit Corp., 5.2%, due 11/01/99 3,848,888
5,350,000 Bellsouth Telecom, Inc., 5.26%, due 11/10/99 5,341,401
4,800,000 Bellsouth Telecom, Inc., 5.2%, due 11/04/99 4,796,533
8,000,000 Ciesco L.P., 5.3%, due 11/01/99 7,997,644
2,000,000 Ciesco L.P., 5.27%, due 11/03/99 1,998,829
6,400,000 Dupont EI De Nemours Co., 5.27%, due 12/07/99 6,364,398
4,200,000 Florida Power Corp., 5.24%, due 11/03/99 4,197,555
5,600,000 Ford Motor Credit Corp., 5.26%, due 11/03/99 5,596,727
10,000,000 General Motors Acceptance Corp., 5.25%, due 11/02/99 9,995,625
10,000,000 Household Finance Corp., 5.32%, due 11/01/99 9,997,044
6,200,000 JP Morgan & Co., Inc., 5.3%, due 11/15/99 6,185,396
6,200,000 May Department Stores Corp., 5.27%, due 11/30/99 6,171,864
10,000,000 Merrill Lynch & Company, Inc., 5.23%, due 11/01/99 9,997,094
3,400,000 Metlife Funding Inc., 5.29%, due 11/19/99 3,390,008
5,000,000 Metlife Funding Inc., 5.3%, due 11/10/99 4,991,903
5,600,000 Nestle Capital Corp., 5.2%, due 11/04/99 5,595,956
7,150,000 Paccar Financial Corp., 5.28%, due 11/10/99 7,138,465
5,000,000 Pacific Life Insurance, 5.27%, due 11/19/99 4,985,361
5,000,000 Pacific Life Insurance, 5.3%, due 11/10/99 4,991,903
10,000,000 Prudential Funding Corp., 5.27%, due 11/05/99 9,991,217
10,000,000 Riverwoods Funding Corp., 6.11%, due 01/12/00 9,874,406
10,000,000 Toyota Motor Credit Corp., 5.28%, due 11/17/99 9,973,600
5,100,000 USAA Capital Corp., 5.24%, due 11/10/99 5,091,834
10,000,000 Walt Disney Co., 5.31%, due 11/01/99 9,997,050
-----------
Total Commercial Paper (Cost: $168,441,742) 168,441,742
-----------
Corporate Fixed Income Securities (23.6%)
8,780,000 Associates Corp. of North America, 9.125%, due 04/01/00 8,903,682
6,000,000 CIT Group, Inc., 5.8%, due 07/20/00 6,003,122
4,000,000 CIT Group, Inc., 6.8%, due 04/17/00 4,027,966
7,800,000 IBM Credit Corp., 6.375%, due 06/15/00 7,831,126
10,000,000 International Lease Finance Corp., 6.375%, due 01/18/00 10,030,869
10,000,000 Nationsbank N.A., 5%, due 01/05/00 9,999,547
</TABLE>
10
See accompanying notes to the financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------- ------------
<S> <C> <C>
Corporate Fixed Income Securities (Continued)
$ 5,000,000 Pitney Bowes Credit Corp., 5.95%, due 09/29/00 $ 5,000,000
10,000,000 Wells Fargo & Company, Inc., 5.31%, due 03/31/00 9,993,530
------------
Total Corporate Fixed Income Securities (Cost: $61,789,842) 61,789,842
------------
Short-Term Investments (Cost: $25,612) (0.0%)
---------------------------------------------
25,612 Investors Bank and Trust Depository Reserve, 4.3%,
due 11/01/99 25,612
------------
Total Investments (Cost: $260,240,731) (99.6%) 260,240,731
Excess of Other Assets Over Liabilities (0.4%) 1,059,513
------------
Net Assets (100.0%) $261,300,244
============
</TABLE>
11
See accompanying notes to the financial statements.
<PAGE>
TCW Galileo Core Fixed Income Fund
- --------------------------------------------------------------------------------
Schedule of Investments
<TABLE>
<CAPTION>
Principal
Amount Fixed Income Securities Value
--------- ----------------------- ---------
<S> <C> <C>
Corporate Bonds
Aerospace/Defense (0.1% of Net Assets)
$ 75,000 BE Aerospace, Inc., 9.5%, due 11/01/08 $ 71,063
---------
Automotive (1.0%)
75,000 American Axle & Manufacturing Holdings, Inc., 9.75%, due 03/01/09 73,875
500,000 Daimler Chrysler N.A., 6.9%, due 09/01/04 501,815
70,000 Hayes Lemmerz International, Inc., 8.25%, due 12/15/08 62,300
75,000 JL French Automotive Castings, Inc., (144A), 11.5%, due 06/01/09 74,063*
---------
Total Automotive 712,053
---------
Banking & Financial Services (2.6%)
400,000 Abbey National PLC, 6.69%, due 10/17/05 389,500
450,000 Bank One Corp., 6.4%, due 08/01/02 446,238
250,000 Lehman Brothers Holdings Inc., 6.625%, due 04/01/04 243,275
75,000 Meditrust, Inc., 7.375%, due 07/15/00 73,178
100,000 Metris Companies, Inc., (144A), 10.125%, due 07/15/06 90,750*
100,000 NationsBank Corp., 7.5%, due 09/15/06 101,125
500,000 PNC Funding Corp., 6.5%, due 05/01/08 471,875
60,000 Security Pacific Corp., 11.5%, due 11/15/00 63,000
---------
Total Banking & Financial Services 1,878,941
---------
Chemicals (1.0%)
5,000 GEO Specialty Chemicals, Inc., 10.125%, due 08/01/08 4,600
600,000 IMC Global Inc., 6.5%, due 08/01/03 575,178
100,000 Lyondell Chemical Companies, Inc., 9.625%, due 05/01/07 99,750
50,000 Lyondell Chemical Companies, Inc., 10.875%, due 05/01/09 49,750
---------
Total Chemicals 729,278
---------
Commercial Services (0.4%)
50,000 International Game Technology, Inc., 8.375%, due 05/15/09 47,375
50,000 Safety-Kleen Corp., 9.25%, due 05/15/09 46,750
200,000 UIH Australia/Pacific, Inc., 0%, due 05/15/06 154,000
50,000 Williams Scotsman, Inc., 9.875%, due 06/01/07 47,750
---------
Total Commercial Services 295,875
---------
Computer Services (1.6%)
50,000 Anteon Corp., 12%, due 05/15/09 48,000
500,000 Comdisco, Inc., 6.24%, due 11/17/00 496,445
300,000 Electronic Data Systems, Corp., 7.125%, due 10/15/09 300,009
</TABLE>
12
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
--------- ----------
<S> <C> <C>
Computer Services (Continued)
$300,000 PSINet, Inc., (144A), 11%, due 08/01/09 $ 307,500*
----------
Total Computer Services 1,151,954
----------
Construction (0.3%)
125,000 Atrium Companies, Inc., 10.5%, due 05/01/09 119,375
50,000 D.R. Horton, Inc., 8%, due 02/01/09 43,500
75,000 Hovnanian Enterprises, Inc., 9.125%, due 05/01/09 67,500
----------
Total Construction 230,375
----------
Containers & Packaging (0.4%)
75,000 Anchor Glass Container Corp., 9.875%, due 03/15/08 70,125
100,000 Consolidated Container Companies, LLC, (144A), 10.125%,
due 07/15/09 100,500*
75,000 Consumers Packaging, Inc., 9.75%, due 02/01/07 66,750
50,000 U.S. Can Corp., Series B, 10.125%, due 10/15/06 50,750
----------
Total Containers & Packaging 288,125
----------
Cosmetics & Household Products (0.4%)
250,000 Procter & Gamble Co., 6.875%, due 09/15/09 251,243
----------
Electronics (0.7%)
150,000 International Wire Group, Inc., 11.75%, due 06/01/05 153,375
75,000 Juno Lighting, Inc., (144A), 11.875%, due 07/01/09 67,500*
200,000 Litton Industries, Inc., 6.05%, due 04/15/03 193,500
105,000 Viasystems, Inc., 9.75%, due 06/01/07 84,000
----------
Total Electronics 498,375
----------
Energy & Oil Services (2.8%)
300,000 Enserch Corp., 7.125%, due 06/15/05 298,875
100,000 Forest Oil Corp., 10.5%, due 01/15/06 102,000
100,000 Grey Wolf, Inc., 8.875%, due 07/01/07 90,000
25,000 Gulf Canada Resources, Ltd., 9.25%, due 01/15/04 25,215
250,000 Occidental Petroleum Corp., 7.65%, due 02/15/06 252,625
100,000 P&L Coal Holdings Corp., 8.875%, due 05/15/08 97,000
150,000 Pride International, Inc., 10%, due 06/01/09 150,000
150,000 R&B Falcon Corp., 9.5%, due 12/15/08 146,250
150,000 Sonat, Inc., 6.75%, due 10/01/07 141,938
100,000 Trans-Canada Pipelines, Ltd., 7.06%, due 10/14/25 89,500
400,000 Trans-Canada Pipelines, Ltd., 7.7%, due 06/15/29 387,316
200,000 Transcontinental Gas Pipe Lines, 6.25%, due 01/15/08 184,250
----------
Total Energy & Oil Services 1,964,969
----------
</TABLE>
13
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Core Fixed Income Fund
- --------------------------------------------------------------------------------
Schedule of Investments (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Entertainment & Leisure (0.8%)
$275,000 Hollywood Park, Inc., 9.25%, due 02/15/07 $265,719
75,000 Mohegan Tribal Gaming, Inc., 8.75%, due 01/01/09 72,750
125,000 SFX Entertainment, Inc., 9.125%, due 12/01/08 115,313
100,000 TV Guide, Inc., 8.125%, due 03/01/09 97,500
--------
Total Entertainment & Leisure 551,282
--------
Foods, Hotels & Restaurants (0.4%)
100,000 ITT Corp., 7.375%, due 11/15/15 83,324
100,000 New World Pasta Company, Inc., 9.25%, due 02/15/09 92,000
100,000 Signature Resorts/Sunterra, Inc., 9.25%, due 05/15/06 94,000
--------
Total Foods, Hotels & Restaurants 269,324
--------
Healthcare (0.6%)
75,000 Concentra Operating Corp., (144A), 13%, due 08/15/09 67,500*
100,000 Express Scripts, Inc., 9.625%, due 06/15/09 100,000
75,000 Hanger Orthopedic Group, Inc., (144A), 11.25%, due 06/15/09 72,750*
75,000 Hudson Respiratory Care, Inc., 9.125%, due 04/15/08 58,500
25,000 Magellan Health Services, Inc., 9%, due 02/15/08 20,875
50,000 Prime Medical Services, Inc., 8.75%, due 04/01/08 47,000
75,000 Unilab Finance Corp., (144A), 12.75%, due 10/01/09 75,000*
--------
Total Healthcare 441,625
--------
Household Products (0.0%)
29,000 Boyds Collection, Ltd., 9%, due 05/15/08 28,203
--------
Machinery (0.7%)
250,000 Federal-Mogul Corp., 7.875%, due 07/01/10 225,968
250,000 United Tech Corp., 7.5%, due 09/15/29 252,378
--------
Total Machinery 478,346
--------
Media -- Broadcasting & Publishing (1.3%)
75,000 American Media Operations, Inc., 10.25%, due 05/01/09 72,938
75,000 Chancellor Media Corp., 9%, due 10/01/08 76,875
500,000 Cox Commuinications, Inc., 7.5%, due 08/15/04 507,170
20,000 Garden State Newspapers, Inc., 8.625%, due 07/01/11 18,200
50,000 Primedia, Inc., 7.625%, due 04/01/08 46,500
100,000 Spanish Broadcasting System, Inc., 9.625%, due 11/01/09 100,625
25,000 STC Broadcasting, Inc., 11%, due 03/15/07 24,875
50,000 Von Hoffmann Press, Inc., (144A), 10.875%, due 05/15/07 49,000*
--------
Total Media -- Broadcasting & Publishing 896,183
--------
</TABLE>
14
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
--------- --------
<S> <C> <C>
Metals (0.4%)
$ 75,000 Golden Northwest Aluminum, Inc., 12%, due 12/15/06 $ 76,875
75,000 NCI Building Systems, Inc., 9.25%, due 05/01/09 69,375
100,000 Neenah Corp., 11.125%, due 05/01/07 92,250
40,000 Wheeling Pittsburgh Corp., 9.25%, due 11/15/07 37,200
--------
Total Metals 275,700
--------
Pollution Control (0.4%)
25,000 Allied Waste North America, Inc., 7.625%, due 01/01/06 21,688
275,000 Allied Waste North America, Inc., 7.875%, due 01/01/09 231,688
50,000 Safety-Kleen Services, Inc., 9.25%, due 06/01/08 48,625
--------
Total Pollution Control 302,001
--------
Real Estate (0.1%)
50,000 Forest City Enterprises, Inc., 8.5%, due 03/15/08 46,500
--------
Retail (0.8%)
50,000 Home Interiors & Gifts, Inc., 10.125%, due 06/01/08 42,000
100,000 Marvel Enterprises, Inc., 12%, due 06/15/09 91,000
90,000 May Department Stores Co., 9.75%, due 02/15/21 109,125
100,000 Panolam Industries International, Inc., (144A), 11.5%,
due 02/15/09 101,250*
250,000 Wal-Mart Stores, Inc., 6.875%, due 08/10/09 250,695
--------
Total Retail 594,070
--------
Telecommunications (4.8%)
250,000 AirTouch Communications, Inc., 6.65%, due 05/01/08 238,438
500,000 AT&T Capital Corp., 6.75%, due 02/04/02 498,475
50,000 CapRock Communications Corp., 11.5%, due 05/01/09 48,750
75,000 Classic Cable, Inc., 9.375%, due 08/01/09 72,750
250,000 EchoStar DBS Corp., 9.375%, due 02/01/09 247,500
75,000 Insight Midwest L.P. & Insight Capital, Inc., (144A), 9.75%,
due 10/01/09 76,500*
200,000 Intermedia Communications, Inc., 9.5%, due 03/01/09 183,500
100,000 Jordan Telecommunications Products, Inc., 0%, due 08/01/07 82,000
170,000 Jordan Telecommunications Products, Inc., 9.875%, due 08/01/07 159,800
500,000 Level 3 Communications, Inc., 9.125%, due 05/01/08 466,250
250,000 Nextlink Communications, Inc., 10.75%, due 06/01/09 254,375
100,000 Northern Telecom Capital Corp., 7.4%, due 06/15/06 101,750
100,000 Primus Telecom Group, Inc., (144A), 12.75%, due 10/15/09 100,000*
100,000 Rhythms NetConnections, Inc., (144A), 12.75%, due 04/15/09 89,500*
75,000 SBA Communications Corp., 0%, due 03/01/08 42,000
160,000 US West Capital Funding, Inc., 6.25%, due 07/15/05 152,323
</TABLE>
15
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Core Fixed Income Fund
- --------------------------------------------------------------------------------
Schedule of Investments (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
- --------- ----------
<S> <C> <C>
Telecommunications (Continued)
$ 75,000 Williams Communication Group, Inc., 10.7%, due 10/01/07 $ 77,813
500,000 Worldwide Fiber, Inc., (144A), 12%, due 08/01/09 500,000*
----------
Total Telecommunications 3,391,724
----------
Textiles, Clothing & Fabrics (0.1%)
50,000 Westpoint Stevens, Inc., 7.875%, due 06/15/08 44,750
----------
Transportation (1.3%)
300,000 American Airlines, Inc., 7.024%, due 10/15/09 298,392
200,000 Continental Airlines, Inc., 7.056%, due 09/15/09 189,416
150,000 Southwest Airlines Co., 7.375%, due 03/01/27 145,875
75,000 Transportation Manufacturing Co., (144A), 11.25%,
due 05/01/09 75,375*
75,000 United Rentals, Inc., 9.25%, due 01/15/09 68,438
50,000 United Rentals, Inc., 9.5%, due 06/01/08 47,250
75,000 Western Star Trucks Holdings, Ltd., 8.75%, due 05/01/07 71,250
----------
Total Transportation 895,996
----------
Utilities (0.6%)
500,000 Commonwealth Edison Co., 6.95%, due 07/15/18 456,250
----------
Miscellaneous (0.1%)
50,000 Polymer Group, Inc., 8.75%, due 03/01/08 46,875
----------
Total Corporate Bonds (Cost: $17,234,950) (23.7%) 16,791,080
----------
Asset Backed Securities
750,000 EQCC Home Equity Loan Trust (1999-1-- A2F), 5.765%,
due 06/20/15 733,553
254,522 Southern Pacific Secured Assets Corp. (1997-3-A4), 6.66%,
due 06/25/24 254,155
250,000 Standard Credit Card Trust 93, 5.95%, due 10/07/04 243,435
15,710 The Money Store Home Equity Trust (1997-C-AF3), 6.3%,
due 08/15/12 15,743
1,000,000 Toyota Auto Lease Trust (1998-B-A2), 5.45%, due 03/25/03 980,760
----------
Total Asset Backed Securities (Cost: $2,264,105) (3.2%) 2,227,646
----------
Collaterized Mortgage Obligations
1,622,633 ABN Amro Mortgage Corp. (1998-4-A6), 6.75%, due 11/25/28 (TAC) 1,502,768
239,195 Bear Stearns Mortgage Securities, Inc. (1997-2-A2), 6.5%,
due 04/28/24 235,530
122,455 Bear Stearns Mortgage Securities, Inc. (1997-2-A5), 6.875%,
due 01/28/24 114,955
</TABLE>
16
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ----------
<S> <C> <C>
Collaterized Mortgage Obligations (Continued)
$ 605,536 Citicorp Mortgage Securities (1998-5-A1), 6.75%, due 03/25/25 $ 602,974
665,000 Countrywide Home Loans (1997-8-A1), 6.75%, due 01/25/28 664,182
2,388,763 Federal Home Loan Mortgage Corp. (1468-ZA), 7%,
due 02/15/22 (PAC) 2,286,357
41,630 Federal Home Loan Mortgage Corp. (1578-O), 7%,
due 09/15/23 (PAC) 39,501
781,000 Federal Home Loan Mortgage Corp. (1588-QD), 6.5%,
due 09/15/23 (PAC) 718,871
450,000 Federal Home Loan Mortgage Corp. (1944-GB), 7.5%,
due 04/17/24 455,045
1,000,000 Federal Home Loan Mortgage Corp. (2018-H), 6.5%,
due 01/15/28 (PAC) 992,030
1,000,000 Federal Home Loan Mortgage Corp. (2043-CH), 6%,
due 08/15/26 (PAC) 912,350
1,000,000 Federal Home Loan Mortgage Corp. (2061-TA), 5.25%,
due 10/15/27 (PAC) 828,340
500,000 Federal Home Loan Mortgage Corp. (2063-PV), 6.25%,
due 10/15/26 (PAC) 464,430
1,000,000 Federal Home Loan Mortgage Corp. (2081-PC), 6.25%,
due 10/15/26 (PAC) 931,540
1,500,000 Federal Home Loan Mortgage Corp. (2141-HA), 6.25%,
due 12/15/26 1,350,930
2,000,000 Federal Home Loan Mortgage Corp. (2151-JE), 6%,
due 01/15/27 1,786,102
37,661 Federal Home Loan Mortgage Corp.-- Government National
Mortgage Association (41-K), 8%, due 04/25/24 (TAC) 37,991
557,467 Federal National Mortgage Association (1994-2-N),
6.5%,due 01/25/24 (TAC) 514,213
419,039 Federal National Mortgage Association (G3-40-ZC), 6.5%,
due 12/25/23 421,260
1,464,595 Financial Asset Securitization Inc. (1997-NAM1-A4), 7.75%,
due 05/25/27 1,458,553
1,481,775 GE Capital Mortgage Services, Inc. (1998-10-1A5), 7%,
due 05/25/28 1,368,316
977,969 Norwest Asset Securities Corp. (1997-8-A4), 7.5%,
due 06/25/27 968,643
478,000 Norwest Asset Securites Corp. (1997-15-A1), 6.75%,
due 10/25/12 471,141
350,000 Residential Funding Mortgage Securities I (1997-S2-A7),
7%, due 12/25/27 334,523
484,545 Residential Funding Mortgage Securities I (1997-S5-A2),
7.5%, due 04/25/27 482,010
400,000 Residential Funding Mortgage Securities I (1998-S8-A3),
6.5%, due 04/25/28 370,124
----------
Total Collaterized Mortgage Obligations
(Cost: $20,872,150) (28.7%) 20,312,679
----------
</TABLE>
17
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Core Fixed Income Fund
- --------------------------------------------------------------------------------
Schedule of Investments (Continued) October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
- ------------ ----------
<S> <C> <C>
Foreign Government Bonds & Notes
EUR 344,000 Belgium Government, 5.5%, due 03/28/28 $ 336,051
CAD 351,000 Canada (Government of), 5.25%, due 12/01/06 221,938
CAD 304,000 Canada (Government of), 8.75%, due 12/01/05 234,359
EUR 245,000 Federal Republic of Germany, 5.125%, due 11/21/00 261,485
EUR French O.A.T., 5.25%, due 04/25/08
1,063,000 1,124,694
EUR 94,000 Hypothekenbk In Essen (Germany), 4.25%, due 07/06/09 88,488
GBP 341,000 International Bank Reconstruction & Development,
7.125%, due 07/30/07 581,384
DKK1,435,000 Kingdom of Denmark, 7%, due 12/15/04 219,711
EUR 320,000 Netherlands Government, 6.5%, due 04/15/03 356,432
400,000 New Zealand (Government of), 8.75%, due 12/15/06 445,040
500,000 Province of Manitoba (Canada), 5.5%, due 10/01/08 453,750
200,000 Province of Quebec (Canada), 7%, due 01/30/07 200,156
AUD 183,000 Queensland Government Developmental Authority
(Australia), 8%, due 05/14/03 121,928
EUR 611,000 Spanish Government, 5.25%, due 01/31/03 655,837
SEK1,300,000 Sweden Government, 5%, due 01/15/04 155,915
EUR 968,000 Treuhandanstalt (Germany), 6.625%, due 07/09/03 1,085,635
----------
Total Foreign Government Bonds & Notes (Cost: $6,946,515) (9.2%) 6,542,803
----------
U.S. Government Agency Obligations
$ 600,000 Federal Home Loan Mortgage Corp., 5%, due 01/15/04 568,398
2,350,000 Federal National Mortgage Association, 5.25%, due 01/15/03 2,277,926
1,525,000 Federal National Mortgage Association, 5.86%, due 08/20/03 1,481,263
955,000 Federal National Mortgage Association, 5.875%, due 04/23/04 924,927
1,410,060 Federal National Mortgage Association, Pool # 252821,
6.5%, due 08/01/29 1,352,324
2,490,499 Government National Mortgage Association, Pool # 780759,
6.5%, due 04/15/13 2,444,575
----------
Total U.S. Government Agency Obligations (Cost: $9,154,801)
(12.8%) 9,049,413
----------
U.S. Treasury Bonds
1,050,000 United States Treasury Bonds, 6.125%, due 11/15/27 1,013,219
100,000 United States Treasury Bonds, 6.125%, due 08/15/29 99,578
1,300,000 United States Treasury Bonds, 7.5%, due 11/15/16 1,433,289
570,000 United States Treasury Bonds, 7.5%, due 11/15/24 645,006
1,900,000 United States Treasury Bonds, 8.5%, due 02/15/20 2,320,945
----------
Total U.S. Treasury Bonds (Cost: $5,924,779) (7.8%) 5,512,037
----------
U.S. Treasury Notes
1,500,000 United States Treasury Notes, 4.5%, due 09/30/00 1,484,880
155,000 United States Treasury Notes, 5.5%, due 08/31/01 154,179
</TABLE>
18
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -----------
<S> <C> <C>
U.S. Treasury Notes (Continued)
$1,000,000 United States Treasury Notes, 5.5%, due 03/31/03 $ 986,420
900,000 United States Treasury Notes, 5.75%, due 06/30/01 899,208
105,000 United States Treasury Notes, 6%, due 08/15/09 104,885
2,000,000 United States Treasury Notes, 6.25%, due 02/15/07 2,010,440
100,000 United States Treasury Notes, 6.5%, due 08/15/05 101,862
1,100,000 United States Treasury Notes, 6.5%, due 10/15/06 1,119,492
-----------
Total U.S. Treasury Notes (Cost: $6,829,788) (9.7%) 6,861,366
-----------
Total Fixed Income Securities (Cost: $69,227,088) (95.1%) 67,297,024
-----------
Short-Term Investments
----------------------
49,525 Bank of Montreal, 5.19%, due 11/01/99 49,525**
104,475 BankBoston Corp., 5.5%, due 11/01/99 104,475**
1,854,056 Foreign Currency Call Accounts 1,854,056
1,318,578 Investors Bank and Trust Depository Reserve, 4.3%, due 11/01/99 1,318,578
500,000 Janus Money Market Fund 500,000**
100,000 Merrimac Money Market Fund 100,000**
-----------
Total Short-Term Investments (Cost: $3,926,634) (5.6%) 3,926,634
-----------
Total Investments (Cost: $73,153,722) (100.7%) 71,223,658
Liabilities in Excess of Other Assets (-0.7%) (474,302)
-----------
Net Assets (100.0%) $70,749,356
===========
</TABLE>
Notes to the Schedule of Investments:
AUD - Australian Dollar.
CAD - Canadian Dollar.
DKK - Danish Krona.
EUR - Euro Currency.
GBP - British Pound.
SEK - Swedish Krone.
* Restricted Security (Note 9).
** Represents investments of security lending collateral (Note 3).
PAC - Planned Amortization Class.
TAC - Target Amortization Class.
19
See accompanying notes to financial statements.
<PAGE>
TCW Galileo High Yield Bond Fund
- --------------------------------------------------------------------------------
Schedule of Investments
<TABLE>
<CAPTION>
Principal
Amount Fixed Income Securities Value
---------- ----------------------- ------------
<S> <C> <C>
Advertising (0.7% of Net Assets)
$1,245,000 Adams Outdoor Advertising, L.P., 10.75%, due 03/15/06 $ 1,282,350
------------
Aerospace/Defense (1.4%)
600,000 BE Aerospace, Inc., 8%, due 03/01/08 520,500
1,295,000 BE Aerospace, Inc., 9.5%, due 11/01/08 1,227,013
845,000 Wyman Gordon Co., 8%, due 12/15/07 916,825
------------
Total Aerospace/Defense 2,664,338
------------
Automotive (4.2%)
825,000 American Axle & Manufacturing Holdings, Inc., 9.75%,
due 03/01/09 812,625
1,750,000 Federal-Mogul Corp., 7.875%, due 07/01/10 1,581,773
1,675,000 Hayes Lemmerz International, Inc., 8.25%, due 12/15/08 1,490,750
970,000 Hayes Lemmerz International, Inc., 9.125%, due 07/15/07 926,350
1,300,000 JL French Automotive Castings, Inc., (144A), 11.5%,
due 06/01/09 1,283,750*
500,000 Lear Corp., (144A), 8.11%, due 05/15/09 477,725*
745,000 Navistar International Corp., 8%, due 02/01/08 713,338
700,000 Transportation Manufacturing Operation Co., (144A),
11.25%, due 05/01/09 703,500*
------------
Total Automotive 7,989,811
------------
Banking & Financial Services (3.1%)
2,600,000 AmeriCredit Corp., 9.875%, due 04/15/06 2,574,000
165,000 Chevy Chase Savings Bank, 9.25%, due 12/01/05 163,350
880,000 Chevy Chase Savings Bank, 9.25%, due 12/01/08 871,200
1,245,000 Forest City Enterprises, Inc., 8.5%, due 03/15/08 1,157,850
1,200,000 Metris Companies, Inc., (144A), 10.125%, due 07/15/06 1,089,000*
------------
Total Banking & Financial Services 5,855,400
------------
Building Materials (2.0%)
85,000 Building Materials Corp., 8.625%, due 12/15/06 80,113
700,000 Juno Lighting, Inc., (144A), 11.875%, due 07/01/09 630,000*
2,000,000 NCI Building Systems, Inc., 9.25%, due 05/01/09 1,850,000
1,140,000 Panolam Industries International, Inc., (144A), 11.5%,
due 02/15/09 1,154,250*
------------
Total Building Materials 3,714,363
------------
Chemicals (5.3%)
1,705,000 Borden Chemicals & Plastics, L.P., 9.5%, due 05/01/05 1,312,850
350,000 General Chemical Industrial Products, (144A), 10.625%,
due 05/01/09 340,375*
1,000,000 Gentek, Inc., (144A), 11%, due 08/01/09 1,005,000*
</TABLE>
20
See accompanying notes to the financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ----------
<S> <C> <C>
Chemicals (Continued)
$ 75,000 GEO Specialty Chemicals, Inc., 10.125%, due 08/01/08 $ 69,000
1,175,000 Huntsman ICI Chemicals, LLC, (144A), 10.125%,
due 07/01/09 1,175,000*
915,000 Huntsman Industries/Specialty Chemical Corp.,
(144A), 9.5%, due 07/01/07 846,375*
1,325,000 ISP Holdings, Inc., 9%,
due 10/15/03 1,288,563
1,450,000 Lyondell Chemical Companies, Inc., 9.625%,
due 05/01/07 1,446,375
600,000 Lyondell Chemical Companies, Inc., 10.875%,
due 05/01/09 597,000
205,000 Polymer Group, Inc., 8.75%, due 03/01/08 192,188
750,000 Sterling Chemicals, Inc., (144A), 12.375%, due 07/15/06 727,500*
1,215,000 Texas Petrochemicals Corp., 11.125%, due 07/01/06 984,150
----------
Total Chemicals 9,984,376
----------
Commercial Services (1.3%)
35,000 Anthony Crane Rentals, L.P., 10.375%, due 08/01/08 29,750
175,000 United Rentals, Inc., 9%, due 04/01/09 157,500
425,000 United Rentals, Inc., 9.25%, due 01/15/09 387,813
650,000 United Rentals, Inc., 9.5%, due 06/01/08 614,250
1,365,000 Williams Scotsman, Inc., 9.875%, due 06/01/07 1,303,575
----------
Total Commercial Services 2,492,888
----------
Computer Services (1.1%)
1,500,000 Anteon Corp., 12%, due 05/15/09 1,440,000
730,000 infoUSA, Inc., 9.5%, due 06/15/08 605,900
----------
Total Computer Services 2,045,900
----------
Conglomerates (0.3%)
620,000 Insilco Corp., 12%, due 08/15/07 602,950
----------
Construction (1.5%)
1,025,000 Atrium Companies, Inc., 10.5%, due 05/01/09 978,875
915,000 D.R. Horton, Inc., 8%, due 02/01/09 796,050
650,000 Hovnanian Enterprises, Inc., 9.125%, due 05/01/09 585,000
460,000 Standard Pacific Corp., 8%, due 02/15/08 407,100
----------
Total Construction 2,767,025
----------
Containers & Packaging (3.9%)
950,000 Anchor Glass Container Corp., 9.875%, due 03/15/08 888,250
520,000 Ball Corp., 7.75%, due 08/01/06 503,100
455,000 BWAY Corp., 10.25%, due 04/15/07 447,038
500,000 Consolidated Container Companies, LLC, (144A),
10.125%, due 07/15/09 502,500*
700,000 Consumers International, Inc., 10.25%, due 04/01/05 696,500
</TABLE>
21
See accompanying notes to the financial statements.
<PAGE>
TCW Galileo High Yield Bond Fund
- --------------------------------------------------------------------------------
Schedule of Investments (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
Containers & Packaging (Continued)
$ 665,000 Consumers Packaging, Inc., 9.75%, due 02/01/07 $ 591,850
780,000 Huntsman Packaging Corp., 9.125%, due 10/01/07 733,200
1,725,000 Packaging Corp. of America, (144A), 9.625%,
due 04/01/09 1,746,563*
745,000 Paperboard Industries International, Inc., 8.375%,
due 09/15/07 685,400
600,000 U.S. Can Corp., Series B, 10.125%, due 10/15/06 609,000
------------
Total Containers & Packaging 7,403,401
------------
Cosmetics & Household Products (0.5%)
1,000,000 Chattem, Inc., 8.875%, due 04/01/08 890,000
------------
Electronics (2.8%)
2,905,000 Ametek, Inc., 7.2%, due 07/15/08 2,645,061
2,135,000 Communications & Power Industries, Inc., 12%,
due 08/01/05 1,708,000
915,000 Viasystems, Inc., 9.75%, due 06/01/07 732,000
255,000 Wavetek Corp., 10.125%, due 06/15/07 211,650
------------
Total Electronics 5,296,711
------------
Energy & Oil Services (6.0%)
1,985,000 Forest Oil Corp., 10.5%, due 01/15/06 2,024,700
1,675,000 Grey Wolf, Inc., 8.875%, due 07/01/07 1,507,500
85,000 Gulf Canada Resources, Ltd., 9.25%, due 01/15/04 85,730
1,275,000 Gulf Canada Resources, Ltd., 9.625%, due 07/01/05 1,300,424
1,190,000 Magnum Hunter Resources, Inc., 10%, due 06/01/07 1,130,500
1,260,000 P&L Coal Holdings Corp., 8.875%, due 05/15/08 1,222,200
1,025,000 Pride International, Inc., 10%, due 06/01/09 1,025,000
1,800,000 R&B Falcon Corp., 9.5%, due 12/15/08 1,755,000
625,000 Swift Energy Company, Inc., (144A), 10.25%,
due 08/01/09 621,875*
775,000 Trico Marine Services, Inc., Series G, 8.5%, due 08/01/05 709,125
------------
Total Energy & Oil Services 11,382,054
------------
Entertainment & Leisure (7.5%)
1,395,000 Boyd Gaming Corp., 9.25%, due 10/01/03 1,395,000
1,435,000 Cinemark USA, Inc., Series B, 9.625%, due 08/01/08 1,269,975
1,005,000 Harrahs Operating Company, Inc., 7.875%, due 12/15/05 958,519
2,665,000 Hollywood Park, Inc., 9.25%, due 02/15/07 2,575,056
1,100,000 International Gaming Technology, Inc., 8.375%,
due 05/15/09 1,042,250
1,245,000 Marvel Enterprise, Inc., 12%, due 06/15/09 1,132,950
1,295,000 Mohegan Tribal Gaming, Inc., 8.75%, due 01/01/09 1,256,150
825,000 Regal Cinemas, Inc., 8.875%, due 12/15/10 602,250
905,000 Regal Cinemas, Inc., 9.5%, due 06/01/08 687,800
400,000 SFX Entertainment, Inc., 9.125%, due 02/01/08 366,000
</TABLE>
22
See accompanying notes to the financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
Entertainment & Leisure (Continued)
$1,495,000 SFX Entertainment, Inc., 9.125%, due 12/01/08 $ 1,379,138
1,430,000 Station Casinos, Inc., 9.75%, due 04/15/07 1,458,600
------------
Total Entertainment & Leisure 14,123,688
------------
Foods, Hotels & Restaurants (6.8%)
1,300,000 Boca Resorts, Inc., 9.875%, due 04/15/09 1,222,000
620,000 Cott Corp., 9.375%, due 07/01/05 599,075
1,025,000 Di Giorgio Corp., 10%, due 06/15/07 943,000
2,105,000 HMH Properties, Inc., 7.875%, due 08/01/08 1,841,875
1,840,000 International Home Foods, Inc., 10.375%, due 11/01/06 1,886,000
1,285,000 ITT Corp., 7.375%, due 11/15/15 1,070,713
400,000 ITT Corp. (New), 6.25%, due 11/15/00 391,788
1,350,000 La Quinta/Meditrust, Inc., 7.11%, due 10/17/01 1,256,324
300,000 La Quinta/Meditrust, Inc., 7.375%, due 07/15/00 292,713
1,315,000 New World Pasta Company, Inc., 9.25%, due 02/15/09 1,209,800
1,115,000 Packaged Ice, Inc., 9.75%, due 02/01/05 925,450
1,000,000 Signature Resorts/Sunterra, Inc., 9.75%, due 10/01/07 890,000
325,000 Signature Resorts/Sunterra, Inc., 9.25%, due 05/15/06 305,500
------------
Total Foods, Hotels & Restaurants 12,834,238
------------
Healthcare (4.7%)
850,000 Concentra Operating Corp., (144A), 13%, due 08/15/09 765,000*
950,000 Express Scripts, Inc., 9.625%, due 06/15/09 950,000
1,000,000 Hanger Orthopedic Group, (144A), 11.25%, due 06/15/09 970,000*
200,000 Hudson Respiratory Care, Inc., 9.125%, due 04/15/08 156,000
395,000 Insight Health Services Corp., Series B, 9.625%, due 06/15/08 367,350
900,000 Lifepoint Hospitals Holdings, (144A), 10.75%, due 05/15/09 877,500*
450,000 Magellan Health Services, Inc., 9%, due 02/15/08 375,750
890,000 Prime Medical Services, Inc., 8.75%, due 04/01/08 836,600
1,400,000 Tenet Healthcare Corp., 8.125%, due 12/01/08 1,267,000
1,430,000 Tenet Healthcare Corp., 8.625%, due 01/15/07 1,337,050
900,000 Unilab Finance Corp., (144A), 12.75%, due 10/01/09 900,000*
------------
Total Healthcare 8,802,250
------------
Household Products (0.9%)
383,000 Boyds Collection, Ltd., 9%, due 05/15/08 372,468
1,520,000 Home Interiors & Gifts, Inc., 10.025%,
due 06/01/08 1,276,800
------------
Total Household Products 1,649,268
------------
</TABLE>
23
See accompanying notes to the financial statements.
<PAGE>
TCW Galileo High Yield Bond Fund
- --------------------------------------------------------------------------------
Schedule of Investments (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
Machinery (0.2%)
$ 355,000 AGCO Corp., 8.5%, due 03/15/06 $ 326,600
------------
Media--Broadcasting & Publishing (11.9%)
1,500,000 Acme Television Corp., 0%, due 09/30/04 1,320,000
295,000 Century Communications Corp., 9.5%, due 03/01/05 295,000
300,000 Chancellor Media Corp., 8.75%, due 06/15/07 297,000
585,000 Chancellor Media Corp., 9%, due 10/01/08 599,625
500,000 Charter Communications Holdings, LLC, 0%,
due 04/01/11 295,000
1,000,000 Classic Cable, Inc., 9.375%, due 08/01/09 970,000
1,100,000 Classic Communications Corp., 13.25%, due 08/01/09 748,000
585,000 CSC Holdings, Inc., 7.625%, due 07/15/18 541,499
270,000 CSC Holdings, Inc., 8.125%, due 08/15/09 267,638
2,500,000 EchoStar DBS Corp., 9.375%, due 02/01/09 2,475,000
350,000 Garden State Newspapers, Inc., 8.625%, due 07/01/11 318,500
775,000 Garden State Newspapers, Inc., 8.75%, due 10/01/09 714,938
60,000 Hollinger International Publishing, Inc., 8.625%,
due 03/15/05 58,800
500,000 Insight Midwest L.P. & Insight Capital, Inc., (144A),
9.75%, due 10/01/09 510,000*
950,000 K-III Communications Corp., 8.5%, due 02/01/06 926,250
1,385,000 Mastec, Inc., 7.75%, due 02/01/08 1,267,275
295,000 Primedia, Inc., 7.625%, due 04/01/08 274,350
495,000 Rogers Cablesystems, Ltd., 10%, due 03/15/05 528,413
625,000 Rogers Communications, Inc., 8.875%, due 07/15/07 626,563
2,500,000 Spanish Broadcasting System, Inc., 9.625%, due 11/01/09 2,515,625
1,950,000 STC Broadcasting, Inc., 11%, due 03/15/07 1,940,250
1,475,000 TV Guide, Inc., 8.125%, due 03/01/09 1,438,125
3,500,000 UIH Australia/Pacific, Inc., 0%, due 05/15/06 2,695,000
855,000 Von Hoffmann Press, Inc., (144A), 10.875%,
due 05/15/07 837,900*
------------
Total Media--Broadcasting & Publishing 22,460,751
------------
Metals (4.7%)
850,000 California Steel Industries, (144A), 8.5%, due 04/01/09 807,500*
955,000 Golden Northwest Aluminum, Inc., 12%, due 12/15/06 978,875
1,035,000 International Wire Group, Inc., 11.75%, due 06/01/05 1,058,288
865,000 International Wire Group, Inc., Series B, 11.75%,
due 06/01/05 884,463
1,930,000 Kaiser Aluminum & Chemicals Corp., 10.875%,
due 10/15/06 1,939,650
825,000 Neenah Corp., 11.125%, due 05/01/07 761,063
125,000 Neenah Corp., Sr. Sub. Notes, 11.125%, due 05/01/07 115,313
1,500,000 Republic Technology, Inc., 13.75%, due 07/15/09 1,387,500
</TABLE>
24
See accompanying notes to the financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ----------
<C> <S> <C>
Metals (Continued)
$ 890,000 Wheeling Pittsburgh Corp., 9.25%, due 11/15/07 $ 827,700
----------
Total Metals 8,760,352
----------
Paper & Forest Products (3.6%)
505,000 Buckeye Technologies, Inc., 8%, due 10/15/10 467,125
875,000 Fibermark, Inc., 9.375%, due 10/15/06 861,875
1,855,000 Riverwood International Corp., 10.625%, due 08/01/07 1,878,188
3,245,000 Stone Container Corp., 12.25%, due 04/01/02 3,261,225
300,000 Tembec Industries, Inc., 8.625%, due 06/30/09 297,000
----------
Total Paper & Forest Products 6,765,413
----------
Pollution Control (1.8%)
310,000 Allied Waste North America, Inc., 7.625%, due 01/01/06 268,925
2,400,000 Allied Waste North America, Inc., 7.875%, due 01/01/09 2,022,000
415,000 Envirosource, Inc., 9.75%, due 06/15/03 253,150
1,050,000 Mid-American Waste System, Inc., 12.25%, due 02/15/03 10,500***
700,000 Safety-Kleen Corp., 9.25%, due 05/15/09 654,500
245,000 Safety-Kleen Services, Inc., 9.25%, due 06/01/08 238,263
----------
Total Pollution Control 3,447,338
----------
Retail (1.0%)
825,000 Avis Rent A Car, Inc., (144A), 11%, due 05/01/09 849,750*
1,000,000 J. Crew Operating Corp., 10.375%, due 10/15/07 840,000
290,000 Specialty Retailers, Inc., 8.5%, due 07/15/05 217,500
----------
Total Retail 1,907,250
----------
Telecommunications (15.3%)
665,000 Bresnan Communications Group, 0%, due 02/01/09 435,575
2,200,000 CapRock Communications Corp., 11.5%, due 05/01/09 2,145,000
1,075,000 CapRock Communications Corp., 12%, due 07/15/08 1,058,875
525,000 Intermedia Communications, Inc., 8.5%, due 01/15/08 458,063
985,000 Intermedia Communications, Inc., 9.5%, due 03/01/09 903,738
1,400,000 KMC Telecom Holdings, Inc., (144A), 13.5%, due 05/15/09 1,393,000*
2,185,000 Level 3 Communications, Inc., 9.125%, due 05/01/08 2,037,513
545,000 Nextlink Communications, Inc., 9.625%, due 10/01/07 524,563
2,905,000 Nextlink Communications, Inc., 10.75%, due 11/15/08 2,948,575
1,500,000 Paging Network, Inc., 10.125%, due 08/01/07 465,000
1,750,000 Primus Telecom Group, Inc., (144A), 12.75%, due 10/15/09 1,750,000*
1,900,000 PSINet, Inc., (144A), 11%, due 08/01/09 1,947,500*
1,270,000 RCN Corp., 0%, due 10/15/07 879,475
1,415,000 RCN Corp., 10%, due 10/15/07 1,404,388
2,875,000 Rhythms NetConnections, Inc., (144A), 12.75%, due
04/15/09 2,573,125*
</TABLE>
25
See accompanying notes to the financial statements.
<PAGE>
TCW Galileo High Yield Bond Fund
- --------------------------------------------------------------------------------
Schedule of Investments (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
Telecommunications (Continued)
$1,095,000 SBA Communications Corp., 0%, due 03/01/08 $ 613,200
1,000,000 Teligent, Inc., 11.5%, due 12/01/07 920,000
2,075,000 Verio, Inc., 11.25%, due 12/01/08 2,165,781
1,500,000 Williams Communication Group, Inc., 10.7%, due 10/01/07 1,556,250
2,575,000 Worldwide Fiber, Inc., (144A), 12%, due 08/01/09 2,575,000*
------------
Total Telecommunications 28,754,621
------------
Textiles, Clothing & Fabrics (0.6%)
500,000 Westpoint Stevens, Inc., 7.875%, due 06/15/05 462,500
810,000 Westpoint Stevens, Inc., 7.875%, due 06/15/08 724,950
------------
Total Textiles, Clothing & Fabrics 1,187,450
------------
Transportation (1.1%)
300,000 Atlas Air, Inc., 10.75%, due 08/01/05 298,500
675,000 International Shipholding Corp., 9%, due 07/01/03 672,469
1,070,000 Western Star Trucks Holdings, Ltd., 8.75%,
due 05/01/07 1,016,500
------------
Total Transportation 1,987,469
------------
Utilities (2.1%)
825,000 CMS Energy Corp., 7.5%, due 01/15/09 755,065
1,115,000 CMS Energy Corp., 7.625%, due 11/15/04 1,069,196
85,000 CMS Energy Corp., 8.125%, due 05/15/02 84,431
2,018,765 Panda Funding Corp., 11.625%, due 08/20/12 2,018,760
------------
Total Utilities 3,927,452
------------
Miscellaneous (1.7%)
1,245,000 Jordan Industries, Inc., 0%, due 04/01/09 809,250
1,495,000 Jordan Telecommunications Products, Inc., 0%,
due 08/01/07 1,225,900
1,310,000 Jordan Telecommunications Products, Inc., 9.875%,
due 08/01/07 1,231,400
------------
Total Miscellaneous 3,266,550
------------
Total Fixed Income Securities (Cost: $195,256,508) (98.0%) 184,572,257
------------
<CAPTION>
Number of
Shares,
Warrants,
or Rights Equity Securities
---------- -----------------
<S> <C> <C>
3,300 Classic Communications, Inc., Warrants, expire 01/01/80 55,011***
6,969 Fitzgerald Gaming Corp., Common Stock 7***
1,250 Forman Petroleum Corp., Warrants, expire 06/01/04 1***
2,920 Terex Corp., Stock Appreciation Rights, expire 05/15/02 40,880***
------------
Total Equity Securities (Cost: $202) (0.1%) 95,899
------------
</TABLE>
26
See accompanying notes to the financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Short-Term Investments Value
---------- ---------------------- ------------
<S> <C> <C>
$ 352,158 Bank of Montreal, 5.19%, due 11/01/99 $ 352,158**
9,342 BankBoston Corp., 5.5%, due 11/01/99 9,342**
3,319,159 Investors Bank and Trust Depository Reserve, 4.3%,
due 11/01/99 3,319,159
5,000,000 Merrimac Money Market Fund 5,000,000**
------------
Total Short-Term Investments
(Cost: $8,680,659) (4.6%) 8,680,659
------------
Total Investments
(Cost: $203,937,369) (102.7%) 193,348,815
Liabilities in Excess of Other Assets (-2.7%) (5,061,919)
------------
Net Assets (100.0%) $188,286,896
============
</TABLE>
Notes to the Schedule of Investments:
*Restricted security (Note 9).
**Represents investments of security lending collateral (Note 3).
***Non-income producing.
27
See accompanying notes to the financial statements.
<PAGE>
TCW Galileo Mortgage-Backed Securities Fund
- --------------------------------------------------------------------------------
Schedule of Investments
<TABLE>
<CAPTION>
Principal
Amount Fixed Income Securities Value
---------- ----------------------- ----------
<S> <C> <C>
Collaterized Mortgage Obligations (28.5% of Net Assets)
$1,412,281 Collateral Mortgage Obligation Trust (64-Z),
9%, due 11/20/20 $1,457,728
1,264,453 Federal Home Loan Mortgage Corp. (1434-G),
6.75%, due 03/15/19 (PAC) 1,267,588
189,082 Federal Home Loan Mortgage Corp. (1899-D),
7.25%, due 09/15/23 (TAC) 189,641
1,828,188 Federal Home Loan Mortgage Corp. (2021-AD),
7.5%, due 08/15/24 1,818,864
1,905,781 Federal Home Loan Mortgage Corp. (2032-AU),
7.5%, due 02/15/27 1,898,196
1,500,000 Federal Home Loan Mortgage Corp. (2057-HJ),
7%, due 05/15/28 (I/O) (PAC) 546,990
355 Federal National Mortgage Association (91-130-SQ),
6,841.4%, due 09/25/21 (I/F) (I/O) 37,949
1,331,291 Federal National Mortgage Association (97-55-T),
7%, due 02/18/27 (TAC) 1,331,051
2,000,000 Federal National Mortgage Association (97-57-PC),
6.5%, due 04/18/20 (PAC) 1,987,149
1,680,732 Federal National Mortgage Association (G93-8-PH), 6.85%,
due 01/25/21 (PAC) 1,673,993
505,681 General Electric Capital Mortgage Services, Inc., (97-9-2A7),
7%, due 10/25/27 503,872
479,157 Greenwich Capital Acceptance, Inc. (91-03), (Private Placement),
9.46%, due 08/01/19 463,584*
42 Guardian Savings and Loan Association (88-1-A), 6.36%,
due 07/25/18 36*
75,778 Guardian Savings and Loan Association (88-3-A),
6.513%, due 10/25/18 64,411*
97,373 Guardian Savings and Loan Association (89-3-A),
7.566%, due 05/25/19 82,767*
518,248 Guardian Savings and Loan Association (89-4-A),
7.446%, due 07/25/19 492,336*
578,847 Guardian Savings and Loan Association (89-5-A),
7.76%, due 07/25/19 549,905*
839,909 Residential Funding Mortgage Securities I (97-S12-A10),
6.7%, due 08/25/27 (PAC) 835,992
1,034 Resolution Trust Corp. (91-6-C2), 2,962.2%,
due 08/25/20 (I/O) 19,121
2,433 Resolution Trust Corp. (91-6-D2), 3,253.2%,
due 09/25/28 (I/O) 45,010
657,505 Sears Mortgage Securities (88-A-A2), 0.878%,
due 05/25/18 (I/O) 6,707*
----------
Total Collaterized Mortgage Obligations (Cost: $16,212,613) 15,272,890
----------
</TABLE>
28
See accompanying notes to the financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Value
---------- ------------
<S> <C> <C>
U.S. Government Agency Obligations (63.2%)
$ 31,789 Federal Home Loan Mortgage Corp., Pool #212346, 9.5%,
due 08/01/01 $ 32,353
639,089 Federal Home Loan Mortgage Corp., Pool #310005, 5.731%,
due 11/01/19 627,106
276,562 Federal Home Loan Mortgage Corp., Pool #410013, 6.953%,
due 12/01/24 281,466
3,000,000 Federal Home Loan Mortgage Corp., Pool #610967, 6.885%,
due 04/01/28 3,086,250
1,904,603 Federal Home Loan Mortgage Corp., Pool #755313, 7.177%,
due 06/01/28 1,932,599
88,027 Federal Home Loan Mortgage Corp., Pool #770584, 6.875%,
due 05/01/19 88,074
217,576 Federal Home Loan Mortgage Corp., Pool #785630, 6.745%,
due 07/01/26 221,112
86,727 Federal Home Loan Mortgage Corp., Pool #865006, 8.584%,
due 08/01/18 88,696
112,519 Federal Home Loan Mortgage Corp., Pool #865270, 7.656%,
due 12/01/18 113,823
72,377 Federal Home Loan Mortgage Corp., Pool #865275, 8.259%,
due 02/01/19 74,426
102,914 Federal National Mortgage Association, Pool #163492, 8.5%,
due 05/01/16 106,412
224,719 Federal National Mortgage Association, Pool #201909, 7.329%,
due 09/01/19 231,053
352,383 Federal National Mortgage Association, Pool #284916, 6.791%,
due 06/01/27 357,873
333,564 Federal National Mortgage Association, Pool #303334, 6.951%,
due 04/01/25 344,675
1,474,527 Federal National Mortgage Association, Pool #303972, 7%,
due 07/01/03 1,480,086
155,814 Federal National Mortgage Association, Pool #313920, 7.313%,
due 11/01/27 159,655
97,782 Federal National Mortgage Association, Pool #358869, 7.239%,
due 09/01/26 100,057
44,243 Federal National Mortgage Association, Pool #369080, 6.975%,
due 04/01/27 45,334
371,188 Federal National Mortgage Association, Pool #376663, 6.67%,
due 06/01/27 375,646
55,929 Federal National Mortgage Association, Pool #392275, 6.977%,
due 06/01/27 56,901
1,451,902 Federal National Mortgage Association, Pool #392536, 7.6%,
due 08/01/27 1,475,452
</TABLE>
29
See accompanying notes to the financial statements.
<PAGE>
TCW GALILEO MORTGAGE-BACKED SECURITIES FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
$ 172,259 Federal National Mortgage Association, Pool #393943, 7.003%,
due 07/01/27 $ 176,786
107,957 Federal National Mortgage Association, Pool #394575, 6.69%,
due 07/01/27 109,877
363,735 Federal National Mortgage Association, Pool #394996, 7.097%,
due 08/01/27 372,195
1,890,591 Federal National Mortgage Association, Pool #396814, 6.625%,
due 07/01/27 1,899,892
261,311 Federal National Mortgage Association, Pool #397897, 7.249%,
due 08/01/27 268,445
2,560,540 Federal National Mortgage Association, Pool #434001, 7.321%,
due 12/01/27 2,600,549
3,389,668 Federal National Mortgage Association, Pool #457319, 6.635%,
due 10/01/28 3,418,533
30,616 Federal National Mortgage Association, Pool #96193, 8.428%,
due 09/01/18 31,333
2,099,937 Government National Mortgage Association, Pool #80011, 6.125%,
due 11/20/26 2,109,660
2,098,814 Government National Mortgage Association, Pool #80022, 6.125%,
due 12/20/26 2,108,552
2,175,392 Government National Mortgage Association, Pool #80057, 6.375%,
due 04/01/27 2,206,663
4,287,478 Government National Mortgage Association, Pool #80185, 6%,
due 04/20/28 4,278,689
2,922,737 Government National Mortgage Association, Pool #80186, 6.375%,
due 04/20/28 2,923,789
------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST: $33,770,292) 33,784,012
------------
TOTAL FIXED INCOME SECURITIES (COST: $49,982,905) (91.7%) 49,056,902
------------
SHORT-TERM INVESTMENTS (COST: $7,819,495) (14.6%)
7,819,495 Repurchase Agreement, ABN Amro, dated 10/29/99, 5.3%,
due 11/01/99 (Collateralized by $7,819,495 current face
Federal Home Loan Mortgage Corp., Pool #C00874, 7%,
due 10/01/29, valued at $7,975,889) 7,819,495
------------
TOTAL INVESTMENTS (COST: $57,802,400) (106.3%) 56,876,397
LIABILITIES IN EXCESS OF OTHER ASSETS (-6.3%) (3,380,180)
------------
NET ASSETS (100.0%) $ 53,496,217
============
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
I/O - Interest Only security.
I/F - Inverse Floating rate security whose interest rate moves in the opposite
direction of prevailing interest rates.
PAC - Planned Amortization Class.
TAC - Target Amortization Class.
* Security valued at fair value as determined in good faith under procedures
established by and under the general supervision of the Fund's Board of Di-
rectors.
30
See accompanying notes to the financial statements.
<PAGE>
TCW Galileo Total Return Mortgage-Backed Securities Fund
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Schedule of Investments October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Fixed Income Securities Value
---------- ----------------------- ----------
<S> <C> <C>
Collaterized Mortgage Obligations (71.9% of Net Assets)
$4,056,582 ABN Amro Mortgage Corp. (98-4-A6), 6.75%,
due 11/25/28 (TAC) $3,756,919
2,013,462 Bear Stearns Mortgage Securities, Inc. (97-2-A5),
6.875%, due 01/28/24 1,890,138
2,000,000 CMC Securities Corp. III (94-A-A12), 6.75%, due 02/25/24 (PAC) 1,974,530
1,500,000 CMC Securities Corp. III (94-A-A22), 8.625%,
due 02/25/24 (I/F) 930,000
4,710,119 Countrywide Funding Corp., (93-7-A5), 7%, due 11/25/23 (TAC) 4,386,571
1,429,625 Federal Home Loan Mortgage Corp. (1422-SA), 8.502%,
due 11/15/07 (I/F) 1,354,784
126,862 Federal Home Loan Mortgage Corp. (1541-J), 6.5%,
due 07/15/23 126,649
3,350,000 Federal Home Loan Mortgage Corp. (1620-SB), 10%,
due 11/15/23 (I/F) 2,584,391
3,357,000 Federal Home Loan Mortgage Corp. (1629-PB), 6%,
due 05/15/23 2,883,126
1,782,000 Federal Home Loan Mortgage Corp. (1662-N), 6.25%,
due 01/15/09 1,661,394
840,946 Federal Home Loan Mortgage Corp. (1717-MA), 6.5%,
due 04/15/24 827,373
850,805 Federal Home Loan Mortgage Corp. (1796-E), 6%,
due 09/15/08 812,930
733,233 Federal Home Loan Mortgage Corp. (1844-E), 6.5%,
due 10/15/13 699,399
3,500,000 Federal Home Loan Mortgage Corp. (2020-D), 6.25%,
due 01/15/27 (PAC) 3,202,255
3,451,384 Federal Home Loan Mortgage Corp. (2052-PA),
6.25%, due 01/15/15 (PAC) 3,444,619
2,000,000 Federal Home Loan Mortgage Corp. (2061-TA),
5.25%, due 10/15/27 (PAC) 1,656,680
4,000,000 Federal Home Loan Mortgage Corp. (2121-C), 6%,
due 02/15/29 3,457,813
1,000,000 Federal National Mortgage Association (92-215-PL),
7.25%, due 11/25/21 (PAC) 990,010
349,714 Federal National Mortgage Association (93-2-B), 7.2%,
due 11/25/03 350,864
2,288,691 Federal National Mortgage Association (93-189-S),
8.099%, due 10/25/23 (I/F) 1,698,346
1,000,000 Federal National Mortgage Association (93-202-SZ),
10%, due 11/25/23 (I/F) (PAC) 838,420
338,099 Federal National Mortgage Association (93-223-EA),
6.5%, due 12/25/23 (PAC) 336,060
2,000,000 Federal National Mortgage Association (93-X-130A-NA),
6.5%, due 05/25/23 1,925,140
3,000,000 Federal National Mortgage Association (94-40-SA),
8.444%, due 03/25/24 (I/F) 2,566,830
1,743,479 Federal National Mortgage Association (G92-29-J), 8%,
due 07/25/22 1,767,312
</TABLE>
31
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Total Return Mortgage-Backed Securities Fund
- --------------------------------------------------------------------------------
Schedule of Investments (Continued)
<TABLE>
<CAPTION>
Principal
Amount Value
---------- -----------
<S> <C> <C>
Collaterized Mortgage Obligations (Continued)
$3,398,485 First Union Residential Securities Trust (98-A-SA4), 7%,
due 04/25/25 $ 3,245,474
756,693 General Electric Capital Mortgage Services, Inc. (96-12-A2),
7.25%, due 07/25/11 754,034
2,925,122 General Electric Capital Mortgage Services, Inc. (97-5-A2),
7.5%, due 06/25/27 2,921,709
41,934 Government National Mortgage Association (94-2-Z), 7.991%,
due 07/16/24 42,383
4,000,000 Government National Mortgage Association (97-2-E), 7.5%,
due 02/20/27 3,954,547
2,942,344 Residential Accredit Loans, Inc. (97-QS-13-A7), 7.25%,
due 12/25/27 2,809,939
2,300,000 Residential Asset Securitization Trust (98-A12-A16), 6.75%,
due 11/25/28 2,202,250
2,876,686 Residential Funding Mortgage Securities I (95-S21-A6), 7.5%,
due 12/26/25 2,884,827
210,896 Residential Funding Mortgage Securities I (95-S7-A9), 8%,
due 05/25/10 (I/O) 23,199
-----------
Total Collaterized Mortgage Obligations (Cost: $65,885,952) 64,960,915
-----------
U.S. Government Agency Obligations (23.4%)
421,397 Federal Home Loan Mortgage Corp., Pool #755183, 7.477%,
due 12/01/15 428,178
300,894 Federal Home Loan Mortgage Corp., Pool #846317, 6.816%,
due 08/01/26 307,033
827,050 Federal Home Loan Mortgage Corp., Pool #846510, 6.819%,
due 04/01/25 848,726
1,079,108 Federal Housing Authority (#000-13002), 7.125%, due 03/01/04 1,027,850
2,817,324 Federal Housing Authority (#012-11216), 7.185%, due 03/25/29 2,683,501
1,855,673 Federal Housing Authority (#044-10592), 7.625%, due 08/01/22 1,804,642
2,535,630 Federal Housing Authority (#112-43055), 9.25%, due 05/25/32 2,605,360
10,394 Federal National Mortgage Association, Pool #029542, 8.75%,
due 07/01/09 10,846
5,409 Federal National Mortgage Association, Pool #062420, 7.5%,
due 03/01/06 5,388
1,941,937 Federal National Mortgage Association, Pool #252386, 6.5%,
due 04/01/19 1,883,957
659,666 Federal National Mortgage Association, Pool #124410, 6.812%,
due 07/01/22 677,846
181,343 Federal National Mortgage Association, Pool #137064, 6.619%,
due 03/01/19 182,572
524,480 Federal National Mortgage Association, Pool #303786, 7.5%,
due 02/01/11 531,036
</TABLE>
32
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
OCTOBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
$ 585,063 Federal National Mortgage Association,
Pool #310001, 6%, due 09/01/00 $ 582,828
36,197 Federal National Mortgage Association,
Pool #347216, 6.845%, due 06/01/26 36,862
367,563 Federal National Mortgage Association,
Pool #348025, 6.699%, due 06/01/26 372,323
4,372,631 Federal National Mortgage Association,
Pool #413618, 6.5%, due 03/01/18 4,230,520
2,554 Government National Mortgage Association,
Pool #176192, 8.25%, due 12/15/01 2,589
1,789 Government National Mortgage Association,
Pool #217350, 9.25%, due 08/15/00 1,802
1,528,745 Government National Mortgage Association,
Pool #351003, 7.5%, due 07/15/28 1,528,745
1,399,193 Government National Mortgage Association,
Pool #365618, 7%, due 10/15/33 1,351,413
26,567 Government National Mortgage Association,
Pool #3933, 8.25%, due 07/15/04 27,024
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST: $21,677,366) 21,131,041
-----------
U.S. TREASURY SECURITIES (0.4%)
197,000 Certificates Accrual Treasury Strips, 0%, due 08/15/01 177,464
177,000 Certificates Accrual Treasury Strips, 0%, due 05/15/06 117,491
112,000 Certificates Accrual Treasury Strips, 0%, due 08/15/08 63,805
-----------
TOTAL U.S. TREASURY SECURITIES (COST: $353,557) 358,760
-----------
TOTAL FIXED INCOME SECURITIES (COST: $87,916,875)
(95.7%) 86,450,716
-----------
SHORT-TERM INVESTMENTS (COST: $3,768,573) (4.2%)
------------------------------------------------
3,768,573 Repurchase Agreement, ABN Amro, dated 10/29/99,
5.3%, due 11/01/99 (Collateralized by $3,768,573
current face Federal Home Loan Mortgage Corp.,
Pool #C00874, 7%, due 10/01/29, valued at $3,843,945) 3,768,573
-----------
TOTAL INVESTMENTS (COST: $91,685,448) (99.9%) 90,219,289
EXCESS OF OTHER ASSETS OVER LIABILITIES (0.1%) 92,813
-----------
NET ASSETS (100.0%) $90,312,102
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
I/O - Interest Only security.
I/F - Inverse Floating rate security whose interest rate moves in the opposite
direction of prevailing interest rates.
PAC - Planned Amortization Class.
TAC - Target Amortization Class.
33
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
U.S. Fixed Income
Statements of Assets and Liabilities October 31, 1999
<TABLE>
<CAPTION>
TCW Galileo
TCW Galileo Total Return
TCW Galileo TCW Galileo TCW Galileo Mortgage- Mortgage-
Money Core Fixed High Yield Backed Backed
Market Income Bond Securities Securities
Fund Fund Fund Fund Fund
----------- ----------- ----------- ----------- ------------
Dollar Amounts in Thousands
(Except per Share Amounts)
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at Value
(/1/) $ 260,241 $ 71,224 $ 193,349 $ 56,876 $ 90,219
Receivables for Securities
Sold -- -- 1,380 120 --
Receivables for Fund
Shares Sold 331 -- -- -- 48
Interest Receivable 1,349 1,007 5,144 316 664
----------- --------- ---------- --------- ----------
Total Assets 261,921 72,231 199,873 57,312 90,931
----------- --------- ---------- --------- ----------
LIABILITIES
Distributions Payable 314 375 1,596 293 529
Payables for Securities
Purchased -- 270 4,417 3,414 --
Payable for Fund Shares
Redeemed 194 -- -- -- --
Payables Upon Return of
Securities Loaned (Note
3) -- 754 5,362 -- --
Accrued Management Fees 57 25 120 57 38
Other Accrued Expenses 56 58 91 52 52
----------- --------- ---------- --------- ----------
Total Liabilities 621 1,482 11,586 3,816 619
----------- --------- ---------- --------- ----------
NET ASSETS $ 261,300 $ 70,749 $ 188,287 $ 53,496 $ 90,312
=========== ========= ========== ========= ==========
NET ASSETS CONSIST OF:
Paid-in Capital $ 261,300 $ 75,241 $ 206,931 $ 59,873 $ 93,047
Undistributed Net Realized
Gain (Loss) on
Investments -- (3,219) (8,481) (5,470) 115
Unrealized (Depreciation)
on Investments -- (1,817) (10,588) (926) (1,466)
Undistributed
(Distributions in excess
of) Net Investment Income -- 544 425 19 (1,384)
----------- --------- ---------- --------- ----------
NET ASSETS $ 261,300 $ 70,749 $ 188,287 $ 53,496 $ 90,312
=========== ========= ========== ========= ==========
NET ASSETS ATTRIBUTABLE TO:
Institutional Class Shares $ 261,300 $ 70,666 $ 188,098 $ 53,496 $ 90,275
=========== ========= ========== ========= ==========
Advisory Class Shares $ -- $ 83 $ 189 $ -- $ 37
=========== ========= ========== ========= ==========
CAPITAL SHARES OUTSTANDING:
Institutional Class 261,300,243 7,500,527 21,252,538 5,578,048 10,069,812
=========== ========= ========== ========= ==========
Advisory Class -- 8,701 21,269 -- 4,031
=========== ========= ========== ========= ==========
NET ASSET VALUE PER SHARE:
Institutional Class $ 1.00 $ 9.42 $ 8.85 $ 9.59 $ 8.96
=========== ========= ========== ========= ==========
Advisory Class $ -- $ 9.51 $ 8.91 $ -- $ 9.23
=========== ========= ========== ========= ==========
</TABLE>
(1) The identified cost for the TCW Galileo Money Market Fund, the TCW Galileo
Core Fixed Income Fund, the TCW Galileo High Yield Bond Fund, the TCW Gali-
leo Mortgage-Backed Securities Fund and the TCW Galileo Total Return Mort-
gage-Backed Securities Fund at October 31, 1999, was $260,241, $73,154,
$203,937, $57,802 and $91,685, respectively.
34
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Statements of Operations Year Ended October 31, 1999
<TABLE>
<CAPTION>
TCW
TCW Galileo
TCW TCW Galileo Total Return
Galileo Galileo TCW Mortgage- Mortgage-
Money Core Fixed Galileo Backed Backed
Market Income High Yield Securities Securities
Fund Fund Bond Fund Fund Fund
------- ---------- ---------- ---------- ------------
Dollar Amounts in Thousands
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest (Note 2) $11,128 $5,064 $19,584 $2,876 $7,483
------- ------ ------- ------ ------
Expenses:
Management Fees 541 307 1,553 232 470
Accounting Service Fees 105 28 50 24 30
Administration Fees 44 18 51 14 24
Transfer Agent Fees--
Institutional Class 35 40 43 38 39
Transfer Agent Fees--
Advisory Class -- 8 8 -- 8
Custodian Fees 25 20 20 13 14
Professional Fees 31 25 44 20 29
Directors' Fees and
Expenses 7 7 7 7 7
Registration Fees--
Institutional Class -- -- 11 -- 2
Registration Fees--
Advisory Class -- 35 34 -- 35
Other 40 22 76 23 35
------- ------ ------- ------ ------
Total Expenses 828 510 1,897 371 693
Less Expenses Borne by
Investment Adviser -- 49 47 20 47
------- ------ ------- ------ ------
Net Expenses 828 461 1,850 351 646
------- ------ ------- ------ ------
Net Investment Income 10,300 4,603 17,734 2,525 6,837
------- ------ ------- ------ ------
NET REALIZED AND
UNREALIZED (LOSS) ON
INVESTMENTS AND FOREIGN
CURRENCY
Net Realized Gain
(Loss) on:
Investments -- (1,241) (5,518) -- 36
Foreign Currency -- (31) -- -- --
Change in Unrealized
Appreciation
(Depreciation) on:
Investments -- (3,229) (2,104) (103) (4,058)
Foreign Currency -- 114 -- -- --
------- ------ ------- ------ ------
Net Realized and
Unrealized (Loss) on
Investments and
Foreign Currency -- (4,387) (7,622) (103) (4,022)
------- ------ ------- ------ ------
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS $10,300 $ 216 $10,112 $2,422 $2,815
======= ====== ======= ====== ======
</TABLE>
35
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
U.S. Fixed Income
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
TCW Galileo TCW Galileo Core
Money Market Fund Fixed Income Fund
------------------ ------------------
Year Ended Year Ended
October 31, October 31,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Dollar Amounts in Thousands
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 10,300 $ 14,062 $ 4,603 $ 3,677
Net Realized Gain (Loss) on
Investments and Foreign Currency -- -- (1,272) 1,270
Change in Unrealized Appreciation
(Depreciation) on Investments and
Foreign Currency -- -- (3,115) 853
-------- -------- -------- --------
Increase in Net Assets Resulting from
Operations 10,300 14,062 216 5,800
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment
Income:
Institutional Class (10,300) (14,062) (4,137) (4,170)
Advisory Class -- -- (2) --
-------- -------- -------- --------
Total Distributions to Shareholders (10,300) (14,062) (4,139) (4,170)
-------- -------- -------- --------
NET CAPITAL SHARE TRANSACTIONS (NOTE
8)
Institutional Class 18,849 19,680 (88,408) 141,998
Advisory Class -- -- 84 --
-------- -------- -------- --------
Increase (Decrease) in Net Assets
Resulting from Net Capital Share
Transactions 18,849 19,680 (88,324) 141,998
-------- -------- -------- --------
Increase (Decrease) in Net Assets 18,849 19,680 (92,247) 143,628
NET ASSETS
Beginning of Year 242,451 222,771 162,996 19,368
-------- -------- -------- --------
End of Year $261,300 $242,451 $ 70,749 $162,996
======== ======== ======== ========
</TABLE>
36
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
TCW Galileo TCW Galileo
High Yield Mortgage-Backed
Bond Fund Securities Fund
------------------ ----------------
Year Ended Year Ended
October 31, October 31,
------------------ ----------------
1999 1998 1999 1998
-------- -------- ------- -------
Dollar Amounts in Thousands
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 17,734 $ 18,130 $ 2,525 $ 1,812
Net Realized (Loss) on Investments (5,518) (2,950) -- (15)
Change in Unrealized Appreciation
(Depreciation) on Investments (2,104) (13,024) (103) 512
-------- -------- ------- -------
Increase in Net Assets Resulting from
Operations 10,112 2,156 2,422 2,309
-------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income:
Institutional Class (17,287) (18,426) (2,506) (593)
Advisory Class (9) -- -- --
Distributions in Excess of Net
Investment Income -- (13) -- --
Distributions from Net Realized Gains -- (2,884) -- (2,222)
-------- -------- ------- -------
Total Distributions to Shareholders (17,296) (21,323) (2,506) (2,815)
-------- -------- ------- -------
NET CAPITAL SHARE TRANSACTIONS (NOTE 8)
Institutional Class 29,567 (23,892) 9,941 (11,162)
Advisory Class 202 -- -- --
-------- -------- ------- -------
Increase (Decrease) in Net Assets
Resulting from Net Capital Share
Transactions 29,769 (23,892) 9,941 (11,162)
-------- -------- ------- -------
Increase (Decrease) in Net Assets 22,585 (43,059) 9,857 (11,668)
NET ASSETS
Beginning of Year 165,702 208,761 43,639 55,307
-------- -------- ------- -------
End of Year $188,287 $165,702 $53,496 $43,639
======== ======== ======= =======
</TABLE>
37
See accompanying notes to financial statements.
<PAGE>
TCW GALILEO FUNDS, INC.
- --------------------------------------------------------------------------------
U.S. FIXED INCOME
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO TOTAL RETURN
MORTGAGE-BACKED
SECURITIES FUND
--------------------------
YEAR ENDED OCTOBER 31,
--------------------------
1999 1998
------------ ------------
DOLLAR AMOUNTS IN
THOUSANDS
<S> <C> <C>
OPERATIONS
Net Investment Income $ 6,837 $ 7,475
Net Realized Gain on Investments 36 41
Change in Unrealized (Depreciation) on Investments (4,058) (551)
------------ ------------
Increase in Net Assets Resulting from Operations 2,815 6,965
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Investment Income -
Institutional Class (6,750) (7,762)
Distributions in Excess of Net Investment Income -
Institutional Class (1,384) (87)
Distributions from Net Realized Gains -- (435)
------------ ------------
Total Distributions to Shareholders (8,134) (8,284)
------------ ------------
NET CAPITAL SHARE TRANSACTIONS (NOTE 8)
Institutional Class (5,907) 21,378
Advisory Class 37 --
------------ ------------
Increase (Decrease) in Net Assets Resulting from
Net Capital Share Transactions (5,870) 21,378
------------ ------------
Increase (Decrease) in Net Assets (11,189) 20,059
NET ASSETS
Beginning of Year 101,501 81,442
------------ ------------
End of Year $ 90,312 $ 101,501
============ ============
</TABLE>
38
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Notes to Financial Statements October 31, 1999
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 20 no-load mutual funds
known as the TCW Galileo Funds (the "Funds"). On January 3, 2000, the Advisor
changed its name to TCW Investment Management Company, Inc. TCW Funds
Management, Inc. (the "Advisor") is the investment advisor to the Funds. TCW
London International, Limited is a sub-advisor for the TCW Galileo Asia Pacific
Equities Fund, the TCW Galileo Emerging Markets Equities Fund, the TCW Galileo
European Equities Fund, the TCW Galileo International Equities Fund, and the
TCW Galileo Japanese Equities Fund. The advisors are registered under the
Investment Advisors Act of 1940. Each Fund has distinct investment objectives
and policies. For the period November 1, 1998 through February 28, 1999, TCW
Investment Management Company, was also the administrator of the Funds' day-to-
day operations. As of March 1, 1999, Investors Bank & Trust Company became the
administrator of the Funds.
The Funds' financial statements are separated into three reports: 1) U.S. Equi-
ties Funds, 2) U.S. Fixed Income Funds, and 3) International Funds. However,
all Funds are listed below along with their investment objectives, and are cur-
rently offered by the Company.
U.S. Equities
<TABLE>
<CAPTION>
TCW Galileo Fund Investment Objective
---------------- --------------------------------------
<C> <S>
Convertible Securities Fund
TCW Galileo Convertible Securities Seeks high total return from current
Fund income and capital appreciation
through investment principally in con-
vertible securities.
Non-Diversified U.S. Equity Funds
TCW Galileo Aggressive Growth Equities Seeks long-term capital appreciation,
Fund (formerly TCW Galileo Mid-Cap primarily by investing in publicly-
Growth Fund) traded equity securities of medium
capitalization companies.
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.
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.
TCW Galileo Large Cap Value Fund Seeks long-term capital appreciation
by investing primarily in publicly
traded equity securities of large cap-
italization companies.
TCW Galileo Select Equities Fund Emphasizes capital appreciation and
(formerly TCW Galileo Core Equities preservation with focus on long-term
Fund) results.
TCW Galileo Small Cap Growth Fund Seeks long-term capital appreciation,
primarily by investing in publicly-
traded equity securities of smaller
capitalization companies.
TCW Galileo Value Opportunities Fund Seeks capital appreciation by invest-
ing at least 65% of its total assets,
under normal circumstances, in pub-
licly traded equity securities issued
by small and medium companies with
market capitalization at the time of
purchase between $500 million and
$5 billion.
</TABLE>
39
<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
U.S. Fixed Income
Notes to Financial Statements (Continued)
Note 1 -- Organization (Continued)
U.S. Fixed Income
<TABLE>
<CAPTION>
TCW Galileo Fund Investment Objective
---------------- --------------------------------------
<C> <S>
Diversified Money Market Fund
TCW Galileo Money Market Fund Seeks current income, preservation of
capital and liquidity by investing in
short-term money market securities.
Diversified Fixed Income Funds
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.
TCW Galileo High Yield Bond Fund Seeks high current income through
investment principally in high yield
fixed income securities.
TCW Galileo Mortgage-Backed Securities Seeks income by investing primarily in
Fund short-term mortgage-backed securities.
TCW Galileo Total Return Mortgage- Seeks income by investing primarily in
Backed Securities Fund (formerly TCW long-term mortgage-backed securities.
Galileo Long Term Mortgage-Backed
Securities Fund)
</TABLE>
International
<TABLE>
<CAPTION>
TCW Galileo Fund Investment Objective
---------------- --------------------------------------
<C> <S>
Non-Diversified International Equity
Funds
TCW Galileo Asia Pacific Equities Fund Seeks long-term capital appreciation,
primarily by investing in equity
securities of companies in the Asia
Pacific region.
TCW Galileo Emerging Markets Equities Seeks long-term capital appreciation
Fund by investing in equity securities of
companies in emerging market countries
around the world.
TCW Galileo European Equities Fund Seeks long-term capital appreciation
by investing primarily in the
securities of issuers located in
Europe.
TCW Galileo International Equities Seeks long-term capital appreciation
Fund by investing in a mix of underlying
TCW Galileo Funds.
TCW Galileo Japanese Equities Fund Seeks long-term capital appreciation
by investing primarily in Japanese
equity securities.
TCW Galileo Latin America Equities Seeks long-term capital appreciation,
Fund primarily by investing in Latin
American equity securities.
Non-Diversified Fixed Income Fund
TCW Galileo Emerging Markets Income Seeks high total return from capital
Fund 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.
</TABLE>
40
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
As of March 1, 1999, nine funds (TCW Galileo Select Equities Fund, TCW Galileo
Large Cap Value Fund, TCW Galileo Large Cap Growth Fund, TCW Galileo Aggressive
Growth Equities Fund, TCW Galileo Small Cap Growth Fund, TCW Galileo European
Equities Fund, TCW Galileo Core Fixed Income Fund, TCW Galileo Total Return
Mortgage-Backed Securities Fund and TCW Galileo High Yield Bond Fund) commenced
offering two classes of shares, Institutional Class shares and Advisory Class
shares. Shares of each class of the Funds represent an equal pro rata interest
in the Funds and generally give the shareholder the same voting, dividend, liq-
uidation, and other rights. The Institutional Class shares are offered at the
current net asset value. The Advisory Class shares are also offered at the cur-
rent net asset value, but are subject to fees imposed under a distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act.
Note 2 -- Significant Accounting Policies
The following is a summary of significant accounting policies which are in con-
formity with generally accepted accounting principles and which are consist-
ently followed by the Funds in the preparation of their financial statements.
The preparation of the financial statements in accordance with generally ac-
cepted accounting principles requires management to make estimates and assump-
tions that affect the reported amounts and disclosures in the financial state-
ments
Principles of Accounting: The Funds use the accrual method of accounting for
financial reporting purposes.
Security Valuations: The value of securities held in the TCW Galileo Money Mar-
ket Fund is determined by using the amortized cost method applied to each indi-
vidual security unless, due to special circumstances, the use of such a method
would result in a valuation that does not approximate fair market value. All
other securities, including the bond fund securities, for which over-the-
counter market quotations are readily available, are valued at the latest bid
price prior to the time of valuation.
Securities for which market quotations are not readily available, including
circumstances under which it is determined by the Advisor 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 un-
der the general supervision of the Company's Board of Directors.
For Funds other than TCW Galileo Money Market Fund, short-term debt securities
with remaining maturities of 60 days or less at the time of purchase are valued
at amortized cost. Other short-term debt securities are valued on a marked-to-
market basis until such time as they reach a remaining maturity of 60 days,
whereupon they will be valued at amortized value using their value on the 61st
day prior to maturity.
Security Transactions and Related Investment Income: Security transactions are
recorded as of the trade date. Interest income is recorded on the accrual
basis. The TCW Galileo Core Fixed Income Fund and the TCW Galileo High Yield
Bond Fund recognize as interest income discounts on securities purchased using
a constant yield to maturity accretion method. Original issue discount is
accreted as interest income using a constant yield to maturity method. Premiums
on securities purchased are not amortized, except for mortgage backed
obligations for which amortization has been elected as allowed by federal
income tax
41
<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
U.S. Fixed Income
Notes to Financial Statements (Continued)
Note 2 -- Significant Accounting Policies (Continued)
regulations and securities held by the TCW Galileo Core Fixed Income Fund.
Realized and unrealized gains and losses on investments are recorded on the
basis of specific identification.
Foreign Currency Translation: The books and records of each Fund are maintained
in U.S. dollars as follows: (1) the foreign currency market value of investment
securities, and other assets and liabilities stated in foreign currencies, are
translated using the daily spot rate; and (2) purchases, sales, income and
expenses are translated at the rate of exchange prevailing on the respective
dates of such transactions. The resultant exchange gains and losses are
included in the Statements of Operations with the related net realized gain
(loss). Pursuant to U.S. federal income tax regulations, certain foreign
exchange gains and losses included in realized and unrealized gains and losses
are included in, or are a reduction of, ordinary income for federal income tax
purposes. It is not practicable to separately identify that portion of gains
and losses of the Funds that arise as a result of changes in the exchange rates
from the fluctuations that arise from changes in market prices of investments
during the year.
Dollar Roll Transactions: The Funds may enter into dollar roll transactions
with financial institutions to take advantage of opportunities in the mortgage
backed securities market. A dollar roll transaction involves a simultaneous
sale by the Fund of securities that it holds with an agreement to repurchase
substantially similar securities at an agreed upon price and date, but
generally will be collateralized at time of delivery by different pools of
mortgages with different prepayment histories than those securities sold. These
transactions are accounted for as financing transactions as opposed to sales
and purchases. The differential between the sale price and the repurchase price
is recorded as deferred income and recognized between the settlement dates of
the sale and repurchase. During the period between the sale and repurchase, the
Fund will not be entitled to receive interest and principal payments on the
securities sold. Dollar roll transactions involve risk that the market value of
the security sold by the Fund may decline below the repurchase price of the
security. There were no such transactions outstanding as of October 31, 1999.
Repurchase Agreements: The Funds may invest in repurchase agreements secured by
U.S. Government obligations and in other securities. Securities pledged as col-
lateral 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; how-
ever, in the event of default or bankruptcy by the other party to the agree-
ments, realization and/or retention of the collateral may be subject to legal
proceedings.
Security Lending: On December 17, 1998, the Funds' Board of Directors approved
securities lending to qualified brokers. The loans are collateralized at all
times with cash or securities with a market value at least equal to the market
value of the securities on loan. As with any extensions of credit, the Funds
may bear the risk of delay in recovery or even loss of rights in the collateral
if the borrowers of the securities fail financially. The Funds receive compen-
sation for lending their securities (See Note 3).
Options: Premiums received from call options written are recorded as a liabili-
ty. 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 re-
ceived are added to the proceeds from the sale of the underlying securities and
a gain or loss is realized.
42
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
Call options purchased are accounted for in the same manner as portfolio secu-
rities. 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, 1999.
Allocation of Operating Activity: Investment income, common expenses and real-
ized and unrealized gains and losses are allocated among the classes of shares
of the Funds based on the relative net assets of each class. Distribution fees,
which are directly attributable to a class of shares, are charged to that
class' operations. 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 di-
viding the net assets of the Fund by the number of issued and outstanding
shares on each business day as of 9:00 A.M. Pacific Standard Time for the TCW
Galileo Money Market Fund and as of 1:00 P.M. Pacific Standard Time for the
other Funds.
Dividends and Distributions: Dividends from net investment income of the TCW
Galileo Money Market Fund are declared each business day. The other fixed in-
come funds declare and pay, or reinvest, dividends from net investment income
monthly. Distribution of any net long-term and net short-term capital gains
earned by a Fund will be distributed at least annually.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign cur-
rency transactions, market discount, losses deferred to wash sales and excise
tax regulations. Permanent book and tax basis differences relating to share-
holder distributions will result in reclassifications to paid in capital and
may affect net investment income per share. Undistributed net investment income
may include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end is
distributed in the following year.
Use of Estimates: The preparation of the accompanying financial statements re-
quires 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.
Note 3 -- Security Lending
The funds listed below loaned securities that were collateralized in cash which
was invested in short-term investments as of October 31, 1999:
<TABLE>
<CAPTION>
Market
Value of Security
Loaned Collateral Lending
Securities Value Fees*
---------- ---------- --------
<S> <C> <C> <C>
TCW Galileo Core Fixed Income Fund $ 733,841 $ 754,000 $3,235
TCW Galileo High Yield Bond Fund 5,222,477 5,361,500 2,054
</TABLE>
* Net of broker fees.
Securities lending fees are included in interest income in the Statements of
Operations.
43
<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
U.S. Fixed Income
Note 4 -- 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, 1999, net unrealized appreciation (depreciation) on investments for
federal income tax purposes was as follows (Amounts in Thousands):
<TABLE>
<CAPTION>
TCW Galileo
TCW Galileo Total Return
TCW Galileo TCW Galileo Mortgage- Mortgage-
Core Fixed High Yield Backed Backed
Income Fund Bond Fund Securities Fund Securities Fund
----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Unrealized Appreciation $ 297 $ 1,069 $ 207 $ 1,788
Unrealized
(Depreciation) (2,325) (11,861) (1,133) (3,254)
------- -------- ------- -------
Net Unrealized
(Depreciation) $(2,028) $(10,792) $ (926) $(1,466)
======= ======== ======= =======
Cost of Investments for
Federal Income Tax
Purposes $73,252 $204,141 $57,802 $91,685
======= ======== ======= =======
</TABLE>
At October 31, 1999, the following Funds had net realized loss carryforwards
for federal income tax purposes (Amounts in Thousands):
<TABLE>
<CAPTION>
Expiring in
-----------------------------------
2002 2003 2004 2005 2006 2007
---- ------ ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
TCW Galileo Core Fixed Income Fund $641 $ 644 $ -- $ -- $ -- $1,259
TCW Galileo High Yield Bond Fund -- -- -- -- 2,560 5,718
TCW Galileo Mortgage-Backed Securities
Fund 446 4,068 861 73 406 --
</TABLE>
Note 5 -- Fund Expenses
The Funds pay to the Advisor, as compensation for services rendered, facilities
furnished and expenses borne by it, the following annual management fees as a
percentage of daily net asset value:
<TABLE>
<S> <C>
TCW Galileo Money Market Fund 0.25%
TCW Galileo Core Fixed Income Fund 0.40%
TCW Galileo High Yield Bond Fund 0.75%
TCW Galileo Mortgage-Backed Securities Fund 0.50%
TCW Galileo Total Return Mortgage-Backed Securities Fund 0.50%
</TABLE>
For the period November 1, 1998 through February 28, 1999, when the Advisor was
the administrator of the Funds, the TCW Galileo Money Market Fund reimbursed
the Advisor for the cost of providing accounting services in an amount not ex-
ceeding an annual rate of 0.10% of the Fund's average daily net assets. Each of
the other Funds also reimbursed the Advisor for the cost of providing account-
ing services in an amount not exceeding $35,000 for any fiscal year.
The ordinary operating expenses of the TCW Galileo Money Market Fund is limited
to 0.40% of the Fund's daily net assets. Effective March 15, 1999 the ordinary
operating expenses (each share class) of the other funds are limited to the av-
erage of the total expense ratios as reported by Lipper Analytical Services,
Inc. for each Fund's respective investment objective, which is
44
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
subject to change on a monthly basis. At October 31, 1999, the average expense
ratios reported by Lipper Analytical Services, Inc. as they relate to each fund
were:
<TABLE>
<S> <C>
TCW Galileo Core Fixed Income Fund 1.00%
TCW Galileo High Yield Bond Fund 1.30%
TCW Galileo Total Return Mortgage-Backed Securities Fund 1.00%
</TABLE>
Effective May 1, 1999, the ordinary operating expenses of the TCW Galileo Mort-
gage-Backed Securities Fund is limited to 0.53% of daily net assets.
Certain officers and/or directors of the Company are officers and/or directors
of the Advisor.
Note 6 -- Distribution Plan
The Company has a distribution plan pursuant to Rule 12b-1 under the 1940 Act
with respect to the Advisory Class shares of each Fund. Under the terms of the
Distribution Plan, each Fund compensates the Distributor at a rate equal to
0.25% of the average daily net assets of the Fund attributable to its Advisory
Class shares for distribution and related services. Distribution fees for the
period March 1, 1999 (Commencement of offering of Advisory Class shares) were
less than $1,000 for each Fund and as a result, are not disclosed in the
Statements of Operations.
Note 7 -- Purchases and Sales of Securities
Investment transactions (excluding short-term investments) for the year ended
October 31, 1999, were as follows (Amounts in Thousands):
<TABLE>
<CAPTION>
TCW Galileo
TCW Galileo Total Return
TCW Galileo TCW Galileo Mortgage- Mortgage-
Core Fixed High Yield Backed Backed
Income Fund Bond Fund Securities Fund Securities Fund
----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C>
Purchases at Cost $27,911 $285,525 $ 1,957 $10,328
======= ======== ======= =======
Sales Proceeds $96,358 $248,453 $ 6,946 $ 2,562
======= ======== ======= =======
U.S. Government
Purchases at Cost $75,112 $ -- $31,167 $14,648
======= ======== ======= =======
U.S. Government Sales
Proceeds $67,669 $ -- $14,912 $26,621
======= ======== ======= =======
</TABLE>
45
<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
U.S. Fixed Income
Note 8 -- Capital Share Transactions
The Declaration of Trust permits the Trustees to issue an unlimited number of
shares of beneficial interest (without par value). Transactions in each Fund's
shares were as follows:
<TABLE>
<CAPTION>
TCW Galileo Money Market Fund Year Ended Year Ended
October 31, 1999 October 31, 1998
------------------------------ -------------------------------
Amount Amount
Shares (in thousands) Shares (in thousands)
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 2,699,538,689 $ 2,699,539 3,148,816,550 $ 3,148,816
Shares Issued Upon
Reinvestment of
Dividends 7,371,745 7,372 8,491,656 8,492
Shares Redeemed (2,688,061,688) (2,688,062) (3,137,627,742) (3,137,628)
-------------- ----------- --------------- -----------
Net Increase 18,848,746 $ 18,849 19,680,464 $ 19,680
============== =========== =============== ===========
<CAPTION>
TCW Galileo Core Fixed Income Fund Year Ended Year Ended
Institutional Class October 31, 1999 October 31, 1998
------------------------------ -------------------------------
Amount Amount
Shares (in thousands) Shares (in thousands)
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 3,702,145 $ 35,593 22,816,543 $ 224,517
Shares Issued Upon
Reinvestment of
Dividends 326,089 3,172 263,818 2,578
Shares Redeemed (13,006,199) (127,173) (8,614,835) (85,097)
-------------- ----------- --------------- -----------
Net Increase (Decrease) (8,977,965) $ (88,408) 14,465,526 $ 141,998
============== =========== =============== ===========
<CAPTION>
TCW Galileo Core Fixed Income Fund Period Ended
Advisory Class October 31, 1999 (/1/)
------------------------------
Amount
Shares (in thousands)
-------------- --------------
<S> <C> <C>
Shares Sold 8,529 $ 83
Shares Issued Upon
Reinvestment of
Dividends 172 1
-------------- -----------
Net Increase 8,701 $ 84
============== ===========
</TABLE>
(1) For the period March 1, 1999 (Commencement of offering of Advisory Class
shares) through October 31, 1999.
<TABLE>
<CAPTION>
TCW Galileo High Yield Year Ended Year Ended
Bond Fund Institutional October 31, 1999 October 31, 1998
Class -------------------------- ---------------------------
Amount Amount
Shares (in thousands) Shares (in thousands)
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares Sold 15,528,524 $ 144,250 8,469,692 $ 84,380
Shares Issued Upon
Reinvestment of
Dividends 1,547,242 14,195 1,952,231 19,439
Shares Redeemed (13,828,336) (128,878) (13,063,683) (127,711)
----------- --------- ------------ ---------
Net Increase (Decrease) 3,247,430 $ 29,567 (2,641,760) $ (23,892)
=========== ========= ============ =========
</TABLE>
46
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
<TABLE>
<CAPTION>
TCW Galileo High Yield Bond Fund Period Ended
Advisory Class October 31, 1999 (/1/)
-----------------------
Amount
Shares (in thousands)
------- --------------
<S> <C> <C>
Shares Sold 36,157 $ 345
Shares Issued Upon Reinvestment
of Dividends 790 7
Shares Redeemed (15,678) (150)
------- -----
Net Increase 21,269 $ 202
======= =====
</TABLE>
(1) For the period March 1, 1999 (Commencement of offering of Advisory Class
shares) through October 31, 1999.
<TABLE>
<CAPTION>
TCW Galileo Mortgage- Year Ended Year Ended
Backed October 31, 1999 October 31, 1998
Securities Fund -------------------------- --------------------------
Amount Amount
Shares (in thousands) Shares (in thousands)
---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Shares Sold 1,189,983 $ 11,464 2,948,909 $ 28,585
Shares Issued Upon
Reinvestment of
Dividends 147,725 1,418 242,345 2,343
Shares Redeemed (306,134) (2,941) (4,345,900) (42,090)
---------- -------- ---------- --------
Net Increase (Decrease) 1,031,574 $ 9,941 (1,154,646) $(11,162)
========== ======== ========== ========
<CAPTION>
TCW Galileo Total
Return Mortgage-Backed Year Ended Year Ended
Securities Fund October 31, 1999 October 31, 1998
Institutional Class -------------------------- --------------------------
Amount Amount
Shares (in thousands) Shares (in thousands)
---------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Shares Sold 1,086,156 $ 10,319 2,490,553 $ 24,464
Shares Issued Upon
Reinvestment of
Dividends 809,473 7,598 782,364 7,673
Shares Redeemed (2,226,690) (23,824) (1,090,917) (10,759)
---------- -------- ---------- --------
Net Increase (Decrease) (331,061) $ (5,907) 2,182,000 $ 21,378
========== ======== ========== ========
<CAPTION>
TCW Galileo Total
Return Mortgage-Backed Period Ended
Securities Fund October 31, 1999 (/1/)
Advisory Class --------------------------
Amount
Shares (in thousands)
---------- --------------
<S> <C> <C>
Shares Sold 4,015 $ 37
Shares Issued Upon
Reinvestment of
Dividends 16 --
---------- --------
Net Increase 4,031 $ 37
========== ========
</TABLE>
(1) For the period March 1, 1999 (Commencement of offering of Advisory Class
shares) through October 31, 1999.
47
<PAGE>
TCW Galileo Funds, Inc.
- --------------------------------------------------------------------------------
U.S. Fixed Income
Notes to Financial Statements (Continued)
Note 9 -- Restricted Securities
The following restricted securities held by the Funds as of October 31, 1999,
were valued both at the date of acquisition and October 31, 1999, 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 Core Fixed Income Fund:
<TABLE>
<CAPTION>
Principal Date of
Amount Investment Acquisition Cost
--------- --------------------------------------------- ----------- --------
<C> <S> <C> <C>
$ 75,000 Concentra Operating Corp., (144A),13%, due 08/05/99
08/15/09 $ 75,000
100,000 Consolidated Container Companies, LLC, 06/24/99
(144A), 10.125%, due 07/15/09 100,281
75,000 Hanger Orthopedic Group, Inc., (144A), 06/09/99
11.25%, due 06/15/09 75,000
75,000 Insight MidWest L.P. & Insight Capital, Inc., 09/28/99
(144A), 9.75%, due 10/01/09 75,000
75,000 JL French Automotive Castings, Inc., (144A), 05/25/99
11.5%, due 06/01/09 75,000
75,000 Juno Lighting, Inc., (144A), 11.875%, due 06/24/99
07/01/09 74,462
100,000 Metris Companies, Inc., (144A), 10.125%, due 07/08/99
07/15/06 95,800
100,000 Panolam Industries International, Inc., 02/10/99
(144A), 11.5%, due 02/15/09 100,000
300,000 PSINet, Inc., (144A), 11%, due 08/01/09 07/16/99 298,750
100,000 Primus Telecom Group, Inc., (144A), 12.75%, 10/12/99
due 10/15/09 100,000
100,000 Rhythm's NetConnections, Inc., (144A), 04/16/99
12.75%, due 04/15/09 100,469
75,000 Transportation Manufacturing Co., (144A) 06/14/99
11.25%, due 05/01/09 73,931
75,000 Unilab Finance Corp., (144A), 12.75%, due 09/21/99
10/01/09 72,951
50,000 Von Hoffman Press, Inc., (144A), 10.875%, due 06/18/99
05/15/07 52,218
500,000 Worldwide Fiber, Inc., 12%, due 08/01/09 07/23/99 493,750
</TABLE>
The total value of restricted securities is $1,847,188, which represents 2.6%
of net assets of the Fund at October 31, 1999.
48
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
October 31, 1999
TCW Galileo High Yield Bond Fund:
<TABLE>
<CAPTION>
Principal Date of
Amount Investment Acquisition Cost
--------- ------------------------------------------ ----------- ----------
<C> <S> <C> <C>
$ 825,000 Avis Rent A Car. Inc., (144A), 11%, due 06/25/99
05/01/09 $ 825,000
850,000 California Steel Industries, (144A), 8.5%, 03/30/99
due 04/01/09 822,250
500,000 Consolidated Container Companies, LLC, 06/24/99
(144A), 10.125%, due 07/15/09 501,125
850,000 Concentra Operating Corp., (144A), 13%, 08/05/99
due 08/15/09 850,000
350,000 General Chemical Industrial Products, 04/22/99
(144A), 10.625%, due 05/01/09 339,000
1,000,000 Gentek, Inc., (144A), 11%, due 08/01/09 08/03/99 1,000,000
1,000,000 Hanger Orthopedic Group, (144A), 11.25%, 06/09/99
due 06/15/09 1,000,000
915,000 Huntsman Industries/Specialty Chemical 11/03/98
Corp., (144A), 9.5%, due 07/01/07 898,153
1,175,000 Huntsman ICI Chemiclas, LLC, (144A), 06/22/99
10.125%, due 07/01/09 1,175,000
500,000 Insight Midwest L.P. & Insight Capital, 09/28/99
Inc., (144A) 9.75%, due 10/01/09 500,000
1,300,000 JL French Automotive Castings, Inc., 05/25/99
(144A), 11.5%, due 06/01/09 1,300,000
700,000 Juno Lighting, Inc., (144A), 11.875%, due 06/24/99
07/01/09 696,160
1,400,000 KMC Telecom Holdings, Inc., (144A), 13.5%, 05/19/99
due 05/15/09 1,400,000
500,000 Lear Corp., (144A), 8.11%, due 05/15/09 05/13/99 500,000
900,000 Lifepoint Hospitals Holdings, (144A), 05/04/99
10.75%, due 05/15/09 900,000
1,200,000 Metris Companies, Inc., (144A), 10.125%, 07/08/99
due 07/15/06 1,149,600
1,725,000 Packaging Corp. of America (144A), 9.625%, 03/31/99
due 04/01/09 1,771,813
1,140,000 Panolam Industries International, (144A), 02/10/99
11.5%, due 02/15/09 1,145,500
1,750,000 Primus Telecom Group, Inc., (144A), 10/12/99
12.75%, due 10/15/09 1,750,000
1,900,000 PSINet, Inc., (144A), 11%, due 08/01/09 07/16/99 1,898,125
2,875,000 Rhythms NetConnections, Inc., (144A), 04/16/99
12.75%, due 04/15/09 2,828,281
750,000 Sterling Chemicals, Inc., (144A), 12.375%, 07/19/99
due 07/15/06 750,000
625,000 Swift Energy Company, Inc., (144A), 07/30/99
10.25%, due 08/01/09 620,225
700,000 Transportation Manufacturing Operation 06/14/99
Co., (144A), 11.25%, due 05/01/09 690,025
900,000 Unilab Finance Corp., (144A), 12.75%, due 09/21/99
10/01/99 875,412
855,000 Von Hoffman Press, Inc., (144A), 10.875%, 06/18/99
due 05/15/07 913,113
2,575,000 Worldwide Fiber, Inc., (144A), 12%, due 07/23/99
08/01/09 2,556,250
</TABLE>
The total value of restricted securities is $28,495,288 which represents 15.1%
of net assets of the Fund at October 31, 1999.
49
<PAGE>
TCW Galileo Money Market Fund
- --------------------------------------------------------------------------------
U.S. Fixed Income
Financial Highlights
<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value per
Share, Beginning of
Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------
Income from Investment
Operations:
Net Investment Income 0.0434 0.0519 0.0516 0.0509 0.0549
-------- -------- -------- -------- -------
Less Distributions:
Distributions from Net
Investment Income (0.0434) (0.0519) (0.0516) (0.0509) (0.0549)
-------- -------- -------- -------- -------
Net Asset Value per
Share, End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
Total Return 4.85% 5.31% 5.29% 5.21% 5.67%
Ratios/Supplemental
Data:
Net Assets, End of
Period (in thousands) $261,300 $242,451 $222,771 $233,671 $86,302
Ratio of Net Expenses to 0.40%
Average Net Assets 0.38% (/1/) 0.40% (/1/) 0.40% (/1/) 0.40% (/1/)
Ratio of Net Investment
Income to Average Net
Assets 4.76% 5.19% 5.17% 5.04% 5.49%
</TABLE>
(1) The Investment Advisor 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 0.40% of net assets as
disclosed in Note5 of the Notes to Financial Statements. Had such action
not been taken, total annualized operating expenses as a percentage of
average net assets would have been 0.41%, 0.40%, 0.44%, and 0.46% for the
fiscal years ended October 31, 1998, 1997, 1996 and 1995, respectively.
50
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Core Fixed Income Fund
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Institutional Class
Financial Highlights
<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------------
1999 1998 1997 1996 1995
------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value per
Share, Beginning
of Year $ 9.89 $ 9.62 $ 9.45 $ 9.61 $ 8.94
------- -------- ------- ------- -------
Income (Loss) from
Investment Operations:
Net Investment Income 0.57 0.55 0.58 0.55 0.58
Net Realized and
Unrealized Gain (Loss)
on Investments (0.50) 0.29 0.19 (0.16) 0.62
------- -------- ------- ------- -------
Total from Investment
Operations 0.07 0.84 0.77 0.39 1.20
------- -------- ------- ------- -------
Less Distributions:
Distributions from Net
Investment Income (0.54) (0.57) (0.60) (0.55) (0.53)
------- -------- ------- ------- -------
Net Asset Value per
Share, End of Year $ 9.42 $ 9.89 $ 9.62 $ 9.45 $ 9.61
======= ======== ======= ======= =======
Total Return 0.69% 9.02% 8.45% 4.26% 13.92%
Ratios/Supplemental
Data:
Net Assets, End of
Period (in thousands) $70,666 $162,996 $19,368 $25,006 $36,236
Ratio of Net Expenses to
Average Net Assets 0.58% (/1/) 0.62% 0.93% 0.76% 0.68% (/1/)
Ratio of Net Investment
Income to Average Net
Assets 5.83% 5.60% 6.13% 5.85% 6.38%
Portfolio Turnover Rate 136.63% 272.77% 142.96% 238.73% 223.78%
</TABLE>
(1) The Investment Advisor has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund. Had such action not been
taken, total annualized operating expenses as a percentage of average net
assets would have been 0.59% and 0.72% for the years ended October 31, 1999
and 1995, respectively.
51
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Core Fixed Income Fund
- --------------------------------------------------------------------------------
Advisory Class
Financial Highlights
<TABLE>
<CAPTION>
March 1, 1999
through
October 31, 1999
----------------
<S> <C>
Net Asset Value per Share, Beginning of Period $ 9.74
------
Income (Loss) from Investment Operations:
Net Investment Income 0.37
Net Realized and Unrealized Gain (Loss) on Investments (0.35)
------
Total from Investment Operations 0.02
------
Less Distributions:
Distributions from Net Investment Income (0.25)
------
Net Asset Value per Share, End of Period $ 9.51
======
Total Return 0.17% (/1/)
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) $ 83
Ratio of Net Expenses to Average Net Assets 1.00% (/2/)(/3/)
Ratio of Net Investment Income to Average Net Assets 5.68% (/2/)
Portfolio Turnover Rate 136.63%
</TABLE>
(1) For the period March 1, 1999 (Commencement of offering of Advisory Class
shares) through October 31, 1999 and not indicative of a full year's oper-
ating results.
(2) Annualized.
(3) The Investment Advisor has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund as disclosed in Note 5 in
the Notes to the Financial Statements. Had such action not been taken,
total annualized operating expenses, as a percentage of average net assets,
would have been 134.10% for the period from March 1, 1999 (Commencement of
offering of Advisory Class shares) to October 31, 1999.
52
See accompanying notes to financial statements.
<PAGE>
TCW Galileo High Yield Bond Fund
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Institutional Class
Financial Highlights
<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value per
Share, Beginning of
Year $ 9.20 $ 10.11 $ 9.77 $ 9.74 $ 9.43
-------- -------- -------- -------- -------
Income (Loss) from
Investment Operations:
Net Investment Income 0.80 0.88 0.91 0.89 0.92
Net Realized and
Unrealized Gain (Loss)
on Investments (0.37) (0.74) 0.34 0.03 0.39
-------- -------- -------- -------- -------
Total from Investment
Operations 0.43 0.14 1.25 0.92 1.31
-------- -------- -------- -------- -------
Less Distributions:
Distributions from Net
Investment Income (0.78) (0.89) (0.91) (0.89) (1.00)
Distributions in Excess
of Net Investment
Income -- (0.01) -- -- --
Distributions from Net
Realized Gains -- (0.15) -- -- --
-------- -------- -------- -------- -------
Total Distributions (0.78) (1.05) (0.91) (0.89) (1.00)
-------- -------- -------- -------- -------
Net Asset Value per
Share, End of Year $ 8.85 $ 9.20 $ 10.11 $ 9.77 $ 9.74
======== ======== ======== ======== =======
Total Return 4.60% 1.18% 13.26% 9.92% 14.65%
Ratios/Supplemental
Data:
Net Assets, End of
Period (in thousands) $188,098 $165,702 $208,761 $183,815 $92,652
Ratio of Expenses to
Average Net Assets 0.90% 0.85% 0.83% 0.90% 0.87% (/1/)
Ratio of Net Investment
Income to Average Net
Assets 8.60% 8.89% 9.10% 9.21% 9.60%
Portfolio Turnover Rate 128.15% 92.24% 109.45% 82.56% 36.32%
</TABLE>
(1) The Investment Advisor 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. Had such action not been
taken, total annualized operating expenses as a percentage of average net
assets would have been 0.88% for the year ended October 31, 1995.
53
See accompanying notes to financial statements.
<PAGE>
TCW Galileo High Yield Bond Fund
- --------------------------------------------------------------------------------
Advisory Class
Financial Highlights
<TABLE>
<CAPTION>
March 1, 1999
through
October 31, 1999
----------------
<S> <C>
Net Asset Value per Share, Beginning of Period $ 9.39
------
Income from Investment Operations:
Net Investment Income 0.55
Net Realized and Unrealized Gain on Investments (0.57)
------
Total from Investment Operations (0.02)
------
Less Distributions:
Distributions from Net Investment Income (0.46)
------
Total Distributions (0.46)
------
Net Asset Value per Share, End of Period $ 8.91
======
Total Return (0.24)% (/1/)
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) $ 189
Ratio of Net Expenses to Average Net Assets 1.30 % (/2/)(/3/)
Ratio of Net Investment Income to Average Net Assets 8.78 % (/2/)(/3/)
Portfolio Turnover Rate 128.15 %
</TABLE>
(1) For the period March 1, 1999 (Commencement of offering of Advisory Class
shares) through October 31, 1999 and not indicative of a full year's
operating results.
(2) Annualized.
(3) The Investment Advisor has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund as disclosed in Note 5 in
the Notes to the Financial Statements. Had such action not been taken,
total annualized operating expenses, as a percentage of average net assets,
would have been 47.83% for the period from March 1, 1999 (Commencement of
offering of Advisory Class shares) to October 31, 1999.
54
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Mortgage-Backed Securities Fund
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Year Ended October 31,
-------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value per
Share, Beginning of
Year $ 9.60 $ 9.70 $ 9.67 $ 9.58 $ 9.41
------- ------- ------- ------- -------
Income (Loss) from
Investment Operations:
Net Investment Income 0.59 0.35 0.58 0.51 0.67
Net Realized and
Unrealized Gain (Loss)
on Investments (0.09) 0.10 0.05 0.22 0.25
------- ------- ------- ------- -------
Total from Investment
Operations 0.50 0.45 0.63 0.73 0.92
------- ------- ------- ------- -------
Less Distributions:
Distributions from Net
Investment Income (0.51) (0.11) (0.38) (0.46) (0.71)
Distributions in Excess
of Net Investment
Income -- -- (0.22) (0.18) (0.04)
Distributions from
Paid-in-Capital -- (0.44) -- -- --
------- ------- ------- ------- -------
Total Distributions (0.51) (0.55) (0.60) (0.64) (0.75)
------- ------- ------- ------- -------
Net Asset Value per
Share, End of Year $ 9.59 $ 9.60 $ 9.70 $ 9.67 $ 9.58
======= ======= ======= ======= =======
Total Return 5.36% 4.73% 6.71% 7.86% 10.16%
Ratios/Supplemental
Data:
Net Assets, End of
Period (in thousands) $53,496 $43,639 $53,307 $61,835 $81,366
Ratio of Net Expenses to
Average Net Assets 0.75% (/1/) 0.83% 0.77% 0.69% 0.61% (/1/)
Ratio of Net Investment
Income to Average Net
Assets 6.10% 3.61% 6.00% 5.34% 7.13%
Portfolio Turnover Rate 53.48% 68.40% 109.91% 54.10% 37.83%
</TABLE>
(1) The Investment Advisor has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund. Had such action not been
taken, total annualized operating expenses as a percentage of average net
assets would have been 0.80% and 0.63% for the years ended October 31, 1999
and 1995, respectively.
55
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Total Return Mortgage-Backed Securities Fund
- --------------------------------------------------------------------------------
Institutional Class
Financial Highlights
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------
1999 1998 1997 1996 1995
------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value per
share, Beginning of
Year $ 9.76 $ 9.91 $ 9.56 $ 9.56 $ 8.95
------- -------- ------- -------- -------
Income (Loss) from
Investment Operations:
Net Investment Income 0.62 0.84 0.75 0.68 0.72
Net Realized and
Unrealized Gain (Loss)
on Investments (0.60) (0.07) 0.32 0.02 0.71
------- -------- ------- -------- -------
Total from Investment
Operations 0.02 0.77 1.07 0.70 1.43
------- -------- ------- -------- -------
Less Distributions:
Distributions from Net
Investment Income (0.62) (0.86) (0.72) (0.68) (0.82)
Distributions in Excess
of Net Investment
Income (0.20) (0.01) -- (0.02) --
Distributions from Net
Realized Gains -- (0.05) -- -- --
------- -------- ------- -------- -------
Total Distributions (0.82) (0.92) (0.72) (0.70) (0.82)
------- -------- ------- -------- -------
Net Asset Value per
Share, End of Year $ 8.96 $ 9.76 $ 9.91 $ 9.56 $ 9.56
======= ======== ======= ======== =======
Total Return 0.20 % 8.20% 11.66% 7.69% 16.84%
Ratios/Supplemental
Data:
Net Assets, End of
Period (in thousands) $90,275 $101,501 $81,442 $112,260 $80,159
Ratio of Expenses to
Average Net Assets 0.69% 0.70% 0.67% 0.68% 0.68% (/1/)
Ratio of Net Investment
Income to Average Net
Assets 6.62% 8.52% 7.77% 7.15% 7.88%
Portfolio Turnover Rate 28.07% 27.95% 16.01% 39.28% 23.76%
</TABLE>
(1) The Investment Advisor 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. Had such action not been
taken, total annualized operating expenses as a percentage of average net
assets would have been 0.69% for the year ended October 31, 1995.
56
See accompanying notes to financial statements.
<PAGE>
[LOGO OF TCW GALILEO FUNDS INC.]
- --------------------------------------------------------------------------------
Advisory Class
Financial Highlights
<TABLE>
<CAPTION>
March 1, 1999
through
October 31, 1999
----------------
<S> <C>
Net Asset Value per Share, Beginning of Period $ 9.40
------
Income (Loss) from Investment Operations:
Net Investment Income 0.43
Net Realized and Unrealized (Loss) on Investments (0.49)
------
Total from Investment Operations (0.06)
------
Less Distributions:
Distributions from Net Investment Income (0.11)
------
Total Distributions (0.11)
------
Net Asset Value per Share, End of Period $ 9.23
======
Total Return (0.69)% (/1/)
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) $ 37
Ratio of Net Expenses to Average Net Assets 1.02% (/2/)(/3/)
Ratio of Net Investment Income to Average Net Assets 7.00% (/2/)(/3/)
Portfolio Turnover Rate 28.07%
</TABLE>
(1) For the period March 1, 1999 (Commencement of offering of Advisory Class
shares) through October 31, 1999 and not indicative of a full year's
operating results.
(2) Annualized.
(3) The Investment Advisor has voluntarily agreed to reduce its fee, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
annual ordinary operating expenses of the Fund as disclosed in Note 5 in
the Notes to the Financial Statements. Had such action not been taken,
total annualized operating expenses, as a percentage of average net assets,
would have been 722.10% for the period from March 1, 1999 (Commencement of
offering of Advisory Class shares) to October 31, 1999.
57
See accompanying notes to financial statements.
<PAGE>
TCW Galileo Funds, Inc.
- -------------------------------------------------------------------------
U.S. Fixed Income
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 Money Market Fund, TCW
Galileo Core Fixed Income Fund, TCW Galileo High Yield Bond Fund, TCW Galileo
Mortgage Backed Securities Fund, and TCW Galileo Total Return Mortgage Backed
Securities Fund (the "Galileo U.S. Fixed Income Funds") (five of twenty funds
comprising TCW Galileo Funds, Inc.) as of October 31, 1999 and the related
statements of operations for the periods then ended, the statements of changes
in net assets for each of the periods ended October 31, 1999 and 1998, and the
financial highlights for each of the respective periods in the periods ended
October 31, 1999. 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, 1999 by correspondence with the custodians and brokers. Where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Galileo U.S. Fixed Income Funds as of October 31, 1999 and
the results of their operations, the changes in their net assets and the
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
December 21, 1999
Los Angeles, California
58
