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TCW GALILEO FUNDS
OCTOBER 31, 2000
ANNUAL REPORT
INTERNATIONAL
ASIA PACIFIC EQUITIES
EMERGING MARKETS EQUITIES
EMERGING MARKETS INCOME
EUROPEAN EQUITIES
INTERNATIONAL EQUITIES
JAPANESE EQUITIES
LATIN AMERICA EQUITIES
[LOGO] TCW-TM- GALILEO FUNDS INC.
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THE POWER OF INDEPENDENT THINKING-TM-
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TCW GALILEO FUNDS, INC.
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INTERNATIONAL
TABLE OF CONTENTS OCTOBER 31, 2000
<TABLE>
<S> <C>
Letter To Shareholders............................ 1
Management Discussions............................ 2
Schedules of Investments:
TCW Galileo Asia Pacific Equities Fund.......... 15
TCW Galileo Emerging Markets Equities Fund...... 18
TCW Galileo Emerging Markets Income Fund........ 23
TCW Galileo European Equities Fund.............. 27
TCW Galileo International Equities Fund......... 30
TCW Galileo Japanese Equities Fund.............. 31
TCW Galileo Latin America Equities Fund......... 34
Statements of Assets and Liabilities.............. 37
Statements of Operations.......................... 39
Statements of Changes in Net Assets............... 41
Notes to Financial Statements..................... 45
Financial Highlights.............................. 56
Independent Auditors' Report...................... 64
Tax Information Notice............................ 65
</TABLE>
[TCW LOGO]
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TO OUR SHAREHOLDERS
We are pleased to submit the October 31, 2000 annual reports for the TCW
Galileo Funds. On the following pages we have provided a discussion and
analysis of each Fund's investment performance as well as a graphical analysis
of each Fund's performance since inception.
TCW is committed to providing you with superior professional investment
management and distinctive personal service through the TCW Galileo Funds. The
Fund's long-term investment performance record is among the best in the
industry. In addition, TCW carefully monitors each Fund's overall expense ratio
to maintain their competitiveness.
The Galileo Mutual Funds continue to provide our clients with targeted
investment strategies featuring daily liquidity, competitive management fees, no
front end loads, and no deferred sales charges.
Please call our Shareholder Services Department at (800) FUND-TCW (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 5, 2000
1
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TCW GALILEO ASIA PACIFIC EQUITIES FUND
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MANAGEMENT DISCUSSIONS
The total return earned by the TCW Galileo Asia Pacific Equities Fund (the
"Fund") during the fiscal year ended October 31, 2000, was negative 2.51%. This
compares favorably to a negative 21.38% return of the Fund's benchmark, the
Morgan Stanley (MSCI) All Country Total Return US$ Far East Free ex-Japan Index,
for the same period.
During the Fund's fiscal year, the Asian equity markets showed high
volatility--spectacular rallies at the end of 1999 through the first quarter of
this year were followed by sharp corrections in the two subsequent quarters. The
rally on NASDAQ had fueled growth in share prices of tech-dominated North
Asia--including Taiwan, Korea and India--which later succumbed to selling
pressure in the second half of the fiscal year. Factors leading to the
correction included interest rate hikes in the U.S., high credit spreads on
Emerging Markets bonds, ten-year high oil prices and the correction on NASDAQ
weighed heavily on the Asian markets.
The Fund reduced its exposure to Internet and other richly valued technology
stocks in favor of interest rate sensitive securities, including banking and
property stocks. With respect to specific country holdings, the Fund was
overweight in Hong Kong and China, due to their strong on-going economic
recoveries. The Fund continued to avoid the markets of Southeast Asia--
including Malaysia, Thailand, the Philippines and Indonesia--due to political
risks and concerns about corporate governance.
Looking ahead, the Fund remains focused on the markets of Hong Kong, Korea,
Taiwan and Singapore with a smaller exposure to India. We believe that Asian
equity markets are poised for a strong rally when investor sentiment toward
global tech sectors improves, oil prices stabilize and concerns of a global hard
landing subside. Asia's growth outlook remains sound over the medium term and a
more benign outlook for global interest rates should be favorable for equities,
particularly in Asia. One of Asia's long-term advantages is its rapid adoption
of information technology, which should support its long-term growth
prospects--particularly in North Asia, Singapore and India. We remain positive
on Asia and consider the current market weakness as a buying opportunity.
2
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TCW GALILEO ASIA PACIFIC EQUITIES FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN (1)
1-YEAR 3-YEAR 5-YEAR SINCE INCEPTION
<S> <C> <C> <C>
(2.51)% 10.95% 3.37% 6.67%
</TABLE>
<TABLE>
<CAPTION>
MSCI FAR EAST FREE MSCI TOTAL RETURN FAR EAST
FUND EX-JAPAN INDEX FREE EX-JAPAN
<S> <C> <C> <C>
Apr 93 $260,748 $271,375 $272,230
May 93 $282,603 $286,626 $288,175
Jun 93 $278,865 $278,744 $280,653
Jul 93 $284,578 $279,915 $282,489
Aug 93 $306,548 $302,840 $306,133
Sep 93 $319,791 $313,954 $317,953
Oct 93 $385,207 $371,376 $376,516
Nov 93 $395,558 $368,368 $373,982
Dec 93 $485,140 $457,403 $464,898
Jan 94 $458,447 $425,750 $433,140
Feb 94 $430,647 $400,844 $408,265
Mar 94 $380,261 $356,310 $363,854
Apr 94 $396,628 $372,237 $380,995
May 94 $413,425 $387,648 $397,241
Jun 94 $391,030 $369,777 $379,584
Jul 94 $407,824 $389,893 $400,783
Aug 94 $438,399 $421,007 $433,423
Sep 94 $432,801 $413,513 $426,445
Oct 94 $438,830 $421,080 $434,735
Nov 94 $391,458 $380,404 $393,331
Dec 94 $376,453 $370,475 $383,616
Jan 95 $333,342 $330,316 $342,473
Feb 95 $362,233 $363,248 $377,087
Mar 95 $360,454 $363,938 $378,897
Apr 95 $358,677 $359,753 $375,312
May 95 $401,790 $402,995 $421,040
Jun 95 $396,458 $396,427 $414,708
Jul 95 $414,680 $402,056 $421,256
Aug 95 $395,613 $382,315 $401,213
Sep 95 $396,515 $388,432 $408,174
Oct 95 $390,658 $382,023 $401,974
Nov 95 $384,802 $377,477 $397,753
Dec 95 $402,376 $395,747 $417,545
Jan 96 $444,730 $431,482 $455,813
Feb 96 $438,873 $429,368 $454,250
Mar 96 $436,622 $432,030 $457,906
Apr 96 $452,392 $443,349 $470,719
May 96 $449,239 $438,295 $466,138
Jun 96 $431,665 $428,872 $456,746
Jul 96 $408,342 $397,221 $423,837
Aug 96 $425,999 $410,806 $439,142
Sep 96 $435,507 $420,665 $450,235
Oct 96 $435,054 $412,252 $441,730
Nov 96 $470,820 $435,338 $467,019
Dec 96 $484,403 $432,117 $464,044
Jan 97 $485,309 $437,821 $470,786
Feb 97 $486,668 $439,003 $472,538
Mar 97 $460,412 $413,936 $446,709
Apr 97 $454,528 $402,760 $435,309
May 97 $496,631 $422,334 $457,414
Jun 97 $541,452 $432,934 $469,641
Jul 97 $545,551 $434,233 $471,928
Aug 97 $464,935 $353,639 $385,036
Sep 97 $455,775 $350,492 $382,145
Oct 97 $337,593 $264,411 $288,921
Nov 97 $320,646 $247,172 $270,545
Dec 97 $313,162 $235,579 $258,438
Jan 98 $306,557 $215,249 $236,675
Feb 98 $340,680 $264,196 $290,976
Mar 98 $331,325 $257,274 $283,873
Apr 98 $309,309 $230,286 $254,642
May 98 $265,278 $193,993 $215,206
Jun 98 $248,768 $172,324 $191,781
Jul 98 $244,128 $167,103 $186,459
Aug 98 $226,045 $140,817 $157,647
Sep 98 $241,304 $155,631 $174,632
Oct 98 $287,643 $197,808 $222,319
Nov 98 $301,772 $215,466 $242,568
Dec 98 $306,293 $218,168 $245,983
Jan 99 $305,726 $210,724 $237,947
Feb 99 $301,770 $206,630 $233,733
Mar 99 $330,592 $229,111 $260,007
Apr 99 $392,754 $281,726 $320,042
May 99 $387,667 $268,682 $305,650
Jun 99 $461,696 $314,826 $358,674
Jul 99 $463,391 $302,217 $344,937
Aug 99 $479,216 $306,847 $350,580
Sep 99 $450,396 $282,014 $322,520
Oct 99 $473,001 $295,288 $338,049
Nov 99 $569,072 $324,463 $371,776
Dec 99 $658,360 $347,759 $398,767
Jan 00 $645,930 $339,830 $390,214
Feb 00 $706,395 $321,581 $369,649
Mar 00 $688,877 $335,988 $387,211
Apr 00 $583,203 $308,235 $355,685
May 00 $534,039 $282,775 $326,807
Jun 00 $575,860 $295,557 $342,356
Jul 00 $547,602 $284,562 $330,141
Aug 00 $543,079 $280,720 $325,998
Sep 00 $495,608 $247,960 $288,296
Oct 00 $461,134 $228,322 $265,783
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 4/1/93
(1) PERFORMANCE DATA INCLUDES THE PERFORMANCE OF THE PREDECESSOR LIMITED
PARTNERSHIP FOR PERIODS BEFORE THE FUND'S REGISTRATION BECAME EFFECTIVE.
THE PREDECESSOR LIMITED PARTNERSHIP WAS NOT REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE WAS NOT
SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE 1940
ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940 ACT, THE
LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
3
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TCW GALILEO EMERGING MARKETS EQUITIES FUND
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MANAGEMENT DISCUSSIONS (CONTINUED)
The total return earned by the TCW Galileo Emerging Markets Equities Fund (the
"Fund") during the fiscal year ended October 31, 2000, was a negative 3.30%.
This compares favorably to the Fund's benchmark, the Morgan Stanley Capital
International (MSCI) Total Return Gross US$ Emerging Markets Free Index, which
posted negative 8.81% return for the same period. The Fund also outperformed the
International Finance Corporation (IFC) Investable Total Return Emerging Markets
Composite Index, which posted a negative 10.1% return for the twelve months
ended October 31, 2000.
Following a breathtaking rally toward the end of 1999, most emerging markets
regions continued to post modest gains in the first few months of the 2000.
However, the Y2K relief was short-lived and gave way to concerns about higher
U.S. interest rates, tighter global liquidity, and rapidly decelerating U.S.
economic growth--all of which suggest a weaker global growth outlook for 2001.
Although global stock prices later rebounded on signs that the U.S. economy
might achieve a soft-landing, the markets consolidated in September due to
concerns about rising crude oil prices. While higher crude oil prices benefit
oil-exporting countries, slower global economic growth that could result from
higher crude oil prices would clearly be a negative development for the asset
class.
The Fund maintained a slight underweight position in Latin America and Asia
Pacific, with a neutral allocation to the EMEA region (emerging Europe, Middle
East, Africa). Latin American holdings continued to focus on blue-chip companies
exhibiting strong and reliable cash flow generation, as well as companies with
low leverage and quality management. In Asia, the Fund reduced its exposure to
Internet and other richly valued technology stocks in favor of interest rate
sensitive securities, including banking and property stocks. The Fund also
continued to avoid the markets of Southeast Asia due to political risks and
concerns about corporate governance.
Despite the stock market turbulence witnessed in the world's emerging markets so
far this year, the medium-term outlook for appears to remain sound. In the
near-term, most emerging markets are likely to continue to take their direction
from U.S. monetary policy and the behavior of U.S. stock markets. Given that
recent declines have been attributed to concerns about high oil prices and
slowing global growth, confirmation of a "soft-landing" of the U.S. economy
would likely provide a more constructive external environment for developing
economies and the performance of the asset class.
4
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TCW GALILEO EMERGING MARKETS EQUITIES FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN (1)
1-YEAR 3-YEAR 5-YEAR SINCE INCEPTION
<S> <C> <C> <C>
(3.30)% (2.89)% 1.45% 2.20%
</TABLE>
<TABLE>
<CAPTION>
IFC INVESTABLE MSCI TOTAL RETURN
FUND EMERGING MARKETS INDEX EMERGING MARKETS FREE
<S> <C> <C> <C>
Jun 93 $254,500 $257,096 $257,413
Jul 93 $259,794 $265,079 $264,211
Aug 93 $278,005 $286,604 $286,521
Sep 93 $283,815 $298,140 $297,002
Oct 93 $320,371 $323,238 $323,649
Nov 93 $335,973 $343,730 $337,970
Dec 93 $404,276 $402,451 $393,837
Jan 94 $408,562 $405,236 $401,000
Feb 94 $380,330 $394,715 $393,867
Mar 94 $337,733 $354,902 $358,226
Apr 94 $332,407 $348,159 $351,061
May 94 $340,395 $356,348 $363,074
Jun 94 $321,758 $343,593 $353,068
Jul 94 $336,591 $368,278 $375,022
Aug 94 $371,960 $415,620 $421,566
Sep 94 $376,903 $425,935 $426,355
Oct 94 $370,059 $411,929 $418,663
Nov 94 $352,944 $396,093 $396,897
Dec 94 $311,487 $353,484 $365,018
Jan 95 $273,834 $306,831 $326,184
Feb 95 $269,270 $302,864 $317,817
Mar 95 $265,467 $302,077 $319,836
Apr 95 $275,736 $314,754 $334,183
May 95 $292,470 $326,535 $351,962
Jun 95 $289,809 $328,494 $353,004
Jul 95 $300,077 $338,947 $360,929
Aug 95 $293,232 $329,862 $352,425
Sep 95 $287,907 $327,362 $350,751
Oct 95 $273,454 $315,010 $337,324
Nov 95 $273,454 $313,435 $331,310
Dec 95 $283,810 $324,341 $346,004
Jan 96 $310,513 $351,516 $370,597
Feb 96 $301,359 $343,711 $364,705
Mar 96 $307,082 $348,730 $367,546
Apr 96 $323,867 $362,795 $382,240
May 96 $326,918 $359,606 $380,532
Jun 96 $325,774 $363,878 $382,906
Jul 96 $305,244 $339,970 $356,739
Aug 96 $317,453 $350,512 $365,871
Sep 96 $317,834 $355,679 $369,040
Oct 96 $312,110 $348,041 $359,197
Nov 96 $322,029 $353,189 $365,217
Dec 96 $330,443 $354,754 $366,868
Jan 97 $353,446 $379,793 $391,892
Feb 97 $367,248 $398,396 $408,677
Mar 97 $357,663 $388,415 $397,941
Apr 97 $358,045 $381,821 $398,645
May 97 $376,828 $394,803 $410,055
Jun 97 $406,730 $411,850 $432,001
Jul 97 $418,118 $415,827 $438,451
Aug 97 $372,217 $362,736 $382,658
Sep 97 $382,245 $374,537 $393,261
Oct 97 $320,917 $313,091 $328,731
Nov 97 $317,445 $298,514 $316,736
Dec 97 $330,946 $302,461 $324,369
Jan 98 $305,873 $282,628 $298,929
Feb 98 $321,302 $311,486 $330,131
Mar 98 $330,173 $323,700 $344,458
Apr 98 $330,173 $324,577 $340,707
May 98 $287,746 $284,086 $294,017
Jun 98 $262,289 $254,973 $263,174
Jul 98 $274,963 $265,141 $271,520
Aug 98 $196,953 $190,602 $193,012
Sep 98 $196,953 $199,776 $205,255
Oct 98 $215,104 $222,718 $226,869
Nov 98 $221,669 $239,471 $245,737
Dec 98 $219,738 $235,898 $242,177
Jan 99 $217,036 $230,444 $238,270
Feb 99 $214,718 $234,548 $240,589
Mar 99 $236,730 $261,655 $272,296
Apr 99 $264,149 $297,334 $305,984
May 99 $263,377 $292,009 $304,203
Jun 99 $300,066 $323,849 $338,727
Jul 99 $294,271 $319,144 $329,524
Aug 99 $300,837 $322,568 $332,523
Sep 99 $297,362 $313,591 $321,270
Oct 99 $303,928 $318,922 $328,110
Nov 99 $342,934 $347,593 $357,529
Dec 99 $413,606 $394,171 $402,999
Jan 00 $403,952 $394,723 $405,401
Feb 00 $430,601 $394,328 $410,756
Mar 00 $423,651 $400,085 $412,761
Apr 00 $377,308 $358,716 $373,635
May 00 $363,793 $348,708 $358,189
Jun 00 $384,645 $358,577 $370,804
Jul 00 $352,977 $341,329 $351,734
Aug 00 $349,500 $342,626 $353,465
Sep 00 $316,675 $312,132 $322,600
Oct 00 $293,891 $286,631 $299,211
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 6/1/93
(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 INVESTMENT
COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE WAS NOT
SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE 1940
ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940 ACT, THE
LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
5
<PAGE>
TCW GALILEO EMERGING MARKETS INCOME FUND
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MANAGEMENT DISCUSSIONS (CONTINUED)
For the fiscal year ended October 31, 2000, the TCW Galileo Emerging Markets
Income Fund (the "Fund") rose 15.12%, versus the J.P. Morgan Emerging Markets
Bond Index Plus ("EMBI+") which rose 15.00%. The positive variance in excess
returns is attributable to overweight positions in Mexico and Brazil and
non-index countries such as Algeria. The Fund also benefited from a lack of
exposure to Nigeria and the Cote d'Ivoire. Weakness in non-Dollar positions
(Poland, South Africa), under-weighted positions in Venezuela and Ecuador, and
various corporate positions (e.g., APP) limited the Fund's outperformance.
Emerging market debt valuations moved higher over the past four quarters, though
recent turbulence in Argentina and Turkey has precipitated a partial retreat.
Behind the headline numbers is a wide variance in underlying performance.
Returns have varied significantly by region and by credit quality with a
minority of sovereign credits exceeding the average return of the index. With
crude oil prices soaring above $30 per barrel, most of the outperformers have
been big oil exporters (e.g., Algeria, Mexico, Russia, Venezuela).
In the year to date, credit fundamentals in the emerging markets have been
dominated by external shocks (e.g., high oil prices, the weak Euro, worries
about a U.S. hard landing) and rising political instability at several
flashpoints. Going forward, most of these external shocks are expected to
diminish, though uncertainties about the U.S. economy are likely to persist for
at least the next couple of quarters. Even accounting for a significant slowdown
in the U.S., however, global economic growth is unlikely to fall below 2-3%.
Secular improving credit fundamentals in the emerging markets are working to
lower medium term default risks. Broadly speaking, the outlook for emerging
markets remains favorable as the main elements of the emerging markets are still
in place: orthodox economic reforms, macroeconomic stabilization, strengthening
growth fundamentals, and low systemic risks.
Credit quality of the emerging markets has improved with default rates
continuing to fall, after having peaked last year. This compares quite favorably
to the U.S. high yield market, where default rates for 2000 could reach 8%, as
estimated by Moody's Investors Service. TCW has experienced no credit-related
losses from default.
Our investment strategy has the following elements:
- High current income. The current yield on the portfolio exceeds 11% and the
blended yield to maturity is 12.77% versus 9.79% and 11.88%, respectively for
the EMBI Global Constrained.
- U.S. dollar denominated. Over 94% of the portfolio is U.S. dollar denominated
or hedged to U.S. dollars.
- Under-weighted U.S. interest rate duration. The Fund continues to be slightly
underweighted U.S. interest rate duration.
- Over-weighted strong growth fundamentals, strong credit fundamentals and
lower relative default risks.
- Over-weighted positions in private sector credits where normal emerging
market risks are partially mitigated by non-emerging market factors (e.g.,
companies with strong foreign equity partners or a high percentage of export
sales to developed markets).
- Under-weighted countries where geopolitical and economic linkages are weak,
or where market valuations do not compensate for normal emerging market
risks.
- Maximum global diversification by country and sector. Portfolio positions
where expected returns have low or negative correlation.
- Minimal exposure to positions where the risks of permanent principal loss
from default or ongoing debt restructuring are highest.
6
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TCW GALILEO EMERGING MARKETS INCOME FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN (1)
1-YEAR 3-YEAR SINCE INCEPTION
<S> <C> <C>
15.12% 3.15% 6.43%
</TABLE>
<TABLE>
<CAPTION>
JP MORGAN EMERGING MARKETS JP MORGAN EMERGING MARKETS
FUND BOND INDEX PLUS BOND INDEX GLOBAL CONSTRAINED
<S> <C> <C> <C>
Sep 96 $257,620 $264,513 $264,655
Oct 96 $257,749 $266,590 $269,170
Nov 96 $267,054 $279,885 $282,677
Dec 96 $272,226 $283,248 $285,456
Jan 97 $281,115 $291,082 $292,424
Feb 97 $289,677 $296,147 $297,287
Mar 97 $280,034 $285,464 $286,403
Apr 97 $289,261 $293,912 $294,889
May 97 $301,974 $305,327 $305,134
Jun 97 $310,955 $312,350 $312,414
Jul 97 $320,445 $325,309 $325,314
Aug 97 $321,128 $323,991 $323,788
Sep 97 $329,975 $333,891 $332,951
Oct 97 $295,169 $295,429 $299,406
Nov 97 $303,776 $309,462 $310,436
Dec 97 $300,593 $320,167 $316,322
Jan 98 $298,311 $319,479 $318,786
Feb 98 $311,180 $328,623 $326,680
Mar 98 $321,984 $336,810 $333,589
Apr 98 $324,287 $337,621 $334,329
May 98 $304,862 $326,097 $325,516
Jun 98 $287,027 $316,683 $317,606
Jul 98 $287,490 $318,868 $318,369
Aug 98 $181,693 $227,226 $235,695
Sep 98 $193,462 $249,448 $258,138
Oct 98 $211,365 $265,588 $275,004
Nov 98 $233,850 $281,220 $293,402
Dec 98 $229,308 $274,189 $290,653
Jan 99 $225,057 $264,009 $287,287
Feb 99 $228,361 $267,800 $289,065
Mar 99 $243,385 $288,059 $304,539
Apr 99 $267,319 $307,745 $321,015
May 99 $255,076 $290,200 $305,587
Jun 99 $264,345 $303,178 $314,458
Jul 99 $262,960 $296,890 $310,018
Aug 99 $262,261 $296,466 $309,032
Sep 99 $270,380 $306,809 $318,053
Oct 99 $281,422 $318,649 $328,275
Nov 99 $290,048 $327,667 $336,107
Dec 99 $302,375 $345,394 $347,501
Jan 00 $301,643 $338,555 $343,488
Feb 00 $314,180 $360,358 $358,467
Mar 00 $319,386 $371,709 $365,379
Apr 00 $314,138 $364,610 $358,356
May 00 $305,066 $355,349 $350,426
Jun 00 $320,700 $373,365 $366,037
Jul 00 $328,391 $384,640 $376,747
Aug 00 $336,144 $398,180 $388,652
Sep 00 $331,062 $392,764 $384,404
Oct 00 $323,967 $383,927 $377,524
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 9/4/96
(1) PERFORMANCE DATA INCLUDES THE PERFORMANCE OF THE PREDECESSOR LIMITED
PARTNERSHIP FOR PERIODS BEFORE THE FUND'S REGISTRATION BECAME EFFECTIVE.
THE PREDECESSOR LIMITED PARTNERSHIP WAS NOT REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE WAS NOT
SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE 1940
ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940 ACT, THE
LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
7
<PAGE>
TCW GALILEO EUROPEAN EQUITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
For the fiscal year ended October 31, 2000, the TCW Galileo European Equities
Fund (the "Fund") returned 10.82% for its Institutional ("I") Class shares
versus the MSCI Europe 15 Index return of 1.21% in US$ terms. It is worth noting
that in local currency terms the European markets are up by over 20% but returns
have been depressed somewhat due to the weakness in the Euro versus the U.S.
dollar. For the Advisory ("N") Class shares the return was 10.08%. The
performance of the Fund's two classes varies because of differing expenses.
Over the past twelve months the market has undergone profound swings in both
liquidity and sentiment. Driven primarily by a volatile U.S. technology market,
the European markets have seen sharp sector rotation and an overall
outperformance of technology stocks. However, behind this outperformance lies an
underperformance of technology stocks year-to-date and, as a result, the fund's
growth style has suffered year-to-date. Defensive and value stocks have
outperformed growth as a style during the past six months as a result of an
escalating oil price, concerns over the U.S. economic momentum and corporate
earnings, and political uncertainties across the Middle East.
The portfolio's position relative to the Frank Russell Universe of European
Funds was first quartile (10th percentile) for the twelve months to the end of
September 2000 but, due to the decline in growth stocks during the past two
quarters, the fund's position slipped to 55th percentile for the nine months to
the end of September 2000.
Despite the uncertain outlook for earnings for some U.S. companies, third
quarter 2000 results in Europe have begun to come in with no nasty surprises.
For example, Nokia reported a strong third quarter net profit increase of 40%
while confirming its forecast for 1 billion mobile users by 2002 and an upbeat
statement for earnings in 2001. Results from most companies in Europe are
showing solid earnings with the weak Euro flattering the bottom line.
The ECB has intervened several times during the past month in the currency
market to support the Euro which provided a major boost to the Euro. But
speculators remain able to punish the currency after each bout of intervention.
We believe that we will see further intervention short-term. Following the 25bp
increase in rates by the ECB at the beginning of October, they may well leave
rates on hold for a while which should also support equity valuations near-term.
The strong fundamental case for European equities remains intact with further
fiscal and pension reforms taking place and corporate earnings not being
threatened yet. We still expect GDP growth for 2000 in the Eurozone to be close
to 3.5% with headline inflation more stable at 2.3% but core inflation remaining
below 2.0%. Unemployment remains on a downward path (9.0% in August versus 9.9%
a year ago) reflecting the benefits of the structural reforms and strong
economic growth.
The valuations of European companies still remain attractive with IBES consensus
earnings estimates growth of 16% for 2000 and 12% for 2001. The past year has
been difficult for growth as a style and year-to-date our fund has suffered the
fallout of technology stocks globally. We reiterate our comfortable stance on
our stocks and with the ECB supporting the Euro, we still expect less currency
risk going forward with good potential for better equity returns during the
final period of the year. We still anticipate a shift back to growth but are
more mindful of a gradual outperformance of growth as investors realize that
value stocks may disappoint on earnings.
8
<PAGE>
[ICON]
--------------------------------------------------------------------------------
TCW GALILEO EUROPEAN EQUITIES FUND -- I CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN
<S> <C>
1-Year Since Inception
10.82% 14.23%
</TABLE>
<TABLE>
<CAPTION>
FUND MSCI EUROPE INDEX
<S> <C> <C>
Nov 97 $251,750 $253,900
Dec 97 $254,751 $263,244
Jan 98 $263,751 $274,273
Feb 98 $288,000 $295,776
Mar 98 $307,999 $316,924
Apr 98 $318,249 $323,136
May 98 $329,248 $329,760
Jun 98 $324,998 $333,454
Jul 98 $330,246 $340,123
Aug 98 $287,998 $297,437
Sep 98 $272,247 $285,629
Oct 98 $292,497 $308,565
Nov 98 $307,248 $325,064
Dec 98 $319,593 $339,357
Jan 99 $326,263 $337,253
Feb 99 $317,284 $328,775
Mar 99 $317,284 $332,447
Apr 99 $324,210 $342,434
May 99 $310,872 $326,069
Jun 99 $316,773 $331,654
Jul 99 $320,878 $334,818
Aug 99 $324,982 $338,304
Sep 99 $322,418 $335,784
Oct 99 $336,269 $348,224
Nov 99 $364,485 $357,696
Dec 99 $428,529 $394,439
Jan 00 $416,230 $366,422
Feb 00 $458,199 $385,611
Mar 00 $449,910 $395,008
Apr 00 $426,920 $377,652
May 00 $415,423 $374,649
Jun 00 $423,976 $382,783
Jul 00 $422,106 $376,754
Aug 00 $415,154 $372,403
Sep 00 $385,749 $355,049
Oct 00 $372,649 $352,436
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 11/3/97
TCW GALILEO EUROPEAN EQUITIES FUND -- N CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN
<S> <C>
1-Year Since Inception
10.08% 9.84%
</TABLE>
<TABLE>
<CAPTION>
FUND MSCI EUROPE INDEX
<S> <C> <C>
Mar 99 $2,000 $2,022
Apr 99 $2,042 $2,083
May 99 $1,958 $1,984
Jun 99 $1,995 $2,018
Jul 99 $2,021 $2,037
Aug 99 $2,045 $2,058
Sep 99 $2,029 $2,043
Oct 99 $2,124 $2,118
Nov 99 $2,304 $2,176
Dec 99 $2,704 $2,399
Jan 00 $2,625 $2,229
Feb 00 $2,889 $2,346
Mar 00 $2,835 $2,403
Apr 00 $2,689 $2,297
May 00 $2,615 $2,279
Jun 00 $2,669 $2,329
Jul 00 $2,654 $2,292
Aug 00 $2,610 $2,265
Sep 00 $2,423 $2,160
Oct 00 $2,339 $2,144
</TABLE>
VALUE OF $2,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 3/1/99
9
<PAGE>
TCW GALILEO INTERNATIONAL EQUITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
For the fiscal year ended October 31, 2000 the TCW Galileo International
Equities Fund (the "Fund") returned 8.07% for its shareholders versus the MSCI
EAFE Index return of negative 2.67% in US$ terms. With approximately 66.0% of
the fund invested in the European markets however, the weak Euro versus the U.S.
dollar held back total returns to our U.S. shareholders despite good equity
returns.
Most markets, both developed and emerging saw good returns during the first half
of the fiscal year ended October 31, 2000, but declined during the latter part.
However, the emerging regions, in particular South East Asia and Emerging
Europe, seemed to suffer most.
This has been a world-wide shift towards value and defensive stocks which began
in the second quarter and continued again in the third quarter of 2000. The
causes of the decline in equities generally over this period can be attributed
to the following themes: uncertainty surrounding the U.S. economy as GDP growth
and inflation is tamed by the Fed's tightening hitherto, an escalating oil
price, the ongoing correction in global technology and telecom stocks, and
investors' concerns that corporate earnings growth may slow as the U.S. economy
slows and global growth peaks. However, while the U.S. economy has enjoyed
unprecedented growth and wealth creation, we believe that investors are
over-discounting these concerns in an international context and that,
fundamentally, there may be a lot to play for in many of the international
markets from here.
The U.S. dollar has continued to prove its strength against most major
currencies which has weakened the dollar return of International markets
further. The monetary tightening we have seen in the U.S. has held back equity
returns and in Europe the bias remains slightly upward, but we may be closer to
seeing rates stabilizing. Further rate hikes by the ECB cannot be ruled out but
the worst of the rate cycle should be behind us.
In Europe the pressure on U.S. technology stocks during the past seven months
has translated into weakness in European technology, telecom, and growth stocks
generally. A further slide in the Euro of more than 19.0% against the U.S.
dollar (to new lows), coupled with the high oil price, has also led to downward
pressure on European equities during the past seven months, particularly from
foreign investors who seemed to be impatient with the Euro's decline.
We see the weakness in the Euro currency mainly due to capital flows favoring
the U.S. while the interest rate differentials between the U.S. and Europe still
support the dollar. However, we have seen unilateral intervention by the ECB and
Fed to support the Euro, and further intervention (which is likely) should
underpin its fortunes near term.
On the macro front, we still expect GDP growth for 2000 in the Eurozone to be
close to 3.5% with headline inflation at 2.4% (above the ECB's limit of 2.0%)
but core inflation remaining more stable. Business and consumer confidence
remains strong, although slightly below the peaks of July, while unemployment
(9.1% in July versus 9.9% a year ago) continues to reflect the benefits of
structural reforms.
While concerns over earnings persist in the U.S., in Asia corporate earnings
have generally been exceptionally strong. A few sectors such as personal
computer (PC) manufacturing, PC peripherals, and components are starting to show
some signs of a slowdown. Overall, however, Asian companies have recorded record
solid profits so far this year and this leaves us cautiously optimistic.
In Japan economic data remains supportive of our view of moderate economic
growth. Consensus economic growth forecasts have been revised up recently,
driven by strong private business investment. With earnings rising strongly,
companies are increasing investment spending with
10
<PAGE>
[ICON]
--------------------------------------------------------------------------------
technology related capital expenditure up sharply while unemployment seems to be
stabilizing more quickly than we expected. With the positive earnings
environment in Japan, we remain broadly optimistic on the Japanese market.
As a result of the correction in Asia since February this year, many Asian
stocks are now trading at attractive valuations and when sentiment towards the
global technology sectors improves, this could set the stage for a rally in
Asian markets.
Many European companies are now trading at 52-week lows with debt and earnings
concerns overdone. We anticipate less currency risk going forward and believe
there will be upside from the low returns seen over the past few months,
particularly for growth as a style.
The issue for the coming year for international equities is one of confidence.
In terms of outlook, we still believe that the U.S. can manage a soft landing
but we need to see further evidence of this, and also that technology stocks
have bottomed, and that the Euro has finally stabilized. If these factors do
transpire then confidence in international equities will return at a time when
fundamentals still remain attractive. We reiterate our comfortable stance on our
stocks and positions within the international markets overall and the prospect
of a weakening of the U.S. dollar, if this takes place, should also help improve
returns from International equity markets.
TCW GALILEO INTERNATIONAL EQUITIES FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN(1)
<S> <C> <C> <C>
1-Year 3-Year 5-Year Since Inception
8.07% 13.99% 10.83% 9.29%
</TABLE>
<TABLE>
<CAPTION>
FUND MSCI EAFE INDEX
<S> <C> <C>
Dec 93 $267,968 $268,109
Jan 94 $291,275 $290,834
Feb 94 $285,980 $290,088
Mar 94 $280,360 $277,655
Apr 94 $288,384 $289,498
May 94 $286,348 $287,898
Jun 94 $281,509 $292,031
Jul 94 $289,521 $294,904
Aug 94 $301,828 $301,951
Sep 94 $292,233 $292,507
Oct 94 $297,374 $302,315
Nov 94 $281,527 $287,853
Dec 94 $277,886 $289,723
Jan 95 $269,314 $278,661
Feb 95 $267,350 $277,934
Mar 95 $273,916 $295,346
Apr 95 $284,177 $306,533
May 95 $280,594 $302,958
Jun 95 $275,852 $297,726
Jul 95 $292,819 $316,342
Aug 95 $287,622 $304,352
Sep 95 $287,688 $310,375
Oct 95 $276,503 $302,111
Nov 95 $282,290 $310,596
Dec 95 $291,464 $323,191
Jan 96 $298,672 $324,593
Feb 96 $302,283 $325,772
Mar 96 $307,144 $332,773
Apr 96 $321,435 $342,529
May 96 $321,721 $336,309
Jun 96 $317,835 $338,283
Jul 96 $304,995 $328,480
Aug 96 $304,888 $329,285
Sep 96 $311,290 $338,116
Oct 96 $306,182 $334,742
Nov 96 $312,563 $348,145
Dec 96 $306,465 $343,751
Jan 97 $297,568 $331,799
Feb 97 $300,791 $337,307
Mar 97 $299,843 $338,612
Apr 97 $299,484 $340,491
May 97 $321,442 $362,732
Jun 97 $337,057 $382,817
Jul 97 $340,445 $389,087
Aug 97 $317,570 $360,108
Sep 97 $332,636 $380,362
Oct 97 $312,142 $351,227
Nov 97 $305,275 $347,714
Dec 97 $304,026 $350,844
Jan 98 $315,576 $366,983
Feb 98 $340,548 $390,616
Mar 98 $355,842 $402,725
Apr 98 $364,581 $405,987
May 98 $368,639 $404,120
Jun 98 $363,644 $407,272
Jul 98 $368,637 $411,508
Aug 98 $322,753 $360,604
Sep 98 $309,643 $349,642
Oct 98 $335,550 $386,179
Nov 98 $354,277 $406,060
Dec 98 $367,414 $422,176
Jan 99 $373,667 $421,024
Feb 99 $367,102 $411,088
Mar 99 $381,485 $428,345
Apr 99 $393,994 $445,800
May 99 $379,609 $422,940
Jun 99 $395,557 $439,527
Jul 99 $407,439 $452,691
Aug 99 $413,693 $454,448
Sep 99 $414,632 $459,124
Oct 99 $427,764 $476,419
Nov 99 $464,975 $493,060
Dec 99 $537,855 $537,411
Jan 00 $521,634 $503,361
Feb 00 $564,131 $517,007
Mar 00 $567,702 $537,149
Apr 00 $530,398 $508,981
May 00 $516,449 $496,649
Jun 00 $533,641 $516,187
Jul 00 $516,447 $494,646
Aug 00 $520,667 $499,039
Sep 00 $485,308 $474,840
Oct 00 $462,276 $463,720
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 12/1/93
(1) PERFORMANCE DATA INCLUDES THE PERFORMANCE OF THE PREDECESSOR LIMITED
PARTNERSHIP FOR PERIODS BEFORE THE FUND'S REGISTRATION BECAME EFFECTIVE.
THE PREDECESSOR LIMITED PARTNERSHIP WAS NOT REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE WAS NOT
SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE 1940
ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940 ACT, THE
LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
11
<PAGE>
TCW GALILEO JAPANESE EQUITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
The TCW Galileo Japanese Equities Fund (the "Fund") out performed its MSCI Japan
benchmark strongly for the fiscal year ended October 31, 2000 returning 0.39%
versus negative 15.14% for the benchmark (US$). This placed us in the top decile
of funds in the Morningstar Japan category. This was especially pleasing given
our general preference for "growth" stocks. We performed strongly during the
first six months of the investment year because of our high weighting in
technology stocks. Throughout this period, we were locking in such gains and
moving to a more defensive position as valuations became progressively more and
more stretched. This enabled us to hold onto much of the relative out
performance during the second half of the investment period.
In terms of sector trends, Japan has been similar to other major equity markets.
Technology stocks were very strong in the fourth quarter of last year and peaked
in the spring of this year. Since then they have fallen sharply, with October
seeing sharp falls in many technology stocks. For the year, it has been
defensive sectors such as pharmaceuticals and utilities that have dominated.
"Value" stocks out performed "growth" stocks. Small cap stocks, especially
growth small cap growth stocks, were very weak.
The difficult current investment environment means that we currently remain
reasonably defensively positioned. Nevertheless, following the sharp fall in
many technology-related growth stocks, we are looking to increase weightings in
those companies which we believe have strong medium-term earnings potential.
Following the sharp correction we have seen in the Japanese market in recent
months, we believe the market is now offering good value. We think earnings
momentum will remain good, driving valuations down further. Our positive stance
is premised on the positive changes taking place within many Japanese companies
and we are believers in the structural transformations that are taking place
within the corporate sector. We continue to invest in those companies that we
believe are focused on creating shareholder value.
TCW GALILEO JAPANESE EQUITIES FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN(1)
<S> <C> <C> <C>
1-Year 3-Year 5-Year Since Inception
0.39% 15.70% 2.49% (0.68)%
</TABLE>
<TABLE>
<CAPTION>
FUND MSCI JAPAN INDEX
<S> <C> <C>
May 95 $227,015 $233,725
Jun 95 $220,881 $222,576
Jul 95 $233,730 $239,759
Aug 95 $231,014 $230,457
Sep 95 $223,686 $230,457
Oct 95 $212,882 $218,381
Nov 95 $229,344 $231,396
Dec 95 $244,024 $242,549
Jan 96 $247,438 $239,299
Feb 96 $243,526 $235,590
Mar 96 $250,864 $243,482
Apr 96 $277,490 $259,747
May 96 $267,345 $247,201
Jun 96 $267,992 $248,586
Jul 96 $256,163 $236,504
Aug 96 $242,730 $226,287
Sep 96 $247,881 $232,804
Oct 96 $232,071 $217,463
Nov 96 $226,733 $219,311
Dec 96 $207,091 $202,578
Jan 97 $188,053 $180,740
Feb 97 $188,979 $183,993
Mar 97 $180,187 $177,498
Apr 97 $178,168 $181,687
May 97 $204,788 $204,452
Jun 97 $213,131 $217,926
Jul 97 $193,288 $209,100
Aug 97 $175,817 $190,511
Sep 97 $158,555 $184,929
Oct 97 $155,439 $170,523
Nov 97 $131,813 $157,972
Dec 97 $113,317 $145,429
Jan 98 $136,859 $161,267
Feb 98 $140,626 $163,266
Mar 98 $131,994 $152,181
Apr 98 $134,662 $149,685
May 98 $130,895 $142,874
Jun 98 $130,267 $144,546
Jul 98 $131,679 $141,597
Aug 98 $117,711 $128,032
Sep 98 $116,298 $124,575
Oct 98 $132,306 $145,442
Nov 98 $142,978 $151,604
Dec 98 $148,785 $156,837
Jan 99 $150,040 $157,764
Feb 99 $152,552 $153,269
Mar 99 $179,076 $174,689
Apr 99 $188,023 $183,539
May 99 $183,001 $174,767
Jun 99 $203,091 $191,491
Jul 99 $222,709 $211,605
Aug 99 $231,027 $217,866
Sep 99 $238,718 $232,707
Oct 99 $239,816 $246,763
Nov 99 $261,004 $263,943
Dec 99 $292,001 $276,797
Jan 00 $281,939 $261,307
Feb 00 $295,415 $256,295
Mar 00 $316,260 $273,767
Apr 00 $282,297 $251,258
May 00 $275,649 $232,795
Jun 00 $292,540 $247,631
Jul 00 $260,194 $219,067
Aug 00 $284,127 $233,723
Sep 00 $266,133 $224,787
Oct 00 $240,763 $209,399
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 5/2/95
(1) PERFORMANCE DATA INCLUDES THE PERFORMANCE OF THE PREDECESSOR LIMITED
PARTNERSHIP FOR PERIODS BEFORE THE FUND'S REGISTRATION BECAME EFFECTIVE.
THE PREDECESSOR LIMITED PARTNERSHIP WAS NOT REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE WAS NOT
SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE 1940
ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940 ACT, THE
LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
12
<PAGE>
TCW GALILEO LATIN AMERICA EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
The total return earned by the TCW Galileo Latin America Equities Fund (the
"Fund") during the fiscal year ended October 31, 2000, was a positive 18.57%.
This compares favorably to the Morgan Stanley Capital International (MSCI) Total
Return Gross US$ Emerging Markets Free Index, which posted a positive 14.24%
return for the same period. The Fund also outperformed the International Finance
Corporation (IFC) Investable Total Return Emerging Markets Composite Index,
which posted a positive 17.37% return for the twelve months ended October 31,
2000.
Following a breathtaking rally toward the end of 1999, most Latin American
equity markets continued to post modest gains in the first few months of the
2000. However, the Y2K relief was short-lived and gave way to concerns about
higher U.S. interest rates, tighter global liquidity, and rapidly decelerating
U.S. economic growth--all of which suggest a weaker global growth outlook for
2001. As a result, Latin American equity markets were not immune to sharp global
volatility of equity markets witnessed during April and May. Although Latin
equity prices later rebounded on signs that the U.S. economy might achieve a
soft landing, the markets consolidated in September due to concerns about rising
crude oil prices. While higher crude oil prices benefit oil-exporting countries
such as Mexico and Venezuela, slower global economic growth that could result
from higher crude oil prices would clearly be a negative development for the
region. In the near-term, Latin America is likely to continue to take its
direction from U.S. monetary policy and the behavior of U.S. stock markets. Key
domestic developments will be the presidential transition in Mexico--following
its historic election--and confidence in Brazil's ability to continue to lower
interest rates and continue with strong economic growth.
The Fund continued to focus on blue-chip companies exhibiting strong and
reliable cash flow generation, as well as companies with low leverage and
quality management. The Fund's largest industry exposure continued to be
telecommunications where earnings growth is being driven by increased
subscribers of both fixed and cellular telephony and by increased usage of the
Internet and business data networks. The Fund increased its exposure to the
retail sector as consumer spending is expected to accompany the economic
recovery in the region.
Despite the stock market turbulence witnessed in the Latin American markets so
far this year, the outlook for corporate earnings growth remains solid in Mexico
and Brazil, which account for the vast majority of the Fund's assets. Economic
growth in Latin America is forecast to be 4.4% in 2000 after registering zero
growth in 1999. Looking forward, the question is whether this positive momentum
will continue into 2001. Given that recent declines have been attributed to
concerns about high oil prices and slowing global growth, confirmation of a
"soft landing" of the U.S. economy would likely provide a more constructive
external environment for Latin American economies and the performance of the
region's equity markets.
13
<PAGE>
TCW GALILEO LATIN AMERICA EQUITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO LATIN AMERICA EQUITIES FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEAR 5-YEAR SINCE INCEPTION
<S> <C> <C> <C>
18.57% (3.16)% 7.81% 7.55%
</TABLE>
<TABLE>
<CAPTION>
IFC INVESTABLE MSCI TOTAL RETURN
FUND LATIN AMERICA INDEX LATIN FREE
<S> <C> <C> <C>
Jul 91 $257,000 $273,535 $281,220
Aug 91 $274,990 $299,098 $300,363
Sep 91 $265,365 $294,672 $295,428
Oct 91 $286,462 $331,301 $315,963
Nov 91 $289,327 $318,477 $297,782
Dec 91 $294,534 $364,115 $341,351
Jan 92 $336,358 $424,541 $393,905
Feb 92 $391,521 $448,211 $427,710
Mar 92 $411,489 $449,367 $452,975
Apr 92 $395,441 $454,584 $450,996
May 92 $404,140 $456,586 $456,822
Jun 92 $340,286 $368,160 $368,249
Jul 92 $348,861 $370,646 $379,135
Aug 92 $328,976 $350,396 $351,700
Sep 92 $312,856 $335,434 $343,312
Oct 92 $345,706 $350,309 $365,017
Nov 92 $355,386 $347,831 $362,348
Dec 92 $376,709 $376,678 $387,140
Jan 93 $371,209 $365,651 $381,546
Feb 93 $352,649 $362,128 $379,726
Mar 93 $383,682 $392,962 $405,836
Apr 93 $369,578 $378,444 $385,650
May 93 $364,640 $383,510 $395,295
Jun 93 $382,624 $404,687 $420,198
Jul 93 $396,024 $416,276 $432,040
Aug 93 $428,466 $452,739 $469,195
Sep 93 $425,647 $460,117 $477,411
Oct 93 $458,090 $491,221 $496,330
Nov 93 $486,656 $528,737 $528,850
Dec 93 $578,347 $605,510 $595,897
Jan 94 $643,035 $686,827 $693,964
Feb 94 $596,724 $655,589 $673,881
Mar 94 $532,421 $611,629 $628,158
Apr 94 $497,206 $566,759 $580,217
May 94 $511,367 $596,398 $614,496
Jun 94 $465,436 $550,633 $575,138
Jul 94 $501,796 $603,317 $629,649
Aug 94 $572,990 $702,889 $732,062
Sep 94 $601,313 $734,112 $763,467
Oct 94 $573,755 $691,229 $725,744
Nov 94 $569,544 $679,164 $705,046
Dec 94 $450,008 $548,140 $599,719
Jan 95 $391,831 $461,550 $534,230
Feb 95 $338,789 $394,633 $456,841
Mar 95 $319,112 $382,845 $441,080
Apr 95 $355,471 $443,002 $504,742
May 95 $353,762 $444,174 $516,209
Jun 95 $357,183 $453,459 $524,252
Jul 95 $372,581 $477,755 $540,456
Aug 95 $378,143 $484,500 $546,645
Sep 95 $373,439 $478,317 $541,982
Oct 95 $338,792 $432,726 $498,379
Nov 95 $355,474 $447,712 $507,335
Dec 95 $361,282 $456,357 $522,753
Jan 96 $403,433 $499,256 $576,351
Feb 96 $380,639 $472,886 $543,165
Mar 96 $388,811 $480,470 $549,971
Apr 96 $406,875 $505,755 $580,422
May 96 $425,368 $518,991 $599,089
Jun 96 $435,692 $528,238 $614,461
Jul 96 $417,196 $504,940 $590,246
Aug 96 $432,249 $518,635 $606,861
Sep 96 $439,990 $528,681 $620,728
Oct 96 $430,526 $518,809 $614,676
Nov 96 $434,397 $521,153 $620,540
Dec 96 $449,449 $534,896 $638,858
Jan 97 $493,265 $584,191 $701,741
Feb 97 $524,499 $622,388 $748,168
Mar 97 $520,161 $615,746 $736,758
Apr 97 $543,589 $640,849 $773,604
May 97 $584,369 $692,622 $828,429
Jun 97 $633,825 $748,274 $899,450
Jul 97 $671,651 $789,780 $949,990
Aug 97 $606,051 $721,129 $858,953
Sep 97 $665,135 $782,006 $941,309
Oct 97 $543,488 $636,313 $762,498
Nov 97 $573,467 $655,914 $788,575
Dec 97 $600,403 $691,482 $840,968
Jan 98 $533,062 $611,431 $747,562
Feb 98 $558,260 $641,775 $786,831
Mar 98 $593,017 $683,756 $842,618
Apr 98 $587,804 $677,882 $823,313
May 98 $512,213 $593,342 $716,826
Jun 98 $487,883 $560,394 $674,462
Jul 98 $508,178 $582,584 $707,834
Aug 98 $324,274 $385,877 $462,301
Sep 98 $349,149 $412,017 $509,636
Oct 98 $380,687 $443,493 $549,041
Nov 98 $402,010 $484,396 $591,437
Dec 98 $368,695 $445,756 $545,731
Jan 99 $314,947 $394,632 $481,117
Feb 99 $334,048 $417,414 $511,817
Mar 99 $391,351 $505,660 $615,864
Apr 99 $453,987 $579,815 $704,579
May 99 $427,333 $560,101 $682,561
Jun 99 $454,430 $583,496 $715,071
Jul 99 $415,340 $543,043 $660,039
Aug 99 $402,456 $527,251 $640,152
Sep 99 $408,674 $537,369 $650,613
Oct 99 $416,227 $547,192 $665,284
Nov 99 $469,533 $617,233 $749,196
Dec 99 $583,695 $721,236 $867,120
Jan 00 $544,605 $695,200 $830,042
Feb 00 $603,242 $755,404 $893,747
Mar 00 $599,243 $763,940 $901,156
Apr 00 $526,836 $679,830 $803,913
May 00 $488,636 $643,527 $764,706
Jun 00 $552,158 $703,568 $834,577
Jul 00 $533,948 $690,693 $817,259
Aug 00 $557,490 $713,624 $836,980
Sep 00 $516,180 $677,015 $787,648
Oct 00 $493,525 $642,217 $760,018
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 7/1/91
(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 INVESTMENT
COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE WAS NOT
SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE 1940
ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940 ACT, THE
LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
14
<PAGE>
TCW GALILEO ASIA PACIFIC EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
---------- ------------ -----------
<C> <S> <C>
CHINA (COST: $446,728) (3.2% OF NET
ASSETS)
2,000,000 PetroChina Company, Limited $ 420,545
-----------
HONG KONG (51.1%)
105,000 Cheung Kong Holdings, Limited 1,161,147
124,000 China Telecom (Hong Kong), Limited 798,908*
112,000 Dah Sing Financial Group 481,063
80,995 HSBC Holdings, PLC 1,126,741
670,000 Huaneng Power International,
Incorporated 259,860
90,970 Hutchison Whampoa, Limited 1,128,465
780,000 Legend Holdings, Limited 660,051
486,000 South China Morning Post Holdings,
Limited 333,372
75,000 Sun Hung Kai Properties, Limited 620,240
-----------
TOTAL HONG KONG (COST: $5,266,211) 6,569,847
-----------
SINGAPORE (21.2%)
309,000 Allgreen Properties 198,753
4,500 Chartered Semiconductor Manufacturing,
Limited (ADR) 209,250*
86,350 City Developments, Limited 398,130
39,000 DBS Group Holdings, Limited 459,529
6 Oversea-Chinese Banking Corporation,
Limited 38
134,000 Parkway Holdings, Limited 274,590
61,000 Singapore Airlines, Limited 611,111
19,340 Singapore Press Holdings, Limited 276,317
750,000 SMRT Corporation, Limited 294,570*
-----------
TOTAL SINGAPORE (COST: $3,003,042) 2,722,288
-----------
SOUTH KOREA (16.2%)
18,633 Housing & Commercial Bank, Korea 447,421*
2,869 Korea Telecom Corporation 168,765*
10,844 Pohang Iron & Steel Company, Limited 629,314
2,599 Samsung Electronics Company, Limited 325,160
2,400 SK Telecom Company, Limited 510,974
-----------
TOTAL SOUTH KOREA (COST: $2,520,883) 2,081,634
-----------
TAIWAN (6.9%)
287 Asustek Computer, Incorporated (144A)
(GDR) 1,571***
7,016 Formosa Growth Fund, Limited 113,870*
253,723 Taiwan Semiconductor Manufacturing
Company, Limited (Local Shares),
(144A) 768,620**
-----------
TOTAL TAIWAN (COST: $1,012,146) 884,061
-----------
TOTAL COMMON STOCK (COST: $12,249,010)
(98.6%) 12,678,375
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
TCW GALILEO ASIA PACIFIC EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS VALUE
---------- ---------------------- -----------
<C> <S> <C>
$ 21 American Express Co., 6.54%, due
11/21/00 $ 21***
21 American Express Co., 6.63%, due
01/18/01 21***
10 Bank of America, 6.64%, due 01/16/01 10***
10 Bank of Nova Scotia, 6.53%, due 11/27/00 10***
16 Bank of Nova Scotia, 6.67%, due 01/05/01 16***
10 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 10***
103 Fleet National Bank, 6.725%, due
04/30/01 103***
5,117 Foreign Currency Call Accounts 5,116
277,997 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 277,997
61 Merrimac Money Market Fund, 6.549%, due
11/01/00 61***
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST: $283,366) (2.2%) 283,365
-----------
TOTAL INVESTMENTS (COST: $12,532,376)
(100.8%) 12,961,740
LIABILITIES IN EXCESS OF OTHER ASSETS
(-0.8%) (104,016)
-----------
NET ASSETS (100.0%) $12,857,724
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** RESTRICTED SECURITY (NOTE 9).
*** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
[ICON]
--------------------------------------------------------------------------------
INVESTMENTS BY INDUSTRY* OCTOBER 31, 2000
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------------------------------------------------- --------------
<S> <C>
Airlines 4.8%
Banking & Financial Services 19.6
Communications 7.5
Computer Services 5.1
Electric Utilities 2.0
Electronics 10.1
Energy & Oil Services 3.3
Healthcare 2.1
Industrial -- Diversified 8.8
Investment Companies 0.9
Media -- Broadcasting & Publishing 4.7
Metals 4.9
Radio Telephone Communications 4.0
Real Estate 18.5
Transportation 2.3
Short-Term Investments 2.2
----------
TOTAL 100.8%
==========
</TABLE>
* THESE CLASSIFICATIONS ARE NOT SUBJECT TO AUDIT.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
TCW GALILEO EMERGING MARKETS EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES EQUITY SECURITIES VALUE
----------- ----------------- -----------
<C> <S> <C>
COMMON STOCK
ARGENTINA (1.4% OF NET ASSETS)
6,347 Banco Frances, S.A. (ADR) $ 138,841
11,858 Perez Companc, S.A. (ADR) 170,459
11,495 Telecom Argentina STET - France Telecom,
S.A., Series B (ADR) 197,570
-----------
TOTAL ARGENTINA (COST: $692,203) 506,870
-----------
BRAZIL (3.9%)
4,968 Brasil Telecom Participacoes, S.A. (ADR) 269,204
7,770 Companhia Brasileira de Distribuicao
Grupo Pao de Acucar (ADR) 276,806
10,168 Companhia De Bebidas PR (ADR) 229,416*
16,260 Companhia Paranaenae de Energia (COPEL)
(ADR) 147,356
4,000,000 Companhia Siderurgica Nacional 111,032
1,700 Companhia Vale do Rio Doce (ADR) 39,737
10,210 Petroleo Brasileiro, S.A. (ADR) 296,728*
-----------
TOTAL BRAZIL (COST: $1,302,712) 1,370,279
-----------
CHILE (1.5%)
7,718 Compania Cervecerias Unidas, S.A. (ADR) 149,054
9,556 Compania de Telecomunicaciones de Chile,
S.A., Series A (ADR) 145,729*
6,346 Vina Concha y Toro, S.A. (ADR) 243,528
-----------
TOTAL CHILE (COST: $635,257) 538,311
-----------
CHINA (COST: $828,704) (2.2%)
3,786,000 PetroChina Company, Limited 796,092
-----------
GREECE (4.0%)
9,600 Alpha Credit Bank, S.A. 354,402
7,500 Cosmote, S.A. (GDR) 112,312*
15,746 Hellenic Telecommunication Organization,
S.A. 274,729
6,387 Intracom, S.A. 166,120
7,947 National Bank of Greece, S.A. 301,709
9,550 Panafon, S.A. 79,261*
3,460 Titan Cement Company, S.A. 124,364
-----------
TOTAL GREECE (COST: $1,967,584) 1,412,897
-----------
HONG KONG (11.6%)
260,000 China Telecom (Hong Kong), Limited 1,675,129*
1,065,896 Cosco Pacific, Limited 799,483
2,099,198 Huaneng Power International,
Incorporated 814,175
965,100 Legend Holdings, Limited 816,686
-----------
TOTAL HONG KONG (COST: $3,933,074) 4,105,473
-----------
HUNGARY (2.0%)
89,284 Magyar Tavkozlesi Rt. 397,471
6,404 OTP Bank Rt. 297,279
-----------
TOTAL HUNGARY (COST: $792,888) 694,750
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<C> <S> <C>
INDIA (4.1%)
20,400 Mahanagar Telephone Nigam, Limited (GDR) $ 120,360
30,000 Reliance Industries, Limited (GDR) 395,250
126,483 Videsh Sanchar Nigam, Limited (ADR) 932,812
-----------
TOTAL INDIA (COST: $2,839,546) 1,448,422
-----------
ISRAEL (5.0%)
78,203 Bank Hapoalim, Limited 197,583
63,860 Bank Leumi Le-Israel 125,285*
39,190 Bezeq Israeli Telecommunications
Corporation, Limited 195,855*
2,430 Check Point Software Technologies,
Limited 384,851*
4,646 ECI Telecommunications, Limited 109,762
16,703 Elbit Systems, Limited 203,548
3,434 NICE-Systems, Limited (ADR) 160,539*
3,260 Partner Communications Company, Limited
(GDR) 19,560*
6,300 Teva Pharmaceutical Industries, Limited
(ADR) 372,488
-----------
TOTAL ISRAEL (COST: $1,618,376) 1,769,471
-----------
MEXICO (11.1%)
10,194 Cemex, S.A. de C.V. (ADR) 215,348*
7,203 Fomento Economico Mexicano, S.A. de
C.V., Series B (ADR) 275,065
193,290 Grupo Financiero Banamex, S.A. de C.V.,
Series O 300,417*
140,588 Grupo Modelo, S.A. de C.V., Series C 374,960
7,964 Grupo Televisa, S.A. de C.V. (GDR) 431,052*
51,238 Kimberly-Clark de Mexico, S.A. de C.V.,
Series A 131,029
29,611 Telefonos de Mexico, S.A. de C.V. (ADR) 1,597,143
267,198 Wal-mart de Mexico, S.A., Series C 609,237*
-----------
TOTAL MEXICO (COST: $3,757,543) 3,934,251
-----------
POLAND (1.4%)
3,637 Bank Rozwoju Eksportu, S.A. 82,143
1,370 Bank Slaski, S.A. 54,664
25,680 Electrim Spolka Akcyjna, S.A. 203,275*
18,199 Telekomunikacja Polska, S.A. 89,644
15,965 Telekomunikacja Polska, S.A. (144A)
(GDR) 80,224***
-----------
TOTAL POLAND (COST: $561,944) 509,950
-----------
RUSSIA (2.3%)
5,000 Mobile Telesystems (ADR) 138,125*
5,725 OAO Lukoil Holdings (ADR) 303,425
8,125 RAO Unified Energy (ADR) 102,578
8,825 Rostelecom (ADR) 77,219
14,650 Surgutneftegaz (ADR) 188,619
-----------
TOTAL RUSSIA (COST: $922,154) 809,966
-----------
SOUTH AFRICA (10.7%)
13,159 Anglo American Platinum Corporation,
Limited 513,459
13,274 Anglo American, PLC 721,613
6,347 Anglogold, Limited 180,496
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
TCW GALILEO EMERGING MARKETS EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<C> <S> <C>
SOUTH AFRICA (CONTINUED)
13,198 De Beers Centenary, AG $ 363,105
938 Edgars Consolidated Stores, Limited 3,493
41,976 Johnnies Industrial Corporation, Limited 477,486
32,847 Liberty Life Association of Africa,
Limited 250,687
31,756 Nedcor Investment Bank Holdings 11,551*
22,552 Nedcor, Limited 423,579
39,594 Remgro, Limited 242,216*
288,838 Sanlam, Limited (Foreign) 299,906*
32,622 South African Breweries, PLC 195,465
39,594 Venfin, Limited 109,717
-----------
TOTAL SOUTH AFRICA (COST: $3,813,006) 3,792,773
-----------
SOUTH KOREA (12.3%)
57,883 Kookmin Bank 660,649
6,715 Korea Telecom Corporation 395,000*
25,202 Pohang Iron & Steel Company, Limited 1,462,557
3,506 Samsung Electronics Company, Limited 438,635
6,500 SK Telecom Company, Limited 1,383,889
-----------
TOTAL SOUTH KOREA (COST: $6,223,244) 4,340,730
-----------
TAIWAN (9.9%)
266 Asustek Computer, Incorporated (144A)
(GDR) 1,456***
98,993 Asustek Computer, Incorporated (GDR) 541,987*
20,874 Formosa Growth Fund, Limited 338,785*
26,000 Taiwan Semiconductor Manufacturing
Company, Limited (ADR) 589,875*
674,061 Taiwan Semiconductor Manufacturing
Company, Limited (Local Shares),
(144A) 2,041,977**
-----------
TOTAL TAIWAN (COST: $4,380,416) 3,514,080
-----------
TURKEY (4.6%)
12,632,868 Akcansa Cimento, A.S. 170,287
6,925,929 Arcelik, A.S. 223,250
2,048,261 Migros Turk, T.A.S. 282,101
15,820 Turkcell Iletisim Hizmetleri, A.S. (ADR) 173,031*
13,323,149 Turkiye Is Bankasi, A.S., Series C 253,771
19,100 Vestel Elektronik Sanayi (GDR) 193,388*
38,485,906 Yapi Ve Kredi Bankasi, A.S. 332,694*
-----------
TOTAL TURKEY (COST: $1,637,280) 1,628,522
-----------
VENEZUELA (COST: $145,506) (0.3%)
4,800 Companhia Anonima Nacional Telefonos de
Venezuela (ADR) 91,200
-----------
TOTAL COMMON STOCK (COST: $36,051,437)
(88.3%) 31,264,037
-----------
PREFERRED STOCK
BRAZIL (6.8%)
42,098,924 Banco Bradesco, S.A. 260,224
3,537,959 Banco Itau, S.A. 275,216
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- -----------
<C> <S> <C>
BRAZIL (CONTINUED)
9,758 Companhia Energetica de Minas Gerais,
S.A. (CEMIG) (ADR) $ 146,370
10,357 Companhia Vale do Rio Doce 238,715
8,270 Embratel Participacoes, S.A. (ADR) 133,871
17,071 Petroleo Brasileiro, S.A. (PETROBRAS) 452,574
12,076 Tele Norte Leste Participacoes, S.A.
(TELEMAR) (ADR) 267,181
5,942 Telecomunicacoes Brasileiras, S.A. (ADR) 435,251*
7,195 Uniao de Bancos Brasileiros, S.A.
(UNIBANCO) (GDR) 181,674
28,558 Vale do Rio Doce --
-----------
TOTAL PREFERRED STOCK (COST: $2,414,861)
(6.8%) 2,391,076
-----------
TOTAL EQUITY SECURITIES (COST:
$38,466,298) (95.1%) 33,655,113
-----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS (COST: $2,028,852) (5.7%)
----------- ------------------------------------------------
<C> <S> <C>
$ 2,028,852 Investors Bank & Trust Depository Reserve,
5.82%, due 11/01/00 2,028,852
-----------
TOTAL INVESTMENTS (COST: $40,495,150) (100.8%) 35,683,965
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.8%) (277,808)
-----------
NET ASSETS (100.0%) $35,406,157
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** RESTRICTED SECURITY (NOTE 9).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
TCW GALILEO EMERGING MARKETS EQUITIES FUND
--------------------------------------------------------------------------------
INVESTMENTS BY INDUSTRY *
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------------------------------------------------- --------------
<S> <C>
Aerospace/Defense 0.6%
Banking & Financial Services 12.5
Beverages, Food & Tobacco 5.7
Building Materials 1.4
Chemicals 1.1
Commercial Services 2.3
Communications 9.7
Computer Services 3.8
Computer Software 1.1
Cosmetics & Personal Care 0.4
Electric Utilities 3.4
Electronics 9.2
Energy & Oil Services 5.8
Home Construction, Furnishings & Appliances 0.6
Industrial--Diversified 6.4
Insurance 1.6
Investment Companies 1.0
Media--Broadcasting & Publishing 1.2
Metals 4.4
Mining 2.3
Pharmaceuticals 1.1
Radio Telephone Communications 5.3
Retail 1.7
Telecommunications 0.3
Telegraph & Other Communications 1.9
Telephone Communications, exc. Radio 10.3
Short-Term Investments 5.7
----------
TOTAL 100.8%
==========
</TABLE>
* THESE CLASSIFICATIONS ARE NOT SUBJECT TO AUDIT.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
TCW GALILEO EMERGING MARKETS INCOME FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FIXED INCOME SECURITIES VALUE
--------------- ----------------------- ------------
<C> <S> <C>
ALGERIA (COST: $2,871,693) (3.1% OF NET
ASSETS)
$ 4,334,850 The People's Democratic Republic of
Algeria, U.B.A.F. as Agent,
Rescheduling Deed dated June 27, 1996,
Tranche 3, Variable Rate based on Six
Month LIBOR +0.8125%, due 2000-2010 $ 3,446,206
------------
ARGENTINA (4.9%)
1,275,000 Cablevision, S.A., 13.75%, due 05/01/09 1,020,000
5,000,000 Republic of Argentina, 11.75%, due
04/07/09 4,375,000
------------
TOTAL ARGENTINA (COST: $5,967,130) 5,395,000
------------
BRAZIL (15.0%)
3,005,000 Republic of Brazil, 12.75%, due 01/15/20 2,779,625
13,000,000 Republic of Brazil, 14.5%, due 10/15/09 13,884,000
------------
TOTAL BRAZIL (COST: $16,569,860) 16,663,625
------------
BULGARIA (4.5%)
5,215,000 Republic of Bulgaria Discount Bonds,
Series A, Variable Rate based on Six
Month LIBOR +0.8125%, due 07/28/24 3,917,769
1,560,000 Republic of Bulgaria Front Loaded
Interest Reduction Bonds, Series A,
2.75%, due 07/28/12 1,117,350
------------
TOTAL BULGARIA (COST: $5,026,287) 5,035,119
------------
CHINA (COST: $1,696,165) (0.7%)
2,200,000 APP China Group, Limited, 14%, due
03/15/10 814,000
------------
COLOMBIA (COST: $2,078,911) (1.8%)
2,035,000 Republic of Colombia, 11.218%, due
08/13/05 1,968,863
------------
CROATIA (COST: $1,175,636) (1.1%)
1,301,818 Croatia Government National, Series A,
Variable Rate based on Six Month LIBOR
+0.8125%, due 07/31/10 1,197,673
------------
INDIA (2.8%)
1,460,000 India Tata Electric Co., 8.5%, due
08/19/17 1,180,118
2,075,000 Reliance Industries, Limited, 10.375%,
due 06/24/16 1,961,912
------------
TOTAL INDIA (COST: $3,177,439) 3,142,030
------------
INDONESIA (COST: $1,480,150) (1.0%)
1,850,000 Asia Pulp & Paper Global Finance
Company, Variable Rate based on Six
Month LIBOR +4%, due 10/04/01 1,147,000
------------
MEXICO (13.4%)
8,800,000 United Mexican States Global Bond,
9.875%, due 02/01/10 9,152,000
5,025,000 United Mexico States Global Bond,
11.375%, due 09/15/16 5,690,813
------------
TOTAL MEXICO (COST: $14,651,847) 14,842,813
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
TCW GALILEO EMERGING MARKETS INCOME FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------- ------------
<C> <S> <C>
PANAMA (COST: $3,157,513) (2.9%)
$ 3,365,000 Republic of Panama, 9.375%, due 04/01/29 $ 3,233,765
------------
PHILIPPINES (3.2%)
1,030,000 Ce Casecnan Water & Energy, Series A,
11.45%, due 11/15/05 916,700*
1,155,000 Philippines Long Distance, 9.875%, due
08/01/05 1,018,918
1,895,000 Republic of Philippines, 9.875%, due
03/16/10 1,610,750
------------
TOTAL PHILIPPINES (COST: $3,855,636) 3,546,368
------------
POLAND (3.1%)
1,775,000 Netia Holdings B.V., 10.25%, due
11/01/07 1,340,125
PLN 11,593,000 Poland Government Bonds, 0%, due
12/21/01 2,051,031
------------
TOTAL POLAND (COST: $3,660,131) 3,391,156
------------
RUSSIA (12.8%)
$ 4,280,000 Russian Federation, 2.25%, due 03/31/30 1,615,700
820,000 Russian Federation, (144A), 12.75%, due
06/24/28, Par Put 06/24/08 691,875*
14,065,000 Russian Federation, (Reg. S), 12.75%,
due 06/24/28, Par Put 06/24/08 11,867,344*
------------
TOTAL RUSSIA (COST: $11,447,228) 14,174,919
------------
SOUTH AFRICA (3.4%)
2,625,000 Republic of South Africa, 9.125%, due
05/19/09 2,546,250
ZAR 9,713,532 Republic of South Africa, 13%, due
08/31/10 1,233,929
------------
TOTAL SOUTH AFRICA (COST: $4,006,042) 3,780,179
------------
SOUTH KOREA (4.7%)
$ 2,015,000 Hanvit Bank, 11.75%, due 03/01/10 1,934,400
100,000 Hanvit Bank, (144A), 11.75%, due
03/01/10 96,000*
2,150,000 Korea Chohung Bank, 11.5%, due 04/01/10 2,047,875
1,310,000 Korea Hyundai Semiconductor, 8.25%, due
05/15/04 1,144,023
------------
TOTAL SOUTH KOREA (COST: $5,364,018) 5,222,298
------------
TRINIDAD & TOBAGO (COST: $1,280,057)
(1.2%)
1,320,000 Republic of Trinidad & Tobago, (144A),
9.75%, due 07/01/20 1,333,200*
------------
TUNISIA (COST: $905,850) (0.9%)
1,080,000 Banque Cent de Tunisie, 8.25%, due
09/19/27 950,724
------------
TURKEY (8.8%)
7,020,000 Republic of Turkey, 11.75%, due 06/15/10 6,791,850
3,000,000 Republic of Turkey, 12.375%, due
06/15/09 3,015,000
------------
TOTAL TURKEY (COST: $10,395,568) 9,806,850
------------
UKRAINE (COST: $1,195,780) (1.1%)
1,860,000 Ukraine Government, 11%, due 03/15/07 1,278,750
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------- ------------
<C> <S> <C>
VENEZUELA (COST: $2,098,350) (2.1%)
$ 2,520,000 Republic of Venezuela, 13.625%, due
08/15/18 $ 2,293,200
------------
TOTAL FIXED INCOME SECURITIES
(COST: $102,061,291) (92.5%) 102,663,738
------------
<CAPTION>
NUMBER OF
WARRANTS WARRANTS
--------------- --------
<C> <S> <C>
INDONESIA (COST: $0) (0.0%)
2,200 Asia Pulp & Paper, Warrants --**
------------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
--------------- ----------------------
<C> <S> <C>
$ 235,919 Foreign Currency Call Accounts 206,728
3,019,567 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 3,019,567
------------
TOTAL SHORT-TERM INVESTMENTS
(COST: $3,255,486) (2.9%) 3,226,295
------------
TOTAL INVESTMENTS (COST: $105,316,777)
(95.4%) 105,890,033
EXCESS OF OTHER ASSETS OVER LIABILITIES
(4.6%) 5,071,217
------------
NET ASSETS (100.0%) $110,961,250
============
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
PLN - POLISH ZLOTY.
ZAR - SOUTH AFRICAN RAND.
* RESTRICTED SECURITY (NOTE 9).
** NON-INCOME PRODUCING.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
TCW GALILEO EMERGING MARKETS INCOME FUND
--------------------------------------------------------------------------------
INVESTMENTS BY INDUSTRY *
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------------------------------------------------- --------------
<S> <C>
Banking & Financial Services 6.9%
Chemicals 1.8
Computer Services 0.7
Electric Utilities 1.9
Electronics 1.0
Government 76.2
Media--Broadcasting & Publishing 0.9
Paper & Forest Products 1.0
Telecommunications 0.9
Telephone Communications, exc. Radio 1.2
Short-Term Investments 2.9
---------
TOTAL 95.4%
=========
</TABLE>
* THESE CLASSIFICATIONS ARE NOT SUBJECT TO AUDIT.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
TCW GALILEO EUROPEAN EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
---------- ------------ -----------
<C> <S> <C>
FINLAND (5.3% OF NET ASSETS)
64,221 Nokia OYJ $ 2,640,114
37,368 Sonera OYJ 822,428
-----------
TOTAL FINLAND (COST: $3,166,549) 3,462,542
-----------
FRANCE (19.5%)
30,350 Alcatel 1,850,040
81,837 Alstom 1,796,978
10,538 Axa, S.A. 1,393,722
9,700 Cap Gemini, S.A. 1,546,048
10,482 Credit Lyonnais, S.A. 358,220*
16,924 Lagardere Groupe 959,892
7,246 PSA Peugeot Citreon, S.A. 1,333,065
34,384 STMicroelectronics N.V. 1,733,012
12,317 Total Fina, S.A. 1,760,581
-----------
TOTAL FRANCE (COST: $11,795,378) 12,731,558
-----------
GERMANY (17.1%)
34,015 Bayerische Hypo-Und Vereinsbank AG 1,865,813
40,550 Bayerische Motoren Werke AG 1,340,753
9,800 Ergo Versicherungs Gruppe AG 1,354,276
21,415 Fresenius Medical Care AG 1,706,630
11,058 SAP AG 1,808,432
15,494 Siemans AG 1,970,372
27,100 Singulus Technologies AG 1,091,331*
-----------
TOTAL GERMANY (COST: $11,324,706) 11,137,607
-----------
GREAT BRITAIN (25.7%)
209,092 BP Amoco, PLC 1,775,162
352,000 British Airways, PLC (Ordinary Shares) 1,574,742
310,825 Centrica, PLC 1,069,992
171,000 Future Network, PLC 1,111,489*
76,166 HSBC Holdings, PLC 1,086,398
18,507 NDS Group, PLC (ADR) 1,388,025*
76,106 Prudential, PLC 1,024,743
83,000 Royal Bank Of Scotland Group 1,865,025
67,197 SmithKline Beecham, PLC 868,672
1,204,431 Vodafone Group, PLC 5,016,508
-----------
TOTAL GREAT BRITAIN (COST: $14,970,637) 16,780,756
-----------
IRELAND (COST: $1,089,106) (2.7%)
34,400 Elan Corporation, PLC (ADR) 1,786,650*
-----------
ISRAEL (COST: $863,786) (1.5%)
16,500 Card-Guard Scientific Survival, Limited 993,451*
-----------
ITALY (COST: $1,526,609) (2.6%)
404,642 Banca Intesa S.p.A 1,680,972
-----------
NETHERLANDS (11.6%)
60,844 ASM Lithography Holding, N.V. 1,661,506*
1,175 Fortis (NL), N.V. 35,862
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
TCW GALILEO EUROPEAN EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<C> <S> <C>
NETHERLANDS (CONTINUED)
60,281 Koninklijke (Royal) Philips Electronics,
N.V. $ 2,366,730
38,702 Koninklijke Numico, N.V. 1,807,917
132,316 Libertel, N.V. 1,721,925*
-----------
TOTAL NETHERLANDS (COST: $7,422,385) 7,593,940
-----------
PORTUGAL (COST: $1,363,446) (1.6%)
94,167 Telecel Comunicacoes Pessoais 1,031,465*
-----------
SPAIN (COST: $1,427,802) (3.0%)
100,910 Telefonica, S.A. 1,922,342*
-----------
SWEDEN (COST: $2,018,710) (2.4%)
117,980 Ericsson AB, Class B 1,566,627
-----------
SWITZERLAND (5.1%)
1,375 Serono, S.A. 1,236,651
4,272 Zurich Financial Services AG 2,067,212
-----------
TOTAL SWITZERLAND (COST: $3,343,671) 3,303,863
-----------
TOTAL COMMON STOCK (COST: $60,312,785)
(98.1%) 63,991,773
-----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
---------- ----------------------
<C> <S> <C>
$ 197,371 American Express Co., 6.54%, due
11/21/00 197,371**
197,371 American Express Co., 6.63%, due
01/18/01 197,371**
98,686 Bank of America, 6.64%, due 01/16/01 98,686**
98,686 Bank of Nova Scotia, 6.53%, due 11/27/00 98,686**
148,029 Bank of Nova Scotia, 6.67%, due 01/05/01 148,029**
98,686 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 98,686**
980,724 Fleet National Bank, 6.725%, due
04/30/01 980,724**
574,291 Foreign Currency Call Accounts 525,125
34,359 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 34,359
582,246 Merrimac Money Market Fund, 6.549%, due
11/01/00 582,246**
-----------
TOTAL SHORT-TERM INVESTMENTS (COST:
$3,010,449) (4.5%) 2,961,283
-----------
TOTAL INVESTMENTS (COST: $63,323,234)
(102.6%) 66,953,056
LIABILITIES IN EXCESS OF OTHER ASSETS
(-2.6%) (1,682,449)
-----------
NET ASSETS (100.0%) $65,270,607
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
[ICON]
--------------------------------------------------------------------------------
INVESTMENTS BY INDUSTRY * OCTOBER 31, 2000
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------------------------------------------------- --------------
<S> <C>
Airlines 2.4%
Automotive 4.1
Banking & Financial Services 10.5
Beverages, Food & Tobacco 2.8
Communications 6.9
Computer Services 2.4
Computer Software & Services 2.8
Electronics 10.5
Heavy Machinery 5.8
Industrial--Diversified 1.5
Insurance 9.0
Media--Broadcasting & Publishing 3.8
Medical Supplies 4.1
Oil & Gas 7.0
Pharmaceuticals 6.0
Radio Telephone Communications 11.9
Telegraph & Other Communications 2.4
Telephone Communications, exc. Radio 4.2
Short-Term Investments 4.5
----------
TOTAL 102.6%
==========
</TABLE>
* THESE CLASSIFICATIONS ARE NOT SUBJECT TO AUDIT.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
TCW GALILEO INTERNATIONAL EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
---------- ------------ -----------
<C> <S> <C>
AUSTRALIA (1.1% OF NET ASSETS)
13,000 AMP, Limited $ 117,172
150,000 Goodman Fielder, Limited 97,181
30,000 Telstra Corporation 97,897
45,000 Western Mining Corporation Holding,
Limited 172,011
-----------
TOTAL COMMON STOCK (COST: $633,209)
(1.1%) 484,261
-----------
<CAPTION>
TCW GALILEO FUNDS
-----------------
<C> <S> <C>
168,985 TCW Galileo Asia Pacific Equities Fund 1,378,9144
122,846 TCW Galileo Emerging Markets Equities
Fund 934,857
2,281,244 TCW Galileo European Equities Fund 31,800,535
738,557 TCW Galileo Japanese Equities Fund 9,881,890
43,715 TCW Galileo Latin America Equities Fund 485,677*
281,530 TCW Galileo Money Market Fund 281,530
-----------
TOTAL TCW GALILEO FUNDS (COST:
$32,823,476) (95.4%) 44,763,403
-----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
---------- ----------------------
<C> <S> <C>
$ 5,761 Foreign Currency Call Accounts 5,515
1,681,865 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 1,681,865
-----------
TOTAL SHORT-TERM INVESTMENTS (COST:
$1,687,626) (3.6%) 1,687,380
-----------
TOTAL INVESTMENTS (COST: $35,144,311)
(100.1%) 46,935,044
LIABILITIES IN EXCESS OF OTHER ASSETS
(-0.1%) (25,816)
-----------
NET ASSETS (100.0%) $46,909,228
===========
</TABLE>
NOTE TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
TCW GALILEO JAPANESE EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
--------------- ------------ -----------
<C> <S> <C>
JAPAN (91.0% OF NET ASSETS)
8,350 Aiful Corporation $ 657,661
40,000 Asahi Breweries, Limited 394,908
127,000 Asahi Organic Chemicals Industry
Company, Limited 786,263
29,000 Bodysonic Company, Limited 97,738*
31,000 Canon, Incorporated 1,229,325
156,000 Cosmo Securities Company, Limited 240,022*
55 DDI Corporation 257,899
95 East Japan Railway Company 545,517
14,000 Fuji Machine Manufacturing Company,
Limited 382,086
18,000 Fuji Photo Film Company 667,644
45,000 Fujitsu, Limited 801,172
79,000 Hitachi, Limited 846,506
26,000 Honda Motor Company, Limited 897,701
20,000 Kansai Electric Power Company 327,319
19,000 Kao Corporation 569,008
704,000 Kawasaki Steel Corporation 689,880*
17,000 Kissel Pharmaceutical Company 311,228
7,900 Kyocera Corporation 1,027,383
1 Kyoto Kimino Yuzen Company, Limited 2,931
20,000 Matsushita Electric Industrial Company,
Limited 580,639
49,000 Megane Top Company, Limited 1,153,311
57,000 Minebea Company, Limited 569,008
130 Mizuho Holdings, Incorporated 998,901*
10,100 Murata Manufacturing Company, Limited 1,208,041
32,000 NEC Corporation 609,580
77,000 Nikko Securities Company 664,292
2,600 Nintendo Corporation, Limited 429,801
223 Nippon Telegraph & Telephone Corporation 2,028,015
54,000 Nippon Thompson Company, Limited 531,642
23,300 Nissin Company, Limited 699,918
38 NTT Mobile Communication Network,
Incorporated 936,166
2,000 Orix Corporation 209,726
3,600 Rohm Company 907,006
92,000 Sanwa Bank, Limited 817,291
42,000 Sharp Corporation 534,664
27,900 Shimano, Incorporated 560,862
20,000 Shin-Etsu Chemical Company, Limited 820,588
3,600 Softbank Corporation 215,954
10,700 Sony Corporation 854,511
32,000 Sumitomo Bakelite Company, Limited 357,835
83,000 Sumitomo Corporation 729,737
14,000 Takeda Chemical Industries, Limited 921,879
85,000 The Bank of Tokyo-Mitsubishi, Limited 1,019,004
34,643 The Chrysalis Fund 1,769,105
33,000 Tokyo Electric Power Company,
Incorporated 800,898
1,700 Tokyo Electron, Limited 132,961
34,000 Tokyo Ohka Kogyo Company, Limited 571,389
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
TCW GALILEO JAPANESE EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------------- -----------
<C> <S> <C>
JAPAN (CONTINUED)
146,000 Toppan Printing Company, Limited $ 1,288,983
123,000 Toshiba Corporation 878,652
39,000 Toyota Motor Corporation 1,557,285
21,900 Yamaichi Electronics Company, Limited 541,533
18,000 Yamanouchi Pharmaceutical Company,
Limited 814,360
-----------
TOTAL COMMON STOCK (COST: $37,854,336)
(91.0%) 37,445,728
-----------
<CAPTION>
PRINCIPAL
AMOUNT FIXED INCOME SECURITIES
--------------- -----------------------
<C> <S> <C>
JAPAN (COST: $620,758) (1.4%)
JPY 64,000,000 Shiga Bank, Limited, 0.4%, due 09/30/03 591,996
-----------
TOTAL FIXED INCOME SECURITIES
(COST: $620,758) (1.4%) 591,996
-----------
<CAPTION>
SHORT-TERM INVESTMENTS
----------------------
<C> <S> <C>
$ 89,798 American Express Co., 6.54%, due
11/21/00 89,798**
89,798 American Express Co., 6.63%, due
01/18/01 89,798**
44,899 Bank of America, 6.64%, due 01/16/01 44,899**
44,899 Bank of Nova Scotia, 6.53%, due 11/27/00 44,899**
67,349 Bank of Nova Scotia, 6.67%, due 01/05/01 67,349**
44,899 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 44,899**
446,203 Fleet National Bank, 6.725%, due
04/30/01 446,203**
2,890,325 Foreign Currency Call Accounts 2,875,771
264,905 Merrimac Money Market Fund, 6.549%, due
11/01/00 264,905**
-----------
TOTAL SHORT-TERM INVESTMENTS (COST:
$3,983,075) (9.6%) 3,968,521
-----------
TOTAL INVESTMENTS (COST: $42,458,169)
(102.0%) 42,006,245
LIABILITIES IN EXCESS OF OTHER ASSETS
(-2.0%) (833,167)
-----------
NET ASSETS (100.0%) $41,173,078
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
JPY - JAPANESE YEN.
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
[ICON]
--------------------------------------------------------------------------------
INVESTMENTS BY INDUSTRY * OCTOBER 31, 2000
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------------------------------------------------- --------------
<S> <C>
Automotive 6.0%
Banking & Financial Services 14.3
Beverages, Food & Tobacco 1.0
Chemicals 4.8
Commercial Services 4.9
Communications 2.1
Computer Services 2.0
Electric Utilities 2.7
Electrical Equipment 11.0
Electronics 13.1
Entertainment & Leisure 4.0
Heavy Machinery 2.2
Household Products 1.4
Investment Companies 4.3
Metals 1.7
Pharmaceuticals 5.0
Radio Telephone Communications 2.3
Retail 2.8
Telephone Communications, exc. Radio 5.5
Transportation 1.3
Short-Term Investments 9.6
----------
TOTAL 102.0%
==========
</TABLE>
* THESE CLASSIFICATIONS ARE NOT SUBJECT TO AUDIT.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
TCW GALILEO LATIN AMERICA EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES EQUITY SECURITIES VALUE
----------- ----------------- ----------
<C> <S> <C>
COMMON STOCK
ARGENTINA (5.4% OF NET ASSETS)
870 Banco Frances, S.A. (ADR) $ 19,031
7,060 CEI Citicorp Holdings, S.A. 27,110*
1,464 Grupo Financiero Galicia (ADR) 21,319*
2,663 Perez Companc, S.A. (ADR) 38,281
14,850 Siderca, S.A. 32,231
1,695 Telecom Argentina STET - France Telecom,
S.A., Series B (ADR) 29,133
----------
TOTAL ARGENTINA (COST: $184,450) 167,105
----------
BRAZIL (12.8%)
922 Brasil Telecom Participacoes, S.A. (ADR) 49,961
1,600 Companhia Brasileira de Distribuicao
Grupo Pao de Acucar (ADR) 57,000
4,115 Companhia De Bebidas PR (ADR) 92,845*
1,178,000 Companhia Siderurgica Nacional 32,699
2,225 Companhia Vale do Rio Doce (ADR) 52,009
3,640 Petroleo Brasileiro, S.A. (ADR) 105,787*
1,080,000 Tele Centro Sul Participacoes, S.A. 8,486
----------
TOTAL BRAZIL (COST: $390,787) 398,787
----------
CHILE (3.5%)
835 Compania Cervecerias Unidas, S.A. (ADR) 16,126
2,843 Compania de Telecomunicaciones de Chile,
S.A., Series A (ADR) 43,356*
520 Distribucion y Servicio D&S, S.A. (ADR) 9,295
1,560 Embotelladora Andina, S.A., Series A
(ADR) 18,720
550 Vina Concha y Toro, S.A. (ADR) 21,106
----------
TOTAL CHILE (COST: $137,868) 108,603
----------
LATIN AMERICA REGIONAL (0.4%)
430 StarMedia Network, Inc. 2,634*
368 Terra Networks, S.A. (ADR) 8,868*
----------
TOTAL LATIN AMERICA REGIONAL (COST:
$19,318) 11,502
----------
MEXICO (45.7%)
3,484 Cemex, S.A. de C.V. (ADR) 73,599*
2,235 Fomento Economico Mexicano, S.A. de
C.V., Series B (ADR) 85,349
9,124 Grupo Carso, S.A. de C.V., Series A1 28,342*
68,460 Grupo Financiero Banamex, S.A. de C.V.,
Series O 106,403*
19,882 Grupo Industrial Bimbo, S.A. de C.V.,
Series A 27,616
39,295 Grupo Modelo, S.A. de C.V., Series C 104,803
8,950 Grupo Nuevo Mexico, S.A. 29,768*
3,080 Grupo Televisa, S.A. de C.V. (GDR) 166,705*
15,525 Kimberly-Clark de Mexico, S.A. de C.V.,
Series A 39,702
10,905 Organizacion Soriana, S.A., Series B 34,217*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ----------
<C> <S> <C>
MEXICO (CONTINUED)
9,367 Telefonos de Mexico, S.A. de C.V. (ADR) $ 505,233
98,097 Wal-mart de Mexico, S.A., Series C 223,671*
----------
TOTAL MEXICO (COST: $1,370,457) 1,425,408
----------
VENEZUELA (COST: $36,265) (0.7%)
1,095 Companhia Anonima Nacional Telefonos de
Venezuela (ADR) 20,805
----------
TOTAL COMMON STOCK (COST: $2,139,145)
(68.5%) 2,132,210
----------
<CAPTION>
<C> <S> <C>
PREFERRED STOCK
ARGENTINA (COST: $15,041) (0.5%)
1,820 Quilmes Industrial, S.A. (ADR) 15,015
----------
BRAZIL (28.9%)
1,310 Aracrus Celulose, S.A. (ADR) 19,650
12,984,795 Banco Bradesco, S.A. 80,262
1,711,000 Banco Itau, S.A. 133,098
2,477 Companhia Energetica de Minas Gerais,
S.A. (CEMIG) (ADR) 37,155
3,335 Companhia Paranaenae de Energia (COPEL)
(ADR) 30,223
2,428 Companhia Vale do Rio Doce 55,962
1,657 Embratel Participacoes, S.A. (ADR) 26,823
24,379 Itausa - Investimentos Itau, S.A. 20,561
6,383 Petroleo Brasileiro, S.A. (PETROBRAS) 169,221
4,407 Tele Norte Leste Participacoes, S.A.
(TELEMAR) (ADR) 97,505
1,660 Telecomunicacoes Brasileiras, S.A. (ADR) 121,595*
1,020 Telesp Celular Participacoes, S.A. (ADR) 32,258
2,140 Uniao de Bancos Brasileiros, S.A.
(UNIBANCO) (GDR) 54,035
4,500 Usinas Siderurgicas de Minas Gerais,
S.A. (USIMINAS) 23,101
72,842 Vale do Rio Doce --
----------
TOTAL BRAZIL (COST: $884,978) 901,449
----------
TOTAL PREFERRED STOCK (COST: $900,019)
(29.4%) 916,464
----------
TOTAL EQUITY SECURITIES (COST:
$3,039,164) (97.9%) 3,048,674
----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS (COST: $103,631) (3.3%)
----------- ----------------------------------------------
<C> <S> <C>
$ 103,631 Investors Bank & Trust Depository Reserve,
5.82%, due 11/01/00 103,631
----------
TOTAL INVESTMENTS (COST: $3,142,795) (101.2%) 3,152,305
LIABILITIES IN EXCESS OF OTHER ASSETS (-1.2%) (37,130)
----------
NET ASSETS (100.0%) $3,115,175
==========
</TABLE>
NOTE TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
TCW GALILEO LATIN AMERICA EQUITIES FUND
--------------------------------------------------------------------------------
INVESTMENTS BY INDUSTRY *
<TABLE>
<CAPTION>
PERCENTAGE OF
INDUSTRY NET ASSETS
-------------------------------------------------- --------------
<S> <C>
Banking & Financial Services 14.5%
Beverages, Food & Tobacco 14.1
Building Materials 2.4
Computer Services 0.4
Cosmetics & Personal Care 1.3
Electric Utilities 2.2
Energy & Oil Services 8.8
Industrial--Diversified 1.6
Investment Companies 0.9
Media--Broadcasting & Publishing 5.4
Metals 2.8
Mining 4.4
Paper & Forest Products 0.6
Radio Telephone Communications 1.0
Retail 8.6
Telecommunications 0.9
Telegraph & Other Communications 5.6
Telephone Communications, exc. Radio 22.4
Short-Term Investments 3.3
----------
TOTAL 101.2%
==========
</TABLE>
* THESE CLASSIFICATIONS ARE NOT SUBJECT TO AUDIT.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
TCW GALILEO FUNDS, INC.
[ICON]
--------------------------------------------------------------------------------
INTERNATIONAL
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
TCW GALILEO EMERGING EMERGING TCW GALILEO
ASIA PACIFIC MARKETS MARKETS EUROPEAN
EQUITIES FUND EQUITIES FUND INCOME FUND EQUITIES FUND
------------- ------------- ------------ -------------
DOLLAR AMOUNTS IN THOUSANDS
(EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
Investments, at Value (1) $ 12,962 $ 35,684 $ 105,890 $ 66,953
Receivables for Securities
Sold 148 149 2,931 761
Interest and Dividends
Receivable 13 57 2,927 28
Receivable for Forward
Foreign Currency Contracts
(Note 10) -- -- 305 --
Foreign Tax Reclaim
Receivable -- -- -- 37
Deferred Organization Costs -- -- -- 3
---------- ---------- ----------- ----------
Total Assets 13,123 35,890 112,053 67,782
---------- ---------- ----------- ----------
LIABILITIES
Distribution Payable -- -- 954 --
Payables for Securities
Purchased 211 384 -- --
Payable Upon Return of
Securities Loaned
(Note 3) -- -- -- 2,402
Accrued Management Fees 7 31 71 39
Other Accrued Expenses 47 69 67 70
---------- ---------- ----------- ----------
Total Liabilities 265 484 1,092 2,511
---------- ---------- ----------- ----------
NET ASSETS $ 12,858 $ 35,406 $ 110,961 $ 65,271
========== ========== =========== ==========
NET ASSETS CONSIST OF:
Paid-in Capital $ 10,625 $ 44,527 $ 109,291 $ 39,255
Undistributed Net Realized
Gain (Loss) on Investments
and Foreign Currency 2,152 (4,755) 570 22,218
Unrealized Appreciation
(Depreciation) on
Investments and Foreign
Currency 430 (4,811) 878 3,630
Undistributed Net Investment
Income (Loss) (349) 445 222 168
---------- ---------- ----------- ----------
NET ASSETS $ 12,858 $ 35,406 $ 110,961 $ 65,271
========== ========== =========== ==========
NET ASSETS ATTRIBUTABLE TO:
Institutional Class Shares $ 12,858 $ 35,406 $ 110,961 $ 65,054
========== ========== =========== ==========
Advisory Class Shares $ -- $ -- $ -- $ 217
========== ========== =========== ==========
CAPITAL SHARES OUTSTANDING:
Institutional Class 1,576,025 4,651,147 13,621,927 4,667,490
========== ========== =========== ==========
Advisory Class -- -- -- 15,575
========== ========== =========== ==========
NET ASSET VALUE PER SHARE:
Institutional Class $ 8.16 $ 7.61 $ 8.15 $ 13.94
========== ========== =========== ==========
Advisory Class $ -- $ -- $ -- $ 13.89
========== ========== =========== ==========
</TABLE>
(1) THE IDENTIFIED COST FOR THE TCW GALILEO ASIA PACIFIC EQUITIES FUND, THE TCW
GALILEO EMERGING MARKETS EQUITIES FUND, THE TCW GALILEO EMERGING MARKETS
INCOME FUND AND THE TCW GALILEO EUROPEAN EQUITIES FUND AT OCTOBER 31, 2000
WAS $12,532, $40,495, $105,317 AND $63,323, RESPECTIVELY.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
INTERNATIONAL JAPANESE LATIN AMERICA
EQUITIES FUND EQUITIES FUND EQUITIES FUND
------------- ------------- -------------
DOLLAR AMOUNTS IN THOUSANDS
(EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
ASSETS
Investments, at Value (1) $ 46,935 $ 42,006 $ 3,152
Receivables for Securities Sold -- 1,059 4
Receivables for Fund Shares Sold 3 500 --
Interest and Dividends Receivable 10 99 10
Foreign Tax Reclaim Receivable -- 6 --
Deferred Organization Costs 4 2 --
---------- ---------- --------
Total Assets 46,952 43,672 3,166
---------- ---------- --------
LIABILITIES
Payables for Securities Purchased -- 1,325 13
Payable Upon Return of Securities
Loaned (Note 3) -- 1,093 --
Accrued Management Fees -- 27 3
Other Accrued Expenses 43 54 35
---------- ---------- --------
Total Liabilities 43 2,499 51
---------- ---------- --------
NET ASSETS $ 46,909 $ 41,173 $ 3,115
========== ========== ========
NET ASSETS CONSIST OF:
Paid-in Capital $ 12,276 $ 28,516 $ 13,833
Undistributed Net Realized Gain
(Loss) on Investments and
Foreign Currency 13,850 13,847 (11,435)
Unrealized Appreciation
(Depreciation) on Investments
and Foreign Currency 11,791 (452) 9
Undistributed Net Investment
Income (Loss) 8,992 (738) 708
---------- ---------- --------
NET ASSETS $ 46,909 $ 41,173 $ 3,115
========== ========== ========
NET ASSETS ATTRIBUTABLE TO:
Institutional Class Shares $ 46,909 $ 41,173 $ 3,115
========== ========== ========
CAPITAL SHARES OUTSTANDING:
Institutional Class 3,291,067 3,075,961 280,322
========== ========== ========
NET ASSET VALUE PER SHARE:
Institutional Class $ 14.25 $ 13.39 $ 11.11
========== ========== ========
</TABLE>
(1) THE IDENTIFIED COST FOR THE TCW GALILEO INTERNATIONAL EQUITIES FUND, THE
TCW GALILEO JAPANESE EQUITIES FUND AND THE TCW GALILEO LATIN AMERICA
EQUITIES FUND AT OCTOBER 31, 2000 WAS $35,144, $42,458 AND $3,143,
RESPECTIVELY.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
[ICON]
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
TCW GALILEO EMERGING EMERGING TCW GALILEO
ASIA PACIFIC MARKETS MARKETS EUROPEAN
EQUITIES FUND EQUITIES FUND INCOME FUND EQUITIES FUND
------------- ------------- ----------- -------------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends (1) $ 182 $ 740 $ -- $ 597
Interest (1) 53 141 11,706 127
------- ------- ------- -------
Total 235 881 11,706 724
------- ------- ------- -------
EXPENSES:
Management Fees 190 570 782 528
Accounting Service Fees 34 35 35 42
Administration Fees 23 23 27 27
Transfer Agent Fees:
Institutional Class 39 38 43 49
Advisory Class -- -- -- 21
Custodian Fees 26 85 52 50
Professional Fees 25 30 32 33
Directors' Fees & Expenses 11 11 11 11
Registration Fees:
Institutional Class 2 4 17 20
Advisory Class -- -- -- 11
Distributions Fees:
Advisory Class (Note 6) -- -- -- 1
Amortization of Deferred
Organization Costs -- -- -- 1
Other 18 40 35 27
------- ------- ------- -------
Total Expenses 368 836 1,034 821
Less Expenses Borne by
Investment Advisor 26 -- -- 31(2)
------- ------- ------- -------
Net Expenses 342 836 1,034 790
------- ------- ------- -------
Net Investment Income (Loss) (107) 45 10,672 (66)
------- ------- ------- -------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
TRANSACTIONS
Net Realized Gain (Loss) on:
Investments 4,866 7,096 5,173 21,357
Foreign Currency (11) (120) (18) (145)
Change in Unrealized
Appreciation
(Depreciation) on:
Investments (3,650) (8,751) (2,487) (9,432)
Foreign Currency -- 6 266 (3)
------- ------- ------- -------
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions 1,205 (1,769) 2,934 11,777
------- ------- ------- -------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 1,098 $(1,724) $13,606 $11,711
======= ======= ======= =======
</TABLE>
(1) NET OF FOREIGN TAXES WITHHELD WAS $17, $55, $25 AND $72 FOR THE TCW GALILEO
ASIA PACIFIC EQUITIES FUND, THE TCW GALILEO EMERGING MARKETS EQUITIES FUND,
THE TCW GALILEO EMERGING MARKETS INCOME FUND AND THE TCW GALILEO EUROPEAN
EQUITIES FUND, RESPECTIVELY.
(2) RELATES TO ADVISORY CLASS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
STATEMENTS OF OPERATIONS YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
INTERNATIONAL JAPANESE LATIN AMERICA
EQUITIES FUND EQUITIES FUND EQUITIES FUND
------------- ------------- -------------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends (1) $ 7,315 $ 223 $ 49
Interest 67 58 8
------- -------- ------
Total 7,382 281 57
------- -------- ------
EXPENSES:
Management Fees -- 392 40
Accounting Service Fees 17 35 35
Administration Fees 24 23 24
Transfer Agent Fees:
Institutional Class 39 34 35
Custodian Fees 1 53 22
Professional Fees 30 28 26
Directors' Fees & Expenses 11 11 11
Registration Fees:
Institutional Class 1 2 2
Amortization of Deferred
Organization Costs 1 1 --
Other 24 27 22
------- -------- ------
Total Expenses 148 606 217
Less Expenses Borne by Investment
Advisor -- -- 146
------- -------- ------
Net Expenses 148 606 71
------- -------- ------
Net Investment Income (Loss) 7,234 (325) (14)
------- -------- ------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net Realized Gain (Loss) on:
Investments 15,995 13,164 949
Foreign Currency (2) (71) 1
Change in Unrealized Appreciation
(Depreciation) on:
Investments (9,871) (10,057) 272
Foreign Currency -- (21) 16
------- -------- ------
Net Realized and Unrealized Gain
on Investments and Foreign
Currency Transactions 6,122 3,015 1,238
------- -------- ------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $13,356 $ 2,690 $1,224
======= ======== ======
</TABLE>
(1) NET OF FOREIGN TAXES WITHHELD WAS $1, $40 AND $8 FOR THE TCW GALILEO
INTERNATIONAL EQUITIES FUND, THE TCW GALILEO JAPANESE EQUITIES FUND AND THE
TCW GALILEO LATIN AMERICA EQUITIES FUND, RESPECTIVELY.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
[ICON]
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO
TCW GALILEO ASIA EMERGING
PACIFIC EQUITIES MARKETS
FUND EQUITIES FUND
----------------- ----------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
----------------- ----------------
2000 1999 2000 1999
-------- ------- ------- -------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ (107) $ (49) $ 45 $ (51)
Net Realized Gain on
Investments and Foreign
Currency Transactions 4,855 2,712 6,976 1,220
Change in Unrealized
Appreciation
(Depreciation) on
Investments and Foreign
Currency Transactions (3,650) 3,653 (8,745) 5,882
-------- ------- ------- -------
Increase (Decrease) in Net
Assets Resulting from
Operations 1,098 6,316 (1,724) 7,051
-------- ------- ------- -------
NET CAPITAL SHARE TRANSACTIONS
(NOTE 8)
Institutional Class (10,310) 7,272 10,539 777
-------- ------- ------- -------
Increase (Decrease) in Net
Assets (9,212) 13,588 8,815 7,828
NET ASSETS
Beginning of Year 22,070 8,482 26,591 18,763
-------- ------- ------- -------
End of Year $ 12,858 $22,070 $35,406 $26,591
======== ======= ======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
EMERGING MARKETS EUROPEAN
INCOME FUND EQUITIES FUND
----------------- -----------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
----------------- -----------------
2000 1999 2000 1999
-------- ------- -------- -------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ 10,672 $ 7,029 $ (66) $ 460
Net Realized Gain on
Investments and Foreign
Currency Transactions 5,155 2,047 21,212 4,966
Change in Unrealized
Appreciation
(Depreciation) on
Investments and Foreign
Currency Transactions (2,221) 6,990 (9,435) 5,763
-------- ------- -------- -------
Increase in Net Assets
Resulting from Operations 13,606 16,066 11,711 11,189
-------- ------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net
Investment Income:
Institutional Class (10,533) (6,940) (365) (145)
Distributions from Net
Realized Gain:
Institutional Class -- -- (4,010) (1,652)
Advisory Class -- -- (6) --
-------- ------- -------- -------
Total Distributions to
Shareholders (10,533) (6,940) (4,381) (1,797)
-------- ------- -------- -------
NET CAPITAL SHARE TRANSACTIONS
(NOTE 8)
Institutional Class 26,775 41,897 (37,800) 22,111
Advisory Class -- -- 103 141
-------- ------- -------- -------
Increase (Decrease) in Net
Assets Resulting from Net
Capital Share Transactions 26,775 41,897 (37,697) 22,252
-------- ------- -------- -------
Increase (Decrease) in Net
Assets 29,848 51,023 (30,367) 31,644
NET ASSETS
Beginning of Year 81,113 30,090 95,638 63,994
-------- ------- -------- -------
End of Year $110,961 $81,113 $ 65,271 $95,638
======== ======= ======== =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
[ICON]
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
INTERNATIONAL JAPANESE
EQUITIES FUND EQUITIES FUND
------------------ -----------------
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
------------------ -----------------
2000 1999 2000 1999
-------- -------- -------- -------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ 7,234 $ 1,558 $ (325) $ (86)
Net Realized Gain on
Investments and Foreign
Currency Transactions 15,993 3,141 13,093 16,487
Change in Unrealized
Appreciation
(Depreciation) on
Investments and Foreign
Currency Transactions (9,871) 17,357 (10,078) 10,743
-------- -------- -------- -------
Increase in Net Assets
Resulting from Operations 13,356 22,056 2,690 27,144
-------- -------- -------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net
Investment Income:
Institutional Class -- (146) (195) (6)
Distributions from Net
Realized Gain:
Institutional Class (4,533) -- (10,225) --
-------- -------- -------- -------
Total Distributions to
Shareholders (4,533) (146) (10,420) (6)
-------- -------- -------- -------
NET CAPITAL SHARE TRANSACTIONS
(NOTE 8)
Institutional Class (74,250) 15,573 (28,072) 21,189
-------- -------- -------- -------
Increase (Decrease) in Net
Assets (65,427) 37,483 (35,802) 48,327
NET ASSETS
Beginning of Year 112,336 74,853 76,975 28,648
-------- -------- -------- -------
End of Year $ 46,909 $112,336 $ 41,173 $76,975
======== ======== ======== =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO
LATIN AMERICA
EQUITIES FUND
------------------
YEAR ENDED
OCTOBER 31,
------------------
2000 1999
-------- --------
DOLLAR AMOUNTS IN
THOUSANDS
<S> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ (14) $ 74
Net Realized Gain (Loss) on
Investments and Foreign Currency
Transactions 950 (1,899)
Change in Unrealized Appreciation on
Investments and Foreign Currency
Transactions 288 484
------- -------
Increase (Decrease) in Net Assets
Resulting from Operations 1,224 (1,341)
------- -------
NET CAPITAL SHARE TRANSACTIONS (NOTE 8)
Institutional Class (6,048) (2,516)
------- -------
(Decrease) in Net Assets (4,824) (3,857)
NET ASSETS
Beginning of Year 7,939 11,796
------- -------
End of Year $ 3,115 $ 7,939
======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
[ICON]
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000
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, (the "1940 Act"), as amended, that currently offers a selection of 21
no-load mutual funds known as the TCW Galileo Funds (the "Funds"). TCW
Investment Management Company (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. Investors Bank & Trust Company serves as the
administrator of the Funds.
The Funds' financial statements are separated into three reports: 1) U.S.
Equities Funds, 2) U.S. Fixed Income Funds, and 3) International Funds. However,
all Funds are listed below along with their investment objectives, and are
currently offered by the Company.
U.S. EQUITIES
<TABLE>
<CAPTION>
TCW GALILEO FUND INVESTMENT OBJECTIVE
---------------- --------------------------------------------------
<S> <C>
CONVERTIBLE SECURITIES FUND
TCW Galileo Convertible Securities Fund Seeks high total return from current income and
capital appreciation through investment principal-
ly in convertible securities.
NON-DIVERSIFIED U.S. EQUITY FUNDS
TCW Galileo Aggressive Growth Equities Fund Seeks long-term capital appreciation by investing
primarily in publicly traded equity securities of
medium capitalization companies.
TCW Galileo Earnings Momentum Fund Seeks capital appreciation by investing primarily
in publicly traded equity securities of companies
experiencing or expected to experience accelerat-
ing earnings growth.
TCW Galileo Large Cap Growth Fund Seeks long-term capital appreciation by investing
primarily in publicly traded equity securities of
large capitalization U.S. companies with above av-
erage earnings prospects.
TCW Galileo Large Cap Value Fund Seeks long-term capital appreciation by investing
primarily in publicly traded equity securities of
large capitalization companies.
TCW Galileo Select Equities Fund Emphasizes capital appreciation and preservation
with focus on long-term results.
TCW Galileo Small Cap Growth Fund Seeks long-term capital appreciation by investing
primarily in publicly traded equity securities of
smaller capitalization growth companies.
</TABLE>
45
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- ORGANIZATION (CONTINUED)
<TABLE>
<CAPTION>
TCW GALILEO FUND INVESTMENT OBJECTIVE
---------------- --------------------------------------------------
<S> <C>
NON-DIVERSIFIED U.S. EQUITY FUNDS
TCW Galileo Small Cap Value Fund Seeks long-term capital appreciation by investing
primarily in publicly traded equity securities of
smaller capitalization value companies.
TCW Galileo Value Opportunities Fund Seeks capital appreciation by investing at least
65% of its total assets, under normal circum-
stances, in publicly traded equity securities
issued by small and medium companies with market
capitalization at the time of purchase between
$500 million and $5 billion.
</TABLE>
U.S. FIXED INCOME
<TABLE>
<CAPTION>
TCW GALILEO FUND INVESTMENT OBJECTIVE
---------------- --------------------
<S> <C>
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 by invest-
ing principally in core fixed income securities
emphasizing high quality and liquid investments.
TCW Galileo High Yield Bond Fund Seeks high current income by investing principally
in high yield fixed income securities.
TCW Galileo Mortgage-Backed Securities Fund Seeks income by investing primarily in short-term
mortgage-backed securities.
TCW Galileo Total Return Mortgage-Backed Seeks income by investing primarily in long-term
Securities Fund mortgage-backed securities.
</TABLE>
INTERNATIONAL
<TABLE>
<CAPTION>
TCW GALILEO FUND INVESTMENT OBJECTIVE
---------------- --------------------
<S> <C>
NON-DIVERSIFIED INTERNATIONAL EQUITY FUNDS
TCW Galileo Asia Pacific Equities Fund Seeks long-term capital appreciation by investing
primarily in equity securities of companies in the
Asia Pacific region.
TCW Galileo Emerging Markets Equities Fund Seeks long-term capital appreciation by investing
in equity securities of companies in emerging mar-
ket 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 Fund Seeks long-term capital appreciation by investing
in a mix of underlying TCW Galileo Funds.
</TABLE>
46
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
INTERNATIONAL (CONTINUED)
<TABLE>
<CAPTION>
TCW GALILEO FUND INVESTMENT OBJECTIVE
---------------- --------------------
<S> <C>
NON-DIVERSIFIED INTERNATIONAL EQUITY FUNDS
TCW Galileo Japanese Equities Fund Seeks long-term capital appreciation by investing
primarily in Japanese equity securities.
TCW Galileo Latin America Equities Fund Seeks long-term capital appreciation by investing
primarily in Latin American equity securities.
NON-DIVERSIFIED FIXED INCOME FUND
TCW Galileo Emerging Markets Income Fund Seeks high total return from capital appreciation
and current income by investing at least 65% of
its total assets in debt securities issued or
guaranteed by companies, financial institutions,
and government entities in emerging market
countries.
</TABLE>
The TCW Galileo Small Cap Value Fund commenced operations on June 14, 2000 as a
new TCW Galileo Fund. Currently, it is not being offered to the general public.
Nine funds (TCW Galileo Aggressive Growth Equities Fund, TCW Galileo Large Cap
Growth Fund, TCW Galileo Large Cap Value Fund, TCW Galileo Select Equities Fund,
TCW Galileo Small Cap Growth Fund, TCW Galileo Core Fixed Income Fund, TCW
Galileo High Yield Bond Fund, TCW Galileo Total Return Mortgage-Backed
Securities Fund and TCW Galileo European Equities Fund) offer 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, liquidation, and other
rights. The Institutional Class shares are offered at the current net asset
value. The Advisory Class shares are also offered at the current net asset
value, but are subject to fees imposed under a distribution plan adopted
pursuant to Rule 12b-1 under the 1940 Act.
Effective November 1, 2000, the TCW Galileo Value Opportunities Fund began
offering Advisory Class shares. Also, the TCW Galileo Technology Fund commenced
operations on November 1, 2000 offering Advisory Class shares.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies which are in
conformity with accounting principles generally accepted in the United States of
America and which are consistently followed by the Funds in the preparation of
their financial statements.
PRINCIPLES OF ACCOUNTING: The Funds use the accrual method of accounting for
financial reporting purposes.
SECURITY VALUATIONS: Equity fund securities listed or traded on the New York,
American or other stock exchanges are valued at the latest sale price on that
exchange (if there were no sales that day, the security is valued at the latest
bid price). All other securities for which over-the-counter market quotations
are readily available, are valued at the latest bid price prior to the time of
valuation.
47
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 under the
general supervision of the Company's Board of Directors.
Short-term debt securities with remaining maturities of 60 days or less at the
time of purchase are valued at amortized cost. Other short-term debt securities
are valued on a marked-to-market basis until such time as they reach a remaining
maturity of 60 days, whereupon they will be valued at amortized value using
their value of the 61st day prior to maturity.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions are
recorded as of the trade date. Dividend income is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. Realized gains and
losses on investments are recorded on the basis of specific identification. The
TCW Galileo Emerging Markets Income Fund recognizes as interest income discounts
on securities purchased using a constant yield to maturity method. Premiums on
securities purchased are not amortized.
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.
FORWARD FOREIGN CURRENCY CONTRACTS: Certain Funds may enter into forward
foreign currency contracts as a hedge against fluctuations in foreign exchange
rates. Forward foreign currency contracts are marked-to-market daily and the
change in market value is recorded by the Fund as an unrealized gain or loss.
When the contract is closed or delivery is taken, the Fund records a realized
gain or loss equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed. Risks may arise upon
entering into these contracts from the potential inability of counterparties to
meet the terms of their contracts and from unanticipated movements in the value
of the foreign currency relative to the U.S. dollar (see Note 10).
REPURCHASE AGREEMENTS: The Funds may invest in repurchase agreements secured by
U.S. Government obligations and by other securities. Securities pledged as
collateral for repurchase agreements are held by the Funds' custodian bank until
maturity of the repurchase agreements. Provisions of the agreements ensure that
the market value of the collateral is sufficient in the event of default;
however, in the event of default or bankruptcy by the other party to the
agreements, realization and/or retention of the collateral may be subject to
legal proceedings.
SECURITY LENDING: The Funds may lend their securities to qualified brokers. The
loans are collateralized at all times with cash or securities with a market
value at least equal to the market
48
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
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 compensation
for lending their securities (see Note 3).
OPTIONS: Premiums received from call options written are recorded as a
liability. The amount of the liability is subsequently adjusted to reflect the
current market value of the option written. If the option expires unexercised,
premiums received are realized as a gain at expiration date. If the position is
closed prior to expiration, a gain or loss is realized based on premiums
received, less the cost to close the option. When an option is exercised,
premiums received are added to the proceeds from the sale of the underlying
securities and a gain or loss is realized. Call options purchased are accounted
for in the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. There were
no option contracts entered into during the year ended October 31, 2000.
DEFERRED ORGANIZATION COSTS: Organization costs of $10,000 per Fund for the TCW
Galileo Asia Pacific Equities Fund and the TCW Galileo Emerging Markets Equities
Fund and $50,000 for the TCW Galileo Latin America Equities Fund have been
completely amortized. Organizational costs of approximately $7,000, $9,000 and
$7,000 for the TCW Galileo European Equities Fund, TCW Galileo International
Equities Fund and the TCW Galileo Japanese Equities Fund, respectively, have
been deferred and are also being amortized on a straight line basis over a
five-year period from the commencement of operations. Organizational costs for
the TCW Galileo Emerging Markets Income Fund were de minimus, and therefore,
were not deferred. Those costs were expensed as incurred.
Upon formation of the Funds, the Company sold and issued to the Advisor 10,008
shares of common stock (one share each of 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, and 2,000 shares of the TCW Galileo Latin America
Equities Fund, collectively the "Initial Shares"). In the event the Advisor
redeems any of its Initial Shares from one or more of the Funds prior to the end
of the five-year period, the proceeds of the redemption payable in respect of
such shares will be reduced by any unamortized organization costs in the same
ratio as the number of Initial Shares being redeemed bears to the number of
Initial Shares outstanding at the time of the redemption.
ALLOCATION OF OPERATING ACTIVITY: Investment income, common expenses and
realized gains and losses are allocated among the classes of shares of the Fund
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
(see Note 6). All other expenses are charged to each Fund as incurred on a
specific identification basis.
NET ASSET VALUE: The Net Asset Value of each Fund's shares is determined by
dividing the net assets of the Fund by the number of issued and outstanding
shares on each business day as of 1:00 P.M. Pacific Standard/Daylight Time.
DIVIDENDS AND DISTRIBUTIONS: The TCW Galileo Emerging Markets Income Fund
declares and pays, or reinvests, dividends from net investment income monthly.
All other Funds declare and pay, or reinvest, dividends from net investment
income annually. Any net long-term and net short-term capital gains earned by a
Fund will be distributed at least annually.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, market discount, losses deferred to wash sales, excise tax
regulations and employing equalization in determining amounts to be
49
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
distributed to Fund shareholders. Permanent book and tax basis differences
relating to shareholder distributions will result in reclassifications to
paid-in capital and may impact net investment income per share. Undistributed
net investment income may include temporary book and tax basis differences which
will reverse in a subsequent period. Any taxable income or gain remaining at
fiscal year end is distributed in the following year. Distributions from net
investment income of $0.05 from the TCW Galileo Japanese Equities Fund for the
year ended October 31, 2000 were from gains of foreign currency transactions.
These gains are considered income, not capital gain under the regulations.
USE OF ESTIMATES The preparation of the accompanying financial statements
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period. Actual
results could differ from these estimates.
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, 2000:
<TABLE>
<CAPTION>
MARKET VALUE SECURITIES
OF LOANED LENDING
SECURITIES COLLATERAL VALUE INCOME*
------------- ---------------- ---------------
<S> <C> <C> <C>
TCW Galileo Asia Pacific Equities
Fund $ 185 $ 252 $ 23,866
TCW Galileo European Equities Fund 2,325,331 2,401,799 15,656
TCW Galileo Japanese Equities Fund 1,025,044 1,092,750 18,142
</TABLE>
* NET OF BROKER FEES
Securities lending income is included in interest income in the Statements of
Operations.
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, 2000 net unrealized appreciation (depreciation) on investments for
federal income tax purposes was as follows (amounts in thousands):
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
TCW GALILEO EMERGING EMERGING TCW GALILEO
ASIA PACIFIC MARKETS MARKETS EUROPEAN
EQUITIES FUND EQUITIES FUND INCOME FUND EQUITIES FUND
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Unrealized Appreciation $ 1,462 $ 1,959 $ 4,600 $ 7,174
Unrealized (Depreciation) (1,032) (6,787) (4,305) (3,773)
------- ------- -------- -------
Net Unrealized Appreciation
(Depreciation) $ 430 $(4,828) $ 295 $ 3,401
======= ======= ======== =======
Cost of Investments for
Federal Income Tax Purposes $12,532 $40,512 $105,595 $63,549
======= ======= ======== =======
</TABLE>
50
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
INTERNATIONAL JAPANESE LATIN AMERICA
EQUITIES FUND EQUITIES FUND EQUITIES FUND
------------- ------------- -------------
<S> <C> <C> <C> <C>
Unrealized Appreciation $12,198 $ 3,578 $ 357
Unrealized (Depreciation) (659) (5,382) (403)
------- ------- --------
Net Unrealized Appreciation
(Depreciation) $11,539 $(1,804) $ (46)
======= ======= ========
Cost of Investments for
Federal Income Tax Purposes $35,396 $43,810 $ 3,198
======= ======= ========
</TABLE>
At October 31, 2000 the following Funds had net realized loss carryforwards for
federal income tax purposes (amounts in thousands):
<TABLE>
<CAPTION>
EXPIRING IN
----------------------------
2003 2004 2006 2007
------ ------ ------ ----
<S> <C> <C> <C> <C>
TCW Galileo Emerging Markets
Equities Fund $ -- $ -- $3,399 $ --
TCW Galileo Latin America
Equities Fund 5,698 3,423 -- 1,259
</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 Asia Pacific Equities Fund 1.00%
TCW Galileo Emerging Markets Equities Fund 1.00%
TCW Galileo Emerging Markets Income Fund 0.75%
TCW Galileo European Equities Fund 0.75%
TCW Galileo International Equities Fund 0.00%
TCW Galileo Japanese Equities Fund 0.75%
TCW Galileo Latin America Equities Fund 1.00%
</TABLE>
The ordinary operating expenses for the following Funds (each share class) are
limited to the average of the total expense ratios as reported by Lipper
Analytical Services, Inc. for each Fund's respective investment objective, which
is subject to change on a monthly basis. At October 31, 2000, the expense ratios
reported by Lipper Analytical Services, Inc. as they relate to the investment
objective applicable to each Fund were:
<TABLE>
<S> <C>
TCW Galileo Asia Pacific Equities Fund 2.21%
TCW Galileo Emerging Markets Equities Fund 2.26%
TCW Galileo Emerging Markets Income Fund 1.50%
TCW Galileo European Equities Fund 1.82%
TCW Galileo International Equities Fund 1.69%
TCW Galileo Japanese Equities Fund 1.93%
TCW Galileo Latin America Equities Fund 2.24%
</TABLE>
Certain officers and/or directors of the Company are officers and/or directors
of the Advisor.
51
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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.
NOTE 7 -- PURCHASES AND SALES OF SECURITIES
Investment transactions (excluding short-term investments) for the year ended
October 31, 2000 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO
ASIA PACIFIC EMERGING MARKETS EMERGING MARKETS EUROPEAN
EQUITIES FUND EQUITIES FUND INCOME FUND EQUITIES FUND
------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C>
Purchases at Cost $14,613 $ 43,935 $130,369 $ 67,133
======= ======== ======== ========
Sales Proceeds $24,809 $ 48,177 $107,285 $109,344
======= ======== ======== ========
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO
INTERNATIONAL JAPANESE LATIN AMERICA
EQUITIES FUND EQUITIES FUND EQUITIES FUND
------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Purchases at Cost $21,966 $ 88,393 $ 2,402
======= ======== ========
Sales Proceeds $94,890 $129,681 $ 8,364
======= ======== ========
</TABLE>
There were no purchases or sales of U.S. Government Securities for the year
ended October 31, 2000.
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 ASIA PACIFIC EQUITIES FUND
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 344,125 $ 3,603 1,521,390 $ 11,280
Shares Issued upon Reinvestment of
Dividends -- 5 -- --
Shares Redeemed (1,403,946) (13,918) (550,972) (4,008)
---------- --------- ---------- --------
Net Increase (Decrease) (1,059,821) $ (10,310) 970,418 $ 7,272
========== ========= ========== ========
<CAPTION>
TCW GALILEO EMERGING MARKETS EQUITIES
FUND YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 4,335,428 $ 40,556 2,061,671 $ 14,832
Shares Redeemed (3,061,062) (30,017) (2,052,759) (14,055)
---------- --------- ---------- --------
Net Increase 1,274,366 $ 10,539 8,912 $ 777
========== ========= ========== ========
</TABLE>
52
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO EMERGING MARKETS INCOME
FUND YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 5,824,085 $ 48,472 7,899,551 $ 56,896
Shares Issued upon Reinvestment of
Dividends 1,033,847 8,567 727,798 5,319
Shares Redeemed (3,583,893) (30,264) (2,849,086) (20,318)
---------- --------- ---------- --------
Net Increase 3,274,039 $ 26,775 5,778,263 $ 41,897
========== ========= ========== ========
<CAPTION>
TCW GALILEO EUROPEAN EQUITIES FUND
INSTITUTIONAL CLASS YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 4,648,648 $ 73,476 3,553,003 $ 44,073
Shares Issued upon Reinvestment of
Dividends 306,031 4,354 150,626 1,791
Shares Redeemed (7,573,232) (115,630) (1,888,163) (23,753)
---------- --------- ---------- --------
Net Increase (Decrease) (2,618,553) $ (37,800) 1,815,466 $ 22,111
========== ========= ========== ========
<CAPTION>
TCW GALILEO EUROPEAN EQUITIES FUND
ADVISORY CLASS YEAR ENDED PERIOD ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999 (1)
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 22,574 $ 362 69,388 $ 861
Shares Issued upon Reinvestment of
Dividends 474 7 -- --
Shares Redeemed (18,812) (266) (58,049) (720)
---------- --------- ---------- --------
Net Increase 4,236 $ 103 11,339 $ 141
========== ========= ========== ========
</TABLE>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS
SHARES) THROUGH OCTOBER 31, 1999.
<TABLE>
<CAPTION>
TCW GALILEO INTERNATIONAL EQUITIES FUND
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 1,254,687 $ 20,066 2,694,927 $ 32,950
Shares Issued upon Reinvestment of
Dividends 306,555 4,503 3,535 40
Shares Redeemed (6,484,929) (98,819) (1,444,569) (17,417)
---------- --------- ---------- --------
Net Increase (Decrease) (4,923,687) $ (74,250) 1,253,893 $ 15,573
========== ========= ========== ========
</TABLE>
53
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
TCW GALILEO JAPANESE EQUITIES FUND
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 2,063,831 $ 31,954 2,769,489 $ 34,755
Shares Issued upon Reinvestment of
Dividends 556,315 7,910 192 3
Shares Redeemed (4,580,910) (67,936) (1,130,500) (13,569)
---------- --------- ---------- --------
Net Increase (Decrease) (1,960,764) $ (28,072) 1,639,181 $ 21,189
========== ========= ========== ========
<CAPTION>
TCW GALILEO LATIN AMERICA EQUITIES FUND
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
-------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 92,291 $ 1,298 740,603 $ 7,251
Shares Redeemed (659,042) (7,346) (1,269,710) (9,767)
---------- --------- ---------- --------
Net (Decrease) (566,751) $ (6,048) (529,107) $ (2,516)
========== ========= ========== ========
</TABLE>
NOTE 9 -- RESTRICTED SECURITIES
The following restricted securities held by the Funds as of October 31, 2000
were valued both at the date of acquisition and October 31, 2000 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 ASIA PACIFIC EQUITIES FUND:
<TABLE>
<CAPTION>
NUMBER OF DATE OF
SHARES INVESTMENT ACQUISITION COST
----------- ----------------------------------- ----------- ----------
<C> <S> <C> <C>
287 Asustek Computer, Incorporated 02/10/99 $ 1,083
(144A) (GDR) (Taiwan)
253,723 Taiwan Semiconductor Manufacturing 01/02/00 860,218
Company, Limited (Local Shares),
(144A) (Taiwan)
</TABLE>
The total value of restricted securities is $770,191, which represents 6.0% of
net assets of the Fund at October 31, 2000.
TCW GALILEO EMERGING MARKETS EQUITIES FUND:
<TABLE>
<CAPTION>
NUMBER OF DATE OF
SHARES INVESTMENT ACQUISITION COST
----------- ----------------------------------- ----------- ----------
<C> <S> <C> <C>
266 Asustek Computer, Incorporated 11/10/98 $ 983
(144A) (GDR) (Taiwan)
674,061 Taiwan Semiconductor Manufacturing 11/30/99 2,471,804
Company, Limited (Local Shares),
(144A) (Taiwan)
15,965 Telekomunikacja Polska, S.A. (144A) 11/09/98 70,885
(GDR) (Poland)
</TABLE>
54
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
The total value of restricted securities is $2,123,657, which represents 6.0% of
net assets of the Fund at October 31, 2000.
TCW GALILEO EMERGING MARKETS INCOME FUND:
<TABLE>
<CAPTION>
PRINCIPAL DATE OF
AMOUNT INVESTMENT ACQUISITION COST
----------- ----------------------------------- ----------- ----------
<C> <S> <C> <C>
$ 1,030,000 Ce Casecnan Water & Energy, Series 10/30/98 $ 903,030
A, 11.45%, due 11/15/05
(Philippines)
$ 100,000 Hanvit Bank, (144A), 11.75%, due 06/02/00 $ 98,567
03/01/10 (South Korea)
1,320,000 Republic of Trinidad & Tobago, 06/22/00 1,280,057
(144A), 9.75%, due 07/01/20
(Trinidad & Tobago)
820,000 Russian Federation, (144A), 12.75%, 07/23/98 727,340
due 06/24/28, Par Put 06/24/08,
(Russia)
14,065,000 Russian Federation, (Reg. S), 07/23/98 9,179,088
12.75%, due 06/24/28, Par Put
06/24/08, (Russia)
</TABLE>
The total value of restricted securities is $14,905,119, which represents 13.4%
of net assets of the Fund at October 31, 2000.
NOTE 10 -- FORWARD FOREIGN CURRENCY CONTRACTS
The Fund listed below invested in forward foreign currency contracts during the
year ended October 31, 2000. The contracts are used for the purpose of hedging
against foreign exchange risk arising from the Fund's investment in foreign
securities. These contracts are "marked-to-market" at the valuation date at the
applicable translation rates and any resulting unrealized gains or losses are
recorded in the Fund's financial statements. The Fund records realized gains or
losses at the time the forward contract is closed. There were no realized gains
or losses recorded in the financial statements for the year ended October 31,
2000. A forward contract is extinguished through a sale or the expiration of the
contract. Risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and from
unanticipated movements in the value of the foreign currency relative to the
U.S. dollar. The following forward foreign currency contracts were outstanding
as of October 31, 2000:
TCW GALILEO EMERGING MARKETS INCOME FUND:
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION IN EXCHANGE (DEPRECIATION)
DATE CONTRACT TO BUY FOR U.S. $ ON CONTRACT
---------- ----------------------------------- ----------- --------------
<S> <C> <C> <C>
08/03/2001 Euro Currency 1,300,000 $1,154,205 $(39,871)
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
EXPIRATION IN EXCHANGE APPRECIATION
DATE CONTRACT TO SELL FOR U.S. $ ON CONTRACT
---------- ----------------------------------- ----------- ------------
<S> <C> <C> <C>
08/03/2001 Euro Currency 1,300,000 $1,459,250 $344,916
</TABLE>
55
<PAGE>
TCW GALILEO ASIA PACIFIC EQUITIES FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Year $ 8.37 $ 5.09 $ 7.37 $ 9.61 $ 8.67
------- ------- ------ ------- -------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net Investment Income (Loss) (0.06) (0.02) 0.02 (0.01) 0.06
Net Realized and Unrealized Gain
(Loss) on Investments (0.15) 3.30 (1.04) (2.10) 0.93
------- ------- ------ ------- -------
Total from Investment Operations (0.21) 3.28 (1.02) (2.11) 0.99
------- ------- ------ ------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment
Income -- -- -- (0.08) (0.05)
Distributions in Excess of Net
Investment Income -- -- -- (0.05) --
Distributions from Net Realized Gain -- -- (1.26) -- --
------- ------- ------ ------- -------
Total Distributions -- -- (1.26) (0.13) (0.05)
------- ------- ------ ------- -------
Net Asset Value per Share, End of
Year $ 8.16 $ 8.37 $ 5.09 $ 7.37 $ 9.61
======= ======= ====== ======= =======
Total Return (2.51)% 64.44% (14.80)% (22.40)% 11.36%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in
thousands) $12,858 $22,070 $8,482 $21,327 $48,266
Ratio of Net Expenses to Average Net
Assets 1.80%(1) 2.03%(1) 2.48% 1.49% 1.43%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.56)% (0.34)% 0.36% (0.02)% 0.66%
Portfolio Turnover Rate 79.17% 119.72% 190.33% 81.92% 84.81%
</TABLE>
<TABLE>
<C> <S>
(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 ANNUAL OPERATING EXPENSES OF THE
FUND AS DISCLOSED IN NOTE 5 OF THE NOTES TO THE FINANCIAL
STATEMENTS. HAD SUCH ACTION NOT BEEN TAKEN, TOTAL OPERATING
EXPENSES, AS A PERCENTAGE OF NET ASSETS, WOULD HAVE BEEN
1.94% AND 2.05% FOR THE YEARS ENDED OCTOBER 31, 2000 AND
1999, RESPECTIVELY.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
56
<PAGE>
TCW GALILEO EMERGING MARKETS EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Year $ 7.87 $ 5.57 $ 8.32 $ 8.18 $ 7.19
------- ------- ------- ------- -------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net Investment Income (Loss) 0.01 (0.02) 0.09 0.03 0.07
Net Realized and Unrealized Gain
(Loss) on Investments (0.27) 2.32 (2.83) 0.22 0.94
------- ------- ------- ------- -------
Total from Investment Operations (0.26) 2.30 (2.74) 0.25 1.01
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment
Income -- -- (0.01) (0.11) (0.02)
------- ------- ------- ------- -------
Net Asset Value per Share, End of
Year $ 7.61 $ 7.87 $ 5.57 $ 8.32 $ 8.18
======= ======= ======= ======= =======
Total Return (3.30)% 41.29% (32.97)% 2.82% 14.14%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in
thousands) $35,406 $26,591 $18,763 $47,726 $57,639
Ratio of Expenses to Average
Net Assets 1.47% 2.02%(1) 1.70% 1.50% 1.41%
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.08% (0.24)% 1.15% 0.36% 0.82%
Portfolio Turnover Rate 84.76% 152.93% 102.28% 79.80% 83.76%
</TABLE>
<TABLE>
<C> <S>
(1) THE INVESTMENT ADVISOR HAD VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND AS
DISCLOSED IN NOTE 5 OF THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1999. HAD SUCH ACTION NOT
BEEN TAKEN, TOTAL OPERATING EXPENSES, AS A PERCENTAGE OF NET
ASSETS, WOULD HAVE BEEN 2.50% FOR THE YEAR ENDED
OCTOBER 31, 1999.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
57
<PAGE>
TCW GALILEO EMERGING MARKETS INCOME FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 3, 1998
YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS)
----------------- THROUGH
2000 1999 OCTOBER 31, 1998
-------- ------- ----------------
<S> <C> <C> <C>
Net Asset Value per Share,
Beginning of Period $ 7.84 $ 6.58 $ 10.00
-------- ------- -------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net Investment Income 0.85 0.84 0.37
Net Realized and Unrealized Gain
(Loss) on Investments 0.30 1.25 (3.41)
-------- ------- -------
Total from Investment Operations 1.15 2.09 (3.04)
-------- ------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment
Income (0.84) (0.83) (0.37)
Distributions in Excess of Net
Investment Income -- -- (0.01)
-------- ------- -------
Total Distributions (0.84) (0.83) (0.38)
-------- ------- -------
Net Asset Value per Share, End of
Period $ 8.15 $ 7.84 $ 6.58
======== ======= =======
Total Return 15.12% 33.31% (30.67)% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
thousands) $110,961 $81,113 $30,090
Ratio of Expenses to Average Net
Assets 0.99% 1.01% 1.53% (2)
Ratio of Net Investment Income to
Average Net Assets 10.22% 11.37% 11.90% (2)
Portfolio Turnover Rate 109.20% 113.00% 68.46% (1)
</TABLE>
(1) FOR THE PERIOD JUNE 3, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH
OCTOBER 31, 1998 AND NOT INDICATIVE OF A FULL YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
58
<PAGE>
TCW GALILEO EUROPEAN EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 3, 1997
YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS)
----------------------- THROUGH
2000 1999 OCTOBER 31, 1998
-------- -------- ----------------
<S> <C> <C> <C>
Net Asset Value per Share, Beginning of Period $ 13.11 $ 11.70 $ 10.00
------- ------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (0.01) 0.07 0.06
Net Realized and Unrealized Gain on Investments 1.44 1.65 1.64
------- ------- -------
Total from Investment Operations 1.43 1.72 1.70
------- ------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income (0.05) (0.03) --
Distributions from Net Realized Gain (0.55) (0.28) --
------- ------- -------
Total Distributions (0.60) (0.31) --
------- ------- -------
Net Asset Value per Share, End of Period $ 13.94 $ 13.11 $ 11.70
======= ======= =======
Total Return 10.82% 15.16% 17.00% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $65,054 $95,489 $63,994
Ratio of Expenses to Average Net Assets 1.12% 1.01% 1.06% (2)
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.09)% 0.58% 0.52% (2)
Portfolio Turnover Rate 96.40% 95.21% 72.05% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1998 AND NOT INDICATIVE OF A FULL YEAR'S
OPERATING RESULTS.
(2) ANNUALIZED.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
59
<PAGE>
TCW GALILEO EUROPEAN EQUITIES FUND
--------------------------------------------------------------------------------
ADVISORY CLASS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
MARCH 1, 1999
(COMMENCEMENT OF
YEAR ENDED OFFERING OF ADVISORY
OCTOBER 31, CLASS SHARES) THROUGH
2000 OCTOBER 31, 1999
----------- ---------------------
<S> <C> <C>
Net Asset Value per Share, Beginning of Period $13.14 $12.37
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (0.09) 0.09
Net Realized and Unrealized Gain on Investments 1.43 0.68
------ ------
Total from Investment Operations 1.34 0.77
------ ------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income (0.04) --
Distributions from Net Realized Gain (0.55) --
------ ------
Total Distributions (0.59) --
------ ------
Net Asset Value per Share, End of Period $13.89 $13.14
====== ======
Total Return 10.08% 6.23% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 217 $ 149
Ratio of Net Expenses to Average Net Assets 1.77% (3) 1.69% (2)(3)
Ratio of Net Investment Income (Loss) to Average Net
Assets (0.56)% 1.12% (2)
Portfolio Turnover Rate 96.40% 95.21% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF
ADVISORY CLASS SHARES) THROUGH OCTOBER 31, 1999.
(2) ANNUALIZED.
(3) THE INVESTMENT ADVISOR VOLUNTARILY AGREED TO REDUCE ITS FEE,
OR TO PAY THE OPERATING EXPENSES OF THE FUND AS DISCLOSED IN
NOTE 5 OF 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
12.03% FOR THE YEAR ENDED OCTOBER 31, 2000 AND 54.30% FOR
THE PERIOD FROM MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF
ADISORY CLASS SHARES) THROUGH OCTOBER 31, 1999.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
60
<PAGE>
TCW GALILEO INTERNATIONAL EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 3, 1997
YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS)
----------------- THROUGH
2000 1999 OCTOBER 31, 1998
------- -------- ----------------
<S> <C> <C> <C>
Net Asset Value per Share,
Beginning of Period $ 13.67 $ 10.75 $ 10.00
------- -------- -------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net Investment Income 1.93 0.21 0.05
Net Realized and Unrealized Gain
(Loss) on Investments (0.80) 2.73 0.70
------- -------- -------
Total from Investment Operations 1.13 2.94 0.75
------- -------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment
Income -- (0.02) --
Distributions from Net Realized
Gain (0.55) -- --
------- -------- -------
Total Distributions (0.55) (0.02) --
------- -------- -------
Net Asset Value per Share, End of
Period $ 14.25 $ 13.67 $ 10.75
======= ======== =======
Total Return 8.07% 27.39% 7.50% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
thousands) $46,909 $112,336 $74,853
Ratio of Expenses to Average Net
Assets 0.25% 0.18% 0.17% (2)
Ratio of Net Investment Income to
Average Net Assets 12.28% 1.70% 0.50% (2)
Portfolio Turnover Rate 36.08% 27.78% 21.12% (1)
</TABLE>
(1) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF OPERATIONS) THROUGH
OCTOBER 31, 1998 AND NOT INDICATIVE OF A FULL YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
61
<PAGE>
TCW GALILEO JAPANESE EQUITIES FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NOVEMBER 3, 1997
YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS)
----------------------- THROUGH
2000 1999 OCTOBER 31, 1998
-------- -------- ----------------
<S> <C> <C> <C>
Net Asset Value per Share, Beginning of Period $ 15.28 $ 8.43 $ 10.00
------- ------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.10) (0.02) (0.04)
Net Realized and Unrealized Gain (Loss) on
Investments 0.29 6.87 (1.46)
------- ------- -------
Total from Investment Operations 0.19 6.85 (1.50)
------- ------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income (0.05) -- (0.07)
Distributions from Net Realized Gain (2.03) -- --
------- ------- -------
Total Distributions (2.08) -- (0.07)
------- ------- -------
Net Asset Value per Share, End of Period $ 13.39 $ 15.28 $ 8.43
======= ======= =======
Total Return 0.39% 81.26% (14.88)% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $41,173 $76,975 $28,648
Ratio of Expenses to Average Net Assets 1.16% 1.04% 1.20% (2)(3)
Ratio of Net Investment (Loss) to Average Net
Assets (0.62)% (0.17)% (0.48)% (2)
Portfolio Turnover Rate 167.56% 149.76% 178.53% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD NOVEMBER 3, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1998 AND NOT INDICATIVE OF A FULL YEAR'S
OPERATING RESULTS.
(2) ANNUALIZED.
(3) 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 1.20% OF NET ASSETS THROUGH
OCTOBER 31, 1998. HAD SUCH ACTION NOT BEEN TAKEN, TOTAL
ANNUALIZED OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET
ASSETS WOULD HAVE 1.51% FOR THE PERIOD NOVEMBER 3, 1997
THROUGH OCTOBER 31, 1998.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
62
<PAGE>
TCW GALILEO LATIN AMERICA EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value per Share, Beginning
of Year $ 9.37 $ 8.57 $ 12.51 $ 10.01 $ 7.92
------ ------ ------- ------- -------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net Investment Income (Loss) (0.04) 0.09 0.13 0.11 0.11
Net Realized and Unrealized Gain
(Loss) on Investments 1.78 0.71 (3.80) 2.50 2.03
------ ------ ------- ------- -------
Total from Investment Operations 1.74 0.80 (3.67) 2.61 2.14
------ ------ ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment
Income -- -- (0.27) (0.11) (0.05)
------ ------ ------- ------- -------
Net Asset Value per Share, End of Year $11.11 $ 9.37 $ 8.57 $ 12.51 $ 10.01
====== ====== ======= ======= =======
Total Return 18.57% 9.34% (29.95)% 26.24% 27.08%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in thousands) $3,115 $7,939 $11,796 $55,336 $68,323
Ratio of Net Expenses to Average Net
Assets 1.76%(1) 2.20%(1) 1.64% 1.46% 1.44%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.33)% 1.05% 1.13% 0.87% 1.12%
Portfolio Turnover Rate 57.44% 162.12% 32.33% 21.17% 44.32%
</TABLE>
<TABLE>
<C> <S>
(1) THE INVESTMENT ADVISOR HAS VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND AS
DISCLOSED IN NOTE 5 OF THE NOTES TO THE FINANCIAL
STATEMENTS. HAD SUCH ACTION NOT BEEN TAKEN, THE TOTAL
OPERATING EXPENSES, AS A PERCENTAGE OF AVERAGE NET ASSETS,
WOULD HAVE BEEN 5.40% AND 3.24% FOR THE YEARS ENDED
OCTOBER 31, 2000 AND 1999, RESPECTIVELY.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
63
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
INTERNATIONAL
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 Asia Pacific Equities Fund, TCW
Galileo Emerging Markets Equities Fund, TCW Galileo Emerging Markets Income
Fund, TCW Galileo European Equities Fund, TCW Galileo International Equities
Fund, TCW Galileo Japanese Equities Fund, and TCW Galileo Latin America Equities
Fund (the "Galileo International Funds") (seven of twenty-one funds comprising
TCW Galileo Funds, Inc.) as of October 31, 2000 and the related statements of
operations for the period then ended, the statements of changes in net assets
for each of the periods ended October 31, 2000 and 1999, and the financial
highlights for each of the respective periods in the periods ended October 31,
2000. 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 auditing standards generally accepted
in the United States of America. 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, 2000 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 International Funds as of October 31, 2000, the
results of their operations, the changes in their net assets, and the financial
highlights for the respective stated periods in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
December 20, 2000
Los Angeles, California
64
<PAGE>
[ICON]
--------------------------------------------------------------------------------
TAX INFORMATION NOTICE (UNAUDITED)
On account of the year ended October 31, 2000, the following funds paid capital
gain distributions within the meaning of Section 852(b)(3)(c) of the Internal
Revenue Code. The Fund designated as a capital gain distribution a portion of
earnings and profits paid to shareholders in redemption of their shares.
<TABLE>
<CAPTION>
AMOUNTS PER
FUND SHARE
---- -----------
<S> <C>
TCW Galileo Asia Pacific Equities Fund $0.33
TCW Galileo European Equities Fund 5.04
TCW Galileo Japanese Equities Fund 5.43
</TABLE>
This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. For income tax preparation purposes, please refer to the calendar year
end information you will receive from the Fund's transfer agent in January 2001.
65
<PAGE>
TCW GALILEO FUNDS
OCTOBER 31, 2000
SHAREHOLDER INFORMATION
DIRECTORS AND OFFICERS
Marc I. Stern
Director and Chairman of the Board
Alvin R. Albe, Jr.
Director and President
John C. Argue
Director
Norman Barker, Jr.
Director
Richard W. Call
Director
Matthew K. Fong
Director
Thomas E. Larkin, Jr.
Director
Charles W. Baldiswieier
Senior Vice President
Michael E. Cahill
Senior Vice President,
General Counsel and Assistant Secretary
Jeffrey V. Peterson
Senior Vice President
Robert S. Sant
Senior Vice President
Philip K. Holl
Secretary
Hilary G. D. Lord
Assistant Secretary
Peter C. DiBora
Treasurer
INVESTMENT ADVISOR
TCW Investment Management Company
865 South Figueroa Street
Los Angeles, California 90017
(213) 244-0000
CUSTODIAN & ADMINISTRATOR
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
TRANSFER AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
DISTRIBUTOR
TCW Brokerage Services
865 South Figueroa Street
Los Angeles, California 90017
INDEPENDENT AUDITORS
Deloitte & Touche, LLP
350 South Grand Avenue
Los Angeles, California 90071
INTLAR103100
