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TCW GALILEO FUNDS
OCTOBER 31, 2000
ANNUAL REPORT
U.S. EQUITIES
AGGRESSIVE GROWTH EQUITIES
CONVERTIBLE SECURITIES
EARNINGS MOMENTUM
LARGE CAP GROWTH
LARGE CAP VALUE
SELECT EQUITIES
SMALL CAP GROWTH
SMALL CAP VALUE
VALUE OPPORTUNITIES
[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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U.S. EQUITIES
TABLE OF CONTENTS OCTOBER 31, 2000
<TABLE>
<S> <C>
Letter to Shareholders............................ 1
Management Discussions............................ 2
Schedules of Investments:
TCW Galileo Aggressive Growth Equities Fund..... 23
TCW Galileo Convertible Securities Fund......... 26
TCW Galileo Earnings Momentum Fund.............. 30
TCW Galileo Large Cap Growth Fund............... 33
TCW Galileo Large Cap Value Fund................ 36
TCW Galileo Select Equities Fund................ 39
TCW Galileo Small Cap Growth Fund............... 41
TCW Galileo Small Cap Value Fund................ 44
TCW Galileo Value Opportunities Fund............ 48
Statements of Assets and Liabilities.............. 52
Statements of Operations.......................... 54
Statements of Changes in Net Assets............... 56
Notes to Financial Statements..................... 61
Financial Highlights.............................. 74
Independent Auditors' Report...................... 88
Tax Information Notice............................ 89
</TABLE>
[TCW LOGO]
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[ICON]
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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 AGGRESSIVE GROWTH EQUITIES FUND
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MANAGEMENT DISCUSSIONS
The TCW Galileo Aggressive Growth Equities Fund (the "Fund") achieved a return
of 40.14% for the fiscal year ended October 31, 2000 for its Institutional ("I")
Class shares. During the same period of time, the S&P 400 Mid Cap Index's return
was 31.63%. For the Advisory ("N") Class shares, the return was 39.68%. The
performance of the Fund's two classes varies because of differing expenses.
The past year's results can be broken up into nearly identical six month
increments. From October to early April, euphoria was the operative word
describing market conditions, and the Fund more than fully participated in the
appreciation that occurred among the so-called "New Economy" stocks. Starting in
April, several events combined to change market conditions and partially reverse
some of our earlier gains. Since the past six months have been as difficult as
any period in recent memory, it may be worth spending some time discussing
recent market trends and what we are doing to take advantage of them.
The primary catalyst driving the market has been the slow down in the economy
driven by successive increase in the short-term interest rate. Despite mounting
evidence that the economy is slowing, the Federal Reserve has kept short-term
rates at a high level because of continued inflation fears. The low unemployment
rate and stubbornly high energy prices have offset other economic indicators
which show that a recession is now a greater danger than inflation. Unemployment
is a lagging indicator and is a particularly poor predictor of future economic
performance. High energy prices, on the other hand, are troubling in that they
should be coming down as the futures market reacts to a slowing economy.
Nevertheless, political crises in Iraq, Venezuela and other major oil producers
have combined to keep prices high even as future demand appears to slacken. The
result has been a continuation of the Fed's tight money policy which restricts
liquidity and inevitably hurts the equity markets.
To most observers, it is now obvious that the economy is slowing to a "soft" or
possibly even to a "hard" landing. The evidence is seen through earnings
disappointments which have affected several high profile companies. Reliable
stalwarts such as Home Depot, Northern Telecom and Intel have missed Wall Street
expectations. Unfortunately for growth investors, technology has been hit
extraordinarily hard with Dell, Hewlett Packard and IBM all experiencing
shortfalls. Slowing earnings growth is never positive for the equity markets,
and we are witnessing the results. Compounding this problem is the political
uncertainty regarding the undecided Presidential election. It is very difficult
for investors to make informed decisions on what companies to buy when they are
uncertain about what the rules of the game are likely to be for the next four
years. Thus, many buyers are waiting on the sidelines until this matter is
resolved. Finally, we would point to the weak Euro as an additional stress.
Wildly fluctuating currencies make capital allocation decisions difficult and
introduce uncertainty into company income statements by making the revenue and
cost of goods sold line items hard to predict.
Given these issues outlined above, what does this mean for future portfolio
returns. On the macroeconomic front, it is important to remember that every
problem we have raised is transitory. Energy prices are set by supply and
demand. Producers of oil have bills to pay just like anyone else and will fight
to preserve their market share even as demand inevitably drops to reflect slower
growth. Past history would seem to drive this point home. The U.S. will have a
new President on January 20, 2001 as mandated by the Constitution which also
provides for a clear, if somewhat bumpy, roadmap for the transfer of power. Over
time the Euro and dollar will adjust to the correct valuation based on the
respective economic performance of North America and the European Union.
Interest rate reductions are inevitable as the inverted yield curve clearly
shows that investors have already figured out the economy is slowing and that
the inflation threat is receding. As money becomes cheaper and the cost of the
factors of production such as energy decrease, companies will become more
productive which will lead to a better earnings
2
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outlook. In other words, the economic cycle will have come full circle, and this
will be reflected in the price of equities. There is nothing that we see on the
horizon that will reverse these fundamental laws of economics.
Having discussed the macroeconomic environment, it is now appropriate to take a
look at what we are doing in the portfolio. As always, we focus exclusively on
executing our investment strategy, that is to say we concentrate on company
fundamentals--their underlying growth rate, their ability to beat consensus
expectations and the dynamics of the business model. While a slowing economy
will have some effect on these fundamentals, it is important to remember that
many of the companies we own are still very early in their growth cycles and
should grow somewhat independent of macroeconomic trends. The companies we own
are invariably pioneers in their industries or are creating new industries where
demand is exploding. We have made these investments precisely because the
underlying growth opportunity is so enormous that it should continue despite a
slowing economy.
As we live through this difficult period, we are focusing mainly on two things.
First, we want to make sure that our companies remain healthy and will deliver
the results Wall Street expects. This means we are on the phone discussing
conditions with companies and their management and using the independent
resources available to us to verify what we are hearing. Secondly, we are taking
advantage of conditions to upgrade the quality of the portfolio. There are many
great companies that formerly were far too expensive to purchase that are now
selling at bargain prices. When markets correct, it is invariably these
companies which hold up best as there are always investors who want to own them
at a price. As the market recovers, these same companies are the first ones
investors come back to. Therefore, we believe execution remains the key, and our
clients should know this is where our attention is focused.
In closing, we would like to point out that the conditions we are seeing today
have occurred before and will occur again sometime in the future. As we have
said on many occasions, times of rising interest rates and political instability
can cause volatility for our strategy. However, we do not panic but use
reasoned, analytical research to identify the very best growth companies and
then build a portfolio around them. This approach has worked in the past and, we
believe, will continue to work in the future.
3
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TCW GALILEO AGGRESSIVE GROWTH EQUITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO AGGRESSIVE GROWTH EQUITIES FUND- I CLASS
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>
40.14% 55.27% 36.89% 39.40%
</TABLE>
<TABLE>
<CAPTION>
S&P 400 MIDCAP
FUND INDEX
<S> <C> <C>
Nov 94 $243,428 $238,727
Dec 94 $256,049 $240,917
Jan 95 $252,459 $243,423
Feb 95 $264,810 $256,182
Mar 95 $276,271 $260,622
Apr 95 $274,480 $265,854
May 95 $278,208 $272,273
Jun 95 $305,169 $283,361
Jul 95 $337,984 $298,143
Aug 95 $346,153 $303,656
Sep 95 $365,551 $311,016
Oct 95 $381,935 $303,014
Nov 95 $396,964 $316,248
Dec 95 $411,366 $315,457
Jan 96 $417,578 $320,038
Feb 96 $429,909 $330,889
Mar 96 $451,959 $334,855
Apr 96 $501,010 $345,081
May 96 $521,777 $349,750
Jun 96 $497,775 $344,501
Jul 96 $439,859 $321,199
Aug 96 $461,773 $339,726
Sep 96 $498,821 $354,534
Oct 96 $479,517 $355,563
Nov 96 $482,125 $375,594
Dec 96 $462,295 $376,007
Jan 97 $477,426 $390,107
Feb 97 $420,551 $390,107
Mar 97 $369,937 $373,489
Apr 97 $378,287 $383,162
May 97 $435,158 $416,650
Jun 97 $456,551 $428,358
Jul 97 $502,466 $470,766
Aug 97 $489,422 $470,201
Sep 97 $531,165 $497,237
Oct 97 $490,467 $475,607
Nov 97 $490,987 $482,646
Dec 97 $520,726 $501,373
Jan 98 $509,770 $491,847
Feb 98 $562,470 $532,572
Mar 98 $603,688 $556,591
Apr 98 $611,512 $566,721
May 98 $574,986 $541,218
Jun 98 $654,817 $544,628
Jul 98 $634,465 $523,496
Aug 98 $499,851 $426,074
Sep 98 $575,508 $465,869
Oct 98 $592,204 $507,518
Nov 98 $700,210 $532,843
Dec 98 $850,342 $597,221
Jan 99 $982,655 $573,971
Feb 99 $945,019 $543,912
Mar 99 $1,092,622 $559,115
Apr 99 $1,182,599 $603,218
May 99 $1,104,382 $605,830
Jun 99 $1,211,408 $638,272
Jul 99 $1,098,505 $624,708
Aug 99 $1,144,960 $603,293
Sep 99 $1,170,253 $584,670
Oct 99 $1,310,215 $614,459
Nov 99 $1,523,098 $646,718
Dec 99 $1,935,295 $685,133
Jan 00 $1,902,666 $665,812
Feb 00 $2,334,761 $712,419
Mar 00 $2,162,456 $772,048
Apr 00 $1,862,847 $745,104
May 00 $1,652,029 $735,790
Jun 00 $2,026,693 $746,606
Jul 00 $1,923,554 $758,403
Aug 00 $2,226,418 $843,040
Sep 00 $2,114,139 $837,223
Oct 00 $1,836,088 $808,833
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 11/1/94
TCW GALILEO AGGRESSIVE GROWTH 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
39.68% 48.59%
</TABLE>
<TABLE>
<CAPTION>
FUND S&P 400 MIDCAP INDEX
<S> <C> <C>
Mar 99 $2,311 $2,056
Apr 99 $2,502 $2,218
May 99 $2,336 $2,228
Jun 99 $2,563 $2,347
Jul 99 $2,324 $2,297
Aug 99 $2,422 $2,218
Sep 99 $2,475 $2,150
Oct 99 $2,770 $2,259
Nov 99 $3,220 $2,378
Dec 99 $4,091 $2,519
Jan 00 $4,020 $2,448
Feb 00 $4,932 $2,620
Mar 00 $4,567 $2,839
Apr 00 $3,933 $2,740
May 00 $3,487 $2,706
Jun 00 $4,277 $2,745
Jul 00 $4,058 $2,789
Aug 00 $4,696 $3,100
Sep 00 $4,458 $3,079
Oct 00 $3,870 $2,974
</TABLE>
VALUE OF $2,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 3/1/99
(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.
4
<PAGE>
TCW GALILEO CONVERTIBLE SECURITIES FUND
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MANAGEMENT DISCUSSIONS (CONTINUED)
The TCW Galileo Convertible Securities Fund (the "Fund") produced a return of
33.59% for the fiscal year ended October 31, 2000. The Fund outperformed the
First Boston Convertible Securities Index that returned 24.40%.
During the fiscal year, the Fund benefited primarily from its holdings in
semiconductors, computer software and energy. In semiconductors, holdings in
Intel, Lattice Semiconductor and STMicroelectronics did well. However, the
biggest gains in technology were in computer software where holdings in Siebel
Systems, BEA Systems and Rational Software generated spectacular one-year
returns. In the energy sector, the Fund benefited from the solid returns
generated by its holdings in Apache, Kerr McGee, Southern Energy and AES Corp.
The past year continued to be a difficult one for most basic industrial
companies (excluding energy) and the Fund benefited from its continuing low
exposure to this sector.
The past twelve months have been a record period for new convertible issuance.
Approximately $63.5 billion was raised through 134 issues. Many of these issues
were attractively priced, particularly during the last several months, as the
markets have become more challenging. The issuance this year has come primarily
from companies in the technology, telecommunications, healthcare and energy
sectors.
While the last two months have been especially painful, we are positioning the
portfolio to take advantage of what we perceive as better times ahead. Thus, we
will sell some convertibles which have large conversion premiums (less equity
sensitivity) and purchase new securities which have better upside. There appear
to be some compelling values in several sectors such as media, technology and
telecommunications. Thus, it is probable that we may add to holdings in these
sectors. In addition, we have recently sold some holdings in the energy area
(Apache and AES) where we believe most of the good news has been discounted.
The overall investment outlook has been problematic. There has been an increase
in negative earnings announcements coming from corporate America. The declining
Euro, higher oil prices and a moderating economy have combined to place pressure
on the profitability of many companies. In addition, we believe that uncertainty
about the election is shaking investors' confidence. These cross currents are
being reflected in the market. Through early November, the S&P 500 and the
NASDAQ are down 10% and 30% year-to-date, respectively. We believe that the
valuations of many stocks and the S&P 500 overall are beginning to discount a
potential hard landing in the economy. This scenario has a low probability of
occurring and we believe stocks could reach a bottom soon and rally into the end
of the year.
5
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TCW GALILEO CONVERTIBLE SECURITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO CONVERTIBLE SECURITIES FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEAR 5-YEAR 10-YEAR SINCE INCEPTION
<S> <C> <C> <C> <C>
33.59% 21.14% 20.19% 18.63% 15.50%
</TABLE>
INCEPTION 1/1/89
VALUE OF $250,000
<TABLE>
<CAPTION>
FIRST BOSTON
CONVERTIBLE
SECURITIES
FUND INDEX
<S> <C> <C>
Jan 89 $261,113 $261,225
Feb 89 $261,314 $261,173
Mar 89 $264,039 $264,568
Apr 89 $272,839 $273,457
May 89 $278,291 $279,009
Jun 89 $277,467 $276,972
Jul 89 $286,143 $284,921
Aug 89 $295,131 $291,189
Sep 89 $294,169 $288,656
Oct 89 $284,944 $279,534
Nov 89 $288,343 $284,091
Dec 89 $290,543 $284,403
Jan 90 $277,268 $273,084
Feb 90 $278,818 $276,689
Mar 90 $283,218 $280,922
Apr 90 $276,942 $274,658
May 90 $294,716 $287,978
Jun 90 $295,541 $287,633
Jul 90 $294,868 $285,073
Aug 90 $280,968 $268,653
Sep 90 $265,691 $256,913
Oct 90 $249,391 $247,304
Nov 90 $265,592 $259,397
Dec 90 $272,842 $264,819
Jan 91 $286,566 $276,709
Feb 91 $306,640 $293,229
Mar 91 $312,629 $300,413
Apr 91 $316,268 $303,447
May 91 $325,269 $312,429
Jun 91 $316,818 $303,712
Jul 91 $329,843 $315,253
Aug 91 $341,143 $327,012
Sep 91 $340,069 $326,423
Oct 91 $347,043 $331,124
Nov 91 $341,918 $323,144
Dec 91 $363,629 $341,918
Jan 92 $368,593 $351,800
Feb 92 $376,894 $360,771
Mar 92 $371,945 $358,173
Apr 92 $373,381 $362,507
May 92 $380,292 $368,815
Jun 92 $377,516 $367,118
Jul 92 $387,543 $376,260
Aug 92 $386,016 $373,889
Sep 92 $392,879 $381,367
Oct 92 $394,891 $382,282
Nov 92 $407,792 $393,330
Dec 92 $416,592 $402,062
Jan 93 $429,785 $414,606
Feb 93 $430,103 $416,016
Mar 93 $445,101 $431,492
Apr 93 $443,494 $431,362
May 93 $453,517 $438,911
Jun 93 $457,417 $443,081
Jul 93 $457,875 $447,645
Aug 93 $475,595 $459,910
Sep 93 $479,780 $465,107
Oct 93 $492,110 $476,084
Nov 93 $485,659 $468,895
Dec 93 $500,325 $476,631
Jan 94 $517,437 $490,311
Feb 94 $511,253 $482,515
Mar 94 $487,807 $462,828
Apr 94 $479,983 $454,405
May 94 $480,069 $455,404
Jun 94 $472,297 $450,258
Jul 94 $478,522 $462,956
Aug 94 $492,686 $472,076
Sep 94 $488,459 $463,720
Oct 94 $486,363 $467,708
Nov 94 $472,881 $450,730
Dec 94 $466,757 $454,156
Jan 95 $467,784 $453,565
Feb 95 $478,529 $468,397
Mar 95 $493,364 $480,763
Apr 95 $505,994 $491,676
May 95 $516,316 $506,181
Jun 95 $532,926 $524,605
Jul 95 $554,776 $543,229
Aug 95 $557,328 $548,933
Sep 95 $565,392 $557,112
Oct 95 $548,985 $540,009
Nov 95 $569,736 $558,801
Dec 95 $572,300 $561,874
Jan 96 $583,861 $574,292
Feb 96 $599,041 $589,740
Mar 96 $600,359 $594,694
Apr 96 $611,802 $608,550
May 96 $621,725 $622,121
Jun 96 $610,982 $607,377
Jul 96 $585,235 $583,689
Aug 96 $613,478 $605,402
Sep 96 $638,637 $621,203
Oct 96 $631,095 $625,055
Nov 96 $656,465 $644,557
Dec 96 $658,277 $639,658
Jan 97 $676,050 $659,999
Feb 97 $661,569 $656,567
Mar 97 $645,771 $642,976
Apr 97 $648,432 $649,470
May 97 $680,321 $679,541
Jun 97 $715,535 $699,315
Jul 97 $747,111 $737,638
Aug 97 $748,456 $738,228
Sep 97 $785,407 $769,381
Oct 97 $774,545 $748,300
Nov 97 $776,582 $743,810
Dec 97 $785,063 $747,976
Jan 98 $792,434 $747,751
Feb 98 $838,871 $781,176
Mar 98 $865,404 $809,376
Apr 98 $863,916 $816,580
May 98 $846,085 $793,062
Jun 98 $854,258 $797,186
Jul 98 $848,270 $779,010
Aug 98 $745,697 $683,426
Sep 98 $765,913 $694,634
Oct 98 $795,370 $719,571
Nov 98 $840,690 $753,902
Dec 98 $883,346 $796,950
Jan 99 $924,767 $822,851
Feb 99 $896,885 $794,298
Mar 99 $918,392 $827,984
Apr 99 $946,486 $861,517
May 99 $939,264 $853,591
Jun 99 $989,036 $890,389
Jul 99 $977,711 $878,636
Aug 99 $976,098 $881,272
Sep 99 $984,190 $883,564
Oct 99 $1,030,634 $914,135
Nov 99 $1,108,849 $984,340
Dec 99 $1,228,238 $1,133,960
Jan 00 $1,259,300 $1,116,837
Feb 00 $1,395,972 $1,234,105
Mar 00 $1,437,684 $1,207,572
Apr 00 $1,381,355 $1,148,642
May 00 $1,290,158 $1,087,075
Jun 00 $1,426,954 $1,157,735
Jul 00 $1,379,208 $1,122,772
Aug 00 $1,515,239 $1,209,113
Sep 00 $1,449,478 $1,191,943
Oct 00 $1,376,874 $1,137,233
</TABLE>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
(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.
6
<PAGE>
TCW GALILEO EARNINGS MOMENTUM FUND
[ICON]
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MANAGEMENT DISCUSSIONS (CONTINUED)
After a volatile year for the stock market, we are pleased to report that the
TCW Galileo Earnings Momentum Fund (the "Fund") was up 26.67% for the fiscal
year ended October 31, 2000. This result was nine percentage points above the
17.41% increase in the Russell 2000 Index for the same period.
Healthcare was by far the best performing industry for Fund in the fiscal year.
We found many attractive healthcare companies in December last year and the
first quarter of 2000. We added to our healthcare names during December in major
part owing to the terrific valuations in the sector, as the technology sector's
increasingly higher valuations dominated the market. In addition, several of our
healthcare names are an integral part of the genomics revolution in healthcare,
which has often been termed "the industrialization of drug discovery." Other
strong performers for the fiscal year included information processing and
consumer services. Groups that penalized the portfolio for the year included
electronics-semiconductors and business services.
Looking forward, we are hoping that a final resolution to the presidential
election will provide more stability to the market. We continue to focus on
small market capitalization companies with strong growth prospects and
reasonable valuations in this portfolio. We are maintaining our emphasis on
industry diversification, with significant weightings in areas such as
restaurants, retail and leisure/entertainment in consumer staples, as well
non-consumer areas such as pollution control and energy/oil services.
TCW GALILEO EARNINGS MOMENTUM 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>
26.67% 16.10% 15.56% 15.14%
</TABLE>
<TABLE>
<CAPTION>
RUSSELL 2000
FUND INDEX
<S> <C> <C>
May 93 $254,738 $261,062
Jun 93 $259,639 $262,691
Jul 93 $266,610 $266,318
Aug 93 $282,881 $277,823
Sep 93 $291,226 $285,663
Oct 93 $299,048 $293,016
Nov 93 $287,978 $283,372
Dec 93 $309,881 $293,060
Jan 94 $329,131 $302,249
Feb 94 $326,419 $301,156
Mar 94 $307,134 $285,255
Apr 94 $299,665 $286,951
May 94 $294,451 $283,729
Jun 94 $274,195 $274,094
Jul 94 $273,790 $278,598
Aug 94 $298,518 $294,122
Sep 94 $298,166 $293,137
Oct 94 $304,562 $291,980
Nov 94 $288,420 $280,188
Dec 94 $292,224 $287,716
Jan 95 $284,910 $284,086
Feb 95 $299,232 $295,903
Mar 95 $305,935 $300,999
Apr 95 $308,676 $307,692
May 95 $312,334 $312,983
Jun 95 $333,969 $329,218
Jul 95 $357,434 $348,184
Aug 95 $356,519 $355,387
Sep 95 $369,621 $361,732
Oct 95 $349,510 $345,555
Nov 95 $364,441 $360,072
Dec 95 $369,463 $369,572
Jan 96 $368,853 $369,177
Feb 96 $391,449 $380,683
Mar 96 $410,074 $388,430
Apr 96 $457,709 $409,200
May 96 $485,190 $425,327
Jun 96 $454,657 $407,862
Jul 96 $387,999 $372,237
Aug 96 $414,030 $393,848
Sep 96 $428,116 $409,242
Oct 96 $398,413 $402,935
Nov 96 $399,943 $419,536
Dec 96 $408,474 $430,531
Jan 97 $413,106 $439,142
Feb 97 $376,723 $428,515
Mar 97 $329,426 $408,289
Apr 97 $331,080 $409,432
May 97 $392,597 $454,961
Jun 97 $421,705 $474,479
Jul 97 $431,416 $496,542
Aug 97 $438,716 $507,913
Sep 97 $485,176 $545,092
Oct 97 $460,287 $521,163
Nov 97 $455,311 $517,775
Dec 97 $449,078 $526,836
Jan 98 $449,078 $518,512
Feb 98 $468,011 $556,830
Mar 98 $495,520 $579,772
Apr 98 $505,168 $582,960
May 98 $471,226 $551,539
Jun 98 $495,164 $552,697
Jul 98 $443,776 $507,984
Aug 98 $331,576 $409,333
Sep 98 $372,798 $441,384
Oct 98 $378,531 $459,393
Nov 98 $421,903 $483,465
Dec 98 $482,539 $513,382
Jan 99 $468,999 $520,210
Feb 99 $425,373 $478,078
Mar 99 $448,692 $485,536
Apr 99 $430,641 $529,045
May 99 $422,369 $536,774
Jun 99 $475,401 $561,047
Jul 99 $454,716 $545,652
Aug 99 $460,359 $525,457
Sep 99 $509,632 $525,573
Oct 99 $568,683 $527,701
Nov 99 $664,216 $559,205
Dec 99 $801,157 $622,507
Jan 00 $777,283 $612,485
Feb 00 $1,063,773 $713,606
Mar 00 $926,036 $666,579
Apr 00 $723,105 $626,451
May 00 $667,548 $589,929
Jun 00 $846,144 $641,371
Jul 00 $771,768 $620,719
Aug 00 $832,831 $668,080
Sep 00 $819,972 $648,438
Oct 00 $720,345 $619,492
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 5/1/93
(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.
7
<PAGE>
TCW GALILEO LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
The TCW Galileo Large Cap Growth Fund had another excellent fiscal year
outperforming all benchmark indices and most of our mutual fund competitors. For
the twelve months ended October 31, 2000 the Fund was up 13.97% for its
Institutional ("I") Class shares, significantly ahead of the S&P Growth Index
return of 2.07% and S&P 500 return of 6.09%. For the Advisory ("N") Class shares
the return was 13.58%. The performance of the Fund's two classes varies because
of differing expenses.
Over most of the past twelve months, technology has led the S&P Growth Index,
while consumer cyclicals have lagged. The Fund has been overweight relative to
the Index in technology and up until the last two months of the year, had
benefited from greater exposure to this sector. However, the majority of the
Funds outperformance for the year came from stock selection. Stand out
performers over the last twelve months include companies such as Juniper
Networks (2.4% of the Fund's assets), Sun Microsystems (3.9%) and Abgenix
(1.1%).
During the first half of the fiscal year, we continued to see strong earnings
from traditional large cap growth stocks and technology companies. However in
the middle of March, we began to see significant concern in the market place
regarding future economic growth. These concerns centered on slower EARNINGS and
economic growth, higher ENERGY prices and later in the year the weak EURO
currency. Dubbed the three "E's", these issues have hurt investor psychology
more than expected. The equity market does not like uncertainty of any kind,
particularly with respect to longer duration growth stocks. Companies that are
expected to grow much faster than the rest of the market are severely penalized
when macro economic growth expectations contract.
Long-term growth prospects for most of our companies are not directly affected
by higher energy prices and a weak Euro. These issues are generally short term
in nature and represent little exposure for our companies. However there is
little doubt that a global slowdown is developing which does impact valuation as
it relates to future earnings growth and profit expectations. The last few
months of the fiscal year have been more difficult as some bellwether companies
in the large cap and technology area have either missed earnings expectations or
have issued warnings of slowing growth. Over the last fifteen months there have
been 131 central bank tightenings and higher interest rates are having a
negative impact everywhere. Concerns of a "hard landing" in the U.S. have been
further discounted into the market as the Fed recently showed no signs of
easing. As October approached, fears of what has historically been a very
difficult time for the market didn't help to ease trepidation. As we head into
November, concerns discussed above coupled with the closest United States
Presidential race we have seen in history has added further uncertainty to the
market.
Over the last ten years the U.S. has experienced the longest expansionary period
since WWII. During this period the economy has seen periods of slowing growth
that were offset by improved productivity gains as debt, inflation and unit
labor costs stayed in check. As a result earnings growth and profitability
remained healthy through these periods. Our biggest concern about the stock
market outlook over the longer term has always related to inflation. When
inflation accelerates, equity valuations tend to fall as investors place a
higher discount rate on future earnings. The Fed has indicated that core
inflation is still "on the high side of the acceptable range." Through the ten
months of 2000, core CPI has risen at an annual rate of 2.7%, compared to gains
of 2.4% in 1998 and 1.9% in 1999 with service costs driving this acceleration.
Tight labor markets and higher energy prices could prompt further acceleration
even if growth is sluggish.
The market seems to be discounting the current slow down more severely compared
to what we have seen in the recent past. Not only is output growth decelerating
but also for the first time in many years, productivity improvements may not be
enough to offset this decline. If unit labor
8
<PAGE>
[ICON]
--------------------------------------------------------------------------------
costs pick up, then labor productivity is apt to decelerate as the economy
slows. If interest expense grows as companies finance more of their capital
spending with external funds, productivity could further erode. It appears the
market has anticipated this scenario and continues to punish the equity market.
We believe the Fed will adopt a neutral bias in December and the market will
begin to discount an easing bias. We do not believe the secular expansion of
capital spending in technology to achieve productivity gains is over. Now more
than ever before technology spending cannot be postponed even in difficult
times. Technology remains the key to not only cut costs and boost productivity,
but to survive. With the build out of the Internet and the benefits to be
realized still in front of us, we are still in one of the most exciting
investment periods of our lifetime.
We understand there will be energy, currency, political and macro economic
disruptions that affect all or certain parts of the market over time. We also
believe that leading companies with strong balance sheets that provide high
value added products will continue to experience strong demand. In addition,
many of the companies in our portfolio enjoy a cost advantage and should be able
to gain market share, as consumers become more price sensitive.
The Fund seeks to identify companies with a dominant industry leadership
position and a sustainable, competitive advantage. Consistent with our strategy,
these are the kinds of companies found in the portfolio -- companies best
positioned for continued above-average, long-term success. We spend less time
predicting macroeconomic events and more time studying companies through
traditional bottom-up fundamental research. From this perspective we estimate
the companies in the portfolio will continue to grow earnings well ahead of the
market average.
The large cap growth sector is a meaningful segment of the equity market that
has solid historical and prospective return potential. The Fund is intended for
investors seeking greater capital appreciation over time compared to large cap
growth style indices with less than average relative volatility. Our portfolio
philosophy and process are clearly defined as to why and how we can achieve our
stated objective. Fundamental research, proprietary earnings forecasts, positive
earnings surprise potential and quantitative portfolio construction guideline
techniques are the cornerstone of the Fund's approach to the large cap growth
sector.
9
<PAGE>
TCW GALILEO LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO LARGE CAP GROWTH FUND - I CLASS
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>
13.97% 33.84% 30.87%
</TABLE>
<TABLE>
<CAPTION>
S&P/BARRA
FUND GROWTH INDEX
<S> <C> <C>
Jun 97 $251,125 $250,600
Jul 97 $270,474 $270,448
Aug 97 $253,694 $252,463
Sep 97 $265,866 $265,338
Oct 97 $258,135 $257,352
Nov 97 $270,556 $271,326
Dec 97 $271,858 $274,663
Jan 98 $277,999 $283,892
Feb 98 $297,423 $303,622
Mar 98 $311,357 $319,320
Apr 98 $321,299 $322,002
May 98 $314,204 $315,530
Jun 98 $347,196 $338,027
Jul 98 $349,709 $337,824
Aug 98 $300,065 $293,873
Sep 98 $333,999 $313,533
Oct 98 $351,280 $339,839
Nov 98 $380,187 $362,859
Dec 98 $432,660 $390,459
Jan 99 $471,963 $414,304
Feb 99 $448,710 $398,051
Mar 99 $490,305 $417,332
Apr 99 $484,083 $416,523
May 99 $463,447 $404,381
Jun 99 $500,786 $433,323
Jul 99 $480,480 $419,612
Aug 99 $499,478 $425,432
Sep 99 $497,515 $418,191
Oct 99 $543,042 $447,130
Nov 99 $579,399 $466,267
Dec 99 $676,894 $500,771
Jan 00 $634,094 $467,420
Feb 00 $690,706 $477,236
Mar 00 $731,783 $521,380
Apr 00 $671,030 $495,572
May 00 $636,855 $475,352
Jun 00 $704,858 $513,713
Jul 00 $687,941 $490,853
Aug 00 $747,311 $519,273
Sep 00 $676,892 $468,592
Oct 00 $618,902 $456,409
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 6/19/97
TCW GALILEO LARGE CAP GROWTH FUND - N CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN
1-YEAR SINCE INCEPTION
<S> <C>
13.58% 21.08%
</TABLE>
<TABLE>
<CAPTION>
S&P/BARRA
FUND GROWTH INDEX
<S> <C> <C>
Mar 99 $2,185 $2,097
Apr 99 $2,158 $2,093
May 99 $2,066 $2,032
Jun 99 $2,231 $2,177
Jul 99 $2,140 $2,108
Aug 99 $2,225 $2,138
Sep 99 $2,219 $2,101
Oct 99 $2,422 $2,247
Nov 99 $2,584 $2,343
Dec 99 $3,017 $2,516
Jan 00 $2,826 $2,349
Feb 00 $3,077 $2,398
Mar 00 $3,259 $2,620
Apr 00 $2,988 $2,490
May 00 $2,834 $2,388
Jun 00 $3,137 $2,581
Jul 00 $3,060 $2,466
Aug 00 $3,322 $2,609
Sep 00 $3,008 $2,354
Oct 00 $2,751 $2,293
</TABLE>
VALUE OF $2,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 3/1/99
(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.
10
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
[ICON]
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
The TCW Galileo Large Cap Value Fund (the "Fund") returned 20.46% for its
Institutional ("I") Class shares versus 9.69% for the S&P/BARRA Value Index for
the fiscal year ended October 31, 2000. For the Advisory ("N") Class shares the
return was 20.04%. The performance of the Fund's two classes varies because of
differing expenses.
Over the past 12 months the Fund's performance has been led by investments in
energy, insurance, investment management and technology companies. Energy and
oil services stocks currently represent 16% of the fund. High crude oil and
natural gas prices have driven the strong performance of these stocks during the
past 12 months. However, crude oil prices will likely decline over the next 12
months. As a result, we recently reduced positions due to our concern that the
stocks are no longer dramatically undervalued.
Insurance and investment management stocks represent 16% of the Fund's net
assets. Insurance stocks have performed well recently. Although the outlook for
insurance stocks is good, we have reduced positions due to the current fair
value for the stocks.
Investment management stocks have been a core holding for the Fund for many
years. The long-term performance for these stocks has been good. However, the
recent decline in stock prices has provided an opportunity to add to current
positions. Investment management stocks remain undervalued.
Technology represents 19.7% of the Fund's net assets. As value managers we find
some of our best opportunities in technology stocks. Technology is the fastest
growing sector in the economy. Despite the excellent long-term outlook for
technology companies the shares are extremely volatile. This volatility creates
opportunities to buy good technology companies when investor sentiment is
negative and the stocks are undervalued. (i.e. fourth quarter '98) We sell the
stocks when investors are eurphoric and the shares are overvalued (i.e. first
quarter 2000). The recent decline of many technology stocks has created another
opportunity to buy good companies at value prices.
Looking forward, we will continue to apply our investment philosophy and process
to value investing; Buy undervalued company's with improving returns on invested
capital. Discipline and patience are the key to successful value investing.
11
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO LARGE CAP VALUE FUND - I CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR SINCE INCEPTION
<S> <C>
20.46% 16.57%
</TABLE>
<TABLE>
<CAPTION>
S&P/BARRA
FUND VALUE INDEX
<S> <C> <C>
Dec 97 $252,350 $255,550
Jan 98 $252,754 $252,407
Feb 98 $267,697 $271,337
Mar 98 $279,293 $285,094
Apr 98 $280,726 $288,458
May 98 $273,548 $284,391
Jun 98 $277,377 $286,552
Jul 98 $272,454 $280,334
Aug 98 $230,875 $235,256
Sep 98 $248,382 $249,560
Oct 98 $276,832 $269,100
Nov 98 $289,414 $283,118
Dec 98 $300,281 $293,061
Jan 99 $304,401 $298,981
Feb 99 $304,127 $292,544
Mar 99 $320,611 $301,411
Apr 99 $344,237 $327,395
May 99 $335,720 $321,610
Jun 99 $348,632 $333,963
Jul 99 $334,896 $323,694
Aug 99 $324,183 $315,495
Sep 99 $308,521 $303,150
Oct 99 $324,731 $320,290
Nov 99 $327,754 $318,400
Dec 99 $338,773 $330,372
Jan 00 $332,675 $319,866
Feb 00 $322,695 $299,874
Mar 00 $364,003 $331,151
Apr 00 $361,787 $328,932
May 00 $364,558 $329,952
Jun 00 $348,477 $316,919
Jul 00 $357,904 $323,257
Aug 00 $376,754 $344,948
Sep 00 $380,360 $344,879
Oct 00 $391,174 $351,328
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 12/1/97
TCW GALILEO LARGE CAP VALUE FUND - N CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN
1-YEAR SINCE INCEPTION
<S> <C>
20.04% 15.88%
</TABLE>
<TABLE>
<CAPTION>
S&P/BARRA
FUND VALUE INDEX
<S> <C> <C>
Mar 99 $2,107 $2,061
Apr 99 $2,262 $2,238
May 99 $2,206 $2,199
Jun 99 $2,291 $2,283
Jul 99 $2,197 $2,213
Aug 99 $2,126 $2,157
Sep 99 $2,025 $2,073
Oct 99 $2,130 $2,190
Nov 99 $2,150 $2,177
Dec 99 $2,221 $2,258
Jan 00 $2,182 $2,187
Feb 00 $2,114 $2,050
Mar 00 $2,385 $2,264
Apr 00 $2,368 $2,249
May 00 $2,386 $2,256
Jun 00 $2,279 $2,166
Jul 00 $2,341 $2,210
Aug 00 $2,464 $2,358
Sep 00 $2,486 $2,358
Oct 00 $2,557 $2,402
</TABLE>
VALUE OF $2,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 3/1/99
(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 SELECT EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
The TCW Galileo Select Equities Fund (the "Fund") concluded the October 2000
fiscal year with a return of 29.38% for its Institutional ("I") Class shares..
This compared favorably with the 6.09% return of the S&P 500 Index. For the
Advisory ("N") Class shares the return was 28.92%. The performance of the Fund's
two classes varies because of differing expenses.
The October fiscal year began with strong returns for the market and the mutual
fund as the Federal Reserve provided a liquidity infusion to avert problems
through the Year 2000 transition and it became apparent that the economy was
gaining strength. Significant weighting in technology contributed to our
superior returns. For valuation reasons we re-directed some of our technology
gains into well-established biotechnology holdings that appeared to be well
positioned to benefit from positive trends related to the coding of the human
genome. These are Amgen, Biogen and Genentech.
In the first half of calendar 2000 as concerns that the economy was slowing
after repeated Federal Reserve rate increases and an un-anticipated rise in the
price of oil we found some opportunities to reposition the portfolio. Southwest
Airlines on news of their energy cost exposure traded to an attractive level and
in view of their very profitable geographic expansion we used the price weakness
to initiate a position. Time Warner on the news of a merger with America Online
traded to a significant premium. Understanding that, with large corporate
marriages, at no time are perceptions more positive than at the outset of a
merger before concessions need to be made to regulators and before key managers
defect. Through the year we liquidated holdings in companies (Coca-Cola,
Gillette and Proctor and Gamble) which constituted our global franchise trend
holdings. We saw in each case that this trend had somewhat run its course as
these companies had exhausted their geographic growth opportunities. Moreover it
had become clear that their pricing power had been lost to the large retailer
who had substitution options and who represent an ever larger portion of the
consumer product companies' total business. For this reason we added Wal-Mart
Stores and Costco.
Through the year as stock market volatility increased we found opportunities to
add some rapidly growing technology sector names to the portfolio. These
companies are JDS Uniphase, Network Appliances, Xilinx and Yahoo. Each of these
companies is well positioned within their business segment. Meanwhile we
liquidated positions in Lucent Technologies and Cox Communications as it has
become clear that both face greater competitive challenges and sizable demand
for new capital expenditures. We also sold Eli Lilly, the railway portion of
Kansas City Southern, Medtronic, Safeway and T. Rowe Price. We were able to
tender Mirage Resorts and Warner Lambert at premiums as the result of
take-overs. Lastly we established a position in General Electric which dominates
several good businesses and is preparing to improve overall profitability as
they harness the power of the Internet.
Through the year the economy has shown strong but slowing growth as the combined
economic rents: higher interest rates and higher energy expense have taken their
toll. The financial markets have reflected these pressures and we ended the
fiscal year with volatile markets and significant declines in the final two
months.
Where is the economy headed? We are not economists but it appears to us that the
economy is indeed slowing. U.S. Gross Domestic Product cannot maintain a 6% rate
of growth in the face of ever rising interest rates and energy costs forever. A
number of technology companies cannot experience hyper growth rates if capital
spending budgets are reduced into a slowing economy. But is the world coming to
an end? We do not think so. Energy prices appear to have stabilized and we
believe we are close to the end of global interest rate hikes. As the slowing
forces abate we still have a favorable economic environment.
13
<PAGE>
TCW GALILEO SELECT EQUITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
The world economy is generally at peace with unparalleled economic
interdependency. Without exception, Central Bankers have maintained a resolve to
control inflation. Mobile businesses' ever-constant threat of migration to a
more favorable business climate enforces this resolve. This creates a backdrop
for a brutal competition where companies must find ways to cut costs to survive.
In order to thrive, companies must innovate and develop global presence. In this
information age the consumer is better informed and product cycles are shorter.
These trends enable the companies with truly superior business models to exploit
their advantages more rapidly and with greater results. Does slower growth
change all of this? No but it does create a riskier environment for the
second-tier performers. As businesses and consumers become more careful about
their purchases, those companies who produce the best products or have a cost
structure advantage and can cut their prices more rapidly, are going to gain
market share versus their lesser competitors. These are the types of companies
that have been and continue to be at the heart of how we invest. After a
turbulent October, we believe the quality businesses we own offer a compelling
opportunity for future capital gains.
14
<PAGE>
[ICON]
--------------------------------------------------------------------------------
TCW GALILEO SELECT EQUITIES FUND - I CLASS
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>
29.38% 31.56% 26.68% 21.09%
</TABLE>
INCEPTION 7/1/91
VALUE OF $250,000
<TABLE>
<CAPTION>
S&P 500
FUND INDEX
<S> <C> <C>
Jul 91 $257,372 $261,653
Aug 91 $266,007 $267,851
Sep 91 $263,197 $263,370
Oct 91 $272,748 $266,909
Nov 91 $258,669 $256,154
Dec 91 $288,532 $285,450
Jan 92 $293,777 $280,132
Feb 92 $298,307 $283,759
Mar 92 $289,356 $278,239
Apr 92 $289,723 $286,406
May 92 $291,714 $287,809
Jun 92 $280,186 $283,527
Jul 92 $291,045 $295,109
Aug 92 $283,233 $289,068
Sep 92 $290,277 $292,465
Oct 92 $298,720 $293,473
Nov 92 $313,714 $303,466
Dec 92 $319,832 $307,191
Jan 93 $331,857 $309,758
Feb 93 $332,023 $313,980
Mar 93 $346,964 $320,605
Apr 93 $340,990 $312,855
May 93 $352,611 $321,223
Jun 93 $363,566 $322,165
Jul 93 $357,589 $320,869
Aug 93 $375,851 $333,043
Sep 93 $376,847 $330,488
Oct 93 $385,481 $337,325
Nov 93 $379,170 $334,111
Dec 93 $393,158 $338,149
Jan 94 $416,130 $349,648
Feb 94 $411,137 $340,160
Mar 94 $388,500 $325,329
Apr 94 $384,172 $329,499
May 94 $392,162 $334,906
Jun 94 $368,860 $326,698
Jul 94 $378,513 $337,427
Aug 94 $393,162 $351,263
Sep 94 $379,511 $342,675
Oct 94 $385,170 $350,375
Nov 94 $369,189 $337,615
Dec 94 $365,490 $342,623
Jan 95 $358,132 $351,506
Feb 95 $374,184 $365,203
Mar 95 $383,883 $375,979
Apr 95 $400,601 $387,051
May 95 $412,306 $402,522
Jun 95 $436,381 $411,872
Jul 95 $460,124 $425,529
Aug 95 $458,785 $426,597
Sep 95 $466,140 $444,600
Oct 95 $457,782 $443,014
Nov 95 $468,480 $462,461
Dec 95 $462,174 $471,368
Jan 96 $464,522 $487,413
Feb 96 $482,982 $491,931
Mar 96 $493,386 $496,668
Apr 96 $511,843 $503,989
May 96 $531,979 $516,987
Jun 96 $516,876 $518,958
Jul 96 $483,311 $496,029
Aug 96 $502,440 $506,491
Sep 96 $532,647 $534,997
Oct 96 $534,660 $549,752
Nov 96 $577,283 $591,309
Dec 96 $557,309 $579,596
Jan 97 $582,472 $615,820
Feb 97 $563,768 $620,624
Mar 97 $530,106 $595,054
Apr 97 $569,212 $630,579
May 97 $611,037 $668,981
Jun 97 $626,338 $698,951
Jul 97 $693,982 $754,588
Aug 97 $653,870 $712,331
Sep 97 $675,971 $751,367
Oct 97 $655,895 $726,271
Nov 97 $676,293 $759,897
Dec 97 $683,800 $772,968
Jan 98 $692,005 $781,548
Feb 98 $740,584 $837,897
Mar 98 $768,956 $880,798
Apr 98 $782,420 $889,694
May 98 $758,377 $874,391
Jun 98 $813,200 $909,891
Jul 98 $831,009 $900,155
Aug 98 $693,975 $769,993
Sep 98 $759,348 $819,349
Oct 98 $812,244 $885,963
Nov 98 $854,083 $939,661
Dec 98 $943,497 $993,804
Jan 99 $1,017,146 $1,035,365
Feb 99 $983,112 $1,003,186
Mar 99 $1,056,757 $1,043,323
Apr 99 $1,053,407 $1,083,731
May 99 $1,015,464 $1,058,144
Jun 99 $1,105,291 $1,116,861
Jul 99 $1,056,194 $1,081,992
Aug 99 $1,062,891 $1,076,636
Sep 99 $1,028,294 $1,047,126
Oct 99 $1,154,393 $1,113,388
Nov 99 $1,210,751 $1,135,990
Dec 99 $1,348,692 $1,202,899
Jan 00 $1,329,500 $1,142,514
Feb 00 $1,438,253 $1,120,920
Mar 00 $1,570,860 $1,230,546
Apr 00 $1,485,955 $1,193,507
May 00 $1,458,613 $1,169,040
Jun 00 $1,573,187 $1,197,798
Jul 00 $1,518,519 $1,179,113
Aug 00 $1,652,862 $1,252,336
Sep 00 $1,555,740 $1,186,212
Oct 00 $1,493,510 $1,181,195
</TABLE>
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
TCW GALILEO SELECT EQUITES FUND - N CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN
1-YEAR SINCE INCEPTION
<S> <C>
28.92% 28.13%
</TABLE>
<TABLE>
<CAPTION>
FUND S&P 500 INDEX
MAR 99 $2,149 $2,080
<S> <C> <C>
Apr 99 $2,143 $2,161
May 99 $2,065 $2,110
Jun 99 $2,247 $2,227
Jul 99 $2,148 $2,157
Aug 99 $2,160 $2,146
Sep 99 $2,090 $2,088
Oct 99 $2,345 $2,220
Nov 99 $2,459 $2,265
Dec 99 $2,738 $2,398
Jan 00 $2,698 $2,278
Feb 00 $2,918 $2,235
Mar 00 $3,186 $2,453
Apr 00 $3,013 $2,379
May 00 $2,957 $2,331
Jun 00 $3,189 $2,388
Jul 00 $3,076 $2,351
Aug 00 $3,349 $2,497
Sep 00 $3,150 $2,365
Oct 00 $3,023 $2,355
</TABLE>
VALUE OF $2,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 3/1/99
(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.
15
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
The TCW Galileo Small Cap Growth Fund (the "Fund") achieved a return of 28.91%
for the fiscal year ended October 31, 2000 for its Institutional ("I")
Class shares. During the same period of time, the Russell 2000 Index gained
17.41%. For the Advisory ("N") Class shares, the return was 28.56%. The
performance of the Fund's two classes varies because of differing expenses.
The past year's results can be broken up into nearly identical six-month
increments. From October to early April, euphoria was the operative word
describing market conditions, and the Fund more than fully participated in the
appreciation that occurred among the so-called "New Economy" stocks. Starting
April, several events combined to change market conditions and partially reverse
some of our earlier gains. Since the past six months have been as difficult as
any period in recent memory, it may be worth spending some time discussing
recent market trends and what we are doing to take advantage of them.
The primary catalyst driving the market has been the slow-down in the economy
driven by successive increases in the short-term interest rate. Despite mounting
evidence that the economy is slowing, the Federal Reserve has kept short-term
rates at a high level because of continued inflation fears. The low unemployment
rate and stubbornly high energy prices have offset other economic indicators
which show that a recession is now a greater danger than inflation. Unemployment
is a lagging indicator and is a particularly poor predictor of future economic
performance. High energy prices, on the other hand, are troubling in that they
should be coming down as the futures market reacts to a slowing economy.
Nevertheless, political crises in Iraq, Venezuela and other major oil producers
have combined to keep prices high even as future demand appears to slacken. The
result has been a continuation of the Fed's tight money policy which restricts
liquidity and inevitably hurts the equity markets.
To most observers, it is now obvious that the economy is slowing to a "soft" or
possibly even to a "hard" landing. The evidence is seen through earnings
disappointments which have affected several high profile companies. Reliable
stalwarts such as Home Depot, Northern Telecom and Intel have missed Wall Street
expectations. Unfortunately for growth investors, technology has been hit
extraordinarily hard with Dell, Hewlett Packard and IBM all experiencing
shortfalls. Slowing earnings growth is never positive for the equity markets,
and we are witnessing the results. Compounding this problem is the political
uncertainty regarding the undecided Presidential election. It is very difficult
for investors to make informed decisions on what companies to buy when they are
uncertain about what the rules of the game are likely to be for the next four
years. Thus, many buyers are waiting on the sidelines until this matter is
resolved. Finally, we would point to the weak Euro as an additional stress.
Wildly fluctuating currencies make capital allocation decisions difficult and
introduce uncertainty into company income statements by making the revenue and
cost of goods sold line items hard to predict.
Given these issues outlined above, what does this mean for future portfolio
returns? On the macroeconomic front, it is important to remember that every
problem we have raised is transitory. Energy prices are set by supply and
demand. Producers of oil have bills to pay just like anyone else and will fight
to preserve their market share even as demand inevitably drops to reflect slower
growth. Past history would seem to drive this point home. The U.S. will have a
new President on January 20, 2001 as mandated by the Constitution, which also
provides for a clear, if somewhat bumpy, roadmap for the transfer of power. Over
time the Euro and dollar will adjust to the correct valuation based on the
respective economic performance of North America and the European Union.
Interest rate reductions are inevitable as the inverted yield curve clearly
shows that investors have already figured out the economy is slowing and that
the inflation threat is receding.
16
<PAGE>
[ICON]
--------------------------------------------------------------------------------
As money becomes cheaper and the cost of the factors of production such as
energy decrease, companies will become more productive which will lead to a
better earnings outlook. In other words, the economic cycle will have come full
circle, and this will be reflected in the price of equities. There is nothing
that we see on the horizon that will reverse these fundamental laws of
economics.
Having discussed the macroeconomic environment, it is now appropriate to take a
look at what we are doing in the portfolio. As always, we focus exclusively on
executing our investment strategy, that is to say we concentrate on company
fundamentals--their underlying growth rate, their ability to beat consensus
expectations and the dynamics of the business model. While a slowing economy
will have some effect on these fundamentals, it is important to remember that
many of the companies we own are still very early in their growth cycles and
should grow somewhat independent of macroeconomic trends. The companies we own
are invariably pioneers in their industries or are creating new industries where
demand is exploding. We have made these investments precisely because the
underlying growth opportunity is so enormous that it should continue despite a
slowing economy.
As we live through this difficult period, we are focusing mainly on two things.
First, we want to make sure that our companies remain healthy and will deliver
the results Wall Street expects. This means we are on the phone discussing
conditions with companies and their management and using the independent
resources available to us to verify what we are hearing. Second, we are taking
advantage of conditions to upgrade the quality of the portfolio. There are many
great companies that formerly were far too expensive to purchase that are now
selling at bargain prices. When markets correct, it is invariably these
companies which hold up best as there are always investors who want to own them
at a price. As the market recovers, these same companies are the first one's
investors come back to. Therefore, we believe execution remains the key, and our
clients should know this is where our attention is focused.
In closing, we would like to point out that the conditions we are seeing today
have occurred before and will occur again sometime in the future. As we have
said on many occasions, times of rising interest rates and political instability
can cause volatility for our strategy. However, we do not panic but use
reasoned, analytical research to identify the very best growth companies and
then build a portfolio around them. This approach has worked in the past and, we
believe, will continue to work in the future.
17
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO SMALL CAP GROWTH FUND - I CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEAR 5-YEAR 10-YEAR SINCE INCEPTION
<S> <C> <C> <C> <C>
28.91% 31.98% 26.91% 26.67% 22.47%
</TABLE>
<TABLE>
<CAPTION>
FUND RUSSELL 2000 INDEX
DEC 89 $259,590 $250,953
<S> <C> <C>
Jan 90 $243,599 $229,047
Feb 90 $250,081 $236,149
Mar 90 $258,337 $245,405
Apr 90 $257,055 $237,382
May 90 $277,417 $254,188
Jun 90 $277,017 $254,848
Jul 90 $271,275 $243,684
Aug 90 $239,031 $211,079
Sep 90 $224,773 $192,313
Oct 90 $215,139 $180,562
Nov 90 $225,012 $194,341
Dec 90 $229,777 $201,981
Jan 91 $246,797 $220,178
Feb 91 $270,699 $244,881
Mar 91 $290,206 $262,049
Apr 91 $279,233 $261,367
May 91 $304,738 $273,809
Jun 91 $278,997 $257,983
Jul 91 $310,727 $267,014
Aug 91 $335,511 $276,867
Sep 91 $341,134 $279,000
Oct 91 $376,875 $286,364
Nov 91 $351,832 $273,104
Dec 91 $416,097 $295,119
Jan 92 $436,220 $319,032
Feb 92 $432,167 $328,338
Mar 92 $394,002 $317,224
Apr 92 $350,607 $306,111
May 92 $351,252 $310,181
Jun 92 $330,872 $295,512
Jul 92 $338,598 $305,795
Aug 92 $325,789 $297,166
Sep 92 $342,808 $304,019
Oct 92 $363,545 $313,683
Nov 92 $407,185 $337,685
Dec 92 $427,516 $349,450
Jan 93 $425,292 $361,277
Feb 93 $379,038 $352,933
Mar 93 $396,617 $364,385
Apr 93 $391,576 $354,383
May 93 $423,968 $370,064
Jun 93 $431,179 $372,373
Jul 93 $438,669 $377,514
Aug 93 $472,354 $393,823
Sep 93 $493,794 $404,937
Oct 93 $508,806 $415,360
Nov 93 $466,092 $401,689
Dec 93 $483,430 $415,423
Jan 94 $504,846 $428,448
Feb 94 $493,941 $426,898
Mar 94 $454,426 $404,359
Apr 94 $444,547 $406,762
May 94 $429,730 $402,195
Jun 94 $404,045 $388,538
Jul 94 $411,948 $394,921
Aug 94 $443,561 $416,927
Sep 94 $450,476 $415,531
Oct 94 $463,815 $413,891
Nov 94 $444,553 $397,175
Dec 94 $462,335 $407,846
Jan 95 $443,564 $402,701
Feb 95 $473,695 $419,453
Mar 95 $509,260 $426,677
Apr 95 $510,742 $436,164
May 95 $522,597 $443,663
Jun 95 $584,341 $466,677
Jul 95 $639,170 $493,562
Aug 95 $651,027 $503,772
Sep 95 $684,939 $512,767
Oct 95 $695,213 $489,835
Nov 95 $735,292 $510,413
Dec 95 $759,564 $523,881
Jan 96 $760,612 $523,321
Feb 96 $797,882 $539,630
Mar 96 $861,920 $550,613
Apr 96 $977,400 $580,055
May 96 $1,032,516 $602,915
Jun 96 $967,952 $578,157
Jul 96 $814,735 $527,658
Aug 96 $891,426 $558,293
Sep 96 $956,563 $580,114
Oct 96 $901,933 $571,173
Nov 96 $900,887 $594,706
Dec 96 $893,473 $610,292
Jan 97 $901,898 $622,498
Feb 97 $789,161 $607,434
Mar 97 $707,507 $578,763
Apr 97 $710,669 $580,383
May 97 $848,695 $644,922
Jun 97 $905,592 $672,589
Jul 97 $958,370 $703,865
Aug 97 $948,805 $719,983
Sep 97 $1,034,340 $772,686
Oct 97 $995,563 $738,765
Nov 97 $984,940 $733,963
Dec 97 $1,021,836 $746,807
Jan 98 $1,012,782 $735,008
Feb 98 $1,098,221 $789,325
Mar 98 $1,173,471 $821,845
Apr 98 $1,166,113 $826,365
May 98 $1,082,946 $781,824
Jun 98 $1,203,467 $783,466
Jul 98 $1,111,546 $720,084
Aug 98 $845,164 $580,243
Sep 98 $934,904 $625,676
Oct 98 $936,044 $651,204
Nov 98 $1,068,382 $685,327
Dec 98 $1,228,853 $727,735
Jan 99 $1,322,184 $737,414
Feb 99 $1,187,943 $677,691
Mar 99 $1,290,486 $688,263
Apr 99 $1,327,936 $749,938
May 99 $1,295,096 $760,895
Jun 99 $1,473,690 $795,302
Jul 99 $1,409,747 $773,479
Aug 99 $1,467,363 $744,853
Sep 99 $1,541,113 $745,017
Oct 99 $1,775,593 $748,034
Nov 99 $2,149,498 $792,692
Dec 99 $2,777,882 $882,424
Jan 00 $2,692,240 $868,217
Feb 00 $3,430,290 $1,011,560
Mar 00 $2,986,856 $944,898
Apr 00 $2,327,149 $888,015
May 00 $2,100,578 $836,244
Jun 00 $2,647,905 $909,164
Jul 00 $2,451,695 $879,889
Aug 00 $2,952,233 $947,025
Sep 00 $2,716,527 $919,182
Oct 00 $2,288,891 $878,150
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 12/1/89
TCW GALILEO SMALL CAP GROWTH FUND - N CLASS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUALIZED TOTAL RETURN
1-YEAR SINCE INCEPTION
<S> <C>
28.56% 47.80%
</TABLE>
<TABLE>
<CAPTION>
FUND RUSSELL 2000 INDEX
MAR 99 $2,172 $2,031
<S> <C> <C>
Apr 99 $2,235 $2,213
May 99 $2,178 $2,246
Jun 99 $2,478 $2,347
Jul 99 $2,371 $2,283
Aug 99 $2,467 $2,198
Sep 99 $2,591 $2,199
Oct 99 $2,984 $2,208
Nov 99 $3,610 $2,339
Dec 99 $4,663 $2,604
Jan 00 $4,518 $2,562
Feb 00 $5,753 $2,985
Mar 00 $5,008 $2,789
Apr 00 $3,909 $2,621
May 00 $3,528 $2,468
Jun 00 $4,441 $2,683
Jul 00 $4,111 $2,597
Aug 00 $4,950 $2,795
Sep 00 $4,554 $2,713
Oct 00 $3,836 $2,592
</TABLE>
VALUE OF $2,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 3/1/99
(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.
18
<PAGE>
TCW GALILEO SMALL CAP VALUE FUND
[ICON]
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
Since it's inception on June 14, 2000, the TCW Galileo Small Cap Value Fund (the
"Fund") has had year-to-date performance of 9.70%. While we have demonstrated
excellent performance, attributable to our "value with a catalyst" investment
style, the overall environment for value investing has been lackluster to awful.
After a seven-year period in which value managers and growth managers generated
equivalent returns, small cap growth funds eclipsed their value counterparts by
46% in 1999.
However, thanks to the bursting of the Internet bubble and the dismal returns of
many growth funds in this year's first half, the tide appears to be shifting
back toward value. Year to date, the Russell 2000 Value Index trounced its
growth counterpart by an astounding 1500 basis points, and the smidcap Russell
2500 Value Index beat its growth counterpart by 700 basis points. Based on input
from consultants, mutual fund managers and pension fund publications, there has
been a significant revival of search activity for the value investment style. We
believe the valuation gap between growth and value remains large and that this
gap will close through a reversion to the mean- a shifting of attitudes toward
value funds on the part of mutual fund investors. Given that mutual fund flows
chase performance, we should soon be witnessing a reversal of money flows into
value strategies.
This should provide us with ample wind at our backs. The Fund is well positioned
among a host of attractively priced stocks in the media, healthcare, financial
and capital goods industries. We have patiently accumulated the temporarily
depressed shares of many excellent companies with superb long-term business
fundamentals. The Fund should benefit from this expected influx of new money
into our asset class. Given the small trading volume of certain of our holdings,
new money flows into our market should create a powerful force for appreciation
into the next small and mid cap value up cycle.
19
<PAGE>
TCW GALILEO SMALL CAP VALUE FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO SMALL CAP VALUE FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TOTAL RETURN
Since Inception
9.70%
<TABLE>
<CAPTION>
RUSSELL 2000 VALUE
FUND WITH INCOME INDEX
<S> <C> <C>
Jun 00 $249,500 $248,700
Jul 00 $253,250 $256,982
Aug 00 $272,249 $268,469
Sep 00 $274,250 $266,939
Oct 00 $274,250 $265,978
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 6/14/00
20
<PAGE>
TCW GALILEO VALUE OPPORTUNITIES FUND
[ICON]
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
For the year fiscal ended October 31, 2000, the TCW Galileo Value Opportunities
Fund (the "Fund") appreciated 47.19% versus 11.85% and 15.56% for the Russell
Midcap Value and Russell 2500 Value indices, respectively. We attribute the
outperformance to our purchase of former institutional darling growth stocks at
"value prices" resulting from turbulent market conditions.
Thanks to the bursting of the Internet bubble and the dismal returns of many
growth funds in this year's first half, the tide appears to be shifting back
toward value. Year to date, the Russell 2500 Value index trounced its growth
counterpart by an astounding 1500 basis points, and the midcap Russell 2500
Value Index beat its growth counterpart by 700 basis points. Based on input from
consultants, mutual fund managers and pension fund publications, there has been
a significant revival of search activity for the value investment style. We
believe the valuation gap between growth and value remains large and that this
gap will close through a reversion to the mean--a shifting of attitudes toward
value funds on the part of mutual fund investors. Given that mutual fund flows
chase performance, we should soon be witnessing a reversal of money flows into
value strategies.
This should provide us with ample wind at our backs. The Fund is well positioned
among a host of attractively priced stocks in the media, financial and capital
goods industries. We have patiently accumulated the temporarily depressed shares
of many excellent companies with superb long-term business fundamentals. The
Fund should benefit from this expected influx of new money into our asset class.
21
<PAGE>
TCW GALILEO VALUE OPPORTUNITIES FUND
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSIONS (CONTINUED)
TCW GALILEO VALUE OPPORTUNITIES 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>
47.19% 18.28% 20.35%
</TABLE>
<TABLE>
<CAPTION>
WILSHER MIDCAP RUSSELL MIDCAP
FUND 750 INDEX VALUE INDEX
<S> <C> <C> <C>
Nov 96 $269,110 $263,350 $265,683
Dec 96 $271,314 $263,297 $264,580
Jan 97 $281,092 $269,932 $272,893
Feb 97 $278,947 $267,476 $277,519
Mar 97 $269,368 $255,038 $269,085
Apr 97 $271,332 $260,114 $275,871
May 97 $296,601 $282,509 $292,134
Jun 97 $309,308 $292,906 $302,978
Jul 97 $329,505 $312,911 $325,477
Aug 97 $336,498 $314,726 $321,675
Sep 97 $346,031 $333,138 $341,626
Oct 97 $316,967 $318,013 $331,240
Nov 97 $313,481 $319,953 $342,419
Dec 97 $317,650 $326,768 $355,520
Jan 98 $315,109 $321,605 $348,613
Feb 98 $337,954 $347,108 $371,907
Mar 98 $344,936 $363,006 $391,049
Apr 98 $348,744 $367,943 $388,867
May 98 $332,877 $351,533 $379,783
Jun 98 $313,836 $354,310 $380,995
Jul 98 $288,761 $331,740 $361,678
Aug 98 $237,361 $269,572 $310,819
Sep 98 $247,829 $286,879 $328,958
Oct 98 $293,206 $305,583 $350,262
Nov 98 $304,630 $319,395 $362,556
Dec 98 $318,591 $340,955 $373,578
Jan 99 $325,256 $337,238 $364,869
Feb 99 $305,900 $317,813 $356,842
Mar 99 $309,390 $324,297 $361,945
Apr 99 $345,248 $353,970 $396,221
May 99 $364,606 $360,235 $397,886
Jun 99 $383,963 $377,634 $402,417
Jul 99 $382,378 $370,875 $392,357
Aug 99 $378,886 $359,266 $378,781
Sep 99 $369,051 $352,656 $359,623
Oct 99 $356,359 $367,115 $370,232
Nov 99 $371,590 $385,691 $363,442
Dec 99 $398,422 $431,819 $373,174
Jan 00 $377,585 $417,829 $350,855
Feb 00 $370,169 $473,441 $336,182
Mar 00 $437,988 $486,745 $376,934
Apr 00 $445,758 $459,001 $378,442
May 00 $465,184 $436,693 $384,947
Jun 00 $456,354 $464,860 $370,600
Jul 00 $470,835 $456,446 $379,261
Aug 00 $516,750 $497,709 $402,514
Sep 00 $513,924 $476,357 $406,370
Oct 00 $524,521 $461,209 $414,095
</TABLE>
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
INCEPTION 11/1/96
(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.
22
<PAGE>
TCW GALILEO AGGRESSIVE GROWTH EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
----------- ------------ ------------
<C> <S> <C>
BANKING & FINANCIAL SERVICES (1.5% OF
NET ASSETS)
93,985 T. Rowe Price Associates, Inc. $ 4,399,673
------------
COMMERCIAL SERVICES (2.2%)
75,488 Paychex, Inc. 4,279,226
35,600 StorageNetworks, Inc. 2,258,375*
------------
TOTAL COMMERCIAL SERVICES 6,537,601
------------
COMPUTER SERVICES (11.2%)
33,800 CheckFree Corp. 1,681,550*
49,500 Commerce One, Inc. 3,177,281*
2,500 Foundry Networks, Inc. 166,094*
82,364 Portal Software, Inc. 2,898,183*
77,510 Scient Corp. 1,395,180*
122,224 VeriSign, Inc. 16,133,586*
65,700 WebMD Corp. 747,337*
120,742 Yahoo!, Inc. 7,078,500*
------------
TOTAL COMPUTER SERVICES 33,277,711
------------
COMPUTER SOFTWARE (24.0%)
92,300 Ariba, Inc. 11,664,412*
130,300 Electronic Arts, Inc. 6,515,000*
63,300 Homestore.com, Inc. 2,152,200*
262,200 Liberate Technologies, Inc. 4,998,187*
56,918 Rational Software Corp. 3,397,293*
288,088 Siebel Systems, Inc. 30,231,234*
23,200 Software.com, Inc. 3,456,800*
40,800 Sycamore Networks, Inc. 2,580,600*
220,954 Vignette Corp. 6,587,191*
------------
TOTAL COMPUTER SOFTWARE 71,582,917
------------
ELECTRONICS (13.8%)
127,034 Altera Corp. 5,200,454*
68,100 Elantec Semiconductor, Inc. 7,576,125*
68,200 Globespan, Inc. 5,247,137*
142,936 Maxim Integrated Products, Inc. 9,478,444*
189,634 XILINX, Inc. 13,736,613*
------------
TOTAL ELECTRONICS 41,238,773
------------
ENTERTAINMENT & LEISURE (0.9%)
145,968 Westwood One, Inc. 2,764,269*
------------
HEALTHCARE (4.1%)
35,800 Affymetrix, Inc. 1,982,425*
161,000 Health Management Associates, Inc. 3,189,813*
78,500 Human Genome Sciences, Inc. 6,938,662*
------------
TOTAL HEALTHCARE 12,110,900
------------
MEDIA--BROADCASTING & PUBLISHING (5.8%)
74,644 Cablevision Systems Corp. 5,560,978*
41,681 Clear Channel Communications, Inc. 2,503,465*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
TCW GALILEO AGGRESSIVE GROWTH EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<C> <S> <C>
MEDIA--BROADCASTING & PUBLISHING
(CONTINUED)
69,100 Cox Radio, Inc. $ 1,572,025*
80,900 Hispanic Broadcasting Corp. 2,528,125*
15,200 Mediacom Communications Corp. 258,400*
130,252 Univision Communications, Inc. 4,982,139*
------------
TOTAL MEDIA--BROADCASTING & PUBLISHING 17,405,132
------------
MEDICAL SUPPLIES (1.2%)
50,400 MiniMed, Inc. 3,676,050*
------------
PHARMACEUTICALS (8.3%)
123,800 Abgenix, Inc. 9,764,725*
76,648 Andrx Corp. 5,518,656*
50,400 Genentech, Inc. 4,158,000*
32,300 Gilead Sciences, Inc. 2,777,800*
39,400 Sepracor, Inc. 2,684,125*
------------
TOTAL PHARMACEUTICALS 24,903,306
------------
RETAIL (4.5%)
47,514 Amazon.com, Inc. 1,740,200*
184,450 Bed, Bath & Beyond, Inc. 4,761,116*
96,264 eBay, Inc. 4,957,596*
23,682 Talbots, Inc. 1,872,358
------------
TOTAL RETAIL 13,331,270
------------
TELECOMMUNICATIONS (16.1%)
24,200 American Tower Corp. 990,688*
7,500 Corvis Corp. 492,188*
151,492 EchoStar Communications Corp. 6,855,013*
135,900 Exodus Communications, Inc. 4,561,144*
87,800 Juniper Networks, Inc. 17,121,000*
158,994 McLeodUSA, Inc. 3,060,635*
102,900 Metromedia Fiber Network, Inc. 1,955,100*
4,700 ONI Systems Corp. 380,994*
62,700 Research In Motion, Ltd. 6,270,000*
72,900 Sonus Networks, Inc. 2,515,050*
185,000 Spectrasite Holdings, Inc. 3,653,750*
------------
TOTAL TELECOMMUNICATIONS 47,855,562
------------
TOTAL COMMON STOCK (COST: $139,390,547)
(93.6%) 279,083,164
------------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
----------- ----------------------
<C> <S> <C>
$ 3,842,190 American Express Co., 6.54%, due
11/21/00 3,842,190**
2,842,190 American Express Co., 6.63%, due
01/18/01 2,842,190**
1,921,095 Bank of America, 6.64%, due 01/16/01 1,921,095**
1,921,095 Bank of Nova Scotia, 6.53%, due 11/27/00 1,921,095**
2,881,642 Bank of Nova Scotia, 6.67%, due 01/05/01 2,881,642**
1,921,095 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 1,921,095**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------- ------------
<C> <S> <C>
$ 5,000,000 Credit Agricole, 6.53%, due 11/06/00 $ 5,000,000**
8,000,000 Credit Agricole, 6.53%, due 11/06/00 8,000,000**
1,591,570 Fleet National Bank, 6.725%, due
04/30/01 1,591,570**
22,043,123 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 22,043,123
9,834,460 Merrimac Money Market Fund, 6.549%, due
11/01/00 9,834,460**
7,000,000 Royal Bank of Scotland, 6.65%, due
01/08/01 7,000,000**
------------
TOTAL SHORT-TERM INVESTMENTS (COST:
$68,798,460) (23.1%) 68,798,460
------------
TOTAL INVESTMENTS (COST: $208,189,007)
(116.7%) 347,881,624
LIABILITIES IN EXCESS OF OTHER ASSETS
(-16.7%) (49,851,983)
------------
NET ASSETS (100.0%) $298,029,641
============
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
TCW GALILEO CONVERTIBLE SECURITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FIXED INCOME SECURITIES VALUE
---------- ----------------------- -----------
<C> <S> <C>
ADVERTISING (2.4% OF NET ASSETS)
$ 195,000 Interpublic Group of Companies, Inc.,
1.87%, due 06/01/06 $ 183,300
830,000 Interpublic Group of Companies, Inc.,
(144A), 1.87%, due 06/01/06 782,275**
705,000 Lamar Advertising Co., 5.25%, due
09/15/06 817,800
-----------
TOTAL ADVERTISING 1,783,375
-----------
BANKING & FINANCIAL SERVICES (3.6%)
325,000 E*TRADE Group, Inc., 6%, due 02/01/07 268,531
1,300,000 E*TRADE Group, Inc., (144A), 6%, due
02/01/07 1,074,125**
525,000 Lehman Brothers Holdings, Inc., 0%, due
07/06/04 518,437
760,000 Providian Financial Corp., 3.25%, due
08/15/05 745,750
-----------
TOTAL BANKING & FINANCIAL SERVICES 2,606,843
-----------
COMMERCIAL SERVICES (1.8%)
690,000 Akamai Technologies, Inc., (144A), 5.5%,
due 07/01/07 496,800**
945,000 Quanta Services, Inc., Exchangeable
Quanta Services, Inc., 4%, due
07/01/07 790,256
-----------
TOTAL COMMERCIAL SERVICES 1,287,056
-----------
COMPUTER SERVICES (6.2%)
790,000 CheckFree Holdings Corp., 6.5%, due
12/01/06 744,575
1,080,000 Goldman Sachs Group, Inc., Exchangeable
Compaq Computer Corp., 0.5%, due
01/13/07 1,069,826
1,060,000 IBM Credit Corp., 2%, due 02/04/03 1,219,000
635,000 Mercury Interactive Corp., (144A),
4.75%, due 07/01/07 764,381**
850,000 Natural Microsystems Corp., Exchangeable
Perot Systems Corp., 5%, due 10/15/05 792,625
-----------
TOTAL COMPUTER SERVICES 4,590,407
-----------
COMPUTER SOFTWARE (6.8%)
145,000 BEA Systems, Inc., 4%, due 12/15/06 316,100
820,000 BEA Systems, Inc., (144A), 4%, due
12/15/06 1,787,600**
135,000 Rational Software Corp., 5%, due
02/01/07 246,037
485,000 Rational Software Corp., (144A), 5%, due
02/01/07 883,912**
390,000 Siebel Systems, Inc., (144A), 5.5%, due
09/15/06 1,783,977**
-----------
TOTAL COMPUTER SOFTWARE 5,017,626
-----------
ELECTRONICS (15.5%)
1,765,000 ASM Lithography Holding N.V., (144A),
4.25%, due 11/30/04 1,782,650**
100,000 Burr-Brown Corp., 4.25%, due 02/15/07 139,625
580,000 Burr-Brown Corp., (144A), 4.25%, due
02/15/07 809,825**
4,555,000 Celestica, Inc., 0%, due 08/01/20 2,328,744
340,000 LSI Logic Corp., 4.25%, due 03/15/04 722,075
1,535,000 Sanmina Corp., Exchangeable Sanmina
Corp., (144A), 0%, due 09/12/20 713,775**
2,080,000 Solectron Corp., 0%, due 01/27/19 1,508,000
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<C> <S> <C>
ELECTRONICS (CONTINUED)
$ 935,000 Transwitch Corp., (144A), 4.5%, due
09/12/05 $ 1,069,406**
2,625,000 Vitesse Semiconductor Corp., (144A), 4%,
due 03/15/05 2,335,463**
-----------
TOTAL ELECTRONICS 11,409,563
-----------
ENERGY & OIL SERVICES (1.4%)
820,000 Kerr-McGee Corp., 5.25%, due 02/15/10 1,004,500
-----------
INDUSTRIAL--DIVERSIFIED (0.5%)
385,000 Kestrel Solutions, (144A), 5.5%, due
07/15/05 381,150**
-----------
INSURANCE (2.7%)
1,105,000 American International Group, Inc.,
0.5%, due 05/15/07 1,256,938
235,000 Berkshire Hathaway, Inc., 1%, due
12/03/01 742,306
-----------
TOTAL INSURANCE 1,999,244
-----------
MEDIA--BROADCASTING & PUBLISHING (2.1%)
730,000 Charter Communications, Inc.,
Exchangeable Charter Communications,
Inc., (144A), 5.75%, due 10/15/05 762,850**
945,000 News America Holdings, Inc., 0%, due
03/11/13 807,975
-----------
TOTAL MEDIA--BROADCASTING & PUBLISHING 1,570,825
-----------
PHARMACEUTICALS (3.3%)
595,000 Centocor, Inc., 4.75%, due 02/15/05 741,519
1,885,000 Roche Holdings, Inc., Exchangeable
Genentech, Inc., (144A), 0%, due
01/19/15 1,691,788**
-----------
TOTAL PHARMACEUTICALS 2,433,307
-----------
TELECOMMUNICATIONS (19.5%)
725,000 American Tower Corp., 2.25%, due
10/15/09 933,438
560,000 China Mobile, Ltd., Exchangeable China
Mobile, Ltd., 2.25%, due 11/03/05 560,000
660,000 Echostar Communications Corp., (144A),
4.875%, due 01/01/07 770,550**
550,000 Exchangeable Certificates Corp., (144A),
0.25%, due 07/17/06 511,500**
795,000 Exodus Communications, Inc., (144A),
4.75%, due 07/15/08 901,053**
3,575,000 Jacor Communications, Inc., Exchangeable
Clear Channel Communications, Inc.,
0%, due 06/12/11 3,414,125
1,490,000 Juniper Networks, Inc., 4.75%, due
03/15/07 2,069,848
390,000 Mayan Networks, 5.25%, due 11/01/05 390,000
1,880,000 Merrill Lynch & Company, Inc.,
Exchangeable Time Warner, Inc., 0.25%,
due 05/10/06 1,898,800
235,000 Nextel Communications, Inc., (144A),
5.25%, due 01/15/10 194,463**
790,000 ONI Systems Corp., Exchangeable ONI
Systems Corp., 5%, due 10/15/05 854,188
825,000 Redback Networks, Inc., Exchangeable
Redback Networks, Inc., 5%, due
04/01/07 717,750
890,000 Telefonos de Mexico, S.A. de C.V.,
4.25%, due 06/15/04 1,116,950
-----------
TOTAL TELECOMMUNICATIONS 14,332,665
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
TCW GALILEO CONVERTIBLE SECURITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<C> <S> <C>
TRANSPORTATION (1.1%)
$ 735,000 United Parcel Service, Inc., 1.75%, due
09/27/07 $ 797,475
-----------
TOTAL FIXED INCOME SECURITIES (COST:
$44,063,014) (66.9%) 49,214,036
-----------
<CAPTION>
NUMBER OF
SHARES CONVERTIBLE PREFERRED STOCK
---------- ---------------------------
<C> <S> <C>
BANKING & FINANCIAL SERVICES (5.5%)
31,700 CNB Capital Trust, $1.50 1,117,425
8,100 Goldman Sachs Group, Inc., Exchangeable
Yahoo!, Inc., $5.154 452,296
22,500 Lehman Brothers Holdings, Inc.,
Series B, Exchangeable Lehman Brothers
Holdings, Inc., Series A, $1.955 956,250
1,845 Morgan Stanley Dean Witter & Co.,
$100.52 1,356,075
5,400 National Australia Bank, $1.97 136,012
-----------
TOTAL BANKING & FINANCIAL SERVICES 4,018,058
-----------
COMMERCIAL SERVICES (0.9%)
35,700 Cendant Corp., $3.75 669,375
-----------
COMMUNICATIONS (0.4%)
13,500 Titan Capital Trust, $2.875 333,180
-----------
ELECTRIC UTILITIES (2.0%)
12,900 Dominion Resources, Inc., $4.75 758,681
11,600 Southern Energy, Inc., $3.25 705,425
-----------
TOTAL ELECTRIC UTILITIES 1,464,106
-----------
ELECTRONICS (0.6%)
666,558 CS First Boston Corp., Exchangeable
Conexant
Systems, Inc., $3.898 431,775
-----------
INSURANCE (0.8%)
12,000 QBE Insurance Group, (144A), $4.00 627,000**
-----------
MEDIA--BROADCASTING & PUBLISHING (1.2%)
1,300 Radio One, Inc., (144A), $65.00 884,000**
-----------
RETAIL (0.7%)
17,700 Dollar General Corp., $3.352 528,788
-----------
TELECOMMUNICATIONS (0.8%)
300 Morgan Stanley Dean Witter & Co.,
Exchangeable Qualcomm, Inc., $100.55 566,100
-----------
UTILITIES (1.7%)
14,100 AES Trust III, $3.375 1,254,900
-----------
TOTAL CONVERTIBLE PREFERRED STOCK (COST:
$10,434,196) (14.6%) 10,777,282
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
---------- ------------ -----------
<C> <S> <C>
COMPUTER SERVICES (4.7%)
29,600 Amkor Technologies, Inc. $ 656,750*
13,900 Critical Path, Inc. 675,019*
20,937 Intel Corp. 942,165
17,800 SCI Systems, Inc. 765,400*
7,700 Yahoo!, Inc. 451,412*
-----------
TOTAL COMPUTER SERVICES 3,490,746
-----------
ELECTRONICS (1.4%)
31,100 LSI Logic Corp. 1,022,412*
-----------
ENERGY & OIL SERVICES (1.8%)
31,100 Vodafone Group, PLC (ADR) 1,323,694
-----------
RETAIL (1.5%)
25,400 Home Depot, Inc. 1,092,200
-----------
TELECOMMUNICATIONS (4.8%)
40,700 Global Crossing Ltd. 961,538*
44,000 McLeodUSA, Inc. 847,000*
31,500 Nextel Communications, Inc., Class A 1,210,781*
13,700 Sprint Corp. (PCS Group) 522,313*
-----------
TOTAL TELECOMMUNICATIONS 3,541,632
-----------
TOTAL COMMON STOCK (COST: $9,271,910)
(14.2%) 10,470,684
-----------
TOTAL FIXED INCOME AND EQUITY SECURITIES
(COST: $63,769,120) (95.7%) 70,462,002
-----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
---------- ----------------------
<C> <S> <C>
$ 548,420 American Express Co., 6.54%, due
11/21/00 548,420***
548,420 American Express Co., 6.63%, due
01/18/01 548,420***
274,210 Bank of America, 6.64%, due 01/16/01 274,210***
274,210 Bank of Nova Scotia, 6.53%, due 11/27/00 274,210***
411,315 Bank of Nova Scotia, 6.67%, due 01/05/01 411,315***
274,210 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 274,210***
2,725,065 Fleet National Bank, 6.725%, due
04/30/01 2,725,065***
2,459,511 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 2,459,511
1,617,840 Merrimac Money Market Fund, 6.549%, due
11/01/00 1,617,840***
-----------
TOTAL SHORT-TERM INVESTMENTS (COST:
$9,133,201) (12.4%) 9,133,201
-----------
TOTAL INVESTMENTS (COST: $72,902,321)
(108.1%) 79,595,203
LIABILITIES IN EXCESS OF OTHER ASSETS
(-8.1%) (5,967,379)
-----------
NET ASSETS (100.0%) $73,627,824
===========
</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.
29
<PAGE>
TCW GALILEO EARNINGS MOMENTUM FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
--------- ------------ -----------
<C> <S> <C>
APPAREL RETAILERS (2.0% OF NET ASSETS)
4,250 Factory 2-U Stores, Inc. $ 135,734*
-----------
AUTOMOTIVE (1.5%)
6,550 Copart, Inc. 98,659*
-----------
CHEMICALS (1.0%)
7,150 Entegris, Inc. 63,903*
-----------
COMMERCIAL SERVICES (22.7%)
4,550 Administaff, Inc. 161,525*
3,350 Aurora Biosciences Corp. 204,141*
5,750 Career Education Corp. 222,453*
1,100 Corinthian Colleges, Inc. 76,037*
3,150 Corporate Executive Board Co. 145,294*
6,850 First Consulting Group, Inc. 45,809*
3,050 Forrester Research, Inc. 125,241*
9,050 Intraware, Inc. 66,178*
4,750 Management Network Group, Inc. 62,641*
4,400 Pegasus Systems, Inc. 75,075*
4,150 ProsoftTraining.com, Inc. 29,050*
2,550 Sangamo Biosciences, Inc. 66,459*
2,650 University of Phoenix Online, Inc. 69,562*
6,350 Waste Connections, Inc. 162,322*
-----------
TOTAL COMMERCIAL SERVICES 1,511,787
-----------
COMPUTER SERVICES (7.0%)
2,450 Aspen Technologies, Inc. 101,216*
1,750 Digital Insight Corp. 33,797*
3,450 Innovative Solutions & Support, Inc. 62,100*
3,950 Interlink Electronics, Inc. 88,381*
3,350 Radiant Systems, Inc. 61,766*
4,950 Virage, Inc. 54,450*
3,350 Websense, Inc. 60,300*
-----------
TOTAL COMPUTER SERVICES 462,010
-----------
COMPUTER SOFTWARE (14.9%)
6,450 Braun Consulting, Inc. 48,577*
3,350 Caminus Corp. 105,525*
3,250 DigitalThink, Inc. 114,512*
5,050 Embarcadero Technologies, Inc. 305,209*
1,350 Informatica Corp. 127,575*
4,250 Moldflow Corp. 107,578*
5,650 SkillSoft Corp. 101,700*
5,950 SmartDisk Corp. 30,494*
4,050 Synplicity, Inc. 51,131*
-----------
TOTAL COMPUTER SOFTWARE 992,301
-----------
ELECTRICAL EQUIPMENT (2.4%)
2,625 Aeroflex, Inc. 156,187*
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<C> <S> <C>
ELECTRONICS (3.9%)
1,150 AstroPower, Inc. $ 66,988*
1,250 HI/FN, Inc. 77,188*
3,550 Pixelworks, Inc. 118,259*
-----------
TOTAL ELECTRONICS 262,435
-----------
ENERGY & OIL SERVICES (4.9%)
3,050 Chiles Offshore, Inc. 48,800*
5,050 Nuevo Energy Co., Inc. 91,531*
6,452 Varco International, Inc. 111,297*
2,550 Veritas DGC, Inc. 76,500*
-----------
TOTAL ENERGY & OIL SERVICES 328,128
-----------
ENTERTAINMENT & LEISURE (2.0%)
1,850 Macrovision Corp. 134,819*
-----------
FOODS, HOTELS & RESTAURANTS (2.9%)
4,950 BUCA, Inc. 77,344*
2,750 P.F. Chang's China Bistro, Inc. 112,750*
-----------
TOTAL FOODS, HOTELS & RESTAURANTS 190,094
-----------
HEALTHCARE (2.1%)
3,250 Accredo Health, Inc. 140,563*
-----------
MEDICAL SUPPLIES (8.2%)
1,350 ABIOMED, Inc. 39,150*
4,450 ArthroCare Corp. 100,959*
2,450 Inverness Medical Technology, Inc. 67,375*
3,650 Physiometrix, Inc. 86,459*
1,950 PolyMedica Corp. 112,125*
5,650 Rita Medical Systems, Inc. 69,213*
2,650 Ventana Medical Systems, Inc. 69,563*
-----------
TOTAL MEDICAL SUPPLIES 544,844
-----------
PHARMACEUTICALS (10.4%)
1,950 Arena Pharmaceuticals, Inc. 68,128*
6,650 Biomatrix, Inc. 127,181*
2,850 Corixa Corp. 126,825*
850 Durect Corp. 12,697*
4,650 Emisphere Technologies, Inc. 117,703*
4,650 Genzyme Surgical Products 34,730*
1,450 Pharmacyclics, Inc. 78,028*
2,950 Titan Pharmaceuticals, Inc. 124,136*
-----------
TOTAL PHARMACEUTICALS 689,428
-----------
POLLUTION CONTROL (4.3%)
8,850 Stericycle, Inc. 286,519*
-----------
RETAIL (3.5%)
3,249 99 Cents Only Stores 72,899*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
TCW GALILEO EARNINGS MOMENTUM FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<C> <S> <C>
RETAIL (CONTINUED)
6,150 Charlotte Russe Holding, Inc. $ 73,031*
2,750 Insight Enterprises, Inc. 89,375*
-----------
TOTAL RETAIL 235,305
-----------
TELECOMMUNICATIONS (3.6%)
6,850 Data Critical Corp. 35,106*
4,250 Lightbridge, Inc. 45,422*
2,750 MCK Communications, Inc. 42,969*
4,250 Socket Communications, Inc. 48,078*
2,050 Tut Systems, Inc. 68,163*
-----------
TOTAL TELECOMMUNICATIONS 239,738
-----------
TOTAL COMMON STOCK (COST: $6,789,529)
(97.3%) 6,472,454
-----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
--------- ----------------------
<C> <S> <C>
$113,962 American Express Co., 6.54%, due
11/21/00 113,962**
113,962 American Express Co., 6.63%, due
01/18/01 113,962**
56,981 Bank of America, 6.64%, due 01/16/01 56,981**
56,981 Bank of Nova Scotia, 6.53%, due 11/27/00 56,981**
85,472 Bank of Nova Scotia, 6.67%, due 01/05/01 85,472**
56,981 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 56,981**
177,460 Fleet National Bank, 6.725%, due
04/30/01 177,460**
284,312 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 284,312
325,000 Merrimac Money Market Fund, 6.549%, due
11/01/00 325,000**
400,000 Royal Bank of Scotland, 6.65%, due
01/08/01 400,000**
-----------
TOTAL SHORT-TERM INVESTMENTS (COST:
$1,671,111) (25.1%) 1,671,111
-----------
TOTAL INVESTMENTS (COST: $8,460,640)
(122.4%) 8,143,565
LIABILITIES IN EXCESS OF OTHER ASSETS
(-22.4%) (1,492,767)
-----------
NET ASSETS (100.0%) $ 6,650,798
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
TCW GALILEO LARGE CAP GROWTH FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
--------- ------------ -----------
<C> <S> <C>
ADVERTISING (0.6% OF NET ASSETS)
1,800 Omnicom Group, Inc. $ 166,050
-----------
BANKING & FINANCIAL SERVICES (1.7%)
12,850 Schwab (Charles) Corp. 451,356
-----------
BEVERAGES, FOOD & TOBACCO (5.6%)
16,700 Anheuser-Busch Companies, Inc. 764,025
12,000 Coca-Cola Co. 724,500
-----------
TOTAL BEVERAGES, FOOD & TOBACCO 1,488,525
-----------
COMPUTER SERVICES (24.2%)
32,100 Cisco Systems, Inc. 1,729,387*
13,100 EMC Corp. (Mass.) 1,166,719*
1,200 Extreme Networks, Inc. 99,525*
3,500 Network Appliance, Inc. 416,500*
18,800 Palm, Inc. 1,006,975*
9,200 Sun Microsystems, Inc. 1,020,050*
2,400 VeriSign, Inc. 316,800*
11,600 Yahoo!, Inc. 680,050*
-----------
TOTAL COMPUTER SERVICES 6,436,006
-----------
COMPUTER SOFTWARE (13.0%)
17,100 Adobe Systems, Inc. 1,300,669
2,800 Ariba, Inc. 353,850*
1,900 i2 Technologies, Inc. 323,000*
29,700 Oracle Corp. 980,100*
4,700 Siebel Systems, Inc. 493,206*
-----------
TOTAL COMPUTER SOFTWARE 3,450,825
-----------
COSMETICS & HOUSEHOLD PRODUCTS (1.4%)
4,700 Corning, Inc. 359,550
-----------
ELECTRICAL EQUIPMENT (8.1%)
39,350 General Electric Co. 2,156,872
-----------
ELECTRONICS (6.0%)
4,300 Analog Devices, Inc. 279,500*
1,400 Broadcom Corp., Class A 311,325*
5,500 Maxim Integrated Products, Inc. 364,719*
1,100 SDL, Inc. 285,175*
5,000 XILINX, Inc. 362,187*
-----------
TOTAL ELECTRONICS 1,602,906
-----------
ENERGY & OIL SERVICES (0.6%)
3,425 Vodafone Group, PLC (ADR) 145,777
-----------
FOODS, HOTELS & RESTAURANTS (2.7%)
14,500 PepsiCo., Inc. 702,344
-----------
HEALTHCARE (2.8%)
19,600 Health Management Associates, Inc. 388,325*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
33
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TCW GALILEO LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<C> <S> <C>
HEALTHCARE (CONTINUED)
2,400 Human Genome Sciences, Inc. $ 212,137*
1,600 Johnson & Johnson 147,400
-----------
TOTAL HEALTHCARE 747,862
-----------
MEDICAL SUPPLIES (3.0%)
3,200 Guidant Corp. 169,400*
8,000 Medtronic, Inc. 434,500
1,700 PE Corp. - PE Biosystems Group 198,900
-----------
TOTAL MEDICAL SUPPLIES 802,800
-----------
PHARMACEUTICALS (13.9%)
1,900 Abbott Laboratories 100,344
3,800 Abgenix, Inc. 299,725*
1,900 Alza Corp. 153,781*
5,100 American Home Products Corp. 323,850
2,000 Andrx Corp. 144,000*
2,200 Genentech, Inc. 181,500*
5,900 Lilly (Eli) & Co. 527,312
29,075 Pfizer, Inc. 1,255,677
13,750 Schering-Plough Corp. 710,703
-----------
TOTAL PHARMACEUTICALS 3,696,892
-----------
RETAIL (9.4%)
22,600 Amazon.com, Inc. 827,725*
5,300 Bed, Bath & Beyond, Inc. 136,806*
7,975 Home Depot, Inc. 342,925
4,200 Safeway, Inc. 229,688*
21,000 Wal-Mart Stores, Inc. 952,875
-----------
TOTAL RETAIL 2,490,019
-----------
TELECOMMUNICATIONS (6.4%)
4,300 CIENA Corp. 452,038*
3,200 Juniper Networks, Inc. 624,000*
500 Micromuse, Inc. 84,844*
8,400 Qualcomm, Inc. 546,919*
-----------
TOTAL TELECOMMUNICATIONS 1,707,801
-----------
TOTAL COMMON STOCK (COST: $18,527,848)
(99.4%) 26,405,585
-----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
--------- ----------------------
<C> <S> <C>
$ 93,866 American Express Co., 6.54%, due
11/21/00 93,866**
93,866 American Express Co., 6.63%, due
01/18/01 93,866**
46,933 Bank of America, 6.64%, due 01/16/01 46,933**
46,933 Bank of Nova Scotia, 6.53%, due 11/27/00 46,933**
70,400 Bank of Nova Scotia, 6.67%, due 01/05/01 70,400**
46,933 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 46,933**
466,414 Fleet National Bank, 6.725%, due
04/30/01 466,414**
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- -----------
<C> <S> <C>
$374,761 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 $ 374,761
276,905 Merrimac Money Market Fund, 6.549%, due
11/01/00 276,905**
-----------
TOTAL SHORT-TERM INVESTMENTS (COST:
$1,517,011) (5.7%) 1,517,011
-----------
TOTAL INVESTMENTS (COST: $20,044,859)
(105.1%) 27,922,596
LIABILITIES IN EXCESS OF OTHER ASSETS
(-5.1%) (1,358,740)
-----------
NET ASSETS (100.0%) $26,563,856
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
---------- ------------ ------------
<C> <S> <C>
AEROSPACE/DEFENSE (6.1% OF NET ASSETS)
21,150 Boeing Co. $ 1,434,234
94,025 Honeywell International, Inc. 5,059,720
28,150 United Technologies Corp. 1,965,222
------------
TOTAL AEROSPACE/DEFENSE 8,459,176
------------
AUTOMOTIVE (1.4%)
49,310 Ford Motor Co. 1,288,224
11,039 General Motors Corp. 685,798
------------
TOTAL AUTOMOTIVE 1,974,022
------------
BANKING & FINANCIAL SERVICES (21.1%)
28,150 American Express Co. 1,689,000
15,600 Associates First Capital Corp., Class A 579,150
35,000 BankAmerica Corp. 1,682,188
28,500 Capital One Financial Corp. 1,799,062
12,350 Chase Manhattan Corp. 561,925
125,683 Citigroup, Inc. 6,614,068
30,700 Federal Home Loan Mortgage Corp. 1,842,000
32,400 Federal National Mortgage Association 2,494,800
9,550 Fifth Third Bancorp 490,631
7,700 J.P. Morgan & Company, Inc. 1,274,350
37,600 Merrill Lynch & Company, Inc. 2,632,000
53,850 Morgan Stanley Dean Witter & Co. 4,324,828
19,250 Schwab (Charles) Corp. 676,156
52,450 Wells Fargo & Co. 2,429,091
------------
TOTAL BANKING & FINANCIAL SERVICES 29,089,249
------------
BEVERAGES, FOOD & TOBACCO (1.1%)
42,700 Philip Morris Companies, Inc. 1,563,887
------------
CHEMICALS (3.3%)
25,500 Du Pont (E.I.) de Nemours & Co. 1,157,062
29,497 Pharmacia Corp. 1,622,335
46,000 Praxair, Inc. 1,713,500
------------
TOTAL CHEMICALS 4,492,897
------------
COMPUTER SERVICES (8.7%)
187,550 Compaq Computer Corp. 5,703,395
89,500 Dell Computer Corp. 2,640,250*
10,700 Hewlett-Packard Co. 496,881
55,500 Intel Corp. 2,497,500
15,100 Solectron Corp. 664,400*
------------
TOTAL COMPUTER SERVICES 12,002,426
------------
ELECTRONICS (3.2%)
10,800 Emerson Electric Co. 793,125
77,089 General Motors Corp., Class H 2,497,684*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<C> <S> <C>
ELECTRONICS (CONTINUED)
21,800 Motorola, Inc. $ 543,637
12,800 Texas Instruments, Inc. 628,000
------------
TOTAL ELECTRONICS 4,462,446
------------
ENERGY & OIL SERVICES (16.0%)
62,300 Baker Hughes, Inc. 2,141,562
5,000 Chevron Corp. 410,625
23,000 Enron Corp. 1,887,438
106,023 Exxon Mobil Corp. 9,455,926
50,450 Royal Dutch Petroleum Co. (NY Shares) 2,995,469
35,200 Santa Fe International Corp. 1,284,800
13,700 Schlumberger, Ltd. 1,042,913
36,900 Texaco, Inc. 2,179,406
13,549 Transocean Sedco Forex, Inc. 718,097
------------
TOTAL ENERGY & OIL SERVICES 22,116,236
------------
ENTERTAINMENT & LEISURE (4.2%)
105,800 Harrah's Entertainment, Inc. 3,028,525*
77,850 The Walt Disney Co. 2,788,003
------------
TOTAL ENTERTAINMENT & LEISURE 5,816,528
------------
FOODS, HOTELS & RESTAURANTS (3.5%)
150,650 McDonald's Corp. 4,670,150
3,200 PepsiCo., Inc. 155,000
------------
TOTAL FOODS, HOTELS & RESTAURANTS 4,825,150
------------
INSURANCE (9.6%)
56,550 Allstate Corp. 2,276,138
43,550 American International Group, Inc. 4,267,900
28,200 Marsh & McLennan Companies, Inc. 3,687,150
30,800 Progressive Corp. 3,026,100
------------
TOTAL INSURANCE 13,257,288
------------
MACHINERY (2.5%)
94,700 Deere & Co. 3,486,144
------------
MEDIA--BROADCASTING & PUBLISHING (0.5%)
12,000 Clear Channel Communications, Inc. 720,750*
------------
METALS (0.5%)
23,900 Alcoa, Inc. 685,631
------------
PAPER & FOREST PRODUCTS (1.8%)
37,100 Kimberly-Clark Corp. 2,448,600
------------
PHARMACEUTICALS (0.6%)
11,800 American Home Products Corp. 749,300
------------
RETAIL (3.4%)
41,700 Circuit City Stores-Circuit City Group 552,525
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- ------------
<C> <S> <C>
RETAIL (CONTINUED)
39,550 Costco Wholesale Corp. $ 1,448,519*
97,300 Target Corp. 2,687,913
------------
TOTAL RETAIL 4,688,957
------------
TELECOMMUNICATIONS (7.8%)
43,650 BellSouth Corp. 2,108,841
72,600 SBC Communications, Inc. 4,188,113
77,250 Verizon Communications 4,466,016
------------
TOTAL TELECOMMUNICATIONS 10,762,970
------------
TRANSPORTATION (3.6%)
176,200 Southwest Airlines, Inc. 5,021,700
------------
TOTAL COMMON STOCK (COST: $116,007,415)
(98.9%) 136,623,357
------------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
---------- ----------------------
<C> <S> <C>
$ 48,143 American Express Co., 6.54%, due
11/21/00 48,143**
48,143 American Express Co., 6.63%, due
01/18/01 48,143**
24,071 Bank of America, 6.64%, due 01/16/01 24,071**
24,071 Bank of Nova Scotia, 6.53%, due 11/27/00 24,071**
36,107 Bank of Nova Scotia, 6.67%, due 01/05/01 36,107**
24,072 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 24,072**
239,218 Fleet National Bank, 6.725%, due
04/30/01 239,218**
3,072,322 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 3,072,322
142,021 Merrimac Money Market Fund, 6.549%, due
11/01/00 142,021**
------------
TOTAL SHORT-TERM INVESTMENTS (COST:
$3,658,168) (2.6%) 3,658,168
------------
TOTAL INVESTMENTS (COST: $119,665,583)
(101.5%) 140,281,525
LIABILITIES IN EXCESS OF OTHER ASSETS
(-1.5%) (2,064,860)
------------
NET ASSETS (100.0%) $138,216,665
============
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
TCW GALILEO SELECT EQUITIES FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
----------- ------------ ------------
<C> <S> <C>
BANKING & FINANCIAL SERVICES (11.4% OF
NET ASSETS)
217,878 Providian Financial Corp. $ 22,659,312
910,469 Schwab (Charles) Corp. 31,980,224
731,038 Stilwell Financial, Inc. 32,759,640
------------
TOTAL BANKING & FINANCIAL SERVICES 87,399,176
------------
COMMERCIAL SERVICES (4.1%)
556,005 Paychex, Inc. 31,518,533
------------
COMPUTER SERVICES (12.9%)
509,426 Cisco Systems, Inc. 27,445,326*
1,314,561 Dell Computer Corp. 38,779,549*
130,400 Network Appliance, Inc. 15,517,600*
292,800 Yahoo!, Inc. 17,165,400*
------------
TOTAL COMPUTER SERVICES 98,907,875
------------
COMPUTER SOFTWARE (10.8%)
326,801 Microsoft Corp. 22,508,419*
570,812 Siebel Systems, Inc. 59,899,584*
------------
TOTAL COMPUTER SOFTWARE 82,408,003
------------
ELECTRICAL EQUIPMENT (1.9%)
262,800 General Electric Co. 14,404,725
------------
ELECTRONICS (17.2%)
345,450 Applied Materials, Inc. 18,352,031*
621,740 Intel Corp. 27,978,300
243,600 JDS Uniphase Corp. 19,838,175*
583,866 Maxim Integrated Products, Inc. 38,717,614*
369,300 XILINX, Inc. 26,751,169*
------------
TOTAL ELECTRONICS 131,637,289
------------
INSURANCE (10.5%)
253,009 American International Group, Inc. 24,794,882
561,898 Progressive Corp. 55,206,479
------------
TOTAL INSURANCE 80,001,361
------------
MEDIA--BROADCASTING & PUBLISHING (1.5%)
345,336 Pixar, Inc. 11,396,088*
------------
PHARMACEUTICALS (14.4%)
413,172 Amgen, Inc. 23,938,153*
539,621 Biogen, Inc. 32,478,439*
329,000 Genentech, Inc. 27,142,500*
615,959 Pfizer, Inc. 26,601,729
------------
TOTAL PHARMACEUTICALS 110,160,821
------------
RETAIL (8.0%)
295,600 Costco Wholesale Corp. 10,826,350*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
TCW GALILEO SELECT EQUITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<C> <S> <C>
RETAIL (CONTINUED)
647,396 Home Depot, Inc. $ 27,838,028
487,900 Wal-Mart Stores, Inc. 22,138,463
------------
TOTAL RETAIL 60,802,841
------------
TRANSPORTATION (3.1%)
835,100 Southwest Airlines, Inc. 23,800,350
------------
TOTAL COMMON STOCK (COST: $605,549,384)
(95.8%) 732,437,062
------------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
----------- ----------------------
<C> <S> <C>
$ 2,618,087 American Express Co., 6.54%, due
11/21/00 2,618,087**
1,618,087 American Express Co., 6.63%, due
01/18/01 1,618,087**
1,309,044 Bank of America, 6.64%, due 01/16/01 1,309,044**
1,309,044 Bank of Nova Scotia, 6.53%, due 11/27/00 1,309,044**
1,963,565 Bank of Nova Scotia, 6.67%, due 01/05/01 1,963,565**
1,309,044 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 1,309,044**
4,500,000 Credit Agricole, 6.53%, due 11/06/00 4,500,000**
2,334,090 Fleet National Bank, 6.725%, due
04/30/01 2,334,090**
24,577,894 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 24,577,894
9,298,357 Merrimac Money Market Fund, 6.549%, due
11/01/00 9,298,357**
5,600,000 Royal Bank of Scotland, 6.65%, due
01/08/01 5,600,000**
------------
TOTAL SHORT-TERM INVESTMENTS (COST:
$56,437,212) (7.4%) 56,437,212
------------
TOTAL INVESTMENTS (COST: $661,986,596)
(103.2%) 788,874,274
LIABILITIES IN EXCESS OF OTHER ASSETS
(-3.2%) (24,172,917)
------------
NET ASSETS (100.0%) $764,701,357
============
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
[ICON]
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
----------- ------------ ------------
<C> <S> <C>
ADVERTISING (0.5% OF NET ASSETS)
195,600 Ventiv Health, Inc. $ 2,102,700*
------------
BANKING & FINANCIAL SERVICES (0.0%)
5,600 E*TRADE Group, Inc. 81,550*
------------
COMMERCIAL SERVICES (5.8%)
71,400 Applied Molecular Evolution 1,552,950*
49,500 Celgene Corp. 3,186,562*
254,600 Corporate Executive Board Co. 11,743,425*
40,100 Diamond Tech Partners, Inc. 1,789,462*
25,000 GoTo.com, Inc. 354,687*
220,900 HNC Software, Inc. 4,487,031*
64,300 HotJobs.com, Ltd. 1,004,687*
63,400 Lexicon Genetics, Inc. 1,283,850*
5,600 Myriad Genetics, Inc. 672,000*
73,400 Support.com, Inc. 1,045,950*
------------
TOTAL COMMERCIAL SERVICES 27,120,604
------------
COMPUTER SERVICES (11.3%)
77,400 Agile Software Corp. 5,834,025*
32,500 CacheFlow, Inc. 3,510,000*
55,100 Critical Path, Inc. 2,675,794*
38,700 Digex, Inc. 1,518,975*
135,500 eLoyalty Corp. 1,304,187*
250,900 InfoSpace.com, Inc. 5,049,362*
87,600 Kana Communications, Inc. 2,058,600*
78,400 Mercury Interactive Corp. 8,702,400*
7,500 Predictive Systems, Inc. 104,062*
178,700 Proxicom, Inc. 2,412,450*
226,200 Read-Rite Corp. 1,682,362*
84,800 VeriSign, Inc. 11,193,600*
147,500 WebEx Communications, Inc. 6,646,719*
------------
TOTAL COMPUTER SERVICES 52,692,536
------------
COMPUTER SOFTWARE (24.1%)
61,000 DigitalThink, Inc. 2,149,298*
128,400 Docent, Inc. 3,306,300*
160,600 Extensity, Inc. 2,047,650*
89,000 Informatica Corp. 8,410,500*
46,600 Interwoven, Inc. 4,694,950*
29,400 Manugistics Group, Inc. 3,349,762*
145,600 Peregrine Systems, Inc. 3,494,400*
82,900 Quest Software, Inc. 3,621,694*
358,587 Retek Inc. 14,141,775*
3,500 Saba Software, Inc. 82,031*
136,000 Selectica, Inc. 3,587,000*
374,600 Siebel Systems, Inc. 39,309,587*
82,000 SmartForce PLC (ADR) 4,126,904*
42,200 Software.com, Inc. 6,287,800*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<C> <S> <C>
COMPUTER SOFTWARE (CONTINUED)
128,900 TIBCO Software, Inc. $ 8,120,700*
160,700 Versata, Inc. 2,651,550*
38,644 webMethods, Inc. 3,434,486*
------------
TOTAL COMPUTER SOFTWARE 112,816,387
------------
ELECTRICAL EQUIPMENT (1.7%)
53,000 Active Power, Inc. 2,020,625*
106,300 Capstone Turbine Corp. 5,899,650*
------------
TOTAL ELECTRICAL EQUIPMENT 7,920,275
------------
ELECTRONICS (9.0%)
39,500 Cobalt Networks, Inc. 2,177,438*
59,400 Exar Corp. 2,654,438*
149,600 Maxim Integrated Products, Inc. 9,920,350*
206,800 Micrel, Inc. 9,357,700*
259,200 Semtech Corp. 8,359,200*
146,600 Silicon Image, Inc. 1,722,550*
90,300 Transwitch Corp. 5,214,825*
113,600 Varian Semiconductor Equipment
Associates, Inc. 2,612,800*
------------
TOTAL ELECTRONICS 42,019,301
------------
ENTERTAINMENT & LEISURE (3.6%)
183,100 Macrovision Corp. 13,343,413*
41,900 Oakley, Inc. 879,900*
125,300 Westwood One, Inc. 2,372,869*
------------
TOTAL ENTERTAINMENT & LEISURE 16,596,182
------------
HEALTHCARE (1.6%)
5,000 Accredo Health, Inc. 216,250*
79,300 Affymetrix, Inc. 4,391,238*
141,450 Dendrite International, Inc. 3,076,538*
------------
TOTAL HEALTHCARE 7,684,026
------------
MEDIA--BROADCASTING & PUBLISHING (5.6%)
283,800 Gemstar-TV Guide International, Inc. 19,458,038*
160,900 Mediacom Communications Corp. 2,735,300*
52,700 Pegasus Communications Corp. 1,874,144*
231,300 Spanish Broadcasting System, Inc. 2,081,700*
------------
TOTAL MEDIA--BROADCASTING & PUBLISHING 26,149,182
------------
PHARMACEUTICALS (10.2%)
191,500 Alkermes, Inc. 7,097,486*
100,500 Andrx Corp. 7,236,000*
88,800 Arena Pharmaceuticals, Inc. 3,102,450*
179,600 ImClone Systems, Inc. 9,821,875*
138,400 Medarex, Inc. 8,459,700*
2,500 Priority Healthcare Corp., Class B 134,375*
52,000 Protein Design Labs, Inc. 7,024,061*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
----------- ------------
<C> <S> <C>
PHARMACEUTICALS (CONTINUED)
77,100 Titan Pharmaceuticals, Inc. $ 3,244,368*
33,000 United Therapeutics Corp. 1,765,500*
------------
TOTAL PHARMACEUTICALS 47,885,815
------------
RETAIL (2.7%)
123,450 Cost Plus, Inc. 3,456,600*
56,887 Dollar Tree Stores, Inc. 2,225,704*
231,000 Linens 'N Things, Inc. 7,103,250*
------------
TOTAL RETAIL 12,785,554
------------
TELECOMMUNICATIONS (12.0%)
290,084 CSG Systems International, Inc. 13,470,776*
699,800 Exodus Communications, Inc. 23,487,038*
100,000 Natural Microsystems Corp. 4,518,750*
129,000 Netro Corp. 2,813,813*
133,400 Polycom, Inc. 8,671,000*
96,900 Sonus Networks, Inc. 3,343,050*
------------
TOTAL TELECOMMUNICATIONS 56,304,427
------------
TOTAL COMMON STOCK (COST: $249,980,630)
(88.1%) 412,158,539
------------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
----------- ----------------------
<C> <S> <C>
$ 6,202,143 American Express Co., 6.54%, due
11/21/00 6,202,143**
5,702,143 American Express Co., 6.63%, due
01/18/01 5,702,143**
3,101,072 Bank of America, 6.64%, due 01/16/01 3,101,072**
10,000,000 Bank of Montreal, 6.54%, due 11/02/00 10,000,000**
3,101,072 Bank of Nova Scotia, 6.53%, due 11/27/00 3,101,072**
4,651,608 Bank of Nova Scotia, 6.67%, due 01/05/01 4,651,608**
3,101,072 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 3,101,072**
5,000,000 Credit Agricole, 6.53%, due 11/06/00 5,000,000**
11,300,000 Credit Agricole, 6.53%, due 11/06/00 11,300,000**
2,018,014 Fleet National Bank, 6.725%, due
04/30/01 2,018,014**
67,072,903 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 67,072,903
18,296,324 Merrimac Money Market Fund, 6.549%, due
11/01/00 18,296,324**
3,000,000 Royal Bank of Scotland, 6.65%, due
01/08/01 3,000,000**
------------
TOTAL SHORT-TERM INVESTMENTS (COST:
$142,546,351) (30.4%) 142,546,351
------------
TOTAL INVESTMENTS (COST: $392,526,981)
(118.5%) 554,704,890
LIABILITIES IN EXCESS OF OTHER ASSETS
(-18.5%) (86,706,794)
------------
NET ASSETS (100.0%) $467,998,096
============
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
TCW GALILEO SMALL CAP VALUE FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
--------- ------------ -----------
<C> <S> <C>
ADVERTISING (1.7% OF NET ASSETS)
500 True North Communications, Inc. $ 18,844
----------
AEROSPACE/DEFENSE (1.7%)
1,500 AAR Corp. 17,906
----------
AIRLINES (0.2%)
200 Airborne Freight Corp. 2,025
----------
APPAREL RETAILERS (1.9%)
1,100 The Wet Seal, Inc., Class A 20,625*
----------
AUTOMOTIVE (1.8%)
400 Federal Signal Corp. 9,350
700 JLG Industries, Inc. 9,756
----------
TOTAL AUTOMOTIVE 19,106
----------
BANKING & FINANCIAL SERVICES (18.0%)
400 American Financial Holdings, Inc. 7,150
600 Astoria Financial Corp. 22,500
1,500 Banknorth Group, Inc. 27,187
800 Doral Financial Corp. 14,300
600 Flushing Financial Corp. 9,150
1,000 GreenPoint Financial Corp. 29,750
500 North Fork Bancorporation, Inc. 10,094
400 Profit Recovery Group International,
Inc. 2,150*
200 Roslyn Bancorp, Inc. 4,337
1,000 Sterling Bancorp 19,625
900 Valley National Bancorp 24,919
200 Washington Trust Bancorp, Inc. 2,837
800 Webster Financial Corp. 19,500
----------
TOTAL BANKING & FINANCIAL SERVICES 193,499
----------
BUILDING MATERIALS (0.1%)
100 Elcor Corp. 1,556
----------
CHEMICALS (4.3%)
200 Applied Extrusion Technologies, Inc. 612*
1,000 Crompton Corp. 8,000
600 MacDermid, Inc. 12,900
1,800 PolyOne Corp. 14,175*
800 Solutia, Inc. 10,200
----------
TOTAL CHEMICALS 45,887
----------
COMMERCIAL SERVICES (5.1%)
800 Bowne & Co., Inc. 6,700
200 Catalytica, Inc. 2,687*
800 NCO Group, Inc. 17,500*
500 Sotheby's Holdings, Inc. 13,594
1,000 Wallace Computer Services, Inc. 14,500
----------
TOTAL COMMERCIAL SERVICES 54,981
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<C> <S> <C>
COMPUTER SERVICES (9.3%)
2,500 Complete Business Solutions, Inc. $ 25,937*
2,000 Computer Horizons Corp. 10,000*
1,000 Electro Rent Corp. 13,687*
800 Intergraph Corp. 5,000*
7,000 Komag, Inc. 12,687*
2,100 Read-Rite Corp. 15,619*
1,200 Systems & Computer Technology Corp. 17,325*
----------
TOTAL COMPUTER SERVICES 100,255
----------
COMPUTER SOFTWARE (2.5%)
1,000 Computer Task Group, Inc. 5,250
1,000 Midway Games, Inc. 7,750*
5,800 Technology Solutions Co. 13,775*
----------
TOTAL COMPUTER SOFTWARE 26,775
----------
COSMETICS & HOUSEHOLD PRODUCTS (1.5%)
800 Dial Corp. 8,950
500 Oneida, Ltd. 5,312
100 Quaker Chemical Corp. 1,719
----------
TOTAL COSMETICS & HOUSEHOLD PRODUCTS 15,981
----------
ELECTRICAL EQUIPMENT (0.7%)
600 Evans & Sutherland Computer Corp. 3,600*
500 SLI, Inc. 4,125
----------
TOTAL ELECTRICAL EQUIPMENT 7,725
----------
ELECTRONICS (10.8%)
600 Adaptec, Inc. 9,487*
300 Arrow Electronics, Inc. 9,600*
500 Barnes Group, Inc. 9,625
800 CommScope, Inc. 20,250*
600 FSI International, Inc. 5,587*
900 General Semiconductor, Inc. 10,294*
800 Hutchinson Technology, Inc. 17,550*
700 Maxwell Technologies, Inc. 11,375*
800 Pioneer Standard Electronics, Inc. 11,100
1,600 Xicor, Inc. 11,050*
----------
TOTAL ELECTRONICS 115,918
----------
ENERGY & OIL SERVICES (3.3%)
400 Barrett Resources Corp. 14,550*
300 Nuevo Energy Co., Inc. 5,437*
600 Oceaneering International, Inc. 8,438*
300 Pride International, Inc. 7,594*
----------
TOTAL ENERGY & OIL SERVICES 36,019
----------
ENTERTAINMENT & LEISURE (0.8%)
900 K2, Inc. 8,550*
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
TCW GALILEO SMALL CAP VALUE FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<C> <S> <C>
FOODS, HOTELS & RESTAURANTS (0.2%)
400 Chart House Enterprises, Inc. $ 2,200*
----------
HEALTHCARE (3.7%)
1,100 DaVita, Inc. 12,375*
400 Henry Schein, Inc. 9,750*
1,000 Omnicare, Inc. 17,500
----------
TOTAL HEALTHCARE 39,625
----------
HOME CONSTRUCTION, FURNISHINGS &
APPLIANCES (1.6%)
200 Bush Industries, Inc., Class A 2,325
100 CoorsTek, Inc. 2,925*
400 Ethan Allen Interiors, Inc. 11,700
----------
TOTAL HOME CONSTRUCTION, FURNISHINGS &
APPLIANCES 16,950
----------
MACHINERY (6.8%)
400 Albany International Corp., Class A 4,300*
500 Crane Co. 13,094
1,000 Kaman Corp., Class A 14,500
600 Kulicke & Soffa Industries, Inc. 8,813*
800 Lam Research Corp. 15,500*
300 Pentair, Inc. 8,944
300 York International Corp. 8,156
----------
TOTAL MACHINERY 73,307
----------
MEDIA--BROADCASTING & PUBLISHING (5.6%)
1,000 Belo (A.H.) Corp., Class A 19,188
300 Houghton Mifflin Co. 11,044
400 Meredith Corp. 12,700
1,000 Thomas Nelson, Inc. 6,688
500 Wiley (John) & Sons, Inc., Class A 10,219
----------
TOTAL MEDIA--BROADCASTING & PUBLISHING 59,839
----------
MEDICAL SUPPLIES (6.5%)
600 Bio-Rad Laboratories, Inc., Class A 17,940*
500 Credence Systems Corp. 9,375*
2,000 GenRad, Inc. 18,250*
800 LeCroy Corp. 14,400*
1,000 Spacelabs Medical, Inc. 10,625*
----------
TOTAL MEDICAL SUPPLIES 70,590
----------
METALS (3.5%)
200 AK Steel Holding Corp. 1,850
200 Fansteel, Inc. 600*
1,100 General Cable Corp. 6,600
1,000 Griffon Corp. 7,625*
900 Hubbell, Inc., Class B 21,544
----------
TOTAL METALS 38,219
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- -----------
<C> <S> <C>
PAPER & FOREST PRODUCTS (0.7%)
600 Interpool, Inc. $ 7,725
----------
RETAIL (1.8%)
800 Polo Ralph Lauren Corp. 15,700*
200 Williams-Sonoma, Inc. 4,163*
----------
TOTAL RETAIL 19,863
----------
TELECOMMUNICATIONS (2.2%)
300 Allen Telecom, Inc. 5,606*
500 International Fibercom, Inc. 6,438*
600 Itron, Inc. 3,525*
1,000 P-Com, Inc. 5,625*
100 Standard Microsystems Corp. 2,400*
----------
TOTAL TELECOMMUNICATIONS 23,594
----------
TRANSPORTATION (2.9%)
600 Fleetwood Enterprises, Inc. 7,913
300 Fritz Companies, Inc. 2,438*
100 Sea Containers, Ltd., Class A 2,150
800 Trinity Industries, Inc. 19,250
----------
TOTAL TRANSPORTATION 31,751
----------
TOTAL COMMON STOCK (COST: $1,013,480)
(99.2%) 1,069,315
----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS (COST: $2,266) (0.2%)
--------- --------------------------------------------
<C> <S> <C>
$2,266 Investors Bank & Trust Depository Reserve,
5.82%, due 11/01/00 2,266
----------
TOTAL INVESTMENTS (COST: $1,015,746) (99.4%) 1,071,581
EXCESS OF OTHER ASSETS OVER LIABILITIES
(0.6%) 6,430
----------
NET ASSETS (100.0%) $1,078,011
==========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
TCW GALILEO VALUE OPPORTUNITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON STOCK VALUE
---------- ------------ -----------
<C> <S> <C>
ADVERTISING (2.0% OF NET ASSETS)
31,100 True North Communications, Inc. $ 1,172,081
-----------
AUTOMOTIVE (2.4%)
42,800 ITT Industries, Inc. 1,393,675
-----------
BANKING & FINANCIAL SERVICES (4.9%)
20,100 Astoria Financial Corp. 753,750
59,500 Banknorth Group, Inc. 1,078,437
38,600 Valley National Bancorp 1,068,737
-----------
TOTAL BANKING & FINANCIAL SERVICES 2,900,924
-----------
BEVERAGES, FOOD & TOBACCO (1.1%)
41,000 Flowers Industries, Inc. 630,375
-----------
BUILDING MATERIALS (4.5%)
32,900 Martin Marietta Materials, Inc. 1,263,360
55,200 Sybron International Corp. 1,366,200*
-----------
TOTAL BUILDING MATERIALS 2,629,560
-----------
CHEMICALS (6.3%)
54,500 Minerals Technologies, Inc. 1,706,531
110,800 PolyOne Corp. 872,550
87,300 Solutia, Inc. 1,113,075
-----------
TOTAL CHEMICALS 3,692,156
-----------
COMMERCIAL SERVICES (8.9%)
28,500 Block, (H&R), Inc. 1,017,094
42,200 Jacobs Engineering Group 1,746,025*
47,400 Reynolds & Reynolds Co., Class A 847,275
57,700 Valassis Communications, Inc. 1,601,175*
-----------
TOTAL COMMERCIAL SERVICES 5,211,569
-----------
COMPUTER SERVICES (9.5%)
69,800 Ceridian Corp. 1,745,000*
44,700 Keane, Inc. 581,100*
15,900 NCR Corp. 685,687*
143,700 Read-Rite Corp. 1,068,769*
114,600 Unisys Corp. 1,461,150*
-----------
TOTAL COMPUTER SERVICES 5,541,706
-----------
COMPUTER SOFTWARE (1.0%)
13,000 PeopleSoft, Inc. 567,328*
-----------
CONSTRUCTION (2.1%)
38,500 Lennar Corp. 1,236,812
-----------
ELECTRONICS (6.4%)
2,600 APW, Ltd. 120,087*
31,900 Arrow Electronics, Inc. 1,020,800*
55,800 CommScope, Inc. 1,412,437*
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<C> <S> <C>
ELECTRONICS (CONTINUED)
15,750 Molex, Inc., Class A $ 619,172
23,100 National Semiconductor Corp. 600,600*
-----------
TOTAL ELECTRONICS 3,773,096
-----------
ENERGY & OIL SERVICES (1.5%)
5,400 Anadarko Petroleum Corp. 345,870
22,000 Pride International, Inc. 556,875*
-----------
TOTAL ENERGY & OIL SERVICES 902,745
-----------
HEALTHCARE (5.4%)
56,900 Henry Schein, Inc. 1,386,937*
101,600 Omnicare, Inc. 1,778,000
-----------
TOTAL HEALTHCARE 3,164,937
-----------
MACHINERY (7.4%)
42,300 Crane Co. 1,107,731
34,400 Grainger (W.W.), Inc. 1,098,650
41,400 Pentair, Inc. 1,234,238
33,400 York International Corp. 908,063
-----------
TOTAL MACHINERY 4,348,682
-----------
MEDIA--BROADCASTING & PUBLISHING (12.9%)
43,300 Belo (A.H.) Corp., Class A 830,819
33,500 Comcast Corp., Class A 1,365,125*
39,400 Houghton Mifflin Co. 1,450,413
41,900 Meredith Corp. 1,330,325
32,500 Readers Digest Association, Inc.,
Class A 1,192,344
36,600 SBS Broadcasting S.A. 1,093,425*
15,600 Wiley (John) & Sons, Inc., Class A 318,825
-----------
TOTAL MEDIA--BROADCASTING & PUBLISHING 7,581,276
-----------
MEDICAL SUPPLIES (3.8%)
34,300 Credence Systems Corp. 643,125*
46,100 KLA-Tencor Corp. 1,558,756*
-----------
TOTAL MEDICAL SUPPLIES 2,201,881
-----------
METALS (2.9%)
104,700 AK Steel Holding Corp. 968,475
30,000 Hubbell, Inc., Class B 718,125
-----------
TOTAL METALS 1,686,600
-----------
PAPER & FOREST PRODUCTS (1.1%)
22,500 Mead Corp. 651,094
-----------
RETAIL (4.3%)
14,500 Abercrombie & Fitch Co. 341,656*
20,500 Ann Taylor Stores, Inc. 615,000*
48,600 Federated Department Stores, Inc. 1,582,538*
-----------
TOTAL RETAIL 2,539,194
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
TCW GALILEO VALUE OPPORTUNITIES FUND
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------- -----------
<C> <S> <C>
TELECOMMUNICATIONS (1.6%)
31,000 AT&T Canada, Inc. $ 959,063*
-----------
TEXTILES, CLOTHING & FABRICS (1.9%)
41,000 Jones Apparel Group, Inc. 1,140,313*
-----------
TOTAL COMMON STOCK (COST: $45,595,725)
(91.9%) 53,925,067
-----------
<CAPTION>
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS
---------- ----------------------
<C> <S> <C>
$ 313,698 American Express Co., 6.54%, due
11/21/00 313,698**
313,698 American Express Co., 6.63%, due
01/18/01 313,698**
156,849 Bank of America, 6.64%, due 01/16/01 156,849**
156,849 Bank of Nova Scotia, 6.53%, due 11/27/00 156,849**
235,273 Bank of Nova Scotia, 6.67%, due 01/05/01 235,273**
156,849 Bayerische Hypo-Und Vereinsbank AG,
6.63%, due 02/01/01 156,849**
558,743 Fleet National Bank, 6.725%, due
04/30/01 558,743**
5,072,737 Investors Bank & Trust Depository
Reserve, 5.82%, due 11/01/00 5,072,737
925,409 Merrimac Money Market Fund, 6.549%, due
11/01/00 925,409**
1,000,000 Royal Bank of Scotland, 6.65%, due
01/08/01 1,000,000**
-----------
TOTAL SHORT-TERM INVESTMENTS (COST:
$8,890,105) (15.2%) 8,890,105
-----------
TOTAL INVESTMENTS (COST: $54,485,830)
(107.1%) 62,815,172
LIABILITIES IN EXCESS OF OTHER ASSETS
(-7.1%) (4,171,532)
-----------
NET ASSETS (100.0%) $58,643,640
===========
</TABLE>
NOTES TO THE SCHEDULE OF INVESTMENTS:
* NON-INCOME PRODUCING.
** REPRESENTS INVESTMENTS OF SECURITY LENDING COLLATERAL (NOTE 3).
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
51
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW
AGGRESSIVE TCW GALILEO TCW GALILEO GALILEO
GROWTH CONVERTIBLE EARNINGS LARGE CAP
EQUITIES SECURITIES MOMENTUM GROWTH
FUND FUND FUND FUND
----------- ----------- ----------- -----------
DOLLAR AMOUNTS IN THOUSANDS
(EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
Investments, at Value(1) $ 347,882 $ 79,595 $ 8,144 $ 27,923
Receivables for Securities
Sold 1,743 331 -- 5,560
Receivables for Fund Shares
Sold 402 722 -- 6
Interest and Dividends
Receivable 129 322 5 3
---------- ---------- -------- ----------
Total Assets 350,156 80,970 8,149 33,492
---------- ---------- -------- ----------
LIABILITIES
Payables for Securities
Purchased 4,009 575 48 5,727
Payables for Fund Shares
Redeemed 1,009 1 -- --
Payables Upon Return of
Securities Loaned
(Note 3) 46,755 6,674 1,387 1,142
Accrued Management Fees 251 46 17 9
Other Accrued Expenses 102 46 46 50
---------- ---------- -------- ----------
Total Liabilities 52,126 7,342 1,498 6,928
---------- ---------- -------- ----------
NET ASSETS $ 298,030 $ 73,628 $ 6,651 $ 26,564
========== ========== ======== ==========
NET ASSETS CONSIST OF:
Paid-in Capital
(Shareholders' Deficit) $ 135,702 $ 53,177 $(11,099) $ 16,117
Undistributed Net Realized
Gain on Investments 28,306 13,792 20,980 2,823
Unrealized Appreciation
(Depreciation) on
Investments 139,693 6,693 (317) 7,878
Undistributed Net Investment
(Loss) (5,671) -- (2,913) (254)
(Overdistributed) Net
Investment Income -- (34) -- --
---------- ---------- -------- ----------
NET ASSETS $ 298,030 $ 73,628 $ 6,651 $ 26,564
========== ========== ======== ==========
NET ASSETS ATTRIBUTABLE TO:
Institutional Class Shares $ 254,452 $ 73,628 $ 6,651 $ 26,247
========== ========== ======== ==========
Advisory Class Shares $ 43,578 $ -- $ -- $ 317
========== ========== ======== ==========
CAPITAL SHARES OUTSTANDING:
Institutional Class 9,052,403 4,853,775 423,815 1,460,947
========== ========== ======== ==========
Advisory Class 1,555,700 -- -- 17,671
========== ========== ======== ==========
NET ASSET VALUE PER SHARE:
Institutional Class $ 28.11 $ 15.17 $ 15.69 $ 17.97
========== ========== ======== ==========
Advisory Class $ 28.01 $ -- $ -- $ 17.91
========== ========== ======== ==========
</TABLE>
(1) THE IDENTIFIED COST FOR THE TCW GALILEO AGGRESSIVE GROWTH EQUITIES FUND,
THE TCW GALILEO CONVERTIBLE SECURITIES FUND, THE TCW GALILEO EARNINGS
MOMENTUM FUND AND THE TCW GALILEO LARGE CAP GROWTH FUND AT OCTOBER 31, 2000
WAS $208,189, $72,902, $8,461 AND $20,045, RESPECTIVELY.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
[ICON]
--------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO
LARGE CAP SELECT SMALL CAP SMALL CAP VALUE
VALUE EQUITIES GROWTH VALUE OPPORTUNITIES
FUND FUND FUND FUND FUND
----------- ----------- ----------- ----------- -------------
DOLLAR AMOUNTS IN THOUSANDS
(EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at
Value(1) $ 140,282 $ 788,874 $ 554,705 $ 1,072 $ 62,815
Receivables for
Securities Sold 1,583 5,813 204 21 704
Receivables for Fund
Shares Sold 28 2,993 1,952 -- 4
Interest and Dividends
Receivable 154 152 287 1 46
Deferred Organization
Costs -- -- -- -- 2
---------- ----------- ---------- ------- ----------
Total Assets 142,047 797,832 557,148 1,094 63,571
---------- ----------- ---------- ------- ----------
LIABILITIES
Payables for Securities
Purchased 3,122 434 12,843 9 1,011
Payables for Fund
Shares Redeemed -- 171 269 -- 17
Payables Upon Return of
Securities Loaned
(Note 3) 586 31,859 75,473 -- 3,817
Accrued Management Fees 57 448 397 -- 37
Other Accrued Expenses 65 219 168 7 45
---------- ----------- ---------- ------- ----------
Total Liabilities 3,830 33,131 89,150 16 4,927
---------- ----------- ---------- ------- ----------
NET ASSETS $ 138,217 $ 764,701 $ 467,998 $ 1,078 $ 58,644
========== =========== ========== ======= ==========
NET ASSETS CONSIST OF:
Paid-in Capital $ 119,707 $ 546,670 $ 299,156 $ 1,000 $ 44,603
Undistributed Net
Realized Gain (Loss)
on Investments (2,672) 93,915 15,405 22 5,604
Unrealized Appreciation
on Investments 20,616 126,888 162,178 56 8,329
Undistributed Net
Investment Income
(Loss) 566 (2,772) (8,741) -- 108
---------- ----------- ---------- ------- ----------
NET ASSETS $ 138,217 $ 764,701 $ 467,998 $ 1,078 $ 58,644
========== =========== ========== ======= ==========
NET ASSETS ATTRIBUTABLE
TO:
Institutional Class
Shares $ 134,388 $ 607,897 $ 375,377 $ 1,078 $ 58,644
========== =========== ========== ======= ==========
Advisory Class Shares $ 3,829 $ 156,804 $ 92,621 $ -- $ --
========== =========== ========== ======= ==========
CAPITAL SHARES
OUTSTANDING:
Institutional Class 9,520,656 23,673,384 9,955,437 98,263 3,944,188
========== =========== ========== ======= ==========
Advisory Class 271,585 6,135,361 2,467,325 -- --
========== =========== ========== ======= ==========
NET ASSET VALUE PER
SHARE:
Institutional Class $ 14.12 $ 25.68 $ 37.71 $ 10.97 $ 14.87
========== =========== ========== ======= ==========
Advisory Class $ 14.10 $ 25.56 $ 37.54 $ -- $ --
========== =========== ========== ======= ==========
</TABLE>
(1) THE IDENTIFIED COST FOR THE TCW GALILEO LARGE CAP VALUE FUND, THE TCW
GALILEO SELECT EQUITIES FUND, THE TCW GALILEO SMALL CAP GROWTH FUND, THE
TCW GALILEO SMALL CAP VALUE FUND AND THE TCW GALILEO VALUE OPPORTUNITIES
FUND AT OCTOBER 31, 2000 WAS $119,666, $661,986, $392,527, $1,016 AND
$54,486, RESPECTIVELY.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
53
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
STATEMENTS OF OPERATIONS YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW
AGGRESSIVE TCW GALILEO TCW GALILEO GALILEO
GROWTH CONVERTIBLE EARNINGS LARGE CAP
EQUITIES SECURITIES MOMENTUM GROWTH
FUND FUND FUND FUND
----------- ----------- ----------- ---------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends $ 97 $ 738 $ 1 $ 107
Interest 757 1,547 132 67
------- ------- ------- ------
Total 854 2,285 133 174
------- ------- ------- ------
EXPENSES:
Management Fees 2,744 463 304 166
Accounting Service Fees 74 28 28 26
Administration Fees 80 23 23 17
Transfer Agent Fees:
Institutional Class 45 35 34 28
Advisory Class 24 -- -- 21
Custodian Fees 4 11 19 2
Professional Fees 49 30 28 27
Directors' Fees & Expenses 11 11 11 11
Registration Fees:
Institutional Class 41 22 1 19
Advisory Class 22 -- -- 12
Distributions Fees:
Advisory Class (Note 6) 55 -- -- 1
Amortization of Deferred
Organization Costs -- 1 -- --
Other 51 29 20 17
------- ------- ------- ------
Total Expenses 3,200 653 468 347
Less Expenses Borne by
Investment Advisor 14(1) -- 6 33(1)
------- ------- ------- ------
Net Expenses 3,186 653 462 314
------- ------- ------- ------
Net Investment Income (Loss) (2,332) 1,632 (329) (140)
------- ------- ------- ------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net Realized Gain on
Investments 13,631 11,381 10,848 2,465
Change in Unrealized
Appreciation
(Depreciation) on
Investments 49,542 1,582 (8,944) 1,078
------- ------- ------- ------
Net Realized and
Unrealized Gain on
Investments 63,173 12,963 1,904 3,543
------- ------- ------- ------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $60,841 $14,595 $ 1,575 $3,403
======= ======= ======= ======
</TABLE>
(1) RELATES TO ADVISORY CLASS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
54
<PAGE>
[ICON]
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO
LARGE CAP SELECT SMALL CAP SMALL CAP VALUE
VALUE EQUITIES GROWTH VALUE OPPORTUNITIES
FUND FUND FUND FUND (2) FUND
----------- ----------- ----------- ----------- -------------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends(1) $ 1,154 $ 1,095 $ -- $ 4 $ 440
Interest 200 1,610 1,695 1 170
------- ------- ------- --- -------
Total 1,354 2,705 1,695 5 610
------- ------- ------- --- -------
EXPENSES:
Management Fees 487 3,770 4,430 3 311
Accounting Service Fees 28 119 115 -- 28
Administration Fees 21 126 125 -- 22
Transfer Agent Fees:
Institutional Class 39 44 44 8 22
Advisory Class 21 25 22 -- --
Custodian Fees 12 5 25 4 7
Professional Fees 34 65 63 6 28
Directors' Fees &
Expenses 11 11 11 -- 11
Registration Fees:
Institutional Class 30 74 71 1 4
Advisory Class 12 40 15 -- --
Distributions Fees:
Advisory Class (Note
6) 2 152 108 -- --
Amortization of
Deferred Organization
Costs -- -- -- -- 1
Other 30 63 78 3 15
------- ------- ------- --- -------
Total Expenses 727 4,494 5,107 25 449
Less Expenses Borne by
Investment Advisor 30(3) 9(3) 14(3) 17 --
Less Management Fees
Waived by Investment
Advisor -- -- -- 3 --
------- ------- ------- --- -------
Net Expenses 697 4,485 5,093 5 449
------- ------- ------- --- -------
Net Investment Income
(Loss) 657 (1,780) (3,398) -- 161
------- ------- ------- --- -------
NET REALIZED AND
UNREALIZED GAIN ON
INVESTMENTS
Net Realized Gain on
Investments 617 52,215 10,009 22 5,631
Change in Unrealized
Appreciation on
Investments 15,901 26,414 31,830 56 8,480
------- ------- ------- --- -------
Net Realized and
Unrealized Gain on
Investments 16,518 78,629 41,839 78 14,111
------- ------- ------- --- -------
INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS $17,175 $76,849 $38,441 $78 $14,272
======= ======= ======= === =======
</TABLE>
(1) NET OF FOREIGN TAXES WITHHELD OF $4 FOR THE TCW GALILEO LARGE CAP VALUE
FUND.
(2) FOR THE PERIOD JUNE 14, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH
OCTOBER 31, 2000.
(3) RELATES TO ADVISORY CLASS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
55
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TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
AGGRESSIVE GROWTH CONVERTIBLE
EQUITIES FUND SECURITIES 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) $ (2,332) $ (1,097) $ 1,632 $ 1,553
Net Realized Gain on
Investments 13,631 32,828 11,381 5,420
Change in Unrealized
Appreciation on
Investments 49,542 63,049 1,582 4,528
-------- -------- ------- -------
Increase in Net Assets
Resulting from Operations 60,841 94,780 14,595 11,501
-------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net
Investment Income:
Institutional Class -- -- (1,818) (1,264)
Distributions in Excess of
Net Investment Income:
Institutional Class -- -- (34) --
Distributions from Net
Realized Gain:
Institutional Class (20,845) (12,024) (4,184) (2,009)
Advisory Class (428) -- -- --
-------- -------- ------- -------
Total Distributions to
Shareholders (21,273) (12,024) (6,036) (3,273)
-------- -------- ------- -------
NET CAPITAL SHARE TRANSACTIONS
(NOTE 8)
Institutional Class 42,704 848 15,239 14,214
Advisory Class 45,198 2,052 -- --
-------- -------- ------- -------
Increase in Net Assets
Resulting from Net Capital
Share Transactions 87,902 2,900 15,239 14,214
-------- -------- ------- -------
Increase in Net Assets 127,470 85,656 23,798 22,442
NET ASSETS
Beginning of Year 170,560 84,904 49,830 27,388
-------- -------- ------- -------
End of Year $298,030 $170,560 $73,628 $49,830
======== ======== ======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
56
<PAGE>
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO
EARNINGS LARGE CAP
MOMENTUM FUND GROWTH 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 (Loss) $ (329) $ (364) $ (140) $ (112)
Net Realized Gain on
Investments 10,848 10,386 2,465 1,680
Change in Unrealized
Appreciation
(Depreciation) on
Investments (8,944) (121) 1,078 4,700
-------- -------- ------- -------
Increase in Net Assets
Resulting from Operations 1,575 9,901 3,403 6,268
-------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net
Realized Gain:
Institutional Class (4,748) (1,596) (1,329) (439)
Advisory Class -- -- (5) --
-------- -------- ------- -------
Total Distributions to
Shareholders (4,748) (1,596) (1,334) (439)
-------- -------- ------- -------
NET CAPITAL SHARE TRANSACTIONS
(NOTE 8)
Institutional Class (12,014) (18,766) 990 9,542
Advisory Class -- -- 255 79
-------- -------- ------- -------
Increase (Decrease) in Net
Assets Resulting from Net
Capital Share Transactions (12,014) (18,766) 1,245 9,621
-------- -------- ------- -------
Increase (Decrease) in Net
Assets (15,187) (10,461) 3,314 15,450
NET ASSETS
Beginning of Year 21,838 32,299 23,250 7,800
-------- -------- ------- -------
End of Year $ 6,651 $ 21,838 $26,564 $23,250
======== ======== ======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
57
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TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO LARGE TCW GALILEO SELECT
CAP VALUE 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) $ 657 $ 477 $ (1,780) $ (942)
Net Realized Gain (Loss) on
Investments 617 (3,003) 52,215 21,665
Change in Unrealized
Appreciation on
Investments 15,901 4,318 26,414 59,270
-------- ------- -------- --------
Increase in Net Assets
Resulting from Operations 17,175 1,792 76,849 79,993
-------- ------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net
Investment Income:
Institutional Class (543) (60) -- --
Advisory Class (1) -- -- --
Distributions from Net
Realized Gain:
Institutional Class -- -- (13,242) (27,870)
Advisory Class -- -- (891) --
-------- ------- -------- --------
Total Distributions to
Shareholders (544) (60) (14,133) (27,870)
-------- ------- -------- --------
NET CAPITAL SHARE TRANSACTIONS
(NOTE 8)
Institutional Class 51,700 56,990 258,066 53,279
Advisory Class 3,594 65 136,262 17,390
-------- ------- -------- --------
Increase in Net Assets
Resulting from Net Capital
Share Transactions 55,294 57,055 394,328 70,669
-------- ------- -------- --------
Increase in Net Assets 71,925 58,787 457,044 122,792
NET ASSETS
Beginning of Year 66,292 7,505 307,657 184,865
-------- ------- -------- --------
End of Year $138,217 $66,292 $764,701 $307,657
======== ======= ======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
58
<PAGE>
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO SMALL
CAP VALUE FUND
TCW GALILEO SMALL -----------------
CAP GROWTH FUND
------------------ JUNE 14, 2000
YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS)
------------------ THROUGH
2000 1999 OCTOBER 31, 2000
-------- -------- -----------------
DOLLAR AMOUNTS IN THOUSANDS
<S> <C> <C> <C>
OPERATIONS
Net Investment (Loss) $ (3,398) $ (1,605) $ --
Net Realized Gain on Investments 10,009 20,462 22
Change in Unrealized Appreciation
on Investments 31,830 90,934 56
-------- -------- ------
Increase in Net Assets Resulting
from Operations 38,441 109,791 78
-------- -------- ------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Realized
Gain:
Institutional Class (16,532) (1,936) --
Advisory Class (80) -- --
-------- -------- ------
Total Distributions to
Shareholders (16,612) (1,936) --
-------- -------- ------
NET CAPITAL SHARE TRANSACTIONS
(NOTE 8)
Institutional Class 99,075 17,017 1,000
Advisory Class 105,631 541 --
-------- -------- ------
Increase in Net Assets Resulting
from Net Capital Share
Transactions 204,706 17,558 1,000
-------- -------- ------
Increase in Net Assets 226,535 125,413 1,078
NET ASSETS
Beginning of Year 241,463 116,050 --
-------- -------- ------
End of Year $467,998 $241,463 $1,078
======== ======== ======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
59
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TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TCW GALILEO VALUE
OPPORTUNITIES FUND
------------------
YEAR ENDED
OCTOBER 31,
------------------
2000 1999
-------- --------
DOLLAR AMOUNTS IN
THOUSANDS
<S> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ 161 $ (28)
Net Realized Gain on Investments 5,631 3,685
Change in Unrealized Appreciation on
Investments 8,480 1,766
------- -------
Increase in Net Assets Resulting from
Operations 14,272 5,423
------- -------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from Net Realized Gain:
Institutional Class (3,131) --
------- -------
NET CAPITAL SHARE TRANSACTIONS (NOTE 8)
Institutional Class 17,265 (3,819)
------- -------
Increase in Net Assets 28,406 1,604
NET ASSETS
Beginning of Year 30,238 28,634
------- -------
End of Year $58,644 $30,238
======= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
60
<PAGE>
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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>
61
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TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
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.
U.S. FIXED INCOME
<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.
INTERNATIONAL
<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>
62
<PAGE>
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OCTOBER 31, 2000
<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.
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.
63
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TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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 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: Organizational costs of approximately $4,000 and
$5,000 for the TCW Galileo Convertible Securities Fund, and the TCW Galileo
Value Opportunities Fund, respectively, have been deferred and are being
amortized on a straight line basis over a five-year period from the commencement
of operations. Organizational costs for all other U.S. Equities funds have been
fully amortized or were de minimus and 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 Convertible Securities
Fund, the TCW Galileo Aggressive Growth Equities Fund, the TCW Galileo Small Cap
Growth Fund, and the TCW Galileo Value Opportunities Fund, and 2,000 shares each
of the other two funds, collectively the "Initial Shares"). In the event the
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
64
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OCTOBER 31, 2000
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.
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.
ALLOCATION OF OPERATING ACTIVITY: Investment income, common expenses and
realized and unrealized gains and losses are allocated among the classes of
shares of the Funds based on the relative net assets of each class. Distribution
fees, which are directly attributable to a class of shares, are charged to that
class' operations (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 Convertible Securities Fund
declares and pays, or reinvests, dividends from net investment income quarterly.
The other equity funds declare and pay, or reinvest, dividends from net
investment income annually. Distribution of any net long-term and net short-term
capital gains earned by a Fund will be distributed at least annually.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, market discount, losses deferred to wash sales, excise tax
regulations and employing equalization in determining amounts to be distributed
to Fund shareholders. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassifications to paid-in capital
and may impact net investment income per share. Undistributed net investment
income may include temporary book and tax basis differences which will reverse
in a subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
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>
SECURITIES
MARKET VALUE OF LENDING
LOANED SECURITIES COLLATERAL VALUE INCOME*
----------------- ---------------- ----------
<S> <C> <C> <C>
TCW Galileo Aggressive Growth
Equities Fund $44,823,758 $46,755,337 $142,685
TCW Galileo Convertible Securities
Fund 6,454,262 6,673,690 7,817
TCW Galileo Earnings Momentum Fund 1,339,137 1,386,799 29,321
TCW Galileo Large Cap Growth Fund 1,109,166 1,142,250 7,845
TCW Galileo Large Cap Value Fund 570,251 585,846 9,453
TCW Galileo Select Equities Fund 30,875,409 31,859,318 286,648
TCW Galileo Small Cap Growth Fund 73,105,692 75,473,448 233,570
TCW Galileo Value Opportunities
Fund 3,682,940 3,817,368 13,937
</TABLE>
* NET OF BROKER FEES.
65
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TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- SECURITY LENDING (CONTINUED)
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
AGGRESSIVE TCW GALILEO TCW GALILEO TCW GALILEO
GROWTH CONVERTIBLE EARNINGS LARGE CAP
EQUITIES SECURITIES MOMENTUM GROWTH
FUND FUND FUND FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Unrealized Appreciation $149,656 $ 9,538 $ 1,727 $ 7,944
Unrealized (Depreciation) (9,963) (3,303) (2,075) (155)
-------- -------- -------- -------
Net Unrealized Appreciation
(Depreciation) $139,693 $ 6,235 $ (348) $ 7,789
======== ======== ======== =======
Cost of Investments for
Federal Income Tax Purposes $208,189 $ 73,360 $ 8,492 $20,134
======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO
LARGE CAP SELECT SMALL CAP SMALL CAP
VALUE EQUITIES GROWTH VALUE
FUND FUND FUND FUND
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Unrealized Appreciation $ 23,124 $187,404 $197,036 $ 136
Unrealized (Depreciation) (3,098) (61,960) (35,534) (81)
-------- -------- -------- -------
Net Unrealized Appreciation $ 20,026 $125,444 $161,502 $ 55
======== ======== ======== =======
Cost of Investments for
Federal Income Tax Purposes $120,255 $663,430 $393,203 $ 1,017
======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO
VALUE
OPPORTUNITIES
FUND
-------------
<S> <C> <C> <C> <C>
Unrealized Appreciation $ 9,491
Unrealized (Depreciation) (1,320)
--------
Net Unrealized Appreciation $ 8,171
========
Cost of Investments for
Federal Income Tax Purposes $ 54,644
========
</TABLE>
At October 31, 2000, the TCW Galileo Large Cap Value Fund had net realized loss
carryforwards for federal income tax purposes of $11, $1,081 and $417 (amounts
in thousands) expiring in 2006, 2007 and 2008, respectively.
66
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OCTOBER 31, 2000
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 Aggressive Growth Equities Fund 1.00%
TCW Galileo Convertible Securities Fund 0.75%
TCW Galileo Earnings Momentum Fund 1.00%
TCW Galileo Large Cap Growth Fund 0.55%
TCW Galileo Large Cap Value Fund 0.55%
TCW Galileo Select Equities Fund 0.75%
TCW Galileo Small Cap Growth Fund 1.00%
TCW Galileo Small Cap Value Fund 1.00%*
TCW Galileo Value Opportunities Fund 0.80%
</TABLE>
* CURRENTLY, THE ADVISOR IS WAIVING THE MANAGEMENT FEE.
The ordinary operating expenses for all Funds (each share class) are limited to
the average total expense ratio 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 Aggressive Growth Equities Fund 1.52%
TCW Galileo Convertible Securities Fund 1.50%
TCW Galileo Earnings Momentum Fund 1.65%
TCW Galileo Large Cap Growth Fund 1.45%
TCW Galileo Large Cap Value Fund 1.31%
TCW Galileo Select Equities Fund 1.45%
TCW Galileo Small Cap Growth Fund 1.52%
TCW Galileo Small Cap Value Fund 1.54%
TCW Galileo Value Opportunities Fund 1.48%
</TABLE>
Certain officers and/or directors of the Company are officers and/or directors
of the Advisor.
NOTE 6 -- DISTRIBUTION PLAN
The Company has a distribution plan pursuant to Rule 12b-1 under the 1940 Act
with respect to the Advisory Class shares of each Fund. Under the terms of the
Distribution Plan, each Fund compensates the distributor at a rate equal to
0.25% of the average daily net assets of the Fund attributable to its Advisory
Class shares for distribution and related services.
67
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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
AGGRESSIVE GROWTH CONVERTIBLE EARNINGS MOMENTUM LARGE CAP GROWTH
EQUITIES FUND SECURITIES FUND FUND FUND
----------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Purchases at Cost $164,365 $122,032 $ 41,424 $33,301
======== ======== ======== =======
Sales Proceeds $116,240 $114,353 $ 61,139 $33,299
======== ======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO TCW GALILEO TCW GALILEO TCW GALILEO
LARGE CAP VALUE SELECT EQUITIES SMALL CAP GROWTH SMALL CAP VALUE
FUND FUND FUND FUND
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Purchases at Cost $148,056 $611,090 $347,149 $ 1,292
======== ======== ======== ========
Sales Proceeds $ 93,944 $253,465 $207,495 $ 301
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO
VALUE
OPPORTUNITIES
FUND
-------------
<S> <C> <C> <C> <C>
Purchases at Cost $ 61,161
========
Sales Proceeds $ 50,199
========
</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). Transaction in each Fund's
shares were as follows:
<TABLE>
<CAPTION>
TCW GALILEO AGGRESSIVE GROWTH YEAR ENDED YEAR ENDED
EQUITIES FUND OCTOBER 31, 2000 OCTOBER 31, 1999
INSTITUTIONAL CLASS -------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 4,004,832 $ 122,909 3,217,826 $ 61,670
Shares Issued upon
Reinvestment of Dividends 791,005 19,591 897,111 11,286
Shares Redeemed (3,289,641) (99,796) (4,048,436) (72,108)
---------- --------- ---------- --------
Net Increase 1,506,196 $ 42,704 66,501 $ 848
========== ========= ========== ========
</TABLE>
68
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO AGGRESSIVE GROWTH YEAR ENDED PERIOD ENDED
EQUITIES FUND OCTOBER 31, 2000 OCTOBER 31, 1999 (1)
ADVISORY CLASS -------------------------- -----------------------------
AMOUNT AMOUNT
SHARES (IN THOUSANDS) SHARES (IN THOUSANDS)
---------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Shares Sold 1,780,163 $ 55,024 177,921 $ 3,453
Shares Issued upon
Reinvestment of Dividends 17,223 485 -- --
Shares Redeemed (347,953) (10,311) (71,654) (1,401)
---------- --------- ---------- --------
Net Increase 1,449,433 $ 45,198 106,267 $ 2,052
========== ========= ========== ========
</TABLE>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS
SHARES) THROUGH OCTOBER 31, 1999.
<TABLE>
<CAPTION>
TCW GALILEO CONVERTIBLE
SECURITIES 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 1,425,345 $ 23,018 2,763,917 $ 31,234
Shares Issued upon
Reinvestment of Dividends 385,856 5,234 266,413 2,893
Shares Redeemed (894,653) (13,013) (1,692,831) (19,913)
---------- --------- ---------- --------
Net Increase 916,548 $ 15,239 1,337,499 $ 14,214
========== ========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO EARNINGS
MOMENTUM 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 86,976 $ 1,839 110,213 $ 1,249
Shares Issued upon
Reinvestment of Dividends 300,226 7,556 132,982 1,471
Shares Redeemed (1,407,640) (21,409) (1,856,416) (21,486)
---------- --------- ---------- --------
Net (Decrease) (1,020,438) $ (12,014) (1,613,221) $(18,766)
========== ========= ========== ========
</TABLE>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS
SHARES) THROUGH OCTOBER 31, 1999.
69
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
TCW GALILEO LARGE CAP GROWTH 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 293,600 $ 5,695 961,287 $ 13,683
Shares Issued upon Reinvestment of
Dividends 64,995 1,117 36,641 439
Shares Redeemed (294,592) (5,822) (298,866) (4,580)
---------- --------- ---------- --------
Net Increase 64,003 $ 990 699,062 $ 9,542
========== ========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO LARGE CAP GROWTH 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 19,725 $ 379 5,290 $ 81
Shares Issued upon Reinvestment of
Dividends 278 25 -- --
Shares Redeemed (7,493) (149) (129) (2)
---------- --------- ---------- --------
Net Increase 12,510 $ 255 5,161 $ 79
========== ========= ========== ========
</TABLE>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS
SHARES) THROUGH OCTOBER 31, 1999.
<TABLE>
<CAPTION>
TCW GALILEO LARGE CAP VALUE 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 5,371,969 $ 69,549 8,030,981 $ 92,437
Shares Issued upon Reinvestment
of Dividends 23,554 285 2,910 30
Shares Redeemed (1,480,796) (18,134) (3,169,587) (35,477)
---------- --------- ---------- --------
Net Increase 3,914,727 $ 51,700 4,864,304 $ 56,990
========== ========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO LARGE CAP VALUE 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 284,746 $ 3,834 13,353 $ 167
Shares Issued upon Reinvestment
of Dividends 19 -- -- --
Shares Redeemed (18,152) (240) (8,381) (102)
---------- --------- ---------- --------
Net Increase 266,613 $ 3,594 4,972 $ 65
========== ========= ========== ========
</TABLE>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS
SHARES) THROUGH OCTOBER 31, 1999.
70
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
TCW GALILEO SELECT 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 15,908,847 $ 409,792 6,400,424 $120,104
Shares Issued upon Reinvestment
of Dividends 472,656 10,251 1,613,101 24,632
Shares Redeemed (6,655,554) (161,977) (5,012,731) (91,457)
---------- --------- ---------- --------
Net Increase 9,725,949 $ 258,066 3,000,794 $ 53,279
========== ========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO SELECT 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 5,833,644 $ 151,761 1,018,247 $ 19,178
Shares Issued upon Reinvestment
of Dividends 40,661 927 -- --
Shares Redeemed (663,718) (16,426) (93,473) (1,788)
---------- --------- ---------- --------
Net Increase 5,210,587 $ 136,262 924,774 $ 17,390
========== ========= ========== ========
</TABLE>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS
SHARES) THROUGH OCTOBER 31, 1999.
<TABLE>
<CAPTION>
TCW GALILEO SMALL CAP GROWTH 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 7,586,939 $ 336,830 2,977,400 $ 68,370
Shares Issued upon Reinvestment of
Dividends 417,754 15,840 100,650 1,878
Shares Redeemed (5,863,737) (253,595) (2,307,584) (53,231)
---------- --------- ---------- --------
Net Increase 2,140,956 $ 99,075 770,466 $ 17,017
========== ========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO SMALL CAP GROWTH 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 2,895,479 $ 123,734 21,894 $ 543
Shares Issued upon Reinvestment of
Dividends 2,092 151 -- --
Shares Redeemed (452,066) (18,254) (74) (2)
---------- --------- ---------- --------
Net Increase 2,445,505 $ 105,631 21,820 $ 541
========== ========= ========== ========
</TABLE>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS
SHARES) THROUGH OCTOBER 31, 1999.
71
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
TCW GALILEO SMALL CAP VALUE FUND
JUNE 14, 2000
(COMMENCEMENT OF
OPERATIONS) THROUGH
OCTOBER 31, 2000
-------------------------
AMOUNT
SHARES (IN THOUSANDS)
--------- --------------
<S> <C> <C>
Shares Sold 98,263 $ 1,000
--------- -------
Net Increase 98,263 $ 1,000
========= =======
</TABLE>
<TABLE>
<CAPTION>
TCW GALILEO VALUE OPPORTUNITIES 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 1,767,014 $23,290 334,352 $ 3,783
Shares Issued upon Reinvestment of
Dividends 274,811 2,940 -- --
Shares Redeemed (789,260) (8,965) (742,180) (7,602)
--------- ------- -------- -------
Net Increase (Decrease) 1,252,565 $17,265 (407,828) $(3,819)
========= ======= ======== =======
</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.
72
<PAGE>
[ICON]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
TCW GALILEO CONVERTIBLE SECURITIES FUND:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR
NUMBER OF DATE OF
SHARES INVESTMENT ACQUISITION COST
---------- ----------------------------------- ----------- ----------
<C> <S> <C> <C>
$ 690,000 Akamai Technologies, Inc., (144A), 06/15/00 $ 675,001
5.5%, due 07/01/07
1,765,000 ASM Lithography Holding N.V., 11/19/99 1,853,545
(144A), 4.25%, due 11/30/04
820,000 BEA Systems, Inc., (144A), 4%, due 12/14/99 1,035,658
12/15/06
580,000 Burr-Brown Corp., (144A), 4.25%, 02/18/00 585,600
due 02/15/07
730,000 Charter Communications, Inc., 10/25/00 730,000
Exchangeable Charter
Communications, Inc., (144A),
5.75%, due 10/15/05
1,300,000 E*TRADE Group, Inc., (144A), 6%, 02/02/00 1,264,482
due 02/01/07
660,000 Echostar Communications Corp., 12/03/99 660,000
(144A), 4.875%, due 01/01/07
550,000 Exchangeable Certificates Corp., 07/16/99 557,476
(144A), 0.25%, due 07/17/06
795,000 Exodus Communications, Inc., 12/02/99 796,900
(144A), 4.75%, due 07/15/08
830,000 Interpublic Group of Companies, 06/01/99 727,329
Inc., (144A), 1.87%, due 06/01/06
385,000 Kestrel Solutions, (144A), 5.5%, 07/20/00 385,000
due 07/15/05
635,000 Mercury Interactive Corp., (144A), 06/27/00 663,500
4.75%, due 07/01/07
235,000 Nextel Communications, Inc., 09/05/00 228,181
(144A), 5.25%, due 01/15/10
12,000 QBE Insurance Group, (144A), $4.00 08/01/00 605,000
1,300 Radio One, Inc., (144A), $65.00 07/11/00 1,170,000
485,000 Rational Software Corp., (144A), 01/27/00 485,000
5%, due 02/01/07
1,885,000 Roche Holdings, Inc., Exchangeable 01/12/00 1,395,341
Genentech, Inc., (144A), 0%, due
01/19/15
1,535,000 Sanmina Corp., Exchangeable Sanmina 10/11/00 606,649
Corp., (144A), 0%, due 09/12/20
390,000 Siebel Systems, Inc., (144A), 5.5%, 09/21/99 390,501
due 09/15/06
935,000 Transwitch Corp., (144A), 4.5%, due 09/06/00 944,451
09/12/05
2,625,000 Vitesse Semiconductor Corp., 03/07/00 2,428,924
(144A), 4%, due 03/15/05
</TABLE>
The total value of restricted securities is $21,008,543, which represents 28.5%
of net assets of the Fund at October 31, 2000.
73
<PAGE>
TCW GALILEO AGGRESSIVE GROWTH EQUITIES FUND
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 3, 1996
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------------- THROUGH
2000 1999 1998 1997 OCTOBER 31, 1996
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value per Share,
Beginning of Period $ 22.29 $ 11.35 $ 9.40 $ 9.19 $ 10.00
-------- -------- ------- -------- -------
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net Investment (Loss) (0.25) (0.14) (0.11) (0.08) (0.03)
Net Realized and Unrealized Gain
(Loss) on Investments 8.80 12.68 2.06 0.29 (0.78)
-------- -------- ------- -------- -------
Total from Investment Operations 8.55 12.54 1.95 0.21 (0.81)
-------- -------- ------- -------- -------
LESS DISTRIBUTIONS:
Distributions from Net Realized
Gain (2.73) (1.60) -- -- --
-------- -------- ------- -------- -------
Net Asset Value per Share, End of
Period $ 28.11 $ 22.29 $ 11.35 $ 9.40 $ 9.19
======== ======== ======= ======== =======
Total Return 40.14% 121.34% 20.74% 2.28% (8.10)% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
thousands) $254,452 $168,193 $84,904 $135,850 $92,430
Ratio of Expenses to Average Net
Assets 1.13% 1.14% 1.17% 1.12% 1.20% (2)(3)
Ratio of Net Investment (Loss) to
Average Net Assets (0.82)% (0.79)% (1.03)% (0.86)% (0.80)% (2)
Portfolio Turnover Rate 44.85% 64.12% 55.36% 50.45% 19.19% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD JUNE 3, 1996 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1996 AND NOT INDICATIVE OF A FULL YEAR'S
OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT 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 DECEMBER
31, 1996. HAD SUCH ACTION NOT BEEN TAKEN, TOTAL ANNUALIZED
OPERATING EXPENSES, AS A PERCENTAGE OF AVERAGE NET ASSETS,
WOULD HAVE BEEN 1.27% FOR THE PERIOD JUNE 3, 1996
(COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER 31, 1996.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
74
<PAGE>
[ICON]
--------------------------------------------------------------------------------
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 $ 22.27 $16.07
------- ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.35) (0.12)
Net Realized and Unrealized Gain on Investments 8.82 6.32
------- ------
Total from Investment Operations 8.47 6.20
------- ------
LESS DISTRIBUTIONS:
Distributions from Net Realized Gain (2.73) --
------- ------
Net Asset Value per Share, End of Period $ 28.01 $22.27
======= ======
Total Return 39.68% 38.58% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $43,578 $2,367
Ratio of Net Expenses to Average Net Assets 1.48%(3) 1.47% (2)(3)
Ratio of Net Investment (Loss) to Average Net Assets (1.15)% (0.92)% (2)
Portfolio Turnover Rate 44.85% 64.12% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF
ADVISORY CLASS SHARES) THROUGH OCTOBER 31, 1999 AND NOT
INDICATIVE OF A FULL YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT ADVISOR HAS VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND, TO THE
EXTENT NECESSARY TO LIMIT THE ANNUAL OPERATING EXPENSES OF
THE FUND AS DISCLOSED IN NOTE 5 IN THE NOTES TO THE
FINANCIAL STATEMENTS. HAD SUCH ACTION NOT BEEN TAKEN, TOTAL
ANNUALIZED OPERATING EXPENSES, AS A PERCENTAGE OF AVERAGE
NET ASSETS, WOULD HAVE BEEN 1.53% FOR THE YEAR ENDED OCTOBER
31, 2000 AND 6.83% FOR THE PERIOD MARCH 1, 1999
(COMMENCEMENT OF OFFERING OF ADVISORY CLASS SHARES) THROUGH
OCTOBER 31, 1999.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
75
<PAGE>
TCW GALILEO CONVERTIBLE SECURITIES FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JANUARY 2, 1997
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------- THROUGH
2000 1999 1998 OCTOBER 31, 1997
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
Net Asset Value per Share, Beginning of Period $ 12.66 $ 10.53 $ 11.41 $ 10.00
------- ------- ------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment Income 0.40 0.41 0.37 0.31
Net Realized and Unrealized Gain (Loss) on
Investments 3.63 2.56 (0.08) 1.43
------- ------- ------- -------
Total from Investment Operations 4.03 2.97 0.29 1.74
------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income (0.40) (0.34) (0.37) (0.33)
Distributions in Excess of Net Investment
Income (0.05) -- (0.05) --
Distributions from Net Realized Gain (1.07) (0.50) (0.75) --
------- ------- ------- -------
Total Distributions (1.52) (0.84) (1.17) (0.33)
------- ------- ------- -------
Net Asset Value per Share, End of Period $ 15.17 $ 12.66 $ 10.53 $ 11.41
======= ======= ======= =======
Total Return 33.59% 29.68% 2.69% 17.66% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $73,628 $49,830 $27,388 $36,890
Ratio of Expenses to Average Net Assets 1.06% 1.03% 1.05%(3) 0.95% (2)(3)
Ratio of Net Investment Income to Average Net
Assets 2.64% 3.53% 3.34% 3.54% (2)(3)
Portfolio Turnover Rate 193.02% 150.91% 139.65% 141.43% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD JANUARY 2, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1997 AND NOT INDICATIVE OF A FULL YEAR'S
OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT ADVISOR HAD VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND, TO THE
EXTENT NECESSARY TO LIMIT THE ANNUAL ORDINARY OPERATING
EXPENSES OF THE FUND TO 0.95% OF NET ASSETS THROUGH OCTOBER
31, 1997 AND 1.05% OF NET ASSETS THROUGH DECEMBER 31, 1998.
HAD SUCH ACTION NOT BEEN TAKEN, TOTAL ANNUALIZED OPERATING
EXPENSES, AS A PERCENTAGE OF AVERAGE NET ASSETS, WOULD HAVE
BEEN 1.16% FOR THE YEAR ENDED OCTOBER 31, 1998 AND 1.51% FOR
THE PERIOD JANUARY 2, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1997.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
76
<PAGE>
TCW GALILEO EARNINGS MOMENTUM 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 $15.12 $ 10.56 $ 13.87 $ 13.01 $ 11.47
------ ------- ------- -------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.19) (0.16) (0.14) (0.12) (0.11)
Net Realized and Unrealized Gain (Loss) on
Investments 4.11 5.26 (2.20) 1.98 1.72
------ ------- ------- -------- -------
Total from Investment Operations 3.92 5.10 (2.34) 1.86 1.61
------ ------- ------- -------- -------
LESS DISTRIBUTIONS:
Distributions from Net Realized Gain (3.35) (0.54) (0.97) (1.00) (0.07)
------ ------- ------- -------- -------
Net Asset Value per Share, End of Year $15.69 $ 15.12 $ 10.56 $ 13.87 $ 13.01
====== ======= ======= ======== =======
Total Return 26.67% 50.23% (17.76)% 15.53% 13.99%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in thousands) $6,651 $21,838 $32,299 $101,667 $77,994
Ratio of Net Expenses to Average Net Assets 1.52%(1) 1.46% 1.27% 1.17% 1.13%(1)
Ratio of Net Investment (Loss) to Average
Net Assets (1.08)% (1.30)% (1.10)% (0.96)% (0.82)%
Portfolio Turnover Rate 152.72% 118.87% 51.25% 93.06% 99.03%
</TABLE>
<TABLE>
<C> <S>
(1) THE INVESTMENT ADVISOR HAS VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND, TO THE
EXTENT NECESSARY TO LIMIT THE ANNUAL ORDINARY OPERATING
EXPENSES OF THE FUND TO 1.14% OF NET ASSETS THROUGH DECEMBER
31, 1995 AND AS DISCLOSED IN NOTE 5 OF THE NOTES TO
FINANCIAL STATEMENTS. HAD SUCH ACTION NOT BEEN TAKEN, TOTAL
ANNUALIZED OPERATING EXPENSES, AS A PERCENTAGE OF AVERAGE
NET ASSETS, WOULD HAVE BEEN 1.54% FOR THE YEAR ENDED OCTOBER
31, 2000 AND 1.14% FOR THE YEAR ENDED OCTOBER 31, 1996.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
77
<PAGE>
TCW GALILEO LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS
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 $ 16.58 $ 11.18 $10.00
------- ------- ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.09) (0.09) --
Net Realized and Unrealized Gain on Investments 2.42 6.00 1.18
------- ------- ------
Total from Investment Operations 2.33 5.91 1.18
------- ------- ------
LESS DISTRIBUTIONS:
Distributions from Net Realized Gain (0.94) (0.51) --
------- ------- ------
Net Asset Value per Share, End of Period $ 17.97 $ 16.58 $11.18
======= ======= ======
Total Return 13.97% 54.59% 11.80% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $26,247 $23,164 $7,800
Ratio of Expenses to Average Net Assets 1.04% 1.30% 0.91% (2)(3)
Ratio of Net Investment (Loss) to Average Net Assets (0.46)% (0.64)% (0.07)% (2)
Portfolio Turnover Rate 113.62% 78.02% 50.76% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD JUNE 3, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1998 AND NOT INDICATIVE OF A FULL
YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT 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 AS DISCLOSED IN NOTE 5 OF THE NOTES TO
THE FINANCIAL STATEMENTS. HAD SUCH ACTIONS NOT BEEN TAKEN,
TOTAL ANNUALIZED OPERATING EXPENSES, AS A PERCENTAGE OF THE
AVERAGE NET ASSETS, WOULD HAVE BEEN 2.53% FOR THE PERIOD
JUNE 3, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH OCTOBER
31, 1998.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
78
<PAGE>
[ICON]
--------------------------------------------------------------------------------
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 $16.60 $13.70
------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.17) (0.08)
Net Realized and Unrealized Gain on Investments 2.42 2.98
------ ------
Total from Investment Operations 2.25 2.90
------ ------
LESS DISTRIBUTIONS:
Distributions from Net Realized Gain (0.94) --
------ ------
Net Asset Value per Share, End of Period $17.91 $16.60
====== ======
Total Return 13.58% 21.17% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $ 317 $ 86
Ratio of Net Expenses to Average Net Assets 1.40% (3) 1.46% (2) (3)
Ratio of Net Investment (Loss) to Average Net Assets (0.86)% (0.74)% (2)
Portfolio Turnover Rate 113.62% 78.02% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF
ADVISORY CLASS SHARES) THROUGH OCTOBER 31, 1999 AND NOT
INDICATIVE OF A FULL YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT ADVISOR HAS VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND, TO THE
EXTENT NECESSARY TO LIMIT THE ANNUAL ORDINARY OPERATING
EXPENSES OF THE FUND AS DISCLOSED IN NOTE 5 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 13.96% FOR THE YEAR
ENDED OCTOBER 31, 2000 AND 392.27% FOR THE PERIOD MARCH 1,
1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS SHARES)
THROUGH OCTOBER 31, 1999.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
79
<PAGE>
TCW GALILEO LARGE CAP VALUE FUND
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS
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 $ 11.82 $ 10.12 $10.00
-------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.10 0.09 0.04
Net Realized and Unrealized Gain on Investments 2.31 1.66 0.08
-------- ------- ------
Total from Investment Operations 2.41 1.75 0.12
-------- ------- ------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income (0.11) (0.05) --
-------- ------- ------
Net Asset Value per Share, End of Period $ 14.12 $ 11.82 $10.12
======== ======= ======
Total Return 20.46% 17.30% 1.20% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $134,388 $66,234 $7,505
Ratio of Expenses to Average Net Assets 0.79% 0.85% 0.55% (2)(3)
Ratio of Net Investment Income to Average Net Assets 0.75% 0.79% 1.04% (2)
Portfolio Turnover Rate 108.54% 142.36% 83.84% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD JUNE 3, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 1998 AND NOT INDICATIVE OF A FULL YEAR'S
OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT 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 AS DISCLOSED IN NOTE 5 OF THE NOTES TO
THE FINANCIAL STATEMENTS. HAD SUCH ACTIONS NOT BEEN TAKEN,
TOTAL ANNUALIZED OPERATING EXPENSES, AS A PERCENTAGE OF
AVERAGE NET ASSETS, WOULD HAVE BEEN 2.48% FOR THE PERIOD
JUNE 3, 1998 (COMMENCEMENT OF OPERATIONS) THROUGH
OCTOBER 31, 1998.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
80
<PAGE>
[ICON]
--------------------------------------------------------------------------------
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 $11.79 $11.07
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.02 0.06
Net Realized and Unrealized Gain on Investments 2.34 0.66
------ ------
Total from Investment Operations 2.36 0.72
------ ------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income (0.05) --
------ ------
Net Asset Value per Share, End of Period $14.10 $11.79
====== ======
Total Return 20.04% 6.51% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $3,829 $ 58
Ratio of Net Expenses to Average Net Assets 1.28% (3) 1.46% (2)(3)
Ratio of Net Investment Income to Average Net Assets 0.13% 0.71% (2)
Portfolio Turnover Rate 108.54% 142.36% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF
ADVISORY CLASS SHARES) THROUGH OCTOBER 31, 1999 AND NOT
INDICATIVE OF A FULL YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT ADVISOR 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 AS DISCLOSED IN NOTE 5 OF THE NOTES TO
THE FINANCIAL STATEMENTS. HAD SUCH ACTIONS NOT BEEN TAKEN,
TOTAL ANNUALIZED OPERATING EXPENSES, AS A PERCENTAGE OF
AVERAGE NET ASSETS, WOULD HAVE BEEN 5.05% FOR THE YEAR ENDED
OCTOBER 31, 2000 AND 163.61% FOR THE PERIOD MARCH 1, 1999
(COMMENCEMENT OF OFFERING OF ADVISORY CLASS SHARES) THROUGH
OCTOBER 31, 1999.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
81
<PAGE>
TCW GALILEO SELECT EQUITIES FUND
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS
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 $ 20.69 $ 16.89 $ 19.29 $ 15.93 $ 13.69
-------- -------- -------- -------- --------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) (0.08) (0.07) (0.02) 0.01 0.11
Net Realized and Unrealized Gain on
Investments 5.99 6.32 3.38 3.57 2.18
-------- -------- -------- -------- --------
Total from Investment Operations 5.91 6.25 3.36 3.58 2.29
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income -- -- -- (0.02) (0.05)
Distributions from Net Realized Gain (0.92) (2.45) (5.76) (0.20) --
-------- -------- -------- -------- --------
Total Distributions (0.92) (2.45) (5.76) (0.22) (0.05)
-------- -------- -------- -------- --------
Net Asset Value per Share, End of Year $ 25.68 $ 20.69 $ 16.89 $ 19.29 $ 15.93
======== ======== ======== ======== ========
Total Return 29.38% 42.12% 23.83% 22.68% 16.79%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in thousands) $607,897 $288,546 $184,865 $156,113 $231,302
Ratio of Net Expenses to Average Net
Assets 0.85%(1) 0.88% 0.86% 0.83% 0.82%
Ratio of Net Investment Income (Loss) to
Average Net Assets (0.31)% (0.39)% (0.14)% 0.08% 0.18%
Portfolio Turnover Rate 52.37% 48.29% 103.51% 39.22% 39.58%
</TABLE>
<TABLE>
<C> <S>
(1) THE INVESTMENT ADVISOR HAS VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND, TO THE
EXTENT NECESSARY TO LIMIT THE ORDINARY 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 0.86% FOR THE YEAR ENDED
OCTOBER 31, 2000.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
82
<PAGE>
[ICON]
--------------------------------------------------------------------------------
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 $ 20.67 $ 17.62
-------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.16) (0.07)
Net Realized and Unrealized Gain on Investments 5.97 3.12
-------- -------
Total from Investment Operations 5.81 3.05
-------- -------
LESS DISTRIBUTIONS:
Distributions from Net Realized Gain (0.92) --
-------- -------
Net Asset Value per Share, End of Period $ 25.56 $ 20.67
======== =======
Total Return 28.92% 17.31% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $156,804 $19,111
Ratio of Expenses to Average Net Assets 1.17% 1.46% (2)(3)
Ratio of Net Investment (Loss) to Average Net Assets (0.64)% (0.53)% (2)
Portfolio Turnover Rate 52.37% 48.29% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF
ADVISORY CLASS SHARES) THROUGH OCTOBER 31, 1999 AND NOT
INDICATIVE OF A FULL YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT ADVISOR HAS VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND, TO THE
EXTENT NECESSARY TO LIMIT THE ORDINARY 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 2.66% FOR THE PERIOD MARCH 1,
1999 (COMMENCEMENT OF OFFERING OF ADVISORY CLASS SHARES)
THROUGH OCTOBER 31, 1999.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
83
<PAGE>
TCW GALILEO SMALL CAP GROWTH FUND
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS
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 $ 30.81 $ 16.48 $ 18.74 $ 17.17 $ 13.53
-------- -------- -------- -------- --------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.32) (0.22) (0.18) (0.15) (0.13)
Net Realized and Unrealized Gain (Loss)
on Investments 9.29 14.82 (0.90) 1.91 4.08
-------- -------- -------- -------- --------
Total from Investment Operations 8.97 14.60 (1.08) 1.76 3.95
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Distributions from Net Investment Income -- -- -- -- (0.01)
Distributions from Net Realized Gain (2.07) (0.27) (1.18) (0.19) (0.30)
-------- -------- -------- -------- --------
Total Distributions (2.07) (0.27) (1.18) (0.19) (0.31)
-------- -------- -------- -------- --------
Net Asset Value per Share, End of Year $ 37.71 $ 30.81 $ 16.48 $ 18.74 $ 17.17
======== ======== ======== ======== ========
Total Return 28.91% 89.63% (5.98)% 10.38% 29.73%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Year (in thousands) $375,377 $240,792 $116,050 $144,756 $132,444
Ratio of Expenses to Average Net Assets 1.12% 1.14% 1.13% 1.14% 1.14%
Ratio of Net Investment (Loss) to Average
Net Assets (0.74)% (0.94)% (0.95)% (0.89)% (0.76)%
Portfolio Turnover Rate 50.94% 74.52% 63.67% 60.52% 45.43%
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
84
<PAGE>
[ICON]
--------------------------------------------------------------------------------
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 $ 30.74 $20.62
------- ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (0.43) (0.20)
Net Realized and Unrealized Gain on Investments 9.30 10.32
------- ------
Total from Investment Operations 8.87 10.12
------- ------
LESS DISTRIBUTIONS:
Distributions from Net Realized Gain (2.07) --
------- ------
Net Asset Value per Share, End of Period $ 37.54 $30.74
======= ======
Total Return 28.56% 49.08% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $92,621 $ 671
Ratio of Net Expenses to Average Net Assets 1.42%(3) 1.53% (2) (3)
Ratio of Net Investment (Loss) to Average Net Assets (1.02)% (1.15)% (2)
Portfolio Turnover Rate 50.94% 74.52% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD MARCH 1, 1999 (COMMENCEMENT OF OFFERING OF
ADVISORY CLASS SHARES) THROUGH OCTOBER 31, 1999 AND NOT
INDICATIVE OF A FULL YEAR'S OPERATING RESULTS.
(2) ANNUALIZED.
(3) THE INVESTMENT ADVISOR HAS VOLUNTARILY AGREED TO REDUCE ITS
FEE, OR TO PAY THE OPERATING EXPENSES OF THE FUND, TO THE
EXTENT NECESSARY TO LIMIT THE ANNUAL ORDINARY OPERATING
EXPENSES OF THE FUND AS DISCLOSED IN NOTE 5 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 1.44% FOR THE YEAR ENDED
OCTOBER 31, 2000 AND 35.14% FOR THE PERIOD MARCH 1, 1999
(COMMENCEMENT OF OFFERING OF ADVISORY CLASS SHARES) THROUGH
OCTOBER 31, 1999.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
85
<PAGE>
TCW GALILEO SMALL CAP VALUE FUND
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 14, 2000
(COMMENCEMENT
OF OPERATIONS)
THROUGH
OCTOBER 31, 2000
-----------------
<S> <C>
Net Asset Value per Share, Beginning of Period $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net Realized and Unrealized Gain on Investments 0.97
------
Total from Investment Operations 0.97
------
Net Asset Value per Share, End of Period $10.97
======
Total Return 9.70% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $1,078
Ratio of Expenses to Average Net Assets 1.55% (2)(3)
Ratio of Net Investment Income to Average Net Assets -% (2)(4)
Portfolio Turnover Rate 32.18% (1)
</TABLE>
<TABLE>
<C> <S>
(1) FOR THE PERIOD JUNE 14, 2000 (COMMENCEMENT OF OPERATIONS)
THROUGH OCTOBER 31, 2000 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 AS DISCLOSED IN NOTE 5 OF THE NOTES TO
THE FINANCIAL STATEMENTS. HAD SUCH ACTIONS NOT BEEN TAKEN,
TOTAL ANNUALIZED OPERATING EXPENSES, AS A PERCENTAGE OF
AVERAGE NET ASSETS, WOULD HAVE BEEN 7.52% FOR THE PERIOD
JUNE 14, 2000 (COMMENCEMENT OF OPERATIONS) THROUGH
OCTOBER 31, 2000.
(4) RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS IS LESS
THAN 0.01%.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
86
<PAGE>
TCW GALILEO VALUE OPPORTUNITIES 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 $ 11.23 $ 9.24 $ 10.00
------- ------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net Investment Income (Loss) 0.05 (0.01) --
Net Realized and Unrealized Gain (Loss) on
Investments 4.80 2.00 (0.75)
------- ------- -------
Total from Investment Operations 4.85 1.99 (0.75)
------- ------- -------
LESS DISTRIBUTIONS:
Distributions in Excess of Net Investment Income -- -- (0.01)
Distributions from Net Realized Gain (1.21) -- --
------- ------- -------
Total Distributions (1.21) -- (0.01)
------- ------- -------
Net Asset Value per Share, End of Period $ 14.87 $ 11.23 $ 9.24
======= ======= =======
Total Return 47.19% 21.54% (7.49)% (1)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) $58,644 $30,238 $28,634
Ratio of Expenses to Average Net Assets 1.15% 1.18% 1.16% (2)
Ratio of Net Investment Income (Loss) to
Average Net Assets 0.41% (0.10)% 0.05% (2)
Portfolio Turnover Rate 137.41% 140.07% 97.30% (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.
87
<PAGE>
TCW GALILEO FUNDS, INC.
--------------------------------------------------------------------------------
U.S. EQUITIES
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 Aggressive Growth Equities Fund,
TCW Galileo Convertible Securities Fund, TCW Galileo Earnings Momentum 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 Small Cap
Value Fund, and TCW Galileo Value Opportunities Fund (the "TCW Galileo U.S.
Equities Funds") (nine 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 TCW Galileo U.S. Equities 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
88
<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 Funds also designate 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 Aggressive Growth Equities Fund $ 1.27
TCW Galileo Convertible Securities Fund 2.23
TCW Galileo Earnings Momentum Fund 30.74
TCW Galileo Large Cap Growth Fund 1.68
TCW Galileo Select Equities Fund 1.66
TCW Galileo Small Cap Growth Fund 0.83
TCW Galileo Small Cap Value Fund 0.23
TCW Galileo Value Opportunities Fund 1.39
</TABLE>
This information is given to meet certain requirements of the Internal Revenue
Code and should not be used by shareholders for preparing their income tax
returns. For income tax preparation purposes, please refer to the calendar year
end information you will receive from the Funds' transfer agent in January 2001.
89
<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
USEQAR103100
