[Federal Register Volume 59, Number 53 (Friday, March 18, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6327]
[[Page Unknown]]
[Federal Register: March 18, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-20130; 812-8850]
TCW Investment Funds, Inc., et al.; Notice of Application
March 11, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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Applicants: TCW Investment Funds, Inc. (``MMP Company''), TCW Funds,
Inc. (``Galileo Company''), and TCW Funds Management, Inc.
(``Adviser'').
Relevant Act Sections: Order requested under section 17(b) of the Act
for an exemption from section 17(a) of the Act.
SUMMARY OF APPLICATION: Applicants seek an order that would permit MMP
Company to transfer substantially all its assets and liabilities to
Galileo Company in exchange for shares of Galileo Company's common
stock.
FILING DATE: The application was filed on February 24, 1994.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on April 5, 1994,
and should be accompanied by proof of service on applicants, in the
form of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issue contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street, NW., Washington, DC 20549.
Applicants, 865 S. Figueroa Street, suite 1800, Los Angeles, California
90071.
FOR FURTHER INFORMATION CONTACT:
Joseph G. Mari, Senior Special Counsel, at (202) 272-3030, or Barry D.
Miller, Senior Special Counsel, at (202) 272-3018 (Division of
Investment Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicants' Representations
1. MMP Company, a Maryland corporation, is a registered no-load,
open-end investment company. Although it was formed as a series mutual
fund, it has offered shares in only one fund, the TCW Money Market
Portfolio (``MMP Fund''). Various affiliates of Adviser have
discretionary investment and voting powers regarding several client
accounts, group trusts, and limited partnerships that owned, on
February 17, 1994, 38.3% of the outstanding shares of MMP Fund.
2. Galileo Company, a Maryland corporation, is a registered no-
load, open-end investment company. It was formed as a series mutual
fund with different investment portfolios, and currently offers six
portfolios. Galileo Company will offer a new portfolio, the TCW Galileo
Money Market Fund (``Galileo MM Fund''), that will have the same
investment objectives and policies as the MMP Fund.
3. A board of directors consisting of five directors currently
manages MMP Company. One of the three independent directors of MMP
Company also is an independent director of Galileo Company, and Galileo
Company recently elected to its board as an independent director
another independent director of MMP Company.
4. Adviser is a wholly-owned subsidiary of the TCW Group, Inc., and
is the investment adviser to MMP Fund and the Galileo Company existing
funds under separate advisory agreements (the ``MMP Advisory
Agreement'' and ``Galileo Advisory Agreement,'' respectively.)
5. Applicants propose that, pursuant to an agreement and plan of
reorganization, all the assets and liabilities of MMP Fund will be
transferred to Galileo Company in exchange for Galileo MM shares (the
``Reorganization''). Those shares will have an aggregate net asset
value equivalent to the net asset value of the assets transferred by
MMP Company to Galileo Company. Upon consummation of the
Reorganization, the Galileo MM shares received by MMP Company will be
distributed by MMP Company to its shareholders, with each shareholder
receiving a number of Galileo MM shares equal to the number of MMP Fund
shares, and having an aggregate net asset value equivalent to the net
asset value of the MMP Fund shares held by such shareholders. MMP
Company then will be dissolved.
6. Following the reorganization, Adviser will render to the Galileo
MMP Fund services substantially the same as those it has been rendering
to the MMP Fund under the MMP Advisory Agreement.
7. The Reorganization will establish Galileo Company as a successor
investment vehicle to MMP Company. Combining the operations of the MMP
Fund with those of Galileo Company will help reduce overall expenses
because of economies of scale. Directors fees, and the costs of
printing shareholder reports, updating prospectuses and performing
similar administrative functions will be spread across a larger asset
base. Including MMP Fund in the Galileo family also will permit more
cohesive marketing under a single corporate name. This in turn may help
accelerate the realization of benefits from economies of scale.
Moreover, the Reorganization will not result in the recognition of any
gain or loss by MMP Company shareholders and will allow Galileo Fund to
acquire portfolio securities without incurring brokerage or transaction
expenses.
8. The Reorganization must be approved by at least a majority of
the outstanding shares of MMP Company, and a special meeting of MMP
Company shareholders has been called for that purpose. Unless postponed
by MMP Company and Galileo Company, the Reorganization is expected to
occur on or about May 15, 1994, on the basis of the net assets of MMP
Fund as of the close of business on the day of the Reorganization.
9. All the expenses generated by the Reorganization will be borne
by Adviser.
10. The boards of directors of MMP Company, and Galileo Company
have considered the desirability of the Reorganization from the
respective points of view of their companies. All the members of the
two boards have approved the Reorganization and concluded that, among
other things, the Reorganization is in the best interests of Galileo
Company, MMP Company, and the interests of existing shareholders of
both companies will not be diluted as a result of the Reorganization.
These findings, and the basis upon which such findings were made, have
been fully recorded in the respective minute books of Galileo Company
and MMP Company.
11. The Reorganization will not be effected until each of the
following conditions is satisfied: the Post-Effective Amendment to
Galileo Company's Registration Statement on Form N-1A has been declared
effective, the SEC has issued an order relating to the application, MMP
Company shareholders have approved the Reorganization in accordance
with applicable law, and Galileo Company and MMP Company have receive
an opinion of counsel that the Reorganization will not require
recognition of taxable income or loss by the holders of MMP Fund
shares.
Applicants' Legal Conclusions
1. Applicants seek an exemption under section 17(b) of the Act from
section 17(a) to the extent necessary to permit the Reorganization.
Section 17(a) of the Act prohibits any affiliated person of a
registered investment company, or any affiliated person of such a
person, from selling to or purchasing from such registered investment
company any security or other property. Section 17(b) provides for SEC
approval of a proposed affiliated transaction that otherwise would be
prohibited by section 17(a) if the terms of the transaction, including
the consideration to be paid or received, are reasonable and fair, and
do not involve overreaching on the part of any person concerned, the
transaction is consistent with the policy of each registered investment
company concerned, and the transaction is consistent with the general
purposes of the Act.
2. MMP Company may be deemed to be an affiliated person of Galileo
Company because affiliates of Adviser serve in investment management
capacities, with discretionary voting power, regarding several client
accounts, group trusts and limited partnerships that own, in the
aggregate, more than 5% of the outstanding shares of MMP Company. Thus,
the Reorganization may be deemed to be prohibited under section 17(a)
if the Reorganization is viewed as a principal transaction between
Galileo Company and MMP Company or between Galileo Company and the
aforementioned accounts, trusts and limited partnerships.
3. Applicants believe that the Reorganization is consistent with
section 17(b) of the Act. The investment objectives and policies of
Galileo MM Fund are identical to those of MMP Fund. Neither the MMP
Fund shareholders nor Adviser will receive any financial benefit from
the Reorganization, apart from the administrative convenience and
potential cost savings of incorporating MMP Fund into the Galileo
family of funds. Additionally, after the Reorganization, former MMP
Fund shareholders will hold the same assets as Galileo Company
shareholders as they had previously held as MMP Fund shareholders. In
this sense, the Reorganization can be viewed as a mere change in
corporate form, rather than a disposition giving rise to section 17(a)
concerns.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-6327 Filed 3-17-94; 8:45 am]
BILLING CODE 8010-01-M
