[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