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As filed with the Securities and Exchange Commission on July 15, 2008
Registration No. 333-151313
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
x Pre-Effective Amendment No. 2 | ¨ Post-Effective Amendment No. |
(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter:
TCW Funds, Inc. | Area Code and Telephone Number:
(213) 244-0000 | |
Address of Principal Executive Offices: (Number, Street, City, State, Zip Code)
865 South Figueroa Street, Suite 1800, Los Angeles, California 90017 | ||
Name and Address of Agent for Service:
Philip K. Holl, Secretary 865 South Figueroa Street, Suite 1800 Los Angeles, California 90017
With copies to:
Douglas P. Dick, Esquire, Dechert LLP 4675 MacArthur Court, Suite 1400 Newport Beach, California 92660 (Number and Street) (City) (State) (Zip Code) | Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement goes effective under the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration under the Securities Act of 1933 on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with the provisions of Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. |
Calculation of Registration Fee under the Securities Act of 1933:
No filing fee is due because an indefinite number of shares have been deemed to be registered in reliance on Section 24(f) under the Investment Company Act of 1940, as amended.
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TCW Equities Fund
865 South Figueroa Street, Suite 1800
Los Angeles, CA 90017
1-800-FUND-TCW
July 15, 2008
Dear TCW Equities Fund Shareholder:
The Board of Directors has called a Special Meeting of Shareholders of the TCW Equities Fund (the “Equities Fund”) scheduled to be held at 9:00 a.m., local time, on Monday, August 18, 2008 at 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017.
The Board of Directors of TCW Funds, Inc. (the “Company”), on behalf of the Equities Fund, has approved a reorganization of the Equities Fund into the TCW Focused Equities Fund (the “Focused Equities Fund”), each a series of the Company managed by TCW Investment Management Company (the “Reorganization”). If the Reorganization is approved by shareholders, you will become a shareholder of the Focused Equities Fund on the date that the Reorganization occurs. The Focused Equities Fund has an investment objective that is identical and investment policies that are similar in many respects to those of the Equities Fund.
While the Reorganization will result in some changes, we expect the Reorganization will offer shareholders the following advantages:
Anticipated reduction in total gross and net operating expenses. The Reorganization is expected to result in a reduction in the total gross and net operating expenses for holders of Class N shares of the Equities Fund. In addition, management has contractually agreed to cap the expenses for the Focused Equities Fund at the lower, pre-merger expense ratio of the Class I shares of the Equities Fund for a period of one year after the Reorganization.
Larger asset base. Shareholders are expected to benefit from combining the funds because, among other things, the Focused Equities Fund would have a larger asset base, which may provide greater investment opportunities and economies of scale over the long term.
No change in fund management. Both the Equities Fund and the Focused Equities Fund are managed by TCW Investment Management Company. Both Funds also have the same portfolio managers.
You are being asked to vote to approve an Agreement and Plan of Reorganization. The accompanying Prospectus/Proxy Statement describes the Reorganization and compares the policies and expenses of each of the funds for your evaluation.
After careful consideration, the Board of Directors of the Company unanimously approved this proposal and recommended that shareholders vote “FOR” the proposal.
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We urge you to vote your shares:
• | By completing and returning the enclosed proxy card in the envelope provided at your earliest convenience, or |
• | In person at the Special Meeting. |
Your vote is important regardless of the number of shares you own. In order to avoid the added cost of follow-up solicitations and possible adjournments, please take a few minutes to read the Prospectus/Proxy Statement and cast your vote. It is important that your vote be received no later than August 15, 2008.
Proxy solicitations will be made by mail, and may also be made by personal interview, telephone, and facsimile transmission on behalf of the Equities Fund by the Company’s directors and officers. In addition, The Altman Group, the Equities Fund’s proxy solicitor, may make proxy solicitations.
We appreciate your participation and prompt response in this matter and thank you for your continued support.
Sincerely, |
William C. Sonneborn |
President |
TCW Funds, Inc. |
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TCW Equities Fund
865 South Figueroa Street, Suite 1800
Los Angeles, CA 90017
1-800-FUND-TCW
Notice of Special Meeting of Shareholders of
TCW Equities Fund
Scheduled For August 18, 2008
To the TCW Equities Fund Shareholders:
A Special Meeting of Shareholders (“Special Meeting”) of the TCW Equities Fund (the “Equities Fund”) is scheduled for Monday, August 18, 2008 at 9:00 a.m. local time, at 865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017.
The purposes of the Special Meeting of the Equities Fund are as follows:
1. | To approve an Agreement and Plan of Reorganization providing for: (i) the transfer of all of the assets and liabilities of the Equities Fund to the TCW Focused Equities Fund (the “Focused Equities Fund”); (ii) the issuance of Class I and Class N shares, as applicable, of the Focused Equities Fund to holders of the Class I and Class N shares, respectively, of the Equities Fund on a pro rata basis; (iii) the subsequent complete liquidation of the Equities Fund; and (iv) an amendment to the Articles of Incorporation of TCW Funds, Inc. reclassifying the Class I and Class N shares of the Equities Fund into Class I and Class N shares, respectively, of the Focused Equities Fund to become effective after the closing. |
2. | To transact such other business as may properly come before the Special Meeting or any adjournments thereof. |
Shareholders of record at the close of business on May 31, 2008 are entitled to notice of, and to vote at, the meeting. Your attention is called to the accompanying Prospectus/Proxy Statement. Regardless of whether you plan to attend the meeting, please complete, sign and promptly return the enclosed proxy card so that a quorum will be present and a maximum number of shares may be voted. If you are present at the meeting, you may change your vote, if desired, at that time.
By Order of the Board of Directors of TCW Funds, Inc. |
Philip K. Holl |
Secretary |
July 15, 2008
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PROSPECTUS/PROXY STATEMENT
TCW Equities Fund
865 South Figueroa Street
Suite 1800
Los Angeles, CA 90017
1-800-FUND-TCW
Special Meeting of Shareholders Scheduled for
August 18, 2008
Relating to the Reorganization of
TCW Equities Fund
(a series of the TCW Funds, Inc.)
into TCW Focused Equities Fund
(a series of the TCW Funds, Inc.)
(collectively, the “Funds” and each, a “Fund”)
INTRODUCTION
This Prospectus/Proxy Statement provides you with information about a proposed transaction between the TCW Equities Fund (the “Equities Fund”) and the TCW Focused Equities Fund (the “Focused Equities Fund”), both series of TCW Funds, Inc. (the “Company”), a Maryland corporation which is an open-end investment company registered under the Investment Company Act of 1940. If approved, this transaction (the “Reorganization”) will involve:
• | the transfer of all of the assets and liabilities of the Equities Fund to the Focused Equities Fund; |
• | the issuance of Class I and Class N shares, as applicable, of the Focused Equities Fund to holders of the Class I and Class N shares, respectively, of the Equities Fund on a pro rata basis; |
• | the subsequent complete liquidation of the Equities Fund; and |
• | an amendment to the Articles of Incorporation of the Company reclassifying the Class I and Class N shares of the Equities Fund into Class I and Class N shares, respectively, of the Focused Equities Fund to become effective after the closing. |
As a result of the Reorganization, you will receive shares of the Focused Equities Fund having an aggregate net asset value equal to the aggregate net asset value of the shares you held of the Equities Fund as of the close of business on the day of the Reorganization.
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You are being asked to vote on the Agreement and Plan of Reorganization through which these transactions will be accomplished.
Because you, as a shareholder of the Equities Fund, are being asked to approve a transaction that will result in you holding shares of the Focused Equities Fund, this Proxy Statement also serves as a Prospectus for the Focused Equities Fund.
This Prospectus/Proxy Statement, which you should retain for future reference, concisely sets forth important information about the Focused Equities Fund that you should know before investing. A Statement of Additional Information dated July 15, 2008 related to this Prospectus/Proxy Statement and the Reorganization (the “Reorganization SAI”) has been filed with the Securities and Exchange Commission (the “SEC”) and is incorporated by reference into this Prospectus/Proxy Statement. A copy of the Reorganization SAI is available upon request and without charge by calling 1-800-FUND-TCW.
The Company is subject to the informational requirements of the Securities Exchange Act of 1934 and in accordance therewith files reports and other information with the SEC. The following documents have been filed with the SEC and are incorporated by reference (i) the Prospectus of the Equities Fund and the Focused Equities Fund (Class I shares) dated February 29, 2008; (ii) the Prospectus of the Equities Fund and the Focused Equities Fund (Class N shares) dated February 29, 2008; (iii) the Statement of Additional Information of the Equities Fund and the Focused Equities Fund dated February 29, 2008 (the “SAI”); and (iv) the Annual Report of the Equities Fund and the Focused Equities Fund for the period ended October 31, 2007 (the “Annual Report”). Copies of any of these documents and any subsequently released annual or semi-annual reports for either of the Funds may be obtained, without charge, by calling 1-800-FUND-TCW or on the Internet at www.tcwfunds.com.
You can copy and review information about each Fund (including the SAI) at the SEC’s Public Reference Room in Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at (202) 942-8090. Proxy materials, reports and other information about each Fund are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov. You may obtain copies of this information, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the SEC’s Public Reference Section, Washington, D.C. 20549-0102.
The Securities and Exchange Commission has not approved or disapproved these securities, or determined that this Prospectus/Proxy Statement is truthful or complete. Any representation to the contrary is a criminal offense.
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COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS | 4 | |
9 | ||
11 | ||
15 | ||
19 | ||
22 | ||
24 | ||
A-1 | ||
B-1 | ||
APPENDIX C—EXCERPT FROM ANNUAL REPORT OF THE FOCUSED EQUITIES FUND | C-1 | |
D-1 |
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You should read this entire Prospectus/Proxy Statement carefully. For additional information, you should consult the Focused Equities Fund Prospectus and the Equities Fund Prospectus, which are incorporated herein by reference and the Agreement and Plan of Reorganization, which is attached hereto as Appendix A.
On February 20, 2008, the Board of Directors of the Company, on behalf of the Equities Fund, approved an Agreement and Plan of Reorganization with respect to the Equities Fund (the “Reorganization Agreement”). Subject to shareholder approval, the Reorganization Agreement provides for:
• | the transfer of all of the assets of the Equities Fund to the Focused Equities Fund; |
• | the assumption by the Focused Equities Fund of all of the liabilities of the Equities Fund; |
• | the issuance of Class I and Class N shares, as applicable, of the Focused Equities Fund to holders of the Class I and Class N shares, respectively, of the Equities Fund on a pro rata basis; |
• | the complete liquidation of the Equities Fund; and |
• | an amendment to the Company’s Articles of Incorporation reclassifying the Class I and Class N shares of the Equities Fund into Class I and Class N shares, respectively, of the Focused Equities Fund to become effective after the closing. |
The Reorganization is expected to be effective upon the close of business on September 30, 2008, or on such other date as the parties may agree (the “Closing”). As a result of the Reorganization, each shareholder of Class I shares of the Equities Fund will become a shareholder of Class I shares of the Focused Equities Fund and each shareholder of Class N shares of the Equities Fund will become a shareholder of Class N shares of the Focused Equities Fund.
Each shareholder will hold, immediately after the Closing, Class I shares or Class N shares of the Focused Equities Fund having an aggregate value equal to the aggregate value of the Class I shares or Class N shares, respectively, of the Equities Fund held by that shareholder as of the close of business on the business day of the Closing.
The primary purposes of the proposed Reorganization are to seek potential economies of scale and to eliminate certain costs associated with operating the Equities Fund and the Focused Equities Fund separately. The proposed Reorganization is designed to provide investors in the Equities Fund with the ability to invest in a fund with an identical investment objective, long-term capital appreciation, and very similar investment policies to the Equities Fund, but with a larger combined asset base than the Equities Fund.
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The portfolio managers of the Focused Equities Fund and the Equities Fund are Thomas K. McKissick and N. John Snider. The investment objectives of both Funds are identical and the investment policies and investment strategies are similar. However, there are some differences. In managing the Focused Equities Fund Messrs. McKissick and Snider typically invest in a portfolio of 25 to 40 issues while the Equities Fund typically holds securities in a larger number of issues.
Management has determined that rather than operating two separate funds with identical investment objectives managed in a substantially similar style by Messrs. McKissick and Snider, that it is in the best interests of the shareholders of the Equities Fund (as well as shareholders of the Focused Equities Fund) to consolidate the assets of both Funds into one fund, the Focused Equities Fund, with a larger combined asset base. Combining the assets of the Funds is intended to provide various benefits to shareholders of the Equities Fund who become shareholders of the Focused Equities Fund (as well as to existing and future investors in the Focused Equities Fund). For example, management believes that the shareholders of the Equities Fund may benefit from the participation in a fund that has had greater overall investment returns than those achieved by the Equities Fund. Management also believes that the Reorganization may benefit the existing and future shareholders of the Focused Equities Fund and the shareholders of the Equities Fund by resulting in a surviving fund with a larger asset base. A larger asset base is expected to provide greater investment opportunities for the surviving portfolio and the potential to take larger portfolio positions, as well as the potential for lower total annual portfolio operating expenses through economies of scale. Based on these factors, Management has determined that the Reorganization is in the best interests of shareholders of each Fund.
Further, the Reorganization will allow the Equities Fund’s shareholders to continue to participate in a professionally-managed portfolio which seeks to achieve long-term capital appreciation through investments in equity securities and equity equivalents of large capitalization companies. Subject to the restrictions of each of the various funds in the TCW Funds group, shareholders of the Focused Equities Fund, including former shareholders of the Equities Fund, will continue to be able to exchange their shares of the Focused Equities Fund for the same class of shares of other mutual funds in the TCW Funds group.
The Reorganization is intended to qualify for Federal income tax purposes as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986, as amended. Accordingly, pursuant to this treatment, neither the Equities Fund nor its shareholders nor the Focused Equities Fund is expected to recognize any gain or loss from the Reorganization for Federal income tax purposes. Immediately prior to the Reorganization, the Equities Fund will pay a dividend or dividends which, together with all previous dividends, will have the effect of distributing to its shareholders all of the Equities Fund’s investment company taxable income for taxable years ending on or prior to the Reorganization (computed without regard to any deduction for dividends paid) and all of its net capital gain, if any, realized in taxable years ending on or prior to the Reorganization (including any gains from sales of holdings prior to the
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Reorganization), after reduction by any available capital loss carry forward. Such dividends will be included in the taxable income of the Equities Fund’s shareholders.
In considering whether to approve the Reorganization, you should note that:
• | The Funds have identical investment objectives and similar investment policies, however, certain important differences are highlighted below. |
• | Both Funds invest principally in equity securities of large capitalization companies. |
• | While there are no restrictions on the number of issues portfolio managers for the Equities Fund may select for investment, the Focused Equities Fund typically invests in a more concentrated portfolio of 25 to 40 issues. |
• | TCW Investment Management Company, 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017 is the investment advisor to both Funds (the “Advisor”). Thomas K. McKissick and N. John Snider are the portfolio managers of both Funds. |
• | The Reorganization is expected to result in a reduction in the total gross and net operating expenses for holders of Class N shares of the Equities Fund. In addition, management has contractually agreed to cap the expenses for the Focused Equities Fund at the lower, pre-merger expense ratio of the Class I shares of the Equities Fund and the Class N shares of the Focused Equities Fund for a period of one year after the Reorganization. |
• | The distribution, purchase and redemption procedures, and the exchange rights and voting rights of the Funds are identical and the Reorganization will not change these procedures and rights. |
• | Approval of the Reorganization Agreement requires the affirmative vote of the holders of a majority of the Equities Fund’s shares outstanding and entitled to vote on the matter as of May 31, 2008 (the “Record Date”). |
After careful consideration, the Board of Directors of the Company, on behalf of the Equities Fund, unanimously approved the proposed Reorganization. The Board recommends that you vote “FOR” the proposed Reorganization.
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COMPARISON OF THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
Comparison of Investment Objectives, Strategies, Processes and Risks
Equities Fund
|
Focused Equities Fund
| |||||
Investment Objective
| The Fund seeks long-term capital appreciation.
| The Fund seeks long-term capital appreciation.
| ||||
Principal Investment Strategies | The Fund invests primarily in equity securities of large capitalization companies.
These equity securities include common and preferred stock; rights or warrants to purchase common or preferred stock; securities convertible into common or preferred stock; and other securities with equity characteristics.
The Fund invests (except when maintaining a temporary defensive position) at least 80% of the value of its net assets (plus amounts borrowed for investment purposes) in publicly traded equity securities of companies with a market capitalization of greater than $3 billion at the time of purchase. The Fund invests in companies trading below their (long-term) intrinsic value in the opinion of the Advisor.
The Fund typically invests in a portfolio of 45 to 75 issues.
| The Fund invests primarily in equity securities of large capitalization companies.
These equity securities include common and preferred stock; rights or warrants to purchase common or preferred stock; securities convertible into common or preferred stock; and other securities with equity characteristics.
The Fund invests (except when maintaining a temporary defensive position) at least 80% of the value of its net assets (plus amounts borrowed for investment purposes) in publicly traded equity securities of companies with a market capitalization of greater than $3 billion dollars at the time of purchase. The Fund invests in companies trading below their (long-term) intrinsic value.
The Fund typically invests in a portfolio of 25 to 40 issues.
|
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Equities Fund
|
Focused Equities Fund
| |||||
Investment Process | The Advisor seeks to invest in attractively valued equity securities of companies where the return on invested capital is improving. The Advisor utilizes bottom-up fundamental research to identify these companies. | The Advisor seeks to invest in attractively valued equity securities where the return on invested capital is improving. The Advisor utilizes bottom-up fundamental research to identify these companies.
| ||||
The Advisor performs fundamental research by using techniques such as: • making company visits • financial screening to identify companies • maintaining a disciplined approach to stock selection and portfolio construction
The Advisor will use both quantitative and qualitative screening criteria to supplement the scope of its fundamental research.
Typically, the Fund sells an individual security when the company fails to meet expectations, there is a deterioration of underlying fundamentals, the intermediate and long-term prospects for the company are poor or the Advisor determines to take advantage of a better investment opportunity. | The application of the Advisor’s quantitative screening focuses on companies that have a disciplined approach to investing capital and favors companies with increasing return on invested capital. The Advisor performs fundamental research by using techniques such as: • making company visits • telephone contract with senior management • industry conferences • financial projections
Typically, the Fund sells an individual security when the company fails to meet expectations, there is a deterioration of underlying fundamentals, the intermediate and long-term prospects for the company are poor or the Advisor determines to take advantage of a better investment opportunity.
|
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Equities Fund
|
Focused Equities Fund
| |||||
Main Risks | The primary risks affecting this Fund are: • price volatility risk • liquidity risk • equity risk • investment style risk • portfolio management risk • securities selection risk • market risk • securities lending risk • non-diversification risk
| The primary risks affecting this Fund are: • price volatility risk • liquidity risk • equity risk • investment style risk • portfolio management risk • securities selection risk • market risk • securities lending risk • non-diversification risk
| ||||
Investment Advisor | TCW Investment Management Company
| TCW Investment Management Company
| ||||
Portfolio Managers
| Thomas K. McKissick and N. John Snider
| Thomas K. McKissick and N. John Snider
|
Comparison of Portfolio Characteristics1
The following table compares certain characteristics of the portfolios of the Funds as of April 30, 2008.
Equities Fund | Focused Equities Fund | |||||||
Net Assets | $57,088,336 | $44,529,783 | ||||||
Number of Holdings | 54 | 34 | ||||||
Portfolio Turnover Rate | 52%* | 65%* | ||||||
Equity Securities | 99.6% | 99.2% | ||||||
Cash | 0.4% | 0.8% |
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Equities Fund | Focused Equities Fund | |||||||||
Top 6 Industries | ||||||||||
(as a % of net assets) | Oil & Gas | 19.97 | % | Oil & Gas | 23.72 | % | ||||
Banking | 8.55 | % | Banking | 9.44 | % | |||||
Aerospace & Defense | 7.88 | % | Aerospace & Defense | 8.64 | % | |||||
Cosmetics & Personal Care | 6.52 | % | Cosmetics & Personal Care | 8.49 | % | |||||
Pharmaceuticals | 6.40 | % | Pharmaceuticals | 8.15 | % | |||||
Financial Services | 6.24 | % | Electronics | 6.53 | % | |||||
Top 10 equity holdings | ||||||||||
(as a % of net assets) | Exxon Mobil Corp. | 5.0 | % | Procter & Gamble Co. | 4.9 | % | ||||
Procter & Gamble Co. | 4.2 | % | JPMorgan Chase & Co. | 4.6 | % | |||||
JPMorgan Chase & Co. | 4.1 | % | Schlumberger Ltd. | 4.6 | % | |||||
Halliburton Co. | 3.2 | % | Flowserve | 4.4 | % | |||||
Wells Fargo & Co. | 3.1 | % | Halliburton Co. | 4.4 | % | |||||
Danaher Corp. | 3.1 | % | Lockheed Martin Corp. | 4.2 | % | |||||
Schlumberger Ltd. | 3.0 | % | Weatherford International | 3.8 | % | |||||
Flowserve | 2.8 | % | Exxon Mobil Corp. | 3.7 | % | |||||
Lockheed Martin Corp. | 2.8 | % | Johnson & Johnson | 3.6 | % | |||||
Honeywell International Inc. | 2.8 | % | Microchip Technology Inc. | 3.5 | % |
* Trailing 12 months. |
1 The numbers in this table are for comparison purposes only and have not been audited. |
Comparison of Distribution, Purchase and Redemption Procedures and Exchange Rights
The distribution, purchase and redemption procedures of both Funds are identical, as are the exchange rights granted to shareholders of both Funds. The Shareholder Guide attached as Exhibit D to this registration statement contains a more detailed description of the distribution, purchase and redemption procedures and exchange rights applicable to both Funds.
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Tax Consequences
The Reorganization is intended to qualify for Federal income tax purposes as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986, as amended. Accordingly, pursuant to this treatment, neither the Equities Fund nor its shareholders nor the Focused Equities Fund is expected to recognize any gain or loss from the Reorganization for Federal income tax purposes. For a more detailed discussion of the tax consequences of the Reorganization see “INFORMATION ABOUT THE REORGANIZATION—Tax Considerations.”
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RISKS OF INVESTING IN THE FUNDS
Because the Funds have investment objectives that are identical and policies that are similar in many respects, many of the risks of investing in the Focused Equities Fund are similar to the risks of investing in the Equities Fund. The following risks should be considered before investing in either Fund.
Equity Risk
Equity Risk is the risk that stocks and other equity securities generally fluctuate more than bonds and can decline in value over short or extended periods. The value of stocks and other equity securities will be affected as a result of changes in a company’s financial condition and in overall market and economic conditions.
Market Risk
There is the possibility that the returns from the types of securities in which either Fund invests will underperform returns from the various general securities markets or different asset classes. Different types of securities tend to go through cycles of outperformance and underperformance in comparison to the general securities markets.
Investment Style/Securities Selection Risk
Both Funds may also be subject to investment style risk. The Advisor primarily uses a particular style or set of styles—in both cases “value” styles—to select investments for the Funds. Those styles may be out of favor or may not produce the best results over short or longer time periods, and may increase the volatility of the Funds’ share prices. There is also the possibility that the specific securities held in each of the Fund’s portfolios will underperform other funds in the same asset class or benchmarks that are representative of the general performance of the asset class because of the portfolio managers’ choice of securities.
Price Volatility
There is the possibility that the value of each of the Fund’s portfolios will change as the prices of their investments go up or down. Both Funds hold primarily stocks, which may go up or down in value, sometimes rapidly and unpredictably. Although stocks offer the potential for greater long-term growth than most fixed income securities, stocks generally have higher short-term volatility.
Non-Diversified Status
Each Fund is non-diversified for the purposes of the Investment Company Act of 1940 (“1940 Act”), and as such may invest a larger percentage of its assets in individual issuers than a diversified investment company. In this regard, the Funds are not subject to the general limitation that they not invest more than 5% of their total assets in the securities of any one issuer.
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To the extent that the Funds make investments in excess of 5% of their assets in a particular issuer, their exposure to credit and market risks associated with that issuer is increased. However, the Funds’ investments will be limited so as to qualify for the special tax treatment afforded “regulated investment companies” under the Internal Revenue Code of 1986, as amended.
Because a relatively high percentage of each Fund’s assets may be invested in the securities of a limited number of issuers, both Funds may be more susceptible to any single economic, political or regulatory occurrence than a diversified fund. This risk is greater with respect to the Focused Equities Fund because the Fund typically limits its investments to a portfolio of 25 to 40 issues.
Liquidity Risk
There is the possibility that both Funds may lose money or be prevented from earning capital gains if they cannot sell a security at the time and price that is most beneficial to the applicable Fund. If that happens, a Fund may have to lower the selling price, sell other securities instead, or forego an investment opportunity, any of which could have a negative effect on the Fund’s performance.
Securities Lending Risk
Each Fund may lend portfolio securities with a value up to 25% of its total assets, including collateral received for securities lent. If a Fund lends securities, there is a risk that the securities will not be available to the Fund on a timely basis, and the Fund, therefore, may lose the opportunity to sell the securities at a desirable price. In addition, as with other extensions of credit, there is the risk of possible delay in receiving additional collateral or in the recovery of the securities or possible loss of rights in the collateral should the borrower fail financially. Also, there is the risk that the value of the investment of the collateral could decline causing a Fund to lose money.
Portfolio Management Risk
Both Funds may be subject to Portfolio Management Risk. The Advisor’s judgments about the attractiveness, value and potential appreciation of particular companies’ stocks may prove to be incorrect and may not anticipate actual market movements or the impact of economic conditions generally. No matter how well the Advisor evaluates market conditions, the securities the Advisor chooses may fail to produce the intended result, and investors could lose money on their investment in the Funds.
Temporary Defensive Strategies
For both Funds, when the Advisor anticipates unusual market or other conditions, the Funds may temporarily depart from their principal investment strategies as a
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defensive measure. The Advisor may temporarily invest up to 100% of the assets in high quality short- term money market instruments if it believes adverse economic conditions such as excessive volatility or sharp market declines, justify taking a defensive posture. To the extent a Fund is engaged in temporary defensive investments, it will not be pursuing its investment objective.
Sale of Securities
Following the Reorganization and in the ordinary course of business as a mutual fund, certain holdings of the Equities Fund that are transferred to the Focused Equities Fund in connection with the Reorganization may be sold. Such sales may result in increased transaction costs for the Focused Equities Fund, and the realization of taxable gains and losses for the Focused Equities Fund which would result in taxable distributions to shareholders. Any sales by the Equities Fund prior to the Reorganization may result in taxable distributions to shareholders of the Equities Fund.
COMPARISON OF FEES AND EXPENSES OF THE FUNDS
The following discussion describes and compares the fees and expenses of the Equities Fund with the Focused Equities Fund.
Annual Fund Operating Expenses
As of April 30, 2008, the operating expenses of the Class I and Class N shares of the Equities Fund, expressed as a ratio of expenses to average daily net assets (“expense ratio”) were 0.82% and 1.77%, respectively before any expense limitations in place for the Class N shares. As of April 30, 2008, the operating expenses of the corresponding Class I and Class N shares of the Focused Equities Fund were 1.25% and 1.25%, respectively.
The Advisor voluntarily paid certain of the operating expenses for the Class N shares of the Equities Fund so that the ordinary operating expenses for the Class N shares of this Fund did not exceed the trailing monthly expense ratio for comparable funds as reported by Lipper, Inc. During the fiscal year ended October 31, 2007, shareholders of the Class N shares of the Equities Fund paid operating expenses of 1.33%, as a result of these waivers and assumptions of expenses. The expense limitations for the Funds are voluntary and are terminable on six months notice.
Management Fee
The Equities Fund has an investment advisory fee of 0.55% of the Fund’s average daily net assets and the Focused Equities Fund has an annual management fee of 0.65% of the Fund’s average daily net assets.
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Distribution and Service Fees
Each Fund charges a distribution (12b-1) fee for its Class N shares of 0.25% of the average daily net assets of the Fund attributable to the Fund’s Class N shares. Neither Fund charges a distribution (12b-1) fee or a service fee for its Class I shares. Neither Fund charges a contingent deferred sales load for Class N or Class I shares.
Expense Table
The current expenses of each of the Funds and estimated pro forma expenses after giving effect to the proposed Reorganization are shown in the following table. Expenses for the Funds are based upon the operating expenses incurred by Class I and Class N shares of the Equities Fund and Focused Equities Fund for the period ended April 30, 2008, which are based upon unaudited financial statements for the period. Pro forma fees show estimated fees of the Class I and Class N shares of the Focused Equities Fund after giving effect to the proposed Reorganization. Pro forma numbers are estimated in good faith and are hypothetical.
Class I | Class N | |||||||||||||||||
Equities Fund | Focused Equities Fund | Focused Equities Fund after Reorganization (Pro Forma)(1) | Equities Fund | Focused Equities Fund | Focused Equities Fund after Reorganization (Pro Forma)(1) | |||||||||||||
Shareholder Transaction Fees (fees paid directly from your investment) | ||||||||||||||||||
Maximum Sales Charge (Load) Imposed on Purchases | None | None | None | None | None | None | ||||||||||||
Maximum Deferred Sales Charge (Load) | None | None | None | None | None | None | ||||||||||||
Maximum Sales Charge (Load) Imposed on Reinvested Dividends | None | None | None | None | None | None | ||||||||||||
Redemption Fee | None | None | None | None | None | None | ||||||||||||
Exchange Fee | None | None | None | None | None | None | ||||||||||||
Annual Fund Operating Expenses (expenses that are deducted from the | ||||||||||||||||||
Management Fees | 0.55 | % | 0.65 | % | 0.65 | % | 0.55 | % | 0.65 | % | 0.65 | % |
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Class I | Class N | |||||||||||||||||
Equities Fund | Focused Equities Fund | Focused Equities Fund after Reorganization (Pro Forma)(1) | Equities Fund | Focused Equities Fund | Focused Equities Fund after Reorganization (Pro Forma)(1) | |||||||||||||
Distribution (12b-1) Fees | None | None | None | 0.25 | % | 0.25 | % | 0.25 | % | |||||||||
Other Expenses | 0.27 | % | 0.60 | % | 0.23 | % | 0.97 | % | 0.35 | % | 0.29 | % | ||||||
Total Annual Fund Operating Expenses | 0.82 | % | 1.25 | % | 0.88 | %(2) | 1.77 | %(3) | 1.25 | % | 1.19 | % |
(1) | Pro forma expenses are estimated. |
(2) | The Advisor will contractually limit the operating expenses at the lower, pre-merger expense ratios for each class. Therefore Class I shares will be limited to 0.82% of net assets. The expense limitation will continue for one year from the date of the Reorganization. The expenses may increase after the expiration of the contractual expense cap ends on or after September 30, 2009 unless the Advisor chooses to extend the term of the cap. If the term of the cap is not extended, the Advisor has agreed to reduce its investment advisory fee or to pay the operating expenses of the Fund to the extent necessary to limit the Fund’s operating expenses to an amount not to exceed the trailing monthly expense ratio average for comparable funds as calculated by Lipper Inc. |
(3) | For the period ended April 30, 2008, the Advisor voluntarily reduced its fee and paid operating expenses of the Class N shares of the Equities Fund, so that the total operating expenses for the Fund’s Class N shares were 1.29%. |
As shown in the table above, the operating expenses, expressed as a percentage of net asset value per share of Class I shares and Class N shares, are as follows:
Class I | Class N | |||||
• Expenses of the Focused Equities Fund (based on the period ended April 30, 2008). | 1.25 | % | 1.25 | % | ||
• Expenses of the Equities Fund (based on the period ended April 30, 2008). | 0.82 | % | 1.77 | % | ||
• Expenses of the Equities Fund after a voluntary reduction of the management fee and assumption of certain fund expenses by the Advisor (based on the period ended April 30, 2008). | 0.82 | % | 1.29 | % | ||
• Projected expenses of the Focused Equities Fund after the Reorganization (Pro Forma). | 0.88 | % | 1.19 | % |
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Class I | Class N | |||||
• Projected expenses of the Focused Equities Fund after the Reorganization and a contractual cap of the management fee and certain fund expenses by the Advisor (Pro Forma). | 0.82 | %1 | 1.19 | % |
1 | The Advisor has contractually agreed to cap the expenses for the combined fund at the lower, pre-merger expense ratios for each class for one year after the Reorganization. |
Expense Examples
The examples are intended to help you compare the cost of investing in each of the Funds with the costs of investing in other mutual funds. The examples assume that you invest $10,000 in each Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The examples also assume that your investment has a 5% return each year and that each Fund’s operating expenses remain the same. The 5% return is an assumption and is not intended to portray past or future investment results. The figures shown are the same whether or not you sold your shares at the end of the period. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
Equities Fund | Focused Equities Fund | Focused Equities Fund after Reorganization (Pro Forma)(1) | ||||||||||||||||||||||||||||||||||
1 Year | 3 Years | 5 Years | 10 Years | 1 Year | 3 Years | 5 Years | 10 Years | 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||||||||||||||
Class I | $ | 84 | $ | 262 | $ | 455 | $ | 1,014 | $ | 127 | $ | 397 | $ | 686 | $ | 1,511 | $ | 90 | $ | 281 | $ | 488 | $ | 1,084 | ||||||||||||
Class N | $ | 180 | $ | 557 | $ | 959 | $ | 2,084 | $ | 127 | $ | 397 | $ | 686 | $ | 1,511 | $ | 121 | $ | 378 | $ | 654 | $ | 1,443 |
(1) | Pro forma figures are estimated. |
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INFORMATION ABOUT THE REORGANIZATION
The Agreement and Plan of Reorganization
The Reorganization Agreement provides for: (i) the transfer of all of the assets and liabilities of the Equities Fund to the Focused Equities Fund; (ii) the issuance of Class I and Class N shares, as applicable, of the Focused Equities Fund to holders of the Class I and Class N shares, respectively, of the Equities Fund on a pro rata basis; (iii) the subsequent complete liquidation of the Equities Fund; and (iv) an amendment to the Articles of Incorporation of the Company reclassifying the Class I and Class N shares of the Equities Fund into Class I and Class N shares, respectively, of the Focused Equities Fund to become effective after the Closing.
The distribution of Focused Equities Fund shares to Equities Fund Shareholders will be accomplished by opening new accounts on the books of the Focused Equities Fund in the names of the Equities Fund Shareholders and transferring to those shareholder accounts the shares of the Focused Equities Fund. Such newly opened accounts on the books of Focused Equities Fund will represent the respective pro rata number of shares of the same class of the Focused Equities Fund that the Equities Fund receives under the terms of the Reorganization Agreement.
After the Reorganization, each shareholder of the Equities Fund will own shares in the Focused Equities Fund having an aggregate net asset value equal to the aggregate net asset value of the shares of the Equities Fund held by that shareholder as of the close of business on the day of the Closing. Shareholders of Class I shares of the Equities Fund will receive Class I shares of the Focused Equities Fund and shareholders of Class N shares of the Equities Fund will receive Class N shares of the Focused Equities Fund. As a result of the Reorganization, a shareholder of the Equities Fund will hold a smaller voting percentage of the combined fund than the shareholder did in the Equities Fund prior to the Reorganization.
In the interest of economy and convenience, shares of the Focused Equities Fund generally will not be represented by physical certificates, unless requested in writing.
Until the Closing, shareholders of the Equities Fund will continue to be able to redeem their shares. Redemption requests received after the Closing will be treated as requests received by the Focused Equities Fund for the redemption of its shares.
The obligations of the Funds under the Reorganization Agreement are subject to various conditions, including approval of the shareholders of the Equities Fund. The Reorganization Agreement also requires that each of the Funds take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by the Reorganization Agreement. The Reorganization Agreement may be terminated by mutual agreement of the parties or on certain other grounds. Please refer to Appendix A to review the terms and conditions of the Reorganization Agreement.
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Reasons for the Reorganization
The primary purposes of the proposed Reorganization are to seek potential economies of scale and to eliminate certain costs associated with operating the Equities Fund and the Focused Equities Fund separately. The proposed Reorganization is designed to provide Equities Fund investors with the ability to invest in a fund with an identical investment objective, long-term capital appreciation, and very similar investment policies to those of the Equities Fund, but with a larger combined asset base than the Equities Fund.
The portfolio managers of the Focused Equities Fund and the Equities Fund are Thomas K. McKissick and N. John Snider. The investment objectives of both Funds are identical and the investment policies and investment strategies are similar. However, there is one material difference. In managing the Focused Equities Fund Messrs. McKissick and Snider invest in a portfolio of 25 to 40 issues while the Equities Fund typically holds securities in a larger number of issues (typically 45 to 75 issues).
Management has determined that rather than operating two separate funds with identical investment objectives managed in a substantially similar style by Messrs. McKissick and Snider, it is in the best interests of the shareholders of the Equities Fund (as well as shareholders of the Focused Equities Fund) to consolidate the assets of both Funds into one fund, the Focused Equities Fund, with a larger combined asset base. Combining the assets of the Funds is intended to provide various benefits to shareholders of the Equities Fund who become shareholders of the Focused Equities Fund (as well as to existing and future investors in the Focused Equities Fund). For example, management believes that the shareholders of the Equities Fund may benefit from the participation in a fund that has had greater overall investment returns than those achieved by the Equities Fund. Management also believes that the Reorganization may benefit the existing and future shareholders of the Focused Equities Fund and the shareholders of the Equities Fund by resulting in a surviving fund with a larger asset base. A larger asset base is expected to provide greater investment opportunities for the surviving portfolio and the potential to take larger portfolio positions, as well as the potential for lower total annual portfolio operating expenses through economies of scale. Based on these factors, Management has determined that the Reorganization is in the best interests of shareholders of each Fund.
Further, the Reorganization will allow the Equities Fund’s shareholders to continue to participate in a professionally-managed portfolio which seeks to achieve long-term capital appreciation through investments in equity securities and equity equivalents of large capitalization companies. Subject to the restrictions of each of the various funds in the TCW Funds group, shareholders of the Focused Equities Fund, including former shareholders of the Equities Fund, will continue to be able to exchange their shares of the Focused Equities Fund for the same class of shares of other mutual funds in the TCW Funds group.
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Expenses of the Reorganization
The Advisor will bear half the cost of the Reorganization, including, but not limited to, the costs of solicitation of voting instructions and any necessary filings with the SEC. Each Fund will bear one quarter of the expenses related to the proposed Reorganization. Each Fund’s estimated cost for the proposed Reorganization is $25,000. The costs of the Reorganization will not include any brokerage or other transaction fees or costs incurred as a result of the purchase or sale of portfolio securities by either Fund. The Advisor will bear the costs of the Reorganization if it is not approved by shareholders.
The Reorganization will result in limitations in the use of capital loss carry forwards, if any, of the Equities Fund after the Reorganization.
Board Considerations
The proposed Reorganization was presented to the Board of Directors of the Company for consideration at a meeting held on February 20, 2008 and the Reorganization was approved by the Directors on behalf of the Equities Fund at that meeting. For the reasons discussed below, the Directors, including all of the Directors who are not “interested persons” of the Fund (as defined in the 1940 Act) and who are advised by their own counsel, determined that the interests of the shareholders of the Equities Fund will not be diluted as a result of the proposed Reorganization, and that the proposed Reorganization is in the best interests of the Equities Fund and its shareholders.
The Board of Directors, on behalf of the Equities Fund, in recommending the proposed transaction, considered a number of factors, including the following:
(1) | expense ratios and information regarding fees and expenses of the Equities Fund and the Focused Equities Fund; |
(2) | the ability of the shareholders of the Equities Fund to continue to participate in a fund that invests with an objective of long-term capital appreciation; |
(3) | that the Reorganization would not dilute the interests of the Equities Fund’s current shareholders; |
(4) | the similarity of the investment objectives, policies and restrictions of the Focused Equities Fund with those of the Equities Fund; |
(5) | the relative sizes of the Funds and whether performance and investment flexibility have the potential to be enhanced if the assets of each of the Funds are combined; |
(6) | the costs borne by the Focused Equities Fund, its shareholders and the Equities Fund and its shareholders; and |
(7) | the possible limitations on the use of the capital loss carry forwards of the Equities Fund after the Reorganization. |
The Directors of the Company, on behalf of the Equities Fund, recommend that shareholders approve the Reorganization with the Focused Equities Fund.
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Tax Considerations
The Reorganization is intended to qualify for Federal income tax purposes as a tax-free reorganization under Section 368 of the Internal Revenue Code of 1986, as amended. Accordingly, pursuant to this treatment, neither the Equities Fund nor its shareholders nor the Focused Equities Fund is expected to recognize any gain or loss from the Reorganization for Federal income tax purposes. As a condition to the Closing of the Reorganization, the Funds will receive an opinion from the law firm of Dechert LLP to the effect that the Reorganization will qualify as a tax-free reorganization for Federal income tax purposes. That opinion will be based in part upon certain assumptions and upon certain representations made by the Focused Equities Fund, the Equities Fund and the Company in the Reorganization Agreement.
Immediately prior to the Reorganization, the Equities Fund will pay a dividend or dividends which, together with all previous dividends, will have the effect of distributing to its shareholders all of the Equities Fund’s investment company taxable income for taxable years ending on or prior to the Reorganization (computed without regard to any deduction for dividends paid) and all of its net capital gain, if any, realized in taxable years ending on or prior to the Reorganization (including any gains from sales of holdings prior to the Reorganization), after reduction by any available capital loss carry forward. Such dividends will be included in the taxable income of the Equities Fund’s shareholders.
Capitalization
The following table shows on an unaudited basis the capitalization of each of the Funds as of the Record Date and on a pro forma basis as of the Record Date after giving effect to the Reorganization:
TCW EQUITIES FUND | TCW FOCUSED EQUITIES FUND | PRO FORMA ADJUSTMENT | PRO FORMA COMBINED(1) | ||||||||||
NET ASSETS | |||||||||||||
I Class | $ | 50,591,542 | $ | 7,257,884 | $ | (28,745 | ) | $ | 57,820,681 | ||||
N Class | $ | 1,775,821 | $ | 32,248,221 | $ | (21,255 | ) | $ | 34,002,787 | ||||
SHARES OUTSTANDING | |||||||||||||
I Class | 3,484,266 | 473,443 | (184,100 | ) | 3,773,609 | ||||||||
N Class | 122,134 | 2,110,486 | (5,915 | ) | 2,226,705 | ||||||||
NET ASSET VALUE PER SHARE | |||||||||||||
I Class | $ | 14.52 | $ | 15.33 | $ | (0.01 | ) | $ | 15.32 | ||||
N Class | $ | 14.54 | $ | 15.28 | $ | (0.01 | ) | $ | 15.27 |
(1) | The pro forma data reflects the combined assets after the merger of the TCW Equities Fund into the TCW Focused Equities Fund. The pro forma data also reflects adjustments to account for the costs of the Merger to be borne by each Fund, which are estimated to be $25,000 per fund. |
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ADDITIONAL INFORMATION ABOUT THE EQUITIES FUND
Investment Personnel
The Equities Fund is managed by Thomas K. McKissick , Group Managing Director of the Advisor, TCW Asset Management Company and Trust Company of the West, and N. John Snider, Group Managing Director of the Advisor, TCW Asset Management Company and Trust Company of the West.
Performance of the Equities Fund
The bar chart and table below show the Equities Fund’s annual and after-tax returns and its long-term performance with respect to its Class I shares. The bar chart provides some indication of the risks of investing in the Fund by showing how the Fund’s performance has varied from year to year. The bar chart includes the performance of the predecessor entity of the Equities Fund which was managed by an affiliate of the Advisor using the same investment strategy as the Equities Fund. The table provides some indication of the risks of investing in the Fund by showing how the Fund’s before and after-tax returns over time compare to that of a broad-based securities market index for the past ten calendar years. Both the bar chart and the table assume reinvestment of dividends and distributions.
The performance of the predecessor entity was calculated using performance standards applicable to private investment partnerships, which take into account all elements of total return and reflect the deduction of fees and expenses of operation. The predecessor account was not registered under the 1940 Act and, therefore, was not subject to certain investment restrictions imposed by the 1940 Act and Subchapter M of the Internal Revenue Code of 1986, as amended. If the account had been registered under the 1940 Act, its performance could have been adversely affected.
As with all mutual funds, past performance, both before and after taxes, is not a prediction of future results.
After-tax returns are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on a shareholder’s tax situation and may differ from those shown, and after-tax returns shown are not relevant if a shareholder holds shares of the Equities Fund through a tax-deferred arrangement, such as an individual retirement account. In some cases the return after taxes may exceed the return before taxes due to an assumed tax benefit from any losses on a sale of Fund shares at the end of the measurement period.
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Year by year total return (%)
as of December 31 each year(1)
Equities Fund—Class I Shares
(1) | During the period shown in the chart, the Fund’s best quarterly performance was 20.89% for the quarter ended December 31, 1998, and the Fund’s worst quarterly performance was -20.98% for the quarter ended September 30, 2002. |
* | The Fund’s total return for the period November 1, 2007 to March 31, 2008 was -10.76%. |
The table below shows what the average annual total returns of the Equities Fund would equal if a shareholder averaged out actual performance over various lengths of time, compared to the S&P 500 Index. The S&P 500 Index is an unmanaged group of securities and assumes no reduction for fees and expenses in measuring returns. The securities in the S&P 500 Index are substantially different from those in the Equities Fund. An investor cannot invest directly in an index.
Average Annual Total Returns
(For the periods ended December 31, 2007) | 1 Year | 5 Years | From Inception/ Registration or 10 Years | ||||||
Return Before Taxes | |||||||||
Equities Fund—Class N | 1.80 | % | 13.43 | % | 5.96 | % | |||
Return Before Taxes from Registration Date (6/3/98) | |||||||||
Equities Fund—Class I | 2.36 | % | 14.13 | % | 7.23 | % | |||
Return After Taxes on Distributions from Registration Date(1) | |||||||||
Equities Fund—Class I | 0.32 | % | 13.33 | % | 6.67 | % | |||
Return After Taxes on Distributions and Sales of Fund Shares from Registration Date(1) | |||||||||
Equities Fund—Class I | 4.28 | % | 12.40 | % | 6.25 | % |
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(For the periods ended December 31, 2007) | 1 Year | 5 Years | From Inception/ Registration or 10 Years | ||||||
S&P 500 Index from Registration Date | 5.49 | % | 12.83 | % | 4.82 | % | |||
(reflects no deduction for fees, expenses or taxes) | |||||||||
Return Before Taxes Including Predecessor Account Performance | |||||||||
Equities Fund—Class I | 2.36 | % | 14.13 | % | 7.82 | % |
(1) | After-tax returns are shown only for Class I shares, after-tax returns for Class N shares will vary. |
For a discussion by the Advisor regarding the performance of the Equities Fund for the fiscal year ended October 31, 2007, see Appendix B to this Prospectus/Proxy Statement.
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ADDITIONAL INFORMATION ABOUT THE FOCUSED EQUITIES FUND
Investment Personnel
The Equities Fund is managed by Thomas K. McKissick , Group Managing Director of the Advisor, TCW Asset Management Company and Trust Company of the West, and N. John Snider, Group Managing Director of the Advisor, TCW Asset Management Company and Trust Company of the West.
Performance of the Focused Equities Fund
The bar chart and table below show the Focused Equities Fund’s annual and after-tax returns and its performance since inception with respect to its Class I shares. The table provides some indication of the risks of investing in the Fund by showing how the Fund’s before and after-tax returns over time compare to that of a broad-based securities market index for the period of time the Fund has been registered with the SEC under the 1940 Act. Both the bar chart and the table assume reinvestment of dividends and distributions.
As with all mutual funds, past performance (before and after taxes) is not a prediction of future results.
Year by year total return (%)
as of December 31 each year(1)
Focused Equities Fund—Class I Shares
(1) | During the period shown in the chart, the Fund’s best quarterly performance was 7.76% for the quarter ended December 31, 2006, and the Fund’s worst quarterly performance was -1.88% for the quarter ended December 31, 2007. |
* | The Fund’s total return for the period November 1, 2007 to March 31, 2008 was -9.41%. |
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After-tax returns are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on a shareholder’s tax situation and may differ from those shown, and after-tax returns shown are not relevant if a shareholder holds shares of the Equities Fund through a tax-deferred arrangement, such as an individual retirement account. In some cases the return after taxes may exceed the return before taxes due to an assumed tax benefit from any losses on a sale of Fund shares at the end of the measurement period.
The table below shows what the average annual total returns of the Focused Equities Fund would equal if a shareholder averaged out actual performance over various lengths of time, compared to the S&P 500 Index. The S&P 500 Index is an unmanaged group of securities and assumes no reduction for fees and expenses in measuring returns. The securities in the S&P 500 Index are substantially different from those in the Focused Equities Fund. An investor cannot invest directly in an index.
Average Annual Total Returns
(For the periods ended December 31, 2007) | 1 Year | 5 Years | From Inception/ Registration | ||||||
Return Before Taxes | |||||||||
Focused Equities Fund—Class N | 3.95 | % | 15.48 | % | 7.54 | % | |||
Return Before Taxes from Registration Date (11/1/04) | |||||||||
Focused Equities Fund—Class I | 4.00 | % | N/A | 11.51 | % | ||||
Return After Taxes on Distributions from Registration Date(1) | |||||||||
Focused Equities Fund—Class I | 3.95 | % | N/A | 11.48 | % | ||||
Return After Taxes on Distributions and Sales of Fund Shares from Registration Date(1) | |||||||||
Focused Equities Fund—Class I | 2.68 | % | N/A | 9.94 | % | ||||
S&P 500 Index | 5.49 | % | N/A | 10.68 | % | ||||
(reflects no deduction for fees, expenses or taxes) |
(1) | After-tax returns are shown only for Class I shares, after-tax returns for Class N shares will vary. |
For a discussion by the Advisor regarding the performance of the Focused Equities Fund for the fiscal year ended October 31, 2007, see Appendix C to this Prospectus/Proxy Statement.
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GENERAL INFORMATION ABOUT THE PROXY STATEMENT
Solicitation of Proxies
Solicitation of proxies is being made primarily by the mailing of this Notice and Prospectus/Proxy Statement with its enclosures on or about July 17, 2008. Shareholders of the Equities Fund whose shares are held by nominees, such as brokers, can vote their proxies by contacting their respective nominee. In addition to the solicitation of proxies by mail, employees of the Company and its affiliates, without additional compensation, may solicit proxies in person or by telephone, telegraph, facsimile, or oral communication. The Equities Fund has retained The Altman Group to act as its proxy solicitor and will receive approximately $3000 as compensation for seeking shareholder votes.
A shareholder may revoke the accompanying proxy at any time prior to its use by filing with the Equities Fund, a written revocation or duly executed proxy bearing a later date. In addition, any shareholder who attends the Special Meeting in person may vote by ballot at the Special Meeting, thereby canceling any proxy previously given. The persons named in the accompanying proxy will vote as directed by the proxy card, but in the absence of voting directions in any proxy card that is signed and returned, they intend to vote “FOR” the Reorganization proposal and may vote in their discretion with respect to other matters not now known to the Board of Directors of the Company that may be presented at the Special Meeting.
Voting Rights
Shareholders of the Equities Fund are entitled to one vote for each share held as to any matter on which they are entitled to vote and each fractional share shall be entitled to a proportionate fractional vote. Shares have no preemptive or subscription rights.
Shareholders of the Equities Fund at the close of business on the Record Date, May 31, 2008, will be entitled to be present at the Special Meeting and to give voting instructions with respect to their shares owned as of the Record Date. As of the Record Date, 3,606,399.53 shares of the Equities Fund were outstanding and entitled to vote.
Approval of the Reorganization requires the affirmative vote of the holders of a majority of the Equities Fund’s shares outstanding and entitled to vote on the matter. The holders of one-third of the outstanding shares will constitute a quorum.
If a shareholder abstains from voting as to any matter, or if a broker returns a “non-vote” proxy, indicating a lack of authority to vote on a matter, the shares represented by the abstention or non-vote will be deemed present at the Special Meeting for purposes of determining a quorum. However, abstentions and broker non-votes will not be deemed represented at the Special Meeting for purposes of calculating the vote on any matter. As a result, an abstention or broker non-vote will have the same effect as a vote against the Reorganization.
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The Equities Fund expects that, before the Special Meeting, broker-dealer firms holding shares of the Fund in “street name” for their customers will request voting instructions from their customers and beneficial owners.
To the knowledge of the Company, as of the Record Date, each of the directors and executive officers owned individually, and collectively as a group, 2.34% of the outstanding shares of the Equities Fund Class I shares and less than 1% of the Class N shares and 1.03% of the outstanding shares of the Focused Equities Fund Class N shares and less than 1% of the Class I shares.
Appendix D lists the persons that as of the Record Date owned beneficially or of record 5% or more of the outstanding shares of any Class of the Equities Fund and/or the Focused Equities Fund.
Adjournment
The vote required to adjourn the Special Meeting is a majority of all the votes cast on the matter by stockholders entitled to vote at the Special Meeting who are present in person or by proxy. If a quorum is not present in person or by proxy at the time the Special Meeting is called to order, the chairman of the Special Meeting or the stockholders may adjourn the Special Meeting. In such a case, the persons named as proxy holders will vote all proxies in favor of the adjournment. If a quorum is present but there are not sufficient votes to approve the proposal, the chairman of the Special Meeting may, with respect to that proposal, adjourn the Special Meeting or the persons named as proxy holders may propose one or more adjournments of the Meeting to permit further solicitation of proxies. In such a case, the persons named as proxy holders will vote those proxies which they are entitled to vote in favor of the proposal “FOR” the adjournment, and will vote those proxies required to be voted against the proposal “AGAINST” the adjournment as to that proposal, and broker non-votes and abstentions will not be voted either for or against the adjournment.
Other Matters to Come Before the Special Meeting
The Company does not know of any matters to be presented at the Special Meeting other than those described in this Prospectus/Proxy Statement. If other business should properly come before the Special Meeting, the proxyholders will vote thereon in accordance with their best judgment.
Shareholder Proposals
The Company is not required to hold regular annual meetings and, in order to minimize its costs, does not intend to hold meetings of shareholders unless so required by applicable law, regulation, regulatory policy or if otherwise deemed advisable by the Company’s management. Therefore it is not practicable to specify a date by which shareholder proposals must be received in order to be incorporated in an upcoming proxy statement for an annual meeting.
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Reports to Shareholders
The Company will furnish, without charge, a copy of the Annual Report and the most recent semi-annual report succeeding the Annual Report, if any, on request. Requests for such reports should be directed to the Company at 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017 or by calling 1-800-FUND-TCW. Such reports may also be found on the Internet at www.tcwfunds.com.
In order that the presence of a quorum at the meeting may be assured, prompt execution and return of the enclosed proxy card is requested. A self-addressed, postage-paid envelope is enclosed for your convenience.
Philip K. Holl |
Secretary |
July 15, 2008
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FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made as of this day of , 2008, by and between TCW Funds, Inc., a Maryland corporation (the “Company”) with its principal place of business at 865 South Figueroa Street, Los Angeles, California 90017, on behalf of itself and its series, the TCW Focused Equities Fund (the “Acquiring Fund”), and the TCW Equities Fund (the “Acquired Fund”).
This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 368(a)(1) of the United States Internal Revenue Code of 1986, as amended (the “Code”). Upon the terms and conditions set forth in this Agreement, the reorganization (the “Reorganization”) will consist of: (i) the transfer of all of the assets of the Acquired Fund to the Acquiring Fund; (ii) the assumption by the Acquiring Fund of all liabilities of the Acquired Fund; (iii) the issuance of the Acquiring Fund Shares (as defined below) to the shareholders of the Acquired Fund on a pro rata basis; (iv) the complete liquidation of the Acquired Fund as provided herein; and (v) an amendment to the Company’s Articles of Incorporation (effective after the Closing (as defined below)) reclassifying the Class I shares of common stock ($0.001 par value) of the Acquired Fund (“Acquired Fund Class I Shares”) into Class I shares of common stock ($0.001 par value) of the Acquiring Fund (the “Acquiring Fund Class I Shares”), reclassifying the Class N shares of common stock ($0.001 par value) of the Acquired Fund (the “Acquired Fund Class N Shares” and together with the Acquired Fund Class I Shares, the “Acquired Fund Shares”) into Class N shares of common stock ($0.001 par value) of the Acquiring Fund (the “Acquiring Fund Class N Shares” and together with the Acquiring Fund Class I Shares, the “Acquiring Fund Shares”) and eliminating the authorized Class K shares of common stock ($0.001 par value) of the Acquired Fund (the “Acquired Fund Class K Shares”).
WHEREAS, the Acquired Fund and the Acquiring Fund are series of an open-end, registered investment company of the management type and the Acquired Fund owns securities which generally are assets of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Directors of the Company have determined that the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund by the Acquiring Fund is in the best interests of the Acquiring Fund and its shareholders and that the interests of the existing shareholders of the Acquiring Fund would not be diluted as a result of this transaction; and
WHEREAS, the Directors of the Company, have determined that the exchange of all of the assets of the Acquired Fund for Acquiring Fund Shares and the assumption of all liabilities of the Acquired Fund by the Acquiring Fund is in the best interests of the
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Acquired Fund and its shareholders and that the interests of the existing shareholders of the Acquired Fund would not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:
1. | FILING OF ARTICLES OF AMENDMENT, TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED FUND |
1.1. Subject to the requisite approval of the Acquired Fund shareholders and the other terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Company agrees that after the Closing Date (as defined below), the Company will execute and file Articles of Amendment to the Company’s Articles of Incorporation with the Maryland State Department of Assessments and Taxation in substantially the form attached hereto as Exhibit A (the “Articles of Amendment”). The Articles of Amendment will, effective after the Closing Date: (i) reclassify all of the issued and outstanding Acquired Fund Class I Shares into Acquiring Fund Class I Shares of equal aggregate value; (ii) reclassify all of the issued and outstanding Acquired Fund Class N Shares into Acquiring Fund Class N Shares of equal aggregate value; (iii) reclassify all of the authorized and unissued Acquired Fund Class I Shares into Acquiring Fund Class I Shares; (iv) reclassify all of the authorized and unissued Acquired Fund Class N Shares into Acquiring Fund Class N Shares; and (v) eliminate the authorized and unissued Acquired Fund Class K Shares.
1.2. Subject to the requisite approval of the Acquired Fund shareholders and the other terms and conditions herein set forth and on the basis of the representations and warranties contained herein, the Acquired Fund agrees to transfer all of the Acquired Fund’s assets, as set forth in Section 1.3, to the Acquiring Fund, and the Acquiring Fund agrees in exchange therefor: (i) to deliver to the Acquired Fund the number of full and fractional Acquiring Fund Class I Shares determined by dividing the aggregate net asset value of the Acquired Fund Class I Shares, computed in the manner and as of the time and date set forth in Section 2, by the net asset value of one Acquiring Fund Class I Share, computed in the manner and as of the time and date set forth in Section 2.2; (ii) to deliver to the Acquired Fund the number of full and fractional Acquiring Fund Class N Shares determined by dividing the aggregate net asset value of the Acquired Fund Class N Shares, computed in the manner and as of the time and date set forth in Section 2, by the net asset value of one Acquiring Fund Class N Share, computed in the manner and as of the time and date set forth in Section 2.2; and (iii) to assume all liabilities of the Acquired Fund, as set forth in Section 1.4. Such transactions shall take place at the closing provided for in Section 3.1 (the “Closing”).
1.3. The assets of the Acquired Fund to be acquired by the Acquiring Fund shall consist of all assets and property, including, without limitation, all cash, securities,
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commodities and futures interests and dividends or interests receivable, that are owned by the Acquired Fund, and any deferred or prepaid expenses shown as an asset on the books of the Acquired Fund on the closing date provided for in Section 3.1 (the “Closing Date”) (collectively, the “Assets”).
1.4. The Acquired Fund will endeavor to discharge all of its known liabilities and obligations prior to the Closing Date. The Acquiring Fund shall also assume all of the liabilities of the Acquired Fund, whether accrued or contingent, known or unknown, existing at the Valuation Date, as defined below (collectively, the “Liabilities”). On or as soon as practicable prior to the Closing Date, the Acquired Fund will declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed substantially all (and in no event less than 98%) of its investment company taxable income (computed without regard to any deduction for dividends paid) and realized net capital gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in Section 1.2, the Acquired Fund will distribute to the Acquired Fund’s shareholders of record, determined as of immediately after the close of business on the Closing Date (the “Acquired Fund Shareholders”), on a pro rata basis, the Acquiring Fund Shares received by the Acquired Fund pursuant to Section 1.2, and will completely liquidate. Such distribution and liquidation will be accomplished, with respect to the Acquired Fund’s shares, by the transfer of the Acquiring Fund Shares then credited to the account of the Acquired Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Acquired Fund Shareholders. The aggregate net asset value of Acquiring Fund Class I Shares to be so credited to Acquired Fund Shareholders holding Acquired Fund Class I Shares shall be equal to the aggregate net asset value of the Acquired Fund Class I Shares owned by the Acquired Fund Shareholders on the Closing Date. The aggregate net asset value of Acquiring Fund Class N Shares to be so credited to Acquired Fund Shareholders holding Acquired Fund Class N Shares shall be equal to the aggregate net asset value of the Acquired Fund Class N Shares owned by the Acquired Fund Shareholders on the Closing Date. The stock transfer books of the Acquired Fund will be permanently closed as of the close of business on the Closing Date. Share certificates representing interests in Acquired Fund Shares will represent a number of the same class of Acquiring Fund Shares after the Closing Date, as determined in accordance with Section 2.3 and 2.4. The Acquiring Fund shall not issue certificates representing the Acquiring Fund Shares issued in connection with the Reorganization, unless requested in writing.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of the Acquiring Fund’s transfer agent.
1.7. Any reporting responsibility of the Acquired Fund including, but not limited to, the responsibility for filing of regulatory reports, tax returns, or other documents
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with the Securities and Exchange Commission (the “Commission”), any state securities commission, and any federal, state or local tax authorities or any other relevant regulatory authority, is and shall remain the responsibility of the Acquired Fund.
2. | VALUATION |
2.1. The value of the Assets shall be the value computed as of immediately after the close of business of the New York Stock Exchange and after the declaration of any dividends on the Closing Date (such time and date being hereinafter called the “Valuation Date”), using the valuation procedures in the Company’s then-current prospectus and statement of additional information and valuation procedures established by the Company’s Board of Directors.
2.2. The net asset value of an Acquiring Fund Class I Share and an Acquiring Fund Class N Share shall be the net asset value per share computed with respect to each class as of the Valuation Date, using the valuation procedures set forth in the Company’s then-current prospectus and statement of additional information and valuation procedures established by the Company’s Board of Directors.
2.3. The number of the Acquiring Fund Class I Shares to be issued (including fractional shares, if any) in exchange for the Acquired Fund’s assets shall be determined with respect to such class by dividing the value of the net assets with respect to the Acquired Fund Class I Shares, determined using the same valuation procedures referred to in Section 2, by the net asset value of an Acquiring Fund Class I Share, determined in accordance with Section 2.2.
2.4. The number of the Acquiring Fund Class N Shares to be issued (including fractional shares, if any) in exchange for the Acquired Fund’s assets shall be determined with respect to such class by dividing the value of the net assets with respect to the Acquired Fund Class N Shares, determined using the same valuation procedures referred to in Section 2, by the net asset value of an Acquiring Fund Class N Share, determined in accordance with Section 2.2.
2.5. All computations of value shall be made by the Company’s designated record keeping agent and shall be subject to confirmation by the Company’s independent accountants.
3. | CLOSING AND CLOSING DATE |
3.1. The Closing Date shall be [Closing Date], 2008, or such other date as the parties may agree to in writing. All acts taking place at the Closing shall be deemed to take place simultaneously as of immediately after the close of business on the Closing Date unless otherwise agreed to by the parties. The close of business on the Closing Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be held at the offices of the Company or at such other time and/or place as the parties may agree.
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3.2. The Acquired Fund shall direct State Street Bank & Trust Company, as custodian for the Acquired Fund (the “Custodian”), to deliver, at the Closing, a certificate of an authorized officer stating that (i) the Assets shall have been delivered in proper form to the Acquiring Fund within two business days prior to or on the Closing Date, and (ii) all necessary taxes in connection with the delivery of the Assets, including all applicable federal and state stock transfer stamps, if any, have been paid or provision for payment has been made. The Acquired Fund’s portfolio securities represented by a certificate or other written instrument shall be presented by the Custodian for examination no later than five business days preceding the Closing Date, and shall be transferred and delivered by the Acquired Fund as of the Closing Date for the account of the Acquiring Fund duly endorsed in proper form for transfer in such condition as to constitute good delivery thereof. The Custodian shall deliver as of the Closing Date by book entry, in accordance with the customary practices of such depositories and the Custodian, the Acquired Fund’s portfolio securities and instruments deposited with a securities depository, as defined in Rule 17f-4 under the Investment Company Act of 1940, as amended (the “1940 Act”). The cash to be transferred by the Acquired Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.3. The Acquired Fund shall direct U.S. Bancorp Fund Services, LLC (the “Transfer Agent”), on behalf of the Acquired Fund, to deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Acquired Fund Shareholders and the number and percentage ownership of outstanding Acquired Fund Class I Shares and Acquired Fund Class N Shares owned by each such shareholder immediately prior to the Closing. The Acquiring Fund shall issue and deliver a confirmation evidencing the Acquiring Fund Shares to be credited on the Closing Date to the Secretary of the Acquiring Fund, or provide evidence satisfactory to the Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired Fund’s account on the books of the Acquiring Fund. At the Closing each party shall deliver to the other such bills of sale, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request.
3.4. In the event that on the Valuation Date (a) the New York Stock Exchange or another primary trading market for portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed to trading or trading thereupon shall be restricted, or (b) trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of the Board of Directors of the Company, accurate appraisal of the value of the net assets of the Acquiring Fund or the Acquired Fund, respectively, is impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored.
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4. | REPRESENTATIONS AND WARRANTIES |
4.1. Except as has been disclosed to the Acquiring Fund in a written instrument executed by an officer of the Company, the Company on behalf of the Acquired Fund represents and warrants as follows:
(a) The Acquired Fund is duly organized as a series of the Company, which is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland with power under the Company’s Articles of Incorporation to own all of its properties and assets and to carry on its business as it is now being conducted;
(b) The Company is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act, and the registration of shares of the Acquired Fund under the Securities Act of 1933, as amended (“1933 Act”), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquired Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”) and the 1940 Act and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information of the Acquired Fund and each prospectus and statement of additional information of the Acquired Fund used during the three years previous to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading;
(e) On the Closing Date, the Acquired Fund will have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer and deliver such Assets hereunder free of any liens or other encumbrances, and upon delivery and payment for such Assets, the Acquiring Fund will acquire good and marketable title thereto, subject to no restrictions on the full transfer thereof, including such restrictions as might arise under the 1933 Act, other than as disclosed to the Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Company’s Articles of Incorporation or By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Company on behalf of the Acquired Fund is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Company on behalf of the Acquired Fund is a party or by which it is bound;
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(g) All material contracts or other commitments of the Acquired Fund (other than this Agreement and certain investment contracts, including options, futures and forward contracts) will terminate without liability to the Acquired Fund on or prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the Company on behalf of the Acquiring Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Acquired Fund or any of its properties or assets that, if adversely determined, would materially and adversely affect its financial condition or the conduct of its business. The Company on behalf of the Acquired Fund knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated;
(i) The Statement of Assets and Liabilities, including the Schedule of Investments of the Acquired Fund as of October 31, 2007, the related Statement of Operations for the year then ended, and the Statements of Changes in Net Assets for each of the years ended October 31, 2007 and 2006 have been audited by Deloitte & Touche LLP, independent registered public accounting firm, and are in accordance with generally accepted accounting principles (“GAAP”). There are no known contingent liabilities of the Acquired Fund required to be reflected on a Statement of Assets and Liabilities (including the notes thereto) in accordance with GAAP as of such date not disclosed therein;
(j) Since October 31, 2007, there has not been any material adverse change in the Acquired Fund’s financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Acquired Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Acquiring Fund. For the purposes of this subsection (j), a decline in net asset value per share of the Acquired Fund due to declines in market values of securities in the Acquired Fund’s portfolio, the discharge of Acquired Fund liabilities, or the redemption of Acquired Fund Shares by shareholders of the Acquired Fund shall not constitute a material adverse change;
(k) On the Closing Date, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Acquired Fund required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Acquired Fund’s knowledge, no such return is currently under audit and no assessment has been asserted with respect to such returns;
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(l) For each taxable year of its operation (including the taxable year ending on the Closing Date), the Acquired Fund has met (or will meet) the requirements of Subchapter M of the Code for qualification as a regulated investment company, has been (or will be) eligible to and has computed (or will compute) its federal income tax under Section 852 of the Code, and will have distributed all of its investment company taxable income and net capital gain (as defined in the Code) that has accrued through the Closing Date, and before the Closing Date will have declared dividends sufficient to distribute all of its investment company taxable income and net capital gain for the period ending on the Closing Date;
(m) All issued and outstanding shares of the Acquired Fund are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Acquired Company and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws. All of the issued and outstanding shares of the Acquired Fund will, at the time of Closing, be held of record by the persons and in the amounts set forth in the records of the Transfer Agent, on behalf of the Acquired Fund, as provided in Section 3.3. The Acquired Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any of the shares of the Acquired Fund, nor is there outstanding any security convertible into any of the Acquired Fund shares;
(n) The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action, if any, on the part of the Directors of the Company on behalf of the Acquired Fund, and, subject to the approval of the shareholders of the Acquired Fund, this Agreement will constitute a valid and binding obligation of the Acquired Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles;
(o) The information to be furnished by the Acquired Fund for use in registration statements, proxy materials and other documents filed or to be filed with any federal, state or local regulatory authority (including the Financial Industry Regulatory Authority), which may be necessary in connection with the transactions contemplated hereby, shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations thereunder applicable thereto; and
(p) The proxy statement of the Acquired Fund (the “Proxy Statement”) to be included in the Registration Statement referred to in Section 5.6, insofar as it relates to the Acquired Fund, will, on the effective date of the Registration Statement and on the Closing Date (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not materially
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misleading provided, however, that the representations and warranties in this subsection (p) shall not apply to statements in or omissions from the Proxy Statement and the Registration Statement made in reliance upon and in conformity with information that was furnished by the Acquiring Fund for use therein, and (ii) comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder.
4.2. Except as has been disclosed to the Acquired Fund in a written statement executed by an officer of the Company on behalf of the Acquiring Fund, the Company on behalf of the Acquiring Fund represents and warrants as follows:
(a) The Acquiring Fund is duly organized as a series of the Company, which is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland with power under the Company’s Articles of Incorporation to own all of its properties and assets and to carry on its business as it is now being conducted;
(b) The Company is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act and the registration of shares of the Acquiring Fund under the 1933 Act, is in full force and effect;
(c) No consent, approval, authorization, or order of any court or governmental authority is required for the consummation by the Acquiring Fund of the transactions contemplated herein, except such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state securities laws;
(d) The current prospectus and statement of additional information of the Acquiring Fund and each prospectus and statement of additional information of the Acquiring Fund used during the three years previous to the date of this Agreement conforms or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading;
(e) On the Closing Date, the Acquiring Fund will have good and marketable title to the Acquiring Fund’s assets, free of any liens or other encumbrances, except those liens or encumbrances as to which the Acquired Fund has received notice and necessary documentation at or prior to the Closing;
(f) The Acquiring Fund is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Company’s Articles of Incorporation or By-Laws or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Company on behalf of the Acquiring Fund is a party or by which it is bound, or (ii) the acceleration of any
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obligation, or the imposition of any penalty, under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Company on behalf of the Acquiring Fund is a party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the Company on behalf of the Acquired Fund, no litigation or administrative proceeding or investigation of or before any court or governmental body is presently pending or, to its knowledge, threatened against the Company on behalf of the Acquiring Fund or any of the Acquiring Fund’s properties or assets that, if adversely determined, would materially and adversely affect the Acquiring Fund’s financial condition or the conduct of the Acquiring Fund’s business. The Company on behalf of the Acquiring Fund knows of no facts which might form the basis for the institution of such proceedings and is not a party to or subject to the provisions of any order, decree or judgment of any court or governmental body which materially and adversely affects its business or its ability to consummate the transactions herein contemplated;
(h) The Statement of Assets and Liabilities, including the Schedule of Investments of the Acquiring Fund as of October 31, 2007, the related Statement of Operations for the year then ended, and the Statements of Changes in Net Assets for each of the years ended October 31, 2007 and 2006 have been audited by Deloitte & Touche LLP, independent registered public accounting firm, and are in accordance with GAAP. There are no known contingent liabilities of the Acquiring Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein;
(i) Since October 31, 2007, there has not been any material adverse change in the Acquiring Fund’s financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, or any incurrence by the Acquiring Fund of indebtedness maturing more than one year from the date such indebtedness was incurred, except as otherwise disclosed to and accepted by the Acquired Fund. For purposes of this subsection (i) a decline in net asset value per share of the Acquiring Fund due to declines in market values of securities in the Acquiring Fund’s portfolio, the discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund Shares by shareholders of the Acquiring Fund, shall not constitute a material adverse change;
(j) On the Closing Date, all Federal and other tax returns, dividend reporting forms, and other tax-related reports of the Acquiring Fund required by law to have been filed by such date (including any extensions) shall have been filed and are or will be correct in all material respects, and all Federal and other taxes shown as due or required to be shown as due on said returns and reports shall have been paid or provision shall have been made for the payment thereof, and to the best of the Acquiring Fund’s knowledge no such return is currently under audit and no assessment has been asserted with respect to such returns;
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(k) For each taxable year of its operation (including the taxable year including the Closing Date), the Acquiring Fund has met (or will meet) the requirements of Subchapter M of the Code for qualification as a regulated investment company has been eligible to and has computed (or will compute) its federal income tax under Section 852 of the Code, and has distributed all of its investment company taxable income and net capital gain (as defined in the Code) for periods ending prior to the Closing Date;
(l) All issued and outstanding Acquiring Fund Shares are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable and have been offered and sold in every state and the District of Columbia in compliance in all material respects with applicable registration requirements of the 1933 Act and state securities laws. The Acquiring Fund does not have outstanding any options, warrants or other rights to subscribe for or purchase any Acquiring Fund Shares, nor is there outstanding any security convertible into any Acquiring Fund Shares;
(m) The execution, delivery and performance of this Agreement will have been fully authorized prior to the Closing Date by all necessary action, if any, on the part of the Directors of the Company on behalf of the Acquiring Fund and this Agreement will constitute a valid and binding obligation of the Acquiring Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights and to general equity principles;
(n) The Acquiring Fund Shares to be issued and delivered to the Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to the terms of this Agreement, will on the Closing Date have been duly authorized and, when so issued and delivered, will be duly and validly issued Acquiring Fund Shares, and will be fully paid and non-assessable;
(o) The information to be furnished by the Company on behalf of the Acquiring Fund for use in the registration statements, proxy materials and other documents that may be necessary in connection with the transactions contemplated hereby shall be accurate and complete in all material respects and shall comply in all material respects with Federal securities and other laws and regulations applicable thereto; and
(p) That insofar as it relates to the Acquiring Fund, the Registration Statement relating to the Acquiring Fund Shares issuable hereunder, and the proxy materials of the Acquired Fund to be included in the Registration Statement, and any amendment or supplement to the foregoing, will, from the effective date of the Registration Statement through the date of the meeting of shareholders of the Acquired Fund contemplated therein (i) not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading provided, however, that the representations and warranties in this subsection (p) shall not apply
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to statements in or omissions from the Registration Statement made in reliance upon and in conformity with information that was furnished by the Acquired Fund for use therein, and (ii) comply in all material respects with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder.
5. | COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND |
5.1. The Acquiring Fund and the Acquired Fund each will operate its business in the ordinary course between the date hereof and the Closing Date, it being understood that such ordinary course of business will include the declaration and payment of customary dividends and distributions, and any other distribution that may be advisable.
5.2. The Acquired Fund will call a meeting of the shareholders of the Acquired Fund to consider and act upon this Agreement and to take all other action necessary to obtain approval of the transactions contemplated herein.
5.3. The Acquired Fund covenants that the Acquiring Fund Shares to be issued hereunder are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement.
5.4. The Acquired Fund will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Acquired Fund shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and the Acquired Fund will each take, or cause to be taken, all action, and do or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement.
5.6. The Acquired Fund will provide the Acquiring Fund with information reasonably necessary for the preparation of a prospectus (the “Prospectus”) which will include the Proxy Statement referred to in Section 4.1(p), all to be included in a Registration Statement on Form N-14 of the Acquiring Fund (the “Registration Statement”), in compliance with the 1933 Act, the 1934 Act and the 1940 Act, in connection with the meeting of the shareholders of the Acquired Fund to consider approval of this Agreement and the transactions contemplated herein.
5.7. As soon as is reasonably practicable after the Closing, the Acquired Fund will make a liquidating distribution to its shareholders consisting of the Acquiring Fund Shares received at the Closing.
5.8. The Acquiring Fund and the Acquired Fund shall each use its reasonable best efforts to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement as promptly as practicable.
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5.9. The Company on behalf of the Acquired Fund covenants that it will, from time to time, as and when reasonably requested by the Acquiring Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action as the Company on behalf of the Acquiring Fund may reasonably deem necessary or desirable in order to vest in and confirm (a) on behalf of the Acquired Fund, the Company’s title to and possession of the Acquiring Fund’s Shares to be delivered hereunder, and (b) on behalf of the Acquiring Fund, the Company’s title to and possession of all the Assets, and to carry out the intent and purpose of this Agreement.
5.10. The Acquiring Fund will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state blue sky or securities laws as may be necessary in order to continue its operations after the Closing Date.
6. | CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND |
The obligations of the Company on behalf of the Acquired Fund to consummate the transactions provided for herein shall be subject, at the Company’s election, to the performance by the Company on behalf of the Acquiring Fund of all the obligations to be performed by it hereunder on or before the Closing Date, and, in addition thereto, the following further conditions:
6.1. All representations and warranties of the Company on behalf of the Acquiring Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date;
6.2. The Company on behalf of the Acquiring Fund shall have delivered to the Company on behalf of the Acquired Fund a certificate executed in its name by its President or Vice President and its Treasurer or Assistant Treasurer, in a form reasonably satisfactory to the Company on behalf of the Acquired Fund and dated as of the Closing Date, to the effect that the representations and warranties of the Company on behalf of the Acquiring Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement and as to such other matters as the Company on behalf of the Acquired Fund shall reasonably request;
6.3. The Company on behalf of the Acquiring Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Company on behalf of the Acquiring Fund on or before the Closing Date; and
6.4. The Acquired Fund and the Acquiring Fund shall have agreed on the number of full and fractional Acquiring Fund Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with Section 1.2.
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7. | CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND |
The obligations of the Company on behalf of the Acquiring Fund to complete the transactions provided for herein shall be subject, at the Company’s election, to the performance by the Company on behalf of the Acquired Fund of all of the obligations to be performed by it hereunder on or before the Closing Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Company on behalf of the Acquired Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Date, with the same force and effect as if made on and as of the Closing Date;
7.2. The Company on behalf of the Acquired Fund shall have delivered to the Acquiring Fund a statement of the Acquired Fund’s assets and liabilities, as of the Closing Date, certified by the Treasurer of the Acquired Company;
7.3. The Company on behalf of the Acquired Fund shall have delivered to the Company on behalf of the Acquiring Fund on the Closing Date a certificate executed in its name by its President or Vice President and its Treasurer or Assistant Treasurer, in form and substance satisfactory to the Company on behalf of the Acquiring Fund and dated as of the Closing Date, to the effect that the representations and warranties of the Company on behalf of the Acquired Fund made in this Agreement are true and correct at and as of the Closing Date, except as they may be affected by the transactions contemplated by this Agreement, and as to such other matters as the Company on behalf of the Acquiring Fund shall reasonably request;
7.4. The Company on behalf of the Acquired Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Company on behalf of the Acquired Fund on or before the Closing Date;
7.5. The Acquired Fund and the Acquiring Fund shall have agreed on the number of full and fractional Acquiring Fund Shares to be issued in connection with the Reorganization after such number has been calculated in accordance with Section 1.2; and
7.6. The Acquired Fund shall have declared and paid a distribution or distributions prior to the Closing that, together with all previous distributions, shall have the effect of distributing to its shareholders: (i) all of its investment company taxable income and all of its net realized capital gains, if any, for the period from the close of its last fiscal year to 4:00 p.m. Eastern time on the Closing; and (ii) any undistributed investment company taxable income and net realized capital gains from any period to the extent not otherwise already distributed.
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8. | FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE ACQUIRED FUND |
If any of the conditions set forth below have not been satisfied on or before the Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other party to this Agreement shall, at its option, not be required to consummate the transactions contemplated by this Agreement:
8.1. The Agreement and the transactions contemplated herein shall have been approved by the requisite vote of the holders of the outstanding shares of the Acquired Fund in accordance with the provisions of the Company’s Articles of Incorporation, By-Laws, applicable Maryland law and the 1940 Act, and certified copies of the resolutions evidencing such approval shall have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this Section 8.1;
8.2. On the Closing Date, no action, suit or other proceeding shall be pending or, to its knowledge, threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein;
8.3. All consents of other parties and all other consents, orders and permits of Federal, state and local regulatory authorities deemed necessary by the Company to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not involve a risk of a material adverse effect on the assets or properties of the Acquiring Fund or the Acquired Fund, provided that either party hereto may for itself waive any of such conditions;
8.4. The Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act; and
8.5. The parties shall have received an opinion of Dechert LLP addressed to the Company substantially to the effect that, based upon certain facts, assumptions, and representations, the transaction contemplated by this Agreement shall constitute a tax-free reorganization for Federal income tax purposes, unless, based on the circumstances existing at the time of the Closing, Dechert LLP determines that the transaction contemplated by this Agreement does not qualify as such. The parties acknowledge that the delivery of such opinion is conditioned upon receipt by Dechert LLP of representations it shall request of the Company. Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the condition set forth in this Section 8.5.
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9. | BROKERAGE FEES AND EXPENSES |
9.1. The Company on behalf of the Acquired Fund and the Company on behalf of the Acquiring Fund represent and warrant to each other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein.
9.2. The expenses relating to the proposed Reorganization will be shared so that: (i) fifty percent of such costs are borne by TCW Investment Management Company, the investment adviser to the Acquired and Acquiring Funds; (ii) twenty-five percent of such costs are borne by the Acquired Fund; and (iii) twenty-five percent of such costs are borne by the Acquiring Fund. The costs of the Reorganization shall include, but not be limited to, costs associated with obtaining any necessary order of exemption from the 1940 Act, preparation of the Registration Statement, printing and distributing the Acquiring Fund’s prospectus and the Acquired Fund’s proxy materials, legal fees, accounting fees, securities registration fees, and expenses of holding shareholders’ meetings. The costs of the Reorganization shall not include any brokerage or other transaction fees or costs incurred as a result of the purchase or sale of portfolio securities by the Acquiring Fund or the Acquired Fund. Notwithstanding any of the foregoing, expenses will in any event be paid by the party directly incurring such expenses if and to the extent that the payment by another person of such expenses would result in the disqualification of such party as a “regulated investment company” within the meaning of Section 851 of the Code.
10. | ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES |
10.1. The Company on behalf of the Acquiring Fund and the Company on behalf of the Acquired Fund agree that neither party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties.
10.2. The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall survive the consummation of the transactions contemplated hereunder. The covenants to be performed after the Closing shall survive the Closing.
11. | TERMINATION |
This Agreement and the transactions contemplated hereby may be terminated and abandoned by resolution of the Board of Directors of the Company at any time prior to the Closing Date, if circumstances should develop that, in the opinion of the Board, make proceeding with the Agreement inadvisable.
12. | AMENDMENTS |
This Agreement may be amended, modified or supplemented in such manner as may be deemed necessary or advisable by the authorized officers of the Company;
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provided, however, that following the meeting of the shareholders of the Acquired Fund called by the Acquired Fund pursuant to Section 5.2 of this Agreement, no such amendment may have the effect of changing the provisions for determining the number of the Acquiring Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement to the detriment of such shareholders without their further approval.
13. | NOTICES |
Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by facsimile, personal service or prepaid or certified mail addressed to the Company, 865 South Figueroa Street, Los Angeles, California 90017, attn: Philip K. Holl, in each case with a copy to Dechert LLP, 4675 MacArthur Court, Suite 1400, Newport Beach, California 92660, attn: Douglas P. Dick.
14. | HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY |
14.1. The Article and Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland without regard to its principles of conflicts of laws.
14.4. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its President or Vice President and its seal to be affixed thereto and attested by its Secretary or Assistant Secretary.
Attest: | TCW FUNDS, INC. on behalf of its | |||||
FOCUSED EQUITIES FUND series | ||||||
| By: |
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SECRETARY | ||||||
Title: |
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Attest: | TCW FUNDS, INC. on behalf of its | |||||
EQUITIES FUND series | ||||||
| By: |
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SECRETARY | ||||||
Title: |
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Exhibit A to Form of Agreement and Plan of Reorganization
TCW FUNDS, INC.
ARTICLES OF AMENDMENT
TCW Funds, Inc., a Maryland corporation and an open-end management investment company, having its registered office in Maryland in the City of Baltimore (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: The Articles of Incorporation of the Corporation are hereby amended by: (i) reclassifying all of the Institutional Class (or Class I) and Investor Class (or Class N) shares of the Corporation’s TCW Equities Fund series (the “Equities Fund”) as Institutional Class (or Class I) and Investor Class (or Class N) shares, respectively, of the Corporation’s TCW Focused Equities Fund series (the “Focused Equities Fund”); (ii) eliminating the authorized Advisor Class (or Class K) shares of the Equities Fund; and (iii) increasing the aggregate number of authorized shares of the Focused Equities Fund by 4,000,000,000 shares.
SECOND: Upon effectiveness of these Articles of Amendment:
(a) All of the assets and liabilities belonging to the Equities Fund and attributable to its Institutional Class (or Class I) and Investor Class (or Class N) shares, respectively, shall be conveyed, transferred and delivered to the Focused Equities Fund, and shall thereupon become and be assets and liabilities belonging to the Focused Equities Fund and attributable to its Institutional Class (or Class I) and Investor Class (or Class N) shares, respectively.
(b) Each of the issued and outstanding Institutional Class (or Class I) and Investor Class (or Class N) shares (and fractions thereof) of the Equities Fund will automatically, and without the need of any further act or deed, be reclassified and changed to that number of full and fractional issued and outstanding Institutional Class (or Class I) and Investor Class (or Class N) shares, respectively, of the Focused Equities Fund having an aggregate net asset value equal to the net asset value of an Institutional Class (or Class I) or Investor Class (or Class N) share (and fractions thereof), respectively, of the Equities Fund being reclassified and changed, such net asset values to be determined as of the close of regular trading on the New York Stock Exchange on the effective date of these Articles of Amendment.
(c) Each unissued Institutional Class (or Class I) share (or fraction thereof) of the Equities Fund will automatically, and without the need for any further act or deed, be reclassified and changed to such number of unissued Institutional Class (or Class I) shares (or fractions thereof) of the Focused Equities Fund as shall result, as of the effective time of these Articles of Amendment, in the total number of unissued Institutional Class (or Class I) shares of the Focused Equities Fund being increased by 2,000,000,000 shares less the number of issued and outstanding Institutional Class (or Class I) shares of the Focused Equities Fund resulting from paragraph (b) of this Article SECOND.
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(d) Each unissued Investor Class (or Class N) share (or fraction thereof) of the Equities Fund will automatically, and without the need for any further act or deed, be reclassified and changed to such number of unissued Investor Class (or Class N) shares (or fractions thereof) of the Focused Equities Fund as shall result, as of the effective time of these Articles of Amendment, in the total number of unissued Investor Class (or Class N) shares of the Focused Equities Fund being increased by 2,000,000,000 shares less the number of issued and outstanding Investor Class (or Class N) shares of the Focused Equities Fund resulting from paragraph (b) of this Article SECOND.
(e) Each unissued Advisor Class (or Class K) share (or fraction thereof) of the Equities Fund will automatically, and without the need for any further act or deed, cease to exist such that, as of the effective time of these Articles of Amendment, there shall be no authorized Advisor Class (or Class K) shares of the Equities Fund.
(f) Open accounts on the share records of the Focused Equities Fund shall be established representing the appropriate number of the Equities Fund shares of the appropriate class deemed to be owned by each such stockholder as a result of the reclassification.
THIRD: These Articles of Amendment do not increase the authorized capital stock of the Corporation or the aggregate par value thereof. These Articles of Amendment eliminate [2,000,000,000] of the authorized and unissued shares of the Equities Fund and reclassify and change the remaining 4,000,000,000 authorized shares of the Equities Fund to 4,000,000,000 additional authorized shares of the Focused Equities Fund. These Articles of Amendment do not amend the description of any class of stock as set forth in the Corporation’s Articles of Incorporation. As a result of these Articles of Amendment the Corporation is authorized to issue up to 4,000,000,000 Institutional Class (or Class I) shares of the Focused Equities Fund and 4,000,000,000 Investor Class (or Class N) shares of the Focused Equities Fund less, at any time, the total number of shares of each respective class of the Focused Equities Fund then issued and outstanding. The shares of the Focused Equities Fund and of each class of the Focused Equities Fund shall have all of the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such Fund and such class as set forth in the Corporation’s Articles of Incorporation.
FOURTH: This amendment has been duly authorized and advised by the Board of Directors of the Corporation and approved by the stockholders of the Corporation entitled to vote thereon.
FIFTH: These Articles of Amendment shall be effective as of , 2008 at 5:00 a.m.
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IN WITNESS WHEREOF: TCW Funds, Inc. has caused these Articles of Amendment to be signed in its name and on its behalf by its President, and attested by its Secretary on the day of , 2008.
TCW FUNDS, INC. | WITNESS: | |||
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William C. Sonneborn | Philip K. Holl | |||
President | Secretary |
The undersigned, William C. Sonneborn, President of TCW Funds, Inc., who executed on behalf of the Corporation the foregoing Articles of Amendment of which this certificate is made a part, hereby acknowledges, in the name and on behalf of the Corporation, the foregoing Articles of Amendment to be the corporate act of the Corporation and hereby certifies, under the penalties of perjury, that to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects.
|
William C. Sonneborn |
President |
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Set forth below is an excerpt from the Annual Report regarding the performance of the Equities Fund for the fiscal year ended October 31, 2007.
Management Discussions
For the year ended October 31, 2007, the TCW Equities Fund (the “Fund”) posted a gain of 9.47%, 8.86%, and 8.96% on its I Class, N Class, and K Class shares, respectively. The performance of the Fund’s classes varies because of differing expenses. The S&P 500 Index and Russell 1000 Value Index (the Fund’s benchmarks) returned 14.56% and 10.83% respectively, over the same period.
Investments in the Energy and Industrial sectors generated the largest contribution to the Fund’s returns during the fiscal year. Favorable returns in the Energy sector were driven by oil service stocks, while favorable returns in the Industrial sector were led by aerospace and diversified industrial companies. Investments in the Consumer Discretionary and Financial sectors generated the Fund’s weakest performance during the year and contributed to the Fund’s underperformance. Unfavorable returns in the Consumer Discretionary sector were generated by investments in the Housing and Retail sectors, specifically Pulte Homes and DR Horton, while unfavorable returns in the Financial sector were led by investments in the mortgage origination business.
The Fund owns attractively valued companies expected to generate increased cash flow and rising returns on capital. The fund’s sector structure is a byproduct of our individual stock selection process. The Fund is currently overweight industrial and energy sectors because this is where we are currently finding the most favorable combination of attractive valuation and increasing cash flows and returns on capital. Corporate balance sheets are in excellent shape, and S&P 500 earnings are forecast to grow 6% in 2008 and 2009. The S&P 500 is attractively valued, trading at 15.1x 2008 earnings and has a 6.6% earnings yield.
This compares quite favorably to the 4.7% coupon yield on 10-year treasuries. According to the Fed Model, which also takes expected earnings growth into consideration, equities are under valued relative to bonds.
We anticipate the Fund’s investment portfolio’s 2008 expected return on equity to be 25% higher than the S&P 500’s projected return on equity, and to grow 210 basis points faster than the S&P 500’s ROE. Despite the investment portfolio’s high and rising returns, it is only valued at a 10 basis point premium to the S&P 500 on a P/E basis. We believe the combination of attractive valuation and accelerating returns on capital creates a compelling investment portfolio.
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Set forth below is an excerpt from the Annual Report regarding the performance of the Focused Equities Fund for the fiscal year ended October 31, 2007.
Management Discussions
For the year ended October 31, 2007, the TCW Focused Equities Fund (the “Fund”) posted a gain of 9.86% and 9.74% on its I Class and N Class shares, respectively. The performance of the Fund’s classes varies because of differing expenses. The S&P 500 Index and Russell 1000 Value Index (the Fund’s benchmarks) returned 14.56% and 10.83% respectively, over the same period.
Investments in the Energy and Industrial sectors generated the largest contribution to the Fund’s returns during the fiscal year. Favorable returns in the Energy sector were driven by oil service stocks, while favorable returns in the Industrial sector were led by aerospace and diversified industrial companies.
Investments in the Consumer Discretionary and Financial sectors generated the Fund’s weakest performance during the year and contributed to the Fund’s underperformance. Unfavorable returns in the Consumer Discretionary sector were generated by investments in the Housing and Retail sectors, specifically Pulte Homes and DR Horton, while unfavorable returns in the Financial sector were led by investments in the mortgage origination business.
The Fund owns attractively valued companies expected to generate increased cash flow and rising returns on capital. The fund’s sector structure is a byproduct of our individual stock selection process. The Fund is currently overweight Industrial and Energy sectors because this is where we are currently finding the most favorable combination of attractive valuation and increasing cash flows and returns on capital. S&P 500 earnings are forecast to grow 6% in 2008 and 2009. The S&P 500 is attractively valued, trading at 15.1x 2008 earnings and has a 6.6% earnings yield. This compares quite favorably to the 4.7% coupon yield on 10-year treasuries. According to the Fed Model, which also takes expected earnings growth into consideration, equities are under valued relative to bonds.
We anticipate the Fund’s investment portfolio’s 2008 expected return on equity to be 30% higher than the S&P 500’s projected return on equity, and to grow 240 basis points faster than the S&P 500’s ROE. Despite the investment portfolio’s high and rising returns, it is valued at a 40 basis point discount to the S&P 500 on a P/E basis. We believe the combination of attractive valuation and accelerating returns on capital creates a compelling investment portfolio.
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Beneficial Ownership of Equities Fund
As of the Record Date, the following persons owned beneficially or of record 5% or more of the outstanding shares of the Equities Fund:
Name and Address | Class | % of Fund before Reorganization | % of Fund after Reorganization | |||||
Bost & Co.1 Mutual Fund Operations P.O. Box 3198 Pittsburgh, PA 15230 | I | 39.85 | %* | 34.85 | %* | |||
Charles Schwab & Co., Inc.1 Reinvest Account 101 Montgomery Street San Francisco, CA 94104 | I | 17.17 | % | 15.01 | % | |||
George S. Parker Childrens Trust2 P.O. Box 8028 Naples, FL 34101 | I | 10.06 | % | 8.80 | % | |||
National Financial Services1 Corp FBO Clients 200 Liberty Street New York, NY 10281 | N | 18.10 | % | 12.87 | % | |||
Wilmington Trust Co., Custodian2 TCW Deferred Compensation Plan P.O. Box 8971 Wilmington, DE 19899 | N | 9.47 | % | 4.62 | % | |||
Charles Schwab & Co., Inc.2, 3 | N | 47.29 | %* | 4.15 | % |
1. | Owned of record. |
2. | Beneficially owned. |
3. | See address for shareholder previously noted above in list. |
* | For purposes of the 1940 Act, any person who owns directly or through one or more controlled companies more than 25% of the voting securities of a company is presumed to “control” such company. Under this definition, this shareholder and its affiliates may be deemed to be controlling the Equities Fund. |
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Beneficial Ownership of Focused Equities Fund
As of the Record Date, the following persons owned beneficially or of record 5% or more of the outstanding shares of the Focused Equities Fund:
Name and Address | Class | % of Fund before Reorganization | % of Fund after Reorganization | |||||
E.L. Shannon Jr. Trust2 14081 Summit Drive Whittier, CA 90602 | I | 16.62 | % | 2.09 | % | |||
Daniel J. Donahue Trust2 800 W. Sixth Street Los Angeles, CA 90017 | I | 16.57 | % | 2.08 | % | |||
Puente Learning Center2 501 S. Boyle Avenue Los Angeles, CA 90033 | I | 11.47 | % | 1.44 | % | |||
Norman E. Friedmann Trust2 908 N. Roxbury Drive Beverly Hills, CA 90210 | I | 8.97 | % | 1.13 | % | |||
McKernan Family Trust2 1070 Fallen Leaf Road Arcadia, CA 91006 | I | 5.13 | % | 0.64 | % | |||
TCW Capital Investment Corporation2 865 S. Figueroa Street Los Angeles, CA 90017 | N | 73.26 | %* | 69.44 | %* | |||
National Financial Services Corp.1 FBO Customers 200 Liberty Street New York, NY 10281 | N | 12.59 | % | 12.87 | % |
1. | Owned of record. |
2. | Beneficially owned. |
* | For purposes of the 1940 Act, any person who owns directly or through one or more controlled companies more than 25% of the voting securities of a company is presumed to “control” such company. Under this definition, this shareholder and its affiliates may be deemed to be controlling the Focused Equities Fund. |
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How to Vote
1) Read the Prospectus/Proxy Statement. 2) Check the appropriate box on the Proxy Card below. 3) Sign and date the Proxy Card below. 4) Return the Proxy Card in the envelope provided. |
TCW EQUITIES FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON August 18, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Philip K. Holl, Michael E. Cahill and David S. DeVito or any one or more of them, proxies, with full power of substitution, to vote all shares of the TCW Equities Fund (the “Fund”) which the undersigned is entitled to vote at the Special Meeting of Shareholders of the Fund to be held at the offices of the Fund at 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017 on Monday, August 18, 2008 at 9:00 a.m., local time, and at any adjournment thereof.
This proxy will be voted as instructed. If no specification is made, the proxy will be voted “FOR” the proposal.
Please vote, date and sign this proxy and return it promptly in the enclosed envelope.
Please indicate your vote by an “x” in the appropriate box below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOLLOWING PROPOSALS:
1. | The approval of the Agreement and Plan of Reorganization which provides for: (i) the transfer of all of the assets and liabilities of the Fund to the TCW Focused Equities Fund (the “Focused Equities Fund”); (ii) the issuance of Class I and Class N shares, as applicable, of the Focused Equities Fund to holders of the Class I and Class N shares, respectively, of the Fund on a pro rata basis; (iii) the subsequent complete liquidation of the Fund; and (iv) an amendment to the Articles of Incorporation of TCW Funds, Inc. reclassifying the Class I and Class N shares of the Fund into Class I and Class N shares, respectively, of the Focused Equities Fund to become effective after the Closing. |
FOR ¨ | AGAINST ¨ | ABSTAIN ¨ |
2. | To transact such other business as may properly come before the Special Meeting or any adjournments or postponement thereof. |
FOR ¨ | AGAINST ¨ | ABSTAIN ¨ |
Please sign below exactly as your name(s) appears on this proxy card. When shares are held jointly, each holder must sign. When signing as executor, administrator, attorney, trustee, guardian or in some other representative capacity, please give the full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name be authorized person.
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Signature | Date | |||||
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Signature (if held jointly) | Date |
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PART B
TCW Focused Equities Fund
Statement of Additional Information
July 15, 2008
Acquisition of the Assets and Liabilities of the TCW Equities Fund (a series of the TCW Funds, Inc.) 865 South Figueroa Street Suite 1800 Los Angeles, CA 90017 | By and in Exchange for Shares of TCW Focused Equities Fund (a series of the TCW Funds, Inc.) 865 South Figueroa Street Suite 1800 Los Angeles, CA 90017 |
This Statement of Additional Information is available to the shareholders of the TCW Equities Fund (the “Equities Fund”) in connection with a proposed transaction (the “Reorganization”) whereby all of the assets and liabilities of the Equities Fund, a series of the TCW Funds, Inc. (the “Company”) will be transferred to the TCW Focused Equities Fund (the “Focused Equities Fund”) in exchange for shares of the Focused Equities Fund.
This Statement of Additional Information is not a prospectus. A Prospectus/Proxy Statement dated July 15, 2008 relating to the Reorganization of the Equities Fund (the “Prospectus/Proxy Statement”) may be obtained, without charge, by writing to TCW Funds at 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017 or calling 1-800-FUND-TCW. This Statement of Additional Information should be read in conjunction with the Prospectus/Proxy Statement.
This Statement of Additional Information consists of a cover page, Pro Forma Financial Statements of the Focused Equities Fund after giving effect to the proposed Reorganization described in the Prospectus/Proxy Statement, and the following documents incorporated by reference:
1. | The Statement of Additional Information of the Equities Fund and the Focused Equities Fund dated February 29, 2008. |
2. | The Financial Statements of the Equities Fund included in the Annual Report of the Company for the year ended October 31, 2007. |
3. | The Financial Statements of the Focused Equities Fund included in the Annual Report of the Company for the year ended October 31, 2007. |
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Pro Forma Financial Statements
Shown below are unaudited pro forma financial statements for the combined Focused Equities Fund, assuming the Reorganization, as more fully described in the combined Prospectus/Proxy Statement dated July 15, 2008, had been consummated as of April 30, 2008. We have estimated these pro forma numbers in good faith.
Additional information regarding the performance of the Funds is contained in Appendix B and Appendix C to the Prospectus/Proxy Statement.
The first table presents pro forma Statements of Assets and Liabilities for the combined Focused Equities Fund. The second table presents pro forma Statements of Operations for the combined Focused Equities Fund. The third table presents pro forma Portfolio of Investments for the combined Focused Equities Fund. The tables are followed by the Notes to the Pro Forma Financial Statements.
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TCW FOCUSED EQUITIES FUND
PRO FORMA
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
AS OF APRIL 30, 2008
TCW EQUITIES FUND (Acquired Fund) | TCW FOCUSED EQUITIES FUND (Acquiring Fund) | PRO FORMA ADJUSTMENT | PRO FORMA COMBINED | |||||||||
(Dollar Amounts in Thousands) | ||||||||||||
ASSETS | ||||||||||||
Investments, at Value(1),(2) | 72,311 | 53,588 | 125,899 | |||||||||
Receivable for Securities Sold | 999 | 686 | 1,685 | |||||||||
Receivable for Fund Shares Sold | 1 | 8 | 9 | |||||||||
Interest and Dividends Receivable | 57 | 42 | 99 | |||||||||
Total Assets | 73,368 | 54,324 | 127,692 | |||||||||
LIABILITIES | ||||||||||||
Payable for Securities Purchased | 349 | 1,119 | 1,468 | |||||||||
Payable for Fund Shares Redeemed | 3 | — | 3 | |||||||||
Payable Upon Return of Securities Loaned(2) | 15,456 | 8,591 | 24,047 | |||||||||
Disbursements in Excess of Available Cash | 367 | — | 367 | |||||||||
Accrued Reorganization Cost | — | — | 50 | 50 | ||||||||
Accrued Directors’ Fees and Expenses | 4 | 4 | 8 | |||||||||
Accrued Compliance Expense | — | (3) | — | — | (3) | |||||||
Accrued Management Fees | 24 | 23 | 47 | |||||||||
Accrued Distribution Fees | — | 7 | 7 | |||||||||
Other Accrued Expenses | 77 | 50 | 127 | |||||||||
Total Liabilities | 16,280 | 9,794 | 26,124 | |||||||||
NET ASSETS | 57,088 | 44,530 | 101,568 | |||||||||
NET ASSETS CONSIST OF: | ||||||||||||
Paid-in Capital | 43,636 | 39,958 | 83,594 | |||||||||
Accumulated Net Realized Gain (Loss) on Investments | 1,288 | (1,699 | ) | (411 | ) | |||||||
Unrealized Appreciation of Investments | 12,105 | 6,205 | 18,310 | |||||||||
Undistributed Net Investment Income | 59 | 66 | 75 | |||||||||
NET ASSETS | 57,088 | 44,530 | 101,568 | |||||||||
NET ASSETS ATTRIBUTABLE TO: | ||||||||||||
I Class Share | 54,944 | 6,822 | 61,736 | |||||||||
N Class Share | 2,144 | 37,708 | 39,832 | |||||||||
K Class Share | — | (3) | ||||||||||
CAPITAL SHARES OUTSTANDING: | ||||||||||||
TCW Equities Fund | ||||||||||||
I Class Share | 3,814,948 | (3,814,948 | )(5) | — | ||||||||
N Class Share | 148,560 | (148,560 | )(6) | — | ||||||||
K Class Share | 12 | (12 | )(7) | |||||||||
TCW Focused Equities Fund | ||||||||||||
I Class Share | 449,798 | 3,621,939 | (5) | 4,071,737 | ||||||||
N Class Share | 2,493,620 | 141,754 | (6) | 2,635,374 | ||||||||
NET ASSET VALUE PER SHARE: | ||||||||||||
I Class Share | 14.40 | (4) | 15.17 | (4) | 15.16 | (4) | ||||||
N Class Share | 14.43 | (4) | 15.12 | (4) | 15.11 | (4) | ||||||
K Class Share | 16.07 | (4) | ||||||||||
(1) | The identified cost for the TCW Equities Fund, the TCW Focused Equities Fund and the Pro Forma TCW Focused Equities Fund at April 30, 2008 was $60,206, $47,383, and $77,589, respectively. |
(2) | The market value of securities lent for the TCW Equities Fund, the TCW Focused Equities Fund, and the Pro Forma TCW Focused Equities Fund at April 30, 2008 was $15,125, $8,410, and $23,535, respectively. |
(3) | Amount rounds to less than $1. |
(4) | Represents offering price and redemption price per share. |
(5) | Acquisition by TCW Focused Equities Fund I Class of all assets of TCW Equities Fund I Class and issuance of TCW Focused Equities Fund I Class shares in exchange for all of the outstanding shares of TCW Equities Fund I Class. |
(6) | Acquisition by TCW Focused Equities Fund N Class of all assets of TCW Equities Fund N Class and issuance of TCW Focused Equities Fund N Class shares in exchange for all of the outstanding shares of TCW Equities Fund N Class. |
(7) | All TCW Equities Fund K Class shares will be redeemed prior to reorganization. |
SAI-2
Table of Contents
TCW FOCUSED EQUITIES FUND
PRO FORMA
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED APRIL 30, 2008
TCW EQUITIES FUND (Acquired Fund) | TCW FOCUSED EQUITIES FUND (Acquiring Fund) | PRO FORMA ADJUSTMENTS | PRO FORMA COMBINED | |||||||||
(Dollar Amounts in Thousands) | ||||||||||||
INVESTMENT INCOME | ||||||||||||
Income: | 1,187 | (1) | 670 | (2) | — | 1,857 | ||||||
Dividends | 25 | 19 | — | 44 | ||||||||
Interest | 41 | (3) | 31 | (3) | — | 72 | ||||||
Net Security Lending Income | ||||||||||||
Total | 1,253 | 720 | — | 1,973 | ||||||||
Expenses: | ||||||||||||
Management Fees | 389 | 276 | 665 | |||||||||
Accounting Service Fees | 17 | 8 | (5 | )(5) | 20 | |||||||
Administration Fees | 35 | 15 | (12 | )(5) | 38 | |||||||
Administrative Service Fees | — | (4) | — | — | ||||||||
K Class | ||||||||||||
Transfer Agent Fees | ||||||||||||
I Class | 8 | 8 | 5 | (6) | 21 | |||||||
N Class | 9 | 14 | (5 | )(5) | 18 | |||||||
K Class | 6 | — | 6 | |||||||||
Custodian Fees | 19 | 21 | (17 | )(5) | 23 | |||||||
Professional Fees | 30 | 29 | (21 | )(5) | 38 | |||||||
Directors’ Fees and Expenses | 13 | 13 | (11 | )(5) | 15 | |||||||
Registration Fees: | ||||||||||||
I Class | 18 | 15 | (17 | )(5) | 16 | |||||||
N Class | 10 | 22 | (13 | )(5) | 19 | |||||||
K Class | 2 | — | (2 | )(5) | — | |||||||
Distribution Fees: | ||||||||||||
N Class | 9 | 88 | 97 | |||||||||
K Class | — | (4) | — | — | ||||||||
Compliance Expense | 2 | 2 | (1 | )(5) | 3 | |||||||
Other | 26 | 18 | (14 | )(5) | 30 | |||||||
Total | 593 | 529 | (99 | ) | 1,009 | |||||||
Less Expenses Borne by Investment Advisor and Distributor: | ||||||||||||
I Class | — | — | 47 | (8) | 47 | (8) | ||||||
N Class | 7 | — | (7 | )(7) | — | |||||||
K Class | 9 | — | (9 | )(7) | — | |||||||
Net Expenses | 577 | 529 | (83 | ) | 962 | |||||||
Net Investment Income | 676 | 191 | 83 | 1,011 | ||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||
Net Realized Gain (Loss) on Investments | 3,710 | (2,152 | ) | 1,558 | ||||||||
Change in Unrealized Appreciation (Depreciation) on Investments | (6,629 | ) | 1,611 | (5,018 | ) | |||||||
Net Realized and Unrealized Loss on Investments | (2,919 | ) | (541 | ) | — | (3,460 | ) | |||||
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | (2,243 | ) | (350 | ) | 83 | (2,449 | ) | |||||
(1) | Net of foreign taxes withheld of $7. |
(2) | Net of foreign taxes withheld of $5. |
(3) | Net of broker fees. |
(4) | Amount rounds to less than $1. |
(5) | Decrease due to the elimination of duplicative expenses achieved by merging the funds. |
(6) | Transfer agent fees for I Class is expected to increase based on combined activity. |
(7) | Combined expenses with respect to combined net assets would have brought the expense ratio under the expense cap for the twelve months ended April 30, 2008. |
(8) | The Advisor will contractually limit the operating expenses at the lower, pre-merger expense ratios for each class. Therefore Class I shares will be limited to 0.82% of net assets. The expense limitation will continue for one year from the date of the Reorganization. The expenses may increase after the expiration of the contractual expense cap ends on or after September 30, 2009 unless the Advisor chooses to extend the term of the cap. If the term of the cap is not extended, the Advisor has agreed to reduce its investment advisory fee or to pay the operating expenses of the Fund to the extent necessary to limit the Fund’s operating expenses to an amount not to exceed the trailing monthly expense ratio average for comparable funds as calculated by Lipper Inc. |
SAI-3
Table of Contents
TCW FOCUSED EQUITIES FUND
PRO FORMA
SCHEDULE OF INVESTMENTS (UNAUDITED)
AS OF APRIL 30, 2008
Number of Shares | Footnote | Cost | Value | Pro Forma Combined Percentage of Net Assets | |||||||||||||||||||||||||
TCW | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | |||||||||||||||||||||
Common Stock | |||||||||||||||||||||||||||||
Aerospace & Defense | |||||||||||||||||||||||||||||
26,610 | 25,800 | 52,410 | Honeywell International, Inc. | $ | 1,228,059 | $ | 1,123,349 | $ | 2,351,408 | $ | 1,580,634 | $ | 1,532,520 | $ | 3,113,154 | ||||||||||||||
15,065 | 17,600 | 32,665 | Lockheed Martin Corp. | 1,036,977 | 1,514,679 | 2,551,656 | 1,597,493 | 1,866,304 | 3,463,797 | ||||||||||||||||||||
6,240 | 6,105 | 12,345 | Northrop Grumman Corp. | (1) | 338,182 | 353,179 | 691,361 | 459,077 | 449,145 | 908,222 | |||||||||||||||||||
3,940 | 6,060 | 10,000 | Precision Castparts Corp. | 468,986 | 721,318 | 1,190,304 | 463,186 | 712,413 | 1,175,599 | ||||||||||||||||||||
11,900 | 11,900 | United Technologies Corp. | (4) | 856,799 | 856,799 | 862,393 | 862,393 | ||||||||||||||||||||||
Total Aerospace & Defense | 3,929,003 | 3,712,525 | 7,641,528 | 4,962,783 | 4,560,382 | 9,523,165 | 9.4 | % | |||||||||||||||||||||
Air Freight & Logistics | |||||||||||||||||||||||||||||
11,815 | 11,815 | FedEx Corp. | (1) | 1,215,843 | 1,215,843 | 1,132,704 | 1,132,704 | ||||||||||||||||||||||
11,912 | 11,912 | United Parcel Service, Inc. | (4) | 882,839 | 882,839 | 862,548 | 862,548 | ||||||||||||||||||||||
Total Air Freight & Logistics | 2,098,682 | 2,098,682 | 1,995,252 | 1,995,252 | 2.0 | % | |||||||||||||||||||||||
Biotechnology | |||||||||||||||||||||||||||||
14,815 | 14,300 | 29,115 | Genzyme Corp. | (2) | 1,054,237 | 1,056,496 | 2,110,733 | 1,042,235 | 1,006,005 | 2,048,240 | |||||||||||||||||||
Total Biotechnology | 1,054,237 | 1,056,496 | 2,110,733 | 1,042,235 | 1,006,005 | 2,048,240 | 2.0 | % | |||||||||||||||||||||
Capital Markets | |||||||||||||||||||||||||||||
27,230 | 27,230 | Charles Schwab Corp. (The) | (4) | 440,148 | 440,148 | 588,168 | 588,168 | ||||||||||||||||||||||
4,914 | 3,865 | 8,779 | Goldman Sachs Group, Inc. | 546,781 | 676,735 | 1,223,516 | 940,392 | 739,645 | 1,680,037 | ||||||||||||||||||||
20,435 | 18,700 | 39,135 | Lehman Brothers Holdings, Inc. | (1) | 1,077,991 | 993,497 | 2,071,488 | 904,045 | 827,288 | 1,731,333 | |||||||||||||||||||
23,200 | 23,200 | Morgan Stanley | (1), (4) | 1,070,186 | 1,070,186 | 1,127,520 | 1,127,520 | ||||||||||||||||||||||
Total Capital Markets | 3,135,106 | 1,670,232 | 4,805,338 | 3,560,125 | 1,566,933 | 5,127,058 | 5.0 | % | |||||||||||||||||||||
Chemicals | |||||||||||||||||||||||||||||
15,365 | 9,965 | 25,330 | Air Products & Chemicals, Inc. | (1) | 768,905 | 618,385 | 1,387,290 | 1,512,377 | 980,855 | 2,493,232 | |||||||||||||||||||
27,112 | 30,475 | 57,587 | Ecolab, Inc. | (1) | 814,282 | 1,142,091 | 1,956,373 | 1,246,068 | 1,400,631 | 2,646,699 | |||||||||||||||||||
5,450 | 5,450 | Praxair, Inc. | (4) | 97,995 | 97,995 | 497,639 | 497,639 | ||||||||||||||||||||||
Total Chemicals | 1,681,182 | 1,760,476 | 3,441,658 | 3,256,084 | 2,381,486 | 5,637,570 | 5.5 | % | |||||||||||||||||||||
Commercial Banks | |||||||||||||||||||||||||||||
59,567 | 46,825 | 106,392 | Wells Fargo & Co. | (1) | 1,462,379 | 1,458,563 | 2,920,942 | 1,772,118 | 1,393,044 | 3,165,162 | |||||||||||||||||||
Total Commercial Banks | 1,462,379 | 1,458,563 | 2,920,942 | 1,772,118 | 1,393,044 | 3,165,162 | 3.1 | % |
SAI-4
Table of Contents
Number of Shares | Footnote | Cost | Value | Pro Forma Combined Percentage of Net Assets | |||||||||||||||||||
TCW | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | |||||||||||||||
Commercial Services & Supplies | |||||||||||||||||||||||
29,500 | 27,400 | 56,900 | Waste Management, Inc. | 1,121,494 | 1,020,950 | 2,142,444 | 1,064,950 | 989,140 | 2,054,090 | ||||||||||||||
Total Commercial Services & Supplies | 1,121,494 | 1,020,950 | 2,142,444 | 1,064,950 | 989,140 | 2,054,090 | 2.0 | % | |||||||||||||||
Communications Equipment | |||||||||||||||||||||||
19,100 | 19,100 | Corning, Inc. | (4) | 389,610 | 389,610 | 510,161 | 510,161 | ||||||||||||||||
37,000 | 37,800 | 74,800 | Nokia Oyj | 849,956 | 1,005,110 | 1,855,066 | 1,112,590 | 1,136,646 | 2,249,236 | ||||||||||||||
Total Communications Equipment | 1,239,566 | 1,005,110 | 2,244,676 | 1,622,751 | 1,136,646 | 2,759,397 | 2.7 | % | |||||||||||||||
Diversified Financial Services | |||||||||||||||||||||||
30,787 | 29,850 | 60,637 | Citigroup, Inc. | (1), (4) | 1,374,090 | 1,362,162 | 2,736,252 | 777,988 | 754,310 | 1,532,298 | |||||||||||||
48,908 | 43,125 | 92,033 | JPMorgan Chase & Co. | 1,900,311 | 1,891,447 | 3,791,758 | 2,330,466 | 2,054,906 | 4,385,372 | ||||||||||||||
Total Diversified Financial Services | 3,274,401 | 3,253,609 | 6,528,010 | 3,108,454 | 2,809,216 | 5,917,670 | 5.8 | % | |||||||||||||||
Electric Utilities | |||||||||||||||||||||||
11,080 | 14,665 | 25,745 | Exelon Corp. | 552,026 | 827,300 | 1,379,326 | 947,118 | 1,253,564 | 2,200,682 | ||||||||||||||
Total Electric Utilities | 552,026 | 827,300 | 1,379,326 | 947,118 | 1,253,564 | 2,200,682 | 2.2 | % | |||||||||||||||
Electrical Equipment | |||||||||||||||||||||||
18,880 | 15,825 | 34,705 | Emerson Electric Co. | 638,654 | 650,929 | 1,289,583 | 986,669 | 827,015 | 1,813,684 | ||||||||||||||
Total Electrical Equipment | 638,654 | 650,929 | 1,289,583 | 986,669 | 827,015 | 1,813,684 | 1.8 | % | |||||||||||||||
Energy Equipment & Services | |||||||||||||||||||||||
13,350 | 13,350 | Baker Hughes, Inc. | (1), (4) | 877,458 | 877,458 | 1,079,748 | 1,079,748 | ||||||||||||||||
39,785 | 42,460 | 82,245 | Halliburton Co. | (1) | 687,498 | 1,345,348 | 2,032,846 | 1,826,529 | 1,949,339 | 3,775,868 | |||||||||||||
4,420 | 8,575 | 12,995 | Noble Corp. | 157,012 | 272,263 | 429,275 | 248,758 | 482,601 | 731,359 | ||||||||||||||
17,260 | 20,235 | 37,495 | Schlumberger, Ltd. | 916,920 | 1,322,199 | 2,239,119 | 1,735,493 | 2,034,629 | 3,770,122 | ||||||||||||||
8,262 | 9,553 | 17,815 | Transocean, Inc. | (1), (2) | 222,531 | 666,081 | 888,612 | 1,218,314 | 1,408,685 | 2,626,999 | |||||||||||||
14,800 | 20,800 | 35,600 | Weatherford International, Ltd. | (1), (2) | 923,482 | 1,322,901 | 2,246,383 | 1,193,916 | 1,677,936 | 2,871,852 | |||||||||||||
Total Energy Equipment & Services | 3,784,901 | 4,928,792 | 8,713,693 | 7,302,758 | 7,553,190 | 14,855,948 | 14.6 | % | |||||||||||||||
Food & Staples Retailing | |||||||||||||||||||||||
4,775 | 4,775 | Costco Wholesale Corp. | (4) | 160,343 | 160,343 | 340,219 | 340,219 | ||||||||||||||||
Total Food & Staples Retailing | 160,343 | 160,343 | 340,219 | 340,219 | 0.3 | % | |||||||||||||||||
Food Products | |||||||||||||||||||||||
32,200 | 32,200 | ConAgra Foods, Inc. | 802,432 | 802,432 | 758,632 | 758,632 | |||||||||||||||||
Total Food Products | 802,432 | 802,432 | 758,632 | 758,632 | 0.7 | % |
SAI-5
Table of Contents
Number of Shares | Footnote | Cost | Value | Pro Forma Combined Percentage of Net Assets | |||||||||||||||||||
TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | |||||||||||||||
Health Care Providers & Services | |||||||||||||||||||||||
24,600 | 26,300 | 50,900 | Cardinal Health, Inc. | 1,586,807 | 1,730,752 | 3,317,559 | 1,280,922 | 1,369,441 | 2,650,363 | ||||||||||||||
25,575 | 24,090 | 49,665 | McKesson Corp. | (1) | 1,288,051 | 1,344,303 | 2,632,354 | 1,332,969 | 1,255,571 | 2,588,540 | |||||||||||||
Total Health Care Providers & Services | 2,874,858 | 3,075,055 | 5,949,913 | 2,613,891 | 2,625,012 | 5,238,903 | 5.2 | % | |||||||||||||||
Household Products | |||||||||||||||||||||||
35,600 | 32,600 | 68,200 | Procter & Gamble Co. (The) | 2,264,112 | 2,079,621 | 4,343,733 | 2,386,980 | 2,185,830 | 4,572,810 | ||||||||||||||
Total Household Products | 2,264,112 | 2,079,621 | 4,343,733 | 2,386,980 | 2,185,830 | 4,572,810 | 4.5 | % | |||||||||||||||
Insurance | |||||||||||||||||||||||
7,375 | 7,375 | Allstate Corp. | (4) | 328,275 | 328,275 | 371,405 | 371,405 | ||||||||||||||||
17,800 | 13,850 | 31,650 | American International Group, Inc. | 1,078,401 | 866,255 | 1,944,656 | 822,360 | 639,870 | 1,462,230 | ||||||||||||||
3,650 | 3,650 | Hartford Financial Services Group | (4) | 243,726 | 243,726 | 260,135 | 260,135 | ||||||||||||||||
Total Insurance | 1,650,402 | 866,255 | 2,516,657 | 1,453,900 | 639,870 | 2,093,770 | 2.1 | % | |||||||||||||||
Machinery | |||||||||||||||||||||||
22,485 | 16,650 | 39,135 | Danaher Corp. | (1) | 1,009,376 | 1,013,384 | 2,022,760 | 1,754,280 | 1,299,033 | 3,053,313 | |||||||||||||
12,915 | 15,795 | 28,710 | Flowserve Corp. | 909,370 | 1,169,363 | 2,078,733 | 1,602,622 | 1,960,002 | 3,562,624 | ||||||||||||||
Total Machinery | 1,918,746 | 2,182,747 | 4,101,493 | 3,356,902 | 3,259,035 | 6,615,937 | 6.5 | % | |||||||||||||||
Metals & Mining | |||||||||||||||||||||||
9,100 | 9,100 | Allegheny Technologies, Inc. | (1), (4) | 907,435 | 907,435 | 626,353 | 626,353 | ||||||||||||||||
6,000 | 6,000 | Freeport-McMoRan Copper & Gold, Inc. | (1), (4) | 554,964 | 554,964 | 682,500 | 682,500 | ||||||||||||||||
Total Metals & Mining | 1,462,399 | 1,462,399 | 1,308,853 | 1,308,853 | 1.3 | % | |||||||||||||||||
Multiline Retail | |||||||||||||||||||||||
23,430 | 24,705 | 48,135 | Kohl’s Corp. | (1), (2) | 1,061,937 | 1,161,657 | 2,223,594 | 1,144,556 | 1,206,839 | 2,351,395 | |||||||||||||
Total Multiline Retail | 1,061,937 | 1,161,657 | 2,223,594 | 1,144,556 | 1,206,839 | 2,351,395 | 2.3 | % | |||||||||||||||
Oil, Gas & Consumable Fuels | |||||||||||||||||||||||
5,000 | 10,000 | 15,000 | Apache Corp. | 213,621 | 682,546 | 896,167 | 673,400 | 1,346,800 | 2,020,200 | ||||||||||||||
30,571 | 17,840 | 48,411 | Exxon Mobil Corp. | (1) | 1,170,949 | 1,123,276 | 2,294,225 | 2,845,243 | 1,660,369 | 4,505,612 | |||||||||||||
8,770 | 8,770 | Peabody Energy Corp. | (1), (4) | 88,270 | 88,270 | 536,110 | 536,110 | ||||||||||||||||
11,815 | 11,815 | Valero Energy Corp. | (1) | 689,721 | 689,721 | 577,163 | 577,163 | ||||||||||||||||
Total Oil, Gas & Consumable Fuels | 2,162,561 | 1,805,822 | 3,968,383 | 4,631,916 | 3,007,169 | 7,639,085 | 7.5 | % |
SAI-6
Table of Contents
Number of Shares | Footnote | Cost | Value | Pro Forma Combined Percentage of Net Assets | ||||||||||||||||||||||||||||
TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | TCW Equities Fund | TCW Focused Equities Fund | Pro Forma Combined | ||||||||||||||||||||||||
Pharmaceuticals | ||||||||||||||||||||||||||||||||
19,900 | 23,800 | 43,700 | Johnson & Johnson | 1,300,414 | 1,552,480 | 2,852,894 | 1,335,091 | 1,596,742 | 2,931,833 | |||||||||||||||||||||||
Total Pharmaceuticals | 1,300,414 | 1,552,480 | 2,852,894 | 1,335,091 | 1,596,742 | 2,931,833 | 2.9 | % | ||||||||||||||||||||||||
Road & Rail | ||||||||||||||||||||||||||||||||
8,900 | 8,900 | CSX Corp. | (1), (4) | 247,502 | 247,502 | 560,255 | 560,255 | |||||||||||||||||||||||||
18,650 | 21,585 | 40,235 | Norfolk Southern Corp. | (1) | 622,298 | 1,040,853 | 1,663,151 | 1,111,167 | 1,286,034 | 2,397,201 | ||||||||||||||||||||||
Total Road & Rail | 869,800 | 1,040,853 | 1,910,653 | 1,671,422 | 1,286,034 | 2,957,456 | 2.9 | % | ||||||||||||||||||||||||
Semiconductors & Semiconductor Equipment | ||||||||||||||||||||||||||||||||
31,090 | 42,215 | 73,305 | Microchip Technology, Inc. | (1) | 1,103,686 | 1,524,748 | 2,628,434 | 1,142,557 | 1,551,401 | 2,693,958 | ||||||||||||||||||||||
48,505 | 46,580 | 95,085 | Texas Instruments, Inc. | (1) | 1,402,157 | 1,353,810 | 2,755,967 | 1,414,406 | 1,358,273 | 2,772,679 | ||||||||||||||||||||||
Total Semiconductors & Semiconductor Equipment | 2,505,843 | 2,878,558 | 5,384,401 | 2,556,963 | 2,909,674 | 5,466,637 | 5.4 | % | ||||||||||||||||||||||||
Specialty Retail | ||||||||||||||||||||||||||||||||
6,235 | 6,235 | Best Buy Co., Inc. | (1) | 255,432 | 255,432 | 268,230 | 268,230 | |||||||||||||||||||||||||
29,600 | 29,600 | Lowe’s Companies, Inc. | (1), (4) | 896,066 | 896,066 | 745,624 | 745,624 | |||||||||||||||||||||||||
20,500 | 20,500 | TJX Companies, Inc. (The) | (1), (4) | 592,727 | 592,727 | 660,510 | 660,510 | |||||||||||||||||||||||||
Total Specialty Retail | 1,744,225 | 1,744,225 | 1,674,364 | 1,674,364 | 1.6 | % | ||||||||||||||||||||||||||
Total Common Stock | 44,749,703 | 37,988,030 | 82,737,733 | 56,854,986 | 44,192,826 | 101,047,812 | 99.4 | % | ||||||||||||||||||||||||
Short-Term Investments | ||||||||||||||||||||||||||||||||
Money Market Investments | ||||||||||||||||||||||||||||||||
15,456,037 | 8,590,561 | 24,046,598 | State Street Navigator Securities Lending Trust, 2.79% | (3) | 15,456,037 | 8,590,561 | 24,046,598 | 15,456,037 | 8,590,561 | 24,046,598 | ||||||||||||||||||||||
Total Money Market Investments | ||||||||||||||||||||||||||||||||
Principal Amount | ||||||||||||||||||||||||||||||||
Other Short Term Investments | ||||||||||||||||||||||||||||||||
804,846 | 804,846 | State Street Bank & Trust Depository Reserve, 1.1% | 804,846 | 804,846 | 804,846 | 804,846 | ||||||||||||||||||||||||||
Total Short-Term Investments | 15,456,037 | 9,395,407 | 24,851,444 | 15,456,037 | 9,395,407 | 24,851,444 | 24.5 | % | ||||||||||||||||||||||||
Total Investments | $ | 60,205,740 | $ | 47,383,437 | $ | 107,589,177 | 72,311,023 | 53,588,233 | 125,899,256 | 123.9 | % | |||||||||||||||||||||
Liabilities in Excess of Other Assets | (15,222,687 | ) | (9,058,450 | ) | (24,281,137 | ) | -23.9 | % | ||||||||||||||||||||||||
Net Assets | $ | 57,088,336 | $ | 44,529,783 | $ | 101,618,119 | 100.0 | % |
Footnotes:
(1) | Security partially or fully lent. |
(2) | Non-income producing security. |
(3) | Represents investment of security lending collateral. |
(4) | Securities to be sold upon on or about the date of the Reorganization. |
SAI-7
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Combined Focused Equities Fund
Notes to Pro Form Financial Statements
(Unaudited)
Note 1 — Basis of Combination
The unaudited Pro Forma Combining Schedule of Investments, Pro Forma Combining Statements of Assets and Liabilities and Pro Forma Combining Statement of Operations reflect the accounts of the Equities Fund and Focused Equities Fund (the “Funds”) as of and for the period ended April 30, 2008. These statements have been derived from the Funds’ books and records utilized in calculated daily net asset value at April 30, 2008.
The pro forma statements give effect to the proposed transfer of assets and assumption of liabilities of the Equities Fund in exchange for shares of the Focused Equities Fund. In accordance with accounting principles generally accepted in the United States, the historical cost of investment securities will be carried forward to the surviving entity and the results of operations for pre-combination periods for the Equities Fund will not be restated. The pro forma statements do not reflect the expenses of either fund in carrying out its obligation under the Agreement and Plan of Reorganization.
The Pro Forma Combining Schedule of Investments, Pro Forma Combining Statements of Assets and Liabilities and Pro Forma Combining Statement of Operations should be read in conjunction with the historical financial statements of the Funds incorporated by reference in the Statement of Additional Information.
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.
Security Valuations: 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.
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.
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Security Lending: The Funds may lend their securities to qualified brokers. The loans are collateralized at all times with cash or other money market instruments or U.S. Government 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 earn additional income for lending their securities by investing the cash collateral in short-term investments. See Note 3.
Note 3 — Security Lending
The Funds listed below have outstanding securities on loan at April 30, 2008. The loans were collateralized with cash which were invested in short-term instruments (amounts in thousands).
Market Value of Loaned Securities | Collateral Value | |||||
TCW Equities Fund | $ | 15,125 | $ | 15,456 | ||
TCW Focused Equities Fund | 8,410 | 8,591 |
Note 4 — Federal Income Taxes
Each fund has elected to be taxed as a “regulated investment company” under the Internal Revenue Code. After the acquisition, the Focused Equities Fund intends to continue to qualify as a regulated investment company, if such qualification is in the best interests of its shareholders, by complying with the provisions available to certain investment companies, as defined in applicable sections of the Internal Revenue Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal income taxes.
The identified cost of investments for the funds is substantially the same for both financial accounting and Federal income tax purposes. The tax cost of investments will remain unchanged for the combined fund.
Note 5 — Restricted Securities
The Funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. There are no restricted securities (excluding 144A issues) at April 30, 2008.
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PART C
Other Information
Item 15. | Indemnification |
Under Article Eighth, Section (9) of the Articles of Incorporation of TCW Funds, Inc. (the “Registrant”), directors and officers of the Registrant will be indemnified, and will be advanced expenses, to the fullest extent permitted by Maryland law, but not in violation of Section 17(i) of the Investment Company Act of 1940. Such indemnification rights are also limited by Article 9.01 of the Registrant’s Bylaws.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in a successful defense of any action, suit or proceeding or payment pursuant to any insurance policy) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
Item 16. | Exhibits |
(1)(a) | Form of Articles of Incorporation. — /1/, /17/ | |
(1)(b) | Form of Articles of Amendment. — /2/, /17/ | |
(1)(c) | Form of Articles Supplementary. — /3/, /17/ | |
(1)(d) | Form of Articles Supplementary. — /4/, /17/ | |
(1)(e) | Form of Articles Supplementary. — /5/, /17/ | |
(1)(f) | Form of Articles of Amendment. — /6/ | |
(1)(g) | Form of Articles of Amendment. — /9/ | |
(1)(h) | Form of Articles of Amendment. — /9/ | |
(1)(i) | Form of Articles Supplementary. — /9/ |
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(1)(j) | Form of Articles Supplementary. — /12/ | |
(1)(k) | Form of Articles Supplementary. — /14/ | |
(1)(l) | Form of Articles of Amendment. — /14/ | |
(1)(m) | Form of Articles Supplementary. — /15/ | |
(1)(n) | Form of Articles of Amendment. — /16/ | |
(1)(o) | Form of Articles of Amendment. — /18/ | |
(1)(p) | Form of Articles of Amendment. — /19/ | |
(1)(q) | Form of Articles Supplementary. — /20/ | |
(1)(r) | Form of Articles of Amendment. — /20/ | |
(1)(s) | Form of Articles of Amendment. — /21/ | |
(1)(t) | Form of Articles Supplementary. — /22/ | |
(1)(u) | Form of Articles Supplementary. — /24/ | |
(1)(v) | Form of Articles Supplementary. — /26/ | |
(1)(w) | Form of Articles of Amendment. — /27/ | |
(1)(x) | Form of Articles Supplementary. — /29/ | |
(1)(y) | Form of Articles of Amendment. — /30/ | |
(1)(z) | Form of Articles of Amendment. — /31/ | |
(1)(aa) | Form of Articles of Amendment. — /32/ | |
(1)(bb) | Form of Articles Supplementary. — /32/ | |
(2)(a) | Bylaws. — /1/, /17/ | |
(2)(b) | Amendment No. 1 to By-laws. — /11/ | |
(2)(c) | Amendment No. 2 to By-laws. — /17/ | |
(2)(d) | Amendment No. 3 to By-laws. — /23/ |
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(3) | Not Applicable. | |
(4) | Form of Agreement and Plan of Reorganization between the Equities Fund and the Focused Equities Fund. — /34/ | |
(5) | No other than as set forth in Exhibits 1 and 2. | |
(6)(a) | Form of Amended and Restated Investment Advisory and Management Agreement between the Registrant and TCW Funds Management, Inc. — /9/ | |
(6)(b) | Form of Amendment No. 1 to Amended and Restated Investment Advisory and Management Agreement between the Registrant and TCW Investment Management Company (previously named TCW Funds Management, Inc.). — /12/ | |
(6)(c) | Form of Sub-Advisory Agreement between TCW Funds Management, Inc. and TCW London International, Limited. — /7/ | |
(6)(d) | Form of Addendum to Sub-Advisory Agreement between TCW Funds Management, Inc. and TCW London International Limited. — /8/ | |
(6)(e) | Form of Amendment No. 1 to Sub-Advisory Agreement between TCW Funds Management, Inc. and TCW London International Limited. — /11/ | |
(6)(f) | Form of Investment Advisory and Management Agreement between the Registrant and TCW Investment Management Company (previously named TCW Funds Management, Inc.). — /14/ | |
(6)(g) | Form of Amendment No. 1 to Investment Advisory and Management Agreement between the Registrant and TCW Investment Management Company. — /17/ | |
(6)(h) | Form of Sub-Advisory Agreement between TCW Investment Management Company and Société Générale Asset Management International Ltd. — /19/ | |
(6)(i) | Form of Sub-Advisory Agreement between TCW Investment Management Company and SGY Asset Management (Singapore) Ltd. — /19/ | |
(6)(j) | Form of Amendment No. 2 to Investment Advisory and Management Agreement between the Registrant and TCW Investment Management Company. — /20/ | |
(6)(k) | Form of Amendment No. 3 to Investment Advisory and Management Agreement between the Registrant and TCW Investment Management Company. — /22/ | |
(6)(l) | Form of Amendment No. 4 to Investment Advisory and Management Agreement between the Registrant and TCW Investment Management Company. — /26/ |
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(6)(m) | Form of Amendment No. 5 to Investment Advisory and Management Agreement between Registrant and TCW Investment Management Company - /29/ | |
(6)(n) | Form of Amendment No. 6 to Investment Advisory and Management Agreement between Registrant and TCW Investment Management Company - /30/ | |
(6)(o) | Form of Amendment No. 7 to Investment Advisory and Management Agreement between Registrant and TCW Investment Management Company – /33/ | |
(7)(a) | Form of Amended and Restated Distribution Agreement between the Registrant and TCW Brokerage Services. — /9/ | |
(7)(b) | Form of Dealer Agreement. — /21/ | |
(8) | Not Applicable. | |
(9)(a) | Form of Custodian Agreement between the Registrant and Investors Bank & Trust Company. — /9/ | |
(9)(a)(1) | Form of Amendment No. 1 to Appendix A to the Custodian Agreement between the Registrant and Investors Bank and Trust Company. — /17/ | |
(9)(b) | Form of Custodian Agreement between the Registrant and Investors Bank and Trust Company. — /32/ | |
(9)(c) | Form of Delegation Agreement between the Registrant and Investors Bank & Trust Company. — /9/ | |
(10)(a) | Form of the Registrant’s Class N Shares Distribution Plan. — /9/ | |
(10)(b) | Form of Amended and Restated Plan Pursuant to Rule 18f-3. — /17/ | |
(11) | Opinion and Consent of Counsel. — /34/ | |
(12) | Form of Opinion and Consent of Counsel supporting tax matters and consequences. — /34/ | |
(13)(a) | Form of Transfer Agency Services Agreement between Registrant and U.S. Bancorp Fund Services, LLC — /26/ | |
(13)(b) | Form of Administration Agreement between the Registrant and Investors Bank & Trust Company. — /9/ | |
(13)(b)(1) | Form of Amendment No. 1 to Appendix A to the Administration Agreement between the Registrant and Investors Bank & Trust Company. — /16/ |
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(13)(c) | Form of Administration Agreement between the Registrant and Investors Bank & Trust Company. — /32/ | |
(13)(d) | Form of Securities Lending Agency Agreement between the Registrant and Investors Bank & Trust Company. — /9/ | |
(13)(d)(1) | Form of Amendment No. 1 to Schedule A to the Securities Lending Agency Agreement between the Registrant and Investors Bank & Trust Company. —/17/ | |
(13)(d)(2) | Form of Amendment Agreement to the Securities Lending Agency Agreement between the Registrant and Investors Bank & Trust Company. — /32/ | |
(13)(e) | Expense Limitation Letter from TCW Investment Management Company to the Board of Directors. — /35/ | |
(13)(e)(1) | Amended Expense Limitation Letter from TCW Investment Management Company to the Board of Directors. | |
(14) | Consent of Deloitte & Touche LLP. — /34/ | |
(15) | None | |
(16) | Power of Attorney for Marc I. Stern filed herein; other Powers of Attorney. — /35/ | |
(17) | None. |
1. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on September 22, 1992. |
2. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on November 26, 1993. |
3. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on March 23, 1994. |
4. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on August 18, 1994. |
5. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on April 21, 1995. |
6. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed April 2, 1998. |
7. | Incorporated herein by reference to the Registrant’s Registration Statement filed on December 21, 1995. |
8. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on October 31, 1997. |
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9. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on December 30, 1998. |
10. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on March 1, 1999. |
11. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on February 29, 2000. |
12. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on August 17, 2000. |
13. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on December 15, 2000. |
14. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on March 1, 2001. |
15. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on June 6, 2001. |
16. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on August 27, 2001. |
17. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on November 15, 2001. |
18. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on July 12, 2002. |
19. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on February 28, 2003. |
20. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on December 17, 2003. |
21. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on March 1, 2004. |
22. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on July 30, 2004. |
23. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on November 1, 2004. |
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24. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on December 23, 2004. |
25. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on February 24, 2005. |
26. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on November 23, 2005. |
27. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on December 23, 2005. |
28. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on February 27, 2006. |
29. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on June 8, 2006. |
30. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on December 21, 2006. |
31. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on February 28, 2007. |
32. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on October 15, 2007. |
33. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-1A filed on February 29, 2008. |
34. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-14 filed on May 30, 2008. |
35. | Incorporated herein by reference to the Registrant’s Registration Statement on Form N-14A filed on July 3, 2008. |
Item 17. | Undertakings |
(1) The undersigned Registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, as amended, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the Securities Act of 1933, as amended, each post-effective amendment shall be deemed to be a new registration
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statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees to file in a Post-Effective Amendment to this Registration Statement a final tax opinion upon the closing of the transaction.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement on Form N-14 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles and the State of California on the 15th day of July, 2008.
TCW Funds, Inc. | ||
By: | /s/ Philip K. Holl | |
Philip K. Holl | ||
Secretary |
Pursuant to the Requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
SIGNATURE | TITLE | DATE | ||
* | July 15, 2008 | |||
Patrick C. Haden | Chairman and Director | |||
* | July 15, 2008 | |||
Samuel P. Bell | Director | |||
* | July 15, 2008 | |||
Thomas E. Larkin, Jr. | Director | |||
* | July 15, 2008 | |||
John A. Gavin | Director | |||
* | July 15, 2008 | |||
Marc I. Stern | Director | |||
* | July 15, 2008 | |||
Richard W. Call | Director | |||
* | July 15, 2008 | |||
Matthew K. Fong | Director | |||
* | July 15, 2008 | |||
Charles A. Parker | Director |
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/s/ David S. DeVito | July 15, 2008 | |||
David S. DeVito | Treasurer (Principal Financial and Accounting Officer) | |||
/s/ William C. Sonneborn | July 15, 2008 | |||
William C. Sonneborn | President (Principal Executive Officer) |
*By: | /s/ Philip K. Holl | |||
Philip K. Holl | ||||
Attorney-in-Fact |
PART C-10