As filed with the Securities and Exchange Commission on May 2, 2001
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Registration No. 33
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment [ ]
Post-Effective Amendment [ ]
TCW Galileo Emerging Markets Equities Fund, Inc.
(exact name of registrant as specified in the charter)
865 South Figueroa Street, Suite 1800
Los Angeles, California 90017
(213) 244-0000
(Registrant's telephone number including area code)
Philip K. Holl
Secretary
865 South Figueroa Street, Suite 1800
Los Angeles, California 90017
with copies to:
Robert Helm, Esquire
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
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Approximate date of Proposed Public Offering:
As soon as practicable after this Registration Statement goes effective
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It is proposed that this filing will become effective on June 1, 2001
pursuant to Rule 488 under the Securities Act of 1933
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No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
TCW Galileo Latin America Equities Fund
865 South Figueroa Street
Suite 1800
Los Angeles, CA 90017
1-800-FUND-TCW
[DATE]
Dear Shareholder:
Your Board of Directors has called a Special Meeting of Shareholders of
the TCW Galileo Latin America Equities Fund of TCW Galileo Funds, Inc. scheduled
to be held at 8:30 a.m., local time, on July 18, 2001 at 865 South Figueroa
Street, Suite 1800, Los Angeles, California 90017.
The Board of Directors of the TCW Galileo Funds, on behalf of the TCW
Galileo Latin America Equity Fund ("Latin America Equities Fund") has approved a
reorganization of the Latin America Equities Fund, into TCW Galileo Emerging
Markets Equities Fund ("Emerging Markets Equities Fund"), each a series of the
TCW Galileo Funds, Inc. (the "Reorganization") and managed by TCW Investment
Management Company. If approved by shareholders, you would become a shareholder
of the Emerging Markets Equities Fund on the date that the Reorganization
occurs. The Emerging Markets Equities Fund has investment objectives that are
identical and investment policies that are similar in many respects to those of
the Latin America Equities Fund, and the Reorganization is expected to result in
operating expenses that are lower for shareholders.
You are being asked to vote to approve an Agreement and Plan of
Reorganization. The accompanying document describes the proposed transaction and
compares the policies and expenses of each of the funds for your evaluation.
After careful consideration, the Board of Directors of TCW Galileo Funds,
Inc. unanimously approved this proposal and recommended shareholders vote "FOR"
the proposal.
A Proxy Statement/Prospectus that describes the Reorganization is
enclosed. We urge you to vote your shares by completing and returning the
enclosed proxy card in the envelope provided at your earliest convenience.
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 Proxy Statement/Prospectus
and cast your vote. It is important that your vote be received no later than
[INSERT DATE].
Proxy solicitations will be made by mail, and may also be made by personal
interview, telephone, and facsimile transmission on behalf of the Latin America
Equities Fund by its directors and officers.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
Alvin R. Albe, Jr.
President
TCW Galileo Latin America Equities Fund
865 South Figueroa Street
Suite 1800
Los Angeles, CA 90017
1-800-FUND-TCW
Notice of Special Meeting of Shareholders of
TCW Galileo Latin America Equities Fund
Scheduled For July 18, 2001
To the Shareholders:
A Special Meeting of Shareholders of the TCW Galileo Latin America
Equities Fund ("Special Meeting") is scheduled for July 18, 2001 at 8:30 a.m.
local time, at 865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017.
The purposes of the Special Meeting of the TCW Galileo Latin America
Equities Fund are as follows:
1. To approve an Agreement and Plan of Reorganization providing for the
acquisition of all of the assets and liabilities of the TCW Galileo
Latin America Equities Fund by TCW Galileo Emerging Markets Equities
Fund in exchange for Class I shares of TCW Galileo Emerging Markets
Fund and the subsequent liquidation of the TCW Galileo Latin America
Equities Fund; and
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 25, 2001 are
entitled to notice of, and to vote at, the meeting. Your attention is called to
the accompanying Proxy Statement/Prospectus. Regardless of whether you plan to
attend the meeting, please complete, sign and return promptly 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
Philip K. Holl
Secretary
[DATE]
TABLE OF CONTENTS
Page
INTRODUCTION.................................................................1
SUMMARY......................................................................2
INVESTMENT OBJECTIVES AND POLICIES...........................................4
Comparison of Investment Objectives and Strategies........................4
Comparison of Portfolio Characteristics...................................5
Relative Performance......................................................6
Comparison of Investment Techniques and Risks of the Funds................6
COMPARISON OF FEES AND EXPENSES.............................................10
ADDITIONAL INFORMATION ABOUT EMERGING MARKETS EQUITIES FUND.................11
Investment Personnel.....................................................11
Performance of Emerging Markets Equities Fund............................11
ADDITIONAL INFORMATION ABOUT LATIN AMERICA EQUITIES FUND....................13
Investment Personnel.....................................................13
Performance of Emerging Markets Equities Fund............................13
INFORMATION ABOUT THE REORGANIZATION........................................15
ADDITIONAL INFORMATION ABOUT THE FUNDS......................................16
GENERAL INFORMATION ABOUT THE PROXY STATEMENT...............................17
Solicitation of Proxies..................................................17
Voting Rights............................................................17
Other Matters to Come Before the Special Meeting.........................18
Shareholder Proposals....................................................18
Reports to Shareholders..................................................18
APPENDIX A.................................................................A-1
APPENDIX B.................................................................B-1
APPENDIX C.................................................................C-1
APPENDIX D.................................................................D-1
APPENDIX E.................................................................E-1
PROXY STATEMENT/PROSPECTUS
Special Meeting of Shareholders Scheduled for
[DATE]
Latin America Equities Fund
(a series of the TCW Galileo Funds Inc.)
Relating to the Reorganization into
Emerging Markets Equities Fund
(a series of the TCW Galileo Funds Inc.)
(collectively, the "Funds" and each, a "Fund")
INTRODUCTION
This Proxy Statement/Prospectus provides you with information about a
proposed transaction. This transaction involves the transfer of all the assets
and liabilities of TCW Galileo Funds Latin America Equities Fund (the "Latin
America Equities Fund") to the TCW Galileo Funds Emerging Markets Equities Fund
(the "Emerging Markets Equities Fund" or "Surviving Fund") in exchange for
shares of Emerging Markets Equities Fund (the "Reorganization"). Latin America
Equities Fund would then distribute the shares of the Emerging Markets Equities
Fund it received in the exchange to its shareholders. The result would be a
liquidation of the Latin America Equities Fund. You will receive shares of the
Emerging Markets Equities Fund having an aggregate value equal to the aggregate
value of the shares you held of the Latin America Equities Fund, as of the close
of business on the business day of the closing of the Reorganization. You are
being asked to vote on the Agreement and Plan of Reorganization through which
these transactions would be accomplished.
Because you, as a shareholder of Latin America Equities Fund, are being
asked to approve a transaction that will result in your holding of shares of
Emerging Markets Equities Fund, this Proxy Statement also serves as a Prospectus
for the Emerging Markets Equities Fund.
This Proxy Statement/Prospectus, which you should retain for future
reference, contains important information about Emerging Markets Fund that you
should know before investing. For a more detailed discussion of the investment
objectives, policies, restrictions and risks of the Emerging Markets Equities
Fund, see the Prospectus (the "Emerging Markets Equities Fund Prospectus") and
the Statement of Additional Information ("SAI") for Emerging Markets Equities
Fund each dated March 1, 2001, which are incorporated herein by reference and
which may be obtained, without charge, by calling 1-800-FUND-TCW. Each of the
Funds also provides periodic reports to its shareholders which highlight certain
important information about the Funds, including investment results and
financial information. The annual reports for Emerging Markets Equities Fund and
the Latin America Equities Fund, each dated October 31, 2000, is incorporated
herein by reference. You may receive a copy of the most recent annual and
semi-annual reports for either of the Funds, without charge, by calling
1-800-FUND-TCW. An SAI dated [ ] containing additional information about the
Reorganization and the parties thereto, has been filed with the Securities and
Exchange Commission (the "Commission") and is incorporated by reference into
this Proxy Statement/Prospectus. A copy of the SAI relating to the
Reorganization is available upon request and without charge by calling
1-800-FUND-TCW.
You can copy and review information about each Fund (including the SAI) at
the Securities and Exchange Commission's ("Commission") Public Reference Room in
Washington, D.C. You may obtain information on the operation of the Public
Reference Room by calling the Commission at (202) 942-8090. Reports and other
information about each Fund are available on the EDGAR Database on the
Commission'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 Commission'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 is truthful or complete. Any
representation to the contrary is a criminal offense.
SUMMARY
You should read this entire Proxy Statement/Prospectus carefully. For
additional information, you should consult the Emerging Markets Equities Fund
Prospectus, the Latin America Equities Fund Prospectus, and the Agreement and
Plan of Reorganization, which is attached hereto as Appendix B.
The Proposed Reorganization. On February 21, 2001, the Board of Directors
of TCW Galileo Funds, Inc. on behalf of the Latin America Equities Fund,
approved an Agreement and Plan of Reorganization with respect to the Latin
America Equities Fund (the "Reorganization Agreement"). Subject to shareholder
approval, the Reorganization Agreement provides for:
o the transfer of all of the assets of the Latin America Equities Fund to
the Emerging Markets Equities Fund, in exchange for shares of the Emerging
Markets Equities Fund;
o the assumption by the Emerging Markets Equities Fund of all of the
liabilities of the Latin America Equity Fund;
o the distribution of the Emerging Markets Equities Fund's shares to the
shareholders of the Latin America Equities Fund; and,
o the complete liquidation of the Latin America Equities Fund.
The Reorganization is expected to be effective upon the close of business
on July 31, 2001, or on a later date as the parties may agree (the "Closing").
As a result of the Reorganization, each shareholder of Class I Shares of the
Latin America Equities Fund, would become a shareholder of Class I shares of the
Emerging Markets Equities Fund.
Each shareholder would hold, immediately after the Closing, Class I shares
of the Emerging Markets Equities Fund having an aggregate value equal to the
aggregate value of the Class I shares of the Latin America Equities Fund held by
that shareholder as of the close of business on the business day of the Closing.
The proposed Reorganization is designed to provide investors with the
ability to invest in a broader market of emerging market securities without
being limited to a particular geographical area. It was also determined by
management that the Latin America Equities Fund has not attracted sufficient
assets to become a viable mutual fund. The proposed Reorganization will allow
the more viable surviving Fund with a greater asset base to participate in
greater investment opportunities and to potentially take larger portfolio
positions.
In considering whether to approve the Reorganization, you should note
that:
o The Funds have identical investment objectives and similar investment
policies, however, certain important differences are highlighted below.
o Both Funds invest principally in international equity securities of
emerging markets. The Emerging Markets Equities Fund may invest at least
65% of its total assets without limit as to geographical location in
emerging and developing countries in all parts of the world, while the
Latin America Equities Fund is required to invest at least 65% of its
total assets in equity securities of Latin American countries.
o The Latin America Equities Fund has only approximately $2.0 million in
total assets, and its small size makes it difficult for management to
adequately diversify the Fund.
o The proposed Reorganization is expected to result in a reduction in total
operating expenses for shareholders of the Latin America Equities Fund.
For example, the operating expenses, expressed as a percentage of net
asset value per share of Class I shares, are as follows:
o Expenses of the Latin America Equities Fund before a 5.40%
voluntary reduction of the management fee and
assumption of certain fund expenses by the adviser
(based on the fiscal year ended October 31, 2000).
o Expenses of the Latin America Equities Fund after a 1.76%
voluntary reduction of the management fee and
assumption of certain fund expenses by the adviser
(based on the fiscal year ended October 31, 2000).
o Expenses of the Emerging Markets Equities Fund (based on
the fiscal year ended October 31, 2000): 1.47%
o Projected expenses of the Emerging Markets Equities Fund
after the Reorganization (Pro Forma): 1.68%
o Even after giving effect to the voluntary fee reduction and assumption of
certain fund expenses by the adviser, the total expense ratio of the
Emerging Markets Equities Fund is less than that of the Latin America
Equities Fund.
o TCW Investment Management Company, 865 South Figueroa Street, Suite 1800
Los Angeles California 90017 is the investment adviser to both Funds. The
Funds also have a common co-portfolio manager. In addition, TCW Investment
Management Company has retained TCW London International Limited as a
subadviser for the Emerging Markets Equities Fund.
o Approval of the Reorganization Agreement requires the vote of a majority
of the shares present in person or by proxy of Latin America Equities
Fund.
After careful consideration, the Board of Directors of the TCW Galileo
Funds, Inc. on behalf of the Latin America Equities Fund, unanimously approved
the proposed Reorganization. The Board recommends that you vote "FOR" the
proposed Reorganization.
INVESTMENT OBJECTIVES AND POLICIES
Comparison of Investment Objectives and Strategies
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Latin America Equities Fund Emerging Markets Equities Fund
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Investment Objective Seeks long-term capital Seeks long-term capital
appreciation. appreciation.
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Primary Investment o Normally invests at o Normally invests at
Strategies least 65% of its assets least 65% of its assets
in Latin American in equity securities of
equity securities. The companies in Emerging
Fund generally invests Market countries around
its assets among at the world. The Fund
least three Latin generally invests its
American countries at assets among at least
all times. Generally, five Emerging Market
95% of the Fund's countries.
investments are
invested in equity o The Fund may also use
securities of issuers options, futures,
in Brazil, Mexico, foreign currency futures
Argentina, Chile, and forward contracts.
Colombia, Peru and These practices are
Venezuela. primarily used to hedge
the Fund's portfolio,
o The Fund may also but may be used to
use options, futures, increase returns.
foreign currency
futures and forward o The Fund may also use
contracts. These convertible debt
practices are primarily securities which are
used to hedge the rated below investment
Fund's portfolio, but grade.
may be used to increase
returns.
o The Fund may also use
convertible debt securi-
ties which are rated
below investment grade.
Investment Adviser TCW Investment Management TCW Investment Management
Company Company
Sub-adviser N/A TCW London International,
Limited
Portfolio Managers Michael P. Reilly Saker Nusseibeh and Michael
P. Reilly
As you can see from the chart above, the Fund's investment objectives are
identical and their strategies are similar.
Comparison of Portfolio Characteristics
The following table compares certain characteristics of the portfolios of
the Funds as of the end of their last fiscal year, October 31, 2000:
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Latin America Equities Fund Emerging Markets Equities
Fund
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Net Assets $3,115,175 $35,406,157
Number of Holdings 50 99
Portfolio Turnover 57.44% 84.76%
Rate
As a percentage of
net assets:
Emerging Market
Equity Securities 97.9% 95.1%
Debt Securities 3.3% 5.7%
Top 5 Industries Telephone Communications (excl. radio) -22.4% Banking and Financial Services - 12.5%
(as a % of net assets) Banking and Financial Services - 14.5%% Telephone Communications (exc. radio) - 10.3%
Beverages, Food and Tobacco - 14.1% Communications-9.7%
Energy and Oil Services -8.8% Electronics - 9.2%
Retail - 8.6% Industrial-Diversified - 6.4%
Top 5 Countries Mexico- 45.7% South Korea - 12.3%
(as a % of net Brazil- 41.7% Hong Kong - 11. 6%
assets) Argentina - 5.9% Mexico - 11.1%
Chile - 3.5% Brazil - 10.7%
Venezuela - .7% South Africa - 10.7%
Top 10 equity Telephonos de Mexico (ADR) - 16.2% Taiwan Semiconductor Manufacturing
holdings Company (local shares) - 5.77%
(as a % of net Walmart de Mexico (series C) - 7.2% China Telecom - 4.7%
assets) Petroleo Brasileiro (preferred) - 5.4% Telephonos de Mexico - 4.5%
Groupo Televisa, S.A. (GDR) -5.4% Pohang Iron and Steel - 4.1%
Banco Itau, S.A. - 4.3% South Korea Telecom - 3.9%
Telecommunicacoes Brasileiras (preferred)(ADR)-3.9% Videsh Sachar Nigam Ltd - 2.6%
Grupo Financiero Banamex, S.A. (Series 0) - 3.4% Legend Holdings - 2.3%
Petroleo Brasileiro, S.A. (ADR) - 3.4% Huaneng Power International - 2.3%
Grupo Modelo- (Series C) - 3.36% Cosco Pacific ltd. - 2.26%
Tele Norte Leste Participacoes (preferred) - 3.1% PetroChina Company - 2.2%
Relative Performance
The following table shows, for the periods shown below, the average annual total
return for: (a) Class I shares of Latin America Equities Fund; (b) The MSCI
Total Return Gross USD LAF Index (c) Class I shares Emerging Markets Equities
Fund; and (d) the MSCI Emerging Markets Equity Index. An index has an inherent
performance advantage over a Fund since it has no cash in its portfolios,
imposes no sales charges and incurs no operating expenses. An investor cannot
invest directly in an index. Total return is calculated assuming reinvestment of
all dividends and capital gain distributions at net asset value. Each Fund's
past performance is not an indication of its future performance.
MSCI
MSCI Total Emerging
Return Gross Emerging Markets
Latin America USD LAF Markets Equity
Year/Period Ended Equities Fund Index Equities Fund Index (2)
- ----------------- ------------- ------------- ------------- ---------
12/31/2000 -18.64% -16.56% -31.93% -30.61%
1/1/2001 - 3/31/2001 -7.48% -2.21% -7.41% -5.47%
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(1) The MSCI Total Return Gross USD LAF Index is an unmanaged index that
measures the performance of securities of 7 Latin American countries
including Argentina, Brazil, Mexico, Peru, Chile, Colombia, and Venezuela.
(2) The MSCI Emerging Markets Equity Index is an unmanaged index that measures
the performance of securities listed on exchanges in emerging markets.
Comparison of Investment Techniques and Risks of 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 Emerging Markets Equities Fund are similar to the risks of investing in the
Latin America Equities Fund. Both Funds seek long term capital appreciation. A
principal risk of an investment in each of the Funds is that you may lose money
on your investment. Each Fund's shares may go up or down, sometimes rapidly and
unpredictably. Market conditions, financial conditions of issuers represented in
the portfolio, investment policies, portfolio management, and other factors
affect the volatility of each Fund's shares.
Foreign Investing. Both Funds invest in foreign securities. Investment in
foreign securities involves special risks in addition to the usual risks
inherent in domestic investments. These include: political or economic
instability; the unpredictability of international trade patterns; the
possibility of foreign governmental actions such as expropriation,
nationalization or confiscatory taxation; the imposition or modification of
foreign currency or foreign investment controls; the imposition of withholding
taxes on dividends, interest and gains; price volatility; and fluctuations in
currency exchange rates.
One risk of foreign investing is currency risk. While the price of a
Fund's shares is quoted in U.S. dollars, a Fund generally converts U.S.
dollars to a foreign market's local currency to purchase a security in that
market. If the value of that local currency falls relative to the U.S.
dollar, the U.S. dollar value of the foreign security will decrease.
As compared to U.S. companies, foreign issuers generally disclose less
financial and other information publicly and are subject to less stringent and
less uniform accounting, auditing and financial reporting standards. Foreign
countries typically impose less thorough regulations on brokers, dealers, stock
exchanges, insiders and listed companies than does the United States. Foreign
securities markets may be less liquid and more volatile than domestic markets.
Investment in foreign securities involves higher costs than investment in U.S.
securities, including higher transaction and custody costs as well as the
imposition of additional taxes by foreign governments. In addition, security
trading practices abroad may offer less protection to investors such as the
Funds. Settlement of transactions in some foreign markets may be delayed or may
be less frequent than in the United States, which could affect the liquidity of
each Fund's portfolio. Also, it may be more difficult to obtain and enforce
legal judgments against foreign corporate issuers than against domestic issuers
and it may be impossible to obtain and enforce judgments against foreign
governmental issuers.
Because foreign securities generally are denominated and pay dividends or
interest in foreign currencies, and the Funds hold various foreign currencies
from time to time, the value of the net assets of those Funds as measured in
U.S. dollars will be affected favorably or unfavorably by changes in exchange
rates. Generally, currency exchange transactions will be conducted on a spot
(i.e., cash) basis at the spot rate prevailing in the currency exchange market.
The cost of currency exchange transactions will generally be the difference
between the bid and offer spot rate of the currency being purchased or sold. In
order to protect against uncertainty in the level of future foreign currency
exchange rates, both Funds are authorized to enter into certain foreign currency
futures and forward contracts. However, they are not obligated to do so and,
depending on the availability and cost of these devices, the Funds may be unable
to use foreign currency futures and forward contracts to protect against
currency uncertainty.
Emerging Market Countries. Both Funds invest in securities of emerging
markets. The Latin America Equities Fund concentrates in investments in Latin
America while the Emerging Markets Equities Fund may diversify across many
regions. Because the Emerging Markets Equities Fund may invest in a broader
range of countries, it may be subject to lower risk than the Latin America
Equities Fund. Investing in emerging market countries involves substantial risk
due to limited information; higher brokerage costs; different accounting
standards; thinner trading markets as compared to those in developed countries;
currency blockages or transfer restrictions; and expropriation, nationalization
or other adverse political or economic developments.
Political and economic structures in many emerging market countries may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristics of more
developed countries. Some of these countries may have in the past failed to
recognize private property rights and have at times nationalized or expropriated
the assets of private companies.
The securities markets of emerging market countries are substantially
smaller, less developed, less liquid and more volatile than the major securities
markets in the United States and other developed nations. The limited size of
many emerging securities markets and limited trading volume in issuers compared
to the volume of trading in U.S. securities or securities of issuers in other
developed countries could cause prices to be erratic for reasons apart from
factors that affect the quality of the securities. For example, limited market
size may cause prices to be unduly influenced by traders who control large
positions. Adverse publicity and investors' perceptions, whether or not based on
fundamental analysis, may decrease the value and liquidity of portfolio
securities, especially in these markets.
In addition, emerging market countries' exchanges and broker-dealers are
generally subject to less government and exchange regulation than their
counterparts in developed countries. Brokerage commissions, dealer concessions,
custodial expenses and other transaction costs may be higher in emerging markets
than in developed countries. As a result, funds investing in emerging market
countries have operating expenses that are expected to be higher than other
funds investing in more established market regions.
Many of the emerging market countries may be subject to a greater degree
of economic, political and social instability than is the case in developed
countries such as the United States, Canada, Australia, New Zealand, Japan and
certain Western European countries. Such instability may result from, among
other things, (i) popular unrest associated with demands for improved political,
economic and social conditions, and (ii) internal insurgencies. Such social,
political and economic instability could disrupt the financial markets in which
funds invest and adversely affect the value of a fund's assets.
In certain emerging market countries, governments participate to a
significant degree, through ownership or regulation, in their respective
economies. Action by these governments could have a significant adverse effect
on market prices of securities and payment of dividends. In addition, most
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation. Inflation and rapid fluctuation in inflation
rates have had and may continue to have very negative effects on the economies
and securities markets of certain emerging market countries. In addition, many
emerging market countries are grappling with severe recession and government
instability.
Many of the currencies of emerging market countries have experienced
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which portfolio securities are denominated will have a detrimental impact on
funds investing in emerging market countries. Many emerging market countries are
experiencing currency exchange problems. Countries have and may in the future
impose foreign currency controls and repatriation control.
Fixed Income Securities. Both Funds may invest in fixed income securities
that are subject to various risks. The two primary (but not exclusive) risks
affecting fixed income instruments are "credit risk" and "interest rate risk".
These risks can affect a security's price volatility to varying degrees,
depending upon the nature of the instrument. In addition, the depth and
liquidity of the market for an individual or class of fixed income security can
also affect its price and, hence, the market value of a Fund.
"Credit risk" refers to the likelihood that an issuer will default in the
payment of principal and/or interest on an instrument. Financial strength and
solvency of an issuer are the primary factors influencing credit risk. In
addition, lack of or inadequacy of collateral or credit enhancements for a fixed
income security may affect credit risk. Credit risk of a security may change
over its life and securities which are rated by rating agencies are often
reviewed and may be subject to downgrades.
Both Funds may invest in debt instruments rated below investment grade.
Debt securities that are rated below investment grade are considered to be
speculative. Those securities rated below investment grade are also commonly
known as "junk" bonds. Generally, lower-rated debt securities provide a higher
yield than higher rated debt securities of similar maturity but are subject to
greater credit risk than higher rated securities of similar maturity. Such
securities are regarded as predominantly speculative with respect to the
issuer's continuing ability to meet principal and interest payments. Because
investment in lower quality securities involves greater investment risk,
achievement of a fund's investment objective will be more dependent on the
adviser's analysis than would be the case if the fund were investing in higher
quality bonds. In addition, lower quality securities may be more susceptible to
real or perceived adverse economic and individual corporate developments than
would investment grade bonds. Moreover, the secondary trading market for lower
quality securities may be less liquid than the market for investment grade
bonds. This potential lack of liquidity may make it more difficult for the
adviser to value accurately certain portfolio securities.
"Interest Rate Risk" refers to the change in value of debt instruments
associated with changes in interest rates. Interest rate changes may affect the
value of a fixed income security directly (especially in the case of fixed rate
securities) and indirectly (especially in the case of adjustable rate
securities). In general, rises in interest rates will negatively impact the
value of fixed rate securities and falling interest rates will have a positive
effect on value. The degree to which a security's price will change as a result
of changes in interest rates is measured by its "duration." For example, the
price of a bond with a 5 year duration would be expected under normal market
conditions to decrease 5% for every 1% increase in interest rates. Generally,
securities with longer maturities have a greater duration and thus are subject
to greater price volatility from changes in interest rates. Adjustable rate
instruments also react to interest rate changes in a similar manner although
generally to a lesser degree (depending, however, on the characteristics of the
reset terms, including the index chosen, frequency of reset and reset caps or
floors, among other things).
Sovereign Debt. Both Funds may also invest in the sovereign debt of
emerging market countries. Political conditions, in terms of a country or
agency's willingness to meet the terms of the obligation are of considerable
significance. Investors should be aware that sovereign debt instruments in which
these Funds may invest involve great risk, and are deemed to be below investment
grade by national statistical ratings organizations such as Moody's Investors
Service, Inc. and Standard & Poors Corporation. Sovereign debt generally offers
high yield, reflecting not only perceived credit risk, but also the need to
compete with other local investments in domestic financial markets. Mexico and
certain other emerging market countries are among the largest debtors to
commercial banks and foreign governments. A foreign debtor's willingness or
ability to repay principal and interest due in a timely manner may be affected
by, among other factors, its cash flow situation, the extent of its foreign
reserves, the availability of sufficient foreign exchange on the date a payment
is due, the relative size of the debt service burden to the economy as a whole,
the foreign debtor's policy towards the International Monetary Fund and the
political constraints to which a sovereign debtor may be subject.
In recent years, some of the emerging market countries in which the Funds
invest have encountered difficulties in servicing their debt. Some of these
countries have withheld payments of interest and/or principal of sovereign debt.
These difficulties have also led to agreements to restructure external debt
obligations; in particular, commercial bank loans, typically by rescheduling
principal payments, reducing interest rates and extended new credits to finance
interest payments on existing debt. In the future, holders of sovereign debt may
be requested to participate in similar rescheduling of such debt.
The ability or willingness of the governments and other emerging market
countries to make timely payments on their sovereign debt is likely to be
influenced strongly by a country's balance of trade and its access to trade and
other international credits. A country whose exports are concentrated in a few
commodities could be vulnerable to a decline in the international prices of one
or more of such commodities. Increased protectionism on the part of a country's
trading partners could also adversely affect its exports. Such events could
extinguish a country's trade account surplus, if any. To the extent that a
country receives payment for its exports in currencies other than hard
currencies, its ability to make hard currency payments could be affected.
The occurrence of political, social and diplomatic changes in one or more
of the countries issuing sovereign debt could adversely affect the Funds'
investments. The countries issuing such instruments are faced with social and
political issues and some of them have experienced high rates of inflation in
recent years and have extensive internal debt. Among other effects, high
inflation and internal debt service requirements may adversely affect the cost
and availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their sovereign debt. There can be no assurance that adverse political changes
will not cause the Funds to suffer a loss of interest or principal on any of
their holdings.
As a result of all of the foregoing, a government obligor may default on
its obligations. If such an event occurs, a fund may have limited legal recourse
against the issuer and/or guarantor. Remedies must, in some cases, be pursued in
the courts of the defaulting party itself, and the ability of the holder of
foreign government debt securities to obtain recourse may be subject to the
political climate in the relevant country. Bankruptcy, moratorium and other
similar laws applicable to issuers of sovereign debt obligations may be
substantially different from those applicable to issuers of private debt
obligations. In addition, no assurance can be given that the holders of
commercial bank debt will not contest payments to the holders of other foreign
government debt obligations in the event of default under their commercial bank
loan agreements.
Periods of economic uncertainty may result in the volatility of market
prices of sovereign debt and in turn, the Funds' net asset values, to a greater
extent than the volatility inherent in domestic securities. The value of
sovereign debt will likely vary inversely with changes in prevailing interest
rates, which are subject to considerable variance in the international market
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.
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 a Fund's assets may be invested in
the securities of a limited number of issuers, the Funds may be more susceptible
to any single economic, political or regulatory occurrence than a diversified
fund.
Temporary Defensive Strategies. For both Funds, when the adviser to the
Funds or subadviser to the Emerging Markets Equities Fund anticipates unusual
market or other conditions, the Funds may temporarily depart from their
principal investment strategies as a defensive measure. The adviser or
sub-adviser 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 Latin America
Equities Fund that are transferred to the Emerging Markets Equities Fund in
connection with the Reorganization may be sold. Such sales may result in
increased transaction costs for the Emerging Markets Equities Fund, and the
realization of taxable gains and losses for the Emerging Markets Equities Fund.
COMPARISON OF FEES AND EXPENSES
The following discussion describes and compares the fees and expenses of
the Latin America Equities Fund with the Emerging Markets Equities Fund.
Annual Fund Operating Expenses. The operating expenses of Emerging Markets
Equities Fund, expressed as a ratio of expenses to average daily net assets
("expense ratio") are lower than those of the Latin America Equities Fund, which
was 5.40%, before the waiver, for the fiscal year ended October 31, 2000. For
the fiscal year ended October 31, 2000, the operating expenses for shares of the
Emerging Markets Equities Fund was 1.47%.
The adviser voluntarily agreed to reduce its fee and paid certain the
operating expenses for the Latin America Equities Fund such that the ordinary
operating expenses for the Latin America Equities Fund is limited to the average
of the total expense ratios as reported by Lipper Analytical Services, Inc. for
the Fund's respective investment objective. During the fiscal year ended on
October 31, 2000, shareholders of the Latin America Equities Fund paid operating
expenses of 1.76% as a result of the waiver and assumption of expenses.
Management Fee. The Latin America Equities Fund and the Emerging Markets
Equities Fund have the same annual management fee of 1.00% of the Fund's average
daily net assets.
Distribution and Service Fees. Neither Fund charges a distribution
(12b-1) fee or a service fee. Neither Fund charges a contingent deferred
sales load.
Expense Table. The current expenses of each of the Funds and estimated pro
forma expenses giving effect to the proposed Reorganization are shown in the
following table. Expenses for the Funds are annualized based upon the operating
expenses incurred by Class I shares of the Emerging Markets Equities Fund and by
Class I shares of the Latin America Equities Fund for the calendar year ended
October 31, 2000. Pro forma fees show estimated fees of Emerging Markets
Equities Fund after giving effect to the proposed Reorganization. Pro forma
numbers are estimated in good faith and are hypothetical.
Annual Fund Operating Expenses (unaudited) (expenses that are
deducted from Fund assets, shown as a ratio of expenses to
average daily net assets)
Distribution
(12b-1) And
Shareholder Total Fund
Management Servicing Other Operating
Fees Fees Expenses Expenses
---------- ------------ -------- ---------
Class I
Latin America Equities 1.00% N/A 4.40% 5.40%(2)
Fund(1)
Emerging Markets 1.00% N/A 0.47% 1.47%
Equities Fund(1)
Surviving Fund after
Reorganization (Pro 1.00% N/A 0.68% 1.68%
Forma)(3)
- ----------
(1) Based upon expenses incurred by the Fund for the fiscal year ended October
31, 2000.
(2) For the fiscal year ended October 31, 2000, the adviser voluntarily
reduced its fee and paid operating expenses of the Latin America Equities
Fund, so that the Fund's total operating expenses were 1.76%.
(3) Pro forma expenses are estimated.
Examples. The examples are intended to help you compare the cost of
investing in each of the 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. Actual costs may be higher or lower. The example is for
comparison purposes only.
Emerging Pro Forma:
Latin America Equities Fund Markets Equities Fund the Funds Combined*
---------------------------- ------------------------- --------------------------
1 3 5 10 1 3 5 10 1 3 5 10
Year Years Years Years Year Years Years Years Year Years Years Years
----- ----- ----- ----- ---- ----- ----- ----- ---- ----- ----- -----
Class I $539 $1,610 $2,673 $5,293 $150 $465 $803 $1,757 $171 $530 $913 $1,987
<FN>
- ----------
* Estimated.
</FN>
ADDITIONAL INFORMATION ABOUT EMERGING MARKETS EQUITIES FUND
Investment Personnel
Emerging Markets Equities Fund is managed by Michael P. Reilly, Managing
Director, the Adviser, TCW Asset Management Company and Trust Company of the
West. The other individual responsible for management is Saker A. Nusseibeh,
Managing Director and Executive Vice President of TCW London International, Ltd
and Managing Director of TCW Asset Management Company since July 1996.
Previously, he was Director of Mercury Asset Management in London.
Performance of Emerging Markets Equities Fund
The bar chart and table below show the Fund's annual returns and its
long-term performance. The bar chart shows you how the Fund's performance has
varied from year to year. The table compares the Fund's performance over time to
that of a broad-based securities index. Both the bar chart and the table assume
reinvestment of dividends and distributions. The performance information
includes the performance of the Fund's predecessor limited partnership, which
was managed by an affiliate of TCW Investment Management Company, using the same
investment strategy as the Fund. The performance of the partnership was
calculated using performance standards applicable to private investment
partnerships, which take into account all elements of total return and reflect
the deduction of all fees and expenses of operation. The predecessor limited
partnership 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 limited
partnership had been registered under the 1940 Act its performance might have
been adversely affected. As with all mutual funds, past performance is not a
prediction of future results.
Calendar Year By Year Total Returns(1)
[Bar Chart appears here]
-22.95% -8.89% 16.43% 0.15% -33.60% 88.23% -31.93%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- ------------
(1) The Emerging Markets Equities Fund commenced operations on June 1, 1993.
During the period shown in the chart, the Fund's best quarterly
performance was 39.09% for the quarter ended December 31, 1999, and the
Fund's worst quarterly performance was -24.90% for the quarter ended
September 30, 1998. The Fund's total return for the period January 1, 2001
to March 31, 2001 was -7.41%.
The table below shows what the average annual total returns of Emerging
Markets Equities Fund would equal if you averaged out actual performance over
various lengths of time, compared to the MSCI Emerging Markets Equity Index. The
MSCI Emerging Markets Equity Index is an unmanaged index and has an inherent
performance advantage over Emerging Markets Equities Fund since it has no cash
in its portfolio, and incurs no operating expenses or management fees. An
investor cannot invest directly in an index. The Emerging Markets Equities
Fund's performance reflected in the table below assumes reinvestment of
dividends and distributions.
- --------------------------------------------------------------------------------
Average Annual Total Returns for the periods ended December 31, 2000
- --------------------------------------------------------------------------------
Since
1 Year 5 Years Inception(3)
------- ------- ------------
Emerging Markets Equities Fund - Class I(1) -31.93% -0.16% 1.58%
MSCI Emerging Markets Equity Index (2) -30.61% -4.17% 6.90%
- ---------------
(1) No sales charge.
(2) The MSCI Emerging Markets Index is an unmanaged index that measures the
performance of securities listed on exchanges in emerging markets.
(3) Emerging Market Equities Fund commenced operations on June 1, 1993.
For a discussion by the adviser regarding the performance of the Emerging
Markets Equities Fund for the year ended October 31, 2000, see Appendix A to
this Proxy Statement/Prospectus. Additional information regarding the Emerging
Markets Equities Fund is included in Appendix D to this Proxy
Statement/Prospectus.
ADDITIONAL INFORMATION ABOUT LATIN AMERICA EQUITIES FUND
Investment Personnel
Latin America Equities Fund is managed by Michael P. Reilly, Managing
Director, the Adviser, TCW Asset Management Company and Trust Company of the
West.
Performance of Latin America Equities Fund
The bar chart and table below show the Fund's annual returns and its
long-term performance. The bar chart shows you how the Fund's performance has
varied from year to year. The table compares the Fund's performance over time to
that of a broad-based securities index. Both the bar chart and the table assume
reinvestment of dividends and distributions. The performance information
includes the performance of the Fund's predecessor limited partnership, which
was managed by an affiliate of TCW Investment Management Company, using the same
investment strategy as the Fund. The performance of the partnership was
calculated using performance standards applicable to private investment
partnerships, which take into account all elements of total return and reflect
the deduction of all fees and expenses of operation. The predecessor limited
partnership 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 limited
partnership had been registered under the 1940 Act its performance might have
been adversely affected. As with all mutual funds, past performance is not a
prediction of future results.
Calendar Year By Year Total Returns (1)
[Bar Chart appears here]
27.90% 53.53% -22.19% -19.72% 24.40% 33.59% -38.59% 58.31% -18.64%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
(1) The Latin America Equities Fund commenced operations on July 1, 1991.
During the period shown in the chart, the Fund's best quarterly
performance was 42.83% for the quarter ended December 31, 1999, and the
Fund's worst quarterly performance was -29.09% for the quarter ended March
31, 1995. The Fund's total return for the period January 1, 2001 to March
31, 2001 was -7.48%.
The table below shows what the average annual total returns of Latin
America Equities Fund would equal if you averaged out actual performance over
various lengths of time, compared to the MSCI Total Return Gross USD LAF Index.
The MSCI Total Return Gross USD LAF Index is an unmanaged index and has an
inherent performance advantage over the Latin America Equities Fund since it has
no cash in its portfolio, and incurs no operating expenses or management fees.
An investor cannot invest directly in an index. The Latin America Equities
Fund's performance reflected in the table below assumes reinvestment of
dividends and distributions.
- --------------------------------------------------------------------------------
Average Annual Total Returns for the periods ended December 31, 2000
- --------------------------------------------------------------------------------
Since
1 Year 5 Years Inception(3)
------- ------- ------------
Latin America Equities Fund - Class I (1) -18.64% 5.62% 6.98%
MSCI Total Return Gross USD LAF Index (2) -16.56% 6.16% 9.95%
- ---------------
(1) No sales charge.
(2) The MSCI Total Return Gross USD LAF Index is an unmanaged index that
measures the performance of securities of 7 Latin American countries
including Argentina, Brazil, Mexico, Peru, Chile, Colombia, and Venezuela.
(3) Latin America Equities Fund commenced operations on July 1, 1991.
For a discussion by the adviser regarding the performance of the Latin
America Equities Fund for the year ended October 31, 2000, see Appendix B to
this Proxy Statement/Prospectus. Additional information regarding the Emerging
Markets Equities Fund is included in Appendix D to this Proxy
Statement/Prospectus.
INFORMATION ABOUT THE REORGANIZATION
The Agreement and Plan of Reorganization. The Agreement and Plan of
Reorganization (the "Reorganization Agreement") provides for the transfer of all
of the assets and liabilities of the Latin America Equities Fund to the Emerging
Markets Equities Fund in exchange for shares of the Emerging Market Equities
Fund. The Latin America Equities Fund will distribute the shares of the Emerging
Markets Equities Fund received in the exchange, to the shareholders of the Latin
America Equities Fund and then Latin America Equities Fund will be liquidated.
After the Reorganization, each shareholder of the Latin America Equities
Fund will own shares in Emerging Markets Equities Fund having an aggregate value
equal to the aggregate value of the shares in the Latin America Equities Fund
held by that shareholder as of the close of business on the business day of the
Closing. Shareholders of Classes I shares of the Latin America Equities Fund
will receive Class I Shares of the Emerging Markets Equities Fund.
In the interest of economy and convenience, shares of the Emerging Market
Equities Fund generally will not be represented by physical certificates, unless
requested in writing.
Until the Closing, shareholders of the Latin America 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 Emerging Markets
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
Latin America 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 B to review the
terms and conditions of the Reorganization Agreement.
Reasons for the Reorganization. The proposed Reorganization is designed to
provide investors with the ability to invest in a broader market of emerging
market securities without being limited to a particular geographical area. It
was also determined by management that the Latin America Equities Fund has not
attracted sufficient assets to become a viable mutual fund. The proposed
Reorganization will allow the more viable surviving Fund with a greater asset
base to participate in greater investment opportunities and to potentially take
larger portfolio positions.
The proposed Reorganization was presented to the Board of Directors of TCW
Galileo Funds, Inc., on behalf of the Latin America Equities Fund for
consideration and approval at a meeting held on February 21, 2001. For the
reasons discussed below, the Directors, including all of the Directors who are
not "interested persons" (in the 1940 Act) determined that the interests of the
shareholders of the Latin America 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 Latin America Equities Fund and its shareholders.
The Reorganization will allow the Latin America 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 companies in emerging markets
throughout the world. Subject to restrictions of various funds, as shareholders
of the Emerging Markets Equities Fund (a former Latin America Equities Fund
Shareholder) will be able to exchange into other mutual funds in TCW Galileo
Funds group for the same class of shares.
Board Considerations. The Board of Directors, on behalf of the Latin America
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 Latin
America Equities Fund and Emerging Markets Equities Fund;
(2) the ability of the shareholders of the Latin American Equities Fund
to continue to participate in a fund that invests in Latin American
securities;
(3) the Reorganization would not dilute the interests of Latin America
Equities Fund's current shareholders;
(4) the similarity of the Emerging Markets Equities Fund's investment
objectives, policies and restrictions with those of Latin America
Equities Fund;
(5) the relative size 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; and,
(6) the costs borne by the Emerging Markets Equities Fund, its
shareholders and the Latin America Equities Fund and its
shareholders.
The Directors of TCW Galileo Funds, Inc. on behalf of the Latin America
Equities Fund, recommend that shareholders approve the Reorganization with the
Emerging Markets Equities Fund.
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 Latin America Equities Fund nor its shareholders nor the
Emerging Markets Equities Fund is expected to recognize any gain or loss for
federal income tax purposes from the transactions contemplated by the
Reorganization Agreement. As a condition to the Closing of the Reorganization,
the Funds will receive an opinion from the law firm of Dechert 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 Emerging Markets Equities Fund, the
Latin America Equities Fund and the TCW Galileo Funds, Inc.
Immediately prior to the Reorganization, the Latin America 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 Latin
America 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 (after reduction for
any available capital loss carryforward). Such dividends will be included in the
taxable income of the Latin America Equities Fund's shareholders.
Expenses of the Reorganization. TCW Investment Management Company,
investment adviser to both the Emerging Markets Equities Fund, and the Latin
America Equities Fund will bear half the cost of the Reorganization. The Funds
will bear the other half of the expenses related to the proposed Reorganization,
including, but not limited to, the costs of solicitation of voting instructions
and any necessary filings with the Commission. Of the Reorganization expenses
allocated to the Funds, each Fund will bear a ratable portion based on its
relative net asset values immediately before Closing.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Form of Organization. The Emerging Markets Equities Fund and the Latin
America Equities Fund are both series of the TCW Galileo Funds, Inc. which is
a Maryland corporation. TCW Galileo Funds, Inc. is governed by a Board of
Directors consisting of seven members.
Distributor. TCW Brokerage Services. (the "Distributor"), whose address
865 South Figueroa Street, Suite 1800, Los Angeles California 90017 serves as
the non-exclusive distributor for both Funds.
Dividends and Other Distributions. Both the Emerging Markets Equities Fund
and the Latin America Equities Fund pay dividends from net investment income and
net capital gains, if any, on an annual basis. Dividends and distributions of
each of the Funds are automatically reinvested in additional shares of the
particular Fund, unless the shareholder elects to receive distributions in cash.
Capitalization. The following table shows on an unaudited basis the
capitalization of each of the Funds as of March 30, 2001 and on a pro forma
basis as of March 30, 2001 giving effect to the Reorganization:
Net Asset
Net Value Shares
Assets Per Share Outstanding
------------ --------- -----------
Latin America Equities Fund
Class I $ $1,709,789 $ 9.89 172,880
Emerging Markets Equities Fund
Class I $ 30,447,152 $ 6.75 4,510,689
Pro Forma - Emerging Markets Equities
Fund (including Latin America Equities
Fund)
Class I $ 32,156,936 $ 6.75 4,763,990
GENERAL INFORMATION ABOUT THE PROXY STATEMENT
Solicitation of Proxies
Solicitation of proxies is being made primarily by the mailing of this
Notice and Proxy Statement with its enclosures on or about [insert date].
Shareholders of the Latin America 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 TCW
Galileo Funds, Inc. and its affiliates, without additional compensation, may
solicit proxies in person or by telephone, telegraph, facsimile, or oral
communication.
A shareholder may revoke the accompanying proxy at any time prior to its
use by filing with the Latin America 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 TCW Galileo
Funds, Inc. that may be presented at the Special Meeting.
Voting Rights
Shareholders of the Latin America 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 Latin America Equities Fund at the close of business on
May 25, 2001 (the "Record Date") will be entitled to be present and give voting
instructions for the Latin America Equities Fund at the Special Meeting with
respect to their shares owned as of that Record Date. As of the Record Date,
[number of shares] shares of the Latin America Equities Fund were outstanding
and entitled to vote.
Approval of the Reorganization requires the vote of a majority of the
Shares present in person or by proxy of the Latin America Equities Fund.
The holders of one-third of the outstanding shares shall constitute a
quorum. In the absence of a quorum, a majority of outstanding shares entitled to
vote present in person or by proxy may adjourn the Special Meeting from time to
time until a quorum is present.
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 not have the same effect as a vote against the
Reorganization.
The Latin America 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. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, TCW Galileo Funds, Inc.
understands that the broker-dealers that are members of the New York Stock
Exchange may vote on the items to be considered at the Special Meeting on behalf
of their customers and beneficial owners under the rules of the New York Stock
Exchange.
To the knowledge of TCW Galileo Funds, Inc., as of April 1, 2001, no
current Director owned 1% or more of the outstanding shares of Latin America
Equities Fund, and the officers and Directors owned, as a group, less than 1% of
the shares of the Latin America Equities Fund.
Appendix D hereto lists the persons that, as of [ ], owned beneficially
or of record 5% or more of the outstanding shares of any Class of the Latin
America Equities Fund or Emerging Markets Equities Fund.
Other Matters to Come Before the Special Meeting
TCW Galileo Funds, Inc. does not know of any matters to be presented at
the Special Meeting other than those described in this Proxy
Statement/Prospectus. If other business should properly come before the Special
Meeting, the proxyholders will vote thereon in accordance with their best
judgment.
Shareholder Proposals
TCW Galileo Funds, Inc. 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 TCW Galileo Funds, Inc.'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.
Reports to Shareholders
TCW Galileo Funds, Inc. will furnish, without charge, a copy of the most
recent Annual Report regarding the Latin America Equities Fund and the most
recent Semi-Annual Report succeeding the Annual Report, if any, on request.
Requests for such reports should be directed to TCW Galileo Funds, Inc. at 865
South Figueroa Street, Suite 1800, Los Angeles, California 90017 or by calling
1-800-FUND-TCW.
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
[date]
865 South Figueroa Street, Suite 1800
Los Angeles CA 90017
APPENDIX A
Set forth below is an excerpt from Emerging Markets Equities Fund's Annual
Report, dated October 31, 2000.
MANAGEMENT DISCUSSIONS
The total return earned by the TCW Galileo Emerging Markets Equities Fund
(the "Fund") during the fiscal year ended October 31, 2000, was a negative
3.30%. This compares favorably to the Fund's benchmark, the Morgan Stanley
Capital International (MSCI) Total Return Gross US$ Emerging Markets Free Index,
which posted negative 8.81% return for the same period. The Fund also
outperformed the International Finance Corporation (IFC) Investable Total Return
Emerging Markets Composite Index, which posted a negative 10.1% return for the
twelve months ended October 31, 2000.
Following a breathtaking rally toward the end of 1999, most emerging
markets regions continued to post modest gains in the first few months of the
2000. However, the Y2K relief was short-lived and gave way to concerns about
higher U.S. interest rates, tighter global liquidity, and rapidly decelerating
U.S. economic growth--all of which suggest a weaker global growth outlook for
2001. Although global stock prices later rebounded on signs that the U.S.
economy might achieve a soft-landing, the markets consolidated in September due
to concerns about rising crude oil prices. While higher crude oil prices benefit
oil-exporting countries, slower global economic growth that could result from
higher crude oil prices would clearly be a negative development for the asset
class.
The Fund maintained a slight underweight position in Latin America and
Asia Pacific, with a neutral allocation to the EMEA region (emerging Europe,
Middle East, Africa). Latin American holdings continued to focus on blue-chip
companies exhibiting strong and reliable cash flow generation, as well as
companies with low leverage and quality management. In Asia, the Fund reduced
its exposure to Internet and other richly valued technology stocks in favor of
interest rate sensitive securities, including banking and property stocks. The
Fund also continued to avoid the markets of Southeast Asia due to political
risks and concerns about corporate governance.
Despite the stock market turbulence witnessed in the world's emerging
markets so far this year, the medium-term outlook for appears to remain sound.
In the near-term, most emerging markets are likely to continue to take their
direction from U.S. monetary policy and the behavior of U.S. stock markets.
Given that recent declines have been attributed to concerns about high oil
prices and slowing global growth, confirmation of a "soft-landing" of the U.S.
economy would likely provide a more constructive external environment for
developing economies and the performance of the asset class.
TCW GALILEO EMERGING MARKETS EQUITIES FUND
AVERAGE ANNUALIZED TOTAL RETURN(1)
- -YEAR 3-YEAR 5-YEAR SINCE INCEPTION
(3.30)% (2.89)% 1.45% 2.20%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
IFC INVESTABLE MSCI TOTAL RETURN
FUND EMERGING MARKETS INDEX EMERGING MARKETS FREE
Jun 93 $254,500 $257,096 $257,413
Jul 93 $259,794 $265,079 $264,211
Aug 93 $278,005 $286,604 $286,521
Sep 93 $283,815 $298,140 $297,002
Oct 93 $320,371 $323,238 $323,649
Nov 93 $335,973 $343,730 $337,970
Dec 93 $404,276 $402,451 $393,837
Jan 94 $408,562 $405,236 $401,000
Feb 94 $380,330 $394,715 $393,867
Mar 94 $337,733 $354,902 $358,226
Apr 94 $332,407 $348,159 $351,061
May 94 $340,395 $356,348 $363,074
Jun 94 $321,758 $343,593 $353,068
Jul 94 $336,591 $368,278 $375,022
Aug 94 $371,960 $415,620 $421,566
Sep 94 $376,903 $425,935 $426,355
Oct 94 $370,059 $411,929 $418,663
Nov 94 $352,944 $396,093 $396,897
Dec 94 $311,487 $353,484 $365,018
Jan 95 $273,834 $306,831 $326,184
Feb 95 $269,270 $302,864 $317,817
Mar 95 $265,467 $302,077 $319,836
Apr 95 $275,736 $314,754 $334,183
May 95 $292,470 $326,535 $351,962
Jun 95 $289,809 $328,494 $353,004
Jul 95 $300,077 $338,947 $360,929
Aug 95 $293,232 $329,862 $352,425
Sep 95 $287,907 $327,362 $350,751
Oct 95 $273,454 $315,010 $337,324
Nov 95 $273,454 $313,435 $331,310
Dec 95 $283,810 $324,341 $346,004
Jan 96 $310,513 $351,516 $370,597
Feb 96 $301,359 $343,711 $364,705
Mar 96 $307,082 $348,730 $367,546
Apr 96 $323,867 $362,795 $382,240
May 96 $326,918 $359,606 $380,532
Jun 96 $325,774 $363,878 $382,906
Jul 96 $305,244 $339,970 $356,739
Aug 96 $317,453 $350,512 $365,871
Sep 96 $317,834 $355,679 $369,040
Oct 96 $312,110 $348,041 $359,197
Nov 96 $322,029 $353,189 $365,217
Dec 96 $330,443 $354,754 $366,868
Jan 97 $353,446 $379,793 $391,892
Feb 97 $367,248 $398,396 $408,677
Mar 97 $357,663 $388,415 $397,941
Apr 97 $358,045 $381,821 $398,645
May 97 $376,828 $394,803 $410,055
Jun 97 $406,730 $411,850 $432,001
Jul 97 $418,118 $415,827 $438,451
Aug 97 $372,217 $362,736 $382,658
Sep 97 $382,245 $374,537 $393,261
Oct 97 $320,917 $313,091 $328,731
Nov 97 $317,445 $298,514 $316,736
Dec 97 $330,946 $302,461 $324,369
Jan 98 $305,873 $282,628 $298,929
Feb 98 $321,302 $311,486 $330,131
Mar 98 $330,173 $323,700 $344,458
Apr 98 $330,173 $324,577 $340,707
May 98 $287,746 $284,086 $294,017
Jun 98 $262,289 $254,973 $263,174
Jul 98 $274,963 $265,141 $271,520
Aug 98 $196,953 $190,602 $193,012
Sep 98 $196,953 $199,776 $205,255
Oct 98 $215,104 $222,718 $226,869
Nov 98 $221,669 $239,471 $245,737
Dec 98 $219,738 $235,898 $242,177
Jan 99 $217,036 $230,444 $238,270
Feb 99 $214,718 $234,548 $240,589
Mar 99 $236,730 $261,655 $272,296
Apr 99 $264,149 $297,334 $305,984
May 99 $263,377 $292,009 $304,203
Jun 99 $300,066 $323,849 $338,727
Jul 99 $294,271 $319,144 $329,524
Aug 99 $300,837 $322,568 $332,523
Sep 99 $297,362 $313,591 $321,270
Oct 99 $303,928 $318,922 $328,110
Nov 99 $342,934 $347,593 $357,529
Dec 99 $413,606 $394,171 $402,999
Jan 00 $403,952 $394,723 $405,401
Feb 00 $430,601 $394,328 $410,756
Mar 00 $423,651 $400,085 $412,761
Apr 00 $377,308 $358,716 $373,635
May 00 $363,793 $348,708 $358,189
Jun 00 $384,645 $358,577 $370,804
Jul 00 $352,977 $341,329 $351,734
Aug 00 $349,500 $342,626 $353,465
Sep 00 $316,675 $312,132 $322,600
Oct 00 $293,891 $286,631 $299,211
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. INCEPTION 6/1/93
- ------------
(1) PERFORMANCE DATA INCLUDES THE PERFORMANCE OF THE PREDECESSOR LIMITED
PARTNERSHIP FOR PERIODS BEFORE THE FUND'S REGISTRATION BECAME EFFECTIVE.
THE PREDECESSOR LIMITED PARTNERSHIP WAS NOT REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE
WAS NOT SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE
1940 ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940
ACT, THE LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
APPENDIX B
Set forth below is an excerpt from Latin America Equities Fund's Annual Report,
dated October 31, 2000
MANAGEMENT DISCUSSIONS
The total return earned by the TCW Galileo Latin America Equities Fund (the
"Fund") during the fiscal year ended October 31, 2000, was a positive 18.57%.
This compares favorably to the Morgan Stanley Capital International (MSCI) Total
Return Gross US$ Emerging Markets Free Index, which posted a positive 14.24%
return for the same period. The Fund also outperformed the International Finance
Corporation (IFC) Investable Total Return Emerging Markets Composite Index,
which posted a positive 17.37% return for the twelve months ended October 31,
2000.
Following a breathtaking rally toward the end of 1999, most Latin American
equity markets continued to post modest gains in the first few months of the
2000. However, the Y2K relief was short-lived and gave way to concerns about
higher U.S. interest rates, tighter global liquidity, and rapidly decelerating
U.S. economic growth -- all of which suggest a weaker global growth outlook for
2001. As a result, Latin American equity markets were not immune to sharp global
volatility of equity markets witnessed during April and May. Although Latin
equity prices later rebounded on signs that the U.S. economy might achieve a
soft landing, the markets consolidated in September due to concerns about rising
crude oil prices. While higher crude oil prices benefit oil-exporting countries
such as Mexico and Venezuela, slower global economic growth that could result
from higher crude oil prices would clearly be a negative development for the
region. In the near-term, Latin America is likely to continue to take its
direction from U.S. monetary policy and the behavior of U.S. stock markets. Key
domestic developments will be the presidential transition in Mexico -- following
its historic election -- and confidence in Brazil's ability to continue to lower
interest rates and continue with strong economic growth.
The Fund continued to focus on blue-chip companies exhibiting strong and
reliable cash flow generation, as well as companies with low leverage and
quality management. The Fund's largest industry exposure continued to be
telecommunications where earnings growth is being driven by increased
subscribers of both fixed and cellular telephony and by increased usage of the
Internet and business data networks. The Fund increased its exposure to the
retail sector as consumer spending is expected to accompany the economic
recovery in the region.
Despite the stock market turbulence witnessed in the Latin American markets so
far this year, the outlook for corporate earnings growth remains solid in Mexico
and Brazil, which account for the vast majority of the Fund's assets. Economic
growth in Latin America is forecast to be 4.4% in 2000 after registering zero
growth in 1999. Looking forward, the question is whether this positive momentum
will continue into 2001. Given that recent declines have been attributed to
concerns about high oil prices and slowing global growth, confirmation of a
"soft landing" of the U.S. economy would likely provide a more constructive
external environment for Latin American economies and the performance of the
region's equity markets.
TCW GALILEO LATIN AMERICA EQUITIES FUND
AVERAGE ANNUALIZED TOTAL RETURN(1)
1-YEAR 3-YEAR 5-YEAR SINCE INCEPTION
18.57% (3.16)% 7.81% 7.55%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FUND IFC INVESTABLE MSCI TOTAL RETURN
LATIN AMERICA LATIN FREE
INDEX
Jul 91 $257,000 $273,535 $281,220
Aug 91 $274,990 $299,098 $300,363
Sep 91 $265,365 $294,672 $295,428
Oct 91 $286,462 $331,301 $315,963
Nov 91 $289,327 $318,477 $297,782
Dec 91 $294,534 $364,115 $341,351
Jan 92 $336,358 $424,541 $393,905
Feb 92 $391,521 $448,211 $427,710
Mar 92 $411,489 $449,367 $452,975
Apr 92 $395,441 $454,584 $450,996
May 92 $404,140 $456,586 $456,822
Jun 92 $340,286 $368,160 $368,249
Jul 92 $348,861 $370,646 $379,135
Aug 92 $328,976 $350,396 $351,700
Sep 92 $312,856 $335,434 $343,312
Oct 92 $345,706 $350,309 $365,017
Nov 92 $355,386 $347,831 $362,348
Dec 92 $376,709 $376,678 $387,140
Jan 93 $371,209 $365,651 $381,546
Feb 93 $352,649 $362,128 $379,726
Mar 93 $383,682 $392,962 $405,836
Apr 93 $369,578 $378,444 $385,650
May 93 $364,640 $383,510 $395,295
Jun 93 $382,624 $404,687 $420,198
Jul 93 $396,024 $416,276 $432,040
Aug 93 $428,466 $452,739 $469,195
Sep 93 $425,647 $460,117 $477,411
Oct 93 $458,090 $491,221 $496,330
Nov 93 $486,656 $528,737 $528,850
Dec 93 $578,347 $605,510 $595,897
Jan 94 $643,035 $686,827 $693,964
Feb 94 $596,724 $655,589 $673,881
Mar 94 $532,421 $611,629 $628,158
Apr 94 $497,206 $566,759 $580,217
May 94 $511,367 $596,398 $614,496
Jun 94 $465,436 $550,633 $575,138
Jul 94 $501,796 $603,317 $629,649
Aug 94 $572,990 $702,889 $732,062
Sep 94 $601,313 $734,112 $763,467
Oct 94 $573,755 $691,229 $725,744
Nov 94 $569,544 $679,164 $705,046
Dec 94 $450,008 $548,140 $599,719
Jan 95 $391,831 $461,550 $534,230
Feb 95 $338,789 $394,633 $456,841
Mar 95 $319,112 $382,845 $441,080
Apr 95 $355,471 $443,002 $504,742
May 95 $353,762 $444,174 $516,209
Jun 95 $357,183 $453,459 $524,252
Jul 95 $372,581 $477,755 $540,456
Aug 95 $378,143 $484,500 $546,645
Sep 95 $373,439 $478,317 $541,982
Oct 95 $338,792 $432,726 $498,379
Nov 95 $355,474 $447,712 $507,335
Dec 95 $361,282 $456,357 $522,753
Jan 96 $403,433 $499,256 $576,351
Feb 96 $380,639 $472,886 $543,165
Mar 96 $388,811 $480,470 $549,971
Apr 96 $406,875 $505,755 $580,422
May 96 $425,368 $518,991 $599,089
Jun 96 $435,692 $528,238 $614,461
Jul 96 $417,196 $504,940 $590,246
Aug 96 $432,249 $518,635 $606,861
Sep 96 $439,990 $528,681 $620,728
Oct 96 $430,526 $518,809 $614,676
Nov 96 $434,397 $521,153 $620,540
Dec 96 $449,449 $534,896 $638,858
Jan 97 $493,265 $584,191 $701,741
Feb 97 $524,499 $622,388 $748,168
Mar 97 $520,161 $615,746 $736,758
Apr 97 $543,589 $640,849 $773,604
May 97 $584,369 $692,622 $828,429
Jun 97 $633,825 $748,274 $899,450
Jul 97 $671,651 $789,780 $949,990
Aug 97 $606,051 $721,129 $858,953
Sep 97 $665,135 $782,006 $941,309
Oct 97 $543,488 $636,313 $762,498
Nov 97 $573,467 $655,914 $788,575
Dec 97 $600,403 $691,482 $840,968
Jan 98 $533,062 $611,431 $747,562
Feb 98 $558,260 $641,775 $786,831
Mar 8 $593,017 $683,756 $842,618
Apr 98 $587,804 $677,882 $823,313
May 98 $512,213 $593,342 $716,826
Jun 98 $487,883 $560,394 $674,462
Jul 98 $508,178 $582,584 $707,834
Aug 98 $324,274 $385,877 $462,301
Sep 98 $349,149 $412,017 $509,636
Oct 98 $380,687 $443,493 $549,041
Nov 98 $402,010 $484,396 $591,437
Dec 98 $368,695 $445,756 $545,731
Jan 99 $314,947 $394,632 $481,117
Feb 99 $334,048 $417,414 $511,817
Mar 99 $391,351 $505,660 $615,864
Apr 99 $453,987 $579,815 $704,579
May 99 $427,333 $560,101 $682,561
Jun 99 $454,430 $583,496 $715,071
Jul 99 $415,340 $543,043 $660,039
Aug 99 $402,456 $527,251 $640,152
Sep 99 $408,674 $537,369 $650,613
Oct 99 $416,227 $547,192 $665,284
Nov 99 $469,533 $617,233 $749,196
Dec 99 $583,695 $721,236 $867,120
Jan 00 $544,605 $695,200 $830,042
Feb 00 $603,242 $755,404 $893,747
Mar 00 $599,243 $763,940 $901,156
Apr 00 $526,836 $679,830 $803,913
May 00 $488,636 $643,527 $764,706
Jun 00 $552,158 $703,568 $834,577
Jul 00 $533,948 $690,693 $817,259
Aug 00 $557,490 $713,624 $836,980
Sep 00 $516,180 $677,015 $787,648
Oct 00 $493,525 $642,217 $760,018
VALUE OF $250,000
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. INCEPTION 7/1/91
- ------------
(1) PERFORMANCE DATA INCLUDES THE PERFORMANCE OF THE PREDECESSOR LIMITED
PARTNERSHIP FOR PERIODS BEFORE THE FUND'S REGISTRATION BECAME EFFECTIVE.
THE PREDECESSOR LIMITED PARTNERSHIP WAS NOT REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"), AND, THEREFORE
WAS NOT SUBJECT TO CERTAIN INVESTMENT RESTRICTIONS THAT ARE IMPOSED BY THE
1940 ACT. IF THE LIMITED PARTNERSHIP HAD BEEN REGISTERED UNDER THE 1940
ACT, THE LIMITED PARTNERSHIP'S PERFORMANCE MAY HAVE BEEN LOWER.
APPENDIX C
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of _____________, 2001, by and between TCW Galileo Funds Inc., a
Maryland corporation (the "Company") with its principal place of business at 865
South Figueroa Street, Los Angeles, California 90017, on behalf of its series,
Emerging Markets Equities Fund (the "Acquiring Fund"), and Latin America
Equities Fund, Inc. (the "Acquired Fund").
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange solely for Class I
shares of common stock ($.001 par value) of the Acquiring Fund (the "Acquiring
Fund Shares"), the assumption by the Acquiring Fund of all liabilities of the
Acquired Fund, and the distribution of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in complete liquidation of the Acquired Fund
as provided herein, all upon the terms and conditions hereinafter set forth in
this Agreement.
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 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. 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. 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 paragraph 1.2, 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 Class I Acquiring
Fund Shares determined by dividing the value of the Acquired Fund's net assets,
computed in the manner and as of the time and date set forth in paragraph 2.1,
by the net asset value of one Acquiring Fund Share of the same class, computed
in the manner and as of the time and date set forth in paragraph 2.2; and (ii)
to assume all liabilities of the Acquired Fund, as set forth in paragraph 1.3.
Such transactions shall take place at the closing provided for in paragraph 3.1
(the "Closing").
2. 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, 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 paragraph 3.1 (the "Closing Date") (collectively, "Assets").
3. 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 (collectively,
"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.
4. Immediately after the transfer of assets provided for in paragraph 1.1,
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 paragraph 1.1, 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
Class I Acquiring Fund Shares to be so credited to Class I Acquired Fund
Shareholders shall be equal to the aggregate net asset value of the Acquired
Fund shares owned by such shareholders on the Closing Date. All issued and
outstanding shares of the Acquired Fund will simultaneously be canceled on the
books of the Acquired Fund, although share certificates representing interests
in Class I shares of the Acquired Fund will represent a number of the same class
of Acquiring Fund Shares after the Closing Date, as determined in accordance
with Section 2.3. The Acquiring Fund shall not issue certificates representing
the Class I Acquiring Fund Shares in connection with such exchange.
5. Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent.
6. Any reporting responsibility of the Acquired Fund including, but not
limited to, the responsibility for filing of regulatory reports, tax returns, or
other documents 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
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. The net asset value of a Class I Acquiring Fund Share shall be the net
asset value per share computed with respect to that class as 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.
3. The number of the Class I Acquiring Fund 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 Class I shares of the Acquired Fund, determined using the
same valuation procedures referred to in paragraph 2.1, by the net asset value
of an Acquiring Fund Share, determined in accordance with paragraph 2.2.
4. 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
1. The Closing Date shall be ________ __, 2001, 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.
2. The Acquired Fund shall direct Investors 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 Acquired Fund Custodian to the
custodian for the Acquiring Fund 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 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"), shall direct the
Custodian to deliver as of the Closing Date by book entry in accordance with the
customary practices of such depositories and the custodian for Acquiring Fund.
The cash to be transferred by the Acquired Fund shall be delivered by wire
transfer of federal funds on the Closing Date.
3. The Acquired Fund shall direct DST Systems, Inc. (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 Class I 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.
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.
4. REPRESENTATIONS AND WARRANTIES
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;
(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, Statements of Operations and
Changes in Net Assets, and Portfolio of Investments of the Acquired Fund at
October 31, 2000, have been audited by Deloitte & Touche LLP, independent
auditors, and are in accordance with accounting principles generally accepted in
the United States of America ("GAAP") consistently applied, and such statements
(copies of which have been furnished to the Acquiring Fund) present fairly, in
all material respects, the financial condition of the Acquired Fund as of such
date in accordance with GAAP, and there are no known contingent liabilities of
the Acquired Fund required to be reflected on a balance sheet (including the
notes thereto) in accordance with GAAP as of such date not disclosed therein;
(j) Since October 31, 2000, 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 subparagraph (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;
(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 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 paragraph
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
National Association of Securities Dealers, Inc.), 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 paragraph 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 misleading provided, however,
that the representations and warranties in this subparagraph (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.
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 of 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 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, Statements of Operations and
Changes in Net Assets and Portfolio of Investments of the Acquiring Fund at
October 31, 2000, have been audited by Deloitte & Touche LLP, independent
auditors, and are in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquired Fund) present
fairly, in all material respects, the financial condition of the Acquiring Fund
as of such date in accordance with GAAP, and 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, 2000, 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 subparagraph (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;
(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 Class I 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 subparagraph (p) shall
not apply 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
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.
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.
3. The Acquired Fund covenants that the Class I 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.
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. 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.
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 paragraph 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.
7. As soon as is reasonably practicable after the Closing, the Acquired
Fund will make a liquidating distribution to its shareholders consisting of the
Class I Acquiring Fund Shares received at the Closing.
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.
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) the Company's on behalf of the
Acquired Fund's title to and possession of the Acquiring Fund's Shares to be
delivered hereunder, and (b) the Company's on behalf of the Acquiring Fund's
title to and possession of all the assets, and to carry out the intent and
purpose of this Agreement.
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:
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;
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;
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
4. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Acquiring Fund Class I Shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1.
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:
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;
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;
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;
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;
5. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Acquiring Fund Class I Shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1; and
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.
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:
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
paragraph 8.1;
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;
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;
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
5. The parties shall have received the opinion of Dechert 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. The
delivery of such opinion is conditioned upon receipt by Dechert 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 paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
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.
2. The expenses relating to the proposed Reorganization will be shared so
that (1) half of such costs are borne by the investment adviser to the Acquired
and Acquiring Funds, and (2) half are borne by the Acquired and Acquiring Funds
and will be paid by the Acquired Fund and Acquiring Fund pro rata based upon the
relative net assets of the Acquired Fund and the Acquiring Fund as of the close
of business on the record date for determining the shareholders of the Acquired
Fund entitled to vote on the Reorganization. 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.
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
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.
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
and; provided, however, that following the meeting of the shareholders of the
Acquired Fund called by the Acquired Fund pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of the Class I 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, 1775 Eye Street, N.W., Washington,
D.C. 20006, attn: Robert W. Helm.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
1. The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
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.
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.
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 GALILEO FUNDS INC. on behalf of its
EMERGING MARKETS EQUITIES FUND series
- ------------------------------- By:__________________________________
SECRETARY
Title:_______________________________
Attest: TCW GALILEO FUNDS INC. on behalf of its
LATIN AMERICA EQUITIES FUND series
- ------------------------------- By:__________________________________
SECRETARY
Title:_______________________________
APPENDIX D
ADDITIONAL INFORMATION REGARDING
TCW GALILEO EMERGING MARKETS EQUITIES FUND
AND
TCW GALILEO LATIN AMERICA EQUITIES FUND
(collectively, the "Funds" and each, a "Fund")
SHAREHOLDER GUIDE
This Proxy Statement/Prospectus relates to shares of the Funds. Currently, the
Funds offer only Class I shares.
Buying shares
You pay no sales charges to invest in either Fund. Your price for Fund shares is
the Fund's net asset value per share (NAV) which is calculated as of the close
of trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time) every
day the exchange is open. Your order will be priced at the next NAV calculated
after your order is accepted by the Fund. Orders received by the Funds' transfer
agent from dealers, brokers or other service providers after the NAV for the day
is determined will receive that same day's NAV if the orders were received by
the dealers, brokers or service providers from their customers prior to 4:00
p.m. and were transmitted to and received by the transfer agent generally prior
to 8:00 a.m. Eastern time on the next day. Each Fund's investments are valued
based on market value, or where market quotations are not readily available,
based on fair value as determined in good faith by the Funds' Board.
Minimum Investments
Initial Additional
$250,000 $ 25,000
TCW Galileo Funds, Inc. may waive the minimum and subsequent investments. All
investments must be in U.S. dollars. Third-party checks, except those payable
to an existing shareholder, will not be accepted. If your check or wire does
not clear, you will be responsible for any loss the Fund incurs.
Selling shares
You may sell shares at any time. Your shares will be sold at the next NAV
calculated after your order is accepted by the Fund's transfer agent. Any
certificates representing Fund shares being sold must be returned with your
redemption request. Your order will be processed promptly and you will generally
receive the proceeds within a week.
Before selling recently purchased shares, please note that if the Fund has not
yet collected payment for the shares you are selling, it may delay sending the
proceeds for up to fifteen days.
Written sell order
Some circumstances require written sell orders, along with signature guarantees.
These include:
o amounts of $100,000 or more
o amounts of $1,000 or more on accounts whose address has been changed within
the last 30 days
o requests to send the proceeds to a payee or address different than what is
on our records
A Medallion signature guarantee helps protect against fraud. You can obtain one
from most banks or securities dealers but not from a notary public. Please call
(800) 248-4486 to ensure that your signature guarantee will be processed
correctly.
Exchange privilege
You can exchange Fund shares into another of the TCW Galileo Funds of the same
class. The Asia Pacific Equities, European Equities and Japanese Equities Funds
have a 1.00% short-term exchange fee on shares owned less than 90 days. You must
meet the investment minimum of the Fund you are exchanging into. You can request
your exchange in writing or by phone. Be sure to read the current prospectus for
any Fund into which you are exchanging. Any new account established through an
exchange will have the same privileges as your original account (as long as they
are available).
Third party transactions
You may buy and redeem Fund shares through certain broker-dealers and financial
organizations and their authorized intermediaries. If purchases and redemptions
of Fund shares are arranged and settlement is made at an investors election
through a registered broker-dealer other than the Fund's distributor, that
broker-dealer may, at its discretion, charge a fee for that service.
Account statements
Every Fund investor automatically receives regular account statements. You will
also be sent a yearly statement detailing the tax characteristics of any
dividends and distributions you have received.
General policies
If your account falls below $250,000 as a result of redemptions and or exchanges
for six months or more, the Fund may close your account and send you the
proceeds upon 60 days' written notice.
Unless you decline telephone privileges on your New Account Form, you may be
responsible for any fraudulent telephone order as long as the Transfer Agent
takes reasonable measures to verify the order.
Large Redemption Amounts
The Fund reserves the right to make a "redemption in kind"--payment in portfolio
securities rather than cash--if the amount you are redeeming in any 90-day
period is large enough to affect Fund operations (for example, if it equals more
than $250,000 or represents more than 1% of the Fund's assets).
The Fund restricts excessive trading (usually defined as more than four
exchanges out of the Fund within a calendar year). You are limited to one
exchange of shares in the same Fund during any 15-day period except for 401(k)
and other group retirement accounts, investors who purchase shares through
certain broker-dealers and asset allocation accounts managed by the Adviser or
an affiliate. Each Fund reserves the right to:
o refuse any purchase or exchange request that could adversely affect a Fund
or its operations, including those from any individual or group who, in
the Fund's view, are likely to engage in excessive trading
o change or discontinue its exchange privilege, or temporarily suspend this
privilege during unusual market conditions
o delay sending out redemption proceeds for up to seven days (generally
applies only in cases of very large redemptions, excessive trading or
during unusual market conditions).
Shareholder Inquiries
To obtain information, by telephone call 1-800-FUND-TCW (386-3829).
By mail, write to: TCW Galileo Funds, Inc.
865 South Figueroa Street
Suite 1800
Los Angeles, CA 90017
On the Internet: Text-only versions of Fund documents can be viewed on line
or down loaded from SEC: http://www.sec.gov.
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington, D.C. (telephone (202) 942-8090) or by sending your request and
duplicating fee to the SEC's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549-0102.
Management of the Fund
Investment Adviser
The Fund's investment adviser is TCW Investment Management Company (the
"Investment Adviser") and is headquartered at 865 South Figueroa Street, Suite
1800, Los Angeles, California 90017. As of December 31, 2000 the Adviser and its
affiliated companies, which provide a variety of trust, investment management
and investment advisory services have approximately $80 billion under management
or committed to management.
Investment Sub-Adviser
TCW London International, Limited ("TCW London") (regulated by I.M.R.O.) serves
as subadviser (the "Subadviser") to the Emerging Markets Equities Fund and is
headquartered at 16 Charles II Street, London, England SW1Y4QU.
Portfolio Managers
Listed below are the individuals who have been primarily responsible for the
day-to-day portfolio management of the Fund, including a summary of each
person's business experience during the past five years:
Portfolio Manager Business Experience During Last Five Years*
- ------------------------------------------------------------------------------------
Saker A. Nusseibeh Managing Director and Executive Vice President, TCW
(Emerging Markets Equity Fund) London International, Limited and Managing Director, TCW
Asset Management Company since July 1996.
Previously Director of Mercury Asset Management
(London).
Michael P. Reilly Managing Director, the Adviser, TCW Asset Management
(Emerging Markets Equity Company and Trust Company of the West.
Fund and Latin America
Equities Fund)
<FN>
* Positions with the TCW Group, Inc. and its affiliates may have changed
over time.
</FN>
Advisory Agreement
The Fund and the Adviser have entered into an Investment Advisory and Management
Agreement (the "Advisory Agreement"), under the terms of which the Fund has
employed the Adviser to manage the investment of its assets, to place orders for
the purchase and sale of its portfolio securities, and to be responsible for
overall management of the Fund's business affairs, subject to control by the
Board of Directors. The adviser also pays certain costs of marketing the Fund,
including sales personnel compensation, from legitimate profits from its
investment advisory fees and other resources available to it. In addition, the
Adviser may reimburse third party administrators for retirement plan shareholder
servicing expenses. Under the Advisory Agreement, the Fund pays the Adviser as
compensation for the services rendered, facilities furnished, and expenses paid
by it, an annual fee of 1.00% of the Fund's average net asset value.
The Adviser has retained, at its sole expense, TCW London to provide investment
advisory services with respect to the Emerging Markets Equities Fund. Under the
Sub-Advisory Agreement the Sub-Adviser assists the Adviser in performing its
advisory functions in respect of the Fund.
The Advisory and Sub-Advisory Agreements provide that the Adviser and the
Sub-Adviser, respectively, shall not be liable for any error of judgment or
mistake of law or for any loss suffered by a Fund in connection with the matters
to which the agreements relate, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser or
Sub-Adviser in the performance of their duties or from reckless disregard by
them of their duties under each respective agreement.
Portfolio Transactions
The Advisor and Sub-Adviser, with respect to the Emerging Markets Equity Fund,
will place orders to execute securities transactions that are designed to
implement the Fund's investment objectives and policies. The Adviser and
Sub-Adviser will use its reasonable efforts to place all purchase and sale
transactions with brokers, dealers and banks ("brokers") that provide "best
execution" of these orders. In placing purchase and sale transactions, the
Adviser and Sub-Adviser may consider brokerage and research services provided by
a broker to the Adviser, the Sub-Adviser or its affiliates, and the Fund may pay
a commission for effecting a securities transaction that is in excess of the
amount another broker would have charged if the Adviser or Sub-Adviser
determines in good faith that the amount of commission is reasonable in relation
to the value of the brokerage and research services provided by the broker. In
addition, the Adviser or Sub-Adviser may place securities transactions with
brokers that provide certain services to the Fund. The Adviser or Sub-Adviser is
satisfied that the Fund would receive best execution of the transaction from the
broker. The Adviser or Sub-Adviser also may consider a broker's sale of Fund
shares if Adviser or Sub-Adviser is satisfied that the Fund would receive best
execution of the transaction from the broker.
Distributions and Taxes
The amount of dividends of net investment income and distributions of net
realized long and short-term capital gains payable to shareholders will be
declared and paid annually. Each Fund will distribute any net realized long or
short-term capital gains at least annually. Your distributions will be
reinvested in the Fund unless you instruct the Fund otherwise. There are no fees
or sales charges on reinvestments.
In any fiscal year in which the Fund qualifies as a regulated investment company
and distribute to shareholders all of their net investment income and net
capital gains, the Fund is relieved of federal income tax.
Generally, all dividends and capital gains are taxable whether they are
reinvested or received in cash--unless you are exempt from taxation or entitled
to tax deferral. Capital gains distributions may be taxable at different rates
depending on the length of time the Fund has held the assets sold. Early each
year, you will be notified as to the amount and federal tax status of all
distributions paid during the prior year. Distributions may also be subject to
state or local taxes. The tax treatment of redemptions from a retirement plan
account may differ from redemptions from an ordinary shareholder account. If you
redeem shares of the Fund or exchange them for shares of another Fund, any gain
on the transaction may be subject to tax. You must provide the Fund with a
correct taxpayer identification number (generally your Social Security Number)
and certify that you are not subject to backup withholding. If you fail to do
so, the IRS can require the Fund to withhold 31% of your taxable distributions
and redemptions. Federal law also requires the Fund to withhold 30% or the
applicable tax treaty rate from dividends paid to nonresident alien, non-U.S.
partnership and non-U.S. corporation shareholder accounts.
This is a brief summary of some of the tax laws that affect your investment in
the Fund. Please see the Statement of Additional Information and your tax
adviser for further information.
Financial Highlights
The financial highlights table is intended to help you understand the Fund's
financial performance for the fiscal years indicated. Certain information
reflects financial results for a single Fund share. "Total return" shows how
much your investment in the Class I shares of the Fund would have increased (or
decreased) during each period, assuming you had reinvested all dividends and
distributions. These figures have been audited by Deloitte & Touche LLP, whose
report, along with Company's financial statements, are included in the annual
report, which is available upon request.
TCW Galileo Emerging Markets Equities Fund
Year Ended October 31
---------------------------------
2000 1999 1998 1997 1996
Per-Share Data ($)
Net asset value, beginning of year $7.87 $5.57 $8.32 $8.18 $7.19
----------------------------------
Investment operations:
Investment income (loss)--net 0.01 (0.02) 0.09 0.03 0.07
Net realized and unrealized gain
(loss) on investments
and foreign currency (0.27) 2.32 (2.83) 0.22 0.94
-----------------------------------
Total from investment operations (0.26) 2.30 (2.74) 0.25 1.01
-----------------------------------
Distributions:
Dividends from net investment income -- -- (0.01)(0.11) (0.02)
-----------------------------------
Net asset value, end of period $7.61 $7.87 $5.57 $8.32 $8.18
===================================
Total return (3.30)% 41.29% (32.97)% 2.82% 14.14%
Ratios/Supplemental Data:
Net assets, end of year ($ x 1,000) $35,406 $26,591 $18,763 $47,726 $57,639
Ratio of expenses to average 1.47% 2.02%(1) 1.70% 1.50% 1.41%
net assets
Ratio of net income (loss) to 0.08% (0.24)% 1.15% 0.36% 0.82%
average net assets
Portfolio turnover rate 84.76% 152.93% 102.28% 79.80% 83.76%
1 The Adviser had voluntarily agreed to reduce its fee from the Fund, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
ordinary operating expenses of the Fund to the average of the total expense
ratios as reported by Lipper Analytical Services, Inc. for the Fund's
investment objective, which is subject to change on a monthly basis, through
December 31, 1999. Had such action not been taken, total operating expenses,
as a percentage of net assets, would have been 2.50% for the year ended
October 31, 1999.
TCW Galileo Latin America Equities Fund
Year Ended October 31
-----------------------------------
2000 1999 1998 1997 1996
Per-Share Data ($)
Net asset value, beginning of year $9.37 $8.57 $12.51 $10.01 $7.92
-----------------------------------
Investment operations:
Investment income (0.04) 0.09 0.13 0.11 0.11
(loss)--net
Net realized and
unrealized gain (loss) on
investments
and foreign currency 1.78 0.71 (3.80) 2.50 2.03
-----------------------------------
Total from investment
operations 1.74 .80 (3.67) 2.61 2.14
-----------------------------------
Distributions:
Dividends from net -- -- (0.27) (0.11) (0.05)
investment income
-----------------------------------
Net asset value, end of period $11.11 $9.37 $8.57 $10.01 $12.51
===================================
Total return 18.57% 9.34% (29.95)% 26.24% 27.08%
Ratios/Supplemental Data:
Net assets, end of year $3,115 $7,939 $11,796 $55,336 $68,323
($ x 1,000)
Ratio of expenses to average 1.76%(1) 2.20%(1) 1.64% 1.46% 1.44%
net assets
Ratio of net income (loss) to (0.33)% 1.05% 1.13% 0.87% 1.12%
average net assets
Portfolio turnover rate 54.44% 162.12% 32.33% 21.17% 44.32%
1 The Adviser had voluntarily agreed to reduce its fee from the Fund, or to pay
the operating expenses of the Fund, to the extent necessary to limit the
ordinary operating expenses of the Fund to the average of the total expense
ratios as reported by Lipper Analytical Services, Inc. for the Fund's
investment objective, which is subject to change on a monthly basis, for the
years ended October 31, 2000 and October 31, 1999. Had such action not been
taken, total operating expenses, as a percentage of net assets, would have
been 5.40% and 3.24% for the years ended October 31, 2000 and October 31,
1999.
APPENDIX E
As of April 19, 2001, the following persons owned beneficially or of
record 5% or more of the outstanding shares of the Latin American Equities Fund
- ----------------------------------------------------------------------------------------
Name and Address Class % of Fund % of Fund
before after
Reorganization Reorganization
- -----------------------------------------------------------------------------------------
Carla A. Hills I 17.42% .82%
3125 Chain Bridge Road
Washington D.C. 20016
Henry Kravis, Trustee I 37.70% 1.77%
Raymond & Bessie Kravis Foundation
c/o Kohlberg, Kravis, Roberts and Co.
9 W. 57th Street
New York, NY 10019
Consuelo Zobel I 16.96% .80%
Alger Foundation
110 N. Hotel Street
Honolulu Hawaii 96817
Gerald P. Gibson, Trustee I 15.29% .72%
Gibson Co. Profit Sharing Plan
PO Box 519
Seagoville, TX 75159
As of April 19, 2001, the following persons owned beneficially or of
record 5% or more of the outstanding shares of the Emerging Markets Equities
Fund:
- ----------------------------------------------------------------------------------------
Name and Address Class % of Fund % of Fund
before after
Reorganization Reorganization
- -----------------------------------------------------------------------------------------
Worchester Polytechic Institute I 17.68% 16.85%
100 Institute Road
Worchester MA 01609
Chase Manhattan Bank, Custodian I 11.88% 11.32%
FBO Via Health Pension Plan
PO Box 1412
Rochester, NY 14603
City of Southfield Fire and Police I 14.55% 13.87%
Retirement System
26000 Evergreen Rd.
Southfield, MI 48076
PART B
TCW Galileo Emerging Markets Equities Fund
Statement of Additional Information
, 2001
------------
- --------------------------------------------------------------------------------
Acquisition of the Assets and By and in Exchange for Shares of
Liabilities of the TCW Galileo TCW Galileo Emerging Markets
Latin America Equities Fund (a series Equities Fund (a series
of the TCW Galileo Funds, Inc.) of the TCW Galileo Funds, Inc.)
865 South Figueroa Street 865 South Figueroa Street
Suite 1800 Suite 1800
Los Angeles, CA 90017 Los Angeles, CA 90017
- --------------------------------------------------------------------------------
This Statement of Additional Information is available to the Shareholders of the
TCW Galileo Latin America Equities Fund ("Latin America Equities Fund") in
connection with a proposed transaction whereby all of the assets and liabilities
of the Latin America Equities Fund, a series of the TCW Galileo Funds, Inc. will
be transferred to the TCW Galileo Emerging Markets Equities Fund ("Emerging
Markets Equities Fund") in exchange for shares of the Emerging Markets Equities
Fund.
This Statement of Additional Information consists of a cover page, Exhibit A and
the following documents incorporated by reference.
1. The Statement of Additional Information for the Emerging Markets Equities
Fund dated March 1, 2001.
2. The Financial Statements of the Latin America Equities Fund are included
in the Annual Report of the TCW Galileo Funds, Inc. dated October 31,
2000.
3. The Financial Statements of the Emerging Markets Equities Fund are
included in the Annual Report of the TCW Galileo Funds, Inc. dated October
31, 2000.
This Statement of Additional Information is not a prospectus. A Prospectus/Proxy
Statement dated _____________, 2001 relating to the Reorganization of the Latin
America Equities Fund may be obtained, without charge, by writing to TCW Galileo
Funds at 865 South Figueroa Street Suite 1800, Los Angeles, CA 90017 or calling
1-800-FUND-TCW. This Statement of Additional Information should be read in
conjunction with the Prospectus/Proxy Statement.
Exhibit A
Additional Information about the TCW Galileo Latin America Equities Fund
For the fiscal years ended October 31, 1998, 1999 and 2000 the total
amounts paid by the TCW Galileo Latin America Equities Fund in advisory fees,
exclusive of any expense reimbursement by the Adviser, were: $313,000, $70,000
and $40,000.
PART C
OTHER INFORMATION
Item 15. INDEMNIFICATION.
Under Article Eighth, Section (9) of the Company's articles of incorporation,
directors and officers 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 is also
limited by Article 9.01 of the Company's Bylaws.
Section 1.10 of the Amended and Restated Distribution Agreement provides for the
indemnification of the Company and its officers and directors against all
liabilities incurred by the Company relating to the untrue statements of
material fact provided by the Distributor.
Registrant has obtained from a major insurance carrier a directors' and
officers' liability policy covering certain types of errors and omissions.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, (the "Securities Act") may be permitted to directors, officer
and controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by the director,
officer or controlling person of the Company in a successful defense of any
action, suit or proceeding or payment pursuant to an insurance policy) is
asserted by such director, officer or controlling person, in connection with the
securities being registered, the Company 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 identification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Item 16. EXHIBITS
(1) (A) Form of Articles of Incorporation. /1/
(B) Form of Articles Supplementary. /2/
(C) Form of Articles Supplementary. /3/
(D) Form of Articles Supplementary. /4/
(E) Form of Articles Supplementary. /5/
(F) Form of Articles Supplementary. /6/
(G) Form of Articles of Amendment. /9/
(H) Form of Articles of Amendment. /9/
(I) Form of Articles Supplementary. /10/
(J) Form of Articles Supplementary. /12/
(K) Form of Articles Supplementary. /14/
(L) Form of Articles of Amendment. /14/
(2) Bylaws. /1/
(A) Amendment No. 1 to By-laws. /11/
(3) Not Applicable.
(4) Form of Plan of Reorganization between the Latin America Equities Fund and
the Emerging Markets Equities Fund. -- filed herein
(5) Not applicable.
(6) (A) Form of Amended and Restated Investment Advisory and Management
Agreement between Registrant and TCW Funds Management, Inc. /9/
(B) Form of Amendment No. 1 to Amended and Restated Investment
Advisory and Management Agreement between Registrant and TCW
Investment Management Company (previously named TCW Funds
Management, Inc.) /12/
(C) Form of Amendment No. 2 to the Amended and Restated Investment
Advisory and Management Agreement between the Company and TCW
Investment Management Company /14/
(D) Form of Sub-Advisory Agreement between TCW Funds Management,
Inc. and TCW London International, Limited. /7/
(E) Form of Addendum to Sub-Advisory Agreement between TCW Funds
Management, Inc. and TCW London International Limited. /8/
(F) Form of Amendment No. 1 to Sub-Advisory Agreement between TCW
Funds Management, Inc. and TCW London International Limited.
/11/
(7) (A) Form of Amended and Restated Distribution Agreement between the
Registrant and TCW Brokerage Services (the "Distributor")
(B) Dealer Agreement between the Distributor and other dealers./9/
(8) Not applicable.
(9) Form of Custody Agreement between Registrant and Investors Bank & Trust
Company. /9/
(10) Not applicable.
(11) Form of Opinion and Consent of Counsel -- filed herein
(12) Form of Opinion and Consent of Counsel supporting tax matters and
consequences.
(13) (A) Form of Delegation Agreement between Registrant and Investors
Bank & Trust Company. /9/
(B) Form of Transfer Agency Services Agreement between Registrant
and PFPC Inc. /13/
(C) Form of Administration Agreement between Registrant and
Investors Bank & Trust Company. /9/
(D) Form of Securities Leading Agency Agreement between Registrant
and Investors Bank & Trust Company. /9/
(14) Consents of Independent Auditors -- filed herein
(15) Not applicable.
(16) Powers of Attorney /11/
(17) Not applicable.
- --------------------------
1. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on September 22, 1992.
2. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on November 26, 1993.
3. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on March 23, 1994.
4. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on August 18, 1994.
5. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on April 21, 1995.
6. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed April 2, 1998.
7. Incorporated herein by reference to Registrant's Registration
Statement filed on December 21, 1995.
8. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on October 31, 1997.
9. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on December 30, 1998.
10. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on March 1, 1999.
11. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on February 29, 2000.
12. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on August 17, 2000.
13. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on December 15, 2000.
14. Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on March 1, 2001.
Item 17. UNDERTAKINGS
Not applicable.
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 1st day of May, 2001
TCW Galileo Emerging Markets Equities Fund, 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
*
- -------------------------
Marc I. Stern Chairman and Director May 1, 2001
*
- -------------------------
Alvin R. Albe, Jr. President and Director May 1, 2001
*
- -------------------------
Thomas E. Larkin Director May 1, 2001
*
- -------------------------
John C. Argue Director May 1, 2001
*
- -------------------------
Norman Barker Director May 1, 2001
*
- -------------------------
Richard W. Call Director May 1, 2001
*
- -------------------------
Matthew K. Fong Director May 1, 2001
*
- -------------------------
Peter C. Dibona Treasurer May 1, 2001
(Principal Financial
and Accounting Officer)
*By: /s/ Philip K. Holl
------------------------------
Philip K. Holl
Attorney-in-Fact
TCW GALILEO LATIN AMERICA EQUITIES FUND
PROXY FOR A SPECIAL MEETING OF THE SHAREHOLDERS ON JULY 18, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Philip K. Holl, proxy, with full powers of
substitution, to vote all shares of the TCW Galileo Latin America Equities Fund
(the "Fund"), as series of the TCW Galileo Funds, Inc. 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 July 18, 2001, at 8:30 a.m. local time, and any adjournment
thereof.
This proxy will be voted as instructed. If no specification is made, the proxy
will be voted "FOR" the proposals.
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 PROPOSAL:
1. To approve an Agreement and Plan of Reorganization providing for the
acquisition of all assets of Class I shares of TCW Galileo Latin America
Equities Fund by TCW Galileo Emerging Markets Equities Fund in exchange for
Class I shares of common stock of the TCW Galileo Emerging Markets Equities Fund
and the assumption by TCW Galileo Emerging Markets Equities Fund of all of the
liabilities of TCW Galileo Latin America Equities Fund.
For [ ] Against [ ] Abstain [ ]
This proxy card must be signed exactly as your name(s) appears hereon. If as an
attorney, executor, guardian or in some representative capacity or as an officer
of a corporation, please add titles as such. Joint owners must each sign.
Signature Date
Signature Date
(if held jointly)
TCW Galileo Funds, Inc.
865 South Figueroa Street
Suite 1800
Los Angeles, CA 90017
Exhibit Index
(4) Form of Plan of Reorganization between the Latin America Equities Fund and
the Emerging Markets Equities Fund
(11) Opinion and Consent of Counsel
(12) Form of Opinion and Consent of Counsel supporting tax matters and
consequences
(14) Consent of Independent Auditors