SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
CHECK THE APPROPRIATE BOX:
/ / Preliminary Proxy Statement
/X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for use of the Commission only (Rule 14a-6(e)(2))
TCW GALILEO FUNDS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filling
fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was previously.
Identify the previous filing by registration statement number of the paid Form
or Schedule and the date of its filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
TCW GALILEO FUNDS, INC.
__________, 1999
Dear Shareholder:
We are pleased to enclose the Notice and Proxy Statement for the
Special Meeting ("Meeting") of Shareholders of the TCW Galileo Funds, Inc. (the
"Company"), on behalf of certain of its series ("Funds"), to be held at 865
South Figueroa Street, 18th floor, Los Angeles, California 90017, on February
10, 1999, at 10:00 a.m., Pacific Time. Formal notice of the Meeting appears on
the next page, followed by the Proxy Statement. Please take time to read the
Proxy Statement and cast your vote, because it covers matters that are important
to the Company and to you as a shareholder.
The Meeting is being called because of the need to address a number of
pending matters, including the adoption of an Amended and Restated Advisory and
Management Agreement ("New Agreement"), and updating investment policies to
reflect regulatory and tax law developments. The New Agreement is substantially
similar to the current agreement. The purpose of adopting the New Agreement is
to enable TCW Funds Management, Inc. (the "Adviser") to outsource accounting
services. The outsourcing will enable the Company to, among other things, post
each Fund's net asset value in the media on a daily basis which would enhance
the visibility and attractiveness of the Company to the investing public. The
Company will retain the services of all of the Adviser's personnel and employees
who now provide investment management and administrative services (with the
exception of accounting services) to the Funds. No change is anticipated in the
investment philosophies and practices currently followed by the Company or the
Funds.
To comply with federal regulations, proposed changes to investment
advisory contracts and a Fund's investment policy, among other matters, must be
submitted for shareholder approval. Accordingly, at the meeting, you will be
asked to consider and vote on a number of matters, as applicable. They are the
following:
o To approve an amended and restated investment advisory and management
agreement that transfers responsibility for accounting and certain
administrative services from the investment adviser to the Funds
o To approve the elimination of the Money Market Fund's fundamental
investment restriction regarding diversification
o To approve the elimination of the Money Market Fund's fundamental
investment restriction regarding illiquidity
o To approve the elimination of the Money Market Fund's fundamental
investment restriction regarding investing in other investment companies
o To approve the elimination of the Money Market Fund's fundamental
investment restriction regarding investing in money market instruments with
maturities of one year or less
o To approve a new investment objective for the Aggressive Growth Equities
Fund (formerly named Mid-Cap Growth Fund)
o To approve the modification of the investment objective of the Core Fixed
Income Fund
o To approve the modification of the investment objective of the Total Return
Mortgage-Backed Securities Fund (formerly named the Long-Term
Mortgage-Backed Securities Fund)
o To approve the modification of the investment objective of the
Mortgage-Backed Securities Fund
o To approve the modification of the investment objective of the High Yield
Bond Fund
o To approve the modification of the investment objective of the Select
Equities Fund (formerly named the Core Equities Fund)
o To approve the modification of the investment objective of the Earnings
Momentum Fund
o To approve the modification of the investment objective of the Small Cap
Growth Fund
o To approve the modification of the investment objective of the Value
Opportunities Fund
o To transact such other business as may properly come before the meeting
The Board of Directors, including a majority of the Independent
Directors, have reviewed the proposals and concluded that they are in the best
interest of the Company, the Funds and their shareholders, and recommend that
you vote "FOR" each of the proposals on the enclosed proxy card. If you happen
to be the record owner of Fund shares, but other persons are the beneficial
owners of such shares and are entitled to vote on theses proposals, please
inform us of the number of such beneficial owners to whom you intend to
distribute proxy materials for the meeting so that may forward the same to you.
Please call us at (800) Fund-TCW should you have any questions or if we
may be of any other assistance. Thank you for your attention to these important
matters.
Sincerely yours,
Thomas E. Larkin, Jr.
Director and President
Enclosures
<PAGE>
TCW GALILEO FUNDS, INC.
865 SOUTH FIGUEROA STREET, SUITE 1800
LOS ANGELES, CALIFORNIA 90017
(800) FUND-TCW
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
To be held
February 10, 1999 at 10:00 a.m., Pacific Time
To the Shareholders of the TCW Galileo Funds:
A special meeting of shareholders of the TCW Galileo Funds, Inc., on
behalf of certain of its series ("Funds"), will be held at 865 South Figueroa
Street, 18th Floor, Los Angeles, California 90017, on February 10, 1999, at
10:00 a.m., Pacific Time, or at such adjourned time as may be necessary for the
holders of a majority of outstanding shares of the Funds to vote (the
"Meeting"). The following table describes each proposal that will be presented
at the Meeting and which Fund is entitled to vote on them.
<TABLE>
<CAPTION>
Proposal Who Will Vote
<S> <C>
PROPOSAL 1
To Approve an Amended and Restated Investment Advisory All Funds
and Management Agreement that Transfers Responsibility
for Accounting and Certain Administrative Services from
the Investment Adviser to the Funds
PROPOSAL 2
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding
Diversification
PROPOSAL 3
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding Illiquidity
PROPOSAL 4
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding Investing
in Other Investment Companies
PROPOSAL 5
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding Investing
in Money Market Instruments with Maturities of One Year
or Less
PROPOSAL 6
To Approve a New Investment Objective for the Aggressive Growth Equities
Aggressive Growth Equities Fund (formerly named Fund Only
Mid-Cap Growth Fund)
PROPOSAL 7
To Approve the Modification of the Investment Objective Core Fixed Income Fund Only
of the Core Fixed Income Fund
PROPOSAL 8
To Approve the Modification of the Investment Objective Total Return
of the Total Return Mortgage-Backed Securities Fund Mortgage-Backed Securities
(formerly named Long-Term Mortgage-Backed Securities Fund Only
Fund)
PROPOSAL 9
To Approve the Modification of the Investment Objective Mortgage-Backed Securities
of the Mortgage-Backed Securities Fund Fund Only
PROPOSAL 10
To Approve the Modification of the Investment Objective High Yield Bond Fund Only
of the High Yield Bond Fund
PROPOSAL 11
To Approve the Modification of the Investment Objective Select Equities Fund Only
of the Select Equities Fund (formerly named Core Equities
Fund)
PROPOSAL 12
To Approve the Modification of the Investment Objective Earnings Momentum Fund Only
of the Earnings Momentum Fund
PROPOSAL 13
To Approve the Modification of the Investment Objective Small Cap Growth Fund Only
of the Small Cap Growth Fund
PROPOSAL 14
To Approve the Modification of the Investment Objective Value Opportunities Fund
of the Value Opportunities Fund Only
PROPOSAL 15
To Transact Such Other Business as May Properly Come Such Funds as Necessary
Before the Meeting.
</TABLE>
The matters referred to above are discussed in detail in the Proxy
Statement attached to this Notice. The Board of Directors has fixed the close of
business on December 31, 1998, as the record date for the determination of
shareholders entitled to notice of, and to vote at, the Meeting, or any
adjournment thereof. Only holders of record of shares at the close of business
on that date are entitled to notice of, and to vote at, the Meeting. Each share
of a Fund is entitled to one vote with respect to proposals on which that Fund's
shareholders are entitled to vote, with fractional votes for fractional shares
held.
You are cordially invited to attend the Meeting. All shareholders are
requested to complete, date and sign the enclosed form of proxy and return it
promptly in the envelope provided for that purpose. The enclosed proxy is being
solicited on behalf of the Board of Directors.
By order of the Directors
Philip K. Holl
Secretary
January 18, 1999
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY,
DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENEVELOPE PROVIDED, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
<PAGE>
PROXY STATEMENT
TCW GALILEO FUNDS, INC.
865 SOUTH FIGUEROA STREET, SUITE 1800
LOS ANGELES, CALIFORNIA 90017
SPECIAL MEETING OF SHAREHOLDERS OF THE TCW GALILEO FUNDS, INC.
TO BE HELD ON FEBRUARY 10, 1999
This Proxy Statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Directors of TCW
Galileo Funds, Inc. (the "Company") on behalf of the TCW Galileo Money Market
Fund, TCW Galileo Core Fixed Income Fund, TCW Galileo High Yield Bond Fund, TCW
Galileo Total Return Mortgage-Backed Securities Fund, TCW Galileo
Mortgage-Backed Securities Fund, TCW Galileo Asia Pacific Equities Fund, TCW
Galileo Emerging Markets Equities Fund, TCW Galileo Emerging Markets Income
Fund, TCW Galileo European Equities Fund, TCW Galileo International Equities
Fund, TCW Galileo Japanese Equities Fund, TCW Galileo Latin America Equities
Fund, TCW Galileo Convertible Securities Fund, TCW Galileo Select Equities Fund,
TCW Galileo Earnings Momentum Fund, TCW Galileo Enhanced 500 Fund, TCW Galileo
Large Cap Growth Fund, TCW Galileo Large Cap Value Fund, TCW Galileo Aggressive
Growth Equities Fund, TCW Galileo Small Cap Growth Fund, and TCW Galileo Value
Opportunities Fund (each a "Fund" and together the "Funds") for use at the
Special Meeting of Shareholders (the "Meeting") to be held at 865 South Figueroa
Street, 18th Floor, Los Angeles, California 90017 on February 10, 1999, at 10:00
a.m., Pacific Time, or at any adjournment thereof, for the purposes set forth in
the accompanying Notice of Meeting.
This Proxy Statement and the form of proxy are being mailed to
shareholders on or about January 20, 1999.
All costs associated with the Meeting, consisting principally of
preparing, printing and mailing expenses will be borne by TCW Funds Management,
Inc. ("Adviser"). The principal solicitation will be by mail, but proxies may
also be solicited by telephone, electronically or by personal interview by
officers or agents of the Fund.
Copies of each of the Funds' most recent annual report and semi-annual
report are available upon request and without charge by calling the Company at
1-800-Fund-TCW or writing to its principal office at 865 South Figueroa Street,
Suite 1800, Los Angeles, California 90017 to the attention of the Secretary of
the Company, Philip K. Holl.
The Company is registered as a management investment company under the
Investment Company Act of 1940, as amended ("1940 Act"), and is organized as a
Maryland corporation. The Funds' shares of common stock are referred to as
"shares," the Company's Board of Director's is referred to as the "Board," and
the Company's Articles of Incorporation are referred to as its "Articles."
The Board has fixed the close of business on December 31, 1998, as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting, or any adjournment thereof, on matters submitted to the
vote of shareholders of the Company. Shareholders of the Company are entitled to
one vote for each share held in the Company. Where any proposal pertains only to
a particular Fund, shareholders of that Fund will be entitled to one vote each
for each share held in that Fund. In either case, shareholders will be entitled
to fractional votes for fractional shares held.
The share ownership of each Fund and list of 5% shareholders is attached
hereto as Exhibit A.
All shares represented by the enclosed form of proxy will be voted in
accordance with the instructions indicated on the proxy if it is properly
completed, dated, signed and returned in time to be voted at the Meeting and is
not subsequently revoked. A shareholder has the power to revoke the proxy at any
time prior to its exercise by filing an instrument revoking the proxy (addressed
to the Secretary of the Company at the principal executive office of the Funds,
865 South Figueroa Street, Suite 1800, Los Angeles, California 90017), by
submitting a proxy bearing a later date, or by attending and voting at the
Meeting. Execution and submission of a proxy does not affect a shareholder's
right to attend the Meeting in person.
The presence at the Meeting, in person or by proxy, of the holders of
one-third of the shares outstanding of the Company entitled to vote is required
to constitute a quorum. With respect to any matter which by law requires the
approval of one or more of the individual Funds, the presence in person or by
proxy of one-third of the shareholders of each affected Fund shall constitute a
quorum on matters related to that Fund. Shares held by shareholders present in
person or represented by proxy at the Meeting will be counted both for purposes
of determining the presence of a quorum and for calculating the votes cast on
the issues before the Meeting. Abstentions will also be counted for quorum
purposes.
Due to applicable legal requirements that the proposals presented in this
Proxy Statement be approved by specified percentages of the outstanding shares
of the Company or any Fund in order to be adopted, an abstention by a
shareholder from voting on a particular proposal, either by proxy or in person
at the Meeting, will have the same effect as a negative vote as to that matter.
Shares that are held by a broker-dealer or other fiduciary as record owner for
the account of a beneficial owner will be counted for purposes of determining
the presence of a quorum and as votes on particular proposals if the beneficial
owner has executed and timely delivered the necessary instructions for the
record owner to attend the Meeting and vote the shares, or if the record owner
has, and exercises, discretionary voting power. If the record owner does not
have discretionary voting power as to a particular proposal, but grants a proxy
for, or votes, the shares, those shares will be counted toward the quorum but
will have the effect of a negative vote as to that proposal.
In the event that a quorum is present at the Meeting but sufficient votes
to approve any proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a majority
of those shares represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the proposal in favor of such an adjournment and will vote
those proxies required to be voted AGAINST the proposal against any such
adjournment. A shareholder vote may be taken on one or more of the proposals in
this Proxy Statement prior to any adjournment if sufficient votes have been
received for approval.
The following table describes each proposal that will be presented at the
Meeting and the Fund or Funds that will vote on them.
Proposal Who Will Vote
PROPOSAL 1
To Approve an Amended and Restated Investment Advisory All Funds
and Management Agreement that Transfers Responsibility
for Accounting and Certain Administrative Services from
the Investment Adviser to the Funds
PROPOSAL 2
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding
Diversification
PROPOSAL 3
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding
Illiquidity
PROPOSAL 4
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding Investing
in Other Investment Companies
PROPOSAL 5
To Approve the Elimination of the Money Market Fund's Money Market Fund Only
Fundamental Investment Restriction Regarding Investing
in Money Market Instruments with Maturities of One Year
or Less
PROPOSAL 6
To Approve New Investment Objective for the Aggressive Aggressive Growth
Growth Equities Fund (formerly named Mid-Cap Growth Equities Fund Only
Fund)
PROPOSAL 7
To Approve the Modification of the Investment Objective Core Fixed Income
of the Core Fixed Income Fund Fund Only
PROPOSAL 8
To Approve the Modification of the Investment Objective Total Return
of the Total Return Mortgage-Backed Securities Fund Mortgage-Backed
(formerly named Long-Term Mortgage-Backed Securities Securities Fund Only
Fund)
PROPOSAL 9
To Approve the Modification of the Investment Objective Mortgage-Backed
of the Mortgage-Backed Securities Fund Securities Fund Only
PROPOSAL 10
To Approve the Modification of the Investment Objective High Yield Bond
of the High Yield Bond Fund Fund Only
PROPOSAL 11
To Approve the Modification of the Investment Select Equities
Objective of the Select Equities Fund (formerly Fund Only
named Core Equities Fund)
PROPOSAL 12
To Approve the Modification of the Investment Earnings Momentum
Objective of the Earnings Momentum Fund Fund Only
PROPOSAL 13
To Approve the Modification of the Investment Objective Small Cap Growth
of the Small Cap Growth Fund Fund Only
PROPOSAL 14
To Approve the Modification of the Investment Objective Value Opportunities
of the Value Opportunities Fund Fund Only
PROPOSAL 15
To Transact Such Other Business as May Properly Come Such Funds as Necessary
Before the Meeting.
Under applicable law, approval of Proposals 1 through 14 with respect to a
Fund each requires the vote of a "majority of the outstanding voting securities"
of a Fund, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), which means the vote of 67% or more of the shares of the Fund
present at the Meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or the vote of more than 50% of the
outstanding shares of the Fund, whichever is less.
PROPOSAL 1
TO APPROVE AN AMENDED AND RESTATED INVESTMENT ADVISORY AND MANAGEMENT
AGREEMENT THAT TRANSFERS RESPONSIBILITY FOR ACCOUNTING AND CERTAIN
ADMINISTRATIVE SERVICES FROM THE INVESTMENT ADVISER TO THE FUNDS
(ALL FUNDS)
TCW Funds Management, Inc., a registered investment adviser, currently
serves as investment adviser to each Fund pursuant to the terms of an Investment
Advisory and Management Agreement. Under the terms of the current Investment
Advisory and Management Agreement (the "Current Agreement"), the Adviser is
responsible for managing the investment of each Fund's assets, placing orders
for the purchase and sale of portfolio securities directly with the issuers or
with brokers or dealers selected by it in its discretion, administering the
day-to-day operations of each Fund, furnishing each Fund with office space,
providing officers and employees, and paying expenses related to these services.
Currently, the Adviser also provides the Funds with certain financial reporting
and accounting services not otherwise provided by the Funds' custodian or
transfer agent, including: maintaining the accounts, books and other documents
which form the basis of each Fund's financial statements; preparing the
financial statements themselves; and furnishing the Board periodic and special
reports as requested.
As discussed in more detail below, management of the Funds has proposed,
and the Board of Directors has approved, implementation by the Funds of a dual
class distribution system, pursuant to which each Fund would offer its current
class of shares (designated the "Institutional Class") as well as a new class of
shares (the "Investor Class" or "Class N" shares). To implement this change,
management of the Funds informed the Board that it would be necessary to engage
the services of a fund accounting agent capable of handling the complexities
attendant to the new dual class distribution system. In particular, management
proposed that the Funds contract with an independent party capable of providing
financial, accounting, and certain administrative services to a fund that issues
shares with respect to more than one class. Management proposed that the Funds
contract with a third party to provide accounting and certain other
administrative services for the Funds and that the Adviser no longer provide
this service as part of its responsibilities under the Current Agreement. In its
proposal, Management noted benefits to the Funds of outsourcing the accounting
and certain other administrative services including, among other things, the
ability to post each Fund's net asset value in the media on a daily basis which
would enhance the visibility and attractiveness of the Funds to the investing
public. Therefore, on December 17, 1998, after considering this and other
factors, the Board, including a majority of the Directors who are not parties to
the Investment Advisory and Management Agreement or interested persons of any
such party (the "Independent Directors"), approved, subject to required
shareholder approval, an Amended and Restated Investment Advisory and Management
Agreement (the "New Agreement") between the Company and the Adviser reflecting
certain changes described below and determined to recommend approval of the New
Agreement to the shareholders of the Funds.
As noted further below, the terms and conditions of the New Agreement are
identical in all material respects to those of the current Investment Advisory
and Management Agreement, with the exception of the current terms obligating the
Adviser to provide accounting and certain other administrative services, its
effective date and termination dates. Under the New Agreement, the Funds will
continue to retain the services of all of the Adviser's personnel and employees
who now provide investment management and administrative services to the Funds
(with the exception of accounting and certain administrative services) and there
will be no change in the current responsibilities of these personnel with
respect to the Funds. No change is anticipated in the investment philosophies
and practices currently followed by the Funds nor will any change occur in the
investment advisory fee rate paid by the Funds.
Finally, the Sub-Advisory Agreements, currently in effect with respect to
a number of Funds, pursuant to which certain affiliates of the Adviser provide
specialized investment advisory services with respect to certain of the Funds,
will be unaffected by the proposed change in the Current Agreement.
The Current Investment Advisory and Management Agreement
The Adviser has served as investment adviser to each Fund of the Company
since each Fund's commencement of investment operations. The Current Agreement,
dated February 20, 1993, between the Adviser and the Company with respect to
each Fund was initially approved by the Board on December 14, 1992 and was
subsequently amended and restated by the Board on February 19, 1993. The
Agreement was last continued by the Board, including a majority of the
Independent Directors, at a meeting held on February 18, 1998. The Current
Agreement was approved by each Fund's initial shareholder. Information about the
Adviser, its Officers and Directors is presented in Exhibit C.
Investment Advisory Services
Under the terms of the Current Agreement, the Adviser is responsible for
making investment decisions and placing orders for the purchase and sale of each
Fund's investments directly with the issuers of such securities or brokers or
dealers selected in its discretion, administering its day-to-day operations, and
managing the Fund's business affairs, subject to the review and control of the
Board of the Company. The Adviser is responsible for obtaining and evaluating
economic, statistical, and financial data and for formulating and implementing
investment programs in furtherance of each Fund's investment objective. The
Adviser also furnishes the Board, which has overall responsibility for the
business and affairs of the Company, periodic reports on the investment
performance of the Funds.
The Adviser is obligated to manage each Fund in accordance with applicable
laws and regulations. The investment advisory services of the Adviser to the
Funds are not exclusive under the terms of the Agreement. The Adviser is free
to, and does, render investment advisory services to others. Attached hereto as
Exhibit D is a list of funds the Adviser serves as an investment adviser or
sub-adviser to which have investment objectives similar to the Funds.
The Current Agreement provides that neither the Adviser, nor any director,
officer, agent or employee of the Adviser, shall be liable or responsible to the
Company or any of its shareholders for any error of judgment, mistake of law or
any loss arising out of any investment, or for any other act or omission in the
performance by such person or persons of their respective duties, except for
liability resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard of their respective duties.
Under the Current Agreement, each Fund pays to the Adviser as compensation
for services rendered, facilities furnished, and expenses paid, a management fee
(the "fee"). The fee is payable for each calendar month as soon as practicable
after the end of the month. For the purposes of calculating such fee, the net
asset value for a month shall be the average of the net asset values as
determined for each business day of the month.
For the fiscal year ended October 31, 1998, the Funds paid advisory fees
in the percentages and aggregate amounts shown below, before reimbursements made
by the Adviser pursuant to the terms of a voluntary agreement by the Adviser to
limit the expenses of certain Funds to certain levels.
Annual Aggregate
Management Amount
Fee Rate of Fee
TCW Galileo Money Market Fund 0.25% $677,897
TCW Galileo Core Fixed Income Fund 0.40% $228,699
TCW Galileo High Yield Bond Fund 0.75% $1,530,298
TCW Galileo Total Return Mortgage-Backed 0.50% $438,514
Securities Fund
TCW Galileo Mortgage-Backed Securities Fund 0.50% $250,821
TCW Galileo Asia Pacific Equities Fund 1.00% $112,286
TCW Galileo Emerging Markets Equities Fund 1.00% $326,761
TCW Galileo Emerging Markets Income Fund 0.75% $71,357
TCW Galileo European Equities Fund 0.75% $411,507
TCW Galileo International Equities Fund * *
TCW Galileo Japanese Equities Fund 0.75% $116,450
TCW Galileo Latin America Equities Fund 1.00% $312,928
TCW Galileo Convertible Securities Fund 0.75% $237,350
TCW Galileo Select Equities Fund 0.75% $1,149,593
TCW Galileo Earnings Momentum Fund 1.00% $593,211
TCW Galileo Enhanced 500 Fund 0.25% $52,135
TCW Galileo Large Cap Growth Fund 0.55% $17,112
TCW Galileo Large Cap Value Fund 0.55% $19,054
TCW Galileo Aggressive Growth Equities Fund 1.00% $1,001,523
TCW Galileo Small Cap Growth Fund 1.00% $1,312,833
TCW Galileo Value Opportunities Fund 0.80% $273,572
*Does not pay an annual management fee
Under the Current Agreement, each Fund other than the Money Market Fund
for the last fiscal year reimbursed the Adviser for the cost of providing
accounting and administrative services to the Fund in an amount not exceeding
$35,000 (subject to any voluntary expense limit). The Money Market Fund also
reimbursed the Adviser for accounting and administrative services under the
Current Agreement, in an amount not exceeding 0.10% of its average daily net
assets.
With respect to Convertible Securities, Enhanced 500, Large Cap Growth,
Large Cap Value, Value Opportunities, Money Market, Emerging Markets Income,
European Equities, International Equities and Japanese Equities, the Adviser
agreed to reduce its investment advisory fee, or to pay the operating expenses
for the Fund, to the extent necessary to limit the Fund's ordinary annual
operating expenses (including amortization of organizational expenses but
excluding brokerages fees and commissions, interest, taxes and certain
extraordinary expenses) to 1.05%, 0.47%, 0.91%, 0.55% (up to $10,000,000 in net
assets, 0.91% thereafter), 1.36%, 0.40%, 1.78%, 1.20%, 1.16% and 1.20%,
respectively, of their average net value for the fiscal year ended October 31,
1998. This led to effective advisory fee rates for the Funds of 0.63%, 0.11%,
0.00%, 0.00%, 0.80%, 0.23%, 0.75%, 0.75%, 0.00%, and 0.44%, respectively. With
respect to Core Fixed Income, the Adviser agreed to reduce its investment
advisory fee for the fiscal year ended October 31, 1998, to 0.35% of the Fund's
average daily net assets.
The New Investment Advisory and Management Agreement
The terms and conditions of the New Agreement are identical in all
material respects to those of the Current Agreement, with the exception of the
terms relating to the provision of accounting and certain other administrative
services by the Adviser and its effective dates and termination dates. Under the
New Agreement, the Funds are responsible for the cost of obtaining necessary
accounting and certain other administrative services, and the Agreement
therefore contains no provision for reimbursing the Adviser for providing these
services. A form of Amended and Restated Investment Advisory and Management
Agreement is attached as Exhibit B. If the New Agreement is approved by the
shareholders, it will become effective upon execution and will remain in effect,
unless earlier terminated, for an initial two-year term, subject to annual
review and continuation thereafter.
In the event that the shareholders of any Fund do not approve the New
Agreement, the Current Agreement would remain in effect with respect to that
Fund. The Board would then consider with the Adviser whether any such Fund would
be able to participate in the proposed dual class distribution system and on
what terms.
The New Agreement provides that it will continue in effect from year to
year after its initial two-year term, subject to annual approval by the Board or
by vote of the holders of a majority of the outstanding shares of each Fund (as
defined in the 1940 Act) and also, in either event, approval by a majority of
the Independent Directors, cast in person at the meeting called for the purpose
of voting on such approval. For this purpose, the vote of the holders of a
majority of the outstanding shares of a Fund means the lesser of either the vote
of (i) 67% or more of the voting securities of the Fund present at the Meeting,
if the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy; or (ii) more than 50% of the outstanding
voting securities of the Fund. The New Agreement will terminate automatically in
the event of its assignment, and may be terminated with respect to a fund at any
time, without the payment of any penalty by a vote of a majority of the
outstanding securities (as defined in the 1940 Act) of the Fund or by a vote of
a majority of the Fund's entire Board on 60 days' written notice to the Adviser,
or by the Adviser on 60 days' written notice to the Company.
Fund Expenses - Comparison of Current Agreement and New Agreement
The advisory fees under the Amended and Restated Advisory and Management
Agreement will not be higher than the advisory fees under the Current Agreement.
The fees are identical under the New Agreement to those under the Current
Agreement with the exception of the fact that the Adviser will no longer provide
accounting and certain other administrative services to the Funds and therefore
will not receive automatically separate fees for accounting and certain other
administrative services from each Fund. Because the Adviser will no longer
provide accounting and certain other administrative services to the Funds, the
Funds will have to retain the services of a fund accounting agent. The total
expenses borne by each Fund as a result may increase since any fees payable to
the fund accounting agent will likely be higher than the fees the Funds paid to
the Adviser for accounting and certain other administrative services under the
Current Agreement. The current and pro forma expenses for each Fund are stated
in the table below. The figures shown under the pro forma expense column below
reflect the capped projected expenses for the first year under the new
arrangement based on assets as of October 31, 1998. The actual expense ratios of
the Funds for the current fiscal year may differ from those shown based on
actual asset levels among other factors.
TCW GALILEO MONEY MARKET FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.25 0.25
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.16 0.11
Total Annual Fund 0.41 0.36
Operating Expenses*
*The actual operating expenses for the Money Market Fund, after
reimbursements from the Adviser, were 0.40% for fiscal year ended October
31, 1998.
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$41.94 $36.84 $131.69 $115.71 $229.87 $202.07 $517.55 $455.59
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO CORE FIXED INCOME FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.40 0.40
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.22 0.23
Total Annual Fund 0.62 0.63
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$63.36 $64.38 $198.52 $201.70 $345.78 $351.28 $774.22 $786.31
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO HIGH YIELD BOND FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.75 0.75
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.10 0.13
Total Annual Fund 0.85 0.88
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$86.76 $89.81 $271.23 $280.69 $471.34 $487.62 $1,048.95 $1,084.32
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO TOTAL RETURN MORTGAGE-BACKED
SECURITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.50 0.50
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.20 0.21
Total Annual Fund 0.70 0.71
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$71.51 $72.52 $223.88 $227.03 $389.63 $395.08 $870.54 $882.50
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO MORTGAGE-BACKED SECURITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.50 0.50
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.33 0.32
Total Annual Fund 0.83 0.82
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$84.73 $83.71 $264.93 $261.78 $460.48 $455.05 $1,025.32 $1,013.50
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO ASIA PACIFIC EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 1.00 1.00
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 1.48 1.32
Total Annual Fund 2.48 2.32
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$251.12 $235.11 $772.51 $724.40 $1,320.51 $1,240.26 $2,816.02 $2,655.87
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO EMERGING MARKETS EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 1.00 1.00
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.70 0.67
Total Annual Fund 1.70 1.67
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$172.81 $169.78 $535.72 $526.49 $922.97 $907.35 $2,008.61 $1,976.20
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO EMERGING MARKETS INCOME FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.75 0.75
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.78 0.72
Total Annual Fund 1.53 1.47
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$155.65 $149.59 $483.35 $464.81 $834.19 $802.67 $1,823.51 $1,757.37
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO EUROPEAN EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.75 0.75
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.31 0.31
Total Annual Fund 1.06 1.06
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$108.09 $108.09 $337.21 $337.21 $584.74 $584.74 $1,294.11 $1,294.11
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO INTERNATIONAL EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.00 0.00
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.17 0.17
Total Annual Fund 0.17 0.17
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$17.41 $17.41 $54.79 $54.79 $95.88 $95.88 $217.26 $217.26
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO JAPANESE EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.75 0.75
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.76 0.68
Total Annual Fund 1.51 1.43
Operating Expenses*
*The actual operating expenses for the Japanese Equities Fund, after
reimbursements from the Adviser, were 1.20% for fiscal year ended October
31, 1998.
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$153.63 $145.55 $477.18 $452.43 $823.70 $781.61 $1,801.52 $1,713.06
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO LATIN AMERICA EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 1.00 1.00
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.64 0.62
Total Annual Fund 1.64 1.62
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$166.76 $164.74 $517.27 $511.11 $891.73 $881.29 $1,943.68 $1,921.93
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO CONVERTIBLE SECURITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.75 0.75
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.41 0.37
Total Annual Fund 1.16 1.12
Operating Expenses*
*The actual operating expenses for the Convertible Securities Fund, after
reimbursements from the Adviser, were 1.05% for fiscal year ended October
31, 1998.
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$118.23 $114.17 $368.48 $355.97 $638.32 $616.90 $1,408.97 $1,363.15
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO SELECT EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.75 0.75
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.11 0.13
Total Annual Fund 0.86 0.88
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$87.78 $89.81 $274.39 $280.69 $476.77 $487.62 $1,060.76 $1,084.32
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO EARNINGS MOMENTUM FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 1.00 1.00
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.27 0.27
Total Annual Fund 1.27 1.27
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$129.37 $129.37 $402.76 $402.76 $696.93 $696.93 $1,533.90 $1,533.90
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO ENHANCED 500 FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.25 0.25
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.37 0.35
Total Annual Fund 0.62 0.60
Operating Expenses*
*The actual operating expenses for the Enhanced 500 Fund, after
reimbursements from the Adviser, were 0.47% for fiscal year ended October
31, 1998.
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$63.36 $61.32 $198.52 $192.17 $345.78 $334.80 $774.22 $750.03
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO LARGE CAP GROWTH FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.55 0.55
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 1.98 1.71
Total Annual Fund 2.53 2.26
Operating Expenses*
*The actual operating expenses for the Large Cap Growth Fund, after
reimbursements from the Adviser, were 0.91% for fiscal year ended October
31, 1998.
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$256.12 $229.10 $787.50 $706.29 $1,345.46 $1,210.00 $2,865.50 $2,595.11
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO LARGE CAP VALUE FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.55 0.55
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 1.93 1.67
Total Annual Fund 2.48 2.22
Operating Expenses*
*The actual operating expenses for the Large Cap Value Fund, after
reimbursements from the Adviser, were 0.55% for fiscal year ended October
31, 1998.
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$251.12 $225.09 $772.51 $694.20 $1,320.51 $1,189.76 $2,816.02 $2,554.37
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO AGGRESSIVE GROWTH EQUITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 1.00 1.00
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.17 0.19
Total Annual Fund 1.17 1.19
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$119.24 $121.27 $371.60 $377.84 $643.65 $654.33 $1,420.38 $1,443.18
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO SMALL CAP GROWTH FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 1.00 1.00
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.13 0.15
Total Annual Fund 1.13 1.15
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$115.19 $117.21 $359.10 $365.35 $622.26 $632.96 $1,374.63 $1,397.51
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
TCW GALILEO VALUE OPPORTUNITIES FUND
Current Expense Pro forma Expense
Annual Fund Operating Expenses
Management Fees 0.80 0.80
Distribution (12b-1) 0.00 0.00
Fees
Other Expenses 0.36 0.34
Total Annual Fund 1.16 1.14
Operating Expenses
Expense example
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
Current Pro Forma Current Pro Forma Current Pro Forma Current Pro Forma
<S> <C> <C> <C> <C> <C> <C> <C>
$118.23 $116.20 $368.48 $362.23 $638.32 $627.62 $1,408.97 $1,386.10
</TABLE>
This example shows what you could pay in expenses over time. It
uses the same hypothetical conditions other funds use in their
prospectuses: $10,000 Initial Investment, 5% total return each year
and no changes in expenses. The figures shown would be the same
whether or not you sold your shares at the end of a period. Because
actual return and expenses will be different, the example is for
comparison purposes only.
Information About the Investment Adviser and Principal Underwriter
The Adviser is a registered investment adviser under the Investment
Advisers Act of 1940 ("Advisers Act") and is headquartered at 865 South Figueroa
Street, Suite 1800, Los Angeles, California 90017. The Adviser was organized in
1987 as a wholly-owned subsidiary of The TCW Group, Inc. (formerly TCW
Management Company), whose subsidiaries, including Trust Company of the West and
TCW Asset Management Company ("TAMCO"), provide a variety of trust, investment
management and investment advisory services. As of December 31, 1998, the
Adviser and its affiliated companies had over $50 billion under management or
committed for management.
TCW Brokerage Services, Inc. (the "Distributor") of 865 South Figueroa
Street, Suite 1800, Los Angeles, California 90017, serves as the Company's
principal underwriter pursuant to a distribution agreement with the Company.
There is no compensation payable under the current distribution agreement to the
Distributor, although the Distributor would be entitled to receive compensation
with respect to the Investor Class shares of each Fund, as described below, if
the proposed dual class distribution system is implemented.
The Evaluation by the Board of Directors
At meetings held on December 14 and 17, 1998, the Board of Directors of
the Company considered a proposal by management to adopt a dual class
distribution system on behalf of the Funds. Under this proposal, the current
class of shares of each Fund would become the "Institutional Class," and a new
class of shares (the "Investor Class" shares) would be created and offered to
prospective investors with respect to each Fund. The new class of shares would
differ from the existing class principally in that it would pay to the
Distributor an ongoing distribution fee equal on an annual basis to 0.25% of
each Fund's total net assets attributable to that class. Revenues from the
distribution fee would in turn be used by the Distributor principally to
compensate third-party financial intermediaries who agree to provide specified
distribution-related services to Investor Class shareholders. Current
shareholders of the Funds, whose shares would be designated Institutional Class
shares, would pay no portion of this distribution fee. The Distributor informed
the Board that dual class (or multi-class) shareholder distribution and service
arrangements were becoming more prevalent in the mutual fund industry and that,
in particular if the Company wishes to participate in the defined contribution
plan (401(k) plan) marketplace, it would be necessary to create a new class of
shares with the features described.
In connection with the presentation of its proposal the Adviser noted that
implementation of a dual class distribution system for the Funds would involve
additional accounting and financial reporting complexities and that the Adviser
did not have the internal capabilities to provide such services to the Funds.
Therefore, management proposed that the Funds contract with an independent party
to provide accounting and certain other administrative services for the Funds
and that the Adviser no longer provide this service as part of its
responsibilities under the Current Agreement. Management noted that, under the
Current Agreement, the Adviser provides necessary accounting and certain other
administrative services to the Company for an annual fee of $35,000 per Fund
(except for the TCW Galileo Money Market Fund, which reimburses the Adviser for
accounting and certain other administrative services provided in an amount not
exceeding 0.10% of its average daily net assets). The proposed amendment to the
Current Agreement will therefore have the net impact of reducing the direct
compensation payable to the Adviser under the Agreement, but will at the same
time relieve the Adviser of the burden of providing accounting and certain other
administrative services to the Company and may result in an increase in the
total expenses borne by the Company. Management of the Company provided
information about the impact of this proposed change on the expense ratios of
the Company's Funds at various asset levels. Management noted that, in its view,
the proposed amendments to the Agreement were necessary to address the increased
complexity and cost of providing accounting services to the Company in
connection with the conversion to a dual class distribution system, as well as
to address the fact that the flat fee paid by the Company to the Adviser under
the Current Agreement is not sufficient to compensate the Adviser for the cost
of providing such services. Management expressed its view that it is more
appropriate for the Company to bear the actual cost of procuring its necessary
accounting services rather than have the provision of accounting services be
subsidized to a significant extent by the Adviser. Management noted that most
mutual funds bear their own costs and expenses of necessary accounting services
directly, without participation or subsidization by the fund's adviser.
In reviewing and reaching a decision concerning management's proposal, the
Directors, including the Independent Directors, were advised by independent
counsel. The Directors considered the proposal from Management and the
supporting expense ratio projections, as well as the general impact of the
proposed changes on current shareholders. The Directors considered the merits of
the proposed dual class distribution system and the likelihood that
implementation of such a system for the Funds would enable the Funds to
participate in more distribution channels and attract new investor assets. The
Directors noted that an increase in Fund assets could result in an increase in
total compensation from the Funds to the Adviser, although the Distributor
reported to the Board that it was likely that, under distribution arrangements
entered into for Investor Class shares, the Adviser would be obligated to
supplement payments to financial intermediaries providing distribution related
services to Investor Class shareholders from its own resources, including from
its profits from serving as investment adviser to the Funds. The Directors
further noted that an increase in Fund assets could produce benefits for the
Funds, including for their current shareholders, in the form of the ability to
take advantage of additional investment opportunities, to realize savings on
security transaction costs, and to reduce per share operating expenses through
the realization of economies of scale.
In considering the benefits of outsourcing accounting and certain
administrative services, as is contemplated under the New Agreement, the
Directors noted that the Funds would benefit in a number of ways. Under the new
arrangement, net asset value for each Fund would be reported on a daily basis to
the media. This would inform, and potentially encourage, new investors to the
Funds. In addition, the new arrangement provides for an expansive disaster
recovery system, critical to securing financial information. The proposed
accounting service provider has a more sophisticated recovery system than the
Adviser currently enjoys. Because the proposed accounting service provider does
similar work for a significant number of other funds, the Funds would benefit
from the "best practices of the industry." Finally, the Funds would benefit from
third party review of daily financial transactions in outsourcing accounting
services.
After careful review and consideration of these and other relevant
factors, including applicable legal standards for their review, the Directors,
including the Independent Directors, unanimously concluded that the New
Agreement was in the best interests of the Company's shareholders and voted to
submit it to shareholders for their approval.
Directors' Recommendation and Vote Required for Approval
Approval of the Amended and Restated Investment Advisory and Management
Agreement with respect to a Fund requires the approval of the lesser of either
(i) 67% or more of the voting securities of the Fund present at the Meeting, if
the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy; or (ii) more than 50% of the outstanding
voting securities of the Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 1, AND ANY UNMARKED PROXIES WILL BE SO
VOTED
PROPOSAL 2
TO APPROVE THE ELIMINATION OF THE MONEY MARKET FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION REGARDING DIVERSIFICATION
(MONEY MARKET FUND ONLY)
The Board of Directors will submit at the Meeting, for approval of
shareholders, a proposal to eliminate the Fund's fundamental investment
restriction on diversification.
The Fund's current fundamental investment restriction regarding portfolio
diversification currently provides, in relevant part, that the Money Market Fund
will not:
purchase the securities of any issuer (other than U.S. Government
Securities) if as a result more than 5% of the value of the Fund's total
assets would be invested in the securities of the issuer (the "5%
Limitation"). The Fund will not purchase more than 10% of the voting
securities of any one issuer (the "10% Limitation"), except that up to 25%
of the value of the Fund's assets may be invested without regard to the
10% Limitation.
The Money Market Fund qualifies currently, and intends to continue to
qualify, as a money market fund under Rule 2a-7 under the 1940 Act. That rules
imposes numerous conditions on funds operating as money market funds, including
diversification requirements. The Adviser believes that the Fund's current
fundamental investment restriction regarding diversification, described above,
is unnecessary and therefore has recommended to the Board that the Fund's
separate policy on diversification be withdrawn. The Board therefore recommends
that shareholders vote to eliminate this investment restriction.
Investment restrictions designated as fundamental policies may be changed
only by a shareholder vote of a majority of the outstanding shares of the
affected Fund. Fundamental restrictions have been adopted in the past to reflect
certain regulatory, business or industry conditions in effect at the time. With
time, they need to be revisited and, if necessary, changed or eliminated. In the
opinion of the Adviser, the Fund's fundamental investment restriction as to
diversification is not necessary. The elimination of this restriction would give
the Fund the flexibility to respond to changing market conditions within the
applicable regulatory framework.
The proposed elimination of this restriction is not expected to affect
negatively the way the Fund is managed, the investment performance of the Fund
or the securities or instruments in which the Fund invests.
Board of Directors Recommendation and Vote Required for Approval
Approval for the elimination of the investment restriction described above
with respect to the Fund requires the approval of the lesser of (i) 67% or more
of the voting securities of the Money Market Fund present at the Meeting, if the
holders of more than 50% of the outstanding voting securities of the Money
Market Fund are present or represented by proxy; or (ii) more than 50% of the
outstanding voting securities of the Money Market Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2, AND ANY UNMARKED PROXIES WILL BE SO
VOTED.
PROPOSAL 3
TO APPROVE THE ELIMINATION OF THE MONEY MARKET FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION REGARDING ILLIQUIDITY
(MONEY MARKET FUND ONLY)
The Board of Directors will submit at the Meeting, for approval of
shareholders, a proposal to eliminate the Money Market Fund's fundamental
investment restriction on the liquidity of portfolio securities.
The Fund's current fundamental investment restriction regarding illiquid
securities provides, in relevant part, that the Fund will not:
purchase illiquid securities or other securities that are not readily
marketable if more than 10% of the net assets of the Fund would be
invested in such securities, which include: (a) repurchase agreements with
maturities greater than seven calendar days; (b) to the extent a liquid
secondary market does not exist for the instruments, futures contracts and
options thereon; (c) over-the-counter options; (d) variable rate demand
notes with a demand period of more than seven days; and (e) foreign
securities not traded on a recognized domestic or foreign exchange or
developed over-the-counter market, to the extent a liquid secondary market
does not exist for such instruments.
As noted under Proposal 2, the Fund is subject to the requirements of Rule
2a-7 under the 1940 Act. These rules include requirements as to the liquidity of
portfolio securities that may be held by the Fund. The Adviser believes that, in
light of the applicability of these rules to the Fund, it is not necessary for
the Fund to have a separate standard regarding liquidity. The Board therefore
recommends that shareholders vote to eliminate this investment restriction.
Investment restrictions designated as fundamental policies may be changed
only by a shareholder vote of a majority of the outstanding shares of the
affected Fund. Fundamental restrictions have been adopted in the past to reflect
certain regulatory, business or industry conditions in effect at the time. In
the opinion of the Adviser, the Fund's fundamental investment policy and
restriction as to liquidity is not necessary. The elimination of this
restriction would give the Fund the flexibility to respond to changes in
applicable rules.
The proposed elimination of this restriction is not expected to affect
negatively the way the Fund is managed, the investment performance of the Fund
or the securities or instruments in which the Fund invests.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the elimination of the investment restriction described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Money Market Fund present at the Meeting, if the holders of more than 50%
of the outstanding voting securities of the Money Market Fund are present or
represented by proxy; or (ii) more than 50% of the outstanding voting securities
of the Money Market Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3, AND ANY UNMARKED PROXIES WILL BE SO
VOTED.
PROPOSAL 4
TO APPROVE THE ELIMINATION OF THE MONEY MARKET FUND'S FUNDAMENTAL
INVESTMENT RESTRICTION REGARDING INVESTING IN OTHER INVESTMENT COMPANIES
(MONEY MARKET FUND ONLY)
The Board of Directors will submit at the Meeting, for approval of
shareholders of the Fund, a proposal to eliminate the Fund's fundamental
restriction regarding investing in other investment companies.
The current fundamental investment restriction provides, in relevant part,
that the Fund may not:
purchase securities of other investment companies if immediately after
such purchase the Fund will own (a) more than 3% of the total outstanding
voting stock of the acquired company, (b) securities issued by the
acquired company having an aggregate value in excess of 5% of the value of
the total assets of the Fund, or (c) securities issued by all investment
companies having an aggregate value in excess of 10% of the value of the
total assets of the Fund, except to the extent permitted by the Investment
Company Act of 1940 and any applicable rules or exemptive orders issued
thereunder.
This restriction incorporates the substance of certain provisions of the
1940 Act that restrict the ability of registered investment companies to acquire
the securities of other investment companies. The Adviser believes that it is
not necessary to have these rules reflected in Fund investment restrictions, as
they are otherwise applicable to the Fund. The Board, therefore, proposes to
eliminate this restriction and thus permit the Fund to invest in other
investment companies subject only to applicable legal restrictions.
Investment restrictions designated as fundamental policies may be changed
only by a shareholder vote of a majority of the outstanding shares of the
affected Fund. Fundamental restrictions have been adopted in the past to reflect
certain regulatory, business or industry conditions in effect at the time. This
current restriction repeats a provision of law otherwise applicable to the Fund.
It is not required to be a fundamental policy of the Fund. The elimination of
this restriction would align the Fund to the current regulatory and competitive
environment.
The proposed elimination of this restriction is not expected to affect
negatively the way the Fund is managed, the investment performance of the Fund
or the securities or instruments in which the Fund invests.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the elimination of the investment restriction described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Money Market Fund present at the Meeting, if the holders of more than 50%
of the outstanding voting securities of the Money Market Fund are present or
represented by proxy; or (ii) more than 50% of the outstanding voting securities
of that Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE MONEY MARKET FUND VOTE "FOR" PROPOSAL 4, AND ANY
UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 5
TO APPROVE THE ELIMINATION OF THE MONEY MARKET FUND'S
FUNDAMENTAL INVESTMENT RESTRICTION REGARDING INVESTING IN
MONEY MARKET INSTRUMENTS WITH MATURITIES OF ONE YEAR OR LESS
(MONEY MARKET FUND ONLY)
The Board of Directors will submit at the Meeting, for approval of
shareholders of the Fund, a proposal to eliminate the Fund's fundamental
restriction regarding investing in money market investments with maturities of
one year or less.
The current investment restriction of the Money Market Fund provides that
the Money Market Fund may not:
purchase any security that matures more than one year from the date of
purchase or which has an implied maturity of more than one year. For the
purposes of satisfying this requirement, the maturity of a portfolio
instrument shall be deemed to be the period remaining until the date noted
on the face of the instrument as the date on which the principal amount
must be paid, or in the case of an instrument called for redemption, the
date on which the redemption payment must be made, except that:
a. An instrument that is issued or guaranteed by the United States
Government or any agency thereof which has a variable rate of
interest readjusted no less frequently than every 762 days shall
be deemed to have a maturity equal to the period remaining until
the next readjustment of the interest rate.
b. A variable rate instrument not subject to an interest rate cap,
the principal amount of which is scheduled on the face of the
instrument to be paid in 397 calendar days or less shall be
deemed to have a maturity equal to the period remaining until the
next readjustment of the interest rate.
c. A variable rate instrument that is subject to a demand feature
shall be deemed to have a maturity equal to the longer of the
period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be
recovered through demand.
d. A floating rate instrument that is subject to a demand feature
shall be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand.
e. A repurchase agreement shall be deemed to have a maturity equal
to the period remaining until the date on which the repurchase of
the underlying securities is scheduled to occur, or where no date
is specified, but the agreement is subject to demand, the notice
period applicable to a demand for the repurchase of the
securities.
f. A portfolio lending agreement shall be treated as having a
maturity equal to the period remaining until the date on which
the loaned securities are scheduled to be returned, or where no
date is specified, but the agreement is subject to demand, the
notice period applicable to a demand for the return of the loaned
securities. Portfolio securities may be loaned if collateral
values are continuously maintained at no less than 100% by
"marking to market" daily. Money Market currently has no
intention of engaging in lending portfolio securities.
The Board, subject to shareholder approval, proposes to eliminate this
restriction and thus permit the Fund to invest in securities with remaining
maturities of 397 days or less--the limit imposed by Rule 2a-7 under the 1940
Act. The Board believes that extending the maturity limit by one month will
permit the Money Market Fund to purchase higher yielding securities, increase
the return to shareholders, and align itself with changes imposed by Rule 2a-7
of the 1940 Act.
Investment restrictions designated as fundamental policies may be changed
only by a shareholder vote of a majority of the outstanding shares of the
affected Fund. Fundamental restrictions have been adopted in the past to reflect
certain regulatory, business or industry conditions in effect at the time.
However, the restriction on maturity of securities of one year or less is no
longer required to be fundamental under applicable law. The elimination of this
restriction would align the Fund to the current regulatory and competitive
environment.
The proposed elimination of this restriction is not expected to affect
negatively the way the Fund is managed, the investment performance of the Fund
or the securities or instruments in which the Fund invests.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the elimination of the investment restriction described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Money Market Fund present at the Meeting, if the holders of more than 50%
of the outstanding voting securities of the Money Market Fund are present or
represented by proxy; or (ii) more than 50% of the outstanding voting securities
of that Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE MONEY MARKET FUND VOTE "FOR" PROPOSAL 5, AND ANY
UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 6
TO APPROVE NEW INVESTMENT OBJECTIVE FOR THE
AGGRESSIVE GROWTH EQUITIES FUND
(AGGRESSIVE GROWTH EQUITIES FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to approve new
investment objectives for the Fund.
The investment objective of the Fund, formerly known as Mid-Cap Growth
Fund, currently reads as follows:
TCW Mid-Cap Growth Fund seeks long-term capital appreciation by investing
at least 65% of total assets under normal circumstances in publicly-traded
equity securities issued by medium-sized companies as defined by S&P in
its original index screening. The Adviser will generally focus on those
companies whose market capitalizations, at the time of acquisition, are in
the $300 million to $5 billion range and that, in the opinion of the
Adviser, exhibit superior earnings growth prospects and attractive stock
market valuations. The equity securities in which Mid-Cap Growth may
invest include common and preferred stock and convertible securities.
The Proposed Investment Objective
The proposed investment objective would read as follows:
The Fund seeks long-term capital appreciation. To pursue this goal,
the Fund invests in the equity securities of companies that appear
to offer superior growth prospects. These securities include common
and preferred stock and convertible securities. In managing the
Fund's investments, the Adviser will focus on emerging companies
that exhibit this characteristic.
The Board recommends that shareholders vote to approve the new investment
objective of the Fund so that the Fund will no longer be required to invest at
least 65% of its assets in mid-capitalization companies. Although the Fund will
continue to focus on mid-capitalization companies, eliminating the 65%
investment requirement will enable the Adviser to invest a greater percentage of
the Fund's assets in issuers outside the mid-capitalization range when the
Adviser deems it appropriate to do so, according to the Adviser's investment
criteria.
Although the percentage of mid-capitalization securities in which the Fund
may invest may shift, the proposed elimination of the 65% investment requirement
is not expected to affect materially the way the Fund is managed, the investment
performance of the Fund or the securities or instruments in which the Fund
invests.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the new investment objective described above requires the
approval of the lesser of (i) 67% or more of the voting securities of the
Aggressive Growth Equities Fund present at the Meeting, if the holders of more
than 50% of the outstanding voting securities of the Aggressive Growth Equities
Fund are present or represented by proxy; or (ii) more than 50% of the
outstanding voting securities of that Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE AGGRESSIVE GROWTH EQUITIES FUND VOTE "FOR" PROPOSAL 6,
AND ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 7
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF
THE CORE FIXED INCOME FUND
(CORE FIXED INCOME FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the Core Fixed Income Fund currently states
that the Fund "seeks to provide above-average total return."
As amended, the investment objective of the Core Fixed Income Fund would
state that the Fund "seeks to provide maximum current income and achieve above
average total return consistent with prudent investment management over a full
market cycle."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Adoption of the change in the investment objective requires the approval
of the lesser of (i) 67% or more of the voting securities of the Core Fixed
Income Fund present at the Meeting, if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy;
or (ii) more than 50% of the outstanding voting securities of the Core Fixed
Income Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE CORE FIXED INCOME FUND VOTE "FOR" PROPOSAL 7, AND
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 8
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF THE TOTAL
RETURN MORTGAGE-BACKED SECURITIES FUND
(TOTAL RETURN MORTGAGE-BACKED SECURITIES FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the Total Return Mortgage-Backed Securities
Fund (formerly named the Long-Term Mortgage-Backed Securities Fund), currently
states that the Fund "seeks current income and capital appreciation."
As amended, the investment objective of the Total Return Mortgage-Backed
Securities Fund, would state that the Fund "seeks to maximize current income and
achieve above average total return consistent with prudent investment management
over a full market cycle."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the change in the investment objective described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Total Return Mortgage-Backed Securities Fund present at the Meeting, if
the holders of more than 50% of the outstanding voting securities of the Fund
are present or represented by proxy; or (ii) more than 50% of the outstanding
voting securities of the Total Return Mortgage-Backed Securities Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE TOTAL RETURN MORTGAGE-BACKED SECURITIES FUND VOTE "FOR"
PROPOSAL 8, AND ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 9
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF THE
MORTGAGE-BACKED SECURITIES FUND
(MORTGAGE-BACKED SECURITIES FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the Mortgage-Backed Securities Fund, currently
states that the Fund "seeks current income and capital appreciation."
As amended, the investment objective of the Mortgage-Backed Securities
Fund, would provide that the Fund "seeks to maximize current income."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the change in the investment objective described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Mortgage-Backed Securities Fund present at the Meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy; or (ii) more than 50% of the outstanding voting securities
of the Mortgage-Backed Securities Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE MORTGAGE-BACKED SECURITIES FUND VOTE "FOR" PROPOSAL 9,
AND ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 10
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF
THE HIGH YIELD BOND FUND
(HIGH YIELD BOND FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the High Yield Bond Fund, currently states
that the Fund "seeks to provide high current income consistent with reasonable
risk."
As amended, the investment objective of the High Yield Bond Fund, would
state that the Fund "seeks to maximize income and achieve above average total
return consistent with reasonable risk over a full market cycle."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the change in the investment objective described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the High Yield Bond Fund present at the Meeting, if the holders of more than
50% of the outstanding voting securities of the High Yield Bond Fund are present
or represented by proxy; or (ii) more than 50% of the outstanding voting
securities of that Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE HIGH YIELD BOND FUND VOTE "FOR" PROPOSAL 10, AND ANY
UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 11
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF
THE SELECT EQUITIES FUND
(SELECT EQUITIES FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the Select Equities Fund, formerly known as
the Core Equities Fund, currently states that the Fund "seeks preservation of
capital and the best possible return, consistent with a reasonable level of
risk."
As amended, the investment objective of the Select Equities Fund, would
state that the Fund "seeks long-term capital appreciation."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the change in the investment objective described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Select Equities Fund present at the Meeting, if the holders of more than
50% of the outstanding voting securities of the Select Equities Fund are present
or represented by proxy; or (ii) more than 50% of the outstanding voting
securities of that Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE SELECT EQUITIES FUND VOTE "FOR" PROPOSAL 11, AND ANY
UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 12
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF
THE EARNINGS MOMENTUM FUND
(EARNINGS MOMENTUM FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the Earnings Momentum Fund, currently states
that the Fund "seeks capital appreciation and total return."
As amended, the investment objective of the Earnings Momentum Fund, would
state that the Fund "seeks long-term capital appreciation."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the change in the investment objective described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Earnings Momentum Fund present at the Meeting, if the holders of more
than 50% of the outstanding voting securities of the Fund are present or
represented by proxy; or (ii) more than 50% of the outstanding voting securities
of the Earnings Momentum Fund present.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE EARNINGS MOMENTUM FUND VOTE "FOR" PROPOSAL 12, AND ANY
UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 13
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF
THE SMALL CAP GROWTH FUND
(SMALL CAP GROWTH FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the Small Cap Growth Fund, currently states
that the Fund "seek capital appreciation."
As amended, the investment objective of the Small Cap Growth Fund, would
state that the Fund "seeks long- term capital appreciation."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the change in the investment objective described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Small Cap Growth Fund present at the Meeting, if the holders of more than
50% of the outstanding voting securities of the Small Cap Growth Fund are
present or represented by proxy; or (ii) more than 50% of the outstanding voting
securities of that Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE SMALL CAP GROWTH FUND VOTE "FOR" PROPOSAL 13, AND ANY
UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 14
TO APPROVE THE MODIFICATION OF THE INVESTMENT OBJECTIVE OF
THE VALUE OPPORTUNITIES FUND
(VALUE OPPORTUNITIES FUND ONLY)
The Board of Directors will submit at the Meeting, for approval by the
shareholders having a voting interest in the Fund, a proposal to amend the
investment objective of the Fund.
The investment objective of the Value Opportunities Fund, states that the
Fund "seeks capital appreciation."
As amended, the investment objective of the Value Opportunities Fund,
would state that the Fund "seeks long-term capital appreciation."
The proposed modification of the investment objective of the Fund is
intended to better reflect the Fund's investment policy and to make the
objectives consistent among similar funds.
Board of Directors' Recommendation and Vote Required for Approval
Approval for the change in the investment objective described above
requires the approval of the lesser of (i) 67% or more of the voting securities
of the Value Opportunities Fund present at the Meeting, if the holders of more
than 50% of the outstanding voting securities of the Value Opportunities Fund
are present or represented by proxy; or (ii) more than 50% of the outstanding
voting securities of that Fund.
THE BOARD OF DIRECTORS, INCLUDING THE INDEPENDENT DIRECTORS, RECOMMENDS
THAT SHAREHOLDERS OF THE VALUE OPPORTUNITIES FUND VOTE "FOR" PROPOSAL 14, AND
ANY UNMARKED PROXIES WILL BE SO VOTED.
PROPOSAL 15
TO TRANSACT SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING
(SUCH FUNDS AS NECESSARY)
The Board of Directors knows of no other matters which may be presented at
the Meeting. However, if any matters not now known properly come before the
meeting, it is intended that the persons named in the attached form of proxy, or
their substitutes, will vote such proxy in accordance with their judgment on
such matters.
Security Ownership and Interest of Management
A board of five directors is responsible for overseeing the Funds'
affairs. The following individuals currently serve as directors and officers of
the Company: Marc I. Stern, Director and Chairman; Thomas E. Larkin, Jr.,
Director and President; John C. Argue, Director; Norman Barker, Jr., Director;
Richard W. Call, Director; Alvin R. Albe, Jr., Senior Vice President; Michael E.
Cahill, Senior Vice President, General Counsel and Assistant Secretary; Jeffrey
Peterson, Senior Vice President; Philip K. Holl, Secretary; and Peter C. DiBona,
Treasurer. Mr. Stern and Mr. Larkin, in addition to being directors of the
Company, also hold senior positions with the Adviser. All of the officers and
directors, with the exception of John C. Argue, Norman Barker, Jr., and Richard
W. Call, also hold senior positions with the Adviser. The amount and nature of
beneficial ownership and percent outstanding of shares of the Funds held by the
Directors and Officers of the Company as of December 31, 1998, are stated below:
The Officers and Directors of the Fund, together, owned less than 1% of
the Fund's outstanding shares on the record date.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Company does not hold annual shareholders' meetings. Shareholders
wishing to submit proposals for consideration for inclusion in a proxy statement
for a subsequent shareholders' meeting of the Company (if any) should send their
written proposals to the Secretary of the Company at the address set forth on
the cover of this Proxy Statement.
ADJOURNMENT
In the event that sufficient votes in favor of the proposals set forth in
this Notice of Meeting and Proxy Statement are not received by the time
scheduled for the Meeting, the persons named as proxies may move one or more
adjournments of the Meeting for a period or periods of not more than [30] days
in the aggregate to permit further solicitation of proxies with respect to any
such proposals. Any such adjournment will require the affirmative vote of a
majority of the shares present at the Meeting. The persons named as proxies will
vote in favor of such adjournment those shares which they are entitled to vote
in favor of such proposals. They will vote against any such adjournment those
proxies which have voted against any of such proposals.
By Order of the Board of Directors
_____________________________
Secretary
_______________, 1999
<PAGE>
EXHIBIT A
Share Ownership of Each Fund
As of the record date, the following numbers of shares of common stock of
each operational Fund were outstanding:
Name of Fund Number of Shares
Outstanding
TCW Galileo Money Market Fund 227,474,959
TCW Galileo Core Fixed Income Fund 9,418,248
TCW Galileo High Yield Bond Fund 24,589,283
TCW Galileo Total Return Mortgage Backed Securities Fund 9,566,900
TCW Galileo Mortgage-Backed Securities Fund 4,491,918
TCW Galileo Asia Pacific Equities Fund 1,554,887
TCW Galileo Emerging Markets Equities Fund 3,041,539
TCW Galileo Emerging Markets Income Fund 8,081,954
TCW Galileo European Equities Fund 5,966,732
TCW Galileo International Equities Fund 7,339,614
TCW Galileo Japanese Equities Fund 3,746,551
TCW Galileo Latin America Equities Fund 1,382,138
TCW Galileo Convertible Securities Fund 4,197,990
TCW Galileo Select Equities Fund 13,139,809
TCW Galileo Earnings Momentum Fund 3,019,495
TCW Galileo Enhanced 500 Fund 5,245,337
TCW Galileo Large Cap Growth Fund 900,853
TCW Galileo Large Cap Value Fund 1,328,366
TCW Galileo Aggressive Growth Equities Fund 8,484,748
TCW Galileo Small Cap Growth Fund 7,406,250
TCW Galileo Value Opportunities Fund 2,815,203
As of December 31, 1998, the record date, the following persons owned of
record or beneficially 5% or more of the shares of the following Funds:
<TABLE>
<CAPTION>
Amount of
Common Shares Percent
Title of Class Name/Address of Beneficial Owner Owned Outstanding
<S> <C> <C> <C>
TCW Galileo Money Market Fund Sanwa Bank California 14,965,210.63 6.58%
Saxon & Co. FBO PNC 61,389,730.01 26.99%
TCW Galileo Core Fixed Income Fund Cedars-Sinai Medical Center 546,314.15 5.81%
Missionaries Benefit Board 4,355,804.35 48.78%
Hilton Charitable Remainder Trust 2,072,203.42 21.76%
TCW Galileo High Yield Bond Fund Genesee County Employees Retirement 4,339,938.73 17.77%
System
Collins Investments, Inc. 1,277,728.68 5.21%
Maine State Retirement System 4,577,956.47 18.68%
First Insurance Company of Hawaii 1,531,839.60 6.25%
TCW Galileo Total Return Mortgage-Backed Securities General Chemical Pension Plan 1,550,518.71 16.45%
Fund
Fisher Scientific International 1,488,849.66 15.67%
St. Vincents Medical Center 894,428.96 9.49%
Cedars-Sinai Medical Center 549,255.85 5.83%
Curtis Wright Corp. Contributory 1,986,926.18 21.08%
Retirement Plan
TCW Galileo Mortgage-Backed Securities Fund Sisters of Charity 1,806,974.21 40.24%
United Negro College Fund 2,110,191.42 47.08%
TCW Galileo Asia Pacific Equities Fund TCW Profit Sharing & Savings Plan 177,338.85 11.24%
Sobrato Revocable Trust 735,971.08 46.99%
TCW Galileo International Equities 294,763.02 18.82%
Fund
W.C. Edwards Trust 113,028.52 7.22%
TCW Galileo Emerging Markets Equities Fund Cravath Swaine & Moore Retirement 365,297.89 11.73%
Savings Plan
Salk Institute 246,135.09 7.96%
Hilton Charitable Remainder Trust 1,182,096.28 38.23%
TCW Galileo Emerging Markets Income Fund Hilton Charitable Remainder Trust 1,892,838.31 23.16%
TCW Capital Investment Corp. 840,257.31 10.28%
Maine State Retirement System 2,956,687.37 36.18%
Claremont McKenna College 2,091,155.21 25.59%
TCW Galileo European Equities Fund Galileo International Equities Fund 5,236,316.41 84.74%
TCW Galileo International Equities Fund The Salk Institute 670,671.34 8.86%
Duke Endowment Trust 4,613,827.40 60.87%
First Insurance Company of Hawaii 1,097,563.03 14.49%
TCW Galileo Japanese Equities Fund Hilton Charitable Remainder Trust 721,923.84 18.77%
Missionaries Benefit Board 1,283,275.40 33.37%
Galileo International Equities Fund 1,698,505.94 44.17%
TCW Galileo Latin America Equities Fund TCW Profit Sharing and Savings Plan 196,407.37 14.53%
TCW Galileo International Equities 84,493.50 6.17%
Fund, Inc.
M.K. Douglas 108,484.68 7.92%
Missionaries Benefit Board 747,747.84 54.62%
TCW Galileo Convertible Securities Fund Kresge Foundation 375,238.00 8.58%
Maine State Retirement System 1,391,460.29 31.83%
Buck Foundation 260,909.10 5.97%
The Rio Hondo Foundation 349,871.32 8.00%
TCW Galileo Select Equities Fund Egleston's Children's Hospital 954,038.39 6.86%
The Salk Institute 1,600,312.82 11.56%
Duke Endowment Trust 3,803,801.82 27.49%
TCW Galileo Earnings Momentum Fund Duke Endowment Trust 481,853.90 14.40%
McCarthy Trust 252,036.10 7.53%
McCarthy Survivors Trust 252,036.10 7.53%
Goldman Sachs Pension Plan 1,282,582.41 38.33%
TCW Galileo Enhanced 500 Fund TCW Capital Investment Corp. 350,289.97 6.47%
Brazeway Retirement Plan 219,477.02 7.73%
Carpenters Health and Welfare Trust 1,452,497.37 26.82%
The Cain Foundation 2,504,912.99 46.25%
TCW Galileo Large Cap Growth Fund Rosenblatt Trust 61,902.45 6.42%
Mead Foundation 585,738.92 60.77%
TCW Capital Investment Corp. 173,383.31 17.99%
TCW Galileo Large Cap Value Fund Primm Family Trust 204,296.90 15.00%
Emett Trust 98,366.47 7.22%
The Salk Institute 609,260.56 44.81%
TCW Galileo Aggressive Growth Equities Fund Tranan Management Corp. 626,148.21 6.65%
Freedom Communications 487,496.75 5.18%
Duke Endowment Trust 1,340,819.36 14.24%
TCW Galileo Small Cap Growth Fund University of Tennessee 644,236.87 7.96%
Fisher Scientific International 472,502.36 5.84%
General Chemical Pension Plan 594,580.03 7.28%
Salem Hospital Retirement Plan 457,771.17 5.75%
TCW Galileo Value Opportunities Fund Robson Trust 213,634.29 7.35%
William & Charlene Norred 213,498.36 7.35%
Collins Management Trust 235,829.91 8.11%
Mead Foundation 163,447.29 5.62%
Tranan Management Corp. 544,740.73 18.74%
<FN>
The address of each shareholder is: TCW Funds Management, Inc., 865 S.
Figueroa Street, 18th Floor, Los Angeles, California 90017, Attention: Investor
Relations.
</FN>
</TABLE>
<PAGE>
EXHIBIT B
FORM OF AMENDED AND RESTATED
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of the ____ day of
_______, 1998 by and between TCW GALILEO FUNDS, INC., a Maryland corporation
(the "Company"), and TCW FUNDS MANAGEMENT, INC., a California corporation (the
"Adviser").
WHEREAS, the Company is engaged in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended ("1940 Act");
WHEREAS, the Adviser is engaged in the business of providing
investment advice and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended;
WHEREAS, the Company wishes to retain the Adviser to render
investment advisory and management services; and
WHEREAS, the Adviser is willing to perform such services.
NOW, THEREFORE, the Company and the Adviser agree as follows:
1. Appointment.
(a) The Company hereby employs the Adviser to provide investment
advisory and management services for each of the portfolios of the Company
specified in Schedule A, as such Schedule A may be amended from time to time
(each, individually, a "Fund" and, collectively, the "Funds"). This engagement
is for the period and on the terms set forth in this Agreement. The Adviser
hereby accepts such employment and agrees to render the services and to assume
the obligations set forth in this Agreement, for the compensation provided
below.
(b) If the Company establishes one or more portfolios other than the
Funds listed in Schedule A with respect to which it desires to retain the
Adviser to act as investment adviser hereunder, it shall notify the Adviser in
writing. If the Adviser is willing to render such services, it shall notify the
Company in writing, whereupon such portfolio shall become a Fund under this
Agreement and Schedule A shall be amended accordingly. The compensation payable
by such new portfolio to the Adviser shall be agreed to in writing at the time.
(c) The Adviser, subject to the prior approval of the Company's
Board of Directors, may from time to time employ or associate itself with such
person or persons as the Adviser may believe to be particularly fitted to assist
it in the performance of this Agreement, provided, however, that the
compensation of such person or persons shall be paid by the Adviser and that the
Adviser shall be as fully responsible to the Company for the acts and omissions
of any sub-adviser as it is for its own acts and omissions.
2. Advisory and Management Services. The Adviser, subject to the
direction and supervision of the Company's Board of Directors and in conformity
with applicable laws, the Company's Articles of Incorporation, Bylaws,
Registration Statement, Prospectus and stated investment objectives, policies
and restrictions, shall:
(a) Manage the investment of each Fund's assets including, by way of
illustration, the evaluation of pertinent economic, statistical, financial and
other data, the determination of the industries and companies to be represented
in that Fund's portfolio, the formulation and implementation of the Fund's
investment program, and the determination from time to time of the securities
and other investments to be purchased, retained or sold by the Fund;
(b) Place orders for the purchase or sale of portfolio securities
for each Fund's account with broker-dealers selected by the Adviser;
(c) Administer the day to day operations of each Fund;
(d) Furnish to the Company office space at such place as may be
agreed upon from time to time, and all office facilities, business equipment,
supplies, utilities and telephone services necessary for managing the affairs
and investments and keeping those accounts and records of the Company and the
Funds that are not maintained by the Company's transfer agent, custodian,
accounting or subaccounting agent, and arrange for officers or employees of the
Adviser to serve, without compensation from the Company, as officers, directors
or employees of the Company, if desired and reasonably required by the Company;
and
(e) Pay such expenses as are incurred by it in connection with
providing the foregoing services, except as provided in Section 3 below.
3. Company Expenses. The Company assumes and shall pay or cause to
be paid all expenses of the Company and the Funds, including, without
limitation: (a) all costs and expenses incident to the public offering of
securities of the Company, including those relating to the registration of its
securities under the Securities Act of 1933, as amended, and any filings
required under state securities laws and any fees payable in connection
therewith; (b) the charges and expenses of any custodian appointed by the
Company for the safekeeping of the cash, portfolio securities and other property
of the Funds; (c) the charges and expenses of independent accountants; (d) the
charges and expenses of stock transfer and dividend disbursing agent or agents
and registrar or registrars appointed by the Company; (e) the charges and
expenses of any accounting or subaccounting agent appointed by the Company to
provide accounting services to the Funds; (f) brokerage commissions, dealer
spreads, and other costs incurred in connection with proposed or consummated
portfolio securities transactions; (g) all taxes, including securities issuance
and transfer taxes, and corporate fees payable by the Company to federal, state,
local or other governmental agencies; (h) the cost and expense of printing and
issuing certificates representing securities of the Company; (i) fees involved
in registering and maintaining registrations of the Company under the 1940 Act;
(j) all expenses of shareholders' and directors' meetings, and of preparing,
printing and mailing proxy statements and reports to shareholders; (k) fees and
expenses of directors of the Company who are not officers or employees of the
Adviser; (l) all fees and expenses incident to the Company's dividend
reinvestment plan; (m) charges and expenses of legal counsel to the independent
directors and to the Company; (n) trade association dues; (o) interest payable
on Company borrowings; (p) any shareholder relations expense; (q) premiums for a
fidelity bond and any errors and omissions insurance maintained by the Company;
and (r) any other ordinary or extraordinary expenses incurred by the Company or
the Funds in the course of their business.
4. Compensation. As compensation for the services performed with
respect to each Fund, the Company shall pay the Adviser as soon as practicable
after the last day of each month a fee for such month computed at an annual rate
specified in Schedule B, as may be amended from time to time.
For the purpose of calculating such fee, the net asset value for a
month shall be the average of the net asset values as determined for each
business day of the month. If this Agreement becomes effective after the first
day of a month, or terminates before the last day of a month, the compensation
provided shall be prorated.
The Company shall also reimburse the Adviser for the organizational
expenses incurred by the Adviser on behalf of each Fund or class thereof. Such
organizational expenses shall be amortized by the Company over five years.
5. Services Not Exclusive. Nothing contained in this Agreement shall
prevent the Adviser or any affiliated person of the Adviser from acting as
investment adviser or manager for any other person, firm or corporation
(including any other investment company), whether or not the investment
objectives or policies of any such other person, firm or corporation are similar
to those of a Fund, and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling or trading any securities or
commodities for their own accounts or for the account of others for whom the
Adviser or any such affiliated person may be acting. While information and
recommendations supplied to each Fund shall, in the Adviser's judgment, be
appropriate under the circumstances and in light of the investment objectives
and policies of the Fund, they may be different from the information and
recommendations supplied by the Adviser or its affiliates to other investment
companies, funds and advisory accounts. The Company shall be entitled to
equitable treatment under the circumstances in receiving information,
recommendations and any other services, but the Company recognizes that it is
not entitled to receive preferential treatment as compared with the treatment
given by the Adviser to any other investment company, fund or advisory account.
6. Portfolio Transactions and Brokerage. In placing portfolio
transactions and selecting brokers or dealers, the Adviser shall endeavor to
obtain on behalf of the Company and the Funds the best overall terms available.
In assessing the best overall terms available for any transaction, the Adviser
shall consider all factors it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
In evaluating the best overall terms available and in selecting the broker or
dealer to execute a particular transaction, the Adviser may also consider the
"brokerage and research services" provided to the Company, the Funds and/or
other accounts over which the Adviser or an affiliate of the Adviser exercises
investment discretion. The Adviser is authorized to pay a broker or dealer which
provides such brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if,
but only if, the Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of that particular transaction
or in terms of the overall responsibilities of the Adviser to the Company and
the Funds.
7. Books and-Records. In compliance with the requirements of Rule
3la-3 under the 1940 Act, the Adviser agrees that all records that it maintains
for the Company are the property of the Company and further agrees to surrender
promptly to the Company any of such records upon the Company's request. The
Adviser further agrees to preserve for the periods prescribed by Rule 3la-2
under the 1940 Act the records required to be maintained by Rule 3la-l under the
1940 Act.
8. Limitation of Liability. Neither the Adviser, nor any director,
officer, agent or employee of the Adviser, shall be liable or responsible to the
Company or any of its shareholders for any error of judgment, mistake of law or
any loss arising out of any investment, or for any other act or omission in the
performance by such person or persons of their respective duties, except for
liability resulting from willful misfeasance, bad faith, gross negligence, or
reckless disregard of their respective duties. The Adviser shall be indemnified
by the Company as an agent of the Company in accordance with the terms of
Article Eighth, Section (9) of the Company's Articles of Incorporation.
9. Nature of Relationship. The Company and the Adviser are not
partners or joint venturers with each other and nothing herein shall be
construed so as to make them such partners or joint venturers or impose any
liability as such on either of them. The Adviser is an independent contractor
and, except as expressly provided or authorized in this Agreement, shall have no
authority to act for or represent the Company.
10. Duration and Termination. This Agreement shall become effective
upon its execution and shall continue in effect until two years from the date
hereof, provided it is approved by the vote of a "majority of the outstanding
voting securities" of the Company. Thereafter, this Agreement shall continue in
effect from year to year, provided its continuance is specifically approved at
least annually (a) by vote of a "majority of the outstanding voting securities"
of the Company or by vote of the Board of Directors of the Company, and (b) by
vote of a majority of the Directors of the Company who are not parties to this
Agreement or "interested persons" of any party to this Agreement, cast in person
at a meeting called for the purpose of voting on such approval. The Company
(either by vote of its Board of Directors or by vote of a "majority of the
outstanding voting securities" of the Company) may, at any time and without
payment of any penalty, terminate this Agreement upon sixty days' written notice
to the Adviser. This Agreement shall automatically and immediately terminate in
the event of its "assignment." The Adviser may terminate this Agreement without
payment of any penalty on sixty days' written notice to the Company.
11. Definitions. For the purposes of this Agreement, the terms
"assignment," "interested person," and "majority of the outstanding voting
securities" shall have their respective meanings defined in the 1940 Act and the
Rules and Regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission, or such interpretive
positions as may be taken by the Commission or its staff under said Act, and the
term "brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934, as amended, and the Rules and Regulations
thereunder.
12. Notices. Any notice under this Agreement shall be given in
writing, addressed and delivered to the party to this Agreement entitled to
receive such notice at such address as such party may designate in writing.
13. Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of California and the applicable provisions of the
1940 Act. To the extent applicable law of the State of California, or any of the
provisions herein, conflict with applicable provisions of the 1940 Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this agreement as of the day and year first above written in Los Angeles,
California.
TCW GALILEO FUNDS, INC.
By____________________________
Attest By____________________________
[NAME]
[TITLE]
____________________________
Secretary
TCW FUNDS MANAGEMENT, INC.
By____________________________
[NAME]
[TITLE]
Attest By____________________________
[NAME]
[TITLE]
____________________________
Secretary
<PAGE>
SCHEDULE A
Funds
- -----------------------------------------------------------
TCW Galileo Money Market Fund
TCW Galileo Emerging Markets Income Fund
TCW Galileo Core Fixed Income Fund
TCW Galileo High Yield Bond Fund
TCW Galileo Total Return Mortgage-Backed Securities Fund
TCW Galileo Mortgage-Backed Securities Fund
TCW Galileo Asia Pacific Equities Fund
TCW Galileo Emerging Markets Equities Fund
TCW Galileo European Equities Fund
TCW Galileo International Equities Fund
TCW Galileo Japanese Equities Fund
TCW Galileo Latin America Equities Fund
TCW Galileo Convertible Securities Fund
TCW Galileo Select Equities Fund
TCW Galileo Earnings Momentum Fund
TCW Galileo Enhanced 500 Fund
TCW Galileo Large Cap Growth Fund
TCW Galileo Large Cap Value Fund
TCW Galileo Aggressive Growth Equities Fund
TCW Galileo Small Cap Growth Fund
TCW Galileo Value Opportunities Fund
<PAGE>
SCHEDULE B
Annual Fee
Rate (expressed as a
Fund percentage of net
assets)
- --------------------------------------------------------------------------------
TCW Galileo Money Market Fund 0.25%
TCW Galileo Emerging Markets Income Fund 0.75%
TCW Galileo Core Fixed Income Fund 0.40%
TCW Galileo High Yield Bond Fund 0.75%
TCW Galileo Total Return Mortgage-Backed Securities 0.50%
Fund
TCW Galileo Mortgage-Backed Securities Fund 0.50%
TCW Galileo Asia Pacific Equities Fund 1.00%
TCW Galileo Emerging Markets Equities Fund 1.00%
TCW Galileo European Equities Fund 0.75%
TCW Galileo International Equities Fund --------
TCW Galileo Japanese Equities Fund 0.75%
TCW Galileo Latin American Equities Fund 1.00%
TCW Galileo Convertible Securities Fund 0.75%
TCW Galileo Select Equities Fund 0.75%
TCW Galileo Earnings Momentum Fund 1.00%
TCW Galileo Enhanced 500 Fund 0.25%
TCW Galileo Large Cap Growth Fund 0.55%
TCW Galileo Large Cap Value Fund 0.55%
TCW Galileo Aggressive Growth Equities Fund 1.00%
TCW Galileo Small Cap Growth Fund 1.00%
TCW Galileo Value Opportunities Fund 0.80%
<PAGE>
EXHIBIT C
Information About the Investment Adviser
TCW Funds Management, Inc. (the "Adviser"), is a wholly-owned subsidiary
of The TCW Group, Inc. of 865 South Figueroa Street, Suite 1800, Los Angeles,
California 90017. TCW Group, Inc. owns 100% of TCW Funds Management, Inc. As of
December 31, 1998, the Adviser and its affiliated companies had over $50 billion
under management or committed for management. The principal business address of
the Adviser is 865 South Figueroa Street, Suite 1800, Los Angeles, California
90017. The Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940. Its directors and principal executive officers, their
principal occupations are shown below. All individuals have been employed by TCW
for five years or more, except for Mr. Sonneborn, although individuals may have
changed positions within the company. The address of each director and officer
is 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017.
<TABLE>
<CAPTION>
Name and Position With Connection With Other
Investment Adviser Name of Other Company Company
<S> <C> <C>
Alvin R. Albe, Jr. TCW Advisors, Inc. Director and Executive Vice
Director and Executive President, Finance & Administration
Vice President, Finance
& Administration
TCW Americas Development, Inc. Director and Chief Administration
Officer
TCW Asia Limited Director
TCW Investment Management Company Director and Executive Vice
President, Finance & Administration
TCW London International, Limited Director and Executive Vice
President, Finance & Administration
TCW Asset Management Company Director and Executive Vice
President, Finance & Administration
Trust Company of the West Director and Executive Vice
President, Finance & Administration
The TCW Group, Inc. Executive Vice President, Finance &
Administration
<PAGE>
Mark L. Attanasio TCW/Crescent Mezzanine, L.L.C. Director and Managing Director
Group Managing Director
and Chief Investment Officer -
Below Investment Grade
Fixed Income
TCW Investment Management Company Group Managing Director and Chief
Investment Officer - Below
Investment Grade Fixed Income
TCW Asset Management Company Director, Group Managing Director
and Chief Investment Officer - Below
Investment Grade Fixed Income
Trust Company of the West Group Managing Director and Chief
Investment Officer - Below
Investment Grade Fixed Income
Crescent MACH I G.P. Corporation Director and Senior Vice President
Crescent/MACH I Partners, Inc. Director and Senior Vice President
Philip A. Barach TCW Advisors, Inc. Group Managing Director and Chief
Group Managing Director Investment Officer - Investment
and Chief Investment Officer - Grade Fixed Income
Investment Grade Fixed
Income
TCW Investment Management Company Group Managing Director and Chief
Investment Officer - Investment
Grade Fixed Income
TCW Asset Management Company Director, Group Managing Director
and Chief Investment Officer -
Investment Grade Fixed Income
Trust Company of the West Group Managing Director and Chief
Investment Officer - Investment
Grade Fixed Income
Apex Mortgage Capital, Inc. Director, President and Chief
Executive Officer
<PAGE>
Javier W. Baz TCW London International, Limited Director, President and Chief
Managing Director and Chief Executive Officer
Investment Officer -
International
TCW Asia Limited Chief Investment Officer -
International
TCW Asset Management Company Director, Managing Director and
Chief Investment Officer -
International
Trust Company of the West Managing Director and Chief
Investment Officer - International
<PAGE>
Michael E. Cahill TCW Advisors, Inc. Managing Director, General Counsel
General Counsel, Secretary and Secretary
and Managing Director
TCW Asia Limited Director
TCW Investment Management Company Managing Director, General Counsel
and Secretary
TCW London International, Limited Director, Managing Director, General
Counsel, Vice President and Secretary
TCW Americas Development, Inc. General Counsel and Assistant
Secretary
TCW Asset Management Company Director, Managing Director, General
Counsel and Secretary
Trust Company of the West Managing Director, General Counsel
and Secretary
The TCW Group, Inc. Managing Director, General Counsel
and Secretary
Apex Mortgage Capital, Inc. Secretary
<PAGE>
Ernest O. Ellison TCW Investment Management Company Chairman, Investment Policy
Chairman, Investment Committee
Policy Committee
TCW Asset Management Company Chairman, Investment Policy Committee
TCW London International, Limited Director and Vice Chairman
The TCW Group, Inc. Director and Vice Chairman
Trust Company of the West Director, Vice Chairman and
Chairman, Investment Policy Committee
TCW Americas Development, Inc. Director and Vice Chairman
Douglas S. Foreman TCW Asset Management Company Director, Group Managing Director
Group Managing Director and Chief Investment Officer -
and Chief Investment Officer U.S. Equities
- - U.S. Equities
Trust Company of the West Group Managing Director and Chief
Investment Officer - U.S. Equities
<PAGE>
Robert M. Hanisee TCW Asset Management Company Managing Director and Chief
Managing Director and Investment Officer - Private Client
Chief Investment Officer Services
- - Private Client Services
Trust Company of the West Managing Director and Chief
Investment Officer - Private Client
Services
Thomas E. Larkin, Jr. TCW Advisors, Inc. Director and Vice Chairman
Chairman of the Board
TCW Investment Management Company Director and Vice Chairman
TCW Americas Development, Inc. Director
TCW Asset Management Company Director and Vice Chairman
Trust Company of the West Director and President
The TCW Group, Inc. Director, Executive Vice President
and Group Managing Director
Hilary G.D. Lord TCW Advisors, Inc. Managing Director, Chief
Managing Director, Chief Compliance Officer and Assistant
Compliance Officer and Secretary
Assistant Secretary
TCW Investment Management Company Managing Director, Chief Compliance
Officer and Assistant Secretary
The TCW Group, Inc. Managing Director, Chief Compliance
Officer and Assistant Secretary
TCW Asset Management Company Managing Director, Chief Compliance
Officer and Assistant Secretary
Trust Company of the West Managing Director, Chief Compliance
Officer and Assistant Secretary
<PAGE>
William C. Sonneborn TCW Advisors, Inc. Managing Director, Chief
Managing Director, Financial Officer and Assistant
Chief Financial Officer Secretary
and Assistant Secretary
TCW Americas Development, Inc. Treasurer and Assistant Secretary
TCW Asset Management Company Director, Managing Director, Chief
Financial Officer and Assistant
Secretary
TCW Investment Management Company Managing Director, Chief Financial
Officer and Assistant Secretary
TCW London International, Limited Managing Director, Chief Financial
Officer and Assistant Secretary
Trust Company of the West Managing Director, Chief Financial
Officer and Assistant Secretary
The TCW Group, Inc. Managing Director, Chief Financial
Officer and Assistant Secretary
Prior to January 1998 Senior Associate
Goldman, Sachs & Co.
<PAGE>
Marc I. Stern TCW Advisors, Inc. Director and Vice Chairman
Director and President
TCW Americas Development, Inc. Chairman
TCW Asia Limited Chairman
TCW Investment Management Company Director and Vice Chairman
TCW London International, Limited Chairman
TCW Asset Management Company Director and Vice Chairman
The TCW Group, Inc. Director and President
Trust Company of the West Director, Executive Vice President
and Group Managing Director
</TABLE>
<PAGE>
EXHIBIT D
The Adviser serves as an investment adviser or sub-adviser to the
following funds, which have investment objectives similar to the Funds:
COMPARABLE FUNDS*
<TABLE>
<CAPTION>
Comparable
Other Funds Galileo Funds Assets as of 12/31/98 Advisory Fee
<S> <C> <C> <C>
TCW/DW Latin Galileo Latin America $129,349,863 0.50% of net assets
American Growth Fund Equities Fund up to $500 million
0.48% thereafter
TCW/DW Mid-Cap Galileo $251,641,336 0.40% of net assets
Equity Trust Aggressive Growth Equities
Fund
TCW/DW Small Cap Galileo Small $335,419,023 0.40% of net assets
Growth Fund Cap Equities Fund
TCW/DW Emerging Markets Galileo Emerging Markets $30,271,853 0.50% of net assets
Opportunities Trust Equities Fund
Dean Witter Select Galileo $13,220,573 0.50% of net assets
Dimensions Investment Emerging Markets Equities
Series - Emerging Markets Fund
Portfolio
TCW Convertible Securities Galileo $393,445,316 0.75% of net assets
Fund, Inc. Convertible Securities to $100,000,000
Fund 0.50% thereafter
<FN>
*For each fund, except for the TCW Convertible Securities Fund, Inc. the
Adviser and Dean Witter have agreed to a division as between themselves of the
total fees necessary for the management of the business affairs of and the
furnishing of investment advice to the funds.
</FN>
</TABLE>
The Adviser has not waived, reduced or otherwise agreed to reduce its
compensation under any applicable contract.
<PAGE>
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
ENCLOSED YOU WILL FIND A PROXY CARD RELATING TO EACH OF THE FUNDS FOR
WHICH YOU ARE ENTITLED TO VOTE. PLEASE INDICATE YOUR VOTE ON THE ENCLOSED PROXY
CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. THE PROXY CAN BE REVOKED AND WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING. WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY CARD PROMPTLY.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
TCW GALILEO FUNDS, INC.
SPECIAL MEETING OF SHAREHOLDERS - ______, 1999
PROXY
The undersigned hereby appoints Alvin R. Albe, Jr., Michael E. Cahill and
Philip K. Holl, or any of them, proxies, each with the power of substitution, to
vote on behalf of the undersigned at the Special Meeting of Shareholders of TCW
Galileo Funds, Inc. - TCW Galileo _________Fund to be held on February 10, 1999,
at _____, Pacific time, and at any adjournment thereof, on the proposals set
forth in the Notice of Meeting dated ________, 1999.
THIS PROXY IS SOLICITED BY THE DIRECTORS. IF NO SPECIFICATION IS MADE
THEREON, THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL.
1. To Approve an Amended and Restated Investment Advisory and
Management Agreement that Transfers Responsibility for Accounting
and Certain Administrative Services from the Investment Adviser
to the Funds (All Funds)
For [ ] Against [ ] Abstain [ ]
2. To Approve the Elimination of the Money Market Fund's
Fundamental Investment Restriction Regarding Diversification
(Money Market Fund Only)
For [ ] Against [ ] Abstain [ ]
3. To Approve the Elimination of the Money Market Fund's
Fundamental Investment Restriction Regarding Illiquidity (Money
Market Fund Only)
For [ ] Against [ ] Abstain [ ]
4. To Approve the Elimination of the Money Market Fund's
Fundamental Investment Restriction Regarding Investing in Other
Investment Companies (Money Market Fund Only)
For [ ] Against [ ] Abstain [ ]
5. To Approve the Elimination of the Money Market Fund's
Fundamental Investment Restriction Regarding Investing in Money
Market Instruments with Maturities of One Year or Less (Money
Market Fund Only)
For [ ] Against [ ] Abstain [ ]
6. To Approve New Investment Objective for the Aggressive
Growth Equities Fund (Aggressive Growth Equities Fund Only)
For [ ] Against [ ] Abstain [ ]
7. To Approve the Modification of the Investment Objective of
the Core Fixed Income Fund (Core Fixed Income Fund Only)
For [ ] Against [ ] Abstain [ ]
8. To Approve the Modification of the Investment Objective of
the Total Return Mortgage-Backed Securities Fund (Total Return
Mortgage Backed Securities Fund Only)
For [ ] Against [ ] Abstain [ ]
9. To Approve the Modification of the Investment Objective of
the Mortgage-Backed Securities Fund (Mortgage-Backed Securities
Fund Only)
For [ ] Against [ ] Abstain [ ]
10. To Approve the Modification of the Investment Objective of
the High Yield Bond Fund (High Yield Bond Fund Only)
For [ ] Against [ ] Abstain [ ]
11. To Approve the Modification of the Investment Objective of
the Select Equities Fund (Select Equities Fund Only)
For [ ] Against [ ] Abstain [ ]
12. To Approve the Modification of the Investment Objective of
the Earnings Momentum Fund (Earnings Momentum Fund Only)
For [ ] Against [ ] Abstain [ ]
13. To Approve the Modification of the Investment Objective of
the Small Cap Growth Fund (Small Cap Growth Fund Only)
For [ ] Against [ ] Abstain [ ]
14. To Approve the Modification of the Investment Objective of
the Value Opportunities Fund (Value Opportunities Fund Only)
For [ ] Against [ ] Abstain [ ]
15. To Transact Such Other Business as May Properly Come Before
the Meeting (Such Funds as Necessary)
For [ ] Against [ ] Abstain [ ]
Please sign personally. If the shares are registered in more than one
name, each joint owner or each fiduciary should sign personally. Only
authorized officers should sign for corporations.
Date:_______________________
____________________________
Signature
_____________________________
Signature
IMPORTANT: PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ENCL0SED ENVELOPE.
