UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21279
---------
THE MERGER FUND VL
------------------
(Exact name of registrant as specified in charter)
100 SUMMIT LAKE DRIVE
---------------------
VALHALLA, NEW YORK 10595
------------------------
(Address of principal executive offices) (Zip code)
BONNIE L. SMITH
---------------
100 SUMMIT LAKE DRIVE
---------------------
VALHALLA, NEW YORK 10595
------------------------
(Name and address of agent for service)
914-741-5600
------------
Registrant's telephone number, including area code
Date of fiscal year end: DECEMBER 31
-----------
Date of reporting period: JUNE 30, 2004
-------------
ITEM 1. REPORT TO STOCKHOLDERS.
- ------------------------------
THE MERGER FUND VL
SEMI-ANNUAL REPORT
JUNE 30, 2004
THE MERGER FUND VL
SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS -- 86.86%*<F1>
BANKS -- 4.68%*<F1>
200 Charter One Financial, Inc. $ 8,838
200 SouthTrust Corporation 7,762
--------
16,600
--------
BROADCASTING -- 2.09%*<F1>
350 Lin TV Corp -- Class A**<F2> 7,420
--------
COMPUTER SOFTWARE -- 3.65%*<F1>
700 PeopleSoft, Inc.(3)<F6>**<F2> 12,950
--------
ELECTRIC UTILITIES -- 2.80%*<F1>
400 Unisource Energy Corporation 9,940
--------
HOTELS & GAMING -- 5.81%*<F1>
300 Mandalay Resort Group(2)<F5> 20,592
--------
HUMAN RESOURCES -- 1.52%*<F1>
1,000 Exult Inc.**<F2> 5,380
--------
INFORMATION TECHNOLOGY -- 2.84%*<F1>
776 The Titan Corporation(4)<F7>**<F2> 10,072
--------
MANAGED CARE -- 4.74%*<F1>
150 WellPoint Health Networks Inc.(2)<F5>**<F2> 16,802
--------
PHARMACEUTICALS -- 23.49%*<F1>
500 Aventis S.A. -- ADR(1)<F4>(3)<F6> 38,035
600 CIMA Labs Inc.(2)<F5>**<F2> 20,238
1,000 ILEX Oncology, Inc.**<F2> 24,990
--------
83,263
--------
REAL ESTATE INVESTMENT TRUSTS -- 3.68%*<F1>
200 Chelsea Property Group, Inc.(3)<F6> 13,044
--------
SATELLITE COMMUNICATIONS -- 1.31%*<F1>
200 PanAmSat Corporation(3)<F6>**<F2> 4,644
--------
SAVINGS & LOANS -- 8.01%*<F1>
700 New York Community Bancorp, Inc. 13,741
200 Seacoast Financial Services Corporation 6,920
200 Washington Mutual, Inc. 7,728
--------
28,389
--------
SECURITY SERVICES -- 2.08%*<F1>
200 Kroll Inc.(2)<F5>**<F2> 7,376
--------
SEMICONDUCTORS -- 5.79%*<F1>
3,271 ChipPAC, Inc. -- Class A**<F2> 20,509
--------
TELEPHONY -- 14.37%*<F1>
1,700 AT&T Wireless Services Inc.(2)<F5>**<F2> 24,344
600 Citizens Communications Company**<F2> 7,260
1,500 NextWave Telecom Inc. -- Class B**<F2> 9,000
700 Price Communications Corporation**<F2> 10,332
--------
50,936
--------
TOTAL COMMON STOCKS (Cost $306,340) 307,917
--------
PRINCIPAL
AMOUNT
- ---------
CORPORATE BONDS -- 0.57%*<F1>
$ 2,000 Adelphia Communications Corporation
9.38%, 11/15/2009 D<F3>(5)<F8> 2,030
--------
TOTAL CORPORATE BONDS (Cost $2,119) 2,030
--------
SHORT-TERM INVESTMENTS -- 4.11%*<F1>
14,557 First American Prime Obligations Fund 14,557
--------
TOTAL SHORT-TERM INVESTMENTS (Cost $14,557) 14,557
--------
TOTAL INVESTMENTS (Cost $323,016) $324,504
--------
--------
ADR- American Depositary Receipt
*<F1> Calculated as a percentage of net assets.
**<F2> Non-income producing security.
D<F3> Security in default.
(1)<F4> Foreign security.
(2)<F5> All or a portion of the shares have been committed as collateral for
open short positions.
(3)<F6> All or a portion of the shares have been committed as collateral for
written option contracts.
(4)<F7> All or a portion of the shares have been committed as collateral for
short foreign currency contracts.
(5)<F8> Fair-valued security.
See notes to the financial statements.
THE MERGER FUND VL
SCHEDULE OF SECURITIES SOLD SHORT
JUNE 30, 2004
(UNAUDITED)
SHARES VALUE
------ -----
150 Anthem, Inc. $13,434
557 Genzyme Corporation 26,363
820 Sanofi-Synthelabo SA -- ADR 26,232
80 Simon Property Group, Inc. 4,113
140 Sovereign Bancorp, Inc. 3,094
9,570 ST Assembly Test Services Limited 7,523
178 Wachovia Corporation 7,921
-------
TOTAL SECURITIES SOLD SHORT
(Proceeds $86,607) $88,680
-------
-------
ADR- American Depositary Receipt
See notes to the financial statements.
THE MERGER FUND VL
SCHEDULE OF OPTIONS WRITTEN
JUNE 30, 2004
(UNAUDITED)
CONTRACTS (100 SHARES PER CONTRACT) VALUE
- ----------------------------------- -----
CALL OPTIONS
Citizens Communications Company
6 Expiration August 21, 2004, Exercise Price $12.50 $ 210
Hewitt Associates, Inc. -- Class A
2 Expiration August 21, 2004, Exercise Price $25.00 570
Mandalay Resort Group
1 Expiration July 17, 2004, Exercise Price $70.00 2
New York Community Bancorp, Inc.
7 Expiration July 17, 2004, Exercise Price $20.00 490
PeopleSoft, Inc.
7 Expiration July 17, 2004, Exercise Price $17.50 945
The Titan Corporation:
1 Expiration August 21, 2004, Exercise Price $12.50 110
2 Expiration August 21, 2004, Exercise Price $15.00 60
Verizon Communications Inc.
2 Expiration July 17, 2004, Exercise Price $35.00 250
Washington Mutual, Inc.
2 Expiration July 17, 2004, Exercise Price $40.00 60
------
TOTAL OPTIONS WRITTEN
(Premiums received $3,460) $2,697
------
------
See notes to the financial statements.
THE MERGER FUND VL
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004
(UNAUDITED)
ASSETS:
Investments, at value (Cost $323,016) $324,504
Deposit at brokers for short sales 55,000
Receivable from brokers for proceeds on securities sold short 72,930
Receivable for investments sold 85,360
Receivable for written options 1,768
Receivable from investment advisor 19,407
Dividends and interest receivable 219
Prepaid expenses 405
--------
Total Assets 559,593
--------
LIABILITIES:
Securities sold short, at value (Proceeds of $86,607) $88,680
Options written, at value (Premiums received $3,460) 2,697
See accompanying schedule
Payable for investment securities purchased 91,484
Payable for forward currency exchange contracts 37
Accrued expenses and other payables 22,164
-------
Total Liabilities 205,062
--------
NET ASSETS $354,531
--------
--------
NET ASSETS Consist Of:
Accumulated undistributed net realized gain on investments
sold and option contracts expired or closed $ 1,106
Net unrealized appreciation (depreciation) on:
Investments $ 1,488
Short positions (2,073)
Written options 763
Forward currency exchange contracts (36)
-------
Net unrealized appreciation 142
Paid-in capital 353,283
--------
Total Net Assets $354,531
--------
--------
NET ASSET VALUE, offering price and redemption price per share
($354,531/ 35,480 shares of beneficial interest outstanding) $9.99
-----
-----
See notes to the financial statements.
THE MERGER FUND VL
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 26, 2004(1)<F9> THROUGH JUNE 30, 2004
(UNAUDITED)
INVESTMENT INCOME:
Interest $ 49
Dividend income on long positions
(net of foreign withholding taxes of $24) 193
--------
Total investment income 242
--------
EXPENSES:
Investment advisory fee $ 238
Transfer agent and shareholder servicing agent fees 9,940
Federal and state registration fees 36
Professional fees 3,681
Trustees' fees and expenses 1,384
Custody fees 6
Administration fee 6,696
Reports to shareholders 458
Borrowing costs 116
-------
Total operating expenses 22,555
Less: Expenses waived (Note 6) (22,172)
--------
Total expenses 383
--------
NET INVESTMENT LOSS (141)
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain on:
Long transactions 715
Option contracts expired or closed 532
-------
Net realized gain 1,247
Change in unrealized appreciation / depreciation on:
Investments 1,488
Short positions (2,073)
Written options 763
Forward currency exchange contracts (36)
-------
Net unrealized gain 142
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,389
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,248
--------
--------
(1)<F9> Commencement of Operations.
See notes to the financial statements.
THE MERGER FUND VL
STATEMENT OF CHANGES IN NET ASSETS
PERIOD MAY 26, 2004 (1)<F10>
THROUGH JUNE 30, 2004
----------------------------
(UNAUDITED)
Net investment loss $ (141)
Net realized gain on investments sold and option contracts expired or closed 1,247
Change in unrealized appreciation / depreciation on investments,
foreign currencies, forward currency exchange contracts, short
positions and written options 142
--------
Net increase in net assets resulting from operations 1,248
--------
Net increase in net assets from capital share transactions (Note 4) 253,283
--------
Net increase in net assets 254,531
NET ASSETS:
Beginning of period 100,000
--------
End of period $354,531
--------
--------
(1)<F10> Commencement of Operations.
See notes to the financial statements.
THE MERGER FUND VL
FINANCIAL HIGHLIGHTS
FOR THE PERIOD
MAY 26, 2004 (1)<F11>
THROUGH
JUNE 30, 2004
---------------------
PER SHARE DATA: (UNAUDITED)
Net Asset Value, beginning of period $10.00
------
Income from investment operations:
Net investment income --
Net realized and unrealized loss on investments (0.01)
------
Total from investment operations (0.01)
------
Net Asset Value, end of period $ 9.99
------
------
Total Return (0.10)%(3)<F13>
Supplemental data and ratios:
Net assets, end of period (000's) $355
Ratio of operating expenses to average
net assets including borrowing costs:
Before expense waiver 118.44%(2)<F12>
After expense waiver 2.01%(2)<F12>
Ratio of operating expenses to average
net assets excluding borrowing costs:
Before expense waiver 117.83%(2)<F12>
After expense waiver 1.40%(2)<F12>
Ratio of net investment income to average net assets:
Before expense waiver (117.17)%(2)<F12>
After expense waiver (0.74)%(2)<F12>
Portfolio turnover rate(4)<F14> 226.20%(3)<F13>
(1)<F11> Commencement of Operations.
(2)<F12> Annualized.
(3)<F13> Not Annualized.
(4)<F14> The numerator for the portfolio turnover rate includes the lesser of
purchases or sales (excluding short positions). The denominator
includes the average long positions throughout the period.
See notes to the financial statements.
THE MERGER FUND VL
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2004 (UNAUDITED)
NOTE 1 -- ORGANIZATION
The Merger Fund VL (the "Fund") is a no-load, open-end, non-diversified
investment company organized as a statutory trust under the laws of Delaware on
November 22, 2002, and registered under the Investment Company Act of 1940 (the
"1940 Act"), as amended. The investment objective of the Fund is to seek to
achieve capital growth by engaging in merger arbitrage. Shares of the Fund are
not offered directly to the public. The Fund's shares are currently offered
only to separate accounts funding variable annuity and variable life insurance
contracts.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. Investment Valuation
Securities listed on the NASDAQ National Market are valued at the NASDAQ
Official Closing Price ("NOCP"). Other listed securities are valued at the last
sales price on the exchange on which such securities are primarily traded or, in
the case of options, at the last sales price on any exchange. Securities not
listed on an exchange, securities for which there are no transactions or options
whose last sales price is outside the parameters of the closing bid and asked
prices are valued at the average of the closing bid and asked prices. Securities
for which there are no such valuations are valued at fair value as determined in
good faith by management under the supervision of the Board of Trustees. The
Adviser (as defined herein) reserves the right to value securities, including
options, at prices other than last-sale prices or the average of closing bid and
asked prices when such prices are believed unrepresentative of fair market value
as determined in good faith by the Adviser. At June 30, 2004, fair-valued long
securities represented 0.63% of investments, at value. Investments in United
States government securities (other than short-term securities) are valued at
the average of the quoted bid and asked prices in the over-the-counter market.
Short-term investments are carried at amortized cost, which approximates market
value.
B. Short Positions
The Fund may sell securities or currencies short for hedging purposes. For
financial statement purposes, an amount equal to the settlement amount is
included in the Statement of Assets and Liabilities as an asset and an
equivalent liability. The amount of the liability is subsequently marked-to-
market to reflect the current value of the short position. Subsequent
fluctuations in the market prices of securities or currencies sold, but not yet
purchased, may require purchasing the securities or currencies at prices which
may differ from the market value reflected on the Statement of Assets and
Liabilities. The Fund is liable for any dividends payable on securities while
those securities are in a short position. As collateral for its short positions,
the Fund is required under the 1940 Act to maintain assets consisting of cash,
cash equivalents or liquid securities. These assets are required to be adjusted
daily to reflect changes in the value of the securities or currencies sold
short.
C. Transactions with Brokers for Short Sales
The Fund's receivable from brokers for proceeds on securities sold short and
deposit at brokers for short sales are with one major securities dealer. The
Fund does not require the brokers to maintain collateral in support of the
receivable from the broker for proceeds on securities sold short.
D. Federal Income Taxes
No provision for federal income taxes has been made since the Fund has
complied to date with the provisions of the Internal Revenue Code applicable to
regulated investment companies and intends to continue to so comply in future
years and to distribute investment company net taxable income and net capital
gains to shareholders. Additionally, the Fund intends to make all required
distributions to avoid federal excise tax.
E. Written Option Accounting
The Fund writes (sells) call options to hedge portfolio investments. Put
options can also be written by the Fund as part of a merger arbitrage strategy
involving a pending corporate reorganization. When the Fund writes (sells) an
option, an amount equal to the premium received by the Fund is included in the
Statement of Assets and Liabilities as an asset and an equivalent liability. The
amount of the liability is subsequently marked-to-market to reflect the current
value of the option written. By writing an option, the Fund may become obligated
during the term of the option to deliver or purchase the securities underlying
the option at the exercise price if the option is exercised. Option contracts
are valued at the last sales price reported on the date of valuation. If no sale
is reported or if the last sale is outside the parameters of the closing bid and
asked prices, the option contract written is valued at the mean of the last
reported bid and asked prices on the day of valuation. When an option expires on
its stipulated expiration date or the Fund enters into a closing purchase
transaction, the Fund realizes a gain or loss if the cost of the closing
purchase transaction differs from the premium received when the option was sold
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is eliminated. When an option is exercised,
the premium originally received decreases the cost basis of the security (or
increases the proceeds on a sale of the security), and the Fund realizes a gain
or loss from the sale of the underlying security.
F. Purchased Option Accounting
The Fund purchases put or call options to hedge portfolio investments.
Premiums paid for option contracts purchased are included in the Statement of
Assets and Liabilities as an asset. Option contracts are valued at the last
sales price reported on the date of valuation. If no sale is reported or if the
last sale is outside the parameters of the closing bid and asked prices, the
option contract purchased is valued at the mean of the last reported bid and
asked prices on the day of valuation. When option contracts expire or are
closed, realized gains or losses are recognized without regard to any unrealized
gains or losses on the underlying securities.
G. Forward Currency Exchange Contracts
The Fund may enter into forward currency exchange contracts obligating the
Fund to deliver or receive a currency at a specified future date. Forward
contracts are valued daily, and unrealized appreciation or depreciation is
recorded daily as the difference between the contract exchange rate and the
closing forward rate applied to the face amount of the contract. A realized gain
or loss is recorded at the time the forward contract is closed.
H. Distributions to Shareholders
Dividends from net investment income and net realized capital gains, if any,
are declared and paid annually. Income and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Accordingly, reclassifications are
made within the net asset accounts for such amounts, as well as amounts related
to permanent differences in the character of certain income and expense items
for income tax and financial reporting purposes. The Fund may utilize earnings
and profits distributed to shareholders on redemption of shares as part of the
dividends-paid-deduction.
I. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
J. Foreign Securities
Investing in securities of foreign companies and foreign governments involves
special risks and considerations not typically associated with investing in U.S.
companies and the U.S. government. These risks include revaluation of currencies
and adverse political and economic developments. Moreover, securities of many
foreign companies and foreign governments and their markets may be less liquid
and their prices more volatile than those of securities of comparable U.S.
companies and the U.S. government.
K. Foreign Currency Translations
The books and records of the Fund are maintained in U.S. dollars. Foreign
currency transactions are translated into U.S. dollars on the following basis:
(i) market value of investment securities, assets and liabilities at the daily
rates of exchange, and (ii) purchases and sales of investment securities,
dividend and interest income and certain expenses at the rates of exchange
prevailing on the respective dates of such transactions. For financial reporting
purposes, the Fund does not isolate changes in the exchange rate of investment
securities from the fluctuations arising from changes in the market prices of
securities. However, for federal income tax purposes, the Fund does isolate and
treat as ordinary income the effect of changes in foreign exchange rates on
realized gain or loss from the sale of investment securities and payables and
receivables arising from trade-date and settlement-date differences.
L. When-Issued Securities
The Fund may sell securities on a when-issued or delayed-delivery basis.
Although the payment and interest terms of these securities are established at
the time the Fund enters into the agreement, these securities may be delivered
for cash proceeds at a future date. The Fund records sales of when-issued
securities and reflects the values of such securities in determining net asset
value in the same manner as other open short-sale positions. The Fund segregates
and maintains at all times cash, cash equivalents or other liquid securities in
an amount at least equal to the market value for when-issued securities.
M. Other
Investment and shareholder transactions are recorded on the trade date.
Realized gains and losses from security transactions are recorded on the
identified cost basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest is accounted for on the accrual
basis. The Fund may utilize derivative instruments including options, forward
currency exchange contracts and other instruments with similar characteristics
to the extent that they are consistent with the Fund's investment objectives and
limitations. The use of these instruments may involve additional investment
risks, including the possibility of illiquid markets or imperfect correlation
between the value of the instruments and the underlying securities.
NOTE 3 -- AGREEMENTS
The Fund's investment adviser is Westchester Capital Management, Inc. (the
"Adviser") pursuant to an investment advisory agreement dated July 1, 2003.
Under the terms of this agreement, the Adviser is entitled to receive a fee,
calculated daily and payable monthly, at the annual rate of 1.25% of the Fund's
average daily net assets. Certain officers of the Fund are also officers of the
Adviser.
U.S. Bancorp Fund Services, LLC, a subsidiary of U.S. Bancorp, a publicly
held bank holding company, serves as transfer agent, administrator and
accounting services agent for the Fund. U.S. Bank, N.A. serves as custodian for
the Fund.
NOTE 4 -- SHARES OF BENEFICIAL INTEREST
The Trustees have the authority to issue an unlimited amount of shares of
beneficial interest without par value.
Changes in shares of beneficial interest were as follows:
PERIOD ENDED
JUNE 30, 2004
------------------
SHARES AMOUNT
------ ------
Sold 25,487 $253,358
Redeemed (7) (75)
------ --------
Net Increase 25,480 $253,283
------ --------
------ --------
NOTE 5 -- INVESTMENT TRANSACTIONS
Purchases and sales of securities for the period ended June 30, 2004
(excluding short-term investments, options and short positions) aggregated
$575,373 and $267,627, respectively. There were no purchases or sales of U.S.
Government Securities.
NOTE 6 -- ADVISER REIMBURSEMENT
The Adviser has agreed to reduce its fees and reimburse The Merger FundVL to
the extent total annualized expenses exceed 1.40% of average daily net assets.
For the period ended June 30, 2004 the Adviser reimbursed $22,172 to the Fund.
NOTE 7 -- OPTION CONTRACTS WRITTEN
The premium amount and the number of option contracts written during the
period ended June 30, 2004, were as follows:
PREMIUM NUMBER OF
AMOUNT CONTRACTS
------- ---------
Options outstanding at May 26, 2004 $ -- --
Options written 3,992 33
Options expired (532) (3)
------ --
Options outstanding at June 30, 2004 $3,460 30
------ --
------ --
NOTE 8 -- FORWARD CURRENCY EXCHANGE CONTRACTS
At June 30, 2004, the Fund had entered into "position hedge" forward currency
exchange contracts that obligated the Fund to deliver or receive currencies at a
specified future date. The net unrealized depreciation of $37 is included in the
net unrealized appreciation (depreciation) section of the accompanying financial
statements. The terms of the open contracts are as follows:
SETTLEMENT CURRENCY TO U.S. $ VALUE AT CURRENCY TO U.S. $ VALUE AT
DATE BE DELIVERED JUNE 30, 2004 BE RECEIVED JUNE 30, 2004
---------- ------------ ------------- ----------- -------------
7/15/04 8,000 Euros $9,730 9,693 U.S. Dollars $9,693
THE MERGER FUND VL
AVAILABILITY OF PROXY VOTING INFORMATION
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available without charge
upon request by calling toll-free at 1-800-343-8959 and on the SEC's website at
www.sec.gov. Information regarding how the Fund voted proxies relating to
- -----------
portfolio securities during the period ending June 30, 2004 will be available
after August 31, 2004 on the SEC's website at www.sec.gov or by calling the
-----------
toll-free number listed above.
INVESTMENT ADVISER
Westchester Capital Management, Inc.
100 Summit Lake Drive
Valhalla, NY 10595
(914) 741-5600
ADMINISTRATOR, TRANSFER AGENT, DIVIDEND PAYING AGENT AND SHAREHOLDER SERVICING
AGENT
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
P.O. Box 701
Milwaukee, WI 53201-0701
(800) 343-8959
CUSTODIAN
U.S. Bank, N.A.
P.O. Box 701
Milwaukee, WI 53201-0701
(800) 343-8959
TRUSTEES
Frederick W. Green
Michael J. Downey
James P. Logan, III
EXECUTIVE OFFICERS
Frederick W. Green, President
Bonnie L. Smith, Vice President,
Treasurer and Secretary
COUNSEL
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue
Milwaukee, WI 53202
ITEM 2. CODE OF ETHICS.
- -----------------------
Not applicable for semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- ----------------------------------------
Not applicable for semi-annual reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- -----------------------------------------------
Not applicable for semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
- ----------------------------------------------
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
- --------------------------------
Not applicable for periods ending before July 9, 2004.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
- -------------------------------------------------------------------------
MANAGEMENT INVESTMENT COMPANIES.
- --------------------------------
Not applicable to open-end management investment companies.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
- ---------------------------------------------------------------------------
COMPANY AND AFFILIATED PURCHASERS.
- ----------------------------------
Not applicable to open-end investment companies.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------------------------------------------------------------
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Registrant's board of trustees.
ITEM 10. CONTROLS AND PROCEDURES.
- ---------------------------------
(a) The Registrant's President and Treasurer have concluded that the
Registrant's disclosure controls and procedures (as defined in Rule 30a-
3(c) under the Investment Company Act of 1940, as amended (the "1940 Act"))
are effective as of a date within 90 days of the filing date of the report
that includes the disclosure required by this paragraph, based on the
evaluation of these controls and procedures required by Rule 30a-3(b) under
the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange
Act of 1934, as amended.
(b) There were no changes in the Registrant's internal controls over financial
reporting that occurred during the Registrant's last fiscal half-year that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
- ------------------
(a) (1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit. Not
applicable for semi-annual reports.
(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
management investment companies.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Merger Fund VL
----------------------------------------
By (Signature and Title) /s/ Frederick W. Green
-----------------------------
Frederick W. Green, President
Date August 25, 2004
------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ Frederick W. Green
-----------------------------
Frederick W. Green, President
Date August 25, 2004
------------------------------------------------
By (Signature and Title) /s/Bonnie L. Smith
-----------------------------
Bonnie L. Smith, Treasurer
Date August 25, 2004
------------------------------------------------