As filed with the Securities and Exchange Commission on December 1, 2004
Securities Act File No. _____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.[ ]
Post-Effective Amendment No.
ING FUNDS TRUST
(Exact Name of Registrant as Specified in Charter)
7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034
(Address of Principal Executive Offices) (Zip Code)
1-800-992-0180
(Registrant's Area Code and Telephone Number)
Huey P. Falgout, Jr.
ING Investments, LLC
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
(Name and Address of Agent for Service)
With copies to:
Jeffrey S. Puretz, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401
---------------
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective on December 31, 2004
pursuant to Rule 488 under the Securities Act of 1933, as amended
- --------------------------------------------------------------------------------
No filing fee is required because an indefinite number of shares have
previously been registered pursuant to Rule 24f-2 under the Investment Company
Act of 1940, as amended.
ING LEXINGTON MONEY MARKET TRUST
ING MONEY MARKET FUND
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
January 7, 2005
Dear Shareholder:
Your Board of Trustees has called a special meeting of shareholders
("Special Meeting") of ING Lexington Money Market Trust ("Lexington Money Market
Trust") and ING Money Market Fund ("Money Market Fund") (each a "Disappearing
Fund," and collectively, the "Disappearing Funds") scheduled to be held at 10:00
a.m., Local time, on February 24, 2005, at 7337 East Doubletree Ranch Road,
Scottsdale, Arizona 85258-2034.
The Board of Trustees of each Disappearing Fund has reviewed and
recommends the proposed reorganizations (each a "Reorganization," and
collectively, the "Reorganizations") of each Disappearing Fund into ING Classic
Money Market Fund ("Surviving Fund") (each a "Fund", and collectively, the
"Funds"). Each Fund is a member of the mutual fund group called the "ING Funds"
and is a series of ING Funds Trust.
If approved by Shareholders, you will become a shareholder of ING Classic
Money Market Fund on the date that the Reorganizations occur. The
Reorganizations would provide Shareholders of each Disappearing Fund,
respectively, with an opportunity to participate in a larger money-market fund
with substantially similar investment objectives and strategies. You are being
asked to approve an Agreement and Plan of Reorganization for the Reorganization
for the Disappearing Fund in which you hold shares. The consummation of one
Reorganization shall not be contingent on the consummation of any other
Reorganization. The accompanying documents describe the proposed transactions
and compare the strategies and expenses of each of the Funds for your
evaluation.
After careful consideration, the Board of Trustees of each Disappearing
Fund unanimously approved these proposals and recommends shareholders vote "FOR"
the proposals.
A Proxy Statement/Prospectus that describes each Reorganization is
enclosed. We hope that you can attend the Special Meeting in person; however, we
urge you in any event to vote your shares by completing and returning the
enclosed proxy card in the envelope provided at your earliest convenience.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. TO
AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS AND POSSIBLE ADJOURNMENTS,
PLEASE TAKE A FEW MINUTES TO READ THE PROXY STATEMENT/PROSPECTUS AND CAST YOUR
VOTE. IT IS IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN FEBRUARY 23,
2005.
Each Disappearing Fund is using Georgeson Shareholder Communications,
Inc., a professional proxy solicitation firm, to assist shareholders in the
voting process. As the date of the Special Meeting approaches, if we have not
already heard from you, you may receive a telephone call from Georgeson
Shareholder Communications, Inc. reminding you to exercise your right to vote.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
/s/ James M. Hennessy
------------------------------------
James M. Hennessy,
President and Chief Executive Officer
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ING LEXINGTON MONEY MARKET TRUST
ING MONEY MARKET FUND
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
January 7, 2005
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
ING LEXINGTON MONEY MARKET TRUST AND ING MONEY MARKET FUND
SCHEDULED FOR FEBRUARY 24, 2005
To the Shareholders:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders ("Special
Meeting") of both ING Lexington Money Market Trust ("Lexington Money Market
Trust") and ING Money Market Fund ("Money Market Fund") is scheduled for
February 24, 2005, at 10:00 a.m., Local time, at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258-2034.
At the Special Meeting, you will be asked to consider and approve the
following proposals:
(1) Lexington Money Market Trust only. To approve an Agreement and Plan
of Reorganization ("Reorganization Agreement") by and among
Lexington Money Market Trust and ING Classic Money Market Fund
providing for the reorganization of Lexington Money Market Trust
with and into ING Classic Money Market Fund;
(2) Money Market Fund only. To approve a Reorganization Agreement by and
among Money Market Fund and ING Classic Money Market Fund providing
for the reorganization of Money Market Fund with and into ING
Classic Money Market Fund; and
(3) Both Funds. To transact such other business, not currently
contemplated, that may properly come before the Special Meeting or
any adjournment(s) thereof in the discretion of the proxies or their
substitutes.
Shareholders of record as of the close of business on December 3, 2004,
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof. Your attention is called to the accompanying Proxy
Statement/Prospectus. Regardless of whether you plan to attend the Special
Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so
that a quorum will be present and a maximum number of shares may be voted.
Proxies may be revoked at any time before they are exercised by executing and
submitting a revised proxy, by giving written notice of revocation to Lexington
Money Market Trust or Money Market Fund, respectively, or by voting in person at
the Special Meeting.
By Order of the Board of Trustees
/s/ Huey P. Falgout, Jr.
-------------------------------------
Huey P. Falgout, Jr.,
Secretary
January 7, 2005
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PROXY STATEMENT/PROSPECTUS FOR
ING LEXINGTON MONEY MARKET TRUST
ING MONEY MARKET FUND
JANUARY 7, 2005
ING CLASSIC MONEY MARKET FUND
TABLE OF CONTENTS
INTRODUCTION.................................................................................................. 1
SUMMARY....................................................................................................... 2
The Proposed Reorganizations............................................................................... 2
Comparison of Investment Objectives and Strategies......................................................... 4
Comparison of Fund Characteristics......................................................................... 6
Relative Performance....................................................................................... 7
Performance of ING Classic Money Market Fund............................................................... 8
Comparison of Investment Techniques and Principal Risks of Investing in the Funds.......................... 10
COMPARISON OF FEES AND EXPENSES............................................................................... 11
Management Fees............................................................................................ 11
Sub-Adviser Fees........................................................................................... 11
Administration Fees........................................................................................ 11
Distribution and Service Fees.............................................................................. 11
Expense Limitation Arrangements............................................................................ 11
Expense Tables............................................................................................. 12
General Information........................................................................................ 16
Material Differences in Rights of Disappearing Funds' Shareholders and Surviving Fund's Shareholders....... 16
INFORMATION ABOUT THE REORGANIZATIONS......................................................................... 17
The Reorganization Agreements.............................................................................. 17
Reasons for the Reorganizations............................................................................ 17
Boards' Considerations..................................................................................... 18
Tax Considerations......................................................................................... 18
Expenses of the Reorganizations............................................................................ 18
ADDITIONAL INFORMATION ABOUT THE FUNDS........................................................................ 19
Form of Organization....................................................................................... 19
Distributor................................................................................................ 19
Dividends and Other Distributions.......................................................................... 19
Capitalization............................................................................................. 19
GENERAL INFORMATION ABOUT THE PROXY STATEMENT................................................................. 21
Solicitation of Proxies.................................................................................... 21
Voting Rights.............................................................................................. 21
Other Matters to Come Before the Special Meeting........................................................... 21
Shareholder Proposals...................................................................................... 21
Reports to Shareholders.................................................................................... 21
APPENDICES.................................................................................................... A-E
Portfolio Manager's Report for ING Classic Money Market Fund............................................... A-1
Form of Agreement and Plan of Reorganization (ING Lexington Money Market Trust)............................ B-1
Form of Agreement and Plan of Reorganization (ING Money Market Fund)....................................... B-2
Additional Information Regarding ING Classic Money Market Fund............................................. C-1
Additional ING Funds Offered............................................................................... D-2
Security Ownership of Certain Beneficial and Record Owners................................................. E-2
PROXY STATEMENT/PROSPECTUS FOR
ING LEXINGTON MONEY MARKET TRUST
ING MONEY MARKET FUND
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
JANUARY 7, 2005
ING CLASSIC MONEY MARKET FUND
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to you in connection
with a special meeting of shareholders of ING Lexington Money Market Trust
("Lexington Money Market Trust") and ING Money Market Fund ("Money Market Fund")
(each a "Disappearing Fund," and collectively, the "Disappearing Funds") to be
held on February 24, 2005 ("Special Meeting"). As more fully described in this
Proxy Statement, the purpose of the Special Meeting is to vote on the proposed
reorganizations (each a "Reorganization," and collectively, the
"Reorganizations") of Lexington Money Market Trust and Money Market Fund with
and into ING Classic Money Market Fund ("Surviving Fund") (each a "Fund" and
collectively, the "Funds").
Under the Agreements and Plans of Reorganization (each a "Reorganization
Agreement," and collectively, the "Reorganization Agreements"), each
Disappearing Fund would transfer its assets to the Surviving Fund in exchange
for shares of beneficial interest of the Surviving Fund and the assumption by
the Surviving Fund of each Disappearing Fund's known liabilities as of the
effective date of the Reorganization. Surviving Fund shares would then be
distributed to shareholders of each Disappearing Fund so that each shareholder
would receive a number of full and fractional shares of the Surviving Fund equal
to the aggregate value of the number of shares of each Disappearing Fund held by
such shareholder. As a result of each Reorganization, each Disappearing Fund
will distribute shares of the Surviving Fund in liquidation of each Disappearing
Fund, respectively, on March 12, 2005, or such other date as the parties may
agree ("Closing Date").
Because you, as shareholders of one or both of the Disappearing Funds, are
each being asked to approve a Reorganization Agreement that will result in a
transaction in which you ultimately hold shares of ING Classic Money Market
Fund, this Proxy Statement also serves as a Prospectus for ING Classic Money
Market Fund. ING Classic Money Market Fund is a diversified, open-end management
investment company, which seeks to provide investors with a high level of
current income, consistent with the preservation of capital and liquidity and
the maintenance of a stable $1.00 net asset value per share, as described more
fully below.
This Proxy Statement/Prospectus, which should be read and retained for
future reference, sets forth concisely the information that shareholders of each
Disappearing Fund should know before voting on each Reorganization Agreement. A
Statement of Additional Information ("SAI") relating to this Proxy Statement
dated January 7, 2005 containing additional information about the
Reorganizations and the parties thereto, has been filed with the U.S. Securities
and Exchange Commission ("SEC") and is incorporated herein by reference. For a
more detailed discussion of the investment objectives, strategies and
restrictions of the Funds, see the Class A, B, C and M Fixed Income Prospectus
for Money Market Fund and ING Classic Money Market Fund, dated August 1, 2004,
and the Class A Prospectus for Lexington Money Market Trust, dated August 1,
2004, and the combined SAI for the Funds, dated August 1, 2004, which are
incorporated herein by reference. Each Fund also provides periodic reports to
its shareholders, which highlight certain important information about the Funds,
including investment results and financial information. The Annual Report for
each Fund, dated March 31, 2004, is incorporated herein by reference. For a copy
of the current prospectus, SAI, annual report and semi-annual report for either
of the Funds without charge, or for a copy of the SAI relating to the Proxy
Statement/Prospectus, contact the Funds at ING Funds, 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258-2034 or by calling 1-800-992-0180.
You can copy and review information about each Fund (including the SAI) at
the SEC's Public Reference Room in Washington, D.C. You may obtain information
on the operation of the Public Reference Room by calling the SEC at
1-202-942-8090. Reports and other information about the Funds are available on
the EDGAR Database on the SEC's internet site at http://www.sec.gov. You may
obtain copies of this information, after paying a duplicating fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED
THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
1
SUMMARY
You should read this entire Proxy Statement/Prospectus carefully. You
should also review the Reorganization Agreements, which are attached hereto as
APPENDICES B-1 and B-2. Also, you should consult the Class A, B, C and M Fixed
Income Funds Prospectus, dated August 1, 2004, for more information about the
ING Classic Money Market Fund.
THE PROPOSED REORGANIZATIONS
At a meeting held on September 2, 2004, the Board of Trustees of each
Disappearing Fund, respectively, approved each Reorganization Agreement. Subject
to shareholder approval, the Reorganization Agreements provide for:
- - the transfer of all of the assets of each Disappearing Fund in exchange
for shares of beneficial interest of the Surviving Fund;
- - the assumption by the Surviving Fund of all of the liabilities of each
Disappearing Fund known as of the Closing Date;
- - the distribution of the Surviving Fund's shares to the shareholders of
each Disappearing Fund; and
- - the complete liquidation of each Disappearing Fund.
As a result of the Reorganizations, each owner of shares of each class of
the Disappearing Funds would become a shareholder of the same class of shares of
ING Classic Money Market Fund. The Reorganizations are expected to be effective
on March 12, 2005, or such other date as the parties may agree (the "Closing
Date").
Each Shareholder will hold, immediately after the Closing Date, shares of
the corresponding class of the Surviving Fund having an aggregate value equal to
the aggregate value of the shares of the class of each Disappearing Fund's
shares held by that shareholder as of the Closing Date.
In considering whether to approve each Reorganization, you should note that:
- - the Funds have substantially similar investment objectives and strategies;
- - the Surviving Fund is the larger fund, and the Disappearing Funds are both
very small (net assets of $428 million for the Surviving Fund versus $43
million each for Lexington Money Market Trust and Money Market Fund,
effective September 30, 2004);
- - the investment adviser, sub-adviser and portfolio management team for each
Fund are identical and will remain unchanged if the Reorganizations are
approved. ING Investments, LLC ("ING Investments") is the investment
adviser for the Funds, and ING Investment Management Co. ("ING IM") serves
as the sub-adviser. All three Funds are currently managed by a team of
investment professionals led by David S. Yealy, and the same team would
continue to manage the Surviving Fund if the Reorganizations are approved;
- - the proposed Reorganizations are designed to reduce a redundancy in the
ING Fund complex, thereby eliminating inefficiencies arising from having
similar portfolios in the same fund group and confusion about overlapping
funds;
- - both existing and prospective shareholders would benefit from the proposed
Reorganizations through an increase in asset size of the Surviving Fund;
- - the three-year and five-year performance of the ING Classic Money Market
Fund is superior to that of the Lexington Money Market Trust and Money
Market Fund;
- - the Surviving Fund will have a higher distribution (12b-1) fee for Class A
shares (0.75% versus 0.25% for Money Market Fund and no fee for Lexington
Money Market Trust), however, ING Funds Distributor, LLC has agreed to
waive up to 0.40% of the distribution (12b-1) fee for Class A shares of
the Surviving Fund, as described more fully below;
- - the Surviving Fund will have a lower management fee (0.25% for Surviving
Fund versus 0.35% for Money Market Fund and 0.50% for the Lexington Money
Market Trust); and
- - the proposed Reorganizations are expected to result in lower net operating
expenses per share after management subsidies for all Classes of both
Disappearing Funds, except Class A shares of Money Market Fund, which
currently benefits from voluntary expense reimbursements. For example, the
total operating expenses before and after the mergers, expressed as a
percentage of net asset value per share of each Class of each Fund, based
on the twelve-month period ended September 30, 2004, are as follows:
2
GROSS EXPENSES BEFORE THE REORGANIZATIONS
CLASS A CLASS B CLASS C
------- ------- -------
Lexington Money Market Trust 0.80% N/A N/A
Money Market Fund 1.01% 1.77% 1.77%
ING Classic Money Market Fund 1.12% 1.37% 1.37%
NET EXPENSES BEFORE THE REORGANIZATION (AFTER FEE WAIVERS)
CLASS A CLASS B CLASS C
------- ------- -------
Lexington Money Market Trust 0.80% N/A N/A
Money Market Fund(1) 0.60% 1.34% 1.34%
ING Classic Money Market Fund(2) (3)(4) 0.77% 1.08% 1.08%
AFTER THE REORGANIZATION: PRO FORMA
CLASS A CLASS B CLASS C
------- ------- -------
Gross estimated expenses of Surviving Fund 1.11% 1.36% 1.36%
Net estimated expenses of Surviving Fund(2) (5) 0.77% 1.07% 1.07%
- ------------------
(1) Includes voluntary reimbursements of expenses made by ING Investments. If
voluntary waivers of 0.41%, 0.43% and 0.43% would have been excluded, net
expenses would be 1.01%, 1.77% and 1.77% for Classes A, B and C,
respectively.
(2) ING Funds Distributor, LLC has agreed to waive up to 0.40% of the
Distribution Fee for Class A Shares of the Fund. The fee waiver will
continue until at least March 31, 2006.
(3) Includes voluntary waivers of class specific expenses made by ING Funds
Distributor, LLC. If voluntary waivers of 0.29% and 0.29% would have been
excluded, net expenses would be 1.37% and 1.37% for Classes B and C,
respectively.
(4) ING Investments has entered into an expense limitation agreement that
limits expenses for ING Classic Money Market Fund to annual rates of
0.77%, 1.41% and 1.41% for Class A, Class B and Class C shares,
respectively. The expense limitation agreement is contractual and shall
renew automatically for one-year terms unless ING Investments provides
written notice of the termination of the expense limitation agreement
within 90 days of the end of the then current term or upon termination of
the investment management agreement. The current expense limitation
agreement provides that it will remain in effect through at least August
1, 2006. There is no assurance that the expense limitation agreements will
remain in effect after this date. Under the terms of the current expense
limitation agreement, ING Investments is entitled to recoup from ING
Classic Money Market Fund any such investment advisory fees waived or
reduced and any such payments made under certain circumstances, as
described in the current expense limitation agreement.
(5) Includes voluntary waivers of class specific expenses made by ING Funds
Distributor, LLC. If voluntary waivers of 0.29% and 0.29% would have been
excluded, net expenses would be 1.36% and 1.36% for Classes B and C,
respectively.
Approval of the Reorganization Agreement requires, if a quorum is present
at the Special Meeting, a vote of the lesser of: (i) 67% or more of the voting
securities present at the Special Meeting, if the holders of more than 50% of
the outstanding voting securities of each Disappearing Fund are present, in
person or by proxy, at the Special Meeting; or (ii) more than 50% of the
outstanding voting securities of each Disappearing Fund.
AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES OF EACH DISAPPEARING
FUND, RESPECTIVELY, UNANIMOUSLY APPROVED THE PROPOSED REORGANIZATIONS. THE BOARD
OF TRUSTEES RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED REORGANIZATIONS.
3
COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES
The following summarizes the investment objective, strategies and
management differences, if any, between the Funds.
LEXINGTON MONEY MARKET TRUST MONEY MARKET FUND ING CLASSIC MONEY MARKET FUND
(DISAPPEARING FUND) (DISAPPEARING FUND) (SURVIVING FUND)
-------------------------------------- --------------------------- -----------------------------
INVESTMENT - Seeks a high level of current - Seeks a high level of - Seeks a high level of
OBJECTIVE income from short-term current income as is current income,
investments as is consistent consistent with the consistent with the
with the preservation of capital preservation of capital preservation of capital
and liquidity. and liquidity. and liquidity.
INVESTMENT - The Fund will operate as a - Same. - Same.
STRATEGIES diversified fund and invest in a
portfolio of high-quality, U.S.
dollar denominated short-term
debt obligations, which are
determined by the Sub-Adviser to
present minimal credit risks.
- Portfolio investments of the
Fund are valued based on the
amortized cost valuation method
pursuant to Rule 2a-7 under the
Investment Company Act of 1940.
Obligations in which the Fund
invests generally have remaining
maturities of 397 days or less,
although upon satisfying certain
conditions of Rule 2a-7, the
Fund may, to the extent
otherwise permissible, invest in
instruments subject to
repurchase agreements and
certain variable and floating
rate obligations that bear
longer final maturities. The
dollar-weighted average
portfolio maturity of the Fund
will not exceed 90 days.
- The Fund will invest in
obligations permitted to be
purchased under Rule 2a-7
including, but not limited to,
(i) U.S. Government securities
and obligations of its agencies
or instrumentalities; (ii)
commercial paper,
mortgage-backed and asset-backed
securities, guaranteed
investment contracts, loan
participation interests, medium
term notes, and other promissory
notes, including floating and
variable rate obligations; and
(iii) the following domestic,
Yankeedollar and Eurodollar
obligations: certificates of
deposit, time deposits, bankers
acceptances, commercial paper,
and other promissory notes,
including floating and variable
rate obligations issued by U.S.
or foreign bank holding
companies and their bank
subsidiaries, branches and
agencies. The Fund may invest
more than 25% of its total
assets in instruments issued by
domestic banks.
- The Fund may purchase
securities on a when-issued
basis and purchase or sell them
on a forward commitment basis.
The Fund may also invest in
4
LEXINGTON MONEY MARKET TRUST MONEY MARKET FUND ING CLASSIC MONEY MARKET FUND
(DISAPPEARING FUND) (DISAPPEARING FUND) (SURVIVING FUND)
-------------------------------------- --------------------------- -----------------------------
variable rate master demand
obligations, which are unsecured
demand notes that permit the
underlying indebtedness to vary,
and provide for periodic
adjustments in the interest
rate. The Fund may enter into
repurchase agreements.
- In choosing investments for
the Fund, the Sub-Adviser
employs a highly disciplined,
four step investment process
designed to ensure preservation
of capital and liquidity as well
as adherence to regulatory
requirements. The four steps
are: (i) a formal list of
high-quality issuers is actively
maintained; (ii) securities of
issuers on the approved list
which meet maturity guidelines
and are rated first tier (i.e.,
they are given the highest
short-term rating by at least
two nationally recognized
statistical rating
organizations, or by a single
rating organization if a
security is rated only by that
organization, or are determined
to be of comparable quality by
the Sub-Adviser pursuant to
guidelines approved by the
Fund's Board of Trustees) are
selected for investment; (iii)
diversification is continuously
monitored to ensure that
regulatory limits are not
exceeded; and (iv) portfolio
maturity decisions are made
based upon expected cash flows,
income opportunities available
in the market and expectations
of future interest rates.
INVESTMENT ING Investments, LLC ING Investments, LLC ING Investments, LLC
ADVISER
SUB-ADVISER ING Investment Management Co. ING IM ING IM
("ING IM")
PORTFOLIO Team of investment professionals Team of investment Team of investment
MANAGERS led by David S. Yealy professionals led by David S. professionals led by David S.
Yealy Yealy
As you can see from the chart above, there are relatively no differences
in the investment strategies of the Funds.
5
COMPARISON OF FUND CHARACTERISTICS
The following table compares certain characteristics of the Funds as of
September 30, 2004:
LEXINGTON MONEY MARKET ING CLASSIC MONEY MARKET
TRUST MONEY MARKET FUND FUND
-------------------------- --------------------------- --------------------------
Net Assets $ 43,004,634 $ 43,014,304 $ 428,113,130
Number of Holdings 91 91 96
Average Dollar Weighted Duration 51 49 48
(Days)
Average Dollar Weighted Rating A-1/P-1 A-1/P-1 A-1/P-1
As a Percentage of Net Assets:
Corporate Bonds/Notes 27.8% 30.7% 30.2%
U.S. Government Securities 12.1% 10.6% 10.3%
Certificates of Deposit 11.5% 11.0% 11.0%
Collateralized Mortgage Obligations 6.1% 6.8% 5.7%
Repurchase Agreements 6.5% 6.9% 4.9%
Instruments Rated A-1, P-1, AAA,
Aaa (Highest Quality) 100.0% 100.0% 100.0%
Instruments Not in Highest Rating
Categories 0.0% 0.0% 0.0%
Top 10 Holdings (as a % of Net Assets)
Repurchase Agreements 6.5% Repurchase Agreements 6.9% Repurchase Agreements 4.9%
Wal-Mart Stores, Inc., Wal-Mart Stores, Inc., Crown Point Capital
1.698% due 2/22/05 3.5% 1.698% due 2/22/05 3.3% Co., 2.050%, due
3/8/05 3.1%
Preferred Receivable Money Market Trust Preferred Receivable
Funding, Corp., Series A, 1.835%, due Funding, Corp.,
1.260%, due 10/4/04 3.1% 10/7/05 3.0% 1.260%, due 10/4/04 3.1%
Crown Point Capital Crown Point Capital Wal-Mart Stores,
Co., 2.050%, due Co., 2.050%, due Inc., 1.698% due
3/8/05 3.0% 3/8/05 3.0% 2/22/05 2.6%
Money Market Trust Verizon Global Money Market Trust
Series A, 1.835%, due Funding, 1.990%, due Series A, 1.835%,
10/7/05 2.3% 10/14/05 2.7% due 10/7/05 2.1%
General Electric General Electric
Capital Corp., Capital Corp., Wells Fargo & Co.,
2.005%, due 3/15/05 2.1% 1.838%, due 10/7/05 2.3% 1.619%, due 10/1/04 2.1%
Verizon Global Verizon Global
Funding, 1.990%, due Wachovia Corp., Funding, 1.990%,
10/14/05 2.0% 2.230%, due 3/31/05 1.9% due 10/14/05 1.9%
HBOS Treasury HBOS Treasury
Services PLC, Services PLC, Morgan Stanley,
1.961%, due 10/24/04 1.6% 1.961%, due 10/24/04 1.9% 1.650%, due 10/14/04 1.6%
HBOS Treasury Thunder Bay
Barclays Bank PLC, Services PLC, Funding, Inc.,
1.913%, due 2/3/05 1.5% 1.640%, due 11/1/05 1.6% 1.510%, due 11/8/04 1.6%
Monument Gardens
Funding LLC, 1.760%, Barclays Bank PLC, Barclays Bank PLC,
due 12/1/04 1.5% 1.913%, due 2/3/05 1.5% 1.913%, due 2/3/05 1.5%
6
RELATIVE PERFORMANCE
The following table shows, for the periods shown, the (unaudited) average
annual total return for: (i) Class A shares of Lexington Money Market Trust;
(ii) Class A shares of Money Market Fund; and (iii) Class A Shares of ING
Classic Money Market Fund. Total return is calculated assuming reinvestment of
all dividends and capital gain distributions at net asset value. Each Fund's
past performance is not an indication of its future performance.
CALENDAR LEXINGTON MONEY ING CLASSIC
YEAR/PERIOD MARKET MONEY MARKET MONEY MARKET
ENDED TRUST (1) FUND FUND
- ----------- --------------- ------------ ------------
12/31/95 3.35% N/A N/A
12/31/95 5.06% N/A N/A
12/31/96 4.50% N/A N/A
12/31/97 4.68% N/A N/A
12/31/98 4.64% N/A N/A
12/31/99 4.34% N/A 4.64%
12/31/00 5.57% 5.18% 5.88%
12/31/01 3.14% 3.10% 3.81%
12/31/02 0.79% 0.77% 1.26%
12/31/03 0.39% 0.75% 0.52%
- -----------------
(1) Prior to July 26, 2000, Lexington Management Corporation served as
investment adviser to the Lexington Money Market Trust. Effective, July
31, 2000, the Lexington Money Market Trust's outstanding shares were
classified as Class A shares.
7
PERFORMANCE OF ING CLASSIC MONEY MARKET FUND
The following bar chart and tables provide an indication of the risks of
investing in ING Classic Money Market Fund. The bar chart shows (on a calendar
year basis) changes in ING Classic Money Market Fund's annual total return from
year to year. The information in the bar chart is based on the performance of
the Class A shares of the Fund. ING Classic Money Market Fund's past performance
is not necessarily an indication of how the Fund will perform in the future.
CALENDAR YEAR-BY-YEAR RETURNS(1)(2)
[BAR GRAPH]
- ------------------
(1) The figures are for the years ended December 31 of each year.
(2) During the periods shown in the chart, the Fund's best quarterly
performance was up 1.52% for the quarter-ended December 31, 2000, and the
Fund's worst quarterly performance was up 0.10% for the quarter-ended
September 30, 2003. The ING Classic Money Market Fund's year-to-date total
return as of September 30, 2004 was 0.39%.
8
The following table shows what the average annual total returns of ING
Classic Money Market Fund would equal if you averaged out actual performance
over various lengths of time assuming that a shareholder paid the maximum
contingent deferred sales charge.
ING CLASSIC MONEY MARKET FUND - AVERAGE ANNUAL TOTAL RETURNS for the period
ended December 31, 2003
1 YEAR 5 YEAR 10 YEARS (OR LIFE OF CLASS)(1)
------ ------ ----------------------------
Class A 0.52% 3.19% 3.20%
Class B(2) (4.86)% 2.22% 2.41%
Class C(3) (0.86)% 2.57% 2.58%
- -------------------
(1) Class A, Class B and Class C shares of the Fund commenced operations on
December 15, 1998.
(2) Reflects deduction of deferred sales charge of 5.00%, 2.00% and 1.00%,
respectively, for 1 year, 5 year and Life of the Class returns.
(3) Reflects deduction of deferred sales charge of 1% for 1-year return.
The Fund's seven-day yields as of December 31, 2003 for the Classes A, B and C
shares were 0.38%, 0.14% and 0.14%, respectively. The seven-day yield represents
the average daily dividends for the seven days, annualized by 365 and divided by
the net asset values per share at the end of the period.
The Fund's seven-day effective yields as of December 31, 2003 for the Classes A,
B and C shares were 0.38%, 0.14% and 0.14%, respectively. The seven-day
effective yield (also an annualized figure) assumes that dividends are
reinvested and compounded. For the Fund's current seven-day yield and current
seven-day effective yield, call the Fund at (800) 992-0180.
The following table shows the performance of ING Classic Money Market Fund
if sales charges are not reflected.
ING CLASSIC MONEY MARKET FUND - AVERAGE ANNUAL TOTAL RETURNS for the period
ended December 31, 2003
1 YEAR 5 YEAR 10 YEARS (OR LIFE OF CLASS)(1)
------ ------ ---------------------------
Class A 0.52% 3.19% 3.20%
Class B 0.14% 2.58% 2.59%
Class C 0.14% 2.57% 2.58%
- -----------------
(1) Class A, Class B and Class C shares of the Fund commenced operations on
December 15, 1998.
The Fund's seven-day yields as of December 31, 2003 for the Classes A, B and C
shares were 0.38%, 0.14% and 0.14%, respectively. The seven-day yield represents
the average daily dividends for the seven days, annualized by 365 and divided by
the net asset values per share at the end of the period.
The Fund's seven-day effective yields as of December 31, 2003 for the Classes A,
B and C shares were 0.38%, 0.14% and 0.14%, respectively. The seven-day
effective yield (also an annualized figure) assumes that dividends are
reinvested and compounded. For the Fund's current seven-day yield and current
seven-day effective yield, call the Fund at (800) 992-0180.
For a discussion by the Adviser regarding the performance of ING Classic
Money Market Fund for the semi-annual period ended September 30, 2004, see
APPENDIX A to this Proxy Statement/Prospectus. Additional information about ING
Classic Money Market Fund is included in APPENDIX C to this Proxy
Statement/Prospectus.
9
COMPARISON OF INVESTMENT TECHNIQUES AND PRINCIPAL RISKS OF INVESTING IN THE
FUNDS
Because the Funds have investment objectives and policies that are the
same in many respects, the risks of investing in ING Classic Money Market Fund
are similar to the risks of investing in Lexington Money Market Trust and Money
Market Fund, respectively. The following summarizes the principal investment
techniques and risks of investing in the Funds.
Risks Particular to Money Market Funds. An investment in each Fund is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. Although each Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Fund. The Fund also is subject to the risks associated with investing in debt
securities.
Changes In Interest Rates. Money market funds, like each of the Funds, are
subject to less interest rate risk than other income funds because they invest
in debt securities with a remaining maturity not greater than 397 days*. Still,
the value of the Fund's investments may fall when interest rates rise.
Credit Risk. Money market funds, like each of the Funds, are subject to less
credit risk than other income funds because they invest in short-term debt
securities of the highest quality. Still, the Fund could lose money if the
issuer of a debt security is unable to meet its financial obligations or goes
bankrupt.
U.S. Government Securities. Each Fund will primarily invest in securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities. Some of
the securities purchased by the Fund are backed by the full faith and credit of
the U.S. government and are guaranteed as to both principal and interest by the
U.S. Treasury. Examples include direct obligations of the U.S. Treasury such as
U.S. Treasury bills, notes and bonds, as well as indirect obligations of the
U.S. Treasury such as obligations of various agencies, including the Government
National Mortgage Association, the Small Business Administration, the Maritime
Administration, the Farmers Home Administration and the Department of Veterans
Affairs.
Other agencies and instrumentalities of the U.S. government issued securities
that are not direct obligations of the U.S. Treasury, but rather are backed by
the ability to borrow directly from the U.S. Treasury. Such agencies include the
Federal Financing Bank, The Federal Home Loan Banks and the U.S. Postal
Services. Still other agencies and instrumentalities are supported solely by the
credit of the agency or instrumentality itself, but are given additional support
due to the U.S. Treasury's authority to purchase their outstanding debt
obligations. These U.S. government sponsored enterprises or agencies include the
Federal Home Loan Banks, the Federal Farm Credit Banks, the Federal Home Loan
Mortgage Corporation and the Federal National Mortgage Association. No assurance
can be given that the U.S. government would provide financial support to such
agencies if needed, as securities issued by these agencies are neither
guaranteed nor insured by the U.S. government.
Risk of Concentration in Banking Loan Obligations. The risks of concentrating in
investments in the banking industry include credit risk, interest rate risks,
and regulatory risk (the impact of state or federal legislation and
regulations).
Risk of Foreign Investing. Euro and Yankee dollar investments involve certain
risks that are different from investments in domestic obligations of U.S. banks.
These risks may include unfavorable political and economic developments,
possible withholding taxes, seizure of foreign deposits, currency controls or
other governmental restrictions that might affect payment of principal or
interest. In addition, foreign banks are not regulated by U.S. banking
authorities and are generally not bound by financial reporting standards
comparable to U.S. banks. Further, adverse political, regulatory, market or
economic developments in foreign countries can affect entities located in those
countries.
- ------------
* All securities with a maturity date greater than 13 months have either a
variable rate, demand feature, prerefunded, optional or mandatory put
resulting in an effective maturity of one year or less.
10
COMPARISON OF FEES AND EXPENSES
The following discussion describes and compares the fees and expenses of
the Funds. For further information on the fees and expenses of ING Classic Money
Market Fund, see "Appendix C: Additional Information Regarding ING Classic Money
Market Fund."
MANAGEMENT FEES
Lexington Money Market Trust currently pays a management fee of 0.50% on
the first $500 million of the Fund's average daily net assets; and 0.45% on the
Fund's average daily net assets over $500 million. Money Market Fund currently
pays a management fee of 0.35% of the Fund's average daily net assets. ING
Classic Money Market Fund currently pays a management fee of 0.25% of the Fund's
average daily net assets. If the Reorganizations are approved, the combined ING
Classic Money Market Fund will pay a management fee of 0.25% of the Fund's
average daily net assets.
SUB-ADVISER FEES
Additionally, for each Fund, ING Investments pays ING IM a sub-advisory
fee of: (i) 0.2250% on the first $500 million of the Lexington Money Market
Trust's average daily net assets, and 0.2025% on the Fund's average daily net
assets over $500 million; (ii) 0.1575% of Money Market Fund's average daily net
assets; and (iii) 0.1125% of the ING Classic Money Market Fund's average daily
net assets. If the Reorganizations are approved, ING Investments will pay to ING
IM a sub-advisory fee of 0.1125% of the Fund's average daily net assets.
ADMINISTRATION FEES
Lexington Money Market Trust and Money Market Fund pay an administration
fee of 0.10% of the Fund's average daily net assets for each Class of Shares.
ING Classic Money Market Fund does not pay an administration fee.
DISTRIBUTION AND SERVICE FEES
Each Fund pays the distribution (12b-1) and service fees for each Class of
shares as described below in the table entitled "Annual Fund Operating
Expenses."
EXPENSE LIMITATION AGREEMENTS
ING Investments has entered into an expense limitation agreement that
limits expenses for ING Classic Money Market Fund to annual rates of 0.77%,
1.41% and 1.41% for Class A, Class B and Class C shares, respectively. The
expense limitation agreement is contractual and shall renew automatically for
one-year terms, unless ING Investments provides written notice of the
termination of the expense limitation agreement within 90 days of the end of the
then current term or upon termination of the investment management agreement.
The current expense limitation agreement provides that it will remain in effect
through at least August 1, 2006. There is no assurance that the expense
limitation agreements will remain in effect after this date. Under the terms of
the current expense limitation agreement, ING Investments is entitled to recoup
from ING Classic Money Market Fund any such investment advisory fees waived or
reduced and any such payments made under certain circumstances, as described in
the current expense limitation agreement.
11
EXPENSE TABLES
There are two types of fees and expenses when you invest in mutual funds:
fees, including sales charges, you pay directly when you buy or sell shares, and
operating expenses paid each year by the Funds. The following table shows the
transaction fees on new investments for Class A, Class B and Class C shares of
ING Classic Money Market Fund.
TRANSACTION FEES ON NEW INVESTMENTS
(fees paid directly from your investment)
CLASS A CLASS B CLASS C
------- ------- -------
Maximum sales charge (load) imposed on purchases (as a percentage of
offering price) none none none
Maximum deferred sales charge (load) (as a percentage of the lower of
original purchase price or redemption proceeds) none(1) 5.00%(2) 1.00%(3)
- ----------------
(1) A contingent deferred sales charge of no more than 1.00% may be assessed
on redemptions of Class A shares that were purchased without an initial
sales charge as part of an investment of $1 million or more. See, "Class A
Shares: Offered Without Sales Charge" in APPENDIX C.
(2) Imposed upon redemptions within 6 years from purchase. Fee has scheduled
reductions after the first year. See "Class B Shares: Deferred Sales
Alternative" in APPENDIX C.
(3) Imposed upon redemptions within 1 year from purchase.
12
The following tables show the current expenses of each of the Funds
and estimated pro forma expenses giving effect to: (i) the proposed
Reorganization of Lexington Money Market Trust into ING Classic Money Market
Fund (assumes Reorganization of Money Market Fund does not occur); (ii) the
proposed Reorganization of Money Market Fund into ING Classic Money Market Fund
(assumes Reorganization of Lexington Money Market Trust does not occur); and
(iii) the proposed Reorganization of Lexington Money Market Trust and Money
Market Fund into ING Classic Money Market Fund. Expenses are based upon the
annual operating expenses incurred by Class A, Class B and Class C shares (as
applicable) of the Funds for the period ended September 30, 2004. Pro forma fees
show estimated fees of the Surviving Fund after giving effect to each proposed
Reorganization as adjusted to reflect changes in contractual charges. Pro forma
numbers are estimated in good faith and are hypothetical.
ANNUAL FUND OPERATING EXPENSES AS OF SEPTEMBER 30, 2004 (UNAUDITED)
(expenses that are deducted from Fund assets, shown as a
ratio of expenses to average daily net assets)(1)
DISTRIBUTION TOTAL WAIVERS,
(12b-1) AND FUND REIMBURSEMENTS
MANAGEMENT SHAREHOLDER OTHER OPERATING AND NET
FEES SERVICING FEES EXPENSES EXPENSES RECOUPMENT(2)(3) EXPENSES
---------- -------------- -------- --------- --------------- --------
CLASS A
Lexington Money Market Trust 0.50% N/A 0.30%(3) 0.80% -- 0.80%
Money Market Fund 0.35% 0.25% 0.41%(3) 1.01% -- 1.01%(4)
ING Classic Money Market Fund 0.25% 0.75% 0.12% 1.12% (0.35)% 0.77%
Surviving Fund After the
Reorganization with Lexington Money
Market Trust
(Estimated Pro Forma) 0.25% 0.75% 0.11% 1.11% (0.34)% 0.77%
Surviving Fund After the
Reorganization with Money Market Fund
(Estimated Pro Forma) 0.25% 0.75% 0.11% 1.11% (0.34)% 0.77%
Surviving Fund After the
Reorganization with Both Disappearing
Funds
(Estimated Pro Forma) 0.25% 0.75% 0.11% 1.11% (0.34)% 0.77%
CLASS B
Lexington Money Market Trust N/A N/A N/A N/A N/A N/A
Money Market Fund 0.35% 1.00% 0.42%(3) 1.77% -- 1.77%(4)
ING Classic Money Market Fund 0.25% 1.00% 0.12% 1.37% -- 1.37%(5)
Surviving Fund After the
Reorganization with Lexington Money
Market Trust
(Estimated Pro Forma) 0.25% 1.00% 0.11% 1.36% -- 1.36%
Surviving Fund After the
Reorganization with Money Market Fund
(Estimated Pro Forma) 0.25% 1.00% 0.11% 1.36% -- 1.36%
Surviving Fund After the
Reorganization with Both Disappearing
Funds
(Estimated Pro Forma) 0.25% 1.00% 0.11% 1.36% -- 1.36%
CLASS C
Lexington Money Market Trust N/A N/A N/A N/A N/A N/A
Money Market Fund 0.35% 1.00% 0.42%(3) 1.77% -- 1.77%(4)
ING Classic Money Market Fund 0.25% 1.00% 0.12% 1.37% -- 1.37%(5)
Surviving Fund After the
Reorganization with Lexington Money
Market Trust
(Estimated Pro Forma) 0.25% 1.00% 0.11% 1.36% -- 1.36%
13
DISTRIBUTION TOTAL WAIVERS,
(12b-1) AND FUND REIMBURSEMENTS
MANAGEMENT SHAREHOLDER OTHER OPERATING AND NET
FEES SERVICING FEES EXPENSES EXPENSES RECOUPMENT(2)(3) EXPENSES
---------- -------------- -------- --------- --------------- --------
Surviving Fund After the
Reorganization with Money Market Fund
(Estimated Pro Forma) 0.25% 1.00% 0.11% 1.36% -- 1.36%
Surviving Fund After the
Reorganization with Both Disappearing
Funds
(Estimated Pro Forma) 0.25% 1.00% 0.11% 1.36% -- 1.36%
- --------------------
(1) The fiscal year end for each Fund is March 31.
(2) ING Investments has entered into an expense limitation agreement that
limit expenses for ING Classic Money Market Fund to annual rates of 0.77%,
1.41% and 1.41% for Class A, Class B and Class C shares, respectively. The
expense limitation agreement is contractual and shall renew automatically
for one-year terms unless ING Investments provides written notice of the
termination of the expense limitation agreement within 90 days of the end
of the then current term or upon termination of the investment management
agreement. The current expense limitation agreement provides that it will
remain in effect through at least August 1, 2006. There is no assurance
that the expense limitation agreements will remain in effect after this
date. Under the terms of the current expense limitation agreement, the
Adviser is entitled to recoup from ING Classic Money Market Fund any such
investment advisory fees waived or reduced and any such payments made
under certain circumstances, as described in the current expense
limitation agreement.
(3) ING Funds Distributor, LLC has agreed to waive up to 0.40% of the
Distribution Fee for Class A Shares of the ING Classic Money Market Fund.
The fee waiver will continue until at least March 31, 2006.
(4) ING Funds Services, LLC receives an annual administration fee equal to
0.10% respectively, of the Fund's average daily net assets.
(5) Excludes voluntary reimbursements of expenses made by ING Investments
during the period ended September 30, 2004. These voluntary reimbursements
were in addition to contractual obligations under the expense limitation
agreement and there is no certainty that these reimbursements will occur
in the future. If voluntary waivers of 0.41%, 0.43% and 0.43% would have
been included, net expenses would be 0.60%, 1.34% and 1.34% for Classes A,
B and C, respectively.
(6) Excludes voluntary waiver of class specific expenses made by ING Funds
Distributor during the period ended September 30, 2004. These voluntary
reimbursements were in addition to contractual obligations under the
expense limitation agreement and there is no certainty that these
reimbursements will occur in the future. If voluntary waivers of 0.29% and
0.29% had been included, net expenses would be 1.08% and 1.08% for Classes
B and C, respectively.
14
Examples. The following examples are intended to help you compare the cost
of investing in the Funds. The examples assume that you invest $10,000 in each
Fund for the time periods indicated and then redeem all of your shares at the
end of those periods. The examples also assume that your investment has a 5%
return each year and that each Fund's operating expenses remain the same. The 5%
return is an assumption and is not intended to portray past or future investment
results. Based upon the above assumptions, you would pay the following expenses
if you redeemed your shares. Your actual costs may be higher or lower.
LEXINGTON MONEY MARKET TRUST MONEY MARKET FUND
---------------------------- -----------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
CLASS A $ 82 $ 255 $ 444 $ 990 $ 103 $ 322 $ 558 $ 1,236
CLASS B N/A N/A N/A N/A 680 $ 857 $ 1,159 $ 1,883*
CLASS C N/A N/A N/A N/A 280 $ 557 $ 959 $ 2,084
ING CLASSIC MONEY MARKET FUND
-----------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS A(1) $ 79 $ 321 $ 583 $ 1,332
CLASS B $ 639 $ 734 $ 950 $ 1,578*
CLASS C $ 239 $ 434 $ 750 $ 1,646
ESTIMATED PRO FORMA: THE FUNDS
COMBINED**
----------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS A(1) $ 79 $ 319 $ 579 $ 1,321
CLASS B $ 638 $ 731 $ 945 $ 1,567*
CLASS C $ 238 $ 431 $ 745 $ 1,635
You would pay the following expenses if you did not redeem your shares:
LEXINGTON MONEY MARKET TRUST MONEY MARKET FUND
---------------------------- -----------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
CLASS A $ 82 $ 255 $ 444 $ 990 $ 103 $ 322 $ 558 $ 1,236
CLASS B N/A N/A N/A N/A $ 180 $ 557 $ 959 $ 1,883*
CLASS C N/A N/A N/A N/A $ 180 $ 557 $ 959 $ 2,084
ING CLASSIC MONEY MARKET FUND
-----------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS A(1) $ 79 $ 321 $ 583 $ 1,332
CLASS B $ 139 $ 434 $ 750 $ 1,578*
CLASS C $ 139 $ 434 $ 750 $ 1,646
ESTIMATED PRO FORMA: THE FUNDS
COMBINED**
----------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS A(1) $ 79 $ 319 $ 579 $ 1,321
CLASS B $ 138 $ 431 $ 745 $ 1,567*
CLASS C $ 138 $ 431 $ 745 $ 1,635
- ----------------
(1) The examples reflect the contractual expense limits for the one-year
period and the first year of the three-, five- and ten-year periods.
* The ten-year calculations for Class B shares assume conversion of the
Class B shares to Class A shares at the end of the eighth year following
the date of purchase.
** Estimated.
15
GENERAL INFORMATION
Class A, Class B and Class C shares of ING Classic Money Market Fund
issued to a shareholder in connection with the Reorganizations will not be
subject to an initial sales charge, but will be subject to the same contingent
deferred sales charge, if any, applicable to the corresponding Class of shares
of each Disappearing Fund held by that shareholder immediately prior to the
Reorganizations.
In addition, the period that the shareholder held shares of each
Disappearing Fund will be included in the holding period of ING Classic Money
Market Fund shares for purposes of calculating any contingent deferred sales
charge. Similarly, Class B shares of ING Classic Money Market Fund issued to a
shareholder in connection with the Reorganizations will convert to Class A
shares eight years after the date that the Class B shares of each Disappearing
Fund were purchased by the shareholder. Purchases of shares of ING Classic Money
Market Fund after the Reorganization will be subject to the same sales load
structure that is currently in effect for the Disappearing Funds, as described
in the table above in the section "Expense Tables."
Neither the Surviving Fund nor the Disappearing Funds have any redemption
fees, exchange fees or sales charges on reinvested dividends.
MATERIAL DIFFERENCES IN RIGHTS OF THE DISAPPEARING FUNDS' SHAREHOLDERS AND
SURVIVING FUND'S SHAREHOLDERS
Each Fund is organized as a series of a Delaware statutory trust and is
governed by the same Trust Instrument and By-laws. As such, there are no
material differences in the rights of each Fund's shareholders. The Trust
Instrument permits the Board of Trustees, without a shareholder vote, to amend
the Trust Instrument, except that shareholders have the right to vote on: (i)
the election of a Trustee; (ii) the removal of the Trustee (by a vote of at
least two-thirds of the outstanding shares); (iii) on any amendment required by
law or by the Trust's most current registration statement; (iv) any amendment to
section 11.8 of the Trust Instrument, which governs the rights of shareholders
to vote on amendments; and (v) any amendment submitted to the shareholders. The
Trust Instrument permits the Trustees pursuant to a majority vote to amend the
By-laws.
16
INFORMATION ABOUT THE REORGANIZATIONS
THE REORGANIZATION AGREEMENTS
The terms and conditions under which the proposed transactions may be
consummated are set forth in the Reorganization Agreements. Significant
provisions of the Reorganization Agreements are summarized below; however, this
summary is qualified in its entirety by reference to the Reorganization
Agreements, copies of which are attached as APPENDICES B-1 and B-2.
The Reorganization Agreements provide for the transfer, as of the Closing
Date, of all of the assets of each Disappearing Fund in exchange for shares of
beneficial interest of the Surviving Fund and the assumption by the Surviving
Fund of each Disappearing Fund's liabilities as set forth in that Fund's
statement of assets and liabilities as of the Closing Date. Potential
liabilities of each Disappearing Fund that are not known as of the Closing Date
are not assumed by the Surviving Fund under the terms of the Reorganization
Agreement. Shares of the Surviving Fund will then be distributed to shareholders
of each Disappearing Fund, as provided for in the Reorganization Agreements.
Each Disappearing Fund will then be liquidated.
Each Class A, Class B and Class C shareholder will hold, immediately after
the Closing Date, shares of the corresponding class of the Surviving Fund having
an aggregate value equal to the aggregate value of the shares of the
corresponding class of the Disappearing Fund held by that shareholder as of the
Closing Date. In the interest of economy and convenience, shares of the
Surviving Fund generally will not be represented by physical certificates,
unless you request the certificates in writing.
Until the Closing Date, shareholders of each Disappearing Fund will
continue to be able to redeem their shares. Redemption requests received after
the Closing Date will be treated as requests received by the Surviving Fund for
the redemption of its shares.
The obligations of the Funds under the Reorganization Agreements are
subject to various conditions, including approval of the shareholders. The
Reorganization Agreements also require that each of the Funds take, or cause to
be taken, all actions, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective the transactions
contemplated by the Reorganization Agreements. The Reorganization Agreements may
be terminated by mutual agreement of the parties or on certain other grounds.
Please refer to APPENDICES B-1 and B-2 to review the terms and conditions of the
Reorganization Agreements.
REASONS FOR THE REORGANIZATIONS
The Reorganizations are part of several reorganizations that have taken
place among various ING Funds. The ING Funds complex has grown in recent years
through the addition of many funds. Management of the ING Funds has proposed the
consolidation of several of the ING Funds that they believe have similar or
compatible investment strategies. The reorganizations are designed to reduce the
substantial overlap in funds offered in the ING Funds complex, thereby
eliminating inefficiencies and potential confusion about overlapping funds. ING
Investments also believes that the reorganizations may benefit Fund shareholders
by resulting in a surviving fund with a greater asset base. This is expected to
provide greater investment opportunities for the surviving fund and the
potential to take larger portfolio positions.
The proposed Reorganizations were presented to the Board of Trustees of
each Fund for consideration at a meeting held on September 2, 2004. For the
reasons discussed below, the Board of Trustees of the Disappearing Funds,
including all of the Trustees who are not "interested persons" (as defined in
the Investment Company Act of 1940, as amended) of the Disappearing Funds,
determined that the interests of the shareholders of each Disappearing Fund
would not be diluted as a result of the proposed Reorganizations, and that the
proposed Reorganizations are in the best interests of each Disappearing Fund and
its shareholders. Likewise, for the reasons set forth below, the Board of
Trustees of the Surviving Fund, including all of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940, as
amended) of the Surviving Fund, determined that the interests of the
shareholders of the Surviving Fund would not be diluted as a result of the
proposed Reorganizations, and that the proposed Reorganizations are in the best
interests of the Surviving Fund and its shareholders.
Each Reorganization will allow each Disappearing Fund's shareholders to
continue to participate in a professionally managed portfolio that operates as a
money market fund. Additionally, as shown in the fee tables above, the proposed
Reorganizations are expected to result in lower gross expenses as well as lower
net operating expenses (excluding short-term, nonrecurring, reorganization
expenses) per share for shareholders of all Classes, except Class A shares of
Money Market Fund which currently benefit from voluntary expense reimbursements.
17
As shareholders of the Surviving Fund, shareholders will be able to continue to
exchange into the ING Funds that offer the same Class of shares in which such
shareholder is currently invested. A list of the ING Funds and the Classes
available after the Reorganization is contained in APPENDIX D.
BOARDS' CONSIDERATIONS
The Board of Trustees of each Fund approved the Reorganizations upon
consideration of a number of factors, including the following:
- the plans of management to reduce overlap in funds in the ING Funds
complex as well as to combine the three substantially similar money
market funds into one more viable fund;
- the relative investment performance of the Surviving Fund as
compared to each Disappearing Fund;
- expense ratios and information regarding fees and expenses of each
Disappearing Fund and the Surviving Fund;
- the relative size of the Funds and the possibility that the
increased asset size of the Surviving Fund could provide the
Surviving Fund with more trading leverage and opportunities to
purchase larger positions;
- whether the Reorganizations would dilute the interests of their
respective Fund's current shareholders;
- the similarity of investment objectives and strategies of each
Disappearing Fund with those of the Surviving Fund;
- the fees or expenses that will be incurred by ING Investments, or an
affiliate, in connection with the Reorganizations; and
- the tax consequences of the Reorganization to each Fund and its
shareholders, including the tax-free nature of the transaction.
The Board of Trustees also considered the future potential benefits to ING
Investments in that its costs to administer the Funds may be reduced if the
Reorganization is approved, and its costs will be eliminated or reduced under
its obligation to limit expenses of the Surviving Fund.
THE TRUSTEES OF EACH DISAPPEARING FUND RECOMMEND THAT SHAREHOLDERS APPROVE THE
REORGANIZATION WITH AND INTO THE SURVIVING FUND.
TAX CONSIDERATIONS
The Reorganizations are intended to qualify for Federal income tax
purposes as a tax-free reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended. Accordingly, pursuant to this treatment, neither the
Disappearing Funds nor their shareholders, nor the Surviving Fund nor its
shareholders, are expected to recognize any gain or loss for federal income tax
purposes from the transactions contemplated by the Reorganization Agreements. As
a condition to the Closing of the Reorganizations, the Funds will receive an
opinion from the law firm of Dechert LLP to the effect that the Reorganizations
will qualify as tax-free reorganizations for Federal income tax purposes. That
opinion will be based in part upon certain assumptions and upon certain
representations made by the Funds.
EXPENSES OF THE REORGANIZATIONS
ING Investments (or an affiliate) will incur the cost of the expenses
related to the proposed Reorganizations, including, but not limited to, the
costs of solicitation of voting instructions and any necessary filings with the
SEC.
ADDITIONAL INFORMATION ABOUT THE FUNDS
FORM OF ORGANIZATION
Each Fund is a diversified series of ING Funds Trust, an open-end
management investment company organized as a Delaware statutory trust. ING Funds
Trust is governed by a Board of Trustees consisting of 11 members. For more
information on the history of the Funds, see the SAI.
18
DISTRIBUTOR
ING Funds Distributor, LLC (the "Distributor"), whose address is 7337 East
Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, is the principal
distributor for the Funds.
DIVIDENDS AND OTHER DISTRIBUTIONS
If the Reorganization Agreement is approved by the Disappearing Fund's
shareholders, then as soon as practicable before the Closing Date, the
Disappearing Fund will pay its shareholders a cash distribution of substantially
all undistributed net investment income and undistributed realized net capital
gains.
CAPITALIZATION
The following tables show on an unaudited basis the capitalization of each
of the Funds as of September 30, 2004 and on a pro forma basis as of September
30, 2004 giving effect to the Reorganizations. The first table presents the
capitalization of each Fund assuming that the Reorganization of the Lexington
Money Market Trust into ING Classic Money Market Fund is consummated, but not
the Reorganization with Money Market Fund. The second table presents the
capitalization of each Fund assuming that the Reorganization of Money Market
Fund into ING Classic Money Market Fund is consummated, but not the
Reorganization of Lexington Money Market Trust. The third table presents the
capitalization of each Fund assuming that the Reorganizations with both the
Lexington Money Market Trust and Money Market Fund are consummated. The
consummation of one Reorganization shall not be contingent on the consummation
of any other Reorganization.
PRO FORMA I: Proposed Reorganization of Lexington Money Market Trust into ING
Classic Money Market Fund (assumes Reorganization of Money Market Fund does not
occur).
NET ASSET VALUE SHARES
NET ASSETS PER SHARE OUTSTANDING
---------- --------- -----------
LEXINGTON MONEY MARKET TRUST
Class A $ 43,004,634 $1.00 43,014,860
Class B N/A N/A N/A
Class C N/A N/A N/A
ING CLASSIC MONEY MARKET FUND
Class A $426,901,693 $1.00 427,042,564
Class B $ 695,560 $1.00 696,183
Class C $ 515,877 $1.00 515,854
PRO FORMA - SURVIVING FUND INCLUDING LEXINGTON MONEY MARKET TRUST
Class A $469,906,327 $1.00 470,057,424
Class B $ 695,560 $1.00 696,183
Class C $ 515,877 $1.00 515,854
19
PRO FORMA II: Proposed Reorganization of Money Market Fund into ING Classic
Money Market Fund (assumes Reorganization of Lexington Money Market Trust does
not occur).
NET ASSET VALUE SHARES
NET ASSETS PER SHARE OUTSTANDING
---------- --------- -----------
MONEY MARKET FUND
Class A $ 17,377,426 $1.00 17,391,337
Class B $ 20,384,336 $1.00 20,391,589
Class C $ 5,252,542 $1.00 5,256,776
ING CLASSIC MONEY MARKET FUND
Class A $426,901,693 $1.00 427,042,564
Class B $ 695,560 $1.00 696,183
Class C $ 515,877 $1.00 515,854
PRO FORMA - SURVIVING FUND INCLUDING MONEY MARKET FUND
Class A $444,279,119 $1.00 444,433,901
Class B $ 21,079,896 $1.00 21,087,772
Class C $ 5,768,419 $1.00 5,772,630
PRO FORMA III: Proposed Reorganization of Lexington Money Market Trust and Money
Market Fund into ING Classic Money Market Fund.
NET ASSET VALUE SHARES
NET ASSETS PER SHARE OUTSTANDING
---------- --------- -----------
LEXINGTON MONEY MARKET TRUST
Class A $ 43,004,634 $1.00 43,014,860
Class B N/A N/A N/A
Class C N/A N/A N/A
MONEY MARKET FUND
Class A $ 17,377,426 $1.00 17,391,337
Class B $ 20,384,336 $1.00 20,391,589
Class C $ 5,252,542 $1.00 5,256,776
ING CLASSIC MONEY MARKET FUND
Class A $426,901,693 $1.00 427,042,564
Class B $ 695,560 $1.00 696,183
Class C $ 515,877 $1.00 515,854
PRO FORMA - SURVIVING FUND INCLUDING LEXINGTON MONEY MARKET TRUST AND MONEY MARKET FUND
Class A $487,283,753 $1.00 487,448,761
Class B $ 21,079,896 $1.00 21,087,772
Class C $ 5,768,419 $1.00 5,772,630
20
GENERAL INFORMATION ABOUT THE PROXY STATEMENT
SOLICITATION OF PROXIES
Solicitation of proxies is being made primarily by the mailing of the
Notice and this Proxy Statement/Prospectus with its enclosures on or about
January 7, 2005. Shareholders of the Disappearing Funds whose shares are held by
nominees, such as brokers, can vote their proxies by contacting their respective
nominee. In addition to the solicitation of proxies by mail, employees of ING
Investments and its affiliates, without additional compensation, may solicit
proxies in person or by telephone, telegraph, facsimile, or oral communications.
Each Disappearing Fund has retained Georgeson Shareholder Communications, Inc.
(the "Solicitor"), a professional proxy solicitation firm, to assist with any
necessary solicitation of proxies. The estimated cost of the proxy solicitation
is $25,000. ING Investments or an affiliate will incur the cost of the proxy
solicitation. Shareholders of each Disappearing Fund may receive a telephone
call from the professional proxy solicitation firm asking the shareholder to
vote.
In all cases where a proxy is solicited by telephone, the Solicitor is
required to ask the person to provide identifying registration data, including
full name and address, and, if known, the number of shares owned. If the
shareholder is a corporation or other entity, the Solicitor will ask for the
title of the person and for confirmation that the person is authorized to direct
the voting of the shares. The Solicitor will advise the shareholder that the
shareholder can vote his or her shares over the telephone and will ask if the
shareholder would like to cast a vote. Although the Solicitor's representative
is permitted to answer questions about the process, he or she is not permitted
to recommend to the shareholder how to vote, other than to read any
recommendation set forth in the Proxy Statement/Prospectus. The Solicitor will
then record the shareholder's instructions on the Proxy Card. Within 72 hours,
the shareholder will be sent a confirmation of his or her vote asking the
shareholder to call the Solicitor immediately if his or her instructions are not
correctly reflected in the confirmation.
If a shareholder wishes to participate in the Special Meeting, but does
not wish to give a proxy by telephone, the shareholder may still submit the
proxy originally sent with the Proxy Statement/Prospectus, attend in person or
vote online. Should shareholders require additional information regarding the
proxy or require replacement of the proxy, they may contact the Solicitor
toll-free at [___].
A shareholder may revoke the accompanying proxy at any time prior to its
use by filing with the respective Disappearing Fund, a written revocation or
duly executed proxy bearing a later date. In addition, any shareholder who
attends the Special Meeting in person may vote by ballot at the Special Meeting,
thereby canceling any proxy previously given. The persons named in the
accompanying proxy will vote as directed by the proxy, but in the absence of
voting directions in any proxy that is signed and returned, they intend to vote
"FOR" the Reorganization proposal and may vote in their discretion with respect
to other matters not now known to the Board of Trustees of the Disappearing
Funds that may be presented at the Special Meeting.
VOTING RIGHTS
As a shareholder of a Disappearing Fund, you are entitled to one vote for
each share held as to any matter on which you are entitled to vote and for each
fractional share that you own, you shall be entitled to a proportionate
fractional vote. Shares have no preemptive or subscription rights.
Only shareholders of a Disappearing Fund at the close of business on
December 3, 2004 (the "Record Date") will be entitled to be present and give
voting instructions for such Disappearing Fund at the Special Meeting with
respect to their shares owned as of that Record Date. As of the Record Date,
[_______] shares of Lexington Money Market Trust and [________] shares of Money
Market Fund were outstanding and entitled to vote.
Approval of each Reorganization Agreement requires the vote, if a quorum
is present, of the lesser of (i) 67% or more of the voting securities present,
provided that more than 50% of the outstanding voting securities are present in
person or represented by proxy at the Special Meeting, or (ii) more than 50% of
the outstanding voting securities. Holders of a majority of outstanding shares
present in person or by proxy shall constitute a quorum. In the absence of a
quorum, a majority of outstanding shares entitled to vote present in person or
by proxy may adjourn the meeting from time to time until a quorum is present.
If a shareholder abstains from voting as to any matter, or if a broker
returns a "non-vote" proxy, indicating a lack of authority to vote on a matter,
the shares represented by the abstention or non-vote will be deemed present at
the Special Meeting for purposes of determining a quorum. However, abstentions
and broker non-votes will not
21
be deemed represented at the Special Meeting for purposes of calculating the
vote on any matter. For this reason, with respect to matters requiring the
affirmative majority of the total shares outstanding, an abstention or broker
non-vote will have the effect of a vote against the Reorganization.
Each Disappearing Fund expects that, before the Special Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers will request voting instructions from their customers and beneficial
owners. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, each Disappearing Fund
understands that the broker-dealers that are members of the New York Stock
Exchange may consider whether the rules of the New York Stock Exchange permit
the broker-dealers to vote on the items to be considered at the Special Meeting
on behalf of their customers and beneficial owners. If permitted, such
broker-dealers may so vote.
To the knowledge of ING Investments, as of December 20, 2004, no current
Trustee owns 1% or more of the outstanding shares of either Fund, and the
officers and Trustees own, as a group, less than 1% of the shares of either
Fund.
APPENDIX E hereto lists the persons that, as of December 20, 2004, owned
beneficially or of record 5% or more of the outstanding shares of any Class of
Lexington Money Market Trust, Money Market Fund or ING Classic Money Market
Fund.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
Neither Disappearing Fund knows of any matters to be presented at the
Special Meeting other than those described in this Proxy Statement/Prospectus.
If other business should properly come before the Special Meeting, the proxy
holders will vote thereon in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Neither Disappearing Fund is required to hold regular annual meetings and,
in order to minimize its costs, does not intend to hold meetings of shareholders
unless so required by applicable law, regulation, regulatory policy or if
otherwise deemed advisable by each Disappearing Fund's management. Therefore, it
is not practicable to specify a date by which shareholder proposals must be
received in order to be incorporated in an upcoming proxy statement for an
annual meeting.
REPORTS TO SHAREHOLDERS
ING Investments will furnish, without charge, a copy of the most recent
Annual Report regarding the Funds and any more recent Semi-Annual Report
succeeding the Annual Report, if any, on request. Requests for such reports
should be directed in writing to the Fund at ING Funds, 7337 East Doubletree
Ranch Road, Scottsdale, Arizona 85258-2034 or by calling Shareholder Services at
1-800-992-0180.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE SPECIAL MEETING MAY BE
ASSURED, PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
/s/ Huey P. Falgout, Jr.
---------------------------
Huey P. Falgout, Jr.,
Secretary
January 7, 2005
22
APPENDIX A
PORTFOLIO MANAGERS' REPORT FOR ING CLASSIC MONEY MARKET FUND
Set forth below is an excerpt from ING Classic Money Market Fund's
Semi-Annual Report, dated September 30, 2004.
* * * *
PORTFOLIO SPECIFICS: During the six months ended September 30, 2004, the
economic recovery was strong enough to convince the Federal Reserve Board
("Fed") that it could begin the process of gradually removing its highly
accommodative monetary policy stance. Accordingly, it increased its Fed Funds
target rate from 1.00% to 1.75%. The first move of 25 basis points came at the
June 30, 2004 Federal Open Market Committee meeting ("FOMC") followed by two
consecutive 25 basis point tightenings at the August and September meetings. The
Fed began this tightening cycle due to a contemporaneous spike in job growth and
inflation in late spring that convinced it of two things: the economic recovery
reached a point that a negative shock would not derail it and that it needed to
keep inflation and inflation expectations from spiraling out of control.
Though the economy hit a summer "soft patch" of slow employment growth and
consumer spending, the FOMC remained bullish on the economic outlook and
continued to increase rates. Economists currently estimate third-quarter real
gross domestic product rebounded to approximately 4% from 3.3% in the second
calendar quarter. However, by the end of the period, the persistent uptrend in
oil prices raised the specter of decelerating growth going forward. Though many
market participants think this will cause the FOMC to slow the pace of Fed Funds
rate increases, there is little indication publicly by Fed members to support
this view. The Fed Funds target rate remains low by historical standards and is
still providing significant support to the economy. Going forward, however, we
expect the flow of economic data to play a larger role in future FOMC meeting
decisions.
To position for a rising rate environment, the Funds shifted from a barbell
strategy to investing to each successive FOMC meeting date through the purchase
of short-term commercial paper or floating rate notes. This strategy allowed the
Funds to hedge against any underperformance associated with an unexpected
increase in the size or pace of tightening. Accordingly, the Funds' weighted
average maturity significantly declined and ended the period at 49 days for ING
Classic Money Market and ING Money Market Funds, and 52 days for ING Lexington
Money Market Fund, compared to the benchmark's weighted average maturity of 42
days. However, securities purchased early in the six-month period when the Funds
utilized a barbell strategy (and had a weighted average maturity significantly
longer than the peer group) increasingly weighed on performance as the Fed
raised rates.
CURRENT STRATEGY AND OUTLOOK: Underlying core inflation appears moderate and
monetary policy still remains highly accommodative for an economy growing at a
healthy pace. Nevertheless, the near-term impact on growth from higher oil
prices may cause the Fed to keep its Fed Funds target rate stable for a period
of time. The impact of oil prices notwithstanding, we believe the economy is
fundamentally strong enough to maintain trend growth, allowing the FOMC to raise
its Fed Funds target rate at a "measured pace." As a result, the Funds will
likely maintain its current strategy of investing in short maturity securities
and opportunistically investing in longer maturities to the extent it makes
sense under various Fed Funds rate scenarios.
PRINCIPAL RISK FACTOR(s): An investment in the Funds is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Funds seek to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Funds.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Fund holdings are subject to change daily.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
A-1
APPENDIX B-1
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 2nd day of September, 2004, by and between ING Funds Trust, a Delaware
statutory trust (the "Trust"), with its principal place of business at 7337 East
Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, on behalf of ING Classic
Money Market Fund (the "Acquiring Fund"), a separate series of the Trust, and
the Trust, on behalf of ING Lexington Money Market Trust (the "Acquired Fund"),
another separate series of the Trust.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of the regulations under
Section 368(a)(1) of the United States Internal Revenue Code of 1986, as amended
(the "Code"). The reorganization (the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange solely for Class A voting shares of beneficial interest of the
Acquiring Fund (the "Acquiring Fund Shares"), the assumption by the Acquiring
Fund of the liabilities of the Acquired Fund described in paragraph 1.3, and the
distribution of the Acquiring Fund Shares to the shareholders of the Acquired
Fund in complete liquidation of the Acquired Fund as provided herein, all upon
the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are each a series of an
open-end, registered investment company of the management type and the Acquired
Fund owns securities which generally are assets of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Board of Trustees of the Trust (the "Board of Trustees") has
determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of the liabilities of the Acquired Fund
described in paragraph 1.3 by the Acquiring Fund is in the best interests of the
Acquiring Fund and its shareholders and that the interests of the existing
shareholders of the Acquiring Fund would not be diluted as a result of this
transaction; and
WHEREAS, the Board of Trustees has determined that the exchange of all of
the assets of the Acquired Fund for Acquiring Fund Shares and the assumption of
all liabilities of the Acquired Fund by the Acquiring Fund is in the best
interests of the Acquired Fund and its shareholders and that the interests of
the existing shareholders of the Acquired Fund would not be diluted as a result
of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the requisite approval of the Acquired Fund shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund agrees to
transfer all of the Acquired Fund's assets, as set forth in paragraph 1.2, to
the Acquiring Fund, and the Acquiring Fund agrees in exchange therefore: (i) to
deliver to the Acquired Fund the number of full and fractional Class A Acquiring
Fund Shares determined by dividing the value of the Acquired Fund's net assets
with respect to Class A, computed in the manner and as of the time and date set
forth in paragraph 2.1, by the net asset value of one Acquiring Fund Share of
the same class, computed in the manner and as of the time and date set forth in
paragraph 2.2; and (ii) to assume all liabilities of the Acquired Fund, as set
forth in paragraph 1.3. Such transactions shall take place at the closing
provided for in paragraph 3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all assets and property, including, without limitation, all
cash, securities, commodities and futures interests and dividends or interests
receivable that are owned by the Acquired Fund and any deferred or prepaid
expenses shown as an asset on the books of the Acquired Fund on the closing date
provided for in paragraph 3.1 (the "Closing Date") (collectively, "Assets").
B-1-1
1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
assume the liabilities of the Acquired Fund set forth in the Acquired Fund's
statement of assets and liabilities as of the Closing Date delivered by the
Trust, on behalf of the Acquired Fund, to the Acquiring Fund, pursuant to
paragraph 7.2 hereof. On or as soon as practicable prior to the Closing Date,
the Acquired Fund will declare and pay to its shareholders of record one or more
dividends and/or other distributions so that it will have distributed
substantially all (and in no event less than 98%) of its investment company
taxable income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
1.4. Immediately after the transfer of assets provided for in paragraph
1.1, the Acquired Fund will (i) distribute to the Acquired Fund's shareholders
of record with respect to Class A shares, determined as of immediately after the
close of business on the Closing Date, on a pro rata basis within that class,
the Acquiring Fund Shares of the same class received by the Acquired Fund
pursuant to paragraph 1.1; and (ii) completely liquidate. Such distribution and
liquidation will be accomplished, with respect to Class A Acquired Fund Shares,
by the transfer of the Acquiring Fund Shares then credited to the account of the
Acquired Fund on the books of the Acquiring Fund to open accounts on the share
records of the Acquiring Fund in the names of the Class A Acquired Fund
shareholders ("Acquired Fund Shareholders"). The aggregate net asset value of
Class A Acquiring Fund Shares to be so credited to Class A Acquired Fund
Shareholders shall, with respect to Class A, be equal to the aggregate net asset
value of the Acquired Fund shares of Class A owned by such shareholders on the
Closing Date. All issued and outstanding Class A Acquired Fund shares will
simultaneously be canceled on the books of the Acquired Fund, although share
certificates representing interests in Class A shares of the Acquired Fund will
represent a number of the same class of Acquiring Fund Shares after the Closing
Date, as determined in accordance with Section 2.3. The Acquiring Fund shall not
issue certificates representing the Class A Acquiring Fund Shares in connection
with such exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent, as defined in paragraph 3.3.
1.6. Any reporting responsibility of the Acquired Fund including, but not
limited to, the responsibility for filing of regulatory reports, tax returns, or
other documents with the U.S. Securities and Exchange Commission (the
"Commission"), any state securities commission, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Acquired Fund.
2. VALUATION
2.1. The value of the Assets shall be the value computed as of immediately
after the close of business of the New York Stock Exchange and after the
declaration of any dividends on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures in the
then-current prospectus and statement of additional information with respect to
the Acquiring Fund, and valuation procedures established by the Board of
Trustees.
2.2. The net asset value of a Class A Acquiring Fund Share shall be the
net asset value per share computed with respect to that class as of the
Valuation Date, using the valuation procedures set forth in the Acquiring Fund's
then-current prospectus and statement of additional information and valuation
procedures established by the Board of Trustees.
2.3. The number of the Class A Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Acquired Fund's assets
shall be determined with respect to Class A by dividing the value of the net
assets with respect to the Class A shares of the Acquired Fund, determined using
the same valuation procedures referred to in paragraph 2.1, by the net asset
value of an Acquiring Fund Share of the same Class, determined in accordance
with paragraph 2.2.
2.4. All computations of value shall be made by the Acquired Fund's
designated record keeping agent and shall be subject to review by Acquiring
Fund's record keeping agent and by each Fund's respective independent
accountants.
B-1-2
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be March 12, 2005, or such other date as the
parties may agree. All acts taking place at the Closing shall be deemed to take
place simultaneously as of immediately after the close of business on the
Closing Date unless otherwise agreed to by the parties. The close of business on
the Closing Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be
held at the offices of the Acquiring Fund or at such other time and/or place as
the parties may agree.
3.2. The Acquired Fund shall direct State Street Bank and Trust Company,
as custodian for the Acquired Fund (the "Custodian"), to deliver, at the
Closing, a certificate of an authorized officer stating that (i) the Assets
shall have been delivered in proper form to the Acquiring Fund within two
business days prior to or on the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets, including all applicable federal and
state stock transfer stamps, if any, have been paid or provision for payment has
been made. The Acquired Fund's portfolio securities represented by a certificate
or other written instrument shall be presented for examination by the Acquired
Fund Custodian to the custodian for the Acquiring Fund no later than five
business days preceding the Closing Date, and shall be transferred and delivered
by the Acquired Fund as of the Closing Date for the account of the Acquiring
Fund duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof. The Custodian shall deliver as of the Closing
Date by book entry, in accordance with the customary practices of the Custodian
and any securities depository (as defined in Rule 17f-4 under the Investment
Company Act of 1940, as amended (the "1940 Act")) in which the Acquired Fund's
Assets are deposited, the Acquired Fund's portfolio securities and instruments
deposited with such depositories. The cash to be transferred by the Acquired
Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.3. The Acquired Fund shall direct DST Systems, Inc. (the "Transfer
Agent"), on behalf of the Acquired Fund, to deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Acquired Fund Shareholders and the number and percentage
ownership of outstanding Class A shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date to the Secretary of the Acquiring Fund, or provide evidence satisfactory to
the Acquired Fund that such Acquiring Fund Shares have been credited to the
Acquired Fund's account on the books of the Acquiring Fund. At the Closing each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
3.4. In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio securities of the
Acquiring Fund or the Acquired Fund shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the judgment of the
Board of Trustees, an accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. Except as has been disclosed to the Acquiring Fund in a written
instrument executed by an officer of the Trust, the Trust, on behalf of the
Acquired Fund, represents and warrants to the Acquiring Fund as follows:
(a) The Acquired Fund is duly organized as a series of the Trust,
which is a statutory trust duly organized, validly existing and in good standing
under the laws of the State of Delaware, with power under the Trust to own all
of its properties and assets and to carry on its business as it is now being
conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
shares of the Acquired Fund under the Securities Act of 1933, as amended ("1933
Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act")
and the 1940 Act and such as may be required by state securities laws;
B-1-3
(d) The current prospectus and statement of additional information
of the Acquired Fund and each prospectus and statement of additional information
of the Acquired Fund used during the three years previous to the date of this
Agreement conforms or conformed at the time of its use in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder and does not or did not at the time
of its use include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading;
(e) On the Closing Date, the Acquired Fund will have good and
marketable title to the Assets and full right, power, and authority to sell,
assign, transfer and deliver such Assets hereunder free of any liens or other
encumbrances, and upon delivery and payment for such Assets, the Acquiring Fund
will acquire good and marketable title thereto, subject to no restrictions on
the full transfer thereof, including such restrictions as might arise under the
1933 Act, other than as disclosed to the Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Trust's Trust Instrument or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust,
on behalf of the Acquired Fund, is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Trust, on behalf of the Acquired Fund, is a party or by which it is bound;
(g) All material contracts or other commitments of the Acquired Fund
(other than this Agreement and certain investment contracts including options,
futures, and forward contracts) will terminate without liability to the Acquired
Fund prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquiring Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Acquired Fund or
any of its properties or assets that, if adversely determined, would materially
and adversely affect its financial condition or the conduct of its business. The
Trust, on behalf of the Acquired Fund, knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
(i) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets, and Schedule of Investments of the
Acquired Fund dated March 31, 2004, have been audited by KPMG LLP, independent
auditors, and are in accordance with generally accepted accounting principles in
the United States ("GAAP") consistently applied, and such statements (copies of
which have been furnished to the Acquiring Fund) present fairly, in all material
respects, the financial condition of the Acquired Fund as of such date in
accordance with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(j) Since March 31, 2004, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes of this subparagraph (j), a
decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund Shares by
shareholders of the Acquired Fund shall not constitute a material adverse
change;
(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the taxable
year ending on the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a
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regulated investment company, has been (or will be) eligible to and has computed
(or will compute) its federal income tax under Section 852 of the Code, and will
have distributed all of its investment company taxable income and net capital
gain (as defined in the Code) that has accrued through the Closing Date, and
before the Closing Date will have declared dividends sufficient to distribute
all of its investment company taxable income and net capital gain for the period
ending on the Closing Date;
(m) All issued and outstanding shares of the Acquired Fund are, and
on the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable and have been offered and sold in every state and the
District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. All of the
issued and outstanding shares of the Acquired Fund will, at the time of Closing,
be held by the persons and in the amounts set forth in the records of the
Transfer Agent, on behalf of the Acquired Fund, as provided in paragraph 3.3.
The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Acquired Fund, nor
is there outstanding any security convertible into any of the Acquired Fund
shares;
(n) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action, if
any, on the part of the Board of Trustees, on behalf of the Acquired Fund, and,
subject to the approval of the shareholders of the Acquired Fund, this Agreement
will constitute a valid and binding obligation of the Acquired Fund, enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(o) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or to be
filed with any federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto;
and
(p) The proxy statement of the Acquired Fund (the "Proxy Statement")
to be included in the Registration Statement referred to in paragraph 5.6,
insofar as it relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date (i) not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading
provided, however, that the representations and warranties in this subparagraph
(p) shall not apply to statements in or omissions from the Proxy Statement and
the Registration Statement made in reliance upon and in conformity with
information that was furnished by the Acquiring Fund for use therein; and (ii)
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder.
4.2. Except as has been disclosed to the Acquired Fund in a written
instrument executed by an officer of the Trust, the Trust, on behalf of the
Acquiring Fund, represents and warrants to the Acquired Fund as follows:
(a) The Acquiring Fund is duly organized as a series of the Trust,
which is a statutory trust duly organized, validly existing and in good standing
under the laws of the State of Delaware, with power under the Trust to own all
of its properties and assets and to carry on its business as it is now being
conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
the shares of the Acquired Fund under the 1933 Act, is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information
of the Acquiring Fund and each prospectus and statement of additional
information of the Acquiring Fund used during the three years previous to the
date of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material fact
or omit to state any material fact
B-1-5
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not materially
misleading;
(e) On the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens of other
encumbrances, except those liens or encumbrances as to which the Acquired Fund
has received notice and necessary documentation at or prior to the Closing;
(f) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Trust's Trust Instrument or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust,
on behalf of the Acquiring Fund, is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Trust, on behalf of the Acquiring Fund, is a party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquired Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Trust, on behalf
of the Acquiring Fund, or any of the Acquiring Fund's properties or assets that,
if adversely determined, would materially and adversely affect the Acquiring
Fund's financial condition or the conduct of the Acquiring Fund's business. The
Trust, on behalf of the Acquiring Fund, knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
(h) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets and Schedule of Investments of the
Acquiring Fund at March 31, 2004, have been audited by KPMG LLP, independent
auditors, and are in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquired Fund) present
fairly, in all material respects, the financial condition of the Acquiring Fund
as of such date in accordance with GAAP, and there are no known contingent
liabilities of the Acquiring Fund required to be reflected on a balance sheet
(including the notes thereto) in accordance with GAAP as of such date not
disclosed therein;
(i) Since March 31, 2004, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquired Fund. For purposes of this subparagraph (i), a
decline in net asset value per share of the Acquiring Fund due to declines in
market values of securities in the Acquiring Fund's portfolio, the discharge of
Acquiring Fund liabilities, or the redemption of Acquiring Fund Shares by
shareholders of the Acquiring Fund, shall not constitute a material adverse
change;
(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquiring Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(k) For each taxable year of its operation (including the taxable
year that includes the Closing Date), the Acquiring Fund has met (or will meet)
the requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been eligible to (or will be eligible to) and has
computed (or will compute) its federal income tax under Section 852 of the Code,
and has distributed all of its investment company taxable income and net capital
gain (as defined in the Code) for periods ending prior to the Closing Date;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Trust and have been offered and sold in every state and
the District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. The
Acquiring Fund does not have outstanding any options, warrants or other rights
to subscribe for or purchase any Acquiring Fund Shares, nor is there outstanding
any security convertible into any Acquiring Fund Shares;
B-1-6
(m) The execution, delivery and performance of this Agreement will
have been fully authorized prior to the Closing Date by all necessary action, if
any, on the part of the Board of Trustees, on behalf of the Acquiring Fund, and
this Agreement will constitute a valid and binding obligation of the Acquiring
Fund, enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(n) The Class A Acquiring Fund Shares to be issued and delivered to
the Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant
to the terms of this Agreement, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly issued
Acquiring Fund Shares, and will be fully paid and non-assessable;
(o) The information to be furnished by the Trust for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) That insofar as it relates to the Acquiring Fund, the
Registration Statement relating to the Acquiring Fund Shares issuable hereunder,
and the proxy materials of the Acquired Fund to be included in the Registration
Statement, and any amendment or supplement to the foregoing, will, from the
effective date of the Registration Statement through the date of the meeting of
shareholders of the Acquired Fund contemplated therein (i) not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading, provided,
however, that the representations and warranties in this subparagraph (p) shall
not apply to statements in or omissions from the Registration Statement made in
reliance upon and in conformity with information that was furnished by the
Acquired Fund for use therein, and (ii) comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, and any other
distribution that may be advisable.
5.2. The Acquired Fund will call a meeting of the shareholders of the
Acquired Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3. The Acquired Fund covenants that the Class A Acquiring Fund Shares to
be issued hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms of this Agreement.
5.4. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.6. The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement referred to in paragraph 4.1(p), all to
be included in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the 1934 Act and the
1940 Act, in connection with the meeting of the shareholders of the Acquired
Fund to consider approval of this Agreement and the transactions contemplated
herein.
5.7. As soon as is reasonably practicable after the Closing, the Acquired
Fund will make a liquidating distribution to its shareholders consisting of the
Class A Acquiring Fund Shares received at the Closing.
B-1-7
5.8. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.9. The Trust, on behalf of the Acquired Fund, covenants that the Trust
will, from time to time, as and when reasonably requested by the Acquiring Fund,
execute and deliver or cause to be executed and delivered all such assignments
and other instruments, and will take or cause to be taken such further action as
the Acquiring Fund may reasonably deem necessary or desirable in order to vest
in and confirm (a) the Trust's, on behalf of the Acquired Fund's, title to and
possession of the Acquiring Fund's Shares to be delivered hereunder, and (b) the
Trust's, on behalf of the Acquiring Fund's, title to and possession of all the
assets and otherwise to carry out the intent and purpose of this Agreement.
5.10. The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Trust, on behalf of the Acquired Fund, to
consummate the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Acquiring Fund, of
all the obligations to be performed by it hereunder on or before the Closing
Date, and, in addition thereto, the following further conditions:
6.1. All representations and warranties of the Trust, on behalf of the
Acquiring Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
6.2. The Trust shall have delivered to the Acquired Fund a certificate
executed in its name by its President or Vice President and its Treasurer or
Assistant Treasurer, in a form reasonably satisfactory to the Acquired Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of the Trust, on behalf of the Acquiring Fund, made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Acquired Fund shall reasonably request;
6.3. The Trust, on behalf of the Acquiring Fund, shall have performed all
of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Trust, on behalf of the
Acquiring Fund, on or before the Closing Date; and
6.4. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Class A Acquiring Fund Shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Trust, on behalf of the Acquiring Fund, to
complete the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Acquired Fund, of
all of the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Trust, on behalf of the
Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
7.2. The Trust shall have delivered to the Acquiring Fund a statement of
the Acquired Fund's assets and liabilities, as of the Closing Date, certified by
the Treasurer of the Trust;
B-1-8
7.3. The Trust shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in its name by its President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Trust, on behalf of the Acquired Fund,
made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Trust shall reasonably request;
7.4. The Trust, on behalf of the Acquired Fund, shall have performed all
of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Trust, on behalf of the
Acquired Fund, on or before the Closing Date;
7.5. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Class A Acquiring Fund Shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1; and
7.6. The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m., Eastern time on the Closing; and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not
otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on
or before the Closing Date with respect to the Trust, on behalf of the Acquired
Fund, or the Trust, on behalf of the Acquiring Fund, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1. The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Trust's Trust
Instrument, By-Laws, applicable Delaware law and the 1940 Act, and certified
copies of the resolutions evidencing such approval shall have been delivered to
the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the
Acquired Fund nor the Acquiring Fund may waive the conditions set forth in this
paragraph 8.1;
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or, to its knowledge, threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain damages or other relief
in connection with, this Agreement or the transactions contemplated herein;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Trust to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Acquired Fund,
provided that either party hereto may for itself waive any of such conditions;
8.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and
8.5. The parties shall have received the opinion of Dechert LLP addressed
to the Trust substantially to the effect that, based upon certain facts,
assumptions, and representations, the transaction contemplated by this Agreement
shall constitute a tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by Dechert LLP of
representations it shall request of the Trust. Notwithstanding anything herein
to the contrary, neither the Acquired Fund nor the Acquiring Fund may waive the
condition set forth in this paragraph 8.5.
B-1-9
9. BROKERAGE FEES AND EXPENSES
9.1. The Acquired Fund and the Acquiring Fund, represent and warrant to
each other that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
9.2. The expenses relating to the proposed Reorganization will be borne by
the investment adviser to the Acquiring Fund. The costs of the Reorganization
shall include, but not be limited to, costs associated with obtaining any
necessary order of exemption from the 1940 Act, preparation of the Registration
Statement, printing and distributing the Acquiring Fund's prospectus and the
Acquired Fund's proxy materials, legal fees, accounting fees, securities
registration fees, and expenses of holding shareholders' meetings.
Notwithstanding any of the foregoing, expenses will in any event be paid by the
party directly incurring such expenses if and to the extent that the payment by
another person of such expenses would result in the disqualification of such
party as a "regulated investment company" within the meaning of Section 851 of
the Code.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The Acquired Fund and the Acquiring Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing shall survive the Closing.
11. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before May
31, 2005, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Trustees or officers,
except for any such material breach or intentional misrepresentation, as to each
of which all remedies at law or in equity of the party adversely affected shall
survive.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be deemed necessary or advisable by the authorized officers of the
Trust; provided, however, that following the meeting of the shareholders of the
Acquired Fund called by the Trust pursuant to paragraph 5.2 of this Agreement,
no such amendment may have the effect of changing the provisions for determining
the number of Class A Acquiring Fund Shares to be issued to the Class A Acquired
Fund Shareholders under this Agreement to the detriment of such shareholders
without their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, personal service or prepaid or certified mail addressed to the Trust,
on behalf of the Acquired Fund, or the Trust, on behalf of the Acquiring Fund,
at 7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, attn: Huey
Falgout, in each case with a copy to Dechert LLP, 1775 I Street, N.W.,
Washington, D.C. 20006, attn: Jeffrey S. Puretz.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
B-1-10
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to its principles of conflicts
of laws.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5. It is expressly agreed that the obligations of the parties hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents, or employees of the Trust personally, but shall bind only the trust
property of the Acquired Fund, as provided in the Trust Instrument. The
execution and delivery by such officers shall not be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of such party.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its President or Vice President and its seal to be affixed
thereto and attested by its Secretary or Assistant Secretary.
ING FUNDS TRUST, on behalf of its
ING CLASSIC MONEY MARKET FUND series
Attest:
By: __________________________________
____________________________
Secretary
Title: __________________________________
ING FUNDS TRUST, on behalf of its
ING LEXINGTON MONEY MARKET TRUST series
Attest:
___________________________ By: __________________________________
Secretary
Title: __________________________________
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APPENDIX B-2
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 2nd day of September, 2004, by and between ING Funds Trust, a Delaware
statutory trust (the "Trust"), with its principal place of business at 7337 East
Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, on behalf of ING Classic
Money Market Fund (the "Acquiring Fund"), a separate series of the Trust, and
the Trust, on behalf of ING Money Market Fund (the "Acquired Fund"), another
separate series of the Trust.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of the regulations under
Section 368(a)(1) of the United States Internal Revenue Code of 1986, as amended
(the "Code"). The reorganization (the "Reorganization") will consist of the
transfer of all of the assets of the Acquired Fund to the Acquiring Fund in
exchange solely for Class A, Class B and Class C voting shares of beneficial
interest of the Acquiring Fund (the "Acquiring Fund Shares"), the assumption by
the Acquiring Fund of the liabilities of the Acquired Fund described in
paragraph 1.3, and the distribution of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in complete liquidation of the Acquired Fund
as provided herein, all upon the terms and conditions hereinafter set forth in
this Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are each a series of an
open-end, registered investment company of the management type and the Acquired
Fund owns securities which generally are assets of the character in which the
Acquiring Fund is permitted to invest;
WHEREAS, the Trustees of the Trust (the "Board of Trustees") has
determined that the exchange of all of the assets of the Acquired Fund for
Acquiring Fund Shares and the assumption of the liabilities of the Acquired Fund
described in paragraph 1.3 by the Acquiring Fund is in the best interests of the
Acquiring Fund and its shareholders and that the interests of the existing
shareholders of the Acquiring Fund would not be diluted as a result of this
transaction; and
WHEREAS, the Board of Trustees has determined that the exchange of all of
the assets of the Acquired Fund for Acquiring Fund Shares and the assumption of
all liabilities of the Acquired Fund described in paragraph 1.3 by the Acquiring
Fund is in the best interests of the Acquired Fund and its shareholders and that
the interests of the existing shareholders of the Acquired Fund would not be
diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR THE ACQUIRING FUND SHARES, THE ASSUMPTION OF ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.2. Subject to the requisite approval of the Acquired Fund shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Fund agrees to
transfer all of the Acquired Fund's assets, as set forth in paragraph 1.2, to
the Acquiring Fund, and the Acquiring Fund agrees in exchange therefore: (i) to
deliver to the Acquired Fund the number of full and fractional Class A, Class B
and Class C Acquiring Fund Shares determined by dividing the value of the
Acquired Fund's net assets with respect to each class, computed in the manner
and as of the time and date set forth in paragraph 2.1, by the net asset value
of one Acquiring Fund Share of the same class, computed in the manner and as of
the time and date set forth in paragraph 2.2; and (ii) to assume all liabilities
of the Acquired Fund, as set forth in paragraph 1.3. Such transactions shall
take place at the closing provided for in paragraph 3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the Acquiring Fund
shall consist of all assets and property, including, without limitation, all
cash, securities, commodities and futures interests and dividends or interests
receivable that are owned by the Acquired Fund and any deferred or prepaid
expenses shown as an asset on the books of the Acquired Fund on the closing date
provided for in paragraph 3.1 (the "Closing Date") (collectively, "Assets").
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1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Fund shall
assume the liabilities of the Acquired Fund set forth in the Acquired Fund's
statement of assets and liabilities as of the Closing Date delivered by the
Trust, on behalf of the Acquired Fund, to the Acquiring Fund, pursuant to
paragraph 7.2 hereof. On or as soon as practicable prior to the Closing Date,
the Acquired Fund will declare and pay to its shareholders of record one or more
dividends and/or other distributions so that it will have distributed
substantially all (and in no event less than 98%) of its investment company
taxable income (computed without regard to any deduction for dividends paid) and
realized net capital gain, if any, for the current taxable year through the
Closing Date.
1.4. Immediately after the transfer of assets provided for in paragraph
1.1, the Acquired Fund will (i) distribute to the Acquired Fund's shareholders
of record with respect to Class A, Class B and Class C shares, determined as of
immediately after the close of business on the Closing Date, on a pro rata basis
within that class, the Acquiring Fund Shares of the same class received by the
Acquired Fund pursuant to paragraph 1.1; and (ii) completely liquidate. Such
distribution and liquidation will be accomplished, with respect to each Class of
the Acquired Fund Shares, by the transfer of the Acquiring Fund Shares then
credited to the account of the Acquired Fund on the books of the Acquiring Fund
to open accounts on the share records of the Acquiring Fund in the names of the
Class A, Class B and Class C Acquired Fund shareholders ("Acquired Fund
Shareholders"). The aggregate net asset value of the Class A, Class B and Class
C Acquiring Fund Shares to be so credited to Class A, Class B and Class C
Acquired Fund Shareholders shall, with respect to each class, be equal to the
aggregate net asset value of the Acquired Fund shares of that same class owned
by such shareholders on the Closing Date. All issued and outstanding Class A,
Class B and Class C Acquired Fund shares will simultaneously be canceled on the
books of the Acquired Fund, although share certificates representing interests
in the Class A, Class B and Class C shares of the Acquired Fund will represent a
number of the same class of Acquiring Fund Shares after the Closing Date, as
determined in accordance with Section 2.3. The Acquiring Fund shall not issue
certificates representing the Class A, Class B and Class C Acquiring Fund Shares
in connection with such exchange.
1.7. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent, as defined in paragraph 3.3.
1.8. Any reporting responsibility of the Acquired Fund including, but not
limited to, the responsibility for filing of regulatory reports, tax returns, or
other documents with the U.S. Securities and Exchange Commission (the
"Commission"), any state securities commission, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Acquired Fund.
2. VALUATION
2.1. The value of the Assets shall be the value computed as of immediately
after the close of business of the New York Stock Exchange and after the
declaration of any dividends on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures in the
then-current prospectus and statement of additional information with respect to
the Acquiring Fund, and valuation procedures established by the Acquiring Fund's
Board of Trustees.
2.2. The net asset value of a Class A, Class B and Class C Acquiring Fund
Share shall be the net asset value per share computed with respect to that class
as of the Valuation Date, using the valuation procedures set forth in the
Acquiring Fund's then-current prospectus and statement of additional information
and valuation procedures established by the Acquiring Fund's Board of Trustees.
2.5. The number of the Class A, Class B and Class C Acquiring Fund Shares
to be issued (including fractional shares, if any) in exchange for the Acquired
Fund's assets shall be determined with respect to each such class by dividing
the value of the net assets with respect to the Class A, Class B and Class C
shares of the Acquired Fund, determined using the same valuation procedures
referred to in paragraph 2.1, by the net asset value of an Acquiring Fund Share
of the same Class, determined in accordance with paragraph 2.2.
2.6. All computations of value shall be made by the Acquired Fund's
designated record keeping agent and shall be subject to review by the Acquiring
Fund's record keeping agent and by each Fund's respective independent
accountants.
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3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be March 12, 2005, or such other date as the
parties may agree. All acts taking place at the Closing shall be deemed to take
place simultaneously as of immediately after the close of business on the
Closing Date unless otherwise agreed to by the parties. The close of business on
the Closing Date shall be as of 4:00 p.m., Eastern Time. The Closing shall be
held at the offices of the Acquiring Fund or at such other time and/or place as
the parties may agree.
3.2. The Acquired Fund shall direct State Street Bank and Trust Company,
as custodian for the Acquired Fund (the "Custodian"), to deliver, at the
Closing, a certificate of an authorized officer stating that (i) the Assets
shall have been delivered in proper form to the Acquiring Fund within two
business days prior to or on the Closing Date, and (ii) all necessary taxes in
connection with the delivery of the Assets, including all applicable federal and
state stock transfer stamps, if any, have been paid or provision for payment has
been made. The Acquired Fund's portfolio securities represented by a certificate
or other written instrument shall be presented for examination by the Acquired
Fund's Custodian to the custodian for the Acquiring Fund no later than five
business days preceding the Closing Date, and shall be transferred and delivered
by the Acquired Fund as of the Closing Date for the account of the Acquiring
Fund duly endorsed in proper form for transfer in such condition as to
constitute good delivery thereof. The Custodian shall deliver as of the Closing
Date by book entry, in accordance with the customary practices of the Custodian
and any securities depository (as defined in Rule 17f-4 under the Investment
Company Act of 1940, as amended (the "1940 Act")) in which the Acquired Fund's
Assets are deposited, the Acquired Fund's portfolio securities and instruments
deposited with such depositories. The cash to be transferred by the Acquired
Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.3. The Acquired Fund shall direct DST Systems, Inc. (the "Transfer
Agent"), on behalf of the Acquired Fund, to deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Acquired Fund Shareholders and the number and percentage
ownership of outstanding Class A, Class B and Class C shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver a confirmation evidencing the Acquiring Fund Shares to be credited on
the Closing Date to the Secretary of the Acquiring Fund, or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request.
3.4. In the event that on the Valuation Date (a) the New York Stock
Exchange or another primary trading market for portfolio securities of the
Acquiring Fund or the Acquired Fund shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the judgment of the
Board of Trustees, an accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. Except as has been disclosed to the Acquiring Fund in a written
instrument executed by an officer of the Trust, the Trust, on behalf of the
Acquired Fund, represents and warrants to the Acquiring Fund as follows:
(a) The Acquired Fund is duly organized as a series of the Trust,
which is a statutory trust duly organized, validly existing and in good standing
under the laws of the State of Delaware, with power under the Trust to own all
of its properties and assets and to carry on its business as it is now being
conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
shares of the Acquired Fund under the Securities Act of 1933, as amended ("1933
Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act")
and the 1940 Act and such as may be required by state securities laws;
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(d) The current prospectus and statement of additional information
of the Acquired Fund and each prospectus and statement of additional information
of the Acquired Fund used during the three years previous to the date of this
Agreement conforms or conformed at the time of its use in all material respects
to the applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder and does not or did not at the time
of its use include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading;
(e) On the Closing Date, the Acquired Fund will have good and
marketable title to the Assets and full right, power, and authority to sell,
assign, transfer and deliver such Assets hereunder free of any liens or other
encumbrances, and upon delivery and payment for such Assets, the Acquiring Fund
will acquire good and marketable title thereto, subject to no restrictions on
the full transfer thereof, including such restrictions as might arise under the
1933 Act, other than as disclosed to the Acquiring Fund;
(f) The Acquired Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Trust's Trust Instrument or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust,
on behalf of the Acquired Fund, is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Trust, on behalf of the Acquired Fund, is a party or by which it is bound;
(g) All material contracts or other commitments of the Acquired Fund
(other than this Agreement and certain investment contracts including options,
futures, and forward contracts) will terminate without liability to the Acquired
Fund prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquiring Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Acquired Fund or
any of its properties or assets that, if adversely determined, would materially
and adversely affect its financial condition or the conduct of its business. The
Trust, on behalf of the Acquired Fund, knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
(i) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets, and Schedule of Investments of the
Acquired Fund dated March 31, 2004, have been audited by KPMG LLP, independent
auditors, and are in accordance with generally accepted accounting principles in
the United States ("GAAP") consistently applied, and such statements (copies of
which have been furnished to the Acquiring Fund) present fairly, in all material
respects, the financial condition of the Acquired Fund as of such date in
accordance with GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(j) Since March 31, 2004, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes of this subparagraph (j), a
decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund Shares by
shareholders of the Acquired Fund shall not constitute a material adverse
change;
(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquired Fund's knowledge, no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the taxable
year ending on the Closing Date), the Acquired Fund has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a
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regulated investment company, has been (or will be) eligible to and has computed
(or will compute) its federal income tax under Section 852 of the Code, and will
have distributed all of its investment company taxable income and net capital
gain (as defined in the Code) that has accrued through the Closing Date, and
before the Closing Date will have declared dividends sufficient to distribute
all of its investment company taxable income and net capital gain for the period
ending on the Closing Date;
(m) All issued and outstanding shares of the Acquired Fund are, and
on the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable and have been offered and sold in every state and the
District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. All of the
issued and outstanding shares of the Acquired Fund will, at the time of Closing,
be held by the persons and in the amounts set forth in the records of the
Transfer Agent, on behalf of the Acquired Fund, as provided in paragraph 3.3.
The Acquired Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the shares of the Acquired Fund, nor
is there outstanding any security convertible into any of the Acquired Fund
shares;
(n) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action, if
any, on the part of the Board of Trustees, on behalf of the Acquired Fund, and,
subject to the approval of the shareholders of the Acquired Fund, this Agreement
will constitute a valid and binding obligation of the Acquired Fund, enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(o) The information to be furnished by the Acquired Fund for use in
registration statements, proxy materials and other documents filed or to be
filed with any federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto;
and
(p) The proxy statement of the Acquired Fund (the "Proxy Statement")
to be included in the Registration Statement referred to in paragraph 5.6,
insofar as it relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date (i) not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially misleading
provided, however, that the representations and warranties in this subparagraph
(p) shall not apply to statements in or omissions from the Proxy Statement and
the Registration Statement made in reliance upon and in conformity with
information that was furnished by the Acquiring Fund for use therein; and (ii)
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder.
4.2. Except as has been disclosed to the Acquired Fund in a written
instrument executed by an officer of the Trust, the Trust, on behalf of the
Acquiring Fund, represents and warrants to the Acquired Fund as follows:
(a) The Acquiring Fund is duly organized as a series of the Trust,
which is a statutory trust duly organized, validly existing and in good standing
under the laws of the State of Delaware, with power under the Trust to own all
of its properties and assets and to carry on its business as it is now being
conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
the shares of the Acquired Fund under the 1933 Act, is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information
of the Acquiring Fund and each prospectus and statement of additional
information of the Acquiring Fund used during the three years previous to the
date of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material fact
or omit to state any material fact
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required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not materially
misleading;
(e) On the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens of other
encumbrances, except those liens or encumbrances as to which the Acquired Fund
has received notice and necessary documentation at or prior to the Closing;
(f) The Acquiring Fund is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Trust's Trust Instrument or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust,
on behalf of the Acquiring Fund, is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Trust, on behalf of the Acquiring Fund, is a party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquired Fund, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Trust, on behalf
of the Acquiring Fund, or any of the Acquiring Fund's properties or assets that,
if adversely determined, would materially and adversely affect the Acquiring
Fund's financial condition or the conduct of the Acquiring Fund's business. The
Trust, on behalf of the Acquiring Fund, knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or subject
to the provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability to
consummate the transactions herein contemplated;
(h) The Statement of Assets and Liabilities, Statements of
Operations and Changes in Net Assets and Schedule of Investments of the
Acquiring Fund at March 31, 2004, have been audited by KPMG LLP, independent
auditors, and are in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquired Fund) present
fairly, in all material respects, the financial condition of the Acquiring Fund
as of such date in accordance with GAAP, and there are no known contingent
liabilities of the Acquiring Fund required to be reflected on a balance sheet
(including the notes thereto) in accordance with GAAP as of such date not
disclosed therein;
(i) Since March 31, 2004, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquired Fund. For purposes of this subparagraph (i), a
decline in net asset value per share of the Acquiring Fund due to declines in
market values of securities in the Acquiring Fund's portfolio, the discharge of
Acquiring Fund liabilities, or the redemption of Acquiring Fund Shares by
shareholders of the Acquiring Fund, shall not constitute a material adverse
change;
(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Fund required by
law to have been filed by such date (including any extensions) shall have been
filed and are or will be correct in all material respects, and all Federal and
other taxes shown as due or required to be shown as due on said returns and
reports shall have been paid or provision shall have been made for the payment
thereof, and to the best of the Acquiring Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to such
returns;
(k) For each taxable year of its operation (including the taxable
year that includes the Closing Date), the Acquiring Fund has met (or will meet)
the requirements of Subchapter M of the Code for qualification as a regulated
investment company, has been eligible to (or will be eligible to) and has
computed (or will compute) its federal income tax under Section 852 of the Code,
and has distributed all of its investment company taxable income and net capital
gain (as defined in the Code) for periods ending prior to the Closing Date;
(l) All issued and outstanding Acquiring Fund Shares are, and on the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable by the Trust and have been offered and sold in every state and
the District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. The
Acquiring Fund does not have outstanding any options, warrants or other rights
to subscribe for or purchase any Acquiring Fund Shares, nor is there outstanding
any security convertible into any Acquiring Fund Shares;
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(m) The execution, delivery and performance of this Agreement will
have been fully authorized prior to the Closing Date by all necessary action, if
any, on the part of the Board of Trustees, on behalf of the Acquiring Fund, and
this Agreement will constitute a valid and binding obligation of the Acquiring
Fund, enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(n) The Class A, Class B and Class C Acquiring Fund Shares to be
issued and delivered to the Acquired Fund, for the account of the Acquired Fund
Shareholders, pursuant to the terms of this Agreement, will on the Closing Date
have been duly authorized and, when so issued and delivered, will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and non-assessable;
(o) The information to be furnished by the Trust for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) That insofar as it relates to the Acquiring Fund, the
Registration Statement relating to the Acquiring Fund Shares issuable hereunder,
and the proxy materials of the Acquired Fund to be included in the Registration
Statement, and any amendment or supplement to the foregoing, will, from the
effective date of the Registration Statement through the date of the meeting of
shareholders of the Acquired Fund contemplated therein (i) not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading, provided,
however, that the representations and warranties in this subparagraph (p) shall
not apply to statements in or omissions from the Registration Statement made in
reliance upon and in conformity with information that was furnished by the
Acquired Fund for use therein, and (ii) comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date, it
being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, and any other
distribution that may be advisable.
5.2. The Acquired Fund will call a meeting of the shareholders of the
Acquired Fund to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.3. The Acquired Fund covenants that the Class A, Class B and Class C
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof, other than in accordance with the
terms of this Agreement.
5.4. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund shares.
5.5. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.6. The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement referred to in paragraph 4.1(p), all to
be included in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the 1934 Act and the
1940 Act, in connection with the meeting of the shareholders of the Acquired
Fund to consider approval of this Agreement and the transactions contemplated
herein.
5.7. As soon as is reasonably practicable after the Closing, the Acquired
Fund will make a liquidating distribution to its shareholders consisting of the
Class A, Class B and Class C Acquiring Fund Shares received at the Closing.
B-2-7
5.8. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.9. The Trust, on behalf of the Acquired Fund, covenants that the Trust
will, from time to time, as and when reasonably requested by the Acquiring Fund,
execute and deliver or cause to be executed and delivered all such assignments
and other instruments, and will take or cause to be taken such further action as
the Acquiring Fund may reasonably deem necessary or desirable in order to vest
in and confirm (a) the Trust's, on behalf of the Acquired Fund's, title to and
possession of the Acquiring Fund's Shares to be delivered hereunder, and (b) the
Trust's, on behalf of the Acquiring Fund's, title to and possession of all the
assets and otherwise to carry out the intent and purpose of this Agreement.
5.10. The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and such of
the state blue sky or securities laws as may be necessary in order to continue
its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Trust, on behalf of the Acquired Fund, to
consummate the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Acquiring Fund, of
all the obligations to be performed by it hereunder on or before the Closing
Date, and, in addition thereto, the following further conditions:
6.1. All representations and warranties of the Trust, on behalf of the
Acquiring Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
6.2. The Trust shall have delivered to the Acquired Fund a certificate
executed in its name by its President or Vice President and its Treasurer or
Assistant Treasurer, in a form reasonably satisfactory to the Acquired Fund and
dated as of the Closing Date, to the effect that the representations and
warranties of the Trust, on behalf of the Acquiring Fund, made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Acquired Fund shall reasonably request;
6.3. The Trust, on behalf of the Acquiring Fund, shall have performed all
of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Trust, on behalf of the
Acquiring Fund, on or before the Closing Date; and
6.4. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Acquiring Fund Shares of each Class to be issued
in connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Trust, on behalf of the Acquiring Fund, to
complete the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Acquired Fund, of
all of the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Trust, on behalf of the
Acquired Fund, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
7.2. The Trust shall have delivered to the Acquiring Fund a statement of
the Acquired Fund's assets and liabilities, as of the Closing Date, certified by
the Treasurer of the Trust;
B-2-8
7.3. The Trust shall have delivered to the Acquiring Fund on the Closing
Date a certificate executed in its name by its President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Acquiring Fund and dated as of the Closing Date, to the effect that the
representations and warranties of the Trust, on behalf of the Acquired Fund,
made in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as the Trust shall reasonably request;
7.4. The Trust, on behalf of the Acquired Fund, shall have performed all
of the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Trust, on behalf of the
Acquired Fund, on or before the Closing Date;
7.5. The Acquired Fund and the Acquiring Fund shall have agreed on the
number of full and fractional Acquiring Fund Shares of each class to be issued
in connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1; and
7.6. The Acquired Fund shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m., Eastern time on the Closing; and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not
otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been satisfied on
or before the Closing Date with respect to the Trust, on behalf of the Acquired
Fund, or the Trust, on behalf of the Acquiring Fund, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1. The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Trust's Trust
Instrument, By-Laws, applicable Delaware law and the 1940 Act, and certified
copies of the resolutions evidencing such approval shall have been delivered to
the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the
Acquired Fund nor the Acquiring Fund may waive the conditions set forth in this
paragraph 8.1;
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or, to its knowledge, threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain damages or other relief
in connection with, this Agreement or the transactions contemplated herein;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Trust to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Acquired Fund,
provided that either party hereto may for itself waive any of such conditions;
8.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and
8.5. The parties shall have received the opinion of Dechert LLP addressed
to the Trust substantially to the effect that, based upon certain facts,
assumptions, and representations, the transaction contemplated by this Agreement
shall constitute a tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by Dechert LLP of
representations it shall request of the Trust. Notwithstanding anything herein
to the contrary, neither the Acquired Fund nor the Acquiring Fund may waive the
condition set forth in this paragraph 8.5.
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9. BROKERAGE FEES AND EXPENSES
9.1. The Acquired Fund and the Acquiring Fund, represent and warrant to
each other that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
9.2. The expenses relating to the proposed Reorganization will be borne by
the investment adviser to the Acquiring Fund. The costs of the Reorganization
shall include, but not be limited to, costs associated with obtaining any
necessary order of exemption from the 1940 Act, preparation of the Registration
Statement, printing and distributing the Acquiring Fund's prospectus and the
Acquired Fund's proxy materials, legal fees, accounting fees, securities
registration fees, and expenses of holding shareholders' meetings.
Notwithstanding any of the foregoing, expenses will in any event be paid by the
party directly incurring such expenses if and to the extent that the payment by
another person of such expenses would result in the disqualification of such
party as a "regulated investment company" within the meaning of Section 851 of
the Code.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The Acquired Fund and the Acquiring Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing shall survive the Closing.
11. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before May
31, 2005, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any party or their respective Trustees or officers,
except for any such material breach or intentional misrepresentation, as to each
of which all remedies at law or in equity of the party adversely affected shall
survive.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be deemed necessary or advisable by the authorized officers of the
Trust; provided, however, that following the meeting of the shareholders of the
Acquired Fund called by the Trust pursuant to paragraph 5.2 of this Agreement,
no such amendment may have the effect of changing the provisions for determining
the number of the Class A, Class B and Class C Acquiring Fund Shares to be
issued to the Class A, Class B and Class C Acquired Fund Shareholders under this
Agreement to the detriment of such shareholders without their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, personal service or prepaid or certified mail addressed to the Trust,
on behalf of the Acquired Fund, or the Trust, on behalf of the Acquiring Fund,
at 7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, attn: Huey
Falgout, in each case with a copy to Dechert LLP, 1775 I Street, N.W.,
Washington, D.C. 20006, attn: Jeffrey S. Puretz.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1. The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
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14.3. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to its principles of conflicts
of laws.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5. It is expressly agreed that the obligations of the parties hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents, or employees of the Trust personally, but shall bind only the trust
property of the Acquired Fund, as provided in the Trust Instrument. The
execution and delivery by such officers shall not be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of such party.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its President or Vice President and its seal to be affixed
thereto and attested by its Secretary or Assistant Secretary.
ING FUNDS TRUST, on behalf of its
ING CLASSIC MONEY MARKET FUND series
Attest:
_______________________________ By:_______________________________________
Secretary
Title:____________________________________
ING FUNDS TRUST, on behalf of its
ING MONEY MARKET FUND series
Attest:
_______________________________ By:_______________________________________
Secretary
Title:____________________________________
B-2-11
APPENDIX C
ADDITIONAL INFORMATION REGARDING ING CLASSIC MONEY MARKET FUND
SHAREHOLDER GUIDE
ING PURCHASE OPTIONS(TM)
This Proxy Statement/Prospectus relates to three separate Classes of
shares of ING Classic Money Market Fund: Class A, Class B and Class C, each of
which represents an identical interest in the Fund's investment portfolio, but
are offered with different sales charges and distribution (Rule 12b-1) and
service fee arrangements. As described below and elsewhere in this Proxy
Statement/Prospectus, the contingent deferred sales charge and conversion
characteristics of Class A, Class B and Class C shares of the Fund that will be
issued to you in the Reorganization will be the same as those that apply to the
Disappearing Fund shares held by you immediately prior to the Reorganization,
and the period that you held shares of the Disappearing Fund will be included in
the holding period of the Fund shares for purposes of calculating any contingent
deferred sales charges and determining any conversion rights. Purchases of the
Class A, Class B and Class C shares of ING Classic Money Market Fund after the
Reorganization will be subject to the sales load structure and conversion rights
discussed below. The sales charges and fees for each Class of shares of ING
Classic Money Market Fund are shown and contrasted in the chart below.
CLASS A CLASS B CLASS C
------- ------- -------
Maximum Initial Sales Charge on Purchases None None None
Contingent Deferred Sales Charge ("CDSC") None(1) 5.00%(2) 1.00%(3)
Annual Distribution (12b-1) and Service Fees (4) 0.75% 1.00% 1.00%
Maximum Purchase Unlimited $100,000 Unlimited
Automatic Conversion to Class A N/A 8 Years(5) N/A
- ------------
(1) For investments of $1 million or more, a CDSC of no more than 1% may
be assessed on redemptions of shares that were purchased without an
initial sales charge.
(2) Imposed upon redemption within 6 years from purchase. Fee has
scheduled reductions after the first year. See "Class B Shares:
Deferred Sales Charge Alternative" in this APPENDIX C.
(3) Imposed upon redemption within 1 year from purchase.
(4) Annual asset-based distribution charge.
(5) Class B shares of ING Classic Money Market Fund issued to
shareholders of the Disappearing Funds in the Reorganization will
convert to Class A shares in the eighth year from the original date
of purchase of the Class B shares of the Disappearing Fund.
The relative impact of the initial sales charges and ongoing annual
expenses will depend on the length of time a share is held. Orders for Class B
shares in excess of $100,000 will be accepted as orders for Class A shares or
declined.
CLASS A SHARES: OFFERED WITHOUT SALES CHARGE. Class A shares are offered
at their NAV per share without any initial sales charge. However, if you
purchase Class A shares in an amount of $1 million or more, the shares will be
subject to a CDSC if they are redeemed within one or two years of purchase,
depending on the amount of the purchase, as follows:
PERIOD DURING WHICH
YOUR INVESTMENT CDSC CDSC APPLIES
- --------------- ---- -------------------
$1,000,000 to $2,499,999 1.00% 2 Years
$2,500,000 to $4,999,999 0.50% 1 Year
$5,000,000 and over 0.25% 1 Year
C-1
CLASS B SHARES: DEFERRED SALES CHARGE ALTERNATIVE. Class B shares are
offered at their NAV per share without any initial sales charge. Class B shares
that are redeemed within six years of purchase, however, will be subject to a
CDSC as described in the table that follows. Class B shares of ING Classic Money
Market Fund are subject to distribution and service fees at an annual rate of
1.00% of the average daily net assets of the Class, which is higher than the
distribution and service fees of Class A shares. The higher distribution and
service fees mean a higher expense ratio, so Class B shares pay correspondingly
lower dividends and may have a lower NAV than Class A shares. Orders for Class B
shares in excess of $100,000 will be accepted as orders for Class A shares or
declined. The amount of the CDSC is based on the lesser of the NAV of the Class
B shares at the time of purchase or redemption. There is no CDSC on Class B
shares acquired through the reinvestment of dividends and capital gains
distributions. The CDSCs are as follows:
YEAR OF REDEMPTION AFTER PURCHASE(1) CDSC
- --------------------------------- ----
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
After Sixth Year None
- ------------
(1) Class B shares that were purchased through funds that were part of the
Northstar family of funds at the time of purchase are subject to a
different CDSC. Please see the SAI for further information.
Class B shares will automatically convert into Class A shares eight years
after purchase. Class B shares of ING Classic Money Market Fund issued in
connection with the Reorganization will convert to Class A shares eight years
after the purchase of the original shares of ING Classic Money Market Fund. For
additional information on the CDSC and the conversion of Class B, see the Fund's
SAI.
CLASS B AND CLASS C SHARES CDSCS. To keep shareholders' CDSCs as low as
possible, each time a shareholder places a request to redeem shares of the ING
Classic Money Market Fund or other open-end funds in the ING Funds with Class B
or Class C shares, shares that are not subject to a CDSC will be the first to be
redeemed, then same shares that have the lowest CDSC will be sold.
CLASS C SHARES. Class C shares are offered at their NAV per share without
an initial sales charge. Class C shares may be subject to a CDSC of 1% if
redeemed within one year of purchase. The amount of the CDSC is based on the
lesser of the NAV of the Class C shares at the time of purchase or redemption.
There is no CDSC on Class C shares acquired through the reinvestment of
dividends and capital gains distributions. Class C shares of ING Classic Money
Market Fund are subject to distribution and service fees at an annual rate of
1.00% of the average daily net assets of the Class, which is higher than the
distribution and service fees of Class A shares. The higher distribution and
service fees mean a higher expense ratio, so Class C shares pay correspondingly
lower dividends and may have a lower NAV than Class A shares.
WAIVERS OF CDSC. The CDSC will be waived in the following cases. In
determining whether a CDSC is applicable, it will be assumed that shares held in
the shareholder's account that are not subject to such charge are redeemed
first.
(i) The CDSC will be waived in the case of redemption following the
death or permanent disability of a shareholder if made within one
year of death or the initial determination of permanent disability.
The waiver is available only for those shares held at the time of
death or initial determination of permanent disability.
(ii) The CDSC also may be waived for Class B and Class C shares redeemed
pursuant to a Systematic Withdrawal Plan, up to a maximum of 12% per
year of a shareholder's account value based on the value of the
account at the time the plan is established and annually thereafter,
provided all dividends and distributions are reinvested and the
total redemptions do not exceed 12% annually.
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(iii) The CDSC also will be waived in the case of mandatory distributions
from a tax-deferred retirement plan or an IRA.
If you think you may be eligible for a CDSC waiver, contact a Shareholder
Servicing Representative at 1-800-992-0180.
REINSTATEMENT PRIVILEGE. Class B or Class C shareholders who have redeemed
their shares in any open-end ING Fund may reinvest some or all of the proceeds
in the same share class within 90 days without a sales charge. Reinstated Class
B and Class C shares will retain their original cost and purchase date for
purposes of the CDSC. This privilege can be used only once per calendar year.
See the SAI for the Fund for details or contact the Shareholder Servicing
Representative at 1-800-992-0180 for more information.
RULE 12b-1 PLAN. ING Classic Money Market Fund has a distribution plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended
("1940 Act") applicable to Class A, Class B and Class C shares of the Fund
("Rule 12b-1 Plan"). Under the Rule 12b-1 Plan, the "Distributor" may receive
from the Fund an annual fee in connection with the offering, sale and
shareholder servicing of the Fund's Class A, Class B and Class C shares.
DISTRIBUTION AND SERVICING FEES. As compensation for services rendered and
expenses borne by the Distributor in connection with the distribution of shares
of the Fund and in connection with services rendered to shareholders of the
Fund, the Bond Fund pays the Distributor servicing fees and distribution fees up
to the annual rates set forth below (calculated as a percentage of the Fund's
average daily net assets attributable to that Class):
SERVICING FEE DISTRIBUTION FEE
------------- ----------------
Class A 0.00% 0.75%
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Fees paid under the Rule 12b-1 Plan may be used to cover the expenses of
the Distributor from the sale of Class A, Class B or Class C shares of the Fund,
including payments to Authorized Dealers, and for shareholder servicing.
Because these fees are paid out of the Fund's assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.
OTHER EXPENSES. In addition to the management fee and other fees described
previously, Classic Money Market Fund pays other expenses, such as legal, audit,
transfer agency and custodian fees, proxy solicitation costs and the
compensation of Directors who are not affiliated with ING Investments, LLC ("ING
Investments"). Most Fund expenses are allocated proportionately among all of the
outstanding shares of the Fund. However, the Rule 12b-1 Plan fees for each Class
of shares are charged proportionately only to the outstanding shares of that
Class.
PURCHASING SHARES
The minimum initial investment in the Fund is $1,000. The minimum initial
investment for a pre-authorized retirement plan is $1,000, plus monthly
installments of at least $100. The Fund reserves the right to liquidate
sufficient shares to recover annual Transfer Agent fees should the investor fail
to maintain his/her account value at a minimum of $1,000.
The Fund and the Distributor reserve the right to reject any purchase
order. Please note that cash, travelers checks, third party checks, money orders
and checks drawn on non-U.S. banks (even if payment may be effected through a
U.S. bank) will not be accepted. The ING Funds reserve the right to waive
minimum investment amounts.
If you are a participant in a qualified retirement plan, you should make
purchases through your plan administrator or sponsor, who is responsible for
transmitting orders
MARKET TIMERS. A Fund may restrict or refuse purchase orders, whether
directly or by exchange, by market timers. "Market timing" is defined as
effecting frequent trades into or out of a Fund in an effort to anticipate or
time market movements. Due to the frequent and disruptive nature of this
activity, it can adversely impact the ability of
C-3
the Sub-Adviser to invest assets in an orderly, long-term manner, which in turn,
may adversely impact the performance of a Fund.
CUSTOMER IDENTIFICATION. To help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify and record information that identifies each
person that opens an account, and to determine whether such person that opens an
account, and to determine whether such person's name appears on government lists
of known or suspected terrorists and terrorist organizations.
What this means for you: The Fund and the Distributor must obtain the
following information for each person that opens an account:
- Name;
- Date of Birth;
- Physical residential address (although post office boxes are
still permitted for mailing); and
- Social security number, taxpayer identification number, or
other identifying number.
You may also be asked to show your driver's license, passport or other
identifying documents in order to verify your identity. In addition, it may be
necessary to verify your identity by cross-referencing your identification
information with a consumer report or other electronic database. Additional
information may be required to open accounts for corporations and other
non-natural persons.
EFFECTIVE OCTOBER 1, 2003, FEDERAL LAW PROHIBITS THE FUNDS, THE
DISTRIBUTOR AND OTHER FINANCIAL INSTITUTIONS FROM OPENING ACCOUNTS UNLESS THEY
RECEIVE THE MINIMUM IDENTIFYING INFORMATION LISTED ABOVE. THEY ALSO MAY BE
REQUIRED TO CLOSE YOUR ACCOUNT IF THEY ARE UNABLE TO VERIFY YOUR IDENTITY WITHIN
A REASONABLE TIME.
PRICE OF SHARES. When you buy shares, you pay the NAV plus any applicable
sales charge. When you sell shares, you receive the NAV minus any applicable
deferred sales charge. Exchange orders are effected at NAV.
DETERMINATION OF NET ASSET VALUE. The net asset value (NAV) per share for
each class of each Fund is determined each business day as of the close of
regular trading on the New York Stock Exchange ("NYSE") (usually 4:00 p.m.
Eastern Time). The Funds are open for business every day the NYSE is open. The
NYSE is closed on all weekends and on all national holidays and Good Friday.
Fund shares will not be priced on those days. The NAV per share of each class of
each Fund is calculated by taking the value of the Fund's assets attributable to
that class, subtracting the Fund's liabilities attributable to that class, and
dividing by the number of shares of that class that are outstanding.
In general, assets are valued based on actual or estimated market value,
with special provisions for assets not having readily available market
quotations and short-term debt securities, and for situations where market
quotations are deemed unreliable. Investments in securities maturing in 60 days
or less are valued at amortized cost, which, when combined with accrued
interest, approximates market value. Securities prices may be obtained from
automated pricing services.
The ING Classic Money Market Fund uses the amortized cost method to value
its portfolio securities and seeks to maintain a constant NAV of $1.00 per
share, although there may be circumstances under which this goal cannot be
achieved. The amortized cost method involves valuing a security at its cost and
amortizing any discount or premium over the period until maturity, regardless of
the impact of fluctuating interest rates or the market value of the security.
Although the Board has established procedures designed to stabilize, to the
extent reasonably possible, the share price of the Fund, there can be no
assurance that the Fund's NAV can be maintained at $1.00 per share.
PRE-AUTHORIZED INVESTMENT PLAN. You may establish a pre-authorized
investment plan to purchase shares with automatic bank account debiting. For
further information on pre-authorized investment plans, contact the Shareholder
Services Representative at 1-800-992-0180.
RETIREMENT PLANS. The ING Funds have available prototype qualified
retirement plans for both corporations and for self-employed individuals. Also
available are prototype IRA, Roth IRA and Simple IRA plans (for both
C-4
individuals and employers), Simplified Employee Pension Plans, Pension and
Profit Sharing Plans and Tax Sheltered Retirement Plans for employees of public
educational institutions and certain non-profit, tax-exempt organizations. State
Street Bank and Trust Company ("SSB") acts as the custodian under these plans.
For further information, contact the Shareholder Services Representative at
1-800-992-0180. SSB currently receives a $12 custodian fee annually for the
maintenance of such accounts.
EXECUTION OF REQUESTS. Purchase and sale requests are executed at the NAV
next determined after the order is received in proper form by the Transfer Agent
or Distributor. A purchase order will be deemed to be in proper form when all of
the required steps set forth in the Fund's Prospectus under the section "How to
Purchase Shares" have been completed. If you purchase by wire, however, the
order will be deemed to be in proper form after the telephone notification and
the federal funds wire have been received. If you purchase by wire, you must
submit an application form in a timely fashion. If an order or payment by wire
is received after the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern Time), the shares will not be credited until the
next business day. For your transaction to be counted on the day you place your
order with your broker-dealer or other financial institution, your order must be
received before 4:00 p.m. Eastern Time and your broker-dealer or financial
institution must promptly transmit the order to the Transfer Agent or
Distributor.
You will receive a confirmation of each new transaction in your account,
which also will show you the number of Fund shares you own including the number
of shares being held in safekeeping by the Transfer Agent for your account. You
may rely on these confirmations in lieu of certificates as evidence of your
ownership. Certificates representing shares of the Fund will not be issued
unless you request them in writing.
TELEPHONE ORDERS. The Fund and its Transfer Agent will not be responsible
for the authenticity of phone instructions or losses, if any, resulting from
unauthorized shareholder transactions if they reasonably believe that such
instructions were genuine. The Fund and its Transfer Agent have established
reasonable procedures to confirm that instructions communicated by telephone are
genuine. These procedures include recording telephone instructions for exchanges
and expedited redemptions, requiring the caller to give certain specific
identifying information, and providing written confirmation to shareholders of
record not later than five days following any such telephone transactions. If
the Fund and its Transfer Agent do not employ these procedures, they may be
liable for any losses due to unauthorized or fraudulent telephone instructions.
EXCHANGE PRIVILEGES AND RESTRICTIONS
An exchange privilege is available. Exchange requests may be made in
writing to the Transfer Agent or by calling the Shareholder Services
Representative at 1-800-992-0180. There is no specific limit on exchange
frequency. ING Investments or the Distributor may prohibit excessive exchanges
(more than four per year). ING Investments reserves the right, upon 60 days'
prior written notice, to cancel the exchange policy or restrict the frequency
of, otherwise modify, or impose charges of up to $5.00 upon exchanges. The total
value of shares being exchanged must at least equal the minimum investment
requirement of the Bond Fund into which they are being exchanged.
Shares of one class of ING Classic Money Market Fund generally may be
exchanged for shares of that same Class of any other open-end ING Fund without
payment of any additional sales charge. In most instances, if you exchange and
subsequently redeem your shares, any applicable CDSC will be based on the full
period of the share ownership. Shareholders exercising the exchange privilege
with any other open-end ING Fund should carefully review the Prospectus of that
Fund. Exchanges of shares are sales and may result in a gain or loss for federal
and state income tax purposes. You will automatically be assigned the telephone
exchange privilege unless you mark the box on the Account Application that
signifies you do not wish to have this privilege. The exchange privilege is only
available in states where shares of the Fund being acquired may be legally sold.
If you exchange into ING Senior Income Fund, your ability to sell or
liquidate your investment will be limited. ING Senior Income Fund is a
closed-end interval fund and does not redeem its shares on a daily basis, and it
is not expected that a secondary market for the fund's shares will develop, so
you will not be able to sell them through a broker or other investment
professional. To provide a measure of liquidity, ING Senior Income Fund will
normally make monthly repurchase offers for 5% of its outstanding common shares.
If more than 5% of the fund's common shares are tendered, you may not be able to
completely liquidate your holdings in any one month. You also would not have
liquidity between these monthly repurchase dates. Investors exercising the
exchange privilege
C-5
with ING Senior Income Fund should carefully review the prospectus of that fund.
Investors may obtain a copy of the ING Senior income Fund prospectus or any
other ING prospectus by calling 1-800-992-0180.
You will automatically have the ability to request an exchange by calling
the Shareholder Services Representative at 1-800-992-0180 unless you mark the
box on the Account Application that indicates that you do not wish to have the
telephone exchange privilege.
CDSC ON EXCHANGE INTO ING SENIOR INCOME FUND. You are not required to pay
an applicable CDSC upon any exchange from the Fund into the ING Senior Income
Fund. However, if you exchange into ING Senior Income Fund and subsequently
offer your shares for repurchase by that fund, the CDSC will apply from the fund
from which you exchanged. The time period for application of the CDSC will be
calculated based on the first date you acquired your shares in the Fund.
SYSTEMATIC EXCHANGE PRIVILEGE. With an initial account balance of at least
$5,000, subject to the information and limitations outlined above, you may elect
to have a specified dollar amount of shares systematically exchanged, monthly,
quarterly, semi-annually or annually (on or about the 10th of the applicable
month), from your account to an identically registered account in the same class
of any other open-end ING Fund. This exchange privilege may be modified at any
time or terminated upon 60 days' written notice to shareholders.
SMALL ACCOUNTS. Due to the relatively high cost of handling small
investments, the ING Funds reserve the right upon 30 days' written notice to
redeem, at NAV, the shares of any shareholder whose account (except for IRAs)
has a value of less than $1,000 other than as a result of a decline in the NAV
per share.
HOW TO REDEEM SHARES
Shares of the Fund will be redeemed at the NAV (less any applicable CDSC
and/or federal income tax withholding) next determined after receipt of a
redemption request in good form on any day the New York Stock Exchange is open
for business. Under unusual circumstances, a Fund may suspend the right at
redemption as allowed by federal securities laws.
SYSTEMATIC WITHDRAWAL PLAN. You may elect to have monthly, quarterly,
semi-annual or annual payments in any fixed amount of $100 or more made to
yourself, or to anyone else you properly designate, as long as the account has a
current value of at least $10,000. For additional information, contact the
Shareholder Services Representative at 1-800-992-0180, or see the Fund's SAI.
PAYMENTS. Payment to shareholders for shares redeemed ordinarily will be
made within seven days (or the maximum period allowed by law, if shorter) after
the redemption request is received in proper form by the Transfer Agent. The
Fund may delay the mailing of a redemption check until the check used to
purchase the shares being redeemed has cleared which may take up to 15 days or
more. To reduce such delay, all purchases should be made by bank wire or federal
funds. The Fund may suspend the right of redemption under certain extraordinary
circumstances in accordance with the Rules of the U.S. Securities and Exchange
Commission. The Fund intends to pay in cash for all shares redeemed, but under
abnormal conditions that make payment in cash harmful to the Fund, the Fund may
make payment wholly or partly in securities at their then current market value
equal to the redemption price. In such case, an ING Fund could elect to make
payment in securities for redemptions in excess of $250,000 or 1% of its net
assets during any 90-day period for any one shareholder. An investor may incur
brokerage costs in converting such securities to cash. To the extent possible,
the Fund will distribute readily marketable securities, in conformity with
applicable rules of the SEC. In the event such redemption is requested by
institutional investors, the Fund will weigh the effects on nonredeeming
shareholders in applying this policy. Securities distributed to shareholders may
be difficult to sell and may result in additional costs to shareholders.
Certain brokers or other designated intermediaries such as third party
administrators or plan trustees may accept purchase and redemption orders on
behalf of the Fund. The transfer Agent will be deemed to have received such an
order when the broker or the designee has accepted the order. Customer orders
are priced at the NAV next computed after such acceptance. Such order may be
transmitted to the Fund or their agents several hours after the time of the
acceptance and pricing.
If you invest in the Fund through a financial intermediary, you may be
charged a commission or transaction fee by the financial intermediary for
purchase and sale of Fund shares.
C-6
Purchases and exchanges should be made for investment purposes only. The
Fund reserves the right to reject any specific purchase or exchange request. In
the event the Fund rejects an exchange request, neither the redemption nor the
purchase side of the exchange will be processed until the Fund receives further
redemption instructions.
ACCOUNT ACCESS
Unless your Fund shares are held through a third-party fiduciary or in an
omnibus registration at your bank or brokerage firm, you may be able to access
your account information over the internet at www.ingfunds.com or via a touch
tone telephone by calling 1-800-992-0180 and selecting Option 1. Should you wish
to speak with a Shareholder Services Representative, you may call the toll-free
number listed above and selection Option 2.
PRIVACY POLICY
The Fund has adopted a policy concerning investor privacy. To review the
privacy policy, contact a Shareholder Services Representative at 1-800-992-0180
and select Option 1 or obtain a policy over the internet at www.ingfunds.com.
MANAGEMENT OF ING CLASSIC MONEY MARKET FUND
INVESTMENT ADVISER. ING Investments, an Arizona limited liability company,
serves as the investment adviser to the ING Classic Money Market Fund. ING
Investments has overall responsibility for management of the Fund. ING
Investments has engaged a Sub-Adviser to provide the day-to-day management of
the Fund's portfolio. ING Investments is responsible for monitoring the
investment program and performance of the Sub-Adviser as well as the custodial,
transfer agency, dividend disbursing, accounting, auditing, compliance and
related services provided to the Fund. As of September 30, 2004, ING Investments
managed over $33.9 billion in assets.
SUB-ADVISER. ING Investment Management Co. ("ING IM"), which changed its
name from ING Aeltus Investment Management, Inc. ("ING Aeltus") in July 2004, is
a registered investment adviser and is responsible for providing the day-to-day
management of the Fund. ING Investment Management is an indirect, wholly-owned
subsidiary of ING Groep, N.V. (NYSE:ING) ("ING Groep") and an affiliate of ING
Investments. ING Aeltus has been managing client assets for more than a quarter
century and as of September 30, 2004, managed over $166.5 billion in assets.
The Sub-Adviser may consider the sale of the Fund and of other investment
companies advised by the Sub-Adviser as a factor in the selection of brokerage
firms to execute the Fund's portfolio transactions, subject to the Sub-Adviser's
duty to obtain best execution.
PORTFOLIO MANAGER. The Funds have been managed by a team of investment
professionals led by David S. Yealy since November, 2004. Mr. Yealy joined ING
IM in November 2004 and has over 18 years of investment experience. Prior to
joining ING IM, he was a Managing Director with Trusco Capital Management
("Trusco") where he was responsible for over $9 billion of assets under
management. Mr. Yealy joined Trusco in 1991 and during his 13-year tenure he was
instrumental in the development and marketing of that firm's cash management
business.
PARENT COMPANY AND DISTRIBUTOR. ING Investments and the Distributor are
indirect, wholly owned subsidiaries of ING Groep. ING Groep is a global
financial institution active in the fields of insurance, banking and asset
management in more than 65 countries, with over 100,000 employees.
From time to time, the Distributor or its affiliates may make payments to
other dealers and/or their registered representatives, who may or may not be
affiliates of ING Groep, who sell shares or who provide shareholder services.
The value of a shareholder's investment will be unaffected by these payments.
SHAREHOLDER SERVICES REPRESENTATIVE. ING Funds Services, LLC serves as
Shareholder Services Representative for the Fund. The Shareholder Services
Representative is responsible for responding to written and telephonic inquiries
from shareholders. The Fund pays the Shareholder Services Representative a
monthly fee on a per-contact basis, based upon incoming and outgoing telephonic
and written correspondence.
C-7
PORTFOLIO TRANSACTIONS. ING Investments or ING Investment Management will
place orders to execute securities transactions that are designed to implement
the Fund's investment objectives and policies. ING Investments or ING Investment
Management will use its reasonable efforts to place all purchase and sale
transactions with brokers, dealers and banks ("brokers") that provide "best
execution" of these orders. In placing purchase and sale transactions, ING
Investments or ING Investment Management may consider brokerage and research
services provided by a broker to ING Investments or ING Investment Management or
an affiliate, and the Fund may pay a commission for effecting a securities
transaction that is in excess of the amount another broker would have charged if
ING Investments or ING Investment Management determines in good faith that the
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by the broker. In addition, ING Investments may place
securities transactions with brokers that provide certain services to the Fund.
ING Investments also may consider a broker's sale of Fund shares if ING
Investments is satisfied that the Fund would receive best execution of the
transaction from that broker.
DIVIDENDS, DISTRIBUTIONS & TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund generally distributes most or all of
its net earnings in the form of dividends. The Fund pays dividends, if any, on a
monthly basis. Capital gains, if any, are distributed annually. Dividends and
distributions will be determined on a class basis.
Any dividends and distributions paid by the Fund will be automatically
reinvested in additional shares of the respective class of the Fund, unless you
elect to receive distributions in cash. A shareholder may elect at any time by
writing to the Fund or the Transfer Agent to have subsequent dividends and/or
distributions paid in cash. In the absence of such an election each purchase of
shares of a class of Fund is made upon the condition and understanding that the
Transfer Agent is automatically appointed the shareholder's agent to receive his
dividends and distributions upon all shares registered in his name and to invest
them in full and fractional shares of the respective class of the Fund at the
applicable net asset value in effect at the close of business on the
reinvestment date. A shareholder may still at any time after a purchase of Fund
shares request that dividends and/or capital gains distributions be made to him
in cash. When a dividend or distribution is paid, the NAV per share is reduced
by the amount of the payment. You may, upon written request or by completing the
appropriate section of the Account Application in the Prospectus, elect to have
all dividends and other distributions paid on Class A, Class B and Class C
shares of the Fund invested into the corresponding Class of an ING Fund that
offers that Class of shares.
FEDERAL TAXES. The following information is meant as a general summary for
U.S. shareholders. Please see the Fund's SAI for additional information. You
should rely on your own tax adviser for advice about the particular federal,
state and local tax consequences to you of investing in the Fund.
The Fund will distribute all or substantially all of its net investment
income and net capital gains to its shareholders each year. Although the Fund
will not be taxed on amounts it distributes, most shareholders will be taxed on
amounts they receive. A particular distribution generally will be taxable as
either ordinary income or long-term capital gain. Except as described below, it
generally does not matter how long you have held your Fund shares or whether you
elect to receive your distributions in cash or reinvest them in additional Fund
shares. For example, if the Fund designates a particular distribution as a
long-term capital gains distribution, it will be taxable to you at your
long-term capital gains rate. Most dividends from the Fund are attributable to
interest and, therefore, do not qualify for the reduced rate of tax that may
apply to certain qualifying dividends on corporate stock, as described below.
Recently enacted tax legislation generally provides of a maximum tax rate for
individual taxpayers of 15% on long-term gains from sales on or after May 6,
2003 and from certain qualifying dividends. These rate reductions do not apply
to corporate taxpayers. The following are guidelines for how certain
distribution by the Fund are generally taxed to individual taxpayers:
- Distributions of earnings from qualifying dividends and
qualifying long-term capital gains will be taxed at a maximum
rate of 15%.
- Note that distributions of earnings from dividends paid by
certain "qualified foreign corporations" can also qualify for
the lower tax rates on qualifying dividends.
- A shareholder will also have to satisfy a more than 60-day
holding period with respect to any distributions of qualifying
dividends in order to obtain the benefit of the lower tax
rate.
C-8
- Distributions of earnings from non-qualifying dividends,
interest income, other types of ordinary income and short-term
capital gains will be taxed at the ordinary income tax rate
applicable to the taxpayer.
- Distributions of long-term gains from sales by the Fund before
May 6, 2003 will be taxed at the maximum rate of 20%.
Dividends declared by the Fund in October, November or December and paid
during the following January may be treated as having been received by
shareholders in the year the distributions were declared.
You will receive an annual statement summarizing your dividend and capital
gains distributions.
If you invest through a tax-deferred account, such as a retirement plan,
you generally will not have to pay tax on dividends until they are distributed
from the account. These accounts are subject to complex tax rules, and you
should consult your tax adviser about investment through a tax-deferred account.
There may be tax consequences to you if you sell or redeem Fund shares.
You will generally have a capital gain or loss, which will be long-term or
short-term, generally depending on how long you hold those shares. If you
exchange shares, you may be treated as if you sold them. You are responsible for
any tax liabilities generated by your transactions.
As with all mutual funds, the Fund may be required to withhold U.S.
federal income tax at the rate of 28% of all taxable distributions payable to
you if you fail to provide the Fund with your correct taxpayer identification
number or to make required certifications, or if you have been notified by the
IRS that you are subject to backup withholding. Backup withholding is not an
additional tax; rather, it is a way in which the IRS ensures it will collect
taxes otherwise due. Any amounts withheld may be credited against your U.S.
federal income tax liability.
C-9
FINANCIAL HIGHLIGHTS
The information below for the six months ended September 30, 2004 is unaudited.
The information below for the fiscal year ended March 31, 2004 and for all
periods prior to November 1, 2000, is audited by KPMG LLP, independent
registered public accounting firm. The information in the table below for the
years ended March 31, 2003, March 31, 2002, and the five months ended March 31,
2001, has been derived from the ING Classic Money Market Fund's financial
statements, which, had been audited by other independent accountants.
CLASS A
---------------------------------------------------------------------------------------
FIVE DECEMBER
SIX MONTHS YEAR YEAR YEAR MONTHS YEAR 15, 1998(2)
ENDED ENDED ENDED ENDED ENDED ENDED TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2004 2004 2003 2002 2001(1) 2000 1999
------------- --------- --------- --------- --------- ----------- ----------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Income (loss) from investment
operations:
Net investment income $ 0.00* 0.00* 0.01 0.03 0.02 0.06 0.04
Total from investment operations $ 0.00* 0.00* 0.01 0.03 0.02 0.06 0.04
Less distributions from:
Net investment income $ 0.00* 0.00* 0.01 0.03 0.02 0.06 0.04
Total distributions $ 0.00* 0.00* 0.01 0.03 0.02 0.06 0.04
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(3): % 0.28 0.44 1.06 2.83 2.36 5.70 3.98
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 426,902 398,997 458,964 549,999 515,651 440,651 228,124
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(4)(5) % 0.77 0.77 0.77 0.77 0.77 0.74 0.73
Gross expense prior to expense
reimbursement/recoupment(4) % 1.12 1.16 1.27 1.27 1.30 1.42 1.67
Net investment income after expense
reimbursement/recoupment(4)(5) % 0.57 0.44 1.06 2.75 5.61 5.59 4.59
- ----------
(1) The Fund changed its fiscal year end to March 31.
(2) Commencement of operations.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(4) Annualized for periods less than one year.
(5) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Amount is less than $0.01 per share
C-10
CLASS B
------------------------------------------------------------------------------------------
FIVE DECEMBER
SIX MONTHS YEAR YEAR YEAR MONTHS YEAR 15, 1998(2)
ENDED ENDED ENDED ENDED ENDED ENDED TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2004 2004 2003 2002 2001(1) 2000 1999
------------- --------- --------- --------- --------- ----------- -----------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Income (loss) from investment
operations:
Net investment income $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Total from investment operations $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Less distributions from:
Net investment income $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Total distributions $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(3): % 0.13 0.15 0.43 2.21 2.11 5.03 3.31
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 696 816 1,156 1,987 2,714 2,706 1,173
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(4)(5) % 1.08 1.07 1.40 1.37 1.41 1.38 1.41
Gross expense prior to expense
reimbursement/recoupment(4) % 1.37 1.41 1.52 1.53 1.55 1.67 1.79
Net investment income after expense
reimbursement/recoupment(4)(5) % 0.25 0.15 0.46 2.27 5.10 4.93 3.85
- ----------
(1) The Fund changed its fiscal year end to March 31.
(2) Commencement of operations.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction
of sales charges. Total return for less than one year is not annualized.
(4) Annualized for periods less than one year.
(5) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Amount is less than $0.01 per share
C-11
CLASS C
------------------------------------------------------------------------------------------
FIVE DECEMBER
SIX MONTHS YEAR YEAR YEAR MONTHS YEAR 15, 1998(2)
ENDED ENDED ENDED ENDED ENDED ENDED TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31, MARCH 31, OCTOBER 31, OCTOBER 31,
2004 2004 2003 2002 2001(1) 2000 1999
------------- --------- --------- --------- --------- ----------- -----------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Income (loss) from investment
operations:
Net investment income $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Total from investment operations $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Less distributions from:
Net investment income $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Total distributions $ 0.00* 0.00* 0.00* 0.02 0.02 0.05 0.03
Net asset value, end of period $ 1.00 1.00 1.00 1.00 1.00 1.00 1.00
TOTAL RETURN(3): % 0.13 0.14 0.42 2.20 2.08 5.03 3.31
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 516 546 524 590 2,583 2,035 444
Ratios to average net assets:
Net expenses after expense
reimbursement/recoupment(4)(5) % 1.08 1.07 1.40 1.38 1.40 1.39 1.41
Gross expense prior to expense
reimbursement/recoupment(4) % 1.37 1.41 1.52 1.53 1.55 1.67 1.78
Net investment income after expense
reimbursement/recoupment(4)(5) % 0.25 0.15 0.42 2.44 5.00 5.03 3.89
- ----------
(1) The Fund changed its fiscal year end to March 31.
(2) Commencement of operations.
(3) Total return is calculated assuming reinvestment of all dividends and
capital gain distributions at net asset value and excluding the deduction of
sales charges. Total return for less than one year is not annualized.
(4) Annualized for periods less than one year.
(5) The Investment Manager has agreed to limit expenses, (excluding interest,
taxes, brokerage and extraordinary expenses) subject to possible recoupment
by ING Investments, LLC within three years.
* Amount is less than $0.01 per share
C-12
APPENDIX D
ADDITIONAL ING FUNDS OFFERED
The following is a list of the ING Funds and the Classes of shares of each
Fund that are expected to be offered at or shortly after the Reorganization:
FUND CLASSES OFFERED
- ---- ---------------
U.S. EQUITY
Balanced Fund A, B, C, I and O
Convertible Fund A, B, C and Q
Disciplined LargeCap Fund A, B, C and I
Equity and Bond Fund A, B, C and Q
Equity Income Fund A, B, C and I
Financial Services Fund A, B, C and O
Growth Fund A, B, C and I
Index Plus LargeCap Fund A, B, C, I and R
Index Plus MidCap Fund A, B, C, I and R
Index Plus SmallCap Fund A, B, C, I and R
LargeCap Growth Fund A, B, C, I and Q
LargeCap Value Fund A, B, C and I
MagnaCap Fund A, B, C, I and M
MidCap Opportunities Fund A, B, C, I and Q
MidCap Value Fund A, B, C, I and Q
Real Estate Fund A, B, C, I, O and Q
SmallCap Opportunities Fund A, B, C, I and Q
SmallCap Value Fund A, B, C, I and Q
Small Company Fund A, B, C and I
Value Opportunity Fund A, B, C and I
GLOBAL/INTERNATIONAL EQUITY
Emerging Countries Fund A, B, C, M and Q
Foreign Fund A, B, C, I and Q
Global Equity Dividend Fund A, B and C
Global Real Estate Fund A, B, C and Q
Global Science and Technology Fund A, B, C and I
International Fund A, B, C, I and Q
International Growth Fund A, B, C and I
International SmallCap Growth Fund A, B, C and Q
International Value Fund A, B, C, I and Q
Precious Metals Fund A
Russia Fund A
Worldwide Growth Fund A, B, C and Q
FIXED INCOME
Aeltus Money Market Fund A, B, C and I
Classic Money Market Fund A, B and C
GNMA Income Fund A, B, C, I, M and Q
Government Fund A, B, C and I
High Yield Bond Fund A, B and C
Intermediate Bond Fund A, B, C, I, O and R
National Tax-Exempt Bond Fund A, B and C
D-1
FUND CLASSES OFFERED
- ---- ---------------
STRATEGIC ALLOCATION FUNDS
Strategic Allocation Balanced Fund A, B, C and I
Strategic Allocation Growth Fund A, B, C and I
Strategic Allocation Income Fund A, B, C and I
LOAN PARTICIPATION FUND
Senior Income Fund A, B, C and Q
D-2
APPENDIX E
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL AND RECORD OWNERS
The following tables provide information about the persons or entities
that, to the knowledge of each Fund, owned beneficially or of record 5% or more
of any class of that Fund's outstanding shares as of December 20, 2004:
ING LEXINGTON MONEY MARKET TRUST
PERCENT OF CLASS OF PERCENTAGE OF
NAME AND ADDRESS OF SHARES AND TYPE OF COMBINED FUND AFTER
SHAREHOLDER OWNERSHIP PERCENTAGE OF FUND THE REORGANIZATION*
- ------------------- ------------------- ------------------ -------------------
ING MONEY MARKET FUND
PERCENT OF CLASS OF PERCENTAGE OF
NAME AND ADDRESS OF SHARES AND TYPE OF COMBINED FUND AFTER
SHAREHOLDER OWNERSHIP PERCENTAGE OF FUND THE REORGANIZATION*
- ------------------- ------------------- ------------------ -------------------
ING CLASSIC MONEY MARKET FUND
PERCENT OF CLASS OF PERCENTAGE OF
NAME AND ADDRESS OF SHARES AND TYPE OF COMBINED FUND AFTER
SHAREHOLDER OWNERSHIP PERCENTAGE OF FUND THE REORGANIZATION*
- ------------------- ------------------- ------------------ -------------------
* On a pro forma basis, assuming that the value of the shareholder's
interest in the Fund on the date of consummation of the Reorganization is
the same as on December 20, 2004.
E-1
PART B
ING FUNDS TRUST
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 7, 2005
Acquisition of the Assets and Liabilities of: By and in Exchange for Shares of:
ING Lexington Money Market Trust ING Classic Money Market Fund
(a series of ING Funds Trust) (a series of ING Funds Trust)
7337 East Doubletree Ranch Road 7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034 Scottsdale, Arizona 85258-2034
and
ING Money Market Fund
(a series of ING Funds Trust)
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
This Statement of Additional Information ("SAI") is available to the
shareholders of ING Lexington Money Market Trust and ING Money Market Fund,
respectively, in connection with a proposed transaction whereby all of the
assets and known liabilities of the ING Lexington Money Market Trust and ING
Money Market Fund, each a separate series of ING Funds Trust, will be
transferred to ING Classic Money Market Fund, also a series of ING Funds Trust,
in exchange for shares of ING Classic Money Market Fund.
This SAI of ING Funds Trust consists of (i) this cover page; (ii) the "ING
Classic Money Market Fund - Additional Information" presented on pages 1-2 of
this SAI, which presents certain information with respect to the management of
the ING Classic Money Market Fund; and (iii) the following documents, each of
which was filed electronically with the U.S. Securities and Exchange Commission
and is incorporated by reference herein:
1. The Statement of Additional Information for ING Classic Money Market Fund,
ING Lexington Money Market Trust and ING Money Market Fund, dated August
1, 2004, as filed on July 30, 2004.
2. The Financial Statements of ING Classic Money Market Fund, ING Lexington
Money Market Trust and ING Money Market Fund, respectively, included in
the Annual Report dated March 31, 2004, as filed on June 10, 2004.
This SAI is not a prospectus. A Prospectus/Proxy Statement dated January 7, 2005
relating to the Reorganizations of ING Lexington Money Market Trust and ING
Money Market Fund may be obtained, without charge, by writing to the ING Funds
at 7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034 or calling
1-800-992-0180. This SAI should be read in conjunction with the Prospectus/Proxy
Statement.
ING CLASSIC MONEY MARKET FUND
ADDITIONAL INFORMATION
TABLE OF CONTENTS
TRUSTEE OWNERSHIP OF SECURITIES........................................ 1
Shareholder Ownership Policy........................................ 1
INDEPENDENT TRUSTEE OWNERSHIP OF SECURITIES............................ 1
Shareholder Ownership Policy........................................ 1
DISCLOSURE OF THE FUND'S PORTFOLIO SECURITIES.......................... 2
PRO FORMA FINANCIAL STATEMENTS......................................... 2
ING CLASSIC MONEY MARKET FUND
ADDITIONAL INFORMATION
TRUSTEE OWNERSHIP OF SECURITIES
Share Ownership Policy
In order to further align the interests of the Independent Trustees with
shareholders, it is the policy to own beneficially shares of one or more fund in
the ING Family of Funds at all times. For this purpose, beneficial ownership of
Fund shares includes ownership of a variable annuity contract or a variable life
insurance policy whose proceeds are invested in a Fund.
Under this Policy, the initial value of investments in the funds in the ING
Family of Funds that are beneficially owned by a Trustee must equal at least
$50,000. Existing Trustees shall have a reasonable amount of time from the date
of adoption of this Policy in order to satisfy the foregoing requirements. A new
Trustee shall satisfy the foregoing requirements within a reasonable amount of
time of becoming a Trustee. A decline in the value of any Fund investments will
not cause a Trustee to have to make any additional investments under this
Policy. Set forth below is the dollar range of equity securities owned by each
Trustee as of December 31, 2003.
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED
INVESTMENT COMPANIES OVERSEEN
BY TRUSTEE IN FAMILY OF INVESTMENT
NAME OF TRUSTEES ING CLASSIC MONEY MARKET FUND COMPANIES
Paul S. Doherty $0 Over $100,000
J. Michael Earley $0 $10,001 - $50,000
R. Barbara Gitenstein $0 $10,001 - $50,000
Walter H. May, Jr. $0 Over $100,000
Jock Patton $0 Over $100,000
David W.C. Putnam $0 Over $100,000
Blaine E. Rieke $0 $50,001 - $100,000
Roger B. Vincent $0 Over $100,000
Richard A. Wedemeyer $10,001 - $50,000 $10,001 - $50,000
TRUSTEES WHO ARE
"INTERESTED PERSONS"
Thomas J. McInerney $0 $50,001 - $100,000
John G. Turner $0 Over $100,000
INDEPENDENT TRUSTEE OWNERSHIP OF SECURITIES
Share Ownership Policy
As of December 31, 2003, none of the Independent Trustees or their immediate
family members owned any shares of the ING Funds' investment adviser or
principal underwriter or of any entity controlling, controlled by or under
common control with the investment adviser or principal underwriter of the ING
Funds (not including registered investment companies).
1
DISCLOSURE OF THE FUND'S PORTFOLIO SECURITIES
The Fund is required by the SEC to file its complete portfolio holdings schedule
with the SEC on a quarterly basis. This schedule is filed with the Funds' annual
and semi-annual reports on Form N-CSR for the second and fourth fiscal quarters
and on Form N-Q for the first and third quarters.
Other than in regulatory filings, the Fund may provide its complete portfolio
holdings schedule to third parties when the Fund has a legitimate business
purpose for doing so. Specifically, the Fund's disclosure of its portfolio
holdings may include disclosure: to the Funds' auditors for use in providing
audit opinions; to financial printers for the purpose of preparing Fund
regulatory filings; for the purpose of due diligence regarding a merger or
acquisition; to a new adviser or sub-adviser prior to the commencement of its
management of the Fund; to rating agencies for use in developing a rating for
the Fund; to consultants for use in providing asset allocation advice in
connection with an investment by affiliated funds-of-funds in the Fund; to
service providers, such as proxy voting services providers and
portfolio-management database providers in connection with their providing
services benefiting the Fund; and for purposes of effecting in-kind redemptions
of securities to facilitate orderly redemption of portfolio assets and minimal
impact on remaining Fund shareholders. The Fund is also contractually obligated
to provide portfolio holdings data on a weekly basis to certain third parties
that have financed the Fund's Class B shares. In all instances of such
disclosure, the receiving party is subject to confidentiality agreements with
the Fund that restricts the use of such information.
In addition to the disclosure discussed above, the Funds compile a Top Ten List
composed of their ten largest holdings. This information is produced monthly and
provided to third-parties, and is made available on ING's website
(www.ingfunds.com) on the tenth day of each month. The "Top Ten" holdings
information is as of the last day of the previous month. A third-party
requesting the Fund's Top Ten List must be in possession of the Fund's current
prospectus before the list will be provided. The Top Ten List is provided in
quarterly Fund descriptions that are included in the offering materials of
variable life insurance products and variable annuity contracts.
If a third-party requests specific, current information regarding the Fund's
portfolio holdings, the Funds will refer the third-party to the latest Top Ten
List, the latest regulatory filing or to ING's website.
PRO FORMA FINANCIAL STATEMENTS
Shown below are financial statements for each Fund and pro forma financial
statements for the combined Fund, assuming the Reorganization is consummated, as
of September 30, 2004. The first table presents Statements of Assets and
Liabilities (unaudited) for each Fund and estimated pro forma figures for the
combined Fund. The second table presents Statements of Operations (unaudited)
for each Fund and estimated pro forma figures for the combined Fund. The third
table presents Portfolio of Investments for each Fund and estimated pro forma
figures for the combined Fund. The tables are followed by the Notes to the Pro
Forma Financial Statements.
2
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 2004 (UNAUDITED)
ING ING ING
LEXINGTON MONEY CLASSIC
MONEY MARKET MARKET MONEY MARKET
FUND FUND FUND PROFORMA
------------ ------------ ------------- -------------
ASSETS:
Short-term investments at amortized cost $ 40,734,823 $ 40,510,517 $ 411,501,112 $ 492,746,452
Repurchase agreement 2,770,000 2,976,000 20,873,000 26,619,000
Cash 1,375 1,061 12,159 14,595
Receivables:
Fund shares sold - 343 45,887 46,230
Interest 74,471 67,354 864,591 1,006,416
Prepaid expenses 11,553 23,804 124,906 160,263
Reimbursement due from manager - 4,002 - 4,002
------------ ------------ ------------- -------------
Total assets 43,592,222 43,583,081 433,421,655 520,596,958
------------ ------------ ------------- -------------
LIABILITIES:
Payable for investment securities purchased 400,000 400,000 4,300,000 5,100,000
Payable for fund shares redeemed - 10,875 31,016 41,891
Income distribution payable 30,656 10,615 310,494 351,765
Payable to affiliates 59,390 40,411 227,977 327,778
Payable for trustee fees 37,858 2,424 12,223 52,505
Other accrued expenses and liabilities 59,684 104,452 426,815 590,951
------------ ------------ ------------- -------------
Total liabilities 587,588 568,777 5,308,525 6,464,890
------------ ------------ ------------- -------------
NET ASSETS $ 43,004,634 $ 43,014,304 $ 428,113,130 $ 514,132,068
============ ============ ============= =============
NET ASSETS WERE COMPRISED OF:
Paid-in capital $ 43,014,847 $ 42,991,167 $ 428,232,878 $ 514,238,892
Undistributed net investment income - 34,160 - 34,160
Accumulated net realized loss on investments (10,213) (11,023) (119,748) (140,984)
------------ ------------ ------------- -------------
NET ASSETS $ 43,004,634 $ 43,014,304 $ 428,113,130 $ 514,132,068
============ ============ ============= =============
See Accompanying Notes to Financial Statements
STATEMENTS OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 2004 (UNAUDITED)
(CONTINUED)
ING ING ING
LEXINGTON MONEY CLASSIC
MONEY MARKET MARKET MONEY MARKET
FUND FUND FUND PROFORMA
------------ ------------ ------------- -------------
CLASS A:
Net assets $ 43,004,634 $ 17,377,426 $ 426,901,693 $ 487,283,753
Shares authorized unlimited unlimited unlimited unlimited
Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001
Shares outstanding 43,014,860 17,391,337 427,042,564 487,448,761
Net asset value and redemption price per share $ 1.00 $ 1.00 $ 1.00 $ 1.00
CLASS B:
Net assets n/a $ 20,384,336 $ 695,560 $ 21,079,896
Shares authorized n/a unlimited unlimited unlimited
Par value n/a $ 0.001 $ 0.001 $ 0.001
Shares outstanding n/a 20,391,589 696,183 21,087,772
Net asset value and redemption price per share(1) n/a $ 1.00 $ 1.00 $ 1.00
Class C:
Net assets n/a $ 5,252,542 $ 515,877 $ 5,768,419
Shares authorized n/a unlimited unlimited unlimited
Par value n/a $ 0.001 $ 0.001 $ 0.001
Shares outstanding n/a 5,256,776 515,854 5,772,630
Net asset value and redemption price per share(1) n/a $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------
(1) Redemption price per share may be reduced for any applicable contingent
deferred sales charges.
See Accompanying Notes to Financial Statements
STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2004 (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------
ING ING ING
LEXINGTON MONEY CLASSIC
MONEY MARKET MARKET MONEY MARKET ADJUSTED
FUND FUND FUND ADJUSTMENTS PROFORMA
------------ --------- ------------- ----------- ------------
INVESTMENT INCOME:
Interest $ 570,557 $ 565,147 $ 5,329,931 $ - $ 6,465,635
----------- --------- ------------ --------- -----------
Total investment income 570,557 565,147 5,329,931 - 6,465,635
----------- --------- ------------ --------- -----------
EXPENSES:
Investment management fees 227,849 155,793 1,058,146 (158,437) (A) 1,283,351
Distribution and service fees:
Class A - 42,312 3,164,222 643,520 (A) 3,850,054
Class B - 219,469 8,269 - 227,738
Class C - 56,406 5,353 - 61,759
Transfer agent fees:
Class A 50,491 23,581 113,638 (10,000) (B) 177,710
Class B - 30,694 231 - 30,925
Class C - 7,808 154 - 7,962
Administrative service fees 45,551 44,513 - (90,064) (A) -
Shareholder reporting expense 3,488 8,638 83,608 (6,100) (B) 89,634
Registration fees 17,664 40,737 169,280 (29,000) (B) 198,681
Professional fees 4,561 13,843 35,638 (9,200) (B) 44,842
Custody and accounting expense 7,594 3,609 8,579 - (B) 19,782
Trustee fees 7,411 2,499 17,934 - (B) 27,844
Miscellaneous expense 2,617 9,265 24,824 - (B) 36,706
----------- --------- ------------ --------- -----------
Total expenses 367,226 659,167 4,689,876 340,719 6,056,988
Less:
Net waived and reimbursed fees - 221,103 1,424,663 356,262 2,002,028
----------- --------- ------------ --------- -----------
Net expenses 367,226 438,064 3,265,213 (15,543) 4,054,960
----------- --------- ------------ --------- -----------
Net investment income (loss) 203,331 127,083 2,064,718 15,543 2,410,675
----------- --------- ------------ --------- -----------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (9,598) (9,275) (84,328) - (103,201)
----------- --------- ------------ ---------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 193,733 $ 117,808 $ 1,980,390 $ 15,543 $ 2,307,474
=========== ========= ============ ========= ===========
- ----------------------
(A) Reflects adjustment in expenses due to effects of new contractual rates.
(B) Reflects adjustment in expenses due to elimination of duplicative services.
See Accompanying Notes to Financial Statements
PORTFOLIOS OF INVESTMENTS AS OF SEPTEMBER 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------
PRINCIPAL AMOUNT
- --------------------------------------------------------------------------
ING ING ING
CLASSIC MONEY LEXINGTON
MONEY MARKET MARKET MONEY MARKET PRO FORMA(1)
- ------------ ---------- ------------ ------------
$ 4,100,000 $ 400,000 $ 400,000 $ 4,900,000
3,900,000 300,000 300,000 4,500,000
1,300,000 100,000 100,000 1,500,000
6,600,000 650,000 650,000 7,900,000 @@
4,000,000 400,000 400,000 4,800,000
2,000,000 200,000 200,000 2,400,000
4,000,000 400,000 500,000 4,900,000
4,500,000 500,000 500,000 5,500,000 @@
4,000,000 400,000 500,000 4,900,000
4,100,000 500,000 500,000 5,100,000
4,400,000 450,000 450,000 5,300,000
4,400,000 450,000 450,000 5,300,000
3,900,000 500,000 500,000 4,900,000 #
4,000,000 500,000 500,000 5,000,000 #
3,900,000 500,000 500,000 4,900,000 #
4,500,000 600,000 300,000 5,400,000 #, I
4,600,000 500,000 500,000 5,600,000 #
3,400,000 325,000 325,000 4,050,000 #
4,200,000 350,000 350,000 4,900,000
1,430,000 250,000 250,000 1,930,000
2,500,000 250,000 250,000 3,000,000
2,300,000 250,000 250,000 2,800,000
4,250,000 350,000 350,000 4,950,000
6,200,000 600,000 500,000 7,300,000 #
3,400,000 400,000 400,000 4,200,000 #
4,000,000 400,000 500,000 4,900,000 #
6,200,000 600,000 500,000 7,300,000 #
4,000,000 300,000 450,000 4,750,000
13,500,000 1,300,000 1,300,000 16,100,000
2,000,000 250,000 250,000 2,500,000
4,100,000 300,000 300,000 4,700,000 #, I
4,400,000 400,000 400,000 5,200,000 #
4,400,000 500,000 500,000 5,400,000
4,300,000 500,000 500,000 5,300,000
2,300,000 250,000 250,000 2,800,000
4,000,000 300,000 500,000 4,800,000
3,900,000 - 500,000 4,400,000
6,600,000 650,000 650,000 7,900,000
3,300,000 325,000 325,000 3,950,000
7,000,000 400,000 400,000 7,800,000
4,400,000 500,000 500,000 5,400,000
- 450,000 - 450,000
2,500,000 250,000 250,000 3,000,000
3,800,000 375,000 375,000 4,550,000
4,450,000 450,000 450,000 5,350,000
13,200,000 450,000 1,350,000 15,000,000
3,300,000 325,000 325,000 3,950,000
PORTFOLIOS OF INVESTMENTS AS OF SEPTEMBER 30, 2004 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
VALUE
- -------------------------------------------------------------------------------------------------------------------------------
ING ING ING
CLASSIC MONEY LEXINGTON
MONEY MARKET MARKET MONEY MARKET PRO FORMA
VALUE VALUE VALUE VALUE
------------ ------------ ------------ -------------
CERTIFICATE OF DEPOSIT: 11.1%
ABN Amro Bank, NV. 1.736%, due 03/18/05 $ 4,099,623 $ 399,963 $ 399,963 $ 4,899,549
ABN Amro Bank, NV. 1.768%, due 10/29/04 3,899,844 299,988 299,988 4,499,820
Barclays Bank PLC, 1.600%, due 12/03/04 1,299,894 99,992 99,992 1,499,878
Barclays Bank PLC, 1.913%, due 02/03/05 6,600,118 650,012 650,012 7,900,142
Dexia Bank, 1.508%, due 12/07/04 4,000,055 400,005 400,005 4,800,065
HSBC Bank, 1.555%, due 04/22/05 2,000,000 200,000 200,000 2,400,000
Royal Bank of Canada, 1.770%, due 03/30/05 3,999,691 399,969 499,961 4,899,621
Royal Bank of Scottland Group PLC, 1.400%, due 10/21/04 4,499,975 499,997 499,997 5,499,969
UBS AG, 1.195%, due 12/06/04 4,000,036 400,004 500,005 4,900,045
Washington Mutual Bank, 1.300%, due 12/27/04 4,100,000 500,000 500,000 5,100,000
Washington Mutual Bank, 1.650%, due 11/12/04 4,399,896 449,989 449,989 5,299,874
Washington Mutual Bank, 1.670%, due 11/01/04 4,400,000 450,000 450,000 5,300,000
------------ ---------- ----------- -------------
Total Certificate of Deposit
(Cost $47,299,132, $4,749,919, $4,949,912, $56,998,963) 47,299,132 4,749,919 4,949,912 56,998,963
------------ ---------- ----------- -------------
COLLATERALIZED MORTGAGE OBLIGATIONS: 5.8%
Blue Heron Funding Ltd., 1.850%, due 05/18/05 3,900,000 500,000 500,000 4,900,000
Blue Heron Funding Ltd., 1.858%, due 03/18/05 4,000,000 500,000 500,000 5,000,000
Blue Heron Funding Ltd., 1.870%, due 02/23/05 3,900,000 500,000 500,000 4,900,000
Newcastle CDO I Ltd., 1.870%, due 09/24/38 4,500,000 600,000 300,000 5,400,000
Putnam Structured Product CDO, 1.780%, due 10/15/38 4,600,000 500,000 500,000 5,600,000
Whitehawk CDO Funding Ltd., 1.805%, due 03/15/05 3,400,000 325,000 325,000 4,050,000
------------ ---------- ----------- -------------
Total Collateralized Mortgage Obligations
(Cost $24,300,000, $2,925,000, $2,625,000, $29,850,000) 24,300,000 2,925,000 2,625,000 29,850,000
------------ ---------- ----------- -------------
COMMERCIAL PAPER: 38.4%
Archer-Daniels-Midland Co., 1.420%, due 10/05/04 4,199,169 349,931 349,931 4,899,031
Barton Capital Corp., 1.520%, due 10/07/04 1,429,577 249,926 249,926 1,929,429
Barton Capital Corp., 1.680%, due 10/18/04 2,497,899 249,790 249,790 2,997,479
Blue Ridge Asset Funding, 1.680%, due 10/18/04 2,298,067 249,790 249,790 2,797,647
Bristol-Myers Squibb Co., 1.520%, due 10/07/04 4,248,746 349,897 349,897 4,948,540
Concord Minutemen Cap, 1.710%, due 10/19/04 6,194,420 599,460 499,550 7,293,430
Concord Minutemen Cap, 1.730%, due 10/10/05 3,400,000 400,000 400,000 4,200,000
Concord Minutemen Cap, 1.740%, due 10/12/05 4,000,000 400,000 500,000 4,900,000
Concord Minutemen Cap, 1.740%, due 10/14/05 6,200,000 600,000 500,000 7,300,000
Crown Point Capital Co., 1.000%, due 10/06/04 3,999,333 299,950 449,925 4,749,208
Crown Point Capital Co., 2.050%, due 03/08/05 13,378,967 1,288,347 1,288,347 15,955,661
Deleware Funding Corp., 1.680%, due 10/18/04 1,998,319 249,790 249,790 2,497,899
Goldman Sachs Group, 1.280%, due 10/27/04 4,100,000 300,000 300,000 4,700,000
Goldman Sachs Group, 1.810%, due 07/29/05 4,400,000 400,000 400,000 5,200,000
Greenwich Capital Holdings, 1.718%, due 01/14/05 4,400,000 500,000 500,000 5,400,000
Household Finance Corp., 1.260%, due 10/06/04 4,299,098 499,895 499,895 5,298,888
Jupiter Securitization, 1.340%, due 10/04/04 2,299,659 249,963 249,963 2,799,585
LaSalle Bank Note, 1.160%, due 12/17/04 4,000,000 300,000 500,000 4,800,000
LaSalle Bank Note, 1.210%, due 11/05/04 3,900,000 - 500,000 4,400,000
Monument Gardens Funding LLC, 1.760%, due 12/01/04 6,580,094 648,040 648,040 7,876,174
Monument Gardens Funding LLC, 1.880%, due 12/20/04 3,286,067 323,628 323,628 3,933,323
Morgan Stanley, 1.650%, due 10/14/04 6,995,501 399,743 399,743 7,794,987
Morgan Stanley, 1.660%, due 10/15/04 4,396,954 499,653 499,653 5,396,260
Morgan Stanley, 1.880%, due 08/15/05 - 450,508 - 450,508
Old Line Funding Corp., 1.650%, due 10/14/04 2,498,393 249,839 249,839 2,998,071
Old Line Funding Corp., 1.710%, due 11/02/04 3,794,055 374,413 374,413 4,542,881
Preferred Receivable Funding Corp., 0.000%, due 10/01/04 4,450,000 450,000 450,000 5,350,000
Preferred Receivable Funding Corp., 1.260%, due 10/04/04 13,198,152 449,937 1,349,810 14,997,899
Preferred Receivable Funding Corp., 1.350%, due 10/05/04 3,299,380 324,939 324,939 3,949,258
PRINCIPAL AMOUNT
- --------------------------------------------------------------------------------
ING ING ING
CLASSIC MONEY LEXINGTON
MONEY MARKET MARKET MONEY MARKET PRO FORMA(1)
- ------------- --------- ------------ ------------ -------
4,300,000 400,000 400,000 5,100,000
4,200,000 400,000 400,000 5,000,000 #
4,400,000 450,000 450,000 5,300,000 #
4,000,000 400,000 400,000 4,800,000 #
6,876,000 - - 6,876,000
1,300,000 250,000 250,000 1,800,000
8,000,000 1,150,000 850,000 10,000,000 #
3,600,000 350,000 350,000 4,300,000
4,950,000 500,000 500,000 5,950,000
2,000,000 200,000 200,000 2,400,000
5,300,000 600,000 500,000 6,400,000
4,800,000 500,000 500,000 5,800,000
4,300,000 400,000 400,000 5,100,000
5,000,000 - - 5,000,000
3,300,000 325,000 325,000 3,950,000
4,700,000 450,000 450,000 5,600,000
1,250,000 250,000 250,000 1,750,000
6,000,000 1,000,000 - 7,000,000
5,600,000 600,000 900,000 7,100,000
4,400,000 500,000 400,000 5,300,000 #
3,000,000 700,000 500,000 4,200,000 @@, #
6,100,000 800,000 700,000 7,600,000 @@, #
2,500,000 250,000 250,000 3,000,000
4,400,000 500,000 500,000 5,400,000
9,200,000 1,300,000 1,000,000 11,500,000 #, I
4,700,000 - 450,000 5,150,000
1,400,000 150,000 150,000 1,700,000
2,750,000 500,000 500,000 3,750,000 #
3,300,000 350,000 350,000 4,000,000
3,300,000 800,000 400,000 4,500,000
5,000,000 - - 5,000,000
11,300,000 1,400,000 1,525,000 14,225,000
8,800,000 - - 8,800,000
3,800,000 300,000 400,000 4,500,000
5,450,000 500,000 500,000 6,450,000
2,700,000 300,000 300,000 3,300,000
4,350,000 450,000 500,000 5,300,000
4,000,000 500,000 500,000 5,000,000
2,700,000 300,000 400,000 3,400,000
4,400,000 400,000 400,000 5,200,000
2,700,000 300,000 400,000 3,400,000
2,700,000 300,000 300,000 3,300,000
4,000,000 400,000 500,000 4,900,000
2,500,000 200,000 300,000 3,000,000
4,000,000 450,000 450,000 4,900,000
VALUE
--------------------------------------------------------
ING ING ING
CLASSIC MONEY LEXINGTON
MONEY MARKET MARKET MONEY MARKET PRO FORMA
------------ ---------- ------------- ------------
SBC Communications, 1.680%, due 10/18/04 4,296,386 399,664 399,664 5,095,714
St. Germain Holdings, 1.510%, due 10/08/04 4,198,595 399,866 399,866 4,998,327
St. Germain Holdings, 1.510%, due 10/13/04 4,397,609 449,756 449,756 5,297,121
St. Germain Holdings, 1.880%, due 12/13/04 3,984,589 398,459 398,459 4,781,507
Thunder Bay Funding, Inc., 1.510%, due 11/08/04 6,863,516 - - 6,863,516
Tulip Funding Corp., 0.000%, due 10/01/04 1,300,000 250,000 250,000 1,800,000
Verizon Global Funding, 1.990%, due 10/14/05 8,000,000 1,149,999 850,000 9,999,999
Windmill Funding Corp., 1.630%, due 10/12/04 3,598,042 349,810 349,810 4,297,662
------------ ---------- ------------- ------------
Total Commercial Paper
(Cost $166,380,587, $15,104,993, $16,004,424, $197,490,004) 166,380,587 15,104,993 16,004,424 197,490,004
------------ ---------- ------------- ------------
CORPORATE BONDS/NOTES: 30.1%
Associates Corp. NA, 2.050%, due 06/27/05 4,954,840 500,489 500,489 5,955,818
Bank One NA, 1.894%, due 11/01/04 2,000,401 200,040 200,040 2,400,481
Bank One NA, 1.980%, due 07/26/05 5,307,807 600,884 500,737 6,409,428
Bear Stearns Cos., Inc., 1.716%, due 10/05/05 4,800,000 500,000 500,000 5,800,000
Bear Stearns Cos., Inc., 1.850%, due 10/28/09 4,300,000 400,000 400,000 5,100,000
BellSouth Corp., 1.880%, due 01/04/05 5,000,000 - - 5,000,000
Credit Suisse First Boston USA, Inc., 2.010%, due 02/08/05 3,303,409 325,336 325,336 3,954,081
Credit Suisse First Boston USA, Inc., 2.050%, due 01/14/05 4,705,922 450,567 450,567 5,607,056
Fleet National Bank, 1.840%, due 11/22/04 1,250,235 250,047 250,047 1,750,329
General Electric Capital Corp., 1.838%, due 10/07/05 6,000,000 1,000,000 - 7,000,000
General Electric Capital Corp., 2.005%, due 03/15/05 5,604,737 600,507 900,761 7,106,005
Goldman Sachs Group LP, 1.769%, due 10/15/05 4,400,000 500,000 400,000 5,300,000
HBOS Treasury Services PLC, 1.640%, due 11/01/05 3,000,000 700,000 500,000 4,200,000
HBOS Treasury Services PLC, 1.961%, due 10/24/05 6,100,000 800,000 700,000 7,600,000
JPMorgan Chase & Co., 2.190%, due 03/29/05 2,503,066 250,307 250,307 3,003,680
Merrill Lynch & Co., Inc., 1.550%, due 01/05/05 4,400,130 500,015 500,015 5,400,160
Money Market Trust Series A, 1.835%, due 10/07/05 9,200,000 1,300,000 1,000,000 11,500,000
Morgan Stanley, 1.880%, due 08/15/05 4,705,302 - 450,508 5,155,810
PNC Bank NA, 1.920%, due 05/18/05 1,402,134 150,229 150,229 1,702,592
The Bank of New York Co., Inc., 1.860%, due 10/27/05 2,750,000 500,000 500,000 3,750,000
Toyota Motor Credit Corp., 1.700%, due 02/07/05 3,300,523 350,055 350,055 4,000,633
Wachovia Corp., 2.230%, due 03/31/05 3,306,611 801,581 400,801 4,508,993
Wachovia Corp., 6.950%, due 11/01/04 5,021,549 - - 5,021,549
Wal-Mart Stores, Inc., 1.698%, due 02/22/05 11,300,990 1,400,118 1,525,132 14,226,240
Wells Fargo & Co., 1.619%, due 10/01/04 8,800,000 - - 8,800,000
Wells Fargo & Co., 1.690%, due 11/02/05 3,800,096 300,096 400,128 4,500,320
Wells Fargo & Co., 2.000%, due 09/29/05 5,453,641 500,334 500,335 6,454,310
Westpac Banking Corp., 1.850%, due 10/11/05 2,700,000 300,000 300,000 3,300,000
------------ ---------- ------------- ------------
Total Corporate Bonds/Notes
(Cost $129,371,393, $13,180,605, $11,955,487, $154,507,485) 129,371,393 13,180,605 11,955,487 154,507,485
------------ ---------- ------------- ------------
U.S. GOVERNMENT AGENCY OBLIGATIONS: 10.5%
FEDERAL HOME LOAN BANK: 6.5%
1.400%, due 02/25/05 4,350,000 450,000 500,000 5,300,000
1.425%, due 04/04/05 4,000,000 500,000 500,000 5,000,000
1.470%, due 02/28/05 2,700,000 300,000 400,000 3,400,000
1.500%, due 12/07/04 4,400,000 400,000 400,000 5,200,000
1.500%, due 03/01/05 2,700,000 300,000 400,000 3,400,000
1.510%, due 12/08/04 2,700,000 300,000 300,000 3,300,000
1.600%, due 03/01/05 4,000,000 400,000 500,000 4,900,000
1.600%, due 05/16/05 2,500,000 200,000 300,000 3,000,000
------------ ---------- ------------- ------------
27,350,000 2,850,000 3,300,000 33,500,000
------------ ---------- ------------- ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION: 1.0%
1.500%, due 02/14/05 4,000,000 450,000 450,000 4,900,000
------------ ---------- ------------- ------------
4,000,000 450,000 450,000 4,900,000
------------ ---------- ------------- ------------
PRINCIPAL AMOUNT
- ---------------------------------------------------------
ING ING ING
CLASSIC MONEY LEXINGTON
MONEY MARKET MARKET MONEY MARKET PRO FORMA(1)
- ------------ ------------ ------------ ------------
4,200,000 450,000 350,000 5,000,000
4,000,000 400,000 500,000 4,900,000
1,900,000 200,000 300,000 2,400,000
2,700,000 200,000 300,000 3,200,000
$ 20,873,000 $ 2,976,000 $ 2,770,000 $ 26,619,000 S
VALUE
-------------------------------------------------------
ING ING ING
CLASSIC MONEY LEXINGTON
MONEY MARKET MARKET MONEY MARKET PRO FORMA
------------ ------ ------------ ---------
FEDERAL NATIONAL MORTGAGE ASSOCIATION: 3.0%
1.400%, due 02/25/05 4,200,000 450,000 350,000 5,000,000
1.550%, due 05/04/05 4,000,000 400,000 500,000 4,900,000
1.610%, due 05/13/05 1,900,000 200,000 300,000 2,400,000
1.630%, due 01/03/05 2,700,000 200,000 300,000 3,200,000
------------ ------------ ------------ ------------
12,800,000 1,250,000 1,450,000 15,500,000
------------ ------------ ------------ ------------
Total U.S. Government Agency Obligations
(Cost $44,150,000, $4,550,000, $5,200,000, $53,900,000) 44,150,000 4,550,000 5,200,000 53,900,000
------------ ------------ ------------ ------------
REPURCHASE AGREEMENTS: 5.2%
Goldman Sachs Repurchase Agreements dated 09/30/04, 1.860%
due 10/01/04, $20,874,078, $2,976,154 and $2,770,143 to
received upon repurchase (Collateralized by
$42,778,509$3,299,087 and $2,922,000 various U.S. Treasury
and Agency Obligations, 0.000%-4.000%, Market Value plus
accrued interest $21,499,509, $3,065,281 and $2,825,574, due
05/15/07-08/15/23) $ 20,873,000 $ 2,976,000 $ 2,770,000 $ 26,619,000
------------ ------------ ------------ ------------
Total Repurchase Agreements (Cost $20,873,000, $2,976,000,
$2,770,000, $23,849,000) 20,873,000 2,976,000 2,770,000 26,619,000
------------ ------------ ------------ ------------
TOTAL INVESTMENTS IN SECURITIES (COST $432,374,112,
$43,486,517,$43,504,823, $519,365,452) 101.0% $432,374,112 $ 43,486,517 $ 43,504,823 $519,365,452
OTHER ASSETS AND LIABILITIES-NET (1.0) (4,260,982) (472,213) (500,189) (5,233,384)
----- ------------ ------------ ------------ ------------
NET ASSETS 100.0% $428,113,130 $ 43,014,304 $ 43,004,634 $514,132,068
===== ============ ============ ============ ============
(1) All securities with a maturity date greater than 13 months have either a
variable rate, demand feature, prerefunded, optional or mandatory put
resulting in an effective maturity of one year or less. Rate shown reflects
current rate.
@@ Foreign issuer
# Securities with purchases pursuant to Rule 144A, under the Securities Act
of 1933 and may not be resold subject to that rule except to qualified
institutional buyers. These securities have been determined to be liquid
under the guidelines established by the Funds' Board of Directors. At
September 30, 2004, these securities totaled $98,625,213, or 23.0% of net
assets.
S Segregated securities for futures, when-issued or delayed delivery
securities held at September 30, 2004.
I Illiquid security
* Cost for federal income tax purposes is the same as for financial statement
purposes.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF COMBINATION:
On September 2, 2004, the Board of Trustees of the ING Lexington Money
Market Trust ("Lexington Money Market Trust"), the ING Money Market Fund ("Money
Market Fund") and the ING Classic Money Market Fund ("Classic Money Market
Fund"), approved an Agreement and Plan of Reorganization (the "Plan") whereby,
subject to approval by the shareholders of Lexington Money Market Trust and
Money Market Fund, Classic Money Market Fund will acquire all of the assets of
the Lexington Money Market Trust and the Money Market Fund, subject to the
liabilities of such Funds, in exchange for a number of shares of Classic Money
Market Fund equal in value to the net assets of the Lexington Money Market Trust
and the Money Market Fund (the "Merger").
The Merger will be accounted for as a tax-free merger of investment
companies. The unaudited pro forma combined financial statements are presented
for the information of the reader and may not necessarily be representative of
what the actual combined financial statements would have been had the
reorganization occurred at September 30, 2004. The unaudited pro forma portfolio
of investments, and statement of assets and liabilities reflect the financial
position of Lexington Money Market Trust, Money Market Fund and Classic Money
Market Fund at September 30, 2004. The unaudited pro forma statement of
operations reflects the results of operations of Lexington Money Market Trust,
Money Market Fund and Classic Money Market Fund for the twelve months ended
September 30, 2004. These statements have been derived from the Funds'
respective books and records utilized in calculating daily net asset value at
the date indicated above for Lexington Money Market Trust, Money Market Fund and
Classic Money Market Fund under accounting principles generally accepted in the
United States of America for investment companies. The historical cost of
investment securities will be carried forward to the surviving entity and the
results of operations of Classic Money Market Fund for pre-combination periods
will not be restated.
The unaudited pro forma portfolio of investments, and unaudited statement
of assets and liabilities and statement of operations should be read in
conjunction with the historical financial statements of each Fund, which are
incorporated by reference in the Statements of Additional Information.
NOTE 2 - SECURITY VALUATION:
The Funds use the amortized cost method to value their portfolio
securities. The amortized cost method involves valuing a security at its cost
and amortizing any discount or premium over the period until maturity.
NOTE 3 - CAPITAL SHARES:
The unaudited pro forma net asset value per share assumes additional
shares of common stock issued in connection with the proposed acquisition of
Lexington Money Market Trust and Money Market Fund by Classic Money Market Fund
as of September 30, 2004. The number of additional shares issued was calculated
by dividing the net asset value of each Class of Lexington Money Market Trust
and Money Market Fund by the respective Class net asset value per share of
Classic Money Market Fund.
NOTE 4 - UNAUDITED PRO FORMA ADJUSTMENTS:
The accompanying unaudited pro forma financial statements reflect changes
in fund shares as if the merger had taken place on September 30, 2004. Lexington
Money Market Trust and Money Market Fund expenses were adjusted assuming Classic
Money Market's fee structure was in effect for the twelve months ended September
30, 2004.
NOTE 5 - MERGER COSTS:
ING Investments, LLC or an affiliate will incur the cost of the expenses
related to the proposed Merger, including, but not limited to, the costs of the
solicitation of voting instructions and any necessary filings with the SEC.
NOTE 6 - USE OF ESTIMATES:
Management of the Funds has made certain estimates and assumptions
relating to the reporting of assets, liabilities, income, and expenses to
prepare these financial statements in conformity with accounting principles
generally accepted in the United States of America for investment companies.
Actual results could differ from these estimates.
NOTE 7 - FEDERAL INCOME TAXES:
It is the policy of the Funds to comply with subchapter M of the Internal
Revenue Code and related excise tax provisions applicable to regulated
investment companies and to distribute substantially all of their net investment
income and any net realized capital gains to their shareholders. Therefore, no
federal income tax provision is required. No capital gain distributions shall be
made until any capital loss carryforwards have been fully utilized or expired. A
portion of the amount of these capital loss carryforwards may be limited in the
future.
ING LEXINGTON MONEY MARKET TRUST
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON FEBRUARY 24, 2005. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoint(s) MICHAEL J. ROLAND AND HUEY P.
FALGOUT, JR. or any one or both of them, proxies, with full power of
substitution, to vote all shares of the above-referenced Fund (the "Fund"),
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Fund to be held at the offices of the Fund at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258-2034 on February 24, 2005 at 10:00 a.m., Local
time, and at any adjournment(s) thereof.
This proxy will be voted as instructed. IF NO SPECIFICATION IS MADE,
THE PROXY WILL BE VOTED "FOR" THE PROPOSALS.
PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE
STRONGLY URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR PROXY CARD AS SOON AS
POSSIBLE. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IF
YOU VOTE VIA PHONE OR THE INTERNET, YOU DO NOT NEED TO RETURN YOUR PROXY CARD.
Please indicate your vote by an "x" in the appropriate box below.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. To approve an Agreement and Plan of Reorganization (the "Reorganization
Agreement") by and among Lexington Money Market Trust and ING Classic
Money Market Fund, providing for the reorganization of Lexington Money
Market Trust with and into ING Classic Money Market Fund; and
For [ ] Against [ ] Abstain [ ]
2. Not Applicable
3. To transact such other business, not currently contemplated, that may
properly come before the Special Meeting or any adjournment(s) thereof in
the discretion of the proxies or their substitutes.
For [ ] Against [ ] Abstain [ ]
This proxy card must be signed exactly as your name(s) appears
hereon. If as an attorney, executor, guardian or in some representative capacity
or as an officer of a corporation, please add title(s) as such. Joint owners
must each sign.
___________________________ _________________________
Signature Date
ING MONEY MARKET FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON FEBRUARY 24, 2005. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoint(s) MICHAEL J. ROLAND AND HUEY P.
FALGOUT, JR. or any one or both of them, proxies, with full power of
substitution, to vote all shares of the above-referenced Fund (the "Fund"),
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of the Fund to be held at the offices of the Fund at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258-2034 on February 24, 2005 at 10:00 a.m., Local
time, and at any adjournment(s) thereof.
This proxy will be voted as instructed. IF NO SPECIFICATION IS MADE,
THE PROXY WILL BE VOTED "FOR" THE PROPOSALS.
PLEASE VOTE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE
STRONGLY URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR PROXY CARD AS SOON AS
POSSIBLE. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IF
YOU VOTE VIA PHONE OR THE INTERNET, YOU DO NOT NEED TO RETURN YOUR PROXY CARD.
Please indicate your vote by an "x" in the appropriate box below.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Not Applicable
2. To approve an Agreement and Plan of Reorganization (the "Reorganization
Agreement") by and among Money Market Fund and ING Classic Money Market
Fund, providing for the reorganization of Money Market Fund with and into
ING Classic Money Market Fund; and
For [ ] Against [ ] Abstain [ ]
3. To transact such other business, not currently contemplated, that may
properly come before the Special Meeting or any adjournment(s) thereof in
the discretion of the proxies or their substitutes.
For [ ] Against [ ] Abstain [ ]
This proxy card must be signed exactly as your name(s) appears
hereon. If as an attorney, executor, guardian or in some representative capacity
or as an officer of a corporation, please add title(s) as such. Joint owners
must each sign.
___________________________ _________________________
Signature Date
PART C:
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Article X of the Registrant's Trust Instrument provides the following:
Section 10.1 Limitation of Liability. A Trustee, when acting in such capacity,
shall not be personally liable to any person other than the Trust or a
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
under Delaware law shall protect any Trustee against any liability to the Trust
or to Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
Section 10.2 Indemnification.
(a) Subject to the exceptions and limitations contained in Section (b)
below:
(i) Every Person who is, or has been a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be
indemnified by the Trust to the fullest extent permitted by
law against liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action,
suit or proceeding in which he becomes involved as a party or
otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the
settlement thereof; (ii) the words "claim," "action," "suit,"
or "proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals),
actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) Who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust
or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office or (B) not to have acted
in good faith in the reasonable belief that his action was in
the best interest of the Trust; or
(ii) In the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement; (B)
by at least a majority of those Trustees who are neither
Interested Persons, as defined in the Trust Instrument, of the
Trust nor are parties to the matter based upon a review of
readily available facts (as opposed to a full trial-type
inquiry); or (C) by written opinion of independent legal
counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry); provided, however, that
any
Shareholder may, by appropriate legal proceedings, challenge
any such determination by the Trustees or by independent
counsel.
(c) The rights of indemnification therein provided may be insured
against by policies maintained by the Trust, shall be severable,
shall not be exclusive of or affect any other rights to which any
Covered Person, as defined in the Trust Instrument, may now or
hereafter be entitled, shall continue as to a person who has ceased
to be a Covered Person and shall inure to the benefit of the heirs,
executors and administrators of such a person. Nothing contained
herein shall affect any rights to indemnification to which Trust
personnel, other than Covered Persons, and other persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character
described in paragraph (a) of this Section 10.2 may be paid by the
Trust or a Series thereof from time to time, prior to final
disposition thereof upon receipt of an undertaking by or on behalf
of such Covered Person that such amount will be paid over by him to
the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.2; provided,
however, that either (a) such Covered Person shall have provided
appropriate security for such undertaking, (b) the Trust is insured
against losses arising out of any such advance payments or (c)
either a majority of the Trustees who are neither Interested Persons
of the Trust nor parties to the matter, or independent legal counsel
in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section
10.2.
Article IX of the Registrant's By-Laws provides the following:
The Trust may purchase and maintain insurance on behalf of any Covered Person or
employee of the Trust, including any Covered Person or employee of the Trust who
is or was serving at the request of the Trust as a Trustee, officer or employee
of a corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the Trustees would have the
power to indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance that protects or
purports to protect any Trustee or officer of the Trust against any liability to
the Trust or its Shareholder to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
Reference is made to Article IX of Registrants By-Laws and paragraph 1.11 of the
Distribution Agreement.
The Registrant is covered under an insurance policy insuring its officers and
trustees against liabilities, and certain costs of defending claims against such
officers and trustees, to the extent such officers and trustees are not found to
have committed conduct constituting willful misfeasance, bad faith, gross
negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers under certain circumstances.
Section 12 of the Management Agreement between Registrant and Manager, Section 8
of the Sub-Advisory Agreements and Section 20 of the Distribution Agreement
between the Registrant
2
and Distributor limit the liability of Manager, the Sub-Advisors and the
Distributor to liabilities arising from willful misfeasance, bad faith or gross
negligence in the performance of their respective duties or from reckless
disregard by them of their respective obligations and duties under the
agreements.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its Trust Instrument, By-Laws, Management Agreement and
Distribution Agreement in a manner consistent with Release No. 11330 of the U.S.
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended (the "1940 Act") so long as the interpretations of Section
17(h) and 17(i) of such Act remain in effect and are consistently applied.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "1933 Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant understands that in the opinion of the SEC such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS
(1) (a) Trust Instrument dated July 30, 1998 - previously filed as an
Exhibit to the Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A filed electronically on October 28, 1998 and incorporated
herein by reference.
(b) Amendment dated February 22, 2001 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A filed
electronically on March 1, 2001 and incorporated herein by
reference.
(c) Certificate of Amendment dated February 27, 2001 to the Trust
Instrument - previously filed as an Exhibit to Post-Effective
Amendment No. 9 to the Registrant's Registration Statement on Form
N-1A on June 15, 2001 and incorporated herein by reference.
(d) Certificate of Amendment dated May 9, 2001 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(e) Amendment No. 1 dated November 2, 2001 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 17 to
the Registrant's Registration Statement on Form N-1A on February 27,
2002 and incorporated herein by reference.
3
(f) Amendment No. 2 to the Trust Instrument - previously filed as an
Exhibit to Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form N-1A on February 27, 2002 and
incorporated herein by reference.
(g) Amendment No. 3 to the Trust Instrument - previously filed as an
Exhibit to Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form N-1A on February 27, 2002 and
incorporated herein by reference.
(h) Certificate of Amendment dated February 15, 2002 to the Trust
Instrument - previously filed as an Exhibit to Post-Effective
Amendment No. 24 to the Registrant's Registration Statement on Form
N-1A on July 29, 2003 and incorporated herein by reference.
(i) Amendment No. 4 dated March 1, 2002 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(j) Amendment No. 5 dated September 23, 2002 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(k) Amendment No. 6 dated September 23, 2002 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(l) Amendment No. 7 dated November 22, 2002 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(m) Amendment No. 8 dated June 2, 2003 to the Trust Instrument -
previously filed as an Exhibit to Post-Effective Amendment No. 24 to
the Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(n) Amendment No. 9, effective August 25, 2003, to the Trust Instrument
- previously filed as an Exhibit to Post-Effective Amendment No. 25
to the Registrant's Registration Statement on Form N-1A on May 25,
2004 and incorporated herein.
(o) Amendment No. 10, effective August 25, 2003, to the Trust Instrument
- previously filed as an Exhibit to Post-Effective Amendment No. 25
to the Registrant's Registration Statement on Form N-1A on May 25,
2004 and incorporated herein by reference.
(p) Amendment No. 11, effective April 23, 2004, to the Trust Instrument
- previously filed as an Exhibit to Post-Effective Amendment No. 25
to the Registrant's Registration Statement on Form N-1A on May 25,
2004 and incorporated herein by reference.
4
(q) Amendment No. 12, effective March 24, 2004, to the Trust Instrument
(Class O shares of ING Intermediate Bond) - previously filed as an
Exhibit to Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and incorporated
herein by reference.
(r) Plan of Liquidation and Dissolution of Series to the Trust
Instrument (ING Strategic Bond Fund) - previously filed as an
Exhibit to Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and incorporated
herein by reference.
(2) Bylaws - previously filed as an Exhibit to the Pre-Effective Amendment No.
1 to Registrant's Registration Statement on Form N-1A filed electronically
on October 28, 1998 and incorporated herein by reference.
(3) Not applicable.
(4) (a) Form of Agreement and Plan of Reorganization between ING Funds
Trust, on behalf of its ING Classic Money Market Fund series and ING
Funds Trust, on behalf of its ING Lexington Money Market Trust
series - filed herewith.
(b) Form of Agreement and Plan of Reorganization between ING Funds
Trust, on behalf of its ING Classic Money Market Fund series and ING
Funds Trust, on behalf of its ING Money Market Fund series - filed
herewith.
(5) The rights of holders of the securities being registered are set out in
Articles II, VII, IX, and X of the Declaration of Trust referenced in
Exhibit (1) above and in Articles IV, VI, and XIII of the Bylaws
referenced in Exhibit (2) above.
(6) (a) Amended Investment Management Agreement dated September 2, 2004,
between Registrant and ING Investments, LLC (successor to Pilgrim
Investments, LLC) with respect to ING Lexington Money Market Trust,
ING Classic Money Market Fund and ING Money Market Fund - filed
herein.
(b) Investment Management Agreement dated May 9, 2001 between Registrant
and ING Investments, LLC (successor to Pilgrim Investments, LLC)
with respect to ING Tax Efficient Equity Fund, ING National
Tax-Exempt Bond Fund, ING Classic Money Market Fund, ING
Intermediate Bond Fund, ING High Yield Fund and ING National
Tax-Exempt Money Market Fund - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference
(c) Form of Restated Investment Management Agreement between Registrant
and ING Pilgrim Investments, LLC - previously filed as an Exhibit to
Post-Effective Amendment No. 12 to the Registrant's Registration
Statement on Form N-1A filed electronically on October 1, 2001 and
incorporated herein by reference.
(d) Form of Investment Management Agreement between Registrant and ING
Pilgrim Investments, LLC with respect to Pilgrim Global Real Estate
Fund - previously filed as an Exhibit to Post-Effective Amendment
No. 10 to the Registrant's Registration Statement on Form N-1A filed
electronically on July 27, 2001 and incorporated herein by
reference.
5
(e) Form of Investment Management Agreement between Registrant and ING
Mutual Funds Management Co. LLC ("IMFC") - previously filed as an
Exhibit to Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A filed electronically on November
6, 2000 and incorporated herein by reference.
(f) Sub-Advisory Agreement between IMFC and Baring Asset Management,
Inc. - previously filed as an Exhibit to Post-Effective Amendment
No. 6 to the Registrant's Registration Statement on Form N-1A filed
electronically on November 6, 2000 and incorporated herein by
reference.
(g) Form of Sub-Advisory Agreement between IMFC and Baring International
Investment Limited - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(h) Form of Sub-Advisory Agreement between IMFC and Baring Asset
Management (Asia) Limited - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(i) First Amendment to Sub-Advisory Agreement between IMFC and ING
Investment Management Advisors B.V. - previously filed as an Exhibit
to Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(j) Form of Sub-Advisory Agreement between IMFC and ING Investment
Management Advisors B.V. - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(k) Form of Sub-Advisory Agreement between IMFC and ING Investment
Management LLC - previously filed as an Exhibit to Post-Effective
Amendment No. 6 to the Registrant's Registration Statement on Form
N-1A filed electronically on November 6, 2000 and incorporated
herein by reference.
(l) Form of Restated Sub-Advisory Agreement between ING Pilgrim
Investments, LLC and ING Investment Management LLC - previously
filed as an Exhibit to Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A filed
electronically on October 1, 2001 and incorporated herein by
reference.
(m) Form of Sub-Advisory Agreement between IMFC and Furman Selz Capital
Management LLC - previously filed as an Exhibit to Post-Effective
Amendment No. 6 to the Registrant's Registration Statement on Form
N-1A filed electronically on November 6, 2000 and incorporated
herein by reference.
(n) Form of Restated Sub-Advisory Agreement between ING Pilgrim
Investments, LLC and Furman Selz Capital Management LLC - previously
filed as an Exhibit to Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A filed
electronically on October 1, 2001 and incorporated herein by
reference.
6
(o) Form of Sub-Advisory Agreement between IMFC and Furman Selz Capital
Management on behalf of Delta Asset Management - previously filed as
an Exhibit to Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A filed electronically on November
6, 2000 and incorporated herein by reference.
(p) Form of Sub-Advisory Agreement between IMFC and CRA Real Estate
Securities, L.P. - previously filed as an Exhibit to Post-Effective
Amendment No. 6 to the Registrant's Registration Statement on Form
N-1A filed electronically on November 6, 2000 and incorporated
herein by reference.
(q) Form of Restated Sub-Advisory Agreement between ING Pilgrim
Investments, LLC and Furman Selz Capital Management on behalf of
Delta Asset Management - previously filed as an Exhibit to
Post-Effective Amendment No. 12 to the Registrant's Registration
Statement on Form N-1A filed electronically on October 1, 2001 and
incorporated herein by reference.
(r) Form of Sub-Advisory Agreement between ING Pilgrim Investments, LLC
and CRA Real Estate Securities L.P. with respect to Pilgrim Global
Real Estate Fund - previously filed as an Exhibit to Post-Effective
Amendment No. 10 to the Registrant's Registration Statement on Form
N-1A filed electronically on July 27, 2001 and incorporated herein
by reference.
(s) Investment Management Agreement dated September 23, 2002 between
Registrant and ING Investments, LLC (successor to Pilgrim
Investments, LLC) with respect to ING GNMA Income Fund and ING
Lexington Money Market Trust - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(t) Investment Management Agreement between Registrant and ING
Investments, LLC (successor to Pilgrim Investments, LLC) with
respect to ING Strategic Bond Fund, ING Money Market Fund, and ING
High Yield Opportunity Fund - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(u) Restated Expense Limitation Agreement effective August 1, 2003
between Registrant and ING Investment, LLC. - previously filed as an
Exhibit to Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and incorporated
herein by reference.
(i) Amended Schedule A to the Restated Expense Limitation
Agreement - previously filed as an Exhibit to Post-Effective
Amendment No. 25 to the Registrant's Registration Statement on
Form N-1A on May 25, 2004 and incorporated herein by
reference.
(ii) Voluntary Expense Limitations Agreement, dated February 1,
2004 - previously filed as an Exhibit to Post-Effective
Amendment No. 25 to the Registrant's Registration Statement on
Form N-1A on May 25, 2004 and incorporated herein.
7
(iii) Voluntary Expense Limitations Agreement, dated February 25,
2004 (ING Intermediate Bond Class O) - previously filed as an
Exhibit to Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and
incorporated herein by reference.
(iv) Form of Voluntary Expense Limitation Side Agreement, dated
June 14, 2004 - previously filed as an Exhibit to
Post-Effective Amendment No. 26 to the Registrant's
Registration Statement on Form N-1A on July 28, 2004 and
incorporated herein by reference.
(v) Sub-Advisory Agreement dated August 1, 2003 between ING Investments,
LLC and Aeltus Investment Management, Inc. - previously filed as an
Exhibit to Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(i) First Amendment to Sub-Advisory Agreement effective September
1, 2003 between ING Investments, LLC and Aeltus Investment
Management, Inc. - previously filed as an Exhibit to
Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and
incorporated herein by reference.
(ii) Amended Schedule A with respect to the Sub-Advisory Agreement
between ING Investments, LLC and Aeltus Investment Management,
Inc. - previously filed as an Exhibit to Post-Effective
Amendment No. 25 to the Registrant's Registration Statement on
Form N-1A on May 25, 2004 and incorporated herein by
reference.
(iii) Amended Schedule A with respect to the Sub-Advisory Agreement
between ING Investments Management, LLC and Aeltus Investment
Management, Inc., dated June 4, 2004 - previously filed as an
Exhibit to Post-Effective Amendment No. 26 to the Registrant's
Registration Statement on Form N-1A on July 28, 2004 and
incorporated herein by reference.
(w) Form of Sub-Advisory Agreement between ING Investments, LLC and ING
Aeltus Investment Management, Inc. with respect to ING Intermediate
Bond Fund - previously filed as an Exhibit to the Registrant's
Registration Statement on Form N-14 on April 30, 2004 and
incorporated herein by reference.
(7) (a) Underwriting Agreement dated September 23, 2002 between Registrant
and ING Funds Distributor, Inc. - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(i) Substitution Agreement & Schedule A, made October 8, 2002
between Registrant and ING Funds Distributor, Inc. -
previously filed as an Exhibit to Post-Effective Amendment No.
25 to the Registrant's Registration Statement on Form N-1A on
May 25, 2004 and incorporated herein by reference.
(b) Form of Financial Institution Selling Group Agreement - previously
filed as an Exhibit to Post-Effective Amendment No. 6 to the
Registrant's Registration
8
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(c) Form of Selling Group Agreement - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(8) Not Applicable.
(9) (a) Custody Agreement dated January 6, 2003 between Registrant and The
Bank of New York - previously filed as an Exhibit to Post-Effective
Amendment No. 24 to the Registrant's Registration Statement on Form
N-1A on July 29, 2003 and incorporated herein by reference.
(i) Amended Exhibit A to the Custody Agreement between Registrant
and The Bank of New York, as of June 14, 2004 - previously
filed as an Exhibit to Post-Effective Amendment No. 26 to the
Registrant's Registration Statement on Form N-1A on July 28,
2004 and incorporated herein by reference.
(b) Foreign Custody Manager Agreement dated January 6, 2003 between
Registrant and The Bank of New York - previously filed as an Exhibit
to Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(i) Amended Schedule 1 dated January 13, 2003 - previously filed
as an Exhibit to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(ii) Amended Schedule 1 dated March 13, 2003 - previously filed as
an Exhibit to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(iii) Amended Schedule 1 dated April 7, 2003 - previously filed as
an Exhibit to Post-Effective Amendment No. 24 to the
Registrant's Registration Statement on Form N-1A on July 29,
2003 and incorporated herein by reference.
(iv) Amended Schedule 1 dated May 1, 2003 - previously filed as an
Exhibit to Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(v) Amended Schedule 2 dated June 6, 2003 - previously filed as an
Exhibit to Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(vi) Amended Exhibit A to the Foreign Custody Manager Agreement
dated as of February 25, 2004 - previously filed as an Exhibit
to Post-Effective
9
Amendment No. 25 to the Registrant's Registration Statement on
Form N-1A on May 25, 2004 and incorporated herein by
reference.
(c) Master Repurchase Agreement dated April 7, 2003 between Registrant
and Goldman Sachs & Co. - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(d) Fund Accounting Agreement between Registrant and The Bank of New
York dated January 6, 2003 - previously filed as an Exhibit to
Post-Effective Amendment No. 25 to the Registrant's Registration
Statement on Form N-1A on May 25, 2004 and incorporated herein by
reference.
(i) Amended Exhibit A to the Fund Accounting Agreement dated
February 25, 2004 - previously filed as an Exhibit to
Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and
incorporated herein by reference.
(e) Securities Lending Agreement and Guaranty, dated as of August 7,
2003, between Registrant and The Bank of New York - previously filed
as an Exhibit to Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and incorporated
herein by reference.
(i) Amended Exhibit A with respect to the Securities Lending
Agreement and Guaranty, dated February 1, 2004 - previously
filed as an Exhibit to Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on Form N-1A on May 25,
2004 and incorporated herein by reference.
(f) The Bank of New York Cash Reserve Agreement, dated March 31, 2003,
between Registrant and the Bank of New York - previously filed as an
Exhibit to Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and incorporated
herein by reference.
(i) Amended Exhibit A with respect to The Bank of New York Cash
Reserve Agreement, dated February 25, 2004 - previously filed
as an Exhibit to Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on Form N-1A on May 25,
2004 and incorporated herein by reference.
(10) (a) Rule 12b-1 Distribution Plan and Agreement with respect to Class A
shares - previously filed as an Exhibit to Post-Effective Amendment
No. 6 to Registrant's Registration Statement on Form N-1A filed
electronically on November 6, 2000 and incorporated herein by
reference.
(b) Rule 12b-1 Distribution Plan and Agreement with respect to Class B,
Class C, and Class X shares - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(c) Form of Amended and Restated Rule 12b-1 Distribution Plan and
Agreement with respect to Class B shares - previously filed as an
Exhibit to Post-Effective
10
Amendment No. 11 to Registrant's Registration Statement on Form N-1A
filed electronically on July 31, 2001 and incorporated by reference.
(d) Amended and Restated Distribution Plan for Class A shares dated July
11, 2002 - previously filed as an Exhibit to Post-Effective
Amendment No. 24 to the Registrant's Registration Statement on Form
N-1A on July 29, 2003 and incorporated herein by reference.
(e) Service and Distribution Plan for Class A shares dated August 20,
2002 with respect to ING GNMA Income and ING Lexington Money Market
Trust Funds - previously filed as an Exhibit to Post-Effective
Amendment No. 24 to the Registrant's Registration Statement on Form
N-1A on July 29, 2003 and incorporated herein by reference.
(f) Service and Distribution Plan for Class A shares dated August 20,
2002 with respect to ING High Yield Opportunity, ING Money Market
and ING Strategic Income Funds - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(g) Service and Distribution Plan for Class B shares dated August 20,
2002 with respect to ING High Yield Opportunity, ING Money Market
and ING Strategic Income Funds - previously filed as an Exhibit to
Post-Effective Amendment No. 21 to the Registrant's Registration
Statement on Form N-1A on September 22, 2003 and incorporated herein
by reference.
(h) Letter Agreement dated September 23, 2002 - previously filed as an
Exhibit to 7 Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(i) Amended Letter Agreement dated August 1, 2003, with respect to the
Distribution Plan for Class A Shares - previously filed as an
Exhibit to Post-Effective Amendment No. 25 to the Registrant's
Registration Statement on Form N-1A on May 25, 2004 and incorporated
herein by reference.
(j) Amended and Restated Distribution Plan for Class B shares dated May
9, 2001 - previously filed as an Exhibit to Post-Effective Amendment
No. 24 to the Registrant's Registration Statement on Form N-1A on
July 29, 2003 and incorporated herein by reference.
(k) Service and Distribution Plan for Class B shares with respect to ING
GNMA Income Fund dated August 20, 2002 - previously filed as an
Exhibit to Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(l) Service and Distribution Plan for Class B shares with respect to ING
High Yield Opportunity, ING Strategic Income and ING Money Market
Funds - previously filed as an Exhibit to Post-Effective Amendment
No. 24 to the Registrant's Registration Statement on Form N-1A on
July 29, 2003 and incorporated herein by reference.
(m) Amended and Restated Distribution Plan for Class C shares dated
August 20, 2002 - previously filed as an Exhibit to Post-Effective
Amendment No. 24 to the
11
Registrant's Registration Statement on Form N-1A on July 29, 2003
and incorporated herein by reference.
(n) Service and Distribution Plan for Class C shares with respect to ING
GNMA Income Fund dated August 20, 2002 - previously filed as an
Exhibit to Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(o) Service and Distribution Plan for Class C shares with respect to ING
High Yield Opportunity, ING Money Market and ING Strategic Income
Fund dated August 20, 2002 - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(p) Service and Distribution Plan for Class M shares with respect to ING
GNMA Income Fund dated August 20, 2002 - previously filed as an
Exhibit to Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(q) Service and Distribution Plan for Class M shares with respect to ING
High Yield Opportunity Fund dated August 20, 2002 - previously filed
as an Exhibit to Post-Effective Amendment No. 24 to the Registrant's
Registration Statement on Form N-1A on July 29, 2003 and
incorporated herein by reference.
(r) Shareholder Service Plan for Class Q shares with respect to ING GNMA
Fund dated August 20, 2002 - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(s) Shareholder Service Plan for Class Q shares with respect to ING High
Yield Opportunity and ING Strategic Income Funds dated August 20,
2002 - previously filed as an Exhibit to Post-Effective Amendment
No. 24 to the Registrant's Registration Statement on Form N-1A on
July 29, 2003 and incorporated herein by reference.
(t) Amended and Restated Shareholder Servicing Plan for Classes A, B,
and C with respect to ING High Yield Bond, ING Intermediate Bond,
ING National Tax Exempt Bond, and ING Classic Money Market Funds
dated August 20, 2002 - previously filed as an Exhibit to
Post-Effective Amendment No. 24 to the Registrant's Registration
Statement on Form N-1A on July 29, 2003 and incorporated herein by
reference.
(u) Shareholder Service Distribution Plan and Agreement for Class R
shares - previously filed as an Exhibit to Post-Effective Amendment
No. 24 to the Registrant's Registration Statement on Form N-1A on
July 29, 2003 and incorporated herein by reference.
(v) Form of 18f-3 Plan - previously filed as an Exhibit to
Post-Effective Amendment No. 10 to the Registrant's Registration
Statement on Form N-1A filed electronically on July 27, 2001 and
incorporated herein by reference.
(w) Amended and Restated 18f-3 Plan - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to Registrant's Registration
Statement on Form N-
12
1A filed electronically on November 6, 2000 and incorporated herein
by reference.
(x) Amended and Restated Rule 18f-3 Plan - previously filed as an
Exhibit to Post-Effective Amendment No. 15 to the Registrant's
Registration Statement on Form N- 1A filed electronically on
November 9, 2001 and incorporated herein by reference.
(11) Form of Opinion and Consent of Counsel - filed herewith.
(12) Opinion and Consent of Counsel Supporting Tax Matters and Consequences -
To be filed by subsequent post-effective amendment.
(13) (a) Form of Service Agreement - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(b) Fund Services Agreement between Registrant and ING Fund Services Co.
LLC - previously filed as an Exhibit to Post-Effective Amendment No.
1 to Registrant's Registration Statement on Form N-1A filed
electronically on April 15, 1999 and incorporated herein by
reference.
(c) Form of Recordkeeping Agreement with State Street Bank and Trust
Company - previously filed as an Exhibit to Post-Effective Amendment
No. 6 to the Registrant's Registration Statement on Form N-1A filed
electronically on November 6, 2000 and incorporated herein by
reference.
(d) Form of Shareholder Servicing Plan - previously filed as an Exhibit
to Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A filed electronically on June 15, 2001 and
incorporated herein by reference.
(e) Amended and Restated Shareholder Servicing Plan - previously filed
as an Exhibit to Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A filed electronically on November
6, 2000 and incorporated herein by reference.
(f) Form of Administration Agreement - previously filed as an Exhibit to
Post-Effective Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed electronically on November 6, 2000 and
incorporated herein by reference.
(g) Form of Amended and Restated Administration Agreement between
Registrant and ING Funds Services, LLC - previously filed as an
Exhibit to Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form N-1A on February 27, 2002 and
incorporated herein by reference.
(h) Form of Expense Limitation Agreement among ING Pilgrim Investments,
LLC, Clarion CRA Securities L.P. and Pilgrim Funds Trust with
respect to Pilgrim Global Real Estate Fund - previously filed as an
Exhibit to Post-Effective Amendment No. 10 to the Registrant's
Registration Statement on Form N-1A on July 27, 2001 and
incorporated herein by reference.
13
(i) Form of Expense Limitation Agreement - previously filed as an
Exhibit to Post-Effective Amendment No. 8 to the Registrant's
Registration Statement on Form N-1A filed electronically on March 1,
2001 and incorporated herein by reference.
(j) Form of Amended and Restated Expense Limitation Agreement between
Registrant and ING Funds Services, LLC - previously filed as an
Exhibit to Post-Effective Amendment No. 17 to the Registrant's
Registration Statement on Form N-1A on February 27, 2002 and
incorporated herein by reference.
(k) Form of Fund Accounting Agreement with Brown Brothers Harriman & Co.
- previously filed as an Exhibit to Post-Effective Amendment No. 17
to the Registrant's Registration Statement on Form N-1A on February
27, 2002 and incorporated herein by reference.
(14) Consent of independent auditors - filed herewith.
(15) Not applicable.
(16) Powers of attorney - filed herewith.
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) under the Securities Act
(17 CFR 230.145(c)), the reoffering prospectus will contain the
information called for by the applicable registration form for reofferings
by persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned registrant undertakes to file a post-effective amendment
to this registration statement upon the closing of the Reorganization
described in this Registration Statement that contains an opinion of
counsel supporting the tax matters discussed in this Registration
Statement.
14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act"), the Registrant has duly caused this Registration Statement on Form
N-14 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the city of Scottsdale and the State of Arizona on the 1st day of December,
2004.
ING FUNDS TRUST
By: /s/ Huey P. Falgout, Jr.
_______________________________
Huey P. Falgout, Jr.
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
SIGNATURE TITLE DATE
________________________ Trustee and Chairman December 1, 2004
John G. Turner*
________________________ President and Chief Executive December 1, 2004
James M. Hennessy* Officer
________________________ Executive Vice President and December 1, 2004
Michael J. Roland* Principal Financial Officer
________________________ Trustee December 1, 2004
Paul S. Doherty*
________________________ Trustee December 1, 2004
J. Michael Earley*
________________________ Trustee December 1, 2004
R. Barbara Gitenstein*
________________________ Trustee December 1, 2004
Walter H. May, Jr.*
________________________ Trustee December 1, 2004
Thomas J. McInerney*
________________________ Trustee December 1, 2004
Jock Patton*
________________________ Trustee December 1, 2004
David W.C. Putnam*
________________________ Trustee December 1, 2004
Blaine E. Rieke*
________________________ Trustee December 1, 2004
Richard A. Wedemeyer*
________________________ Trustee December 1, 2004
Roger B. Vincent*
*By:
___________________________
Huey P. Falgout, Jr.
Attorney-in-Fact**
** Executed pursuant to powers of attorney filed in this Registration Statement.
EXHIBIT INDEX
(4) (a) Form of Agreement and Plan of Reorganization between ING Funds Trust, on
behalf of its ING Classic Money Market Fund series and ING Funds Trust,
on behalf of its ING Lexington Money Market Fund series
(4) (b) Form of Agreement and Plan of Reorganization between ING Funds Trust, on
behalf of its ING Classic Money Market Fund series and ING Funds Trust,
on behalf of its ING Money Market Fund series
(6) (a) Amended Investment Management Agreement dated September 2, 2004, between
Registrant and ING Investments, LLC (successor to Pilgrim Investments,
LLC) with respect to ING Lexington Money Market Trust, ING Classic Money
Market Fund and ING Money Market Fund - filed herein.
(11) Form of Opinion and Consent of Counsel
(14) Consent of Independent Registered Public Accounting Firm
(16) Powers of Attorney