PROXY STATEMENT
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14c-6(e)(2)
________________________________________________________________________________
ING EQUITY TRUST
ING FUNDS TRUST
ING INVESTMENT FUNDS, INC.
ING MUTUAL FUNDS
ING SENIOR INCOME FUND
ING VARIABLE INSURANCE TRUST
ING VARIABLE PRODUCTS TRUST
ING VP NATURAL RESOURCES TRUST
ING INVESTORS TRUST
USLICO SERIES FUND
________________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
__________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
(X) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined.)
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
( ) Fee paid with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
(3) Filing Party:
________________________________________________________________________________
(4) Date Filed:
ING FUNDS
ING CONVERTIBLE FUND ING WORLDWIDE GROWTH FUND
ING EQUITY AND BOND FUND ING VP CONVERTIBLE PORTFOLIO
ING FINANCIAL SERVICES FUND ING VP GROWTH OPPORTUNITIES PORTFOLIO
ING GNMA INCOME FUND ING VP HIGH YIELD BOND PORTFOLIO
ING GROWTH OPPORTUNITIES FUND ING VP INTERNATIONAL VALUE PORTFOLIO
ING HIGH YIELD OPPORTUNITY FUND ING VP LARGE COMPANY VALUE PORTFOLIO
ING INTERNATIONAL FUND ING VP MAGNACAP PORTFOLIO
ING LARGE COMPANY VALUE FUND ING VP MIDCAP OPPORTUNITIES PORTFOLIO
ING LEXINGTON MONEY MARKET TRUST ING VP NATURAL RESOURCES TRUST
ING MAGNACAP FUND ING VP SMALLCAP OPPORTUNITIES PORTFOLIO
ING MIDCAP OPPORTUNITIES FUND ING VP WORLDWIDE GROWTH PORTFOLIO
ING MONEY MARKET FUND ING INTERNATIONAL PORTFOLIO
ING PRECIOUS METALS FUND USLICO SERIES FUND:
ING SENIOR INCOME FUND THE ASSET ALLOCATION PORTFOLIO
ING SMALLCAP OPPORTUNITIES FUND THE BOND PORTFOLIO
ING STRATEGIC BOND FUND THE MONEY MARKET PORTFOLIO
ING TAX EFFICIENT EQUITY FUND THE STOCK PORTFOLIO
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
(800) 992-0180
June 13, 2003
Dear Shareholder:
On behalf of the Boards of Directors/Trustees (the "Board") of the ING
Funds named above, I invite you to a Special Meeting of shareholders ("Special
Meeting") to be held at 10:00 a.m., Local time, on July 22, 2003, at 7337 East
Doubletree Ranch Road, Scottsdale, Arizona 85258-2034.
At the Special Meeting, shareholders of each Fund (except ING
International Portfolio) will be asked to approve a Sub-Advisory Agreement
between ING Investments, LLC, the adviser of each Fund, and Aeltus Investment
Management, Inc. ("ING Aeltus"). Shareholders of ING International Portfolio
will be asked to approve a Sub-Advisory Agreement between Directed Services,
Inc., and ING Aeltus. The subadvisory arrangements with ING Aeltus will not
result in any increase in fees to the Funds or their shareholders. If approved,
ING Aeltus would serve as the sub-adviser to each Fund. The Sub-Advisory
Agreements require shareholder approval.
After careful consideration, your Board of Directors/Trustees unanimously
approved the proposal which has been made for each Fund and recommends that
shareholders vote "FOR" the proposals.
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 AND CAST YOUR VOTE. IT IS
IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN JULY 21, 2003.
The Funds are 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,
James M. Hennessy
President and Chief Executive Officer
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF
ING RETAIL FUNDS ING VP PORTFOLIOS
---------------- -----------------
ING EQUITY TRUST ING VARIABLE INSURANCE TRUST
ING Convertible Fund ING VP Worldwide Growth Portfolio
ING Equity and Bond Fund
ING Financial Services Fund ING VARIABLE PRODUCTS TRUST
ING Growth Opportunities Fund ING VP Convertible Portfolio
ING Large Company Value Fund ING VP Growth Opportunities Portfolio
ING MidCap Opportunities Fund ING VP High Yield Bond Portfolio
ING SmallCap Opportunities Fund ING VP International Value Portfolio
ING Tax Efficient Equity Fund ING VP Large Company Value Portfolio
ING VP MagnaCap Portfolio
ING FUNDS TRUST ING VP MidCap Opportunities Portfolio
ING GNMA Income Fund ING VP SmallCap Opportunities Portfolio
ING High Yield Opportunity Fund
ING Lexington Money Market Trust ING VP NATURAL RESOURCES TRUST
ING Money Market Fund ING VP Natural Resources Trust
ING Strategic Bond Fund
ING INVESTORS TRUST
ING INVESTMENT FUNDS, INC. ING International Portfolio
ING MagnaCap Fund
USLICO SERIES FUND
ING MUTUAL FUNDS The Asset Allocation Portfolio
ING International Fund The Bond Portfolio
ING Precious Metals Fund The Money Market Portfolio
ING Worldwide Growth Fund The Stock Portfolio
ING SENIOR INCOME FUND
ING Senior Income Fund
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
(800) 992-0180
TO BE HELD ON JULY 22, 2003
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders ("Special
Meeting") of the ING Funds named above, is scheduled for July 22, 2003, 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:
For Shareholders of all ING Funds except the ING International Portfolio:
I. To approve a Sub-Advisory Agreement between ING Investments,
LLC and ING Aeltus Investment Management, Inc., with no change
in the Adviser, the portfolio manager(s), or the overall
management fee paid by the Fund.
For Shareholders of ING International Portfolio:
II. To approve a Sub-Advisory Agreement between Directed Services,
Inc. and ING Aeltus Investment Management, Inc., with no
change in the Adviser, the portfolio manager(s), or the
overall management fee paid by the Fund.
For All ING Funds:
III. 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 April 24, 2003 are
entitled to notice of, and to vote at, the Special Meeting. Your attention is
called to the accompanying Proxy Statement. Regardless of whether you plan to
attend the Special Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE
ENCLOSED PROXY BALLOT 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 your Fund or by voting in person at the Special Meeting.
By Order of the Board of Directors,
Kimberly A. Anderson,
Vice President and Secretary
Dated: June 13, 2003
PROXY STATEMENT
JUNE 13, 2003
ING RETAIL FUNDS ING VP PORTFOLIOS
---------------- -----------------
ING EQUITY TRUST ING VARIABLE INSURANCE TRUST
ING Convertible Fund ING VP Worldwide Growth Portfolio
ING Equity and Bond Fund
ING Financial Services Fund ING VARIABLE PRODUCTS TRUST
ING Growth Opportunities Fund ING VP Convertible Portfolio
ING Large Company Value Fund ING VP Growth Opportunities Portfolio
ING MidCap Opportunities Fund ING VP High Yield Bond Portfolio
ING SmallCap Opportunities Fund ING VP International Value Portfolio
ING Tax Efficient Equity Fund ING VP Large Company Value Portfolio
ING VP MagnaCap Portfolio
ING FUNDS TRUST ING VP MidCap Opportunities Portfolio
ING GNMA Income Fund ING VP SmallCap Opportunities Portfolio
ING High Yield Opportunity Fund
ING Lexington Money Market Trust ING VP NATURAL RESOURCES TRUST
ING Money Market Fund ING VP Natural Resources Trust
ING Strategic Bond Fund
ING INVESTORS TRUST
ING INVESTMENT FUNDS, INC. ING International Portfolio
ING MagnaCap Fund
USLICO SERIES FUND
ING MUTUAL FUNDS The Asset Allocation Portfolio
ING International Fund The Bond Portfolio
ING Precious Metals Fund The Money Market Portfolio
ING Worldwide Growth Fund The Stock Portfolio
ING SENIOR INCOME FUND
ING Senior Income Fund
(each, a "Retail Fund" and collectively, the "Retail Funds") (each a "VP Portfolio" and collectively, the "VP Portfolios")
(each a "Company" and collectively, the "Companies" and each Retail Fund and VP
Portfolio of a Company listed above is referred to as a "Fund" or an "ING Fund"
and, collectively, the "Funds" or "ING Funds")
TOLL FREE: (800) 992-0180
7337 EAST DOUBLETREE RANCH ROAD
SCOTTSDALE, AZ 85258-2034
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SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 22, 2003
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The Board is sending this Proxy Statement, the attached Notice of Special
Meeting and the enclosed Proxy Ballot(s) on or about June 13, 2003 to all
shareholders of record who are eligible to vote.
DRAFT
WHO IS ASKING FOR MY VOTE?
The Board of Directors or Trustees,(the "Board") of each Company is
sending this Proxy Statement and the enclosed Proxy Ballot(s) to you and all
other shareholders. (For ease of reference, the term "Director" shall
hereinafter be used to refer to both Directors and Trustees unless the context
requires otherwise.) The Board is soliciting your vote for a special meeting of
shareholders ("Special Meeting") of each Fund.
WHO IS ELIGIBLE TO VOTE?
The Board is sending this Proxy Statement, the attached Notice of Special
Meeting and the enclosed Proxy Ballot(s) on or about June 13, 2003 to all
shareholders of record who are eligible to vote. Shareholders who owned shares
in a Fund as of the close of business on April 24, 2003 ("Record Date") are
eligible to vote. APPENDIX 1 sets forth the number of shares outstanding for
each Fund as of the Record Date.
As of May 15, 2003, no person owned beneficially more than 5% of any class
of a Fund, except as set forth in APPENDIX 2. To the best of each Fund's
knowledge, as of May 15, 2003, no Director owned beneficially more than 1% of
any class of a Fund.
WHY IS THE SPECIAL MEETING BEING HELD?
ING Investments, LLC ("ING Investments"), the investment adviser to each
of the ING Funds (except the ING International Portfolio) and Directed Services,
Inc. ("DSI"), the investment adviser to the ING International Portfolio (each an
"Adviser" and, collectively, the "Advisers"), are both indirect, wholly-owned
subsidiaries of ING Groep N.V. ("ING Group"). Headquartered in Amsterdam, ING
Group is a global financial institution active in the fields of asset
management, insurance and banking. ING has embarked upon a plan to integrate the
management and operations of various asset management groups of certain of its
subsidiaries. As a result of this integration plan the operational and
supervisory functions will be separated from the portfolio management functions
related to the ING Funds, with the former continuing to be provided by ING
Investments or DSI and the latter provided by Aeltus Investment Management, Inc.
("ING Aeltus" or "Proposed Sub-Adviser"). In this regard, on April 9, 2003, ING
Investments and DSI proposed and the Board approved changes in the investment
advisory arrangements for the ING Funds, which, if approved by shareholders,
would result in ING Aeltus becoming the sub-adviser to the ING Funds. These new
investment advisory arrangements are described more fully later in this Proxy
Statement. Your Fund's current portfolio manager(s) will continue to manage your
Fund utilizing the same investment philosophy, but will do so as an employee of
ING Aeltus, not ING Investments. No changes to any of the ING Funds' portfolio
management personnel responsible for managing particular ING Funds are being
proposed as part of this proxy.
The Special Meeting is being held for the following purposes:
For the Shareholders of the ING Funds except the ING International Portfolio
1
I. To approve a Sub-Advisory Agreement between ING Investments, LLC and
ING Aeltus Investment Management, Inc., with no change in the
Adviser, the portfolio manager(s), or the overall management fee
paid by each Fund.
For the Shareholders of the ING International Portfolio:
II. To approve a Sub-Advisory Agreement , between Directed Services,
Inc. and ING Aeltus Investment Management, Inc., with no change in
the Adviser, the portfolio manager(s), or the overall management fee
paid by the Fund.
For the Shareholders of All ING Funds:
II. 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 each Fund whose shareholders approve the Proposal, ING Aeltus will
become the sub-adviser to the Funds under each Sub-Advisory Agreement.
Please keep the following in mind when considering the changes:
THE PEOPLE MANAGING YOUR FUND WILL NOT CHANGE. These proposals will
generally not result in a change in the actual portfolio management
personnel who manage your Fund. While ING Aeltus will become the
sub-adviser to the Funds, ING Investments would be responsible for
monitoring the investment program and performance of ING Aeltus.
THE FUNDAMENTAL OBJECTIVES OF YOUR FUND WILL NOT CHANGE. While ING Aeltus
will become the sub-adviser of your Fund, the fundamental investment
objectives will remain the same.
THE ADVISORY FEES PAID BY YOUR FUND WILL NOT INCREASE. The fees payable to
ING Aeltus will be paid by the Adviser, and not by the Funds. The overall
management fee of each Fund will not increase.
WHICH PROPOSALS APPLY TO MY FUND?
The following table identifies each proposal to be presented at the Special
Meeting of shareholders (each a "Proposal") and the Funds whose shareholders the
Board is soliciting with respect to that Proposal:
PROPOSALS FUNDS VOTING
1. To approve a Sub-Advisory Agreement between ING ING Convertible Fund
Investments, LLC and ING Aeltus Investment Management, Inc., ING Equity and Bond Fund
with no change in the Adviser, the portfolio manager(s) ING Financial Services Fund
or the overall management fee paid by the Fund. ING GNMA Income Fund
ING Growth Opportunities Fund
ING High Yield Opportunity Fund
ING International Fund
ING Large Company Value Fund
ING Lexington Money Market Trust
ING MagnaCap Fund
ING MidCap Opportunities Fund
ING Money Market Fund
ING Precious Metals Fund
2
ING Senior Income Fund
ING SmallCap Opportunities Fund
ING Strategic Bond Fund
ING Tax Efficient Equity Fund
ING Worldwide Growth Fund
ING VP Convertible Portfolio
ING VP Growth Opportunities Portfolio
ING VP High Yield Bond Portfolio
ING VP International Value Portfolio
ING VP Large Company Value Portfolio
ING VP MagnaCap Portfolio
ING VP MidCap Opportunities Portfolio
ING VP Natural Resources Trust
ING VP SmallCap Opportunities Portfolio
ING VP Worldwide Growth Portfolio
USLICO Asset Allocation Portfolio
USLICO Bond Portfolio
USLICO Money Market Portfolio
USLICO Stock Portfolio
2. To approve a Sub-Advisory Agreement between Directed ING International Portfolio
Services, Inc. and ING Aeltus Investment Management, Inc.,
with no change in the Adviser, the portfolio manager(s),
or the overall management fee paid by each Fund.
3. To transact such other business, not currently contemplated, All Funds
that may properly come before the Special Meeting or any
adjournment(s) thereof in the discretion of the proxies or
their substitutes.
WHY DID YOU SEND ME THIS BOOKLET?
This booklet is a Proxy Statement. It provides you with information you
should review before voting on the matters listed above and in the Notice of
Special Meeting for each Fund. You are receiving these proxy materials -- a
booklet that includes the Proxy Statement and one Proxy Ballot for each Fund you
own -- because you have the right to vote on this important Proposal concerning
your Fund(s).
HOW DO I VOTE?
Shareholders can vote by completing, signing and returning the enclosed
Proxy Ballot(s) promptly in the enclosed envelope or by attending the meeting in
person and voting. Joint owners should each sign the Proxy Ballot(s). In
addition to solicitation by mail, certain officers and representatives of the
Funds, officers and employees of ING Funds Services, LLC (the "Administrator")
or its affiliates and certain financial services firms and their
representatives, who will receive no extra compensation for their services, may
solicit proxies by telephone, telegram, facsimile, or oral communication.
Shareholders of the Funds whose shares are held by nominees, such as brokers,
can vote their proxies by contacting their respective nominee.
3
Georgeson Shareholder Communications, Inc. (the "Solicitor") has been
engaged to assist in the solicitation of proxies, at an estimated cost of
$100,000, which will be paid by ING Aeltus and not the Funds. As the date of the
Special Meeting approaches, certain Fund shareholders may receive a telephone
call from a representative of the Solicitor if their votes have not yet been
received. Authorization to permit the Solicitor to execute proxies may be
obtained by telephonic instructions from shareholders. Proxies that are obtained
telephonically will be recorded in accordance with certain procedures, as
explained further below. The Board believes that these procedures are reasonably
designed to ensure that both the identity of the shareholder casting the vote
and the voting instructions of the shareholder are accurately determined.
In situations where a telephonic proxy is solicited, the Solicitor's
representative is required to ask for each shareholder's full name, address,
social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), the number of
shares owned, and to confirm that the shareholder has received the proxy
materials in the mail. If the information solicited agrees with the information
provided to the Solicitor, then the Solicitor's representative has the
responsibility to explain the process, read the Proposal on the Proxy Ballot(s),
and ask for the shareholder's instructions on the Proposal. 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. The
Solicitor's representative will record the shareholder's instructions on the
Ballot. Within 72 hours, the shareholder will be sent a letter or mailgram to
confirm his or her vote and asking the shareholder to call the Solicitor
immediately if his or her instructions are not correctly reflected in the
confirmation.
RETAIL FUNDS:
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 Ballot(s) originally sent with the Proxy Statement or attend in person.
Should shareholders require additional information regarding the proxy or
require replacement Proxy Ballot(s), they may contact the Solicitor toll-free at
1-866-821-1463.
VP PORTFOLIOS:
Shares of the VP Portfolios are sold to separate accounts of insurance
companies ("Separate Accounts") and are used to fund variable annuity and/or
variable life contracts ("Variable Contracts"). Variable contract owners or
participants under group contracts ("Variable Contract Owners"), as applicable,
who select the VP Portfolio for investment through a Variable Contract have a
beneficial interest in the VP Portfolio, but do not invest directly in or hold
shares of the VP Portfolio. The insurance company that uses the VP Portfolio as
a funding vehicle, is, in most cases, the legal shareholder of the VP Portfolio
and, as such, has sole voting and investment power with respect to the shares,
but generally will pass through any voting rights to Variable Contract Owners.
Therefore, an Insurance Company will request voting instructions from the
Variable Contract Owner and will vote shares or other voting interests in the
Separate Account, with respect to SEC-registered separate accounts, in
proportion to voting instructions received. With respect to Fund shares held by
unregistered separate accounts, the Insurance Company generally will only vote
those separate account shares for which it receives instructions.
Variable Contract Owners permitted to give instructions to the VP
Portfolio and the number of shares for which such instructions may be given for
purposes of voting at the Special Meeting, and any adjournment thereof, will be
determined as of the Record Date. In connection with the solicitation of such
instructions from Variable Contract Owners, it is expected that the respective
Insurance Companies will furnish a copy of this Proxy Statement to Variable
Contract Owners.
If a Variable Contract Owner wishes to participate in the Special Meeting,
but does not wish to give a proxy by telephone, the Variable Contract Owner may
still submit the Proxy Ballot(s) originally sent with the
4
Proxy Statement or attend in person. All persons entitled to direct the voting
of shares, whether they are Variable Contract Owners or Insurance Companies, are
described as voting for purposes of this Proxy Statement.
WHEN AND WHERE WILL THE SPECIAL MEETING BE HELD?
The Special Meeting will be held at 7337 East Doubletree Ranch Road,
Scottsdale, Arizona 85258-2034, on July 22, 2003, at 10:00 a.m., local time,
and, if the Special Meeting is adjourned or postponed, at any adjournment(s) or
postponement(s) of the Special Meeting. If you expect to attend the Special
Meeting in person, please call Shareholder Services toll-free at 1-800-992-0180.
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
Each Fund's Board, recommends that shareholders vote FOR the proposals.
Each Fund's Board, including a majority of the Directors who are not "interested
parties" to the proposed Sub-Advisory Agreements or interested persons of such
parties (hereinafter, "Independent Directors"), voted to approve the proposed
Sub-Advisory Agreements at a meeting held on April 9, 2003 (the "Meeting").
HOW CAN I OBTAIN MORE INFORMATION ABOUT THE FUNDS?
Copies of each Fund's Annual and Semi-Annual Reports have previously been
mailed to shareholders. This Proxy Statement should be read in conjunction with
the Annual and Semi-Annual Reports. You can obtain copies of those Reports,
without charge, by writing to The ING Funds, 7337 East Doubletree Ranch Road,
Scottsdale, Arizona, 85258-2034, Attention: Literature Fulfillment, or by
calling 1-800-992-0180.
5
PROPOSAL NO. 1
FOR SHAREHOLDERS OF ING FUNDS (EXCEPT THE ING INTERNATIONAL PORTFOLIO)
APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENT
WHAT IS THE PROPOSAL?
The Funds and ING Investments, Adviser to the ING Funds, wish to retain
the services of ING Aeltus as a Sub-Adviser to the Funds. ING Aeltus would serve
the Funds under the proposed Sub-Advisory Agreements between ING Investments and
ING Aeltus, a copy of which is included as APPENDIX 3. The description of the
proposed Sub-Advisory Agreements that follows is qualified in its entirety by
reference to APPENDIX 3.
WHO IS THE ADVISER?
ING Investments, whose principal office is located at 7337 East Doubletree
Ranch Road, Scottsdale, Arizona 85258-2034, is an Arizona limited liability
company, which serves as the investment adviser to the ING Funds (except the ING
International Portfolio). See APPENDIX 4 for a listing of the names, addresses,
and the principal occupations of the principal executive officers of ING
Investments. ING Investments is registered with the U.S. Securities and Exchange
Commission ("SEC") as an investment adviser. ING Investments is an indirect,
wholly-owned subsidiary of ING Group. ING Group is a global financial
institution active in the fields of insurance, banking and asset management in
more than 65 countries, with more than 100,000 employees. As of March 31, 2003,
ING Investments managed over $32.4 billion in assets. The last date upon which
shareholders approved each advisory agreement is set out in APPENDIX 5.
APPENDIX 5 also sets out the aggregate investment advisory fees paid by each
Fund for its last fiscal year.
WHO IS THE PROPOSED SUB-ADVISER?
ING has undertaken a reorganization plan that will, among other things,
integrate its portfolio management professionals across the U.S. under a common
management structure known as ING Investment Management Americas, which includes
ING Aeltus. One of the primary purposes of the integration plan is to use the
resources of several ING Group companies to promote consistently high levels of
performance in terms of investment standards, research, policies and procedures
and infrastructure support provided to the ING Funds. As a result of this
integration plan the operational and supervisory functions will be separated
from the portfolio management functions related to the ING Funds, with the
former continuing to be provided by ING Investments and the latter provided by
ING Aeltus. The portfolio management personnel currently employed by ING
Investments will now become employees of ING Aeltus, which will assume primary
responsibility for all portfolio management issues, including the purchase,
retention, or sale of portfolio securities. Your current portfolio manager(s)
will continue to manage your Fund utilizing the same investment philosophy, but
will do so as an employee of ING Aeltus, not ING Investments.
ING Aeltus, whose principal office is located at 10 State House Square,
Hartford, CT 06103, is an indirect, wholly-owned subsidiary of ING Group and an
affiliate of ING Investments. ING Aeltus, a registered investment adviser, has
been managing client assets for more than a quarter of a century. As of March
31, 2003, ING Aeltus managed over $38 billion in assets. See APPENDIX 4 for a
listing of the names, addresses, and the principal occupations of the principal
executive officers of ING Aeltus. As of May 15, 2003, the only Director/Trustee
or officer of the Funds who was an officer, director, employee, general partner
or shareholder of ING Aeltus was Tom McInerney, who serves as President, Chief
Executive Officer and Director.
APPENDIX 6 sets forth the name of each other investment company, with
investment objectives similar to the Funds, for which ING Aeltus acts as an
investment adviser or sub-adviser, the annual rate of compensation and the net
assets of the investment company as of December 31, 2002.
HOW WILL THIS AFFECT THE MANAGEMENT OF THE FUNDS?
6
Currently, the Funds are managed by ING Investments. If the proposed
Sub-Advisory Agreements are approved, ING Aeltus would provide day-to-day
management of each Fund's portfolio. ING Investments would be responsible for
monitoring the investment program and performance of ING Aeltus.
WHAT ARE THE TERMS OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENT?
Each Fund's current Investment Management Agreement requires the Adviser
to oversee the provision of all investment advisory and portfolio management
services for the Funds. Each Investment Management Agreement requires the
Adviser to provide, subject to the supervision of the Board of Directors,
investment advice and investment services to the Fund and to furnish advice and
recommendations with respect to the investment of each Fund's assets and the
purchase or sale of its portfolio securities. The Investment Management
Agreement also permits the Adviser to delegate certain management
responsibilities, pursuant to a sub-advisory agreement, to other investment
advisers. ING Investments, as Adviser, is required to oversee the investment
management services of any sub-adviser.
Each current Investment Management Agreement provides that the Adviser is
not subject to liability to the Fund for any act or omission in the course of,
or connected with, rendering services under the Agreement, except by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under the Agreement. After the initial term, the current
Investment Management Agreement continues in effect from year to year so long as
such continuance is specifically approved at least annually by (a) the Board of
Directors or (b) the vote of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding shares voting as a single class; provided, that in either
event the continuance is also approved by at least a majority of the Board of
Directors who are not "interested persons" (as defined in the 1940 Act) of any
party to the Agreement by vote cast in person at a meeting called for the
purpose of voting on such approval.
The Investment Management Agreements provide that ING Investments is paid
an advisory fee at a specified annual rate of the average daily net assets of
the Funds (see APPENDIX 7). The Proposed Sub-Advisory Agreements will not result
in a change in the overall management fee for each of the Funds. ING
Investments, not the Funds, will bear the expense of the Proposed Sub-Adviser.
WHAT ARE THE TERMS OF THE PROPOSED SUB-ADVISORY AGREEMENTS?
The Proposed Sub-Advisory Agreements require ING Aeltus to provide,
subject to the supervision of the Board and ING Investments, a continuous
investment program for each Fund and to determine the composition of the assets
of the Funds, including determination of the purchase, retention or sale of the
securities, cash and other investments for each Fund, in accordance with each
Fund's investment objectives, policies and restrictions and applicable laws and
regulations. The Proposed Sub-Advisory Agreements also require ING Aeltus to use
reasonable compliance techniques as the Adviser or the Board may reasonably
adopt, including any written compliance procedures.
The fee payable to ING Aeltus, which will be paid by ING Investments and
not by the Fund, will not increase the overall management fee of each Fund (see
APPENDIX 7 FOR SPECIFIC FEE RATES). In each instance, the fee to be paid to ING
Aeltus by the Adviser will equal 45% (gross) of the fee paid by the Fund to the
Adviser.
The proposed Sub-Advisory Agreements provide that ING Aeltus is not
subject to liability for any damages, expenses, or losses to each Fund connected
with or arising out of any investment advisory services rendered under the
agreement, except by reason of willful misfeasance, bad faith, or negligence in
the performance of its duties, or by reason of reckless disregard of obligations
and duties under the Sub-Advisory Agreement.
7
The Proposed Sub-Advisory Agreements provide, in part, that under certain
circumstances, the Adviser will indemnify and hold harmless the Proposed
Sub-Adviser against any and all losses (including legal and other expenses),
based on (1) the Adviser's negligence, willful misfeasance, or bad faith, in the
performance of its duties, (which could include a negligent action or a
negligent omission to act), or by reason of the Adviser's reckless disregard of
its obligations under the agreement, or (2) any untrue statement or alleged
untrue statement of a material fact contained in the registration statement or
prospectus of the Fund, unless such statement was made in reliance upon
information furnished to the Adviser or a Fund by ING Aeltus. The Proposed
Sub-Advisory Agreements also provide, in part, that under certain circumstances,
the Proposed Sub-Adviser will indemnify and hold harmless the Adviser to the
agreement against any and all losses (including legal and other expenses), based
on (1) the Proposed Sub-Adviser's negligence, willful misfeasance, or bad faith,
in the performance of its duties, (which could include a negligent action or a
negligent omission to act), or by reason of the Adviser's reckless disregard of
its obligations under the agreement, or (2) any untrue statement or alleged
untrue statement of a material fact contained in the registration statement or
prospectus of the Fund, such statement was made in reliance upon information
furnished to the Adviser or a Fund by ING Aeltus.
The Proposed Sub-Advisory Agreements may be terminated at any time by the
Fund by a vote of the majority of the Board of Directors of each Fund or by a
vote of a majority of the outstanding voting securities. The Proposed
Sub-Advisory Agreements also may be terminated by: (i) the Adviser upon sixty
(60) days' written notice to the Fund and the Proposed Sub-Adviser; (ii) at any
time, without payment of a penalty by the Fund, by the Fund's Board of Directors
or a majority of the outstanding voting securities of the Fund upon sixty (60)
days' written notice to the Adviser and the Proposed Sub-Adviser; or (iii) by
the Proposed Sub-Adviser upon three (3) months' written notice unless the Fund
or the Adviser requests additional time to find a replacement for the Proposed
Sub-Adviser, in which case, the Proposed Sub-Adviser shall allow additional
time, not to exceed three (3) additional months beyond the initial three (3)
month period; provided, however, that the Proposed Sub-Adviser can terminate the
contract at any time, if the Proposed Sub-Adviser or the Adviser is legally
incapable of providing services under the contract or ceases to be a registered
investment adviser. The Proposed Sub-Advisory Agreements will terminate
automatically in the event of an "assignment" (as defined in the 1940 Act).
The Proposed Sub-Advisory Agreements were approved by the Directors of the
ING Funds, including a majority of the Directors who are not "interested
persons" of the Adviser, the Proposed Sub-Adviser, or the Funds, on April 9,
2003.
WHO ARE THE OTHER SERVICE PROVIDERS TO THE FUNDS?
ING Funds Services, LLC ("ING Funds Services"), an affiliate of the
Adviser and ING Aeltus, serves as the Administrator to the Funds. ING Funds
Distributor, Inc. ("ING Funds Distributor"), also an affiliate of the Adviser
and ING Aeltus, serves as Principal Underwriter to each Fund. ING Funds Services
and ING Funds Distributor have their principal offices located at 7337 East
Doubletree Ranch Road, Scottsdale, Arizona 85258-2034. See APPENDIX 4 for a
listing of the names, addresses, and the principal occupations of their
principal executive officers.
The Funds did not pay any commissions to affiliated brokers during their
most recently completed fiscal year ends and semi-annual periods.
WHAT IS THE REQUIRED VOTE?
Shareholders of each Fund must separately approve the applicable Proposed
Sub-Advisory Agreement with respect to that Fund. Approval of each Proposed
Sub-Advisory Agreement requires the affirmative vote of a "majority of the
outstanding voting securities" of the Fund, which, for this purpose, means the
affirmative vote of the lesser of (i) more than 50% of the outstanding shares of
the Fund, or (ii) 67% or more of the shares of the Fund present at the meeting,
if more than 50% of the outstanding shares of the Fund are represented at the
meeting in person or by proxy.
8
WHAT HAPPENS IF SHAREHOLDERS DO NOT APPROVE THE PROPOSAL?
If shareholders of a Fund do not approve the Proposed Sub-Advisory
Agreement, the Fund will continue to be managed under the current Investment
Management Agreement and the Board will determine what action, if any, should
be taken. All shareholders of each Fund will vote separately on this proposal.
WHAT ARE THE FACTORS THAT WERE CONSIDERED BY THE BOARD?
On August 20, 2002 and November 22, 2002, the Board and ING Investments
held preliminary discussions regarding the possibility of a reorganization of
certain of ING's U.S. based asset management groups. On February 25, the Board
and ING Investments discussed, among other matters, the process for integrating
these asset management groups and the benefits and challenges presented by this
process.
At a special meeting of the Board held on April 9, 2003 (the "Meeting"),
the Proposed Sub-Advisory Agreement for each Fund, and ING Investments'
recommendation to seek the necessary shareholder approvals were considered by
the Board, including the Independent Directors. During the Meeting, the
Independent Directors met in executive session with their independent counsel to
discuss the legal standards applicable to the proposed transaction. They
considered the advantages of a manager-of-managers format and the ongoing duty
that ING Investments would have to monitor and oversee the Proposed Sub-Adviser.
In determining whether or not it was appropriate to approve the proposed
Sub-Advisory Agreements and to recommend approval to shareholders, the Board,
including a majority of the Independent Directors, considered several factors.
Foremost among them was the fact that the proposed new arrangement will not
affect the fees charged to any Fund, nor the provision of portfolio management
services to any Funds. In their approval of the proposed arrangements, the Board
considered several factors including, but not limited to, the following: (1) the
centralization of asset managers will allow ING to access and leverage the
capabilities of its portfolio management personnel among all subsidiaries, (2)
the reorganization will facilitate more effective use of research and trading
facilities and capabilities for greater efficiency, (3) the consolidation of
portfolio management within one entity will permit certain future changes in
portfolio management personnel without the potential expense of shareholder
proxy solicitations, (4) the reorganization can help ING Aeltus to build a
larger, more coherent management structure and to retain and attract highly
qualified portfolio managers. The Board noted that ING Aeltus had taken steps
to ameliorate any disadvantages, which might result from the reorganization. In
addition, the Board considered: (1) the current portfolio managers will remain
and continue to provide services under the direction of the Proposed
Sub-Adviser; (2) the nature and quality of the services to be provided by the
Proposed Sub-Adviser including the Proposed Sub-Adviser's extensive investment
management experience and the quality of services provided to the other mutual
funds advised by the Proposed Sub-Adviser; (3) the fairness of the compensation
under the Sub-Advisory Agreements in light of the services to be provided;
(4) the personnel, operations, financial condition, and investment management
capabilities and methodologies of ING Aeltus after the reorganization; (5) the
expectation of management that the reorganization will enable the Proposed
Sub-Adviser to attract additional highly qualified personnel and to leverage its
portfolio management resources and trading and research capabilities; and (6)
compensation and the fact that the cost of the Proposed Sub-Adviser will be paid
by the Adviser and not directly by the Funds. The Boards also considered the
advisory fee to be retained by ING Investments for its oversight and monitoring
services that will be provided to the sub-advised Funds and the fee waiver
arrangements, which will continue if the Proposals are approved. After
considering ING Investments' recommendation and these other factors, the Boards
concluded that engaging ING Aeltus as Sub-Adviser would be in the best interests
of each Fund and its shareholders.
WHAT IS THE RECOMMENDATION OF THE BOARD?
Based upon its review, the Board has determined that facilitating the
reorganization of the ING investment advisory functions by permitting ING Aeltus
to become the sub-adviser to the ING Funds is in the best interests of each Fund
and its shareholders. Accordingly, after consideration of the above factors, and
such
9
factors and information it considered relevant, the Board, including all of the
Independent Directors present at the meeting, unanimously approved the proposed
Sub-Advisory Agreements and voted to recommend their approval.
10
PROPOSAL NO. 2
FOR SHAREHOLDER OF ING INTERNATIONAL PORTFOLIO
APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENT
WHAT IS THE PROPOSAL?
The ING International Portfolio and Directed Services, Inc., Adviser to
the Fund, wish to retain the services of ING Aeltus as a Sub-Adviser to the
Fund. ING Aeltus would serve the Fund under the proposed Sub-Advisory Agreement
between DSI and ING Aeltus, a copy of which is included as APPENDIX 3. The
description of the proposed Sub-Advisory Agreement that follows is qualified in
its entirety by reference to APPENDIX 3.
WHO IS THE ADVISER?
DSI, whose principal office is located at 1475 Dunwoody Drive, West
Chester, Pennsylvania 19380, is a New York Corporation, which serves as the
investment adviser to the ING International Portfolio. See Appendix 4 for a
listing of the names, addresses, and the principal occupations of the principal
executive officers of DSI. DSI is a wholly owned indirect subsidiary of ING
Group. DSI is registered with the U.S. Securities and Exchange Commission
("SEC") as an investment adviser and a broker-dealer. DSI is the principal
underwriter and distributor of the Variable Contracts that Golden American Life
Insurance Company issues. As of March 31, 2003, DSI managed over $9.7 billion in
assets. APPENDIX 5 sets out the last date upon which shareholders of the ING
International Portfolio approved its advisory agreement with DSI. APPENDIX 5
also sets out the aggregate investment advisory fees paid by the Fund for its
last fiscal year.
WHO IS THE CURRENT SUB-ADVISER?
ING Investments, whose principal office is located at 7337 East Doubletree
Ranch Road, Scottsdale, Arizona 85258-2034, is an Arizona limited liability
company, which serves as the sub-adviser to the ING International Portfolio. See
APPENDIX 4 for a listing of the names, addresses, and the principal occupations
of the principal executive officers of ING Investments. ING Investments is
registered with the U.S. Securities and Exchange Commission ("SEC") as an
investment adviser. ING Investments is an indirect, wholly-owned subsidiary of
ING Group. ING Group is a global financial institution active in the fields of
insurance, banking and asset management in more than 65 countries, with more
than 100,000 employees. As of March 31, 2003, ING Investments managed over $32.4
billion in assets. As part of the reorganization plan discussed below, the
employees of ING Investments that manage the ING International Portfolio will
become employees of ING Aeltus. Therefore, the Board of Trustees approved,
subject to shareholder approval, the Sub-Advisory Agreement on behalf of ING
International Portfolio, with ING Aeltus. If shareholders of the Fund approve
the proposed sub-advisory arrangement, ING Aeltus will become the sub-adviser to
the Fund and the sub-advisory agreement between DSI and ING Investments will
terminate.
WHO IS THE PROPOSED SUB-ADVISER?
ING has undertaken on a reorganization plan that will, among other things,
integrate its portfolio management professionals across the U.S. under a common
management structure known as ING Investment Management Americas, which includes
ING Aeltus. One of the primary purposes of the integration plan is to use the
resources of several ING Group companies to promote consistently high levels of
performance in terms of investment standards, research, policies and procedures
and infrastructure support provided to the ING Funds. As a result of this
integration plan the operational and supervisory functions will be separated
from the portfolio management functions related to the ING Funds, with the
former continuing to be provided by DSI and the latter provided by ING Aeltus.
The portfolio management personnel currently employed by ING Investments will
now become employees of ING Aeltus, which will assume primary responsibility for
all portfolio management issues, including the purchase, retention, or sale of
portfolio securities. Your current portfolio manager(s) will continue to manage
your Fund utilizing the same investment philosophy, but will do so as an
employee of ING Aeltus, not ING Investments.
ING Aeltus, whose principal office is located at 10 State House Square,
Hartford, CT 06103, is an indirect, wholly-owned subsidiary of ING Group and an
affiliate of ING Investments. ING Aeltus, a registered investment adviser, has
been managing client assets for more than a quarter of a century. As of March
31, 2003, ING Aeltus managed over $38 billion in assets. See APPENDIX 4 for a
listing
11
of the names, addresses, and the principal occupations of the principal
executive officers of ING Aeltus. As of May 15, 2003, the only Director/Trustee
or officer of the Funds who was an officer, director, employee, general partner
or shareholder of ING Aeltus was Tom McInerney, who serves as President, Chief
Executive Officer and Director.
APPENDIX 6 sets forth the name of each other investment company, with
investment objectives similar to the Funds, for which ING Aeltus acts as an
investment adviser or sub-adviser, the annual rate of compensation and the net
assets of the investment company as of December 31, 2002.
HOW WILL THIS AFFECT THE MANAGEMENT OF THE FUND?
Currently, the Fund is managed by DSI and sub-advised by ING Investments.
If the proposed Sub-Advisory Agreement is approved, ING Aeltus would provide
day-to-day management of the Fund's portfolio. DSI would be responsible for
monitoring the investment program and performance of ING Aeltus.
WHAT ARE THE TERMS OF THE CURRENT INVESTMENT MANAGEMENT AGREEMENT?
The Fund's current Investment Management Agreement requires the Adviser to
oversee the provision of all investment advisory and portfolio management
services for the Fund. The Investment Management Agreement requires the Adviser
to provide, subject to the supervision of the Board of Trustees, investment
advice and investment services to the Fund and to furnish advice and
recommendations with respect to the investment of the Fund's assets and the
purchase or sale of its portfolio securities. The Investment Management
Agreement also permits the Adviser to delegate certain management
responsibilities, pursuant to a sub-advisory agreement, to other investment
advisers. DSI, as Adviser, is required to oversee the investment management
services of any sub-adviser.
The current Investment Management Agreement provides that the Adviser is
not subject to liability to the Fund for any act or omission in the course of,
or connected with, rendering services under the Agreement, except by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under the Agreement. After the initial term, the current
Investment Management Agreement continues in effect from year to year so long as
such continuance is specifically approved at least annually by (a) the Board of
Trustees or (b) the vote of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding shares voting as a single class; provided, that in either
event the continuance is also approved by at least a majority of the Board of
Trustees who are not "interested persons" (as defined in the 1940 Act) of any
party to the Agreement by vote cast in person at a meeting called for the
purpose of voting on such approval.
The Investment Management Agreement provides that DSI is paid an advisory
fee at a specified annual rate of the average daily net assets of the Fund (see
APPENDIX 7). The Proposed Sub-Advisory Agreement will not result in a change in
the overall management fee for the Fund. DSI, not the Fund, will bear the
expense of the Proposed Sub-Adviser.
WHAT ARE THE TERMS OF THE PROPOSED SUB-ADVISORY AGREEMENT?
The Proposed Sub-Advisory Agreement requires ING Aeltus to provide,
subject to the supervision of the Board and DSI, a continuous investment program
for the Fund and to determine the composition of the assets of the Fund,
including determination of the purchase, retention or sale of the securities,
cash and other investments for the Fund, in accordance with the Fund's
investment objectives, policies and restrictions and applicable laws and
regulations. The Proposed Sub-Advisory Agreement also requires ING Aeltus to use
reasonable compliance techniques as the Adviser or the Board may reasonably
adopt, including any written compliance procedures.
12
The fee payable to ING Aeltus, which will be paid by DSI, not by the Fund,
will not increase the overall management fee of the Fund (see APPENDIX 7).
The proposed Sub-Advisory Agreement provides that ING Aeltus is not
subject to liability for any damages, expenses, or losses to the Fund connected
with or arising out of any investment advisory services rendered under the
agreement, except by reason of willful misfeasance, bad faith, or negligence in
the performance of its duties, or by reason of reckless disregard of obligations
and duties under the Sub-Advisory Agreement.
The Proposed Sub-Advisory Agreement provides, in part, that under certain
circumstances, the Adviser will indemnify and hold harmless the Proposed
Sub-Adviser to the agreement against any and all losses (including legal and
other expenses), based on (1) the Adviser's negligence, willful misfeasance, or
bad faith, in the performance of its duties, (which could include a negligent
action or a negligent omission to act), or by reason of the Adviser's reckless
disregard of its obligations under the agreement, or (2) any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement or prospectus of the Fund, unless such statement was made in reliance
upon information furnished to the Adviser or a Fund by ING Aeltus. The Proposed
Sub-Advisory Agreement also provides, in part, that under certain circumstances,
the Proposed Sub-Adviser will indemnify and hold harmless the Adviser to the
agreement against any and all losses (including legal and other expenses), based
on (1) the Proposed Sub-Adviser's negligence, willful misfeasance, or bad faith,
in the performance of its duties, (which could include a negligent action or a
negligent omission to act), or by reason of the Adviser's reckless disregard of
its obligations under the agreement, or (2) any untrue statement or alleged
untrue statement of a material fact contained in the registration statement or
prospectus of the Fund, such statement was made in reliance upon information
furnished to the Adviser or a Fund by ING Aeltus.
The Proposed Sub-Advisory Agreement may be terminated at any time by the
Fund by a vote of the majority of the Board of Trustees of the Fund or by a vote
of a majority of the outstanding voting securities. The Proposed Sub-Advisory
Agreement also may be terminated by: (i) the Adviser upon sixty (60) days'
written notice to the Fund and the Proposed Sub-Adviser; (ii) at any time,
without payment of a penalty by the Fund, by the Fund's Board of Trustees or a
majority of the outstanding voting securities of the Fund upon sixty (60) days'
written notice to the Adviser and the Proposed Sub-Adviser; or (iii) by the
Proposed Sub-Adviser upon three (3) months' written notice unless the Fund or
the Adviser requests additional time to find a replacement for the Proposed
Sub-Adviser, in which case, the Proposed Sub-Adviser shall allow additional
time, not to exceed three (3) additional months beyond the initial three (3)
month period; provided, however, that the Proposed Sub-Adviser can terminate the
contract at any time, if the Proposed Sub-Adviser or the Adviser is legally
incapable of providing services under the contract or ceases to be a registered
investment company. The Proposed Sub-Advisory Agreement will terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
The Proposed Sub-Advisory Agreement was approved by the Trustees of the
Fund, including a majority of the Trustees who are not "interested persons" of
the Adviser, the Proposed Sub-Adviser or the Fund, on April 9, 2003.
WHO ARE THE OTHER SERVICE PROVIDERS TO THE FUND?
ING Funds Services, an affiliate of the Adviser and ING Aeltus, serves as
the Administrator to the Fund. DSI, serves as Principal Underwriter to the Fund.
ING Funds Services' principal office is located at 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258-2034. DSI's principal office is located at 1475
Dunwoody Drive, West Chester, Pennsylvania 19380. See APPENDIX 4 for a listing
of the names, addresses, and the principal occupations of their principal
executive officers.
WHAT IS THE REQUIRED VOTE?
13
Approval of the Proposed Sub-Advisory Agreement requires the affirmative
vote of a "majority of the outstanding voting securities" of the Fund, which,
for this purpose, means the affirmative vote of the lesser of (i) more than 50%
of the outstanding shares of the Fund, or (ii) 67% or more of the shares of the
Fund present at the meeting, if more than 50% of the outstanding shares of the
Fund are represented at the meeting in person or by proxy.
WHAT HAPPENS IF SHAREHOLDERS DO NOT APPROVE THE PROPOSAL?
If shareholders of the Fund do not approve the Proposed Sub-Advisory
Agreement, the Fund will continue to be managed under the current Sub-Advisory
Agreement and the Board of Trustees will determine what action, if any, should
be taken.
WHAT ARE THE FACTORS THAT WERE CONSIDERED BY THE BOARD?
On August 20, 2002 and November 22, 2002, the Board and ING Investments
held preliminary discussions regarding the possibility of a reorganization of
certain of ING Group's U.S. based asset management groups. On February 25, the
Board and ING Investments discussed, among other matters, the process for
integrating ING's asset management groups and the benefits and challenges
presented by this process.
At a special meeting of the Board held on April 9, 2003 (the "Meeting"),
the Proposed Sub-Advisory Agreement for the Fund and ING Investments
recommendation to seek the necessary shareholder approvals were considered by
the Board, including the Independent Trustees. During the Meeting, the
Independent Trustees met in executive session with their independent counsel to
discuss the legal standards applicable to the proposed transaction. They
considered the advantages of a manager-of-managers format and the ongoing duty
that DSI would have to monitor and oversee the Proposed Sub-Adviser.
In determining whether or not it was appropriate to approve the proposed
Sub-Advisory Agreement and to recommend approval to shareholders, the Board of
Trustees, including the Independent Trustees, considered several factors.
Foremost among them was the fact that the proposed new arrangements will not
affect the fees charged to the Fund, nor the provision of portfolio management
services to the Fund. In their approval of the proposed arrangements, the Board
considered several factors, including, but not limited to, the following: (1)
the centralization of asset managers will allow ING to access and leverage the
capabilities of its portfolio management personnel among all subsidiaries, (2)
the reorganization will facilitate more effective use of research and trading
facilities and capabilities for greater efficiency, (3) the consolidation of
portfolio management within one entity will permit certain future changes in
portfolio management personnel without the potential expense of shareholder
proxy solicitations, (4) the reorganization can help ING Aeltus to build a
larger, more coherent management structure and to retain and attract highly
qualified portfolio managers. The Board noted that ING Aeltus had taken steps to
ameliorate any disadvantages, which might result from the reorganization. In
addition, the Board considered: (1) the current portfolio managers will remain
and continue to provide services under the direction of the Proposed
Sub-Adviser; (2) the nature and quality of the services to be provided by the
Proposed Sub-Adviser including the Proposed Sub-Adviser's extensive investment
management experience and the quality of services provided to the other mutual
funds advised by the Proposed Sub-Adviser; (3) the fairness of the compensation
under the Sub-Advisory Agreement in light of the services to be provided; (4)
the personnel, operations, financial condition, and investment management
capabilities and methodologies of ING Aeltus after the reorganization; (5) the
expectation of management that the reorganization will enable the Proposed
Sub-Adviser to attract additional highly qualified personnel and to leverage its
portfolio management resources and trading and research capabilities; and (6)
compensation and the fact that the cost of the Proposed Sub-Adviser will be paid
by the Adviser and not directly by the Fund. The Board also considered the
advisory fee to be retained by DSI for its oversight and monitoring services
that will be provided to the sub-advised Fund and the fee waiver arrangements,
which will continue if the Proposals are approved. After considering DSI's
recommendation and these other factors, the Board concluded that engaging ING
Aeltus as Sub-Adviser would be in the best interests of the Fund and its
shareholders.
14
WHAT IS THE RECOMMENDATION OF THE BOARD?
Based upon its review, the Board has determined that facilitating the
reorganization of the ING investment advisory functions by permitting ING Aeltus
to become the sub-adviser to the Fund is in the best interests of the Fund and
its shareholders. Accordingly, after consideration of the above factors, and
such factors and information it considered relevant, the Board, including all of
the Independent Trustees present at the Meeting, unanimously approved the
proposed Sub-Advisory Agreement and voted to recommend their approval.
GENERAL INFORMATION
WHAT HAPPENS TO MY PROXY ONCE I VOTE IT?
The Board has named Kimberly A. Anderson and Michael J. Roland, or one or
more substitutes designated by them, as proxies who are authorized to vote your
shares as you direct when you complete your Proxy Ballot. If you followed the
instructions when you voted, your proxies will vote your shares as you have
directed. If you submitted your Proxy Ballot but did not vote on the Proposal,
your proxies will vote on the Proposal as recommended by the Board.
WHAT IF A PROPOSAL THAT'S NOT IN THE PROXY STATEMENT COMES UP AT THE SPECIAL
MEETING?
If any other matter is properly presented, your proxies will vote in
accordance with their best judgment. At the time this Proxy Statement was
printed, the Board knew of no matter that needed to be acted on at the Special
Meeting other than the Proposals discussed in this Proxy Statement.
I WANT TO ATTEND THE SPECIAL MEETING AND VOTE IN PERSON. HOW DO I DO THIS?
If you attend the Special Meeting and wish to vote in person, you will be
given a ballot when you arrive. However, if your shares are held in the name of
your broker, bank or other nominee, you must bring a letter from the nominee
indicating that you are the beneficial owner of the shares on the Record Date
and authorizing you to vote.
WHAT ARE THE VOTING RIGHTS AND THE QUORUM REQUIREMENTS?
The table below sets forth the quorum requirements for the Funds.
COMPANY QUORUM REQUIREMENT
ING MUTUAL FUNDS,
ING FUNDS TRUST, AND ING VARIABLE INSURANCE TRUST 1/3 of interests of the Trust present at meeting
(DELAWARE BUSINESS TRUSTS)
ING SENIOR INCOME FUND (DELAWARE BUSINESS TRUST) 40% of shares outstanding present at meeting
ING EQUITY TRUST, ING VARIABLE PRODUCTS TRUST AND ING NATURAL
RESOURCES TRUST Majority of outstanding shares present at meeting
(MASSACHUSETTS BUSINESS TRUSTS)
USLICO SERIES FUND (MASSACHUSETTS BUSINESS TRUST) 30% of outstanding shares present at meeting
ING INVESTMENT FUNDS, INC. (MARYLAND CORPORATION) Majority of outstanding shares present at meeting
ING INVESTORS TRUST (MASSACHUSETTS BUSINESS TRUST) 30% of outstanding shares present at meeting
15
April 24, 2003 has been chosen as the Record Date. Each share of each
class of a Fund is entitled to one vote. Shareholders of each Fund at the close
of business on the Record Date will be entitled to be present and to give voting
instructions for the Funds at the Special Meeting and any adjournments thereof
with respect to their shares owned as of the Record Date.
Shares of the Retail Funds may be held by affiliates of ING Investments in
various capacities and will be voted in the following manner: shares of a Fund
owned beneficially by ING Investments or an affiliate as an initial capital
investment in a Fund or other direct investment of the ING affiliate will be
voted in favor of the Proposal. Shares of a Fund held of record by an ING
affiliate as trustee or custodian in connection with an employee benefit plan
will only be voted in accordance with actual instructions received from such
employee benefit plan or, under some plans, the plan participants. With respect
to shares of a Fund held by an affiliated insurance company in connection with
the insurance company's variable contracts, this Proxy Statement is used to
solicit instruction for voting shares of each Fund relating to such contract
holders' interests in each Fund. The insurance company affiliates will generally
only vote shares of each Fund held through its separate accounts in accordance
with actual instructions from such contract holders and will not vote shares for
which no instructions are received.
An Insurance Company will vote shares of the VP Portfolios held by its
Separate Accounts in accordance with instructions received from the Variable
Contract Owners. If a Variable Contract Owner executes and returns a proxy but
fails to indicate how that vote should be cast, the proxy will be voted in favor
of the Proposal. An Insurance Company will also vote shares of the VP Portfolios
held in SEC-registered Separate Accounts for which no voting instructions have
been received in the same proportion as it votes shares held in Separate
Accounts for which it has received instructions. With respect to Fund shares
held by the Insurance Company in unregistered separate accounts, the Insurance
Company generally will only vote those separate account shares for which it
receives instructions. Shares held by an Insurance Company in its general
account, if any, must be voted in the same proportion as the votes cast with
respect to shares held in all of such Company's Separate Accounts in the
aggregate.
If a quorum is not present at the Special Meeting, or if a quorum is
present but sufficient votes to approve any or all of the Proposals are not
received, the persons named as proxies may propose one or more adjournments of
the Special Meeting to permit further solicitation of proxies. A shareholder
vote may be taken on the Proposal in this Proxy Statement prior to any
adjournment if sufficient votes have been received with respect to the Proposal.
Any adjournment will require the affirmative vote of a majority of those shares
represented at the Special Meeting in person or by proxy. The persons named in
the enclosed proxies will vote in favor of such adjournment for those proxies
which they are entitled to vote in favor of any Proposal that has not been
adopted, will vote against any adjournments for those proxies required to be
voted against any Proposal that has not been adopted, and will not vote any
proxies that direct them to abstain from voting on such Proposal.
It is expected that, before the Special Meeting, broker-dealer firms
holding shares of the Retail Funds 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, the Retail Funds understand that the
broker-dealers that are members of the New York Stock Exchange may vote on the
items to be considered at the Special Meeting on behalf of their customers and
beneficial owners under the rules of the New York Stock Exchange.
16
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,
then the shares represented by such abstention or non-vote will be considered to
be present at the Special Meeting for purposes of determining the existence of a
quorum. However, abstentions and broker non-votes will be disregarded in
determining the "votes cast" on an issue. For this reason, with respect to
matters requiring the affirmative vote of a majority of the total shares
outstanding, an abstention or broker non-vote will have the effect of a vote
against such matters.
CAN I REVOKE MY PROXY AFTER I VOTE IT?
A shareholder may revoke the accompanying proxy at any time prior to its
use by filing with his/her respective Fund a written revocation or a 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"
each of the Proposals and may vote in their discretion with respect to other
matters not now known to the Board that may be presented at the Special Meeting.
WHO PAYS FOR THIS PROXY SOLICITATION?
ING Aeltus will pay 100% of the expenses in connection with this Notice
and Proxy Statement and Special Meeting, including the printing, mailing,
solicitation, vote tabulation expenses, legal fees, and out-of-pocket expenses.
CAN SHAREHOLDERS SUBMIT PROPOSALS FOR CONSIDERATION IN A PROXY STATEMENT?
The Funds are not required to hold annual meetings and currently do not
intend to hold such meetings unless shareholder action is required in accordance
with the 1940 Act. A shareholder proposal to be considered for inclusion in a
proxy statement at any subsequent meeting of shareholders must be submitted in a
reasonable time before a proxy statement for that meeting is mailed. Whether a
proposal is submitted in a proxy statement will be determined in accordance with
applicable federal and state laws.
17
APPENDIX 1
NUMBER OF SHARES OUTSTANDING AS OF THE RECORD DATE, APRIL 24, 2003
FUND SHARE CLASS SHARES OUTSTANDING
- ---- ----------- ------------------
ING Convertible Fund Class A 3,024,336.2490
ING Convertible Fund Class B 4,108,418.0700
ING Convertible Fund Class C 4,034,504.2780
ING Convertible Fund Class Q 263,802.3580
ING Equity and Bond Fund Class A 4,182,593.2380
ING Equity and Bond Fund Class B 1,784,949.0290
ING Equity and Bond Fund Class C 1,281,782.2730
ING Equity and Bond Fund Class Q 18,946.5330
ING Equity and Bond Fund Class T 271,280.0900
ING Financial Services Fund Class A 9,579,995.0140
ING Financial Services Fund Class B 6,729,782.1910
ING GNMA Income Fund Class A 73,567,721.1250
ING GNMA Income Fund Class B 17,001,157.0580
ING GNMA Income Fund Class C 9,453,259.6120
ING GNMA Income Fund Class I 794,079.7620
ING GNMA Income Fund Class M 123,593.3440
ING GNMA Income Fund Class Q 20,403.0370
ING GNMA Income Fund Class T 1,053,834.7310
ING Growth Opportunities Fund Class A 5,281,155.7600
ING Growth Opportunities Fund Class B 4,979,889.5120
ING Growth Opportunities Fund Class C 2,395,148.1040
ING Growth Opportunities Fund Class I 3,874,590.4460
ING Growth Opportunities Fund Class Q 240.1080
ING Growth Opportunities Fund Class T 731,282.6580
ING High Yield Opportunity Fund Class A 17,691,452.3220
ING High Yield Opportunity Fund Class B 28,735,111.6710
ING High Yield Opportunity Fund Class C 4,193,645.8890
ING High Yield Opportunity Fund Class M 503,626.7820
ING High Yield Opportunity Fund Class Q 155,345.7670
ING High Yield Opportunity Fund Class T 719,376.8880
ING International Fund Class A 5,057,509.4800
ING International Fund Class B 1,499,987.3270
ING International Fund Class C 1,802,563.1540
ING International Fund Class I 1,297,031.1120
ING International Fund Class Q 1,200,587.7160
ING Large Company Value Fund Class A 6,962,526.0270
ING Large Company Value Fund Class B 300,110.2010
ING Large Company Value Fund Class C 92,522.8540
ING Large Company Value Fund Class I 1.3190
ING Large Company Value Fund Class Q 1,153.4000
ING Lexington Money Market Trust N/A 49,226,301.2280
ING MagnaCap Fund Class A 18,325,481.8060
ING MagnaCap Fund Class B 6,086,439.6690
ING MagnaCap Fund Class C 972,220.3660
ING MagnaCap Fund Class I 69.3120
18
FUND SHARE CLASS SHARES OUTSTANDING
- ---- ----------- ------------------
ING MagnaCap Fund Class M 873,832.0510
ING MagnaCap Fund Class Q 842,391.9920
ING MidCap Opportunities Fund Class A 4,325,337.6400
ING MidCap Opportunities Fund Class B 4,569,929.8250
ING MidCap Opportunities Fund Class C 7,088,245.6650
ING MidCap Opportunities Fund Class I 1,109,575.6820
ING MidCap Opportunities Fund Class Q 442,289.8980
ING Money Market Fund Class A 18,063,084.2320
ING Money Market Fund Class B 32,922,750.3770
ING Money Market Fund Class C 10,223,082.4190
ING Precious Metals Fund Class A 15,393,705.5700
ING Senior Income Fund Class A 1,082,828.1790
ING Senior Income Fund Class B 1,289,678.8080
ING Senior Income Fund Class C 2,690,718.3600
ING Senior Income Fund Class Q 14,586,700.8920
ING SmallCap Opportunities Fund Class A 6,612,144.4340
ING SmallCap Opportunities Fund Class B 5,174,424.8620
ING SmallCap Opportunities Fund Class C 3,854,685.6080
ING SmallCap Opportunities Fund Class I 491,336.0030
ING SmallCap Opportunities Fund Class Q 56,088.1910
ING SmallCap Opportunities Fund Class T 110,948.9840
ING Strategic Bond Fund Class A 2,666,590.0910
ING Strategic Bond Fund Class B 1,242,007.3300
ING Strategic Bond Fund Class C 352,697.5400
ING Strategic Bond Fund Class Q 8,787.4070
ING Tax Efficient Equity Fund Class A 3,067,495.6370
ING Tax Efficient Equity Fund Class B 640,824.7680
ING Tax Efficient Equity Fund Class C 110,204.0710
ING Worldwide Growth Fund Class A 5,275,044.4940
ING Worldwide Growth Fund Class B 2,485,799.6830
ING Worldwide Growth Fund Class C 3,592,426.1060
ING Worldwide Growth Fund Class Q 733,390.7280
ING International Portfolio Class A 164,459.3280
ING International Portfolio Class S 21,544,000.4640
ING VP Convertible Portfolio Class S 194,462.8070
ING VP Growth Opportunities Portfolio Class R 1,357,197.9450
ING VP Growth Opportunities Portfolio Class S 3,017,310.1630
ING VP High Yield Bond Portfolio Class R 8,615,530.9870
ING VP International Value Portfolio Class R 9,951,814.9110
ING VP International Value Portfolio Class S 11,929.7760
ING VP Large Company Value Portfolio Class S 190,919.8880
ING VP MagnaCap Portfolio Class R 803,481.6500
ING VP MagnaCap Portfolio Class S 2,138,804.9860
ING VP MidCap Opportunities Portfolio Class R 1,393,166.8530
ING VP MidCap Opportunities Portfolio Class S 621,635.7870
ING VP Natural Resources Trust N/A 1,696,460.1540
ING VP SmallCap Opportunities Portfolio Class R 5,839,652.8050
ING VP SmallCap Opportunities Portfolio Class S 3,571,914.5820
ING VP Worldwide Growth Portfolio N/A 5,619,599.1430
19
FUND SHARE CLASS SHARES OUTSTANDING
- ---- ----------- ------------------
USLICO Asset Allocation Portfolio N/A 102,906.0800
USLICO Bond Portfolio N/A 95,474.0000
USLICO Money Market Portfolio N/A 55,324.6500
USLICO Stock Portfolio N/A 8,691.0900
20
APPENDIX 2
BENEFICIAL OWNERS OF MORE THAN 5% OF A CLASS OF A FUND
AS OF MAY 15, 2003
PERCENT OF CLASS OF SHARES
AND TYPE OF
FUND NAME AND CLASS NAME AND ADDRESS OF SHAREHOLDER OWNERSHIP* PERCENT OF FUND
- ------------------- ------------------------------- ---------- ---------------
ING Convertible Fund MLPF & S For the Sole Benefit 19.12%, 5.20%
Class A of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Convertible Fund MLPF & S For the Sole Benefit 21.40%, 7.62%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Convertible Fund MLPF & S For the Sole Benefit 47.37%, 16.53%
Class C of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Convertible Fund Trust Company of America 12.19%, 0.28%
Class Q FBO TCA Beneficial
7103 S Revere Pkwy
Englewood CO80112-3936
ING Convertible Fund Charles Schwab & Co Inc 41.93%, 0.97%
Class Q 101 Montgomery Street Beneficial
11th Floor
San Francisco CA 94104-4122
ING Equity and Bond Fund MLPF & S For the Sole Benefit 5.05%, 4.18%
Class A of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Equity and Bond Fund MLPF & S For the Sole Benefit 27.00%, 14.44%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Equity and Bond Fund MLPF & S For the Sole Benefit 33.92%, 12.91%
Class C of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
21
ING Equity and Bond Fund Equitable Life for Separate 9.32%, 0.05%
Class Q Account 65 On Behalf of Beneficial
Various Expediter 401k Plans
200 Plaza Dr HM-Z
Attn: Ken Butka
Secaucus NJ 07094-3607
ING Equity and Bond Fund Charles Schwab & Co Inc 90.67%, 0.52%
Class Q 101 Montgomery Street Beneficial
11th Floor
San Francisco CA 94104-4122
ING Financial Services Fund MLPF & S For the Sole Benefit 11.42%, 6.71%
Class A of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Financial Services Fund MLPF & S For the Sole Benefit 19.30%, 7.95%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING GNMA Income Fund ING Life Insurance and Annuity Co 5.10%, 3.65%
Class A Attn Valuation Unit-TN41 Beneficial
151 Farmington Ave
Hartford Ct 06156-0001
ING GNMA Income Fund Charles Schwab & Co Inc 26.44%, 18.94%
Class A Reinvest Account Beneficial
Att Mutual Fund Dept
101 Montgomery Street
11th Floor
San Francisco CA 94104-4122
ING GNMA Income Fund MLPF & S For the Sole Benefit 14.72%, 2.48%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING GNMA Income Fund MLPF & S For the Sole Benefit 22.17%, 2.13%
Class C of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING GNMA Income Fund ING National Trust 96.43%, 0.75%
Class I 151 Farmington Ave. #41 Beneficial
Hartford CT 06156-0001
ING GNMA Income Fund Wexford Clearing Services 5.14%, 0.01%
Class M Corp FBO Advest Inc Shareholder
Cust FBO Iris L. Aster IRA R/O
16242 12th Rd
Whitestone NY 11357-2804
22
ING GNMA Income Fund Wexford Clearing Services 5.20%, 0.01%
Class M Corp FBO Advest Inc Shareholder
Cust FBO Theodore Aster
IRA R/O
16242 12th Rd
Whitestone NY 11357-2804
ING GNMA Income Fund Wexford Clearing Services 5.26%, 0.01%
Class M Corp FBO Advest Inc Shareholder
Cust FBO Donald Stubbings
IRA R/O
7 Washington Ave
Hicksville NY 11801-2107
ING GNMA Income Fund First Clearing Corp 21.72%, 0.03%
Class M A/C 7025-3432 Shareholder
Gerard C Reidy IRA
6 Carol Rd
Westfield NJ 07090-1816
ING GNMA Income Fund LPL Financial Services 6.09%, 0.00%
Class Q A/C 1993-5971 Beneficial
9785 Towne Centre Dr
San Diego CA 92121-1968
ING GNMA Income Fund LPL Financial Services 6.37%, 0.00%
Class Q A/C 7229-2054 Beneficial
9785 Towne Centre Dr
San Diego CA 92121-1968
ING GNMA Income Fund LPL Financial Services 9.97%, 0.00%
Class Q A/C 1162-2605 Beneficial
9785 Towne Centre Dr
San Diego CA 92121-1968
ING GNMA Income Fund LPL Financial Services 16.03%, 0.00%
Class Q A/C 5892-6058 Beneficial
9785 Towne Centre Dr
San Diego CA 92121-1968
ING GNMA Income Fund Wedbush Morgan Securities 16.32%, 0.00%
Class Q A/C 7907-9961 Beneficial
1000 Wilshire Blvd
Los Angeles CA 90017-2457
ING GNMA Income Fund Pershing LLC 30.31%, 0.00%
Class Q PO Box 2052 Beneficial
Jersey City NJ 07303-2052
ING Growth Opportunities Fund MLPF & S For the Sole Benefit 9.26%, 2.61%
Class A of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
23
ING Growth Opportunities Fund State Street Bank & Trust Co Cust 19.82%, 5.59%
Class A Reliastar Life Insurance Co Beneficial
Retirement Division
Attn Jill Barth Conveyor TN41
151 Farmington Ave
Hartford CT 06156-0001
ING Growth Opportunities Fund MLPF & S For the Sole Benefit 23.93%, 7.13%
Class B of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING Growth Opportunities Fund MLPF & S For the Sole Benefit 29.50%, 4.17%
Class C of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING Growth Opportunities Fund Norwest Bank Minnesota N A 12.45%, 2.92%
Class I FBO Reliastar Pension Plan Shareholder
Ron Butler
5780 Powers Ferry Rd NW
Atlanta GA 30327-4347
ING Growth Opportunities Fund Norwest Bank MN TR 87.53%, 20.54%
Class I FBO Reliastar Pension Plan & Trust Beneficial
A/C # 13132700
PO Box 1533
Minneapolis MN 55480-1533
ING Growth Opportunities Fund LPL Financial Services 99.64%, 0.00%
Class Q A/C 3402-0716 Beneficial
9785 Towne Centre Dr
San Diego CA 92121-1968
ING High Yield Opportunity Fund Merrill Lynch Pierce Fenner 7.19%, 2.46%
Class A & Smith Beneficial
Mutual Fund Operations
Attn Bank Reconciliations
4800 Deer Lake Dr. East
Jacksonville FL 32246-6486
ING High Yield Opportunity Fund Merrill Lynch Pierce Fenner 23.17%, 12.81%
Class B & Smith Beneficial
Mutual Fund Operations
Attn Bank Reconciliations
4800 Deer Lake Dr. East
Jacksonville FL 32246-6486
ING High Yield Opportunity Fund Merrill Lynch Pierce Fenner 22.11%, 1.74%
Class C & Smith Beneficial
Mutual Fund Operations
Attn Bank Reconciliations
4800 Deer Lake Dr. East
Jacksonville FL 32246-6486
24
ING High Yield Opportunity Fund MLPF & S for the Sole Benefit 6.59%, 0.06%
Class M Of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr E. 3rd Flr
Jacksonville FL 32246-6484
ING High Yield Opportunity Fund Charles Schwab & Co Inc 98.53%, 0.30%
Class Q 101 Montgomery Street Beneficial
11th Floor
San Francisco CA 94104-4122
ING International Fund MLPF & S For the Sole Benefit 5.92%, 2.75%
Class A of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING International Fund ING Life Insurance and Annuity Co 27.41%, 12.76%
Class A 151 Farmington Ave Beneficial
Hartford Ct 06156-0001
ING International Fund MLPF & S For the Sole Benefit of Its 18.11%, 2.43%
Class B Customers A/C 72885A40 Beneficial
Attn: Fund Administration
4800 Deer Lake Drive East 2nd Fl
Jacksonville FL 32246-6484
ING International Fund MLPF & S For the Sole Benefit 43.59%, 7.03%
Class C of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING International Fund ING National Trust 99.97%, 11.94%
Class I 151 Farmington Ave. #41 Beneficial
Hartford CT 06156-0001
ING International Fund ING National Trust 12.43%, 1.49%
Class Q 151 Farmington Ave #41 Beneficial
Hartford CT 06156-0001
ING International Fund Charles Schwab & Co Inc 85.15%, 10.20%
Class Q Att Mutual Fund Dept Beneficial
101 Montgomery Street
11th Floor
San Francisco CA 94104-4122
ING Large Company Value Fund ING National Trust 6.55%, 6.20%
Class A 151 Farmington Ave #41 Beneficial
Hartford CT 06156-0001
ING Large Company Value Fund MLPF & S For the Sole Benefit 13.64%, 0.55%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
25
ING Large Company Value Fund MLPF & S For the Sole Benefit 15.75%, 0.20%
Class C of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Large Company Value Fund Output Audit Cash Account 49.81%, 0.00%
Class I DST Systems Inc Beneficial
330 W 9th St. Fl 2
Kansas City MO 64105-1514
ING Large Company Value Fund ING Investments LLC 50.19%, 0.00%
Class I Attn Lydia Homer Beneficial
7337 E. Doubletree Ranch Rd
Scottsdale AZ 85258
ING Large Company Value Fund Pershing LLC 100%, 0.02%
Class Q PO Box 2052 Beneficial
Jersey City NJ 07303-2052
ING MagnaCap Fund MLPF & S For the Sole Benefit 8.34%, 5.64%
Class A of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING MagnaCap Fund MLPF & S For the Sole Benefit 17.56%, 3.93%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING MagnaCap Fund Pershing LLC 6.17%, 0.22%
Class C PO Box 2052 Beneficial
Jersey City NJ 07303-2052
ING MagnaCap Fund MLPF & S For the Sole Benefit 17.71%, 0.64%
Class C of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING MagnaCap Fund State Street Bk & Tr Co Cust 91.08%, 0.00%
Class I Marjie A Hauser IRA Rollover Beneficial
8 Downing Dr
Trafalgar IN 46181-9301
ING MagnaCap Fund Norman F. Sather & 6.47%, 0.21%
Class M Eric M Lind Tr Beneficial
U/A 01/01/1992
Pettit Oil Co 401(k) 10 PSP
820 Myrtle St.
Hoquiam WA 98550-4236
ING MagnaCap Fund Norwest Bank MN Tr 99.99%, 3.14%
Class Q FBO Reliastar Pension Plan & Trust Beneficial
A/C # 13132700
PO Box 1533
Minneapolis MN 55480-1533
26
ING MidCap Opportunities Fund MLPF & S For the Sole Benefit 34.96%, 10.81%
Class A of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING MidCap Opportunities Fund MLPF & S For the Sole Benefit 25.47%, 31.56%
Class B of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING MidCap Opportunities Fund MLPF & S For the Sole Benefit 63.44%, 31.54%
Class C of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING MidCap Opportunities Fund Securities Trust Company Cust FBO 17.95%, 1.42%
Class I ING Americas Deferred Comp Plan Beneficial
2390 E. Camelback Rd Ste 240
Phoenix AZ 85016-3434
ING MidCap Opportunities Fund Reliastar Pension Account 81.92%, 6.46%
Class I Ron Butler Beneficial
5780 Powers Ferry Rd. NW
Atlanta GA 30327-4347
ING MidCap Opportunities Fund Charles Schwab & Co Inc 11.95%, 0.41%
Class Q Att Mutual Fund Dept Beneficial
101 Montgomery Street
11th Floor
San Francisco CA 94104-4122
ING MidCap Opportunities Fund Donald A Pels 54.19%, 1.86%
Class Q 375 Park Ave Ste 3305 Shareholder
New York NY 10152-3303
ING Precious Metals Fund Charles Schwab & Co Inc 21.09%, 21.09%
Class A Reinvest Account Beneficial
Att Mutual Fund Dept
101 Montgomery Street
11th Floor
San Francisco CA 94104-4122
ING Senior Income Fund NFSC FEBO # 251-044369 8.61%, 0.58%
Class A Dennis M. Hanson Shareholder
Dennis M. Hanson Tr
U/A 01/01/1989
800 South St Ste 305
Waltham MA 02453-1439
ING Senior Income Fund ING Life Insurance & Annuity Co 40.00%, 28.48%
Class Q 151 Farmington Ave Beneficial
Hartford CT 06156-0001
27
ING Senior Income Fund Equitable Life Insurance Company of Iowa 56.79%, 40.43%
Class Q Attn David Pendergrass Beneficial
5780 Powers Ferry Rd NW
Atlanta GA 30327-4347
ING SmallCap Opportunities Fund ING National Trust 6.59%, 2.69%
Class A 151 Farmington Ave #41 Beneficial
Hartford CT 06156-0001
ING SmallCap Opportunities Fund State Street Bank & Trust Co Cust 12.12%, 4.94%
Class A Reliastar Life Insurance Co Beneficial
Retirement Division
Attn Jill Barth Conveyor TN41
151 Farmington Ave
Hartford CT 06156-0001
ING SmallCap Opportunities Fund MLPF & S For the Sole Benefit 24.49%, 9.99%
Class A of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING SmallCap Opportunities Fund MLPF & S For the Sole Benefit 26.20%, 8.29%
Class B of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING SmallCap Opportunities Fund MLPF & S For the Sole Benefit 51.93%, 12.23%
Class C of Its Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 2nd Flr
Jacksonville FL 32246-6484
ING SmallCap Opportunities Fund Securities Trust Company Cust FBO 16.38%, 0.50%
Class I ING Americas Deferred Comp Plan Beneficial
2390 E. Camelback Rd Ste 240
Phoenix AZ 85016-3434
ING SmallCap Opportunities Fund ING National Trust 83.62%, 2.54%
Class I 151 Farmington Ave #41 Beneficial
Hartford CT 06156-0001
ING SmallCap Opportunities Fund Charles Schwab & Co Inc 66.41%, 0.21%
Class Q Att Mutual Fund Dept Beneficial
101 Montgomery Street
11th Floor
San Francisco CA 94104-4122
ING Strategic Bond Fund ING Life Insurance & Annuity Co 57.08%, 35.70%
Class A 151 Farmington Ave Beneficial
Hartford CT 06156-0001
ING Strategic Bond Fund MLPF & S For the Sole Benefit 37.00%, 10.83%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
28
ING Strategic Bond Fund MLPF & S For the Sole Benefit 41.62%, 3.32%
Class C of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Strategic Bond Fund Charles Schwab & Co Inc 10.76%, 0.02%
Class Q 101 Montgomery Street Beneficial
11th Floor
San Francisco CA 94104-4122
ING Strategic Bond Fund Securities Trust Company Cust FBO 85.99%, 0.18%
Class Q ING Americas Deferred Comp Plan Beneficial
2390 E. Camelback Rd Ste 240
Phoenix AZ 85016-3434
ING Tax Efficient Equity Fund ING Life Insurance & Annuity Co 73.82%, 59.48%
Class A 151 Farmington Ave Beneficial
Hartford CT 06156-0001
ING Tax Efficient Equity Fund Irvin Harold Altman & 8.53%, 0.24%
Class C Estelle Altman Tr Beneficial
U/A 05/05/1977
Altman Family Trust
21276 Cancun
Mission Viejo CA 92692-4961
ING Worldwide Growth Fund Prudential Securities Inc 9.20%, 2.80%
Class A Special Custody Acct For the Beneficial
Exclusive Benefit of Customers - PC
Attn Mutual Funds
1 New York Plaza
New York, NY 10004-1901
ING Worldwide Growth Fund MLPF & S For the Sole Benefit 35.11%, 10.67%
Class A of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Worldwide Growth Fund MLPF & S For the Sole Benefit 25.68%, 3.63%
Class B of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Worldwide Growth Fund MLPF & S For the Sole Benefit 55.57%, 11.38%
Class C of the Customers Beneficial
Attn Fund Administration
4800 Deer Lake Dr. E. 3rd Flr
Jacksonville FL 32246-6484
ING Worldwide Growth Fund National Investor Services FBO 7.67%, 0.35%
Class Q 508-24749-24 Shareholder
55 Water Street, 32nd Floor
New York NY 10041-0028
29
ING Worldwide Growth Fund National Investor Services FBO 7.98%, 0.37%
Class Q 508-20123-28 Shareholder
55 Water Street, 32nd Floor
New York NY 10041-0028
ING Worldwide Growth Fund National Investor Services FBO 8.07%, 0.37%
Class Q 508-20105-20 Shareholder
55 Water Street, 32nd Floor
New York NY 10041-0028
ING Worldwide Growth Fund National Investor Services FBO 8.18%, 0.38%
Class Q 508-20124-27 Shareholder
55 Water Street, 32nd Floor
New York NY 10041-0028
ING Worldwide Growth Fund Charles Schwab & Co Inc 30.17%, 1.39%
Class Q 101 Montgomery Street Beneficial
11th Floor
San Francisco CA 94104-4122
ING VP Convertible Portfolio ING Life Insurance & Annuity Co 25.86%, 25.86%
Class S 151 Farmington Ave Beneficial
Hartford CT 06156-0001
ING VP Convertible Portfolio Golden American Life Insurance Co 74.14%, 74.14%
Class S 1475 Dunwoody Dr Beneficial
West Chester PA 19380-1478
ING VP Growth Opportunities Portfolio ING Life Insurance & Annuity Co 11.53%, 3.11%
Class R Aces Separate Acct B Beneficial
Valuations Processing Dept
151 Farmington Ave
Hartford CT 06156-0001
ING VP Growth Opportunities Portfolio Reliastar Life Insurance Co 83.68%, 22.59%
Class R FBO Select III Non Qualified Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP Growth Opportunities Portfolio Golden American Life Insurance Co 97.79%, 71.39%
Class S 1475 Dunwoody Dr Beneficial
West Chester PA 19380-1478
ING VP High Yield Bond Portfolio Reliastar Life Insurance Co 95.93%, 95.93%
Class R FBO Select Life 1 Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP International Value Portfolio Reliastar Life Insurance Co 44.10%, 44.04%
Class R FBO Select Life 1 Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP International Value Portfolio ING Life Insurance & Annuity Co 55.44%, 55.37%
Class R Aces Separate Acct B Beneficial
Valuations Processing Dept
151 Farmington Ave
Hartford CT 06156-0001
30
ING VP International Value Portfolio Golden American Life Insurance Co 99.98%, 0.13%
Class S 1475 Dunwoody Dr Beneficial
West Chester PA 19380-1478
ING VP Large Company Value Portfolio ING Life Insurance & Annuity Co 26.79%, 26.79%
Class S 151 Farmington Ave Beneficial
Hartford CT 06156-0001
ING VP Large Company Value Portfolio Golden American Life Insurance Co 73.21%, 73.21%
Class S 1475 Dunwoody Dr Beneficial
West Chester PA 19380-1478
ING VP MagnaCap Portfolio Security Life Insurance of Denver 5.40%, 1.35%
Class R C/O ING America Equities Inc Beneficial
1290 Broadway
Denver CO 80203-2122
ING VP MagnaCap Portfolio Security Life Insurance of Denver 16.46%, 4.12%
Class R A Vul Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP MagnaCap Portfolio ING Life Insurance & Annuity Co 21.14%, 5.30%
Class R Aces Separate Acct B Beneficial
Valuations Processing Dept
151 Farmington Ave
Hartford CT 06156-0001
ING VP MagnaCap Portfolio Reliastar Life Insurance Co 55.10%, 13.80%
Class R FBO Select III Non Qualified Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP MagnaCap Portfolio Golden American Life Insurance Co 96.68%, 72.46%
Class S 1475 Dunwoody Dr Beneficial
West Chester PA 19380-1478
ING VP MidCap Opportunities Portfolio Security Life Insurance of Denver 5.37%, 3.93%
Class R A Vul Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP MidCap Opportunities Portfolio Security Life Insurance of Denver 8.27%, 6.05%
Class R C/O ING America Equities Inc Beneficial
1290 Broadway
Denver CO 80203-2122
ING VP MidCap Opportunities Portfolio Reliastar Life Insurance Co 39.89%, 29.18%
Class R FBO Select III Non Qualified Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP MidCap Opportunities Portfolio ING Life Insurance & Annuity Co 45.58%, 33.35%
Class R Aces Separate Acct B Beneficial
Valuations Processing Dept
151 Farmington Ave
Hartford CT 06156-0001
31
ING VP MidCap Opportunities Portfolio ING Life Insurance & Annuity Co 99.04%, 26.58%
Class S Aces Separate Acct B Beneficial
Valuations Processing Dept
151 Farmington Ave
Hartford CT 06156-0001
ING VP Natural Resources Trust Safeco Life Insurance Company 11.12%, 11.12%
Class N/A Retirement Services Beneficial
PO Box 34690
Seattle WA 98124-1690
ING VP Natural Resources Trust Kemper Investors Life Insurance Co 13.93%, 13.93%
Class N/A Variable Annuity Separate Account Beneficial
Attn: Karen Porten
1 Kemper Drive T-1
Long Grove IL 60049-0001
ING VP Natural Resources Trust ING Life Insurance And Annuity Co 71.37%, 71.37%
Class N/A Aces Separate Acct B Beneficial
Valuations Processing Department
151 Farmington Ave - RSMA
Hartford CT 06156-0001
ING VP SmallCap Opportunities Portfolio ING Life Insurance & Annuity Co 19.90%, 12.00%
Class R Aces Separate Acct B Beneficial
Valuations Processing Dept
151 Farmington Ave
Hartford CT 06156-0001
ING VP SmallCap Opportunities Portfolio Reliastar Life Insurance Co 75.07%, 45.28%
Class R FBO Select Life 1 Beneficial
Rte 5106 PO Box 20
Minneapolis MN 55440-0020
ING VP SmallCap Opportunities Portfolio Golden American Life Insurance Co 95.39%, 37.86%
Class S 1475 Dunwoody Dr Beneficial
West Chester PA 19380-1478
ING VP Worldwide Growth Portfolio Golden American Life Insurance Co 98.73%, 98.73%
Class N/A 1475 Dunwoody Dr Beneficial
West Chester PA 19380-1478
* Each of these entities is the shareholder of record and may be deemed to be
the beneficial owner of the shares listed for certain purposes under the
securities laws, although in certain instances they may not have an economic
interest in these shares and would, therefore, ordinarily disclaim any
beneficial ownership therein.
32
APPENDIX 3
FORM OF SUB-ADVISORY AGREEMENT
FORM OF SUB-ADVISORY AGREEMENT
[INSERT FUND REGISTRANT]
AGREEMENT made this ____ day of ________, 2003 between [Insert
Manager], a [Insert Manager's State] [Limited Liability Company/Corporation]
(the "Manager"), and Aeltus Investment Management, Inc., a Connecticut
corporation (the "Sub-Adviser").
WHEREAS, the [Insert Fund Registrant] (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
[open-end/closed-end], management investment company; and
WHEREAS, the Fund is authorized to issue separate series, each
series having its own investment objective or objectives, policies, and
limitations; and
WHEREAS, the Fund may offer shares of additional series in the
future; and
WHEREAS, pursuant to an Investment Management Agreement, dated
__________, 2003 (the "Management Agreement"), a copy of which has been provided
to the Sub-Adviser, the Fund has retained the Manager to render advisory and
management services with respect to certain of the Fund's series; and
WHEREAS, pursuant to authority granted to the Manager in the
Management Agreement, the Manager wishes to retain the Sub-Adviser to furnish
investment advisory services to one or more of the series of the Fund, and the
Sub-Adviser is willing to furnish such services to the Fund and the Manager.
NOW, THEREFORE, in consideration of the premises and the promises
and mutual covenants herein contained, it is agreed between the Manager and the
Sub-Adviser as follows:
1. Appointment. The Manager hereby appoints the Sub-Adviser to
act as the investment adviser and manager to the series of the Fund set forth on
Schedule A hereto (the "Series") for the periods and on the terms set forth in
this Agreement. The Sub-Adviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
In the event the Fund designates one or more series (other than the
Series) with respect to which the Manager wishes to retain the Sub-Adviser to
render investment advisory services hereunder, it shall notify the Sub-Adviser
in writing. If the Sub-Adviser is willing to render such services, it shall
notify the Manager in writing, whereupon such series shall become a Series
hereunder, and be subject to this Agreement.
2. Sub-Adviser Duties. Subject to the supervision of the Fund's
Board of [Directors/Trustees] and the Manager, the Sub-Adviser will provide a
continuous investment program for each Series' portfolio and determine in its
discretion the composition of the assets of each Series' portfolio, including
determination of the purchase, retention, or sale of the securities, cash, and
other investments contained in the portfolio. The Sub-Adviser will provide
investment research and conduct a continuous program of evaluation, investment,
sales, and reinvestment of each Series' assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various securities and
other investments in which it may invest. To the extent permitted by the
investment policies of each Series, the Sub-Adviser shall make decisions for the
Series as to foreign currency matters and make determinations as to and
33
execute and perform foreign currency exchange contracts on behalf of the Series.
The Sub-Adviser will provide the services under this Agreement in accordance
with each Series' investment objective or objectives, policies, and restrictions
as stated in the Fund's Registration Statement filed with the Securities and
Exchange Commission ("SEC"), as amended, copies of which shall be sent to the
Sub-Adviser by the Manager prior to the commencement of this Agreement and
promptly following any such amendment. The Sub-Adviser further agrees as
follows:
(a) The Sub-Adviser will conform with the 1940 Act and all rules
and regulations thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Fund's Board of
[Directors/Trustees] of which the Sub-Adviser has been sent a copy, and the
provisions of the Registration Statement of the Fund filed under the Securities
Act of 1933 (the "1933 Act") and the 1940 Act, as supplemented or amended, of
which the Sub-Adviser has received a copy, and with the Manager's portfolio
manager operating policies and procedures as in effect on the date hereof, as
such policies and procedures may be revised or amended by the Manager and agreed
to by the Sub-Adviser. In carrying out its duties under the Sub-Adviser
Agreement, the Sub-Adviser will comply with the following policies and
procedures:
(i) The Sub-Adviser will manage each Series so that it meets the
income and asset diversification requirements of Section 851 of the Internal
Revenue Code.
(ii) The Sub-Adviser will assist in voting all proxies solicited by
or with respect to the issuers of securities which assets of the Series are
invested consistent with any procedures or guidelines approved by the Board of
[Directors/Trustees], and the Manager or the Sub-Adviser. If requested, the
Sub-Adviser will maintain appropriate records detailing its voting of proxies on
behalf of the Fund and will provide to the Fund at least quarterly a report
setting forth the proposals voted on and how the Series' shares were voted since
the prior report, including the name of the corresponding issuers.
(iii) In connection with the purchase and sale of securities for
each Series, the Sub-Adviser will arrange for the transmission to the custodian
and portfolio accounting agent for the Series on a daily basis, such
confirmation, trade tickets, and other documents and information, including, but
not limited to, Cusip, Cedel, or other numbers that identify securities to be
purchased or sold on behalf of the Series, as may be reasonably necessary to
enable the custodian and portfolio accounting agent to perform its
administrative and recordkeeping responsibilities with respect to the Series.
With respect to portfolio securities to be settled through the Depository Trust
Company, the Sub-Adviser will arrange for the prompt transmission of the
confirmation of such trades to the Fund's custodian and portfolio accounting
agent.
(iv) The Sub-Adviser will assist the custodian and portfolio
accounting agent for the Fund in determining or confirming, consistent with the
procedures and policies stated in the Registration Statement for the Fund or
adopted by the Board of [Directors/Trustees], the value of any portfolio
securities or other assets of the Series for which the custodian and portfolio
accounting agent seeks assistance from or identifies for review by the
Sub-Adviser. The parties acknowledge that the Sub-Adviser is not a custodian of
the Series' assets and will not take possession or custody of such assets.
(v) The Sub-Adviser will provide the Manager, no later than the
10th business day following the end of each Series' semi-annual period and
fiscal year, a letter to shareholders (to be subject to review and editing by
the Manager) containing a discussion of those factors referred to in Item 5(a)
of 1940 Act Form N-1A in respect of both the prior semi-annual period, if
different, and the fiscal year to date.
(vi) The Sub-Adviser will complete and deliver to the Manager a
written compliance checklist in a form provided by the Manager for each month by
the 10th business day of the following month.
34
(b) The Sub-Adviser will complete and deliver to the Manager by
the 10th business day of each month a written report on each Series of the Fund
that contains the following information as of the immediately previous month's
end:
(i) A performance comparison to the Series benchmark listed in the
prospectus as well as a comparison to other mutual funds as listed in the
rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., or
similar independent services that monitor the performance of mutual funds or
with other appropriate indexes of investment securities;
(ii) Composition of the assets of each Series' portfolio and the
impact of key portfolio holdings and sector concentrations on the Series; and
(iii) Confirmation of the Fund's current investment objective and
Sub-Adviser's projected plan to realize the Fund's investment objectives.
(c) The Sub-Adviser will contact Morningstar to clarify any style
box conflicts with the Fund's style and the anticipated timeframe in which
Morningstar will remedy such conflicts, if any.
(d) The Sub-Adviser will make available to the Fund and the
Manager, promptly upon request, any of the Series' investment records and
ledgers maintained by the Sub-Adviser (which shall not include the records and
ledgers maintained by the custodian or portfolio accounting agent for the Fund)
as are necessary to assist the Fund and the Manager to comply with requirements
of the 1940 Act and the Investment Advisers Act of 1940 (the "Advisers Act"), as
well as other applicable laws. The Sub-Adviser will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with such services in respect to the Series which may be requested in
order to ascertain whether the operations of the Fund are being conducted in a
manner consistent with applicable laws and regulations.
(e) The Sub-Adviser will provide reports to the Fund's Board of
[Directors/Trustees] for consideration at meetings of the Board of
[Directors/Trustees] on the investment program for each Series and the issuers
and securities represented in each Series' portfolio, and will furnish the
Fund's Board of [Directors/Trustees] with respect to each Series such periodic
and special reports as the [Directors/Trustees] and the Manager may reasonably
request.
3. Broker-Dealer Selection. The Sub-Adviser is authorized to make
decisions to buy and sell securities and other investments for each Series'
portfolio, broker-dealer selection and negotiation of brokerage commission rates
in effecting a security transaction. The Sub-Adviser's primary consideration in
effecting a security transaction will be to obtain the best execution for the
Series, taking into account the factors specified in the prospectus and/or
statement of additional information for the Fund, and determined in consultation
with the Manager, which include price (including the applicable brokerage
commission or dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation, the experience
and financial stability of the broker-dealer involved, the quality of the
service, the difficulty of execution, and the execution capabilities and
operational facilities of the firm involved, and the firm's risk in positioning
a block of securities. Accordingly, the price to a Series in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified, in the judgment of the Sub-Adviser in the
exercise of its fiduciary obligations to the Fund, by other aspects of the
portfolio execution services offered. Subject to such policies as the Fund's
Board of [Directors/Trustees] or Manager may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, the Sub-Adviser shall not
be deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused a Series to pay a
broker-dealer for effecting a portfolio investment transaction in excess of the
amount of commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of
35
either that particular transaction or the Sub-Adviser's or the Manager's overall
responsibilities with respect to the Series and to their respective other
clients as to which they exercise investment discretion. The Sub-Adviser will
consult with the Manager to the end that portfolio transactions on behalf of a
Series are directed to broker-dealers on the basis of criteria reasonably
considered appropriate by the Manager. To the extent consistent with these
standards, the Sub-Adviser is further authorized to allocate the orders placed
by it on behalf of a Series to the Sub-Adviser if it is registered as a
broker-dealer with the SEC, to an affiliated broker-dealer, or to such brokers
and dealers who also provide research or statistical material, or other services
to the Series, the Sub-Adviser, or an affiliate of the Sub-Adviser. Such
allocation shall be in such amounts and proportions as the Sub-Adviser shall
determine consistent with the above standards, and the Sub-Adviser will report
on said allocation regularly to the Fund's Board of [Directors/Trustees]
indicating the broker-dealers to which such allocations have been made and the
basis therefore.
4. Disclosure about Sub-Adviser. The Sub-Adviser has reviewed the
most recent Post-Effective Amendment to the Registration Statement for the Fund
filed with the SEC that contains disclosure about the Sub-Adviser, and
represents and warrants that, with respect to the disclosure about the
Sub-Adviser or information relating, directly or indirectly, to the Sub-Adviser,
such Registration Statement contains, as of the date hereof, no untrue statement
of any material fact and does not omit any statement of a material fact which
was required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. The Sub-Adviser further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and will maintain such
registration so long as this Agreement remains in effect. The Sub-Adviser will
provide the Manager with a copy of the Sub-Adviser's Form ADV, Part II at the
time the Form ADV is filed with the SEC.
5. Expenses. During the term of this Agreement, the Sub-Adviser
will pay all expenses incurred by it and its staff and for their activities in
connection with its portfolio management duties under this Agreement. The
Manager or the Fund shall be responsible for all the expenses of the Fund's
operations.
6. Compensation. For the services provided to each Series, the
Manager will pay the Sub-Adviser an annual fee equal to the amount specified for
such Series in Schedule A hereto, payable monthly in arrears. The fee will be
appropriately prorated to reflect any portion of a calendar month that this
Agreement is not in effect among the parties. In accordance with the provisions
of the Management Agreement, the Manager is solely responsible for the payment
of fees to the Sub-Adviser, and the Sub-Adviser agrees to seek payment of its
fees solely from the Manager; provided, however, that if the Fund fails to pay
the Manager all or a portion of the management fee under said Management
Agreement when due, and the amount that was paid is insufficient to cover the
Sub-Adviser's fee under this Agreement for the period in question, then the
Sub-Adviser may enforce against the Fund any rights it may have as a third-party
beneficiary under the Management Agreement and the Manager will take all steps
appropriate under the circumstances to collect the amount due from the Fund.
7. Marketing Materials.
(a) During the term of this Agreement, the Sub-Adviser agrees to
furnish the Manager at its principal office for prior review and approval by the
Manager all written and/or printed materials, including but not limited to,
PowerPoint(R) or slide presentations, news releases, advertisements, brochures,
fact sheets and other promotional, informational or marketing materials (the
"Marketing Materials") for internal use or public dissemination, that are
produced or are for use or reference by the Sub-Adviser, its affiliates or other
designees, broker-dealers or the public in connection with the Series, and
Sub-Adviser shall not use any such materials if the Manager reasonably objects
in writing within five business days (or such other period as may be mutually
agreed) after receipt thereof. Marketing Materials may be furnished to the
Manager by first class or overnight mail, facsimile transmission equipment,
electronic delivery or hand delivery.
36
(b) During the term of this Agreement, the Manager agrees to
furnish the Sub-Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, or Marketing Materials prepared for
distribution to shareholders of each Series, or the public that refer to the
Sub-Adviser in any way, prior to the use thereof, and the Manager shall not use
any such materials if the Sub-Adviser reasonably objects in writing within five
business days (or such other period as may be mutually agreed) after receipt
thereof. The Sub-Adviser's right to object to such materials is limited to the
portions of such materials that expressly relate to the Sub-Adviser, its
services and its clients. The Manager agrees to use its reasonable best efforts
to ensure that materials prepared by its employees or agents or its affiliates
that refer to the Sub-Adviser or its clients in any way are consistent with
those materials previously approved by the Sub-Adviser as referenced in the
first sentence of this paragraph. Marketing Materials may be furnished to the
Sub-Adviser by first class or overnight mail, facsimile transmission equipment,
electronic delivery or hand delivery.
8. Compliance.
(a) The Sub-Adviser agrees to use reasonable compliance techniques
as the Manager or the Board of [Directors/Trustees] may adopt, including any
written compliance procedures.
(b) The Sub-Adviser agrees that it shall promptly notify the
Manager and the Fund (1) in the event that the SEC has censured the Sub-Adviser;
placed limitations upon its activities, functions or operations; suspended or
revoked its registration as an investment adviser; or has commenced proceedings
or an investigation that may result in any of these actions, or (2) upon having
a reasonable basis for believing that the Series has ceased to qualify or might
not qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code. The Sub-Adviser further agrees to notify the Manager and the Fund
promptly of any material fact known to the Sub-Adviser respecting or relating to
the Sub-Adviser that is not contained in the Registration Statement or
prospectus for the Fund (which describes the Series), or any amendment or
supplement thereto, or if any statement contained therein that becomes untrue in
any material respect.
(c) The Manager agrees that it shall promptly notify the
Sub-Adviser (1) in the event that the SEC has censured the Manager or the Fund;
placed limitations upon either of their activities, functions, or operations;
suspended or revoked the Manager's registration as an investment adviser; or has
commenced proceedings or an investigation that may result in any of these
actions, or (2) upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code.
9. Books and Records. The Sub-Adviser hereby agrees that all
records which it maintains for the Series are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's or the Manager's request in compliance with the requirements of Rule
31a-3 under the 1940 Act, although the Sub-Adviser may, at its own expense, make
and retain a copy of such records. The Sub-Adviser further agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-l under the 1940 Act.
10. Cooperation; Confidentiality. Each party to this Agreement
agrees to cooperate with the other party and with all appropriate governmental
authorities having the requisite jurisdiction (including, but not limited to,
the SEC) in connection with any investigation or inquiry relating to this
Agreement or the Fund. Subject to the foregoing, the Sub-Adviser shall treat as
confidential all information pertaining to the Fund and actions of the Fund, the
Manager and the Sub-Adviser, and the Manager shall treat as confidential and use
only in connection with the Series all information furnished to the Fund or the
Manager by the Sub-Adviser, in connection with its duties under the agreement
except that the aforesaid information need not be treated as confidential if
required to be disclosed under applicable law, if generally available to the
public through means other than by disclosure by the Sub-Adviser or the Manager,
or if available from a source other than the Manager, Sub-Adviser or this Fund.
37
11. Representations Respecting Sub-Adviser. The Manager agrees
that neither the Manager, nor affiliated persons of the Manager, shall give any
information or make any representations or statements in connection with the
sale of shares of the Series concerning the Sub-Adviser or the Series other than
the information or representations contained in the Registration Statement,
prospectus, or statement of additional information for the Fund's shares, as
they may be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional material
approved in advance by the Sub-Adviser, except with the prior permission of the
Sub-Adviser.
12. Control. Notwithstanding any other provision of the Agreement,
it is understood and agreed that the Fund shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement and has reserved the right to reasonably direct any action hereunder
taken on its behalf by the Sub-Adviser.
13. Liability. Except as may otherwise be required by the 1940 Act
or the rules thereunder or other applicable law, the Manager agrees that the
Sub-Adviser, any affiliated person of the Sub-Adviser, and each person, if any,
who, within the meaning of Section 15 of the 1933 Act controls the Sub-Adviser
(1) shall bear no responsibility and shall not be subject to any liability for
any act or omission respecting any series of the Fund that is not a Series
hereunder, and (2) shall not be liable for, or subject to any damages, expenses,
or losses in connection with, any act or omission connected with or arising out
of any services rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or negligence in the performance of the Sub-Adviser's
duties, or by reason of reckless disregard of the Sub-Adviser's obligations and
duties under this Agreement.
14. Indemnification.
(a) The Manager agrees to indemnify and hold harmless the
Sub-Adviser, any affiliated person of the Sub-Adviser, and each person, if any,
who, within the meaning of Section 15 of the 1933 Act controls ("controlling
person") the Sub-Adviser (all of such persons being referred to as "Sub-Adviser
Indemnified Persons") against any and all losses, claims, damages, liabilities,
or litigation (including legal and other expenses) to which a Sub-Adviser
Indemnified Person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, under any other statute, at common law or otherwise, arising out
of the Manager's responsibilities to the Fund which (1) may be based upon the
Manager's negligence, willful misfeasance, or bad faith in the performance of
its duties (which could include a negligent action or a negligent omission to
act), or by reason of the Manager's reckless disregard of its obligations and
duties under this Agreement, or (2) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or prospectus covering shares of the Fund or any Series, or any
amendment thereof or any supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon information furnished to the Manager or the Fund or to
any affiliated person of the Manager by a Sub-Adviser Indemnified Person;
provided however, that in no case shall the indemnity in favor of the
Sub-Adviser Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of obligations and duties under
this Agreement.
(b) Notwithstanding Section 13 of this Agreement, the Sub-Adviser
agrees to indemnify and hold harmless the Manager, any affiliated person of the
Manager, and any controlling person of the Manager (all of such persons being
referred to as "Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and other expenses)
to which a Manager Indemnified Person may become subject under the 1933 Act,
1940 Act, the Advisers Act, under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser of the Series
which (1) may be based upon the Sub-Adviser's negligence, willful misfeasance,
or bad faith in the performance of its duties (which
38
could include a negligent action or a negligent omission to act), or by reason
of the Sub-Adviser's reckless disregard of its obligations and duties under this
Agreement, or (2) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
prospectus covering the shares of the Fund or any Series, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact known or which should have been known to the Sub-Adviser and was
required to be stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance upon
information furnished to the Manager, the Fund, or any affiliated person of the
Manager or Fund by the Sub-Adviser or any affiliated person of the Sub-Adviser;
provided, however, that in no case shall the indemnity in favor of a Manager
Indemnified Person be deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties, or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this
Section 14 with respect to any claim made against a Sub-Adviser Indemnified
Person unless such Sub-Adviser Indemnified Person shall have notified the
Manager in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Sub-Adviser Indemnified Person (or after such Sub-Adviser
Indemnified Person shall have received notice of such service on any designated
agent), but failure to notify the Manager of any such claim shall not relieve
the Manager from any liability which it may have to the Sub-Adviser Indemnified
Person against whom such action is brought except to the extent the Manager is
prejudiced by the failure or delay in giving such notice. In case any such
action is brought against the Sub-Adviser Indemnified Person, the Manager will
be entitled to participate, at its own expense, in the defense thereof or, after
notice to the Sub-Adviser Indemnified Person, to assume the defense thereof,
with counsel satisfactory to the Sub-Adviser Indemnified Person. If the Manager
assumes the defense of any such action and the selection of counsel by the
Manager to represent the Manager and the Sub-Adviser Indemnified Person would
result in a conflict of interests and therefore, would not, in the reasonable
judgment of the Sub-Adviser Indemnified Person, adequately represent the
interests of the Sub-Adviser Indemnified Person, the Manager will, at its own
expense, assume the defense with counsel to the Manager and, also at its own
expense, with separate counsel to the Sub-Adviser Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Sub-Adviser Indemnified
Person. The Sub-Adviser Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Manager shall not be liable to
the Sub-Adviser Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Sub-Adviser Indemnified Person
independently in connection with the defense thereof other than reasonable costs
of investigation. The Manager shall not have the right to compromise on or
settle the litigation without the prior written consent of the Sub-Adviser
Indemnified Person if the compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Sub-Adviser Indemnified Person.
(d) The Sub-Adviser shall not be liable under Paragraph (b) of
this Section 14 with respect to any claim made against a Manager Indemnified
Person unless such Manager Indemnified Person shall have notified the
Sub-Adviser in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Manager Indemnified Person (or after such Manager Indemnified
Person shall have received notice of such service on any designated agent), but
failure to notify the Sub-Adviser of any such claim shall not relieve the
Sub-Adviser from any liability which it may have to the Manager Indemnified
Person against whom such action is brought except to the extent the Sub-Adviser
is prejudiced by the failure or delay in giving such notice. In case any such
action is brought against the Manager Indemnified Person, the Sub- Adviser will
be entitled to participate, at its own expense, in the defense thereof or, after
notice to the Manager Indemnified Person, to assume the defense thereof, with
counsel satisfactory to the Manager Indemnified Person. If the Sub-Adviser
assumes the defense of any such action and the selection of counsel by the
Sub-Adviser to represent both the Sub-Adviser and the Manager Indemnified Person
would result in a conflict of interests and therefore, would not, in the
reasonable judgment of the Manager Indemnified Person, adequately represent the
interests of the Manager Indemnified Person, the Sub-
39
Adviser will, at its own expense, assume the defense with counsel to the
Sub-Adviser and, also at its own expense, with separate counsel to the Manager
Indemnified Person, which counsel shall be satisfactory to the Sub-Adviser and
to the Manager Indemnified Person. The Manager Indemnified Person shall bear the
fees and expenses of any additional counsel retained by it, and the Sub-Adviser
shall not be liable to the Manager Indemnified Person under this Agreement for
any legal or other expenses subsequently incurred by the Manager Indemnified
Person independently in connection with the defense thereof other than
reasonable costs of investigation. The Sub-Adviser shall not have the right to
compromise on or settle the litigation without the prior written consent of the
Manager Indemnified Person if the compromise or settlement results, or may
result in a finding of wrongdoing on the part of the Manager Indemnified Person.
15. Duration and Termination.
(a) This Agreement shall become effective on the date first
indicated above, subject to the condition that the Fund's Board of
[Directors/Trustees], including a majority of those [Directors/Trustees] who are
not interested persons (as such term is defined in the 1940 Act) of the Manager
or the Sub-Adviser, and the shareholders of each Series, shall have approved
this Agreement. Unless terminated as provided herein, this Agreement shall
remain in full force and effect for two years from such date and continue on an
annual basis thereafter with respect to each Series covered by this Agreement;
provided that such annual continuance is specifically approved each year by (a)
the Board of [Directors/Trustees] of the Fund, or by the vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of each Series,
and (b) the vote of a majority of those [Directors/Trustees] who are not parties
to this Agreement or interested persons (as such term is defined in the 1940
Act) of any such party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval. However, any approval of this Agreement
by the holders of a majority of the outstanding shares (as defined in the 1940
Act) of a Series shall be effective to continue this Agreement with respect to
such Series notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Series or (ii) that
this agreement has not been approved by the vote of a majority of the
outstanding shares of the Fund, unless such approval shall be required by any
other applicable law or otherwise. Notwithstanding the foregoing, this Agreement
may be terminated with respect to any Series covered by this Agreement: (a) by
the Manager at any time, upon sixty (60) days' written notice to the Sub-Adviser
and the Fund, (b) at any time without payment of any penalty by the Fund, by the
Fund's Board of [Directors/Trustees] or a majority of the outstanding voting
securities of each Series, upon sixty (60) days' written notice to the Manager
and the Sub-Adviser, or (c) by the Sub-Adviser upon three (3) months' written
notice unless the Fund or the Manager requests additional time to find a
replacement for the Sub-Adviser, in which case the Sub-Adviser shall allow the
additional time requested by the Fund or Manager not to exceed three (3)
additional months beyond the initial three-month notice period; provided,
however, that the Sub-Adviser may terminate this Agreement at any time without
penalty, effective upon written notice to the Manager and the Fund, in the event
either the Sub-Adviser (acting in good faith) or the Manager ceases to be
registered as an investment adviser under the Advisers Act or otherwise becomes
legally incapable of providing investment management services pursuant to its
respective contract with the Fund, or in the event the Manager becomes bankrupt
or otherwise incapable of carrying out its obligations under this Agreement, or
in the event that the Sub-Adviser does not receive compensation for its services
from the Manager or the Fund as required by the terms of this agreement.
In the event of termination for any reason, all records of each
Series for which the Agreement is terminated shall promptly be returned to the
Manager or the Fund, free from any claim or retention of rights in such record
by the Sub-Adviser, although the Sub-Adviser may, at its own expense, make and
retain a copy of such records. This Agreement shall automatically terminate in
the event of its assignment (as such term is described in the 1940 Act). In the
event this Agreement is terminated or is not approved in the manner described
above, the Sections or Paragraphs numbered 9, 10, 11, 12, 13, 14 and 17 of this
Agreement shall remain in effect, as well as any applicable provision of this
Section numbered 15 and, to the extent that only
40
amounts are owed to the Sub-Adviser as compensation for services rendered while
the agreement was in effect, Section 6.
(b) Notices. Any notice must be in writing and shall be
sufficiently given (1) when delivered in person, (2) when dispatched by telegram
or electronic facsimile transfer (confirmed in writing by postage prepaid first
class air mail simultaneously dispatched), (3) when sent by internationally
recognized overnight courier service (with receipt confirmed by such overnight
courier service), or (4) when sent by registered or certified mail, to the other
party at the address of such party set forth below or at such other address as
such party may from time to time specify in writing to the other party.
If to the Fund:
[Insert Manager Address]
If to the Sub-Adviser:
Aeltus Investment Management, Inc.
10 State House Square
Hartford, CT 06103-3602
Attention: Michael Gioffre
16. Amendments. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, and no amendment of this Agreement shall be effective
until approved as required by applicable law.
17. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
Arizona, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder, and without regard for the conflicts of laws principle thereof. The
term "affiliate" or "affiliated person" as used in this Agreement shall mean
"affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
(b) The Manager and the Sub-Adviser acknowledge that the Fund
enjoys the rights of a third-party beneficiary under this Agreement, and the
Manager acknowledges that the Sub-Adviser enjoys the rights of a third party
beneficiary under the Management Agreement.
(c) The captions of this Agreement are included for convenience
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
(d) To the extent permitted under Section 15 of this Agreement,
this Agreement may only be assigned, as defined in the Investment Company Act of
1940, by any party with the prior written consent of the other parties.
(e) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby, and to this extent, the provisions of
this Agreement shall be deemed to be severable.
(f) Nothing herein shall be construed as constituting the
Sub-Adviser as an agent or co-partner of the Manager, or constituting the
Manager as an agent or co-partner of the Sub-Adviser.
41
(g) This agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
[Insert MANAGER]
By: __________________________
__________________________
Title
AELTUS INVESTMENT MANAGEMENT, INC.
By: __________________________
__________________________
Title
42
SCHEDULE A
WITH RESPECT TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
[INSERT MANAGER]
AND
ING AELTUS INVESTMENT MANAGEMENT, INC.
ANNUAL SUB-ADVISER FEE LAST CONTINUED/
(AS A PERCENTAGE OF AVERAGE DAILY APPROVED BY
SERIES NET ASSETS) BOARD REAPPROVAL DATE
[Insert Fund] [Insert Fee] [Insert Date] [Insert Date]
43
SCHEDULE B
TO THE
SUB-ADVISORY AGREEMENT
BY AND BETWEEN
[INSERT MANAGER]
AND
ING AELTUS INVESTMENT MANAGEMENT, INC.
EFFECTIVE [INSERT DATE]
The Reapproval date of this Agreement with respect to the Fund is as follows:
NAME OF FUND REAPPROVAL DATE
[INSERT SERIES] [INSERT DATE]
44
APPENDIX 4
PRINCIPAL EXECUTIVE OFFICERS OF ING INVESTMENTS, LLC
7337 E. DOUBLETREE RANCH ROAD
SCOTTSDALE, AZ 85258
NAME AND TITLE
James M. Hennessy - President and CEO
Stanley D. Vyner - Executive VP & Chief Investment Risk and Strategy Officer
Michael J. Roland - Executive VP, CFO & Treasurer
Lydia L. Homer - Senior VP & Controller
Robert S. Naka - Senior VP & Assistant Secretary
William H. Rivoir, III - Senior VP & Secretary
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF
ING AELTUS INVESTMENT MANAGEMENT, INC.
10 STATE HOUSE SQUARE
HARTFORD, CT 06103
NAME AND TITLE
Thomas J. McInerney, Director
Robert J. Crispin, Director
J.Scott Fox, Director, Chief Executive Officer and President
Neil Kochen, Executive Vice President
Jeffrey T. Becker, Senior Vice President and Chief Financial Officer
Michael Gioffre, Senior Vice President, Counsel and Secretary
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF
DIRECTED SERVICES, INC.
1475 DUNWOODY DRIVE
WEST CHESTER, PA 19380
NAME AND TITLE
James R. McInnis, Director and President
Alan G. Hoden, Director
Stephen J. Preston, Director
David S. Pendergrass, Vice President and Treasurer
David L. Jacobson, Senior Vice President
Kimberly J. Smith, Secretary
PRINCIPAL EXECUTIVE OFFICERS OF ING FUNDS SERVICES, LLC
7337 E. DOUBLETREE RANCH ROAD
SCOTTSDALE, AZ 85258
NAME AND TITLE
James M. Hennessy - President and CEO
Michael J. Roland - Executive VP, CFO & Treasurer
Lydia L. Homer - Senior VP & Controller
45
William H. Rivoir III - Senior VP & Secretary
Robert S. Naka - Senior VP & Assistant Secretary
PRINCIPAL EXECUTIVE OFFICERS OF ING FUNDS DISTRIBUTOR, LLC
7337 E. DOUBLETREE RANCH ROAD
SCOTTSDALE, AZ 85258
NAME AND TITLE
Robert J. Boulware - President & CEO
James M. Hennessy - Senior Executive VP & Chief Operating Officer
Michael J. Roland - Executive VP, CFO & Treasurer
Lydia L. Homer - Senior VP & Controller
Lauren Bensinger - VP & Chief Compliance Officer
46
APPENDIX 5
MANAGEMENT
AGGREGATE AGREEMENT LAST
FISCAL YEAR ADVISORY FEES APPROVED BY
NAME OF REGISTRANT AND FUND END PAID SHAREHOLDERS
- --------------------------- ----------- ------------- --------------
ING EQUITY TRUST
ING Convertible Fund 05/31/02 $2,156,604 8/18/00
ING Equity and Bond Fund 05/31/02 $ 892,830 8/18/00
ING Financial Services Fund 05/31/02 $3,017,738 8/18/00
ING Growth Opportunities Fund 05/31/02 $3,583,090 8/25/00
ING Large Company Value Fund 05/31/02 $1,273,036 7/21/00
ING MidCap Opportunities Fund 05/31/02 $1,036,003 8/18/00
ING SmallCap Opportunities Fund 05/31/02 $3,747,533 8/25/00
ING Tax Efficient Equity Fund 05/31/02 $ 391,876 N/A*
ING FUNDS TRUST
ING GNMA Income Fund 03/31/03 $3,944,780 7/21/00
ING High Yield Opportunity Fund 03/31/03 $1,880,158 8/18/00
ING Lexington Money Market Trust 03/31/03 $ 261,796 7/21/00
ING Money Market Fund 03/31/03 $ 245,287 8/18/00
ING Strategic Bond Fund 03/31/03 $ 222,903 8/18/00
ING INVESTMENTS FUND, INC.
ING MagnaCap Fund 05/31/02 $2,642,299 8/18/00
ING MUTUAL FUNDS
ING International Fund 10/31/02 $ 583,867 7/21/00
ING Precious Metals Fund 10/31/02 $ 692,736 7/21/00
ING Worldwide Growth Fund 10/31/02 $2,596,016 8/18/00
ING SENIOR INCOME FUND
ING Senior Income Fund 02/28/03 $2,275,682 N/A*
ING VARIABLE INSURANCE TRUST
ING VP Worldwide Growth Portfolio 12/31/02 $ 286,125 N/A*
MANAGEMENT
AGGREGATE AGREEMENT LAST
FISCAL YEAR ADVISORY FEES APPROVED BY
NAME OF REGISTRANT AND FUND END PAID SHAREHOLDERS
- --------------------------- ----------- ------------- --------------
ING VARIABLE PRODUCTS TRUST
ING VP Convertible Portfolio 12/31/02 $ 9,209 N/A*
ING VP Growth Opportunities Portfolio 12/31/02 $ 104,703 8/18/00
ING VP High Yield Bond Portfolio 12/31/02 $ 75,915 8/18/00
ING VP International Value Portfolio 12/31/02 $ 499,493 8/18/00
ING VP Large Company Value Portfolio 12/31/02 $ 8,906 N/A*
ING VP MagnaCap Portfolio 12/31/02 $ 102,228 8/18/00
ING VP MidCap Opportunities Portfolio 12/31/02 $ 44,465 8/18/00
ING VP SmallCap Opportunities Portfolio 12/31/02 $ 807,368 8/18/00
ING VP NATURAL RESOURCES TRUST
ING VP Natural Resources Trust 12/31/02 $ 231,067 7/21/00
ING INVESTORS TRUST
ING International Portfolio 12/31/02 $1,863,379 7/10/02
USLICO SERIES FUND
The Asset Allocation Portfolio 12/31/02 $ 60,240 8/18/00
The Bond Portfolio 12/31/02 $ 14,746 8/18/00
The Money Market Portfolio 12/31/02 $ 32,124 8/18/00
The Stock Portfolio 12/31/02 $ 61,078 8/18/00
*Approved by sole-shareholder consent prior to Fund Inception
APPENDIX 6
ADVISORY FEE RATES FOR FUNDS
WITH SIMILAR INVESTMENT OBJECTIVES ADVISED OR SUB-ADVISED
BY AELTUS INVESTMENT MANAGEMENT, INC.
The following table sets forth the name of each other Investment Company, with
investment objectives similar to the Funds, for which Aeltus Investment
Management, Inc. acts as a sub-adviser, the annual rate of compensation and the
net assets of the Investment Company as of December 31, 2002.
SUBADVISORY
FUND NAME FEE ASSETS
- --------- ----------- ---------------------
ING Growth Fund................... 0.315% On first $250 million
0.293% On next $250 million
0.281% On next $250 million
0.270% On next $1.25 million
0.248% Over $2 billion
ING International Growth Fund..... 0.383% On first $250 million
0.360% On next $250 million
0.349% On next $250 million
0.338% On next $1.25 million
0.315% Over $2 billion
ING Small Company................. 0.383% On first $250 million
0.360% On next $250 million
0.349% On next $250 million
0.338% On next $1.25 million
0.326% Over $2 billion
ING Aeltus Money Market Fund...... 0.108% On first $500 million
0.158% On next $500 million
0.153% On next $1 billion
0.149% On next $1 billion
0.135% Over $3 billion
47
APPENDIX 7
CURRENT ADVISER AND PROPOSED SUB-ADVISER FEES
COMPARISON OF FUND ADVISER FEES
Fund Adviser Fee (paid by the Fund) Proposed Sub-Adviser Fee
(to be paid by the Adviser)
U.S. Equity
Convertible Fund 0.75% of the first $500 million of assets 0.3375% of the first $500 million of assets
0.675% of the next $500 million of assets 0.3038% of the next $500 million of assets
0.65% of the assets in excess of $1 billion 0.2925% of the assets in excess of $1 billion
Equity and Bond Fund 0.75% of the first $500 million of assets 0.3375% of the first $500 million of assets
0.675% of the next $500 million of assets 0.3038% of the next $500 million of assets
0.65% of the assets in excess of $1 billion 0.2925% of the assets in excess of $1 billion
Financial Services Fund 1.00% of the first $30 million of assets 0.4500% of the first $30 million of assets
0.75% of the next $95 million of assets 0.3375% of the next $95 million of assets
0.70% of assets in excess of $125 million 0.3150% of assets in excess of $125 million
Growth Opportunities Fund 0.95% 0.4275%
Large Company Value 0.75% of the first $100 million of assets 0.3375% of the first $100 million of assets
0.60% of assets in excess of $100 million 0.2700% of assets in excess of $100 million
0.50% of assets in excess of $150 million 0.2250% of assets in excess of $150 million
up to $250 million up to $250 million
0.40% of assets in excess of $250 million 0.1800% of assets in excess of $250 million
MagnaCap Fund 1.00% of the first $30 million of assets 0.4500% of the first $30 million of assets
0.75% of $30 million to $250 million 0.3375% of $30 million to $250 million
0.625% of $250 million to $500 million 0.2813% of $250 million to $500 million
0.50% of assets in excess of $500 million 0.2250% of assets in excess of $500 million
MidCap Opportunities Fund 1.00% 0.4500%
SmallCap Opportunities Fund 1.00% 0.4500%
Tax Efficient Equity Fund 0.80% 0.3600%
VP Convertible Portfolio 0.75% 0.3375%
VP Growth Opportunities Portfolio 0.75% 0.3375%
VP Large Company Value Portfolio 0.75% 0.3375%
VP MagnaCap Portfolio 0.75% 0.3375%
VP SmallCap Opportunities Portfolio 0.75% of the first $250 million of assets 0.3375% of the first $250 million of assets
0.70% of the next $250 million of assets 0.3150% of the next $250 million of assets
0.65% of the next $250 million of assets 0.2925% of the next $250 million of assets
0.60% of the next $250 million of assets 0.2700% of the next $250 million of assets
0.55% of the assets in excess of $1 billion 0.2475% of the assets in excess of $1 billion
Global/International Equity
International Fund 1.00% 0.4500%
Precious Metals Fund 1.00% of assets up to $50 million 0.4500% of assets up to $50 million
0.75% of assets in excess of $50 million 0.3375% of assets in excess of $50 million
Worldwide Growth Fund 1.00% of the first $500 million of assets 0.4500% of the first $500 million of assets
0.90% of the next $500 million of assets 0.4050% of the next $500 million of assets
0.85% of assets in excess of $1 billion 0.3825% of assets in excess of $1 billion
International Portfolio 1.25% of the first $500 million of assets 0.5625% of the first $500 million of assets
1.05% of the assets in excess of $500 million 0.4725% of the assets in excess of $500 million
VP International Value Portfolio 1.00% 0.4500%
VP Natural Resources Trust 1.00% 0.4500%
VP Worldwide Growth Portfolio 1.00% 0.4500%
48
Fixed Income
GNMA Income Fund 0.60% of the first $150 million of assets 0.2700% of the first $150 million of assets
0.50% of assets in excess of $150 million 0.2250% of assets in excess of $150 million
up to $400 million up to $400 million
0.45% of assets in excess of $400 million 0.2025% of assets in excess of $400 million
up to $800 million up to $800 million
0.40% of assets in excess of $800 million 0.1800% of assets in excess of $800 million
High Yield Opportunity Fund 0.60% 0.2700%
Lexington Money Market Trust 0.50% of assets up to $500 million 0.2250% of assets up to $500 million
0.45% of assets in excess of $500 million 0.2025% of assets in excess of $500 million
Money Market Fund 0.35% 0.1575%
Strategic Bond Fund 0.45% of first $500 million of assets 0.2025% of first $500 million of assets
0.40% of next $250 million of assets 0.1800% of next $250 million of assets
0.35% of assets in excess of $750 million 0.1575% of assets in excess of $750 million
VP High Yield Bond Fund 0.75% of the first $250 million of assets 0.3375% of the first $250 million of assets
0.70% of the next $250 million of assets 0.3150% of the next $250 million of assets
0.65% of the next $250 million of assets 0.2925% of the next $250 million of assets
0.60% of the next $250 million of assets 0.2700% of the next $250 million of assets
0.55% of the assets in excess of $1 billion 0.2475% of the assets in excess of $1 billion
Loan Participation Fund
Senior Income Fund 0.80% 0.3600%
USLICO Series Fund
The Asset Allocation Portfolio 0.50% of the first $100 million of assets 0.2250% of the first $100 million of assets
0.45% of assets in excess of $100 million 0.2025% of assets in excess of $100 million
The Bond Portfolio 0.50% of the first $100 million of assets 0.2250% of the first $100 million of assets
0.45% of assets in excess of $100 million 0.2025% of assets in excess of $100 million
The Money Market Portfolio 0.50% of the first $100 million of assets 0.2250% of the first $100 million of assets
0.45% of assets in excess of $100 million 0.2025% of assets in excess of $100 million
The Stock Portfolio 0.50% of the first $100 million of assets 0.2250% of the first $100 million of assets
0.45% of assets in excess of $100 million 0.2025% of assets in excess of $100 million
49
[ING __________ FUND]
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON JULY 22, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
[DIRECTORS/TRUSTEES]
The undersigned hereby instructs Kimberly A. Anderson or Michael J. Roland or
one or more substitutes designated by them, (Proxies) to vote the shares held by
him or her at the Special Meeting of shareholders ("Special Meeting") of the ING
[________________] Fund (the "Fund") to be held at: 7337 East Doubletree Ranch
Road, Scottsdale, Arizona 85258-2034, on July 22, 2003, at 10:00 a.m., Local
time and at any adjournment(s) thereof, in the manner directed below with
respect to the matters referred to in the Proxy Statement for the Special
Meeting, receipt of which is hereby acknowledged, and in the Proxies'
discretion, upon such other matters as may properly come before the meeting or
any adjournment(s) thereof.
Please vote, sign and date this voting instruction and return it in the enclosed
envelope.
These voting instructions will be voted as specified. IF NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED "FOR" ALL PROPOSALS.
TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY URGE YOU TO
REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR VOTE IS
IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
Please indicate your vote by an "X" in the appropriate box below.
THIS PROXY BALLOT IS VALID ONLY WHEN SIGNED AND DATED.
THE BOARD OF DIRECTORS/TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS.
FOR SHAREHOLDERS OF ALL FUNDS EXCEPT FOR AGAINST ABSTAIN
ING INTERNATIONAL PORTFOLIO
1. To approve a Sub-Advisory Agreement between ING
Investments, LLC and ING Aeltus Investment
Management, Inc. with no change in the Adviser,
the portfolio manager(s), or the overall
management fee paid by the Fund. [ ] [ ] [ ]
FOR SHAREHOLDERS OF ING
INTERNATIONAL PORTFOLIO ONLY
50
2. To approve a Sub-Advisory Agreement for ING
International Portfolio between Directed Services,
Inc. and ING Aeltus Investment Management, Inc.
with no change in the Adviser, the portfolio
manager(s), or the overall management fee paid by
the Fund. [ ] [ ] [ ]
FOR SHAREHOLDERS OF ALL ING FUNDS
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. [ ] [ ] [ ]
This proxy 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
__________________________________ __________________
Signature (if held jointly) Date
51