As filed with the Securities and Exchange Commission on December 23, 2003
Securities Act File No. 333-_____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.[ ]
Post-Effective Amendment No. [ ]
ING VARIABLE PRODUCTS TRUST
(Exact Name of Registrant as Specified in Charter)
7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034
(Address of Principal Executive Offices) (Zip Code)
1-800-992-0180
(Registrant's Area Code and Telephone Number)
Huey P. Falgout, Jr.
ING Investments, LLC
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
(Name and Address of Agent for Service)
With copies to:
Jeffrey S. Puretz, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401
------------------
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective on January 22, 2003
pursuant to Rule 488 under the Securities Act of 1933, as amended
- --------------------------------------------------------------------------------
No filing fee is required because an indefinite number of shares have previously
been registered pursuant to Rule 24f-2 under the Investment Company Act
of 1940, as amended.
ING VP GROWTH OPPORTUNITIES PORTFOLIO
ING VP GROWTH + VALUE PORTFOLIO
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
February 9, 2004
Dear Variable Contract Holder:
Your Board of Trustees has called a Special Meeting of shareholders
("Special Meeting") of ING VP Growth Opportunities Portfolio ("Growth
Opportunities Portfolio") and ING VP Growth + Value Portfolio ("Growth + Value
Portfolio"), which is scheduled for 10:00 a.m., Local time, on March 25, 2004 at
7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034.
The Board of Trustees of Growth Opportunities Portfolio and Growth +
Value Portfolio has reviewed and recommends the proposed reorganizations (each a
"Reorganization") of the Growth Opportunities Portfolio and Growth + Value
Portfolio, into ING VP MidCap Opportunities Portfolio ("MidCap Opportunities
Portfolio") (each a "Portfolio", and collectively, the "Portfolios"). The
Portfolios are members of the mutual fund group called the "ING Funds."
Shares of Growth Opportunities Portfolio or Growth + Value Portfolio
have been purchased at your direction by your insurance company ("Insurance
Company") through its separate account to fund benefits payable under your
variable annuity contract or variable life insurance policy (each, a "variable
contract"). Your Insurance Company, as the legal owner of that separate account,
has been asked to approve the Reorganization. You, as an owner of a variable
contract for which the Portfolios serve as investment options, are being asked
by your Insurance Company for instructions as to how to vote the shares of
Growth Opportunities Portfolio or Growth + Value Portfolio to which you have
allocated cash values under your variable contract.
If the Reorganization is approved and consummated, the separate account
in which you have an interest will own shares of MidCap Opportunities Portfolio
instead of shares of Growth Opportunities Portfolio or Growth + Value Portfolio.
The Reorganization would provide the separate account in which you have an
interest with an opportunity to participate in a larger fund with similar
investment objectives and strategies.
After careful consideration, the Board of Trustees of Growth
Opportunities Portfolio and Growth + Value Portfolio, unanimously approved each
proposal and recommends shareholders vote "FOR" the proposals.
A Proxy Statement/Prospectus that describes the Reorganization is
enclosed. We hope that you can attend the Special Meeting in person; however, we
urge you in any event to vote your shares by completing and returning the
enclosed proxy card in the envelope provided at your earliest convenience.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES ATTRIBUTABLE
TO YOUR VARIABLE CONTRACT. TO AVOID THE ADDED COST OF FOLLOW-UP SOLICITATIONS
AND POSSIBLE ADJOURNMENTS, PLEASE TAKE A FEW MINUTES TO READ THE PROXY
STATEMENT/PROSPECTUS AND CAST YOUR VOTE. IT IS IMPORTANT THAT YOUR VOTE BE
RECEIVED NO LATER THAN MARCH 24, 2004.
We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
/s/ James M. Hennessy
------------------------------
James M. Hennessy,
President and Chief Executive Officer
ING VP GROWTH OPPORTUNITIES PORTFOLIO
ING VP GROWTH + VALUE PORTFOLIO
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF ING VP GROWTH OPPORTUNITIES PORTFOLIO AND ING VP GROWTH + VALUE PORTFOLIO
SCHEDULED FOR MARCH 25, 2004
To the Variable Contract Holders:
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders ("Special
Meeting") of ING VP Growth Opportunities Portfolio ("Growth Opportunities
Portfolio") and ING VP Growth + Value Portfolio ("Growth + Value Portfolio") is
scheduled for March 25, 2004 at 10:00 a.m., Local time, at 7337 East Doubletree
Ranch Road, Scottsdale, Arizona 85258-2034.
At the Special Meeting, you will be asked to consider and approve the
following proposals:
(1) Growth Opportunities Portfolio only:
To approve an Agreement and Plan of Reorganization (the
"Reorganization Agreement") by and among Growth Opportunities
Portfolio and MidCap Opportunities Portfolio, providing for
the merger of Growth Opportunities Portfolio with and into
MidCap Opportunities Portfolio;
(2) Growth + Value Portfolio only:
To approve an Agreement and Plan of Reorganization (the
"Reorganization Agreement") by and among Growth + Value
Portfolio and MidCap Opportunities Portfolio, providing for
the merger of Growth + Value Portfolio with and into MidCap
Opportunities Portfolio; and
(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.
Shareholders of record as of the close of business on January 6, 2004,
are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof. Your attention is called to the accompanying Proxy
Statement/Prospectus. Regardless of whether you plan to attend the Special
Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so
that a quorum will be present and a maximum number of shares may be voted.
Proxies may be revoked at any time before they are exercised by executing and
submitting a revised proxy, by giving written notice of revocation to the Growth
Opportunities Portfolio or the Growth + Value Portfolio or by voting in person
at the Special Meeting.
By Order of the Board of Trustees
/s/ Huey P. Falgout
---------------------
Huey P. Falgout, Jr.,
Secretary
February 9, 2004
ING VP GROWTH OPPORTUNITIES PORTFOLIO
ING VP GROWTH + VALUE PORTFOLIO
PROXY STATEMENT/PROSPECTUS
FEBRUARY 9, 2004
TABLE OF CONTENTS
INTRODUCTION.............................................................................................. 1
SUMMARY................................................................................................... 3
The Proposed Reorganization............................................................................ 3
Comparison of Investment Objectives and Strategies..................................................... 6
Comparison of Portfolio Characteristics................................................................ 8
Relative Performance................................................................................... 10
Performance of ING MidCap Opportunities Portfolio...................................................... 11
Comparison of Investment Techniques and Principal Risks of Investing in the Portfolios................. 12
COMPARISON OF FEES AND EXPENSES........................................................................... 14
Management Fees........................................................................................ 14
Administration Fees.................................................................................... 14
Service Fees........................................................................................... 14
Expense Limitation Arrangements........................................................................ 14
Expense Tables......................................................................................... 15
INFORMATION ABOUT THE REORGANIZATION...................................................................... 17
The Reorganization Agreement........................................................................... 17
Reasons for the Reorganization......................................................................... 17
Board Considerations................................................................................... 18
Tax Considerations..................................................................................... 19
Expenses of the Reorganization......................................................................... 19
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS............................................................... 19
Form of Organization................................................................................... 19
Distributor............................................................................................ 19
Dividends and Other Distributions...................................................................... 20
Capitalization......................................................................................... 20
GENERAL INFORMATION ABOUT THE PROXY STATEMENT............................................................. 20
Solicitation of Proxies................................................................................ 20
Voting Rights.......................................................................................... 21
Other Matters to Come Before the Special Meeting....................................................... 22
Shareholder Proposals.................................................................................. 22
Reports to Shareholders................................................................................ 22
APPENDICES
Portfolio Manager's Report for ING VP MidCap Opportunities Portfolio................................... A
Form of Agreement and Plan of Reorganization (Growth + Value Portfolio)................................ B-1
Form of Agreement and Plan of Reorganization (Growth Opportunities Portfolio).......................... B-2
Additional Information Regarding ING VP MidCap Opportunities Portfolio................................. C
Security Ownership of Certain Beneficial and Record Owners............................................. D
DRAFT
SUBJECT TO TAX REVIEW
ING VP GROWTH OPPORTUNITIES PORTFOLIO
ING VP GROWTH + VALUE PORTFOLIO
PROXY STATEMENT/PROSPECTUS
FEBRUARY 9, 2004
ING VP MIDCAP OPPORTUNITIES PORTFOLIO
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to you in connection
with a Special Meeting of shareholders of ING VP Growth Opportunities Portfolio
("Growth Opportunities Portfolio") and ING VP Growth + Value Portfolio ("Growth
+ Value Portfolio") to be held on March 25, 2004 ("Special Meeting"). As more
fully described in this Proxy Statement, the purpose of the Special Meeting is
to vote on proposed reorganizations (each a "Reorganization") of the Growth
Opportunities Portfolio and the Growth + Value Portfolio into ING VP MidCap
Opportunities Portfolio ("MidCap Opportunities Portfolio") (each a "Portfolio"
and collectively, the "Portfolios").
Shares of Growth Opportunities Portfolio and Growth + Value Portfolio
are sold to separate accounts of insurance companies and are used to fund
variable annuity and/or variable life contracts ("Variable Contracts"). Variable
contract owners who select a Portfolio for investment through a Variable
Contract have a beneficial interest in the Portfolio, but do not invest directly
in or hold shares of the Portfolio. The insurance company that uses a Portfolio
as a funding vehicle, is, in most cases, the true shareholder of the Portfolio
and, as the legal owner of the Portfolio's shares, has sole voting and
investment power with respect to the shares, but generally will pass through any
voting rights to variable contract owners. For ease of reference throughout the
Proxy Statement/Prospectus, contract holders will be referred to as
"shareholders" of the Portfolios.
Under an Agreement and Plan of Reorganization (the "Reorganization
Agreement"), the Growth Opportunities Portfolio and Growth + Value Portfolio
(each, an "Acquired Portfolio" and collectively, the "Acquired Portfolios")
would each transfer all of its respective assets to MidCap Opportunities
Portfolio in exchange for shares of beneficial interest of MidCap Opportunities
Portfolio and the assumption by MidCap Opportunities Portfolio of each of the
Acquired Portfolio's liabilities.
Because you, as a shareholder of either the Growth Opportunities
Portfolio or Growth + Value Portfolio, are being asked to approve the
Reorganization Agreement that will result in a transaction in which you will
ultimately hold shares of MidCap Opportunities Portfolio, this Proxy Statement
also serves as a Prospectus for MidCap Opportunities Portfolio. MidCap
Opportunities Portfolio is a diversified mutual fund. MidCap Opportunities
Portfolio's investment objective is to seek long-term capital appreciation. The
Portfolio, under normal market conditions, seeks to achieve its investment
objective by investing at least 80% of its assets in common stocks of mid-sized
U.S. companies that the Sub-Adviser (Aeltus Investment Management, Inc. ("ING
Aeltus")) believes have above average prospects for growth.
This Proxy Statement/Prospectus, which should be read and retained for
future reference, sets forth concisely the information that a shareholder should
know before voting on the Reorganization Agreements. A Statement of Additional
Information ("SAI") relating to this Proxy Statement dated February 9, 2004
containing additional information about each Reorganization and the parties
thereto, has been filed with the U.S. Securities and Exchange Commission (the
"SEC") and is incorporated herein by reference. For a more detailed discussion
of the investment objectives, strategies and restrictions of the Portfolios, see
the Class R Prospectus, Class S Prospectus, and the SAI for the Portfolios,
dated May 1, 2003, which are incorporated herein by reference. Each Portfolio
also provides periodic reports to its shareholders which highlight certain
important information about the Portfolios, including investment results and
financial information. The annual report for MidCap Opportunities Portfolio,
dated December 31, 2002, is incorporated herein by reference. The semi-annual
report for MidCap Opportunities Portfolio, dated June 30, 2003, is incorporated
herein by reference. You may receive a copy of the most recent Prospectus, SAI,
SAI relating to the Proxy Statement, and annual report or semi-annual report for
any of the
1
Portfolios without charge by contacting the Portfolios at ING Funds, 7337 East
Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, Attention: Literature
Fulfillment, or by calling 1-800-992-0180.
You can copy and review information about each Portfolio (including the
SAI) at the SEC's Public Reference Room in Washington, D.C. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-202-942-8090. Reports and other information about the Portfolios are available
on the EDGAR Database on the SEC's internet site at http://www.sec.gov. You may
obtain copies of this information, after paying a duplicating fee, by electronic
request at the following e-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.
THE U.S. SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES, OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
SUMMARY
You should read this entire Proxy Statement/Prospectus carefully,
including the Appendices, which are also a part of the Proxy
Statement/Prospectus. You should also consult the Class R Prospectus and Class S
Prospectus for the Portfolios for more information about the Portfolios and the
Reorganization Agreements, which are attached hereto as APPENDIX B-1 and
APPENDIX B-2.
THE PROPOSED REORGANIZATIONS
On November 11, 2003, the Board of Trustees of Growth + Value Portfolio
and Growth Opportunities Portfolio approved the Reorganization Agreement with
respect to each Acquired Portfolio (each, a "Reorganization Agreement") and
MidCap Opportunities Portfolio. Subject to shareholder approval, each
Reorganization Agreement provides for:
- the transfer of all of the assets of Acquired Portfolio to
MidCap Opportunities Portfolio in exchange for shares of
beneficial interest of MidCap Opportunities Portfolio;
- the assumption by MidCap Opportunities Portfolio of all of the
liabilities of each Acquired Portfolio;
- the distribution of MidCap Opportunities Portfolio shares to
the shareholders of each Acquired Portfolio; and
- the complete liquidation of the Acquired Portfolio.
MidCap Opportunities Portfolio shares would then be distributed to
shareholders of each Acquired Portfolio so that each shareholder would receive a
number of full and fractional shares of MidCap Opportunities Portfolio equal to
the aggregate value of shares of the Acquired Portfolio held by such
shareholder.
As a result of the Reorganizations, each owner of Class R and Class S
shares of the Acquired Portfolios would become a shareholder of Class R and
Class S shares of MidCap Opportunities Portfolio. The Reorganization is expected
to be effective on April [__], 2004, or such other date as the parties may agree
(the "Closing Date").
Each shareholder will hold, immediately after the Closing Date, Class R
and Class S shares of MidCap Opportunities Portfolio having an aggregate value
equal to the aggregate value of the shares of the corresponding class of the
Acquired Portfolio held by that shareholder as of the Closing Date.
In considering whether to approve the Reorganization, you should note
that:
- The Portfolios have similar investment objectives;
- The Portfolios currently have the same portfolio management
team;
- The portfolio management team manages each Portfolio in a
similar fashion; and
- After application of expense reimbursements, it is expected
that the net operating expenses paid by the shareholders of
Class R and Class S shares of the Growth Opportunities
Portfolio will remain the same after the Reorganization
(excluding short-term, nonrecurring, reorganization expenses).
It is also expected that the net operating expenses paid by
the shareholders of Class R shares of the Growth + Value
Portfolio will increase by an annual rate of 0.10% after the
Reorganization (excluding short-term, nonrecurring,
reorganization expenses). Even with this increase, it should
be noted that after application of expense reimbursements,
after the Reorganization, shareholders of Class R shares of
the Growth + Value Portfolio will bear expenses within the
combined Portfolio that are below the median and mean for the
Growth + Value Portfolio's Lipper Peer Group, and that ING
Investments has agreed to continue the expense limitation
arrangement until at least December 31, 2005.
3
GROSS EXPENSES BEFORE THE MERGER
CLASS R CLASS S
------- -------
- Expenses of Growth + Value Portfolio
before expense reimbursement from
management: 1.13% N/A
- Expenses of Growth Opportunities
Portfolio before expense reimbursement
from management: 1.26% 1.51%
- Expenses of MidCap Opportunities
Portfolio before expense reimbursement
from management: 1.39% 1.65%
NET EXPENSES BEFORE THE MERGER (AFTER FEE WAIVER)
CLASS R CLASS S
------- -------
- Expenses of Growth + Value Portfolio
after expense reimbursement from
management:(2) 0.80% N/A
- Expenses of Growth Opportunities
Portfolio after expense reimbursement
from management:(2) 0.90% 1.10%(1)
- Expenses of MidCap Opportunities
Portfolio after expense reimbursement
from management:(2) 0.90% 1.10%(1)
AFTER THE MERGER: Pro Forma
- Gross Expenses of MidCap Opportunities
Portfolio before expense reimbursement
from management: 1.12% 1.37%
- Net Expenses of MidCap Opportunities
Portfolio after expense reimbursement
from management:(3)(4) 0.90% 1.10%(1)
- -------------------------------------------------------
(1) Includes 0.05% waiver of the 12b-1 fee for Class S.
(2) ING Investments has entered into an expense limitation agreement with
Growth + Value Portfolio that limits expenses to 0.80% for Class R
shares of the Portfolio. ING Investments has entered into an expense
limitation agreement with Growth Opportunities Portfolio that limits
expenses to 0.90% and 1.10%, respectively, for Class R and Class S
shares of the Portfolio. The expense limitation agreements are
contractual and will continue at least through December 31, 2004.
Thereafter, the expense limitation agreement shall renew automatically
for one-year terms unless ING Investments provides written notice of
the termination of the expense limitation agreement at least 90 days
prior to the end of the then current term or upon termination of the
investment management agreement. For more information, see "Comparison
of Fees and Expenses - Expense Limitation Arrangements."
(3) ING Investments has entered into an expense limitation agreement with
MidCap Opportunities Portfolio that limits expenses to 0.90% and 1.10%,
respectively, for Class R and Class S shares of the Portfolio. The
expense limitation agreement is contractual and will continue at least
through December 31, 2005. Thereafter, the expense limitation agreement
shall renew automatically for one-year terms unless ING Investments
provides written notice of the termination of the expense limitation
agreement at least 90 days prior to the end of the then current term or
upon termination of the investment management agreement. For more
information, see "Comparison of Fees and Expenses - Expense Limitation
Arrangements."
(4) Net Expenses after the Reorganization do not reflect short-term,
nonrecurring, reorganization expenses.
4
Approval of the Reorganization Agreement on behalf of the Growth Opportunities
Portfolio or the Growth + Value Portfolio requires the affirmative vote of the
holders of a majority of the shares of that Portfolio. The holders of a majority
of outstanding shares present in person or by proxy shall constitute a quorum at
any meeting of the shareholders.
AFTER CAREFUL CONSIDERATION, THE BOARD OF TRUSTEES OF GROWTH + VALUE
PORTFOLIO AND GROWTH OPPORTUNITIES PORTFOLIO UNANIMOUSLY APPROVED THE PROPOSED
REORGANIZATIONS. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED
REORGANIZATIONS.
5
COMPARISON OF INVESTMENT OBJECTIVES AND STRATEGIES
The following summarizes the investment objective, strategies and
management differences, if any, among Growth Opportunities Portfolio, Growth +
Value Portfolio and MidCap Opportunities Portfolio:
GROWTH OPPORTUNITIES MIDCAP OPPORTUNITIES
PORTFOLIO GROWTH + VALUE PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OBJECTIVE Seeks long-term growth of capital. Seeks capital appreciation. Seeks long-term capital
appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT STRATEGIES - Normally invests at least - Normally invests at least - Normally invests at least
65% of its total assets in 65% of its total assets in 80% of its assets in the
securities purchased on the securities purchased on the common stocks of mid-sized
basis of the potential for basis of the potential for U.S. companies.
capital appreciation. These capital appreciation. These
securities may be from securities may be from
large-cap, mid-cap, or large-cap, mid-cap, or
small-cap companies. small-cap companies.
- The Sub-Adviser uses a - The portfolio managers use - The Sub-Adviser uses a
disciplined combination of a disciplined combination disciplined combination of
quantitative screens and of quantitative screens and quantitative screens and
bottom-up fundamental bottom-up fundamental bottom-up fundamental
security analysis to build security analysis to build security analysis to build
a diversified portfolio of a broadly diversified a diversified portfolio of
companies the Sub-Adviser portfolio of companies that companies the Sub-Adviser
believes will have have improving bottom believes will have
improving bottom lines, lines, with reasonable improving bottom lines,
with reasonable valuation, valuation, whose stocks with reasonable valuation,
whose stocks demonstrate demonstrate relative whose stocks demonstrate
relative strength. The strength. The portfolio relative strength. The
Sub-Adviser's company managers' company analysis Sub-Adviser's company
analysis focuses upon the focuses upon the prospects analysis focuses upon the
prospects for continuing for continuing bottom-line prospects for continuing
bottom-line growth, balance growth, balance sheet bottom-line growth, balance
sheet strength, and cash strength, and cash flow sheet strength, and cash
flow characteristics. The characteristics. The flow characteristics. The
Sub-Adviser uses a portfolio managers use a Sub-Adviser uses a
proprietary measure to proprietary measure to proprietary measure to
determine relative stock determine relative stock determine relative stock
price strength. A price. A determination of price strength. A
determination of reasonable reasonable valuation for determination of reasonable
valuation for individual individual securities is valuation for individual
securities is based on the based on the judgment of securities is based on the
judgment of the the portfolio managers. judgment of the
Sub-Adviser. Sub-Adviser.
- The Sub-Adviser may sell - The portfolio managers may - The Sub-Adviser may sell
securities for a variety of sell securities for a securities for a variety of
reasons, such as to secure variety of reasons, such as reasons, such as to secure
gains, limit losses, or to secure gains, limit gains, limit losses, or
redeploy assets into losses, or redeploy assets redeploy assets into
opportunities believed to into opportunities believed opportunities believed to
be more promising. The most to be more promising. The be more promising. The most
frequent reason to sell a most frequent reason to frequent reason to sell a
security is likely to be sell a security is likely security is likely to be
that the Sub-Adviser to be that the portfolio that the Sub-Adviser
believes a company's bottom managers believe a believes a company's bottom
line results or prospects company's bottom line line results or prospects
have been changed. results or prospects have have been changed.
been changed.
6
GROWTH OPPORTUNITIES MIDCAP OPPORTUNITIES
PORTFOLIO GROWTH + VALUE PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
- The Portfolio also may lend - The Portfolio also may lend - The Portfolio also may lend
portfolio securities on a portfolio securities on a portfolio securities on a
short-term or long-term short-term or long-term short-term or long-term
basis, up to 33 1/3% of its basis, up to 33 1/3% of its basis, up to 33 1/3% of its
total assets. total assets. total assets.
- The Portfolio may engage - The Portfolio may engage - The Portfolio may engage
in frequent and active in frequent and active in frequent and active
trading of portfolio trading of portfolio trading of portfolio
securities to achieve securities to achieve its securities to achieve its
its investment objective. investment objective. investment objective.
- ------------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENTS - The Portfolio invests - The Portfolio invests - The Portfolio invests
primarily in common stock primarily in a primarily in common
of U.S. companies that diversified portfolio of stock of U.S.companies
the Sub-Adviser feels have equity securities, that the Sub-Adviser
above average prospects including common and feels have above average
for growth. preferred stock. The prospects for growth.
Portfolio invests in
common stock of companies
the portfolio managers
believe are poised to rise
in price.
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT ADVISER ING Investments, LLC ING Investments, LLC ING Investments, LLC
- ------------------------------------------------------------------------------------------------------------------------------------
SUB-ADVISER Aeltus Investment N/A Aeltus Investment
Management, Inc. Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO MANAGERS (1) Matthew S. Price, CFA and Matthew S. Price, CFA and Matthew S. Price, CFA and
David C. Campbell David C. Campbell David C. Campbell
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Price and Mr. Campbell became the portfolio managers of Growth
Opportunities Portfolio and the MidCap Opportunities Portfolio as of
April 21, 2003. Prior to April 21, 2003, those Portfolios were both
managed by another portfolio management team. Messrs. Price and
Campbell became the portfolio managers of the Growth + Value Portfolio
as of June 16, 2003. Prior to that date, the Growth + Value Portfolio
was sub-advised by an investment advisory firm that was not affiliated
with the Adviser.
As you can see from the chart above, the investment objectives
and strategies of the Portfolios are similar. Each Portfolio also has
substantially similar purchase options, exchange rights and redemption
procedures.
7
COMPARISON OF PORTFOLIO CHARACTERISTICS
The following table compares certain characteristics of Growth
Opportunities Portfolio, Growth + Value Portfolio and MidCap Opportunities
Portfolio as of June 30, 2003:
MIDCAP
GROWTH + VALUE GROWTH OPPORTUNITIES OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
Net Assets $ 56,585,640 $20,902,946 $ 13,500,369
- ---------------------------------------------------------------------------------------------------------------------
Number of Holdings 98 91 91
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate(1) 240% 151% 165%
- ---------------------------------------------------------------------------------------------------------------------
Average market capitalization of
companies in Portfolio: $2.1 billion $3.7 billion $3.2 billion
Market capitalization range of
companies in Portfolio
(as a % of net assets):
Holdings in companies with
market capitalizations over $10
billion: 11.68% 41.62% 16.84%
Holdings in companies with
market capitalizations between
$5 billion and $10 billion: 11.47% 17.22% 24.16%
Holdings in companies with
market capitalizations under $5
billion: 68.14% 38.32% 55.87%
- ---------------------------------------------------------------------------------------------------------------------
U.S Equity Securities
(as a % of net assets) 95.3% 94.0% 94.4%
- ---------------------------------------------------------------------------------------------------------------------
Foreign Securities
(as a % of net assets) - 3.7% 3.1%
- ---------------------------------------------------------------------------------------------------------------------
Top 5 Industries Commercial
(as % of net assets) Services 8.9% Retail 11.4% Retail 11.2%
Retail 7.9% Pharmaceuticals 8.4% Pharmaceuticals
Commercial 10.2%
Electronics 7.2% Computers 8.2% Services 9.2%
Pharmaceuticals 6.5% Oil & Gas 7.7% Oil & Gas 6.3%
Internet 5.4% Equity Fund 5.3% Healthcare-Products 6.1%
- ---------------------------------------------------------------------------------------------------------------------
Top 10 Holdings Halliburton Co. 2.2% Omnicare, Inc. 2.2% Pharm. Product
(as a % of net assets) Develop., Inc. 2.1%
Nabors Industries
Amazon.Com, Inc. 2.0% Ltd. 2.2% Gentex Corp. 2.0%
Timberland Co. 2.0% Xilinx, Inc. 2.0% InterActiveCorp. 2.0%
Veritas Software Varian Medical
Tetra Tech, Inc. 2.0% Corp. 2.0% Systems, Inc. 1.8%
Avid Technology, Pharm. Product Abercrombie and
Inc. 2.0% Devel., Inc. 1.8% Fitch Co. 1.8%
Tractor Supply Co. 1.8% Citigroup, Inc. 1.8% Omnicare, Inc. 1.8%
Performance Food Patterson-UTI
Group Co. 1.8% Utstarcom, Inc. 1.8% Energy, Inc. 1.7%
8
- ---------------------------------------------------------------------------------------------------------------------
MIDCAP
GROWTH + VALUE GROWTH OPPORTUNITIES OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------
Midcap SPDR Trust Nasdaq-100 Index Nabors Industries
Series 1 1.7% Tracking Stock 1.7% Ltd. 1.7%
International Bank America
Game Technology 1.6% Corp. 1.7% Medimmune, Inc. 1.6%
Utstarcom, Inc. 1.6% Wells Fargo &
Co. 1.7% Altera Corp. 1.6%
(1) For the six-month period ended June 30, 2003
Following the Reorganizations, certain holdings of Growth + Value
Portfolio and the Growth Opportunities Portfolio that are transferred to MidCap
Opportunities Portfolio in connection with the Reorganizations may be sold. Such
sales may result in increased transaction costs for MidCap Opportunities
Portfolio, and the realization of taxable gains or losses for MidCap
Opportunities Portfolio. For more information, see the notes to the Pro Forma
financial statements in the SAI relating to this Proxy Statement/Prospectus.
9
RELATIVE PERFORMANCE
The following table shows, for the periods shown, the unaudited average
annual total return for: (i) Class R shares of Growth + Value Portfolio; (ii)
Class R shares of Growth Opportunities Portfolio; (iii) Class R shares of MidCap
Opportunities Portfolio; (iv) Russell MidCap Growth Index; and (v) Russell
MidCap Index. Performance of the Portfolios in the table below does not reflect
the deduction of expenses and charges which are, or may be imposed under your
annuity contract or life insurance policy, and would be lower if it did. An
index has an inherent performance advantage over the Portfolios since it has no
cash in its portfolios, imposes no sales charges, and incurs no operating
expenses. An investor cannot invest directly in an index. Total return is
calculated assuming reinvestment of all dividends and capital gain distributions
at net asset value. Each Portfolio's past performance is not an indication of
its future performance.
CALENDAR RUSSELL RUSSELL
YEAR/PERIOD GROWTH + GROWTH MIDCAP MIDCAP GROWTH MIDCAP
ENDED VALUE(1)(4) OPPORTUNITIES(1)(5) OPPORTUNITIES(1)(5) INDEX(2) INDEX(3)
----- ----------- ------------------- ------------------ ------- --------
12/31/01 -30.99% -38.57% -32.92% -20.15% -5.62%
12/31/02 -37.33% -31.57% -25.86% -27.41% -16.18%
1/1/03-9/30/03 22.90% 19.20% 22.44% 27.24% 22.89%
- ----------------
(1) Class R shares of the Growth + Value Portfolio commenced May 6, 1994.
Class R shares of the Growth Opportunities Portfolio commenced May 3,
2000. Class R shares of the MidCap Opportunities Portfolio commenced
May 5, 2000. The performance of Class S shares of the Growth
Opportunities Portfolio and the MidCap Opportunities Portfolio would
have been lower due to higher expenses of Class S shares.
(2) The Russell MidCap Growth Index is an unmanaged index that measures the
performance of those companies included in the Russell MidCap Index
with relatively higher price-to-book rations and higher forecasted
growth values.
(3) The Russell MidCap Index is an unmanaged index that measures the
performance of the 800 smallest companies in the Russell 1000 Index,
which represent approximately 26% of the total market capitalization of
the Russell 1000 Index.
(4) Growth + Value Portfolio is directly advised by ING Investments under
the portfolio management team of Mr. Matthew Price and Mr. David
Campbell as of June 16, 2003. Prior to that date, the Growth + Value
Portfolio was sub-advised by an investment advisory firm that was not
affiliated with the Adviser.
(5) Growth Opportunities Portfolio and MidCap Opportunities Portfolio are
both managed by Mr. Price and Mr. Campbell as of April 21, 2003. Prior
to April 21, 2003, those Portfolios were both managed by a different
portfolio management team.
10
PERFORMANCE OF MIDCAP OPPORTUNITIES PORTFOLIO
The following bar chart and tables provide an indication of the risks
of investing in MidCap Opportunities Portfolio by showing (on a calendar year
basis) changes in MidCap Opportunities Portfolio's annual total return from year
to year and by showing (on a calendar year basis) how MidCap Opportunities
Portfolio's average annual returns for one year and life of class compare to
those of the Russell MidCap Growth Index and the Russell MidCap Index. The
information in the bar chart is based on the performance of the Class R shares
of the MidCap Opportunities Portfolio. Performance does not reflect the
deduction of expenses and charges which are, or may be imposed under your
annuity contract or life insurance policy, and would be lower if they did.
MidCap Opportunities Portfolio's past performance is not necessarily an
indication of how the Portfolio will perform in the future. Total returns
include reinvestment of dividends and capital gains distributions, if any. The
Russell MidCap Growth Index and the Russell MidCap Index are unmanaged.
CALENDAR YEAR-BY-YEAR RETURNS(1)(2)(3)
<Table>
<Caption>
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
-32.92 -25.86
</Table>
- ---------------------
(1) These figures are for the year ended December 31 of each year.
(2) Class R shares of the Portfolio commenced operations on May 5, 2000.
Class S shares commenced operations on May 8, 2001. Class S shares
would have substantially similar annual returns as the Class R shares
because the classes are invested in the same portfolio of securities.
Annual returns would differ only to the extent that Class R and Class S
shares have different expenses. The performance of Class S shares of
the MidCap Opportunities Portfolio would have been lower due to the
higher expenses of Class S shares. During the period shown in the
chart, the Portfolio's best performance was 23.12% for the quarter
ended December 31, 2001, and the Portfolio's worst quarterly
performance was -28.03% for the quarter ended September 30, 2001. The
Portfolio's year-to-date total return as of September 30, 2003 is
19.20%.
(3) MidCap Opportunities Portfolio is managed by Mr. Matthew Price and Mr.
David Campbell as of April 21, 2003. Prior to April 21, 2003, the
Portfolio were both managed by a different portfolio management team.
11
The following table shows what the average annual total returns of MidCap
Portfolio would equal if you averaged out actual performance over various
lengths of time compared to the Russell MidCap Growth Index and the Russell
MidCap Index, unmanaged indices. The Russell MidCap Growth Index and the Russell
MidCap Index have an inherent performance advantage over MidCap Opportunities
Portfolio since it has no cash in its portfolio, imposes no sales charges and
incurs no operating expenses. An investor cannot invest directly in an index.
MIDCAP OPPORTUNITIES PORTFOLIO -- AVERAGE ANNUAL TOTAL RETURNS for the periods
ended December 31, 2002
SINCE 10 YEARS
1 YEAR INCEPTION (OR LIFE OF CLASS)
------ --------- ------------------
Class R return (1) -25.86% -25.89% N/A
Class S return (2) -25.99% -24.45% N/A
Russell MidCap Growth Index (reflects no deduction for
fees or expenses) (3) -27.41% -24.79% (4) N/A
Russell MidCap Index (reflects no deduction for fees -16.18% -7.32% (4) N/A
or expenses) (5)
- -----------------------------
(1) Class R shares commenced operations on May 5, 2000.
(2) Class S shares commenced operations on May 8, 2001.
(3) Russell MidCap Growth Index is an unmanaged index that measures the
performance of those companies included in the Russell MidCap Index
with relatively higher price-to-book ratios and higher forecasted
growth values.
(4) Index return for Class R shares is for the period beginning May 1,
2000. Index return for Class S shares is - 21.84% for Russell MidCap
Growth Index and -11.61% for Russell MidCap Index for the period
beginning May 1, 2001.
(5) Russell MidCap Index measures the performance of the 800 smallest
companies in the Russell 1000 Index, which represent approximately 26%
of the total market capitalization of the Russell 1000 Index.
For a discussion by the Adviser regarding the performance of MidCap
Opportunities Portfolio for the semi-annual period ended June 30, 2003, see
APPENDIX A to this Proxy Statement/Prospectus. Additional information about
MidCap Opportunities Portfolio is included in Appendix C to this Proxy
Statement/Prospectus.
COMPARISON OF INVESTMENT TECHNIQUES AND PRINCIPAL RISKS OF INVESTING IN THE
PORTFOLIOS
Because the Portfolios have investment objectives and strategies that
are similar, many of the risks of investing in MidCap Opportunities Portfolio
are substantially the same as the risks of investing in the Growth Opportunities
Portfolio and the Growth + Value Portfolio. You may lose money on your
investment in any of the Portfolios. The value of each Portfolio's shares may go
up or down, sometimes rapidly and unpredictably. Market conditions, financial
conditions of issuers represented in the portfolio, investment strategies,
portfolio management, and other factors affect the volatility of each
Portfolio's shares. The following summarizes the principal investment techniques
and risks of investing in the Portfolios.
Price Volatility. Each of the Portfolios faces the risk of price
volatility. The value of a Portfolio changes as the prices of its investments go
up or down. Equity securities face market, issuer and other risks, and their
values may go up or down, sometimes rapidly and unpredictably. Market risk is
the risk that securities may decline in value due to factors affecting
securities markets generally or particular industries. Issuer risk is the risk
that the value of a security may decline for reasons relating to the issuer,
such as changes in the financial condition of the issuer. While equities may
offer the potential for greater long-term growth than most debt securities, they
generally have higher volatility. The Growth Opportunities Portfolio and MidCap
Opportunities Portfolio each invests in companies that the Sub-Adviser feels
have the potential for rapid growth which may give the Portfolio a higher risk
of price volatility than a fund that emphasizes other styles, such as a
value-oriented style. The MidCap Opportunities Portfolio invests in mid-sized
companies and the Growth Opportunities Portfolio and the Growth + Value
Portfolio may invest in small and mid-sized companies. Small and mid-sized
companies may be more susceptible to price swings than larger companies because
they have fewer financial resources, more limited product and market
diversification and many are dependent on a few key managers.
12
Market Trends. From time to time, the stock market may not favor the
growth securities in which the Portfolios invest or the mid-cap growth
securities which the MidCap Opportunities Portfolio emphasizes and in which the
Growth Opportunities Portfolio and Growth + Value Portfolio may invest. Rather,
the market could favor more speculative growth stocks or more value-oriented
stocks or large or small company stocks, or may not favor equities at all.
Inability to Sell Securities. Securities of small and mid-sized
companies usually trade in lower volume and may be less liquid than securities
of larger, more established companies. These less liquid securities could
include securities of small- and mid-size U.S. companies, high-yield securities,
convertible securities, unrated debt and convertible securities, securities that
originate from small offerings, and foreign securities, particularly those from
companies in emerging markets. A Portfolio could lose money if it cannot sell a
security at the time and price that would be most beneficial to the Portfolio.
Securities Lending. There is a risk when lending portfolio securities,
the securities may not be available to the Portfolio on a timely basis and the
Portfolio may, therefore lose the opportunity to sell the securities at a
desirable price.
Portfolio Turnover. A high portfolio turnover rate involves greater
expenses to the Portfolio, including brokerage commissions and other transaction
costs, and is likely to generate more taxable short-term gains for shareholders,
which may have an adverse impact on performance.
Management Risk. Each Portfolio is subject to management risk because
it is an actively managed investment portfolio. The Adviser, each Sub-Adviser
and each portfolio manager will apply investment techniques and risk analyses in
making investment decisions for the Portfolios, but there can be no guarantee
that these will produce the desired results.
Changes in Interest Rates. (Growth + Value) The value of the
Portfolio's convertible securities may fall when interest rates rise.
Convertible securities with longer durations tend to be more sensitive to
changes in interest rates, usually making them more volatile than convertible
securities with shorter durations.
Credit Risk. (Growth + Value) The Portfolio could lose money if the
issuer of a convertible security is unable to meet its financial obligations or
goes bankrupt.
Initial Public Offerings. (Growth Opportunities and MidCap
Opportunities) A significant portion of the Portfolio's return may be
attributable to its investment in initial public offerings. When the Portfolio's
asset base is small, the impact of such investments on the Portfolio's return
will be magnified. As the Portfolio's assets grow, it is probable that the
effect of the Portfolio's investment in initial public offerings on the
Portfolio's total return will decline.
13
COMPARISON OF FEES AND EXPENSES
The following discussion describes and compares the fees and expenses
of the Portfolios. For further information on the fees and expenses of MidCap
Opportunities Portfolio, see "APPENDIX C: ADDITIONAL INFORMATION REGARDING
MIDCAP OPPORTUNITIES PORTFOLIO."
MANAGEMENT FEES
Growth + Value Portfolio, Growth Opportunities Portfolio and MidCap
Opportunities Portfolio pay ING Investments, LLC ("ING Investments" or
"Adviser") a management fee of 0.75% of each Portfolio's average daily net
assets.
The Adviser pays ING Aeltus a sub-advisory fee of 0.3375% of Growth
Opportunities Portfolio's average daily net assets and 0.3375% of MidCap
Opportunities Portfolio's average daily net assets for its services as
sub-adviser to the Portfolios.
ADMINISTRATIVE FEES
Each of the Portfolios pays an annual administrative fee of 0.10% of
the average daily net assets of each Portfolio.
SERVICE FEES
The Growth Opportunities Portfolio and MidCap Opportunities Portfolio
each has adopted a Shareholder Services Plan (the Plan) for its Class S shares.
Under the Plan, each Portfolio makes payments at an annual rate of 0.25% of the
Portfolio's average daily net assets attributable to its Class S shares to
insurance companies, broker-dealers or other financial intermediaries that
provide services relating to Class S shares and their shareholders .
EXPENSE LIMITATION ARRANGEMENTS
Expense limitation agreements are in place for each of the Portfolios.
Under the terms of the expense limitation agreements, ING Investments has agreed
to limit the expenses of the Portfolios, excluding interest, taxes, brokerage
and extraordinary expenses, subject to possible recoupment by ING Investments
within three years. The current expense limitation agreement for each Portfolio
is contractual and shall review automatically for one-year terms unless the
Adviser provides written notice of the termination of the expense limitation
agreement within 90 days of the end of the then current term or upon termination
of the investment management agreement. The current agreements, with respect to
the Growth + Value and Growth Opportunities Portfolios, provide that it will
remain in effect through at least December 31, 2004. The expense limitation
agreement for the MidCap Opportunities Portfolio will remain in effect through
at least December 31, 2005. There can be no assurance that the expense
limitation agreements will be continued after this date. The expense limitation
for Class R of the Growth + Value Portfolio is 0.80%. The expense limitations
for Class R shares and Class S shares of Growth Opportunities Portfolio and
MidCap Opportunities Portfolio are 0.90% and 1.10%, respectively. This
information and similar information is shown in the table below entitled "Annual
Portfolio Operating Expenses."
14
EXPENSE TABLE
The current expenses of each Portfolio and estimated pro forma expenses
giving effect to the proposed Reorganizations are shown in the following table.
Expenses of the Portfolios are based upon the operating expenses incurred by
Class R and Class S shares of the Portfolios for the period ended June 30, 2003.
Pro forma fees show estimated fees of MidCap Opportunities Portfolio after
giving effect to the proposed Reorganization. Pro forma numbers are estimated in
good faith and are hypothetical.
ANNUAL PORTFOLIO OPERATING EXPENSES (UNAUDITED)
(expenses that are deducted from Portfolio assets, shown as a ratio of expenses
to average daily net assets) (1)
TOTAL FEE WAIVER
MANAGEMENT SERVICE OTHER OPERATING BY NET
FEES FEES EXPENSES(2)(4) EXPENSES ADVISER(3) EXPENSES
---- ---- -------------- -------- ---------- --------
CLASS R
Growth + Value Portfolio 0.75% N/A 0.38% 1.13% 0.33% 0.80%
Growth Opportunities Portfolio 0.75% N/A 0.51% 1.26% 0.36% 0.90%
MidCap Opportunities Portfolio 0.75% N/A 0.64% 1.39% 0.49% 0.90%
MidCap Opportunities Portfolio
After the Reorganization
(Estimated Pro Forma) 0.75% N/A 0.37% 1.12% 0.22% 0.90%
CLASS S
Growth + Value Portfolio N/A N/A N/A N/A N/A N/A
Growth Opportunities Portfolio(5) 0.75% 0.25% 0.51% 1.51% 0.41% 1.10%
MidCap Opportunities Portfolio(5) 0.75% 0.25% 0.65% 1.65% 0.55% 1.10%
MidCap Opportunities Portfolio
After the Reorganization(5)
(Estimated Pro Forma) 0.75% 0.25% 0.37% 1.37% 0.27% 1.10%
- -----------------------
(1) The fiscal year end for Growth + Value Portfolio, Growth Opportunities
Portfolio and MidCap Opportunities Portfolio is December 31.
(2) ING Funds Services, LLC receives an annual administration fee equal to
0.10% of average daily net assets.
(3) ING Investments has entered into an expense limitation agreement with
each Portfolio under which it will limit the expenses of the Portfolios
(excluding interest, taxes, brokerage and extraordinary expenses,
subject to possible recoupment by ING Investments within three years).
The expense limitation is for 0.80% for the Class R shares of the
Growth + Value Portfolio. The expense limitation is for 0.90% and
1.10%, respectively, for Class R shares and Class S shares of the
Growth Opportunities Portfolio and MidCap Opportunities Portfolio. The
expense limitation agreements are contractual and will continue at
least through December 31, 2004 for the Growth + Value Portfolio and
the Growth Opportunities Portfolio. The expense limitation agreement
for MidCap Opportunities Portfolio will continue at least through
December 31, 2005. Thereafter, the expense limitation agreements renew
automatically for one-year terms unless ING Investments provides
written notice of the termination of the expense limitation agreement
at least 90 days prior to the end of the then-current term or upon
termination of the investment management agreement.
(4) Estimated "Other Expenses" for Class S are based on MidCap
Opportunities Portfolio's actual "Other Expenses" for Class S shares
for the Portfolio's most recently completed fiscal year. "Other
Expenses" excludes short-term, nonrecurring expenses related to the
Reorganization of the Growth Opportunities Portfolio and Growth + Value
Portfolio with and into the MidCap Opportunities Portfolio.
(5) Includes 0.05% waiver of the 12b-1 fee for Class S.
15
Examples. The following examples are intended to help you compare the
cost of investing in each Portfolio and the combined Portfolio. The examples
assume that you invest $10,000 in each Portfolio and in the combined Portfolio
after the Reorganizations for the time periods indicated. The examples also
assume that your investment has a 5% return each year and that each Portfolio's
operating expenses remain the same. The 5% return is an assumption and is not
intended to portray past or future investment results. Based on the above
assumptions, you would pay the following expenses. Your actual costs may be
higher or lower.
GROWTH + VALUE PORTFOLIO(1) GROWTH OPPORTUNITIES PORTFOLIO(1)
--------------------------- ---------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
CLASS R 82 326 590 1,345 92 364 657 1,491
CLASS S N/A N/A N/A N/A 112 437 785 1,767
MIDCAP OPPORTUNITIES PORTFOLIO(1)
---------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS R 92 392 714 1,626
CLASS S 112 467 845 1,908
ESTIMATED PRO FORMA:
THE PORTFOLIOS COMBINED (1)*
----------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CLASS R 92 334 596 1,343
CLASS S 112 407 724 1,623
- ----------
(1) The example reflects the contractual expense limitation for the
one-year period and the first year of the three-, five-, and ten-year
periods.
* Estimated.
16
INFORMATION ABOUT THE REORGANIZATION
THE REORGANIZATION AGREEMENTS
The terms and conditions under which the proposed transaction may be
consummated are set forth in each Reorganization Agreement. Significant
provisions of the Reorganization Agreements are summarized below; however, this
summary is qualified in its entirety by reference to the Reorganization
Agreements, copies of which are attached as APPENDIX B-1 and APPENDIX B-2.
The Reorganization Agreements provide for (i) the transfer, as of the
Closing Date, of all of the assets of Growth + Value Portfolio and Growth
Opportunities Portfolio in exchange for shares of beneficial interest of MidCap
Opportunities Portfolio and the assumption by MidCap Opportunities Portfolio of
all of each Acquired Portfolio's liabilities; and (ii) the distribution of
shares of MidCap Opportunities Portfolio to shareholders of each Acquired
Portfolio, as provided for in the Reorganization Agreements. Growth + Value
Portfolio and Growth Opportunities Portfolio will then be liquidated.
After the Reorganizations, each shareholder of each Acquired Portfolio
will own shares of MidCap Opportunities Portfolio having an aggregate value
equal to the aggregate value of the shares in the Acquired Portfolio held by
that shareholder as of the Closing Date. Shareholders of Class R shares of
Growth + Value Portfolio will receive Class R shares of MidCap Opportunities
Portfolio. Shareholders of Class R shares and Class S shares of Growth
Opportunities Portfolio will receive the corresponding class of shares of MidCap
Opportunities Portfolio.
Until the Closing Date, shareholders of each Acquired Portfolio will
continue to be able to exchange their shares for shares of another portfolio in
accordance with the provisions in their variable insurance contract prospectus.
Exchange requests received after the Closing Date will be treated as requests
received by MidCap Opportunities Portfolio for the exchange of its shares.
The obligations of the Portfolios under the Reorganization Agreement
are subject to various conditions, including approval of the shareholders of
each of the Acquired Portfolios. The Reorganization Agreement also requires that
each of the Portfolios take, or cause to be taken, all actions, and do or cause
to be done, all things reasonably necessary, proper or advisable to consummate
and make effective the transactions contemplated by the Reorganization
Agreements. The Reorganization Agreements may be terminated by mutual agreement
of the parties or on certain other grounds. Please refer to APPENDIX B-1 and
APPENDIX B-2 to review the terms and conditions of the Reorganization
Agreements.
REASONS FOR THE REORGANIZATION
Each Reorganization is one of several reorganizations that have taken
place among various ING Funds. The ING Fund complex has grown in recent years
through the addition of many funds. Management of the ING Funds has proposed the
consolidation of several of the ING Funds that they believe have similar or
compatible investment strategies. The Reorganizations are designed to reduce the
overlap in funds offered in the ING Funds complex, thereby eliminating
inefficiencies and confusion about overlapping funds. ING Investments also
believes that the Reorganizations may benefit shareholders by resulting in a
surviving fund with a greater asset base. This is expected to provide greater
investment opportunities for the MidCap Opportunities Portfolio and the
potential to take larger portfolio positions.
The proposed Reorganizations were presented to the Board of Trustees of
Growth + Value Portfolio, Growth Opportunities Portfolio, and MidCap
Opportunities Portfolio for consideration at a meeting held on November 11,
2003. For the reasons discussed below, the Trustees of the Portfolios, including
all of the Trustees who are not "interested persons" (as defined in the
Investment Company Act of 1940, as amended) of the Portfolios, determined that
the interests of the shareholders of either Portfolio will not be diluted as a
result of the proposed Reorganizations, and that the proposed Reorganizations
are in the best interests of both Portfolios and their shareholders.
The Reorganization will allow the Growth + Value Portfolio's and the
Growth Opportunities Portfolio's shareholders to continue to participate in a
professionally managed portfolio that seeks to achieve capital
17
appreciation through investment in equity securities. As shown in the fee table,
after application of expense reimbursements, it is expected that the net
operating expenses paid by the shareholders of Class R and Class S shares of the
Growth Opportunities Portfolio will remain the same after the Reorganization
(excluding short-term, nonrecurring, reorganization expenses). It is also
expected that the net operating expenses paid by the shareholders of Class R
shares of the Growth + Value Portfolio increase by an annual rate of 0.10% after
the Reorganization (excluding short-term, nonrecurring, reorganization
expenses). Even with this increase, it should be noted that after application of
expense reimbursements, after the Reorganization, shareholders of the Growth +
Value Portfolio will bear expenses within the combined Portfolio that are below
the median and mean for the Growth + Value Portfolio's Lipper Peer Group, and
that ING Investments has agreed to continue the expense limitation arrangement
until at least December 31, 2005.
- -------------------------------------------------------------------------------------------
CLASS R EXPENSE RATIO** TOTAL ASSETS (MILLIONS $)**
- -------------------------------------------------------------------------------------------
GROWTH + VALUE PORTFOLIO 0.80% 59.7
- -------------------------------------------------------------------------------------------
MIDCAP OPPORTUNITIES PORTFOLIO 0.90% 13.6
- -------------------------------------------------------------------------------------------
Lipper Peer Group*
- -------------------------------------------------------------------------------------------
Low 0.75% 21.1
- -------------------------------------------------------------------------------------------
High 1.59% 6.6
- -------------------------------------------------------------------------------------------
Median 1.04% 24
- -------------------------------------------------------------------------------------------
Average 1.06% 12.2
- -------------------------------------------------------------------------------------------
+1 Standard Deviation 1.27% 25.5
- -------------------------------------------------------------------------------------------
Fund Rank 5/26 12/26
- -------------------------------------------------------------------------------------------
* Selected Peer Group: total assets range ($2 million to $46 million), 26 Funds
**Class level Expense Ratio and Fund level total assets as of 6/30/03
Shares of the Portfolios may be exchanged for shares of any other
Portfolio before taking expense reimbursements into account.
BOARD CONSIDERATIONS
The Board of Trustees of Growth + Value Portfolio and Growth
Opportunities Portfolio in recommending the proposed transaction, considered a
number of factors, including the following:
- the plans of management to reduce overlap in funds in the ING
Fund complex;
- the potential benefits of the transaction to shareholders;
- the relative investment performance of MidCap Opportunities
Portfolio as compared to Growth + Value Portfolio and Growth
Opportunities Portfolio;
- gross and net expense ratios and information regarding fees
and expenses of Growth + Value Portfolio, Growth Opportunities
Portfolio and MidCap Opportunities Portfolio;
- the relative size of the Portfolios;
18
- whether the Reorganization would dilute the interests of the
Portfolios' current shareholders;
- the similarity of investment objectives and strategies of
MidCap Opportunities Portfolio with those of Growth + Value
Portfolio and Growth Opportunities Portfolio;
- each of the Portfolios has the same portfolio management team;
- the fees or expenses that will be borne directly or indirectly
by the Portfolios in connection with the merger;
- any benefits that may be realized by the Adviser; and
- the tax consequences of each Reorganization to Growth + Value
Portfolio and Growth Opportunities Portfolio and its
shareholders, including the tax-free nature of the
transaction.
The Board of Trustees also considered the future potential benefits to
ING Investments in that its costs to administer the Portfolios may be reduced if
the Reorganizations are approved, and its costs may be reduced under its
obligation to limit expenses of Portfolios.
THE TRUSTEES OF GROWTH + VALUE PORTFOLIO AND GROWTH OPPORTUNITIES
PORTFOLIO RECOMMEND THAT SHAREHOLDERS APPROVE THE REORGANIZATION WITH AND INTO
MIDCAP OPPORTUNITIES PORTFOLIO.
TAX CONSIDERATIONS
The Reorganization is intended to qualify for Federal income tax
purposes as a tax-free reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended. Accordingly, pursuant to this treatment, neither
Growth + Value Portfolio, Growth Opportunities Portfolio nor their shareholders,
nor MidCap Opportunities Portfolio nor its shareholders, are expected to
recognize any gain or loss for federal income tax purposes from the transactions
contemplated by the Reorganization Agreements. As a condition to the Closing of
the Reorganization, the Portfolios will receive an opinion from the law firm of
Dechert to the effect that each Reorganization will qualify as a tax-free
reorganization for Federal income tax purposes. That opinion will be based in
part upon certain assumptions and upon certain representations made by the
Portfolios.
EXPENSES OF THE REORGANIZATIONS
ING Investments will bear half the cost of the Reorganizations. The
Portfolios will bear the other half of the expenses related to the proposed
Reorganizations, including, but not limited to, the costs of solicitation of
voting instructions and any necessary filings with the SEC. Of the
Reorganization expenses allocated to the Portfolios, each Portfolio will bear a
pro rata portion based on its relative net asset values immediately before the
Closing Date.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
FORM OF ORGANIZATION
The Portfolios are each diversified series of ING Variable Products
Trust, an open-end management investment company organized as a Massachusetts
business trust. ING Variable Products Trust is governed by a Board of Trustees
consisting of ten members. For more information on the history of the
Portfolios, see the SAI.
DISTRIBUTOR
ING Funds Distributor, LLC (the "Distributor"), whose address is 7337
East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, is the principal
distributor for the Portfolios.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Portfolios pay dividends from net investment income and net capital
gains, if any, on a quarterly basis. As a contract owner invested in a
Portfolio, you are entitled to a share of the income and capital gains that the
Portfolio distributes. The amount you receive is based on the number of shares
you own. Since the sole
19
shareholders of the Portfolios are separate accounts, no discussion is included
as to the federal income tax consequences at the shareholder level.
If each Reorganization Agreement is approved by the relevant Acquired
Portfolio's shareholders, then as soon as practicable before the Closing Date,
each Acquired Portfolio will pay its shareholders a cash distribution of
substantially all undistributed net investment income and undistributed realized
net capital gains.
CAPITALIZATION
The following table shows, on an unaudited basis, the capitalization of
each of the Portfolios as of June 30, 2003, and on a pro forma basis as of June
30, 2003 giving effect to the Reorganization:
NET ASSET VALUE SHARES
NET ASSETS PER SHARE OUTSTANDING
---------- --------- -----------
GROWTH + VALUE PORTFOLIO
Class R $ 56,585,640 $11.24 5,032,563
Total Growth + Value Portfolio $ 56,585,640 5,032,563
GROWTH OPPORTUNITIES PORTFOLIO
Class R $ 5,335,957 $ 4.26 1,251,960
Class S $ 15,566,989 $ 4.26 3,652,575
Total Growth Opportunities Portfolio $ 20,902,946 4,904,535
MIDCAP OPPORTUNITIES PORTFOLIO
Class R $ 9,674,601 $ 5.27 1,834,838
Class S $ 3,825,768 $ 5.24 730,379
Total MidCap Opportunities Portfolio $ 13,500,369 2,565,217
PRO FORMA - MIDCAP OPPORTUNITIES PORTFOLIO INCLUDING GROWTH + VALUE PORTFOLIO AND GROWTH OPPORTUNITIES
PORTFOLIO(1)
Class R $71,596,198 $ 5.27 13,581,883
Class S $19,392,757 $ 5.24 3,699,891
Total Pro Forma MidCap Opportunities Portfolio $90,988,955 17,281,774
- ------------------
(1) Capitalization table does not include one time Reorganization related
expenses estimated at $25,000.
GENERAL INFORMATION ABOUT THE PROXY STATEMENT
SOLICITATION OF PROXIES
Solicitation of proxies is being made primarily by the mailing of the
Notice and this Proxy Statement/Prospectus with its enclosures on or about
February 9, 2004. In addition to the solicitation of proxies by mail, employees
of ING Investments and its affiliates, without additional compensation, may
solicit proxies in person or by telephone, telegraph, facsimile, or oral
communications.
If a shareholder wishes to participate in the Special Meeting, but does
not wish to give a proxy by telephone, the shareholder may still submit the
proxy originally sent with the Proxy Statement/Prospectus, attend in person or
vote online. Should shareholders require additional information regarding the
proxy or require replacement of the proxy, they may contact Shareholder Services
toll-free at 1-800-992-0180.
A shareholder may revoke the accompanying proxy at any time prior to
its use by filing with Growth + Value Portfolio or Growth Opportunities
Portfolio, a written revocation or duly executed proxy bearing a later date. In
addition, any shareholder who attends the Special Meeting in person may vote by
ballot at the Special Meeting, thereby canceling any proxy previously given. The
persons named in the accompanying proxy will vote as directed
20
by the proxy, but in the absence of voting directions in any proxy that is
signed and returned, they intend to vote "FOR" the Reorganization proposals and
may vote in their discretion with respect to other matters not now known to the
Board of Growth + Value Portfolio and Growth Opportunities Portfolio that may be
presented at the Special Meeting.
VOTING RIGHTS
Only shareholders of Growth + Value Portfolio and Growth Opportunities
Portfolio at the close of business on January 6, 2004 (the "Record Date") will
be entitled to be present and give voting instructions for Growth + Value
Portfolio and Growth Opportunities Portfolio at the Special Meeting with respect
to their shares owned as of that Record Date. As of the Record Date, [______]
shares of Growth + Value Portfolio and [______] shares of Growth Opportunities
Portfolio were outstanding and entitled to vote. Each share is entitled to one
vote and each fractional share is entitled to a proportionate fractional vote.
Shares of Growth + Value Portfolio and Growth Opportunities Portfolio
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 who select a Portfolio for investment
through a Variable Contract have a beneficial interest in the Portfolio, but do
not invest directly in or hold shares of the Portfolio. The insurance company
that uses the Portfolio as a funding vehicle, is, in most cases, the true
shareholder of the Portfolio and, as the legal owner of the Portfolio's shares,
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 in
proportion to voting instructions received. An insurance company will also vote
shares of a Portfolio held in its Separate Accounts for which no voting
instructions have been received in the same proportion as it votes shares held
in the Separate Accounts for which it has received 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 the insurance
company's separate accounts in the aggregate.
Variable contract owners permitted to give instructions to a 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/Prospectus 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 Proxy
Statement/Prospectus or attend in person. All persons entitled to direct the
voting of shares, whether they are variable contract owners or shareholders, are
described as voting for purposes of this Proxy Statement/Prospectus.
Approval of each Reorganization Agreement requires the affirmative vote
of the holders of a majority of the shares of the Acquired Portfolio. The
holders of a majority of outstanding shares present in person or by proxy shall
constitute a quorum at any meeting of the shareholders. In the absence of a
quorum, a majority of outstanding shares entitled to vote present in person or
by proxy may adjourn the meeting from time to time until a quorum shall be
present.
To the knowledge of ING Investments, as of [____], 2004, no current
Trustee owns 1% or more of the outstanding shares of the Portfolios, and the
officers and Trustees own, as a group, less than 1% of the shares of the
Portfolios.
APPENDIX D hereto lists the persons that, as of [____], 2004, owned
beneficially or of record 5% or more of the outstanding shares of any Class of
Growth + Value Portfolio, Growth Opportunities Portfolio or MidCap Opportunities
Portfolio.
OTHER MATTERS TO COME BEFORE THE SPECIAL MEETING
Growth + Value Portfolio and Growth Opportunities Portfolio do not know
of any matters to be presented at the Special Meeting other than those described
in this Proxy Statement/Prospectus. If other business should
21
properly come before the Special Meeting, the proxyholders will vote thereon in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Neither Growth + Value Portfolio nor Growth Opportunities Portfolio is
required to hold regular annual meetings and, in order to minimize its costs,
does not intend to hold meetings of shareholders unless so required by
applicable law, regulation, regulatory policy or if otherwise deemed advisable
by Growth + Value Portfolio's and Growth Opportunities Portfolio's management.
Therefore, it is not practicable to specify a date by which shareholder
proposals must be received in order to be incorporated in an upcoming proxy
statement for an annual meeting.
REPORTS TO SHAREHOLDERS
ING Investments will furnish, without charge, a copy of the most recent
Annual Report regarding the Portfolios and any more recent Semi-Annual Report
succeeding the Annual Report, if any, on request. Requests for such reports
should be directed in writing to a Portfolio at ING Funds, 7337 East Doubletree
Ranch Road, Scottsdale, Arizona 85258-2034 or by calling 1-800-992-0180.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE SPECIAL MEETING MAY BE
ASSURED, PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY CARD IS REQUESTED. A
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
/s/ Huey P. Falgout
Huey P. Falgout, Jr.,
Secretary
February 9, 2004
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
22
APPENDIX A
REPORT FOR ING VP MIDCAP OPPORTUNITIES PORTFOLIO
Set forth below is an excerpt from ING VP MidCap Opportunities
Portfolio's Semi-Annual Report, dated, June 30, 2003, regarding the Portfolio's
performance.
PORTFOLIO MANAGEMENT: A team of investment professionals led by Matthew Price,
CFA and David Campbell, ING Investments, LLC.*
GOAL: The ING VP MidCap Opportunities Portfolio (the "Portfolio") seeks
long-term capital appreciation.
MARKET OVERVIEW: The first half of 2003 marked a return to positive territory
for the S&P MidCap 400 Index (S&P 400), with the index increasing 12.42% for the
six months ending June 30, 2003. The positive first half performance was led by
a blistering 17.64% increase in the second quarter. Investors showed their
fondness for equities once again, as the Iraqi War came to an end. Resolution of
this conflict allowed investors to refocus on the markets, and less on the
uncertain geo-political events abroad. The Federal Reserve and Washington both
did their parts to create a favorable environment for equities compared to fixed
income through a low interest rate environment and a tax rate reduction on
dividends.
PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R
shares, excluding any charges, provided a total return of 17.11% compared to the
Russell MidCap Growth and S&P 400, which returned 18.74% and 12.42%,
respectively.
PORTFOLIO SPECIFICS: The outperformance in the first three months of the year
was largely attributable to the Portfolio's health care, information technology
and energy holdings, offset somewhat by weaker results from the materials and
industrial sectors. Consistent with our longstanding strategy, the Portfolio
remained significantly overweight in information technology, health care and
energy stocks, all of which held up well during a volatile quarter. Within the
"Life Sciences Revolution" category, Biovail (a manufacturer of advanced drug
delivery technologies) was the Portfolio's top performer. Media and
telecommunications stocks also helped the Portfolio's tech holdings outperform
during this period, especially such companies as Echostar and Comverse
Technology. The decision to increase the Portfolio's weighting to gas and oil
exploration stocks also provided to be fortuitous in light of global supply
concerns. The Portfolio's exposure to industrial companies was cut in half by
selling Parker Hannafin and discount air carrier Ryanair. Another significant
portfolio reduction was in the "The New Consumer" category, where Coach, Ralph
Lauren, Pier I, and Williams-Sonoma were sold.
The second quarter marked a transitional period for the Portfolio. We began the
stewardship of these assets in mid-April and have gradually reoriented the
portfolio holdings. Our emphasis is on a broadly diversified portfolio of stocks
that are chosen based on our expectation of continued earnings growth, ongoing
relative price strength, and reasonable valuations. Performance was helped by
favorable sector allocation and stock selection. Exposure to the health care and
technology sectors were positive factors, while positions in consumer staples
and business services acted as a drag on performance. Examples of positive stock
selection were Veritas Software, Yahoo, and Omnicare. Conversely, among the
holdings that negatively impacted results were Abercrombie & Fitch, Expeditors
Intl., and Staples.
MARKET OUTLOOK: The resurgence of stocks in the June quarter was a welcome
relief after three years of wealth deflation. Most questions center around
whether this advance represents the beginning of a long upward trend or whether
it is a false start reminiscent of the second and fourth quarters of 2001 when
the Russell MidCap Growth Index posted a strong advance only to decline sharply
in 2002. The weight of the argument appears to us to lean towards the optimistic
side, which does not imply that advances from here will be without
interruptions. Stock valuations very much depend on predictions about future
earnings streams. We think that the corporate cost cutting of the past few years
should translate that growth into strong profit gains. Importantly, alternatives
to stocks for long-term investors do not appear particularly appealing right
now.
- ------------------
* A team of investment professionals led by Matthew Price, CFA and David
Campbell, ING Investments, LLC assumed responsibility for the Portfolio on
April 21, 2003.
* * * *
A-1
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2003
-------------------------------------
SINCE INCEPTION
1 YEAR 5/5/00
------ ------
Class R 0.38% -18.36%
Russell MidCap Growth Index 7.35% -16.95%(1)
S&P MidCap 400 Index -0.71% 1.00%(1)
</Table>
Based on a $10,000 initial investment, the table above illustrates the total
return of ING VP MidCap Opportunities Portfolio against the Russell MidCap
Growth Index and S&P MidCap 400 Index. The Indices are unmanaged and have no
cash in their portfolios, impose no sales charges and incur no operating
expenses. An investor cannot invest directly in an index. The Portfolio's
performance is shown without the imposition of any expenses or charges which
are, or may be, imposed under your annuity contract or life insurance policy.
Total returns would have been lower if such expenses or charges were included.
Performance table does not reflect the deduction of taxes that a shareholder
will pay on Portfolio distributions or the redemption of Portfolio shares.
Total returns reflect the fact that the Investment Manager has waived certain
fees and expenses otherwise payable by the Portfolio. Total returns would have
been lower had there been no waiver to the Portfolio.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
This report contains statements that may be "forward-looking" statements. Actual
results may differ materially from those projected in the "forward-looking"
statements.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY
THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS'
VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS.
Portfolio holdings are subject to change daily.
(1) Since inception performance for the index is shown from 5/1/00.
PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany
investments in equities. In exchange for higher growth potential, investing in
stocks of smaller medium-sized companies may entail greater price variability
than investing in stocks of larger companies.
A-2
APPENDIX B-1
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 11th day of November, 2003, by and between ING Variable Products Trust,
a Massachusetts business trust (the "Trust") with its principal place of
business at 7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, on
behalf of the ING VP MidCap Opportunities Portfolio (the "Acquiring Portfolio"),
a separate series of the Trust, and ING Variable Products Trust, on behalf of
the ING VP Growth + Value Portfolio (the "Acquired Portfolio"), another separate
series of the Trust.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Acquired Portfolio to the Acquiring Portfolio in exchange solely
for Class R voting shares of beneficial interest of the Acquiring Portfolio (the
"Acquiring Portfolio Shares"), the assumption by the Acquiring Portfolio of all
liabilities of the Acquired Portfolio, and the distribution of the Acquiring
Portfolio Shares to the shareholders of the Acquired Portfolio in complete
liquidation of the Acquired Portfolio as provided herein, all upon the terms and
conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquired Portfolio and the Acquiring Portfolio are series
of an open-end, registered investment company of the management type, and the
Acquired Portfolio owns securities which generally are assets of the character
in which the Acquiring Portfolio is permitted to invest; and
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Acquired Portfolio for Acquiring Portfolio Shares and
the assumption of all liabilities of the Acquired Portfolio by the Acquiring
Portfolio is in the best interests of the Acquiring Portfolio and its
shareholders and that the interests of the existing shareholders of the
Acquiring Portfolio would not be diluted as a result of this transaction; and
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Acquired Portfolio for Acquiring Portfolio Shares and
the assumption of all liabilities of the Acquired Portfolio by the Acquiring
Portfolio is in the best interests of the Acquired Portfolio and its
shareholders and that the interests of the existing shareholders of the Acquired
Portfolio would not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED PORTFOLIO TO THE ACQUIRING PORTFOLIO
IN EXCHANGE FOR THE ACQUIRING PORTFOLIO SHARES, THE ASSUMPTION OF ALL
ACQUIRED PORTFOLIO LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED
PORTFOLIO
1.1. Subject to the requisite approval of the Acquired Portfolio
shareholders and the other terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired
Portfolio agrees to transfer all of the Acquired Portfolio's assets, as set
forth in paragraph 1.2, to the Acquiring Portfolio, and the Acquiring Portfolio
agrees in exchange therefor: (i) to deliver to the Acquired Portfolio the number
of full and fractional Class R Acquiring Portfolio Shares determined by dividing
the value of the Acquired Portfolio's net assets with respect to Class R,
computed in the manner and as of the time and date set forth in paragraph 2.1,
by the net asset value of one Acquiring Portfolio Share of Class R, computed in
the manner and as of the time and date set forth in paragraph 2.2; and (ii) to
assume all liabilities of the Acquired Portfolio as set forth in paragraph 1.3.
Such transactions shall take place at the closing provided for in paragraph 3.1
(the "Closing").
1.2. The assets of the Acquired Portfolio to be acquired by the
Acquiring Portfolio shall consist of all assets and property, including, without
limitation, all cash, securities, commodities and futures interests and
dividends or interests receivable, that are owned by the Acquired Portfolio, and
any deferred or prepaid expenses
B-1
shown as an asset on the books of the Acquired Portfolio, on the closing date
provided for in paragraph 3.1 (the "Closing Date") (collectively, "Assets").
1.3. The Acquired Portfolio will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Portfolio
shall also assume all of the liabilities of the Acquired Portfolio, whether
accrued or contingent, known or unknown, existing at the Valuation Date, as
defined in paragraph 2.1 (collectively, "Liabilities"). On or as soon as
practicable prior to the Closing Date, the Acquired Portfolio will declare and
pay to its shareholders of record one or more dividends and/or other
distributions so that it will have distributed substantially all (and in no
event less than 98%) of its investment company taxable income (computed without
regard to any deduction for dividends paid) and realized net capital gain, if
any, for the current taxable year through the Closing Date.
1.4. Immediately after the transfer of Assets provided for in paragraph
1.1, the Acquired Portfolio will distribute to the Acquired Portfolio's
shareholders of record, determined as of immediately after the close of business
on the Closing Date (the "Acquired Portfolio Shareholders"), on a pro rata
basis, the Acquiring Portfolio Shares of the same class received by the Acquired
Portfolio pursuant to paragraph 1.1, and will completely liquidate. Such
distribution and liquidation will be accomplished, with respect to the Acquired
Portfolio's shares, by the transfer of the Acquiring Portfolio Shares then
credited to the account of the Acquired Portfolio on the books of the Acquiring
Portfolio to open accounts on the share records of the Acquiring Portfolio in
the names of the Acquired Portfolio Shareholders. The aggregate net asset value
of Class R Acquiring Portfolio Shares to be so credited to Class R Acquired
Portfolio Shareholders shall be equal to the aggregate net asset value of the
Acquired Portfolio shares of that same class owned by such shareholders on the
Closing Date. All issued and outstanding shares of the Acquired Portfolio will
simultaneously be canceled on the books of the Acquired Portfolio.
1.5. Ownership of Acquiring Portfolio Shares will be shown on the books
of the Acquiring Portfolio's transfer agent, as defined in paragraph 3.3.
1.6. Any reporting responsibility of the Acquired Portfolio including,
but not limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the U.S. Securities and Exchange Commission
(the "Commission"), any state securities commission, and any federal, state or
local tax authorities or any other relevant regulatory authority, is and shall
remain the responsibility of the Acquired Portfolio.
2. VALUATION
2.1. The value of the Assets shall be the value computed as of
immediately after the close of business of the New York Stock Exchange ("NYSE")
and after the declaration of any dividends on the Closing Date (such time and
date being hereinafter called the "Valuation Date"), using the valuation
procedures in the then-current prospectus and statement of additional
information with respect to the Acquiring Portfolio, and valuation procedures
established by the Acquiring Portfolio's Board of Trustees.
2.2. The net asset value of a Class R Acquiring Portfolio Share shall
be the net asset value per share computed with respect to that class as of the
Valuation Date, using the valuation procedures set forth in the Acquiring
Portfolio's then-current prospectus and statement of additional information and
valuation procedures established by the Acquiring Portfolio's Board of Trustees.
2.3. The number of the Class R Acquiring Portfolio Shares to be issued
(including fractional shares, if any) in exchange for the Acquired Portfolio's
Assets shall be determined by dividing the value of the net assets with respect
to the Class R shares of the Acquired Portfolio, determined using the same
valuation procedures referred to in paragraph 2.1, by the net asset value of an
Acquiring Portfolio Share, determined in accordance with paragraph 2.2.
2.4. All computations of value shall be made by the Acquired
Portfolio's designated record keeping agent and shall be subject to review by
the Acquiring Portfolio's record keeping agent and by each Portfolio's
respective independent accountants.
B-2
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be [____], 2004, or such other date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of immediately after the close of
business on the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 p.m., Eastern Time.
The Closing shall be held at the offices of the Acquiring Portfolio or at such
other time and/or place as the parties may agree.
3.2. The Acquired Portfolio shall direct State Street Bank and Trust
Company, as custodian for the Acquired Portfolio (the "Custodian"), to deliver,
at the Closing, a certificate of an authorized officer stating that (i) the
Assets shall have been delivered in proper form to the Acquiring Portfolio
within two business days prior to or on the Closing Date, and (ii) all necessary
taxes in connection with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or provision for
payment has been made. The Acquired Portfolio's portfolio securities represented
by a certificate or other written instrument shall be presented by the Acquired
Portfolio Custodian to the custodian for the Acquiring Portfolio for examination
no later than five business days preceding the Closing Date, and shall be
transferred and delivered by the Acquired Portfolio as of the Closing Date for
the account of the Acquiring Portfolio duly endorsed in proper form for transfer
in such condition as to constitute good delivery thereof. The Custodian shall
deliver, as of the Closing Date by Date by book entry, in accordance with the
customary practices of the Custodian and any securities depository (as defined
in Rule 17f-4 under the Investment Company Act of 1940, as amended (the "1940
Act")) in which the Acquired Portfolio's Assets are deposited, the Assets that
are deposited with such depositories. The cash to be transferred by the Acquired
Portfolio shall be delivered by wire transfer of federal funds on the Closing
Date.
3.3. The Acquired Portfolio shall direct DST Systems, Inc. (the
"Transfer Agent"), on behalf of the Acquired Portfolio, to deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Acquired Portfolio Shareholders and the number
and percentage ownership of outstanding Class R shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Portfolio shall
issue and deliver a confirmation evidencing the Acquiring Portfolio Shares to be
credited on the Closing Date to the Secretary of the Acquiring Portfolio, or
provide evidence satisfactory to the Acquired Portfolio that such Acquiring
Portfolio Shares have been credited to the Acquired Portfolio's account on the
books of the Acquiring Portfolio. At the Closing each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request.
3.4. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Portfolio or
the Acquired Portfolio shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board of Trustees,
respectively, accurate appraisal of the value of the net assets of the Acquiring
Portfolio or the Acquired Portfolio, respectively, is impracticable, the Closing
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Trust on behalf of the Acquired Portfolio, represents and
warrants as follows:
(a) The Acquired Portfolio is duly organized as a series of the Trust
which is a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with power under the Trust's
Declaration of Trust ("Declaration of Trust") to own all of its Assets and to
carry on its business as it is now being conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
shares of the Acquired Portfolio under the Securities Act of 1933, as amended
("1933 Act"), is in full force and effect;
B-3
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired
Portfolio of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended
(the "1934 Act") and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information of
the Acquired Portfolio and each prospectus and statement of additional
information of the Acquired Portfolio used during the three years previous to
the date of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not materially misleading;
(e) On the Closing Date, the Trust, on behalf of the Acquired Portfolio
will have good and marketable title to the Assets and full right, power, and
authority to sell, assign, transfer and deliver such Assets hereunder free of
any liens or other encumbrances, and upon delivery and payment for such Assets,
the Trust, on behalf of the Acquiring Portfolio will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Portfolio;
(f) The Acquired Portfolio is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Trust's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust
on behalf of the Acquired Portfolio, is a party or by which it is bound, or (ii)
the acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Trust, on behalf of the Acquired Portfolio is a party or by which it is
bound;
(g) All material contracts or other commitments of the Acquired
Portfolio (other than this Agreement and certain investment contracts, including
options, futures, and forward contracts) will terminate without liability to the
Acquired Portfolio on or prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquiring Portfolio, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Acquired
Portfolio, or any of its properties or assets that, if adversely determined,
would materially and adversely affect the Acquired Portfolio's financial
condition or the conduct of its business. The Trust, on behalf of the Acquired
Portfolio, knows of no facts which might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which materially and
adversely affects the Acquired Portfolio's business or the Acquired Portfolio's
ability to consummate the transactions herein contemplated;
(i) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets, and Portfolio of Investments of the Acquired
Portfolio as of December 31, 2002 have been audited by KPMG LLP, independent
accountants, and are in accordance with generally accepted accounting principles
("GAAP") consistently applied, and such statements (copies of which have been
furnished to the Acquiring Portfolio) present fairly, in all material respects,
the financial condition of the Acquired Portfolio as of such date in accordance
with GAAP, and there are no known contingent liabilities of the Acquired
Portfolio required to be reflected on a balance sheet (including the notes
thereto) in accordance with GAAP as of such date not disclosed therein;
(j) Since December 31, 2002, there has not been any material adverse
change in the Acquired Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Portfolio of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Acquiring Portfolio. For the purposes of this
subparagraph (j), a decline in net asset value per share of the Acquired
Portfolio due to declines in market values of securities in the Acquired
Portfolio's portfolio, the discharge of Acquired Portfolio liabilities, or the
redemption of Acquired Portfolio Shares by shareholders of the Acquired
Portfolio shall not constitute a material adverse change;
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(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Portfolio
required by law to have been filed by such date (including any extensions) shall
have been filed and are or will be correct in all material respects, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof, and to the best of the Acquired Portfolio's knowledge, no
such return is currently under audit and no assessment has been asserted with
respect to such returns;
(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Portfolio has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has complied (or will comply) with the applicable
diversification requirements imposed by Subchapter L of the Code, has been (or
will be) eligible to and has computed (or will compute) its federal income tax
under Section 852 of the Code, and will have distributed all of its investment
company taxable income and net capital gain (as defined in the Code) that has
accrued through the Closing Date, and before the Closing Date will have declared
dividends sufficient to distribute all of its investment company taxable income
and net capital gain for the period ending on the Closing Date;
(m) All issued and outstanding shares of the Acquired Portfolio are,
and on the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Trust and have been offered and sold in every
state and the District of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws.
All of the issued and outstanding shares of the Acquired Portfolio will, at the
time of Closing, be held by the persons and in the amounts set forth in the
records of the Transfer Agent, on behalf of the Acquired Portfolio, as provided
in paragraph 3.3. The Acquired Portfolio does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of the shares of the
Acquired Portfolio, nor is there outstanding any security convertible into any
of the Acquired Portfolio shares;
(n) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action, if any,
on the part of the Trustees of the Trust on behalf of the Acquired Portfolio,
and, subject to the approval of the shareholders of the Acquired Portfolio, this
Agreement will constitute a valid and binding obligation of the Acquired
Portfolio, enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights and to general equity principles;
(o) The information to be furnished by the Acquired Portfolio for use
in registration statements, proxy materials and other documents filed or to be
filed with any federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto;
and
(p) The proxy statement of the Acquired Portfolio (the "Proxy
Statement") to be included in the Registration Statement, insofar as it relates
to the Acquired Portfolio, will, on the effective date of the Registration
Statement and on the Closing Date (i) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not materially misleading provided, however,
that the representations and warranties in this subparagraph (p) shall not apply
to statements in or omissions from the Proxy Statement and the Registration
Statement made in reliance upon and in conformity with information that was
furnished by the Acquiring Portfolio for use therein, and (ii) comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the 1940
Act and the rules and regulations thereunder.
4.2. The Trust, on behalf of the Acquiring Portfolio, represents and
warrants as follows:
(a) The Acquiring Portfolio is duly organized as a series of the Trust,
which is a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with power under the Trust's
Declaration of Trust to own all of its properties and assets and to carry on its
business as it is now being conducted;
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(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
shares of the Acquiring Portfolio under the 1933 Act, is in full force and
effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring
Portfolio of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required by state securities laws;
(d) The current prospectus and statement of additional information of
the Acquiring Portfolio and each prospectus and statement of additional
information of the Acquiring Portfolio used during the three years previous to
the date of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not materially misleading;
(e) On the Closing Date, the Acquiring Portfolio will have good and
marketable title to the Acquiring Portfolio's assets, free of any liens of other
encumbrances, except those liens or encumbrances as to which the Acquired
Portfolio has received notice and necessary documentation at or prior to the
Closing;
(f) The Acquiring Portfolio is not engaged currently, and the
execution, delivery and performance of this Agreement will not result, in (i) a
material violation of the Trust's Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
the Trust, on behalf of the Acquiring Portfolio, is a party or by which it is
bound, or (ii) the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease, judgment
or decree to which the Trust on behalf of the Acquiring Portfolio, is a party or
by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquired Portfolio, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Trust, on behalf
of the Acquiring Portfolio, or any of the Acquiring Portfolio's properties or
assets that, if adversely determined, would materially and adversely affect the
Acquiring Portfolio's financial condition or the conduct of its business. The
Trust on behalf of the Acquiring Portfolio knows of no facts which might form
the basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the Acquiring
Portfolio's business or the Acquiring Portfolio's ability to consummate the
transactions herein contemplated;
(h) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets and Portfolio of Investments of the Acquiring
Portfolio as of December 31, 2002 have been audited by KPMG LLP, independent
accountants, and are in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquired Portfolio)
present fairly, in all material respects, the financial condition of the
Acquiring Portfolio as of such date in accordance with GAAP, and there are no
known contingent liabilities of the Acquiring Portfolio required to be reflected
on a balance sheet (including the notes thereto) in accordance with GAAP as of
such date not disclosed therein;
(i) Since December 31, 2002, there has not been any material adverse
change in the Acquiring Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Portfolio of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Acquired Portfolio. For purposes of this subparagraph
(i), a decline in net asset value per share of the Acquiring Portfolio due to
declines in market values of securities in the Acquiring Portfolio's portfolio,
the discharge of Acquiring Portfolio liabilities, or the redemption of Acquiring
Portfolio Shares by shareholders of the Acquiring Portfolio, shall not
constitute a material adverse change;
(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Portfolio
required by law to have been filed by such date (including any extensions) shall
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have been filed and are or will be correct in all material respects, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof, and to the best of the Acquiring Portfolio's knowledge no
such return is currently under audit and no assessment has been asserted with
respect to such returns;
(k) For each taxable year of its operation (including the taxable year
that includes the Closing Date), the Acquiring Portfolio has met (or will meet)
the requirements of Subchapter M of the Code for qualification as a regulated
investment company, has complied (or will comply) with the applicable
diversification requirements imposed by Subchapter L of the Code, has been
eligible to (or will be eligible to) and has computed (or will compute) its
federal income tax under Section 852 of the Code, and has distributed all of its
investment company taxable income and net capital gain (as defined in the Code)
for periods ending prior to the Closing Date;
(l) All issued and outstanding Acquiring Portfolio Shares are, and on
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable (recognizing that, under Massachusetts law, it is
theoretically possible that shareholders of the Acquiring Portfolio could, under
certain circumstances, be held personally liable for obligations of the
Acquiring Portfolio) and have been offered and sold in every state and the
District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. The
Acquiring Portfolio does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquiring Portfolio Shares, nor is there
outstanding any security convertible into any Acquiring Portfolio Shares;
(m) The execution, delivery and performance of this Agreement will have
been fully authorized prior to the Closing Date by all necessary action, if any,
on the part of the Trustees of the Trust on behalf of the Acquiring Portfolio
and this Agreement will constitute a valid and binding obligation of the Trust,
on behalf of the Acquiring Portfolio, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) Acquiring Portfolio Shares to be issued and delivered to the
Acquired Portfolio, for the account of the Acquired Portfolio Shareholders,
pursuant to the terms of this Agreement, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly issued
Acquiring Portfolio Shares, and will be fully paid and non-assessable
(recognizing that, under Massachusetts law, it is theoretically possible that
shareholders of the Acquiring Portfolio could, under certain circumstances, be
held personally liable for obligations of the Acquiring Portfolio);
(o) The information to be furnished by the Trust for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) That insofar as it relates to the Acquiring Portfolio, the
Registration Statement relating to the Acquiring Portfolio Shares issuable
hereunder, and the proxy materials of the Acquired Portfolio to be included in
the Registration Statement, and any amendment or supplement to the foregoing,
will, from the effective date of the Registration Statement through the date of
the meeting of shareholders of the Acquired Portfolio contemplated therein (i)
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading provided, however, that the representations and warranties in this
subparagraph (p) shall not apply to statements in or omissions from the
Registration Statement made in reliance upon and in conformity with information
that was furnished by the Acquired Portfolio for use therein, and (ii) comply in
all material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder.
5. COVENANTS OF THE ACQUIRING PORTFOLIO AND THE ACQUIRED PORTFOLIO
5.1. The Acquiring Portfolio and the Acquired Portfolio each will
operate its business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business will
include the declaration and payment of customary dividends and distributions,
and any other distribution that may be advisable.
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5.2. The Trust will call a meeting of the shareholders of the Acquired
Portfolio to consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated herein.
5.3. The Acquired Portfolio covenants that the Class R Acquiring
Portfolio Shares to be issued hereunder are not being acquired for the purpose
of making any distribution thereof, other than in accordance with the terms of
this Agreement.
5.4. Subject to the provisions of this Agreement, the Acquiring
Portfolio and the Acquired Portfolio will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
5.5. As soon as is reasonably practicable after the Closing, the
Acquired Portfolio will make a liquidating distribution to its shareholders
consisting of the Class R Acquiring Portfolio Shares received at the Closing.
5.6. The Acquiring Portfolio and the Acquired Portfolio shall each use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to effect the transactions contemplated by this Agreement
as promptly as practicable.
5.7. The Trust, on behalf of the Acquired Portfolio, covenants that the
Trust will, from time to time, as and when reasonably requested by the Acquiring
Portfolio, execute and deliver or cause to be executed and delivered all such
assignments and other instruments, and will take or cause to be taken such
further action as the Trust, on behalf of the Acquiring Portfolio, may
reasonably deem necessary or desirable in order to vest in and confirm (a) the
Trust's, on behalf of the Acquired Portfolio's, title to and possession of the
Acquiring Portfolio Shares to be delivered hereunder, and (b) Trust's, on behalf
of the Acquiring Portfolio's, title to and possession of all the assets, and to
carry out the intent and purpose of this Agreement.
5.8. The Acquiring Portfolio will use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state blue sky or securities laws as may be necessary in order to
continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED PORTFOLIO
The obligations of the Trust, on behalf of the Acquired Portfolio, to
consummate the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Acquiring Portfolio,
of all the obligations to be performed by it hereunder on or before the Closing
Date, and, in addition thereto, the following further conditions:
6.1. All representations and warranties of the Trust, on behalf of the
Acquiring Portfolio, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
6.2. The Acquiring Portfolio shall have delivered to the Acquired
Portfolio a certificate executed in its name by its President or Vice President
and its Treasurer or Assistant Treasurer, in a form reasonably satisfactory to
the Acquired Portfolio and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Portfolio made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Acquired Portfolio shall reasonably request;
6.3. The Trust, on behalf of the Acquiring Portfolio, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by the Trust, on behalf of
the Acquiring Portfolio, on or before the Closing Date; and
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6.4. The Acquired Portfolio and the Acquiring Portfolio shall have
agreed on the number of full and fractional Acquiring Portfolio Shares of Class
R to be issued in connection with the Reorganization after such number has been
calculated in accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING PORTFOLIO
The obligations of the Trust, on behalf of the Acquiring Portfolio, to
complete the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust on behalf of the Acquired Portfolio of
all of the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Trust, on behalf of the
Acquired Portfolio, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
7.2. The Trust shall have delivered to the Acquiring Portfolio a
statement of the Acquired Portfolio's assets and liabilities, as of the Closing
Date, certified by the Treasurer of the Trust;
7.3 The Acquired Portfolio shall have delivered to the Acquiring
Portfolio a certificate executed in its name by its President or Vice President
and its Treasurer or Assistant Treasurer, in a form reasonably satisfactory to
the Acquiring Portfolio and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Portfolio made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Acquiring Portfolio shall reasonably request;
7.4. The Trust, on behalf of the Acquired Portfolio, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by the Trust, on behalf of
the Acquired Portfolio, on or before the Closing Date;
7.5. The Acquired Portfolio and the Acquiring Portfolio shall have
agreed on the number of full and fractional Acquiring Portfolio Shares of Class
R to be issued in connection with the Reorganization after such number has been
calculated in accordance with paragraph 1.1; and
7.6. The Acquired Portfolio shall have declared and paid a distribution
or distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing; and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not
otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING PORTFOLIO
AND THE ACQUIRED PORTFOLIO
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to the Trust, on behalf of the Acquired
Portfolio, or the Trust, on behalf of the Acquiring Portfolio, the other party
to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Portfolio in accordance with the provisions of the Trust's
Declaration of Trust, By-Laws, applicable Massachusetts law and the 1940 Act,
and certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Portfolio. Notwithstanding anything herein to the
contrary, the Trust may not waive the conditions set forth in this paragraph 8.1
on behalf of the Acquired Portfolio or the Acquiring Portfolio;
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8.2. On the Closing Date no action, suit or other proceeding shall be
pending or, to the Trust's knowledge, threatened before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Agreement or the transactions
contemplated herein;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Trust to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Portfolio or the Acquired
Portfolio, provided that either party hereto may for itself waive any of such
conditions;
8.4. The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and
8.5. The parties shall have received the opinion of Dechert addressed
to the Trust substantially to the effect that, based upon certain facts,
assumptions, and representations, the transaction contemplated by this Agreement
shall constitute a tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by Dechert of
representations it shall request of the Trust. Notwithstanding anything herein
to the contrary, the Trust may not waive the condition set forth in this
paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1. The Trust, on behalf of the Acquiring Portfolio and the Acquired
Portfolio, represents and warrants that there are no brokers or finders entitled
to receive any payments in connection with the transactions provided for herein.
9.2. The expenses relating to the proposed Reorganization will be
shared so that (1) half of such costs are borne by the investment adviser to the
Acquired and Acquiring Portfolios, and (2) half are borne by the Acquired and
Acquiring Portfolios and will be paid by the Acquired Portfolio and Acquiring
Portfolio pro rata based upon the relative net assets of the Acquired Portfolio
and Acquiring Portfolio as of the close of business on the record date for
determining the shareholders of the Acquired Portfolio entitled to vote on the
Reorganization. The costs of the Reorganization shall include, but not be
limited to, costs associated with obtaining any necessary order of exemption
from the 1940 Act, preparation of the Registration Statement, printing and
distributing the Acquiring Portfolio's prospectus and the Acquired Portfolio's
proxy materials, legal fees, accounting fees, securities registration fees, and
expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by another person of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The Trust agrees that it has not made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing shall survive the Closing.
11. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before July
31, 2004, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
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misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any of the parties including the Trust or its Trustees
or officers, except for any such material breach or intentional
misrepresentation, as to each of which all remedies at law or in equity of the
party adversely affected shall survive.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be deemed necessary or advisable by the authorized officers of the Trust;
provided, however, that following the meeting of the shareholders of the
Acquired Portfolio called by the Trust pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of the Class R Acquiring Portfolio Shares to be issued to
the Acquired Portfolio Shareholders under this Agreement to the detriment of
such shareholders without their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, personal service or prepaid or certified mail addressed to the Trust,
7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, attn: Huey P.
Falgout, Jr., with a copy to Dechert LLP, 1775 I Street, N.W., Washington, D.C.
20006, attn: Jeffrey S. Puretz.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
14.1. The Article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to its principles of
conflicts of laws.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5. It is expressly agreed that the obligations of the parties
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Trust personally, but shall bind only the
trust property of such party, as provided in the Declaration of Trust of the
Trust. The execution and delivery by such officers shall not be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of such party as provided in
the Declaration of Trust.
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ING VARIABLE PRODUCTS TRUST on behalf
of its ING VP GROWTH + VALUE
PORTFOLIO
Attest:
_________________________________ By:___________________________________
Secretary
Title:________________________________
ING VARIABLE PRODUCTS TRUST on behalf
of its ING VP MIDCAP OPPORTUNITIES
PORTFOLIO
Attest:
________________________________ By:___________________________________
Secretary
Title:________________________________
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APPENDIX B-2
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 11th day of November, 2004, by and between ING Variable Products Trust,
a Massachusetts business trust (the "Trust") with its principal place of
business at 7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, on
behalf of the ING VP MidCap Opportunities (the "Acquiring Portfolio"), a
separate series of the Trust, and ING Variable Products Trust, on behalf of the
ING VP Growth Opportunities Portfolio (the "Acquired Portfolio"), another
separate series of the Trust.
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section 368(a)(1) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of the transfer of all of the
assets of the Acquired Portfolio to the Acquiring Portfolio in exchange solely
for Class R and Class S voting shares of beneficial interest of the Acquiring
Portfolio (the "Acquiring Portfolio Shares"), the assumption by the Acquiring
Portfolio of all liabilities of the Acquired Portfolio, and the distribution of
the Acquiring Portfolio Shares to the shareholders of the Acquired Portfolio in
complete liquidation of the Acquired Portfolio as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquired Portfolio and the Acquiring Portfolio are series
of an open-end, registered investment company of the management type, and the
Acquired Portfolio owns securities which generally are assets of the character
in which the Acquiring Portfolio is permitted to invest; and
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Acquired Portfolio for Acquiring Portfolio Shares and
the assumption of all liabilities of the Acquired Portfolio by the Acquiring
Portfolio is in the best interests of the Acquiring Portfolio and its
shareholders and that the interests of the existing shareholders of the
Acquiring Portfolio would not be diluted as a result of this transaction; and
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Acquired Portfolio for Acquiring Portfolio Shares and
the assumption of all liabilities of the Acquired Portfolio by the Acquiring
Portfolio is in the best interests of the Acquired Portfolio and its
shareholders and that the interests of the existing shareholders of the Acquired
Portfolio would not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED PORTFOLIO TO THE ACQUIRING PORTFOLIO
IN EXCHANGE FOR THE ACQUIRING PORTFOLIO SHARES, THE ASSUMPTION OF ALL
ACQUIRED PORTFOLIO LIABILITIES AND THE LIQUIDATION OF THE ACQUIRED
PORTFOLIO
1.1. Subject to the requisite approval of the Acquired Portfolio
shareholders and the other terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired
Portfolio agrees to transfer all of the Acquired Portfolio's assets, as set
forth in paragraph 1.2, to the Acquiring Portfolio, and the Acquiring Portfolio
agrees in exchange therefor: (i) to deliver to the Acquired Portfolio the number
of full and fractional Class R and Class S Acquiring Portfolio Shares determined
by dividing the value of the Acquired Portfolio's net assets with respect to
Class R and Class S, computed in the manner and as of the time and date set
forth in paragraph 2.1, by the net asset value of one Acquiring Portfolio Share
of Class R and Class S, computed in the manner and as of the time and date set
forth in paragraph 2.2; and (ii) to assume all liabilities of the Acquired
Portfolio as set forth in paragraph 1.3. Such transactions shall take place at
the closing provided for in paragraph 3.1 (the "Closing").
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1.2. The assets of the Acquired Portfolio to be acquired by the
Acquiring Portfolio shall consist of all assets and property, including, without
limitation, all cash, securities, commodities and futures interests and
dividends or interests receivable, that are owned by the Acquired Portfolio, and
any deferred or prepaid expenses shown as an asset on the books of the Acquired
Portfolio, on the closing date provided for in paragraph 3.1 (the "Closing
Date") (collectively, "Assets").
1.3. The Acquired Portfolio will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Portfolio
shall also assume all of the liabilities of the Acquired Portfolio, whether
accrued or contingent, known or unknown, existing at the Valuation Date, as
defined in paragraph 2.1 (collectively, "Liabilities"). On or as soon as
practicable prior to the Closing Date, the Acquired Portfolio will declare and
pay to its shareholders of record one or more dividends and/or other
distributions so that it will have distributed substantially all (and in no
event less than 98%) of its investment company taxable income (computed without
regard to any deduction for dividends paid) and realized net capital gain, if
any, for the current taxable year through the Closing Date.
1.4. Immediately after the transfer of Assets provided for in paragraph
1.1, the Acquired Portfolio will distribute to the Acquired Portfolio's
shareholders of record, determined as of immediately after the close of business
on the Closing Date (the "Acquired Portfolio Shareholders"), on a pro rata
basis, the Acquiring Portfolio Shares of the same class received by the Acquired
Portfolio pursuant to paragraph 1.1, and will completely liquidate. Such
distribution and liquidation will be accomplished, with respect to the Acquired
Portfolio's shares, by the transfer of the Acquiring Portfolio Shares then
credited to the account of the Acquired Portfolio on the books of the Acquiring
Portfolio to open accounts on the share records of the Acquiring Portfolio in
the names of the Acquired Portfolio Shareholders. The aggregate net asset value
of Class R and Class S Acquiring Portfolio Shares to be so credited to Class R
and Class S Acquired Portfolio Shareholders shall be equal to the aggregate net
asset value of the Acquired Portfolio shares of that same class owned by such
shareholders on the Closing Date. All issued and outstanding shares of the
Acquired Portfolio will simultaneously be canceled on the books of the Acquired
Portfolio.
1.5. Ownership of Acquiring Portfolio Shares will be shown on the books
of the Acquiring Portfolio's transfer agent, as defined in paragraph 3.3.
1.6. Any reporting responsibility of the Acquired Portfolio including,
but not limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the U.S. Securities and Exchange Commission
(the "Commission"), any state securities commission, and any federal, state or
local tax authorities or any other relevant regulatory authority, is and shall
remain the responsibility of the Acquired Portfolio.
2. VALUATION
2.1. The value of the Assets shall be the value computed as of
immediately after the close of business of the New York Stock Exchange ("NYSE")
and after the declaration of any dividends on the Closing Date (such time and
date being hereinafter called the "Valuation Date"), using the valuation
procedures in the then-current prospectus and statement of additional
information with respect to the Acquiring Portfolio, and valuation procedures
established by the Acquiring Portfolio's Board of Trustees.
2.2. The net asset value of a Class R and Class S Acquiring Portfolio
Share shall be the net asset value per share computed with respect to that class
as of the Valuation Date, using the valuation procedures set forth in the
Acquiring Portfolio's then-current prospectus and statement of additional
information and valuation procedures established by the Acquiring Portfolio's
Board of Trustees.
2.3. The number of the Class R and Class S Acquiring Portfolio Shares
to be issued (including fractional shares, if any) in exchange for the Acquired
Portfolio's Assets shall be determined by dividing the value of the net assets
with respect to the Class S shares of the Acquired Portfolio, determined using
the same valuation procedures referred to in paragraph 2.1, by the net asset
value of an Acquiring Portfolio Share, determined in accordance with paragraph
2.2.
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2.4. All computations of value shall be made by the Acquired
Portfolio's designated record keeping agent and shall be subject to review by
the Acquiring Portfolio's record keeping agent and by each Portfolio's
respective independent accountants.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be [____], 2004, or such other date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of immediately after the close of
business on the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 p.m., Eastern Time.
The Closing shall be held at the offices of the Acquiring Portfolio or at such
other time and/or place as the parties may agree.
3.2. The Acquired Portfolio shall direct State Street Bank and Trust
Company, as custodian for the Acquired Portfolio (the "Custodian"), to deliver,
at the Closing, a certificate of an authorized officer stating that (i) the
Assets shall have been delivered in proper form to the Acquiring Portfolio
within two business days prior to or on the Closing Date, and (ii) all necessary
taxes in connection with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or provision for
payment has been made. The Acquired Portfolio's portfolio securities represented
by a certificate or other written instrument shall be presented by the Acquired
Portfolio Custodian to the custodian for the Acquiring Portfolio for examination
no later than five business days preceding the Closing Date, and shall be
transferred and delivered by the Acquired Portfolio as of the Closing Date for
the account of the Acquiring Portfolio duly endorsed in proper form for transfer
in such condition as to constitute good delivery thereof. The Custodian shall
deliver, as of the Closing Date by Date by book entry, in accordance with the
customary practices of the Custodian and any securities depository (as defined
in Rule 17f-4 under the Investment Company Act of 1940, as amended (the "1940
Act")) in which the Acquired Portfolio's Assets are deposited, the Assets that
are deposited with such depositories. The cash to be transferred by the Acquired
Portfolio shall be delivered by wire transfer of federal funds on the Closing
Date.
3.3. The Acquired Portfolio shall direct DST Systems, Inc. (the
"Transfer Agent"), on behalf of the Acquired Portfolio, to deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Acquired Portfolio Shareholders and the number
and percentage ownership of outstanding Class R and Class S shares owned by each
such shareholder immediately prior to the Closing. The Acquiring Portfolio shall
issue and deliver a confirmation evidencing the Acquiring Portfolio Shares to be
credited on the Closing Date to the Secretary of the Acquiring Portfolio, or
provide evidence satisfactory to the Acquired Portfolio that such Acquiring
Portfolio Shares have been credited to the Acquired Portfolio's account on the
books of the Acquiring Portfolio. At the Closing each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may reasonably
request.
3.4. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Portfolio or
the Acquired Portfolio shall be closed to trading or trading thereupon shall be
restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board of Trustees,
respectively, accurate appraisal of the value of the net assets of the Acquiring
Portfolio or the Acquired Portfolio, respectively, is impracticable, the Closing
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Trust on behalf of the Acquired Portfolio, represents and
warrants as follows:
(a) The Acquired Portfolio is duly organized as a series of the Trust
which is a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with power under the Trust's
Declaration of Trust ("Declaration of Trust") to own all of its Assets and to
carry on its business as it is now being conducted;
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(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the registration of
shares of the Acquired Portfolio under the Securities Act of 1933, as amended
("1933 Act"), is in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired
Portfolio of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the Securities Exchange Act of 1934, as amended
(the "1934 Act") and the 1940 Act and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information of
the Acquired Portfolio and each prospectus and statement of additional
information of the Acquired Portfolio used during the three years previous to
the date of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not materially misleading;
(e) On the Closing Date, the Trust, on behalf of the Acquired Portfolio
will have good and marketable title to the Assets and full right, power, and
authority to sell, assign, transfer and deliver such Assets hereunder free of
any liens or other encumbrances, and upon delivery and payment for such Assets,
the Trust, on behalf of the Acquiring Portfolio will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Portfolio;
(f) The Acquired Portfolio is not engaged currently, and the execution,
delivery and performance of this Agreement will not result, in (i) a material
violation of the Trust's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the Trust
on behalf of the Acquired Portfolio, is a party or by which it is bound, or (ii)
the acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to which
the Trust, on behalf of the Acquired Portfolio is a party or by which it is
bound;
(g) All material contracts or other commitments of the Acquired
Portfolio (other than this Agreement and certain investment contracts, including
options, futures, and forward contracts) will terminate without liability to the
Acquired Portfolio on or prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquiring Portfolio, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Acquired
Portfolio, or any of its properties or assets that, if adversely determined,
would materially and adversely affect the Acquired Portfolio's financial
condition or the conduct of its business. The Trust, on behalf of the Acquired
Portfolio, knows of no facts which might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which materially and
adversely affects the Acquired Portfolio's business or the Acquired Portfolio's
ability to consummate the transactions herein contemplated;
(i) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets, and Portfolio of Investments of the Acquired
Portfolio as of December 31, 2002 have been audited by KPMG LLP, independent
auditors, and are in accordance with generally accepted accounting principles in
the United States ("GAAP") consistently applied, and such statements (copies of
which have been furnished to the Acquiring Portfolio) present fairly, in all
material respects, the financial condition of the Acquired Portfolio as of such
date in accordance with GAAP, and there are no known contingent liabilities of
the Acquired Portfolio required to be reflected on a balance sheet (including
the notes thereto) in accordance with GAAP as of such date not disclosed
therein;
(j) Since December 31, 2002, there has not been any material adverse
change in the Acquired Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
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any incurrence by the Acquired Portfolio of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Acquiring Portfolio. For the purposes of this
subparagraph (j), a decline in net asset value per share of the Acquired
Portfolio due to declines in market values of securities in the Acquired
Portfolio's portfolio, the discharge of Acquired Portfolio liabilities, or the
redemption of Acquired Portfolio Shares by shareholders of the Acquired
Portfolio shall not constitute a material adverse change;
(k) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquired Portfolio
required by law to have been filed by such date (including any extensions) shall
have been filed and are or will be correct in all material respects, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof, and to the best of the Acquired Portfolio's knowledge, no
such return is currently under audit and no assessment has been asserted with
respect to such returns;
(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Portfolio has met (or will meet) the
requirements of Subchapter M of the Code for qualification as a regulated
investment company, has complied (or will comply) with the applicable
diversification requirements imposed by Subchapter L of the Code, has been (or
will be) eligible to and has computed (or will compute) its federal income tax
under Section 852 of the Code, and will have distributed all of its investment
company taxable income and net capital gain (as defined in the Code) that has
accrued through the Closing Date, and before the Closing Date will have declared
dividends sufficient to distribute all of its investment company taxable income
and net capital gain for the period ending on the Closing Date;
(m) All issued and outstanding shares of the Acquired Portfolio are,
and on the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Trust and have been offered and sold in every
state and the District of Columbia in compliance in all material respects with
applicable registration requirements of the 1933 Act and state securities laws.
All of the issued and outstanding shares of the Acquired Portfolio will, at the
time of Closing, be held by the persons and in the amounts set forth in the
records of the Transfer Agent, on behalf of the Acquired Portfolio, as provided
in paragraph 3.3. The Acquired Portfolio does not have outstanding any options,
warrants or other rights to subscribe for or purchase any of the shares of the
Acquired Portfolio, nor is there outstanding any security convertible into any
of the Acquired Portfolio shares;
(n) The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary action, if any,
on the part of the Trustees of the Trust on behalf of the Acquired Portfolio,
and, subject to the approval of the shareholders of the Acquired Portfolio, this
Agreement will constitute a valid and binding obligation of the Acquired
Portfolio, enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights and to general equity principles;
(o) The information to be furnished by the Acquired Portfolio for use
in registration statements, proxy materials and other documents filed or to be
filed with any federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary in
connection with the transactions contemplated hereby, shall be accurate and
complete in all material respects and shall comply in all material respects with
Federal securities and other laws and regulations thereunder applicable thereto;
and
(p) The proxy statement of the Acquired Portfolio (the "Proxy
Statement") to be included in the Registration Statement, insofar as it relates
to the Acquired Portfolio, will, on the effective date of the Registration
Statement and on the Closing Date (i) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not materially misleading provided, however,
that the representations and warranties in this subparagraph (p) shall not apply
to statements in or omissions from the Proxy Statement and the Registration
Statement made in reliance upon and in conformity with information that was
furnished by the Acquiring Portfolio for use therein, and (ii) comply in all
material respects with the provisions of the 1933 Act, the 1934 Act and the 1940
Act and the rules and regulations thereunder.
4.2. The Trust, on behalf of the Acquiring Portfolio, represents and
warrants as follows:
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(a) The Acquiring Portfolio is duly organized as a series of the Trust,
which is a business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with power under the Trust's
Declaration of Trust to own all of its properties and assets and to carry on its
business as it is now being conducted;
(b) The Trust is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration of
shares of the Acquiring Portfolio under the 1933 Act, is in full force and
effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring
Portfolio of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required by state securities laws;
(d) The current prospectus and statement of additional information of
the Acquiring Portfolio and each prospectus and statement of additional
information of the Acquiring Portfolio used during the three years previous to
the date of this Agreement conforms or conformed at the time of its use in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and does not or
did not at the time of its use include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not materially misleading;
(e) On the Closing Date, the Acquiring Portfolio will have good and
marketable title to the Acquiring Portfolio's assets, free of any liens of other
encumbrances, except those liens or encumbrances as to which the Acquired
Portfolio has received notice and necessary documentation at or prior to the
Closing;
(f) The Acquiring Portfolio is not engaged currently, and the
execution, delivery and performance of this Agreement will not result, in (i) a
material violation of the Trust's Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
the Trust, on behalf of the Acquiring Portfolio, is a party or by which it is
bound, or (ii) the acceleration of any obligation, or the imposition of any
penalty, under any agreement, indenture, instrument, contract, lease, judgment
or decree to which the Trust on behalf of the Acquiring Portfolio, is a party or
by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the
Trust, on behalf of the Acquired Portfolio, no litigation or administrative
proceeding or investigation of or before any court or governmental body is
presently pending or, to its knowledge, threatened against the Trust, on behalf
of the Acquiring Portfolio, or any of the Acquiring Portfolio's properties or
assets that, if adversely determined, would materially and adversely affect the
Acquiring Portfolio's financial condition or the conduct of its business. The
Trust on behalf of the Acquiring Portfolio knows of no facts which might form
the basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects the Acquiring
Portfolio's business or the Acquiring Portfolio's ability to consummate the
transactions herein contemplated;
(h) The Statement of Assets and Liabilities, Statements of Operations
and Changes in Net Assets and Portfolio of Investments of the Acquiring
Portfolio as of December 31, 2002 have been audited by KPMG LLP, independent
auditors, and are in accordance with GAAP consistently applied, and such
statements (copies of which have been furnished to the Acquired Portfolio)
present fairly, in all material respects, the financial condition of the
Acquiring Portfolio as of such date in accordance with GAAP, and there are no
known contingent liabilities of the Acquiring Portfolio required to be reflected
on a balance sheet (including the notes thereto) in accordance with GAAP as of
such date not disclosed therein;
(i) Since December 31, 2002, there has not been any material adverse
change in the Acquiring Portfolio's financial condition, assets, liabilities or
business, other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Portfolio of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Acquired Portfolio. For purposes of this subparagraph
(i), a decline in net asset value per share of the Acquiring Portfolio due to
declines in market values of securities in the Acquiring Portfolio's portfolio,
the discharge of Acquiring Portfolio liabilities, or the
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redemption of Acquiring Portfolio Shares by shareholders of the Acquiring
Portfolio, shall not constitute a material adverse change;
(j) On the Closing Date, all Federal and other tax returns, dividend
reporting forms, and other tax-related reports of the Acquiring Portfolio
required by law to have been filed by such date (including any extensions) shall
have been filed and are or will be correct in all material respects, and all
Federal and other taxes shown as due or required to be shown as due on said
returns and reports shall have been paid or provision shall have been made for
the payment thereof, and to the best of the Acquiring Portfolio's knowledge no
such return is currently under audit and no assessment has been asserted with
respect to such returns;
(k) For each taxable year of its operation (including the taxable year
that includes the Closing Date), the Acquiring Portfolio has met (or will meet)
the requirements of Subchapter M of the Code for qualification as a regulated
investment company, has complied (or will comply) with the applicable
diversification requirements imposed by Subchapter L of the Code, has been
eligible to (or will be eligible to) and has computed (or will compute) its
federal income tax under Section 852 of the Code, and has distributed all of its
investment company taxable income and net capital gain (as defined in the Code)
for periods ending prior to the Closing Date;
(l) All issued and outstanding Acquiring Portfolio Shares are, and on
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable (recognizing that, under Massachusetts law, it is
theoretically possible that shareholders of the Acquiring Portfolio could, under
certain circumstances, be held personally liable for obligations of the
Acquiring Portfolio) and have been offered and sold in every state and the
District of Columbia in compliance in all material respects with applicable
registration requirements of the 1933 Act and state securities laws. The
Acquiring Portfolio does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Acquiring Portfolio Shares, nor is there
outstanding any security convertible into any Acquiring Portfolio Shares;
(m) The execution, delivery and performance of this Agreement will have
been fully authorized prior to the Closing Date by all necessary action, if any,
on the part of the Trustees of the Trust on behalf of the Acquiring Portfolio
and this Agreement will constitute a valid and binding obligation of the Trust,
on behalf of the Acquiring Portfolio, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) Acquiring Portfolio Shares to be issued and delivered to the
Acquired Portfolio, for the account of the Acquired Portfolio Shareholders,
pursuant to the terms of this Agreement, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly issued
Acquiring Portfolio Shares, and will be fully paid and non-assessable
(recognizing that, under Massachusetts law, it is theoretically possible that
shareholders of the Acquiring Portfolio could, under certain circumstances, be
held personally liable for obligations of the Acquiring Portfolio);
(o) The information to be furnished by the Trust for use in the
registration statements, proxy materials and other documents that may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations applicable
thereto; and
(p) That insofar as it relates to the Acquiring Portfolio, the
Registration Statement relating to the Acquiring Portfolio Shares issuable
hereunder, and the proxy materials of the Acquired Portfolio to be included in
the Registration Statement, and any amendment or supplement to the foregoing,
will, from the effective date of the Registration Statement through the date of
the meeting of shareholders of the Acquired Portfolio contemplated therein (i)
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading provided, however, that the representations and warranties in this
subparagraph (p) shall not apply to statements in or omissions from the
Registration Statement made in reliance upon and in conformity with information
that was furnished by the Acquired Portfolio for use therein, and (ii) comply in
all material respects with the provisions of the 1933 Act, the 1934 Act and the
1940 Act and the rules and regulations thereunder.
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5. COVENANTS OF THE ACQUIRING PORTFOLIO AND THE ACQUIRED PORTFOLIO
5.1. The Acquiring Portfolio and the Acquired Portfolio each will
operate its business in the ordinary course between the date hereof and the
Closing Date, it being understood that such ordinary course of business will
include the declaration and payment of customary dividends and distributions,
and any other distribution that may be advisable.
5.2. The Trust will call a meeting of the shareholders of the Acquired
Portfolio to consider and act upon this Agreement and to take all other action
necessary to obtain approval of the transactions contemplated herein.
5.3. The Acquired Portfolio covenants that the Class R and Class S
Acquiring Portfolio Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof, other than in accordance with the
terms of this Agreement.
5.4. Subject to the provisions of this Agreement, the Acquiring
Portfolio and the Acquired Portfolio will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement.
5.5. As soon as is reasonably practicable after the Closing, the
Acquired Portfolio will make a liquidating distribution to its shareholders
consisting of the Class R and Class S Acquiring Portfolio Shares received at the
Closing.
5.6. The Acquiring Portfolio and the Acquired Portfolio shall each use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to effect the transactions contemplated by this Agreement
as promptly as practicable.
5.7. The Trust, on behalf of the Acquired Portfolio, covenants that the
Trust will, from time to time, as and when reasonably requested by the Acquiring
Portfolio, execute and deliver or cause to be executed and delivered all such
assignments and other instruments, and will take or cause to be taken such
further action as the Trust, on behalf of the Acquiring Portfolio, may
reasonably deem necessary or desirable in order to vest in and confirm (a) the
Trust's, on behalf of the Acquired Portfolio's, title to and possession of the
Acquiring Portfolio Shares to be delivered hereunder, and (b) Trust's, on behalf
of the Acquiring Portfolio's, title to and possession of all the assets, and to
carry out the intent and purpose of this Agreement.
5.8. The Acquiring Portfolio will use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state blue sky or securities laws as may be necessary in order to
continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED PORTFOLIO
The obligations of the Trust, on behalf of the Acquired Portfolio, to
consummate the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust, on behalf of the Acquiring Portfolio,
of all the obligations to be performed by it hereunder on or before the Closing
Date, and, in addition thereto, the following further conditions:
6.1. All representations and warranties of the Trust, on behalf of the
Acquiring Portfolio, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
6.2. The Acquiring Portfolio shall have delivered to the Acquired
Portfolio a certificate executed in its name by its President or Vice President
and its Treasurer or Assistant Treasurer, in a form reasonably satisfactory to
the Acquired Portfolio and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Portfolio made in this Agreement
are true and correct at and as of the Closing Date, except as they may
B-8
be affected by the transactions contemplated by this Agreement and as to such
other matters as the Acquired Portfolio shall reasonably request;
6.3. The Trust, on behalf of the Acquiring Portfolio, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by the Trust, on behalf of
the Acquiring Portfolio, on or before the Closing Date; and
6.4. The Acquired Portfolio and the Acquiring Portfolio shall have
agreed on the number of full and fractional Acquiring Portfolio Shares of Class
R and Class S to be issued in connection with the Reorganization after such
number has been calculated in accordance with paragraph 1.1.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING PORTFOLIO
The obligations of the Trust, on behalf of the Acquiring Portfolio, to
complete the transactions provided for herein shall be subject, at the Trust's
election, to the performance by the Trust on behalf of the Acquired Portfolio of
all of the obligations to be performed by it hereunder on or before the Closing
Date and, in addition thereto, the following conditions:
7.1. All representations and warranties of the Trust, on behalf of the
Acquired Portfolio, contained in this Agreement shall be true and correct in all
material respects as of the date hereof and, except as they may be affected by
the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date;
7.2. The Trust shall have delivered to the Acquiring Portfolio a
statement of the Acquired Portfolio's assets and liabilities, as of the Closing
Date, certified by the Treasurer of the Trust;
7.3 The Acquired Portfolio shall have delivered to the Acquiring
Portfolio a certificate executed in its name by its President or Vice President
and its Treasurer or Assistant Treasurer, in a form reasonably satisfactory to
the Acquiring Portfolio and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Portfolio made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Acquiring Portfolio shall reasonably request;
7.4. The Trust, on behalf of the Acquired Portfolio, shall have
performed all of the covenants and complied with all of the provisions required
by this Agreement to be performed or complied with by the Trust, on behalf of
the Acquired Portfolio, on or before the Closing Date;
7.5. The Acquired Portfolio and the Acquiring Portfolio shall have
agreed on the number of full and fractional Acquiring Portfolio Shares of Class
R and Class S to be issued in connection with the Reorganization after such
number has been calculated in accordance with paragraph 1.1; and
7.6. The Acquired Portfolio shall have declared and paid a distribution
or distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders (i) all
of its investment company taxable income and all of its net realized capital
gains, if any, for the period from the close of its last fiscal year to 4:00
p.m. Eastern time on the Closing; and (ii) any undistributed investment company
taxable income and net realized capital gains from any period to the extent not
otherwise already distributed.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING PORTFOLIO
AND THE ACQUIRED PORTFOLIO
If any of the conditions set forth below have not been satisfied on or
before the Closing Date with respect to the Trust, on behalf of the Acquired
Portfolio, or the Trust, on behalf of the Acquiring Portfolio, the other party
to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
B-9
8.1. The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Portfolio in accordance with the provisions of the Trust's
Declaration of Trust, By-Laws, applicable Massachusetts law and the 1940 Act,
and certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Portfolio. Notwithstanding anything herein to the
contrary, the Trust may not waive the conditions set forth in this paragraph 8.1
on behalf of the Acquired Portfolio or the Acquiring Portfolio;
8.2. On the Closing Date no action, suit or other proceeding shall be
pending or, to the Trust's knowledge, threatened before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Agreement or the transactions
contemplated herein;
8.3. All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary by
the Trust to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Portfolio or the Acquired
Portfolio, provided that either party hereto may for itself waive any of such
conditions;
8.4. The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act; and
8.5. The parties shall have received the opinion of Dechert addressed
to the Trust substantially to the effect that, based upon certain facts,
assumptions, and representations, the transaction contemplated by this Agreement
shall constitute a tax-free reorganization for Federal income tax purposes. The
delivery of such opinion is conditioned upon receipt by Dechert of
representations it shall request of the Trust. Notwithstanding anything herein
to the contrary, the Trust may not waive the condition set forth in this
paragraph 8.5.
9. BROKERAGE FEES AND EXPENSES
9.1. The Trust, on behalf of the Acquiring Portfolio and the Acquired
Portfolio, represents and warrants that there are no brokers or finders entitled
to receive any payments in connection with the transactions provided for herein.
9.2. The expenses relating to the proposed Reorganization will be
shared so that (1) half of such costs are borne by the investment adviser to the
Acquired and Acquiring Portfolios, and (2) half are borne by the Acquired and
Acquiring Portfolios and will be paid by the Acquired Portfolio and Acquiring
Portfolio pro rata based upon the relative net assets of the Acquired Portfolio
and Acquiring Portfolio as of the close of business on the record date for
determining the shareholders of the Acquired Portfolio entitled to vote on the
Reorganization. The costs of the Reorganization shall include, but not be
limited to, costs associated with obtaining any necessary order of exemption
from the 1940 Act, preparation of the Registration Statement, printing and
distributing the Acquiring Portfolio's prospectus and the Acquired Portfolio's
proxy materials, legal fees, accounting fees, securities registration fees, and
expenses of holding shareholders' meetings. Notwithstanding any of the
foregoing, expenses will in any event be paid by the party directly incurring
such expenses if and to the extent that the payment by another person of such
expenses would result in the disqualification of such party as a "regulated
investment company" within the meaning of Section 851 of the Code.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1. The Trust agrees that it has not made any representation,
warranty or covenant not set forth herein and that this Agreement constitutes
the entire agreement between the parties.
10.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing shall survive the Closing.
B-10
11. TERMINATION
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before July
31, 2004, unless such date is extended by mutual agreement of the parties, or
(iii) by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder on the part of any of the parties including the Trust or its Trustees
or officers, except for any such material breach or intentional
misrepresentation, as to each of which all remedies at law or in equity of the
party adversely affected shall survive.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be deemed necessary or advisable by the authorized officers of the Trust;
provided, however, that following the meeting of the shareholders of the
Acquired Portfolio called by the Trust pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of the Class R and Class S Acquiring Portfolio Shares to
be issued to the Acquired Portfolio Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
facsimile, personal service or prepaid or certified mail addressed to the Trust,
7337 East Doubletree Ranch Road, Scottsdale, Arizona 85258-2034, attn: Huey P.
Falgout, Jr., with a copy to Dechert LLP, 1775 I Street, N.W., Washington, D.C.
20006, attn: Jeffrey S. Puretz.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
14.1. The Article and paragraph headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to its principles of
conflicts of laws.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.5. It is expressly agreed that the obligations of the parties
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Trust personally, but shall bind only the
trust property of such party, as provided in the Declaration of Trust of the
Trust. The execution and delivery by such officers shall not be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of such party as provided in
the Declaration of Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its President or Vice President and its seal to be affixed thereto
and attested by its Secretary or Assistant Secretary.
B-11
ING VARIABLE PRODUCTS TRUST on behalf
of its ING VP GROWTH OPPORTUNITIES
VALUE PORTFOLIO
Attest:
__________________________________ By:___________________________________
Secretary
Title:________________________________
ING VARIABLE PRODUCTS TRUST
on behalf of its ING VP MIDCAP
OPPORTUNITIES
Attest:
_________________________________ By:___________________________________
Secretary
Title:________________________________
B-12
APPENDIX C
ADDITIONAL INFORMATION REGARDING ING VP MIDCAP OPPORTUNITIES PORTFOLIO
("MIDCAP OPPORTUNITIES PORTFOLIO")
SHAREHOLDER GUIDE
ABOUT YOUR INVESTMENT
The Portfolios are available only to serve as investment options under
variable annuity contracts or variable life insurance policies issued by
insurance companies that are part of the ING Group of companies. Shares of the
Portfolios may be sold in the future to insurance companies that are not
affiliated with ING Group.
ING Funds Distributor, LLC, the Distributor for the Trust, also offers
directly to the public other ING funds that have similar names, investment
objectives and strategies as those of the Portfolios offered by this Prospectus.
You should be aware that the Portfolios are likely to differ from these other
ING funds in size and cash flow pattern. Accordingly, the performance of these
Portfolios can be expected to vary from those of the other funds.
You do not buy, sell or exchange shares of the Portfolios. You choose
investment options through your annuity contract or life insurance policy.
The insurance company that issued your variable annuity contract or
life insurance policy is responsible for investing in the Portfolios according
to the investment options you've chosen. You should consult your variable
contract prospectus for additional information about how this works.
The Trust currently does not foresee any disadvantages to investors if
the Trust serves as an investment medium for both variable annuity contracts and
variable life insurance policies. However, it is possible that the interests of
owners of variable annuity contracts and variable insurance policies for which
the Trust serves as an investment medium might at some time be in conflict
because of differences in tax treatment or other considerations. The Board of
Trustees intends to monitor events to identify any material conflicts between
variable annuity contract owners and variable life insurance policy owners, and
would have to determine what action, if any, should be taken in the event of
such a conflict. If such a conflict occurred, an insurance company participating
in the Trust might be required to redeem the investment of one or more of its
separate accounts from the Trust, which might force the Trust to sell securities
at disadvantageous prices.
The Trust may discontinue offering shares of any Portfolio at any time.
If a Portfolio is discontinued, any allocation to that Portfolio will be
allocated to another Portfolio that the Board of Trustees believes is suitable,
as long as any required regulatory standards are met.
MANAGEMENT OF MIDCAP OPPORTUNITIES PORTFOLIO
INVESTMENT ADVISER. ING Investments, LLC ("ING Investments") an Arizona
limited liability company, serves as the investment adviser to MidCap
Opportunities Portfolio. ING Investments has overall responsibility for
management of MidCap Opportunities Portfolio. ING Investments has engaged a
Sub-Adviser to provide the day-to-day management of the MidCap Opportunities
Portfolio's portfolio. The Sub-Adviser has, at least in part, been selected on
the basis of its successful application of consistent, well-defined, long-term
investment approach over a period of several market cycles. Under the terms of
the sub-advisory agreement, the agreement can be terminated by either ING
Investments or the Board of Trustees of the Portfolio. In the event the
sub-advisory agreement is terminated, the Sub-Adviser may be replaced subject to
any regulatory requirements or ING Investments may assume day-to-day investment
management of the Portfolio. ING Investments is responsible for monitoring the
investment program and performance of the Sub-Adviser as well as the custodial,
transfer agency, dividend disbursing, accounting, auditing, compliance and
related services. As of November 30, 2003, ING Investments managed over $35.8
billion in assets.
C-1
SUB-ADVISER. Aeltus Investment Management, Inc. ("ING Aeltus"), a
registered investment adviser with the SEC, is responsible for providing the
day-to-day management of MidCap Opportunities Portfolio. ING Aeltus is an
indirect, wholly owned subsidiary of ING Groep, N.V. (NYSE:ING) ("ING Group")
and an affiliate of ING Investments. Its principal office is located at 10 State
House Square, Hartford, Connecticut 06103-3602. ING Aeltus has been managing
client assets for more than a quarter century and as of November 30, 2003,
managed over $[__] billion in assets.
MidCap Opportunities Portfolio has been managed by a team of investment
professionals led by Matthews S. Price and David C. Campbell since April 2003.
Matthew S. Price, Portfolio Manager, joined ING Investments as a managing
director and portfolio manager in 1992. David C. Campbell, Portfolio Manager,
joined ING Investments as a managing director and portfolio manager in 1990.
PARENT COMPANY AND DISTRIBUTOR. ING Investments and ING Funds
Distributor, LLC (the "Distributor") are indirect, wholly owned subsidiaries 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 over
100,000 employees.
CLASS S SHARES
Effective May 1, 2001, the Trust offers investors Class R and Class S shares of
the Portfolios.
SERVICE FEES-CLASS S SHARES
The Trust has adopted a Shareholder Services Plan (the Plan) for the
Class S shares of the MidCap Opportunities Portfolio. The Plan allows the
Trust's Administrator, ING Funds Services, LLC, to use payments under the Plan
to make payments to insurance companies, broker-dealers or other financial
intermediaries that provide services relating to Class S shares and their
shareholders including variable contract owners with interests in the
portfolios. Services that may be provided under the Plan include, among other
things, providing information about the Portfolios and delivering Portfolio
documents. Under the Plan, a Portfolio makes payments at an annual rate of 0.25%
of the Portfolio's average daily net assets attributable to its Class S shares.
DETERMINATION OF NET ASSET VALUE
The price that investors pay when they buy and the price that investors
receive when they sell or exchange shares is determined by the net asset value
(NAV) per share of the Portfolio. NAV per share for each Portfolio is calculated
each business day as of the close of regular trading on the New York Stock
Exchange (usually 4:00 p.m. Eastern time). The NAV per share for each Portfolio
is calculated by taking the value of a Portfolio's assets, subtracting that
Portfolio's liabilities, and dividing by the number of shares that are
outstanding. Please note that foreign securities may trade in their primary
markets on weekends or other days when the Portfolios do not price their shares.
Therefore, the value of a Portfolio's investments (if the Portfolio holds
foreign securities) may change on days when you will not be able to reallocate
between investment options.
In general, assets are valued based on actual or estimated market
value, with special provisions for assets not having readily available market
quotations, and short-term debt securities, and for situations where market
quotations are deemed unreliable. Short-term debt securities having a maturity
of 60 days or less are valued at amortized cost, unless the amortized cost does
not approximate market value. Securities prices may be obtained from automated
pricing services. When market quotations are not readily available or are deemed
unreliable, securities are valued at their fair value as determined in good
faith under the supervision of the Board of Trustees. Valuing securities at fair
value involves greater reliance on judgment than securities that have readily
available market quotations.
When a participating insurance company is buying shares, it will pay
the NAV that is next calculated after its order is received in proper form. When
a participating insurance company is selling shares, it will normally receive
the NAV that is next calculated after its order is received in proper form.
C-2
PRIVACY POLICY
The Portfolio has adopted a policy concerning investor privacy. To
review the privacy policy, contact a Shareholder Services Representative at
1-800-992-0180 and select Option 1 or obtain a policy over the internet at
www.ingfunds.com.
PORTFOLIO EARNINGS AND YOUR TAXES
Each Portfolio distributes virtually all of its net investment income
and net capital gains to shareholders in the form of dividends. The Portfolios
declare and pay dividends quarterly, with the exception of the High Yield Bond
Portfolio, which declares dividends daily and pays dividends quarterly.
Each Portfolio intends to elect to qualify as a "regulated investment
company" under the provisions of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). If each Portfolio qualifies as a "regulated
investment company" and complies with the appropriate provisions of the Code,
each Portfolio will be relieved of federal income tax on the amounts
distributed.
In order for the separate accounts to comply with regulations under
Section 817(h) of the Code, each Portfolio will diversify its investments so
that on the last day of each quarter of a calendar year, no more than 55% of the
value of each separate account's proportionate share of the assets owned by each
of the regulated investment companies in which it owns shares is represented by
any one investment, no more than 70% is represented by any two investments, no
more than 80% is represented by any three investments, and no more than 90% is
represented by any four investments. For this purpose, securities of a single
issuer are treated as one investment and each U.S. Government agency or
instrumentality is treated as a separate issuer. Any security issued,
guaranteed, or insured (to the extent so guaranteed or insured) by the U.S.
Government or an agency or instrumentality of the U.S. Government is treated as
a security issued by the U.S. Government or its agency or instrumentality,
whichever is applicable.
If a Portfolio fails to meet this diversification requirement, income
with respect to variable insurance contracts invested in the Portfolio at any
time during the calendar quarter in which the failure occurred could become
currently taxable to the owners of the contracts. Similarly, income for prior
periods with respect to such contracts also could be taxable, most likely in the
year of the failure to achieve the required diversification. Other adverse tax
consequences could also ensue.
Since the sole shareholders of the Portfolios will be separate
accounts, no discussion is included herein as to the federal income tax
consequences at the shareholder level. For information concerning the federal
income tax consequences to purchasers of the policies, see the attached
prospectus for the policy.
You should consult the variable contract prospectus or offering
memorandum along with your tax advisor for information as to how investing in
variable portfolios affects your personal tax situation.
THE TAX STATUS OF YOUR INVESTMENT IN THE PORTFOLIO DEPENDS UPON THE FEATURES OF
YOUR POLICY OR CONTRACT. FOR FURTHER INFORMATION, PLEASE REFER TO THE POLICY OR
CONTRACT PROSPECTUS.
C-3
FINANCIAL HIGHLIGHTS
The financial information presented below for the sixth-month period
ended June 30, 2003 is unaudited. The other information in the table below has
been derived from ING VP MidCap Opportunities Portfolio's financial statements,
that have been audited by KPMG LLP, independent auditors.
CLASS R
-----------------------------------------------------------------
(UNAUDITED)
SIX MONTHS MAY 5, 2000(4) TO
ENDED JUNE 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
2003 2002 2001 2000
---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of the
period $ 4.50 6.07 9.05 10.00
Income from investment operations:
Net investment income (loss) $ -0.01 -0.02 -0.01 0.01
Net realized and unrealized gain
(loss) on investments $ 0.78 -1.55 -2.97 -0.95
Total from investment operations $ 0.77 -1.57 - 2.98 -0.94
Less distributions from:
Net investment income $ -- -- -- 0.01
Total distributions $ -- -- -- 0.01
Net asset value, end of the period $ 5.27 4.50 6.07 9.05
TOTAL RETURN(1) % 17.11 -25.86 -32.92 -9.38
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of the period (000s) $ 9,675 4,683 3,616 1,995
Ratio of expenses to average net
assets after reimbursement(2)(3) % 0.90 0.88 0.90 0.90
Ratio of expenses to average net
assets prior to expense reimbursement(2) % 1.39 1.53 2.66 5.76
Ratio of net investment income (loss)
to average net assets after
reimbursement(2)(3) % -0.58 -0.42 -0.32 0.40
Portfolio turnover rate % 165 387 429 103
- -------------------------------------------
(1) Assumes dividends have been reinvested and does not reflect the effect
of contract insurance charges. Total return for periods less than one
year are not annualized.
(2) Annualized for periods less than one year.
(3) The Investment Adviser has agreed to limit expenses (excluding taxes,
brokerage and extraordinary expenses) subject to possible recoupment by
ING Investments, LLC within three years.
(4) Commencement of operations of Class.
C-4
CLASS S
-------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS ENDED MAY 7, 2001(4) TO
JUNE 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
2003 2002 2001
---- ---- ----
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 4.47 6.04 7.10
Income from investment operations:
Net investment loss $ -0.02 -0.02 -0.01
Net realized and unrealized gain
(loss) on investments $ 0.79 -1.55 -1.05
Total from investment operations $ 0.77 -1.57 -1.06
Net asset value, end of period $ 5.24 4.47 6.04
TOTAL RETURN(1): % 17.23 -25.99 -14.93
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000's) $ 3,826 2,595 865
Ratio of expenses to average net
assets after expense
reimbursement(2)(3) % 1.10 1.12 1.10
Ratio of expenses to average net
assets prior to expense
reimbursement(2) % 1.65 1.75 4.28
Ratio of net investment loss to
average net assets after expense
reimbursement(2)(3) % -0.79 -0.67 -0.67
Portfolio turnover rate % 165 387 429
- ----------------------------------
(1) Assumes dividends have been reinvested and does not reflect the effect
of contract insurance charges. Total return for periods less than one
year are not annualized.
(2) Annualized for periods less than one year.
(3) The Investment Manager has agreed to limit expenses (excluding
interest, taxes, brokerage and extraordinary expenses) subject to
possible recoupment by ING Investments, LLC within three years.
(4) Commencement of operations of Class.
C-5
APPENDIX D
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL AND RECORD OWNERS
The following tables provide information about the persons or entities
who, to the knowledge of each Portfolio, owned beneficially or of record 5% or
more of any class of that Portfolio's outstanding shares as of [____], 2004:
ING VP GROWTH + VALUE PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF COMBINED
NAME AND ADDRESS OF SHAREHOLDER PERCENT OF CLASS OF SHARES PERCENTAGE OF PORTFOLIO PORTFOLIO AFTER THE
AND TYPE OF OWNERSHIP REORGANIZATION*
- -------------------------------------------------------------------------------------------------------------------
ING VP GROWTH OPPORTUNITIES PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF COMBINED
NAME AND ADDRESS OF SHAREHOLDER PERCENT OF CLASS OF SHARES PERCENTAGE OF PORTFOLIO PORTFOLIO AFTER THE
AND TYPE OF OWNERSHIP REORGANIZATION*
- -------------------------------------------------------------------------------------------------------------------
ING VP MIDCAP OPPORTUNITIES PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF COMBINED
NAME AND ADDRESS OF SHAREHOLDER PERCENT OF CLASS OF SHARES PERCENTAGE OF PORTFOLIO PORTFOLIO AFTER THE
AND TYPE OF OWNERSHIP REORGANIZATION*
- -------------------------------------------------------------------------------------------------------------------
- ---------------
* On a pro forma basis, assuming that the value of the shareholder's
interest in the Portfolio on the date of consummation of the
Reorganization is the same as on [_____], 2004.
D-1
PART B
ING VARIABLE PRODUCTS TRUST
Statement of Additional Information
February 9, 2004
Acquisition of the Assets and Liabilities of: By and in Exchange for Shares of:
ING VP Growth + Value Portfolio ING VP MidCap Opportunities Portfolio
(a series of ING Variable Products Trust) (a series of ING Variable Products Trust)
ING VP Growth Opportunities Portfolio 7337 East Doubletree Ranch Road
(a series of ING Variable Products Trust) Scottsdale, Arizona 85258-2034
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
This Statement of Additional Information is available to the shareholders of ING
VP Growth + Value Portfolio and ING VP Growth Opportunities Portfolio in
connection with a proposed transaction whereby all of the assets and liabilities
of ING VP Growth + Value Portfolio and ING VP Growth Opportunities Portfolio,
each a series of ING Variable Products Trust, will be transferred to ING VP
MidCap Opportunities Portfolio, another series of ING Variable Products Trust,
in exchange for shares of ING VP MidCap Opportunities Portfolio.
This Statement of Additional Information of ING Variable Products Trust consists
of this cover page and the following documents, each of which was filed
electronically with the U.S. Securities and Exchange Commission and is
incorporated by reference herein:
1. The Statement of Additional Information for ING VP Growth + Value
Portfolio, ING VP Growth Opportunities Portfolio and ING VP MidCap
Opportunities Portfolio, dated May 1, 2003, as filed on May 6, 2003.
Supplement dated September 11, 2003 to the Statement of Additional
Information dated May 1, 2003, as filed on September 12, 2003.
2. The Financial Statements of ING VP Growth + Value Portfolio, ING VP
Growth Opportunities Portfolio and ING VP MidCap Opportunities
Portfolio are included in the Class R Annual Report of the ING Funds,
dated December 31, 2002, as filed on March 4, 2003, and the Class S
Annual Report of ING Funds dated December 31, 2002, as filed on March
4, 2003.
3. The Financial Statements of ING VP Growth + Value Portfolio, ING VP
Growth Opportunities Portfolio and ING VP MidCap Opportunities
Portfolio are included in the Class R Annual Report of the ING Funds,
dated June 30, 2003, as filed on August 29, 2003, and the Class S
Annual Report of ING Funds dated June 30, 2003, as filed on August 29,
2003
This Statement of Additional Information is not a prospectus. A Prospectus/Proxy
Statement dated February 9, 2004 relating to the Reorganization of ING VP Growth
+ Value Portfolio and ING VP Growth Opportunities Portfolio may be obtained,
without charge, by writing to the ING Funds at 7337 East Doubletree Ranch Road,
Scottsdale, Arizona 85258-2034 or calling 1-800-992-0180. This Statement of
Additional Information should be read in conjunction with the Prospectus/Proxy
Statement.
PRO FORMA FINANCIAL STATEMENTS
Shown below are financial statements for each Portfolio and pro forma
financial statements for the combined Portfolio, assuming the Reorganization is
consummated, as of June 30, 2003. The first table presents Statements of Assets
and Liabilities for each Portfolio and estimated pro forma figures for the
combined Portfolio. The second table presents Statements of Operations for each
Portfolio and estimated pro forma figures for the combined Portfolio. The third
table presents Portfolio of Investments for each Portfolio and estimated pro
forma figures for the combined Portfolio. The tables are followed by the Notes
to the Pro Forma Financial Statements.
STATEMENTS OF ASSETS AND LIABILITIES AS OF JUNE 30, 2003 (UNAUDITED)
ING VP ING VP
ING VP Growth MidCap
Growth + Value Opportunities Opportunities
Portfolio Portfolio Portfolio
-------------- ------------- -------------
ASSETS:
Investments in securities at value* $ 53,910,960 $ 20,409,679 $ 13,155,040
Short-term investments at amortized cost 5,025,000 596,000 426,000
Cash 313 568 252
Receivables:
Investment securities sold 742,926 155,736 -
Fund shares sold 15,537 122,836 27,125
Dividends and interest 6,708 4,081 2,506
Prepaid expenses 650 37 -
Reimbursement due from manager 12,248 6,142 6,353
-------------- ------------- -------------
Total assets 59,714,342 21,295,079 13,617,276
-------------- ------------- -------------
LIABILITIES:
Payable for investment securities purchased 3,018,612 352,417 63,850
Payable for fund shares redeemed 433 878 18,686
Payable to affiliates 39,806 16,573 9,822
Payable for trustee fees 7,399 755 416
Payable for merger fees - - -
Other accrued expenses and liabilities 62,452 21,510 24,133
-------------- ------------- -------------
Total liabilities 3,128,702 392,133 116,907
-------------- ------------- -------------
NET ASSETS $ 56,585,640 $ 20,902,946 $ 13,500,369
============== ============= =============
NET ASSETS WERE COMPRISED OF:
Paid-in Capital 138,495,957 28,077,578 14,813,550
Accumulated net investment loss (123,859) (44,778) (29,848)
Accumulated net realized loss on investments (84,526,469) (9,447,417) (2,440,816)
Net unrealized appreciation of investments 2,740,011 2,317,563 1,157,483
-------------- ------------- -------------
NET ASSETS $ 56,585,640 $ 20,902,946 $ 13,500,369
============== ============= =============
* Cost of investments in securities $ 51,170,949 $ 18,092,116 $ 11,997,557
CLASS R:
Net assets $ 56,585,640 $ 5,335,957 $ 9,674,601
Shares outstanding 5,032,563 1,251,960 1,834,838 5,462,522 (A)
Net asset value and redemption price per share $ 11.24 $ 4.26 $ 5.27
CLASS S:
Net assets n/a $ 15,566,989 $ 3,825,768
Shares outstanding n/a 3,652,575 730,379 (683,063(A)
Net asset value and redemption price per share n/a $ 4.26 $ 5.24
ING VP ING VP
MidCap MidCap
Opportunities Pro Forma Opportunities
Portfolio Combined Adjustments Portfolio Proforma
------------------ ----------- ------------------
ASSETS:
Investments in securities at value* $ 87,475,679 $ 87,475,679
Short-term investments at amortized cost 6,047,000 6,047,000
Cash 1,133 1,133
Receivables:
Investment securities sold 898,662 898,662
Fund shares sold 165,498 165,498
Dividends and interest 13,295 13,295
Prepaid expenses 687 687
Reimbursement due from manager 24,743 24,743
-------------- ------------- --------------
Total assets 94,626,697 - 94,626,697
-------------- ------------- --------------
LIABILITIES:
Payable for investment securities purchased 3,434,879 3,434,879
Payable for fund shares redeemed 19,997 19,997
Payable to affiliates 66,201 66,201
Payable for trustee fees 8,570 8,570
Payable for merger fees - 25,000(B) 25,000
Other accrued expenses and liabilities 108,095 108,095
-------------- ------------- --------------
Total liabilities 3,637,742 25,000 3,662,742
-------------- ------------- --------------
NET ASSETS $ 90,988,955 $ (25,000) $ 90,963,955
============== ============= ==============
NET ASSETS WERE COMPRISED OF:
Paid-in Capital 181,387,085 181,387,085
Accumulated net investment loss (198,485) (25,000) (223,485)
Accumulated net realized loss on investments (96,414,702) (96,414,702)
Net unrealized appreciation of investments 6,215,057 6,215,057
-------------- ------------- --------------
NET ASSETS $ 90,988,955 $ (25,000) $ 90,963,955
============== ============= ==============
* Cost of investments in securities $ 81,260,622 $ 81,260,622
CLASS R:
Net assets $ 71,596,198 $ (19,672)(B) $ 71,576,526
Shares outstanding 13,581,883 13,581,883
Net asset value and redemption price per share $ 5.27 $ 5.27
CLASS S:
Net assets $ 19,392,757 $ (5,328)(B) $ 19,387,429
Shares outstanding 3,699,891 3,699,891
Net asset value and redemption price per share $ 5.24 $ 5.24
(A) Reflects new shares issued, net of retired shares of Growth Opps VP and
Growth + Value VP. (Calculation: Net Assets / NAV per share)
(B) Reflects adjustment for estimated one time merger expenses (See Note 5
in Notes to Unaudited Pro Forma Financial Statements).
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2003 (UNAUDITED)
ING VP ING VP
ING VP Growth MidCap
Growth + Value Opportunities Opportunities
Portfolio Portfolio Portfolio
-------------- ------------- -------------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld) $ 225,717 $ 57,425 $ 20,604
Interest 57,381 12,473 8,469
-------------- ----------- -----------
Total investment income 283,098 69,898 29,073
-------------- ----------- -----------
EXPENSES:
Investment advisory fees 435,333 113,778 58,713
Distribution and service fees:
Class S - 25,770 6,308
Transfer agent fees:
Class R 12,066 13,924 13,469
Class S -
Administrative service fees 58,045 15,170 7,829
Custody and accounting expense 22,236 14,892 7,903
Shareholder reporting expense 44,416 8,211 1,843
Registration fees 123 33 56
Professional fees 108,350 21,493 8,690
Trustee fees 6,136 462 365
Merger fees - - -
Miscellaneous expense 6,394 1,043 676
-------------- ----------- -----------
Total expenses 693,099 214,776 105,852
Less:
Net waived and reimbursed fees 227,077 58,086 30,636
-------------- ----------- -----------
Net expenses 466,022 156,690 75,216
-------------- ----------- -----------
Net investment loss (182,924) (86,792) (46,143)
-------------- ----------- -----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND OPTIONS
Net realized gain on:
Investments (14,387,067) (3,082,228) (825,685)
Options - 3,656 2,017
-------------- ----------- -----------
Net realized gain on investments and options (14,387,067) (3,078,572) (823,668)
Net change in unrealized appreciation of investments 4,456,893 2,648,653 1,439,976
-------------- ----------- -----------
Net realized and unrealized gain on investments and options (9,930,174) (429,919) 616,308
-------------- ----------- -----------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (10,113,098) $ (516,711) $ 570,165
============== =========== ===========
Pro Forma Pro Forma Pro Forma
Combined Adjustments Combined
-------------- ----------- -----------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld) $ 303,746 $ 303,746
Interest 78,323 78,323
-------------- ----------- ------------
Total investment income 382,069 382,069
-------------- ----------- ------------
EXPENSES:
Investment advisory fees 607,824 607,824
Distribution and service fees:
Class S 32,078 32,078
Transfer agent fees: -
Class R 39,459 (20,490)(A) 18,969
Class S - -
Administrative service fees 81,044 81,044
Custody and accounting expense 45,031 45,031
Shareholder reporting expense 54,470 (3,016)(A) 51,454
Registration fees 212 212
Professional fees 138,533 (9,055)(A) 129,478
Trustee fees 6,963 6,963
Merger fees - 25,000 (B) 25,000
Miscellaneous expense 8,113 8,113
-------------- ----------- ------------
Total expenses 1,013,727 (7,561) 1,006,166
Less:
Net waived and reimbursed fees 315,799 315,799
-------------- ----------- ------------
Net expenses 697,928 (7,561) 690,367
-------------- ----------- ------------
Net investment loss (315,859) (7,561) (308,298)
-------------- ----------- ------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND OPTIONS
Net realized gain on:
Investments (18,294,980) (18,294,980)
Options 5,673 5,673
-------------- ----------- ------------
Net realized gain on investments and options (18,289,307) (18,289,307)
Net change in unrealized appreciation of investments 8,545,522 8,545,522
-------------- ----------- ------------
Net realized and unrealized gain on investments and options (9,743,785) 7,561 (9,743,785)
-------------- ----------- ------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (10,059,644) $ 7,561 $(10,052,083)
============== =========== ============
(A) Reflects adjustment in expenses due to elimination of duplicative
services.
(B) Reflects adjustment for estimated one time merger expenses (See Note 5
in Notes to Unaudited Pro Forma Financial Statements).
See Accompanying Notes to Unaudited Pro Forma Financial Statements
PORTFOLIOS OF INVESTMENTS AS OF JUNE 30, 2003 (UNAUDITED)
VP VP
GROWTH + VP GROWTH VP MIDCAP GROWTH + VP GROWTH
VALUE OPPORTUNITIES OPPORTUNITIES VALUE OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO PRO FORMA PORTFOLIO PORTFOLIO
Shares Shares Shares Shares COMMON STOCK: 93.3% VALUE VALUE
---------------------------
ADVERTISING: 0.3%
6,800 - - 6,800 @ Getty Images, Inc. $ 280,840 -
---------------------------
280,840 -
---------------------------
AIRLINES: 0.7%
61,300 - - 61,300 @ Airtran Holdings, Inc. 641,811 -
---------------------------
641,811 -
---------------------------
AGRICULTURE: 0.9%
36,200 - - 36,200 Delta & Pine Land Co. 795,676 -
---------------------------
795,676 -
---------------------------
APPAREL: 2.3%
12,400 3,900 2,300 18,600 @ Coach, Inc. 616,776 193,986
21,600 - - 21,600 @ Timberland Co. 1,141,776 -
---------------------------
1,758,552 193,986
---------------------------
AUTO PARTS & EQUIPMENT: 0.3%
- 2,100 1,200 3,300 Johnson Controls, Inc. - 179,760
---------------------------
- 179,760
---------------------------
BANKS: 1.6%
- 4,600 - 4,600 Bank of America Corp. - 363,538
- - 3,000 3,000 Bank of Hawaii Corp. - -
20,500 20,500 UCBH Holdings, Inc. 587,940
- 7,100 - 7,100 Wells Fargo & Co. - 357,840
---------------------------
587,940 721,378
---------------------------
BIOTECHNOLOGY: 1.9% -
- 2,800 - 2,800 @ Amgen, Inc. - 187,544
- 7,300 - 7,300 @ Digene Corp. - 198,779
18,100 - - 18,100 @ Genzyme Corp.--Genl Division 756,580 -
21,100 - - 21,100 @ Integra LifeSciences Holdings Corp. 556,618 -
---------------------------
1,313,198 386,323
---------------------------
BUILDING MATERIALS: 0.1%
- - 1,500 1,500 @ American Standard Cos., Inc. - -
---------------------------
- -
---------------------------
COMMERCIAL SERVICES: 7.6%
13,900 - - 13,900 @ Apollo Group, Inc. 858,464 -
0 - 6,000 6,000 @ Aramark Corp. - -
5,000 - 1,600 6,600 @ Career Education Corp. 342,100 -
6,900 - 1,600 8,500 @ Corporate Executive Board Co. 281,658 -
5,500 - 1,900 7,400 @ Education Management Corp. 292,490 -
17,800 7,600 5,400 30,800 @ FTI Consulting, Inc. 444,466 189,772
22,100 - - 22,100 @ Iron Mountain, Inc. 819,689 -
16,700 3,700 5,300 25,700 @ Kroll, Inc. 451,902 100,122
8,800 - 4,200 13,000 Paychex, Inc. 257,928 -
29,400 13,000 10,000 52,400 @ Pharmaceutical Product Development, Inc 844,662 373,490
22,900 - - 22,900 Rollins, Inc. 431,665 -
- - 3,100 3,100 @ Weight Watchers Intl., Inc. - -
---------------------------
5,025,024 663,384
---------------------------
COMPUTERS: 5.8%
- - 3,000 3,000 @ Affiliated Computer Services, Inc. - -
- 6,500 4,300 10,800 @ CACI Intl., Inc. - 222,950
- 5,700 - 5,700 @ Dell Computer Corp. 182,172
VP
GROWTH + VP GROWTH VP MIDCAP VP MIDCAP
VALUE OPPORTUNITIES OPPORTUNITIES OPPORTUNITIES
PORTFOLIO PORTFOLIO PORTFOLIO PRO FORMA PORTFOLIO PRO FORMA
Shares Shares Shares Shares COMMON STOCK: 93.3% VALUE VALUE
----------------------------
ADVERTISING: 0.3%
6,800 - - 6,800 @ Getty Images, Inc. - $ 280,840
---------------------------
- 280,840
---------------------------
AIRLINES: 0.7%
61,300 - - 61,300 @ Airtran Holdings, Inc. - 641,811
---------------------------
- 641,811
---------------------------
AGRICULTURE: 0.9%
36,200 - - 36,200 Delta & Pine Land Co. - 795,676
---------------------------
- 795,676
---------------------------
APPAREL: 2.3%
12,400 3,900 2,300 18,600 @ Coach, Inc. 114,402 925,164
21,600 - - 21,600 @ Timberland Co. - 1,141,776
---------------------------
114,402 2,066,940
---------------------------
AUTO PARTS & EQUIPMENT: 0.3%
- 2,100 1,200 3,300 Johnson Controls, Inc. 102,720 282,480
---------------------------
102,720 282,480
---------------------------
BANKS: 1.6%
- 4,600 - 4,600 Bank of America Corp. - 363,538
- - 3,000 3,000 Bank of Hawaii Corp. 99,450 99,450
20,500 20,500 UCBH Holdings, Inc. 587,940
- 7,100 - 7,100 Wells Fargo & Co. - 357,840
---------------------------
99,450 1,408,768
---------------------------
BIOTECHNOLOGY: 1.9%
- 2,800 - 2,800 @ Amgen, Inc. - 187,544
- 7,300 - 7,300 @ Digene Corp. - 198,779
18,100 - - 18,100 @ Genzyme Corp.--Genl Division - 756,580
21,100 - - 21,100 @ Integra LifeSciences Holdings Corp. - 556,618
---------------------------
- 1,699,521
---------------------------
BUILDING MATERIALS: 0.1%
- - 1,500 1,500 @ American Standard Cos., Inc. 110,895 110,895
---------------------------
110,895 110,895
---------------------------
COMMERCIAL SERVICES: 7.6%
13,900 - - 13,900 @ Apollo Group, Inc. - 858,464
0 - 6,000 6,000 @ Aramark Corp. 134,520 134,520
5,000 - 1,600 6,600 @ Career Education Corp. 109,472 451,572
6,900 - 1,600 8,500 @ Corporate Executive Board Co. 65,312 346,970
5,500 - 1,900 7,400 @ Education Management Corp. 101,042 393,532
17,800 7,600 5,400 30,800 @ FTI Consulting, Inc. 134,838 769,076
22,100 - - 22,100 @ Iron Mountain, Inc. - 819,689
16,700 3,700 5,300 25,700 @ Kroll, Inc. 143,418 695,442
8,800 - 4,200 13,000 Paychex, Inc. 123,102 381,030
29,400 13,000 10,000 52,400 @ Pharmaceutical Product Development, Inc 287,300 1,505,452
22,900 - - 22,900 Rollins, Inc. - 431,665
- - 3,100 3,100 @ Weight Watchers Intl., Inc. 141,019 141,019
---------------------------
1,240,023 6,928,431
---------------------------
COMPUTERS: 5.8%
- - 3,000 3,000 @ Affiliated Computer Services, Inc. 137,190 137,190
- 6,500 4,300 10,800 @ CACI Intl., Inc. 147,490 370,440
- 5,700 - 5,700 @ Dell Computer Corp. - 182,172
- 30,700 - 30,700 @ EMC Corp. 321,429
- 9,700 - 9,700 Hewlett-Packard Co. 206,610
- 2,200 - 2,200 International Business Machines Corp. 181,500
3,700 - 2,000 5,700 @ Lexmark Intl., Inc. 261,849 -
8,100 - - 8,100 @ Micros Systems, Inc. 267,138 -
33,000 4,200 - 37,200 @ NetScreen Technologies, Inc. 744,150 94,710
49,100 19,500 12,200 80,800 @ Network Appliance, Inc. 795,911 316,095
9,100 6,800 4,500 20,400 Reynolds & Reynolds Co. 259,896 194,208
47,600 - - 47,600 @ Western Digital Corp. 490,280 -
------------------------
2,819,224 1,719,674
------------------------
DIVERSIFIED FINANCIAL SERVICES: 1.3%
- - 1,600 1,600 Bear Stearns Cos., Inc. - -
- 8,700 - 8,700 Citigroup, Inc. - 372,360
4,000 - - 4,000 Countrywide Financial Corp. 278,280 -
- 6,100 - 6,100 JP Morgan Chase & Co. - 208,498
- 6,300 - 6,300 SLM Corp. - 246,771
------------------------
278,280 827,629
------------------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.7%
34,900 - 8,500 43,400 American Power Conversion 544,091 -
------------------------
544,091 -
------------------------
ELECTRONICS: 5.6%
17,700 - - 17,700 @ Benchmark Electronics, Inc. 544,452 -
21,300 - - 21,300 @ Dionex Corp. 846,675 -
17,700 3,300 - 21,000 @ Flir Systems, Inc. 533,655 99,495
27,500 9,300 8,800 45,600 @ Gentex Corp. 841,775 284,673
24,700 9,300 6,500 40,500 @ Jabil Circuit, Inc. 545,870 205,530
34,200 34,200 @ Trimble Navigation Ltd. 784,206 -
------------------------
4,096,633 589,698
------------------------
ENERGY-ALTERNATE SOURCES: 0.1%
- 5,200 - 5,200 @ Headwaters, Inc. - 76,388
------------------------
- 76,388
------------------------
ENGINEERING & CONSTRUCTION: 2.2%
16,200 6,200 4,300 26,700 Fluor Corp. 544,968 208,568
15,000 7,900 3,800 26,700 @ Jacobs Engineering Group, Inc. 632,250 332,985
------------------------
1,177,218 541,553
------------------------
ENTERTAINMENT: 1.3%
7,800 - - 7,800 GTECH Holdings Corp. 293,670 -
9,000 - - 9,000 International Game Technology 920,970 -
------------------------
1,214,640 -
------------------------
ENVIRONMENTAL CONTROL: 1.9%
0 - 5,500 5,500 @ Republic Services, Inc. - -
11,800 - - 11,800 @ Stericycle, Inc. 454,064 -
66,500 - - 66,500 @ Tetra Tech, Inc. 1,139,145 -
------------------------
1,593,209 -
------------------------
FOOD: 2.8%
18,400 6,500 6,750 31,650 @ Dean Foods Co. 579,600 204,750
26,800 5,400 3,500 35,700 @ Performance Food Group Co. 991,600 199,800
- 6,100 - 6,100 Sysco Corp. - 183,244
------------------------
1,571,200 587,794
------------------------
HEALTHCARE--PRODUCTS: 4.7%
5,400 - - 5,400 @ Advanced Neuromodulation Systems, Inc. 279,558 -
- 2,000 - 2,000 @ Boston Scientific Corp. - 122,200
3,700 - 2,000 5,700 CR Bard, Inc. 263,847 -
5,300 - - 5,300 @ Inamed Corp. 284,557 -
- 4,100 - 4,100 Medtronic, Inc. - 196,677
9,600 5,500 3,100 18,200 @ St. Jude Medical, Inc. 552,000 316,250
- 30,700 - 30,700 @ EMC Corp. - 321,429
- 9,700 - 9,700 Hewlett-Packard Co. - 206,610
- 2,200 - 2,200 International Business Machines Corp. - 181,500
3,700 - 2,000 5,700 @ Lexmark Intl., Inc. 141,540 403,389
8,100 - - 8,100 @ Micros Systems, Inc. - 267,138
33,000 4,200 - 37,200 @ NetScreen Technologies, Inc. - 838,860
49,100 19,500 12,200 80,800 @ Network Appliance, Inc. 197,762 1,309,768
9,100 6,800 4,500 20,400 Reynolds & Reynolds Co. 128,520 582,624
47,600 - - 47,600 @ Western Digital Corp. - 490,280
------------------------
752,502 5,291,400
------------------------
DIVERSIFIED FINANCIAL SERVICES: 1.3%
- - 1,600 1,600 Bear Stearns Cos., Inc. 115,872 115,872
- 8,700 - 8,700 Citigroup, Inc. - 372,360
4,000 - - 4,000 Countrywide Financial Corp. - 278,280
- 6,100 - 6,100 JP Morgan Chase & Co. - 208,498
- 6,300 - 6,300 SLM Corp. - 246,771
------------------------
115,872 1,221,781
------------------------
ELECTRICAL COMPONENTS & EQUIPMENT: 0.7%
34,900 - 8,500 43,400 American Power Conversion 132,515 676,606
------------------------
132,515 676,606
------------------------
ELECTRONICS: 5.6%
17,700 - - 17,700 @ Benchmark Electronics, Inc. - 544,452
21,300 - - 21,300 @ Dionex Corp. - 846,675
17,700 3,300 - 21,000 @ Flir Systems, Inc. - 633,150
27,500 9,300 8,800 45,600 @ Gentex Corp. 269,368 1,395,816
24,700 9,300 6,500 40,500 @ Jabil Circuit, Inc. 143,650 895,050
34,200 34,200 @ Trimble Navigation Ltd. - 784,206
------------------------
413,018 5,099,349
------------------------
ENERGY-ALTERNATE SOURCES: 0.1%
- 5,200 - 5,200 @ Headwaters, Inc. - 76,388
------------------------
- 76,388
------------------------
ENGINEERING & CONSTRUCTION: 2.2%
16,200 6,200 4,300 26,700 Fluor Corp. 144,652 898,188
15,000 7,900 3,800 26,700 @ Jacobs Engineering Group, Inc. 160,170 1,125,405
------------------------
304,822 2,023,593
------------------------
ENTERTAINMENT: 1.3%
7,800 - - 7,800 GTECH Holdings Corp. - 293,670
9,000 - - 9,000 International Game Technology - 920,970
------------------------
- 1,214,640
------------------------
ENVIRONMENTAL CONTROL: 1.9%
0 - 5,500 5,500 @ Republic Services, Inc. 124,685 124,685
11,800 - - 11,800 @ Stericycle, Inc. - 454,064
66,500 - - 66,500 @ Tetra Tech, Inc. - 1,139,145
------------------------
124,685 1,717,894
------------------------
FOOD: 2.8%
18,400 6,500 6,750 31,650 @ Dean Foods Co. 212,625 996,975
26,800 5,400 3,500 35,700 @ Performance Food Group Co. 129,500 1,320,900
- 6,100 - 6,100 Sysco Corp. - 183,244
------------------------
342,125 2,501,119
------------------------
HEALTHCARE--PRODUCTS: 4.7%
5,400 - - 5,400 @ Advanced Neuromodulation Systems, Inc. - 279,558
- 2,000 - 2,000 @ Boston Scientific Corp. - 122,200
3,700 - 2,000 5,700 CR Bard, Inc. 142,620 406,467
5,300 - - 5,300 @ Inamed Corp. - 284,557
- 4,100 - 4,100 Medtronic, Inc. - 196,677
9,600 5,500 3,100 18,200 @ St. Jude Medical, Inc. 178,250 1,046,500
- - 5,300 5,300 @ Steris Corp. - -
9,400 3,600 4,200 17,200 @ Varian Medical Systems, Inc. 541,158 207,252
11,800 - - 11,800 @ Visx, Inc. 204,730 -
5,900 4,500 3,200 13,600 @ Zimmer Holdings, Inc. 265,795 202,725
------------------------
2,391,645 1,045,104
------------------------
HEALTHCARE--SERVICES: 1.9%
- 3,300 2,000 5,300 A Aetna, Inc. - 198,660
11,400 - - 11,400 @ Amsurg Corp. 347,700 -
3,600 - - 3,600 @ Anthem, Inc. 277,740 -
6,300 - - 6,300 @ Coventry Health Care, Inc. 290,808 -
- - 6,400 6,400 Health Management Associates, Inc. - -
- 3,800 - 3,800 UnitedHealth Group, Inc. - 190,950
- - 1,600 1,600 @ WellPoint Health Networks - -
------------------------
916,248 389,610
------------------------
HOME FURNISHINGS: 0.4%
3,600 - 800 4,400 Harman Intl. Industries, Inc. 284,904 -
------------------------
284,904 -
------------------------
INSURANCE: 1.6%
- 6,300 - 6,300 Aflac, Inc. - 193,725
- 3,300 - 3,300 American Intl. Group - 182,094
10,700 - - 10,700 First American Corp. 281,945 -
11,300 2,200 1,900 15,400 WR Berkley Corp. 595,510 115,940
------------------------
877,455 491,759
------------------------
INTERNET: 5.1%
31,500 5,600 - 37,100 @ Amazon.Com, Inc. 1,149,435 204,344
16,500 - - 16,500 @ Digital Insight Corp. 314,325 -
- 8,700 6,700 15,400 @ InterActiveCorp. - 344,259
32,100 - - 32,100 @ United Online, Inc. 813,414 -
72,800 20,000 12,000 104,800 @ WebMD Corp. 788,424 216,600
- 6,700 4,500 11,200 @ Yahoo!, Inc. - 219,492
------------------------
3,065,598 984,695
------------------------
MACHINERY--DIVERSIFIED: 1.0%
20,300 9,000 3,600 32,900 @ Cognex Corp. 453,705 201,150
- - 5,500 5,500 Rockwell Automation, Inc. - -
- - 700 700 @ Zebra Technologies Corp. - -
------------------------
453,705 201,150
------------------------
MEDIA: 1.2%
- - 4,300 4,300 @ Cablevision Systems Corp. - -
- 5,700 - 5,700 @ Comcast Corp. - 164,331
- 3,000 4,500 7,500 @ EchoStar Communications Corp. - 103,860
16,000 - - 16,000 @ Radio One, Inc. 284,320 -
- - 3,200 3,200 @ Univision Communications, Inc. - -
- 4,800 - 4,800 @ Viacom, Inc. - 211,362
------------------------
284,320 479,553
------------------------
MISCELLANEOUS MANUFACTURING: 1.0%
8,200 3,000 2,100 13,300 Danaher Corp. 558,010 204,150
------------------------
558,010 204,150
------------------------
OFFICE/BUSINESS EQUIPMENT: 0.7%
50,700 - 12,400 63,100 @ Xerox Corp. 536,913 -
------------------------
536,913 -
------------------------
OIL & GAS: 5.2%
- 4,600 2,000 6,600 Apache Corp. - 299,276
- - 2,700 2,700 Devon Energy Corp. - -
13,300 - - 13,300 @ Evergreen Resources, Inc. 722,323 -
- 9,700 - 9,700 Exxon Mobil Corp. - 348,327
- 11,500 5,700 17,200 @,@@ Nabors Industries Ltd. - 454,825
- - 5,300 5,300 @ Steris Corp. 122,377 122,377
9,400 3,600 4,200 17,200 @ Varian Medical Systems, Inc. 241,794 990,204
11,800 - - 11,800 @ Visx, Inc. - 204,730
5,900 4,500 3,200 13,600 @ Zimmer Holdings, Inc. 144,160 612,680
------------------------
829,201 4,265,950
------------------------
HEALTHCARE--SERVICES: 1.9%
- 3,300 2,000 5,300 A Aetna, Inc. 120,400 319,060
11,400 - - 11,400 @ Amsurg Corp. - 347,700
3,600 - - 3,600 @ Anthem, Inc. - 277,740
6,300 - - 6,300 @ Coventry Health Care, Inc. - 290,808
- - 6,400 6,400 Health Management Associates, Inc. 118,080 118,080
- 3,800 - 3,800 UnitedHealth Group, Inc. - 190,950
- - 1,600 1,600 @ WellPoint Health Networks 134,880 134,880
------------------------
373,360 1,679,218
------------------------
HOME FURNISHINGS: 0.4%
3,600 - 800 4,400 Harman Intl. Industries, Inc. 63,312 348,216
------------------------
63,312 348,216
------------------------
INSURANCE: 1.6%
- 6,300 - 6,300 Aflac, Inc. - 193,725
- 3,300 - 3,300 American Intl. Group - 182,094
10,700 - - 10,700 First American Corp. - 281,945
11,300 2,200 1,900 15,400 WR Berkley Corp. 100,130 811,580
------------------------
100,130 1,469,344
------------------------
INTERNET: 5.1%
31,500 5,600 - 37,100 @ Amazon.Com, Inc. - 1,353,779
16,500 - - 16,500 @ Digital Insight Corp. - 314,325
- 8,700 6,700 15,400 @ InterActiveCorp. 265,119 609,378
32,100 - - 32,100 @ United Online, Inc. - 813,414
72,800 20,000 12,000 104,800 @ WebMD Corp. 129,960 1,134,984
- 6,700 4,500 11,200 @ Yahoo!, Inc. 147,420 366,912
------------------------
542,499 4,592,792
------------------------
MACHINERY--DIVERSIFIED: 1.0%
20,300 9,000 3,600 32,900 @ Cognex Corp. 80,460 735,315
- - 5,500 5,500 Rockwell Automation, Inc. 131,120 131,120
- - 700 700 @ Zebra Technologies Corp. 52,633 52,633
------------------------
264,213 919,068
------------------------
MEDIA: 1.2%
- - 4,300 4,300 @ Cablevision Systems Corp. 89,268 89,268
- 5,700 - 5,700 @ Comcast Corp. - 164,331
- 3,000 4,500 7,500 @ EchoStar Communications Corp. 155,790 259,650
16,000 - - 16,000 @ Radio One, Inc. - 284,320
- - 3,200 3,200 @ Univision Communications, Inc. 97,280 97,280
- 4,800 - 4,800 @ Viacom, Inc. - 211,362
------------------------
342,338 1,106,211
------------------------
MISCELLANEOUS MANUFACTURING: 1.0%
8,200 3,000 2,100 13,300 Danaher Corp. 142,905 905,065
------------------------
142,905 905,065
------------------------
OFFICE/BUSINESS EQUIPMENT: 0.7%
50,700 - 12,400 63,100 @ Xerox Corp. 131,316 668,229
------------------------
131,316 668,229
------------------------
OIL & GAS: 5.2%
- 4,600 2,000 6,600 Apache Corp. 130,120 429,396
- - 2,700 2,700 Devon Energy Corp. 144,180 144,180
13,300 - - 13,300 @ Evergreen Resources, Inc. - 722,323
- 9,700 - 9,700 Exxon Mobil Corp. - 348,327
- 11,500 5,700 17,200 @,@@ Nabors Industries Ltd. 225,435 680,260
23,250 - - 23,250 PATINA OIL & GAS CORP. 747,488 -
14,900 9,300 7,000 31,200 @ Patterson-UTI Energy, Inc. 482,760 301,320
6,500 - - 6,500 Pogo Producing Co. 277,875 -
- 9,800 6,400 16,200 XTO Energy, Inc. - 197,078
------------------------
2,230,446 1,600,826
------------------------
OIL & GAS SERVICES: 1.5%
55,100 - - 55,100 Halliburton Co. 1,267,300 -
- - 3,300 3,300 @ BJ Services Co. - -
------------------------
1,267,300 -
------------------------
PACKAGING & CONTAINERS: 0.2%
- - 6,700 6,700 @ Pactiv Corp. - -
------------------------
- -
------------------------
PHARMACEUTICALS: 7.5%
7,500 5,200 3,600 16,300 @ AdvancePCS 286,725 198,796
6,900 - 1,700 8,600 Allergan, Inc. 531,990 -
- 6,600 4,000 10,600 @,@@ Biovail Corp. 0 310,596
18,000 3,200 4,500 25,700 @ Celgene Corp. 547,200 97,280
3,800 3,500 2,400 9,700 @ Express Scripts, Inc. 259,198 238,735
15,700 7,800 6,000 29,500 @ Medimmune, Inc. 571,009 283,686
17,500 - 4,500 22,000 Mylan Laboratories 608,475 -
25,100 13,600 7,100 45,800 Omnicare, Inc. 848,129 459,544
- 5,000 - 5,000 Pfizer, Inc. - 170,750
100 - - 100 @ Pharmaceutical Resources, Inc. 4,866 -
------------------------
3,657,592 1,759,387
------------------------
PIPELINES: 0.6%
17,000 - - 17,000 Questar Corp. 568,990 -
------------------------
568,990 -
------------------------
RETAIL: 9.2%
7,900 3,100 4,200 15,200 @ 99 Cents Only Stores 271,128 106,392
- 11,400 8,500 19,900 @ Abercrombie & Fitch Co. - 323,874
8,800 3,300 - 12,100 Applebees Intl., Inc. 276,584 103,719
7,300 2,700 1,700 11,700 @ Autozone, Inc. 554,581 205,119
- - 2,700 2,700 @ Bed Bath & Beyond, Inc. - -
14,400 5,500 4,500 24,400 CBRL Group, Inc. 559,584 213,730
27,500 10,100 6,100 43,700 @ Chico's FAS, Inc. 578,875 212,605
- 10,800 - 10,800 Gap, Inc. - 202,608
22,300 7,200 4,800 34,300 @ HOT Topic, Inc. 600,093 193,752
- 3,800 - 3,800 @ Pacific Sunwear of California - 91,542
22,900 4,200 5,000 32,100 @ Sonic Corp. 582,347 106,806
- 13,400 10,400 23,800 @ Staples, Inc. - 245,890
- 5,900 4,500 10,400 Tiffany & Co. - 192,812
21,900 - - 21,900 @ Tractor Supply Co. 1,045,725 -
- 3,500 - 3,500 Wal-Mart Stores, Inc. - 187,845
------------------------
4,468,917 2,386,694
------------------------
SAVINGS & LOANS: 0.7%
19,100 - 4,133 23,233 New York Community Bancorp, Inc. 555,619 -
------------------------
555,619 -
------------------------
SEMICONDUCTORS: 3.1%
29,500 20,900 13,100 63,500 @ Altera Corp. 483,800 342,760
15,400 6,000 3,900 25,300 Linear Technology Corp. 496,034 193,260
18,900 16,500 2,500 37,900 @ Xilinx, Inc. 478,359 417,615
------------------------
1,458,193 953,635
------------------------
SOFTWARE: 4.6%
31,600 - - 31,600 @ Avid Technology, Inc. 1,108,212 -
- - 2,900 2,900 @ D&B Corp. - -
- - 3,800 3,800 Fair Isaac Corp. - -
- 4,500 - 4,500 First Data Corp. - 186,480
23,250 - - 23,250 PATINA OIL & GAS CORP. - 747,488
14,900 9,300 7,000 31,200 @ Patterson-UTI Energy, Inc. 226,800 1,010,880
6,500 - - 6,500 Pogo Producing Co. - 277,875
- 9,800 6,400 16,200 XTO Energy, Inc. 128,704 325,782
------------------------
855,239 4,686,511
------------------------
OIL & GAS SERVICES: 1.5%
55,100 - - 55,100 Halliburton Co. - 1,267,300
- - 3,300 3,300 @ BJ Services Co. 123,288 123,288
------------------------
123,288 1,390,588
------------------------
PACKAGING & CONTAINERS: 0.2%
- - 6,700 6,700 @ Pactiv Corp. 132,057 132,057
------------------------
132,057 132,057
------------------------
PHARMACEUTICALS: 7.5%
7,500 5,200 3,600 16,300 @ AdvancePCS 137,628 623,149
6,900 - 1,700 8,600 Allergan, Inc. 131,070 663,060
- 6,600 4,000 10,600 @,@@ Biovail Corp. 188,240 498,836
18,000 3,200 4,500 25,700 @ Celgene Corp. 136,800 781,280
3,800 3,500 2,400 9,700 @ Express Scripts, Inc. 163,704 661,637
15,700 7,800 6,000 29,500 @ Medimmune, Inc. 218,220 1,072,915
17,500 - 4,500 22,000 Mylan Laboratories 156,465 764,940
25,100 13,600 7,100 45,800 Omnicare, Inc. 239,909 1,547,582
- 5,000 - 5,000 Pfizer, Inc. - 170,750
100 - - 100 @ Pharmaceutical Resources, Inc. - 4,866
------------------------
1,372,036 6,789,015
------------------------
PIPELINES: 0.6%
17,000 - - 17,000 Questar Corp. - 568,990
------------------------
- 568,990
------------------------
RETAIL: 9.2%
7,900 3,100 4,200 15,200 @ 99 Cents Only Stores 144,144 521,664
- 11,400 8,500 19,900 @ Abercrombie & Fitch Co. 241,485 565,359
8,800 3,300 - 12,100 Applebees Intl., Inc. - 380,303
7,300 2,700 1,700 11,700 @ Autozone, Inc. 129,149 888,849
- - 2,700 2,700 @ Bed Bath & Beyond, Inc. 104,787 104,787
14,400 5,500 4,500 24,400 CBRL Group, Inc. 174,870 948,184
27,500 10,100 6,100 43,700 @ Chico's FAS, Inc. 128,405 919,885
- 10,800 - 10,800 Gap, Inc. - 202,608
22,300 7,200 4,800 34,300 @ HOT Topic, Inc. 129,168 923,013
- 3,800 - 3,800 @ Pacific Sunwear of California - 91,542
22,900 4,200 5,000 32,100 @ Sonic Corp. 127,150 816,303
- 13,400 10,400 23,800 @ Staples, Inc. 190,840 436,730
- 5,900 4,500 10,400 Tiffany & Co. 147,060 339,872
21,900 - - 21,900 @ Tractor Supply Co. - 1,045,725
- 3,500 - 3,500 Wal-Mart Stores, Inc. - 187,845
------------------------
1,517,058 8,372,669
------------------------
SAVINGS & LOANS: 0.7%
19,100 - 4,133 23,233 New York Community Bancorp, Inc. 120,229 675,848
------------------------
120,229 675,848
------------------------
SEMICONDUCTORS: 3.1%
29,500 20,900 13,100 63,500 @ Altera Corp. 214,840 1,041,400
15,400 6,000 3,900 25,300 Linear Technology Corp. 125,619 814,913
18,900 16,500 2,500 37,900 @ Xilinx, Inc. 63,850 959,824
------------------------
404,309 2,816,137
------------------------
SOFTWARE: 4.6%
31,600 - - 31,600 @ Avid Technology, Inc. - 1,108,212
- - 2,900 2,900 @ D&B Corp. 119,190 119,190
- - 3,800 3,800 Fair Isaac Corp. 195,510 195,510
- 4,500 - 4,500 First Data Corp. - 186,480
- 4,200 - 4,200 Microsoft Corp. - 107,562
7,500 - - 7,500 @ National Instruments Corp. 283,350 -
39,200 7,100 - 46,300 @ Packeteer, Inc. 610,344 110,547
29,600 14,400 6,600 50,600 @ Veritas Software Corp. 848,632 412,848
------------------------
2,850,538 817,437
------------------------
TELECOMMUNICATIONS: 3.2%
5,300 - - 5,300 @ Adtran, Inc. 270,406 -
- 12,100 - 12,100 @ Cisco Systems, Inc. 200,739
- 29,900 14,400 44,300 @ Corning, Inc. - 220,961
19,400 - - 19,400 @ Foundry Networks, Inc. 279,360 -
- - 5,000 5,000 @ Juniper Networks, Inc. - -
- 14,100 3,200 17,300 @ Nextel Communications, Inc. - 254,928
25,275 10,400 5,880 41,555 @ Utstarcom, Inc. 899,031 369,928
------------------------
1,448,797 1,046,556
------------------------
TOYS/GAMES/HOBBIES: 0.1%
- - 6,000 6,000 Mattel, Inc. - -
------------------------
- -
------------------------
TRANSPORTATION: 2.4%
15,800 6,200 5,500 27,500 CH Robinson Worldwide, Inc. 561,848 220,472
15,700 6,500 5,600 27,800 Expeditors Intl. Washington, Inc. 543,848 225,160
11,100 - - 11,100 @ Knight Transportation, Inc. 276,390 -
------------------------
1,382,086 445,632
------------------------
Total Common Stock
(Cost $50,195,736, $17,109,349,
$11,474,411, $78,779,496) 52,954,812 19,293,755
MUTUAL FUNDS: 2.9%
EQUITY FUND: 2.9%
- 800 - 800 Biotech HOLDRs Trust - 98,600
- 5,400 4,100 9,500 Internet HOLDRs Trust - 209,358
10,900 - 1,500 12,400 Midcap SPDR Trust Series 1 956,148 -
- 12,140 4,300 16,440 @ Nasdaq-100 Index Tracking Stock - 363,593
- 3,400 - 3,400 Semiconductor HOLDRs Trust - 96,322
- 3,565 1,300 4,865 SPDR Trust Series 1 - 348,051
------------------------
Total Mutual Funds
(Cost $975,213, $982,767,
$523,146, $2,481,126) 956,148 1,115,924
------------------------
Total Long-Term Investments (Cost
$51,170,949, $18,092,116, $11,997,557,
$81,260,622) 53,910,960 20,409,679
------------------------
SHORT-TERM INVESTMENTS: 6.6%
5,025,000 596,000 426,000 6,047,000 REPURCHASE AGREEMENT: 6.6%
State Street Repurchase
Agreements dated 06/30/03,
0.950%, due 07/01/03, $5,023,133,
$596,016,$426,011 to be received
upon repurchase (Collateralized
by $5,085,000 USTN, 1.750%,
Market Value $5,125,517 due
12/31/04, collateralized by
$400,000 USTB, 8.500%, Market
Value $609,304, due 02/15/20,
collateralized by $290,000
USTB, 8.500%, Market Value
$441,746, due 02/15/20)
Total Short-Term Investments
(Cost $5,025,000, $596,000,
$426,000, $6,047,000) 5,025,000 596,000
------------------------
TOTAL INVESTMENTS IN SECURITIES
(COST $56,195,949, $18,688,116,
$12,423,557, $87,307,622)* 102.8% $58,935,960 $21,005,679
OTHER ASSETS AND LIABILITIES-NET -2.8% (2,350,320) (102,733)
-----------------------------------
NET ASSETS 100.0% $56,585,640 $20,902,946
===================================
- 4,200 - 4,200 Microsoft Corp. - 107,562
7,500 - - 7,500 @ National Instruments Corp. - 283,350
39,200 7,100 - 46,300 @ Packeteer, Inc. - 720,891
29,600 14,400 6,600 50,600 @ Veritas Software Corp. 189,222 1,450,702
--------------------------
503,922 4,171,897
--------------------------
TELECOMMUNICATIONS: 3.2%
5,300 - - 5,300 @ Adtran, Inc. - 270,406
- 12,100 - 12,100 @ Cisco Systems, Inc. 200,739
- 29,900 14,400 44,300 @ Corning, Inc. 106,416 327,377
19,400 - - 19,400 @ Foundry Networks, Inc. - 279,360
- - 5,000 5,000 @ Juniper Networks, Inc. 61,850 61,850
- 14,100 3,200 17,300 @ Nextel Communications, Inc. 57,856 312,784
25,275 10,400 5,880 41,555 @ Utstarcom, Inc. 209,152 1,478,111
--------------------------
435,274 2,930,627
--------------------------
TOYS/GAMES/HOBBIES: 0.1%
- - 6,000 6,000 Mattel, Inc. 113,520 113,520
--------------------------
113,520 113,520
--------------------------
TRANSPORTATION: 2.4%
15,800 6,200 5,500 27,500 CH Robinson Worldwide, Inc. 195,580 977,900
15,700 6,500 5,600 27,800 Expeditors Intl. Washington, Inc. 193,984 962,992
11,100 - - 11,100 @ Knight Transportation, Inc. - 276,390
--------------------------
389,564 2,217,282
--------------------------
Total Common Stock
(Cost $50,195,736, $17,109,349,
$11,474,411, $78,779,496) 12,608,799 84,857,366
MUTUAL FUNDS: 2.9%
EQUITY FUND: 2.9%
- 800 - 800 Biotech HOLDRs Trust - 98,600
- 5,400 4,100 9,500 Internet HOLDRs Trust 158,957 368,315
10,900 - 1,500 12,400 Midcap SPDR Trust Series 1 131,580 1,087,728
- 12,140 4,300 16,440 @ Nasdaq-100 Index Tracking Stock 128,785 492,378
- 3,400 - 3,400 Semiconductor HOLDRs Trust - 96,322
- 3,565 1,300 4,865 SPDR Trust Series 1 126,919 474,970
--------------------------
Total Mutual Funds
(Cost $975,213, $982,767,
$523,146, $2,481,126) 546,241 2,618,313
--------------------------
Total Long-Term Investments (Cost
$51,170,949, $18,092,116, $11,997,557,
$81,260,622) 13,155,040 87,475,679
--------------------------
SHORT-TERM INVESTMENTS: 6.6%
5,025,000 596,000 426,000 6,047,000 REPURCHASE AGREEMENT: 6.6%
State Street Repurchase
Agreements dated 06/30/03,
0.950%, due 07/01/03, $5,023,133,
$596,016,$426,011 to be received
upon repurchase (Collateralized
by $5,085,000 USTN, 1.750%,
Market Value $5,125,517 due
12/31/04, collateralized by
$400,000 USTB, 8.500%, Market
Value $609,304, due 02/15/20,
collateralized by $290,000
USTB, 8.500%, Market Value
$441,746, due 02/15/20)
Total Short-Term Investments
(Cost $5,025,000, $596,000,
$426,000, $6,047,000) 426,000 6,047,000
--------------------------
TOTAL INVESTMENTS IN SECURITIES
(COST $56,195,949, $18,688,116,
$12,423,557, $87,307,622)* $13,581,040 $93,522,679
OTHER ASSETS AND LIABILITIES-NET (80,671) (2,533,724)
--------------------------
NET ASSETS $13,500,369 $90,988,955
==========================
@ Non-income producing security
@@ Foreign Issuer
A Related Party
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS(UNAUDITED)
NOTE 1 - BASIS OF COMBINATION:
On November 11, 2003, the Board of Trustees of ING VP Growth + Value
Portfolio ("Growth + Value Portfolio"), ING VP Growth Opportunities Portfolio
("Growth Opportunities Portfolio") and ING VP MidCap Opportunities Portfolio
("MidCap Opportunities Portfolio"), approved an Agreement and Plan of
Reorganization (the "Plan") whereby, subject to approval by the shareholders of
Growth + Value Portfolio and Growth Opportunities Portfolio, MidCap
Opportunities Portfolio will acquire all of the assets of the Growth + Value
Portfolio and Growth Opportunities Portfolio, subject to the liabilities of such
Funds, in exchange for a number of shares of MidCap Opportunities Portfolio
equal in value to the net assets of the Growth + Value Portfolio and Growth
Opportunities Portfolio (the "Merger").
The Merger will be accounted for as a tax-free merger of investment
companies. The unaudited pro forma combined financial statements are presented
for the information of the reader and may not necessarily be representative of
what the actual combined financial statements would have been had the
reorganization occurred at June 30, 2003. The unaudited pro forma portfolio of
investments, and statement of assets and liabilities reflect the financial
position of Growth + Value Portfolio and Growth Opportunities Portfolio and
MidCap Opportunities Portfolio at June 30, 2003. The unaudited pro forma
statement of operations reflects the results of operations of Growth + Value
Portfolio and Growth Opportunities Portfolio and MidCap Opportunities Portfolio
for the year ended June 30, 2003. These statements have been derived from the
Funds' respective books and records utilized in calculating daily net asset
value at the date indicated above for Growth + Value Portfolio and Growth
Opportunities Portfolio and MidCap Opportunities Portfolio under generally
accepted accounting principles in the United States of America. The historical
cost of investment securities will be carried forward to the surviving entity
and the results of operations of MidCap Opportunities Portfolio for
pre-combination periods will not be restated.
The unaudited pro forma portfolio of investments, and unaudited statement
of assets and liabilities and statement of operations should be read in
conjunction with the historical financial statements of each Fund which are
incorporated by reference in the Statements of Additional Information.
NOTE 2 - SECURITY VALUATION:
Investments in equity securities traded on a national securities exchange
are valued at the last reported sale price. Portfolio securities reported by
NASDAQ will be valued at the NASDAQ official closing price. Securities traded on
an exchange or NASDAQ for which there has been no sale and securities traded in
the over-the-counter- market are valued at the mean between the last reported
bid and ask prices. All investments quoted in foreign currencies will be valued
daily in U.S. dollars on the basis of the foreign currency exchange rates
prevailing at that time. Debt securities are valued at bid prices obtained from
independent services or from one or more dealers making markets in the
securities. U.S. Government obligations are valued by using market quotations or
independent pricing services which uses prices provided by market-makers or
estimates of market values obtained from yield data relating to instruments or
securities with similar characteristics. Securities and assets for which market
quotations are not readily available (which may include certain restricted
securities which are subject to limitations as to their sale) are valued at
their fair values as determined in good faith by or under the supervision of the
Portfolio's Board of Trustees ("Board"), in accordance with methods that are
specifically authorized by the Board. Securities traded on exchanges, including
foreign exchanges, which close earlier than the time that a Portfolio calculates
its net asset value may also be valued at their fair values as determined in
good faith by or under the supervision of a Portfolio's Board, in accordance
with methods that are specifically authorized by the Board. If a significant
event which is likely to impact the value of one or more foreign securities held
by a Portfolio occurs after the time at which the foreign market for such
security(ies) closes but before the time that the Portfolio's net asset value is
calculated on any business day, such event may be taken into account in
determining the fair value of such security(ies) at the time the Portfolio
calculates its net asset value. For these purposes, significant events after the
close of trading on a foreign market may include, among others, securities
trading in the U.S. and other markets, corporate announcements, natural and
other
disasters, and political and other events. Among other elements of analysis, the
Board has authorized the use of one or more research services to assist with the
determination of the fair value of foreign securities in light of significant
events. Research services use statistical analyses and quantitative models to
help determine fair value as of the time a Portfolio calculates its net asset
value. Unlike the closing price of a security on an exchange, fair value
determinations employ elements of judgment, and the fair value assigned to a
security may not represent the actual value that a Portfolio could obtain if it
were to sell the security at the time of the close of the NYSE. Investments in
securities maturing in less than 60 days from the date of acquisition are valued
at amortized cost, which, when combined with accrued interest, approximates
market value.
NOTE 3 - CAPITAL SHARES:
The unaudited pro forma net asset value per share assumes additional shares
of common stock issued in connection with the proposed acquisition of Growth +
Value Portfolio and Growth Opportunities Portfolio by MidCap Opportunities
Portfolio as of June 30, 2003. The number of additional shares issued was
calculated by dividing the net asset value of each Class of Growth + Value
Portfolio and Growth Opportunities Portfolio by the respective Class net asset
value per share of MidCap Opportunities Portfolio.
NOTE 4 - UNAUDITED PRO FORMA ADJUSTMENTS:
The accompanying unaudited pro forma financial statements reflect changes
in fund shares as if the merger had taken place on June 30, 2003. Growth + Value
Portfolio and Growth Opportunities Portfolio expenses were adjusted assuming
MidCap Opportunities Portfolio's fee structure was in effect for the year ended
June 30, 2003.
NOTE 5 - MERGER COSTS:
Merger costs to be incurred by the Funds are estimated at approximately
$25,000. These costs represent one half of the estimated expense of all the
Funds carrying out their obligations under the Plan and consist of management's
estimate of legal fees, accounting fees, printing costs and mailing charges
related to the proposed merger. ING Investments LLC, Investment Adviser to the
Funds, will bear the other half of the cost of the Reorganization.
NOTE 6 - USE OF ESTIMATES
Management of the Funds has made certain estimates and assumptions
relating to the reporting of assets, liabilities, income, and expenses to
prepare these financial statements in conformity with accounting principles
generally accepted in the United States of America. Actual results could differ
from these estimates.
NOTE 7 - FEDERAL INCOME TAXES:
It is the policy of the Funds, to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute substantially all of their net investment income and any net
realized gains to their shareholders. Therefore, a federal income tax or excise
tax provision is not required. In addition, by distributing during each calendar
year substantially all of its net investment income and net realized capital
gains, each Fund intends not to be subject to any federal excise tax.
The Fund intends to offset any net capital gains with any available
capital loss carryforward until each carryforward has been fully utilized or
expires. The amount of capital loss carryforward, which may offset MidCap
Opportunities Portfolio's capital gains in any given year, may be limited as a
result of previous reorganizations. In addition, no capital gain distribution
shall be made until the capital loss carryforward has been fully utilized or
expires.
ING VP GROWTH + VALUE PORTFOLIO
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON MARCH 25, 2004. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoint(s) MICHAEL J. ROLAND AND HUEY P.
FALGOUT, JR. or any one or both of them, proxies, with full power of
substitution, to vote all shares of ING VP Growth + Value Portfolio (the
"Portfolio"), a series of ING Variable Products Trust, which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the Portfolio to be
held at the offices of the Portfolio at 7337 East Doubletree Ranch Road,
Scottsdale, Arizona 85258-2034 on March 25, 2004 at 10:00 a.m., Local time, and
at any adjournment thereof.
This proxy will be voted as instructed. If no specification is made,
the proxy will be voted "FOR" the proposals.
Please vote, date and sign this proxy and return it promptly in the
enclosed envelope.
Please indicate your vote by an "x" in the appropriate box below.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. To approve an Agreement and Plan of Reorganization providing for the
acquisition of all of the assets of ING VP Growth + Value Portfolio by ING VP
MidCap Opportunities Portfolio in exchange for Class R shares of beneficial
interest of ING VP MidCap Opportunities Portfolio and the assumption by ING VP
MidCap Opportunities Portfolio of all of the liabilities of ING VP Growth +
Value Portfolio, a series of ING Variable Products Trust.
For [ ] Against [ ] Abstain [ ]
2. To transact such other business, not currently contemplated, that may
properly come before the Special Meeting or any adjournment(s) thereof in the
discretion of the proxies or their substitutes.
For [ ] Against [ ] Abstain [ ]
This proxy card must be signed exactly as your name(s) appears hereon.
If as an attorney, executor, guardian or in some representative capacity or as
an officer of a corporation, please add titles as such. Joint owners must each
sign.
________________________ ________________
Signature Date
________________________ ________________
Signature (if held jointly) Date
ING Variable Products Trust
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
ING VP GROWTH OPPORTUNITIES PORTFOLIO
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS ON MARCH 25, 2004. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoint(s) MICHAEL J. ROLAND AND HUEY P.
FALGOUT, JR. or any one or both of them, proxies, with full power of
substitution, to vote all shares of ING VP Growth Opportunities Portfolio (the
"Portfolio"), a series of ING Variable Products Trust, which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the Portfolio to be
held at the offices of the Portfolio at 7337 East Doubletree Ranch Road,
Scottsdale, Arizona 85258-2034 on March 25, 2004 at 10:00 a.m., Local time, and
at any adjournment thereof.
This proxy will be voted as instructed. If no specification is made,
the proxy will be voted "FOR" the proposals.
Please vote, date and sign this proxy and return it promptly in the
enclosed envelope.
Please indicate your vote by an "x" in the appropriate box below.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. To approve an Agreement and Plan of Reorganization providing for the
acquisition of all of the assets of ING VP Growth Opportunities Portfolio by ING
VP MidCap Opportunities Portfolio in exchange for Class R and Class S shares of
beneficial interest of ING VP MidCap Opportunities Portfolio and the assumption
by ING VP MidCap Opportunities Portfolio of all of the liabilities of ING VP
Growth Opportunities Portfolio, a series of ING Variable Products Trust.
For [ ] Against [ ] Abstain [ ]
2. To transact such other business, not currently contemplated, that may
properly come before the Special Meeting or any adjournment(s) thereof in the
discretion of the proxies or their substitutes.
For [ ] Against [ ] Abstain [ ]
This proxy card must be signed exactly as your name(s) appears hereon.
If as an attorney, executor, guardian or in some representative capacity or as
an officer of a corporation, please add titles as such. Joint owners must each
sign.
________________________ ________________
Signature Date
________________________ ________________
Signature (if held jointly) Date
ING Variable Products Trust
7337 East Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Section 4.3 of Registrant's Declaration of Trust provides the following:
(a) Subject to the exceptions and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer of the Trust
shall be indemnified by the Trust to the fullest extent permitted by
law against all liability and against all expenses reasonably incurred
or paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or
incurred by him in the settlement thereof; and
(ii) the word "claim," "action," "suit," or "proceeding" shall apply to
all claims, actions suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; aria
the words "liability" and "expenses" shall include, without limitation,
attorneys fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust, a Series thereof, or the
Shareholders by reason of a final adjudication by a court or other body
before which a proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust; or
(iii) in the event of a settlement or other disposition not involving a
final adjudication as provided in paragraph (b) (i) or (b) (ii)
resulting in a payment by a Trustee or officer, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office:
(a) by the court or other body approving the settlement or
other disposition; or
(b) based upon a review of readily available facts (as opposed
to a full trial-type inquiry) by (x) vote of a majority of the
Disinterested Trustees acting on the matter (provided that a
majority of the Disinterested Trustees then in office act on
the matter) or (y) written opinion of independent legal
counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a person who has ceased to he such Trustee or officer and shall
inure to the benefit of the heirs, executors, administrators and assigns of such
a person. Nothing contained herein shall affect any rights to indemnification to
which personnel of the Trust other than Trustees and officers may be entitled by
contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this Section
4.3 may be advanced by the Trust prior to final
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disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Section 4.3, provided that either: (i)
such undertaking is secured by a surety bond or some other appropriate security
provided by the recipient, or the Trust shall be insured against losses arising
out of any such advances; or (ii) a majority of the Disinterested Trustees
acting on the matter (provided that a majority of the disinterested Trustees act
on the matter) or an independent legal counsel in a written opinion shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will he found entitled to indemnification. As used in this Section
4.3, a "Disinterested Trustee" is one who is not (i) an Interested Person of the
Trust (including anyone who has been exempted from being an Interested Person by
any rule, regulation or order of the Commission), or (ii) involved in the claim,
action, suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in
connection with the successful defense of any action suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy, as expressed in the Act and be governed by final
adjudication of such issue.
ITEM 16. EXHIBITS
(1) (A) Declaration of Trust -- Filed as an Exhibit to
Post-Effective Amendment No. 4 to Registrant's Registration
Statement on Form N-1A on February 28, 1996, and incorporated
herein by reference.
(B) Certificate of Amendment of Declaration of Trust and
Redesignation of Series -- Filed as an Exhibit to
Post-Effective Amendment No. 6 to Registrant's Registration
Statement on Form N-1A on April 30, 1997, and incorporated
herein by reference.
(C) Certificate of Establishment and Designation -- Filed as an
Exhibit to Post-Effective Amendment No. 7 to Registrant's
Registration Statement on Form N-1A on May 16, 1997, and
incorporated herein by reference.
(D) Certificate of Establishment and Designation -- Filed as an
Exhibit to Post-Effective Amendment No. 8 to Registrant's
Registration Statement on Form N-1A on May 20, 1997, and
incorporated herein by reference.
(E) Certificate of Amendment of Declaration of Trust and
Redesignation of Series -- Filed as an Exhibit to
Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A on January 28, 2000, and incorporated
herein by reference.
(F) Certificate of Amendment of Declaration of Trust -- Filed as
an Exhibit to Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A on January 28, 2000, and
incorporated herein by reference.
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(G) Certificate of Amendment of Declaration of Trust --Filed as an
Exhibit to Post-Effective Amendment No. 15 to Registrant's
Registration Statement on Form N-1A on January 28, 2000, and
incorporated herein by reference.
(H) Certificate of Establishment and Designation of Series --
Filed as an Exhibit to Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A on January
28, 2000, and incorporated herein by reference.
(I) Establishment and Designation of Series and Classes.
(J) Certificate of Amendment of Declaration of Trust and
Redesignation of Series -- Filed as an Exhibit to
Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A on January 28, 2000, and incorporated
herein by reference.
(K) Certificate of Amendment of Declaration of Trust and
Redesignation of Series.
(L) Certificate of Amendment of Declaration of Trust and
Establishment and Designation of Additional Series of Shares
of Beneficial Interest; Establishment of Additional Series;
Establishment of New Principal Place of Business -- Filed as
an Exhibit to Post-Effective Amendment No. 19 to Registrant's
Registration Statement on Form N-1A on April 27, 2001, and
incorporated herein by reference.
(M) Form of Certificate of Amendment of Declaration of Trust:
Abolition of Series of Shares of Beneficial Interests -- Filed
as an Exhibit to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A on April 18,
2002, and incorporated herein by reference.
(N) Form of Certificate of Amendment of Declaration of Trust and
Redesignation of Series - Filed as an Exhibit to
Post-Effective Amendment No. 20 to Registrant's Registration
Statement on Form N-1A on April 18, 2002, and incorporated
herein by reference.
(O) Form of Certificate of Amendment of Declaration of Trust and
Redesignation of Series - Filed as an Exhibit to
Post-Effective Amendment No. 20 to Registrant's Registration
Statement on Form N-1A on April 18, 2002, and incorporated
herein by reference.
(P) Abolition of Series of shares of beneficial interest - Filed
as an Exhibit to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A on April 28,
2003, and incorporated herein by reference.
(Q) Abolition of Series of shares of beneficial interest.
(2) (A) By-laws. -- Filed as an Exhibit to Post-Effective
Amendment No. 4 to Registrant's Registration Statement on Form
N-1A on February 28, 1996, and incorporated herein by
reference.
(3) Not Applicable
(4) (A) Form of Agreement and Plan of Reorganization between ING
Variable Products Trust on behalf of ING VP Growth + Value
Portfolio and ING Variable Products Trust, on behalf of ING VP
MidCap Opportunities Portfolio.
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(B) Form of Agreement and Plan of Reorganization between ING
Variable Products Trust on behalf of ING VP Growth
Opportunities Portfolio and ING Variable Products Trust, on
behalf of ING VP MidCap Opportunities Portfolio.
(5) Instruments defining the rights of holders -- set forth in the
Declaration of Trust.
(6) (A) Form of Advisory Agreement between Registrant and ING
Pilgrim Investments, LLC -- Filed as an Exhibit to
Post-Effective Amendment No. 24 to Registrant's Registration
Statement on Form N-1A on April 28, 2003, and incorporated
herein by reference.
(B) Form of Investment Advisory Agreement between the Registrant
and ING Pilgrim Investments, LLC -- Filed as an Exhibit to
Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A on January 28, 2000, and incorporated
herein by reference.
(C) Form of Investment Advisory Agreement between the Registrant
and ING Pilgrim Investments, LLC -- Filed as an Exhibit to
Post-Effective Amendment No. 17 to Registrant's Registration
Statement on Form N-1A on April 27, 2000, and incorporated
herein by reference.
(D) Amended and Restated Schedule A with respect to the Investment
Advisory Agreement between the Registrant and ING Investments,
LLC -- Filed as an Exhibit to Post-Effective Amendment No. 23
to Registrant's Registration Statement on Form N-1A on April
28, 2003, and incorporated herein by reference.
(E) Sub-Adviser Agreement between ING Pilgrim Investments, LLC and
Aeltus Investment Management, Inc.
(F) First Amendment to Sub-Adviser Agreement between ING
Investments, LLC (formerly ING Pilgrim Investments, LLC) and
Aeltus Investment Management, Inc.
(G) Second Amendment to Sub-Adviser Agreement between ING
Investments, LLC and Aeltus Investment Management, Inc.
(H) Amended Schedule A with respect to Sub-Advisory Agreement
between ING Investments, LLC and Aeltus Investment Management,
Inc.
(7) (A) Form of Distribution Agreement between the Registrant and
ING Pilgrim Securities, Inc. -- Filed as an Exhibit to
Post-Effective Amendment No. 19 to Registrant's Registration
Statement on Form N-1A on April 27, 2001, and incorporated
herein by reference.
(B) Amended and Restated Schedule of Portfolios with respect to
the Distribution Agreement between the Registrant and ING
Funds Distributor, LLC. -- Filed as an Exhibit to
Post-Effective Amendment No. 23 to Registrant's Registration
Statement on Form N-1A on April 28, 2003, and incorporated
herein by reference.
(8) Not Applicable.
(9) (A) Custodian Agreement -- Filed as an Exhibit to Post-Effective
Amendment No. 4 to Registrant's Registration Statement on Form
N-1A on February 28, 1996, and incorporated herein by
reference.
(B) Amendment to Custodian Agreement -- Filed as an Exhibit to
Post-Effective Amendment No. 11 to Registrant's Registration
Statement on Form N-1A on February 27, 1998, and incorporated
herein by reference.
(C) Form of Custodian and Investment Accounting Agreement with
State Street Bank and Trust Company for Convertible Portfolio,
Financial Services Portfolio, Large Company
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Value Portfolio, Growth + Value Portfolio, Growth
Opportunities Portfolio, High Yield Bond Portfolio, LargeCap
Growth Portfolio, MagnaCap Portfolio, MidCap Opportunities
Portfolio, Research Enhanced Index Portfolio, and SmallCap
Opportunities Portfolio - Filed as an Exhibit to
Post-Effective Amendment No. 21 to Registrant's Registration
Statement on Form N-1A on April 18, 2002, and incorporated
herein by reference.
(D) Form of Amendment to Custodian and Investment Accounting
Agreement with State Street Bank and Trust Company -- Filed as
an Exhibit to Post-Effective Amendment No. 21 to Registrant's
Registration Statement on Form N-1A on April 18, 2002, and
incorporated herein by reference.
(E) Foreign Custody Manager Agreement.
(F) Amendment to Custody Agreement, Foreign Custody Manager
Agreement, Fund Accounting Agreement, Custody and Fund
Accounting Fee Schedule and Global Securities Fee Schedule
(dated September 25, 2003).
(G) Amendment to Custody Agreement, Foreign Custody Manager
Agreement, Fund Accounting Agreement, Custody and Fund
Accounting Fee Schedule and Global Securities Fee Schedule
(dated October 17, 2003).
(10) Not Applicable.
(11) Form of Opinion and Consent of Counsel
(12) Form of Opinion of Counsel Supporting Tax Matters and Consequences --
To Be Filed in a Subsequent Post-Effective Amendment.
(13) (A) Administrative Services Agreement -- Filed as an Exhibit to
Post-Effective Amendment No. 8 to Registrant's Registration
Statement on Form N-1A on May 20, 1997, and incorporated
herein by reference.
(B) Amended and Restated Administrative Services Agreement --
Filed as an Exhibit to Post- Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A on April 27,
2000, and incorporated herein by reference.
(C) Form of Amended and Restated Administrative Services Agreement
-- Filed as an Exhibit to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A on April 27,
2001, and incorporated herein by reference.
(D) Amendment to Amended and Restated Administrative Services
Agreement between Registrant and ING Pilgrim Group, LLC--
Filed as an Exhibit to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A on April 18,
2002, and incorporated herein by reference.
(E) Amended and Restated Schedule A with respect to the Amended
and Restated Administrative Services Agreement between
Registrant and ING Funds Services, LLC (formerly ING Pilgrim
Group, Inc.)
(F) Form of Shareholder Service Plan -- Filed as an Exhibit to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A on February 15, 2001, and incorporated
herein by reference.
(G) Accounting Agency Agreement with Brown Brothers Harriman & Co.
for International Portfolio, International Value Portfolio,
Emerging Countries Portfolio, and International SmallCap
Growth Portfolio - Filed as an Exhibit to Post-Effective
Amendment No. 21 to
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Registrant's Registration Statement on Form N-1A on April 18,
2002, and incorporated herein by reference.
(H) Restated Expense Limitation Agreement by and between
Registrant and ING Investments, LLC.
(I) Form of Amended and Restated Schedule of Portfolios with
respect to the Shareholder Services Plan -- Filed as an
Exhibit to Post-Effective Amendment No. 23 to Registrant's
Registration Statement on Form N-1A on April 28, 2003, and
incorporated herein by reference.
(J) Security Lending Agreement and Guaranty between Registrant and
Bank of New York.
(K) Amended Exhibit A with respect to Security Lending Agreement
and Guaranty between Registrant and Bank of New York
(September 25, 2003).
(L) Amended Exhibit A with respect to Security Lending Agreement
and Guaranty between Registrant and Bank of New York (October
17, 2003).
(M) Transfer Agency Agreement
(14) Consent of Independent Accountants.
(15) Not Applicable
(16) Powers of Attorney.
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ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) under the 1933 Act (17 CFR
230.145(c)), the reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) The undersigned registrant undertakes to file a post-effective
amendment to this registration statement upon the closing of the Reorganization
described in this Registration Statement that contains an opinion of counsel
supporting the tax matters discussed in this Registration Statement.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
(the"1933 Act"), the Registrant has duly caused this Registration Statement on
Form N-14 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Scottsdale and the State of Arizona on the 23rd day
of December, 2003.
ING VARIABLE PRODUCTS TRUST
By: /s/ Huey Falgout, Jr.
Huey Falgout, Jr.
Secretary
Pursuant to the requirements of the 1933 Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ John G. Turner
_____________________________________________ Trustee and Chairman December 23, 2003
John G. Turner*
/s/ James M. Hennessy President and Chief Executive December 23, 2003
_____________________________________________ Officer
James M. Hennessy*
/s/ Michael J. Roland Executive Vice President and December 23, 2003
_____________________________________________ Principal Financial Officer
Michael J. Roland*
/s/ Paul S. Doherty
_____________________________________________ Trustee December 23, 2003
Paul S. Doherty*
/s/ J. Michael Earley
_____________________________________________ Trustee December 23, 2003
J. Michael Earley*
/s/ R. Barbara Gitenstein
_____________________________________________ Trustee December 23, 2003
R. Barbara Gitenstein*
/s/ Walter H. May, Jr.
_____________________________________________ Trustee December 23, 2003
Walter H. May, Jr.*
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/s/ Thomas J. McInerney
_____________________________________________ Trustee December 23, 2003
Thomas J. McInerney*
/s/ Jock Patton
_____________________________________________ Trustee December 23, 2003
Jock Patton*
/s/ David W.C. Putnam
_____________________________________________ Trustee December 23, 2003
David W.C. Putnam*
/s/ Blaine E. Rieke
_____________________________________________ Trustee December 23, 2003
Blaine E. Rieke*
/s/ Roger B. Vincent
_____________________________________________ Trustee December 23, 2003
Roger B. Vincent*
/s/ Richard A. Wedemeyer
_____________________________________________ Trustee December 23, 2003
Richard A. Wedemeyer*
*By: /s/ Huey Falgout, Jr.
Huey Falgout, Jr.
Attorney-in-Fact**
** Executed pursuant to powers of attorney filed in this Registration Statement.
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EXHIBIT INDEX
(1) (I) Establishment and Designation of Series and Classes.
(K) Certificate of Amendment of Declaration of Trust and
Redesignation of Series.
(Q) Abolition of Series of shares of beneficial interest.
(4) (A) Form of Agreement and Plan of Reorganization between ING
Variable Products Trust on behalf of ING VP Growth + Value
Portfolio and ING Variable Products Trust, on behalf of ING VP
MidCap Opportunities Portfolio.
(B) Form of Agreement and Plan of Reorganization between ING
Variable Products Trust on behalf of ING VP Growth
Opportunities Portfolio and ING Variable Products Trust, on
behalf of ING VP MidCap Opportunities Portfolio.
(6) (E) Sub-Adviser Agreement between ING Pilgrim Investments, LLC
and Aeltus Investment Management, Inc.
(F) First Amendment to Sub-Adviser Agreement between ING
Investments, LLC (formerly ING Pilgrim Investments, LLC) and
Aeltus Investment Management, Inc.
(G) Second Amendment to Sub-Adviser Agreement between ING
Investments, LLC and Aeltus Investment Management, Inc.
(H) Amended Schedule A with respect to Sub-Advisory Agreement
between ING Investments, LLC and Aeltus Investment Management,
Inc.
(9) (E) Foreign Custody Manager Agreement.
(F) Amendment to Custody Agreement, Foreign Custody Manager
Agreement, Fund Accounting Agreement, Custody and Fund
Accounting Fee Schedule and Global Securities Fee Schedule
(dated September 25, 2003).
(G) Amendment to Custody Agreement, Foreign Custody Manager
Agreement, Fund Accounting Agreement, Custody and Fund
Accounting Fee Schedule and Global Securities Fee Schedule
(dated October 17, 2003).
(11) Form of Opinion and Consent of Counsel
(13) (E) Amended and Restated Schedule A with respect to the
Amended and Restated Administrative Services Agreement between
Registrant and ING Funds Services, LLC (formerly ING Pilgrim
Group, Inc.)
(H) Restated Expense Limitation Agreement by and between
Registrant and ING Investments, LLC.
(J) Security Lending Agreement and Guaranty between Registrant and
Bank of New York.
(K) Amended Exhibit A with respect to Security Lending Agreement
and Guaranty between Registrant and Bank of New York
(September 25, 2003).
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(L) Amended Exhibit A with respect to Security Lending Agreement
and Guaranty between Registrant and Bank of New York (October
17, 2003).
(M) Transfer Agency Agreement.
(14) Consent of Independent Accountants.
(16) Powers of Attorney.
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