FIRST QUARTER REPORT
May 31, 2003 ING PRIME RATE TRUST
[GRAPHIC]
[LION LOGO]
ING FUNDS
ING Prime Rate Trust
FIRST QUARTER REPORT
May 31, 2003
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Table of Contents
Portfolio Managers' Report ............................. 2
Statistics and Performance ............................. 6
Additional Notes and Information ....................... 9
Statement of Assets and Liabilities .................... 11
Statement of Operations ................................ 12
Statements of Changes in Net Assets .................... 13
Statement of Cash Flows ................................ 14
Financial Highlights ................................... 15
Notes to Financial Statements .......................... 16
Portfolio of Investments ............................... 22
Additional Information ................................. 40
Trustee and Officer Information ........................ 41
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ING Prime Rate Trust
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PORTFOLIO MANAGERS' REPORT
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PERFORMANCE OF THE TRUST
The Trust declared to common shareholders $0.11 of dividends during the fiscal
quarter ended May 31, 2003, which, based on the average month-end net asset
value ("NAV") per share of $6.81, resulted in an annualized distribution rate of
6.16%.(1) Total return (based on NAV) for the quarter was 3.96%, up from 2.63%
during the previous fiscal quarter, and above the 2.28% level of the fiscal
quarter ended May 31, 2002. The favorable comparison against the prior year
period is significant in light of a further decline in short-term interest rates
since that time.
The Trust's common shares also performed well during the quarter, as investors
continued to search for relatively higher yields on their income-oriented
investments. Total return based on market value (assuming full dividend
reinvestment) was 11.14% for the three-month period ended May 31, 2003. Since
the beginning of 2003, the Trust's common shares have provided a total return of
18.37%, as compared to 10.35% for the S&P 500 Index.
Not unlike last quarter, performance during the fiscal quarter ended May 31,
2003 was driven by a broad-based technical rally in the high yield loan and bond
markets, and further enhanced by favorable credit-specific developments in
several of the Trust's larger holdings. Specifically, Nextel Communications
(approximately 3.64% of total assets, the largest single issuer at the end of
the quarter) and Charter Communications Operating, LLC (2.91%, the second
largest) again posted respectable to comparably strong operating and financial
results. Equally as important, both issuers took significant steps to improve
their respective balance sheets and/or liquidity positions. By way of its
bellwether standing, Nextel's success has also had a tangible positive effect on
loan prices across the cellular communications sector, historically one of the
Trust's largest. As a case-in-point, Western Wireless Corporation, the second
largest wireless position in the portfolio (1.24%), was one of several issuers
in the sector to take advantage of improved investor sentiment in order to
access alternative capital markets and thereby reduce its secured debt level.
Similarly, the strengthening of Charter's loan prices had a marked positive
impact on the cable sector at large (which, at approximately 8.64% of the
Trust's total assets, represented the largest sector exposure at quarter-end).
Fortunately, detractors were few during the quarter; there was relatively little
deterioration across the Trust's older, illiquid positions, existing
non-performing loans and/or areas of difficulty over the last several quarters.
The Trust utilizes financial leverage to seek to increase the yield to the
holders of common shares. As of May 31, 2003, the Trust had $534 million of
borrowings outstanding, consisting of $450 million of "aaa/AAA" rated cumulative
auction rate preferred shares, and $84 million outstanding under $540 million in
available credit facilities. Total leverage, as a percentage of total assets
(including preferred shares), was 35.9% at quarter end. The weighted average
leverage cost including all borrowings and preferred shares as of quarter end
was 1.13%. While the use of leverage for investment purposes increases both
investment opportunity and investment risk, we continue to deploy leverage only
when it is in the best interest of the Trust's common shareholders.
2
OUTLOOK
Although the bulk of the expected price appreciation appears to be behind us,
our near-term outlook for the loan market in general, and the Trust
specifically, remains relatively favorable. Overall credit conditions continue
to consistently improve, as evidenced by another quarter-over-quarter decline in
the market-wide trailing loan default rate to approximately 2.48%, after peaking
at 7.4% in June of last year.(2) Assuming even a modest economic recovery takes
hold, we'd expect a coupon-like return for the balance of the year, with some
upside available on those few actively traded issues still changing hands at a
discount to par. Assuming also that the easing bias on the part of the Federal
Reserve has run its course, our most immediate issue/challenge is to ensure
access to attractive investment opportunities as the loan market enters a
seasonally slow part of the year and continues to battle a persistent imbalance
between supply of new loans (stubbornly low) and investor demand (very high).
We thank you for your investment in ING Prime Rate Trust.
/s/ Jeffrey A. Bakalar /s/ Daniel A. Norman
Jeffrey A. Bakalar Daniel A. Norman
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
CO-SENIOR PORTFOLIO MANAGER CO-SENIOR PORTFOLIO MANAGER
ING Prime Rate Trust
July 17, 2003
3
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PORTFOLIO MANAGERS' FOOTNOTES
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1. The distribution rate is calculated by annualizing dividends declared
during the quarter and dividing the resulting annualized dividend by the
Trust's average month-end net asset value (in the case of NAV) or the
average month-end NYSE Composite closing price (in the case of Market). The
distribution rate is based solely on the actual dividends and
distributions, which are made at the discretion of management. The
distribution rate may or may not include all investment income and
ordinarily will not include capital gains or losses, if any.
2. Source: As tracked by S&P Leveraged Commentary & Data Group, July 15, 2003,
a leading data provider to the Loan Market.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
SENIOR LOANS ARE SUBJECT TO CREDIT RISKS AND THE POTENTIAL FOR NON-PAYMENT OF
SCHEDULED PRINCIPAL OR INTEREST PAYMENTS, WHICH MAY RESULT IN A REDUCTION OF THE
TRUST'S NAV.
THIS LETTER CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING STATEMENTS." ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING
STATEMENTS."
THE VIEWS EXPRESSED IN THIS LETTER REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
4
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INDEX DESCRIPTIONS
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The S&P 500 INDEX is a capitalization-weighted index of 500 stocks chosen for
market size, liquidity, and industry group representation.
All indices are unmanaged.
An investor cannot invest directly in an index.
5
ING Prime Rate Trust
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STATISTICS AND PERFORMANCE as of May 31, 2003
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PORTFOLIO CHARACTERISTICS
Net Assets $ 944,738,398
Assets Invested in Senior Loans $1,416,046,783
Total Number of Senior Loans 343
Average Amount Outstanding per Loan $ 4,128,416
Total Number of Industries 36
Average Loan Amount per Industry $ 39,334,633
Portfolio Turnover Rate 50%
Weighted Average Days to Interest Rate Reset 310 days
Average Loan Final Maturity 51 months
Total Leverage as a Percentage of Total Assets
(including Preferred Shares) 35.9%
TOP TEN INDUSTRY SECTORS AS A PERCENTAGE OF:
NET ASSETS TOTAL ASSETS
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Cable Television 13.6% 8.6%
Healthcare, Education and Childcare 11.8% 7.5%
Cellular 11.6% 7.4%
Automobile 10.5% 6.6%
Leisure, Amusement and Entertainment 10.1% 6.4%
Printing and Publishing 8.6% 5.4%
Containers, Packaging and Glass 8.5% 5.4%
Beverage, Food and Tobacco 6.8% 4.3%
Chemicals, Plastics and Rubber 6.2% 4.0%
Diversified/Conglomerate Manufacturing 5.6% 3.6%
TOP TEN SENIOR LOAN ISSUERS AS A PERCENTAGE OF:
NET ASSETS TOTAL ASSETS
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Nextel Communications(1) 5.7% 3.6%
Charter Communications Operating, LLC 4.5% 2.9%
Wyndham International, Inc. 2.2% 1.4%
Western Wireless Corporation 1.9% 1.2%
Olympus Cable Holdings, LLC 1.9% 1.2%
Safelite Glass Corporation 1.8% 1.2%
Mandalay Resort Group 1.8% 1.1%
Broadwing, Inc. 1.7% 1.1%
Extended Stay America, Inc. 1.7% 1.1%
Dean Foods Company 1.6% 1.0%
(1) COMBINATION OF NEXTEL FINANCE COMPANY AND NEXTEL OPERATIONS, INC.
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ING Prime Rate Trust
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STATISTICS AND PERFORMANCE as of May 31, 2003
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YIELDS AND DISTRIBUTION RATES
NET ASSET AVERAGE AVERAGE
VALUE ("NAV") MARKET ANNUALIZED ANNUALIZED
PRIME 30-DAY SEC 30-DAY SEC DISTRIBUTION DISTRIBUTION
QUARTER ENDED RATE YIELD(A) YIELD(A) RATE AT NAV(B) RATE AT MARKET(B)
------------- ---- -------- -------- -------------- -----------------
May 31, 2003 4.25% 6.93% 6.75% 6.16% 6.07%
February 28, 2003 4.25% 6.93% 7.23% 6.52% 6.93%
November 30, 2002 4.25% 8.02% 9.10% 6.86% 7.87%
August 31, 2002 4.75% 7.39% 8.53% 6.34% 7.33%
AVERAGE ANNUAL TOTAL RETURNS
NAV MARKET
--- ------
1 Year 1.99% 13.41%
3 Years -0.08% 1.94%
5 Years 2.48% 1.15%
10 Years 5.27% 5.97%
Since Trust Inception(F,H) 6.46% N/A
Since Initial Trading on NYSE(G) N/A 6.15%
ASSUMES RIGHTS WERE EXERCISED AND EXCLUDES SALES CHARGES AND COMMISSIONS(C,D,E)
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
See statistics and performance footnotes on page 8.
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ING Prime Rate Trust
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STATISTICS AND PERFORMANCE FOOTNOTES
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(A) Yield is calculated by dividing the Trust's net investment income per share
for the most recent thirty days by the net asset value (in the case of NAV)
or the NYSE Composite closing price (in the case of market) at quarter-end.
Yield calculations do not include any commissions or sales charges, and are
compounded for six months and annualized for a twelve-month period to
derive the Trust's yield consistent with the SEC standardized yield formula
for open-end investment companies.
(B) The distribution rate is calculated by annualizing each monthly dividend,
then averaging the annualized dividends declared for each month during the
quarter and dividing the resulting average annualized dividend amount by
the Trust's average net asset value (in the case of NAV) or the NYSE
Composite closing price (in the case of Market) at the end of the period.
(C) Calculation of total return assumes a hypothetical initial investment at
the net asset value (in the case of NAV) or the NYSE Composite closing
price (in the case of Market) on the last business day before the first day
of the stated period, with all dividends and distributions reinvested at
the actual reinvestment price.
(D) On December 27, 1994, the Trust issued to its shareholders transferable
rights which entitled the holders to subscribe for 17,958,766 shares of the
Trust's common stock at the rate of one share of common stock for each four
rights held. On January 27, 1995, the offering expired and was fully
subscribed. The Trust issued 17,958,766 shares of its common stock to
exercising rights holders at a subscription price of $8.12. Offering costs
of $4,470,955 were charged against the offering proceeds.
(E) On October 18, 1996, the Trust issued to its shareholders non-transferable
rights which entitled the holders to subscribe for 18,122,963 shares of the
Trust's common stock at the rate of one share of common stock for each five
rights held. On November 12, 1996, the offering expired and was fully
subscribed. The Trust issued 18,122,963 shares of its common stock to
exercising rights holders at a subscription price of $9.09. Offering costs
of $6,972,203 were charged against the offering proceeds.
(F) Inception Date -- May 12, 1988.
(G) Initial Trading on NYSE -- March 9, 1992.
(H) Reflects partial waiver of fees.
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ING Prime Rate Trust
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ADDITIONAL NOTES AND INFORMATION
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SHAREHOLDER INVESTMENT PROGRAM
The Trust offers a Shareholder Investment Program (the "Program," formerly known
as the Dividend Reinvestment and Cash Purchase Plan) which allows holders of the
Trust's common shares a simple way to reinvest dividends and capital gains
distributions, if any, in additional common shares of the Trust. The Program
also offers holders of the Trust's common shares the ability to make optional
cash investments in any amount from $100 to $5,000 on a monthly basis. Amounts
in excess of $5,000 require prior approval of the Trust. DST Systems, Inc., the
Trust's Transfer Agent, is the administrator for the Program.
For dividend reinvestment purposes, DST Systems, Inc. will purchase shares of
the Trust on the open market when the market price plus estimated commissions is
less than the net asset value on the valuation date. The Trust may issue new
shares when the market price plus estimated commissions is equal to or exceeds
the net asset value on the valuation date. New shares may be issued at the
greater of (i) net asset value or (ii) the market price of the shares during the
pricing period, minus a discount of 5%.
For optional cash investments, shares will be purchased on the open market by
the DST Systems, Inc. when the market price plus estimated commissions is less
than the net asset value on the valuation date. New shares may be issued by the
Trust when the market price plus estimated commissions is equal to or exceeds
the net asset value on the valuation date.
There is no charge to participate in the Program. Participants may elect to
discontinue participation in the Program at any time. Participants will share,
on a pro-rata basis, in the fees or expenses of any shares acquired in the open
market.
Participation in the Program is not automatic. If you would like to receive more
information about the Program or if you desire to participate, please contact
your broker or our Shareholder Services Department at (800) 992-0180.
KEY FINANCIAL DATES -- CALENDAR 2003 DIVIDENDS:
DECLARATION DATE EX-DIVIDEND DATE PAYABLE DATE
---------------- ---------------- ------------
January 31 February 6 February 25
February 28 March 6 March 24
March 31 April 8 April 23
April 30 May 8 May 22
May 30 June 6 June 23
June 30 July 8 July 22
July 31 August 7 August 22
August 29 September 8 September 22
September 30 October 8 October 22
October 31 November 6 November 24
November 28 December 8 December 22
December 19 December 29 January 13, 2004
RECORD DATE WILL BE TWO BUSINESS DAYS AFTER EACH EX-DIVIDEND DATE. THESE DATES
ARE SUBJECT TO CHANGE.
STOCK DATA
The Trust's shares are traded on the New York Stock Exchange (Symbol: PPR).
Effective March 1, 2002, the Trust's name changed to ING Prime Rate Trust and
its CUSIP number changed to 44977W106. The Trust's NAV and market price are
published daily under the "Closed-End Funds" feature in Barron's, The New York
Times, The Wall Street Journal and many other regional and national
publications.
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ING Prime Rate Trust
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STATEMENT OF ASSETS AND LIABILITIES as of May 31, 2003 (Unaudited)
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ASSETS:
Investments in securities at value (Cost $1,555,091,343) $ 1,474,827,100
Cash 4,067,233
Receivables:
Interest 8,559,115
Other 76,678
Prepaid expenses 260,637
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Total assets 1,487,790,763
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LIABILITIES:
Notes payable 84,000,000
Payable for investments purchased 2,305,612
Deferred income on revolving senior loans 4,042,244
Accrued auction preferred shares dividends payable 59,341
Payable to affiliates 1,338,176
Accrued trustees' fees 34,737
Other accrued expenses 1,272,255
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Total liabilities 93,052,365
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Preferred shares, $25,000 stated value per share at liquidation value
(18,000 shares outstanding) 450,000,000
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NET ASSETS $ 944,738,398
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Net asset value per common share outstanding (net assets less preferred shares
at liquidation value, divided by 137,100,184 shares of beneficial
interest authorized and outstanding, no par value) $ 6.89
NET ASSETS CONSIST OF:
Paid-in capital $ 1,288,813,843
Undistributed net investment income 12,368,697
Accumulated net realized loss on investments (276,179,899)
Net unrealized depreciation of investments (80,264,243)
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NET ASSETS $ 944,738,398
===============
See Accompanying Notes to Financial Statements
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ING Prime Rate Trust
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STATEMENT OF OPERATIONS for the Three Months Ended May 31, 2003 (Unaudited)
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INVESTMENT INCOME:
Interest $ 20,301,670
Revolver fees earned 713,986
Dividends 3,003
Other 977,557
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Total investment income 21,996,216
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EXPENSES:
Investment management fees 3,068,743
Administration fees 958,982
Transfer agent and registrar fees 175,293
Interest 696,397
Shareholder reporting expense 38,088
Custodian fees 127,236
Revolving credit facility fees 54,907
Professional fees 219,971
Preferred Shares - Dividend disbursing agent fees 297,043
Insurance expense 9,088
Pricing expense 13,782
ICI fees 3,088
Postage expense 74,116
Trustees' fees 18,400
Miscellaneous expense 75,783
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Total expenses 5,830,917
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Net investment income 16,165,299
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REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS:
Net realized loss on investments (30,723,480)
Net change in unrealized appreciation of investments 51,567,554
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Net realized and unrealized gain on investments 20,844,074
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DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (1,407,386)
------------
Net increase in net assets resulting from operations $ 35,601,987
============
See Accompanying Notes to Financial Statements
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ING Prime Rate Trust
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STATEMENTS OF CHANGES IN NET ASSETS
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THREE MONTHS
ENDED MAY 31, YEAR ENDED
2003 FEBRUARY 28,
(UNAUDITED) 2003
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 16,165,299 $ 69,429,083
Net realized loss on investments (30,723,480) (115,778,026)
Change in unrealized depreciation on investments 51,567,554 51,893,096
Distributions to preferred shareholders from net
investment income (1,407,386) (7,499,067)
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Net increase in net assets resulting from operations 35,601,987 (1,954,914)
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DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Distributions from net investment income (14,112,565) (61,643,423)
------------- -------------
Decrease in net assets from distributions to common
shareholders (14,112,565) (61,643,423)
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CAPITAL SHARE TRANSACTIONS:
Common shares issued from dividend reinvestment 865,634 --
------------- -------------
Net increase from capital share transactions 865,634 --
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Net decrease in net assets 22,355,056 (63,598,337)
NET ASSETS:
Beginning of period 922,383,342 985,981,679
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End of period (including undistributed net investment
income of $12,368,697 and $11,723,349, respectively) $ 944,738,398 $ 922,383,342
============= =============
See Accompanying Notes to Financial Statements
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ING Prime Rate Trust
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STATEMENT OF CASH FLOWS for the Three Months Ended May 31, 2003 (Unaudited)
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INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received 17,714,933
Dividends received 3,003
Facility fees paid (54,907)
Dividends paid to preferred shareholders (1,394,459)
Revolver fee received 1,663,663
Other income received 981,861
Interest paid (696,397)
Other operating expenses paid (4,900,912)
Purchases of securities (234,923,162)
Proceeds from sales of securities 320,578,819
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Net cash provided by operating activities 98,972,442
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CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common shareholders (14,112,565)
Net repayment of notes payable (83,000,000)
Dividends reinvested for common shares 865,634
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Net cash flows used in financing activities (96,246,931)
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Net change in cash 2,725,511
Cash at beginning of period 1,341,722
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Cash at end of period 4,067,233
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RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations 35,601,987
------------
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
Change in unrealized depreciation of securities (51,567,554)
Net accretion of discounts on securities (1,406,199)
Realized loss on sale of securities 30,723,480
Purchase of securities (234,923,162)
Proceeds on sale of securities 320,578,819
Increase in other assets 4,304
Decrease in interest receivable (1,180,538)
Decrease in prepaid expenses (56,860)
Increase in deferred fees on revolver senior loans 949,677
Increase in preferred shareholder dividend payable 12,927
Increase in affiliate payable 105,609
Increase in accrued trustees' fees 5,362
Increase in accrued expenses 124,590
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Total adjustments 63,370,455
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Net cash provided by operating activities 98,972,442
============
See Accompanying Notes to Financial Statements
14
ING Prime Rate Trust
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FINANCIAL HIGHLIGHTS
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For a common share outstanding throughout the period
THREE
MONTHS
ENDED YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
MAY 31, ------------------------------------------------------------------
2003 2003 2002 2001 2000 1999(4)
---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 6.73 $ 7.20 $ 8.09 $ 8.95 $ 9.24 $ 9.34
Net investment income 0.11 0.50 0.74 0.88 0.79 0.79
Net realized and unrealized gain (loss) on
investments 0.17 (0.47) (0.89) (0.78) (0.30) (0.10)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net asset value from
investment operations 0.27 (0.02) (0.26) 0.04 0.49 0.69
Distributions to Common Shareholders from
net investment income (0.11) (0.45) (0.63) (0.86) (0.78) (0.82)
Distribution to Preferred Shareholders (0.01) (0.05) (0.11) (0.06) -- --
Increase in net asset value from share
offerings -- -- -- -- -- 0.03
Reduction in net asset value from
Preferred Shares offerings -- -- -- (0.04) -- --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 6.89 $ 6.73 $ 7.20 $ 8.09 $ 8.95 $ 9.24
========== ========== ========== ========== ========== ==========
Closing market price at end of period $ 7.07 $ 6.46 $ 6.77 $ 8.12 $ 8.25 $ 9.56
TOTAL INVESTMENT RETURN(1)
Total investment return at closing
market price(2) 11.13% 2.53% (9.20)% 9.10% (5.88)% 1.11%
Total investment return at net asset value(3) 3.96% 0.44% (3.02)% 0.19% 5.67% 7.86%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (000's) $ 944,738 $ 922,383 $ 985,982 $1,107,432 $1,217,339 $1,202,565
Preferred Shares
Aggregate amount outstanding (000's) $ 450,000 $ 450,000 $ 450,000 $ 450,000 -- --
Borrowings at end of period (000's) $ 84,000 $ 167,000 $ 282,000 $ 510,000 $ 484,000 $ 534,000
Liquidation and market value per share of
Preferred Shares $ 25,000 $ 25,000 $ 25,000 $ 25,000 -- --
Asset coverage ratios(6) 277% 250% 235% 215% -- 325%
Average borrowings (000's) $ 147,848 $ 190,671 $ 365,126 $ 450,197 $ 524,019 $ 490,978
Ratios to average net assets including
Preferred Shares(7)
Expenses (before interest and other fees
related to revolving credit facility) 1.47% 1.49% 1.57% 1.62% -- --
Expenses 1.67% 1.81% 2.54% 3.97% -- --
Net investment income 4.64% 4.97% 6.83% 9.28% -- --
Ratios to average net assets plus borrowing
Expenses (before interest and other fees
related to revolving credit facility) 1.86% 1.82% 1.66% 1.31% 1.00%(5) 1.05%(5)
Expenses 2.14% 2.23% 2.70% 3.21% 2.79%(5) 2.86%(5)
Net investment income 5.95% 6.10% 7.24% 7.50% 6.12% 6.00%
Ratios to average net assets
Expenses (before interest and other fees
related to revolving credit facility) 2.18% 2.19% 2.25% 1.81% 1.43%(5) 1.50%(5)
Expenses 2.50% 2.68% 3.64% 4.45% 4.00%(5) 4.10%(5)
Net investment income 6.90% 7.33% 9.79% 10.39% 8.77% 8.60%
Portfolio turnover rate 50% 48% 53% 46% 71% 68%
Common shares outstanding at end of
period (000's) 136,973 136,973 136,973 136,847 136,036 130,206
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(1) Total investment return calculations are attributable to common
shareholders.
(2) Total investment return measures the change in the market value of your
investment assuming reinvestment of dividends and capital gain
distributions, if any, in accordance with the provisions of the dividend
reinvestment plan.
(3) Total investment return at net asset value has been calculated assuming a
purchase at net asset value at the beginning of each period and a sale at
net asset value at the end of each period and assumes reinvestment of
dividends and capital gain distributions in accordance with the provisions
of the dividend reinvestment plan. This calculation differs from total
investment return because it excludes the effects of changes in the market
values of the Trust's shares.
(4) The Investment Manager agreed to reduce its fee for a period of three years
from the Expiration Date of the November 12, 1996 Rights Offering to 0.60%
of the average daily net assets, plus the proceeds of any outstanding
borrowings, over $1.15 billion.
(5) Calculated on total expenses before impact on earnings credits.
(6) Asset coverage represents the total assets available for settlement of
Preferred Stockholder's interest and notes payables in relation to the
Preferred Shareholder interest and notes payable balance outstanding. The
Preferred Shares were first offered November 2, 2000.
(7) Ratios do not reflect the effect of dividend payments to Preferred
Shareholders; income ratios reflect income earned on assets attributable to
preferred shares.
See Accompanying Notes to Financial Statements
15
ING Prime Rate Trust
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NOTES TO FINANCIAL STATEMENTS as of May 31, 2003 (Unaudited)
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NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
ING Prime Rate Trust (the "Trust"), is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end,
investment management company. The Trust invests in senior loans which are
exempt from registration under the Securities Act of 1933 as amended (the "`33
Act"), but contain certain restrictions on resale and cannot be sold publicly.
These loans bear interest (unless otherwise noted) at rates that float
periodically at a margin above the Prime Rate of a U.S. bank specified in the
credit agreement, the London Inter-Bank Offered Rate ("LIBOR"), the certificate
of deposit rate, or in some cases another base lending rate. The following is a
summary of the significant accounting policies consistently followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America.
A. SENIOR LOAN AND OTHER SECURITY VALUATION. Loans are normally valued at the
mean of the means of one or more bid and asked quotations obtained from a
pricing service or other sources determined by the Board of Trustees to be
independent and believed to be reliable. Loans for which reliable
quotations are not available may be valued with reference to another loan
or a group of loans for which quotations are more readily available and
whose characteristics are comparable to the loan being valued. Under this
approach, the comparable loan or loans serve as a proxy for changes in
value. The Trust has engaged an independent pricing service to provide
quotations from dealers in loans and to calculate values under the proxy
procedure described above. As of May 31, 2003, 92.21% of total investments
were valued based on these procedures. It is expected that most of the
loans held by the Trust will be valued with reference to quotations from
the independent pricing service or with reference to the proxy procedure
described above.
Prices from a pricing source may not be available for all loans and ING
Investments, LLC (the "Investment Manager") may believe that the price for
a loan derived from market quotations or the proxy procedure described
above is not reliable or accurate. Among other reasons, this may be the
result of information about a particular loan or borrower known to the
Investment Manager that the Investment Manager believes may not be known to
the pricing service or reflected in a price quote. In this event, the loan
is valued at fair value as determined in good faith under procedures
established by the Trust's Board of Trustees and in accordance with the
provisions of the 1940 Act. Under these procedures, fair value is
determined by the Investment Manager and monitored by the Trust's Board of
Trustees through its Valuation Committee. In fair valuing a loan,
consideration is given to several factors, which may include, among others,
the following: (i) the characteristics of and fundamental analytical data
relating to the loan, including the cost, size, current interest rate,
period until the next interest rate reset, maturity and base lending rate
of the loan, the terms and conditions of the loan and any related
agreements, and the position of the loan in the borrower's debt structure;
(ii) the nature, adequacy and value of the collateral, including the
Trust's rights, remedies and interests with respect to the collateral;
(iii) the creditworthiness of the borrower and the cash flow coverage of
outstanding principal and interest, based on an evaluation of its financial
condition, financial statements and information about the borrower's
business, cash flows, capital structure and future prospects; (iv)
information relating to the market for the loan, including price quotations
for, and trading in, the loan and interests in similar loans; (v) the
reputation and financial condition of the agent for the loan and any
intermediate participants in the loan; (vi) the borrower's management; and
(vii) the general economic and market conditions affecting the fair value
of the loan. Securities for which the primary market is a national
securities exchange or the NASDAQ National Market System are stated at the
last reported sale price on the day of valuation. Debt and equity
securities traded in the over-the-counter market and listed securities for
which no sale was reported on that date are valued at the mean between the
last reported bid and asked price. Securities other than senior loans for
which reliable quotations are not readily available and all other assets
will be valued at their respective fair
16
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
values as determined in good faith by, or under procedures established by,
the Board of Trustees of the Trust. 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.
B. FEDERAL INCOME TAXES. It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to "regulated
investment companies" and to distribute all of its taxable income to its
shareholders. Therefore, no provision for Federal income taxes is required.
In addition, by distributing during each calendar year substantially all of
its net investment income and net realized capital gains (if any), the
Trust intends not to be subject to any federal excise tax.
C. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Loans are booked on a
settlement date basis and security transactions are accounted for on trade
date (date the order to buy or sell is executed). Realized gains or losses
are reported on the basis of identified cost of securities delivered.
Dividend income is recognized on the ex-dividend date. Interest income is
recorded on an accrual basis at the then-current interest rate of the loan.
The accrual of interest on loans is discontinued when, in the opinion of
management, there is an indication that the borrower may be unable to meet
payments as they become due. Upon such discontinuance, all unpaid accrued
interest is reversed. Cash collections on nonaccrual senior loans are
generally applied as a reduction to the recorded investment of the loan.
Senior loans are returned to accrual status only after all past due amounts
have been received. For all loans acquired prior to March 1, 2001, fees,
which represent non-refundable fees associated with the acquisition of
loans, are deferred and recognized over the shorter of 2.5 years or the
actual terms of the loan. For all loans, except revolving credit
facilities, acquired subsequent to February 28, 2001, fees are treated as
discounts and accreted as described in Note 1.H. Fees associated with
revolving credit facilities acquired subsequent to February 28, 2001 are
deferred and recognized over the shorter of 4 years or the actual term of
the loan.
D. DISTRIBUTIONS TO COMMON SHAREHOLDERS. The Trust records distributions to
its shareholders on the ex-dividend date. Distributions from income are
declared by the Trust on a monthly basis. Distributions from capital gains,
if any, are declared on an annual basis.
E. DIVIDEND REINVESTMENTS. Pursuant to the Shareholder Investment Program
(formerly known as the Automatic Dividend Reinvestment Plan), DST Systems,
Inc., the Plan Agent, purchases, from time to time, shares of beneficial
interest of the Trust on the open market to satisfy dividend reinvestments.
Such shares are purchased only when the closing sale or bid price plus
commission is less than the net asset value per share of the stock on the
valuation date. If the market price plus commissions is equal to or exceeds
the net asset value, new shares are issued at the greater of (i) net asset
value or (ii) the market price of the shares during the pricing period,
minus a discount of 5%.
F. USE OF ESTIMATES. Management of the Trust has made certain estimates and
assumptions relating to the reporting of assets, liabilities, revenues,
expenses and contingencies to prepare these financial statements in
conformity with generally accepted accounting principles in the United
States of America. Actual results could differ from these estimates.
G. SHARE OFFERINGS. During the year ended February 28, 1999, the Trust began
issuing shares under various shelf registration statements, whereby the net
proceeds received by the Trust from share sales may not be less than the
greater of (i) the NAV per share or (ii) 94% of the average daily market
price over the relevant pricing period.
17
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
H. CHANGE IN ACCOUNTING PRINCIPLE. In November 2000 the American Institute of
Certified Public Accountants (the "AICPA") issued a revised version of the
AICPA Audit and Accounting Guide for Investment Companies (the "Guide").
Effective March 1, 2001, the Fund adopted the provisions of the Guide and
began amortizing premiums and accreting discounts on debt securities. Prior
to March 1, 2001, the Trust had not amortized premiums nor accreted
discounts. The cumulative effect of this accounting change had no impact on
net assets of the Trust, but resulted in a $3,653,000 increase in the cost
of securities and a corresponding $3,653,000 increase in net unrealized
depreciation of investments, based on securities held by the Trust on March
1, 2001.
NOTE 2 -- INVESTMENTS
For the three months ended May 31, 2003, the cost of purchases and the proceeds
from principal repayment and sales of investments, excluding short-term notes,
totaled $230,834,763 and $313,525,585, respectively. At May 31, 2003, the Trust
held senior loans valued at $1,416,046,783 representing 96.0% of its total
investments. The market value of these assets is established as set forth in
Note 1.
The senior loans acquired by the Trust may take the form of a direct lending
relationship with the borrower, an assignment of a lender's interest in a loan,
or a participation interest in a lender's interest in a loan. The lead lender in
a typical corporate loan syndicate administers the loan and monitors collateral.
In the event that the lead lender becomes insolvent, enters FDIC receivership
or, if not FDIC insured, enters into bankruptcy, the Trust may incur certain
costs and delays in realizing payment, or may suffer a loss of principal and/or
interest. Additionally, certain situations may arise where the Trust acquires a
participation in a lender's interest in a loan and the Trust does not have
privity with or direct recourse against the borrower. Accordingly, the Trust may
incur additional credit risk as a participant because it must assume the risk of
insolvency or bankruptcy of the lender from which the participation was
acquired.
Common and preferred shares, and stock purchase warrants held in the portfolio
were acquired in conjunction with senior loans held by the Trust. Certain of
these stocks and warrants are restricted and may not be publicly sold without
registration under the '33 Act, or without an exemption under the '33 Act. In
some cases, these restrictions expire after a designated period of time after
issuance of the shares or warrant.
18
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
The Fund values portfolio securities by using the market value of the securities
when market quotations for the securities are readily available. When market
quotations are not readily available, the Fund determines, in good faith, the
fair value of the securities in accordance with the Trust's fair valuation
procedures as established by the Board of Trustees. Dates of acquisition and
cost or assigned basis of restricted securities are as follows:
DATE OF COST OR
ACQUISITION ASSIGNED BASIS
------------- ---------------
360Networks, Inc. -- Common Shares 11/26/02 $ --
Allied Digital Technologies Corporation -- Residual Interest in
Bankruptcy Estate 06/05/02 186,961
AM Cosmetics Corporation -- Common Shares 06/08/99 385,610
AM Cosmetics Corporation -- Preferred Shares 06/02/99 --
Autotote Systems, Inc. -- Option 02/26/97 --
Block Vision Holdings Corporation -- Common Shares 09/30/02 --
Boston Chicken Inc. -- Residual Interest in Boston Chicken Plan Trust 12/26/00 8,014,961
Capital Tool & Design, Ltd. -- Warrants 07/26/96 --
Cedar Chemical -- Residual Interest in Bankruptcy Estate 12/31/02 --
Centis, Inc. -- Residual Interest in Bankruptcy Estate 05/23/03 --
Covenant Care, Inc. -- Warrants 12/22/95 --
Covenant Care, Inc. -- Warrants 01/18/02 --
Decision One Corporation -- Common Shares 06/16/00 --
Electro Mechanical Solutions -- Residual Interest in Bankruptcy Estate 10/01/02 11,356
Enterprise Profit Solutions -- Liquidation Interest 10/21/02 --
Euro United Corporation -- Residual Interest in Bankruptcy Estate 06/21/02 4,466,250
Exide Technologies -- Warrants 11/30/01 --
Gevity HR -- Common Shares 07/21/97 34,325
Grand Union Company -- Residual Interest in Bankruptcy Estate 07/01/02 8,198
Holmes Group -- Warrants 10/24/01 --
Humphreys, Inc. -- Residual Interest in Bankruptcy Estate 05/15/02 25,000
Imperial Home D-cor Group, Inc. -- Common Shares 05/02/01 1,654,378
IHDG Realty -- Common Shares 05/02/01 1
Insilco Technologies -- Residual Interest in Bankruptcy Estate 05/02/03 144,581
Intera Group, Inc. -- Common Shares 11/29/02 --
Kevco, Inc. -- Residual Interest in Bankruptcy Estate 06/05/02 400,069
Morris Material Handling, Inc. -- Common Shares 01/10/01 3,009,059
MP Holdings, Inc. -- Common Shares 03/14/01 6
Murray's Discount Auto Stores, Inc. -- Common Shares 03/25/02 --
Murray's Discount Auto Stores, Inc. -- Warrants 02/16/99 --
New World Restaurant Group, Inc. -- Warrants 09/27/01 40
Safelite Glass Corporation -- Common Shares 09/12/00 --
Safelite Realty -- Common Shares 09/12/00 --
Sarcom Corporation -- Common Shares 12/11/02 --
Sarcom Corporation -- Preferred Shares 12/11/02 2,782,654
Scientific Games Corporation -- Warrants 05/11/01 --
Soho Publishing -- Common Shares 03/14/01 176
Stellex Aerostructures, Inc. -- Common Shares 10/17/01 275,767
Tartan Textile Services, Inc. -- Series D Preferred Shares 07/17/01 2,227,655
Tartan Textile Services, Inc. -- Series E Preferred Shares 07/17/01 2,333,852
Telinget, Inc. -- Residual Interest in Bankruptcy Estate 09/18/02 --
Tembec, Inc. -- Common Shares 01/10/01 1,442,942
Transtar Metals -- Residual Interest in Bankruptcy Estate 01/09/03 160,918
TSR Wireless, LLC -- Residual Interest in Bankruptcy Estate 10/14/02 --
U.S. Aggregates -- Residual Interest in Bankruptcy Estate 04/07/03 --
U.S. Office Products Company -- Residual Interest in Bankruptcy Estate 11/28/00 --
-----------
Total restricted securities excluding senior loans (market value of
$31,859,267 was 3.4% of net assets at May 31, 2003) $27,564,759
===========
19
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
NOTE 3 -- MANAGEMENT AND ADMINISTRATION AGREEMENTS
The Trust has entered into an Investment Management Agreement with the
Investment Manager, a wholly-owned subsidiary of ING Funds Services, LLC (the
"Administrator"), to provide advisory and management services. The Investment
Management Agreement compensates the Investment Manager with a fee, computed
daily and payable monthly, at an annual rate of 0.80% of the Trust's average
daily net assets (inclusive of preferred stock) plus borrowings ("Managed
Assets").
The Trust has also entered into an Administration Agreement with the
Administrator to provide administrative services and also to furnish facilities.
The Administrator is compensated with a fee, computed daily and payable monthly,
at an annual rate of 0.25% of the Trust's average daily Managed Assets.
At May 31, 2003, the Trust had the following amounts recorded in payable to
affiliates on the accompanying Statement of Assets and Liabilities:
ACCRUED INVESTMENT ACCRUED ADMINISTRATIVE
MANAGEMENT FEES FEES TOTAL
--------------- ---- ----------
$ 1,019,602 $318,574 $1,338,176
The Trust has adopted a Retirement Policy covering all independent trustees of
the Trust who will have served as a independent trustee for at least five years
at the time of retirement. Benefits under this plan are based on an annual rate
as defined in the plan agreement, as amended May 24, 2002.
NOTE 4 -- COMMITMENTS
The Trust has entered into both a $90 million 364-day revolving credit agreement
which matures on August 27, 2003 and a $450 million five-year revolving credit
agreement which matures on July 15, 2003, collateralized by assets of the Trust.
Borrowing rates under these agreements are based on a fixed spread over LIBOR,
the federal funds rate, or a commercial paper-based rate. Prepaid arrangement
fees for any unborrowed amounts are amortized over the term of the agreements.
The amount of borrowings outstanding at May 31, 2003, was $84 million, at a
weighted average interest rate of 1.7%. The amount of borrowings represented
5.7% of total assets at May 31, 2003. Average borrowings for the period ended
May 31, 2003 were $147,847,826 and the average annualized interest rate was
2.0%.
As of May 31, 2003, the Trust had unfunded loan commitments pursuant to the
terms of the following loan agreements:
Airgate PCS, Inc. $ 644,951
Aurora Foods, Inc. 404,571
Block Vision Holdings Corp. 118,771
Centennial Cellular Operating Co. 400,000
Citadel Broadcasting Company 1,505,000
Express Script, Inc. 2,061,337
Hercules Incorporated 1,500,000
Hilton Hawaiian Village, LLC 8,455,882
Houghton Mifflin Co. 2,076,923
Insight Health Services Corporation 1,666,667
Levi Strauss & Co. 2,500,000
Lyondell Chemical Company 9,000,000
Murray's Discount Auto Stores, Inc. 3,083,332
Owens -- Illinois, Inc. 4,675,501
Packaging Corporation of America 2,753,596
Park Place Entertainment Corporation 5,078,740
Primedia, Inc. 1,379,158
Relizon Company (The) 7,096,674
Sears Roebuck and Co. 10,000,000
Six Flags Theme Parks, Inc. 1,100,000
Smurfit-Stone Container 2,230,596
Waste Connections, Inc. 5,298,851
Western Wireless Corporation 6,000,000
------------
$ 79,030,550
============
20
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
NOTE 5 -- RIGHTS AND OTHER OFFERINGS
As of May 31,, 2003, share offerings pursuant to shelf registrations were as
follows:
REGISTRATION SHARES SHARES
DATE REGISTERED REMAINING
---- ---------- ----------
6/11/98 15,000,000 --
6/19/98 10,000,000 9,730,800
9/15/98 25,000,000 19,170,354
3/04/99 5,000,000 3,241,645
On November 2, 2000, the Trust issued 3,600 shares each of Series M, Series W
and Series F Auction Rate Cumulative Preferred Shares, $.01 Par Value, $25,000
liquidation preference, for a total issuance of $270 million. Also, on November
16, 2000, the Trust issued 3,600 shares of Series T and Series Th Auction Rate
Cumulative Preferred Shares, $.01 Par Value, $25,000, liquidation preference,
for a total issuance of $180 million. Costs associated with the offering of
approximately $5,438,664 were charged against the proceeds received. The Trust
used the net proceeds of the offering to partially pay down the then existing
indebtedness. The Trust may reborrow amounts in the future to increase its use
of leverage which will be consistent with the limitations imposed by the 1940
Act. Preferred Shares pay dividends based on a rate set at auctions, normally
held every 7 days. In most instances dividends are also payable every 7 days, on
the first business day following the end of the rate period.
NOTE 6 -- CUSTODIAL AGREEMENT
State Street Bank and Trust Company ("SSB") serves as the Trust's custodian and
recordkeeper. Custody fees paid to SSB are reduced by earnings credits based on
the cash balances held by SSB for the Trust. There were no earnings credits for
the period ended May 31, 2003.
NOTE 7 -- SUBORDINATED LOANS AND UNSECURED LOANS
The primary risk arising from investing in subordinated loans or in unsecured
loans is the potential loss in the event of default by the issuer of the loans.
The Trust may acquire a subordinated loan only if, at the time of acquisition,
it acquires or holds a Senior Loan from the same borrower. The Trust will
acquire unsecured loans only where the Investment Manager believes, at the time
of acquisition, that the Trust would have the right to payment upon default that
is not subordinate to any other creditor. The Trust may invest up to 5% of its
total assets, measured at the time of investment, in subordinated loans and
unsecured loans. As of May 31, 2003, the Trust held 3.8% of its total assets in
subordinated loans and unsecured loans.
NOTE 8 -- SUBSEQUENT EVENTS
Subsequent to May 31, 2003, the Trust paid to Common Shareholders the following
dividends from net investment income:
PER SHARE AMOUNT DECLARATION DATE RECORD DATE PAYABLE DATE
---------------- ---------------- ----------- ------------
$0.0345 6/30/03 7/10/03 7/22/03
Subsequent to May 31, 2003, the Trust paid to Preferred Shareholders the
following dividends from net investment income:
TOTAL
PREFERRED PER SHARE AUCTION RECORD PAYABLE
SHARES AMOUNT DATES DATES DATES
------ ------- ----- ----- -----
Series M $ 34.57 06/02/03 to 07/07/03 06/09/03 to 07/14/03 06/10/03 to 07/15/03
Series T $ 33.14 06/03/03 to 07/08/03 06/10/03 to 07/15/03 06/11/03 to 07/16/03
Series W $ 31.55 06/04/03 to 07/09/03 06/11/03 to 07/16/03 06/12/03 to 07/17/03
Series Th $ 33.62 06/05/03 to 07/10/03 06/12/03 to 07/17/03 06/13/03 to 07/18/03
Series F $ 32.36 06/06/03 to 07/11/03 06/13/03 to 07/18/03 06/16/03 to 07/21/03
21
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited)
--------------------------------------------------------------------------------
SENIOR LOANS*: 149.9%
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
AEROSPACE AND DEFENSE: 2.9%
ALLIANT TECHSYSTEMS, INC. Ba2 BB-
$ 2,428,571 Term Loan, maturing April 20, 2009 $ 2,436,464
DRS TECHNOLOGIES, INC. Ba3 BB-
1,970,035 Term Loan, maturing September 30, 2008 1,983,579
NEW PIPER AIRCRAFT, INC. NR NR
8,240,533 (3) Term Loan, maturing April 15, 2005 5,109,130
PIEDMONT AVIATION SERVICES NR NR
4,680,432 Term Loan, maturing July 23, 2006 4,633,627
4,680,432 Term Loan, maturing July 23, 2007 4,633,628
TITAN CORPORATION Ba3 BB-
2,977,500 Term Loan, maturing June 30, 2009 2,981,222
TRANSDIGM HOLDING CORPORATION B1 B+
432,575 Term Loan, maturing May 15, 2006 435,819
2,140,740 Term Loan, maturing May 15, 2007 2,156,796
UNITED DEFENSE INDUSTRIES, INC. Ba3 BB-
3,309,888 Term Loan, maturing August 13, 2009 3,317,276
--------------
27,687,542
--------------
AUTOMOBILE: 9.8%
AFTERMARKET TECHNOLOGY CORPORATION Ba2 BB-
1,722,367 Term Loan, maturing February 8, 2008 1,721,138
1,252,607 Term Loan, maturing February 8, 2008 1,251,713
AMERICAN AXLE & MANUFACTURING, INC. Ba1 BB+
5,116,000 Term Loan, maturing April 30, 2006 5,112,091
CAPITAL TOOL & DESIGN, LTD. NR NR
6,346,127 Term Loan, maturing May 31, 2003 6,297,876
COLLINS & AIKMAN PRODUCTS Ba3 BB-
4,424,906 Term Loan, maturing December 31, 2005 4,417,994
DURA OPERATING CORPORATION Ba3 BB
3,176,000 Term Loan, maturing December 31, 2008 3,174,015
(2) EXIDE TECHNOLOGIES NR D
1,612,012 (3) Revolver, maturing December 18, 2003 922,877
371,195 (3) Term Loan, maturing December 18, 2003 212,509
3,227,260 (3) Term Loan, maturing March 18, 2005 1,839,538
(2) FEDERAL-MOGUL CORPORATION D D
1,500,000 Term Loan, maturing February 24, 2004 1,170,938
4,880,000 Term Loan, maturing February 24, 2005 3,845,440
FORD MOTOR CREDIT COMPANY A3 BBB
15,000,000 Floating Rate Note, maturing October 25, 2004 14,875,365
GOODYEAR TIRE & RUBBER COMPANY Ba2 BB+
5,500,000 Term Loan, maturing April 30, 2005 5,335,000
(2) HAYES LEMMERZ INTERNATIONAL, INC. Caa2 NR
3,478,750 (3) Term Loan, maturing December 31, 2005 2,951,138
METALDYNE COMPANY, LLC B2 BB-
3,995,000 Term Loan, maturing December 31, 2009 3,733,451
POLYPORE, INC. Ba3 B+
5,445,000 Term Loan, maturing December 31, 2007 5,472,225
SAFELITE GLASS CORPORATION B3 B+
6,757,557 Term Loan, maturing September 30, 2007 6,656,194
10,852,547 Term Loan, maturing September 30, 2007 10,689,758
See Accompanying Notes to Financial Statements
22
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
AUTOMOBILE (CONTINUED)
STONERIDGE, INC. Ba3 BB
$ 580,000 Term Loan, maturing April 30, 2008 $ 579,275
TENNECO AUTOMOTIVE, INC. B1 B
2,000,000 Term Loan, maturing September 30, 2005 1,975,000
1,424,113 Term Loan, maturing November 4, 2007 1,386,532
1,424,113 Term Loan, maturing May 4, 2008 1,389,302
TRW AUTOMOTIVE ACQUISITIONS CORPORATION Ba2 BB
8,000,000 Term Loan, maturing February 27, 2011 8,031,432
--------------
93,040,800
--------------
BANKING: 0.6%
(2) OUTSOURCING SOLUTIONS, INC. Caa1 D
12,055,854 (3) Term Loan, maturing June 10, 2006 5,425,134
--------------
5,425,134
--------------
BEVERAGE, FOOD AND TOBACCO: 6.8%
AURORA FOODS, INC. B3 CCC
1,595,429 Revolver, maturing June 30, 2005 1,415,943
3,423,147 Term Loan, maturing June 30, 2005 3,170,690
BIRDS EYE FOODS, INC. Ba3 B+
6,977,500 Term Loan, maturing June 30, 2008 6,992,034
COMMONWEALTH BRANDS, INC. Ba3 BB-
7,979,833 Term Loan, maturing August 28, 2007 7,984,821
CONSTELLATION BRANDS, INC. Ba1 BB
6,000,000 Term Loan, maturing November 30, 2008 6,029,250
COTT BEVERAGES, INC. Ba3 BB-
673,000 Term Loan, maturing December 31, 2006 675,524
CP KELCO APS B3 B+
3,873,131 Term Loan, maturing March 31, 2008 3,842,468
1,297,279 Term Loan, maturing September 30, 2008 1,287,008
DEAN FOODS COMPANY Ba1 BB+
15,378,097 Term Loan, maturing July 15, 2008 15,411,298
DEL MONTE CORPORATION Ba3 BB-
4,643,762 Term Loan, maturing December 20, 2010 4,696,005
(2) FLEMING COMPANIES, INC. B3 D
820,420 Revolver, maturing June 18, 2007 699,408
1,685,300 Term Loan, maturing June 18, 2008 1,410,596
INTERSTATE BRANDS CORPORATION Ba2 BB+
2,947,500 Term Loan, maturing July 19, 2007 2,937,552
992,500 Term Loan, maturing July 19, 2007 986,297
MAFCO WORLDWIDE CORPORATION B1 B
2,100,676 Term Loan, maturing March 31, 2006 2,079,669
NATIONAL DAIRY HOLDINGS, L.P. Ba2 BB+
2,475,000 Term Loan, maturing April 30, 2009 2,470,359
NUTRASWEET ACQUISITION CORPORATION Ba3 NR
502,901 Term Loan, maturing June 30, 2006 501,434
SOUTHERN WINE & SPIRITS OF AMERICA, INC. Ba3 BBB-
1,985,000 Term Loan, maturing July 2, 2008 1,990,584
--------------
64,580,940
--------------
See Accompanying Notes to Financial Statements
23
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
BUILDINGS AND REAL ESTATE: 0.7%
(2) HQ GLOBAL WORKPLACES, INC. NR NR
$ 3,865,243 (3) Term Loan, maturing November 6, 2005 $ 2,009,927
MACERICH PARTNERSHIP, L.P. Ba2 NR
4,915,200 Term Loan, maturing July 26, 2005 4,921,344
--------------
6,931,271
--------------
CABLE TELEVISION: 13.6%
(2) ADELPHIA COMMUNICATIONS CORPORATION NR BBB
2,970,000 Debtor in Possession Term Loan,
maturing June 25, 2004 2,981,138
BRESNAN COMMUNICATIONS, LLC B1 BB-
5,000,000 Term Loan, maturing December 31, 2007 4,927,085
CC VI OPERATING COMPANY, LLC B2 CCC+
7,980,000 Term Loan, maturing November 12, 2008 6,939,751
CC VIII OPERATING, LLC B2 B-
4,443,750 Term Loan, maturing February 2, 2008 4,075,554
(2) CENTURY CABLE HOLDINGS, LLC Caa1 D
1,230,000 Revolver, maturing March 31, 2009 1,006,038
11,000,000 Term Loan, maturing June 30, 2009 9,114,281
5,000,000 Term Loan, maturing December 31, 2009 4,116,250
CHARTER COMMUNICATIONS OPERATING, LLC B2 B
16,355,000 Term Loan, maturing September 18, 2008 15,055,693
30,210,706 Term Loan, maturing March 18, 2008 27,869,377
(2) FRONTIERVISION OPERATING PARTNERS, L.P. B2 D
2,593,939 Revolver, maturing October 31, 2005 2,446,949
2,000,000 Term Loan, maturing September 30, 2005 1,886,666
2,400,000 Term Loan, maturing March 31, 2006 2,256,000
INSIGHT MIDWEST HOLDINGS, LLC Ba3 BB+
14,500,000 Term Loan, maturing December 31, 2009 14,456,703
MCC IOWA MEDIACOM BROADBAND Ba3 BB+
13,500,000 Term Loan, maturing September 30, 2010 13,500,932
(2) OLYMPUS CABLE HOLDINGS, LLC B2 D
2,000,000 Term Loan, maturing June 30, 2010 1,742,142
18,250,000 Term Loan, maturing September 30, 2010 16,228,813
--------------
128,603,370
--------------
CARGO TRANSPORT: 2.5%
(2) AMERICAN COMMERCIAL LINES, LLC Caa1 D
1,258,356 Term Loan, maturing June 30, 2006 1,016,123
1,804,934 Term Loan, maturing June 30, 2007 1,456,582
(2) AMERICAN COMMERCIAL LINES, LLC Ba3 NR
2,000,000 Debtor in Possession Term Loan,
maturing July 31, 2004 1,995,000
CSX/HORIZON LINES, LLC Ba3 BB-
1,666,667 Term Loan, maturing February 27, 2009 1,671,875
GEMINI LEASING, INC. B1 NR
4,117,116 (3) Term Loan, maturing August 12, 2005 1,543,919
NEOPLAN USA CORPORATION NR NR
2,406,000 (3) Letter of Credit, maturing May 29, 2005 1,058,640
1,603,721 (3) Revolver, maturing May 29, 2005 705,637
15,026,825 (3) Term Loan, maturing May 29, 2005 6,611,803
2,315,775 (3) Term Loan, maturing May 29, 2005 1,018,941
See Accompanying Notes to Financial Statements
24
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
CARGO TRANSPORT (CONTINUED)
OMNITRAX RAILROADS, LLC NR NR
$ 2,801,953 Term Loan, maturing May 13, 2005 $ 2,794,948
TEREX CORPORATION B1 BB-
3,480,006 Term Loan, maturing December 31, 2009 3,418,020
--------------
23,291,488
--------------
CELLULAR: 11.6%
AIRGATE PCS, INC. B3 CCC-
894,870 Term Loan, maturing June 6, 2007 729,319
9,387,622 Term Loan, maturing September 30, 2008 7,650,912
AMERICAN CELLULAR CORPORATION B3 CC
2,469,499 Term Loan, maturing March 31, 2008 2,159,782
4,330,351 Term Loan, maturing March 31, 2009 3,787,252
CENTENNIAL CELLULAR OPERATING COMPANY B3 B-
1,600,000 Revolver, maturing January 30, 2006 1,364,000
956,522 Term Loan, maturing November 30, 2006 880,683
498,700 Term Loan, maturing May 31, 2007 450,388
498,695 Term Loan, maturing November 30, 2007 450,383
INDEPENDENT WIRELESS ONE CORPORATION Caa1 CC
10,000,000 (3) Term Loan, maturing June 20, 2008 7,200,000
MICROCELL CONNEXIONS, INC. NR CCC+
2,510,152 Term Loan, maturing March 1, 2006 2,108,528
NEXTEL FINANCE COMPANY Ba3 BB-
13,641,026 Term Loan, maturing December 31, 2007 13,019,500
2,731,250 Term Loan, maturing June 30, 2008 2,680,695
2,731,250 Term Loan, maturing December 31, 2008 2,680,695
36,408,750 Term Loan, maturing March 31, 2009 35,330,505
NEXTEL OPERATIONS, INC. Ba3 BB-
2,124,580 Term Loan, maturing February 10, 2007 2,123,034
RURAL CELLULAR CORPORATION B2 B
4,911,130 Term Loan, maturing October 3, 2008 4,517,218
4,911,130 Term Loan, maturing April 3, 2009 4,504,941
WESTERN WIRELESS CORPORATION B3 B-
4,000,000 Revolver, maturing March 31, 2008 3,652,000
7,800,000 Term Loan, maturing March 31, 2008 7,234,500
7,980,000 Term Loan, maturing September 30, 2008 7,392,903
--------------
109,917,237
--------------
CHEMICALS, PLASTICS AND RUBBER: 6.2%
ACADIA ELASTOMERS CORPORATION NR NR
9,270,073 Term Loan, maturing March 31, 2004 8,713,869
EQUISTAR CHEMICALS, L.P. Ba2 BB+
4,988,885 Term Loan, maturing August 24, 2007 5,009,294
FMC CORPORATION Ba1 BBB-
3,990,000 Term Loan, maturing October 21, 2007 4,043,865
FOAMEX, L.P. B2 B+
1,682,653 Term Loan, maturing June 30, 2005 1,575,384
1,529,690 Term Loan, maturing June 30, 2006 1,432,172
GEO SPECIALTY CHEMICALS, INC. B1 B
2,757,857 Term Loan, maturing December 31, 2007 2,544,123
See Accompanying Notes to Financial Statements
25
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
CHEMICALS, PLASTICS AND RUBBER (CONTINUED)
HERCULES, INC. Ba1 BB
$ 4,987,500 Term Loan, maturing May 15, 2007 $ 5,001,006
HUNTSMAN INTERNATIONAL, LLC B2 B+
509,663 Term Loan, maturing June 30, 2005 500,320
4,624,593 Term Loan, maturing June 30, 2007 4,617,656
4,624,593 Term Loan, maturing June 30, 2008 4,620,741
HUNTSMAN, LLC B2 B+
7,700,916 Term Loan, maturing March 31, 2007 7,001,419
3,694,203 Term Loan, maturing March 31, 2007 3,358,648
JOHNSONDIVERSEY, INC. Ba3 BB-
3,960,000 Term Loan, maturing November 3, 2009 3,983,823
MILLENNIUM AMERICA, INC. Baa3 BB+
770,000 Term Loan, maturing June 18, 2006 772,406
NOVEON, INC. B1 BB-
4,663,901 Term Loan, maturing September 30, 2008 4,680,975
OM GROUP, INC. B2 B+
917,075 Term Loan, maturing April 1, 2006 915,241
--------------
58,770,943
--------------
CONTAINERS, PACKAGING AND GLASS: 8.5%
BERRY PLASTICS CORPORATION B1 B+
2,977,500 Term Loan, maturing July 22, 2010 2,992,387
BLUE RIDGE PAPER PRODUCTS, INC. B3 B+
8,658,467 Term Loan, maturing May 14, 2006 8,442,005
CONSTAR INTERNATIONAL, INC. B1 BB-
2,985,000 Term Loan, maturing November 20, 2009 2,996,194
CROWN CORK & SEAL COMPANY, INC. Ba3 BB
3,500,000 Term Loan, maturing September 15, 2008 3,512,688
GRAPHIC PACKAGING CORPORATION Ba3 BB
1,975,000 Term Loan, maturing February 28, 2009 1,981,172
GREIF BROS. CORPORATION Ba3 BB
2,977,500 Term Loan, maturing August 23, 2009 2,979,733
IMPAXX, INC. NR NR
4,197,914 Term Loan, maturing April 30, 2005 3,736,144
JEFFERSON SMURFIT CORPORATION Ba3 B+
1,647,273 Term Loan, maturing March 31, 2007 1,636,925
(2) LINCOLN PULP & EASTERN FINE NR NR
92,280 (3) Term Loan, maturing December 31, 2001 42,449
14,881,108 (3) Term Loan, maturing August 31, 2004 6,845,310
NEXPAK CORPORATION B1 B+
2,191,514 (3) Term Loan, maturing March 31, 2004 851,128
2,191,551 (3) Term Loan, maturing March 31, 2004 851,142
OWENS-BROCKWAY GLASS CONTAINER, INC. B1 BB
7,732,214 Revolver, maturing March 31, 2004 7,691,620
PACKAGING CORPORATION OF AMERICA Baa3 BBB
1,002,633 Term Loan, maturing June 29, 2006 1,000,126
PLIANT CORPORATION B2 BB-
2,640,080 Term Loan, maturing May 31, 2008 2,618,630
RIVERWOOD INTERNATIONAL CORPORATION B1 B
15,000,000 Term Loan, maturing December 31, 2006 14,980,080
See Accompanying Notes to Financial Statements
26
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING AND GLASS (CONTINUED)
SILGAN HOLDINGS, INC. Ba2 BB
$ 2,990,000 Term Loan, maturing November 30, 2008 $ 2,992,491
SMURFIT-STONE CONTAINER Ba3 B+
769,404 Revolver, maturing February 28, 2005 739,590
SMURFIT-STONE CONTAINER CANADA, INC. Ba3 B+
1,597,010 Term Loan, maturing June 30, 2009 1,591,187
STONE CONTAINER CORPORATION Ba3 B+
9,425,605 Term Loan, maturing June 30, 2009 9,382,162
TEKNI-PLEX, INC. B1 B+
2,917,500 Term Loan, maturing June 21, 2008 2,871,004
--------------
80,734,166
--------------
DATA AND INTERNET SERVICES: 0.6%
360NETWORKS, INC. NR NR
1,353,721 Term Loan, maturing November 12, 2007 676,861
ARCH WIRELESS HOLDINGS, INC. Caa3 NR
423,939 Senior Note, maturing May 15, 2007 423,939
ICG COMMUNICATIONS, INC. NR NR
4,863,150 Term Loan, maturing May 31, 2005 3,623,047
MCLEODUSA, INC. Caa2 NR
1,329,412 Term Loan, maturing May 30, 2008 689,078
--------------
5,412,924
--------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING: 5.6%
BARJAN PRODUCTS, LLC NR NR
4,813,875 Term Loan, maturing May 31, 2006 2,936,464
BRAND SERVICES, INC. B1 B+
3,990,000 Term Loan, maturing October 16, 2009 4,010,780
DRESSER, INC. Ba3 BB-
5,219,136 Term Loan, maturing April 10, 2009 5,238,243
FLOWSERVE CORPORATION Ba3 BB-
1,506,892 Term Loan, maturing June 30, 2006 1,496,062
4,673,400 Term Loan, maturing June 30, 2009 4,681,513
GENERAL CABLE CORPORATION B1 BB-
1,541,037 Term Loan, maturing May 28, 2007 1,221,272
MANITOWOC COMPANY, INC. Ba2 BB
1,965,000 Term Loan, maturing May 9, 2007 1,969,667
MUELLER GROUP, INC. B1 B+
5,955,000 Term Loan, maturing May 31, 2008 5,947,026
NEPTUNE TECHNOLOGY GROUP, INC. B1 B+
4,750,000 Term Loan, maturing March 31, 2010 4,785,625
NORCROSS SAFETY PRODUCTS, LLC B1 B+
1,250,000 Term Loan, maturing March 20, 2009 1,252,735
SPX CORPORATION Ba2 BBB-
6,477,812 Term Loan, maturing September 30, 2009 6,477,411
7,606,296 Term Loan, maturing March 31, 2010 7,605,824
UNITED PET GROUP NR NR
5,748,984 Term Loan, maturing March 31, 2006 5,672,235
--------------
53,294,857
--------------
See Accompanying Notes to Financial Statements
27
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
DIVERSIFIED/CONGLOMERATE SERVICE: 1.1%
IRON MOUNTAIN, INC. Ba3 BB
$ 1,994,000 Term Loan, maturing February 15, 2008 $ 2,002,546
PRIVATE BUSINESS, INC. NR NR
3,537,882 Term Loan, maturing August 19, 2006 3,484,814
US INVESTIGATIONS SERVICES, LLC B1 BB-
4,738,813 Term Loan, maturing January 10, 2009 4,715,118
--------------
10,202,479
--------------
ECOLOGICAL: 0.5%
(2) IT GROUP, INC. Caa1 NR
4,154,605 (3) Term Loan, maturing June 11, 2007 353,141
WASTE CONNECTIONS, INC. Ba3 BB
4,701,149 Revolver, maturing May 16, 2005 4,560,115
--------------
4,913,256
--------------
ELECTRONICS: 1.9%
(2) ACTERNA, LLC Caa1 D
6,098,973 (3) Term Loan, maturing September 30, 2007 1,326,527
DECISION ONE CORPORATION B3 CCC
9,050,516 Term Loan, maturing April 18, 2005 7,692,938
1,794,690 Term Loan, maturing April 18, 2005 1,525,487
KNOWLES ELECTRONICS, INC. B3 CCC+
3,170,210 Term Loan, maturing June 29, 2007 2,948,295
SARCOM, INC. NR NR
1,003,670 Term Loan, maturing June 30, 2007 1,003,670
TRANSACTION NETWORK SERVICES, INC. Ba3 BB-
3,722,219 Term Loan, maturing April 3, 2007 3,705,935
--------------
18,202,852
--------------
GAMING: 4.9%
(2) ALADDIN GAMING, LLC Caa1 NR
2,968,421 (3) Term Loan, maturing August 26, 2006 2,530,579
4,455,000 (3) Term Loan, maturing February 26, 2008 3,797,888
ALLIANCE GAMING CORPORATION B1 BB-
4,950,000 Term Loan, maturing December 31, 2006 4,975,780
AMERISTAR CASINOS, INC. Ba3 BB-
2,921,762 Term Loan, maturing December 20, 2006 2,934,910
ARGOSY GAMING COMPANY Ba2 BB
4,421,250 Term Loan, maturing July 31, 2008 4,447,039
BOYD GAMING CORPORATION Ba1 BB+
992,500 Term Loan, maturing June 24, 2008 995,229
ISLE OF CAPRI CASINOS, INC. Ba2 BB-
990,000 Term Loan, maturing April 26, 2008 993,867
MANDALAY RESORT GROUP Ba2 BB+
17,000,000 Term Loan, maturing August 22, 2006 16,847,714
PARK PLACE ENTERTAINMENT CORPORATION Ba1 BBB-
4,921,260 Revolver, maturing December 31, 2003 4,841,289
PENN NATIONAL GAMING Ba3 B+
3,500,000 Term Loan, maturing September 3, 2007 3,503,062
--------------
45,867,358
--------------
See Accompanying Notes to Financial Statements
28
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
GROCERY: 0.2%
GIANT EAGLE, INC. Ba2 BB+
$ 1,985,000 Term Loan, maturing August 2, 2009 $ 1,988,309
--------------
1,988,309
--------------
HEALTHCARE, EDUCATION AND CHILDCARE: 11.8%
ALLIANCE IMAGING, INC. B1 B+
1,038,168 Term Loan, maturing November 2, 2006 1,021,298
6,217,331 Term Loan, maturing June 10, 2008 5,996,616
AMERIPATH, INC. B1 B+
2,100,000 Term Loan, maturing March 27, 2010 2,110,500
APRIA HEALTHCARE GROUP, INC. Ba1 BBB-
4,925,000 Term Loan, maturing July 20, 2008 4,927,310
CAREMARK RX, INC. Ba2 BB+
2,470,038 Term Loan, maturing March 31, 2006 2,471,581
COMMUNITY HEALTH SYSTEMS, INC. Ba3 BB-
14,935,000 Term Loan, maturing July 16, 2010 14,903,502
CONCENTRA OPERATING CORPORATION B1 B+
2,987,259 Term Loan, maturing June 30, 2006 2,942,451
1,493,630 Term Loan, maturing June 30, 2007 1,471,225
COVENANT CARE, INC. NR NR
5,304,415 Term Loan, maturing June 30, 2003 5,238,110
DAVITA, INC. Ba3 BB-
8,910,000 Term Loan, maturing March 31, 2009 8,933,389
EXPRESS SCRIPTS, INC. Ba1 BBB-
1,030,668 Revolver, maturing March 31, 2005 1,015,208
3,076,923 Term Loan, maturing March 31, 2008 3,078,846
FISHER SCIENTIFIC INTERNATIONAL, INC. Ba3 BB+
4,000,000 Term Loan, maturing March 31, 2010 4,021,000
(2) FOUNTAIN VIEW, INC. NR NR
9,939,548 Term Loan, maturing March 31, 2004 9,902,275
FRESENIUS MEDICAL CARE HOLDING, INC. Ba1 BB+
4,000,000 Term Loan, maturing February 21, 2010 4,010,416
GENESIS HEALTH VENTURES, INC. Ba3 B+
1,539,950 Floating Rate Note, maturing April 2, 2007 1,455,253
HCA, INC. Ba1 BBB-
9,257,143 Term Loan, maturing April 30, 2006 9,129,857
IASIS HEALTHCARE CORPORATION B1 B
1,995,000 Term Loan, maturing February 7, 2009 2,009,963
INSIGHT HEALTH SERVICES CORPORATION B1 B+
3,333,333 Term Loan, maturing October 17, 2008 3,340,627
KINETIC CONCEPTS, INC. Ba3 B+
2,639,967 Term Loan, maturing March 31, 2006 2,641,617
MAGELLAN HEALTH SERVICES, INC. Caa1 D
1,231,415 Term Loan, maturing February 12, 2005 1,161,635
1,231,415 Term Loan, maturing February 12, 2006 1,161,635
MARINER HEALTH CARE, INC. B1 NR
988,381 Floating Rate Note, maturing May 13, 2009 983,644
OXFORD HEALTH PLANS, INC. Ba2 BB+
3,500,000 Term Loan, maturing April 25, 2009 3,510,210
See Accompanying Notes to Financial Statements
29
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
HEALTHCARE, EDUCATION AND CHILDCARE (CONTINUED)
SYBRON DENTAL MANAGEMENT, INC. Ba3 BB-
$ 1,338,503 Term Loan, maturing June 6, 2009 $ 1,344,024
TRIAD HOSPITALS, INC. Ba3 B+
1,967,273 Term Loan, maturing September 30, 2008 1,980,351
VANGUARD HEALTH SYSTEMS, INC. Ba3 B+
5,486,250 Term Loan, maturing January 3, 2010 5,513,681
VICAR OPERATING, INC. B1 B+
4,967,475 Term Loan, maturing September 30, 2008 4,990,241
--------------
111,266,464
--------------
HOME AND OFFICE FURNISHING, HOUSEWARES: 1.3%
(2) DESA INTERNATIONAL, INC. Caa2 NR
801,544 Term Loan, maturing November 26, 2004 801,544
HOLMES PRODUCTS CORPORATION B2 B
2,431,443 Term Loan, maturing February 5, 2007 2,360,525
IDENTITY GROUP, INC. NR NR
4,525,000 Term Loan, maturing May 11, 2007 2,262,500
IMPERIAL HOME DECOR GROUP, INC. NR NR
833,725 (3) Term Loan, maturing April 4, 2006 416,862
NATIONAL BEDDING COMPANY B1 B+
2,957,955 Term Loan, maturing August 31, 2008 2,965,811
SEALY MATTRESS COMPANY B1 B+
794,004 Term Loan, maturing December 15, 2004 789,438
1,062,244 Term Loan, maturing December 15, 2005 1,055,605
1,358,133 Term Loan, maturing December 15, 2006 1,349,644
--------------
12,001,930
--------------
INSURANCE: 0.2%
USI HOLDINGS CORPORATION B1 B+
2,274,198 Term Loan, maturing September 17, 2004 2,097,948
--------------
2,097,948
--------------
LEISURE, AMUSEMENT AND ENTERTAINMENT: 10.1%
AMF BOWLING WORLDWIDE, INC. B1 B
1,821,058 Term Loan, maturing February 28, 2008 1,821,817
BALLY TOTAL FITNESS HOLDING CORPORATION Ba3 B+
5,881,479 Term Loan, maturing November 10, 2004 5,705,035
FITNESS HOLDINGS WORLDWIDE, INC. B1 B
8,347,370 Term Loan, maturing November 2, 2006 7,862,180
7,462,881 Term Loan, maturing November 2, 2007 7,029,101
KERASOTES THEATRES, INC. B1 B+
1,995,000 Term Loan, maturing December 31, 2008 2,007,469
LODGENET ENTERTAINMENT CORPORATION Ba3 B+
4,969,836 Term Loan, maturing June 30, 2006 4,946,542
LOEWS CINEPLEX ENTERTAINMENT CORPORATION NR NR
9,796,480 Term Loan, maturing February 29, 2008 9,669,429
METRO-GOLDWYN-MAYER STUDIOS, INC. Ba3 BB-
500,000 Term Loan, maturing June 30, 2007 496,875
14,500,000 Term Loan, maturing June 30, 2008 14,488,676
NEW JERSEY BASKETBALL, LLC B2 B-
4,000,000 Term Loan, maturing December 8, 2003 4,000,000
See Accompanying Notes to Financial Statements
30
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
LEISURE, AMUSEMENT AND ENTERTAINMENT (CONTINUED)
PANAVISION, INC. Caa1 CCC
$ 13,990,723 Term Loan, maturing March 31, 2005 $ 12,824,834
REGAL CINEMAS, INC. Ba2 BB-
2,343,750 Term Loan, maturing December 31, 2007 2,352,539
SIX FLAGS THEME PARKS, INC. Ba2 BB-
1,900,000 Revolver, maturing June 30, 2008 1,843,000
11,000,000 Term Loan, maturing June 30, 2009 10,945,205
WASHINGTON FOOTBALL, INC. Baa3 NR
3,000,000 Term Loan, maturing October 16, 2007 3,016,875
XANTERRA PARKS & RESORTS, LLC NR NR
3,287,317 Term Loan, maturing September 30, 2004 3,279,098
3,287,317 Term Loan, maturing September 30, 2005 3,279,098
--------------
95,567,773
--------------
LODGING: 5.2%
EXTENDED STAY AMERICA, INC. Ba3 BB-
16,227,853 Term Loan, maturing January 15, 2008 16,174,016
GAYLORD ENTERTAINMENT COMPANY NR NR
5,000,000 Term Loan, maturing March 22, 2006 4,981,250
HILTON HAWAIIAN VILLAGE, LLC Ba1 BBB-
7,169,118 Revolver, maturing June 1, 2003 7,106,388
WYNDHAM INTERNATIONAL, INC. NR CCC+
7,136,323 Term Loan, maturing June 30, 2004 5,969,028
17,947,072 Term Loan, maturing June 30, 2006 14,550,589
-------------
48,781,271
--------------
MACHINERY: 2.8%
ALLIANCE LAUNDRY HOLDINGS, LLC B1 B
3,755,555 Term Loan, maturing August 2, 2007 3,717,218
ANTHONY CRANE RENTAL, L.P. Caa2 CC
14,437,500 Term Loan, maturing July 20, 2006 8,566,245
MORRIS MATERIAL HANDLING, INC. NR NR
258,831 Term Loan, maturing September 28, 2004 245,889
NATIONAL WATERWORKS, INC. B1 BB-
1,980,000 Term Loan, maturing November 22, 2009 2,001,038
REXNORD CORPORATION B1 B+
6,805,556 Term Loan, maturing November 25, 2009 6,862,266
UNITED RENTALS (NORTH AMERICA), INC. Ba3 BB
1,725,660 Term Loan, maturing August 31, 2007 1,717,185
VUTEK, INC. B1 NR
903,446 Term Loan, maturing July 31, 2005 876,343
1,699,805 Term Loan, maturing July 31, 2007 1,648,811
641,133 Term Loan, maturing December 30, 2007 621,524
--------------
26,256,518
--------------
MINING, STEEL, IRON AND NON-PRECIOUS METALS: 1.0%
PEABODY ENERGY CORPORATION Ba1 BB+
9,000,000 Term Loan, maturing March 21, 2010 9,064,125
--------------
9,064,125
--------------
See Accompanying Notes to Financial Statements
31
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
OIL AND GAS: 1.7%
CITGO PETROLEUM CORPORATION Ba2 BB
$ 2,500,000 Term Loan, maturing February 27, 2006 $ 2,525,000
PACIFIC ENERGY GROUP, LLC Ba2 BBB-
4,000,000 Term Loan, maturing July 26, 2009 4,020,000
PLAINS MARKETING, L.P. Ba1 BBB-
3,465,000 Term Loan, maturing September 21, 2007 3,483,046
PMC COMPANY Ba1 BBB-
2,760,000 Term Loan, maturing May 5, 2006 2,749,650
W-H ENERGY SERVICES, INC. B2 B+
3,430,016 Term Loan, maturing April 16, 2007 3,421,441
--------------
16,199,136
--------------
OTHER BROADCASTING AND ENTERTAINMENT: 1.8%
AMERICAN MOVIE CLASSICS Ba3 BBB-
1,000,000 Term Loan, maturing March 14, 2009 1,001,375
DIRECTV HOLDINGS, LLC Ba2 BB-
6,000,000 Term Loan, maturing March 6, 2010 6,043,878
PEGASUS MEDIA & COMMUNICATIONS, INC. B3 B-
5,869,924 Term Loan, maturing April 30, 2005 5,701,164
RAINBOW MEDIA GROUP Ba3 BB+
4,000,000 Term Loan, maturing March 14, 2009 4,005,500
--------------
16,751,917
--------------
OTHER TELECOMMUNICATIONS: 2.2%
BROADWING, INC. B1 B-
10,229,922 Term Loan, maturing November 9, 2004 10,208,613
5,709,366 Term Loan, maturing December 30, 2006 5,645,644
687,357 Term Loan, maturing June 28, 2007 677,218
GCI HOLDINGS, INC. Ba3 BB+
1,500,000 Term Loan, maturing October 15, 2004 1,510,313
INTERA GROUP, INC. NR NR
2,854,468 Term Loan, maturing December 31, 2005 2,711,744
1,681,780 (3) Term Loan, maturing December 31, 2005 --
909,384 (3) Term Loan, maturing December 31, 2005 --
--------------
20,753,532
--------------
PERSONAL AND NON DURABLE CONSUMER PRODUCTS: 4.7%
ARMKEL, LLC Ba3 B+
1,924,301 Term Loan, maturing March 28, 2009 1,937,050
BUHRMANN U.S., INC. B1 B+
2,261,865 Term Loan, maturing October 26, 2005 2,062,538
1,090,140 Term Loan, maturing October 26, 2007 1,005,109
CHURCH & DWIGHT COMPANY, INC. Ba2 BB
2,979,987 Term Loan, maturing September 30, 2007 2,998,612
JOSTENS, INC. B1 BB-
1,758,052 Term Loan, maturing May 31, 2006 1,733,146
4,486,364 Term Loan, maturing December 31, 2009 4,495,709
NORWOOD PROMOTIONAL PRODUCTS, INC. NR NR
9,510,848 Term Loan, maturing February 1, 2005 9,510,848
7,731,328 (3) Term Loan, maturing February 1, 2005 3,440,441
1,998,167 (3) Term Loan, maturing February 1, 2005 --
See Accompanying Notes to Financial Statements
32
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
PERSONAL AND NON DURABLE CONSUMER PRODUCTS (CONTINUED)
PAINT SUNDRY BRANDS CORPORATION B2 B+
$ 894,245 Term Loan, maturing August 11, 2005 $ 889,774
875,811 Term Loan, maturing August 11, 2006 871,432
PLAYTEX PRODUCTS, INC. Ba3 BB-
11,218,425 Term Loan, maturing May 31, 2009 11,169,344
RAYOVAC CORPORATION Ba3 BB-
4,450,000 Term Loan, maturing September 30, 2009 4,458,344
--------------
44,572,346
--------------
PERSONAL, FOOD AND MISCELLANEOUS SERVICES: 3.1%
AFC ENTERPRISES, INC. Ba2 BB
1,512,013 Term Loan, maturing May 23, 2009 1,504,138
COINMACH CORPORATION B1 BB-
4,900,000 Term Loan, maturing July 25, 2009 4,914,087
DOMINO'S, INC. Ba3 BB-
2,977,500 Term Loan, maturing June 30, 2008 2,984,944
GATE GOURMET BORROWER, LLC B1 BB
1,000,000 Term Loan, maturing December 31, 2008 925,000
1,000,000 Term Loan, maturing December 31, 2009 990,000
NEW WORLD RESTAURANT GROUP, INC. B3 CCC-
4,000,000 Secured Floating Rate Note, maturing June 15, 2003 3,600,000
OTIS SPUNKMEYER, INC. B1 B+
6,835,055 Term Loan, maturing February 20, 2009 6,822,239
PAPA GINO'S, INC. NR NR
1,866,477 Term Loan, maturing August 31, 2006 1,842,063
4,757,812 Term Loan, maturing August 31, 2007 4,731,278
RELIZON COMPANY Ba3 BB-
1,117,115 Revolver, maturing August 4, 2006 1,005,404
--------------
29,319,153
--------------
PRINTING AND PUBLISHING: 8.6%
ADAMS OUTDOOR ADVERTISING, L.P. B1 B+
1,775,000 Term Loan, maturing February 8, 2008 1,780,547
ADVANSTAR COMMUNICATIONS, INC. B2 B
9,629,933 Term Loan, maturing April 11, 2007 9,052,137
AMERICAN MEDIA OPERATIONS, INC. Ba3 B+
3,989,822 Term Loan, maturing April 1, 2007 4,002,912
BELL ACTIMEDIA, INC. Ba3 BB-
1,821,991 Term Loan, maturing November 29, 2010 1,838,389
CANWEST MEDIA, INC. Ba3 B+
4,200,639 Term Loan, maturing May 15, 2008 4,214,686
4,498,904 Term Loan, maturing May 15, 2009 4,513,949
DEX MEDIA EAST, LLC Ba3 BB-
5,164,634 Term Loan, maturing May 8, 2009 5,232,880
HOLLINGER INTERNATIONAL PUBLISHING, INC. Ba2 BB-
2,487,500 Term Loan, maturing September 30, 2009 2,521,703
HOUGHTON MIFFLIN COMPANY Ba3 BB-
423,077 Revolver, maturing February 28, 2008 399,803
LAMAR MEDIA CORPORATION Ba2 BB-
15,000,000 Term Loan, maturing June 30, 2010 15,016,875
See Accompanying Notes to Financial Statements
33
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
PRINTING AND PUBLISHING (CONTINUED)
MOORE CORPORATION Ba2 BB+
$ 6,000,000 Term Loan, maturing March 15, 2010 $ 6,039,378
PRIMEDIA, INC. B3 B
620,843 Revolver, maturing June 30, 2008 566,519
3,743,351 Term Loan, maturing June 30, 2009 3,617,597
R.H. DONNELLEY, INC. Ba3 BB
7,980,000 Term Loan, maturing June 30, 2010 8,058,140
READER'S DIGEST ASSOCIATIONS, INC. Baa3 BB+
6,947,500 Term Loan, maturing May 20, 2008 6,856,314
TRANSWESTERN PUBLISHING COMPANY Ba3 BB-
2,947,500 Term Loan, maturing June 27, 2008 2,954,256
VERTIS, INC. B2 B+
2,994,437 Term Loan, maturing December 7, 2008 2,907,099
ZIFF DAVIS MEDIA, INC. B3 CCC
1,694,296 Term Loan, maturing March 31, 2007 1,495,217
--------------
81,068,399
--------------
RADIO AND TV BROADCASTING: 5.3%
BLOCK COMMUNICATIONS, INC. Ba2 BB-
2,834,660 Term Loan, maturing November 15, 2009 2,845,290
CITADEL BROADCASTING COMPANY Ba2 B+
1,995,000 Revolver, maturing April 2, 2008 1,925,175
1,617,778 Term Loan, maturing June 26, 2008 1,617,778
3,328,000 Term Loan, maturing June 26, 2009 3,338,816
CUMULUS MEDIA, INC. Ba3 B+
3,000,000 Term Loan, maturing March 28, 2010 3,011,874
EMMIS OPERATING COMPANY Ba2 B+
10,982,904 Term Loan, maturing August 31, 2009 11,009,384
FISHER BROADCASTING, INC. Ba3 B+
2,000,000 Term Loan, maturing February 28, 2010 1,995,000
GRAY TELEVISION, INC. Ba3 B+
4,000,000 Term Loan, maturing December 31, 2010 4,025,500
LIN TELEVISION CORPORATION Ba2 BB
2,102,857 Term Loan, maturing December 31, 2007 2,107,063
1,897,143 Term Loan, maturing December 31, 2007 1,899,989
PAXSON COMMUNICATIONS CORPORATION Ba3 BB-
4,912,500 Term Loan, maturing June 30, 2006 4,894,078
SINCLAIR BROADCAST GROUP, INC. Ba2 BB
5,000,000 Term Loan, maturing December 31, 2009 5,008,704
3,000,000 Term Loan, maturing December 31, 2009 3,006,027
SUSQUEHANNA MEDIA COMPANY Ba1 BB-
2,475,000 Term Loan, maturing June 30, 2008 2,484,281
--------------
49,168,959
--------------
RETAIL: 3.8%
ADVANCE STORES COMPANY, INC. Ba3 BB-
4,706,353 Term Loan, maturing November 30, 2007 4,721,060
4,706,352 Term Loan, maturing November 30, 2007 4,719,097
CH OPERATING, LLC B2 B+
2,431,034 Term Loan, maturing June 21, 2007 2,423,437
See Accompanying Notes to Financial Statements
34
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
RETAIL (CONTINUED)
MURRAY'S DISCOUNT AUTO STORES, INC. NR B
$ 12,839,799 Term Loan, maturing June 30, 2003 $ 12,700,766
616,667 Revolver, maturing June 30, 2003 --
PANTRY, INC. B1 B+
5,000,000 Term Loan, maturing March 31, 2007 4,968,750
PETCO ANIMAL SUPPLIES, INC. Ba3 BB-
3,472,868 Term Loan, maturing October 2, 2008 3,485,169
SHOPPERS DRUG MART CORPORATION Baa3 BBB+
882,353 Term Loan, maturing February 4, 2009 884,467
TRAVELCENTERS OF AMERICA, INC. Ba3 BB
2,382,515 Term Loan, maturing November 14, 2008 2,393,684
--------------
36,296,432
--------------
TELECOMMUNICATIONS EQUIPMENT: 4.9%
AMERICAN TOWER, L.P. B2 B
9,797,583 Term Loan, maturing June 30, 2007 9,583,261
1,663,816 Term Loan, maturing December 31, 2007 1,652,095
CROWN CASTLE OPERATING COMPANY Ba3 B-
13,000,000 Term Loan, maturing March 15, 2008 12,986,454
PINNACLE TOWERS, INC. B3 D
8,266,878 Term Loan, maturing October 31, 2005 7,998,204
SPECTRASITE COMMUNICATIONS, INC. B1 B+
6,999,889 Term Loan, maturing December 31, 2007 7,005,720
TRIPOINT GLOBAL COMMUNICATIONS, INC. NR NR
3,093,034 Term Loan, maturing May 31, 2006 2,938,382
TSI TELECOMMUNICATION SERVICES, INC. Ba3 B+
3,980,352 Term Loan, maturing December 31, 2006 3,880,843
--------------
46,044,960
--------------
TEXTILES AND LEATHER: 2.6%
(2) GALEY & LORD, INC. Caa2 NR
2,692,043 Term Loan, maturing April 2, 2005 1,554,655
1,927,515 Term Loan, maturing April 1, 2006 1,113,140
LEVI STRAUSS & COMPANY B1 BB
4,906,930 Term Loan, maturing July 31, 2006 4,819,013
(2) MALDEN MILLS INDUSTRIES, INC. NR NR
8,958,296 (3) Term Loan, maturing October 28, 2006 4,755,010
POLYMER GROUP, INC. NR NR
8,902,127 Term Loan, maturing December 31, 2006 8,363,548
TARGUS GROUP, INC. NR NR
3,306,761 Term Loan, maturing August 31, 2006 2,926,483
WILLIAM CARTER COMPANY Ba3 BB
946,442 Term Loan, maturing September 30, 2008 952,357
--------------
24,484,206
--------------
UTILITIES: 0.8%
CALPINE CORPORATION Ba3 BBB-
1,899,130 Term Loan, maturing March 8, 2004 1,839,189
ITC HOLDINGS CORPORATION Baa3 BBB-
1,000,000 Term Loan, maturing February 28, 2009 1,004,167
See Accompanying Notes to Financial Statements
35
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------
UTILITIES (CONTINUED)
MICHIGAN ELECTRIC TRANSMISSION COMPANY Baa2 BB+
$ 2,977,500 Term Loan, maturing May 1, 2007 $ 2,985,563
PIKE ELECTRIC, INC. Ba3 BB-
1,647,059 Term Loan, maturing April 18, 2010 1,657,868
--------------
7,486,788
--------------
TOTAL SENIOR LOANS
(COST $1,489,750,945) $1,416,046,783
--------------
OTHER CORPORATE DEBT: 2.1%
AUTOMOBILE: 0.6%
CAPITAL TOOL & DESIGN, LTD. NR NR
6,000,000 Subordinated Note, maturing July 10, 2004 5,700,000
DATA AND INTERNET SERVICES: 0.1%
ARCH WIRELESS HOLDINGS, INC. Ca NR
739,789 (3) Subordinated Note, maturing May 15, 2009 739,789
FINANCE: 1.0%
VALUE ASSET MANAGEMENT, INC. B3 B
10,000,000 Senior Subordinated Bridge Note,
maturing August 31, 2005 9,400,000
HEALTHCARE, EDUCATION AND CHILDCARE: 0.0%
BLOCK VISION HOLDINGS CORPORATION NR NR
13,365 Junior Term Loan, maturing January 31, 2006 --
HOME AND OFFICE FURNISHINGS, HOUSEWARES: 0.0%
MP HOLDINGS, INC. NR NR
45,229 Subordinated Note, maturing March 14, 2007 42,967
PERSONAL AND NON DURABLE CONSUMER PRODUCTS: 0.3%
PAINT SUNDRY BRANDS B2 B+
2,875,000 Subordinated Note, maturing August 11, 2008 2,601,875
TEXTILES AND LEATHER: 0.1%
TARTAN TEXTILE SERVICES, INC. NR NR
1,332,583 Subordinated Note, maturing April 1, 2011 1,332,583
--------------
TOTAL OTHER CORPORATE DEBT (COST $20,232,242) 19,817,214
--------------
See Accompanying Notes to Financial Statements
36
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
SECURITY DESCRIPTION VALUE
-----------------------------------------------------------------------------------------------------------
EQUITIES AND OTHER ASSETS: 4.1%
(@) , (R) 360Networks, Inc. (76,029 Common Shares) $ --
(1), (@) , (R) Allied Digital Technologies Corporation
(Residual Interest in Bankruptcy Estate) 186,961
(@) , (R) AM Cosmetics Corporation (Liquidation Interest) 100
(@) Arch Wireless Holdings, Inc. (102,124 Common Shares) 563,724
(@) , (R) Autotote Systems, Inc. (Option to Purchase 0.248% of
Common Shares Issued and Outstanding) --
(@) , (R) Block Vision Holdings Corporation (571 Common Shares) --
(2), (@) , (R) Boston Chicken, Inc. (Residual Interest in Boston Chicken Plan Trust) 8,014,961
(@) , (R) Capital Tool & Design, Ltd. (Warrants for 121,159 Common Shares) --
(@) , (R) Cedar Chemical (Liquidation Interest) --
(2), (@) , (R) Centis, Inc. (Residual Interest in Bankruptcy Estate) 100,000
(@) , (R) Covenant Care, Inc. (Warrants for 19,000 Common Shares,
Expires January 13, 2005) --
Covenant Care, Inc. (Warrants for 28,901 Common Shares,
Expires March 31, 2013) --
(@) Dan River, Inc. (127,306 Common Shares) 420,110
(@) , (R) Decision One Corporation (350,059 Common Shares) --
(2), (@) , (R) Electro Mechanical Solutions (Residual Interest in Bankruptcy Estate) 4,387
(@) , (R) Enterprise Profit Solutions (Liquidation Interest) --
(4), (@) , (R) Euro United Corporation (Residual Interest in Bankruptcy Estate) 4,466,250
(2), (@) , (R) Exide Technologies (Warrants for 16,501 Common Shares,
Expires March 16, 2006) 165
(@) Genesis Health Ventures, Inc. (190,605 Common Shares) 3,289,842
(@) Genesis Health Ventures, Inc. (2,223 Preferred Shares) 200,070
(@) , (R) Gevity HR (60,056 Common Shares) 606,566
(2), (@) , (R) Grand Union Company (Residual Interest in Bankruptcy Estate) 90,339
(@) , (R) Holmes Products Corporation (Warrants for 19,397 Common Shares,
Expires May 7, 2006) --
(2), (@) , (R) Humphreys, Inc. (Residual Interest in Bankruptcy Estate) --
(@) , (R) Imperial Home Decor Group, Inc. (300,141 Common Shares) 1
(@) , (R) IHDG Realty (300,141 Common Shares) 1
(2), (@) , (R) Insilco Technologies (Residual Interest in Bankruptcy Estate) 147,443
(@) , (R) Intera Group, Inc. (864 Common Shares) --
(2), (@) , (R) Kevco, Inc. (Residual Interest in Bankruptcy Estate) 144,581
(@) Mariner Health Care, Inc. (126,525 Common Shares) 556,710
(@) Microcell Connexions, Inc. (2,473 1st Preferred Voting Shares) 21,345
(@) Microcell Connexions, Inc. (171,635 1st Preferred Non-Voting Shares) 1,625,213
(@) Microcell Connexions, Inc. (53,271 2nd Preferred Non-Voting Shares) 426,820
(@) , (R) Morris Material Handling, Inc. (481,373 Common Shares) 779,824
(@) , (R) MP Holdings, Inc. (590 Common Shares) 6
(@) , (R) Murray's Discount Auto Stores, Inc. (17 Common Shares) 91,783
(@) , (R) Murray's Discount Auto Stores, Inc. (Warrants for 955 Common Shares,
Expires January 22, 2007) 5,166,661
See Accompanying Notes to Financial Statements
37
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
SECURITY DESCRIPTION VALUE
-----------------------------------------------------------------------------------------------------------
(@) , (R) New World Restaurant Group, Inc. (Warrants for 4,489 Common
Shares, Expires June 15, 2006) $ 101,182
(@) , (R) Safelite Glass Corporation (660,808 Common Shares) 5,914,232
(@) , (R) Safelite Realty (44,605 Common Shares) 1
(@) , (R) Sarcom Corporation (462,984 Common Shares) --
(@) , (R) Sarcom Corporation (4,015 Preferred Shares) 1,391,287
(@) , (R) Scientific Games Corporation (48,930 Warrants for Class B
Non-Voting Common Shares, Expires October 2003) 155,454
(@) , (R) Soho Publishing (17,582 Common Shares) 176
(@) , (R) Stellex Aerostructures, Inc. (11,130 Common Shares) --
(@) , (R) Tartan Textile Services, Inc. (23,449 Shares of Series D
Preferred Stock) 2,344,900
(@) , (R) Tartan Textile Services, Inc. (36,775 Shares of Series E
Preferred Stock) 1,287,125
(@) , (R) Teligent, Inc. (50 Common Shares) --
(@) , (R) Tembec, Inc. (167,239 Common Shares) 864,882
(1), (@) , (R) Transtar Metals (Residual Interest in Bankruptcy Estate) --
(1), (@) , (R) TSR Wireless, LLC (Residual Interest in Bankruptcy Estate) --
(2), (@) , (R) U.S. Aggregates (Residual Interest in Bankruptcy Estate) --
(2), (@) , (R) U.S. Office Products Company (Residual Interest in
Bankruptcy Estate) --
--------------
TOTAL FOR EQUITIES AND OTHER ASSETS (COST $45,108,156) 38,963,103
--------------
TOTAL INVESTMENTS (COST $1,555,091,343)(5) 156.1% $1,474,827,100
PREFERRED SHARES AND LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS, NET (56.1) (530,088,702)
------ --------------
NET ASSETS 100.0% $ 944,738,398
====== ==============
See Accompanying Notes to Financial Statements
38
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of May 31, 2003 (Unaudited) (Continued)
--------------------------------------------------------------------------------
(@) Non-income producing security.
(R) Restricted security.
* Senior loans, while exempt from registration under the Security Act of
1933, as amended contain certain restrictions on resale and cannot be sold
publicly. These senior loans bear interest (unless otherwise noted) at
rates that float periodically at a margin above the London Inter-Bank
Offered Rate ("LIBOR") and other short-term rates.
NR Not Rated
+ Bank Loans rated below Baa by Moody's Investor Services, Inc. or BBB by
Standard & Poor's Group are considered to be below investment grade.
(1) The borrower filed for protection under Chapter 7 of the U.S. Federal
bankruptcy code.
(2) The borrower filed for protection under Chapter 11 of the U.S. Federal
bankruptcy code.
(3) Loan is on non-accrual basis.
(4) The borrower filed for protection under the Canadian Bankruptcy and
Insolvency Act.
(5) For federal income tax purposes, the cost of investment is $1,554,263,115
and net unrealized depreciation consists of the following:
Gross Unrealized Appreciation $ 14,809,113
Gross Unrealized Depreciation (94,245,128)
-------------
Net Unrealized Depreciation $ (79,436,015)
=============
See Accompanying Notes to Financial Statements
39
ING Prime Rate Trust
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
Management's Additional Operating Information (Unaudited)
REPURCHASE OF SECURITIES BY CLOSED-END COMPANIES
In accordance with Section 23(c) of the 1940 Act, and Rule 23c-1 under the 1940
Act the Trust may from time to time purchase shares of beneficial interest of
the Trust in the open market, in privately negotiated transactions and/or
purchase shares to correct erroneous transactions.
SHAREHOLDER INVESTMENT PROGRAM
The Trust offers a Shareholder Investment Program (the "Program") which enables
investors to conveniently add to their holdings at reduced costs. Should you
desire further information concerning this Program, please contact the
Shareholder Servicing Agent at (800) 992-0180.
NUMBER OF SHAREHOLDERS
The approximate number of record holders of Common Stock as of June 30, 2003 was
7,931 which does not include approximately 49,750 beneficial owners of shares
held in the name of brokers of other nominees.
40
ING Prime Rate Trust
--------------------------------------------------------------------------------
TRUSTEE AND OFFICER INFORMATION (Unaudited)
--------------------------------------------------------------------------------
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees. A Trustee who is not an interested person of the
Trust, as defined in the 1940 Act, is an independent trustee ("Independent
Trustee"). The Trustees of the Trust are listed below. The Statement of
Additional Information includes additional information about trustees of the
Registrant and is available, without charge, upon request at 1-800-992-0180.
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
INDEPENDENT TRUSTEES
Paul S. Doherty(2) Trustee October Mr. Doherty is 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - President and Partner, (February 2002 -
Scottsdale, Arizona 85258 Present Doherty, Wallace, Present).
Born: 1934 Pillsbury and Murphy,
P.C., Attorneys (1996 -
Present); Director,
Tambrands, Inc. (1993 -
1998); and Trustee of
each of the funds
managed by Northstar
Investment Manage-
ment Corporation
(1993 - 1999).
J. Michael Earley(3) Trustee February President and Chief 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, (1997 - Present).
Scottsdale, Arizona 85258 Present Bankers Trust Company,
Born: 1945 N.A. (1992 - Present).
R. Barbara Gitenstein(2) Trustee February President, College of 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 - (1997 - Present).
Scottsdale, Arizona 85258 Present Present). Formerly,
Born: 1948 Executive Vice
President and Provost,
Drake University (1992
- 1998).
Walter H. May(2) Trustee October Retired. Formerly, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - Managing Director and (February 2002 -
Scottsdale, Arizona 85258 Present Director of Marketing, Present) and Best Prep
Born: 1936 Piper Jaffray, Inc.; Charity (1991 -
Trustee of each of the Present).
funds managed by
Northstar Investment
Management
Corporation (1996 -
1999).
Jock Patton(2) Trustee August Private Investor (June 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1995 - 1997 - Present). (February 2002 -
Scottsdale, Arizona 85258 Present Formerly, Director and Present); Director,
Born: 1945 Chief Executive Officer, Hypercom, Inc. (January
Rainbow Multimedia 1999 - Present); JDA
Group, Inc. (January Software Group, Inc.
1999 - December 2001); (January 1999 -
Director of Stuart Present); Buick of
Entertainment, Inc.; Scottsdale, Inc.; Na-
Director of Artisoft, Inc. tional Airlines, Inc.; BG
(1994 - 1998). Associates, Inc.; BK En-
tertainment, Inc.; and
Arizona Rotorcraft, Inc.
41
ING Prime Rate Trust
--------------------------------------------------------------------------------
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
David W.C. Putnam(3) Trustee October President and Director, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 1999 - F.L. Putnam Securities (February 2002 -
Scottsdale, Arizona 85258 Present Company, Inc. and its Present), Anchor
Born: 1939 affiliates; President, International Bond
Secretary and Trustee, (December 2000 -
The Principled Equity Present); Progressive
Marke Fund. Formerly, Capital Accumulation
Trustee, Trust Realty Trust (August 1998 -
Trust (December Corp.; Present); Principled
Anchor Investment Equity Market Fund
Trust; Bow 2000 - (November 1996 -
Present); Ridge Mining Present), Mercy
Company and each of Endowment
the F.L. Putnam funds Foundation (1995 -
managed by Northstar Present); Director, F.L.
Investment Foundation Putnam Investment
Management Management Company
Corporation (1994 - (December 2001 -
1999). Present); Asian
American Bank and
Trust Company (June
1992 - Present); and
Notre Dame Health
Care Center (1991 -
Present) F.L. Putnam
Securities Company,
Inc. (June 1978 -
Present); and an
Honorary Trustee,
Mercy Hospital (1973 -
Present).
Blaine E. Rieke(3) Trustee February General Partner, 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners (February 2002 -
Scottsdale, Arizona 85258 Present (January 1997 - Present) and Morgan
Born: 1933 Present). Chairman of Chase Trust Co.
the Board and Trustee (January 1998 -
of each of the funds Present).
managed by ING
Investment
Management Co. LLC
(November 1998 -
February 2001).
Roger B. Vincent(3) Trustee February President, Springwell 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - (1994 - Present); and
Scottsdale, Arizona 85258 Present Present). Formerly, Director, AmeriGas
Born: 1945 Director, Tatham Propane, Inc. (1998 -
Offshore, Inc. (1996 - Present).
2000).
Richard A. Wedemeyer(2) Trustee February Retired. Mr. 106 Trustee, GCG Trust
7337 E. Doubletree Ranch Rd. 2001 - Wedemeyer was (February 2002 -
Scottsdale, Arizona 85258 Present formerly Vice President Present) and
Born: 1936 - Finance and Touchstone Consulting
Administration, Group (1997 - Present).
Channel Corporation
(June 1996 - April
2002). Formerly, Vice
President, Operations
and Administration,
Jim Henson
Productions. (1979 -
1997); Trustee, First
Choice Funds (1997 -
2001); and of each of
the funds managed by
ING Investment
Management Co. LLC
(1998 - 2001).
42
ING Prime Rate Trust
--------------------------------------------------------------------------------
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
TRUSTEES WHO ARE "INTERESTED PERSONS"
Thomas J. McInerney(4) Trustee February Chief Executive Officer, 160 Director, Hemisphere,
7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial Inc. (May 2003 -
Scottsdale, Arizona 85258 Present Services (September Present); Trustee, GCG
Born: 1956 2001 - Present); Trust (February 2002 -
General Manager and Present); Equitable Life
Chief Executive Officer, Insurance Co., Golden
ING U.S. Worksite American Life
Financial Services Insurance Co., Life
(December 2000 - Insurance Company of
Present); Member, ING Georgia, Midwestern
Americas Executive United Life Insurance
Committee (2001 - Co., ReliaStar Life
Present); President, Insurance Co., Security
Chief Executive Officer Life of Denver, Security
and Director of Connecticut Life
Northern Life Insurance Insurance Co.,
Company (2001 - Southland Life
Present), ING Aeltus Insurance Co., USG
Holding Company, Inc. Annuity and Life
(2000 - Present), ING Company, and United
Retail Holding Life and Annuity
Company (1998 - Insurance Co. Inc
Present), Formerly, ING (March 2001 - Present);
Life Insurance and Director, Ameribest Life
Annuity Company Insurance Co., (March
(1997 - November 2001 to January 2003);
2002) and ING Director, First
Retirement Holdings, Columbine Life
Inc. (1997 - March Insurance Co. (March
2003). Formerly, 2001 to December
General Manager and 2002); Member of the
Chief Executive Officer, Board, National
ING Worksite Division Commission on
(December 2000 - Retirement Policy,
October 2001), Governor's Council on
President, ING-SCI, Inc. Economic
(August 1997 - Competitiveness and
December 2000); Technology of
President, Aetna Connecticut,
Financial Services Connecticut Business
(August 1997 - and Industry
December 2000); Head Association, Bushnell;
of National Accounts Connecticut Forum;
Core Sales and Metro Hartford
Marketing, Aetna U.S. Chamber of Commerce;
Healthcare (April 1996 - and is Chairman,
March 1997). Concerned Citizens for
Effective Government.
43
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- --------- --------------- ---------- -------
John G. Turner(5) Trustee October Chairman, Hillcrest 157 Trustee, GCG; Director,
7337 E. Doubletree Ranch Rd. 1999 - Capital Partners (May Hormel Foods
Scottsdale, Arizona 85258 Present 2002-Present); Corporation (March
Born: 1939 President, Turner 2000 - Present); Shopko
Investment Company Stores, Inc. (August
(January 2002 - 1999 - Present); and
Present). Mr. Turner M.A. Mortenson
was formerly Vice Company (March 2002 -
Chairman of ING Present).
Americas (2000 - 2002);
Chairman and Chief
Executive Officer of
ReliaStar Financial
Corp. and ReliaStar
Life Insurance Company
(1993 - 2000); Chairman
of ReliaStar United
Services Life Insurance
Company (1995 - 1998);
Chairman of ReliaStar
Life Insurance Company
of New York (1995 -
2001); Chairman of
Northern Life Insurance
Company (1992 - 2001);
Chairman and Trustee of
the Northstar
affiliated investment
companies (1993 - 2001)
and Director, Northstar
Investment Management
Corporation and its
affiliates (1993 - 1999
). (1) Trustees serve
until their successors
are duly elected and
qualified. (2)
Valuation Committee
member. (3) Audit
Committee member. (4)
Mr. McInerney is an
"interested person," as
defined by the 1940
Act, because of his
affiliation with ING
U.S. Worksite Financial
Services, an affiliate
of ING Investments,
LLC. (5) Mr. Turner is
an "interested person,"
as defined by the 1940
Act, because of his
affiliation with ING
Americas, an affiliate
of ING Investments,
LLC.
44
ING Prime Rate Trust
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
James M. Hennessy President and Chief February 2001 - President and Chief Executive
7337 E. Doubletree Ranch Rd., Executive Officer Present Officer of ING Capital Corporation,
Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING
Born: 1949 Chief Operating June 2000 - Present Advisors, Inc., ING Investments,
Officer LLC, Lexington Funds Distributor,
Inc., Express America T.C. Inc. and
Senior Executive June 2000 - February EAMC Liquidation Corp. (since
Vice President 2001 December 2001); Executive Vice
President and Chief Operating
Secretary April 1995 - February Officer of ING Funds Distributor,
2001 LLC (since June 2000). Formerly,
Executive Vice President and Chief
Operating Officer of ING
Quantitative Management, Inc.
(October 2001 to September 2002);
Senior Executive Vice President
(June 2000 to December 2000) and
Secretary (April 1995 to December
2000) of ING Capital Corporation,
LLC, ING Funds Services, LLC, ING
Investments, LLC, ING Advisors,
Inc., Express America T.C. Inc.,
and EAMC Liquidation Corp.; and
Executive Vice President, ING
Capital Corporation, LLC and its
affiliates (May 1998 to June 2000)
and Senior Vice President, ING
Capital Corporation, LLC and its
affiliates (April 1995 to April
1998).
Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief
7337 E. Doubletree Ranch Rd., President and Present Financial Officer and Treasurer of
Scottsdale, Arizona 85258 Assistant Secretary ING Funds Services, LLC, ING Funds
Born: 1958 Distributor, LLC, ING Advisors, Inc.,
Chief Financial Officer June 1998 - Present ING Investments, LLC (December
2001 to present), Lexington Funds
Senior Vice President June 1998 - February Distributor, Inc., Express America
2002 T.C. Inc. and EAMC Liquidation
Corp. (since December 2001).
Formerly, Executive Vice President,
Chief Financial Officer and
Treasurer of ING Quantitative
Management, Inc. (December 2001 to
October 2002); Senior Vice
President, ING Funds Services, LLC,
ING Investments, LLC, and ING Funds
Distributor, LLC (June 1998 to
December 2001) and Chief Financial
Officer of Endeavor Group (April
1997 to June 1998).
Robert S. Naka Senior Vice President November 1999 - Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd., Present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1963 Assistant Secretary July 1996 - Present ING Advisors, Inc., ING
Investments, LLC (October 2001 to
present) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Senior Vice
President and Assistant Secretary
for ING Quantitative
Management, Inc. (October 2001
to October 2002); Vice President,
ING Investments, LLC (April 1997
to October 1999) , ING Funds
Services, LLC (February 1997 to
August 1999) and Assistant Vice
President, ING Funds Services, LLC
(August 1995 to February 1997).
45
ING Prime Rate Trust
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
Daniel Norman Senior Vice President April 1995 - Present Senior Vice President, ING
7337 E. Doubletree Ranch Rd., Investments, LLC (since December
Scottsdale, Arizona 85258 Co-Senior Portfolio November 1999 - 1994); ING Funds Distributor, LLC
Born: 1957 Manager Present (since December 1995); has served
as an officer of other affiliates of
Treasurer June 1997 - Present ING since February 1992.
Jeffrey A. Bakalar Senior Vice President January 1998 - Senior Vice President, ING
7337 E. Doubletree Ranch Rd., Present Investments, LLC (since November
Scottsdale, Arizona 85258 1999). Formerly Vice President and
Born: 1959 Co-Senior Portfolio November 1999 - Assistant Portfolio Manager, ING
Manager Present Investments, LLC (February 1998 -
November 1999); Vice President of
First National Bank of Chicago
(July 1994 - January 1998).
Elliot Rosen Senior Vice President May 2002 - Present Senior Vice President, ING
7337 E. Doubletree Ranch Rd., Investments, LLC (since February
Scottsdale, Arizona 85258 1999). Formerly, Senior Vice
Born: 1953 President IPS-Sendero (May 1997 -
February 1999) and President of
Sendero, which merged into IPS
(August 1993 - May 1997).
William H. Rivoir III Senior Vice President February 2001 - Senior Vice President and
7337 E. Doubletree Ranch Rd., and Assistant Present Secretary of ING Capital
Scottsdale, Arizona 85258 Secretary Corporation, LLC and ING Funds
Born: 1951 Services, LLC (since February 2001),
ING Funds Distributor, LLC, ING
Advisors, Inc., ING Investments,
LLC, and ING Quantitative
Management, Inc. (since October
2001), Lexington Funds Distributor,
Inc., ING Pilgrim Funding, Inc.,
Pilgrim America Financial, Inc.,
Express America TC, Inc. and
EAMC Liquidation Corp. (since
December 2001). Formerly, Senior
Vice President and Assistant
Secretary of ING Funds Services,
LLC (since June 1998), ING
Investments, LLC, and Pilgrim
America Financial, Inc. (since
February 1999), Senior Vice
President of ING Investments, LLC
(since December 1998) and
Assistant Secretary of ING Funds
Distributor, LLC (since February
1999) and ING Investments, LLC
(since June 1998).
Curtis F. Lee Senior Vice President January 2001- Present Senior Vice President and Chief
7337 E. Doubletree Ranch Rd., and Chief Credit Credit Officer of Senior Loans of
Scottsdale, Arizona 85258 Officer ING Investments, LLC (since August
Born: 1955 1999). Formerly, held a series of
positions with Standard Chartered
Bank in the credit approval and
problem loan management functions
(August 1992 - June 1999).
46
ING Prime Rate Trust
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ------------------- -------------- ---------------
OFFICERS:
Kimberly A. Anderson Vice President and February 2001 - Vice President and Assistant
7337 E. Doubletree Ranch Rd., Secretary Present Secretary of ING Funds Services,
Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC,
Born: 1964 Assistant Vice November 1999 - ING Advisors, Inc., ING
President and February 2001 Investments, LLC (since October
Assistant Secretary 2001) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Vice President for
ING Quantitative Management,
Inc. (October 2001 to October
2002); Assistant Vice President of
ING Funds Services, LLC (November
1999 to January 2001) and has
held various other positions with
ING Funds Services, LLC for more
than the last five years
Robyn L. Ichilov Vice President November 1997 - Vice President of ING Funds
7337 E. Doubletree Ranch Rd., Present Services, LLC (since October 2001)
Scottsdale, Arizona 85258 and ING Investments, LLC (since
Born: 1967 August 1997); Accounting
Manager, ING Investments, LLC
(since November 1995).
Maria M. Anderson Assistant Vice August 2001 - Present Assistant Vice President of ING
7337 E. Doubletree Ranch Rd., President Funds Services, LLC (since October
Scottsdale, Arizona 85258 2001). Formerly, Manager of Fund
Born: 1958 Accounting and Fund Compliance,
ING Investments, LLC (September
1999 to November 2001); Section
Manager of Fund Accounting, Stein
Roe Mutual Funds (July 1998 to
August 1999); and Financial
Reporting Analyst, Stein Roe Mutual
Funds (August 1997 to July 1998).
Todd Modic Assistant Vice August 2001 - Present Vice President of Financial
7337 E. Doubletree Ranch Rd., President Reporting-Fund Accounting of ING
Scottsdale, Arizona 85258 Funds Services, LLC (September
Born: 1967 2002 to Present). Director of
Financial Reporting of ING
Investments, LLC (March 2001 to
September 2002). Formerly, Director
of Financial Reporting, Axient
Communications, Inc. (May 2000 to
January 2001) and Director of
Finance, Rural/Metro Corporation
(March 1995 to May 2000).
Susan P. Kinens Assistant Vice February 2003 - Assistant Vice President and
7337 E. Doubletree Ranch Rd. President and Present (For the ING Assistant Secretary, ING Funds
Scottsdale, Arizona 85258 Assistant Secretary Funds) Services, LLC (December 2002 -
Born: 1976 Present); and has held various
other positions with ING Funds
Services, LLC for the last five
years.
----------
(1) The officers hold office until the next meeting of the Trustees and untill
their successors shall have been elected and qualified.
47
INVESTMENT MANAGER
ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
ADMINISTRATOR
ING Fund Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
INSTITUTIONAL INVESTORS AND ANALYSTS
Call ING Prime Rate Trust
1-800-336-3436, Extension 2217
DISTRIBUTOR
ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-334-3444
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 219368
Kansas City, Missouri 64141-9368
CUSTODIAN
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITORS
KPMG LLP
355 S. Grand Avenue, Suite 2000
Los Angeles, CA 90071
WRITTEN REQUESTS
Please mail all account inquiries and other comments to:
ING Prime Rate Trust
Account c/o ING Fund Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
TOLL-FREE SHAREHOLDER INFORMATION
Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account
or other information, at 1-800-992-0180
A prospectus containing more complete information regarding the Trust, including
charges and expenses, may be obtained by calling ING Funds Distributor, LLC,
Distributor, at 1-800-992-0180. Please read the prospectus carefully before you
invest or send money.
[LION LOGO]
ING FUNDS PRT1Q0503-073003