THIRD QUARTER REPORT
THIRD QUARTER REPORT
NOVEMBER 30, 2003
ING PRIME
RATE TRUST
[GRAPHIC]
[ING FUNDS LOGO]
ING Prime Rate Trust
THIRD QUARTER REPORT
November 30, 2003
Table of Contents
Portfolio Managers' Report 2
Statistics and Performance 5
Additional Notes and Information 8
Statement of Assets and Liabilities 9
Statement of Operations 10
Statements of Changes in Net Assets 11
Statement of Cash Flows 12
Financial Highlights 13
Notes to Financial Statements 14
Portfolio of Investments 21
Shareholder Meeting Information 40
Additional Information 41
Trustee and Officer Information 42
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT
Dear Shareholders:
ING Prime Rate Trust (the "Trust") is a diversified, closed-end investment
company that seeks to provide investors with as high a level of current income
as is consistent with the preservation of capital. The Trust seeks to achieve
this objective by investing in a professionally managed portfolio comprised
primarily of senior loans.
PERFORMANCE SUMMARY
The Trust declared $0.10 of common dividends during the third fiscal quarter
ended November 30, 2003, which, based on the average month-end net asset value
("NAV") per share of $7.18, resulted in an annualized distribution rate of
5.83%(1). Total return (based on NAV) for the quarter was 4.65%, versus a gross
total return of 2.53% for the S&P/LSTA Loan Index, while total return for the
nine months ended November 30, 2003 was 12.52% compared to 7.46% for the
S&P/LSTA Loan Index. During the nine-month period ended November 30, 2003, total
return based on the market value of the Trust's common shares (assuming full
dividend reinvestment) was 21.11%.
The non-investment grade loan market remained strong during the quarter, again
taking its cue from robust conditions in several other key credit markets. A
confluence of positive developments, including a now visibly strengthening U.S.
economy, healthier corporate earnings, and a further decline in non-investment
grade default rates, resulted in the continuation of a strong technical rally in
loan prices, thereby propelling 2003 returns to unprecedented levels. The
S&P/LSTA Loan Index posted a total return of 9.78% for the full calandar year,
up from 2.16% in 2002, and approximately 8.5% in excess of the average
three-month London inter-bank offering rate (LIBOR) during the same period.
Broadly speaking, during the quarter, loan values improved across virtually all
industry sectors held by the Trust. The primary catalyst behind the Trust's
favorable results for the quarter, however, was again an overweight of the cable
and wireless sectors. Cable (at 10.1% of total assets as of quarter-end, the
leading sector exposure) has clearly ridden the coattails of Charter
Communications (the second largest individual position at 3.3% of total assets
at quarter-end). Charter, the leading contributor to index returns during 2003,
is now bid at near-par levels, due to improved operating visibility and
liquidity, and further independent market validation of the underlying value of
the company's cable assets. Similarly, all of the Trust's wireless names (at
9.6% of total assets, the second largest sector concentration at quarter-end)
improved further during the quarter. Notably, while it remains the Trust's
largest single holding (4.7% of total assets at quarter-end), we reduced
slightly our aggregate exposure to Nextel Communications as the company
refinanced its sizeable institutional term loan during the period. Also
favorably impacting performance during the quarter was a continued decline in
the number of existing non-performing assets.
Always a key component of our ongoing strategy, we remain focused on maintaining
an appropriate level of diversification across both industry sector and issuer
lines. During the quarter, the Trust's average amount outstanding per loan
declined slightly (to 0.28% of total loan assets, from 0.30% at August 30,
2003), while the number of individual loan positions increased to 355 from 330.
We continue to believe that adequate diversification represents the best line of
defense against systemic credit risk.
USE OF LEVERAGE
The Trust utilizes financial leverage to seek to increase the yield to the
holders of common shares. As of November 30, 2003, the Trust had $655 million of
leverage, consisting of $450 million of "Aaa(2)/AAA(3)" rated cumulative auction
rate preferred shares, and $205 million outstanding
2
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT (Continued)
under $415 million in available credit facilities. Total leverage, as a
percentage of total assets (including preferred shares), was 39.49% at quarter
end. The weighted average leverage cost including all borrowings and preferred
shares as of quarter end was 1.40%. The use of leverage for investment purposes
increases both investment opportunity and investment risk, and we continue to
deploy leverage only when it is in the best interest of the Trust's common
shareholders.
OUTLOOK
The year 2003 was a pivotal year in the leveraged loan market. One look at
annual total return statistics and trailing default rates clearly reveals the
market's recovery from its lows of 2002. It also sets the stage for more modest
expectations going forward. As we enter 2004, due primarily to excess demand for
floating rate secured assets, most seasoned loans remain well bid, many without
offer. Assuming no external event or events, we expect little change over the
very near-term. As such, we continue to expect further spread tightening, albeit
at a somewhat slower pace than in the latter portion of 2003. We also continue
to be on watch for structural compromise (e.g.; higher leverage multiples,
second lien secured paper) and will, if necessary, sacrifice yield in an attempt
to maintain credit discipline. As stated previously, the most significant
uncertainty at this point surrounds the timing of a rise in short-term rates.
Clearly, an upward move would prove a positive for the performance of adjustable
rate senior loans. As we monitor these developments, we will continue to adhere
to a disciplined investment strategy that seeks to maintain a high degree of
diversification while attempting to take advantage of selective market
opportunities.
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
AELTUS INVESTMENT MANAGEMENT, INC. AELTUS INVESTMENT MANAGEMENT, INC.
ING Prime Rate Trust
January 15, 2004
3
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT (Continued)
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. Obligations rated Aaa by Moody's are judged to be of the highest quality,
with minimal credit risk.
3. An obligator rated 'AAA' has extremely strong capacity to meet its
financial commitments. 'AAA' is the highest Issuer Credit Rating assigned
by Standard & Poor's.
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.
INDEX DESCRIPTIONS
The S&P 500 INDEX is a capitalization-weighted index of 500 stocks chosen for
market size, liquidity, and industry group representation.
The S&P/LSTA LEVERAGED LOAN INDEX ("LLI") is a total return index that captures
accrued interest, repayments, and market value changes. It represents a broad
cross section of leveraged loans syndicated in the United States, including
dollar-denominated loans to overseas issuers. Standard & Poor's and the Loan
Syndications & Trading Association ("LSTA") conceived the LLI to establish a
performance benchmark for the syndicated leveraged loan industry.
ALL INDICES ARE UNMANAGED. AN INVESTOR CANNOT INVEST DIRECTLY IN AN INDEX.
4
ING Prime Rate Trust
STATISTICS AND PERFORMANCE as of November 30, 2003
PORTFOLIO CHARACTERISTICS
Net Assets $ 995,593,796
Assets Invested in Senior Loans $ 1,580,484,387
Senior Loans Represented 355
Average Amount Outstanding per Loan $ 4,452,069
Industries Represented 39
Average Loan Amount per Industry $ 40,525,241
Portfolio Turnover Rate 64%
Weighted Average Days to Interest Rate Reset 45
Average Loan Final Maturity 54 months
Total Leverage as a Percentage of Total Assets (including Preferred Shares) 39.49%
TOP TEN INDUSTRY SECTORS AS A PERCENTAGE OF:
NET ASSETS TOTAL ASSETS
Cable Television 16.9% 10.1%
Cellular Communications 16.1% 9.6%
Healthcare, Education and Childcare 11.2% 6.7%
Printing and Publishing 10.4% 6.3%
Automobile 8.9% 5.4%
Containers, Packaging and Glass 8.2% 4.9%
Leisure, Amusement and Entertainment 7.3% 4.4%
Chemicals, Plastics and Rubber 7.3% 4.4%
Beverage, Food and Tobacco 6.6% 3.9%
Telecommunications Equipment 6.1% 3.7%
TOP TEN SENIOR LOAN ISSUERS AS A PERCENTAGE OF:
NET ASSETS TOTAL ASSETS
Nextel Finance Company(1) 7.8% 4.7%
Charter Communications Operating, LLC 5.5% 3.3%
Dex Media West, LLC 2.9% 1.8%
Conseco, Inc. 2.5% 1.5%
Crown Castle Operating Company 2.2% 1.3%
Century Cable Holdings, LLC 2.1% 1.3%
Wyndham International, Inc. 2.1% 1.2%
Olympus Cable Holdings, LLC 1.9% 1.2%
Cincinnati Bell, Inc. 1.9% 1.1%
Calpine Corporation 1.8% 1.1%
----------
(1) COMBINATION OF NEXTEL FINANCE COMPANY AND NEXTEL OPERATIONS, INC.
5
ING Prime Rate Trust
STATISTICS AND PERFORMANCE as of November 30, 2003
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)
------------- ----- ------------- ---------- -------------- -----------------
November 30, 2003 4.00% 6.51% 6.30% 5.83% 5.68%
August 31, 2003 4.00% 5.82% 5.45% 5.98% 5.72%
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%
AVERAGE ANNUAL TOTAL RETURNS
NAV MARKET
1 Year 15.40% 34.76%
3 Years 3.70% 7.58%
5 Years 3.40% 3.30%
10 Years 6.36% 6.32%
Since Trust Inception(F),(H) 6.79% N/A
Since Initial Trading on NYSE(G) N/A 6.66%
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 7.
6
ING Prime Rate Trust
STATISTICS AND PERFORMANCE FOOTNOTES
(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. Since inception return is not applicable
since the Trust did not trade on the NYSE prior to March 9, 1992.
(G) Initial Trading on NYSE -- March 9, 1992.
(H) Reflects partial waiver of fees.
7
ING Prime Rate Trust
ADDITIONAL NOTES AND INFORMATION
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 $25,000 on a monthly basis. Amounts
in excess of $25,000 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 2004 DIVIDENDS:
DECLARATION DATE EX-DIVIDEND DATE PAYABLE DATE
---------------- ---------------- ------------
January 30 February 6 February 24
February 27 March 8 March 22
March 31 April 7 April 22
April 30 May 6 May 24
May 28 June 8 June 22
June 30 July 8 July 22
July 30 August 6 August 23
August 31 September 8 September 22
September 30 October 7 October 22
October 29 November 8 November 22
November 30 December 8 December 22
December 20 December 29 January 12
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.
8
ING Prime Rate Trust
STATEMENT OF ASSETS AND LIABILITIES as of November 30, 2003 (Unaudited)
ASSETS:
Investments in securities at value (Cost $1,656,285,703) $ 1,636,468,603
Cash 6,398,365
Receivables:
Investment securities sold 7,086,765
Interest 8,460,871
Other 208,455
Prepaid expenses 99,690
-----------------
Total assets 1,658,722,749
-----------------
LIABILITIES:
Notes payable 205,000,000
Deferred arrangement fees on senior loans 5,349,570
Dividends payable -- preferred shares 66,392
Payable to affiliates 1,427,680
Accrued trustees' fees 22,183
Other accrued expenses 1,263,128
-----------------
Total liabilities 213,128,953
-----------------
Preferred shares, $25,000 stated value per share at liquidation
value (18,000 shares outstanding) 450,000,000
-----------------
NET ASSETS $ 995,593,796
=================
Net assets value per common share outstanding (net assets less preferred
shares at liquidation value, divided by 137,462,862 shares of
beneficial interest authorized and outstanding, no par value) $ 7.24
NET ASSETS CONSIST OF:
Paid-in capital $ 1,291,917,268
Undistributed net investment income 14,057,326
Accumulated net realized loss on investments (290,563,698)
Net unrealized depreciation of investments (19,817,100)
-----------------
NET ASSETS $ 995,593,796
=================
See Accompanying Notes to Financial Statements
9
ING Prime Rate Trust
STATEMENT OF OPERATIONS for the Nine Months Ended November 30, 2003 (Unaudited)
INVESTMENT INCOME:
Interest $ 61,243,559
Arrangement fees earned 2,533,121
Dividends 9,008
Other 2,579,093
--------------
Total investment income 66,364,781
--------------
EXPENSES:
Investment management fees 9,233,423
Administration fees 2,885,445
Transfer agent and registrar fees 534,372
Interest 1,816,262
Shareholder reporting expense 113,850
Custodian fees 380,325
Revolving credit facility fees 97,956
Professional fees 669,861
Preferred Shares -- Dividend disbursing agent fees 892,901
Insurance expense 21,054
Pricing expense 45,622
ICI fees 12,981
Postage expense 221,065
Trustees' fees 55,000
Miscellaneous expense 192,649
--------------
Total expenses 17,172,766
--------------
Net investment income 49,192,015
--------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS:
Net realized loss on investments (45,107,279)
Net change in unrealized appreciation of investments 112,014,697
--------------
Net realized and unrealized gain on investments 66,907,418
--------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (3,923,170)
--------------
Net increase in net assets resulting from operations $ 112,176,263
==============
See Accompanying Notes to Financial Statements
10
ING Prime Rate Trust
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
NINE MONTHS YEAR
ENDED ENDED
NOVEMBER 30, FEBRUARY 28,
2003 2003
------------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 49,192,015 $ 69,429,083
Net realized loss on investments (45,107,279) (115,778,026)
Change in unrealized appreciation on
investments 112,014,697 51,893,096
Distributions to preferred shareholders
from net investment income (3,923,170) (7,499,067)
------------- -------------
Net increase (decrease) in net assets
resulting from operations 112,176,263 (1,954,914)
------------- -------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Distributions from net investment income (42,934,868) (61,643,423)
------------- -------------
Decrease in net assets from distributions
to common shareholders (42,934,868) (61,643,423)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Dividends reinvested for common shares 3,969,059 --
------------- -------------
Net increase from capital share transactions 3,969,059 --
------------- -------------
Net increase (decrease) in net assets 73,210,454 (63,598,337)
------------- -------------
NET ASSETS:
Beginning of period 922,383,342 985,981,679
------------- -------------
End of period (including undistributed
net investment income of $14,057,326
and $11,723,349, respectively) $ 995,593,796 $ 922,383,342
============= =============
See Accompanying Notes to Financial Statements
11
ING Prime Rate Trust
STATEMENT OF CASH FLOWS for the Nine Months Ended November 30, 2003 (Unaudited)
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 53,908,935
Dividends received 9,008
Facility fees paid (97,956)
Dividends paid to preferred shareholder (3,903,192)
Arrangement fees received 4,790,124
Other income received 2,451,620
Interest paid (1,816,262)
Other operating expenses paid (14,851,077)
Purchases of securities (968,845,688)
Proceeds from sales of securities 934,376,940
-------------
Net cash provided by operating activities $ 6,022,452
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common shareholders (42,934,868)
Net repayment of notes payable 38,000,000
Dividends reinvested for common shares 3,969,059
-------------
Net cash flows used in financing activities (965,809)
-------------
Net change in cash 5,056,643
Cash at beginning of period 1,341,722
-------------
Cash at end of period $ 6,398,365
=============
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 $ 112,176,263
-------------
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by operating activities:
Change in unrealized depreciation of securities (112,014,697)
Net accretion of discounts on securities (6,252,330)
Realized loss on sale of securities 45,107,279
Purchase of securities (968,845,688)
Proceeds on sale of securities 934,376,940
Increase in other assets (127,473)
Increase in interest receivable (1,082,294)
Decrease in prepaid expenses 104,087
Increase in deferred arrangement fees on senior loans 2,257,003
Increase in dividends payable -- preferred shareholder 19,978
Increase in payable to affiliate 195,113
Decrease in accrued trustees' fees (7,192)
Increase in other accrued expenses 115,463
-------------
Total adjustments (106,153,811)
-------------
Net cash provided by operating activities $ 6,022,452
=============
See Accompanying Notes to Financial Statements
12
ING PRIME RATE TRUST
FINANCIAL HIGHLIGHTS (Unaudited)
For a common share outstanding throughout the period
NINE MONTHS
ENDED YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
NOVEMBER 30, -------------------------------------------------------
2003 2003 2002 2001 2000 1999(4)
------------------------------------------------------------------------------------------------------------------------------------
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 $ 0.34 0.50 0.74 0.88 0.79 0.79
Net realized and unrealized gain (loss) on investments $ 0.52 (0.47) (0.89) (0.78) (0.30) (0.10)
----------- ------- ------- --------- --------- ---------
Increase (decrease) in net asset value from investment
operations $ 0.86 0.03 (0.15) 0.10 0.49 0.69
Distributions to Common Shareholders from net investment
income $ (0.32) (0.45) (0.63) (0.86) (0.78) (0.82)
Distribution to Preferred Shareholders $ (0.03) (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 $ 7.24 6.73 7.20 8.09 8.95 9.24
=========== ======= ======= ========= ========= =========
Closing market price at end of period $ 7.48 6.46 6.77 8.12 8.25 9.56
TOTAL INVESTMENT RETURN(1)
Total investment return at closing market price(2) % 21.11 2.53 (9.20) 9.10 (5.88) 1.11
Total investment return at net asset value(3) % 13.83 0.44 (3.02) 0.19 5.67 7.86
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (000's) $ 995,594 922,383 985,982 1,107,432 1,217,339 1,202,565
Preferred Shares-Aggregate amount outstanding (000's) $ 450,000 450,000 450,000 450,000 -- --
Liquidation and market value per share of Preferred Shares $ 25,000 25,000 25,000 25,000 -- --
Borrowings at end of period (000's) $ 205,000 167,000 282,000 510,000 484,000 534,000
Asset coverage ratios(6) % 252 250 235 215 352 325
Average borrowings (000's) $ 130,535 190,671 365,126 450,197 524,019 490,978
Ratios to average net assets including Preferred Shares(7)
Expenses (before interest and other fees
related to revolving credit facility)(8) % 1.45 1.49 1.57 1.62 -- --
Expenses(8) % 1.62 1.81 2.54 3.97 -- --
Net investment income(8) % 4.65 4.97 6.83 9.28 -- --
Ratios to average net assets plus borrowing
Expenses (before interest and other fees related to
revolving credit facility)(8) % 1.86 1.82 1.66 1.31 1.00(5) 1.05(5)
Expenses(8) % 2.10 2.23 2.70 3.21 2.79(5) 2.86(5)
Net investment income(8) % 6.01 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)(8) % 2.12 2.19 2.25 1.81 1.43(5) 1.50(5)
Expenses(8) % 2.39 2.68 3.64 4.45 4.00(5) 4.10(5)
Net investment income(8) % 6.84 7.33 9.79 10.39 8.77 8.60
Portfolio turnover rate % 64 48 53 46 71 68
Common shares outstanding at end of period (000's) 137,463 136,973 136,973 136,847 136,036 130,206
(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.
(8) Annualized for periods less than one year.
See Accompanying Notes to Financial Statements
13
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of November 30, 2003 (Unaudited)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
ING Prime Rate Trust (the "Trust"), a Massachusetts business 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 market
value quotations are not readily 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 of the loan being valued. 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
November 30, 2003, 94.87% 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") or Aeltus Investment
Management, Inc. ("ING Aeltus" the "Sub-Advisor"), 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 are valued at the last reported sale price. Securities
reported by NASDAQ will be valued at NASDAQ official closing price. Debt
and equity securities traded in the over-the-counter market
14
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of November 30, 2003 (Unaudited) (Continued)
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 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.
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,
arrangement 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 four 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.
15
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of November 30, 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 nine months ended November 30, 2003, the cost of purchases and the
proceeds from principal repayment and sales of investments, excluding short-term
notes, totaled $981,891,893 and $954,048,503, respectively. At November 30,
2003, the Trust held senior loans valued at $1,580,741,268 representing 96.6% 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.
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.
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.
The Fund values portfolio securities by using the market value of the securities
when reliable market value quotations for the securities are readily available.
When reliable market value quotations are not readily available, the Fund
determines, in good faith, the fair value of the
16
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of November 30, 2003 (Unaudited) (Continued)
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
----------- --------------
Allied Digital Technologies Corporation -- Residual Interest in
Bankruptcy Estate 06/05/02 $ 186,961
AM Cosmetics Corporation -- Liquidation Interest 03/07/03 50
Block Vision Holdings Corporation -- Common Shares 09/30/02 --
Boston Chicken Inc. -- Residual Interest in Boston Chicken Plan Trust 12/26/00 6,990,635
Cedar Chemical -- Liquidation Interest 12/31/02 --
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 10/02/02 61
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 --
Grand Union Company -- Residual Interest in Bankruptcy Estate 07/01/02 4,268
Holmes Products Corporation -- Warrants 10/24/01 --
Humphreys, Inc. -- Residual Interest in Bankruptcy Estate 05/15/02 100
IHDG Realty -- Common Shares 05/02/01 1
Imperial Home Decor Group, Inc. -- Common Shares 05/02/01 1
Insilco Technologies -- Residual Interest in Bankruptcy Estate 05/02/03 43,482
Intera Group, Inc. -- Common Shares 11/29/02 --
IT Group, Inc. -- Residual Interest in Bankruptcy Estate 09/12/03 366,989
Kevco, Inc. -- Residual Interest in Bankruptcy Estate 06/05/02 147,443
Morris Material Handling, Inc. -- Common Shares 10/09/01 3,009,059
MP Holdings, Inc. -- Common Shares 04/16/01 6
Murray's Discount Auto Stores, Inc. -- Interest in Undistributed Escrow Account 08/11/03 510,279
Neoplan USA Corporation -- Common Shares 08/29/03 --
Neoplan USA Corporation -- Series B Preferred Shares 08/29/03 --
Neoplan USA Corporation -- Series C Preferred Shares 08/29/03 428,603
Neoplan USA Corporation -- Series D Preferred Shares 08/29/03 3,524,300
New Piper Aircraft -- Residual Interest in Litigation Proceeds 07/02/03 --
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, Inc. -- Common Shares 12/11/02 --
Sarcom, Inc. -- Preferred Shares 12/11/02 2,782,654
Scientific Games Corporation -- Common Shares 10/30/03 554,457
Soho Publishing -- Common Shares 01/10/02 133
Stellex Aerostructures, Inc. -- Common Shares 10/17/01 275,767
Targus Group, Inc. -- Common Shares 03/11/03 --
Tartan Textile Services, Inc. -- Series D Preferred Shares 07/16/01 2,227,655
Tartan Textile Services, Inc. -- Series E Preferred Shares 07/16/01 2,333,852
Telinget, Inc. -- Common Shares 09/18/02 --
Tembec, Inc. -- Common Shares 01/08/02 1,442,942
Transtar Metals -- Residual Interest in Bankruptcy Estate 01/09/03 80,459
TSR Wireless, LLC -- Residual Interest in Bankruptcy Estate 10/15/02 --
U.S. Aggregates -- Residual Interest in Bankruptcy Estate 04/07/03 --
U.S. Office Products Company -- Residual Interest in Bankruptcy Estate 06/11/02 --
--------------
Total restricted securities excluding senior loans (market value of
$33,494,775 was 3.4% of net assets at November 30, 2003) $ 29,376,447
==============
17
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of November 30, 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 Investment Manager entered into a subadvisory agreement with ING Aeltus, a
wholly owned subsidiary of ING Groep N.V. effective August 19, 2003. Subject to
such policies as the Board or the Investment Manager may determine, ING Aeltus
manages the Trust's assets in accordance with the Trust's investment objectives,
policies, and limitations.
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 November 30, 2003, the Trust had the following amounts recorded in payable to
affiliates on the accompanying Statement of Assets and Liabilities:
ACCRUED INVESTMENT ACCRUED
MANAGEMENT FEES ADMINISTRATIVE FEES TOTAL
------------------ ------------------- ------------
$ 1,087,756 $ 339,924 $ 1,427,680
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.
NOTE 4 -- COMMITMENTS
The Trust has entered into both a $90 million 364-day revolving credit agreement
which matures on August 25, 2004 and a $325 million 364-day revolving
securitization facility which matures on June 12, 2004, 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 November 30, 2003, was $205
million, at a weighted average interest rate of 1.61%. The amount of borrowings
represented 12.4% of total assets at November 30, 2003. Average borrowings for
the period ended November 30, 2003 were $130,534,545 and the average annualized
interest rate was 1.95%.
As of November 30, 2003, the Trust had unfunded loan commitments pursuant to the
terms of the following loan agreements:
Amerco, Inc. $ 9,773,135
Block Vision Holdings Corporation 118,771
Centennial Cellular Operating Company 2,000,000
Cincinnati Bell, Inc. 2,596,489
Citadel Broadcasting Company 1,680,000
Davita, Inc. 3,000,000
DirecTV Holdings, LLC 2,000,000
Express Scripts, Inc. 3,092,006
Federal-Mogul Corporation 389,471
Fleming Companies, Inc. 797,493
Georgia-Pacific Corporation 8,440,000
Hercules, Inc. 1,500,000
Insight Health Services Corporation 250,000
J.C. Penney Company, Inc. 10,000,000
Lyondell Chemical Company 9,000,000
Neoplan USA Corporation 1,125,000
Nextel Finance Company $ 8,273,476
Nutrasweet Acquisition Corporation 472,250
Park Place Entertainment Corporation 5,297,136
Peabody Energy Corporation 2,500,000
Primedia, Inc. 1,290,468
Quality Distribution, Inc. 1,054,534
Relizon Company 8,213,749
Rural Cellular Corporation 1,046,863
Sears Roebuck and Company 10,000,000
Six Flags Theme Parks, Inc. 3,000,000
Smurfit-Stone Container 2,269,080
United Defense Industries, Inc. 3,000,000
United Rentals (North America), Inc. 6,000,000
Western Wireless Corporation 9,500,000
---------------
$ 117,679,921
===============
18
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of November 30, 2003 (Unaudited) (Continued)
NOTE 5 -- RIGHTS AND OTHER OFFERINGS
As of November 30, 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 19,126,437
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 November 30, 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 November 30, 2003, the Trust held 0.90% of its total
assets in subordinated loans and unsecured loans.
NOTE 8 -- FEDERAL INCOME TAXES
Dividends paid by the Trust from net investment income and distributions of net
realized short-term capital gains (if any) are, for federal income tax purposes,
taxable as ordinary income to shareholders. The tax composition of dividends and
distributions to common shareholders for nine months ended November 30, 2003 and
year ended February 28, 2003 were as follows:
ORDINARY LONG-TERM TAX RETURN
INCOME CAPITAL GAINS OF CAPITAL
------------- ------------- ----------
November 30, 2003 $ 42,934,867 $ -- $ --
February 28, 2003 61,643,423 -- --
The amount of distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations, which
may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or
19
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of November 30, 2003 (Unaudited) (Continued)
permanent in nature. Key differences are the treatment of short-term capital
gains, foreign currency transactions, organization costs and other temporary
differences. To the extent that these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassifications. To
the extent distributions exceed net investment income and/or net realized
capital gains for tax purposes, they are reported as distributions of paid-in
capital.
NOTE 9 -- OTHER INFORMATION
As with many financial services companies, ING investments and affiliates of ING
investments (collectively, "ING") have received requests for information from
various governmental and self-regulatory agencies in connection with
investigations related to trading in investment company shares. In each case,
full cooperation and responses are being provided. ING is also conducting an
internal review of investment company share trading as well as reviewing their
policies and procedures in this area.
NOTE 10 -- SUBSEQUENT EVENTS
Subsequent to November 30, 2003, the Trust paid to Common Shareholders the
following dividends from net investment income:
PER SHARE AMOUNT DECLARATION DATE RECORD DATE PAYABLE DATE
---------------- ---------------- ----------- ------------
$ 0.0360 12/19/03 12/31/03 1/13/04
Subsequent to November 30, 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 $ 33.99 12/01/03 to 01/05/04 12/08/03 to 01/12/04 12/09/03 to 01/13/04
Series T $ 34.32 12/02/03 to 01/06/04 12/09/03 to 01/13/04 12/10/03 to 01/14/04
Series W $ 34.76 12/03/03 to 01/07/04 12/10/03 to 01/14/04 12/11/03 to 01/15/04
Series Th $ 36.89 12/04/03 to 01/08/04 12/11/03 to 01/15/04 12/12/03 to 01/16/04
Series F $ 33.75 12/05/03 to 01/09/04 12/12/03 to 01/16/04 12/15/03 to 01/20/04
20
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited)
SENIOR LOANS*: 158.7%
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
AEROSPACE AND DEFENSE: 2.4%
ALLIANT TECHSYSTEMS, INC. Ba2 BB-
$ 2,276,748 Term Loan, maturing April 20, 2009 $ 2,298,330
DRS TECHNOLOGIES, INC. Ba3 BB-
1,500,000 Term Loan, maturing November 04, 2010 1,521,796
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-
2,962,500 Term Loan, maturing June 30, 2009 2,969,290
TRANSDIGM, INC. B1 B+
2,000,000 Term Loan, maturing July 22, 2010 2,024,688
UNITED DEFENSE INDUSTRIES, INC. Ba3 BB
6,224,849 Term Loan, maturing August 13, 2009 6,253,197
---------------
24,334,556
---------------
AUTOMOBILE: 8.9%
AFTERMARKET TECHNOLOGY CORPORATION Ba2 BB-
1,713,682 Term Loan, maturing February 08, 2008 1,709,397
1,246,268 Term Loan, maturing February 08, 2008 1,249,829
AMERICAN AXLE & MANUFACTURING, INC. Ba1 BBB
3,518,257 Term Loan, maturing April 30, 2006 3,529,251
COLLINS & AIKMAN PRODUCTS B1 B+
3,397,224 Term Loan, maturing December 31, 2005 3,362,159
DURA OPERATING CORPORATION Ba3 BB
3,160,000 Term Loan, maturing December 31, 2008 3,184,689
(2) EXIDE TECHNOLOGIES NR D
1,612,012 (3) Revolver, maturing December 18, 2003 1,140,498
371,195 (3) Term Loan, maturing December 18, 2003 262,620
3,227,260 (3) Term Loan, maturing March 18, 2005 2,283,286
(2) FEDERAL-MOGUL CORPORATION Ca NR
7,551,408 Revolver, maturing February 24, 2004 6,591,752
4,059,121 Term Loan, maturing February 24, 2004 3,535,243
5,880,000 Term Loan, maturing February 24, 2005 5,159,700
GOODYEAR TIRE & RUBBER COMPANY Ba2 BB+
5,500,000 Term Loan, maturing March 31, 2006 5,548,125
HLI OPERATING COMPANY, INC. Ba3 BB-
4,987,500 Term Loan, maturing June 03, 2009 5,051,405
KEYSTONE AUTOMOTIVE INDUSTRIES, INC. B1 B+
1,500,000 Term Loan, maturing October 30, 2009 1,520,625
METALDYNE COMPANY, LLC B2 BB-
4,407,226 Term Loan, maturing December 31, 2009 4,376,010
POLYPORE, INC. Ba3 BB-
5,417,500 Term Loan, maturing December 31, 2007 5,469,416
SAFELITE GLASS CORPORATION B3 B+
6,729,690 Term Loan, maturing September 30, 2007 6,662,393
See Accompanying Notes to Financial Statements
21
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
$ 10,823,607 Term Loan, maturing September 30, 2007 $ 10,701,841
STONERIDGE, INC. Ba3 BB
570,000 Term Loan, maturing April 30, 2008 570,000
TENNECO AUTOMOTIVE, INC. B1 B
1,281,583 Term Loan, maturing November 04, 2007 1,290,127
1,281,583 Term Loan, maturing May 04, 2008 1,290,127
TRW AUTOMOTIVE ACQUISITIONS CORPORATION Ba2 BB
11,000,000 Term Loan, maturing February 28, 2011 11,117,634
UNITED COMPONENTS, INC. B1 BB-
3,465,000 Term Loan, maturing June 30, 2010 3,495,319
---------------
89,101,446
---------------
BANKING: 0.2%
(2) OUTSOURCING SOLUTIONS, INC. NR D
3,495,095 (3) Term Loan, maturing June 10, 2006 2,284,919
---------------
2,284,919
---------------
BEVERAGE, FOOD AND TOBACCO: 6.6%
B & G FOODS, INC. B1 B+
1,500,000 Term Loan, maturing August 31, 2009 1,518,125
BIRDS EYE FOODS, INC. Ba3 B+
6,602,432 Term Loan, maturing June 30, 2008 6,650,920
COMMONWEALTH BRANDS, INC. Ba3 BB-
6,896,500 Term Loan, maturing August 28, 2007 6,918,052
CONSTELLATION BRANDS, INC. Ba1 BB
3,750,000 Term Loan, maturing November 30, 2008 3,784,766
CP KELCO APS B3 B
2,965,909 Term Loan, maturing March 31, 2008 2,986,300
981,723 Term Loan, maturing September 30, 2008 988,473
DEAN FOODS COMPANY Ba1 BB+
4,812,500 Term Loan, maturing July 15, 2007 4,830,547
11,591,653 Term Loan, maturing July 15, 2008 11,694,888
DEL MONTE CORPORATION Ba3 BB-
4,620,485 Term Loan, maturing December 20, 2010 4,677,761
DS WATERS ENTERPRISES L.P. B1 B+
3,500,000 Term Loan, maturing November 07, 2009 3,551,041
(2) FLEMING COMPANIES, INC. B3 D
1,537,589 Revolver, maturing June 18, 2007 1,528,620
3,494,133 Term Loan, maturing June 18, 2008 3,469,384
INTERSTATE BRANDS CORPORATION Ba2 BB
987,500 Term Loan, maturing July 19, 2007 989,506
938,871 Term Loan, maturing July 19, 2007 942,744
MAFCO WORLDWIDE CORPORATION B1 B
1,725,476 Term Loan, maturing March 31, 2006 1,708,221
NATIONAL DAIRY HOLDINGS, L.P. Ba2 BB+
2,462,500 Term Loan, maturing April 30, 2009 2,467,629
See Accompanying Notes to Financial Statements
22
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
BEVERAGE, FOOD AND TOBACCO (CONTINUED)
NUTRASWEET ACQUISITION CORPORATION Ba3 NR
$ 417,720 Term Loan, maturing May 24, 2005 $ 398,923
304,101 Term Loan, maturing June 30, 2006 304,862
3,000,000 Second Lien Term Loan, maturing May 25, 2009 2,958,750
SOUTHERN WINE & SPIRITS OF AMERICA, INC. Ba3 BBB-
2,975,000 Term Loan, maturing July 02, 2008 3,002,272
---------------
65,371,784
---------------
BUILDINGS AND REAL ESTATE: 1.2%
(2) AMERCO, INC. NR NR
2,226,865 Debtor in Possession Term Loan, maturing
August 13, 2004 2,215,731
ASSOCIATED MATERIALS, INC. Ba3 B+
1,710,526 Term Loan, maturing August 02, 2010 1,729,056
78,947 Term Loan, maturing August 20, 2010 79,638
BUILDING MATERIALS HOLDING CORPORATION Ba2 BB-
1,995,000 Term Loan, maturing August 21, 2010 2,002,481
MACERICH PARTNERSHIP, L.P. Ba2 NR
4,723,200 Term Loan, maturing July 26, 2005 4,746,816
WERNER HOLDINGS COMPANY, INC. Ba3 B
1,000,000 Term Loan, maturing June 11, 2009 913,333
---------------
11,687,055
---------------
CABLE TELEVISION: 16.9%
(2) ADELPHIA COMMUNICATIONS CORPORATION NR BBB
2,945,693 Debtor in Possession Term Loan, maturing
June 25, 2004 2,972,696
BRESNAN COMMUNICATIONS, LLC B1 BB-
5,000,000 Term Loan, maturing December 31, 2007 5,039,845
CC VI OPERATING COMPANY, LLC B2 CCC+
9,598,619 Term Loan, maturing November 12, 2008 9,232,672
CC VIII OPERATING, LLC B2 B-
4,421,250 Term Loan, maturing February 02, 2008 4,294,139
(2) CENTURY CABLE HOLDINGS, LLC Caa1 NR
1,230,000 Revolver, maturing March 31, 2009 1,097,775
16,500,000 Term Loan, maturing June 30, 2009 15,190,313
5,000,000 Term Loan, maturing December 31, 2009 4,537,500
CHARTER COMMUNICATIONS OPERATING, LLC B2 B
40,055,519 Term Loan, maturing March 18, 2008 38,756,198
16,272,399 Term Loan, maturing September 18, 2008 15,692,695
FALCON CABLE COMMUNICATIONS, LLC B2 BB
1,280,777 Term Loan, maturing December 31, 2007 1,232,748
2,262,063 Term Loan, maturing November 01, 2008 2,165,926
1,417,834 Term Loan, maturing November 01, 2008 1,343,398
(2) FRONTIERVISION OPERATING PARTNERS, L.P. B2 NR
2,593,939 Revolver, maturing October 31, 2005 2,540,439
See Accompanying Notes to Financial Statements
23
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
CABLE TELEVISION (CONTINUED)
$ 2,000,000 Term Loan, maturing September 30, 2005 $ 1,958,750
2,400,000 Term Loan, maturing March 31, 2006 2,350,500
(2) HILTON HEAD COMMUNICATIONS, L.P. Caa1 NR
7,000,000 Revolver, maturing September 30, 2007 6,326,250
INSIGHT MIDWEST HOLDINGS, LLC Ba3 BB+
1,000,000 Term Loan, maturing June 30, 2009 991,667
14,500,000 Term Loan, maturing December 31, 2009 14,567,976
2,000,000 Term Loan, maturing January 06, 2010 2,009,376
MCC IOWA MEDIACOM BROADBAND Ba3 BB+
16,500,000 Term Loan, maturing September 30, 2010 16,593,951
(2) OLYMPUS CABLE HOLDINGS, LLC B2 NR
2,000,000 Term Loan, maturing June 30, 2010 1,861,000
18,250,000 Term Loan, maturing September 30, 2010 17,374,000
---------------
168,129,814
---------------
CARGO TRANSPORT: 2.1%
(2) AMERICAN COMMERCIAL LINES, LLC Ba3 NR
2,000,000 Debtor in Possession Term Loan, maturing
July 31, 2004 1,995,000
(2) AMERICAN COMMERCIAL LINES, LLC Caa1 D
1,258,356 Term Loan, maturing June 30, 2006 1,088,478
1,804,934 Term Loan, maturing June 30, 2007 1,561,268
CSX/HORIZON LINES, LLC Ba3 BB-
1,569,048 Term Loan, maturing February 27, 2009 1,580,571
GEMINI LEASING, INC. B1 NR
4,117,116 (3) Term Loan, maturing August 12, 2005 1,646,847
NEOPLAN USA CORPORATION NR NR
1,125,000 Revolver, maturing June 30, 2006 1,125,000
5,428,505 Term Loan, maturing June 30, 2006 5,428,505
PACER INTERNATIONAL, INC. B1 BB-
2,611,765 Term Loan, maturing June 10, 2010 2,634,074
QUALITY DISTRIBUTION, INC. B1 B+
445,466 Term Loan, maturing November 13, 2009 450,477
TEREX CORPORATION B1 BB-
1,411,524 Term Loan, maturing July 03, 2009 1,408,584
1,960,075 Term Loan, maturing December 31, 2009 1,961,790
---------------
20,880,594
---------------
CELLULAR COMMUNICATIONS: 16.1%
AIRGATE PCS, INC. B3 CC
972,817 Term Loan, maturing June 06, 2007 935,120
12,868,789 Term Loan, maturing September 30, 2008 12,370,124
ALAMOSA HOLDINGS, LLC B2 CC
1,000,000 Term Loan, maturing February 14, 2008 970,313
See Accompanying Notes to Financial Statements
24
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
CELLULAR COMMUNICATIONS (CONTINUED)
CENTENNIAL CELLULAR OPERATING CORPORATION B3 B
$ 7,939,333 Term Loan, maturing November 30, 2006 $ 7,858,948
CENTENNIAL PUERTO RICO OPERATIONS
CORPORATION B3 B
632,731 Term Loan, maturing November 30, 2006 626,325
DOBSON CELLULAR SYSTEMS, INC. Ba3 B-
7,000,000 Term Loan, maturing March 31, 2010 7,098,126
HORIZON PERSONAL COMMUNICATIONS, INC. B2 D
1,000,000 Term Loan, maturing September 26, 2008 820,000
3,500,000 Term Loan, maturing March 31, 2009 2,870,000
INDEPENDENT WIRELESS ONE CORPORATION Caa1 NR
10,000,000 (3) Term Loan, maturing June 20, 2008 7,200,000
MICROCELL TELECOMMUNICATIONS, INC. NR CCC+
8,417,900 Term Loan, maturing December 31, 2008 8,186,408
NEXTEL FINANCE COMPANY Ba2 BB
777,734 Revolver, maturing December 31, 2007 764,231
36,612,449 Term Loan, maturing December 31, 2007 36,287,917
38,216,225 Term Loan, maturing March 31, 2009 38,378,644
NEXTEL OPERATIONS, INC. Ba2 BB
1,885,658 Term Loan, maturing February 10, 2007 1,912,749
RURAL CELLULAR CORPORATION B2 B-
8,745,974 Term Loan, maturing April 03, 2008 8,614,785
3,459,377 Term Loan, maturing October 03, 2008 3,469,558
3,459,377 Term Loan, maturing April 03, 2009 3,468,938
US UNWIRED, INC. B2 CCC-
2,790,405 Term Loan, maturing September 30, 2007 2,692,741
1,770,992 Term Loan, maturing March 31, 2008 1,709,008
WESTERN WIRELESS CORPORATION B3 B-
500,000 Revolver, maturing March 31, 2008 485,834
6,825,000 Term Loan, maturing March 31, 2008 6,742,888
2,291,667 Term Loan, maturing March 31, 2008 2,243,686
4,135,439 Term Loan, maturing September 30, 2008 4,140,178
---------------
159,846,521
---------------
CHEMICALS, PLASTICS AND RUBBER: 7.3%
ACADIA ELASTOMERS CORPORATION NR NR
8,467,153 Term Loan, maturing March 31, 2004 8,043,796
FMC CORPORATION Ba1 BBB-
3,970,000 Term Loan, maturing October 21, 2007 4,024,588
GEO SPECIALTY CHEMICALS, INC. B3 CCC+
1,740,101 Term Loan, maturing December 31, 2007 1,557,390
HERCULES, INC. Ba1 BB
4,962,500 Term Loan, maturing May 15, 2007 4,999,719
HUNTSMAN, LLC B2 B
5,565,110 Term Loan, maturing March 31, 2007 5,126,858
7,800,617 Term Loan, maturing March 31, 2007 7,186,318
See Accompanying Notes to Financial Statements
25
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
CHEMICALS, PLASTICS AND RUBBER (CONTINUED)
HUNTSMAN INTERNATIONAL, LLC B1 B
$ 5,624,593 Term Loan, maturing June 30, 2007 $ 5,653,419
5,624,593 Term Loan, maturing June 30, 2008 5,654,280
JOHNSONDIVERSEY, INC. Ba3 BB-
3,307,344 Term Loan, maturing November 03, 2009 3,341,105
NALCO COMPANY B1 BB
15,000,000 Term Loan, maturing November 04, 2010 15,125,625
NOVEON, INC. B1 BB-
7,901,655 Term Loan, maturing December 31, 2009 7,985,610
ROCKWOOD SPECIALTIES GROUP, INC. B1 B+
4,000,000 Term Loan, maturing July 23, 2010 4,044,168
---------------
72,742,876
---------------
CONTAINERS, PACKAGING AND GLASS: 8.2%
BERRY PLASTICS CORPORATION B1 B+
2,965,000 Term Loan, maturing August 31, 2010 2,994,650
1,000,000 Term Loan, maturing August 31, 2010 1,002,500
BLUE RIDGE PAPER PRODUCTS, INC. B3 B+
7,536,863 Term Loan, maturing May 14, 2006 7,084,652
CONSTAR INTERNATIONAL, INC. B2 BB-
2,970,000 Term Loan, maturing November 20, 2009 2,931,637
CROWN CORK & SEAL COMPANY, INC. Ba3 BB-
3,500,000 Term Loan, maturing September 15, 2008 3,534,563
GRAPHIC PACKAGING INTERNATIONAL, INC. B1 B+
15,000,000 Term Loan, maturing August 09, 2010 15,189,375
GREIF BROS. CORPORATION Ba3 BB
2,262,500 Term Loan, maturing August 23, 2009 2,274,620
IMPAXX, INC. NR NR
4,081,057 Term Loan, maturing April 30, 2005 3,632,141
JEFFERSON SMURFIT CORPORATION Ba3 B+
1,647,273 Term Loan, maturing March 31, 2007 1,658,426
KERR GROUP, INC. B1 BB-
2,500,000 Term Loan, maturing August 13, 2010 2,520,833
(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
OWENS-ILLINOIS GROUP, INC. B1 BB
12,000,000 Term Loan, maturing April 01, 2008 12,086,256
PLIANT CORPORATION B2 BB-
1,752,828 Term Loan, maturing May 31, 2008 1,761,045
SILGAN HOLDINGS, INC. Ba2 BB
2,990,000 Term Loan, maturing November 30, 2008 3,009,934
SMURFIT-STONE CONTAINER Ba3 B+
730,919 Revolver, maturing December 31, 2005 720,869
See Accompanying Notes to Financial Statements
26
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING AND GLASS (CONTINUED)
SMURFIT-STONE CONTAINER CANADA, INC. Ba3 B+
$ 1,589,025 Term Loan, maturing June 30, 2009 $ 1,601,936
STONE CONTAINER CORP.
9,378,477 Term Loan, maturing June 30, 2009 9,454,677
TEKNI-PLEX, INC. B1 B+
2,902,500 Term Loan, maturing June 21, 2008 2,900,686
---------------
81,246,559
---------------
DATA AND INTERNET SERVICES: 0.1%
McLEODUSA, INC. Caa2 NR
1,326,088 Term Loan, maturing May 30, 2008 965,834
---------------
965,834
---------------
DIVERSIFIED NATURAL RESOURCES, PRECIOUS METALS & MINERALS: 0.4%
GEORGIA-PACIFIC CORPORATION Ba2 BB+
1,560,000 Revolver, maturing November 03, 2005 1,531,140
2,500,000 Term Loan, maturing November 03, 2005 2,504,168
---------------
4,035,308
---------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING: 4.9%
BARJAN PRODUCTS, LLC NR NR
4,813,875 (3) Term Loan, maturing May 31, 2006 2,069,966
BRAND SERVICES, INC. B1 B+
3,970,000 Term Loan, maturing October 16, 2009 3,991,505
DRESSER, INC. Ba3 BB-
5,219,136 Term Loan, maturing April 10, 2009 5,280,179
FLOWSERVE CORPORATION Ba3 BB-
1,321,878 Term Loan, maturing June 30, 2006 1,327,249
4,062,900 Term Loan, maturing June 30, 2009 4,095,911
MUELLER GROUP, INC. B1 B+
5,925,000 Term Loan, maturing May 31, 2008 5,947,219
NEPTUNE TECHNOLOGY GROUP, INC. B1 B+
4,625,000 Term Loan, maturing March 31, 2010 4,688,594
NORCROSS SAFETY PRODUCTS, LLC B1 B+
955,288 Term Loan, maturing March 20, 2009 964,244
SPX CORPORATION Ba2 BBB-
14,084,108 Term Loan, maturing September 30, 2009 14,231,991
UNITED PET GROUP NR NR
5,719,119 Term Loan, maturing March 31, 2006 5,733,417
---------------
48,330,275
---------------
DIVERSIFIED/CONGLOMERATE SERVICE: 1.0%
IRON MOUNTAIN, INC. Ba3 BB
1,990,000 Term Loan, maturing February 15, 2008 2,009,723
PRIVATE BUSINESS, INC. NR NR
3,473,894 Term Loan, maturing August 19, 2006 3,421,786
US INVESTIGATIONS SERVICES, LLC B1 BB-
4,364,155 Term Loan, maturing December 31, 2008 4,391,431
---------------
9,822,940
---------------
See Accompanying Notes to Financial Statements
27
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
ECOLOGICAL: 1.0%
ALLIED WASTE NORTH AMERICA, INC. Ba3 BB
$ 2,000,000 Term Loan, maturing January 15, 2010 $ 2,012,500
3,597,321 Term Loan, maturing January 15, 2010 3,621,452
IESI COPRORATION B1 B+
1,000,000 Term Loan, maturing September 30, 2010 1,011,875
WASTE CONNECTIONS, INC. Ba2 BB+
3,000,000 Term Loan, maturing October 22, 2010 3,038,439
---------------
9,684,266
---------------
ELECTRONICS: 1.7%
ACTERNA, LLC NR NR
769,003 Term Loan, maturing October 14, 2008 769,003
DECISION ONE CORPORATION B3 CCC
8,907,032 Term Loan, maturing April 18, 2005 6,502,133
1,766,238 Term Loan, maturing April 18, 2005 1,289,354
KNOWLES ELECTRONICS, INC. B2 CCC+
2,121,197 Term Loan, maturing June 29, 2007 2,110,591
SARCOM, INC. NR NR
1,000,659 Term Loan, maturing June 30, 2007 1,000,659
TRANSACTION NETWORK SERVICES, INC. Ba3 BB-
5,526,836 Term Loan, maturing April 03, 2007 5,513,019
---------------
17,184,759
---------------
FARMING AND AGRICULTURE: 0.3%
SCOTTS COMPANY Ba1 BB
3,000,000 Term Loan, maturing September 30, 2010 3,037,767
---------------
3,037,767
---------------
FINANCE: 0.5%
RENT-A-CENTER, INC. Ba2 BB
4,987,500 Term Loan, maturing May 28, 2009 5,039,714
---------------
5,039,714
---------------
GAMING: 4.4%
(2) ALADDIN GAMING, LLC Caa1 NR
4,596,275 (3) Term Loan, maturing August 26, 2006 3,929,815
12,327,146 (3) Term Loan, maturing February 26, 2008 10,539,710
ALLIANCE GAMING CORPORATION B1 BB-
7,000,000 Term Loan, maturing September 04, 2009 7,061,250
AMERISTAR CASINOS, INC. Ba3 BB-
2,906,770 Term Loan, maturing December 20, 2006 2,923,121
ARGOSY GAMING COMPANY Ba2 BB
4,398,750 Term Loan, maturing July 31, 2008 4,428,991
BOYD GAMING CORPORATION Ba1 BB+
987,500 Term Loan, maturing June 24, 2008 993,055
ISLE OF CAPRI CASINOS, INC. Ba2 BB-
2,569,803 Term Loan, maturing April 26, 2008 2,590,081
See Accompanying Notes to Financial Statements
28
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
GAMING (CONTINUED)
PARK PLACE ENTERTAINMENT CORPORATION Ba1 BB+
$ 4,702,864 Revolver, maturing December 31, 2003 $ 4,692,085
PENN NATIONAL GAMING Ba3 BB-
3,482,501 Term Loan, maturing September 01, 2007 3,505,555
UNITED AUBURN INDIAN COMMUNITY Ba3 BB-
3,293,436 Term Loan, maturing January 24, 2009 3,318,137
---------------
43,981,800
---------------
GROCERY: 0.2%
GIANT EAGLE, INC. Ba2 BB+
1,919,667 Term Loan, maturing August 02, 2009 1,930,864
---------------
1,930,864
---------------
HEALTHCARE, EDUCATION AND CHILDCARE: 11.2%
ALARIS MEDICAL SYSTEMS, INC. B1 BB
2,380,255 Term Loan, maturing June 30, 2009 2,407,628
ALLIANCE IMAGING, INC. B1 B+
887,405 Term Loan, maturing November 02, 2006 872,984
4,217,331 Term Loan, maturing June 10, 2008 4,183,065
APRIA HEALTHCARE GROUP, INC. Ba1 BBB-
4,900,000 Term Loan, maturing July 20, 2008 4,916,846
CAREMARK RX, INC. Ba2 BBB-
2,457,563 Term Loan, maturing March 31, 2006 2,471,386
COMMUNITY HEALTH SYSTEMS, INC. Ba3 BB-
14,859,950 Term Loan, maturing July 16, 2010 15,001,119
2,000,000 Term Loan, maturing January 16, 2011 2,016,876
COVENANT CARE, INC. NR NR
5,126,131 Term Loan, maturing February 15, 2004 5,062,055
DAVITA, INC. Ba3 BB-
4,687,500 Term Loan, maturing March 31, 2007 4,718,752
8,975,758 Term Loan, maturing March 31, 2009 9,035,599
EXPRESS SCRIPTS, INC. Ba1 BBB
3,076,923 Term Loan, maturing March 31, 2008 3,104,120
FISHER SCIENTIFIC INTERNATIONAL, INC. Ba3 BB+
2,705,078 Term Loan, maturing March 31, 2010 2,724,690
3,615,833 Term Loan, maturing March 31, 2010 3,642,048
FRESENIUS MEDICAL CARE HOLDINGS, INC. Ba1 BB+
4,987,500 Term Loan, maturing February 21, 2010 5,042,053
HANGER ORTHOPEDIC B1 B+
2,000,000 Term Loan, maturing September 30, 2009 2,020,000
HCA, INC. Ba1 BBB-
8,228,571 Term Loan, maturing April 30, 2006 8,141,143
IASIS HEALTHCARE CORPORATION B1 B+
1,845,000 Term Loan, maturing September 30, 2010 1,867,140
INSIGHT HEALTH SERVICES CORPORATION B1 B+
200,000 Term Loan, maturing October 07, 2008 200,250
See Accompanying Notes to Financial Statements
29
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
HEALTHCARE, EDUCATION AND CHILDCARE (CONTINUED)
$ 50,000 Term Loan, maturing October 07, 2008 $ 50,063
2,666,667 Term Loan, maturing October 17, 2008 2,670,000
3,316,400 Term Loan, maturing October 17, 2008 3,330,909
KINETIC CONCEPTS, INC. B1 BB-
4,987,500 Term Loan, maturing August 11, 2010 5,038,936
MARINER HEALTH CARE, INC. B1 NR
988,381 Floating Rate Note, maturing May 13, 2009 982,468
MEDCO HEALTH Ba1 BBB
3,000,000 Term Loan, maturing June 30, 2010 3,011,874
OXFORD HEALTH PLANS, INC. Ba2 BB+
3,482,500 Term Loan, maturing April 25, 2009 3,501,581
PACIFICARE HEALTH SYSTEMS, INC. B1 BB
997,500 Term Loan, maturing June 03, 2008 1,006,644
SYBRON DENTAL MANAGEMENT, INC. Ba3 BB-
1,032,265 Term Loan, maturing June 06, 2009 1,038,330
TRIAD HOSPITALS, INC. Ba3 BB
1,547,653 Term Loan, maturing September 30, 2008 1,560,873
VANGUARD HEALTH SYSTEMS, INC. Ba3 B+
5,458,750 Term Loan, maturing January 03, 2010 5,503,102
VICAR OPERATING, INC. B1 B+
5,941,803 Term Loan, maturing June 30, 2009 5,986,366
---------------
111,108,900
---------------
HOME AND OFFICE FURNISHING, HOUSEWARES: 1.0%
GLOBAL IMAGING SYSTEMS, INC. Ba3 BB-
1,496,250 Term Loan, maturing June 25, 2009 1,503,731
HOLMES PRODUCTS CORPORATION B2 B
1,310,712 Term Loan, maturing February 05, 2007 1,310,985
IDENTITY GROUP, INC. NR NR
4,525,000 Term Loan, maturing May 11, 2007 2,850,750
IMPERIAL HOME DECOR GROUP, INC. NR NR
833,725 (3) Term Loan, maturing April 04, 2006 --
SEALY MATTRESS COMPANy B1 B+
1,136,956 Term Loan, maturing December 15, 2004 1,138,661
1,521,057 Term Loan, maturing December 15, 2005 1,523,339
1,944,748 Term Loan, maturing December 15, 2006 1,947,665
---------------
10,275,131
---------------
INSURANCE: 2.8%
CONSECO, INC. Caa2 B-
3,846,154 Term Loan, maturing September 10, 2009 3,850,962
15,384,615 Term Loan, maturing September 10, 2009 15,408,662
1,153,846 Term Loan, maturing September 10, 2010 1,155,288
4,615,385 Term Loan, maturing September 10, 2010 4,622,114
INFINITY PROPERTY & CASUALTY Baa3 BBB
2,966,250 Term Loan, maturing June 30, 2010 2,992,205
---------------
28,029,231
---------------
See Accompanying Notes to Financial Statements
30
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
LEISURE, AMUSEMENT AND ENTERTAINMENT: 7.3%
AMF BOWLING WORLDWIDE, INC. B1 B
$ 1,623,973 Term Loan, maturing February 28, 2008 $ 1,632,093
FITNESS HOLDINGS WORLDWIDE, INC. B1 B
5,521,240 Term Loan, maturing November 02, 2006 5,505,135
5,619,836 Term Loan, maturing November 02, 2007 5,603,442
LODGENET ENTERTAINMENT CORPORATION B1 B+
4,944,608 Term Loan, maturing June 30, 2006 4,958,517
LOEWS CINEPLEX ENTERTAINMENT CORPORATION NR NR
6,400,898 Term Loan, maturing February 29, 2008 6,430,234
NEW JERSEY BASKETBALL, LLC B2 B-
4,000,000 Term Loan, maturing December 08, 2003 3,980,000
PANAVISION, INC. Caa1 CCC
13,913,248 Term Loan, maturing March 31, 2005 13,113,236
PURE FISHING NR NR
2,962,500 Term Loan, maturing December 31, 2009 2,968,055
REGAL CINEMAS, INC. Ba2 BB-
4,947,823 Term Loan, maturing June 30, 2009 5,005,549
SIX FLAGS THEME PARKS, INC. Ba2 B+
10,000,000 Term Loan, maturing June 30, 2009 9,997,320
VIVENDI UNIVERSAL ENTERTAINMENT, LLLP Ba2 BB+
7,000,000 Term Loan, maturing June 30, 2008 7,057,750
XANTERRA PARKS & RESORTS, LLC NR NR
3,252,713 Term Loan, maturing September 30, 2004 3,248,648
3,252,713 Term Loan, maturing September 30, 2005 3,248,648
---------------
72,748,627
---------------
LODGING: 2.6%
EXTENDED STAY AMERICA, INC. Ba3 BB-
5,114,441 Term Loan, maturing January 15, 2008 5,169,421
WYNDHAM INTERNATIONAL, INC. NR NR
5,861,783 Term Loan, maturing June 30, 2004 5,547,932
16,357,004 Term Loan, maturing June 30, 2006 15,167,718
---------------
25,885,071
---------------
MACHINERY: 2.7%
ALLIANCE LAUNDRY HOLDINGS, LLC B1 B
3,502,371 Term Loan, maturing August 02, 2007 3,509,667
ANTHONY CRANE RENTAL, L.P. Caa2 CC
13,861,917 Term Loan, maturing July 20, 2006 9,252,830
MORRIS MATERIAL HANDLING, INC. NR NR
249,574 Term Loan, maturing September 28, 2004 237,095
NATIONAL WATERWORKS, INC. B1 BB-
2,969,388 Term Loan, maturing November 22, 2009 2,995,370
REXNORD CORPORATION B1 B+
6,436,111 Term Loan, maturing November 25, 2009 6,481,363
UNITED RENTALS (NORTH AMERICA), INC. Ba3 BB
1,725,660 Term Loan, maturing August 31, 2007 1,737,389
See Accompanying Notes to Financial Statements
31
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
MACHINERY (CONTINUED)
VUTEK, INC. B1 NR
$ 821,051 Term Loan, maturing July 31, 2005 $ 796,419
1,695,438 Term Loan, maturing July 31, 2007 1,644,575
657,848 Term Loan, maturing December 30, 2007 645,696
---------------
27,300,404
---------------
MINING, STEEL, IRON AND NON-PRECIOUS METALS: 0.9%
PEABODY ENERGY CORPORATION Ba1 BB+
8,955,000 Term Loan, maturing March 21, 2010 9,056,675
---------------
9,056,675
---------------
OIL AND GAS: 1.6%
CITGO PETROLEUM CORPORATION Ba2 BB+
2,500,000 Term Loan, maturing February 27, 2006 2,600,000
PACIFIC ENERGY GROUP, LLC Ba2 BBB-
4,000,000 Term Loan, maturing July 26, 2009 4,033,752
W-H ENERGY SERVICES, INC. B2 B+
3,412,547 Term Loan, maturing April 16, 2007 3,446,672
3,491,250 Term Loan, maturing April 16, 2007 3,480,340
WILLIAMS PRODUCTION RMT COMPANY B1 BB
2,493,750 Term Loan, maturing May 30, 2007 2,528,039
---------------
16,088,803
---------------
OTHER BROADCASTING AND ENTERTAINMENT: 3.6%
AMERICAN MOVIE CLASSICS Ba1 BBB-
997,500 Term Loan, maturing March 14, 2009 1,000,201
DIRECTV HOLDINGS, LLC Ba2 BB
8,500,000 Term Loan, maturing March 06, 2010 8,556,848
LIBERTY MEDIA CORPORATION Baa3 BBB-
15,000,000 Floating Rate Note, maturing
September 17, 2006 15,153,570
PEGASUS MEDIA & COMMUNICATIONS, INC. B3 B-
1,651,507 Term Loan, maturing April 30, 2005 1,604,026
5,000,000 Term Loan, maturing July 31, 2006 5,075,000
RAINBOW MEDIA GROUP Ba2 BB+
3,990,000 Term Loan, maturing March 14, 2009 4,000,805
---------------
35,390,450
---------------
OTHER TELECOMMUNICATIONS: 2.3%
CINCINNATI BELL, INC. B1 B+
374,348 Revolver, maturing November 09, 2004 373,119
18,000,000 Term Loan, maturing June 30, 2008 18,205,308
GCI HOLDINGS, INC. Ba3 BB+
2,928,286 Term Loan, maturing October 31, 2007 2,960,315
INTERA GROUP, INC. NR NR
2,685,175 Term Loan, maturing December 31, 2005 1,235,181
1,741,297 (3) Term Loan, maturing December 31, 2005 --
909,384 (3) Term Loan, maturing December 31, 2005 --
---------------
22,773,923
---------------
See Accompanying Notes to Financial Statements
32
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
PERSONAL AND NON DURABLE CONSUMER PRODUCTS: 4.4%
ARMKEL, LLC Ba3 BB-
$ 1,532,087 Term Loan, maturing March 28, 2009 $ 1,546,450
BUHRMANN U.S., INC. Ba3 B+
1,315,518 Term Loan, maturing October 26, 2005 1,295,785
634,034 Term Loan, maturing October 26, 2007 636,808
CHURCH & DWIGHT COMPANY, INC. Ba2 BB
1,380,000 Term Loan, maturing September 30, 2007 1,397,768
JARDEN CORPORATION Ba3 B+
2,000,000 Term Loan, maturing April 24, 2008 2,015,626
JOSTENS, INC. Ba3 B+
4,500,000 Term Loan, maturing July 29, 2010 4,544,888
NORWOOD PROMOTIONAL PRODUCTS, INC. NR NR
12,305,290 Term Loan, maturing February 01, 2005 12,305,290
7,731,328 (3) Term Loan, maturing February 01, 2005 3,440,441
1,998,167 (3) Term Loan, maturing February 01, 2005 --
PAINT SUNDRY BRANDS CORPORATION B2 B+
664,162 Term Loan, maturing August 11, 2005 660,842
650,472 Term Loan, maturing August 11, 2006 647,219
PLAYTEX PRODUCTS, INC. B2 B
11,161,766 Term Loan, maturing May 31, 2009 11,159,444
RAYOVAC CORPORATION B1 B+
4,450,000 Term Loan, maturing September 30, 2009 4,467,613
---------------
44,118,174
---------------
PERSONAL, FOOD AND MISCELLANEOUS SERVICES: 3.3%
AFC ENTERPRISES, INC. B1 B
1,535,827 Term Loan, maturing May 23, 2009 1,539,282
ALDERWOODS GROUP, INC. B1 BB-
2,254,659 Term Loan, maturing September 29, 2008 2,287,775
COINMACH CORPORATION B1 BB-
4,900,000 Term Loan, maturing July 25, 2009 4,927,053
DOMINO'S, INC. B1 B+
6,173,918 Term Loan, maturing June 25, 2010 6,224,081
GATE GOURMET BORROWER, LLC B1 BB
1,000,000 Term Loan, maturing December 31, 2008 985,625
1,000,000 Term Loan, maturing December 31, 2009 982,500
OTIS SPUNKMEYER, INC. B1 B+
6,676,100 Term Loan, maturing February 20, 2009 6,720,609
PAPA GINO'S, INC. NR NR
1,585,227 Term Loan, maturing August 31, 2006 1,565,683
4,593,750 Term Loan, maturing August 31, 2007 4,567,014
PERSONAL, FOOD AND MISCELLANEOUS SERVICES (CONTINUED)
RELIZON COMPANY Ba3 BB-
40 Revolver, maturing August 04, 2006 36
See Accompanying Notes to Financial Statements
33
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
WEIGHT WATCHES INTERNATIONAL, INC. Ba1 BB
$ 340,458 Term Loan, maturing December 31, 2009 $ 343,331
2,652,042 Term Loan, maturing December 31, 2009 2,673,921
---------------
32,816,910
---------------
PRINTING AND PUBLISHING: 10.4%
ADAMS OUTDOOR ADVERTISING, L.P. B1 B+
1,765,000 Term Loan, maturing February 08, 2008 1,774,192
AMERICAN MEDIA OPERATIONS, INC. Ba3 B+
3,969,466 Term Loan, maturing April 01, 2007 4,002,214
CANWEST MEDIA, INC. Ba3 B+
9,948,718 Term Loan, maturing May 15, 2009 10,057,537
DEX MEDIA EAST, LLC Ba3 BB-
4,859,535 Term Loan, maturing November 08, 2008 4,889,908
4,693,600 Term Loan, maturing May 08, 2009 4,739,072
DEX MEDIA WEST, LLC Ba3 BB-
1,914,815 Term Loan, maturing September 09, 2009 1,929,574
26,807,407 Term Loan, maturing March 09, 2010 27,103,415
LAMAR MEDIA CORPORATION Ba2 BB-
15,000,000 Term Loan, maturing June 30, 2010 15,153,120
MOORE CORPORATION Ba2 BB+
3,990,000 Term Loan, maturing March 15, 2010 4,005,377
PRIMEDIA, INC. B3 B
709,532 Revolver, maturing June 30, 2008 658,978
6,527,706 Term Loan, maturing June 30, 2009 6,348,194
R.H. DONNELLEY, INC. Ba3 BB
7,940,000 Term Loan, maturing June 30, 2010 8,048,627
READER'S DIGEST ASSOCIATIONS, INC. Ba1 BB
8,244,456 Term Loan, maturing May 20, 2008 8,265,801
1,874,354 Term Loan, maturing May 21, 2007 1,874,941
TRANSWESTERN PUBLISHING COMPANY Ba3 BB-
2,307,000 Term Loan, maturing June 27, 2008 2,324,662
ZIFF DAVIS MEDIA, INC. B3 CCC
2,609,544 Term Loan, maturing March 31, 2007 2,495,377
---------------
103,670,989
---------------
RADIO AND TV BROADCASTING: 4.7%
BLOCK COMMUNICATIONS, INC. Ba2 BB-
2,819,660 Term Loan, maturing November 15, 2009 2,846,094
CITADEL BROADCASTING COMPANY Ba2 B+
1,820,000 Revolver, maturing April 02, 2008 1,765,400
483,778 Term Loan, maturing June 26, 2008 485,290
34
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
RADIO AND TV BROADCASTING (CONTINUED)
CUMULUS MEDIA, INC. Ba3 B+
$ 2,985,000 Term Loan, maturing March 28, 2010 $ 3,022,313
EMMIS OPERATING COMPANY Ba2 B+
10,982,904 Term Loan, maturing August 31, 2009 11,120,190
FISHER BROADCASTING, INC. Ba3 B+
1,985,000 Term Loan, maturing February 28, 2010 1,988,722
GRAY TELEVISION, INC. Ba3 B+
4,000,000 Term Loan, maturing December 31, 2010 4,043,500
LIN TELEVISION CORPORATION Ba2 BB
2,097,143 Term Loan, maturing December 31, 2007 2,117,366
PAXSON COMMUNICATIONS CORPORATION B1 BB-
4,887,500 Term Loan, maturing June 30, 2006 4,908,883
SINCLAIR BROADCAST GROUP, INC. Ba2 BB
4,859,000 Term Loan, maturing December 31, 2009 4,902,386
2,915,400 Term Loan, maturing December 31, 2009 2,938,306
SPANISH BROADCASTING SYSTEMS B1 B+
2,000,000 Term Loan, maturing October 30, 2009 2,020,000
SUSQUEHANNA MEDIA COMPANY Ba1 BB-
2,462,500 Term Loan, maturing June 30, 2008 2,487,125
TELEVICENTRO OF PUERTO RICO, LLC Ba2 BB
1,862,857 Term Loan, maturing December 31, 2007 1,880,821
---------------
46,526,396
---------------
RETAIL STORES: 2.9%
ADVANCE STORES COMPANY, INC. Ba3 BB
3,348,233 Term Loan, maturing November 30, 2007 3,385,900
3,348,233 Term Loan, maturing November 30, 2007 3,374,392
CH OPERATING, LLC B2 B+
1,919,238 Term Loan, maturing June 21, 2007 1,919,238
CSK AUTO, INC. Ba3 BB-
1,500,000 Term Loan, maturing February 15, 2006 1,514,532
PANTRY, INC. B1 B+
5,901,185 Term Loan, maturing March 31, 2007 5,974,950
PETCO ANIMAL SUPPLIES, INC. Ba3 BB-
2,553,010 Term Loan, maturing October 26, 2008 2,584,923
RITE AID CORPORATION B1 BB
8,000,000 Term Loan, maturing April 30, 2008 8,125,832
TRAVELCENTERS OF AMERICA, INC. Ba3 BB
2,370,452 Term Loan, maturing November 14, 2008 2,387,491
---------------
29,267,258
---------------
SATELLITE: 1.3%
ECHOSTAR DBS CORPORATION Ba3 BB-
12,000,000 Floating Rate Note, maturing
October 01, 2008 12,390,000
PANAMSAT CORPORATION Ba2 BB
1,000,000 Term Loan, maturing September 30, 2010 1,011,042
---------------
13,401,042
---------------
See Accompanying Notes to Financial Statements
35
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT: 6.1%
AMERICAN TOWER, L.P. B1 B
$ 10,064,522 Term Loan, maturing June 30, 2007 $ 10,077,102
1,071,567 Term Loan, maturing December 31, 2007 1,078,446
CROWN CASTLE OPERATING COMPANY B1 B-
4,066,258 Term Loan, maturing September 15, 2007 4,082,372
17,435,000 Term Loan, maturing September 30, 2010 17,628,964
PINNACLE TOWERS, INC. B1 NR
10,457,423 Term Loan, maturing October 31, 2005 10,450,887
SPECTRASITE COMMUNICATIONS, INC. B1 B+
10,281,954 Term Loan, maturing December 31, 2007 10,420,761
4,905,408 Term Loan, maturing December 31, 2007 4,922,783
TRIPOINT GLOBAL COMMUNICATIONS, INC. NR NR
2,331,867 Term Loan, maturing May 31, 2006 2,238,593
---------------
60,899,908
---------------
TEXTILES AND LEATHER: 2.4%
(2) GALEY & LORD, INC. Caa2 NR
2,692,043 Term Loan, maturing April 02, 2005 1,009,516
1,927,515 Term Loan, maturing April 01, 2006 722,818
LEVI STRAUSS & COMPANY Caa2 BB-
2,000,000 Term Loan, maturing September 29, 2009 2,050,000
MALDEN MILLS INDUSTRIES, INC. NR NR
893,051 Term Loan, maturing October 01, 2008 602,985
3,125,677 Term Loan, maturing October 01, 2008 3,125,677
POLYMER GROUP, INC. NR NR
8,843,705 Term Loan, maturing December 31, 2006 8,832,650
TARGUS GROUP, INC. NR NR
6,049,003 Term Loan, maturing August 31, 2006 5,353,368
WILLIAM CARTER COMPANY Ba3 BB
1,752,511 Term Loan, maturing September 08, 2008 1,763,464
---------------
23,460,478
---------------
UTILITIES: 2.8%
CALPINE CONSTRUCTION FINANCE COMPANY, L.P. NR B+
2,000,000 Term Loan, maturing February 26, 2009 2,064,166
CALPINE CORPORATION B2 B
8,982,500 Term Loan, maturing July 16, 2007 8,513,164
9,476,250 Term Loan, maturing July 16, 2007 9,310,569
CENTERPOINT ENERGY, INC. Ba1 BBB-
3,500,000 Term Loan, maturing October 07, 2006 3,537,188
MICHIGAN ELECTRIC TRANSMISSION COMPANY Baa2 BB+
2,962,500 Term Loan, maturing May 01, 2007 2,977,929
PIKE ELECTRIC, INC. Ba3 BB-
1,611,765 Term Loan, maturing April 18, 2010 1,623,350
---------------
28,026,366
---------------
TOTAL SENIOR LOANS
(COST $1,593,929,812) $ 1,580,484,387
---------------
See Accompanying Notes to Financial Statements
36
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
BANK LOAN
RATINGS+
(UNAUDITED)
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
---------------------------------------------------------------------------------------------------------
OTHER CORPORATE DEBT: 1.5%
DATA AND INTERNET SERVICES: 0.1%
ARCH WIRELESS HOLDINGS, INC. Ca NR
$ 739,789 Subordinated Note, maturing May 15, 2009 $ 865,553
FINANCE: 1.0%
VALUE ASSET MANAGEMENT, INC. B3 B
10,000,000 Senior Subordinated Bridge Note,
maturing August 31, 2005 9,675,000
HEALTHCARE, EDUCATION AND CHILDCARE: 0.0%
BLOCK VISION HOLDINGS CORPORATION NR NR
13,365 Junior Term Loan, maturing
January 31, 2006 --
HOME AND OFFICE FURNISHING, 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 CORPORATION 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 01, 2011 1,332,583
---------------
TOTAL OTHER CORPORATE DEBT
(COST $14,232,242) 14,517,978
---------------
SECURITY DESCRIPTION VALUE
---------------------------------------------------------------------------------------------------------
EQUITIES AND OTHER ASSETS: 4.2%
(@) Acterna, LLC (102,534 Common Shares) 1,304,647
(@), (R) Acterna, Inc. -- Contingent Right --
(1), (@), (R) Allied Digital Technologies Corporation
(Residual Interest in Bankruptcy Estate) 186,961
(@), (R) AM Cosmetics Corporation (Liquidation Interest) 50
(@) Arch Wireless Holdings, Inc. (77,124 Common Shares) 1,347,356
(@), (R) Block Vision Holdings Corporation (571 Common Shares) --
(2), (@), (R) Boston Chicken, Inc. (Residual Interest in
Boston Chicken Plan Trust) 6,990,635
(@), (R) Cedar Chemical (Liquidation Interest) --
(@), (R) Covenant Care, Inc. (Warrants for 19,000 Common Shares,
Expires January 13, 2005) --
(@), (R) Covenant Care, Inc. (Warrants for 26,901 Common Shares,
Expires March 31, 2013) --
(@) Dan River, Inc. (127,306 Common Shares) 98,026
(@), (R) Decision One Corporation (350,059 Common Shares) --
(2), (@), (R) Electro Mechanical Solutions (Residual Interest in
Bankruptcy Estate) 4,387
(@), (R) Enginen Realty (1,025 Common Shares) --
See Accompanying Notes to Financial Statements
37
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
SECURITY DESCRIPTION VALUE
---------------------------------------------------------------------------------------------------------
(@), (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. (40,605 Common Shares) 1,275,403
(@) Genesis Health Ventures, Inc. (2,223 Preferred Shares) 267,872
(2), (@), (R) Grand Union Company (Residual Interest in Bankruptcy Estate) 90,339
(@) Hayes Lemmerz (73,835 Common Shares) 1,188,744
(@) Hayes Lemmerz (246 Preferred Shares) 3,961
(@), (R) Holmes Products Corporation (Warrants for 13,848,.56
Common Shares, Expires May 7, 2006) --
(@) HQ Global (1,523 Common Shares) --
HQ Global (2,461,860 Preferred Shares) 2,009,926
(2), (@), (R) Humphreys, Inc. (Residual Interest in Bankruptcy Estate) --
(@), (R) IHDG Realty (300,141 Common Shares) 1
(@), (R) Imperial Home Decor Group, Inc. (300,141 Common Shares) 1
(2), (@), (R) Insilco Technologies (Residual Interest in Bankruptcy Estate) 43,482
(@), (R) Intera Group, Inc. (864 Common Shares) --
(2), (@), (R) IT Group, Inc. (Residual Interest in Bankruptcy Estate) 366,989
(2), (@), (R) Kevco, Inc. (Residual Interest in Bankruptcy Estate) 147,443
(@), (R) Malden Mills Industries, Inc. (530,576 Common Shares) --
(@), (R) Malden Mills Industries, Inc. (1,733,907 Preferred Shares) --
(@) Microcell Telecommunications, Inc. (98,449 1st Preferred
Non-Voting Shares) 1,381,800
(@) Microcell Telecommunications, Inc. (53,271 2nd Preferred
Non-Voting Shares) 748,105
(@), (R) Morris Material Handling, Inc. (481,373 Common Shares) 938,677
(@), (R) MP Holdings, Inc. (590 Common Shares) 6
(@), (R) Murray's Discount Auto Stores, Inc. (Interest in Undistributed
Escrow Account) 510,279
(@), (R) Neoplan USA Corporation (17,348 Common Shares) --
(@), (R) Neoplan USA Corporation (1,814,180 Series B Preferred Shares) --
(@), (R) Neoplan USA Corporation (1,084,000 Series C Preferred Shares) 428,603
(@), (R) Neoplan USA Corporation (3,524,300 Series D Preferred Shares) 3,524,300
(@), (R) New Piper Aircraft (Residual Interest in Litigation Proceeds) --
(@), (R) New World Restaurant Group, Inc. (Warrants for 4,489
Common Shares, Expires June 15, 2006) 61,589
(@), (R) Safelite Glass Corporation (660,808 Common Shares) 7,797,534
(@), (R) Safelite Realty (44,605 Common Shares) 1
(@), (R) Sarcom, Inc. (462,984 Common Shares) --
(@), (R) Sarcom, Inc. (4,015 Preferred Shares) 935,019
(@), (R) Scientific Games Corporation (48,930 Non-Voting Common Shares) 795,601
(@), (R) Soho Publishing (17,582 Common Shares) 176
(@), (R) Stellex Aerostructures, Inc. (11,130 Common Shares) --
(@), (R) Targus Group, Inc. (Warrants for 66,824 Common Shares,
Expires December 6, 2012) --
See Accompanying Notes to Financial Statements
38
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of November 30, 2003 (Unaudited) (Continued)
SECURITY DESCRIPTION VALUE
---------------------------------------------------------------------------------------------------------
(@), (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) 919,885
(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 $48,123,649) 41,466,238
---------------
TOTAL INVESTMENTS
(COST $1,656,285,703)(5) 164.4% $ 1,636,468,603
PREFERRED SHARES AND LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS, NET (64.4) (640,874,807)
----- ---------------
NET ASSETS 100.0% $ 995,593,796
===== ===============
----------
(@) 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 Baa3 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 $1,654,889,703
and net unrealized depreciation consists of the following:
Gross Unrealized Appreciation $ 25,025,196
Gross Unrealized Depreciation (43,446,296)
--------------
Net Unrealized Depreciation $ (18,421,100)
==============
See Accompanying Notes to Financial Statements
39
ING Prime Rate Trust
SHAREHOLDER MEETING INFORMATION (Unaudited)
A special meeting of shareholders of the ING Prime Rate Trust held August 19,
2003, at the offices of ING Funds, 7337 East Doubletree Ranch Road, Scottsdale,
AZ 85258.
A brief description of each matter voted upon as well as the results are
outlined below:
ING PRIME RATE TRUST, COMMON SHARES
1. To elect nine members of the Board of Trustees to represent the interests
of the holders of the Common Shares of the Trust until the election and
qualification of their successors.
ING PRIME RATE TRUST, PREFERRED SHARES
2. To elect two members of the Board of Trustees to represent the interests of
the holders of Auction Rate Cumulative Preferred Shares -- Series M, T, W,
TH, and F of the Trust -- until the election and qualification of their
successors.
ING PRIME RATE TRUST
3. To ratify selection of KPMG LLP as the current independent auditor of the
Trust.
4. To approve a Sub-Advisory Agreement between ING Investments, LLC and Aeltus
Investment Management, Inc., with no change in the advisor, the portfolio
managers, or the overall management fee paid by the Trust.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) or postponement(s) thereof.
SHARES VOTED SHARES BROKER TOTAL SHARES
PROPOSAL SHARES VOTED FOR AGAINST OR WITHHELD ABSTAINED NON-VOTE VOTED
--------------------- ---------------- ------------------- ----------- -------- ------------
Common Paul S. Doherty 114,685,160 2,423,071 -- -- 117,108,231
Shares J. Michael Earley 114,782,052 2,326,179 -- -- 117,108,231
Trustees R. Barbara Gitenstein 114,708,163 2,400,068 -- -- 117,108,231
Thomas J. McInerney 114,686,460 2,421,771 -- -- 117,108,231
David W.C. Putnam 114,770,313 2,337,918 -- -- 117,108,231
Blaine E. Rieke 114,692,561 2,415,670 -- -- 117,108,231
John G. Turner 114,800,060 2,308,171 -- -- 117,108,231
Roger B. Vincent 114,776,458 2,331,773 -- -- 117,108,231
Richard A. Wedemeyer 114,695,507 2,412,724 -- -- 117,108,231
Preferred Shares Walter H. May 17,595 62 -- -- 17,657
Trustees Jock Patton 17,580 77 -- -- 17,657
KPMG LLP 3 114,713,065 1,205,046 1,207,777 -- 117,125,888
Sub-Advisory
Agreement 4 113,175,355 2,221,470 1,729,063 -- 117,125,888
Such other
business 5 111,634,959 2,906,152 2,584,777 -- 117,125,888
40
ING Prime Rate Trust
ADDITIONAL 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 December 31, 2003
was 7,667 which does not include approximately 50,098 beneficial owners of
shares held in the name of brokers of other nominees.
41
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 Trustees 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.
NUMBER OF
PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH AND LENGTH OF DURING THE OVERSEEN BY HELD BY
AND AGE THE REGISTRANT(S) TIME SERVED(1) PAST FIVE YEARS TRUSTEE TRUSTEE
------------- ----------------- -------------- --------------- ------------- --------------
NON-INTERESTED TRUSTEES:
Paul S. Doherty(2) Trustee November Mr. Doherty is President 116 None
7337 E. Doubletree Ranch Rd. 1999 - present and Partner, Doherty,
Scottsdale, Arizona 85258 Wallace, Pillsbury and
Born: 1934 Murphy, P.C., Attorneys
(1996 - Present); and
Trustee of each of the
funds managed by
Northstar Investment
Management Corporation
(1993 - 1999).
J. Michael Earley(3) Trustee February President and Chief 116 None
7337 E. Doubletree Ranch Rd. 2002 - present Executive Officer,
Scottsdale, Arizona 85258 Bankers Trust Company,
Born: 1945 N.A. (1992 - Present).
R. Barbara Gitenstein(2) Trustee February President, College of 116 None
7337 E. Doubletree Ranch Rd. 2002 - present New Jersey (1999 -
Scottsdale, Arizona 85258 Present).
Born: 1948
Walter H. May(2) Trustee November Retired. Formerly, 116 Best Prep
7337 E. Doubletree Ranch Rd. 1999 - present Managing Director and Charity
Scottsdale, Arizona 85258 Director of Marketing, (1991 -
Born: 1936 Piper Jaffray, Inc.; Present).
Trustee of each of the
funds managed by
Northstar Investment
Management Corporation
(1996 - 1999).
Jock Patton(2) Trustee August Private Investor (June 116 Director,
7337 E. Doubletree Ranch Rd. 1995 - present 1997 - Present). Hypercom, Inc.
Scottsdale, Arizona 85258 Formerly Director and (January 1999
Born: 1945 Chief Executive Officer, - Present); JDA
Rainbow Multimedia Software Group,
Group, Inc. (January Inc. (January
1999 - December 2001). 1999 - Present).
42
ING Prime Rate Trust
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
NUMBER OF
PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH AND LENGTH OF DURING THE OVERSEEN BY HELD BY
AND AGE THE REGISTRANT(S) TIME SERVED(1) PAST FIVE YEARS TRUSTEE TRUSTEE
------- ----------------- -------------- --------------- ------- -------
David W.C. Putnam(3) Trustee November President and Director, 116 Director of F.L.
7337 E. Doubletree Ranch Rd. 1999 - present F.L. Putnam Securities Putnam Securities
Scottsdale, Arizona 85258 Company, Inc. and its company, Inc. (June
Born: 1939 affiliates; President, 1978 to Present);
Secretary and Trustee, F.L. Putnam
The Principled Equity Investment Managment
Market Fund. Formerly, Company (December
Trustee, Trust Realty 2001 to Present);
Trust (December Corp.; Asian Amerrican Bank
Anchor Investment Trust; and Trust company
Bow 2000 - Present); (June 1992 to
Ridge Mining Company and Persent); and Notre
each of the F.L. Putnam Dame Health Care
funds managed by Center (1991 to
Northstar Investment Present). He is also
Foundation Management a Trustee of The
Corporation (1994 - Principiled Equity
1999). Market Fund
(November 1996 to
Present); Anchor
International Bond
(December 2000 -
Present);
Progressive Capital
Accumulation Trust
(August 1998 -
Present); Principled
Equity Market Fund
(November 1996 -
Present), Mercy
Endowment Foundation
(1995 - Present);
Director, F.L.
Putnam Investment
Management Company
(December 2001 -
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 Trustee February General Partner, 116 Morgan Chase Trust
7337 E. Doubletree Ranch Rd. 2001 - present Huntington Partners Co. (January 1998 -
Scottsdale, Arizona 85258 (January 1997 - Present).
Born: 1933 Present). Chairman of
the Board and Trustee of
each of the funds
managed by ING
Investment Management
Co. LLC (November 1998 -
February 2001).
Roger B. Vincent Trustee February President, Springwell 116 Director, AmeriGas
7337 E. Doubletree Ranch Rd. 2002 - present Corporation (1989 - Propane, Inc. (1998
Scottsdale, Arizona 85258 Present). Formerly, - Present).
Born: 1945 Director Tatham
Offshore, Inc. (1996 -
2000).
Richard A. Wedemeyer(3) Trustee February Retired. Mr. Wedemeyer 116 Touchstone
7337 E. Doubletree Ranch Rd. 2001 - present was formerly Vice Consulting Group
Scottsdale, Arizona 85258 President - Finance and (1997 - Present).
Born: 1936 Administration, Channel
Corporation (June 1996 -
April 2002). Formerly
Trustee, First Choice
Funds (1997 - 2001); and
of each of the funds
managed by ING
Investment Management
Co. LLC (1998 - 2001).
43
ING Prime Rate Trust
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
NUMBER OF
PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH AND LENGTH OF DURING THE OVERSEEN BY HELD BY
AND AGE THE REGISTRANT(S) TIME SERVED(1) PAST FIVE YEARS TRUSTEE TRUSTEE
------------- ----------------- -------------- --------------- ------------- -------------
INTERESTED TRUSTEES:
Thomas J. McInerney(4) Trustee February Chief Executive Officer, 170 Director,
7337 E. Doubletree Ranch Rd. 2001 - present ING U.S. Financial Hemisphere, Inc.
Scottsdale, Arizona 85258 Services (September 2001 (May 2003 -
Born: 1956 to present); General Present). Director,
Manager and Chief Equitable Life
Executive Officer, ING Insurance Co.,
U.S. Worksite Financial Golden American Life
Services (December 2000 Insurance Co., Life
to present); Member, ING Insurance Company of
Americas Executive Georgia, Midwestern
Committee (2001 to United Life
present); President, Insurance Co.,
Chief Executive Officer ReliaStar Life
and Director of Northern Insurance Co.,
Life Insurance Company Security Life of
(2001 to present), ING Denver, Security
Aeltus Holding Company, Connecticut Life
Inc. (2000 to present), Insurance Co.,
ING Retail Holding Southland Life
Company (1998 to Insurance Co., USG
present). Formerly, ING Annuity and Life
Life Insurance and Company, and United
Annuity Company (1997 to Life and Annuity
November 2002), ING Insurance Co. Inc.
Retirement Holdings, (March 2001 -
Inc. (1997 to March Present); Trustee,
2003); General Manager Ameribest Life
and Chief Executive Insurance Co.,
Officer, ING Worksite (2001-2003);
Division (December 2000 Trustee, First
to October 2001), Columbine Life
President, ING-SCI, Inc. Insurance Co.,
(August 1997 to December (2001-2002); Member
2000); President, Aetna of the Board,
Financial Services National Commission
(August 1997 to December on Retirement
2000); and has held a Policy,
variety of line and Competitiveness and
corporate staff Technology of
positions since 1978. Connecticut,
Connecticut Business
and Industry
Association,
Bushnell;
Connecticut Forum;
Metro Hartford
Chamber of Commerce;
and is Chairman,
Concerned Citizens
for Effective
Government.
John G. Turner(5) Trustee September Chairman, Hillcrest 116 Director, Hormel
7337 E. Doubletree Ranch Rd. 2000 - present Capital Partners (May Foods Corporation
Scottsdale, Arizona 85258 2002 - Present); (March 2000 -
Born: 1939 President, Turner Present); Shopko
Investment Company Stores, Inc. (August
(January 2002 - 1999 - Present); and
Present). Mr. Turner was M.A. Mortenson
formerly Vice Chairman Company (March 2002
of ING Americas (2000 - - Present).
2002); Chairman and
Chief Executive Officer
of ReliaStar Financial
Corp.
----------
(1) Trustees serve until their successors are duly elected and qualified,
subject to the Board's retirement policy.
(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. Financial Services and ING U.S.
Worksite Financial Services, both affiliates 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
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) HELD AND LENGTH OF DURING THE
AND AGE WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- ---------------- -------------- ---------------
OFFICERS:
James M. Hennessy President and Chief February 2001 - present President and Chief Executive Officer of
7337 E. Doubletree Ranch Rd. Executive Officer ING Capital Corporation, LLC, ING Funds
Scottsdale, Arizona 85258 Services, LLC, ING Advisors, Inc., ING
Born: 1949 Chief Operating Officer June 2000 - present Investments, LLC, Lexington Funds
Distributor, Inc., Express America T.C.
Senior Executive Vice June 2000 - February 2001 Inc. and EAMC Liquidation Corp. (since
President December 2001); Executive Vice President
April 1995 - February 2001 and Chief Operating Officer of ING Funds
Secretary Distributor, LLC (since June 2000).
Michael J. Roland Executive Vice President February 2002 - present Executive Vice President, Chief Financial
7337 E. Doubletree Ranch Rd. and Assistant Secretary Officer and Treasurer of ING Funds
Scottsdale, Arizona 85258 Services, LLC, ING Funds Distributor, LLC,
Born: 1958 Chief Financial Officer June 1998 - present ING Advisors, Inc., ING Investments, LLC
(December 2001 to present), Lexington
Senior Vice President June 1998 - February Funds 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); and Senior Vice President, ING
Funds Services, LLC, ING Investments, LLC,
and ING Funds Distributor, LLC (June 1998
to December 2001).
Robert S. Naka Senior Vice President November 1999 - present Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. Secretary of ING Funds Services, LLC, ING
Scottsdale, Arizona 85258 Assistant Secretary July 1996 - present Funds Distributor, LLC, ING Advisors,
Born: 1963 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), and ING
Funds Services, LLC (February 1997 to
August 1999).
Daniel A. Norman Senior Vice President April 1995 - present Senior Vice President, ING Investments,
7337 E. Doubletree Ranch Rd. LLC (since December 1994); ING Funds
Scottsdale, Arizona 85258 Treasurer June 1997 - present Distributor, LLC (since December 1995);
Born: 1957 has served as an officer of other
affiliates of ING since February 1992.
Jeffrey A. Bakalar Senior Vice President November 1999 - present Senior Vice President, ING Investments,
7337 E. Doubletree Ranch Rd. LLC (since November 1999). Formerly Vice
Scottsdale, Arizona 85258 President and Assistant Portfolio Manager,
Born: 1959 ING Investments, LLC (February 1998 -
November 1999).
45
ING Prime Rate Trust
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) HELD AND LENGTH OF DURING THE
AND AGE WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------- -------------- -------------- ---------------
Elliot Rosen Senior Vice President May 2002 - present Senior Vice President, ING Investments,
7337 E. Doubletree Ranch Rd. LLC (since February 1999). Formerly,
Scottsdale, Arizona 85258 Senior Vice President IPS-Sendero (May
Born: 1953 1997 - February 1999).
William H. Rivoir III Senior Vice President and February 2001 - present Senior Vice President and Secretary of ING
7337 E. Doubletree Ranch Rd. Assistant Secretary Capital Corporation, LLC and ING Funds
Scottsdale, Arizona 85258 Services, LLC (since February 2001). ING
Born: 1951 Funds Distributor, LLC, ING Advisors,
Inc., ING Investments, LLC, and 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 Quantitative
Management, Inc. (October 2001 to October
2002) and 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).
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 and February 2002 - present Senior Vice President and Chief Credit
7337 E. Doubletree Ranch Rd. Chief Credit Officer Officer of Senior Loans of ING
Scottsdale, Arizona 85258 Investments, LLC (since August 1999).
Born: 1955 Formerly, held a series of positions with
Standard Chartered Bank in the credit
approval and problem loan management
functions (August 1992 - June 1999).
Kimberly A. Anderson Vice President February 2001 - present Vice President and Assistant Secretary of
7337 E. Doubletree Ranch Rd. ING Funds Services, LLC, ING Funds
Scottsdale, Arizona 85258 Secretary February 2001 - August Distributor, LLC, ING Advisors, Inc., ING
Born: 1964 2003 Investments, LLC (since October 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.
46
ING Prime Rate Trust
TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) HELD AND LENGTH OF DURING THE
AND AGE WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS
------------- ---------------- -------------- ----------------
Robyn L. Ichilov Vice President November 1997 - present Vice President of ING Funds Services, LLC
7337 E. Doubletree Ranch Rd. (October 2001 to present) and ING
Scottsdale, Arizona 85258 Investments, LLC (August 1997 to present);
Born: 1967 Accounting Manager, ING Investments, LLC
(November 1995 to present).
J. David Greenwald Vice President August 2003 - present Vice President of Mutual Fund Compliance
7337 E. Doubletree Ranch Rd. of ING Funds Services, LLC (May 2003 -
Scottsdale, Arizona 85258 Present). Formerly Assistant Treasurer and
Born: 1957 Director of Mutual Fund Compliance and
Operations of American Skandia, A
Prudential Financial Company (October 1996
- May 2003).
Lauren D. Bensinger Vice President March 2003 - present Vice President and Chief Compliance
7337 E. Doubletree Ranch Rd. Officer, ING Funds Distributor, LLC. (July
Scottsdale, Arizona 85258 1995 to Present); Vice President (February
Born: 1957 1996 to Present) and Chief Compliance
Officer (October 2001 to Present) ING
Investments, LLC; Vice President and Chief
Compliance Off
Huey P. Falgout Secretary August 2003 - present Counsel, ING U.S. Financial Services
7337 E. Doubletree Ranch Rd. (November 2002 - Present). Formerly,
Scottsdale, Arizona 85258 Associate General Counsel of AIG American
Born: 1963 General (January 1999 - November 2002) and
Associate General Counsel of Van Kampen,
Inc. (April 1992 - January 1999).
Todd Modic Vice President August 2003 - present Vice President of Financial Reporting-
7337 E. Doubletree Ranch Rd. Fund Accounting of ING Funds Services, LLC
Scottsdale, Arizona 85258 Assistant Vice President February 2002 - August (September 2002 to present). Director of
Born: 1967 2003 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 President and February 2003 - present Assistant Vice President and Assistant
7337 E. Doubletree Ranch Rd. Assistant Secretary Secretary, ING Funds Services, LLC
Scottsdale, Arizona 85258 (December 2002 - Present); and has held
Born: 1976 various other positions with ING Funds
Services, LLC for more than the last five
years.
Maria M. Anderson Assistant Vice President August 2001 - present Assistant Vice President of ING Funds
7337 E. Doubletree Ranch Rd. Services, LLC (since October 2001).
Scottsdale, Arizona 85258 Formerly, Manager of Fund Accounting and
Born: 1958 Fund Compliance, ING Investments, LLC
(September 1999 to November 2001); and
Section Manager of Fund Accounting, Stein
Roe Mutual Funds (July 1998 to August
1999).
Theresa Kelety Assistant Secretary August 2003 - Present Counsel, ING U.S. Financial Services
7337 E. Doubletree Ranch Rd. (April 2003 - Present). Formerly, Senior
Scottsdale, Arizona 85258 Associate with Shearman & Sterling
Born: 1963 (February 2000 - April 2003) and Associate
with Sutherland Asbill & Brennan (1996 -
February 2000).
----------
(1) The officers hold office until the next annual meeting of the Trustees and
until their successors have been elected and qualified.
47
(THIS PAGE INTENTIONALLY LEFT BLANK)
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 LLP
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 Funds, including
charges and expenses, may be obtained by calling ING Funds Distributor, LLC at
1-800-992-0180. Please read the prospectus carefully before you invest or send
money. The Funds' proxy voting record will be available without charge on or
about August 31, 2004 on the Funds' website at www.ingfunds.com and on the SEC's
website at www.sec.gov.
[ING FUNDS LOGO]
PRTSAR0803-102903