FIRST QUARTER REPORT
FIRST QUARTER REPORT
MAY 31, 2004
ING PRIME
RATE TRUST
[GRAPHIC]
[ING FUNDS LOGO]
ING Prime Rate Trust
FIRST QUARTER REPORT
May 31, 2004
Table of Contents
Portfolio Managers' Report 2
Statement of Assets and Liabilities 7
Statement of Operations 8
Statements of Changes in Net Assets 9
Statement of Cash Flows 10
Financial Highlights 11
Notes to Financial Statements 12
Portfolio of Investments 19
Additional Information 39
Trustee and Officer Information 41
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT
Dear Shareholders:
ING Prime Rate Trust (the "Trust") is a diversified, closed-end management
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.
PORTFOLIO CHARACTERISTICS
AS OF MAY 31, 2004
Net Assets $ 1,014,597,112
Total Assets $ 1,917,751,793
Assets Invested in
Senior Loans $ 1,828,496,834
Senior Loans Represented 384
Average Amount Outstanding
per Loan $ 4,761,711
Industries Represented 39
Average Loan Amount
per Industry $ 46,884,534
Portfolio Turnover Rate (YTD) 24%
Weighted Average Days to
Interest Rate Reset 45
Average Loan Final Maturity 57 months
Total Leverage as a Percentage
of Total Assets
(including Preferred Shares) 45.31%
PEFORMANCE SUMMARY*
The Trust declared $0.10 of dividends during the first fiscal quarter ended May
31, 2004. Based on the average month-end net asset value ("NAV") per share of
$7.38, this resulted in an annualized distribution rate of 5.62%(1) for the
quarter. The Trust's total return for the first fiscal quarter, based on NAV,
was 1.63%, versus a total return on the S&P/LSTA Leveraged Loan Index of 0.95%
for the same period. The total market value return (based on full reinvestment
of dividends) for the Trust's common shares during the first fiscal quarter was
2.01%.
MARKET OVERVIEW
The tone of the non-investment grade loan market remained quite strong during
this fiscal quarter. Factors underlying such strength included a demonstrably
healthier U.S. economic environment, improved corporate earnings and a continued
reduction in trailing default rates. To these factors, add a now near consensus
view that the Federal Reserve is about to embark on a program to systematically
raise short-term interest rates, and the result is an almost universally bullish
outlook--and intense investor demand--for floating rate loans.
When taken in isolation, strong demand for loans has a positive influence on
loan returns in that it provides significant and deep price support. To be fully
constructive, however, high levels of demand must be met with an equally strong
supply of new loans. Although improved measurably, supply only kept pace with
demand during the quarter. As a result, significant levels of idle cash resident
in many loan portfolios since the end of 2003 remained largely in place, thereby
driving secondary loan prices to new highs and borrowing spreads on new loans to
historical lows. On the plus side, while pricing trends remain unfavorable,
credit trends continue to look relatively positive. At this point, nearly all
qualitative and quantitative factors point to the continuation of low near-term
default risk in non-investment grade credit markets.
----------
* Please see the more detailed information on the charts immediately following
this report.
2
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT (continued)
PORTFOLIO OVERVIEW
In addition to general market strength, the Trust's favorable results for the
first fiscal quarter were attributable primarily to gains experienced by a
select number of individual positions in which the Trust had a significant
investment and, to a lesser degree, the higher utilization of leverage for
investment purposes (discussed below). Valuations (and thus loan prices) in the
cable television sector were buoyed during the quarter by the successful
refinance of the Charter Communications Holdings, LLC ("Charter") loan
facilities. The refinance enabled us to reduce (at full value) the Trust's
aggregate Charter exposure to 2.7% of total assets (from 4.0% at the end of last
fiscal quarter) and realize gains on prior investments. Similarly, Nextel
Finance Company ("Nextel"), historically one of the Trust's largest holdings and
long the bellwether issuer in the cellular communications sector, refinanced its
sizeable loan facility during the quarter. Accordingly, our exposure to Nextel
declined to 3.3% of total assets (the Trust's largest holding as of the current
fiscal quarter-end), from 3.7% at last quarter-end. A follow-on refinance is
expected to close shortly which will materially reduce our Nextel position from
this lower level. These activities had, in part, the net effect of reducing the
Trust's exposure to the cable television and wireless communications sectors to
approximately 9.0% and 6.8% of total assets, respectively, from 11.9% and 9.1%,
respectively, at the end of the prior fiscal quarter. We continue to find these
sectors attractive on the basis of offering attractive returns for the
underlying risk.
TOP TEN INDUSTRY SECTORS AS OF
MAY 31, 2004 AS A
PERCENTAGE OF:
TOTAL NET
ASSETS ASSETS
-------- --------
Cable Television 9.0% 17.0%
Cellular Communications 6.8% 12.8%
Printing and Publishing 6.6% 12.4%
Leisure, Amusement and
Entertainment 5.9% 11.1%
Healthcare, Education and
Childcare 5.5% 10.3%
Chemicals, Plastics and Rubber 5.4% 10.2%
Automobile 4.8% 9.0%
Containers, Packaging and
Glass 4.0% 7.6%
Beverage, Food and Tobacco 3.4% 6.5%
Radio and TV Broadcasting 3.3% 6.2%
While we proactively manage the Trust's top exposures, we continue to maintain a
high level of diversification of the portfolio across both issuer and industry
lines. As of May 31, 2004, the average individual position accounted for
approximately 0.25% of the Trust's total assets, while the average amount
invested per industry amounted to approximately 2.44% of total assets.
TOP TEN SENIOR LOAN ISSUERS
AS OF MAY 31, 2004
AS A PERCENTAGE OF:
TOTAL NET
ASSETS ASSETS
-------- --------
Nextel Finance Company 3.3% 6.3%
Charter Communications
Holdings, LLC 2.7% 5.2%
CNL Hospitality Partners, L.P. 1.8% 3.4%
Dex Media West, LLC 1.7% 3.1%
Metro-Goldwyn-Mayer Studios,
Inc. 1.5% 2.9%
Century Cable Holdings, LLC 1.2% 2.4%
Olympus Cable Holdings, LLC 1.2% 2.3%
General Growth Properties 1.2% 2.3%
Crown Castle Operating
Company 1.1% 2.1%
Allegheny Energy Supply
Company 1.1% 2.1%
USE OF LEVERAGE
The Trust utilizes financial leverage to seek to increase the yield to the
holders of common shares. As of May 31, 2004, the Trust had $450 million of
"Aaa/AAA(2)" rated cumulative auction rate preferred shares outstanding, and
$419 million of borrowings outstanding under $525 million in available credit
facilities. Total leverage, as a percentage of total assets (including preferred
shares), was 45.3% at
3
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT (continued)
year end. The use of leverage for investment purposes increases both investment
opportunity and investment risk.
OUTLOOK
The combination of rising short-term rates and the expectation of a relatively
stable credit environment has created unprecedented demand for the floating rate
loan asset class. As a result, barring any unforeseen economic or geopolitical
event, we expect the second half of the year to be at least as robust as the
first. The downside to such technical strength, while limited in terms of
immediate NAV volatility, continues to be the compression of borrowing spreads
to historical lows, and in many cases, relaxed structural protections afforded
to senior secured lenders (e.g., second lien and covenant-light loan
facilities). Our strategy remains credit-focused; as in the past, we will
continue to forfeit yield in order to maintain credit discipline. As with other
market participants, we'll also stay keenly focused on the Federal Reserve as it
determines the timing of future changes in interest rates. Given the ultra-short
duration of floating rate loans, an upward move in short-term rates would prove
positive for the Fund's distributable yield.
We thank you for your investment in ING Prime Rate Trust.
/s/ Jeffrey A. Bakalar /s/ Daniel A. Norman
Jeffrey A. Bakalar Daniel A. Norman
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
CO-SENIOR PORTFOLIO MANAGER CO-SENIOR PORTFOLIO MANAGER
ING INVESTMENT MANAGEMENT CO. ING INVESTMENT MANAGEMENT CO.
ING Prime Rate Trust
July 26, 2004
(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 Investors Service are judged to be of the
highest quality, with minimal credit risk. 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.
4
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT (continued)
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED MAY 31, 2004
--------------------------------------------------------------------------------------------
SINCE TRUST SINCE INITIAL
1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION(1)(2) TRADING ON NYSE(3)
-------- -------- -------- -------- -------------------- --------------------
Based on Net Asset
Value (NAV) 13.13% 4.90% 3.82% 5.90% 6.86% --
Based on Market
Value 18.19% 7.91% 4.37% 6.55% -- 7.08%
Credit Suisse
First Boston
Leveraged Loan
Index 8.29% 4.87% 4.83% 6.18% -- 6.80%
S&P/LSTA Leveraged
Loan Index(4) 7.58% 4.93% 5.07% -- -- --
ASSUMES RIGHTS WERE EXERCISED AND EXCLUDES SALES CHARGES AND
COMMISSIONS(5),(6),(7)
(1) Inception Date -- May 12, 1988. Return since inception is not applicable
since the Trust did not trade on the NYSE prior to March 9, 1992.
(2) Reflects partial waiver of fees.
(3) Initial Trading on NYSE -- March 9, 1992. Performance since inception for
the index is shown from 03/01/92.
(4) Performance since inception for the index is 5.32% from 1/1/97.
(5) 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.
(6) 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.
(7) 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.
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. THE TRUST'S PERFORMANCE MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA
SHOWN. PLEASE LOG ON TO www.ingfunds.com OR CALL (800) 992-0180 TO GET
PERFORMANCE TO THE MOST RECENT MONTH END.
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.
5
ING Prime Rate Trust
PORTFOLIO MANAGERS' REPORT (continued)
YIELDS AND DISTRIBUTION RATES
NET ASSET AVERAGE AVERAGE
VALUE ("NAV") MARKET ANNUALIZED ANNUALIZED
PRIME 30-DAY SEC 30-DAY SEC DISTRIBUTION DISTRIBUTION
QUARTER ENDED RATE YIELD(A) YIELD(A) RATE AT NAV(B) RATE AT MARKET(B)
---------------------- --------------- --------------- --------------- -------------------- --------------------
May 31, 2004 4.00% 5.83% 5.44% 5.62% 5.17%
February 29, 2004 4.00% 5.56% 5.20% 5.82% 5.35%
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%
(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
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.
INDEX DESCRIPTIONS
THE S&P/LSTA LEVERAGED LOAN INDEX ("LLI") is an unmanaged 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. An investor cannot invest directly in an index.
THE CREDIT SUISSE FIRST BOSTON LEVERAGED LOAN INDEX is an unmanaged index of
below investment grade loans designed to mirror the investable universe of the
U.S. dollar-denominated leveraged loan market. An investor cannot invest
directly in an index.
6
ING Prime Rate Trust
STATEMENT OF ASSETS AND LIABILITIES as of May 31, 2004 (Unaudited)
ASSETS:
Investments in securities at value (Cost $1,878,179,401) $ 1,873,157,301
Cash 21,276,345
Receivables:
Investment securities sold 14,226,916
Interest 8,780,568
Other 95,810
Prepaid expenses 214,853
----------------
Total assets 1,917,751,793
----------------
LIABILITIES:
Notes payable 419,000,000
Payable for investments purchased 27,360,378
Deferred arrangement fees on senior loans 3,199,903
Dividends payable - preferred shares 43,875
Payable to affiliates 1,658,807
Accrued trustees' fees 49,308
Other accrued expenses 1,842,410
----------------
Total liabilities 453,154,681
----------------
Preferred shares, $25,000 stated value per share at liquidation
value (18,000 shares outstanding) 450,000,000
----------------
NET ASSETS $ 1,014,597,112
================
Net assets value per common share outstanding (net assets less preferred
shares at liquidation value, divided by 137,821,394 shares of
beneficial interest authorized and outstanding, no par value) $ 7.36
NET ASSETS CONSIST OF:
Paid-in capital $ 1,290,371,862
Undistributed net investment income 9,372,635
Accumulated net realized loss on investments (280,125,285)
Net unrealized depreciation of investments (5,022,100)
----------------
NET ASSETS $ 1,014,597,112
================
See Accompanying Notes to Financial Statement
7
ING Prime Rate Trust
STATEMENT OF OPERATIONS for the Three Months Ended May 31, 2004 (Unaudited)
INVESTMENT INCOME:
Interest $ 20,967,401
Arrangement fees earned 676,232
Dividends 15,337
Other 545,646
----------------
Total investment income 22,204,616
----------------
EXPENSES:
Investment management fees 3,597,102
Administration fees 1,124,094
Transfer agent and registrar fees 186,608
Interest 1,280,690
Shareholder reporting expense 37,340
Custodian fees 179,400
Professional fees 264,183
Preferred Shares - Dividend disbursing agent fees 295,945
Pricing expense 8,074
ICI fees 10,790
Postage expense 58,780
Trustees' fees 18,400
Miscellaneous expense 40,860
----------------
Total expenses 7,102,266
----------------
Net investment income 15,102,350
----------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS:
Net realized gain on investments 2,168,656
Net change in value of investments 148,464
----------------
Net realized and unrealized gain on investments 2,317,120
----------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (1,206,860)
----------------
Net increase in net assets resulting from operations $ 16,212,610
================
See Accompanying Notes to Financial Statement
8
ING Prime Rate Trust
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
THREE MONTHS
ENDED YEAR ENDED
MAY 31, FEBRUARY 29,
2004 2004
--------------- ---------------
FROM OPERATIONS:
Net investment income $ 15,102,350 $ 64,881,220
Net realized gain (loss) on investments 2,168,656 (45,502,509)
Change in value of investments 148,464 126,661,233
Distributions to preferred shareholders
from net investment income (1,206,860) (5,199,537)
--------------- ---------------
Net increase in net assets
resulting from operations 16,212,610 140,840,407
--------------- ---------------
FROM DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Distributions from net investment income (14,184,327) (57,649,691)
--------------- ---------------
Decrease in net assets from distributions
to common shareholders (14,184,327) (57,649,691)
--------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS:
Dividends reinvested for common shares 2,063,350 4,364,604
Sales of shares in connection with shelf offering 180,038 386,779
--------------- ---------------
Net increase from capital share transactions 2,243,388 4,751,383
--------------- ---------------
Net increase in net assets 4,271,671 87,942,099
--------------- ---------------
NET ASSETS:
Beginning of period 1,010,325,441 922,383,342
--------------- ---------------
End of period (including undistributed
net investment income of $9,372,635
and $9,661,472, respectively) $ 1,014,597,112 $ 1,010,325,441
=============== ===============
SUMMARY OF CAPITAL SHARE TRANSACTIONS:
Shares issued in payment of distributions from net
investments income 158,628 612,173
Shares sold in connection with shelf offering 24,495 53,184
--------------- ---------------
Net increase in shares outstanding 183,123 665,357
=============== ===============
See Accompanying Notes to Financial Statement
9
ING Prime Rate Trust
STATEMENT OF CASH FLOWS for the Three Months Ended May 31, 2004 (Unaudited)
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 18,148,626
Dividends received 15,337
Dividends paid to preferred shareholders (1,230,264)
Arrangement fee paid (354,883)
Other income received 543,153
Interest paid (1,280,690)
Other operating expenses paid (5,335,203)
Purchases of securities (595,134,226)
Proceeds from sales of securities 421,377,350
---------------
Net cash used in operating activities $ (163,250,800)
---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid in cash to common shareholders (12,120,977)
Proceeds from shelf offerings 180,038
Net issuance of notes payable 194,000,000
---------------
Net cash flows provided by financing activities 182,059,061
---------------
Net change in cash 18,808,261
Cash at beginning of period 2,468,084
---------------
Cash at end of period $ 21,276,345
===============
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET
CASH USED IN OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $ 16,212,610
---------------
Adjustments to reconcile net increase in net assets resulting from
operations to net cash provided by operating activities:
Change in unrealized depreciation of securities (148,464)
Net accretion of discounts on securities (1,777,495)
Realized gain on sale of securities (2,168,656)
Purchase of securities (595,134,226)
Proceeds on sale of securities 421,377,350
Increase in other assets (2,493)
Increase in interest receivable (1,041,280)
Increase in prepaid expenses (177,563)
Decrease in deferred arrangement fees on senior loans (1,031,115)
Decrease in preferred shareholder dividend payable (23,404)
Increase in affiliate payable 274,389
Increase in accrued trustees' fees 7,106
Increase in accrued expenses 382,441
---------------
Total adjustments (179,463,410)
---------------
Net cash used in operating activities $ (163,250,800)
===============
NON CASH FINANCING ACTIVITIES
Reinvestment of dividends $ 2,063,350
See Accompanying Notes to Financial Statement
10
ING PRIME RATE TRUST
FINANCIAL HIGHLIGHTS
For a common share outstanding throughout the period
THREE MONTHS
ENDED
MAY 31, YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
2004 --------------------------------------------------------------
(UNAUDITED) 2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 7.34 6.73 7.20 8.09 8.95 9.24
Income from investment operations:
Net investment income $ 0.11 0.46 0.50 0.74 0.88 0.79
Net realized and unrealized
gain (loss) on investments $ 0.02 0.61 (0.47) (0.89) (0.78) (0.30)
------------ ---------- ---------- ---------- ----------- ----------
Total from investment operations $ 0.13 1.07 0.03 (0.15) 0.10 0.49
Distributions to Common Shareholders from net
investment income $ (0.10) (0.42) (0.45) (0.63) (0.86) (0.78)
Distribution to Preferred Shareholders $ (0.01) (0.04) (0.05) (0.11) (0.06) --
Reduction in net asset value from
Preferred Shares offerings $ -- -- -- -- (0.04) --
------------ ---------- ---------- ---------- ----------- ----------
Net asset value, end of year $ 7.36 7.34 6.73 7.20 8.09 8.95
============ ========== ========== ========== =========== ==========
Closing market price at end of year $ 7.89 7.84 6.46 6.77 8.12 8.25
TOTAL INVESTMENT RETURN(1)
Total investment return at
closing market price(2) % 2.01 28.77 2.53 (9.20) 9.10 (5.88)
Total investment return at net asset value(3) % 1.63 15.72 0.44 (3.02) 0.19 5.67
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (000's) $ 1,014,597 1,010,325 922,383 985,982 1,107,432 1,217,339
Preferred Shares-Aggregate amount
outstanding (000's) $ 450,000 450,000 450,000 450,000 450,000 --
Liquidation and market value
per share of Preferred Shares $ 25,000 25,000 25,000 25,000 25,000 --
Borrowings at end of year (000's) $ 419,000 225,000 167,000 282,000 510,000 484,000
Asset coverage per $1,000 of debt(4) $ 2,170 2,500 2,500 2,350 2,150 3,520
Average borrowings (000's) $ 321,315 143,194 190,671 365,126 450,197 524,019
Ratios to average net assets
including Preferred Shares(5)
Expenses (before interest and other fees
related to revolving credit facility)(6) % 1.59 1.45 1.49 1.57 1.62 --
Expenses(6) % 1.94 1.65 1.81 2.54 3.97 --
Net investment income(6) % 1.03 4.57 4.97 6.83 9.28 --
Ratios to average net assets plus borrowings
Expenses (before interest and
other fees related to
revolving credit facility)(6) % 1.75 1.84 1.82 1.66 1.31 1.00(7)
Expenses(6) % 2.10 2.09 2.23 2.70 3.21 2.79(7)
Net investment income(6) % 4.48 5.82 6.10 7.24 7.50 6.12
Ratios to average net assets
Expenses (before interest and other fees
related to revolving credit facility)(6) % 2.26 2.11 2.19 2.25 1.81 1.43(7)
Expenses(6) % 2.78 2.40 2.68 3.64 4.45 4.00(7)
Net investment income(6) % 5.91 6.68 7.33 9.79 10.39 8.77
Portfolio turnover rate % 24 87 48 53 46 71
Common shares outstanding
at end of period (000's) 137,821 137,638 136,973 136,973 136,847 136,036
(1) Total investment return calculations are attributable to common shares.
(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 Trust's
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) 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.
(5) Ratios do not reflect the effect of dividend payments to Preferred
Shareholders; income ratios reflect income earned on assets attributable to
the Preferred Shares.
(6) Annualized for periods less than one year.
(7) Calculated on total expenses before impact on earnings credits.
See Accompanying Notes to Financial Statements
11
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of May 31, 2004 (Unaudited)
NOTE 1 -- ORGANIZATION
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, management investment company. The Trust
invests primarily in senior loans which are exempt from registration under the
Securities Act of 1933, as amended (the "33 Act"), but which 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.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles in the
United States of America.
A. SENIOR LOAN AND OTHER SECURITY VALUATION. Senior loans held by the Trust
are normally valued at the mean of the means of one or more bid and asked
quotations obtained from an independent 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 reliable quotations are 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 readily
available, reliable market value quotations from dealers in loans and, when
such quotations are not readily available, to calculate values under the
proxy procedure described above. As of May 31, 2004, 97.60% of total
investments were valued based on these procedures. It is expected that most
of the loans held by the Trust will continue to 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 ING Investment Management
Co. (formerly, "Aeltus Investment Management, Inc.")("INGIM" the
"Sub-Adviser"), 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 or the
Sub-Adviser that the Investment Manager or the Sub-Adviser 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 and Proxy Voting 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
12
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of May 31, 2004 (Unaudited) (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 the NASDAQ official closing price. Debt and equity securities traded in
the over-the-counter market and listed securities for which no sale was
reported on a valuation date are valued at the mean between the last
reported bid and asked price on such exchange. Securities other than senior
loans for which reliable market value quotations are not readily available
and all other assets will be valued at their respective fair values as
determined in good faith by, and 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 subchapter M
of the Internal Revenue Code and related excise tax provisions applicable
to regulated investment companies and to distribute substantially all of
its net investment income and net realized capital gains to its
shareholders. Therefore, no federal income tax provision is required. No
capital gain distributions will be made by the Trust until any capital loss
carryforwards have been fully utilized or expire.
C. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Revolver and delayed draw
loans are booked on a settlement date basis. Security transactions and
senior loans 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 sold. 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 received, 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 received are treated as discounts and
are accreted whereas premiums are amortized. 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 declares dividends monthly
for net investment income. Distributions from capital gains, if any, are
declared and paid annually. The Trust may make additional distributions to
comply with the distribution requirements of the Internal Revenue Code. The
character and amounts of income and gains to be distributed are determined
in accordance with federal income tax regulations, which may differ from
accounting principles generally accepted in the United States of America
for investment companies. Dividends paid by the Trust from net investment
income and distributions of net realized short-term capital gains are, for
federal income tax purposes, taxable as ordinary income to shareholders.
The Trust records distributions to its shareholders on the ex-dividend
date.
13
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of May 31, 2004 (Unaudited) (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. DIVIDEND REINVESTMENTS. Pursuant to the Trust's 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 on the open market only when the
closing sale or bid price plus commission is less than the net asset value
per share of the Trust's common shares on the valuation date. If the market
price plus commissions is equal to or exceeds the net asset value, new
shares are issued by the Trust 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. Beginning in 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.
NOTE 3 -- INVESTMENTS
For the three months ended May 31, 2004, the cost of purchases and the proceeds
from principal repayment and sales of investments, excluding short-term notes,
totaled $599,935,714 and $420,421,285, respectively. At May 31, 2004, the Trust
held senior loans valued at $1,828,496,834 representing 97.6% of its total
investments. The market value of these assets is established as set forth in
Note 2.
The senior loans acquired by the Trust typically take the form of a direct
lending relationship with the borrower, and are typically acquired through an
assignment of another lender's interest in a loan. The lead lender in a typical
corporate loan syndicate administers the loan and monitors the collateral
securing the loan.
Common and preferred shares, and stock purchase warrants held in the portfolio
were acquired in conjunction with 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 warrants.
14
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of May 31, 2004 (Unaudited) (continued)
NOTE 3 -- INVESTMENTS (CONTINUED)
Dates of acquisition and cost or assigned basis of restricted securities are as
follows:
DATE OF COST OR
ACQUISITION ASSIGNED BASIS
--------------- ---------------
Acterna, LLC -- Common Shares 12/24/03 $ 1,090,731
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 6,728,959
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 30
Enginen Realty -- Common Shares 11/24/03 --
Enterprise Profit Solutions -- Liquidation Interest 10/21/02 --
Euro United Corporation -- Residual Interest in Bankruptcy Estate 06/21/02 2,539,432
Exide Technologies -- Warrants 11/30/01 --
Galey & Lord -- Common Shares 03/31/04 --
Gate Gourment Borrower, LLC -- Common Shares 12/04/03 --
Gemini Leasing, Inc. -- Common Shares 01/08/04 --
Grand Union Company -- Residual Interest in Bankruptcy Estate 07/01/02 3,599
Holmes Group -- Common Shares 05/26/04 --
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 1,654,378
Insilco Technologies -- Residual Interest in Bankruptcy Estate 05/02/03 21,140
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
Malden Mills Industries, Inc. -- Common Shares 11/04/03 --
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. -- Escrow 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
$29,175,576 was 2.9% of net assets at May 31, 2004) $ 29,910,019
===============
15
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of May 31, 2004 (Unaudited) (continued)
NOTE 4 -- 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 Managed
Assets. For purposes of this Agreement, "Managed Assets" shall mean the Trust's
average daily gross asset value, minus the sum of the Trust's accrued and unpaid
dividends on any outstanding preferred shares and accrued liabilities (other
than liabilities for the principal amount of any borrowings incurred, commercial
paper or notes issued by the Trust and the liquidation preference of any
outstanding preferred shares).
The Investment Manager entered into a subadvisory agreement with INGIM, 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, INGIM 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.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
At May 31, 2004, the Trust had the following amounts recorded in payables to
affiliates on the accompanying Statement of Assets and Liabilities:
ACCRUED INVESTMENT ACCRUED
MANAGEMENT FEES ADMINISTRATIVE FEES TOTAL
------------------ ------------------- ------------
$ 1,263,853 $ 394,954 $ 1,658,807
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 6 -- COMMITMENTS
The Trust has entered into both a $90 million 364-day revolving credit agreement
which matures on August 25, 2004 and a $435 million 364-day revolving
securitization facility which matures on June 13, 2005, 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 these facilities are amortized over the term of the
agreements. The amount of borrowings outstanding at May 31, 2004, was $419
million. Weighted average interest rate on outstanding borrowings was 1.50%,
excluding fees related to the unused portion of the facilities, and other fees.
The amount of borrowings represented 21.84% of total assets at May 31, 2004.
Average borrowings for the three months ended May 31, 2004 were $321,315,217 and
the average annualized interest rate was 1.47% excluding other fees related to
the unused portion of the facilities, and other fees.
16
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of May 31, 2004 (Unaudited) (continued)
As of May 31, 2004, the Trust had unfunded loan commitments pursuant to the
terms of the following loan agreements:
Allied Waste North America, Inc. $ 1,402,800
Apria Healthcare Group, Inc. 2,000,000
Block Vision Holdings Corporation 118,771
Cincinnati Bell, Inc. 2,970,838
Davita, Inc. 3,000,000
Envirosolutions, Inc. 1,363,636
Federal -Mogul Corporation 438,518
Fleming Companies, Inc. 593,411
Geo Specialty Chemicals, Inc. 670,000
Georgia-Pacific Corporation 16,703,111
Green-Valley Ranch Gaming, LLC 1,000,000
IESI Corporation 1,049,375
Lyondell-Citgo Refining, L.P. 9,000,000
Neoplan USA Corporation 315,000
Nextel Finance Company $ 5,952,591
Nutrasweet Acquisition Corporation 425,025
Outsourcing Solutions, Inc. 63,692
Owens-Illinois Group, Inc. 7,000,000
Peabody Energy Corporation 2,500,000
Pinnacle Entertainment 1,050,525
Ply Gem Industries 1,045,455
Primedia Inc. 6,893,570
Saguaro Utility Group 3,500,000
SBA Senior Finance, Inc. 1,115,385
Six Flags Theme Parks, Inc. 2,700,000
United Defense Industries, Inc. 3,000,000
United Industries Corporation 1,280,000
---------------
$ 77,151,703
===============
NOTE 7 -- RIGHTS AND OTHER OFFERINGS
As of May 31, 2004, outstanding share offerings pursuant to shelf registrations
were as follows:
REGISTRATION SHARES SHARES
DATE REGISTERED REMAINING
------------ ---------- ----------
9/15/98 25,000,000 19,089,760
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 and to purchase additional senior loans. 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 8 -- 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 three months ended May 31, 2004.
NOTE 9 -- SUBORDINATED LOANS AND UNSECURED LOANS
The Trust may invest in subordinated loans and in unsecured loans. The primary
risk arising from investing in subordinated loans or in unsecured loans is the
potential loss in the event of default by the issuer of the loans. The Trust may
acquire a subordinated loan only if, at the time of acquisition, it acquires or
holds a senior loan from the same borrower. The Trust will acquire unsecured
loans only where the Investment Manager believes, at the time of acquisition,
that the Trust would have the right to payment upon default that is not
subordinate to any other creditor. The Trust may invest up to 5% of its total
assets, measured at the time of investment, in subordinated loans and unsecured
loans. As of May 31, 2004, the Trust held 0.79% of its total assets in
subordinated loans and unsecured loans.
17
ING Prime Rate Trust
NOTES TO FINANCIAL STATEMENTS as of May 31, 2004 (Unaudited) (continued)
NOTE 10 -- FEDERAL INCOME TAXES
The tax composition of dividends and distributions to shareholders for the three
months ended May 31, 2004 and year ended February 29, 2004 were as follows:
THREE MONTHS ENDED MAY 31, 2004 YEAR ENDED FEBRUARY 29, 2004
------------------------------- ----------------------------
ORDINARY INCOME ORDINARY INCOME
--------------- ---------------
$ 15,391,187 $ 62,849,228
NOTE 11 -- SUBSEQUENT EVENTS
Subsequent to May 31, 2004, the Trust paid to Common Shareholders the following
dividends from net investment income:
PER SHARE AMOUNT DECLARATION DATE RECORD DATE PAYABLE DATE
---------------- ---------------- ----------- ------------
$ 0.035 5/28/04 6/10/04 6/22/04
0.035 6/30/04 7/12/04 7/22/04
Subsequent to May 31, 2004, 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 $ 38.83 06/07/04 to 07/12/04 06/14/04 to 07/19/04 06/15/04 to 07/20/04
Series T $ 40.06 06/01/04 to 07/06/04 06/08/04 to 07/13/04 06/09/04 to 07/14/04
Series W $ 38.46 06/02/04 to 07/07/04 06/09/04 to 07/14/04 06/10/04 to 07/15/04
Series Th $ 40.04 06/03/04 to 07/08/04 06/10/04 to 07/15/04 06/14/04 to 07/16/04
Series F $ 39.74 06/04/04 to 07/09/04 06/11/04 to 07/16/04 06/14/04 to 07/19/04
18
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited)
SENIOR LOANS*: 180.2%
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
AEROSPACE AND DEFENSE: 2.0%
ALLIANT TECHSYSTEMS, INC. Ba2 BB
$ 2,000,000 Term Loan, maturing March 31, 2011 $ 2,016,250
ARINC, INC. Ba3 BB
1,000,000 Term Loan, maturing March 10, 2011 1,011,875
PIEDMONT AVIATION SERVICES NR NR
4,504,706 Term Loan, maturing July 23, 2006 4,459,659
4,504,706 Term Loan, maturing July 23, 2007 4,459,659
TRANSDIGM, INC. B1 B+
1,995,000 Term Loan, maturing July 22, 2010 2,011,834
UNITED DEFENSE INDUSTRIES, INC. Ba2 BB
6,139,810 Term Loan, maturing August 13, 2009 6,194,632
----------------
20,153,909
----------------
AUTOMOBILE: 9.0%
AFTERMARKET TECHNOLOGY CORPORATION Ba3 BB-
958,622 Term Loan, maturing February 08, 2008 961,960
1,318,154 Term Loan, maturing February 08, 2008 1,324,745
COLLINS & AIKMAN PRODUCTS B1 B+
1,298,246 Term Loan, maturing December 31, 2005 1,312,851
DURA OPERATING CORPORATION Ba3 BB
3,144,000 Term Loan, maturing December 31, 2008 3,170,529
(2) FEDERAL-MOGUL CORPORATION Ca NR
8,502,361 Revolver, maturing February 24, 2004 7,822,172
5,059,121 Term Loan, maturing February 24, 2004 4,659,137
7,500,000 Term Loan, maturing February 24, 2005 6,907,035
GOODYEAR TIRE & RUBBER COMPANY B1 BB
5,500,000 Term Loan, maturing March 31, 2006 5,564,169
GOODYEAR TIRE & RUBBER COMPANY B2 B
1,500,000 Term Loan, maturing March 31, 2006 1,507,500
GUILFORD MILLS, INC. B2 B+
3,000,000 Term Loan, maturing May 31, 2010 2,992,500
HLI OPERATING COMPANY, INC. Ba3 BB-
4,784,722 Term Loan, maturing June 03, 2009 4,859,483
KEYSTONE AUTOMOTIVE INDUSTRIES, INC. B1 B+
1,454,348 Term Loan, maturing October 30, 2009 1,472,527
MERIDIAN AUTOMOTIVE SYSTEMS, INC. B2 B+
2,000,000 Term Loan, maturing April 28, 2010 2,000,000
METALDYNE COMPANY, LLC B2 BB-
3,401,703 Term Loan, maturing December 31, 2009 3,411,058
PLASTECH, INC. Ba3 BB-
2,000,000 Term Loan, maturing February 12, 2010 2,029,166
RJ TOWER CORPORATION B1 B+
6,000,000 Term Loan, maturing May 21, 2009 6,037,500
SAFELITE GLASS CORPORATION B3 B+
6,729,690 Term Loan, maturing September 30, 2007 6,578,272
10,823,607 Term Loan, maturing September 30, 2007 10,580,076
See Accompanying Notes to Financial Statements
19
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE: (CONTINUED)
TENNECO AUTOMOTIVE, INC. B1 B+
$ 2,064,825 Term Loan, maturing December 12, 2010 $ 2,098,808
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. B2 B
2,500,000 Term Loan, maturing March 14, 2009 2,520,833
TRW AUTOMOTIVE ACQUISITIONS CORPORATION Ba2 BB+
1,600,000 Term Loan, maturing February 28, 2009 1,610,501
9,913,043 Term Loan, maturing February 28, 2011 10,070,591
UNITED COMPONENTS, INC. B1 BB-
2,998,333 Term Loan, maturing June 30, 2010 3,043,308
----------------
92,534,720
----------------
BANKING: 0.1%
OUTSOURCING SOLUTIONS, INC. NR NR
2,978 Revolver, maturing December 09, 2008 2,918
1,426,801 Term Loan, maturing December 09, 2008 1,398,265
----------------
1,401,183
----------------
BEVERAGE, FOOD AND TOBACCO: 6.5%
B & G FOODS, INC. B1 B
1,492,500 Term Loan, maturing August 31, 2009 1,503,694
BIRDS EYE FOODS, INC. B1 B+
6,567,369 Term Loan, maturing June 30, 2008 6,650,486
COMMONWEALTH BRANDS, INC. Ba3 BB-
5,954,000 Term Loan, maturing August 28, 2007 6,020,983
CONSTELLATION BRANDS, INC. Ba1 BB
5,250,000 Term Loan, maturing November 30, 2008 5,328,750
DEAN FOODS COMPANY Ba1 BB+
4,437,500 Term Loan, maturing July 15, 2007 4,469,397
13,453,532 Term Loan, maturing July 15, 2008 13,612,647
DEL MONTE CORPORATION Ba3 BB-
3,195,840 Term Loan, maturing December 20, 2010 3,241,282
DR. PEPPER BOTTLING COMPANY OF TEXAS B1 BB-
3,880,411 Term Loan, maturing December 19, 2010 3,939,223
DS WATERS ENTERPRISES, L.P. B1 B+
2,481,250 Term Loan, maturing November 07, 2009 2,477,374
(2) FLEMING COMPANIES, INC. B3 D
455,428 Revolver, maturing June 18, 2007 452,771
GOLDEN STATE FOODS CORPORATION B1 B+
4,000,000 Term Loan, maturing February 28, 2011 4,027,500
INTERSTATE BRANDS CORPORATION B1 CCC+
934,069 Term Loan, maturing July 19, 2007 914,512
2,478,693 Term Loan, maturing July 19, 2007 2,429,506
MAFCO WORLDWIDE CORPORATION B1 B
980,098 Term Loan, maturing March 31, 2006 970,297
MICHAEL FOODS, INC. B1 B+
3,980,000 Term Loan, maturing November 21, 2010 4,038,458
See Accompanying Notes to Financial Statements
20
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
BEVERAGE, FOOD AND TOBACCO: (CONTINUED)
PINNACLE FOODS CORPORATION B1 BB-
$ 2,339,450 Term Loan, maturing November 25, 2010 $ 2,365,769
660,550 Term Loan, maturing November 25, 2010 667,981
SOUTHERN WINE & SPIRITS OF AMERICA, INC. Ba3 BB+
2,959,991 Term Loan, maturing July 02, 2008 2,995,141
----------------
66,105,770
----------------
BUILDINGS AND REAL ESTATE: 5.8%
ASSOCIATED MATERIALS, INC. Ba3 B+
1,473,684 Term Loan, maturing August 02, 2010 1,492,105
ATRIUM COMPANIES, INC. B1 B+
2,992,500 Term Loan, maturing December 10, 2008 3,033,647
BUILDERS FIRSTSOURCE, INC. B1 B+
4,000,000 Term Loan, maturing February 25, 2010 4,040,000
BUILDING MATERIALS HOLDING CORPORATION Ba2 BB-
1,985,000 Term Loan, maturing August 21, 2010 1,992,444
CRESCENT REAL ESTATE EQUITIES, L.P. B1 BB+
3,500,000 Term Loan, maturing January 12, 2006 3,532,813
DMB NEWCO, LLC NR NR
8,208,810 Term Loan, maturing February 28, 2009 8,229,332
GENERAL GROWTH PROPERTIES Ba1 BBB-
5,925,000 Term Loan, maturing April 16, 2006 5,962,031
16,762,500 Term Loan, maturing April 16, 2006 16,867,266
MACERICH PARTNERSHIP, L.P. Ba2 NR
4,723,200 Term Loan, maturing July 26, 2005 4,746,816
PLY GEM INDUSTRIES B1 B+
204,545 Revolver, maturing February 12, 2009 198,409
750,000 Term Loan, maturing March 15, 2010 750,938
4,250,000 Term Loan, maturing October 01, 2011 4,250,000
ST. MARYS CEMENT, INC. B1 BB-
2,992,500 Term Loan, maturing December 04, 2009 3,038,324
WERNER HOLDINGS COMPANY, INC. B1 B
958,333 Term Loan, maturing June 11, 2009 931,380
----------------
59,065,503
----------------
CABLE TELEVISION: 17.0%
(2) ADELPHIA COMMUNICATIONS CORPORATION NR BBB
2,956,684 Debtor in Possession Term Loan,
maturing March 31, 2005 2,970,852
ATLANTIC BROADBAND FINANCE, LLC B2 B
2,000,000 Term Loan, maturing September 01, 2011 2,024,376
BRESNAN COMMUNICATIONS, LLC B1 BB-
5,000,000 Term Loan, maturing December 31, 2007 5,052,500
CEBRIDGE CONNECTIONS, INC. NR NR
4,500,000 Term Loan, maturing February 04, 2009 4,466,250
1,500,000 Term Loan, maturing February 23, 2009 1,503,750
See Accompanying Notes to Financial Statements
21
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
CABLE TELEVISION: (CONTINUED)
(2) CENTURY CABLE HOLDINGS, LLC Caa1 NR
$ 1,230,000 Revolver, maturing March 31, 2009 $ 1,186,566
18,357,940 Term Loan, maturing June 30, 2009 17,879,863
5,000,000 Term Loan, maturing December 31, 2009 4,851,250
CHARTER COMMUNICATIONS HOLDINGS, LLC B2 B
53,000,000 Term Loan, maturing April 27, 2011 52,440,161
(2) FRONTIERVISION OPERATING PARTNERS, L.P. B2 NR
4,546,959 Revolver, maturing October 31, 2005 4,541,275
(2) HILTON HEAD COMMUNICATIONS, L.P. Caa1 NR
7,000,000 Revolver, maturing September 30, 2007 6,741,000
6,500,000 Term Loan, maturing March 31, 2008 6,266,000
INSIGHT MIDWEST HOLDINGS, LLC Ba3 BB+
1,940,000 Term Loan, maturing June 30, 2009 1,936,363
1,995,000 Term Loan, maturing December 31, 2009 2,016,197
16,458,750 Term Loan, maturing December 31, 2009 16,633,624
MCC IOWA, LLC Ba3 BB+
1,500,000 Term Loan, maturing March 31, 2010 1,496,484
16,000,000 Term Loan, maturing September 30, 2010 16,202,000
(2) OLYMPUS CABLE HOLDINGS, LLC B2 NR
5,000,000 Term Loan, maturing June 30, 2010 4,843,305
19,250,000 Term Loan, maturing September 30, 2010 18,756,719
PERSONA COMMUNICATIONS, INC. B2 B+
1,000,000 Term Loan, maturing May 31, 2011 1,007,813
----------------
172,816,348
----------------
CARGO TRANSPORT: 3.1%
(2) AMERICAN COMMERCIAL LINES, LLC Caa1 D
1,258,356 Term Loan, maturing June 30, 2006 1,168,698
1,804,934 Term Loan, maturing June 30, 2007 1,676,332
(2) AMERICAN COMMERCIAL LINES, LLC Ba3 NR
689,870 Debtor in Possession Term Loan,
maturing July 31, 2004 688,145
ATLANTIC EXPRESS TRANSPORT B3 B
6,000,000 Floating Rate Note, maturing April 15, 2008 5,970,000
BAKER TANKS, INC. B1 B+
997,500 Term Loan, maturing January 30, 2011 1,002,176
CSX/HORIZON LINES, LLC Ba3 BB-
1,569,048 Term Loan, maturing February 27, 2009 1,576,239
GEMINI LEASING, INC. NR NR
1,972,274 Term Loan, maturing December 31, 2011 1,577,819
NEOPLAN USA CORPORATION NR NR
1,935,000 Revolver, maturing June 30, 2006 1,935,000
5,401,295 Term Loan, maturing June 30, 2006 5,401,295
PACER INTERNATIONAL, INC. B1 BB-
2,282,353 Term Loan, maturing June 10, 2010 2,313,735
See Accompanying Notes to Financial Statements
22
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
CARGO TRANSPORT: (CONTINUED)
TEREX CORPORATION B1 BB-
$ 1,960,075 Term Loan, maturing December 31, 2009 $ 1,971,345
1,411,524 Term Loan, maturing July 03, 2009 1,418,935
UNITED STATES SHIPPING, LLC Ba2 BB
3,500,000 Term Loan, maturing April 14, 2010 3,530,625
YELLOW ROADWAY CORPORATION Baa3 BBB
1,168,831 Term Loan, maturing June 11, 2008 1,177,597
----------------
31,407,943
----------------
CELLULAR COMMUNICATIONS: 12.8%
AIRGATE PCS, INC. B2 CCC+
696,750 Term Loan, maturing June 06, 2007 693,847
9,890,932 Term Loan, maturing September 30, 2008 9,849,716
CELLULAR SOUTH, INC. Ba3 B+
2,000,000 Term Loan, maturing May 04, 2011 2,011,250
CENTENNIAL CELLULAR OPERATING COMPANY B2 B-
9,980,000 Term Loan, maturing February 09, 2011 9,997,675
DOBSON CELLULAR SYSTEMS, INC. B1 B-
5,463,747 Term Loan, maturing March 31, 2010 5,460,332
INDEPENDENT WIRELESS ONE CORPORATION Caa1 NR
3,304,714 (3) Term Loan, maturing December 20, 2007 3,201,442
10,912,873 (3) Term Loan, maturing June 20, 2008 10,571,846
MICROCELL TELECOMMUNICATIONS, INC. B3 B-
7,000,000 Term Loan, maturing July 15, 2011 7,030,625
MICROCELL TELECOMMUNICATIONS, INC. Caa2 CCC-
1,000,000 Term Loan, maturing February 15, 2011 1,025,000
NEXTEL FINANCE COMPANY Ba2 BBB
595,773 Revolver, maturing December 31, 2007 590,963
34,578,424 Term Loan, maturing December 31, 2007 34,470,366
28,932,500 Term Loan, maturing December 15, 2010 29,180,480
NEXTEL PARTNERS OPERATING CORPORATION B1 B+
8,000,000 Term Loan, maturing May 31, 2011 8,073,752
RURAL CELLULAR CORPORATION B2 B-
2,500,000 Floating Rate Note, maturing March 15, 2010 2,550,000
US UNWIRED, INC. B2 CCC-
2,457,145 Term Loan, maturing September 30, 2007 2,379,335
2,681,083 Term Loan, maturing March 31, 2008 2,596,181
----------------
129,682,810
----------------
CHEMICALS, PLASTICS AND RUBBER: 10.2%
ACADIA ELASTOMERS CORPORATION NR NR
8,430,657 Term Loan, maturing March 31, 2004 8,009,124
BRENNTAG AG B1 BB-
4,000,000 Term Loan, maturing December 09, 2011 4,030,000
CP KELCO APS B3 B
2,492,576 Term Loan, maturing March 31, 2008 2,512,310
810,798 Term Loan, maturing September 30, 2008 816,372
See Accompanying Notes to Financial Statements
23
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
CHEMICALS, PLASTICS AND RUBBER: (CONTINUED)
FMC CORPORATION Ba1 BBB-
$ 3,887,824 Term Loan, maturing October 21, 2007 $ 3,938,852
(2) GEO SPECIALTY CHEMICALS, INC. Caa1 D
1,740,101 Term Loan, maturing December 31, 2007 1,613,944
HERCULES, INC. Ba1 BB
9,325,000 Term Loan, maturing October 08, 2010 9,456,137
HUNTSMAN INTERNATIONAL, LLC B1 B
5,624,593 Term Loan, maturing June 30, 2007 5,653,593
5,624,593 Term Loan, maturing June 30, 2008 5,653,593
HUNTSMAN, LLC B2 B
7,372,482 Term Loan, maturing March 31, 2007 7,315,869
5,565,110 Term Loan, maturing March 31, 2007 5,525,358
JOHNSONDIVERSEY, INC. Ba3 BB-
3,203,601 Term Loan, maturing November 03, 2009 3,244,649
KRATON POLYMERS B1 BB-
2,991,667 Term Loan, maturing December 23, 2010 3,026,571
NALCO COMPANY B1 BB-
17,331,923 Term Loan, maturing November 04, 2010 17,400,523
NOVEON, INC. B1 BB-
7,862,146 Term Loan, maturing December 31, 2009 7,894,090
NUTRASWEET ACQUISITION CORPORATION Ba3 NR
47,225 Revolver, maturing May 24, 2005 45,100
281,567 Term Loan, maturing May 24, 2005 268,896
207,979 Term Loan, maturing June 30, 2006 208,499
2,868,590 Term Loan, maturing May 25, 2009 2,839,904
POLYPORE, INC. B1 B+
10,000,000 Term Loan, maturing November 12, 2011 10,112,500
ROCKWOOD SPECIALTIES GROUP, INC. B1 B+
3,980,000 Term Loan, maturing July 23, 2010 4,012,338
----------------
103,578,222
----------------
CONTAINERS, PACKAGING AND GLASS: 7.6%
BERRY PLASTICS CORPORATION B1 B+
1,000,000 Term Loan, maturing July 22, 2010 1,010,000
2,842,357 Term Loan, maturing July 22, 2010 2,880,553
CONSTAR INTERNATIONAL, INC. B2 BB-
2,457,525 Term Loan, maturing November 20, 2009 2,487,091
CROWN CORK & SEAL COMPANY, INC. Ba3 BB-
3,325,000 Term Loan, maturing September 15, 2008 3,371,237
GRAPHIC PACKAGING INTERNATIONAL, INC. B1 B+
14,925,000 Term Loan, maturing August 09, 2010 15,131,771
GREIF BROS. CORPORATION Ba3 BB
2,198,625 Term Loan, maturing August 23, 2009 2,217,863
IMPAXX, INC. NR NR
2,754,865 Term Loan, maturing April 30, 2005 2,272,477
JEFFERSON SMURFIT CORPORATION Ba3 B+
1,647,273 Term Loan, maturing March 31, 2007 1,665,187
See Accompanying Notes to Financial Statements
24
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING AND GLASS: (CONTINUED)
KERR GROUP, INC. B1 BB-
$ 2,423,692 Term Loan, maturing August 13, 2010 $ 2,442,248
KOCH CELLULOSE B1 BB
1,812,680 Term Loan, maturing May 07, 2011 1,823,444
(2) LINCOLN PULP & EASTERN FINE NR NR
61,520 (3) Term Loan, maturing December 31, 2001 12,919
112,339 (3) Term Loan, maturing August 25, 2004 112,339
13,849,995 (3) Term Loan, maturing August 31, 2004 2,908,499
OWENS-ILLINOIS GROUP, INC. B1 BB-
12,000,000 Term Loan, maturing April 01, 2008 12,063,216
SILGAN HOLDINGS, INC. Ba3 BB
5,929,950 Term Loan, maturing November 30, 2008 6,008,706
SMURFIT-STONE CONTAINER CANADA, INC. Ba3 B+
1,204,111 Term Loan, maturing June 30, 2009 1,216,905
SOLO CUP, INC. B1 B+
9,476,250 Term Loan, maturing February 27, 2011 9,612,471
STONE CONTAINER CORPORATION Ba3 B+
9,290,454 Term Loan, maturing June 30, 2009 9,373,195
TEKNI-PLEX, INC. B1 B+
253,713 Term Loan, maturing June 21, 2008 255,193
----------------
76,865,314
----------------
DATA AND INTERNET SERVICES: 0.1%
McLEODUSA, INC. Caa2 NR
1,319,441 Term Loan, maturing May 30, 2008 724,868
----------------
724,868
----------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING: 4.6%
BRAND SERVICES, INC. B1 B+
3,181,544 Term Loan, maturing October 16, 2009 3,202,755
DRESSER, INC. Ba3 BB-
3,092,429 Term Loan, maturing April 10, 2009 3,135,918
FLOWSERVE CORPORATION Ba3 BB-
1,208,163 Term Loan, maturing June 30, 2006 1,214,455
3,840,150 Term Loan, maturing June 30, 2009 3,887,192
MUELLER GROUP, INC. B2 B+
9,633,028 Term Loan, maturing April 23, 2011 9,705,276
NORCROSS SAFETY PRODUCTS, LLC B1 B+
949,038 Term Loan, maturing March 20, 2009 958,528
RLC INDUSTRIES COMPANY B1 BB+
1,995,000 Term Loan, maturing February 26, 2010 2,009,963
ROPER INDUSTRIES, INC. Ba2 BB+
3,308,125 Term Loan, maturing December 29, 2008 3,356,715
SENSUS METERING SYSTEMS, INC. B2 B+
1,734,783 Term Loan, maturing December 17, 2010 1,749,602
260,217 Term Loan, maturing December 17, 2010 262,440
SPX CORPORATION Ba2 BBB-
11,473,481 Term Loan, maturing September 30, 2009 11,616,900
See Accompanying Notes to Financial Statements
25
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING: (CONTINUED)
UNITED PET GROUP NR NR
$ 5,648,685 Term Loan, maturing March 31, 2006 $ 5,662,807
----------------
46,762,549
----------------
DIVERSIFIED/CONGLOMERATE SERVICE: 2.0%
AMERCO, INC. NR BB
9,983,334 Term Loan, maturing February 27, 2009 10,226,678
IRON MOUNTAIN, INC. B1 BB-
1,500,000 Term Loan, maturing April 02, 2009 1,517,813
RELIZON COMPANY B1 BB-
4,306,476 Term Loan, maturing February 20, 2011 4,322,625
US INVESTIGATIONS SERVICES, LLC B1 BB-
4,109,445 Term Loan, maturing December 31, 2008 4,106,877
----------------
20,173,992
----------------
DIVERSFIED/NATURAL RESOURCES, METALS AND MINERALS: 0.2%
GEORGIA-PACIFIC CORPORATION Ba2 BB+
2,296,889 Revolver, maturing November 03, 2005 2,288,995
----------------
2,288,995
----------------
ECOLOGICAL: 2.0%
ALLIED WASTE NORTH AMERICA, INC. Ba3 BB
97,200 Revolver, maturing June 30, 2010 96,095
7,572,321 Term Loan, maturing January 15, 2010 7,685,565
2,000,000 Term Loan, maturing January 15, 2010 2,031,876
1,000,000 Term Loan, maturing January 15, 2010 1,013,625
ENVIROSOLUTIONS, INC. NR NR
3,559,091 Term Loan, maturing March 01, 2009 3,559,091
77,273 Term Loan, maturing March 31, 2009 77,273
GREAT LAKES DREDGE & DOCK CORPORATION B1 B
1,917,081 Term Loan, maturing December 22, 2010 1,936,252
IESI COPRORATION B1 B+
200,625 Revolver, maturing September 30, 2008 198,117
995,000 Term Loan, maturing September 30, 2010 1,007,438
WASTE CONNECTIONS, INC. Ba2 BB+
3,000,000 Term Loan, maturing October 22, 2010 3,018,750
----------------
20,624,082
----------------
ELECTRONICS: 1.3%
ACTERNA, LLC NR NR
670,332 Term Loan, maturing October 14, 2008 670,332
ANTEON CORPORATION Ba3 BB
997,500 Term Loan, maturing December 31, 2010 1,006,644
DECISION ONE CORPORATION B3 CCC
1,744,352 Term Loan, maturing April 18, 2005 1,133,829
8,796,660 Term Loan, maturing April 18, 2005 5,717,829
INVENSYS INTERNATIONAL HOLDINGS LIMITED Ba3 B+
2,000,000 Term Loan, maturing September 05, 2009 2,020,000
KNOWLES ELECTRONICS, INC. B3 B-
2,121,197 Term Loan, maturing June 29, 2007 2,130,918
See Accompanying Notes to Financial Statements
26
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: (CONTINUED)
SARCOM, INC. NR NR
$ 978,578 Term Loan, maturing June 30, 2007 $ 479,503
----------------
13,159,056
----------------
FARMING AND AGRICULTURE: 1.5%
AGCO CORPORATION Ba1 BB+
4,628,333 Term Loan, maturing January 31, 2006 4,697,758
SCOTTS COMPANY Ba1 BB
2,997,000 Term Loan, maturing September 30, 2010 3,037,741
UNITED INDUSTRIES CORPORATION B1 B+
720,000 Revolver, maturing April 30, 2010 709,200
7,000,000 Term Loan, maturing April 29, 2011 7,091,875
----------------
15,536,574
----------------
FINANCE: 0.5%
RENT-A-CENTER, INC. Ba2 BB+
4,962,500 Term Loan, maturing May 28, 2009 5,027,633
----------------
5,027,633
----------------
GAMING: 4.3%
(2) ALADDIN GAMING, LLC Caa1 NR
3,869,336 (3) Term Loan, maturing August 26, 2006 3,701,666
10,377,506 (3) Term Loan, maturing February 26, 2008 9,927,818
ALLIANCE GAMING CORPORATION B1 BB-
8,000,000 Term Loan, maturing September 04, 2009 8,090,000
AMERISTAR CASINOS, INC. Ba3 BB-
2,762,195 Term Loan, maturing December 20, 2006 2,793,270
ARGOSY GAMING COMPANY Ba2 BB
4,376,250 Term Loan, maturing July 31, 2008 4,414,542
GLOBAL CASH ACCESS, LLC B2 B+
3,000,000 Term Loan, maturing March 10, 2010 3,037,500
GREEN VALLEY RANCH GAMING, LLC B1 B+
1,995,000 Term Loan, maturing December 22, 2010 2,017,444
ISLE OF CAPRI CASINOS, INC. Ba2 BB-
2,165,418 Term Loan, maturing April 26, 2008 2,190,940
PENN NATIONAL GAMING Ba3 BB-
2,211,922 Term Loan, maturing September 01, 2007 2,244,548
PINNACLE ENTERTAINMENT B1 B+
2,286,667 Term Loan, maturing December 17, 2009 2,316,680
UNITED AUBURN INDIAN COMMUNITY Ba3 BB-
3,069,498 Term Loan, maturing January 24, 2009 3,084,845
----------------
43,819,252
----------------
GROCERY: 0.3%
GIANT EAGLE, INC. Ba2 BB+
1,909,667 Term Loan, maturing August 02, 2009 1,938,312
1,041,960 Term Loan, maturing August 06, 2009 1,054,659
----------------
2,992,971
----------------
See Accompanying Notes to Financial Statements
27
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
HEALTHCARE, EDUCATION AND CHILDCARE: 10.3%
ALARIS MEDICAL SYSTEMS, INC. Ba3 BB
$ 1,997,908 Term Loan, maturing June 30, 2009 $ 2,025,068
ALLIANCE IMAGING, INC. B1 B+
704,198 Term Loan, maturing November 02, 2006 692,755
4,612,436 Term Loan, maturing June 10, 2008 4,583,608
APRIA HEALTHCARE GROUP, INC. Ba1 BBB-
2,753,425 Term Loan, maturing July 20, 2006 2,789,564
4,875,000 Term Loan, maturing July 20, 2008 4,934,109
COMMUNITY HEALTH SYSTEMS, INC. Ba3 BB-
14,784,900 Term Loan, maturing July 16, 2010 15,030,699
1,990,000 Term Loan, maturing January 16, 2011 2,017,363
DAVITA, INC. Ba2 BB
4,062,500 Term Loan, maturing March 31, 2007 4,100,586
10,921,856 Term Loan, maturing March 31, 2009 11,034,493
DJ ORTHOPEDICS, LLC B1 BB-
987,500 Term Loan, maturing May 15, 2009 1,001,078
EMPI CORPORATION B1 B+
1,450,795 Term Loan, maturing November 24, 2009 1,467,116
EXPRESS SCRIPTS, INC. Ba1 BBB
3,000,000 Term Loan, maturing February 13, 2010 3,026,874
FISHER SCIENTIFIC INTERNATIONAL, INC. Ba3 BB+
5,171,655 Term Loan, maturing March 31, 2010 5,211,518
FRESENIUS MEDICAL CARE HOLDINGS, INC. Ba1 BB+
4,000,000 Term Loan, maturing February 21, 2010 4,015,624
IASIS HEALTHCARE CORPORATION B1 B+
1,835,000 Term Loan, maturing February 09, 2009 1,844,175
INSIGHT HEALTH SERVICES CORPORATION B1 B+
866,667 Term Loan, maturing October 07, 2008 866,667
200,000 Term Loan, maturing October 07, 2008 200,000
100,000 Term Loan, maturing October 07, 2008 100,000
5,289,255 Term Loan, maturing October 17, 2008 5,302,478
KINETIC CONCEPTS, INC. B1 BB-
4,454,167 Term Loan, maturing August 11, 2010 4,489,431
MAGELLAN HEALTH SERVICES, INC. B1 B+
1,604,167 Term Loan, maturing August 15, 2008 1,630,235
OXFORD HEALTH PLANS, INC. Baa3 BB+
4,950,000 Term Loan, maturing April 25, 2009 4,973,720
PACIFICARE HEALTH SYSTEMS, INC. Ba3 BB+
992,500 Term Loan, maturing June 03, 2008 1,003,252
SOLA INTERNATIONAL, INC. Ba3 BB-
2,000,000 Term Loan, maturing December 11, 2009 2,032,500
SYBRON DENTAL MANAGEMENT, INC. Ba2 BB+
628,305 Term Loan, maturing June 06, 2009 632,468
TRIAD HOSPITALS, INC. Ba3 BB
1,491,121 Term Loan, maturing September 30, 2008 1,512,636
See Accompanying Notes to Financial Statements
28
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
HEALTHCARE, EDUCATION AND CHILDCARE: (CONTINUED)
VANGUARD HEALTH SYSTEMS, INC. Ba3 B+
$ 6,000,000 Term Loan, maturing May 18, 2009 $ 6,022,500
VICAR OPERATING, INC. B1 B+
5,911,718 Term Loan, maturing June 30, 2009 5,985,614
VWR INTERNATIONAL, INC. B1 BB-
5,500,000 Term Loan, maturing April 07, 2011 5,577,688
----------------
104,103,818
----------------
HOME AND OFFICE FURNISHINGS, HOUSEWARES: 3.1%
GLOBAL IMAGING SYSTEMS, INC. Ba3 BB-
1,500,000 Term Loan, maturing May 10, 2010 1,500,000
HILLMAN GROUP, INC. B2 B
3,000,000 Term Loan, maturing March 30, 2011 3,030,000
HOLMES GROUP, INC. B1 B
5,000,000 Term Loan, maturing November 08, 2010 5,025,000
IDENTITY GROUP, INC. NR NR
4,082,337 Term Loan, maturing April 30, 2006 2,571,872
SEALY MATTRESS COMPANY B2 B+
9,000,000 Term Loan, maturing April 06, 2012 9,112,500
SIMMONS COMPANY B2 B+
8,323,704 Term Loan, maturing December 19, 2011 8,415,614
XEROX CORPORATION Ba3 BB-
2,000,000 Term Loan, maturing September 30, 2008 1,998,542
----------------
31,653,529
----------------
INSURANCE: 1.4%
CONSECO, INC. B3 BB-
8,778,184 Term Loan, maturing September 10, 2009 8,796,469
1,995,042 Term Loan, maturing September 10, 2009 1,999,198
2,633,455 Term Loan, maturing September 10, 2010 2,638,940
598,512 Term Loan, maturing September 10, 2010 599,759
----------------
14,034,366
----------------
LEISURE, AMUSEMENT AND ENTERTAINMENT: 11.1%
AMF BOWLING WORLDWIDE, INC. B1 B
2,500,000 Term Loan, maturing August 26, 2009 2,517,188
FITNESS HOLDINGS WORLDWIDE, INC. B1 B
4,987,500 Term Loan, maturing July 01, 2009 5,018,672
LODGENET ENTERTAINMENT CORPORATION B1 B+
4,919,380 Term Loan, maturing June 30, 2006 4,947,819
LOEWS CINEPLEX ENTERTAINMENT CORPORATION NR NR
6,210,990 Term Loan, maturing February 29, 2008 6,222,636
METRO-GOLDWYN-MAYER STUDIOS, INC. Ba3 B+
29,000,000 Term Loan, maturing April 30, 2011 29,152,250
NEW JERSEY BASKETBALL, LLC NR NR
9,000,000 Term Loan, maturing July 16, 2004 9,016,875
PURE FISHING B1 BB-
3,000,000 Term Loan, maturing September 30, 2010 3,041,250
See Accompanying Notes to Financial Statements
29
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
LEISURE, AMUSEMENT AND ENTERTAINMENT: (CONTINUED)
REGAL CINEMAS, INC. Ba3 BB-
$ 14,000,000 Term Loan, maturing November 10, 2010 $ 14,129,066
SIX FLAGS THEME PARKS, INC. Ba3 B+
300,000 Revolver, maturing June 30, 2008 291,000
9,959,870 Term Loan, maturing June 30, 2009 10,055,315
VIVENDI UNIVERSAL ENTERTAINMENT, LLLP Ba2 BBB-
7,000,000 Term Loan, maturing June 30, 2008 7,054,691
WARNER MUSIC GROUP B1 B+
15,000,000 Term Loan, maturing February 28, 2011 15,179,685
XANTERRA PARKS & RESORTS, LLC NR NR
3,030,409 Term Loan, maturing September 30, 2004 3,026,621
3,030,409 Term Loan, maturing September 30, 2005 3,026,621
----------------
112,679,688
----------------
LODGING: 5.3%
CNL HOSPITALITY PARTNERS, L.P. NR NR
35,000,000 Term Loan, maturing January 02, 2005 35,000,000
WYNDHAM INTERNATIONAL, INC. NR NR
3,546,242 Term Loan, maturing April 01, 2006 3,474,682
15,713,651 Term Loan, maturing June 30, 2006 15,119,486
----------------
53,594,169
----------------
MACHINERY: 4.0%
ALLIANCE LAUNDRY HOLDINGS, LLC B1 B
3,206,990 Term Loan, maturing August 02, 2007 3,223,025
ANTHONY CRANE RENTAL, L.P. Caa2 CC
13,757,427 Term Loan, maturing July 20, 2006 10,341,004
ENERSYS, INC. B1 BB-
4,500,000 Term Loan, maturing March 15, 2011 4,571,249
MORRIS MATERIAL HANDLING, INC. NR NR
249,574 Term Loan, maturing September 28, 2004 237,095
NATIONAL WATERWORKS, INC. B1 BB-
2,892,857 Term Loan, maturing November 22, 2009 2,926,608
REXNORD CORPORATION B1 B+
6,222,222 Term Loan, maturing November 25, 2009 6,288,333
UNITED RENTALS (NORTH AMERICA), INC. Ba3 BB
10,333,333 Term Loan, maturing February 14, 2011 10,445,708
VUTEK, INC. B1 NR
470,218 Term Loan, maturing July 31, 2005 456,111
1,650,956 Term Loan, maturing July 31, 2007 1,601,427
671,218 Term Loan, maturing December 30, 2007 671,218
----------------
40,761,778
----------------
MINING, STEEL, IRON AND NONPRECIOUS METALS: 0.9%
PEABODY ENERGY CORPORATION Ba1 BB+
8,910,000 Term Loan, maturing March 21, 2010 8,991,304
----------------
8,991,304
----------------
See Accompanying Notes to Financial Statements
30
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
OIL AND GAS: 2.6%
CITGO PETROLEUM CORPORATION Ba2 BB+
$ 2,500,000 Term Loan, maturing February 27, 2006 $ 2,601,563
GETTY PETROLEUM MARKETING, INC. B1 BB-
6,000,000 Term Loan, maturing May 19, 2010 6,000,000
LYONDELL-CITGO REFINING, L.P. Ba3 BB
1,000,000 Term Loan, maturing May 03, 2007 1,015,313
PACIFIC ENERGY GROUP, LLC Ba2 BBB-
4,000,000 Term Loan, maturing July 26, 2009 4,040,000
TRANSWESTERN PIPELINE COMPANY B1 BB
2,000,000 Term Loan, maturing April 30, 2009 2,021,876
W-H ENERGY SERVICES, INC. B2 B+
3,395,078 Term Loan, maturing April 16, 2007 3,412,053
3,473,750 Term Loan, maturing April 16, 2007 3,491,119
WILLIAMS PRODUCTION RMT COMPANY B2 BB
3,981,281 Term Loan, maturing May 30, 2007 4,024,828
----------------
26,606,752
----------------
OTHER BROADCASTING AND ENTERTAINMENT: 3.2%
DIRECTV HOLDINGS, LLC Ba2 BB
7,020,306 Term Loan, maturing March 06, 2010 7,124,733
LIBERTY MEDIA CORPORATION Baa3 BBB-
15,000,000 Floating Rate Note, maturing
September 17, 2006 15,254,760
PEGASUS MEDIA & COMMUNICATIONS, INC. Caa1 B-
1,651,507 Term Loan, maturing April 30, 2005 1,589,575
RAINBOW MEDIA GROUP Ba2 BB+
7,959,972 Term Loan, maturing March 31, 2009 8,030,450
----------------
31,999,518
----------------
OTHER TELECOMMUNICATIONS: 6.1%
CINCINNATI BELL, INC. B1 B+
14,389,414 Term Loan, maturing June 30, 2008 14,547,698
CONSOLIDATED COMMUNICATIONS, INC. B1 B+
3,500,000 Term Loan, maturing March 31, 2010 3,508,750
2,500,000 Term Loan, maturing October 14, 2011 2,509,375
D&E COMMUNICATIONS, INC. Ba3 BB-
2,992,500 Term Loan, maturing March 05, 2012 3,026,166
ECHOSTAR DBS CORPORATION Ba3 BB-
12,000,000 Floating Rate Note, maturing
October 01, 2008 12,405,000
GCI HOLDINGS, INC. Ba3 BB+
2,087,144 Term Loan, maturing October 31, 2007 2,104,102
INTERA GROUP, INC. NR NR
2,640,478 (3) Term Loan, maturing December 31, 2005 1,214,620
909,384 (3) Term Loan, maturing December 31, 2005 --
1,922,621 (3) Term Loan, maturing December 31, 2005 --
PANAMSAT CORPORATION Ba2 BB
537,115 Term Loan, maturing September 30, 2010 539,465
See Accompanying Notes to Financial Statements
31
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
OTHER TELECOMMUNICATIONS: (CONTINUED)
QWEST COMMUNICATIONS INTERNATIONAL, INC. B3 CCC+
$ 15,000,000 Floating Rate Note, maturing
February 15, 2009 $ 13,875,000
QWEST CORPORATION B2 B-
2,000,000 Term Loan, maturing June 30, 2007 2,067,750
TIME WARNER TELECOM HOLDINGS B1 B
6,000,000 Floating Rate Note, maturing
February 15, 2011 5,880,000
----------------
61,677,925
----------------
PERSONAL AND NONDURABLE CONSUMER PRODUCTS: 4.3%
AMSCAN HOLDINGS, INC. B1 B+
3,000,000 Term Loan, maturing April 30, 2012 3,030,000
BUHRMANN U.S., INC. Ba3 BB-
2,992,500 Term Loan, maturing December 31, 2010 3,028,841
CHURCH & DWIGHT CO., INC. Ba2 BB
1,163,424 Term Loan, maturing September 30, 2007 1,172,877
JARDEN CORPORATION Ba3 B+
1,990,000 Term Loan, maturing April 24, 2008 2,010,523
JOSTENS, INC. Ba3 B+
4,264,991 Term Loan, maturing July 29, 2010 4,308,707
NORWOOD PROMOTIONAL PRODUCTS, INC. NR NR
12,113,580 Term Loan, maturing February 01, 2005 12,113,580
8,358,425 (3) Term Loan, maturing February 01, 2005 3,719,499
1,998,167 (3) Term Loan, maturing February 01, 2005 --
PAINT SUNDRY BRANDS CORPORATION B1 B
4,000,000 Term Loan, maturing July 28, 2010 4,050,000
PRESTIGE BRANDS HOLDINGS, INC. B1 B
6,000,000 Term Loan, maturing April 06, 2011 6,048,750
RAYOVAC CORPORATION B1 B+
3,607,729 Term Loan, maturing September 30, 2009 3,649,445
----------------
43,132,222
----------------
PERSONAL, FOOD AND MISCELLANEOUS SERVICES: 2.9%
AFC ENTERPRISES, INC. B1 B
1,478,620 Term Loan, maturing May 23, 2009 1,484,165
ALDERWOODS GROUP, INC. B1 BB-
2,155,448 Term Loan, maturing September 29, 2008 2,187,107
COINMACH CORPORATION B1 BB-
4,900,000 Term Loan, maturing July 25, 2009 4,949,613
DOMINO'S, INC. B1 B+
7,971,655 Term Loan, maturing June 25, 2010 8,067,562
GATE GOURMET BORROWER, LLC B1 BB
990,000 Term Loan, maturing December 31, 2008 992,888
1,034,811 Term Loan, maturing December 31, 2009 1,050,333
JACK IN THE BOX, INC. Ba2 BB
3,990,000 Term Loan, maturing January 09, 2010 4,049,850
OTIS SPUNKMEYER, INC. B1 B+
6,127,563 Term Loan, maturing February 20, 2009 6,181,179
----------------
28,962,697
----------------
See Accompanying Notes to Financial Statements
32
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
PRINTING AND PUBLISHING: 12.4%
ADAMS OUTDOOR ADVERTISING, L.P. B1 B+
$ 4,000,000 Term Loan, maturing October 15, 2011 $ 4,040,832
AMERICAN ACHIEVEMENT CORPORATION B1 B+
1,000,000 Term Loan, maturing March 17, 2011 1,013,750
AMERICAN MEDIA OPERATIONS, INC. Ba3 B+
3,777,279 Term Loan, maturing April 01, 2007 3,832,760
AMERICAN REPROGRAPHICS COMPANY B1 BB
2,493,750 Term Loan, maturing June 18, 2009 2,524,922
AMERICAN REPROGRAPHICS COMPANY B3 B
1,000,000 Term Loan, maturing December 18, 2009 1,017,500
CANWEST MEDIA, INC. Ba3 B+
9,897,436 Term Loan, maturing May 15, 2009 9,938,679
DEX MEDIA EAST, LLC B1 BB-
7,561,803 Term Loan, maturing November 08, 2008 7,590,160
4,205,195 Term Loan, maturing May 08, 2009 4,227,537
DEX MEDIA WEST, LLC B1 BB-
6,345,372 Term Loan, maturing September 09, 2009 6,369,827
25,381,476 Term Loan, maturing March 09, 2010 25,576,380
FREEDOM COMMUNICATIONS Ba3 BB
12,000,000 Term Loan, maturing April 12, 2012 12,117,504
LAMAR MEDIA CORPORATION Ba2 BB-
2,000,000 Term Loan, maturing June 30, 2009 2,007,084
12,370,370 Term Loan, maturing June 30, 2010 12,540,463
MEDIANEWS GROUP, INC. Ba3 BB
2,493,750 Term Loan, maturing December 30, 2010 2,518,688
PRIMEDIA, INC. B3 B
6,439,135 Term Loan, maturing June 30, 2009 6,141,325
R.H. DONNELLEY, INC. Ba3 BB
7,901,382 Term Loan, maturing June 30, 2010 8,000,694
TRANSWESTERN PUBLISHING COMPANY B1 BB-
6,418,750 Term Loan, maturing February 25, 2011 6,474,914
TRANSWESTERN PUBLISHING COMPANY B2 B
4,000,000 Term Loan, maturing February 25, 2012 4,031,668
ZIFF DAVIS MEDIA, INC. B3 CCC
6,315,549 Term Loan, maturing March 31, 2007 6,253,707
----------------
126,218,393
----------------
RADIO AND TV BROADCASTING: 6.2%
BLOCK COMMUNICATIONS, INC. Ba2 BB-
2,804,772 Term Loan, maturing November 15, 2009 2,839,832
CUMULUS MEDIA, INC. Ba3 B+
2,970,000 Term Loan, maturing March 28, 2010 3,013,065
EMMIS OPERATING COMPANY Ba2 B+
10,000,000 Term Loan, maturing November 10, 2011 10,013,890
FISHER BROADCASTING, INC. Ba3 B+
1,271,673 Term Loan, maturing February 28, 2010 1,274,852
See Accompanying Notes to Financial Statements
33
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
RADIO AND TV BROADCASTING: (CONTINUED)
GRAY TELEVISION, INC. Ba2 B+
$ 3,990,000 Term Loan, maturing December 31, 2010 $ 4,018,429
LIN TELEVISION CORPORATION Ba1 BB
2,028,571 Term Loan, maturing December 31, 2007 2,054,652
MISSION BROADCASTING, INC. Ba3 B+
2,327,500 Term Loan, maturing December 31, 2010 2,352,230
NEXSTAR BROADCASTING Ba3 B+
1,196,426 Term Loan, maturing December 31, 2010 1,207,643
PAXSON COMMUNICATIONS CORPORATION B1 B+
18,000,000 Floating Rate Note, maturing
January 15, 2010 17,820,000
SINCLAIR BROADCAST GROUP, INC. Ba2 BB
2,765,400 Term Loan, maturing December 31, 2009 2,806,306
4,609,000 Term Loan, maturing December 31, 2009 4,676,213
SPANISH BROADCASTING SYSTEMS B1 B+
1,995,000 Term Loan, maturing October 30, 2009 2,022,431
SUSQUEHANNA MEDIA COMPANY Ba2 BB-
7,000,000 Term Loan, maturing March 31, 2012 7,067,816
TELEVICENTRO OF PUERTO RICO, LLC Ba1 BB
1,851,429 Term Loan, maturing December 31, 2007 1,875,233
----------------
63,042,591
----------------
RETAIL: 4.2%
ADVANCE STORES COMPANY, INC. Ba2 BB
5,478,926 Term Loan, maturing November 30, 2007 5,545,703
ALIMENTATION COUCHE-TARD, INC. Ba2 BB
1,221,429 Term Loan, maturing December 17, 2010 1,234,661
BAKER & TAYLOR, INC. B1 B
1,000,000 Term Loan, maturing May 06, 2011 990,000
CH OPERATING, LLC B2 B+
1,663,339 Term Loan, maturing June 21, 2007 1,679,972
CSK AUTO, INC. Ba3 B+
1,500,000 Term Loan, maturing June 19, 2009 1,516,875
NEBRASKA BOOK COMPANY, INC. B2 B
2,500,000 Term Loan, maturing March 04, 2011 2,533,595
ORIENTAL TRADING COMPANY, INC. B1 B+
2,936,651 Term Loan, maturing August 06, 2010 2,956,840
ORIENTAL TRADING COMPANY, INC. B2 B-
1,000,000 Term Loan, maturing January 08, 2011 1,019,583
PANTRY, INC. B1 B+
9,000,000 Term Loan, maturing March 12, 2011 9,129,375
PETCO ANIMAL SUPPLIES, INC. Ba3 BB
2,540,168 Term Loan, maturing October 26, 2008 2,565,570
RITE AID CORPORATION Ba3 BB
11,000,000 Term Loan, maturing April 30, 2008 11,269,500
See Accompanying Notes to Financial Statements
34
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
RETAIL: (CONTINUED)
TRAVELCENTERS OF AMERICA, INC. Ba3 BB
$ 2,192,775 Term Loan, maturing November 14, 2008 $ 2,222,011
----------------
42,663,686
----------------
TELECOMMUNICATIONS EQUIPMENT: 4.4%
CROWN CASTLE OPERATING COMPANY B1 B-
4,066,258 Term Loan, maturing September 15, 2007 4,096,393
17,347,825 Term Loan, maturing September 30, 2010 17,666,591
SBA SENIOR FINANCE, INC. B2 CCC+
6,134,615 Term Loan, maturing October 31, 2008 6,165,288
SPECTRASITE COMMUNICATIONS, INC. B1 B+
10,263,258 Term Loan, maturing December 31, 2007 10,385,134
4,896,488 Term Loan, maturing December 31, 2007 4,923,012
TRIPOINT GLOBAL COMMUNICATIONS, INC. NR NR
1,043,184 Term Loan, maturing May 31, 2006 1,006,673
----------------
44,243,091
----------------
TEXTILES AND LEATHER: 0.9%
GALEY & LORD, INC. NR NR
2,670,191 Term Loan, maturing September 05, 2009 1,555,386
MALDEN MILLS INDUSTRIES, INC. NR NR
2,573,615 Term Loan, maturing October 01, 2008 2,573,615
735,319 (3) Term Loan, maturing October 01, 2008 --
POLYMER GROUP, INC. B2 B+
3,000,000 Term Loan, maturing April 27, 2010 3,023,751
WILLIAM CARTER COMPANY Ba3 BB+
1,515,984 Term Loan, maturing September 08, 2008 1,533,039
----------------
8,685,791
----------------
UTILITIES: 6.0%
ALLEGHENY ENERGY SUPPLY COMPANY B1 B
14,000,000 Term Loan, maturing March 08, 2011 14,037,506
7,000,000 Term Loan, maturing June 08, 2011 7,011,249
ASTORIA ENERGY, LLC Ba3 B+
14,500,000 Term Loan, maturing April 15, 2012 14,617,813
CALPINE CONSTRUCTION FINANCE COMPANY, L.P. NR B+
1,990,000 Term Loan, maturing February 26, 2009 2,102,435
CALPINE CORPORATION B2 B
7,433,775 Term Loan, maturing July 16, 2007 7,461,652
3,962,550 Term Loan, maturing July 16, 2007 3,551,435
CALPINE GENERATING COMPANY, LLC B1 B+
2,500,000 Term Loan, maturing April 01, 2008 2,476,563
CENTERPOINT ENERGY, INC. Ba1 BBB
3,481,081 Term Loan, maturing October 07, 2006 3,540,757
PIKE ELECTRIC, INC. Ba3 BB-
1,611,765 Term Loan, maturing April 18, 2010 1,631,912
TETON POWER FUNDING Ba3 B+
4,250,000 Term Loan, maturing March 12, 2011 4,292,500
----------------
60,723,821
----------------
TOTAL SENIOR LOANS
(COST $1,834,605,679) $ 1,828,496,834
----------------
See Accompanying Notes to Financial Statements
35
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
BANK LOAN
RATINGS+
PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
------------------------------------------------------------------------------------------------------------------------
OTHER CORPORATE DEBT: 1.1%
FINANCE: 0.8%
VALUE ASSET MANAGEMENT, INC. B3 B
$ 7,794,118 Senior Subordinated Bridge Note,
maturing August 31, 2005 $ 7,618,750
----------------
7,618,750
----------------
HEALTHCARE, EDUCATION AND CHILDCARE: 0.0%
BLOCK VISION HOLDINGS CORPORATION NR NR
13,365 Junior Term Loan, maturing July 30, 2007 --
----------------
--
----------------
HOME AND OFFICE FURNISHINGS, HOUSEWARES: 0.2%
MP HOLDINGS, INC. NR NR
45,229 Subordinated Note, maturing
March 14, 2007 42,968
SEALY MATTRESS COMPANY B3 B-
2,000,000 Unsecured Term Loan,
maturing April 05, 2013 2,026,250
----------------
2,069,218
----------------
TEXTILES AND LEATHER: 0.1%
TARTAN TEXTILE SERVICES, INC. NR NR
1,332,583 Subordinated Note,
maturing April 01, 2011 1,332,583
----------------
1,332,583
----------------
TOTAL OTHER CORPORATE DEBT
(COST $11,144,616) 11,020,551
----------------
EQUITIES AND OTHER ASSETS: 3.3%
SECURITY DESCRIPTION VALUE
------------------------------------------------------------------------------------------------------------------------
(@), (R) Acterna, LLC (85,722 Common Shares) 1,090,731
(@), (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
(@), (R) Block Vision Holdings Corporation (571 Common Shares) --
(2), (@), (R) Boston Chicken, Inc. (Residual Interest in Boston
Chicken Plan Trust) 6,728,959
(@), (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) --
(@), (R) Decision One Corporation (350,065 Common Shares) --
(2), (@), (R) Electro Mechanical Solutions (Residual Interest in
Bankruptcy Estate) 2,193
(@), (R) Enginen Realty (857 Common Shares) --
(@), (R) Enterprise Profit Solutions (Liquidation Interest) --
See Accompanying Notes to Financial Statements
36
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
SECURITY DESCRIPTION VALUE
------------------------------------------------------------------------------------------------------------------------
(4), (@), (R) Euro United Corporation (Residual Interest in
Bankruptcy Estate) $ 2,335,366
(2), (@), (R) Exide Technologies (Warrants for 16,501 Common Shares,
Expires March 16, 2006) 165
(@), (R) Galey & Lord (203,345 Common Shares) --
(@), (R) Gate Gourmet Borrower, LLC (Warrants for 101
Common Shares) --
(@), (R) Gemini Leasing, Inc. (143,079 common shares) --
(@) Genesis Healthcare Corporation (13,302 Common Shares) 244,276
(2), (@), (R) Grand Union Company (Residual Interest in
Bankruptcy Estate) 76,172
(@) Hayes Lemmerz (73,835 Common Shares) 976,837
(@) Hayes Lemmerz (246 Preferred Shares) 3,255
(@), (R) Holmes Group (2,303, Common Shares) 24,527
(@) HQ Global (1,523 Common Shares) 24,520
HQ Global (2,461,860 Preferred Shares) 2,461,860
(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
(@), (R) Imperial Home Decor Group, Inc. (Liquidation Interest) --
(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. (436,865 Common Shares) --
(@), (R) Malden Mills Industries, Inc. (1,427,661 Preferred Shares) --
(@), (R) Morris Material Handling, Inc. (481,373 Common Shares) 1,078,276
(@), (R) MP Holdings, Inc. (590 Common Shares) 6
(@), (R) Murray's Discount Auto Stores, Inc. (Escrow Interest) 510,279
(@) NeighborCare (6,365 Common Shares) 190,950
(@), (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
(@) Outsourcing Solutions, Inc. (31,129 Common Shares) 766,707
(@), (R) Safelite Glass Corporation (660,808 Common Shares) 8,484,775
(@), (R) Safelite Realty (44,605 Common Shares) 245,328
(@), (R) Sarcom, Inc. (462,984 Common Shares) --
(@), (R) Sarcom, Inc. (4,015 Preferred Shares) --
(@), (R) Scientific Games Corporation (48,930 Non-Voting
Common Shares) 906,184
(@), (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
37
ING Prime Rate Trust
PORTFOLIO OF INVESTMENTS as of May 31, 2004 (Unaudited) (continued)
SECURITY DESCRIPTION VALUE
------------------------------------------------------------------------------------------------------------------------
(@), (R) Tartan Textile Services, Inc.
(23,449 Shares of Series D Preferred Stock) $ 1,440,521
(@), (R) Tartan Textile Services, Inc.
(36,775 Shares of Series E Preferred Stock) --
(@), (R) Teligent, Inc. (50 Common Shares) --
(@), (R) Tembec, Inc. (167,239 Common Shares) 1,288,434
(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 EQUITY AND OTHER ASSETS
(COST $33,429,106) 33,639,916
---------------
TOTAL INVESTMENTS
(COST $1,879,179,401) 184.6% $ 1,873,157,301
PREFERRED SHARES AND LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS, NET (84.6) (858,560,189)
----- ---------------
NET ASSETS 100.0% $ 1,014,597,112
===== ===============
----------
(@) 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 $1,880,664,502.
Net unrealized depreciation consists of the following:
Gross Unrealized Appreciation $ 79,017,853
Gross Unrealized Depreciation (85,525,054)
--------------
Net Unrealized Depreciation $ (6,507,201)
==============
See Accompanying Notes to Financial Statements
38
ING Prime Rate Trust
ADDITIONAL INFORMATION (Unaudited)
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 $100,000 on a monthly basis.
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 will issue new
shares for dividend reinvestment purchases 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 will be issued by the
Trust for optional cash investments when the market price plus estimated
commissions is equal to or exceeds the net asset value on the valuation date.
Such shares will be issued at a discount to market, determined by the Trust,
between 0% and 5%.
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 PRORATA 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 the Trust's 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 common 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
39
ING Prime Rate Trust
ADDITIONAL INFORMATION (Unaudited) (continued)
Funds" feature in Barron's, The New York Times, The Wall Street Journal and many
other regional and national publications.
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.
NUMBER OF SHAREHOLDERS
The approximate number of record holders of Common Stock as of May 28, 2004 was
7,428 which does not include approximately 49,800 beneficial owners of shares
held in the name of brokers of other nominees.
40
ING Prime Rate Trust
TRUSTEE AND OFFICER INFORMATION (Unaudited)
The business and affairs of the Trust are managed under the direction of the
Trust's Board of Trustees. A trustee who is not an interested person of the
Trust, as defined in the 1940 Act, is an independent trustee ("Non-Interested
Trustee"). The Trustees of the Trust are listed below. The Trust's Statement of
Additional Information includes additional information about the trustees 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 President and Partner, 118 University of Massachusetts
7337 E. Doubletree Ranch Rd. 1999 - Doherty, Wallace, Foundation Board (April
Scottsdale, Arizona 85258 present Pillsbury 2004 - Present)
Born: 1934 and Murphy, P.C.,
Attorneys
(1996 - Present).
J. Michael Earley(3) Trustee February President and Chief 118 None
7337 E. Doubletree Ranch Rd. 2002 - Executive Officer,
Scottsdale, Arizona 85258 present Bankers
Born: 1945 Trust Company, N.A.
(1992 - Present).
R. Barbara Gitenstein(2) Trustee February President, College of 118 New Jersey Resources
7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 - (September 2003 - Present)
Scottsdale, Arizona 85258 present Present).
Born: 1948
Walter H. May(2) Trustee November Retired. Formerly, 118 Trustee, BestPrep Charity
7337 E. Doubletree Ranch Rd. 1999 - Trustee of each of the (1991 - Present) -
Scottsdale, Arizona 85258 present funds managed by Charitable
Born: 1936 Northstar Investment organization.
Management Corporation
(1996 - 1999).
Jock Patton(2) Trustee August Private Investor (June 118 Director, Hypercom, Inc.
7337 E. Doubletree Ranch Rd. 1995 - 1997 - Present).Formerly, (January 1999 - Present);
Scottsdale, Arizona 85258 present Director and Chief JDA Software Group, Inc.
Born: 1945 Executive Officer, (January 1999 - Present);
Rainbow Multimedia Swift Transportation Co.
Group, Inc. (January (March 2004 - Present)
1999 - December 2001).
David W.C. Putnam(3) Trustee November President and Director, 118 Anchor International Bond
7337 E. Doubletree Ranch Rd. 1999 - F.L. Putnam Securities Trust (December 2000 -
Scottsdale, Arizona 85258 present Company, Inc. and its 2002); F.L. Putnam
Born: 1939 affiliates (1978 - Foundation (December 2000 -
Present); President, Present); Progressive
Secretary and Trustee, Capital Accumulation Trust
The Principled Equity (August 1998 - Present);
Market Fund (1996 - Principled Equity Market
Present). Fund (November 1996 -
Present); Mercy Endowment
Foundation (1995 -
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 1998 -
Present); and an Honorary
Trustee, Mercy Hospital
(1973 - Present).
Blaine E. Rieke Trustee February General Partner, 118 Trustee, Morgan Chase Trust
7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners Co. (January 1998 -
Scottsdale, Arizona 85258 present (January 1997 - Present); Director, Members
Born: 1933 Present). Chairman of Trust Co. (November 2003 -
the Board and Trustee of Present).
each of the funds
managed by ING
Investment Management
Co. LLC (November 1998 -
February 2001).
Roger B. Vincent Trustee February President, Springwell 118 Director, AmeriGas Propane,
7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - Inc. (1998 - Present).
Scottsdale, Arizona 85258 present Present). Formerly,
Born: 1945 Director Tatham
Offshore, Inc. (1996 -
2000).
41
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:
Richard A. Wedemeyer(2)(3) Trustee February Retired. Formerly, Vice 118 Touchstone Consulting Group
7337 E. Doubletree Ranch Rd. 2001 - President - Finance and (1997 - Present); Jim Henson
Scottsdale, Arizona 85258 present Administration, Channel Legacy (1994 - Present).
Born: 1936 Corporation (1996 -
2002); Trustee, First
Choice Funds (1997 -
2001); and of each of
the funds managed by ING
Investment Management
Co. LLC (1998 - 2001).
Thomas J. McInerney(4) Trustee February Chief Executive Officer, 171 Director, Equitable Life
7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial Insurance Co., Golden
Scottsdale, Arizona 85258 present Services (September 2001 American Life Insurance
Born: 1956 - present); Member, ING Co., Life Insurance Company
Americas Executive of Georgia, Midwestern
Committee (2001 - United Life Insurance Co.,
present); President, ReliaStar Life Insurance
Chief Executive Officer Co., Security Life of
and Director of Northern Denver, Security
Life Insurance Company Connecticut Life Insurance
(2001 - present), ING Co., Southland Life
Aeltus Holding Company, Insurance Co., USG Annuity
Inc. (2000 - present), and Life Company and United
ING Retail Holding Life and Annuity Insurance
Company (1998 - Co. Inc. (March 2001 -
present). Formerly, Present); Member of the
General Manager and Board, Bushnell Performing
Chief Executive Officer, Arts Center; St. Francis
ING Worksite Division Hospital; National
(December 2000 - October Conference of Community
2001), President, Justice; and Metro Atlanta
ING-SCI, Inc. (August Chamber of Commerce.
1997 - December 2000);
President, Aetna
Financial Services
(August 1997 - December
2000).
John G. Turner(5) Trustee September Chairman, Hillcrest 118 Director, Hormel Foods
7337 E. Doubletree Ranch Rd. 2000 - Capital Partners Corporation (March 2000 -
Scottsdale, Arizona 85258 present (May 2002 - Present); Present); Shopko Stores,
Born: 1939 Formerly, Vice Chairman Inc. (August 1999 -
of ING Americas (2000 - Present); and M.A.
2002); Chairman and Mortenson Company (March
Chief Executive Officer 2002 - Present); Conseco,
of ReliaStar Financial Inc. (September 2003 -
Corp. (1993 - 2001); Present).
Chairman of ReliaStar
Life Insurance Company
of New York (1995 -
2001); Chairman of
Northern Life Insurance
Company (1992 - 2001);
Chairman and Trustee of
the Northstar affiliated
investment companies
(1993 - 2001); and
Director, Northstar
Investment Management
Corporation and its
affiliates (1993 -
1999).
----------
(1) Trustees serve until their successors are duly elected and qualified,
subject to the Board's retirement policy.
(2) Valuation and Proxy Voting Committee (formerly the Valuation Committee)
member.
(3) Audit Committee member.
(4) Mr.McInerney is an "interested person," as defined by the 1940 Act, because
of an affiliation with ING Groep N.V., the parent corporation of the
Investment Manager, ING Investments, LLC and the Distributor, ING Funds
Distributor, LLC.
(5) Mr. Turner is an "interested person," as defined by the 1940 Act, because of
his affiliation with ING Groep N.V., the parent corporation of the
Investment Manager, ING Investments, LLC and the Distributor, ING Funds
Distributor, LLC.
42
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,
7337 E. Doubletree Ranch Rd. Executive Officer ING Investments, LLC(2) (December
Scottsdale, Arizona 85258 2001 - Present). Formerly, Senior
Born: 1949 Chief Operating Officer July 2000 - Present Executive Vice President and Chief
Operating Officer, ING Investments,
LLC(2) (April 1995 - December 2000);
and Executive Vice President, ING
Investments, LLC(2) (May 1998 - June
2000).
Michael J. Roland Executive Vice President February 2002 - Present Executive Vice President, Chief
7337 E. Doubletree Ranch Rd. and Assistant Secretary Financial Officer and Treasurer, ING
Scottsdale, Arizona 85258 Investments, LLC(2) (December 2001 -
Born: 1958 Chief Financial Officer August 1998 - Present Present). Formerly, Senior Vice
President, ING Investments, LLC(2)
(June 1998 - December 2001).
Stanley D. Vyner Executive Vice President August 2003 - Present Executive Vice President, ING
7337 E. Doubletree Ranch Rd. Investments, LLC(2) and certain of its
Scottsdale, Arizona 85258 affiliates (July 2000 - Present) and
Born: 1950 Chief Investment Risk Officer (June
2003 - Present); Formerly, Chief
Investment Officer for the
International Portfolios, ING
Investments, LLC(2) (July 1996 - June
2003); and President and Chief
Executive Officer, ING Investments,
LLC(2) (August 1996 - August 2000).
Robert S. Naka Senior Vice President November 1999 - Present Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. Secretary, ING Funds Services, LLC(3)
Scottsdale, Arizona 85258 Assistant Secretary July 1996 - Present (October 2001 - Present). Formerly,
Born: 1963 Senior Vice President and Assistant
Secretary, ING Funds Services, LLC(3)
(February 1997 - August 1999).
Daniel A. Norman Senior Vice President April 1995 - Present Senior Vice President (April 1995 -
7337 E. Doubletree Ranch Rd. Present) and Senior Investment
Scottsdale, Arizona 85258 Treasurer June 1997 - Present Manager, in the Senior Floating Rate
Born: 1957 Loan Group (November 1999 -
Present), ING Investment Management
Co. Formerly, Portfolio Manager, in
the Senior Floating Rate Loan Group
(April 1995 - November 1999).
Jeffrey A. Bakalar Senior Vice President November 1999 - Present Senior Vice President (January 1998 -
7337 E. Doubletree Ranch Rd. Present) and Senior Investment
Scottsdale, Arizona 85258 Manager, in the Senior Floating Rate
Born: 1959 Loan Group (November 1999 -
Present), ING Investment Management
Co. Formerly, Portfolio Manager, in
the Senior Floating Rate Loan Group
(January 1998 - November 1999).
Elliot Rosen Senior Vice President May 2002 - Present Senior Vice President, in the Senior
7337 E. Doubletree Ranch Rd. Floating Rate Loan Group of ING
Scottsdale, Arizona 85258 Investment Management Co.
Born: 1953 (February 1999 - Present).
William H. Rivoir III Senior Vice President and February 2001 - Present Vice President of ING Investment
7337 E. Doubletree Ranch Rd. Assistant Secretary Management Co. (January 2004 -
Scottsdale, Arizona 85258 Present). Formerly, Counsel, ING USFS
Born: 1951 Law Department (January 2003 -
December 2003); and Senior Vice
President, ING Investments, LLC(2) and
certain of its affiliates (June 1998 -
December 2002).
Curtis F. Lee Senior Vice President and February 2001 - Present Senior Vice President and Chief Credit
7337 E. Doubletree Ranch Rd. Chief Credit Officer Officer in the Senior Floating Rate
Scottsdale, Arizona 85258 Loan Group of ING Investment
Born: 1955 Management Co. (August 1999 -
Present). Formerly, held a series of
positions with Standard Chartered
Bank in the credit approval and
problem loan management functions
(1992 - 1999).
43
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
---------------------------- ---------------------------- ------------------------- ----------------------------------------
Kimberly A. Anderson Senior Vice President November 2003 - Present Senior Vice President and Assistant
7337 E. Doubletree Ranch Rd. Secretary, ING Investments, LLC(2)
Scottsdale, Arizona 85258 (October 2003 - Present). Formerly,
Born: 1964 Vice President and Assistant Secretary,
ING Investments, LLC(2) (October 2001 -
October 2003); Secretary, ING
Investments, LLC(2) (October 2001 -
August 2003); Assistant Vice President,
ING Funds Services, LLC(3) (November
1999 - January 2001); and has held
various other positions with ING Funds
Services, LLC(3) for more than the last
five years.
Robyn L. Ichilov Vice President November 1997 - Present Vice President, ING Funds Services,
7337 E. Doubletree Ranch Rd. LLC(3) (October 2001 - Present) and
Scottsdale, Arizona 85258 ING Investments, LLC(2) (August
Born: 1967 1997 - Present).
J. David Greenwald Vice President August 2003 - June 2004 Vice President of Mutual Fund
7337 E. Doubletree Ranch Rd. Compliance, ING Funds Services, LLC(3)
Scottsdale, Arizona 85258 (May 2003 - June 2004). Formerly,
Born: 1957 Assistant Treasurer and Director of
Mutual Fund Compliance and
Operations, American Skandia, a
Prudential Financial Company
(October 1996 - May 2003).
Lauren D. Bensinger Vice President August 2003 - Present Vice President and Chief Compliance
7337 E. Doubletree Ranch Rd. Officer, ING Funds Distributor, LLC(4)
Scottsdale, Arizona 85258 (July 1995 - Present); Vice President
Born: 1954 (February 1996 - Present) and Chief
Compliance Officer (October 2001 -
Present), ING Investments, LLC(2).
Huey P. Falgout, Jr. Secretary August 2003 - Present Chief Counsel, ING U.S. Financial
7337 E. Doubletree Ranch Rd. Services (September 2003 - Present).
Scottsdale, Arizona 85258 Formerly, Counsel, ING U.S. Financial
Born: 1963 Services (November 2002 - September
2003); and Associate General Counsel
of AIG American General (January
1999 - November 2002).
Todd Modic Vice President August 2003 - Present Vice President of Financial Reporting -
7337 E. Doubletree Ranch Rd. Fund Accounting of ING Fund
Scottsdale, Arizona 85258 Services, LLC(3) (September 2002 -
Born: 1967 Present). Formerly, Director of
Financial Reporting, ING Investments,
LLC(2) (March 2001 - September 2002);
Director of Financial Reporting,
Axient Communications, Inc. (May
2000 - January 2001); and Director of
Finance, Rural/Metro Corporation
(March 1995 - May 2000).
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).
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
Born: 1976 held various other positions with ING
Funds Services, LLC for more than the
last five years.
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
---------------------------- ---------------------------- ------------------------- ----------------------------------------
Maria M. Anderson Assistant Vice President August 2001 - Present Assistant Vice President of ING Funds
7337 E. Doubletree Ranch Rd. Services, LLC(3) (October 2001 -
Scottsdale, Arizona 85258 Present). Formerly, Manager of Fund
Born: 1958 Accounting and Fund Compliance,
ING Investments, LLC(2)
(September 1999 - November 2001);
and Section Manager of Fund
Accounting, Stein Roe Mutual Funds
(July 1998 - August 1999).
----------
(1) The officers hold office until the next annual meeting of the Trustees and
until their successors have been elected and qualified.
(2) ING Investments, LLC was previously named ING Pilgrim Investments, LLC. ING
Pilgrim Investments, LLC is the sucessor in interest to ING Pilgrim
Investments, Inc., which was previously known as Pilgrim Investments, Inc.
and before that was known as Pilgrim America Investments, Inc.
(3) ING Funds Services, LLC was previously named ING Pilgrim Group, LLC. ING
Pilgrim Group, LLC is the sucessor in interest to ING Pilgrim Group, Inc.,
which was previously known as Pilgrim Group, Inc. and before that was known
as Pilgrim America Group, Inc.
(4) ING Funds Distributor, LLC is the sucessor in interest to ING Funds
Distributor, Inc., which was previously known as ING Pilgrim Securities,
Inc., and before that was known as Pilgrim Securities, Inc., and before
that was known as Pilgrim America Securities, Inc.
45
INVESTMENT MANAGER
ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
ADMINISTRATOR
ING Fund Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
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
1-800-334-3444
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 219368
Kansas City, Missouri 64141
CUSTODIAN
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105
LEGAL COUNSEL
Dechert LLP
1775 I Street, N.W.
Washington, D.C. 20006
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
355 S. Grand Avenue, Suite 2000
Los Angeles, CA 90071-1568
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
FOR MORE COMPLETE INFORMATION, OR TO OBTAIN A PROSPECTUS ON ANY ING FUND, PLEASE
CALL YOUR INVESTMENT PROFESSIONAL OR ING FUNDS DISTRIBUTOR, LLC AT (800)
992-0180 OR LOG ON TO www.ingfunds.com. THE PROSPECTUS SHOULD BE READ CAREFULLY
BEFORE INVESTING. CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND CHARGES
AND EXPENSES CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS
INFORMATION AND OTHER INFORMATION ABOUT THE FUND. THE TRUST'S PROXY VOTING
RECORD WILL BE AVAILABLE WITHOUT CHARGE ON OR ABOUT AUGUST 31, 2004 ON THE
FUND'S WEBSITE AT www.ingfunds.com AND ON THE SEC'S WEBSITE www.sec.gov.
[ING FUNDS LOGO]
PRQR-PRT1Q (0507-073004)