Third Quarter Report
November 30, 2002 ING Prime Rate Trust
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ING FUNDS
ING Prime Rate Trust
THIRD QUARTER REPORT
November 30, 2002
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Table of Contents
Portfolio Managers' Report .................... 2
Statistics and Performance .................... 6
Additional Notes and information .............. 9
Portfolio of Investments ...................... 11
Statement of Assets and Liabilities ........... 30
Statement of Operations ....................... 31
Statements of Changes in Net Assets ........... 32
Statement of Cash Flows ....................... 33
Financial Highlights .......................... 34
Notes to Financial Statements ................. 36
Trustee and Officer Information ............... 43
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ING Prime Rate Trust
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PORTFOLIO MANAGERS' REPORT
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PERFORMANCE OF THE TRUST
Based on $0.11 of dividends declared during the period and the average month-end
net asset value ("NAV") per share of $6.66, the Trust's annualized distribution
rate was 6.89%1 for the third fiscal quarter ended November 30, 2002, up from
6.34% for the three-month period ended August 31, 2002.
During the fiscal third quarter, the Trust posted a -0.36% total return (based
on NAV), a significant improvement from a decline of 4.46% during the previous
fiscal quarter. As a result, the Trust finished the three-month period in the
second quartile of the Lipper Loan Participation Fund2 peer group, which posted
an average total return of -0.68%. Based on strong relative performance during
the last two months of the year, during the fourth calendar quarter (ended
December 31, 2002), the Trust posted a 1.26% total return and again finished the
period in the second quartile of the overall peer group.
In general, the leveraged loan market closed out the choppiest year on record in
a fairly strong fashion. The fourth quarter's performance, as benchmarked by a
1.6% rise in the S&P/LSTA Leverage Loan Index (LLI), was the best since the
first quarter of 2001, and a significant reversal of the painful 1.2% loss in
the third quarter, the worst three-month period on record. Although several
forces remain at work, the strong quarter was clearly driven by a resurgent
high-yield bond market and the resulting improvement in loan market technicals.
The Trust clearly benefited from this improved investor sentiment, as indicative
prices for some of the largest holdings (Nextel Communications, in particular,
representing 3.5% of total assets at November 30) reached levels not seen for
some time. Also contributing to the strong relative recent performance was
consistent if not strong returns across several of the Trust's key sector
exposures (e.g., healthcare, containers & packaging and beverage & food).
Indicative prices in the cellular communications sector, historically one of the
Trust's largest, have recently been riding the coattails of Nextel, the group's
undisputed benchmark. Indicative bid interest for Nextel loans continues to be
driven north by strong operating performance and an increasingly clear path to
free cash flow generation and debt reduction. Providing a partial offset to some
of the Trust's top performers has been the continuing volatility in Charter
Communications, the nation's third largest cable television provider, and lower
recoveries on a handful of existing non-performing credits, particularly the
Trust's older, illiquid positions. Indicative bids for Charter continue to be
negatively impacted by earnings issues, a series of ratings downgrades and, not
insignificantly, supply/demand factors (Charter is one of the largest issuers in
the loan market). We continue to see limited downside and meaningful potential
upside in Charter's senior secured loans, as evidenced by the current valuation
levels of other cable TV systems.
The Trust utilizes financial leverage to seek to increase the yield to the
holders of common shares. As of November 30, 2002, the Trust had $641 million of
borrowings outstanding, consisting of $450 million of "aaa/AAA" rated cumulative
auction rate preferred shares, and $191 million outstanding under $540 million
in available credit facilities. Total leverage, as a percentage of total assets
(including preferred shares), was 41.1% at quarter end. The weighted average
leverage cost including all borrowings and preferred shares as of quarter ended
November 30, 2002 was 1.58%.
2
OUTLOOK
Clearly, as we enter 2003, the loan market appears to be on more solid footing
relative to the start of 2002. In addition to empirical return data, two other
key measures of market health, new transaction issuance and credit quality, also
are showing continuing, albeit uneven, signs of strength. Institutional
M&A-related loan volume jumped to $6.2 billion during the fourth quarter,
roughly twice that of the previous quarter, and up over six-fold from the fourth
quarter of 2001. As of this writing, the forward calendar also looks reasonably
robust (in excess of $4.0 billion), with several large-cap deals in the offing.
Trailing loan default rates (by principal amount, as tracked by S&P Leveraged
Commentary & Data Group) also continue to improve slowly, ending the year at
approximately 6%, after peaking at 7.4% by principal amount in June.
The outlook is not without risk, however. In addition to being increasingly tied
to the equity and high-yield bond markets, the loan market remains challenged by
economic uncertainty, the increasing potential for outside geopolitical shocks
and historically low short-term interest rates that will continue to hinder
returns, even if bids continue to rise. Until we gain sufficient clarity on
these issues, we will remain in a relatively defensive posture while attempting
to take advantage of selective accretive buying opportunities.
We thank you for your investment in ING Prime Rate Trust.
/s/ Jeffrey A. Bakalar /s/ Daniel A. Norman
Jeffrey A. Bakalar Daniel A. Norman
SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT
CO-SENIOR PORTFOLIO MANAGER CO-SENIOR PORTFOLIO MANAGER
ING Prime Rate Trust
January 15, 2003
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PORTFOLIO MANAGERS' FOOTNOTES
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1. The distribution rate is calculated by annualizing dividends declared
during the quarter and dividing the resulting annualized dividend by the
Trust's average month-end net asset value (in the case of NAV) or the
average month-end NYSE Composite closing price (in the case of Market). The
distribution rate is based solely on the actual dividends and
distributions, which are made at the discretion of management. The
distribution rate may or may not include all investment income and
ordinarily will not include capital gains or losses, if any.
2. Lipper, Inc. rankings are based on average annual total returns, not
including sales charges, among 43 Loan Participation Funds.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
SENIOR LOANS ARE SUBJECT TO CREDIT RISKS AND THE POTENTIAL FOR NON-PAYMENT OF
SCHEDULED PRINCIPAL OR INTEREST PAYMENTS, WHICH MAY RESULT IN A REDUCTION OF THE
TRUST'S NAV.
THIS LETTER CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING STATEMENTS."
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
"FORWARD-LOOKING STATEMENTS."
THE VIEWS EXPRESSED IN THIS LETTER REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
4
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INDEX DESCRIPTIONS
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The S&P 500 INDEX is an unmanaged index that measures the performance of
securities of approximately 500 large-capitalization companies whose securities
are traded on major U.S. stock markets.
The LSTA LEVERAGED LOAN INDEX (LLI) is a weekly return index that uses market to
market pricing to calculate market value change. The LLI tracks the current
outstanding balance and spread over LIBOR for fully funded term loans.
All indices are unmanaged.
An investor cannot invest directly in an index.
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ING Prime Rate Trust
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STATISTICS AND PERFORMANCE as of November 30, 2002
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PORTFOLIO CHARACTERISTICS
Net Assets $ 914,905,419
Assets Invested in Senior Loans* $1,479,865,820
Total Number of Senior Loans 265
Average Amount Outstanding per Loan $ 5,584,399
Total Number of Industries 35
Average Loan Amount per Industry $ 42,281,881
Portfolio Turnover Rate (YTD) 40%
Weighted Average Days to Interest Rate Reset 53 days
Average Loan Final Maturity 51 months
Total Leverage as a Percentage of Total Assets
(including Preferred Shares) 41.1%
* INCLUDES LOANS AND OTHER DEBT RECEIVED THROUGH RESTRUCTURINGS
TOP TEN SENIOR LOAN INDUSTRY SECTORS AS A PERCENTAGE OF:
NET ASSETS TOTAL ASSETS
---------- ------------
Cable Television 12.3% 7.2%
Cellular 11.9% 7.0%
Healthcare, Education and Childcare 10.9% 6.4%
Leisure, Amusement, Motion Pictures, and Entertainment 9.6% 5.6%
Containers, Packaging and Glass 9.3% 5.4%
Automobile 8.5% 5.0%
Lodging 7.8% 4.6%
Beverage, Food and Tobacco 7.7% 4.5%
Personal & Non-Durable Consumer Products 6.8% 4.0%
Chemicals, Plastics and Rubber 6.6% 3.9%
TOP TEN SENIOR LOANS AS A PERCENTAGE OF:
NET ASSETS TOTAL ASSETS
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Nextel Finance Company 6.0% 3.5%
Charter Communications Operating, LLC 4.5% 2.6%
SPX Corporation 2.4% 1.4%
SC International Services 2.3% 1.3%
Wyndham International, Inc. 2.3% 1.3%
Safelite Glass Corporation 2.0% 1.2%
Dean Foods Corporation 1.9% 1.1%
Mandalay Resort Group 1.8% 1.1%
Extended Stay America, Inc. 1.7% 1.0%
Olympus Cable Holdings, LLC 1.7% 1.0%
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ING Prime Rate Trust
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STATISTICS AND PERFORMANCE as of November 30, 2002
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YIELDS AND DISTRIBUTION RATES
AVERAGE AVERAGE
(NAV) (MKT) ANNUALIZED ANNUALIZED
PRIME 30-DAY SEC 30-DAY SEC DISTRIBUTION DISTRIBUTION
QUARTER ENDED RATE YIELD(A) YIELD(A) RATE AT NAV(B) RATE AT MKT(B)
------------- ---- ------- ------- ------------- -------------
November 30, 2002 4.25% 8.02% 9.10% 6.86% 7.87%
August 31, 2002 4.75% 7.39% 8.53% 6.34% 7.33%
May 31, 2002 4.75% 7.32% 7.94% 6.09% 6.52%
February 28, 2002 4.75% 7.26% 7.73% 6.80% 7.31%
AVERAGE ANNUAL TOTAL RETURNS
NAV MKT
--- ---
1 Year -1.75% -3.57%
3 Years -1.22% -5.90%
5 Years 2.02% -2.18%
10 Years 4.95% 4.20%
Since Trust Inception F,H 6.22% N/A
Since Initial Trading on NYSE G N/A 4.36%
ASSUMES RIGHTS WERE EXERCISED AND EXCLUDES SALES CHARGES AND COMMISSIONS C,D,E
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST
WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
See statistics and performance footnotes on page 8.
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ING Prime Rate Trust
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STATISTICS AND PERFORMANCE FOOTNOTES
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(A) Yield is calculated by dividing the Trust's net investment income per share
for the most recent thirty days by the net asset value (in the case of NAV)
or the NYSE Composite closing price (in the case of market) at quarter-end.
Yield calculations do not include any commissions or sales charges, and are
compounded for six months and annualized for a twelve-month period to
derive the Trust's yield consistent with the SEC standardized yield formula
for open-end investment companies.
(B) The distribution rate is calculated by annualizing each monthly dividend,
then averaging the annualized dividends declared for each month during the
quarter and dividing the resulting average annualized dividend amount by
the Trust's average net asset value (in the case of NAV) or the NYSE
Composite closing price (in the case of Market) at the end of the period.
(C) Calculation of total return assumes a hypothetical initial investment at
the net asset value (in the case of NAV) or the NYSE Composite closing
price (in the case of Market) on the last business day before the first day
of the stated period, with all dividends and distributions reinvested at
the actual reinvestment price.
(D) On December 27, 1994, the Trust issued to its shareholders transferable
rights which entitled the holders to subscribe for 17,958,766 shares of the
Trust's common stock at the rate of one share of common stock for each four
rights held. On January 27, 1995, the offering expired and was fully
subscribed. The Trust issued 17,958,766 shares of its common stock to
exercising rights holders at a subscription price of $8.12. Offering costs
of $4,470,955 were charged against the offering proceeds.
(E) On October 18, 1996, the Trust issued to its shareholders non-transferable
rights which entitled the holders to subscribe for 18,122,963 shares of the
Trust's common stock at the rate of one share of common stock for each five
rights held. On November 12, 1996, the offering expired and was fully
subscribed. The Trust issued 18,122,963 shares of its common stock to
exercising rights holders at a subscription price of $9.09. Offering costs
of $6,972,203 were charged against the offering proceeds.
(F) Inception Date -- May 12, 1988.
(G) Initial Trading on NYSE -- March 9, 1992.
(H) Reflects partial waiver of fees.
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ING Prime Rate Trust
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ADDITIONAL NOTES AND INFORMATION
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SHAREHOLDER INVESTMENT PROGRAM
The Trust offers a Shareholder Investment Program (the "Program," formerly known
as the Dividend Reinvestment and Cash Purchase Plan) which allows common
shareholders a simple way to reinvest dividends and capital gains distributions,
if any, in additional common shares of the Trust. The Program also offers Trust
common shareholders the ability to make optional cash investments in any amount
from $100 to $5,000 on a monthly basis. Amounts in excess of $5,000 require
prior approval of the Trust. DST Systems, Inc., the Trust's Transfer Agent, is
the Administrator for the Program.
For dividend reinvestment purposes, the Administrator will purchase shares of
the Trust on the open market when the market price plus estimated commissions is
less than the net asset value on the valuation date. The Trust may issue new
shares when the market price plus estimated commissions is equal to or exceeds
the net asset value on the valuation date. New shares may be issued at the
greater of (i) net asset value or (ii) the market price of the shares during the
pricing period, minus a discount of 5%.
For optional cash investments, shares will be purchased on the open market by
the Administrator when the market price plus estimated commissions is less than
the net asset value on the valuation date. New shares may be issued by the Trust
when the market price plus estimated commissions is equal to or exceeds the net
asset value on the valuation date.
There is no charge to participate in the Program. Participants may elect to
discontinue participation in the Program at any time. Participants will share,
on a pro-rata basis, in the fees or expenses of any shares acquired in the open
market.
Participation in the Program is not automatic. If you would like to receive more
information about the Program or if you desire to participate, please contact
your broker or our Shareholder Services Department at (800) 992-0180.
KEY FINANCIAL DATES -- CALENDAR 2003 DIVIDENDS:
DECLARATION DATE EX-DATE PAYABLE DATE
---------------- ------- ------------
January 31 February 6 February 25
February 28 March 6 March 24
March 31 April 8 April 22
April 30 May 8 May 22
May 30 June 6 June 23
June 30 July 8 July 22
July 31 August 7 August 22
August 29 September 8 September 22
September 30 October 8 October 22
October 31 November 6 November 24
November 28 December 8 December 22
December 19 December 29 January 13, 2004
RECORD DATE WILL BE TWO BUSINESS DAYS AFTER EACH EX-DATE. THESE DATES
ARE SUBJECT TO CHANGE.
STOCK DATA
The Trust's shares are traded on the New York Stock Exchange (Symbol: PPR).
Effective March 1, 2002, the Trust's name changed to ING Prime Rate Trust and
its CUSIP number changed to 44977W106. On November 16, 1998 the Trust's name
changed to Pilgrim Prime Rate Trust and its CUSIP number became 72146W103. Prior
to November 16, 1998 the Trust's name was Pilgrim America Prime Rate Trust and
its CUSIP number was 720906106. The Trust's NAV and market price are published
daily under the "Closed-End Funds" feature in Barron's, The New York Times, The
Wall Street Journal and many other regional and national publications.
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(THIS PAGE INTENTIONALLY LEFT BLANK)
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ING Prime Rate Trust
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PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
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SENIOR LOANS
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
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AEROSPACE AND DEFENSE: 3.9%
ALLIANT TECHSYSTEMS, INC. Ba2 BB-
$ 2,670,714 Term Loan, maturing April 20, 2009 $ 2,677,391
DRS TECHNOLOGIES, INC. Ba3 BB-
1,980,000 Term Loan, maturing September 30, 2008 1,992,375
NEW PIPER AIRCRAFT, INC. NR NR
8,417,749 Term Loan, maturing April 15, 2005 8,312,527
PIEDMONT AVIATION SERVICES NR NR
5,714,080 Term Loan, maturing July 23, 2006 5,656,939
5,714,080 Term Loan, maturing July 23, 2007 5,656,939
TITAN CORPORATION Ba3 BB-
2,992,500 Term Loan, maturing June 30, 2009 2,986,578
TRANSDIGM HOLDING CORPORATION B1 B+
443,398 Term Loan, maturing May 15, 2006 445,961
1,149,118 Term Loan, maturing May 15, 2007 1,155,761
TRANSTAR METALS, INC. NR NR
14,866,071 Term Loan, maturing December 31, 2005(3) 2,973,214
UNITED DEFENSE INDUSTRIES, INC. Ba3 BB-
3,590,387 Term Loan, maturing June 30, 2009 3,595,999
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35,453,684
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AUTOMOBILE: 8.5%
AFTERMARKET TECHNOLOGY CORPORATION Ba2 BB-
1,258,947 Term Loan, maturing February 8, 2008 1,257,374
1,731,053 Term Loan, maturing February 8, 2008 1,728,889
AMERICAN AXLE & MANUFACTURING, INC. Ba2 BB+
5,453,298 Term Loan, maturing April 30, 2006 5,429,014
BREED TECHNOLOGIES, INC. NR NR
1,140,679 Term Loan, maturing December 20, 2004 1,077,942
CAPITAL TOOL & DESIGN, LTD. NR NR
8,879,303 Term Loan, maturing May 31, 2003 8,707,868
COLLINS & AIKMAN PRODUCTS Ba3 BB-
2,977,500 Term Loan, maturing December 31, 2005 2,983,083
DURA OPERATING CORPORATION Ba3 BB
3,192,000 Term Loan, maturing December 31, 2008 3,184,419
EXIDE TECHNOLOGIES(2) NR D
1,612,012 Revolver, maturing December 18, 2003(3) 844,291
371,195 Term Loan, maturing December 18, 2003(3) 194,413
3,227,260 Term Loan, maturing March 18, 2005(3) 1,668,493
FORD MOTOR CREDIT COMPANY A3 BBB
15,000,000 Floating Rate Note, maturing October 25, 2004 14,372,730
HAYES LEMMERZ INTERNATIONAL, INC.(2) Caa2 NR
3,478,750 Term Loan, maturing December 31, 2005(3) 2,771,405
METALDYNE COMPANY, LLC B1 BB-
4,000,000 Term Loan, maturing December 31, 2009 3,860,000
POLYPORE, INC. Ba3 B+
5,472,500 Term Loan, maturing December 31, 2007 5,483,899
See Accompanying Notes to Financial Statements
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ING Prime Rate Trust
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PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
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BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
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AUTOMOBILE (CONTINUED)
SAFELITE GLASS CORPORATION B3 B+
$ 7,820,732 Term Loan, maturing September 30, 2007 $ 7,625,213
10,925,552 Term Loan, maturing September 30, 2007 10,652,415
STONERIDGE, INC. Ba3 BB
1,390,000 Term Loan, maturing April 30, 2008 1,390,000
TENNECO AUTOMOTIVE, INC. B2 B
2,436,449 Term Loan, maturing November 4, 2007 2,182,715
2,436,449 Term Loan, maturing May 4, 2008 2,182,715
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77,596,878
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BANKING: 0.5%
OUTSOURCING SOLUTIONS, INC. Caa1 D
12,055,854 Term Loan, maturing June 10, 2006(3) 4,762,062
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4,762,062
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BEVERAGE, FOOD AND TOBACCO: 7.7%
AGRILINK FOODS, INC. Ba3 B+
4,500,000 Term Loan, maturing June 30, 2008 4,510,548
AURORA FOODS, INC. B2 B-
1,657,143 Revolver, maturing June 30, 2005 1,425,143
4,107,777 Term Loan, maturing June 30, 2005 3,573,766
COMMONWEALTH BRANDS, INC. Ba3 BB-
12,241,667 Term Loan, maturing August 28, 2007 12,211,062
COTT BEVERAGES, INC. Ba3 BB-
1,731,363 Term Loan, maturing December 31, 2006 1,737,855
CP KELCO APS B3 B+
4,188,687 Term Loan, maturing March 31, 2008 3,937,366
1,402,464 Term Loan, maturing September 30, 2008 1,318,316
DEAN FOODS COMPANY Ba2 BB+
16,936,250 Term Loan, maturing July 15, 2008 16,925,852
EMPIRE KOSHER POULTRY, INC. NR NR
13,545,000 Term Loan, maturing July 31, 2004(3) 5,553,450
FLEMING COMPANIES, INC. Ba3 BB
418,182 Revolver, maturing June 18, 2007 388,212
2,992,500 Term Loan, maturing June 19, 2008 2,922,176
FLOWERS FOODS, INC. Ba2 BBB-
2,468,750 Term Loan, maturing March 26, 2007 2,480,837
INTERSTATE BRANDS CORPORATION Ba1 BBB-
997,500 Term Loan, maturing July 19, 2007 1,000,617
2,962,500 Term Loan, maturing July 19, 2007 2,971,388
MAFCO WORLDWIDE CORPORATION B1 B
3,032,178 Term Loan, maturing March 31, 2006 3,001,856
NATIONAL DAIRY HOLDINGS, L.P. Ba2 BB+
2,487,500 Term Loan, maturing April 29, 2009 2,488,537
NUTRASWEET ACQUISITION CORPORATION Ba3 NR
676,333 Term Loan, maturing May 25, 2007 677,460
SOUTHERN WINE & SPIRITS OF AMERICA, INC. Ba3 BBB-
1,995,000 Term Loan, maturing July 2, 2008 1,999,988
See Accompanying Notes to Financial Statements
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ING Prime Rate Trust
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PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
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BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
BEVERAGE, FOOD AND TOBACCO (CONTINUED)
SWIFT & COMPANY Ba2 BB
$ 1,000,000 Term Loan, maturing September 19, 2008 $ 997,500
--------------
70,121,929
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BUILDINGS AND REAL ESTATE: 3.1%
ASSOCIATED MATERIALS, INC. Ba3 BB-
692,000 Term Loan, maturing April 19, 2009 695,677
HQ GLOBAL WORKPLACES, INC.(2) NR NR
3,865,243 Term Loan, maturing November 6, 2005(3) 2,415,777
JDN REALTY CORPORATION Ba3 BB-
10,000,000 Term Loan, maturing December 31, 2002 10,025,000
MACERICH PARTNERSHIP, L.P. Ba2 NR
6,000,000 Term Loan, maturing July 26, 2005 5,977,500
NATIONAL GOLF OPERATING PARTNERSHIP, L.P. NR NR
7,027,739 Term Loan, maturing March 31, 2003 6,992,601
U.S. AGGREGATES, INC.(2) NR NR
1,555,139 Term Loan, maturing March 31, 2006(3) 388,074
VENTAS REALTY, L.P. Ba3 BB-
1,995,000 Term Loan, maturing April 17, 2007 1,992,506
--------------
28,487,135
--------------
CABLE TELEVISION: 12.3%
ADELPHIA COMMUNICATIONS CORPORATION(2) NR BBB
3,000,000 Debtor in Possession Term Loan, maturing
June 25, 2004 3,001,875
CC VI OPERATING, LLC B1 BB
8,000,000 Term Loan, maturing November 12, 2008 6,328,888
CC VIII OPERATING, LLC B1 BB-
4,466,250 Term Loan, maturing February 2, 2008 3,627,435
CENTURY CABLE HOLDINGS, LLC(2) Caa1 D
1,230,000 Revolver, maturing March 31, 2009 836,400
11,000,000 Term Loan, maturing June 30, 2009 7,760,500
5,000,000 Term Loan, maturing December 31, 2009 3,471,590
CHARTER COMMUNICATIONS OPERATING, LLC B1 BB
28,910,969 Term Loan, maturing March 18, 2008 24,556,254
19,900,000 Term Loan, maturing September 18, 2008 16,660,718
FRONTIERVISION OPERATING PARTNERS, L.P.(2) B2 D
2,593,939 Revolver, maturing October 31, 2005 2,243,758
2,000,000 Term Loan, maturing September 30, 2005 1,720,000
INSIGHT MIDWEST HOLDINGS, LLC Ba3 BB+
14,500,000 Term Loan, maturing December 31, 2009 13,613,688
MCC IOWA MEDIACOM BROADBAND Ba3 BB+
13,500,000 Term Loan, maturing September 30, 2010 12,742,502
OLYMPUS CABLE HOLDINGS, LLC(2) B2 D
2,000,000 Term Loan, maturing June 30, 2010 1,564,286
18,250,000 Term Loan, maturing September 30, 2010 14,257,813
--------------
112,385,707
--------------
See Accompanying Notes to Financial Statements
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ING Prime Rate Trust
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PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
CARGO TRANSPORT: 2.7%
AMERICAN COMMERCIAL LINES, LLC B3 B-
$ 1,283,457 Term Loan, maturing June 30, 2006 $ 1,042,167
1,840,937 Term Loan, maturing June 30, 2007 1,494,841
EVERGREEN INTERNATIONAL AVIATION, INC. Ba2 B+
2,163,265 Term Loan, maturing May 7, 2003 1,914,489
343,981 Term Loan, maturing May 7, 2003 304,423
GEMINI LEASING, INC. B1 B
4,117,116 Term Loan, maturing August 12, 2005(3) 1,749,774
NEOPLAN USA CORPORATION NR NR
9,562,848 Term Loan, maturing May 29, 2005 8,224,049
OMNITRAX RAILROADS, LLC NR NR
4,448,037 Term Loan, maturing May 13, 2005 4,436,917
TEREX CORPORATION Ba3 BB-
4,500,000 Term Loan, maturing December 31, 2009 4,308,750
UNITED STATES SHIPPING, LLC Ba2 BB
1,500,000 Term Loan, maturing September 12, 2008 1,505,625
--------------
24,981,035
--------------
CELLULAR: 11.9%
AIRGATE PCS, INC. B3 B-
967,427 Term Loan, maturing June 6, 2007 701,384
9,172,638 Term Loan, maturing September 30, 2008 6,650,163
AMERICAN CELLULAR CORPORATION B3 CCC-
2,540,711 Term Loan, maturing March 31, 2008 1,681,633
4,455,224 Term Loan, maturing March 31, 2009 2,948,801
INDEPENDENT WIRELESS ONE CORPORATION Caa1 CCC
10,000,000 Term Loan, maturing June 20, 2008 8,785,448
MICROCELL CONNEXIONS, INC. CC Ca
5,000,000 Term Loan, maturing February 22, 2007(3) 2,000,000
NEXTEL FINANCE COMPANY Ba3 BB-
4,750,000 Term Loan, maturing June 30, 2008 4,406,298
4,750,000 Term Loan, maturing December 31, 2008 4,406,298
50,500,000 Term Loan, maturing March 31, 2009 45,746,183
NEXTEL OPERATIONS, INC. Ba3 BB-
6,784,146 Term Loan, maturing March 15, 2005 6,391,794
2,353,577 Term Loan, maturing February 10, 2007 2,158,772
RURAL CELLULAR CORPORATION Ba3 B+
4,911,130 Term Loan, maturing October 3, 2008 4,154,816
4,911,130 Term Loan, maturing April 3, 2009 4,154,816
WESTERN WIRELESS CORPORATION B1 B
4,000,000 Revolver, maturing March 31, 2008 2,920,000
8,000,000 Term Loan, maturing March 31, 2008 5,744,000
8,000,000 Term Loan, maturing September 30, 2008 5,760,000
--------------
108,610,406
--------------
CHEMICALS, PLASTICS AND RUBBER: 6.6%
ACADIA ELASTOMERS CORPORATION NR NR
9,343,066 Term Loan, maturing March 31, 2004 9,058,439
See Accompanying Notes to Financial Statements
14
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
CHEMICALS, PLASTICS AND RUBBER (CONTINUED)
CEDAR CHEMICALS CORPORATION(2) NR NR
$ 8,792,484 Term Loan, maturing October 3, 2003(3) $ 584,586
EQUISTAR CHEMICALS, L.P. Ba2 BB+
7,950,000 Term Loan, maturing August 24, 2007 7,945,580
FMC CORPORATION Ba1 BBB
4,000,000 Term Loan, maturing October 21, 2007 3,990,000
FOAM FABRICATORS, INC. NR NR
2,701,530 Term Loan, maturing March 5, 2005 2,694,776
FOAMEX, L.P. B2 BB-
1,682,653 Term Loan, maturing June 30, 2005 1,537,524
1,529,690 Term Loan, maturing June 30, 2006 1,397,754
GEO SPECIALTY CHEMICALS, INC. B1 B+
2,757,857 Term Loan, maturing December 31, 2007 2,569,404
HUNTSMAN COMPANY, LLC B+ NR
7,025,108 Term Loan, maturing March 31, 2007 5,854,254
3,370,012 Term Loan, maturing March 31, 2007 2,808,342
HUNTSMAN INTERNATIONAL, LLC B2 B+
904,712 Term Loan, maturing June 30, 2005 873,274
3,940,128 Term Loan, maturing June 30, 2007 3,846,822
3,940,128 Term Loan, maturing June 30, 2008 3,846,822
JOHNSONDIVERSEY, INC. Ba3 BB-
3,980,000 Term Loan, maturing November 3, 2009 3,988,290
LYONDELL CHEMICAL COMPANY Ba3 BB
3,335,429 Term Loan, maturing May 17, 2006 3,377,468
MILLENNIUM AMERICA, INC. Baa3 BBB-
790,000 Term Loan, maturing June 18, 2006 792,617
NOVEON, INC. B1 BB-
4,663,901 Term Loan, maturing September 30, 2008 4,673,896
OM GROUP, INC. B2 B+
995,000 Term Loan, maturing April 1, 2007 839,116
--------------
60,678,964
--------------
CONTAINERS, PACKAGING AND GLASS: 9.3%
BERRY PLASTICS CORPORATION B1 B+
2,992,500 Term Loan, maturing July 22, 2010 3,004,659
BLUE RIDGE PAPER PRODUCTS, INC. B3 B+
8,704,121 Term Loan, maturing May 14, 2006 8,486,517
GRAPHIC PACKAGING CORPORATION Ba3 BB
1,985,000 Term Loan, maturing February 28, 2009 1,994,925
GREIF BROS. CORPORATION Ba3 BB
2,992,500 Term Loan, maturing August 23, 2009 3,003,722
IMPAXX, INC. NR NR
4,246,208 Term Loan, maturing April 30, 2005 3,779,125
JEFFERSON SMURFIT CORPORATION Ba3 B+
2,989,091 Term Loan, maturing March 31, 2007 2,972,543
LINCOLN PULP & EASTERN FINE(2) NR NR
92,280 Term Loan, maturing December 31, 2001 65,519
14,881,108 Term Loan, maturing August 31, 2004 10,565,587
See Accompanying Notes to Financial Statements
15
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
CONTAINERS, PACKAGING AND GLASS (CONTINUED)
NEXPAK CORPORATION B1 B+
$ 2,277,745 Term Loan, maturing March 31, 2004 $ 1,901,917
2,277,745 Term Loan, maturing March 31, 2004 1,901,917
OWENS-ILLINOIS, INC. B1 BB
7,624,532 Revolver, maturing March 31, 2004 7,338,612
PACKAGING CORPORATION OF AMERICA Baa3 BBB
1,332,613 Term Loan, maturing June 29, 2006 1,329,282
PLIANT CORPORATION B2 B+
2,708,730 Term Loan, maturing May 31, 2008 2,694,341
RIVERWOOD INTERNATIONAL CORPORATION B1 B
458,333 Revolver, maturing December 31, 2006 437,135
15,000,000 Term Loan, maturing December 31, 2006 14,955,465
SILGAN HOLDINGS, INC. Ba2 BB-
1,990,000 Term Loan, maturing November 30, 2008 1,989,170
SMURFIT-STONE CONTAINER CANADA, INC. Ba3 B+
4,307,692 Term Loan, maturing June 30, 2009 4,247,566
TEKNI-PLEX, INC. B1 B+
2,932,500 Term Loan, maturing June 21, 2008 2,878,738
STONE CONTAINER CORPORATION Ba3 B+
11,692,308 Term Loan, maturing June 30, 2009 11,522,407
--------------
85,069,147
--------------
DATA AND INTERNET SERVICES: 1.0%
360NETWORKS, INC. NR NR
1,353,721 Term Loan, maturing November 12, 2007 825,770
ARCH WIRELESS HOLDINGS, INC. NR NR
1,118,000 Senior Note, maturing May 15, 2007 927,940
ICG COMMUNICATIONS, INC. NR NR
4,908,431 Term Loan, maturing May 31, 2005 4,147,625
MCLEODUSA, INC. Caa2 NR
1,858,824 Term Loan, maturing May 30, 2008 895,334
TELETOUCH COMMUNICATIONS, INC. NR NR
2,341,461 Term Loan, maturing May 1, 2005 2,259,510
--------------
9,056,179
--------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING: 6.6%
BARJAN PRODUCTS, LLC NR NR
4,838,625 Term Loan, maturing May 31, 2006 4,540,149
BRAND SERVICES, INC. B1 B+
4,000,000 Term Loan, maturing October 16, 2009 4,012,500
DRESSER, INC. Ba3 BB-
5,317,830 Term Loan, maturing April 10, 2009 5,328,753
FLOWSERVE CORPORATION Ba3 BB-
1,738,159 Term Loan, maturing June 30, 2006 1,708,285
5,366,400 Term Loan, maturing June 30, 2009 5,312,258
GENERAL CABLE CORPORATION Ba3 BB-
2,581,174 Term Loan, maturing May 25, 2007 1,920,825
See Accompanying Notes to Financial Statements
16
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
DIVERSIFIED/CONGLOMERATE MANUFACTURING (CONTINUED)
MANITOWOC COMPANY, INC. Ba2 BB
$ 1,975,000 Term Loan, maturing May 9, 2007 $ 1,981,172
MUELLER GROUP, INC. B1 B+
3,990,000 Term Loan, maturing May 31, 2008 3,975,038
NEPTUNE TECHNOLOGY GROUP, INC. Ba3 BB-
3,881,919 Term Loan, maturing November 1, 2008 3,901,328
SPX CORPORATION Ba2 BB+
2,992,992 Term Loan, maturing September 30, 2004 2,970,544
7,107,188 Term Loan, maturing September 30, 2009 7,075,205
11,845,313 Term Loan, maturing March 31, 2010 11,796,451
UNITED PET GROUP NR NR
6,071,249 Term Loan, maturing March 31, 2006 5,993,015
--------------
60,515,523
--------------
DIVERSIFIED/CONGLOMERATE SERVICE: 0.9%
IRON MOUNTAIN, INC. Ba3 BB
1,998,000 Term Loan, maturing April 15, 2007 2,003,411
PRIVATE BUSINESS, INC. NR NR
3,595,513 Term Loan, maturing August 19, 2006 3,541,580
URS CORPORATION Ba3 BB-
3,000,000 Term Loan, maturing August 22, 2008 2,947,500
--------------
8,492,491
--------------
ECOLOGICAL: 2.1%
ALLIED WASTE NORTH AMERICA, INC. Ba3 BB
3,120,546 Term Loan, maturing July 21, 2005 3,016,260
1,806,714 Term Loan, maturing July 21, 2006 1,778,116
2,168,055 Term Loan, maturing July 21, 2007 2,133,738
AMERICAN REF-FUEL COMPANY, LLC Baa2 BBB
3,637,209 Term Loan, maturing April 30, 2005 3,582,651
IT GROUP, INC.(2) Caa1 NR
4,154,605 Term Loan, maturing June 11, 2007(3) 384,301
RUMPKE CONSOLIDATED COMPANIES, INC. B1 BB-
3,331,912 Term Loan, maturing March 31, 2003 3,316,085
WASTE CONNECTIONS, INC. Ba3 BB
5,195,402 Revolver, maturing May 16, 2005 5,117,471
--------------
19,328,622
--------------
ELECTRONICS: 2.5%
ACTERNA, LLC Caa1 CCC+
6,218,626 Term Loan, maturing September 30, 2007 1,570,203
DECISION ONE CORPORATION B3 CCC
1,969,782 Term Loan, maturing April 18, 2005 1,674,315
9,933,493 Term Loan, maturing April 18, 2005 8,443,469
INSILCO TECHNOLOGIES, INC. Caa2 D
4,925,016 Term Loan, maturing March 25, 2007(3) 1,083,503
KNOWLES ELECTRONICS, INC B3 CCC+
3,395,397 Term Loan, maturing June 29, 2007 2,727,634
See Accompanying Notes to Financial Statements
17
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
ELECTRONICS (CONTINUED)
SARCOM, INC. NR NR
$ 8,993,645 Term Loan, maturing December 31, 2002(3) $ 3,786,323
TRANSACTION NETWORK SERVICES, INC. Ba3 BB-
3,895,833 Term Loan, maturing April 3, 2007 3,876,354
--------------
23,161,801
--------------
FINANCE: 2.8%
ALLIANCE DATA SYSTEMS CORPORATION B1 B+
8,710,638 Term Loan, maturing July 25, 2005 8,628,976
ANTHONY CRANE RENTAL, L.P. Caa2 CCC+
14,512,500 Term Loan, maturing July 20, 2006 8,441,442
RENT-A-CENTER, INC. Ba2 BB
1,441,705 Term Loan, maturing January 31, 2006 1,438,822
3,174,077 Term Loan, maturing January 31, 2007 3,167,729
1,250,713 Term Loan, maturing December 31, 2007 1,248,993
UNITED RENTALS, INC. Ba3 BB
1,994,937 Term Loan, maturing August 31, 2007 1,945,895
VALUE ASSET MANAGEMENT, INC. B1 B+
750,000 Term Loan, maturing April 28, 2003 731,250
--------------
25,603,107
--------------
GAMING: 4.6%
ALADDIN GAMING, LLC(2) Caa1 NR
2,968,421 Term Loan, maturing August 26, 2006(3) 2,367,316
4,455,000 Term Loan, maturing February 26, 2008(3) 3,552,863
ALLIANCE GAMING CORPORATION B1 BB-
4,975,000 Term Loan, maturing December 31, 2006 4,997,800
AMERISTAR CASINOS, INC. Ba3 BB-
1,577,878 Term Loan, maturing December 20, 2006 1,584,782
1,358,876 Term Loan, maturing December 20, 2006 1,364,821
ARGOSY GAMING COMPANY Ba2 BB
4,443,750 Term Loan, maturing July 31, 2008 4,458,561
BOYD GAMING CORPORATION Ba1 BB+
997,500 Term Loan, maturing June 24, 2008 999,370
ISLE OF CAPRI CASINOS, INC. Ba2 BB-
995,000 Term Loan, maturing April 26, 2008 997,720
MANDALAY RESORT GROUP Ba2 BB+
17,000,000 Term Loan, maturing August 22, 2006 16,904,375
SCIENTIFIC GAMES CORPORATION Ba3 BB-
4,900,000 Term Loan, maturing September 30, 2007 4,910,721
--------------
42,138,329
--------------
GROCERY: 0.4%
GIANT EAGLE, INC. Ba2 BB+
1,995,000 Term Loan, maturing August 2, 2009 1,996,247
WINN DIXIE STORES, INC. Baa3 BBB
1,440,000 Term Loan, maturing March 29, 2007 1,446,000
--------------
3,442,247
--------------
See Accompanying Notes to Financial Statements
18
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
HEALTHCARE, EDUCATION AND CHILDCARE: 10.9%
ALLIANCE IMAGING, INC. B1 B+
$ 1,038,168 Term Loan, maturing November 2, 2006 $ 1,021,298
6,703,060 Term Loan, maturing June 10, 2008 6,703,060
ALPHARMA OPERATING CORPORATION B2 BB-
1,285,282 Term Loan, maturing October 5, 2008 1,198,526
APRIA HEALTHCARE GROUP INC. Ba1 BBB-
4,950,000 Term Loan, maturing July 20, 2008 4,947,678
BROWN SCHOOLS B3 B
7,930,861 Term Loan, maturing June 30, 2003 7,375,700
CAREMARK RX, INC. Ba2 BB+
2,482,513 Term Loan, maturing March 31, 2006 2,484,580
COMMUNITY HEALTH SYSTEMS, INC. Ba3 BB-
13,000,000 Term Loan, maturing July 16, 2010 12,953,278
CONCENTRA OPERATING CORPORATION B1 B+
3,002,778 Term Loan, maturing June 30, 2006 2,819,482
1,501,389 Term Loan, maturing June 30, 2007 1,409,741
COVENANT CARE, INC. NR NR
5,424,807 Term Loan, maturing June 30, 2003 5,356,997
DAVITA, INC. Ba3 BB-
8,935,941 Term Loan, maturing March 31, 2009 8,949,908
EXPRESS SCRIPTS, INC. Ba1 BBB-
4,000,000 Term Loan, maturing March 31, 2008 3,990,716
FOUNTAIN VIEW, INC.(2) NR NR
12,167,195 Term Loan, maturing March 31, 2004 11,637,813
GENESIS HEALTH VENTURES, INC. Ba3 B+
1,027,170 Term Loan, maturing March 31, 2007 1,023,318
744,936 Term Loan, maturing March 31, 2007 744,005
1,539,950 Floating Rate Note, maturing April 2, 2007 1,539,950
HCA, INC. Ba1 BBB-
9,771,429 Term Loan, maturing April 30, 2006 9,636,202
KINETIC CONCEPTS, INC. Ba1 BBB
3,950,000 Term Loan, maturing March 31, 2006 3,945,063
MAGELLAN HEALTH SERVICES, INC. Caa1 CCC
1,235,296 Term Loan, maturing February 12, 2005 1,041,354
1,235,296 Term Loan, maturing February 12, 2006 1,045,369
MARINER HEALTH CARE, INC. B1 NR
988,381 Floating Rate Note, maturing May 13, 2009 973,555
SYBRON DENTAL MANAGEMENT, INC. Ba3 BB-
1,545,875 Term Loan, maturing June 6, 2009 1,548,774
TRIAD HOSPITALS, INC. Ba3 B+
1,978,182 Term Loan, maturing September 30, 2008 1,986,714
VICAR OPERATING, INC. B1 B+
4,992,500 Term Loan, maturing September 30, 2008 5,004,981
--------------
99,338,062
--------------
See Accompanying Notes to Financial Statements
19
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
HOME AND OFFICE FURNISHING, HOUSEWARES: 1.8%
DESA INTERNATIONAL, INC.(2) Caa2 NR
$ 3,510,000 Debtor in Possession, maturing November 26, 2002 $ 3,492,450
7,136,218 Term Loan, maturing November 26, 2004(3) 6,137,148
HOLMES PRODUCTS CORPORATION B2 B
3,584,928 Term Loan, maturing February 5, 2007 3,307,096
IDENTITY GROUP, INC. NR NR
4,525,000 Term Loan, maturing May 11, 2007 2,579,250
IMPERIAL HOME DECOR GROUP, INC. NR NR
833,725 Term Loan, maturing April 4, 2006 779,533
--------------
16,295,477
--------------
INSURANCE: 0.7%
FUND AMERICAN COMPANIES, INC. Baa2 BBB+
4,432,500 Term Loan, maturing March 31, 2007 4,421,419
USI HOLDINGS CORPORATION B1 B+
2,449,137 Term Loan, maturing September 17, 2004 2,259,329
--------------
6,680,748
--------------
LEISURE, AMUSEMENT, MOTION PICTURES, AND ENTERTAINMENT: 9.6%
AMF BOWLING WORLDWIDE, INC. B1 B
1,904,722 Term Loan, maturing February 28, 2008 1,871,390
BALLY TOTAL FITNESS HOLDING CORPORATION Ba3 B+
5,922,332 Term Loan, maturing November 10, 2004 5,833,497
FITNESS HOLDINGS WORLDWIDE, INC. B1 B
8,595,637 Term Loan, maturing November 2, 2006 8,352,096
7,684,841 Term Loan, maturing November 2, 2007 7,467,106
KERASOTES THEATRES, INC. B1 B+
2,000,000 Term Loan, maturing December 31, 2008 2,003,750
LODGENET ENTERTAINMENT CORPORATION Ba3 B+
2,990,000 Term Loan, maturing June 30, 2006 2,976,919
LOEWS CINEPLEX ENTERTAINMENT CORPORATION NR NR
9,912,777 Term Loan, maturing February 29, 2008 9,697,997
METRO-GOLDWYN-MAYER STUDIOS, INC. Ba3 BB-
14,500,000 Term Loan, maturing June 30, 2008 14,318,750
PANAVISION, INC. Caa1 CCC
14,016,487 Term Loan, maturing March 31, 2005 11,984,096
REGAL CINEMAS, INC. B1 BB-
2,437,500 Term Loan, maturing December 31, 2007 2,443,594
SIX FLAGS THEME PARKS, INC. Ba2 BB-
11,000,000 Term Loan, maturing June 30, 2009 10,800,625
WASHINGTON FOOTBALL, INC. Baa3 NR
3,000,000 Term Loan, maturing October 16, 2007 3,016,875
XANTERRA PARKS & RESORTS, LLC NR NR
3,418,661 Term Loan, maturing September 30, 2004 3,410,114
3,418,661 Term Loan, maturing September 30, 2005 3,410,114
--------------
87,586,923
--------------
See Accompanying Notes to Financial Statements
20
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
LODGING: 7.8%
EXTENDED STAY AMERICA, INC. Ba3 BB-
$ 16,227,853 Term Loan, maturing January 15, 2008 $ 15,903,296
HILTON HAWAIIAN VILLAGE, LLC Ba1 BBB-
13,786,765 Revolver, maturing June 1, 2003 13,579,963
KSL RECREATIONAL GROUP, INC. Ba3 B+
1,513,611 Term Loan, maturing April 30, 2005 1,502,259
1,513,611 Term Loan, maturing April 30, 2006 1,505,097
9,075,000 Term Loan, maturing December 22, 2006 9,044,287
MERISTAR INVESTMENT PARTNERS Ba3 B-
6,150,707 Term Loan, maturing March 31, 2003 6,166,083
2,500,000 Term Loan, maturing March 31, 2003 2,506,250
WYNDHAM INTERNATIONAL, INC. NR B-
7,646,072 Term Loan, maturing June 30, 2004 5,973,493
19,392,939 Term Loan, maturing June 30, 2006 14,900,235
--------------
71,080,963
--------------
MACHINERY: 0.8%
ALLIANCE LAUNDRY HOLDINGS, LLC B1 B
3,966,541 Term Loan, maturing August 2, 2007 3,900,431
MORRIS MATERIAL HANDLING, INC. NR NR
258,831 Term Loan, maturing September 28, 2004 245,889
VUTEK, INC. B1 NR
1,068,237 Term Loan, maturing July 31, 2005 1,023,202
1,708,539 Term Loan, maturing July 31, 2007 1,642,627
628,431 Term Loan, maturing December 30, 2007 604,187
--------------
7,416,336
--------------
MINING, STEEL, IRON AND NON-PRECIOUS METALS: 0.1%
NATIONAL REFRACTORIES & MINERALS CORPORATION(2) NR NR
1,250,000 Term Loan, maturing March 30, 2002 1,187,500
--------------
1,187,500
--------------
OIL AND GAS: 2.2%
PACIFIC ENERGY GROUP, LLC Ba2 BBB-
4,000,000 Term Loan, maturing July 26, 2009 4,015,000
PLAINS MARKETING, L.P. Ba1 BB+
3,465,000 Term Loan, maturing September 21, 2007 3,482,325
PMC COMPANY Ba1 BB+
2,970,000 Term Loan, maturing May 5, 2006 2,977,425
TESORO PETROLEUM CORPORATION Ba3 BB
993,898 Term Loan, maturing December 31, 2007 918,527
5,948,478 Term Loan, maturing December 31, 2007 5,497,387
W-H ENERGY SERVICES, INC. B2 B+
3,447,500 Term Loan, maturing April 16, 2007 3,460,428
--------------
20,351,092
--------------
See Accompanying Notes to Financial Statements
21
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
OTHER TELECOMMUNICATIONS: 2.6%
BROADWING, INC. Ba3 BB
$ 9,779,000 Term Loan, maturing November 9, 2004 $ 8,735,903
6,326,734 Term Loan, maturing December 30, 2006 5,686,152
759,759 Term Loan, maturing June 28, 2007 683,308
GCI HOLDINGS, INC. Ba3 BB+
1,500,000 Term Loan, maturing October 15, 2004 1,492,500
INFONET SERVICES CORPORATION Ba3 BB-
4,521,081 Term Loan, maturing June 30, 2006 4,498,476
INTERA GROUP, INC. NR NR
2,905,339 Term Loan, maturing December 31, 2005(3) 2,760,072
909,384 Term Loan, maturing December 31, 2005(3) --
1,591,423 Term Loan, maturing December 31, 2005(3) --
--------------
23,856,411
--------------
PERSONAL & NON-DURABLE CONSUMER PRODUCTS: 6.8%
AM COSMETICS CORPORATION NR NR
2,292,689 Revolver, maturing May 30, 2004(3) 1,857,078
1,305,151 Term Loan, maturing May 30, 2004(3) --
2,610,303 Term Loan, maturing December 31, 2004(3) --
AMSCAN HOLDINGS, INC. B1 B+
9,494,337 Term Loan, maturing December 31, 2004 9,209,507
ARMKEL, LLC Ba3 B+
1,980,000 Term Loan, maturing March 28, 2009 1,993,082
BUHRMANN U.S., INC. Ba3 BB-
2,958,821 Term Loan, maturing October 26, 2005 2,751,704
5,072,551 Term Loan, maturing October 26, 2007 4,793,560
CENTIS, INC.(2) B2 B
3,900,000 Term Loan, maturing September 30, 2005(3) 1,014,000
3,421,250 Term Loan, maturing September 30, 2006(3) 889,525
CHURCH & DWIGHT CO., INC. Ba2 BB
2,995,000 Term Loan, maturing September 30, 2007 3,014,656
JOSTENS, INC. B1 BB-
4,500,000 Term Loan, maturing December 31, 2009 4,506,561
2,845,552 Term Loan, maturing May 31, 2006 2,795,754
NORWOOD PROMOTIONAL PRODUCTS, INC. NR NR
8,614,438 Term Loan, maturing February 1, 2005 8,614,438
5,860,162 Term Loan, maturing February 1, 2005(3) 3,044,354
1,641,647 Term Loan, maturing February 1, 2005(3) --
PAINT SUNDRY BRANDS CORPORATION B2 B+
938,563 Term Loan, maturing August 11, 2005 872,864
919,216 Term Loan, maturing August 11, 2006 854,871
PLAYTEX PRODUCTS, INC. Ba3 BB-
11,275,083 Term Loan, maturing May 31, 2009 11,236,331
RAYOVAC CORPORATION Ba3 BB-
4,975,000 Term Loan, maturing September 30, 2009 4,968,781
--------------
62,417,066
--------------
See Accompanying Notes to Financial Statements
22
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
PERSONAL, FOOD & MISCELLANEOUS SERVICES: 5.4%
AFC ENTERPRISES, INC. Ba2 BB
$ 1,596,000 Term Loan, maturing May 23, 2009 $ 1,597,163
COINMACH CORPORATION B1 BB-
4,925,000 Term Loan, maturing July 25, 2009 4,931,156
DOMINOS, INC. Ba3 BB-
2,992,500 Term Loan, maturing June 30, 2008 2,999,981
NEW WORLD RESTAURANT GROUP, INC. Caa2 CCC+
4,000,000 Secured Floating Rate Note, maturing June 15, 2003 3,600,000
OTIS SPUNKMEYER, INC. B1 B+
7,000,000 Term Loan, maturing January 21, 2009 6,965,000
PAPA GINO'S, INC. NR NR
1,943,182 Term Loan, maturing August 31, 2006 1,897,781
4,921,875 Term Loan, maturing August 31, 2007 4,843,367
RELIZON COMPANY Ba3 BB-
1,440,699 Revolver, maturing August 4, 2006 1,361,460
SC INTERNATIONAL SERVICES Ba1 BB
25,123,262 Term Loan, maturing March 1, 2007 21,040,732
--------------
49,236,640
--------------
PRINTING AND PUBLISHING: 5.5%
ADAMS OUTDOOR ADVERTISING, L.P. B1 B+
1,785,000 Term Loan, maturing February 8, 2008 1,790,950
ADVANSTAR COMMUNICATIONS, INC. B2 B
10,643,610 Term Loan, maturing April 11, 2007 9,579,249
2,451,429 Term Loan, maturing October 11, 2007 2,206,286
CANWEST MEDIA, INC. Ba3 B+
4,222,181 Term Loan, maturing May 15, 2008 4,224,820
4,521,976 Term Loan, maturing May 15, 2009 4,521,270
DEX MEDIA EAST, LLC Ba3 BB-
5,500,000 Term Loan, maturing November 8, 2009 5,502,750
LAMAR MEDIA CORPORATION Ba2 BB-
5,310,937 Term Loan, maturing March 1, 2006 5,232,936
PRIMEDIA, INC. B3 B
3,960,000 Term Loan, maturing June 30, 2009 3,598,650
READER'S DIGEST ASSOCIATIONS, INC. Baa3 BB+
6,982,500 Term Loan, maturing May 20, 2008 6,763,047
TRANSWESTERN PUBLISHING COMPANY Ba3 B+
2,962,500 Term Loan, maturing June 27, 2008 2,949,539
VERTIS, INC. B1 B+
2,463,679 Term Loan, maturing December 7, 2008 2,412,866
ZIFF DAVIS MEDIA, INC. B3 CCC-
1,694,296 Term Loan, maturing March 31, 2007 1,457,095
--------------
50,239,458
--------------
See Accompanying Notes to Financial Statements
23
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
RADIO AND TELEVISION BROADCASTING: 5.0%
BENEDEK BROADCASTING CORPORATION(2) B2 NR
$ 15,909 Term Loan, maturing November 20, 2007 $ 15,876
BLOCK COMMUNICATIONS, INC. Ba2 BB-
2,992,500 Term Loan, maturing November 15, 2009 3,001,852
CITADEL BROADCASTING COMPANY Ba2 B+
4,500,000 Term Loan, maturing June 26, 2009 4,524,750
CUMULUS MEDIA, INC. Ba3 B+
3,000,000 Term Loan, maturing March 28, 2010 3,021,249
EMMIS OPERATING COMPANY Ba2 B+
10,982,904 Term Loan, maturing August 31, 2009 11,016,083
FISHER BROADCASTING, INC. Ba3 B+
2,500,000 Term Loan, maturing February 28, 2010 2,500,625
GRAY TELEVISION, INC. Ba3 B+
4,000,000 Term Loan, maturing December 31, 2010 4,020,000
PAXSON COMMUNICATIONS CORPORATION Ba3 BB
4,937,500 Term Loan, maturing June 30, 2006 4,888,125
PEGASUS MEDIA & COMMUNICATIONS, INC. B3 B+
5,899,950 Term Loan, maturing April 30, 2005 5,019,872
SINCLAIR BROADCAST GROUP, INC. Ba2 BB
5,000,000 Term Loan, maturing December 31, 2009 5,012,500
SUSQUEHANNA MEDIA COMPANY Ba1 BB-
2,487,500 Term Loan, maturing June 30, 2008 2,499,938
--------------
45,520,870
--------------
RETAIL STORES: 6.1%
ADVANCE STORES COMPANY, INC. Ba3 BB-
3,500,000 Term Loan, maturing November 30, 2007 3,506,017
CH OPERATING, LLC B2 B+
4,758,621 Term Loan, maturing June 30, 2007 4,699,138
HERBALIFE INTERNATIONAL, INC. B1 BB-
1,944,444 Term Loan, maturing July 31, 2008 1,929,861
K MART CORPORATION Ba1 BBB
3,500,000 Debtor in Possession Term Loan, maturing
April 22, 2004 3,441,666
MURRAY'S DISCOUNT AUTO STORES, INC. NR B
13,369,190 Term Loan, maturing June 30, 2003 13,209,304
PEEBLES, INC. NR NR
7,839,708 Term Loan, maturing April 30, 2004 7,800,509
PETCO ANIMAL SUPPLIES, INC. Ba3 BB-
3,490,956 Term Loan, maturing October 2, 2008 3,502,958
RITE AID CORPORATION B2 BB-
14,775,191 Term Loan, maturing June 27, 2005 14,553,563
SHOPPERS DRUG MART CORPORATION Ba1 BBB+
952,941 Term Loan, maturing February 4, 2009 954,966
TRAVELCENTERS OF AMERICA, INC. Ba3 BB
2,481,250 Term Loan, maturing November 14, 2008 2,492,882
--------------
56,090,864
--------------
See Accompanying Notes to Financial Statements
24
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
BANK LOAN
RATINGS+
PRINCIPAL (UNAUDITED)
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT: 5.2%
AMERICAN TOWER, L.P. B2 BB-
$ 11,916,667 Term Loan, maturing June 30, 2007 $ 10,351,246
CROWN CASTLE OPERATING COMPANY Ba3 BB-
13,000,000 Term Loan, maturing March 15, 2008 11,952,772
PINNACLE TOWERS, INC. B3 D
8,619,958 Term Loan, maturing June 30, 2007 7,887,261
SPECTRASITE COMMUNICATIONS, INC. B3 CC
8,500,000 Term Loan, maturing December 31, 2007 7,426,875
TRIPOINT GLOBAL COMMUNICATIONS, INC. NR NR
4,179,805 Term Loan, maturing May 31, 2006 4,095,147
TSI TELECOMMUNICATION SERVICES, INC. Ba3 B+
5,846,591 Term Loan, maturing December 31, 2006 5,486,049
--------------
47,199,350
--------------
TEXTILES AND LEATHER: 2.9%
ACCESSORY NETWORK GROUP, INC. NR NR
8,203,882 Term Loan, maturing June 30, 2003 5,332,523
GALEY & LORD, INC.(2) Caa2 NR
2,736,593 Term Loan, maturing April 2, 2005 1,847,201
1,959,413 Term Loan, maturing April 1, 2006 1,322,604
LEVI STRAUSS & COMPANY B1 BB
76,456 Term Loan, maturing August 29, 2003 76,134
MALDEN MILLS INDUSTRIES, INC.(2) NR NR
8,958,296 Term Loan, maturing October 28, 2006(3) 4,755,010
POLYMER GROUP, INC.(2) B3 NR
4,779,769 Term Loan, maturing December 20, 2005 4,322,278
5,462,500 Term Loan, maturing December 20, 2006 4,932,184
TARGUS GROUP, INC. NR NR
3,432,425 Term Loan, maturing August 31, 2006 3,037,696
WILLIAM CARTER COMPANY Ba3 BB-
990,000 Term Loan, maturing September 30, 2008 997,425
--------------
26,623,055
--------------
UTILITIES: 1.0%
CALPINE CORPORATION Ba3 BBB-
1,899,130 Term Loan, maturing March 8, 2004 1,619,439
MICHIGAN ELECTRIC TRANSMISSION COMPANY Baa2 BB+
2,992,500 Term Loan, maturing May 1, 2007 2,973,797
PIKE ELECTRIC, INC. Ba3 BB-
1,776,471 Term Loan, maturing April 18, 2010 1,786,834
SOUTHERN CALIFORNIA EDISON COMPANY Ba2 BB
2,500,000 Term Loan, maturing March 1, 2003 2,479,689
--------------
8,859,759
--------------
TOTAL SENIOR LOAN -- 161.8%
(COST $1,646,480,555) $1,479,865,820
--------------
See Accompanying Notes to Financial Statements
25
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
OTHER CORPORATE DEBT
PRINCIPAL
AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE
-----------------------------------------------------------------------------------------------------------------
AUTOMOBILE: 0.5%
CAPITAL TOOL & DESIGN, LTD. NR NR
$ 6,000,000 Subordinated Note, maturing July 10, 2004 $ 4,800,000
DATA AND INTERNET SERVICES: 0.0%
ARCH WIRELESS HOLDINGS, INC. NR NR
739,789 Subordinated Note, maturing May 15, 2009(3) 236,732
FINANCE: 1.1%
VALUE ASSET MANAGEMENT, INC. B3 B
10,000,000 Senior Subordinated Bridge Note, maturing August 31, 9,750,000
2005
HEALTHCARE, EDUCATION AND CHILDCARE: 0.0%
BLOCK VISION HOLDINGS CORPORATION NR NR
13,365 Junior Term Loan, maturing January 31, 2006 --
HOME AND OFFICE FURNISHINGS, HOUSEWARES, AND DURABLE CONSUMER PRODUCTS: 0.0%
MP HOLDINGS, INC. NR NR
38,060 Subordinated Note, maturing March 14, 2007 36,157
OIL AND GAS: 0.8%
PREMCOR REFINING GROUP Ba3 BB-
8,000,000 Floating Rate Note, maturing November 15, 2004 7,280,000
PERSONAL & NONDURABLE CONSUMER PRODUCTS: 0.3%
AM COSMETICS CORPORATION NR NR
3,626,611 Subordinated Note, maturing March 31, 2006(3) --
PAINT SUNDRY BRANDS B2 B+
2,875,000 Subordinated Note, maturing August 11, 2008 2,328,750
TEXTILES AND LEATHER: 0.1%
TARTAN TEXTILE SERVICES, INC. NR NR
1,332,583 Subordinated Note, maturing April 1, 2011 1,265,954
--------------
TOTAL OTHER CORPORATE DEBT -- 2.8%
(COST $27,965,025) 25,697,593
--------------
See Accompanying Notes to Financial Statements
26
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
EQUITIES AND OTHER INVESTMENTS
VALUE
-----
360 Networks, Inc. (76,029 Common Shares)(@) (R) $ --
Allied Digital Technologies Corporation (Residual Interest in
Bankruptcy Estate)(1) (@) (R) 186,961
AM Cosmetics Corporation (37,197 Common Shares)(@) (R) --
AM Cosmetics Corporation (415 Preferred Shares)(@) (R) --
Arch Wireless Holdings, Inc. (102,124 Common Shares)(@) 112,336
Avborne, Inc. (Residual Interest in Bankruptcy Estate)(2) (@) (R) 1,236,960
Autotote Systems, Inc. (Option to Purchase 0.248% of Common Shares
Issued and Outstanding)(@) (R) --
Block Vision Holdings Corporation (571 Common Shares)(@) (R) --
Boston Chicken Inc. (Residual Interest in Boston Chicken
Plan Trust)(2) (@) (R) 8,014,962
Breed Technologies, Inc. (212,171 Common Shares)(@) (R) 3,392,614
Capital Tool & Design, Ltd. (Warrants for 121,159 Common Shares)(@) (R) --
Casden Properties Operation (10,000 Shares of Junior Cumulative
Preferred Partnership Units)(R) 250,000
Covenant Care, Inc. (Warrants for 26,501 Common Shares,
Expires March 31, 2003)(@) (R) --
Covenant Care, Inc. (Warrants for 19,000 Common Shares,
Expires January 13, 2005)(@) (R) --
Dan River, Inc. (127,306 Common Shares)(@) 229,151
Decision One Corporation (350,059 Common Shares)(@) (R) 2,187,869
Electro Mechanical Solutions (Residual Interest in Bankruptcy
Estate)(2) (@) (R) 11,356
Enterprise Profit Solutions (Liquidation Interest)(@) (R) --
Euro United Corporation (Residual Interest in Bankruptcy
Estate)(4) (@) (R) 4,466,250
Exide Technologies (Warrants for 16,501 Common Shares, Expires
March 16, 2006)(2) (@) (R) 165
Genesis Health Ventures, Inc. (190,605 Common Shares)(@) 3,337,494
Genesis Health Ventures, Inc. (2,223 Preferred Shares)(@) 200,070
Grand Union Company (Residual Interest in Bankruptcy
Estate)(2) (@) (R) 130,142
Holmes Products Corporation (Warrants for 19,397 Common Shares,
Expires May 7, 2006)(@) (R) --
Humphreys, Inc. (Residual Interest in Bankruptcy Estate)(2) (@) (R) 25,000
Imperial Home Decor Group, Inc. (300,141 Common Shares)(@) (R) 1
IHDG Realty (300,141 Common Shares)(@) (R) 1
Intera Group, Inc. (864 Common Shares)(@) (R) --
Kevco, Inc. (Residual Interest in Bankruptcy Estate)(2) (@) (R) 147,443
Mariner Health Care, Inc. (126,525 Common Shares)(@) 852,779
Morris Material Handling, Inc. (481,373 Common Shares)(@) (R) 760,569
MP Holdings, Inc. (590 Common Shares)(@) (R) 6
Murray's Discount Auto Stores, Inc. (17 Common Shares)(@) (R) 95,524
Murray's Discount Auto Stores, Inc. (Warrants for 955 Common
Shares, Expires January 22, 2007)(@) (R) 5,377,251
See Accompanying Notes to Financial Statements
27
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
VALUE
-----
New World Restaurant Group, Inc. (Warrants for 4,000 Common
Shares, Expires June 15, 2006)(@) (R) $ 48,020
Safelite Glass Corporation (660,808 Common Shares)(@) (R) 8,623,544
Safelite Realty (44,605 Common Shares)(@) (R) 1
Scientific Games Corporation (48,930 Warrants for Class B
Non-Voting Common Shares, Expires October 2003)(@) (R) 137,565
Soho Publishing (17,582 Common Shares)(@) (R) 176
Staff Leasing, Inc. (60,056 Common Shares)(@) (R) 234,819
Stellex Aerostructures, Inc. (11,130 Common Shares)(@) (R) --
Tartan Textile Services, Inc. (23,449 Shares of Series D
Preferred Stock)(@) (R) 2,227,655
Tartan Textile Services, Inc. (36,775 Shares of Series E
Preferred Stock)(@) (R) 2,333,852
Telinget, Inc. (Residual Interest in Bankruptcy Estate)(2) (@) (R) --
Tembec, Inc. (167,239 Common Shares)(@) (R) 1,160,221
TSR Wireless, LLC (Residual Interest in Bankruptcy Estate)(1)(@) (R) --
U.S. Office Products Company (Residual Interest in Bankruptcy
Estate)(2) (@) (R) --
--------------
TOTAL FOR EQUITIES AND OTHER INVESTMENTS -- 5.0%
(COST $43,442,667) 45,780,757
--------------
TOTAL INVESTMENTS (COST $1,717,888,247)(5) 169.6% $1,551,344,170
PREFERRED SHARES AND LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS, NET -69.6% (636,438,751)
------ --------------
NET ASSETS 100.0% $ 914,905,419
====== ==============
See Accompanying Notes to Financial Statements
28
ING Prime Rate Trust
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
----------
@ 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 margin above the Prime Rate of a U.S. bank
specified in the credit agreement, LIBOR, the certificate of deposit rate,
or in some cases another base lending rate.
NR Not Rated
+ Bank Loans rated below Baa by Moody's Investor Services, Inc. or BBB by
Standard & Poor's Group are considered to be below investment grade.
(1) The borrower filed for protection under Chapter 7 of the U.S. Federal
bankruptcy code.
(2) The borrower filed for protection under Chapter 11 of the U.S. Federal
bankruptcy code.
(3) Loan is on non-accrual basis.
(4) The borrower filed for protection under the Canadian Bankruptcy and
Insolvency Act.
(5) For federal income tax purposes, the cost of investment is $1,715,065,247
and net unrealized depreciation consists of the following:
Gross Unrealized Appreciation $ 9,383,201
Gross Unrealized Depreciation (173,104,278)
---------------
Net Unrealized Depreciation $ (163,721,077)
===============
See Accompanying Notes to Financial Statements
29
ING Prime Rate Trust
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
ASSETS:
Investments in securities at value (Cost $1,717,888,247) $ 1,551,344,170
Cash 195,873
Receivables:
Interest 9,172,371
Other 101,811
Prepaid expenses 155,084
Prepaid arrangement fees on notes payable 151,670
---------------
Total assets 1,561,120,979
---------------
LIABILITIES:
Notes payable 191,000,000
Deferred arrangement fees on senior loans 2,767,178
Accrued interest payable 426,059
Accrued Auction Preferred Shares dividends payable 62,405
Payable to affiliates 1,348,752
Accrued expenses 611,166
---------------
Total liabilities 196,215,560
---------------
Preferred shares, $25,000 stated value per share
at liquidation value (18,000 shares outstanding) 450,000,000
NET ASSETS $ 914,905,419
===============
Net asset value per common share outstanding (net assets
less Preferred Shares at liquidation value, divided by 136,972,914 shares
of beneficial interest authorized and outstanding, no par value) $ 6.68
NET ASSETS CONSIST OF:
Paid in capital $ 1,287,948,209
Undistributed net investment income 10,257,775
Accumulated net realized loss on investments (216,756,488)
Net unrealized depreciation of investments (166,544,077)
---------------
NET ASSETS $ 914,905,419
===============
See Accompanying Notes to Financial Statements
30
ING Prime Rate Trust
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS for the Nine Months Ended November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 68,577,620
Arrangement fees earned 1,903,263
Dividends 9,008
Other 2,684,981
------------
Total investment income 73,174,872
------------
EXPENSES:
Interest 3,526,989
Investment management fees 9,678,839
Administration fees 3,024,618
Transfer agent and registrar fees 473,076
Shareholder reporting expense 137,635
Custodian fees 420,075
Revolving credit facility fees 204,141
Professional fees 700,369
Preferred shares -- Dividend disbursing agent fees 896,339
Insurance expense 18,447
Pricing expense 58,817
Postage expense 192,500
Trustees' fees 55,000
Miscellaneous expense 144,269
NYSE Registration fees 50,960
------------
Total expenses 19,582,074
------------
Net investment income 53,592,798
------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS:
Net realized loss on investments (89,658,095)
Net change in unrealized depreciation of investments 17,180,816
------------
Net loss on investments (72,477,279)
------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS:
From net investment income (6,025,702)
------------
Net decrease in net assets resulting from operations $(24,910,183)
============
See Accompanying Notes to Financial Statements
31
ING Prime Rate Trust
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
NINE MONTHS ENDED
NOVEMBER 30, YEAR ENDED
2002 FEBRUARY 28,
(UNAUDITED) 2002
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 53,592,798 $ 101,753,746
Net realized loss on investments (89,658,095) (53,063,828)
Change in unrealized appreciation (depreciation)
of investments 17,180,816 (69,951,020)
Distributions to preferred shareholders from net
investment income (6,025,702) (15,273,093)
--------------- ---------------
Net decrease in net assets resulting
from operations (24,910,183) (36,534,195)
--------------- ---------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS:
Distributions from net investment income (46,166,077) (85,728,945)
--------------- ---------------
Decrease in net assets from distributions to
common shareholders (46,166,077) (85,728,945)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Common shares issued from dividend reinvestment -- 919,219
Common shares sold in connection with shelf offerings -- 87,513
Offering costs of preferred shares -- (194,010)
--------------- ---------------
Net increase from capital share transactions -- 812,722
--------------- ---------------
Net decrease in net assets (71,076,260) (121,450,418)
NET ASSETS:
Beginning of period 985,981,679 1,107,432,097
--------------- ---------------
End of period (including undistributed net investment
income of $10,257,775 and $8,856,756, respectively) $ 914,905,419 $ 985,981,679
=============== ===============
SUMMARY OF COMMON SHARE TRANSACTIONS:
Shares issued in payment of distributions from net
investment income -- 114,904
Shares sold in connection with shelf offerings -- 10,939
--------------- ---------------
Net increase in shares common shares outstanding -- 125,843
=============== ===============
See Accompanying Notes to Financial Statements
32
ING Prime Rate Trust
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS for the Nine Months Ended November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 65,090,123
Dividends received 9,008
Facility fees paid (88,415)
Dividends paid to preferred shareholders (6,040,908)
Arrangement fees received 4,052,219
Other income received 2,725,049
Interest paid (3,617,996)
Other operating expenses paid (15,606,425)
Purchases of securities (636,913,825)
Proceeds from sale of securities 726,886,032
-------------
Net cash provided by operating activities 136,494,862
=============
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to common shareholders (46,166,077)
Loan advance (91,000,000)
-------------
Net cash flows used in financing activities (137,166,077)
-------------
Net change in cash (671,215)
Cash at beginning of period 867,088
-------------
Cash at end of period $ 195,873
=============
RECONCILIATION OF NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH USED FOR OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations $ (24,910,183)
-------------
Adjustments to reconcile net increase in net assets resulting
from operations to net cash used for operating activities:
Change in unrealized depreciation of securities (17,180,816)
Net accretion of discounts on securities (3,307,281)
Realized loss on sale of securities 89,658,095
Purchase of securities (636,913,825)
Proceeds on sale of securities 726,886,032
Increase in interest receivable (180,216)
Decrease in other assets 40,068
Decrease in prepaid arrangement fees on notes payable 115,726
Decrease in prepaid expenses 175,724
Increase in deferred arrangement fees on senior loans 2,148,956
Decrease in accrued interest payable (91,007)
Decrease in preferred shareholders dividend payable (15,206)
Decrease in payable to affiliates (29,610)
Increase in accrued expenses 98,405
-------------
Total adjustments 161,405,045
-------------
Net cash provided by operating activities $ 136,494,862
=============
See Accompanying Notes to Financial Statements
33
ING Prime Rate Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
For a common share outstanding throughout the period
NINE MONTHS
ENDED YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
NOVEMBER 30, -------------------------------------------
2002 2002 2001 2000
----------- ----------- ----------- -----------
(UNAUDITED)
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.20 $ 8.09 $ 8.95 $ 9.24
Net investment income 0.34 0.74 0.88 0.79
Net realized and unrealized gain (loss) on
investments (0.48) (0.89) (0.78) (0.30)
Distribution to Preferred Shareholders (0.04) (0.11) (0.06) --
Increase (decrease) in net asset value from
investment operations (0.18) (0.26) 0.04 0.49
Distributions to Common Shareholders from net invest-
ment income (0.34) (0.63) (0.86) (0.78)
Increase in net asset value from share offerings -- -- -- --
Reduction in net asset value from rights offering -- -- -- --
Increase in net asset value from
repurchase of capital stock -- -- -- --
Reduction in net asset value from
Preferred Shares offerings -- -- (0.04) --
----------- ----------- ----------- -----------
Net asset value, end of period $ 6.68 $ 7.20 $ 8.09 $ 8.95
=========== =========== =========== ===========
Closing market price at end of period $ 5.91 $ 6.77 $ 8.12 $ 8.25
TOTAL RETURN(3)
Total investment return at closing
market price(4) (7.86)% (9.20)% 9.10% (5.88)%
Total investment return at net asset value(5) (2.07)% (3.02)% 0.19% 5.67%
RATIOS/SUPPLEMENTAL DATA
Net assets end of period (000's) $ 914,905 $ 985,982 $ 1,107,432 $ 1,217,339
Preferred Rate Shares
Aggregate amount outstanding (000's) $ 450,000 $ 450,000 $ 450,000 --
Liquidation and market value Per Share $ 25,000 $ 25,000 $ 25,000 --
Asset coverage Per Share** 243% 235% 215% --
Average borrowings (000's) $ 200,258 $ 365,126 $ 450,197 $ 524,019
Ratios to average net assets including preferred*
Expenses (before interest and other fees related to
revolving credit facility)(1) 1.54% 1.57% 1.62% --
Expenses(1) 1.91% 2.54% 3.97% --
Net investment income(1) 5.22%(A) 6.83% 9.28% --
Ratios to average net assets plus borrowing
Expenses (before interest and other fees related to
revolving credit facility)(1) 1.88% 1.66% 1.31% 1.00%(9)
Expenses(1) 2.34% 2.70% 3.21% 2.79%(9)
Net investment income(1) 6.40%(B) 7.24% 7.50% 6.12%
Ratios to average net assets
Expenses (before interest and other fees related to
revolving credit facility)(1) 2.31% 2.25% 1.81% 1.43%(9)
Expenses(1) 2.85% 3.64% 4.45% 4.00%(9)
Net investment income(1) 7.79%(C) 9.79% 10.39% 8.77%
Portfolio turnover rate 40% 53% 46% 71%
Common shares outstanding at end of period (000's) 136,973 136,973 136,847 136,036
----------
(1) Annualized for periods less than one year.
(2) Prior to the waiver of expenses, the ratios of expenses to average net
assets were 1.95% (annualized), 1.48% and 1.44% for the period from May 12,
1988 to February 28, 1989, and for the fiscal years ended February 28, 1990
and February 29, 1992, respectively, and the ratios of net investment
income to average net assets were 8.91% (annualized), 10.30% and 7.60% for
the period from May 12, 1988 to February 28, 1989, and for the fiscal years
ended February 28, 1990 and February 29, 1992, respectively.
(3) Total return calculations are attributable to common shareholders.
(4) Total investment return measures the change in the market value of your
investment assuming reinvestment of dividends and capital gain
distributions, if any, in accordance with the provisions of the dividend
reinvestment plan. On March 9, 1992, the shares of the Trust were initially
listed for trading on the New York Stock Exchange. Accordingly, the total
investment return for the year ended February 28, 1993, covers only the
period from March 9, 1992, to February 28, 1993. Total investment return
for periods prior to the year ended February 28, 1993, are not presented
since market values for the Trust's shares were not available. Total
returns for less than one year are not annualized.
(5) 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. Total returns for less than one year are not
annualized.
(6) Calculation of total return excludes the effects of the per share dilution
resulting from the rights offering as the total account value of a fully
subscribed shareholder was minimally impacted.
See Accompanying Notes to Financial Statements
34
ING Prime Rate Trust
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Continued)
--------------------------------------------------------------------------------
YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
---------------------------------------------------------------------------------------------------------------------------
1999(8) 1998(8) 1997(8) 1996(7) 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 9.34 $ 9.45 $ 9.61 $ 9.66 $ 10.02 $ 10.05 $ 9.96 $ 9.97
0.79 0.87 0.82 0.89 0.74 0.60 0.60 0.76
(0.10) (0.13) (0.02) (0.08) 0.07 (0.05) 0.01 (0.02)
-- -- -- 0.81 0.81 0.55 0.61 0.74
0.69 0.74 0.80 (0.86) (0.73) (0.60) (0.57) (0.75)
(0.82) (0.85) (0.82) -- -- -- -- --
0.03 -- -- -- -- -- -- --
-- -- (0.14) -- (0.44) -- -- --
-- -- -- -- -- 0.02 0.05 --
-- -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 9.24 $ 9.34 $ 9.45 $ 9.61 $ 9.66 $ 10.02 $ 10.05 $ 9.96
=========== =========== =========== =========== =========== =========== =========== ===========
$ 9.56 $ 10.31 $ 10.00 $ 9.50 $ 8.75 $ 9.25 $ 9.13 --
1.11% 12.70% 15.04%(6) 19.19% 3.27%(6) 8.06% 10.89% --
7.86% 8.01% 8.06%(6) 9.21% 5.24%(6) 6.28% 7.29% 7.71%
$ 1,202,565 $ 1,034,403 $ 1,031,089 $ 862,938 $ 867,083 $ 719,979 $ 738,810 $ 874,104
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
$ 490,978 $ 346,110 $ 131,773 -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
1.05%(9) 1.04% 1.13% -- -- -- -- --
2.86%(9) 2.65% 1.92% -- -- -- -- --
6.00% 6.91% 7.59% -- -- -- -- --
1.50%(9) 1.39% 1.29% -- -- -- -- --
4.10%(9) 3.54% 2.20% 1.23% 1.30% 1.31% 1.42% 1.42%(2)
8.60% 9.23% 8.67% 9.23% 7.59% 6.04% 5.88% 7.62%(2)
68% 90% 82% 88% 108% 87% 81% 53%
130,206 110,764 109,140 89,794 89,794 71,835 73,544 87,782
----------
(7) ING Investments, LLC, the Trust's investment manager, acquired certain
assets of Pilgrim Management Corporation, the Trust's former investment
manager, in a transaction that closed on April 7, 1995.
(8) The Manager agreed to reduce its fee for a period of three years from the
Expiration Date of the November 12, 1996 Rights Offering to 0.60% of the
average daily net assets, plus the proceeds of any outstanding borrowings,
over $1.15 billion.
(9) Calculated on total expenses before impact on earnings credits.
* Ratios do not reflect the effect of dividend payments to Preferred
Shareholders; income ratios reflect income earned on assets attributable to
preferred shares.
** 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.
(A) Had the Trust not amortized premiums and accreted discounts, the ratio of
net investment income to average net assets including preferred shares
would have been 4.90% for the nine months ended November 30, 2002.
(B) Had the Trust not amortized premiums and accreted discounts, the ratio of
net investment income to average net assets plus borrowings applicable to
common shares would have been 6.00% for the nine months ended November 30,
2002.
(C) Had the Trust not amortized premiums and accreted discounts, the ratio of
net investment income to average net assets applicable to common shares
would have been 7.31% for the nine months ended November 30, 2002.
See Accompanying Notes to Financial Statements
35
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
ING Prime Rate Trust (the "Trust"), is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end,
investment management company. The Trust invests in senior loans which are
exempt from registration under the Securities Act of 1933 as amended (the "`33
Act"), but contain certain restrictions on resale and cannot be sold publicly.
These loans bear interest (unless otherwise noted) at rates that float
periodically at a margin above the Prime Rate of a U.S. bank specified in the
credit agreement, the London Inter-Bank Offered Rate ("LIBOR"), the certificate
of deposit rate, or in some cases another base lending rate. The following is a
summary of the significant accounting policies consistently followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America.
A. SENIOR LOAN AND OTHER SECURITY VALUATION. Loans are normally valued at the
mean of the means of one or more bid and asked quotations obtained from a
pricing service or other sources determined by the Board of Trustees to be
independent and believed to be reliable. Loans for which reliable
quotations are not available may be valued with reference to another loan
or a group of loans for which quotations are more readily available and
whose characteristics are comparable to the loan being valued. Under this
approach, the comparable loan or loans serve as a proxy for changes in
value. The Trust has engaged an independent pricing service to provide
quotations from dealers in loans and to calculate values under the proxy
procedure described above. It is expected that most of the loans held by
the Trust will be valued with reference to quotations from the independent
pricing service or with reference to the proxy procedure described above.
ING Investments, LLC (the "Investment Manager") may believe that the price
for a loan derived from market quotations or the proxy procedure described
above is not reliable or accurate. Among other reasons, this may be the
result of information about a particular loan or borrower known to the
Investment Manager that the Investment Manager believes may not be known to
the pricing service or reflected in a price quote. In this event, the loan
is valued at fair value as determined in good faith under procedures
established by the Trust's Board of Trustees and in accordance with the
provisions of the 1940 Act. Under these procedures, fair value is
determined by the Investment Manager and monitored by the Trust's Board of
Trustees through its Valuation Committee. In fair valuing a loan,
consideration is given to several factors, which may include, among others,
the following: (i) the characteristics of and fundamental analytical data
relating to the loan, including the cost, size, current interest rate,
period until the next interest rate reset, maturity and base lending rate
of the loan, the terms and conditions of the loan and any related
agreements, and the position of the loan in the borrower's debt structure;
(ii) the nature, adequacy and value of the collateral, including the
Trust's rights, remedies and interests with respect to the collateral;
(iii) the creditworthiness of the borrower and the cash flow coverage of
outstanding principal and interest, based on an evaluation of its financial
condition, financial statements and information about the borrower's
business, cash flows, capital structure and future prospects; (iv)
information relating to the market for the loan, including price quotations
for, and trading in, the loan and interests in similar loans; (v) the
reputation and financial condition of the agent for the loan and any
intermediate participants in the loan; (vi) the borrower's management; and
(vii) the general economic and market conditions affecting the fair value
of the loan. Securities for which the primary market is a national
securities exchange or the NASDAQ National Market System are stated at the
last reported sale price on the day of valuation. Debt and equity
securities traded in the over-the-counter market and listed securities for
which no sale was reported on that date are valued at the mean between the
last reported bid and asked price. Securities other than senior loans for
which reliable quotations are not readily available and all other assets
will be valued at their respective fair values as determined in good faith
by, or under procedures established by, the Board of Trustees of the Trust.
Investments in securities maturing in
36
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
less than 60 days from the date of acquisition are valued at amortized
cost, which, when combined with accrued interest, approximates market
value.
B. FEDERAL INCOME TAXES. It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its taxable
income to its shareholders. Therefore, no federal income tax provision is
required.
At February 28, 2002, the Trust had capital loss carryforwards for federal
income tax purposes of approximately $125,806,013 which are scheduled to
expire through February 28, 2011.
The Board of Trustees intends to offset any future net capital gains with
the capital loss carryforwards until each carryforward has been fully
utilized or expires.
C. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Loans are booked on a
settlement date basis and security transactions are accounted for on trade
date (date the order to buy or sell is executed). Realized gains or losses
are reported on the basis of identified cost of securities delivered.
Dividend income is recognized on the ex-dividend date. Interest income is
recorded on an accrual basis at the then-current interest rate of the loan.
The accrual of interest on loans is discontinued when, in the opinion of
management, there is an indication that the borrower may be unable to meet
payments as they become due. Upon such discontinuance, all unpaid accrued
interest is reversed. Cash collections on nonaccrual senior loans are
generally applied as a reduction to the recorded investment of the loan.
Senior loans are returned to accrual status only after all past due amounts
have been received and the borrower has demonstrated sustained performance.
For all loans acquired prior to March 1, 2001, arrangement fees, which
represent non-refundable fees associated with the acquisition of loans, are
deferred and recognized over the shorter of 2.5 years or the actual terms
of the loan. For all loans, except revolving credit facilities, acquired
subsequent to February 28, 2001, arrangement fees are treated as discounts
and accreted as described in Note 1.H. Arrangement fees associated with
revolving credit facilities acquired subsequent to February 28, 2001 are
deferred and recognized over the shorter of 4 years or the actual term of
the loan.
D. DISTRIBUTIONS TO SHAREHOLDERS. The Trust records distributions to its
shareholders on the ex-date. Distributions from income are declared by the
Trust on a monthly basis. Distributions from capital gains, if any, are
declared on an annual basis. The amount of distributions from net
investment income and net realized capital gains are determined in
accordance with federal income tax regulations, which may differ from
accounting principles generally accepted in the United States of America
for items such as the treatment of short term capital gains and the
amortization of premiums and accretion of discounts. These "book/tax"
differences are considered either temporary or permanent in nature. To the
extent that these differences are permanent in nature, such amounts are
reclassified within the capital accounts based on their federal tax-basis
treatment; temporary differences do not require reclassifications.
Distributions which exceed net investment income and net realized capital
gains for financial reporting purposes but not for tax purposes are
reported as distributions in excess of net investment income and/or
realized capital gains. To the extent they exceed net investment income and
net realized capital gains for tax purposes, they are reported as a tax
return of capital. During the year ended February 28, 2002 the Trust
reclassified $2,580,000 from undistributed net investment income to
accumulated net realized loss on investments, to reflect the treatment of
permanent book/tax differences.
E. DIVIDEND REINVESTMENTS. Pursuant to the Shareholder Investment Program
(formerly known as the Automatic Dividend Reinvestment Plan), DST Systems,
Inc., the Plan Agent, purchases, from time to time, shares of beneficial
interest of the Trust on the open market to satisfy dividend reinvestments.
Such shares are purchased only when the closing sale or bid price plus
commission is less than the net asset value per share of the stock on the
valuation date. If the market
37
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
price plus commissions is equal to or exceeds the net asset value, new
shares are issued at the greater of (i) net asset value or (ii) the market
price of the shares during the pricing period, minus a discount of 5%.
F. USE OF ESTIMATES. Management of the Trust has made certain estimates and
assumptions relating to the reporting of assets, liabilities, revenues,
expenses and contingencies to prepare these financial statements in
conformity with generally accepted accounting principles in the United
States of America. Actual results could differ from these estimates.
G. SHARE OFFERINGS. During the year ended February 28, 1999, the Trust began
issuing shares under various shelf registration statements, whereby the net
proceeds received by the Trust from share sales may not be less than the
greater of (i) the NAV per share or (ii) 94% of the average daily market
price over the relevant pricing period.
H. CHANGE IN ACCOUNTING PRINCIPLE. In November 2000 the American Institute of
Certified Public Accountants (the "AICPA") issued a revised version of the
AICPA Audit and Accounting Guide for Investment Companies (the "Guide").
Effective March 1, 2001, the Fund adopted the provisions of the Guide and
began amortizing premiums and accreting discounts on debt securities. Prior
to March 1, 2001, the Trust had not amortized premiums nor accreted
discounts. The cumulative effect of this accounting change had no impact on
net assets of the Trust, but resulted in a $2,823,000 increase in the cost
of securities and a corresponding $2,823,000 increase in net unrealized
depreciation of investments, based on securities held by the Trust on March
1, 2001.
I. RECLASSIFICATION. Under EITF Topic D-98, CLASSIFICATION AND MEASUREMENT OF
REDEEMABLE SECURITIES, which was issued on July 19, 2001, preferred
securities that are redeemable for cash or other assets are to be
classified outside of permanent equity to the extent that the redemption is
at a fixed or determinable price and at the option of the holder or upon
the occurrence of an event that is not solely within the control of the
issuer. Subject to the guidance of the EITF, the Trust's preferred stock,
which was previously classified as a component of net assets, has been
reclassified outside of permanent equity (net assets) in the accompanying
financial statements. Prior year amounts have also been reclassified to
conform with this presentation. The impact of this reclassification creates
no change to the net assets available to common shareholders.
NOTE 2 -- INVESTMENTS
For the nine months ended November 30, 2002, the cost of purchases and the
proceeds from principal repayment and sales of investments, excluding short-term
notes, totaled $635,820,345 and $726,696,339, respectively. At November 30,
2002, the Trust held senior loans valued at $1,479,865,820 representing 95.4% of
its total investments. The market value of these assets is established as set
forth in Note 1.
The senior loans acquired by the Trust may take the form of a direct co-lending
relationship with the corporate issuer, an assignment of a co-lender's interest
in a loan, or a participation interest in a co-lender's interest in a loan. The
lead lender in a typical corporate loan syndicate administers the loan and
monitors collateral. In the event that the lead lender becomes insolvent, enters
FDIC receivership or, if not FDIC insured, enters into bankruptcy, the Trust may
incur certain costs and delays in realizing payment, or may suffer a loss of
principal and/or interest. Additionally, certain situations may arise where the
Trust acquires a participation in a co-lender's interest in a loan and the Trust
does not have privity with or direct recourse against the corporate issuer.
Accordingly, the Trust may incur additional credit risk as a participant because
it must assume the risk of insolvency or bankruptcy of the co-lender from which
the participation was acquired. Common and preferred stocks, and stock purchase
warrants held in the portfolio were acquired in conjunction with senior loans
held by the Trust. Certain of these stocks and warrants are restricted and may
not be publicly
38
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
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 stock or warrant. These restricted securities are
valued at fair value as determined by the Board of Trustees by considering
quality, dividend rate, and marketability of the securities compared to similar
issues. In order to assist in the determination of fair value, the Trust will
obtain quotes from dealers who periodically trade in such securities where such
quotes are available. Dates of acquisition and cost or assigned basis of
restricted securities are as follows:
DATE OF COST OR
ACQUISITION ASSIGNED BASIS
----------- --------------
360 Networks, Inc. -- Common Stock 11/26/02 --
Allied Digital Technologies Corporation -- Residual Interest in
Bankruptcy Estate 06/05/02 186,961
AM Cosmetics Corporation -- Common Stock 06/08/99 385,610
AM Cosmetics Corporation -- Preferred Stock 06/02/99 --
Arch Wireless Holdings, Inc. -- Common Stock 07/22/02 68,423
Avborne, Inc. - Residual Interest in Bankruptcy Estate 10/11/02 1,236,960
Autotote Systems, Inc. -- Option 02/26/97 --
Block Vision Holdings Corporation -- Common Stock 09/30/02 --
Boston Chicken Inc. -- Residual Interest in Boston Chicken Plan Trust 12/26/00 8,014,961
Breed Technologies, Inc. -- Common Stock 12/27/00 3,343,665
Capital Tool & Design, Ltd. -- Warrants 07/26/96 --
Casden Properties Corporation -- Preferred Partnership Units 12/31/98 --
Covenant Care, Inc. -- Warrants 12/22/95 --
Covenant Care, Inc. -- Warrants 01/18/02 --
Decision One Corporation -- Common Stock 06/16/00 --
Electro Mechanical Solutions -- Residual Interest in Bankruptcy Estate 10/01/02 11,356
Enterprise Profit Solutions -- Liquidation Interest 10/21/02 --
Euro United Corporation -- Residual Interest in Bankruptcy Estate 06/21/02 4,466,250
Exide Technologies -- Warrants 11/30/01 --
Grand Union Company -- Residual Interest in Bankruptcy Estate 07/01/02 8,198
Holmes Group -- Warrants 10/24/01 --
Imperial Home Decor Group, Inc. -- Common Stock 05/02/01 1,654,378
IHDG Realty -- Common Stock 05/02/01 1
Intera Group, Inc. -- Common Stock 11/29/02 --
Kevco, Inc. - Residual Interest in Bankruptcy Estate 06/05/02 400,069
Morris Material Handling, Inc. -- Common Stock 01/10/01 3,009,059
MP Holdings, Inc. -- Common Stock 03/14/01 6
Murray's Discount Auto Stores, Inc. -- Warrants 02/16/99 --
Safelite Glass Corporation -- Common Stock 09/12/00 --
Safelite Realty -- Common Stock 09/12/00 --
Soho Publishing -- Common Stock 03/14/01 176
Stellex Aerostructures, Inc. -- Common Stock 10/17/01 275,767
Tartan Textile Services, Inc. -- Series D Preferred Stock 07/17/01 2,227,655
Tartan Textile Services, Inc. -- Series E Preferred Stock 07/17/01 2,333,852
Telinget, Inc. -- Residual Interest in Bankruptcy Estate 09/18/02 --
Tembec, Inc. -- Common Stock 01/10/01 1,442,942
TSR Wireless, LLC - Residual Interest in Bankruptcy Estate 10/14/02 --
U.S. Office Products Company - Residual Interest in Bankruptcy Estate 11/28/00 --
-----------
Total restricted securities excluding senior loans (market value of
$40,620,335 was 4.4% of net assets at November 30, 2002) $29,066,289
===========
39
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
NOTE 3 -- MANAGEMENT AND ADMINISTRATION AGREEMENTS
The Trust has entered into an Investment Management Agreement with the
Investment Manager, a wholly-owned subsidiary of ING Funds Services, LLC (the
"Administrator"), to provide advisory and management services. The Investment
Management Agreement compensates the Investment Manager with a fee, computed
daily and payable monthly, at an annual rate of 0.80% of the Trust's average
daily net assets (inclusive of preferred stock) plus borrowings ("Managed
Assets").
The Trust has also entered into an Administration Agreement with the
Administrator to provide administrative services and also to furnish facilities.
The Administrator is compensated with a fee, computed daily and payable monthly,
at an annual rate of 0.25% of the Trust's average daily Managed Assets.
At November 30, 2002, the Trust had the following amounts recorded in payable to
affiliates on the accompanying Statement of Assets and Liabilities:
ACCRUED INVESTMENT ACCRUED ADMINISTRATIVE
MANAGEMENT FEES FEES TOTAL
--------------- ---- -----
$1,027,621 $321,131 $1,348,752
NOTE 4 -- COMMITMENTS
The Trust has entered into both a 364-day and a five-year revolving credit
agreement, collateralized by assets of the Trust, to borrow up to $540 million
from a syndicate of major financial institutions maturing July 15, 2003.
Borrowing rates under these agreements are based on a fixed spread over LIBOR,
the federal funds rate, or a commercial paper-based rate. Prepaid arrangement
fees for any unborrowed amounts are amortized over the term of the agreements.
The amount of borrowings outstanding at November 30, 2002, was $191 million, at
a weighted average interest rate of 1.6%. The amount of borrowings represented
12.2% of total assets at November 30, 2002. Average borrowings for the nine
months ended November 30, 2002 were $200,258,182 and the average annualized
interest rate was 2.5%.
As of November 30, 2002, the Trust had unfunded loan commitments pursuant to the
terms of the following loan agreements:
Airgate PCS, Inc. $ 859,935
Aladdin Gaming, LLC 2,500,000
Aurora Foods, Inc. 342,857
BlockVision Holdings Corp. 118,771
Doshi Diagnostic 1,287,031
Express Scripts, Inc. 3,092,006
Fleming Companies, Inc. 1,581,818
Frontiervision Operating Partners, L.P. 1,296,970
Hilton Hawaiian Village, LLC 1,838,235
Insight Health Services Corporation 5,000,000
Lamar Media Corporation 6,398,438
Levi Strauss & Co. 9,329,077
Lyondell Chemical Company 9,000,000
Murray's Discount Auto Stores, Inc. 3,699,999
Owens -- Illinois, Inc. 4,336,144
Packaging Corporation of America 2,753,595
Relizon Company (The) 6,773,090
Riverwood International Corporation 5,041,667
Six Flags Theme Parks, Inc. 3,000,000
Waste Connections, Inc. 4,804,598
Western Wireless Corporation 6,000,000
-----------
$79,054,231
===========
40
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
NOTE 5 -- RIGHTS AND OTHER OFFERINGS
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.
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.
As of November 30, 2002, share offerings pursuant to shelf registrations were as
follows:
REGISTRATION SHARES SHARES
DATE REGISTERED REMAINING
---- ---------- ---------
6/11/98 15,000,000 --
6/19/98 10,000,000 9,730,800
9/15/98 25,000,000 19,170,354
3/04/99 5,000,000 3,241,645
On November 2, 2000, the Trust issued 3,600 shares each of Series M, Series W
and Series F Auction Rate Cumulative Preferred Shares, $.01 Par Value, $25,000
liquidation preference, for a total issuance of $270 million. Also, on November
16, 2000, the Trust issued 3,600 shares of Series T and Series Th Auction Rate
Cumulative Preferred Shares, $.01 Par Value, $25,000, liquidation preference,
for a total issuance of $180 million. Costs associated with the offering of
approximately $5,438,664 were charged against the proceeds received. The Trust
used the net proceeds of the offering to partially pay down the then existing
indebtedness. The Trust may reborrow amounts in the future to increase its use
of leverage which will be consistent with the limitations imposed by the 1940
Act. Preferred Shares pay dividends based on a rate set at auctions, normally
held every 7 days. In the most instances dividends are also payable every 7
days, on the first business day following the end of the rate period.
NOTE 6 -- CUSTODIAL AGREEMENT
State Street Bank and Trust Company ("SSB") serves as the Trust's custodian and
recordkeeper. Custody fees paid to SSB are reduced by earnings credits based on
the cash balances held by SSB for the Trust. There were no earnings credits for
the nine months ended November 30, 2002.
NOTE 7 -- SUBORDINATED LOANS AND UNSECURED LOANS
The primary risk arising from investing in subordinated loans or in unsecured
loans is the potential loss in the event of default by the issuer of the loans.
The Trust may acquire a subordinated loan only if, at the time of acquisition,
it acquires or holds a Senior Loan from the same borrower. The Trust will
acquire unsecured loans only where the Investment Manager believes, at the time
of acquisition, that the Trust would have the right to payment upon default that
is not subordinate to any other creditor. The Trust may invest up to 5% of its
total assets, measured at the time of investment, in subordinated loans and
unsecured loans. As of November 30, 2002, the Trust held 3.4% of its total
assets in subordinated loans and unsecured loans.
41
ING Prime Rate Trust
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS as of November 30, 2002 (Unaudited)
--------------------------------------------------------------------------------
NOTE 8 -- SUBSEQUENT EVENTS
Subsequent to November 30, 2002, the Trust paid to Common Shareholders the
following dividends from net investment income:
PER SHARE AMOUNT DECLARATION DATE RECORD DATE PAYABLE DATE
---------------- ---------------- ----------- ------------
$0.0380 11/29/02 12/10/02 12/23/02
$0.0385 12/20/02 12/31/02 11/13/03
Subsequent to November 30, 2002, 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 $46.29 12/02/02 to 01/13/03 12/09/02 to 01/17/03 12/10/02 to 01/21/03
Series T $45.63 12/03/02 to 01/14/03 12/10/02 to 01/21/03 12/11/02 to 01/22/03
Series W $47.58 12/04/02 to 01/15/03 12/11/02 to 01/22/03 12/12/02 to 01/23/03
Series Th $43.78 12/05/02 to 01/16/03 12/12/02 to 01/23/03 12/13/02 to 01/24/03
Series F $46.31 12/06/02 to 01/17/03 12/13/02 to 01/24/03 12/16/02 to 01/27/03
MANAGEMENT'S ADDITIONAL OPERATING INFORMATION (UNAUDITED)
APPROVAL OF CHANGES IN INVESTMENT POLICIES
At a Special Meeting of Trust Shareholders, held August 6, 1998, Shareholders
approved changes in the Trust's fundamental investment policies which make
available certain additional investment opportunities to the Trust, including
(i) investing in loans in any form of business entity, as long as the loans
otherwise meet the Trust's requirements regarding the quality of loans in which
it may invest; (ii) the treatment of lease participations as Senior Loans which
would constitute part of the 80% of the Trust's assets normally invested in
Senior Loans; (iii) investing in all types of hybrid loans that meet credit
standards established by the Investment Manager constituting part of the 20% of
the Trust's assets that may be invested in Other Investments; and (iv) the
ability to invest up to 5% of its total assets in both subordinated loans and
unsecured loans which would constitute part of the 20% of the Trust's assets
that may be invested in Other Investments.
Additionally, another policy change approved by the Board of Trustees of the
Trust, which does not require shareholder approval, permits the Trust to accept
guarantees and expanded forms of intangible assets as collateral, including
copyrights, patent rights, franchise value, and trademarks. Another policy
change approved by the Board, that does not require shareholder approval,
provides that 80% of the Trust's managed assets, as opposed to 80% of its net
assets, may normally be invested in Senior Loans.
The Trust's Manager considered the evolving nature of the syndicated loan market
and the potential benefits to the Trust and its shareholders of revising the
restriction to permit the Trust to invest in loans other than Senior Loans and
the increase in the number of attractive investment opportunities available to
the Trust due to the change.
REPURCHASE OF SECURITIES BY CLOSED-END COMPANIES
In accordance with Section 23(c) of the 1940 Act, and Rule 23c-1 under the 1940
Act the Trust may from time to time purchase shares of beneficial interest of
the Trust in the open market, in privately negotiated transactions and/or
purchase shares to correct erroneous transactions.
SHAREHOLDER INVESTMENT PROGRAM
The Trust offers a Shareholder Investment Program (the "Program") which enables
investors to conveniently add to their holdings at reduced costs. Should you
desire further information concerning this Program, please contact the
Shareholder Servicing Agent at (800) 992-0180.
42
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TRUSTEE AND OFFICER INFORMATION (Unaudited)
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The business and affairs of the Trust is managed under the direction of the
Trust's Board of Trustees. Information pertaining to the Trustees and Officers
of the Trust is set forth below:
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- ------ --------------- ---------- -------
Independent Trustees:
Paul S. Doherty Trustee October Mr. Doherty is 105 Mr. Doherty is a Trustee
7337 E. Doubletree Ranch Rd. 1999 to President and Partner, of the GCG Trust
Scottsdale, AZ 85258 Present Doherty, Wallace, (February 2002 to
Born: 1934 Pillsbury and Murphy, present).
P.C.,Attorneys (1996 to
present); a Director of
Tambrands, Inc. (1993
to 1998); and a Trustee
of each of the funds
managed by
Northstar Investment
Management
Corporation (1993 to
1999).
J. Michael Earley Trustee February President and Chief 105 Mr. Earley is a Trustee
7337 E. Doubletree Ranch Rd. 2002 to Executive Officer of of the GCG Trust (1997
Scottsdale, AZ 85258 Present Bankers Trust Company, to present).
Born: 1945 N.A. (1992 to present).
R. Barbara Gitenstein Trustee February President of the 105 Dr. Gitenstein is a
7337 E. Doubletree Ranch Rd. 2002 to College of New Jersey Trustee of the GCG
Scottsdale, AZ 85258 Present (1999 to present); Trust (1997 to present).
Born: 1948 Executive Vice
President and Provost
at Drake University
(1992 to 1998).
Walter H. May Trustee October Retired. Mr. May was 105 Mr. May is a Trustee for
7337 E. Doubletree Ranch Rd. 1999 to formerly Managing the Best Prep Charity
Scottsdale, AZ 85258 Present Director and Director (1991 to present) and
Born: 1936 of Marketing for Piper the GCG Trust
Jaffray, Inc. (an (February 2002 to
investment present).
banking/underwriting
firm). Mr. May was
formerly a Trustee of
each of the funds
managed by Northstar
Investment
Management
Corporation (1996 to
1999).
Jock Patton Trustee August Private Investor. Mr. 105 Mr. Patton is a Trustee
7337 E. Doubletree Ranch Rd. 1995 to Patton was formerly of the GCG Trust
Scottsdale, AZ 85258 Present Director and Chief (February 2002 to
Born: 1945 Executive Officer of present); He is also
Rainbow Multimedia Director of Hypercom,
Group, Inc. (January Inc. and JDA Software
1999 to December Group, Inc. (January
2001); Director of 1999 to present);
Stuart Entertainment, National Airlines, Inc.;
Inc.; Directory of and BG Associates, Inc.
Artisoft, Inc. (1994 to
1998); President and
co-owner of StockVal,
Inc. (November 1992 to
June 1997) and a
Partner and Director of
the law firm of Streich
Lang, P.A. (1972 to
1993).
43
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- ------ --------------- ---------- -------
David W.C. Putnam Trustee October President and 105 Mr. Putnam is a Trustee
7337 E. Doubletree Ranch Rd. 1999 to Director of F.L. of GCG Trust (February
Scottsdale, AZ 85258 Present Putnam Securities 2002 to present);
Born: 1939 Company, Inc. and its Director of F.L. Putnam
affiliates. Mr. Putnam Securities Company, Inc.
is also President, (June 1978 to present);
Secretary and Trustee F.L. Putnam Investment
of The Principled Management Company
Equity Market Fund. (December 2001 to
Mr. Putnam was present); Asian American
formerly a Bank and Trust Company
Director/Trustee of (June 1992 to present);
Trust Realty Corp., and Notre Dame Health
Anchor Investment Care Center (1991 to
Trust, Bow Ridge present). He is also a
Mining Co., and each Trustee of The Principled
of the funds Equity Market Fund
managed by (November 1996 to
Northstar Investment present); Progressive
Management Capital Accumulation
Corporation (1994 to Trust (August 1998 to
1999). present); Anchor
International Bond Trust
(December 2000 to
present); F.L. Putnam
Foundation (December
2000 to present); Mercy
Endowment Foundation
(1995 to present); and an
Honorary Trustee of
Mercy Hospital (1973 to
present).
Blaine E. Rieke Trustee February General Partner of 105 Mr. Rieke is a
7337 E. Doubletree Ranch Rd. 2001 to Huntington Partners, Director/Trustee of the
Scottsdale, AZ 85258 Present an investment Morgan Chase Trust Co.
Born: 1933 partnership (1997 to (January 1998 to present)
present). Mr. Rieke and the GCG Trust
was formerly (February 2002 to
Chairman and Chief present).
Executive Officer of
Firstar Trust Company
(1973 to 1996). Mr.
Rieke was formerly
the Chairman of the
Board and a Trustee
of each of the funds
managed by
ING Investment
Management Co. LLC.
(1998 to 2001).
Roger B. Vincent Trustee February President of 105 Mr. Vincent is a Trustee
7337 E. Doubletree Ranch Rd. 2002 to Springwell of the GCG Trust (1994
Scottsdale, AZ 85258 Present Corporation, a to present) and a
Born: 1945 corporate advisory Director of AmeriGas
firm (1989 to Propane, Inc. (1998 to
present). Mr. Vincent present).
was formerly a
Director of Tatham
Offshore, Inc.
(1996 to 2000) and
Petrolane, Inc.
(1993 to 1995).
44
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- ------ --------------- ---------- -------
Richard A. Wedemeyer Trustee February Vice President -- 105 Mr. Wedemeyer is a
7337 E. Doubletree Ranch Rd. 2001 to Finance and Trustee of Touchstone
Scottsdale, AZ 85258 Present Administration -- of the Consulting Group (1997
Born: 1936 Channel Corporation, an to present) and the
importer of specialty GCG Trust (February
alloy aluminum 2002 to present).
products (1996 to
present). Mr.
Wedemeyer was
formerly Vice President
-- Finance and
Administration -- of
Performance
lAdvantage, Inc., a
provider of training and
consultation services
(1992 to 1996), and Vice
President -- Operations
and Administration of
Jim Henson Productions
(1979 to 1997). Mr.
Wedemeyer was a
Trustee of each of the
funds managed by
ING Investment
Management Co. LLC.
(1998 to 2001).
Interested Directors:
R. Glenn Hilliard(1) Trustee February Chairman and CEO of 105 Mr. Hilliard is a Trustee
ING Americas 2002 to ING Americas and a of the GCC Trust
5780 Powers Ferry Road, NW Present member of its Americas (February 2002 to
Atlanta, GA 30327 Executive Committee present). Mr. Hilliard
Born: 1943 (1999 to present). Mr. also serves as a
Hilliard was formerly member of the Board
Chairman and CEO of of Directors of the
ING North America, Clemson University
encompassing the U.S., Foundation, the Board
Mexico and Canada of Councilors for the
regions (1994 to 1999). Carter Center, a Trustee
of the Woodruff Arts
Center and also on the
Board of Directors for
the High Museum of
Art.
45
ING Prime Rate Trust
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
TERM OF NUMBER OF
OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER
POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY
AND AGE FUND SERVED PAST FIVE YEARS BY TRUSTEE TRUSTEE
------- ---- ------ --------------- ---------- -------
Thomas J. McInerney(2) Trustee February Chief Executive Officer, 159 Mr. McInerney serves as
7337 E. Doubletree Ranch Rd. 2001 to ING U.S. Financial a Director/Trustee of
Scottsdale, AZ 85258 Present Services (October 2001 Aeltus Investment
Born: 1956 to present); President, Management, Inc.
Chief Executive Officer, (1997 to present); each
and Director of of the Aetna Funds
Northern Life Insurance (April 2002 to present);
Company (2001 to Ameribest Life
present); and President Insurance Co. (2001 to
and Director of Aetna present); Equitable Life
Life Insurance and Insurance Co. (2001 to
Annuity Company (1997 present); First
to present), Aetna Columbine Life
Retirement Holdings, Insurance Co. (2001 to
Inc. (1997 to present), present); Golden
Aetna Investment American Life
Adviser Holding Co. Insurance Co. (2001 to
(2000 to present), and present); Life Insurance
Aetna Retail Holding Company of Georgia
Company (2000 to (2001 to present);
present). Mr. McInerney Midwestern United Life
was formerly General Insurance Co. (2001 to
Manager and Chief present); ReliaStar Life
Executive Officer of ING Insurance Co. (2001 to
Worksite Division (since present); Security Life
December 2000 to of Denver (2001 to
October 2001); President present); Security
of Aetna Financial Connecticut Life
Services (August 1997 to Insurance Co. (2001 to
December 2000); Head present); Southland
of National Accounts Life Insurance Co. (2001
and Core Sales and to present); USG
Marketing for Aetna Annuity and Life
U.S. Healthcare (April Company (2001 to
1996 to March 1997); present); United Life
Head of Corporate and Annuity Insurance
Strategies for Aetna Inc. Co. Inc (2001 to
(July 1995 to April present); and the GCG
1996); and has held a Trust (February 2002 to
variety of line and present). Mr. McInerney
corporate staff positions is a member of the
since 1978. Board of the National
Commission on
Retirement Policy, the
Governor's Council
on Economic
Competitiveness and
Technology of
Connecticut, the Board
of Directors of the
Connecticut Business
and Industry
Association, the Board
of Trustees of the
Bushnell, the Board for
the Connecticut Forum,
and the Board of the
Metro Hartford
Chamber of Commerce,
and is Chairman of
Concerned Citizens for
Effective Government.
(1) Mr. Hilliard is an "interested person", as defined by the Investment
Company Act of 1940, as amended (the "1940 Act"), because of his
relationship with ING Americas, an affiliate of ING Investments, LLC.
(2) Mr. McInerney is an "interested person", as defined by the 1940 Act,
because of his affiliation with ING U.S. Worksite Financial Services, an
affiliate of ING Investments, LLC.
46
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED PAST FIVE YEARS
------- ------------------- ----------- ---------------
OFFICERS:
James M. Hennessy President and Chief February 2001 - President and Chief Executive
7337 E. Doubletree Executive Officer Present Officer of ING Capital Corporation,
Ranch Rd., Scottsdale, Advisors, Inc., ING Investments,
Arizona 85258 Chief Operating June 2000 - Present LLC, Lexington Funds Distributor,
Born: 1949 Officer Inc., Express America T.C. Inc. and
EAMC Liquidation Corp. (since
Senior Executive June 2000 - February December 2001); Executive Vice
Vice President 2001 President and Chief Operating
Officer of ING Funds Distributor,
Secretary April 1995 - February LLC (since June 2000). Formerly,
2001 Executive Vice President and Chief
Operating Officer of ING
Quantitative Management, Inc.
(October 2001 to September
2002); Senior Executive Vice
President (June 2000 to December
2000) and Secretary (April 1995 to
December 2000) of ING Capital
Corporation, LLC, ING Funds
Services, LLC, ING Investments,
LLC, ING Advisors, Inc., Express
America T.C. Inc., and EAMC
Liquidation Corp.; and Executive
Vice President, ING Capital
Corporation, LLC and its affiliates
(May 1998 to June 2000) and
Senior Vice President, ING Capital
Corporation, LLC and its affiliates
(April 1995 to April 1998).
Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief
7337 E. Doubletree President and Present Financial Officer and Treasurer of
Ranch Rd., Scottsdale, Assistant Secretary ING Funds Services, LLC, ING Funds
Arizona 85258 Distributor, LLC, ING Advisors, Inc.,
Born: 1958 Chief Financial Officer June 1998 - Present ING Investments, LLC (December
2001 to present), Lexington Funds
Senior Vice President June 1998 - February Distributor, Inc., Express America
2002 T.C. Inc. and EAMC Liquidation
Corp. (since December 2001).
Formerly, Executive Vice President,
Chief Financial Officer and
Treasurer of ING Quantitative
Management, Inc. (December 2001
to October 2002); Senior Vice
President, ING Funds Services, LLC,
ING Investments, LLC, and ING
Funds Distributor, LLC (June 1998
to December 2001) and Chief
Financial Officer of Endeavor
Group (April 1997 to June 1998).
Daniel Norman Senior Vice President April 1995 - Present Senior Vice President, ING
7337 E. Doubletree Investments, LLC (since December
Ranch Rd., Scottsdale, Co-Senior Portfolio November 1999 - 1994); ING Funds Distributor, LLC
Arizona 85258 Manager Present (since December 1995); has served
Born: 1957 as an officer of other affiliates of
Treasurer June 1997 - Present ING since February 1992.
Jeffrey A. Bakalar Senior Vice President January 1998 - Senior Vice President, ING
7337 E. Doubletree Present Investments, LLC (since November
Ranch Rd., Scottsdale, 1999). Formerly Vice President and
Arizona 85258 Co-Senior Portfolio November 1999 - Assistant Portfolio Manager, ING
Born: 1959 Manager Present Investments, LLC (February 1998 -
November 1999); Vice President of
First National Bank of Chicago
(July 1994 - January 1998).
47
ING Prime Rate Trust
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED PAST FIVE YEARS
------- ------------------- ----------- ---------------
OFFICERS:
Curtis F. Lee Senior Vice President January 2001- Present Senior Vice President and Chief
7337 E. Doubletree and Chief Credit Credit Officer of Senior Loans of
Ranch Rd., Scottsdale, Officer ING Investments, LLC (since August
Arizona 85258 1999). Formerly, held a series of
Born: 1955 positions with Standard Chartered
Bank in the credit approval and
problem loan management
functions (August 1992 - June
1999).
Robert S. Naka Senior Vice President November 1999 - Senior Vice President and Assistant
7337 E. Doubletree Present Secretary of ING Funds Services,
Ranch Rd., Scottsdale, LLC, ING Funds Distributor, LLC,
Arizona 85258 Assistant Secretary July 1996 - Present ING Advisors, Inc., ING
Born: 1963 Investments, LLC (October 2001 to
present) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Senior Vice
President and Assistant Secretary
for ING Quantitative
Management, Inc. (October 2001
to October 2002); Vice President,
ING Investments, LLC (April 1997
to October 1999) , ING Funds
Services, LLC (February 1997 to
August 1999) and Assistant Vice
President, ING Funds Services, LLC
(August 1995 to February 1997).
Robyn L. Ichilov Vice President November 1997 - Vice President of ING Funds
7337 E. Doubletree Present Services, LLC (since October 2001)
Ranch Rd., Scottsdale, and ING Investments, LLC (since
Arizona 85258 August 1997); Accounting
Born: 1967 Manager, ING Investments, LLC
(since November 1995).
Kimberly A. Anderson Vice President and February 2001 - Vice President and Assistant
7337 E. Doubletree Secretary Present Secretary of ING Funds Services,
Ranch Rd., Scottsdale, LLC, ING Funds Distributor, LLC,
Arizona 85258 Assistant Vice November 1999 - ING Advisors, Inc., ING
Born: 1964 President and February 2001 Investments, LLC (since October
Assistant Secretary 2001) and Lexington Funds
Distributor, Inc. (since December
2001). Formerly, Vice President for
ING Quantitative Management,
Inc. (October 2001 to October
2002); Assistant Vice President of
ING Funds Services, LLC (November
1999 to January 2001) and has
held various other positions with
ING Funds Services, LLC for more
than the last five years.
Todd Modic Assistant Vice August 2001- Present Director of Financial Reporting of
7337 E. Doubletree President ING Investments, LLC (since March
Ranch Rd., Scottsdale, 2001). Formerly, Director of
Arizona 85258 Financial Reporting, Axient
Born: 1967 Communications, Inc. (May 2000
to January 2001) and Director of
Finance, Rural/Metro Corporation
(March 1995 to May 2000).
48
ING Prime Rate Trust
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TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued)
--------------------------------------------------------------------------------
PRINCIPAL
TERM OF OFFICE OCCUPATION(S)
NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE
AND AGE HELD WITH THE TRUST TIME SERVED PAST FIVE YEARS
------- ------------------- ----------- ---------------
Maria M. Anderson Assistant Vice August 2001 - Present Assistant Vice President of ING
7337 E. Doubletree President Funds Services, LLC (since October
Ranch Rd., Scottsdale, 2001). Formerly, Manager of Fund
Arizona 85258 Accounting and Fund Compliance,
Born: 1958 ING Investments, LLC (September
1999 to November 2001); Section
Manager of Fund Accounting,
Stein Roe Mutual Funds (July 1998
to August 1999); and Financial
Reporting Analyst, Stein Roe
Mutual Funds (August 1997 to July
1998).
Elliot Rosen Senior Vice President May 2002 - Present Senior Vice President, ING
7337 E. Doubletree Investments, LLC (since February
Ranch Rd., Scottsdale, 1999). Formerly, Senior Vice
Arizona 85258 President IPS-Sendero (May 1997 -
Born: 1953 February 1999) and President of
Sendero, which merged into IPS
(August 1993 - May 1997).
William H. Rivoir III Senior Vice President February 2001 - Senior Vice President and
7337 E. Doubletree and Assistant Present Secretary of ING Capital
Ranch Rd., Scottsdale, Secretary Corporation, LLC and ING Funds
Arizona 85258 Services, LLC (since February 2001),
Born: 1951 ING Funds Distributor, LLC, ING
Advisors, Inc., ING Investments,
LLC, and ING Quantitative
Management, Inc. (since October
2001), Lexington Funds Distributor,
Inc., ING Pilgrim Funding, Inc.,
Pilgrim America Financial, Inc.,
Express America TC, Inc. and
EAMC Liquidation Corp. (since
December 2001). Formerly, Senior
Vice President and Assistant
Secretary of ING Funds Services,
LLC (since June 1998), ING
Investments, LLC, and Pilgrim
America Financial, Inc. (since
February 1999), Senior Vice
President of ING Investments, LLC
(since December 1998) and
Assistant Secretary of ING Funds
Distributor, LLC (since February
1999) and ING Investments, LLC
(since June 1998).
49
INVESTMENT MANAGER
ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
ADMINISTRATOR
ING Fund Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-992-0180
INSTITUTIONAL INVESTORS AND ANALYSTS
Call ING Prime Rate Trust
1-800-336-3436, Extension 2217
DISTRIBUTOR
ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
1-800-334-3444
TRANSFER AGENT
DST Systems, Inc.
P.O. Box 219368
Kansas City, Missouri 64141-9368
CUSTODIAN
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105
LEGAL COUNSEL
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITORS
KPMG LLP
355 South Grand Avenue
Los Angeles, California 90071
WRITTEN REQUESTS
Please mail all account inquiries and other comments to:
ING Prime Rate Trust Account
c/o ING Fund Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258-2034
TOLL-FREE SHAREHOLDER INFORMATION
Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account
or other information, at 1-800-992-0180
A prospectus containing more complete information regarding the Trust, including
charges and expenses, may be obtained by calling ING Funds Distributor, LLC,
Distributor, at 1-800-992-0180. Please read the prospectus carefully before you
invest or send money.
[LION LOGO]
ING FUNDS PRT3Q 1102-012103