N-CSRS 1 a04-15326_1ncsrs.htm N-CSRS

 

 

 

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SECURITIES AND EXCHANGE COMMISSION

 

 

Washington, D.C. 20549

 

 

FORM N-CSR

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act file number

811-8817

 

ING Equity Trust

(Exact name of registrant as specified in charter)

 

7337 E. Doubletree Ranch Rd., Scottsdale, AZ

 

85258

(Address of principal executive offices)

 

(Zip code)

 

CT Corporation System,
101 Federal Street, Boston, MA 02110

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

1-800-992-0180

 

 

Date of fiscal year end:

May 31

 

 

Date of reporting period:

June 1, 2004 to November 30, 2004

 

 

 

ITEM 1.                             REPORTS TO STOCKHOLDERS.

 

The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1):

 


 

GRAPHIC

 

 

Funds

 

 

Semi-Annual Report

 

 

 

November 30, 2004

 

 

 

Classes A, B, C and Q

 

Principal Protection Funds

 

 

 

•     ING Principal Protection Fund

 

•     ING Principal Protection Fund II

 

•     ING Principal Protection Fund III

 

•     ING Principal Protection Fund IV

 

•     ING Principal Protection Fund V

 

•     ING Principal Protection Fund VI

 

•     ING Principal Protection Fund VII

 

•     ING Principal Protection Fund VIII

 

•     ING Principal Protection Fund IX

 

•     ING Principal Protection Fund X

 

•     ING Principal Protection Fund XI

 

•     ING Principal Protection Fund XII

 

GRAPHIC   E-Delivery Sign-up — details inside

 

This report is submitted for general information to shareholders of the ING Funds. It is not authorized for distribution to prospective shareholders unless accompanied or preceded by a prospectus which includes details regarding the funds’ investment objectives, risks, charges, expenses and other information. This information should be read carefully.

 

GRAPHIC

 


 

TABLE OF CONTENTS

 

President’s Letter

1

Market Perspective

2

Portfolio Managers’ Report

4

Investment Strategy and Principal Risks

16

Shareholder Expense Examples

18

Statements of Assets and Liabilities

23

Statements of Operations

29

Statements of Changes in Net Assets

32

Financial Highlights

36

Notes to Financial Statements

48

Portfolios of Investments

60

 

 

GRAPHIC

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GRAPHIC

 

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Just go to www.ingfunds.com, click on the E-Delivery icon from the home page, follow the directions and complete the quick 5 Steps to Enroll.

 

You will be notified by e-mail when these communications become available on the internet. Documents that are not available on the internet will continue to be sent by mail.

 


 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 


 

PRESIDENT’S LETTER

 

GRAPHIC

 

JAMES M. HENNESSY

 

Dear Shareholder:

 

The past year has brought about numerous changes in the mutual funds industry, including requests for additional disclosures. I would like to draw your attention to some additional information you will now see in the reports due, in part, to these new requirements:

 

•                  You will see a new section entitled “Shareholder Expense Examples”. These examples are intended to illustrate for you the ongoing costs of investing in a mutual fund and to provide a method to compare those costs with the ongoing costs of investing in other mutual funds.

 

•                  In addition to the normal performance tables included in the Portfolio Managers’ Reports, there are now additional graphical or tabular presentations, which illustrate the current holdings of the funds as of the period-end.

 

•                  Each fund now also files its complete schedule of portfolio holdings with the Securities Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. These Forms are available for shareholders to view on the SEC’s website at www.sec.gov.

 

We welcome these changes and believe that they will provide valuable information to our shareholders. We hope you will find these additional disclosures beneficial and easy to understand.

 

On behalf of ING Funds, I thank you for your continued support and confidence and look forward to serving you in 2005 and beyond.

 

Sincerely,

 

GRAPHIC

 

James M. Hennessy

President

ING Funds

January 25, 2005

 

1


 

MARKET PERSPECTIVE:  SIX MONTHS ENDED NOVEMBER 30, 2004

 

Two months prior to the start of our fiscal year, the economic outlook had changed radically. On April 2, 2004, a very bullish U.S. employment report had sparked a few days of euphoria that vanished as it became clear that as the job market tightens, inflation picks up and rising interest rates cannot be far away. This was followed up with another strong report in May and by mid-month major stock and bond markets had negative returns for 2004. Markets were off their lows as we started our half year and in this period, as we shall see below, sentiment would undergo two more major reversals, accompanied by record-breaking market movements.

 

Global equities added 9.0% from the end of May through November according to the Morgan Stanley Capital International (“MSCI”) World Index(1) in dollars including net dividends, just under half due to dollar weakness. Among currencies, the euro, yen and pound all gained on the dollar, although the pendulum swung back and forth. Ultimately, the dollar succumbed to record U.S. trade deficits, and latterly, to fears that non-U.S. investors might diversify out of U.S. financial assets. By the end of November 2004, the euro had gained 8.9% and a new all time record against the dollar. The yen rose 6.2% to a level not seen since early 2000, while the pound stood 4.2% higher at a remarkable 12-year peak. On a trade-weighted basis, the dollar plummeted to 9-year lows.

 

Investment grade U.S. fixed income classes initially bore the brunt of fears of a new cycle of rising interest rates from multi-decade low levels, as evidence mounted that inflation was on the rise. In the six months ended November 30, 2004, the Federal Open Market Committee (FOMC) would increase the Federal Reserves Funds rate four times to 2.0%, even as the economy clearly decelerated again. During this time, the total return of the Lehman Brothers Aggregate Bond Index(2) of investment grade bonds was 3.8%. High yield bonds fared comparatively well, the Lehman Brothers U.S. Corporate High Yield Bond Index(3) returning 9.6% for the six months. In a similar vein there was a notable flattening of the yield curve, as short-term interest rates marched up in anticipation of continued monetary tightening, while bond yields ignored this and fell in the face of mostly tame economic data. For the six months, the yield on 10-year Treasury Notes fell by 30 basis points to 4.4%, but the yield on 13-week Treasury Bills rose 113 basis points to 2.2%.

 

The U.S. equities market in the form of the Standard & Poor’s (“S&P”) 500 Index(4) rose 5.7% including dividends in the six months ended November 30, 2004. At that point the market was trading at a price to earnings (“P/E”) level of just under 16 times 2005 estimated earnings. As mentioned above, strong monthly employment reports from April 2004 set the tone. After an initial scare about the rise in interest rates that this implied, investors regained their nerve and as the Federal Reserve embarked on its tightening cycle at the end of June the market was challenging its best levels of 2004. And yet in the week before the increase the wind seemed to shift again with some unexpectedly downbeat economic releases. From July through October 2004, the employment reports were neutral to shockingly weak, while oil prices continued their rise, peaking on Friday, October 22 at 41% above end of May 2004 levels. This effective deflationary “tax” on worldwide consumers troubled equity markets, and the S&P 500 Index reached its lowest point of 2004 on August 12. From there, however, oil prices retreated by 13% and that, combined with a clear election result, perceived to be business and shareholder friendly, plus a new, powerful employment report, caused sentiment to shift yet again. By the end of November, the S&P 500 Index had breached levels not seen since before September  11, 2001, bolstered by an upward revision to third quarter gross domestic product (“GDP”) growth to 3.9%.

 

In international equities markets, for the six months ended November 30, 2004, Japan rose 4.8% in dollars, according to the MSCI Japan Index(5) with net dividends, but fell 2.6% in yen. At that point, stocks were trading at nearly 16 times 2005 estimated earnings. Initially encouraged by surprisingly strong, export led, 6.1% first quarter GDP growth, investors became disillusioned by a likely slow down in China, rising oil prices and a slumping dollar. By the third quarter, GDP growth had fallen to a depressingly flat 0.1%.

 

Meanwhile, European excluding (“ex”) UK markets gained 15.5% in dollars, about five-eighths due to dollar weakness, according to the MSCI Europe ex UK Index(6) with net dividends. In local currency terms, the region’s markets reached a 28-month high during November 2004, and were then trading on average at just over 13 times 2005 estimated earnings. Growth in this region is held back by weak domestic demand, restrained by 8.9% unemployment in inflexible labor

 

2


 

markets. This region’s main attraction is its relative cheapness; the concern is the fragility of this picture, given its export dependency.

 

The UK market rose 12.1% in dollars between May and November 2004, based on the MSCI UK Index(7) with net dividends. In pounds, the market rose 7.5%, attaining the highest mark since mid-2002, and traded at about 16 1/2 times 2005 estimated earnings. Unlike Continental Europe, the UK economy strains at full employment, with over-committed, property owning consumers, enriched (at least in their own minds), by a housing price bubble. The Bank of England has been trying, with five interest rate increases since November 2003, to cool demand and by the end of November seemed to be succeeding.

 

(1) The MSCI World Index measures the performance of over 1,400 securities listed on exchanges in the United States, Europe, Canada, Australia, New Zealand and the Far East.

 

(2) The Lehman Brothers Aggregate Bond Index is composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment.

 

(3) The Lehman Brothers U.S. Corporate High Yield Bond Index is generally representative of corporate bonds rated below investment-grade.

 

(4) The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

 

(5) The MSCI Japan Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan.

 

(6) The MSCI Europe ex UK Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe, excluding the UK.

 

(7) The MSCI UK Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK.

 

All indices are unmanaged and investors cannot invest directly in an index.

 

Past performance does not guarantee future results. The performance quoted represents past performance. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The Funds’ performance is subject to change since the period’s end and may be lower or higher than the performance data shown. Please call (800) 992-0180 or log on to www.ingfunds.com to obtain performance data current to the most recent month end.

 

Market Perspective reflects the views of the Chief Investment Risk Officer only through the end of the period, and is subject to change based on market and other conditions.

 

3


 

ING PRINCIPAL PROTECTION FUNDS

PORTFOLIO MANAGERS’ REPORT

 

During the Guarantee Period, the Funds seek to participate in favorable equity market conditions while preserving at least the principal amount of the Fund as of the inception of the Guarantee Period. After the five year Guarantee Period, the Index Plus LargeCap Period begins. During this Period, the Fund will seek to outperform the total return performance of the Standard & Poor’s (“S&P”) 500 Index while maintaining a risk profile consistent with the Index. At the end of the Guarantee Period, the guarantee will no longer apply. The Funds are managed by the following Portfolio Management Team with ING Investment Management Co. (formerly, Aeltus Investment Management, Inc.), the Sub-Adviser:

 

Asset Allocation: Mary Ann Fernandez, Senior Vice President, serves as strategist for the Funds and is responsible for overseeing overall Fund strategy and the allocation of Fund Assets between the Equity and Fixed components.

 

Equity Component: Hugh T.M. Whelan, Portfolio Manager and Douglas K. Coté, Portfolio Manager, co-manage the Equity Component.

 

Fixed Component: The Fixed Component is managed by a team of fixed-income specialists led by James B. Kauffmann, Portfolio Manager.

 

Note: The Funds are closed to new deposits.

 

Performance: Listed below are the Class A share total returns of each Principal Protection Fund (“PPF”), excluding sales charges, the S&P 500 Index(1) and the Lehman Brothers Aggregate Bond (“LBAB”) Index(2) for the six months ended November 30, 2004:

 

PPF

 

1.01

%

PPF II

 

1.07

%

PPF III

 

1.20

%

PPF IV

 

1.94

%

PPF V

 

1.95

%

PPF VI

 

1.73

%

PPF VII

 

2.09

%

PPF VIII

 

2.08

%

PPF IX

 

2.43

%

S&P 500 Index(1)

 

5.67

%

LBAB Index(2)

 

3.82

%

 

For the periods ended November 30, 2004 for those PPFs with less than six months of performance since the inception of the Guarantee Period:

 

PPF X from 08/17/04

 

2.46

%

S&P 500 Index(1)  from 09/01/04

 

6.78

%

LBAB Index(2)  from 09/01/04

 

0.31

%

 

 

 

 

PPF XI from 11/18/04

 

(1.60

)%

S&P 500 Index(1)  from 11/01/04

 

4.05

%

LBAB Index(2)  from 11/01/04

 

(0.80

)%

 

 

 

 

PPF XII(3)

 

—

 

 

(1)   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.

 

(2)   The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(3)   Since PPF XII had not entered the Guarantee Period as of November 30, 2004, performance information is not presented. The Guarantee Period for PPF XII begins February 16, 2005.

 

An investor cannot invest directly in an index.

 

Portfolio Specifics: Fund performance is driven by a combination of returns on the equity portfolio, returns on the bond portfolio, and the asset allocation between the two components. The asset allocation process seeks to participate in rising equity markets and protect principal on the downside. Stocks are more volatile than bonds — an important consideration in the asset allocation process. Other factors, such as the current level of interest rates, time remaining to the maturity date, and the ratio of current assets to the underlying guarantee amount are also important. The Fund’s allocation to equities and fixed income is dependent on these factors and the path they take over the guarantee period. In general, when the time left to maturity is short, or the ratio of assets to the guarantee amount is low, asset allocation will tend to be conservative in order to protect principal from losses. All other factors being equal, the Funds generally buy equities (and sell bonds) when the equity market rises and sell equities (and buy bonds) as the equity market declines. The use of fixed income reduces the Fund’s ability to participate as fully in upward moving equity markets.

 

The Fund’s fixed income component underperformed the LBAB Index. The Fund is comprised of short to intermediate duration Treasury and agency securities. In general, long duration credit, agency, and Treasury issues outperformed shorter duration securities in the

 

4


 

Index. The mortgage-backed sector also outperformed short- and intermediate-term Treasuries and agencies as the market moved away from AAA-rated Treasuries and agencies towards lower quality issues over the six-month period.

 

The Fund’s equity component outperformed the S&P 500 Index due to security selection, especially in the health care and information technology sectors. Stock selection in financials and consumer staples detracted modestly from results. The largest contribution to performance was Microsoft Corp. Other positive contributors to performance came from overweight positions in ChevronTexaco Corp. and Apple Computer, Inc. Among the most disappointing performers were Gap, Inc. and Motorola, Inc. Individual security selection was helped by the effectiveness of most of our model’s factors that have been historically successful at identifying outperforming stocks, especially price momentum and analyst estimate revision. Only long-term price reversal detracted from performance modestly. Asset allocation had a neutral impact on performance over the period.

 

Asset Allocation

as of November 30, 2004

(as a percent of net assets)

 

 

 

Fixed
Income

 

Common
Stock

 

Other Assets
and Liabilities

 

 

 

 

 

 

 

 

 

PPF

 

85.9

%

14.5

%

(0.4

)%

PPF II

 

91.3

%

9.1

%

(0.4

)%

PPF III

 

85.3

%

15.1

%

(0.4

)%

PPF IV

 

65.0

%

35.2

%

(0.2

)%

PPF V

 

70.0

%

30.3

%

(0.3

)%

PPF VI

 

69.6

%

30.6

%

(0.2

)%

PPF VII

 

73.3

%

26.9

%

(0.2

)%

PPF VIII

 

69.5

%

30.8

%

(0.3

)%

PPF IX

 

67.8

%

32.4

%

(0.2

)%

PPF X

 

64.8

%

35.4

%

(0.2

)%

PPF XI

 

68.6

%

31.4

%

—

%

PPF XII*

 

60.3

%

—

%

39.7

%

 

Portfolio holdings are subject to change daily.

 

* As of November 30, 2004, the Fund was in its Offering Period.

 

Current Strategy and Outlook: The near-term outlook is positive with third calendar quarter 2004 earnings hitting 17% and the non-farm payroll report almost double expectations. The Federal Reserve (“Fed”) signaled its intentions to continue with its “measured” increase in rates, and in November 2004 lifted the Fed funds rate to 2.00%*, still considered to be accommodative, triggering a bond market rally. Robust corporate profits, strong jobs numbers, and an inflation-fighting Federal Reserve bode well for equities. Despite Federal Reserve increases to the Fed funds rate, longer term fixed income issues have shown resilience through this period. Looking to 2005, however, we do project rising longer-term rates for the bond market. The allocation decision between equities and fixed income is dependent on our quantitative asset allocation model, which uses the factors mentioned above, not on a qualitative evaluation of the bond versus the equity markets.

 

*              Subsequent to the preparation of this report, the Fed raised rates 25 basis points on December 14 to 2.25%.

 

5


 

GRAPHIC

 

Average Annual Total Returns for the Periods Ended November 30, 2004

 

 

 

1 Year

 

Since Inception
of Guarantee Period
October 12, 2001

 

Including Sales Charge:

 

 

 

 

 

Class A(1)

 

(4.42

)%

(0.27

)%

Class B(2)

 

(4.27

)%

(0.36

)%

Class C(3)

 

(0.37

)%

0.91

%

Class Q

 

1.42

%

1.74

%

Excluding Sales Charge:

 

 

 

 

 

Class A

 

1.42

%

1.63

%

Class B

 

0.69

%

0.89

%

Class C

 

0.62

%

0.91

%

Class Q

 

1.42

%

1.74

%

S&P 500 Index(4)

 

12.85

%

5.65

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

4.44

%

5.57

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively, for the 1 year and since inception returns.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from October 1, 2001.

 

6


 

ING PRINCIPAL PROTECTION FUND II

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Average Annual Total Returns for the Periods Ended November 30, 2004

 

 

 

1 Year

 

Since Inception
of Guarantee Period
February 1, 2002

 

Including Sales Charge:

 

 

 

 

 

Class A(1)

 

(4.55

)%

(0.97

)%

Class B(2)

 

(4.48

)%

(1.02

)%

Class C(3)

 

(0.45

)%

0.37

%

Class Q

 

1.23

%

1.22

%

Excluding Sales Charge:

 

 

 

 

 

Class A

 

1.27

%

1.12

%

Class B

 

0.45

%

0.35

%

Class C

 

0.54

%

0.37

%

Class Q

 

1.23

%

1.22

%

S&P 500 Index(4)

 

12.85

%

3.12

%

Lehman Brothers Aggregate Bond Index(5)

 

4.44

%

5.93

%

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund II against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% and 4%, respectively, for the 1 year and since inception returns.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

7


 

ING PRINCIPAL PROTECTION FUND III

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Average Annual Total Returns for the Periods Ended November 30, 2004

 

 

 

1 Year

 

Since Inception
of Guarantee Period
June 6, 2002

 

Including Sales Charge:

 

 

 

 

 

Class A(1)

 

(4.33

)%

(0.85

)%

Class B(2)

 

(4.23

)%

(0.82

)%

Class C(3)

 

(0.26

)%

0.76

%

Class Q

 

1.47

%

1.61

%

Excluding Sales Charge:

 

 

 

 

 

Class A

 

1.51

%

1.54

%

Class B

 

0.71

%

0.75

%

Class C

 

0.73

%

0.76

%

Class Q

 

1.47

%

1.61

%

S&P 500 Index(4)

 

12.85

%

5.74

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

4.44

%

5.87

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund III against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% and 4%, respectively, for the 1 year and since inception returns.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from June 1, 2002.

 

8


 

ING PRINCIPAL PROTECTION FUND IV

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Average Annual Total Returns for the Periods Ended November 30, 2004

 

 

 

1 Year

 

Since Inception
of Guarantee Period
October 8, 2002

 

Including Sales Charge:

 

 

 

 

 

Class A(1)

 

(2.70

)%

0.80

%

Class B(2)

 

(2.56

)%

1.03

%

Class C(3)

 

1.50

%

2.84

%

Class Q

 

3.29

%

3.72

%

Excluding Sales Charge:

 

 

 

 

 

Class A

 

3.23

%

3.62

%

Class B

 

2.44

%

2.85

%

Class C

 

2.50

%

2.84

%

Class Q

 

3.29

%

3.72

%

S&P 500 Index(4)

 

12.85

%

20.45

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

4.44

%

4.20

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund IV against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% and 4%, respectively, for the 1 year and since inception returns.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from October 1, 2002.

 

9


 

ING PRINCIPAL PROTECTION FUND V

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Average Annual Total Returns for the Periods Ended November 30, 2004

 

 

 

1 Year

 

Since Inception
of Guarantee Period
January 23, 2003

 

Including Sales Charge:

 

 

 

 

 

Class A(1)

 

(3.04

)%

(0.46

)%

Class B(2)

 

(2.81

)%

(0.54

)%

Class C(3)

 

1.13

%

2.07

%

Excluding Sales Charge:

 

 

 

 

 

Class A

 

2.87

%

2.76

%

Class B

 

2.09

%

2.10

%

Class C

 

2.11

%

2.07

%

S&P 500 Index(4)

 

12.85

%

20.95

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

4.44

%

4.04

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund V against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% for the 1 year and since inception returns.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from February 1, 2003.

 

10


 

ING PRINCIPAL PROTECTION FUND VI

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Average Annual Total Returns for the Periods Ended November 30, 2004

 

 

 

1 Year

 

Since Inception
of Guarantee Period
April 24, 2003

 

Including Sales Charge:

 

 

 

 

 

Class A(1)

 

(3.35

)%

(1.34

)%

Class B(2)

 

(3.14

)%

(1.43

)%

Class C(3)

 

0.87

%

1.61

%

Class Q

 

2.58

%

2.41

%

Excluding Sales Charge:

 

 

 

 

 

Class A

 

2.54

%

2.36

%

Class B

 

1.75

%

1.62

%

Class C

 

1.85

%

1.61

%

Class Q

 

2.58

%

2.41

%

S&P 500 Index(4)

 

12.85

%

18.96

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

4.44

%

3.31

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund VI against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% for the 1 year and since inception returns.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from May 1, 2003.

 

11


 

ING PRINCIPAL PROTECTION FUND VII

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Average Annual Total Returns for the Period Ended November 30, 2004

 

 

 

1 Year

 

Since Inception
of Guarantee Period
June 30, 2003

 

Including Sales Charge:

 

 

 

 

 

Class A(1)

 

(2.70

)%

(2.32

)%

Class B(2)

 

(2.43

)%

(2.41

)%

Class C(3)

 

1.56

%

1.04

%

Excluding Sales Charge:

 

 

 

 

 

Class A

 

3.24

%

1.84

%

Class B

 

2.57

%

1.07

%

Class C

 

2.56

%

1.04

%

S&P 500 Index(4)

 

12.85

%

16.04

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

4.44

%

2.50

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund VII against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% for the 1 year and since inception return.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the since inception return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from July 1, 2003.

 

12


 

ING PRINCIPAL PROTECTION FUND VIII

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Cumulative Total Returns for the Period Ended November 30, 2004

 

 

 

Since Inception
of Guarantee Period
December 23, 2003

 

Including Sales Charge:

 

 

 

Class A(1)

 

(4.22

)%

Class B(2)

 

(4.10

)%

Class C(3)

 

(0.08

)%

Excluding Sales Charge:

 

 

 

Class A

 

1.62

%

Class B

 

0.85

%

Class C

 

0.91

%

S&P 500 Index(4)

 

7.22

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

3.39

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund VIII against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% for the since inception return.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the since inception return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from January 1, 2004.

 

13


 

ING PRINCIPAL PROTECTION FUND IX

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Cumulative Total Returns for the Period Ended November 30, 2004

 

 

 

Since Inception
of Guarantee Period
April 22, 2004

 

Including Sales Charge:

 

 

 

Class A(1)

 

(4.23

)%

Class B(2)

 

(3.90

)%

Class C(3)

 

0.07

%

Excluding Sales Charge:

 

 

 

Class A

 

1.61

%

Class B

 

1.10

%

Class C

 

1.07

%

S&P 500 Index(4)

 

7.13

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

3.40

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund IX against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% for the since inception return.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the since inception return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from May 1, 2004.

 

14


 

ING PRINCIPAL PROTECTION FUND X

PORTFOLIO MANAGERS’ REPORT

 

GRAPHIC

 

Cumulative Total Returns for the Period Ended November 30, 2004

 

 

 

Since Inception
of Guarantee Period
August 17, 2004

 

Including Sales Charge:

 

 

 

Class A(1)

 

(3.43

)%

Class B(2)

 

(2.80

)%

Class C(3)

 

1.22

%

Excluding Sales Charge:

 

 

 

Class A

 

2.46

%

Class B

 

2.20

%

Class C

 

2.22

%

S&P 500 Index(4)

 

6.78

%(6)

Lehman Brothers Aggregate Bond Index(5)

 

0.31

%(6)

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Principal Protection Fund IX against the S&P 500 Index and the Lehman Brothers Aggregate Bond Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund’s performance is shown both with and without the imposition of sales charges.

 

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

 

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

 

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund’s current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

 

This report contains statements that may be “forward-looking” statements. Actual results may differ materially from those projected in the “forward-looking” statements.

 

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers’ views are subject to change at any time based on market and other conditions.

 

Fund holdings are subject to change daily.

 

(1)Reflects deduction of the maximum Class A sales charge of 5.75%.

 

(2)Reflects deduction of the Class B deferred sales charge of 5% for the since inception return.

 

(3)Reflects deduction of the Class C deferred sales charge of 1% for the since inception return.

 

(4)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.

 

(5)The Lehman Brothers Aggregate Bond Index is a widely recognized, unmanaged index of publicly issued investment grade U.S. Government, mortgage-backed, asset-backed and corporate debt securities.

 

(6)Since inception performance for the index is shown from May 1, 2004.

 

15


 

ING PRINCIPAL PROTECTION FUNDS

INVESTMENT STRATEGY AND PRINCIPAL RISKS

 

What is the Investment Strategy During the Guarantee Period?

 

The Funds undertake (the “Payment Undertaking”) that on the Guarantee Maturity Date specified in the Prospectus, each shareholder will be entitled to redeem his or her shares for an amount no less than the value of that shareholder’s account as of the inception of the Guarantee Period, less certain expenses not covered by the Expense Limitation Agreement (“Guaranteed Amount”), provided that all dividends and distributions received from the Fund have been reinvested and no shares have been redeemed. Note: An investor must act on the Guarantee Maturity Date in order to receive the Guaranteed Amount.

 

As you know, the Funds do not implement an “investment strategy” in any conventional sense. Rather, the Funds’ asset allocation strategy seeks to optimize the exposure of the series to the Equity Component while protecting the Funds’ assets. Assets allocated to the Equity Component may be reduced or eliminated in order to conserve assets at a level equal to or above the present value of the Payment Undertaking. The Funds allocate their assets among the following asset classes during the Guarantee Period:

 

•   During the Guarantee Period, the Funds’ assets will be allocated between the:

 

•              Equity Component, consisting primarily of common stocks included in the S&P 500 Index and futures contracts on the S&P 500 Index; and the

 

•              Fixed Component, consisting primarily of short- to intermediate-duration U.S. Government securities.

 

The Funds’ asset allocation strategy is implemented by allocating assets appropriately to the Equity Component and to the Fixed Component to optimize exposure to the Equity Component while controlling the risk that payment by MBIA under the Guarantee will be required. Consequently, there can be no assurance as to the percentage of assets, if any, allocated to the Equity Component, or to any investment returns generated by the Funds.

 

How Does the Funds’ Asset Allocation work?

 

The Funds use a proprietary computer model to determine on a daily basis the percentage of assets allocated to the Equity Component and to the Fixed Component. The model evaluates a number of factors, including the then current market value of the Funds, the then prevailing level of interest rates, equity market volatility, the Funds’ total annual expenses, and the Maturity Date. The model determined the initial allocation between the Equity Component and the Fixed Component on the first day of the Guarantee Period and provides direction for any reallocations on a daily basis thereafter.

 

Equity Component: The Funds will employ an enhanced index strategy. This strategy means that the Funds invest at least 80% of the Equity Component’s net assets in stocks included in the S&P 500 Index although the weightings of the stocks will vary somewhat from their respective weightings in the Index. The Equity Component may also include up to 20% of its assets in S&P 500 Index futures contracts. The Funds may use futures for hedging purposes, but may only use futures on the S&P 500 Index and U.S. Treasury securities.

 

If the Equity Component’s market value is $5 million or less, in order to replicate investment in stocks listed on the S&P 500 Index, the Portfolio Manager may invest the entire amount of the Equity Component’s assets in S&P 500 Index futures, in exchange traded funds (ETFs), or in a combination of S&P 500 Index futures and ETFs, subject to any limitation on the Funds’ investment in such securities. ETFs are passively managed investment companies traded on a securities exchange whose goal is to track or replicate a desired index. The Funds’ Portfolio Manager will not employ an enhanced index strategy when it invests in S&P 500 Index futures and ETFs.

 

Fixed Component: The Funds look to select investments for the Fixed Component with financial characteristics that will, at any point in time, closely resemble those of a portfolio of zero coupon bonds which mature within three months of the Guarantee Maturity Date. The Fixed Component will consist primarily of securities issued or guaranteed by the U.S. Government and its agencies or instrumentalities of a short- to intermediate duration. Duration refers to the sensitivity of fixed income securities to interest rate changes. Generally, fixed income securities with shorter durations are less sensitive to changes in interest rates. These U.S. Government securities include STRIPS (Separate Trading of Registered Interest and Principal of Securities). STRIPS are created by the Federal Reserve Bank by separating the interest and principal components of an outstanding U.S. Treasury or Agency bond and selling them as individual securities. The Fixed Component may also include corporate bonds rated AA- or higher by S&P and/or Aa3 or higher by Moody’s Investors Service, Inc., futures on U.S. Treasury securities and money market instruments.

 

What Are the Principal Guarantee Period Risks?

 

Allocation Risk: If at the inception of, or at any time during, the Guarantee Period interest rates are low, the Funds’ assets may be largely invested in the Fixed Component in order to decrease the likelihood that a payment would be required under the Payment Undertaking. The effect of low interest rates on the Funds would likely be more pronounced at the inception of the Guarantee Period, as the initial allocation of assets would include more fixed income securities. In addition, if during the Guarantee Period the equity markets experienced a major decline, the Funds’ assets may become largely invested in the Fixed Component. If the

 

16


 

value of the Equity Component were to decline by a significant amount, a complete reallocation to the Fixed Component would likely occur. In the event of a reallocation of 100% of the assets to the Fixed Component, the Funds would not reallocate any assets into the Equity Component prior to the Maturity Date. Use of the Fixed Component reduces the Funds’ ability to participate as fully in upward equity market movements, and therefore represents some loss of opportunity, or opportunity cost, compared to a portfolio that is fully invested in equities.

 

Opportunity Costs: The Funds may allocate a substantial portion, and under certain circumstances all, of the Fund’s assets to the Fixed Component in order to conserve the Funds’ assets to a level equal to or above the present value of the Payment Undertaking. Initially, if interest rates are low, the allocation to the Fixed Component may be over 70% of the Funds’ assets. If the market value of the Equity Component rises, the percentage of the Funds’ assets allocated to the Equity Component generally will also rise. However, the relative volatility of these two Components as well as the past performance of the Funds will affect these allocations. For example, if the Funds incur early losses, the Funds may allocate 100% of the Funds’ assets to the Fixed Component for the entire Guarantee Period, irrespective of the subsequent upward movements in the equity markets and/or the Equity Component. The extent to which the Funds participate in upward movements in the Equity Component during the Guarantee Period will depend on the performance of the Funds, the performance and volatility of the Fixed and Equity Components, interest rates, expenses of the Fund and other factors. The Funds might capture a material portion, very little or none of any equity market increase. It is possible that on the Maturity Date, an investor could receive only the Guaranteed Amount even though the equity markets, as well as the Equity Component, has had significant positive performance during the Guarantee Period.

 

Worse Case Scenarios for the Funds’ Equity Participation: The opportunity cost of not allocating assets to the Equity Component will be particularly high if early in the Guarantee period: (a) the Fund’s NAVs decrease; or (b) the value of the Equity Component declines. In either case, all or substantially all of the Funds’ assets could be allocated to the Fixed Component for the remainder of the Guarantee Period.

 

Investing in Stocks: The risks associated with investing in stocks include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. The performance of the Equity Component also depends significantly on the Portfolio Manager’s skill in determining which securities to overweight, underweight or avoid altogether.

 

Investing in Bonds: The principal risk associated with investing in bonds is that interest rates may rise, which generally causes bond prices to fall. The market value of a zero coupon bond portfolio (which may include STRIPS) generally is more volatile than the market value of a portfolio of fixed income securities with similar maturities that pay interest periodically. With corporate bonds, there is also a risk that the issuer will default on the payment of principal or interest. Federal tax law requires that a holder of a zero coupon security accrue a portion of the discount at which the security was purchased as taxable income each year, even though the holder receives no interest payment on the security during the year. Because the Funds must distribute substantially all of their net income (including non-cash income attributable to zero coupon securities) to their shareholders each year for income and excise tax purposes, such accrued discount would also be taken into account in determining the amount of taxable distributions to shareholders. In addition, the Funds may have to dispose of portfolio securities under disadvantageous circumstances to generate cash, or may be required to borrow, to satisfy their distribution requirements.

 

Use of Futures: While the use of futures contracts by the Funds can amplify a gain, it can also amplify a loss. Such a loss can be substantially more money than the actual cost of the investment. In addition, while a hedging strategy can guard against potential risks for the Funds as a whole, it adds to the Funds’ expense and may reduce or eliminate potential gains. There is also a risk that a futures contract intended as a hedge may not perform as expected.

 

Transaction Costs and Taxes: The asset allocation process results in additional transaction costs such as brokerage commissions. The process can have an adverse effect on the performance of the Funds during periods of increased equity market volatility. In addition, a high portfolio turnover rate, which may also have an adverse effect on the performance of the Funds, may increase the Funds’ transaction costs.

 

The asset allocation process and sale of fixed-income securities in connection with the transition period may also result in the realization of additional gains to the Funds and may therefore also increase the tax liability of shareholders. The Funds will distribute any net gains and income to shareholders. Such distributions are taxable to shareholders even if the distributions are reinvested in the Funds.

 

For further information on the Funds’ Investment Strategy and Risks, please refer to your Prospectus and Statement of Additional Information.

 

17


 

SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED)

 

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution [and/or service] (12b–1) fees; and other Fund expenses. These Examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The Examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from June 1, 2004 to November 30, 2004.

 

Actual Expenses

 

The first section of the table shown, “Actual Fund Return,” provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

 

The second section of the table shown, “Hypothetical 5% Return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the hypothetical lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

ING Principal Protection Fund

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,010.10

 

1.74

%

$

8.77

 

Class B

 

1,000.00

 

1,006.90

 

2.49

 

12.53

 

Class C

 

1,000.00

 

1,007.20

 

2.49

 

12.53

 

Class Q

 

1,000.00

 

1,011.10

 

1.74

 

8.77

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,016.34

 

1.74

%

$

8.80

 

Class B

 

1,000.00

 

1,012.58

 

2.49

 

12.56

 

Class C

 

1,000.00

 

1,012.58

 

2.49

 

12.56

 

Class Q

 

1,000.00

 

1,016.34

 

1.74

 

8.80

 

 

*      Expenses are equal to each Fund’s respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

 

18


 

ING Principal Protection Fund II

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,010.70

 

1.60

%

$

8.06

 

Class B

 

1,000.00

 

1,006.60

 

2.35

 

11.82

 

Class C

 

1,000.00

 

1,007.50

 

2.35

 

11.83

 

Class Q

 

1,000.00

 

1,010.20

 

1.59

 

8.01

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,017.05

 

1.60

%

$

8.09

 

Class B

 

1,000.00

 

1,013.29

 

2.35

 

11.86

 

Class C

 

1,000.00

 

1,013.29

 

2.35

 

11.86

 

Class Q

 

1,000.00

 

1,017.10

 

1.59

 

8.04

 

 

ING Principal Protection Fund III

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the
Six Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,012.00

 

1.59

%

$

8.02

 

Class B

 

1,000.00

 

1,008.10

 

2.34

 

11.78

 

Class C

 

1,000.00

 

1,008.30

 

2.34

 

11.78

 

Class Q

 

1,000.00

 

1,012.70

 

1.59

 

8.02

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,017.10

 

1.59

%

$

8.04

 

Class B

 

1,000.00

 

1,013.34

 

2.34

 

11.81

 

Class C

 

1,000.00

 

1,013.34

 

2.34

 

11.81

 

Class Q

 

1,000.00

 

1,017.10

 

1.59

 

8.04

 

 

ING Principal Protection Fund IV

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the
Six Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,019.40

 

1.57

%

$

7.95

 

Class B

 

1,000.00

 

1,015.50

 

2.32

 

11.72

 

Class C

 

1,000.00

 

1,016.10

 

2.32

 

11.73

 

Class Q

 

1,000.00

 

1,019.00

 

1.57

 

7.95

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,017.20

 

1.57

%

$

7.94

 

Class B

 

1,000.00

 

1,013.44

 

2.32

 

11.71

 

Class C

 

1,000.00

 

1,013.44

 

2.32

 

11.71

 

Class Q

 

1,000.00

 

1,017.20

 

1.57

 

7.94

 

 

*      Expenses are equal to each Fund’s respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

 

19


 

ING Principal Protection Fund V

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,019.50

 

1.56

%

$

7.90

 

Class B

 

1,000.00

 

1,015.90

 

2.31

 

11.67

 

Class C

 

1,000.00

 

1,015.10

 

2.31

 

11.67

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,017.25

 

1.56

%

$

7.89

 

Class B

 

1,000.00

 

1,013.49

 

2.31

 

11.66

 

Class C

 

1,000.00

 

1,013.49

 

2.31

 

11.66

 

 

ING Principal Protection Fund VI

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,017.30

 

1.58

%

$

7.99

 

Class B

 

1,000.00

 

1,012.50

 

2.33

 

11.75

 

Class C

 

1,000.00

 

1,013.50

 

2.33

 

11.76

 

Class Q

 

1,000.00

 

1,016.70

 

1.58

 

7.99

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,017.15

 

1.58

%

$

7.99

 

Class B

 

1,000.00

 

1,013.39

 

2.33

 

11.76

 

Class C

 

1,000.00

 

1,013.39

 

2.33

 

11.76

 

Class Q

 

1,000.00

 

1,017.15

 

1.58

 

7.99

 

 

ING Principal Protection Fund VII

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,020.90

 

1.35

%

$

6.84

 

Class B

 

1,000.00

 

1,017.40

 

2.10

 

10.62

 

Class C

 

1,000.00

 

1,017.30

 

2.10

 

10.62

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,018.30

 

1.35

%

$

6.83

 

Class B

 

1,000.00

 

1,014.54

 

2.10

 

10.61

 

Class C

 

1,000.00

 

1,014.54

 

2.10

 

10.61

 

 

*      Expenses are equal to each Fund’s respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

 

20


 

ING Principal Protection Fund VIII

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,020.80

 

1.51

%

$

7.65

 

Class B

 

1,000.00

 

1,017.10

 

2.26

 

11.43

 

Class C

 

1,000.00

 

1,017.70

 

2.26

 

11.43

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,017.50

 

1.51

%

$

7.64

 

Class B

 

1,000.00

 

1,013.74

 

2.26

 

11.41

 

Class C

 

1,000.00

 

1,013.74

 

2.26

 

11.41

 

 

ING Principal Protection Fund IX

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,024.30

 

1.75

%

$

8.88

 

Class B

 

1,000.00

 

1,020.20

 

2.50

 

12.66

 

Class C

 

1,000.00

 

1,019.90

 

2.50

 

12.66

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,016.29

 

1.75

%

$

8.85

 

Class B

 

1,000.00

 

1,012.53

 

2.50

 

12.61

 

Class C

 

1,000.00

 

1,012.53

 

2.50

 

12.61

 

 

ING Principal Protection Fund X

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,024.60

 

1.72

%

$

8.73

 

Class B

 

1,000.00

 

1,022.00

 

2.22

 

11.25

 

Class C

 

1,000.00

 

1,022.20

 

2.28

 

11.56

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,016.44

 

1.72

%

$

8.69

 

Class B

 

1,000.00

 

1,013.94

 

2.22

 

11.21

 

Class C

 

1,000.00

 

1,013.64

 

2.28

 

11.51

 

 

*      Expenses are equal to each Fund’s respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

 

21


 

ING Principal Protection Fund XI

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

984.00

 

1.24

%

$

6.17

 

Class B

 

1,000.00

 

985.00

 

1.99

 

9.90

 

Class C

 

1,000.00

 

985.00

 

1.99

 

9.90

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,018.85

 

1.24

%

$

6.28

 

Class B

 

1,000.00

 

1,015.14

 

1.99

 

10.05

 

Class C

 

1,000.00

 

1,014.84

 

1.99

 

10.05

 

 

ING Principal Protection Fund XII

 

Beginning
Account
Value
June 1, 2004

 

Ending
Account
Value
November 30, 2004

 

Annualized
Expense
Ratio

 

Expenses Paid
During the Six
Months Ended
November 30, 2004*

 

Actual Fund Return

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,000.00

 

1.25

%

$

6.27

 

Class B

 

1,000.00

 

1,000.00

 

1.90

 

9.53

 

Class C

 

1,000.00

 

1,000.00

 

1.90

 

9.53

 

Hypothetical (5% return before expenses)

 

 

 

 

 

 

 

 

 

Class A

 

$

1,000.00

 

$

1,019.00

 

1.25

%

$

6.33

 

Class B

 

1,000.00

 

1,015.09

 

1.90

 

9.60

 

Class C

 

1,000.00

 

1,015.09

 

1.90

 

9.60

 

 

*      Expenses are equal to each Fund’s respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

 

22


 

STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

 

 

ING
Principal
Protection
Fund

 

ING
Principal
Protection
Fund II

 

ING
Principal
Protection
Fund III

 

ING
Principal
Protection
Fund IV

 

ASSETS:

 

 

 

 

 

 

 

 

 

Investments in securities at value*

 

$

265,532,116

 

$

379,175,499

 

$

293,751,388

 

$

566,110,089

 

Repurchase agreement

 

1,193,000

 

2,521,000

 

2,477,000

 

4,428,000

 

Cash

 

861

 

893

 

238

 

263

 

Dividends and interest receivable

 

185,135

 

166,839

 

180,714

 

992,492

 

Prepaid expenses

 

2,535

 

3,605

 

2,524

 

4,783

 

Total assets

 

266,913,647

 

381,867,836

 

296,411,864

 

571,535,627

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Payable for fund shares redeemed

 

306,263

 

675,288

 

625,720

 

793,137

 

Payable to affiliates

 

527,006

 

583,368

 

451,793

 

874,371

 

Payable for trustee fees

 

27,672

 

52,389

 

33,480

 

40,841

 

Other accrued expenses and liabilities

 

377,008

 

465,037

 

281,673

 

433,280

 

Total liabilities

 

1,237,949

 

1,776,082

 

1,392,666

 

2,141,629

 

NET ASSETS

 

$

265,675,698

 

$

380,091,754

 

$

295,019,198

 

$

569,393,998

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS WERE COMPRISED OF:

 

 

 

 

 

 

 

 

 

Paid-in capital

 

$

269,940,515

 

$

398,608,503

 

$

301,676,840

 

$

532,882,539

 

Accumulated net investment loss

 

(821,077

)

(626,916

)

(443,909

)

(73,163

)

Accumulated net realized loss on investments

 

(16,578,655

)

(34,388,224

)

(21,693,184

)

(2,643,334

)

Net unrealized appreciation or depreciation on investments

 

13,134,915

 

16,498,391

 

15,479,451

 

39,227,956

 

NET ASSETS

 

$

265,675,698

 

$

380,091,754

 

$

295,019,198

 

$

569,393,998

 

 

* Cost of investments in securities

 

$

252,397,201

 

$

362,677,108

 

$

278,271,937

 

$

526,882,133

 

 

See Accompanying Notes to Financial Statements

 

23


 

STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

 

 

ING
Principal
Protection
Fund

 

ING
Principal
Protection
Fund II

 

ING
Principal
Protection
Fund III

 

ING
Principal
Protection
Fund IV

 

Class A:

 

 

 

 

 

 

 

 

 

Net assets

 

$

23,410,232

 

$

31,765,257

 

$

23,987,323

 

$

42,136,427

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

2,385,922

 

3,305,374

 

2,458,025

 

4,043,621

 

Net asset value and redemption price per share

 

$

9.81

 

$

9.61

 

$

9.76

 

$

10.42

 

Maximum offering price per share (5.75%)(1)

 

$

10.40

 

$

10.20

 

$

10.36

 

$

11.06

 

 

 

 

 

 

 

 

 

 

 

Class B:

 

 

 

 

 

 

 

 

 

Net assets

 

$

208,609,127

 

$

290,065,637

 

$

234,603,957

 

$

446,470,906

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

21,243,292

 

30,152,326

 

24,027,584

 

42,838,315

 

Net asset value and redemption price per share(2)

 

$

9.82

 

$

9.62

 

$

9.76

 

$

10.42

 

Maximum offering price per share

 

$

9.82

 

$

9.62

 

$

9.76

 

$

10.42

 

 

 

 

 

 

 

 

 

 

 

Class C:

 

 

 

 

 

 

 

 

 

Net assets

 

$

33,087,909

 

$

58,229,789

 

$

35,833,339

 

$

79,827,829

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

3,360,304

 

6,036,910

 

3,659,587

 

7,640,811

 

Net asset value and redemption price per share(2)

 

$

9.85

 

$

9.65

 

$

9.79

 

$

10.45

 

Maximum offering price per share

 

$

9.85

 

$

9.65

 

$

9.79

 

$

10.45

 

 

 

 

 

 

 

 

 

 

 

Class Q:

 

 

 

 

 

 

 

 

 

Net assets

 

$

568,430

 

$

31,071

 

$

594,579

 

$

958,836

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

57,792

 

3,230

 

60,999

 

92,028

 

Net asset value and redemption price per share(2)

 

$

9.84

 

$

9.62

 

$

9.75

 

$

10.42

 

Maximum offering price per share

 

$

9.84

 

$

9.62

 

$

9.75

 

$

10.42

 

 

(1)   Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

 

(2)   Redemption price per share may be reduced for any applicable contingent deferred sales charges.

 

See Accompanying Notes to Financial Statements

 

24


 

STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

 

 

ING
Principal
Protection
Fund V

 

ING
Principal
Protection
Fund VI

 

ING
Principal
Protection
Fund VII

 

ING
Principal
Protection
Fund VIII

 

ASSETS:

 

 

 

 

 

 

 

 

 

Investments in securities at value*

 

$

460,295,352

 

$

429,712,482

 

$

220,724,569

 

$

146,735,455

 

Repurchase agreement

 

3,496,000

 

2,923,000

 

1,267,000

 

1,139,000

 

Cash

 

686

 

761

 

570

 

911

 

 

 

 

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

 

 

 

 

Investment securities sold

 

—

 

14,572,902

 

—

 

4,596,495

 

Dividends and interest

 

696,596

 

585,202

 

293,656

 

204,803

 

Prepaid expenses

 

3,528

 

3,460

 

1,759

 

2,265

 

Reimbursement due from manager

 

—

 

—

 

35,740

 

—

 

Total assets

 

464,492,162

 

447,797,807

 

222,323,294

 

152,678,929

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Payable for investment securities purchased

 

—

 

14,694,308

 

—

 

4,739,430

 

Payable for fund shares redeemed

 

1,040,254

 

361,477

 

173,388

 

62,646

 

Payable to affiliates

 

710,643

 

662,531

 

339,706

 

199,940

 

Payable for trustee fees

 

14,445

 

12,433

 

17,824

 

8,680

 

Other accrued expenses and liabilities

 

332,751

 

303,642

 

230,047

 

193,085

 

Total liabilities

 

2,098,093

 

16,034,391

 

760,965

 

5,203,781

 

NET ASSETS

 

$

462,394,069

 

$

431,763,416

 

$

221,562,329

 

$

147,475,148

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS WERE COMPRISED OF:

 

 

 

 

 

 

 

 

 

Paid-in capital

 

$

464,795,019

 

$

436,768,051

 

$

224,194,175

 

$

148,717,830

 

Undistributed net investment income (accumulated net investment loss)

 

(143,628

)

(139,834

)

(76,846

)

(162,887

)

Accumulated net realized loss on investments

 

(3,675,706

)

(3,512,914

)

(342,524

)

(1,659,944

)

Net unrealized appreciation or depreciation on investments

 

1,418,384

 

(1,351,887

)

(2,212,476

)

580,149

 

NET ASSETS

 

$

462,394,069

 

$

431,763,416

 

$

221,562,329

 

$

147,475,148

 

 

* Cost of investments in securities

 

$

458,876,968

 

$

431,064,369

 

$

222,937,045

 

$

146,155,306

 

 

See Accompanying Notes to Financial Statements

 

25


 

STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

(CONTINUED)

 

 

 

ING
Principal
Protection
Fund V

 

ING
Principal
Protection
Fund VI

 

ING
Principal
Protection
Fund VII

 

ING
Principal
Protection
Fund VIII

 

Class A:

 

 

 

 

 

 

 

 

 

Net assets

 

$

35,893,378

 

$

36,599,355

 

$

17,477,963

 

$

19,330,641

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

3,655,750

 

3,738,460

 

1,786,935

 

1,957,047

 

Net asset value and redemption price per share

 

$

9.82

 

$

9.79

 

$

9.78

 

$

9.88

 

Maximum offering price per share (5.75%)(1)

 

$

10.42

 

$

10.39

 

$

10.38

 

$

10.48

 

 

 

 

 

 

 

 

 

 

 

Class B:

 

 

 

 

 

 

 

 

 

Net assets

 

$

378,149,278

 

$

343,558,602

 

$

170,879,437

 

$

98,401,496

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

38,445,718

 

35,044,796

 

17,319,144

 

9,946,220

 

Net asset value and redemption price per share (2)

 

$

9.84

 

$

9.80

 

$

9.87

 

$

9.89

 

Maximum offering price per share

 

$

9.84

 

$

9.80

 

$

9.87

 

$

9.89

 

 

 

 

 

 

 

 

 

 

 

Class C:

 

 

 

 

 

 

 

 

 

Net assets

 

$

48,351,413

 

$

51,319,127

 

$

33,204,929

 

$

29,743,011

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

4,905,675

 

5,222,554

 

3,367,531

 

3,005,533

 

Net asset value and redemption price per share (2)

 

$

9.86

 

$

9.83

 

$

9.86

 

$

9.90

 

Maximum offering price per share

 

$

9.86

 

$

9.83

 

$

9.86

 

$

9.90

 

 

 

 

 

 

 

 

 

 

 

Class Q:

 

 

 

 

 

 

 

 

 

Net assets

 

n/a

 

$

286,332

 

n/a

 

n/a

 

Shares authorized

 

n/a

 

unlimited

 

n/a

 

n/a

 

Par value

 

n/a

 

$

0.01

 

n/a

 

n/a

 

Shares outstanding

 

n/a

 

29,236

 

n/a

 

n/a

 

Net asset value and redemption price per share

 

n/a

 

$

9.79

 

n/a

 

n/a

 

Maximum offering price per share

 

n/a

 

$

9.79

 

n/a

 

n/a

 

 

(1)   Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

 

(2)   Redemption price per share may be reduced for any applicable contingent deferred sales charges.

 

See Accompanying Notes to Financial Statements

 

26


 

STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

 

 

ING
Principal
Protection
Fund IX

 

ING
Principal
Protection
Fund X

 

ING
Principal
Protection
Fund XI

 

ING
Principal
Protection
Fund XII

 

ASSETS:

 

 

 

 

 

 

 

 

 

Investments in securities at value*

 

$

98,314,511

 

$

73,419,767

 

$

45,981,578

 

$

—

 

Short-term investments**

 

—

 

—

 

—

 

872,509

 

Repurchase agreement

 

521,000

 

378,000

 

661,000

 

198,000

 

Cash

 

108

 

571

 

294

 

58,151

 

 

 

 

 

 

 

 

 

 

 

Receivables:

 

 

 

 

 

 

 

 

 

Investment securities sold

 

—

 

15

 

—

 

—

 

Fund shares sold

 

2,362

 

—

 

—

 

647,985

 

Dividends and interest

 

164,595

 

128,384

 

6,856

 

16

 

Prepaid expenses

 

57,565

 

87,951

 

170,902

 

—

 

Total assets

 

99,060,141

 

74,014,688

 

46,820,630

 

1,776,661

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

Payable for fund shares redeemed

 

8,041

 

89,582

 

—

 

—

 

Payable to affiliates

 

144,920

 

105,896

 

49,159

 

553

 

Payable for trustee fees

 

7,657

 

3,470

 

1,023

 

3

 

Other accrued expenses and liabilities

 

226,494

 

140,564

 

125,922

 

61

 

Total liabilities

 

387,112

 

339,512

 

176,104

 

617

 

NET ASSETS

 

$

98,673,029

 

$

73,675,176

 

$

46,644,526

 

$

1,776,044

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS WERE COMPRISED OF:

 

 

 

 

 

 

 

 

 

Paid-in capital

 

$

98,498,316

 

$

72,562,918

 

$

47,348,328

 

$

1,776,434

 

Accumulated net investment loss

 

(144,687

)

(165,783

)

(115,720

)

(337

)

Accumulated net realized gain (loss) on investments

 

(672,997

)

46,571

 

—

 

—

 

Net unrealized appreciation or depreciation on investments

 

992,397

 

1,231,470

 

(588,082

)

(53

)

NET ASSETS

 

$

98,673,029

 

$

73,675,176

 

$

46,644,526

 

$

1,776,044

 

 

* Cost of investments in securities

 

$

97,322,114

 

$

72,188,297

 

$

46,569,660

 

$

—

 

** Cost of short-term investments

 

$

—

 

$

—

 

$

—

 

$

872,562

 

 

See Accompanying Notes to Financial Statements

 

27


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)
(CONTINUED)

 

 

 

ING
Principal
Protection
Fund IX

 

ING
Principal
Protection
Fund X

 

ING
Principal
Protection
Fund XI

 

ING
Principal
Protection
Fund XII

 

Class A:

 

 

 

 

 

 

 

 

 

Net assets

 

$

17,307,578

 

$

15,825,647

 

$

9,723,332

 

$

129,261

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

1,732,670

 

1,559,372

 

986,668

 

12,927

 

Net asset value and redemption price per share

 

$

9.99

 

$

10.15

 

$

9.85

 

$

10.00

 

Maximum offering price per share (5.75%)(1)

 

$

10.60

 

$

10.77

 

$

10.45

 

$

10.61

 

 

 

 

 

 

 

 

 

 

 

Class B:

 

 

 

 

 

 

 

 

 

Net assets

 

$

62,144,816

 

$

44,242,318

 

$

29,336,919

 

$

1,460,598

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

6,213,864

 

4,358,278

 

2,977,763

 

146,094

 

Net asset value and redemption price per share(2)

 

$

10.00

 

$

10.15

 

$

9.85

 

$

10.00

 

Maximum offering price per share

 

$

10.00

 

$

10.15

 

$

9.85

 

$

10.00

 

 

 

 

 

 

 

 

 

 

 

Class C:

 

 

 

 

 

 

 

 

 

Net assets

 

$

19,220,635

 

$

13,607,211

 

$

7,584,275

 

$

186,185

 

Shares authorized

 

unlimited

 

unlimited

 

unlimited

 

unlimited

 

Par value

 

$

0.01

 

$

0.01

 

$

0.01

 

$

0.01

 

Shares outstanding

 

1,921,120

 

1,340,621

 

770,050

 

18,622

 

Net asset value and redemption price per share(2)

 

$

10.00

 

$

10.15

 

$

9.85

 

$

10.00

 

Maximum offering price per share

 

$

10.00

 

$

10.15

 

$

9.85

 

$

10.00

 

 

(1)   Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

 

(2)   Redemption price per share may be reduced for any applicable contingent deferred sales charges.

 

See Accompanying Notes to Financial Statements

 

28


 

STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)

 

 

 

ING
Principal
Protection
Fund

 

ING
Principal
Protection
Fund II

 

ING
Principal
Protection
Fund III

 

ING
Principal
Protection
Fund IV

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

Dividends

 

$

441,425

 

$

397,451

 

$

452,704

 

$

2,348,888

 

Interest

 

5,198,194

 

8,043,534

 

5,873,389

 

6,448,829

 

Total investment income

 

5,639,619

 

8,440,985

 

6,326,093

 

8,797,717

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Investment management fees

 

1,151,429

 

1,639,999

 

1,258,465

 

2,419,628

 

 

 

 

 

 

 

 

 

 

 

Distribution and service fees:

 

 

 

 

 

 

 

 

 

Class A

 

31,915

 

43,247

 

33,295

 

59,931

 

Class B

 

1,118,167

 

1,553,979

 

1,239,274

 

2,337,581

 

Class C

 

190,331

 

322,859

 

197,657

 

442,474

 

Class Q

 

783

 

44

 

743

 

1,190

 

 

 

 

 

 

 

 

 

 

 

Transfer agent fees:

 

 

 

 

 

 

 

 

 

Class A

 

4,790

 

8,790

 

6,728

 

8,408

 

Class B

 

41,850

 

77,013

 

62,300

 

81,993

 

Class C

 

7,150

 

15,995

 

9,975

 

15,567

 

Class Q

 

106

 

9

 

137

 

149

 

Administrative service fees

 

143,927

 

204,998

 

157,307

 

302,451

 

Shareholder reporting expense

 

30,983

 

45,225

 

31,380

 

47,667

 

Registration fees

 

3,292

 

1,964

 

2,106

 

8,228

 

Professional fees

 

10,776

 

20,385

 

16,617

 

27,401

 

Custody and accounting expense

 

23,830

 

31,110

 

24,790

 

42,973

 

Trustee fees

 

7,618

 

20,117

 

12,201

 

12,763

 

Guarantee fees

 

474,965

 

676,500

 

519,117

 

998,097

 

Miscellaneous expense

 

13,401

 

17,072

 

12,309

 

21,260

 

Total expenses

 

3,255,313

 

4,679,306

 

3,584,401

 

6,827,761

 

Net recouped fees

 

230,000

 

—

 

—

 

—

 

Net expenses

 

3,485,313

 

4,679,306

 

3,584,401

 

6,827,761

 

Net investment income

 

2,154,306

 

3,761,679

 

2,741,692

 

1,969,956

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized gain on investments

 

1,008,113

 

558,526

 

1,809,702

 

1,830,703

 

Net change in unrealized appreciation or depreciation on investments

 

(1,198,015

)

(1,404,138

)

(1,740,052

)

5,418,427

 

Net realized and unrealized gain (loss) on investments

 

(189,902

)

(845,612

)

69,650

 

7,249,130

 

Increase in net assets resulting from operations

 

$

1,964,404

 

$

2,916,067

 

$

2,811,342

 

$

9,219,086

 

 

See Accompanying Notes to Financial Statements

 

29


 

 

 

ING
Principal
Protection
Fund V

 

ING
Principal
Protection
Fund VI

 

ING
Principal
Protection
Fund VII

 

ING
Principal
Protection
Fund VIII

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

Dividends

 

$

1,659,104

 

$

1,410,618

 

$

676,186

 

$

488,435

 

Interest

 

5,732,985

 

5,542,544

 

2,584,922

 

2,004,867

 

Total investment income

 

7,392,089

 

6,953,162

 

3,261,108

 

2,493,302

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Investment management fees

 

1,950,382

 

1,831,451

 

937,270

 

481,226

 

 

 

 

 

 

 

 

 

 

 

Distribution and service fees:

 

 

 

 

 

 

 

 

 

Class A

 

49,931

 

50,334

 

24,738

 

26,037

 

Class B

 

1,962,011

 

1,794,595

 

884,405

 

516,036

 

Class C

 

276,244

 

291,959

 

188,233

 

161,773

 

Class Q

 

—

 

357

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Transfer agent fees:

 

 

 

 

 

 

 

 

 

Class A

 

6,941

 

9,802

 

3,942

 

3,282

 

Class S

 

—

 

—

 

—

 

—

 

Class B

 

68,077

 

87,329

 

35,198

 

16,267

 

Class C

 

9,605

 

14,331

 

7,562

 

5,137

 

Class Q

 

—

 

68

 

—

 

—

 

Administrative service fees

 

243,795

 

228,929

 

117,158

 

78,195

 

Shareholder reporting expense

 

37,110

 

34,770

 

25,268

 

6,657

 

Registration fees

 

2,858

 

14,136

 

10,935

 

9,031

 

Professional fees

 

25,437

 

23,081

 

12,024

 

6,172

 

Custody and accounting expense

 

27,630

 

31,750

 

21,594

 

19,620

 

Trustee fees

 

9,787

 

8,565

 

6,734

 

2,254

 

Guarantee fees

 

804,533

 

755,474

 

386,624

 

258,046

 

Organization and offering expense

 

—

 

—

 

18,782

 

97,307

 

Miscellaneous expense

 

16,046

 

14,425

 

8,573

 

2,828

 

Total expenses

 

5,490,387

 

5,191,356

 

2,689,040

 

1,689,868

 

Net waived and reimbursed fees

 

—

 

—

 

(312,215

)

—

 

Net expenses

 

5,490,387

 

5,191,356

 

2,376,825

 

1,689,868

 

Net investment income

 

1,901,702

 

1,761,806

 

884,283

 

803,434

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on investments

 

1,486,481

 

586,961

 

1,816,915

 

(674,887

)

Net change in unrealized appreciation or depreciation on investments

 

4,028,577

 

3,711,608

 

1,368,968

 

2,633,360

 

Net realized and unrealized gain on investments

 

5,515,058

 

4,298,569

 

3,185,883

 

1,958,473

 

Increase in net assets resulting from operations

 

$

7,416,760

 

$

6,060,375

 

$

4,070,166

 

$

2,761,907

 

 

See Accompanying Notes to Financial Statements

 

30


 

 

 

ING
Principal
Protection
Fund IX

 

ING
Principal
Protection
Fund X

 

ING
Principal
Protection
Fund XI

 

ING
Principal
Protection
Fund XII

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

Dividends

 

$

384,784

 

$

207,293

 

$

6,819

 

$

4

 

Interest

 

1,397,623

 

612,259

 

135,371

 

276

 

Total investment income

 

1,782,407

 

819,552

 

142,190

 

280

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Investment management fees

 

329,376

 

159,103

 

23,236

 

256

 

 

 

 

 

 

 

 

 

 

 

Distribution and service fees:

 

 

 

 

 

 

 

 

 

Class A

 

23,579

 

16,425

 

3,588

 

5

 

Class B

 

327,614

 

188,728

 

44,463

 

240

 

Class C

 

104,501

 

54,114

 

10,061

 

24

 

 

 

 

 

 

 

 

 

 

 

Transfer agent fees:

 

 

 

 

 

 

 

 

 

Class A

 

5,920

 

4,740

 

1,062

 

1

 

Class B

 

20,542

 

13,488

 

3,290

 

18

 

Class C

 

6,563

 

3,853

 

745

 

2

 

Administrative service fees

 

52,642

 

30,854

 

6,888

 

28

 

Shareholder reporting expense

 

21,453

 

19,908

 

4,546

 

19

 

Registration fees

 

33,048

 

9,245

 

433

 

1

 

Professional fees

 

22,863

 

14,749

 

3,444

 

13

 

Custody and accounting expense

 

11,401

 

7,162

 

1,605

 

7

 

Trustee fees

 

6,035

 

3,458

 

1,023

 

3

 

Guarantee fees

 

173,722

 

70,952

 

5,095

 

 

 

Organization and offering expense

 

87,739

 

101,164

 

16,233

 

—

 

Miscellaneous expense

 

3,617

 

2,031

 

433

 

—

 

Total expenses

 

1,230,615

 

699,974

 

126,145

 

617

 

Net recouped (waived and reimbursed) fees

 

13,000

 

(45,548

)

—

 

—

 

Net expenses

 

1,243,615

 

654,426

 

126,145

 

617

 

Net investment income (loss)

 

538,792

 

165,126

 

16,045

 

(337

)

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on investments

 

(356,232

)

268,966

 

—

 

—

 

Net change in unrealized appreciation or depreciation on investments

 

1,989,194

 

1,230,712

 

(588,082

)

(53

)

Net realized and unrealized gain (loss) on investments

 

1,632,962

 

1,499,678

 

(588,082

)

(53

)

Increase (decrease) in net assets resulting from operations

 

$

2,171,754

 

$

1,664,804

 

$

(572,037

)

$

(390

)

 

See Accompanying Notes to Financial Statements

 

31


 

STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

 

 

 

ING Principal
Protection Fund

 

ING Principal
Protection Fund II

 

ING Principal
Protection Fund III

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

FROM OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

2,154,306

 

$

5,268,801

 

$

3,761,679

 

$

8,790,620

 

$

2,741,692

 

$

6,428,702

 

Net realized gain on investments

 

1,008,113

 

12,838,793

 

558,526

 

18,834,971

 

1,809,702

 

8,922,253

 

Net change in unrealized appreciation or depreciation on investments

 

(1,198,015

)

(24,692,215

)

(1,404,138

)

(40,945,613

)

(1,740,052

)

(24,725,472

)

Net increase (decrease) in net assets resulting from operations

 

1,964,404

 

(6,584,621

)

2,916,067

 

(13,320,022

)

2,811,342

 

(9,374,517

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

(564,345

)

(745,132

)

(866,398

)

(1,197,538

)

(626,977

)

(832,606

)

Class B

 

(3,355,370

)

(3,485,693

)

(5,524,028

)

(5,262,708

)

(4,298,535

)

(3,887,884

)

Class C

 

(477,836

)

(690,305

)

(1,035,340

)

(1,303,518

)

(636,967

)

(676,217

)

Class Q

 

(13,669

)

(20,464

)

(820

)

(1,033

)

(15,845

)

(12,938

)

Total distributions

 

(4,411,220

)

(4,941,594

)

(7,426,586

)

(7,764,797

)

(5,578,324

)

(5,409,645

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

3,465,396

 

3,885,287

 

5,578,636

 

5,723,908

 

4,415,080

 

4,189,718

 

Cost of shares redeemed

 

(45,139,034

)

(149,531,466

)

(58,073,994

)

(206,725,364

)

(40,446,327

)

(123,579,930

)

Net decrease in net assets resulting from capital share transactions

 

(41,673,638

)

(145,646,179

)

(52,495,358

)

(201,001,456

)

(36,031,247

)

(119,390,212

)

Net decrease in net assets

 

(44,120,454

)

(157,172,394

)

(57,005,877

)

(222,086,275

)

(38,798,229

)

(134,174,374

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

309,796,152

 

466,968,546

 

437,097,631

 

659,183,906

 

333,817,427

 

467,991,801

 

End of period

 

$

265,675,698

 

$

309,796,152

 

$

380,091,754

 

$

437,097,631

 

$

295,019,198

 

$

333,817,427

 

Undistributed net investment income (accumulated net investment loss) at end of period

 

$

(821,077

)

$

1,435,837

 

$

(626,916

)

$

3,037,991

 

$

(443,909

)

$

2,392,723

 

 

See Accompanying Notes to Financial Statements

 

32


 

 

 

ING Principal
Protection Fund IV

 

ING Principal
Protection Fund V

 

ING Principal
Protection Fund VI

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

FROM OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

1,969,956

 

$

3,011,173

 

$

1,901,702

 

$

3,240,676

 

$

1,761,806

 

$

2,869,402

 

Net realized gain on investments

 

1,830,703

 

2,049,301

 

1,486,481

 

16,807,982

 

586,961

 

11,213,182

 

Net change in unrealized appreciation or depreciation on investments

 

5,418,427

 

(6,751,561

)

4,028,577

 

(28,351,175

)

3,711,608

 

(22,877,710

)

Net increase (decrease) in net assets resulting from operations

 

9,219,086

 

(1,691,087

)

7,416,760

 

(8,302,517

)

6,060,375

 

(8,795,126

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

(506,742

)

(919,743

)

(496,879

)

(842,738

)

(511,388

)

(547,735

)

Class B

 

(1,908,318

)

(3,228,097

)

(2,350,735

)

(2,665,614

)

(2,107,697

)

(1,560,667

)

Class C

 

(236,264

)

(575,221

)

(218,543

)

(462,165

)

(215,982

)

(321,198

)

Class Q

 

(11,929

)

(15,495

)

—

 

—

 

(4,049

)

(3,278

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gains:

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

(188,414

)

(192,145

)

(1,227,769

)

(442,254

)

(1,182,133

)

(151,157

)

Class B

 

(1,998,186

)

(1,520,921

)

(12,976,224

)

(3,193,257

)

(11,096,003

)

(1,115,952

)

Class C

 

(359,397

)

(391,698

)

(1,686,942

)

(638,079

)

(1,690,563

)

(243,823

)

Class Q

 

(4,227

)

(2,962

)

—

 

—

 

(9,107

)

(799

)

Total distributions

 

(5,213,477

)

(6,846,282

)

(18,957,092

)

(8,244,107

)

(16,816,922

)

(3,944,609

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

4,213,070

 

5,413,299

 

16,739,395

 

7,188,304

 

14,393,055

 

3,346,598

 

Cost of shares redeemed

 

(77,237,278

)

(236,370,783

)

(51,984,786

)

(159,341,091

)

(53,210,027

)

(119,629,889

)

Net decrease in net assets resulting from capital share transactions

 

(73,024,208

)

(230,957,484

)

(35,245,391

)

(152,152,787

)

(38,816,972

)

(116,283,291

)

Net decrease in net assets

 

(69,018,599

)

(239,494,853

)

(46,785,723

)

(168,699,411

)

(49,573,519

)

(129,023,026

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

638,412,597

 

877,907,450

 

509,179,792

 

677,879,203

 

481,336,935

 

610,359,961

 

End of period

 

$

569,393,998

 

$

638,412,597

 

$

462,394,069

 

$

509,179,792

 

$

431,763,416

 

$

481,336,935

 

Undistributed net investment income (accumulated net investment loss) at end of period

 

$

(73,163

)

$

620,134

 

$

(143,628

)

$

1,020,827

 

$

(139,834

)

$

937,476

 

 

See Accompanying Notes to Financial Statements

 

33


 

 

 

ING Principal
Protection Fund VII

 

ING Principal
Protection Fund VIII

 

ING Principal
Protection Fund IX

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

FROM OPERATIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

884,283

 

$

2,283,738

 

$

803,434

 

$

447,810

 

$

538,792

 

$

99,904

 

Net realized gain (loss) on investments

 

1,816,915

 

1,190,476

 

(674,887

)

552,844

 

(356,232

)

(28,231

)

Net change in unrealized appreciation or depreciation on investments

 

1,368,968

 

(3,578,229

)

2,633,360

 

(2,053,211

)

1,989,194

 

(996,797

)

Net increase (decrease) in net assets resulting from operations

 

4,070,166

 

(104,015

)

2,761,907

 

(1,052,557

)

2,171,754

 

(925,124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

(279,134

)

(504,097

)

(335,824

)

(18,697

)

(245,556

)

—

 

Class B

 

(1,424,159

)

(977,463

)

(856,452

)

(80,749

)

(506,813

)

—

 

Class C

 

(204,609

)

(425,072

)

(248,056

)

(26,745

)

(151,384

)

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gains:

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

(268,658

)

—

 

(199,695

)

—

 

(50,450

)

—

 

Class B

 

(2,577,457

)

—

 

(1,026,758

)

—

 

(181,711

)

—

 

Class C

 

(507,137

)

—

 

(312,466

)

—

 

(56,624

)

—

 

Total distributions

 

(5,261,154

)

(1,906,632

)

(2,979,251

)

(126,191

)

(1,192,538

)

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FROM CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds from sale of shares

 

—

 

178,689,762

 

—

 

175,816,255

 

—

 

110,468,680

 

Dividends reinvested

 

4,485,076

 

1,581,185

 

2,340,510

 

99,974

 

955,712

 

—

 

 

 

4,485,076

 

180,270,947

 

2,340,510

 

175,916,229

 

955,712

 

110,468,680

 

Cost of shares redeemed

 

(30,038,631

)

(52,898,713

)

(15,721,464

)

(13,664,035

)

(11,732,364

)

(1,073,091

)

Net increase (decrease) in net assets resulting from capital share transactions

 

(25,553,555

)

127,372,234

 

(13,380,954

)

162,252,194

 

(10,776,652

)

109,395,589

 

Net increase (decrease) in net assets

 

(26,744,543

)

125,361,587

 

(13,598,298

)

161,073,446

 

(9,797,436

)

108,470,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

248,306,872

 

122,945,285

 

161,073,446

 

—

 

108,470,465

 

—

 

End of period

 

$

221,562,329

 

$

248,306,872

 

$

147,475,148

 

$

161,073,446

 

$

98,673,029

 

$

108,470,465

 

Undistributed net investment income (accumulated net investment loss) at end of period

 

$

(76,846

)

$

946,773

 

$

(162,887

)

$

474,011

 

$

(144,687

)

$

220,274

 

 

See Accompanying Notes to Financial Statements

 

34


 

 

 

ING Principal
Protection Fund X

 

ING Principal
Protection
Fund XI(1)

 

ING Principal
Protection
Fund XII(2)

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Period
Ended
November 30,
2004

 

Period
Ended
November 30,
2004

 

FROM OPERATIONS:

 

 

 

 

 

 

 

 

 

Net investment income (loss)

 

$

165,126

 

$

(4,182

)

$

16,045

 

$

(337

)

Net realized gain on investments

 

268,966

 

—

 

—

 

—

 

Net change in unrealized appreciation or depreciation on investments

 

1,230,712

 

758

 

(588,082

)

(53

)

Net increase (decrease) in net assets resulting from operations

 

1,664,804

 

(3,424

)

(572,037

)

(390

)

 

 

 

 

 

 

 

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income:

 

 

 

 

 

 

 

 

 

Class A

 

(102,080

)

—

 

(35,729

)

—

 

Class B

 

(174,940

)

—

 

(74,764

)

—

 

Class C

 

(56,252

)

—

 

(21,272

)

—

 

 

 

 

 

 

 

 

 

 

 

Net realized gains:

 

 

 

 

 

 

 

 

 

Class A

 

(47,638

)

—

 

—

 

—

 

Class B

 

(133,701

)

—

 

—

 

—

 

Class C

 

(41,056

)

—

 

—

 

—

 

Total distributions

 

(555,667

)

—

 

(131,765

)

—

 

 

 

 

 

 

 

 

 

 

 

FROM CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

 

 

Net proceeds from sale of shares

 

54,811,621

 

19,576,040

 

47,835,655

 

1,776,434

 

Dividends reinvested

 

462,384

 

—

 

110,271

 

—

 

 

 

55,274,005

 

19,576,040

 

47,945,926

 

1,776,434

 

Cost of shares redeemed

 

(2,057,322

)

(223,260

)

(597,598

)

—

 

Net increase in net assets resulting from capital share transactions

 

53,216,683

 

19,352,780

 

47,348,328

 

1,776,434

 

Net increase in net assets

 

54,325,820

 

19,349,356

 

46,644,526

 

1,776,044

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS:

 

 

 

 

 

 

 

 

 

Beginning of period

 

19,349,356

 

—

 

—

 

—

 

End of period

 

$

73,675,176

 

$

19,349,356

 

$

46,644,526

 

$

1,776,044

 

Undistributed net investment income (accumulated net investment loss) at end of period

 

$

(165,783

)

$

2,363

 

$

(115,720

)

$

(337

)

 

(1)   Fund commenced operations on September 16, 2004.

 

(2)   Fund commenced operations on November 15, 2004.

 

See Accompanying Notes to Financial Statements

 

35


 

ING PRINCIPAL PROTECTION FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

 

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

July 5,
2001(1)  to
May 31,

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

July 5,
2001(1)  to
May 31,

 

 

 

2004

 

2004

 

2003

 

2002

 

2004

 

2004

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.95

 

10.25

 

9.85

 

10.00

 

9.91

 

10.21

 

9.81

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.14

 

0.23

 

0.22

 

0.11

 

0.08

 

0.14

 

0.15

 

0.04

 

Net realized and unrealized gain (loss) on investments

$

 

(0.04

)

(0.33

)

0.42

 

(0.22

)

(0.01

)

(0.32

)

0.41

 

(0.21

)

Total from investment operations

$

 

0.10

 

(0.10

)

0.64

 

(0.11

)

0.07

 

(0.18

)

0.56

 

(0.17

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.24

 

0.20

 

0.24

 

0.04

 

0.16

 

0.12

 

0.16

 

0.02

 

Total distributions

$

 

0.24

 

0.20

 

0.24

 

0.04

 

0.16

 

0.12

 

0.16

 

0.02

 

Net asset value, end of period

$

 

9.81

 

9.95

 

10.25

 

9.85

 

9.82

 

9.91

 

10.21

 

9.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.01

 

(1.01

)

6.60

 

(1.29

)*

0.69

 

(1.76

)

5.82

 

(1.78

)*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

23,410

 

28,057

 

51,385

 

62,301

 

208,609

 

237,539

 

328,399

 

345,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement/
recoupment (3)(4)

%

 

1.74

 

1.74

 

1.75

 

1.75

 

2.49

 

2.49

 

2.50

 

2.50

 

Gross expenses prior to expense reimbursement/
recoupment(3)

%

 

1.58

 

1.67

 

1.78

 

1.87

 

2.33

 

2.42

 

2.54

 

2.62

 

Net investment income after expense reimbursement/
recoupment (3)(4)

%

 

2.18

 

2.03

 

2.21

 

1.44

 

1.43

 

1.28

 

1.46

 

0.69

 

Portfolio turnover rate

%

 

4

 

29

 

47

 

125

 

4

 

29

 

47

 

125

 

 

 

 

Class C

 

Class Q

 

 

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

July 5,
2001(1)  to
May 31,

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

July 5,
2001(1)  to
May 31,

 

 

 

2004

 

2004

 

2003

 

2002

 

2004

 

2004

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.92

 

10.21

 

9.81

 

10.00

 

9.97

 

10.27

 

9.87

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.10

 

0.15

 

0.15

 

0.05

 

0.17

 

0.24

 

0.25

 

0.11

 

Net realized and unrealized gain (loss) on investments

$

 

(0.03

)

(0.34

)

0.41

 

(0.22

)

(0.06

)

(0.34

)

0.40

 

(0.19

)

Total from investment operations

$

 

0.07

 

(0.19

)

0.56

 

(0.17

)

0.11

 

(0.10

)

0.65

 

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.14

 

0.10

 

0.16

 

0.02

 

0.24

 

0.20

 

0.25

 

0.05

 

Total distributions

$

 

0.14

 

0.10

 

0.16

 

0.02

 

0.24

 

0.20

 

0.25

 

0.05

 

Net asset value, end of period

$

 

9.85

 

9.92

 

10.21

 

9.81

 

9.84

 

9.97

 

10.27

 

9.87

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

0.72

 

(1.83

)

5.78

 

(1.66

)*

1.11

 

(1.01

)

6.68

 

(1.13

)*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

33,088

 

43,529

 

85,451

 

105,908

 

568

 

671

 

1,733

 

2,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement/
recoupment (3)(4)

%

 

2.49

 

2.49

 

2.50

 

2.30

 

1.74

 

1.70

 

1.66

 

1.60

 

Gross expenses prior to expense reimbursement/
recoupment (3)

%

 

2.33

 

2.42

 

2.54

 

2.62

 

1.58

 

1.63

 

1.69

 

1.72

 

Net investment income after expense reimbursement/
recoupment (3)(4)

%

 

1.42

 

1.28

 

1.45

 

0.72

 

2.18

 

2.08

 

2.30

 

1.59

 

Portfolio turnover rate

%

 

4

 

29

 

47

 

125

 

4

 

29

 

47

 

125

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

(4) The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

 

*      Represents performance beginning on the first day of the Guarantee Period (October 12, 2001). Total return from commencement of offering of shares was (1.11)%, (1.70)%, (1.70)% and (0.81)% for Class A, B, C and Q, respectively.

 

See Accompanying Notes to Financial Statements

 

36


 

ING PRINCIPAL PROTECTION FUND II (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

 

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

November 5,
2001(1)  to
May 31,

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

November 5,
2001(1)  to
May 31,

 

 

 

2004

 

2004

 

2003

 

2002

 

2004

 

2004

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.77

 

10.15

 

9.83

 

10.00

 

9.74

 

10.12

 

9.80

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.17

 

0.25

 

0.23

 

0.06

 

0.09

 

0.16

 

0.16

 

0.03

 

Net realized and unrealized gain (loss) on investments

$

 

(0.06

)

(0.43

)

0.32

 

(0.22

)

(0.03

)

(0.41

)

0.32

 

(0.23

)

Total from investment operations

$

 

0.11

 

(0.18

)

0.55

 

(0.16

)

0.06

 

(0.25

)

0.48

 

(0.20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.27

 

0.20

 

0.23

 

0.01

 

0.18

 

0.13

 

0.16

 

0.00

*

Total distributions

$

 

0.27

 

0.20

 

0.23

 

0.01

 

0.18

 

0.13

 

0.16

 

0.00

*

Net asset value, end of period

$

 

9.61

 

9.77

 

10.15

 

9.83

 

9.62

 

9.74

 

10.12

 

9.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.07

 

(1.74

)

5.73

 

(1.70

)**

0.66

 

(2.47

)

4.98

 

(2.00

)**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

31,765

 

37,580

 

76,897

 

98,109

 

290,066

 

328,221

 

442,268

 

465,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement/
recoupment(3)(4)

%

 

1.60

 

1.69

 

1.75

 

1.61

 

2.35

 

2.44

 

2.50

 

2.36

 

Gross expenses prior to expense reimbursement/
recoupment(3)

%

 

1.60

 

1.65

 

1.78

 

1.61

 

2.35

 

2.40

 

2.53

 

2.36

 

Net investment income after expense reimbursement/
recoupment(3)(4)

%

 

2.52

 

2.26

 

2.30

 

1.36

 

1.77

 

1.51

 

1.55

 

0.61

 

Portfolio turnover rate

%

 

3

 

74

 

60

 

70

 

3

 

74

 

60

 

70

 

 

 

 

Class C

 

Class Q

 

 

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

November 5,
2001(1)  to
May 31,

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

November 5,
2001(1)  to
May 31,

 

 

 

2004

 

2004

 

2003

 

2002

 

2004

 

2004

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.75

 

10.12

 

9.80

 

10.00

 

9.78

 

10.16

 

9.83

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.12

 

0.18

 

0.15

 

0.03

 

0.24

 

0.24

 

0.31

 

0.07

 

Net realized and unrealized gain (loss) on investments

$

 

(0.05

)

(0.43

)

0.33

 

(0.23

)

(0.14

)

(0.40

)

0.26

 

(0.23

)

Total from investment operations

$

 

0.07

 

(0.25

)

0.48

 

(0.20

)

0.10

 

(0.16

)

0.57

 

(0.16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.17

 

0.12

 

0.16

 

0.00

*

0.26

 

0.22

 

0.24

 

0.01

 

Total distributions

$

 

0.17

 

0.12

 

0.16

 

0.00

*

0.26

 

0.22

 

0.24

 

0.01

 

Net asset value, end of period

$

 

9.65

 

9.75

 

10.12

 

9.80

 

9.62

 

9.78

 

10.16

 

9.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

0.75

 

(2.52

)

4.99

 

(2.00

)**

1.02

 

(1.56

)

5.87

 

(1.70

)**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

58,230

 

71,250

 

139,961

 

159,563

 

31

 

47

 

58

 

81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement/
recoupment (3)(4)

%

 

2.35

 

2.44

 

2.50

 

2.36

 

1.60

 

1.63

 

1.61

 

1.45

 

Gross expenses prior to expense reimbursement/
recoupment(3)

%

 

2.35

 

2.40

 

2.53

 

2.36

 

1.60

 

1.59

 

1.64

 

1.45

 

Net investment income after expense reimbursement/
recoupment (3)(4)

%

 

1.77

 

1.51

 

1.55

 

0.69

 

2.50

 

2.33

 

2.42

 

1.52

 

Portfolio turnover rate

%

 

3

 

74

 

60

 

70

 

3

 

74

 

60

 

70

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

(4) The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

 

*      Amount represents less than $0.01 per share.

 

**   Represents performance beginning on the first day of the Guarantee Period (February 1, 2002). Total return from commencement of offering of shares was (1.60)%, (1.96)%, (1.97)% and (1.60)% for Class A, B, C and Q, respectively.

 

See Accompanying Notes to Financial Statements

 

37


 

ING PRINCIPAL PROTECTION FUND III (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

 

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

March 5,
2002(1)  to
May 31,

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

March 5,
2002(1)  to
May 31,

 

 

 

2004

 

2004

 

2003

 

2002

 

2004

 

2004

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.90

 

10.27

 

10.01

 

10.00

 

9.86

 

10.23

 

10.00

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.16

 

0.25

 

0.21

 

0.01

 

0.09

 

0.16

 

0.13

 

0.00

*

Net realized and unrealized gain (loss) on investments

$

 

(0.04

)

(0.42

)

0.22

 

0.00

*

(0.01

)

(0.40

)

0.22

 

0.00

*

Total from investment operations

$

 

0.12

 

(0.17

)

0.43

 

0.01

 

0.08

 

(0.24

)

0.35

 

0.00

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.26

 

0.20

 

0.17

 

—

 

0.18

 

0.13

 

0.12

 

—

 

Total distributions

$

 

0.26

 

0.20

 

0.17

 

—

 

0.18

 

0.13

 

0.12

 

—

 

Net asset value, end of period

$

 

9.76

 

9.90

 

10.27

 

10.01

 

9.76

 

9.86

 

10.23

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.20

 

(1.63

)

4.35

***

—

**

0.81

 

(2.38

)

3.51

***

—

**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

23,987

 

29,113

 

49,652

 

57,749

 

234,604

 

261,098

 

335,942

 

347,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement/
recoupment(3)(4)

%

 

1.59

 

1.68

 

1.75

 

0.97

 

2.34

 

2.43

 

2.50

 

1.72

 

Gross expenses prior to expense reimbursement/
recoupment(3)

%

 

1.59

 

1.66

 

1.77

 

0.97

 

2.34

 

2.41

 

2.52

 

1.72

 

Net investment income after expense reimbursement/
recoupment(3)(4)

%

 

2.42

 

2.26

 

2.08

 

0.85

 

1.68

 

1.51

 

1.33

 

0.07

 

Portfolio turnover rate

%

 

10

 

27

 

91

 

—

 

10

 

27

 

91

 

—

 

 

 

 

Class C

 

Class Q

 

 

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

March 5,
2002(1)  to
May 31,

 

Six Months
Ended
November 30,

 

Year Ended
May 31,

 

March 5,
2002(1)  to
May 31,

 

 

 

2004

 

2004

 

2003

 

2002

 

2004

 

2004

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.88

 

10.23

 

10.00

 

10.00

 

9.89

 

10.28

 

10.02

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.10

 

0.19

 

0.13

 

0.00

*

0.13

 

0.23

 

0.22

 

0.01

 

Net realized and unrealized gain (loss) on investments

$

 

(0.02

)

(0.43

)

0.22

 

0.00

*

0.00

*

(0.40

)

0.22

 

0.01

 

Total from investment operations

$

 

0.08

 

(0.24

)

0.35

 

0.00

*

0.13

 

(0.17

)

0.44

 

0.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.17

 

0.11

 

0.12

 

—

 

0.27

 

0.22

 

0.18

 

—

 

Total distributions

$

 

0.17

 

0.11

 

0.12

 

—

 

0.27

 

0.22

 

0.18

 

—

 

Net asset value, end of period

$

 

9.79

 

9.88

 

10.23

 

10.00

 

9.75

 

9.89

 

10.28

 

10.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

0.83

 

(2.37

)

3.51

***

—

**

1.27

 

(1.64

)

4.45

***

—

**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

35,833

 

43,018

 

81,800

 

90,826

 

595

 

588

 

599

 

574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement/
recoupment(3)(4)

%

 

2.34

 

2.43

 

2.50

 

1.72

 

1.59

 

1.62

 

1.62

 

0.80

 

Gross expenses prior to expense reimbursement/
recoupment(3)

%

 

2.34

 

2.41

 

2.52

 

1.72

 

1.59

 

1.60

 

1.63

 

0.80

 

Net investment income after expense reimbursement/
recoupment(3)(4)

%

 

1.68

 

1.51

 

1.33

 

0.06

 

2.44

 

2.32

 

2.22

 

1.02

 

Portfolio turnover rate

%

 

10

 

27

 

91

 

—

 

10

 

27

 

91

 

—

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

(4) The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

 

*  Amount represents less than $0.01 per share.

 

**   As of May 31, 2002, the Fund was in its Offering Period. Total return from commencement of offering of shares was 0.10%, 0.00%, 0.00% and 0.20% for Class A, B, C and Q, respectively.

 

*** Represents performance beginning on the first day of the Guarantee Period (June 6, 2002). Total return for year ended May 31, 2003 was 4.35%, 3.51%, 3.51% and 4.45% for Class A, B, C and Q, respectively.

 

See Accompanying Notes to Financial Statements

 

38


 

ING PRINCIPAL PROTECTION FUND IV (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

July 1,
2002(1)  to
May 31,
2003

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

July 1,
2002(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

10.39

 

10.52

 

10.00

 

10.35

 

10.47

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.09

 

0.12

 

0.09

 

0.03

 

0.04

 

0.03

 

Net realized and unrealized gain (loss) on investments

$

 

0.12

 

(0.08

)

0.47

 

0.13

 

(0.07

)

0.46

 

Total from investment operations

$

 

0.21

 

0.04

 

0.56

 

0.16

 

(0.03

)

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.13

 

0.14

 

0.03

 

0.04

 

0.06

 

0.01

 

Net realized gains on investments

$

 

0.05

 

0.03

 

0.01

 

0.05

 

0.03

 

0.01

 

Total distributions

$

 

0.18

 

0.17

 

0.04

 

0.08

 

0.09

 

0.02

 

Net asset value, end of period

$

 

10.42

 

10.39

 

10.52

 

10.45

 

10.35

 

10.47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.94

 

0.36

 

5.50

*

1.55

 

(0.29

)

4.89

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

42,136

 

52,094

 

89,558

 

446,471

 

487,343

 

603,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses(3)

%

 

1.57

 

1.65

 

1.61

 

2.32

 

2.40

 

2.36

 

Net investment income(3)

%

 

1.33

 

1.08

 

1.12

 

0.59

 

0.33

 

0.36

 

Portfolio turnover rate

%

 

40

 

75

 

31

 

40

 

75

 

31

 

 

 

 

Class C

 

Class Q

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

July 1,
2002(1)  to
May 31,
2003

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

July 1,
2002(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

10.36

 

10.47

 

10.00

 

10.40

 

10.52

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.04

 

0.05

 

0.03

 

0.07

 

0.13

 

0.10

 

Net realized and unrealized gain (loss) on investments

$

 

0.13

 

(0.09

)

0.46

 

0.13

 

(0.07

)

0.46

 

Total from investment operations

$

 

0.17

 

(0.04

)

0.49

 

0.20

 

0.06

 

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.03

 

0.04

 

0.01

 

0.13

 

0.15

 

0.03

 

Net realized gains on investments

$

 

0.05

 

0.03

 

0.01

 

0.05

 

0.03

 

0.01

 

Total distributions

$

 

0.08

 

0.07

 

0.02

 

0.18

 

0.18

 

0.04

 

Net asset value, end of period

$

 

10.45

 

10.36

 

10.47

 

10.42

 

10.40

 

10.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.61

 

(0.37

)

4.90

*

1.90

 

0.58

 

5.54

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

79,828

 

98,026

 

183,228

 

959

 

950

 

1,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses(3)

%

 

2.32

 

2.40

 

2.36

 

1.57

 

1.59

 

1.49

 

Net investment income(3)

%

 

0.58

 

0.33

 

0.36

 

1.36

 

1.14

 

1.24

 

Portfolio turnover rate

%

 

40

 

75

 

31

 

40

 

75

 

31

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

*      Represents performance beginning on the first day of the Guarantee Period (October 8, 2002). Total return from commencement of offering of shares was 5.61%, 4.89%, 4.90% and 5.64% for Class A, B, C and Q, respectively.

 

See Accompanying Notes to Financial Statements

 

39


 

ING PRINCIPAL PROTECTION FUND V (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

November 1,
2002(1)  to
May 31,
2003

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

November 1,
2002(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

10.11

 

10.41

 

10.00

 

10.09

 

10.38

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.10

 

0.13

 

0.05

 

0.04

 

0.05

 

0.01

 

Net realized and unrealized gain (loss) on investments

$

 

0.10

 

(0.22

)

0.36

 

0.12

 

(0.21

)

0.37

 

Total from investment operations

$

 

0.20

 

(0.09

)

0.41

 

0.16

 

(0.16

)

0.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.14

 

0.14

 

—

 

0.06

 

0.06

 

—

 

Net realized gains on investments

$

 

0.35

 

0.07

 

—

 

0.35

 

0.07

 

—

 

Total distributions

$

 

0.49

 

0.21

 

—

 

0.41

 

0.13

 

—

 

Net asset value, end of period

$

 

9.82

 

10.11

 

10.41

 

9.84

 

10.09

 

10.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.95

 

(0.89

)

4.10

*

1.59

 

(1.54

)

3.90

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

35,893

 

42,889

 

74,905

 

378,149

 

405,311

 

496,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses(3)

%

 

1.56

 

1.67

 

1.56

 

2.31

 

2.42

 

2.31

 

Net investment income(3)

%

 

1.46

 

1.22

 

1.00

 

0.72

 

0.47

 

0.25

 

Portfolio turnover rate

%

 

45

 

53

 

12

 

45

 

53

 

12

 

 

 

 

Class C

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

November 1,
2002(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

10.10

 

10.38

 

10.00

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

Net investment income

$

 

0.05

 

0.06

 

0.01

 

Net realized and unrealized gain (loss) on investments

$

 

0.10

 

(0.22

)

0.37

 

Total from investment operations

$

 

0.15

 

(0.16

)

0.38

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

Net investment income

$

 

0.04

 

0.05

 

—

 

Net realized gains on investments

$

 

0.35

 

0.07

 

—

 

Total distributions

$

 

0.39

 

0.12

 

—

 

Net asset value, end of period

$

 

9.86

 

10.10

 

10.38

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.51

 

(1.52

)

3.90

*

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

48,351

 

60,980

 

106,754

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

Expenses(3)

%

 

2.31

 

2.42

 

2.31

 

Net investment income(3)

%

 

0.70

 

0.47

 

0.25

 

Portfolio turnover rate

%

 

45

 

53

 

12

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

*      Represents performance beginning on the first day of the Guarantee Period (January 23, 2003). Total return from commencement of offering of shares is 4.10%, 3.80% and 3.80% for Class A, B and C, respectively.

 

See Accompanying Notes to Financial Statements

 

40


 

ING PRINCIPAL PROTECTION FUND VI (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

February 3,
2003(1)  to
May 31,
2003

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

February 3,
2003(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

10.08

 

10.31

 

10.00

 

10.06

 

10.30

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.09

 

0.13

 

0.01

 

0.04

 

0.05

 

0.00

*

Net realized and unrealized gain (loss) on investments

$

 

0.09

 

(0.23

)

0.30

 

0.09

 

(0.22

)

0.30

 

Total from investment operations

$

 

0.18

 

(0.10

)

0.31

 

0.13

 

(0.17

)

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.14

 

0.10

 

—

 

0.06

 

0.04

 

—

 

Net realized gains on investments

$

 

0.33

 

0.03

 

—

 

0.33

 

0.03

 

—

 

Total distributions

$

 

0.47

 

0.13

 

—

 

0.39

 

0.07

 

—

 

Net asset value, end of period

$

 

9.79

 

10.08

 

10.31

 

9.80

 

10.06

 

10.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.73

 

(1.01

)

3.10

**

1.25

 

(1.70

)

3.10

**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

36,599

 

43,443

 

63,460

 

343,559

 

372,323

 

444,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses(3)

%

 

1.58

 

1.67

 

1.41

 

2.33

 

2.42

 

2.16

 

Net investment income (loss)(3)

%

 

1.45

 

1.19

 

0.59

 

0.71

 

0.44

 

(0.16

)

Portfolio turnover rate

%

 

54

 

44

 

3

 

54

 

44

 

3

 

 

 

 

Class C

 

Class Q

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

February 3,
2003(1)  to
May 31,
2003

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

February 3,
2003(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

10.06

 

10.30

 

10.00

 

10.09

 

10.33

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.05

 

0.05

 

0.00

*

0.08

 

0.13

 

0.01

 

Net realized and unrealized gain (loss) on investments

$

 

0.09

 

(0.22

)

0.30

 

0.10

 

(0.23

)

0.32

 

Total from investment operations

$

 

0.14

 

(0.17

)

0.30

 

0.18

 

(0.10

)

0.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.04

 

0.04

 

—

 

0.15

 

0.11

 

—

 

Net realized gains on investments

$

 

0.33

 

0.03

 

—

 

0.33

 

0.03

 

—

 

Total distributions

$

 

0.37

 

0.07

 

—

 

0.48

 

0.14

 

—

 

Net asset value, end of period

$

 

9.83

 

10.06

 

10.30

 

9.79

 

10.09

 

10.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.35

 

(1.72

)

3.00

**

1.67

 

(0.98

)

3.20

**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

51,319

 

65,269

 

102,047

 

286

 

302

 

304

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses(3)

%

 

2.33

 

2.42

 

2.19

 

1.58

 

1.61

 

1.35

 

Net investment income (loss)(3)

%

 

0.69

 

0.44

 

(0.13

)

1.46

 

1.24

 

0.81

 

Portfolio turnover rate

%

 

54

 

44

 

3

 

54

 

44

 

3

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

*                 Amount represents less than $0.01 per share.

 

**          Represents performance beginning on the first day of the Guarantee Period (April 24, 2003). Total return from commencement of offering of shares was 3.10%, 3.00%, 3.00% and 3.30% for Class A, B, C and Q, respectively.

 

See Accompanying Notes to Financial Statements

 

41


 

ING PRINCIPAL PROTECTION FUND VII (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

May 1,
2003(1)  to
May 31,
2003

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

May 1,
2003(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.88

 

10.00

 

10.00

 

9.93

 

10.00

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.09

 

0.13

 

0.00

*

0.04

 

0.07

 

0.00

*

Net realized and unrealized gain (loss) on investments

$

 

0.12

 

(0.08

)

0.00

*

0.13

 

(0.09

)

0.00

*

Total from investment operations

$

 

0.21

 

0.05

 

0.00

*

0.17

 

(0.02

)

0.00

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.16

 

0.17

 

—

 

0.08

 

0.05

 

—

 

Net realized gains on investments

$

 

0.15

 

—

 

—

 

0.15

 

 

 

—

 

Total distributions

$

 

0.31

 

0.17

 

—

 

0.23

 

0.05

 

—

 

Net asset value, end of period

$

 

9.78

 

9.88

 

10.00

 

9.87

 

9.93

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

2.09

 

0.52

***

—

**

1.74

 

(0.21

)***

—

**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

17,478

 

21,805

 

11,028

 

170,879

 

182,112

 

92,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement(3)(4)

%

 

1.35

 

0.99

 

0.88

 

2.10

 

1.74

 

1.60

 

Gross expenses prior to expense reimbursement (3)

%

 

1.61

 

1.72

 

0.88

 

2.36

 

2.47

 

1.60

 

Net investment income (loss) after expense reimbursement(3)(4)

%

 

1.44

 

1.51

 

0.09

 

0.70

 

0.76

 

(0.63

)

Portfolio turnover rate

%

 

19

 

91

 

—

 

19

 

91

 

—

 

 

 

 

Class C

 

 

 

Six Months
Ended
November 30,
2004

 

Year
Ended
May 31,
2004

 

May 1,
2003(1)  to
May 31,
2003

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.90

 

10.00

 

10.00

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

Net investment income

$

 

0.05

 

0.07

 

0.00

*

Net realized and unrealized gain (loss) on investments

$

 

0.12

 

(0.09

)

0.00

*

Total from investment operations

$

 

0.17

 

(0.02

)

0.00

*

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

Net investment income

$

 

0.06

 

0.08

 

—

 

Net realized gains on investments

$

 

0.15

 

 

 

—

 

Total distributions

$

 

0.21

 

0.08

 

—

 

Net asset value, end of period

$

 

9.86

 

9.90

 

10.00

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

1.73

 

(0.24

)***

—

**

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

33,205

 

44,390

 

19,903

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

Net expenses after expense reimbursement(3)(4)

%

 

2.10

 

1.74

 

1.60

 

Gross expenses prior to expense reimbursement(3)

%

 

2.36

 

2.47

 

1.60

 

Net investment income (loss) after expense reimbursement(3)(4)

%

 

0.68

 

0.76

 

(0.64

)

Portfolio turnover rate

%

 

19

 

91

 

—

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

(4) The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

 

*      Amount represents less than $0.01 per share.

 

**   As of May 31, 2003, the Fund was in its Offering Period. Total return from commencement of offering of shares was 0.00%, 0.00% and 0.00% for Class A, B and C, respectively.

 

*** Represents performance beginning on the first day of Guarantee Period (June 30, 2003). Total return for the year ended May 31, 2004 was 0.69%, (0.02)% and (0.05)% for Class A, B and C, respectively.

 

See Accompanying Notes to Financial Statements

 

42


 

ING PRINCIPAL PROTECTION FUND VIII (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

Class C

 

 

 

Six Months
Ended
November 30,
2004

 

October 1,
2003(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

October 1,
2003(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

October 1,
2003(1)  to
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

 

9.95

 

10.00

 

9.91

 

10.00

 

9.91

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.10

 

0.06

 

0.05

 

0.02

 

0.05

 

0.02

 

Net realized and unrealized loss on investments

$

 

0.11

 

(0.10

)

0.72

 

(0.10

)

0.12

 

(0.10

)

Total from investment operations

$

 

0.21

 

(0.04

)

0.17

 

(0.08

)

0.17

 

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

 

0.18

 

0.01

 

0.09

 

0.01

 

0.09

 

0.01

 

Net realized gains on investments

$

 

0.10

 

 

 

0.10

 

 

 

0.10

 

 

 

Total distributions

$

 

0.28

 

 

 

0.19

 

 

 

0.19

 

 

 

Net asset value, end of period

$

 

9.88

 

9.95

 

9.89

 

9.91

 

9.89

 

9.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

 

2.08

 

(0.45

)*

1.71

 

(0.85

)*

1.77

 

(0.85

)*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

 

19,331

 

22,336

 

98,401

 

105,448

 

29,743

 

33,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement(3)(4)

%

 

1.51

 

1.51

 

2.26

 

2.12

(5)

2.26

 

2.12

(5)

Gross expenses prior to expense reimbursement(3)

%

 

1.51

 

1.54

 

2.26

 

2.29

 

2.26

 

2.29

 

Net investment income after expense reimbursement(3)(4)

%

 

1.67

 

0.96

 

0.93

 

0.39

(5)

0.93

 

0.39

(5)

Portfolio turnover rate

%

 

47

 

42

 

47

 

42

 

47

 

42

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

(4) The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

 

(5) ING Funds Distributor, LLC voluntarily waived 0.75% of distribution fees on Classes B and C from October 1, 2003 through December 23, 2003.

 

*      Represents performance beginning on the first day of the Guarantee Period (December 23, 2003). Total return from commencement of offering of shares was (0.45)%, (0.85)% and (0.85)% for Class A, B and C, respectively.

 

See Accompanying Notes to Financial Statements

 

43


 

ING PRINCIPAL PROTECTION FUND IX (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

Class C

 

 

 

Six Months
Ended
November 30,
2004

 

February 2,
2004(1) to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

February 2,
2004(1) to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

February 2,
2004(1) to
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

9.92

 

10.00

 

9.91

 

10.00

 

9.91

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

0.10

 

0.02

 

0.05

 

0.01

 

0.05

 

0.01

 

Net realized and unrealized loss on investments

$

0.15

 

(0.10

)

0.15

 

(0.10

)

0.15

 

(0.10

)

Total from investment operations

$

0.24

 

(0.08

)

0.20

 

(0.09

)

0.20

 

(0.09

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

0.14

 

—

 

0.08

 

—

 

0.08

 

—

 

Net realized gain on investments

$

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

Total distributions

$

0.17

 

 

 

0.11

 

 

 

0.11

 

 

 

Net asset value, end of period

$

9.99

 

9.92

 

10.00

 

9.91

 

10.00

 

9.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

2.43

 

(0.80

)*

2.02

 

(0.90

)*

1.99

 

(0.90

)*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

17,308

 

20,081

 

62,145

 

66,636

 

19,221

 

21,753

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense
reimbursement (3)(4)

%

1.75

 

1.30

 

2.50

 

1.74

(5)

2.50

 

1.74

(5)

Gross expenses prior to expense reimbursement(3)

%

1.72

 

1.56

 

2.47

 

2.36

 

2.47

 

2.36

 

Net investment income after expense reimbursement (3)(4)

%

1.63

 

0.77

 

0.89

 

0.37

(5)

0.89

 

0.37

(5)

Portfolio turnover rate

%

42

 

4

 

42

 

4

 

42

 

4

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

(4) The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

 

(5) ING Fund Distributor, LLC voluntarily waived 0.75% of distribution fees on Class B and Class C of Principal Protection IX from February 2, 2004 through April 22, 2004.

 

*               Represents performance beginning on the first day of the Guarantee Period (April 22, 2004). Total return from commencement of offering of shares was (0.50)%, (0.60)% and (0.60)% for Class A, B and C, respectively.

 

See Accompanying Notes to Financial Statements

 

44


 

ING PRINCIPAL PROTECTION FUND X (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

Class C

 

 

 

Six Months
Ended
November 30,
2004

 

May 3,
2004(1) to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

May 3,
2004(1) to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

May 3,
2004(1) to
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

$

10.00

 

10.00

 

10.00

 

10.00

 

10.00

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

0.04

 

0.00

*

0.02

 

0.00

*

0.02

 

0.00

*

Net realized and unrealized gain (loss) on investments

$

0.21

 

0.00

*

0.20

 

0.00

*

0.21

 

0.00

*

Total from investment operations

$

0.25

 

0.00

*

0.22

 

0.00

*

0.22

 

0.00

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

$

0.07

 

—

 

0.04

 

—

 

0.04

 

—

 

Net realized gains on investments

$

0.03

 

 

 

0.03

 

 

 

0.03

 

 

 

Total distributions

$

0.10

 

 

 

0.07

 

 

 

0.07

 

 

 

Net asset value, end of period

$

10.15

 

10.00

 

10.15

 

10.00

 

10.15

 

10.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Return(2):

%

2.46

***

—

**

2.20

***

—

**

2.22

***

—

**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

15,826

 

5,047

 

44,242

 

12,477

 

13,607

 

1,825

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net expenses after expense reimbursement(3)(4)

%

1.72

 

0.93

 

2.22

 

1.68

 

2.28

 

1.68

 

Gross expenses prior to expense reimbursement(3)

%

1.87

 

2.27

 

2.36

 

3.02

 

2.44

 

3.02

 

Net investment loss after expense reimbursement(3)(4)

%

0.95

 

(0.01

)

0.42

 

(0.75

)

0.44

 

(0.77

)

Portfolio turnover rate

%

38

 

—

 

38

 

—

 

38

 

—

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

(4) The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

 

*                      Amount represents less than $0.01 per share.

 

**               As of May 31, 2004, the Fund was in its Offering Period. Total return calculation will begin on the commencement date of the Guarantee Period (August 17, 2004). Total return from commencement of offering of shares was 0.00%, 0.00% and 0.00% for Class A, B and C, respectively.

 

***        Represents performance beginning on the first day of the Guarantee Period (August 17, 2004). Total return for the six months ended November 30, 2004 was 2.46%, 2.20% and 2.22% for Class A, B and C, respectively.

 

See Accompanying Notes to Financial Statements

 

45


 

ING PRINCIPAL PROTECTION FUND XI (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

Class C

 

 

 

August 16,
2004(1) to
November 30,
2004

 

August 16,
2004(1) to
November 30,
2004

 

August 16,
2004(1) to
November 30,
2004

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

Net asset value, beginning of period

$

10.00

 

10.00

 

10.00

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

Net investment income

$

0.01

 

0.00

*

0.00

*

Net realized and unrealized gain (loss) on investments

$

(0.12

)

(0.12

)

(0.12

)

Total from investment operations

$

(0.11

)

(0.12

)

(0.12

)

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

Net investment income

$

0.04

 

0.03

 

0.03

 

Net asset value, end of period

$

9.85

 

9.85

 

9.85

 

 

 

 

 

 

 

 

 

Total Return(2):

%

(1.60

)**

(1.50

)**

(1.50

)**

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

9,723

 

29,337

 

7,584

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

Expenses(3)

%

1.24

 

1.99

 

1.99

 

Net investment loss(3)

%

0.83

 

0.07

 

0.08

 

Portfolio turnover rate

%

0

 

0

 

0

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

*            Amount represents less than $0.01 per share.

 

**     Represents performance beginning on the first day of the Guarantee Period (November 18, 2004). Total return from commencement of offering of shares was (1.50)%, (1.50)% and (1.50)% for Class A, B and C, respectively.

 

See Accompanying Notes to Financial Statements

 

46


 

ING PRINCIPAL PROTECTION FUND XII (UNAUDITED)

FINANCIAL HIGHLIGHTS

 

Selected data for a share of beneficial interest outstanding throughout each period.

 

 

 

Class A

 

Class B

 

Class C

 

 

 

November 15,
2004(1) to
November 30,
2004

 

November 15,
2004(1) to
November 30,
2004

 

November 15,
2004(1) to
November 30,
2004

 

 

 

 

 

 

 

 

 

Per Share Operating Performance:

 

 

 

 

 

 

 

Net asset value, beginning of period

$

10.00

 

10.00

 

10.00

 

 

 

 

 

 

 

 

 

Income (loss) from investment operations:

 

 

 

 

 

 

 

Net investment income

$

0.00

*

0.00

*

0.00

*

Net realized and unrealized gain (loss) on investments

$

0.00

*

0.00

*

0.00

*

Total from investment operations

$

0.00

*

0.00

*

0.00

*

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

Net investment income

$

—

 

—

 

—

 

Net asset value, end of period

$

10.00

 

10.00

 

10.00

 

 

 

 

 

 

 

 

 

Total Return(2):

%

—

**

—

**

—

**

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

Net assets, end of period (000’s)

$

129

 

1,461

 

186

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

Expenses(3)

%

1.25

 

1.90

 

1.90

 

Net investment loss(3)

%

(0.39

)

(1.08

)

(0.85

)

Portfolio turnover rate

%

—

 

—

 

—

 

 

(1) Commencement of operations.

 

(2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

 

(3) Annualized for periods less than one year.

 

*               Amount represents less than $0.01 per share.

 

**        As of November 30, 2004, the Fund was in its Offering Period. Total return calculation will begin on the commencement date of the Guarantee Period (February 16, 2005). Total return from commencement of offering of shares was 0.00%, 0.00% and 0.00% for Class A, B and C, respectively.

 

See Accompanying Notes to Financial Statements

 

47


 

NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

 

NOTE 1 — ORGANIZATION

 

Organization. The ING Principal Protection Funds are part of the ING Equity Trust (“IET”), which is an open-end investment management company registered under the Investment Company Act of 1940 (“the 1940 Act”), as amended.

 

IET is a Massachusetts business trust organized on June 12, 1998 with twenty-three separate funds. Twelve of the Funds included in this report are: ING Principal Protection Fund (“Principal Protection” or “PPF”), ING Principal Protection Fund II (“Principal Protection II” or “PPF II”), ING Principal Protection Fund III (“Principal Protection III” or “PPF III”), ING Principal Protection Fund IV (“Principal Protection IV” or “PPF IV”), ING Principal Protection Fund V (“Principal Protection V” or “PPF V”), ING Principal Protection Fund VI (“Principal Protection VI” or “PPF VI”), ING Principal Protection Fund VII (“Principal Protection VII” or “PPF VII”), ING Principal Protection VIII (“Principal Protection VIII” or “PPF VIII”), ING Principal Protection IX (“Principal Protection IX” or “PPF IX”), ING Principal Protection X (“Principal Protection X” or “PPF X”), ING Principal Protection XI (“Principal Protection XI” or “PPFXI”), and ING Principal Protection XII (“Principal Protection XII” or “PPFXII”), (each a “Fund”; collectively the “Funds”).

 

Each Fund has an Offering Period, a Guarantee Period and an Index Plus LargeCap Period. Shares of each Fund will be offered during the Offering Period but will not be offered during the Guarantee Period, except in connection with reinvestment of dividends. Each Fund will be offered on a continuous basis to existing shareholders during the Index Plus LargeCap Period. During the Guarantee Period, each Fund seeks to participate in favorable equity market conditions while preserving at least the principal amount of the Fund as of the inception of the Guarantee Period. Each Fund guarantees that the amount distributed, if any, to each shareholder at the end of the Guarantee Period will be no less than the value of that shareholder’s investment as of the inception of the Guarantee Period provided that all distributions received from the Fund have been reinvested and no shares have been redeemed. Each Fund’s Guarantee is backed by an unconditional, irrevocable guarantee from MBIA Insurance Corporation (“MBIA”), a monoline financial guarantor. Each Fund pays MBIA a guarantee fee of 0.33% of its average daily net assets during the guarantee period. During the Index Plus LargeCap Period, which will commence immediately following the Guarantee Period, the Fund seeks to outperform the total return performance of the S&P 500 Index, while maintaining a risk profile consistent with the Index.

 

The following table presents the time periods for each Fund’s three phases:

 

 

 

Offering
Period

 

Guarantee
Period

 

Commencement
of Index Plus
LargeCap

 

 

 

 

 

 

 

 

 

PPF

 

07/05/01 – 10/11/01

 

10/12/01 – 10/11/06

 

10/12/06

 

PPF II

 

11/05/01 –01/31/02

 

02/01/02 – 01/31/07

 

02/01/07

 

PPF III

 

03/01/02 – 05/30/02*

 

06/06/02 – 06/05/07

 

06/06/07

 

PPF IV

 

07/01/02 – 09/30/02*

 

10/08/02 – 10/08/07

 

10/09/07

 

PPF V

 

11/01/02 – 01/15/03*

 

01/23/03 – 01/22/08

 

01/23/08

 

PPF VI

 

02/03/03 – 04/15/03*

 

04/24/03 – 04/23/08

 

04/24/08

 

PPF VII

 

05/01/03 – 06/24/03*

 

06/30/03 – 06/26/08

 

06/27/08

 

PPF VIII

 

10/01/03 – 12/15/03*

 

12/23/03 – 12/22/08

 

12/23/08

 

PPF IX

 

02/02/04 – 04/15/04*

 

04/22/04 – 04/21/09

 

04/22/09

 

PPF X

 

05/03/04 – 08/09/04*

 

08/17/04 – 08/14/09

 

08/15/09

 

PPF XI

 

08/16/04 – 11/11/04*

 

11/18/04 – 11/18/09

 

11/19/09

 

PPF XII

 

11/15/04 – 02/09/05*

 

02/16/05 – 02/16/10

 

02/17/10

 

 

*  A Quiet Period between the Offering Period and the Guarantee Period where new deposits are not accepted and the assets will remain invested in short term instruments.

 

Each Fund offers at least three of the following classes of shares: Class A, Class B, Class C and Class Q. The separate classes of shares differ principally in the applicable sales charges (if any), distribution fees, shareholder servicing fees and transfer agency fees. Shareholders of each class also bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of the Funds and earn income and realized gains/losses from the Funds pro rata based on the average daily net assets of each class, without distinction between share classes. No class has preferential dividend rights. Differences in per share dividend rates generally result from the relative weighting of pro rata income and realized gain allocations and from differences in separate class expenses, including distribution and shareholder servicing fees. Class B shares, along with their pro rata reinvested dividend shares, automatically convert to Class A shares approximately eight years after purchase.

 

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

 

The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements. Such policies are in conformity with accounting principles generally accepted in the United States of America for investment companies.

 

A.                Security Valuation. Investments in equity securities traded on a national securities exchange are valued at the last reported sale

 

48


 

price. Securities reported by NASDAQ will be valued at the NASDAQ official closing prices. Securities traded on an exchange or NASDAQ for which there has been no sale and securities traded in the over-the-counter-market are valued at the mean between the last reported bid and ask prices. All investments quoted in foreign currencies will be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at that time. Debt securities are valued at prices obtained from independent services or from one or more dealers making markets in the securities and may be adjusted based on the Fund’s valuation procedures. U.S. Government obligations are valued by using market quotations or independent pricing services that use prices provided by market-makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics.

 

Securities and assets for which market quotations are not readily available (which may include certain restricted securities which are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Funds’ Board of Trustees (“Board”), in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, which close earlier than the time that a Fund calculates its net asset value may also be valued at their fair values as determined in good faith by or under the supervision of a Fund’s Board, in accordance with methods that are specifically authorized by the Board. If a significant event which is likely to impact the value of one or more foreign securities held by a Fund occurs after the time at which the foreign market for such security(ies) closes but before the time that the Fund’s net asset value is calculated on any business day, such event may be taken into account in determining the fair value of such security(ies) at the time the Fund calculates its net asset value. For these purposes, significant events after the close of trading on a foreign market may include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis, the Board has authorized the use of one or more research services to assist with the determination of the fair value of foreign securities. Research services use statistical analyses and quantitative models to help determine fair value as of the time a Fund calculates its net asset value. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment, and the fair value assigned to a security may not represent the actual value that a Fund could obtain if it were to sell the security at the time of the close of the NYSE. Investments in securities maturing in 60 days or less from the date of acquisition are valued at amortized cost, which, when combined with accrued interest, approximates market value.

 

B.                  Security Transactions and Revenue Recognition. Securities transactions are accounted for on the trade date. Realized gains and losses are reported on the basis of identified cost of securities sold. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date, or for certain foreign securities, when the information becomes available to the Funds. Premium amortization and discount accretion are determined by the effective yield method.

 

C.                  Foreign Currency Translation. The books and records of the Funds are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

 

(1)               Market value of investment securities, other assets and liabilities — at the exchange rates prevailing at the end of the day.

 

(2)               Purchases and sales of investment securities, income and expenses — at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Funds do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments.

 

49


 

For securities which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities’ current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax.

 

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. Government securities. These risks include but are not limited to revaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. Government securities.

 

D.                                  Foreign Currency Transactions and Futures Contracts. The Funds may enter into foreign currency exchange transactions to convert to and from different foreign currencies and to and from the U.S. dollar in connection with the planned purchases or sales of securities. The Funds either enter into these transactions on a spot basis at the spot rate prevailing in the foreign currency exchange market or use forward foreign currency contracts to purchase or sell foreign currencies. When the contract is fulfilled or closed, gains or losses are realized. Until then, the gain or loss is included in unrealized appreciation or depreciation. Risks may arise upon entering into forward contracts from the potential inability of counterparties to meet the terms of their forward contracts and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar.

 

Each Fund may enter into futures contracts involving foreign currency, interest rates, securities and security indices. A futures contract obligates the seller of the contract to deliver and the purchaser of the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time for a specified price. Upon entering into such a contract, a Fund is required to deposit and maintain as collateral such initial margin as required by the exchange on which the contract is traded. Pursuant to the contract, a Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuations in the value of the contract. Such receipts or payments are known as variation margins and are recorded as unrealized gains or losses by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

 

E.                                    Distributions to Shareholders. The Funds record distributions to their shareholders on ex-dividend date. Each Fund pays dividends and capital gains, if any, annually. The Funds may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. The characteristics of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America for investment companies.

 

F.                                    Federal Income Taxes. It is the policy of the Funds to comply with the requirements of the subchapter M of the Internal Revenue Code and related excise tax provisions applicable to regulated investment companies and to distribute substantially all of their net investment income and any net realized capital gains to their shareholders. Therefore, no federal income tax or provision is required. No capital gain distributions shall be made until any capital loss carryforwards have been fully utilized or expired.

 

G.                                   Organization Expenses and Offering Costs. Costs incurred with the organization of the Funds were expensed as incurred. Costs incurred with the offering of shares of the Funds are deferred and amortized over a twelve-month period starting on the first day of the Guarantee Period on a straight-line basis.

 

50


 

 

H.                                  Use of Estimates. Management of the Funds has made certain estimates and assumptions relating to the reporting of assets, liabilities, income, and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America for investment companies. Actual results could differ from these estimates.

 

I.                                       Repurchase Agreements. Each Fund may invest in repurchase agreements only with government securities dealers recognized by the Board of Governors of the Federal Reserve System. Under such agreements, the seller of the security agrees to repurchase it at a mutually agreed upon time and price. The resale price is in excess of the purchase price and reflects an agreed upon interest rate for the period of time the agreement is outstanding. The period of the repurchase agreements is usually short, from overnight to one week, while the underlying securities generally have longer maturities. Each Fund will receive as collateral securities acceptable to it whose market value is equal to at least 100% of the carrying amount of the repurchase agreements, plus accrued interest, being invested by the Fund. The underlying collateral is valued daily on a mark-to-market basis to assure that the value, including accrued interest is at least equal to the repurchase price. If the seller defaults, a Fund might incur a loss or delay in the realization of proceeds if the value of the security collateralizing the repurchase agreement declines, and it might incur disposition costs in liquidating the collateral.

 

J.                                      Illiquid and Restricted Securities. Each Fund may not invest more than 15% of its net assets in illiquid securities. Illiquid securities are not readily marketable. Disposing of illiquid investments may involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Funds to sell them promptly at an acceptable price. Each Fund also may invest in restricted securities, which include those sold under Rule 144A of the Securities Act of 1933 (“1933 Act”) or securities offered pursuant to Section 4(2) of the 1933 Act, and/or are subject to legal or contractual restrictions on resale and generally may not be publicly sold without registration under the 1933 Act. Certain restricted securities may be considered liquid pursuant to procedures adopted by the Board or may be deemed to be illiquid because they may not be readily marketable. Illiquid and restricted securities are valued using market quotations when readily available. In the absence of market quotations, the securities are valued based upon their fair value determined under procedures approved by the Board.

 

NOTE 3 — INVESTMENT TRANSACTIONS

 

For the six months ended November 30, 2004, the cost of purchases and proceeds from the sales of securities, excluding short-term securities, were as follows:

 

 

 

Purchases

 

Sales

 

PPF

 

$

11,901,780

 

$

11,127,797

 

PPF II

 

10,731,648

 

9,871,933

 

PPF III

 

22,016,701

 

11,688,494

 

PPF IV

 

141,986,403

 

158,690,513

 

PPF V

 

100,149,715

 

206,560,516

 

PPF VI

 

120,186,582

 

168,738,767

 

PPF VII

 

27,838,163

 

34,746,788

 

PPF VIII

 

42,775,139

 

47,097,869

 

PPF IX

 

25,537,723

 

31,083,643

 

PPF X

 

33,726,073

 

9,510,804

 

PPF XI

 

14,731,325

 

—

 

 

U.S. Government securities not included above were as follows:

 

 

 

Purchases

 

Sales

 

PPF

 

$

—

 

$

49,968,223

 

PPF II

 

—

 

65,587,300

 

PPF III

 

8,100,145

 

63,937,423

 

PPF IV

 

99,364,104

 

167,217,516

 

PPF V

 

119,299,640

 

71,778,624

 

PPF VI

 

123,810,199

 

136,904,935

 

PPF VII

 

15,945,400

 

42,217,980

 

PPF VIII

 

29,663,485

 

42,977,891

 

PPF IX

 

18,796,493

 

25,760,171

 

PPF X

 

54,406,130

 

7,191,652

 

PPF XI

 

31,798,160

 

—

 

 

 

 

 

 

 

 

NOTE 4 — INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES

 

The Funds entered into an Investment Management Agreement with ING Investments, LLC (the “Investment Manager”). The Investment Management Agreements compensate the Investment Manager with a fee, computed daily and payable monthly, based on the average daily net assets of each Fund. The fee for each Fund is 0.25% during its Offering Period and 0.60% during its Index Plus LargeCap Period. For PPF – PPF VII, the fee during the Guarantee Period is 0.80%. During the Guarantee Period for PPF VIII – PPF XII, the maximum fee is 0.80% on the Equity Component and 0.55% on both the Fixed Component and Exchange Traded Fund (“ETF”) Strategy Component of the average daily net assets.

 

51


 

From June 30, 2003 through April 30, 2004, the Investment Manager waived 0.80% of its fees for PPF VII. Beginning May 1, 2004, the Investment Manager began receiving a portion of its Investment Management fees.

 

ING Investment Management Co. (formerly, Aeltus Investment Management, Inc.,) a registered investment advisor, serves as Sub-Adviser to the Funds.

 

ING Funds Services, LLC (the “Administrator”), serves as administrator to each Fund. The Funds compensate the Administrator with a fee calculated at an annual rate of 0.10% of each Fund’s average daily net assets.

 

The Investment Manager, Sub-Adviser, Administrator and Distributor are indirect wholly-owned subsidiaries of ING Groep N.V., a global financial institution active in the fields of banking, insurance and asset management.

 

NOTE 5 — DISTRIBUTION AND SERVICE FEES

 

Each share class of the Funds has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the “12b-1 Plans”), whereby ING Funds Distributor, LLC (the “Distributor”) is reimbursed or compensated (depending on the class of shares) by the Funds for expenses incurred in the distribution of each Fund’s shares (“Distribution Fees”). Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month to compensate or reimburse expenses incurred in the distribution and promotion of each Fund’s shares, including expenses incurred in printing prospectuses and reports used for sales purposes, expenses incurred in preparing and printing sales literature and other such distribution related expenses, including any distribution or shareholder servicing fees (“Service Fees”) paid to securities dealers who have executed a distribution agreement with the Distributor. Under the 12b-1 Plans, each class of shares of the Fund pays the Distributor a combined Distribution and Service Fee based on average daily net assets at the following rates:

 

 

 

Class A

 

Class B

 

Class C

 

Class Q

 

PPF

 

0.25

%

1.00

%

1.00

%

0.25

%

PPF II

 

0.25

%

1.00

%

1.00

%

0.25

%

PPF III

 

0.25

%

1.00

%

1.00

%

0.25

%

PPF IV

 

0.25

%

1.00

%

1.00

%

0.25

%

PPF V

 

0.25

%

1.00

%

1.00

%

N/A

 

PPF VI

 

0.25

%

1.00

%

1.00

%

0.25

%

PPF VII

 

0.25

%

1.00

%

1.00

%

N/A

 

PPF VIII

 

0.25

%

1.00

%

1.00

%

N/A

 

PPF IX

 

0.25

%

1.00

%

1.00

%

N/A

 

PPF X

 

0.25

%

1.00

%

1.00

%

N/A

 

PPF XI

 

0.25

%

1.00

%

1.00

%

N/A

 

PPF XII

 

0.25

%

1.00

%

1.00

%

N/A

 

 

From October 1, 2003 through December 23, 2003, the Distributor voluntarily waived 0.75% of Distribution and Service fees on Class B and Class C of Principal Protection VIII. From February 2, 2004 through April 22, 2004, the Distributor voluntarily waived 0.75% of Distribution and Service fees on Class B and Class C of Principal Protection IX.

 

For the six months ended November 30, 2004, the Distributor retained the following amounts in sales charges:

 

 

 

Class A
Shares

 

Class B
Shares

 

Class C
Shares

 

Class Q
Shares

 

Initial Sales Charges

 

$

117,201

 

N/A

 

N/A

 

N/A

 

Contingent Deferred Sales Charges

 

$

995

 

—

 

$

252

 

N/A

 

 

NOTE 6 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

 

At November 30, 2004, the Funds had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities (see Notes 4 and 5):

 

 

 

Accrued
Investment
Management
Fees

 

Payable to
Adviser
for
Recoupment

 

Accrued
Administrative
Fees

 

Accrued
Shareholder
Service and
Distribution
Fees

 

Total

 

PPF

 

$

177,660

 

$

120,003

 

$

22,206

 

$

207,137

 

$

527,006

 

PPF II

 

254,036

 

—

 

31,751

 

297,581

 

583,368

 

PPF III

 

196,718

 

—

 

24,588

 

230,487

 

451,793

 

PPF IV

 

379,621

 

—

 

47,449

 

447,301

 

874,371

 

PPF V

 

308,847

 

—

 

38,603

 

363,193

 

710,643

 

PPF VI

 

288,699

 

—

 

36,085

 

337,747

 

662,531

 

PPF VII

 

147,697

 

—

 

18,461

 

173,548

 

339,706

 

PPF VIII

 

76,071

 

—

 

12,355

 

111,514

 

199,940

 

PPF IX

 

52,106

 

12,546

 

8,293

 

71,975

 

144,920

 

PPF X

 

38,681

 

10,000

 

6,092

 

51,123

 

105,896

 

PPF XI

 

15,066

 

—

 

3,620

 

30,473

 

49,159

 

PPF XII

 

256

 

—

 

28

 

269

 

553

 

 

The Funds have adopted a Retirement Policy covering all independent trustees of the Fund who will have served as an independent trustee for at least five years at the time of retirement. Benefits under this

 

52


 

plan are based on an annual rate as defined in the plan agreement.

 

NOTE 7 — OTHER ACCRUED EXPENSES AND LIABILITIES

 

At November 30, 2004, the Funds had the following payables included in Other Accrued Expenses and Liabilities on the Statements of Assets and Liabilities that exceeded 5% of total liabilities.

 

 

 

Payable For
Guarantee
Fees

 

 

 

Payable For
Transfer Agent
Fees

 

 

 

 

 

 

 

 

 

PPF

 

$

73,286

 

PPF

 

$

116,123

 

PPF II

 

104,789

 

PPF III

 

66,960

 

PPF III

 

81,147

 

PPF IV

 

108,550

 

PPF IV

 

156,599

 

PPF VII

 

44,911

 

PPF V

 

127,401

 

PPF IX

 

39,500

 

PPF VII

 

60,926

 

 

 

 

 

PPF IX

 

27,371

 

 

 

 

 

PPF X

 

20,106

 

 

 

 

 

 

 

 

Payable for
Organization and
Offering Fees

 

 

 

Payable for
Professional
Fees

 

PPF IX

 

$

86,692

 

PPF IX

 

$

27,623

 

PPF X

 

71,569

 

 

 

 

 

PPF XI

 

109,007

 

 

 

 

 

 

 

 

Payable for
Shareholder
Reporting Expense

 

 

 

 

 

PPF

 

$

129,852

 

 

 

 

 

PPF II

 

119,876

 

 

 

 

 

PPF III

 

72,675

 

 

 

 

 

PPF VII

 

63,974

 

 

 

 

 

PPF IX

 

31,165

 

 

 

 

 

 

NOTE 8 — EXPENSE LIMITATIONS

 

ING Investments entered into a written Expense Limitation Agreement with each of the Funds whereby, the Investment Manager has agreed to limit expenses, excluding interest, taxes, brokerage and extraordinary expenses to the levels listed below:

 

 

 

Class A

 

Class B

 

Class C

 

Class Q

 

PPF

 

1.75

%

2.50

%

2.50

%

1.75

%

PPF II

 

1.75

%

2.50

%

2.50

%

1.75

%

PPF III

 

1.75

%

2.50

%

2.50

%

1.75

%

PPF IV

 

1.75

%

2.50

%

2.50

%

1.75

%

PPF V

 

1.75

%

2.50

%

2.50

%

N/A

 

PPF VI

 

1.75

%

2.50

%

2.50

%

1.75

%

PPF VII(1)

 

1.75

%

2.50

%

2.50

%

N/A

 

PPF VIII

 

1.75

%

2.50

%

2.50

%

N/A

 

PPF IX

 

1.75

%

2.50

%

2.50

%

N/A

 

PPF X

 

1.75

%

2.50

%

2.50

%

N/A

 

PPF XI

 

1.75

%

2.50

%

2.50

%

N/A

 

PPF XII

 

1.75

%

2.50

%

2.50

%

N/A

 

 

(1)        The Expense Limitation Agreement for PPF VII was modified May 1, 2004 into a tier structure based on the percentage of assets in the Equity Component. Under this tier structure, the Investment Manager will limit expenses to a maximum of 1.75%, 2.50% and 2.50% for Classes A, B and C, respectively, excluding expenses such as interest, taxes, brokerage and extraordinary expenses. The actual expense limitation rates from May 31, 2004 to November 30, 2004 were 1.35%, 2.10% and 2.10% for Classes A, B and C, respectively.

 

The Investment Manager may at a later date recoup from a Fund for management fees waived and other expenses assumed by the Investment Manager during the previous 36 months, but only if, after such reimbursement, that Fund’s expense ratio does not exceed the percentage described above. Waived and reimbursed fees net of any recoupment by the Investment Manager of such waived and reimbursed fees are reflected on the accompanying Statement of Operations for each Fund. Outstanding reimbursement balances due to the Funds, if any, under their respective expense limitation agreements are reflected in Reimbursement Due from Manager on the accompanying Statements of Assets and Liabilities.

 

As of November 30, 2004, the cumulative amounts of reimbursed fees that are subject to possible recoupment by the Investment Manager, and the related expiration dates are as follows:.

 

 

 

November 30,

 

 

 

 

 

2005

 

2006

 

2007

 

Total

 

PPF

 

$

274,859

 

—

 

$

—

 

$

274,859

 

PPF VII

 

—

 

—

 

312,215

 

312,215

 

PPF IX

 

—

 

—

 

48,423

 

48,423

 

 

The Expense Limitation Agreements are contractual and shall renew automatically for one-year terms unless ING Investments provides written termination of the Expense Limitation Agreement within 90 days of the end of the then current term.

 

NOTE 9 — LINE OF CREDIT

 

The Funds, in addition to certain other funds managed by the Investment Manager, have entered into an unsecured committed revolving line of credit agreement (the “Credit Agreement”) with The Bank of New York for an aggregate amount of $125,000,000. The proceeds may be used to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the Funds; and (3) enable the Funds to meet other emergency expenses as defined in the Credit Agreement. The Funds to which the line of credit is available pay a commitment fee equal to 0.09% per annum on the daily unused portion of the committed line amount payable quarterly in arrears. At November 30, 2004, the Funds did not have any loans outstanding under the line of credit.

 

53


 

NOTE 10 — CAPITAL SHARES

 

Transactions in capital shares and dollars were as follows:

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

Class Q Shares

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

49,672

 

62,521

 

269,163

 

279,376

 

31,671

 

46,877

 

1,262

 

1,657

 

Shares redeemed

 

(483,691

)

(2,255,672

)

(2,987,620

)

(8,475,812

)

(1,057,688

)

(4,032,857

)

(10,717

)

(103,130

)

Net decrease in shares outstanding

 

(434,019

)

(2,193,151

)

(2,718,457

)

(8,196,436

)

(1,026,017

)

(3,985,980

)

(9,455

)

(101,473

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

$

488,774

 

$

49,672

 

$

2,651,252

 

$

2,779,804

 

$

312,912

 

$

466,898

 

$

12,458

 

$

16,522

 

Shares redeemed

 

(4,833,454

)

(22,766,805

)

(29,678,740

)

(85,181,330

)

(10,519,489

)

(40,540,710

)

(107,351

)

(1,042,621

)

Net decrease

 

$

(4,344,680

)

$

(22,717,133

)

$

(27,027,488

)

$

(82,401,526

)

$

(10,206,577

)

$

(40,073,812

)

$

(94,893

)

$

(1,026,099

)

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

Class Q Shares

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund II
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

70,514

 

97,596

 

435,167

 

403,691

 

71,657

 

82,101

 

85

 

105

 

Shares redeemed

 

(610,589

)

(3,829,487

)

(3,982,284

)

(10,422,755

)

(1,339,550

)

(6,613,575

)

(1,613

)

(1,025

)

Net decrease in shares outstanding

 

(540,075

)

(3,731,891

)

(3,547,117

)

(10,019,064

)

(1,267,893

)

(6,531,474

)

(1,528

)

(920

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund II ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

$

680,470

 

$

956,440

 

$

4,203,704

 

$

3,960,223

 

$

693,642

 

$

806,212

 

$

820

 

$

1,033

 

Shares redeemed

 

(5,992,309

)

(38,008,278

)

(38,938,411

)

(103,152,786

)

(13,127,434

)

(65,553,861

)

(15,840

)

(10,439

)

Net decrease

 

$

(5,311,839

)

$

(37,051,838

)

$

(34,734,707

)

$

(99,192,563

)

$

(12,433,792

)

$

(64,747,649

)

$

(15,020

)

$

(9,406

)

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

Class Q Shares

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund III
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

54,990

 

70,392

 

350,147

 

309,859

 

43,326

 

40,366

 

1,522

 

1,226

 

Shares redeemed

 

(538,781

)

(1,964,837

)

(2,802,322

)

(6,666,799

)

(737,913

)

(3,681,856

)

—

 

—

 

Net decrease in shares outstanding

 

(483,791

)

(1,894,445

)

(2,452,175

)

(6,356,940

)

(694,587

)

(3,641,490

)

1,522

 

1,226

 

Principal Protection Fund III ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

$

538,903

 

$

698,989

 

$

3,434,937

 

$

3,076,937

 

$

426,334

 

$

401,636

 

$

14,906

 

$

12,156

 

Shares redeemed

 

(5,370,069

)

(19,781,296

)

(27,758,364

)

(66,780,710

)

(7,317,894

)

(37,017,924

)

—

 

—

 

Net decrease

 

$

(4,831,166

)

$

(19,082,307

)

$

(24,323,427

)

$

(63,703,773

)

$

(6,891,560

)

$

(36,616,288

)

$

14,906

 

$

12,156

 

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

Class Q Shares

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund IV
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

54,624

 

85,420

 

307,311

 

379,544

 

38,575

 

60,931

 

1,520

 

1,695

 

Shares redeemed

 

(1,023,772

)

(3,588,838

)

(4,540,793

)

(10,943,351

)

(1,855,555

)

(8,099,131

)

(866

)

(50,269

)

Net increase (decrease) in shares outstanding

 

(969,148

)

(3,503,418

)

(4,233,482

)

(10,563,807

)

(1,816,980

)

(8,038,200

)

654

 

(48,574

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund IV ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

$

571,505

 

$

876,255

 

$

3,220,622

 

$

3,894,121

 

$

405,028

 

$

625,532

 

$

15,915

 

$

17,391

 

Shares redeemed

 

(10,720,913

)

(37,594,082

)

(47,207,441

)

(113,922,982

)

(19,299,924

)

(84,331,915

)

(9,000

)

(521,804

)

Net increase (decrease)

 

$

(10,149,408

)

$

(36,717,827

)

$

(43,986,819

)

$

(110,028,861

)

$

(18,894,896

)

$

(83,706,383

)

$

6,915

 

$

(504,413

)

 

54


 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

Class Q Shares

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund V
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

160,677

 

112,825

 

1,385,762

 

520,030

 

146,148

 

81,204

 

—

 

—

 

Shares redeemed

 

(745,539

)

(3,066,422

)

(3,099,337

)

(8,170,839

)

(1,281,051

)

(4,329,176

)

—

 

(13,824

)

Net increase (decrease) in shares outstanding

 

(584,862

)

(2,953,597

)

(1,713,575

)

(7,650,809

)

(1,134,903

)

(4,247,972

)

—

 

(13,824

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund V ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

$

1,585,875

 

$

1,133,886

 

$

13,705,190

 

$

5,236,695

 

$

1,448,330

 

$

817,723

 

$

—

 

$

—

 

Shares redeemed

 

(7,600,704

)

(31,425,959

)

(31,399,544

)

(83,486,312

)

(12,984,538

)

(44,284,992

)

—

 

(143,828

)

Net increase (decrease)

 

$

(6,014,829

)

$

(30,292,073

)

$

(17,694,354

)

$

(78,249,617

)

$

(11,536,208

)

$

(43,467,269

)

$

—

 

$

(143,828

)

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

Class Q Shares

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund VI
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

146,847

 

59,009

 

1,171,582

 

232,991

 

138,182

 

40,979

 

1,334

 

406

 

Shares redeemed

 

(716,574

)

(1,903,216

)

(3,145,014

)

(6,380,073

)

(1,403,283

)

(3,461,259

)

(1,978

)

—

 

Net increase (decrease) in shares outstanding

 

(569,727

)

(1,844,207

)

(1,973,432

)

(6,147,082

)

(1,265,101

)

(3,420,280

)

(644

)

406

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund VI ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends reinvested

 

$

1,447,922

 

$

591,859

 

$

11,563,979

 

$

2,339,231

 

$

1,367,998

 

$

411,432

 

$

13,156

 

$

4,099

 

Shares redeemed

 

(7,263,882

)

(19,429,994

)

(31,757,749

)

(64,953,503

)

(14,168,396

)

(35,246,415

)

(20,000

)

—

 

Net increase (decrease)

 

$

(5,815,960

)

$

(18,838,135

)

$

(20,193,770

)

$

(62,614,272

)

$

(12,800,398

)

$

(34,834,983

)

$

(6,844

)

$

4,099

 

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

 

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

Year Ended
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund VII
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

—

 

2,083,874

 

—

 

11,662,174

 

—

 

4,123,160

 

Dividends reinvested

 

47,944

 

44,585

 

353,912

 

86,623

 

49,842

 

29,507

 

Shares redeemed

 

(468,273

)

(1,023,987

)

(1,378,124

)

(2,609,291

)

(1,166,076

)

(1,659,767

)

Net increase in shares outstanding

 

(420,329

)

1,104,472

 

(1,024,212

)

9,139,506

 

(1,116,234

)

2,492,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund VII ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

$

—

 

$

20,838,011

 

$

—

 

$

116,620,846

 

$

—

 

$

41,230,905

 

Dividends reinvested

 

472,258

 

436,037

 

3,517,887

 

854,800

 

494,931

 

290,348

 

Shares redeemed

 

(4,658,472

)

(10,221,967

)

(13,776,526

)

(26,156,354

)

(11,603,633

)

(16,520,392

)

Net increase

 

$

(4,186,214

)

$

11,052,081

 

$

(10,258,639

)

$

91,319,292

 

$

(11,108,702

)

$

25,000,861

 

 

55


 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

 

 

Six Months
Ended
November 30,
2004

 

October 1,
2003(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

October 1,
2003(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

October 1,
2003(1)  to
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund VIII
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

—

 

2,708,122

 

—

 

11,208,345

 

—

 

3,668,221

 

Dividends reinvested

 

42,409

 

1,516

 

158,647

 

6,815

 

33,549

 

1,616

 

Shares redeemed

 

(331,065

)

(463,935

)

(849,809

)

(577,778

)

(386,617

)

(311,236

)

Net increase in shares outstanding

 

(288,656

)

2,245,703

 

(691,162

)

10,637,382

 

(353,068

)

3,358,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund VIII ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

$

—

 

$

27,077,722

 

$

—

 

$

112,063,568

 

$

—

 

$

36,674,965

 

Dividends reinvested

 

422,391

 

15,221

 

1,583,297

 

68,535

 

334,822

 

16,218

 

Shares redeemed

 

(3,323,514

)

(4,696,020

)

(8,516,814

)

(5,829,267

)

(3,881,136

)

(3,138,748

)

Net increase

 

$

(2,901,123

)

$

22,396,923

 

$

(6,933,517

)

$

106,302,836

 

$

(3,546,314

)

$

33,552,435

 

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

 

 

Six Months
Ended
November 30,
2004

 

February 2,
2004(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

February 2,
2004(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

February 2,
2004(1)  to
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund IX
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

—

 

2,043,715

 

—

 

6,785,067

 

—

 

2,218,307

 

Dividends reinvested

 

20,485

 

—

 

60,706

 

—

 

13,569

 

—

 

Shares redeemed

 

(311,573

)

(19,733

)

(568,073

)

(59,012

)

(286,562

)

(24,194

)

Net increase in shares outstanding

 

(291,088

)

2,023,982

 

(507,367

)

6,726,055

 

(272,993

)

2,194,113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund IX ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

$

—

 

$

20,437,156

 

$

—

 

$

67,850,682

 

$

—

 

$

22,183,082

 

Dividends reinvested

 

206,282

 

—

 

612,520

 

—

 

136,910

 

—

 

Shares redeemed

 

(3,126,006

)

(197,373

)

(5,730,514

)

(587,944

)

(2,875,844

)

(239,965

)

Net increase

 

$

(2,919,724

)

$

20,239,783

 

$

(5,117,994

)

$

67,262,738

 

$

(2,738,934

)

$

21,943,117

 

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

 

 

Six Months
Ended
November 30,
2004

 

May 3,
2004(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

May 3,
2004(1)  to
May 31,
2004

 

Six Months
Ended
November 30,
2004

 

May 3,
2004(1)  to
May 31,
2004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund X
(Number of Shares)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

1,089,013

 

460,824

 

3,209,038

 

1,216,466

 

1,183,012

 

185,618

 

Dividends reinvested

 

13,562

 

—

 

26,227

 

—

 

5,366

 

—

 

Shares redeemed

 

(47,870

)

(28

)

(125,044

)

(298

)

(30,310

)

—

 

Net increase in shares outstanding

 

1,054,705

 

460,796

 

3,110,221

 

1,216,168

 

1,158,068

 

185,618

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Protection Fund X ($)

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares sold

 

$

10,890,199

 

$

4,608,253

 

$

32,090,469

 

$

12,164,658

 

$

11,830,953

 

$

1,856,179

 

Dividends reinvested

 

138,874

 

—

 

268,560

 

—

 

54,950

 

—

 

Shares redeemed

 

(484,685

)

(285

)

(1,268,490

)

(2,981

)

(304,147

)

—

 

Net increase

 

$

10,544,388

 

$

4,607,968

 

$

31,090,539

 

$

12,161,677

 

$

11,581,756

 

$

1,856,179

 

 

(1) Commencement of operations.

 

56


 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

 

 

August 16,
2004(1)  to
November 30,
2004

 

August 16,
2004(1)  to
November 30,
2004

 

August 16,
2004(1)  to
November 30,
2004

 

 

 

 

 

 

 

 

 

Principal Protection Fund XI
(Number of Shares)

 

 

 

 

 

 

 

Shares sold

 

1,017,250

 

2,997,223

 

768,805

 

Dividends reinvested

 

3,170

 

6,646

 

1,245

 

Shares redeemed

 

(33,752

)

(26,106

)

—

 

Net increase in shares outstanding

 

986,668

 

2,977,763

 

770,050

 

 

 

 

 

 

 

 

 

Principal Protection Fund XI ($)

 

 

 

 

 

 

 

Shares sold

 

$

10,175,414

 

$

29,972,215

 

$

7,688,026

 

Dividends reinvested

 

31,603

 

66,257

 

12,411

 

Shares redeemed

 

(337,181

)

(260,417

)

—

 

Net increase

 

$

9,869,836

 

$

29,778,055

 

$

7,700,437

 

 

 

 

Class A Shares

 

Class B Shares

 

Class C Shares

 

 

 

November 15,
2004(1)  to
November 30,
2004

 

November 15,
2004(1)  to
November 30,
2004

 

November 15,
2004(1)  to
November 30,
2004

 

 

 

 

 

 

 

 

 

Principal Protection Fund XII
(Number of Shares)

 

 

 

 

 

 

 

Shares sold

 

12,927

 

146,094

 

18,622

 

Dividends reinvested

 

—

 

—

 

—

 

Shares redeemed

 

—

 

—

 

—

 

Net increase in shares outstanding

 

12,927

 

146,094

 

18,622

 

 

 

 

 

 

 

 

 

Principal Protection Fund XII ($)

 

 

 

 

 

 

 

Shares sold

 

$

129,273

 

$

1,460,944

 

$

186,217

 

Dividends reinvested

 

—

 

—

 

—

 

Shares redeemed

 

—

 

—

 

—

 

Net increase

 

$

129,273

 

$

1,460,944

 

$

186,217

 

 

(1) Commencement of operations.

 

NOTE 11 — FEDERAL INCOME TAXES

 

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 investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, organizational and offering expenses, and wash sale deferrals. Distributions in excess of net investment income and/or net realized capital gains for tax purposes are reported as distributions of paid-in capital.

 

Dividends paid by the Funds from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders.

 

The tax composition of dividends and distributions to shareholders were as follows:

 

 

 

Six Months Ended
November 30, 2004

 

 

 

Ordinary
Income

 

Long-term
Capital Gains

 

PPF

 

$

4,411,200

 

$

—

 

PPF II

 

7,426,586

 

—

 

PPF III

 

5,578,324

 

—

 

PPF IV

 

2,663,253

 

2,550,224

 

PPF V

 

3,066,157

 

15,890,935

 

PPF VI

 

2,839,116

 

13,977,806

 

PPF VII

 

1,907,902

 

3,353,252

 

PPF VIII

 

1,440,332

 

1,538,919

 

PPF IX

 

903,753

 

288,785

 

PPF X

 

333,272

 

222,395

 

PPF XI

 

131,765

 

—

 

 

57


 

 

 

Year Ended May 31, 2004

 

 

 

Ordinary
Income

 

Long-term
Capital Gains

 

Principal Protection

 

$

4,941,594

 

$

—

 

Principal Protection II

 

7,764,797

 

—

 

Principal Protection III

 

5,409,645

 

—

 

Principal Protection IV

 

6,816,803

 

29,479

 

Principal Protection V

 

8,244,107

 

—

 

Principal Protection VI

 

3,944,609

 

—

 

Principal Protection VII

 

1,906,632

 

—

 

Principal Protection VIII

 

126,191

 

—

 

 

The tax-basis components of distributable earnings and the expiration dates of the capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes were as follows at May 31, 2004:

 

 

 

Undistributed
Ordinary
Income

 

Undistributed
Long-term
Capital Gain

 

Appreciation
(Depreciation)

 

Post-October
Capital Losses
Deferred

 

Unrealized
Loss
Carryforwards

 

Capital
Expiration
Dates

 

Principal Protection

 

$

1,573,337

 

$

—

 

$

10,757,549

 

$

—

 

$

(14,011,387

)

2011

 

Principal Protection II

 

3,073,676

 

—

 

14,730,582

 

—

 

(31,774,803

)

2011

 

Principal Protection III

 

2,408,613

 

—

 

14,040,216

 

—

 

(20,323,598

)

2011

 

Principal Protection IV

 

1,281,396

 

1,584,238

 

29,643,246

 

—

 

—

 

—

 

Principal Protection V

 

9,186,833

 

4,437,054

 

(4,482,834

)

—

 

—

 

—

 

Principal Protection VI

 

11,066,732

 

1,319,197

 

(6,631,429

)

—

 

—

 

—

 

Principal Protection VII

 

2,340,463

 

2,752

 

(3,784,073

)

—

 

—

 

—

 

Principal Protection VIII

 

1,325,297

 

796

 

(2,342,164

)

—

 

—

 

—

 

Principal Protection IX

 

220,274

 

—

 

(1,014,929

)

(9,848

)

—

 

—

 

Principal Protection X

 

2,363

 

—

 

758

 

—

 

—

 

—

 

 

NOTE 12 — LITIGATION

 

Lawsuits have been filed by certain shareholders on behalf of Principal Protection, Principal Protection II, and Principal Protection IV (the “Funds”) against ING Investments, LLC, the Funds’ Investment Manager, ING IM, the Funds’ Sub-Adviser, ING Funds Distributors, LLC, the Funds’ Distributor and certain of the independent trustees of the Funds (collectively, the “Defendants”) that allege, among other things, that the Funds’ advisory fees, sub-advisory fees and certain 12b-1 fees are excessive. The Funds are named as nominal defendants in each of these suits. The suits seek recovery by the Funds from the Defendants of any fees found to be excessive. The Defendants have advised the Funds that they believe the lawsuits are without merit, and they intend to vigorously defend themselves against the allegations.

 

NOTE 13 — INFORMATION REGARDING TRADING OF ING’S U.S. MUTUAL FUNDS

 

ING Investments, LLC (“Investments”), the adviser to the ING Funds, has reported to the Boards of Directors/Trustees (the “Board”) of the ING Funds that, like many U.S. financial services companies, Investments and certain of its U.S. affiliates have received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. Investments has advised the Board that it and its affiliates have cooperated fully with each request.

 

In addition to responding to regulatory and governmental requests, Investments reported that management of U.S. affiliates of ING Groep N.V., including Investments (collectively, “ING”), on their own initiative, have conducted, through independent special counsel and a national accounting firm, an extensive internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review was to identify any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. ING’s internal review related to mutual fund trading is now substantially completed. ING has reported that, of the millions of customer relationships that ING maintains, the internal review identified several isolated arrangements allowing third parties to engage in frequent trading of mutual funds within ING’s variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred, despite measures taken by ING intended to combat market timing. ING further reported that each of these arrangements has been terminated and fully disclosed to regulators. The results of the internal review were also reported to the independent members of the Board.

 

Investments has advised the Board that most of the identified arrangements were initiated prior to ING’s acquisition of the businesses in question in the

 

58


 

U.S. Investments further reported that the companies in question did not receive special benefits in return for any of these arrangements, which have all been terminated. Based on the internal review, Investments has advised the Board that the identified arrangements do not represent a systemic problem in any of the companies that were involved.

 

More specifically, Investments reported to the Board that, at this time, these instances include the following:

 

•                  ING has identified three arrangements, dating from 1995, 1996 and 1998, under which the administrator to the then-Pilgrim Funds, which subsequently became part of the ING Funds, entered formal and informal arrangements that permitted frequent trading. ING Funds Distributor, LLC (“IFD”) has received a notice from the staff of the NASD informing IFD that it has made a preliminary determination to recommend that disciplinary action be brought against IFD and one of its registered persons for violations of the NASD Conduct Rules and certain provisions of the federal securities laws in connection with these arrangements.

 

•                  Aeltus Investment Management, Inc. (a predecessor entity to ING Investment Management Co.) has identified two investment professionals who engaged in extensive frequent trading in certain ING Funds. One was subsequently terminated for cause and incurred substantial financial penalties in connection with this conduct and the second has been disciplined.

 

•                  ReliaStar Life Insurance Company (“ReliaStar”) entered into agreements seven years ago permitting the owner of policies issued by the insurer to engage in frequent trading and to submit orders until 4pm Central Time. In 2001 ReliaStar also entered into a selling agreement with a broker-dealer that engaged in frequent trading. Employees of ING affiliates were terminated and/or disciplined in connection with these matters.

 

•                  In 1998, Golden American Life Insurance Company entered into arrangements permitting a broker-dealer to frequently trade up to certain specific limits in a fund available in an ING variable annuity product. No employee responsible for this arrangement remains at the company.

 

For additional information regarding these matters, you may consult the Form  8-K for each of four life insurance companies, ING USA Annuity and Life Insurance Company, ING Life Insurance and Annuity Company, ING Insurance Company of America, and ReliaStar Life Insurance Company of New York, each filed with the Securities and Exchange Commission (the “SEC”) on September 9, 2004. These Forms 8-K can be accessed through the SEC’s Web site at http://www.sec.gov. Despite the extensive internal review conducted through independent special counsel and a national accounting firm, there can be no assurance that the instances of inappropriate trading reported to the Board are the only instances of such trading respecting the ING Funds. Investments reported to the Board that ING is committed to conducting its business with the highest standards of ethical conduct with zero tolerance for noncompliance.

 

Accordingly, Investments advised the Board that ING management was disappointed that its voluntary internal review identified these situations. Viewed in the context of the breadth and magnitude of its U.S. business as a whole, ING management does not believe that ING’s acquired companies had systemic ethical or compliance issues in these areas. Nonetheless, Investments reported that given ING’s refusal to tolerate any lapses, it has taken the steps noted below, and will continue to seek opportunities to further strengthen the internal controls of its affiliates.

 

•                  ING has agreed with the ING Funds to indemnify and hold harmless the ING Funds from all damages resulting from wrongful conduct by ING or its employees or from ING’s internal investigation, any investigations conducted by any governmental or self-regulatory agencies, litigation or other formal proceedings, including any proceedings by the Securities and Exchange Commission. Investments reported to the Board that ING management believes that the total amount of any indemnification obligations will not be material to ING or its U.S. business.

 

•                  ING updated its Code of Conduct for employees reinforcing its employees’ obligation to conduct personal trading activity consistent with the law, disclosed limits, and other requirements.

 

•                  The ING Funds, upon a recommendation from ING, updated their respective Codes of Ethics applicable to investment professionals with ING entities and certain other fund personnel, requiring such personnel to pre-clear any purchases or sales of ING Funds that are not systematic in nature (i.e., dividend reinvestment), and imposing minimum holding periods for shares of ING Funds.

 

•                  ING instituted excessive trading policies for all customers in its variable insurance and retirement products and for shareholders of the ING Funds sold to the public through financial intermediaries. ING does not make exceptions to these policies.

 

•                  ING reorganized and expanded its U.S. Compliance Department, and created an Enterprise Compliance team to enhance controls and consistency in regulatory compliance.

 

59


 

ING PRINCIPAL PROTECTION FUND I

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 14.5%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

1,550

 

@

 

Interpublic Group of Cos., Inc.

 

$

19,236

 

650

 

 

 

Omnicom Group, Inc.

 

52,650

 

 

 

 

 

 

 

71,886

 

 

 

 

 

Aerospace/ Defense: 0.3%

 

 

 

4,870

 

 

 

Boeing Co.

 

260,885

 

1,150

 

 

 

General Dynamics Corp.

 

124,614

 

630

 

 

 

Goodrich Corp.

 

20,003

 

1,550

 

 

 

Lockheed Martin Corp.

 

94,302

 

1,100

 

 

 

Northrop Grumman Corp.

 

61,963

 

2,650

 

 

 

Raytheon Co.

 

106,901

 

610

 

 

 

Rockwell Collins, Inc.

 

24,315

 

1,800

 

 

 

United Technologies Corp.

 

175,644

 

 

 

 

 

 

 

868,627

 

 

 

 

 

Agriculture: 0.2%

 

 

 

7,090

 

 

 

Altria Group, Inc.

 

407,604

 

2,170

 

 

 

Archer-Daniels-Midland Co.

 

46,004

 

900

 

 

 

Monsanto Co.

 

41,418

 

500

 

 

 

Reynolds American, Inc.

 

37,815

 

1,050

 

 

 

UST, Inc.

 

46,232

 

 

 

 

 

 

 

579,073

 

 

 

 

 

Apparel: 0.1%

 

 

 

900

 

@

 

Coach, Inc.

 

44,856

 

700

 

 

 

Jones Apparel Group, Inc.

 

24,871

 

610

 

 

 

Liz Claiborne, Inc.

 

25,053

 

1,470

 

 

 

Nike, Inc.

 

124,449

 

260

 

 

 

Reebok Intl. Ltd.

 

10,109

 

650

 

 

 

VF Corp.

 

35,094

 

 

 

 

 

 

 

264,432

 

 

 

 

 

Auto Manufacturers: 0.1%

 

 

 

10,580

 

 

 

Ford Motor Co.

 

150,024

 

1,950

 

 

 

General Motors Corp.

 

75,251

 

900

 

 

 

PACCAR, Inc.

 

70,290

 

 

 

 

 

 

 

295,565

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

600

 

 

 

Dana Corp.

 

9,810

 

630

 

 

 

Johnson Controls, Inc.

 

38,682

 

 

 

 

 

 

 

48,492

 

 

 

 

 

Banks: 1.0%

 

 

 

1,290

 

 

 

AmSouth Bancorporation

 

33,450

 

13,788

 

 

 

Bank of America Corp.

 

637,970

 

1,900

 

 

 

BB&T Corp.

 

80,655

 

800

 

 

 

Comerica, Inc.

 

49,200

 

750

 

 

 

Fifth Third Bancorp

 

37,770

 

430

 

 

 

First Horizon National Corp.

 

18,791

 

980

 

 

 

Huntington Bancshares, Inc.

 

23,775

 

1,580

 

 

 

KeyCorp

 

52,598

 

400

 

 

 

M & T Bank Corp.

 

42,164

 

750

 

 

 

Marshall & Ilsley Corp.

 

31,268

 

1,300

 

 

 

Mellon Financial Corp.

 

37,986

 

3,140

 

 

 

National City Corp.

 

116,431

 

600

 

 

 

North Fork Bancorporation, Inc.

 

17,280

 

750

 

 

 

Northern Trust Corp.

 

35,280

 

940

 

 

 

PNC Financial Services Group, Inc.

 

51,136

 

1,606

 

 

 

Regions Financial Corp.

 

56,194

 

440

 

 

 

State Street Corp.

 

19,606

 

1,220

 

 

 

SunTrust Banks, Inc.

 

86,986

 

400

 

 

 

Synovus Financial Corp.

 

10,800

 

1,050

 

 

 

The Bank of New York Co., Inc.

 

34,556

 

6,330

 

 

 

U.S. Bancorp

 

187,558

 

7,389

 

 

 

Wachovia Corp.

 

382,381

 

5,800

 

 

 

Wells Fargo & Co.

 

358,266

 

340

 

 

 

Zions Bancorporation

 

22,610

 

 

 

 

 

 

 

2,424,711

 

 

 

 

 

Beverages: 0.3%

 

 

 

150

 

 

 

Adolph Coors Co.

 

11,235

 

2,790

 

 

 

Anheuser-Busch Cos., Inc.

 

139,751

 

380

 

 

 

Brown-Forman Corp.

 

18,248

 

8,370

 

 

 

Coca-Cola Co.

 

329,025

 

1,600

 

 

 

Coca-Cola Enterprises, Inc.

 

33,280

 

1,070

 

 

 

Pepsi Bottling Group, Inc.

 

29,981

 

5,830

 

 

 

PepsiCo, Inc.

 

290,975

 

 

 

 

 

 

 

852,495

 

 

 

 

 

Biotechnology: 0.2%

 

 

 

4,362

 

@

 

Amgen, Inc.

 

261,894

 

1,150

 

@

 

Biogen Idec, Inc.

 

67,482

 

800

 

@

 

Genzyme Corp.

 

44,808

 

800

 

@

 

MedImmune, Inc.

 

21,280

 

200

 

@

 

Millipore Corp.

 

9,744

 

 

 

 

 

 

 

405,208

 

 

 

 

 

Building Materials: 0.0%

 

 

 

670

 

@

 

American Standard Cos., Inc.

 

26,090

 

1,400

 

 

 

Masco Corp.

 

49,377

 

450

 

 

 

Vulcan Materials Co.

 

23,333

 

 

 

 

 

 

 

98,800

 

 

 

 

 

Chemicals: 0.2%

 

 

 

750

 

 

 

Air Products & Chemicals, Inc.

 

42,938

 

250

 

 

 

Ashland, Inc.

 

14,788

 

3,350

 

 

 

Dow Chemical Co.

 

169,074

 

3,450

 

 

 

E.I. du Pont de Nemours & Co.

 

156,353

 

300

 

 

 

Eastman Chemical Co.

 

16,314

 

350

 

 

 

Ecolab, Inc.

 

12,243

 

650

 

 

 

Engelhard Corp.

 

19,429

 

340

 

 

 

International Flavors & Fragrances, Inc.

 

13,770

 

1,080

 

 

 

PPG Industries, Inc.

 

72,868

 

1,320

 

 

 

Praxair, Inc.

 

59,268

 

690

 

 

 

Rohm & Haas Co.

 

30,422

 

650

 

 

 

Sherwin-Williams Co.

 

28,990

 

300

 

 

 

Sigma-Aldrich Corp.

 

17,919

 

 

 

 

 

 

 

654,376

 

 

 

 

 

Commercial Services: 0.1%

 

 

 

570

 

@

 

Apollo Group, Inc.

 

45,429

 

3,600

 

 

 

Cendant Corp.

 

81,613

 

150

 

 

 

Deluxe Corp.

 

5,931

 

410

 

 

 

Equifax, Inc.

 

11,324

 

730

 

 

 

H&R Block, Inc.

 

34,821

 

1,000

 

 

 

McKesson Corp.

 

29,550

 

500

 

 

 

Moody’s Corp.

 

40,375

 

1,650

 

 

 

Paychex, Inc.

 

54,714

 

800

 

 

 

R.R. Donnelley & Sons Co.

 

27,760

 

880

 

 

 

Robert Half Intl., Inc.

 

23,786

 

 

 

 

 

 

 

355,303

 

 

 

 

 

Computers: 0.7%

 

 

 

450

 

@

 

Affiliated Computer Services, Inc.

 

26,631

 

2,200

 

@

 

Apple Computer, Inc.

 

147,510

 

650

 

@

 

Computer Sciences Corp.

 

35,165

 

11,350

 

@

 

Dell, Inc.

 

459,902

 

1,800

 

 

 

Electronic Data Systems Corp.

 

40,410

 

8,150

 

@

 

EMC Corp.

 

109,373

 

1,200

 

@

 

Gateway, Inc.

 

8,172

 

10,267

 

 

 

Hewlett-Packard Co.

 

205,340

 

7,620

 

 

 

International Business Machines Corp.

 

718,109

 

420

 

@

 

Lexmark Intl., Inc.

 

35,658

 

 

See Accompanying Notes to Financial Statements

 

60


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

300

 

@

 

NCR Corp.

 

$

17,919

 

1,200

 

@

 

Network Appliance, Inc.

 

36,192

 

19,500

 

@

 

Sun Microsystems, Inc.

 

108,225

 

1,030

 

@

 

Sungard Data Systems, Inc.

 

27,305

 

1,200

 

@

 

Unisys Corp.

 

13,788

 

 

 

 

 

 

 

1,989,699

 

 

 

 

 

Cosmetics/ Personal Care: 0.5%

 

 

 

405

 

 

 

Alberto-Culver Co.

 

18,752

 

1,550

 

 

 

Avon Products, Inc.

 

58,187

 

1,750

 

 

 

Colgate-Palmolive Co.

 

80,483

 

5,750

 

 

 

Gillette Co.

 

250,068

 

2,270

 

 

 

Kimberly-Clark Corp.

 

144,395

 

14,530

 

 

 

Procter & Gamble Co.

 

777,063

 

 

 

 

 

 

 

1,328,948

 

 

 

 

 

Distribution/ Wholesale: 0.0%

 

 

 

550

 

 

 

Genuine Parts Co.

 

23,876

 

550

 

 

 

W.W. Grainger, Inc.

 

34,023

 

 

 

 

 

 

 

57,899

 

 

 

 

 

Diversified Financial Services: 1.1%

 

 

 

4,180

 

 

 

American Express Co.

 

232,867

 

350

 

 

 

Bear Stearns Cos., Inc.

 

34,153

 

790

 

 

 

Capital One Financial Corp.

 

62,078

 

950

 

 

 

CIT Group, Inc.

 

40,613

 

17,550

 

 

 

Citigroup, Inc.

 

785,362

 

3,200

 

 

 

Countrywide Financial Corp.

 

106,272

 

1,350

 

@

 

E*TRADE Financial Corp.

 

18,711

 

3,360

 

 

 

Fannie Mae

 

230,831

 

350

 

 

 

Federated Investors, Inc.

 

10,297

 

850

 

 

 

Franklin Resources, Inc.

 

55,786

 

2,280

 

 

 

Freddie Mac

 

155,633

 

1,650

 

 

 

Goldman Sachs Group, Inc.

 

172,854

 

4,895

 

 

 

J.P. Morgan Chase & Co.

 

184,296

 

850

 

 

 

Janus Capital Group, Inc.

 

14,068

 

950

 

 

 

Lehman Brothers Holdings, Inc.

 

79,591

 

4,205

 

 

 

MBNA Corp.

 

111,685

 

3,210

 

 

 

Merrill Lynch & Co., Inc.

 

178,829

 

1,490

 

 

 

Morgan Stanley

 

75,618

 

900

 

@

 

Providian Financial Corp.

 

14,445

 

1,410

 

 

 

SLM Corp.

 

72,150

 

 

 

 

 

 

 

2,636,139

 

 

 

 

 

Electric: 0.4%

 

 

 

2,100

 

@

 

AES Corp.

 

25,704

 

250

 

 

 

Ameren Corp.

 

12,105

 

1,530

 

 

 

American Electric Power Co., Inc.

 

52,280

 

550

 

 

 

Cinergy Corp.

 

22,765

 

850

 

 

 

Consolidated Edison, Inc.

 

37,273

 

700

 

 

 

Constellation Energy Group, Inc.

 

30,590

 

450

 

 

 

Dominion Resources, Inc.

 

29,462

 

600

 

 

 

DTE Energy Co.

 

26,328

 

4,350

 

 

 

Duke Energy Corp.

 

109,967

 

1,390

 

 

 

Edison Intl

 

44,341

 

750

 

 

 

Entergy Corp.

 

48,615

 

2,340

 

 

 

Exelon Corp.

 

97,600

 

1,100

 

 

 

FirstEnergy Corp.

 

46,453

 

600

 

 

 

FPL Group, Inc.

 

42,198

 

1,480

 

@

 

PG&E Corp.

 

49,225

 

300

 

 

 

Pinnacle West Capital Corp.

 

13,260

 

1,030

 

 

 

PPL Corp.

 

53,509

 

800

 

 

 

Public Service Enterprise Group, Inc.

 

35,192

 

2,490

 

 

 

Southern Co.

 

81,647

 

1,400

 

 

 

TXU Corp.

 

87,948

 

1,850

 

 

 

Xcel Energy, Inc.

 

33,411

 

 

 

 

 

 

 

979,873

 

 

 

 

 

Electrical Components and Equipment: 0.0%

 

 

 

1,910

 

 

 

Emerson Electric Co.

 

127,626

 

 

 

 

 

 

 

127,626

 

 

 

 

 

Electronics: 0.1%

 

 

 

1,550

 

@

 

Agilent Technologies, Inc.

 

35,479

 

730

 

 

 

Applera Corp. — Applied Biosystems Group

 

14,965

 

400

 

@

 

Fisher Scientific Intl

 

22,616

 

580

 

@

 

Jabil Circuit, Inc.

 

14,535

 

400

 

 

 

Parker Hannifin Corp.

 

29,919

 

650

 

 

 

PerkinElmer, Inc.

 

13,865

 

750

 

@

 

Sanmina-SCI Corp.

 

6,623

 

2,650

 

@

 

Solectron Corp.

 

16,563

 

250

 

 

 

Tektronix, Inc.

 

7,843

 

800

 

@

 

Thermo Electron Corp.

 

24,199

 

450

 

@

 

Waters Corp.

 

20,997

 

 

 

 

 

 

 

207,604

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

300

 

 

 

Fluor Corp.

 

15,570

 

 

 

 

 

 

 

15,570

 

 

 

 

 

Entertainment: 0.0%

 

 

 

1,030

 

 

 

International Game Technology

 

36,411

 

 

 

 

 

 

 

36,411

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

1,840

 

 

 

Waste Management, Inc.

 

54,850

 

 

 

 

 

 

 

54,850

 

 

 

 

 

Food: 0.2%

 

 

 

1,300

 

 

 

Albertson’s, Inc.

 

32,890

 

550

 

 

 

Campbell Soup Co.

 

15,692

 

1,750

 

 

 

ConAgra Foods, Inc.

 

47,338

 

1,250

 

 

 

General Mills, Inc.

 

56,863

 

1,170

 

 

 

H.J. Heinz Co.

 

43,477

 

900

 

 

 

Hershey Foods Corp.

 

46,620

 

1,260

 

 

 

Kellogg Co.

 

55,062

 

1,000

 

@

 

Kroger Co.

 

16,180

 

500

 

 

 

McCormick & Co., Inc.

 

18,225

 

2,540

 

 

 

Sara Lee Corp.

 

59,639

 

530

 

 

 

SUPERVALU, Inc.

 

16,743

 

1,000

 

 

 

Wm. Wrigley Jr. Co.

 

68,799

 

 

 

 

 

 

 

477,528

 

 

 

 

 

Forest Products and Paper: 0.1%

 

 

 

900

 

 

 

Georgia-Pacific Corp.

 

32,949

 

1,780

 

 

 

International Paper Co.

 

73,906

 

550

 

 

 

Louisiana-Pacific Corp.

 

13,459

 

700

 

 

 

MeadWestvaco Corp.

 

23,555

 

600

 

 

 

Plum Creek Timber Co., Inc.

 

22,200

 

200

 

 

 

Temple-Inland, Inc.

 

11,918

 

1,200

 

 

 

Weyerhaeuser Co.

 

79,199

 

 

 

 

 

 

 

257,186

 

 

 

 

 

Gas: 0.0%

 

 

 

660

 

 

 

KeySpan Corp.

 

26,083

 

990

 

 

 

Sempra Energy

 

36,610

 

 

 

 

 

 

 

62,693

 

 

See Accompanying Notes to Financial Statements

 

61


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Hand/ Machine Tools: 0.0%

 

 

 

410

 

 

 

Black & Decker Corp.

 

$

34,477

 

140

 

 

 

Snap-On, Inc.

 

4,425

 

410

 

 

 

Stanley Works

 

19,172

 

 

 

 

 

 

 

58,074

 

 

 

 

 

Healthcare — Products: 0.6%

 

 

 

200

 

 

 

Bausch & Lomb, Inc.

 

11,776

 

2,150

 

 

 

Baxter Intl., Inc.

 

68,048

 

1,080

 

 

 

Becton Dickinson & Co.

 

59,162

 

800

 

 

 

Biomet, Inc.

 

38,296

 

2,770

 

@

 

Boston Scientific Corp.

 

96,424

 

540

 

 

 

C.R. Bard, Inc.

 

32,351

 

1,070

 

 

 

Guidant Corp.

 

69,368

 

13,600

 

 

 

Johnson & Johnson

 

820,351

 

4,050

 

 

 

Medtronic, Inc.

 

194,603

 

1,220

 

@

 

St. Jude Medical, Inc.

 

46,531

 

550

 

 

 

Stryker Corp.

 

24,195

 

850

 

@

 

Zimmer Holdings, Inc.

 

69,360

 

 

 

 

 

 

 

1,530,465

 

 

 

 

 

Healthcare — Services: 0.3%

 

 

 

910

 

 

 

Aetna, Inc.

 

107,844

 

750

 

@

 

Humana, Inc.

 

18,615

 

450

 

@

 

Laboratory Corp. Of America Holdings

 

21,578

 

350

 

 

 

Manor Care, Inc.

 

12,058

 

150

 

 

 

Quest Diagnostics, Inc.

 

14,063

 

3,810

 

 

 

UnitedHealth Group, Inc.

 

315,658

 

930

 

@

 

WellPoint Health Networks, Inc.

 

116,342

 

810

 

@

 

WellPoint, Inc.

 

82,077

 

 

 

 

 

 

 

688,235

 

 

 

 

 

Home Builders: 0.0%

 

 

 

460

 

 

 

Centex Corp.

 

24,136

 

 

 

 

 

 

 

24,136

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

640

 

 

 

Leggett & Platt, Inc.

 

19,104

 

370

 

 

 

Whirlpool Corp.

 

23,884

 

 

 

 

 

 

 

42,988

 

 

 

 

 

Household Products/ Wares: 0.0%

 

 

 

350

 

 

 

Avery Dennison Corp.

 

20,531

 

970

 

 

 

Clorox Co.

 

53,467

 

630

 

 

 

Fortune Brands, Inc.

 

49,442

 

 

 

 

 

 

 

123,440

 

 

 

 

 

Housewares: 0.0%

 

 

 

950

 

 

 

Newell Rubbermaid, Inc.

 

21,926

 

 

 

 

 

 

 

21,926

 

 

 

 

 

Insurance: 0.9%

 

 

 

1,540

 

@@

 

ACE Ltd.

 

62,247

 

1,720

 

 

 

AFLAC, Inc.

 

64,706

 

3,250

 

 

 

Allstate Corp.

 

164,125

 

370

 

 

 

AMBAC Financial Group, Inc.

 

30,092

 

14,900

 

 

 

American International Group, Inc.

 

943,916

 

1,000

 

 

 

AON Corp.

 

21,120

 

1,120

 

 

 

Chubb Corp.

 

85,355

 

820

 

 

 

CIGNA Corp.

 

57,416

 

609

 

 

 

Cincinnati Financial Corp.

 

27,283

 

950

 

 

 

Hartford Financial Services Group, Inc.

 

60,800

 

510

 

 

 

Jefferson-Pilot Corp.

 

25,087

 

850

 

 

 

Lincoln National Corp.

 

39,117

 

900

 

 

 

Loews Corp.

 

62,919

 

1,770

 

 

 

Marsh & McLennan Cos., Inc.

 

50,604

 

520

 

 

 

MBIA, Inc.

 

31,179

 

3,400

 

 

 

MetLife, Inc.

 

132,600

 

300

 

 

 

MGIC Investment Corp.

 

20,400

 

1,070

 

 

 

Principal Financial Group

 

40,318

 

660

 

 

 

Progressive Corp.

 

60,053

 

3,020

 

 

 

Prudential Financial, Inc.

 

147,829

 

630

 

 

 

Safeco Corp.

 

30,536

 

480

 

 

 

Torchmark Corp.

 

26,357

 

1,100

 

 

 

UnumProvident Corp.

 

17,127

 

450

 

@@

 

XL Capital Ltd.

 

33,912

 

 

 

 

 

 

 

2,235,098

 

 

 

 

 

Internet: 0.2%

 

 

 

2,150

 

@

 

eBay, Inc.

 

241,767

 

1,750

 

@

 

Symantec Corp.

 

111,668

 

4,450

 

@

 

Yahoo!, Inc.

 

167,409

 

 

 

 

 

 

 

520,844

 

 

 

 

 

Iron/ Steel: 0.0%

 

 

 

500

 

 

 

Nucor Corp.

 

26,450

 

750

 

 

 

United States Steel Corp.

 

39,270

 

 

 

 

 

 

 

65,720

 

 

 

 

 

Leisure Time: 0.1%

 

 

 

340

 

 

 

Brunswick Corp.

 

16,599

 

2,100

 

 

 

Carnival Corp.

 

111,321

 

1,000

 

 

 

Harley-Davidson, Inc.

 

57,820

 

500

 

 

 

Sabre Holdings Corp.

 

11,540

 

 

 

 

 

 

 

197,280

 

 

 

 

 

Lodging: 0.0%

 

 

 

330

 

 

 

Harrah’s Entertainment, Inc.

 

20,262

 

1,230

 

 

 

Hilton Hotels Corp.

 

25,412

 

800

 

 

 

Marriott Intl., Inc.

 

45,479

 

650

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

33,989

 

 

 

 

 

 

 

125,142

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

450

 

 

 

Caterpillar, Inc.

 

41,198

 

 

 

 

 

 

 

41,198

 

 

 

 

 

Machinery — Diversified: 0.0%

 

 

 

880

 

 

 

Deere & Co.

 

63,122

 

790

 

 

 

Rockwell Automation, Inc.

 

37,367

 

 

 

 

 

 

 

100,489

 

 

 

 

 

Media: 0.4%

 

 

 

750

 

 

 

Clear Channel Communications, Inc.

 

25,260

 

7,550

 

@

 

Comcast Corp.

 

226,802

 

910

 

 

 

Gannett Co., Inc.

 

75,066

 

260

 

 

 

Knight-Ridder, Inc.

 

17,703

 

860

 

 

 

McGraw-Hill Cos., Inc.

 

75,448

 

220

 

 

 

Meredith Corp.

 

11,598

 

500

 

 

 

New York Times Co.

 

20,500

 

15,100

 

@

 

Time Warner, Inc.

 

267,422

 

420

 

 

 

Tribune Co.

 

18,215

 

400

 

@

 

Univision Communications, Inc.

 

12,040

 

2,360

 

 

 

Viacom, Inc.

 

81,892

 

7,070

 

 

 

Walt Disney Co.

 

190,042

 

 

 

 

 

 

 

1,021,988

 

 

 

 

 

Mining: 0.0%

 

 

 

470

 

 

 

Phelps Dodge Corp.

 

45,651

 

 

 

 

 

 

 

45,651

 

 

See Accompanying Notes to Financial Statements

 

62


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing: 0.8%

 

 

 

2,650

 

 

 

3M Co.

 

$

210,914

 

260

 

 

 

Cooper Industries Ltd.

 

17,241

 

1,000

 

 

 

Danaher Corp.

 

56,880

 

750

 

 

 

Dover Corp.

 

30,338

 

960

 

 

 

Eastman Kodak Co.

 

31,402

 

480

 

 

 

Eaton Corp.

 

32,352

 

35,780

 

 

 

General Electric Co.

 

1,265,180

 

2,820

 

 

 

Honeywell International, Inc.

 

99,631

 

1,050

 

 

 

Illinois Tool Works, Inc.

 

98,942

 

570

 

@@

 

Ingersoll-Rand Co.

 

42,419

 

250

 

 

 

ITT Industries, Inc.

 

21,280

 

400

 

 

 

Pall Corp.

 

10,836

 

520

 

 

 

Textron, Inc.

 

37,762

 

6,800

 

@@

 

Tyco Intl. Ltd.

 

230,995

 

 

 

 

 

 

 

2,186,172

 

 

 

 

 

Office/ Business Equipment: 0.0%

 

 

 

720

 

 

 

Pitney Bowes, Inc.

 

31,514

 

2,640

 

@

 

Xerox Corp.

 

40,445

 

 

 

 

 

 

 

71,959

 

 

 

 

 

Oil and Gas: 1.2%

 

 

 

280

 

 

 

Amerada Hess Corp.

 

24,878

 

1,050

 

 

 

Anadarko Petroleum Corp.

 

73,080

 

1,094

 

 

 

Apache Corp.

 

59,142

 

2,120

 

 

 

Burlington Resources, Inc.

 

98,389

 

11,150

 

 

 

ChevronTexaco Corp.

 

608,789

 

2,866

 

 

 

ConocoPhillips

 

260,776

 

2,640

 

 

 

Devon Energy Corp.

 

109,349

 

400

 

 

 

EOG Resources, Inc.

 

30,028

 

27,290

 

 

 

Exxon Mobil Corp.

 

1,398,612

 

500

 

 

 

Kerr-McGee Corp.

 

31,115

 

1,370

 

 

 

Marathon Oil Corp.

 

54,033

 

180

 

@,@@

 

Nabors Industries Ltd.

 

9,360

 

450

 

@

 

Noble Corp.

 

21,803

 

1,370

 

 

 

Occidental Petroleum Corp.

 

82,488

 

400

 

 

 

Sunoco, Inc.

 

33,024

 

950

 

@

 

Transocean, Inc.

 

38,257

 

1,000

 

 

 

Unocal Corp.

 

46,040

 

1,200

 

 

 

Valero Energy Corp.

 

56,148

 

 

 

 

 

 

 

3,035,311

 

 

 

 

 

Oil and Gas Services: 0.0%

 

 

 

1,100

 

 

 

Baker Hughes, Inc.

 

48,763

 

500

 

 

 

BJ Services Co.

 

25,335

 

1,350

 

 

 

Halliburton Co.

 

55,823

 

 

 

 

 

 

 

129,921

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

540

 

 

 

Ball Corp.

 

24,153

 

340

 

 

 

Bemis Co.

 

9,466

 

880

 

@

 

Pactiv Corp.

 

21,868

 

250

 

@

 

Sealed Air Corp.

 

12,853

 

 

 

 

 

 

 

68,340

 

 

 

 

 

Pharmaceuticals: 0.8%

 

 

 

5,250

 

 

 

Abbott Laboratories

 

220,290

 

450

 

 

 

Allergan, Inc.

 

33,075

 

350

 

 

 

AmerisourceBergen Corp.

 

20,629

 

6,500

 

 

 

Bristol-Myers Squibb Co.

 

152,750

 

1,500

 

 

 

Cardinal Health, Inc.

 

78,420

 

2,600

 

@

 

Caremark Rx, Inc.

 

92,976

 

1,550

 

 

 

Eli Lilly & Co.

 

82,662

 

250

 

@

 

Express Scripts, Inc.

 

17,990

 

1,210

 

@

 

Forest Laboratories, Inc.

 

47,154

 

1,500

 

@

 

Gilead Sciences, Inc.

 

51,690

 

550

 

@

 

Hospira, Inc.

 

17,727

 

980

 

@

 

King Pharmaceuticals, Inc.

 

12,201

 

949

 

@

 

Medco Health Solutions, Inc.

 

35,796

 

7,600

 

 

 

Merck & Co., Inc.

 

212,952

 

25,634

 

 

 

Pfizer, Inc.

 

711,855

 

4,900

 

 

 

Schering-Plough Corp.

 

87,465

 

4,600

 

 

 

Wyeth

 

183,402

 

 

 

 

 

 

 

2,059,034

 

 

 

 

 

Pipelines: 0.0%

 

 

 

1,850

 

 

 

El Paso Corp.

 

19,314

 

150

 

 

 

Kinder Morgan, Inc.

 

10,395

 

1,750

 

 

 

Williams Cos., Inc.

 

29,173

 

 

 

 

 

 

 

58,882

 

 

 

 

 

Real Estate Investment Trusts: 0.0%

 

 

 

550

 

 

 

Equity Office Properties Trust

 

15,098

 

600

 

 

 

ProLogis

 

24,138

 

710

 

 

 

Simon Property Group, Inc.

 

44,076

 

 

 

 

 

 

 

83,312

 

 

 

 

 

Retail: 1.3%

 

 

 

1,000

 

@

 

Bed Bath & Beyond, Inc.

 

39,928

 

1,100

 

 

 

Best Buy Co., Inc.

 

62,018

 

950

 

 

 

Circuit City Stores, Inc.

 

14,811

 

2,650

 

 

 

Costco Wholesale Corp.

 

128,790

 

1,310

 

 

 

CVS Corp.

 

59,435

 

600

 

 

 

Darden Restaurants, Inc.

 

16,356

 

770

 

 

 

Federated Department Stores, Inc.

 

42,196

 

4,020

 

 

 

Gap, Inc.

 

87,837

 

12,550

 

 

 

Home Depot, Inc.

 

523,962

 

1,600

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

61,760

 

450

 

@

 

Kohl’s Corp.

 

20,772

 

2,130

 

 

 

Limited Brands, Inc.

 

52,057

 

2,670

 

 

 

Lowe’s Cos., Inc.

 

147,731

 

950

 

 

 

May Department Stores Co.

 

26,714

 

4,250

 

 

 

McDonald’s Corp.

 

130,645

 

450

 

 

 

Nordstrom, Inc.

 

19,688

 

1,730

 

@

 

Office Depot, Inc.

 

28,372

 

890

 

 

 

RadioShack Corp.

 

28,097

 

2,220

 

 

 

Staples, Inc.

 

70,840

 

1,350

 

@

 

Starbucks Corp.

 

75,951

 

3,050

 

 

 

Target Corp.

 

156,221

 

1,630

 

 

 

TJX Cos., Inc.

 

38,370

 

950

 

@

 

Toys R US, Inc.

 

18,373

 

14,270

 

 

 

Wal-Mart Stores, Inc.

 

742,895

 

4,700

 

 

 

Walgreen Co.

 

179,446

 

510

 

 

 

Wendy’s Intl., Inc.

 

18,192

 

970

 

 

 

Yum! Brands, Inc.

 

44,038

 

 

 

 

 

 

 

2,835,495

 

 

 

 

 

Savings and Loans: 0.1%

 

 

 

500

 

 

 

Golden West Financial Corp.

 

59,620

 

450

 

 

 

Sovereign Bancorp, Inc.

 

9,833

 

3,120

 

 

 

Washington Mutual, Inc.

 

127,015

 

 

 

 

 

 

 

196,468

 

 

 

 

 

Semiconductors: 0.3%

 

 

 

1,800

 

@

 

Altera Corp.

 

40,824

 

1,240

 

 

 

Analog Devices, Inc.

 

45,818

 

5,740

 

@

 

Applied Materials, Inc.

 

95,514

 

21,850

 

 

 

Intel Corp.

 

488,347

 

650

 

@

 

KLA-Tencor Corp.

 

29,289

 

1,050

 

 

 

Linear Technology Corp.

 

40,068

 

450

 

 

 

Maxim Integrated Products, Inc.

 

18,432

 

1,300

 

@

 

National Semiconductor Corp.

 

20,098

 

2,350

 

 

 

Texas Instruments, Inc.

 

56,823

 

 

 

 

 

 

 

835,213

 

 

 

 

 

Software: 0.7%

 

 

 

810

 

 

 

Adobe Systems, Inc.

 

49,054

 

560

 

 

 

Autodesk, Inc.

 

36,630

 

 

See Accompanying Notes to Financial Statements

 

63


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software (continued)

 

 

 

1,920

 

 

 

Automatic Data Processing, Inc.

 

$

87,418

 

1,210

 

@

 

BMC Software, Inc.

 

22,482

 

850

 

@

 

Citrix Systems, Inc.

 

20,069

 

1,980

 

 

 

Computer Associates Intl., Inc.

 

60,449

 

1,900

 

@

 

Compuware Corp.

 

10,963

 

400

 

@

 

Electronic Arts, Inc.

 

19,560

 

2,824

 

 

 

First Data Corp.

 

116,037

 

760

 

@

 

Fiserv, Inc.

 

29,268

 

1,250

 

 

 

IMS Health, Inc.

 

28,213

 

650

 

@

 

Intuit, Inc.

 

27,196

 

36,850

 

 

 

Microsoft Corp.

 

987,948

 

2,100

 

@

 

Novell, Inc.

 

12,810

 

30,130

 

@

 

Oracle Corp.

 

381,445

 

1,000

 

@

 

PeopleSoft, Inc.

 

23,610

 

2,650

 

@

 

Siebel Systems, Inc.

 

26,712

 

1,380

 

@

 

Veritas Software Corp.

 

30,222

 

 

 

 

 

 

 

1,970,086

 

 

 

 

 

Telecommunications: 1.0%

 

 

 

1,480

 

 

 

Alltel Corp.

 

83,901

 

1,038

 

 

 

AT&T Corp.

 

18,995

 

1,350

 

@

 

Avaya, Inc.

 

22,167

 

6,300

 

 

 

BellSouth Corp.

 

168,966

 

680

 

 

 

CenturyTel, Inc.

 

22,386

 

23,320

 

@

 

Cisco Systems, Inc.

 

436,317

 

800

 

 

 

Citizens Communications Co.

 

11,440

 

710

 

@

 

Comverse Technology, Inc.

 

15,102

 

4,700

 

@

 

Corning, Inc.

 

59,126

 

14,100

 

@

 

Lucent Technologies, Inc.

 

55,413

 

10,750

 

 

 

Motorola, Inc.

 

207,045

 

3,750

 

@

 

Nextel Communications, Inc.

 

106,725

 

5,400

 

 

 

Qualcomm, Inc.

 

224,748

 

6,350

 

@

 

Qwest Communications Intl., Inc.

 

25,400

 

11,400

 

 

 

SBC Communications, Inc.

 

286,938

 

770

 

 

 

Scientific-Atlanta, Inc.

 

22,807

 

4,950

 

 

 

Sprint Corp.

 

112,910

 

1,720

 

@

 

Tellabs, Inc.

 

14,706

 

9,490

 

 

 

Verizon Communications, Inc.

 

391,273

 

 

 

 

 

 

 

2,286,365

 

 

 

 

 

Textiles: 0.0%

 

 

 

550

 

 

 

Cintas Corp.

 

24,596

 

 

 

 

 

 

 

24,596

 

 

 

 

 

Toys/ Games/ Hobbies: 0.0%

 

 

 

920

 

 

 

Hasbro, Inc.

 

17,508

 

1,400

 

 

 

Mattel, Inc.

 

26,530

 

 

 

 

 

 

 

44,038

 

 

 

 

 

Transportation: 0.2%

 

 

 

1,210

 

 

 

Burlington Northern Santa Fe Corp.

 

54,498

 

750

 

 

 

CSX Corp.

 

28,598

 

1,400

 

 

 

FedEx Corp.

 

133,042

 

1,800

 

 

 

Norfolk Southern Corp.

 

61,794

 

270

 

 

 

Ryder System, Inc.

 

14,483

 

350

 

 

 

Union Pacific Corp.

 

22,204

 

3,880

 

 

 

United Parcel Service, Inc.

 

326,502

 

 

 

 

 

 

 

641,121

 

 

 

 

 

Total Common Stock
(Cost $29,625,827)

 

38,519,981

 

 

Principal
Amount

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 72.6%

 

 

 

 

 

 

 

Federal National Mortgage Association: 72.6%

 

 

 

$

5,000,000

 

 

 

3.320%, due 07/24/06, STRIP

 

$

4,738,175

 

200,000,000

 

 

 

3.390%, due 10/11/06

 

187,956,200

 

 

 

 

 

 

 

 

 

 

 

 

 

Total U.S. Government Agency Obligations (Cost $188,720,865)

 

192,694,375

 

 

 

 

 

 

 

 

 

U.S. TREASURY OBLIGATIONS: 12.9%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 12.9%

 

 

 

16,863,000

 

 

 

2.880%, due 05/15/06

 

16,180,200

 

19,394,000

 

 

 

3.090%, due 02/15/07

 

18,137,560

 

 

 

 

 

 

 

 

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $34,050,509)

 

34,317,760

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Long-Term Investments
(Cost $252,397,201)

 

265,532,116

 

 

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS: 0.4%

 

 

 

 

 

 

 

Repurchase Agreement: 0.4%

 

 

 

1,193,000

 

 

 

Goldman Sachs Repurchase Agreement dated 11/30/04, 2.060% due 12/01/04, $1,193,068 to be received upon repurchase (Collateralized by $1,151,000 Federal Home Loan Mortgage Corporation, 5.500%, Market Value plus accrued interest $1,217,902, due 07/15/06)

 

1,193,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Short-Term Investments
(Cost $1,193,000)

 

1,193,000

 

 

 

 

 

 

 

 

 

 

 

Total Investments In Securities
(Cost $253,590,201)*

 

100.4

%

$

266,725,116

 

 

 

Other Assets and Liabilities-Net

 

(0.4

)

(1,049,418

)

 

 

 

 

 

 

 

 

 

 

Net Assets

 

100.0

%

$

265,675,698

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $256,854,085. Net unrealized appreciation consists of:

 

Gross Unrealized Appreciation

 

$

10,354,760

 

Gross Unrealized Depreciation

 

(483,729

)

Net Unrealized Appreciation

 

$

9,871,031

 

 

See Accompanying Notes to Financial Statements

 

64


 

ING PRINCIPAL PROTECTION FUND II

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 9.1%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

450

 

@

 

Interpublic Group of Cos., Inc.

 

$

5,585

 

550

 

 

 

Omnicom Group, Inc.

 

44,550

 

 

 

 

 

 

 

50,135

 

 

 

 

 

Aerospace/Defense: 0.2%

 

 

 

4,370

 

 

 

Boeing Co.

 

234,101

 

1,000

 

 

 

General Dynamics Corp.

 

108,360

 

330

 

 

 

Goodrich Corp.

 

10,478

 

1,360

 

 

 

Lockheed Martin Corp.

 

82,742

 

1,100

 

 

 

Northrop Grumman Corp.

 

61,963

 

2,400

 

 

 

Raytheon Co.

 

96,816

 

540

 

 

 

Rockwell Collins, Inc.

 

21,524

 

1,590

 

 

 

United Technologies Corp.

 

155,152

 

 

 

 

 

 

 

771,136

 

 

 

 

 

Agriculture: 0.1%

 

 

 

6,370

 

 

 

Altria Group, Inc.

 

366,211

 

1,950

 

 

 

Archer-Daniels-Midland Co.

 

41,340

 

850

 

 

 

Monsanto Co.

 

39,117

 

450

 

 

 

Reynolds American, Inc.

 

34,034

 

900

 

 

 

UST, Inc.

 

39,627

 

 

 

 

 

 

 

520,329

 

 

 

 

 

Apparel: 0.1%

 

 

 

800

 

@

 

Coach, Inc.

 

39,872

 

600

 

 

 

Jones Apparel Group, Inc.

 

21,318

 

530

 

 

 

Liz Claiborne, Inc.

 

21,767

 

1,330

 

 

 

Nike, Inc.

 

112,597

 

250

 

 

 

Reebok Intl. Ltd.

 

9,720

 

550

 

 

 

VF Corp.

 

29,695

 

 

 

 

 

 

 

234,969

 

 

 

 

 

Auto Manufacturers: 0.1%

 

 

 

9,490

 

 

 

Ford Motor Co.

 

134,568

 

1,750

 

 

 

General Motors Corp.

 

67,533

 

840

 

 

 

PACCAR, Inc.

 

65,604

 

 

 

 

 

 

 

267,705

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

550

 

 

 

Dana Corp.

 

8,993

 

570

 

 

 

Johnson Controls, Inc.

 

34,998

 

 

 

 

 

 

 

43,991

 

 

 

 

 

Banks: 0.6%

 

 

 

1,100

 

 

 

AmSouth Bancorporation

 

28,523

 

12,288

 

 

 

Bank of America Corp.

 

568,566

 

1,700

 

 

 

BB&T Corp.

 

72,165

 

750

 

 

 

Comerica, Inc.

 

46,125

 

700

 

 

 

Fifth Third Bancorp

 

35,252

 

480

 

 

 

First Horizon National Corp.

 

20,976

 

870

 

 

 

Huntington Bancshares, Inc.

 

21,106

 

1,730

 

 

 

KeyCorp

 

57,592

 

350

 

 

 

M & T Bank Corp.

 

36,894

 

860

 

 

 

Marshall & Ilsley Corp.

 

35,853

 

1,200

 

 

 

Mellon Financial Corp.

 

35,064

 

2,800

 

 

 

National City Corp.

 

103,824

 

600

 

 

 

North Fork Bancorporation, Inc.

 

17,280

 

650

 

 

 

Northern Trust Corp.

 

30,576

 

820

 

 

 

PNC Financial Services Group, Inc.

 

44,608

 

1,414

 

 

 

Regions Financial Corp.

 

49,476

 

390

 

 

 

State Street Corp.

 

17,378

 

1,100

 

 

 

SunTrust Banks, Inc.

 

78,430

 

400

 

 

 

Synovus Financial Corp.

 

10,800

 

950

 

 

 

The Bank of New York Co., Inc.

 

31,265

 

5,680

 

 

 

U.S. Bancorp

 

168,298

 

6,620

 

 

 

Wachovia Corp.

 

342,585

 

5,200

 

 

 

Wells Fargo & Co.

 

321,204

 

120

 

 

 

Zions Bancorporation

 

7,980

 

 

 

 

 

 

 

2,181,820

 

 

 

 

 

Beverages: 0.2%

 

 

 

150

 

 

 

Adolph Coors Co.

 

11,235

 

2,500

 

 

 

Anheuser-Busch Cos., Inc.

 

125,225

 

340

 

 

 

Brown-Forman Corp.

 

16,327

 

7,490

 

 

 

Coca-Cola Co.

 

294,433

 

1,430

 

 

 

Coca-Cola Enterprises, Inc.

 

29,744

 

1,120

 

 

 

Pepsi Bottling Group, Inc.

 

31,382

 

5,240

 

 

 

PepsiCo, Inc.

 

261,528

 

 

 

 

 

 

 

769,874

 

 

 

 

 

Biotechnology: 0.1%

 

 

 

3,918

 

@

 

Amgen, Inc.

 

235,237

 

1,000

 

@

 

Biogen Idec, Inc.

 

58,680

 

700

 

@

 

Genzyme Corp.

 

39,207

 

700

 

@

 

MedImmune, Inc.

 

18,620

 

200

 

@

 

Millipore Corp.

 

9,744

 

 

 

 

 

 

 

361,488

 

 

 

 

 

Building Materials: 0.0%

 

 

 

920

 

@

 

American Standard Cos., Inc.

 

35,825

 

1,300

 

 

 

Masco Corp.

 

45,851

 

400

 

 

 

Vulcan Materials Co.

 

20,740

 

 

 

 

 

 

 

102,416

 

 

 

 

 

Chemicals: 0.2%

 

 

 

700

 

 

 

Air Products & Chemicals, Inc.

 

40,075

 

250

 

 

 

Ashland, Inc.

 

14,788

 

3,000

 

 

 

Dow Chemical Co.

 

151,409

 

3,100

 

 

 

E.I. du Pont de Nemours & Co.

 

140,492

 

250

 

 

 

Eastman Chemical Co.

 

13,595

 

330

 

 

 

Ecolab, Inc.

 

11,543

 

550

 

 

 

Engelhard Corp.

 

16,440

 

430

 

 

 

International Flavors & Fragrances, Inc.

 

17,415

 

970

 

 

 

PPG Industries, Inc.

 

65,446

 

980

 

 

 

Praxair, Inc.

 

44,002

 

610

 

 

 

Rohm & Haas Co.

 

26,895

 

650

 

 

 

Sherwin-Williams Co.

 

28,990

 

250

 

 

 

Sigma-Aldrich Corp.

 

14,933

 

 

 

 

 

 

 

586,023

 

 

 

 

 

Commercial Services: 0.1%

 

 

 

500

 

@

 

Apollo Group, Inc.

 

39,850

 

3,250

 

 

 

Cendant Corp.

 

73,677

 

120

 

 

 

Deluxe Corp.

 

4,745

 

560

 

 

 

Equifax, Inc.

 

15,467

 

670

 

 

 

H&R Block, Inc.

 

31,959

 

900

 

 

 

McKesson Corp.

 

26,595

 

450

 

 

 

Moody’s Corp.

 

36,338

 

1,150

 

 

 

Paychex, Inc.

 

38,134

 

400

 

 

 

R.R. Donnelley & Sons Co.

 

13,880

 

790

 

 

 

Robert Half Intl., Inc.

 

21,354

 

 

 

 

 

 

 

301,999

 

 

 

 

 

Computers: 0.5%

 

 

 

400

 

@

 

Affiliated Computer Services, Inc.

 

23,672

 

1,950

 

@

 

Apple Computer, Inc.

 

130,748

 

600

 

@

 

Computer Sciences Corp.

 

32,460

 

10,230

 

@

 

Dell, Inc.

 

414,519

 

1,600

 

 

 

Electronic Data Systems Corp.

 

35,920

 

7,300

 

@

 

EMC Corp.

 

97,966

 

1,050

 

@

 

Gateway, Inc.

 

7,151

 

9,302

 

 

 

Hewlett-Packard Co.

 

186,040

 

6,890

 

 

 

International Business Machines Corp.

 

649,313

 

370

 

@

 

Lexmark Intl., Inc.

 

31,413

 

 

See Accompanying Notes to Financial Statements

 

65


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

450

 

@

 

NCR Corp.

 

$

26,879

 

1,050

 

@

 

Network Appliance, Inc.

 

31,668

 

17,550

 

@

 

Sun Microsystems, Inc.

 

97,403

 

940

 

@

 

Sungard Data Systems, Inc.

 

24,919

 

1,100

 

@

 

Unisys Corp.

 

12,639

 

 

 

 

 

 

 

1,802,710

 

 

 

 

 

Cosmetics/Personal Care: 0.3%

 

 

 

375

 

 

 

Alberto-Culver Co.

 

17,363

 

1,400

 

 

 

Avon Products, Inc.

 

52,556

 

1,550

 

 

 

Colgate-Palmolive Co.

 

71,285

 

5,170

 

 

 

Gillette Co.

 

224,843

 

2,050

 

 

 

Kimberly-Clark Corp.

 

130,401

 

13,110

 

 

 

Procter & Gamble Co.

 

701,122

 

 

 

 

 

 

 

1,197,570

 

 

 

 

 

Distribution/Wholesale: 0.0%

 

 

 

500

 

 

 

Genuine Parts Co.

 

21,705

 

500

 

 

 

W.W. Grainger, Inc.

 

30,930

 

 

 

 

 

 

 

52,635

 

 

 

 

 

Diversified Financial Services: 0.7%

 

 

 

3,920

 

 

 

American Express Co.

 

218,382

 

330

 

 

 

Bear Stearns Cos., Inc.

 

32,201

 

690

 

 

 

Capital One Financial Corp.

 

54,220

 

900

 

 

 

CIT Group, Inc.

 

38,475

 

15,750

 

 

 

Citigroup, Inc.

 

704,812

 

2,860

 

 

 

Countrywide Financial Corp.

 

94,981

 

1,200

 

@

 

E*TRADE Financial Corp.

 

16,632

 

2,980

 

 

 

Fannie Mae

 

204,725

 

300

 

 

 

Federated Investors, Inc.

 

8,826

 

750

 

 

 

Franklin Resources, Inc.

 

49,223

 

2,040

 

 

 

Freddie Mac

 

139,250

 

1,500

 

 

 

Goldman Sachs Group, Inc.

 

157,140

 

4,394

 

 

 

J.P. Morgan Chase & Co.

 

165,434

 

750

 

 

 

Janus Capital Group, Inc.

 

12,413

 

840

 

 

 

Lehman Brothers Holdings, Inc.

 

70,375

 

3,775

 

 

 

MBNA Corp.

 

100,264

 

2,860

 

 

 

Merrill Lynch & Co., Inc.

 

159,331

 

1,350

 

 

 

Morgan Stanley

 

68,513

 

900

 

@

 

Providian Financial Corp.

 

14,445

 

1,410

 

 

 

SLM Corp.

 

72,150

 

 

 

 

 

 

 

2,381,792

 

 

 

 

 

Electric: 0.2%

 

 

 

1,900

 

@

 

AES Corp.

 

23,256

 

250

 

 

 

Ameren Corp.

 

12,105

 

1,400

 

 

 

American Electric Power Co., Inc.

 

47,838

 

250

 

 

 

Cinergy Corp.

 

10,348

 

750

 

 

 

Consolidated Edison, Inc.

 

32,888

 

700

 

 

 

Constellation Energy Group, Inc.

 

30,590

 

400

 

 

 

Dominion Resources, Inc.

 

26,188

 

550

 

 

 

DTE Energy Co.

 

24,134

 

3,900

 

 

 

Duke Energy Corp.

 

98,591

 

1,240

 

 

 

Edison Intl.

 

39,556

 

700

 

 

 

Entergy Corp.

 

45,374

 

2,000

 

 

 

Exelon Corp.

 

83,420

 

1,000

 

 

 

FirstEnergy Corp.

 

42,230

 

680

 

 

 

FPL Group, Inc.

 

47,824

 

1,300

 

@

 

PG&E Corp.

 

43,238

 

250

 

 

 

Pinnacle West Capital Corp.

 

11,050

 

810

 

 

 

PPL Corp.

 

42,080

 

750

 

 

 

Public Service Enterprise Group, Inc.

 

32,993

 

2,260

 

 

 

Southern Co.

 

74,105

 

1,250

 

 

 

TXU Corp.

 

78,525

 

1,650

 

 

 

Xcel Energy, Inc.

 

29,799

 

 

 

 

 

 

 

876,132

 

 

 

 

 

Electrical Components and Equipment: 0.0%

 

 

 

1,730

 

 

 

Emerson Electric Co.

 

115,599

 

 

 

 

 

 

 

115,599

 

 

 

 

 

Electronics: 0.1%

 

 

 

1,400

 

@

 

Agilent Technologies, Inc.

 

32,045

 

590

 

 

 

Applera Corp. — Applied Biosystems Group

 

12,095

 

350

 

@

 

Fisher Scientific Intl.

 

19,789

 

540

 

@

 

Jabil Circuit, Inc.

 

13,532

 

400

 

 

 

Parker Hannifin Corp.

 

29,920

 

550

 

 

 

PerkinElmer, Inc.

 

11,732

 

700

 

@

 

Sanmina-SCI Corp.

 

6,181

 

2,350

 

@

 

Solectron Corp.

 

14,688

 

350

 

 

 

Tektronix, Inc.

 

10,980

 

700

 

@

 

Thermo Electron Corp.

 

21,175

 

400

 

@

 

Waters Corp.

 

18,664

 

 

 

 

 

 

 

190,801

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

300

 

 

 

Fluor Corp.

 

15,570

 

 

 

 

 

 

 

15,570

 

 

 

 

 

Entertainment: 0.0%

 

 

 

1,080

 

 

 

International Game Technology

 

38,178

 

 

 

 

 

 

 

38,178

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

1,880

 

 

 

Waste Management, Inc.

 

56,043

 

 

 

 

 

 

 

56,043

 

 

 

 

 

Food: 0.1%

 

 

 

1,150

 

 

 

Albertson’s, Inc.

 

29,095

 

500

 

 

 

Campbell Soup Co.

 

14,265

 

1,550

 

 

 

ConAgra Foods, Inc.

 

41,928

 

1,150

 

 

 

General Mills, Inc.

 

52,313

 

1,050

 

 

 

H.J. Heinz Co.

 

39,018

 

800

 

 

 

Hershey Foods Corp.

 

41,440

 

1,120

 

 

 

Kellogg Co.

 

48,944

 

900

 

@

 

Kroger Co.

 

14,562

 

450

 

 

 

McCormick & Co., Inc.

 

16,403

 

2,220

 

 

 

Sara Lee Corp.

 

52,126

 

510

 

 

 

SUPERVALU, Inc.

 

16,111

 

900

 

 

 

Wm. Wrigley Jr. Co.

 

61,919

 

 

 

 

 

 

 

428,124

 

 

 

 

 

Forest Products and Paper: 0.1%

 

 

 

800

 

 

 

Georgia-Pacific Corp.

 

29,288

 

1,590

 

 

 

International Paper Co.

 

66,017

 

500

 

 

 

Louisiana-Pacific Corp.

 

12,235

 

600

 

 

 

MeadWestvaco Corp.

 

20,190

 

600

 

 

 

Plum Creek Timber Co., Inc.

 

22,200

 

250

 

 

 

Temple-Inland, Inc.

 

14,898

 

1,050

 

 

 

Weyerhaeuser Co.

 

69,299

 

 

 

 

 

 

 

234,127

 

 

 

 

 

Gas: 0.0%

 

 

 

570

 

 

 

KeySpan Corp.

 

22,526

 

860

 

 

 

Sempra Energy

 

31,803

 

 

 

 

 

 

 

54,329

 

 

See Accompanying Notes to Financial Statements

 

66


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Hand/Machine Tools: 0.0%

 

 

 

400

 

 

 

Black & Decker Corp.

 

$

33,636

 

120

 

 

 

Snap-On, Inc.

 

3,793

 

380

 

 

 

Stanley Works

 

17,769

 

 

 

 

 

 

 

55,198

 

 

 

 

 

Healthcare — Products: 0.4%

 

 

 

150

 

 

 

Bausch & Lomb, Inc.

 

8,832

 

1,900

 

 

 

Baxter Intl., Inc.

 

60,135

 

1,010

 

 

 

Becton Dickinson & Co.

 

55,328

 

750

 

 

 

Biomet, Inc.

 

35,903

 

2,480

 

@

 

Boston Scientific Corp.

 

86,329

 

400

 

 

 

C.R. Bard, Inc.

 

23,964

 

990

 

 

 

Guidant Corp.

 

64,182

 

12,200

 

 

 

Johnson & Johnson

 

735,903

 

3,600

 

 

 

Medtronic, Inc.

 

172,980

 

1,020

 

@

 

St. Jude Medical, Inc.

 

38,903

 

500

 

 

 

Stryker Corp.

 

21,995

 

750

 

@

 

Zimmer Holdings, Inc.

 

61,200

 

 

 

 

 

 

 

1,365,654

 

 

 

 

 

Healthcare — Services: 0.2%

 

 

 

810

 

 

 

Aetna, Inc.

 

95,993

 

750

 

@

 

Humana, Inc.

 

18,615

 

400

 

@

 

Laboratory Corp. Of America Holdings

 

19,180

 

300

 

 

 

Manor Care, Inc.

 

10,335

 

100

 

 

 

Quest Diagnostics, Inc.

 

9,375

 

3,430

 

 

 

UnitedHealth Group, Inc.

 

284,176

 

760

 

@

 

WellPoint Health Networks, Inc.

 

95,076

 

700

 

@

 

WellPoint, Inc.

 

70,931

 

 

 

 

 

 

 

603,681

 

 

 

 

 

Home Builders: 0.0%

 

 

 

390

 

 

 

Centex Corp.

 

20,463

 

 

 

 

 

 

 

20,463

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

650

 

 

 

Leggett & Platt, Inc.

 

19,403

 

300

 

 

 

Whirlpool Corp.

 

19,365

 

 

 

 

 

 

 

38,768

 

 

 

 

 

Household Products/Wares: 0.0%

 

 

 

300

 

 

 

Avery Dennison Corp.

 

17,598

 

870

 

 

 

Clorox Co.

 

47,954

 

510

 

 

 

Fortune Brands, Inc.

 

40,025

 

 

 

 

 

 

 

105,577

 

 

 

 

 

Housewares: 0.0%

 

 

 

850

 

 

 

Newell Rubbermaid, Inc.

 

19,618

 

 

 

 

 

 

 

19,618

 

 

 

 

 

Insurance: 0.5%

 

 

 

1,370

 

@@

 

ACE Ltd.

 

55,375

 

1,550

 

 

 

AFLAC, Inc.

 

58,311

 

2,900

 

 

 

Allstate Corp.

 

146,450

 

300

 

 

 

AMBAC Financial Group, Inc.

 

24,399

 

13,450

 

 

 

American International Group, Inc.

 

852,058

 

1,000

 

 

 

AON Corp.

 

21,120

 

1,010

 

 

 

Chubb Corp.

 

76,972

 

740

 

 

 

CIGNA Corp.

 

51,815

 

525

 

 

 

Cincinnati Financial Corp.

 

23,520

 

850

 

 

 

Hartford Financial Services Group, Inc.

 

54,400

 

460

 

 

 

Jefferson-Pilot Corp.

 

22,627

 

750

 

 

 

Lincoln National Corp.

 

34,515

 

800

 

 

 

Loews Corp.

 

55,928

 

1,560

 

 

 

Marsh & McLennan Cos., Inc.

 

44,600

 

470

 

 

 

MBIA, Inc.

 

28,181

 

3,100

 

 

 

MetLife, Inc.

 

120,900

 

450

 

 

 

MGIC Investment Corp.

 

30,600

 

970

 

 

 

Principal Financial Group

 

36,550

 

590

 

 

 

Progressive Corp.

 

53,684

 

2,700

 

 

 

Prudential Financial, Inc.

 

132,165

 

580

 

 

 

Safeco Corp.

 

28,113

 

520

 

 

 

Torchmark Corp.

 

28,553

 

1,000

 

 

 

UnumProvident Corp.

 

15,570

 

550

 

@@

 

XL Capital Ltd.

 

41,448

 

 

 

 

 

 

 

2,037,854

 

 

 

 

 

Internet: 0.1%

 

 

 

2,050

 

@

 

eBay, Inc.

 

230,522

 

1,550

 

@

 

Symantec Corp.

 

98,906

 

3,950

 

@

 

Yahoo!, Inc.

 

148,599

 

 

 

 

 

 

 

478,027

 

 

 

 

 

Iron/Steel: 0.0%

 

 

 

500

 

 

 

Nucor Corp.

 

26,450

 

400

 

 

 

United States Steel Corp.

 

20,944

 

 

 

 

 

 

 

47,394

 

 

 

 

 

Leisure Time: 0.0%

 

 

 

360

 

 

 

Brunswick Corp.

 

17,575

 

1,900

 

 

 

Carnival Corp.

 

100,719

 

930

 

 

 

Harley-Davidson, Inc.

 

53,773

 

450

 

 

 

Sabre Holdings Corp.

 

10,386

 

 

 

 

 

 

 

182,453

 

 

 

 

 

Lodging: 0.0%

 

 

 

320

 

 

 

Harrah’s Entertainment, Inc.

 

19,648

 

1,100

 

 

 

Hilton Hotels Corp.

 

22,726

 

700

 

 

 

Marriott Intl., Inc.

 

39,795

 

600

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

31,374

 

 

 

 

 

 

 

113,543

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

400

 

 

 

Caterpillar, Inc.

 

36,620

 

 

 

 

 

 

 

36,620

 

 

 

 

 

Machinery — Diversified: 0.0%

 

 

 

150

 

 

 

Cummins, Inc.

 

11,943

 

780

 

 

 

Deere & Co.

 

55,949

 

780

 

 

 

Rockwell Automation, Inc.

 

36,894

 

 

 

 

 

 

 

104,786

 

 

 

 

 

Media: 0.2%

 

 

 

700

 

 

 

Clear Channel Communications, Inc.

 

23,576

 

6,800

 

@

 

Comcast Corp.

 

204,272

 

790

 

 

 

Gannett Co., Inc.

 

65,167

 

200

 

 

 

Knight-Ridder, Inc.

 

13,618

 

760

 

 

 

McGraw-Hill Cos., Inc.

 

66,675

 

190

 

 

 

Meredith Corp.

 

10,017

 

450

 

 

 

New York Times Co.

 

18,450

 

13,500

 

@

 

Time Warner, Inc.

 

239,085

 

390

 

 

 

Tribune Co.

 

16,914

 

400

 

@

 

Univision Communications, Inc.

 

12,040

 

2,100

 

 

 

Viacom, Inc.

 

72,870

 

6,180

 

 

 

Walt Disney Co.

 

166,118

 

 

 

 

 

 

 

908,802

 

 

 

 

 

Mining: 0.0%

 

 

 

440

 

 

 

Phelps Dodge Corp.

 

42,737

 

 

 

 

 

 

 

42,737

 

 

See Accompanying Notes to Financial Statements

 

67


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing: 0.5%

 

 

 

2,370

 

 

 

3M Co.

 

$

188,628

 

250

 

 

 

Cooper Industries Ltd.

 

16,578

 

900

 

 

 

Danaher Corp.

 

51,192

 

650

 

 

 

Dover Corp.

 

26,293

 

850

 

 

 

Eastman Kodak Co.

 

27,804

 

450

 

 

 

Eaton Corp.

 

30,330

 

32,020

 

 

 

General Electric Co.

 

1,132,226

 

2,580

 

 

 

Honeywell International, Inc.

 

91,151

 

880

 

 

 

Illinois Tool Works, Inc.

 

82,922

 

490

 

@@

 

Ingersoll-Rand Co.

 

36,466

 

230

 

 

 

ITT Industries, Inc.

 

19,578

 

350

 

 

 

Pall Corp.

 

9,482

 

530

 

 

 

Textron, Inc.

 

38,489

 

6,150

 

@@

 

Tyco Intl. Ltd.

 

208,915

 

 

 

 

 

 

 

1,960,054

 

 

 

 

 

Office/Business Equipment: 0.0%

 

 

 

680

 

 

 

Pitney Bowes, Inc.

 

29,764

 

2,820

 

@

 

Xerox Corp.

 

43,202

 

 

 

 

 

 

 

72,966

 

 

 

 

 

Oil and Gas: 0.8%

 

 

 

260

 

 

 

Amerada Hess Corp.

 

23,101

 

950

 

 

 

Anadarko Petroleum Corp.

 

66,120

 

980

 

 

 

Apache Corp.

 

52,979

 

1,930

 

 

 

Burlington Resources, Inc.

 

89,571

 

10,050

 

 

 

ChevronTexaco Corp.

 

548,729

 

2,576

 

 

 

ConocoPhillips

 

234,389

 

2,400

 

 

 

Devon Energy Corp.

 

99,408

 

350

 

 

 

EOG Resources, Inc.

 

26,275

 

24,580

 

 

 

Exxon Mobil Corp.

 

1,259,724

 

500

 

 

 

Kerr-McGee Corp.

 

31,115

 

990

 

 

 

Marathon Oil Corp.

 

39,046

 

140

 

@,@@

 

Nabors Industries Ltd.

 

7,280

 

450

 

@

 

Noble Corp.

 

21,803

 

1,220

 

 

 

Occidental Petroleum Corp.

 

73,456

 

350

 

 

 

Sunoco, Inc.

 

28,896

 

850

 

@

 

Transocean, Inc.

 

34,230

 

820

 

 

 

Unocal Corp.

 

37,753

 

1,300

 

 

 

Valero Energy Corp.

 

60,827

 

 

 

 

 

 

 

2,734,702

 

 

 

 

 

Oil and Gas Services: 0.0%

 

 

 

1,000

 

 

 

Baker Hughes, Inc.

 

44,330

 

450

 

 

 

BJ Services Co.

 

22,802

 

1,250

 

 

 

Halliburton Co.

 

51,687

 

 

 

 

 

 

 

118,819

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

300

 

 

 

Ball Corp.

 

13,419

 

280

 

 

 

Bemis Co.

 

7,795

 

610

 

@

 

Pactiv Corp.

 

15,159

 

450

 

@

 

Sealed Air Corp.

 

23,134

 

 

 

 

 

 

 

59,507

 

 

 

 

 

Pharmaceuticals: 0.5%

 

 

 

4,700

 

 

 

Abbott Laboratories

 

197,212

 

400

 

 

 

Allergan, Inc.

 

29,400

 

300

 

 

 

AmerisourceBergen Corp.

 

17,682

 

5,800

 

 

 

Bristol-Myers Squibb Co.

 

136,300

 

1,350

 

 

 

Cardinal Health, Inc.

 

70,578

 

2,350

 

@

 

Caremark Rx, Inc.

 

84,036

 

1,400

 

 

 

Eli Lilly & Co.

 

74,662

 

250

 

@

 

Express Scripts, Inc.

 

17,990

 

1,080

 

@

 

Forest Laboratories, Inc.

 

42,088

 

1,300

 

@

 

Gilead Sciences, Inc.

 

44,798

 

500

 

@

 

Hospira, Inc.

 

16,115

 

890

 

@

 

King Pharmaceuticals, Inc.

 

11,081

 

862

 

@

 

Medco Health Solutions, Inc.

 

32,515

 

6,860

 

 

 

Merck & Co., Inc.

 

192,217

 

23,046

 

 

 

Pfizer, Inc.

 

639,986

 

4,400

 

 

 

Schering-Plough Corp.

 

78,540

 

3,950

 

 

 

Wyeth

 

157,487

 

 

 

 

 

 

 

1,842,687

 

 

 

 

 

Pipelines: 0.0%

 

 

 

1,650

 

 

 

El Paso Corp.

 

17,226

 

150

 

 

 

Kinder Morgan, Inc.

 

10,395

 

1,600

 

 

 

Williams Cos., Inc.

 

26,672

 

 

 

 

 

 

 

54,293

 

 

 

 

 

Real Estate Investment Trusts: 0.0%

 

 

 

500

 

 

 

Equity Office Properties Trust

 

13,725

 

550

 

 

 

ProLogis

 

22,127

 

640

 

 

 

Simon Property Group, Inc.

 

39,731

 

 

 

 

 

 

 

75,583

 

 

 

 

 

Retail: 0.8%

 

 

 

910

 

@

 

Bed Bath & Beyond, Inc.

 

36,334

 

950

 

 

 

Best Buy Co., Inc.

 

53,561

 

850

 

 

 

Circuit City Stores, Inc.

 

13,252

 

2,400

 

 

 

Costco Wholesale Corp.

 

116,640

 

1,200

 

 

 

CVS Corp.

 

54,444

 

550

 

 

 

Darden Restaurants, Inc.

 

14,993

 

680

 

 

 

Federated Department Stores, Inc.

 

37,264

 

3,620

 

 

 

Gap, Inc.

 

79,097

 

11,300

 

 

 

Home Depot, Inc.

 

471,775

 

1,450

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

55,970

 

400

 

@

 

Kohl’s Corp.

 

18,464

 

1,910

 

 

 

Limited Brands, Inc.

 

46,680

 

2,430

 

 

 

Lowe’s Cos., Inc.

 

134,452

 

850

 

 

 

May Department Stores Co.

 

23,902

 

3,850

 

 

 

McDonald’s Corp.

 

118,349

 

400

 

 

 

Nordstrom, Inc.

 

17,500

 

1,450

 

@

 

Office Depot, Inc.

 

23,780

 

800

 

 

 

RadioShack Corp.

 

25,256

 

2,020

 

 

 

Staples, Inc.

 

64,458

 

1,210

 

@

 

Starbucks Corp.

 

68,075

 

2,750

 

 

 

Target Corp.

 

140,855

 

1,460

 

 

 

TJX Cos., Inc.

 

34,368

 

650

 

@

 

Toys R US, Inc.

 

12,571

 

13,050

 

 

 

Wal-Mart Stores, Inc.

 

679,382

 

4,250

 

 

 

Walgreen Co.

 

162,265

 

470

 

 

 

Wendy’s Intl., Inc.

 

16,765

 

850

 

 

 

Yum! Brands, Inc.

 

38,590

 

 

 

 

 

 

 

2,559,042

 

 

 

 

 

Savings and Loans: 0.0%

 

 

 

460

 

 

 

Golden West Financial Corp.

 

54,850

 

400

 

 

 

Sovereign Bancorp, Inc.

 

8,740

 

2,770

 

 

 

Washington Mutual, Inc.

 

112,767

 

 

 

 

 

 

 

176,357

 

 

 

 

 

Semiconductors: 0.2%

 

 

 

1,630

 

@

 

Altera Corp.

 

36,968

 

1,130

 

 

 

Analog Devices, Inc.

 

41,754

 

5,120

 

@

 

Applied Materials, Inc.

 

85,197

 

19,810

 

 

 

Intel Corp.

 

442,753

 

600

 

@

 

KLA-Tencor Corp.

 

27,036

 

930

 

 

 

Linear Technology Corp.

 

35,489

 

400

 

 

 

Maxim Integrated Products, Inc.

 

16,384

 

1,200

 

@

 

National Semiconductor Corp.

 

18,552

 

2,100

 

 

 

Texas Instruments, Inc.

 

50,778

 

 

 

 

 

 

 

754,911

 

 

 

 

 

Software: 0.5%

 

 

 

730

 

 

 

Adobe Systems, Inc.

 

44,209

 

560

 

 

 

Autodesk, Inc.

 

36,630

 

 

See Accompanying Notes to Financial Statements

 

68


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software (continued)

 

 

 

1,890

 

 

 

Automatic Data Processing, Inc.

 

$

86,052

 

1,120

 

@

 

BMC Software, Inc.

 

20,810

 

670

 

@

 

Citrix Systems, Inc.

 

15,819

 

1,770

 

 

 

Computer Associates Intl., Inc.

 

54,038

 

1,700

 

@

 

Compuware Corp.

 

9,809

 

360

 

@

 

Electronic Arts, Inc.

 

17,604

 

2,609

 

 

 

First Data Corp.

 

107,204

 

600

 

@

 

Fiserv, Inc.

 

23,106

 

650

 

 

 

IMS Health, Inc.

 

14,671

 

560

 

@

 

Intuit, Inc.

 

23,430

 

33,140

 

 

 

Microsoft Corp.

 

888,482

 

1,900

 

@

 

Novell, Inc.

 

11,590

 

27,050

 

@

 

Oracle Corp.

 

342,453

 

900

 

@

 

PeopleSoft, Inc.

 

21,249

 

2,340

 

@

 

Siebel Systems, Inc.

 

23,587

 

1,230

 

@

 

Veritas Software Corp.

 

26,937

 

 

 

 

 

 

 

1,767,680

 

 

 

 

 

Telecommunications: 0.5%

 

 

 

1,360

 

 

 

Alltel Corp.

 

77,098

 

942

 

 

 

AT&T Corp.

 

17,239

 

1,200

 

@

 

Avaya, Inc.

 

19,704

 

5,660

 

 

 

BellSouth Corp.

 

151,801

 

570

 

 

 

CenturyTel, Inc.

 

18,764

 

20,910

 

@

 

Cisco Systems, Inc.

 

391,227

 

950

 

 

 

Citizens Communications Co.

 

13,585

 

800

 

@

 

Comverse Technology, Inc.

 

17,016

 

4,400

 

@

 

Corning, Inc.

 

55,352

 

12,700

 

@

 

Lucent Technologies, Inc.

 

49,911

 

9,650

 

 

 

Motorola, Inc.

 

185,859

 

3,350

 

@

 

Nextel Communications, Inc.

 

95,341

 

4,800

 

 

 

Qualcomm, Inc.

 

199,776

 

5,750

 

@

 

Qwest Communications Intl., Inc.

 

23,000

 

10,230

 

 

 

SBC Communications, Inc.

 

257,489

 

620

 

 

 

Scientific-Atlanta, Inc.

 

18,364

 

4,450

 

 

 

Sprint Corp.

 

101,505

 

1,590

 

@

 

Tellabs, Inc.

 

13,595

 

8,510

 

 

 

Verizon Communications, Inc.

 

350,867

 

 

 

 

 

 

 

2,057,493

 

 

 

 

 

Textiles: 0.0%

 

 

 

500

 

 

 

Cintas Corp.

 

22,360

 

 

 

 

 

 

 

22,360

 

 

 

 

 

Toys/Games/Hobbies: 0.0%

 

 

 

800

 

 

 

Hasbro, Inc.

 

15,224

 

1,300

 

 

 

Mattel, Inc.

 

24,635

 

 

 

 

 

 

 

39,859

 

 

 

 

 

Transportation: 0.2%

 

 

 

1,060

 

 

 

Burlington Northern Santa Fe Corp.

 

47,742

 

700

 

 

 

CSX Corp.

 

26,691

 

1,260

 

 

 

FedEx Corp.

 

119,738

 

1,650

 

 

 

Norfolk Southern Corp.

 

56,645

 

310

 

 

 

Ryder System, Inc.

 

16,628

 

300

 

 

 

Union Pacific Corp.

 

19,032

 

3,480

 

 

 

United Parcel Service, Inc.

 

292,842

 

 

 

 

 

 

 

579,318

 

 

 

 

 

Total Common Stock
(Cost $26,726,675)

 

34,672,301

 

 

Principal

 

 

 

 

 

 

 

Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 78.8%

 

 

 

 

 

 

 

Federal Home Loan Mortgage Corporation: 4.9%

 

 

 

$

20,000,000

 

 

 

3.390%, due 01/26/07

 

$

18,619,900

 

 

 

 

 

 

 

18,619,900

 

 

 

 

 

Federal National Mortgage Association: 72.9%

 

 

 

13,653,000

 

 

 

3.520%, due 01/15/07 STRIP

 

12,686,204

 

285,000,000

 

 

 

3.510%, due 01/31/07

 

264,466,889

 

 

 

 

 

 

 

277,153,093

 

 

 

 

 

Other: 1.0%

 

 

 

4,000,000

 

 

 

Financing Corp. FICO STRIP, 3.340%, due 12/06/06

 

3,743,824

 

 

 

 

 

 

 

3,743,824

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $291,008,812)

 

299,516,817

 

U.S. TREASURY OBLIGATIONS: 10.4%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 10.4%

 

 

 

41,907,000

 

 

 

3.020%, due 11/15/06

 

39,536,405

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $39,604,864)

 

39,536,405

 

OTHER BONDS: 1.4%

 

 

 

 

 

 

 

 

 

Sovereign: 1.4%

 

 

 

5,827,000

 

 

 

Israel Trust, 3.480%, due 11/15/06

 

5,449,976

 

 

 

 

 

Total Other Bonds
(Cost $5,336,757)

 

5,449,976

 

 

 

 

 

Total Long-Term Investments
(Cost $362,677,108)

 

379,175,499

 

 

See Accompanying Notes to Financial Statements

 

69


 

Principal

 

 

 

 

 

 

 

Amount

 

 

 

 

 

Value

 

SHORT-TERM INVESTMENTS: 0.7%

 

 

 

 

 

 

 

Repurchase Agreement: 0.7%

 

 

 

$

2,521,000

 

 

 

Goldman Sachs Repurchase Agreement 11/30/04, 2.060%, due 12/01/04, $2,521,144 to be received upon repurchase (Collateralized by $2,431,000 Federal Home Loan Mortgage Corporation, 5.500%, Market Value plus accrued interest $2,572,302, due 07/15/06)

 

$

2,521,000

 

 

 

 

 

Total Short-Term Investments
(Cost $2,521,000)

 

2,521,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments In Securities
(Cost $365,198,108)*

 

100.4

%

$

381,696,499

 

Other Assets and Liabilities-Net

 

(0.4

)

(1,604,745

)

 

 

 

 

 

 

 

 

 

 

Net Assets

 

100.0

%

$

380,091,754

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $368,234,705. Net unrealized appreciation consists of:

 

Gross Unrealized Appreciation

 

$

13,826,010

 

Gross Unrealized Depreciation

 

(364,216

)

 

 

 

 

Net Unrealized Appreciation

 

$

13,461,794

 

 

See Accompanying Notes to Financial Statements

 

70


 

ING PRINCIPAL PROTECTION FUND III

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 15.1%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

1,450

 

@

 

Interpublic Group of Cos., Inc.

 

$

17,995

 

700

 

 

 

Omnicom Group, Inc.

 

56,700

 

 

 

 

 

 

 

74,695

 

 

 

 

 

Aerospace/Defense: 0.3%

 

 

 

5,600

 

 

 

Boeing Co.

 

299,992

 

1,350

 

 

 

General Dynamics Corp.

 

146,286

 

450

 

 

 

Goodrich Corp.

 

14,288

 

1,800

 

 

 

Lockheed Martin Corp.

 

109,512

 

1,500

 

 

 

Northrop Grumman Corp.

 

84,495

 

3,200

 

 

 

Raytheon Co.

 

129,088

 

300

 

 

 

Rockwell Collins, Inc.

 

11,958

 

2,080

 

 

 

United Technologies Corp.

 

202,966

 

 

 

 

 

 

 

998,585

 

 

 

 

 

Agriculture: 0.2%

 

 

 

8,150

 

 

 

Altria Group, Inc.

 

468,543

 

2,000

 

 

 

Archer-Daniels-Midland Co.

 

42,400

 

900

 

 

 

Monsanto Co.

 

41,418

 

500

 

 

 

Reynolds American, Inc.

 

37,815

 

950

 

 

 

UST, Inc.

 

41,829

 

 

 

 

 

 

 

632,005

 

 

 

 

 

Apparel: 0.1%

 

 

 

1,300

 

@

 

Coach, Inc.

 

64,792

 

620

 

 

 

Jones Apparel Group, Inc.

 

22,029

 

370

 

 

 

Liz Claiborne, Inc.

 

15,196

 

1,900

 

 

 

Nike, Inc.

 

160,853

 

250

 

 

 

Reebok Intl. Ltd.

 

9,720

 

550

 

 

 

VF Corp.

 

29,695

 

 

 

 

 

 

 

302,285

 

 

 

 

 

Auto Manufacturers: 0.1%

 

 

 

13,060

 

 

 

Ford Motor Co.

 

185,191

 

2,400

 

 

 

General Motors Corp.

 

92,616

 

1,160

 

 

 

PACCAR, Inc.

 

90,596

 

 

 

 

 

 

 

368,403

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

650

 

 

 

Dana Corp.

 

10,628

 

600

 

 

 

Johnson Controls, Inc.

 

36,840

 

 

 

 

 

 

 

47,468

 

 

 

 

 

Banks: 1.0%

 

 

 

1,250

 

 

 

AmSouth Bancorporation

 

32,413

 

16,196

 

 

 

Bank of America Corp.

 

749,388

 

2,350

 

 

 

BB&T Corp.

 

99,758

 

900

 

 

 

Comerica, Inc.

 

55,350

 

750

 

 

 

Fifth Third Bancorp

 

37,770

 

450

 

 

 

First Horizon National Corp.

 

19,665

 

650

 

 

 

Huntington Bancshares, Inc.

 

15,769

 

2,350

 

 

 

KeyCorp

 

78,232

 

350

 

 

 

M & T Bank Corp.

 

36,894

 

750

 

 

 

Marshall & Ilsley Corp.

 

31,268

 

1,400

 

 

 

Mellon Financial Corp.

 

40,908

 

3,750

 

 

 

National City Corp.

 

139,049

 

600

 

 

 

North Fork Bancorporation, Inc.

 

17,280

 

700

 

 

 

Northern Trust Corp.

 

32,928

 

1,150

 

 

 

PNC Financial Services Group, Inc.

 

62,560

 

1,493

 

 

 

Regions Financial Corp.

 

52,240

 

550

 

 

 

State Street Corp.

 

24,508

 

1,500

 

 

 

SunTrust Banks, Inc.

 

106,950

 

400

 

 

 

Synovus Financial Corp.

 

10,800

 

1,000

 

 

 

The Bank of New York Co., Inc.

 

32,910

 

7,750

 

 

 

U.S. Bancorp

 

229,632

 

8,634

 

 

 

Wachovia Corp.

 

446,809

 

6,700

 

 

 

Wells Fargo & Co.

 

413,858

 

250

 

 

 

Zions Bancorporation

 

16,625

 

 

 

 

 

 

 

2,783,564

 

 

 

 

 

Beverages: 0.3%

 

 

 

3,300

 

 

 

Anheuser-Busch Cos., Inc.

 

165,297

 

400

 

 

 

Brown-Forman Corp.

 

19,208

 

9,500

 

 

 

Coca-Cola Co.

 

373,445

 

1,400

 

 

 

Coca-Cola Enterprises, Inc.

 

29,120

 

800

 

 

 

Pepsi Bottling Group, Inc.

 

22,416

 

6,600

 

 

 

PepsiCo, Inc.

 

329,406

 

 

 

 

 

 

 

938,892

 

 

 

 

 

Biotechnology: 0.2%

 

 

 

4,926

 

@

 

Amgen, Inc.

 

295,757

 

1,400

 

@

 

Biogen Idec, Inc.

 

82,152

 

950

 

@

 

Genzyme Corp.

 

53,210

 

750

 

@

 

MedImmune, Inc.

 

19,950

 

250

 

@

 

Millipore Corp.

 

12,180

 

 

 

 

 

 

 

463,249

 

 

 

 

 

Building Materials: 0.0%

 

 

 

900

 

@

 

American Standard Cos., Inc.

 

35,046

 

1,700

 

 

 

Masco Corp.

 

59,959

 

500

 

 

 

Vulcan Materials Co.

 

25,925

 

 

 

 

 

 

 

120,930

 

 

 

 

 

Chemicals: 0.3%

 

 

 

1,000

 

 

 

Air Products & Chemicals, Inc.

 

57,250

 

150

 

 

 

Ashland, Inc.

 

8,873

 

3,950

 

 

 

Dow Chemical Co.

 

199,356

 

4,100

 

 

 

E.I. du Pont de Nemours & Co.

 

185,811

 

350

 

 

 

Eastman Chemical Co.

 

19,033

 

350

 

 

 

Ecolab, Inc.

 

12,243

 

640

 

 

 

Engelhard Corp.

 

19,130

 

300

 

 

 

International Flavors & Fragrances, Inc.

 

12,150

 

1,250

 

 

 

PPG Industries, Inc.

 

84,338

 

1,450

 

 

 

Praxair, Inc.

 

65,105

 

900

 

 

 

Rohm & Haas Co.

 

39,681

 

1,000

 

 

 

Sherwin-Williams Co.

 

44,600

 

250

 

 

 

Sigma-Aldrich Corp.

 

14,933

 

 

 

 

 

 

 

762,503

 

 

 

 

 

Commercial Services: 0.1%

 

 

 

800

 

@

 

Apollo Group, Inc.

 

63,759

 

4,350

 

 

 

Cendant Corp.

 

98,614

 

60

 

 

 

Deluxe Corp.

 

2,372

 

600

 

 

 

Equifax, Inc.

 

16,572

 

1,210

 

 

 

H&R Block, Inc.

 

57,717

 

950

 

 

 

McKesson Corp.

 

28,073

 

450

 

 

 

Moody’s Corp.

 

36,338

 

1,150

 

 

 

Paychex, Inc.

 

38,134

 

650

 

 

 

R.R. Donnelley & Sons Co.

 

22,555

 

650

 

 

 

Robert Half Intl., Inc.

 

17,570

 

 

 

 

 

 

 

381,704

 

 

 

 

 

Computers: 0.8%

 

 

 

450

 

@

 

Affiliated Computer Services, Inc.

 

26,631

 

2,800

 

@

 

Apple Computer, Inc.

 

187,740

 

600

 

@

 

Computer Sciences Corp.

 

32,460

 

13,150

 

@

 

Dell, Inc.

 

532,837

 

1,650

 

 

 

Electronic Data Systems Corp.

 

37,043

 

10,000

 

@

 

EMC Corp.

 

134,200

 

1,300

 

@

 

Gateway, Inc.

 

8,853

 

12,500

 

 

 

Hewlett-Packard Co.

 

250,000

 

9,000

 

 

 

International Business Machines Corp.

 

848,159

 

480

 

@

 

Lexmark Intl., Inc.

 

40,752

 

300

 

@

 

NCR Corp.

 

17,919

 

 

See Accompanying Notes to Financial Statements

 

71


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

1,150

 

@

 

Network Appliance, Inc.

 

$

34,684

 

23,800

 

@

 

Sun Microsystems, Inc.

 

132,090

 

1,200

 

@

 

Sungard Data Systems, Inc.

 

31,812

 

1,250

 

@

 

Unisys Corp.

 

14,363

 

 

 

 

 

 

 

2,329,543

 

 

 

 

 

Cosmetics/Personal Care: 0.5%

 

 

 

375

 

 

 

Alberto-Culver Co.

 

17,363

 

1,950

 

 

 

Avon Products, Inc.

 

73,203

 

2,200

 

 

 

Colgate-Palmolive Co.

 

101,178

 

7,000

 

 

 

Gillette Co.

 

304,430

 

2,600

 

 

 

Kimberly-Clark Corp.

 

165,386

 

16,900

 

 

 

Procter & Gamble Co.

 

903,812

 

 

 

 

 

 

 

1,565,372

 

 

 

 

 

Distribution/Wholesale: 0.0%

 

 

 

650

 

 

 

Genuine Parts Co.

 

28,217

 

500

 

 

 

W.W. Grainger, Inc.

 

30,930

 

 

 

 

 

 

 

59,147

 

 

 

 

 

Diversified Financial Services: 1.2%

 

 

 

5,250

 

 

 

American Express Co.

 

292,477

 

400

 

 

 

Bear Stearns Cos., Inc.

 

39,032

 

980

 

 

 

Capital One Financial Corp.

 

77,008

 

1,150

 

 

 

CIT Group, Inc.

 

49,163

 

20,600

 

 

 

Citigroup, Inc.

 

921,849

 

3,998

 

 

 

Countrywide Financial Corp.

 

132,774

 

1,150

 

@

 

E*TRADE Financial Corp.

 

15,939

 

4,010

 

 

 

Fannie Mae

 

275,486

 

150

 

 

 

Federated Investors, Inc.

 

4,413

 

1,050

 

 

 

Franklin Resources, Inc.

 

68,912

 

2,830

 

 

 

Freddie Mac

 

193,176

 

2,000

 

 

 

Goldman Sachs Group, Inc.

 

209,520

 

5,892

 

 

 

J.P. Morgan Chase & Co.

 

221,834

 

400

 

 

 

Janus Capital Group, Inc.

 

6,620

 

1,150

 

 

 

Lehman Brothers Holdings, Inc.

 

96,347

 

5,225

 

 

 

MBNA Corp.

 

138,776

 

3,900

 

 

 

Merrill Lynch & Co., Inc.

 

217,269

 

1,800

 

 

 

Morgan Stanley

 

91,350

 

1,350

 

@

 

Providian Financial Corp.

 

21,668

 

1,800

 

 

 

SLM Corp.

 

92,106

 

 

 

 

 

 

 

3,165,719

 

 

 

 

 

Electric: 0.4%

 

 

 

3,370

 

@

 

AES Corp.

 

41,249

 

250

 

 

 

Ameren Corp.

 

12,105

 

1,300

 

 

 

American Electric Power Co., Inc.

 

44,421

 

600

 

 

 

Cinergy Corp.

 

24,834

 

750

 

 

 

Consolidated Edison, Inc.

 

32,888

 

650

 

 

 

Constellation Energy Group, Inc.

 

28,405

 

500

 

 

 

Dominion Resources, Inc.

 

32,735

 

550

 

 

 

DTE Energy Co.

 

24,134

 

5,150

 

 

 

Duke Energy Corp.

 

130,191

 

1,690

 

 

 

Edison Intl

 

53,911

 

950

 

 

 

Entergy Corp.

 

61,579

 

2,700

 

 

 

Exelon Corp.

 

112,617

 

1,050

 

 

 

FirstEnergy Corp.

 

44,342

 

600

 

 

 

FPL Group, Inc.

 

42,198

 

1,320

 

@

 

PG&E Corp.

 

43,903

 

400

 

 

 

Pinnacle West Capital Corp.

 

17,680

 

950

 

 

 

PPL Corp.

 

49,353

 

1,000

 

 

 

Public Service Enterprise Group, Inc.

 

43,990

 

3,000

 

 

 

Southern Co.

 

98,370

 

1,600

 

 

 

TXU Corp.

 

100,512

 

1,250

 

 

 

Xcel Energy, Inc.

 

22,575

 

 

 

 

 

 

 

1,061,992

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

2,300

 

 

 

Emerson Electric Co.

 

153,686

 

 

 

 

 

 

 

153,686

 

 

 

 

 

Electronics: 0.1%

 

 

 

1,850

 

@

 

Agilent Technologies, Inc.

 

42,346

 

1,000

 

 

 

Applera Corp.— Applied Biosystems Group

 

20,500

 

500

 

@

 

Fisher Scientific Intl

 

28,270

 

900

 

@

 

Jabil Circuit, Inc.

 

22,554

 

400

 

 

 

Parker Hannifin Corp.

 

29,920

 

700

 

 

 

PerkinElmer, Inc.

 

14,931

 

1,500

 

@

 

Sanmina-SCI Corp.

 

13,245

 

2,950

 

@

 

Solectron Corp.

 

18,438

 

200

 

 

 

Tektronix, Inc.

 

6,274

 

500

 

@

 

Thermo Electron Corp.

 

15,125

 

550

 

@

 

Waters Corp.

 

25,663

 

 

 

 

 

 

 

237,266

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

300

 

 

 

Fluor Corp.

 

15,570

 

 

 

 

 

 

 

15,570

 

 

 

 

 

Entertainment: 0.0%

 

 

 

1,100

 

 

 

International Game Technology

 

38,885

 

 

 

 

 

 

 

38,885

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

2,450

 

 

 

Waste Management, Inc.

 

73,035

 

 

 

 

 

 

 

73,035

 

 

 

 

 

Food: 0.2%

 

 

 

1,550

 

 

 

Albertson’s, Inc.

 

39,215

 

650

 

 

 

Campbell Soup Co.

 

18,545

 

1,700

 

 

 

ConAgra Foods, Inc.

 

45,985

 

1,600

 

 

 

General Mills, Inc.

 

72,784

 

1,100

 

 

 

H.J. Heinz Co.

 

40,876

 

800

 

 

 

Hershey Foods Corp.

 

41,440

 

1,700

 

 

 

Kellogg Co.

 

74,290

 

1,150

 

@

 

Kroger Co.

 

18,607

 

500

 

 

 

McCormick & Co., Inc.

 

18,225

 

3,350

 

 

 

Sara Lee Corp.

 

78,658

 

950

 

 

 

SUPERVALU, Inc.

 

30,011

 

1,300

 

 

 

Wm. Wrigley Jr. Co.

 

89,439

 

 

 

 

 

 

 

568,075

 

 

 

 

 

Forest Products and Paper: 0.1%

 

 

 

1,140

 

 

 

Georgia-Pacific Corp.

 

41,735

 

2,050

 

 

 

International Paper Co.

 

85,116

 

520

 

 

 

Louisiana-Pacific Corp.

 

12,724

 

800

 

 

 

MeadWestvaco Corp.

 

26,920

 

600

 

 

 

Plum Creek Timber Co., Inc.

 

22,200

 

300

 

 

 

Temple-Inland, Inc.

 

17,877

 

1,500

 

 

 

Weyerhaeuser Co.

 

99,001

 

 

 

 

 

 

 

305,573

 

 

 

 

 

Gas: 0.0%

 

 

 

500

 

 

 

KeySpan Corp.

 

19,760

 

950

 

 

 

Sempra Energy

 

35,131

 

 

 

 

 

 

 

54,891

 

 

See Accompanying Notes to Financial Statements

 

72


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Hand/Machine Tools: 0.0%

 

 

 

420

 

 

 

Black & Decker Corp.

 

$

35,317

 

250

 

 

 

Snap-On, Inc.

 

7,903

 

350

 

 

 

Stanley Works

 

16,366

 

 

 

 

 

 

 

59,586

 

 

 

 

 

Healthcare — Products: 0.6%

 

 

 

250

 

 

 

Bausch & Lomb, Inc.

 

14,720

 

2,550

 

 

 

Baxter Intl., Inc.

 

80,708

 

1,280

 

 

 

Becton Dickinson & Co.

 

70,118

 

750

 

 

 

Biomet, Inc.

 

35,903

 

3,550

 

@

 

Boston Scientific Corp.

 

123,576

 

400

 

 

 

C.R. Bard, Inc.

 

23,964

 

1,330

 

 

 

Guidant Corp.

 

86,224

 

15,950

 

 

 

Johnson & Johnson

 

962,103

 

4,700

 

 

 

Medtronic, Inc.

 

225,835

 

1,600

 

@

 

St. Jude Medical, Inc.

 

61,024

 

500

 

 

 

Stryker Corp.

 

21,995

 

1,050

 

@

 

Zimmer Holdings, Inc.

 

85,680

 

 

 

 

 

 

 

1,791,850

 

 

 

 

 

Healthcare — Services: 0.3%

 

 

 

1,080

 

 

 

Aetna, Inc.

 

127,991

 

900

 

@

 

Humana, Inc.

 

22,338

 

450

 

@

 

Laboratory Corp. Of America Holdings

 

21,578

 

400

 

 

 

Manor Care, Inc.

 

13,780

 

150

 

 

 

Quest Diagnostics, Inc.

 

14,063

 

4,450

 

 

 

UnitedHealth Group, Inc.

 

368,682

 

1,120

 

@

 

WellPoint Health Networks, Inc.

 

140,112

 

980

 

@

 

WellPoint, Inc.

 

99,303

 

 

 

 

 

 

 

807,847

 

 

 

 

 

Home Builders: 0.0%

 

 

 

490

 

 

 

Centex Corp.

 

25,710

 

 

 

 

 

 

 

25,710

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

550

 

 

 

Leggett & Platt, Inc.

 

16,418

 

300

 

 

 

Whirlpool Corp.

 

19,365

 

 

 

 

 

 

 

35,783

 

 

 

 

 

Household Products/Wares: 0.0%

 

 

 

400

 

 

 

Avery Dennison Corp.

 

23,464

 

1,210

 

 

 

Clorox Co.

 

66,695

 

550

 

 

 

Fortune Brands, Inc.

 

43,164

 

 

 

 

 

 

 

133,323

 

 

 

 

 

Housewares: 0.0%

 

 

 

900

 

 

 

Newell Rubbermaid, Inc.

 

20,772

 

 

 

 

 

 

 

20,772

 

 

 

 

 

Insurance: 0.9%

 

 

 

1,200

 

@@

 

ACE Ltd.

 

48,504

 

2,100

 

 

 

AFLAC, Inc.

 

79,002

 

3,850

 

 

 

Allstate Corp.

 

194,424

 

400

 

 

 

AMBAC Financial Group, Inc.

 

32,532

 

17,650

 

 

 

American International Group, Inc.

 

1,118,127

 

1,000

 

 

 

AON Corp.

 

21,120

 

1,350

 

 

 

Chubb Corp.

 

102,883

 

770

 

 

 

CIGNA Corp.

 

53,915

 

577

 

 

 

Cincinnati Financial Corp.

 

25,850

 

1,250

 

 

 

Hartford Financial Services Group, Inc.

 

80,000

 

450

 

 

 

Jefferson-Pilot Corp.

 

22,136

 

950

 

 

 

Lincoln National Corp.

 

43,719

 

850

 

 

 

Loews Corp.

 

59,424

 

1,650

 

 

 

Marsh & McLennan Cos., Inc.

 

47,174

 

450

 

 

 

MBIA, Inc.

 

26,982

 

4,150

 

 

 

MetLife, Inc.

 

161,849

 

400

 

 

 

MGIC Investment Corp.

 

27,200

 

1,000

 

 

 

Principal Financial Group

 

37,680

 

850

 

 

 

Progressive Corp.

 

77,342

 

3,700

 

 

 

Prudential Financial, Inc.

 

181,114

 

700

 

 

 

Safeco Corp.

 

33,929

 

350

 

 

 

Torchmark Corp.

 

19,219

 

1,050

 

 

 

UnumProvident Corp.

 

16,349

 

400

 

@@

 

XL Capital Ltd.

 

30,144

 

 

 

 

 

 

 

2,540,618

 

 

 

 

 

Internet: 0.2%

 

 

 

2,600

 

@

 

eBay, Inc.

 

292,370

 

2,150

 

@

 

Symantec Corp.

 

137,192

 

5,650

 

@

 

Yahoo!, Inc.

 

212,553

 

 

 

 

 

 

 

642,115

 

 

 

 

 

Iron/Steel: 0.0%

 

 

 

600

 

 

 

Nucor Corp.

 

31,740

 

850

 

 

 

United States Steel Corp.

 

44,506

 

 

 

 

 

 

 

76,246

 

 

 

 

 

Leisure Time: 0.1%

 

 

 

330

 

 

 

Brunswick Corp.

 

16,111

 

2,650

 

 

 

Carnival Corp.

 

140,476

 

1,250

 

 

 

Harley-Davidson, Inc.

 

72,275

 

550

 

 

 

Sabre Holdings Corp.

 

12,694

 

 

 

 

 

 

 

241,556

 

 

 

 

 

Lodging: 0.0%

 

 

 

450

 

 

 

Harrah’s Entertainment, Inc.

 

27,630

 

1,400

 

 

 

Hilton Hotels Corp.

 

28,924

 

700

 

 

 

Marriott Intl., Inc.

 

39,795

 

600

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

31,374

 

 

 

 

 

 

 

127,723

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

450

 

 

 

Caterpillar, Inc.

 

41,198

 

 

 

 

 

 

 

41,198

 

 

 

 

 

Machinery — Diversified: 0.0%

 

 

 

200

 

 

 

Cummins, Inc.

 

15,924

 

1,050

 

 

 

Deere & Co.

 

75,317

 

600

 

 

 

Rockwell Automation, Inc.

 

28,380

 

 

 

 

 

 

 

119,621

 

 

 

 

 

Media: 0.4%

 

 

 

900

 

 

 

Clear Channel Communications, Inc.

 

30,312

 

9,300

 

@

 

Comcast Corp.

 

279,372

 

1,100

 

 

 

Gannett Co., Inc.

 

90,739

 

100

 

 

 

Knight-Ridder, Inc.

 

6,809

 

1,050

 

 

 

McGraw-Hill Cos., Inc.

 

92,117

 

230

 

 

 

Meredith Corp.

 

12,126

 

450

 

 

 

New York Times Co.

 

18,450

 

17,850

 

@

 

Time Warner, Inc.

 

316,123

 

400

 

 

 

Tribune Co.

 

17,348

 

400

 

@

 

Univision Communications, Inc.

 

12,040

 

2,900

 

 

 

Viacom, Inc.

 

100,630

 

8,500

 

 

 

Walt Disney Co.

 

228,480

 

 

 

 

 

 

 

1,204,546

 

 

 

 

 

Mining: 0.0%

 

 

 

550

 

 

 

Phelps Dodge Corp.

 

53,422

 

 

 

 

 

 

 

53,422

 

 

See Accompanying Notes to Financial Statements

 

73


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing: 0.9%

 

 

 

3,150

 

 

 

3M Co.

 

$

250,708

 

300

 

 

 

Cooper Industries Ltd.

 

19,893

 

1,000

 

 

 

Danaher Corp.

 

56,880

 

800

 

 

 

Dover Corp.

 

32,360

 

1,110

 

 

 

Eastman Kodak Co.

 

36,308

 

550

 

 

 

Eaton Corp.

 

37,070

 

41,400

 

 

 

General Electric Co.

 

1,463,903

 

3,600

 

 

 

Honeywell International, Inc.

 

127,188

 

1,250

 

 

 

Illinois Tool Works, Inc.

 

117,788

 

550

 

@@

 

Ingersoll-Rand Co.

 

40,931

 

330

 

 

 

ITT Industries, Inc.

 

28,090

 

400

 

 

 

Pall Corp.

 

10,836

 

530

 

 

 

Textron, Inc.

 

38,489

 

8,300

 

@@

 

Tyco Intl. Ltd.

 

281,950

 

 

 

 

 

 

 

2,542,394

 

 

 

 

 

Office/Business Equipment: 0.0%

 

 

 

850

 

 

 

Pitney Bowes, Inc.

 

37,205

 

3,600

 

@

 

Xerox Corp.

 

55,152

 

 

 

 

 

 

 

92,357

 

 

 

 

 

Oil and Gas: 1.3%

 

 

 

320

 

 

 

Amerada Hess Corp.

 

28,432

 

1,300

 

 

 

Anadarko Petroleum Corp.

 

90,480

 

1,318

 

 

 

Apache Corp.

 

71,251

 

2,750

 

 

 

Burlington Resources, Inc.

 

127,628

 

13,200

 

 

 

ChevronTexaco Corp.

 

720,720

 

3,368

 

 

 

ConocoPhillips

 

306,454

 

2,900

 

 

 

Devon Energy Corp.

 

120,118

 

400

 

 

 

EOG Resources, Inc.

 

30,028

 

31,500

 

 

 

Exxon Mobil Corp.

 

1,614,374

 

450

 

 

 

Kerr-McGee Corp.

 

28,004

 

1,300

 

 

 

Marathon Oil Corp.

 

51,272

 

150

 

@,@@

 

Nabors Industries Ltd.

 

7,800

 

400

 

@

 

Noble Corp.

 

19,380

 

1,630

 

 

 

Occidental Petroleum Corp.

 

98,142

 

450

 

 

 

Sunoco, Inc.

 

37,152

 

1,100

 

@

 

Transocean, Inc.

 

44,297

 

1,150

 

 

 

Unocal Corp.

 

52,946

 

1,800

 

 

 

Valero Energy Corp.

 

84,222

 

 

 

 

 

 

 

3,532,700

 

 

 

 

 

Oil and Gas Services: 0.0%

 

 

 

1,050

 

 

 

Baker Hughes, Inc.

 

46,547

 

550

 

 

 

BJ Services Co.

 

27,869

 

1,600

 

 

 

Halliburton Co.

 

66,159

 

 

 

 

 

 

 

140,575

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

340

 

 

 

Ball Corp.

 

15,208

 

500

 

 

 

Bemis Co.

 

13,920

 

800

 

@

 

Pactiv Corp.

 

19,880

 

300

 

@

 

Sealed Air Corp.

 

15,423

 

 

 

 

 

 

 

64,431

 

 

 

 

 

Pharmaceuticals: 0.8%

 

 

 

6,100

 

 

 

Abbott Laboratories

 

255,955

 

400

 

 

 

Allergan, Inc.

 

29,400

 

400

 

 

 

AmerisourceBergen Corp.

 

23,576

 

8,050

 

 

 

Bristol-Myers Squibb Co.

 

189,175

 

1,750

 

 

 

Cardinal Health, Inc.

 

91,490

 

3,200

 

@

 

Caremark Rx, Inc.

 

114,432

 

1,800

 

 

 

Eli Lilly & Co.

 

95,994

 

300

 

@

 

Express Scripts, Inc.

 

21,588

 

1,550

 

@

 

Forest Laboratories, Inc.

 

60,404

 

1,400

 

@

 

Gilead Sciences, Inc.

 

48,244

 

650

 

@

 

Hospira, Inc.

 

20,950

 

650

 

@

 

King Pharmaceuticals, Inc.

 

8,093

 

1,182

 

@

 

Medco Health Solutions, Inc.

 

44,585

 

9,100

 

 

 

Merck & Co., Inc.

 

254,981

 

29,630

 

 

 

Pfizer, Inc.

 

822,824

 

6,150

 

 

 

Schering-Plough Corp.

 

109,778

 

5,550

 

 

 

Wyeth

 

221,279

 

 

 

 

 

 

 

2,412,748

 

 

 

 

 

Pipelines: 0.0%

 

 

 

1,750

 

 

 

El Paso Corp.

 

18,270

 

150

 

 

 

Kinder Morgan, Inc.

 

10,395

 

1,800

 

 

 

Williams Cos., Inc.

 

30,006

 

 

 

 

 

 

 

58,671

 

 

 

 

 

Real Estate Investment Trusts: 0.0%

 

 

 

500

 

 

 

Equity Office Properties Trust

 

13,725

 

550

 

 

 

ProLogis

 

22,127

 

650

 

 

 

Simon Property Group, Inc.

 

40,352

 

 

 

 

 

 

 

76,204

 

 

 

 

 

Retail: 1.2%

 

 

 

900

 

@

 

Bed Bath & Beyond, Inc.

 

35,935

 

1,350

 

 

 

Best Buy Co., Inc.

 

76,113

 

850

 

 

 

Circuit City Stores, Inc.

 

13,252

 

3,300

 

 

 

Costco Wholesale Corp.

 

160,380

 

1,650

 

 

 

CVS Corp.

 

74,861

 

850

 

 

 

Darden Restaurants, Inc.

 

23,171

 

700

 

 

 

Federated Department Stores, Inc.

 

38,360

 

5,000

 

 

 

Gap, Inc.

 

109,250

 

14,790

 

 

 

Home Depot, Inc.

 

617,482

 

2,000

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

77,200

 

550

 

@

 

Kohl’s Corp.

 

25,388

 

2,690

 

 

 

Limited Brands, Inc.

 

65,744

 

3,230

 

 

 

Lowe’s Cos., Inc.

 

178,716

 

1,000

 

 

 

May Department Stores Co.

 

28,120

 

5,200

 

 

 

McDonald’s Corp.

 

159,848

 

400

 

 

 

Nordstrom, Inc.

 

17,500

 

1,510

 

@

 

Office Depot, Inc.

 

24,764

 

790

 

 

 

RadioShack Corp.

 

24,940

 

2,800

 

 

 

Staples, Inc.

 

89,348

 

1,600

 

@

 

Starbucks Corp.

 

90,016

 

3,750

 

 

 

Target Corp.

 

192,075

 

1,600

 

 

 

TJX Cos., Inc.

 

37,664

 

750

 

@

 

Toys R US, Inc.

 

14,505

 

16,600

 

 

 

Wal-Mart Stores, Inc.

 

864,195

 

5,800

 

 

 

Walgreen Co.

 

221,443

 

650

 

 

 

Wendy’s Intl., Inc.

 

23,186

 

1,100

 

 

 

Yum! Brands, Inc.

 

49,940

 

 

 

 

 

 

 

3,333,396

 

 

 

 

 

Savings and Loans: 0.1%

 

 

 

520

 

 

 

Golden West Financial Corp.

 

62,005

 

550

 

 

 

Sovereign Bancorp, Inc.

 

12,018

 

3,650

 

 

 

Washington Mutual, Inc.

 

148,591

 

 

 

 

 

 

 

222,614

 

 

 

 

 

Semiconductors: 0.3%

 

 

 

1,500

 

@

 

Altera Corp.

 

34,020

 

1,600

 

 

 

Analog Devices, Inc.

 

59,120

 

7,050

 

@

 

Applied Materials, Inc.

 

117,312

 

25,600

 

 

 

Intel Corp.

 

572,160

 

600

 

@

 

KLA-Tencor Corp.

 

27,036

 

950

 

 

 

Linear Technology Corp.

 

36,252

 

450

 

 

 

Maxim Integrated Products, Inc.

 

18,432

 

1,250

 

@

 

National Semiconductor Corp.

 

19,325

 

2,200

 

 

 

Texas Instruments, Inc.

 

53,196

 

 

 

 

 

 

 

936,853

 

 

 

 

 

Software: 0.8%

 

 

 

900

 

 

 

Adobe Systems, Inc.

 

54,504

 

600

 

 

 

Autodesk, Inc.

 

39,246

 

 

See Accompanying Notes to Financial Statements

 

74


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software (continued)

 

 

 

2,400

 

 

 

Automatic Data Processing, Inc.

 

$

109,272

 

1,180

 

@

 

BMC Software, Inc.

 

21,924

 

450

 

@

 

Citrix Systems, Inc.

 

10,625

 

2,450

 

 

 

Computer Associates Intl., Inc.

 

74,799

 

1,950

 

@

 

Compuware Corp.

 

11,252

 

520

 

@

 

Electronic Arts, Inc.

 

25,428

 

3,557

 

 

 

First Data Corp.

 

146,157

 

750

 

@

 

Fiserv, Inc.

 

28,883

 

1,150

 

 

 

IMS Health, Inc.

 

25,956

 

750

 

@

 

Intuit, Inc.

 

31,380

 

42,550

 

 

 

Microsoft Corp.

 

1,140,765

 

1,000

 

@

 

Novell, Inc.

 

6,100

 

34,500

 

@

 

Oracle Corp.

 

436,769

 

1,300

 

@

 

PeopleSoft, Inc.

 

30,693

 

1,800

 

@

 

Siebel Systems, Inc.

 

18,144

 

1,650

 

@

 

Veritas Software Corp.

 

36,135

 

 

 

 

 

 

 

2,248,032

 

 

 

 

 

Telecommunications: 1.0%

 

 

 

1,700

 

 

 

Alltel Corp.

 

96,373

 

1,240

 

 

 

AT&T Corp.

 

22,692

 

1,450

 

@

 

Avaya, Inc.

 

23,809

 

7,550

 

 

 

BellSouth Corp.

 

202,491

 

400

 

 

 

CenturyTel, Inc.

 

13,168

 

26,550

 

@

 

Cisco Systems, Inc.

 

496,750

 

1,300

 

 

 

Citizens Communications Co.

 

18,590

 

600

 

@

 

Comverse Technology, Inc.

 

12,762

 

5,950

 

@

 

Corning, Inc.

 

74,851

 

17,500

 

@

 

Lucent Technologies, Inc.

 

68,775

 

13,250

 

 

 

Motorola, Inc.

 

255,195

 

4,650

 

@

 

Nextel Communications, Inc.

 

132,339

 

6,400

 

 

 

Qualcomm, Inc.

 

266,368

 

6,000

 

@

 

Qwest Communications Intl., Inc.

 

24,000

 

12,950

 

 

 

SBC Communications, Inc.

 

325,951

 

850

 

 

 

Scientific-Atlanta, Inc.

 

25,177

 

6,100

 

 

 

Sprint Corp.

 

139,141

 

1,450

 

@

 

Tellabs, Inc.

 

12,398

 

10,950

 

 

 

Verizon Communications, Inc.

 

451,468

 

 

 

 

 

 

 

2,662,298

 

 

 

 

 

Textiles: 0.0%

 

 

 

550

 

 

 

Cintas Corp.

 

24,596

 

 

 

 

 

 

 

24,596

 

 

 

 

 

Toys/Games/Hobbies: 0.0%

 

 

 

500

 

 

 

Hasbro, Inc.

 

9,515

 

1,700

 

 

 

Mattel, Inc.

 

32,215

 

 

 

 

 

 

 

41,730

 

 

 

 

 

Transportation: 0.2%

 

 

 

1,550

 

 

 

Burlington Northern Santa Fe Corp.

 

69,812

 

700

 

 

 

CSX Corp.

 

26,691

 

1,650

 

 

 

FedEx Corp.

 

156,800

 

1,700

 

 

 

Norfolk Southern Corp.

 

58,361

 

350

 

 

 

Ryder System, Inc.

 

18,774

 

300

 

 

 

Union Pacific Corp.

 

19,032

 

4,400

 

 

 

United Parcel Service, Inc.

 

370,260

 

 

 

 

 

 

 

719,730

 

 

 

 

 

Total Common Stock
(Cost $35,730,906)

 

44,534,282

 

 

Principal

 

 

 

 

 

 

 

Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 54.9%

 

 

 

 

 

 

 

Federal National Mortgage Association: 54.9%

 

 

 

$

177,000,000

 

 

 

3.640%, due 06/05/07

 

$

161,813,401

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $157,250,485)

 

161,813,401

 

U.S. TREASURY OBLIGATIONS: 29.6%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 29.6%

 

 

 

15,800,000

 

 

 

3.140%, due 05/15/07

 

14,636,298

 

78,591,000

 

 

 

3.190%, due 05/15/07

 

72,767,407

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $85,290,546)

 

87,403,705

 

 

 

 

 

Total Long-Term Investments
(Cost $278,271,937)

 

293,751,388

 

SHORT-TERM INVESTMENTS: 0.8%

 

 

 

 

 

 

 

Repurchase Agreement: 0.8%

 

 

 

2,477,000

 

 

 

Goldman Sachs Repurchase Agreement dated 11/30/04, 2.060%, due 12/01/04, $2,477,141 to be received upon repurchase (Collateralized by $2,388,000.00 Federal Home Loan Mortgage Corporation, 5.500%, Market Value plus accrued interest $2,526,802, due 07/15/06)

 

2,477,000

 

 

 

 

 

Total Short-Term Investments
(Cost $2,477,000)

 

2,477,000

 

 

 

 

 

 

 

 

Total Investments In Securities
(Cost $280,748,937)*

 

100.4

%

$

296,228,388

 

Other Assets and Liabilities-Net

 

(0.4

)

(1,209,190

)

 

 

 

 

 

 

Net Assets

 

100.0

%

$

295,019,198

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $283,343,588. Net unrealized appreciation consists of:

 

Gross Unrealized Appreciation

 

$

13,325,275

 

Gross Unrealized Depreciation

 

(440,475

)

 

 

 

 

Net Unrealized Appreciation

 

$

12,884,800

 

 

See Accompanying Notes to Financial Statements

 

75


 

ING PRINCIPAL PROTECTION FUND IV

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 35.2%

 

 

 

 

 

 

 

Advertising: 0.1%

 

 

 

6,750

 

@

 

Interpublic Group of Cos., Inc.

 

$

83,768

 

2,900

 

 

 

Omnicom Group, Inc.

 

234,900

 

 

 

 

 

 

 

318,668

 

 

 

 

 

Aerospace/Defense: 0.8%

 

 

 

25,050

 

 

 

Boeing Co.

 

1,341,928

 

6,100

 

 

 

General Dynamics Corp.

 

660,996

 

2,900

 

 

 

Goodrich Corp.

 

92,075

 

8,300

 

 

 

Lockheed Martin Corp.

 

504,972

 

5,950

 

 

 

Northrop Grumman Corp.

 

335,164

 

14,550

 

 

 

Raytheon Co.

 

586,947

 

2,800

 

 

 

Rockwell Collins, Inc.

 

111,608

 

9,460

 

 

 

United Technologies Corp.

 

923,107

 

 

 

 

 

 

 

4,556,797

 

 

 

 

 

Agriculture: 0.5%

 

 

 

36,150

 

 

 

Altria Group, Inc.

 

2,078,263

 

11,100

 

 

 

Archer-Daniels-Midland Co.

 

235,320

 

4,250

 

 

 

Monsanto Co.

 

195,585

 

2,750

 

 

 

Reynolds American, Inc.

 

207,983

 

5,600

 

 

 

UST, Inc.

 

246,568

 

 

 

 

 

 

 

2,963,719

 

 

 

 

 

Apparel: 0.2%

 

 

 

5,800

 

@

 

Coach, Inc.

 

289,072

 

3,170

 

 

 

Jones Apparel Group, Inc.

 

112,630

 

2,780

 

 

 

Liz Claiborne, Inc.

 

114,175

 

8,400

 

 

 

Nike, Inc.

 

711,144

 

700

 

 

 

Reebok Intl. Ltd.

 

27,216

 

2,600

 

 

 

VF Corp.

 

140,374

 

 

 

 

 

 

 

1,394,611

 

 

 

 

 

Auto Manufacturers: 0.3%

 

 

 

57,120

 

 

 

Ford Motor Co.

 

809,961

 

10,150

 

 

 

General Motors Corp.

 

391,689

 

5,095

 

 

 

PACCAR, Inc.

 

397,920

 

 

 

 

 

 

 

1,599,570

 

 

 

 

 

Auto Parts and Equipment: 0.1%

 

 

 

3,650

 

 

 

Dana Corp.

 

59,678

 

5,650

 

@

 

Goodyear Tire & Rubber Co.

 

71,303

 

2,800

 

 

 

Johnson Controls, Inc.

 

171,920

 

 

 

 

 

 

 

302,901

 

 

 

 

 

Banks: 2.2%

 

 

 

5,650

 

 

 

AmSouth Bancorporation

 

146,505

 

71,844

 

 

 

Bank of America Corp.

 

3,324,221

 

10,400

 

 

 

BB&T Corp.

 

441,480

 

3,450

 

 

 

Comerica, Inc.

 

212,175

 

4,000

 

 

 

Fifth Third Bancorp

 

201,440

 

2,250

 

 

 

First Horizon National Corp.

 

98,325

 

4,300

 

 

 

Huntington Bancshares, Inc.

 

104,318

 

9,200

 

 

 

KeyCorp

 

306,268

 

1,800

 

 

 

M & T Bank Corp.

 

189,738

 

3,150

 

 

 

Marshall & Ilsley Corp.

 

131,324

 

7,300

 

 

 

Mellon Financial Corp.

 

213,306

 

16,550

 

 

 

National City Corp.

 

613,674

 

3,225

 

 

 

North Fork Bancorporation, Inc.

 

92,880

 

4,000

 

 

 

Northern Trust Corp.

 

188,160

 

4,250

 

 

 

PNC Financial Services Group, Inc.

 

231,200

 

6,747

 

 

 

Regions Financial Corp.

 

236,078

 

2,000

 

 

 

State Street Corp.

 

89,120

 

6,650

 

 

 

SunTrust Banks, Inc.

 

474,145

 

2,150

 

 

 

Synovus Financial Corp.

 

58,050

 

4,800

 

 

 

The Bank of New York Co., Inc.

 

157,968

 

32,750

 

 

 

U.S. Bancorp

 

970,383

 

38,289

 

 

 

Wachovia Corp.

 

1,981,455

 

29,800

 

 

 

Wells Fargo & Co.

 

1,840,745

 

1,450

 

 

 

Zions Bancorporation

 

96,425

 

 

 

 

 

 

 

12,399,383

 

 

 

 

 

Beverages: 0.8%

 

 

 

800

 

 

 

Adolph Coors Co.

 

59,920

 

15,100

 

 

 

Anheuser-Busch Cos., Inc.

 

756,359

 

1,800

 

 

 

Brown-Forman Corp.

 

86,436

 

42,650

 

 

 

Coca-Cola Co.

 

1,676,571

 

7,950

 

 

 

Coca-Cola Enterprises, Inc.

 

165,360

 

4,650

 

 

 

Pepsi Bottling Group, Inc.

 

130,293

 

29,950

 

 

 

PepsiCo, Inc.

 

1,494,805

 

 

 

 

 

 

 

4,369,744

 

 

 

 

 

Biotechnology: 0.4%

 

 

 

22,150

 

@

 

Amgen, Inc.

 

1,329,886

 

5,700

 

@

 

Biogen Idec, Inc.

 

334,476

 

4,150

 

@

 

Genzyme Corp.

 

232,442

 

4,100

 

@

 

MedImmune, Inc.

 

109,060

 

50

 

@

 

Millipore Corp.

 

2,436

 

 

 

 

 

 

 

2,008,300

 

 

 

 

 

Building Materials: 0.1%

 

 

 

3,050

 

@

 

American Standard Cos., Inc.

 

118,767

 

8,500

 

 

 

Masco Corp.

 

299,795

 

1,800

 

 

 

Vulcan Materials Co.

 

93,330

 

 

 

 

 

 

 

511,892

 

 

 

 

 

Chemicals: 0.6%

 

 

 

3,950

 

 

 

Air Products & Chemicals, Inc.

 

226,138

 

1,600

 

 

 

Ashland, Inc.

 

94,640

 

18,800

 

 

 

Dow Chemical Co.

 

948,835

 

19,750

 

 

 

E.I. du Pont de Nemours & Co.

 

895,070

 

1,800

 

 

 

Eastman Chemical Co.

 

97,884

 

1,900

 

 

 

Ecolab, Inc.

 

66,462

 

2,950

 

 

 

Engelhard Corp.

 

88,176

 

1,200

 

 

 

International Flavors & Fragrances, Inc.

 

48,600

 

4,600

 

 

 

PPG Industries, Inc.

 

310,362

 

5,300

 

 

 

Praxair, Inc.

 

237,970

 

4,100

 

 

 

Rohm & Haas Co.

 

180,769

 

4,350

 

 

 

Sherwin-Williams Co.

 

194,010

 

1,200

 

 

 

Sigma-Aldrich Corp.

 

71,676

 

 

 

 

 

 

 

3,460,592

 

 

 

 

 

Commercial Services: 0.3%

 

 

 

3,250

 

@

 

Apollo Group, Inc.

 

259,025

 

19,550

 

 

 

Cendant Corp.

 

443,198

 

820

 

 

 

Deluxe Corp.

 

32,423

 

2,300

 

 

 

Equifax, Inc.

 

63,526

 

3,180

 

 

 

H&R Block, Inc.

 

151,686

 

5,850

 

 

 

McKesson Corp.

 

172,868

 

2,200

 

 

 

Moody’s Corp.

 

177,650

 

5,450

 

 

 

Paychex, Inc.

 

180,722

 

3,000

 

 

 

R.R. Donnelley & Sons Co.

 

104,100

 

2,300

 

 

 

Robert Half Intl., Inc.

 

62,169

 

 

 

 

 

 

 

1,647,367

 

 

 

 

 

Computers: 1.8%

 

 

 

2,300

 

@

 

Affiliated Computer Services, Inc.

 

136,114

 

12,600

 

@

 

Apple Computer, Inc.

 

844,830

 

2,750

 

@

 

Computer Sciences Corp.

 

148,775

 

59,100

 

@

 

Dell, Inc.

 

2,394,731

 

9,150

 

 

 

Electronic Data Systems Corp.

 

205,418

 

45,400

 

@

 

EMC Corp.

 

609,268

 

7,100

 

@

 

Gateway, Inc.

 

48,351

 

55,700

 

 

 

Hewlett-Packard Co.

 

1,114,000

 

 

See Accompanying Notes to Financial Statements

 

76


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

39,900

 

 

 

International Business Machines Corp.

 

$

3,760,175

 

2,450

 

@

 

Lexmark Intl., Inc.

 

208,005

 

1,750

 

@

 

NCR Corp.

 

104,528

 

5,750

 

@

 

Network Appliance, Inc.

 

173,420

 

98,200

 

@

 

Sun Microsystems, Inc.

 

545,010

 

4,800

 

@

 

Sungard Data Systems, Inc.

 

127,248

 

5,300

 

@

 

Unisys Corp.

 

60,897

 

 

 

 

 

 

 

10,480,770

 

 

 

 

 

Cosmetics/Personal Care: 1.2%

 

 

 

1,575

 

 

 

Alberto-Culver Co.

 

72,923

 

7,150

 

 

 

Avon Products, Inc.

 

268,411

 

9,950

 

 

 

Colgate-Palmolive Co.

 

457,601

 

30,150

 

 

 

Gillette Co.

 

1,311,223

 

12,250

 

 

 

Kimberly-Clark Corp.

 

779,223

 

76,400

 

 

 

Procter & Gamble Co.

 

4,085,871

 

 

 

 

 

 

 

6,975,252

 

 

 

 

 

Distribution/Wholesale: 0.0%

 

 

 

2,500

 

 

 

Genuine Parts Co.

 

108,525

 

2,500

 

 

 

W.W. Grainger, Inc.

 

154,650

 

 

 

 

 

 

 

263,175

 

 

 

 

 

Diversified Financial Services: 2.5%

 

 

 

23,450

 

 

 

American Express Co.

 

1,306,399

 

1,500

 

 

 

Bear Stearns Cos., Inc.

 

146,370

 

3,630

 

 

 

Capital One Financial Corp.

 

285,245

 

4,400

 

 

 

CIT Group, Inc.

 

188,100

 

91,600

 

 

 

Citigroup, Inc.

 

4,099,099

 

18,248

 

 

 

Countrywide Financial Corp.

 

606,016

 

5,050

 

@

 

E*TRADE Financial Corp.

 

69,993

 

17,900

 

 

 

Fannie Mae

 

1,229,729

 

1,850

 

 

 

Federated Investors, Inc.

 

54,427

 

4,400

 

 

 

Franklin Resources, Inc.

 

288,772

 

12,750

 

 

 

Freddie Mac

 

870,315

 

9,050

 

 

 

Goldman Sachs Group, Inc.

 

948,078

 

26,450

 

 

 

J.P. Morgan Chase & Co.

 

995,843

 

4,700

 

 

 

Janus Capital Group, Inc.

 

77,785

 

4,850

 

 

 

Lehman Brothers Holdings, Inc.

 

406,333

 

24,000

 

 

 

MBNA Corp.

 

637,440

 

17,550

 

 

 

Merrill Lynch & Co., Inc.

 

977,711

 

7,700

 

 

 

Morgan Stanley

 

390,775

 

6,590

 

@

 

Providian Financial Corp.

 

105,770

 

6,750

 

 

 

SLM Corp.

 

345,398

 

900

 

 

 

T. Rowe Price Group, Inc.

 

53,244

 

 

 

 

 

 

 

14,082,842

 

 

 

 

 

Electric: 0.9%

 

 

 

16,200

 

@

 

AES Corp.

 

198,288

 

1,250

 

 

 

Ameren Corp.

 

60,525

 

6,550

 

 

 

American Electric Power Co., Inc.

 

223,814

 

1,300

 

 

 

Cinergy Corp.

 

53,807

 

4,450

 

 

 

Consolidated Edison, Inc.

 

195,133

 

3,250

 

 

 

Constellation Energy Group, Inc.

 

142,025

 

2,300

 

 

 

Dominion Resources, Inc.

 

150,581

 

3,200

 

 

 

DTE Energy Co.

 

140,416

 

22,750

 

 

 

Duke Energy Corp.

 

575,119

 

7,910

 

 

 

Edison Intl

 

252,329

 

4,050

 

 

 

Entergy Corp.

 

262,521

 

12,300

 

 

 

Exelon Corp.

 

513,032

 

5,250

 

 

 

FirstEnergy Corp.

 

221,708

 

3,250

 

 

 

FPL Group, Inc.

 

228,573

 

7,070

 

@

 

PG&E Corp.

 

235,148

 

1,950

 

 

 

Pinnacle West Capital Corp.

 

86,190

 

4,550

 

 

 

PPL Corp.

 

236,373

 

4,300

 

 

 

Public Service Enterprise Group, Inc.

 

189,157

 

13,000

 

 

 

Southern Co.

 

426,270

 

4,100

 

 

 

TECO Energy, Inc.

 

61,336

 

7,500

 

 

 

TXU Corp.

 

471,150

 

6,050

 

 

 

Xcel Energy, Inc.

 

109,263

 

 

 

 

 

 

 

5,032,758

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

10,850

 

 

 

Emerson Electric Co.

 

724,997

 

 

 

 

 

 

 

724,997

 

 

 

 

 

Electronics: 0.2%

 

 

 

7,800

 

@

 

Agilent Technologies, Inc.

 

178,541

 

4,400

 

 

 

Applera Corp. — Applied Biosystems Group

 

90,200

 

2,200

 

@

 

Fisher Scientific Intl.

 

124,388

 

5,030

 

@

 

Jabil Circuit, Inc.

 

126,052

 

1,800

 

 

 

Parker Hannifin Corp.

 

134,640

 

3,500

 

 

 

PerkinElmer, Inc.

 

74,655

 

7,200

 

@

 

Sanmina-SCI Corp.

 

63,576

 

14,400

 

@

 

Solectron Corp.

 

90,000

 

1,050

 

 

 

Tektronix, Inc.

 

32,939

 

2,950

 

@

 

Thermo Electron Corp.

 

89,238

 

3,050

 

@

 

Waters Corp.

 

142,313

 

 

 

 

 

 

 

1,146,542

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

1,600

 

 

 

Fluor Corp.

 

83,040

 

 

 

 

 

 

 

83,040

 

 

 

 

 

Entertainment: 0.0%

 

 

 

5,550

 

 

 

International Game Technology

 

196,193

 

 

 

 

 

 

 

196,193

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

9,000

 

 

 

Waste Management, Inc.

 

268,290

 

 

 

 

 

 

 

268,290

 

 

 

 

 

Food: 0.4%

 

 

 

6,850

 

 

 

Albertson’s, Inc.

 

173,305

 

2,850

 

 

 

Campbell Soup Co.

 

81,311

 

8,150

 

 

 

ConAgra Foods, Inc.

 

220,458

 

6,800

 

 

 

General Mills, Inc.

 

309,332

 

5,350

 

 

 

H.J. Heinz Co.

 

198,806

 

4,350

 

 

 

Hershey Foods Corp.

 

225,330

 

6,250

 

 

 

Kellogg Co.

 

273,125

 

5,100

 

@

 

Kroger Co.

 

82,518

 

2,900

 

 

 

McCormick & Co., Inc.

 

105,705

 

3,100

 

@

 

Safeway, Inc.

 

59,768

 

14,250

 

 

 

Sara Lee Corp.

 

334,590

 

3,600

 

 

 

SUPERVALU, Inc.

 

113,724

 

5,100

 

 

 

Wm. Wrigley Jr. Co.

 

350,879

 

 

 

 

 

 

 

2,528,851

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

4,700

 

 

 

Georgia-Pacific Corp.

 

172,067

 

8,000

 

 

 

International Paper Co.

 

332,160

 

2,500

 

 

 

Louisiana-Pacific Corp.

 

61,175

 

4,350

 

 

 

MeadWestvaco Corp.

 

146,378

 

3,250

 

 

 

Plum Creek Timber Co., Inc.

 

120,250

 

1,100

 

 

 

Temple-Inland, Inc.

 

65,549

 

6,250

 

 

 

Weyerhaeuser Co.

 

412,500

 

 

 

 

 

 

 

1,310,079

 

 

See Accompanying Notes to Financial Statements

 

77


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Gas: 0.1%

 

 

 

3,000

 

 

 

KeySpan Corp.

 

$

118,560

 

4,500

 

 

 

Sempra Energy

 

166,410

 

 

 

 

 

 

 

284,970

 

 

 

 

 

Hand/Machine Tools: 0.0%

 

 

 

1,950

 

 

 

Black & Decker Corp.

 

163,976

 

400

 

 

 

Snap-On, Inc.

 

12,644

 

1,800

 

 

 

Stanley Works

 

84,168

 

 

 

 

 

 

 

260,788

 

 

 

 

 

Healthcare — Products: 1.4%

 

 

 

1,150

 

 

 

Bausch & Lomb, Inc.

 

67,712

 

10,900

 

 

 

Baxter Intl., Inc.

 

344,985

 

6,220

 

 

 

Becton Dickinson & Co.

 

340,732

 

4,200

 

 

 

Biomet, Inc.

 

201,054

 

15,500

 

@

 

Boston Scientific Corp.

 

539,555

 

2,400

 

 

 

C.R. Bard, Inc.

 

143,784

 

5,670

 

 

 

Guidant Corp.

 

367,586

 

70,750

 

 

 

Johnson & Johnson

 

4,267,639

 

21,200

 

 

 

Medtronic, Inc.

 

1,018,660

 

7,200

 

@

 

St. Jude Medical, Inc.

 

274,608

 

2,750

 

 

 

Stryker Corp.

 

120,973

 

3,850

 

@

 

Zimmer Holdings, Inc.

 

314,160

 

 

 

 

 

 

 

8,001,448

 

 

 

 

 

Healthcare — Services: 0.6%

 

 

 

4,500

 

 

 

Aetna, Inc.

 

533,295

 

4,200

 

@

 

Humana, Inc.

 

104,244

 

2,150

 

@

 

Laboratory Corp. Of America Holdings

 

103,093

 

1,700

 

 

 

Manor Care, Inc.

 

58,565

 

700

 

 

 

Quest Diagnostics, Inc.

 

65,625

 

19,800

 

 

 

UnitedHealth Group, Inc.

 

1,640,429

 

4,970

 

@

 

WellPoint Health Networks, Inc.

 

621,747

 

4,090

 

@

 

WellPoint, Inc.

 

414,440

 

 

 

 

 

 

 

3,541,438

 

 

 

 

 

Home Builders: 0.0%

 

 

 

2,220

 

 

 

Centex Corp.

 

116,483

 

 

 

 

 

 

 

116,483

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

3,800

 

 

 

Leggett & Platt, Inc.

 

113,430

 

1,250

 

 

 

Whirlpool Corp.

 

80,688

 

 

 

 

 

 

 

194,118

 

 

 

 

 

Household Products/Wares: 0.1%

 

 

 

2,100

 

 

 

Avery Dennison Corp.

 

123,186

 

4,960

 

 

 

Clorox Co.

 

273,395

 

2,750

 

 

 

Fortune Brands, Inc.

 

215,820

 

 

 

 

 

 

 

612,401

 

 

 

 

 

Housewares: 0.0%

 

 

 

5,000

 

 

 

Newell Rubbermaid, Inc.

 

115,400

 

 

 

 

 

 

 

115,400

 

 

 

 

 

Insurance: 2.0%

 

 

 

5,750

 

@@

 

ACE Ltd.

 

232,415

 

8,800

 

 

 

AFLAC, Inc.

 

331,056

 

17,350

 

 

 

Allstate Corp.

 

876,174

 

1,800

 

 

 

AMBAC Financial Group, Inc.

 

146,394

 

78,300

 

 

 

American International Group, Inc.

 

4,960,304

 

5,250

 

 

 

AON Corp.

 

110,880

 

6,000

 

 

 

Chubb Corp.

 

457,260

 

4,270

 

 

 

CIGNA Corp.

 

298,985

 

2,992

 

 

 

Cincinnati Financial Corp.

 

134,042

 

4,450

 

 

 

Hartford Financial Services Group, Inc.

 

284,800

 

2,250

 

 

 

Jefferson-Pilot Corp.

 

110,678

 

4,500

 

 

 

Lincoln National Corp.

 

207,090

 

4,400

 

 

 

Loews Corp.

 

307,604

 

9,050

 

 

 

Marsh & McLennan Cos., Inc.

 

258,740

 

2,700

 

 

 

MBIA, Inc.

 

161,892

 

18,650

 

 

 

MetLife, Inc.

 

727,350

 

1,850

 

 

 

MGIC Investment Corp.

 

125,800

 

4,850

 

 

 

Principal Financial Group

 

182,748

 

3,500

 

 

 

Progressive Corp.

 

318,465

 

15,450

 

 

 

Prudential Financial, Inc.

 

756,278

 

4,100

 

 

 

Safeco Corp.

 

198,727

 

2,100

 

 

 

Torchmark Corp.

 

115,311

 

5,000

 

 

 

UnumProvident Corp.

 

77,850

 

2,450

 

@@

 

XL Capital Ltd.

 

184,632

 

 

 

 

 

 

 

11,565,475

 

 

 

 

 

Internet: 0.5%

 

 

 

11,700

 

@

 

eBay, Inc.

 

1,315,665

 

9,700

 

@

 

Symantec Corp.

 

618,957

 

25,150

 

@

 

Yahoo!, Inc.

 

946,143

 

 

 

 

 

 

 

2,880,765

 

 

 

 

 

Iron/Steel: 0.1%

 

 

 

3,100

 

 

 

Nucor Corp.

 

163,990

 

2,750

 

 

 

United States Steel Corp.

 

143,990

 

 

 

 

 

 

 

307,980

 

 

 

 

 

Leisure Time: 0.2%

 

 

 

1,450

 

 

 

Brunswick Corp.

 

70,789

 

11,900

 

 

 

Carnival Corp.

 

630,819

 

4,400

 

 

 

Harley-Davidson, Inc.

 

254,408

 

3,400

 

 

 

Sabre Holdings Corp.

 

78,472

 

 

 

 

 

 

 

1,034,488

 

 

 

 

 

Lodging: 0.1%

 

 

 

1,430

 

 

 

Harrah’s Entertainment, Inc.

 

87,802

 

5,600

 

 

 

Hilton Hotels Corp.

 

115,696

 

3,800

 

 

 

Marriott Intl., Inc.

 

216,030

 

3,500

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

183,015

 

 

 

 

 

 

 

602,543

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

2,350

 

 

 

Caterpillar, Inc.

 

215,143

 

 

 

 

 

 

 

215,143

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

1,200

 

 

 

Cummins, Inc.

 

95,544

 

3,950

 

 

 

Deere & Co.

 

283,334

 

3,750

 

 

 

Rockwell Automation, Inc.

 

177,375

 

 

 

 

 

 

 

556,253

 

 

 

 

 

Media: 1.0%

 

 

 

4,050

 

 

 

Clear Channel Communications, Inc.

 

136,404

 

41,500

 

@

 

Comcast Corp.

 

1,246,659

 

4,750

 

 

 

Gannett Co., Inc.

 

391,828

 

1,150

 

 

 

Knight-Ridder, Inc.

 

78,304

 

4,650

 

 

 

McGraw-Hill Cos., Inc.

 

407,945

 

1,050

 

 

 

Meredith Corp.

 

55,356

 

2,200

 

 

 

New York Times Co.

 

90,200

 

80,500

 

@

 

Time Warner, Inc.

 

1,425,654

 

2,250

 

 

 

Tribune Co.

 

97,583

 

2,200

 

@

 

Univision Communications, Inc.

 

66,220

 

 

See Accompanying Notes to Financial Statements

 

78


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Media (continued)

 

 

 

12,300

 

 

 

Viacom, Inc.

 

$

426,810

 

38,250

 

 

 

Walt Disney Co.

 

1,028,160

 

 

 

 

 

 

 

5,451,123

 

 

 

 

 

Mining: 0.0%

 

 

 

2,450

 

 

 

Phelps Dodge Corp.

 

237,969

 

 

 

 

 

 

 

237,969

 

 

 

 

 

Miscellaneous Manufacturing: 2.0%

 

 

 

14,450

 

 

 

3M Co.

 

1,150,075

 

1,700

 

 

 

Cooper Industries Ltd.

 

112,727

 

4,950

 

 

 

Danaher Corp.

 

281,556

 

3,150

 

 

 

Dover Corp.

 

127,418

 

5,970

 

 

 

Eastman Kodak Co.

 

195,279

 

2,200

 

 

 

Eaton Corp.

 

148,280

 

186,750

 

 

 

General Electric Co.

 

6,603,479

 

15,850

 

 

 

Honeywell Intl., Inc.

 

559,980

 

5,550

 

 

 

Illinois Tool Works, Inc.

 

522,977

 

2,600

 

@@

 

Ingersoll-Rand Co.

 

193,492

 

1,350

 

 

 

ITT Industries, Inc.

 

114,912

 

1,800

 

 

 

Pall Corp.

 

48,762

 

1,930

 

 

 

Textron, Inc.

 

140,157

 

35,450

 

@@

 

Tyco Intl. Ltd.

 

1,204,236

 

 

 

 

 

 

 

11,403,330

 

 

 

 

 

Office/Business Equipment: 0.1%

 

 

 

4,400

 

 

 

Pitney Bowes, Inc.

 

192,588

 

12,800

 

@

 

Xerox Corp.

 

196,096

 

 

 

 

 

 

 

388,684

 

 

 

 

 

Oil and Gas: 2.8%

 

 

 

1,560

 

 

 

Amerada Hess Corp.

 

138,606

 

5,400

 

 

 

Anadarko Petroleum Corp.

 

375,840

 

4,600

 

 

 

Apache Corp.

 

248,676

 

11,500

 

 

 

Burlington Resources, Inc.

 

533,715

 

58,650

 

 

 

ChevronTexaco Corp.

 

3,202,289

 

14,950

 

 

 

ConocoPhillips

 

1,360,300

 

14,400

 

 

 

Devon Energy Corp.

 

596,447

 

1,700

 

 

 

EOG Resources, Inc.

 

127,619

 

141,550

 

 

 

Exxon Mobil Corp.

 

7,254,437

 

2,150

 

 

 

Kerr-McGee Corp.

 

133,795

 

5,000

 

 

 

Marathon Oil Corp.

 

197,200

 

850

 

@,@@

 

Nabors Industries Ltd.

 

44,200

 

1,850

 

@

 

Noble Corp.

 

89,633

 

6,890

 

 

 

Occidental Petroleum Corp.

 

414,847

 

1,800

 

 

 

Sunoco, Inc.

 

148,608

 

4,950

 

@

 

Transocean, Inc.

 

199,337

 

6,200

 

 

 

Unocal Corp.

 

285,448

 

6,200

 

 

 

Valero Energy Corp.

 

290,098

 

 

 

 

 

 

 

15,641,095

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

4,600

 

 

 

Baker Hughes, Inc.

 

203,918

 

2,750

 

 

 

BJ Services Co.

 

139,343

 

7,200

 

 

 

Halliburton Co.

 

297,720

 

 

 

 

 

 

 

640,981

 

 

 

 

 

Packaging and Containers: 0.1%

 

 

 

2,600

 

 

 

Ball Corp.

 

116,298

 

1,400

 

 

 

Bemis Co.

 

38,976

 

2,550

 

@

 

Pactiv Corp.

 

63,368

 

1,400

 

@

 

Sealed Air Corp.

 

71,974

 

 

 

 

 

 

 

290,616

 

 

 

 

 

Pharmaceuticals: 1.9%

 

 

 

29,000

 

 

 

Abbott Laboratories

 

1,216,839

 

2,250

 

 

 

Allergan, Inc.

 

165,375

 

2,050

 

 

 

AmerisourceBergen Corp.

 

120,827

 

36,500

 

 

 

Bristol-Myers Squibb Co.

 

857,750

 

6,700

 

 

 

Cardinal Health, Inc.

 

350,276

 

13,600

 

@

 

Caremark Rx, Inc.

 

486,336

 

8,000

 

 

 

Eli Lilly & Co.

 

426,640

 

1,400

 

@

 

Express Scripts, Inc.

 

100,744

 

6,050

 

@

 

Forest Laboratories, Inc.

 

235,769

 

6,800

 

@

 

Gilead Sciences, Inc.

 

234,328

 

3,200

 

@

 

Hospira, Inc.

 

103,136

 

5,700

 

@

 

King Pharmaceuticals, Inc.

 

70,965

 

4,948

 

@

 

Medco Health Solutions, Inc.

 

186,639

 

41,000

 

 

 

Merck & Co., Inc.

 

1,148,819

 

133,070

 

 

 

Pfizer, Inc.

 

3,695,353

 

27,550

 

 

 

Schering-Plough Corp.

 

491,768

 

25,050

 

 

 

Wyeth

 

998,744

 

 

 

 

 

 

 

10,890,308

 

 

 

 

 

Pipelines: 0.1%

 

 

 

12,850

 

@

 

Dynegy, Inc.

 

72,603

 

9,500

 

 

 

El Paso Corp.

 

99,180

 

750

 

 

 

Kinder Morgan, Inc.

 

51,975

 

9,000

 

 

 

Williams Cos., Inc.

 

150,030

 

 

 

 

 

 

 

373,788

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

2,900

 

 

 

Equity Office Properties Trust

 

79,605

 

2,750

 

 

 

ProLogis

 

110,633

 

3,700

 

 

 

Simon Property Group, Inc.

 

229,696

 

 

 

 

 

 

 

419,934

 

 

 

 

 

Retail: 2.6%

 

 

 

5,550

 

@

 

Bed Bath & Beyond, Inc.

 

221,600

 

5,000

 

 

 

Best Buy Co., Inc.

 

281,900

 

5,950

 

 

 

Circuit City Stores, Inc.

 

92,761

 

14,550

 

 

 

Costco Wholesale Corp.

 

707,130

 

6,350

 

 

 

CVS Corp.

 

288,100

 

3,950

 

 

 

Darden Restaurants, Inc.

 

107,677

 

2,650

 

 

 

Federated Department Stores, Inc.

 

145,220

 

20,670

 

 

 

Gap, Inc.

 

451,640

 

65,640

 

 

 

Home Depot, Inc.

 

2,740,469

 

8,850

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

341,610

 

2,350

 

@

 

Kohl’s Corp.

 

108,476

 

11,550

 

 

 

Limited Brands, Inc.

 

282,282

 

14,590

 

 

 

Lowe’s Cos., Inc.

 

807,265

 

4,250

 

 

 

May Department Stores Co.

 

119,510

 

23,100

 

 

 

McDonald’s Corp.

 

710,094

 

2,350

 

 

 

Nordstrom, Inc.

 

102,813

 

5,500

 

@

 

Office Depot, Inc.

 

90,200

 

3,840

 

 

 

RadioShack Corp.

 

121,229

 

11,620

 

 

 

Staples, Inc.

 

370,794

 

7,050

 

@

 

Starbucks Corp.

 

396,633

 

16,900

 

 

 

Target Corp.

 

865,618

 

7,800

 

 

 

TJX Cos., Inc.

 

183,612

 

3,950

 

@

 

Toys R US, Inc.

 

76,393

 

75,100

 

 

 

Wal-Mart Stores, Inc.

 

3,909,705

 

25,900

 

 

 

Walgreen Co.

 

988,861

 

3,450

 

 

 

Wendy’s Intl., Inc.

 

123,062

 

4,250

 

 

 

Yum! Brands, Inc.

 

192,950

 

 

 

 

 

 

 

14,827,604

 

 

 

 

 

Savings and Loans: 0.2%

 

 

 

2,700

 

 

 

Golden West Financial Corp.

 

321,948

 

5,500

 

 

 

Sovereign Bancorp, Inc.

 

120,175

 

14,150

 

 

 

Washington Mutual, Inc.

 

576,047

 

 

 

 

 

 

 

1,018,170

 

 

 

 

 

Semiconductors: 0.8%

 

 

 

2,450

 

@

 

Advanced Micro Devices, Inc.

 

52,136

 

5,600

 

@

 

Altera Corp.

 

127,008

 

6,600

 

 

 

Analog Devices, Inc.

 

243,870

 

27,500

 

@

 

Applied Materials, Inc.

 

457,600

 

113,600

 

 

 

Intel Corp.

 

2,538,960

 

 

See Accompanying Notes to Financial Statements

 

79


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Semiconductors (continued)

 

 

 

3,300

 

@

 

KLA-Tencor Corp.

 

$

148,698

 

5,300

 

 

 

Linear Technology Corp.

 

202,248

 

2,050

 

 

 

Maxim Integrated Products, Inc.

 

83,968

 

6,850

 

@

 

National Semiconductor Corp.

 

105,901

 

1,800

 

@

 

Qlogic Corp.

 

61,902

 

12,000

 

 

 

Texas Instruments, Inc.

 

290,160

 

 

 

 

 

 

 

4,312,451

 

 

 

 

 

Software: 1.8%

 

 

 

3,550

 

 

 

Adobe Systems, Inc.

 

214,988

 

3,300

 

 

 

Autodesk, Inc.

 

215,853

 

9,650

 

 

 

Automatic Data Processing, Inc.

 

439,365

 

5,280

 

@

 

BMC Software, Inc.

 

98,102

 

2,650

 

@

 

Citrix Systems, Inc.

 

62,567

 

8,850

 

 

 

Computer Associates Intl., Inc.

 

270,191

 

10,700

 

@

 

Compuware Corp.

 

61,739

 

2,200

 

@

 

Electronic Arts, Inc.

 

107,580

 

16,128

 

 

 

First Data Corp.

 

662,699

 

2,750

 

@

 

Fiserv, Inc.

 

105,903

 

6,550

 

 

 

IMS Health, Inc.

 

147,834

 

3,450

 

@

 

Intuit, Inc.

 

144,348

 

191,000

 

 

 

Microsoft Corp.

 

5,120,709

 

7,200

 

@

 

Novell, Inc.

 

43,920

 

154,750

 

@

 

Oracle Corp.

 

1,959,134

 

7,300

 

@

 

PeopleSoft, Inc.

 

172,353

 

8,350

 

@

 

Siebel Systems, Inc.

 

84,168

 

6,500

 

@

 

Veritas Software Corp.

 

142,350

 

 

 

 

 

 

 

10,053,803

 

 

 

 

 

Telecommunications: 2.1%

 

 

 

6,600

 

 

 

Alltel Corp.

 

374,154

 

5,540

 

 

 

AT&T Corp.

 

101,382

 

8,050

 

@

 

Avaya, Inc.

 

132,181

 

34,350

 

 

 

BellSouth Corp.

 

921,267

 

3,250

 

 

 

CenturyTel, Inc.

 

106,990

 

119,050

 

@

 

Cisco Systems, Inc.

 

2,227,425

 

5,600

 

 

 

Citizens Communications Co.

 

80,080

 

4,800

 

@

 

Comverse Technology, Inc.

 

102,096

 

20,600

 

@

 

Corning, Inc.

 

259,148

 

72,550

 

@

 

Lucent Technologies, Inc.

 

285,122

 

59,050

 

 

 

Motorola, Inc.

 

1,137,303

 

18,350

 

@

 

Nextel Communications, Inc.

 

522,241

 

30,150

 

 

 

Qualcomm, Inc.

 

1,254,843

 

28,750

 

@

 

Qwest Communications Intl., Inc.

 

115,000

 

58,900

 

 

 

SBC Communications, Inc.

 

1,482,512

 

3,850

 

 

 

Scientific-Atlanta, Inc.

 

114,037

 

25,900

 

 

 

Sprint Corp.

 

590,779

 

8,450

 

@

 

Tellabs, Inc.

 

72,248

 

48,750

 

 

 

Verizon Communications, Inc.

 

2,009,962

 

 

 

 

 

 

 

11,888,770

 

 

 

 

 

Textiles: 0.0%

 

 

 

3,700

 

 

 

Cintas Corp.

 

165,464

 

 

 

 

 

 

 

165,464

 

 

 

 

 

Toys/Games/Hobbies: 0.0%

 

 

 

4,900

 

 

 

Hasbro, Inc.

 

93,247

 

7,350

 

 

 

Mattel, Inc.

 

139,283

 

 

 

 

 

 

 

232,530

 

 

 

 

 

Transportation: 0.6%

 

 

 

5,700

 

 

 

Burlington Northern Santa Fe Corp.

 

256,728

 

3,950

 

 

 

CSX Corp.

 

150,614

 

7,450

 

 

 

FedEx Corp.

 

707,973

 

8,050

 

 

 

Norfolk Southern Corp.

 

276,357

 

1,200

 

 

 

Ryder System, Inc.

 

64,368

 

1,750

 

 

 

Union Pacific Corp.

 

111,020

 

19,950

 

 

 

United Parcel Service, Inc.

 

1,678,792

 

 

 

 

 

 

 

3,245,852

 

 

 

 

 

Total Common Stock
(Cost $156,655,918)

 

200,398,498

 

 

Principal

 

 

 

 

 

 

 

Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 59.4%

 

 

 

 

 

 

 

Federal Home Loan Bank: 55.4%

 

 

 

$

350,000,000

 

 

 

3.670%, due 10/05/07

 

$

315,893,900

 

 

 

 

 

 

 

315,893,900

 

 

 

 

 

Federal National Mortgage Association: 4.0%

 

 

 

25,000,000

 

 

 

3.740%, due 10/05/07

 

22,521,700

 

 

 

 

 

 

 

22,521,700

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $342,808,761)

 

338,415,600

 

U.S. TREASURY OBLIGATIONS: 4.8%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 4.8%

 

 

 

29,760,000

 

 

 

3.240%, due 08/15/07

 

27,295,991

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $27,417,454)

 

27,295,991

 

 

 

 

 

Total Long-Term Investments
(Cost $526,882,133)

 

566,110,089

 

SHORT-TERM INVESTMENTS: 0.8%

 

 

 

 

 

 

 

Repurchase Agreement: 0.8%

 

 

 

4,428,000

 

 

 

Goldman Sachs Repurchase Agreement dated 11/30/04, 2.060%, due 12/01/04, $4,428,253 to be received upon repurchase (Collateralized by $4,525,000 Federal Home Loan Bank, 3.200%, Market Value plus accrued interest $4,516,940, due 11/29/06)

 

4,428,000

 

 

 

 

 

Total Short-Term Investments
(Cost $4,428,000)

 

4,428,000

 

 

 

 

 

 

 

 

Total Investments In Securities
(Cost $531,310,133)*

 

100.2

%

$

570,538,089

 

Other Assets and Liabilities-Net

 

(0.2

)

(1,144,091

)

 

 

 

 

 

 

Net Assets

 

100.0

%

$

569,393,998

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $535,435,198. Net unrealized appreciation consists of:

 

Gross Unrealized Appreciation

 

$

41,028,474

 

Gross Unrealized Depreciation

 

(5,925,583

)

Net Unrealized Appreciation

 

$

35,102,891

 

 

See Accompanying Notes to Financial Statements

 

80


 

ING PRINCIPAL PROTECTION FUND V

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 30.3%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

1,950

 

@

 

Interpublic Group of Cos., Inc.

 

$

24,200

 

2,050

 

 

 

Omnicom Group, Inc.

 

166,050

 

 

 

 

 

 

 

190,250

 

 

 

 

 

Aerospace/ Defense: 0.7%

 

 

 

18,500

 

 

 

Boeing Co.

 

991,045

 

4,300

 

 

 

General Dynamics Corp.

 

465,948

 

2,100

 

 

 

Goodrich Corp.

 

66,675

 

5,800

 

 

 

Lockheed Martin Corp.

 

352,872

 

3,850

 

 

 

Northrop Grumman Corp.

 

216,871

 

10,200

 

 

 

Raytheon Co.

 

411,468

 

2,000

 

 

 

Rockwell Collins, Inc.

 

79,720

 

6,600

 

 

 

United Technologies Corp.

 

644,028

 

 

 

 

 

 

 

3,228,627

 

 

 

 

 

Agriculture: 0.4%

 

 

 

25,350

 

 

 

Altria Group, Inc.

 

1,457,371

 

8,100

 

 

 

Archer-Daniels-Midland Co.

 

171,720

 

3,600

 

 

 

Monsanto Co.

 

165,672

 

1,550

 

 

 

Reynolds American, Inc.

 

117,227

 

3,600

 

 

 

UST, Inc.

 

158,508

 

 

 

 

 

 

 

2,070,498

 

 

 

 

 

Apparel: 0.2%

 

 

 

3,350

 

@

 

Coach, Inc.

 

166,964

 

1,260

 

 

 

Jones Apparel Group, Inc.

 

44,768

 

1,750

 

 

 

Liz Claiborne, Inc.

 

71,873

 

5,900

 

 

 

Nike, Inc.

 

499,493

 

500

 

 

 

Reebok Intl. Ltd.

 

19,440

 

1,900

 

 

 

VF Corp.

 

102,581

 

 

 

 

 

 

 

905,119

 

 

 

 

 

Auto Manufacturers: 0.2%

 

 

 

40,030

 

 

 

Ford Motor Co.

 

567,625

 

7,100

 

 

 

General Motors Corp.

 

273,989

 

3,275

 

 

 

PACCAR, Inc.

 

255,778

 

 

 

 

 

 

 

1,097,392

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

1,300

 

 

 

Dana Corp.

 

21,255

 

4,150

 

@

 

Goodyear Tire & Rubber Co.

 

52,373

 

2,450

 

 

 

Johnson Controls, Inc.

 

150,430

 

 

 

 

 

 

 

224,058

 

 

 

 

 

Banks: 1.9%

 

 

 

4,350

 

 

 

AmSouth Bancorporation

 

112,796

 

50,404

 

 

 

Bank of America Corp.

 

2,332,192

 

7,300

 

 

 

BB&T Corp.

 

309,885

 

2,500

 

 

 

Comerica, Inc.

 

153,750

 

2,450

 

 

 

Fifth Third Bancorp

 

123,382

 

1,450

 

 

 

First Horizon National Corp.

 

63,365

 

2,900

 

 

 

Huntington Bancshares, Inc.

 

70,354

 

7,000

 

 

 

KeyCorp

 

233,030

 

1,250

 

 

 

M & T Bank Corp.

 

131,763

 

2,250

 

 

 

Marshall & Ilsley Corp.

 

93,803

 

4,350

 

 

 

Mellon Financial Corp.

 

127,107

 

11,600

 

 

 

National City Corp.

 

430,128

 

1,875

 

 

 

North Fork Bancorporation, Inc.

 

54,000

 

2,450

 

 

 

Northern Trust Corp.

 

115,248

 

3,000

 

 

 

PNC Financial Services Group, Inc.

 

163,200

 

4,856

 

 

 

Regions Financial Corp.

 

169,911

 

1,400

 

 

 

State Street Corp.

 

62,384

 

4,650

 

 

 

SunTrust Banks, Inc.

 

331,545

 

1,400

 

 

 

Synovus Financial Corp.

 

37,800

 

3,400

 

 

 

The Bank of New York Co., Inc.

 

111,894

 

24,700

 

 

 

U.S. Bancorp

 

731,861

 

26,899

 

 

 

Wachovia Corp.

 

1,392,022

 

20,950

 

 

 

Wells Fargo & Co.

 

1,294,082

 

1,050

 

 

 

Zions Bancorporation

 

69,825

 

 

 

 

 

 

 

8,715,327

 

 

 

 

 

Beverages: 0.7%

 

 

 

550

 

 

 

Adolph Coors Co.

 

41,195

 

10,600

 

 

 

Anheuser-Busch Cos., Inc.

 

530,954

 

1,900

 

 

 

Brown-Forman Corp.

 

91,238

 

29,900

 

 

 

Coca-Cola Co.

 

1,175,369

 

4,850

 

 

 

Coca-Cola Enterprises, Inc.

 

100,880

 

2,650

 

 

 

Pepsi Bottling Group, Inc.

 

74,253

 

21,000

 

 

 

PepsiCo, Inc.

 

1,048,110

 

 

 

 

 

 

 

3,061,999

 

 

 

 

 

Biotechnology: 0.3%

 

 

 

15,550

 

@

 

Amgen, Inc.

 

933,622

 

4,150

 

@

 

Biogen Idec, Inc.

 

243,522

 

2,900

 

@

 

Genzyme Corp.

 

162,429

 

2,500

 

@

 

MedImmune, Inc.

 

66,500

 

450

 

@

 

Millipore Corp.

 

21,924

 

 

 

 

 

 

 

1,427,997

 

 

 

 

 

Building Materials: 0.1%

 

 

 

2,350

 

@

 

American Standard Cos., Inc.

 

91,509

 

6,200

 

 

 

Masco Corp.

 

218,674

 

1,300

 

 

 

Vulcan Materials Co.

 

67,405

 

 

 

 

 

 

 

377,588

 

 

 

 

 

Chemicals: 0.5%

 

 

 

2,950

 

 

 

Air Products & Chemicals, Inc.

 

168,888

 

1,100

 

 

 

Ashland, Inc.

 

65,065

 

13,150

 

 

 

Dow Chemical Co.

 

663,680

 

13,850

 

 

 

E.I. du Pont de Nemours & Co.

 

627,681

 

1,100

 

 

 

Eastman Chemical Co.

 

59,818

 

1,150

 

 

 

Ecolab, Inc.

 

40,227

 

1,750

 

 

 

Engelhard Corp.

 

52,308

 

1,000

 

 

 

International Flavors & Fragrances, Inc.

 

40,500

 

3,900

 

 

 

PPG Industries, Inc.

 

263,133

 

3,450

 

 

 

Praxair, Inc.

 

154,905

 

2,750

 

 

 

Rohm & Haas Co.

 

121,248

 

2,550

 

 

 

Sherwin-Williams Co.

 

113,730

 

700

 

 

 

Sigma-Aldrich Corp.

 

41,811

 

 

 

 

 

 

 

2,412,994

 

 

 

 

 

Commercial Services: 0.3%

 

 

 

2,300

 

@

 

Apollo Group, Inc.

 

183,310

 

13,200

 

 

 

Cendant Corp.

 

299,244

 

250

 

 

 

Deluxe Corp.

 

9,885

 

2,150

 

 

 

Equifax, Inc.

 

59,383

 

3,000

 

 

 

H&R Block, Inc.

 

143,100

 

3,900

 

 

 

McKesson Corp.

 

115,245

 

1,500

 

 

 

Moody’s Corp.

 

121,125

 

3,950

 

 

 

Paychex, Inc.

 

130,982

 

2,950

 

 

 

R.R. Donnelley & Sons Co.

 

102,365

 

2,350

 

 

 

Robert Half Intl., Inc.

 

63,521

 

 

 

 

 

 

 

1,228,160

 

 

 

 

 

Computers: 1.6%

 

 

 

1,700

 

@

 

Affiliated Computer Services, Inc.

 

100,606

 

8,800

 

@

 

Apple Computer, Inc.

 

590,040

 

1,900

 

@

 

Computer Sciences Corp.

 

102,790

 

41,600

 

@

 

Dell, Inc.

 

1,685,631

 

6,600

 

 

 

Electronic Data Systems Corp.

 

148,170

 

31,800

 

@

 

EMC Corp.

 

426,756

 

4,100

 

@

 

Gateway, Inc.

 

27,921

 

39,050

 

 

 

Hewlett-Packard Co.

 

781,000

 

28,050

 

 

 

International Business Machines Corp.

 

2,643,431

 

 

See Accompanying Notes to Financial Statements

 

81


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

1,600

 

@

 

Lexmark Intl., Inc.

 

$

135,840

 

1,150

 

@

 

NCR Corp.

 

68,690

 

4,450

 

@

 

Network Appliance, Inc.

 

134,212

 

68,850

 

@

 

Sun Microsystems, Inc.

 

382,118

 

2,850

 

@

 

Sungard Data Systems, Inc.

 

75,554

 

3,300

 

@

 

Unisys Corp.

 

37,917

 

 

 

 

 

 

 

7,340,676

 

 

 

 

 

Cosmetics/ Personal Care: 1.1%

 

 

 

1,200

 

 

 

Alberto-Culver Co.

 

55,560

 

5,900

 

 

 

Avon Products, Inc.

 

221,486

 

7,000

 

 

 

Colgate-Palmolive Co.

 

321,930

 

21,150

 

 

 

Gillette Co.

 

919,814

 

8,600

 

 

 

Kimberly-Clark Corp.

 

547,046

 

53,600

 

 

 

Procter & Gamble Co.

 

2,866,528

 

 

 

 

 

 

 

4,932,364

 

 

 

 

 

Distribution/ Wholesale: 0.0%

 

 

 

2,400

 

 

 

Genuine Parts Co.

 

104,184

 

1,350

 

 

 

W.W. Grainger, Inc.

 

83,511

 

 

 

 

 

 

 

187,695

 

 

 

 

 

Diversified Financial Services: 2.2%

 

 

 

16,450

 

 

 

American Express Co.

 

916,429

 

1,350

 

 

 

Bear Stearns Cos., Inc.

 

131,733

 

2,500

 

 

 

Capital One Financial Corp.

 

196,450

 

3,100

 

 

 

CIT Group, Inc.

 

132,525

 

64,300

 

 

 

Citigroup, Inc.

 

2,877,424

 

12,798

 

 

 

Countrywide Financial Corp.

 

425,022

 

6,250

 

@

 

E*TRADE Financial Corp.

 

86,625

 

12,550

 

 

 

Fannie Mae

 

862,184

 

1,350

 

 

 

Federated Investors, Inc.

 

39,717

 

2,700

 

 

 

Franklin Resources, Inc.

 

177,201

 

8,900

 

 

 

Freddie Mac

 

607,514

 

6,350

 

 

 

Goldman Sachs Group, Inc.

 

665,226

 

18,536

 

 

 

J.P. Morgan Chase & Co.

 

697,880

 

3,300

 

 

 

Janus Capital Group, Inc.

 

54,615

 

3,050

 

 

 

Lehman Brothers Holdings, Inc.

 

255,529

 

16,800

 

 

 

MBNA Corp.

 

446,208

 

12,300

 

 

 

Merrill Lynch & Co., Inc.

 

685,233

 

5,450

 

 

 

Morgan Stanley

 

276,588

 

4,350

 

@

 

Providian Financial Corp.

 

69,818

 

4,700

 

 

 

SLM Corp.

 

240,499

 

650

 

 

 

T. Rowe Price Group, Inc.

 

38,454

 

 

 

 

 

 

 

9,882,874

 

 

 

 

 

Electric: 0.7%

 

 

 

7,800

 

@

 

AES Corp.

 

95,472

 

900

 

 

 

Ameren Corp.

 

43,578

 

5,050

 

 

 

American Electric Power Co., Inc.

 

172,559

 

900

 

 

 

Cinergy Corp.

 

37,251

 

2,550

 

 

 

Consolidated Edison, Inc.

 

111,818

 

2,150

 

 

 

Constellation Energy Group, Inc.

 

93,955

 

1,650

 

 

 

Dominion Resources, Inc.

 

108,026

 

2,400

 

 

 

DTE Energy Co.

 

105,312

 

16,000

 

 

 

Duke Energy Corp.

 

404,479

 

5,520

 

 

 

Edison Intl

 

176,088

 

2,850

 

 

 

Entergy Corp.

 

184,737

 

8,600

 

 

 

Exelon Corp.

 

358,705

 

3,500

 

 

 

FirstEnergy Corp.

 

147,805

 

2,300

 

 

 

FPL Group, Inc.

 

161,759

 

4,300

 

@

 

PG&E Corp.

 

143,018

 

1,000

 

 

 

Pinnacle West Capital Corp.

 

44,200

 

2,700

 

 

 

PPL Corp.

 

140,265

 

3,050

 

 

 

Public Service Enterprise Group, Inc.

 

134,170

 

9,100

 

 

 

Southern Co.

 

298,389

 

2,950

 

 

 

TECO Energy, Inc.

 

44,132

 

4,950

 

 

 

TXU Corp.

 

310,959

 

4,400

 

 

 

Xcel Energy, Inc.

 

79,464

 

 

 

 

 

 

 

3,396,141

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

7,050

 

 

 

Emerson Electric Co.

 

471,081

 

 

 

 

 

 

 

471,081

 

 

 

 

 

Electronics: 0.2%

 

 

 

5,900

 

@

 

Agilent Technologies, Inc.

 

135,050

 

1,550

 

 

 

Applera Corp. — Applied Biosystems Group

 

31,775

 

1,600

 

@

 

Fisher Scientific Intl

 

90,464

 

1,950

 

@

 

Jabil Circuit, Inc.

 

48,867

 

1,350

 

 

 

Parker Hannifin Corp.

 

100,980

 

2,300

 

 

 

PerkinElmer, Inc.

 

49,059

 

6,050

 

@

 

Sanmina-SCI Corp.

 

53,422

 

9,450

 

@

 

Solectron Corp.

 

59,063

 

750

 

 

 

Tektronix, Inc.

 

23,528

 

2,700

 

@

 

Thermo Electron Corp.

 

81,675

 

2,000

 

@

 

Waters Corp.

 

93,320

 

 

 

 

 

 

 

767,203

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

1,150

 

 

 

Fluor Corp.

 

59,685

 

 

 

 

 

 

 

59,685

 

 

 

 

 

Entertainment: 0.0%

 

 

 

3,800

 

 

 

International Game Technology

 

134,330

 

 

 

 

 

 

 

134,330

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

7,250

 

 

 

Waste Management, Inc.

 

216,123

 

 

 

 

 

 

 

216,123

 

 

 

 

 

Food: 0.4%

 

 

 

4,800

 

 

 

Albertson’s, Inc.

 

121,440

 

2,000

 

 

 

Campbell Soup Co.

 

57,060

 

5,750

 

 

 

ConAgra Foods, Inc.

 

155,538

 

4,150

 

 

 

General Mills, Inc.

 

188,784

 

3,850

 

 

 

H.J. Heinz Co.

 

143,066

 

2,800

 

 

 

Hershey Foods Corp.

 

145,040

 

5,150

 

 

 

Kellogg Co.

 

225,055

 

3,800

 

@

 

Kroger Co.

 

61,484

 

1,300

 

 

 

McCormick & Co., Inc.

 

47,385

 

2,200

 

@

 

Safeway, Inc.

 

42,416

 

10,050

 

 

 

Sara Lee Corp.

 

235,974

 

2,450

 

 

 

SUPERVALU, Inc.

 

77,396

 

3,700

 

 

 

Wm. Wrigley Jr. Co.

 

254,559

 

 

 

 

 

 

 

1,755,197

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

3,800

 

 

 

Georgia-Pacific Corp.

 

139,118

 

6,200

 

 

 

International Paper Co.

 

257,424

 

1,750

 

 

 

Louisiana-Pacific Corp.

 

42,823

 

3,000

 

 

 

MeadWestvaco Corp.

 

100,950

 

2,100

 

 

 

Plum Creek Timber Co., Inc.

 

77,700

 

750

 

 

 

Temple-Inland, Inc.

 

44,693

 

4,350

 

 

 

Weyerhaeuser Co.

 

287,099

 

 

 

 

 

 

 

949,807

 

 

 

 

 

Gas: 0.0%

 

 

 

1,750

 

 

 

KeySpan Corp.

 

69,160

 

950

 

 

 

Nicor, Inc.

 

35,055

 

3,250

 

 

 

Sempra Energy

 

120,185

 

 

 

 

 

 

 

224,400

 

 

See Accompanying Notes to Financial Statements

 

82


 

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Value

 

 

 

 

 

Hand/ Machine Tools: 0.0%

 

 

 

1,380

 

 

 

Black & Decker Corp.

 

$

116,044

 

300

 

 

 

Snap-On, Inc.

 

9,483

 

1,400

 

 

 

Stanley Works

 

65,464

 

 

 

 

 

 

 

190,991

 

 

 

 

 

Healthcare — Products: 1.2%

 

 

 

750

 

 

 

Bausch & Lomb, Inc.

 

44,160

 

6,700

 

 

 

Baxter Intl., Inc.

 

212,055

 

4,500

 

 

 

Becton Dickinson & Co.

 

246,510

 

3,200

 

 

 

Biomet, Inc.

 

153,184

 

10,870

 

@

 

Boston Scientific Corp.

 

378,385

 

1,200

 

 

 

C.R. Bard, Inc.

 

71,892

 

3,950

 

 

 

Guidant Corp.

 

256,079

 

49,650

 

 

 

Johnson & Johnson

 

2,994,887

 

14,900

 

 

 

Medtronic, Inc.

 

715,945

 

5,400

 

@

 

St. Jude Medical, Inc.

 

205,956

 

1,650

 

 

 

Stryker Corp.

 

72,584

 

2,700

 

@

 

Zimmer Holdings, Inc.

 

220,320

 

 

 

 

 

 

 

5,571,957

 

 

 

 

 

Healthcare — Services: 0.5%

 

 

 

3,150

 

 

 

Aetna, Inc.

 

373,307

 

3,050

 

@

 

Humana, Inc.

 

75,701

 

1,500

 

@

 

Laboratory Corp. Of America Holdings

 

71,925

 

1,200

 

 

 

Manor Care, Inc.

 

41,340

 

550

 

 

 

Quest Diagnostics, Inc.

 

51,563

 

13,900

 

 

 

UnitedHealth Group, Inc.

 

1,151,614

 

3,480

 

@

 

WellPoint Health Networks, Inc.

 

435,348

 

3,110

 

@

 

WellPoint, Inc.

 

315,136

 

 

 

 

 

 

 

2,515,934

 

 

 

 

 

Home Builders: 0.0%

 

 

 

1,460

 

 

 

Centex Corp.

 

76,606

 

 

 

 

 

 

 

76,606

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

1,800

 

 

 

Leggett & Platt, Inc.

 

53,730

 

1,100

 

 

 

Whirlpool Corp.

 

71,005

 

 

 

 

 

 

 

124,735

 

 

 

 

 

Household Products/ Wares: 0.1%

 

 

 

1,550

 

 

 

Avery Dennison Corp.

 

90,923

 

2,900

 

 

 

Clorox Co.

 

159,848

 

1,500

 

 

 

Fortune Brands, Inc.

 

117,720

 

 

 

 

 

 

 

368,491

 

 

 

 

 

Housewares: 0.0%

 

 

 

3,650

 

 

 

Newell Rubbermaid, Inc.

 

84,242

 

 

 

 

 

 

 

84,242

 

 

 

 

 

Insurance: 1.7%

 

 

 

4,250

 

@@

 

ACE Ltd.

 

171,785

 

5,350

 

 

 

AFLAC, Inc.

 

201,267

 

12,150

 

 

 

Allstate Corp.

 

613,574

 

1,350

 

 

 

AMBAC Financial Group, Inc.

 

109,796

 

55,000

 

 

 

American International Group, Inc.

 

3,484,249

 

5,250

 

 

 

AON Corp.

 

110,880

 

4,200

 

 

 

Chubb Corp.

 

320,082

 

2,970

 

 

 

CIGNA Corp.

 

207,959

 

1,890

 

 

 

Cincinnati Financial Corp.

 

84,672

 

3,200

 

 

 

Hartford Financial Services Group, Inc.

 

204,800

 

1,350

 

 

 

Jefferson-Pilot Corp.

 

66,407

 

2,550

 

 

 

Lincoln National Corp.

 

117,351

 

2,800

 

 

 

Loews Corp.

 

195,748

 

6,400

 

 

 

Marsh & McLennan Cos., Inc.

 

182,976

 

2,050

 

 

 

MBIA, Inc.

 

122,918

 

13,050

 

 

 

MetLife, Inc.

 

508,950

 

1,000

 

 

 

MGIC Investment Corp.

 

68,000

 

3,400

 

 

 

Principal Financial Group

 

128,112

 

2,450

 

 

 

Progressive Corp.

 

222,926

 

11,550

 

 

 

Prudential Financial, Inc.

 

565,372

 

2,850

 

 

 

Safeco Corp.

 

138,140

 

1,000

 

 

 

Torchmark Corp.

 

54,910

 

3,600

 

 

 

UnumProvident Corp.

 

56,052

 

1,500

 

@@

 

XL Capital Ltd.

 

113,040

 

 

 

 

 

 

 

8,049,966

 

 

 

 

 

Internet: 0.4%

 

 

 

8,100

 

@

 

eBay, Inc.

 

910,845

 

6,800

 

@

 

Symantec Corp.

 

433,908

 

17,600

 

@

 

Yahoo!, Inc.

 

662,112

 

 

 

 

 

 

 

2,006,865

 

 

 

 

 

Iron/ Steel: 0.1%

 

 

 

1,800

 

 

 

Nucor Corp.

 

95,220

 

2,700

 

 

 

United States Steel Corp.

 

141,372

 

 

 

 

 

 

 

236,592

 

 

 

 

 

Leisure Time: 0.2%

 

 

 

1,050

 

 

 

Brunswick Corp.

 

51,261

 

8,300

 

 

 

Carnival Corp.

 

439,983

 

3,350

 

 

 

Harley-Davidson, Inc.

 

193,697

 

2,400

 

 

 

Sabre Holdings Corp.

 

55,392

 

 

 

 

 

 

 

740,333

 

 

 

 

 

Lodging: 0.1%

 

 

 

1,250

 

 

 

Harrah’s Entertainment, Inc.

 

76,750

 

3,450

 

 

 

Hilton Hotels Corp.

 

71,277

 

2,300

 

 

 

Marriott Intl., Inc.

 

130,755

 

2,300

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

120,267

 

 

 

 

 

 

 

399,049

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

1,700

 

 

 

Caterpillar, Inc.

 

155,635

 

 

 

 

 

 

 

155,635

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

800

 

 

 

Cummins, Inc.

 

63,696

 

2,750

 

 

 

Deere & Co.

 

197,258

 

2,650

 

 

 

Rockwell Automation, Inc.

 

125,345

 

 

 

 

 

 

 

386,299

 

 

 

 

 

Media: 0.8%

 

 

 

2,850

 

 

 

Clear Channel Communications, Inc.

 

95,988

 

29,100

 

@

 

Comcast Corp.

 

874,164

 

3,250

 

 

 

Gannett Co., Inc.

 

268,093

 

800

 

 

 

Knight-Ridder, Inc.

 

54,472

 

3,100

 

 

 

McGraw-Hill Cos., Inc.

 

271,963

 

750

 

 

 

Meredith Corp.

 

39,540

 

1,550

 

 

 

New York Times Co.

 

63,550

 

56,500

 

@

 

Time Warner, Inc.

 

1,000,615

 

1,400

 

 

 

Tribune Co.

 

60,718

 

1,400

 

@

 

Univision Communications, Inc.

 

42,140

 

8,600

 

 

 

Viacom, Inc.

 

298,420

 

26,800

 

 

 

Walt Disney Co.

 

720,384

 

 

 

 

 

 

 

3,790,047

 

 

 

 

 

Mining: 0.0%

 

 

 

1,500

 

 

 

Phelps Dodge Corp.

 

145,695

 

 

 

 

 

 

 

145,695

 

 

See Accompanying Notes to Financial Statements

 

83


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing: 1.8%

 

 

 

10,100

 

 

 

3M Co.

 

$

803,859

 

1,500

 

 

 

Cooper Industries Ltd.

 

99,465

 

3,900

 

 

 

Danaher Corp.

 

221,832

 

2,050

 

 

 

Dover Corp.

 

82,923

 

4,560

 

 

 

Eastman Kodak Co.

 

149,158

 

1,650

 

 

 

Eaton Corp.

 

111,210

 

131,100

 

 

 

General Electric Co.

 

4,635,695

 

11,100

 

 

 

Honeywell Intl., Inc.

 

392,163

 

3,900

 

 

 

Illinois Tool Works, Inc.

 

367,497

 

1,850

 

@@

 

Ingersoll-Rand Co.

 

137,677

 

1,000

 

 

 

ITT Industries, Inc.

 

85,120

 

1,200

 

 

 

Pall Corp.

 

32,508

 

1,750

 

 

 

Textron, Inc.

 

127,085

 

26,350

 

@@

 

Tyco Intl. Ltd.

 

895,109

 

 

 

 

 

 

 

8,141,301

 

 

 

 

 

Office/ Business Equipment: 0.1%

 

 

 

2,550

 

 

 

Pitney Bowes, Inc.

 

111,614

 

9,950

 

@

 

Xerox Corp.

 

152,434

 

 

 

 

 

 

 

264,048

 

 

 

 

 

Oil and Gas: 2.5%

 

 

 

1,100

 

 

 

Amerada Hess Corp.

 

97,735

 

3,800

 

 

 

Anadarko Petroleum Corp.

 

264,480

 

3,120

 

 

 

Apache Corp.

 

168,667

 

7,700

 

 

 

Burlington Resources, Inc.

 

357,357

 

41,150

 

 

 

ChevronTexaco Corp.

 

2,246,789

 

10,500

 

 

 

ConocoPhillips

 

955,394

 

10,100

 

 

 

Devon Energy Corp.

 

418,341

 

1,050

 

 

 

EOG Resources, Inc.

 

78,824

 

99,350

 

 

 

Exxon Mobil Corp.

 

5,091,687

 

1,500

 

 

 

Kerr-McGee Corp.

 

93,345

 

4,470

 

 

 

Marathon Oil Corp.

 

176,297

 

700

 

@,@@

 

Nabors Industries Ltd.

 

36,400

 

1,850

 

@

 

Noble Corp.

 

89,633

 

4,150

 

 

 

Occidental Petroleum Corp.

 

249,872

 

1,300

 

 

 

Sunoco, Inc.

 

107,328

 

3,450

 

@

 

Transocean, Inc.

 

138,932

 

3,400

 

 

 

Unocal Corp.

 

156,536

 

4,150

 

 

 

Valero Energy Corp.

 

194,179

 

 

 

 

 

 

 

10,921,796

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

3,200

 

 

 

Baker Hughes, Inc.

 

141,856

 

1,800

 

 

 

BJ Services Co.

 

91,206

 

5,050

 

 

 

Halliburton Co.

 

208,818

 

 

 

 

 

 

 

441,880

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

1,200

 

 

 

Ball Corp.

 

53,676

 

1,000

 

 

 

Bemis Co.

 

27,840

 

2,340

 

@

 

Pactiv Corp.

 

58,149

 

1,000

 

@

 

Sealed Air Corp.

 

51,410

 

 

 

 

 

 

 

191,075

 

 

 

 

 

Pharmaceuticals: 1.6%

 

 

 

20,300

 

 

 

Abbott Laboratories

 

851,787

 

1,650

 

 

 

Allergan, Inc.

 

121,275

 

1,350

 

 

 

AmerisourceBergen Corp.

 

79,569

 

25,600

 

 

 

Bristol-Myers Squibb Co.

 

601,600

 

4,700

 

 

 

Cardinal Health, Inc.

 

245,716

 

9,600

 

@

 

Caremark Rx, Inc.

 

343,296

 

5,650

 

 

 

Eli Lilly & Co.

 

301,315

 

900

 

@

 

Express Scripts, Inc.

 

64,764

 

4,050

 

@

 

Forest Laboratories, Inc.

 

157,829

 

4,800

 

@

 

Gilead Sciences, Inc.

 

165,408

 

2,400

 

@

 

Hospira, Inc.

 

77,352

 

2,530

 

@

 

King Pharmaceuticals, Inc.

 

31,499

 

3,460

 

@

 

Medco Health Solutions, Inc.

 

130,511

 

28,750

 

 

 

Merck & Co., Inc.

 

805,575

 

93,290

 

 

 

Pfizer, Inc.

 

2,590,662

 

19,300

 

 

 

Schering-Plough Corp.

 

344,505

 

17,550

 

 

 

Wyeth

 

699,719

 

 

 

 

 

 

 

7,612,382

 

 

 

 

 

Pipelines: 0.1%

 

 

 

8,500

 

@

 

Dynegy, Inc.

 

48,025

 

5,850

 

 

 

El Paso Corp.

 

61,074

 

550

 

 

 

Kinder Morgan, Inc.

 

38,115

 

6,150

 

 

 

Williams Cos., Inc.

 

102,521

 

 

 

 

 

 

 

249,735

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

2,100

 

 

 

Equity Office Properties Trust

 

57,645

 

1,950

 

 

 

ProLogis

 

78,449

 

2,700

 

 

 

Simon Property Group, Inc.

 

167,616

 

 

 

 

 

 

 

303,710

 

 

 

 

 

Retail: 2.3%

 

 

 

3,100

 

@

 

Bed Bath & Beyond, Inc.

 

123,777

 

3,450

 

 

 

Best Buy Co., Inc.

 

194,511

 

3,750

 

 

 

Circuit City Stores, Inc.

 

58,463

 

10,200

 

 

 

Costco Wholesale Corp.

 

495,720

 

4,300

 

 

 

CVS Corp.

 

195,091

 

2,800

 

 

 

Darden Restaurants, Inc.

 

76,328

 

2,250

 

 

 

Federated Department Stores, Inc.

 

123,300

 

14,940

 

 

 

Gap, Inc.

 

326,439

 

46,050

 

 

 

Home Depot, Inc.

 

1,922,587

 

6,300

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

243,180

 

1,650

 

@

 

Kohl’s Corp.

 

76,164

 

8,100

 

 

 

Limited Brands, Inc.

 

197,964

 

10,230

 

 

 

Lowe’s Cos., Inc.

 

566,026

 

2,950

 

 

 

May Department Stores Co.

 

82,954

 

16,200

 

 

 

McDonald’s Corp.

 

497,988

 

2,000

 

 

 

Nordstrom, Inc.

 

87,500

 

5,750

 

@

 

Office Depot, Inc.

 

94,300

 

1,550

 

 

 

RadioShack Corp.

 

48,934

 

7,090

 

 

 

Staples, Inc.

 

226,242

 

4,950

 

@

 

Starbucks Corp.

 

278,487

 

11,850

 

 

 

Target Corp.

 

606,957

 

5,600

 

 

 

TJX Cos., Inc.

 

131,824

 

2,200

 

@

 

Toys R US, Inc.

 

42,548

 

52,700

 

 

 

Wal-Mart Stores, Inc.

 

2,743,561

 

18,150

 

 

 

Walgreen Co.

 

692,967

 

2,020

 

 

 

Wendy’s Intl., Inc.

 

72,053

 

3,150

 

 

 

Yum! Brands, Inc.

 

143,010

 

 

 

 

 

 

 

10,348,875

 

 

 

 

 

Savings and Loans: 0.2%

 

 

 

1,900

 

 

 

Golden West Financial Corp.

 

226,556

 

1,700

 

 

 

Sovereign Bancorp, Inc.

 

37,145

 

11,350

 

 

 

Washington Mutual, Inc.

 

462,059

 

 

 

 

 

 

 

725,760

 

 

 

 

 

Semiconductors: 0.7%

 

 

 

1,700

 

@

 

Advanced Micro Devices, Inc.

 

36,176

 

5,550

 

@

 

Altera Corp.

 

125,874

 

4,650

 

 

 

Analog Devices, Inc.

 

171,818

 

21,750

 

@

 

Applied Materials, Inc.

 

361,920

 

79,750

 

 

 

Intel Corp.

 

1,782,412

 

2,100

 

@

 

KLA-Tencor Corp.

 

94,626

 

3,350

 

 

 

Linear Technology Corp.

 

127,836

 

1,450

 

 

 

Maxim Integrated Products, Inc.

 

59,392

 

4,800

 

@

 

National Semiconductor Corp.

 

74,208

 

1,300

 

@

 

Qlogic Corp.

 

44,707

 

7,250

 

 

 

Texas Instruments, Inc.

 

175,305

 

 

 

 

 

 

 

3,054,274

 

 

See Accompanying Notes to Financial Statements

 

84


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software: 1.5%

 

 

 

2,500

 

 

 

Adobe Systems, Inc.

 

$

151,400

 

1,900

 

 

 

Autodesk, Inc.

 

124,279

 

7,550

 

 

 

Automatic Data Processing, Inc.

 

343,752

 

3,750

 

@

 

BMC Software, Inc.

 

69,675

 

1,550

 

@

 

Citrix Systems, Inc.

 

36,596

 

6,250

 

 

 

Computer Associates Intl., Inc.

 

190,813

 

7,350

 

@

 

Compuware Corp.

 

42,410

 

1,550

 

@

 

Electronic Arts, Inc.

 

75,795

 

11,290

 

 

 

First Data Corp.

 

463,905

 

1,950

 

@

 

Fiserv, Inc.

 

75,095

 

2,300

 

 

 

IMS Health, Inc.

 

51,911

 

2,450

 

@

 

Intuit, Inc.

 

102,508

 

133,900

 

 

 

Microsoft Corp.

 

3,589,858

 

4,700

 

@

 

Novell, Inc.

 

28,670

 

108,500

 

@

 

Oracle Corp.

 

1,373,609

 

4,800

 

@

 

PeopleSoft, Inc.

 

113,328

 

8,950

 

@

 

Siebel Systems, Inc.

 

90,216

 

4,250

 

@

 

Veritas Software Corp.

 

93,075

 

 

 

 

 

 

 

7,016,895

 

 

 

 

 

Telecommunications: 1.8%

 

 

 

4,700

 

 

 

Alltel Corp.

 

266,443

 

3,900

 

 

 

AT&T Corp.

 

71,370

 

5,750

 

@

 

Avaya, Inc.

 

94,415

 

24,050

 

 

 

BellSouth Corp.

 

645,021

 

2,100

 

 

 

CenturyTel, Inc.

 

69,132

 

83,450

 

@

 

Cisco Systems, Inc.

 

1,561,349

 

4,800

 

 

 

Citizens Communications Co.

 

68,640

 

3,000

 

@

 

Comverse Technology, Inc.

 

63,810

 

15,100

 

@

 

Corning, Inc.

 

189,958

 

46,450

 

@

 

Lucent Technologies, Inc.

 

182,549

 

41,400

 

 

 

Motorola, Inc.

 

797,364

 

13,900

 

@

 

Nextel Communications, Inc.

 

395,594

 

21,150

 

 

 

Qualcomm, Inc.

 

880,263

 

24,400

 

@

 

Qwest Communications Intl., Inc.

 

97,600

 

41,350

 

 

 

SBC Communications, Inc.

 

1,040,780

 

2,650

 

 

 

Scientific-Atlanta, Inc.

 

78,493

 

18,200

 

 

 

Sprint Corp.

 

415,142

 

5,500

 

@

 

Tellabs, Inc.

 

47,025

 

34,200

 

 

 

Verizon Communications, Inc.

 

1,410,065

 

 

 

 

 

 

 

8,375,013

 

 

 

 

 

Textiles: 0.0%

 

 

 

1,800

 

 

 

Cintas Corp.

 

80,496

 

 

 

 

 

 

 

80,496

 

 

 

 

 

Toys/ Games/ Hobbies: 0.0%

 

 

 

3,450

 

 

 

Hasbro, Inc.

 

65,654

 

5,550

 

 

 

Mattel, Inc.

 

105,172

 

 

 

 

 

 

 

170,826

 

 

 

 

 

Transportation: 0.5%

 

 

 

3,800

 

 

 

Burlington Northern Santa Fe Corp.

 

171,152

 

2,500

 

 

 

CSX Corp.

 

95,325

 

5,200

 

 

 

FedEx Corp.

 

494,156

 

6,450

 

 

 

Norfolk Southern Corp.

 

221,429

 

500

 

 

 

Ryder System, Inc.

 

26,820

 

1,100

 

 

 

Union Pacific Corp.

 

69,784

 

14,000

 

 

 

United Parcel Service, Inc.

 

1,178,100

 

 

 

 

 

 

 

2,256,766

 

 

 

 

 

Total Common Stock
(Cost $134,552,747)

 

140,255,854

 

 

Principal

 

 

 

 

 

 

 

Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 59.6%

 

 

 

 

 

 

 

Federal National Mortgage Association: 59.6%

 

 

 

$

310,000,000

 

 

 

3.820%, due 01/22/08

 

$

275,531,720

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $279,692,999)

 

275,531,720

 

U.S. TREASURY OBLIGATIONS: 9.6%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 9.6%

 

 

 

49,000,000

 

 

 

3.300%, due 11/15/07

 

44,507,778

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $44,631,222)

 

44,507,778

 

 

 

 

 

Total Long-Term Investments
(Cost $458,876,968)

 

460,295,352

 

SHORT-TERM INVESTMENTS: 0.8%

 

 

 

 

 

 

 

Repurchase Agreement: 0.8%

 

 

 

3,496,000

 

 

 

Goldman Sachs Repurchase Agreement 11/30/04, 2.060%, due 12/01/04, $3,496,200 to be received upon repurchase (Collateralized by $3,371,000 Federal Home Loan Mortgage Corporation, 5.500%, Market Value plus accrued interest $3,566,939, due 07/15/06)

 

3,496,000

 

 

 

 

 

Total Short-Term Investments
(Cost $3,496,000)

 

3,496,000

 

 

 

 

 

 

 

 

Total Investments In Securities
(Cost $462,372,968)*

 

100.3

%

$

463,791,352

 

Other Assets and Liabilities-Net

 

(0.3

)

(1,397,283

)

Net Assets

 

100.0

%

$

462,394,069

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $465,673,342. Net unrealized appreciation consists of:

 

 

 

 

 

Gross Unrealized Appreciation

 

$

6,137,981

 

Gross Unrealized Depreciation

 

(8,019,971

)

Net Unrealized Appreciation

 

$

(1,881,990

)

 

See Accompanying Notes to Financial Statements

 

85


 

ING PRINCIPAL PROTECTION FUND VI

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 30.6%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

1,350

 

@

 

Interpublic Group of Cos., Inc.

 

$

16,754

 

1,850

 

 

 

Omnicom Group, Inc.

 

149,850

 

 

 

 

 

 

 

166,604

 

 

 

 

 

Aerospace/Defense: 0.7%

 

 

 

16,950

 

 

 

Boeing Co.

 

908,012

 

4,150

 

 

 

General Dynamics Corp.

 

449,694

 

900

 

 

 

Goodrich Corp.

 

28,575

 

4,850

 

 

 

Lockheed Martin Corp.

 

295,074

 

4,200

 

 

 

Northrop Grumman Corp.

 

236,586

 

8,550

 

 

 

Raytheon Co.

 

344,907

 

1,650

 

 

 

Rockwell Collins, Inc.

 

65,769

 

6,100

 

 

 

United Technologies Corp.

 

595,238

 

 

 

 

 

 

 

2,923,855

 

 

 

 

 

Agriculture: 0.5%

 

 

 

24,550

 

 

 

Altria Group, Inc.

 

1,411,379

 

6,850

 

 

 

Archer-Daniels-Midland Co.

 

145,220

 

2,550

 

 

 

Monsanto Co.

 

117,351

 

1,650

 

 

 

Reynolds American, Inc.

 

124,790

 

3,300

 

 

 

UST, Inc.

 

145,299

 

 

 

 

 

 

 

1,944,039

 

 

 

 

 

Apparel: 0.2%

 

 

 

4,050

 

@

 

Coach, Inc.

 

201,852

 

1,050

 

 

 

Jones Apparel Group, Inc.

 

37,307

 

1,600

 

 

 

Liz Claiborne, Inc.

 

65,712

 

4,950

 

 

 

Nike, Inc.

 

419,067

 

500

 

 

 

Reebok Intl. Ltd.

 

19,440

 

1,600

 

 

 

VF Corp.

 

86,384

 

 

 

 

 

 

 

829,762

 

 

 

 

 

Auto Manufacturers: 0.2%

 

 

 

33,600

 

 

 

Ford Motor Co.

 

476,447

 

5,950

 

 

 

General Motors Corp.

 

229,611

 

3,675

 

 

 

PACCAR, Inc.

 

287,018

 

 

 

 

 

 

 

993,076

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

1,100

 

 

 

Dana Corp.

 

17,985

 

3,450

 

@

 

Goodyear Tire & Rubber Co.

 

43,539

 

1,650

 

 

 

Johnson Controls, Inc.

 

101,310

 

 

 

 

 

 

 

162,834

 

 

 

 

 

Banks: 2.0%

 

 

 

2,950

 

 

 

AmSouth Bancorporation

 

76,494

 

48,704

 

 

 

Bank of America Corp.

 

2,253,533

 

6,100

 

 

 

BB&T Corp.

 

258,945

 

3,600

 

 

 

Comerica, Inc.

 

221,400

 

2,000

 

 

 

Fifth Third Bancorp

 

100,720

 

1,200

 

 

 

First Horizon National Corp.

 

52,440

 

2,600

 

 

 

Huntington Bancshares, Inc.

 

63,076

 

6,050

 

 

 

KeyCorp

 

201,405

 

1,200

 

 

 

M & T Bank Corp.

 

126,492

 

2,300

 

 

 

Marshall & Ilsley Corp.

 

95,887

 

4,350

 

 

 

Mellon Financial Corp.

 

127,107

 

9,750

 

 

 

National City Corp.

 

361,530

 

5,475

 

 

 

North Fork Bancorporation, Inc.

 

157,680

 

2,300

 

 

 

Northern Trust Corp.

 

108,192

 

2,550

 

 

 

PNC Financial Services Group, Inc.

 

138,720

 

5,647

 

 

 

Regions Financial Corp.

 

197,589

 

4,100

 

 

 

State Street Corp.

 

182,696

 

3,900

 

 

 

SunTrust Banks, Inc.

 

278,070

 

1,150

 

 

 

Synovus Financial Corp.

 

31,050

 

2,800

 

 

 

The Bank of New York Co., Inc.

 

92,148

 

22,450

 

 

 

U.S. Bancorp

 

665,194

 

22,581

 

 

 

Wachovia Corp.

 

1,168,566

 

20,200

 

 

 

Wells Fargo & Co.

 

1,247,753

 

850

 

 

 

Zions Bancorporation

 

56,525

 

 

 

 

 

 

 

8,263,212

 

 

 

 

 

Beverages: 0.7%

 

 

 

350

 

 

 

Adolph Coors Co.

 

26,215

 

8,900

 

 

 

Anheuser-Busch Cos., Inc.

 

445,801

 

1,000

 

 

 

Brown-Forman Corp.

 

48,020

 

29,100

 

 

 

Coca-Cola Co.

 

1,143,921

 

4,500

 

 

 

Coca-Cola Enterprises, Inc.

 

93,600

 

2,750

 

 

 

Pepsi Bottling Group, Inc.

 

77,055

 

27,350

 

 

 

PepsiCo, Inc.

 

1,365,039

 

 

 

 

 

 

 

3,199,651

 

 

 

 

 

Biotechnology: 0.3%

 

 

 

15,250

 

@

 

Amgen, Inc.

 

915,610

 

3,750

 

@

 

Biogen Idec, Inc.

 

220,050

 

2,450

 

@

 

Genzyme Corp.

 

137,225

 

1,150

 

@

 

MedImmune, Inc.

 

30,590

 

400

 

@

 

Millipore Corp.

 

19,488

 

 

 

 

 

 

 

1,322,963

 

 

 

 

 

Building Materials: 0.1%

 

 

 

2,000

 

@

 

American Standard Cos., Inc.

 

77,880

 

5,150

 

 

 

Masco Corp.

 

181,641

 

1,100

 

 

 

Vulcan Materials Co.

 

57,035

 

 

 

 

 

 

 

316,556

 

 

 

 

 

Chemicals: 0.5%

 

 

 

2,550

 

 

 

Air Products & Chemicals, Inc.

 

145,988

 

800

 

 

 

Ashland, Inc.

 

47,320

 

11,050

 

 

 

Dow Chemical Co.

 

557,693

 

11,600

 

 

 

E.I. du Pont de Nemours & Co.

 

525,711

 

1,050

 

 

 

Eastman Chemical Co.

 

57,099

 

950

 

 

 

Ecolab, Inc.

 

33,231

 

1,750

 

 

 

Engelhard Corp.

 

52,308

 

1,000

 

 

 

International Flavors & Fragrances, Inc.

 

40,500

 

3,250

 

 

 

PPG Industries, Inc.

 

219,278

 

4,000

 

 

 

Praxair, Inc.

 

179,600

 

2,200

 

 

 

Rohm & Haas Co.

 

96,998

 

2,550

 

 

 

Sherwin-Williams Co.

 

113,730

 

700

 

 

 

Sigma-Aldrich Corp.

 

41,811

 

 

 

 

 

 

 

2,111,267

 

 

 

 

 

Commercial Services: 0.2%

 

 

 

1,750

 

@

 

Apollo Group, Inc.

 

139,475

 

11,500

 

 

 

Cendant Corp.

 

260,704

 

300

 

 

 

Deluxe Corp.

 

11,862

 

1,900

 

 

 

Equifax, Inc.

 

52,478

 

3,300

 

 

 

H&R Block, Inc.

 

157,410

 

3,600

 

 

 

McKesson Corp.

 

106,380

 

1,250

 

 

 

Moody’s Corp.

 

100,938

 

3,500

 

 

 

Paychex, Inc.

 

116,060

 

2,050

 

 

 

R.R. Donnelley & Sons Co.

 

71,135

 

2,050

 

 

 

Robert Half Intl., Inc.

 

55,412

 

 

 

 

 

 

 

1,071,854

 

 

 

 

 

Computers: 1.7%

 

 

 

1,450

 

@

 

Affiliated Computer Services, Inc.

 

85,811

 

7,400

 

@

 

Apple Computer, Inc.

 

496,170

 

1,750

 

@

 

Computer Sciences Corp.

 

94,675

 

40,500

 

@

 

Dell, Inc.

 

1,641,060

 

5,600

 

 

 

Electronic Data Systems Corp.

 

125,720

 

26,700

 

@

 

EMC Corp.

 

358,314

 

3,700

 

@

 

Gateway, Inc.

 

25,197

 

35,950

 

 

 

Hewlett-Packard Co.

 

719,000

 

34,200

 

 

 

International Business Machines Corp.

 

3,223,007

 

 

See Accompanying Notes to Financial Statements

 

86


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

1,150

 

@

 

Lexmark Intl., Inc.

 

$

97,635

 

1,100

 

@

 

NCR Corp.

 

65,703

 

4,050

 

@

 

Network Appliance, Inc.

 

122,148

 

61,200

 

@

 

Sun Microsystems, Inc.

 

339,660

 

2,400

 

@

 

Sungard Data Systems, Inc.

 

63,624

 

3,200

 

@

 

Unisys Corp.

 

36,768

 

 

 

 

 

 

 

7,494,492

 

 

 

 

 

Cosmetics/Personal Care: 1.0%

 

 

 

900

 

 

 

Alberto-Culver Co.

 

41,670

 

5,100

 

 

 

Avon Products, Inc.

 

191,454

 

5,850

 

 

 

Colgate-Palmolive Co.

 

269,042

 

20,300

 

 

 

Gillette Co.

 

882,847

 

7,200

 

 

 

Kimberly-Clark Corp.

 

457,992

 

45,000

 

 

 

Procter & Gamble Co.

 

2,406,599

 

 

 

 

 

 

 

4,249,604

 

 

 

 

 

Distribution/Wholesale: 0.1%

 

 

 

2,900

 

 

 

Genuine Parts Co.

 

125,889

 

1,600

 

 

 

W.W. Grainger, Inc.

 

98,976

 

 

 

 

 

 

 

224,865

 

 

 

 

 

Diversified Financial Services: 2.2%

 

 

 

15,200

 

 

 

American Express Co.

 

846,791

 

900

 

 

 

Bear Stearns Cos., Inc.

 

87,822

 

4,000

 

 

 

Capital One Financial Corp.

 

314,320

 

6,750

 

 

 

Charles Schwab Corp.

 

72,765

 

4,350

 

 

 

CIT Group, Inc.

 

185,963

 

62,150

 

 

 

Citigroup, Inc.

 

2,781,212

 

10,698

 

 

 

Countrywide Financial Corp.

 

355,281

 

3,350

 

@

 

E*TRADE Financial Corp.

 

46,431

 

11,650

 

 

 

Fannie Mae

 

800,354

 

1,000

 

 

 

Federated Investors, Inc.

 

29,420

 

2,250

 

 

 

Franklin Resources, Inc.

 

147,668

 

7,500

 

 

 

Freddie Mac

 

511,950

 

5,900

 

 

 

Goldman Sachs Group, Inc.

 

618,083

 

15,548

 

 

 

J.P. Morgan Chase & Co.

 

585,382

 

1,100

 

 

 

Janus Capital Group, Inc.

 

18,205

 

4,400

 

 

 

Lehman Brothers Holdings, Inc.

 

368,632

 

14,100

 

 

 

MBNA Corp.

 

374,496

 

10,350

 

 

 

Merrill Lynch & Co., Inc.

 

576,599

 

4,850

 

 

 

Morgan Stanley

 

246,138

 

2,400

 

@

 

Providian Financial Corp.

 

38,520

 

5,200

 

 

 

SLM Corp.

 

266,084

 

 

 

 

 

 

 

9,272,116

 

 

 

 

 

Electric: 0.8%

 

 

 

7,960

 

@

 

AES Corp.

 

97,430

 

750

 

 

 

Ameren Corp.

 

36,315

 

3,550

 

 

 

American Electric Power Co., Inc.

 

121,304

 

2,200

 

 

 

Cinergy Corp.

 

91,058

 

2,650

 

 

 

Consolidated Edison, Inc.

 

116,203

 

2,100

 

 

 

Constellation Energy Group, Inc.

 

91,770

 

3,950

 

 

 

Dominion Resources, Inc.

 

258,607

 

1,750

 

 

 

DTE Energy Co.

 

76,790

 

19,000

 

 

 

Duke Energy Corp.

 

480,319

 

4,620

 

 

 

Edison Intl.

 

147,378

 

2,400

 

 

 

Entergy Corp.

 

155,568

 

7,250

 

 

 

Exelon Corp.

 

302,397

 

3,150

 

 

 

FirstEnergy Corp.

 

133,025

 

2,000

 

 

 

FPL Group, Inc.

 

140,660

 

4,300

 

@

 

PG&E Corp.

 

143,018

 

750

 

 

 

Pinnacle West Capital Corp.

 

33,150

 

2,250

 

 

 

PPL Corp.

 

116,888

 

1,200

 

 

 

Progress Energy, Inc.

 

52,692

 

2,550

 

 

 

Public Service Enterprise Group, Inc.

 

112,175

 

8,000

 

 

 

Southern Co.

 

262,320

 

2,500

 

 

 

TECO Energy, Inc.

 

37,400

 

4,400

 

 

 

TXU Corp.

 

276,407

 

3,750

 

 

 

Xcel Energy, Inc.

 

67,725

 

 

 

 

 

 

 

3,350,599

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

5,850

 

 

 

Emerson Electric Co.

 

390,897

 

 

 

 

 

 

 

390,897

 

 

 

 

 

Electronics: 0.1%

 

 

 

5,050

 

@

 

Agilent Technologies, Inc.

 

115,594

 

2,100

 

 

 

Applera Corp. — Applied Biosystems Group

 

43,050

 

1,300

 

@

 

Fisher Scientific Intl.

 

73,502

 

1,650

 

@

 

Jabil Circuit, Inc.

 

41,349

 

1,150

 

 

 

Parker Hannifin Corp.

 

86,020

 

1,700

 

 

 

PerkinElmer, Inc.

 

36,261

 

5,500

 

@

 

Sanmina-SCI Corp.

 

48,565

 

6,950

 

@

 

Solectron Corp.

 

43,438

 

700

 

 

 

Tektronix, Inc.

 

21,959

 

2,550

 

@

 

Thermo Electron Corp.

 

77,138

 

1,100

 

@

 

Waters Corp.

 

51,326

 

 

 

 

 

 

 

638,202

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

1,000

 

 

 

Fluor Corp.

 

51,900

 

 

 

 

 

 

 

51,900

 

 

 

 

 

Entertainment: 0.0%

 

 

 

3,050

 

 

 

International Game Technology

 

107,818

 

 

 

 

 

 

 

107,818

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

5,650

 

 

 

Waste Management, Inc.

 

168,427

 

 

 

 

 

 

 

168,427

 

 

 

 

 

Food: 0.4%

 

 

 

4,050

 

 

 

Albertson’s, Inc.

 

102,465

 

5,100

 

 

 

Campbell Soup Co.

 

145,503

 

5,250

 

 

 

ConAgra Foods, Inc.

 

142,013

 

3,700

 

 

 

General Mills, Inc.

 

168,313

 

3,500

 

 

 

H.J. Heinz Co.

 

130,060

 

2,650

 

 

 

Hershey Foods Corp.

 

137,270

 

5,000

 

 

 

Kellogg Co.

 

218,500

 

3,050

 

@

 

Kroger Co.

 

49,349

 

1,150

 

 

 

McCormick & Co., Inc.

 

41,918

 

1,800

 

@

 

Safeway, Inc.

 

34,704

 

9,400

 

 

 

Sara Lee Corp.

 

220,712

 

2,300

 

 

 

SUPERVALU, Inc.

 

72,657

 

3,300

 

 

 

Wm. Wrigley Jr. Co.

 

227,039

 

 

 

 

 

 

 

1,690,503

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

2,350

 

 

 

Georgia-Pacific Corp.

 

86,034

 

4,950

 

 

 

International Paper Co.

 

205,524

 

1,500

 

 

 

Louisiana-Pacific Corp.

 

36,705

 

1,900

 

 

 

MeadWestvaco Corp.

 

63,935

 

2,000

 

 

 

Plum Creek Timber Co., Inc.

 

74,000

 

600

 

 

 

Temple-Inland, Inc.

 

35,754

 

3,650

 

 

 

Weyerhaeuser Co.

 

240,900

 

 

 

 

 

 

 

742,852

 

 

 

 

 

Gas: 0.1%

 

 

 

1,700

 

 

 

KeySpan Corp.

 

67,184

 

800

 

 

 

Nicor, Inc.

 

29,520

 

3,350

 

 

 

Sempra Energy

 

123,883

 

 

 

 

 

 

 

220,587

 

 

See Accompanying Notes to Financial Statements

 

87


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Hand/Machine Tools: 0.0%

 

 

 

1,300

 

 

 

Black & Decker Corp.

 

$

109,317

 

300

 

 

 

Snap-On, Inc.

 

9,483

 

900

 

 

 

Stanley Works

 

42,084

 

 

 

 

 

 

 

160,884

 

 

 

 

 

Healthcare — Products: 1.4%

 

 

 

550

 

 

 

Bausch & Lomb, Inc.

 

32,384

 

7,350

 

 

 

Baxter Intl., Inc.

 

232,628

 

4,950

 

 

 

Becton Dickinson & Co.

 

271,161

 

2,200

 

 

 

Biomet, Inc.

 

105,314

 

9,150

 

@

 

Boston Scientific Corp.

 

318,511

 

1,150

 

 

 

C.R. Bard, Inc.

 

68,897

 

3,350

 

 

 

Guidant Corp.

 

217,181

 

60,600

 

 

 

Johnson & Johnson

 

3,655,391

 

14,450

 

 

 

Medtronic, Inc.

 

694,322

 

3,800

 

@

 

St. Jude Medical, Inc.

 

144,932

 

1,400

 

 

 

Stryker Corp.

 

61,586

 

2,950

 

@

 

Zimmer Holdings, Inc.

 

240,720

 

 

 

 

 

 

 

6,043,027

 

 

 

 

 

Healthcare — Services: 0.5%

 

 

 

3,150

 

 

 

Aetna, Inc.

 

373,306

 

2,550

 

@

 

Humana, Inc.

 

63,291

 

1,250

 

@

 

Laboratory Corp. Of America Holdings

 

59,938

 

850

 

 

 

Manor Care, Inc.

 

29,283

 

450

 

 

 

Quest Diagnostics, Inc.

 

42,188

 

13,600

 

 

 

UnitedHealth Group, Inc.

 

1,126,759

 

2,950

 

@

 

WellPoint Health Networks, Inc.

 

369,045

 

2,600

 

@

 

WellPoint, Inc.

 

263,458

 

 

 

 

 

 

 

2,327,268

 

 

 

 

 

Home Builders: 0.0%

 

 

 

1,400

 

 

 

Centex Corp.

 

73,458

 

 

 

 

 

 

 

73,458

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

1,800

 

 

 

Leggett & Platt, Inc.

 

53,730

 

900

 

 

 

Whirlpool Corp.

 

58,095

 

 

 

 

 

 

 

111,825

 

 

 

 

 

Household Products/Wares: 0.1%

 

 

 

1,350

 

 

 

Avery Dennison Corp.

 

79,191

 

2,450

 

 

 

Clorox Co.

 

135,044

 

1,300

 

 

 

Fortune Brands, Inc.

 

102,024

 

 

 

 

 

 

 

316,259

 

 

 

 

 

Housewares: 0.0%

 

 

 

3,100

 

 

 

Newell Rubbermaid, Inc.

 

71,548

 

 

 

 

 

 

 

71,548

 

 

 

 

 

Insurance: 1.7%

 

 

 

3,300

 

@@

 

ACE Ltd.

 

133,386

 

5,900

 

 

 

AFLAC, Inc.

 

221,958

 

10,200

 

 

 

Allstate Corp.

 

515,099

 

1,100

 

 

 

AMBAC Financial Group, Inc.

 

89,463

 

46,150

 

 

 

American International Group, Inc.

 

2,923,602

 

4,450

 

 

 

AON Corp.

 

93,984

 

3,550

 

 

 

Chubb Corp.

 

270,546

 

2,850

 

 

 

CIGNA Corp.

 

199,557

 

1,680

 

 

 

Cincinnati Financial Corp.

 

75,264

 

3,500

 

 

 

Hartford Financial Services Group, Inc.

 

224,000

 

1,150

 

 

 

Jefferson-Pilot Corp.

 

56,569

 

2,600

 

 

 

Lincoln National Corp.

 

119,652

 

3,900

 

 

 

Loews Corp.

 

272,649

 

5,350

 

 

 

Marsh & McLennan Cos., Inc.

 

152,957

 

1,650

 

 

 

MBIA, Inc.

 

98,934

 

12,200

 

 

 

MetLife, Inc.

 

475,799

 

850

 

 

 

MGIC Investment Corp.

 

57,800

 

2,800

 

 

 

Principal Financial Group

 

105,504

 

2,050

 

 

 

Progressive Corp.

 

186,530

 

10,450

 

 

 

Prudential Financial, Inc.

 

511,527

 

2,750

 

 

 

Safeco Corp.

 

133,293

 

3,200

 

 

 

St. Paul Travelers Cos., Inc.

 

116,736

 

1,000

 

 

 

Torchmark Corp.

 

54,910

 

3,000

 

 

 

UnumProvident Corp.

 

46,710

 

1,250

 

@@

 

XL Capital Ltd.

 

94,200

 

 

 

 

 

 

 

7,230,629

 

 

 

 

 

Internet: 0.4%

 

 

 

7,900

 

@

 

eBay, Inc.

 

888,355

 

5,700

 

@

 

Symantec Corp.

 

363,717

 

16,450

 

@

 

Yahoo!, Inc.

 

618,849

 

 

 

 

 

 

 

1,870,921

 

 

 

 

 

Iron/Steel: 0.0%

 

 

 

1,600

 

 

 

Nucor Corp.

 

84,640

 

1,650

 

 

 

United States Steel Corp.

 

86,394

 

 

 

 

 

 

 

171,034

 

 

 

 

 

Leisure Time: 0.1%

 

 

 

1,000

 

 

 

Brunswick Corp.

 

48,820

 

7,000

 

 

 

Carnival Corp.

 

371,070

 

2,650

 

 

 

Harley-Davidson, Inc.

 

153,223

 

2,200

 

 

 

Sabre Holdings Corp.

 

50,776

 

 

 

 

 

 

 

623,889

 

 

 

 

 

Lodging: 0.1%

 

 

 

1,000

 

 

 

Harrah’s Entertainment, Inc.

 

61,400

 

3,250

 

 

 

Hilton Hotels Corp.

 

67,145

 

3,750

 

 

 

Marriott Intl., Inc.

 

213,187

 

2,050

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

107,195

 

 

 

 

 

 

 

448,927

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

1,450

 

 

 

Caterpillar, Inc.

 

132,748

 

 

 

 

 

 

 

132,748

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

500

 

 

 

Cummins, Inc.

 

39,810

 

2,300

 

 

 

Deere & Co.

 

164,979

 

1,700

 

 

 

Rockwell Automation, Inc.

 

80,410

 

 

 

 

 

 

 

285,199

 

 

 

 

 

Media: 0.8%

 

 

 

2,400

 

 

 

Clear Channel Communications, Inc.

 

80,832

 

26,650

 

@

 

Comcast Corp.

 

800,565

 

2,950

 

 

 

Gannett Co., Inc.

 

243,346

 

850

 

 

 

Knight-Ridder, Inc.

 

57,877

 

2,600

 

 

 

McGraw-Hill Cos., Inc.

 

228,098

 

600

 

 

 

Meredith Corp.

 

31,632

 

1,350

 

 

 

New York Times Co.

 

55,350

 

54,550

 

@

 

Time Warner, Inc.

 

966,080

 

1,150

 

 

 

Tribune Co.

 

49,876

 

1,150

 

@

 

Univision Communications, Inc.

 

34,615

 

7,250

 

 

 

Viacom, Inc.

 

251,575

 

24,550

 

 

 

Walt Disney Co.

 

659,904

 

 

 

 

 

 

 

3,459,750

 

 

 

 

 

Mining: 0.0%

 

 

 

1,250

 

 

 

Phelps Dodge Corp.

 

121,413

 

 

 

 

 

 

 

121,413

 

 

See Accompanying Notes to Financial Statements

 

88


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing: 1.8%

 

 

 

9,350

 

 

 

3M Co.

 

$

744,167

 

800

 

 

 

Cooper Industries Ltd.

 

53,048

 

3,250

 

 

 

Danaher Corp.

 

184,860

 

2,000

 

 

 

Dover Corp.

 

80,900

 

4,050

 

 

 

Eastman Kodak Co.

 

132,476

 

1,450

 

 

 

Eaton Corp.

 

97,730

 

126,650

 

 

 

General Electric Co.

 

4,478,343

 

9,300

 

 

 

Honeywell Intl., Inc.

 

328,569

 

3,250

 

 

 

Illinois Tool Works, Inc.

 

306,248

 

1,700

 

@@

 

Ingersoll-Rand Co.

 

126,514

 

1,000

 

 

 

ITT Industries, Inc.

 

85,120

 

1,100

 

 

 

Pall Corp.

 

29,799

 

1,400

 

 

 

Textron, Inc.

 

101,668

 

24,100

 

@@

 

Tyco Intl. Ltd.

 

818,676

 

 

 

 

 

 

 

7,568,118

 

 

 

 

 

Office/Business Equipment: 0.1%

 

 

 

2,400

 

 

 

Pitney Bowes, Inc.

 

105,048

 

9,200

 

@

 

Xerox Corp.

 

140,944

 

 

 

 

 

 

 

245,992

 

 

 

 

 

Oil and Gas: 2.5%

 

 

 

1,050

 

 

 

Amerada Hess Corp.

 

93,293

 

4,000

 

 

 

Anadarko Petroleum Corp.

 

278,400

 

3,000

 

 

 

Apache Corp.

 

162,180

 

6,750

 

 

 

Burlington Resources, Inc.

 

313,268

 

34,550

 

 

 

ChevronTexaco Corp.

 

1,886,429

 

8,050

 

 

 

ConocoPhillips

 

732,469

 

8,500

 

 

 

Devon Energy Corp.

 

352,069

 

1,050

 

 

 

EOG Resources, Inc.

 

78,824

 

103,550

 

 

 

Exxon Mobil Corp.

 

5,306,937

 

1,300

 

 

 

Kerr-McGee Corp.

 

80,899

 

2,900

 

 

 

Marathon Oil Corp.

 

114,376

 

700

 

@,@@

 

Nabors Industries Ltd.

 

36,400

 

1,100

 

@

 

Noble Corp.

 

53,295

 

4,550

 

 

 

Occidental Petroleum Corp.

 

273,956

 

1,100

 

 

 

Sunoco, Inc.

 

90,816

 

2,900

 

@

 

Transocean, Inc.

 

116,783

 

4,200

 

 

 

Unocal Corp.

 

193,368

 

4,450

 

 

 

Valero Energy Corp.

 

208,216

 

 

 

 

 

 

 

10,371,978

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

4,050

 

 

 

Baker Hughes, Inc.

 

179,536

 

1,450

 

 

 

BJ Services Co.

 

73,472

 

2,050

 

 

 

Halliburton Co.

 

84,768

 

 

 

 

 

 

 

337,776

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

1,200

 

 

 

Ball Corp.

 

53,676

 

1,000

 

 

 

Bemis Co.

 

27,840

 

1,500

 

@

 

Pactiv Corp.

 

37,275

 

800

 

@

 

Sealed Air Corp.

 

41,128

 

 

 

 

 

 

 

159,919

 

 

 

 

 

Pharmaceuticals: 1.7%

 

 

 

18,600

 

 

 

Abbott Laboratories

 

780,455

 

1,350

 

 

 

Allergan, Inc.

 

99,225

 

1,300

 

 

 

AmerisourceBergen Corp.

 

76,622

 

23,600

 

 

 

Bristol-Myers Squibb Co.

 

554,600

 

5,100

 

 

 

Cardinal Health, Inc.

 

266,628

 

9,450

 

@

 

Caremark Rx, Inc.

 

337,932

 

13,450

 

 

 

Eli Lilly & Co.

 

717,288

 

700

 

@

 

Express Scripts, Inc.

 

50,372

 

3,350

 

@

 

Forest Laboratories, Inc.

 

130,550

 

4,100

 

@

 

Gilead Sciences, Inc.

 

141,286

 

2,050

 

@

 

Hospira, Inc.

 

66,072

 

950

 

@

 

King Pharmaceuticals, Inc.

 

11,828

 

2,899

 

@

 

Medco Health Solutions, Inc.

 

109,350

 

26,600

 

 

 

Merck & Co., Inc.

 

745,331

 

90,350

 

 

 

Pfizer, Inc.

 

2,509,019

 

16,200

 

 

 

Schering-Plough Corp.

 

289,170

 

16,050

 

 

 

Wyeth

 

639,914

 

 

 

 

 

 

 

7,525,642

 

 

 

 

 

Pipelines: 0.0%

 

 

 

6,800

 

@

 

Dynegy, Inc.

 

38,420

 

4,850

 

 

 

El Paso Corp.

 

50,634

 

450

 

 

 

Kinder Morgan, Inc.

 

31,185

 

4,150

 

 

 

Williams Cos., Inc.

 

69,181

 

 

 

 

 

 

 

189,420

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

1,800

 

 

 

Equity Office Properties Trust

 

49,410

 

1,650

 

 

 

ProLogis

 

66,380

 

2,300

 

 

 

Simon Property Group, Inc.

 

142,784

 

 

 

 

 

 

 

258,574

 

 

 

 

 

Retail: 2.4%

 

 

 

2,750

 

@

 

Bed Bath & Beyond, Inc.

 

109,802

 

3,650

 

 

 

Best Buy Co., Inc.

 

205,787

 

3,200

 

 

 

Circuit City Stores, Inc.

 

49,888

 

8,550

 

 

 

Costco Wholesale Corp.

 

415,530

 

4,000

 

 

 

CVS Corp.

 

181,480

 

2,600

 

 

 

Darden Restaurants, Inc.

 

70,876

 

1,600

 

 

 

Federated Department Stores, Inc.

 

87,680

 

12,700

 

 

 

Gap, Inc.

 

277,495

 

44,800

 

 

 

Home Depot, Inc.

 

1,870,400

 

5,300

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

204,580

 

4,100

 

@

 

Kohl’s Corp.

 

189,256

 

5,650

 

 

 

Limited Brands, Inc.

 

138,086

 

8,600

 

 

 

Lowe’s Cos., Inc.

 

475,838

 

2,750

 

 

 

May Department Stores Co.

 

77,330

 

20,450

 

 

 

McDonald’s Corp.

 

628,633

 

1,200

 

 

 

Nordstrom, Inc.

 

52,500

 

4,600

 

@

 

Office Depot, Inc.

 

75,440

 

1,350

 

 

 

RadioShack Corp.

 

42,620

 

7,300

 

 

 

Staples, Inc.

 

232,943

 

6,550

 

@

 

Starbucks Corp.

 

368,503

 

10,900

 

 

 

Target Corp.

 

558,298

 

5,050

 

 

 

TJX Cos., Inc.

 

118,877

 

2,450

 

@

 

Toys R US, Inc.

 

47,383

 

50,950

 

 

 

Wal-Mart Stores, Inc.

 

2,652,456

 

15,250

 

 

 

Walgreen Co.

 

582,245

 

1,800

 

 

 

Wendy’s Intl., Inc.

 

64,206

 

2,700

 

 

 

Yum! Brands, Inc.

 

122,580

 

 

 

 

 

 

 

9,900,712

 

 

 

 

 

Savings and Loans: 0.1%

 

 

 

1,500

 

 

 

Golden West Financial Corp.

 

178,860

 

1,450

 

 

 

Sovereign Bancorp, Inc.

 

31,683

 

9,500

 

 

 

Washington Mutual, Inc.

 

386,745

 

 

 

 

 

 

 

597,288

 

 

 

 

 

Semiconductors: 0.6%

 

 

 

3,400

 

@

 

Altera Corp.

 

77,112

 

3,900

 

 

 

Analog Devices, Inc.

 

144,105

 

18,250

 

@

 

Applied Materials, Inc.

 

303,680

 

76,950

 

 

 

Intel Corp.

 

1,719,833

 

1,750

 

@

 

KLA-Tencor Corp.

 

78,855

 

3,000

 

 

 

Linear Technology Corp.

 

114,480

 

1,200

 

 

 

Maxim Integrated Products, Inc.

 

49,152

 

3,400

 

@

 

National Semiconductor Corp.

 

52,564

 

1,100

 

@

 

Qlogic Corp.

 

37,829

 

8,350

 

 

 

Texas Instruments, Inc.

 

201,903

 

 

 

 

 

 

 

2,779,513

 

 

See Accompanying Notes to Financial Statements

 

89


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software: 1.5%

 

 

 

2,100

 

 

 

Adobe Systems, Inc.

 

$

127,176

 

1,800

 

 

 

Autodesk, Inc.

 

117,738

 

6,350

 

 

 

Automatic Data Processing, Inc.

 

289,116

 

3,450

 

@

 

BMC Software, Inc.

 

64,101

 

1,300

 

@

 

Citrix Systems, Inc.

 

30,693

 

5,750

 

 

 

Computer Associates Intl., Inc.

 

175,548

 

5,350

 

@

 

Compuware Corp.

 

30,870

 

1,300

 

@

 

Electronic Arts, Inc.

 

63,570

 

9,467

 

 

 

First Data Corp.

 

388,998

 

2,000

 

@

 

Fiserv, Inc.

 

77,020

 

1,950

 

 

 

IMS Health, Inc.

 

44,012

 

1,900

 

@

 

Intuit, Inc.

 

79,496

 

130,400

 

 

 

Microsoft Corp.

 

3,496,023

 

3,500

 

@

 

Novell, Inc.

 

21,350

 

104,900

 

@

 

Oracle Corp.

 

1,328,033

 

3,250

 

@

 

PeopleSoft, Inc.

 

76,733

 

4,950

 

@

 

Siebel Systems, Inc.

 

49,896

 

3,850

 

@

 

Veritas Software Corp.

 

84,315

 

 

 

 

 

 

 

6,544,688

 

 

 

 

 

Telecommunications: 1.9%

 

 

 

5,050

 

 

 

Alltel Corp.

 

286,285

 

3,300

 

 

 

AT&T Corp.

 

60,390

 

6,600

 

@

 

Avaya, Inc.

 

108,372

 

20,200

 

 

 

BellSouth Corp.

 

541,764

 

1,500

 

 

 

CenturyTel, Inc.

 

49,380

 

80,900

 

@

 

Cisco Systems, Inc.

 

1,513,638

 

3,600

 

 

 

Citizens Communications Co.

 

51,480

 

2,850

 

@

 

Comverse Technology, Inc.

 

60,620

 

16,550

 

@

 

Corning, Inc.

 

208,199

 

52,550

 

@

 

Lucent Technologies, Inc.

 

206,522

 

38,300

 

 

 

Motorola, Inc.

 

737,658

 

12,050

 

@

 

Nextel Communications, Inc.

 

342,943

 

19,600

 

 

 

Qualcomm, Inc.

 

815,752

 

19,800

 

@

 

Qwest Communications Intl., Inc.

 

79,200

 

39,950

 

 

 

SBC Communications, Inc.

 

1,005,541

 

2,250

 

 

 

Scientific-Atlanta, Inc.

 

66,645

 

17,600

 

 

 

Sprint Corp.

 

401,456

 

4,000

 

@

 

Tellabs, Inc.

 

34,200

 

33,150

 

 

 

Verizon Communications, Inc.

 

1,366,774

 

 

 

 

 

 

 

7,936,819

 

 

 

 

 

Textiles: 0.0%

 

 

 

1,550

 

 

 

Cintas Corp.

 

69,316

 

 

 

 

 

 

 

69,316

 

 

 

 

 

Toys/Games/Hobbies: 0.0%

 

 

 

2,100

 

 

 

Hasbro, Inc.

 

39,963

 

4,400

 

 

 

Mattel, Inc.

 

83,380

 

 

 

 

 

 

 

123,343

 

 

 

 

 

Transportation: 0.5%

 

 

 

3,350

 

 

 

Burlington Northern Santa Fe Corp.

 

150,884

 

2,100

 

 

 

CSX Corp.

 

80,073

 

4,350

 

 

 

FedEx Corp.

 

413,381

 

5,500

 

 

 

Norfolk Southern Corp.

 

188,815

 

1,000

 

 

 

Ryder System, Inc.

 

53,640

 

950

 

 

 

Union Pacific Corp.

 

60,268

 

13,550

 

 

 

United Parcel Service, Inc.

 

1,140,232

 

 

 

 

 

 

 

2,087,293

 

 

 

 

 

Total Common Stock
(Cost $127,514,288)

 

132,053,705

 

 

Principal
Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 64.3%

 

 

 

 

 

 

 

Federal National Mortgage Association: 50.8%

 

 

 

$

250,000,000

 

 

 

3.900%, due 04/22/08

 

$

219,596,249

 

 

 

 

 

 

 

219,596,249

 

 

 

 

 

Other: 13.5%

 

 

 

16,301,000

 

 

 

FICO STRIP, 3.680%, due 04/06/08

 

14,444,414

 

50,000,000

 

 

 

Federal Agriculture Mortgage Corp., 3.900%, due 04/22/08

 

43,919,250

 

 

 

 

 

 

 

58,363,664

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $283,615,107)

 

277,959,913

 

U.S. TREASURY OBLIGATIONS: 4.6%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 4.6%

 

 

 

21,878,000

 

 

 

3.320%, due 02/15/08

 

19,698,864

 

 

 

 

 

Total U.S. Treasury Obligations (Cost $19,934,974)

 

19,698,864

 

 

 

 

 

Total Long-Term Investments (Cost $431,064,369)

 

429,712,482

 

SHORT-TERM INVESTMENTS: 0.7%

 

 

 

 

 

 

 

Repurchase Agreement: 0.7%

 

 

 

2,923,000

 

 

 

Goldman Sachs Repurchase Agreement 11/30/04, 2.060%, due 12/01/04, $2,923,167 to be received upon repurchase (Collateralized by $2,818,000 Federal Home Loan Mortgage Corporation, 5.500%, Market Value plus accrued interest $2,981,796, due 07/15/06)

 

2,923,000

 

 

 

 

 

Total Short-Term Investments
(Cost $2,923,000)

 

2,923,000

 

 

Total Investments In Securities
(Cost $433,987,369)*

 

100.2

%

$

432,635,482

 

Other Assets and
Liabilities-Net

 

(0.2

)

(872,066

)

Net Assets

 

100.0

%

$

431,763,416

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $437,992,154. Net unrealized appreciation consists of:

 

Gross Unrealized Appreciation

 

$

3,564,090

 

Gross Unrealized Depreciation

 

(8,920,762

)

Net Unrealized Appreciation

 

$

(5,356,672

)

 

See Accompanying Notes to Financial Statements

 

90


 

ING PRINCIPAL PROTECTION FUND VII

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 26.9%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

2,100

 

@

 

Interpublic Group of Cos., Inc.

 

$

26,061

 

1,000

 

 

 

Omnicom Group, Inc.

 

81,000

 

 

 

 

 

 

 

107,061

 

 

 

 

 

Aerospace/ Defense: 0.6%

 

 

 

7,450

 

 

 

Boeing Co.

 

399,096

 

1,800

 

 

 

General Dynamics Corp.

 

195,048

 

450

 

 

 

Goodrich Corp.

 

14,288

 

2,250

 

 

 

Lockheed Martin Corp.

 

136,890

 

2,000

 

 

 

Northrop Grumman Corp.

 

112,660

 

4,300

 

 

 

Raytheon Co.

 

173,462

 

800

 

 

 

Rockwell Collins, Inc.

 

31,888

 

2,800

 

 

 

United Technologies Corp.

 

273,224

 

 

 

 

 

 

 

1,336,556

 

 

 

 

 

Agriculture: 0.4%

 

 

 

10,750

 

 

 

Altria Group, Inc.

 

618,017

 

2,850

 

 

 

Archer-Daniels-Midland Co.

 

60,420

 

1,150

 

 

 

Monsanto Co.

 

52,923

 

800

 

 

 

Reynolds American, Inc.

 

60,504

 

1,550

 

 

 

UST, Inc.

 

68,247

 

 

 

 

 

 

 

860,111

 

 

 

 

 

Apparel: 0.2%

 

 

 

1,700

 

@

 

Coach, Inc.

 

84,728

 

500

 

 

 

Jones Apparel Group, Inc.

 

17,765

 

450

 

 

 

Liz Claiborne, Inc.

 

18,482

 

2,450

 

 

 

Nike, Inc.

 

207,417

 

200

 

 

 

Reebok Intl. Ltd.

 

7,776

 

800

 

 

 

VF Corp.

 

43,192

 

 

 

 

 

 

 

379,360

 

 

 

 

 

Auto Manufacturers: 0.2%

 

 

 

16,900

 

 

 

Ford Motor Co.

 

239,642

 

3,000

 

 

 

General Motors Corp.

 

115,770

 

1,600

 

 

 

PACCAR, Inc.

 

124,960

 

 

 

 

 

 

 

480,372

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

550

 

 

 

Dana Corp.

 

8,993

 

1,000

 

 

 

Johnson Controls, Inc.

 

61,400

 

 

 

 

 

 

 

70,393

 

 

 

 

 

Banks: 1.7%

 

 

 

1,750

 

 

 

AmSouth Bancorporation

 

45,378

 

21,406

 

 

 

Bank of America Corp.

 

990,455

 

3,100

 

 

 

BB&T Corp.

 

131,595

 

1,200

 

 

 

Comerica, Inc.

 

73,800

 

1,050

 

 

 

Fifth Third Bancorp

 

52,878

 

700

 

 

 

First Horizon National Corp.

 

30,590

 

1,300

 

 

 

Huntington Bancshares, Inc.

 

31,538

 

3,100

 

 

 

KeyCorp

 

103,199

 

500

 

 

 

M & T Bank Corp.

 

52,705

 

1,050

 

 

 

Marshall & Ilsley Corp.

 

43,775

 

2,100

 

 

 

Mellon Financial Corp.

 

61,362

 

4,950

 

 

 

National City Corp.

 

183,546

 

825

 

 

 

North Fork Bancorporation, Inc.

 

23,760

 

1,000

 

 

 

Northern Trust Corp.

 

47,040

 

1,250

 

 

 

PNC Financial Services Group, Inc.

 

68,000

 

2,110

 

 

 

Regions Financial Corp.

 

73,829

 

600

 

 

 

State Street Corp.

 

26,736

 

1,950

 

 

 

SunTrust Banks, Inc.

 

139,035

 

550

 

 

 

Synovus Financial Corp.

 

14,850

 

1,450

 

 

 

The Bank of New York Co., Inc.

 

47,720

 

10,200

 

 

 

U.S. Bancorp

 

302,226

 

11,324

 

 

 

Wachovia Corp.

 

586,016

 

8,900

 

 

 

Wells Fargo & Co.

 

549,752

 

400

 

 

 

Zions Bancorporation

 

26,600

 

 

 

 

 

 

 

3,706,385

 

 

 

 

 

Beverages: 0.6%

 

 

 

250

 

 

 

Adolph Coors Co.

 

18,725

 

4,350

 

 

 

Anheuser-Busch Cos., Inc.

 

217,892

 

600

 

 

 

Brown-Forman Corp.

 

28,812

 

12,700

 

 

 

Coca-Cola Co.

 

499,236

 

1,950

 

 

 

Coca-Cola Enterprises, Inc.

 

40,560

 

1,400

 

 

 

Pepsi Bottling Group, Inc.

 

39,228

 

8,850

 

 

 

PepsiCo, Inc.

 

441,704

 

 

 

 

 

 

 

1,286,157

 

 

 

 

 

Biotechnology: 0.3%

 

 

 

6,600

 

@

 

Amgen, Inc.

 

396,264

 

1,850

 

@

 

Biogen Idec, Inc.

 

108,558

 

1,250

 

@

 

Genzyme Corp.

 

70,013

 

1,050

 

@

 

MedImmune, Inc.

 

27,930

 

 

 

 

 

 

 

602,765

 

 

 

 

 

Building Materials: 0.1%

 

 

 

950

 

@

 

American Standard Cos., Inc.

 

36,993

 

2,650

 

 

 

Masco Corp.

 

93,466

 

500

 

 

 

Vulcan Materials Co.

 

25,925

 

 

 

 

 

 

 

156,384

 

 

 

 

 

Chemicals: 0.5%

 

 

 

1,300

 

 

 

Air Products & Chemicals, Inc.

 

74,425

 

500

 

 

 

Ashland, Inc.

 

29,575

 

5,500

 

 

 

Dow Chemical Co.

 

277,585

 

5,950

 

 

 

E.I. du Pont de Nemours & Co.

 

269,654

 

500

 

 

 

Eastman Chemical Co.

 

27,190

 

500

 

 

 

Ecolab, Inc.

 

17,490

 

900

 

 

 

Engelhard Corp.

 

26,901

 

400

 

 

 

International Flavors & Fragrances, Inc.

 

16,200

 

1,650

 

 

 

PPG Industries, Inc.

 

111,326

 

1,500

 

 

 

Praxair, Inc.

 

67,350

 

1,300

 

 

 

Rohm & Haas Co.

 

57,317

 

1,150

 

 

 

Sherwin-Williams Co.

 

51,290

 

400

 

 

 

Sigma-Aldrich Corp.

 

23,892

 

 

 

 

 

 

 

1,050,195

 

 

 

 

 

Commercial Services: 0.2%

 

 

 

900

 

@

 

Apollo Group, Inc.

 

71,730

 

5,600

 

 

 

Cendant Corp.

 

126,952

 

300

 

 

 

Deluxe Corp.

 

11,862

 

700

 

 

 

Equifax, Inc.

 

19,334

 

1,050

 

 

 

H&R Block, Inc.

 

50,085

 

1,600

 

 

 

McKesson Corp.

 

47,280

 

850

 

 

 

Moody’s Corp.

 

68,638

 

1,700

 

 

 

Paychex, Inc.

 

56,372

 

950

 

 

 

R.R. Donnelley & Sons Co.

 

32,965

 

1,200

 

 

 

Robert Half Intl., Inc.

 

32,436

 

 

 

 

 

 

 

517,654

 

 

 

 

 

Computers: 1.4%

 

 

 

600

 

@

 

Affiliated Computer Services, Inc.

 

35,508

 

3,700

 

@

 

Apple Computer, Inc.

 

248,085

 

800

 

@

 

Computer Sciences Corp.

 

43,280

 

17,600

 

@

 

Dell, Inc.

 

713,151

 

2,400

 

 

 

Electronic Data Systems Corp.

 

53,880

 

13,250

 

@

 

EMC Corp.

 

177,815

 

1,100

 

@

 

Gateway, Inc.

 

7,491

 

16,650

 

 

 

Hewlett-Packard Co.

 

333,000

 

11,900

 

 

 

International Business Machines Corp.

 

1,121,455

 

550

 

@

 

Lexmark Intl., Inc.

 

46,695

 

550

 

@

 

NCR Corp.

 

32,852

 

2,150

 

@

 

Network Appliance, Inc.

 

64,844

 

 

See Accompanying Notes to Financial Statements

 

91


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

31,750

 

@

 

Sun Microsystems, Inc.

 

$

176,213

 

1,850

 

@

 

Sungard Data Systems, Inc.

 

49,044

 

1,600

 

@

 

Unisys Corp.

 

18,384

 

 

 

 

 

 

 

3,121,697

 

 

 

 

 

Cosmetics/ Personal Care: 0.9%

 

 

 

450

 

 

 

Alberto-Culver Co.

 

20,835

 

2,600

 

 

 

Avon Products, Inc.

 

97,604

 

2,650

 

 

 

Colgate-Palmolive Co.

 

121,874

 

9,300

 

 

 

Gillette Co.

 

404,457

 

3,650

 

 

 

Kimberly-Clark Corp.

 

232,177

 

22,750

 

 

 

Procter & Gamble Co.

 

1,216,669

 

 

 

 

 

 

 

2,093,616

 

 

 

 

 

Distribution/ Wholesale: 0.0%

 

 

 

1,000

 

 

 

Genuine Parts Co.

 

43,410

 

800

 

 

 

W.W. Grainger, Inc.

 

49,488

 

 

 

 

 

 

 

92,898

 

 

 

 

 

Diversified Financial Services: 1.9%

 

 

 

6,900

 

 

 

American Express Co.

 

384,398

 

450

 

 

 

Bear Stearns Cos., Inc.

 

43,911

 

1,200

 

 

 

Capital One Financial Corp.

 

94,296

 

1,300

 

 

 

CIT Group, Inc.

 

55,575

 

27,300

 

 

 

Citigroup, Inc.

 

1,221,674

 

5,248

 

 

 

Countrywide Financial Corp.

 

174,286

 

2,400

 

@

 

E*TRADE Financial Corp.

 

33,264

 

5,250

 

 

 

Fannie Mae

 

360,674

 

600

 

 

 

Federated Investors, Inc.

 

17,652

 

1,150

 

 

 

Franklin Resources, Inc.

 

75,475

 

3,750

 

 

 

Freddie Mac

 

255,975

 

2,650

 

 

 

Goldman Sachs Group, Inc.

 

277,614

 

7,844

 

 

 

J.P. Morgan Chase & Co.

 

295,327

 

1,550

 

 

 

Janus Capital Group, Inc.

 

25,653

 

1,500

 

 

 

Lehman Brothers Holdings, Inc.

 

125,670

 

6,950

 

 

 

MBNA Corp.

 

184,592

 

5,200

 

 

 

Merrill Lynch & Co., Inc.

 

289,692

 

2,400

 

 

 

Morgan Stanley

 

121,800

 

2,200

 

@

 

Providian Financial Corp.

 

35,310

 

2,450

 

 

 

SLM Corp.

 

125,367

 

 

 

 

 

 

 

4,198,205

 

 

 

 

 

Electric: 0.7%

 

 

 

3,320

 

@

 

AES Corp.

 

40,637

 

350

 

 

 

Ameren Corp.

 

16,947

 

2,000

 

 

 

American Electric Power Co., Inc.

 

68,340

 

850

 

 

 

Cinergy Corp.

 

35,182

 

1,350

 

 

 

Consolidated Edison, Inc.

 

59,198

 

700

 

 

 

Constellation Energy Group, Inc.

 

30,590

 

700

 

 

 

Dominion Resources, Inc.

 

45,829

 

950

 

 

 

DTE Energy Co.

 

41,686

 

6,800

 

 

 

Duke Energy Corp.

 

171,903

 

2,370

 

 

 

Edison Intl

 

75,603

 

1,200

 

 

 

Entergy Corp.

 

77,784

 

3,650

 

 

 

Exelon Corp.

 

152,241

 

1,450

 

 

 

FirstEnergy Corp.

 

61,234

 

900

 

 

 

FPL Group, Inc.

 

63,297

 

1,750

 

@

 

PG&E Corp.

 

58,205

 

600

 

 

 

Pinnacle West Capital Corp.

 

26,520

 

1,150

 

 

 

PPL Corp.

 

59,743

 

1,300

 

 

 

Public Service Enterprise Group, Inc.

 

57,187

 

4,050

 

 

 

Southern Co.

 

132,800

 

1,150

 

 

 

TECO Energy, Inc.

 

17,204

 

2,200

 

 

 

TXU Corp.

 

138,203

 

1,800

 

 

 

Xcel Energy, Inc.

 

32,508

 

 

 

 

 

 

 

1,462,841

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

3,000

 

 

 

Emerson Electric Co.

 

200,460

 

 

 

 

 

 

 

200,460

 

 

 

 

 

Electronics: 0.1%

 

 

 

2,500

 

@

 

Agilent Technologies, Inc.

 

57,224

 

1,400

 

 

 

Applera Corp. — Applied Biosystems Group

 

28,700

 

650

 

@

 

Fisher Scientific Intl

 

36,751

 

800

 

@

 

Jabil Circuit, Inc.

 

20,048

 

550

 

 

 

Parker Hannifin Corp.

 

41,140

 

900

 

 

 

PerkinElmer, Inc.

 

19,197

 

2,350

 

@

 

Sanmina-SCI Corp.

 

20,751

 

1,750

 

@

 

Solectron Corp.

 

10,938

 

300

 

 

 

Tektronix, Inc.

 

9,411

 

900

 

@

 

Thermo Electron Corp.

 

27,225

 

800

 

@

 

Waters Corp.

 

37,328

 

 

 

 

 

 

 

308,713

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

400

 

 

 

Fluor Corp.

 

20,760

 

 

 

 

 

 

 

20,760

 

 

 

 

 

Entertainment: 0.0%

 

 

 

1,500

 

 

 

International Game Technology

 

53,025

 

 

 

 

 

 

 

53,025

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

2,600

 

 

 

Waste Management, Inc.

 

77,506

 

 

 

 

 

 

 

77,506

 

 

 

 

 

Food: 0.3%

 

 

 

2,050

 

 

 

Albertson’s, Inc.

 

51,865

 

850

 

 

 

Campbell Soup Co.

 

24,251

 

2,350

 

 

 

ConAgra Foods, Inc.

 

63,568

 

1,950

 

 

 

General Mills, Inc.

 

88,706

 

1,550

 

 

 

H.J. Heinz Co.

 

57,598

 

1,150

 

 

 

Hershey Foods Corp.

 

59,570

 

2,050

 

 

 

Kellogg Co.

 

89,585

 

1,550

 

@

 

Kroger Co.

 

25,079

 

900

 

 

 

McCormick & Co., Inc.

 

32,805

 

900

 

@

 

Safeway, Inc.

 

17,352

 

4,000

 

 

 

Sara Lee Corp.

 

93,920

 

1,200

 

 

 

SUPERVALU, Inc.

 

37,908

 

1,650

 

 

 

Wm. Wrigley Jr. Co.

 

113,519

 

 

 

 

 

 

 

755,726

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

1,200

 

 

 

Georgia-Pacific Corp.

 

43,932

 

2,850

 

 

 

International Paper Co.

 

118,332

 

700

 

 

 

Louisiana-Pacific Corp.

 

17,129

 

1,200

 

 

 

MeadWestvaco Corp.

 

40,380

 

850

 

 

 

Plum Creek Timber Co., Inc.

 

31,450

 

350

 

 

 

Temple-Inland, Inc.

 

20,857

 

1,850

 

 

 

Weyerhaeuser Co.

 

122,100

 

 

 

 

 

 

 

394,180

 

 

 

 

 

Gas: 0.0%

 

 

 

900

 

 

 

KeySpan Corp.

 

35,568

 

1,300

 

 

 

Sempra Energy

 

48,074

 

 

 

 

 

 

 

83,642

 

 

 

 

 

Hand/ Machine Tools: 0.0%

 

 

 

600

 

 

 

Black & Decker Corp.

 

50,454

 

100

 

 

 

Snap-On, Inc.

 

3,161

 

450

 

 

 

Stanley Works

 

21,042

 

 

 

 

 

 

 

74,657

 

 

See Accompanying Notes to Financial Statements

 

92


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Healthcare — Products: 1.1%

 

 

 

300

 

 

 

Bausch & Lomb, Inc.

 

$

17,664

 

2,850

 

 

 

Baxter Intl., Inc.

 

90,203

 

1,850

 

 

 

Becton Dickinson & Co.

 

101,343

 

1,100

 

 

 

Biomet, Inc.

 

52,657

 

4,550

 

@

 

Boston Scientific Corp.

 

158,386

 

500

 

 

 

C.R. Bard, Inc.

 

29,955

 

1,450

 

 

 

Guidant Corp.

 

94,004

 

21,100

 

 

 

Johnson & Johnson

 

1,272,751

 

6,600

 

 

 

Medtronic, Inc.

 

317,130

 

2,300

 

@

 

St. Jude Medical, Inc.

 

87,722

 

700

 

 

 

Stryker Corp.

 

30,793

 

1,150

 

@

 

Zimmer Holdings, Inc.

 

93,840

 

 

 

 

 

 

 

2,346,448

 

 

 

 

 

Healthcare — Services: 0.5%

 

 

 

1,500

 

 

 

Aetna, Inc.

 

177,765

 

1,350

 

@

 

Humana, Inc.

 

33,507

 

650

 

@

 

Laboratory Corp. Of America Holdings

 

31,168

 

300

 

 

 

Manor Care, Inc.

 

10,335

 

200

 

 

 

Quest Diagnostics, Inc.

 

18,750

 

5,900

 

 

 

UnitedHealth Group, Inc.

 

488,815

 

1,450

 

@

 

WellPoint Health Networks, Inc.

 

181,395

 

1,300

 

@

 

WellPoint, Inc.

 

131,729

 

 

 

 

 

 

 

1,073,464

 

 

 

 

 

Home Builders: 0.0%

 

 

 

650

 

 

 

Centex Corp.

 

34,106

 

 

 

 

 

 

 

34,106

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

1,200

 

 

 

Leggett & Platt, Inc.

 

35,820

 

300

 

 

 

Whirlpool Corp.

 

19,365

 

 

 

 

 

 

 

55,185

 

 

 

 

 

Household Products/ Wares: 0.1%

 

 

 

650

 

 

 

Avery Dennison Corp.

 

38,129

 

1,600

 

 

 

Clorox Co.

 

88,192

 

700

 

 

 

Fortune Brands, Inc.

 

54,936

 

 

 

 

 

 

 

181,257

 

 

 

 

 

Housewares: 0.0%

 

 

 

1,300

 

 

 

Newell Rubbermaid, Inc.

 

30,004

 

 

 

 

 

 

 

30,004

 

 

 

 

 

Insurance: 1.6%

 

 

 

2,100

 

@@

 

ACE Ltd.

 

84,882

 

2,300

 

 

 

AFLAC, Inc.

 

86,526

 

5,150

 

 

 

Allstate Corp.

 

260,074

 

550

 

 

 

AMBAC Financial Group, Inc.

 

44,732

 

23,350

 

 

 

American International Group, Inc.

 

1,479,222

 

2,250

 

 

 

AON Corp.

 

47,520

 

1,800

 

 

 

Chubb Corp.

 

137,178

 

1,250

 

 

 

CIGNA Corp.

 

87,525

 

945

 

 

 

Cincinnati Financial Corp.

 

42,336

 

1,650

 

 

 

Hartford Financial Services Group, Inc.

 

105,600

 

700

 

 

 

Jefferson-Pilot Corp.

 

34,433

 

1,350

 

 

 

Lincoln National Corp.

 

62,127

 

1,200

 

 

 

Loews Corp.

 

83,892

 

2,350

 

 

 

Marsh & McLennan Cos., Inc.

 

67,187

 

850

 

 

 

MBIA, Inc.

 

50,966

 

5,500

 

 

 

MetLife, Inc.

 

214,500

 

650

 

 

 

MGIC Investment Corp.

 

44,200

 

1,450

 

 

 

Principal Financial Group

 

54,636

 

1,050

 

 

 

Progressive Corp.

 

95,540

 

4,900

 

 

 

Prudential Financial, Inc.

 

239,854

 

1,200

 

 

 

Safeco Corp.

 

58,164

 

700

 

 

 

Torchmark Corp.

 

38,437

 

1,450

 

 

 

UnumProvident Corp.

 

22,577

 

600

 

@@

 

XL Capital Ltd.

 

45,216

 

 

 

 

 

 

 

3,487,324

 

 

 

 

 

Internet: 0.4%

 

 

 

3,450

 

@

 

eBay, Inc.

 

387,953

 

3,000

 

@

 

Symantec Corp.

 

191,430

 

7,550

 

@

 

Yahoo!, Inc.

 

284,031

 

 

 

 

 

 

 

863,414

 

 

 

 

 

Iron/ Steel: 0.0%

 

 

 

1,000

 

 

 

Nucor Corp.

 

52,900

 

800

 

 

 

United States Steel Corp.

 

41,888

 

 

 

 

 

 

 

94,788

 

 

 

 

 

Leisure Time: 0.1%

 

 

 

850

 

 

 

Brunswick Corp.

 

41,497

 

3,500

 

 

 

Carnival Corp.

 

185,535

 

1,350

 

 

 

Harley-Davidson, Inc.

 

78,057

 

550

 

 

 

Sabre Holdings Corp.

 

12,694

 

 

 

 

 

 

 

317,783

 

 

 

 

 

Lodging: 0.1%

 

 

 

500

 

 

 

Harrah’s Entertainment, Inc.

 

30,700

 

1,700

 

 

 

Hilton Hotels Corp.

 

35,122

 

950

 

 

 

Marriott Intl., Inc.

 

54,007

 

950

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

49,676

 

 

 

 

 

 

 

169,505

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

600

 

 

 

Caterpillar, Inc.

 

54,930

 

 

 

 

 

 

 

54,930

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

250

 

 

 

Cummins, Inc.

 

19,905

 

1,150

 

 

 

Deere & Co.

 

82,490

 

1,050

 

 

 

Rockwell Automation, Inc.

 

49,665

 

 

 

 

 

 

 

152,060

 

 

 

 

 

Media: 0.7%

 

 

 

1,200

 

 

 

Clear Channel Communications, Inc.

 

40,416

 

12,250

 

@

 

Comcast Corp.

 

367,990

 

1,450

 

 

 

Gannett Co., Inc.

 

119,611

 

400

 

 

 

Knight-Ridder, Inc.

 

27,236

 

1,350

 

 

 

McGraw-Hill Cos., Inc.

 

118,436

 

300

 

 

 

Meredith Corp.

 

15,816

 

650

 

 

 

New York Times Co.

 

26,650

 

24,950

 

@

 

Time Warner, Inc.

 

441,864

 

600

 

 

 

Tribune Co.

 

26,022

 

550

 

@

 

Univision Communications, Inc.

 

16,555

 

3,650

 

 

 

Viacom, Inc.

 

126,655

 

11,300

 

 

 

Walt Disney Co.

 

303,744

 

 

 

 

 

 

 

1,630,995

 

 

 

 

 

Mining: 0.0%

 

 

 

650

 

 

 

Phelps Dodge Corp.

 

63,135

 

 

 

 

 

 

 

63,135

 

 

 

 

 

Miscellaneous Manufacturing: 1.6%

 

 

 

4,300

 

 

 

3M Co.

 

342,237

 

500

 

 

 

Cooper Industries Ltd.

 

33,155

 

1,550

 

 

 

Danaher Corp.

 

88,164

 

1,250

 

 

 

Dover Corp.

 

50,563

 

1,700

 

 

 

Eastman Kodak Co.

 

55,607

 

700

 

 

 

Eaton Corp.

 

47,180

 

55,650

 

 

 

General Electric Co.

 

1,967,783

 

4,650

 

 

 

Honeywell Intl., Inc.

 

164,285

 

 

See Accompanying Notes to Financial Statements

 

93


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing (continued)

 

 

 

1,650

 

 

 

Illinois Tool Works, Inc.

 

$

155,480

 

750

 

@@

 

Ingersoll-Rand Co.

 

55,815

 

450

 

 

 

ITT Industries, Inc.

 

38,304

 

600

 

 

 

Pall Corp.

 

16,254

 

700

 

 

 

Textron, Inc.

 

50,834

 

11,100

 

@@

 

Tyco Intl. Ltd.

 

377,066

 

 

 

 

 

 

 

3,442,727

 

 

 

 

 

Office/ Business Equipment: 0.1%

 

 

 

1,200

 

 

 

Pitney Bowes, Inc.

 

52,524

 

4,250

 

@

 

Xerox Corp.

 

65,110

 

 

 

 

 

 

 

117,634

 

 

 

 

 

Oil and Gas: 2.2%

 

 

 

450

 

 

 

Amerada Hess Corp.

 

39,983

 

1,600

 

 

 

Anadarko Petroleum Corp.

 

111,360

 

1,600

 

 

 

Apache Corp.

 

86,496

 

3,100

 

 

 

Burlington Resources, Inc.

 

143,871

 

17,500

 

 

 

ChevronTexaco Corp.

 

955,499

 

4,450

 

 

 

ConocoPhillips

 

404,905

 

4,200

 

 

 

Devon Energy Corp.

 

173,964

 

500

 

 

 

EOG Resources, Inc.

 

37,535

 

42,200

 

 

 

Exxon Mobil Corp.

 

2,162,749

 

600

 

 

 

Kerr-McGee Corp.

 

37,338

 

1,450

 

 

 

Marathon Oil Corp.

 

57,188

 

250

 

@,@@

 

Nabors Industries Ltd.

 

13,000

 

850

 

@

 

Noble Corp.

 

41,183

 

2,050

 

 

 

Occidental Petroleum Corp.

 

123,431

 

600

 

 

 

Sunoco, Inc.

 

49,536

 

1,450

 

@

 

Transocean, Inc.

 

58,392

 

1,900

 

 

 

Unocal Corp.

 

87,476

 

2,100

 

 

 

Valero Energy Corp.

 

98,259

 

 

 

 

 

 

 

4,682,165

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

1,500

 

 

 

Baker Hughes, Inc.

 

66,495

 

900

 

 

 

BJ Services Co.

 

45,603

 

2,150

 

 

 

Halliburton Co.

 

88,903

 

 

 

 

 

 

 

201,001

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

800

 

 

 

Ball Corp.

 

35,784

 

400

 

 

 

Bemis Co.

 

11,136

 

800

 

@

 

Pactiv Corp.

 

19,880

 

400

 

@

 

Sealed Air Corp.

 

20,564

 

 

 

 

 

 

 

87,364

 

 

 

 

 

Pharmaceuticals: 1.5%

 

 

 

8,600

 

 

 

Abbott Laboratories

 

360,855

 

650

 

 

 

Allergan, Inc.

 

47,775

 

650

 

 

 

AmerisourceBergen Corp.

 

38,311

 

10,750

 

 

 

Bristol-Myers Squibb Co.

 

252,625

 

2,000

 

 

 

Cardinal Health, Inc.

 

104,560

 

4,050

 

@

 

Caremark Rx, Inc.

 

144,828

 

2,400

 

 

 

Eli Lilly & Co.

 

127,992

 

500

 

@

 

Express Scripts, Inc.

 

35,980

 

1,650

 

@

 

Forest Laboratories, Inc.

 

64,301

 

2,000

 

@

 

Gilead Sciences, Inc.

 

68,920

 

1,000

 

@

 

Hospira, Inc.

 

32,230

 

1,000

 

@

 

King Pharmaceuticals, Inc.

 

12,450

 

1,491

 

@

 

Medco Health Solutions, Inc.

 

56,241

 

12,300

 

 

 

Merck & Co., Inc.

 

344,645

 

39,650

 

 

 

Pfizer, Inc.

 

1,101,080

 

8,100

 

 

 

Schering-Plough Corp.

 

144,585

 

7,350

 

 

 

Wyeth

 

293,045

 

 

 

 

 

 

 

3,230,423

 

 

 

 

 

Pipelines: 0.0%

 

 

 

3,850

 

@

 

Dynegy, Inc.

 

21,753

 

2,500

 

 

 

El Paso Corp.

 

26,100

 

250

 

 

 

Kinder Morgan, Inc.

 

17,325

 

2,450

 

 

 

Williams Cos., Inc.

 

40,841

 

 

 

 

 

 

 

106,019

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

750

 

 

 

Equity Office Properties Trust

 

20,588

 

800

 

 

 

ProLogis

 

32,184

 

950

 

 

 

Simon Property Group, Inc.

 

58,976

 

 

 

 

 

 

 

111,748

 

 

 

 

 

Retail: 2.1%

 

 

 

1,700

 

@

 

Bed Bath & Beyond, Inc.

 

67,878

 

1,700

 

 

 

Best Buy Co., Inc.

 

95,846

 

1,650

 

 

 

Circuit City Stores, Inc.

 

25,724

 

4,300

 

 

 

Costco Wholesale Corp.

 

208,980

 

1,750

 

 

 

CVS Corp.

 

79,398

 

1,250

 

 

 

Darden Restaurants, Inc.

 

34,075

 

750

 

 

 

Federated Department Stores, Inc.

 

41,100

 

6,850

 

 

 

Gap, Inc.

 

149,673

 

19,550

 

 

 

Home Depot, Inc.

 

816,212

 

2,400

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

92,640

 

700

 

@

 

Kohl’s Corp.

 

32,312

 

3,450

 

 

 

Limited Brands, Inc.

 

84,318

 

4,300

 

 

 

Lowe’s Cos., Inc.

 

237,918

 

1,800

 

 

 

May Department Stores Co.

 

50,616

 

6,950

 

 

 

McDonald’s Corp.

 

213,643

 

600

 

 

 

Nordstrom, Inc.

 

26,250

 

2,050

 

@

 

Office Depot, Inc.

 

33,620

 

1,150

 

 

 

RadioShack Corp.

 

36,306

 

3,050

 

 

 

Staples, Inc.

 

97,326

 

2,100

 

@

 

Starbucks Corp.

 

118,146

 

4,950

 

 

 

Target Corp.

 

253,538

 

2,600

 

 

 

TJX Cos., Inc.

 

61,204

 

1,200

 

@

 

Toys R US, Inc.

 

23,208

 

22,400

 

 

 

Wal-Mart Stores, Inc.

 

1,166,143

 

7,500

 

 

 

Walgreen Co.

 

286,349

 

850

 

 

 

Wendy’s Intl., Inc.

 

30,320

 

1,250

 

 

 

Yum! Brands, Inc.

 

56,750

 

 

 

 

 

 

 

4,419,493

 

 

 

 

 

Savings and Loans: 0.1%

 

 

 

800

 

 

 

Golden West Financial Corp.

 

95,392

 

750

 

 

 

Sovereign Bancorp, Inc.

 

16,388

 

4,850

 

 

 

Washington Mutual, Inc.

 

197,443

 

 

 

 

 

 

 

309,223

 

 

 

 

 

Semiconductors: 0.6%

 

 

 

1,600

 

@

 

Altera Corp.

 

36,288

 

1,950

 

 

 

Analog Devices, Inc.

 

72,053

 

9,150

 

@

 

Applied Materials, Inc.

 

152,256

 

33,850

 

 

 

Intel Corp.

 

756,547

 

900

 

@

 

KLA-Tencor Corp.

 

40,554

 

1,350

 

 

 

Linear Technology Corp.

 

51,516

 

600

 

 

 

Maxim Integrated Products, Inc.

 

24,576

 

1,600

 

@

 

National Semiconductor Corp.

 

24,736

 

500

 

@

 

Qlogic Corp.

 

17,195

 

3,100

 

 

 

Texas Instruments, Inc.

 

74,958

 

 

 

 

 

 

 

1,250,679

 

 

 

 

 

Software: 1.4%

 

 

 

1,200

 

 

 

Adobe Systems, Inc.

 

72,672

 

800

 

 

 

Autodesk, Inc.

 

52,328

 

3,200

 

 

 

Automatic Data Processing, Inc.

 

145,696

 

1,550

 

@

 

BMC Software, Inc.

 

28,799

 

800

 

@

 

Citrix Systems, Inc.

 

18,888

 

 

See Accompanying Notes to Financial Statements

 

94


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software (continued)

 

 

 

2,550

 

 

 

Computer Associates Intl., Inc.

 

$

77,852

 

2,200

 

@

 

Compuware Corp.

 

12,694

 

650

 

@

 

Electronic Arts, Inc.

 

31,785

 

4,749

 

 

 

First Data Corp.

 

195,136

 

1,000

 

@

 

Fiserv, Inc.

 

38,510

 

1,600

 

 

 

IMS Health, Inc.

 

36,112

 

1,100

 

@

 

Intuit, Inc.

 

46,024

 

56,900

 

 

 

Microsoft Corp.

 

1,525,488

 

1,950

 

@

 

Novell, Inc.

 

11,895

 

46,100

 

@

 

Oracle Corp.

 

583,625

 

2,250

 

@

 

PeopleSoft, Inc.

 

53,123

 

2,350

 

@

 

Siebel Systems, Inc.

 

23,688

 

2,500

 

@

 

Veritas Software Corp.

 

54,750

 

 

 

 

 

 

 

3,009,065

 

 

 

 

 

Telecommunications: 1.6%

 

 

 

2,000

 

 

 

Alltel Corp.

 

113,380

 

1,650

 

 

 

AT&T Corp.

 

30,195

 

1,950

 

@

 

Avaya, Inc.

 

32,019

 

10,000

 

 

 

BellSouth Corp.

 

268,200

 

600

 

 

 

CenturyTel, Inc.

 

19,752

 

35,500

 

@

 

Cisco Systems, Inc.

 

664,204

 

1,950

 

 

 

Citizens Communications Co.

 

27,885

 

1,500

 

@

 

Comverse Technology, Inc.

 

31,905

 

6,750

 

@

 

Corning, Inc.

 

84,915

 

23,250

 

@

 

Lucent Technologies, Inc.

 

91,373

 

17,450

 

 

 

Motorola, Inc.

 

336,087

 

6,050

 

@

 

Nextel Communications, Inc.

 

172,183

 

8,900

 

 

 

Qualcomm, Inc.

 

370,418

 

8,500

 

@

 

Qwest Communications Intl., Inc.

 

34,000

 

17,300

 

 

 

SBC Communications, Inc.

 

435,441

 

1,200

 

 

 

Scientific-Atlanta, Inc.

 

35,544

 

7,700

 

 

 

Sprint Corp.

 

175,637

 

2,700

 

@

 

Tellabs, Inc.

 

23,085

 

14,550

 

 

 

Verizon Communications, Inc.

 

599,896

 

 

 

 

 

 

 

3,546,119

 

 

 

 

 

Textiles: 0.0%

 

 

 

750

 

 

 

Cintas Corp.

 

33,540

 

 

 

 

 

 

 

33,540

 

 

 

 

 

Toys/ Games/ Hobbies: 0.0%

 

 

 

1,000

 

 

 

Hasbro, Inc.

 

19,030

 

2,250

 

 

 

Mattel, Inc.

 

42,638

 

 

 

 

 

 

 

61,668

 

 

 

 

 

Transportation: 0.4%

 

 

 

1,600

 

 

 

Burlington Northern Santa Fe Corp.

 

72,064

 

1,000

 

 

 

CSX Corp.

 

38,130

 

2,200

 

 

 

FedEx Corp.

 

209,066

 

3,000

 

 

 

Norfolk Southern Corp.

 

102,990

 

400

 

 

 

Ryder System, Inc.

 

21,456

 

450

 

 

 

Union Pacific Corp.

 

28,548

 

5,900

 

 

 

United Parcel Service, Inc.

 

496,485

 

 

 

 

 

 

 

968,739

 

 

 

 

 

Total Common Stock
(Cost $55,904,028)

 

59,623,324

 

 

Principal
Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 59.5%

 

 

 

 

 

 

 

Federal Home Loan Mortgage Corporation: 28.9%

 

 

 

$

73,000,000

 

 

 

3.880%, due 06/26/08

 

$

63,996,107

 

 

 

 

 

 

 

63,996,107

 

 

 

 

 

Federal National Mortgage Association: 30.6%

 

 

 

5,430,000

 

 

 

4.040%, due 05/15/08 STRIP

 

4,756,729

 

72,000,000

 

 

 

4.070%, due 05/15/08 STRIP

 

63,009,144

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $137,252,905)

 

131,761,980

 

U.S. TREASURY OBLIGATIONS: 13.2%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 13.2%

 

 

 

32,942,000

 

 

 

3.410%, due 05/15/08

 

29,339,265

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $29,780,112)

 

29,339,265

 

 

 

 

 

Total Long-Term Investments
(Cost $222,937,045)

 

220,724,569

 

SHORT-TERM INVESTMENTS: 0.6%

 

 

 

 

 

 

 

Repurchase Agreement: 0.6%

 

 

 

1,267,000

 

 

 

Goldman Sachs Repurchase Agreement dated 11/30/04, 2.060%, due 12/01/04, $1,267,073 to be received upon repurchase (Collateralized by $1,222,000 Federal Home Loan Mortgage Corporation, 5.500%, Market Value plus accrued interest $1,293,029, due 07/15/06)

 

1,267,000

 

 

 

 

 

Total Short-Term Investments
(Cost $1,267,000)

 

1,267,000

 

 

Total Investments In Securities
(Cost $224,204,045)*

 

100.2

%

$

221,991,569

 

Other Assets and
Liabilities-Net

 

(0.2

)

(429,240

)

Net Assets

 

100.0

%

$

221,562,329

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $224,802,893. Net unrealized depreciation consists of:

 

 

 

 

 

Gross Unrealized Appreciation

 

$

4,764,461

 

Gross Unrealized Depreciation

 

(7,575,785

)

Net Unrealized Depreciation

 

$

(2,811,324

) 

 

See Accompanying Notes to Financial Statements

 

95


 

ING PRINCIPAL PROTECTION FUND VIII

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 30.8%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

480

 

@

 

Interpublic Group of Cos., Inc.

 

$

5,957

 

670

 

 

 

Omnicom Group, Inc.

 

54,270

 

 

 

 

 

 

 

60,227

 

 

 

 

 

Aerospace/Defense: 0.7%

 

 

 

5,820

 

 

 

Boeing Co.

 

311,778

 

1,440

 

 

 

General Dynamics Corp.

 

156,038

 

360

 

 

 

Goodrich Corp.

 

11,430

 

1,730

 

 

 

Lockheed Martin Corp.

 

105,253

 

1,200

 

 

 

Northrop Grumman Corp.

 

67,596

 

3,000

 

 

 

Raytheon Co.

 

121,020

 

520

 

 

 

Rockwell Collins, Inc.

 

20,727

 

1,950

 

 

 

United Technologies Corp.

 

190,281

 

 

 

 

 

 

 

984,123

 

 

 

 

 

Agriculture: 0.5%

 

 

 

8,390

 

 

 

Altria Group, Inc.

 

482,341

 

2,430

 

 

 

Archer-Daniels-Midland Co.

 

51,516

 

900

 

 

 

Monsanto Co.

 

41,418

 

570

 

 

 

Reynolds American, Inc.

 

43,109

 

1,200

 

 

 

UST, Inc.

 

52,836

 

 

 

 

 

 

 

671,220

 

 

 

 

 

Apparel: 0.2%

 

 

 

1,400

 

@

 

Coach, Inc.

 

69,776

 

520

 

 

 

Jones Apparel Group, Inc.

 

18,476

 

330

 

 

 

Liz Claiborne, Inc.

 

13,553

 

1,720

 

 

 

Nike, Inc.

 

145,615

 

160

 

 

 

Reebok Intl. Ltd.

 

6,221

 

500

 

 

 

VF Corp.

 

26,995

 

 

 

 

 

 

 

280,636

 

 

 

 

 

Auto Manufacturers: 0.2%

 

 

 

11,780

 

 

 

Ford Motor Co.

 

167,040

 

2,070

 

 

 

General Motors Corp.

 

79,881

 

1,275

 

 

 

PACCAR, Inc.

 

99,578

 

 

 

 

 

 

 

346,499

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

380

 

 

 

Dana Corp.

 

6,213

 

650

 

@

 

Goodyear Tire & Rubber Co.

 

8,203

 

670

 

 

 

Johnson Controls, Inc.

 

41,138

 

 

 

 

 

 

 

55,554

 

 

 

 

 

Banks: 2.0%

 

 

 

1,280

 

 

 

AmSouth Bancorporation

 

33,190

 

16,680

 

 

 

Bank of America Corp.

 

771,783

 

2,300

 

 

 

BB&T Corp.

 

97,635

 

1,240

 

 

 

Comerica, Inc.

 

76,260

 

700

 

 

 

Fifth Third Bancorp

 

35,252

 

310

 

 

 

First Horizon National Corp.

 

13,547

 

580

 

 

 

Huntington Bancshares, Inc.

 

14,071

 

2,050

 

 

 

KeyCorp

 

68,245

 

400

 

 

 

M & T Bank Corp.

 

42,164

 

770

 

 

 

Marshall & Ilsley Corp.

 

32,101

 

1,240

 

 

 

Mellon Financial Corp.

 

36,233

 

3,410

 

 

 

National City Corp.

 

126,443

 

1,885

 

 

 

North Fork Bancorporation, Inc.

 

54,288

 

360

 

 

 

Northern Trust Corp.

 

16,934

 

910

 

 

 

PNC Financial Services Group, Inc.

 

49,504

 

1,918

 

 

 

Regions Financial Corp.

 

67,111

 

1,400

 

 

 

State Street Corp.

 

62,384

 

1,370

 

 

 

SunTrust Banks, Inc.

 

97,681

 

400

 

 

 

Synovus Financial Corp.

 

10,800

 

990

 

 

 

The Bank of New York Co., Inc.

 

32,581

 

7,690

 

 

 

U.S. Bancorp

 

227,855

 

7,873

 

 

 

Wachovia Corp.

 

407,428

 

6,910

 

 

 

Wells Fargo & Co.

 

426,830

 

290

 

 

 

Zions Bancorporation

 

19,285

 

 

 

 

 

 

 

2,819,605

 

 

 

 

 

Beverages: 0.7%

 

 

 

3,110

 

 

 

Anheuser-Busch Cos., Inc.

 

155,780

 

400

 

 

 

Brown-Forman Corp.

 

19,208

 

9,990

 

 

 

Coca-Cola Co.

 

392,707

 

1,640

 

 

 

Coca-Cola Enterprises, Inc.

 

34,112

 

720

 

 

 

Pepsi Bottling Group, Inc.

 

20,174

 

9,380

 

 

 

PepsiCo, Inc.

 

468,156

 

 

 

 

 

 

 

1,090,137

 

 

 

 

 

Biotechnology: 0.3%

 

 

 

5,220

 

@

 

Amgen, Inc.

 

313,408

 

1,150

 

@

 

Biogen Idec, Inc.

 

67,482

 

850

 

@

 

Genzyme Corp.

 

47,609

 

750

 

@

 

MedImmune, Inc.

 

19,950

 

150

 

@

 

Millipore Corp.

 

7,308

 

 

 

 

 

 

 

455,757

 

 

 

 

 

Building Materials: 0.1%

 

 

 

690

 

@

 

American Standard Cos., Inc.

 

26,869

 

1,820

 

 

 

Masco Corp.

 

64,191

 

310

 

 

 

Vulcan Materials Co.

 

16,074

 

 

 

 

 

 

 

107,134

 

 

 

 

 

Chemicals: 0.5%

 

 

 

900

 

 

 

Air Products & Chemicals, Inc.

 

51,525

 

150

 

 

 

Ashland, Inc.

 

8,873

 

4,080

 

 

 

Dow Chemical Co.

 

205,917

 

4,050

 

 

 

E.I. du Pont de Nemours & Co.

 

183,545

 

350

 

 

 

Eastman Chemical Co.

 

19,033

 

320

 

 

 

Ecolab, Inc.

 

11,194

 

510

 

 

 

Engelhard Corp.

 

15,244

 

270

 

 

 

International Flavors & Fragrances, Inc.

 

10,935

 

1,300

 

 

 

PPG Industries, Inc.

 

87,711

 

1,210

 

 

 

Praxair, Inc.

 

54,329

 

730

 

 

 

Rohm & Haas Co.

 

32,186

 

750

 

 

 

Sherwin-Williams Co.

 

33,450

 

270

 

 

 

Sigma-Aldrich Corp.

 

16,127

 

 

 

 

 

 

 

730,069

 

 

 

 

 

Commercial Services: 0.3%

 

 

 

730

 

@

 

Apollo Group, Inc.

 

58,181

 

4,030

 

 

 

Cendant Corp.

 

91,359

 

190

 

 

 

Deluxe Corp.

 

7,513

 

520

 

 

 

Equifax, Inc.

 

14,362

 

860

 

 

 

H&R Block, Inc.

 

41,022

 

850

 

 

 

McKesson Corp.

 

25,118

 

630

 

 

 

Moody’s Corp.

 

50,873

 

1,620

 

 

 

Paychex, Inc.

 

53,719

 

900

 

 

 

R.R. Donnelley & Sons Co.

 

31,230

 

600

 

 

 

Robert Half Intl., Inc.

 

16,218

 

 

 

 

 

 

 

389,595

 

 

 

 

 

Computers: 1.8%

 

 

 

500

 

@

 

Affiliated Computer Services, Inc.

 

29,590

 

2,760

 

@

 

Apple Computer, Inc.

 

185,058

 

600

 

@

 

Computer Sciences Corp.

 

32,460

 

13,880

 

@

 

Dell, Inc.

 

562,417

 

2,050

 

 

 

Electronic Data Systems Corp.

 

46,023

 

9,340

 

@

 

EMC Corp.

 

125,343

 

710

 

@

 

Gateway, Inc.

 

4,835

 

12,310

 

 

 

Hewlett-Packard Co.

 

246,200

 

11,750

 

 

 

International Business Machines Corp.

 

1,107,319

 

430

 

@

 

Lexmark Intl., Inc.

 

36,507

 

350

 

@

 

NCR Corp.

 

20,906

 

1,190

 

@

 

Network Appliance, Inc.

 

35,890

 

 

See Accompanying Notes to Financial Statements

 

96


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

23,550

 

@

 

Sun Microsystems, Inc.

 

$

130,703

 

1,090

 

@

 

Sungard Data Systems, Inc.

 

28,896

 

1,200

 

@

 

Unisys Corp.

 

13,788

 

 

 

 

 

 

 

2,605,935

 

 

 

 

 

Cosmetics/Personal Care: 1.0%

 

 

 

510

 

 

 

Alberto-Culver Co.

 

23,613

 

1,600

 

 

 

Avon Products, Inc.

 

60,064

 

2,040

 

 

 

Colgate-Palmolive Co.

 

93,820

 

6,980

 

 

 

Gillette Co.

 

303,560

 

2,500

 

 

 

Kimberly-Clark Corp.

 

159,025

 

15,730

 

 

 

Procter & Gamble Co.

 

841,240

 

 

 

 

 

 

 

1,481,322

 

 

 

 

 

Distribution/Wholesale: 0.0%

 

 

 

1,000

 

 

 

Genuine Parts Co.

 

43,410

 

450

 

 

 

W.W. Grainger, Inc.

 

27,837

 

 

 

 

 

 

 

71,247

 

 

 

 

 

Diversified Financial Services: 2.3%

 

 

 

5,230

 

 

 

American Express Co.

 

291,363

 

380

 

 

 

Bear Stearns Cos., Inc.

 

37,080

 

1,360

 

 

 

Capital One Financial Corp.

 

106,869

 

2,300

 

 

 

Charles Schwab Corp.

 

24,794

 

1,500

 

 

 

CIT Group, Inc.

 

64,125

 

21,290

 

 

 

Citigroup, Inc.

 

952,728

 

3,760

 

 

 

Countrywide Financial Corp.

 

124,870

 

1,050

 

@

 

E*TRADE Financial Corp.

 

14,553

 

4,000

 

 

 

Fannie Mae

 

274,800

 

120

 

 

 

Federated Investors, Inc.

 

3,530

 

770

 

 

 

Franklin Resources, Inc.

 

50,535

 

2,600

 

 

 

Freddie Mac

 

177,476

 

2,020

 

 

 

Goldman Sachs Group, Inc.

 

211,615

 

5,461

 

 

 

J.P. Morgan Chase & Co.

 

205,607

 

250

 

 

 

Janus Capital Group, Inc.

 

4,138

 

1,530

 

 

 

Lehman Brothers Holdings, Inc.

 

128,183

 

4,960

 

 

 

MBNA Corp.

 

131,738

 

3,630

 

 

 

Merrill Lynch & Co., Inc.

 

202,227

 

1,780

 

 

 

Morgan Stanley

 

90,335

 

780

 

@

 

Providian Financial Corp.

 

12,519

 

1,520

 

 

 

SLM Corp.

 

77,778

 

200

 

 

 

T. Rowe Price Group, Inc.

 

11,832

 

 

 

 

 

 

 

3,198,695

 

 

 

 

 

Electric: 0.8%

 

 

 

3,150

 

@

 

AES Corp.

 

38,556

 

500

 

@

 

Allegheny Energy, Inc.

 

9,570

 

250

 

 

 

Ameren Corp.

 

12,105

 

1,690

 

 

 

American Electric Power Co., Inc.

 

57,747

 

500

 

 

 

Cinergy Corp.

 

20,695

 

850

 

 

 

Consolidated Edison, Inc.

 

37,273

 

950

 

 

 

Constellation Energy Group, Inc.

 

41,515

 

1,350

 

 

 

Dominion Resources, Inc.

 

88,385

 

600

 

 

 

DTE Energy Co.

 

26,328

 

6,510

 

 

 

Duke Energy Corp.

 

164,573

 

1,910

 

 

 

Edison Intl.

 

60,929

 

850

 

 

 

Entergy Corp.

 

55,097

 

2,530

 

 

 

Exelon Corp.

 

105,526

 

1,120

 

 

 

FirstEnergy Corp.

 

47,298

 

540

 

 

 

FPL Group, Inc.

 

37,978

 

1,440

 

@

 

PG&E Corp.

 

47,894

 

240

 

 

 

Pinnacle West Capital Corp.

 

10,608

 

790

 

 

 

PPL Corp.

 

41,041

 

400

 

 

 

Progress Energy, Inc.

 

17,564

 

900

 

 

 

Public Service Enterprise Group, Inc.

 

39,591

 

3,090

 

 

 

Southern Co.

 

101,321

 

900

 

 

 

TECO Energy, Inc.

 

13,464

 

1,570

 

 

 

TXU Corp.

 

98,627

 

1,320

 

 

 

Xcel Energy, Inc.

 

23,839

 

 

 

 

 

 

 

1,197,524

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

2,070

 

 

 

Emerson Electric Co.

 

138,317

 

 

 

 

 

 

 

138,317

 

 

 

 

 

Electronics: 0.1%

 

 

 

1,600

 

@

 

Agilent Technologies, Inc.

 

36,623

 

600

 

 

 

Applera Corp. — Applied Biosystems Group

 

12,300

 

450

 

@

 

Fisher Scientific Intl.

 

25,443

 

570

 

@

 

Jabil Circuit, Inc.

 

14,284

 

340

 

 

 

Parker Hannifin Corp.

 

25,432

 

390

 

 

 

PerkinElmer, Inc.

 

8,319

 

1,640

 

@

 

Sanmina-SCI Corp.

 

14,481

 

3,270

 

@

 

Solectron Corp.

 

20,438

 

250

 

 

 

Tektronix, Inc.

 

7,843

 

670

 

@

 

Thermo Electron Corp.

 

20,268

 

350

 

@

 

Waters Corp.

 

16,331

 

 

 

 

 

 

 

201,762

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

350

 

 

 

Fluor Corp.

 

18,165

 

 

 

 

 

 

 

18,165

 

 

 

 

 

Entertainment: 0.0%

 

 

 

1,210

 

 

 

International Game Technology

 

42,774

 

 

 

 

 

 

 

42,774

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

2,010

 

 

 

Waste Management, Inc.

 

59,918

 

 

 

 

 

 

 

59,918

 

 

 

 

 

Food: 0.4%

 

 

 

1,400

 

 

 

Albertson’s, Inc.

 

35,420

 

1,750

 

 

 

Campbell Soup Co.

 

49,928

 

1,950

 

 

 

ConAgra Foods, Inc.

 

52,748

 

1,250

 

 

 

General Mills, Inc.

 

56,863

 

1,150

 

 

 

H.J. Heinz Co.

 

42,734

 

850

 

 

 

Hershey Foods Corp.

 

44,030

 

1,420

 

 

 

Kellogg Co.

 

62,054

 

1,100

 

@

 

Kroger Co.

 

17,798

 

550

 

 

 

McCormick & Co., Inc.

 

20,048

 

650

 

@

 

Safeway, Inc.

 

12,532

 

2,750

 

 

 

Sara Lee Corp.

 

64,569

 

770

 

 

 

SUPERVALU, Inc.

 

24,324

 

1,260

 

 

 

Wm. Wrigley Jr. Co.

 

86,687

 

 

 

 

 

 

 

569,735

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

1,100

 

 

 

Georgia-Pacific Corp.

 

40,271

 

2,060

 

 

 

International Paper Co.

 

85,531

 

510

 

 

 

Louisiana-Pacific Corp.

 

12,480

 

650

 

 

 

MeadWestvaco Corp.

 

21,873

 

550

 

 

 

Plum Creek Timber Co., Inc.

 

20,350

 

250

 

 

 

Temple-Inland, Inc.

 

14,898

 

1,300

 

 

 

Weyerhaeuser Co.

 

85,799

 

 

 

 

 

 

 

281,202

 

 

 

 

 

Gas: 0.0%

 

 

 

430

 

 

 

KeySpan Corp.

 

16,994

 

300

 

 

 

Nicor, Inc.

 

11,070

 

1,150

 

 

 

Sempra Energy

 

42,527

 

 

 

 

 

 

 

70,591

 

 

See Accompanying Notes to Financial Statements

 

97


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Hand/Machine Tools: 0.0%

 

 

 

410

 

 

 

Black & Decker Corp.

 

$

34,477

 

90

 

 

 

Snap-On, Inc.

 

2,845

 

280

 

 

 

Stanley Works

 

13,093

 

 

 

 

 

 

 

50,415

 

 

 

 

 

Healthcare — Products: 1.4%

 

 

 

260

 

 

 

Bausch & Lomb, Inc.

 

15,309

 

2,510

 

 

 

Baxter Intl., Inc.

 

79,442

 

1,700

 

 

 

Becton Dickinson & Co.

 

93,126

 

750

 

 

 

Biomet, Inc.

 

35,903

 

3,210

 

@

 

Boston Scientific Corp.

 

111,740

 

340

 

 

 

C.R. Bard, Inc.

 

20,369

 

1,170

 

 

 

Guidant Corp.

 

75,851

 

20,790

 

 

 

Johnson & Johnson

 

1,254,052

 

4,970

 

 

 

Medtronic, Inc.

 

238,808

 

1,340

 

@

 

St. Jude Medical, Inc.

 

51,108

 

500

 

 

 

Stryker Corp.

 

21,995

 

910

 

@

 

Zimmer Holdings, Inc.

 

74,256

 

 

 

 

 

 

 

2,071,959

 

 

 

 

 

Healthcare — Services: 0.5%

 

 

 

970

 

 

 

Aetna, Inc.

 

114,955

 

740

 

@

 

Humana, Inc.

 

18,367

 

450

 

@

 

Laboratory Corp. Of America Holdings

 

21,578

 

390

 

 

 

Manor Care, Inc.

 

13,436

 

140

 

 

 

Quest Diagnostics, Inc.

 

13,125

 

4,670

 

 

 

UnitedHealth Group, Inc.

 

386,909

 

1,020

 

@

 

WellPoint Health Networks, Inc.

 

127,601

 

920

 

@

 

WellPoint, Inc.

 

93,224

 

 

 

 

 

 

 

789,195

 

 

 

 

 

Home Builders: 0.0%

 

 

 

460

 

 

 

Centex Corp.

 

24,136

 

 

 

 

 

 

 

24,136

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

510

 

 

 

Leggett & Platt, Inc.

 

15,224

 

290

 

 

 

Whirlpool Corp.

 

18,719

 

 

 

 

 

 

 

33,943

 

 

 

 

 

Household Products/Wares: 0.1%

 

 

 

350

 

 

 

Avery Dennison Corp.

 

20,531

 

860

 

 

 

Clorox Co.

 

47,403

 

500

 

 

 

Fortune Brands, Inc.

 

39,240

 

 

 

 

 

 

 

107,174

 

 

 

 

 

Housewares: 0.0%

 

 

 

1,100

 

 

 

Newell Rubbermaid, Inc.

 

25,388

 

 

 

 

 

 

 

25,388

 

 

 

 

 

Insurance: 1.6%

 

 

 

1,140

 

@@

 

ACE Ltd.

 

46,079

 

2,020

 

 

 

AFLAC, Inc.

 

75,992

 

3,590

 

 

 

Allstate Corp.

 

181,295

 

370

 

 

 

AMBAC Financial Group, Inc.

 

30,092

 

14,520

 

 

 

American International Group, Inc.

 

919,842

 

1,540

 

 

 

AON Corp.

 

32,525

 

1,260

 

 

 

Chubb Corp.

 

96,025

 

890

 

 

 

CIGNA Corp.

 

62,318

 

482

 

 

 

Cincinnati Financial Corp.

 

21,594

 

1,200

 

 

 

Hartford Financial Services Group, Inc.

 

76,800

 

360

 

 

 

Jefferson-Pilot Corp.

 

17,708

 

710

 

 

 

Lincoln National Corp.

 

32,674

 

1,350

 

 

 

Loews Corp.

 

94,379

 

2,200

 

 

 

Marsh & McLennan Cos., Inc.

 

62,898

 

570

 

 

 

MBIA, Inc.

 

34,177

 

3,840

 

 

 

MetLife, Inc.

 

149,760

 

270

 

 

 

MGIC Investment Corp.

 

18,360

 

960

 

 

 

Principal Financial Group

 

36,173

 

730

 

 

 

Progressive Corp.

 

66,423

 

3,400

 

 

 

Prudential Financial, Inc.

 

166,430

 

720

 

 

 

Safeco Corp.

 

34,898

 

1,100

 

 

 

St. Paul Travelers Cos., Inc.

 

40,128

 

330

 

 

 

Torchmark Corp.

 

18,120

 

900

 

 

 

UnumProvident Corp.

 

14,013

 

420

 

@@

 

XL Capital Ltd.

 

31,651

 

 

 

 

 

 

 

2,360,354

 

 

 

 

 

Internet: 0.4%

 

 

 

2,730

 

@

 

eBay, Inc.

 

306,989

 

2,000

 

@

 

Symantec Corp.

 

127,620

 

5,650

 

@

 

Yahoo!, Inc.

 

212,553

 

 

 

 

 

 

 

647,162

 

 

 

 

 

Iron/Steel: 0.0%

 

 

 

400

 

 

 

Allegheny Technologies, Inc.

 

8,800

 

400

 

 

 

Nucor Corp.

 

21,160

 

750

 

 

 

United States Steel Corp.

 

39,270

 

 

 

 

 

 

 

69,230

 

 

 

 

 

Leisure Time: 0.1%

 

 

 

320

 

 

 

Brunswick Corp.

 

15,622

 

2,450

 

 

 

Carnival Corp.

 

129,875

 

1,020

 

 

 

Harley-Davidson, Inc.

 

58,976

 

650

 

 

 

Sabre Holdings Corp.

 

15,002

 

 

 

 

 

 

 

219,475

 

 

 

 

 

Lodging: 0.1%

 

 

 

320

 

 

 

Harrah’s Entertainment, Inc.

 

19,648

 

1,270

 

 

 

Hilton Hotels Corp.

 

26,238

 

1,270

 

 

 

Marriott Intl., Inc.

 

72,199

 

740

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

38,695

 

 

 

 

 

 

 

156,780

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

500

 

 

 

Caterpillar, Inc.

 

45,775

 

 

 

 

 

 

 

45,775

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

250

 

 

 

Cummins, Inc.

 

19,905

 

810

 

 

 

Deere & Co.

 

58,101

 

520

 

 

 

Rockwell Automation, Inc.

 

24,596

 

 

 

 

 

 

 

102,602

 

 

 

 

 

Media: 0.8%

 

 

 

850

 

 

 

Clear Channel Communications, Inc.

 

28,628

 

9,150

 

@

 

Comcast Corp.

 

274,866

 

990

 

 

 

Gannett Co., Inc.

 

81,665

 

110

 

 

 

Knight-Ridder, Inc.

 

7,490

 

950

 

 

 

McGraw-Hill Cos., Inc.

 

83,344

 

140

 

 

 

Meredith Corp.

 

7,381

 

490

 

 

 

New York Times Co.

 

20,090

 

18,720

 

@

 

Time Warner, Inc.

 

331,531

 

370

 

 

 

Tribune Co.

 

16,047

 

400

 

@

 

Univision Communications, Inc.

 

12,040

 

2,500

 

 

 

Viacom, Inc.

 

86,750

 

7,890

 

 

 

Walt Disney Co.

 

212,083

 

 

 

 

 

 

 

1,161,915

 

 

 

 

 

Mining: 0.0%

 

 

 

420

 

 

 

Phelps Dodge Corp.

 

40,795

 

 

 

 

 

 

 

40,795

 

 

See Accompanying Notes to Financial Statements

 

98


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing: 1.8%

 

 

 

3,200

 

 

 

3M Co.

 

$

254,688

 

390

 

 

 

Cooper Industries Ltd.

 

25,861

 

1,050

 

 

 

Danaher Corp.

 

59,724

 

600

 

 

 

Dover Corp.

 

24,270

 

1,870

 

 

 

Eastman Kodak Co.

 

61,168

 

600

 

 

 

Eaton Corp.

 

40,440

 

43,450

 

 

 

General Electric Co.

 

1,536,392

 

3,280

 

 

 

Honeywell Intl., Inc.

 

115,882

 

1,130

 

 

 

Illinois Tool Works, Inc.

 

106,480

 

530

 

@@

 

Ingersoll-Rand Co.

 

39,443

 

320

 

 

 

ITT Industries, Inc.

 

27,238

 

410

 

 

 

Pall Corp.

 

11,107

 

510

 

 

 

Textron, Inc.

 

37,036

 

8,260

 

@@

 

Tyco Intl. Ltd.

 

280,592

 

 

 

 

 

 

 

2,620,321

 

 

 

 

 

Office/Business Equipment: 0.1%

 

 

 

900

 

 

 

Pitney Bowes, Inc.

 

39,393

 

2,610

 

@

 

Xerox Corp.

 

39,985

 

 

 

 

 

 

 

79,378

 

 

 

 

 

Oil and Gas: 2.5%

 

 

 

290

 

 

 

Amerada Hess Corp.

 

25,767

 

1,360

 

 

 

Anadarko Petroleum Corp.

 

94,656

 

1,320

 

 

 

Apache Corp.

 

71,359

 

2,390

 

 

 

Burlington Resources, Inc.

 

110,920

 

11,640

 

 

 

ChevronTexaco Corp.

 

635,544

 

2,780

 

 

 

ConocoPhillips

 

252,952

 

2,960

 

 

 

Devon Energy Corp.

 

122,603

 

390

 

 

 

EOG Resources, Inc.

 

29,277

 

35,500

 

 

 

Exxon Mobil Corp.

 

1,819,375

 

520

 

 

 

Kerr-McGee Corp.

 

32,360

 

1,300

 

 

 

Marathon Oil Corp.

 

51,272

 

200

 

@,@@

 

Nabors Industries Ltd.

 

10,400

 

350

 

@

 

Noble Corp.

 

16,958

 

1,330

 

 

 

Occidental Petroleum Corp.

 

80,079

 

560

 

 

 

Sunoco, Inc.

 

46,234

 

1,000

 

@

 

Transocean, Inc.

 

40,270

 

1,420

 

 

 

Unocal Corp.

 

65,377

 

1,800

 

 

 

Valero Energy Corp.

 

84,222

 

 

 

 

 

 

 

3,589,625

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

1,400

 

 

 

Baker Hughes, Inc.

 

62,062

 

620

 

 

 

BJ Services Co.

 

31,415

 

700

 

 

 

Halliburton Co.

 

28,945

 

 

 

 

 

 

 

122,422

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

580

 

 

 

Ball Corp.

 

25,943

 

320

 

 

 

Bemis Co.

 

8,909

 

580

 

@

 

Pactiv Corp.

 

14,413

 

290

 

@

 

Sealed Air Corp.

 

14,909

 

 

 

 

 

 

 

64,174

 

 

 

 

 

Pharmaceuticals: 1.7%

 

 

 

6,400

 

 

 

Abbott Laboratories

 

268,544

 

490

 

 

 

Allergan, Inc.

 

36,015

 

550

 

 

 

AmerisourceBergen Corp.

 

32,417

 

7,520

 

 

 

Bristol-Myers Squibb Co.

 

176,720

 

1,750

 

 

 

Cardinal Health, Inc.

 

91,490

 

2,800

 

@

 

Caremark Rx, Inc.

 

100,128

 

4,610

 

 

 

Eli Lilly & Co.

 

245,851

 

320

 

@

 

Express Scripts, Inc.

 

23,027

 

1,270

 

@

 

Forest Laboratories, Inc.

 

49,492

 

1,500

 

@

 

Gilead Sciences, Inc.

 

51,690

 

400

 

@

 

Hospira, Inc.

 

12,892

 

700

 

@

 

King Pharmaceuticals, Inc.

 

8,715

 

1,020

 

@

 

Medco Health Solutions, Inc.

 

38,474

 

9,110

 

 

 

Merck & Co., Inc.

 

255,262

 

30,970

 

 

 

Pfizer, Inc.

 

860,037

 

5,700

 

 

 

Schering-Plough Corp.

 

101,745

 

5,150

 

 

 

Wyeth

 

205,331

 

 

 

 

 

 

 

2,557,830

 

 

 

 

 

Pipelines: 0.0%

 

 

 

2,500

 

@

 

Dynegy, Inc.

 

14,125

 

1,700

 

 

 

El Paso Corp.

 

17,748

 

140

 

 

 

Kinder Morgan, Inc.

 

9,702

 

1,670

 

 

 

Williams Cos., Inc.

 

27,839

 

 

 

 

 

 

 

69,414

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

650

 

 

 

Equity Office Properties Trust

 

17,843

 

500

 

 

 

ProLogis

 

20,115

 

810

 

 

 

Simon Property Group, Inc.

 

50,284

 

 

 

 

 

 

 

88,242

 

 

 

 

 

Retail: 2.4%

 

 

 

1,040

 

@

 

Bed Bath & Beyond, Inc.

 

41,525

 

1,110

 

 

 

Best Buy Co., Inc.

 

62,582

 

1,050

 

 

 

Circuit City Stores, Inc.

 

16,370

 

3,020

 

 

 

Costco Wholesale Corp.

 

146,772

 

1,380

 

 

 

CVS Corp.

 

62,611

 

450

 

 

 

Darden Restaurants, Inc.

 

12,267

 

650

 

 

 

Federated Department Stores, Inc.

 

35,620

 

4,580

 

 

 

Gap, Inc.

 

100,073

 

15,350

 

 

 

Home Depot, Inc.

 

640,863

 

2,100

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

81,060

 

1,400

 

@

 

Kohl’s Corp.

 

64,624

 

2,220

 

 

 

Limited Brands, Inc.

 

54,257

 

2,990

 

 

 

Lowe’s Cos., Inc.

 

165,437

 

860

 

 

 

May Department Stores Co.

 

24,183

 

7,010

 

 

 

McDonald’s Corp.

 

215,487

 

390

 

 

 

Nordstrom, Inc.

 

17,063

 

1,700

 

@

 

Office Depot, Inc.

 

27,880

 

700

 

 

 

RadioShack Corp.

 

22,099

 

2,830

 

 

 

Staples, Inc.

 

90,305

 

2,260

 

@

 

Starbucks Corp.

 

127,148

 

3,500

 

 

 

Target Corp.

 

179,270

 

1,680

 

 

 

TJX Cos., Inc.

 

39,547

 

900

 

@

 

Toys R US, Inc.

 

17,406

 

17,490

 

 

 

Wal-Mart Stores, Inc.

 

910,528

 

5,320

 

 

 

Walgreen Co.

 

203,118

 

480

 

 

 

Wendy’s Intl., Inc.

 

17,122

 

1,020

 

 

 

Yum! Brands, Inc.

 

46,308

 

 

 

 

 

 

 

3,421,525

 

 

 

 

 

Savings and Loans: 0.2%

 

 

 

610

 

 

 

Golden West Financial Corp.

 

72,736

 

950

 

 

 

Sovereign Bancorp, Inc.

 

20,758

 

3,310

 

 

 

Washington Mutual, Inc.

 

134,750

 

 

 

 

 

 

 

228,244

 

 

 

 

 

Semiconductors: 0.7%

 

 

 

1,120

 

@

 

Altera Corp.

 

25,402

 

1,370

 

 

 

Analog Devices, Inc.

 

50,622

 

6,400

 

@

 

Applied Materials, Inc.

 

106,495

 

26,390

 

 

 

Intel Corp.

 

589,816

 

650

 

@

 

KLA-Tencor Corp.

 

29,289

 

1,030

 

 

 

Linear Technology Corp.

 

39,305

 

410

 

 

 

Maxim Integrated Products, Inc.

 

16,794

 

1,190

 

@

 

National Semiconductor Corp.

 

18,397

 

400

 

@

 

Qlogic Corp.

 

13,756

 

2,860

 

 

 

Texas Instruments, Inc.

 

69,155

 

 

 

 

 

 

 

959,031

 

 

 

 

 

Software: 1.5%

 

 

 

860

 

 

 

Adobe Systems, Inc.

 

52,082

 

830

 

 

 

Autodesk, Inc.

 

54,290

 

 

See Accompanying Notes to Financial Statements

 

99


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software (continued)

 

 

 

2,210

 

 

 

Automatic Data Processing, Inc.

 

$

100,621

 

1,110

 

@

 

BMC Software, Inc.

 

20,624

 

540

 

@

 

Citrix Systems, Inc.

 

12,749

 

1,970

 

 

 

Computer Associates Intl., Inc.

 

60,144

 

1,640

 

@

 

Compuware Corp.

 

9,463

 

470

 

@

 

Electronic Arts, Inc.

 

22,983

 

3,347

 

 

 

First Data Corp.

 

137,528

 

740

 

@

 

Fiserv, Inc.

 

28,497

 

680

 

 

 

IMS Health, Inc.

 

15,348

 

530

 

@

 

Intuit, Inc.

 

22,175

 

44,700

 

 

 

Microsoft Corp.

 

1,198,408

 

1,630

 

@

 

Novell, Inc.

 

9,943

 

35,970

 

@

 

Oracle Corp.

 

455,380

 

1,040

 

@

 

PeopleSoft, Inc.

 

24,554

 

1,570

 

@

 

Siebel Systems, Inc.

 

15,826

 

1,290

 

@

 

Veritas Software Corp.

 

28,251

 

 

 

 

 

 

 

2,268,866

 

 

 

 

 

Telecommunications: 1.9%

 

 

 

1,710

 

 

 

Alltel Corp.

 

96,940

 

1,170

 

 

 

AT&T Corp.

 

21,411

 

2,350

 

@

 

Avaya, Inc.

 

38,587

 

7,060

 

 

 

BellSouth Corp.

 

189,349

 

390

 

 

 

CenturyTel, Inc.

 

12,839

 

27,750

 

@

 

Cisco Systems, Inc.

 

519,202

 

800

 

 

 

Citizens Communications Co.

 

11,440

 

540

 

@

 

Comverse Technology, Inc.

 

11,486

 

4,600

 

@

 

Corning, Inc.

 

57,868

 

16,000

 

@

 

Lucent Technologies, Inc.

 

62,880

 

13,130

 

 

 

Motorola, Inc.

 

252,884

 

4,220

 

@

 

Nextel Communications, Inc.

 

120,101

 

6,690

 

 

 

Qualcomm, Inc.

 

278,438

 

6,250

 

@

 

Qwest Communications Intl., Inc.

 

25,000

 

13,710

 

 

 

SBC Communications, Inc.

 

345,080

 

710

 

 

 

Scientific-Atlanta, Inc.

 

21,030

 

5,350

 

 

 

Sprint Corp.

 

122,034

 

1,990

 

@

 

Tellabs, Inc.

 

17,015

 

11,350

 

 

 

Verizon Communications, Inc.

 

467,960

 

 

 

 

 

 

 

2,671,544

 

 

 

 

 

Textiles: 0.0%

 

 

 

490

 

 

 

Cintas Corp.

 

21,913

 

 

 

 

 

 

 

21,913

 

 

 

 

 

Toys/Games/Hobbies: 0.0%

 

 

 

760

 

 

 

Hasbro, Inc.

 

14,463

 

1,150

 

 

 

Mattel, Inc.

 

21,792

 

 

 

 

 

 

 

36,255

 

 

 

 

 

Transportation: 0.5%

 

 

 

1,190

 

 

 

Burlington Northern Santa Fe Corp.

 

53,598

 

750

 

 

 

CSX Corp.

 

28,598

 

1,510

 

 

 

FedEx Corp.

 

143,495

 

1,880

 

 

 

Norfolk Southern Corp.

 

64,540

 

270

 

 

 

Ryder System, Inc.

 

14,483

 

350

 

 

 

Union Pacific Corp.

 

22,204

 

4,630

 

 

 

United Parcel Service, Inc.

 

389,614

 

 

 

 

 

 

 

716,532

 

 

 

 

 

Total Common Stock
(Cost $43,833,749)

 

45,349,357

 

 

Principal
Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 58.0%

 

 

 

 

 

 

 

Federal Home Loan Mortgage Corporation: 58.0%

 

 

 

$

100,000,000

 

 

 

3.880%, due 12/22/08

 

$

85,671,001

 

 

 

 

 

Total U.S. Government Agency Obligations (Cost $86,388,978)

 

85,671,001

 

U.S. TREASURY OBLIGATIONS: 10.7%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 10.7%

 

 

 

18,048,000

 

 

 

3.560%, due 11/15/08

 

15,715,097

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $15,932,579)

 

15,715,097

 

 

 

 

 

Total Long-Term Investments
(Cost $146,155,306)

 

146,735,455

 

SHORT-TERM INVESTMENTS: 0.8%

 

 

 

 

 

 

 

Repurchase Agreement: 0.8%

 

 

 

1,139,000

 

 

 

Goldman Sachs Repurchase Agreement dated 11/30/04, 2.060%, due 12/01/04, $1,139,065 to be received upon repurchase (Collateralized by $1,098,000 Federal Home Loan Mortgage Corporation, 5.500%, Market Value plus accrued interest $1,161,821, due 07/15/06)

 

1,139,000

 

 

 

 

 

Total Short-Term Investments
(Cost $1,139,000)

 

1,139,000

 

 

Total Investments In Securities
(Cost $147,294,306)*

 

100.3

%

$

147,874,455

 

Other Assets and
Liabilities-Net

 

(0.3

)

(399,307

)

Net Assets

 

100.0

%

$

147,475,148

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $149,253,759. Net unrealized appreciation consists of:

 

 

 

 

 

Gross Unrealized Appreciation

 

$

456,190

 

Gross Unrealized Depreciation

 

(1,835,494

)

Net Unrealized Appreciation

 

$

(1,379,304

) 

 

See Accompanying Notes to Financial Statements

 

100


 

ING PRINCIPAL PROTECTION FUND IX

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 32.4%

 

 

 

 

 

 

 

Advertising: 0.1%

 

 

 

1,000

 

@

 

Interpublic Group of Cos., Inc.

 

$

12,410

 

600

 

 

 

Omnicom Group, Inc.

 

48,600

 

 

 

 

 

 

 

61,010

 

 

 

 

 

Aerospace/Defense: 0.7%

 

 

 

4,100

 

 

 

Boeing Co.

 

219,637

 

1,000

 

 

 

General Dynamics Corp.

 

108,360

 

400

 

 

 

Goodrich Corp.

 

12,700

 

1,200

 

 

 

Lockheed Martin Corp.

 

73,008

 

1,150

 

 

 

Northrop Grumman Corp.

 

64,780

 

2,100

 

 

 

Raytheon Co.

 

84,714

 

500

 

 

 

Rockwell Collins, Inc.

 

19,930

 

1,450

 

 

 

United Technologies Corp.

 

141,491

 

 

 

 

 

 

 

724,620

 

 

 

 

 

Agriculture: 0.5%

 

 

 

5,900

 

 

 

Altria Group, Inc.

 

339,190

 

1,750

 

 

 

Archer-Daniels-Midland Co.

 

37,100

 

700

 

 

 

Monsanto Co.

 

32,214

 

450

 

 

 

Reynolds American, Inc.

 

34,034

 

650

 

 

 

UST, Inc.

 

28,620

 

 

 

 

 

 

 

471,158

 

 

 

 

 

Apparel: 0.2%

 

 

 

700

 

@

 

Coach, Inc.

 

34,888

 

450

 

 

 

Jones Apparel Group, Inc.

 

15,989

 

450

 

 

 

Liz Claiborne, Inc.

 

18,482

 

1,200

 

 

 

Nike, Inc.

 

101,591

 

100

 

 

 

Reebok Intl. Ltd.

 

3,888

 

450

 

 

 

VF Corp.

 

24,296

 

 

 

 

 

 

 

199,134

 

 

 

 

 

Auto Manufacturers: 0.3%

 

 

 

8,500

 

 

 

Ford Motor Co.

 

120,530

 

1,650

 

 

 

General Motors Corp.

 

63,674

 

800

 

 

 

PACCAR, Inc.

 

62,480

 

 

 

 

 

 

 

246,684

 

 

 

 

 

Auto Parts and Equipment: 0.1%

 

 

 

600

 

 

 

Dana Corp.

 

9,810

 

800

 

@

 

Goodyear Tire & Rubber Co.

 

10,096

 

550

 

 

 

Johnson Controls, Inc.

 

33,770

 

 

 

 

 

 

 

53,676

 

 

 

 

 

Banks: 2.1%

 

 

 

900

 

 

 

AmSouth Bancorporation

 

23,337

 

11,750

 

 

 

Bank of America Corp.

 

543,672

 

1,750

 

 

 

BB&T Corp.

 

74,288

 

750

 

 

 

Comerica, Inc.

 

46,125

 

600

 

 

 

Fifth Third Bancorp

 

30,216

 

250

 

 

 

First Horizon National Corp.

 

10,925

 

600

 

 

 

Huntington Bancshares, Inc.

 

14,556

 

1,350

 

 

 

KeyCorp

 

44,942

 

400

 

 

 

M & T Bank Corp.

 

42,164

 

550

 

 

 

Marshall & Ilsley Corp.

 

22,930

 

1,050

 

 

 

Mellon Financial Corp.

 

30,681

 

2,450

 

 

 

National City Corp.

 

90,846

 

525

 

 

 

North Fork Bancorporation, Inc.

 

15,120

 

600

 

 

 

Northern Trust Corp.

 

28,224

 

850

 

 

 

PNC Financial Services Group, Inc.

 

46,240

 

1,387

 

 

 

Regions Financial Corp.

 

48,531

 

350

 

 

 

State Street Corp.

 

15,596

 

1,100

 

 

 

SunTrust Banks, Inc.

 

78,430

 

350

 

 

 

Synovus Financial Corp.

 

9,450

 

850

 

 

 

The Bank of New York Co., Inc.

 

27,974

 

5,450

 

 

 

U.S. Bancorp

 

161,483

 

6,251

 

 

 

Wachovia Corp.

 

323,488

 

4,900

 

 

 

Wells Fargo & Co.

 

302,672

 

200

 

 

 

Zions Bancorporation

 

13,300

 

 

 

 

 

 

 

2,045,190

 

 

 

 

 

Beverages: 0.7%

 

 

 

100

 

 

 

Adolph Coors Co.

 

7,490

 

2,250

 

 

 

Anheuser-Busch Cos., Inc.

 

112,703

 

300

 

 

 

Brown-Forman Corp.

 

14,406

 

6,850

 

 

 

Coca-Cola Co.

 

269,273

 

1,200

 

 

 

Coca-Cola Enterprises, Inc.

 

24,960

 

650

 

 

 

Pepsi Bottling Group, Inc.

 

18,213

 

4,900

 

 

 

PepsiCo, Inc.

 

244,559

 

 

 

 

 

 

 

691,604

 

 

 

 

 

Biotechnology: 0.3%

 

 

 

3,600

 

@

 

Amgen, Inc.

 

216,144

 

1,050

 

@

 

Biogen Idec, Inc.

 

61,614

 

700

 

@

 

Genzyme Corp.

 

39,207

 

650

 

@

 

MedImmune, Inc.

 

17,290

 

100

 

@

 

Millipore Corp.

 

4,872

 

 

 

 

 

 

 

339,127

 

 

 

 

 

Building Materials: 0.1%

 

 

 

650

 

@

 

American Standard Cos., Inc.

 

25,311

 

1,200

 

 

 

Masco Corp.

 

42,324

 

250

 

 

 

Vulcan Materials Co.

 

12,963

 

 

 

 

 

 

 

80,598

 

 

 

 

 

Chemicals: 0.5%

 

 

 

550

 

 

 

Air Products & Chemicals, Inc.

 

31,488

 

200

 

 

 

Ashland, Inc.

 

11,830

 

2,750

 

 

 

Dow Chemical Co.

 

138,792

 

3,000

 

 

 

E.I. du Pont de Nemours & Co.

 

135,959

 

300

 

 

 

Eastman Chemical Co.

 

16,314

 

300

 

 

 

Ecolab, Inc.

 

10,494

 

450

 

 

 

Engelhard Corp.

 

13,451

 

200

 

 

 

International Flavors & Fragrances, Inc.

 

8,100

 

850

 

 

 

PPG Industries, Inc.

 

57,350

 

850

 

 

 

Praxair, Inc.

 

38,165

 

600

 

 

 

Rohm & Haas Co.

 

26,454

 

650

 

 

 

Sherwin-Williams Co.

 

28,990

 

200

 

 

 

Sigma-Aldrich Corp.

 

11,946

 

 

 

 

 

 

 

529,333

 

 

 

 

 

Commercial Services: 0.3%

 

 

 

550

 

@

 

Apollo Group, Inc.

 

43,835

 

2,650

 

 

 

Cendant Corp.

 

60,075

 

100

 

 

 

Deluxe Corp.

 

3,954

 

300

 

 

 

Equifax, Inc.

 

8,286

 

600

 

 

 

H&R Block, Inc.

 

28,620

 

850

 

 

 

McKesson Corp.

 

25,118

 

350

 

 

 

Moody’s Corp.

 

28,263

 

1,000

 

 

 

Paychex, Inc.

 

33,160

 

700

 

 

 

R.R. Donnelley & Sons Co.

 

24,290

 

500

 

 

 

Robert Half Intl., Inc.

 

13,515

 

 

 

 

 

 

 

269,116

 

 

 

 

 

Computers: 1.7%

 

 

 

350

 

@

 

Affiliated Computer Services, Inc.

 

20,713

 

1,850

 

@

 

Apple Computer, Inc.

 

124,043

 

400

 

@

 

Computer Sciences Corp.

 

21,640

 

9,550

 

@

 

Dell, Inc.

 

386,965

 

1,400

 

 

 

Electronic Data Systems Corp.

 

31,430

 

6,550

 

@

 

EMC Corp.

 

87,901

 

1,000

 

@

 

Gateway, Inc.

 

6,810

 

8,650

 

 

 

Hewlett-Packard Co.

 

173,000

 

6,400

 

 

 

International Business Machines Corp.

 

603,135

 

300

 

@

 

Lexmark Intl., Inc.

 

25,470

 

250

 

@

 

NCR Corp.

 

14,933

 

 

See Accompanying Notes to Financial Statements

 

101


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

800

 

@

 

Network Appliance, Inc.

 

$

24,128

 

15,350

 

@

 

Sun Microsystems, Inc.

 

85,193

 

700

 

@

 

Sungard Data Systems, Inc.

 

18,557

 

800

 

@

 

Unisys Corp.

 

9,192

 

 

 

 

 

 

 

1,633,110

 

 

 

 

 

Cosmetics/Personal Care: 1.1%

 

 

 

400

 

 

 

Alberto-Culver Co.

 

18,520

 

1,450

 

 

 

Avon Products, Inc.

 

54,433

 

1,450

 

 

 

Colgate-Palmolive Co.

 

66,686

 

4,950

 

 

 

Gillette Co.

 

215,275

 

1,850

 

 

 

Kimberly-Clark Corp.

 

117,679

 

12,200

 

 

 

Procter & Gamble Co.

 

652,455

 

 

 

 

 

 

 

1,125,048

 

 

 

 

 

Distribution/Wholesale: 0.0%

 

 

 

400

 

 

 

Genuine Parts Co.

 

17,364

 

350

 

 

 

W.W. Grainger, Inc.

 

21,651

 

 

 

 

 

 

 

39,015

 

 

 

 

 

Diversified Financial Services: 2.2%

 

 

 

3,650

 

 

 

American Express Co.

 

203,341

 

300

 

 

 

Bear Stearns Cos., Inc.

 

29,274

 

600

 

 

 

Capital One Financial Corp.

 

47,148

 

850

 

 

 

CIT Group, Inc.

 

36,338

 

14,700

 

 

 

Citigroup, Inc.

 

657,824

 

2,650

 

 

 

Countrywide Financial Corp.

 

88,007

 

850

 

@

 

E*TRADE Financial Corp.

 

11,781

 

2,800

 

 

 

Fannie Mae

 

192,359

 

100

 

 

 

Federated Investors, Inc.

 

2,942

 

650

 

 

 

Franklin Resources, Inc.

 

42,660

 

1,900

 

 

 

Freddie Mac

 

129,694

 

1,350

 

 

 

Goldman Sachs Group, Inc.

 

141,426

 

4,048

 

 

 

J.P. Morgan Chase & Co.

 

152,407

 

200

 

 

 

Janus Capital Group, Inc.

 

3,310

 

750

 

 

 

Lehman Brothers Holdings, Inc.

 

62,835

 

4,000

 

 

 

MBNA Corp.

 

106,240

 

2,700

 

 

 

Merrill Lynch & Co., Inc.

 

150,417

 

1,250

 

 

 

Morgan Stanley

 

63,438

 

600

 

@

 

Providian Financial Corp.

 

9,630

 

1,200

 

 

 

SLM Corp.

 

61,404

 

 

 

 

 

 

 

2,192,475

 

 

 

 

 

Electric: 0.8%

 

 

 

2,400

 

@

 

AES Corp.

 

29,376

 

400

 

@

 

Allegheny Energy, Inc.

 

7,656

 

200

 

 

 

Ameren Corp.

 

9,684

 

1,050

 

 

 

American Electric Power Co., Inc.

 

35,879

 

400

 

 

 

Cinergy Corp.

 

16,556

 

500

 

 

 

Consolidated Edison, Inc.

 

21,925

 

450

 

 

 

Constellation Energy Group, Inc.

 

19,665

 

400

 

 

 

Dominion Resources, Inc.

 

26,188

 

500

 

 

 

DTE Energy Co.

 

21,940

 

3,700

 

 

 

Duke Energy Corp.

 

93,535

 

1,100

 

 

 

Edison Intl.

 

35,090

 

650

 

 

 

Entergy Corp.

 

42,133

 

1,800

 

 

 

Exelon Corp.

 

75,078

 

850

 

 

 

FirstEnergy Corp.

 

35,896

 

400

 

 

 

FPL Group, Inc.

 

28,132

 

1,050

 

@

 

PG&E Corp.

 

34,923

 

300

 

 

 

Pinnacle West Capital Corp.

 

13,260

 

650

 

 

 

PPL Corp.

 

33,768

 

700

 

 

 

Public Service Enterprise Group, Inc.

 

30,793

 

1,950

 

 

 

Southern Co.

 

63,941

 

700

 

 

 

TECO Energy, Inc.

 

10,472

 

1,250

 

 

 

TXU Corp.

 

78,524

 

1,300

 

 

 

Xcel Energy, Inc.

 

23,478

 

 

 

 

 

 

 

787,892

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

1,650

 

 

 

Emerson Electric Co.

 

110,253

 

 

 

 

 

 

 

110,253

 

 

 

 

 

Electronics: 0.1%

 

 

 

1,150

 

@

 

Agilent Technologies, Inc.

 

26,324

 

700

 

 

 

Applera Corp. — Applied Biosystems Group

 

14,350

 

250

 

@

 

Fisher Scientific Intl.

 

14,135

 

450

 

@

 

Jabil Circuit, Inc.

 

11,277

 

250

 

 

 

Parker Hannifin Corp.

 

18,700

 

500

 

 

 

PerkinElmer, Inc.

 

10,665

 

2,100

 

@

 

Solectron Corp.

 

13,125

 

300

 

 

 

Tektronix, Inc.

 

9,411

 

500

 

@

 

Thermo Electron Corp.

 

15,125

 

300

 

@

 

Waters Corp.

 

13,998

 

 

 

 

 

 

 

147,110

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

250

 

 

 

Fluor Corp.

 

12,975

 

 

 

 

 

 

 

12,975

 

 

 

 

 

Entertainment: 0.0%

 

 

 

800

 

 

 

International Game Technology

 

28,280

 

 

 

 

 

 

 

28,280

 

 

 

 

 

Environmental Control: 0.1%

 

 

 

1,850

 

 

 

Waste Management, Inc.

 

55,149

 

 

 

 

 

 

 

55,149

 

 

 

 

 

Food: 0.4%

 

 

 

800

 

 

 

Albertson’s, Inc.

 

20,240

 

450

 

 

 

Campbell Soup Co.

 

12,839

 

1,150

 

 

 

ConAgra Foods, Inc.

 

31,108

 

1,200

 

 

 

General Mills, Inc.

 

54,588

 

1,000

 

 

 

H.J. Heinz Co.

 

37,160

 

550

 

 

 

Hershey Foods Corp.

 

28,490

 

1,300

 

 

 

Kellogg Co.

 

56,809

 

900

 

@

 

Kroger Co.

 

14,562

 

400

 

 

 

McCormick & Co., Inc.

 

14,580

 

500

 

@

 

Safeway, Inc.

 

9,640

 

2,150

 

 

 

Sara Lee Corp.

 

50,482

 

550

 

 

 

SUPERVALU, Inc.

 

17,375

 

800

 

 

 

Wm. Wrigley Jr. Co.

 

55,040

 

 

 

 

 

 

 

402,913

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

950

 

 

 

Georgia-Pacific Corp.

 

34,780

 

1,650

 

 

 

International Paper Co.

 

68,507

 

430

 

 

 

Louisiana-Pacific Corp.

 

10,522

 

550

 

 

 

MeadWestvaco Corp.

 

18,508

 

450

 

 

 

Plum Creek Timber Co., Inc.

 

16,650

 

200

 

 

 

Temple-Inland, Inc.

 

11,918

 

1,000

 

 

 

Weyerhaeuser Co.

 

66,000

 

 

 

 

 

 

 

226,885

 

 

 

 

 

Gas: 0.1%

 

 

 

400

 

 

 

KeySpan Corp.

 

15,808

 

100

 

 

 

Nicor, Inc.

 

3,690

 

950

 

 

 

Sempra Energy

 

35,131

 

 

 

 

 

 

 

54,629

 

 

See Accompanying Notes to Financial Statements

 

102


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Hand/Machine Tools: 0.0%

 

 

 

300

 

 

 

Black & Decker Corp.

 

$

25,227

 

100

 

 

 

Snap-On, Inc.

 

3,161

 

300

 

 

 

Stanley Works

 

14,028

 

 

 

 

 

 

 

42,416

 

 

 

 

 

Healthcare — Products: 1.3%

 

 

 

200

 

 

 

Bausch & Lomb, Inc.

 

11,776

 

1,600

 

 

 

Baxter Intl., Inc.

 

50,640

 

900

 

 

 

Becton Dickinson & Co.

 

49,302

 

550

 

 

 

Biomet, Inc.

 

26,329

 

2,250

 

@

 

Boston Scientific Corp.

 

78,322

 

250

 

 

 

C.R. Bard, Inc.

 

14,978

 

800

 

 

 

Guidant Corp.

 

51,864

 

11,350

 

 

 

Johnson & Johnson

 

684,631

 

3,450

 

 

 

Medtronic, Inc.

 

165,772

 

1,200

 

@

 

St. Jude Medical, Inc.

 

45,768

 

400

 

 

 

Stryker Corp.

 

17,596

 

650

 

@

 

Zimmer Holdings, Inc.

 

53,040

 

 

 

 

 

 

 

1,250,018

 

 

 

 

 

Healthcare — Services: 0.6%

 

 

 

650

 

 

 

Aetna, Inc.

 

77,032

 

600

 

@

 

Anthem, Inc.

 

60,798

 

0

 

 

 

HCA, Inc.

 

0

 

600

 

@

 

Humana, Inc.

 

14,892

 

350

 

@

 

Laboratory Corp. Of America Holdings

 

16,783

 

300

 

 

 

Manor Care, Inc.

 

10,335

 

100

 

 

 

Quest Diagnostics, Inc.

 

9,375

 

3,250

 

 

 

UnitedHealth Group, Inc.

 

269,262

 

750

 

@

 

WellPoint Health Networks, Inc.

 

93,825

 

 

 

 

 

 

 

552,302

 

 

 

 

 

Home Builders: 0.0%

 

 

 

400

 

 

 

Centex Corp.

 

20,988

 

 

 

 

 

 

 

20,988

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

600

 

 

 

Leggett & Platt, Inc.

 

17,910

 

200

 

 

 

Whirlpool Corp.

 

12,910

 

 

 

 

 

 

 

30,820

 

 

 

 

 

Household Products/Wares: 0.1%

 

 

 

350

 

 

 

Avery Dennison Corp.

 

20,531

 

900

 

 

 

Clorox Co.

 

49,608

 

400

 

 

 

Fortune Brands, Inc.

 

31,392

 

 

 

 

 

 

 

101,531

 

 

 

 

 

Housewares: 0.0%

 

 

 

800

 

 

 

Newell Rubbermaid, Inc.

 

18,464

 

 

 

 

 

 

 

18,464

 

 

 

 

 

Insurance: 1.8%

 

 

 

950

 

@@

 

ACE Ltd.

 

38,399

 

1,300

 

 

 

AFLAC, Inc.

 

48,906

 

2,650

 

 

 

Allstate Corp.

 

133,824

 

300

 

 

 

AMBAC Financial Group, Inc.

 

24,399

 

12,550

 

 

 

American International Group, Inc.

 

795,042

 

800

 

 

 

AON Corp.

 

16,896

 

850

 

 

 

Chubb Corp.

 

64,779

 

600

 

 

 

CIGNA Corp.

 

42,012

 

375

 

 

 

Cincinnati Financial Corp.

 

16,800

 

900

 

 

 

Hartford Financial Services Group, Inc.

 

57,600

 

400

 

 

 

Jefferson-Pilot Corp.

 

19,676

 

500

 

 

 

Lincoln National Corp.

 

23,010

 

700

 

 

 

Loews Corp.

 

48,937

 

1,300

 

 

 

Marsh & McLennan Cos., Inc.

 

37,167

 

350

 

 

 

MBIA, Inc.

 

20,986

 

3,100

 

 

 

MetLife, Inc.

 

120,899

 

250

 

 

 

MGIC Investment Corp.

 

17,000

 

850

 

 

 

Principal Financial Group

 

32,028

 

550

 

 

 

Progressive Corp.

 

50,045

 

2,400

 

 

 

Prudential Financial, Inc.

 

117,480

 

650

 

 

 

Safeco Corp.

 

31,506

 

300

 

 

 

Torchmark Corp.

 

16,473

 

750

 

 

 

UnumProvident Corp.

 

11,678

 

400

 

@@

 

XL Capital Ltd.

 

30,144

 

 

 

 

 

 

 

1,815,686

 

 

 

 

 

Internet: 0.5%

 

 

 

1,900

 

@

 

eBay, Inc.

 

213,655

 

1,500

 

@

 

Symantec Corp.

 

95,715

 

3,850

 

@

 

Yahoo!, Inc.

 

144,837

 

 

 

 

 

 

 

454,207

 

 

 

 

 

Iron/Steel: 0.1%

 

 

 

400

 

 

 

Nucor Corp.

 

21,160

 

600

 

 

 

United States Steel Corp.

 

31,416

 

 

 

 

 

 

 

52,576

 

 

 

 

 

Leisure Time: 0.2%

 

 

 

250

 

 

 

Brunswick Corp.

 

12,205

 

1,750

 

 

 

Carnival Corp.

 

92,768

 

900

 

 

 

Harley-Davidson, Inc.

 

52,038

 

500

 

 

 

Sabre Holdings Corp.

 

11,540

 

 

 

 

 

 

 

168,551

 

 

 

 

 

Lodging: 0.1%

 

 

 

250

 

 

 

Harrah’s Entertainment, Inc.

 

15,350

 

1,150

 

 

 

Hilton Hotels Corp.

 

23,759

 

500

 

 

 

Marriott Intl., Inc.

 

28,425

 

500

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

26,145

 

 

 

 

 

 

 

93,679

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

350

 

 

 

Caterpillar, Inc.

 

32,043

 

 

 

 

 

 

 

32,043

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

200

 

 

 

Cummins, Inc.

 

15,924

 

700

 

 

 

Deere & Co.

 

50,211

 

450

 

 

 

Rockwell Automation, Inc.

 

21,285

 

 

 

 

 

 

 

87,420

 

 

 

 

 

Media: 0.9%

 

 

 

650

 

 

 

Clear Channel Communications, Inc.

 

21,892

 

6,450

 

@

 

Comcast Corp.

 

193,758

 

850

 

 

 

Gannett Co., Inc.

 

70,117

 

100

 

 

 

Knight-Ridder, Inc.

 

6,809

 

800

 

 

 

McGraw-Hill Cos., Inc.

 

70,184

 

100

 

 

 

Meredith Corp.

 

5,272

 

300

 

 

 

New York Times Co.

 

12,300

 

13,150

 

@

 

Time Warner, Inc.

 

232,886

 

350

 

 

 

Tribune Co.

 

15,180

 

350

 

@

 

Univision Communications, Inc.

 

10,535

 

2,000

 

 

 

Viacom, Inc.

 

69,400

 

5,950

 

 

 

Walt Disney Co.

 

159,936

 

 

 

 

 

 

 

868,269

 

 

 

 

 

Metal Fabricate/Hardware: 0.0%

 

 

 

300

 

 

 

Worthington Industries, Inc.

 

6,453

 

 

 

 

 

 

 

6,453

 

 

See Accompanying Notes to Financial Statements

 

103


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Mining: 0.0%

 

 

 

400

 

 

 

Phelps Dodge Corp.

 

$

38,852

 

 

 

 

 

 

 

38,852

 

 

 

 

 

Miscellaneous Manufacturing: 1.8%

 

 

 

2,250

 

 

 

3M Co.

 

179,078

 

300

 

 

 

Cooper Industries Ltd.

 

19,893

 

950

 

 

 

Danaher Corp.

 

54,036

 

500

 

 

 

Dover Corp.

 

20,225

 

850

 

 

 

Eastman Kodak Co.

 

27,804

 

350

 

 

 

Eaton Corp.

 

23,590

 

30,050

 

 

 

General Electric Co.

 

1,062,567

 

2,150

 

 

 

Honeywell International, Inc.

 

75,960

 

800

 

 

 

Illinois Tool Works, Inc.

 

75,384

 

500

 

@@

 

Ingersoll-Rand Co.

 

37,210

 

200

 

 

 

ITT Industries, Inc.

 

17,024

 

300

 

 

 

Pall Corp.

 

8,127

 

350

 

 

 

Textron, Inc.

 

25,417

 

5,800

 

@@

 

Tyco Intl. Ltd.

 

197,025

 

 

 

 

 

 

 

1,823,340

 

 

 

 

 

Office/Business Equipment: 0.1%

 

 

 

550

 

 

 

Pitney Bowes, Inc.

 

24,074

 

2,100

 

@

 

Xerox Corp.

 

32,172

 

 

 

 

 

 

 

56,246

 

 

 

 

 

Oil and Gas: 2.7%

 

 

 

200

 

 

 

Amerada Hess Corp.

 

17,770

 

900

 

 

 

Anadarko Petroleum Corp.

 

62,640

 

850

 

 

 

Apache Corp.

 

45,951

 

1,900

 

 

 

Burlington Resources, Inc.

 

88,179

 

9,600

 

 

 

ChevronTexaco Corp.

 

524,159

 

2,450

 

 

 

ConocoPhillips

 

222,926

 

2,400

 

 

 

Devon Energy Corp.

 

99,408

 

300

 

 

 

EOG Resources, Inc.

 

22,521

 

22,800

 

 

 

Exxon Mobil Corp.

 

1,168,499

 

300

 

 

 

Kerr-McGee Corp.

 

18,669

 

700

 

 

 

Marathon Oil Corp.

 

27,608

 

100

 

@,@@

 

Nabors Industries Ltd.

 

5,200

 

300

 

@

 

Noble Corp.

 

14,535

 

1,000

 

 

 

Occidental Petroleum Corp.

 

60,210

 

350

 

 

 

Sunoco, Inc.

 

28,896

 

800

 

@

 

Transocean, Inc.

 

32,216

 

950

 

 

 

Unocal Corp.

 

43,738

 

1,250

 

 

 

Valero Energy Corp.

 

58,488

 

 

 

 

 

 

 

2,541,613

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

900

 

 

 

Baker Hughes, Inc.

 

39,897

 

300

 

 

 

BJ Services Co.

 

15,201

 

1,200

 

 

 

Halliburton Co.

 

49,620

 

 

 

 

 

 

 

104,718

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

400

 

 

 

Ball Corp.

 

17,892

 

200

 

 

 

Bemis Co.

 

5,568

 

400

 

@

 

Pactiv Corp.

 

9,940

 

200

 

@

 

Sealed Air Corp.

 

10,282

 

 

 

 

 

 

 

43,682

 

 

 

 

 

Pharmaceuticals: 1.7%

 

 

 

4,400

 

 

 

Abbott Laboratories

 

184,623

 

400

 

 

 

Allergan, Inc.

 

29,400

 

350

 

 

 

AmerisourceBergen Corp.

 

20,629

 

5,600

 

 

 

Bristol-Myers Squibb Co.

 

131,600

 

1,150

 

 

 

Cardinal Health, Inc.

 

60,122

 

2,200

 

@

 

Caremark Rx, Inc.

 

78,672

 

1,300

 

 

 

Eli Lilly & Co.

 

69,329

 

200

 

@

 

Express Scripts, Inc.

 

14,392

 

1,000

 

@

 

Forest Laboratories, Inc.

 

38,970

 

1,200

 

@

 

Gilead Sciences, Inc.

 

41,352

 

350

 

@

 

Hospira, Inc.

 

11,281

 

600

 

@

 

King Pharmaceuticals, Inc.

 

7,470

 

800

 

@

 

Medco Health Solutions, Inc.

 

30,176

 

6,350

 

 

 

Merck & Co., Inc.

 

177,927

 

21,450

 

 

 

Pfizer, Inc.

 

595,666

 

4,000

 

 

 

Schering-Plough Corp.

 

71,400

 

3,850

 

 

 

Wyeth

 

153,500

 

 

 

 

 

 

 

1,716,509

 

 

 

 

 

Pipelines: 0.1%

 

 

 

1,300

 

@

 

Dynegy, Inc.

 

7,345

 

1,800

 

 

 

El Paso Corp.

 

18,792

 

100

 

 

 

Kinder Morgan, Inc.

 

6,930

 

1,350

 

 

 

Williams Cos., Inc.

 

22,505

 

 

 

 

 

 

 

55,572

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

450

 

 

 

Equity Office Properties Trust

 

12,353

 

400

 

 

 

ProLogis

 

16,092

 

550

 

 

 

Simon Property Group, Inc.

 

34,144

 

 

 

 

 

 

 

62,589

 

 

 

 

 

Retail: 2.5%

 

 

 

650

 

@

 

Bed Bath & Beyond, Inc.

 

25,953

 

1,050

 

 

 

Best Buy Co., Inc.

 

59,199

 

750

 

 

 

Circuit City Stores, Inc.

 

11,693

 

2,450

 

 

 

Costco Wholesale Corp.

 

119,070

 

1,200

 

 

 

CVS Corp.

 

54,444

 

600

 

 

 

Darden Restaurants, Inc.

 

16,356

 

350

 

 

 

Dillard’s, Inc.

 

8,813

 

450

 

 

 

Federated Department Stores, Inc.

 

24,660

 

3,250

 

 

 

Gap, Inc.

 

71,013

 

10,750

 

 

 

Home Depot, Inc.

 

448,812

 

1,450

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

55,970

 

400

 

@

 

Kohl’s Corp.

 

18,464

 

1,950

 

 

 

Limited Brands, Inc.

 

47,658

 

2,250

 

 

 

Lowe’s Cos., Inc.

 

124,493

 

850

 

 

 

May Department Stores Co.

 

23,902

 

3,850

 

 

 

McDonald’s Corp.

 

118,349

 

350

 

 

 

Nordstrom, Inc.

 

15,313

 

800

 

@

 

Office Depot, Inc.

 

13,120

 

300

 

 

 

RadioShack Corp.

 

9,471

 

1,700

 

 

 

Staples, Inc.

 

54,247

 

1,150

 

@

 

Starbucks Corp.

 

64,699

 

2,550

 

 

 

Target Corp.

 

130,610

 

1,050

 

 

 

TJX Cos., Inc.

 

24,717

 

1,000

 

@

 

Toys R US, Inc.

 

19,340

 

12,000

 

 

 

Wal-Mart Stores, Inc.

 

624,719

 

4,000

 

 

 

Walgreen Co.

 

152,719

 

450

 

 

 

Wendy’s Intl., Inc.

 

16,052

 

650

 

 

 

Yum! Brands, Inc.

 

29,510

 

 

 

 

 

 

 

2,383,366

 

 

 

 

 

Savings and Loans: 0.2%

 

 

 

400

 

 

 

Golden West Financial Corp.

 

47,696

 

750

 

 

 

Sovereign Bancorp, Inc.

 

16,388

 

2,700

 

 

 

Washington Mutual, Inc.

 

109,917

 

 

 

 

 

 

 

174,001

 

 

 

 

 

Semiconductors: 0.7%

 

 

 

950

 

@

 

Altera Corp.

 

21,546

 

1,100

 

 

 

Analog Devices, Inc.

 

40,645

 

4,600

 

@

 

Applied Materials, Inc.

 

76,544

 

18,600

 

 

 

Intel Corp.

 

415,710

 

450

 

@

 

KLA-Tencor Corp.

 

20,277

 

800

 

 

 

Linear Technology Corp.

 

30,528

 

350

 

 

 

Maxim Integrated Products, Inc.

 

14,336

 

1,000

 

@

 

National Semiconductor Corp.

 

15,460

 

 

See Accompanying Notes to Financial Statements

 

104


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Semiconductors (continued)

 

 

 

350

 

@

 

Qlogic Corp.

 

$

12,037

 

1,750

 

 

 

Texas Instruments, Inc.

 

42,315

 

 

 

 

 

 

 

689,398

 

 

 

 

 

Software: 1.6%

 

 

 

550

 

 

 

Adobe Systems, Inc.

 

33,308

 

450

 

 

 

Autodesk, Inc.

 

29,435

 

1,600

 

 

 

Automatic Data Processing, Inc.

 

72,847

 

1,000

 

@

 

BMC Software, Inc.

 

18,580

 

450

 

@

 

Citrix Systems, Inc.

 

10,625

 

1,750

 

 

 

Computer Associates Intl., Inc.

 

53,428

 

1,450

 

@

 

Compuware Corp.

 

8,367

 

350

 

@

 

Electronic Arts, Inc.

 

17,115

 

2,700

 

 

 

First Data Corp.

 

110,942

 

500

 

@

 

Fiserv, Inc.

 

19,255

 

550

 

 

 

IMS Health, Inc.

 

12,414

 

550

 

@

 

Intuit, Inc.

 

23,012

 

30,750

 

 

 

Microsoft Corp.

 

824,407

 

1,100

 

@

 

Novell, Inc.

 

6,710

 

24,950

 

@

 

Oracle Corp.

 

315,866

 

1,150

 

@

 

PeopleSoft, Inc.

 

27,152

 

1,250

 

@

 

Siebel Systems, Inc.

 

12,600

 

1,050

 

@

 

Veritas Software Corp.

 

22,995

 

 

 

 

 

 

 

1,619,058

 

 

 

 

 

Telecommunications: 1.9%

 

 

 

1,300

 

 

 

Alltel Corp.

 

73,697

 

900

 

 

 

AT&T Corp.

 

16,470

 

1,900

 

@

 

Avaya, Inc.

 

31,198

 

5,300

 

 

 

BellSouth Corp.

 

142,146

 

300

 

 

 

CenturyTel, Inc.

 

9,876

 

19,250

 

@

 

Cisco Systems, Inc.

 

360,167

 

650

 

 

 

Citizens Communications Co.

 

9,295

 

700

 

@

 

Comverse Technology, Inc.

 

14,889

 

3,500

 

@

 

Corning, Inc.

 

44,030

 

10,650

 

@

 

Lucent Technologies, Inc.

 

41,855

 

9,150

 

 

 

Motorola, Inc.

 

176,229

 

3,000

 

@

 

Nextel Communications, Inc.

 

85,380

 

4,750

 

 

 

Qualcomm, Inc.

 

197,695

 

4,900

 

@

 

Qwest Communications Intl., Inc.

 

19,600

 

9,650

 

 

 

SBC Communications, Inc.

 

242,890

 

600

 

 

 

Scientific-Atlanta, Inc.

 

17,772

 

4,250

 

 

 

Sprint Corp.

 

96,943

 

1,100

 

@

 

Tellabs, Inc.

 

9,405

 

7,950

 

 

 

Verizon Communications, Inc.

 

327,778

 

 

 

 

 

 

 

1,917,315

 

 

 

 

 

Textiles: 0.0%

 

 

 

500

 

 

 

Cintas Corp.

 

22,360

 

 

 

 

 

 

 

22,360

 

 

 

 

 

Toys/Games/Hobbies: 0.0%

 

 

 

700

 

 

 

Hasbro, Inc.

 

13,321

 

900

 

 

 

Mattel, Inc.

 

17,055

 

 

 

 

 

 

 

30,376

 

 

 

 

 

Transportation: 0.5%

 

 

 

850

 

 

 

Burlington Northern Santa Fe Corp.

 

38,284

 

600

 

 

 

CSX Corp.

 

22,878

 

1,250

 

 

 

FedEx Corp.

 

118,788

 

1,400

 

 

 

Norfolk Southern Corp.

 

48,062

 

200

 

 

 

Ryder System, Inc.

 

10,728

 

250

 

 

 

Union Pacific Corp.

 

15,860

 

3,250

 

 

 

United Parcel Service, Inc.

 

273,487

 

 

 

 

 

 

 

528,087

 

 

 

 

 

Total Common Stock
(Cost $30,684,534)

 

31,929,489

 

 

Principal

 

 

 

 

 

 

 

Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 51.3%

 

 

 

 

 

 

 

Federal Home Loan Mortgage Corporation: 51.3%

 

 

 

$

60,000,000

 

 

 

3.970%, due 04/21/09

 

$

50,581,201

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $50,645,688)

 

50,581,201

 

 

 

 

 

 

 

 

 

U.S. TREASURY OBLIGATIONS: 16.0%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 16.0%

 

 

 

18,370,000

 

 

 

3.640%, due 02/15/09

 

15,803,821

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $15,991,892)

 

15,803,821

 

 

 

 

 

Total Long-Term Investments
(Cost $97,322,114)

 

98,314,511

 

 

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS: 0.5%

 

 

 

 

 

 

 

Repurchase Agreement: 0.5%

 

 

 

521,000

 

 

 

Morgan Stanley Repurchase Agreement dated 11/30/04, 2.070%, due 12/01/04, $521,030 to be received upon repurchased (Collateralized by $535,000 Federal National Mortgage Association, 2.350%-6.250% Market Value plus accrued interest $537,688 due 05/03/06-06/28/19)

 

521,000

 

 

 

 

 

Total Short-Term Investments
(Cost $521,000)

 

521,000

 

 

 

 

 

 

 

 

 

Total Investments In Securities
(Cost $97,843,114)*

 

100.2

%

$

98,835,511

 

Other Assets and Liabilities-Net

 

(0.2

)

(162,482

)

Net Assets

 

100.0

%

$

98,673,029

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $98,705,601. Net unrealized appreciation consists of:

 

Gross Unrealized Appreciation

 

$

1,087,726

 

Gross Unrealized Depreciation

 

(957,816

)

Net Unrealized Appreciation

 

$

129,910

 

 

See Accompanying Notes to Financial Statements

 

105


 

ING PRINCIPAL PROTECTION FUND X

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 35.4%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

331

 

@

 

Interpublic Group of Cos., Inc.

 

$

4,108

 

357

 

 

 

Omnicom Group, Inc.

 

28,917

 

 

 

 

 

 

 

33,025

 

 

 

 

 

Aerospace/Defense: 0.8%

 

 

 

3,415

 

 

 

Boeing Co.

 

182,942

 

799

 

 

 

General Dynamics Corp.

 

86,580

 

313

 

 

 

Goodrich Corp.

 

9,938

 

1,049

 

 

 

Lockheed Martin Corp.

 

63,821

 

877

 

 

 

Northrop Grumman Corp.

 

49,401

 

1,881

 

 

 

Raytheon Co.

 

75,880

 

419

 

 

 

Rockwell Collins, Inc.

 

16,701

 

1,199

 

 

 

United Technologies Corp.

 

116,998

 

 

 

 

 

 

 

602,261

 

 

 

 

 

Agriculture: 0.5%

 

 

 

4,676

 

 

 

Altria Group, Inc.

 

268,823

 

1,495

 

 

 

Archer-Daniels-Midland Co.

 

31,694

 

654

 

 

 

Monsanto Co.

 

30,097

 

367

 

 

 

Reynolds American, Inc.

 

27,756

 

622

 

 

 

UST, Inc.

 

27,387

 

 

 

 

 

 

 

385,757

 

 

 

 

 

Apparel: 0.2%

 

 

 

600

 

@

 

Coach, Inc.

 

29,904

 

353

 

 

 

Jones Apparel Group, Inc.

 

12,542

 

261

 

 

 

Liz Claiborne, Inc.

 

10,719

 

1,108

 

 

 

Nike, Inc.

 

93,803

 

142

 

 

 

Reebok Intl. Ltd.

 

5,521

 

413

 

 

 

VF Corp.

 

22,298

 

 

 

 

 

 

 

174,787

 

 

 

 

 

Auto Manufacturers: 0.3%

 

 

 

7,350

 

 

 

Ford Motor Co.

 

104,223

 

1,325

 

 

 

General Motors Corp.

 

51,132

 

581

 

 

 

PACCAR, Inc.

 

45,376

 

 

 

 

 

 

 

200,731

 

 

 

 

 

Auto Parts and Equipment: 0.1%

 

 

 

210

 

 

 

Cooper Tire & Rubber Co.

 

4,288

 

395

 

 

 

Dana Corp.

 

6,458

 

429

 

@

 

Goodyear Tire & Rubber Co.

 

5,414

 

430

 

 

 

Johnson Controls, Inc.

 

26,402

 

247

 

 

 

Visteon Corp.

 

2,090

 

 

 

 

 

 

 

44,652

 

 

 

 

 

Banks: 2.2%

 

 

 

850

 

 

 

AmSouth Bancorporation

 

22,041

 

9,312

 

 

 

Bank of America Corp.

 

430,865

 

1,135

 

 

 

BB&T Corp.

 

48,181

 

537

 

 

 

Comerica, Inc.

 

33,026

 

550

 

 

 

Fifth Third Bancorp

 

27,698

 

270

 

 

 

First Horizon National Corp.

 

11,799

 

498

 

 

 

Huntington Bancshares, Inc.

 

12,081

 

1,252

 

 

 

KeyCorp

 

41,679

 

271

 

 

 

M & T Bank Corp.

 

28,566

 

545

 

 

 

Marshall & Ilsley Corp.

 

22,721

 

1,028

 

 

 

Mellon Financial Corp.

 

30,038

 

1,868

 

 

 

National City Corp.

 

69,265

 

406

 

 

 

North Fork Bancorporation, Inc.

 

11,693

 

521

 

 

 

Northern Trust Corp.

 

24,508

 

629

 

 

 

PNC Financial Services Group, Inc.

 

34,218

 

866

 

 

 

Regions Financial Corp.

 

30,301

 

252

 

 

 

State Street Corp.

 

11,229

 

875

 

 

 

SunTrust Banks, Inc.

 

62,388

 

263

 

 

 

Synovus Financial Corp.

 

7,101

 

628

 

 

 

The Bank of New York Co., Inc.

 

20,667

 

4,568

 

 

 

U.S. Bancorp

 

135,350

 

4,985

 

 

 

Wachovia Corp.

 

257,974

 

3,863

 

 

 

Wells Fargo & Co.

 

238,618

 

199

 

 

 

Zions Bancorporation

 

13,234

 

 

 

 

 

 

 

1,625,241

 

 

 

 

 

Beverages: 0.8%

 

 

 

107

 

 

 

Adolph Coors Co.

 

8,014

 

1,942

 

 

 

Anheuser-Busch Cos., Inc.

 

97,275

 

313

 

 

 

Brown-Forman Corp.

 

15,030

 

5,542

 

 

 

Coca-Cola Co.

 

217,856

 

1,162

 

 

 

Coca-Cola Enterprises, Inc.

 

24,170

 

609

 

 

 

Pepsi Bottling Group, Inc.

 

17,064

 

4,045

 

 

 

PepsiCo, Inc.

 

201,886

 

 

 

 

 

 

 

581,295

 

 

 

 

 

Biotechnology: 0.4%

 

 

 

3,027

 

@

 

Amgen, Inc.

 

181,740

 

801

 

@

 

Biogen Idec, Inc.

 

47,003

 

557

 

@

 

Genzyme Corp.

 

31,198

 

550

 

@

 

MedImmune, Inc.

 

14,630

 

97

 

@

 

Millipore Corp.

 

4,726

 

 

 

 

 

 

 

279,297

 

 

 

 

 

Building Materials: 0.1%

 

 

 

471

 

@

 

American Standard Cos., Inc.

 

18,341

 

1,118

 

 

 

Masco Corp.

 

39,432

 

252

 

 

 

Vulcan Materials Co.

 

13,066

 

 

 

 

 

 

 

70,839

 

 

 

 

 

Chemicals: 0.6%

 

 

 

552

 

 

 

Air Products & Chemicals, Inc.

 

31,602

 

142

 

 

 

Ashland, Inc.

 

8,399

 

2,398

 

 

 

Dow Chemical Co.

 

121,027

 

2,561

 

 

 

E.I. du Pont de Nemours & Co.

 

116,065

 

161

 

 

 

Eastman Chemical Co.

 

8,755

 

273

 

 

 

Ecolab, Inc.

 

9,550

 

344

 

 

 

Engelhard Corp.

 

10,282

 

188

 

 

 

International Flavors & Fragrances, Inc.

 

7,614

 

635

 

 

 

PPG Industries, Inc.

 

42,843

 

715

 

 

 

Praxair, Inc.

 

32,104

 

551

 

 

 

Rohm & Haas Co.

 

24,294

 

512

 

 

 

Sherwin-Williams Co.

 

22,835

 

169

 

 

 

Sigma-Aldrich Corp.

 

10,094

 

 

 

 

 

 

 

445,464

 

 

 

 

 

Commercial Services: 0.3%

 

 

 

394

 

@

 

Apollo Group, Inc.

 

31,402

 

2,545

 

 

 

Cendant Corp.

 

57,695

 

110

 

 

 

Deluxe Corp.

 

4,349

 

292

 

 

 

Equifax, Inc.

 

8,065

 

578

 

 

 

H&R Block, Inc.

 

27,571

 

711

 

 

 

McKesson Corp.

 

21,010

 

347

 

 

 

Moody’s Corp.

 

28,020

 

873

 

 

 

Paychex, Inc.

 

28,949

 

479

 

 

 

R.R. Donnelley & Sons Co.

 

16,621

 

495

 

 

 

Robert Half Intl., Inc.

 

13,380

 

 

 

 

 

 

 

237,062

 

 

 

 

 

Computers: 1.8%

 

 

 

331

 

@

 

Affiliated Computer Services, Inc.

 

19,589

 

1,645

 

@

 

Apple Computer, Inc.

 

110,297

 

429

 

@

 

Computer Sciences Corp.

 

23,209

 

7,686

 

@

 

Dell, Inc.

 

311,436

 

1,250

 

 

 

Electronic Data Systems Corp.

 

28,063

 

5,860

 

@

 

EMC Corp.

 

78,641

 

231

 

@

 

Gateway, Inc.

 

1,573

 

7,189

 

 

 

Hewlett-Packard Co.

 

143,780

 

5,198

 

 

 

International Business Machines Corp.

 

489,859

 

303

 

@

 

Lexmark Intl., Inc.

 

25,725

 

 

See Accompanying Notes to Financial Statements

 

106


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

223

 

@

 

NCR Corp.

 

$

13,320

 

824

 

@

 

Network Appliance, Inc.

 

24,852

 

11,562

 

@

 

Sun Microsystems, Inc.

 

64,169

 

714

 

@

 

Sungard Data Systems, Inc.

 

18,928

 

716

 

@

 

Unisys Corp.

 

8,227

 

 

 

 

 

 

 

1,361,668

 

 

 

 

 

Cosmetics/Personal Care: 1.2%

 

 

 

343

 

 

 

Alberto-Culver Co.

 

15,881

 

963

 

 

 

Avon Products, Inc.

 

36,151

 

1,275

 

 

 

Colgate-Palmolive Co.

 

58,637

 

3,881

 

 

 

Gillette Co.

 

168,785

 

1,597

 

 

 

Kimberly-Clark Corp.

 

101,585

 

9,916

 

 

 

Procter & Gamble Co.

 

530,308

 

 

 

 

 

 

 

911,347

 

 

 

 

 

Distribution/Wholesale: 0.0%

 

 

 

378

 

 

 

Genuine Parts Co.

 

16,409

 

285

 

 

 

W.W. Grainger, Inc.

 

17,630

 

 

 

 

 

 

 

34,039

 

 

 

 

 

Diversified Financial Services: 2.6%

 

 

 

3,016

 

 

 

American Express Co.

 

168,020

 

249

 

 

 

Bear Stearns Cos., Inc.

 

24,297

 

594

 

 

 

Capital One Financial Corp.

 

46,677

 

600

 

 

 

CIT Group, Inc.

 

25,650

 

11,850

 

 

 

Citigroup, Inc.

 

530,287

 

2,330

 

 

 

Countrywide Financial Corp.

 

77,379

 

838

 

@

 

E*TRADE Financial Corp.

 

11,615

 

2,318

 

 

 

Fannie Mae

 

159,246

 

99

 

 

 

Federated Investors, Inc.

 

2,913

 

573

 

 

 

Franklin Resources, Inc.

 

37,606

 

1,644

 

 

 

Freddie Mac

 

112,219

 

1,180

 

 

 

Goldman Sachs Group, Inc.

 

123,617

 

3,424

 

 

 

J.P. Morgan Chase & Co.

 

128,913

 

544

 

 

 

Janus Capital Group, Inc.

 

9,003

 

629

 

 

 

Lehman Brothers Holdings, Inc.

 

52,698

 

3,112

 

 

 

MBNA Corp.

 

82,655

 

2,253

 

 

 

Merrill Lynch & Co., Inc.

 

125,515

 

890

 

 

 

Morgan Stanley

 

45,168

 

561

 

@

 

Providian Financial Corp.

 

9,004

 

845

 

 

 

SLM Corp.

 

43,239

 

 

 

 

 

 

 

1,815,721

 

 

 

 

 

Electric: 0.8%

 

 

 

1,708

 

@

 

AES Corp.

 

20,906

 

325

 

@

 

Allegheny Energy, Inc.

 

6,221

 

186

 

 

 

Ameren Corp.

 

9,006

 

757

 

 

 

American Electric Power Co., Inc.

 

25,867

 

167

 

 

 

Cinergy Corp.

 

6,912

 

262

 

@

 

CMS Energy Corp.

 

2,672

 

578

 

 

 

Consolidated Edison, Inc.

 

25,345

 

423

 

 

 

Constellation Energy Group, Inc.

 

18,485

 

300

 

 

 

Dominion Resources, Inc.

 

19,641

 

415

 

 

 

DTE Energy Co.

 

18,210

 

2,945

 

 

 

Duke Energy Corp.

 

74,450

 

791

 

 

 

Edison Intl.

 

25,233

 

550

 

 

 

Entergy Corp.

 

35,651

 

1,526

 

 

 

Exelon Corp.

 

63,649

 

783

 

 

 

FirstEnergy Corp.

 

33,066

 

352

 

 

 

FPL Group, Inc.

 

24,756

 

1,004

 

@

 

PG&E Corp.

 

33,393

 

223

 

 

 

Pinnacle West Capital Corp.

 

9,857

 

504

 

 

 

PPL Corp.

 

26,183

 

550

 

 

 

Public Service Enterprise Group, Inc.

 

24,195

 

1,492

 

 

 

Southern Co.

 

48,923

 

146

 

 

 

TECO Energy, Inc.

 

2,184

 

833

 

 

 

TXU Corp.

 

52,329

 

957

 

 

 

Xcel Energy, Inc.

 

17,283

 

 

 

 

 

 

 

624,417

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

1,354

 

 

 

Emerson Electric Co.

 

90,474

 

 

 

 

 

 

 

90,474

 

 

 

 

 

Electronics: 0.2%

 

 

 

1,142

 

@

 

Agilent Technologies, Inc.

 

26,141

 

494

 

 

 

Applera Corp. — Applied Biosystems Group

 

10,127

 

290

 

@

 

Fisher Scientific Intl.

 

16,397

 

474

 

@

 

Jabil Circuit, Inc.

 

11,878

 

288

 

 

 

Parker Hannifin Corp.

 

21,542

 

284

 

 

 

PerkinElmer, Inc.

 

6,058

 

1,082

 

@

 

Sanmina-SCI Corp.

 

9,554

 

745

 

@

 

Solectron Corp.

 

4,656

 

171

 

 

 

Tektronix, Inc.

 

5,364

 

383

 

@

 

Thermo Electron Corp.

 

11,586

 

290

 

@

 

Waters Corp.

 

13,531

 

 

 

 

 

 

 

136,834

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

88

 

 

 

Fluor Corp.

 

4,567

 

 

 

 

 

 

 

4,567

 

 

 

 

 

Entertainment: 0.0%

 

 

 

876

 

 

 

International Game Technology

 

30,967

 

 

 

 

 

 

 

30,967

 

 

 

 

 

Environmental Control: 0.1%

 

 

 

1,352

 

 

 

Waste Management, Inc.

 

40,303

 

 

 

 

 

 

 

40,303

 

 

 

 

 

Food: 0.4%

 

 

 

878

 

 

 

Albertson’s, Inc.

 

22,213

 

350

 

 

 

Campbell Soup Co.

 

9,986

 

1,021

 

 

 

ConAgra Foods, Inc.

 

27,618

 

730

 

 

 

General Mills, Inc.

 

33,208

 

832

 

 

 

H.J. Heinz Co.

 

30,917

 

589

 

 

 

Hershey Foods Corp.

 

30,510

 

979

 

 

 

Kellogg Co.

 

42,782

 

675

 

@

 

Kroger Co.

 

10,922

 

291

 

 

 

McCormick & Co., Inc.

 

10,607

 

400

 

@

 

Safeway, Inc.

 

7,712

 

1,862

 

 

 

Sara Lee Corp.

 

43,720

 

457

 

 

 

SUPERVALU, Inc.

 

14,437

 

583

 

 

 

Wm. Wrigley Jr. Co.

 

40,110

 

 

 

 

 

 

 

324,742

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

533

 

 

 

Georgia-Pacific Corp.

 

19,513

 

1,133

 

 

 

International Paper Co.

 

47,042

 

344

 

 

 

Louisiana-Pacific Corp.

 

8,418

 

475

 

 

 

MeadWestvaco Corp.

 

15,984

 

446

 

 

 

Plum Creek Timber Co., Inc.

 

16,502

 

194

 

 

 

Temple-Inland, Inc.

 

11,560

 

824

 

 

 

Weyerhaeuser Co.

 

54,384

 

 

 

 

 

 

 

173,403

 

 

 

 

 

Gas: 0.1%

 

 

 

381

 

 

 

KeySpan Corp.

 

15,057

 

135

 

 

 

Nicor, Inc.

 

4,982

 

47

 

 

 

Peoples Energy Corp.

 

2,097

 

715

 

 

 

Sempra Energy

 

26,440

 

 

 

 

 

 

 

48,576

 

 

See Accompanying Notes to Financial Statements

 

107


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Hand/Machine Tools: 0.1%

 

 

 

298

 

 

 

Black & Decker Corp.

 

$

25,059

 

148

 

 

 

Snap-On, Inc.

 

4,678

 

285

 

 

 

Stanley Works

 

13,327

 

 

 

 

 

 

 

43,064

 

 

 

 

 

Healthcare — Products: 1.4%

 

 

 

153

 

 

 

Bausch & Lomb, Inc.

 

9,009

 

1,219

 

 

 

Baxter Intl., Inc.

 

38,581

 

814

 

 

 

Becton Dickinson & Co.

 

44,591

 

572

 

 

 

Biomet, Inc.

 

27,382

 

1,751

 

@

 

Boston Scientific Corp.

 

60,952

 

307

 

 

 

C.R. Bard, Inc.

 

18,392

 

749

 

 

 

Guidant Corp.

 

48,558

 

9,152

 

 

 

Johnson & Johnson

 

552,049

 

2,900

 

 

 

Medtronic, Inc.

 

139,345

 

788

 

@

 

St. Jude Medical, Inc.

 

30,054

 

350

 

 

 

Stryker Corp.

 

15,397

 

509

 

@

 

Zimmer Holdings, Inc.

 

41,534

 

 

 

 

 

 

 

1,025,844

 

 

 

 

 

Healthcare — Services: 0.6%

 

 

 

537

 

 

 

Aetna, Inc.

 

63,640

 

542

 

@

 

Humana, Inc.

 

13,452

 

300

 

@

 

Laboratory Corp. Of America Holdings

 

14,385

 

231

 

 

 

Manor Care, Inc.

 

7,958

 

102

 

 

 

Quest Diagnostics, Inc.

 

9,563

 

2,554

 

 

 

UnitedHealth Group, Inc.

 

211,599

 

650

 

@

 

WellPoint Health Networks, Inc.

 

81,315

 

594

 

@

 

WellPoint, Inc.

 

60,190

 

 

 

 

 

 

 

462,102

 

 

 

 

 

Home Builders: 0.0%

 

 

 

262

 

 

 

Centex Corp.

 

13,747

 

 

 

 

 

 

 

13,747

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

449

 

 

 

Leggett & Platt, Inc.

 

13,403

 

155

 

 

 

Whirlpool Corp.

 

10,005

 

 

 

 

 

 

 

23,408

 

 

 

 

 

Household Products/ Wares: 0.1%

 

 

 

273

 

 

 

Avery Dennison Corp.

 

16,014

 

550

 

 

 

Clorox Co.

 

30,316

 

338

 

 

 

Fortune Brands, Inc.

 

26,526

 

 

 

 

 

 

 

72,856

 

 

 

 

 

Housewares: 0.0%

 

 

 

668

 

 

 

Newell Rubbermaid, Inc.

 

15,417

 

 

 

 

 

 

 

15,417

 

 

 

 

 

Insurance: 2.0%

 

 

 

732

 

@@

 

ACE Ltd.

 

29,587

 

986

 

 

 

AFLAC, Inc.

 

37,093

 

2,214

 

 

 

Allstate Corp.

 

111,807

 

267

 

 

 

AMBAC Financial Group, Inc.

 

21,715

 

10,149

 

 

 

American International Group, Inc.

 

642,940

 

756

 

 

 

AON Corp.

 

15,967

 

786

 

 

 

Chubb Corp.

 

59,901

 

468

 

 

 

CIGNA Corp.

 

32,769

 

411

 

 

 

Cincinnati Financial Corp.

 

18,413

 

676

 

 

 

Hartford Financial Services Group, Inc.

 

43,264

 

341

 

 

 

Jefferson-Pilot Corp.

 

16,774

 

440

 

 

 

Lincoln National Corp.

 

20,249

 

581

 

 

 

Loews Corp.

 

40,618

 

1,232

 

 

 

Marsh & McLennan Cos., Inc.

 

35,223

 

347

 

 

 

MBIA, Inc.

 

20,806

 

2,391

 

 

 

MetLife, Inc.

 

93,249

 

187

 

 

 

MGIC Investment Corp.

 

12,716

 

658

 

 

 

Principal Financial Group

 

24,793

 

442

 

 

 

Progressive Corp.

 

40,218

 

2,013

 

 

 

Prudential Financial, Inc.

 

98,536

 

368

 

 

 

Safeco Corp.

 

17,837

 

277

 

 

 

Torchmark Corp.

 

15,210

 

760

 

 

 

UnumProvident Corp.

 

11,833

 

302

 

@@

 

XL Capital Ltd.

 

22,759

 

 

 

 

 

 

 

1,484,277

 

 

 

 

 

Internet: 0.5%

 

 

 

1,583

 

@

 

eBay, Inc.

 

178,008

 

1,244

 

@

 

Symantec Corp.

 

79,380

 

3,249

 

@

 

Yahoo!, Inc.

 

122,227

 

 

 

 

 

 

 

379,615

 

 

 

 

 

Iron/Steel: 0.1%

 

 

 

121

 

 

 

Allegheny Technologies, Inc.

 

2,662

 

346

 

 

 

Nucor Corp.

 

18,304

 

343

 

 

 

United States Steel Corp.

 

17,959

 

 

 

 

 

 

 

38,925

 

 

 

 

 

Leisure Time: 0.2%

 

 

 

188

 

 

 

Brunswick Corp.

 

9,178

 

1,507

 

 

 

Carnival Corp.

 

79,886

 

562

 

 

 

Harley-Davidson, Inc.

 

32,495

 

404

 

 

 

Sabre Holdings Corp.

 

9,324

 

 

 

 

 

 

 

130,883

 

 

 

 

 

Lodging: 0.1%

 

 

 

264

 

 

 

Harrah’s Entertainment, Inc.

 

16,210

 

847

 

 

 

Hilton Hotels Corp.

 

17,499

 

516

 

 

 

Marriott Intl., Inc.

 

29,334

 

454

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

23,740

 

 

 

 

 

 

 

86,783

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

312

 

 

 

Caterpillar, Inc.

 

28,564

 

 

 

 

 

 

 

28,564

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

106

 

 

 

Cummins, Inc.

 

8,440

 

631

 

 

 

Deere & Co.

 

45,261

 

446

 

 

 

Rockwell Automation, Inc.

 

21,096

 

 

 

 

 

 

 

74,797

 

 

 

 

 

Media: 1.0%

 

 

 

550

 

 

 

Clear Channel Communications, Inc.

 

18,524

 

5,364

 

@

 

Comcast Corp.

 

161,135

 

629

 

 

 

Gannett Co., Inc.

 

51,886

 

74

 

 

 

Knight-Ridder, Inc.

 

5,039

 

606

 

 

 

McGraw-Hill Cos., Inc.

 

53,164

 

95

 

 

 

Meredith Corp.

 

5,008

 

339

 

 

 

New York Times Co.

 

13,899

 

10,457

 

@

 

Time Warner, Inc.

 

185,193

 

286

 

 

 

Tribune Co.

 

12,404

 

300

 

@

 

Univision Communications, Inc.

 

9,030

 

1,595

 

 

 

Viacom, Inc.

 

55,347

 

4,920

 

 

 

Walt Disney Co.

 

132,250

 

 

 

 

 

 

 

702,879

 

 

 

 

 

Metal Fabricate/ Hardware: 0.0%

 

 

 

241

 

 

 

Worthington Industries, Inc.

 

5,184

 

 

 

 

 

 

 

5,184

 

 

See Accompanying Notes to Financial Statements

 

108


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Mining: 0.0%

 

 

 

254

 

 

 

Phelps Dodge Corp.

 

$

24,671

 

 

 

 

 

 

 

24,671

 

 

 

 

 

Miscellaneous Manufacturing: 2.0%

 

 

 

1,840

 

 

 

3M Co.

 

146,446

 

213

 

 

 

Cooper Industries Ltd.

 

14,124

 

72

 

 

 

Crane Co.

 

2,179

 

725

 

 

 

Danaher Corp.

 

41,238

 

503

 

 

 

Dover Corp.

 

20,346

 

657

 

 

 

Eastman Kodak Co.

 

21,490

 

346

 

 

 

Eaton Corp.

 

23,320

 

24,205

 

 

 

General Electric Co.

 

855,890

 

2,059

 

 

 

Honeywell Intl., Inc.

 

72,744

 

714

 

 

 

Illinois Tool Works, Inc.

 

67,280

 

304

 

@@

 

Ingersoll-Rand Co.

 

22,624

 

215

 

 

 

ITT Industries, Inc.

 

18,301

 

308

 

 

 

Pall Corp.

 

8,344

 

337

 

 

 

Textron, Inc.

 

24,473

 

4,619

 

@@

 

Tyco Intl. Ltd.

 

156,907

 

 

 

 

 

 

 

1,495,706

 

 

 

 

 

Office/Business Equipment: 0.1%

 

 

 

559

 

 

 

Pitney Bowes, Inc.

 

24,467

 

1,794

 

@

 

Xerox Corp.

 

27,485

 

 

 

 

 

 

 

51,952

 

 

 

 

 

Oil and Gas: 2.9%

 

 

 

210

 

 

 

Amerada Hess Corp.

 

18,659

 

677

 

 

 

Anadarko Petroleum Corp.

 

47,119

 

608

 

 

 

Apache Corp.

 

32,868

 

1,465

 

 

 

Burlington Resources, Inc.

 

67,991

 

7,622

 

 

 

ChevronTexaco Corp.

 

416,160

 

1,943

 

 

 

ConocoPhillips

 

176,794

 

1,824

 

 

 

Devon Energy Corp.

 

75,550

 

288

 

 

 

EOG Resources, Inc.

 

21,620

 

18,327

 

 

 

Exxon Mobil Corp.

 

939,258

 

365

 

 

 

Kerr-McGee Corp.

 

22,714

 

826

 

 

 

Marathon Oil Corp.

 

32,577

 

130

 

@,@@

 

Nabors Industries Ltd.

 

6,760

 

325

 

@

 

Noble Corp.

 

15,746

 

890

 

 

 

Occidental Petroleum Corp.

 

53,587

 

262

 

 

 

Sunoco, Inc.

 

21,631

 

650

 

@

 

Transocean, Inc.

 

26,176

 

648

 

 

 

Unocal Corp.

 

29,834

 

764

 

 

 

Valero Energy Corp.

 

35,748

 

 

 

 

 

 

 

2,040,792

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

613

 

 

 

Baker Hughes, Inc.

 

27,174

 

362

 

 

 

BJ Services Co.

 

18,343

 

950

 

 

 

Halliburton Co.

 

39,282

 

 

 

 

 

 

 

84,799

 

 

 

 

 

Packaging and Containers: 0.1%

 

 

 

260

 

 

 

Ball Corp.

 

11,629

 

275

 

 

 

Bemis Co.

 

7,656

 

401

 

@

 

Pactiv Corp.

 

9,965

 

197

 

@

 

Sealed Air Corp.

 

10,128

 

 

 

 

 

 

 

39,378

 

 

 

 

 

Pharmaceuticals: 1.9%

 

 

 

3,717

 

 

 

Abbott Laboratories

 

155,965

 

293

 

 

 

Allergan, Inc.

 

21,536

 

275

 

 

 

AmerisourceBergen Corp.

 

16,209

 

4,720

 

 

 

Bristol-Myers Squibb Co.

 

110,920

 

898

 

 

 

Cardinal Health, Inc.

 

46,947

 

1,791

 

@

 

Caremark Rx, Inc.

 

64,046

 

1,025

 

 

 

Eli Lilly & Co.

 

54,663

 

190

 

@

 

Express Scripts, Inc.

 

13,672

 

859

 

@

 

Forest Laboratories, Inc.

 

33,475

 

1,024

 

@

 

Gilead Sciences, Inc.

 

35,287

 

335

 

@

 

Hospira, Inc.

 

10,797

 

574

 

@

 

King Pharmaceuticals, Inc.

 

7,146

 

624

 

@

 

Medco Health Solutions, Inc.

 

23,537

 

5,299

 

 

 

Merck & Co., Inc.

 

148,478

 

17,356

 

 

 

Pfizer, Inc.

 

481,977

 

3,550

 

 

 

Schering-Plough Corp.

 

63,368

 

3,234

 

 

 

Wyeth

 

128,940

 

 

 

 

 

 

 

1,416,963

 

 

 

 

 

Pipelines: 0.1%

 

 

 

1,140

 

@

 

Dynegy, Inc.

 

6,441

 

1,250

 

 

 

El Paso Corp.

 

13,050

 

77

 

 

 

Kinder Morgan, Inc.

 

5,336

 

1,229

 

 

 

Williams Cos., Inc.

 

20,488

 

 

 

 

 

 

 

45,315

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

400

 

 

 

Equity Office Properties Trust

 

10,980

 

414

 

 

 

ProLogis

 

16,655

 

496

 

 

 

Simon Property Group, Inc.

 

30,792

 

 

 

 

 

 

 

58,427

 

 

 

 

 

Retail: 2.7%

 

 

 

678

 

@

 

Bed Bath & Beyond, Inc.

 

27,071

 

763

 

 

 

Best Buy Co., Inc.

 

43,018

 

643

 

 

 

Circuit City Stores, Inc.

 

10,024

 

1,886

 

 

 

Costco Wholesale Corp.

 

91,660

 

806

 

 

 

CVS Corp.

 

36,568

 

361

 

 

 

Darden Restaurants, Inc.

 

9,841

 

204

 

 

 

Dillard’s, Inc.

 

5,137

 

419

 

 

 

Federated Department Stores, Inc.

 

22,961

 

2,568

 

 

 

Gap, Inc.

 

56,111

 

8,502

 

 

 

Home Depot, Inc.

 

354,959

 

1,192

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

46,011

 

321

 

@

 

Kohl’s Corp.

 

14,817

 

1,482

 

 

 

Limited Brands, Inc.

 

36,220

 

1,881

 

 

 

Lowe’s Cos., Inc.

 

104,076

 

633

 

 

 

May Department Stores Co.

 

17,800

 

2,982

 

 

 

McDonald’s Corp.

 

91,667

 

299

 

 

 

Nordstrom, Inc.

 

13,081

 

762

 

@

 

Office Depot, Inc.

 

12,497

 

297

 

 

 

RadioShack Corp.

 

9,376

 

1,525

 

 

 

Staples, Inc.

 

48,663

 

896

 

@

 

Starbucks Corp.

 

50,409

 

2,151

 

 

 

Target Corp.

 

110,174

 

1,180

 

 

 

TJX Cos., Inc.

 

27,777

 

465

 

@

 

Toys R US, Inc.

 

8,993

 

9,720

 

 

 

Wal-Mart Stores, Inc.

 

506,022

 

3,353

 

 

 

Walgreen Co.

 

128,018

 

389

 

 

 

Wendy’s Intl., Inc.

 

13,876

 

546

 

 

 

Yum! Brands, Inc.

 

24,788

 

 

 

 

 

 

 

1,921,615

 

 

 

 

 

Savings and Loans: 0.2%

 

 

 

361

 

 

 

Golden West Financial Corp.

 

43,046

 

304

 

 

 

Sovereign Bancorp, Inc.

 

6,642

 

2,081

 

 

 

Washington Mutual, Inc.

 

84,718

 

 

 

 

 

 

 

134,406

 

 

 

 

 

Semiconductors: 0.7%

 

 

 

690

 

@

 

Altera Corp.

 

15,649

 

849

 

 

 

Analog Devices, Inc.

 

31,371

 

3,482

 

@

 

Applied Materials, Inc.

 

57,940

 

14,711

 

 

 

Intel Corp.

 

328,791

 

433

 

@

 

KLA-Tencor Corp.

 

19,511

 

723

 

 

 

Linear Technology Corp.

 

27,590

 

262

 

 

 

Maxim Integrated Products, Inc.

 

10,732

 

807

 

@

 

National Semiconductor Corp.

 

12,476

 

 

See Accompanying Notes to Financial Statements

 

109


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Semiconductors (continued)

 

 

 

83

 

@

 

Qlogic Corp.

 

$

2,854

 

1,333

 

 

 

Texas Instruments, Inc.

 

32,232

 

 

 

 

 

 

 

539,146

 

 

 

 

 

Software: 1.8%

 

 

 

527

 

 

 

Adobe Systems, Inc.

 

31,915

 

336

 

 

 

Autodesk, Inc.

 

21,978

 

1,413

 

 

 

Automatic Data Processing, Inc.

 

64,334

 

714

 

@

 

BMC Software, Inc.

 

13,266

 

446

 

@

 

Citrix Systems, Inc.

 

10,530

 

1,131

 

 

 

Computer Associates Intl., Inc.

 

34,529

 

1,259

 

@

 

Compuware Corp.

 

7,264

 

278

 

@

 

Electronic Arts, Inc.

 

13,594

 

2,069

 

 

 

First Data Corp.

 

85,015

 

489

 

@

 

Fiserv, Inc.

 

18,831

 

687

 

 

 

IMS Health, Inc.

 

15,506

 

428

 

@

 

Intuit, Inc.

 

17,908

 

24,887

 

 

 

Microsoft Corp.

 

667,221

 

747

 

@

 

Novell, Inc.

 

4,557

 

20,196

 

@

 

Oracle Corp.

 

255,682

 

721

 

@

 

Parametric Technology Corp.

 

4,218

 

858

 

@

 

PeopleSoft, Inc.

 

20,257

 

1,317

 

@

 

Siebel Systems, Inc.

 

13,275

 

953

 

@

 

Veritas Software Corp.

 

20,871

 

 

 

 

 

 

 

1,320,751

 

 

 

 

 

Telecommunications: 2.1%

 

 

 

847

 

 

 

Alltel Corp.

 

48,016

 

737

 

 

 

AT&T Corp.

 

13,487

 

1,083

 

@

 

Avaya, Inc.

 

17,783

 

4,446

 

 

 

BellSouth Corp.

 

119,242

 

330

 

 

 

CenturyTel, Inc.

 

10,864

 

15,501

 

@

 

Cisco Systems, Inc.

 

290,023

 

836

 

 

 

Citizens Communications Co.

 

11,955

 

450

 

@

 

Comverse Technology, Inc.

 

9,572

 

3,046

 

@

 

Corning, Inc.

 

38,319

 

9,765

 

@

 

Lucent Technologies, Inc.

 

38,376

 

7,609

 

 

 

Motorola, Inc.

 

146,549

 

2,333

 

@

 

Nextel Communications, Inc.

 

66,397

 

3,894

 

 

 

Qualcomm, Inc.

 

162,068

 

3,750

 

@

 

Qwest Communications Intl., Inc.

 

15,000

 

7,593

 

 

 

SBC Communications, Inc.

 

191,116

 

315

 

 

 

Scientific-Atlanta, Inc.

 

9,330

 

3,350

 

 

 

Sprint Corp.

 

76,414

 

1,157

 

@

 

Tellabs, Inc.

 

9,892

 

6,295

 

 

 

Verizon Communications, Inc.

 

259,543

 

 

 

 

 

 

 

1,533,946

 

 

 

 

 

Textiles: 0.0%

 

 

 

411

 

 

 

Cintas Corp.

 

18,380

 

 

 

 

 

 

 

18,380

 

 

 

 

 

Toys/ Games/ Hobbies: 0.0%

 

 

 

545

 

 

 

Hasbro, Inc.

 

10,371

 

976

 

 

 

Mattel, Inc.

 

18,496

 

 

 

 

 

 

 

28,867

 

 

 

 

 

Transportation: 0.6%

 

 

 

872

 

 

 

Burlington Northern Santa Fe Corp.

 

39,275

 

510

 

 

 

CSX Corp.

 

19,446

 

935

 

 

 

FedEx Corp.

 

88,853

 

1,175

 

 

 

Norfolk Southern Corp.

 

40,338

 

165

 

 

 

Ryder System, Inc.

 

8,851

 

250

 

 

 

Union Pacific Corp.

 

15,860

 

2,562

 

 

 

United Parcel Service, Inc.

 

215,592

 

 

 

 

 

 

 

428,215

 

 

 

 

 

Total Common Stock
(Cost $24,468,179)

 

26,049,143

 

 

Principal
Amount

 

 

 

 

 

Value

 

U.S. TREASURY OBLIGATIONS: 64.3%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 64.3%

 

 

 

$

56,290,000

 

 

 

3.700%, due 08/15/09

 

$

47,370,624

 

 

 

 

 

Total U.S. Treasury Obligations
(Cost $47,720,118)

 

47,370,624

 

 

 

 

 

Total Long-Term Investments
(Cost $72,188,297)

 

73,419,767

 

 

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS: 0.5%

 

 

 

 

 

 

 

Repurchase Agreement: 0.5%

 

 

 

378,000

 

 

 

Morgan Stanley Repurchase Agreement dated 11/30/04, 2.071%, due 12/01/04, $3,378,022 to be received upon repurchase (Collateralized by $1,085,000 Federal National Mortgage Association, 4.625%, Market Value plus accrued interest $1,067,342, due 05/01/13)

 

378,000

 

 

 

 

 

Total Short-Term Investments
(Cost $378,000)

 

378,000

 

 

 

 

 

 

 

 

 

Total Investments In
Securities
(Cost $72,566,297)*

 

100.2

%

$

73,797,767

 

Other Assets and
Liabilities-Net

 

(0.2

)

(122,591

)

Net Assets

 

100.0

%

$

73,675,176

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is $72,687,152. Net unrealized appreciation consists of:

 

 

 

 

 

Gross Unrealized Appreciation

 

$

1,798,180

 

Gross Unrealized Depreciation

 

(687,565

)

Net Unrealized Appreciation

 

$

1,110,615

 

 

See Accompanying Notes to Financial Statements

 

110


 

ING PRINCIPAL PROTECTION FUND XI

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Shares

 

 

 

 

 

Value

 

COMMON STOCK: 31.4%

 

 

 

 

 

 

 

Advertising: 0.0%

 

 

 

233

 

@

 

Interpublic Group of Cos., Inc.

 

$

2,892

 

237

 

 

 

Omnicom Group, Inc.

 

19,197

 

 

 

 

 

 

 

22,089

 

 

 

 

 

Aerospace/Defense: 0.7%

 

 

 

1,849

 

 

 

Boeing Co.

 

99,051

 

447

 

 

 

General Dynamics Corp.

 

48,437

 

137

 

 

 

Goodrich Corp.

 

4,350

 

586

 

 

 

Lockheed Martin Corp.

 

35,652

 

452

 

 

 

Northrop Grumman Corp.

 

25,461

 

989

 

 

 

Raytheon Co.

 

39,896

 

215

 

 

 

Rockwell Collins, Inc.

 

8,570

 

669

 

 

 

United Technologies Corp.

 

65,281

 

 

 

 

 

 

 

326,698

 

 

 

 

 

Agriculture: 0.5%

 

 

 

2,519

 

 

 

Altria Group, Inc.

 

144,818

 

822

 

 

 

Archer-Daniels-Midland Co.

 

17,427

 

367

 

 

 

Monsanto Co.

 

16,889

 

188

 

 

 

Reynolds American, Inc.

 

14,218

 

377

 

 

 

UST, Inc.

 

16,599

 

 

 

 

 

 

 

209,951

 

 

 

 

 

Apparel: 0.2%

 

 

 

393

 

@

 

Coach, Inc.

 

19,587

 

162

 

 

 

Jones Apparel Group, Inc.

 

5,756

 

183

 

 

 

Liz Claiborne, Inc.

 

7,516

 

588

 

 

 

Nike, Inc.

 

49,781

 

72

 

 

 

Reebok Intl. Ltd.

 

2,799

 

264

 

 

 

VF Corp.

 

14,253

 

 

 

 

 

 

 

99,692

 

 

 

 

 

Auto Manufacturers: 0.2%

 

 

 

4,043

 

 

 

Ford Motor Co.

 

57,330

 

748

 

 

 

General Motors Corp.

 

28,865

 

372

 

@

 

PACCAR, Inc.

 

29,053

 

 

 

 

 

 

 

115,248

 

 

 

 

 

Auto Parts and Equipment: 0.0%

 

 

 

171

 

 

 

Dana Corp.

 

2,796

 

323

 

@

 

Goodyear Tire & Rubber Co.

 

4,076

 

252

 

 

 

Johnson Controls, Inc.

 

15,473

 

 

 

 

 

 

 

22,345

 

 

 

 

 

Banks: 2.0%

 

 

 

432

 

 

 

AmSouth Bancorporation

 

11,202

 

5,295

 

 

 

Bank of America Corp.

 

245,000

 

732

 

 

 

BB&T Corp.

 

31,073

 

303

 

 

 

Comerica, Inc.

 

18,635

 

294

 

 

 

Fifth Third Bancorp

 

14,806

 

162

 

 

 

First Horizon National Corp.

 

7,079

 

290

 

 

 

Huntington Bancshares, Inc.

 

7,035

 

731

 

 

 

KeyCorp

 

24,335

 

147

 

 

 

M & T Bank Corp.

 

15,495

 

298

 

 

 

Marshall & Ilsley Corp.

 

12,424

 

567

 

 

 

Mellon Financial Corp.

 

16,568

 

1,151

 

 

 

National City Corp.

 

42,679

 

249

 

 

 

North Fork Bancorporation, Inc.

 

7,171

 

277

 

 

 

Northern Trust Corp.

 

13,030

 

361

 

 

 

PNC Financial Services Group, Inc.

 

19,638

 

599

 

 

 

Regions Financial Corp.

 

20,959

 

175

 

 

 

State Street Corp

 

7,798

 

471

 

 

 

SunTrust Banks, Inc.

 

33,582

 

164

 

 

 

Synovus Financial Corp.

 

4,428

 

397

 

 

 

The Bank of New York Co., Inc.

 

13,065

 

2,455

 

 

 

U.S. Bancorp

 

72,742

 

2,797

 

 

 

Wachovia Corp.

 

144,745

 

2,179

 

 

 

Wells Fargo & Co.

 

134,597

 

126

 

 

 

Zions Bancorporation

 

8,379

 

 

 

 

 

 

 

926,465

 

 

 

 

 

Beverages: 0.7%

 

 

 

1,029

 

 

 

Anheuser-Busch Cos., Inc.

 

51,543

 

147

 

 

 

Brown-Forman Corp.

 

7,059

 

3,133

 

 

 

Coca-Cola Co.

 

123,158

 

598

 

 

 

Coca-Cola Enterprises, Inc.

 

12,438

 

344

 

 

 

Pepsi Bottling Group, Inc.

 

9,639

 

2,212

 

 

 

PepsiCo, Inc.

 

110,401

 

 

 

 

 

 

 

314,238

 

 

 

 

 

Biotechnology: 0.3%

 

 

 

1,634

 

@

 

Amgen, Inc.

 

98,106

 

447

 

@

 

Biogen Idec, Inc.

 

26,230

 

307

 

@

 

Genzyme Corp.

 

17,195

 

130

 

@

 

MedImmune, Inc.

 

3,458

 

59

 

@

 

Millipore Corp.

 

2,874

 

 

 

 

 

 

 

147,863

 

 

 

 

 

Building Materials: 0.1%

 

 

 

289

 

@

 

American Standard Cos., Inc.

 

11,254

 

550

 

 

 

Masco Corp.

 

19,398

 

143

 

 

 

Vulcan Materials Co.

 

7,415

 

 

 

 

 

 

 

38,067

 

 

 

 

 

Chemicals: 0.5%

 

 

 

296

 

 

 

Air Products & Chemicals, Inc.

 

16,946

 

90

 

 

 

Ashland, Inc.

 

5,324

 

1,293

 

 

 

Dow Chemical Co.

 

65,257

 

1,356

 

 

 

E.I. du Pont de Nemours & Co.

 

61,453

 

118

 

 

 

Eastman Chemical Co.

 

6,417

 

138

 

 

 

Ecolab, Inc.

 

4,827

 

147

 

 

 

Engelhard Corp.

 

4,394

 

146

 

 

 

International Flavors & Fragrances, Inc.

 

5,913

 

382

 

 

 

PPG Industries, Inc.

 

25,774

 

440

 

 

 

Praxair, Inc.

 

19,756

 

307

 

 

 

Rohm & Haas Co.

 

13,536

 

321

 

 

 

Sherwin-Williams Co.

 

14,317

 

102

 

 

 

Sigma-Aldrich Corp.

 

6,092

 

 

 

 

 

 

 

250,006

 

 

 

 

 

Commercial Services: 0.3%

 

 

 

244

 

@

 

Apollo Group, Inc.

 

19,447

 

1,378

 

 

 

Cendant Corp.

 

31,238

 

71

 

 

 

Deluxe Corp.

 

2,807

 

156

 

 

 

Equifax, Inc.

 

4,309

 

305

 

 

 

H&R Block, Inc.

 

14,549

 

390

 

 

 

McKesson Corp.

 

11,525

 

191

 

 

 

Moody’s Corp.

 

15,423

 

468

 

 

 

Paychex, Inc.

 

15,519

 

287

 

 

 

R.R. Donnelley & Sons Co.

 

9,959

 

201

 

 

 

Robert Half Intl., Inc.

 

5,433

 

 

 

 

 

 

 

130,209

 

 

 

 

 

Computers: 1.6%

 

 

 

166

 

@

 

Affiliated Computer Services, Inc.

 

9,824

 

879

 

@

 

Apple Computer, Inc.

 

58,937

 

234

 

@

 

Computer Sciences Corp.

 

12,659

 

4,381

 

@

 

Dell, Inc.

 

177,518

 

684

 

 

 

Electronic Data Systems Corp.

 

15,356

 

2,941

 

@

 

EMC Corp.

 

39,468

 

484

 

@

 

Gateway, Inc.

 

3,296

 

3,790

 

 

 

Hewlett-Packard Co.

 

75,800

 

2,927

 

 

 

International Business Machines Corp.

 

275,841

 

169

 

@

 

Lexmark Intl., Inc.

 

14,348

 

124

 

@

 

NCR Corp.

 

7,407

 

384

 

@

 

Network Appliance, Inc.

 

11,581

 

 

See Accompanying Notes to Financial Statements

 

111


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Computers (continued)

 

 

 

6,759

 

@

 

Sun Microsystems, Inc.

 

$

37,512

 

377

 

@

 

Sungard Data Systems, Inc.

 

9,994

 

381

 

@

 

Unisys Corp.

 

4,378

 

 

 

 

 

 

 

753,919

 

 

 

 

 

Cosmetics/Personal Care: 1.1%

 

 

 

123

 

 

 

Alberto-Culver Co.

 

5,695

 

617

 

 

 

Avon Products, Inc.

 

23,162

 

669

 

 

 

Colgate-Palmolive Co.

 

30,767

 

2,199

 

 

 

Gillette Co.

 

95,635

 

884

 

 

 

Kimberly-Clark Corp.

 

56,231

 

5,617

 

 

 

Procter & Gamble Co.

 

300,397

 

 

 

 

 

 

 

511,887

 

 

 

 

 

Distribution/Wholesale: 0.0%

 

 

 

228

 

 

 

Genuine Parts Co.

 

9,897

 

198

 

 

 

W.W. Grainger, Inc.

 

12,249

 

 

 

 

 

 

 

22,146

 

 

 

 

 

Diversified Financial Services: 2.2%

 

 

 

1,645

 

 

 

American Express Co.

 

91,643

 

130

 

 

 

Bear Stearns Cos., Inc.

 

12,685

 

306

 

 

 

Capital One Financial Corp.

 

24,045

 

378

 

 

 

CIT Group, Inc.

 

16,160

 

6,724

 

 

 

Citigroup, Inc.

 

300,898

 

1,168

 

 

 

Countrywide Financial Corp.

 

38,789

 

494

 

@

 

E*TRADE Financial Corp.

 

6,847

 

1,271

 

 

 

Fannie Mae

 

87,318

 

57

 

 

 

Federated Investors, Inc.

 

1,677

 

313

 

 

 

Franklin Resources, Inc.

 

20,542

 

887

 

 

 

Freddie Mac

 

60,547

 

623

 

 

 

Goldman Sachs Group, Inc.

 

65,265

 

1,867

 

 

 

J.P. Morgan Chase & Co.

 

70,293

 

345

 

 

 

Janus Capital Group, Inc.

 

5,710

 

357

 

 

 

Lehman Brothers Holdings, Inc.

 

29,909

 

1,647

 

 

 

MBNA Corp.

 

43,744

 

1,211

 

 

 

Merrill Lynch & Co., Inc.

 

67,465

 

565

 

 

 

Morgan Stanley

 

28,674

 

352

 

@

 

Providian Financial Corp.

 

5,650

 

551

 

 

 

SLM Corp.

 

28,195

 

 

 

 

 

 

 

1,006,056

 

 

 

 

 

Electric: 0.8%

 

 

 

808

 

@

 

AES Corp.

 

9,890

 

144

 

@

 

Allegheny Energy, Inc.

 

2,756

 

106

 

 

 

Ameren Corp.

 

5,133

 

539

 

 

 

American Electric Power Co., Inc.

 

18,418

 

96

 

 

 

Cinergy Corp.

 

3,973

 

317

 

 

 

Consolidated Edison, Inc.

 

13,900

 

232

 

 

 

Constellation Energy Group, Inc.

 

10,138

 

171

 

 

 

Dominion Resources, Inc.

 

11,195

 

224

 

 

 

DTE Energy Co.

 

9,829

 

1,680

 

 

 

Duke Energy Corp.

 

42,469

 

544

 

 

 

Edison Intl.

 

17,354

 

301

 

 

 

Entergy Corp.

 

19,511

 

863

 

 

 

Exelon Corp.

 

35,995

 

433

 

 

 

FirstEnergy Corp.

 

18,286

 

236

 

 

 

FPL Group, Inc.

 

16,598

 

502

 

@

 

PG&E Corp.

 

16,697

 

127

 

 

 

Pinnacle West Capital Corp.

 

5,613

 

328

 

 

 

PPL Corp.

 

17,040

 

322

 

 

 

Public Service Enterprise Group, Inc.

 

14,165

 

954

 

 

 

Southern Co.

 

31,282

 

285

 

 

 

TECO Energy, Inc.

 

4,264

 

534

 

 

 

TXU Corp.

 

33,546

 

550

 

 

 

Xcel Energy, Inc.

 

9,933

 

 

 

 

 

 

 

367,985

 

 

 

 

 

Electrical Components and Equipment: 0.1%

 

 

 

737

 

 

 

Emerson Electric Co.

 

49,246

 

 

 

 

 

 

 

49,246

 

 

 

 

 

Electronics: 0.2%

 

 

 

606

 

@

 

Agilent Technologies, Inc.

 

13,872

 

278

 

 

 

Applera Corp. — Applied Biosystems Group

 

5,699

 

159

 

@

 

Fisher Scientific Intl.

 

8,990

 

274

 

@

 

Jabil Circuit, Inc.

 

6,866

 

153

 

 

 

Parker Hannifin Corp.

 

11,444

 

195

 

 

 

PerkinElmer, Inc.

 

4,159

 

249

 

@

 

Sanmina-SCI Corp.

 

2,199

 

461

 

@

 

Solectron Corp.

 

2,881

 

130

 

 

 

Tektronix, Inc.

 

4,078

 

321

 

@

 

Thermo Electron Corp.

 

9,710

 

154

 

@

 

Waters Corp.

 

7,186

 

 

 

 

 

 

 

77,084

 

 

 

 

 

Engineering and Construction: 0.0%

 

 

 

122

 

 

 

Fluor Corp.

 

6,332

 

 

 

 

 

 

 

6,332

 

 

 

 

 

Entertainment: 0.0%

 

 

 

441

 

 

 

International Game Technology

 

15,589

 

 

 

 

 

 

 

15,589

 

 

 

 

 

Environmental Control: 0.0%

 

 

 

769

 

 

 

Waste Management, Inc.

 

22,924

 

 

 

 

 

 

 

22,924

 

 

 

 

 

Food: 0.4%

 

 

 

495

 

 

 

Albertson’s, Inc.

 

12,524

 

206

 

 

 

Campbell Soup Co.

 

5,877

 

669

 

 

 

ConAgra Foods, Inc.

 

18,096

 

500

 

 

 

General Mills, Inc.

 

22,745

 

450

 

 

 

H.J. Heinz Co.

 

16,722

 

327

 

 

 

Hershey Foods Corp.

 

16,939

 

541

 

 

 

Kellogg Co.

 

23,642

 

378

 

@

 

Kroger Co.

 

6,116

 

192

 

 

 

McCormick & Co., Inc.

 

6,998

 

227

 

@

 

Safeway, Inc.

 

4,377

 

1,047

 

 

 

Sara Lee Corp.

 

24,584

 

300

 

 

 

SUPERVALU, Inc.

 

9,477

 

393

 

 

 

Wm. Wrigley Jr. Co.

 

27,037

 

 

 

 

 

 

 

195,134

 

 

 

 

 

Forest Products and Paper: 0.2%

 

 

 

341

 

 

 

Georgia-Pacific Corp.

 

12,484

 

664

 

 

 

International Paper Co.

 

27,569

 

203

 

 

 

Louisiana-Pacific Corp.

 

4,967

 

272

 

 

 

MeadWestvaco Corp.

 

9,153

 

227

 

 

 

Plum Creek Timber Co., Inc.

 

8,399

 

98

 

 

 

Temple-Inland, Inc.

 

5,840

 

430

 

 

 

Weyerhaeuser Co.

 

28,380

 

 

 

 

 

 

 

96,792

 

 

 

 

 

Gas: 0.1%

 

 

 

212

 

 

 

KeySpan Corp.

 

8,378

 

75

 

 

 

Nicor, Inc.

 

2,768

 

417

 

 

 

Sempra Energy

 

15,420

 

 

 

 

 

 

 

26,566

 

 

 

 

 

Hand/Machine Tools: 0.1%

 

 

 

172

 

 

 

Black & Decker Corp.

 

14,463

 

92

 

 

 

Snap-On, Inc.

 

2,908

 

159

 

 

 

Stanley Works

 

7,435

 

 

 

 

 

 

 

24,806

 

 

See Accompanying Notes to Financial Statements

 

112


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Healthcare — Products: 1.3%

 

 

 

70

 

 

 

Bausch & Lomb, Inc.

 

$

4,122

 

802

 

 

 

Baxter Intl., Inc.

 

25,383

 

456

 

 

 

Becton Dickinson & Co.

 

24,980

 

330

 

 

 

Biomet, Inc.

 

15,797

 

1,086

 

@

 

Boston Scientific Corp.

 

37,804

 

143

 

 

 

C.R. Bard, Inc.

 

8,567

 

415

 

 

 

Guidant Corp.

 

26,904

 

5,217

 

 

 

Johnson & Johnson

 

314,689

 

1,572

 

 

 

Medtronic, Inc.

 

75,535

 

446

 

@

 

St. Jude Medical, Inc.

 

17,010

 

206

 

 

 

Stryker Corp.

 

9,062

 

321

 

@

 

Zimmer Holdings, Inc.

 

26,194

 

 

 

 

 

 

 

586,047

 

 

 

 

 

Healthcare — Services: 0.6%

 

 

 

331

 

 

 

Aetna, Inc.

 

39,227

 

308

 

@

 

Humana, Inc.

 

7,645

 

181

 

@

 

Laboratory Corp. Of America Holdings

 

8,679

 

125

 

 

 

Manor Care, Inc.

 

4,306

 

56

 

 

 

Quest Diagnostics, Inc.

 

5,250

 

1,453

 

 

 

UnitedHealth Group, Inc.

 

120,381

 

344

 

@

 

WellPoint Health Networks, Inc.

 

43,034

 

299

 

@

 

WellPoint, Inc.

 

30,298

 

 

 

 

 

 

 

258,820

 

 

 

 

 

Home Builders: 0.0%

 

 

 

153

 

 

 

Centex Corp.

 

8,028

 

 

 

 

 

 

 

8,028

 

 

 

 

 

Home Furnishings: 0.0%

 

 

 

241

 

 

 

Leggett & Platt, Inc.

 

7,194

 

85

 

 

 

Whirlpool Corp.

 

5,487

 

 

 

 

 

 

 

12,681

 

 

 

 

 

Household Products/Wares: 0.1%

 

 

 

147

 

 

 

Avery Dennison Corp.

 

8,623

 

366

 

 

 

Clorox Co.

 

20,174

 

182

 

 

 

Fortune Brands, Inc.

 

14,283

 

 

 

 

 

 

 

43,080

 

 

 

 

 

Housewares: 0.0%

 

 

 

358

 

 

 

Newell Rubbermaid, Inc.

 

8,263

 

 

 

 

 

 

 

8,263

 

 

 

 

 

Insurance: 1.8%

 

 

 

495

 

@@

 

ACE Ltd.

 

20,008

 

647

 

 

 

AFLAC, Inc.

 

24,340

 

1,213

 

 

 

Allstate Corp.

 

61,257

 

142

 

 

 

AMBAC Financial Group, Inc.

 

11,549

 

5,732

 

 

 

American International Group, Inc.

 

363,122

 

553

 

 

 

AON Corp.

 

11,679

 

425

 

 

 

Chubb Corp.

 

32,389

 

314

 

 

 

CIGNA Corp.

 

21,986

 

226

 

 

 

Cincinnati Financial Corp.

 

10,125

 

383

 

 

 

Hartford Financial Services Group, Inc.

 

24,512

 

171

 

 

 

Jefferson-Pilot Corp.

 

8,411

 

288

 

 

 

Lincoln National Corp.

 

13,254

 

316

 

 

 

Loews Corp.

 

22,092

 

669

 

 

 

Marsh & McLennan Cos., Inc.

 

19,127

 

183

 

 

 

MBIA, Inc.

 

10,973

 

1,296

 

 

 

MetLife, Inc.

 

50,544

 

125

 

 

 

MGIC Investment Corp.

 

8,500

 

403

 

 

 

Principal Financial Group

 

15,185

 

258

 

 

 

Progressive Corp.

 

23,475

 

1,133

 

 

 

Prudential Financial, Inc.

 

55,460

 

300

 

 

 

Safeco Corp.

 

14,541

 

152

 

 

 

Torchmark Corp.

 

8,346

 

403

 

 

 

UnumProvident Corp.

 

6,275

 

171

 

@@

 

XL Capital Ltd.

 

12,887

 

 

 

 

 

 

 

850,037

 

 

 

 

 

Internet: 0.4%

 

 

 

843

 

@

 

eBay, Inc.

 

94,796

 

669

 

@

 

Symantec Corp.

 

42,689

 

1,765

 

@

 

Yahoo!, Inc.

 

66,399

 

 

 

 

 

 

 

203,884

 

 

 

 

 

Iron/Steel: 0.1%

 

 

 

143

 

 

 

Allegheny Technologies Inc

 

3,146

 

205

 

 

 

Nucor Corp.

 

10,845

 

276

 

 

 

United States Steel Corp.

 

14,451

 

 

 

 

 

 

 

28,442

 

 

 

 

 

Leisure Time: 0.2%

 

 

 

158

 

 

 

Brunswick Corp.

 

7,714

 

825

 

 

 

Carnival Corp.

 

43,733

 

395

 

 

 

Harley-Davidson, Inc.

 

22,839

 

253

 

 

 

Sabre Holdings Corp.

 

5,839

 

 

 

 

 

 

 

80,125

 

 

 

 

 

Lodging: 0.1%

 

 

 

141

 

 

 

Harrah’s Entertainment, Inc.

 

8,657

 

486

 

 

 

Hilton Hotels Corp.

 

10,041

 

301

 

 

 

Marriott Intl., Inc.

 

17,112

 

283

 

 

 

Starwood Hotels & Resorts Worldwide, Inc.

 

14,798

 

 

 

 

 

 

 

50,608

 

 

 

 

 

Machinery — Construction and Mining: 0.0%

 

 

 

174

 

 

 

Caterpillar, Inc.

 

15,930

 

 

 

 

 

 

 

15,930

 

 

 

 

 

Machinery — Diversified: 0.1%

 

 

 

54

 

 

 

Cummins, Inc.

 

4,299

 

309

 

 

 

Deere & Co.

 

22,165

 

251

 

 

 

Rockwell Automation, Inc.

 

11,872

 

 

 

 

 

 

 

38,336

 

 

 

 

 

Media: 0.8%

 

 

 

295

 

 

 

Clear Channel Communications, Inc.

 

9,936

 

2,910

 

@

 

Comcast Corp.

 

87,416

 

350

 

 

 

Gannett Co., Inc.

 

28,872

 

102

 

 

 

Knight-Ridder, Inc.

 

6,945

 

334

 

 

 

McGraw-Hill Cos., Inc.

 

29,302

 

54

 

 

 

Meredith Corp.

 

2,847

 

207

 

 

 

New York Times Co.

 

8,487

 

5,969

 

@

 

Time Warner, Inc.

 

105,711

 

168

 

 

 

Tribune Co.

 

7,286

 

169

 

@

 

Univision Communications, Inc.

 

5,087

 

902

 

 

 

Viacom, Inc.

 

31,299

 

2,669

 

 

 

Walt Disney Co.

 

71,743

 

 

 

 

 

 

 

394,931

 

 

 

 

 

Mining: 0.0%

 

 

 

169

 

 

 

Phelps Dodge Corp.

 

16,415

 

 

 

 

 

 

 

16,415

 

 

 

 

 

Miscellaneous Manufacturing: 1.8%

 

 

 

1,017

 

 

 

3M Co.

 

80,943

 

127

 

 

 

Cooper Industries Ltd.

 

8,421

 

388

 

 

 

Danaher Corp.

 

22,069

 

273

 

 

 

Dover Corp.

 

11,043

 

477

 

 

 

Eastman Kodak Co.

 

15,603

 

189

 

 

 

Eaton Corp.

 

12,739

 

13,613

 

 

 

General Electric Co.

 

481,356

 

1,106

 

 

 

Honeywell Intl., Inc.

 

39,075

 

389

 

 

 

Illinois Tool Works, Inc.

 

36,655

 

 

See Accompanying Notes to Financial Statements

 

113


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Miscellaneous Manufacturing (continued)

 

 

 

230

 

@@

 

Ingersoll-Rand Co.

 

$

17,117

 

118

 

 

 

ITT Industries, Inc.

 

10,044

 

160

 

 

 

Pall Corp.

 

4,334

 

177

 

 

 

Textron, Inc.

 

12,854

 

2,573

 

@@

 

Tyco Intl. Ltd.

 

87,405

 

 

 

 

 

 

 

839,658

 

 

 

 

 

Office/Business Equipment: 0.1%

 

 

 

293

 

 

 

Pitney Bowes, Inc.

 

12,825

 

1,069

 

@

 

Xerox Corp.

 

16,377

 

 

 

 

 

 

 

29,202

 

 

 

 

 

Oil and Gas: 2.5%

 

 

 

98

 

 

 

Amerada Hess Corp.

 

8,707

 

390

 

 

 

Anadarko Petroleum Corp.

 

27,144

 

394

 

 

 

Apache Corp.

 

21,300

 

793

 

 

 

Burlington Resources, Inc.

 

36,803

 

4,262

 

 

 

ChevronTexaco Corp.

 

232,705

 

1,092

 

 

 

ConocoPhillips

 

99,361

 

987

 

 

 

Devon Energy Corp.

 

40,882

 

134

 

 

 

EOG Resources, Inc.

 

10,059

 

10,318

 

 

 

Exxon Mobil Corp.

 

528,797

 

177

 

 

 

Kerr-McGee Corp.

 

11,015

 

417

 

 

 

Marathon Oil Corp.

 

16,446

 

74

 

@,@@

 

Nabors Industries Ltd.

 

3,848

 

144

 

@

 

Noble Corp.

 

6,977

 

453

 

 

 

Occidental Petroleum Corp.

 

27,275

 

143

 

 

 

Sunoco, Inc.

 

11,806

 

388

 

@

 

Transocean, Inc.

 

15,625

 

406

 

 

 

Unocal Corp.

 

18,692

 

506

 

 

 

Valero Energy Corp.

 

23,676

 

 

 

 

 

 

 

1,141,118

 

 

 

 

 

Oil and Gas Services: 0.1%

 

 

 

400

 

 

 

Baker Hughes, Inc.

 

17,732

 

194

 

 

 

BJ Services Co.

 

9,830

 

515

 

 

 

Halliburton Co.

 

21,295

 

 

 

 

 

 

 

48,857

 

 

 

 

 

Packaging and Containers: 0.0%

 

 

 

140

 

 

 

Ball Corp.

 

6,262

 

162

 

 

 

Bemis Co.

 

4,510

 

178

 

@

 

Pactiv Corp.

 

4,423

 

116

 

@

 

Sealed Air Corp.

 

5,964

 

 

 

 

 

 

 

21,159

 

 

 

 

 

Pharmaceuticals: 1.7%

 

 

 

2,046

 

 

 

Abbott Laboratories

 

85,850

 

181

 

 

 

Allergan, Inc.

 

13,304

 

198

 

 

 

AmerisourceBergen Corp.

 

11,670

 

2,510

 

 

 

Bristol-Myers Squibb Co.

 

58,985

 

553

 

 

 

Cardinal Health, Inc.

 

28,911

 

999

 

@

 

Caremark Rx, Inc.

 

35,724

 

599

 

 

 

Eli Lilly & Co.

 

31,945

 

96

 

@

 

Express Scripts, Inc.

 

6,908

 

488

 

@

 

Forest Laboratories, Inc.

 

19,017

 

576

 

@

 

Gilead Sciences, Inc.

 

19,849

 

222

 

@

 

Hospira, Inc.

 

7,155

 

375

 

@

 

King Pharmaceuticals, Inc.

 

4,669

 

363

 

@

 

Medco Health Solutions, Inc.

 

13,692

 

2,904

 

 

 

Merck & Co., Inc.

 

81,370

 

9,574

 

 

 

Pfizer, Inc.

 

265,870

 

1,950

 

 

 

Schering-Plough Corp.

 

34,808

 

1,754

 

 

 

Wyeth

 

69,932

 

 

 

 

 

 

 

789,659

 

 

 

 

 

Pipelines: 0.1%

 

 

 

944

 

@

 

Dynegy, Inc.

 

5,334

 

686

 

 

 

El Paso Corp.

 

7,162

 

62

 

 

 

Kinder Morgan, Inc.

 

4,297

 

637

 

 

 

Williams Cos., Inc.

 

10,618

 

 

 

 

 

 

 

27,411

 

 

 

 

 

Real Estate Investment Trusts: 0.1%

 

 

 

204

 

 

 

Equity Office Properties Trust

 

5,600

 

253

 

 

 

ProLogis

 

10,178

 

286

 

 

 

Simon Property Group, Inc.

 

17,755

 

 

 

 

 

 

 

33,533

 

 

 

 

 

Retail: 2.4%

 

 

 

395

 

@

 

Bed Bath & Beyond, Inc.

 

15,772

 

416

 

 

 

Best Buy Co., Inc.

 

23,454

 

438

 

 

 

Circuit City Stores, Inc.

 

6,828

 

1,034

 

 

 

Costco Wholesale Corp.

 

50,252

 

521

 

 

 

CVS Corp.

 

23,638

 

212

 

 

 

Darden Restaurants, Inc.

 

5,779

 

225

 

 

 

Federated Department Stores, Inc.

 

12,330

 

1,582

 

 

 

Gap, Inc.

 

34,567

 

4,903

 

 

 

Home Depot, Inc.

 

204,700

 

651

 

 

 

J.C. Penney Co., Inc. Holding Co.

 

25,129

 

182

 

@

 

Kohl’s Corp.

 

8,401

 

848

 

@

 

Limited Brands, Inc.

 

20,725

 

1,008

 

 

 

Lowe’s Cos., Inc.

 

55,773

 

369

 

 

 

May Department Stores Co.

 

10,376

 

1,632

 

 

 

McDonald’s Corp.

 

50,168

 

187

 

 

 

Nordstrom, Inc.

 

8,181

 

429

 

@

 

Office Depot, Inc.

 

7,036

 

215

 

 

 

RadioShack Corp.

 

6,788

 

854

 

 

 

Staples, Inc.

 

27,251

 

510

 

@

 

Starbucks Corp.

 

28,693

 

1,195

 

 

 

Target Corp.

 

61,208

 

645

 

 

 

TJX Cos., Inc.

 

15,183

 

385

 

@

 

Toys R US, Inc.

 

7,446

 

5,571

 

 

 

Wal-Mart Stores, Inc.

 

290,025

 

1,803

 

 

 

Walgreen Co.

 

68,839

 

157

 

 

 

Wendy’s Intl., Inc.

 

5,600

 

387

 

 

 

Yum! Brands, Inc.

 

17,570

 

 

 

 

 

 

 

1,091,712

 

 

 

 

 

Savings and Loans: 0.2%

 

 

 

199

 

 

 

Golden West Financial Corp.

 

23,729

 

178

 

 

 

Sovereign Bancorp, Inc.

 

3,889

 

1,117

 

 

 

Washington Mutual, Inc.

 

45,473

 

 

 

 

 

 

 

73,091

 

 

 

 

 

Semiconductors: 0.7%

 

 

 

478

 

@

 

Altera Corp.

 

10,841

 

483

 

 

 

Analog Devices, Inc.

 

17,847

 

2,126

 

@

 

Applied Materials, Inc.

 

35,377

 

8,162

 

 

 

Intel Corp.

 

182,421

 

241

 

@

 

KLA-Tencor Corp.

 

10,859

 

397

 

 

 

Linear Technology Corp.

 

15,150

 

170

 

 

 

Maxim Integrated Products, Inc.

 

6,963

 

420

 

 

 

National Semiconductor Corp.

 

6,493

 

119

 

@

 

Qlogic Corp.

 

4,092

 

877

 

 

 

Texas Instruments, Inc.

 

21,206

 

 

 

 

 

 

 

311,249

 

 

 

 

 

Software: 1.6%

 

 

 

315

 

 

 

Adobe Systems, Inc.

 

19,076

 

240

 

 

 

Autodesk, Inc.

 

15,698

 

750

 

 

 

Automatic Data Processing, Inc.

 

34,148

 

543

 

@

 

BMC Software, Inc.

 

10,089

 

230

 

@

 

Citrix Systems, Inc.

 

5,430

 

756

 

 

 

Computer Associates Intl., Inc.

 

23,081

 

764

 

@

 

Compuware Corp.

 

4,408

 

151

 

@

 

Electronic Arts, Inc.

 

7,384

 

1,123

 

 

 

First Data Corp.

 

46,144

 

267

 

@

 

Fiserv, Inc.

 

10,282

 

314

 

 

 

IMS Health, Inc.

 

7,087

 

 

See Accompanying Notes to Financial Statements

 

114


 

Shares

 

 

 

 

 

Value

 

 

 

 

 

Software (continued)

 

 

 

260

 

@

 

Intuit, Inc.

 

$

10,878

 

14,090

 

 

 

Microsoft Corp.

 

377,754

 

415

 

@

 

Novell, Inc.

 

2,532

 

11,197

 

@

 

Oracle Corp.

 

141,754

 

497

 

@

 

PeopleSoft, Inc.

 

11,734

 

753

 

@

 

Siebel Systems, Inc.

 

7,590

 

552

 

@

 

Veritas Software Corp.

 

12,089

 

 

 

 

 

 

 

747,158

 

 

 

 

 

Telecommunications: 1.8%

 

 

 

532

 

 

 

Alltel Corp.

 

30,159

 

396

 

 

 

AT&T Corp.

 

7,247

 

588

 

@

 

Avaya, Inc.

 

9,655

 

2,385

 

 

 

BellSouth Corp.

 

63,966

 

171

 

 

 

CenturyTel, Inc.

 

5,629

 

8,707

 

@

 

Cisco Systems, Inc.

 

162,909

 

398

 

 

 

Citizens Communications Co.

 

5,691

 

258

 

@

 

Comverse Technology, Inc.

 

5,488

 

1,785

 

@

 

Corning, Inc.

 

22,455

 

5,383

 

@

 

Lucent Technologies, Inc.

 

21,155

 

4,116

 

 

 

Motorola, Inc.

 

79,274

 

1,406

 

@

 

Nextel Communications, Inc.

 

40,015

 

2,050

 

 

 

QUALCOMM, Inc.

 

85,321

 

2,244

 

@

 

Qwest Communications Intl., Inc.

 

8,976

 

4,278

 

 

 

SBC Communications, Inc.

 

107,677

 

187

 

 

 

Scientific-Atlanta, Inc.

 

5,539

 

1,854

 

 

 

Sprint Corp.

 

42,290

 

495

 

@

 

Tellabs, Inc.

 

4,232

 

3,632

 

 

 

Verizon Communications, Inc.

 

149,747

 

 

 

 

 

 

 

857,425

 

 

 

 

 

Textiles: 0.0%

 

 

 

218

 

 

 

Cintas Corp.

 

9,749

 

 

 

 

 

 

 

9,749

 

 

 

 

 

Toys/Games/Hobbies: 0.0%

 

 

 

224

 

 

 

Hasbro, Inc.

 

4,263

 

524

 

 

 

Mattel, Inc.

 

9,930

 

 

 

 

 

 

 

14,193

 

 

 

 

 

Transportation: 0.5%

 

 

 

476

 

 

 

Burlington Northern Santa Fe Corp.

 

21,439

 

264

 

 

 

CSX Corp.

 

10,066

 

527

 

 

 

FedEx Corp.

 

50,081

 

680

 

 

 

Norfolk Southern Corp.

 

23,344

 

78

 

 

 

Ryder System, Inc.

 

4,184

 

134

 

 

 

Union Pacific Corp.

 

8,501

 

1,446

 

 

 

United Parcel Service, Inc.

 

121,681

 

 

 

 

 

 

 

239,296

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Common Stock
(Cost $14,731,326)

 

14,649,434

 

 

Principal
Amount

 

 

 

 

 

Value

 

U.S. GOVERNMENT AGENCY OBLIGATIONS: 35.0%

 

 

 

 

 

 

 

Federal National Mortgage Association: 35.0%

 

 

 

$

20,000,000

 

 

 

4.630%, due 09/15/09

 

$

16,322,520

 

 

 

 

 

 

 

 

 

 

 

 

 

Total U.S. Government Agency Obligations (Cost $16,691,499)

 

16,322,520

 

 

 

 

 

 

 

 

 

U.S. TREASURY OBLIGATIONS: 32.2%

 

 

 

 

 

 

 

U.S. Treasury STRIP: 32.2%

 

 

 

18,000,000

 

 

 

3.700%, due 11/15/09

 

15,009,624

 

 

 

 

 

Total U.S. Treasury Obligations (Cost $15,146,835)

 

15,009,624

 

 

 

 

 

Total Long-Term Investment
(Cost $46,569,660)

 

45,981,578

 

 

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS: 1.4%

 

 

 

 

 

 

 

Repurchase Agreement: 1.4%

 

 

 

661,000

 

 

 

Morgan Stanley Repurchase Agreement 11/30/04, 2.070%, due 12/01/04, $661,038 to be received upon repurchase (Collateralized by $715,000 Federal Home Loan Mortgage Corporation, 3.500%, Market Value plus accrued interest $721,107, due 09/15/07)

 

661,000

 

 

 

 

 

Total Short-Term Investments (Cost $661,000)

 

661,000

 

 

Total Investments In Securities
(Cost $47,230,660)*

 

100.0

%

$

46,642,578

 

Other Assets and
Liabilities-Net

 

0.0

 

1,948

 

Net Assets

 

100.0

%

$

46,644,526

 

 

@

 

Non-income producing security

@@

 

Foreign issuer

STRIP

 

Separate Trading of Registered Interest and Principal of Securities

*

 

Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of:

 

Gross Unrealized Appreciation

 

$

136,117

 

Gross Unrealized Depreciation

 

(724,199

)

Net Unrealized Depreciation

 

$

(588,082

)

 

See Accompanying Notes to Financial Statements

 

115


 

ING PRINCIPAL PROTECTION FUND XII

PORTFOLIO OF INVESTMENTS

AS OF NOVEMBER 30, 2004 (UNAUDITED)

 

Principal
Amount

 

 

 

 

 

Value

 

SHORT-TERM INVESTMENTS: 60.3%
U.S. Government Agency Obligations: 49.2%

 

 

 

 

 

 

 

Federal Home Loan Bank: 11.2%

 

 

 

$

100,000

 

 

 

2.220%, due 01/28/05

 

$

99,638

 

100,000

 

 

 

2.280%, due 02/09/05

 

99,552

 

 

 

 

 

 

 

199,190

 

 

 

 

 

Federal Home Loan Mortgage Corporation: 9.8%

 

 

 

175,000

 

 

 

2.210%, due 01/18/05

 

174,476

 

 

 

 

 

 

 

174,476

 

 

 

 

 

Federal National Mortgage Association: 16.9%

 

 

 

300,000

 

 

 

2.240%, due 01/12/05

 

299,201

 

 

 

 

 

 

 

299,201

 

 

 

 

 

Other: 11.3%

 

 

 

100,000

 

 

 

Federal Farm Credit Discount Notes, 1.970%, due 12/17/04

 

99,907

 

100,000

 

 

 

Federal Farm Credit Discount Notes, 2.180%, due 01/13/05

 

99,735

 

 

 

 

 

 

 

199,642

 

 

 

 

 

 

 

 

 

 

 

 

 

Total U.S. Government Agency Obligations
(Cost $872,562)

 

872,509

 

 

 

 

 

Repurchase Agreement: 11.1%

 

 

 

198,000

 

 

 

Morgan Stanley Repurchase Agreement 11/30/04, 2.071%, due 12/01/04, $198,011 to be received upon repurchase (Collateralized by $205,000 Federal National Mortgage Association, 1.750%-5.000%, Market Value plus accrued interest $206,605, due 05/23/05-03/21/07)

 

198,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Repurchase Agreement
(Cost $198,000)

 

198,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Short-Term Investments
(Cost $1,070,562)

 

1,070,509

 

 

 

 

Total Investments In Securities
(Cost $1,070,562)*

 

60.3

%

$

1,070,509

 

 

 

Other Assets and
Liabilities-Net

 

39.7

 

705,535

 

 

 

Net Assets

 

100.0

%

$

1,776,044

 

 

*

 

Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of:

 

Gross Unrealized Appreciation

 

$

—

 

Gross Unrealized Depreciation

 

(53

)

Net Unrealized Depreciation

 

$

(53

)

 

See Accompanying Notes to Financial Statements

 

116


 

ING Funds Distributor, LLC offers the funds listed below. Before investing in a fund, shareholders should carefully review the fund’s prospectus. Investors may obtain a copy of a prospectus of any ING Fund by calling (800) 992-0180.

 

Domestic Equity and Income Funds

ING Balanced Fund

ING Convertible Fund

ING Equity and Bond Fund

ING Equity Income Fund

ING Real Estate Fund

 

Domestic Equity Growth Funds

ING Disciplined LargeCap Fund

ING Growth Fund

ING LargeCap Growth Fund

ING MidCap Opportunities Fund

ING SmallCap Opportunities Fund

ING Small Company Fund

 

Domestic Equity Index Funds

ING Index Plus LargeCap Fund

ING Index Plus MidCap Fund

ING Index Plus SmallCap Fund

 

Domestic Equity Value Funds

ING Financial Services Fund

ING LargeCap Value Fund

ING MagnaCap Fund

ING MidCap Value Fund

ING SmallCap Value Fund

ING Value Opportunity Fund

 

Fixed Income Funds

ING GNMA Income Fund

ING Government Fund

ING High Yield Bond Fund

ING Intermediate Bond Fund

ING National Tax Exempt Bond Fund

 

Global Equity Funds

ING Global Equity Dividend Fund

ING Global Real Estate Fund

ING Global Science and Technology Fund

ING Worldwide Growth Fund

 

International Equity Funds

ING Emerging Countries Fund

ING Foreign Fund

ING International Fund

ING International Growth Fund

ING International SmallCap Growth Fund

ING International Value Fund

ING Precious Metals Fund

ING Russia Fund

 

Loan Participation Fund

ING Senior Income Fund

 

Money Market Funds*

ING Aeltus Money Market Fund

ING Classic Money Market Fund

ING Lexington Money Market Trust

ING Money Market Fund

 

Strategic Allocation Funds

ING Strategic Allocation Balanced Fund

ING Strategic Allocation Growth Fund

ING Strategic Allocation Income Fund

 

*

 

An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

 

PROXY VOTING INFORMATION

A description of the policies and procedures that the Registrant uses to determine how to vote proxies related to portfolio securities is available (1) without charge, upon request, by calling Shareholder Services toll-free at 800-992-0180; (2) on the Registrant’s website at www.ingfunds.com and (3) on the SEC’s website at www.sec.gov.

 

Information regarding how the Registrant voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Registrant’s website at www.ingfunds.com and on the SEC website at www.sec.gov.

 

QUARTERLY PORTFOLIO HOLDINGS

The Registrant files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Registrant’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Registrant’s Forms N-Q may be reviewed and copied at the Commissions Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330; and is available upon request from the Registrant by calling Shareholder Services toll-free at 800-992-0180.

 


 

Investment Manager

ING Investments, LLC

7337 E. Doubletree Ranch Road

Scottsdale, Arizona 85258

 

Administrator

ING Funds Services, LLC

7337 E. Doubletree Ranch Road

Scottsdale, Arizona 85258

 

Distributor

ING Funds Distributor, LLC

7337 E. Doubletree Ranch Road

Scottsdale, Arizona 85258

1-800-992-0180

 

Transfer Agent

DST Systems, Inc.

P.O. Box 419368

Kansas City, Missouri 64141

 

Custodian

The Bank of New York

100 Colonial Center Parkway, Suite 300

Lake Mary, FL 32746

 

Legal Counsel

Dechert LLP

1775 I Street, N.W.

Washington, D.C. 20006

 

For more complete information, or to obtain a prospectus on any ING fund, please call your Investment Professional or ING Funds Distributor, LLC at (800) 992-0180 or log on to www.ingfunds.com. The prospectus should be read carefully before investing. Consider the fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this information and other information about the fund. Information regarding how the Funds voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Funds’ website at www.ingfunds.com and on the SEC’s website www.sec.gov.

 

GRAPHIC

PRSAR-UFPPFABCQ          (1104-012805)

 


Funds

Semi-Annual Report

November 30, 2004

Classes A, B, C, M and O

Domestic Equity Growth Funds  Domestic Equity and Income Funds

n  ING Disciplined LargeCap Fund  n  ING Convertible Fund

n  ING LargeCap Growth Fund  n  ING Equity and Bond Fund

n  ING MidCap Opportunities Fund  n  ING Real Estate Fund

n  ING SmallCap Opportunities Fund

Domestic Equity Value Funds

n  ING Financial Services Fund

n  ING LargeCap Value Fund

n  ING MagnaCap Fund

n  ING MidCap Value Fund

n  ING SmallCap Value Fund

This report is submitted for general information to shareholders of the ING Funds. It is not authorized for distribution to prospective shareholders unless accompanied or preceded by a prospectus which includes details regarding the funds' investment objectives, risks, charges, expenses and other information. This information should be read carefully.

E-Delivery Sign-up – details inside


TABLE OF CONTENTS

President's Letter     1    
Market Perspective     2    
Portfolio Managers' Reports:  
Domestic Equity Growth Funds     4    
Domestic Equity Value Funds     12    
Domestic Equity and Income Funds     22    
Shareholder Expense Examples     28    
Statements of Assets and Liabilities     33    
Statements of Operations     39    
Statements of Changes in Net Assets     42    
Financial Highlights     48    
Notes to Financial Statements     71    
Portfolios of Investments     89    

 

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PRESIDENT'S LETTER

Dear Shareholder:

The past year has brought about numerous changes in the mutual funds industry, including requests for additional disclosures. I would like to draw your attention to some additional information you will now see in the reports due, in part, to these new requirements:

•  You will see a new section entitled "Shareholder Expense Examples". These examples are intended to illustrate for you the ongoing costs of investing in a mutual fund and to provide a method to compare those costs with the ongoing costs of investing in other mutual funds.

•  In addition to the normal performance tables included in the Portfolio Managers' Reports, there are now additional graphical or tabular presentations, which illustrate the current holdings of the funds as of the period-end.

•  Each fund now also files its complete schedule of portfolio holdings with the Securities Exchange Commission ("SEC") for the first and third quarters of each fiscal year on
Form N-Q. These Forms are available for shareholders to view on the SEC's website at www.sec.gov.

We welcome these changes and believe that they will provide valuable information to our shareholders. We hope you will find these additional disclosures beneficial and easy to understand.

On behalf of ING Funds, I thank you for your continued support and confidence and look forward to serving you in 2005 and beyond.

Sincerely,

James M. Hennessy
President
ING Funds
January 25, 2005

JAMES M. HENNESSY

1


MARKET PERSPECTIVE: SIX MONTHS ENDED NOVEMBER 30, 2004

Two months prior to the start of our fiscal year, the economic outlook had changed radically. On April 2, 2004, a very bullish U.S. employment report had sparked a few days of euphoria that vanished as it became clear that as the job market tightens, inflation picks up and rising interest rates cannot be far away. This was followed up with another strong report in May and by mid-month major stock and bond markets had negative returns for 2004. Markets were off their lows as we started our half year and in this period, as we shall see below, sentiment would undergo two more major reversals, accompanied by record-breaking market movements.

Global equities added 9.0% from the end of May through November according to the Morgan Stanley Capital International ("MSCI") World Index(1) in dollars including net dividends, just under half due to dollar weakness. Among currencies, the euro, yen and pound all gained on the dollar, although the pendulum swung back and forth. Ultimately, the dollar succumbed to record U.S. trade deficits, and latterly, to fears that non-U.S. investors might diversify out of U.S. financial assets. By the end of November 2004, the euro had gained 8.9% and a new all time record against the dollar. The yen rose 6.2% to a level not seen since early 2000, while the pound stood 4.2% higher at a remarkable 12-year peak. On a trade-weighted basis, the dollar plumbed 9-year lows.

Investment grade U.S. fixed income classes initially bore the brunt of fears of a new cycle of rising interest rates from multi-decade low levels, as evidence mounted that inflation was on the rise. In the six months ended November 30, 2004, the Federal Open Market Committee (FOMC) would increase the Federal Reserves Funds rate four times to 2.0%, even as the economy clearly decelerated again. During this time, the total return of the Lehman Brothers Aggregate Bond Index(2) of investment grade bonds was 3.8%. High yield bonds fared comparatively well, the Lehman Brothers U.S. Corporate High Yield Bond Index(3) returning 9.6% for the six months. In a similar vein there was a notable flattening of the yield curve, as short-term interest rates marched up in anticipation of continued monetary tightening, while bond yields ignored this and fell in the face of mostly tame economic data. For the six months, the yield on 10-year Treasury Notes fell by 30 basis points to 4.4%, but the yield on 13-week Treasury Bills rose 113 basis points to 2.2%.

The U.S. equities market in the form of the Standard & Poor's ("S&P") 500 Index(4) rose 5.7% including dividends in the six months ended November 30, 2004. At that point the market was trading at a price to earnings ("P/E") level of just under 16 times 2005 estimated earnings. As mentioned above, strong monthly employment reports from April 2004 set the tone. After an initial scare about the rise in interest rates that this implied, investors regained their nerve and as the Federal Reserve embarked on its tightening cycle at the end of June the market was challenging its best levels of 2004. And yet in the week before the increase the wind seemed to shift again with some unexpectedly downbeat economic releases. From July through October 2004, the employment reports were neutral to shockingly weak, while oil prices continued their rise, peaking on Friday, October 22 at 41% above end of May 2004 levels. This effective deflationary "tax" on worldwide consumers troubled equity markets, and the S&P 500 Index reached its lowest point of 2004 on August 12. From there, however, oil prices retreated by 13% and that, combined with a clear election result, perceived to be business and shareholder friendly, plus a new, powerful employment report, caused sentiment to shift yet again. By the end of November, the S&P 500 Index had breached levels not seen since before September 11, 2001, bolstered by an upward revision to third quarter gross domestic product ("GDP") growth to 3.9%.

In international equities markets, for the six months ended November 30, 2004, Japan rose 4.8% in dollars, according to the MSCI Japan Index(5) with net dividends, but fell 2.6% in yen. At that point, stocks were trading at nearly 16 times 2005 estimated earnings. Initially encouraged by surprisingly strong, export led, 6.1% first quarter GDP growth, investors became disillusioned by a likely slow down in China, rising oil prices and a slumping dollar. By the third quarter, GDP growth had fallen to a depressingly flat 0.1%.

Meanwhile, European excluding ("ex") UK markets gained 15.5% in dollars, about five-eighths due to dollar weakness, according to the MSCI Europe ex UK Index(6) with net dividends. In local currency terms, the region's markets reached a 28-month high during November 2004, and were then trading on average at just over 13 times 2005 estimated earnings. Growth in this region is held back by weak domestic demand, restrained by 8.9% unemployment in inflexible labor markets. This region's main attraction is its relative

2


MARKET PERSPECTIVE: SIX MONTHS ENDED NOVEMBER 30, 2004

cheapness; the concern is the fragility of this picture, given its export dependency.

The UK market rose 12.1% in dollars between May and November 2004, based on the MSCI UK Index(7) with net dividends. In pounds, the market rose 7.5%, attaining the highest mark since mid-2002, and traded at about 161/2 times 2005 estimated earnings. Unlike Continental Europe, the UK economy strains at full employment, with over-committed, property owning consumers, enriched (at least in their own minds), by a housing price bubble. The Bank of England has been trying, with five interest rate increases since November 2003, to cool demand and by the end of November seemed to be succeeding.

(1)  The MSCI World Index measures the performance of over 1,400 securities listed on exchanges in the United States, Europe, Canada, Australia, New Zealand and the Far East.

(2)  The Lehman Brothers Aggregate Bond Index is composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment.

(3)  The Lehman Brothers U.S. Corporate High Yield Bond Index is generally representative of corporate bonds rated below investment-grade.

(4)  The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

(5)  The MSCI Japan Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan.

(6)  The MSCI Europe ex UK Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe, excluding the UK.

(7)  The MSCI UK Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK.

All indices are unmanaged and investors cannot invest directly in an index.

Past performance does not guarantee future results. The performance quoted represents past performance. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The Funds' performance is subject to change since the period's end and may be lower or higher than the performance data shown. Please call (800) 992-0180 or log on to www.ingfunds.com to obtain performance data current to the most recent month end.

Market Perspective reflects the views of the Chief Investment Risk Officer only through the end of the period, and is subject to change based on market and other conditions.

3


ING DISCIPLINED LARGECAP FUND

PORTFOLIO MANAGERS' REPORT

The ING Disciplined LargeCap Fund (the "Fund") seeks capital appreciation. The Fund is managed by a team of investment professionals led by Hugh T.M. Whelan Sr., CFA, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 7.37% compared to the Standard & Poor's ("S&P") 500 Index(4), which returned 5.67% for the same period.

Portfolio Specifics: Performance benefited from good stock selection. Sector allocation, market timing, and other macro themes played no significant role in the Fund's outperformance of its benchmark.

Relative performance during the first five months of this period was positive, but somewhat restrained. The market headed down going into August weighed by oil's ascent and the beginning of a season full of large events, such as the Olympics and the Democratic and Republican conventions, which were perceived to be prime targets for terrorists. As each potential disaster passed without incident, the market slowly drifted up, until by the end of October it was roughly back to where it had started. Throughout this period, we incrementally added value, especially in the information technology and health care sectors. Stock selection in these sectors was helped by our model's earnings quality and valuation factors. Price momentum and other market recognition factors were detrimental to security selection in these sectors. Security selection during this time was weakest in the financials sector where historically successful factors, such as earnings momentum and earnings surprise, failed to provide positive guidance.

A market catalyst emerged after the election. In November, the S&P 500 Index returned a robust 4.1%, and we generated as much outperformance in November as we did in the preceding five months. The markets seemed to ease its concern over macro fears and concentrate more on individual stock stories. Like the first five months of the reporting period, stock selection within the health care and information technology sectors was particularly successful. However, this time the factors that proved to be the strong indicators of performance were market recognition factors, such as price momentum and analyst estimate revision. Factors that tended not to work as well were those that monitor management behavior, such as capital expenditures intensity. Stock selection in November was weakest in the industrial sector.

For the full six-month performance period, roughly half our outperformance came in November and the other half was spread out over the preceding five months. We had strong stock selection in the health care and information technology sector and weak stock selection in the financial and industrial sectors.

Current Strategy and Outlook: Our strategy going forward is to continue our focus on bottom-up stock selection using the criteria of positive business momentum, valuation, and market recognition. The Fund is overweight in the consumer discretionary and energy sectors and underweight in the industrials and financials sectors. However, our overall sector exposures are a result of our bottom-up stock picking and are by design quite close to the S&P 500 Index so that nearly all of our relative performance is driven by individual stock selection.

The outlook for equities is positive with third calendar quarter earnings hitting seventeen percent and the non-farm payroll report almost double expectations. The Federal Reserve signaled its intentions to continue with its "measured" increase in rates and in November lifted the fed funds rate to 2.00%, still considered to be accommodative. Robust corporate profits, strong jobs numbers and inflation fighting Federal Reserve all bode well for equities.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Exxon Mobil Corp.     3.7 %  
General Electric Co.     3.1 %  
Microsoft Corp.     2.6 %  
Johnson & Johnson     2.5 %  
American International Group, Inc.     2.5 %  
International Business Machines Corp.     2.4 %  
Procter & Gamble Co.     2.1 %  
Citigroup, Inc.     2.0 %  
Wal-Mart Stores, Inc.     2.0 %  
Pfizer, Inc.     1.9 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

4


PORTFOLIO MANAGERS' REPORT

ING DISCIPLINED LARGECAP FUND

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   Since Inception
December 30, 1998		  
Including Sales Charge:      
Class A(1)     6.89 %     (4.45 )%     (1.69 )%  
Class B(2)     7.52 %     (4.40 )%     (1.57 )%  
Class C(3)     11.52 %     (4.01 )%     (1.40 )%  
Excluding Sales Charge:      
Class A     13.41 %     (3.31 )%     (0.70 )%  
Class B     12.52 %     (4.01 )%     (1.40 )%  
Class C     12.52 %     (4.01 )%     (1.40 )%  
S&P 500 Index(4)     12.85 %     (1.84 )%     0.70 %(5)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Disciplined LargeCap Fund against the S&P 500 Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%, respectively, for the 1 year, 5 year and since inception returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(5) Since inception performance for index is shown from
January 1, 1999.

5


ING LARGECAP GROWTH FUND

PORTFOLIO MANAGERS' REPORT

The ING LargeCap Growth Fund (the "Fund") seeks long-term capital appreciation by investing primarily in equity securities of large U.S. companies. The Fund is managed by Andrew J. Shilling, CFA, Senior Vice President, Partner and Equity Portfolio Manager, Wellington Management Company, LLP - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 0.34% compared to the Russell 1000 Growth Index(4) and the Standard & Poor's ("S&P") 500 Index(5), which returned 0.81% and 5.67%, respectively, for the same period.

Portfolio Specifics: The summer of 2004 weakness in equities was a result of investor focus on several concerns: a softening economy, uncertainty over presidential elections, continued violence in Iraq, and worries of potential terrorist strikes during the political conventions or the Olympics. By fall, many of these worries had been mitigated and America remained free of terrorist attacks. The economy seemed to be moving forward despite record high oil prices. Equity markets generally rallied beginning in September, resulting in positive performance for the six month period.

In this volatile environment, the Fund maintained its focus on stock selection. Wireless handheld device maker Research In Motion Ltd., the top positive contributor to absolute Fund returns, benefited from the introduction of an appealing new messaging and communication device and a software agreement with cell phone giant Nokia Corp. Internet media company Yahoo!, Inc. also boosted results on favorable trends for online advertising and paid search, while online auctioneer eBay, Inc., a consumer discretionary stock, rose on strong international growth and accelerating PayPal metrics.

Unfavorable performance from Apollo Group, Inc. and a handful of health care stocks contributed to the Fund's relative underperformance during the period. Post-secondary educator Apollo Group, Inc., the bottom contributor on a relative basis, declined on negative news flow for the industry and questions regarding its recruitment practices. In the health care sector, pharmaceuticals were generally weak during the period. Of our holdings, Eli Lilly & Co. and AstraZeneca PLC were particularly weak. AstraZeneca PLC's weakness was driven mainly by FDA concerns about negative side effects of Exanta, a blood thinning drug in the company's product pipeline. Drug distributor Cardinal Health, Inc., which was held during the period, was hurt by an investigation of accounting practices.

Current Strategy and Outlook: Though we believe that the economy will exhibit moderate growth over the intermediate term, we are somewhat challenged to aptly forecast the near-term macroeconomic environment. On the one hand, gross domestic product (GDP) rose at a 3.9% annualized rate in the third calendar quarter of 2004, manufacturing indicators continue to show strength, and interest rates are relatively low. On the other hand, employment growth remains somewhat sluggish, the Federal Reserve continues to raise short-term interest rates, and oil prices remain high. Elevated energy prices, particularly if they persist or rise in the coming months, could serve to restrain corporate spending and/or curtail consumer consumption. In this uncertain environment, we continue to emphasize competitively-advantaged, share-gaining industry leaders that should perform well in most economic scenarios. Our strategy is to build a diversified portfolio on a stock-by-stock basis, identifying companies with sustainable strong revenue and cash flow growth.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Research In Motion Ltd.     5.6 %  
Apollo Group, Inc.     5.1 %  
Yahoo!, Inc.     5.1 %  
Countrywide Financial Corp.     4.9 %  
Guidant Corp.     4.6 %  
eBay, Inc.     4.5 %  
Dell, Inc.     4.1 %  
Electronic Arts, Inc.     3.7 %  
AstraZeneca PLC ADR     3.4 %  
First Data Corp.     3.3 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

6


PORTFOLIO MANAGERS' REPORT

ING LARGECAP GROWTH FUND

Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   Since Inception
July 21, 1997		  
Including Sales Charge:      
Class A(1)     3.05 %     (12.05 )%     5.16 %  
Class B(2)     3.64 %     (11.93 )%     5.32 %  
Class C(3)     7.54 %     (11.59 )%     5.31 %  
Excluding Sales Charge:      
Class A     9.34 %     (11.00 )%     6.00 %  
Class B     8.64 %     (11.58 )%     5.32 %  
Class C     8.54 %     (11.59 )%     5.31 %  
Russell 1000 Growth Index(4)     5.83 %     (8.19 )%     1.24 %(6)  
S&P 500 Index(5)     12.85 %     (1.84 )%     4.44 %(6)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING LargeCap Growth Fund against the Russell 1000 Growth Index and the S&P 500 Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The Russell 1000 Growth Index is an index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.

(5) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(6) Since inception performance for index is shown from August 1, 1997.

7


ING MIDCAP OPPORTUNITIES FUND

PORTFOLIO MANAGERS' REPORT

The ING MidCap Opportunities Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by a team of investment professionals led by Matthew Price, CFA and David Campbell, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 4.98% compared to the Russell MidCap Growth Index(4) and the Russell MidCap Index(5), which returned 5.68% and 11.09%, respectively, for the same period.

Portfolio Specifics: The Fund slightly underperformed the Russell MidCap Growth Index as unfavorable sector allocation was offset by good stock selection. A substantial overweight in the energy sector combined with strong stock selection was a major positive factor, as was the industrial sector where superior stock selection more than offset unfavorable sector allocation. With energy prices likely to settle for a period around the $40 price level, we believe that share prices remain attractive in that sector. The health care sector hurt performance most as asset allocation and poor stock selection united to negatively impact results. Stocks that contributed to performance during the past six months were Harman Intl. Industries, Inc., CACI Intl., Inc., and Adobe Systems, Inc., while Omnicare, Inc., Broadcom Corp., and NBTY, Inc., which were all previously held, performed poorly and detracted from results.

Energy represents the most heavily overweighted sector relative to the Russell MidCap Growth Index, while technology remains as the most underweighted. This is an indication as to where the Fund's managers believe the best earnings growth will be found in 2005. The latter sector was reduced sharply during the past six months as profits were taken in successful investments, while several unsuccessful technology positions were sold. The exposure to health care remains above the benchmark as we believe that following a period of difficult earnings comparisons and potential "headline risk" from new product failures, the sector offers above- average potential. Overall, we believe that the Fund is well positioned for the 2005 investment environment we see ahead.

Current Strategy and Outlook: The stock market seems poised to end 2004 on a positive note. The favorable presidential election outcome (from the market's perspective) and the outlook for stable to declining energy prices over the next few months have enabled investors to focus on the more traditional economic and market metrics: valuation, interest rates, corporate profits and inflation. Given our positive economic outlook for the remainder of 2004 and into 2005, we believe that the market is reasonably valued and able to provide positive returns during the coming year. However, our stock selection process is primarily based on a combination of positive earnings growth, relative price strength and reasonable valuation and, as such, is not dependent upon our market or economic outlook.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Adobe Systems, Inc.     2.1 %  
Harman Intl. Industries, Inc.     2.1 %  
Coach, Inc.     2.1 %  
Mohawk Industries, Inc.     2.0 %  
Avid Technology, Inc.     2.0 %  
Rockwell Automation, Inc.     1.8 %  
Chesapeake Energy Corp.     1.8 %  
St. Jude Medical, Inc.     1.8 %  
CACI Intl., Inc.     1.7 %  
Sonic Corp.     1.7 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

8


PORTFOLIO MANAGERS' REPORT

ING MIDCAP OPPORTUNITIES FUND

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   Since Inception
August 20, 1998		  
Including Sales Charge:  
Class A(1)     0.35 %     (6.11 )%     8.17 %  
Class B(2)     0.67 %     (5.97 )%     8.49 %  
Class C(3)     4.70 %     (5.65 )%     8.42 %  
Excluding Sales Charge:  
Class A     6.48 %     (4.99 )%     9.19 %  
Class B     5.67 %     (5.64 )%     8.49 %  
Class C     5.70 %     (5.65 )%     8.42 %  
Russell MidCap Growth Index(4)     11.40 %     (1.15 )%     8.40 %(6)  
Russell MidCap Index(5)     18.76 %     8.51 %     12.27 %(6)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING MidCap Opportunities Fund against the Russell MidCap Growth Index and the Russell MidCap Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%, respectively, for the 1 year, 5 year and since inception returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The Russell MidCap Growth Index consists of those companies included in the Russell MidCap Index with relatively higher price-to-book ratios and higher forecasted growth values with greater than average growth orientation.

(5) The Russell MidCap Index measures the performance of the 800 smallest companies in the Russell 1000 Index.

(6) Since inception performance for index is shown from September 1, 1998.

9


ING SMALLCAP OPPORTUNITIES FUND

PORTFOLIO MANAGERS' REPORT

The ING SmallCap Opportunities Fund (the "Fund") seeks capital appreciation. The Fund is managed by a team of investment professionals led by Matthew Price, CFA and David Campbell, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 7.81% compared to the Russell 2000 Growth Index(4) and the Russell 2000 Index(5), which returned 7.88% and 12.18%, respectively, for the same period.

Portfolio Specifics: Strong stock selection was able to overcome disappointing results from our sector allocation, providing a return for the six months ended November 30, 2004 that was in line with the Fund's benchmark. The divergence in performance among sectors was very wide during this period. Compared to the benchmark technology experienced very positive results, but these gains were more than offset by disappointing performance in the health care sector. Strong contributors in technology included Cognizant Technology Solutions, Micros Systems, Inc., and Silicon Image, Inc. However, the problems among several small health care-related companies, including previously held Ligand Pharmaceuticals, Martek Biosciences Corp., and Accredo Health, Inc. had a severely negative impact. The energy sector contributed to the favorable results due to a combination of good sector weighting decisions and strong stock selection, including Southwestern Energy Co. Favorable stock selections in the consumer discretionary sector, such as Penn National Gaming, Inc. and Dick's Sporting Goods, Inc., also helped performance. Lack of exposure to the strongly performing materials sector detracted from performance.

The sector weightings remained relatively unchanged during the June to November 2004 period. The consumer discretionary sector is the Fund's largest position and represents a substantial overweighting versus the benchmark. As is often the case in small-cap growth portfolios, consumer discretionary, technology, and health care remain the three largest sectors, representing about 70% of the entire Fund versus about 65% of the benchmark. There is a high level of industry diversification within these sectors, but they remain the growth areas of the economy. On the other hand, industrials are the most heavily underweighted sector in the Fund, where a lack of earnings growth and relative price strength has made security selection challenging.

Current Strategy and Outlook: The stock market seems poised to end 2004 on a positive note. The favorable presidential election outcome (from the market's perspective) and the outlook for stable to declining energy prices over the next few months have enabled investors to focus on the more traditional economic and market metrics: valuation, interest rates, corporate profits, and inflation. Given our positive economic outlook, we believe that the market is reasonably valued and able to provide positive returns during the coming year.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Southwestern Energy Co.     3.0 %  
Shuffle Master, Inc.     2.8 %  
Cognizant Technology Solutions Corp.     2.6 %  
Ishares Russell 2000 Growth Index Fund     2.6 %  
Avid Technology, Inc.     2.5 %  
Amsurg Corp.     2.4 %  
SCP Pool Corp.     2.4 %  
Station Casinos, Inc.     2.3 %  
Inamed Corp.     2.3 %  
Pediatrix Medical Group, Inc.     2.2 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

10


PORTFOLIO MANAGERS' REPORT

ING SMALLCAP OPPORTUNITIES FUND

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   Since Inception
of Class A, B and C
June 5, 1995		  
Including Sales Charge:  
Class A(1)     (3.28 )%     (10.16 )%     7.05 %  
Class B(2)     (3.04 )%     (10.00 )%     6.98 %  
Class C(3)     0.92 %     (9.72 )%     6.96 %  
Excluding Sales Charge:  
Class A     2.62 %     (9.09 )%     7.72 %  
Class B     1.96 %     (9.71 )%     6.98 %  
Class C     1.92 %     (9.72 )%     6.96 %  
Russell 2000 Growth Index(4)     10.83 %     (1.09 )%     6.19 %(6)  
Russell 2000 Index(5)     17.26 %     8.29 %     10.85 %(6)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING SmallCap Opportunities Fund against the Russell 2000 Growth Index and the Russell 2000 Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The Russell 2000 Growth Index measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values.

(5) The Russell 2000 Index consists of the smallest 2,000 companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged Index that measures the performance of 3000 U.S. companies based on total market capitalization.

(6) Since inception performance for index is shown from
June 1, 1995.

11


ING FINANCIAL SERVICES FUND

PORTFOLIO MANAGERS' REPORT

The ING Financial Services Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by a team of investment professionals led by Steven L. Rayner, CFA, CPA, Vice President and Portfolio Manager and Robert M. Kloss, Vice President and Portfolio Manager, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 6.70% compared to the Standard & Poor's ("S&P") Financials Index(3) and the S&P 500 Index(4), which returned 4.36% and 5.67%, respectively, for the same period.

Portfolio Specifics: We continued to bias our positioning of the portfolio toward "offensive" holdings during this period, favoring stocks that we believed would benefit on a relative basis from a strengthening economy and would tend to be less vulnerable to a higher interest rate environment that often follows more robust economic growth.

This proved to be an effective strategy overall, though we had to work through a challenging summer and early fall period characterized by oil-price-induced questions about the sustainability of the economic recovery. The Fund was able to outperform its benchmark for the period, and at the time of this writing, we remain committed to our offensive stance, as the domestic economy moves forward and the Federal Reserve ("Fed") continues its measured pace of interest rate increases.

Stock selection rather than allocation to financial industry groups was the source of most of the relative gain, and we were able to add value through stock selection in each of the three main groups: banks, diversified financials, and Insurance. AIG was a benefit to performance and Bank of America a detractor because we were under- and over-weight, respectively, in these stocks. Among the specific stocks that were significant contributors to performance during the six months ended November 30, 2004 were: asset managers Affiliated Managers Group, Franklin Resources, and T. Rowe Price; subprime home equity lender Accredited Home Lenders; banks Prosperity Bancshares and Bank of America; and internet broker E*Trade Financial.

Conversely, our holdings of multiline insurers American Intl. Group and Hartford Financial Services Group suffered due to their involvement in the insurance brokerage scandal, though we continue to hold stakes in both firms as of this writing, believing further downside to be limited.

Current Strategy and Outlook: In our last commentary six months ago, we expressed our conviction that higher interest rates were coming. So far, the Fed has done its part to increase short-term rates, boosting Fed funds from 1.00% in May to 2.25% in December 2004. However, while long-term rates have gyrated a bit during the period, they generally remained in the 4% range.

This flatter yield curve could be a potential negative for interest-spread-driven financials such as banks. As such, we are maintaining our underweight position in the banking sub-sector. But we must point out that the prospect of higher rates is not an automatic negative for financial stocks - there are many companies in our universe that will actually benefit from moderately higher rates. Further, higher rates do not occur in a vacuum; they are typically a result of strong economic growth, which would benefit the earnings of a substantial portion of our universe. That said, we do not foresee the kind of precipitous rise in interest rates that would likely be a major negative for the market as a whole including most of the financial universe.

We have, therefore, maintained our offensive bias in the portfolio, though we are cognizant of the need to maintain valuation discipline in the face of rising equity prices.

We continue to focus on finding what we believe to be the best relative values among companies leveraged to an economic recovery, as opposed to those whose earnings outlook might prove disappointing in a higher rate environment.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Citigroup, Inc.     5.8 %  
Wells Fargo & Co.     4.4 %  
American International Group, Inc.     3.7 %  
Affiliated Managers Group     3.5 %  
JPMorgan Chase & Co.     3.2 %  
Goldman Sachs Group, Inc.     3.2 %  
Freddie Mac     3.0 %  
Morgan Stanley     2.9 %  
Hartford Financial Services Group, Inc.     2.8 %  
U.S. Bancorp     2.7 %  

 

Portfolio holdings are subject to change daily.

12


PORTFOLIO MANAGERS' REPORT

ING FINANCIAL SERVICES FUND

Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   10 Year   Since Inception
of Class B
October 20, 1997		   Since Inception
of Class C
August 25, 2004		   Since Inception
of Class O
September 15, 2004		  
Including Sales Charge:  
Class A(1)     6.31 %     9.05 %     13.19 %     -       -       -    
Class B(2)     6.98 %     9.24 %     -       2.16 %     -       -    
Class C     -       -       -       -       4.55 %     -    
Class O     -       -       -       -       -       3.72 %  
Excluding Sales Charge:  
Class A     12.80 %     10.35 %     17.12 %     -       -       -    
Class B     11.98 %     9.52 %     -       5.73 %     -       -    
Class C     -       -       -       -       5.53 %     -    
Class O     -       -       -       -       -       3.72 %  
S&P 500 Financials Index(3)     11.44 %     5.92 %     17.25 %     7.97 %(5)     2.60 %(6)     3.48 %(7)  
S&P 500 Index(4)     12.85 %     (1.84 )%     11.90 %     5.15 %(5)     6.78 %(6)     5.63 %(7)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Financial Services Fund against the S&P 500 Financials Index and the S&P 500 Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5%, 2% and 1%, respectively, for the 1 year, 5 year and since inception returns.

(3) The S&P 500 Financials Index is a capitalization-weighted index of all stocks designed to measure the performance of the financial sector of the S&P 500 Index.

(4) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(5) Since inception performance for index is shown from November 1, 1997.

(6) Since inception performance for index is shown from September 1, 2004.

(7) Since inception performance for index is shown from October 1, 2004.

13


ING LARGECAP VALUE FUND

PORTFOLIO MANAGERS' REPORT

The ING LargeCap Value Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by Brandes Investment Partners, L.P. - the Sub-Adviser. Brandes' Large Cap Investment Committee is responsible for making the day-to-day investment decisions for the Fund.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 7.05% compared to the Russell 1000 Value Index(4) and the Russell 1000 Index(5), which returned 11.01% and 5.92%, respectively, for the same period.

Portfolio Specifics: While energy prices increased substantially during the period ended November 30, 2004, U.S. economic output continued to expand. In October, as the price of crude oil reached $55 a barrel, the Commerce Department reported that gross domestic product grew at an annualized 3.7% in the third calendar quarter of 2004.

The Federal Reserve raised U.S. interest rates four times, bringing the federal funds rate to 2.0%. In a November statement, the central bank noted that "output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved."

In this environment, U.S. stocks tended to post advances. The Dow Jones Industrial Average(7) gained 3.48%, while the S&P 500 Index(8) climbed 5.67%.

Additionally, the large-cap Russell 1000 Index gained 5.92%, while the small-cap Russell 2000 Index(9) climbed 12.18%, suggesting that returns for large caps trailed returns for small caps during the period. Among large caps, less-expensive "value" stocks tended to outperform their "growth" counterparts. While the Russell 1000 Value Index advanced 11.01%, for example, the Russell 1000 Growth Index(10) gained only 0.81%.

The Fund underperformed the Russell 1000 Value Index, but outperformed the Russell 1000 Index. For the Fund, a majority of holdings posted advances. Gains for positions in industries such as diversified telecom services, oil and gas, and tobacco made the most substantial contributions to returns. Strong performers in these industries included Sprint Corp., El Paso Corp. and Altria Group, Inc.

Returns for holdings in pharmaceuticals were mixed during the period, with Wyeth and Schering-Plough Corp. advancing, while positions such as Merck & Co., Inc. and Pfizer Inc. declined. On a stock-by-stock basis, declines for positions in Merck & Co., Inc., Micron Technology, Inc. and Safeway, Inc. were the most significant detractors from the Fund's performance.

Current Strategy and Outlook: During the period, we sold several positions as their market prices advanced toward our estimate of their fair values. We used the proceeds to purchase shares of new holdings at prices that we consider attractive.

As a result of this buying and selling, many of the Fund's industry exposures shifted. For example, exposure to the insurance industry increased, while exposure to the diversified telecom services industry declined. Keep in mind that the Fund's industry exposures are not the product of top-down forecasts or industry-level analysis, but merely stem from our company-by-company search for compelling investment opportunities.

Overall, we offer no predictions regarding the short-term direction of the stock market, or regarding large-cap U.S. stocks in particular. Instead, we remain focused on purchasing large-cap stocks at discounts to their intrinsic values and holding them until the broader market recognizes their true worth. We believe that this approach will provide patient investors with favorable returns over the long term.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Merck & Co, Inc.     4.0 %  
Schering-Plough Corp.     4.0 %  
Safeway, Inc.     4.0 %  
BellSouth Corp.     3.9 %  
Kroger Co.     3.8 %  
Pfizer, Inc.     3.6 %  
Bristol-Myers Squibb Co.     3.5 %  
Ford Motor Co.     3.5 %  
Albertson's, Inc.     3.5 %  
SBC Communications, Inc.     3.5 %  

 

Portfolio holdings are subject to change daily.

14


PORTFOLIO MANAGERS' REPORT

ING LARGECAP VALUE FUND

  Average Annual Total Returns for the Periods Ended November 30, 2004

            Since Inception
of Class A and Class B
February 2, 2004		   Since Inception
of Class C
February 3, 2004		  
Including Sales Charge:  
Class A(1)             (2.64 )%     -    
Class B(2)             (2.38 )%     -    
Class C(3)             -       2.02 %  
Excluding Sales Charge:  
Class A             3.30 %     -    
Class B             2.62 %     -    
Class C             -       3.02 %  
Russell 1000 Value Index(4)             10.77 %(6)     10.77 %(6)  
Russell 1000 Index(5)             5.51 %(6)     5.51 %(6)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING LargeCap Value Fund against the Russell 1000 Value Index and the Russell 1000 Index. The Indices have no cash in their portfolios, imposes no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

Performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5%.

(3) Reflects deduction of the Class C deferred sales charge of 1%.

(4) The Russell 1000 Value Index measures the performance of those Russell 1000 securities with lower price-to-book ratios and lower forecasted growth values.

(5) The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.

(6) Since inception performance for the index is shown from February 1, 2004.

(7) The Dow Jones Industrial Average is an unmanaged U.S. stock index based on the stock prices of 30 large and actively traded U.S. companies.

(8) 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.

(9) The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3,000 U.S. companies based on total market capitalization.

(10) The Russell 1000 Growth Index measures the performance of the 1,000 largest companies in the Russell 3000 Index with higher price-to-book ratios and higher forecasted growth.

15


ING MAGNACAP FUND

PORTFOLIO MANAGERS' REPORT

The ING MagnaCap Fund (the "Fund") seeks growth of capital, with dividend income as a secondary consideration. The Fund is managed by a team of investment professionals led by William F. Coughlin, CFA, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 7.19% compared to the Russell 1000 Value Index(5) and the Russell 1000 Index(6), which returned 11.01% and 5.92%, respectively, for the same period.

Portfolio Specifics: A combination of sector allocation and disappointing stock selection caused the Fund to underperform its Russell 1000 Value Index benchmark during the past six months. With respect to the Fund's sector allocation, an overweighted position in the poorly performing health care sector had a negative impact on performance as Merck & Co., which was previously held, and Pfizer, Inc. were two of the Fund's worst performing positions. Partially offsetting this weakness, however, was an important overweighting of the energy sector where Apache Corp., Halliburton Co., and ChevronTexaco Corp. made positive contributions. Overall, our holdings in the financial services sector had the most impact on relative results as American Intl. Group, Washington Mutual, Inc. and Morgan Stanley all declined during the period.

There were no major sector changes over the last six months. The largest sector exposure in the Fund remains financial services at approximately 34% of total assets. While this appears to be a relatively high level for a single sector, the Russell 1000 Value Index has a weighting of nearly 33%, so the Fund is relatively in line with its benchmark. Consumer staples continues to the most heavily overweighted sector relative to the benchmark, while technology is the most underweighted. Overall, the Fund's sector weightings have remained sensitive to the weightings of the underlying benchmark as a means of controlling the overall risk and volatility of the Fund's returns.

Current Strategy and Outlook: The stock market seems poised to end 2004 on a positive note. The favorable presidential election outcome (from the market's perspective) and the outlook for stable to declining energy prices over the next few months have enabled investors to focus on the more traditional economic and market metrics: valuation, interest rates, corporate profits, and inflation. Given our positive economic outlook, we believe that the market is reasonably valued and able to provide positive returns during the coming year.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

ChevronTexaco Corp.     3.8 %  
Bank of America Corp.     3.7 %  
General Dynamics Corp.     3.6 %  
Altria Group, Inc.     3.6 %  
Exxon Mobil Corp.     3.4 %  
Wells Fargo & Co.     3.3 %  
Nestle SA ADR     3.1 %  
BP PLC ADR     3.0 %  
Fannie Mae     3.0 %  
Merrill Lynch & Co, Inc.     3.0 %  

 

Portfolio holdings are subject to change daily.

16


PORTFOLIO MANAGERS' REPORT

ING MAGNACAP FUND

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   10 Year   Since Inception
of Class B and M
July 17, 1995		   Since Inception
of Class C
June 1, 1999		  
Including Sales Charge:  
Class A(1)     7.66 %     (2.03 )%     9.08 %     -       -    
Class B(2)     8.40 %     (1.84 )%     -       7.39 %     -    
Class C(3)     12.39 %     (1.55 )%     -       -       (0.86 )%  
Class M(4)     9.69 %     (1.97 )%     -       7.27 %     -    
Excluding Sales Charge:  
Class A     14.23 %     (0.86 )%     9.73 %     -       -    
Class B     13.40 %     (1.55 )%     -       7.39 %     -    
Class C     13.39 %     (1.55 )%     -       -       (0.86 )%  
Class M     13.67 %     (1.27 )%     -       7.68 %     -    
Russell 1000 Value Index(5)     19.67 %     4.68 %     13.58 %     11.92 %(7)     3.75 %  
Russell 1000 Index(6)     12.66 %     (1.30 )%     11.92 %     10.02 %(7)     0.11 %  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING MagnaCap Fund against the Russell 1000 Value Index and the Russell 1000 Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) Reflects deduction of the maximum Class M sales charge of 3.50%.

(5) The Russell 1000 Value Index measures the performance of those Russell 1000 securities with lower price-to-book ratios and lower forecasted growth values.

(6) The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.

(7) Since inception performance for index is shown from August 1, 1995.

17


ING MIDCAP VALUE FUND

PORTFOLIO MANAGERS' REPORT

The ING MidCap Value Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by Brandes Investment Partners, L.P. - the Sub-Adviser. Brandes' Mid Cap Investment Committee is responsible for making the day-to-day investment decisions for the Fund.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 5.85% compared to the Russell MidCap Value Index(4) and the Russell MidCap Index(5), which returned 15.09% and 11.09%, respectively, for the same period.

Portfolio Specifics: While energy prices increased substantially during the period, U.S. economic output continued to expand. In October, as the price of crude oil reached $55 a barrel, the Commerce Department reported that gross domestic product grew at an annualized 3.7% in the third quarter of 2004.

The Federal Reserve raised U.S. interest rates four times, bringing the federal funds rate to 2.0% as of period end. In a November statement, the central bank noted that "output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved."

In this environment, U.S. stocks tended to post advances. The Dow Jones Industrial Average(7) gained 3.48%, while the S&P 500 Index(8) climbed 5.67%.

Additionally, the large-cap Russell 1000 Index(9) gained 5.92% while the Russell Midcap Index climbed 11.09%, suggesting that returns for large caps trailed returns for mid caps during the period. Among mid caps, less-expensive "value" stocks tended to outperform their "growth" counterparts. While the Russell Midcap Value Index advanced 15.09%, for example, the Russell Midcap Growth Index(10) gained only 5.68%.

For the Fund, a majority of holdings posted advances; however, the Fund still underperformed its benchmarks. Gains for positions in the oil and gas, tobacco, and chemicals industries made the most substantial contributions to returns. Strong performers in these industries included El Paso Corp., Loews Corp. - Carolina Group, and RPM International, which was sold during the period.

Returns for positions in the auto components industry were mixed, with Goodyear Tire & Rubber Co. advancing while Visteon Corp. declined. On a stock-by-stock basis, declines for positions in Tommy Hilfiger Corp. and Winn-Dixie Stores, Inc. were the most significant detractors from the Fund's performance.

Current Strategy and Outlook: During the six-month period ended November 30, 2004, we sold several positions as their market prices advanced toward our estimate of their fair values. We used the proceeds to purchase shares of new holdings at prices that we consider attractive.

As a result of this buying and selling, many of the Fund's industry exposures shifted. For example, exposure to the health care providers & services industry increased, while exposure to the chemicals industry declined. Keep in mind that the Fund's industry exposures are not the product of top-down forecasts or industry-level analysis, but merely stem from our company-by-company search for compelling investment opportunities.

Overall, we offer no predictions regarding the short-term direction of the stock market, or regarding mid-cap U.S. stocks in particular. Instead, we remain focused on purchasing mid-cap stocks at discounts to their intrinsic values and holding them until the broader market recognizes their true worth. We believe that this approach will provide patient investors with favorable returns over the long term.

Top Ten Industries
as of November 30, 2004
(as a percent of net assets)*

Agere Systems, Inc.     4.2 %  
Goodyear Tire & Rubber Co.     4.1 %  
UnumProvident Corp.     4.0 %  
Unisys Corp.     4.0 %  
El Paso Corp.     3.4 %  
Synopsys, Inc.     3.4 %  
Tenet Healthcare Corp.     3.3 %  
Visteon Corp.     3.2 %  
Loews Corp.     3.2 %  
3Com Corp.     3.1 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

18


PORTFOLIO MANAGERS' REPORT

ING MIDCAP VALUE FUND

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   Since Inception
of Class A
February 1, 2002		   Since Inception
of Class B and C
February 4, 2002		  
Including Sales Charge:      
Class A(1)     11.78 %     5.86 %     -    
Class B(2)     12.75 %     -       7.00 %  
Class C(3)     16.65 %     -       7.89 %  
Excluding Sales Charge:      
Class A     18.60 %     8.09 %     -    
Class B     17.75 %     -       7.93 %  
Class C     17.65 %     -       7.89 %  
Russell MidCap Value Index(4)     24.23 %     14.59 %     14.59 %(6)  
Russell MidCap Index(5)     18.76 %     11.51 %     11.51 %(6)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING MidCap Value Fund against the Russell MidCap Value Index and the Russell MidCap Index. The Indices are unmanaged and have no cash in their portfolios, imposes no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively for the 1 year and since inception returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The Russell Midcap Value Index is an unmanaged index that measures the performance of Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values.

(5) The Russell MidCap Index measures the performance of the 800 smallest companies in the Russell 1000 Index.

(6) Since inception performance for index is shown from February 1, 2002.

(7) The Dow Jones Industrial Average is an unmanaged U.S. stock index based on the stock prices of 30 large and actively traded U.S. companies.

(8) 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.

(9) The Russell 1000 Index measures the performance of the 1000 largest in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3,000 U.S. companies based on total market capitalization.

(10) The Russell MidCap Growth Index consists of those companies included in the Russell MidCap Index with relatively higher price-to-book ratios and higher forecasted growth values with greater than average growth orientation.

19


ING SMALLCAP VALUE FUND

PORTFOLIO MANAGERS' REPORT

The ING SmallCap Value Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by Brandes Investment Partners, L.P. - the Sub-Adviser. Brandes' Small Cap Investment Committee is responsible for making the day-to-day investment decisions for the Fund.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 6.56% compared to the Russell 2000 Value Index(4) and the Russell 2000 Index(5), which returned 16.35% and 12.18%, respectively, for the same period.

Portfolio Specifics: While energy prices increased substantially during the period, U.S. economic output continued to expand. In October, as the price of crude oil reached $55 a barrel, the Commerce Department reported that gross domestic product grew at an annualized 3.7% in the third calendar quarter of 2004.

The Federal Reserve raised U.S. interest rates four times, bringing the federal funds rate to 2.0% as of period end. In a November statement, the central bank noted that "output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved."

In this environment, U.S. stocks tended to post advances. The Dow Jones Industrial Average(7) gained 3.48%, while the S&P 500 Index(8) climbed 5.67%.

Additionally, the large-cap Russell 1000 Index(9) gained 5.92%, while the small-cap Russell 2000 Index climbed 12.18%, suggesting that returns for large caps trailed returns for small caps during the period. Among small caps, less-expensive "value" stocks tended to outperform their "growth" counterparts. While the Russell 2000 Value Index advanced 16.35%, for example, the Russell 2000 Growth Index(10) gained only 7.88%.

For the Fund, a majority of holdings posted advances; however, the Fund still underperformed its benchmarks. Gains for positions in industries such as household durables, computers and peripherals, and chemicals made the most substantial contributions to returns. Strong performers in these industries included American Greetings Corp., Gateway, Inc., and PolyOne Corp.

Holdings in food & staples retailing and in speciality retail declined. On a stock-by-stock basis, declines for positions in Winn-Dixie Stores, Inc., Tommy Hilfiger Corp., and Interstate Bakeries Corp. - which was sold during the period - were the most significant detractors from the Fund's performance.

Current Strategy and Outlook: During the six-month period ended November 30, 2004, we sold several positions as their market prices advanced toward our estimate of their fair values. We used the proceeds to purchase shares of new holdings at prices that we consider attractive.

As a result of this buying and selling, many of the Fund's industry exposures shifted. For example, exposure to the textiles, apparel & luxury goods industry increased, while exposure to the machinery industry declined. Keep in mind that the Fund's industry exposures are not the product of top-down forecasts or industry-level analysis, but merely stem from our company-by-company search for compelling investment opportunities.

Overall, we offer no predictions regarding the short-term direction of the stock market, or regarding small-cap U.S. stocks in particular. Instead, we remain focused on purchasing small-cap stocks at discounts to their intrinsic values and holding them until the broader market recognizes their true worth. We believe that this approach will provide patient investors with favorable returns over the long term.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Visteon Corp.     3.4 %  
Winn-Dixie Stores, Inc.     3.3 %  
Playtex Products, Inc.     3.3 %  
Payless Shoesource, Inc.     3.1 %  
Wellman, Inc.     3.0 %  
Delta Air Lines, Inc.     3.0 %  
Cincinnati Bell, Inc.     2.9 %  
Kemet Corp.     2.9 %  
Dillard's, Inc.     2.9 %  
Sensient Technologies Corp.     2.8 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

20


ING SMALLCAP VALUE FUND

PORTFOLIO MANAGERS' REPORT

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   Since Inception
of Class A
February 1, 2002		   Since Inception
of Class B
February 4, 2002		   Since Inception
of Class C
February 7, 2002		  
Including Sales Charge:  
Class A(1)     14.97 %     14.58 %     -       -    
Class B(2)     16.07 %     -       16.02 %     -    
Class C(3)     20.09 %     -       -       17.27 %  
Excluding Sales Charge:  
Class A     21.98 %     17.00 %     -       -    
Class B     21.07 %     -       16.83 %     -    
Class C     21.09 %     -       -       17.27 %  
Russell 2000 Value Index(4)     23.71 %     16.04 %     16.04 %(6)     16.04 %(6)  
Russell 2000 Index(5)     17.26 %     11.46 %     11.46 %(6)     11.46 %(6)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING SmallCap Value Fund against the Russell 2000 Value Index and Russell 2000 Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively, for the 1 year and since inception return.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The Russell 2000 Value Index measures the performance of those Russell 2000 securities with lower price-to-book ratios and lower forecasted growth values.

(5) The Russell 2000 Index consists of the smallest 2,000 companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3000 U.S. companies based on total market capitalization.

(6) Since inception performance for index is shown from February 1, 2002.

(7) The Dow Jones Industrial Average is an unmanaged U.S. stock index based on the stock prices of 30 large and actively traded U.S. companies.

(8) 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.

(9) The Russell 1000 Index measures the performance of the 1,000 largest in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3,000 U.S. companies based on total market capitalization.

(10) The Russell 2000 Growth Index measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values.

21


ING CONVERTIBLE FUND

PORTFOLIO MANAGERS' REPORT

The ING Convertible Fund (the "Fund") seeks maximum total return, consisting of capital appreciation and current income. The Fund is managed by a team of investment professionals led by Anuradha Sahai, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 3.89% compared to the Merrill Lynch All Convertibles Excluding Mandatory All Qualities ("ML Convertible") Index(4) and the First Boston Convertible Index(5), which returned 4.13% and 3.79%, respectively, for the same period.

Portfolio Specifics: The Fund slightly underperformed its benchmark index (the "ML Convertible Index") and comparable mutual funds for the six months ended November 30, 2004. The Fund was relatively defensively positioned versus its peer group, as well as the Index at the beginning of the six-month period. The barbell approach adopted earlier in the year, with heavier weights in more defensive bond-like higher income names, along with some equity sensitive names having good fundamentals, helped the Fund participate more during the rallies.

The technology sector was the driver of the majority of the gains in the convertible market due to its heavy weight in the ML Convertible Index. The Fund lagged due to underweighting in this sector versus the benchmark. Slight overweighting and security selection aided the Fund in beating the benchmark handily in the energy sector, which was a strong performing sector in the Fund. Security selection was the major driver of performance in the consumer discretionary, transportation, and health care sectors as well. An overweight sensitivity in the materials sector also benefited performance. This was offset by significant underperformance in telecommunications, due to pronounced underperformance of Primus Telecommunications Group, Inc. (3.750%, due 09/15/10), which the Fund has since sold. The Fund also underperformed in the industrial sector due to a couple of names not meeting third-quarter earnings expectations. We believe the investment thesis for these companies remains intact and that the market has overreacted. Financials were affected negatively due to overexposure to insurers, which were first affected by hurricanes and then by the announcement of investigations into their sales practices.

Current Strategy and Outlook: With the continued redemption of higher interest bond-like convertibles, as well as the continued new issuance of more equity-like convertibles, the convertible market has taken on more equity sensitivity than witnessed in the last couple of years. U.S. economic indicators continue to improve, but we believe that equity market valuations will improve more modestly going into 2005. A weak dollar, combined with relatively high oil prices, could still act as a damper to economic growth going forward. Inflationary fears, along with geopolitical concerns, decrease the visibility for the financial markets going into next year.

As the equity markets have rallied and with spreads tight, the Fund has since shifted from the barbell approach to a more middle of the road stance with most of its weighting in total return convertibles with neither a pure bond-like tilt, nor a pure equity tilt.

In these volatile times, we believe convertible securities are attractive relative to comparable asset classes due to their bond floor downside protection, while providing equity-like upside participation. Despite the fear of higher rates, strong balance sheets and lower default risk should keep bond floors from dropping much. We continue to look for companies across the spectrum that will benefit from a gradually recovering economy as we expect the market will reward companies that typically profit in the recovery part of the cycle. A bottom-up approach, which relies on fundamental analysis and careful security selection within our broader top-down sector positioning strategy, continues to be the foundation for our investment decisions.

Top Ten Industries
as of November 30, 2004
(as a percent of net assets)*

Electronics     3.6 %  
Pharmaceuticals     9.6 %  
Mining     4.3 %  
Telecommunications     6.3 %  
Miscellaneous Manufacturing     3.3 %  
Insurance     9.8 %  
Media     6.0 %  
Healthcare-Services     3.5 %  
Diversified Financial Services     5.7 %  
Oil and Gas     4.7 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

22


ING CONVERTIBLE FUND

PORTFOLIO MANAGERS' REPORT

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   10 Year   Since Inception
of Class B
May 31, 1995		  
Including Sales Charge:  
Class A(1)     0.71 %     1.71 %     11.75 %     -    
Class B(2)     1.09 %     1.99 %     -       11.69 %  
Class C(3)     5.15 %     2.30 %     11.72 %     -    
Excluding Sales Charge:  
Class A     6.85 %     2.92 %     12.42 %     -    
Class B     6.09 %     2.29 %     -       11.69 %  
Class C     6.15 %     2.30 %     11.72 %     -    
ML Convertible Index(4)     8.86 %     4.31 %     10.99 %     10.34 %(6)  
First Boston Convertible Index(5)     8.63 %     4.31 %     10.43 %     9.66 %(6)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Convertible Fund against the ML Convertible Index and the First Boston Convertible Index. The Indicies are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The Merrill Lynch All Convertibles Excluding Mandatory All Quantities Index ("ML Convertible Index") is a market capitalization-weighted index including all non-mandatory domestic corporate convertible securities with at least on overall par of $50 million market value.

(5) The First Boston Convertible Index is an index representing the universe of convertible securities.

(6) Since inception performance for index is shown from June 1, 1995.

23


ING EQUITY AND BOND FUND

PORTFOLIO MANAGERS' REPORT

The ING Equity and Bond Fund (the "Fund") seeks a balance of long-term capital appreciation and current income. The equity portion of the Fund is managed by a team of investment professionals led by James A. Vail, CFA. The bond portion of the Fund is managed by a team of investment professionals led by James B. Kauffmann. Both are with ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 3.12% compared to the Standard & Poor's ("S&P") 500 Index(4), the Lehman Brothers Aggregate Bond Index(5), and a Composite Index (60% S&P 500 Index / 40% Lehman Brothers Aggregate Bond Index), which returned 5.67%, 3.82% and 4.98%, respectively, for the same period.

Portfolio Specifics: Stock selection was the primary reason for the underperformance of the equity portion of the Fund for the six months ended November 30, 2004. Despite being underweight information technology, individual stocks, such as previously held NVIDIA Corp. and Corning, Inc., the Fund encountered company-specific disappointments and negatively impacted performance. Likewise in health care, individual disappointments in biotech and generic pharmaceuticals, specifically Chiron Corp. because of flu vaccine problems and Barr Pharmaceuticals, Inc. and Par Pharmaceuticals, Inc., which was held during the period, due to drug delays, hurt performance.

Performance was aided by our overweight in industrials where demand for a broad array of industrial and heavy duty truck components propelled sales and earnings ahead of expectations. Parker Hannifin Corp., Rockwell Automation, Inc., and Paccar, Inc. all contributed positively to results. The second best supporter of performance was our significant underweight in the consumer staples sector.

Our continuing exposure to emerging markets debt and crossover high yield issues contributed to the outperformance of the fixed income portion of the Fund. The Fund was well positioned for a rising rate environment in which yields of shorter maturities rise more than those of longer maturities. Our underweight in five- and ten-year maturities was particularly beneficial. Overweights in the outperforming securitized sectors -mortgage-backed securities, asset-backed securities, and commercial mortgage-backed securities - also helped. Our underweight in agencies held back performance somewhat.

Overall, our underweight in stocks in favor of cash and bonds detracted from performance.

Current Strategy and Outlook: With domestic gross domestic product and corporate profit growth expected to slow in the quarters ahead, we believe equity returns could also moderate as we go forward. The Fund is positioned for such an environment by stressing later cycle names in the industrial sector that benefit from late cycle corporate spending, such as General Electric Co. and United Technologies Corp. Additionally, we will be seeking individual companies whose particular fundamentals warrant inclusion in the Fund. These would include specialty and discount retailers within the consumer discretionary sector that would benefit from individual company- specific; for example, content providers to a new generation of video games appear ready to outperform. Finally, the Fund will likely maintain its energy exposure since we continue to believe higher relative prices are here to stay and the sector remains attractive.

While the bond market has renewed its focus on the improving economic releases, we do not believe that the yields on shorter maturity Treasuries fully reflect the future pace of economic activity and the rise in a number of inflation measures. Some projections place a neutral overnight rate around 4% or 5%, indicating that monetary policy is still highly accommodative. Tactically, the Fund is short duration in the anticipation of improving domestic economic fundamentals and the potential for increasing inflation and enduring dollar weakness. The Fund is neutral home mortgages, overweight asset-backed and commercial mortgage-backed securities, and underweight the intermediate and front-end of the yield curve, which appear most vulnerable in a tightening cycle. We are also underweight agencies, which had witnessed some regulatory criticism. While stretched valuations in investment-grade credit still warrant caution, credit continues to post positive excess returns. Exposures to emerging markets debt and crossover high yield remain intact.

Top Ten Industries
as of November 30, 2004
(as a percent of net assets)*

Diversified Financial Services     9.2 %  
Whole Loan Collaterized Mortgage Obligation     7.1 %  
Banks     6.7 %  
U.S. Treasury Notes     4.9 %  
Federal Home Loan Mortgage Corporation     4.6 %  
Miscelaneous Manufacturing     4.6 %  
Oil and Gas     4.3 %  
Federal National Mortgage Association     3.9 %  
Chemicals     3.3 %  
Retail     3.0 %  

 

Portfolio holdings are subject to change daily.

24


ING EQUITY AND BOND FUND

PORTFOLIO MANAGERS' REPORT

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   5 Year   10 Year   Since Inception
of Class B
May 31, 1995		  
Including Sales Charge:  
Class A(1)     0.44 %     (0.69 )%     8.28 %     -    
Class B(2)     0.80 %     (0.51 )%     -       7.49 %  
Class C(3)     4.94 %     (0.15 )%     8.22 %     -    
Excluding Sales Charge:  
Class A     6.56 %     0.49 %     8.92 %     -    
Class B     5.80 %     (0.18 )%     -       7.49 %  
Class C     5.94 %     (0.15 )%     8.22 %     -    
S&P 500 Index(4)     12.85 %     (1.84 )%     11.90 %     10.50 %(7)  
Lehman Brothers Aggregate Bond Index(5)     4.44 %     7.41 %     7.70 %     6.90 %(7)  
Composite Index (60% S&P 500 Index/40% Lehman Brothers
Aggregate Bond Index)		     9.50 %     2.16 %     10.55 %     9.41 %(7)  
S&P Barra Value Index(6)     18.99 %     2.58 %     12.02 %     10.58 %(7)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Equity and Bond Fund against the S&P 500 Index, Lehman Brothers Aggregate Bond Index, Composite Index and the S&P Barra Value Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(5) The Lehman Brothers Aggregate Bond Index is a widely recognized index of publicly issued fixed rate U.S. government, investment grade mortgage-backed and corporate debt securities.

(6) The S&P Barra Value Index is a capitalization-weighted index of all the stocks in the S&P 500 Index that have low price-to-book ratios.

(7) Since inception performance for index is shown from June 1, 1995.

25


ING REAL ESTATE FUND

PORTFOLIO MANAGERS' REPORT

The ING Real Estate Fund (the "Fund") seeks total return. The Fund is managed by T. Ritson Ferguson, Chief Investment Officer and Kenneth D. Campbell, Managing Director, ING Clarion Real Estate Securities L.P. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class A shares, excluding sales charges, provided a total return of 21.49% compared to the Dow Jones Wilshire ("DJW") Real Estate Securities Index(4), which returned 23.01% for the same period.

Portfolio Specifics: Real estate stocks have continued to deliver good returns to investors. The Fund returned 21.49% and 30.54% net of expenses in the last six and 12 months respectively, which trailed the DJW Real Estate Securities Index return of 23.00% and 31.79% for the same time periods. Real estate investment trusts ("REITs") have outperformed other stocks and bonds in the last year. Over the last six months, the Standard & Poor's ("S&P") 500 Index(9) gained 5.67% and the Lehman Brothers Aggregate Bond Index(10) rose 3.82%. For the year ended November 30, 2004, the S&P 500 Index is up 12.85% and the Lehman Bond Aggregate Bond Index is up 4.44%.

The best returns by sector in the last six months were from the retail (malls and shopping centers), industrial and hotel sectors. Our decision to increase the Fund's weighting to hotels, apartments and industrial in the spring of 2004 when evidence of economic growth was becoming more evident has aided performance. We are now overweight in the mall, hotel and apartment sectors reflecting a more positive view of the economy and accelerating earnings growth prospects for these more economically sensitive property types. We have decreased our exposure to the more bond-like health care sector and remain underweight the office sector.

Real estate stocks have rebounded sharply since April's double-digit decline. The market has adjusted to an expectation of measured increases in short-term interest rates over time as the Federal Reserve reacts appropriately to an improving U.S. economy. Importantly, investors have also realized that REITs can prosper in an environment of slowly rising rates if the economic setting is conducive to better real estate fundamentals and improved earnings prospects for the owners of real estate assets.

The Fund's underperformance for the year as a whole traced to the third quarter when we lost nearly 1% alone from the General Growth Properties, Inc. acquisition of Rouse Co. for a 33% premium. We owned the acquirer but not the acquiree.

Current Strategy and Outlook: With growing evidence that the U.S. economic recovery is gaining strength, the outlook for real estate fundamentals appears to be improving. We look for the earnings growth rate for REITs to nearly double from 4% in 2004 to almost 8% in 2005. Positive earnings growth is expected in every property sector next year. The improving earnings outlook should help offset the impact of higher interest rates on REIT stock prices.

REIT valuations are above long-term averages reflecting optimism for the sector. At month end, REIT valuations were roughly 12% higher than our estimate of Net Asset Value (NAV). Prices represented a 14.2 multiple of forward cash earnings before depreciation (FFO), which is about 15% above the 12.2 long-term multiple. The average REIT dividend yield is now 4.79%, down almost 90 basis points from 6 months ago. During the same period, the yield on the 10-year Treasury bond has decreased approximately 30 basis points. The average REIT dividend now represents a 43 basis point spread over the yield on the 10-year Treasury bond. The current "spread" is a little below the average spread over the last 20 years which has been approximately 60 basis points. However, it is not unprecedented for REITs to trade at yields less than the 10-year Treasury yield.

Momentum for REITs may continue as funds flows remain strong. According to data from AMG Data Services, dedicated REIT mutual funds have attracted $5.7 billion of new investment this year including $1.75 billion thus far in the fourth calendar quarter of 2004. The positive funds flows to REITs reflects a widespread desire for investors (both institutions and individuals) to increase their allocation to real estate.

REITs offer an attractive source of high current income and as long as new stock issuance remains disciplined, stock prices should improve with earnings growth. For now, we expect REITs, which offer relatively high yields and solid earnings prospects, to retain their appeal to investors, given the alternatives. We believe that REIT investors can still expect reasonable return.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Simon Property Group, Inc.     5.4 %  
Starwood Hotels & Resorts Worldwide, Inc.     5.1 %  
Archstone-Smith Trust     5.0 %  
ProLogis     5.0 %  
Boston Properties, Inc.     5.0 %  
Mills Corp.     4.8 %  
United Dominion Realty Trust, Inc.     4.0 %  
Regency Centers Corp.     3.5 %  
SL Green Realty Corp.     3.5 %  
Vornado Realty Trust     3.5 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

26


ING REAL ESTATE FUND

PORTFOLIO MANAGERS' REPORT

  Average Annual Total Returns for the Periods Ended November 30, 2004

    1 Year   Since Inception
of Class A
December 20, 2002		   Since Inception
of Class B
November 20, 2002		   Since Inception
of Class C
January 17, 2003		   Since Inception
of Class O
September 15, 2004		  
Including Sales Charge:  
Class A(1)     23.03 %     28.78 %     -       -       -    
Class B(2)     24.66 %     -       29.48 %     -       -    
Class C(3)     28.51 %*     -       -       34.64 %     -    
Class O     -       -       -       -       13.12 %  
Excluding Sales Charge:  
Class A     30.54 %*     32.75 %     -       -       -    
Class B     29.66 %*     -       30.60 %     -       -    
Class C     29.51 %*     -       -       34.64 %     -    
Class O     -       -       -       -       13.12 %  
Dow Jones Wilshire Real Estate Securities Index(4)     31.82 %     33.95 %(5)     33.30 %(6)     37.96 %(7)     10.37 %(8)  

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Real Estate Fund against the Dow Jones Wilshire Real Estate Securities Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

* Performance was attributed to highly favorable conditions. Please be advised that such conditions may not continue to exist and such performance may not be repeated in the future.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) Reflects deduction of the maximum Class A sales charge of 5.75%.

(2) Reflects deduction of the Class B deferred sales charge of 5% and 4%, respectively, for the 1 year and since inception returns.

(3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return.

(4) The Dow Jones Wilshire Real Estate Securities Index measures the performance of publicly traded real estate securities, such as Real Estate Investment Trusts (REITs) and Real Estate Operating Companies (REOCs). The Index is capitalization-weighted.

(5) Since inception for the index is shown from January 1, 2003.

(6) Since inception for the index is shown from December 1, 2002.

(7) Since inception for the index is shown from February 1, 2003.

(8) Since inception for the index is shown from October 1, 2004.

(9) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(10) The Lehman Brothers Aggregated Bond Index is a widely recognized index of publicly issued fixed rate U.S. government investment grade mortgage-backed and corporate debt securities.

27


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED)

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution [and/or service] (12b–1) fees; and other Fund expenses. These Examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from June 1, 2004 to November 30, 2004.

Actual Expenses

The first section of the table shown, "Actual Fund Return," provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second section of the table shown, "Hypothetical 5% Return," provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the hypothetical lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

ING Disciplined LargeCap Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,073.70       1.36 %   $ 7.07    
Class B     1,000.00       1,069.50       2.06       10.69    
Class C     1,000.00       1,069.50       2.06       10.69    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,018.15       1.36 %   $ 6.88    
Class B     1,000.00       1,014.74       2.06       10.40    
Class C     1,000.00       1,014.64       2.06       10.40    

 

*   Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

28


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED) (CONTINUED)

ING LargeCap Growth Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,003.40       1.45 %   $ 7.28    
Class B     1,000.00       1,000.40       2.10       10.53    
Class C     1,000.00       999.90       2.10       10.53    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,018.90       1.45 %   $ 7.33    
Class B     1,000.00       1,015.14       2.10       10.61    
Class C     1,000.00       1,015.14       2.10       10.61    
ING MidCap Opportunities Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,049.80       1.75 %   $ 8.99    
Class B     1,000.00       1,045.70       2.45       12.56    
Class C     1,000.00       1,046.00       2.45       12.57    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,016.34       1.75 %   $ 8.85    
Class B     1,000.00       1,012.84       2.45       12.36    
Class C     1,000.00       1,012.78       2.45       12.36    
ING SmallCap Opportunities Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,078.10       1.72 %   $ 8.96    
Class B     1,000.00       1,074.60       2.42       12.59    
Class C     1,000.00       1,074.80       2.42       12.59    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,016.44       1.72 %   $ 8.69    
Class B     1,000.00       1,013.09       2.42       12.21    
Class C     1,000.00       1,012.99       2.42       12.21    

 

*   Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

29


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED) (CONTINUED)

ING Financial Services Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,067.00       1.17 %   $ 6.06    
Class B     1,000.00       1,063.70       1.92       9.93    
Class C     1,000.00       1,055.30       1.92       9.89    
Class O     1,000.00       1,037.20       1.13       5.77    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,019.20       1.17 %   $ 5.92    
Class B     1,000.00       1,015.44       1.92       9.70    
Class C     1,000.00       1,016.39       1.92       9.70    
Class O     1,000.00       1,019.40       1.13       5.72    
ING LargeCap Value Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,070.50       1.45 %   $ 7.53    
Class B     1,000.00       1,065.70       2.20       11.39    
Class C     1,000.00       1,065.50       2.20       11.39    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,017.90       1.45 %   $ 7.33    
Class B     1,000.00       1,014.04       2.20       11.11    
Class C     1,000.00       1,014.04       2.20       11.11    
ING MagnaCap Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,071.90       1.16 %   $ 6.02    
Class B     1,000.00       1,067.60       1.86       9.64    
Class C     1,000.00       1,068.70       1.86       9.65    
Class M     1,000.00       1,069.60       1.61       8.35    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,019.25       1.16 %   $ 5.87    
Class B     1,000.00       1,015.74       1.86       9.40    
Class C     1,000.00       1,015.74       1.86       9.40    
Class M     1,000.00       1,017.00       1.61       8.14    

 

*   Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

30


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED) (CONTINUED)

ING MidCap Value Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,058.50       1.68 %   $ 8.67    
Class B     1,000.00       1,054.70       2.43       12.52    
Class C     1,000.00       1,054.70       2.43       12.52    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,016.65       1.68 %   $ 8.49    
Class B     1,000.00       1,012.89       2.43       12.26    
Class C     1,000.00       1,012.89       2.43       12.26    
ING SmallCap Value Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,065.60       1.72 %   $ 8.91    
Class B     1,000.00       1,061.20       2.47       12.76    
Class C     1,000.00       1,061.30       2.47       12.76    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,016.44       1.72 %   $ 8.69    
Class B     1,000.00       1,012.68       2.47       12.46    
Class C     1,000.00       1,012.68       2.47       12.46    
ING Convertible Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,038.90       1.41 %   $ 7.21    
Class B     1,000.00       1,035.20       2.06       10.51    
Class C     1,000.00       1,035.60       2.06       10.51    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,018.00       1.41 %   $ 7.13    
Class B     1,000.00       1,014.74       2.06       10.40    
Class C     1,000.00       1,014.74       2.06       10.40    

 

*   Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

31


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED) (CONTINUED)

ING Equity and Bond Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,031.20       1.60 %   $ 8.15    
Class B     1,000.00       1,028.40       2.25       11.44    
Class C     1,000.00       1,028.50       2.25       11.44    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,017.05       1.60 %   $ 8.09    
Class B     1,000.00       1,013.79       2.25       11.36    
Class C     1,000.00       1,013.79       2.25       11.36    
ING Real Estate Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the Six
Months Ended
November 30, 2004*		  
Actual Fund Return  
Class A   $ 1,000.00     $ 1,214.90       1.24 %   $ 6.89    
Class B     1,000.00       1,211.90       1.99       11.03    
Class C     1,000.00       1,211.00       1.99       11.03    
Hypothetical (5% return before expenses)  
Class A   $ 1,000.00     $ 1,019.45       1.24 %   $ 6.28    
Class B     1,000.00       1,015.64       1.99       10.05    
Class C     1,000.00       1,015.64       1.99       10.05    

 

*   Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

32


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

    ING
Disciplined
LargeCap
Fund		   ING
LargeCap
Growth
Fund		   ING
MidCap
Opportunities
Fund		   ING
SmallCap
Opportunities
Fund		  
ASSETS:  
Investments in securities at value+*   $ 49,434,365     $ 315,413,674     $ 413,429,678     $ 228,793,610    
Short-term investments at amortized cost     379,129       34,202,610       43,961,923       39,670,466    
Repurchase agreement     902,000       -       9,091,000       1,592,000    
Cash     316       7,328,269       659       209    
Cash collateral for futures     48,000       -       -       -    
Receivables:  
Investment securities sold     -       640,838       4,048,270       2,647,490    
Fund shares sold     2,737       400,360       50,220       13,201    
Dividends and interest     242,755       1,054,628       59,492       32,236    
Prepaid expenses     23,848       33,613       30,104       19,893    
Total assets     51,033,150       359,073,992       470,671,346       272,769,105    
LIABILITIES:  
Payable for investment securities purchased     -       2,565,568       2,150,005       -    
Payable for fund shares redeemed     62,059       268,303       475,779       265,376    
Payable for futures variation margin     1,425       -       -       -    
Payable upon receipt of securities loaned     379,129       34,202,610       43,961,923       39,670,466    
Payable to affiliates     71,831       443,812       728,712       317,098    
Payable for trustee     5,808       11,700       20,795       11,821    
Other accrued expenses and liabilities     138,504       425,136       680,681       254,695    
Total liabilities     658,756       37,917,129       48,017,895       40,519,456    
NET ASSETS   $ 50,374,394     $ 321,156,863     $ 422,653,451     $ 232,249,649    
NET ASSETS WERE COMPRISED OF:  
Paid-in capital   $ 92,502,045     $ 665,445,578     $ 588,588,790     $ 504,183,821    
Undistributed net investment income
(accumulated net investment loss or 
distributions in excess)		     112,247       (9,331,502 )     (3,768,195 )     (2,050,927 )  
Accumulated net realized loss on investments
and futures		     (46,642,783 )     (391,028,796 )     (255,561,411 )     (346,789,092 )  
Net unrealized appreciation on investments
and futures		     4,402,885       56,071,583       93,394,267       76,905,847    
NET ASSETS   $ 50,374,394     $ 321,156,863     $ 422,653,451     $ 232,249,649    
+ Including securities loaned at value   $ 369,244     $ 33,248,005     $ 42,247,835     $ 38,383,888    
* Cost of investments in securities   $ 45,032,128     $ 259,342,091     $ 320,035,411     $ 151,887,763    

 

See Accompanying Notes to Financial Statements

33


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

    ING
Disciplined
LargeCap
Fund		   ING
LargeCap
Growth
Fund		   ING
MidCap
Opportunities
Fund		   ING
SmallCap
Opportunities
Fund		  
Class A:      
Net Assets   $ 5,087,825     $ 110,029,149     $ 127,958,230     $ 105,312,124    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     536,986       6,233,223       10,104,307       4,335,379    
Net asset value and redemption price per share   $ 9.47     $ 17.65     $ 12.66     $ 24.29    
Maximum offering price per share (5.75%)(1)    $ 10.05     $ 18.73     $ 13.43     $ 25.77    
Class B:      
Net Assets   $ 31,295,544     $ 115,070,783     $ 168,987,832     $ 60,704,615    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     3,445,103       6,701,823       13,937,341       2,718,854    
Net asset value and redemption price per share(2)    $ 9.08     $ 17.17     $ 12.12     $ 22.33    
Maximum offering price per share   $ 9.08     $ 17.17     $ 12.12     $ 22.33    
Class C:      
Net Assets   $ 13,986,491     $ 52,989,337     $ 117,912,829     $ 53,120,315    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     1,539,823       3,096,325       9,773,132       2,384,367    
Net asset value and redemption price per share(2)    $ 9.08     $ 17.11     $ 12.06     $ 22.28    
Maximum offering price per share   $ 9.08     $ 17.11     $ 12.06     $ 22.28    
Class I:      
Net Assets   $ 4,534     $ 37,838,639     $ 2,985,670     $ 12,792,928    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     469       2,078,840       230,208       520,134    
Net asset value and redemption price per share   $ 9.67     $ 18.20     $ 12.97     $ 24.60    
Maximum offering price per share   $ 9.67     $ 18.20     $ 12.97     $ 24.60    
Class Q:      
Net Assets     n/a     $ 5,228,955     $ 4,808,890     $ 319,667    
Shares authorized     n/a       unlimited       unlimited       unlimited    
Par value     n/a     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     n/a       288,779       375,977       13,082    
Net asset value and redemption price per share     n/a     $ 18.11     $ 12.79     $ 24.44    
Maximum offering price per share     n/a     $ 18.11     $ 12.79     $ 24.44    

 

(1)  Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

(2)  Redemption price per share may be reduced for any applicable contingent deferred sales charges.

See Accompanying Notes to Financial Statements

34


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

    ING
Financial
Services
Fund		   ING
LargeCap
Value
Fund		  
ING
MagnaCap
Fund		   ING
MidCap
Value
Fund		  
ASSETS:      
Investments in securities at value+*   $ 308,720,509     $ 31,797,838     $ 376,239,011     $ 161,733,891    
Short-term investments at amortized cost     -       -       -       25,264,576    
Repurchase agreement     7,334,000       -       2,837,000       -    
Cash     677       2,240,220       158       8,031,901    
Receivables:  
Fund shares sold     48,090       224,487       677       1,666,826    
Dividends and interest     405,213       48,249       942,827       242,279    
Prepaid expenses     31,394       47,773       30,747       18,480    
Reimbursement due from manager     -       27,466       -       -    
Total assets     316,539,883       34,386,033       380,050,420       196,957,953    
LIABILITIES:      
Payable for investment securities purchased     120,917       1,581,306       -       3,452,746    
Payable for fund shares redeemed     320,935       484       185,500       156,178    
Payable upon receipt of securities loaned     -       -       -       25,264,576    
Payable to affiliates     334,011       40,871       357,735       250,102    
Payable for trustee fees     21,026       1,157       58,030       1,754    
Other accrued expenses and liabilities     429,722       77,179       487,410       61,487    
Total liabilities     1,226,611       1,700,997       1,088,675       29,186,843    
NET ASSETS   $ 315,313,272     $ 32,685,036     $ 378,961,745     $ 167,771,110    
NET ASSETS WERE COMPRISED OF:      
Paid-in capital   $ 254,309,232     $ 31,290,950     $ 377,253,427     $ 163,835,217    
Undistributed net investment income
(accumulated net investment loss)		     148,366       (37,850 )     (274,550 )     (471,989 )  
Accumulated net realized gain (loss) on investments     837,466       356,858       (71,632,059 )     3,160,044    
Net unrealized appreciation on investments     60,018,208       1,075,078       73,614,927       1,247,838    
NET ASSETS   $ 315,313,272     $ 32,685,036     $ 378,961,745     $ 167,771,110    
+ Including securities loaned at value   $ -     $ -     $ -     $ 23,864,087    
* Cost of investments in securities   $ 248,702,301     $ 30,722,760     $ 302,128,558     $ 160,486,053    

 

See Accompanying Notes to Financial Statements

35


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

    ING
Financial
Services
Fund		   ING
LargeCap
Value
Fund		   ING
MagnaCap
Fund		   ING
MidCap
Value
Fund		  
Class A:  
Net Assets   $ 193,057,028     $ 14,422,617     $ 315,708,153     $ 76,288,758    
Shares authorized     unlimited       unlimited       80,000,000       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     8,798,157       1,415,224       28,996,894       6,745,688    
Net asset value and redemption price per share   $ 21.94     $ 10.19     $ 10.89     $ 11.31    
Maximum offering price per share (5.75%)(1)    $ 23.28     $ 10.81     $ 11.55     $ 12.00    
Class B:  
Net Assets   $ 121,424,457     $ 6,789,543     $ 46,213,724     $ 43,156,840    
Shares authorized     unlimited       unlimited       80,000,000       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     5,599,238       668,022       4,376,450       3,875,209    
Net asset value and redemption price per share(2)    $ 21.69     $ 10.16     $ 10.56     $ 11.14    
Maximum offering price per share   $ 21.69     $ 10.16     $ 10.56     $ 11.14    
Class C:  
Net Assets   $ 2,682     $ 8,807,918     $ 9,970,068     $ 46,159,703    
Shares authorized     unlimited       unlimited       20,000,000       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     124       866,836       943,545       4,145,661    
Net asset value and redemption price per share(2)    $ 21.59     $ 10.16     $ 10.57     $ 11.13    
Maximum offering price per share   $ 21.59     $ 10.16     $ 10.57     $ 11.13    
Class I:  
Net Assets     n/a     $ 2,664,958     $ 2,271,718     $ 2,145,009    
Shares authorized     n/a       unlimited       50,000,000       unlimited    
Par value     n/a     $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     n/a       261,620       209,911       187,674    
Net asset value and redemption price per share     n/a     $ 10.19     $ 10.82     $ 11.43    
Maximum offering price per share     n/a     $ 10.19     $ 10.82     $ 11.43    
Class M:  
Net Assets     n/a       n/a     $ 4,798,082       n/a    
Shares authorized     n/a       n/a       5,000,000       n/a    
Par value     n/a       n/a     $ 0.00       n/a    
Shares outstanding     n/a       n/a       443,215       n/a    
Net asset value and redemption price per share     n/a       n/a     $ 10.83       n/a    
Maximum offering price per share     n/a       n/a     $ 10.83       n/a    
Class O:  
Net Assets   $ 829,105       n/a       n/a       n/a    
Shares authorized     unlimited       n/a       n/a       n/a    
Par value   $ 0.00       n/a       n/a       n/a    
Shares outstanding     37,857       n/a       n/a       n/a    
Net asset value and redemption price per share   $ 21.90       n/a       n/a       n/a    
Maximum offering price per share   $ 21.90       n/a       n/a       n/a    
Class Q:  
Net Assets     n/a       n/a       n/a     $ 20,800    
Shares authorized     n/a       n/a       n/a       unlimited    
Par value     n/a       n/a       n/a     $ 0.001    
Shares outstanding     n/a       n/a       n/a       1,842    
Net asset value and redemption price per share     n/a       n/a       n/a     $ 11.29    
Maximum offering price per share     n/a       n/a       n/a     $ 11.29    

 

(1)  Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

(2)  Redemption price per share may be reduced for any applicable contingent deferred sales charges.

See Accompanying Notes to Financial Statements

36


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

    ING
SmallCap
Value
Fund		  
ING
Convertible
Fund		  
ING
Equity and Bond
Fund		  
ING
Real Estate
Fund		  
ASSETS:  
Investments in securities at value+*   $ 154,497,494     $ 197,410,504     $ 65,854,178     $ 240,281,035    
Short-term investments at amortized cost     34,093,573       53,943,311       -       9,043,070    
Repurchase agreement     -       1,065,000       3,292,000       -    
Cash     4,310,357       -       7,046       4,772,647    
Cash collateral for futures     -       -       7,131       -    
Foreign currencies at value***     -       388       -       -    
Receivables:  
Investment securities sold     104,555       -       682,795       371,916    
Fund shares sold     1,545,438       59,740       744       18,500    
Dividends and interest     208,077       861,652       333,554       185,499    
Prepaid expenses     17,221       23,646       19,070       39,188    
Total assets     194,776,715       253,364,241       70,196,518       254,711,855    
LIABILITIES:  
Payable for investment securities purchased     1,217,883       -       5,648,348       929,811    
Payable for fund shares redeemed     99,170       495,859       32,672       -    
Payable for futures variation margin     -       -       3,141       -    
Payable upon receipt of securities loaned     34,093,573       53,943,311       -       9,043,070    
Payable to affiliates     272,212       267,805       89,731       224,171    
Payable to custodian     -       4,971       -       -    
Payable for trustee fees     3,265       14,974       4,344       5,041    
Other accrued expenses and liabilities     62,234       217,945       121,592       139,662    
Total liabilities     35,748,337       54,944,865       5,899,828       10,341,755    
NET ASSETS   $ 159,028,378     $ 198,419,376     $ 64,296,690     $ 244,370,100    
NET ASSETS WERE COMPRISED OF:  
Paid-in capital   $ 146,347,901     $ 258,623,990     $ 75,549,304     $ 180,992,251    
Undistributed net investment income
(accumulated net investment loss)		     (419,868 )     789,019       140,828       2,242,494    
Accumulated net realized gain (loss) on
investments, foreign currencies and futures		     2,209,370       (80,098,377 )     (14,866,452 )     2,958,782    
Net unrealized appreciation on investments,
foreign currencies and futures		     10,890,975       19,104,744       3,473,010       58,176,573    
NET ASSETS   $ 159,028,378     $ 198,419,376     $ 64,296,690     $ 244,370,100    
+ Including securities loaned at value   $ 31,965,747     $ 52,558,629     $ -     $ 8,856,992    
* Cost of investments in securities   $ 143,606,519     $ 178,306,148     $ 62,388,209     $ 182,104,462    

 

See Accompanying Notes to Financial Statements

37


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

    ING
SmallCap
Value
Fund		  
ING
Convertible
Fund		  
ING
Equity and Bond
Fund		  
ING
Real Estate
Fund		  
Class A:      
Net Assets   $ 88,102,947     $ 60,615,668     $ 34,189,443     $ 38,487,554    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.00    
Shares outstanding     6,520,546       3,271,384       2,674,821       2,698,366    
Net asset value and redemption price per share   $ 13.51     $ 18.53     $ 12.78     $ 14.26    
Maximum offering price per share (5.75%)(1)    $ 14.33     $ 19.66     $ 13.56     $ 15.13    
Class B:      
Net Assets   $ 26,109,462     $ 66,597,556     $ 17,407,222     $ 3,088,890    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.00    
Shares outstanding     1,966,957       3,264,430       1,262,835       216,073    
Net asset value and redemption price per share(2)    $ 13.27     $ 20.40     $ 13.78     $ 14.30    
Maximum offering price per share   $ 13.27     $ 20.40     $ 13.78     $ 14.30    
Class C:      
Net Assets   $ 44,235,075     $ 68,400,264     $ 12,409,157     $ 3,476,512    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.00    
Shares outstanding     3,335,852       3,600,076       1,017,491       236,663    
Net asset value and redemption price per share(2)    $ 13.26     $ 19.00     $ 12.20     $ 14.69    
Maximum offering price per share   $ 13.26     $ 19.00     $ 12.20     $ 14.69    
Class I:      
Net Assets   $ 514,154       n/a       n/a     $ 195,284,167    
Shares authorized     unlimited       n/a       n/a       unlimited    
Par value   $ 0.00       n/a       n/a     $ 0.00    
Shares outstanding     37,796       n/a       n/a       13,112,275    
Net asset value and redemption price per share   $ 13.60       n/a       n/a     $ 14.89    
Maximum offering price per share   $ 13.60       n/a       n/a     $ 14.89    
Class O:      
Net Assets     n/a       n/a       n/a     $ 4,032,977    
Shares authorized     n/a       n/a       n/a       unlimited    
Par value     n/a       n/a       n/a     $ 0.00    
Shares outstanding     n/a       n/a       n/a       283,008    
Net asset value and redemption price per share     n/a       n/a       n/a     $ 14.25    
Maximum offering price per share     n/a       n/a       n/a     $ 14.25    
Class Q:      
Net Assets   $ 66,740     $ 2,805,888     $ 290,868       n/a    
Shares authorized     unlimited       unlimited       unlimited       n/a    
Par value   $ 0.00     $ 0.00     $ 0.00       n/a    
Shares outstanding     4,872       156,101       22,915       n/a    
Net asset value and redemption price per share   $ 13.70     $ 17.97     $ 12.69       n/a    
Maximum offering price per share   $ 13.70     $ 17.97     $ 12.69       n/a    

 

(1)  Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

(2)  Redemption price per share may be reduced for any applicable contingent deferred sales charges.

See Accompanying Notes to Financial Statements

38


STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)

    ING
Disciplined
LargeCap
Fund		   ING
LargeCap
Growth
Fund		   ING
MidCap
Opportunities
Fund		   ING
SmallCap
Opportunities
Fund		  
INVESTMENT INCOME:  
Dividends, net of foreign taxes withheld*   $ 691,060     $ 1,805,856     $ 807,753     $ 227,471    
Interest     4,425       280       72,014       25,401    
Securities lending income     684       10,762       33,398       45,707    
Other     8,641       -       -       -    
Total investment income     704,810       1,816,898       913,165       298,579    
EXPENSES:  
Investment management fees     234,184       1,172,003       2,110,695       1,086,573    
Distribution and service fees:  
Class A     7,838       184,836       185,922       152,861    
Class B     158,729       567,446       859,197       321,149    
Class C     71,301       257,635       595,408       261,952    
Class Q     -       6,963       5,760       447    
Transfer agent fees:  
Class A     2,409       74,221       87,048       79,035    
Class B     12,043       80,355       116,212       49,945    
Class C     6,603       36,613       87,126       40,772    
Class I     261       5,320       32       668    
Class Q     -       743       55       20    
Administrative service fees     33,455       156,265       367,700       242,224    
Shareholder reporting expense     8,105       27,414       45,600       42,520    
Registration fees     21,390       38,825       51,208       24,604    
Professional fees     5,475       12,977       12,282       12,849    
Custody and accounting expense     6,797       15,298       10,755       16,480    
Trustee fees     1,983       4,657       6,341       8,281    
Miscellaneous expense     21,990       6,733       15,019       9,126    
Total expenses     592,563       2,648,304       4,556,360       2,349,506    
Less:  
Net recouped fees     -       (55,000 )     (125,000 )     -    
Brokerage commission recapture     -       32,660       -       -    
Net expenses     592,563       2,670,644       4,681,360       2,349,506    
Net investment income (loss)     112,247       (853,746 )     (3,768,195 )     (2,050,927 )  
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES:		  
Net realized gain (loss) on:  
Investments     4,559,066       (3,952,007 )     2,749,837       2,980,721    
Futures     (12,554 )     -       -       -    
Net realized gain (loss) on investments
and futures		     4,546,512       (3,952,007 )     2,749,837       2,980,721    
Net change in unrealized appreciation
or depreciation on:		  
Investments     (1,107,879 )     4,474,101       18,335,010       14,797,287    
Futures     (1,077 )     -       -       -    
Net change in unrealized appreciation or
depreciation on investments and futures		     (1,108,956 )     4,474,101       18,335,010       14,797,287    
Net realized and unrealized gain on investments
investments and futures		     3,437,556       522,094       21,084,847       17,778,008    
Increase (decrease) in net assets resulting from
operations		   $ 3,549,803     $ (331,652 )   $ 17,316,652     $ 15,727,081    
* Foreign taxes   $ -     $ 656     $ -     $ -    

 

See Accompanying Notes to Financial Statements

39


STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)

    ING
Financial
Services
Fund		   ING
LargeCap
Value
Fund		  
ING
MagnaCap
Fund		   ING
MidCap
Value
Fund		  
INVESTMENT INCOME:      
Dividends, net of foreign taxes withheld*   $ 2,750,505     $ 246,685     $ 4,540,680     $ 951,578    
Interest     58,755       -       25,519       150    
Securities lending income     -       -       4,382       91,306    
Total investment income     2,809,260       246,685       4,570,581       1,043,034    
EXPENSES:      
Investment management fees     1,166,681       99,146       1,368,733       676,353    
Distribution and service fees:  
Class A     239,023       11,578       465,906       84,150    
Class B     611,318       23,788       243,240       192,338    
Class C     7       31,717       54,872       184,336    
Class M     -       -       18,272       -    
Class O     196       -       -       -    
Class Q     -       -       -       24    
Transfer agent fees:  
Class A     85,841       7,493       98,014       34,814    
Class B     54,934       3,980       15,523       19,788    
Class C     -       5,176       3,493       19,006    
Class I     -       956       14       853    
Class M     -       -       1,553       -    
Class O     49       -       -       -    
Class Q     -       28       -       10    
Administrative service fees     -       11,016       -       72,364    
Shareholder reporting expense     54,082       4,626       23,547       9,876    
Registration fees     26,064       36,481       40,639       23,930    
Professional fees     14,436       3,254       16,285       12,414    
Custody and accounting expense     14,334       2,314       19,905       5,604    
Trustee fees     9,671       1,102       9,006       1,614    
Offering expense     -       50,137       -       -    
Miscellaneous expense     13,490       625       16,565       2,202    
Total expenses     2,290,126       293,417       2,395,567       1,339,676    
Less:  
Net waived and reimbursed (recouped) fees     -       96,134       -       (153,977 )  
Net expenses     2,290,126       197,283       2,395,567       1,493,653    
Net investment income (loss)     519,134       49,402       2,175,014       (450,619 )  
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:		      
Net realized gain (loss) on investments     3,685,735       599,544       (1,812,694 )     8,657,798    
Net change in unrealized appreciation
or depreciation on investments		     15,534,797       1,182,223       25,384,178       (426,989 )  
Net realized and unrealized gain on investments     19,220,532       1,781,767       23,571,484       8,230,809    
Increase in net assets resulting from operations   $ 19,739,666     $ 1,831,169     $ 25,746,498     $ 7,780,190    
* Foreign taxes   $ -     $ -     $ 42,112     $ -    

 

See Accompanying Notes to Financial Statements

40


STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)

    ING
SmallCap
Value
Fund		  
ING
Convertible
Fund		  
ING
Equity and Bond
Fund		  
ING
Real Estate
Fund		  
INVESTMENT INCOME:      
Dividends, net of foreign taxes withheld*   $ 771,846     $ 1,330,249     $ 357,175     $ 4,680,768    
Interest     -       1,955,962       611,485       -    
Securities lending income     134,338       69,737       -       5,047    
Total investment income     906,184       3,355,948       968,660       4,685,815    
EXPENSES:      
Investment management fees     592,957       760,810       248,784       724,287    
Distribution and service fees:  
Class A     85,829       106,825       61,183       31,007    
Class B     110,437       348,467       91,076       12,180    
Class C     174,573       345,930       64,299       14,983    
Class O     -       -       -       883    
Class Q     75       3,691       382       -    
Transfer agent fees:  
Class A     39,421       25,663       19,709       2,174    
Class B     12,621       29,576       10,263       221    
Class C     20,054       29,415       7,192       295    
Class I     162       -       -       12,266    
Class O     -       -       -       159    
Class Q     18       418       143       -    
Administrative service fees     63,098       101,440       33,171       103,469    
Shareholder reporting expense     8,607       57,030       17,751       12,301    
Registration fees     22,427       26,150       23,127       30,867    
Professional fees     4,338       12,613       7,402       13,014    
Custody and accounting expense     2,910       15,718       20,156       7,850    
Trustee fees     1,917       5,555       2,652       2,897    
Miscellaneous expense     2,034       7,643       3,534       27,839    
Total expenses     1,141,478       1,876,944       610,824       996,692    
Less:  
Net recouped fees     (163,241 )     -       (20,000 )     (115,001 )  
Brokerage commission recapture     -       -       -       72,658    
Net expenses     1,304,719       1,876,944       630,824       1,039,035    
Net investment income/(loss)     (398,535 )     1,479,004       337,836       3,646,780    
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FOREIGN CURRENCIES AND
FUTURES:		      
Net realized gain (loss) on:  
Investments     5,255,247       1,064,427       707,649       9,073,434    
Foreign currencies     -       14,642       -       -    
Futures     -       -       (19,674 )     -    
Net realized gain on investments,
foreign currencies and futures		     5,255,247       1,079,069       687,975       9,073,434    
Net change in unrealized appreciation
or depreciation on:		  
Investments     5,652,992       4,393,868       837,028       28,898,993    
Foreign currencies     -       388       -       -    
Futures     -       -       35,819       -    
Net change in unrealized appreciation
or depreciation on investments, foreign
currencies and futures		     5,652,992       4,394,256       872,847       28,898,993    
Net realized and unrealized gain on investments,
foreign currencies and futures		     10,908,239       5,473,325       1,560,822       37,972,427    
Increase in net assets resulting from operations   $ 10,509,704     $ 6,952,329     $ 1,898,658     $ 41,619,207    
* Foreign taxes   $ -     $ -     $ 558     $ -    

 

See Accompanying Notes to Financial Statements

41


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING Disciplined LargeCap Fund   ING LargeCap Growth Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:  
Net investment income (loss)   $ 112,247     $ (196,511 )   $ (853,746 )   $ (2,863,179 )  
Net realized gain (loss) on investments and futures     4,546,512       8,281,222       (3,952,007 )     39,816,143    
Net change in unrealized appreciation or depreciation on
invesments and futures		     (1,108,956 )     4,006,258       4,474,101       18,934,271    
Net increase (decrease) in net assets resulting from
operations		     3,549,803       12,090,969       (331,652 )     55,887,235    
FROM DISTRIBUTIONS TO SHAREHOLDERS:  
Net investment income:  
Class A     -       -       (3,156,967 )     -    
Class B     -       -       (2,693,358 )     -    
Class C     -       -       (1,248,300 )     -    
Class I     -       -       (1,216,755 )     -    
Class Q     -       -       (162,376 )     -    
Total distributions     -       -       (8,477,756 )     -    
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     2,070,186       4,879,672       61,314,036       167,009,595    
Dividends reinvested     -       -       6,728,584       -    
      2,070,186       4,879,672       68,042,620       167,009,595    
Cost of shares redeemed     (31,450,468 )     (23,356,188 )     (64,106,366 )     (70,231,343 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (29,380,282 )     (18,476,516 )     3,936,254       96,778,252    
Net increase (decrease) in net assets     (25,830,479 )     (6,385,547 )     (4,873,154 )     152,665,487    
NET ASSETS:  
Beginning of period     76,204,873       82,590,420       326,030,017       173,364,530    
End of period   $ 50,374,394     $ 76,204,873     $ 321,156,863     $ 326,030,017    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ 112,247     $ -     $ (9,331,502 )   $ -    

 

See Accompanying Notes to Financial Statements

42


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING MidCap Opportunities Fund   ING SmallCap Opportunities Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:  
Net investment loss   $ (3,768,195 )   $ (3,189,037 )   $ (2,050,927 )   $ (5,073,085 )  
Net realized gain on investments     2,749,837       36,005,578       2,980,721       43,684,508    
Net change in unrealized appreciation or depreciation on
investments		     18,335,010       (14,157,412 )     14,797,287       20,950,754    
Net increase in net assets resulting from operations     17,316,652       18,659,129       15,727,081       59,562,177    
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     12,197,998       28,495,626       18,636,682       55,115,680    
Dividends reinvested     -       373,162,486       -       -    
      12,197,998       401,658,112       18,636,682       55,115,680    
Cost of shares redeemed     (70,485,126 )     (127,345,757 )     (54,883,976 )     (140,542,492 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (58,287,128 )     274,312,355       (36,247,294 )     (85,426,812 )  
Net increase (decrease) in net assets     (40,970,476 )     292,971,484       (20,520,213 )     (25,864,635 )  
NET ASSETS:  
Beginning of period     463,623,927       170,652,443       252,769,862       278,634,497    
End of period   $ 422,653,451     $ 463,623,927     $ 232,249,649     $ 252,769,862    
Accumualted net investment loss at end of period   $ (3,768,195 )   $ -     $ (2,050,927 )   $ -    

 

See Accompanying Notes to Financial Statements

43


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING Financial Services Fund   ING LargeCap Value Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   February 2,
2004(1)
to May 31,
2004		  
FROM OPERATIONS:  
Net investment income   $ 519,134     $ 291,940     $ 49,402     $ 5,355    
Net realized gain on investments     3,685,735       30,704,885       599,544       8,982    
Net change in unrealized appreciation or depreciation on
investments		     15,534,797       25,739,724       1,182,223       (107,145 )  
Net increase in net assets resulting from operations     19,739,666       56,736,549       1,831,169       (92,808 )  
FROM DISTRIBUTIONS TO SHAREHOLDERS:  
Net investment income:  
Class A     (653,510 )     (697,897 )     (82,342 )     -    
Class B     -       -       (14,178 )     -    
Class C     (11 )     -       (17,275 )     -    
Class I     -       -       (18,995 )     -    
Class O     (4,300 )     -                    
Net realized gains:  
Class A     (12,401,564 )     (7,418,743 )     (110,882 )     -    
Class B     (7,842,026 )     (5,117,566 )     (52,095 )     -    
Class C     (171 )     -       (67,763 )     -    
Class I     -       -       (20,928 )     -    
Class O     (47,206 )     -       -       -    
Total distributions     (20,948,788 )     (13,234,206 )     (384,458 )     -    
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     9,523,610       17,608,115       21,137,141       11,680,876    
Dividends reinvested     15,284,143       9,519,235       261,534       -    
      24,807,753       27,127,350       21,398,675       11,680,876    
Cost of shares redeemed     (29,041,606 )     (58,848,107 )     (1,284,059 )     (464,359 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (4,233,853 )     (31,720,757 )     20,114,616       11,216,517    
Net increase (decrease) in net assets     (5,442,975 )     11,781,586       21,561,327       11,123,709    
NET ASSETS:  
Beginning of period     320,756,247       308,974,661       11,123,709       -    
End of period   $ 315,313,272     $ 320,756,247     $ 32,685,036     $ 11,123,709    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ 148,366     $ 287,053     $ (37,850 )   $ 45,538    

 

(1)  Commencement of operations

See Accompanying Notes to Financial Statements

44


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING MagnaCap Fund   ING MidCap Value Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:      
Net investment income (loss)   $ 2,175,014     $ 2,960,215     $ (450,619 )   $ (455,900 )  
Net realized gain (loss) on investments     (1,812,694 )     5,922,962       8,657,798       9,538,762    
Net change in unrealized appreciation or depreciation on
invesments		     25,384,178       38,819,962       (426,989 )     9,173,938    
Net increase in net assets resulting from operations     25,746,498       47,703,139       7,780,190       18,256,800    
FROM DISTRIBUTIONS TO SHAREHOLDERS:      
Net investment income:  
Class A     (3,660,545 )     (2,197,417 )     -       -    
Class B     (93,647 )     -       -       -    
Class C     (21,507 )     -       -       -    
Class I     (21,582 )     (112 )     -       -    
Class M     (16,713 )     (4,890 )     -       -    
Class O     -       (42,794 )     -       -    
Net realized gains:  
Class A     -       -       (5,379,868 )     -    
Class B     -       -       (3,140,896 )     -    
Class C     -       -       (3,310,535 )     -    
Class I     -       -       (154,805 )     -    
Class Q                     (1,507 )     -    
Total distributions     (3,813,994 )     (2,245,213 )     (11,987,611 )     -    
FROM CAPITAL SHARE TRANSACTIONS:      
Net proceeds from sale of shares     14,321,548       35,810,247       68,181,104       90,677,565    
Net proceeds from shares issued in merger     -       147,505,028       -       -    
Dividends reinvested     3,316,498       1,940,774       9,165,841       -    
      17,638,046       185,256,049       77,346,945       90,677,565    
Cost of shares redeemed     (41,295,845 )     (80,780,723 )     (33,014,389 )     (20,765,261 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (23,657,799 )     104,475,326       44,332,556       69,912,304    
Net increase (decrease) in net assets     (1,725,295 )     149,933,252       40,125,135       88,169,104    
NET ASSETS:      
Beginning of period     380,687,040       230,753,788       127,645,975       39,476,871    
End of period   $ 378,961,745     $ 380,687,040     $ 167,771,110     $ 127,645,975    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ (274,550 )   $ 1,364,430     $ (471,989 )   $ (21,333 )  

 

See Accompanying Notes to Financial Statements

45


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING SmallCap Value Fund   ING Convertible Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:      
Net investment income (loss)   $ (398,535 )   $ (576,767 )   $ 1,479,004     $ 3,558,967    
Net realized gain on investments and foreign currencies     5,255,247       10,868,528       1,079,069       18,580,712    
Net change in unrealized appreciation or depreciation on
investments and foreign currencies		     5,652,992       8,636,660       4,394,256       5,044,475    
Net increase in net assets resulting from operations     10,509,704       18,928,421       6,952,329       27,184,154    
FROM DISTRIBUTIONS TO SHAREHOLDERS:      
Net investment income:  
Class A     -       -       (931,468 )     (1,433,574 )  
Class B     -       -       (720,738 )     (1,224,775 )  
Class C     -       -       (801,156 )     (1,281,578 )  
Class Q     -       -       (49,687 )     (99,026 )  
Net realized gains:  
Class A     (5,340,181 )     (1,073,901 )     -       -    
Class B     (1,592,895 )     (775,481 )     -       -    
Class C     (2,730,797 )     (949,961 )     -       -    
Class I     (31,243 )     (22,291 )     -       -    
Class Q     (4,047 )     (49 )     -       -    
Total distributions     (9,699,163 )     (2,821,683 )     (2,503,049 )     (4,038,953 )  
FROM CAPITAL SHARE TRANSACTIONS:      
Net proceeds from sale of shares     79,263,566       57,600,625       11,627,954       47,499,407    
Dividends reinvested     7,367,984       2,135,022       1,611,454       2,581,510    
      86,631,550       59,735,647       13,239,408       50,080,917    
Cost of shares redeemed     (23,281,611 )     (12,951,477 )     (32,350,100 )     (53,959,375 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     63,349,939       46,784,170       (19,110,692 )     (3,878,458 )  
Net increase (decrease) in net assets     64,160,480       62,890,908       (14,661,412 )     19,266,743    
NET ASSETS:      
Beginning of period     94,867,898       31,976,990       213,080,788       193,814,045    
End of period   $ 159,028,378     $ 94,867,898     $ 198,419,376     $ 213,080,788    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ (419,868 )   $ (21,333 )   $ 789,019     $ 1,813,063    

 

See Accompanying Notes to Financial Statements

46


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING Equity and Bond Fund   ING Real Estate Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 13,
2004		  
FROM OPERATIONS:  
Net investment income   $ 337,836     $ 692,027     $ 3,646,780     $ 7,739,664    
Net realized gain (loss) on investments and futures     687,975       (791,892 )     9,073,434       18,787,767    
Net change in unrealized appreciation or depreciation on
investments and futures		     872,847       6,008,996       28,898,993       10,691,837    
Net increase in net assets resulting from operations     1,898,658       5,909,131       41,619,207       37,219,268    
FROM DISTRIBUTIONS TO SHAREHOLDERS:  
Net investment income:  
Class A     (217,758 )     (789,960 )     (409,850 )     (327,077 )  
Class B     (42,676 )     (315,822 )     (33,431 )     (35,510 )  
Class C     (42,964 )     (249,621 )     (42,116 )     (77,403 )  
Class I     -       -       (3,183,919 )     (8,236,929 )  
Class Q     (2,104 )     (6,646 )     -       -    
Class O     -       -       (6,743 )     -    
Net realized gains:  
Class A     -       -       (2,268,169 )     (242,273 )  
Class B     -       -       (184,964 )     (30,332 )  
Class C     -       -       (206,851 )     (87,401 )  
Class I     -       -       -       (6,232,489 )  
Class T     -       -       (11,900,609 )     -    
Class O     -       -       (199,400 )     -    
Total distributions     (305,502 )     (1,362,049 )     (18,436,052 )     (15,269,414 )  
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     2,894,753       18,750,762       38,765,916       73,899,420    
Dividends reinvested     232,892       1,011,337       12,832,345       9,979,129    
      3,127,645       19,762,099       51,598,261       83,878,549    
Cost of shares redeemed     (9,905,097 )     (27,110,551 )     (13,582,137 )     (49,590,718 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (6,777,452 )     (7,348,452 )     38,016,124       34,287,831    
Net increase (decrease) in net assets     (5,184,296 )     (2,801,370 )     61,199,279       56,237,685    
NET ASSETS:  
Beginning of period     69,480,986       72,282,356       183,170,821       126,933,136    
End of period   $ 64,296,690     $ 69,480,986     $ 244,370,100     $ 183,170,821    
Undistributed net investment income at end of period   $ 140,828     $ 108,494     $ 2,242,494     $ 2,271,773    

 

See Accompanying Notes to Financial Statements

47


ING DISCIPLINED LARGECAP FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended		               Seven
Months
Ended		   Year
Ended		   December 30,
1998(2) to		  
    November 30,   Year Ended May 31,   May 31,   October 31,   October 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:              
Net asset value, beginning of period   $ 8.82       7.61       8.43       9.87       11.17       11.14       10.00    
Income (loss) from investment operations:      
Net investment income (loss)   $ 0.04       0.01       0.03       0.03       (0.01 )     -       0.01    
Net realized and unrealized gain (loss)
on investments		   $ 0.61       1.20       (0.85 )     (1.47 )     (1.29 )     0.18       1.13    
Total from investment operations   $ 0.65       1.21       (0.82 )     (1.44 )     (1.30 )     0.18       1.14    
Less distributions from:      
Net realized gain from investments   $ -       -       -       -       -       0.15       -    
Total distributions   $ -       -       -       -       -       0.15       -    
Net asset value, end of period   $ 9.47       8.82       7.61       8.43       9.87       11.17       11.14    
Total Return(3)    % 7.37       15.90       (9.73 )     (14.59 )     (11.64 )     1.55       11.40    
Ratios and Supplemental Data:              
Net assets, end of period (000's)   $ 5,088       5,362       7,205       9,883       12,748       23,571       27,091    
Ratios to average net assets:      
Net expenses after expense
reimbursement(4) 		   % 1.36       1.53       1.54       1.33       1.45       1.37       1.29 (5)   
Gross expenses prior to expense                                                          
reimbursement(4)    % 1.36       1.53       1.54       1.33       1.45       1.37       1.56    
Net investment income (loss) after expense
reimbursement(4) 		   % 0.89       0.11       0.32       0.12       (0.13 )     0.01       0.23 (5)   
Portfolio turnover rate   % 79       200       106       149       26       57       26    
    Class B  
    Six Months
Ended		               Seven
Months
Ended		   Year
Ended		   December 30,
1998(2) to		  
    November 30,   Year Ended May 31,   May 31,   October 31,   October 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:              
Net asset value, beginning of period   $ 8.49       7.37       8.23       9.70       11.04       11.09       10.00    
Income (loss) from investment operations:      
Net investment income (loss)   $ 0.01       (0.05 )     (0.03 )     (0.07 )     (0.05 )     (0.08 )     (0.02 )  
Net realized and unrealized gain (loss)
on investments		   $ 0.58       1.17       (0.83 )     (1.40 )     (1.29 )     0.18       1.11    
Total from investment operations   $ 0.59       1.12       (0.86 )     (1.47 )     (1.34 )     0.10       1.09    
Less distributions from:      
Net realized gain from investments   $ -       -       -       -       -       0.15       -    
Total distributions   $ -       -       -       -       -       0.15       -    
Net asset value, end of period   $ 9.08       8.49       7.37       8.23       9.70       11.04       11.09    
Total Return(3)    % 6.95       15.20       (10.45 )     (15.15 )     (12.14 )     0.83       10.90    
Ratios and Supplemental Data:              
Net assets, end of period (000's)   $ 31,296       32,848       34,358       53,185       76,726       94,028       99,249    
Ratios to average net assets:      
Net expenses after expense
reimbursement(4) 		   % 2.06       2.23       2.24       2.03       2.15       2.07       1.99 (5)   
Gross expenses prior to expense                                                          
reimbursement(4)    % 2.06       2.23       2.24       2.03       2.15       2.07       2.29    
Net investment income (loss) after expense
reimbursement(4) 		   % 0.21       (0.59 )     (0.43 )     (0.58 )     (0.83 )     (0.70 )     (0.49 )(5)   
Portfolio turnover rate   % 79       200       106       149       26       57       26    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Commencement of operations.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  Expenses calculated net of taxes and advisor reimbursement.

See Accompanying Notes to Financial Statements

48


ING DISCIPLINED LARGECAP FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended		               Seven
Months
Ended		   Year
Ended		   December 30,
1998(2) to		  
    November 30,   Year Ended May 31,   May 31,   October 31,   October 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 8.49       7.37       8.23       9.70       11.05       11.09       10.00    
Income (loss) from investment operations:      
Net investment income (loss)   $ 0.01       (0.06 )     (0.04 )     (0.09 )     (0.05 )     (0.08 )     (0.02 )  
Net realized and unrealized gain (loss)
on investments		   $ 0.58       1.18       (0.82 )     (1.38 )     (1.30 )     0.19       1.11    
Total from investment operations   $ 0.59       1.12       (0.86 )     (1.47 )     (1.35 )     0.11       1.09    
Less distributions from:      
Net realized gain from investments   $ -       -       -       -       -       0.15       -    
Total distributions   $ -       -       -       -       -       0.15       -    
Net asset value, end of period   $ 9.08       8.49       7.37       8.23       9.70       11.05       11.09    
Total Return(3)    % 6.95       15.20       (10.45 )     (15.15 )     (12.12 )     0.92       10.90    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 13,986       15,233       21,478       36,486       66,252       88,449       75,941    
Ratios to average net assets:      
Net expenses after expense
reimbursement(4) 		   % 2.06       2.23       2.24       2.03       2.15       2.07       1.99 (5)   
Gross expenses prior to expense                                                          
reimbursement(4)    % 2.06       2.23       2.24       2.03       2.15       2.07       2.27    
Net investment income (loss) after expense
reimbursement(4) 		   % 0.19       (0.59 )     (0.43 )     (0.58 )     (0.83 )     (0.70 )     (0.49 )(5)   
Portfolio turnover rate   % 79       200       106       149       26       57       26    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Commencement of operations.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  Expenses calculated net of taxes and advisor reimbursement.

See Accompanying Notes to Financial Statements

49


ING LARGECAP GROWTH FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended		               Eleven
Months
Ended		   Year
Ended		   Three
Months
Ended		  
    November 30,   Year Ended May 31,   May 31,   June 30,   June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 18.11       14.33       16.59       24.40       43.12       28.09       24.94    
Income (loss) from investment operations:      
Net investment loss   $ -       (0.10 )     (0.15 )     (0.18 )     (0.20 )     (0.22 )     (0.02 )  
Net realized and unrealized gain (loss)
on investments		   $ 0.07       3.88       (2.11 )     (7.63 )     (18.05 )     15.63       3.17    
Total from investment operations   $ 0.07       3.78       (2.26 )     (7.81 )     (18.25 )     15.41       3.15    
Less distributions from:      
Net investment income   $ 0.53       -       -       0.00 *     -       -       -    
Net realized gain from investments   $ -       -       -       -       0.47       0.38       -    
Total distributions   $ 0.53       -       -       0.00 *     0.47       0.38       -    
Net asset value, end of period   $ 17.65       18.11       14.33       16.59       24.40       43.12       28.09    
Total Return(3)    % 0.34       26.38       (13.62 )     (31.99 )     (42.67 )     55.35       12.63    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 110,029       109,858       40,941       65,642       161,824       186,261       30,108    
Ratios to average net assets:      
Net expenses after expense reimbursement/
recoupment and brokerage commission recapture(4)(5) 		   % 1.42       1.42       1.60       1.58       1.47       1.36       1.43    
Net expenses after expense
reimbursement/recoupment(4)(5) 		   % 1.45       1.45       1.60       1.58       1.47       1.36       1.43    
Gross expenses prior to expense reimbursement
and brokerage commission recapture(4) 		   % 1.41       1.61       1.76       1.58       1.47       1.36       1.45    
Net investment loss after expense
reimbursement/recoupment and brokerage commission 		   % (0.26 )     (0.82 )     (0.96 )     (1.12 )     (0.78 )     (0.87 )     (0.56 )  
recapture(4)(5)   
Portfolio turnover rate   % 40       142       291       536       331       139       27    
    Class B  
    Six Months
Ended		               Eleven
Months
Ended		   Year
Ended		   Three
Months
Ended		  
    November 30,   Year Ended May 31,   May 31,   June 30,   June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 17.57       13.99       16.30       24.14       42.94       28.15       25.04    
Income (loss) from investment operations:      
Net investment loss   $ (0.07 )     (0.21 )     (0.24 )     (0.43 )     (0.41 )     (0.39 )     (0.05 )  
Net realized and unrealized gain (loss)
on investments		   $ 0.08       3.79       (2.07 )     (7.41 )     (17.92 )     15.56       3.16    
Total from investment operations   $ 0.01       3.58       (2.31 )     (7.84 )     (18.33 )     15.17       3.11    
Less distributions from:      
Net investment income   $ 0.41       -       -       -       -       -       -    
Net realized gain from investments   $ -       -       -       -       0.47       0.38       -    
Total distributions   $ 0.41       -       -       -       0.47       0.38       -    
Net asset value, end of period   $ 17.17       17.57       13.99       16.30       24.14       42.94       28.15    
Total Return(3)    % 0.04       25.59       (14.17 )     (32.48 )     (43.04 )     55.37       12.42    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 115,071       119,658       72,575       116,738       224,572       333,256       49,057    
Ratios to average net assets:      
Net expenses after expense reimbursement/
recoupment and brokerage commission recapture(4)(5) 		   % 2.07       2.07       2.25       2.23       2.12       2.01       2.08    
Net expenses after expense
reimbursement/recoupment(4)(5) 		   % 2.10       2.09       2.25       2.23       2.12       2.01       2.10    
Gross expenses prior to expense reimbursement/
recoupment and brokerage commission recapture(4) 		   % 2.06       2.26       2.41       2.23       2.12       2.01       2.10    
Net investment loss after expense reimbursement
and brokerage commission recapture(4)(5) 		   % (0.92 )     (1.47 )     (1.61 )     (1.77 )     (1.43 )     (1.52 )     (1.21 )  
Portfolio turnover rate   % 40       142       291       536       331       139       27    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its year end to June 30. The Fund was directly managed by ING Investments, LLC from October 1, 2000 to June 2, 2003. Effective June 2, 2003, Wellington Capital Management was appointed as Sub-Adviser to the Fund.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Amount represents less than $0.01 per share.

See Accompanying Notes to Financial Statements

50


ING LARGECAP GROWTH FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended		               Eleven
Months
Ended		   Year
Ended		   Three
Months
Ended		  
    November 30,   Year Ended May 31,   May 31,   June 30,   June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 17.52       13.95       16.25       24.07       42.82       28.07       24.97    
Income (loss) from investment operations:      
Net investment loss   $ (0.07 )     (0.22 )     (0.25 )     (0.48 )     (0.39 )     (0.35 )     (0.06 )  
Net realized and unrealized gain (loss)
on investments		   $ 0.07       3.79       (2.05 )     (7.34 )     (17.89 )     15.48       3.16    
Total from investment operations   $ 0.00 *     3.57       (2.30 )     (7.82 )     (18.28 )     15.13       3.10    
Less distributions from:      
Net investment income   $ 0.41       -       -       -       -       -       -    
Net realized gain from investments   $ -       -       -       -       0.47       0.38       -    
Total distributions   $ 0.41       -       -       -       0.47       0.38       -    
Net asset value, end of period   $ 17.11       17.52       13.95       16.25       24.07       42.82       28.07    
Total Return(3)    % (0.01 )     25.59       (14.15 )     (32.49 )     (43.04 )     54.38       12.41    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 52,989       53,976       31,516       54,048       117,222       152,682       17,755    
Ratios to average net assets:      
Net expenses after expense reimbursement and
brokerage commission recapture(4)(5) 		   % 2.07       2.07       2.25       2.23       2.12       2.01       2.08    
Net expenses after expense reimbursement(4)(5)    % 2.10       2.09       2.25       2.23       2.12       2.01       2.08    
Gross expenses prior to expense reimbursement and
brokerage commission recapture(4) 		   % 2.06       2.26       2.41       2.23       2.12       2.01       2.10    
Net investment loss after expense reimbursement                                                          
and brokerage commission recapture(4)(5)    % (0.91 )     (1.47 )     (1.61 )     (1.77 )     (1.43 )     (1.52 )     (1.21 )  
Portfolio turnover rate   % 40       142       291       536       331       139       27    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its year end to June 30. The Fund was directly managed by ING Investments, LLC from October 1, 2000 to June 2, 2003. Effective June 2, 2003, Wellington Capital Management was appointed as Sub-Adviser to the Fund.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Amount represents less than $0.01 per share.

See Accompanying Notes to Financial Statements

51


ING MIDCAP OPPORTUNITIES FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended		               Five
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended December 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 12.06       10.12       11.11       14.58       19.12       21.29       12.96    
Income (loss) from investment operations:      
Net investment loss   $ (0.08 )     (0.06 )     (0.12 )     (0.17 )*     (0.11 )     (0.15 )     (0.09 )  
Net realized and unrealized gain (loss)                                                          
on investments   $ 0.68       2.00       (0.87 )     (3.30 )     (4.43 )     0.16       12.01    
Total from investment operations   $ 0.60       1.94       (0.99 )     (3.47 )     (4.54 )     0.01       11.92    
Less distributions from:      
Net realized gain from investments   $ -       -       -       -       -       2.18       3.59    
Total distributions   $ -       -       -       -       -       2.18       3.59    
Net asset value, end of period   $ 12.66       12.06       10.12       11.11       14.58       19.12       21.29    
Total Return(2)    % 4.98       19.17       (8.91 )     (23.80 )     (23.74 )     (0.35 )     103.24    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 127,958       133,363       44,010       68,106       24,265       25,742       6,291    
Ratios to average net assets:      
Net expenses after expense
reimbursement/recoupment(3)(4) 		   % 1.75       1.59       1.50       1.77       2.06       1.66       1.74    
Gross expenses prior to expense                                                          
reimbursement/recoupment(3)    % 1.68       1.70       1.83       1.99       2.06       1.66       1.74    
Net investment loss after expense
reimbursement/recoupment(3)(4) 		   % (1.31 )     (1.06 )     (1.15 )     (1.45 )     (1.52 )     (0.96 )     (1.34 )  
Portfolio turnover rate   % 25       115       345       399       182       188       201    
    Class B  
    Six Months
Ended		               Five
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended December 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 11.59       9.80       10.83       14.30       18.79       21.12       12.97    
Income (loss) from investment operations:      
Net investment loss   $ (0.13 )     (0.06 )     (0.20 )     (0.25 )*     (0.14 )     (0.24 )     (0.07 )  
Net realized and unrealized gain (loss)      
on investments   $ 0.66       1.85       (0.83 )     (3.22 )     (4.35 )     0.09       11.81    
Total from investment operations   $ 0.53       1.79       (1.03 )     (3.47 )     (4.49 )     (0.15 )     11.74    
Less distributions from:      
Net realized gain from investments   $ -       -       -       -       -       2.18       3.59    
Total distributions   $ -       -       -       -       -       2.18       3.59    
Net asset value, end of period   $ 12.12       11.59       9.80       10.83       14.30       18.79       21.12    
Total Return(2)    % 4.57       18.27       (9.51 )     (24.27 )     (23.90 )     (1.13 )     101.73    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 168,988       191,288       43,183       69,621       28,448       35,551       8,252    
Ratios to average net assets:      
Net expenses after expense
reimbursement/recoupment(3)(4) 		   % 2.45       2.29       2.20       2.47       2.76       2.36       2.40    
Gross expenses prior to expense                                                          
reimbursement/recoupment(3)    % 2.38       2.40       2.53       2.69       2.76       2.36       2.40    
Net investment loss after expense
reimbursement/recoupment(3)(4) 		   % (2.00 )     (1.69 )     (1.85 )     (2.15 )     (2.22 )     (1.66 )     (2.00 )  
Portfolio turnover rate   % 25       115       345       399       182       188       201    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Per share data calculated using weighted average number of shares outstanding throughout the period.

See Accompanying Notes to Financial Statements

52


ING MIDCAP OPPORTUNITIES FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended		               Five
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended December 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 11.53       9.75       10.77       14.24       18.72       21.03       12.96    
Income (loss) from investment operations:      
Net investment loss   $ (0.13 )     (0.12 )     (0.19 )     (0.25 )*     (0.14 )     (0.24 )     (0.07 )  
Net realized and unrealized gain (loss)                                                          
on investments   $ 0.66       1.90       (0.83 )     (3.22 )     (4.34 )     0.11       11.73    
Total from investment operations   $ 0.53       1.78       (1.02 )     (3.47 )     (4.48 )     (0.13 )     11.66    
Less distributions from:      
Net realized gain from investments   $ -       -       -       -       -       2.18       3.59    
Total distributions   $ -       -       -       -       -       2.18       3.59    
Net asset value, end of period   $ 12.06       11.53       9.75       10.77       14.24       18.72       21.03    
Total Return(2)    % 4.60       18.26       (9.47 )     (24.37 )     (23.93 )     (1.03 )     101.16    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 117,913       131,461       67,730       100,888       18,901       25,939       4,560    
Ratios to average net assets:      
Net expenses after expense
reimbursement(3)(4) 		   % 2.45       2.29       2.20       2.47       2.76       2.36       2.36    
Gross expenses prior to expense                                                          
reimbursement(3)    % 2.38       2.40       2.53       2.69       2.76       2.36       2.36    
Net investment loss after expense
reimbursement(3)(4) 		   % (2.01 )     (1.80 )     (1.85 )     (2.15 )     (2.22 )     (1.66 )     (1.98 )  
Portfolio turnover rate   % 25       115       345       399       182       188       201    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has aggreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary (expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Per share data calculated using weighted average number of shares outstanding throughout the period.

See Accompanying Notes to Financial Statements

53


ING SMALLCAP OPPORTUNITIES FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended		               Five
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended December 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 22.53       18.16       24.04       38.78       47.17       59.35       29.00    
Income (loss) from investment operations:      
Net investment loss   $ (0.17 )     (0.37 )     (0.35 )     (0.51 )*     (0.23 )     (0.54 )     (0.32 )  
Net realized and unrealized gain (loss)      
on investments   $ 1.93       4.74       (5.53 )     (13.24 )     (8.16 )     (2.74 )     38.23    
Total from investment operations   $ 1.76       4.37       (5.88 )     (13.75 )     (8.39 )     (3.28 )     37.91    
Less distributions from:      
Net realized gain from investments   $ -       -       -       0.99       -       8.90       7.56    
Total distributions   $ -       -       -       0.99       -       8.90       7.56    
Net asset value, end of period   $ 24.29       22.53       18.16       24.04       38.78       47.17       59.35    
Total Return(2)    % 7.81       24.06 †     (24.46 )     (35.86 )     (17.79 )     (6.04 )     146.94    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 105,312       105,890       118,570       183,810       159,641       177,286       123,377    
Ratios to average net assets:      
Expenses(3)    % 1.72       1.74       1.88       1.81       1.69       1.45       1.43    
Net investment loss(3)    % (1.45 )     (1.52 )     (1.80 )     (1.70 )     (1.41 )     (1.05 )     (1.21 )  
Portfolio turnover rate   % 34       60       357       427       104       134       223    
    Class B  
    Six Months
Ended		               Five
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended December 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 20.78       16.87       22.48       36.60       44.64       57.06       28.26    
Income (loss) from investment operations:      
Net investment loss   $ (0.25 )     (0.50 )     (0.48 )     (0.68 )*     (0.33 )     (0.96 )     (0.60 )  
Net realized and unrealized gain (loss)      
on investments   $ 1.80       4.41       (5.13 )     (12.45 )     (7.71 )     (2.56 )     36.96    
Total from investment operations   $ 1.55       3.91       (5.61 )     (13.13 )     (8.04 )     (3.52 )     36.36    
Less distributions from:      
Net realized gain from investments   $ -       -       -       0.99       -       8.90       7.56    
Total distributions   $ -       -       -       0.99       -       8.90       7.56    
Net asset value, end of period   $ 22.33       20.78       16.87       22.48       36.60       44.64       57.06    
Total Return(2)    % 7.46       23.18 †     (24.96 )     (36.31 )     (18.01 )     (6.71 )     145.24    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 60,705       77,751       85,465       154,899       206,968       266,348       264,677    
Ratios to average net assets:      
Expenses(3)    % 2.42       2.44       2.58       2.51       2.39       2.15       2.15    
Net investment loss(3)    % (2.14 )     (2.07 )     (2.50 )     (2.40 )     (2.11 )     (1.75 )     (1.93 )  
Portfolio turnover rate   % 34       60       357       427       104       134       223    

 

(1)  The Fund changed its fiscal year-end to May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

*  Per share data calculated using weighted average number of shares outstanding throughout the period.

†  Total return without the effect of reimbursement by affiliate for investment transaction losses would have been 23.95% and 23.12%, for Class A and Class B, respectively.

See Accompanying Notes to Financial Statements

54


ING SMALLCAP OPPORTUNITIES FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended		               Five
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended December 31,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 20.73       16.83       22.44       36.53       44.54       56.98       28.24    
Income (loss) from investment operations:      
Net investment loss   $ (0.23 )     (0.49 )     (0.49 )     (0.67 )*     (0.33 )     (0.97 )     (0.53 )  
Net realized and unrealized gain (loss)                                                          
on investments   $ 1.78       4.39       (5.12 )     (12.43 )     (7.68 )     (2.57 )     36.83    
Total from investment operations   $ 1.55       3.90       (5.61 )     (13.10 )     (8.01 )     (3.54 )     36.30    
Less distributions from:      
Net realized gain from investments   $ -       -       -       0.99       -       8.90       7.56    
Total distributions   $ -       -       -       0.99       -       8.90       7.56    
Net asset value, end of period   $ 22.28       20.73       16.83       22.44       36.53       44.54       56.98    
Total Return(2)    % 7.48       23.17 †     (25.00 )     (36.30 )     (17.98 )     (6.76 )     145.12    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 53,120       57,140       63,406       119,498       78,658       104,094       72,581    
Ratios to average net assets:      
Net expenses(3)    % 2.42       2.44       2.58       2.51       2.39       2.15       2.18    
Net investment loss(3)    % (2.15 )     (2.06 )     (2.50 )     (2.40 )     (2.11 )     (1.75 )     (1.96 )  
Portfolio turnover rate   % 34       60       357       427       104       134       223    

 

(1)  The Fund changed its fiscal year-end to May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

*  Per share data calculated using weighted average number of shares outstanding throughout the period.

†  Total return without the effect of reimbursement by affiliate for investment transaction losses would have been 23.11% for Class C.

See Accompanying Notes to Financial Statements

55


ING FINANCIAL SERVICES FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended		               Eleven
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 22.03       19.24       22.11       23.36       16.42       24.38       27.52    
Income (loss) from investment operations:      
Net investment income   $ 0.07       0.09       0.12       0.14       0.31       0.32       0.29    
Net realized and unrealized gain (loss)      
on investments   $ 1.40       3.60       (1.78 )     1.29       7.11       (5.30 )     (2.70 )  
Total from investment operations   $ 1.47       3.69       (1.66 )     1.43       7.42       (4.98 )     (2.41 )  
Less distributions from:      
Net investment income   $ 0.08       0.08       0.09       0.33       0.33       0.25       0.18    
Net realized gain from investments   $ 1.48       0.82       1.12       2.35       0.15       2.73       0.55    
Total distributions   $ 1.56       0.90       1.21       2.68       0.48       2.98       0.73    
Net asset value, end of period   $ 21.94       22.03       19.24       22.11       23.36       16.42       24.38    
Total Return(2)     % 6.70       19.57       (6.98 )     7.05       46.01       (22.44 )     (8.61 )  
Ratios and Supplemental Data:      
Net assets, end of period (millions)   $ 193       193       182       231       252       210       403    
Ratios to average net assets:      
Expenses(3)    % 1.17       1.41       1.52       1.48       1.42       1.41       1.39    
Net investment income(3)    % 0.62       0.40       0.54       0.54       1.48       1.46       1.09    
Portfolio turnover rate   % 12       35       19       43       39       10       29    
    Class B  
    Six Months
Ended		               Eleven
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 21.79       19.12       22.03       23.28       16.35       24.21       27.40    
Income (loss) from investment operations:      
Net investment income (loss)   $ (0.01 )     (0.08 )     (0.07 )     (0.04 )     0.15       0.22       0.08    
Net realized and unrealized gain (loss)      
on investments   $ 1.39       3.57       (1.72 )     1.29       7.12       (5.32 )     (2.66 )  
Total from investment operations   $ 1.38       3.49       (1.79 )     1.25       7.27       (5.10 )     (2.58 )  
Less distributions from:      
Net investment income   $ -       -       -       0.15       0.19       0.03       0.06    
Net realized gain from investments   $ 1.48       0.82       1.12       2.35       0.15       2.73       0.55    
Total distributions   $ 1.48       0.82       1.12       2.50       0.34       2.76       0.61    
Net asset value, end of period   $ 21.69       21.79       19.12       22.03       23.28       16.35       24.21    
Total Return(2)     % 6.37       18.60       (7.66 )     6.22       45.01       (23.00 )     (9.31 )  
Ratios and Supplemental Data:      
Net assets, end of period (millions)   $ 121       127       127       171       183       148       343    
Ratios to average net assets:      
Expenses(3)    % 1.92       2.16       2.27       2.23       2.17       2.16       2.14    
Net investment income (loss)(3)    % (0.13 )     (0.36 )     (0.21 )     (0.21 )     0.73       0.71       0.34    
Portfolio turnover rate   % 12       35       19       43       39       10       29    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

See Accompanying Notes to Financial Statements

56


ING FINANCIAL SERVICES FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C   Class O  
    August 25,
2004(1) to
November 30,
2004		   September 15,
2004(1) to
November 30,
2004		  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 21.78       22.67    
Income (loss) from investment operations:  
Net investment loss   $ (0.09 )     (0.10 )  
Net realized and unrealized gain on investments   $ 1.48       0.94    
Total from investment operations   $ 1.39       0.84    
Less distributions from:  
Net investment income   $ 0.10       0.13    
Net realized gain from investments   $ 1.48       1.48    
Total distributions   $ 1.58       1.61    
Net asset value, end of period   $ 21.59       21.90    
Total Return(2)    % 5.53       3.72    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 3       829    
Ratios to average net assets:  
Expenses(3)(4)    % 1.92       1.13    
Net investment income after expense reimbursement(3)(4)    % 0.00 *     0.81    
Portfolio turnover rate   % 12       12    

 

(1)  Commencement of operations.  

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

*  Amount represents less than $0.01 per share or 0.01%.

See Accompanying Notes to Financial Statements

57


ING LARGECAP VALUE FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A   Class B  
    Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		   Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 9.65       10.00       9.63       10.00    
Income (loss) from investment operations:      
Net investment income (loss)   $ -       0.01       (0.02 )     (0.00 )*  
Net realized and unrealized income (loss)       
on investments   $ 0.68       (0.36 )     0.65       (0.37 )  
Total from investment operations   $ 0.68       (0.35 )     0.63       (0.37 )  
Less distributions from:      
Net investment income   $ 0.06       -       0.02       -    
Net realized gains on investments   $ 0.08       -       0.08       -    
Total distributions   $ 0.14       -       0.10       -    
Net asset value, end of period   $ 10.19       9.65       10.16       9.63    
Total Return(2)    % 7.05       (3.50 )     6.57       (3.70 )  
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 14,423       4,729       6,790       2,601    
Ratios to average net assets:                                  
Net expenses after expense 
reimbursement(3)(4)  		   % 1.45       1.35       2.20      
2.10		    
Gross expenses prior to expense                                  
reimbursement(4)    % 2.32       4.05       3.07       4.80    
Net investment income (loss) after
expense reimbursement(3)(4)  		   % 0.80       0.72       0.05      
(0.07)		    
Portfolio turnover rate   % 21       4       21       4    

 

    Class C  
    Six Months
Ended
November 30,
2004		   February 3,
2004(1) to
May 31,
2004		  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 9.63       9.96    
Income (loss) from investment operations:      
Net investment loss   $ (0.02 )     (0.00 )*  
Net realized and unrealized income (loss)       
on investments   $ 0.65       (0.33 )  
Total from investment operations   $ 0.63       (0.33 )  
Less distributions from:      
Net investment income   $ 0.02       -    
Net realized gains on investments   $ 0.08       -    
Total distributions   $ 0.10       -    
Net asset value, end of period   $ 10.16       9.63    
Total Return(2)    % 6.55       (3.31 )  
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 8,808       3,793    
Ratios to average net assets:      
Net expenses after expense
reimbursement(3)(4) 		   % 2.20       2.11    
Gross expenses prior to expense      
reimbursement(4)    % 3.07       4.81    
Net investment income (loss) after
expense reimbursement(3)(4) 		   % 0.05       (0.03 )  
Portfolio turnover rate   % 21       4    

 

(1)  Commencement of operations.  

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Amount is less than $0.01 per share.

See Accompanying Notes to Financial Statements

58


ING MAGNACAP FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended		               Eleven
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 10.28       8.82       10.11       13.54       15.84       17.69       17.07    
Income (loss) from investment operations:      
Net investment income   $ 0.15       0.09       0.06       0.07       0.05       0.07       0.07    
Net realized and unrealized gain (loss)      
on investments   $ 0.66       1.46       (1.32 )     (1.53 )     (0.38 )     (0.08 )     2.37    
Total from investment operations   $ 0.81       1.55       (1.26 )     (1.46 )     (0.33 )     (0.01 )     2.44    
Less distributions from:      
Net investment income   $ 0.20       0.09       0.03       0.07       0.09       0.05       0.04    
Net realized gain from investments   $ -       -       -       1.90       1.88       1.79       1.78    
Total distributions   $ 0.20       0.09       0.03       1.97       1.97       1.84       1.82    
Net asset value, end of period   $ 10.89       10.28       8.82       10.11       13.54       15.84       17.69    
Total Return(2)    % 7.19       17.64       (12.46 )     (10.96 )     (2.77 )     (0.36 )     15.93    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 315,708       311,087       156,902       211,602       277,722       303,864       368,508    
Ratios to average net assets:      
Expenses(3)    % 1.16       1.35       1.45       1.34       1.31       1.29       1.35    
Net investment income(3)    % 1.27       1.10       0.73       0.59       0.33       0.41       0.41    
Portfolio turnover rate   % 10       28       110       75       92       26       48    
    Class B  
    Six Months
Ended		               Eleven
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 9.91       8.48       9.75       13.14       15.44       17.36       16.86    
Income (loss) from investment operations:      
Net investment income (loss)   $ 0.04       0.04       0.00 *     (0.02 )     (0.01 )     (0.05 )     (0.04 )  
Net realized and unrealized gain (loss)      
on investments   $ 0.63       1.39       (1.27 )     (1.47 )     (0.41 )     (0.08 )     2.32    
Total from investment operations   $ 0.67       1.43       (1.27 )     (1.49 )     (0.42 )     (0.13 )     2.28    
Less distributions from:      
Net investment income   $ 0.02       -       -       -       -       -       -    
Net realized gain from investments   $ -       -       -       1.90       1.88       1.79       1.78    
Total distributions   $ 0.02       -       -       1.90       1.88       1.79       1.78    
Net asset value, end of period   $ 10.56       9.91       8.48       9.75       13.14       15.44       17.36    
Total Return(2)     % 6.76       16.86       (13.03 )     (11.61 )     (3.40 )     (1.11 )     15.12    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 46,214       52,812       50,677       79,685       112,286       87,167       116,227    
Ratios to average net assets:      
Expenses(3)    % 1.86       2.05       2.15       2.04       2.01       1.99       2.05    
Net investment income (loss)(3)    % 0.56       0.35       0.03       (0.11 )     (0.37 )     (0.29 )     (0.29 )  
Portfolio turnover rate   % 10       28       110       75       92       26       48    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and

  excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

*  Amount represents less than $0.01 per share.

See Accompanying Notes to Financial Statements

59


ING MAGNACAP FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven
Months
Ended
May 31,		   Year
Ended
June 30,		   June 1,
1999(2) to
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 9.91       8.48       9.76       13.14       15.44       17.37       16.69    
Income (loss) from investment operations:      
Net investment income (loss)   $ 0.04       0.03       0.00 *     (0.01 )     (0.01 )     (0.10 )     -    
Net realized and unrealized gain (loss)      
on investments   $ 0.64       1.40       (1.28 )     (1.47 )     (0.41 )     (0.04 )     0.68    
Total from investment operations   $ 0.68       1.43       (1.28 )     (1.48 )     (0.42 )     (0.14 )     0.68    
Less distributions from:      
Net investment income   $ 0.02       -       -       -       -       -       -    
Net realized gain from investments   $ -       -       -       1.90       1.88       1.79       -    
Total distributions   $ 0.02       -       -       1.90       1.88       1.79       -    
Net asset value, end of period   $ 10.57       9.91       8.48       9.76       13.14       15.44       17.37    
Total Return(3)     % 6.87       16.86       (13.11 )     (11.53 )     (3.41 )     (1.17 )     4.07    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 9,970       11,502       8,291       9,693       10,887       3,660       601    
Ratios to average net assets:      
Expenses(4)    % 1.86       2.05       2.15       2.04       2.01       1.99       1.12    
Net investment income (loss)(4)    % 0.56       0.36       0.03       (0.11 )     (0.37 )     (0.29 )     0.42    
Portfolio turnover rate   % 10       28       110       75       92       26       48    
    Class M  
    Six Months
Ended		               Eleven
Months
Ended		          
    November 30,   Year Ended May 31,   May 31,   Year Ended June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 10.16       8.68       9.96       13.36       15.64       17.51       16.95    
Income (loss) from investment operations:      
Net investment income (loss)   $ 0.05       0.08       0.03       0.02       -       (0.01 )     (0.01 )  
Net realized and unrealized gain (loss)      
on investments   $ 0.66       1.41       (1.31 )     (1.50 )     (0.39 )     (0.06 )     2.35    
Total from investment operations   $ 0.71       1.49       (1.28 )     (1.48 )     (0.39 )     (0.07 )     2.34    
Less distributions from:      
Net investment income   $ 0.04       0.01       -       0.02       0.01       0.01       -    
Net realized gain from investments   $ -       -       -       1.90       1.88       1.79       1.78    
Total distributions   $ 0.04       0.01       -       1.92       1.89       1.80       1.78    
Net asset value, end of period   $ 10.83       10.16       8.68       9.96       13.36       15.64       17.51    
Total Return(3)     % 6.96       17.13       (12.85 )     (11.30 )     (3.21 )     (0.71 )     15.41    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 4,798       5,270       7,445       12,074       17,440       13,050       16,351    
Ratios to average net assets:      
Expenses(4)    % 1.61       1.80       1.90       1.79       1.76       1.74       1.80    
Net investment income (loss)(4)    % 0.82       0.55       0.28       0.14       (0.12 )     (0.04 )     (0.04 )  
Portfolio turnover rate   % 10       28       110       75       92       26       48    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Commencement of operations.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and

excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

*  Amount represents less than $0.01 per share.

See Accompanying Notes to Financial Statements

60


ING MIDCAP VALUE FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended
November 30,		   Year Ended May 31,   February 1,
2002(1) to
May 31		  
    2004   2004   2003   2002  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 11.53       8.36       10.28       10.00    
Income (loss) from investment operations:      
Net investment income (loss)   $ (0.01 )     (0.02 )     0.00 *     0.00 *  
Net realized and unrealized gain (loss) on investments   $ 0.67       3.19       (1.77 )     0.28    
Total from investment operations   $ 0.66       3.17       (1.77 )     0.28    
Less distributions from:      
Net investment income   $ -       -       0.04       -    
Net realized gain from investments   $ 0.88       -       0.11       -    
Total distributions   $ 0.88       -       0.15       -    
Net asset value, end of period   $ 11.31       11.53       8.36       10.28    
Total Return(2)    % 5.85       37.92       (16.94 )     2.80    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 76,289       58,631       15,026       25,325    
Ratios to average net assets:      
Net expenses after expense reimbursement/recoupment(3)(4)    % 1.68       1.75       1.75       1.61    
Gross expenses prior to expense reimbursement(3)    % 1.47       1.62       2.17       3.05    
Net investment income (loss) after expense reimbursement/recoupment(3)(4)    % (0.25 )     (0.18 )     (0.10 )     0.04    
Portfolio turnover rate   % 42       70       72       13    
    Class B  
    Six Months
Ended
November 30,		   Year Ended May 31,   February 4,
2002(1) to
May 31,		  
    2004   2004   2003   2002  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 11.41       8.34       10.27       9.87    
Income (loss) from investment operations:      
Net investment (loss)   $ (0.05 )     (0.07 )     (0.06 )     (0.01 )  
Net realized and unrealized gain (loss) on investments   $ 0.66       3.14       (1.75 )     0.41    
Total from investment operations   $ 0.61       3.07       (1.81 )     0.40    
Less distributions from:      
Net investment income   $ -       -       0.01       -    
Net realized gain from investments   $ 0.88       -       0.11       -    
Total distributions   $ 0.88       -       0.12       -    
Net asset value, end of period   $ 11.14       11.41       8.34       10.27    
Total Return(2)    % 5.47       36.81       (17.40 )     4.05    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 43,157       34,856       12,205       11,656    
Ratios to average net assets:      
Net expenses after expense reimbursement/recoupment(3)(4)    % 2.43       2.50       2.50       2.36    
Gross expenses prior to expense reimbursement(3)    % 2.22       2.37       2.92       3.80    
Net investment (loss) after expense reimbursement/recoupment(3)(4)    % (0.98 )     (0.95 )     (0.82 )     (0.71 )  
Portfolio turnover rate   % 42       70       72       13    

 

(1)  Commencement of operations.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Amount represents less than $0.01 per share.

See Accompanying Notes to Financial Statements

61


ING MIDCAP VALUE FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended
November 30,		   Year Ended May 31,   February 4,
2002(1) to
May 31,		  
    2004   2004   2003   2002  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 11.40       8.34       10.26       9.87    
Income (loss) from investment operations:      
Net investment loss   $ (0.04 )     (0.07 )     (0.05 )     (0.01 )  
Net realized and unrealized gain (loss) on investments   $ 0.65       3.13       (1.75 )     0.40    
Total from investment operations   $ 0.61       3.06       (1.80 )     0.39    
Less distributions from:      
Net investment income   $ -       -       0.01       -    
Net realized gain from investments   $ 0.88       -       0.11       -    
Total distributions   $ 0.88       -       0.12       -    
Net asset value, end of period   $ 11.13       11.40       8.34       10.26    
Total Return(2)    % 5.47       36.69       (17.32 )     3.95    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 46,160       31,982       12,034       9,731    
Ratios to average net assets:      
Net expenses after expense reimbursement/recoupment(3)(4)    % 2.43       2.50       2.50       2.36    
Gross expenses prior to expense reimbursement(3)    % 2.22       2.37       2.92       3.80    
Net investment loss after expense reimbursement/recoupment(3)(4)    % (0.97 )     (0.94 )     (0.81 )     (0.71 )  
Portfolio turnover rate   % 42       70       72       13    

 

(1)  Commencement of operations.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements

62


ING SMALLCAP VALUE FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended
November 30,		   Year Ended May 31,   February 1,
2002(1) to
May 31,		  
    2004   2004   2003   2002  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 13.53       9.44       10.62       10.00    
Income (loss) from investment operations:      
Net investment loss   $ (0.01 )     (0.05 )     (0.05 )     (0.01 )  
Net realized and unrealized gain (loss) on investments   $ 0.88       4.88       (1.00 )     0.63    
Total from investment operations   $ 0.87       4.83       (1.05 )     0.62    
Less distributions from:      
Net investment income   $ -       -       0.04       -    
Net realized gain from investments   $ 0.89       0.74       0.09       -    
Total distributions   $ 0.89       0.74       0.13       -    
Net asset value, end of period   $ 13.51       13.53       9.44       10.62    
Total Return(2)    % 6.56       52.83       (9.83 )     6.20    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 88,103       45,609       12,280       18,435    
Ratios to average net assets:      
Net expenses after expense reimbursement/recoupment(3)(4)    % 1.72       1.75       1.75       1.62    
Gross expenses prior to expense reimbursement(3)    % 1.47       1.66       2.17       3.65    
Net investment loss after expense reimbursement/recoupment(3)(4)    % (0.29 )     (0.67 )     (0.54 )     (0.39 )  
Portfolio turnover rate   % 16       57       54       12    
    Class B  
    Six Months
Ended
November 30,		   Year Ended May 31,   February 4,
2002(1) to
May 31,		  
    2004   2004   2003   2002  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 13.36       9.39       10.60       9.85    
Income (loss) from investment operations:      
Net investment loss   $ (0.06 )     (0.13 )     (0.11 )     (0.02 )  
Net realized and unrealized gain (loss) on investments   $ 0.86       4.84       (1.01 )     0.77    
Total from investment operations   $ 0.80       4.71       (1.12 )     0.75    
Less distributions from:      
Net investment income   $ -       -       -       -    
Net realized gain from investments   $ 0.89       0.74       0.09       -    
Total distributions   $ 0.89       0.74       0.09       -    
Net asset value, end of period   $ 13.27       13.36       9.39       10.60    
Total Return(2)    % 6.12       51.80       (10.53 )     7.61    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 26,109       19,815       8,233       7,889    
Ratios to average net assets:      
Net expenses after expense reimbursement/recoupment(3)(4)    % 2.47       2.50       2.50       2.37    
Gross expenses prior to expense reimbursement(3)    % 2.22       2.41       2.92       4.40    
Net investment loss after expense reimbursement/recoupment(3)(4)    % (1.06 )     (1.37 )     (1.29 )     (1.14 )  
Portfolio turnover rate   % 16       57       54       12    

 

(1)  Commencement of operations.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements

63


ING SMALLCAP VALUE FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended
November 30,		   Year Ended May 31,   February 7,
2002(1) to
May 31,		  
    2004   2004   2003   2002  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 13.35       9.38       10.60       9.76    
Income (loss) from investment operations:      
Net investment loss   $ (0.05 )     (0.12 )     (0.10 )     (0.01 )  
Net realized and unrealized gain (loss) on investments   $ 0.85       4.83       (1.02 )     0.85    
Total from investment operations   $ 0.80       4.71       (1.12 )     0.84    
Less distributions from:      
Net investment income   $ -       -       0.01       -    
Net realized gain from investments   $ 0.89       0.74       0.09       -    
Total distributions   $ 0.89       0.74       0.10       -    
Net asset value, end of period   $ 13.26       13.35       9.38       10.60    
Total Return(2)    % 6.13       51.86       (10.55 )     8.61    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 44,235       28,906       11,241       8,468    
Ratios to average net assets:      
Net expenses after expense reimbursement/recoupment(3)(4)    % 2.47       2.50       2.50       2.37    
Gross expenses prior to expense reimbursement(3)    % 2.22       2.41       2.92       4.40    
Net investment loss after expense reimbursement/recoupment(3)(4)    % (1.05 )     (1.35 )     (1.28 )     (1.14 )  
Portfolio turnover rate   % 16       57       54       12    

 

(1)  Commencement of operations.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements

64


ING CONVERTIBLE FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven
Months
Ended
May 31,		   Year
Ended
June 30,		   Three
Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 18.11       16.20       15.35       17.89       27.70       23.27       21.92    
Income (loss) from investment operations:      
Net investment income   $ 0.18       0.36       0.38       0.30       0.85       0.42       0.10    
Net realized and unrealized gain (loss)      
on investments   $ 0.52       1.97       0.78       (2.34 )     (5.29 )     8.02       1.35    
Total from investment operations   $ 0.70       2.33       1.16       (2.04 )     (4.44 )     8.44       1.45    
Less distributions from:      
Net investment income   $ 0.28       0.42       0.31       0.41       0.51       0.32       0.10    
Net realized gain from investments   $ -       -       -       0.09       4.86       3.69       -    
Total distributions   $ 0.28       0.42       0.31       0.50       5.37       4.01       0.10    
Net asset value, end of period   $ 18.53       18.11       16.20       15.35       17.89       27.70       23.27    
Total Return(3)     % 3.89       14.52       7.80       (11.44 )     (17.78 )     39.88       6.62    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 60,616       63,443       51,008       60,692       98,896       131,218       73,133    
Ratios to average net assets:      
Net expenses after expense
reimbursement(4)(5) 		   % 1.41       1.48       1.59       1.46       1.42       1.35       1.45    
Gross expenses prior to expense      
reimbursement(4)    % 1.41       1.48       1.59       1.46       1.41       1.35       2.10    
Net investment income after
expense reimbursement(4)(5) 		   % 1.90       2.13       2.57       1.93       2.20       1.78       1.82    
Portfolio turnover rate   % 27       138       97       100       145       129       28    
    Class B  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven
Months
Ended
May 31,		   Year
Ended
June 30,		   Three
Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 19.91       17.79       16.83       19.56       30.20       25.34       23.86    
Income (loss) from investment operations:      
Net investment income   $ 0.15       0.30       0.35       0.24       0.49       0.29       0.07    
Net realized and unrealized gain (loss)      
on investments   $ 0.54       2.13       0.83       (2.59 )     (5.49 )     8.77       1.47    
Total from investment operations   $ 0.69       2.43       1.18       (2.35 )     (5.00 )     9.06       1.54    
Less distributions from:      
Net investment income   $ 0.20       0.31       0.22       0.28       0.34       0.19       0.06    
Net realized gain from investments   $ -       -       -       0.10       5.30       4.01       -    
Total distributions   $ 0.20       0.31       0.22       0.38       5.64       4.20       0.06    
Net asset value, end of period   $ 20.40       19.91       17.79       16.83       19.56       30.20       25.34    
Total Return(3)     % 3.52       13.75       7.16       (12.04 )     (18.26 )     39.21       6.47    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 66,598       75,097       72,364       88,650       125,366       139,704       68,091    
Ratios to average net assets:      
Net expenses after expense
reimbursement(4)(5) 		   % 2.06       2.13       2.24       2.11       2.07       2.00       2.10    
Gross expenses prior to expense      
reimbursement(4)    % 2.06       2.13       2.24       2.11       2.06       2.00       2.10    
Net investment income after
expense reimbursement(4)(5) 		   % 1.25       1.48       1.92       1.28       1.55       1.13       1.17    
Portfolio turnover rate   % 27       138       97       100       145       129       28    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser in which capacity it served until October 1, 2000, and the Fund changed its year end to June 30.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements

65


ING CONVERTIBLE FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven
Months
Ended
May 31,		   Year
Ended
June 30,		   Three
Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:  
Net asset value, beginning of period   $ 18.56       16.62       15.75       18.33       28.33       23.78       22.40    
Income (loss) from investment operations:      
Net investment income   $ 0.12       0.27       0.32       0.22       0.58       0.28       0.07    
Net realized and unrealized gain (loss)      
on investments   $ 0.53       1.99       0.78       (2.42 )     (5.26 )     8.22       1.37    
Total from investment operations   $ 0.65       2.26       1.10       (2.20 )     (4.68 )     8.50       1.44    
Less distributions from:      
Net investment income   $ 0.21       0.32       0.23       0.29       0.35       0.19       0.06    
Net realized gain from investments   $ -       -       -       0.09       4.97       3.76       -    
Total distributions   $ 0.21       0.32       0.23       0.38       5.32       3.95       0.06    
Net asset value, end of period   $ 19.00       18.56       16.62       15.75       18.33       28.33       23.78    
Total Return(3)    % 3.56       13.72       7.15       (12.03 )     (18.25 )     39.24       6.45    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 68,400       71,365       66,412       81,247       118,363       156,592       100,276    
Ratios to average net assets:      
Net expenses after expense
reimbursement(4)(5) 		   % 2.06       2.13       2.24       2.11       2.07       2.00       2.10    
Gross expenses prior to expense      
reimbursement(4)    % 2.06       2.13       2.24       2.11       2.06       2.00       2.10    
Net investment income after
expense reimbursement(4)(5) 		   % 1.25       1.48       1.92       1.28       1.55       1.13       1.17    
Portfolio turnover rate   % 27       138       97       100       145       129       28    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser in which capacity it served until October 1, 2000, and the Fund changed its year end to June 30.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements

66


ING EQUITY AND BOND FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven
Months
Ended
May 31,		   Year
Ended
June 30,		   Three
Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 12.47       11.71       12.06       13.30       15.04       19.23       19.03    
Income (loss) from investment operations:      
Net investment income   $ 0.08       0.15       0.31       0.39       0.93       0.51       0.10    
Net realized and unrealized gain (loss)      
on investments   $ 0.31       0.87       (0.41 )     (1.13 )     (1.01 )     (0.60 )     0.17    
Total from investment operations   $ 0.39       1.02       (0.10 )     (0.74 )     (0.08 )     (0.09 )     0.27    
Less distributions from:      
Net investment income   $ 0.08       0.26       0.25       0.45       0.51       0.39       0.07    
Net realized gain from investments   $ -        -       -       0.05       1.15       3.71       -    
Total distributions   $ 0.08       0.26       0.25       0.50       1.66       4.10       0.07    
Net asset value, end of period   $ 12.78       12.47       11.71       12.06       13.30       15.04       19.23    
Total Return(3)     % 3.12       8.84 †     (0.66 )     (5.55 )     (0.61 )     (1.01 )     1.42    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 34,189       36,205       32,179       57,042       61,477       63,592       9,619    
Ratios to average net assets:      
Net expenses after expense
reimbursement/recoupment(4)(5) 		   % 1.60       1.60       1.60       1.48       1.32       1.40       1.49    
Gross expenses prior to expense
reimbursement(4) 		   % 1.54       1.59       1.71       1.45       1.53       1.61       1.75    
Net investment income after
expense reimbursement/recoupment(4)(5) 		   % 1.33       1.27       2.62       3.11       3.54       3.26       2.06    
Portfolio turnover rate   % 36       302       129       145       76       173       63    
    Class B  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven
Months
Ended
May 31,		   Year
Ended
June 30,		   Three
Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 13.43       12.61       12.97       14.28       16.09       20.59       20.38    
Income (loss) from investment operations:      
Net investment income   $ 0.04       0.08       0.29       0.32       0.80       0.44       0.07    
Net realized and unrealized gain (loss)      
on investments   $ 0.34       0.92       (0.47 )     (1.22 )     (0.98 )     (0.64 )     0.18    
Total from investment operations   $ 0.38       1.00       (0.18 )     (0.90 )     (0.18 )     (0.20 )     0.25    
Less distributions from:      
Net investment income   $ 0.03       0.18       0.18       0.36       0.39       0.33       0.04    
Net realized gain from investments   $ -       -       -       0.05       1.24       3.97       -    
Total distributions   $ 0.03       0.18       0.18       0.41       1.63       4.30       0.04    
Net asset value, end of period   $ 13.78       13.43       12.61       12.97       14.28       16.09       20.59    
Total Return(3)     % 2.84       8.05 †     (1.29 )     (6.26 )     (1.21 )     (1.58 )     1.24    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 17,407       19,386       22,348       31,682       35,828       41,026       7,157    
Ratios to average net assets:      
Net expenses after expense
reimbursement/recoupment(4)(5) 		   % 2.25       2.25       2.25       2.13       1.97       2.05       2.14    
Gross expenses prior to expense
reimbursement(4) 		   % 2.19       2.24       2.36       2.10       2.18       2.26       2.40    
Net investment income after
expense reimbursement/recoupment(4)(5) 		   % 0.67       0.62       1.97       2.46       2.89       2.61       1.41    
Portfolio turnover rate   % 36       302       129       145       76       173       63    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its year end to June 30.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

†  Total return without the effect of reimbursement by affiliate for investment transaction losses would have been 8.76% for Class A, and there was no effect on Class B.

See Accompanying Notes to Financial Statements

67


ING EQUITY AND BOND FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C  
    Six Months
Ended		       Eleven
Months
Ended		   Year
Ended		   Three
Months
Ended		  
    November 30,   Year Ended May 31,   May 31,   June 30,   June 30,  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:      
Net asset value, beginning of period   $ 11.90       11.21       11.57       12.78       14.45       18.53       18.35    
Income (loss) from investment operations:      
Net investment income   $ 0.04       0.07       0.17       0.34       0.74       0.45       0.06    
Net realized and unrealized gain (loss)      
on investments   $ 0.30       0.82       (0.34 )     (1.13 )     (0.91 )     (0.62 )     0.16    
Total from investment operations   $ 0.34       0.89       (0.17 )     (0.79 )     (0.17 )     (0.17 )     0.22    
Less distributions from:      
Net investment income   $ 0.04       0.20       0.19       0.37       0.39       0.34       0.04    
Net realized gain from investments   $ -       -       -       0.05       1.11       3.57       -    
Total distributions   $ 0.04       0.20       0.19       0.42       1.50       3.91       0.04    
Net asset value, end of period   $ 12.20       11.90       11.21       11.57       12.78       14.45       18.53    
Total Return(3)     % 2.85       8.04 †     (1.27 )     (6.20 )     (1.28 )     (1.53 )     1.21    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 12,409       13,566       14,240       18,007       22,679       25,838       21,331    
Ratios to average net assets:      
Net expenses after expense
reimbursement/recoupment(4)(5) 		   % 2.25       2.25       2.25       2.13       1.97       2.05       2.14    
Gross expenses prior to expense      
reimbursement(4)    % 2.19       2.24       2.36       2.10       2.18       2.26       2.40    
Net investment income after
expense reimbursement/recoupment(4)(5) 		   % 0.67       0.62       1.96       2.46       2.89       2.61       1.41    
Portfolio turnover rate   % 36       302       129       145       76       173       63    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its year end to June 30.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

†  Total return without the effect of affiliated payments would have been 7.95%.

See Accompanying Notes to Financial Statements

68


ING REAL ESTATE FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class A   Class B  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   December 20,
2002(1) to
May 31,
2003		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   November 20,
2002(1) to
May 31,
2003		  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 12.76       11.06       10.06       12.78       11.10       10.00    
Income (loss) from investment operations:      
Net investment income   $ 0.17       0.57       0.16       0.15       0.45       0.12    
Net realized and unrealized gain      
on investments   $ 2.53       2.29       1.04       2.52       2.32       1.15    
Total from investment operations   $ 2.70       2.86       1.20       2.67       2.77       1.27    
Less distributions from:      
Net investment income   $ 0.25       0.65       0.20       0.20       0.58       0.17    
Net realized gain from investments   $ 0.95       0.51       -       0.95       0.51       -    
Total distributions   $ 1.20       1.16       0.20       1.14       1.09       0.17    
Net asset value, end of period   $ 14.26       12.76       11.06       14.30       12.78       11.10    
Total Return(2)     % 21.49       26.79       12.06       21.19       25.81       12.77    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 38,488       16,569       982       3,089       1,990       149    
Ratios to average net assets:      
Net expenses after expense reimbursement/
recoupment and brokerage commission recapture(3)(4) 		   % 1.17       1.27       1.45       1.92       2.02       2.20    
Net expenses after expense      
reimbursement/recoupment(4)(5)    % 1.24       1.31       1.45       1.99       2.06       2.20    
Gross expenses prior to expense
reimbursement and brokerage commission
recapture(5) 		   % 1.14       1.37       1.53       1.89       2.12       2.30    
Net investment income after expense      
reimbursement/recoupment and      
brokerage commission recapture(5)(6)    % 3.35       4.84       0.01       2.61       3.28       1.91    
Portfolio turnover rate   % 37       132       62       37       132       62    

 

(1)  Commencement of operations.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements

69


ING REAL ESTATE FUND (UNAUDITED) (CONTINUED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class C   Class O  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   January 17
2003(1) to
May 31,
2003		   September 15,
2004(1) to
November 30,
2004		  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 13.11       11.37       9.96       13.52    
Income (loss) from investment operations:      
Net investment income (loss)   $ 0.16       0.43       (0.01 )*     0.30    
Net realized and unrealized gain      
on investments   $ 2.56       2.40       1.50       1.65    
Total from investment operations   $ 2.72       2.83       1.49       1.95    
Less distributions from:      
Net investment income   $ 0.19       0.58       0.08       0.27    
Net realized gain from investments   $ 0.95       0.51       -       0.95    
Total distributions   $ 1.14       1.09       0.08       1.22    
Net asset value, end of period   $ 14.69       13.11       11.37       14.25    
Total Return(2)     % 21.10       25.75       15.03       13.12    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 3,477       2,708       157       4,033    
Ratios to average net assets:      
Net expenses after expense reimbursement/recoupment
and brokerage commission recapture(3)(4) 		   % 1.92       2.02       2.20       1.07    
Net expenses after expense reimbursement/recoupment(4)(5)    % 1.99       2.06       2.20       1.16    
Gross expenses prior to expense reimbursement
and brokerage commission recapture(5) 		   % 1.89       2.12       2.30       1.16    
Net investment income (loss) after expense reimbursement/      
recoupment and brokerage commission recapture(5)(6)    % 2.67       3.54       (1.62 )     3.34    
Portfolio turnover rate   % 37       132       62       37    

 

(1)  Commencement of operations.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Per share data calculated using weighted average number of shares outstanding throughout the period.

See Accompanying Notes to Financial Statements

70


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED)

NOTE 1 - ORGANIZATION

Organization. The ING Funds contained within this book are comprised of ING Equity Trust ("IET") and ING Investment Funds, Inc. ("IIF") both of which are open-end investment management companies registered under the Investment Company Act of 1940, as amended.

IET is a Massachusetts business trust organized on June 12, 1998 with twenty-three separate series (Portfolios). Eleven of which ar discussed in this report: ING Disciplined LargeCap Fund ("Disciplined LargeCap"), ING LargeCap Growth Fund ("LargeCap Growth"), ING MidCap Opportunities Fund ("MidCap Opportunities"), ING SmallCap Opportunities Fund ("SmallCap Opportunities"), ING Financial Services Fund ("Financial Services"), ING LargeCap Value Fund ("LargeCap Value"), ING MidCap Value Fund ("MidCap Value"), ING SmallCap Value Fund ("SmallCap Value"), ING Convertible Fund ("Convertible"), ING Equity and Bond Fund ("Equity and Bond") and ING Real Estate Fund ("Real Estate"). IIF is a Maryland Corporation organized on July 7, 1969 with one Portfolio, ING MagnaCap Fund ("MagnaCap").

Each Fund offers at least three of the following classes of shares: Class A, Class B, Class C, Class I, Class M, Class O and Class Q. The separate classes of shares differ principally in the applicable sales charges (if any), distribution fees, shareholder servicing fees and transfer agency fees. Shareholders of each class also bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of the Fund and earn income and realized gains/losses from the Fund pro rata based on the average daily net assets of each class, without distinction between share classes. No class preferential dividend rights exist. Differences in per share dividend rates generally results from the relative weighting of pro rata income and realized gain allocations and from differences in separate class expenses, including distribution, and shareholder servicing fees. Class B shares, along with their pro rata reinvested dividend shares, automatically convert to Class A shares approximately eight years after purchase.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements. Such policies are in conformity with accounting principles generally accepted in the United States of America for investment companies.

A.  Security Valuation. Investments in equity securities traded on a national securities exchange are

valued at the last reported sale price. Securities reported by NASDAQ will be valued at the NASDAQ official closing prices. Securities traded on an exchange or NASDAQ for which there has been no sale and securities traded in the over-the-counter-market are valued at the mean between the last reported bid and ask prices. All investments quoted in foreign currencies will be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at that time. Debt securities are valued at prices obtained from independent services or from one or more dealers making markets in the securities and may be adjusted based on the Funds' valuation procedures. U.S. Government obligations are valued by using market quotations or independent pricing services that use prices provided by market-makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics.

Securities and assets for which market quotations are not readily available (which may include certain restricted securities which are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Funds' Board of Directors/Trustees (''Board''), in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, which close earlier than the time that a Fund calculates its net asset value may also be valued at their fair values as determined in good faith by or under the supervision of a Fund's Board, in accordance with methods that are specifically authorized by the Board. If a significant event which is likely to impact the value of one or more foreign securities held by a Fund occurs after the time at which the foreign market for such security(ies) closes but before the time that the Fund's net asset value is calculated on any business day, such event may be taken into account in determining the fair value of such security(ies) at the time the Fund calculates its net asset value. For these purposes, significant events after the close of trading on a foreign market may include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis, the Board has authorized the use of one or more research services to assist with the determination of the fair value of foreign securities. Research services use statistical analyses and quantitative models to help determine fair value as of the time

71


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

a Fund calculates its net asset value. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment, and the fair value assigned to a security may not represent the actual value that a Fund could obtain if it were to sell the security at the time of the close of the NYSE. Investments in securities maturing in 60 days or less from the date of acquisition are valued at amortized cost, which, when combined with accrued interest, approximates market value.

B.  Security Transactions and Revenue Recognition. Securities transactions are accounted for on the trade date. Realized gains and losses are reported on the basis of identified cost of securities sold. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date, or for certain foreign securities, when the information becomes available to the funds. Premium amortization and discount accretion are determined by the effective yield method.

C.  Foreign Currency Translation. The books and records of the Funds are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

(1)  Market value of investment securities, other assets and liabilities - at the exchange rates prevailing at the end of the day.

(2)  Purchases and sales of investment securities, income and expenses - at the rates of exchange prevailing on the respective dates of such transactions.

Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Funds do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities' current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies,

currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and the U.S. Government securities. These risks include but are not limited to revaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and the U.S. Government securities.

D.  Foreign Currency Transactions and Futures Contracts. Certain funds may enter into foreign currency exchange transactions to convert to and from different foreign currencies and to and from the U.S. dollar in connection with the planned purchases or sales of securities. The Funds either enter into these transactions on a spot basis at the spot rate prevailing in the foreign currency exchange market or use forward foreign currency contracts to purchase or sell foreign currencies. When the contract is fulfilled or closed, gains or losses are realized. Until then, the gain or loss is included in unrealized appreciation or depreciation. Risks may arise upon entering into forward contracts from the potential inability of counterparties to meet the terms of their forward contracts and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar.

Each Fund may enter into futures contracts involving foreign currency, interest rates, securities and security indices. A futures contract obligates the seller of the contract to deliver and the purchaser of the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time for a specified price. Upon entering into such a contract, a Fund is required to deposit and maintain as collateral such initial margin as required by the exchange on which the contract is traded. Pursuant to the contract, a Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuations in the value of the contract. Such receipts or payments are known as

72


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

variation margins and are recorded as unrealized gains or losses by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

E.  Distributions to Shareholders. The Funds record distributions to their shareholders on the ex-dividend date. Each Fund pays dividends, if any, as follows:

Annually   Semi-Annually  
Financial Services   MagnaCap  
LargeCap Growth   Quarterly  
MidCap Opportunities      
SmallCap Opportunities   Convertible  
Disciplined LargeCap   Equity and Bond  
LargeCap Value   Real Estate  
MidCap Value      
SmallCap Value      

 

Each Fund distributes capital gains, to the extent available, annually. The Funds may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. The characteristics of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America for investment companies.

F.  Federal Income Taxes. It is the policy of the Funds to comply with subchapter M of the Internal Revenue Code and related excise tax provisions applicable to regulated investment companies and to distribute substantially all of their net investment income and any net realized capital gains to their shareholders. Therefore, no federal income tax provision is required. No capital gain distributions shall be made until any capital loss carryforwards have been fully utilized or expired.

The Funds may utilize equalization accounting for tax purposes, where by a portion of redemption payments are treated as distributions of income or gain for income tax purposes.

G.  Use of Estimates. Management of the Funds has made certain estimates and assumptions relating to the reporting of assets, liabilities, income, and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America for investment companies. Actual results could differ from these estimates.

H.  Repurchase Agreements. Each Fund may invest in repurchase agreements only with government securities dealers recognized by the Board of Governors of the Federal Reserve System. Under such agreements, the seller of the security agrees to repurchase it at a mutually agreed upon time and price. The resale price is in excess of the purchase price and reflects an agreed upon interest rate for the period of time the agreement is outstanding. The period of the repurchase agreements is usually short, from overnight to one week, while the underlying securities generally have longer maturities. Each Fund will receive as collateral securities acceptable to it whose market value is equal to at least 100% of the carrying amount of the repurchase agreements, plus accrued interest, being invested by the Fund. The underlying collateral is valued daily on a mark to market basis to assure that the value, including accrued interest is at least equal to the repurchase price. If the seller defaults, a Fund might incur a loss or delay in the realization of proceeds if the value of the collateral securing the repurchase agreement declines, and it might incur disposition costs in liquidating the collateral.

I.  Options Contracts. Each Funds may purchase put and call options and may write (sell) put options and covered call options. The Funds may engage in option transactions as a hedge against adverse movements in the value of portfolio holdings or to increase market exposure. Option contracts are valued daily and unrealized gains or losses are recorded based upon the last sales price on the principal exchange on which the options are traded. The Funds will realize a gain or loss upon  the expiration or closing of the option contract. When an option is exercised, the proceeds on sales of the underlying security for a written call option, the purchase cost of the security for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Realized and unrealized gains or losses on option contracts are reflected in the accompanying financial statements. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties to meet the terms of the contract.

73


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

J.  Securities Lending. Each Fund has the option to temporarily loan up to 30% of its total assets to brokers, dealers or other financial institutions in exchange for a negotiated lender's fee. The borrower is required to fully collateralize the loans with cash or U.S. Government securities. Generally, in the event of counterparty default, the Fund has the right to use collateral to offset losses incurred. There would be potential loss to the Fund in the event the Fund is delayed or prevented from exercising its right to dispose of the collateral. The Fund bears the risk of loss with respect to the investment of collateral. Engaging in securities lending could have a leveraging effect, which may intensify the credit, market and other risks associated with investing in a Fund.

K.  Offering Costs. Offering costs are capitalized and amortized on a straight line basis over a period of twelve months.

L.  Illiquid and Restricted Securities. Each Fund may not invest more than 15% of its net assets in illiquid securities. Illiquid securities are not readily marketable. Disposing of illiquid investments may involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Funds to sell them promptly at an acceptable price. Each Fund also may invest in restricted securities, which include those sold under Rule 144A of the Securities Act of 1933 ("1933 Act") or securities offered pursuant to Section 4(2) of the 1933 Act, and/or are subject to legal or contractual restrictions on resale and generally may not be publicly sold without registration under the 1933 Act. Certain restricted securities may be considered liquid pursuant to procedures adopted by the Board or may be deemed to be illiquid because they may not be readily marketable. Illiquid and restricted securities are valued using market quotations when readily available. In the absence of market quotations, the illiquid and restricted securities are valued based upon their fair value determined under procedures approved by the Board.

M.  Delayed Delivery Transactions. Each Funds may purchase or sell securities on a when-issued or forward commitment basis. The price of the underlying securities and date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The market value of such is identified in each Fund's Portfolio of

Investments. Losses may arise due to changes in the market value of the securities or from the inability of counterparties to meet the terms of the contract. In connection with such purchases, the Funds are required to segregate liquid assets with the Funds' custodian sufficient to cover the purchase price.

N.  Mortgage Dollar Roll Transactions. In connection with a Fund's ability to purchase or sell securities on a when-issued basis, the Funds may engage in dollar roll transactions with respect to mortgage-backed securities issued by Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corp. In a dollar roll transaction, a Fund sells a mortgage-backed security to a financial institution, such as a bank or broker/dealer, and simultaneously agrees to repurchase a substantially similar (i.e., same type, coupon, and maturity) security from the institution on a delayed delivery basis at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. The Funds account for dollar roll transactions as purchases and sales.

NOTE 3 - INVESTMENT TRANSACTIONS

For the six months ended November 30, 2004, the cost of purchases and proceeds from the sales of securities, excluding short-term securities, were as follows:

    Purchases   Sales  
Disciplined LargeCap   $ 52,790,720     $ 81,930,384    
LargeCap Growth     125,403,346       129,217,717    
MidCap Opportunities     105,857,740       178,501,008    
SmallCap Opportunities     77,628,487       117,895,157    
Financial Services     37,899,983       66,013,997    
LargeCap Value     24,096,258       4,359,730    
MagnaCap     37,811,928       65,086,971    
MidCap Value     88,695,426       57,880,610    
SmallCap Value     77,638,421       19,300,495    
Convertible     53,381,754       74,327,783    
Equity and Bond     24,561,128       28,708,066    
Real Estate     96,961,140       75,381,250    

 

U.S. Governemnt securities not included above were as follows:

    Purchases   Sales  
Equity and Bond   $ 49,664,983     $ 53,462,074    

 

NOTE 4 - INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES

The Funds entered into Investment Management Agreements with ING Investments, LLC (the

74


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 4 - INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES (continued)

"Investment Manager") a wholly-owned subsidiary of ING Groep N.V. ING Groep N.V. is a global financial institution active in the fields of insurance, banking and asset management. The Investment Management Agreements compensate the Investment Manager with a fee, computed daily and payable monthly, based on the average daily net assets of each Fund, at the following annual rates:

    As a Percent of Average Net Assets  
Disciplined LargeCap     0.70 %  
LargeCap Growth*   0.75% on first $500 million; 0.675% on next $500 million; and 0.65% in excess of $1 billion  
MidCap Opportunities   1.00% on first $500 million; and 0.90% thereafter  
SmallCap Opportunities   1.00% on first $100 million; 0.90% on next $150 million; 0.80% on next
$250 million; and 0.75% in excess of
$500 million		  
Financial Services   1.00% on first $30 million; 0.75% on next $95 million; and 0.70% in excess of
$125 million		  
LargeCap Value   0.90% on first $50 million; 0.85% on next $450 million; and 0.80% thereafter  
MagnaCap   1.00% on first $30 million; 0.75% on next $220 million; 0.625% on next
$200 million; and 0.50% in excess of
$450 million		  
MidCap Value   1.00% on first $50 million; and 0.90%  
    thereafter  
SmallCap Value   1.00% on first $50 million; and 0.90%  
    thereafter  
Convertible   0.75% on first $500 million; 0.675% on next $500 million; and 0.65% in excess of $1 billion  
Equity and Bond   0.75% on first $500 million; 0.675% on next $500 million; and 0.65% in excess of $1 billion  
Real Estate     0.70 %  

 

* Assets are aggregated with ING VP LargeCap Growth Portfolio to determine fees.

ING Investment Management Co. (formerly, Aeltus Investment Management, Inc. "ING IM"), a registered investment adviser, serves as Sub-Adviser to the MidCap Opportunities Fund, SmallCap Opportunities Fund, Disciplined LargeCap Fund, Financial Services Fund, MagnaCap Fund, Convertible Fund and the Equity and Bond Fund pursuant to Sub-Advisory Agreements between the Investment Manager and ING IM.

Brandes Investment Partners, LP ("Brandes"), a registered investment adviser, serves as Sub-Adviser to the LargeCap Value, MidCap Value and SmallCap Value Funds pursuant to a Sub-Advisory Agreement between the Investment Manager and Brandes.

Wellington Management Company, LLP is the Sub-Adviser to the LargeCap Growth Fund.

ING Clarion Real Estate Securities L.P. ("ING Clarion"), a registered investment adviser, is the Sub-Adviser to the Real Estate Fund pursuant to a Sub-Advisory Agreement between the Investment Manager and ING Clarion.

ING Funds Services, LLC (the "Administrator" or "IFS"), serves as administrator to each Fund except Financial Services and MagnaCap. The Funds pay the Administrator a fee calculated at an annual rate of 0.10% of each Funds' average daily net assets.

Financial Services and MagnaCap have entered into Shareholder Service Agreements with IFS whereby IFS will act as Shareholder Service Agent for the Funds. The agreement provides that IFS will be compensated for incoming and outgoing shareholder telephone calls and letters, and all reasonable out-of-pocket expenses incurred in connection with the performance of such services. Prior to March 1, 2002, IFS acted as Shareholder Service Agent for LargeCap Growth, Convertible and Equity and Bond.

MidCap Opportunities and SmallCap Opportunities also pay IFS an annual shareholder account servicing fee of $5.00, payable semi-annually, for each account of beneficial owners of shares.

The Investment Manager, ING IM, ING Clarion, IFS and the Distributor are indirect wholly-owned subsidiaries of ING Groep N.V., a global financial institution active in the fields of banking, insurance and asset management.

NOTE 5 - DISTRIBUTION AND SERVICE FEES

Each share class of the Funds (except as noted below) has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), whereby ING Funds Distributor, LLC (the "Distributor") is reimbursed or compensated (depending on the class of shares) by the Funds for expenses incurred in the distribution of each Fund's shares ("Distribution Fees"). Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month to reimburse or compensate expenses incurred in the distribution and promotion of each Fund's shares, including expenses incurred in printing prospectuses and reports used for sales purposes, expenses incurred in preparing and printing sales literature and other such distribution related expenses, including any distribution or shareholder servicing fees ("Service Fees") paid to securities dealers who have executed a distribution agreement with the Distributor. Under the 12b-1 Plans, each class of shares of the Fund pays the Distributor a combined Distribution and/or

75


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 5 - DISTRIBUTION AND SERVICE FEES (continued)

Service Fee based on average daily net assets at the following rates:

    Class A   Class B
and C		   Class I   Class M   Class O   Class Q  
Disciplined LargeCap     0.30 %     1.00 %   N/A   N/A   N/A     N/A    
LargeCap Growth     0.35 %     1.00 %   N/A   N/A   N/A     0.25 %  
MidCap Opportunities     0.30 %     1.00 %   N/A   N/A   N/A     0.25 %  
SmallCap Opportunities     0.30 %     1.00 %   N/A   N/A   N/A     0.25 %  
Financial Services     0.25 %     1.00 %   N/A   N/A     0.25 %     0.25 %  
LargeCap Value     0.25 %     1.00 %   N/A   N/A   N/A     N/A    
MagnaCap     0.30 %     1.00 %   N/A     0.75 %   N/A     N/A    
MidCap Value     0.25 %     1.00 %   N/A   N/A   N/A     0.25 %  
SmallCap Value     0.25 %     1.00 %   N/A   N/A   N/A     0.25 %  
Convertible     0.35 %     1.00 %   N/A   N/A   N/A     0.25 %  
Equity and Bond     0.35 %     1.00 %   N/A   N/A   N/A     0.25 %  
Real Estate     0.25 %     1.00 %   N/A   N/A     0.25 %     0.25 %  

 

For the six months ended November 30, 2004, the Distributor has retained $172,546 as sales charges from the proceeds of Class A Shares sold, $22,017 and $20,318 from the proceeds of Class A Shares and Class C Shares redeemed, respectively and $90 from the proceeds of Class M Shares sold.

NOTE 6 - OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

The Investment Manager may direct the Funds' portfolio managers to use their best efforts (subject to obtaining best execution of each transaction) to allocate a Fund's equity security transactions through certain designated broker-dealers. The designated broker-dealer, in turn, will reimburse a portion of the brokerage commissions to pay certain expenses of that Portfolio. Any amounts credited to the Funds are reflected as brokerage commission recapture in the Statements of Operations.

At November 30, 2004, the Funds had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities (see Notes 4 and 5):

    Accrued
Investment
Management
Fees		   Accrued
Administrative
Fees		   Accrued
Shareholder
Services and
Distribution
Fees		   Recoupment   Total  
Disciplined
LargeCap		   $ 29,088     $ 4,155     $ 38,588     $ -     $ 71,831    
LargeCap
Growth		     195,865       26,113       169,316       52,518       443,812    
MidCap
Opportunities		     347,009       34,698       268,401       78,604       728,712    
SmallCap
Opportunities		     178,898       18,963       119,237       -       317,098    
Financial
Services		     193,512       -       140,499       -       334,011    
LargeCap Value     23,174       2,575       15,122       -       40,871    
MagnaCap     225,948       -       127,002       4,785       357,735    
MidCap Value     120,377       12,918       83,556       33,251       250,102    
SmallCap Value     115,731       12,402       71,079       73,000       272,212    
Convertible     122,402       16,319       129,084       -       267,805    
Equity and Bond     39,852       5,313       34,567       9,999       89,731    
Real Estate     136,515       19,501       13,026       55,129       224,171    

 

At November 30, 2004, ING Life Insurance & Annuity Company, a wholly-owned indirect subsidiary of ING Groep N.V., held 11.1% of the Real Estate Fund. At November 30, 2004, certain non-affiliated individuals and entities owned separately the following percentage of the Real Estate Fund: 5.3% and 22.9%. Investment activities of these shareholders could have a material impact on the Funds.

NOTE 7 - OTHER ACCRUED EXPENSES AND LIABILITIES

At November 30, 2004, the funds had following payables included in Other Accrued Expenses and Liabilities on the Statements of Assets and Liabilities that exceeded 5% of total liabilities:

    Payable for Custody
and Accounting Fees		  
Disciplined LargeCap   $ 14,496    
    Payable for Transfer
Agent Fees		  
Disciplined LargeCap   $ 28,931    
Financial Services     112,651    
MagnaCap     188,311    
    Payable for Shareholder 
Reporting Expense		  
Disciplined LargeCap   $ 62,990    
Financial Services     254,818    
MagnaCap     206,738    

 

NOTE 8 - EXPENSE LIMITATIONS

For the following Funds, the Investment Manager has agreed to limit expenses, excluding interest, taxes, brokerage and extraordinary expenses to the levels listed below:

    Class A   Class B   Class C   Class I   Class O   Class Q  
LargeCap Growth     1.45 %     2.10 %     2.10 %     1.10 %   N/A     1.35 %  
MidCap Opportunities     1.75 %     2.45 %     2.45 %     1.45 %   N/A     1.60 %  
LargeCap Value     1.45 %     2.20 %     2.20 %     1.20 %   N/A     N/A    
MidCap Value     1.75 %     2.50 %     2.50 %     1.50 %   N/A     1.75 %  
SmallCap Value     1.75 %     2.50 %     2.50 %     1.50 %   N/A     1.75 %  
Convertible     1.60 %     2.25 %     2.25 %     N/A     N/A     1.50 %  
Equity and Bond     1.60 %     2.25 %     2.25 %     N/A     N/A     1.50 %  
Real Estate     1.45 %     2.20 %     2.20 %     1.00 %     1.45 %     1.45 %  

 

Each Fund will at a later date reimburse the Investment Manager for management fees waived and other expenses assumed by the Investment Manager during the previous 36 months, but only if, after such reimbursement, the Fund's expense ratio does not exceed the percentage described above. Waived and reimbursed fees and any recoupment by the Investment Manager of such waived and reimbursed fees are reflected on the accompanying Statements of Operations for each Fund.

Outstanding reimbursement balances due to the Funds, if any, under their respective expense limitation

76


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 8 - EXPENSE LIMITATIONS (continued)

agreements are reflected in Reimbursement Due from Manager on the accompanying Statements of Assets and Liabilities.

As of November 30, 2004, the cumulative amounts of waived or reimbursed fees that are subject to possible recoupment by the Investment Manager, and the related expiration dates are as follows:

    November 30,      
    2005   2006   2007   Total  
LargeCap Growth   $ 263,850     $ 365,234     $ 23,483     $ 652,567    
MidCap Opportunities     554,148       398,893       -       953,041    
LargeCap Value     -       -       145,120       145,120    
MidCap Value     -       20,025       -       20,025    
SmallCap Value     9,105       42,868       -       51,973    
Real Estate     -       123,825       -       123,825    

 

The Expense Limitation Agreements are contractual and shall renew automatically for one-year terms unless ING Investments, LLC provides written notice of the termination of the Expense Limitation Agreement within 90 days of the end of the then current term.

NOTE 9 - LINE OF CREDIT

All of the Funds included in this report, in addition to certain other funds managed by the Investment Manager have entered into an unsecured committed revolving line of credit agreement (the "Credit Agreement") with The Bank of New York for an aggregate amount of $125,000,000. The proceeds may be used to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the Funds; and (3) enable the Funds to meet other emergency expenses as defined in the Credit Agreement. The Funds to which the line of credit is available pay a commitment fee equal to 0.09% per annum on the daily unused portion of the committed line amount payable quarterly in arrears.

The following Funds utilized the line of credit during the six months ended November 30, 2004:

    Days
Utilized		   Approximate
Average Daily
Balance		   Approximate
Weighted
Average
Interest Rate		  
MidCap Opportunities     8       818,125       1.82 %  
SmallCap Opportunities     14       1,173,996       2.13 %  
MagnaCap     3       576,667       2.35 %  
SmallCap Value     4       1,185,000       2.49 %  
Covertible     14       1,026,951       2.22 %  
Real Estate     1       4,300,000       1.80 %  

 

NOTE 10 - CAPITAL SHARES

Transactions in capital shares and dollars were as follows:

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Disciplined LargeCap (Number of Shares)  
Shares sold     51,840       113,903       166,227       389,459       19,552       84,889    
Shares redeemed     (122,484 )     (453,135 )     (591,037 )     (1,178,718 )     (274,401 )     (1,202,854 )  
Net decrease in shares outstanding     (70,644)       (339,232 )     (424,810 )     (789,259 )     (254,849 )     (1,117,965 )  
Disciplined LargeCap ($)  
Shares sold   $ 463,191     $ 970,844     $ 1,432,573     $ 3,217,947     $ 174,422     $ 690,881    
Shares redeemed     (1,076,198 )     (3,704,827 )     (4,937,725 )     (9,667,160 )     (2,294,763 )     (9,984,201 )  
Net decrease   $ (613,007 )   $ (2,733,983 )   $ (3,505,152 )   $ (6,449,213 )   $ (2,120,341 )   $ (9,293,320 )  
    Class I Shares          
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		                  
Disciplined LargeCap (Number of Shares)  
Shares sold     -       -                                    
Shares redeemed     (2,531,779 )     -                                    
Net decrease in shares outstanding     (2,531,779 )     -                                    
Disciplined LargeCap ($)  
Shares sold   $ -     $ -                                    
Shares redeemed     (23,141,782 )     -                                    
Net decrease   $ (23,141,782 )   $ -                                    

 

77


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
LargeCap Growth (Number of Shares)  
Shares sold     2,189,218       4,717,809       666,364       3,033,622       465,836       1,665,504    
Dividends reinvested     146,425       -       111,851       -       49,176       -    
Shares redeemed     (2,168,903 )     (1,508,196 )     (886,581 )     (1,409,436 )     (500,211 )     (842,766 )  
Net increase (decrease) in shares outstanding     166,740       3,209,613       (108,366 )     1,624,186       14,801       822,738    
LargeCap Growth ($)  
Shares sold   $ 38,528,666     $ 77,600,379     $ 11,338,359     $ 48,308,654     $ 7,828,856     $ 25,792,950    
Dividends reinvested     2,601,968       -       1,933,909       -       847,791       -    
Shares redeemed     (37,589,048 )     (24,659,524 )     (14,849,443 )     (22,603,682 )     (8,385,013 )     (13,587,922 )  
Net increase (decrease)   $ 3,541,586     $ 52,940,855     $ (1,577,175 )   $ 25,704,972     $ 291,634     $ 12,205,028    
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
LargeCap Growth (Number of Shares)  
Shares sold     178,623       650,093       21,137       252,367                    
Dividends reinvested     66,417       -       7,030       -                    
Shares redeemed     (119,403 )     (202,685 )     (64,228 )     (348,885 )                  
Net increase (decrease) in shares outstanding     125,637       447,408       (36,061 )     (96,518 )                  
LargeCap Growth ($)  
Shares sold   $ 3,231,684     $ 11,253,002     $ 386,471     $ 4,054,610                    
Dividends reinvested     1,216,755       -       128,161       -                    
Shares redeemed     (2,129,403 )     (3,512,313 )     (1,153,459 )     (5,867,902 )                  
Net increase (decrease)   $ 2,319,036     $ 7,740,689     $ (638,827 )   $ (1,813,292 )                  
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MidCap Opportunities (Number of Shares)  
Shares sold     761,487       1,036,073       168,479       733,927       83,761       329,723    
Shares issued in merger     -       7,257,045       -       13,295,946       -       5,847,535    
Shares redeemed     (1,712,984 )     (1,584,581 )     (2,736,169 )     (1,932,970 )     (1,709,173 )     (1,727,198 )  
Net increase (decrease) in shares outstanding     (951,497 )     6,708,537       (2,567,690 )     12,096,903       (1,625,412 )     4,450,060    
MidCap Opportunities ($)  
Shares sold   $ 8,917,692     $ 11,933,398     $ 1,919,978     $ 8,169,093     $ 943,468     $ 3,570,794    
Shares issued in merger     -       90,057,643       -       158,660,384       -       69,438,190    
Shares redeemed     (20,055,661 )     (18,290,662 )     (30,803,978 )     (21,648,477 )     (19,115,772 )     (19,175,206 )  
Net increase (decrease)   $ (11,137,969 )   $ 83,700,379     $ (28,884,000 )   $ 145,181,000     $ (18,172,304 )   $ 53,833,778    

 

78


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
MidCap Opportunities (Number of Shares)      
Shares sold     32,492       137,735       2,513       295,722                    
Shares issued in merger     -       4,319,450       -       17,144                    
Shares redeemed     (14,345 )     (5,294,804 )     (28,902 )     (390,135 )                  
Net increase (decrease) in shares outstanding     18,147       (837,619 )     (26,389 )     (77,269 )                  
MidCap Opportunities ($)      
Shares sold   $ 387,678     $ 1,697,334     $ 29,182     $ 3,125,007                    
Shares issued in merger     -       54,791,843       -       214,426                    
Shares redeemed     (174,631 )     (64,078,651 )     (335,084 )     (4,152,761 )                  
Net increase (decrease)   $ 213,047     $ (7,589,474 )   $ (305,902 )   $ (813,328 )                  
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
SmallCap Opportunities (Number of Shares)      
Shares sold     709,123       1,922,887       42,965       324,368       23,097       110,776    
Shares redeemed     (1,074,212 )     (3,854,778 )     (1,065,657 )     (1,650,166 )     (394,572 )     (1,121,973 )  
Net increase (decrease) in shares outstanding     (365,089 )     (1,931,891 )     (1,022,692 )     (1,325,798 )     (371,475 )     (1,011,197 )  
SmallCap Opportunities ($)      
Shares sold   $ 15,788,738     $ 41,773,565     $ 882,557     $ 6,706,707     $ 464,323     $ 2,424,180    
Shares redeemed     (23,735,242 )     (80,177,493 )     (21,785,610 )     (33,798,668 )     (8,024,914 )     (22,678,422 )  
Net increase (decrease)   $ (7,946,504 )   $ (38,403,928 )   $ (20,903,053 )   $ (27,091,961 )   $ (7,560,591 )   $ (20,254,242 )  
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
SmallCap Opportunities (Number of Shares)      
Shares sold     66,536       186,283       -       1,160                    
Shares redeemed     (52,813 )     (145,691 )     (7,358 )     (30,438 )                  
Net increase (decrease) in shares outstanding     13,723       40,592       (7,358 )     (29,278 )                  
SmallCap Opportunities ($)      
Shares sold   $ 1,501,064     $ 4,182,902     $ -     $ 28,326                    
Shares redeemed     (1,176,441 )     (3,235,935 )     (161,769 )     (651,974 )                  
Net increase (decrease)   $ 324,623     $ 946,967     $ (161,769 )   $ (623,648 )                  
    Class A Shares   Class B Shares   Class C Shares   Class O  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   August 25,
2004(1) to
November 30,
2004		   September 15,
2004(1) to
November 30,
2004		  
Financial Services (Number of Shares)      
Shares sold     246,320       455,137       143,236       368,220       116       40,941    
Dividends reinvested     416,930       277,726       281,714       192,903       8       2,154    
Shares redeemed     (645,481 )     (1,417,033 )     (669,976 )     (1,350,445 )     -       (5,238 )  
Net increase (decrease) in shares outstanding     17,769       (684,170 )     (245,026 )     (789,322 )     124       37,857    
Financial Services ($)      
Shares sold   $ 5,462,060     $ 9,841,082     $ 3,136,133     $ 7,767,033     $ 2,522     $ 922,895    
Dividends reinvested     9,134,930       5,632,245       6,101,924       3,886,990       182       47,107    
Shares redeemed     (14,283,946 )     (30,228,337 )     (14,640,566 )     (28,619,770 )     -       (117,094 )  
Net increase (decrease)   $ 313,044     $ (14,755,010 )   $ (5,402,509 )   $ (16,965,747 )   $ 2,704     $ 852,908    

 

79


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		   Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		   Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		  
LargeCap Value (Number of Shares)  
Shares sold     998,189       518,761       413,099       283,191       493,764       400,925    
Dividends reinvested     14,581       -       4,783       -       6,111       -    
Shares redeemed     (87,531 )     (28,776 )     (20,073 )     (12,978 )     (27,131 )     (6,833 )  
Net increase in shares outstanding     925,239       489,985       397,809       270,213       472,744       394,092    
LargeCap Value ($)  
Shares sold   $ 9,803,063     $ 5,037,124     $ 4,039,690     $ 2,755,909     $ 4,796,388     $ 3,887,843    
Dividends reinvested     149,894       -       48,999       -       62,641       -    
Shares redeemed     (866,916 )     (274,359 )     (195,910 )     (124,117 )     (261,156 )     (65,883 )  
Net increase   $ 9,086,041     $ 4,762,765     $ 3,892,779     $ 2,631,792     $ 4,597,873     $ 3,821,960    
    Class I
Shares		                      
    August 2,
2004(1) to
November 30,
2004		                      
LargeCap Value (Number of Shares)  
Shares sold     257,733                                            
Dividends reinvested     3,887                                            
Shares redeemed     -                                            
Net increase in shares outstanding     261,620                                            
LargeCap Value ($)  
Shares sold   $ 2,500,000                                            
Dividends reinvested     39,923                                            
Shares redeemed     -                                            
Net increase   $ 2,539,923                                            
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MagnaCap (Number of Shares)  
Shares sold     1,007,491       2,598,002       127,846       715,715       26,553       263,235    
Shares issued in merger     -       14,679,883       -       443,560       -       235,540    
Dividends reinvested     301,850       203,397       6,892       -       1,810       -    
Shares redeemed     (2,579,765 )     (5,008,192 )     (1,089,709 )     (1,805,792 )     (245,138 )     (315,710 )  
Net increase (decrease) in shares outstanding     (1,270,424 )     12,473,090       (954,971 )     (646,517 )     (216,775 )     183,065    
MagnaCap ($)  
Shares sold   $ 10,456,168     $ 25,810,263     $ 1,286,003     $ 7,106,156     $ 268,486     $ 2,618,410    
Shares issued in merger     -       141,208,171       -       4,106,720       -       2,182,353    
Dividends reinvested     3,192,414       1,893,245       68,642       -       18,047       -    
Shares redeemed     (26,904,590 )     (49,598,073 )     (10,937,153 )     (17,200,575 )     (2,487,389 )     (2,831,500 )  
Net increase (decrease)   $ (13,256,008 )   $ 119,313,606     $ (9,582,508 )   $ (5,987,699 )   $ (2,200,856 )   $ 1,969,263    

 

(1) Commencement of operations. 

80


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class I Shares   Class M Shares   Class Q Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MagnaCap (Number of Shares)      
Shares sold     221,490       -       1,636       30,375       -       -    
Shares issued in merger     -       2       -       -       -       807    
Dividends reinvested     1,995       12       1,533       506       -       4,830    
Shares redeemed     (14,363 )     (2 )     (78,720 )     (369,836 )     (814 )     (847,215 )  
Net increase (decrease) in shares outstanding     209,122       12       (75,551 )     (338,955 )     (814 )     (841,578 )  
MagnaCap ($)      
Shares sold   $ 2,294,178     $ -     $ 16,713     $ 275,418     $ -     $ -    
Shares issued in merger     -       18       -       -       -       7,766    
Dividends reinvested     21,582       111       15,813       4,431       -       42,987    
Shares redeemed     (152,409 )     (21 )     (805,860 )     (3,437,895 )     (8,444 )     (7,712,659 )  
Net increase (decrease)   $ 2,163,351     $ 108     $ (773,334 )   $ (3,158,046 )   $ (8,444 )   $ (7,661,906 )  
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MidCap Value (Number of Shares)      
Shares sold     3,579,577       4,389,175       945,597       1,916,154       1,434,397       1,895,746    
Dividends reinvested     385,030       -       214,551       -       213,558       -    
Shares redeemed     (2,304,605 )     (1,100,635 )     (340,795 )     (323,780 )     (306,631 )     (534,781 )  
Net increase in shares outstanding     1,660,002       3,288,540       819,353       1,592,374       1,341,324       1,360,965    
MidCap Value ($)      
Shares sold   $ 41,280,708     $ 47,731,690     $ 10,710,789     $ 20,528,670     $ 16,189,607     $ 20,537,186    
Dividends reinvested     4,301,356       -       2,360,063       -       2,349,128       -    
Shares redeemed     (25,637,914 )     (12,000,827 )     (3,790,654 )     (3,379,087 )     (3,450,323 )     (5,326,519 )  
Net increase   $ 19,944,150     $ 35,730,863     $ 9,280,198     $ 17,149,583     $ 15,088,412     $ 15,210,667    
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
MidCap Value (Number of Shares)      
Shares sold     -       167,376       -       -                    
Dividends reinvested     13,266       -       135       -                    
Shares redeemed     (11,385 )     (5,110 )     -       -                    
Net increase in shares outstanding     1,881       162,266       135       -                    
MidCap Value ($)      
Shares sold   $ -     $ 1,880,019     $ -     $ -                    
Dividends reinvested     153,787       -       1,507       -                    
Shares redeemed     (135,498 )     (58,828 )     -       -                    
Net increase   $ 18,289     $ 1,821,191     $ 1,507     $ -                    

 

81


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
SmallCap Value (Number of Shares)  
Shares sold     4,168,645       2,394,934       534,967       752,515       1,306,443       1,373,071    
Dividends reinvested     324,833       83,905       98,206       55,029       137,839       50,521    
Shares redeemed     (1,343,277 )     (409,889 )     (149,120 )     (201,315 )     (274,000 )     (455,949 )  
Net increase in shares outstanding     3,150,201       2,068,950       484,053       606,229       1,170,282       967,643    
SmallCap Value ($)  
Shares sold   $ 55,188,734     $ 30,977,651     $ 7,025,405     $ 9,220,990     $ 17,041,617     $ 17,186,034    
Dividends reinvested     4,281,297       940,575       1,271,774       611,375       1,783,641       560,781    
Shares redeemed     (17,838,218 )     (5,024,204 )     (1,908,851 )     (2,376,307 )     (3,537,268 )     (5,504,573 )  
Net increase   $ 41,631,813     $ 26,894,022     $ 6,388,328     $ 7,456,058     $ 15,287,990     $ 12,242,242    
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
SmallCap Value (Number of Shares)  
Shares sold     205       13,396       370       4,134                    
Dividends reinvested     2,260       1,983       303       -                    
Shares redeemed     -       (3,604 )     -       -                    
Net increase in shares outstanding     2,465       11,775       673       4,134                    
SmallCap Value ($)  
Shares sold   $ 2,810     $ 158,274     $ 5,000     $ 57,676                    
Dividends reinvested     29,951       22,291       4,047       -                    
Shares redeemed     -       (46,393 )     -       -                    
Net increase   $ 32,761     $ 134,172     $ 9,047     $ 57,676                    
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Convertible (Number of Shares)  
Shares sold     374,702       1,298,675       140,780       739,659       112,815       557,509    
Dividends reinvested     37,842       60,283       24,184       42,820       21,723       35,305    
Shares redeemed     (644,139 )     (1,003,751 )     (672,948 )     (1,078,475 )     (378,972 )     (744,929 )  
Net increase (decrease) in shares outstanding     (231,595 )     355,207       (507,984 )     (295,996 )     (244,434 )     (152,115 )  
Convertible ($)  
Shares sold   $ 6,753,786     $ 22,561,007     $ 2,780,427     $ 14,414,494     $ 2,081,591     $ 10,042,116    
Dividends reinvested     683,419       1,052,348       481,004       813,670       402,497       627,776    
Shares redeemed     (11,570,432 )     (17,665,114 )     (13,314,403 )     (20,919,881 )     (6,982,232 )     (13,528,070 )  
Net increase (decrease)   $ (4,133,227 )   $ 5,948,241     $ (10,052,972 )   $ (5,691,717 )   $ (4,498,144 )   $ (2,858,178 )  
    Class Q Shares          
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		                  
Convertible (Number of Shares)  
Shares sold     704       27,805                                    
Dividends reinvested     2,542       5,192                                    
Shares redeemed     (27,818 )     (108,400 )                                  
Net increase (decrease) in shares outstanding     (24,572 )     (75,403 )                                  
Convertible ($)  
Shares sold   $ 12,150     $ 481,790                                    
Dividends reinvested     44,534       87,716                                    
Shares redeemed     (483,033 )     (1,846,310 )                                  
Net increase (decrease)   $ (426,349 )   $ (1,276,804 )                                  

 

82


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Equity and Bond (Number of Shares)      
Shares sold     106,090       887,579       108,252       437,744       7,269       141,155    
Dividends reinvested     13,886       53,776       2,096       15,763       2,345       13,925    
Shares redeemed     (349,668 )     (1,045,795 )     (290,619 )     (782,074 )     (132,365 )     (285,420 )  
Net increase (decrease) in shares outstanding     (229,692 )     (104,440 )     (180,271 )     (328,567 )     (122,751 )     (130,340 )  
Equity and Bond ($)      
Shares sold   $ 1,325,834     $ 10,932,304     $ 1,459,661     $ 5,924,840     $ 86,354     $ 1,627,156    
Dividends reinvested     174,303       644,730       28,384       201,540       28,101       158,421    
Shares redeemed     (4,360,582 )     (13,177,888 )     (3,908,740 )     (10,424,076 )     (1,570,483 )     (3,316,399 )  
Net increase (decrease)   $ (2,860,445 )   $ (1,600,854 )   $ (2,420,695 )   $ (4,297,696 )   $ (1,456,028 )   $ (1,530,822 )  
    Class Q Shares          
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		                  
Equity and Bond (Number of Shares)      
Shares sold     1,836       22,261                                    
Dividends reinvested     169       556                                    
Shares redeemed     (5,240 )     (15,787 )                                  
Net increase (decrease) in shares outstanding     (3,235 )     7,030                                    
Equity and Bond ($)      
Shares sold   $ 22,904     $ 266,462                                    
Dividends reinvested     2,104       6,646                                    
Shares redeemed     (65,292 )     (192,188 )                                  
Net increase (decrease)   $ (40,284 )   $ 80,920                                    
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Real Estate (Number of Shares)      
Shares sold     1,296,961       1,380,337       61,751       166,580       49,705       292,977    
Dividends reinvested     185,743       43,360       13,596       3,900       15,446       12,292    
Shares redeemed     (82,888 )     (213,905 )     (14,977 )     (28,211 )     (35,006 )     (112,603 )  
Net increase (decrease) in shares outstanding     1,399,816       1,209,792       60,370       142,269       30,145       192,666    
Real Estate ($)      
Shares sold   $ 17,848,353     $ 16,994,026     $ 849,451     $ 2,087,459     $ 688,996     $ 3,611,743    
Dividends reinvested     2,584,373       538,693       189,646       48,871       220,956       154,981    
Shares redeemed     (1,121,002 )     (2,582,779 )     (204,720 )     (344,880 )     (483,364 )     (1,396,621 )  
Net increase (decrease)   $ 19,311,724     $ 14,949,940     $ 834,377     $ 1,791,450     $ 426,588     $ 2,370,103    
    Class I Shares   Class O      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   September 15,
2004(1) to
November 30,
2004		              
Real Estate (Number of Shares)      
Shares sold     1,082,086       4,052,833       292,138                            
Dividends reinvested     665,515       735,129       14,205                            
Shares redeemed     (829,154 )     (3,565,560 )     (23,335 )                          
Net increase (decrease) in shares outstanding     918,447       1,222,402       283,008                            
Real Estate ($)      
Shares sold   $ 15,222,356     $ 51,206,192     $ 4,156,760                            
Dividends reinvested     9,638,943       9,236,584       198,427                            
Shares redeemed     (11,434,487 )     (45,266,438 )     (338,564 )                          
Net increase (decrease)   $ 13,426,812     $ 15,176,338     $ 4,016,623                            

 

(1) Commencement of operations.

83


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 11 - SECURITIES LENDING

Under an agreement with The Bank of New York ("BNY"), the Funds can lend their securities to approved brokers, dealers and other financial institutions. Loans are collateralized by cash and U.S. Government securities. The collateral must be in an amount equal to at least 105% of the market value of non-U.S. securities loaned and 102% of the market value of U.S. securities loaned. The cash collateral received is invested in approved investments as defined in the Securities Lending Agreement with BNY (the "Agreement"). The collateral received is reflected in the Portfolio of Investments as collateral for securities loaned. Generally, in the event of counterparty default, the Funds have the right to use the collateral to offset losses incurred. The Agreement contains certain guarantees by BNY in the event of counterparty default and/or a borrower's failure to return a loaned security; however there would be a potential loss to the Funds in the event the Funds are delayed or prevented from exercising their right to dispose of the collateral. The Funds bear the risk of loss with respect to the investment of collateral. Engaging in securities lending could have a leveraging effect, which may intensify the credit, market and other risks associated with investing in a Fund. At November 30, 2004, the Funds had securities on loan with the following market values:

    Value of
Securities
Loaned		   Value of
Collateral		  
Disciplined LargeCap   $ 369,244     $ 379,129    
LargeCap Growth     33,248,005       34,202,610    
MidCap Opportunities     42,247,835       43,961,923    
SmallCap Opportunities     38,383,888       39,670,466    
MidCap Value     23,864,087       25,264,576    
SmallCap Value     31,965,747       34,093,573    
Convertible     52,558,629       53,943,311    
Real Estate     8,856,992       9,043,070    

 

NOTE 12 - WHEN ISSUED SECURITIES

The Equity and Bond Fund, at times, may purchase FNMA/GNMA certificates on a delayed delivery, forward or when-issued basis with payment and delivery often taking place a month or more after the initiation of the transaction. It is the Fund's policy to record when-issued FNMA/GNMA certificates (and the corresponding obligation to pay for the securities) at the time the purchase commitment becomes fixed - generally on the trade date. It is also the Fund's policy to segregate assets to cover its commitments for when-issued securities on trade date.

NOTE 13 - FEDERAL INCOME TAXES

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 investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, organizational and offering expenses, and wash sale deferrals. Distributions in excess of available earnings and profits, current and accumulated, for tax purposes are reported as distributions of paid-in capital.

Dividends paid by the Funds from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders.

The tax composition of dividends and distributions to shareholders were as follows:

    Six Months Ended
November 30, 2004		  
    Ordinary   Long-Term  
    Income   Capital Gains  
LargeCap Growth   $ 8,477,756     $ -    
Financial Services     657,821       20,290,967    
LargeCap Value     132,790       251,668    
SmallCap Value     -       9,699,163    
Convertible     2,503,049       -    
Equity and Bond     305,502       -    
Real Estate     3,676,059       14,759,993    
    Year Ended May 31, 2004  
    Ordinary
Income		   Long-Term
Capital Gains		  
Financial Services   $ 697,897     $ 12,536,310    
MagnaCap     2,245,213       -    
SmallCap Value     536,307       2,285,376    
Convertible     4,038,953       -    
Equity and Bond     1,362,049       -    
Real Estate(1)      8,704,727       6,564,687    

 

(1) Composition of dividends and distributions presented herein differ from final amounts based on the Fund's tax year end of December 31, 2003.

84


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 13 - FEDERAL INCOME TAXES (continued)

The tax-basis components of distributable earnings and the expiration dates of the capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes were as follows at May 31, 2004:

    Undistributed
Ordinary Income		   Undistributed
Long-Term
Capital Gain		   Unrealized
Appreciation/
(Depreciation)		   Post October
Losses
Deferred		   Capital
Loss
Carryforwards		   Expiration
Dates		  
LargeCap Growth   $ -     $ -     $ 51,263,561     $ -     $ (129,467,771 )     2009    
                                      (140,176,886 )     2010    
                                      (117,098,211 )     2011    
                                    $ (386,742,868 )*          
MidCap Opportunities     -       -       74,959,819       -     $ (133,027,987 )     2008    
                                      (94,142,180 )     2009    
                                      (21,217,297 )     2010    
                                      (9,824,346 )     2011    
                                    $ (258,211,810 )*          
SmallCap Opportunities     -       -       61,768,589       -     $ (1,017,516 )     2008    
                                      (74,206,071 )     2009    
                                      (106,886,755 )     2010    
                                      (167,319,500 )     2011    
                                    $ (349,429,842 )*          
Disciplined LargeCap     -       -       4,324,900       -     $ (1,279,041 )     2008    
                                      (7,339,303 )     2009    
                                      (10,480,954 )     2010    
                                      (24,371,998 )     2011    
                                      (6,531,058 )     2012    
                                    $ (50,002,354 )          
Financial Services             2,075,255       15,819,260       44,318,646       -     $ -    
LargeCap Value             54,520       -       (107,145 )     -     $ -    
MagnaCap     1,364,430       -       48,726,275       (309,679 )   $ (10,576,002 )     2011    
                                      (58,933,684 )     2012    
                                    $ (69,509,686 )          
MidCap Value             3,838,510       2,707,472       1,618,665       -     $ -    
SmallCap Value             3,161,587       3,491,699       5,237,983       -     $ -    
Convertible     1,813,064       -       14,601,092       -     $ (65,571,008 )     2010    
                                      (15,497,044 )     2011    
                                    $ (81,068,052 )          
Equity and Bond     109,754       -       2,551,909       (1,260 )   $ (2,058,681 )     2010    
                                      (4,569,236 )     2011    
                                      (8,878,256 )     2012    
                                    $ (15,506,173 )          
Real Estate(1)              -       -       30,275,162       -     $ -    

 

*  Utilization of these capital losses is subject to annual limitations under Section 382 of the Internal Revenue Code.

(1) As of the Fund's tax year ended December 31, 2003.

85


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 14 - ILLIQUID SECURITIES

Pursuant to guidelines adopted by the Funds' Board, the following securities have been deemed to be illiquid. The Funds currently limit investment in illiquid securities to 15% of the Fund's net assets, at market value, at time of purchase.

Fund   Security   Shares   Initial
Acquisition
Date		   Cost   Value   Percent
of Net
Assets		  
Convertible   WinStar Communications, Inc.     51,932     11/6/98   $ 2,364,096     $ 5       0.00 %  
Equity and Bond   Dayton Superior Corp.     400     8/31/01     7,446       4       0.00 %  
    Iridium World Comm     500     8/31/01     50,507       -       0.00 %  
    North Atlantic Trading Co.     1,209     8/31/01     12       1       0.00 %  
    WinStar Communications, Inc.     500,000     1/10/01     386,500       50       0.00 %  
                    $ 444,465     $ 55       0.00 %  

 

NOTE 15 - REORGANIZATION

On November 8, 2003, MagnaCap as listed below ("Acquiring Fund"), acquired the assets and certain liabilities of the ING Large Company Value Fund, also listed below ("Acquired Fund"), in a tax-free reorganization in exchange for shares of the Acquiring Fund, pursuant to a plan of reorganization approved by the Acquired Fund's shareholders. The number and value of shares issued by the Acquiring Fund are presented in Note 10 - Capital Shares. Net assets and unrealized appreciation as of the reorganization dates were as follows:

Acquiring
Fund		   Acquired
Funds		   Total net assets of
Acquired Fund (000's)		   Total net assets of
Acquiring Fund (000's)		   Acquired Fund
unrealized
appreciation
(000's)		   Conversion
Ratio		  
MagnaCap
 		   ING Large
Company Value Fund		  
$147,505		  
$230,749		  
$9,420		  
1.40		  

 

The net assets of MagnaCap after the acquisition were approximately $378,254,371.

On April 17, 2004, MidCap Opportunities as listed below ("Acquiring Fund"), acquired the assets and certain liabilities of the ING Growth + Value Fund and the ING Growth Opportunities Fund, also listed below ("Acquired Funds"), in a tax-free reorganization in exchange for shares of the Acquiring Fund, pursuant to a plan of reorganization approved by the Acquired Fund's shareholders. The number and value of shares issued by the Acquiring Fund are presented in Note 10 - Capital Shares. Net assets and unrealized appreciation as of the reorganization dates were as follows:

Acquiring
Fund		   Acquired
Funds		   Total net assets of
Acquired Fund (000's)		   Total net assets of
Acquiring Fund (000's)		   Acquired Fund
unrealized
appreciation
(000's)		   Conversion
Ratio		  
MidCap Opportunities   ING Growth + Value Fund   $ 196,927     $ 173,487     $ 36,128       0.79    
MidCap Opportunities
 		   ING Growth
Opportunities Fund		    
176,236		      
173,487		      
35,037		      
1.10		    

 

The net assets of MidCap Opportunities after the acquisition were approximately $546,649,969.

NOTE 16 - INFORMATION REGARDING TRADING OF ING'S U.S. MUTUAL FUNDS

ING Investments, LLC ("Investments"), the adviser to the ING Funds, has reported to the Boards of Directors/Trustees (the "Board") of the ING Funds that, like many U.S. financial services companies, Investments and certain of its U.S. affiliates have received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. Investments has advised the Board that it and its affiliates have cooperated fully with each request.

In addition to responding to regulatory and governmental requests, Investments reported that management of U.S. affiliates of ING Groep N.V., including Investments (collectively, "ING"), on their own initiative, have conducted, through independent special counsel and a national accounting firm, an extensive internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review was to identify any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. ING's internal review related to mutual fund trading is now substantially completed. ING has

86


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 16 - INFORMATION REGARDING TRADING OF ING'S U.S. MUTUAL FUNDS (continued)

reported that, of the millions of customer relationships that ING maintains, the internal review identified several isolated arrangements allowing third parties to engage in frequent trading of mutual funds within ING's variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred, despite measures taken by ING intended to combat market timing. ING further reported that each of these arrangements has been terminated and fully disclosed to regulators. The results of the internal review were also reported to the independent members of the Board.

Investments has advised the Board that most of the identified arrangements were initiated prior to ING's acquisition of the businesses in question in the U.S. Investments further reported that the companies in question did not receive special benefits in return for any of these arrangements, which have all been terminated. Based on the internal review, Investments has advised the Board that the identified arrangements do not represent a systemic problem in any of the companies that were involved.

More specifically, Investments reported to the Board that, at this time, these instances include the following:

•  ING has identified three arrangements, dating from 1995, 1996 and 1998, under which the administrator to the then-Pilgrim Funds, which subsequently became part of the ING Funds, entered formal and informal arrangements that permitted frequent trading. ING Funds Distributor, LLC ("IFD") has received a notice from the staff of the NASD informing IFD that it has made a preliminary determination to recommend that disciplinary action be brought against IFD and one of its registered persons for violations of the NASD Conduct Rules and certain provisions of the federal securities laws in connection with these arrangements.

•  Aeltus Investment Management, Inc. (a predecessor entity to ING Investment Management Co.) has identified two investment professionals who engaged in extensive frequent trading in certain ING Funds. One was subsequently terminated for cause and incurred substantial financial penalties in connection with this conduct and the second has been disciplined.

•  ReliaStar Life Insurance Company ("ReliaStar") entered into agreements seven years ago permitting the owner of policies issued by the insurer to engage in frequent trading and to submit orders until 4pm Central Time. In 2001 ReliaStar also entered into a selling agreement with a broker-dealer that engaged in frequent trading. Employees of ING affiliates were terminated and/or disciplined in connection with these matters.

•  In 1998, Golden American Life Insurance Company entered into arrangements permitting a broker-dealer to frequently trade up to certain specific limits in a fund available in an ING variable annuity product. No employee responsible for this arrangement remains at the company.

For additional information regarding these matters, you may consult the Form 8-K for each of four life insurance companies, ING USA Annuity and Life Insurance Company, ING Life Insurance and Annuity Company, ING Insurance Company of America, and ReliaStar Life Insurance Company of New York, each filed with the Securities and Exchange Commission (the "SEC") on September 9, 2004. These Forms 8-K can be accessed through the SEC's Web site at http://www.sec.gov. Despite the extensive internal review conducted through independent special counsel and a national accounting firm, there can be no assurance that the instances of inappropriate trading reported to the Board are the only instances of such trading respecting the ING Funds. Investments reported to the Board that ING is committed to conducting its business with the highest standards of ethical conduct with zero tolerance for noncompliance.

Accordingly, Investments advised the Board that ING management was disappointed that its voluntary internal review identified these situations. Viewed in the context of the breadth and magnitude of its U.S. business as a whole, ING management does not believe that ING's acquired companies had systemic ethical or compliance issues in these areas. Nonetheless, Investments reported that given ING's refusal to tolerate any lapses, it has taken the steps noted below, and will continue to seek opportunities to further strengthen the internal controls of its affiliates.

•  ING has agreed with the ING Funds to indemnify and hold harmless the ING Funds from all damages resulting from wrongful conduct by ING or its employees or from ING's internal investigation, any investigations conducted by any governmental or self-regulatory agencies, litigation or other formal proceedings, including

87


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 16 - INFORMATION REGARDING TRADING OF ING'S U.S. MUTUAL FUNDS (continued)

any proceedings by the Securities and Exchange Commission. Investments reported to the Board that ING management believes that the total amount of any indemnification obligations will not be material to ING or its U.S. business.

•  ING updated its Code of Conduct for employees reinforcing its employees' obligation to conduct personal trading activity consistent with the law, disclosed limits, and other requirements.

•  The ING Funds, upon a recommendation from ING, updated their respective Codes of Ethics applicable to investment professionals with ING entities and certain other fund personnel, requiring such personnel to pre-clear any purchases or sales of ING Funds that are not systematic in nature (i.e., dividend reinvestment), and imposing minimum holding periods for shares of ING Funds.

•  ING instituted excessive trading policies for all customers in its variable insurance and retirement products and for shareholders of the ING Funds sold to the public through financial intermediaries. ING does not make exceptions to these policies.

•  ING reorganized and expanded its U.S. Compliance Department, and created an Enterprise Compliance team to enhance controls and consistency in regulatory compliance.

NOTE 17 - SUBSEQUENT EVENTS

Effective January 1, 2005, the expense limitations for Disciplined LargeCap, MidCap Opportunities, SmallCap Opportunities, Convertible and Equity and Bond will be lowered based on the following tables:

    Class A   Class B   Class C   Class I   Class Q  
Disciplined Large Cap     1.36 %     2.11 %     2.11 %     1.11 %     N/A    
MidCap Opportunities     1.50 %     2.25 %     2.25 %     1.25 %     1.50 %  
SmallCap Opportunities     1.50 %     2.25 %     2.25 %     1.25 %     1.50 %  
Convertible     1.33 %     2.08 %     2.08 %     N/A       1.33 %  
Equity and Bond     1.36 %     2.11 %     2.11 %     N/A       1.36 %  

 

These expense limitation agreements are for the period beginning January 1, 2005 through December 31, 2005.

Effective January 1, 2005, ING Funds Distributor, LLC has contractually agreed to waive 0.05% of the Distribution Fee for Class A shares of Disciplined LargeCap, MidCap Opportunities and SmallCap Opportunities and 0.10% of the Distribution Fee for Class A shares of Convertible and Equity and Bond. The fee waiver is for the period beginning January 1, 2005 through December 31, 2005.

88


  PORTFOLIO OF INVESTMENTS
ING DISCIPLINED LARGECAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 98.1%  
            Aerospace/Defense: 2.8%      
  9,700         Boeing Co.   $ 519,629    
  3,350         General Dynamics Corp.     363,006    
  8,000         Raytheon Co.     322,720    
  2,200         United Technologies Corp.     214,676    
      1,420,031    
            Agriculture: 1.3%  
  8,850         Altria Group, Inc.     508,786    
  3,691         UST, Inc.     162,515    
      671,301    
            Apparel: 1.4%  
  4,200     @   Coach, Inc.     209,328    
  4,150         Nike, Inc.     351,339    
  2,500         VF Corp.     134,975    
      695,642    
            Auto Manufacturers: 1.3%  
  25,650         Ford Motor Co.     363,717    
  3,600         PACCAR, Inc.     281,160    
      644,877    
            Banks: 5.5%  
  17,750         Bank of America Corp.     821,292    
  3,700         Comerica, Inc.     227,550    
  8,400         KeyCorp     279,636    
  9,634         National City Corp.     357,229    
  8,250         U.S. Bancorp     244,448    
  7,050         Wachovia Corp.     364,837    
  7,450         Wells Fargo & Co.     460,186    
      2,755,178    
            Beverages: 2.3%  
  10,600         Coca-Cola Co.     416,686    
  15,150         PepsiCo, Inc.     756,137    
      1,172,823    
            Biotechnology: 0.2%  
  1,800     @   Amgen, Inc.     108,072    
      108,072    
            Chemicals: 1.6%  
  4,100         Dow Chemical Co.     206,927    
  4,700         E.I. du Pont de Nemours & Co.     213,004    
  3,750         PPG Industries, Inc.     253,013    
  3,300         Sherwin-Williams Co.     147,180    
      820,124    
            Commercial Services: 0.5%  
  2,600         Equifax, Inc.     71,812    
  3,400         H&R Block, Inc.     162,180    
      233,992    
            Computers: 6.0%  
  5,900     @   Apple Computer, Inc.     395,595    
  21,200     @   Dell, Inc.     859,024    
  13,237         Hewlett-Packard Co.     264,740    
  12,550         International Business
Machines Corp.		     1,182,711    
  12,700     @,X   Seagate Technology     0    
  61,600     @   Sun Microsystems, Inc.     341,880    
      3,043,950    

 

Shares           Value  
            Cosmetics/Personal Care: 3.1%  
  11,800         Gillette Co.   $ 513,182    
  19,800         Procter & Gamble Co.     1,058,904    
      1,572,086    
            Distribution/Wholesale: 0.6%  
  3,800         Genuine Parts Co.     164,958    
  1,950         W.W. Grainger, Inc.     120,627    
      285,585    
            Diversified Financial Services: 6.2%  
  5,650         American Express Co.     314,762    
  4,050         Capital One Financial Corp.     318,249    
  4,850         CIT Group, Inc.     207,338    
  21,850         Citigroup, Inc.     977,787    
  10,150         Countrywide Financial Corp.     337,081    
  4,250         Fannie Mae     291,975    
  4,250         Lehman Brothers Holdings, Inc.     356,064    
  4,100         Merrill Lynch & Co., Inc.     228,411    
  6,000     @   Providian Financial Corp.     96,300    
      3,127,967    
            Electric: 2.8%  
  11,700     @   AES Corp.     143,208    
  3,700         Constellation Energy Group, Inc.     161,690    
  12,550         Duke Energy Corp.     317,264    
  6,500         Edison Intl.     207,350    
  2,500         Exelon Corp.     104,275    
  3,565         PPL Corp.     185,202    
  4,450         TXU Corp.     279,549    
      1,398,538    
            Electronics: 0.2%  
  3,350     @   Thermo Electron Corp.     101,338    
      101,338    
            Food: 0.8%  
  3,350         SUPERVALU, Inc.     105,827    
  4,428         Wm. Wrigley Jr. Co.     304,646    
      410,473    
            Forest Products and Paper: 0.8%  
  1,900         Louisiana-Pacific Corp.     46,493    
  1,050         Temple-Inland, Inc.     62,570    
  4,500         Weyerhaeuser Co.     297,000    
      406,063    
            Gas: 0.3%  
  4,550     L   Sempra Energy     168,259    
      168,259    
            Hand/Machine Tools: 0.3%  
  1,700         Black & Decker Corp.     142,953    
      142,953    
            Healthcare-Products: 3.6%  
  5,100         Becton Dickinson & Co.     279,378    
  21,450         Johnson & Johnson     1,293,864    
  5,350         Medtronic, Inc.     257,068    
      1,830,310    

 

See Accompanying Notes to Financial Statements

89


  PORTFOLIO OF INVESTMENTS
ING DISCIPLINED LARGECAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Healthcare-Services: 3.2%  
  2,750         Aetna, Inc.   $ 325,903    
  3,250     @   Humana, Inc.     80,665    
  7,050         UnitedHealth Group, Inc.     584,092    
  2,750     @   WellPoint Health Networks, Inc.     344,025    
  2,750     @   WellPoint, Inc.     278,658    
      1,613,343    
            Household Products/Wares: 0.5%  
  4,700         Clorox Co.     259,064    
      259,064    
            Insurance: 6.1%  
  19,050         American International Group, Inc.     1,206,817    
  3,700         Chubb Corp.     281,977    
  3,200         CIGNA Corp.     224,064    
  3,600         Lincoln National Corp.     165,672    
  3,959         Loews Corp.     276,774    
  10,150         MetLife, Inc.     395,849    
  7,750         Prudential Financial, Inc.     379,362    
  2,950         Safeco Corp.     142,987    
      3,073,502    
            Internet: 1.8%  
  2,800     @   eBay, Inc.     314,860    
  5,450     @   Symantec Corp.     347,765    
  5,850     @   Yahoo!, Inc.     220,077    
      882,702    
            Iron/Steel: 0.2%  
  2,300         United States Steel Corp.     120,428    
      120,428    
            Leisure Time: 0.4%  
  2,700         Carnival Corp.     143,127    
  3,100         Sabre Holdings Corp.     71,548    
      214,675    
            Lodging: 0.5%  
  4,600         Marriott Intl., Inc.     261,510    
      261,510    
            Machinery-Diversified: 0.2%  
  1,000         Cummins, Inc.     79,620    
      79,620    
            Media: 2.3%  
  9,800     @   Comcast Corp.     294,392    
  3,500         McGraw-Hill Cos., Inc.     307,055    
  19,550     @   Time Warner, Inc.     346,231    
  8,700         Walt Disney Co.     233,856    
      1,181,534    
            Mining: 0.4%  
  2,100         Phelps Dodge Corp.     203,973    
      203,973    
            Miscellaneous Manufacturing: 5.0%  
  3,500         3M Co.     278,565    
  6,050     L   Eastman Kodak Co.     197,896    
  45,100         General Electric Co.     1,594,736    
  4,200         Honeywell International, Inc.     148,386    
  8,700     @@   Tyco Intl. Ltd.     295,539    
      2,515,122    

 

Shares           Value  
            Oil and Gas: 8.8%      
  3,950         Anadarko Petroleum Corp.   $ 274,920    
  6,200         Burlington Resources, Inc.     287,742    
  15,350         ChevronTexaco Corp.     838,110    
  2,678         ConocoPhillips     243,671    
  7,200         Devon Energy Corp.     298,224    
  36,400     S   Exxon Mobil Corp.     1,865,499    
  1,650         Sunoco, Inc.     136,224    
  5,100         Unocal Corp.     234,804    
  4,800         Valero Energy Corp.     224,592    
      4,403,786    
            Pharmaceuticals: 4.7%  
  6,950         Abbott Laboratories     291,622    
  2,450         AmerisourceBergen Corp.     144,403    
  8,250     @   Caremark Rx, Inc.     295,020    
  5,050         Eli Lilly & Co.     269,317    
  9,650         Merck & Co., Inc.     270,393    
  32,390         Pfizer, Inc.     899,470    
  5,500         Wyeth     219,285    
      2,389,510    
            Pipelines: 0.1%  
  10,850     @,L   Dynegy, Inc.     61,303    
      61,303    
            Retail: 8.8%  
  4,300         Circuit City Stores, Inc.     67,037    
  7,450         Costco Wholesale Corp.     362,070    
  15,100         Gap, Inc.     329,935    
  18,450         Home Depot, Inc.     770,288    
  6,150         J.C. Penney Co., Inc. Holding Co.     237,390    
  10,000     @   Limited Brands, Inc.     244,400    
  15,250         McDonald's Corp.     468,785    
  9,300         Staples, Inc.     296,763    
  6,450     @   Starbucks Corp.     362,877    
  3,800         Target Corp.     194,636    
  5,350     @   Toys R US, Inc.     103,469    
  18,350         Wal-Mart Stores, Inc.     955,300    
      4,392,950    
            Semiconductors: 1.2%  
  26,750         Intel Corp.     597,863    
      597,863    
            Software: 4.7%  
  2,650     @   Autodesk, Inc.     173,337    
  5,100     @   BMC Software, Inc.     94,758    
  10,000     @   Compuware Corp.     57,700    
  46,650         Microsoft Corp.     1,250,686    
  50,950     @   Oracle Corp.     645,027    
  5,100     @   Parametric Technology Corp.     29,835    
  12,050     @   Siebel Systems, Inc.     121,464    
      2,372,807    
            Telecommunications: 5.4%  
  9,200         Alltel Corp.     521,548    
  28,900     @   Cisco Systems, Inc.     540,719    
  27,250         Motorola, Inc.     524,835    
  7,150         Qualcomm, Inc.     297,583    
  20,050         Verizon Communications, Inc.     826,661    
      2,711,346    

 

See Accompanying Notes to Financial Statements

90


  PORTFOLIO OF INVESTMENTS
ING DISCIPLINED LARGECAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Transportation: 2.2%      
  4,150         FedEx Corp.   $ 394,375    
  8,000         Norfolk Southern Corp.     274,640    
  5,000         United Parcel Service, Inc.     420,750    
      1,089,765    
            Total Common Stock
(Cost $45,032,128)		    
49,434,365		    
Principal
Amount		       Value  

 

SHORT-TERM INVESTMENTS: 2.6%

    Repurchase Agreement: 1.8%      
$902,000   Goldman Sachs Repurchase Agreement
11/30/04, 2.060%, due 12/01/04,
 $902,052 to be
received upon repurchase
(Collateralized by $870,000
Federal Home Loan Mortgage
Corporation, 5.500%, Market Value
plus accrued interest $920,569,
due 07/15/06)		      
 
 
 
 
 
 
 
 		       902,000    
    Total Repurchase Agreement
(Cost $902,000)		      
 		       902,000    
    Securities Lending Collateralcc: 0.8%      
  379,129     The Bank of New York Institutional
Cash Reserves Fund		      
 		       379,129    
    Total Securities Lending Collateral
(Cost $379,129)		      
 		       379,129    
    Total Short-Term Investments
(Cost $1,281,129)		      
 		       1,281,129    
    Total Investments In
Securities (Cost
$46,313,257)* 		    100.7 %    

$50,715,494		    
    Other Assets and
Liabilities-Net		     (0.7 )     (341,100 )  
    Net Assets     100.0 %   $ 50,374,394    

 

@  Non-income producing security

@@  Foreign issuer

cc  Securities purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

S  Segregated assets for futures collateral.

X  Fair value determined by ING Funds Valuation Committee appointed by the Funds' Board of Directors/Trustees.

*  Cost for federal income tax purposes is $46,585,594. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 5,254,608    
Gross Unrealized Depreciation     (1,124,708 )  
Net Unrealized Appreciation   $ 4,129,900    

 

Information concerning open futures contracts for the ING Discipline LargeCap Fund at November 30, 2004 is shown below:

Long Contracts   No. of
Contracts		   Notional
Market Value		   Expiration
Date		   Unrealized
Gain		  
S&P 500     3     $ 880,575       12/16/04     $ 648    

 

See Accompanying Notes to Financial Statements

91


  PORTFOLIO OF INVESTMENTS
ING LARGECAP GROWTH FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 98.2%  
            Advertising: 2.2%      
  89,110         Omnicom Group, Inc.   $ 7,217,910    
      7,217,910    
            Aerospace/Defense: 1.0%  
  30,300         General Dynamics Corp.     3,283,308    
      3,283,308    
            Apparel: 0.0%  
  2,600     @   Coach, Inc.     129,584    
      129,584    
            Auto Parts and Equipment: 1.0%  
  51,370         Johnson Controls, Inc.     3,154,118    
      3,154,118    
            Biotechnology: 0.8%  
  44,130     @   Genzyme Corp.     2,471,721    
      2,471,721    
            Commercial Services: 7.5%  
  142,970     @,@@   Accenture Ltd. - Class A     3,708,642    
  208,940     @,L   Apollo Group, Inc.     16,652,517    
  46,110         Moody's Corp.     3,723,383    
      24,084,542    
            Computers: 10.7%  
  327,290     @   Dell, Inc.     13,261,791    
  37,130     @   Lexmark Intl., Inc.     3,152,337    
  203,510     @,@@   Research In Motion Ltd.     18,106,285    
      34,520,413    
            Cosmetics/Personal Care: 1.8%  
  131,430         Gillette Co.     5,715,891    
      5,715,891    
            Distribution/Wholesale: 3.0%  
  148,690         CDW Corp.     9,771,907    
      9,771,907    
            Diversified Financial
Services: 11.4%		          
  40,680         Capital One Financial Corp.     3,196,634    
  136,570         Citigroup, Inc.     6,111,508    
  472,388         Countrywide Financial Corp.     15,688,006    
  74,400         Franklin Resources, Inc.     4,882,872    
  97,170         Freddie Mac     6,632,824    
      36,511,844    
            Healthcare-Products: 7.7%  
  225,100         Guidant Corp.     14,593,233    
  209,800         Medtronic, Inc.     10,080,890    
      24,674,123    
            Home Builders: 0.9%  
  67,900         Lennar Corp.     3,050,747    
      3,050,747    
            Insurance: 0.5%  
  17,160         Progressive Corp.     1,561,388    
      1,561,388    

 

Shares           Value  
            Internet: 9.6%      
  127,210     @,L   eBay, Inc.   $ 14,304,765    
  436,550     @   Yahoo!, Inc.     16,423,011    
      30,727,776    
            Media: 2.9%  
  254,040     @,L   XM Satellite Radio
Holdings, Inc.		     9,376,616    
      9,376,616    
            Miscellaneous
Manufacturing: 3.7%		          
  74,770         Danaher Corp.     4,252,918    
  211,760         General Electric Co.     7,487,833    
      11,740,751    
            Oil and Gas: 1.2%  
  70,050     @@   Petro-Canada     3,999,855    
      3,999,855    
            Pharmaceuticals: 11.1%  
  141,880         Abbott Laboratories     5,953,285    
  283,300     @,@@,L   AstraZeneca PLC ADR     11,159,186    
  109,500     @,@@,L   Elan Corp. PLC ADR     2,890,800    
  134,550         Eli Lilly & Co.     7,175,552    
  39,840     @   Forest Laboratories, Inc.     1,552,565    
  81,680     @   Gilead Sciences, Inc.     2,814,693    
  221,220         Schering-Plough Corp.     3,948,777    
      35,494,858    
            Retail: 5.1%  
  81,680     @,L   Autozone, Inc.     6,991,808    
  85,890         Best Buy Co., Inc.     4,842,478    
  56,660         Lowe's Cos., Inc.     3,134,998    
  39,100     L   PETsMART, Inc.     1,339,957    
      16,309,241    
            Semiconductors: 1.8%  
  186,850     L   Xilinx, Inc.     5,833,457    
      5,833,457    
            Software: 10.7%  
  242,960     @,L   Electronic Arts, Inc.     11,880,744    
  258,700         First Data Corp.     10,629,983    
  305,990         Microsoft Corp.     8,203,592    
  38,760     @,L   Pixar, Inc.     3,514,369    
      34,228,688    
            Telecommunications: 3.6%  
  68,860     @,@@   America Movil SA de CV ADR     3,216,451    
  445,670     @   Cisco Systems, Inc.     8,338,485    
      11,554,936    
    Total Common Stock
(Cost $259,342,091)		     315,413,674    

 

See Accompanying Notes to Financial Statements

92


  PORTFOLIO OF INVESTMENTS
ING LARGECAP GROWTH FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
SHORT-TERM INVESTMENTS: 10.7%  
    Securities Lending Collateralcc: 10.7%  
$ 34,202,610     The Bank of New York            
   
    Institutional Cash            
   
    Reserves Fund           $ 34,202,610    
    Total Short-Term Investments
(Cost $34,202,610)		      
 		       34,202,610    
    Total Investments In
Securities (Cost
$293,544,701)* 		    108.9 %    

$349,616,284		    
    Other Assets and
Liabilities-Net 		    (8.9 )     (28,459,421 )  
    Net Assets     100.0 %   $ 321,156,863    

 

@  Non-income producing security

@@  Foreign issuer

ADR  American Depositary Receipt

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $303,679,987. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 51,664,500    
Gross Unrealized Depreciation     (5,728,203 )  
Net Unrealized Appreciation   $ 45,936,297    

 

See Accompanying Notes to Financial Statements

93


  PORTFOLIO OF INVESTMENTS
ING MIDCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  COMMON STOCK: 97.8%        
            Advertising: 0.6%  
  42,200     @   Getty Images, Inc.   $ 2,458,150    
      2,458,150    
            Apparel: 3.1%  
  172,500     @   Coach, Inc.     8,597,400    
  109,500         Polo Ralph Lauren Corp.     4,313,205    
      12,910,605    
            Auto Parts and Equipment: 1.2%  
  98,800     L   BorgWarner Inc     4,945,928    
      4,945,928    
            Banks: 0.5%  
  32,600         Zions Bancorporation     2,167,900    
      2,167,900    
            Biotechnology: 3.3%  
  197,520     @   Celgene Corp.     5,415,998    
  85,000     @   Charles River Laboratories
Intl., Inc.		     3,973,750    
  97,200     @,L   Millipore Corp.     4,735,584    
      14,125,332    
            Building Materials: 1.2%  
  130,500     @   American Standard Cos., Inc.     5,081,670    
      5,081,670    
            Coal: 1.4%  
  72,900         Peabody Energy Corp.     6,050,700    
      6,050,700    
            Commercial Services: 4.8%  
  120,300     @   Alliance Data Systems Corp.     5,160,870    
  100,000     @   CoStar Group, Inc.     4,380,000    
  133,200     @   Education Management Corp.     4,414,248    
  156,061     @   Laureate Education, Inc.     6,147,243    
      20,102,361    
            Computers: 3.5%  
  63,100     @   Anteon Intl. Corp.     2,335,962    
  121,600     @   CACI Intl., Inc.     7,555,008    
  140,700     @,L   palmOne, Inc.     4,930,128    
      14,821,098    
            Distribution/Wholesale: 1.1%  
  135,056         Hughes Supply, Inc.     4,440,641    
      4,440,641    
            Diversified Financial Services: 1.4%  
  414,100     @   Ameritrade Holding Corp.     5,768,413    
      5,768,413    
            Electrical Components and
Equipment: 1.0%		          
  129,700         Ametek, Inc.     4,238,596    
      4,238,596    
            Electronics: 2.7%  
  88,000     @,L   Arrow Electronics, Inc.     2,158,640    
  66,250     @   Benchmark Electronics, Inc.     2,322,063    
  147,000     @   Waters Corp.     6,859,020    
      11,339,723    

 

Shares           Value  
            Hand/Machine Tools: 0.5%      
  48,200         Stanley Works   $ 2,253,832    
      2,253,832    
            Healthcare-Products: 8.2%  
  90,000     @   Gen-Probe, Inc.     3,591,000    
  120,400     @   Inamed Corp.     6,459,460    
  151,200     @,L   Patterson Cos., Inc.     6,178,032    
  185,830     @   St. Jude Medical, Inc.     7,087,556    
  130,400     @,L   Varian Medical Systems, Inc.     5,487,232    
  70,000     @   Zimmer Holdings, Inc.     5,712,000    
      34,515,280    
            Healthcare-Services: 6.1%  
  22,800         Aetna, Inc.     2,702,028    
  88,450     @   Amsurg Corp.     2,274,050    
  184,500     @   Community Health Systems, Inc.     5,101,425    
  47,300     L   Quest Diagnostics, Inc.     4,434,375    
  320,000         Select Medical Corp.     5,584,000    
  114,800     @   WellChoice, Inc.     5,624,052    
      25,719,930    
            Home Furnishings: 2.1%  
  72,000         Harman Intl. Industries, Inc.     8,845,200    
      8,845,200    
            Household Products/Wares: 1.1%  
  150,600     @,L   Yankee Candle Co., Inc.     4,587,276    
      4,587,276    
            Insurance: 2.5%  
  26,700         AMBAC Financial Group, Inc.     2,171,511    
  74,500     L   MBIA, Inc.     4,467,020    
  96,700     @   Proassurance Corp.     3,776,135    
      10,414,666    
            Internet: 2.6%  
  332,800     @,L   Akamai Technologies, Inc.     4,309,760    
  78,400     @,L   Ask Jeeves, Inc.     2,025,856    
  402,100     @   TIBCO Software, Inc.     4,624,150    
      10,959,766    
            Iron/Steel: 1.2%  
  99,500         Nucor Corp.     5,263,550    
      5,263,550    
            Leisure Time: 1.0%  
  63,500         Polaris Industries, Inc.     4,184,650    
      4,184,650    
            Lodging: 1.3%  
  91,300     L   Harrah's Entertainment, Inc.     5,605,820    
      5,605,820    
            Machinery-Diversified: 1.8%  
  157,300         Rockwell Automation, Inc.     7,440,290    
      7,440,290    
            Miscellaneous Manufacturing: 3.5%  
  98,500     L   Danaher Corp.     5,602,680    
  70,800         Donaldson Co., Inc.     2,194,800    
  29,200         ITT Industries, Inc.     2,485,504    
  115,500         Pentair, Inc.     4,622,310    
      14,905,294    

 

See Accompanying Notes to Financial Statements

94


  PORTFOLIO OF INVESTMENTS
ING MIDCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Office/Business Equipment: 0.9%      
  256,800     @,L   Xerox Corp.   $ 3,934,176    
      3,934,176    
            Oil and Gas: 7.7%  
  63,730         Apache Corp.     3,445,244    
  399,300         Chesapeake Energy Corp.     7,187,400    
  26,600         Murphy Oil Corp.     2,269,246    
  67,255     @,@@   Nabors Industries Ltd.     3,497,260    
  70,400         Patina Oil & Gas Corp.     2,337,280    
  348,600         Patterson-UTI Energy, Inc.     6,972,000    
  190,575         XTO Energy, Inc.     6,927,401    
      32,635,831    
            Oil and Gas Services: 1.8%  
  93,000         BJ Services Co.     4,712,310    
  50,500     @,L   Smith Intl., Inc.     3,058,785    
      7,771,095    
            Pharmaceuticals: 0.5%  
  74,300     @   MGI Pharma, Inc.     2,005,357    
      2,005,357    
            Retail: 12.0%  
  51,400     @,L   Advance Auto Parts, Inc.     2,120,764    
  159,550         Applebees Intl., Inc.     4,100,435    
  159,100     @,L   Chico's FAS, Inc.     6,141,260    
  279,400         Foot Locker, Inc.     7,258,812    
  240,200     L   Michaels Stores, Inc.     6,564,666    
  88,700     L   MSC Industrial Direct Co.     3,159,494    
  93,100     @   Pacific Sunwear of
California, Inc.		     2,067,751    
  58,700     @,L   Panera Bread Co.     2,344,478    
  158,600     L   PETsMART, Inc.     5,435,222    
  102,000         Regis Corp.     4,554,300    
  255,000     @   Sonic Corp.     7,438,350    
      51,185,532    
            Savings and Loans: 2.7%  
  130,700         Independence Community
Bank Corp.		     5,552,136    
  274,400     L   Sovereign Bancorp, Inc.     5,995,640    
      11,547,776    
            Semiconductors: 1.8%  
  91,500     @,L   Altera Corp.     2,075,220    
  141,800     L   Linear Technology Corp.     5,411,088    
      7,486,308    
            Software: 5.5%  
  147,500         Adobe Systems, Inc.     8,932,600    
  147,800     @,L   Avid Technology, Inc.     8,434,946    
  99,900     @   Dun & Bradstreet Corp.     5,930,064    
      23,297,610    
            Telecommunications: 2.3%  
  328,400     @,L   Comverse Technology, Inc.     6,985,068    
  118,600     @   Polycom, Inc.     2,708,824    
      9,693,892    
            Textiles: 2.0%  
  97,200     @   Mohawk Industries, Inc.     8,524,440    
      8,524,440    

 

Shares           Value  
            Transportation: 2.9%  
  66,100         CH Robinson Worldwide, Inc.   $ 3,552,875    
  97,900     @,L   Forward Air Corp.     4,537,665    
  102,250         J.B. Hunt Transport
Services, Inc.		     4,110,450    
      12,200,990    
    Total Common Stock
(Cost $320,035,411)		     413,429,678    
Principal
Amount		       Value  

 

SHORT-TERM INVESTMENTS: 12.6%

    Repurchase Agreement: 2.2%  
$ 9,091,000     Goldman Sachs Repurchase
Agreement 11/30/04, 2.060%,
due 12/01/04, $9,091,520 to be
received upon repurchase
(Collateralized by $9,290,000
Federal Home Loan Bank,
3.200%, Market Value plus
accrued interest $9,273,453,
due 11/29/06)		      
 
 
 
 
 
 
 
 		       9,091,000    
    Total Repurchase Agreement
(Cost $9,091,000)		      
 		       9,091,000    
    Securities Lending Collateralcc: 10.4%  
  43,961,923     The Bank of New York
Institutional Cash
Reserves Fund		      
 
 		       43,961,923    
    Total Securities Lending Collateral
(Cost $43,961,923)		      
 		       43,961,923    
    Total Short-Term Investments
(Cost $53,052,923)		      
 		      
53,052,923		    
    Total Investments In
Securities (Cost
$373,088,334)*		     110.4 %    

$466,482,601		    
    Other Assets and
Liabilities-Net		     (10.4 )    
(43,829,150)		    
    Net Assets     100.0 %   $ 422,653,451    

 

@  Non-income producing security

@@  Foreign issuer

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $373,133,784. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 94,074,065    
Gross Unrealized Depreciation     (725,248 )  
Net Unrealized Appreciation   $ 93,348,817    

 

See Accompanying Notes to Financial Statements

95


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  COMMON STOCK: 98.5%        
            Banks: 5.1%  
  202,700     L   Southwest Bancorp
of Texas, Inc.		   $ 4,958,042    
  55,500     L   UCBH Holdings, Inc.     2,516,370    
  75,900         Westamerica Bancorporation     4,414,344    
      11,888,756    
            Biotechnology: 2.7%  
  51,400     @   Celgene Corp.     1,409,388    
  141,100     @,L   Integra LifeSciences
Holdings Corp.		     4,795,989    
      6,205,377    
            Commercial Services: 3.5%  
  72,100     @   CoStar Group, Inc.     3,157,980    
  45,900     @   Education Management Corp.     1,521,126    
  86,057     @   Laureate Education, Inc.     3,389,785    
      8,068,891    
            Computers: 9.1%  
  41,600     @   Anteon Intl. Corp.     1,540,032    
  79,200     @   CACI Intl., Inc.     4,920,696    
  162,000     @   Cognizant Technology
Solutions Corp.		     6,177,060    
  114,600         Jack Henry & Associates, Inc.     2,209,488    
  48,800     @   Micros Systems, Inc.     3,580,456    
  79,000     @,L   PalmOne, Inc.     2,768,160    
      21,195,892    
            Distribution/Wholesale: 3.0%  
  42,164         Hughes Supply, Inc.     1,386,352    
  173,550         SCP Pool Corp.     5,472,032    
      6,858,384    
            Electrical Components and
Equipment: 1.1%		          
  89,501     @   Intermagnetics General Corp.     2,637,594    
      2,637,594    
            Electronics: 2.4%  
  68,442     @,L   Benchmark Electronics, Inc.     2,398,892    
  22,500     @   Dionex Corp.     1,291,275    
  71,400     @   Measurement Specialties, Inc.     1,821,414    
      5,511,581    
            Entertainment: 6.0%  
  83,100     @,L   Penn National Gaming, Inc.     4,385,187    
  127,300     @   Scientific Games Corp.     3,042,470    
  141,922     @,L   Shuffle Master, Inc.     6,532,670    
      13,960,327    
            Healthcare-Products: 7.2%  
  78,200     @,L   Arthrocare Corp.     2,367,114    
  74,300     @   Gen-Probe, Inc.     2,964,570    
  97,800     @   Inamed Corp.     5,246,970    
  157,401     @,L   Kyphon, Inc.     3,787,068    
  63,100     @   Quinton Cardiology
Systems, Inc.		     646,775    
  43,500     @   Techne Corp.     1,616,025    
  12,553     @,L   TriPath Imaging, Inc.     90,131    
      16,718,653    

 

Shares           Value  
            Healthcare-Services: 7.0%  
  214,000     @   Amsurg Corp.   $ 5,501,940    
  81,100     @   Pediatrix Medical Group, Inc.     5,052,530    
  152,100         Select Medical Corp.     2,654,145    
  77,840     @   United Surgical Partners
Intl., Inc.		     3,072,345    
      16,280,960    
            Home Builders: 1.1%  
  74,798     L   Thor Industries, Inc.     2,498,253    
      2,498,253    
            Household Products/Wares: 1.3%  
  97,600     @   Yankee Candle Co., Inc.     2,972,896    
      2,972,896    
            Insurance: 2.5%  
  54,900     @   Philadelphia Consolidated
Holding Co.		     3,746,925    
  50,700     @   Proassurance Corp.     1,979,835    
      5,726,760    
            Internet: 4.1%  
  181,800     @   Akamai Technologies, Inc.     2,354,310    
  42,200     @,L   Ask Jeeves, Inc.     1,090,448    
  221,200     @   TIBCO Software, Inc.     2,543,800    
  279,700     @   ValueClick, Inc.     3,608,130    
      9,596,688    
            Investment Companies: 2.6%  
  93,050     @,L   Ishares Russell 2000 Growth
Index Fund		     6,066,860    
      6,066,860    
            Leisure Time: 1.0%  
  36,600         Polaris Industries, Inc.     2,411,940    
      2,411,940    
            Lodging: 2.3%  
  95,200         Station Casinos, Inc.     5,430,208    
      5,430,208    
            Miscellaneous Manufacturing: 2.4%  
  81,800     @,L   Ceradyne, Inc.     4,040,920    
  24,570     @   Cuno, Inc.     1,610,072    
      5,650,992    
            Oil and Gas: 6.0%  
  83,100         Patina Oil & Gas Corp.     2,758,920    
  125,200     @   Southwestern Energy Co.     6,873,480    
  107,000     @   Unit Corp.     4,239,340    
      13,871,740    
            Oil and Gas Services: 1.2%  
  310,660     @,L   Input/Output, Inc.     2,724,488    
      2,724,488    
            Pharmaceuticals: 3.6%  
  117,000     @,L   HealthExtras, Inc.     1,868,490    
  84,100     @   MGI Pharma, Inc.     2,269,859    
  227,298     @,L   VCA Antech, Inc.     4,218,651    
      8,357,000    

 

See Accompanying Notes to Financial Statements

96


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Retail: 12.6%  
  95,000     L   Applebees Intl., Inc.   $ 2,441,500    
  86,880     @   Chico's FAS, Inc.     3,353,568    
  58,600     @   Copart, Inc.     1,265,760    
  90,400     @   Dave & Buster's, Inc.     1,690,480    
  100,400     @,L   Dick's Sporting Goods, Inc.     3,614,400    
  48,284     @,L   GameStop Corp.     1,018,310    
  57,800         MSC Industrial Direct Co.     2,058,836    
  192,542     @   Pacific Sunwear of
California, Inc.		     4,276,357    
  31,900     @,L   Panera Bread Co.     1,274,086    
  72,800     @   PETCO Animal Supplies, Inc.     2,632,448    
  49,400         Regis Corp.     2,205,710    
  121,950     @   Sonic Corp.     3,557,282    
      29,388,737    
            Semiconductors: 1.9%  
  260,600     @   Silicon Image, Inc.     4,378,080    
      4,378,080    
            Software: 5.3%  
  105,100     @   Avid Technology, Inc.     5,998,057    
  42,300     L   Global Payments, Inc.     2,333,268    
  271,820     @   Witness Systems, Inc.     4,074,582    
      12,405,907    
            Telecommunications: 2.1%  
  81,044     @   Polycom, Inc.     1,851,045    
  146,500     @,L   Powerwave Technologies, Inc.     1,184,892    
  77,200     @   Tekelec     1,807,252    
      4,843,189    
            Transportation: 1.4%  
  67,820     @   Forward Air Corp.     3,143,457    
      3,143,457    
    Total Common Stock
(Cost $151,887,763)		     228,793,610    
Principal
Amount		       Value  
  SHORT-TERM INVESTMENTS: 17.8%        
        Repurchase Agreement: 0.7%  
$ 1,592,000     Goldman Sachs Repurchase
Agreement 11/30/04, 2.060%,
due 12/01/04, $1,592,091 to be
received upon repurchase
(Collateralized by $1,535,000
Federal Home Loan Bank,
5.500%, Market Value plus
accrued interest $1,624,222,
due 07/15/06)		    
 
 
 
 
 
 
 
 		     1,592,000    
        Total Repurchase Agreement
(Cost $1,592,000)		    
 		     1,592,000    

 

Principal
Amount		           Value  
    Securities Lending Collateralcc: 17.1%      
$ 39,670,466     The Bank of New York            
   
    Institutional Cash            
   
    Reserves Fund           $ 39,670,466    
    Total Securities Lending Collateral
(Cost $39,670,466)		      
 		       39,670,466    
    Total Short-Term Investments
(Cost $41,262,466)		      
 		       41,262,466    
    Total Investments In
Securities (Cost
$193,150,229)* 		    116.3 %   $ 270,056,076    
    Other Assets and
Liabilities-Net		     (16.3 )     (37,806,427 )  
    Net Assets     100.0 %   $ 232,249,649    

 

@  Non-income producing security

@@  Foreign issuer

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $193,359,874. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 77,016,023    
Gross Unrealized Depreciation     (319,821 )  
Net Unrealized Appreciation   $ 76,696,202    

 

See Accompanying Notes to Financial Statements

97


  PORTFOLIO OF INVESTMENTS
ING FINANCIAL SERVICES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 97.9%  
            Banks: 22.9%      
  174,622         Bank of America Corp.   $ 8,079,760    
  120,733         City National Corp.     8,258,137    
  124,785         Cullen/Frost Bankers, Inc.     5,978,449    
  120,964         Northern Trust Corp.     5,690,147    
  215,000         Prosperity Bancshares, Inc.     6,097,400    
  181,895         The Bank of New York Co., Inc.     5,986,164    
  289,667         U.S. Bancorp     8,582,833    
  76,400         UnionBanCal Corp.     4,723,812    
  99,787         Wachovia Corp.     5,163,977    
  222,600         Wells Fargo & Co.     13,750,003    
      72,310,682    
            Diversified Financial Services: 45.9%  
  146,740     @   Accredited Home Lenders
Holding Co.		     6,302,483    
  172,778     @   Affiliated Managers Group, Inc.     10,950,669    
  117,800         American Express Co.     6,562,638    
  82,700         Capital One Financial Corp.     6,498,566    
  150,700         CIT Group, Inc.     6,442,425    
  411,200         Citigroup, Inc.     18,401,199    
  204,374         Countrywide Financial Corp.     6,787,261    
  547,200     @   E*TRADE Financial Corp.     7,584,192    
  111,513         Fannie Mae     7,660,943    
  87,218         Franklin Resources, Inc.     5,724,117    
  136,700         Freddie Mac     9,331,142    
  95,777         Goldman Sachs Group, Inc.     10,033,599    
  267,649         J.P. Morgan Chase & Co.     10,076,984    
  79,179         Lehman Brothers Holdings, Inc.     6,633,617    
  122,767         MBNA Corp.     3,260,692    
  153,254         Merrill Lynch & Co., Inc.     8,537,780    
  177,950         Morgan Stanley     9,030,963    
  82,362         T. Rowe Price Group, Inc.     4,872,536    
      144,691,806    
            Home Builders: 2.3%  
  206,650         DR Horton, Inc.     7,276,147    
      7,276,147    
            Insurance: 22.9%  
  176,700     @@   ACE Ltd.     7,142,214    
  121,200         AFLAC, Inc.     4,559,544    
  96,759         Allstate Corp.     4,886,330    
  184,871         American International
Group, Inc.		     11,711,579    
  125,000     @@   Endurance Specialty Holdings Ltd.     4,196,250    
  138,000         Hartford Financial Services
Group, Inc.		     8,832,000    
  139,919         MetLife, Inc.     5,456,841    
  164,285         PMI Group, Inc.     6,765,256    
  98,000         Prudential Financial, Inc.     4,797,100    
  95,449         Radian Group, Inc.     4,891,761    
  81,961     @@   RenaissanceRe Holdings Ltd.     4,126,736    
  130,311     @@   Willis Group Holdings Ltd.     4,932,271    
      72,297,882    
            Software: 3.9%  
  189,900         First Data Corp.     7,802,991    
  112,724     @   Fiserv, Inc.     4,341,001    
      12,143,992    
    Total Common Stock
(Cost $248,702,301)		     308,720,509    

 

Principal
Amount		           Value  
SHORT-TERM INVESTMENTS: 2.3%  
    Repurchase Agreement: 2.3%  
$ 7,334,000     Morgan Stanley Repurchase        
   
    Agreement 11/30/04, 2.070%,        
   
    due 12/01/04, $7,334,422 to be        
   
    received upon repurchase        
   
    (Collateralized by $7,334,422        
   
    Federal National Mortgage        
   
    Association, 4.625%, Market Value        
   
    plus accrued interest $7,481,234,        
   
    due 05/01/13)       $ 7,334,000    
    Total Short-Term Investments
(Cost $7,334,000)		         7,334,000    
    Total Investments In
Securities (Cost
$256,036,301)*		     100.2 %   $ 316,054,509    
    Other Assets and
Liabilities-Net		     (0.2 )     (741,237 )  
    Net Assets     100.0 %   $ 315,313,272    

 

@  Non-income producing security

@@  Foreign issuer

*  Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 63,116,297    
Gross Unrealized Depreciation     (3,098,089 )  
Net Unrealized Appreciation   $ 60,018,208    

 

See Accompanying Notes to Financial Statements

98


  PORTFOLIO OF INVESTMENTS
ING LARGECAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 97.3%  
            Agriculture: 5.8%      
  19,650         Altria Group, Inc.   $ 1,129,679    
  5,790         Reynolds American, Inc.     437,898    
  7,710         UST, Inc.     339,471    
      1,907,048    
            Auto Manufacturers: 6.9%  
  80,030         Ford Motor Co.     1,134,825    
  29,100         General Motors Corp.     1,122,969    
      2,257,794    
            Auto Parts and Equipment: 1.5%  
  54,230         Delphi Corp.     488,070    
      488,070    
            Commercial Services: 2.0%  
  22,200         McKesson Corp.     656,010    
      656,010    
            Computers: 7.2%  
  43,320         Electronic Data Systems Corp.     972,534    
  46,200         Hewlett-Packard Co.     924,000    
  41,150     @   Unisys Corp.     472,814    
      2,369,348    
            Diversified Financial Services: 3.6%  
  12,520         CIT Group, Inc.     535,230    
  17,390         J.P. Morgan Chase & Co.     654,734    
      1,189,964    
            Electric: 0.9%  
  8,340         American Electric Power Co., Inc.     284,978    
      284,978    
            Environmental Control: 0.9%  
  9,420         Waste Management, Inc.     280,810    
      280,810    
            Food: 12.5%  
  44,730         Albertson's, Inc.     1,131,669    
  11,850         Kraft Foods, Inc.     405,270    
  76,820     @   Kroger Co.     1,242,948    
  67,120     @   Safeway, Inc.     1,294,073    
      4,073,960    
            Healthcare-Services: 1.9%  
  57,630     @   Tenet Healthcare Corp.     625,286    
      625,286    
            Housewares: 2.4%  
  33,810         Newell Rubbermaid, Inc.     780,335    
      780,335    
            Insurance: 8.6%  
  29,470         AON Corp.     622,406    
  13,670         Loews Corp.     955,670    
  28,400         Marsh & McLennan Cos., Inc.     811,956    
  11,440         Nationwide Financial Services     429,915    
      2,819,947    
            Office/Business Equipment: 2.1%  
  44,220     @   Xerox Corp.     677,450    
      677,450    

 

Shares           Value  
            Pharmaceuticals: 16.4%  
  48,550         Bristol-Myers Squibb Co.   $ 1,140,925    
  46,300         Merck & Co., Inc.     1,297,325    
  41,800         Pfizer, Inc.     1,160,786    
  72,590         Schering-Plough Corp.     1,295,732    
  11,470         Wyeth     457,309    
      5,352,077    
            Pipelines: 3.1%  
  96,880         El Paso Corp.     1,011,427    
      1,011,427    
            Retail: 2.4%  
  27,510         May Department Stores Co.     773,581    
      773,581    
            Semiconductors: 2.9%  
  85,210     @   Micron Technology, Inc.     944,127    
      944,127    
            Telecommunications: 14.2%  
  47,900         BellSouth Corp.     1,284,679    
  181,040     @   Lucent Technologies, Inc.     711,487    
  44,890         SBC Communications, Inc.     1,129,881    
  32,830         Sprint Corp.     748,852    
  18,780         Verizon Communications, Inc.     774,299    
      4,649,198    
  34,640         Mattel, Inc.     656,428    
      656,428    
        Total Common Stock
(Cost $30,722,760)		         31,797,838    
        Total Investments In
Securities (Cost
$30,722,760)*		     97.3 %   $ 31,797,838    
        Other Assets and
Liabilities-Net		     2.7       887,198    
    Net Assets     100.0 %   $ 32,685,036    

 

@  Non-income producing security

*  Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 1,993,776    
Gross Unrealized Depreciation     (918,698 )  
Net Unrealized Appreciation   $ 1,075,078    

 

See Accompanying Notes to Financial Statements

99


  PORTFOLIO OF INVESTMENTS
ING MAGNACAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 99.3%  
            Aerospace/Defense: 3.6%      
  125,900         General Dynamics Corp.   $ 13,642,524    
      13,642,524    
            Agriculture: 3.6%  
  236,015         Altria Group, Inc.     13,568,502    
      13,568,502    
            Apparel: 1.8%  
  81,300         Nike, Inc.     6,882,858    
      6,882,858    
            Banks: 7.0%  
  300,800         Bank of America Corp.     13,918,016    
  203,400         Wells Fargo & Co.     12,564,018    
      26,482,034    
            Building Materials: 1.8%  
  198,200         Masco Corp.     6,990,514    
      6,990,514    
            Chemicals: 4.6%  
  195,200         Dow Chemical Co.     9,851,744    
  165,700         Praxair, Inc.     7,439,930    
      17,291,674    
            Computers: 2.0%  
  80,200         International Business
Machines Corp.		     7,558,048    
      7,558,048    
            Cosmetics/Personal Care: 2.9%  
  174,500         Kimberly-Clark Corp.     11,099,945    
      11,099,945    
            Diversified Financial Services: 13.3%  
  205,000         Citigroup, Inc.     9,173,750    
  165,300         Fannie Mae     11,356,110    
  115,000         Freddie Mac     7,849,900    
  203,600         Merrill Lynch & Co., Inc.     11,342,556    
  201,200         Morgan Stanley     10,210,900    
      49,933,216    
            Electrical Components and
Equipment: 2.9%		          
  166,800         Emerson Electric Co.     11,145,576    
      11,145,576    
            Electronics: 2.6%  
  381,300     @@   Koninklijke Philips Electronics NV     9,814,662    
      9,814,662    
            Food: 4.6%  
  182,600     @@   Nestle SA ADR     11,734,442    
  87,500     @@   Unilever NV     5,512,500    
      17,246,942    
            Forest Products and Paper: 1.9%  
  175,800         International Paper Co.     7,299,216    
      7,299,216    

 

Shares           Value  
            Healthcare-Products: 2.3%  
  134,000         Beckman Coulter, Inc.   $ 8,771,640    
      8,771,640    
            Healthcare-Services: 2.3%  
  93,400         Quest Diagnostics, Inc.     8,756,250    
      8,756,250    
            Insurance: 8.1%  
  189,000         Allstate Corp.     9,544,500    
  175,100         American International
Group, Inc.		     11,092,585    
  257,000         MetLife, Inc.     10,023,000    
      30,660,085    
            Media: 2.3%  
  106,200         Gannett Co., Inc.     8,760,438    
      8,760,438    
            Miscellaneous
Manufacturing: 2.7%		          
  288,300         Honeywell Intl., Inc.     10,185,639    
      10,185,639    
            Oil and Gas: 12.8%  
  184,700         Apache Corp.     9,984,882    
  187,500     @@   BP PLC ADR     11,503,125    
  260,900         ChevronTexaco Corp.     14,245,140    
  249,400         Exxon Mobil Corp.     12,781,750    
      48,514,897    
            Oil and Gas Services: 2.6%  
  235,980         Halliburton Co.     9,757,773    
      9,757,773    
            Pharmaceuticals: 1.7%  
  232,200         Pfizer, Inc.     6,448,194    
      6,448,194    
            Retail: 2.1%  
  263,400         McDonald's Corp.     8,096,916    
      8,096,916    
            Savings and Loans: 5.6%  
  509,300         Sovereign Bancorp, Inc.     11,128,205    
  252,100         Washington Mutual, Inc.     10,262,991    
      21,391,196    
            Telecommunications: 4.2%  
  295,700         SBC Communications, Inc.     7,442,769    
  206,100         Verizon Communications, Inc.     8,497,503    
      15,940,272    
    Total Common Stock
(Cost $302,128,558)		     376,239,011    

 

See Accompanying Notes to Financial Statements

100


  PORTFOLIO OF INVESTMENTS
ING MAGNACAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
SHORT-TERM INVESTMENTS: 0.7%      
    Repurchase Agreement: 0.7%  
$ 2,837,000     Goldman Sachs Repurchase        
   
    Agreement 11/30/04, 2.060%,        
   
    due 12/01/04, $2,837,162 to be        
   
    received upon repurchase        
   
    (Collateralized by $2,735,000        
   
    Federal Home Loan Mortgage        
   
    Corporation, 5.500%, Market Value        
   
    plus accrued interest $2,893,972,        
   
    due 07/15/06)       $ 2,837,000    
    Total Short-Term Investments
(Cost $2,837,000)		         2,837,000    
    Total Investments In
Securities (Cost
$304,965,558)*		     100.0 %   $ 379,076,011    
    Other Assets and
Liabilities-Net		     0.0 %     (114,266 )  
    Net Assets     100.0 %   $ 378,961,745    

 

@@  Foreign issuer

ADR  American Depositary Receipt

*  Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 76,661,734    
Gross Unrealized Depreciation     (2,551,281 )  
Net Unrealized Appreciation   $ 74,110,453    

 

See Accompanying Notes to Financial Statements

101


  PORTFOLIO OF INVESTMENTS
ING MIDCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 96.4%  
            Agriculture: 3.9%      
  184,580         Loews Corp.   $ 5,426,652    
  25,640         UST, Inc.     1,128,929    
      6,555,581    
            Airlines: 3.0%  
  326,840     @,L   AMR Corp.     2,951,365    
  296,400     @,L   Delta Air Lines, Inc.     2,065,908    
      5,017,273    
            Apparel: 2.1%  
  354,610     @,@@   Tommy Hilfiger Corp.     3,475,178    
      3,475,178    
            Auto Parts and Equipment: 9.8%  
  112,200         ArvinMeritor, Inc.     2,462,790    
  100,000         Dana Corp.     1,635,000    
  543,730     @,L   Goodyear Tire & Rubber Co.     6,861,872    
  644,310     L   Visteon Corp.     5,450,863    
      16,410,525    
            Building Materials: 2.4%  
  110,400         York Intl. Corp.     4,070,448    
      4,070,448    
            Chemicals: 5.6%  
  96,690         Great Lakes Chemical Corp.     2,833,017    
  87,680         Lubrizol Corp.     3,029,344    
  156,300     L   Sensient Technologies Corp.     3,602,715    
      9,465,076    
            Commercial Services: 6.7%  
  330,300     @   Convergys Corp.     4,911,561    
  49,000         Kelly Services, Inc.     1,489,600    
  683,580     @   Service Corp. Intl.     4,826,075    
      11,227,236    
            Computers: 7.4%  
  323,580     @,L   Synopsys, Inc.     5,704,715    
  577,590     @   Unisys Corp.     6,636,510    
      12,341,225    
            Diversified Financial
Services: 0.6%		          
  24,000         CIT Group, Inc.     1,026,000    
      1,026,000    
            Electric: 0.0%  
  162,000     @,L   Mirant Corp.     59,738    
      59,738    
            Electronics: 1.6%  
  302,700     @   Kemet Corp.     2,681,922    
      2,681,922    
            Food: 4.5%  
  44,000     L   Albertson's, Inc.     1,113,200    
  363,330     @   Del Monte Foods Co.     3,942,131    
  606,064     @,L   Winn-Dixie Stores, Inc.     2,424,256    
      7,479,587    

 

Shares           Value  
            Healthcare-Services: 5.3%      
  122,800     @   Health Net, Inc.   $ 3,342,616    
  517,030     @   Tenet Healthcare Corp.     5,609,776    
      8,952,392    
            Home Furnishings: 3.0%  
  253,320         Maytag Corp.     5,091,732    
      5,091,732    
            Household Products/Wares: 2.1%  
  189,410         Tupperware Corp.     3,545,755    
      3,545,755    
            Insurance: 14.0%  
  132,200     @   Allmerica Financial Corp.     4,303,110    
  255,010     L   Assured Guaranty Ltd.     4,697,283    
  62,460     @   CNA Financial Corp.     1,630,831    
  69,400         Nationwide Financial Services     2,608,052    
  285,550     L   Phoenix Cos., Inc.     3,483,710    
  431,350     L   UnumProvident Corp.     6,716,119    
      23,439,105    
            Miscellaneous Manufacturing: 2.4%  
  78,600         Teleflex, Inc.     3,969,300    
      3,969,300    
            Office/Business Equipment: 2.8%  
  420,420         IKON Office Solutions, Inc.     4,742,338    
      4,742,338    
            Pipelines: 3.4%  
  548,193         El Paso Corp.     5,723,135    
      5,723,135    
            Retail: 5.2%  
  90,320         Dillard's, Inc.     2,274,258    
  135,000     @,L   Payless Shoesource, Inc.     1,576,800    
  248,220     @   Toys R US, Inc.     4,800,574    
      8,651,632    
            Semiconductors: 4.3%  
  5,136,390     @   Agere Systems, Inc.     6,985,490    
  19,958     @,L   Micron Technology, Inc.     221,135    
      7,206,625    
            Telecommunications: 6.3%  
  1,182,050     @   3Com Corp.     5,248,302    
  66,550         CenturyTel, Inc.     2,190,826    
  878,600     @   Cincinnati Bell, Inc.     3,162,960    
      10,602,088    
    Total Common Stock
(Cost $160,486,053)		     161,733,891    

 

See Accompanying Notes to Financial Statements

102


  PORTFOLIO OF INVESTMENTS
ING MIDCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
SHORT-TERM INVESTMENTS: 15.1%  
    Securities Lending Collateralcc: 15.1%  
$ 25,264,576     The Bank of New York Institutional
Cash Reserves Fund		           $ 25,264,576    
    Total Short-Term Investments
(Cost $25,264,576)		             25,264,576    
    Total Investments In
Securities (Cost
$185,750,629)*		     111.5 %     $186,998,467    
    Other Assets and
Liabilities-Net		     (11.5 )     (19,227,357 )  
    Net Assets     100.0 %   $ 167,771,110    

 

@  Non-income producing security

@@  Foreign issuer

cc  Securities purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $185,798,818. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 14,562,208    
Gross Unrealized Depreciation     (13,362,559 )  
Net Unrealized Appreciation   $ 1,199,649    

 

See Accompanying Notes to Financial Statements

103


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 97.2%  
            Airlines: 3.0%      
  685,520     @,L   Delta Air Lines, Inc.   $ 4,778,074    
      4,778,074    
            Apparel: 4.9%  
  94,848         Oshkosh B'Gosh, Inc.     1,944,384    
  132,150         Russell Corp.     2,423,631    
  353,940     @,@@   Tommy Hilfiger Corp.     3,468,612    
      7,836,627    
            Auto Parts and Equipment: 9.9%  
  110,140     @   Aftermarket Technology Corp.     1,918,639    
  351,779     @,L   Goodyear Tire & Rubber Co.     4,439,451    
  140,590     L   Superior Industries Intl., Inc.     3,971,668    
  635,290         Visteon Corp.     5,374,553    
      15,704,311    
            Building Materials: 2.0%  
  85,490         York Intl. Corp.     3,152,016    
      3,152,016    
            Chemicals: 11.4%  
  95,260         Great Lakes Chemical Corp.     2,791,118    
  36,000         Lubrizol Corp.     1,243,800    
  55,505     @@   Octel Corp.     1,224,440    
  375,260     @   PolyOne Corp.     3,463,650    
  194,590         Sensient Technologies Corp.     4,485,300    
  464,700         Wellman, Inc.     4,781,762    
      17,990,070    
            Commercial Services: 3.1%  
  95,330         Kelly Services, Inc.     2,898,032    
  281,980     @   Service Corp. Intl.     1,990,779    
      4,888,811    
            Computers: 4.1%  
  630,600     @   Gateway, Inc.     4,294,386    
  173,100     @,L   Mentor Graphics Corp.     2,172,405    
      6,466,791    
            Electric: 0.3%  
  25,000         Westar Energy, Inc.     553,750    
      553,750    
            Electrical Components and
Equipment: 2.3%		          
  157,780         Belden CDT, Inc.     3,658,918    
      3,658,918    
            Electronics: 2.9%  
  517,940     @   Kemet Corp.     4,588,948    
      4,588,948    
            Food: 6.6%  
  125,440     @   Del Monte Foods Co.     1,361,024    
  675,960     @,L   Interstate Bakeries Corp.     3,934,087    
  1,304,837     @,L   Winn-Dixie Stores, Inc.     5,219,348    
      10,514,459    
            Hand/Machine Tools: 1.1%  
  90,220         Starrett (L.S.) Co.     1,793,574    
      1,793,574    

 

Shares           Value  
            Healthcare-Services: 2.0%  
  560,900     @,L   OCA, Inc.   $ 3,208,348    
      3,208,348    
            Home Builders: 0.8%  
  127,500     @   National RV Holdings, Inc.     1,240,575    
      1,240,575    
            Home Furnishings: 2.0%  
  157,100         Maytag Corp.     3,157,710    
      3,157,710    
            Household Products/Wares: 8.9%  
  125,500         American Greetings Corp.     3,340,810    
  695,740     @,L   Playtex Products, Inc.     5,218,050    
  64,900         Russ Berrie & Co., Inc.     1,475,826    
  220,770         Tupperware Corp.     4,132,814    
      14,167,500    
            Insurance: 8.6%  
  73,900     @   Allmerica Financial Corp.     2,405,445    
  164,700     @@   Assured Guaranty Ltd.     3,033,773    
  29,990         Kansas City Life Insurance Co.     1,482,706    
  46,020         Landamerica Financial
Group, Inc.		     2,457,468    
  14,545     @   National Western Life
Insurance Co.		     2,359,054    
  155,260     L   Phoenix Cos., Inc.     1,894,172    
      13,632,618    
            Iron/Steel: 0.0%  
  4,154     L   Ryerson Tull, Inc.     67,212    
      67,212    
            Leisure Time: 2.2%  
  272,900         Callaway Golf Co.     3,209,304    
  19,800     @   K2, Inc.     334,224    
      3,543,528    
            Machinery-Diversified: 5.3%  
  36,290         Nacco Industries, Inc.     3,973,392    
  100,840         Tecumseh Products Co.     4,416,792    
      8,390,184    
            Mining: 0.0%  
  5,305         USEC, Inc.     55,862    
      55,862    
            Miscellaneous Manufacturing: 1.2%  
  33,453         Federal Signal Corp.     575,392    
  116,881         Myers Industries, Inc.     1,324,261    
      1,899,653    
            Oil and Gas Services: 1.3%  
  59,850         Tidewater, Inc.     2,030,711    
      2,030,711    
            Pipelines: 1.8%  
  504,090     @,L   Dynegy, Inc.     2,848,109    
      2,848,109    
            Retail: 7.3%  
  182,150     L   Dillard's, Inc.     4,586,537    

 

See Accompanying Notes to Financial Statements

104


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Retail (continued)      
  78,100         Lone Star Steakhouse & 
Saloon, Inc.		   $ 2,107,919    
  415,820     @,L   Payless ShoeSource, Inc.     4,856,778    
      11,551,234    
            Software: 1.3%  
  133,760     @   SPSS, Inc.     2,138,822    
      2,138,822    
            Telecommunications: 2.9%  
  1,288,633     @   Cincinnati Bell, Inc.     4,639,079    
      4,639,079    
    Total Common Stock
(Cost $143,606,519)		     154,497,494    
Principal
Amount		       Value  

 

SHORT-TERM INVESTMENTS: 21.4%

    Securities Lending CollateralCC: 21.4%  
$ 34,093,573     The Bank of New York Institutional
Cash Reserves		             34,093,573    
    Total Short-Term Investments
(Cost $34,093,573)		             34,093,573    
    Total Investments In
Securities (Cost
$177,700,092)* 		    118.6 %    
$188,591,067		    
    Other Assets and
Liabilities-Net		     (18.6 )     (29,562,689 )  
    Net Assets     100.0 %   $ 159,028,378    

 

@  Non-income producing security

@@  Foreign issuer

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes $177,739,983. Net unrealized Appreciation consists of:

Gross Unrealized Appreciation   $ 19,268,214    
Gross Unrealized Depreciation     (8,417,130 )  
Net Unrealized Appreciation   $ 10,851,084    

 

See Accompanying Notes to Financial Statements

105


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 9.3%  
            Computers: 0.5%      
  1,462,500     @,@@   Bull SA   $ 913,556    
      913,556    
            Food: 0.6%  
  35,000     @   Dean Foods Co.     1,108,450    
      1,108,450    
            Healthcare-Services: 2.1%  
  74,600     @   Community Health Systems,
Inc.		     2,062,690    
  22,800     @   WellPoint, Inc.     2,310,324    
      4,373,014    
            Investment Companies: 2.6%  
  45,000     @,L   SPDR Trust Series 1     5,305,050    
      5,305,050    
            Miscellaneous
Manufacturing: 0.6%		          
  36,000         General Electric Co.     1,272,960    
      1,272,960    
            Retail: 1.6%  
  18,000         Wal-Mart Stores, Inc.     937,080    
  60,000     L   Wendy's Intl., Inc.     2,140,200    
      3,077,280    
            Telecommunications: 1.3%  
  60,000         QUALCOMM, Inc.     2,497,200    
      2,497,200    
    Total Common Stock
(Cost $13,462,240)		     18,547,510    
  PREFERRED STOCK: 22.5%        
            Auto Manufacturers: 2.8%  
  55,000         Ford Motor Co. Capital
Trust II		     2,884,750    
  105,000         General Motors Corp.     2,680,400    
      5,565,150    
            Chemicals: 0.4%  
  960         Hercules Trust II     844,800    
      844,800    
            Diversified Financial
Services: 1.8%		          
  88,300         Gabelli Asset Management,
Inc.		     2,301,981    
  48,000         Lehman Brothers Holdings,
Inc.		     1,233,600    
      3,535,581    
            Food: 1.3%  
  97,500         Albertson's, Inc.     2,570,100    
      2,570,100    
            Home Builders: 0.6%  
  25,000     @   Fleetwood Capital Trust     1,131,250    
      1,131,250    

 

Shares           Value  
            Insurance: 5.9%  
  60,000         Hartford Financial Services
Group, Inc.		   $ 3,703,800    
  67,800         Reinsurance Group of America     4,139,190    
  118,000         Travelers Property
Casualty Corp.		     2,725,800    
  40,000     @@   XL Capital Ltd.     987,200    
      11,555,990    
            Media: 2.2%  
  25,000     @,L   Comcast Corp.     1,212,500    
  25,200         Emmis Communications Corp.     1,146,600    
  1,985         News Corp Finance Trust II     1,990,558    
      4,349,658    
            Mining: 0.9%  
  1,900          Freeport-McMoRan Copper & 
Gold, Inc.		     1,869,125    
      1,869,125    
            Office/Business
Equipment: 0.7%		          
  9,900     @   Xerox Corp.     1,357,290    
      1,357,290    
            Oil and Gas: 1.3%  
  24,700         Chesapeake Energy Corp.     2,608,950    
      2,608,950    
            Pharmaceuticals: 1.2%  
  44,500         Omnicare, Inc.     2,327,350    
      2,327,350    
            Real Estate Investment
Trusts: 1.6%		          
  83,000     @   FelCor Lodging Trust, Inc.     2,058,400    
  20,000         Simon Property Group Inc     1,142,600    
      3,201,000    
            Savings and Loans: 0.9%  
  39,200         Sovereign Capital Trust II     1,871,800    
      1,871,800    
            Telecommunications: 0.9%  
  1,500     @   Lucent Technologies Capital
Trust I		     1,825,410    
  51,932     @,I,X,**   Winstar Communications, Inc.     5    
      1,825,415    
    Total Preferred Stock
(Cost $43,418,025)		     44,613,459    
Principal
Amount		           Value  
CONVERTIBLE CORPORATE BONDS: 67.1%  
            Advertising: 1.1%      
$ 2,000,000     L   Lamar Advertising Co.,
2.875%, due 12/31/10		     2,132,500    
      2,132,500    
            Aerospace/Defense: 1.3%  
  3,460,000         Spacehab, Inc., 8.000%,
due 10/15/07		     2,633,925    
      2,633,925    

 

See Accompanying Notes to Financial Statements

106


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Apparel: 1.0%  
$ 1,950,000     #   Reebok International Ltd.,
2.000%, due 05/01/24		   $ 2,025,563    
      2,025,563    
            Auto Parts and Equipment: 1.0%  
  4,000,000     L   Lear Corp.,4.000%,
due 02/20/22		     2,035,000    
      2,035,000    
            Biotechnology: 0.6%  
  1,485,000         ICOS Corp., 2.000%,
due 07/01/23		     1,254,825    
      1,254,825    
            Distribution/Wholesale: 2.0%  
  3,500,000         Costco Wholesale Corp.,
0.000%, due 08/19/17		     3,876,250    
      3,876,250    
            Diversified Financial Services: 3.9%  
  980,000     @@,#,L   AngloGold Holdings PLC,
2.375%, due 02/27/09		     951,825    
  4,875,000         Lehman Brothers Holdings, Inc., 
1.000%, due 09/16/10		     4,424,062    
  2,000,000     @@,#   RepCon Lux SA, 4.500%,
due 01/26/11		     2,410,466    
      7,786,353    
            Electric: 2.3%  
  2,000,000     L   Centerpoint Energy, Inc.,
3.750%, due 05/15/23		     2,285,000    
  2,000,000     L   PPL Energy Supply LLC,
2.625%, due 05/15/23		     2,222,500    
      4,507,500    
            Electrical Components and
Equipment: 1.9%		          
  1,000,000     @@   ABB Intl. Finance Ltd.,
4.625%, due 05/16/07		     1,052,500    
  3,000,000         GrafTech Intl. Ltd., 1.625%,
due 01/15/24		     2,707,500    
      3,760,000    
            Electronics: 3.6%  
  1,500,000     @@,L   Flextronics Intl. Ltd., 1.000%,
due 08/01/10		     1,753,125    
  3,000,000     L   Flir Systems, Inc., 3.000%,
due 06/01/23		     4,462,500    
  100,000,000     @@   Sony Corp., 0.000%,
due 12/18/08		     972,972    
      7,188,597    
            Energy-Alternate Sources: 1.3%  
  2,000,000     #,L   Headwaters, Inc., 2.875%,
due 06/01/16		     2,560,000    
      2,560,000    
            Entertainment: 0.9%  
  1,500,000         International Game Technology,
0.860%, due 01/29/33		     1,179,375    
  480,000         Six Flags, Inc., 4.500%,
due 05/15/15		     511,200    
      1,690,575    

 

Principal
Amount		           Value  
            Environmental Control: 1.5%      
$ 3,500,000     L   Allied Waste Industries, Inc.,
4.250%, due 04/15/34		   $ 3,049,375    
      3,049,375    
            Healthcare-Products: 3.1%  
  2,900,000     L   Advanced Medical Optics Inc,
2.500%, due 07/15/24		     3,200,875    
  2,900,000     #   Henry Schein, Inc., 3.000%,
due 08/15/34		     3,026,875    
      6,227,750    
            Healthcare-Services: 1.3%  
  2,000,000     L   Laboratory Corp. of America
Holdings, 1.570%,
due 09/11/21		     1,540,000    
  1,000,000     L   Quest Diagnostics, Inc.,
1.750%, due 11/30/21		     1,088,750    
      2,628,750    
            Insurance: 3.9%  
  3,770,000     L   American Intl. Group, Inc.,
0.500%, due 05/15/07		     3,586,213    
  1,970,000     #   AmerUs Group Co., 2.000%,
due 03/06/32		     2,531,450    
  1,440,000     L   PMA Capital Corp, 6.500%,
due 09/30/22		     1,564,200    
      7,681,863    
            Internet: 2.1%  
  1,470,000     L   Equinix Inc, 2.500%,
due 02/15/24		     1,719,900    
  960,000     @@,#   Shanda Interactive
Entertainment Ltd,
0.000%, due 10/15/14		     1,168,800    
  1,400,000         Sohu.com, Inc., 0.700%,
due 07/14/23		     1,228,500    
      4,117,200    
            Lodging: 1.2%  
  1,000,000     L   Hilton Hotels Corp., 3.375%,
due 04/15/23		     1,148,750    
  1,000,000     L   Starwood Hotels & Resorts
Worldwide, Inc.,
3.500%, due 05/16/23		     1,150,000    
      2,298,750    
            Media: 3.8%  
  2,400,000     #,L   Charter Communications Inc,
5.875%, due 11/16/09		     2,568,000    
  2,460,000         Citadel Broadcasting Corp,
1.875%, due 02/15/11		     2,198,625    
  1,000,000         Liberty Media Corp, 3.500%,
due 01/15/31		     956,250    
  1,920,000     @@   ZEE Telefilms Ltd, 0.500%,
due 04/29/09		     1,850,928    
      7,573,803    
            Mining: 3.4%  
  1,500,000     @@,L   Inco Ltd., 0.000%,
due 03/29/21		     1,545,000    
  1,985,000     @@,L   Inco Ltd., 1.000%,
due 03/14/23		     2,654,938    

 

See Accompanying Notes to Financial Statements

107


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Mining (continued)      
$ 2,000,000     @@,L   Placer Dome, Inc., 2.750%,
due 10/15/23		   $ 2,612,500    
      6,812,438    
            Miscellaneous Manufacturing: 2.7%  
  3,500,000     @@,#   Tyco Intl. Group SA, 2.750%,
due 01/15/18		     5,363,750    
      5,363,750    
            Oil and Gas: 3.3%  
  1,998,000         Devon Energy Corp., 4.900%,
due 08/15/08		     2,210,288    
  2,000,000     @@,L   Formosa Petrochemical Corp.,
0.000%, due 06/30/11		     2,199,000    
  1,985,000     #,L   Pride Intl., Inc., 3.250%,
due 05/01/33		     2,133,875    
      6,543,163    
            Oil and Gas Services: 0.5%  
  1,000,000     @@,L   Schlumberger Ltd., 2.125%,
due 06/01/23		     1,077,500    
      1,077,500    
            Packaging and Containers: 1.0%  
  2,000,000     #   Sealed Air Corp., 3.000%,
due 06/30/33		     2,035,000    
      2,035,000    
            Pharmaceuticals: 7.9%  
  1,990,000     L   Amylin Pharmaceuticals, Inc.,
2.250%, due 06/30/08		     1,947,713    
  4,000,000         Cephalon, Inc., 2.500%,
due 12/15/06		     3,944,999    
  1,920,000     #   Isolagen Inc, 3.500%,
due 11/01/24		     2,133,600    
  3,000,000         NPS Pharmaceuticals, Inc.,
3.000%, due 06/15/08		     2,737,500    
  1,000,000     L   Sepracor, Inc., 5.000%,
due 02/15/07		     1,028,750    
  1,920,000     #   Sepracor, Inc., 0.430%,
due 10/15/24		     1,764,000    
  2,000,000         Teva Pharmaceutical Finance
LLC, .500%, due 02/01/24		     1,962,500    
      15,519,062    
            Retail: 0.6%  
  1,100,000         Rite Aid Corp., 4.750%,
due 12/01/06		     1,116,500    
      1,116,500    
            Savings and Loans: 2.0%  
  3,870,000     #   Ocwen Financial Corp.,
3.250%, due 08/01/24		     4,063,500    
      4,063,500    
            Semiconductors: 2.7%  
  3,000,000     L   Advanced Micro Devices, Inc.,
4.750%, due 02/01/22		     3,393,750    
  1,000,000         Cypress Semiconductor Corp,
1.250%, due 06/15/08		     992,500    
  960,000     #   Vitesse Semiconductor Corp.,
1.500%, due 10/01/24		     1,053,600    
      5,439,850    

 

Principal
Amount		           Value  
            Telecommunications: 4.0%  
$ 2,000,000         Nextel Partners, Inc.,
1.500%, due 11/15/08		   $ 3,142,499    
  1,000,000     L   NII Holdings, Inc., 2.875%,
due 02/01/34		     1,107,500    
  1,470,000     L   Primus Telecommunications
Group, Inc., 5.750%,
due 02/15/07		     1,288,088    
  1,980,000     L   RF Micro Devices, Inc.,
1.500%, due 07/01/10		     2,272,050    
      7,810,137    
            Transportation: 1.2%  
  985,000     #   Yellow Corp., 5.000%,
due 08/08/23		     1,636,331    
  490,000     #   Yellow Corp., 3.375%,
due 11/25/23		     711,725    
      2,348,056    
    Total Convertible
Corporate Bonds
(Cost $120,465,883)		     133,157,535    
  CORPORATE BONDS/NOTES: 0.6%        
            Building Materials: 0.6%  
  960,000     #,L   NCI Building Systems Inc,
2.125%, due 11/15/24		     1,092,000    
    Total Corporate Bonds/notes
(Cost $960,000)		     1,092,000    
    Total Long-Term Investments
(Cost $178,306,148)		     197,410,504    

 

SHORT-TERM INVESTMENTS: 27.7%

    Repurchase Agreement: 0.5%  
  1,065,000     Morgan Stanley Repurchase
Agreement 11/30/04, 2.070%,
due 12/01/04, $1,065,061 to be
received upon repurchase
(Collateralized by $980,000
Federal National Mortgage
Association, 6.250%, Market
Value plus accrued interest
$1,089,368, due 07/15/06)		      
 
 
 
 
 
 
 
 		       1,065,000    
    Total Repurchase Agreement
(Cost $1,065,000)		             1,065,000    
    Securities Lending CollateralCC: 27.2%  
  53,943,311     The Bank of New York Institutional
Cash Reserves Fund		             53,943,311    
    Total Securities Lending Collateral
(Cost $53,943,311)		             53,943,311    
    Total Short-Term Investments
(Cost $55,008,311)		             55,008,311    
    Total Investments In
Securities (Cost
$233,314,459)*		     127.2 %   $ 252,418,815    
    Other Assets and
Liabilities-Net		     (27.2 )     (53,999,439 )  
    Net Assets     100.0 %   $ 198,419,376    

 

See Accompanying Notes to Financial Statements

108


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

@  Non-income producing security

@@  Foreign issuer

#  Securities with purchases pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees.

cc  Securities purchased with cash collateral for securities loaned.

I  Illiquid security

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

X  Fair value determined by ING Funds Valuation Committee appointed by the Funds' Board of Directors/Trustees.

**  Defaulted security

*  Cost for federal income tax purposes is $233,423,855. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 24,245,259    
Gross Unrealized Depreciation     (5,250,299 )  
Net Unrealized Appreciation   $ 18,994,960    

 

See Accompanying Notes to Financial Statements

109


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  COMMON STOCK: 55.6%        
            Aerospace/Defense: 2.2%  
  8,320         Boeing Co.   $ 445,702    
  4,170         General Dynamics Corp.     451,861    
  5,100         United Technologies Corp.     497,659    
      1,395,222    
            Agriculture: 0.8%  
  9,300         Altria Group, Inc.     534,657    
      534,657    
            Auto Manufacturers: 0.6%  
  4,800         PACCAR, Inc.     374,880    
      374,880    
            Banks: 3.3%  
  9,100         Bank of America Corp.     421,057    
  14,785         North Fork Bancorporation, Inc.     425,808    
  16,100         U.S. Bancorp     477,043    
  5,900         Wachovia Corp.     305,325    
  7,900         Wells Fargo & Co.     487,983    
      2,117,216    
            Beverages: 0.6%  
  7,900         PepsiCo, Inc.     394,289    
      394,289    
            Biotechnology: 1.2%  
  6,600     @   Amgen, Inc.     396,264    
  6,455     @   Biogen Idec, Inc.     378,779    
      775,043    
            Chemicals: 3.2%  
  6,225         Air Products & Chemicals, Inc.     356,381    
  12,900         Dow Chemical Co.     651,063    
  9,300         E.I. du Pont de Nemours & Co.     421,476    
  8,325         Praxair, Inc.     373,793    
  5,000         Sherwin-Williams Co.     223,000    
      2,025,713    
            Commercial Services: 0.9%  
  26,200         Cendant Corp.     593,954    
      593,954    
            Computers: 2.6%  
  11,100     @   Dell, Inc.     449,772    
  36,700     @   EMC Corp.     492,514    
  7,800         International Business
Machines Corp.		     735,072    
      1,677,358    
            Cosmetics/Personal Care: 0.7%  
  8,400         Procter & Gamble Co.     449,232    
      449,232    
            Diversified Financial Services: 6.9%  
  23,100         Citigroup, Inc.     1,033,726    
  21,800         Countrywide Financial Corp.     723,978    
  37,120     @   E*TRADE Financial Corp.     514,483    
  8,900         Goldman Sachs Group, Inc.     932,364    
  13,000         J.P. Morgan Chase & Co.     489,450    
  8,800         Lehman Brothers Holdings, Inc.     737,264    
  1,209     I,XX   North Atlantic Trading Co., Inc.     1    
      4,431,266    

 

Shares           Value  
            Electric: 0.8%  
  11,100         Consolidated Edison, Inc.   $ 486,735    
      486,735    
            Electronics: 0.5%  
  4,510          Parker Hannifin Corp.     337,348    
      337,348    
            Healthcare-Products: 2.4%  
  6,090         Guidant Corp.     394,815    
  10,800         Johnson & Johnson     651,456    
  5,800     @   Zimmer Holdings, Inc.     473,280    
      1,519,551    
            Healthcare-Services: 0.8%  
  4,000     @   WellPoint Health Networks, Inc.     500,400    
      500,400    
            Insurance: 2.1%  
  13,380         American Intl. Group, Inc.     847,623    
  6,300         Chubb Corp.     480,123    
      1,327,746    
            Investment Companies: 1.0%  
  12,400         iShares Goldman Sachs
Semiconductor Index Fund		     651,000    
      651,000    
            Leisure Time: 1.4%  
  10,300         Carnival Corp.     546,003    
  6,600         Harley-Davidson, Inc.     381,612    
      927,615    
            Lodging: 1.1%  
  8,425         Marriott Intl., Inc.     478,961    
  4,900         Starwood Hotels & Resorts
Worldwide, Inc.		     256,221    
      735,182    
            Machinery-Diversified: 0.6%  
  8,700         Rockwell Automation, Inc.     411,510    
      411,510    
            Media: 0.8%  
  16,400     @   Comcast Corp.     486,260    
      486,260    
            Mining: 0.7%  
  13,300         Alcoa, Inc.     451,934    
      451,934    
            Miscellaneous Manufacturing: 4.7%  
  9,400         3M Co.     748,146    
  3,980         Eaton Corp.     268,252    
  37,200         General Electric Co.     1,315,392    
  19,480     @@   Tyco Intl. Ltd.     661,736    
      2,993,526    
            Oil and Gas: 3.2%  
  10,500         ChevronTexaco Corp.     573,300    
  19,200         Exxon Mobil Corp.     984,000    
  9,850     @,@@   Nabors Industries Ltd.     512,200    
      2,069,500    

 

See Accompanying Notes to Financial Statements

110


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Oil and Gas Services: 2.2%  
  16,230         Baker Hughes, Inc.   $ 719,476    
  13,120         BJ Services Co.     664,790    
      1,384,266    
            Pharmaceuticals: 2.7%  
  5,900         Abbott Laboratories     247,564    
  4,210         Allergan, Inc.     309,435    
  11,250     @   Barr Pharmaceuticals, Inc.     439,313    
  13,200         Merck & Co., Inc.     369,864    
  13,885         Pfizer, Inc.     385,586    
      1,751,762    
            Retail: 3.0%  
  9,440         CVS Corp.     428,293    
  9,010     @   Kohl's Corp.     415,902    
  7,900         Lowe's Cos., Inc.     437,107    
  12,600         Wal-Mart Stores, Inc.     655,955    
      1,937,257    
            Semiconductors: 0.7%  
  19,800         Intel Corp.     442,530    
      442,530    
            Software: 1.5%  
  35,200         Microsoft Corp.     943,712    
      943,712    
            Telecommunications: 2.4%  
  13,300     @   Avaya, Inc.     218,386    
  26,500     @   Cisco Systems, Inc.     495,815    
  9,900         Qualcomm, Inc.     412,038    
  16,400         SBC Communications, Inc.     412,788    
      1,539,027    
    Total Common Stock
(Cost $31,718,106)		     35,665,691    
  PREFERRED STOCK: 0.3%        
            Banks: 0.3%  
  16     #,XX   DG Funding Trust     173,100    
      173,100    
            Electric: 0.0%  
  1,025     XX   TECO Energy, Inc.     26,045    
      26,045    
    Total Preferred Stock
(Cost $199,878)		     199,145    
  WARRANTS: 0.0%        
            Building Materials: 0.0%  
  400     I,#   Dayton Superior Corp.     4    
            Telecommunications: 0.0%  
  500     I,X   Iridium World Communications, Inc.     -    
      -    
    Total Warrants
(Cost $57,953)		     4    

 

Principal
Amount		           Value  
  CORPORATE BONDS/NOTES: 10.7%        
            Airlines: 0.1%  
$ 90,000         American Airlines, Inc., 7.324%,
due 10/15/09		   $ 73,136    
      73,136    
            Auto Manufacturers: 0.3%  
  24,000         Ford Motor Co., 6.625%,
due 10/01/28		     21,743    
  72,000         Ford Motor Co., 7.450%,
due 07/16/31		     70,244    
  76,000         General Motors Corp., 8.375%,
due 07/15/33		     77,575    
      169,562    
            Banks: 2.6%  
  40,000     @@   Australia & New Zealand
Banking Group Ltd.,
2.405%, due 10/29/49		     34,803    
  48,000     @@   Banco Bradesco SA/Cayman
Islands,
8.750%, due 10/24/13		     51,840    
  109,000     @@   Banco Santander Chile SA,
7.375%, due 07/18/12		     122,903    
  40,000     @@   Bank of Ireland,
2.160%, due 12/29/49		     34,656    
  30,000     @@   Bank of Nova Scotia,
2.115%, due 08/31/85		     24,885    
  50,000         BankAmerica Capital II,
8.000%, due 12/15/26		     54,169    
  43,000     @@,#   Danske Bank A/S,
5.914%, due 12/29/49		     45,157    
  20,000     @@   Den Norske Bank ASA,
2.125%, due 08/29/49		     16,575    
  80,000     #   Dresdner Funding Trust I,
8.151%, due 06/30/31		     96,579    
  53,000         FBS Capital I,
8.090%, due 11/15/26		     57,623    
  45,000     @@,#   HBOS Capital Funding LP,
6.071%, due 06/30/49		     47,813    
  150,000     @@   HSBC Bank PLC,
1.971%, due 06/29/49		     129,903    
  80,000     @@   Lloyds TSB Bank PLC,
2.090%, due 08/29/49		     68,263    
  80,000     @@   Lloyds TSB Bank PLC,
2.188%, due 06/29/49		     71,154    
  71,000         M & T Bank Corp.,
3.850%, due 04/01/13		     70,087    
  51,000         Mellon Capital I,
7.720%, due 12/01/26		     55,169    
  30,000     @@   National Australia Bank Ltd.,
2.361%, due 10/29/49		     26,102    
  90,000         National Westminster Bank PLC,
2.563%, due 11/29/49		     76,704    
  58,000     #   Rabobank Capital Funding II,
5.260%, due 12/29/49		     58,704    
  70,000     @@   Royal Bank of Canada,
1.750%, due 06/29/85		     59,921    
  30,000     @@   Royal Bank of Scotland
Group PLC,
2.063%, due 12/29/49		     26,414    
  20,000     @@   Societe Generale,
2.705%, due 11/29/49		     17,150    
  130,000     @@,C   Standard Chartered PLC,
2.070%, due 12/29/49		     104,325    

 

See Accompanying Notes to Financial Statements

111


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Banks (continued)      
$ 160,000     @@,C   Standard Chartered PLC,
2.813%, due 11/29/49		   $ 127,563    
  49,000         Wells Fargo Capital I,
7.960%, due 12/15/26		     53,156    
  30,000     @@   Westpac Banking Corp.,
2.338%, due 09/29/49		     25,910    
  155,000     #   Westpac Capital Trust IV,
5.256%, due 12/29/49		     151,510    
      1,709,038    
            Beverages: 0.4%  
  145,000     @@   Cia Brasileira de Bebidas,
8.750%, due 09/15/13		     165,844    
  11,000     @@   Cia Brasileira de Bebidas,
10.500%, due 12/15/11		     13,640    
  80,000     #,S   Miller Brewing Co.,
4.250%, due 08/15/08		     80,504    
      259,988    
            Chemicals: 0.1%  
  23,000         Dow Chemical Co.,
5.750%, due 11/15/09		     24,509    
  22,000     @@,#,S   Sociedad Quimica y
Minera de Chile SA,
7.700%, due 09/15/06		     23,391    
      47,900    
            Diversified Financial Services: 1.6%  
  22,118     @@,#   Arcel Finance Ltd.,
5.984%, due 02/01/09		     22,884    
  47,000     @@,#,S   Arcel Finance Ltd.,
6.361%, due 05/01/12		     46,872    
  46,000     @@,#   Arcel Finance Ltd.,
7.048%, due 09/01/11		     47,523    
  122,000     @@,#   Brazilian Merchant Voucher
Receivables Ltd.,
5.911%, due 06/15/11		     121,390    
  51,000         Citigroup Capital II,
7.750%, due 12/01/36		     54,578    
  51,000     #   Corestates Capital Trust I,
8.000%, due 12/15/26		     55,549    
  72,000     #   Farmers Exchange Capital,
7.200%, due 07/15/48		     71,661    
  30,000     @@   Financiere CSFB NV,
2.125%, due 03/29/49		     24,877    
  24,000         Ford Motor Credit Co.,
7.000%, due 10/01/13		     25,081    
  106,000     #   HVB Funding Trust III,
9.000%, due 10/22/31		     136,557    
  14,000         JPM Capital Trust I,
7.540%, due 01/15/27		     14,946    
  45,000         JPM Capital Trust II,
7.950%, due 02/01/27		     48,771    
  135,000     #,XX   Mangrove Bay Pass-Through Trust,
6.102%, due 07/15/33		     134,477    
  66,453     @@,#   PF Export Receivables Master Trust,
3.748%, due 06/01/13		     64,266    
  101,236     @@,#   PF Export Receivables Master Trust,
6.436%, due 06/01/15		     100,308    
  69,000     @@   UFJ Finance Aruba AEC,
8.750%, due 11/29/49		     77,491    
      1,047,231    

 

Principal
Amount		           Value  
            Electric: 1.6%      
$ 100,000     @@,#   AES Gener SA,
7.500%, due 03/25/14		   $ 104,750    
  74,842     #   Allegheny Energy Supply
Statutory Trust 2001,
10.250%, due 11/15/07		     85,881    
  8,344     #   Allegheny Energy Supply
Statutory Trust 2001,
13.000%, due 11/15/07		     9,137    
  91,880         CE Generation LLC,
7.416%, due 12/15/18		     95,038    
  81,000         Consumers Energy Co.,
4.250%, due 04/15/08		     81,636    
  62,000     S   DTE Energy Co,
2.740%, due 06/01/07		     62,356    
  98,000     @@,S   Empresa Nacional de
Electricidad SA/Chile,
8.625%, due 08/01/15		     113,438    
  116,000         Enterprise Capital Trust II,
3.195%, due 06/30/28		     110,454    
  69,000         Monongahela Power Co.,
7.360%, due 01/15/10		     75,630    
  106,000         Ohio Power Co.,
6.375%, due 07/15/33		     109,111    
  11,970     #,S   Power Contract Financing LLC,
5.200%, due 02/01/06		     12,098    
  47,000     #   Power Contract Financing LLC,
6.256%, due 02/01/10		     48,951    
  18,094         PPL Montana LLC,
8.903%, due 07/02/20		     20,458    
  26,000         Sithe/Independence Funding,
9.000%, due 12/30/13		     28,688    
  31,810     @@,#   Tenaska Virginia Partners LP,
6.119%, due 03/30/24		     33,073    
  63,000     S   TXU Corp, 4.446%, due 11/16/06     63,785    
      1,054,484    
            Food: 0.4%  
  35,000     S   Kroger Co., 7.250%, due 06/01/09     38,990    
  65,000     S   Safeway, Inc.,
4.800%, due 07/16/07		     66,517    
  45,000         Supervalu, Inc.,
7.875%, due 08/01/09		     51,565    
  89,000     S   Tyson Foods, Inc.,
7.250%, due 10/01/06		     94,698    
      251,770    
            Gas: 0.1%  
  67,000     #,S   Williams Gas Pipelines
Central, Inc.,
7.375%, due 11/15/06		     71,606    
      71,606    
            Healthcare-Services: 0.1%  
  50,000         HCA, Inc., 5.500%, due 12/01/09     49,814    
      49,814    
            Home Builders: 0.0%  
  4,000         Technical Olympic USA, Inc.,
9.000%, due 07/01/10		     4,330    
      4,330    

 

See Accompanying Notes to Financial Statements

112


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Insurance: 0.4%  
$ 18,000     @@,#   Farmers Insurance Exchange,
6.000%, due 08/01/14		   $ 17,862    
  26,000     @@,#   Farmers Insurance Exchange,
8.625%, due 05/01/24		     30,180    
  54,000     @@,#   Monumental Global Funding II,
3.850%, due 03/03/08		     53,964    
  53,000     S   Prudential Financial, Inc.,
4.104%, due 11/15/06		     53,570    
  88,000     @@,#   Zurich Capital Trust I,
8.376%, due 06/01/37		     97,489    
      253,065    
            Media: 0.1%  
  48,000         COX Communications, Inc.,
6.850%, due 01/15/18		     50,132    
  10,000     @@   Rogers Cable, Inc.,
6.750%, due 03/15/15		     10,200    
      60,332    
            Mining: 0.2%  
  47,000     @@,#   Corp Nacional del Cobre de Chile,
5.500%, due 10/15/13		     48,335    
  74,000     @@,S   Vale Overseas Ltd.,
8.625%, due 03/08/07		     82,214    
      130,549    
            Multi-National: 0.2%  
  124,000     @@,S   Corp Andina de Fomento CAF,
6.875%, due 03/15/12		     137,660    
      137,660    
            Oil and Gas: 1.0%  
  59,000         Amerada Hess Corp.,
6.650%, due 08/15/11		     64,592    
  67,000     @@,#   Empresa Nacional de Petroleo,
4.875%, due 03/15/14		     64,799    
  76,000     @@,#   Gazprom International SA,
7.201%, due 02/01/20		     79,420    
  53,000     @@   Husky Energy, Inc.,
6.150%, due 06/15/19		     55,969    
  104,000     #   Pemex Project Funding
Master Trust,
3.180%, due 06/15/10		     106,860    
  37,000         Pemex Project Funding
Master Trust,
7.375%, due 12/15/14		     40,460    
  37,000     @@   Petroleos Mexicanos,
9.250%, due 03/30/18		     44,955    
  22,868     @@   Petrozuata Finance, Inc.,
7.630%, due 04/01/09		     23,868    
  100,000     @@   Tengizchevroil Finance Co S.ar.1,
6.124%, due 11/15/14		     100,000    
  42,000         Valero Energy Corp.,
8.750%, due 06/15/30		     54,429    
      635,352    
            Packaging and Containers: 0.1%  
  32,000     #   Sealed Air Corp.,
5.375%, due 04/15/08		     33,308    
      33,308    

 

Principal
Amount		           Value  
            Real Estate: 0.2%  
$ 70,000         EOP Operating LP,
7.750%, due 11/15/07		   $ 77,461    
  61,000     S   Liberty Property LP,
7.750%, due 04/15/09		     68,490    
      145,951    
            Real Estate Investment Trusts: 0.5%  
  11,000         Liberty Property Trust,
6.375%, due 08/15/12		     11,824    
  99,000         Rouse Co.,
7.200%, due 09/15/12		     105,881    
  50,000         Rouse Co.,
8.000%, due 04/30/09		     54,780    
  54,000         Simon Property Group LP,
4.875%, due 03/18/10		     54,711    
  96,000     S   Simon Property Group LP,
6.375%, due 11/15/07		     102,489    
      329,685    
            Savings and Loans: 0.1%  
  48,000         Great Western Financial,
8.206%, due 02/01/27		     52,248    
      52,248    
            Telecommunications: 0.5%  
  101,000         AT&T Corp.,
9.750%, due 11/15/31		     117,539    
  65,000         BellSouth Corp.,
4.200%, due 09/15/09		     64,782    
  43,000     S   Sprint Capital Corp.,
4.780%, due 08/17/06		     43,877    
  15,000     S   Sprint Capital Corp.,
8.375%, due 03/15/12		     18,147    
  53,000         Verizon Virginia, Inc.,
4.625%, due 03/15/13		     51,097    
  500,000     I,X,**   Winstar Communications, Inc.,
0.000%, due 04/15/10		     50    
      295,492    
            Transportation: 0.1%  
  42,000     @@,#   MISC Capital Ltd.,
6.125%, due 07/01/14		     44,616    
      44,616    
    Total Corporate Bonds/Notes
(Cost $7,204,050)		     6,857,117    
  U.S. GOVERNMENT AGENCY OBLIGATIONS: 13.7%        
            Federal Home Loan Bank: 0.4%  
  270,000         3.250%, due 12/17/07     268,005    
      268,005    
            Federal Home Loan Mortgage
Corporation: 4.0%		          
  556,000         2.700%, due 03/16/07     549,128    
  361,000         4.500%, due 10/15/12     364,106    
  93,437         4.500%, due 04/01/14     93,307    
  54,000     W   5.500%, due 12/15/18     55,671    
  96,000         5.875%, due 03/21/11     103,118    
  93,813         6.000%, due 04/01/14     98,592    
  556,260         6.000%, due 01/15/29     576,823    
  193,012         6.500%, due 12/01/31     202,528    
  488,000     W   7.000%, due 12/15/34     517,585    
      2,560,858    

 

See Accompanying Notes to Financial Statements

113


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Federal National Mortgage
Association: 9.0%		          
$ 325,000         2.875%, due 05/19/08   $ 316,724    
  141,000         4.750%, due 12/25/42     141,842    
  420,000     W   5.000%, due 12/01/17     425,644    
  2,562,000     W   5.000%, due 01/15/34     2,521,167    
  150,000         5.250%, due 08/01/12     154,419    
  5,070     W   5.500%, due 12/15/19     5,230    
  569,000     W   5.500%, due 01/01/33     574,156    
  199,639         6.000%, due 08/01/16     209,314    
  67,686         6.000%, due 10/01/18     70,959    
  344,344         6.000%, due 07/25/29     355,621    
  145,711         6.000%, due 04/25/31     150,885    
  96,000         6.000%, due 12/15/33     99,090    
  211,000         6.000%, due 01/15/34     217,264    
  231,000         6.500%, due 12/15/34     242,406    
  135,000         6.625%, due 11/15/10     152,115    
  35,691         7.500%, due 09/01/30     38,269    
  65,451         7.500%, due 06/25/32     70,164    
  84,049         7.500%, due 01/25/48     89,569    
      5,834,838    
            Government National
Mortgage Association: 0.3%		          
  164,311         6.500%, due 06/15/29     173,404    
      173,404    
    Total U.S. Government
Agency Obligations
(Cost $8,845,801)		     8,837,105    
  U.S. TREASURY OBLIGATIONS: 7.1%        
            U.S. Treasury Bonds: 2.4%  
  229,000     W   4.250%, due 11/15/14     227,104    
  885,000     S   5.375%, due 02/15/31     931,739    
  121,000         6.250%, due 08/15/23     138,876    
  228,000     S   10.375%, due 11/15/12     272,986    
      1,570,705    
            U.S. Treasury Notes: 4.4%  
  1,530,000         1.625%, due 01/31/05     1,529,284    
  237,000         2.875%, due 11/30/06     236,426    
  175,000         3.000%, due 11/15/07     173,742    
  906,000     S   3.500%, due 11/15/09     898,073    
      2,837,525    
            U.S. Treasury STRIP: 0.3%  
  325,000     S   4.870%, due 05/15/16     188,545    
      188,545    
    Total U.S. Treasury Obligations
(Cost $4,637,354)		     4,596,775    
  ASSET-BACKED SECURITIES: 3.2%        
            Automobile Asset-Backed
Securities: 0.3%		          
  95,000         Capital One Auto Finance Trust,
3.180%, due 09/15/10		     94,176    
  50,000         Nissan Auto Receivables
Owner Trust,
2.050%, due 03/16/09		     48,759    
  40,000         USAA Auto Owner Trust,
2.040%, due 02/16/10		     39,319    
      182,254    

 

Principal
Amount		           Value  
            Credit Card Asset-Backed
Securities: 0.4%		          
$ 55,000         Bank One Issuance Trust,
4.540%, due 09/15/10		   $ 55,808    
  55,000         Capital One Master Trust,
4.900%, due 03/15/10		     56,883    
  95,000         Citibank Credit Card
Issuance Trust,
5.650%, due 06/16/08		     98,492    
  75,000         MBNA Credit Card
Master Note Trust,
4.950%, due 06/15/09		     77,624    
      288,807    
            Home Equity Asset-Backed
Securities: 2.1%		          
  89,900         Asset Backed Funding Certificates,
2.461%, due 11/25/33		     89,930    
  157,159     XX   Bayview Financial Acquisition Trust,
2.694%, due 09/28/43		     157,343    
  267,966         Centex Home Equity,
2.460%, due 01/25/34		     268,383    
  294,505         Emergent Home
Equity Loan Trust,
7.080%, due 12/15/28		     301,456    
  236,000         GSAA Trust, 5.242%, due 05/25/35     234,553    
  103,738         Merrill Lynch
Mortgage Investors, Inc.,
2.541%, due 07/25/34		     103,847    
  38,662         Residential Asset Mortgage
Products, Inc.,
2.491%, due 06/25/33		     38,654    
  143,994         Residential Asset Securities Corp.,
2.491%, due 12/25/33		     144,283    
      1,338,449    
            Other Asset-Backed Securities: 0.4%  
  34,678     XX   Amortizing Residential
Collateral Trust,
2.681%, due 05/25/32		     34,657    
  11,000         Chase Funding Mortgage Loan,
2.734%, due 09/25/24		     10,944    
  7,000         Chase Funding Mortgage Loan,
4.045%, due 05/25/33		     7,036    
  52,488         Chase Funding Mortgage
Loan Asset-Backed Certificates,
2.481%, due 07/25/33		     52,550    
  96,000     XX   First Horizon Asset Back Trust,
0.000%, due 10/25/34		     96,000    
  8,000     XX   Popular ABS Mortgage
Pass-Through Trust,
3.735%, due 12/25/34		     7,980    
  8,000     XX   Popular ABS Mortgage
Pass-Through Trust,
4.000%, due 12/25/34		     7,983    
      217,150    
    Total Asset-backed Securities
(Cost $2,022,196)		     2,026,660    

 

See Accompanying Notes to Financial Statements

114


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
  COLLATERALIZED MORTGAGE OBLIGATIONS: 11.2%        
            Commercial Mortgage-Backed
Securities: 2.4%		          
$ 81,000         Bear Stearns Commercial
Mortgage Securities,
4.170%, due 01/12/41		   $ 81,394    
  79,000         COMM, 3.600%, due 03/10/39     77,665    
  303,000         CS First Boston
Mortgage Securities Corp.,
3.861%, due 03/15/36		     302,519    
  40,000         CS First Boston
Mortgage Securities Corp.,
7.792%, due 04/14/62		     46,162    
  215,000         DLJ Commercial Mortgage Corp.,
6.240%, due 11/12/31		     231,638    
  60,000     #   DLJ Commercial Mortgage Corp.,
6.460%, due 03/10/32		     65,433    
  570,000         DLJ Commercial Mortgage Corp.,
7.300%, due 06/10/32		     640,777    
  97,000         GE Capital Commercial
Mortgage Corp.,
5.994%, due 12/10/35		     103,893    
      1,549,481    
            Federal Home Loan
Mortgage Corporation: 0.7%		          
  469,538         Freddie Mac,
2.740%, due 04/15/32		     473,362    
      473,362    
            Whole Loan Collateral PAC: 1.1%  
  141,376         GSR Mortgage Loan Trust,
2.581%, due 10/25/32		     141,421    
  184,642         MASTR Alternative Loans Trust,
2.581%, due 11/25/33		     184,895    
  112,723         MASTR Alternative Loans Trust,
8.500%, due 05/25/33		     114,742    
  239,756         Washington Mutual,
2.580%, due 03/25/34		     240,236    
      681,294    
            Whole Loan Collateralized
Mortgage Obligations: 7.0%		          
  203,712         Banc of America Funding Corp,
5.750%, due 09/20/34		     206,434    
  320,763         Bank of America Alternative
Loan Trust, 2.631%, due 12/25/33		     321,260    
  134,393         Bank of America
Mortgage Securities,
2.631%, due 12/25/33		     134,582    
  113,471         Bank of America
Mortgage Securities,
5.000%, due 12/25/18		     114,216    
  115,217         Bank of America
Mortgage Securities,
5.000%, due 06/25/33		     114,749    
  69,629         Bank of America
Mortgage Securities,
5.250%, due 11/25/19		     70,586    
  63,823         Bank of America
Mortgage Securities,
5.500%, due 11/25/33		     63,215    
  111,134         Citicorp Mortgage Securities, Inc.,
2.433%, due 10/25/33		     110,913    

 

Principal
Amount		           Value  
            Whole Loan Collateralized
Mortgage Obligations: (continued)		          
$ 70,502         Countrywide Alternative
Loan Trust,
2.581%, due 07/25/18		   $ 70,647    
  108,225         Countrywide Alternative
Loan Trust,
5.000%, due 10/25/18		     108,935    
  117,715         Countrywide Home Loan
Mortgage Pass Through Trust,
5.000%, due 11/25/18		     118,487    
  99,000         Countrywide Home Loan
Mortgage Pass Through Trust,
6.000%, due 11/25/34		     102,240    
  114,000         CS First Boston Mortgage
Securities Corp.,
4.147%, due 10/25/33		     113,167    
  139,081         GMAC Mortgage Corp.
Loan Trust, 5.250%, due 04/25/34		     139,463    
  230,000         GMAC Mortgage Corp.
Loan Trust, 5.500%, due 01/25/34		     233,620    
  121,455         GSR Mortgage Loan Trust,
6.500%, due 01/25/34		     126,655    
  96,432         Homebanc Mortgage Trust,
2.611%, due 08/25/29		     96,384    
  161,000     XX   MASTR Alternative Loans Trust,
0.000%, due 01/15/20		     165,025    
  109,000         MASTR Alternative Loans Trust,
5.750%, due 09/25/34		     110,851    
  198,909         MASTR Alternative Loans Trust,
6.000%, due 09/25/34		     204,007    
  92,021         MASTR Asset Securitization Trust,
2.631%, due 11/25/33		     92,222    
  98,000         MASTR Asset Securitization Trust,
5.500%, due 09/25/34		     96,630    
  80,784         MLCC Mortgage Investors, Inc.,
2.541%, due 04/25/29		     80,920    
  139,324         Prime Mortgage Trust,
5.250%, due 11/25/19		     141,240    
  132,467         Residential Accredit Loans, Inc.,
2.631%, due 03/25/18		     132,729    
  99,000         Residential Asset
Securitization Trust,
5.500%, due 11/25/34		     97,580    
  143,000         Residential Funding
Mortgage Sec I,
5.750%, due 09/25/34		     143,522    
  581,144         Thornburg Mortgage
Securities Trust,
2.531%, due 12/25/33		     581,322    
  141,004         Washington Mutual,
6.000%, due 06/25/34		     144,617    
  182,847         Wells Fargo Mortgage
Backed Securities Trust,
2.681%, due 02/25/34		     183,185    
  130,000         Wells Fargo Mortgage
Backed Securities Trust,
4.500%, due 08/25/18		     124,671    
      4,544,074    
    Total Collateralized
Mortgage Obligations
(Cost $7,298,929)		     7,248,211    

 

See Accompanying Notes to Financial Statements

115


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
OTHER BONDS: 0.5%  
            Sovereign: 0.5%      
$ 29,118     @@   Brazilian Government Intl. Bond,
3.125%, due 04/15/12		   $ 27,367    
  22,000     @@   Brazilian Government Intl. Bond,
12.250%, due 03/06/30		     27,940    
  36,000     @@,S   Colombia Government Intl. Bond,
10.000%, due 01/23/12		     40,950    
  59,000     @@   Dominican Republic,
9.040%, due 01/23/13		     51,478    
  71,000     @@   Russian Federation,
5.000%, due 03/31/30		     70,840    
  28,000     @@,S   Turkey Government Intl. Bond,
12.375%, due 06/15/09		     34,860    
  14,000     @@,#   Ukraine Government Intl. Bond,
7.650%, due 06/11/13		     14,175    
  50,847     @@,S,XX   Uruguay Government Intl. Bond,
10.500%, due 10/20/06		     58,800    
  15,000     @@   Venezuela Government Intl. Bond,
8.500%, due 10/08/14		     15,638    
    Total Other Bonds
(Cost $321,737)		     342,048    
  MUNICIPAL BONDS: 0.1%        
            Municipal: 0.1%  
  25,000         City of New York NY,
5.000%, due 11/01/08		     26,966    
  25,000         City of New York NY,
5.000%, due 11/01/11		     27,300    
  25,000         City of New York NY,
5.000%, due 11/01/15		     27,156    
    Total Municipal Bonds
(Cost $82,205)		     81,422    
    Total Long-Term Investments
(Cost $62,388,209)		     65,854,178    

 

SHORT-TERM INVESTMENTS: 5.1%

    Repurchase Agreement: 5.1%  
  3,292,000     Morgan Stanley Repurchase
Agreement 11/30/04, 2.070%,
due 12/01/04, $3,292,189 to be
received upon repurchase
(Collateralized by $3,220,000
various U.S. Government Agency
Obligation, 4.750%-5.250%, Market
Value plus accrued interest
$3,365,716, due 01/02/07-08/01/12)		      
 
 
 
 
 
 
 
 		      
3,292,000		    
    Total Short-Term Investments
(Cost $3,292,000)		             3,292,000    
    Total Investments In
Securities (Cost
$65,680,209)*		     107.5 %   $ 69,146,178    
    Other Assets and
Liabilities-Net		     (7.5 )     (4,849,488 )  
    Net Assets     100.0 %   $ 64,296,690    

 

@  Non-income producing security

@@  Foreign issuer

STRIP  Separate Trading of Registered Interest and Principal of Securities

#  Securities with purchases pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees.

C  Bond may be called prior to maturity date.

W  When-issued or delayed delivery security.

S  Segregated securities for futures, when-issued or delayed delivery securities held at November 30, 2004.

I  Illiquid security

X  Fair value determined by ING Funds Valuation Committee appointed by the Funds' Board of Directors/Trustees.

XX  Value of securities obtained from one or more dealers making markets in the securities in accordance with the Fund's valuation procedures.

**  Defaulted security

*  Cost for federal income tax purposes is $65,725,180. Net unrealized depreciation consists of:

Gross Unrealized Appreciation   $ 4,643,604    
Gross Unrealized Depreciation     (1,222,606 )  
Net Unrealized Depreciation   $ 3,420,998    

 

Information concerning open futures for ING Equity and Bond Fund at November 30, 2004 is shown below:

Short Contracts   No. of
Contracts		   Notional
Market Value		   Expiration
Date		   Unrealized
Gain (Loss)		  
U.S. 2 Year
Treasury Note		     3     $ (630,797 )   01/05/05   $ 595    
U.S. 10 Year
Treasury Note		     10       (1,114,531 )   12/30/04     10,731    
            $ (1,745,328 )       $ 11,326    
Long Contracts                  
U.S. Long Bond     7     $ 777,656     12/30/04   $ (4,285 )  

 

See Accompanying Notes to Financial Statements

116


  PORTFOLIO OF INVESTMENTS
ING REAL ESTATE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  REAL ESTATE INVESTMENT TRUSTS: 93.2%        
            Apartments: 19.0%  
  99,600     L   Apartment Investment & 
Management Co.		   $ 3,622,452    
  338,100     L   Archstone-Smith Trust     12,340,650    
  102,600     L   AvalonBay Communities, Inc.     7,294,860    
  154,500     L   Camden Property Trust     7,575,135    
  60,200     L   Essex Property Trust, Inc.     4,847,906    
  30,000     L   Post Properties, Inc.     1,023,000    
  424,500         United Dominion Realty Trust, Inc.     9,759,255    
      46,463,258    
            Diversified: 8.0%  
  127,100     @   American Campus
Communities, Inc.		     2,656,390    
  204,000         Liberty Property Trust     8,364,000    
  116,600         Vornado Realty Trust     8,570,100    
      19,590,490    
            Health Care: 2.0%  
  385,800         Omega Healthcare Investors, Inc.     4,826,358    
      4,826,358    
            Hotels: 5.0%  
  465,500         Host Marriott Corp.     7,289,730    
  81,100         LaSalle Hotel Properties     2,489,770    
  167,800         Strategic Hotel Capital, Inc.     2,533,780    
      12,313,280    
            Office Property: 21.7%  
  205,000         Arden Realty, Inc.     7,380,000    
  199,100         Boston Properties, Inc.     11,981,838    
  176,650         Corporate Office
Properties Trust SBI MD		     4,907,337    
  54,000         Mack-Cali Realty Corp.     2,361,960    
  277,800         Maguire Properties, Inc.     7,308,918    
  85,400         Prentiss Properties Trust     3,193,106    
  150,100     L   SL Green Realty Corp.     8,650,263    
  439,000         Trizec Properties, Inc.     7,230,330    
      53,013,752    
            Regional Malls: 18.5%  
  70,900         CBL & Associates Properties, Inc.     5,196,261    
  182,900         General Growth Properties, Inc.     6,275,299    
  140,100     L   Macerich Co.     8,509,674    
  198,900         Mills Corp.     11,806,704    
  214,800         Simon Property Group, Inc.     13,334,784    
      45,122,722    
            Shopping Centers: 10.3%  
  148,400         Acadia Realty Trust     2,248,260    
  164,900     L   Developers Diversified Realty Corp.     7,098,945    
  122,400         Pan Pacific Retail Properties, Inc.     7,258,320    
  166,700         Regency Centers Corp.     8,668,400    
      25,273,925    
            Storage: 1.0%  
  173,300         Extra Space Storage, Inc.     2,408,870    
      2,408,870    

 

Shares           Value  
            Warehouse: 7.7%      
  207,279     L   Catellus Development Corp.   $ 6,508,561    
  305,200         ProLogis     12,278,196    
      18,786,757    
    Total Real Estate
Investment Trust
(Cost $173,275,454)		     227,799,412    
  COMMON STOCK: 5.1%        
            Hotels and Motels: 5.1%  
  238,700     L   Starwood Hotels & 
Resorts Worldwide, Inc.		     12,481,623    
    Total Common Stock
(Cost $8,829,008)		     12,481,623    
    Total Long-Term Investments
(Cost $182,104,462)		     240,281,035    
Principal
Amount		           Value  

 

SHORT-TERM INVESTMENTS: 3.7%

    Securities Lending CollateralCC: 3.7%  
$ 9,043,070     The Bank of New York Institutional
Cash Reserves Fund		      
 		       9,043,070    
    Total Short-Term Investments
(Cost $9,043,070)		      
 		       9,043,070    
    Total Investments In            
   
    Securities (Cost            
   
    $191,147,532)*     102.0 %   $ 249,324,105    
    Other Assets and
Liabilities-Net		     (2.0 )     (4,954,005 )  
    Net Assets     100.0 %   $ 244,370,100    

 

@  Non-income producing security

cc  Securities purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $189,916,706. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 59,407,399    
Gross Unrealized Depreciation     -    
Net Unrealized Appreciation   $ 59,407,399    

 

See Accompanying Notes to Financial Statements

117


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ING Funds Distributor, LLC offers the funds listed below. Before investing in a fund, shareholders should carefully review the fund's prospectus. Investors may obtain a copy of a prospectus of any ING Fund by calling (800) 992-0180.

Domestic Equity and Income Funds

ING Balanced Fund
ING Convertible Fund
ING Equity and Bond Fund
ING Equity Income Fund
ING Real Estate Fund

Domestic Equity Growth Funds

ING Disciplined LargeCap Fund
ING Growth Fund
ING LargeCap Growth Fund
ING MidCap Opportunities Fund
ING SmallCap Opportunities Fund
ING Small Company Fund

Domestic Equity Index Funds

ING Index Plus LargeCap Fund
ING Index Plus MidCap Fund
ING Index Plus SmallCap Fund

Domestic Equity Value Funds

ING Financial Services Fund
ING LargeCap Value Fund
ING MagnaCap Fund
ING MidCap Value Fund
ING SmallCap Value Fund
ING Value Opportunity Fund

Fixed Income Funds

ING GNMA Income Fund
ING Government Fund
ING High Yield Bond Fund
ING Intermediate Bond Fund
ING National Tax Exempt Bond Fund

Global Equity Funds

ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING Global Science and Technology Fund
ING Worldwide Growth Fund

International Equity Funds

ING Emerging Countries Fund
ING Foreign Fund
ING International Fund
ING International Growth Fund
ING International SmallCap Growth Fund
ING International Value Fund
ING Precious Metals Fund
ING Russia Fund

Loan Participation Fund

ING Senior Income Fund

Money Market Funds*

ING Aeltus Money Market Fund
ING Classic Money Market Fund
ING Lexington Money Market Trust
ING Money Market Fund

Strategic Allocation Funds

ING Strategic Allocation Balanced Fund
ING Strategic Allocation Growth Fund
ING Strategic Allocation Income Fund

*  An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

PROXY VOTING INFORMATION

A description of the policies and procedures that the Registrants use to determine how to vote proxies related to portfolio securities is available (1) without charge, upon request, by calling Shareholder Services toll-free at 800-992-0180; (2) on the Registrants' website at www.ingfunds.com and (3) on the SEC's website at www.sec.gov.

Information regarding how the Registrants voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Registrants' website at www.ingfunds.com and on the SEC website at www.sec.gov.

QUARTERLY PORTFOLIO HOLDINGS

The Registrants file their complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Registrants' Forms N-Q are available on the SEC's website at www.sec.gov. The Registrants' Forms N-Q may be reviewed and copied at the Commissions Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330; and is available upon request from the Registrants by calling Shareholder Services toll-free at 800-992-0180.


Investment Manager

ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258

Administrator

ING Funds Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258

Distributor

ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
1-800-334-3444

Transfer Agent

DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141

Custodian

The Bank of New York
100 Colonial Center Parkway, Suite 300
Lake Mary, Florida 32746

Legal Counsel

Dechert
1775 I Street, N.W.
Washington, D.C. 20006

For more complete information, or to obtain a prospectus on any ING fund, please call your Investment Professional or ING Funds Distributor, LLC at (800) 992-0180 or log on to www.ingfunds.com. The prospectus should be read carefully before investing. Consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this information and other information about the fund. Information regarding how the Funds voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Funds' website at www.ingfunds.com and on the SEC's website at www.sec.gov.

PRSAR-UFDEABCMO (1104-012805)


Funds

Semi-Annual Report

November 30, 2004

Classes I and Q

Domestic Equity Growth Funds   Domestic Equity And Income Funds  
n ING Disciplined LargeCap Fund   n ING Convertible Fund  
n ING LargeCap Growth Fund   n ING Equity and Bond Fund  
n ING MidCap Opportunities Fund   n ING Real Estate Fund  
n ING SmallCap Opportunities Fund      
Domestic Equity Value Funds      
n ING LargeCap Value Fund      
n ING MagnaCap Fund      
n ING MidCap Value Fund      
n ING SmallCap Value Fund      

 

This report is submitted for general information to shareholders of the ING Funds. It is not authorized for distribution to prospective shareholders unless accompanied or preceded by a prospectus which includes details regarding the funds' investment objectives, risks, charges, expenses and other information. This information should be read carefully.

E-Delivery Sign-up – details inside


TABLE OF CONTENTS

President's Letter     1    
Market Perspective     2    
Portfolio Managers' Reports:  
Domestic Equity Growth Funds     4    
Domestic Equity Value Funds     12    
Domestic Equity and Income Funds     20    
Shareholder Expense Examples     26    
Statements of Assets and Liabilities     29    
Statements of Operations     35    
Statements of Changes in Net Assets     38    
Financial Highlights     44    
Notes to Financial Statements     55    
Portfolios of Investments     73    

 

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PRESIDENT'S LETTER

Dear Shareholder:

The past year has brought about numerous changes in the mutual funds industry, including requests for additional disclosures. I would like to draw your attention to some additional information you will now see in the reports due, in part, to these new requirements:

•  You will see a new section entitled "Shareholder Expense Examples". These examples are intended to illustrate for you the ongoing costs of investing in a mutual fund and to provide a method to compare those costs with the ongoing costs of investing in other mutual funds.

•  In addition to the normal performance tables included in the Portfolio Managers' Reports, there are now additional graphical or tabular presentations, which illustrate the current holdings of the funds as of the period-end.

•  Each fund now also files its complete schedule of portfolio holdings with the Securities Exchange Commission ("SEC") for the first and third quarters of each fiscal year on
Form N-Q. These Forms are available for shareholders to view on the SEC's website at www.sec.gov.

We welcome these changes and believe that they will provide valuable information to our shareholders. We hope you will find these additional disclosures beneficial and easy to understand.

On behalf of ING Funds, I thank you for your continued support and confidence and look forward to serving you in 2005 and beyond.

Sincerely,

James M. Hennessy

President

ING Funds

January 25, 2005

JAMES M. HENNESSY

1


MARKET PERSPECTIVE: SIX MONTHS ENDED NOVEMBER 30, 2004

Two months prior to the start of our fiscal year, the economic outlook had changed radically. On April 2, 2004, a very bullish U.S. employment report had sparked a few days of euphoria that vanished as it became clear that as the job market tightens, inflation picks up and rising interest rates cannot be far away. This was followed up with another strong report in May and by mid-month major stock and bond markets had negative returns for 2004. Markets were off their lows as we started our half year and in this period, as we shall see below, sentiment would undergo two more major reversals, accompanied by record-breaking market movements.

Global equities added 9.0% from the end of May through November according to the Morgan Stanley Capital International ("MSCI") World Index(1) in dollars including net dividends, just under half due to dollar weakness. Among currencies, the euro, yen and pound all gained on the dollar, although the pendulum swung back and forth. Ultimately, the dollar succumbed to record U.S. trade deficits, and latterly, to fears that non-U.S. investors might diversify out of U.S. financial assets. By the end of November 2004, the euro had gained 8.9% and a new all time record against the dollar. The yen rose 6.2% to a level not seen since early 2000, while the pound stood 4.2% higher at a remarkable 12-year peak. On a trade-weighted basis, the dollar plumbed 9-year lows.

Investment grade U.S. fixed income classes initially bore the brunt of fears of a new cycle of rising interest rates from multi-decade low levels, as evidence mounted that inflation was on the rise. In the six months ended November 30, 2004, the Federal Open Market Committee (FOMC) would increase the Federal Reserves Funds rate four times to 2.0%, even as the economy clearly decelerated again. During this time, the total return of the Lehman Brothers Aggregate Bond Index(2) of investment grade bonds was 3.8%. High yield bonds fared comparatively well, the Lehman Brothers U.S. Corporate High Yield Bond Index(3) returning 9.6% for the six months. In a similar vein there was a notable flattening of the yield curve, as short-term interest rates marched up in anticipation of continued monetary tightening, while bond yields ignored this and fell in the face of mostly tame economic data. For the six months, the yield on 10-year Treasury Notes fell by 30 basis points to 4.4%, but the yield on 13-week Treasury Bills rose 113 basis points to 2.2%.

The U.S. equities market in the form of the Standard & Poor's ("S&P") 500 Index(4) rose 5.7% including dividends in the six months ended November 30, 2004. At that point the market was trading at a price to earnings ("P/E") level of just under 16 times 2005 estimated earnings. As mentioned above, strong monthly employment reports from April 2004 set the tone. After an initial scare about the rise in interest rates that this implied, investors regained their nerve and as the Federal Reserve embarked on its tightening cycle at the end of June the market was challenging its best levels of 2004. And yet in the week before the increase the wind seemed to shift again with some unexpectedly downbeat economic releases. From July through October 2004, the employment reports were neutral to shockingly weak, while oil prices continued their rise, peaking on Friday, October 22 at 41% above end of May 2004 levels. This effective deflationary "tax" on worldwide consumers troubled equity markets, and the S&P 500 Index reached its lowest point of 2004 on August 12. From there, however, oil prices retreated by 13% and that, combined with a clear election result, perceived to be business and shareholder friendly, plus a new, powerful employment report, caused sentiment to shift yet again. By the end of November, the S&P 500 Index had breached levels not seen since before September 11, 2001, bolstered by an upward revision to third quarter gross domestic product ("GDP") growth to 3.9%.

In international equities markets, for the six months ended November 30, 2004, Japan rose 4.8% in dollars, according to the MSCI Japan Index(5) with net dividends, but fell 2.6% in yen. At that point, stocks were trading at nearly 16 times 2005 estimated earnings. Initially encouraged by surprisingly strong, export led, 6.1% first quarter GDP growth, investors became disillusioned by a likely slow down in China, rising oil prices and a slumping dollar. By the third quarter, GDP growth had fallen to a depressingly flat 0.1%.

Meanwhile, European excluding ("ex") UK markets gained 15.5% in dollars, about five-eighths due to dollar weakness, according to the MSCI Europe ex UK Index(6) with net dividends. In local currency terms, the region's markets reached a 28-month high during November 2004, and were then trading on average at just over 13 times 2005 estimated earnings. Growth in this region is held back by weak domestic demand, restrained by 8.9% unemployment in inflexible labor markets. This region's main attraction is its relative

2


MARKET PERSPECTIVE: SIX MONTHS ENDED NOVEMBER 30, 2004

cheapness; the concern is the fragility of this picture, given its export dependency.

The UK market rose 12.1% in dollars between May and November 2004, based on the MSCI UK Index(7) with net dividends. In pounds, the market rose 7.5%, attaining the highest mark since mid-2002, and traded at about 161/2 times 2005 estimated earnings. Unlike Continental Europe, the UK economy strains at full employment, with over-committed, property owning consumers, enriched (at least in their own minds), by a housing price bubble. The Bank of England has been trying, with five interest rate increases since November 2003, to cool demand and by the end of November seemed to be succeeding.

(1)  The MSCI World Index measures the performance of over 1,400 securities listed on exchanges in the United States, Europe, Canada, Australia, New Zealand and the Far East.

(2)  The Lehman Brothers Aggregate Bond Index is composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment.

(3)  The Lehman Brothers U.S. Corporate High Yield Bond Index is generally representative of corporate bonds rated below investment-grade.

(4)  The Standard & Poor's 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

(5)  The MSCI Japan Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan.

(6)  The MSCI Europe ex UK Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe, excluding the UK.

(7)  The MSCI UK Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK.

All indices are unmanaged and investors cannot invest directly in an index.

Past performance does not guarantee future results. The performance quoted represents past performance. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. The Funds' performance is subject to change since the period's end and may be lower or higher than the performance data shown. Please call (800) 992-0180 or log on to www.ingfunds.com to obtain performance data current to the most recent month end.

Market Perspective reflects the views of the Chief Investment Risk Officer only through the end of the period, and is subject to change based on market and other conditions.

3


ING DISCIPLINED LARGECAP FUND

PORTFOLIO MANAGERS' REPORT

The ING Disciplined LargeCap Fund (the "Fund") seeks capital appreciation. The Fund is managed by a team of investment professionals led by Hugh T.M. Whelan Sr., CFA, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class I shares provided a total return of 7.56% compared to the Standard & Poor's ("S&P") 500 Index(4), which returned 5.67% for the same period.

Portfolio Specifics: Performance benefited from good stock selection. Sector allocation, market timing, and other macro themes played no significant role in the Fund's outperformance of its benchmark.

Relative performance during the first five months of this period was positive, but somewhat restrained. The market headed down going into August weighed by oil's ascent and the beginning of a season full of large events, such as the Olympics and the Democratic and Republican conventions, which were perceived to be prime targets for terrorists. As each potential disaster passed without incident, the market slowly drifted up, until by the end of October it was roughly back to where it had started. Throughout this period, we incrementally added value, especially in the information technology and health care sectors. Stock selection in these sectors was helped by our model's earnings quality and valuation factors. Price momentum and other market recognition factors were detrimental to security selection in these sectors. Security selection during this time was weakest in the financials sector where historically successful factors, such as earnings momentum and earnings surprise, failed to provide positive guidance.

A market catalyst emerged after the election. In November, the S&P 500 Index returned a robust 4.1%, and we generated as much outperformance in November as we did in the preceding five months. The markets seemed to ease its concern over macro fears and concentrate more on individual stock stories. Like the first five months of the reporting period, stock selection within the health care and information technology sectors was particularly successful. However, this time the factors that proved to be the strong indicators of performance were market recognition factors, such as price momentum and analyst estimate revision. Factors that tended not to work as well were those that monitor management behavior, such as capital expenditures intensity. Stock selection in November was weakest in the industrial sector.

For the full six-month performance period, roughly half our outperformance came in November and the other half was spread out over the preceding five months. We had strong stock selection in the health care and information technology sector and weak stock selection in the financial and industrial sectors.

Current Strategy and Outlook: Our strategy going forward is to continue our focus on bottom-up stock selection using the criteria of positive business momentum, valuation, and market recognition. The Fund is overweight in the consumer discretionary and energy sectors and underweight in the industrials and financials sectors. However, our overall sector exposures are a result of our bottom-up stock picking and are by design quite close to the S&P 500 Index so that nearly all of our relative performance is driven by individual stock selection.

The outlook for equities is positive with third calendar quarter earnings hitting seventeen percent and the non-farm payroll report almost double expectations. The Federal Reserve signaled its intentions to continue with its "measured" increase in rates and in November lifted the fed funds rate to 2.00%, still considered to be accommodative. Robust corporate profits, strong jobs numbers and inflation fighting Federal Reserve all bode well for equities.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Exxon Mobil Corp.     3.7 %  
General Electric Co.     3.1 %  
Microsoft Corp.     2.6 %  
Johnson & Johnson     2.5 %  
American International Group, Inc.     2.5 %  
International Business Machines Corp.     2.4 %  
Procter & Gamble Co.     2.1 %  
Citigroup, Inc.     2.0 %  
Wal-Mart Stores, Inc.     2.0 %  
Pfizer, Inc.     1.9 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

4


PORTFOLIO MANAGERS' REPORT  ING DISCIPLINED LARGECAP FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   5 Year   Since Inception
December 30, 1998		  
Class I     13.90 %     (2.97 )%     (0.35 )%  
S&P 500 Index(1)     12.85 %     (1.84 )%     0.70 %(2)  

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING Disciplined LargeCap Fund against the S&P 500 Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(2) Since inception performance for index is shown from January 1, 1999.

5


ING LARGECAP GROWTH FUND

PORTFOLIO MANAGERS' REPORT

The ING LargeCap Growth Fund (the "Fund") seeks long-term capital appreciation by investing primarily in equity securities of large U.S. companies. The Fund is managed by Andrew J. Shilling, CFA, Senior Vice President, Partner and Equity Portfolio Manager, Wellington Management Company, LLP - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class Q shares provided a total return of 0.48% compared to the Russell 1000 Growth Index(4) and the Standard & Poor's ("S&P") 500 Index(5), which returned 0.81% and 5.67%, respectively, for the same period.

Portfolio Specifics: The summer of 2004 weakness in equities was a result of investor focus on several concerns: a softening economy, uncertainty over presidential elections, continued violence in Iraq, and worries of potential terrorist strikes during the political conventions or the Olympics. By fall, many of these worries had been mitigated and America remained free of terrorist attacks. The economy seemed to be moving forward despite record high oil prices. Equity markets generally rallied beginning in September, resulting in positive performance for the six month period.

In this volatile environment, the Fund maintained its focus on stock selection. Wireless handheld device maker Research In Motion Ltd., the top positive contributor to absolute Fund returns, benefited from the introduction of an appealing new messaging and communication device and a software agreement with cell phone giant Nokia Corp. Internet media company Yahoo!, Inc. also boosted results on favorable trends for online advertising and paid search, while online auctioneer eBay, Inc., a consumer discretionary stock, rose on strong international growth and accelerating PayPal metrics.

Unfavorable performance from Apollo Group, Inc. and a handful of health care stocks contributed to the Fund's relative underperformance during the period. Post-secondary educator Apollo Group, Inc., the bottom contributor on a relative basis, declined on negative news flow for the industry and questions regarding its recruitment practices. In the health care sector, pharmaceuticals were generally weak during the period. Of our holdings, Eli Lilly & Co. and AstraZeneca PLC were particularly weak. AstraZeneca PLC's weakness was driven mainly by FDA concerns about negative side effects of Exanta, a blood thinning drug in the company's product pipeline. Drug distributor Cardinal Health, Inc., which was held during the period, was hurt by an investigation of accounting practices.

Current Strategy and Outlook: Though we believe that the economy will exhibit moderate growth over the intermediate term, we are somewhat challenged to aptly forecast the near-term macroeconomic environment. On the one hand, gross domestic product (GDP) rose at a 3.9% annualized rate in the third calendar quarter of 2004, manufacturing indicators continue to show strength, and interest rates are relatively low. On the other hand, employment growth remains somewhat sluggish, the Federal Reserve continues to raise short-term interest rates, and oil prices remain high. Elevated energy prices, particularly if they persist or rise in the coming months, could serve to restrain corporate spending and/or curtail consumer consumption. In this uncertain environment, we continue to emphasize competitively-advantaged, share-gaining industry leaders that should perform well in most economic scenarios. Our strategy is to build a diversified portfolio on a stock-by-stock basis, identifying companies with sustainable strong revenue and cash flow growth.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Research In Motion Ltd.     5.6 %  
Apollo Group, Inc.     5.1 %  
Yahoo!, Inc.     5.1 %  
Countrywide Financial Corp.     4.9 %  
Guidant Corp.     4.6 %  
eBay, Inc.     4.5 %  
Dell, Inc.     4.1 %  
Electronic Arts, Inc.     3.7 %  
AstraZeneca PLC ADR     3.4 %  
First Data Corp.     3.3 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

6


PORTFOLIO MANAGERS' REPORT  ING LARGECAP GROWTH FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   5 Year   Since Inception
of Class I
January 8, 2002		   Since Inception
of Class Q
July 21, 1997		  
Class I     9.81 %     -       (3.81 )%     -    
Class Q     9.62 %     (10.74 )%     -       6.27 %  
Russell 1000 Growth Index(1)     5.83 %     (8.19 )%     (1.49 )%(3)     1.24 %(4)  
S&P 500 Index(2)     12.85 %     (1.84 )%     2.51 %(3)     4.44 %(4)  

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING LargeCap Growth Fund against the Russell 1000 Growth Index and the S&P 500 Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Russell 1000 Growth Index is an index that measures the performance of those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.

(2) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(3) Since inception performance for index is shown from January 1, 2002.

(4) Since inception performance for index is shown from August 1, 1997.

7


ING MIDCAP OPPORTUNITIES FUND

PORTFOLIO MANAGERS' REPORT

The ING MidCap Opportunities Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by a team of investment professionals led by Matthew Price, CFA and David Campbell, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class I shares provided a total return of 5.19% compared to the Russell MidCap Growth Index(4) and the Russell MidCap Index(5), which returned 5.68% and 11.09%, respectively, for the same period.

Portfolio Specifics: The Fund slightly underperformed the Russell MidCap Growth Index as unfavorable sector allocation was offset by good stock selection. A substantial overweight in the energy sector combined with strong stock selection was a major positive factor, as was the industrial sector where superior stock selection more than offset unfavorable sector allocation. With energy prices likely to settle for a period around the $40 price level, we believe that share prices remain attractive in that sector. The health care sector hurt performance most as asset allocation and poor stock selection united to negatively impact results. Stocks that contributed to performance during the past six months were Harman Intl. Industries, Inc., CACI Intl., Inc., and Adobe Systems, Inc., while Omnicare, Inc., Broadcom Corp., and NBTY, Inc., which were all previously held, performed poorly and detracted from results.

Energy represents the most heavily overweighted sector relative to the Russell MidCap Growth Index, while technology remains as the most underweighted. This is an indication as to where the Fund's managers believe the best earnings growth will be found in 2005. The latter sector was reduced sharply during the past six months as profits were taken in successful investments, while several unsuccessful technology positions were sold. The exposure to health care remains above the benchmark as we believe that following a period of difficult earnings comparisons and potential "headline risk" from new product failures, the sector offers above- average potential. Overall, we believe that the Fund is well positioned for the 2005 investment environment we see ahead.

Current Strategy and Outlook: The stock market seems poised to end 2004 on a positive note. The favorable presidential election outcome (from the market's perspective) and the outlook for stable to declining energy prices over the next few months have enabled investors to focus on the more traditional economic and market metrics: valuation, interest rates, corporate profits and inflation. Given our positive economic outlook for the remainder of 2004 and into 2005, we believe that the market is reasonably valued and able to provide positive returns during the coming year. However, our stock selection process is primarily based on a combination of positive earnings growth, relative price strength and reasonable valuation and, as such, is not dependent upon our market or economic outlook.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Adobe Systems, Inc.     2.1 %  
Harman Intl. Industries, Inc.     2.1 %  
Coach, Inc.     2.1 %  
Mohawk Industries, Inc.     2.0 %  
Avid Technology, Inc.     2.0 %  
Rockwell Automation, Inc.     1.8 %  
Chesapeake Energy Corp.     1.8 %  
St. Jude Medical, Inc.     1.8 %  
CACI Intl., Inc.     1.7 %  
Sonic Corp.     1.7 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

8


PORTFOLIO MANAGERS' REPORT  ING MIDCAP OPPORTUNITIES FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   5 Year   Since Inception
of Class I
August 20, 1998		   Since Inception
of Class Q
April 4, 2000		  
Class I     6.92 %     (4.58 )%     9.60 %     -    
Class Q     6.76 %     -       -       (9.48 )%  
Russell MidCap Growth Index(1)     11.40 %     (1.15 )%     8.40 %(3)     (8.39 )%(4)  
Russell MidCap Index(2)     18.76 %     8.51 %     12.27 %(3)     5.01 %(4)  

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING MidCap Opportunities Fund against the Russell MidCap Growth Index and the Russell MidCap Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Russell MidCap Growth Index consists of those companies included in the Russell MidCap Index with relatively higher price-to-book ratios and higher forecasted growth values with greater than average growth orientation.

(2) The Russell MidCap Index measures the performance of the 800 smallest companies in the Russell 1000 Index.

(3) Since inception performance for index is shown from September 1, 1998.

(4) Since inception performance for index is shown from April 1, 2000.

9


ING SMALLCAP OPPORTUNITIES FUND

PORTFOLIO MANAGERS' REPORT

The ING SmallCap Opportunities Fund (the "Fund") seeks capital appreciation. The Fund is managed by a team of investment professionals led by Matthew Price, CFA and David Campbell, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class I shares provided a total return of 8.08% compared to the Russell 2000 Growth Index(4) and the Russell 2000 Index(5), which returned 7.88% and 12.18%, respectively, for the same period.

Portfolio Specifics: Strong stock selection was able to overcome disappointing results from our sector allocation, providing a return for the six months ended November 30, 2004 that was in line with the Fund's benchmark. The divergence in performance among sectors was very wide during this period. Compared to the benchmark technology experienced very positive results, but these gains were more than offset by disappointing performance in the health care sector. Strong contributors in technology included Cognizant Technology Solutions, Micros Systems, Inc., and Silicon Image, Inc. However, the problems among several small health care-related companies, including previously held Ligand Pharmaceuticals, Martek Biosciences Corp., and Accredo Health, Inc. had a severely negative impact. The energy sector contributed to the favorable results due to a combination of good sector weighting decisions and strong stock selection, including Southwestern Energy Co. Favorable stock selections in the consumer discretionary sector, such as Penn National Gaming, Inc. and Dick's Sporting Goods, Inc., also helped performance. Lack of exposure to the strongly performing materials sector detracted from performance.

The sector weightings remained relatively unchanged during the June to November 2004 period. The consumer discretionary sector is the Fund's largest position and represents a substantial overweighting versus the benchmark. As is often the case in small-cap growth portfolios, consumer discretionary, technology, and health care remain the three largest sectors, representing about 70% of the entire Fund versus about 65% of the benchmark. There is a high level of industry diversification within these sectors, but they remain the growth areas of the economy. On the other hand, industrials are the most heavily underweighted sector in the Fund, where a lack of earnings growth and relative price strength has made security selection challenging.

Current Strategy and Outlook: The stock market seems poised to end 2004 on a positive note. The favorable presidential election outcome (from the market's perspective) and the outlook for stable to declining energy prices over the next few months have enabled investors to focus on the more traditional economic and market metrics: valuation, interest rates, corporate profits, and inflation. Given our positive economic outlook, we believe that the market is reasonably valued and able to provide positive returns during the coming year.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Southwestern Energy Co.     3.0 %  
Shuffle Master, Inc.     2.8 %  
Cognizant Technology Solutions Corp.     2.6 %  
Ishares Russell 2000 Growth Index Fund     2.6 %  
Avid Technology, Inc.     2.5 %  
Amsurg Corp.     2.4 %  
SCP Pool Corp.     2.4 %  
Station Casinos, Inc.     2.3 %  
Inamed Corp.     2.3 %  
Pediatrix Medical Group, Inc.     2.2 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

10


PORTFOLIO MANAGERS' REPORT  ING SMALLCAP OPPORTUNITIES FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   5 Year   Since Inception
of Class I
April 1, 1999		   Since Inception
of Class Q
April 4, 2000		  
Class I     3.10 %     (8.86 )%     2.38 %     -    
Class Q     2.78 %     -       -       (14.14 )%  
Russell 2000 Growth Index(1)     10.83 %     (1.09 )%     2.83 %     (6.34 )%(4)  
Russell 2000 Index(2)     17.26 %     8.29 %     9.98 %     4.88 %(4)  

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING SmallCap Opportunities Fund against the Russell 2000 Growth Index and the Russell 2000 Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Russell 2000 Growth Index measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values.

(2) The Russell 2000 Index consists of the smallest 2,000 companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3000 U.S. companies based on total market capitalization.

(3) The Fund normally invests in small-cap companies that the portfolio managers feel have above average prospects for growth. The Russell 2000 Growth Index tracks the performance of small-cap growth companies.

(4) Since inception performance for index is shown from April 1, 2000.

11


ING LARGECAP VALUE FUND

PORTFOLIO MANAGERS' REPORT

The ING LargeCap Value Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by Brandes Investment Partners, L.P. - the Sub-Adviser. Brandes' Large Cap Investment Committee is responsible for making the day-to-day investment decisions for the Fund.

Performance: For the period from August 2, 2004(1) to November 30, 2004, the Fund's Class I shares provided a total return of 6.42% compared to the Russell 1000 Value Index(3)(4) and the Russell 1000 Index(3)(5), which returned 10.00% and 7.83%, respectively, for the period.

Portfolio Specifics: While energy prices increased substantially during the period ended November 30, 2004, U.S. economic output continued to expand. In October, as the price of crude oil reached $55 a barrel, the Commerce Department reported that gross domestic product grew at an annualized 3.7% in the third calendar quarter of 2004.

The Federal Reserve raised U.S. interest rates four times, bringing the federal funds rate to 2.0%. In a November statement, the central bank noted that "output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved."

In this environment, U.S. stocks tended to post advances. The Dow Jones Industrial Average(7) gained 3.48%, while the S&P 500 Index(8) climbed 5.67%.

Additionally, the large-cap Russell 1000 Index gained 5.92%, while the small-cap Russell 2000 Index(9) climbed 12.18%, suggesting that returns for large caps trailed returns for small caps during the period. Among large caps, less-expensive "value" stocks tended to outperform their "growth" counterparts. While the Russell 1000 Value Index advanced 11.01%, for example, the Russell 1000 Growth Index(10) gained only 0.81%.

The Fund underperformed the Russell 1000 Value Index, but outperformed the Russell 1000 Index. For the Fund, a majority of holdings posted advances. Gains for positions in industries such as diversified telecom services, oil and gas, and tobacco made the most substantial contributions to returns. Strong performers in these industries included Sprint Corp., El Paso Corp. and Altria Group, Inc.

Returns for holdings in pharmaceuticals were mixed during the period, with Wyeth and Schering-Plough Corp. advancing, while positions such as Merck & Co., Inc. and Pfizer, Inc. declined. On a stock-by-stock basis, declines for positions in Merck & Co., Inc., Micron Technology, Inc., and Safeway, Inc. were the most significant detractors from the Fund's performance.

Current Strategy and Outlook: During the period, we sold several positions as their market prices advanced toward our estimate of their fair values. We used the proceeds to purchase shares of new holdings at prices that we consider attractive.

As a result of this buying and selling, many of the Fund's industry exposures shifted. For example, exposure to the insurance industry increased, while exposure to the diversified telecom services industry declined. Keep in mind that the Fund's industry exposures are not the product of top-down forecasts or industry-level analysis, but merely stem from our company-by-company search for compelling investment opportunities.

Overall, we offer no predictions regarding the short-term direction of the stock market, or regarding large-cap U.S. stocks in particular. Instead, we remain focused on purchasing large-cap stocks at discounts to their intrinsic values and holding them until the broader market recognizes their true worth. We believe that this approach will provide patient investors with favorable returns over the long term.

(1)  Commencement of operations for Class I

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Merck & Co, Inc.     4.0 %  
Schering-Plough Corp.     4.0 %  
Safeway, Inc.     4.0 %  
BellSouth Corp.     3.9 %  
Kroger Co.     3.8 %  
Pfizer, Inc.     3.6 %  
Bristol-Myers Squibb Co.     3.5 %  
Ford Motor Co.     3.5 %  
Albertson's, Inc.     3.5 %  
SBC Communications, Inc.     3.5 %  

 

Portfolio holdings are subject to change daily.

12


PORTFOLIO MANAGERS' REPORT  ING LARGECAP VALUE FUND

Cumulative Total Returns for the Periods Ended November 30, 2004  

 

    Since Inception
of Class I
August 2, 2004		  
Class I     6.42 %  
Russell 1000 Value Index(1)     10.00 %(3)  
Russell 1000 Index(2)     7.83 %(3)  

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING LargeCap Value Fund against the Russell 1000 Value Index and the Russell 1000 Index. The Index has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

Performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund, subject to possible later recoupment during a three-year period. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Russell 1000 Value Index measures the performance of those Russell 1000 securities with lower price-to-book ratios and lower forecasted growth values.

(2) The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.

(3) Since inception performance for the index is shown from August 1, 2004.

(4) The Dow Jones Industrial Average is an unmanaged U.S. stock index based on the stock prices of 30 large and actively traded U.S. companies.

(5) 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.

(6) The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3,000 U.S. companies based on total market capitalization.

(7) The Russell 1000 Growth Index measures the performance of the 1,000 largest companies in the Russell 3000 Index with higher price-to-book ratios and higher forecasted growth.

13


ING MAGNACAP FUND

PORTFOLIO MANAGERS' REPORT

The ING MagnaCap Fund (the "Fund") seeks growth of capital, with dividend income as a secondary consideration. The Fund is managed by a team of investment professionals led by William F. Coughlin, CFA, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class I shares provided a total return of 7.28% compared to the Russell 1000 Value Index(5) and the Russell 1000 Index(6), which returned 11.01% and 5.92%, respectively, for the same period.

Portfolio Specifics: A combination of sector allocation and disappointing stock selection caused the Fund to underperform its Russell 1000 Value Index benchmark during the past six months. With respect to the Fund's sector allocation, an overweighted position in the poorly performing health care sector had a negative impact on performance as Merck & Co., which was previously held, and Pfizer, Inc. were two of the Fund's worst performing positions. Partially offsetting this weakness, however, was an important overweighting of the energy sector where Apache Corp., Halliburton Co., and ChevronTexaco Corp. made positive contributions. Overall, our holdings in the financial services sector had the most impact on relative results as American Intl. Group, Washington Mutual, Inc. and Morgan Stanley all declined during the period.

There were no major sector changes over the last six months. The largest sector exposure in the Fund remains financial services at approximately 34% of total assets. While this appears to be a relatively high level for a single sector, the Russell 1000 Value Index has a weighting of nearly 33%, so the Fund is relatively in line with its benchmark. Consumer staples continues to the most heavily overweighted sector relative to the benchmark, while technology is the most underweighted. Overall, the Fund's sector weightings have remained sensitive to the weightings of the underlying benchmark as a means of controlling the overall risk and volatility of the Fund's returns.

Current Strategy and Outlook: The stock market seems poised to end 2004 on a positive note. The favorable presidential election outcome (from the market's perspective) and the outlook for stable to declining energy prices over the next few months have enabled investors to focus on the more traditional economic and market metrics: valuation, interest rates, corporate profits, and inflation. Given our positive economic outlook, we believe that the market is reasonably valued and able to provide positive returns during the coming year.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

ChevronTexaco Corp.     3.8 %  
Bank of America Corp.     3.7 %  
General Dynamics Corp.     3.6 %  
Altria Group, Inc.     3.6 %  
Exxon Mobil Corp.     3.4 %  
Wells Fargo & Co.     3.3 %  
Nestle SA ADR     3.1 %  
BP PLC ADR     3.0 %  
Fannie Mae     3.0 %  
Merrill Lynch & Co, Inc.     3.0 %  

 

Portfolio holdings are subject to change daily.

14


PORTFOLIO MANAGERS' REPORT  ING MAGNACAP FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  

 

    1 Year   Since Inception
of Class I
March 5, 2003		  
Class I     14.65 %     25.86 %  
Russell 1000 Value Index(1)      19.67 %     28.14 %(3)   
Russell 1000 Index(2)      12.66 %     23.83 %(3)   

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING MagnaCap Fund against the Russell 1000 Value Index, Russell 1000 Index and the S&P Barra Value Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Russell 1000 Value Index measures the performance of those Russell 1000 securities with lower price-to-book ratios and lower forecasted growth values.

(2) The Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.

(3) Since inception performance for index is shown from March 1, 2003.

(4) Since inception performance for index is shown from December 1, 1999.

15


ING MIDCAP VALUE FUND

PORTFOLIO MANAGERS' REPORT

The ING MidCap Value Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by Brandes Investment Partners, L.P. - the Sub-Adviser. Brandes' Mid Cap Investment Committee is responsible for making the day-to-day investment decisions for the Fund.

Performance: For the six months ended November 30, 2004, the Fund's Class I shares provided a total return of 6.15% compared to the Russell MidCap Value Index(4) and the Russell MidCap Index(5), which returned 15.09% and 11.09%, respectively, for the same period.

Portfolio Specifics: While energy prices increased substantially during the period, U.S. economic output continued to expand. In October, as the price of crude oil reached $55 a barrel, the Commerce Department reported that gross domestic product grew at an annualized 3.7% in the third quarter of 2004.

The Federal Reserve raised U.S. interest rates four times, bringing the federal funds rate to 2.0% as of period end. In a November statement, the central bank noted that "output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved."

In this environment, U.S. stocks tended to post advances. The Dow Jones Industrial Average(7) gained 3.48%, while the S&P 500 Index(8) climbed 5.67%.

Additionally, the large-cap Russell 1000 Index(9) gained 5.92% while the Russell Midcap Index climbed 11.09%, suggesting that returns for large caps trailed returns for mid caps during the period. Among mid caps, less-expensive "value" stocks tended to outperform their "growth" counterparts. While the Russell Midcap Value Index advanced 15.09%, for example, the Russell Midcap Growth Index(10) gained only 5.68%.

For the Fund, a majority of holdings posted advances; however, the Fund still underperformed its benchmarks. Gains for positions in the oil and gas, tobacco, and chemicals industries made the most substantial contributions to returns. Strong performers in these industries included El Paso Corp., Loews Corp. - Carolina Group, and RPM International, which was sold during the period.

Returns for positions in the auto components industry were mixed, with Goodyear Tire & Rubber Co. advancing while Visteon Corp. declined. On a stock-by-stock basis, declines for positions in Tommy Hilfiger Corp. and Winn-Dixie Stores, Inc. were the most significant detractors from the Fund's performance.

Current Strategy and Outlook: During the six-month period ended November 30, 2004, we sold several positions as their market prices advanced toward our estimate of their fair values. We used the proceeds to purchase shares of new holdings at prices that we consider attractive.

As a result of this buying and selling, many of the Fund's industry exposures shifted. For example, exposure to the health care providers & services industry increased, while exposure to the chemicals industry declined. Keep in mind that the Fund's industry exposures are not the product of top-down forecasts or industry-level analysis, but merely stem from our company-by-company search for compelling investment opportunities.

Overall, we offer no predictions regarding the short-term direction of the stock market, or regarding mid-cap U.S. stocks in particular. Instead, we remain focused on purchasing mid-cap stocks at discounts to their intrinsic values and holding them until the broader market recognizes their true worth. We believe that this approach will provide patient investors with favorable returns over the long term.

Top Ten Industries
as of November 30, 2004
(as a percent of net assets)*

Agere Systems, Inc.     4.2 %  
Goodyear Tire & Rubber Co.     4.1 %  
UnumProvident Corp.     4.0 %  
Unisys Corp.     4.0 %  
El Paso Corp.     3.4 %  
Synopsys, Inc.     3.4 %  
Tenet Healthcare Corp.     3.3 %  
Visteon Corp.     3.2 %  
Loews Corp.     3.2 %  
3Com Corp.     3.1 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

16


PORTFOLIO MANAGERS' REPORT  ING MIDCAP VALUE FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   Since Inception
of Class I
March 4, 2002		   Since Inception
of Class Q
April 17, 2002		  
Class I     19.07 %     8.18 %     -    
Class Q     18.28 %     -       6.76 %  
Russell MidCap Value Index(1)      24.23 %     14.39 %(3)      13.21 %(4)   
Russell MidCap Index(2)      18.76 %     12.32 %(3)      11.48 %(4)  

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING MidCap Value Fund against the Russell MidCap Value Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Russell Midcap Value Index is an unmanaged index that measures the performance of Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values.

(2) The Russell MidCap Index measures the performance of the 800 smallest companies in the Russell 1000 Index.

(3) Since inception performance for index is shown from March 1, 2002.

(4) Since inception performance for the index is shown from May 1, 2002.

(5) The Dow Jones Industrial Average is an unmanaged U.S. stock index based on the stock prices of 30 large and actively traded U.S. companies.

(6) The S&P 500 Index is an unmanaged index that measures the performance of securities in approximately 500 large, capitalization companies whose securities are traded on major U.S. stock markets.

(7) The Russell 1000 Index measures the performance of the 1000 largest in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3,000 U.S. companies based on total market capitalization.

(8) The Russell MidCap Growth Index consists of those companies included in the Russell MidCap Index with relatively higher price-to-book ratios and higher forecasted growth values with greater than average growth orientation.

17


ING SMALLCAP VALUE FUND

PORTFOLIO MANAGERS' REPORT

The ING SmallCap Value Fund (the "Fund") seeks long-term capital appreciation. The Fund is managed by Brandes Investment Partners, L.P. - the Sub-Adviser. Brandes' Small Cap Investment Committee is responsible for making the day-to-day investment decisions for the Fund.

Performance: For the six months ended November 30, 2004, the Fund's Class I shares provided a total return of 6.68% compared to the Russell 2000 Value Index(4) and the Russell 2000 Index(5), which returned 16.35% and 12.18%, respectively, for the same period.

Portfolio Specifics: While energy prices increased substantially during the period, U.S. economic output continued to expand. In October, as the price of crude oil reached $55 a barrel, the Commerce Department reported that gross domestic product grew at an annualized 3.7% in the third calendar quarter of 2004.

The Federal Reserve raised U.S. interest rates four times, bringing the federal funds rate to 2.0% as of period end. In a November statement, the central bank noted that "output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved."

In this environment, U.S. stocks tended to post advances. The Dow Jones Industrial Average(7) gained 3.48%, while the S&P 500 Index(8) climbed 5.67%.

Additionally, the large-cap Russell 1000 Index(9) gained 5.92%, while the small-cap Russell 2000 Index climbed 12.18%, suggesting that returns for large caps trailed returns for small caps during the period. Among small caps, less-expensive "value" stocks tended to outperform their "growth" counterparts. While the Russell 2000 Value Index advanced 16.35%, for example, the Russell 2000 Growth Index(10) gained only 7.88%.

For the Fund, a majority of holdings posted advances; however, the Fund still underperformed its benchmarks. Gains for positions in industries such as household durables, computers and peripherals, and chemicals made the most substantial contributions to returns. Strong performers in these industries included American Greetings Corp., Gateway, Inc., and PolyOne Corp.

Holdings in food & staples retailing and in specialty retail declined. On a stock-by-stock basis, declines for positions in Winn-Dixie Stores, Inc., Tommy Hilfiger Corp., and Interstate Bakeries Corp. – which was sold during the period – were the most significant detractors from the Fund's performance.

Current Strategy and Outlook: During the six-month period ended November 30, 2004, we sold several positions as their market prices advanced toward our estimate of their fair values. We used the proceeds to purchase shares of new holdings at prices that we consider attractive.

As a result of this buying and selling, many of the Fund's industry exposures shifted. For example, exposure to the textiles, apparel & luxury goods industry increased, while exposure to the machinery industry declined. Keep in mind that the Fund's industry exposures are not the product of top-down forecasts or industry-level analysis, but merely stem from our company-by-company search for compelling investment opportunities.

Overall, we offer no predictions regarding the short-term direction of the stock market, or regarding small-cap U.S. stocks in particular. Instead, we remain focused on purchasing small-cap stocks at discounts to their intrinsic values and holding them until the broader market recognizes their true worth. We believe that this approach will provide patient investors with favorable returns over the long term.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Visteon Corp.     3.4 %  
Winn-Dixie Stores, Inc.     3.3 %  
Playtex Products, Inc.     3.3 %  
Payless Shoesource, Inc.     3.1 %  
Wellman, Inc.     3.0 %  
Delta Air Lines, Inc.     3.0 %  
Cincinnati Bell, Inc.     2.9 %  
Kemet Corp.     2.9 %  
Dillard's, Inc.     2.9 %  
Sensient Technologies Corp.     2.8 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

18


PORTFOLIO MANAGERS' REPORT  ING SMALLCAP VALUE FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   Since Inception
of Class I
March 7, 2002		   Since Inception
of Class Q
April 30, 2002		  
Class I     22.33 %     16.81 %     -    
Class Q     22.04 %     -       14.74 %  
Russell 2000 Value Index(1)      23.71 %     16.30 %(3)      12.68 %(4)   
Russell 2000 Index(2)      17.26 %     12.96 %(3)      10.11 %(4)   

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING SmallCap Value Fund against the Russell 2000 Value Index and Russell 2000 Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.

(2) The Russell 2000 Index consists of the smallest 2,000 companies in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3000 U.S. companies based on total market capitalization.

(3) Since inception performance for index is shown from March 1, 2002.

(4) Since inception performance for index is shown from May 1, 2002.

(5) The Dow Jones Industrial Average is an unmanaged U.S. stock index based on the stock prices of 30 large and actively traded U.S. companies.

(6) The S&P 500 Index is an unmanaged index that measures the performance of securities in approximately 500 large, capitalization companies whose securities are traded on major U.S. stock markets.

(7) The Russell 1000 Index measures the performance of the 1000 largest in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of 3,000 U.S. companies based on total market capitalization.

(8) The Russell 2000 Growth Index measures the performance of those Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values.

19


ING CONVERTIBLE FUND

PORTFOLIO MANAGERS' REPORT

The ING Convertible Fund (the "Fund") seeks maximum total return, consisting of capital appreciation and current income. The Fund is managed by a team of investment professionals led by Anuradha Sahai, ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class Q shares provided a total return of 3.93% compared to the Merrill Lynch All Convertibles Excluding Mandatory All Qualities ("ML Convertible") Index(4) and the First Boston Convertible Index(5), which returned 4.13% and 3.79%, respectively, for the same period.

Portfolio Specifics: The Fund slightly underperformed its benchmark index (the "ML Convertible Index") and comparable mutual funds for the six months ended November 30, 2004. The Fund was relatively defensively positioned versus its peer group, as well as the Index at the beginning of the six-month period. The barbell approach adopted earlier in the year, with heavier weights in more defensive bond-like higher income names, along with some equity sensitive names having good fundamentals, helped the Fund participate more during the rallies.

The technology sector was the driver of the majority of the gains in the convertible market due to its heavy weight in the ML Convertible Index. The Fund lagged due to underweighting in this sector versus the benchmark. Slight overweighting and security selection aided the Fund in beating the benchmark handily in the energy sector, which was a strong performing sector in the Fund. Security selection was the major driver of performance in the consumer discretionary, transportation, and health care sectors as well. An overweight sensitivity in the materials sector also benefited performance. This was offset by significant underperformance in telecommunications, due to pronounced underperformance of Primus Telecommunications Group, Inc. (3.750%, due 09/15/10), which the Fund has since sold. The Fund also underperformed in the industrial sector due to a couple of names not meeting third-quarter earnings expectations. We believe the investment thesis for these companies remains intact and that the market has overreacted. Financials were affected negatively due to overexposure to insurers, which were first affected by hurricanes and then by the announcement of investigations into their sales practices.

Current Strategy and Outlook: With the continued redemption of higher interest bond-like convertibles, as well as the continued new issuance of more equity-like convertibles, the convertible market has taken on more equity sensitivity than witnessed in the last couple of years. U.S. economic indicators continue to improve, but we believe that equity market valuations will improve more modestly going into 2005. A weak dollar, combined with relatively high oil prices, could still act as a damper to economic growth going forward. Inflationary fears, along with geopolitical concerns, decrease the visibility for the financial markets going into next year.

As the equity markets have rallied and with spreads tight, the Fund has since shifted from the barbell approach to a more middle of the road stance with most of its weighting in total return convertibles with neither a pure bond-like tilt, nor a pure equity tilt.

In these volatile times, we believe convertible securities are attractive relative to comparable asset classes due to their bond floor downside protection, while providing equity-like upside participation. Despite the fear of higher rates, strong balance sheets and lower default risk should keep bond floors from dropping much. We continue to look for companies across the spectrum that will benefit from a gradually recovering economy as we expect the market will reward companies that typically profit in the recovery part of the cycle. A bottom-up approach, which relies on fundamental analysis and careful security selection within our broader top-down sector positioning strategy, continues to be the foundation for our investment decisions.

Top Ten Industries
as of November 30, 2004
(as a percent of net assets)*

Electronics     3.6 %  
Pharmaceuticals     9.6 %  
Mining     4.3 %  
Telecommunications     6.3 %  
Miscellaneous Manufacturing     3.3 %  
Insurance     9.8 %  
Media     6.0 %  
Healthcare-Services     3.5 %  
Diversified Financial Services     5.7 %  
Oil and Gas     4.7 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

20


PORTFOLIO MANAGERS' REPORT  ING CONVERTIBLE FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   5 Year   Since Inception
August 31, 1995		  
Class Q     6.99 %     3.22 %     11.87 %  
Merrill Lynch Convertible Index(1)      8.86 %     4.31 %     9.66 %(3)   
First Boston Convertible Index(2)      8.63 %     4.31 %     8.97 %(3)   

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Convertible Fund against the Merrill Lynch Convertible Index and the First Boston Convertible Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Merrill Lynch Convertible Index is a market capitalization-weighted index including all non-mandatory domestic corporate convertible securities with at least an overall par of $50 million market value.

(2) The First Boston Convertible Index is an index representing the universe of convertible securities.

(3) Since inception performance for index is shown from September 1, 1995.

21


ING EQUITY AND BOND FUND

PORTFOLIO MANAGERS' REPORT

The ING Equity and Bond Fund (the "Fund") seeks a balance of long-term capital appreciation and current income. The equity portion of the Fund is managed by a team of investment professionals led by James A. Vail, CFA. The bond portion of the Fund is managed by a team of investment professionals led by James B. Kauffmann. Both are with ING Investment Management Co. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class Q shares provided a total return of 3.20% compared to the Standard & Poor's ("S&P") 500 Index(4), the Lehman Brothers Aggregate Bond Index(5), and a Composite Index (60% S&P 500 Index / 40% Lehman Brothers Aggregate Bond Index), which returned 5.67%, 3.82% and 4.98%, respectively, for the same period.

Portfolio Specifics: Stock selection was the primary reason for the underperformance of the equity portion of the Fund for the six months ended November 30, 2004. Despite being underweight information technology, individual stocks, such as previously held NVIDIA Corp. and Corning, Inc., the Fund encountered company-specific disappointments and negatively impacted performance. Likewise in health care, individual disappointments in biotech and generic pharmaceuticals, specifically Chiron Corp. because of flu vaccine problems and Barr Pharmaceuticals, Inc. and Par Pharmaceuticals, Inc., which was held during the period, due to drug delays, hurt performance.

Performance was aided by our overweight in industrials where demand for a broad array of industrial and heavy duty truck components propelled sales and earnings ahead of expectations. Parker Hannifin Corp., Rockwell Automation, Inc., and Paccar, Inc. all contributed positively to results. The second best supporter of performance was our significant underweight in the consumer staples sector.

Our continuing exposure to emerging markets debt and crossover high yield issues contributed to the outperformance of the fixed income portion of the Fund. The Fund was well positioned for a rising rate environment in which yields of shorter maturities rise more than those of longer maturities. Our underweight in five- and ten-year maturities was particularly beneficial. Overweights in the outperforming securitized sectors -mortgage-backed securities, asset-backed securities, and commercial mortgage-backed securities - also helped. Our underweight in agencies held back performance somewhat.

Overall, our underweight in stocks in favor of cash and bonds detracted from performance.

Current Strategy and Outlook: With domestic gross domestic product and corporate profit growth expected to slow in the quarters ahead, we believe equity returns could also moderate as we go forward. The Fund is positioned for such an environment by stressing later cycle names in the industrial sector that benefit from late cycle corporate spending, such as General Electric Co. and United Technologies Corp. Additionally, we will be seeking individual companies whose particular fundamentals warrant inclusion in the Fund. These would include specialty and discount retailers within the consumer discretionary sector that would benefit from individual company- specific; for example, content providers to a new generation of video games appear ready to outperform. Finally, the Fund will likely maintain its energy exposure since we continue to believe higher relative prices are here to stay and the sector remains attractive.

While the bond market has renewed its focus on the improving economic releases, we do not believe that the yields on shorter maturity Treasuries fully reflect the future pace of economic activity and the rise in a number of inflation measures. Some projections place a neutral overnight rate around 4% or 5%, indicating that monetary policy is still highly accommodative. Tactically, the Fund is short duration in the anticipation of improving domestic economic fundamentals and the potential for increasing inflation and enduring dollar weakness. The Fund is neutral home mortgages, overweight asset-backed and commercial mortgage-backed securities, and underweight the intermediate and front-end of the yield curve, which appear most vulnerable in a tightening cycle. We are also underweight agencies, which had witnessed some regulatory criticism. While stretched valuations in investment-grade credit still warrant caution, credit continues to post positive excess returns. Exposures to emerging markets debt and crossover high yield remain intact.

Top Ten Industries
as of November 30, 2004
(as a percent of net assets)*

Diversified Financial Services     9.2 %  
Whole Loan Collaterized Mortgage Obligation     7.1 %  
Banks     6.7 %  
U.S. Treasury Notes     4.9 %  
Federal Home Loan Mortgage Corporation     4.6 %  
Miscelaneous Manufacturing     4.6 %  
Oil and Gas     4.3 %  
Federal National Mortgage Association     3.9 %  
Chemicals     3.3 %  
Retail     3.0 %  

 

Portfolio holdings are subject to change daily.

22


PORTFOLIO MANAGERS' REPORT  ING EQUITY AND BOND FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   5 Year   Since Inception
August 31, 1995		  
Class Q     6.73 %     0.60 %     7.33 %  
S&P 500 Index(1)      12.85 %     (1.84 )%     10.10 %(4)   
Lehman Brothers Aggregate Bond Index(2)      4.44 %     7.41 %     6.89 %(4)   
Composite Index (60% S&P 500 Index/40%
Lehman Brothers Aggregate Bond Index)		     9.50 %     2.16 %     9.18 %(4)   
S&P Barra Value Index(3)      18.99 %     2.58 %     10.28 %(4)   

 

Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Equity and Bond Fund against the S&P 500 Index, Lehman Brothers Aggregate Bond Index, Composite Index and the S&P Barra Value Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(2) The Lehman Brothers Aggregate Bond Index is a widely recognized index of publicly issued fixed rate U.S. government, investment grade mortgage-backed and corporate debt securities.

(3) The S&P Barra Value Index is a capitalization-weighted index of all the stocks in the S&P 500 Index that have low price-to-book ratios.

(4) Since inception performance for index is shown from September 1, 1995.

23


ING REAL ESTATE FUND

PORTFOLIO MANAGERS' REPORT

The ING Real Estate Fund (the "Fund") seeks total return. The Fund is managed by T. Ritson Ferguson, Chief Investment Officer and Kenneth D. Campbell, Managing Director, ING Clarion Real Estate Securities L.P. - the Sub-Adviser.

Performance: For the six months ended November 30, 2004, the Fund's Class I shares, excluding sales charges, provided a total return of 25.63% compared to the Dow Jones Wilshire ("DJW") Real Estate Securities Index(4), which returned 23.01% for the same period.

Portfolio Specifics: Real estate stocks have continued to deliver good returns to investors. The Fund returned 21.49% and 30.54% net of expenses in the last six and 12 months respectively, which trailed the DJW Real Estate Securities Index return of 23.00% and 31.79% for the same time periods. Real estate investment trusts ("REITs") have outperformed other stocks and bonds in the last year. Over the last six months, the Standard & Poor's ("S&P") 500 Index(9) gained 5.67% and the Lehman Brothers Aggregate Bond Index(10) rose 3.82%. For the year ended November 30, 2004, the S&P 500 Index is up 12.85% and the Lehman Bond Aggregate Bond Index is up 4.44%.

The best returns by sector in the last six months were from the retail (malls and shopping centers), industrial and hotel sectors. Our decision to increase the Fund's weighting to hotels, apartments and industrial in the spring of 2004 when evidence of economic growth was becoming more evident has aided performance. We are now overweight in the mall, hotel and apartment sectors reflecting a more positive view of the economy and accelerating earnings growth prospects for these more economically sensitive property types. We have decreased our exposure to the more bond-like health care sector and remain underweight the office sector.

Real estate stocks have rebounded sharply since April's double-digit decline. The market has adjusted to an expectation of measured increases in short-term interest rates over time as the Federal Reserve reacts appropriately to an improving U.S. economy. Importantly, investors have also realized that REITs can prosper in an environment of slowly rising rates if the economic setting is conducive to better real estate fundamentals and improved earnings prospects for the owners of real estate assets.

The Fund's underperformance for the year as a whole traced to the third quarter when we lost nearly 1% alone from the General Growth Properties, Inc. acquisition of Rouse Co. for a 33% premium. We owned the acquirer but not the acquiree.

Current Strategy and Outlook: With growing evidence that the U.S. economic recovery is gaining strength, the outlook for real estate fundamentals appears to be improving. We look for the earnings growth rate for REITs to nearly double from 4% in 2004 to almost 8% in 2005. Positive earnings growth is expected in every property sector next year. The improving earnings outlook should help offset the impact of higher interest rates on REIT stock prices.

REIT valuations are above long-term averages reflecting optimism for the sector. At month end, REIT valuations were roughly 12% higher than our estimate of Net Asset Value (NAV). Prices represented a 14.2 multiple of forward cash earnings before depreciation (FFO), which is about 15% above the 12.2 long-term multiple. The average REIT dividend yield is now 4.79%, down almost 90 basis points from 6 months ago. During the same period, the yield on the 10-year Treasury bond has decreased approximately 30 basis points. The average REIT dividend now represents a 43 basis point spread over the yield on the 10-year Treasury bond. The current "spread" is a little below the average spread over the last 20 years which has been approximately 60 basis points. However, it is not unprecedented for REITs to trade at yields less than the 10-year Treasury yield.

Momentum for REITs may continue as funds flows remain strong. According to data from AMG Data Services, dedicated REIT mutual funds have attracted $5.7 billion of new investment this year including $1.75 billion thus far in the fourth calendar quarter of 2004. The positive funds flows to REITs reflects a widespread desire for investors (both institutions and individuals) to increase their allocation to real estate.

REITs offer an attractive source of high current income and as long as new stock issuance remains disciplined, stock prices should improve with earnings growth. For now, we expect REITs, which offer relatively high yields and solid earnings prospects, to retain their appeal to investors, given the alternatives. We believe that REIT investors can still expect reasonable return.

Top Ten Holdings
as of November 30, 2004
(as a percent of net assets)*

Simon Property Group, Inc.     5.4 %  
Starwood Hotels & Resorts Worldwide, Inc.     5.1 %  
Archstone-Smith Trust     5.0 %  
ProLogis     5.0 %  
Boston Properties, Inc.     5.0 %  
Mills Corp.     4.8 %  
United Dominion Realty Trust, Inc.     4.0 %  
Regency Centers Corp.     3.5 %  
SL Green Realty Corp.     3.5 %  
Vornado Realty Trust     3.5 %  

 

Portfolio holdings are subject to change daily.

* Excludes short-term securities related to securities lending.

24


PORTFOLIO MANAGERS' REPORT  ING REAL ESTATE FUND

Average Annual Total Returns for the Periods Ended November 30, 2004  
    1 Year   5 Year   Since Inception
December 31, 1996		  
Class I     30.88 %     21.64 %     12.55 %  
Dow Jones Wilshire Real Estate Security Index(1)      31.82 %     21.91 %     12.19 %(2)   

 

Based on a $1,000,000 initial investment, the graph and table above illustrate the total return of ING Real Estate Fund against the Dow Jones Wilshire Real Estate Security Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges.

The performance graph and table does not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares.

Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund.

Performance data represents past performance and is no assurance of future results. Investment return and principal value of an investment in the Fund will fluctuate. Shares, when sold, may be worth more or less than their original cost. The Fund's performance may be lower or higher than the performance data shown. Please log on to www.ingfunds.com or call (800) 922-0180 to get performance through the most recent month end.

This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements.

The views expressed in this report reflect those of the portfolio managers, only through the end of the period as stated on the cover. The portfolio managers' views are subject to change at any time based on market and other conditions.

Fund holdings are subject to change daily.

(1) The Dow Jones Wilshire Real Estate Securities Index measures the performance of publicly traded real estate securities, such as Real Estate Investment Trusts (REITs) and Real Estate Operating Companies (REOCs). The index is capitalization-weighted.

(2) Since inception for the index is shown from January 1, 1997.

(3) The S&P 500 Index is a capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation.

(4) The Lehman Brothers Aggregated Bond Index is a widely recognized index of publicly issued fixed rate U.S. government investment grade mortgage-backed and corporate debt securities.

25


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED)

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution [and/or service] (12b–1) fees; and other Fund expenses. These Examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period from June 1, 2004 to November 30, 2004.

Actual Expenses

The first section of the table shown, "Actual Fund Return," provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second section of the table shown, "Hypothetical 5% Return," provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the hypothetical lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

ING Disciplined LargeCap Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000.00     $ 1,075.60       1.03 %   $ 5.36    
Hypothetical (5% return before expenses)  
Class I   $ 1,000.00     $ 1,019.90       1.03 %   $ 5.22    
ING LargeCap Growth Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000     $ 1,006       0.98 %   $ 4.93    
Class Q     1,000       1,005       1.21       6.08    
Hypothetical (5% return before expenses)  
Class I   $ 1,000     $ 1,020       0.98 %   $ 4.96    
Class Q     1,000       1,019       1.21       6.12    

 

*  Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

26


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED) (CONTINUED)

ING MidCap Opportunities Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000     $ 1,052       1.30 %   $ 6.69    
Class Q     1,000       1,051       1.55       7.97    
Hypothetical (5% return before expenses)  
Class I   $ 1,000     $ 1,019       1.30 %   $ 6.58    
Class Q     1,000       1,017       1.55       7.84    
ING SmallCap Opportunities Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000     $ 1,081       1.27 %   $ 6.62    
Class Q     1,000       1,080       1.47       7.66    
Hypothetical (5% return before expenses)  
Class I   $ 1,000     $ 1,019       1.27     $ 6.43    
Class Q     1,000       1,018       1.47       7.44    
ING LargeCap Value Fund   Beginning
Account
Value
August 2, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Period Ended
November 30, 2004**		  
Actual Fund Return  
Class I   $ 1,000.00     $ 1,064.20       1.05 %   $ 5.43    
Hypothetical (5% return before expenses)  
Class I   $ 1,000.00     $ 1,019.80       1.05     $ 5.32    
ING MagnaCap Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000.00     $ 1,072.80       0.80 %   $ 4.16    
Hypothetical (5% return before expenses)  
Class I   $ 1,000.00     $ 1,021.06       0.80 %   $ 4.05    
ING MidCap Value Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000.00     $ 1,061.50       1.41 %   $ 7.29    
Class Q     1,001.00       1,056.76       2.11       10.88    
Hypothetical (5% return before expenses)  
Class I   $ 1,000.00     $ 1,018.00       1.41 %   $ 7.13    
Class Q     1,000.00       1,014.49       2.11     $ 10.66    

 

*  Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

**  Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 121/365 (to reflect the period).

27


SHAREHOLDER EXPENSE EXAMPLES (UNAUDITED) (CONTINUED)

ING SmallCap Value Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000.00     $ 1,066.80       1.46 %   $ 7.56    
Class Q     1,001.00       1,066.57       1.69       8.76    
Hypothetical (5% return before expenses)  
Class I   $ 1,000.00     $ 1,017.75       1.46 %   $ 7.38    
Class Q     1,000.00       1,016.60       1.69       8.54    
ING Convertible Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class Q   $ 1,000.00     $ 1,039.30       1.25 %   $ 6.39    
Hypothetical (5% return before expenses)  
Class Q   $ 1,000.00     $ 1,018.80       1.25 %   $ 6.33    
ING Equity and Bond Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class Q   $ 1,000.00     $ 1,032.00       1.48 %   $ 7.54    
Hypothetical (5% return before expenses)  
Class Q   $ 1,000.00     $ 1,017.65       1.48 %   $ 7.49    
ING Real Estate Fund   Beginning
Account
Value
June 1, 2004		   Ending
Account
Value
November 30, 2004		   Annualized
Expense
Ratio		   Expenses Paid
During the
Six Months Ended
November 30, 2004*		  
Actual Fund Return  
Class I   $ 1,000.00     $ 1,216.30       0.88 %   $ 4.89    
Hypothetical (5% return before expenses)  
Class I   $ 1,000.00     $ 1,020.66       0.88 %   $ 4.46    

 

*  Expenses are equal to each Fund's respective annualized expense ratios multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period).

28


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

    ING
Disciplined
LargeCap
Fund		   ING
LargeCap
Growth
Fund		   ING
MidCap
Opportunities
Fund		   ING
SmallCap
Opportunities
Fund		  
ASSETS:  
Investments in securities at value+*   $ 49,434,365     $ 315,413,674     $ 413,429,678     $ 228,793,610    
Short-term investments at amortized cost     379,129       34,202,610       43,961,923       39,670,466    
Repurchase agreement     902,000       -       9,091,000       1,592,000    
Cash     316       7,328,269       659       209    
Cash collateral for futures     48,000       -       -       -    
Receivables:  
Investment securities sold     -       640,838       4,048,270       2,647,490    
Fund shares sold     2,737       400,360       50,220       13,201    
Dividends and interest     242,755       1,054,628       59,492       32,236    
Prepaid expenses     23,848       33,613       30,104       19,893    
Total assets     51,033,150       359,073,992       470,671,346       272,769,105    
LIABILITIES:  
Payable for investment securities purchased     -       2,565,568       2,150,005       -    
Payable for fund shares redeemed     62,059       268,303       475,779       265,376    
Payable for futures variation margin     1,425       -       -       -    
Payable upon receipt of securities loaned     379,129       34,202,610       43,961,923       39,670,466    
Payable to affiliates     71,831       443,812       728,712       317,098    
Payable for trustee     5,808       11,700       20,795       11,821    
Other accrued expenses and liabilities     138,504       425,136       680,681       254,695    
Total liabilities     658,756       37,917,129       48,017,895       40,519,456    
NET ASSETS   $ 50,374,394     $ 321,156,863     $ 422,653,451     $ 232,249,649    
NET ASSETS WERE COMPRISED OF:  
Paid-in capital   $ 92,502,045     $ 665,445,578     $ 588,588,790     $ 504,183,821    
Undistributed net investment income, (accumulated
net investment loss or distributions in excess) 		     112,247       (9,331,502 )     (3,768,195 )     (2,050,927 )  
Accumulated net realized loss on investments
and futures		     (46,642,783 )     (391,028,796 )     (255,561,411 )     (346,789,092 )  
Net unrealized appreciation on investments
and futures		     4,402,885       56,071,583       93,394,267       76,905,847    
NET ASSETS   $ 50,374,394     $ 321,156,863     $ 422,653,451     $ 232,249,649    
+ Including securities loaned at value   $ 369,244     $ 33,248,005     $ 42,247,835     $ 38,383,888    
* Cost of investments in securities   $ 45,032,128     $ 259,342,091     $ 320,035,411     $ 151,887,763    

 

See Accompanying Notes to Financial Statements

29


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

    ING
Disciplined
LargeCap
Fund		   ING
LargeCap
Growth
Fund		   ING
MidCap
Opportunities
Fund		   ING
SmallCap
Opportunities
Fund		  
Class A:  
Net Assets   $ 5,087,825     $ 110,029,149     $ 127,958,230     $ 105,312,124    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     536,986       6,233,223       10,104,307       4,335,379    
Net asset value and redemption price per share   $ 9.47     $ 17.65     $ 12.66     $ 24.29    
Maximum offering price per share (5.75%)(1)    $ 10.05     $ 18.73     $ 13.43     $ 25.77    
Class B:  
Net Assets   $ 31,295,544     $ 115,070,783     $ 168,987,832     $ 60,704,615    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     3,445,103       6,701,823       13,937,341       2,718,854    
Net asset value and redemption price per share(2)    $ 9.08     $ 17.17     $ 12.12     $ 22.33    
Maximum offering price per share   $ 9.08     $ 17.17     $ 12.12     $ 22.33    
Class C:  
Net Assets   $ 13,986,491     $ 52,989,337     $ 117,912,829     $ 53,120,315    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     1,539,823       3,096,325       9,773,132       2,384,367    
Net asset value and redemption price per share(2)    $ 9.08     $ 17.11     $ 12.06     $ 22.28    
Maximum offering price per share   $ 9.08     $ 17.11     $ 12.06     $ 22.28    
Class I:  
Net Assets   $ 4,534     $ 37,838,639     $ 2,985,670     $ 12,792,928    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.01     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     469       2,078,840       230,208       520,134    
Net asset value and redemption price per share   $ 9.67     $ 18.20     $ 12.97     $ 24.60    
Maximum offering price per share   $ 9.67     $ 18.20     $ 12.97     $ 24.60    
Class Q:  
Net Assets     n/a     $ 5,228,955     $ 4,808,890     $ 319,667    
Shares authorized     n/a       unlimited       unlimited       unlimited    
Par value     n/a     $ 0.00     $ 0.01     $ 0.01    
Shares outstanding     n/a       288,779       375,977       13,082    
Net asset value and redemption price per share     n/a     $ 18.11     $ 12.79     $ 24.44    
Maximum offering price per share     n/a     $ 18.11     $ 12.79     $ 24.44    

 

(1)  Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

(2)  Redemption price per share may be reduced for any applicable contingent deferred sales charges.

See Accompanying Notes to Financial Statements

30


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

        ING
LargeCap
Value
Fund		  
ING
MagnaCap
Fund		   ING
MidCap
Value
Fund		  
ASSETS:  
Investments in securities at value+*       $ 31,797,838     $ 376,239,011     $ 161,733,891    
Short-term investments at amortized cost         -       -       25,264,576    
Repurchase agreement         -       2,837,000       -    
Cash         2,240,220       158       8,031,901    
Receivables:  
Fund shares sold         224,487       677       1,666,826    
Dividends and interest         48,249       942,827       242,279    
Prepaid expenses         47,773       30,747       18,480    
Reimbursement due from manager         27,466       -       -    
Total assets         34,386,033       380,050,420       196,957,953    
LIABILITIES:  
Payable for investment securities purchased         1,581,306       -       3,452,746    
Payable for fund shares redeemed         484       185,500       156,178    
Payable upon receipt of securities loaned         -       -       25,264,576    
Payable to affiliates         40,871       357,735       250,102    
Payable for trustee fees         1,157       58,030       1,754    
Other accrued expenses and liabilities         77,179       487,410       61,487    
Total liabilities         1,700,997       1,088,675       29,186,843    
NET ASSETS       $ 32,685,036     $ 378,961,745     $ 167,771,110    
NET ASSETS WERE COMPRISED OF:  
Paid-in capital       $ 31,290,950     $ 377,253,427     $ 163,835,217    
Accumulated net investment loss         (37,850 )     (274,550 )     (471,989 )  
Accumulated net realized gain (loss) on investments         356,858       (71,632,059 )     3,160,044    
Net unrealized appreciation on investments         1,075,078       73,614,927       1,247,838    
NET ASSETS       $ 32,685,036     $ 378,961,745     $ 167,771,110    
+ Including securities loaned at value         $ -     $ -     $ 23,864,087    
* Cost of investments in securities         $ 30,722,760     $ 302,128,558     $ 160,486,053    

 

See Accompanying Notes to Financial Statements

31


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

    ING
LargeCap
Value
Fund		   ING
MagnaCap
Fund		   ING
MidCap
Value
Fund		  
Class A:      
Net Assets   $ 14,422,617     $ 315,708,153     $ 76,288,758    
Shares authorized     unlimited       80,000,000       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     1,415,224       28,996,894       6,745,688    
Net asset value and redemption price per share   $ 10.19     $ 10.89     $ 11.31    
Maximum offering price per share (5.75%)(1)    $ 10.81     $ 11.55     $ 12.00    
Class B:      
Net Assets   $ 6,789,543     $ 46,213,724     $ 43,156,840    
Shares authorized     unlimited       80,000,000       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     668,022       4,376,450       3,875,209    
Net asset value and redemption price per share(2)    $ 10.16     $ 10.56     $ 11.14    
Maximum offering price per share   $ 10.16     $ 10.56     $ 11.14    
Class C:      
Net Assets   $ 8,807,918     $ 9,970,068     $ 46,159,703    
Shares authorized     unlimited       20,000,000       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     866,836       943,545       4,145,661    
Net asset value and redemption price per share(2)    $ 10.16     $ 10.57     $ 11.13    
Maximum offering price per share   $ 10.16     $ 10.57     $ 11.13    
Class I:      
Net Assets   $ 2,664,958     $ 2,271,718     $ 2,145,009    
Shares authorized     unlimited       50,000,000       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.001    
Shares outstanding     261,620       209,911       187,674    
Net asset value and redemption price per share   $ 10.19     $ 10.82     $ 11.43    
Maximum offering price per share   $ 10.19     $ 10.82     $ 11.43    
Class M:      
Net Assets     n/a     $ 4,798,082       n/a    
Shares authorized     n/a       5,000,000       n/a    
Par value     n/a     $ 0.00       n/a    
Shares outstanding     n/a       443,215       n/a    
Net asset value and redemption price per share     n/a     $ 10.83       n/a    
Maximum offering price per share     n/a     $ 10.83       n/a    
Class Q:      
Net Assets     n/a       n/a     $ 20,800    
Shares authorized     n/a       n/a       unlimited    
Par value     n/a       n/a     $ 0.001    
Shares outstanding     n/a       n/a       1,842    
Net asset value and redemption price per share     n/a       n/a     $ 11.29    
Maximum offering price per share     n/a       n/a     $ 11.29    

 

(1)  Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

(2)  Redemption price per share may be reduced for any applicable contingent deferred sales charges.

See Accompanying Notes to Financial Statements

32


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED)

    ING
SmallCap
Value
Fund		  
ING
Convertible
Fund		  
ING
Equity and Bond
Fund		  
ING
Real Estate
Fund		  
ASSETS:      
Investments in securities at value+*   $ 154,497,494     $ 197,410,504     $ 65,854,178     $ 240,281,035    
Short-term investments at amortized cost     34,093,573       53,943,311       -       9,043,070    
Repurchase agreement     -       1,065,000       3,292,000       -    
Cash     4,310,357       -       7,046       4,772,647    
Cash collateral for futures     -       -       7,131       -    
Foreign currencies at value***     -       388       -       -    
Receivables:  
Investment securities sold     104,555       -       682,795       371,916    
Fund shares sold     1,545,438       59,740       744       18,500    
Dividends and interest     208,077       861,652       333,554       185,499    
Prepaid expenses     17,221       23,646       19,070       39,188    
Total assets     194,776,715       253,364,241       70,196,518       254,711,855    
LIABILITIES:      
Payable for investment securities purchased     1,217,883       -       5,648,348       929,811    
Payable for fund shares redeemed     99,170       495,859       32,672       -    
Payable for futures variation margin     -       -       3,141       -    
Payable upon receipt of securities loaned     34,093,573       53,943,311       -       9,043,070    
Payable to affiliates     272,212       267,805       89,731       224,171    
Payable to custodian     -       4,971       -       -    
Payable for trustee fees     3,265       14,974       4,344       5,041    
Other accrued expenses and liabilities     62,234       217,945       121,592       139,662    
Total liabilities     35,748,337       54,944,865       5,899,828       10,341,755    
NET ASSETS   $ 159,028,378     $ 198,419,376     $ 64,296,690     $ 244,370,100    
NET ASSETS WERE COMPRISED OF:      
Paid-in capital   $ 146,347,901     $ 258,623,990     $ 75,549,304     $ 180,992,251    
Undistributed net investment income
(accumulated net investment loss)		     (419,868 )     789,019       140,828       2,242,494    
Accumulated net realized gain (loss) on
investments, foreign currencies and futures		     2,209,370       (80,098,377 )     (14,866,452 )     2,958,782    
Net unrealized appreciation on investments,
foreign currencies and futures		     10,890,975       19,104,744       3,473,010       58,176,573    
NET ASSETS   $ 159,028,378     $ 198,419,376     $ 64,296,690     $ 244,370,100    
+ Including securities loaned at value   $ 31,965,747     $ 52,558,629     $ -     $ 8,856,992    
* Cost of investments in securities   $ 143,606,519     $ 178,306,148     $ 62,388,209     $ 182,104,462    

 

See Accompanying Notes to Financial Statements

33


STATEMENTS OF ASSETS AND LIABILITIES AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

    ING
SmallCap
Value
Fund		  
ING
Convertible
Fund		  
ING
Equity and Bond
Fund		  
ING
Real Estate
Fund		  
Class A:  
Net Assets   $ 88,102,947     $ 60,615,668     $ 34,189,443     $ 38,487,554    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.00    
Shares outstanding     6,520,546       3,271,384       2,674,821       2,698,366    
Net asset value and redemption price per share   $ 13.51     $ 18.53     $ 12.78     $ 14.26    
Maximum offering price per share (5.75%)(1)    $ 14.33     $ 19.66     $ 13.56     $ 15.13    
Class B:  
Net Assets   $ 26,109,462     $ 66,597,556     $ 17,407,222     $ 3,088,890    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.00    
Shares outstanding     1,966,957       3,264,430       1,262,835       216,073    
Net asset value and redemption price per share(2)    $ 13.27     $ 20.40     $ 13.78     $ 14.30    
Maximum offering price per share   $ 13.27     $ 20.40     $ 13.78     $ 14.30    
Class C:  
Net Assets   $ 44,235,075     $ 68,400,264     $ 12,409,157     $ 3,476,512    
Shares authorized     unlimited       unlimited       unlimited       unlimited    
Par value   $ 0.00     $ 0.00     $ 0.00     $ 0.00    
Shares outstanding     3,335,852       3,600,076       1,017,491       236,663    
Net asset value and redemption price per share(2)    $ 13.26     $ 19.00     $ 12.20     $ 14.69    
Maximum offering price per share   $ 13.26     $ 19.00     $ 12.20     $ 14.69    
Class I:  
Net Assets   $ 514,154       n/a       n/a     $ 195,284,167    
Shares authorized     unlimited       n/a       n/a       unlimited    
Par value   $ 0.00       n/a       n/a     $ 0.00    
Shares outstanding     37,796       n/a       n/a       13,112,275    
Net asset value and redemption price per share   $ 13.60       n/a       n/a     $ 14.89    
Maximum offering price per share   $ 13.60       n/a       n/a     $ 14.89    
Class O:  
Net Assets     n/a       n/a       n/a     $ 4,032,977    
Shares authorized     n/a       n/a       n/a       unlimited    
Par value     n/a       n/a       n/a     $ 0.00    
Shares outstanding     n/a       n/a       n/a       283,008    
Net asset value and redemption price per share     n/a       n/a       n/a     $ 14.25    
Maximum offering price per share     n/a       n/a       n/a     $ 14.25    
Class Q:  
Net Assets   $ 66,740     $ 2,805,888     $ 290,868       n/a    
Shares authorized     unlimited       unlimited       unlimited       n/a    
Par value   $ 0.00     $ 0.00     $ 0.00       n/a    
Shares outstanding     4,872       156,101       22,915       n/a    
Net asset value and redemption price per share   $ 13.70     $ 17.97     $ 12.69       n/a    
Maximum offering price per share   $ 13.70     $ 17.97     $ 12.69       n/a    

 

(1)  Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced.

(2)  Redemption price per share may be reduced for any applicable contingent deferred sales charges.

See Accompanying Notes to Financial Statements

34


STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)

    ING
Disciplined
LargeCap
Fund		   ING
LargeCap
Growth
Fund		   ING
MidCap
Opportunities
Fund		   ING
SmallCap
Opportunities
Fund		  
INVESTMENT INCOME:      
Dividends, net of foreign taxes withheld*   $ 691,060     $ 1,805,856     $ 807,753     $ 227,471    
Interest     4,425       280       72,014       25,401    
Securities lending income     684       10,762       33,398       45,707    
Other     8,641       -       -       -    
Total investment income     704,810       1,816,898       913,165       298,579    
EXPENSES:      
Investment management fees     234,184       1,172,003       2,110,695       1,086,573    
Distribution and service fees:  
Class A     7,838       184,836       185,922       152,861    
Class B     158,729       567,446       859,197       321,149    
Class C     71,301       257,635       595,408       261,952    
Class Q     -       6,963       5,760       447    
Transfer agent fees:  
Class A     2,409       74,221       87,048       79,035    
Class B     12,043       80,355       116,212       49,945    
Class C     6,603       36,613       87,126       40,772    
Class I     261       5,320       32       668    
Class Q     -       743       55       20    
Administrative service fees     33,455       156,265       367,700       242,224    
Shareholder reporting expense     8,105       27,414       45,600       42,520    
Registration fees     21,390       38,825       51,208       24,604    
Professional fees     5,475       12,977       12,282       12,849    
Custody and accounting expense     6,797       15,298       10,755       16,480    
Trustee fees     1,983       4,657       6,341       8,281    
Miscellaneous expense     21,990       6,733       15,019       9,126    
Total expenses     592,563       2,648,304       4,556,360       2,349,506    
Less:  
Net recouped fees     -       (55,000 )     (125,000 )     -    
Brokerage commission recapture     -       32,660       -       -    
Net expenses     592,563       2,670,644       4,681,360       2,349,506    
Net investment income (loss)     112,247       (853,746 )     (3,768,195 )     (2,050,927 )  
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES:		      
Net realized gain (loss) on:  
Investments     4,559,066       (3,952,007 )     2,749,837       2,980,721    
Futures     (12,554 )     -       -       -    
Net realized gain (loss) on investments
and futures		     4,546,512       (3,952,007 )     2,749,837       2,980,721    
Net change in unrealized appreciation
or depreciation on:		  
Investments     (1,107,879 )     4,474,101       18,335,010       14,797,287    
Futures     (1,077 )     -       -       -    
Net change in unrealized appreciation or
depreciation on investments and futures		     (1,108,956 )     4,474,101       18,335,010       14,797,287    
Net realized and unrealized gain on investments
investments and futures		     3,437,556       522,094       21,084,847       17,778,008    
Increase (decrease) in net assets resulting from
operations		   $ 3,549,803     $ (331,652 )   $ 17,316,652     $ 15,727,081    
* Foreign taxes   $ -     $ 656     $ -     $ -    

 

See Accompanying Notes to Financial Statements

35


STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)

        ING
LargeCap
Value
Fund		  
ING
MagnaCap
Fund		   ING
MidCap
Value
Fund		  
INVESTMENT INCOME:  
Dividends, net of foreign taxes withheld*       $ 246,685     $ 4,540,680     $ 951,578    
Interest         -       25,519       150    
Securities lending income         -       4,382       91,306    
Total investment income         246,685       4,570,581       1,043,034    
EXPENSES:  
Investment management fees         99,146       1,368,733       676,353    
Distribution and service fees:  
Class A         11,578       465,906       84,150    
Class B         23,788       243,240       192,338    
Class C         31,717       54,872       184,336    
Class M         -       18,272       -    
Class Q         -       -       24    
Transfer agent fees:  
Class A         7,493       98,014       34,814    
Class B         3,980       15,523       19,788    
Class C         5,176       3,493       19,006    
Class I         956       14       853    
Class M         -       1,553       -    
Class Q         28       -       10    
Administrative service fees         11,016       -       72,364    
Shareholder reporting expense         4,626       23,547       9,876    
Registration fees         36,481       40,639       23,930    
Professional fees         3,254       16,285       12,414    
Custody and accounting expense         2,314       19,905       5,604    
Trustee fees         1,102       9,006       1,614    
Offering expense         50,137       -       -    
Miscellaneous expense         625       16,565       2,202    
Total expenses         293,417       2,395,567       1,339,676    
Less:  
Net waived and reimbursed (recouped) fees         96,134       -       (153,977 )  
Net expenses         197,283       2,395,567       1,493,653    
Net investment income (loss)         49,402       2,175,014       (450,619 )  
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:		  
Net realized gain (loss) on investments         599,544       (1,812,694 )     8,657,798    
Net change in unrealized appreciation
or depreciation on investments		         1,182,223       25,384,178       (426,989 )  
Net realized and unrealized gain on investments         1,781,767       23,571,484       8,230,809    
Increase in net assets resulting from operations       $ 1,831,169     $ 25,746,498     $ 7,780,190    
* Foreign taxes         $ -     $ 42,112     $ -    

 

See Accompanying Notes to Financial Statements

36


STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)

    ING
SmallCap
Value
Fund		  
ING
Convertible
Fund		  
ING
Equity and Bond
Fund		  
ING
Real Estate
Fund		  
INVESTMENT INCOME:      
Dividends, net of foreign taxes withheld*   $ 771,846     $ 1,330,249     $ 357,175     $ 4,680,768    
Interest     -       1,955,962       611,485       -    
Securities lending income     134,338       69,737       -       5,047    
Total investment income     906,184       3,355,948       968,660       4,685,815    
EXPENSES:      
Investment management fees     592,957       760,810       248,784       724,287    
Distribution and service fees:  
Class A     85,829       106,825       61,183       31,007    
Class B     110,437       348,467       91,076       12,180    
Class C     174,573       345,930       64,299       14,983    
Class O     -       -       -       883    
Class Q     75       3,691       382       -    
Transfer agent fees:  
Class A     39,421       25,663       19,709       2,174    
Class B     12,621       29,576       10,263       221    
Class C     20,054       29,415       7,192       295    
Class I     162       -       -       12,266    
Class O     -       -       -       159    
Class Q     18       418       143       -    
Administrative service fees     63,098       101,440       33,171       103,469    
Shareholder reporting expense     8,607       57,030       17,751       12,301    
Registration fees     22,427       26,150       23,127       30,867    
Professional fees     4,338       12,613       7,402       13,014    
Custody and accounting expense     2,910       15,718       20,156       7,850    
Trustee fees     1,917       5,555       2,652       2,897    
Miscellaneous expense     2,034       7,643       3,534       27,839    
Total expenses     1,141,478       1,876,944       610,824       996,692    
Less:  
Net recouped fees     (163,241 )     -       (20,000 )     (115,001 )  
Brokerage commission recapture     -       -       -       72,658    
Net expenses     1,304,719       1,876,944       630,824       1,039,035    
Net investment income/(loss)     (398,535 )     1,479,004       337,836       3,646,780    
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS, FOREIGN CURRENCIES AND
FUTURES:		      
Net realized gain (loss) on:  
Investments     5,255,247       1,064,427       707,649       9,073,434    
Foreign currencies     -       14,642       -       -    
Futures     -       -       (19,674 )     -    
Net realized gain on investments,
foreign currencies and futures		     5,255,247       1,079,069       687,975       9,073,434    
Net change in unrealized appreciation
or depreciation on:		  
Investments     5,652,992       4,393,868       837,028       28,898,993    
Foreign currencies     -       388       -       -    
Futures     -       -       35,819       -    
Net change in unrealized appreciation
or depreciation on investments, foreign
currencies and futures		     5,652,992       4,394,256       872,847       28,898,993    
Net realized and unrealized gain on investments,
foreign currencies and futures		     10,908,239       5,473,325       1,560,822       37,972,427    
Increase in net assets resulting from operations   $ 10,509,704     $ 6,952,329     $ 1,898,658     $ 41,619,207    
* Foreign taxes   $ -     $ -     $ 558     $ -    

 

See Accompanying Notes to Financial Statements

37


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING Disciplined LargeCap Fund   ING LargeCap Growth Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:  
Net investment income (loss)   $ 112,247     $ (196,511 )   $ (853,746 )   $ (2,863,179 )  
Net realized gain (loss) on investments and futures     4,546,512       8,281,222       (3,952,007 )     39,816,143    
Net change in unrealized appreciation or depreciation on
invesments and futures		     (1,108,956 )     4,006,258       4,474,101       18,934,271    
Net increase (decrease) in net assets resulting from
operations		     3,549,803       12,090,969       (331,652 )     55,887,235    
FROM DISTRIBUTIONS TO SHAREHOLDERS:  
Net investment income:  
Class A     -       -       (3,156,967 )     -    
Class B     -       -       (2,693,358 )     -    
Class C     -       -       (1,248,300 )     -    
Class I     -       -       (1,216,755 )     -    
Class Q     -       -       (162,376 )     -    
Total distributions     -       -       (8,477,756 )     -    
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     2,070,186       4,879,672       61,314,036       167,009,595    
Dividends reinvested     -       -       6,728,584       -    
      2,070,186       4,879,672       68,042,620       167,009,595    
Cost of shares redeemed     (31,450,468 )     (23,356,188 )     (64,106,366 )     (70,231,343 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (29,380,282 )     (18,476,516 )     3,936,254       96,778,252    
Net increase (decrease) in net assets     (25,830,479 )     (6,385,547 )     (4,873,154 )     152,665,487    
NET ASSETS:  
Beginning of period     76,204,873       82,590,420       326,030,017       173,364,530    
End of period   $ 50,374,394     $ 76,204,873     $ 321,156,863     $ 326,030,017    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ 112,247     $ -     $ (9,331,502 )   $ -    

 

See Accompanying Notes to Financial Statements

38


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING MidCap Opportunities Fund   ING SmallCap Opportunities Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:  
Net investment loss   $ (3,768,195 )   $ (3,189,037 )   $ (2,050,927 )   $ (5,073,085 )  
Net realized gain on investments     2,749,837       36,005,578       2,980,721       43,684,508    
Net change in unrealized appreciation or depreciation on
investments		     18,335,010       (14,157,412 )     14,797,287       20,950,754    
Net increase in net assets resulting from operations     17,316,652       18,659,129       15,727,081       59,562,177    
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     12,197,998       28,495,626       18,636,682       55,115,680    
Dividends reinvested     -       373,162,486       -       -    
      12,197,998       401,658,112       18,636,682       55,115,680    
Cost of shares redeemed     (70,485,126 )     (127,345,757 )     (54,883,976 )     (140,542,492 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (58,287,128 )     274,312,355       (36,247,294 )     (85,426,812 )  
Net increase (decrease) in net assets     (40,970,476 )     292,971,484       (20,520,213 )     (25,864,635 )  
NET ASSETS:  
Beginning of period     463,623,927       170,652,443       252,769,862       278,634,497    
End of period   $ 422,653,451     $ 463,623,927     $ 232,249,649     $ 252,769,862    
Accumualted net investment loss at end of period   $ (3,768,195 )   $ -     $ (2,050,927 )   $ -    

 

See Accompanying Notes to Financial Statements

39


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

        ING LargeCap Value Fund  
    Six Months
Ended
November 30,
2004		   February 2,
2004(1)
to May 31,
2004		  
FROM OPERATIONS:      
Net investment income   $ 49,402     $ 5,355    
Net realized gain on investments     599,544       8,982    
Net change in unrealized appreciation or depreciation on
investments		     1,182,223       (107,145 )  
Net increase in net assets resulting from operations     1,831,169       (92,808 )  
FROM DISTRIBUTIONS TO SHAREHOLDERS:      
Net investment income:  
Class A     (82,342 )     -    
Class B     (14,178 )     -    
Class C     (17,275 )     -    
Class I     (18,995 )     -    
Class O  
Net realized gains:  
Class A     (110,882 )     -    
Class B     (52,095 )     -    
Class C     (67,763 )     -    
Class I     (20,928 )     -    
Class O     -       -    
Total distributions     (384,458 )     -    
FROM CAPITAL SHARE TRANSACTIONS:      
Net proceeds from sale of shares     21,137,141       11,680,876    
Dividends reinvested     261,534       -    
      21,398,675       11,680,876    
Cost of shares redeemed     (1,284,059 )     (464,359 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     20,114,616       11,216,517    
Net increase (decrease) in net assets     21,561,327       11,123,709    
NET ASSETS:      
Beginning of period     11,123,709       -    
End of period   $ 32,685,036     $ 11,123,709    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ (37,850 )   $ 45,538    

 

(1)  Commencement of operations

See Accompanying Notes to Financial Statements

40


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING MagnaCap Fund   ING MidCap Value Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:  
Net investment income (loss)   $ 2,175,014     $ 2,960,215     $ (450,619 )   $ (455,900 )  
Net realized gain (loss) on investments     (1,812,694 )     5,922,962       8,657,798       9,538,762    
Net change in unrealized appreciation or depreciation on
invesments		     25,384,178       38,819,962       (426,989 )     9,173,938    
Net increase in net assets resulting from operations     25,746,498       47,703,139       7,780,190       18,256,800    
FROM DISTRIBUTIONS TO SHAREHOLDERS:  
Net investment income:  
Class A     (3,660,545 )     (2,197,417 )     -       -    
Class B     (93,647 )     -       -       -    
Class C     (21,507 )     -       -       -    
Class I     (21,582 )     (112 )     -       -    
Class M     (16,713 )     (4,890 )     -       -    
Class O     -       (42,794 )     -       -    
Net realized gains:  
Class A     -       -       (5,379,868 )     -    
Class B     -       -       (3,140,896 )     -    
Class C     -       -       (3,310,535 )     -    
Class I     -       -       (154,805 )     -    
Class Q                     (1,507 )     -    
Total distributions     (3,813,994 )     (2,245,213 )     (11,987,611 )     -    
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     14,321,548       35,810,247       68,181,104       90,677,565    
Net proceeds from shares issued in merger     -       147,505,028       -       -    
Dividends reinvested     3,316,498       1,940,774       9,165,841       -    
      17,638,046       185,256,049       77,346,945       90,677,565    
Cost of shares redeemed     (41,295,845 )     (80,780,723 )     (33,014,389 )     (20,765,261 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (23,657,799 )     104,475,326       44,332,556       69,912,304    
Net increase (decrease) in net assets     (1,725,295 )     149,933,252       40,125,135       88,169,104    
NET ASSETS:  
Beginning of period     380,687,040       230,753,788       127,645,975       39,476,871    
End of period   $ 378,961,745     $ 380,687,040     $ 167,771,110     $ 127,645,975    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ (274,550 )   $ 1,364,430     $ (471,989 )   $ (21,333 )  

 

See Accompanying Notes to Financial Statements

41


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING SmallCap Value Fund   ING Convertible Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
FROM OPERATIONS:  
Net investment income (loss)   $ (398,535 )   $ (576,767 )   $ 1,479,004     $ 3,558,967    
Net realized gain on investments and foreign currencies     5,255,247       10,868,528       1,079,069       18,580,712    
Net change in unrealized appreciation or depreciation on
investments and foreign currencies		     5,652,992       8,636,660       4,394,256       5,044,475    
Net increase in net assets resulting from operations     10,509,704       18,928,421       6,952,329       27,184,154    
FROM DISTRIBUTIONS TO SHAREHOLDERS:  
Net investment income:  
Class A     -       -       (931,468 )     (1,433,574 )  
Class B     -       -       (720,738 )     (1,224,775 )  
Class C     -       -       (801,156 )     (1,281,578 )  
Class Q     -       -       (49,687 )     (99,026 )  
Net realized gains:  
Class A     (5,340,181 )     (1,073,901 )     -       -    
Class B     (1,592,895 )     (775,481 )     -       -    
Class C     (2,730,797 )     (949,961 )     -       -    
Class I     (31,243 )     (22,291 )     -       -    
Class Q     (4,047 )     (49 )     -       -    
Total distributions     (9,699,163 )     (2,821,683 )     (2,503,049 )     (4,038,953 )  
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     79,263,566       57,600,625       11,627,954       47,499,407    
Dividends reinvested     7,367,984       2,135,022       1,611,454       2,581,510    
      86,631,550       59,735,647       13,239,408       50,080,917    
Cost of shares redeemed     (23,281,611 )     (12,951,477 )     (32,350,100 )     (53,959,375 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     63,349,939       46,784,170       (19,110,692 )     (3,878,458 )  
Net increase (decrease) in net assets     64,160,480       62,890,908       (14,661,412 )     19,266,743    
NET ASSETS:  
Beginning of period     94,867,898       31,976,990       213,080,788       193,814,045    
End of period   $ 159,028,378     $ 94,867,898     $ 198,419,376     $ 213,080,788    
Undistributed net investment income (accumulated net
investment loss) at end of period		   $ (419,868 )   $ (21,333 )   $ 789,019     $ 1,813,063    

 

See Accompanying Notes to Financial Statements

42


STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

    ING Equity and Bond Fund   ING Real Estate Fund  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 13,
2004		  
FROM OPERATIONS:  
Net investment income   $ 337,836     $ 692,027     $ 3,646,780     $ 7,739,664    
Net realized gain (loss) on investments and futures     687,975       (791,892 )     9,073,434       18,787,767    
Net change in unrealized appreciation or depreciation on
investments and futures		     872,847       6,008,996       28,898,993       10,691,837    
Net increase in net assets resulting from operations     1,898,658       5,909,131       41,619,207       37,219,268    
FROM DISTRIBUTIONS TO SHAREHOLDERS:  
Net investment income:  
Class A     (217,758 )     (789,960 )     (409,850 )     (327,077 )  
Class B     (42,676 )     (315,822 )     (33,431 )     (35,510 )  
Class C     (42,964 )     (249,621 )     (42,116 )     (77,403 )  
Class I     -       -       (3,183,919 )     (8,236,929 )  
Class Q     (2,104 )     (6,646 )     -       -    
Class O     -       -       (6,743 )     -    
Net realized gains:  
Class A     -       -       (2,268,169 )     (242,273 )  
Class B     -       -       (184,964 )     (30,332 )  
Class C     -       -       (206,851 )     (87,401 )  
Class I     -       -       -       (6,232,489 )  
Class T     -       -       (11,900,609 )     -    
Class O     -       -       (199,400 )     -    
Total distributions     (305,502 )     (1,362,049 )     (18,436,052 )     (15,269,414 )  
FROM CAPITAL SHARE TRANSACTIONS:  
Net proceeds from sale of shares     2,894,753       18,750,762       38,765,916       73,899,420    
Dividends reinvested     232,892       1,011,337       12,832,345       9,979,129    
      3,127,645       19,762,099       51,598,261       83,878,549    
Cost of shares redeemed     (9,905,097 )     (27,110,551 )     (13,582,137 )     (49,590,718 )  
Net increase (decrease) in net assets resulting from
capital share transactions		     (6,777,452 )     (7,348,452 )     38,016,124       34,287,831    
Net increase (decrease) in net assets     (5,184,296 )     (2,801,370 )     61,199,279       56,237,685    
NET ASSETS:  
Beginning of period     69,480,986       72,282,356       183,170,821       126,933,136    
End of period   $ 64,296,690     $ 69,480,986     $ 244,370,100     $ 183,170,821    
Undistributed net investment income at end of period   $ 140,828     $ 108,494     $ 2,242,494     $ 2,271,773    

 

See Accompanying Notes to Financial Statements

43


ING DISCIPLINED LARGECAP FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I  
    Six Months
Ended
November 30,		   Year Ended May 31,   Seven Months
Ended
May 31,		   Year
Ended
October 31,		   December 30,
1998(2) to
October 31,		  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 8.99       7.72       8.52       9.94       11.25       11.17       10.00    
Income (loss) from investment operations:  
Net investment income   $ 0.07       0.05       0.05       0.04       0.02       0.04       0.06    
Net realized and unrealized gain (loss)  
on investments   $ 0.61       1.22       (0.85 )     (1.46 )     (1.33 )     0.19       1.11    
Total from investment operations   $ 0.68       1.27       (0.80 )     (1.42 )     (1.31 )     0.23       1.17    
Less distributions from:  
Net realized gain from investments   $ -       -       -       -       -       0.15       -    
Total distributions   $ -       -       -       -       -       0.15       -    
Net asset value, end of period   $ 9.67       8.99       7.72       8.52       9.94       11.25       11.17    
Total Return(3)    % 7.56       16.45       (9.39 )     (14.28 )     (11.64 )     2.00       11.70    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 5       22,762       19,550       21,578       25,172       28,473       27,927    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(4)    % 1.03       1.09       1.12       1.00       1.04       1.07       0.98 (5)   
Gross expenses prior to expense
reimbursement(4) 		   % 1.03       1.09       1.12       1.00       1.04       1.07       1.23    
Net investment income after expense  
reimbursement(4)    % 0.54       0.55       0.70       0.46       0.27       0.34       0.62 (5)   
Portfolio turnover rate   % 79       200       106       149       26       57       26    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  The Fund commenced operations on December 30, 1998.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  Expenses calculated net of taxes and advisor reimbursement.

See Accompanying Notes to Financial Statements.

44


ING LARGECAP GROWTH FUND (UNAUDITED)

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I  
    Six Months
Ended
November 30,		   Year Ended May 31,   January 8,
2002(1) to
May 31,		  
    2004   2004   2003   2002  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 18.69       14.71       16.93       21.04    
Income (loss) from investment operations:  
Net investment loss   $ 0.04       (0.05 )     (0.06 )     (0.02 )  
Net realized and unrealized gain (loss) on investments   $ 0.08       4.03       (2.16 )     (4.09 )  
Total from investment operations   $ 0.11       3.98       (2.22 )     (4.11 )  
Less distributions from:  
Net investment income   $ 0.60       -       -       -    
Total distribution   $ 0.60       -       -       -    
Net asset value, end of period   $ 18.20       18.69       14.71       16.93    
Total Return(2)    % 0.58       27.06       (13.11 )     (19.53 )  
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 37,839       36,504       22,156       26,106    
Ratios to average net assets:  
Net expenses after expense reimbursement  
and brokerage commission recapture(3)(4)    % 0.96       0.91       1.05       0.96    
Net expenses after expense reimbursement(3)(4)    % 0.96       0.94       1.05       0.96    
Gross expenses prior to expense reimbursement(3)    % 0.95       1.10       1.21       0.96    
Net investment loss after expense reimbursement  
and brokerage commission recapture(3)(4)    % 0.22       (0.31 )     (0.42 )     (0.43 )  
Portfolio turnover rate   % 40       142       291       536    

 

    Class Q  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven Months
Ended
May 31,		   Year
Ended
June 30,		   Three Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(5)    2000   1999(6)   
Per Share Operating Performance:  
Net asset value, beginning of period   $ 18.58       14.66       16.92       24.81       43.71       28.43       25.24    
Income (loss) from investment operations:  
Net investment loss   $ (0.01 )     (0.11 )     (0.15 )     (0.44 )     (0.17 )     (0.20 )     (0.03 )  
Net realized and unrealized gain (loss)  
on investments   $ 0.10       4.03       (2.11 )     (7.44 )     (18.26 )     15.86       3.22    
Total from investment operations   $ 0.09       3.92       (2.26 )     (7.88 )     (18.43 )     15.66       3.19    
Less distributions from:  
Net investment income   $ 0.56       -       -       0.01       -       -       -    
Net realized gain from investments   $ -       -       -       -       0.47       0.38       -    
Total distributions   $ 0.56       -       -       0.01       0.47       0.38       -    
Net asset value, end of period   $ 18.11       18.58       14.66       16.92       24.81       43.71       28.43    
Total Return(2)     % 0.48       26.74       (13.36 )     (31.77 )     (42.50 )     55.57       12.64    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 5,229       6,035       6,178       16,840       12,534       24,838       6,044    
Ratios to average net assets:  
Net expenses after expense  
reimbursement and brokerage  
commission recapture(3)(4)    % 1.21       1.14       1.31       1.21       1.19       1.26       1.23    
Net expenses after expense
reimbursement(3)(4) 		   % 1.21       1.17       1.31       1.21       1.19       1.26       1.23    
Gross expenses prior to expense  
reimbursement and brokerage  
commission recapture(3)    % 1.20       1.32       1.47       1.21       1.19       1.26       1.25    
Net investment loss after
expense reimbursement(3)(4) 		   % (0.08 )     (0.53 )     (0.66 )     (0.76 )     (0.50 )     (0.77 )     (0.36 )  
Portfolio turnover rate   % 40       142       291       536       331       139       27    

 

(1)  Commencement of operations of Class I.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

(5)  The Fund changed its fiscal year end to May 31.

(6)  Effective May 24, 1999, ING investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as sub-advisor and the Fund changed its year end to June 30.

See Accompanying Notes to Financial Statements.

45


ING MIDCAP OPPORTUNITIES FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I  
    Six Months
Ended
November 30,		   Year Ended May 31,   Five Months
Ended
May 31,		   Year Ended
December 31,		  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 12.33       10.33       11.29       14.73       19.26       21.34       12.99    
Income (loss) from investment  
operations:  
Net investment loss   $ (0.05 )     (0.09 )*     (0.11 )     (0.11 )*     (0.06 )     (0.13 )     (0.15 )  
Net realized and unrealized gain (loss)  
on investments   $ 0.69       2.09       (0.85 )     (3.33 )     (4.47 )     0.23       12.09    
Total from investment operations   $ 0.64       2.00       (0.96 )     (3.44 )     (4.53 )     0.10       11.94    
Less distributions from:  
Net realized gain on investments   $ -       -       -       -       -       2.18       3.59    
Total distributions   $ -       -       -       -       -       2.18       3.59    
Net asset value, end of period   $ 12.97       12.33       10.33       11.29       14.73       19.26       21.34    
Total Return(2)     % 5.19       19.36       (8.50 )     (23.35 )     (23.52 )     0.08       103.19    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 2,986       2,614       10,844       39,874       52,007       68,006       67,954    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(3)(4)    % 1.39       1.17       1.09       1.26       1.52       1.36       1.41    
Gross expenses prior to expense  
reimbursement(3)    % 1.34       1.31       1.41       1.50       1.52       1.36       1.41    
Net investment loss after expense  
reimbursement(3)(4)    % (0.93 )     (0.81 )     (0.71 )     (0.95 )     (0.97 )     (0.66 )     (1.04 )  
Portfolio turnover rate   % 25       115       345       399       182       188       201    

 

    Class Q  
    Six Months
Ended
November 30,		   Year Ended May 31,   Five Months
Ended
May 31,		   April 4,
2000(5) to
December 31,		  
    2004   2004   2003   2002   2001(1)    2000  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 12.17       10.19       11.16       14.63       19.16       22.57    
Income (loss) from investment operations:  
Net investment loss   $ (0.06 )     (0.10 )*     (0.09 )     (0.17 )*     (0.08 )     (0.06 )  
Net realized and unrealized gain (loss)  
on investments   $ 0.68       2.08       (0.88 )     (3.30 )     (4.45 )     (1.17 )  
Total from investment operations   $ 0.62       1.98       (0.97 )     (3.47 )     (4.53 )     (1.23 )  
Less distributions from:  
Net realized gain from investments   $ -       -       -       -       -       2.18    
Total distributions   $ -       -       -       -       -       2.18    
Net asset value, end of period   $ 12.79       12.17       10.19       11.16       14.63       19.16    
Total Return(2)    % 5.09       19.43       (8.69 )     (23.72 )     (23.64 )     (5.86 )  
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 4,809       4,898       4,886       6,563       3,071       3,264    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(3)(4)    % 1.51       1.45       1.33       1.63       1.82       1.61    
Gross expenses prior to expense
reimbursement(3) 		   % 1.45       1.56       1.66       1.69       1.82       1.61    
Net investment loss after expense  
reimbursement(3)(4)    % (1.00 )     (1.00 )     (0.98 )     (1.35 )     (1.28 )     (0.91 )  
Portfolio turnover rate   % 25       115       345       399       182       188    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

(5)  Commencement of operations of class.

*  Per share data calculated using average number of shares outstanding throughout the period.

See Accompanying Notes to Financial Statements.

46


ING SMALLCAP OPPORTUNITIES FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I  
    Six Months
Ended
November 30,		   Year Ended May 31,   Five Months
Ended
May 31,		   Year Ended
December 31,		   April 1,
1999(2) to
December 31,		  
    2004   2004   2003   2002   2001(1)    2000   1999  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 22.76       18.27       24.07       39.02       47.47       59.54       31.78    
Income (loss) from investment operations:  
Net investment loss   $ (0.11 )     (0.23 )     (0.23 )     (0.36 )**     (0.14 )     (1.00 )     (0.08 )  
Net realized and unrealized gain (loss)  
on investments   $ 1.95       4.72       (5.57 )     (13.60 )     (8.31 )     (2.17 )     35.40    
Total from investment operations   $ 1.84       4.49       (5.80 )     (13.96 )     (8.45 )     (3.17 )     35.32    
Less distributions from:  
Net realized gain from investments   $ -       -       -       0.99       -       8.90       7.56    
Total distributions   $ -       -       -       0.99       -       8.90       7.56    
Net asset value, end of period   $ 24.60       22.76       18.27       24.07       39.02       47.47       59.54    
Total Return(3)    % 8.08       24.58 †     (24.10 )     (36.17 )     (17.80 )     (5.21 )     126.05    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 12,793       11,526       8,510       10,700       - *     - *     - *  
Ratios to average net assets:  
Expenses(4)    % 1.27       1.31       1.46       1.41       1.31       1.15       0.47    
Net investment loss after expense  
reimbursement(4)    % (1.01 )     (1.09 )     (1.37 )     (1.34 )     (1.03 )     (0.75 )     (0.35 )  
Portfolio turnover rate   % 34       60       357       423       104       134       223    

 

    Class Q  
    Six Months
Ended
November 30,		   Year Ended May 31,   Five Months
Ended
May 31,		   April 4,
2000(5) to
December 31,		  
    2004   2004   2003   2002   2001(1)    2000  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 22.64       18.22       24.07       38.81       47.20       60.86    
Income (loss) from investment operations:  
Net investment loss   $ (0.17 )     (0.29 )**     (0.53 )     (0.51 )**     (0.20 )     (0.27 )  
Net realized and unrealized gain (loss)
on investments		   $ 1.97       4.91       (5.32 )     (13.24 )     (8.19 )     (4.49 )  
Total from investment operations   $ 1.80       4.42       (5.85 )     (13.75 )     (8.39 )     (4.76 )  
Less distributions from:  
Net realized gain from investments   $ -       -       -       0.99       -       8.90    
Total distributions   $ -       -       -       0.99       -       8.90    
Net asset value, end of period   $ 24.44       22.64       18.22       24.07       38.81       47.20    
Total Return(3)    % 7.95       24.26 †     (24.30 )     (35.83 )     (17.78 )     (8.29 )  
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 320       463       906       3,651       2,832       2,545    
Ratios to average net assets:  
Expenses(4)    % 1.48       1.57       1.70       1.66       1.56       1.40    
Net investment loss after expense  
reimbursement(4)(5)    % (1.23 )     (1.36 )     (1.62 )     (1.62 )     (1.28 )     (1.10 )  
Portfolio turnover rate   % 34       60       357       423       104       134    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Commencement of operations of the Fund.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  Commencement of operations of Class Q.

*  Amount represents less than $1,000.

**  Per share data calculated using average number of shares outstanding throughout the period.

†  Total return without the effect of reimbursement by affiliate for investment transaction losses would have been 24.52% and 24.15% for Class I and Class Q respectively.

See Accompanying Notes to Financial Statements.

47


ING LARGECAP VALUE FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I  
    August 2,
2004(1) to
November 30,
2004		  
Per Share Operating Performance:      
Net asset value, beginning of period   $ 9.72    
Income (loss) from investment operations:  
Net investment income   $ (0.03 )  
Net realized and unrealized gain (loss) on investments   $ 0.50    
Total from investment operations   $ 0.47    
Less distributions from:  
Net investment income   $ -    
Net asset value, end of period   $ 10.19    
Total Return(2)    % 6.42    
Ratios and Supplemental Data:      
Net assets, end of period (000's)   $ 2,665    
Ratios to average net assets:  
Net expenses after expense reimbursement(3)(4)    % 1.05    
Gross expenses prior to expense reimbursement(3)    % 1.93    
Net investment after expense reimbursement(3)(4)    % 1.18    
Portfolio turnover rate   % 21    

 

(1)  Commencement of operations.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total returns for periods less than one year are not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Manager has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses), subject to possible reimbursement to ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements.

48


ING MAGNACAP FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   March 5,
2003(1) to
May 31,
2003		  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 10.27       8.82       7.55    
Income (loss) from investment operations:  
Net investment income   $ 0.08       0.15       0.01    
Net realized and unrealized gain (loss) on investments   $ 0.66       1.44       1.26    
Total from investment operations   $ 0.74       1.59       1.27    
Less distributions from:  
Net investment income   $ 0.19       0.14       -    
Net realized gain from investments   $ -       -       -    
Total distributions   $ 0.19       0.14       -    
Net asset value, end of period   $ 10.82       10.27       8.82    
Total Return(4)    % 7.28       18.26       16.82    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 2,272       8       7    
Ratios to average net assets:  
Expenses(5)    % 0.80       0.88       0.92    
Net investment income(5)    % 2.05       1.55       2.06    
Portfolio turnover rate   % 10       28       110    

 

(1)  Commencement of operations of Class I.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

See Accompanying Notes to Financial Statements.

49


ING MIDCAP VALUE FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I   Class Q  
    Six Months
Ended
November 30,		   Year Ended May 31,   March 4,
2002(1) to
May 31,		   Six Months
Ended
November 30,		   Year Ended May 31,   April 17,
2002(2) to
May 31,		  
    2004   2004   2003   2002   2004   2004   2003   2002  
Per Share Operating Performance:  
Net asset value, beginning  
of period   $ 11.61       8.39       10.30       10.20       11.54       8.36       10.28       10.52    
Income (loss) from investment  
operations:  
Net investment income (loss)   $ 0.00 *     0.01 **     0.01       0.01       (0.04 )     (0.02 )**     0.00 *     0.00 *  
Net realized and unrealized  
gain (loss) on investments   $ 0.70       3.21       (1.74 )     0.09       0.67       3.20       (1.75 )     (0.24 )  
Total from investment                                                                     
operations   $ 0.70       3.22       (1.73 )     0.10       0.63       3.18       (1.75 )     (0.24 )  
Less distributions from:  
Net investment income   $ -       -       0.07       -       -       -       0.06       -    
Net realized gain from  
investments   $ 0.88       -       0.11       -       0.88       -       0.11       -    
Total distributions   $ 0.88       -       0.18       -       0.88       -       0.17       -    
Net asset value, end of period   $ 11.43       11.61       8.39       10.30       11.29       11.54       8.36       10.28    
Total Return(3)    % 6.15       38.38       (16.35 )     0.98       5.57       38.04       (16.62 )     (2.28 )  
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 2,145       2,157       197       71       21       20       14       11    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(4)(5)    % 1.41       1.46       1.28       1.24       2.11       1.67       1.54       1.52    
Gross expenses prior to  
expense reimbursement(4)    % 1.20       1.34       1.70       2.60       1.47       1.54       1.96       2.28    
Net investment income (loss)  
after expense  
reimbursement(4)(5)    % 0.05       0.22       0.46       0.38       (0.66 )     (0.16 )     0.14       0.43    
Portfolio turnover rate   % 42       70       72       13       42       70       72       13    

 

(1)  Commencement of operations of Class I.

(2)  Commencement of operations of Class Q.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Amount represents less than $0.01 per share.

**  Per share data calculated using average number of shares outstanding throughout the period.

See Accompanying Notes to Financial Statements.

50


ING SMALLCAP VALUE FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I   Class Q  
    Six Months       March 7,   Six Months       April 30,  
    Ended
November 30,		   Year Ended May 31,   2002(1) to
May 31,		   Ended
November 30,		   Year Ended May 31,   2002(2) to
May 31,		  
    2004   2004   2003   2002   2004   2004   2003   2002  
Per Share Operating Performance:  
Net asset value, beginning  
of period   $ 13.60       9.44       10.63       10.32       13.71       9.53       10.63       11.01    
Income (loss) from investment  
operations:  
Net investment income (loss)   $ (0.00 )*     (0.04 )     (0.05 )     0.00 *     (0.01 )     (0.01 )     0.33       0.00 *  
Net realized and unrealized  
gain (loss) on investments   $ 0.89       4.94       (0.97 )     0.31       0.89       4.93       (1.34 )     (0.38 )  
Total from investment                                                                    
operations   $ 0.89       4.90       (1.02 )     0.31       0.88       4.92       (1.01 )     (0.38 )  
Less distributions from:  
Net investment income   $ -       -       0.08       -       -       -       -       -    
Net realized gain from  
investments   $ 0.89       0.74       0.09       -       0.89       0.74       0.09       -    
Total distributions   $ 0.89       0.74       0.17       -       0.89       0.74       0.09       -    
Net asset value, end of period   $ 13.60       13.60       9.44       10.63       13.70       13.71       9.53       10.63    
Total Return(3)    % 6.68       53.60       (9.49 )     3.00       6.55       53.29       (9.47 )     (3.45 )  
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 514       481       222       26       67       58       1       8    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(4)(5)    % 1.46       1.43       1.32       1.23       1.69       1.52       1.35       1.42    
Gross expenses prior to
expense reimbursement(4) 		   % 1.18       1.35       1.73       2.78       1.42       1.52       1.73       2.42    
Net investment income (loss)  
after expense  
reimbursement(4)(5)    % (0.03 )     (0.37 )     (0.13 )     0.17       (0.25 )     (1.03 )     (0.32 )     0.00    
Portfolio turnover rate   % 16       57       54       12       16       57       54       12    

 

(1)  The Fund commenced operations on February 1, 2002.

(2)  Class B and Class C commenced offering shares on February 4, 2002.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

*  Amount represents less than $0.01 per share.

See Accompanying Notes to Financial Statements.

51


ING CONVERTIBLE FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class Q  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven Months
Ended
May 31,		   Year
Ended
June 30,		   Three Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:  
Net asset value, beginning of period   $ 17.58       15.74       14.91       17.37       26.85       22.51       21.22    
Income (loss) from investment operations:  
Net investment income   $ 0.20       0.46       0.41       0.36       0.59       0.44       0.09    
Net realized and unrealized gain (loss)  
on investments   $ 0.48       1.84       0.76       (2.28 )     (4.84 )     7.82       1.31    
Total from investment operations   $ 0.68       2.30       1.17       (1.92 )     (4.25 )     8.26       1.40    
Less distributions from:  
Net investment income   $ 0.29       0.46       0.34       0.45       0.53       0.35       0.11    
Net realized gain from investments   $ -       -       -       0.09       4.70       3.57       -    
Total distributions   $ 0.29       0.46       0.34       0.54       5.23       3.92       0.11    
Net asset value, end of period   $ 17.97       17.58       15.74       14.91       17.37       26.85       22.51    
Total Return(3)    % 3.93       14.72       8.11       (11.12 )     (17.50 )     40.36       6.62    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 2,806       3,176       4,030       8,626       29,629       56,165       17,537    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(4)(5)    % 1.25       1.26       1.36       1.19       1.15       1.25       1.23    
Gross expenses prior to expense  
reimbursement(4)    % 1.25       1.26       1.36       1.19       1.14       1.25       1.23    
Net investment income after expense  
reimbursement(4)(5)    % 2.06       2.37       2.78       2.23       2.47       1.88       2.04    
Portfolio turnover rate   % 27       138       97       100       145       129       28    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING Investments, LLC became the Investment Manager of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as sub-advisor and the Fund changed its year end to June 30.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding thededuction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements.

52


ING EQUITY AND BOND FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class Q  
    Six Months
Ended
November 30,		   Year Ended May 31,   Eleven Months
Ended
May 31,		   Year
Ended
June 30,		   Three Months
Ended
June 30,		  
    2004   2004   2003   2002   2001(1)    2000   1999(2)   
Per Share Operating Performance:  
Net asset value, beginning of period   $ 12.38       11.63       11.98       13.23       14.94       19.04       18.85    
Income (loss) from investment operations:  
Net investment income   $ 0.09       0.17       0.28       0.42       0.44       0.54       0.11    
Net realized and unrealized gain (loss)  
on investments   $ 0.30       0.86       (0.38 )     (1.15 )     (0.54 )     (0.57 )     0.16    
Total from investment operations   $ 0.39       1.03       (0.10 )     (0.73 )     (0.10 )     (0.03 )     0.27    
Less distributions from:  
Net investment income   $ 0.08       0.28       0.25       0.47       0.47       0.40       0.08    
Net realized gain from investments   $ -       -       -       0.05       1.14       3.67       -    
Total distributions   $ 0.08       0.28       0.25       0.52       1.61       4.07       0.08    
Net asset value, end of period   $ 12.69       12.38       11.63       11.98       13.23       14.94       19.04    
Total Return(3)    % 3.20       8.93 †     (0.61 )     (5.53 )     (0.70 )     (0.60 )     1.44    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 291       324       222       191       373       230       190    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(4)(5)    % 1.48       1.49       1.50       1.40       1.25       1.30       1.25    
Gross expenses prior to expense  
reimbursement(4)    % 1.42       1.48       1.61       1.40       1.46       1.51       1.51    
Net investment income after expense  
reimbursement(4)(5)    % 1.43       1.39       2.70       3.31       3.61       3.36       2.30    
Portfolio turnover rate   % 36       302       129       145       76       173       63    

 

(1)  The Fund changed its fiscal year end to May 31.

(2)  Effective May 24, 1999, ING investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as sub-advisor and the Fund changed its year end to June 30.

(3)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(4)  Annualized for periods less than one year.

(5)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

†  Total return without the effect of reimbursement by affiliate for investment transaction losses would have been 8.84% for Class Q.

See Accompanying Notes to Financial Statements.

53


ING REAL ESTATE FUND

FINANCIAL HIGHLIGHTS

Selected data for a share of beneficial interest outstanding throughout each period.

    Class I  
    Six Months
Ended
November 30,		   Year
Ended
May 31,		   Period
Ended
May 31,		   Year Ended October 31,  
    2004   2003   2003(1)    2002   2001   2000   1999  
Per Share Operating Performance:  
Net asset value, beginning of period   $ 13.28       11.45       9.98       9.77       9.57       8.24       9.10    
Income (loss) from investment operations:  
Net investment income   $ 0.25       0.58       0.20       0.60       0.50       0.69       0.49    
Net realized and unrealized gain (loss)  
on investments   $ 2.57       2.43       1.47       0.23       0.27       1.21       (0.80 )  
Total from investment operations   $ 2.82       3.01       1.67       0.83       0.77       1.90       (0.31 )  
Less distributions from:  
Net investment income   $ 0.26       0.67       0.20       0.62       0.57       0.57       0.55    
Net realized gain from investments   $ 0.95       0.51       -       -       -       -       -    
Total distributions   $ 1.21       1.18       0.20       0.62       0.57       0.57       0.55    
Net asset value, end of period   $ 14.89       13.28       11.45       9.98       9.77       9.57       8.24    
Total Return(2)    % 25.63       27.24       16.95       8.06       7.88       23.78       3.70    
Ratios and Supplemental Data:  
Net assets, end of period (000's)   $ 195,284       161,904       125,645       97,331       76,188       64,447       55,968    
Ratios to average net assets:  
Net expenses after expense  
reimbursement(3)(4)    % 0.88       0.96       1.00       0.98       1.00       1.00       1.00    
Gross expenses prior to expense  
reimbursement(3)    % 0.83       1.06       1.19       0.98       1.03       1.05       1.11    
Net investment income after expense  
reimbursement(3)(4)    % 3.66       4.69       4.26       4.29       4.84       5.71       5.37    
Portfolio turnover rate   % 37       132       62       106       77       93       67    

 

(1)  On November 4, 2002, pursuant to an Agreement and Plan of Reorganization dated August 20, 2002, all of the assets and liabilities of the CRA Realty Shares Portfolio were transferred to the newly created ING Real Estate Fund in exchange for shares of the ING Real Estate Fund. The financial highlight information presented for periods prior to November 4, 2002 reflects the activity of the CRA Realty Shares Portfolio. The ING Real Estate Fund has adopted a fiscal year end of May 31.

(2)  Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized.

(3)  Annualized for periods less than one year.

(4)  The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years.

See Accompanying Notes to Financial Statements.

54


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED)

NOTE 1 - ORGANIZATION

Organization. The ING Funds contained within this book are comprised of ING Equity Trust ("IET") and ING Investment Funds, Inc. ("IIF") both of which are open-end investment management companies registered under the Investment Company Act of 1940, as amended.

IET is a Massachusetts business trust organized on June 12, 1998 with twenty-three separate series (Portfolios). Eleven of which are discussed in this report: ING Disciplined LargeCap Fund ("Disciplined LargeCap"), ING LargeCap Growth Fund ("LargeCap Growth"), ING MidCap Opportunities Fund ("MidCap Opportunities"), ING SmallCap Opportunities Fund ("SmallCap Opportunities"), ING LargeCap Value Fund ("LargeCap Value"), ING MidCap Value Fund ("MidCap Value"), ING SmallCap Value Fund ("SmallCap Value"), ING Convertible Fund ("Convertible"), ING Equity and Bond Fund ("Equity and Bond") and ING Real Estate Fund ("Real Estate"). IIF is a Maryland Corporation organized on July 7, 1969 with one Portfolio, ING MagnaCap Fund ("MagnaCap").

Each Fund offers at least three of the following classes of shares: Class A, Class B, Class C, Class I, Class M, Class O and Class Q. The separate classes of shares differ principally in the applicable sales charges (if any), distribution fees, shareholder servicing fees and transfer agency fees. Shareholders of each class also bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of the Fund and earn income and realized gains/losses from the Fund pro rata based on the average daily net assets of each class, without distinction between share classes. No class preferential dividend rights exist. Differences in per share dividend rates generally results from the relative weighting of pro rata income and realized gain allocations and from differences in separate class expenses, including distribution, and shareholder servicing fees. Class B shares, along with their pro rata reinvested dividend shares, automatically convert to Class A shares approximately eight years after purchase.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements. Such policies are in conformity with accounting principles generally accepted in the United States of America for investment companies.

A.  Security Valuation. Investments in equity securities traded on a national securities exchange are valued at the last reported sale price. Securities reported by NASDAQ will be valued at the NASDAQ official closing prices. Securities traded on an exchange or NASDAQ for which there has been no sale and securities traded in the over-the-counter-market are valued at the mean between the last reported bid and ask prices. All investments quoted in foreign currencies will be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at that time. Debt securities are valued at prices obtained from independent services or from one or more dealers making markets in the securities and may be adjusted based on the Funds' valuation procedures. U.S. Government obligations are valued by using market quotations or independent pricing services that use prices provided by market-makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics.

Securities and assets for which market quotations are not readily available (which may include certain restricted securities which are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Funds' Board of Directors/Trustees (''Board''), in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, which close earlier than the time that a Fund calculates its net asset value may also be valued at their fair values as determined in good faith by or under the supervision of a Fund's Board, in accordance with methods that are specifically authorized by the Board. If a significant event which is likely to impact the value of one or more foreign securities held by a Fund occurs after the time at which the foreign market for such security(ies) closes but before the time that the Fund's net asset value is calculated on any business day, such event may be taken into account in determining the fair value of such security(ies) at the time the Fund calculates its net asset value. For these purposes, significant events after the close of trading on a foreign market may include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis, the Board has authorized the use of one or more research services to assist with the determination of the fair value of foreign securities. Research services use statistical analyses and quantitative models to help determine fair value as of the time

55


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

a Fund calculates its net asset value. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment, and the fair value assigned to a security may not represent the actual value that a Fund could obtain if it were to sell the security at the time of the close of the NYSE. Investments in securities maturing in 60 days or less from the date of acquisition are valued at amortized cost, which, when combined with accrued interest, approximates market value.

B.  Security Transactions and Revenue Recognition. Securities transactions are accounted for on the trade date. Realized gains and losses are reported on the basis of identified cost of securities sold. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date, or for certain foreign securities, when the information becomes available to the funds. Premium amortization and discount accretion are determined by the effective yield method.

C.  Foreign Currency Translation. The books and records of the Funds are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

(1)  Market value of investment securities, other assets and liabilities - at the exchange rates prevailing at the end of the day.

(2)  Purchases and sales of investment securities, income and expenses - at the rates of exchange prevailing on the respective dates of such transactions.

Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Funds do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities' current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax.

Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and the U.S. Government securities. These risks include but are not limited to revaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and the U.S. Government securities.

D.  Foreign Currency Transactions and Futures Contracts. Certain funds may enter into foreign currency exchange transactions to convert to and from different foreign currencies and to and from the U.S. dollar in connection with the planned purchases or sales of securities. The Funds either enter into these transactions on a spot basis at the spot rate prevailing in the foreign currency exchange market or use forward foreign currency contracts to purchase or sell foreign currencies. When the contract is fulfilled or closed, gains or losses are realized. Until then, the gain or loss is included in unrealized appreciation or depreciation. Risks may arise upon entering into forward contracts from the potential inability of counterparties to meet the terms of their forward contracts and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar.

Each Fund may enter into futures contracts involving foreign currency, interest rates, securities and security indices. A futures contract obligates the seller of the contract to deliver and the purchaser of the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time for a specified price. Upon entering into such a contract, a Fund is required to deposit and maintain as collateral such initial margin as required by the exchange on which the contract is traded. Pursuant to the contract, a Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuations in the value of the contract. Such receipts or payments are known as

56


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

variation margins and are recorded as unrealized gains or losses by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

E.  Distributions to Shareholders. The Funds record distributions to their shareholders on the ex-dividend date. Each Fund pays dividends, if any, as follows:

Annually   Semi-Annually  
Disciplined LargeCap   MagnaCap  
LargeCap Growth      
    Quarterly  
MidCap Opportunities      
SmallCap Opportunities   Convertible  
LargeCap Value   Equity and Bond  
MidCap Value   Real Estate  
SmallCap Value      

 

Each Fund distributes capital gains, to the extent available, annually. The Funds may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. The characteristics of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America for investment companies.

F.  Federal Income Taxes. It is the policy of the Funds to comply with subchapter M of the Internal Revenue Code and related excise tax provisions applicable to regulated investment companies and to distribute substantially all of their net investment income and any net realized capital gains to their shareholders. Therefore, no federal income tax provision is required. No capital gain distributions shall be made until any capital loss carryforwards have been fully utilized or expired.

The Funds may utilize equalization accounting for tax purposes, where by a portion of redemption payments are treated as distributions of income or gain for income tax purposes.

G.  Use of Estimates. Management of the Funds has made certain estimates and assumptions relating to the reporting of assets, liabilities, income, and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America for investment companies. Actual results could differ from these estimates.

H.  Repurchase Agreements. Each Fund may invest in repurchase agreements only with government securities dealers recognized by the Board of Governors of the Federal Reserve System. Under such agreements, the seller of the security agrees to repurchase it at a mutually agreed upon time and price. The resale price is in excess of the purchase price and reflects an agreed upon interest rate for the period of time the agreement is outstanding. The period of the repurchase agreements is usually short, from overnight to one week, while the underlying securities generally have longer maturities. Each Fund will receive as collateral securities acceptable to it whose market value is equal to at least 100% of the carrying amount of the repurchase agreements, plus accrued interest, being invested by the Fund. The underlying collateral is valued daily on a mark to market basis to assure that the value, including accrued interest is at least equal to the repurchase price. If the seller defaults, a Fund might incur a loss or delay in the realization of proceeds if the value of the collateral securing the repurchase agreement declines, and it might incur disposition costs in liquidating the collateral.

I.  Options Contracts. Each Funds may purchase put and call options and may write (sell) put options and covered call options. The Funds may engage in option transactions as a hedge against adverse movements in the value of portfolio holdings or to increase market exposure. Option contracts are valued daily and unrealized gains or losses are recorded based upon the last sales price on the principal exchange on which the options are traded. The Funds will realize a gain or loss upon  the expiration or closing of the option contract. When an option is exercised, the proceeds on sales of the underlying security for a written call option, the purchase cost of the security for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Realized and unrealized gains or losses on option contracts are reflected in the accompanying financial statements. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties to meet the terms of the contract.

57


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

J.  Securities Lending. Each Fund has the option to temporarily loan up to 30% of its total assets to brokers, dealers or other financial institutions in exchange for a negotiated lender's fee. The borrower is required to fully collateralize the loans with cash or U.S. Government securities. Generally, in the event of counterparty default, the Fund has the right to use collateral to offset losses incurred. There would be potential loss to the Fund in the event the Fund is delayed or prevented from exercising its right to dispose of the collateral. The Fund bears the risk of loss with respect to the investment of collateral. Engaging in securities lending could have a leveraging effect, which may intensify the credit, market and other risks associated with investing in a Fund.

K.  Offering Costs. Offering costs are capitalized and amortized on a straight line basis over a period of twelve months.

L.  Illiquid and Restricted Securities. Each Fund may not invest more than 15% of its net assets in illiquid securities. Illiquid securities are not readily marketable. Disposing of illiquid investments may involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Funds to sell them promptly at an acceptable price. Each Fund also may invest in restricted securities, which include those sold under Rule 144A of the Securities Act of 1933 ("1933 Act") or securities offered pursuant to Section 4(2) of the 1933 Act, and/or are subject to legal or contractual restrictions on resale and generally may not be publicly sold without registration under the 1933 Act. Certain restricted securities may be considered liquid pursuant to procedures adopted by the Board or may be deemed to be illiquid because they may not be readily marketable. Illiquid and restricted securities are valued using market quotations when readily available. In the absence of market quotations, the illiquid and restricted securities are valued based upon their fair value determined under procedures approved by the Board.

M.  Delayed Delivery Transactions. Each Fund may purchase or sell securities on a when-issued or forward commitment basis. The price of the underlying securities and date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The market value of such is identified in each Fund's Portfolio of Investments. Losses may arise due to changes in the market value of the securities or from the inability of counterparties to meet the terms of the contract. In connection with such purchases, the Funds are required to segregate liquid assets with the Funds' custodian sufficient to cover the purchase price.

N.  Mortgage Dollar Roll Transactions. In connection with a Fund's ability to purchase or sell securities on a when-issued basis, the Funds may engage in dollar roll transactions with respect to mortgage-backed securities issued by Government National Mortgage Association, Federal National Mortgage Association and Federal Home Loan Mortgage Corp. In a dollar roll transaction, a Fund sells a mortgage-backed security to a financial institution, such as a bank or broker/dealer, and simultaneously agrees to repurchase a substantially similar (i.e., same type, coupon, and maturity) security from the institution on a delayed delivery basis at an agreed upon price. The mortgage-backed securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. The Funds account for dollar roll transactions as purchases and sales.

NOTE 3 - INVESTMENT TRANSACTIONS

For the six months ended November 30, 2004, the cost of purchases and proceeds from the sales of securities, excluding short-term securities, were as follows:

    Purchases   Sales  
Disciplined LargeCap   $ 52,790,720     $ 81,930,384    
LargeCap Growth     125,403,346       129,217,717    
MidCap Opportunities     105,857,740       178,501,008    
SmallCap Opportunities     77,628,487       117,895,157    
LargeCap Value     24,096,258       4,359,730    
MagnaCap     37,811,928       65,086,971    
MidCap Value     88,695,426       57,880,610    
SmallCap Value     77,638,421       19,300,495    
Convertible     53,381,754       74,327,783    
Equity and Bond     24,561,128       28,708,066    
Real Estate     96,961,140       75,381,250    

 

U.S. Governemnt securities not included above were as follows:

    Purchases   Sales  
Equity and Bond   $ 49,664,983     $ 53,462,074    

 

NOTE 4 - INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES

The Funds entered into Investment Management Agreements with ING Investments, LLC (the "Investment Manager"). The Investment Management

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NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 4 - INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES (continued)

Agreements compensate the Investment Manager with a fee, computed daily and payable monthly, based on the average daily net assets of each Fund, at the following annual rates:

    As a Percent of Average Net Assets  
Disciplined LargeCap     0.70 %  
LargeCap Growth*   0.75% on first $500 million; 0.675% onnext $500 million; and 0.65% in excess of $1 billion  
MidCap Opportunities   1.00% on first $500 million; and 0.90% thereafter  
SmallCap Opportunities   1.00% on first $100 million; 0.90% on next $150 million; 0.80% on next
$250 million; and 0.75% in excess of
$500 million		  
LargeCap Value   0.90% on first $50 million; 0.85% on next $450 million; and 0.80% thereafter  
MagnaCap   1.00% on first $30 million; 0.75% on next $220 million; 0.625% on next
$200 million; and 0.50% in excess of
$450 million		  
MidCap Value   1.00% on first $50 million; and 0.90% thereafter  
SmallCap Value   1.00% on first $50 million; and 0.90% thereafter  
Convertible   0.75% on first $500 million; 0.675% on next $500 million; and 0.65% in excess of $1 billion  
Equity and Bond   0.75% on first $500 million; 0.675% on next $500 million; and 0.65% in excess of $1 billion  
Real Estate     0.70 %  

 

* Assets are aggregated with ING VP LargeCap Growth Portfolio to determine fees.

ING Investment Management Co. (formerly, Aeltus Investment Management, Inc. "ING IM"), a registered investment adviser, serves as Sub-Adviser to the MidCap Opportunities Fund, SmallCap Opportunities Fund, Disciplined LargeCap Fund, MagnaCap Fund, Convertible Fund and the Equity and Bond Fund pursuant to Sub-Advisory Agreements between the Investment Manager and ING IM.

Brandes Investment Partners, LP ("Brandes"), a registered investment adviser, serves as Sub-Adviser to the LargeCap Value, MidCap Value and SmallCap Value Funds pursuant to a Sub-Advisory Agreement between the Investment Manager and Brandes.

Wellington Management Company, LLP is the Sub-Adviser to the LargeCap Growth Fund.

ING Clarion Real Estate Securities L.P. ("ING Clarion"), a registered investment adviser, is the Sub-Adviser to the Real Estate Fund pursuant to a Sub-Advisory Agreement between the Investment Manager and ING Clarion.

ING Funds Services, LLC (the "Administrator" or "IFS"), serves as administrator to each Fund except MagnaCap. The Funds pay the Administrator a fee calculated at an annual rate of 0.10% of each Fund's average daily net assets.

MagnaCap has entered into a Shareholder Service Agreement with IFS whereby IFS will act as Shareholder Service Agent for the Fund. The agreement provides that IFS will be compensated for incoming and outgoing shareholder telephone calls and letters, and all reasonable out-of-pocket expenses incurred in connection with the performance of such services.

MidCap Opportunities and SmallCap Opportunities also pay IFS an annual shareholder account servicing fee of $5.00, payable semi-annually, for each account of beneficial owners of shares.

The Investment Manager, ING IM, ING Clarion, IFS and the Distributor are indirect wholly-owned subsidiaries of ING Groep N.V., a global financial institution active in the fields of banking, insurance and asset management.

NOTE 5 - DISTRIBUTION AND SERVICE FEES

Each share class of the Funds (except as noted below) has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), whereby ING Funds Distributor, LLC (the "Distributor") is reimbursed or compensated (depending on the class of shares) by the Funds for expenses incurred in the distribution of each Fund's shares ("Distribution Fees"). Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month to reimburse or compensate expenses incurred in the distribution and promotion of each Fund's shares, including expenses incurred in printing prospectuses and reports used for sales purposes, expenses incurred in preparing and printing sales literature and other such distribution related expenses, including any distribution or shareholder servicing fees ("Service Fees") paid to securities dealers who have executed a distribution agreement with the Distributor. Under the 12b-1 Plans, each class of shares of the Fund pays the Distributor a combined Distribution and/or

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NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 5 - DISTRIBUTION AND SERVICE FEES (continued)

Service Fee based on average daily net assets at the following rates:

    Class A   Class B
and C		   Class I   Class M   Class O   Class Q  
Disciplined LargeCap     0.30 %     1.00 %   N/A   N/A   N/A     N/A    
LargeCap Growth     0.35 %     1.00 %   N/A   N/A   N/A     0.25 %  
MidCap Opportunities     0.30 %     1.00 %   N/A   N/A   N/A     0.25 %  
SmallCap Opportunities     0.30 %     1.00 %   N/A   N/A   N/A     0.25 %  
LargeCap Value     0.25 %     1.00 %   N/A   N/A   N/A     N/A    
MagnaCap     0.30 %     1.00 %   N/A     0.75 %   N/A     N/A    
MidCap Value     0.25 %     1.00 %   N/A   N/A   N/A     0.25 %  
SmallCap Value     0.25 %     1.00 %   N/A   N/A   N/A     0.25 %  
Convertible     0.35 %     1.00 %   N/A   N/A   N/A     0.25 %  
Equity and Bond     0.35 %     1.00 %   N/A   N/A   N/A     0.25 %  
Real Estate     0.25 %     1.00 %   N/A   N/A     0.25 %     0.25 %  

 

For the six months ended November 30, 2004, the Distributor has retained $163,391 as sales charges from the proceeds of Class A Shares sold, $22,085 and $20,318 from the proceeds of Class A Shares and Class C Shares redeemed, respectively and $90 from the proceeds of Class M Shares sold.

NOTE 6 - OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

The Investment Manager may direct the Funds' portfolio managers to use their best efforts (subject to obtaining best execution of each transaction) to allocate a Fund's equity security transactions through certain designated broker-dealers. The designated broker-dealer, in turn, will reimburse a portion of the brokerage commissions to pay certain expenses of that Portfolio. Any amounts credited to the Funds are reflected as brokerage commission recapture in the Statements of Operations.

At November 30, 2004, the Funds had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities (see Notes 4 and 5):

    Accrued
Investment
Management
Fees		   Accrued
Administrative
Fees		   Accrued
Shareholder
Services and
Distribution
Fees		   Recoupment   Total  
Disciplined
LargeCap		   $ 29,088     $ 4,155     $ 38,588     $ -     $ 71,831    
LargeCap
Growth		     195,865       26,113       169,316       52,518       443,812    
MidCap
Opportunities		     347,009       34,698       268,401       78,604       728,712    
SmallCap
Opportunities		     178,898       18,963       119,237       -       317,098    
LargeCap Value     23,174       2,575       15,122       -       40,871    
MagnaCap     225,948       -       127,002       4,785       357,735    
MidCap Value     120,377       12,918       83,556       33,251       250,102    
SmallCap Value     115,731       12,402       71,079       73,000       272,212    
Convertible     122,402       16,319       129,084       -       267,805    
Equity and Bond     39,852       5,313       34,567       9,999       89,731    
Real Estate     136,515       19,501       13,026       55,129       224,171    

 

At November 30, 2004, ING Life Insurance & Annuity Company, a wholly-owned indirect subsidiary of ING Groep N.V., held 11.1% of the Real Estate Fund. At November 30, 2004, certain non-affiliated individuals and entities owned separately the following percentage of the Real Estate Fund: 5.3% and 22.9%. Investment activities of these shareholders could have a material impact on the Funds.

NOTE 7 - OTHER ACCRUED EXPENSES AND LIABILITIES

At November 30, 2004, the funds had following payables included in Other Accrued Expenses and Liabilities on the Statements of Assets and Liabilities that exceeded 5% of total liabilities:

    Payable for Custody
and Accounting Fees		  
Disciplined LargeCap   $ 14,496    
    Payable for Transfer
Agent Fees		  
Disciplined LargeCap   $ 28,931    
MagnaCap     188,311    
    Payable for Shareholder
Reporting Expenses		  
Disciplined LargeCap   $ 62,990    
MagnaCap     206,738    

 

NOTE 8 - EXPENSE LIMITATIONS

For the following Funds, the Investment Manager has agreed to limit expenses, excluding interest, taxes, brokerage and extraordinary expenses to the levels listed below:

    Class A   Class B   Class C   Class I   Class O   Class Q  
LargeCap Growth     1.45 %     2.10 %     2.10 %     1.10 %   N/A     1.35 %  
MidCap Opportunities     1.75 %     2.45 %     2.45 %     1.45 %   N/A     1.60 %  
LargeCap Value     1.45 %     2.20 %     2.20 %     1.20 %   N/A     N/A    
MidCap Value     1.75 %     2.50 %     2.50 %     1.50 %   N/A     1.75 %  
SmallCap Value     1.75 %     2.50 %     2.50 %     1.50 %   N/A     1.75 %  
Convertible     1.60 %     2.25 %     2.25 %     N/A     N/A     1.50 %  
Equity and Bond     1.60 %     2.25 %     2.25 %     N/A     N/A     1.50 %  
Real Estate     1.45 %     2.20 %     2.20 %     1.00 %     1.45 %     1.45 %  

 

Each Fund will at a later date reimburse the Investment Manager for management fees waived and other expenses assumed by the Investment Manager during the previous 36 months, but only if, after such reimbursement, the Fund's expense ratio does not exceed the percentage described above. Waived and reimbursed fees and any recoupment by the Investment Manager of such waived and reimbursed fees are reflected on the accompanying Statements of Operations for each Fund.

Outstanding reimbursement balances due to the Funds, if any, under their respective expense limitation agreements are reflected in Reimbursement Due from Manager on the accompanying Statements of Assets and Liabilities.

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NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 8 - EXPENSE LIMITATIONS (continued)

As of November 30, 2004, the cumulative amounts of waived or reimbursed fees that are subject to possible recoupment by the Investment Manager, and the related expiration dates are as follows:

    November 30,      
    2005   2006   2007   Total  
LargeCap Growth   $ 263,850     $ 365,234     $ 23,483     $ 652,567    
MidCap Opportunities     554,148       398,893       -       953,041    
LargeCap Value     -       -       145,120       145,120    
MidCap Value     -       20,025       -       20,025    
SmallCap Value     9,105       42,868       -       51,973    
Real Estate     -       123,825       -       123,825    

 

The Expense Limitation Agreements are contractual and shall renew automatically for one-year terms unless ING Investments, LLC provides written notice of the termination of the Expense Limitation Agreement within 90 days of the end of the then current term.

NOTE 9 - LINE OF CREDIT

All of the Funds included in this report, in addition to certain other funds managed by the Investment Manager have entered into an unsecured committed revolving line of credit agreement (the "Credit Agreement") with The Bank of New York for an aggregate amount of $125,000,000. The proceeds may be used to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the Funds; and (3) enable the Funds to meet other emergency expenses as defined in the Credit Agreement. The Funds to which the line of credit is available pay a commitment fee equal to 0.09% per annum on the daily unused portion of the committed line amount payable quarterly in arrears.

The following Funds utilized the line of credit during the six months ended November 30, 2004:

    Days
Utilized		   Approximate
Average Daily
Balance		   Approximate
Weighted
Average
Interest Rate		  
MidCap Opportunities     8       818,125       1.82 %  
SmallCap Opportunities     14       1,173,996       2.13 %  
MagnaCap     3       576,667       2.35 %  
SmallCap Value     4       1,185,000       2.49 %  
Convertible     14       1,026,951       2.22 %  
Real Estate     1       4,300,000       1.80 %  

 

NOTE 10 - CAPITAL SHARES

Transactions in capital shares and dollars were as follows:

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Disciplined LargeCap (Number of Shares)      
Shares sold     51,840       113,903       166,227       389,459       19,552       84,889    
Shares redeemed     (122,484 )     (453,135 )     (591,037 )     (1,178,718 )     (274,401 )     (1,202,854 )  
Net decrease in shares outstanding     (70,644)       (339,232 )     (424,810 )     (789,259 )     (254,849 )     (1,117,965 )  
Disciplined LargeCap ($)      
Shares sold   $ 463,191     $ 970,844     $ 1,432,573     $ 3,217,947     $ 174,422     $ 690,881    
Shares redeemed     (1,076,198 )     (3,704,827 )     (4,937,725 )     (9,667,160 )     (2,294,763 )     (9,984,201 )  
Net decrease   $ (613,007 )   $ (2,733,983 )   $ (3,505,152 )   $ (6,449,213 )   $ (2,120,341 )   $ (9,293,320 )  
    Class I Shares          
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		                  
Disciplined LargeCap (Number of Shares)      
Shares sold     -       -                                    
Shares redeemed     (2,531,779 )     -                                    
Net decrease in shares outstanding     (2,531,779 )     -                                    
Disciplined LargeCap ($)      
Shares sold   $ -     $ -                                    
Shares redeemed     (23,141,782 )     -                                    
Net decrease   $ (23,141,782 )   $ -                                    

 

61


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
LargeCap Growth (Number of Shares)      
Shares sold     2,189,218       4,717,809       666,364       3,033,622       465,836       1,665,504    
Dividends reinvested     146,425       -       111,851       -       49,176       -    
Shares redeemed     (2,168,903 )     (1,508,196 )     (886,581 )     (1,409,436 )     (500,211 )     (842,766 )  
Net increase (decrease) in shares outstanding     166,740       3,209,613       (108,366 )     1,624,186       14,801       822,738    
LargeCap Growth ($)      
Shares sold   $ 38,528,666     $ 77,600,379     $ 11,338,359     $ 48,308,654     $ 7,828,856     $ 25,792,950    
Dividends reinvested     2,601,968       -       1,933,909       -       847,791       -    
Shares redeemed     (37,589,048 )     (24,659,524 )     (14,849,443 )     (22,603,682 )     (8,385,013 )     (13,587,922 )  
Net increase (decrease)   $ 3,541,586     $ 52,940,855     $ (1,577,175 )   $ 25,704,972     $ 291,634     $ 12,205,028    
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
LargeCap Growth (Number of Shares)      
Shares sold     178,623       650,093       21,137       252,367                    
Dividends reinvested     66,417       -       7,030       -                    
Shares redeemed     (119,403 )     (202,685 )     (64,228 )     (348,885 )                  
Net increase (decrease) in shares outstanding     125,637       447,408       (36,061 )     (96,518 )                  
LargeCap Growth ($)      
Shares sold   $ 3,231,684     $ 11,253,002     $ 386,471     $ 4,054,610                    
Dividends reinvested     1,216,755       -       128,161       -                    
Shares redeemed     (2,129,403 )     (3,512,313 )     (1,153,459 )     (5,867,902 )                  
Net increase (decrease)   $ 2,319,036     $ 7,740,689     $ (638,827 )   $ (1,813,292 )                  
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MidCap Opportunities (Number of Shares)      
Shares sold     761,487       1,036,073       168,479       733,927       83,761       329,723    
Shares issued in merger     -       7,257,045       -       13,295,946       -       5,847,535    
Shares redeemed     (1,712,984 )     (1,584,581 )     (2,736,169 )     (1,932,970 )     (1,709,173 )     (1,727,198 )  
Net increase (decrease) in shares outstanding     (951,497 )     6,708,537       (2,567,690 )     12,096,903       (1,625,412 )     4,450,060    
MidCap Opportunities ($)      
Shares sold   $ 8,917,692     $ 11,933,398     $ 1,919,978     $ 8,169,093     $ 943,468     $ 3,570,794    
Shares issued in merger     -       90,057,643       -       158,660,384       -       69,438,190    
Shares redeemed     (20,055,661 )     (18,290,662 )     (30,803,978 )     (21,648,477 )     (19,115,772 )     (19,175,206 )  
Net increase (decrease)   $ (11,137,969 )   $ 83,700,379     $ (28,884,000 )   $ 145,181,000     $ (18,172,304 )   $ 53,833,778    

 

62


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
MidCap Opportunities (Number of Shares)      
Shares sold     32,492       137,735       2,513       295,722                    
Shares issued in merger     -       4,319,450       -       17,144                    
Shares redeemed     (14,345 )     (5,294,804 )     (28,902 )     (390,135 )                  
Net increase (decrease) in shares outstanding     18,147       (837,619 )     (26,389 )     (77,269 )                  
MidCap Opportunities ($)      
Shares sold   $ 387,678     $ 1,697,334     $ 29,182     $ 3,125,007                    
Shares issued in merger     -       54,791,843       -       214,426                    
Shares redeemed     (174,631 )     (64,078,651 )     (335,084 )     (4,152,761 )                  
Net increase (decrease)   $ 213,047     $ (7,589,474 )   $ (305,902 )   $ (813,328 )                  
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
SmallCap Opportunities (Number of Shares)      
Shares sold     709,123       1,922,887       42,965       324,368       23,097       110,776    
Shares redeemed     (1,074,212 )     (3,854,778 )     (1,065,657 )     (1,650,166 )     (394,572 )     (1,121,973 )  
Net increase (decrease) in shares outstanding     (365,089 )     (1,931,891 )     (1,022,692 )     (1,325,798 )     (371,475 )     (1,011,197 )  
SmallCap Opportunities ($)      
Shares sold   $ 15,788,738     $ 41,773,565     $ 882,557     $ 6,706,707     $ 464,323     $ 2,424,180    
Shares redeemed     (23,735,242 )     (80,177,493 )     (21,785,610 )     (33,798,668 )     (8,024,914 )     (22,678,422 )  
Net increase (decrease)   $ (7,946,504 )   $ (38,403,928 )   $ (20,903,053 )   $ (27,091,961 )   $ (7,560,591 )   $ (20,254,242 )  
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
SmallCap Opportunities (Number of Shares)      
Shares sold     66,536       186,283       -       1,160                    
Shares redeemed     (52,813 )     (145,691 )     (7,358 )     (30,438 )                  
Net increase (decrease) in shares outstanding     13,723       40,592       (7,358 )     (29,278 )                  
SmallCap Opportunities ($)      
Shares sold   $ 1,501,064     $ 4,182,902     $ -     $ 28,326                    
Shares redeemed     (1,176,441 )     (3,235,935 )     (161,769 )     (651,974 )                  
Net increase (decrease)   $ 324,623     $ 946,967     $ (161,769 )   $ (623,648 )                  
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		   Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		   Six Months
Ended
November 30,
2004		   February 2,
2004(1) to
May 31,
2004		  
LargeCap Value (Number of Shares)      
Shares sold     998,189       518,761       413,099       283,191       493,764       400,925    
Dividends reinvested     14,581       -       4,783       -       6,111       -    
Shares redeemed     (87,531 )     (28,776 )     (20,073 )     (12,978 )     (27,131 )     (6,833 )  
Net increase in shares outstanding     925,239       489,985       397,809       270,213       472,744       394,092    
LargeCap Value ($)      
Shares sold   $ 9,803,063     $ 5,037,124     $ 4,039,690     $ 2,755,909     $ 4,796,388     $ 3,887,843    
Dividends reinvested     149,894       -       48,999       -       62,641       -    
Shares redeemed     (866,916 )     (274,359 )     (195,910 )     (124,117 )     (261,156 )     (65,883 )  
Net increase   $ 9,086,041     $ 4,762,765     $ 3,892,779     $ 2,631,792     $ 4,597,873     $ 3,821,960    

 

(1) Commencement of operations. 

63


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class I
Shares		                      
    August 2,
2004(1) to
November 30,
2004		                      
LargeCap Value (Number of Shares)  
Shares sold     257,733                                            
Dividends reinvested     3,887                                            
Shares redeemed     -                                            
Net increase in shares outstanding     261,620                                            
LargeCap Value ($)  
Shares sold   $ 2,500,000                                            
Dividends reinvested     39,923                                            
Shares redeemed     -                                            
Net increase   $ 2,539,923                                            
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MagnaCap (Number of Shares)  
Shares sold     1,007,491       2,598,002       127,846       715,715       26,553       263,235    
Shares issued in merger     -       14,679,883       -       443,560       -       235,540    
Dividends reinvested     301,850       203,397       6,892       -       1,810       -    
Shares redeemed     (2,579,765 )     (5,008,192 )     (1,089,709 )     (1,805,792 )     (245,138 )     (315,710 )  
Net increase (decrease) in shares outstanding     (1,270,424 )     12,473,090       (954,971 )     (646,517 )     (216,775 )     183,065    
MagnaCap ($)  
Shares sold   $ 10,456,168     $ 25,810,263     $ 1,286,003     $ 7,106,156     $ 268,486     $ 2,618,410    
Shares issued in merger     -       141,208,171       -       4,106,720       -       2,182,353    
Dividends reinvested     3,192,414       1,893,245       68,642       -       18,047       -    
Shares redeemed     (26,904,590 )     (49,598,073 )     (10,937,153 )     (17,200,575 )     (2,487,389 )     (2,831,500 )  
Net increase (decrease)   $ (13,256,008 )   $ 119,313,606     $ (9,582,508 )   $ (5,987,699 )   $ (2,200,856 )   $ 1,969,263    
    Class I Shares   Class M Shares   Class Q Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MagnaCap (Number of Shares)  
Shares sold     221,490       -       1,636       30,375       -       -    
Shares issued in merger     -       2       -       -       -       807    
Dividends reinvested     1,995       12       1,533       506       -       4,830    
Shares redeemed     (14,363 )     (2 )     (78,720 )     (369,836 )     (814 )     (847,215 )  
Net increase (decrease) in shares outstanding     209,122       12       (75,551 )     (338,955 )     (814 )     (841,578 )  
MagnaCap ($)  
Shares sold   $ 2,294,178     $ -     $ 16,713     $ 275,418     $ -     $ -    
Shares issued in merger     -       18       -       -       -       7,766    
Dividends reinvested     21,582       111       15,813       4,431       -       42,987    
Shares redeemed     (152,409 )     (21 )     (805,860 )     (3,437,895 )     (8,444 )     (7,712,659 )  
Net increase (decrease)   $ 2,163,351     $ 108     $ (773,334 )   $ (3,158,046 )   $ (8,444 )   $ (7,661,906 )  

 

(1) Commencement of operations. 

64


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
MidCap Value (Number of Shares)  
Shares sold     3,579,577       4,389,175       945,597       1,916,154       1,434,397       1,895,746    
Dividends reinvested     385,030       -       214,551       -       213,558       -    
Shares redeemed     (2,304,605 )     (1,100,635 )     (340,795 )     (323,780 )     (306,631 )     (534,781 )  
Net increase in shares outstanding     1,660,002       3,288,540       819,353       1,592,374       1,341,324       1,360,965    
MidCap Value ($)  
Shares sold   $ 41,280,708     $ 47,731,690     $ 10,710,789     $ 20,528,670     $ 16,189,607     $ 20,537,186    
Dividends reinvested     4,301,356       -       2,360,063       -       2,349,128       -    
Shares redeemed     (25,637,914 )     (12,000,827 )     (3,790,654 )     (3,379,087 )     (3,450,323 )     (5,326,519 )  
Net increase   $ 19,944,150     $ 35,730,863     $ 9,280,198     $ 17,149,583     $ 15,088,412     $ 15,210,667    
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
MidCap Value (Number of Shares)  
Shares sold     -       167,376       -       -                    
Dividends reinvested     13,266       -       135       -                    
Shares redeemed     (11,385 )     (5,110 )     -       -                    
Net increase in shares outstanding     1,881       162,266       135       -                    
MidCap Value ($)  
Shares sold   $ -     $ 1,880,019     $ -     $ -                    
Dividends reinvested     153,787       -       1,507       -                    
Shares redeemed     (135,498 )     (58,828 )     -       -                    
Net increase   $ 18,289     $ 1,821,191     $ 1,507     $ -                    
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
SmallCap Value (Number of Shares)  
Shares sold     4,168,645       2,394,934       534,967       752,515       1,306,443       1,373,071    
Dividends reinvested     324,833       83,905       98,206       55,029       137,839       50,521    
Shares redeemed     (1,343,277 )     (409,889 )     (149,120 )     (201,315 )     (274,000 )     (455,949 )  
Net increase in shares outstanding     3,150,201       2,068,950       484,053       606,229       1,170,282       967,643    
SmallCap Value ($)  
Shares sold   $ 55,188,734     $ 30,977,651     $ 7,025,405     $ 9,220,990     $ 17,041,617     $ 17,186,034    
Dividends reinvested     4,281,297       940,575       1,271,774       611,375       1,783,641       560,781    
Shares redeemed     (17,838,218 )     (5,024,204 )     (1,908,851 )     (2,376,307 )     (3,537,268 )     (5,504,573 )  
Net increase   $ 41,631,813     $ 26,894,022     $ 6,388,328     $ 7,456,058     $ 15,287,990     $ 12,242,242    
    Class I Shares   Class Q Shares      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		          
SmallCap Value (Number of Shares)  
Shares sold     205       13,396       370       4,134                    
Dividends reinvested     2,260       1,983       303       -                    
Shares redeemed     -       (3,604 )     -       -                    
Net increase in shares outstanding     2,465       11,775       673       4,134                    
SmallCap Value ($)  
Shares sold   $ 2,810     $ 158,274     $ 5,000     $ 57,676                    
Dividends reinvested     29,951       22,291       4,047       -                    
Shares redeemed     -       (46,393 )     -       -                    
Net increase   $ 32,761     $ 134,172     $ 9,047     $ 57,676                    

 

65


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Convertible (Number of Shares)  
Shares sold     374,702       1,298,675       140,780       739,659       112,815       557,509    
Dividends reinvested     37,842       60,283       24,184       42,820       21,723       35,305    
Shares redeemed     (644,139 )     (1,003,751 )     (672,948 )     (1,078,475 )     (378,972 )     (744,929 )  
Net increase (decrease) in shares outstanding     (231,595 )     355,207       (507,984 )     (295,996 )     (244,434 )     (152,115 )  
Convertible ($)  
Shares sold   $ 6,753,786     $ 22,561,007     $ 2,780,427     $ 14,414,494     $ 2,081,591     $ 10,042,116    
Dividends reinvested     683,419       1,052,348       481,004       813,670       402,497       627,776    
Shares redeemed     (11,570,432 )     (17,665,114 )     (13,314,403 )     (20,919,881 )     (6,982,232 )     (13,528,070 )  
Net increase (decrease)   $ (4,133,227 )   $ 5,948,241     $ (10,052,972 )   $ (5,691,717 )   $ (4,498,144 )   $ (2,858,178 )  
    Class Q Shares          
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		                  
Convertible (Number of Shares)  
Shares sold     704       27,805                                    
Dividends reinvested     2,542       5,192                                    
Shares redeemed     (27,818 )     (108,400 )                                  
Net increase (decrease) in shares outstanding     (24,572 )     (75,403 )                                  
Convertible ($)  
Shares sold   $ 12,150     $ 481,790                                    
Dividends reinvested     44,534       87,716                                    
Shares redeemed     (483,033 )     (1,846,310 )                                  
Net increase (decrease)   $ (426,349 )   $ (1,276,804 )                                  
    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Equity and Bond (Number of Shares)  
Shares sold     106,090       887,579       108,252       437,744       7,269       141,155    
Dividends reinvested     13,886       53,776       2,096       15,763       2,345       13,925    
Shares redeemed     (349,668 )     (1,045,795 )     (290,619 )     (782,074 )     (132,365 )     (285,420 )  
Net increase (decrease) in shares outstanding     (229,692 )     (104,440 )     (180,271 )     (328,567 )     (122,751 )     (130,340 )  
Equity and Bond ($)  
Shares sold   $ 1,325,834     $ 10,932,304     $ 1,459,661     $ 5,924,840     $ 86,354     $ 1,627,156    
Dividends reinvested     174,303       644,730       28,384       201,540       28,101       158,421    
Shares redeemed     (4,360,582 )     (13,177,888 )     (3,908,740 )     (10,424,076 )     (1,570,483 )     (3,316,399 )  
Net increase (decrease)   $ (2,860,445 )   $ (1,600,854 )   $ (2,420,695 )   $ (4,297,696 )   $ (1,456,028 )   $ (1,530,822 )  
    Class Q Shares          
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		                  
Equity and Bond (Number of Shares)  
Shares sold     1,836       22,261                                    
Dividends reinvested     169       556                                    
Shares redeemed     (5,240 )     (15,787 )                                  
Net increase (decrease) in shares outstanding     (3,235 )     7,030                                    
Equity and Bond ($)  
Shares sold   $ 22,904     $ 266,462                                    
Dividends reinvested     2,104       6,646                                    
Shares redeemed     (65,292 )     (192,188 )                                  
Net increase (decrease)   $ (40,284 )   $ 80,920                                    

 

66


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 10 - CAPITAL SHARES (continued)

    Class A Shares   Class B Shares   Class C Shares  
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		  
Real Estate (Number of Shares)      
Shares sold     1,296,961       1,380,337       61,751       166,580       49,705       292,977    
Dividends reinvested     185,743       43,360       13,596       3,900       15,446       12,292    
Shares redeemed     (82,888 )     (213,905 )     (14,977 )     (28,211 )     (35,006 )     (112,603 )  
Net increase (decrease) in shares outstanding     1,399,816       1,209,792       60,370       142,269       30,145       192,666    
Real Estate ($)      
Shares sold   $ 17,848,353     $ 16,994,026     $ 849,451     $ 2,087,459     $ 688,996     $ 3,611,743    
Dividends reinvested     2,584,373       538,693       189,646       48,871       220,956       154,981    
Shares redeemed     (1,121,002 )     (2,582,779 )     (204,720 )     (344,880 )     (483,364 )     (1,396,621 )  
Net increase (decrease)   $ 19,311,724     $ 14,949,940     $ 834,377     $ 1,791,450     $ 426,588     $ 2,370,103    
    Class I Shares   Class O      
    Six Months
Ended
November 30,
2004		   Year
Ended
May 31,
2004		   September 15,
2004(1) to
November 30,
2004		              
Real Estate (Number of Shares)      
Shares sold     1,082,086       4,052,833       292,138                            
Dividends reinvested     665,515       735,129       14,205                            
Shares redeemed     (829,154 )     (3,565,560 )     (23,335 )                          
Net increase (decrease) in shares outstanding     918,447       1,222,402       283,008                            
Real Estate ($)      
Shares sold   $ 15,222,356     $ 51,206,192     $ 4,156,760                            
Dividends reinvested     9,638,943       9,236,584       198,427                            
Shares redeemed     (11,434,487 )     (45,266,438 )     (338,564 )                          
Net increase (decrease)   $ 13,426,812     $ 15,176,338     $ 4,016,623                            

 

(1) Commencement of operations.

67


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 11 - SECURITIES LENDING

Under an agreement with The Bank of New York ("BNY"), the Funds can lend their securities to approved brokers, dealers and other financial institutions. Loans are collateralized by cash and U.S. Government securities. The collateral must be in an amount equal to at least 105% of the market value of non-U.S. securities loaned and 102% of the market value of U.S. securities loaned. The cash collateral received is invested in approved investments as defined in the Securities Lending Agreement with BNY (the "Agreement"). The collateral received is reflected in the Portfolio of Investments as collateral for securities loaned. Generally, in the event of counterparty default, the Funds have the right to use the collateral to offset losses incurred. The Agreement contains certain guarantees by BNY in the event of counterparty default and/or a borrower's failure to return a loaned security; however there would be a potential loss to the Funds in the event the Funds are delayed or prevented from exercising their right to dispose of the collateral. The Funds bear the risk of loss with respect to the investment of collateral. Engaging in securities lending could have a leveraging effect, which may intensify the credit, market and other risks associated with investing in a Fund. At November 30, 2004, the Funds had securities on loan with the following market values:

    Value of
Securities
Loaned		   Value of
Collateral		  
Disciplined LargeCap   $ 369,244     $ 379,129    
LargeCap Growth     33,248,005       34,202,610    
MidCap Opportunities     42,247,835       43,961,923    
SmallCap Opportunities     38,383,888       39,670,466    
MidCap Value     23,864,087       25,264,576    
SmallCap Value     31,965,747       34,093,573    
Convertible     52,558,629       53,943,311    
Real Estate     8,856,992       9,043,070    

 

NOTE 12 - WHEN ISSUED SECURITIES

The Equity and Bond Fund, at times, may purchase FNMA/GNMA certificates on a delayed delivery, forward or when-issued basis with payment and delivery often taking place a month or more after the initiation of the transaction. It is the Fund's policy to record when-issued FNMA/GNMA certificates (and the corresponding obligation to pay for the securities) at the time the purchase commitment becomes fixed - generally on the trade date. It is also the Fund's policy to segregate assets to cover its commitments for when-issued securities on trade date.

NOTE 13 - FEDERAL INCOME TAXES

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 investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, organizational and offering expenses, and wash sale deferrals. Distributions in excess of available earnings and profits, current and accumulated, for tax purposes are reported as distributions of paid-in capital.

Dividends paid by the Funds from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders.

The tax composition of dividends and distributions to shareholders were as follows:

    Six Months Ended
November 30, 2004		  
    Ordinary
Income		   Long-Term
Capital Gains		  
LargeCap Growth   $ 8,477,756     $ -    
LargeCap Value     132,790       251,668    
SmallCap Value     -       9,699,163    
Convertible     2,503,049       -    
Equity and Bond     305,502       -    
Real Estate     3,676,059       14,759,993    
    Year Ended May 31, 2004  
    Ordinary
Income		   Long-Term
Capital Gains		  
MagnaCap   $ 2,245,213     $ -    
SmallCap Value     536,307       2,285,376    
Convertible     4,038,953       -    
Equity and Bond     1,362,049       -    
Real Estate(1)      8,704,727       6,564,687    

 

(1) Composition of dividends and distributions presented herein differ from final amounts based on the Fund's tax year end of December 31, 2003.

68


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 13 - FEDERAL INCOME TAXES (continued)

The tax-basis components of distributable earnings and the expiration dates of the capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes were as follows at May 31, 2004:

    Undistributed
Ordinary Income		   Undistributed
Long-Term
Capital Gain		   Unrealized
Appreciation/
(Depreciation)		   Post October
Losses
Deferred		   Capital
Loss
Carryforwards		   Expiration
Dates		  
LargeCap Growth   $ -     $ -     $ 51,263,561     $ -     $ (129,467,771 )     2009    
                                      (140,176,886 )     2010    
                                      (117,098,211 )     2011    
                                    $ (386,742,868 )*          
MidCap Opportunities     -       -       74,959,819       -     $ (133,027,987 )     2008    
                                      (94,142,180 )     2009    
                                      (21,217,297 )     2010    
                                      (9,824,346 )     2011    
                                    $ (258,211,810 )*          
SmallCap Opportunities     -       -       61,768,589       -     $ (1,017,516 )     2008    
                                      (74,206,071 )     2009    
                                      (106,886,755 )     2010    
                                      (167,319,500 )     2011    
                                    $ (349,429,842 )*          
Disciplined LargeCap     -       -       4,324,900       -     $ (1,279,041 )     2008    
                                      (7,339,303 )     2009    
                                      (10,480,954 )     2010    
                                      (24,371,998 )     2011    
                                      (6,531,058 )     2012    
                                    $ (50,002,354 )          
LargeCap Value     54,520       -       (107,145 )     -     $ -            
MagnaCap     1,364,430       -       48,726,275       (309,679 )   $ (10,576,002 )     2011    
                                      (58,933,684 )     2012    
                                    $ (69,509,686 )          
MidCap Value     3,838,510       2,707,472       1,618,665       -     $ -            
SmallCap Value     3,161,587       3,491,699       5,237,983       -     $ -            
Convertible     1,813,064       -       14,601,092       -     $ (65,571,008 )     2010    
                                      (15,497,044 )     2011    
                                    $ (81,068,052 )          
Equity and Bond     109,754       -       2,551,909       (1,260 )   $ (2,058,681 )     2010    
                                      (4,569,236 )     2011    
                                      (8,878,256 )     2012    
                                    $ (15,506,173 )          
Real Estate(1)      -       -       30,275,162       -     $ -            

 

*  Utilization of these capital losses is subject to annual limitations under Section 382 of the Internal Revenue Code.

(1) As of the Fund's tax year ended December 31, 2003.

69


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 14 - ILLIQUID SECURITIES

Pursuant to guidelines adopted by the Funds' Board, the following securities have been deemed to be illiquid. The Funds currently limit investment in illiquid securities to 15% of the Fund's net assets, at market value, at time of purchase.

Fund   Security   Shares   Initial
Acquisition
Date		   Cost   Value   Percent
of Net
Assets		  
Convertible   WinStar Communications, Inc.     51,932     11/6/98   $ 2,364,096     $ 5       0.00 %  
Equity and Bond   Dayton Superior Corp.     400     8/31/01     7,446       4       0.00 %  
    Iridium World Comm     500     8/31/01     50,507       -       0.00 %  
    North Atlantic Trading Co.     1,209     8/31/01     12       1       0.00 %  
    WinStar Communications, Inc.     500,000     1/10/01     386,500       50       0.00 %  
                    $ 444,465     $ 55       0.00 %  

 

NOTE 15 - REORGANIZATION

On November 8, 2003, MagnaCap as listed below ("Acquiring Fund"), acquired the assets and certain liabilities of the ING Large Company Value Fund, also listed below ("Acquired Fund"), in a tax-free reorganization in exchange for shares of the Acquiring Fund, pursuant to a plan of reorganization approved by the Acquired Fund's shareholders. The number and value of shares issued by the Acquiring Fund are presented in Note 10 - Capital Shares. Net assets and unrealized appreciation as of the reorganization dates were as follows:

Acquiring
Fund		   Acquired
Funds		   Total net assets of
Acquired Fund (000's)		   Total net assets of
Acquiring Fund (000's)		   Acquired Fund
unrealized
appreciation
(000's)		   Conversion
Ratio		  
MagnaCap
 		   ING Large
Company Value Fund		  
$147,505		  
$230,749		  
$9,420		  
1.40		  

 

The net assets of MagnaCap after the acquisition were approximately $378,254,371.

On April 17, 2004, MidCap Opportunities as listed below ("Acquiring Fund"), acquired the assets and certain liabilities of the ING Growth + Value Fund and the ING Growth Opportunities Fund, also listed below ("Acquired Funds"), in a tax-free reorganization in exchange for shares of the Acquiring Fund, pursuant to a plan of reorganization approved by the Acquired Fund's shareholders. The number and value of shares issued by the Acquiring Fund are presented in Note 10 - Capital Shares. Net assets and unrealized appreciation as of the reorganization dates were as follows:

Acquiring
Fund		   Acquired
Funds		   Total net assets of
Acquired Fund (000's)		   Total net assets of
Acquiring Fund (000's)		   Acquired Fund
unrealized
appreciation
(000's)		   Conversion
Ratio		  
MidCap Opportunities   ING Growth + Value Fund   $ 196,927     $ 173,487     $ 36,128       0.79    
MidCap Opportunities
 		   ING Growth
Opportunities Fund		    
176,236		      
173,487		      
35,037		      
1.10		    

 

The net assets of MidCap Opportunities after the acquisition were approximately $546,649,969.

NOTE 16 - INFORMATION REGARDING TRADING OF ING'S U.S. MUTUAL FUNDS

ING Investments, LLC ("Investments"), the adviser to the ING Funds, has reported to the Boards of Directors/Trustees (the "Board") of the ING Funds that, like many U.S. financial services companies, Investments and certain of its U.S. affiliates have received informal and formal requests for information since September 2003 from various governmental and self-regulatory agencies in connection with investigations related to mutual funds and variable insurance products. Investments has advised the Board that it and its affiliates have cooperated fully with each request.

In addition to responding to regulatory and governmental requests, Investments reported that management of U.S. affiliates of ING Groep N.V., including Investments (collectively, "ING"), on their own initiative, have conducted, through independent special counsel and a national accounting firm, an extensive internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review was to identify any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. ING's internal review related to mutual fund trading is now substantially completed. ING has

70


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 16 - INFORMATION REGARDING TRADING OF ING'S U.S. MUTUAL FUNDS (continued)

reported that, of the millions of customer relationships that ING maintains, the internal review identified several isolated arrangements allowing third parties to engage in frequent trading of mutual funds within ING's variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred, despite measures taken by ING intended to combat market timing. ING further reported that each of these arrangements has been terminated and fully disclosed to regulators. The results of the internal review were also reported to the independent members of the Board.

Investments has advised the Board that most of the identified arrangements were initiated prior to ING's acquisition of the businesses in question in the U.S. Investments further reported that the companies in question did not receive special benefits in return for any of these arrangements, which have all been terminated. Based on the internal review, Investments has advised the Board that the identified arrangements do not represent a systemic problem in any of the companies that were involved.

More specifically, Investments reported to the Board that, at this time, these instances include the following:

•  ING has identified three arrangements, dating from 1995, 1996 and 1998, under which the administrator to the then-Pilgrim Funds, which subsequently became part of the ING Funds, entered formal and informal arrangements that permitted frequent trading. ING Funds Distributor, LLC ("IFD") has received a notice from the staff of the NASD informing IFD that it has made a preliminary determination to recommend that disciplinary action be brought against IFD and one of its registered persons for violations of the NASD Conduct Rules and certain provisions of the federal securities laws in connection with these arrangements.

•  Aeltus Investment Management, Inc. (a predecessor entity to ING Investment Management Co.) has identified two investment professionals who engaged in extensive frequent trading in certain ING Funds. One was subsequently terminated for cause and incurred substantial financial penalties in connection with this conduct and the second has been disciplined.

•  ReliaStar Life Insurance Company ("ReliaStar") entered into agreements seven years ago permitting the owner of policies issued by the insurer to engage in frequent trading and to submit orders until 4pm Central Time. In 2001 ReliaStar also entered into a selling agreement with a broker-dealer that engaged in frequent trading. Employees of ING affiliates were terminated and/or disciplined in connection with these matters.

•  In 1998, Golden American Life Insurance Company entered into arrangements permitting a broker-dealer to frequently trade up to certain specific limits in a fund available in an ING variable annuity product. No employee responsible for this arrangement remains at the company.

For additional information regarding these matters, you may consult the Form 8-K for each of four life insurance companies, ING USA Annuity and Life Insurance Company, ING Life Insurance and Annuity Company, ING Insurance Company of America, and ReliaStar Life Insurance Company of New York, each filed with the Securities and Exchange Commission (the "SEC") on September 9, 2004. These Forms 8-K can be accessed through the SEC's Web site at http://www.sec.gov. Despite the extensive internal review conducted through independent special counsel and a national accounting firm, there can be no assurance that the instances of inappropriate trading reported to the Board are the only instances of such trading respecting the ING Funds. Investments reported to the Board that ING is committed to conducting its business with the highest standards of ethical conduct with zero tolerance for noncompliance.

Accordingly, Investments advised the Board that ING management was disappointed that its voluntary internal review identified these situations. Viewed in the context of the breadth and magnitude of its U.S. business as a whole, ING management does not believe that ING's acquired companies had systemic ethical or compliance issues in these areas. Nonetheless, Investments reported that given ING's refusal to tolerate any lapses, it has taken the steps noted below, and will continue to seek opportunities to further strengthen the internal controls of its affiliates.

•  ING has agreed with the ING Funds to indemnify and hold harmless the ING Funds from all damages resulting from wrongful conduct by ING or its employees or from ING's internal investigation, any investigations conducted by any governmental or self-regulatory agencies, litigation or other formal proceedings, including

71


NOTES TO FINANCIAL STATEMENTS AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

NOTE 16 - INFORMATION REGARDING TRADING OF ING'S U.S. MUTUAL FUNDS (continued)

any proceedings by the Securities and Exchange Commission. Investments reported to the Board that ING management believes that the total amount of any indemnification obligations will not be material to ING or its U.S. business.

•  ING updated its Code of Conduct for employees reinforcing its employees' obligation to conduct personal trading activity consistent with the law, disclosed limits, and other requirements.

•  The ING Funds, upon a recommendation from ING, updated their respective Codes of Ethics applicable to investment professionals with ING entities and certain other fund personnel, requiring such personnel to pre-clear any purchases or sales of ING Funds that are not systematic in nature (i.e., dividend reinvestment), and imposing minimum holding periods for shares of ING Funds.

•  ING instituted excessive trading policies for all customers in its variable insurance and retirement products and for shareholders of the ING Funds sold to the public through financial intermediaries. ING does not make exceptions to these policies.

•  ING reorganized and expanded its U.S. Compliance Department, and created an Enterprise Compliance team to enhance controls and consistency in regulatory compliance.

NOTE 17 - SUBSEQUENT EVENTS

Effective January 1, 2005, the expense limitations for Disciplined LargeCap, MidCap Opportunities, SmallCap Opportunities, Convertible and Equity and Bond will be lowered based on the following tables:

    Class A   Class B   Class C   Class I   Class Q  
Disciplined Large Cap     1.36 %     2.11 %     2.11 %     1.11 %     N/A    
MidCap Opportunities     1.50 %     2.25 %     2.25 %     1.25 %     1.50 %  
SmallCap Opportunities     1.50 %     2.25 %     2.25 %     1.25 %     1.50 %  
Convertible     1.33 %     2.08 %     2.08 %     N/A       1.33 %  
Equity and Bond     1.36 %     2.11 %     2.11 %     N/A       1.36 %  

 

These expense limitation agreements are for the period beginning January 1, 2005 through December 31, 2005.

Effective January 1, 2005, ING Funds Distributor, LLC has contractually agreed to waive 0.05% of the Distribution Fee for Class A shares of Disciplined LargeCap, MidCap Opportunities and SmallCap Opportunities and 0.10% of the Distribution Fee for Class A shares of Convertible and Equity and Bond. The fee waiver is for the period beginning January 1, 2005 through December 31, 2005.

72


   PORTFOLIO OF INVESTMENTS
ING DISCIPLINED LARGECAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 98.1%  
            Aerospace/Defense: 2.8%      
  9,700         Boeing Co.   $ 519,629    
  3,350         General Dynamics Corp.     363,006    
  8,000         Raytheon Co.     322,720    
  2,200         United Technologies Corp.     214,676    
      1,420,031    
            Agriculture: 1.3%  
  8,850         Altria Group, Inc.     508,786    
  3,691         UST, Inc.     162,515    
      671,301    
            Apparel: 1.4%  
  4,200     @   Coach, Inc.     209,328    
  4,150         Nike, Inc.     351,339    
  2,500         VF Corp.     134,975    
      695,642    
            Auto Manufacturers: 1.3%  
  25,650         Ford Motor Co.     363,717    
  3,600         PACCAR, Inc.     281,160    
      644,877    
            Banks: 5.5%  
  17,750         Bank of America Corp.     821,292    
  3,700         Comerica, Inc.     227,550    
  8,400         KeyCorp     279,636    
  9,634         National City Corp.     357,229    
  8,250         U.S. Bancorp     244,448    
  7,050         Wachovia Corp.     364,837    
  7,450         Wells Fargo & Co.     460,186    
      2,755,178    
            Beverages: 2.3%  
  10,600         Coca-Cola Co.     416,686    
  15,150         PepsiCo, Inc.     756,137    
      1,172,823    
            Biotechnology: 0.2%  
  1,800     @   Amgen, Inc.     108,072    
      108,072    
            Chemicals: 1.6%  
  4,100         Dow Chemical Co.     206,927    
  4,700         E.I. du Pont de Nemours & Co.     213,004    
  3,750         PPG Industries, Inc.     253,013    
  3,300         Sherwin-Williams Co.     147,180    
      820,124    
            Commercial Services: 0.5%  
  2,600         Equifax, Inc.     71,812    
  3,400         H&R Block, Inc.     162,180    
      233,992    
            Computers: 6.0%  
  5,900     @   Apple Computer, Inc.     395,595    
  21,200     @   Dell, Inc.     859,024    
  13,237         Hewlett-Packard Co.     264,740    
  12,550         International Business
Machines Corp.		     1,182,711    
  12,700     @,X   Seagate Technology     0    
  61,600     @   Sun Microsystems, Inc.     341,880    
      3,043,950    

 

Shares           Value  
            Cosmetics/Personal Care: 3.1%  
  11,800         Gillette Co.   $ 513,182    
  19,800         Procter & Gamble Co.     1,058,904    
      1,572,086    
            Distribution/Wholesale: 0.6%  
  3,800         Genuine Parts Co.     164,958    
  1,950         W.W. Grainger, Inc.     120,627    
      285,585    
            Diversified Financial Services: 6.2%  
  5,650         American Express Co.     314,762    
  4,050         Capital One Financial Corp.     318,249    
  4,850         CIT Group, Inc.     207,338    
  21,850         Citigroup, Inc.     977,787    
  10,150         Countrywide Financial Corp.     337,081    
  4,250         Fannie Mae     291,975    
  4,250         Lehman Brothers Holdings, Inc.     356,064    
  4,100         Merrill Lynch & Co., Inc.     228,411    
  6,000     @   Providian Financial Corp.     96,300    
      3,127,967    
            Electric: 2.8%  
  11,700     @   AES Corp.     143,208    
  3,700         Constellation Energy Group, Inc.     161,690    
  12,550         Duke Energy Corp.     317,264    
  6,500         Edison Intl.     207,350    
  2,500         Exelon Corp.     104,275    
  3,565         PPL Corp.     185,202    
  4,450         TXU Corp.     279,549    
      1,398,538    
            Electronics: 0.2%  
  3,350     @   Thermo Electron Corp.     101,338    
      101,338    
            Food: 0.8%  
  3,350         SUPERVALU, Inc.     105,827    
  4,428         Wm. Wrigley Jr. Co.     304,646    
      410,473    
            Forest Products and Paper: 0.8%  
  1,900         Louisiana-Pacific Corp.     46,493    
  1,050         Temple-Inland, Inc.     62,570    
  4,500         Weyerhaeuser Co.     297,000    
      406,063    
            Gas: 0.3%  
  4,550     L   Sempra Energy     168,259    
      168,259    
            Hand/Machine Tools: 0.3%  
  1,700         Black & Decker Corp.     142,953    
      142,953    
            Healthcare-Products: 3.6%  
  5,100         Becton Dickinson & Co.     279,378    
  21,450         Johnson & Johnson     1,293,864    
  5,350         Medtronic, Inc.     257,068    
      1,830,310    

 

See Accompanying Notes to Financial Statements

73


  PORTFOLIO OF INVESTMENTS
ING DISCIPLINED LARGECAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Healthcare-Services: 3.2%  
  2,750         Aetna, Inc.   $ 325,903    
  3,250     @   Humana, Inc.     80,665    
  7,050         UnitedHealth Group, Inc.     584,092    
  2,750     @   WellPoint Health Networks, Inc.     344,025    
  2,750     @   WellPoint, Inc.     278,658    
      1,613,343    
            Household Products/Wares: 0.5%  
  4,700         Clorox Co.     259,064    
      259,064    
            Insurance: 6.1%  
  19,050         American International Group, Inc.     1,206,817    
  3,700         Chubb Corp.     281,977    
  3,200         CIGNA Corp.     224,064    
  3,600         Lincoln National Corp.     165,672    
  3,959         Loews Corp.     276,774    
  10,150         MetLife, Inc.     395,849    
  7,750         Prudential Financial, Inc.     379,362    
  2,950         Safeco Corp.     142,987    
      3,073,502    
            Internet: 1.8%  
  2,800     @   eBay, Inc.     314,860    
  5,450     @   Symantec Corp.     347,765    
  5,850     @   Yahoo!, Inc.     220,077    
      882,702    
            Iron/Steel: 0.2%  
  2,300         United States Steel Corp.     120,428    
      120,428    
            Leisure Time: 0.4%  
  2,700         Carnival Corp.     143,127    
  3,100         Sabre Holdings Corp.     71,548    
      214,675    
            Lodging: 0.5%  
  4,600         Marriott Intl., Inc.     261,510    
      261,510    
            Machinery-Diversified: 0.2%  
  1,000         Cummins, Inc.     79,620    
      79,620    
            Media: 2.3%  
  9,800     @   Comcast Corp.     294,392    
  3,500         McGraw-Hill Cos., Inc.     307,055    
  19,550     @   Time Warner, Inc.     346,231    
  8,700         Walt Disney Co.     233,856    
      1,181,534    
            Mining: 0.4%  
  2,100         Phelps Dodge Corp.     203,973    
      203,973    
            Miscellaneous Manufacturing: 5.0%  
  3,500         3M Co.     278,565    
  6,050     L   Eastman Kodak Co.     197,896    
  45,100         General Electric Co.     1,594,736    
  4,200         Honeywell International, Inc.     148,386    
  8,700     @@   Tyco Intl. Ltd.     295,539    
      2,515,122    

 

Shares           Value  
            Oil and Gas: 8.8%      
  3,950         Anadarko Petroleum Corp.   $ 274,920    
  6,200         Burlington Resources, Inc.     287,742    
  15,350         ChevronTexaco Corp.     838,110    
  2,678         ConocoPhillips     243,671    
  7,200         Devon Energy Corp.     298,224    
  36,400     S   Exxon Mobil Corp.     1,865,499    
  1,650         Sunoco, Inc.     136,224    
  5,100         Unocal Corp.     234,804    
  4,800         Valero Energy Corp.     224,592    
      4,403,786    
            Pharmaceuticals: 4.7%  
  6,950         Abbott Laboratories     291,622    
  2,450         AmerisourceBergen Corp.     144,403    
  8,250     @   Caremark Rx, Inc.     295,020    
  5,050         Eli Lilly & Co.     269,317    
  9,650         Merck & Co., Inc.     270,393    
  32,390         Pfizer, Inc.     899,470    
  5,500         Wyeth     219,285    
      2,389,510    
            Pipelines: 0.1%  
  10,850     @,L   Dynegy, Inc.     61,303    
      61,303    
            Retail: 8.8%  
  4,300         Circuit City Stores, Inc.     67,037    
  7,450         Costco Wholesale Corp.     362,070    
  15,100         Gap, Inc.     329,935    
  18,450         Home Depot, Inc.     770,288    
  6,150         J.C. Penney Co., Inc. Holding Co.     237,390    
  10,000     @   Limited Brands, Inc.     244,400    
  15,250         McDonald's Corp.     468,785    
  9,300         Staples, Inc.     296,763    
  6,450     @   Starbucks Corp.     362,877    
  3,800         Target Corp.     194,636    
  5,350     @   Toys R US, Inc.     103,469    
  18,350         Wal-Mart Stores, Inc.     955,300    
      4,392,950    
            Semiconductors: 1.2%  
  26,750         Intel Corp.     597,863    
      597,863    
            Software: 4.7%  
  2,650     @   Autodesk, Inc.     173,337    
  5,100     @   BMC Software, Inc.     94,758    
  10,000     @   Compuware Corp.     57,700    
  46,650         Microsoft Corp.     1,250,686    
  50,950     @   Oracle Corp.     645,027    
  5,100     @   Parametric Technology Corp.     29,835    
  12,050     @   Siebel Systems, Inc.     121,464    
      2,372,807    
            Telecommunications: 5.4%  
  9,200         Alltel Corp.     521,548    
  28,900     @   Cisco Systems, Inc.     540,719    
  27,250         Motorola, Inc.     524,835    
  7,150         Qualcomm, Inc.     297,583    
  20,050         Verizon Communications, Inc.     826,661    
      2,711,346    

 

See Accompanying Notes to Financial Statements

74


  PORTFOLIO OF INVESTMENTS
ING DISCIPLINED LARGECAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Transportation: 2.2%      
  4,150         FedEx Corp.   $ 394,375    
  8,000         Norfolk Southern Corp.     274,640    
  5,000         United Parcel Service, Inc.     420,750    
      1,089,765    
            Total Common Stock
(Cost $45,032,128)		    
49,434,365		    
Principal
Amount		       Value  

 

SHORT-TERM INVESTMENTS: 2.6%

    Repurchase Agreement: 1.8%  
$902,000   Goldman Sachs Repurchase Agreement
11/30/04, 2.060%, due 12/01/04,
$902,052 to be
received upon repurchase
(Collateralized by $870,000
Federal Home Loan Mortgage
Corporation, 5.500%, Market Value
plus accrued interest $920,569,
due 07/15/06)		      
 
 
 
 
 
 
 
 		       902,000    
    Total Repurchase Agreement
(Cost $902,000)		      
 		       902,000    
    Securities Lending Collateralcc: 0.8%  
  379,129     The Bank of New York Institutional
Cash Reserves Fund		      
 		       379,129    
    Total Securities Lending Collateral
(Cost $379,129)		      
 		       379,129    
    Total Short-Term Investments
(Cost $1,281,129)		      
 		       1,281,129    
    Total Investments In
Securities (Cost
$46,313,257)* 		    100.7 %    

$50,715,494		    
    Other Assets and
Liabilities-Net		     (0.7 )     (341,100 )  
    Net Assets     100.0 %   $ 50,374,394    

 

@  Non-income producing security

@@  Foreign issuer

cc  Securities purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

S  Segregated assets for futures collateral.

X  Fair value determined by ING Funds Valuation Committee appointed by the Funds' Board of Directors/Trustees.

*  Cost for federal income tax purposes is $46,585,594. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 5,254,608    
Gross Unrealized Depreciation     (1,124,708 )  
Net Unrealized Appreciation   $ 4,129,900    

 

Information concerning open futures contracts for the ING Discipline LargeCap Fund at November 30, 2004 is shown below:

Long Contracts   No. of
Contracts		   Notional
Market Value		   Expiration
Date		   Unrealized
Gain		  
S&P 500     3     $ 880,575       12/16/04     $ 648    

 

See Accompanying Notes to Financial Statements

75


  PORTFOLIO OF INVESTMENTS
ING LARGECAP GROWTH FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 98.2%  
            Advertising: 2.2%      
  89,110         Omnicom Group, Inc.   $ 7,217,910    
      7,217,910    
            Aerospace/Defense: 1.0%  
  30,300         General Dynamics Corp.     3,283,308    
      3,283,308    
            Apparel: 0.0%  
  2,600     @   Coach, Inc.     129,584    
      129,584    
            Auto Parts and Equipment: 1.0%  
  51,370         Johnson Controls, Inc.     3,154,118    
      3,154,118    
            Biotechnology: 0.8%  
  44,130     @   Genzyme Corp.     2,471,721    
      2,471,721    
            Commercial Services: 7.5%  
  142,970     @,@@   Accenture Ltd. - Class A     3,708,642    
  208,940     @,L   Apollo Group, Inc.     16,652,517    
  46,110         Moody's Corp.     3,723,383    
      24,084,542    
            Computers: 10.7%  
  327,290     @   Dell, Inc.     13,261,791    
  37,130     @   Lexmark Intl., Inc.     3,152,337    
  203,510     @,@@   Research In Motion Ltd.     18,106,285    
      34,520,413    
            Cosmetics/Personal Care: 1.8%  
  131,430         Gillette Co.     5,715,891    
      5,715,891    
            Distribution/Wholesale: 3.0%  
  148,690         CDW Corp.     9,771,907    
      9,771,907    
            Diversified Financial
Services: 11.4%		          
  40,680         Capital One Financial Corp.     3,196,634    
  136,570         Citigroup, Inc.     6,111,508    
  472,388         Countrywide Financial Corp.     15,688,006    
  74,400         Franklin Resources, Inc.     4,882,872    
  97,170         Freddie Mac     6,632,824    
      36,511,844    
            Healthcare-Products: 7.7%  
  225,100         Guidant Corp.     14,593,233    
  209,800         Medtronic, Inc.     10,080,890    
      24,674,123    
            Home Builders: 0.9%  
  67,900         Lennar Corp.     3,050,747    
      3,050,747    
            Insurance: 0.5%  
  17,160         Progressive Corp.     1,561,388    
      1,561,388    

 

Shares           Value  
            Internet: 9.6%  
  127,210     @,L   eBay, Inc.   $ 14,304,765    
  436,550     @   Yahoo!, Inc.     16,423,011    
      30,727,776    
            Media: 2.9%  
  254,040     @,L   XM Satellite Radio
Holdings, Inc.		     9,376,616    
      9,376,616    
            Miscellaneous
Manufacturing: 3.7%		          
  74,770         Danaher Corp.     4,252,918    
  211,760         General Electric Co.     7,487,833    
      11,740,751    
            Oil and Gas: 1.2%  
  70,050     @@   Petro-Canada     3,999,855    
      3,999,855    
            Pharmaceuticals: 11.1%  
  141,880         Abbott Laboratories     5,953,285    
  283,300     @,@@,L   AstraZeneca PLC ADR     11,159,186    
  109,500     @,@@,L   Elan Corp. PLC ADR     2,890,800    
  134,550         Eli Lilly & Co.     7,175,552    
  39,840     @   Forest Laboratories, Inc.     1,552,565    
  81,680     @   Gilead Sciences, Inc.     2,814,693    
  221,220         Schering-Plough Corp.     3,948,777    
      35,494,858    
            Retail: 5.1%  
  81,680     @,L   Autozone, Inc.     6,991,808    
  85,890         Best Buy Co., Inc.     4,842,478    
  56,660         Lowe's Cos., Inc.     3,134,998    
  39,100     L   PETsMART, Inc.     1,339,957    
      16,309,241    
            Semiconductors: 1.8%  
  186,850     L   Xilinx, Inc.     5,833,457    
      5,833,457    
            Software: 10.7%  
  242,960     @,L   Electronic Arts, Inc.     11,880,744    
  258,700         First Data Corp.     10,629,983    
  305,990         Microsoft Corp.     8,203,592    
  38,760     @,L   Pixar, Inc.     3,514,369    
      34,228,688    
            Telecommunications: 3.6%  
  68,860     @,@@   America Movil SA de CV ADR     3,216,451    
  445,670     @   Cisco Systems, Inc.     8,338,485    
      11,554,936    
    Total Common Stock
(Cost $259,342,091)		     315,413,674    

 

See Accompanying Notes to Financial Statements

76


  PORTFOLIO OF INVESTMENTS
ING LARGECAP GROWTH FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
SHORT-TERM INVESTMENTS: 10.7%  
    Securities Lending Collateralcc: 10.7%  
$ 34,202,610     The Bank of New York            
   
    Institutional Cash            
   
    Reserves Fund           $ 34,202,610    
    Total Short-Term Investments
(Cost $34,202,610)		      
 		       34,202,610    
    Total Investments In
Securities (Cost
$293,544,701)* 		    108.9 %    

$349,616,284		    
    Other Assets and
Liabilities-Net 		    (8.9 )     (28,459,421 )  
    Net Assets     100.0 %   $ 321,156,863    

 

@  Non-income producing security

@@  Foreign issuer

ADR  American Depositary Receipt

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $303,679,987. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 51,664,500    
Gross Unrealized Depreciation     (5,728,203 )  
Net Unrealized Appreciation   $ 45,936,297    

 

See Accompanying Notes to Financial Statements

77


  PORTFOLIO OF INVESTMENTS
ING MIDCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 97.8%  
            Advertising: 0.6%      
  42,200     @   Getty Images, Inc.   $ 2,458,150    
      2,458,150    
            Apparel: 3.1%  
  172,500     @   Coach, Inc.     8,597,400    
  109,500         Polo Ralph Lauren Corp.     4,313,205    
      12,910,605    
            Auto Parts and Equipment: 1.2%  
  98,800     L   BorgWarner Inc     4,945,928    
      4,945,928    
            Banks: 0.5%  
  32,600         Zions Bancorporation     2,167,900    
      2,167,900    
            Biotechnology: 3.3%  
  197,520     @   Celgene Corp.     5,415,998    
  85,000     @   Charles River Laboratories
Intl., Inc.		     3,973,750    
  97,200     @,L   Millipore Corp.     4,735,584    
      14,125,332    
            Building Materials: 1.2%  
  130,500     @   American Standard Cos., Inc.     5,081,670    
      5,081,670    
            Coal: 1.4%  
  72,900         Peabody Energy Corp.     6,050,700    
      6,050,700    
            Commercial Services: 4.8%  
  120,300     @   Alliance Data Systems Corp.     5,160,870    
  100,000     @   CoStar Group, Inc.     4,380,000    
  133,200     @   Education Management Corp.     4,414,248    
  156,061     @   Laureate Education, Inc.     6,147,243    
      20,102,361    
            Computers: 3.5%  
  63,100     @   Anteon Intl. Corp.     2,335,962    
  121,600     @   CACI Intl., Inc.     7,555,008    
  140,700     @,L   palmOne, Inc.     4,930,128    
      14,821,098    
            Distribution/Wholesale: 1.1%  
  135,056         Hughes Supply, Inc.     4,440,641    
      4,440,641    
            Diversified Financial Services: 1.4%  
  414,100     @   Ameritrade Holding Corp.     5,768,413    
      5,768,413    
            Electrical Components and
Equipment: 1.0%		          
  129,700         Ametek, Inc.     4,238,596    
      4,238,596    
            Electronics: 2.7%  
  88,000     @,L   Arrow Electronics, Inc.     2,158,640    
  66,250     @   Benchmark Electronics, Inc.     2,322,063    
  147,000     @   Waters Corp.     6,859,020    
      11,339,723    

 

Shares           Value  
            Hand/Machine Tools: 0.5%      
  48,200         Stanley Works   $ 2,253,832    
      2,253,832    
            Healthcare-Products: 8.2%  
  90,000     @   Gen-Probe, Inc.     3,591,000    
  120,400     @   Inamed Corp.     6,459,460    
  151,200     @,L   Patterson Cos., Inc.     6,178,032    
  185,830     @   St. Jude Medical, Inc.     7,087,556    
  130,400     @,L   Varian Medical Systems, Inc.     5,487,232    
  70,000     @   Zimmer Holdings, Inc.     5,712,000    
      34,515,280    
            Healthcare-Services: 6.1%  
  22,800         Aetna, Inc.     2,702,028    
  88,450     @   Amsurg Corp.     2,274,050    
  184,500     @   Community Health Systems, Inc.     5,101,425    
  47,300     L   Quest Diagnostics, Inc.     4,434,375    
  320,000         Select Medical Corp.     5,584,000    
  114,800     @   WellChoice, Inc.     5,624,052    
      25,719,930    
            Home Furnishings: 2.1%  
  72,000         Harman Intl. Industries, Inc.     8,845,200    
      8,845,200    
            Household Products/Wares: 1.1%  
  150,600     @,L   Yankee Candle Co., Inc.     4,587,276    
      4,587,276    
            Insurance: 2.5%  
  26,700         AMBAC Financial Group, Inc.     2,171,511    
  74,500     L   MBIA, Inc.     4,467,020    
  96,700     @   Proassurance Corp.     3,776,135    
      10,414,666    
            Internet: 2.6%  
  332,800     @,L   Akamai Technologies, Inc.     4,309,760    
  78,400     @,L   Ask Jeeves, Inc.     2,025,856    
  402,100     @   TIBCO Software, Inc.     4,624,150    
      10,959,766    
            Iron/Steel: 1.2%  
  99,500         Nucor Corp.     5,263,550    
      5,263,550    
            Leisure Time: 1.0%  
  63,500         Polaris Industries, Inc.     4,184,650    
      4,184,650    
            Lodging: 1.3%  
  91,300     L   Harrah's Entertainment, Inc.     5,605,820    
      5,605,820    
            Machinery-Diversified: 1.8%  
  157,300         Rockwell Automation, Inc.     7,440,290    
      7,440,290    
            Miscellaneous Manufacturing: 3.5%  
  98,500     L   Danaher Corp.     5,602,680    
  70,800         Donaldson Co., Inc.     2,194,800    
  29,200         ITT Industries, Inc.     2,485,504    
  115,500         Pentair, Inc.     4,622,310    
      14,905,294    

 

See Accompanying Notes to Financial Statements

78


  PORTFOLIO OF INVESTMENTS
ING MIDCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Office/Business Equipment: 0.9%      
  256,800     @,L   Xerox Corp.   $ 3,934,176    
      3,934,176    
            Oil and Gas: 7.7%  
  63,730         Apache Corp.     3,445,244    
  399,300         Chesapeake Energy Corp.     7,187,400    
  26,600         Murphy Oil Corp.     2,269,246    
  67,255     @,@@   Nabors Industries Ltd.     3,497,260    
  70,400         Patina Oil & Gas Corp.     2,337,280    
  348,600         Patterson-UTI Energy, Inc.     6,972,000    
  190,575         XTO Energy, Inc.     6,927,401    
      32,635,831    
            Oil and Gas Services: 1.8%  
  93,000         BJ Services Co.     4,712,310    
  50,500     @,L   Smith Intl., Inc.     3,058,785    
      7,771,095    
            Pharmaceuticals: 0.5%  
  74,300     @   MGI Pharma, Inc.     2,005,357    
      2,005,357    
            Retail: 12.0%  
  51,400     @,L   Advance Auto Parts, Inc.     2,120,764    
  159,550         Applebees Intl., Inc.     4,100,435    
  159,100     @,L   Chico's FAS, Inc.     6,141,260    
  279,400         Foot Locker, Inc.     7,258,812    
  240,200     L   Michaels Stores, Inc.     6,564,666    
  88,700     L   MSC Industrial Direct Co.     3,159,494    
  93,100     @   Pacific Sunwear of
California, Inc.		     2,067,751    
  58,700     @,L   Panera Bread Co.     2,344,478    
  158,600     L   PETsMART, Inc.     5,435,222    
  102,000         Regis Corp.     4,554,300    
  255,000     @   Sonic Corp.     7,438,350    
      51,185,532    
            Savings and Loans: 2.7%  
  130,700         Independence Community
Bank Corp.		     5,552,136    
  274,400     L   Sovereign Bancorp, Inc.     5,995,640    
      11,547,776    
            Semiconductors: 1.8%  
  91,500     @,L   Altera Corp.     2,075,220    
  141,800     L   Linear Technology Corp.     5,411,088    
      7,486,308    
            Software: 5.5%  
  147,500         Adobe Systems, Inc.     8,932,600    
  147,800     @,L   Avid Technology, Inc.     8,434,946    
  99,900     @   Dun & Bradstreet Corp.     5,930,064    
      23,297,610    
            Telecommunications: 2.3%  
  328,400     @,L   Comverse Technology, Inc.     6,985,068    
  118,600     @   Polycom, Inc.     2,708,824    
      9,693,892    
            Textiles: 2.0%  
  97,200     @   Mohawk Industries, Inc.     8,524,440    
      8,524,440    

 

Shares           Value  
            Transportation: 2.9%  
  66,100         CH Robinson Worldwide, Inc.   $ 3,552,875    
  97,900     @,L   Forward Air Corp.     4,537,665    
  102,250         J.B. Hunt Transport
Services, Inc.		     4,110,450    
      12,200,990    
    Total Common Stock
(Cost $320,035,411)		     413,429,678    
Principal
Amount		       Value  

 

SHORT-TERM INVESTMENTS: 12.6%

    Repurchase Agreement: 2.2%      
$ 9,091,000     Goldman Sachs Repurchase
Agreement 11/30/04, 2.060%,
due 12/01/04, $9,091,520 to be
received upon repurchase
(Collateralized by $9,290,000
Federal Home Loan Bank,
3.200%, Market Value plus
accrued interest $9,273,453,
due 11/29/06)		      
 
 
 
 
 
 
 
 		       9,091,000    
    Total Repurchase Agreement
(Cost $9,091,000)		      
 		       9,091,000    
    Securities Lending Collateralcc: 10.4%      
  43,961,923     The Bank of New York
Institutional Cash
Reserves Fund		      
 
 		       43,961,923    
    Total Securities Lending Collateral
(Cost $43,961,923)		      
 		       43,961,923    
    Total Short-Term Investments
(Cost $53,052,923)		      
 		      
53,052,923		    
    Total Investments In
Securities (Cost
$373,088,334)*		     110.4 %    

$466,482,601		    
    Other Assets and
Liabilities-Net		     (10.4 )    
(43,829,150)		    
    Net Assets     100.0 %   $ 422,653,451    

 

@  Non-income producing security

@@  Foreign issuer

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $373,133,784. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 94,074,065    
Gross Unrealized Depreciation     (725,248 )  
Net Unrealized Appreciation   $ 93,348,817    

 

See Accompanying Notes to Financial Statements

79


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  COMMON STOCK: 98.5%        
            Banks: 5.1%  
  202,700     L   Southwest Bancorp
of Texas, Inc.		   $ 4,958,042    
  55,500     L   UCBH Holdings, Inc.     2,516,370    
  75,900         Westamerica Bancorporation     4,414,344    
      11,888,756    
            Biotechnology: 2.7%  
  51,400     @   Celgene Corp.     1,409,388    
  141,100     @,L   Integra LifeSciences
Holdings Corp.		     4,795,989    
      6,205,377    
            Commercial Services: 3.5%  
  72,100     @   CoStar Group, Inc.     3,157,980    
  45,900     @   Education Management Corp.     1,521,126    
  86,057     @   Laureate Education, Inc.     3,389,785    
      8,068,891    
            Computers: 9.1%  
  41,600     @   Anteon Intl. Corp.     1,540,032    
  79,200     @   CACI Intl., Inc.     4,920,696    
  162,000     @   Cognizant Technology
Solutions Corp.		     6,177,060    
  114,600         Jack Henry & Associates, Inc.     2,209,488    
  48,800     @   Micros Systems, Inc.     3,580,456    
  79,000     @,L   PalmOne, Inc.     2,768,160    
      21,195,892    
            Distribution/Wholesale: 3.0%  
  42,164         Hughes Supply, Inc.     1,386,352    
  173,550         SCP Pool Corp.     5,472,032    
      6,858,384    
            Electrical Components and
Equipment: 1.1%		          
  89,501     @   Intermagnetics General Corp.     2,637,594    
      2,637,594    
            Electronics: 2.4%  
  68,442     @,L   Benchmark Electronics, Inc.     2,398,892    
  22,500     @   Dionex Corp.     1,291,275    
  71,400     @   Measurement Specialties, Inc.     1,821,414    
      5,511,581    
            Entertainment: 6.0%  
  83,100     @,L   Penn National Gaming, Inc.     4,385,187    
  127,300     @   Scientific Games Corp.     3,042,470    
  141,922     @,L   Shuffle Master, Inc.     6,532,670    
      13,960,327    
            Healthcare-Products: 7.2%  
  78,200     @,L   Arthrocare Corp.     2,367,114    
  74,300     @   Gen-Probe, Inc.     2,964,570    
  97,800     @   Inamed Corp.     5,246,970    
  157,401     @,L   Kyphon, Inc.     3,787,068    
  63,100     @   Quinton Cardiology
Systems, Inc.		     646,775    
  43,500     @   Techne Corp.     1,616,025    
  12,553     @,L   TriPath Imaging, Inc.     90,131    
      16,718,653    

 

Shares           Value  
            Healthcare-Services: 7.0%  
  214,000     @   Amsurg Corp.   $ 5,501,940    
  81,100     @   Pediatrix Medical Group, Inc.     5,052,530    
  152,100         Select Medical Corp.     2,654,145    
  77,840     @   United Surgical Partners
Intl., Inc.		     3,072,345    
      16,280,960    
            Home Builders: 1.1%  
  74,798     L   Thor Industries, Inc.     2,498,253    
      2,498,253    
            Household Products/Wares: 1.3%  
  97,600     @   Yankee Candle Co., Inc.     2,972,896    
      2,972,896    
            Insurance: 2.5%  
  54,900     @   Philadelphia Consolidated
Holding Co.		     3,746,925    
  50,700     @   Proassurance Corp.     1,979,835    
      5,726,760    
            Internet: 4.1%  
  181,800     @   Akamai Technologies, Inc.     2,354,310    
  42,200     @,L   Ask Jeeves, Inc.     1,090,448    
  221,200     @   TIBCO Software, Inc.     2,543,800    
  279,700     @   ValueClick, Inc.     3,608,130    
      9,596,688    
            Investment Companies: 2.6%  
  93,050     @,L   Ishares Russell 2000 Growth
Index Fund		     6,066,860    
      6,066,860    
            Leisure Time: 1.0%  
  36,600         Polaris Industries, Inc.     2,411,940    
      2,411,940    
            Lodging: 2.3%  
  95,200         Station Casinos, Inc.     5,430,208    
      5,430,208    
            Miscellaneous Manufacturing: 2.4%  
  81,800     @,L   Ceradyne, Inc.     4,040,920    
  24,570     @   Cuno, Inc.     1,610,072    
      5,650,992    
            Oil and Gas: 6.0%  
  83,100         Patina Oil & Gas Corp.     2,758,920    
  125,200     @   Southwestern Energy Co.     6,873,480    
  107,000     @   Unit Corp.     4,239,340    
      13,871,740    
            Oil and Gas Services: 1.2%  
  310,660     @,L   Input/Output, Inc.     2,724,488    
      2,724,488    
            Pharmaceuticals: 3.6%  
  117,000     @,L   HealthExtras, Inc.     1,868,490    
  84,100     @   MGI Pharma, Inc.     2,269,859    
  227,298     @,L   VCA Antech, Inc.     4,218,651    
      8,357,000    

 

See Accompanying Notes to Financial Statements

80


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP OPPORTUNITIES FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Retail: 12.6%      
  95,000     L   Applebees Intl., Inc.   $ 2,441,500    
  86,880     @   Chico's FAS, Inc.     3,353,568    
  58,600     @   Copart, Inc.     1,265,760    
  90,400     @   Dave & Buster's, Inc.     1,690,480    
  100,400     @,L   Dick's Sporting Goods, Inc.     3,614,400    
  48,284     @,L   GameStop Corp.     1,018,310    
  57,800         MSC Industrial Direct Co.     2,058,836    
  192,542     @   Pacific Sunwear of
California, Inc.		     4,276,357    
  31,900     @,L   Panera Bread Co.     1,274,086    
  72,800     @   PETCO Animal Supplies, Inc.     2,632,448    
  49,400         Regis Corp.     2,205,710    
  121,950     @   Sonic Corp.     3,557,282    
      29,388,737    
            Semiconductors: 1.9%  
  260,600     @   Silicon Image, Inc.     4,378,080    
      4,378,080    
            Software: 5.3%  
  105,100     @   Avid Technology, Inc.     5,998,057    
  42,300     L   Global Payments, Inc.     2,333,268    
  271,820     @   Witness Systems, Inc.     4,074,582    
      12,405,907    
            Telecommunications: 2.1%  
  81,044     @   Polycom, Inc.     1,851,045    
  146,500     @,L   Powerwave Technologies, Inc.     1,184,892    
  77,200     @   Tekelec     1,807,252    
      4,843,189    
            Transportation: 1.4%  
  67,820     @   Forward Air Corp.     3,143,457    
      3,143,457    
    Total Common Stock
(Cost $151,887,763)		     228,793,610    
Principal
Amount		           Value  
  SHORT-TERM INVESTMENTS: 17.8%        
        Repurchase Agreement: 0.7%  
$ 1,592,000     Goldman Sachs Repurchase
Agreement 11/30/04, 2.060%,
due 12/01/04, $1,592,091 to be
received upon repurchase
(Collateralized by $1,535,000
Federal Home Loan Bank,
5.500%, Market Value plus
accrued interest $1,624,222,
due 07/15/06)		    
 
 
 
 
 
 
 
 		     1,592,000    
        Total Repurchase Agreement
(Cost $1,592,000)		    
 		     1,592,000    

 

Principal
Amount		           Value  
    Securities Lending Collateralcc: 17.1%  
$ 39,670,466     The Bank of New York            
   
    Institutional Cash            
   
    Reserves Fund           $ 39,670,466    
    Total Securities Lending Collateral
(Cost $39,670,466)		      
 		       39,670,466    
    Total Short-Term Investments
(Cost $41,262,466)		      
 		       41,262,466    
    Total Investments In
Securities (Cost
$193,150,229)*		     116.3 %   $ 270,056,076    
    Other Assets and
Liabilities-Net		     (16.3 )     (37,806,427 )  
    Net Assets     100.0 %   $ 232,249,649    

 

@  Non-income producing security

@@  Foreign issuer

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $193,359,874. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 77,016,023    
Gross Unrealized Depreciation     (319,821 )  
Net Unrealized Appreciation   $ 76,696,202    

 

See Accompanying Notes to Financial Statements

81


  PORTFOLIO OF INVESTMENTS
ING LARGECAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 97.3%  
            Agriculture: 5.8%      
  19,650         Altria Group, Inc.   $ 1,129,679    
  5,790         Reynolds American, Inc.     437,898    
  7,710         UST, Inc.     339,471    
      1,907,048    
            Auto Manufacturers: 6.9%  
  80,030         Ford Motor Co.     1,134,825    
  29,100         General Motors Corp.     1,122,969    
      2,257,794    
            Auto Parts and Equipment: 1.5%  
  54,230         Delphi Corp.     488,070    
      488,070    
            Commercial Services: 2.0%  
  22,200         McKesson Corp.     656,010    
      656,010    
            Computers: 7.2%  
  43,320         Electronic Data Systems Corp.     972,534    
  46,200         Hewlett-Packard Co.     924,000    
  41,150     @   Unisys Corp.     472,814    
      2,369,348    
            Diversified Financial Services: 3.6%  
  12,520         CIT Group, Inc.     535,230    
  17,390         J.P. Morgan Chase & Co.     654,734    
      1,189,964    
            Electric: 0.9%  
  8,340         American Electric Power Co., Inc.     284,978    
      284,978    
            Environmental Control: 0.9%  
  9,420         Waste Management, Inc.     280,810    
      280,810    
            Food: 12.5%  
  44,730         Albertson's, Inc.     1,131,669    
  11,850         Kraft Foods, Inc.     405,270    
  76,820     @   Kroger Co.     1,242,948    
  67,120     @   Safeway, Inc.     1,294,073    
      4,073,960    
            Healthcare-Services: 1.9%  
  57,630     @   Tenet Healthcare Corp.     625,286    
      625,286    
            Housewares: 2.4%  
  33,810         Newell Rubbermaid, Inc.     780,335    
      780,335    
            Insurance: 8.6%  
  29,470         AON Corp.     622,406    
  13,670         Loews Corp.     955,670    
  28,400         Marsh & McLennan Cos., Inc.     811,956    
  11,440         Nationwide Financial Services     429,915    
      2,819,947    
            Office/Business Equipment: 2.1%  
  44,220     @   Xerox Corp.     677,450    
      677,450    

 

Shares           Value  
            Pharmaceuticals: 16.4%      
  48,550         Bristol-Myers Squibb Co.   $ 1,140,925    
  46,300         Merck & Co., Inc.     1,297,325    
  41,800         Pfizer, Inc.     1,160,786    
  72,590         Schering-Plough Corp.     1,295,732    
  11,470         Wyeth     457,309    
      5,352,077    
            Pipelines: 3.1%  
  96,880         El Paso Corp.     1,011,427    
      1,011,427    
            Retail: 2.4%  
  27,510         May Department Stores Co.     773,581    
      773,581    
            Semiconductors: 2.9%  
  85,210     @   Micron Technology, Inc.     944,127    
      944,127    
            Telecommunications: 14.2%  
  47,900         BellSouth Corp.     1,284,679    
  181,040     @   Lucent Technologies, Inc.     711,487    
  44,890         SBC Communications, Inc.     1,129,881    
  32,830         Sprint Corp.     748,852    
  18,780         Verizon Communications, Inc.     774,299    
      4,649,198    
            Toys/Games/Hobbies: 2.0%  
  34,640         Mattel, Inc.     656,428    
      656,428    
        Total Common Stock
(Cost $30,722,760)		         31,797,838    
        Total Investments In
Securities (Cost
$30,722,760)*		     97.3 %   $ 31,797,838    
        Other Assets and
Liabilities-Net		     2.7       887,198    
    Net Assets     100.0 %   $ 32,685,036    

 

@  Non-income producing security

*  Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 1,993,776    
Gross Unrealized Depreciation     (918,698 )  
Net Unrealized Appreciation   $ 1,075,078    

 

See Accompanying Notes to Financial Statements

82


  PORTFOLIO OF INVESTMENTS
ING MAGNACAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 99.3%  
            Aerospace/Defense: 3.6%      
  125,900         General Dynamics Corp.   $ 13,642,524    
      13,642,524    
            Agriculture: 3.6%  
  236,015         Altria Group, Inc.     13,568,502    
      13,568,502    
            Apparel: 1.8%  
  81,300         Nike, Inc.     6,882,858    
      6,882,858    
            Banks: 7.0%  
  300,800         Bank of America Corp.     13,918,016    
  203,400         Wells Fargo & Co.     12,564,018    
      26,482,034    
            Building Materials: 1.8%  
  198,200         Masco Corp.     6,990,514    
      6,990,514    
            Chemicals: 4.6%  
  195,200         Dow Chemical Co.     9,851,744    
  165,700         Praxair, Inc.     7,439,930    
      17,291,674    
            Computers: 2.0%  
  80,200         International Business
Machines Corp.		     7,558,048    
      7,558,048    
            Cosmetics/Personal Care: 2.9%  
  174,500         Kimberly-Clark Corp.     11,099,945    
      11,099,945    
            Diversified Financial Services: 13.3%  
  205,000         Citigroup, Inc.     9,173,750    
  165,300         Fannie Mae     11,356,110    
  115,000         Freddie Mac     7,849,900    
  203,600         Merrill Lynch & Co., Inc.     11,342,556    
  201,200         Morgan Stanley     10,210,900    
      49,933,216    
            Electrical Components and
Equipment: 2.9%		          
  166,800         Emerson Electric Co.     11,145,576    
      11,145,576    
            Electronics: 2.6%  
  381,300     @@   Koninklijke Philips Electronics NV     9,814,662    
      9,814,662    
            Food: 4.6%  
  182,600     @@   Nestle SA ADR     11,734,442    
  87,500     @@   Unilever NV     5,512,500    
      17,246,942    
            Forest Products and Paper: 1.9%  
  175,800         International Paper Co.     7,299,216    
      7,299,216    

 

Shares           Value  
            Healthcare-Products: 2.3%      
  134,000         Beckman Coulter, Inc.   $ 8,771,640    
      8,771,640    
            Healthcare-Services: 2.3%  
  93,400         Quest Diagnostics, Inc.     8,756,250    
      8,756,250    
            Insurance: 8.1%  
  189,000         Allstate Corp.     9,544,500    
  175,100         American International
Group, Inc.		     11,092,585    
  257,000         MetLife, Inc.     10,023,000    
      30,660,085    
            Media: 2.3%  
  106,200         Gannett Co., Inc.     8,760,438    
      8,760,438    
            Miscellaneous
Manufacturing: 2.7%		          
  288,300         Honeywell Intl., Inc.     10,185,639    
      10,185,639    
            Oil and Gas: 12.8%  
  184,700         Apache Corp.     9,984,882    
  187,500     @@   BP PLC ADR     11,503,125    
  260,900         ChevronTexaco Corp.     14,245,140    
  249,400         Exxon Mobil Corp.     12,781,750    
      48,514,897    
            Oil and Gas Services: 2.6%  
  235,980         Halliburton Co.     9,757,773    
      9,757,773    
            Pharmaceuticals: 1.7%  
  232,200         Pfizer, Inc.     6,448,194    
      6,448,194    
            Retail: 2.1%  
  263,400         McDonald's Corp.     8,096,916    
      8,096,916    
            Savings and Loans: 5.6%  
  509,300         Sovereign Bancorp, Inc.     11,128,205    
  252,100         Washington Mutual, Inc.     10,262,991    
      21,391,196    
            Telecommunications: 4.2%  
  295,700         SBC Communications, Inc.     7,442,769    
  206,100         Verizon Communications, Inc.     8,497,503    
      15,940,272    
    Total Common Stock
(Cost $302,128,558)		     376,239,011    

 

See Accompanying Notes to Financial Statements

83


  PORTFOLIO OF INVESTMENTS
ING MAGNACAP FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
SHORT-TERM INVESTMENTS: 0.7%      
    Repurchase Agreement: 0.7%  
$ 2,837,000     Goldman Sachs Repurchase        
   
    Agreement 11/30/04, 2.060%,        
   
    due 12/01/04, $2,837,162 to be        
   
    received upon repurchase        
   
    (Collateralized by $2,735,000        
   
    Federal Home Loan Mortgage        
   
    Corporation, 5.500%, Market Value        
   
    plus accrued interest $2,893,972,        
   
    due 07/15/06)       $ 2,837,000    
    Total Short-Term Investments
(Cost $2,837,000)		         2,837,000    
    Total Investments In
Securities (Cost
$304,965,558)*		     100.0 %   $ 379,076,011    
    Other Assets and
Liabilities-Net		     0.0 %     (114,266 )  
    Net Assets     100.0 %   $ 378,961,745    

 

@@  Foreign issuer

ADR  American Depositary Receipt

*  Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 76,661,734    
Gross Unrealized Depreciation     (2,551,281 )  
Net Unrealized Appreciation   $ 74,110,453    

 

See Accompanying Notes to Financial Statements

84


  PORTFOLIO OF INVESTMENTS
ING MIDCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  COMMON STOCK: 96.4%        
            Agriculture: 3.9%  
  184,580         Loews Corp.   $ 5,426,652    
  25,640         UST, Inc.     1,128,929    
      6,555,581    
            Airlines: 3.0%  
  326,840     @,L   AMR Corp.     2,951,365    
  296,400     @,L   Delta Air Lines, Inc.     2,065,908    
      5,017,273    
            Apparel: 2.1%  
  354,610     @,@@   Tommy Hilfiger Corp.     3,475,178    
      3,475,178    
            Auto Parts and Equipment: 9.8%  
  112,200         ArvinMeritor, Inc.     2,462,790    
  100,000         Dana Corp.     1,635,000    
  543,730     @,L   Goodyear Tire & Rubber Co.     6,861,872    
  644,310     L   Visteon Corp.     5,450,863    
      16,410,525    
            Building Materials: 2.4%  
  110,400         York Intl. Corp.     4,070,448    
      4,070,448    
            Chemicals: 5.6%  
  96,690         Great Lakes Chemical Corp.     2,833,017    
  87,680         Lubrizol Corp.     3,029,344    
  156,300     L   Sensient Technologies Corp.     3,602,715    
      9,465,076    
            Commercial Services: 6.7%  
  330,300     @   Convergys Corp.     4,911,561    
  49,000         Kelly Services, Inc.     1,489,600    
  683,580     @   Service Corp. Intl.     4,826,075    
      11,227,236    
            Computers: 7.4%  
  323,580     @,L   Synopsys, Inc.     5,704,715    
  577,590     @   Unisys Corp.     6,636,510    
      12,341,225    
            Diversified Financial
Services: 0.6%		          
  24,000         CIT Group, Inc.     1,026,000    
      1,026,000    
            Electric: 0.0%  
  162,000     @,L   Mirant Corp.     59,738    
      59,738    
            Electronics: 1.6%  
  302,700     @   Kemet Corp.     2,681,922    
      2,681,922    
            Food: 4.5%  
  44,000     L   Albertson's, Inc.     1,113,200    
  363,330     @   Del Monte Foods Co.     3,942,131    
  606,064     @,L   Winn-Dixie Stores, Inc.     2,424,256    
      7,479,587    

 

Shares           Value  
            Healthcare-Services: 5.3%      
  122,800     @   Health Net, Inc.   $ 3,342,616    
  517,030     @   Tenet Healthcare Corp.     5,609,776    
      8,952,392    
            Home Furnishings: 3.0%  
  253,320         Maytag Corp.     5,091,732    
      5,091,732    
            Household Products/Wares: 2.1%  
  189,410         Tupperware Corp.     3,545,755    
      3,545,755    
            Insurance: 14.0%  
  132,200     @   Allmerica Financial Corp.     4,303,110    
  255,010     L   Assured Guaranty Ltd.     4,697,283    
  62,460     @   CNA Financial Corp.     1,630,831    
  69,400         Nationwide Financial Services     2,608,052    
  285,550     L   Phoenix Cos., Inc.     3,483,710    
  431,350     L   UnumProvident Corp.     6,716,119    
      23,439,105    
            Miscellaneous Manufacturing: 2.4%  
  78,600         Teleflex, Inc.     3,969,300    
      3,969,300    
            Office/Business Equipment: 2.8%  
  420,420         IKON Office Solutions, Inc.     4,742,338    
      4,742,338    
            Pipelines: 3.4%  
  548,193         El Paso Corp.     5,723,135    
      5,723,135    
            Retail: 5.2%  
  90,320         Dillard's, Inc.     2,274,258    
  135,000     @,L   Payless Shoesource, Inc.     1,576,800    
  248,220     @   Toys R US, Inc.     4,800,574    
      8,651,632    
            Semiconductors: 4.3%  
  5,136,390     @   Agere Systems, Inc.     6,985,490    
  19,958     @,L   Micron Technology, Inc.     221,135    
      7,206,625    
            Telecommunications: 6.3%  
  1,182,050     @   3Com Corp.     5,248,302    
  66,550         CenturyTel, Inc.     2,190,826    
  878,600     @   Cincinnati Bell, Inc.     3,162,960    
      10,602,088    
    Total Common Stock
(Cost $160,486,053)		     161,733,891    

 

See Accompanying Notes to Financial Statements

85


  PORTFOLIO OF INVESTMENTS
ING MIDCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
SHORT-TERM INVESTMENTS: 15.1%  
    Securities Lending Collateralcc: 15.1%  
$ 25,264,576     The Bank of New York Institutional
Cash Reserves Fund		           $ 25,264,576    
    Total Short-Term Investments
(Cost $25,264,576)		             25,264,576    
    Total Investments In
Securities (Cost
$185,750,629)*		     111.5 %     $186,998,467    
    Other Assets and
Liabilities-Net		     (11.5 )     (19,227,357 )  
    Net Assets     100.0 %   $ 167,771,110    

 

@  Non-income producing security

@@  Foreign issuer

cc  Securities purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $185,798,818. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 14,562,208    
Gross Unrealized Depreciation     (13,362,559 )  
Net Unrealized Appreciation   $ 1,199,649    

 

See Accompanying Notes to Financial Statements

86


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 97.2%  
            Airlines: 3.0%      
  685,520     @,L   Delta Air Lines, Inc.   $ 4,778,074    
      4,778,074    
            Apparel: 4.9%  
  94,848         Oshkosh B'Gosh, Inc.     1,944,384    
  132,150         Russell Corp.     2,423,631    
  353,940     @,@@   Tommy Hilfiger Corp.     3,468,612    
      7,836,627    
            Auto Parts and Equipment: 9.9%  
  110,140     @   Aftermarket Technology Corp.     1,918,639    
  351,779     @,L   Goodyear Tire & Rubber Co.     4,439,451    
  140,590     L   Superior Industries Intl., Inc.     3,971,668    
  635,290         Visteon Corp.     5,374,553    
      15,704,311    
            Building Materials: 2.0%  
  85,490         York Intl. Corp.     3,152,016    
      3,152,016    
            Chemicals: 11.4%  
  95,260         Great Lakes Chemical Corp.     2,791,118    
  36,000         Lubrizol Corp.     1,243,800    
  55,505     @@   Octel Corp.     1,224,440    
  375,260     @   PolyOne Corp.     3,463,650    
  194,590         Sensient Technologies Corp.     4,485,300    
  464,700         Wellman, Inc.     4,781,762    
      17,990,070    
            Commercial Services: 3.1%  
  95,330         Kelly Services, Inc.     2,898,032    
  281,980     @   Service Corp. Intl.     1,990,779    
      4,888,811    
            Computers: 4.1%  
  630,600     @   Gateway, Inc.     4,294,386    
  173,100     @,L   Mentor Graphics Corp.     2,172,405    
      6,466,791    
            Electric: 0.3%  
  25,000         Westar Energy, Inc.     553,750    
      553,750    
            Electrical Components and
Equipment: 2.3%		          
  157,780         Belden CDT, Inc.     3,658,918    
      3,658,918    
            Electronics: 2.9%  
  517,940     @   Kemet Corp.     4,588,948    
      4,588,948    
            Food: 6.6%  
  125,440     @   Del Monte Foods Co.     1,361,024    
  675,960     @,L   Interstate Bakeries Corp.     3,934,087    
  1,304,837     @,L   Winn-Dixie Stores, Inc.     5,219,348    
      10,514,459    
            Hand/Machine Tools: 1.1%  
  90,220         Starrett (L.S.) Co.     1,793,574    
      1,793,574    

 

Shares           Value  
            Healthcare-Services: 2.0%      
  560,900     @,L   OCA, Inc.   $ 3,208,348    
      3,208,348    
            Home Builders: 0.8%  
  127,500     @   National RV Holdings, Inc.     1,240,575    
      1,240,575    
            Home Furnishings: 2.0%  
  157,100         Maytag Corp.     3,157,710    
      3,157,710    
            Household Products/Wares: 8.9%  
  125,500         American Greetings Corp.     3,340,810    
  695,740     @,L   Playtex Products, Inc.     5,218,050    
  64,900         Russ Berrie & Co., Inc.     1,475,826    
  220,770         Tupperware Corp.     4,132,814    
      14,167,500    
            Insurance: 8.6%  
  73,900     @   Allmerica Financial Corp.     2,405,445    
  164,700     @@   Assured Guaranty Ltd.     3,033,773    
  29,990         Kansas City Life Insurance Co.     1,482,706    
  46,020         Landamerica Financial
Group, Inc.		     2,457,468    
  14,545     @   National Western Life
Insurance Co.		     2,359,054    
  155,260     L   Phoenix Cos., Inc.     1,894,172    
      13,632,618    
            Iron/Steel: 0.0%  
  4,154     L   Ryerson Tull, Inc.     67,212    
      67,212    
            Leisure Time: 2.2%  
  272,900         Callaway Golf Co.     3,209,304    
  19,800     @   K2, Inc.     334,224    
      3,543,528    
            Machinery-Diversified: 5.3%  
  36,290         Nacco Industries, Inc.     3,973,392    
  100,840         Tecumseh Products Co.     4,416,792    
      8,390,184    
            Mining: 0.0%  
  5,305         USEC, Inc.     55,862    
      55,862    
            Miscellaneous Manufacturing: 1.2%  
  33,453         Federal Signal Corp.     575,392    
  116,881         Myers Industries, Inc.     1,324,261    
      1,899,653    
            Oil and Gas Services: 1.3%  
  59,850         Tidewater, Inc.     2,030,711    
      2,030,711    
            Pipelines: 1.8%  
  504,090     @,L   Dynegy, Inc.     2,848,109    
      2,848,109    
            Retail: 7.3%  
  182,150     L   Dillard's, Inc.     4,586,537    

 

See Accompanying Notes to Financial Statements

87


  PORTFOLIO OF INVESTMENTS
ING SMALLCAP VALUE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Retail (continued)      
  78,100         Lone Star Steakhouse & 
Saloon, Inc.		   $ 2,107,919    
  415,820     @,L   Payless ShoeSource, Inc.     4,856,778    
      11,551,234    
            Software: 1.3%  
  133,760     @   SPSS, Inc.     2,138,822    
      2,138,822    
            Telecommunications: 2.9%  
  1,288,633     @   Cincinnati Bell, Inc.     4,639,079    
      4,639,079    
    Total Common Stock
(Cost $143,606,519)		     154,497,494    
Principal
Amount		       Value  

 

SHORT-TERM INVESTMENTS: 21.4%

    Securities Lending CollateralCC: 21.4%  
$ 34,093,573     The Bank of New York Institutional
Cash Reserves		      
 		       34,093,573    
    Total Short-Term Investments
(Cost $34,093,573)		      
 		       34,093,573    
    Total Investments In
Securities (Cost
$177,700,092)*		     118.6 %   $ 188,591,067    
    Other Assets and
Liabilities-Net		     (18.6 )     (29,562,689 )  
    Net Assets     100.0 %   $ 159,028,378    

 

@  Non-income producing security

@@  Foreign issuer

cc  Security purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes $177,739,983. Net unrealized Appreciation consists of:

Gross Unrealized Appreciation   $ 19,268,214    
Gross Unrealized Depreciation     (8,417,130 )  
Net Unrealized Appreciation   $ 10,851,084    

 

See Accompanying Notes to Financial Statements

88


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
COMMON STOCK: 9.3%  
            Computers: 0.5%      
  1,462,500     @,@@   Bull SA   $ 913,556    
      913,556    
            Food: 0.6%  
  35,000     @   Dean Foods Co.     1,108,450    
      1,108,450    
            Healthcare-Services: 2.1%  
  74,600     @   Community Health Systems,
Inc.		     2,062,690    
  22,800     @   WellPoint, Inc.     2,310,324    
      4,373,014    
            Investment Companies: 2.6%  
  45,000     @,L   SPDR Trust Series 1     5,305,050    
      5,305,050    
            Miscellaneous
Manufacturing: 0.6%		          
  36,000         General Electric Co.     1,272,960    
      1,272,960    
            Retail: 1.6%  
  18,000         Wal-Mart Stores, Inc.     937,080    
  60,000     L   Wendy's Intl., Inc.     2,140,200    
      3,077,280    
            Telecommunications: 1.3%  
  60,000         QUALCOMM, Inc.     2,497,200    
      2,497,200    
    Total Common Stock
(Cost $13,462,240)		     18,547,510    
  PREFERRED STOCK: 22.5%        
            Auto Manufacturers: 2.8%  
  55,000         Ford Motor Co. Capital
Trust II		     2,884,750    
  105,000         General Motors Corp.     2,680,400    
      5,565,150    
            Chemicals: 0.4%  
  960         Hercules Trust II     844,800    
      844,800    
            Diversified Financial
Services: 1.8%		          
  88,300         Gabelli Asset Management,
Inc.		     2,301,981    
  48,000         Lehman Brothers Holdings,
Inc.		     1,233,600    
      3,535,581    
            Food: 1.3%  
  97,500         Albertson's, Inc.     2,570,100    
      2,570,100    
            Home Builders: 0.6%  
  25,000     @   Fleetwood Capital Trust     1,131,250    
      1,131,250    

 

Shares           Value  
            Insurance: 5.9%      
  60,000         Hartford Financial Services
Group, Inc.		   $ 3,703,800    
  67,800         Reinsurance Group of America     4,139,190    
  118,000         Travelers Property
Casualty Corp.		     2,725,800    
  40,000     @@   XL Capital Ltd.     987,200    
      11,555,990    
            Media: 2.2%  
  25,000     @,L   Comcast Corp.     1,212,500    
  25,200         Emmis Communications Corp.     1,146,600    
  1,985         News Corp Finance Trust II     1,990,558    
      4,349,658    
            Mining: 0.9%  
  1,900          Freeport-McMoRan Copper & 
Gold, Inc.		     1,869,125    
      1,869,125    
            Office/Business
Equipment: 0.7%		          
  9,900     @   Xerox Corp.     1,357,290    
      1,357,290    
            Oil and Gas: 1.3%  
  24,700         Chesapeake Energy Corp.     2,608,950    
      2,608,950    
            Pharmaceuticals: 1.2%  
  44,500         Omnicare, Inc.     2,327,350    
      2,327,350    
            Real Estate Investment
Trusts: 1.6%		          
  83,000     @   FelCor Lodging Trust, Inc.     2,058,400    
  20,000         Simon Property Group Inc     1,142,600    
      3,201,000    
            Savings and Loans: 0.9%  
  39,200         Sovereign Capital Trust II     1,871,800    
      1,871,800    
            Telecommunications: 0.9%  
  1,500     @   Lucent Technologies Capital
Trust I		     1,825,410    
  51,932     @,I,X,**   Winstar Communications, Inc.     5    
      1,825,415    
    Total Preferred Stock
(Cost $43,418,025)		     44,613,459    
Principal
Amount		           Value  
  CONVERTIBLE CORPORATE BONDS: 67.1%        
            Advertising: 1.1%  
$ 2,000,000     L   Lamar Advertising Co.,
2.875%, due 12/31/10		     2,132,500    
      2,132,500    
            Aerospace/Defense: 1.3%  
  3,460,000         Spacehab, Inc., 8.000%,
due 10/15/07		     2,633,925    
      2,633,925    

 

See Accompanying Notes to Financial Statements

89


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Apparel: 1.0%      
$ 1,950,000     #   Reebok International Ltd.,
2.000%, due 05/01/24		   $ 2,025,563    
      2,025,563    
            Auto Parts and Equipment: 1.0%  
  4,000,000     L   Lear Corp.,4.000%,
due 02/20/22		     2,035,000    
      2,035,000    
            Biotechnology: 0.6%  
  1,485,000         ICOS Corp., 2.000%,
due 07/01/23		     1,254,825    
      1,254,825    
            Distribution/Wholesale: 2.0%  
  3,500,000         Costco Wholesale Corp.,
0.000%, due 08/19/17		     3,876,250    
      3,876,250    
            Diversified Financial Services: 3.9%  
  980,000     @@,#,L   AngloGold Holdings PLC,
2.375%, due 02/27/09		     951,825    
  4,875,000         Lehman Brothers Holdings, Inc., 
1.000%, due 09/16/10		     4,424,062    
  2,000,000     @@,#   RepCon Lux SA, 4.500%,
due 01/26/11		     2,410,466    
      7,786,353    
            Electric: 2.3%  
  2,000,000     L   Centerpoint Energy, Inc.,
3.750%, due 05/15/23		     2,285,000    
  2,000,000     L   PPL Energy Supply LLC,
2.625%, due 05/15/23		     2,222,500    
      4,507,500    
            Electrical Components and
Equipment: 1.9%		          
  1,000,000     @@   ABB Intl. Finance Ltd.,
4.625%, due 05/16/07		     1,052,500    
  3,000,000         GrafTech Intl. Ltd., 1.625%,
due 01/15/24		     2,707,500    
      3,760,000    
            Electronics: 3.6%  
  1,500,000     @@,L   Flextronics Intl. Ltd., 1.000%,
due 08/01/10		     1,753,125    
  3,000,000     L   Flir Systems, Inc., 3.000%,
due 06/01/23		     4,462,500    
  100,000,000     @@   Sony Corp., 0.000%,
due 12/18/08		     972,972    
      7,188,597    
            Energy-Alternate Sources: 1.3%  
  2,000,000     #,L   Headwaters, Inc., 2.875%,
due 06/01/16		     2,560,000    
      2,560,000    
            Entertainment: 0.9%  
  1,500,000         International Game Technology,
0.860%, due 01/29/33		     1,179,375    
  480,000         Six Flags, Inc., 4.500%,
due 05/15/15		     511,200    
      1,690,575    

 

Principal
Amount		           Value  
            Environmental Control: 1.5%  
$ 3,500,000     L   Allied Waste Industries, Inc.,
4.250%, due 04/15/34		   $ 3,049,375    
      3,049,375    
            Healthcare-Products: 3.1%  
  2,900,000     L   Advanced Medical Optics Inc,
2.500%, due 07/15/24		     3,200,875    
  2,900,000     #   Henry Schein, Inc., 3.000%,
due 08/15/34		     3,026,875    
      6,227,750    
            Healthcare-Services: 1.3%  
  2,000,000     L   Laboratory Corp. of America
Holdings, 1.570%,
due 09/11/21		     1,540,000    
  1,000,000     L   Quest Diagnostics, Inc.,
1.750%, due 11/30/21		     1,088,750    
      2,628,750    
            Insurance: 3.9%  
  3,770,000     L   American Intl. Group, Inc.,
0.500%, due 05/15/07		     3,586,213    
  1,970,000     #   AmerUs Group Co., 2.000%,
due 03/06/32		     2,531,450    
  1,440,000     L   PMA Capital Corp, 6.500%,
due 09/30/22		     1,564,200    
      7,681,863    
            Internet: 2.1%  
  1,470,000     L   Equinix Inc, 2.500%,
due 02/15/24		     1,719,900    
  960,000     @@,#   Shanda Interactive
Entertainment Ltd,
0.000%, due 10/15/14		     1,168,800    
  1,400,000         Sohu.com, Inc., 0.700%,
due 07/14/23		     1,228,500    
      4,117,200    
            Lodging: 1.2%  
  1,000,000     L   Hilton Hotels Corp., 3.375%,
due 04/15/23		     1,148,750    
  1,000,000     L   Starwood Hotels & Resorts
Worldwide, Inc.,
3.500%, due 05/16/23		     1,150,000    
      2,298,750    
            Media: 3.8%  
  2,400,000     #,L   Charter Communications Inc,
5.875%, due 11/16/09		     2,568,000    
  2,460,000         Citadel Broadcasting Corp,
1.875%, due 02/15/11		     2,198,625    
  1,000,000         Liberty Media Corp, 3.500%,
due 01/15/31		     956,250    
  1,920,000     @@   ZEE Telefilms Ltd, 0.500%,
due 04/29/09		     1,850,928    
      7,573,803    
            Mining: 3.4%  
  1,500,000     @@,L   Inco Ltd., 0.000%,
due 03/29/21		     1,545,000    
  1,985,000     @@,L   Inco Ltd., 1.000%,
due 03/14/23		     2,654,938    

 

See Accompanying Notes to Financial Statements

90


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Mining (continued)      
$ 2,000,000     @@,L   Placer Dome, Inc., 2.750%,
due 10/15/23		   $ 2,612,500    
      6,812,438    
            Miscellaneous Manufacturing: 2.7%  
  3,500,000     @@,#   Tyco Intl. Group SA, 2.750%,
due 01/15/18		     5,363,750    
      5,363,750    
            Oil and Gas: 3.3%  
  1,998,000         Devon Energy Corp., 4.900%,
due 08/15/08		     2,210,288    
  2,000,000     @@,L   Formosa Petrochemical Corp.,
0.000%, due 06/30/11		     2,199,000    
  1,985,000     #,L   Pride Intl., Inc., 3.250%,
due 05/01/33		     2,133,875    
      6,543,163    
            Oil and Gas Services: 0.5%  
  1,000,000     @@,L   Schlumberger Ltd., 2.125%,
due 06/01/23		     1,077,500    
      1,077,500    
            Packaging and Containers: 1.0%  
  2,000,000     #   Sealed Air Corp., 3.000%,
due 06/30/33		     2,035,000    
      2,035,000    
            Pharmaceuticals: 7.9%  
  1,990,000     L   Amylin Pharmaceuticals, Inc.,
2.250%, due 06/30/08		     1,947,713    
  4,000,000         Cephalon, Inc., 2.500%,
due 12/15/06		     3,944,999    
  1,920,000     #   Isolagen Inc, 3.500%,
due 11/01/24		     2,133,600    
  3,000,000         NPS Pharmaceuticals, Inc.,
3.000%, due 06/15/08		     2,737,500    
  1,000,000     L   Sepracor, Inc., 5.000%,
due 02/15/07		     1,028,750    
  1,920,000     #   Sepracor, Inc., 0.430%,
due 10/15/24		     1,764,000    
  2,000,000         Teva Pharmaceutical Finance
LLC, .500%, due 02/01/24		     1,962,500    
      15,519,062    
            Retail: 0.6%  
  1,100,000         Rite Aid Corp., 4.750%,
due 12/01/06		     1,116,500    
      1,116,500    
            Savings and Loans: 2.0%  
  3,870,000     #   Ocwen Financial Corp.,
3.250%, due 08/01/24		     4,063,500    
      4,063,500    
            Semiconductors: 2.7%  
  3,000,000     L   Advanced Micro Devices, Inc.,
4.750%, due 02/01/22		     3,393,750    
  1,000,000         Cypress Semiconductor Corp,
1.250%, due 06/15/08		     992,500    
  960,000     #   Vitesse Semiconductor Corp.,
1.500%, due 10/01/24		     1,053,600    
      5,439,850    

 

Principal
Amount		           Value  
            Telecommunications: 4.0%      
$ 2,000,000         Nextel Partners, Inc.,
1.500%, due 11/15/08		   $ 3,142,499    
  1,000,000     L   NII Holdings, Inc., 2.875%,
due 02/01/34		     1,107,500    
  1,470,000     L   Primus Telecommunications
Group, Inc., 5.750%,
due 02/15/07		     1,288,088    
  1,980,000     L   RF Micro Devices, Inc.,
1.500%, due 07/01/10		     2,272,050    
      7,810,137    
            Transportation: 1.2%  
  985,000     #   Yellow Corp., 5.000%,
due 08/08/23		     1,636,331    
  490,000     #   Yellow Corp., 3.375%,
due 11/25/23		     711,725    
      2,348,056    
    Total Convertible
Corporate Bonds
(Cost $120,465,883)		     133,157,535    
  CORPORATE BONDS/NOTES: 0.6%        
            Building Materials: 0.6%  
  960,000     #,L   NCI Building Systems Inc,
2.125%, due 11/15/24		     1,092,000    
    Total Corporate Bonds/notes
(Cost $960,000)		     1,092,000    
    Total Long-Term Investments
(Cost $178,306,148)		     197,410,504    

 

SHORT-TERM INVESTMENTS: 27.7%

    Repurchase Agreement: 0.5%  
  1,065,000     Morgan Stanley Repurchase
Agreement 11/30/04, 2.070%,
due 12/01/04, $1,065,061 to be
received upon repurchase
(Collateralized by $980,000
Federal National Mortgage
Association, 6.250%, Market
Value plus accrued interest
$1,089,368, due 07/15/06)		      
 
 
 
 
 
 
 
 		       1,065,000    
    Total Repurchase Agreement
(Cost $1,065,000)		             1,065,000    
    Securities Lending CollateralCC: 27.2%  
  53,943,311     The Bank of New York Institutional
Cash Reserves Fund		             53,943,311    
    Total Securities Lending Collateral
(Cost $53,943,311)		             53,943,311    
    Total Short-Term Investments
(Cost $55,008,311)		             55,008,311    
    Total Investments In
Securities (Cost
$233,314,459)*		     127.2 %   $ 252,418,815    
    Other Assets and
Liabilities-Net		     (27.2 )     (53,999,439 )  
    Net Assets     100.0 %   $ 198,419,376    

 

See Accompanying Notes to Financial Statements

91


  PORTFOLIO OF INVESTMENTS
ING CONVERTIBLE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

@  Non-income producing security

@@  Foreign issuer

#  Securities with purchases pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees.

cc  Securities purchased with cash collateral for securities loaned.

I  Illiquid security

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

X  Fair value determined by ING Funds Valuation Committee appointed by the Funds' Board of Directors/Trustees.

**  Defaulted security

*  Cost for federal income tax purposes is $233,423,855. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 24,245,259    
Gross Unrealized Depreciation     (5,250,299 )  
Net Unrealized Appreciation   $ 18,994,960    

 

See Accompanying Notes to Financial Statements

92


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  COMMON STOCK: 55.6%        
            Aerospace/Defense: 2.2%  
  8,320         Boeing Co.   $ 445,702    
  4,170         General Dynamics Corp.     451,861    
  5,100         United Technologies Corp.     497,659    
      1,395,222    
            Agriculture: 0.8%  
  9,300         Altria Group, Inc.     534,657    
      534,657    
            Auto Manufacturers: 0.6%  
  4,800         PACCAR, Inc.     374,880    
      374,880    
            Banks: 3.3%  
  9,100         Bank of America Corp.     421,057    
  14,785         North Fork Bancorporation, Inc.     425,808    
  16,100         U.S. Bancorp     477,043    
  5,900         Wachovia Corp.     305,325    
  7,900         Wells Fargo & Co.     487,983    
      2,117,216    
            Beverages: 0.6%  
  7,900         PepsiCo, Inc.     394,289    
      394,289    
            Biotechnology: 1.2%  
  6,600     @   Amgen, Inc.     396,264    
  6,455     @   Biogen Idec, Inc.     378,779    
      775,043    
            Chemicals: 3.2%  
  6,225         Air Products & Chemicals, Inc.     356,381    
  12,900         Dow Chemical Co.     651,063    
  9,300         E.I. du Pont de Nemours & Co.     421,476    
  8,325         Praxair, Inc.     373,793    
  5,000         Sherwin-Williams Co.     223,000    
      2,025,713    
            Commercial Services: 0.9%  
  26,200         Cendant Corp.     593,954    
      593,954    
            Computers: 2.6%  
  11,100     @   Dell, Inc.     449,772    
  36,700     @   EMC Corp.     492,514    
  7,800         International Business
Machines Corp.		     735,072    
      1,677,358    
            Cosmetics/Personal Care: 0.7%  
  8,400         Procter & Gamble Co.     449,232    
      449,232    
            Diversified Financial Services: 6.9%  
  23,100         Citigroup, Inc.     1,033,726    
  21,800         Countrywide Financial Corp.     723,978    
  37,120     @   E*TRADE Financial Corp.     514,483    
  8,900         Goldman Sachs Group, Inc.     932,364    
  13,000         J.P. Morgan Chase & Co.     489,450    
  8,800         Lehman Brothers Holdings, Inc.     737,264    
  1,209     I,XX   North Atlantic Trading Co., Inc.     1    
      4,431,266    

 

Shares           Value  
            Electric: 0.8%  
  11,100         Consolidated Edison, Inc.   $ 486,735    
      486,735    
            Electronics: 0.5%  
  4,510          Parker Hannifin Corp.     337,348    
      337,348    
            Healthcare-Products: 2.4%  
  6,090         Guidant Corp.     394,815    
  10,800         Johnson & Johnson     651,456    
  5,800     @   Zimmer Holdings, Inc.     473,280    
      1,519,551    
            Healthcare-Services: 0.8%  
  4,000     @   WellPoint Health Networks, Inc.     500,400    
      500,400    
            Insurance: 2.1%  
  13,380         American Intl. Group, Inc.     847,623    
  6,300         Chubb Corp.     480,123    
      1,327,746    
            Investment Companies: 1.0%  
  12,400         iShares Goldman Sachs
Semiconductor Index Fund		     651,000    
      651,000    
            Leisure Time: 1.4%  
  10,300         Carnival Corp.     546,003    
  6,600         Harley-Davidson, Inc.     381,612    
      927,615    
            Lodging: 1.1%  
  8,425         Marriott Intl., Inc.     478,961    
  4,900         Starwood Hotels & Resorts
Worldwide, Inc.		     256,221    
      735,182    
            Machinery-Diversified: 0.6%  
  8,700         Rockwell Automation, Inc.     411,510    
      411,510    
            Media: 0.8%  
  16,400     @   Comcast Corp.     486,260    
      486,260    
            Mining: 0.7%  
  13,300         Alcoa, Inc.     451,934    
      451,934    
            Miscellaneous Manufacturing: 4.7%  
  9,400         3M Co.     748,146    
  3,980         Eaton Corp.     268,252    
  37,200         General Electric Co.     1,315,392    
  19,480     @@   Tyco Intl. Ltd.     661,736    
      2,993,526    
            Oil and Gas: 3.2%  
  10,500         ChevronTexaco Corp.     573,300    
  19,200         Exxon Mobil Corp.     984,000    
  9,850     @,@@   Nabors Industries Ltd.     512,200    
      2,069,500    

 

See Accompanying Notes to Financial Statements

93


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Shares           Value  
            Oil and Gas Services: 2.2%  
  16,230         Baker Hughes, Inc.   $ 719,476    
  13,120         BJ Services Co.     664,790    
      1,384,266    
            Pharmaceuticals: 2.7%  
  5,900         Abbott Laboratories     247,564    
  4,210         Allergan, Inc.     309,435    
  11,250     @   Barr Pharmaceuticals, Inc.     439,313    
  13,200         Merck & Co., Inc.     369,864    
  13,885         Pfizer, Inc.     385,586    
      1,751,762    
            Retail: 3.0%  
  9,440         CVS Corp.     428,293    
  9,010     @   Kohl's Corp.     415,902    
  7,900         Lowe's Cos., Inc.     437,107    
  12,600         Wal-Mart Stores, Inc.     655,955    
      1,937,257    
            Semiconductors: 0.7%  
  19,800         Intel Corp.     442,530    
      442,530    
            Software: 1.5%  
  35,200         Microsoft Corp.     943,712    
      943,712    
            Telecommunications: 2.4%  
  13,300     @   Avaya, Inc.     218,386    
  26,500     @   Cisco Systems, Inc.     495,815    
  9,900         Qualcomm, Inc.     412,038    
  16,400         SBC Communications, Inc.     412,788    
      1,539,027    
    Total Common Stock
(Cost $31,718,106)		     35,665,691    
  PREFERRED STOCK: 0.3%        
            Banks: 0.3%  
  16     #,XX   DG Funding Trust     173,100    
      173,100    
            Electric: 0.0%  
  1,025     XX   TECO Energy, Inc.     26,045    
      26,045    
    Total Preferred Stock
(Cost $199,878)		     199,145    
  WARRANTS: 0.0%        
            Building Materials: 0.0%  
  400     I,#   Dayton Superior Corp.     4    
            Telecommunications: 0.0%  
  500     I,X   Iridium World Communications, Inc.     -    
      -    
    Total Warrants
(Cost $57,953)		     4    

 

Principal
Amount		           Value  
CORPORATE BONDS/NOTES: 10.7%  
            Airlines: 0.1%      
$ 90,000         American Airlines, Inc., 7.324%,
due 10/15/09		   $ 73,136    
      73,136    
            Auto Manufacturers: 0.3%  
  24,000         Ford Motor Co., 6.625%,
due 10/01/28		     21,743    
  72,000         Ford Motor Co., 7.450%,
due 07/16/31		     70,244    
  76,000         General Motors Corp., 8.375%,
due 07/15/33		     77,575    
      169,562    
            Banks: 2.6%  
  40,000     @@   Australia & New Zealand
Banking Group Ltd.,
2.405%, due 10/29/49		     34,803    
  48,000     @@   Banco Bradesco SA/Cayman
Islands,
8.750%, due 10/24/13		     51,840    
  109,000     @@   Banco Santander Chile SA,
7.375%, due 07/18/12		     122,903    
  40,000     @@   Bank of Ireland,
2.160%, due 12/29/49		     34,656    
  30,000     @@   Bank of Nova Scotia,
2.115%, due 08/31/85		     24,885    
  50,000         BankAmerica Capital II,
8.000%, due 12/15/26		     54,169    
  43,000     @@,#   Danske Bank A/S,
5.914%, due 12/29/49		     45,157    
  20,000     @@   Den Norske Bank ASA,
2.125%, due 08/29/49		     16,575    
  80,000     #   Dresdner Funding Trust I,
8.151%, due 06/30/31		     96,579    
  53,000         FBS Capital I,
8.090%, due 11/15/26		     57,623    
  45,000     @@,#   HBOS Capital Funding LP,
6.071%, due 06/30/49		     47,813    
  150,000     @@   HSBC Bank PLC,
1.971%, due 06/29/49		     129,903    
  80,000     @@   Lloyds TSB Bank PLC,
2.090%, due 08/29/49		     68,263    
  80,000     @@   Lloyds TSB Bank PLC,
2.188%, due 06/29/49		     71,154    
  71,000         M & T Bank Corp.,
3.850%, due 04/01/13		     70,087    
  51,000         Mellon Capital I,
7.720%, due 12/01/26		     55,169    
  30,000     @@   National Australia Bank Ltd.,
2.361%, due 10/29/49		     26,102    
  90,000         National Westminster Bank PLC,
2.563%, due 11/29/49		     76,704    
  58,000     #   Rabobank Capital Funding II,
5.260%, due 12/29/49		     58,704    
  70,000     @@   Royal Bank of Canada,
1.750%, due 06/29/85		     59,921    
  30,000     @@   Royal Bank of Scotland
Group PLC,
2.063%, due 12/29/49		     26,414    
  20,000     @@   Societe Generale,
2.705%, due 11/29/49		     17,150    
  130,000     @@,C   Standard Chartered PLC,
2.070%, due 12/29/49		     104,325    

 

See Accompanying Notes to Financial Statements

94


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Banks (continued)  
$ 160,000     @@,C   Standard Chartered PLC,
2.813%, due 11/29/49		   $ 127,563    
  49,000         Wells Fargo Capital I,
7.960%, due 12/15/26		     53,156    
  30,000     @@   Westpac Banking Corp.,
2.338%, due 09/29/49		     25,910    
  155,000     #   Westpac Capital Trust IV,
5.256%, due 12/29/49		     151,510    
      1,709,038    
            Beverages: 0.4%  
  145,000     @@   Cia Brasileira de Bebidas,
8.750%, due 09/15/13		     165,844    
  11,000     @@   Cia Brasileira de Bebidas,
10.500%, due 12/15/11		     13,640    
  80,000     #,S   Miller Brewing Co.,
4.250%, due 08/15/08		     80,504    
      259,988    
            Chemicals: 0.1%  
  23,000         Dow Chemical Co.,
5.750%, due 11/15/09		     24,509    
  22,000     @@,#,S   Sociedad Quimica y
Minera de Chile SA,
7.700%, due 09/15/06		     23,391    
      47,900    
            Diversified Financial Services: 1.6%  
  22,118     @@,#   Arcel Finance Ltd.,
5.984%, due 02/01/09		     22,884    
  47,000     @@,#,S   Arcel Finance Ltd.,
6.361%, due 05/01/12		     46,872    
  46,000     @@,#   Arcel Finance Ltd.,
7.048%, due 09/01/11		     47,523    
  122,000     @@,#   Brazilian Merchant Voucher
Receivables Ltd.,
5.911%, due 06/15/11		     121,390    
  51,000         Citigroup Capital II,
7.750%, due 12/01/36		     54,578    
  51,000     #   Corestates Capital Trust I,
8.000%, due 12/15/26		     55,549    
  72,000     #   Farmers Exchange Capital,
7.200%, due 07/15/48		     71,661    
  30,000     @@   Financiere CSFB NV,
2.125%, due 03/29/49		     24,877    
  24,000         Ford Motor Credit Co.,
7.000%, due 10/01/13		     25,081    
  106,000     #   HVB Funding Trust III,
9.000%, due 10/22/31		     136,557    
  14,000         JPM Capital Trust I,
7.540%, due 01/15/27		     14,946    
  45,000         JPM Capital Trust II,
7.950%, due 02/01/27		     48,771    
  135,000     #,XX   Mangrove Bay Pass-Through Trust,
6.102%, due 07/15/33		     134,477    
  66,453     @@,#   PF Export Receivables Master Trust,
3.748%, due 06/01/13		     64,266    
  101,236     @@,#   PF Export Receivables Master Trust,
6.436%, due 06/01/15		     100,308    
  69,000     @@   UFJ Finance Aruba AEC,
8.750%, due 11/29/49		     77,491    
      1,047,231    

 

Principal
Amount		           Value  
            Electric: 1.6%      
$ 100,000     @@,#   AES Gener SA,
7.500%, due 03/25/14		   $ 104,750    
  74,842     #   Allegheny Energy Supply
Statutory Trust 2001,
10.250%, due 11/15/07		     85,881    
  8,344     #   Allegheny Energy Supply
Statutory Trust 2001,
13.000%, due 11/15/07		     9,137    
  91,880         CE Generation LLC,
7.416%, due 12/15/18		     95,038    
  81,000         Consumers Energy Co.,
4.250%, due 04/15/08		     81,636    
  62,000     S   DTE Energy Co,
2.740%, due 06/01/07		     62,356    
  98,000     @@,S   Empresa Nacional de
Electricidad SA/Chile,
8.625%, due 08/01/15		     113,438    
  116,000         Enterprise Capital Trust II,
3.195%, due 06/30/28		     110,454    
  69,000         Monongahela Power Co.,
7.360%, due 01/15/10		     75,630    
  106,000         Ohio Power Co.,
6.375%, due 07/15/33		     109,111    
  11,970     #,S   Power Contract Financing LLC,
5.200%, due 02/01/06		     12,098    
  47,000     #   Power Contract Financing LLC,
6.256%, due 02/01/10		     48,951    
  18,094         PPL Montana LLC,
8.903%, due 07/02/20		     20,458    
  26,000         Sithe/Independence Funding,
9.000%, due 12/30/13		     28,688    
  31,810     @@,#   Tenaska Virginia Partners LP,
6.119%, due 03/30/24		     33,073    
  63,000     S   TXU Corp, 4.446%, due 11/16/06     63,785    
      1,054,484    
            Food: 0.4%  
  35,000     S   Kroger Co., 7.250%, due 06/01/09     38,990    
  65,000     S   Safeway, Inc.,
4.800%, due 07/16/07		     66,517    
  45,000         Supervalu, Inc.,
7.875%, due 08/01/09		     51,565    
  89,000     S   Tyson Foods, Inc.,
7.250%, due 10/01/06		     94,698    
      251,770    
            Gas: 0.1%  
  67,000     #,S   Williams Gas Pipelines
Central, Inc.,
7.375%, due 11/15/06		     71,606    
      71,606    
            Healthcare-Services: 0.1%  
  50,000         HCA, Inc., 5.500%, due 12/01/09     49,814    
      49,814    
            Home Builders: 0.0%  
  4,000         Technical Olympic USA, Inc.,
9.000%, due 07/01/10		     4,330    
      4,330    

 

See Accompanying Notes to Financial Statements

95


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Insurance: 0.4%      
$ 18,000     @@,#   Farmers Insurance Exchange,
6.000%, due 08/01/14		   $ 17,862    
  26,000     @@,#   Farmers Insurance Exchange,
8.625%, due 05/01/24		     30,180    
  54,000     @@,#   Monumental Global Funding II,
3.850%, due 03/03/08		     53,964    
  53,000     S   Prudential Financial, Inc.,
4.104%, due 11/15/06		     53,570    
  88,000     @@,#   Zurich Capital Trust I,
8.376%, due 06/01/37		     97,489    
      253,065    
            Media: 0.1%  
  48,000         COX Communications, Inc.,
6.850%, due 01/15/18		     50,132    
  10,000     @@   Rogers Cable, Inc.,
6.750%, due 03/15/15		     10,200    
      60,332    
            Mining: 0.2%  
  47,000     @@,#   Corp Nacional del Cobre de Chile,
5.500%, due 10/15/13		     48,335    
  74,000     @@,S   Vale Overseas Ltd.,
8.625%, due 03/08/07		     82,214    
      130,549    
            Multi-National: 0.2%  
  124,000     @@,S   Corp Andina de Fomento CAF,
6.875%, due 03/15/12		     137,660    
      137,660    
            Oil and Gas: 1.0%  
  59,000         Amerada Hess Corp.,
6.650%, due 08/15/11		     64,592    
  67,000     @@,#   Empresa Nacional de Petroleo,
4.875%, due 03/15/14		     64,799    
  76,000     @@,#   Gazprom International SA,
7.201%, due 02/01/20		     79,420    
  53,000     @@   Husky Energy, Inc.,
6.150%, due 06/15/19		     55,969    
  104,000     #   Pemex Project Funding
Master Trust,
3.180%, due 06/15/10		     106,860    
  37,000         Pemex Project Funding
Master Trust,
7.375%, due 12/15/14		     40,460    
  37,000     @@   Petroleos Mexicanos,
9.250%, due 03/30/18		     44,955    
  22,868     @@   Petrozuata Finance, Inc.,
7.630%, due 04/01/09		     23,868    
  100,000     @@   Tengizchevroil Finance Co S.ar.1,
6.124%, due 11/15/14		     100,000    
  42,000         Valero Energy Corp.,
8.750%, due 06/15/30		     54,429    
      635,352    
            Packaging and Containers: 0.1%  
  32,000     #   Sealed Air Corp.,
5.375%, due 04/15/08		     33,308    
      33,308    

 

Principal
Amount		           Value  
            Real Estate: 0.2%  
$ 70,000         EOP Operating LP,
7.750%, due 11/15/07		   $ 77,461    
  61,000     S   Liberty Property LP,
7.750%, due 04/15/09		     68,490    
      145,951    
            Real Estate Investment Trusts: 0.5%  
  11,000         Liberty Property Trust,
6.375%, due 08/15/12		     11,824    
  99,000         Rouse Co.,
7.200%, due 09/15/12		     105,881    
  50,000         Rouse Co.,
8.000%, due 04/30/09		     54,780    
  54,000         Simon Property Group LP,
4.875%, due 03/18/10		     54,711    
  96,000     S   Simon Property Group LP,
6.375%, due 11/15/07		     102,489    
      329,685    
            Savings and Loans: 0.1%  
  48,000         Great Western Financial,
8.206%, due 02/01/27		     52,248    
      52,248    
            Telecommunications: 0.5%  
  101,000         AT&T Corp.,
9.750%, due 11/15/31		     117,539    
  65,000         BellSouth Corp.,
4.200%, due 09/15/09		     64,782    
  43,000     S   Sprint Capital Corp.,
4.780%, due 08/17/06		     43,877    
  15,000     S   Sprint Capital Corp.,
8.375%, due 03/15/12		     18,147    
  53,000         Verizon Virginia, Inc.,
4.625%, due 03/15/13		     51,097    
  500,000     I,X,**   Winstar Communications, Inc.,
0.000%, due 04/15/10		     50    
      295,492    
            Transportation: 0.1%  
  42,000     @@,#   MISC Capital Ltd.,
6.125%, due 07/01/14		     44,616    
      44,616    
    Total Corporate Bonds/Notes
(Cost $7,204,050)		     6,857,117    
  U.S. GOVERNMENT AGENCY OBLIGATIONS: 13.7%        
            Federal Home Loan Bank: 0.4%  
  270,000         3.250%, due 12/17/07     268,005    
      268,005    
            Federal Home Loan Mortgage
Corporation: 4.0%		          
  556,000         2.700%, due 03/16/07     549,128    
  361,000         4.500%, due 10/15/12     364,106    
  93,437         4.500%, due 04/01/14     93,307    
  54,000     W   5.500%, due 12/15/18     55,671    
  96,000         5.875%, due 03/21/11     103,118    
  93,813         6.000%, due 04/01/14     98,592    
  556,260         6.000%, due 01/15/29     576,823    
  193,012         6.500%, due 12/01/31     202,528    
  488,000     W   7.000%, due 12/15/34     517,585    
      2,560,858    

 

See Accompanying Notes to Financial Statements

96


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
            Federal National Mortgage
Association: 9.0%		          
$ 325,000         2.875%, due 05/19/08   $ 316,724    
  141,000         4.750%, due 12/25/42     141,842    
  420,000     W   5.000%, due 12/01/17     425,644    
  2,562,000     W   5.000%, due 01/15/34     2,521,167    
  150,000         5.250%, due 08/01/12     154,419    
  5,070     W   5.500%, due 12/15/19     5,230    
  569,000     W   5.500%, due 01/01/33     574,156    
  199,639         6.000%, due 08/01/16     209,314    
  67,686         6.000%, due 10/01/18     70,959    
  344,344         6.000%, due 07/25/29     355,621    
  145,711         6.000%, due 04/25/31     150,885    
  96,000         6.000%, due 12/15/33     99,090    
  211,000         6.000%, due 01/15/34     217,264    
  231,000         6.500%, due 12/15/34     242,406    
  135,000         6.625%, due 11/15/10     152,115    
  35,691         7.500%, due 09/01/30     38,269    
  65,451         7.500%, due 06/25/32     70,164    
  84,049         7.500%, due 01/25/48     89,569    
      5,834,838    
            Government National
Mortgage Association: 0.3%		          
  164,311         6.500%, due 06/15/29     173,404    
      173,404    
    Total U.S. Government
Agency Obligations
(Cost $8,845,801)		     8,837,105    
  U.S. TREASURY OBLIGATIONS: 7.1%        
            U.S. Treasury Bonds: 2.4%  
  229,000     W   4.250%, due 11/15/14     227,104    
  885,000     S   5.375%, due 02/15/31     931,739    
  121,000         6.250%, due 08/15/23     138,876    
  228,000     S   10.375%, due 11/15/12     272,986    
      1,570,705    
            U.S. Treasury Notes: 4.4%  
  1,530,000         1.625%, due 01/31/05     1,529,284    
  237,000         2.875%, due 11/30/06     236,426    
  175,000         3.000%, due 11/15/07     173,742    
  906,000     S   3.500%, due 11/15/09     898,073    
      2,837,525    
            U.S. Treasury STRIP: 0.3%  
  325,000     S   4.870%, due 05/15/16     188,545    
      188,545    
    Total U.S. Treasury Obligations
(Cost $4,637,354)		     4,596,775    
  ASSET-BACKED SECURITIES: 3.2%        
            Automobile Asset-Backed
Securities: 0.3%		          
  95,000         Capital One Auto Finance Trust,
3.180%, due 09/15/10		     94,176    
  50,000         Nissan Auto Receivables
Owner Trust,
2.050%, due 03/16/09		     48,759    
  40,000         USAA Auto Owner Trust,
2.040%, due 02/16/10		     39,319    
      182,254    

 

Principal
Amount		           Value  
            Credit Card Asset-Backed
Securities: 0.4%		          
$ 55,000         Bank One Issuance Trust,
4.540%, due 09/15/10		   $ 55,808    
  55,000         Capital One Master Trust,
4.900%, due 03/15/10		     56,883    
  95,000         Citibank Credit Card
Issuance Trust,
5.650%, due 06/16/08		     98,492    
  75,000         MBNA Credit Card
Master Note Trust,
4.950%, due 06/15/09		     77,624    
      288,807    
            Home Equity Asset-Backed
Securities: 2.1%		          
  89,900         Asset Backed Funding Certificates,
2.461%, due 11/25/33		     89,930    
  157,159     XX   Bayview Financial Acquisition Trust,
2.694%, due 09/28/43		     157,343    
  267,966         Centex Home Equity,
2.460%, due 01/25/34		     268,383    
  294,505         Emergent Home
Equity Loan Trust,
7.080%, due 12/15/28		     301,456    
  236,000         GSAA Trust, 5.242%, due 05/25/35     234,553    
  103,738         Merrill Lynch
Mortgage Investors, Inc.,
2.541%, due 07/25/34		     103,847    
  38,662         Residential Asset Mortgage
Products, Inc.,
2.491%, due 06/25/33		     38,654    
  143,994         Residential Asset Securities Corp.,
2.491%, due 12/25/33		     144,283    
      1,338,449    
            Other Asset-Backed Securities: 0.4%  
  34,678     XX   Amortizing Residential
Collateral Trust,
2.681%, due 05/25/32		     34,657    
  11,000         Chase Funding Mortgage Loan,
2.734%, due 09/25/24		     10,944    
  7,000         Chase Funding Mortgage Loan,
4.045%, due 05/25/33		     7,036    
  52,488         Chase Funding Mortgage
Loan Asset-Backed Certificates,
2.481%, due 07/25/33		     52,550    
  96,000     XX   First Horizon Asset Back Trust,
0.000%, due 10/25/34		     96,000    
  8,000     XX   Popular ABS Mortgage
Pass-Through Trust,
3.735%, due 12/25/34		     7,980    
  8,000     XX   Popular ABS Mortgage
Pass-Through Trust,
4.000%, due 12/25/34		     7,983    
      217,150    
    Total Asset-backed Securities
(Cost $2,022,196)		     2,026,660    

 

See Accompanying Notes to Financial Statements

97


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
  COLLATERALIZED MORTGAGE OBLIGATIONS: 11.2%        
            Commercial Mortgage-Backed
Securities: 2.4%		          
$ 81,000         Bear Stearns Commercial
Mortgage Securities,
4.170%, due 01/12/41		   $ 81,394    
  79,000         COMM, 3.600%, due 03/10/39     77,665    
  303,000         CS First Boston
Mortgage Securities Corp.,
3.861%, due 03/15/36		     302,519    
  40,000         CS First Boston
Mortgage Securities Corp.,
7.792%, due 04/14/62		     46,162    
  215,000         DLJ Commercial Mortgage Corp.,
6.240%, due 11/12/31		     231,638    
  60,000     #   DLJ Commercial Mortgage Corp.,
6.460%, due 03/10/32		     65,433    
  570,000         DLJ Commercial Mortgage Corp.,
7.300%, due 06/10/32		     640,777    
  97,000         GE Capital Commercial
Mortgage Corp.,
5.994%, due 12/10/35		     103,893    
      1,549,481    
            Federal Home Loan
Mortgage Corporation: 0.7%		          
  469,538         Freddie Mac,
2.740%, due 04/15/32		     473,362    
      473,362    
            Whole Loan Collateral PAC: 1.1%  
  141,376         GSR Mortgage Loan Trust,
2.581%, due 10/25/32		     141,421    
  184,642         MASTR Alternative Loans Trust,
2.581%, due 11/25/33		     184,895    
  112,723         MASTR Alternative Loans Trust,
8.500%, due 05/25/33		     114,742    
  239,756         Washington Mutual,
2.580%, due 03/25/34		     240,236    
      681,294    
            Whole Loan Collateralized
Mortgage Obligations: 7.0%		          
  203,712         Banc of America Funding Corp,
5.750%, due 09/20/34		     206,434    
  320,763         Bank of America Alternative
Loan Trust, 2.631%, due 12/25/33		     321,260    
  134,393         Bank of America
Mortgage Securities,
2.631%, due 12/25/33		     134,582    
  113,471         Bank of America
Mortgage Securities,
5.000%, due 12/25/18		     114,216    
  115,217         Bank of America
Mortgage Securities,
5.000%, due 06/25/33		     114,749    
  69,629         Bank of America
Mortgage Securities,
5.250%, due 11/25/19		     70,586    
  63,823         Bank of America
Mortgage Securities,
5.500%, due 11/25/33		     63,215    
  111,134         Citicorp Mortgage Securities, Inc.,
2.433%, due 10/25/33		     110,913    

 

Principal
Amount		           Value  
            Whole Loan Collateralized
Mortgage Obligations: (continued)		          
$ 70,502         Countrywide Alternative
Loan Trust,
2.581%, due 07/25/18		   $ 70,647    
  108,225         Countrywide Alternative
Loan Trust,
5.000%, due 10/25/18		     108,935    
  117,715         Countrywide Home Loan
Mortgage Pass Through Trust,
5.000%, due 11/25/18		     118,487    
  99,000         Countrywide Home Loan
Mortgage Pass Through Trust,
6.000%, due 11/25/34		     102,240    
  114,000         CS First Boston Mortgage
Securities Corp.,
4.147%, due 10/25/33		     113,167    
  139,081         GMAC Mortgage Corp.
Loan Trust, 5.250%, due 04/25/34		     139,463    
  230,000         GMAC Mortgage Corp.
Loan Trust, 5.500%, due 01/25/34		     233,620    
  121,455         GSR Mortgage Loan Trust,
6.500%, due 01/25/34		     126,655    
  96,432         Homebanc Mortgage Trust,
2.611%, due 08/25/29		     96,384    
  161,000     XX   MASTR Alternative Loans Trust,
0.000%, due 01/15/20		     165,025    
  109,000         MASTR Alternative Loans Trust,
5.750%, due 09/25/34		     110,851    
  198,909         MASTR Alternative Loans Trust,
6.000%, due 09/25/34		     204,007    
  92,021         MASTR Asset Securitization Trust,
2.631%, due 11/25/33		     92,222    
  98,000         MASTR Asset Securitization Trust,
5.500%, due 09/25/34		     96,630    
  80,784         MLCC Mortgage Investors, Inc.,
2.541%, due 04/25/29		     80,920    
  139,324         Prime Mortgage Trust,
5.250%, due 11/25/19		     141,240    
  132,467         Residential Accredit Loans, Inc.,
2.631%, due 03/25/18		     132,729    
  99,000         Residential Asset
Securitization Trust,
5.500%, due 11/25/34		     97,580    
  143,000         Residential Funding
Mortgage Sec I,
5.750%, due 09/25/34		     143,522    
  581,144         Thornburg Mortgage
Securities Trust,
2.531%, due 12/25/33		     581,322    
  141,004         Washington Mutual,
6.000%, due 06/25/34		     144,617    
  182,847         Wells Fargo Mortgage
Backed Securities Trust,
2.681%, due 02/25/34		     183,185    
  130,000         Wells Fargo Mortgage
Backed Securities Trust,
4.500%, due 08/25/18		     124,671    
      4,544,074    
    Total Collateralized
Mortgage Obligations
(Cost $7,298,929)		     7,248,211    

 

See Accompanying Notes to Financial Statements

98


  PORTFOLIO OF INVESTMENTS
ING EQUITY AND BOND FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED) (CONTINUED)

Principal
Amount		           Value  
OTHER BONDS: 0.5%  
            Sovereign: 0.5%      
$ 29,118     @@   Brazilian Government Intl. Bond,
3.125%, due 04/15/12		   $ 27,367    
  22,000     @@   Brazilian Government Intl. Bond,
12.250%, due 03/06/30		     27,940    
  36,000     @@,S   Colombia Government Intl. Bond,
10.000%, due 01/23/12		     40,950    
  59,000     @@   Dominican Republic,
9.040%, due 01/23/13		     51,478    
  71,000     @@   Russian Federation,
5.000%, due 03/31/30		     70,840    
  28,000     @@,S   Turkey Government Intl. Bond,
12.375%, due 06/15/09		     34,860    
  14,000     @@,#   Ukraine Government Intl. Bond,
7.650%, due 06/11/13		     14,175    
  50,847     @@,S,XX   Uruguay Government Intl. Bond,
10.500%, due 10/20/06		     58,800    
  15,000     @@   Venezuela Government Intl. Bond,
8.500%, due 10/08/14		     15,638    
    Total Other Bonds
(Cost $321,737)		     342,048    
  MUNICIPAL BONDS: 0.1%        
            Municipal: 0.1%  
  25,000         City of New York NY,
5.000%, due 11/01/08		     26,966    
  25,000         City of New York NY,
5.000%, due 11/01/11		     27,300    
  25,000         City of New York NY,
5.000%, due 11/01/15		     27,156    
    Total Municipal Bonds
(Cost $82,205)		     81,422    
    Total Long-Term Investments
(Cost $62,388,209)		     65,854,178    

 

SHORT-TERM INVESTMENTS: 5.1%

    Repurchase Agreement: 5.1%      
  3,292,000     Morgan Stanley Repurchase
Agreement 11/30/04, 2.070%,
due 12/01/04, $3,292,189 to be
received upon repurchase
(Collateralized by $3,220,000
various U.S. Government Agency
Obligation, 4.750%-5.250%, Market
Value plus accrued interest
$3,365,716, due 01/02/07-08/01/12)		      
 
 
 
 
 
 
 
 		      
3,292,000		    
    Total Short-Term Investments
(Cost $3,292,000)		             3,292,000    
    Total Investments In
Securities (Cost
$65,680,209)*		     107.5 %   $ 69,146,178    
    Other Assets and
Liabilities-Net		     (7.5 )     (4,849,488 )  
    Net Assets     100.0 %   $ 64,296,690    

 

@  Non-income producing security

@@  Foreign issuer

STRIP  Separate Trading of Registered Interest and Principal of Securities

#  Securities with purchases pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees.

C  Bond may be called prior to maturity date.

W  When-issued or delayed delivery security.

S  Segregated securities for futures, when-issued or delayed delivery securities held at November 30, 2004.

I  Illiquid security

X  Fair value determined by ING Funds Valuation Committee appointed by the Funds' Board of Directors/Trustees.

XX  Value of securities obtained from one or more dealers making markets in the securities in accordance with the Fund's valuation procedures.

**  Defaulted security

*  Cost for federal income tax purposes is $65,725,180. Net unrealized depreciation consists of:

Gross Unrealized Appreciation   $ 4,643,604    
Gross Unrealized Depreciation     (1,222,606 )  
Net Unrealized Depreciation   $ 3,420,998    

 

Information concerning open futures for ING Equity and Bond Fund at November 30, 2004 is shown below:

Short Contracts   No. of
Contracts		   Notional
Market Value		   Expiration
Date		   Unrealized
Gain (Loss)		  
U.S. 2 Year
Treasury Note		     3     $ (630,797 )   01/05/05   $ 595    
U.S. 10 Year
Treasury Note		     10       (1,114,531 )   12/30/04     10,731    
            $ (1,745,328 )       $ 11,326    
Long Contracts  
U.S. Long Bond     7     $ 777,656     12/30/04   $ (4,285 )  

 

See Accompanying Notes to Financial Statements

99


  PORTFOLIO OF INVESTMENTS
ING REAL ESTATE FUND  AS OF NOVEMBER 30, 2004 (UNAUDITED)

Shares           Value  
  REAL ESTATE INVESTMENT TRUSTS: 93.2%        
            Apartments: 19.0%  
  99,600     L   Apartment Investment & 
Management Co.		   $ 3,622,452    
  338,100     L   Archstone-Smith Trust     12,340,650    
  102,600     L   AvalonBay Communities, Inc.     7,294,860    
  154,500     L   Camden Property Trust     7,575,135    
  60,200     L   Essex Property Trust, Inc.     4,847,906    
  30,000     L   Post Properties, Inc.     1,023,000    
  424,500         United Dominion Realty Trust, Inc.     9,759,255    
      46,463,258    
            Diversified: 8.0%  
  127,100     @   American Campus
Communities, Inc.		     2,656,390    
  204,000         Liberty Property Trust     8,364,000    
  116,600         Vornado Realty Trust     8,570,100    
      19,590,490    
            Health Care: 2.0%  
  385,800         Omega Healthcare Investors, Inc.     4,826,358    
      4,826,358    
            Hotels: 5.0%  
  465,500         Host Marriott Corp.     7,289,730    
  81,100         LaSalle Hotel Properties     2,489,770    
  167,800         Strategic Hotel Capital, Inc.     2,533,780    
      12,313,280    
            Office Property: 21.7%  
  205,000         Arden Realty, Inc.     7,380,000    
  199,100         Boston Properties, Inc.     11,981,838    
  176,650         Corporate Office
Properties Trust SBI MD		     4,907,337    
  54,000         Mack-Cali Realty Corp.     2,361,960    
  277,800         Maguire Properties, Inc.     7,308,918    
  85,400         Prentiss Properties Trust     3,193,106    
  150,100     L   SL Green Realty Corp.     8,650,263    
  439,000         Trizec Properties, Inc.     7,230,330    
      53,013,752    
            Regional Malls: 18.5%  
  70,900         CBL & Associates Properties, Inc.     5,196,261    
  182,900         General Growth Properties, Inc.     6,275,299    
  140,100     L   Macerich Co.     8,509,674    
  198,900         Mills Corp.     11,806,704    
  214,800         Simon Property Group, Inc.     13,334,784    
      45,122,722    
            Shopping Centers: 10.3%  
  148,400         Acadia Realty Trust     2,248,260    
  164,900     L   Developers Diversified Realty Corp.     7,098,945    
  122,400         Pan Pacific Retail Properties, Inc.     7,258,320    
  166,700         Regency Centers Corp.     8,668,400    
      25,273,925    
            Storage: 1.0%  
  173,300         Extra Space Storage, Inc.     2,408,870    
      2,408,870    

 

Shares           Value  
            Warehouse: 7.7%      
  207,279     L   Catellus Development Corp.   $ 6,508,561    
  305,200         ProLogis     12,278,196    
      18,786,757    
    Total Real Estate
Investment Trust
(Cost $173,275,454)		     227,799,412    
  COMMON STOCK: 5.1%        
            Hotels and Motels: 5.1%  
  238,700     L   Starwood Hotels & 
Resorts Worldwide, Inc.		     12,481,623    
    Total Common Stock
(Cost $8,829,008)		     12,481,623    
    Total Long-Term Investments
(Cost $182,104,462)		     240,281,035    
Principal
Amount		           Value  

 

SHORT-TERM INVESTMENTS: 3.7%

    Securities Lending CollateralCC: 3.7%  
$ 9,043,070     The Bank of New York Institutional
Cash Reserves Fund		      
 		       9,043,070    
    Total Short-Term Investments
 (Cost $9,043,070)		      
 		       9,043,070    
    Total Investments In
Securities (Cost
$191,147,532)*		     102.0 %     $249,324,105    
    Other Assets and
Liabilities-Net		     (2.0 )     (4,954,005)    
    Net Assets     100.0 %   $ 244,370,100    

 

@  Non-income producing security

cc  Securities purchased with cash collateral for securities loaned.

L  Loaned security, a portion or all of the security is on loan at November 30, 2004.

*  Cost for federal income tax purposes is $189,916,706. Net unrealized appreciation consists of:

Gross Unrealized Appreciation   $ 59,407,399    
Gross Unrealized Depreciation     -    
Net Unrealized Appreciation   $ 59,407,399    

 

See Accompanying Notes to Financial Statements

100


(THIS PAGE INTENTIONALLY LEFT BLANK)


ING Funds Distributor, LLC offers the funds listed below. Before investing in a fund, shareholders should carefully review the fund's prospectus. Investors may obtain a copy of a prospectus of any ING Fund by calling (800) 992-0180.

Domestic Equity and Income Funds

ING Balanced Fund
ING Convertible Fund
ING Equity and Bond Fund
ING Equity Income Fund
ING Real Estate Fund

Domestic Equity Growth Funds

ING Disciplined LargeCap Fund
ING Growth Fund
ING LargeCap Growth Fund
ING MidCap Opportunities Fund
ING SmallCap Opportunities Fund
ING Small Company Fund

Domestic Equity Index Funds

ING Index Plus LargeCap Fund
ING Index Plus MidCap Fund
ING Index Plus SmallCap Fund

Domestic Equity Value Funds

ING Financial Services Fund
ING LargeCap Value Fund
ING MagnaCap Fund
ING MidCap Value Fund
ING SmallCap Value Fund
ING Value Opportunity Fund

Fixed Income Funds

ING GNMA Income Fund
ING Government Fund
ING High Yield Bond Fund
ING Intermediate Bond Fund
ING National Tax Exempt Bond Fund

Global Equity Funds

ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING Global Science and Technology Fund
ING Worldwide Growth Fund

International Equity Funds

ING Emerging Countries Fund
ING Foreign Fund
ING International Fund
ING International Growth Fund
ING International SmallCap Growth Fund
ING International Value Fund
ING Precious Metals Fund
ING Russia Fund

Loan Participation Fund

ING Senior Income Fund

Money Market Funds*

ING Aeltus Money Market Fund
ING Classic Money Market Fund
ING Lexington Money Market Trust
ING Money Market Fund

Strategic Allocation Funds

ING Strategic Allocation Balanced Fund
ING Strategic Allocation Growth Fund
ING Strategic Allocation Income Fund

*  An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

PROXY VOTING INFORMATION

A description of the policies and procedures that the Registrants use to determine how to vote proxies related to portfolio securities is available (1) without charge, upon request, by calling Shareholder Services toll-free at 800-992-0180; (2) on the Registrants' website at www.ingfunds.com and (3) on the SEC's website at www.sec.gov.

Information regarding how the Registrants voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Registrants' website at www.ingfunds.com and on the SEC website at www.sec.gov.

QUARTERLY PORTFOLIO HOLDINGS

The Registrants file their complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q. The Registrants' Forms N-Q are available on the SEC's website at www.sec.gov. The Registrants' Forms N-Q may be reviewed and copied at the Commissions Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330; and is available upon request from the Registrants by calling Shareholder Services toll-free at 800-992-0180.


Investment Manager

ING Investments, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258

Administrator

ING Funds Services, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258

Distributor

ING Funds Distributor, LLC
7337 E. Doubletree Ranch Road
Scottsdale, Arizona 85258
1-800-334-3444

Transfer Agent

DST Systems, Inc.
P.O. Box 419368
Kansas City, Missouri 64141

Custodian

The Bank of New York
100 Colonial Center Parkway, Suite 300
Lake Mary, Florida 32746

Legal Counsel

Dechert
1775 I Street, N.W.
Washington, D.C. 20006

For more complete information, or to obtain a prospectus on any ING fund, please call your Investment Professional or ING Funds Distributor, LLC at (800) 992-0180 or log on to www.ingfunds.com. The prospectus should be read carefully before investing. Consider the fund's investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this information and other information about the fund. Information regarding how the Funds voted proxies related to portfolio securities during the most recent 12-month period ended June 30 is available without charge on the Funds' website at www.ingfunds.com and on the SEC's website at www.sec.gov.

PRSAR-UFDEIQ (1104-012805)


ITEM 2.                             CODE OF ETHICS.

 

Not required for semi-annual filing.

 

ITEM 3.                             AUDIT COMMITTEE FINANCIAL EXPERT.

 

Not required for semi-annual filing.

 

ITEM 4.                             PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 

Not required for semi-annual filing.

 

ITEM 5.                             AUDIT COMMITTEE OF LISTED REGISTRANTS.

 

Not required for semi-annual filing.

 

ITEM 6.                             SCHEDULE OF INVESTMENTS.

 

Schedule is included as part of the report to shareholders filed under Item 1 of

this Form.

 

ITEM 7.                             DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

 

Not required for semi-annual filing.

 

ITEM 8.                             PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

 

Not applicable.

 

ITEM 9.                             SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

The Board has a Nominating Committee (“Committee”) for the purpose of considering and presenting to the Board candidates it proposes for nomination to fill Trustee vacancies on the Board.  The Committee currently consists of four Trustees of the Board, none of whom are considered “interested persons” of the Trust within the meaning of Section 2(a)(19) of the Investment Company Act of 1940.  The Committee has adopted a written charter that sets forth the policies and procedures of the Committee.  The Committee will accept referrals for potential candidates from Board members, Fund shareholders, legal counsel to the disinterested Trustees or such other sources as the Committee deems appropriate.  Shareholders can submit recommendations in writing to the attention of the Chairperson of the Committee at an address to be maintained by Fund management for this purpose.  In order for the Committee to consider a potential candidate, the Committee initially must receive at least the following information regarding such person: (1) name; (2) date of birth; (3) education; (4) business, professional or other relevant experience and areas of expertise; (5) current business, professional or other relevant experience and areas of expertise; (6) current business and home addresses and contact information; (7) other board positions or prior experience; and (8) any knowledge and experience relating to investment companies and investment company governance.

 


 

earlier than the 90th day prior to such meeting and not later than the close of business on the later of the 60th day prior to such meeting or the 10th day following the day on which public announcement of the date of the meeting is first made, by either disclosure in a press release or in a document publicly filed by the Fund with the Securities and Exchange Commission.

 

ITEM 10.                       CONTROLS AND PROCEDURES.

 

(a)                                  Based on our evaluation conducted within 90 days of the filing date, hereof, the design and operation of the registrant’s disclosure controls and procedures are effective to ensure that material information relating to the registrant is made known to the certifying officers by others within the appropriate entities, particularly during the period in which Forms N-CSR are being prepared, and the registrant’s disclosure controls and procedures allow timely preparation and review of the information for the registrant’s Form N-CSR and the officer certifications of such Form N-CSR.

 

(b)                                 There were no significant changes in the registrant’s internal controls that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 11.                       EXHIBITS.

 

(a)(1)                    The Code of Ethics is not required for the semi-annual filing.

 

(a)(2)                    A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as EX-99.CERT.

 

(a)(3)                    Not required for semi-annual filing.

 

(b)                                 The officer certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as EX-99.906CERT

 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant): ING Equity Trust

 

By

/s/

James M. Hennessy

 

 

 

James M. Hennessy

 

 

President and Chief Executive Officer

 

 

 

 

Date:

February 7, 2005

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By

/s/

James M. Hennessy

 

 

 

James M. Hennessy

 

 

President and Chief Executive Officer

 

 

Date:

February 7, 2005

 

 

 

 

 

By

/s/

Michael J. Roland

 

 

 

Michael J. Roland

 

 

Executive Vice President and Chief Financial Officer

 

 

 

 

Date:

February 7, 2005