-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QVsPZRuTk7UAa8WoYA5Hlmw1GcOaoZeXDyrgbbv8Ws42Dyp8LAdDJhckA93+ra46 GV8XE5EJ/Hf2TLiuFZX6pA== 0000950153-03-001726.txt : 20030829 0000950153-03-001726.hdr.sgml : 20030829 20030828201952 ACCESSION NUMBER: 0000950153-03-001726 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030829 EFFECTIVENESS DATE: 20030829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ING VP MONEY MARKET PORTFOLIO CENTRAL INDEX KEY: 0000002663 IRS NUMBER: 060920532 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02565 FILM NUMBER: 03872276 BUSINESS ADDRESS: STREET 1: ING FUNDS SERVICES STREET 2: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85258 BUSINESS PHONE: 480-477-3000 MAIL ADDRESS: STREET 1: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 06103-3602 FORMER COMPANY: FORMER CONFORMED NAME: AETNA VARIABLE ENCORE FUND DATE OF NAME CHANGE: 20020322 FORMER COMPANY: FORMER CONFORMED NAME: ING MONEY MARKET PORTFOLIO DATE OF NAME CHANGE: 20020320 FORMER COMPANY: FORMER CONFORMED NAME: AETNA VARIABLE ENCORE FUND INC DATE OF NAME CHANGE: 19920703 N-CSRS 1 p68192knvcsrs.txt N-CSRS OMB APPROVAL OMB Number: 3235-0570 Expires: Nov. 30, 2005 Estimated average burden hours per response: 5.0 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-02565 --------- ING VP Money Market Portfolio ----------------------------- (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: December 31 ----------- Date of reporting period: January 1, 2003 to June 30, 2003 -------------------------------- 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): SEMI-ANNUAL REPORT (PHOTO OF COMPASS) June 30, 2003 Classes R and S ING VARIABLE PRODUCT PORTFOLIOS INTERNATIONAL EQUITY PORTFOLIO ING VP International Equity Portfolio DOMESTIC EQUITY GROWTH PORTFOLIOS ING VP Growth Portfolio ING VP Small Company Portfolio ING VP Technology Portfolio DOMESTIC EQUITY VALUE PORTFOLIO ING VP Value Opportunity Portfolio DOMESTIC EQUITY AND INCOME PORTFOLIOS ING VP Balanced Portfolio ING VP Growth and Income Portfolio FIXED INCOME PORTFOLIOS ING VP Bond Portfolio ING VP Money Market Portfolio (ING FUNDS LOGO) TABLE OF CONTENTS - -------------------------------------------------------------------------------- President's Letter...................................... 1 Portfolio Managers' Reports: International Equity Portfolio........................ 2 Domestic Equity Growth Portfolios..................... 4 Domestic Equity Value Portfolio....................... 10 Domestic Equity and Income Portfolios................. 12 Fixed Income Portfolios............................... 16 Index Descriptions...................................... 19 Statements of Assets and Liabilities.................... 20 Statements of Operations................................ 22 Statements of Changes in Net Assets..................... 24 Financial Highlights.................................... 29 Notes to Financial Statements........................... 38 Portfolios of Investments............................... 47 Director and Officer Information........................ 83
(THIS PAGE INTENTIONALLY LEFT BLANK) PRESIDENT'S LETTER - -------------------------------------------------------------------------------- [PHOTO] JAMES M. HENNESSY Dear Shareholder, It would be an understatement to refer to this past year as a challenging one for investors. In the past twelve months, there have been a number of events on the geopolitical front and numerous economic setbacks that have tested investor resilience. We are now in the third year of one of the longest economic downturns in U.S. history. And although few of us will take much comfort in the fact that we have coped through a particularly challenging time, perhaps we should. We at ING Funds remain optimistic about the future. We acknowledge the recent difficulties, but we also prefer to look at the positives that have emerged in the wake of those difficulties. For instance, the quick actions on the part of the financial industry and government regulators following a string of recent corporate scandals may have helped regain investor trust as well as introduce new accounting standards that may bring permanent improvements to our industry. Although I do not wish to overstate my enthusiasm, I do believe that the gradual market upturn of recent months supports our long-held philosophy that it is important for investors to remain focused on their long-term goals and maintain reasonable expectations. We remain committed to providing quality service and innovative products to help meet the needs of our investors,and we are excited and optimistic about the future. On behalf of ING Funds, I thank you for your continued support and confidence and look forward to serving you in the future. Sincerely, /s/ James M. Hennessy James M. Hennessy President ING Funds August 15, 2003 1 ING VP INTERNATIONAL EQUITY PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment specialists, ING Aeltus Investment Management, Inc., -- the Sub-Adviser. GOAL: ING VP International Equity Portfolio (the "Portfolio") seeks long-term capital growth primarily through investment in a diversified portfolio of common stocks principally traded in countries outside of the United States. MARKET OVERVIEW: A hesitant international economy and the looming hostilities in Iraq exerted strong downward pressure on international equity markets through mid-March. In Asia, the already problematic outlook was compounded by the outbreak of the Severe Acute Respiratory Syndrome (SARS) virus. In tandem with Wall Street, international markets began a remarkable recovery once the U.S. invaded Iraq. The notable exception was Japan, where initially forced selling of blue-chip shares by domestic institutions restricted gains. In May and June, however, this pressure had abated and the Japanese market was the best performing region. For the period as a whole, the Developed Asia/Australia region (+16.0%) showed the highest return, followed by Pan-Europe (+11.2%) and Japan (+3.1%). The depreciation of the U.S. dollar during the period, especially against the euro, bolstered the dollar-based return significantly. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, returned 6.92% compared to MSCI EAFE Index, which returned 9.85% for the same period. PORTFOLIO SPECIFICS: The Portfolio performance was characterized by a sharp reversal of fortune of the cyclically sensitive and the weakly capitalized stocks within the benchmark. The Portfolio, with its relative emphasis on well-financed companies with strong and sustainable growth prospects, consequently underperformed vis-a-vis the benchmark. This trend was especially acute from mid-March through May. In Japan this trend was compounded by the forced liquidation of relatively liquid and higher quality stocks. At the regional level, the performance shortfall arose almost entirely from adverse stock selection in Japan. European stock selection contributed marginally to the Portfolio's underperformance, while in Developed Asia/Australia a small negative contribution was recorded. Across the Portfolio, sector allocation added no value. The positive impacts of underweights in consumer staples and materials and the overweight of telecom were effectively neutralized by the Portfolio's overweight positions in energy and utilities and the underweight exposure to industrials. Adverse stock selection in the industrials, consumer staples, consumer discretionary, and financials sectors held back performance, while stocks within information technology added value. The largest individual negative was our lack of any holdings in the strongly recovering Barclays PLC (a British bank). Two other poor performers were Numico NV, a Dutch food producer with operational problems at its U.S. subsidiary, and Japanese grocer Ito-Yokado, which incurred unexpectedly high restructuring costs. Hong Kong trading and property conglomerate Li & Fung contributed the most positively after management had upgraded its earnings target. Telecom Italia was also a noteworthy contributor after the merger with part of the Olivetti group. MARKET OUTLOOK: Investors are hoping for a recovery in corporate spending in the U.S., as the European economies remain mired in a broad based slowdown. Globally, the balance sheet and earnings deterioration appear to be stabilizing. European companies should be able to achieve some earnings growth through cost- cutting. Fears of a credit crunch have eased in Europe due to lower interest rates and improving balance sheets. Deferred capital spending is also leading to increased obsolescence, especially in technology, suggesting that this category should start slowly improving later this year. On balance, the economic slowdown seems to have run its course and is allowing markets to project resumed earnings growth within the next year. The latest rally seems to be more sustainable than the many false starts we have had in the bear market. Under anything but a Japanese style deflation scenario, to which we attach only a small probability, the mid-March lows represent a major cyclical bottom. We have adopted a slight pro-cyclical stance in Europe and are becoming less defensive in Japan. In the short run, some consolidation is possible ahead of more concrete signs of an economic recovery. As the second half of the year progresses, increasing economic and earnings estimates allow for further modest upside from current levels. 2 PORTFOLIO MANAGERS' REPORT ING VP INTERNATIONAL EQUITY PORTFOLIO - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ---------------------------------------------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION OF CLASS R OF CLASS S 1 YEAR 5 YEAR 12/22/97 11/01/01 ------ ------ -------- -------- Class R -12.03% -6.84% -2.31% -- Class S -12.23% -- -- -10.74% MSCI EAFE Index -6.06% -3.68% -0.70%(1) -2.03%
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP International Equity Portfolio against the MSCI EAFE 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 Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on Portfolio distributions or the redemption of portfolio shares. Total returns reflect the fact that the Investment Manager has waived certain fees and operating expenses otherwise payable by the Portfolio, subject to possible later reimbursement during a three-year period. Total returns would have been lower had there been no waiver to the Portfolio. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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. Portfolio holdings are subject to change daily. (1) Since inception performance for the index is shown from 01/01/98. PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. These risks include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. International investing does pose special risks including currency fluctuations, economic and political risks not found in investments that are solely domestic. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 19. 3 ING VP GROWTH PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment specialists led by Kenneth Bragdon, CFA, ING Aeltus Investment Management, Inc., -- the Sub-Adviser. GOAL: ING VP Growth Portfolio (the "Portfolio") seeks growth of capital through investment in a diversified portfolio consisting primarily of common stocks and securities convertible into common stocks believed to offer growth potential. MARKET OVERVIEW: After beginning the year with a 9% decline, the market began to rally in mid-March and rose nearly 21% from it's lows through the end of June. The rally reflected the easing of geopolitical tensions, as the war in Iraq was relatively short, and optimism that the passage of a new economic stimulus package would have a positive impact on U.S. economic growth. Economically sensitive sectors, such as technology and consumer discretionary stocks, outperformed during the first half. Sectors that benefited most from the cut in the dividend tax rate, such as utilities, also performed well during the period. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, provided a total return of 14.01% compared to the Russell 1000 Growth Index, which returned 13.09% for the same period. PORTFOLIO SPECIFICS: Strong stock selection in the health care and consumer discretionary sectors were the biggest contributors to relative performance. In the health care sector, our holdings in Aetna, Inc. rose sharply during the first half. Aetna's first-quarter earnings beat consensus by 56%, and forward-earnings estimates were raised significantly. Aetna has made significant progress narrowing the profitability gap between them and their managed care peers. In the information technology sector, our holdings in internet commerce stocks such as Yahoo! Inc. and Expedia significantly outperformed, reflecting strong secular growth trends and unexpected positive earnings. Our performance was hurt by poor stock selection in the technology and producer durables sectors. In the technology sector, a still challenging economy combined with ongoing pressure on technology budgets led to disappointing sales from Intuit and Hewlett-Packard in the first quarter. Other names, including Microchip and Texas Instruments, had to reduce their earnings outlook due, in part, to the impact of the Severe Acute Respiratory Syndrome (SARS) outbreak in Asia. During the recent rally we were hurt by being overweight more reliable, but slower growth names such as anti-virus maker Symantec, and underweight more volatile, but potentially faster growing names such as semiconductor maker Intel. In the producer durables sector, our investment in Parker Hannifin, a supplier of industrial parts, declined due to softer than expected results from its fluid control and aerospace businesses. These soft trends caused the company to lower earnings guidance for the year. MARKET OUTLOOK: With the military action in Iraq now largely behind us, investors' attention has turned toward the prospects for economic growth in the U.S. In this regard, we remain optimistic that the combination of stimulative tax policy, accommodative monetary policy, low interest rates and a weaker dollar will combine to drive relatively strong economic growth in the months ahead. Despite the recent rally, equity valuations remain attractive relative to other asset classes, in our view. We continue to believe that these factors create a positive backdrop for the equity markets overall, and for growth stocks in particular. As always, we continue to invest in companies displaying positive business momentum and attractive valuation. 4 PORTFOLIO MANAGERS' REPORT ING VP GROWTH PORTFOLIO - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 --------------------------------------------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION OF CLASS R OF CLASS S 1 YEAR 5 YEAR 12/13/96 11/01/01 ------ ------ -------- -------- Class R -2.38% -4.71% 4.16% -- Class S -2.63% -- -- -9.50% Russell 1000 Growth Index 2.94% -5.03% 2.67%(1) -6.62%
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP Growth Portfolio against the Russell 1000 Growth 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 Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on Portfolio distributions or the redemption of portfolio shares. Total returns reflect the fact that the Investment Manager has waived certain fees and operating expenses otherwise payable by the Portfolio, subject to possible later reimbursement during a three-year period. Total returns would have been lower had there been no waiver to the Portfolio. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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. Portfolio holdings are subject to change daily. (1) Since inception performance for the index is shown from 12/01/96. PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. They include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. Growth-oriented stocks typically sell at relatively high valuations as compared to other types of stocks. Historically, growth-oriented stocks have been more volatile than value-oriented stocks. The value of convertible securities may fall when interest rates rise. See accompanying index descriptions on page 19. 5 ING VP SMALL COMPANY PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment specialists led by Carolie Burroughs, CFA, ING Aeltus Investment Management, Inc. -- the Sub-Adviser. INVESTMENT OBJECTIVE: ING VP Small Company Portfolio (the "Portfolio") seeks growth of capital primarily through investment in a diversified portfolio of common stocks and securities convertible into common stocks of companies with smaller market capitalizations. MARKET OVERVIEW: Funds flowed out of the U.S. equities market during the first half of the six-month period ended June 30, 2003, as the threat of war with Iraq rattled investors' nerves. The uncertainty surrounding the multitude of possible outcomes of a confrontation with Iraq consumed Americans. This distraction stifled consumer spending and paralyzed corporate decision making, essentially slowing down an already anemic economic recovery. By March, it was almost certain that there would be a U.S.-led invasion of Iraq. The market began to rally in anticipation of a successful outcome. The market rallied for the remainder of the period as the news flow turned positive. Hussein's regime crumbled. First quarter earnings were better than expected for U.S. companies. Consumer confidence increased. Finally, President Bush's second tax cut package was approved, which sent a strong signal to the market that this administration was committed to supporting the U.S. economy in its recovery. For the six months ended June 30, 2003, the S&P 500 Index was up 11.77%, the Russell 1000 Index was up 12.34%, the Nasdaq Composite Index was up 21.82%, and the S&P 600 Index was up 12.94%. Speculation in the market has continued since the fourth quarter 2002. This is evidenced by the Russell 2000 Index's ongoing outperformance over the S&P Small Cap 600 Index. For the six months ended June 30, 2003, the Russell 2000 Index returned 17.88%. Technology, biotechnology, and telecommunications were some of the big winners, regardless of whether fundamentals supported the stock prices. During the period, the best performing sectors in the Index were technology and healthcare. Consumer staples and autos and transportation were the worst performing sectors. The Russell 2000 Growth Index beat the Russell 2000 Value Index by almost 275 bps. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, returned 13.88%, underperforming the benchmark, the Russell 2000 Index, which returned 17.88% over the same period. PORTFOLIO SPECIFICS: Stock selection in the technology and producer durables sectors contributed positively to the Portfolio's performance. Stock selection in the consumer discretionary and materials and processing sectors contributed negatively to the Portfolio's performance. Our underweight position in the materials and processing sector helped performance, while our slight underweight position in healthcare hurt performance. The largest individual positive contributors to performance during the period were SanDisk, InterDigital Communications, and Flagstar Bancorp. The largest negative contributors were NPS Pharmaceuticals, Sierra Pacific Resources, and Palm. During the period we shifted to a slight underweight position in the financial services sector. In preparation for the Russell rebalance (effective June 30), we increased our weight in the consumer discretionary sector and slightly increased our weight in the technology sector. We raised about 5% in cash by selling some of the larger stocks in the Portfolio that were migrating to the Russell 1000 Index. We will hold futures while we finish investing this money in smaller, less liquid stocks. Following the rebalance, our weight in technology is higher than our target weight due to the timing of the sale of two large positions in stocks that moved to the Russell 1000 Index. We will finalize the changes to the Portfolio pertaining to the Russell rebalance by mid-July. These include achieving our target weight in the technology sector, lowering the number of holdings to 115-120, and completely eliminating the futures position. We maintain the +/-5% collar for all of our sector active weights and a style neutral position to avoid being harmed by market reversals. On average, our cash position has been 2-4%. MARKET OUTLOOK: We expect the market rally to pause going into the second quarter earnings season as stock fundamentals catch up with stock prices, or visa-versa. Although volatility declined by almost 50% during the period, we expect it to move between the highs and the lows achieved during the last six months. With volatility at these levels, we expect speculative investors to remain in the small cap space, perpetuating a market that may not consistently reward stocks with good fundamentals. Despite the current environment, we expect smaller capitalization stocks to outperform for the remainder of 2003. First, small cap stocks have historically outperformed during post-recession recovery periods. The U.S. economic recovery is slowly building momentum, as evidenced by the monthly economic data. The Federal Reserve Board implemented its thirteenth rate cut this quarter, indicating that it will do what is necessary to keep the economic recovery on track. Second, small cap companies have reported better earnings and revenues, year-to-date, and announced better business guidance going forward for 2003. Finally, active large cap managers are looking for opportunities further down the asset class spectrum, and both private equity investors and public companies have money to invest. 6 PORTFOLIO MANAGERS' REPORT ING VP SMALL COMPANY PORTFOLIO - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ------------------------------------------------------------------------------------------------ SINCE INCEPTION SINCE INCEPTION OF CLASS R OF CLASS S 1 YEAR 5 YEAR 12/27/96 11/01/01 ------ ------ -------- -------- Class R -6.04% 3.68% 8.87% -- Class S -5.83% -- -- -1.87% Russell 2000 Index -1.64% 0.97% 4.69%(1) 4.27%
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP Small Company Portfolio against the Russell 2000 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 Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on Portfolio distributions or the redemption of portfolio shares. Total returns reflect the fact that the Investment Manager has waived certain fees and operating expenses otherwise payable by the Portfolio, subject to possible later reimbursement during a three-year period. Total returns would have been lower had there been no waiver to the Portfolio. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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. Portfolio holdings are subject to change daily. (1) Since inception performance for the index is shown from 01/01/97. PRINCIPAL RISK FACTOR(S): Exposure to financial and market risks that accompany investments in equities. In exchange for higher growth potential, investing in stocks of smaller companies may entail greater price volatility and less liquidity than investing in stocks of larger companies. The Portfolio may invest in foreign securities. International investing does pose special risks including currency fluctuations, economical and political risks not found in domestic investments. Risks of foreign investing are generally intensified in emerging markets. The value of convertible securities may fall when interest rates rise. See accompanying index descriptions on page 19. 7 ING VP TECHNOLOGY PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: Ronald E. Elijah and Roderick R. Berry, AIC Asset Management, LLC -- the Sub-Adviser. GOAL: ING VP Technology Portfolio (the "Portfolio") seeks long-term capital appreciation. MARKET OVERVIEW: During the first half of 2003, the market continued to move off the bottom established in early October 2002. However, this recovery has not been without volatility. Uncertainty brought about by the conflict in the Mid-East, saber rattling in North Korea, the Severe Acute Respiratory Syndrome (SARS) epidemic in Asia, as well as growing concerns of deflation all contributed to the violent market swings that investors had to endure. Despite the uncertainties, the market has continued to "climb the wall of worry", as the NASDAQ Composite rewarded investors with a 21.8% return in the first half of the year. Since our year-end 2002 commentary we have seen the major economic indicators continue to show gradual improvement. In most areas this improvement continued in the second quarter. As we monitor the economy's progress, we generally track data in four key areas, the health of the consumer, capital expenditure levels, inflation/deflation, and economic stimulus trends. In our view, consumer confidence has continued to be a key component in the economic recovery. That confidence may be affected by recent unemployment news, with weekly jobless claims remaining over the critical 400,000 level for the entire second quarter, and the unemployment rate spiking to 6.4% in June. However, we remind investors that employment tends to be a lagging indicator in a recovery, and in our experience unemployment levels tend to peak nearly a year after the equity markets have begun their recovery. Despite rising unemployment, consumer confidence improved markedly in the second quarter over the first quarter. We have also seen continued strength in the housing market with May housing starts up 12.5%. In retail sales, spending on electronics and appliances rose 2.9% in May, the biggest increase in 18 months. Of course much of the resilience of the consumer can be attributed to the aggressive monetary and fiscal stimulus efforts that have taken place. In June, the Federal Open Market Committee (FOMC) elected to drop short-term rates another 25 basis points -- the 13th rate cut since easing began. The impact of these rate cuts has perhaps aided the consumer the most in the form of mortgage re-financings. In addition, the President recently signed a new tax relief program, which will start benefiting consumers in the second half of the year. The Federal Reserve Board ("Fed") would not be able to maintain the easing campaign if there was any threat of inflation. Indeed, the greater fear now is that Japanese style deflation may strangle the economy. Fed Chairman Alan Greenspan has made it clear that he will not stop short of printing currency to prevent such deflation. His actions appear to be working as the long-end of the yield curve is beginning to rise and the recently released PPI number for June showed a 0.5% increase. Finally, the biggest drag on the economy continues to be the absence of any rebound in capital expenditures. After indicating expansion in the first quarter, the ISM manufacturing index once again dipped below 50 in the second quarter, signifying a further contraction of the manufacturing sector. Unfortunately, over-capacity remains throughout much of the economy and will take some time to be absorbed. On a positive note, capacity utilization in the semiconductor industry has improved significantly and the resulting pricing power that is now evident will be a positive for our semiconductor and semiconductor equipment investments in the second half of the year. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, returned 16.16% compared to the Goldman Sachs Technology Industry Composite Index, which returned 21.83% for the same period. PORTFOLIO SPECIFICS: Primarily due to its large capitalization focus, the Portfolio under-performed its peer group in the first quarter, as smaller capitalization stocks led the early gains from the market bottom in October of 2002. However, as the rally broadened during the second quarter to include the large capitalization industry leaders, the Portfolio performed more in line with its peer group and the NASDAQ Composite index. Leading the way for performance during the first half of the year was the Portfolio's holdings in the semiconductor and semiconductor capital equipment segments. Of the Portfolio's top-10 performing holdings during the first half of the year, seven were in these two categories. The most disappointing investment segment during the first half of the year was software, which significantly under-performed the market. Fortunately, this segment only made up 14% of the Portfolio exiting the first half of 2003. During the first half, our investment in BMC Software was down 5%, our investment in Intuit was down 5% and our investment in Oracle was up 11%. Our largest portfolio investment, Microsoft was down 1%. For the first half of the year, the best performing individual investments in the Portfolio were, Best Buy (+82%), Lam Research (+69%), Ebay (+53%), Analog Devices (+46%) and Taiwan Semiconductor (+43%). During the first half of the year we have made some small changes to the sector weightings of the Portfolio. Most notable is the reduction in the Portfolio's software exposure. Since the beginning of the year, the software exposure has been trimmed from 21% to 14%. With the proceeds from these sales, we have increased our exposure to semiconductor equipment companies from 14% to 19%. With capital expenditure levels continuing to be weak, we wanted to reduce the Fund's exposure to companies that depend on long-lead time, multi-million dollar software implementation programs. With capacity tightening in the semiconductor industry, we also felt it was a good time to increase the Portfolio's exposure in semiconductor equipment companies. Due to improving fundamentals, we also increased the semiconductor mix slightly. MARKET OUTLOOK: With the commencement of an economic recovery last fall, our strategy for the Portfolio has been to maintain an over-weight position in the most cyclical sub-sector of the highly cyclical information technology sector, semiconductors. As has been proven in countless economic cycles before, we continue to believe that the semiconductor sub-sector will outperform as the economic recovery proceeds. To date, the sub-sector has indeed outperformed the market 8 PORTFOLIO MANAGERS' REPORT ING VP TECHNOLOGY PORTFOLIO - -------------------------------------------------------------------------------- during the recovery, but the Portfolio's performance has been somewhat muted versus our peer group due to the large capitalization focus of the Portfolio. Similar to past economic recoveries, small capitalization technology stocks have outperformed during the early months. In fact, many highly speculative small capitalization companies with no earnings have seen their stock prices more than double year-to-date. We will continue to focus the Portfolio on investments in information technology industry leaders with growing market share and healthy cash flows and believe investors may be rewarded with market and peer group out-performance as the recovery progresses. From an economic standpoint, the recovery continues to gradually muddle its way through. Despite headline unemployment numbers that show little progress, we continue to see evidence of a sustainable recovery. The end of the Iraq conflict coupled with an extremely low rate environment has boosted consumer confidence well ahead of what we saw in the first quarter. This has resulted in modest gains in consumer spending. This rise in consumer spending also comes at a time when inventory levels remain at historic lows. This has resulted in price stability and, in some cases, an increase in pricing power, across many of the sub-sectors we invest in. In fact, memory semiconductor pricing has been steadily rising recently both in the spot market and in new contracts. We are starting to see early signs of increased capital spending on technology products. For instance, during the second quarter, PC unit growth reached 10%. This is where one would logically expect to see capital spending improve initially, as the life expectancy of technology tends to be much shorter than other areas of capital expenditure. In addition, technology helps improve worker productivity -- an important feature when one considers the downsizing that many companies have recently endured. With continued strong fiscal and monetary stimulus, low inventory levels, improving consumer confidence and an aging installed base of technology products, we anticipate a continuation of the recovery in the information technology sector.
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ------------------------------------------------------------------------ SINCE INCEPTION SINCE INCEPTION OF CLASS R OF CLASS S 1 YEAR 05/01/00 11/01/01 ------ -------- -------- Class R -5.79% -31.04% -- Class S -6.10% -- -15.46% Goldman Sachs Technology Industry Composite Index 8.57% -31.17% -10.16%
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP Technology Portfolio against the Goldman Sachs Technology Industry Composite 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 Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on Portfolio distributions or the redemption of portfolio shares. Total returns reflect the fact that the Investment Manager has waived certain fees and operating expenses otherwise payable by the Portfolio, subject to possible later reimbursement during a three-year period. Total returns would have been lower had there been no waiver to the Portfolio. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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. Portfolio holdings are subject to change daily. PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. The Portfolio concentrates its investments in information technology industries and will tend to experience more volatility than funds not concentrated in one industry. Stocks of smaller companies tend to be less liquid and more volatile than stocks of larger companies. Further, stocks of smaller companies also can be particularly sensitive to expected changes in interest rates, borrowing costs and earnings. The value of convertible securities may fall when interest rates rise. See accompanying index descriptions on page 19. 9 ING VP VALUE OPPORTUNITY PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's equity investment specialists led by Donald Townswick, CFA, ING Aeltus Investment Management, Inc., -- the Sub-Adviser. GOAL: ING VP Value Opportunity Portfolio (the "Portfolio") seeks growth of capital primarily through investment in a diversified portfolio of common stocks and securities convertible into common stock. MARKET OVERVIEW: The first half of 2003 marked a return to positive territory for the S&P 500 Index, with the Index increasing 11.77% for the six months ended June 30, 2003. The positive first half performance was led by a blistering 15.37% increase in the second quarter. Investors showed their fondness for equities once again, as the Iraqi War came to an end. Resolution of this conflict allowed investors to refocus on the markets, and less on the uncertain geo-political events abroad. The Federal Reserve Board and Washington both did their parts to create a favorable environment for equities compared to fixed income through a low interest rate environment and a tax rate reduction on dividends. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, returned 9.72%, compared to the S&P 500 Index which returned 11.77% for the same period. PORTFOLIO SPECIFICS: The Portfolio experienced strong performance in the finance sector due to its positions in Bear Stearns and Countrywide Financial Corp. Bear Stearns posted its fifth consecutive earnings increase during the first quarter as record low interest rates boosted its mortgage-securities business. Strong refinancing volumes helped Countrywide Financial Corp to post record numbers. Unfortunately, the strong performance in the finance sector was offset by poor performance in the utilities sector. Slow customer growth caused telecommunication stocks to underperform the market for the quarter. The Portfolio was hurt by holdings in AT&T and SBC Communications. Jones Apparel was another stock that had a negative impact on performance during the period as a licensing dispute with Polo Ralph Lauren Corp. caused the stock to drop for the quarter. For the second half of the reporting period, the market's performance was dominated by high beta stocks. In turn, we benefited from owning such high beta stocks as Cisco and JP Morgan. On the other hand, holding low beta stocks, such as Anheuser Busch and Kellogg, was a drag on performance for the quarter. It is difficult for a risk-controlled portfolio to outperform in this type of environment. Individual stocks that hurt performance included Procter & Gamble, which underperformed after tornado damage forced the temporary closing of its plant in Tennessee, and weakness in the Asian markets caused Qualcom to underperform. In addition, not owning Altria Group, formerly known as Philip Morris, had a negative impact on performance as the stock rose significantly on a favorable legal ruling. Cendant, American Greetings, and Hewlett Packard are holdings that had a positive impact on performance. Cendant was up over 44% for the quarter and American Greetings was up almost 50%. Hewlett Packard's second quarter sales and profit exceeded analysts' forecasts and the stock was up over 37% for the quarter. Overall, sector selection had a negative impact on performance. A 13% difference in return between the best performing sector and the worst performing sector caused small active sector weights to have a larger impact on performance than if the inter-sector spread was narrower. We benefited from being overweight technology but were hurt by an underweight position in utilities, the best performing sector. MARKET OUTLOOK: We believe that the bear market may be over and expect to see a shift to a market driven more by fundamentals rather than concerns over war and anxiety over corporate scandals. The uncertainty over the war with Iraq is behind us. In addition, positive macro economic conditions such as higher gross domestic product growth, low inflation, and low interest rates suggest that we may be in the early stages of a bull market. We believe that our quantitative stock selection process coupled with our disciplined risk controls on size, style and beta may help us to perform well in this environment. 10 PORTFOLIO MANAGERS' REPORT ING VP VALUE OPPORTUNITY PORTFOLIO - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ------------------------------------------------------------------------------------------------ SINCE INCEPTION SINCE INCEPTION OF CLASS R OF CLASS S 1 YEAR 5 YEAR 12/13/96 07/16/01 ------ ------ -------- -------- Class R -9.40% 1.07% 8.30% -- Class S -9.58% -- -- -14.33% S&P 500 Index 0.25% -1.61% 5.45%(1) -9.24%(2)
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP Value Opportunity Portfolio against the S&P 500 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 Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on Portfolio distributions or the redemption of portfolio shares. Total returns reflect the fact that the Investment Manager has waived certain fees and operating expenses otherwise payable by the Portfolio, subject to possible later reimbursement during a three-year period. Total returns would have been lower had there been no waiver to the Portfolio. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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. Portfolio holdings are subject to change daily. (1) Since inception performance for the index is shown from 12/01/96. (2) Since inception performance for the index is shown from 08/01/01. PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. They include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. Because the prices of value-oriented stocks tend to correlate more closely with economic cycles than growth-oriented stocks, they generally are more sensitive to changing economic conditions, such as changes in interest rates, corporate earnings and industrial production. The value of convertible securities may fall when interest rates rise. See accompanying index descriptions on page 19. 11 ING VP BALANCED PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: Neil Kochen, CFA and James B. Kauffman, ING Aeltus Investment Management, Inc., the Sub-Adviser. GOAL: ING VP Balanced Portfolio (the "Portfolio") seeks to maximize investment return consistent with reasonable safety of principal, by investing in a diversified portfolio of one or more of the following asset classes: stocks, bonds and cash equivalents, based on the judgement of the Portfolio's management, of which of those sectors or mix thereof offers the best investment prospects. MARKET OVERVIEW: For the period, stocks outperformed bonds and small-caps outperformed large-caps as the equity markets rallied in the second quarter. The outperformance of the Portfolio's equity component was driven by the strong small-cap market, which helped the equity component beat the Standard and Poor's 500 Index ("S&P 500") and by modest outperformance of the fixed income component, relative to the Lehman Brothers Aggregate Bond Index ("Lehman Aggregate"). PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, returned 9.60% compared to the Composite Index (60% S&P 500 Index/40% Lehman Brothers Aggregate Bond Index), which returned 8.67% for the same period. PORTFOLIO SPECIFICS: Sector allocation was strong across all market caps and sectors, but the Portfolio was particularly aided by overweights in technology and consumer discretionary and underweights in telecom and consumer staples. Security selection helped performance in health care and financial names, but detracted from results in materials and consumer discretionary. Some stocks adding the most to performance were General Electric, Flagstar Bancorp and Citigroup, while some names detracting the most from performance were American International Group, Sprint and Pepsi Bottling Group. The fixed income component modestly outperformed the Lehman Aggregate Index. The Portfolio's short duration at the end of the reporting period hurt performance. Duration measures a portfolio's sensitivity to interest rate changes and is expressed in years. So by being short duration, our portfolio rose in value by less than the benchmark as interest rates fell. This drag on performance was offset by our overweighting in credit sectors, which boosted relative returns as all credit sectors have posted positive excess returns year-to-date. Credit sectors are those with higher credit risks than Treasuries. They do well during periods when investors lower the extra return they demand for the risk involved. The utilities sector was the biggest winner, with 5.82% of excess returns; industrials returned 3.73%; and financials were up 3.40%. Commercial mortgages returned 1.59%, and asset-backed securities, which tend to be shorter in duration, posted 1.26% of excess returns. Positive contributors to performance also included an underweight in mortgages, which are facing a perilous environment: 95% of the outstanding paper is refinance-able. With the average dollar price over $104, the prospect of receiving a large portion of your mortgage portfolio back at $100 is not a happy one. The sector produced 0.46% of excess return. An overall yield advantage to the benchmark contributed positively to overall results. MARKET OUTLOOK: Despite all the negative events, which weighed on the economy and markets for the past 12 months, the market appears to have bottomed in March 2003. There are currently a significant number of market and economic supports in place that should aid momentum in the market in the future. Interest rates are at a 40-year low, with the Federal Reserve indicating it has no interest in raising rates until economic growth is firmly entrenched. Fiscal policy is also very accommodative, with the recent $350 billion tax cut front-loaded to stimulate the economy in 2003 and 2004. The dollar, which declined from multi-year highs, will give U.S. firms pricing advantage in overseas markets and enhance large cap multinational profitability. Consumer confidence is rising rapidly after the end of the Iraqi conflict, as it did in 1991. Record mortgage refinancing and recent tax relief have left the consumer with a great deal of liquidity, to invest or spend. Funds have recently begun to flow from very low yielding money market mutual funds back into equities. For the first quarter of 2003, corporate profitability rose above analyst estimates, but due more to increased efficiency and productivity than from a general rise in demand. Manufacturing inventories are at record low levels. Any demand created by a very accommodative monetary and fiscal policy will have to translate into increased production and employment. Technology capital replacement has already been in evidence for several quarters, which has in turn helped support the NASDAQ relative to other indices. We look for the current gradual recovery in the economy and the markets to continue and build momentum through the third and fourth quarters of this year. 12 PORTFOLIO MANAGERS' REPORT ING VP BALANCED PORTFOLIO - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ------------------------------------------------------------------ SINCE INCEPTION OF CLASS S 1 YEAR 5 YEAR 10 YEAR 05/29/03 ------ ------ ------- -------- Class R 3.98% 2.35% 8.95% -- Class S -- -- -- 0.95% S&P 500 Index 0.25% -1.61% 10.04% 1.28%(1) Lehman Brothers Aggregate Bond Index 10.40% 7.55% 7.21% -0.20%(1) Composite Index (60% S&P 500 Index/ 40% Lehman Brothers Aggregate Bond Index) 4.85% 2.46% 9.24% 0.69%(1)
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP Balanced Portfolio against the S&P 500 Index, Lehman Brothers Aggregate Bond Index and Composite Index (60% S&P 500 Index, 40% Lehman Brothers Aggregate Bond Index). The Indices have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on Portfolio distributions or the redemption of portfolio shares. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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. Portfolio holdings are subject to change daily. (1) Since inception performance for the index is shown from 06/01/03. PRINCIPAL RISK FACTOR(S): Those generally attributable to stock and bond investing. Because the Portfolio's assets are allocated between equities and fixed income securities, the Portfolio may underperform stock funds when stocks are in favor and underperform bond funds when bonds are in favor. Investments in high yield bonds are high risk investments. Certain high yield/high risk bonds carry particular market, prepayment and credit risks and may experience greater volatility in market value than investment grade corporate bonds. International investing does pose special risks including currency fluctuations, economic and political risks not found in investments that are solely domestic. Risks of foreign investing are generally intensified for investments in emerging markets. Stocks of smaller companies tend to be less liquid and more volatile than stocks of larger companies. Further, stocks of smaller companies also can be particularly sensitive to expected changes in interest rates, borrowing costs and earnings. See accompanying index descriptions on page 19. 13 ING VP GROWTH AND INCOME PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: A team of investment professionals, each of whom specializes in a particular asset class, led by Donald Townswick, CFA, ING Aeltus Investment Management, Inc., -- the Sub-Adviser. GOAL: ING VP Growth and Income Portfolio (the "Portfolio") seeks to maximize total return through investments in a diversified portfolio of common stocks and securities convertible into common stock. It is anticipated that capital appreciation and investment income will both be major factors in achieving total return. MARKET OVERVIEW: The first half of 2003 marked a return to positive territory for the S&P 500 Index, with the Index increasing 11.77% for the six months ended June 30, 2003. The positive first half performance was led by a blistering 15.37% increase in the second quarter. Investors showed their fondness for equities once again, as the Iraqi War came to an end. Resolution of this conflict allowed investors to refocus on the markets, and less on the uncertain geo-political events abroad. The Federal Reserve Board and Washington both did their parts to create a favorable environment for equities compared to fixed income through a low interest rate environment and a tax rate reduction on dividends. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, returned 10.14%, compared to the S&P 500 Index, which returned 11.77% for the same period. PORTFOLIO SPECIFICS: Strong performance at the beginning of the reporting period in the finance sector due to positions in Bear Stearns and Countrywide Financial Corp. was offset by poor performance in the utilities and consumer discretionary sectors. Slow customer growth caused telecommunication stocks to underperform the market in the first quarter. The Portfolio was hurt by holdings in AT&T and SBC Communications. Jones Apparel was a consumer stock that had a negative impact on performance during the period as licensing dispute with Polo Ralph Lauren Corp. caused the stock to drop. Sector selection had a slightly positive impact on performance as we benefited from being overweight health care, the best performing sector, and from not owning any stocks in the commercial services sector. In contrast, being overweight consumer staples was a drag on performance. During the second quarter, the high beta stocks within the S&P 500 Index significantly outperformed low beta stocks. Because our risk controls prevent us from owning a portfolio of all high beta stocks, this was a drag on performance. In addition, Procter & Gamble underperformed significantly after tornado damage forced the temporary closing of its snack plant in Tennessee, and weakness in the Asian markets caused Qualcom to underperform. Not owning Altria Group, formerly known as Philip Morris, had a negative impact on performance as the stock was up significantly. Cendant, Hewlett Packard, and Merrill Lynch had a positive impact on performance as all posted robust gains. Overall, sector selection had a negative impact on performance. A large inter-sector spread caused small active sector weights to have a notable impact on performance. The Portfolio benefited from being overweight technology but was hurt by its underweight position in utilities, the best performing sector. MARKET OUTLOOK: We believe that the bear market may be over and expect to see a shift to a market driven more by fundamentals rather than concerns over war and anxiety over corporate scandals. The uncertainty over the war with Iraq is behind us. In addition, positive macro economic conditions such as higher gross domestic product growth, low inflation, and low interest rates suggest that we may be in the early stages of a bull market. We believe that our quantitative stock selection process coupled with our disciplined risk controls on size, style and beta may help us to perform well in this environment. 14 PORTFOLIO MANAGERS' REPORT ING VP GROWTH AND INCOME PORTFOLIO - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ---------------------------------------------------------------------------- SINCE INCEPTION OF CLASS S 1 YEAR 5 YEAR 10 YEAR 06/11/03 ------ ------ ------- -------- Class R -5.93% -6.47% 6.03% -- Class S -- -- -- -2.26% S&P 500 Index 0.25% -1.61% 10.04% 1.28%(1)
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP Growth and Income Portfolio against the S&P 500 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 Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on portfolio distributions or the redemption of Portfolio shares. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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. Portfolio holdings are subject to change daily. (1) Since inception performance for the index is shown from 06/01/03. PRINCIPAL RISK FACTOR(S): Those generally attributable to stock investing. They include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. International investing involves special risks including currency fluctuations, lower liquidity, political and economic uncertainties, and differences in accounting standards. Risks of foreign investing are generally intensified for investment in emerging markets. In exchange for higher growth potential, investing in stocks of mid-sized and smaller companies may entail greater price volatility and less liquidity than investing in stocks of larger companies. The value of convertible securities may fall when interest rates rise. See accompanying index descriptions on page 19. 15 ING VP BOND PORTFOLIO PORTFOLIO MANAGER'S REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT: James B. Kauffman, ING Aeltus Investment Management, Inc., the Sub-Adviser. GOAL: ING VP Bond Portfolio (the "Portfolio") seeks to maximize total return consistent with reasonable risk, through investments in a diversified portfolio consisting of debt securities. It is anticipated that capital appreciation and investment income will both be major factors in achieving total return. MARKET OVERVIEW: Despite the uncertainties surrounding the war in Iraq, all credit sensitive sectors rallied significantly in the first half of 2003; yields on the Treasury curve dropped as well. By the second quarter, strong buying from Asian central banks and mortgage hedgers propelled the 10-year Treasury from 3.80% to a low 3.10% only to see it retreat to 3.45% by quarter-end. China was reported to have been buying up to $600 million a day of short U. S. government paper, and their foreign reserves ballooned to $340 billion. As summer approached incipient signs of domestic economic stability, improving financial conditions, a firmer dollar, and positive equity markets resulted in rising rates for investment grade bonds. Nevertheless, the Lehman Brothers Aggregate Bond Index is up year-to-date by 3.93%. The Federal Reserve Board ("Fed") sent an unequivocal message to the markets with the release of its May policy statement: "The probability of an unwelcome substantial fall in inflation, though minor, exceeds that of a pickup in inflation from its already low level." Subsequent comments from Fed officials reiterated their concern about the tepid recovery and "corrosive deflation." The Fed concerns coupled with mediocre economic numbers and no signs of core inflation fueled a strong rally in bonds in May. However, the governors presented a more sanguine economic outlook by the June Federal Open Markets Committee meeting. While the Fed did drop overnight rates to 1.00%, the bond market backed off as many participants had hoped for a larger ease of 50 basis points. PERFORMANCE: For the six months ended June 30, 2003, the Portfolio's Class R shares, excluding any charges, returned 5.25% compared to the Lehman Brothers Aggregate Bond Index, which returned 3.93% for the same period. PORTFOLIO SPECIFICS: The Portfolio's short duration at the end of the reporting period hurt performance. Duration measures a portfolio's sensitivity to interest rate changes and is expressed in years. So by being short duration, our portfolio rose in value by less than the benchmark as interest rates fell. This drag on performance was offset by our overweighting in credit sectors, which boosted relative returns as all credit sectors have posted positive excess returns year-to-date. Credit sectors are those with higher credit risks than Treasuries. They do well during periods when investors lower the extra return they demand for the risk involved. The utilities sector was the biggest winner, with 5.82% of excess returns; industrials returned 3.73%; and financials were up 3.40%. Commercial mortgages returned 1.59%, and asset-backed securities, which tend to be shorter in duration, posted 1.26% of excess returns. Positive contributors to performance also included an underweight in mortgages, which are facing a perilous environment: 95% of the outstanding paper is refinance-able. With the average dollar price over $104, the prospect of receiving a large portion of your mortgage portfolio back at $100 is not a happy one. The sector produced 0.46% of excess return. An overall yield advantage to the benchmark contributed positively to overall results. At present we have a significant exposure to two non-index sectors: high yield and emerging market debt. Both commitments enhanced our performance versus the index as the emerging market sector produced 8.41% of excess return and the high yield sector, 7.73% excess return. MARKET OUTLOOK: Weak aggregate demand has followed the capital expenditure binge years of the late 1990s, and this phenomenon is global in nature. Many economists contend that gross domestic product must come in above 3.5% for an extended period in order for deflationary concerns to abate. We believe that the stimulative effects of negative real rates, a weaker dollar, and tax cuts will eventually boost the domestic economy out of its lethargy. The Fed is intent on fomenting the "animal spirits" of capital markets, and the American homeowner is once again reaping the rewards of cheap mortgage rates some of which may find its way into consumer spending. The big questions for bond investors are how long rates will stay relatively low and when and how fast the economy will gain traction. A yield of 3.45% on the 10-year Treasury looks very low when compared to the interest rates witnessed in the 1980s and 1990s, but so-called low yields are not unusual in the context of rates from the end of WW II until the oil embargoes of the 1970s. Clearly, the late June retreat in bond prices was the result of unsustainable, near-term supply and demand technicals, and now market pundits will be looking for data confirming their forward-looking, bullish economic outlook. In response to these historically low interest rates, we are slightly short in duration, and we continue our underweight in mortgages. 16 PORTFOLIO MANAGER'S REPORT ING VP BOND PORTFOLIO - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2003 ---------------------------------------------------------------------------------------- SINCE INCEPTION OF CLASS S 1 YEAR 5 YEAR 10 YEAR 5/3/02 ------ ------ ------- ------ Class R 11.02% 7.03% 6.78% -- Class S 10.80% -- -- 11.05% Lehman Brothers Aggregate Bond Index 10.40% 7.55% 7.21% 10.46%(1)
Based upon a $10,000 initial investment, the table above illustrates the total return of ING VP Bond Portfolio against the Lehman Brothers Aggregate Bond 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 Portfolio's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract or life insurance policy. Total returns would have been lower if such expenses or charges were included. Performance table does not reflect the deduction of taxes that a shareholder will pay on Portfolio distributions or the redemption of portfolio shares. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE PORTFOLIO WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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 MANAGER, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. Portfolio holdings are subject to change daily. (1) Since inception performance for the index is shown from 05/01/02. PRINCIPAL RISK FACTOR(S): Those generally attributable to debt investing, including increases in interest rates and loss of principal. Generally, when interest rates rise, bond prices fall. Bonds with longer maturities tend to be more sensitive to changes in interest rates. For all bonds there is a risk that the issuer will default. High-yield bonds generally are more susceptible to the risk of default than higher rated bonds. International investing does pose special risks including currency fluctuation, economic and political risks not found in investments that are solely domestic. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 19. 17 ING VP MONEY MARKET PORTFOLIO PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PORTFOLIO MANAGEMENT TEAM: A team of the Sub-Adviser's fixed-income specialists led by Jennifer J. Thompson, CFA, ING Aeltus Investment Management, Inc. -- the Sub-Adviser. GOAL: ING VP Money Market Portfolio (the "Portfolio") seeks to provide high current return, consistent with preservation of capital and liquidity, through investment in high-quality money market instruments. MARKET OVERVIEW: The first half of 2003 was eventful and volatile. During the first quarter, the markets and the world watched as United Nations weapons inspectors combed Iraq for weapons of mass destruction. President Bush set forth Iraq's continued violations of U.N. resolutions and prepared America and the world for war with or without U.N. Security Council support. Ultimately, in March, a U.S./U.K.-led coalition declared war on Iraq and, in April, the coalition was successful in ousting Saddam Hussein and liberating Iraqi citizens from the brutal dictator. In early May, President Bush declared an end to major combat in Iraq. The war and the build up to war virtually paralyzed the economy in the first quarter. The "political uncertainty" manifested itself in declining employment and low consumer confidence and spending, reduced business spending, higher energy prices and related stresses on the airline and transportation industries. Even the Federal Reserve Board's ("Fed") Federal Open Market Committee ("FOMC") admitted its inability to characterize the risks to the economy at its March 18th FOMC meeting. The second-quarter war-related euphoria, however, was short-lived on Wall Street as market participants quickly changed their focus to the U.S. economy. During the quarter, Fed Chairman Greenspan and other Fed officials began discussing the low level of price inflation in the U.S. Fed officials emphasized that a substantial fall in inflation would be an unwelcome development. Chairman Greenspan stated in testimony to Congress in May that though the risks of deflation are minor, the consequences are severe enough to merit consideration of possible measures to address it. In total, the market first interpreted these comments to mean that the Fed Funds target rate of 1.25% would be kept low for an extended period of time. However, as the quarter progressed and the risks of deflation became the focus, market participants began pricing in a Fed ease of 25 basis points and, at times, a strong probability of a 50 basis point ease. Ultimately, the Fed lowered rates by 25 basis points at its June 25th FOMC meeting, leaving the Fed Funds target at 1.00% -- the lowest level since 1958. The LIBOR curve was flat and, at times, inverted throughout the first half. One-month LIBOR began the period at 1.38% and ended it at 1.12%. Twelve-month LIBOR went from approximately 1.45% to 1.19% by the period end. The steepness of the curve remained the same at 7 bps with some significant volatility during the period associated with the underpinnings of war, a lackluster economy and discussions of declining price inflation by Fed officials. PORTFOLIO SPECIFICS: In the generally flat interest rate environment, strategies used to add higher yielding securities to the Portfolio included increasing purchases of floating rate notes (which reset at higher yields than commercial paper, certificates of deposit and bank notes), and purchasing callable paper. We attempted to take advantage of the volatility in 12-month LIBOR and purchased long paper whenever rates backed up. In addition to adding yield, this was also used as a hedge to a decline in the Fed Funds target rate. Using such strategies, the average maturity of the portfolio remained longer than competitors throughout the period and was 67 days at the end of June versus 57 days for the benchmark. MARKET OUTLOOK: In early July, market participants are beginning to wonder whether the economic paralysis in the first half of the year was really war-related. Some economic indicators, at times, seem to signal recovery. However, employment levels remain subdued and business excess capacity remains high. For now, the LIBOR yield curve remains very flat and market participants have no conviction about the direction of interest rates going forward. With this backdrop, we will keep most purchases very short -- in the one-month to three-month area -- until the direction of the economy becomes detectable. PRINCIPAL RISK FACTOR(S): Investments in the Portfolio are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Unlike many money market funds, the Portfolio is not managed to maintain a constant net asset value. Instead, the net asset value will change with the value of the investments in the Portfolio. 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. Portfolio holdings are subject to change daily. This report contains statements that may be "forward-looking" statements. Actual results may differ materially from those projected in the "forward-looking" statements. 18 INDEX DESCRIPTIONS - -------------------------------------------------------------------------------- The GOLDMAN SACHS TECHNOLOGY INDUSTRY COMPOSITE INDEX is a widely recognized, unmanaged index of technology stocks. The INSTITUTE FOR SUPPLY MANAGEMENT INDEX is a composite index based on the seasonally adjusted diffusion indices for five indicators with varying weights: New Orders -- 30%; Production -- 25%; Employment -- 20%; Supplier Deliveries -- 15%; and Inventories -- 10%, based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. The LEHMAN BROTHERS AGGREGATE BOND INDEX is an unmanaged index and is composed of securities from Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Backed Securities Index. The LONDON INTERBANK OFFERING RATE (LIBOR) yield is the interest rate at which banks offer to lend money to one another in the wholesale money markets in London. The MSCI EAFE INDEX is an unmanaged index that measures the performance of securities listed on exchanges in markets in Europe, Australia and the Far East. The NASDAQ COMPOSITE INDEX is a broad-based capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. 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. The RUSSELL 2000 INDEX is an unmanaged index that measures the performance of securities of small companies. The STANDARD & POOR'S 500 INDEX is an unmanaged index that measures the performance of securities of approximately 500 large-capitalization companies whose securities are traded on major U.S. stock markets. The STANDARD & POOR'S SMALLCAP 600 INDEX is an unmanaged index used to measure stock market performance composed of companies with a weighted average market value of approximately $820 million. All indices are unmanaged. An investor cannot invest directly in an index. 19 STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
ING VP ING VP ING VP ING VP ING VP INTERNATIONAL GROWTH SMALL COMPANY TECHNOLOGY VALUE OPPORTUNITY EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------------- --------- --------- --------- --------- ASSETS: Investments in securities at value* $ 31,697,560 $ 198,364,340 $316,523,422 $ 54,994,903 $226,715,780 Short-term investments at amortized cost 401,000 6,688,000 11,510,000 3,716,000 4,787,000 Cash 1,812 1,042 -- 955 560 Cash collateral for futures -- 270,750 792,000 -- -- Foreign currencies at value** 689,695 -- -- -- -- Receivables: Investment securities sold 146,925 2,464,183 24,507,616 -- 2,127,607 Portfolio shares sold 63,698 -- -- -- -- Dividends and interest 131,177 84,744 217,860 7,354 173,000 Futures variation margin -- -- 54,450 -- -- Other 4,556 14 -- 7,033 -- Prepaid expenses 396 2,092 5,630 1,356 5,901 Reimbursement due from manager 5,128 -- -- -- -- ------------ ------------- ------------ ------------ ------------ Total assets 33,141,947 207,875,165 353,610,978 58,727,601 233,809,848 ------------ ------------- ------------ ------------ ------------ LIABILITIES: Payable for investment securities purchased 18,721 1,364,029 11,593,471 -- 1,456,589 Payable for futures variation margin 23,710 -- -- -- -- Payable for portfolio shares redeemed 3 -- -- -- -- Payable to affiliates 25,297 108,745 217,521 47,308 122,348 Payable to custodian -- -- 134,761 -- -- Payable for director fees 452 5,717 5,702 1,237 2,046 Other accrued expenses and liabilities 89,011 60,420 70,327 34,591 59,178 ------------ ------------- ------------ ------------ ------------ Total liabilities 157,194 1,538,911 12,021,782 83,136 1,640,161 ------------ ------------- ------------ ------------ ------------ NET ASSETS $ 32,984,753 $ 206,336,254 $341,589,196 $ 58,644,465 $232,169,687 ============ ============= ============ ============ ============ NET ASSETS WERE COMPRISED OF: Paid-in capital $ 64,923,617 $ 425,488,770 $377,831,946 $120,721,210 $295,061,662 Undistributed net investment income (accumulated net investment loss) 685,924 109,871 1,246,327 (226,450) 2,783,016 Accumulated net realized loss on investments, futures and foreign currencies (33,025,958) (233,683,763) (73,958,076) (61,256,983) (85,700,548) Net unrealized appreciation (depreciation) on investments, futures and foreign currencies 401,170 14,421,376 36,468,999 (593,312) 20,025,557 ------------ ------------- ------------ ------------ ------------ NET ASSETS $ 32,984,753 $ 206,336,254 $341,589,196 $ 58,644,465 $232,169,687 ============ ============= ============ ============ ============ - ------------------ * Cost of investments in securities $ 31,267,389 $ 183,770,141 $279,972,903 $ 55,588,215 $206,690,223 ** Cost of foreign currencies $ 696,660 $ -- $ -- $ -- $ -- CLASS R Net assets $ 32,936,401 $ 206,223,066 $341,244,504 $ 58,636,604 $230,728,075 Shares authorized 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 Shares outstanding 5,326,717 26,416,788 23,500,367 18,956,616 21,528,143 Net asset value and redemption price per share $ 6.18 $ 7.81 $ 14.52 $ 3.09 $ 10.72 CLASS S Net assets $ 48,352 $ 113,188 $ 344,692 $ 7,861 $ 1,441,612 Shares authorized 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 Par value $ 0.001 $ 0.001 $ 0.001 $ 0.001 $ 0.001 Shares outstanding 7,835 14,560 23,713 2,551 135,002 Net asset value and redemption price per share $ 6.17 $ 7.77 $ 14.54 $ 3.08 $ 10.68
See Accompanying Notes to Financial Statements 20 STATEMENTS OF ASSETS AND LIABILITIES as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
ING VP ING VP ING VP ING VP BALANCED GROWTH AND INCOME BOND MONEY MARKET PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- ASSETS: Investments in securities at value* $1,270,419,915 $ 3,479,190,278 $1,335,646,053 $1,457,931,484 Short-term investments at amortized cost 53,030,368 42,305,000 163,156,595 -- Cash -- 4,237 23,905 -- Foreign currencies at value** 69 14,647 169 -- Swap contracts at value 194,138 -- 591,101 -- Receivables: Investment securities sold 118,993,509 38,980,828 227,126,829 -- Dividends and interest 5,231,141 2,833,688 11,620,558 4,201,030 Other 146 947 62 1,660 Prepaid expenses 12,935 40,781 24,193 19,696 -------------- --------------- -------------- -------------- Total assets 1,447,882,221 3,563,370,406 1,738,189,465 1,462,153,870 -------------- --------------- -------------- -------------- LIABILITIES: Payable for investment securities purchased 160,624,291 27,785,537 368,029,445 13,987,517 Payable to affiliates 573,925 1,586,411 519,013 350,582 Payable to custodian 12,067 -- -- 16,625 Payable for director fees 25,393 78,346 22,994 26,517 Other accrued expenses and liabilities 221,863 562,133 180,619 183,166 -------------- --------------- -------------- -------------- Total liabilities 161,457,539 30,012,427 368,752,071 14,564,407 -------------- --------------- -------------- -------------- NET ASSETS $1,286,424,682 $ 3,533,357,979 $1,369,437,394 $1,447,589,463 ============== =============== ============== ============== NET ASSETS WERE COMPRISED OF: Paid-in capital $1,431,831,070 $ 6,506,416,509 $1,250,986,632 $1,444,031,955 Undistributed net investment income 36,279,840 17,550,895 20,634,162 7,475,340 Accumulated net realized gain (loss) on investments, futures, foreign currencies and swaps (249,429,862) (3,403,276,506) 64,353,391 (4,506,979) Net unrealized appreciation on investments, futures, foreign currencies and swaps 67,743,634 412,667,081 33,463,209 589,147 -------------- --------------- -------------- -------------- NET ASSETS $1,286,424,682 $ 3,533,357,979 $1,369,437,394 $1,447,589,463 ============== =============== ============== ============== - ------------------ * Cost of investments in securities $1,202,870,419 $ 3,066,568,037 $1,302,773,953 $1,457,342,337 ** Cost of foreign currencies $ 70 $ 14,743 $ 161 $ -- CLASS R Net assets $1,286,410,185 $ 3,533,239,102 $1,281,099,833 $1,447,589,463 Shares authorized 2,000,000,000 unlimited unlimited unlimited Par value $ 0.001 $ 1.000 $ 1.000 $ 1.000 Shares outstanding 109,434,874 221,278,398 89,956,322 112,324,849 Net asset value and redemption price per share $ 11.76 $ 15.97 $ 14.24 $ 12.89 CLASS S Net assets $ 14,497 $ 118,877 $ 88,337,561 n/a Shares authorized 2,000,000,000 unlimited unlimited n/a Par value $ 0.001 $ 1.000 $ 1.000 n/a Shares outstanding 1,233 7,445 6,212,140 n/a Net asset value and redemption price per share $ 11.75 $ 15.97 $ 14.22 n/a
See Accompanying Notes to Financial Statements 21 STATEMENTS OF OPERATIONS for the six months ended June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
ING VP ING VP ING VP ING VP ING VP INTERNATIONAL GROWTH SMALL COMPANY TECHNOLOGY VALUE OPPORTUNITY EQUITY PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------------- --------- --------- --------- --------- INVESTMENT INCOME: Dividends (net of foreign taxes)* $ 497,024 $ 738,580 $ 1,526,432 $ 38,680 $ 1,761,036 Interest 4,702 46,271 78,740 18,819 20,526 ------------ ------------ ------------ ------------ ------------ Total investment income 501,726 784,851 1,605,172 57,499 1,781,562 ------------ ------------ ------------ ------------ ------------ EXPENSES: Investment management fees 127,417 562,620 1,093,022 236,813 635,084 Distribution and service fees: Class S 32 92 278 9 1,491 Transfer agent fees 5,611 5,072 5,400 4,860 5,400 Administrative service fees 8,244 51,573 80,155 13,710 58,216 Shareholder reporting expense 5,249 8,514 14,202 5,637 10,093 Registration fees 2,949 -- 754 262 1,137 Professional fees 14,257 16,097 18,364 12,958 16,282 Custody and accounting expense 58,950 18,970 45,895 2,076 30,600 Directors' fees 773 5,595 9,968 803 3,254 Miscellaneous expense 2,978 6,447 9,971 2,071 7,309 ------------ ------------ ------------ ------------ ------------ Total expenses 226,460 674,980 1,278,009 279,199 768,866 ------------ ------------ ------------ ------------ ------------ Less: Net waived and reimbursed (recouped) fees 53,526 -- -- (4,750) -- ------------ ------------ ------------ ------------ ------------ Net expenses 172,934 674,980 1,278,009 283,949 768,866 ------------ ------------ ------------ ------------ ------------ Net investment income (loss) 328,792 109,871 327,163 (226,450) 1,012,696 ------------ ------------ ------------ ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES AND FOREIGN CURRENCIES: Net realized gain (loss) on: Investments (891,374) (1,783,787) (376,153) (3,446,014) (7,171,975) Futures and forward foreign currency exchange contracts (25,287) 570,800 -- -- -- Foreign currency related transactions 25,523 -- -- -- -- ------------ ------------ ------------ ------------ ------------ Net realized loss (891,138) (1,212,987) (376,153) (3,446,014) (7,171,975) ------------ ------------ ------------ ------------ ------------ Net change in unrealized appreciation (depreciation) on: Investments 2,888,192 26,416,408 40,944,314 11,214,767 26,517,076 Futures and forward foreign currency exchange contracts (23,677) (172,823) (81,520) -- -- Foreign currency related transactions (15,574) -- -- -- -- ------------ ------------ ------------ ------------ ------------ Net change in unrealized appreciation 2,848,941 26,243,585 40,862,794 11,214,767 26,517,076 ------------ ------------ ------------ ------------ ------------ Net realized and unrealized gain on investments, futures and foreign currencies 1,957,803 25,030,598 40,486,641 7,768,753 19,345,101 ------------ ------------ ------------ ------------ ------------ INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,286,595 $ 25,140,469 $ 40,813,804 $ 7,542,303 $ 20,357,797 ============ ============ ============ ============ ============ - ------------------ * Foreign Taxes $ 69,393 $ -- $ 1,431 $ 900 $ --
See Accompanying Notes to Financial Statements 22 STATEMENTS OF OPERATIONS for the six months ended June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
ING VP ING VP ING VP ING VP BALANCED GROWTH AND INCOME BOND MONEY MARKET PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- INVESTMENT INCOME: Dividends $ 5,505,948 $ 27,327,278 $ 7,648 $ -- Interest 9,857,171 285,900 26,473,986 10,154,896 ------------ ------------- ------------ ------------ Total investment income 15,363,119 27,613,178 26,481,634 10,154,896 ------------ ------------- ------------ ------------ EXPENSES: Investment management fees 3,024,390 8,380,658 2,613,422 1,887,007 Distribution and service fees: Class S 3 8 89,311 -- Transfer agent fees 1,980 9,540 10,299 1,980 Administrative service fees 332,683 921,872 359,346 415,141 Shareholder reporting expense 44,883 140,400 30,675 42,860 Registration fees -- 9 3,847 6,188 Professional fees 37,467 61,217 41,764 33,847 Custody and accounting expense 158,201 361,104 150,794 212,224 Directors' fees 33,874 75,075 47,029 34,301 Miscellaneous expense 39,504 112,400 39,597 41,028 ------------ ------------- ------------ ------------ Total expenses 3,672,985 10,062,283 3,386,084 2,674,576 ------------ ------------- ------------ ------------ Net investment income 11,690,134 17,550,895 23,095,550 7,480,320 ------------ ------------- ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FUTURES, FOREIGN CURRENCIES AND SWAPS: Net realized gain (loss) on: Investments (1,627,914) (153,712,360) 40,735,688 -- Futures, forward foreign currency exchange contracts and swaps 71,980 -- (929,380) -- Foreign currency related transactions 1,080,168 4,225 2,655,093 -- ------------ ------------- ------------ ------------ Net realized gain (loss) (475,766) (153,708,135) 42,461,401 -- ------------ ------------- ------------ ------------ Net change in unrealized appreciation (depreciation) on: Investments 101,072,846 460,959,273 2,216,918 291,362 Futures, forward foreign currency exchange contracts and swaps 279,589 -- 9,803 -- Foreign currency related transactions 111,829 10,600 66,566 -- ------------ ------------- ------------ ------------ Net change in unrealized appreciation 101,464,264 460,969,873 2,293,287 291,362 ------------ ------------- ------------ ------------ Net realized and unrealized gain on investments, futures, foreign currencies and swaps 100,988,498 307,261,738 44,754,688 291,362 ------------ ------------- ------------ ------------ INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $112,678,632 $ 324,812,633 $ 67,850,238 $ 7,771,682 ============ ============= ============ ============
See Accompanying Notes to Financial Statements 23 STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) - --------------------------------------------------------------------------------
ING VP INTERNATIONAL EQUITY PORTFOLIO ING VP GROWTH PORTFOLIO --------------------------- ---------------------------- SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- FROM OPERATIONS: Net investment income (loss) $ 328,792 $ 162,363 $ 109,871 $ (151,362) Net realized loss on investments, futures and foreign currencies swaps (891,138) (8,255,262) (1,212,987) (70,073,222) Net change in unrealized appreciation (depreciation) on investments, futures and foreign currencies swaps 2,848,941 (4,414,002) 26,243,585 (15,240,955) ------------ ------------ ------------ ------------- Net increase (decrease) in net assets resulting from operations 2,286,595 (12,506,901) 25,140,469 (85,465,539) ------------ ------------ ------------ ------------- FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class R -- (93,596) -- -- ------------ ------------ ------------ ------------- Total distributions -- (93,596) -- -- ------------ ------------ ------------ ------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 38,211,149 80,512,745 11,055,365 35,492,407 Dividends reinvested -- 93,596 -- -- ------------ ------------ ------------ ------------- 38,211,149 80,606,341 11,055,365 35,492,407 Cost of shares redeemed (36,437,977) (87,743,989) (10,941,678) (74,579,328) ------------ ------------ ------------ ------------- Net increase (decrease) in net asset resulting from capital share transactions 1,773,172 (7,137,648) 113,687 (39,086,921) ------------ ------------ ------------ ------------- Net increase (decrease) in net assets 4,059,767 (19,738,145) 25,254,156 (124,552,460) NET ASSETS: Beginning of period 28,924,986 48,663,131 181,082,098 305,634,558 ------------ ------------ ------------ ------------- End of period $ 32,984,753 $ 28,924,986 $206,336,254 $ 181,082,098 ============ ============ ============ ============= Undistributed net investment income at end of period $ 685,924 $ 357,132 $ 109,871 $ -- ============ ============ ============ =============
See Accompanying Notes to Financial Statements 24 STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued) - --------------------------------------------------------------------------------
ING VP SMALL COMPANY PORTFOLIO ING VP TECHNOLOGY PORTFOLIO ------------------------------ --------------------------- SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- FROM OPERATIONS: Net investment income (loss) $ 327,163 $ 1,305,149 $ (226,450) $ (498,251) Net realized loss on investments, futures and foreign currencies (376,153) (66,845,231) (3,446,014) (15,534,432) Net change in unrealized appreciation (depreciation) on investments, futures and foreign currencies 40,862,794 (26,970,408) 11,214,767 (15,966,037) ------------ ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations 40,813,804 (92,510,490) 7,542,303 (31,998,720) ------------ ------------- ------------ ------------ FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class R -- (1,576,315) -- -- Class S -- (603) -- -- ------------ ------------- ------------ ------------ Total distributions -- (1,576,918) -- -- ------------ ------------- ------------ ------------ FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 55,833,836 175,762,621 27,849,016 66,979,389 Dividends reinvested -- 1,576,918 -- -- ------------ ------------- ------------ ------------ 55,833,836 177,339,539 27,849,016 66,979,389 Cost of shares redeemed (44,131,915) (135,522,236) (22,312,347) (52,304,809) ------------ ------------- ------------ ------------ Net increase in net asset resulting from capital share transactions 11,701,921 41,817,303 5,536,669 14,674,580 ------------ ------------- ------------ ------------ Net increase (decrease) in net assets 52,515,725 (52,270,105) 13,078,972 (17,324,140) NET ASSETS: Beginning of period 289,073,471 341,343,576 45,565,493 62,889,633 ------------ ------------- ------------ ------------ End of period $341,589,196 $ 289,073,471 $ 58,644,465 $ 45,565,493 ============ ============= ============ ============ Undistributed net investment income (accumulated net investment loss) at end of period $ 1,246,327 $ 919,164 $ (226,450) $ -- ============ ============= ============ ============
See Accompanying Notes to Financial Statements 25 STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued) - --------------------------------------------------------------------------------
ING VP VALUE OPPORTUNITY PORTFOLIO ING VP BALANCED PORTFOLIO ---------------------------------- ---------------------------------- SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- FROM OPERATIONS: Net investment income $ 1,012,696 $ 1,144,646 $ 11,690,134 $ 28,271,047 Net realized loss on investments, futures, foreign currencies and swaps (7,171,975) (61,487,644) (475,766) (154,844,006) Net change in unrealized appreciation (depreciation) on investments, futures, foreign currencies and swaps 26,517,076 (8,717,153) 101,464,264 (34,537,848) ------------ ------------ -------------- -------------- Net increase (decrease) in net assets resulting from operations 20,357,797 (69,060,151) 112,678,632 (161,110,807) ------------ ------------ -------------- -------------- FROM DIVIDENDS TO SHAREHOLDERS: Net investment income: Class R -- (951,142) -- (14,989,364) Class S -- (3,459) -- -- ------------ ------------ -------------- -------------- Total distributions -- (954,601) -- (14,989,364) ------------ ------------ -------------- -------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 9,196,383 86,392,780 8,861,214 23,017,801 Dividends reinvested -- 954,601 -- 14,989,364 ------------ ------------ -------------- -------------- 9,196,383 87,347,381 8,861,214 38,007,165 Cost of shares redeemed (9,946,170) (24,364,504) (57,888,973) (230,189,224) ------------ ------------ -------------- -------------- Net increase (decrease) in net assets resulting from capital share transactions (749,787) 62,982,877 (49,027,759) (192,182,059) ------------ ------------ -------------- -------------- Net increase (decrease) in net assets 19,608,010 (7,031,875) 63,650,873 (368,282,230) ------------ ------------ -------------- -------------- NET ASSETS: Beginning of period 212,561,677 219,593,552 1,222,773,809 1,591,056,039 ------------ ------------ -------------- -------------- End of period $232,169,687 $212,561,677 $1,286,424,682 $1,222,773,809 ============ ============ ============== ============== Undistributed net investment income at end of period $ 2,783,016 $ 1,770,320 $ 36,279,840 $ 24,589,706 ============ ============ ============== ==============
See Accompanying Notes to Financial Statements 26 STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued) - --------------------------------------------------------------------------------
ING VP GROWTH AND INCOME PORTFOLIO ING VP BOND PORTFOLIO ---------------------------------- ------------------------------- SIX MONTHS SIX MONTHS ENDED YEAR ENDED ENDED YEAR ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- FROM OPERATIONS: Net investment income $ 17,550,895 $ 37,957,496 $ 23,095,550 $ 39,840,504 Net realized gain (loss) on investments, futures, foreign currencies and swaps (153,708,135) (891,690,878) 42,461,401 17,457,903 Net change in unrealized appreciation (depreciation) on investments, futures, foreign currencies and swaps 460,969,873 (459,505,600) 2,293,287 31,731,171 -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations 324,812,633 (1,313,238,982) 67,850,238 89,029,578 -------------- --------------- -------------- -------------- FROM DIVIDENDS TO SHAREHOLDERS: Net investment income Class R -- (38,495,841) -- (36,706,026) Class S -- -- -- (1,364,988) Net realized gain from investments Class R -- -- -- (5,077,726) Class S -- -- -- (25,540) -------------- --------------- -------------- -------------- Total distributions -- (38,495,841) -- (43,174,280) -------------- --------------- -------------- -------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 7,542,835 27,763,650 142,823,268 265,499,333 Dividends reinvested -- 38,475,273 -- 43,149,619 -------------- --------------- -------------- -------------- 7,542,835 66,238,923 142,823,268 308,648,952 Cost of shares redeemed (324,246,068) (828,611,395) (96,794,217) (122,508,850) -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from capital share transactions (316,703,233) (762,372,472) 46,029,051 186,140,102 -------------- --------------- -------------- -------------- Net increase (decrease) in net assets 8,109,400 (2,114,107,295) 113,879,289 231,995,400 NET ASSETS: Beginning of period 3,525,248,579 5,639,355,874 1,255,558,105 1,023,562,705 -------------- --------------- -------------- -------------- End of period $3,533,357,979 $ 3,525,248,579 $1,369,437,394 $1,255,558,105 ============== =============== ============== ============== Undistributed net investment income (accumulated net investment loss) at end of period $ 17,550,895 $ -- $ 20,634,162 $ (2,461,388) ============== =============== ============== ==============
See Accompanying Notes to Financial Statements 27 STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) (Continued) - --------------------------------------------------------------------------------
ING VP MONEY MARKET PORTFOLIO --------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, 2003 2002 ---- ---- FROM OPERATIONS: Net investment income $ 7,480,320 $ 24,749,106 Net realized gain on investments -- 23,728 Net change in unrealized appreciation (depreciation) on investments 291,362 (340,945) --------------- --------------- Net increase in net assets resulting from operations 7,771,682 24,431,889 --------------- --------------- FROM DIVIDENDS TO SHAREHOLDERS: Net investment income (24,741,578) (57,317,722) --------------- --------------- Total distributions (24,741,578) (57,317,722) --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 1,452,310,168 2,748,252,013 Dividends reinvested 24,741,578 57,317,722 --------------- --------------- 1,477,051,746 2,805,569,735 Cost of shares redeemed (1,564,158,836) (2,739,754,578) --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (87,107,090) 65,815,157 --------------- --------------- Net increase (decrease) in net assets (104,076,986) 32,929,324 NET ASSETS: Beginning of period 1,551,666,449 1,518,737,125 --------------- --------------- End of period $ 1,447,589,463 $ 1,551,666,449 =============== =============== Undistributed net investment income at end of period $ 7,475,340 $ 24,736,598 =============== ===============
See Accompanying Notes to Financial Statements 28 FINANCIAL HIGHLIGHTS ING VP INTERNATIONAL EQUITY PORTFOLIO (UNAUDITED) - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R ----------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------ 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 5.78 7.90 10.40 15.92 11.59 10.27 Income from investment operations: Net investment income (loss) $ 0.02 0.03 0.02 (0.02) (0.01) 0.07 Net realized and unrealized gain (loss) on investments $ 0.38 (2.13) (2.51) (3.17) 5.78 1.87 Total from investment operations $ 0.40 (2.10) (2.49) (3.19) 5.77 1.94 Less distributions from: Net investment income $ -- 0.02 0.01 0.01 0.15 0.01 Net realized gains on investments $ -- -- -- 2.32 1.29 0.61 Total distributions $ -- 0.02 0.01 2.33 1.44 0.62 Net asset value, end of period $ 6.18 5.78 7.90 10.40 15.92 11.59 TOTAL RETURN(1): % 6.92 (26.68) (23.88) (20.33) 51.33 18.92 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 32,936 28,917 48,652 52,210 43,548 16,242 Ratios to average net assets: Net expenses after expense reimbursement(2)(3) % 1.15 1.15 1.15 1.15 1.15 1.15 Gross expenses prior to expense reimbursement(2) % 1.51 1.46 1.26 1.34 1.62 1.77 Net investment income (loss) after expense reimbursement(2)(3) % 2.19 0.40 0.23 (0.18) 0.13 0.55 Portfolio turnover rate % 33 266 229 212 169 158 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ------------------------------------------------- SIX MONTHS YEAR NOVEMBER 1, ENDED ENDED 2001(4) TO JUNE 30, DECEMBER 31, DECEMBER 31, 2003 2002 2001 - ---------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 5.78 7.90 7.38 Income from investment operations: Net investment income $ (0.02) 0.01 -- Net realized and unrealized gain (loss) on investments $ 0.41 (2.13) 0.52 Total from investment operations $ 0.39 (2.12) 0.52 Net asset value, end of period $ 6.17 5.78 7.90 TOTAL RETURN(1): % 6.75 (26.84) 7.05 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 48 8 11 Ratios to average net assets: Net expenses after expense reimbursement(2)(3) % 1.37 1.40 1.39 Gross expenses prior to expense reimbursement(2) % 1.73 1.71 1.49 Net investment income after expense reimbursement(2)(3) % 1.97 0.15 0.01 Portfolio turnover rate % 33 266 229 - ----------------------------------------------------------------------------------------------------------------------
(1) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (2) Annualized for periods less than one year. (3) 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. (4) Commencement of operations of class. See Accompanying Notes to Financial Statements 29 ING VP GROWTH PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------------------------------------- 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 6.85 9.64 14.99 17.32 13.53 9.85 Income from investment operations: Net investment income (loss) $ 0.00* (0.01) (0.01) 0.01 0.03 0.03 Net realized and unrealized gain (loss) on investments $ 0.96 (2.78) (3.87) (2.02) 4.62 3.68 Total from investment operations $ 0.96 (2.79) (3.88) (2.01) 4.65 3.71 Less distributions from: Net investment income $ -- -- 0.01 0.01 0.02 0.03 Net realized gains on investments $ -- 1.46 0.31 0.84 -- Total distributions $ -- -- 1.47 0.32 0.86 0.03 Net asset value, end of period $ 7.81 6.85 9.64 14.99 17.32 13.53 TOTAL RETURN(2): % 14.01 (28.94) (27.06) (11.95) 34.97 37.68 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 206,223 181,029 305,624 460,578 369,845 142,363 Ratios to average net assets: Expenses(3) % 0.72 0.72 0.70 0.70 0.71 0.75 Net investment income (loss)(3) % 0.11 (0.06) (0.08) 0.06 0.20 0.40 Portfolio turnover rate % 83 241 216 179 138 153 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ------------------------------------------------- SIX MONTHS YEAR NOVEMBER 1, ENDED ENDED 2001(1) TO JUNE 30, DECEMBER 31, DECEMBER 31, 2003 2002 2001 - -------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 6.83 9.63 8.96 Income from investment operations: Net investment loss $ (0.01) (0.01) -- Net realized and unrealized gain (loss) on investments $ 0.95 (2.79) 0.67 Total from investment operations $ 0.94 (2.80) 0.67 Net asset value, end of period $ 7.77 6.83 9.63 TOTAL RETURN(2): % 13.76 (29.08) 7.48 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 113 53 11 Ratios to average net assets: Expenses(3) % 0.97 0.97 0.94 Net investment loss(3) % (0.14) (0.31) (0.32) Portfolio turnover rate % 83 241 216 - --------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations of class. (2) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (3) Annualized for periods less than one year. * Amount is less than $0.01 per share. See Accompanying Notes to Financial Statements 30 FINANCIAL HIGHLIGHTS ING VP SMALL COMPANY PORTFOLIO (UNAUDITED) - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R -------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------------- 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.75 16.68 16.65 16.52 12.79 12.77 Income from investment operations: Net investment income $ 0.01 0.05 0.06 0.11 0.08 0.07 Net realized and unrealized gain (loss) on investments $ 1.76 (3.91) 0.58 1.09 3.84 0.07 Total from investment operations $ 1.77 (3.86) 0.64 1.20 3.92 0.14 Less distributions from: Net investment income $ -- 0.07 0.10 0.02 0.06 0.08 Net realized gains on investments $ -- -- 0.51 1.05 0.13 0.04 Total distributions $ -- 0.07 0.61 1.07 0.19 0.12 Net asset value, end of period $ 14.52 12.75 16.68 16.65 16.52 12.79 TOTAL RETURN:(2) % 13.88 (23.23) 4.00 6.72 30.85 1.10 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 341,245 288,890 341,332 273,617 149,416 99,823 Ratios to average net assets: Expenses(3) % 0.88 0.87 0.86 0.87 0.88 0.89 Net investment income(3) % 0.22 0.39 0.50 0.80 0.64 0.93 Portfolio turnover rate % 144 371 240 330 256 185 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ------------------------------------------------ SIX MONTHS YEAR NOVEMBER 1, ENDED ENDED 2001(1) TO JUNE 30, DECEMBER 31, DECEMBER 31, 2003 2002 2001 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.72 16.68 14.90 Income from investment operations: Net investment loss $ (0.01) (0.04) -- Net realized and unrealized gain (loss) on investments $ 1.83 (3.86) 1.78 Total from investment operations $ 1.82 (3.90) 1.78 Less distribution from: Net investment income $ -- 0.06 -- Total distribution $ -- 0.06 -- Net asset value, end of period $ 14.54 12.72 16.68 TOTAL RETURN(2): % 14.31 (23.45) 11.95 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 345 184 11 Ratios to average net assets: Expenses(3) % 1.13 1.12 1.10 Net investment income(3) % 0.00* 0.14 0.29 Portfolio turnover rate % 144 371 240 - -------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations of class. (2) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (3) Annualized for periods less than one year. * Amount is less than $0.01 per share. See Accompanying Notes to Financial Statements 31 ING VP TECHNOLOGY PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R ----------------------------------------------------------------------- SIX MONTHS YEAR MAY 1, ENDED ENDED YEAR ENDED 2000(1) TO JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 2.66 4.53 5.88 10.00 Income from investment operations: Net investment loss $ (0.01) (0.03) (0.02) (0.02) Net realized and unrealized loss on investments $ 0.44 (1.84) (1.33) (4.10) Total from investment operations $ 0.43 (1.87) (1.35) (4.12) Net asset value, end of period $ 3.09 2.66 4.53 5.88 TOTAL RETURN(2): % 16.16 (41.28) (22.96) (41.20) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 58,637 45,559 62,878 44,621 Ratios to average net assets: Net expenses after expense reimbursement/recoupment(3)(4) % 1.14 1.11 1.11 1.15 Gross expenses prior to expense reimbursement/recoupment(3) % 1.12 1.12 1.11 1.20 Net investment loss after expense reimbursement/recoupment(3)(4) % (0.91) (0.89) (0.49) (0.61) Portfolio turnover rate % 15 61 129 150 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ------------------------------------------------- SIX MONTHS YEAR NOVEMBER 1, ENDED ENDED 2001(5) TO JUNE 30, DECEMBER 31, DECEMBER 31, 2003 2002 2001 - -------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 2.65 4.53 3.92 Income from investment operations: Net investment loss $ (0.02) (0.04) -- Net realized and unrealized gain (loss) on investments $ 0.45 (1.84) 0.61 Total from investment operations $ 0.43 (1.88) 0.61 Net asset value, end of period $ 3.08 2.65 4.53 TOTAL RETURN(2): % 16.23 (41.50) 15.56 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 8 7 12 Ratios to average net assets: Net expenses after expense reimbursement/recoupment(3)(4) % 1.36 1.36 1.36 Gross expenses prior to expense reimbursement/recoupment(3) % 1.34 1.37 1.36 Net investment loss after expense reimbursement/recoupment(3)(4) % (1.14) (1.14) (0.74) Portfolio turnover rate % 15 61 129 - --------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations. (2) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return 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. (5) Commencement of operations of class. See Accompanying Notes to Financial Statements 32 FINANCIAL HIGHLIGHTS ING VP VALUE OPPORTUNITY PORTFOLIO (UNAUDITED) - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R ------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, --------------------------------------------------------- 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 9.77 13.25 15.34 16.42 14.41 11.92 Income from investment operations: Net investment income $ 0.05 0.04 0.03 0.07 0.10 0.09 Net realized and unrealized gain (loss) on investments $ 0.90 (3.47) (1.43) 1.49 2.71 2.56 Total from investment operations $ 0.95 (3.43) (1.40) 1.56 2.81 2.65 Less distributions from: Net investment income $ -- 0.05 0.05 0.03 0.08 0.08 Net realized gains on investments $ -- 0.64 2.61 0.72 0.08 Total distributions $ -- 0.05 0.69 2.64 0.80 0.16 Net asset value, end of period $ 10.72 9.77 13.25 15.34 16.42 14.41 TOTAL RETURN(2): % 9.72 (25.96) (9.62) 10.19 19.58 22.39 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 230,728 211,470 219,287 116,029 85,030 76,109 Ratios to average net assets: Expenses(3) % 0.72 0.72 0.71 0.75 0.73 0.74 Net investment income(3) % 0.95 0.51 0.54 0.58 0.69 0.93 Portfolio turnover rate % 67 304 185 171 125 126 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ---------------------------------------------- SIX MONTHS YEAR NOVEMBER 1, ENDED ENDED 2001(1) TO JUNE 30, DECEMBER 31, DECEMBER 31, 2003 2002 2001 - --------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 9.75 13.24 14.58 Income from investment operations: Net investment income $ 0.02 0.01 -- Net realized and unrealized gain (loss) on investments $ 0.91 (3.46) (1.34) Total from investment operations $ 0.93 (3.45) (1.34) Less distributions from: Net investment income $ -- 0.04 -- Total distributions $ -- 0.04 -- Net asset value, end of period $ 10.68 9.75 13.24 TOTAL RETURN(2): % 9.54 (26.12) (9.19) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 1,442 1,092 307 Ratios to average net assets: Expenses(3) % 0.97 0.97 0.96 Net investment income(3) % 0.70 0.26 0.29 Portfolio turnover rate % 67 304 185 - ---------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations of class. (2) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (3) Annualized for periods less than one year. See Accompanying Notes to Financial Statements 33 ING VP BALANCED PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R ------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------- 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.73 12.09 13.40 15.57 15.73 16.03 Income from investment operations: Net investment income $ 0.12 0.25 0.31 0.43 0.44 0.46 Net realized and unrealized gain (loss) on investments $ 0.91 (1.49) (0.87) (0.49) 1.56 2.11 Total from investment operations $ 1.03 (1.24) (0.56) (0.06) 2.00 2.57 Less distributions from: Net investment income $ -- 0.12 0.28 0.46 0.40 0.39 Net realized gains on investments $ -- -- 0.47 1.65 1.76 2.48 Total distributions $ -- 0.12 0.75 2.11 2.16 2.87 Net asset value, end of period $ 11.76 10.73 12.09 13.40 15.57 15.73 TOTAL RETURN(1): % 9.60 (10.31) (4.21) (0.56) 13.60 16.93 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (millions) $ 1,286 1,223 1,591 1,777 1,988 1,852 Ratios to average net assets: Expenses(3) % 0.61 0.60 0.59 0.59 0.59 0.59 Net investment income(3) % 1.93 2.00 2.46 2.72 2.81 3.01 Portfolio turnover rate % 180 345 167 182 136 86 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ---------- MAY 29, 2003(2) TO JUNE 30, 2003 - ----------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 11.53 Income from investment operations: Net investment income $ 0.02 Net realized and unrealized gain on investments $ 0.20 Total from investment operations $ 0.22 Net asset value, end of period $ 11.75 TOTAL RETURN(1): % 1.91 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (millions) $ --* Ratios to average net assets: Expenses(3) % 0.81 Net investment income(3) % 1.61 Portfolio turnover rate % 180 - -----------------------------------------------------------------------------------
(1) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (2) Commencement of operations of class. (3) Annualized for periods less than one year. * Amount is less than $1,000,000. See Accompanying Notes to Financial Statements 34 FINANCIAL HIGHLIGHTS ING VP GROWTH AND INCOME PORTFOLIO (UNAUDITED) - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R --------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------------------------------- 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 14.50 19.54 24.12 30.69 31.87 33.63 Income from investment operations: Net investment income $ 0.08 0.16 0.14 0.17 0.31 0.38 Net realized and unrealized gain (loss) on investments $ 1.39 (5.04) (4.58) (3.46) 4.86 4.47 Total from investment operations $ 1.47 (4.88) (4.44) (3.29) 5.17 4.85 Less distributions from: Net investment income $ -- 0.16 0.14 0.16 0.34 0.40 Net realized gains on investments $ -- -- -- 3.12 6.01 6.21 Total distributions $ -- 0.16 0.14 3.28 6.35 6.61 Net asset value, end of period $ 15.97 14.50 19.54 24.12 30.69 31.87 TOTAL RETURN(1): % 10.14 (24.99) (18.40) (10.97) 17.42 14.49 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (millions) $ 3,533 3,525 5,639 7,797 10,029 9,801 Ratios to average net assets: Expenses(3) % 0.60 0.59 0.59 0.58 0.58 0.57 Net investment income(3) % 1.05 0.83 0.62 0.55 0.89 1.03 Portfolio turnover rate % 73 246 185 149 133 146 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ---------- JUNE 11, 2003(2) TO JUNE 30, 2003 - --------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 16.32 Income from investment operations: Net investment income $ 0.00* Net realized and unrealized loss on investments $ (0.35) Total from investment operations $ (0.35) Net asset value, end of period $ 15.97 TOTAL RETURN(1): % (2.14) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (millions) $ --+ Ratios to average net assets: Expenses(3) % 0.85 Net investment income(3) % 0.18 Portfolio turnover rate % 73 - ---------------------------------------------------------------------------------
(1) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (2) Commencement of operations of class. (3) Annualized for periods less than one year. * Amount is less than $0.01 per share. + Amount is less than $1,000,000. See Accompanying Notes to Financial Statements 35 ING VP BOND PORTFOLIO (UNAUDITED) FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R ------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, --------------------------------------------------------------- 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 13.53 12.95 12.61 12.17 13.06 12.85 Income from investment operations: Net investment income $ 0.24 0.45 0.59 0.79 0.76 0.75 Net realized and unrealized gain (loss) on investments $ 0.47 0.63 0.51 0.37 (0.86) 0.28 Total from investment operations $ 0.71 1.08 1.10 1.16 (0.10) 1.03 Less distributions from: Net investment income $ -- 0.43 0.65 0.72 0.75 0.76 Net realized gains on investments $ -- 0.07 0.11 -- 0.04 0.06 Total distributions $ -- 0.50 0.76 0.72 0.79 0.82 Net asset value, end of period $ 14.24 13.53 12.95 12.61 12.17 13.06 TOTAL RETURN(1): % 5.25 8.33 8.75 9.64 (0.74) 8.14 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 1,281,100 1,205,968 1,023,563 711,211 717,472 794,560 Ratios to average net assets: Expenses(2) % 0.50 0.49 0.50 0.50 0.49 0.49 Net investment income(2) % 3.55 3.50 5.06 6.29 5.77 5.82 Portfolio turnover rate % 285 565 219 334 201 89 - ---------------------------------------------------------------------------------------------------------------------------------
CLASS S ---------------------------- SIX MONTHS MAY 3, ENDED 2002(3) TO JUNE 30, DECEMBER 31, 2003 2002 - ----------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 13.53 13.05 Income from investment operations: Net investment income $ 0.20 0.16 Net realized and unrealized gain on investments $ 0.49 0.81 Total from investment operations $ 0.69 0.97 Less distributions from: Net investment income $ -- 0.42 Net realized gains on investments $ -- 0.07 Total distributions $ -- 0.49 Net asset value, end of period $ 14.22 13.53 TOTAL RETURN(1): % 5.10 7.45 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 88,338 49,590 Ratios to average net assets: Expenses(2) % 0.75 0.74 Net investment income(2) % 3.22 3.25 Portfolio turnover rate % 285 565 - -----------------------------------------------------------------------------------------------
(1) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (2) Annualized for periods less than one year. (3) Commencement of operations of class. See Accompanying Notes to Financial Statements 36 FINANCIAL HIGHLIGHTS ING VP MONEY MARKET PORTFOLIO (UNAUDITED) - -------------------------------------------------------------------------------- Selected data for a share of beneficial interest outstanding throughout each period.
CLASS R ----------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------------- 2003 2002 2001 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 13.03 13.33 13.61 13.42 13.39 13.36 Income from investment operations: Net investment income $ 0.05 0.21 0.50 0.83 0.59 0.63 Net realized and unrealized gain (loss) on investments $ 0.01 -- 0.01 (0.02) 0.06 0.07 Total from investment operations $ 0.06 0.21 0.51 0.81 0.65 0.70 Less distributions from: Net investment income $ 0.20 0.51 0.79 0.62 0.62 0.67 Total distributions $ 0.20 0.51 0.79 0.62 0.62 0.67 Net asset value, end of period $ 12.89 13.03 13.33 13.61 13.42 13.39 TOTAL RETURN(1): % 0.51 1.66 3.94 6.38 5.08 5.46 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 1,447,589 1,551,666 1,518,737 1,195,930 1,157,818 875,169 Ratios to average net assets: Expenses(2) % 0.35 0.34 0.34 0.34 0.34 0.34 Net investment income(2) % 0.99 1.63 4.07 6.20 5.04 5.28 - ---------------------------------------------------------------------------------------------------------------------------------
(1) Assumes dividends have been reinvested and does not reflect the effect of contract insurance charges. Total return for periods less than one year are not annualized. (2) Annualized for periods less than one year. See Accompanying Notes to Financial Statements 37 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) - -------------------------------------------------------------------------------- NOTE 1 -- ORGANIZATION Organization. The ING Variable Product Portfolios are comprised of ING Variable Portfolios, Inc., ING VP Balanced Portfolio, Inc., ING Variable Funds, ING Income Shares and ING VP Money Market Fund, all of which are open-end investment management companies registered under the Investment Company Act of 1940, as amended. The ING Variable Portfolios, Inc. is a company incorporated under the laws of Maryland on June 4, 1996 and has eight separate portfolios. The five portfolios that are in this report are: ING VP International Equity Portfolio ("International"), ING VP Growth Portfolio ("Growth"), ING VP Small Company Portfolio ("Small Company"), ING VP Technology Portfolio ("Technology"), and ING VP Value Opportunity Portfolio ("Value Opportunity"). ING VP Balanced Portfolio, Inc. ("Balanced") is a company incorporated under the laws of Maryland on December 14, 1988. ING Variable Funds is a company incorporated under the laws of Massachusetts on January 25, 1984 with one portfolio, ING VP Growth and Income Portfolio ("Growth and Income"). ING Income Shares is a company incorporated under the laws of Massachusetts on January 25, 1984 with one portfolio, ING VP Bond Portfolio ("Bond"). ING VP Money Market Fund is a company incorporated under the laws of Massachusetts on January 25, 1984 with one portfolio, ING VP Money Market Portfolio ("Money Market"). Each Portfolio offers class R shares. International, Growth, Small Company, Technology, Value Opportunity, Balanced, Growth and Income and Bond also offer class S shares. The two classes differ principally in applicable shareholder service fees. Shareholders of each class also bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of the Portfolios and earn income from the portfolio pro rata based on the average daily net assets of each class, without discrimination between share classes. Dividends are determined separately for each class based on income and expenses allocable to each class. Realized gains are allocated to each class pro rata based on the net assets of each class on the date of distribution. 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. NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies are consistently followed by the Portfolios in the preparation of their financial statements, and 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. Portfolio securities reported by NASDAQ will be valued at NASDAQ official closing price. Portfolio 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 bid prices obtained from independent services or from one or more dealers making markets in the securities. U.S. Government obligations are valued by using market quotations or independent pricing services which 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 Portfolios' Board of Directors ("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 Portfolio 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 Portfolio'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 Portfolio occurs after the time at which the foreign market for such security (ies) closes but before the time that the Portfolio'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 Portfolio 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 in light of significant events. Research services use statistical analyses and 38 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- quantitative models to help determine fair value as of the time a Portfolio 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 Portfolio could obtain if it were to sell the security at the time of the close of the NYSE. Investments in securities maturing in less than 60 days from the date of acquisition are valued at amortized cost, which, when combined with accrued interest, approximates market value. B. 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 delivered. Interest income is recorded on an accrual basis except when collection is not expected. Dividend income is recorded on the ex-dividend date, or for certain foreign securities, when the information becomes available to the portfolios. Premium amortization and discount accretion are determined by the effective yield method. C. Foreign Currency Translation. The books and records of the portfolios 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 Portfolios 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 and maturities of short-term securities, 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 Portfolio'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 re-evaluation 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. Certain portfolios 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 Portfolios 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 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 Portfolio may enter into futures contracts involving foreign currency, interest rates, securities and securities indices, for hedging purposes only. 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 Portfolio 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 Portfolio 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 Portfolio. When 39 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- the contract is closed, the Portfolio 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. Dividends from net investment income and capital gains, if any, are declared and paid annually by the International, Growth, Small Company, Technology, Value Opportunity, Balanced and Money Market Portfolios; and declared and paid semi-annually by Bond and Growth and Income Portfolios. F. Federal Income Taxes. It is the policy of the Portfolios, to comply with the requirements of the Internal Revenue Code that are 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, a federal income tax or excise tax provision is not required. The Board of Directors intends to offset any net capital gains with any available capital loss carryforward until each carryforward has been fully utilized or expires. G. Use of Estimates. Management of the Portfolios 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. Actual results could differ from these estimates. H. Repurchase Agreements. Each Portfolio may invest in repurchase agreements only with government securities dealers recognized by the Board of Governors of the Federal Reserve System or with member banks 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 Portfolio will always 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 Portfolio. 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 Portfolio 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. Securities Lending. Each Portfolio 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 Portfolios have the right to use collateral to offset losses incurred. There would be potential loss to the Portfolios in the event the Portfolios are delayed or prevented from exercising their right to dispose of the collateral. The Portfolios 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. No securities were on loan at June 30, 2003. J. Illiquid and Restricted 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 Portfolios to sell them promptly at an acceptable price. Restricted securities are those sold under Rule 144A of the Securities Act of 1933 (1933 Act) or are securities offered pursuant to Section 4(2) of the 1933 Act, and are subject to legal or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. 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. Each Portfolio, except for Money Market, may invest up to 15% of its net assets in illiquid securities. 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. The Portfolios will not pay the costs of disposition of restricted securities other than ordinary brokerage fees, if any. K. Delayed Delivery Transactions. Balanced, Growth and Income, and Bond Portfolios 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 the Portfolios' 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 Portfolios are required to hold liquid assets as collateral with the Portfolios' custodian sufficient to cover the purchase price. 40 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- L. Mortgage Dollar Roll Transactions. In connection with a portfolio's ability to purchase or sell securities on a when-issued basis, Balanced, Growth and Income, and Bond Portfolios 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 Portfolio 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 Portfolios account for dollar roll transactions as purchases and sales. M. Options Contracts. Balanced, Growth and Income, and Bond may purchase put and call options and may write (sell) put options and covered call options. The Portfolios 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 Portfolios 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 Portfolios 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 Portfolios 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 Portfolios 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. N. Swap Contracts. The Balanced and Bond Portfolios may enter into interest rate swaps, currency swaps and other types of swap agreements, including swaps on securities and indices. A swap is an agreement between two parties pursuant to which each party agrees to make one or more payments to the other on regularly scheduled dates over a stated term, based on different interest rates, currency exchange rates, security prices, the prices or rates of other types of financial instruments or assets or the levels of specified indices. During the term of the swap, changes in the value of the swap are recognized by marking-to-market the value of the swap. For each swap contract, a capital gain or loss is recognized on each contract's respective payment date. NOTE 3 -- INVESTMENT TRANSACTIONS For the six months ended June 30, 2003, the cost of purchases and proceeds from the sales of securities, excluding U.S. Government and short-term securities, were as follows:
PURCHASES SALES --------- ----- International $ 10,330,600 $ 9,644,209 Growth 150,969,727 156,098,358 Small Company 404,643,988 403,392,836 Technology 10,108,111 7,139,334 Value Opportunity 143,364,890 140,714,718 Balanced 1,046,786,670 1,159,241,673 Growth and Income 2,457,567,103 2,758,397,654 Bond 777,746,564 950,750,050
U.S. Government Securities not included above were as follows:
PURCHASES SALES --------- ----- Balanced $1,144,297,205 $1,037,147,730 Bond 2,977,041,134 2,631,961,344
NOTE 4 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES Each of the Portfolios has entered into an Investment Management Agreement with ING Investments, LLC (the "Manager"), a wholly-owned subsidiary of ING Groep N.V. The investment management agreements compensate the Manager with a fee, computed daily and payable monthly, based on the average daily net assets of each Portfolio, at the following annual rates:
AS A PERCENTAGE OF AVERAGE NET ASSETS ----------------------------- International 0.85% Growth 0.60% Small Company 0.75% Technology 0.95% Value Opportunity 0.60% Balanced 0.50% Growth and Income 0.50% on first $10 billion; 0.45% on next $5 billion; and 0.425% over $15 billion Bond 0.40% Money Market 0.25%
41 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- The Manager entered into a subadvisory agreement with Aeltus Investment Management, Inc. (ING Aeltus), a wholly owned subsidiary of ING Groep N.V. effective March 1, 2002. ING Aeltus acts as subadvisor to all Portfolios except the Technology Portfolio. Subject to such policies as the Board or the Manager may determine, ING Aeltus manages the Portfolios' assets in accordance with the Portfolios' investment objectives, policies, and limitations. Pursuant to a subadvisory agreement between the Manager and AIC Asset Management, LLC ("AIC"), AIC serves as subadviser to the Technology Portfolio. Pursuant to an Administrative Services Agreement, ING Funds Services, LLC ("IFS") acts as administrator and provides certain administrative and shareholder services necessary for Portfolio operations and is responsible for the supervision of other service providers. IFS is entitled to receive from each Portfolio a fee at an annual rate of 5.5 basis points on the first $5 billion of daily net assets and 3.0 basis points thereafter. NOTE 5 -- DISTRIBUTION AND SERVICE FEES Class S shares of the Portfolios have 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 by the Portfolios for expenses incurred in the distribution of each Portfolio'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 Portfolio'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, Class S shares of the Portfolios pay the Distributor a fee calculated at an annual rate of 0.25% of average daily net assets. NOTE 6 -- OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES At June 30, 2003 the Portfolios had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities (see Notes 4 and 5):
ACCRUED ACCRUED SHAREHOLDER INVESTMENT ACCRUED SERVICES AND MANAGEMENT ADMINISTRATIVE DISTRIBUTION FEES FEES FEES TOTAL ---- ---- ---- ----- International $ 23,750 $ 1,537 $ 10 $ 25,297 Growth 99,595 9,129 21 108,745 Small Company 202,599 14,857 65 217,521 Technology 44,717 2,589 2 47,308 Value Opportunity 111,812 10,250 286 122,348 Balanced 517,047 56,875 3 573,925 Growth and Income 1,429,191 157,211 9 1,586,411 Bond 440,385 60,553 18,075 519,013 Money Market 287,362 63,220 -- 350,582
Each Portfolio has adopted a Deferred Compensation Plan (the "Plan"), which allows eligible non-affiliated directors as described in the Plan to defer the receipt of all or a portion of the directors' fees payable. The deferred fees are invested in various funds advised by ING Investments, LLC until distribution in accordance with the Plan. NOTE 7 -- EXPENSE LIMITATIONS For the following Portfolios, the Investment Manager has voluntarily agreed to limit expenses, excluding interest, taxes, brokerage and extraordinary expenses to the levels listed below:
CLASS R CLASS S ------- ------- International 1.15% 1.40% Growth 0.80% 1.05% Small Company 0.95% 1.20% Technology 1.15% 1.40% Value Opportunity 0.80% 1.05%
Each Portfolio will at a later date reimburse the Investment Manager for expenses waived during the previous 36 months, but only if, after such reimbursement, the Portfolio'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 Portfolio. As of June 30, 2003, the cumulative amount of reimbursed fees that are subject to possible recoupment by the Manager are as follows: International $135,287
42 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- NOTE 8 -- LINE OF CREDIT All of the Portfolios included in this report, in addition to certain other funds managed by the Adviser, have entered into an unsecured committed revolving line of credit agreement (the "Credit Agreement ") with a syndicate of banks led by Citibank, N.A. for an aggregate amount of $200,000,000. The proceeds may be used only to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the Portfolios; and (3) enable the Portfolios to meet other emergency expenses as defined in the Credit Agreement. The Portfolios to which the line of credit is available pay a commitment fee equal to 0.09% per annum on the daily unused portion of the committed line amount. Each of the Portfolios will pay its pro rata share of both the agent and commitment fee. Generally, borrowings under the Credit Agreement accrue interest at the Federal Funds Rate plus a specified margin. Repayments generally must be made within 30 days after the date of a revolving credit advance. At June 30, 2003, the Portfolios did not have any loans outstanding under the line of credit. NOTE 9 -- CAPITAL SHARES TRANSACTIONS Transaction in capital shares and dollars were as follows:
CLASS R SHARES CLASS S SHARES --------------------------------- --------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL (NUMBER OF SHARES) Shares sold 6,641,609 12,211,157 7,622 -- Shares issued as reinvestment of dividends -- 13,352 -- -- Shares redeemed (6,321,285) (13,375,503) (1,142) -- --------------- --------------- ------------ ------------ Net increase (decrease) in shares outstanding 320,324 (1,150,994) 6,480 -- =============== =============== ============ ============ INTERNATIONAL ($) Shares sold $ 38,169,585 $ 80,512,745 $ 41,564 $ -- Shares issued as reinvestment of dividends -- 93,596 -- -- Shares redeemed (36,431,704) (87,743,989) (6,273) -- --------------- --------------- ------------ ------------ Net increase (decrease) $ 1,737,881 $ (7,137,648) $ 35,291 $ -- =============== =============== ============ ============
CLASS R SHARES CLASS S SHARES --------------------------------- --------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- GROWTH (NUMBER OF SHARES) Shares sold 1,486,974 4,049,562 6,797 6,802 Shares redeemed (1,513,604) (9,317,320) (33) (122) --------------- --------------- ------------ ------------ Net increase (decrease) in shares outstanding (26,630) (5,267,758) 6,764 6,680 =============== =============== ============ ============ GROWTH ($) Shares sold $ 11,005,349 $ 35,440,835 $ 50,016 $ 51,572 Shares redeemed (10,941,434) (74,578,416) (244) (912) --------------- --------------- ------------ ------------ Net increase (decrease) $ 63,915 $ (39,137,581) $ 49,772 $ 50,660 =============== =============== ============ ============
43 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
CLASS R SHARES CLASS S SHARES --------------------------------- --------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- SMALL COMPANY (NUMBER OF SHARES) Shares sold 4,265,341 11,534,225 10,700 16,344 Shares issued as reinvestment of dividends -- 105,298 -- 40 Shares redeemed (3,426,512) (9,435,640) (1,417) (2,625) --------------- --------------- ------------ ------------ Net increase in shares outstanding 838,829 2,203,883 9,283 13,759 =============== =============== ============ ============ SMALL COMPANY ($) Shares sold $ 55,691,493 $ 175,512,145 $ 142,343 $ 250,476 Shares issued as reinvestment of dividends -- 1,576,315 -- 603 Shares redeemed (44,114,125) (135,484,865) (17,790) (37,371) --------------- --------------- ------------ ------------ Net increase $ 11,577,368 $ 41,603,595 $ 124,553 $ 213,708 =============== =============== ============ ============
CLASS R SHARES CLASS S SHARES --------------------------------- --------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2001 2003 2002 ---- ---- ---- ---- TECHNOLOGY (NUMBER OF SHARES) Shares sold 9,757,580 18,405,609 -- -- Shares redeemed (7,934,881) (15,147,805) -- -- --------------- --------------- ------------ ------------ Net increase in shares outstanding 1,822,699 3,257,804 -- -- =============== =============== ============ ============ TECHNOLOGY ($) Shares sold $ 27,849,016 $ 66,979,389 $ -- $ -- Shares redeemed (22,312,347) (52,304,809) -- -- --------------- --------------- ------------ ------------ Net increase $ 5,536,669 $ 14,674,580 $ -- $ -- =============== =============== ============ ============
CLASS R SHARES CLASS S SHARES --------------------------------- --------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- VALUE OPPORTUNITY (NUMBER OF SHARES) Shares sold 897,761 7,209,302 28,901 104,635 Shares issued as reinvestment of dividends -- 82,208 -- 300 Shares redeemed (1,012,173) (2,198,402) (5,933) (16,084) --------------- --------------- ------------ ------------ Net increase (decrease) in shares outstanding (114,412) 5,093,108 22,968 88,851 =============== =============== ============ ============ VALUE OPPORTUNITY ($) Shares sold $ 8,907,353 $ 85,145,155 $ 289,030 $ 1,247,625 Shares issued as reinvestment of dividends -- 951,142 -- 3,459 Shares redeemed (9,889,802) (24,195,900) (56,368) (168,604) --------------- --------------- ------------ ------------ Net increase (decrease) $ (982,449) $ 61,900,397 $ 232,662 $ 1,082,480 =============== =============== ============ ============
44 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
CLASS R SHARES CLASS S SHARES --------------------------------- -------------- SIX MONTHS YEAR PERIOD ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, 2003 2002 2003(1) ---- ---- ------- BALANCED (NUMBER OF SHARES) Shares sold 795,496 1,996,574 1,234 Shares issued as reinvestment of dividends -- 1,341,931 -- Shares redeemed (5,305,083) (20,950,203) (1) --------------- --------------- ------------ Net increase (decrease) in shares outstanding (4,509,587) (17,611,698) 1,233 =============== =============== ============ BALANCED ($) Shares sold $ 8,846,984 $ 23,017,801 $ 14,230 Shares issued as reinvestment of dividends -- 14,989,364 -- Shares redeemed (57,888,965) (230,189,224) (8) --------------- --------------- ------------ Net increase (decrease) $ (49,041,981) $ (192,182,059) $ 14,222 =============== =============== ============
CLASS R SHARES CLASS S SHARES --------------------------------- -------------- SIX MONTHS YEAR PERIOD ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, 2003 2002 2003(2) ---- ---- ------- GROWTH AND INCOME (NUMBER OF SHARES) Shares sold 491,003 1,580,665 7,446 Shares issued as reinvestment of dividends -- 2,604,961 -- Shares redeemed (22,297,417) (49,721,251) (1) --------------- --------------- ------------ Net increase (decrease) in shares outstanding (21,806,414) (45,535,625) 7,445 =============== =============== ============ GROWTH AND INCOME ($) Shares sold $ 7,421,530 $ 27,763,650 $ 121,305 Shares issued as reinvestment of dividends -- 38,475,273 -- Shares redeemed (324,246,056) (828,611,395) (12) --------------- --------------- ------------ Net increase (decrease) $ (316,824,526) $ (762,372,472) $ 121,293 =============== =============== ============
CLASS R SHARES CLASS S SHARES --------------------------------- --------------------------- SIX MONTHS YEAR SIX MONTHS PERIOD ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2003 2002 2003 2002(3) ---- ---- ---- ------- BOND (NUMBER OF SHARES) Shares sold 6,021,478 15,194,847 4,312,320 4,594,043 Shares issued as reinvestment of dividends -- 3,110,914 -- 103,425 Shares redeemed (5,186,812) (8,233,251) (1,765,875) (1,031,773) --------------- --------------- ------------ ------------ Net increase in shares outstanding 834,666 10,072,510 2,546,445 3,665,695 =============== =============== ============ ============ BOND ($) Shares sold $ 83,028,663 $ 203,392,793 $ 59,794,605 $ 62,106,540 Shares issued as reinvestment of dividends -- 41,759,091 -- 1,390,528 Shares redeemed (72,161,444) (108,669,400) (24,632,773) (13,839,450) --------------- --------------- ------------ ------------ Net increase $ 10,867,219 $ 136,482,484 $ 35,161,832 $ 49,657,618 =============== =============== ============ ============
- ------------------ (1) Class S commenced operations on May 29, 2003. (2) Class S commenced operations on June 11, 2003. (3) Class S commenced offering of shares on May 3, 2002. 45 NOTES TO FINANCIAL STATEMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- NOTE 9 -- CAPITAL SHARES TRANSACTIONS (CONTINUED)
CLASS R SHARES --------------------------------- SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, 2003 2002 ---- ---- MONEY MARKET (NUMBER OF SHARES) Shares sold 112,697,924 212,328,316 Shares issued as reinvestment of dividends 1,928,116 4,467,825 Shares redeemed (121,427,592) (211,631,167) --------------- --------------- Net increase (decrease) in shares outstanding (6,801,552) 5,164,974 =============== =============== MONEY MARKET ($) Shares sold $ 1,452,310,168 $ 2,748,252,013 Shares issued as reinvestment of dividends 24,741,578 57,317,722 Shares redeemed (1,564,158,836) (2,739,754,578) --------------- --------------- Net increase (decrease) $ (87,107,090) $ 65,815,157 =============== ===============
NOTE 10 -- FEDERAL INCOME TAXES 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 for six months ended June 30, 2003 were as follow:
ORDINARY INCOME ------ Money Market $24,741,578
The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles. These book/tax differences are either considered temporary or permanent in nature. Key differences are the treatment of short-term capital gains, foreign currency transactions, organization costs and other temporary differences. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassifications. To the extent distributions exceed net investment income and/or net realized capital gains for tax purposes, they are reported as distributions of paid-in capital. Capital loss carryforwards, which may be used to offset future realized capital gains for federal income tax purposes were as follows at December 31, 2002:
AMOUNT EXPIRATION DATES ------ ---------------- International $ 31,531,309 2009-2010 Growth 217,997,040 2009-2010 Small Company 70,984,645 2009-2010 Technology 57,131,367 2008-2010 Value Opportunity 70,506,602 2009-2010 Balanced 205,059,932 2009-2010 Growth and Income 3,023,558,930 2009-2011 Bond 571,253 2011 Money Market 4,506,979 2003-2010
NOTE 11 -- SUBSEQUENT EVENTS Dividends. Subsequent to June 30, 2003, the following Portfolios declared dividends of:
PER SHARE TYPE AMOUNT PAYABLE DATE RECORD DATE ---- --------- ------------- ------------- INTERNATIONAL Class R NII $0.0674 July 3, 2003 June 30, 2003 Class S NII $0.0633 July 3, 2003 June 30, 2003 SMALL COMPANY Class R NII $0.0394 July 3, 2003 June 30, 2003 Class S NII $0.0281 July 3, 2003 June 30, 2003 VALUE OPPORTUNITY Class R NII $0.0826 July 3, 2003 June 30, 2003 Class S NII $0.0714 July 3, 2003 June 30, 2003 BALANCED Class R NII $0.2357 July 3, 2003 June 30, 2003 Class S NII $0.2334 July 3, 2003 June 30, 2003 BOND Class R NII $0.2300 July 3, 2003 June 30, 2003 Class S NII $0.2151 July 3, 2003 June 30, 2003
- ------------------ NII Net Investment Income 46 ING VP INTERNATIONAL EQUITY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Shares Value - --------------------------------------------------------------------------- COMMON STOCK: 96.1% AUSTRALIA: 5.2% 26,900 Amcor Ltd. $ 146,489 41,400 AMP Ltd. 137,992 16,700 Australia & New Zealand Banking Group Ltd. 208,429 37,300 BHP Billiton Ltd. 216,132 9,700 Foodland Associated Ltd. 128,155 77,100 Macquarie Infrastructure Group 185,629 52,400 Mayne Group Ltd. 96,289 14,700 National Australia Bank Ltd. 330,262 9,200 St. George Bank Ltd. 133,271 19,700 TABCORP Holdings Ltd. 142,291 ----------- TOTAL AUSTRALIA 1,724,939 ----------- BELGIUM: 1.9% 13,000 Dexia 164,363 21,000 Fortis 364,624 4,200 Interbrew 93,326 ----------- TOTAL BELGIUM 622,313 ----------- FINLAND: 2.1% 32,100 Nokia OYJ ADR 527,403 16,100 Stora Enso OYJ 179,892 ----------- TOTAL FINLAND 707,295 ----------- FRANCE: 11.1% 900 Air Liquide 133,427 12,300 Alcatel SA 110,879 6,100 Aventis SA 335,606 8,300 BNP Paribas 421,760 3,100 Cap Gemini SA 110,072 5,900 Carrefour SA 289,168 8,300 France Telecom 203,589 1,500 Groupe Danone 207,564 2,100 Lafarge SA 122,988 2,400 Peugeot SA 116,580 1,400 Pinault-Printemps-Redoute 105,464 3,300 Schneider Electric SA 155,144 2,400 Societe Generale 152,133 12,100 Suez SA 192,585 4,848 Total SA 732,644 5,400 Veolia Environnement 111,000 8,500 Vivendi Universal SA 154,711 ----------- TOTAL FRANCE 3,655,314 ----------- GERMANY: 8.1% 3,300 BASF AG 140,971 11,800 Bayer AG 273,450 7,400 DaimlerChrysler AG 258,333 4,800 Deutsche Bank AG 311,322 15,700 Deutsche Telekom AG 239,607 7,900 E.ON AG 406,152 12,300 Infineon Technologies AG 118,930 2,000 Muenchener Rueckversicherungs AG 203,901 1,800 SAP AG 212,284 6,700 Siemens AG 328,685 3,900 Volkswagen AG 164,856 ----------- TOTAL GERMANY 2,658,491 ----------- HONG KONG: 2.3% 35,000 Cheung Kong Holdings Ltd. 210,050 38,000 Hutchison Whampoa Ltd. 231,465 248,000 Li & Fung Ltd. 319,614 ----------- TOTAL HONG KONG 761,129 ----------- IRELAND: 0.5% 14,000 Bank of Ireland 169,611 ----------- TOTAL IRELAND 169,611 -----------
Shares Value - --------------------------------------------------------------------------- ITALY: 3.6% 10,900 Assicurazioni Generali S.p.A. $ 252,593 17,300 ENI-Ente Nazionale Idrocarburi S.p.A. 261,641 48,600 Telecom Italia S.p.A. 439,781 49,500 UniCredito Italiano S.p.A. 235,900 ----------- TOTAL ITALY 1,189,915 ----------- JAPAN: 19.0% 2,000 Bandai Co. Ltd. 76,286 7,000 Canon, Inc. 321,216 12,300 Chubu Electric Power Co., Inc. 224,335 13,000 Dai Nippon Printing Co. Ltd. 137,497 40 East Japan Railway Co. 177,889 9,800 Eisai Co. Ltd. 201,591 2,200 Fanuc Ltd. 109,015 5,000 Fuji Photo Film Co. Ltd. 144,493 400 Funai Electric Co. Ltd. 44,639 35,000 Hitachi Ltd. 148,366 5,100 Honda Motor Co. Ltd. 193,254 8,000 Ito-Yokado Co. Ltd. 191,547 44,000 Kajima Corp. 104,435 7,000 Kao Corp. 130,294 700 Keyence Corp. 128,253 19,000 Kikkoman Corp. 125,480 11,000 Matsushita Electric Industrial Co. Ltd. 108,924 26 Millea Holdings, Inc. 198,776 69 Mitsubishi Tokyo Financial Group, Inc. 312,030 33,000 Mitsui & Co. Ltd. 165,447 1,900 Nidec Corp. 124,531 118,000 Nippon Steel Corp. 162,149 30,000 Nippon Yusen Kabushiki Kaisha 116,927 23,800 Nissan Motor Co. Ltd. 227,544 3,500 Nitto Denko Corp. 114,553 24,000 Nomura Holdings, Inc. 304,610 150 NTT DoCoMo, Inc. 324,797 600 Obic Co. Ltd. 107,233 59,000 Osaka Gas Co. Ltd. 145,934 1,300 Rohm Co. Ltd. 141,720 10,000 Sharp Corp. 128,336 6,800 Shin-Etsu Chemical Co. Ltd. 232,188 1,200 SMC Corp. 101,037 3,600 Sony Corp. 101,337 18,200 Toyota Motor Corp. 471,389 8,300 Yamanouchi Pharmaceutical Co. Ltd. 216,356 ----------- TOTAL JAPAN 6,264,408 ----------- LUXEMBOURG: 0.5% 15,400 Arcelor 179,322 ----------- TOTAL LUXEMBOURG 179,322 ----------- NETHERLANDS: 6.5% 15,500 Aegon NV 155,211 13,300 @ ASML Holding NV 126,308 11,900 Koninklijke Ahold NV 98,801 8,800 Koninklijke Philips Electronics NV 167,347 24,800 S Royal Dutch Petroleum Co. 1,151,124 8,300 Unilever NV ADR 445,303 ----------- TOTAL NETHERLANDS 2,144,094 ----------- SINGAPORE: 0.3% 19,000 DBS Group Holdings Ltd. 111,130 ----------- TOTAL SINGAPORE 111,130 ----------- SPAIN: 4.8% 5,000 Banco Popular Espanol 252,637 45,600 Banco Santander Central Hispano SA 399,543 15,400 Endesa SA 257,841 12,500 Iberdrola SA 216,464
See Accompanying Notes to Financial Statements 47 ING VP INTERNATIONAL EQUITY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Shares Value - --------------------------------------------------------------------------- SPAIN (CONTINUED) 5,300 Inditex SA $ 133,289 26,216 Telefonica SA 304,363 ----------- TOTAL SPAIN 1,564,137 ----------- SWEDEN: 0.5% 141,300 Telefonaktiebolaget LM Ericsson 151,804 ----------- TOTAL SWEDEN 151,804 ----------- SWITZERLAND: 8.9% 2,450 Adecco SA 100,927 11,150 Credit Suisse Group 293,453 2,360 Nestle SA 486,966 17,300 Novartis AG 684,567 5,450 Roche Holding AG 427,494 3,650 Swiss Reinsurance 202,231 7,050 UBS AG 392,173 2,832 Zurich Financial Services AG 337,653 ----------- TOTAL SWITZERLAND 2,925,464 ----------- UNITED KINGDOM: 20.8% 19,500 Anglo American PLC 297,646 9,900 AstraZeneca PLC 396,977 31,100 Aviva PLC 215,927 139,233 BP PLC 965,547 26,800 Compass Group PLC 144,502 26,600 Diageo PLC 283,994 21,500 GlaxoSmithKline PLC ADR 871,610 23,600 HBOS PLC 305,512 39,800 HSBC Holdings PLC 470,240 39,959 Lloyds TSB Group PLC 283,700 20,100 Marks & Spencer Group PLC 104,728 41,962 National Grid Transco PLC 284,591 24,300 Pearson PLC 226,958 28,800 Reed Elsevier PLC 239,641 21,503 Royal Bank of Scotland Group PLC 603,214 50,500 Tesco PLC 182,707 506,641 Vodafone Group PLC 990,700 ----------- TOTAL UNITED KINGDOM 6,868,194 ----------- Total Common Stocks (Cost $31,267,389) 31,697,560 ----------- Principal Amount Value - ---------------------------------------------------------------------------- SHORT-TERM INVESTMENT: 1.2% $401,000 S UBS Finance, Inc., 0.000%, due 07/01/03 401,000 ----------- Total Short-Term Investment (Cost $401,000) 401,000 -----------
TOTAL INVESTMENTS IN SECURITIES (COST $31,668,389)* 97.3% $32,098,560 OTHER ASSETS AND LIABILITIES-NET 2.7 886,193 ------ ----------- NET ASSETS 100.0% $32,984,753 ====== ===========
@ Non-income producing security ADR American Depositary Receipt S Segregated securities for futures contracts held at June 30, 2003. * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 2,208,565 Gross Unrealized Depreciation (1,778,394) ----------- Net Unrealized Appreciation $ 430,171 ===========
Percentage of Industry Group Net Assets - -------------------------------------------------------------------------- Auto Manufacturers 4.3% Banks 17.9% Beverages 1.1% Building Materials 0.4% Chemicals 2.7% Commercial Paper 1.2% Commercial Services 1.6% Computers 0.7% Cosmetics/Personal Care 0.4% Distribution/Wholesale 1.5% Diversified Financial Services 0.9% Electric 4.2%
- --------------------------------------------------------------------------
Percentage of Industry Group Net Assets Electrical Components & Equipment 1.0% Electronics 1.2% Engineering & Construction 0.3% Entertainment 0.4% Food 6.0% Food Service 0.4% Forest Products & Paper 0.6% Gas 0.4% Hand/Machine Tools 1.2% Holding Companies-Diversified 0.7% Home Furnishings 0.6% Insurance 5.2% Iron/Steel 1.1% Media 1.9% Mining 1.6% Miscellaneous Manufacturing 1.4% Office/Business Equipment 1.0% Oil & Gas 9.4% Packaging & Containers 0.5% Pharmaceuticals 9.5% Real Estate 0.6% Retail 1.6% Semiconductors 1.2% Software 0.6% Telecommunications 10.0% Toys/Games/Hobbies 0.2% Transportation 0.9% Water 0.9% Other Assets and Liabilities, Net 2.7% ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 48 ING VP INTERNATIONAL EQUITY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- Information concerning open futures contracts at June 30, 2003 is shown below:
NO. OF NOTIONAL EXPIRATION UNREALIZED CONTRACTS MARKET VALUE DATE LOSS --------- ------------ ---- ---- LONG CONTRACTS - -------------- Dow Jones Euro-Stoxx 44 $1,226,300 Sep-03 $(16,697) FTSE 100 Index 10 662,370 Sep-03 (7,013) ---------- -------- $1,888,670 $(23,710) ========== ========
See Accompanying Notes to Financial Statements 49 ING VP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Shares Value - ---------------------------------------------------------------------------- COMMON STOCK: 96.1% AEROSPACE/DEFENSE: 1.3% 57,800 Lockheed Martin Corp. $ 2,749,546 ------------ 2,749,546 ------------ BEVERAGES: 2.1% 94,700 Coca-Cola Co. 4,395,027 ------------ 4,395,027 ------------ BIOTECHNOLOGY: 2.9% 49,572 @ Amgen, Inc. 3,293,564 38,200 @ Genentech, Inc. 2,754,984 ------------ 6,048,548 ------------ COMMERCIAL SERVICES: 2.0% 67,300 @ Apollo Group, Inc. 4,156,448 ------------ 4,156,448 ------------ COMPUTERS: 2.6% 166,200 @ Dell Computer Corp. 5,311,752 ------------ 5,311,752 ------------ COSMETICS/PERSONAL CARE: 4.4% 45,700 Estee Lauder Cos., Inc. 1,532,321 116,300 Gillette Co. 3,705,318 43,200 Procter & Gamble Co. 3,852,576 ------------ 9,090,215 ------------ DIVERSIFIED FINANCIAL SERVICES: 8.5% 36,100 American Express Co. 1,509,341 36,000 Bear Stearns Cos., Inc. 2,607,120 32,300 Capital One Financial Corp. 1,588,514 46,700 Citigroup, Inc. 1,998,760 19,900 Countrywide Financial Corp. 1,384,443 45,800 Fannie Mae 3,088,752 19,500 Goldman Sachs Group, Inc. 1,633,125 46,300 Merrill Lynch & Co., Inc. 2,161,284 34,100 Morgan Stanley 1,457,775 ------------ 17,429,114 ------------ ENTERTAINMENT: 0.1% 7,500 GTECH Holdings Corp. 282,375 ------------ 282,375 ------------ HAND/MACHINE TOOLS: 1.0% 46,200 Black & Decker Corp. 2,007,390 ------------ 2,007,390 ------------ HEALTHCARE -- PRODUCTS: 4.4% 71,600 Johnson & Johnson 3,701,720 26,400 @ St. Jude Medical, Inc. 1,518,000 66,000 @ Varian Medical Systems, Inc. 3,799,620 ------------ 9,019,340 ------------ HEALTHCARE -- SERVICES: 4.3% 34,100 A Aetna, Inc. 2,052,820 39,300 @ Anthem, Inc. 3,031,995 48,800 @ Coventry Health Care, Inc. 2,252,608 31,400 UnitedHealth Group, Inc. 1,577,850 ------------ 8,915,273 ------------ HOME BUILDERS: 0.7% 18,900 Centex Corp. 1,470,231 ------------ 1,470,231 ------------ INSURANCE: 0.9% 61,200 @@ Willis Group Holdings Ltd. 1,881,900 ------------ 1,881,900 ------------
Shares Value - ---------------------------------------------------------------------------- INTERNET: 5.7% 31,000 @ eBay, Inc. $ 3,229,580 86,200 @ Symantec Corp. 3,780,732 142,800 @ Yahoo!, Inc. 4,678,128 ------------ 11,688,440 ------------ LODGING: 0.8% 38,500 @ Harrah's Entertainment, Inc. 1,549,240 ------------ 1,549,240 ------------ MEDIA: 1.9% 138,700 @ Fox Entertainment Group, Inc. 3,991,786 ------------ 3,991,786 ------------ MISCELLANEOUS MANUFACTURING: 5.7% 41,597 Danaher Corp. 2,830,675 23,100 Eaton Corp. 1,815,891 247,100 General Electric Co. 7,086,828 ------------ 11,733,394 ------------ OIL & GAS: 0.9% 46,900 @,@@ Nabors Industries Ltd. 1,854,895 ------------ 1,854,895 ------------ OIL & GAS SERVICES: 4.3% 49,400 @ BJ Services Co. 1,845,584 229,500 Halliburton Co. 5,278,500 49,700 @ Smith Intl., Inc. 1,825,978 ------------ 8,950,062 ------------ PHARMACEUTICALS: 14.6% 45,700 @ Barr Laboratories, Inc. 2,993,350 70,100 @ Forest Laboratories, Inc. 3,837,975 75,500 @ Gilead Sciences, Inc. 4,196,290 396,980 S Pfizer, Inc. 13,556,867 59,300 @@ Teva Pharmaceutical Industries ADR 3,375,949 53,300 @ Watson Pharmaceuticals, Inc. 2,151,721 ------------ 30,112,152 ------------ RETAIL: 5.7% 52,700 @ Bed Bath & Beyond, Inc. 2,045,287 101,500 Home Depot, Inc. 3,361,680 117,800 Wal-Mart Stores, Inc. 6,322,326 ------------ 11,729,293 ------------ SEMICONDUCTORS: 5.9% 276,700 Intel Corp. 5,750,933 97,300 Linear Technology Corp. 3,134,033 80,500 @ Nvidia Corp. 1,852,305 28,600 @ QLogic Corp. 1,382,238 ------------ 12,119,509 ------------ SOFTWARE: 11.7% 47,000 @ Electronic Arts, Inc. 3,477,530 79,900 First Data Corp. 3,311,056 63,900 @ Mercury Interactive Corp. 2,467,179 412,400 Microsoft Corp. 10,561,564 366,100 @ Oracle Corp. 4,400,522 ------------ 24,217,851 ------------ TELECOMMUNICATIONS: 3.7% 109,800 @,@@ Amdocs Ltd. 2,635,200 301,100 @ Cisco Systems, Inc. 5,025,359 ------------ 7,660,559 ------------ Total Common Stock (Cost $183,770,141) 198,364,340 ------------
See Accompanying Notes to Financial Statements 50 ING VP GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- SHORT-TERM INVESTMENT: 3.3% $6,688,000 State Street Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $6,688,204 to be received upon repurchase (Collateralized by $6,820,000 Federal Home Loan Bank, 1.300%, Market Value $6,826,397, due 06/28/04) $ 6,688,000 ------------ Total Short-Term Investment (Cost $6,688,000) 6,688,000 ------------
TOTAL INVESTMENTS IN SECURITIES (COST $190,458,141)* 99.4% $205,052,340 OTHER ASSETS AND LIABILITIES-NET 0.6 1,283,914 ------ ------------ NET ASSETS 100.0% $206,336,254 ====== ============
@ Non-income producing security @@ Foreign Issuer A Related Party ADR American Depositary Receipt S Segregated securities for futures contracts held at June 30, 2003. * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $18,560,679 Gross Unrealized Depreciation (3,966,480) ----------- Net Unrealized Appreciation $14,594,199 ===========
Information concerning open futures contracts at June 30, 2003 is shown below:
NO. OF NOTIONAL EXPIRATION UNREALIZED CONTRACTS MARKET VALUE DATE LOSS --------- ------------ ---- ---- LONG CONTRACTS - -------------- S&P 500 Index 19 $4,623,175 Sep-03 $(172,823) ---------- --------- $4,623,175 $(172,823) ========== =========
See Accompanying Notes to Financial Statements 51 ING VP SMALL COMPANY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Shares Value - --------------------------------------------------------------------------- COMMON STOCK: 92.6% AEROSPACE/DEFENSE: 0.2% 17,375 @ Moog, Inc. $ 603,781 ------------ 603,781 ------------ AGRICULTURE: 0.6% 85,800 Delta & Pine Land Co. 1,885,884 ------------ 1,885,884 ------------ AIRLINES: 0.1% 32,000 @ Continental Airlines, Inc. 479,040 ------------ 479,040 ------------ APPAREL: 1.2% 54,600 @ Nautica Enterprises, Inc. 700,518 200,000 @ Quiksilver, Inc. 3,298,000 ------------ 3,998,518 ------------ BANKS: 3.5% 60,000 Chittenden Corp. 1,641,000 50,000 Community First Bankshares, Inc. 1,365,000 43,900 Cullen/Frost Bankers, Inc. 1,409,190 73,800 @ First Republic Bank 1,963,080 50,000 Greater Bay BanCorp. 1,021,000 93,000 @ Local Financial Corp. 1,342,920 46,000 Provident Bankshares Corp. 1,168,860 73,650 @@ R&G Financial Corp. 2,187,405 ------------ 12,098,455 ------------ BIOTECHNOLOGY: 0.8% 105,600 @ Integra LifeSciences Holdings Corp. 2,785,728 ------------ 2,785,728 ------------ BUILDING MATERIALS: 0.7% 57,650 @ Trex Co., Inc. 2,262,763 ------------ 2,262,763 ------------ COMMERCIAL SERVICES: 4.5% 60,000 @ Advisory Board Co. 2,415,600 90,600 Banta Corp. 2,932,722 80,000 @ Corinthian Colleges, Inc. 3,885,600 195,000 @ FTI Consulting, Inc. 4,869,150 76,100 Rollins, Inc. 1,434,485 ------------ 15,537,557 ------------ COMPUTERS: 6.3% 123,900 @ CACI Intl., Inc. 4,249,770 100,550 @ Hutchinson Technology, Inc. 3,307,089 100,500 @ Intergraph Corp. 2,160,750 226,150 @ Iomega Corp. 2,397,190 191,500 @ Lexar Media, Inc. 1,811,590 125,000 @ Sandisk Corp. 5,043,750 250,000 @ Western Digital Corp. 2,575,000 ------------ 21,545,139 ------------ COSMETICS/PERSONAL CARE: 0.4% 67,075 @ Chattem, Inc. 1,261,010 ------------ 1,261,010 ------------ DISTRIBUTION/WHOLESALE: 0.8% 139,300 @ Handleman Co. 2,228,800 10,700 Hughes Supply, Inc. 371,290 ------------ 2,600,090 ------------ DIVERSIFIED FINANCIAL SERVICES: 1.9% 21,000 @ Affiliated Managers Group 1,279,950 160,000 Friedman Billings Ramsey Group, Inc. 2,144,000 250,200 @ Knight Trading Group, Inc. 1,556,244 279,100 Metris Cos., Inc. 1,549,005 ------------ 6,529,199 ------------
Shares Value - --------------------------------------------------------------------------- ELECTRIC: 0.7% 88,400 PNM Resources, Inc. $ 2,364,700 ------------ 2,364,700 ------------ ELECTRICAL COMPONENTS & EQUIPMENT: 2.0% 100,000 Ametek, Inc. 3,665,000 115,600 @ Rayovac Corp. 1,497,020 45,600 @ Wilson Greatbatch Technologies, Inc. 1,646,160 ------------ 6,808,180 ------------ ELECTRONICS: 4.7% 43,550 Analogic Corp. 2,123,498 154,000 @ Benchmark Electronics, Inc. 4,737,040 85,450 @ Itron, Inc. 1,842,302 70,100 @ Paxar Corp. 771,100 69,000 @ Planar Systems, Inc. 1,349,640 62,100 @ Trimble Navigation Ltd. 1,423,953 110,600 @ Varian, Inc. 3,834,502 ------------ 16,082,035 ------------ ENGINEERING & CONSTRUCTION: 0.8% 105,400 @@ Chicago Bridge & Iron Co. NV ADR 2,390,472 9,500 @ Washington Group Intl., Inc. 208,050 ------------ 2,598,522 ------------ ENTERTAINMENT: 1.6% 294,300 @,S Alliance Gaming Corp. 5,565,213 ------------ 5,565,213 ------------ FOOD: 2.5% 140,000 @ Hain Celestial Group, Inc. 2,238,600 81,650 @ RalCorp. Holdings, Inc. 2,037,984 131,350 Sensient Technologies Corp. 2,996,094 100,500 @ Wild Oats Markets, Inc. 1,105,500 ------------ 8,378,178 ------------ GAS: 0.6% 99,400 Oneok, Inc. 1,951,222 ------------ 1,951,222 ------------ HEALTHCARE -- PRODUCTS: 2.6% 170,200 Cooper Cos., Inc. 5,917,854 149,100 @ Wright Medical Group, Inc. 2,832,900 ------------ 8,750,754 ------------ HEALTHCARE -- SERVICES: 1.0% 36,700 @ Option Care, Inc. 423,151 125,650 @ Select Medical Corp. 3,119,890 ------------ 3,543,041 ------------ HOME BUILDERS: 1.5% 157,800 Standard-Pacific Corp. 5,232,648 ------------ 5,232,648 ------------ HOUSEHOLD PRODUCTS/WARES: 2.6% 202,600 @ American Greetings 3,979,064 71,500 @ Central Garden and Pet Co. 1,705,275 118,150 Harland John H. Co. 3,090,804 ------------ 8,775,143 ------------ INSURANCE: 3.9% 185,000 AmerUs Group Co. 5,215,150 45,000 Delphi Financial Group 2,106,000 82,600 Landamerica Financial Group, Inc. 3,923,500 75,000 @ Stewart Information Services Corp. 2,088,750 ------------ 13,333,400 ------------ INTERNET: 3.0% 100,517 @ Mindspeed Technologies, Inc. 271,395 201,050 Netbank, Inc. 2,645,818
See Accompanying Notes to Financial Statements 52 ING VP SMALL COMPANY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Shares Value - --------------------------------------------------------------------------- INTERNET (CONTINUED) 93,800 @ United Online, Inc. $ 2,376,892 351,850 @ WebEx Communications, Inc. 4,883,678 ------------ 10,177,783 ------------ INVESTMENT COMPANIES: 0.7% 99,200 American Capital Strategies Ltd. 2,474,048 ------------ 2,474,048 ------------ LEISURE TIME: 0.5% 143,850 @ K2, Inc. 1,762,162 ------------ 1,762,162 ------------ MACHINERY -- CONSTRUCTION & MINING: 0.6% 101,500 @ Terex Corp. 1,981,280 ------------ 1,981,280 ------------ MACHINERY -- DIVERSIFIED: 0.6% 43,800 Briggs & Stratton 2,211,900 ------------ 2,211,900 ------------ MEDIA: 1.7% 150,000 @ Cumulus Media, Inc. 2,839,500 41,550 Liberty Corp. 1,765,875 101,300 @ XM Satellite Radio Holdings, Inc. 1,113,287 ------------ 5,718,662 ------------ MISCELLANEOUS MANUFACTURING: 0.9% 72,450 AO Smith Corp. 2,039,468 110,000 @ EnPro Industries, Inc. 1,175,900 ------------ 3,215,368 ------------ OIL & GAS: 2.6% 147,300 @ Denbury Resources, Inc. 1,978,239 125,000 Patina Oil & Gas Corp. 4,018,750 187,600 @ Southwestern Energy Co. 2,815,876 ------------ 8,812,865 ------------ OIL & GAS SERVICES: 1.3% 62,550 @ Lone Star Technologies 1,324,809 126,250 @ Oceaneering Intl., Inc. 3,225,688 ------------ 4,550,497 ------------
Shares Value - --------------------------------------------------------------------------- PACKAGING & CONTAINERS: 0.6% 302,800 @ Crown Holdings, Inc. $ 2,161,992 ------------ 2,161,992 ------------ PHARMACEUTICALS: 5.8% 206,600 @ Alkermes, Inc. 2,220,950 61,000 @,@@ Angiotech Pharmaceuticals, Inc. 2,485,140 187,650 @ Atherogenics, Inc. 2,801,614 75,000 @ Atrix Labs, Inc. 1,649,250 112,600 @ Ilex Oncology, Inc. 2,185,566 36,400 @ Inspire Pharmaceuticals, Inc. 393,120 85,000 @ MGI Pharma, Inc. 2,178,550 75,000 @ Neurocrine Biosciences, Inc. 3,745,500 50,000 @ Trimeris, Inc. 2,284,000 ------------ 19,943,690 ------------ REITS: 7.6% 108,000 Alexandria Real Estate Equities, Inc. 4,860,000 32,500 CBL & Associates Properties, Inc. 1,397,500 37,000 Centerpoint Properties Trust 2,266,250 65,000 Corp.orate Office Properties Trust SBI MD 1,100,450 133,075 Equity One, Inc. 2,182,430 100,000 Newcastle Investment Corp. 1,958,000 42,100 Ramco-Gershenson Properties 980,930 188,000 Reckson Associates Realty Corp. 3,921,680 39,800 Regency Centers Corp. 1,392,204 80,000 SL Green Realty Corp. 2,791,200 68,100 Taubman Centers, Inc. 1,304,796 70,000 Washington Real Estate Investment Trust 1,904,000 ------------ 26,059,440 ------------ RETAIL: 2.2% 40,000 Claire's Stores, Inc. 1,014,400 85,200 @ Hollywood Entertainment Corp. 1,465,440 155,850 @ Movie Gallery, Inc. 2,875,433 168,600 @ ShopKo Stores, Inc. 2,191,800 ------------ 7,547,073 ------------ SAVINGS & LOANS: 3.2% 145,000 Commercial Federal Corp. 3,074,000 31,300 Connecticut Bancshares, Inc. 1,228,525 60,000 @ FirstFed Financial Corp. 2,117,400 70,000 Waypoint Financial Corp. 1,262,800 84,200 WSFS Financial Corp. 3,233,280 ------------ 10,916,005 ------------ SEMICONDUCTORS: 3.3% 160,850 @ Artisan Components, Inc. 3,636,818 301,550 @ Conexant Systems, Inc. 1,236,355 251,300 @ GlobespanVirata, Inc. 2,100,868 173,900 @ Power Integrations, Inc. 4,229,248 ------------ 11,203,289 ------------ SOFTWARE: 8.2% 301,150 @ Activision, Inc. 3,890,858 104,550 @ Avid Technology, Inc. 3,666,568 50,500 @ Hyperion Solutions Corp. 1,704,880 100,300 @ Mantech Intl. Corp. 1,924,757 176,000 @ Micromuse, Inc. 1,406,240 187,600 @ NETIQ Corp. 2,900,296 150,800 @ Serena Software, Inc. 3,148,704 202,600 @,S Take-Two Interactive Software, Inc. 5,741,684 201,050 @ THQ, Inc. 3,618,900 ------------ 28,002,887 ------------ TELECOMMUNICATIONS: 4.3% 121,100 @ Boston Communications Group 2,074,443 476,300 @ Cincinnati Bell, Inc. 3,191,210 35,000 @ Commonwealth Telephone Enterprises, Inc. 1,538,950 239,250 @ Crown Castle Intl. Corp. 1,858,972 650,000 @ Enterasys Networks, Inc. 1,969,500 186,350 @ Metro One Telecommunications 961,566 363,000 @ Sonus Networks, Inc. 1,825,890 125,000 @ Talk America Holdings, Inc. 1,393,750 ------------ 14,814,281 ------------ Total Common Stock (Cost $279,972,903) 316,523,422 ------------
See Accompanying Notes to Financial Statements 53 ING VP SMALL COMPANY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - --------------------------------------------------------------------------- SHORT-TERM INVESTMENT: 3.4% $11,510,000 S State Street Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $11,510,352 to be received upon repurchase (Collateralized by $11,730,000 Federal Home Loan Bank, 1.300%, Market Value $11,741,003, due 06/28/04) $ 11,510,000 ------------ Total Short-Term Investment (Cost $11,510,000) 11,510,000 ------------
TOTAL INVESTMENTS IN SECURITIES (COST $291,482,903)* 96.0% $328,033,422 OTHER ASSETS AND LIABILITIES-NET 4.0 13,555,774 ------ ------------ NET ASSETS 100.0% $341,589,196 ====== ============
@ Non-income producing security @@ Foreign Issuer ADR American Depositary Receipt S Segregated securities for futures contracts held at June 30, 2003 * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $40,770,634 Gross Unrealized Depreciation (4,220,115) ----------- Net Unrealized Appreciation $36,550,519 ===========
Information concerning open futures contracts at June 30, 2003 is shown below:
NO. OF NOTIONAL EXPIRATION UNREALIZED CONTRACTS MARKET VALUE DATE LOSS --------- ------------ ---- ---- LONG CONTRACTS - -------------- Russell 2000 Index 66 $14,797,200 Sep-03 $(81,520) ----------- -------- $14,797,200 $(81,520) =========== ========
See Accompanying Notes to Financial Statements 54 ING VP TECHNOLOGY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Shares Value - --------------------------------------------------------------------------- COMMON STOCK: 93.8% COMPUTERS: 15.5% 35,650 @ Affiliated Computer Services, Inc. $ 1,630,275 700 @ Anteon Intl. Corp. 19,537 45,200 @ Computer Sciences Corp. 1,723,024 99,750 @ Dell Computer Corp. 3,188,010 118,100 Hewlett-Packard Co. 2,515,530 ----------- 9,076,376 ----------- DISTRIBUTION/WHOLESALE: 4.1% 52,200 @ CDW Corp. 2,390,760 ----------- 2,390,760 ----------- ELECTRONICS: 4.4% 247,500 @,@@ Flextronics Intl. Ltd. 2,571,525 ----------- 2,571,525 ----------- INTERNET: 3.8% 21,400 @ eBay, Inc. 2,229,452 ----------- 2,229,452 ----------- RETAIL: 4.4% 58,775 @ Best Buy Co., Inc. 2,581,398 ----------- 2,581,398 ----------- SEMICONDUCTORS: 43.4% 99,000 @ Altera Corp. 1,623,600 49,650 @ Analog Devices, Inc. 1,728,813 170,900 @ Applied Materials, Inc. 2,710,474 113,650 Intel Corp. 2,362,102 50,900 @ Kla-Tencor Corp. 2,366,341 154,250 @ Lam Research Corp. 2,808,892 158,100 @ Micron Technology, Inc. 1,838,703 88,000 @ Novellus Systems, Inc. 3,222,648 45,000 @@ STMicroelectronics NV 935,550 217,415 @,@@ Taiwan Semiconductor Manufacturing Co. Ltd. ADR 2,191,543 96,250 Texas Instruments, Inc. 1,694,000 78,700 @ Xilinx, Inc. 1,991,897 ----------- 25,474,563 ----------- SOFTWARE: 13.8% 71,850 @ BMC Software, Inc. 1,173,311 51,550 @ Intuit, Inc. 2,295,521 132,000 Microsoft Corp. 3,380,520 104,650 @ Oracle Corp. 1,257,893 ----------- 8,107,245 ----------- TELECOMMUNICATIONS: 4.4% 153,600 @ Cisco Systems, Inc. 2,563,584 ----------- 2,563,584 ----------- Total Common Stock (Cost $55,588,215) 54,994,903 ----------- SHORT-TERM INVESTMENT: 6.3% $ 3,716,000 State Street Repurchase Agreement dated 06/30/03, 0.950%, due 07/01/03, $3,716,098 to be received upon repurchase (Collateralized by $3,705,000 U.S. Treasury Note, 3.000%, Market Value $3,792,994, due 02/29/04) 3,716,000 ----------- Total Short-Term Investment (Cost $3,716,000) 3,716,000 -----------
TOTAL INVESTMENTS IN SECURITIES (COST $59,304,215)* 100.1% $ 58,710,903 OTHER ASSETS AND LIABILITIES-NET (0.1) (66,438) ------ ------------ NET ASSETS 100.0% $ 58,644,465 ====== ============
@ Non-income producing security @@ Foreign Issuer ADR American Depositary Receipt * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized depreciation consists of:
Gross Unrealized Appreciation $ 5,505,391 Gross Unrealized Depreciation (6,098,703) ----------- Net Unrealized Depreciation $ (593,312) ===========
See Accompanying Notes to Financial Statements 55 ING VALUE OPPORTUNITY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Shares Value - --------------------------------------------------------------------------- COMMON STOCK: 97.6% AEROSPACE/DEFENSE: 0.4% 28,800 Boeing Co. $ 988,416 ------------ 988,416 ------------ APPAREL: 2.7% 118,900 @ Jones Apparel Group, Inc. 3,479,014 79,300 @ Reebok Intl. Ltd. 2,666,859 ------------ 6,145,873 ------------ BANKS: 7.1% 83,300 Bank of America Corp. 6,583,199 126,000 National City Corp. 4,121,460 77,500 Wachovia Corp. 3,096,900 51,200 Wells Fargo & Co. 2,580,480 ------------ 16,382,039 ------------ BEVERAGES: 3.0% 113,500 Anheuser-Busch Cos., Inc. 5,794,175 26,000 PepsiCo, Inc. 1,157,000 ------------ 6,951,175 ------------ BIOTECHNOLOGY: 2.0% 69,200 @ Amgen, Inc. 4,597,648 ------------ 4,597,648 ------------ CHEMICALS: 0.8% 66,100 Sherwin-Williams Co. 1,776,768 ------------ 1,776,768 ------------ COMMERCIAL SERVICES: 3.0% 268,900 @ Cendant Corp. 4,926,248 75,200 Equifax, Inc. 1,955,200 ------------ 6,881,448 ------------ COMPUTERS: 5.1% 94,100 @ Dell Computer Corp. 3,007,436 241,000 Hewlett-Packard Co. 5,133,300 44,700 International Business Machines Corp. 3,687,750 ------------ 11,828,486 ------------ COSMETICS/PERSONAL CARE: 3.3% 84,500 Procter & Gamble Co. 7,535,710 ------------ 7,535,710 ------------ DIVERSIFIED FINANCIAL SERVICES: 11.9% 80,000 Bear Stearns Cos., Inc. 5,793,600 160,200 Citigroup, Inc. 6,856,560 56,700 Countrywide Financial Corp. 3,944,619 25,500 Fannie Mae 1,719,720 40,100 Goldman Sachs Group, Inc. 3,358,375 133,200 JP Morgan Chase & Co. 4,552,776 34,100 Morgan Stanley 1,457,775 ------------ 27,683,425 ------------ ELECTRIC: 1.4% 35,100 Dominion Resources, Inc. 2,255,877 18,100 Exelon Corp. 1,082,561 ------------ 3,338,438 ------------ ELECTRONICS: 0.2% 31,100 @ Thomas & Betts Corp. 449,395 ------------ 449,395 ------------ HEALTHCARE -- PRODUCTS: 5.3% 98,300 Bausch & Lomb, Inc. 3,686,250 36,900 CR Bard, Inc. 2,631,339 117,600 Johnson & Johnson 6,079,920 ------------ 12,397,509 ------------ HEALTHCARE -- SERVICES: 0.5% 14,000 @ WellPoint Health Networks 1,180,200 ------------ 1,180,200 ------------
Shares Value - --------------------------------------------------------------------------- HOUSEHOLD PRODUCTS/WARES: 2.1% 249,000 @ American Greetings $ 4,890,360 ------------ 4,890,360 ------------ INSURANCE: 2.6% 14,000 Aflac, Inc. 430,500 19,100 American Intl. Group 1,053,938 25,900 Progressive Corp. 1,893,290 37,100 Safeco Corp. 1,308,888 34,600 Torchmark Corp. 1,288,850 ------------ 5,975,466 ------------ MEDIA: 1.0% 31,700 @ AOL Time Warner, Inc. 510,053 44,100 @ Clear Channel Communications, Inc. 1,869,399 ------------ 2,379,452 ------------ MISCELLANEOUS MANUFACTURING: 4.0% 72,300 Cooper Industries Ltd. 2,985,990 143,200 General Electric Co. 4,106,976 82,300 Honeywell Intl., Inc. 2,209,755 ------------ 9,302,721 ------------ OFFICE/BUSINESS EQUIPMENT: 0.6% 142,500 @ Xerox Corp. 1,509,075 ------------ 1,509,075 ------------ OIL & GAS: 5.9% 76,500 Anadarko Petroleum Corp. 3,401,955 19,100 ConocoPhillips 1,046,680 160,900 Exxon Mobil Corp. 5,777,919 101,000 Occidental Petroleum Corp. 3,388,550 ------------ 13,615,104 ------------ PACKAGING & CONTAINERS: 1.0% 121,300 @ Pactiv Corp. 2,390,823 ------------ 2,390,823 ------------ PHARMACEUTICALS: 5.8% 72,900 Abbott Laboratories 3,190,104 72,700 Bristol-Myers Squibb Co. 1,973,805 58,000 Merck & Co., Inc. 3,511,900 140,100 Pfizer, Inc. 4,784,415 ------------ 13,460,224 ------------ RETAIL: 3.9% 92,900 Federated Department Stores 3,423,365 41,900 Home Depot, Inc. 1,387,728 80,300 Wal-Mart Stores, Inc. 4,309,701 ------------ 9,120,794 ------------ SAVINGS & LOANS: 2.0% 111,900 Washington Mutual, Inc. 4,621,470 ------------ 4,621,470 ------------ SEMICONDUCTORS: 2.7% 190,400 Intel Corp. 3,957,274 21,100 Maxim Integrated Products 721,409 85,300 Texas Instruments, Inc. 1,501,280 ------------ 6,179,963 ------------ SOFTWARE: 7.8% 29,800 @ Electronic Arts, Inc. 2,204,902 91,000 First Data Corp. 3,771,040 335,700 Microsoft Corp. 8,597,277 350,100 @ Novell, Inc. 1,078,308 213,100 @ Oracle Corp. 2,561,462 ------------ 18,212,989 ------------ TELECOMMUNICATIONS: 11.2% 102,700 AT&T Corp. 1,976,975 560,800 @ AT&T Wireless Services, Inc. 4,604,168 64,200 BellSouth Corp. 1,709,646 379,200 @ Cisco Systems, Inc. 6,328,848
See Accompanying Notes to Financial Statements 56 ING VALUE OPPORTUNITY PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Shares Value - --------------------------------------------------------------------------- TELECOMMUNICATIONS (CONTINUED) 88,300 @ Citizens Communications Co. $ 1,138,187 148,800 Motorola, Inc. 1,403,184 94,700 @ Nextel Communications, Inc. 1,712,176 116,700 Qualcomm, Inc. 4,172,025 77,800 Verizon Communications, Inc. 3,069,210 ------------ 26,114,419 ------------ TRANSPORTATION: 0.3% 13,000 FedEx Corp. 806,390 ------------ 806,390 ------------ Total Common Stock (Cost $206,690,223) 226,715,780 ------------ Principal Amount Value - --------------------------------------------------------------------------- SHORT-TERM INVESTMENT: 2.1% $ 4,787,000 State Street Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $4,787,146 to be received upon repurchase (Collateralized by $4,880,000 Federal Home Loan Bank, 1.350%, Market Value $4,886,246, due 06/02/04) 4,787,000 ------------ Total Short-Term Investment (Cost $4,787,000) 4,787,000 ------------
TOTAL INVESTMENTS IN SECURITIES (COST $211,477,223)* 99.7% $231,502,780 OTHER ASSETS AND LIABILITIES-NET 0.3 666,907 ------ ------------ NET ASSETS 100.0% $232,169,687 ====== ============
@ 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 $ 22,125,783 Gross Unrealized Depreciation (2,100,226) ------------ Net Unrealized Appreciation $ 20,025,557 ============
See Accompanying Notes to Financial Statements 57 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Shares Value - ---------------------------------------------------------------------------- COMMON STOCK: 59.2% AEROSPACE/DEFENSE: 1.0% 53,450 Boeing Co. $ 1,834,404 96,125 Goodrich Corp. 2,018,625 89,500 Lockheed Martin Corp. 4,257,515 94,300 Rockwell Collins, Inc. 2,322,609 29,000 United Technologies Corp. 2,054,070 -------------- 12,487,223 -------------- AGRICULTURE: 0.5% 128,550 Altria Group, Inc. 5,841,312 -------------- 5,841,312 -------------- APPAREL: 1.0% 137,775 Liz Claiborne, Inc. 4,856,569 64,000 Nike, Inc. 3,423,360 52,075 @ Quiksilver, Inc. 858,717 81,275 @ Reebok Intl. Ltd. 2,733,278 104,075 @ Skechers U.S.A., Inc. 770,155 -------------- 12,642,079 -------------- AUTO MANUFACTURERS: 0.5% 390,300 Ford Motor Co. 4,289,397 40,100 Paccar, Inc. 2,709,156 -------------- 6,998,553 -------------- AUTO PARTS & EQUIPMENT: 0.1% 102,150 @ Dura Automotive Systems, Inc. 1,002,092 -------------- 1,002,092 -------------- BANKS: 2.9% 161,900 Bank of America Corp. 12,794,957 71,950 Bank One Corp. 2,675,101 130,275 Hibernia Corp. 2,365,794 129,050 National City Corp. 4,221,226 116,600 US BanCorp. 2,856,700 187,100 Wachovia Corp. 7,476,516 105,300 Wells Fargo & Co. 5,307,120 -------------- 37,697,414 -------------- BEVERAGES: 1.0% 155,100 Coca-Cola Co. 7,198,191 38,850 @ Constellation Brands, Inc. 1,219,890 108,150 PepsiCo, Inc. 4,812,675 -------------- 13,230,756 -------------- BIOTECHNOLOGY: 0.7% 80,800 @ Amgen, Inc. 5,368,352 59,700 @ Chiron Corp. 2,610,084 41,650 @ Invitrogen Corp. 1,598,111 -------------- 9,576,547 -------------- CHEMICALS: 0.5% 68,950 Dow Chemical Co. 2,134,692 76,100 Du Pont EI de Nemours & Co. 3,168,804 51,700 HB Fuller Co. 1,138,434 -------------- 6,441,930 -------------- COMMERCIAL SERVICES: 0.8% 58,850 @ Corp.orate Executive Board Co. 2,385,191 42,900 Equifax, Inc. 1,115,400 64,500 H&R Block, Inc. 2,789,625 76,500 @ Quintiles Transnational Corp. 1,085,535 39,650 @ Rent-A-Center, Inc. 3,005,867 -------------- 10,381,618 -------------- COMPUTERS: 2.5% 305,900 @ Dell Computer Corp. 9,776,564 131,450 @ EMC Corp.-Mass 1,376,282 57,850 @ Fidelity National Information Solutions, Inc. 1,508,728 188,750 Hewlett-Packard Co. 4,020,375 102,300 International Business Machines Corp. 8,439,750
Shares Value - ---------------------------------------------------------------------------- 39,200 @ Lexmark Intl., Inc. $ 2,774,184 107,600 @ Perot Systems Corp. 1,222,336 15,300 @ Synopsys, Inc. 946,305 207,500 @ Western Digital Corp. 2,137,250 -------------- 32,201,774 -------------- COSMETICS/PERSONAL CARE: 1.8% 91,200 Colgate-Palmolive Co. 5,285,040 173,500 Gillette Co. 5,527,710 137,300 Procter & Gamble Co. 12,244,414 -------------- 23,057,164 -------------- DISTRIBUTION/WHOLESALE: 0.2% 22,300 @ Handleman Co. 356,800 30,400 @ Scansource, Inc. 813,200 42,650 @ Tech Data Corp. 1,139,182 932 @ Timco Aviation Services 354 -------------- 2,309,536 -------------- DIVERSIFIED FINANCIAL SERVICES: 5.5% 55,500 @ Affiliated Managers Group 3,382,725 82,550 American Express Co. 3,451,416 35,900 Bear Stearns Cos., Inc. 2,599,878 65,950 Capital One Financial Corp. 3,243,421 310,300 Citigroup, Inc. 13,280,840 40,300 Countrywide Financial Corp. 2,803,671 124,050 Fannie Mae 8,365,932 106,950 Freddie Mac 5,429,852 253,000 JP Morgan Chase & Co. 8,647,540 57,400 Lehman Brothers Holdings, Inc. 3,815,952 246,250 MBNA Corp. 5,131,850 140,600 Merrill Lynch & Co., Inc. 6,563,208 67,750 Morgan Stanley 2,896,313 39,775 New Century Financial Corp. 1,736,179 -------------- 71,348,777 -------------- ELECTRIC: 1.6% 287,000 @ AES Corp. 1,822,450 62,250 Cinergy Corp. 2,290,178 71,000 CMS Energy Corp. 575,100 20,450 Dominion Resources, Inc. 1,314,322 43,950 Duke Energy Corp. 876,803 71,050 Exelon Corp. 4,249,501 11,300 FPL Group, Inc. 755,405 147,300 @ PG&E Corp. 3,115,395 35,500 PNM Resources, Inc. 949,625 62,850 PPL Corp. 2,702,550 47,300 Southern Co. 1,473,868 -------------- 20,125,197 -------------- ELECTRICAL COMPONENTS & EQUIPMENT: 0.2% 118,450 American Power Conversion 1,846,636 26,200 Emerson Electric Co. 1,338,820 -------------- 3,185,456 -------------- ELECTRONICS: 0.5% 32,500 @ Benchmark Electronics, Inc. 999,700 77,450 @ Itron, Inc. 1,669,822 57,400 @,@@ Mettler Toledo Intl., Inc. 2,103,710 70,550 @ Waters Corp. 2,055,122 -------------- 6,828,354 -------------- ENTERTAINMENT: 0.4% 127,375 @ Alliance Gaming Corp. 2,408,661 56,400 GTECH Holdings Corp. 2,123,460 -------------- 4,532,121 -------------- ENVIRONMENTAL CONTROL: 0.1% 120,850 @ Allied Waste Industries, Inc. 1,214,543 -------------- 1,214,543 --------------
See Accompanying Notes to Financial Statements 58 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Shares Value - ---------------------------------------------------------------------------- FOOD: 0.3% 98,950 HJ Heinz Co. $ 3,263,371 29,300 Sensient Technologies Corp. 668,333 -------------- 3,931,704 -------------- FOREST PRODUCTS & PAPER: 0.1% 37,700 International Paper Co. 1,347,021 -------------- 1,347,021 -------------- GAS: 0.3% 123,750 Oneok, Inc. 2,429,213 24,650 Peoples Energy Corp. 1,057,239 -------------- 3,486,452 -------------- HAND/MACHINE TOOLS: 0.1% 35,500 Snap-On, Inc. 1,030,565 -------------- 1,030,565 -------------- HEALTHCARE -- PRODUCTS: 2.1% 68,475 CR Bard, Inc. 4,882,952 63,575 @ Edwards Lifesciences Corp. 2,043,301 78,700 Guidant Corp. 3,493,493 43,775 Invacare Corp. 1,444,575 182,050 Johnson & Johnson 9,411,985 77,775 @ Respironics, Inc. 2,918,118 37,900 @ Varian Medical Systems, Inc. 2,181,903 -------------- 26,376,327 -------------- HEALTHCARE -- SERVICES: 1.6% 48,900 A Aetna, Inc. 2,943,780 43,000 @ Anthem, Inc. 3,317,450 83,500 @ Humana, Inc. 1,260,850 67,450 @ Pacificare Health Systems 3,327,309 67,150 @ Sierra Health Services 1,343,000 107,800 UnitedHealth Group, Inc. 5,416,950 40,050 @ WellPoint Health Networks 3,376,215 -------------- 20,985,554 -------------- HOUSEHOLD PRODUCTS/WARES: 0.4% 210,075 @ American Greetings 4,125,873 35,350 Tupperware Corp. 507,626 -------------- 4,633,499 -------------- INSURANCE: 2.9% 81,500 @@ ACE Ltd. 2,794,635 117,050 Aflac, Inc. 3,599,288 129,700 Allstate Corp. 4,623,805 159,700 American Intl. Group 8,812,246 66,543 Fidelity National Financial, Inc. 2,046,863 70,800 First American Corp. 1,865,580 30,600 Landamerica Financial Group, Inc. 1,453,500 97,350 Principal Financial Group 3,139,538 53,100 Progressive Corp. 3,881,610 57,050 Safeco Corp. 2,012,724 37,200 @@ XL Capital Ltd. 3,087,600 -------------- 37,317,389 -------------- INTERNET: 0.8% 53,450 @ eBay, Inc. 5,568,421 58,150 @ eSpeed, Inc. 1,149,044 136,500 @ RSA Security, Inc. 1,467,375 54,150 @ Symantec Corp. 2,375,019 -------------- 10,559,859 -------------- MACHINERY -- DIVERSIFIED: 0.5% 22,725 @ AGCO Corp. 388,143 68,150 Deere & Co. 3,114,455 42,475 @ Flowserve Corp. 835,483 89,100 Rockwell Automation, Inc. 2,124,144 -------------- 6,462,225 -------------- MEDIA: 2.0% 277,850 @ AOL Time Warner, Inc. 4,470,607 37,050 @ Clear Channel Communications, Inc. 1,570,550
Shares Value - ---------------------------------------------------------------------------- 144,100 @ Comcast Corp. $ 4,348,938 58,850 @ Entercom Communications Corp. 2,884,239 16,600 Gannett Co., Inc. 1,275,046 23,100 Media General, Inc. 1,321,320 24,900 Meredith Corp. 1,095,600 28,525 @ Scholastic Corp. 849,475 109,700 @ Viacom, Inc. 4,789,502 126,900 Walt Disney Co. 2,506,275 -------------- 25,111,552 -------------- METAL FABRICATE/HARDWARE: 0.2% 70,325 Quanex Corp. 2,090,059 -------------- 2,090,059 -------------- MINING: 0.1% 29,900 Newmont Mining Corp. 970,554 -------------- 970,554 -------------- MISCELLANEOUS MANUFACTURING: 2.6% 24,100 3M Co. 3,108,418 90,350 Eastman Kodak Co. 2,471,073 844,750 General Electric Co. 24,227,430 53,050 Honeywell Intl., Inc. 1,424,393 120,950 @@ Tyco Intl. Ltd. 2,295,631 -------------- 33,526,945 -------------- OFFICE/BUSINESS EQUIPMENT: 0.2% 260,050 IKON Office Solutions, Inc. 2,314,445 -------------- 2,314,445 -------------- OIL & GAS: 3.1% 68,900 Anadarko Petroleum Corp. 3,063,983 66,800 ChevronTexaco Corp. 4,822,960 42,200 ConocoPhillips 2,312,560 407,200 Exxon Mobil Corp. 14,622,552 68,600 @ Houston Exploration Co. 2,380,420 107,650 Marathon Oil Corp. 2,836,578 103,300 Occidental Petroleum Corp. 3,465,715 44,400 Sunoco, Inc. 1,675,656 150,450 @ Tesoro Petroleum Corp. 1,035,096 90,550 Unocal Corp. 2,597,880 63,875 Vintage Petroleum, Inc. 720,510 -------------- 39,533,910 -------------- OIL & GAS SERVICES: 0.2% 243,450 @ Veritas DGC, Inc. 2,799,675 -------------- 2,799,675 -------------- PACKAGING & CONTAINERS: 0.3% 36,950 Ball Corp. 1,681,595 53,000 @ Sealed Air Corp. 2,525,980 -------------- 4,207,575 -------------- PHARMACEUTICALS: 3.0% 98,600 Abbott Laboratories 4,314,736 69,100 Eli Lilly & Co. 4,765,827 128,775 ICN Pharmaceuticals, Inc. 2,158,269 144,600 @ King Pharmaceuticals, Inc. 2,134,296 20,625 Medicis Pharmaceutical 1,169,438 135,500 Merck & Co., Inc. 8,204,525 481,200 Pfizer, Inc. 16,432,980 -------------- 39,180,071 -------------- PIPELINES: 0.1% 19,900 Williams Energy Partners LP 942,464 -------------- 942,464 -------------- REAL ESTATE: 0.2% 70,625 LNR Property Corp. 2,641,375 -------------- 2,641,375 --------------
See Accompanying Notes to Financial Statements 59 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Shares Value - ---------------------------------------------------------------------------- REITS: 0.2% 46,350 Chelsea Property Group, Inc. $ 1,868,369 26,975 Kimco Realty Corp. 1,022,353 -------------- 2,890,722 -------------- RETAIL: 3.3% 71,725 Claire's Stores, Inc. 1,818,946 73,750 Federated Department Stores 2,717,688 146,050 Home Depot, Inc. 4,837,176 42,175 @ Jack in the Box, Inc. 940,503 48,400 Lowe's Cos., Inc. 2,078,780 79,350 McDonald's Corp. 1,750,461 125,800 @ Movie Gallery, Inc. 2,321,010 94,950 @ ShopKo Stores, Inc. 1,234,350 113,525 @ Sports Authority, Inc. 1,214,718 148,950 @ Staples, Inc. 2,733,233 50,425 @ United Auto Group, Inc. 1,098,257 170,850 Walgreen Co. 5,142,585 266,350 Wal-Mart Stores, Inc. 14,295,005 -------------- 42,182,712 -------------- SAVINGS & LOANS: 1.6% 127,100 BankAtlantic BanCorp., Inc. 1,511,219 26,975 Downey Financial Corp. 1,114,068 76,700 @ FirstFed Financial Corp. 2,706,743 200,675 Flagstar BanCorp., Inc. 4,906,504 99,866 New York Community BanCorp., Inc. 2,905,102 151,400 Washington Mutual, Inc. 6,252,820 33,050 Webster Financial Corp. 1,249,290 -------------- 20,645,746 -------------- SEMICONDUCTORS: 0.9% 191,100 @ Applied Micro Circuits Corp. 1,156,155 101,050 @ Cirrus Logic, Inc. 406,221 401,200 Intel Corp. 8,338,541 248,250 @ Silicon Image, Inc. 1,385,235 -------------- 11,286,152 -------------- SOFTWARE: 4.7% 75,900 Adobe Systems, Inc. 2,434,113 93,300 @ Citrix Systems, Inc. 1,899,588 152,900 Computer Associates Intl., Inc. 3,406,612 210,080 @ Compuware Corp. 1,212,162 45,250 First Data Corp. 1,875,160 72,225 Inter-Tel, Inc. 1,532,615 64,300 @ Intuit, Inc. 2,863,279 51,700 @ Mercury Interactive Corp. 1,996,137 938,250 Microsoft Corp. 24,028,583 139,750 @ NETIQ Corp. 2,160,535 540,450 @ Novell, Inc. 1,664,586 664,100 @ Oracle Corp. 7,982,482 105,575 @ Pinnacle Systems, Inc. 1,129,653 270,750 @ ScanSoft, Inc. 1,470,173 217,300 @ Siebel Systems, Inc. 2,073,042 117,650 @ Veritas Software Corp. 3,373,026 -------------- 61,101,746 -------------- TELECOMMUNICATIONS: 4.3% 233,550 @ Arris Group, Inc. 1,158,408 248,150 @ Avaya, Inc. 1,603,049 51,050 Black Box Corp. 1,848,010 745,200 @ Cisco Systems, Inc. 12,437,388 59,850 @ Commonwealth Telephone Enterprises, Inc. 2,631,605 105,100 @ Comverse Technology, Inc. 1,579,653 39,850 Harris Corp. 1,197,493 238,800 @ Nextel Communications, Inc. 4,317,504 47,750 Qualcomm, Inc. 1,707,063 36,050 @ SafeNet, Inc. 1,008,679 373,600 SBC Communications, Inc. 9,545,480 84,350 Scientific-Atlanta, Inc. 2,010,904
Shares Value - ---------------------------------------------------------------------------- 226,350 Sprint Corp.-FON Group $ 3,259,440 287,600 Verizon Communications, Inc. 11,345,820 -------------- 55,650,496 -------------- TOYS/GAMES/HOBBIES: 0.3% 101,500 Hasbro, Inc. 1,775,235 127,450 Mattel, Inc. 2,411,354 -------------- 4,186,589 -------------- TRANSPORTATION: 1.0% 64,600 FedEx Corp. 4,007,138 141,300 United Parcel Service, Inc. 9,000,810 -------------- 13,007,948 -------------- Total Common Stock (Cost $706,317,706) 761,503,777 -------------- PREFERRED STOCK: 0.2% AUTO MANUFACTURERS 0.2% 62,560 General Motors Corp. 1,557,744 -------------- 1,557,744 -------------- MEDIA: 0.0% 1,000 Cablevision Systems Corp. 102,750 9 @ Paxson Communications Corp. 88,875 850 Primedia, Inc. 81,813 -------------- 273,438 -------------- TELECOMMUNICATIONS: 0.0% 45 @ Crown Castle Intl. Corp. 49,388 -------------- 49,388 -------------- Total Preferred Stock (Cost $1,881,175) 1,880,570 -------------- Number of Warrants Value - ---------------------------------------------------------------------------- WARRANTS: 0.0% DISTRIBUTION/WHOLESALE: 0.0% 2,978 XX Timco Aviation Services -- -------------- Total Warrants (Cost $0) -- -------------- Principal Amount Value - ---------------------------------------------------------------------------- CORPORATE BONDS: 14.6% ADVERTISING: 0.0% $ 60,000 # RH Donnelley Finance Corp. I, 10.875%, due 12/15/12 70,200 90,000 # Vertis, Inc., 9.750%, due 04/01/09 94,050 -------------- 164,250 -------------- AEROSPACE/DEFENSE: 0.2% 410,000 Boeing Co., 6.125%, due 02/15/33 429,612 45,000 L-3 Communications Corp., 7.625%, due 06/15/12 49,725 1,321,000 Raytheon Co., 6.150%, due 11/01/08 1,495,408 60,000 Sequa Corp., 9.000%, due 08/01/09 63,900 70,000 # Titan Corp., 8.000%, due 05/15/11 74,550 65,000 # Vought Aircraft Industries, Inc., 8.000%, due 07/15/11 65,650 -------------- 2,178,845 -------------- AGRICULTURE: 0.2% 770,000 # Bunge Ltd. Finance Corp., 5.875%, due 05/15/13 795,858 55,000 # DIMON, Inc., 7.750%, due 06/01/13 56,787 680,000 RJ Reynolds Tobacco Holdings, Inc., 6.500%, due 06/01/07 681,774 505,000 RJ Reynolds Tobacco Holdings, Inc., 7.750%, due 05/15/06 519,849 -------------- 2,054,268 --------------
See Accompanying Notes to Financial Statements 60 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- AIRLINES: 0.1% $ 1,650,000 American Airlines, Inc., 7.024%, due 10/15/09 $ 1,576,190 -------------- 1,576,190 -------------- APPAREL: 0.0% 65,000 Levi Strauss & Co., 11.625%, due 01/15/08 56,062 90,000 # Phillips-Van Heusen, 8.125%, due 05/01/13 92,812 -------------- 148,874 -------------- AUTO MANUFACTURERS: 0.5% 2,435,000 Ford Motor Co., 6.375%, due 02/01/29 1,974,310 1,350,000 Ford Motor Co., 6.625%, due 10/01/28 1,126,435 135,000 Ford Motor Co., 7.250%, due 10/01/08 141,342 1,863,000 General Motors Corp., 6.750%, due 05/01/28 1,578,941 1,485,000 General Motors Corp., 8.375%, due 07/15/33 1,461,700 -------------- 6,282,728 -------------- AUTO PARTS & EQUIPMENT: 0.0% 40,000 # Advanced Accessory Systems LLC, 10.750%, due 06/15/11 42,600 45,000 Dana Corp., 10.125%, due 03/15/10 49,837 60,000 Dura Operating Corp., 8.625%, due 04/15/12 61,800 100,000 Lear Corp., 8.110%, due 05/15/09 115,000 75,000 # TRW Automotive, Inc., 11.000%, due 02/15/13 82,125 45,000 # UIS, Inc., 9.375%, due 06/15/13 46,912 -------------- 398,274 -------------- BANKS: 1.0% 1,115,000 Bank One Corp., 4.900%, due 04/30/15 1,153,382 310,000 BNY Capital I, 7.970%, due 12/31/26 360,884 2,520,000 @@,# Credit Suisse First Boston, 7.900%, due 05/01/07 2,865,885 335,000 Fleet Capital Trust II, 7.920%, due 12/11/26 381,354 40,000 FleetBoston Financial Corp., 6.875%, due 01/15/28 46,399 840,000 M&T Bank Corp., 3.850%, due 04/01/13 858,064 1,770,000 Mellon Capital I, 7.720%, due 12/01/26 2,090,779 925,000 NB Capital Trust IV, 8.250%, due 04/15/27 1,127,643 940,000 Sovereign Bank, 5.125%, due 03/15/13 972,991 880,000 US Bank National Association, 4.800%, due 04/15/15 909,637 1,030,000 US Bank National Association, 6.300%, due 07/15/08 1,190,534 180,000 # Wells Fargo Capital A, 7.730%, due 12/01/26 209,147 -------------- 12,166,699 -------------- BUILDING MATERIALS: 0.0% 50,000 Nortek Holdings, Inc., 9.875%, due 06/15/11 52,875 -------------- 52,875 --------------
Principal Amount Value - ---------------------------------------------------------------------------- CHEMICALS: 0.1% $ 770,000 Dow Chemical Co., 5.750%, due 11/15/09 $ 843,235 45,000 Equistar Chemicals LP/Equistar Funding Corp., 10.125%, due 09/01/08 46,575 30,000 # Equistar Chemicals LP/Equistar Funding Corp., 10.625%, due 05/01/11 30,900 290,000 IMC Global, Inc., 10.875%, due 06/01/08 303,050 260,000 Lyondell Chemical Co., 9.625%, due 05/01/07 256,100 -------------- 1,479,860 -------------- COMMERCIAL SERVICES: 0.0% 70,000 Corrections Corp. of America, 7.500%, due 05/01/11 73,500 175,000 @@ Quebecor Media, Inc., 11.125%, due 07/15/11 201,250 220,000 # United Rentals North America, Inc., 10.750%, due 04/15/08 241,450 5,000 United Rentals North America, Inc., 10.750%, due 04/15/08 5,487 -------------- 521,687 -------------- COMPUTERS: 0.0% 50,000 @@ Seagate Technology Holdings, 8.000%, due 05/15/09 54,375 50,000 Unisys Corp., 8.125%, due 06/01/06 53,750 -------------- 108,125 -------------- COSMETICS/PERSONAL CARE: 0.0% 130,000 Chattem, Inc., 8.875%, due 04/01/08 134,875 -------------- 134,875 -------------- DISTRIBUTION/WHOLESALE: 0.0% 120,000 # Aviall, Inc., 7.625%, due 07/01/11 122,250 2,871 Timco Aviation Services, 8.000%, due 01/02/07 16 -------------- 122,266 -------------- DIVERSIFIED FINANCIAL SERVICES: 1.2% 1,285,000 Boeing Capital Corp., 7.375%, due 09/27/10 1,524,845 930,000 CitiCorp. Capital I, 7.933%, due 02/15/27 1,092,558 195,000 # Corestates Capital Trust I, 8.000%, due 12/15/26 232,424 1,423,000 Countrywide Home Loans, Inc., 4.250%, due 12/19/07 1,496,287 440,000 # Erac USA Finance Co., 8.000%, due 01/15/11 524,981 1,095,000 # Farmers Exchange Capital, 7.200%, due 07/15/48 905,457 600,000 Ford Motor Credit Co., 7.375%, due 10/28/09 629,939 805,000 General Electric Capital Corp., 5.000%, due 06/15/07 877,302 2,245,000 General Electric Capital Corp., 6.000%, due 06/15/12 2,538,545 55,000 # HLI Operating Co., Inc., 10.500%, due 06/15/10 58,025 700,000 International Lease Finance Corp., 5.875%, due 05/01/13 755,024 1,190,000 Lehman Brothers Holdings, Inc., 4.000%, due 01/22/08 1,241,510 310,000 Morgan Stanley, 6.750%, due 04/15/11 363,163
See Accompanying Notes to Financial Statements 61 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- DIVERSIFIED FINANCIAL SERVICES (CONTINUED) $ 155,000 Nexstar Finance LLC, 12.000%, due 04/01/08 $ 173,600 2,070,000 @@,#,XX PF Export Receivables Master Trust, 3.748%, due 06/01/13 2,089,023 1,070,000 @@,#,XX PF Export Receivables Master Trust, 6.436%, due 06/01/15 1,075,350 30,000 Technical Olympic USA, Inc., 10.375%, due 07/01/12 32,100 90,000 Technical Olympic USA, Inc., 9.000%, due 07/01/10 97,650 15,000 # Universal City Development Partners, 11.750%, due 04/01/10 16,537 -------------- 15,724,320 -------------- ELECTRIC: 1.1% 115,000 # AES Corp., 8.750%, due 05/15/13 120,175 1,470,000 Arizona Public Service, 4.650%, due 05/15/15 1,465,103 600,000 # Consumers Energy Co., 4.250%, due 04/15/08 621,117 1,235,000 Duke Capital Corp., 6.250%, due 02/15/13 1,315,235 75,000 Homer City Funding LLC, 8.734%, due 10/01/26 82,312 730,000 Nisource Finance Corp., 6.150%, due 03/01/13 785,029 1,005,000 Nisource Finance Corp., 7.625%, due 11/15/05 1,099,416 1,320,000 # Ohio Edison Co., 4.000%, due 05/01/08 1,355,427 1,150,000 # Ohio Power Co., 6.600%, due 02/15/33 1,287,949 870,000 # Oncor Electric Delivery Co., 7.250%, due 01/15/33 1,029,835 1,120,000 # PG&E Corp., 6.875%, due 07/15/08 1,167,600 780,000 # PSEG Energy Holdings, Inc., 7.750%, due 04/16/07 825,661 725,000 # Reliant Resources, Inc., 9.250%, due 07/15/10 732,250 1,122,000 # TXU Energy Co., 6.125%, due 03/15/08 1,204,514 710,000 # TXU Energy Co., 7.000%, due 03/15/13 787,466 -------------- 13,879,089 -------------- ELECTRICAL COMPONENTS & EQUIPMENT: 0.0% 50,000 @@,# FIMEP SA, 10.500%, due 02/15/13 56,000 55,000 @@ Legrand, 8.500%, due 02/15/25 56,925 -------------- 112,925 -------------- ELECTRONICS: 0.0% 55,000 @@,# Flextronics Intl. Ltd., 6.500%, due 05/15/13 53,212 55,000 Stoneridge, Inc., 11.500%, due 05/01/12 61,875 -------------- 115,087 --------------
Principal Amount Value - ---------------------------------------------------------------------------- ENTERTAINMENT: 0.0% $ 70,000 Carmike Cinemas, Inc., 10.375%, due 02/01/09 $ 73,850 65,000 # Cinemark USA, Inc., 9.000%, due 02/01/13 70,850 10,000 # Cinemark USA, Inc., 9.000%, due 02/01/13 10,900 75,000 Regal Cinemas, Inc., 9.375%, due 02/01/12 83,062 50,000 Six Flags, Inc., 9.750%, due 06/15/07 49,750 40,000 # Speedway Motorsports, Inc., 6.750%, due 06/01/13 41,600 -------------- 330,012 -------------- ENVIRONMENTAL CONTROL: 0.0% 130,000 Allied Waste North America, 10.000%, due 08/01/09 138,775 225,000 Allied Waste North America, 7.875%, due 04/15/13 236,531 115,000 Allied Waste North America, 8.500%, due 12/01/08 124,200 -------------- 499,506 -------------- FOOD: 0.8% 190,000 Ahold Finance USA, Inc., 8.250%, due 07/15/10 195,700 580,000 ConAgra Foods, Inc., 7.500%, due 09/15/05 647,117 135,000 # Del Monte Corp., 8.625%, due 12/15/12 143,775 90,000 # Domino's, Inc., 8.250%, due 07/01/11 93,375 110,000 Great Atlantic & Pacific Tea Co., 9.125%, due 12/15/11 103,400 105,000 Ingles Markets, Inc., 8.875%, due 12/01/11 106,181 480,000 Kroger Co., 5.500%, due 02/01/13 507,614 701,000 Kroger Co., 7.250%, due 06/01/09 819,688 705,000 Kroger Co., 7.500%, due 04/01/31 838,840 125,000 Michael Foods, Inc., 11.750%, due 04/01/11 144,375 140,000 Pilgrims Pride Corp., 9.625%, due 09/15/11 150,150 70,000 Roundy's, Inc., 8.875%, due 06/15/12 73,500 1,140,000 Safeway, Inc., 4.800%, due 07/16/07 1,193,291 610,000 Safeway, Inc., 5.800%, due 08/15/12 655,276 50,000 # Smithfield Foods, Inc., 7.750%, due 05/15/13 53,875 1,940,000 Supervalu, Inc., 7.875%, due 08/01/09 2,264,626 1,955,000 Tyson Foods, Inc., 6.625%, due 10/01/04 2,027,051 85,000 Winn-Dixie Stores, Inc., 8.875%, due 04/01/08 90,525 -------------- 10,108,359 -------------- FOREST PRODUCTS & PAPER: 0.4% 370,000 @@ Abitibi-Consolidated, Inc., 6.950%, due 04/01/08 389,809 1,340,000 @@ Abitibi-Consolidated, Inc., 6.950%, due 12/15/06 1,417,992 200,000 Appleton Papers, Inc., 12.500%, due 12/15/08 225,000 810,000 Fort James Corp., 6.625%, due 09/15/04 828,225 150,000 Georgia-Pacific Corp., 8.125%, due 05/15/11 154,875 175,000 # Georgia-Pacific Corp., 8.875%, due 02/01/10 190,750 225,000 @@ Tembec Industries, Inc., 7.750%, due 03/15/12 219,375
See Accompanying Notes to Financial Statements 62 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- FOREST PRODUCTS & PAPER (CONTINUED) $ 50,000 @@ Tembec Industries, Inc., 8.500%, due 02/01/11 $ 49,750 1,121,000 Weyerhaeuser Co., 6.875%, due 12/15/33 1,228,080 -------------- 4,703,856 -------------- HEALTHCARE -- PRODUCTS: 0.0% 80,000 # Medex, Inc., 8.875%, due 05/15/13 83,400 -------------- 83,400 -------------- HEALTHCARE -- SERVICES: 0.0% 70,000 Alliance Imaging, Inc., 10.375%, due 04/15/11 73,500 100,000 Triad Hospitals, Inc., 8.750%, due 05/01/09 106,875 -------------- 180,375 -------------- HOME BUILDERS: 0.0% 65,000 # K Hovnanian Enterprises, Inc., 7.750%, due 05/15/13 68,412 55,000 KB Home, 7.750%, due 02/01/10 59,744 25,000 Meritage Corp., 9.750%, due 06/01/11 27,750 30,000 # Meritage Corp., 9.750%, due 06/01/11 33,300 55,000 Standard-Pacific Corp., 7.750%, due 03/15/13 58,437 55,000 Toll Corp., 8.250%, due 02/01/11 61,600 80,000 WCI Communities, Inc., 10.625%, due 02/15/11 88,800 -------------- 398,043 -------------- INSURANCE: 0.9% 1,695,000 # AIG SunAmerica Global Financing VII, 5.850%, due 08/01/08 1,913,272 2,420,000 CNA Financial Corp., 6.250%, due 11/15/03 2,454,296 855,000 # John Hancock Global Funding II, 5.250%, due 02/25/15 901,373 960,000 # Monumental Global Funding II, 3.850%, due 03/03/08 993,316 550,000 # New York Life Insurance Co., 5.875%, due 05/15/33 579,295 940,000 Travelers Property Casualty Corp., 6.375%, due 03/15/33 1,030,954 3,342,000 # Zurich Capital Trust I, 8.376%, due 06/01/37 3,683,379 -------------- 11,555,885 --------------
Principal Amount Value - ---------------------------------------------------------------------------- IRON/STEEL: 0.0% $ 280,000 AK Steel Corp., 7.875%, due 02/15/09 $ 239,400 55,000 United States Steel Corp., 9.750%, due 05/15/10 56,100 -------------- 295,500 -------------- LEISURE TIME: 0.0% 75,000 @@ Royal Caribbean Cruises Ltd., 8.000%, due 05/15/10 78,375 40,000 # Worldspan LP/WS Financing Corp., 9.625%, due 06/15/11 41,400 -------------- 119,775 -------------- LODGING: 0.2% 215,000 Ameristar Casinos, Inc., 10.750%, due 02/15/09 244,831 105,000 Aztar Corp., 9.000%, due 08/15/11 114,187 80,000 Extended Stay America, Inc., 9.875%, due 06/15/11 86,400 45,000 Host Marriott Corp., 7.875%, due 08/01/05 46,012 30,000 Host Marriott Corp., 7.875%, due 08/01/08 30,600 215,000 Mandalay Resort Group, 9.500%, due 08/01/08 247,250 300,000 MGM Mirage, 8.375%, due 02/01/11 342,750 50,000 MGM Mirage, 8.500%, due 09/15/10 59,000 115,000 # Park Place Entertainment Corp., 7.000%, due 04/15/13 123,625 270,000 Park Place Entertainment Corp., 7.875%, due 03/15/10 291,600 200,000 Starwood Hotels & Resorts Worldwide, Inc., 7.875%, due 05/01/12 220,000 70,000 Venetian Casino Resort LLC, 11.000%, due 06/15/10 79,275 -------------- 1,885,530 -------------- MACHINERY -- DIVERSIFIED: 0.0% 25,000 # Cummins, Inc., 9.500%, due 12/01/10 28,500 -------------- 28,500 -------------- MEDIA: 0.8% 790,000 AMFM, Inc., 8.000%, due 11/01/08 922,325 1,315,000 AOL Time Warner, Inc., 6.875%, due 05/01/12 1,504,269 95,000 @@ CanWest Media, Inc., 10.625%, due 05/15/11 108,775 185,000 @@,# CanWest Media, Inc., 7.625%, due 04/15/13 197,487 75,000 Charter Communications Holdings LLC, 0.000%, due 05/15/11 38,250 295,000 Charter Communications Holdings LLC, 9.625%, due 11/15/09 216,825 1,350,000 # COX Enterprises, Inc., 4.375%, due 05/01/08 1,405,320 110,000 CSC Holdings, Inc., 10.500%, due 05/15/16 120,450 50,000 CSC Holdings, Inc., 7.625%, due 04/01/11 50,750 55,000 CSC Holdings, Inc., 7.625%, due 07/15/18 55,137 155,000 Dex Media East Finance Co., 12.125%, due 11/15/12 184,062 55,000 Dex Media East Finance Co., 9.875%, due 11/15/09 61,600 150,000 # DirecTV Holdings LLC, 8.375%, due 03/15/13 168,000 175,000 Granite Broadcasting Corp., 8.875%, due 05/15/08 171,937 105,000 Hollinger Intl. Publishing, 9.000%, due 12/15/10 112,875 50,000 @@,# Hollinger, Inc., 11.875%, due 03/01/11 55,750 125,000 Insight Communications, 0.000%, due 02/15/11 104,375 770,000 InterActiveCorp., 7.000%, due 01/15/13 888,471 230,000 Mediacom Broadband LLC, 11.000%, due 07/15/13 257,025 630,000 News America Holdings, 7.600%, due 10/11/15 763,964 80,000 # Nexstar Finance Holdings LLC, Inc., 0.000%, due 04/01/13 53,700
See Accompanying Notes to Financial Statements 63 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- MEDIA (CONTINUED) $ 75,000 Paxson Communications Corp., 10.750%, due 07/15/08 $ 81,000 70,000 # Primedia, Inc., 8.000%, due 05/15/13 72,100 95,000 Primedia, Inc., 8.875%, due 05/15/11 100,462 65,000 Radio One, Inc., 8.875%, due 07/01/11 71,825 30,000 @@,# Rogers Cable, Inc., 6.250%, due 06/15/13 30,075 20,000 Salem Communications Holding Corp., 9.000%, due 07/01/11 21,625 60,000 # Sinclair Broadcast Group, Inc., 8.000%, due 03/15/12 64,350 35,000 Susquehanna Media Co., 8.500%, due 05/15/09 37,100 1,350,000 Time Warner, Inc., 6.950%, due 01/15/28 1,450,521 165,000 @@,# Vivendi Universal SA, 9.250%, due 04/15/10 188,512 180,000 Young Broadcasting, Inc., 10.000%, due 03/01/11 195,750 -------------- 9,754,667 -------------- MINING: 0.1% 135,000 Compass Minerals Group, Inc., 10.000%, due 08/15/11 151,875 540,000 @@,# WMC Finance USA, 5.125%, due 05/15/13 558,786 -------------- 710,661 -------------- MISCELLANEOUS MANUFACTURING: 0.1% 75,000 SPX Corp., 7.500%, due 01/01/13 81,562 55,000 # Tenneco Automotive, Inc., 10.250%, due 07/15/13 55,962 775,000 @@ Tyco Intl. Group SA, 6.125%, due 01/15/09 809,875 430,000 @@ Tyco Intl. Group SA, 6.125%, due 11/01/08 451,500 205,000 @@ Tyco Intl. Group SA, 6.750%, due 02/15/11 218,325 -------------- 1,617,224 -------------- MULTI-NATIONAL: 0.1% 1,480,000 @@ Corp. Andina de Fomento CAF, 5.200%, due 05/21/13 1,502,779 280,000 @@ Corp. Andina de Fomento CAF, 6.875%, due 03/15/12 319,402 -------------- 1,822,181 -------------- OFFICE/BUSINESS EQUIPMENT: 0.0% 115,000 Xerox Corp., 7.625%, due 06/15/13 115,719 -------------- 115,719 --------------
Principal Amount Value - ---------------------------------------------------------------------------- OIL & GAS: 1.1% $ 1,115,000 Amerada Hess Corp., 5.900%, due 08/15/06 $ 1,227,379 870,000 Amerada Hess Corp., 7.125%, due 03/15/33 993,514 565,000 @@ Anderson Exploration Ltd., 6.750%, due 03/15/11 655,191 165,000 # Chesapeake Energy Corp., 7.500%, due 09/15/13 176,137 1,410,000 # Enterprise Products Partners LP, 6.875%, due 03/01/33 1,602,368 60,000 Forest Oil Corp., 8.000%, due 06/15/08 64,500 3,799,000 @@ Husky Oil Co., 8.900%, due 08/15/28 4,406,840 50,000 Nuevo Energy Co., 9.500%, due 06/01/08 52,687 800,000 Ocean Energy, Inc., 4.375%, due 10/01/07 842,032 1,732,000 Pemex Project Funding Master Trust, 7.375%, due 12/15/14 1,900,870 165,000 Swift Energy Co., 9.375%, due 05/01/12 180,262 690,000 Valero Energy Corp., 8.750%, due 06/15/30 886,731 310,000 @@ Western Oil Sands, Inc., 8.375%, due 05/01/12 347,200 175,000 Westport Resources Corp., 8.250%, due 11/01/11 192,500 -------------- 13,528,211 -------------- OIL & GAS SERVICES: 0.0% 195,000 Hanover Equipment Trust, 8.500%, due 09/01/08 205,725 80,000 Hanover Equipment Trust, 8.750%, due 09/01/11 84,400 -------------- 290,125 -------------- OTHER ABS: 0.5% 5,290,000 PP&L Transition Bond Co LLC, 7.050%, due 06/25/09 6,114,208 -------------- 6,114,208 -------------- PACKAGING & CONTAINERS: 0.3% 105,000 Ball Corp., 6.875%, due 12/15/12 111,825 140,000 # BWAY Finance Corp., 10.000%, due 10/15/10 142,800 170,000 @@,# Crown European Holdings SA, 10.875%, due 03/01/13 186,150 50,000 @@,# Norampac, Inc., 6.750%, due 06/01/13 52,750 110,000 # Owens-Brockway, 8.250%, due 05/15/13 115,500 240,000 Owens-Brockway, 8.875%, due 02/15/09 261,600 465,000 # Sealed Air Corp., 5.375%, due 04/15/08 488,526 860,000 # Sealed Air Corp., 5.625%, due 07/15/13 869,168 1,560,000 # Sealed Air Corp., 6.950%, due 05/15/09 1,725,299 195,000 Smurfit-Stone Container Corp., 8.250%, due 10/01/12 210,112 -------------- 4,163,730 -------------- PHARMACEUTICALS: 0.0% 170,000 AmerisourceBergen Corp., 7.250%, due 11/15/12 185,300 -------------- 185,300 -------------- PIPELINES: 0.4% 90,000 # ANR Pipeline Co., 8.875%, due 03/15/10 98,775 1,975,000 CenterPoint Energy Resources Corp., 8.125%, due 07/15/05 2,140,276 1,035,000 Duke Energy Field Services LLC, 7.500%, due 08/16/05 1,132,449 115,000 # El Paso Production Holding Co., 7.750%, due 06/01/13 115,287 90,000 # GulfTerra Energy Partners LP, 8.500%, due 06/01/10 96,750 985,000 Kinder Morgan Energy Partners LP, 7.300%, due 08/15/33 1,186,853
See Accompanying Notes to Financial Statements 64 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- PIPELINES (CONTINUED) $ 70,000 Southern Natural Gas Co., 7.350%, due 02/15/31 $ 71,575 60,000 Southern Natural Gas Co., 8.000%, due 03/01/32 65,175 70,000 Tennessee Gas Pipeline Co., 8.375%, due 06/15/32 76,475 135,000 Transcontinental Gas Pipe LN, 8.875%, due 07/15/12 153,225 115,000 Williams Cos., Inc., 8.625%, due 06/01/10 120,750 -------------- 5,257,590 -------------- REAL ESTATE: 0.3% 350,000 EOP Operating LP, 7.250%, due 02/15/18 413,643 1,430,000 EOP Operating LP, 7.750%, due 11/15/07 1,676,458 510,000 Liberty Property-LP, 7.250%, due 03/15/11 602,879 1,007,000 Liberty Property-LP, 7.750%, due 04/15/09 1,217,011 -------------- 3,909,991 -------------- REITS: 0.3% 90,000 Felcor Lodging LP, 8.500%, due 06/01/11 91,125 20,000 Host Marriott LP, 9.500%, due 01/15/07 21,600 65,000 # La Quinta Properties, Inc., 8.875%, due 03/15/11 69,550 935,000 Liberty Property Trust, 6.375%, due 08/15/12 1,046,205 730,000 # Simon Property Group LP, 4.875%, due 03/18/10 760,245 1,075,000 Simon Property Group LP, 6.375%, due 11/15/07 1,200,509 615,000 Simon Property Group LP, 7.375%, due 06/15/18 736,784 -------------- 3,926,018 --------------
Principal Amount Value - ---------------------------------------------------------------------------- RETAIL: 0.1% $ 40,000 Dollar General Corp., 8.625%, due 06/15/10 $ 44,450 195,000 JC Penney Co., Inc., 7.600%, due 04/01/07 205,725 55,000 # Rent-A-Center, Inc., 7.500%, due 05/01/10 58,025 150,000 Rite Aid Corp., 7.625%, due 04/15/05 149,625 65,000 # Rite Aid Corp., 9.250%, due 06/01/13 64,675 130,000 # Star Gas Partners LP, 10.250%, due 02/15/13 135,850 105,000 Yum! Brands, Inc., 8.875%, due 04/15/11 124,950 -------------- 783,300 -------------- SEMICONDUCTORS: 0.0% 25,000 # AMI Semiconductor, Inc., 10.750%, due 02/01/13 28,375 20,000 # Amkor Technology, Inc., 7.750%, due 05/15/13 19,100 -------------- 47,475 -------------- SOVEREIGN: 2.4% 1,285,000 @@ Argentina Bonos, 0.000%, due 08/03/12 770,101 2,214,000 @@ Brazilian Government Intl. Bond, 0.000%, due 04/15/12 1,676,662 184,000 @@ Brazilian Government Intl. Bond, 10.000%, due 01/16/07 189,520 424,000 @@ Brazilian Government Intl. Bond, 10.250%, due 06/17/13 405,980 1,517,000 @@ Brazilian Government Intl. Bond, 11.000%, due 08/17/40 1,388,055 717,000 @@ Bulgaria Government Intl. Bond, 0.000%, due 01/15/15 849,143 250 @@ Central Bank of Nigeria, 0.000%, due 11/15/20 0 500,000 @@ Central Bank of Nigeria, 0.000%, due 11/15/20 430,000 485,000 @@ Chile Government Intl. Bond, 5.500%, due 01/15/13 514,342 507,000 @@ Colombia Government Intl. Bond, 0.000%, due 02/25/20 632,483 1,307,000 @@ Colombia Government Intl. Bond, 10.000%, due 01/23/12 1,467,107 726,000 @@ Dominican Republic Intl. Bond, 0.000%, due 01/23/13 677,576 713,000 @@ Ecuador Government Intl. Bond, 0.000%, due 08/15/30 456,320 516,000 @@ El Salvador Government Intl. Bond, 0.000%, due 01/24/23 544,380 4,725,000 Fannie Mae, 2.375%, due 04/13/06 4,772,236 720,000 @@ Mexico Government Intl. Bond, 4.625%, due 10/08/08 736,920 1,135,000 @@ Mexico Government Intl. Bond, 6.625%, due 03/03/15 1,208,775 1,950,667 @@ Panama Government Intl. Bond, 0.000%, due 07/17/16 1,577,602 306,000 @@ Peru Government Intl. Bond, 0.000%, due 03/07/17 239,063 675,000 @@ Peru Government Intl. Bond, 9.125%, due 02/21/12 721,237 1,613,000 @@ Philippine Government Intl. Bond, 9.875%, due 01/15/19 1,784,381 3,800,000 @@ Russia Government Intl. Bond, 0.000%, due 03/31/30 3,727,990 2,021,000 @@ Turkey Government Intl. Bond, 12.375%, due 06/15/09 2,182,680 301,655 @@ Ukraine Government Intl. Bond, 0.000%, due 03/15/07 332,574 350,000 @@,# Ukraine Government Intl. Bond, 7.650%, due 06/11/13 348,908 430,000 @@ Uruguay Government Intl. Bond, 7.500%, due 03/15/15 336,475 964,286 @@ Venezuela Government Intl. Bond, 0.000%, due 12/18/07 767,523 2,124,000 @@ Venezuela Government Intl. Bond, 9.250%, due 09/15/27 1,577,070 -------------- 30,315,103 -------------- TELECOMMUNICATIONS: 1.4% 75,000 American Tower Corp., 9.375%, due 02/01/09 75,750 90,000 American Tower Escrow Corp., 0.000%, due 08/01/08 58,500 801,000 AT&T Corp., 6.000%, due 03/15/09 858,344 2,070,000 AT&T Corp., 7.800%, due 11/15/11 2,370,701 515,000 AT&T Corp., 8.500%, due 11/15/31 585,984 420,000 AT&T Wireless Services, Inc., 8.125%, due 05/01/12 507,032 115,000 Block Communications, Inc., 9.250%, due 04/15/09 125,925 85,000 # Centennial Cellular Operating Co., 10.125%, due 06/15/13 84,575 110,000 Crown Castle Intl. Corp., 9.375%, due 08/01/11 114,950
See Accompanying Notes to Financial Statements 65 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- TELECOMMUNICATIONS (CONTINUED) $ 750,000 @@ Deutsche Telekom Intl. Finance BV, 8.250%, due 06/15/05 $ 836,805 45,000 Dobson Communications Corp., 10.875%, due 07/01/10 48,825 40,000 Dobson/Sygnet Communications Co., 12.250%, due 12/15/08 43,000 160,000 Insight Capital, Inc., 10.500%, due 11/01/10 176,400 420,000 Nextel Communications, Inc., 9.375%, due 11/15/09 453,075 30,000 Nextel Partners, Inc., 12.500%, due 11/15/09 33,900 50,000 # Nextel Partners, Inc., 8.125%, due 07/01/11 50,125 205,000 PanAmSat Corp., 8.500%, due 02/01/12 222,937 180,000 Qwest Communications Intl., 7.500%, due 11/01/08 167,400 100,000 # Qwest Corp., 8.875%, due 03/15/12 112,250 150,000 # Qwest Services Corp., 14.000%, due 12/15/14 174,750 115,000 @@ Rogers Wireless Communications, Inc., 9.625%, due 05/01/11 132,825 70,000 # Spectrasite, Inc., 8.250%, due 05/15/10 73,150 970,000 Sprint Capital Corp., 6.000%, due 01/15/07 1,043,410 2,130,000 Sprint Capital Corp., 6.875%, due 11/15/28 2,144,573 705,000 Sprint Capital Corp., 6.900%, due 05/01/19 740,606 3,095,000 TCI Communications Finance, 9.650%, due 03/31/27 3,698,525 145,000 @@ TELUS Corp., 8.000%, due 06/01/11 168,200 145,000 # Triton PCS, Inc., 8.500%, due 06/01/13 156,600 40,000 Triton PCS, Inc., 9.375%, due 02/01/11 41,100 1,566,000 Verizon Global Funding Corp., 7.375%, due 09/01/12 1,914,028 930,000 Verizon Wireless Capital LLC, 5.375%, due 12/15/06 1,022,433 -------------- 18,236,678 -------------- TRANSPORTATION: 0.0% 1,756 Chicago & Northwest Co., 6.250%, due 07/30/12 1,925 -------------- 1,925 -------------- Total Corporate Bonds (Cost $178,975,684) 188,190,084 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS AND ASSET BACKED SECURITIES: 4.2% AUTOMOBILE: 0.1% 300,000 Capital Auto Receivables Asset Trust, 2.750%, due 04/16/07 307,053 1,590,000 Nissan Auto Receivables Owner Trust, 2.610%, due 07/15/08 1,615,589 -------------- 1,922,642 -------------- COMMERCIAL: 2.4% 2,060,000 Chase Manhattan Bank-First Union National Bank, 7.439%, due 08/15/31 2,485,030 1,500,000 XX CS First Boston Mortgage Securities Corp., 3.562%, due 05/15/38 1,479,204 1,363,207 CS First Boston Mortgage Securities Corp., 3.727%, due 03/15/35 1,394,235 3,600,000 First Union National Bank, 6.136%, due 12/15/10 4,131,037 500,000 Ge Capital Commercial Mortgage Corp., 6.531%, due 05/15/33 586,691 200,000 JP Morgan Chase Commercial Mortgage Securities Corp., 6.162%, due 05/12/34 229,653 3,120,000 JP Morgan Chase Commercial Mortgage Securities Corp., 6.244%, due 04/15/35 3,547,935 2,340,000 LB-UBS Commercial Mortgage Trust, 4.659%, due 12/15/26 2,474,447 3,800,000 LB-UBS Commercial Mortgage Trust, 6.133%, due 12/15/30 4,360,089 1,850,000 LB-UBS Commercial Mortgage Trust, 6.226%, due 03/15/26 2,117,333 3,000,000 LB-UBS Commercial Mortgage Trust, 7.370%, due 08/15/26 3,646,564
Principal Amount Value - ---------------------------------------------------------------------------- $ 3,120,000 Mortgage Capital Funding, Inc., 6.663%, due 03/18/30 $ 3,586,496 207,892 Prudential Commercial Mortgage Trust, 3.669%, due 02/11/36 212,180 -------------- 30,250,894 -------------- CREDIT CARD: 0.2% 775,000 Citibank Credit Card Issuance Trust, 5.650%, due 06/16/08 852,055 1,270,000 Fleet Credit Card Master Trust II, 2.400%, due 07/15/08 1,288,137 -------------- 2,140,192 -------------- HOME EQUITY: 0.1% 240,000 Equity One, Inc., 2.976%, due 09/25/33 243,782 940,000 Residential Funding Mortgage Securities II, 3.450%, due 01/25/16 963,229 -------------- 1,207,011 -------------- OTHER: 0.1% 1,190,000 XX Residential Asset Mortgage Products, Inc., 2.140%, due 06/25/33 1,182,191 -------------- 1,182,191 -------------- WHOLE LOAN COLLATERAL: 1.3% 4,377,724 Bank of America Mortgage Securities, 4.413%, due 03/25/33 4,453,259 807,211 XX Bear Stearns Adjustable Rate Mortgage Trust, 6.020%, due 01/25/32 818,562 5,695,635 MASTR Alternative Loans Trust, 6.500%, due 05/25/33 5,884,303 5,420,000 XX Washington Mutual, 5.000%, due 06/25/18 5,541,950 -------------- 16,698,074 -------------- Total Collateralized Mortgage Obligations and Asset Backed Securities (Cost $51,174,696) 53,401,004 -------------- U.S. GOVERNMENT AGENCY OBLIGATIONS: 11.4% FEDERAL HOME LOAN MORTGAGE CORPORATION: 3.1% 2,625,000 3.960%, due 06/25/33 2,678,883 993,000 4.000%, due 04/15/21 1,008,458 4,725,000 4.250%, due 06/15/05 4,985,437 9,420,441 5.500%, due 05/01/23 9,758,907
See Accompanying Notes to Financial Statements 66 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- FEDERAL HOME LOAN MORTGAGE CORPORATION (CONTINUED) $ 7,137,690 5.500%, due 05/15/31 $ 7,308,797 2,510,000 5.875%, due 03/21/11 2,827,864 10,850,000 6.000%, due 09/15/31 11,246,698 -------------- 39,815,044 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION: 6.0% 240,000 2.859%, due 12/26/29 243,201 4,710,000 2.875%, due 05/19/08 4,730,771 7,331,000 4.000%, due 06/25/16 7,427,084 8,940,000 4.600%, due 06/05/18 8,933,134 11,700,000 5.000%, due 08/25/18 12,061,975 1,800,000 5.000%, due 10/25/33 TBA 1,814,625 8,380,000 5.500%, due 10/15/33 TBA 8,610,450 1,600,000 6.000%, due 07/01/16 1,670,499 10,870,000 6.000%, due 10/15/32 TBA 11,284,419 2,244,670 6.500%, due 11/01/28 2,339,632 2,894,600 7.000%, due 06/01/31 3,054,238 1,110,976 7.000%, due 11/01/29 1,170,880 1,631,215 7.500%, due 01/25/48 1,821,354 1,297,976 7.500%, due 06/25/32 1,449,273 483,114 7.500%, due 10/01/30 513,444 525,706 7.500%, due 10/01/30 558,709 509,425 7.500%, due 11/01/30 541,407 495,015 7.500%, due 11/01/30 526,092 3,722,789 8.500%, due 01/01/25 4,056,376 1,359,214 8.500%, due 11/01/23 1,482,526 2,432,335 9.500%, due 10/01/16 2,706,952 -------------- 76,997,041 -------------- GOVERNMENT NATIONAL MORTGAGE: 2.3% 149,162 5.000%, due 12/20/29 155,007 578,678 5.375%, due 04/20/28 600,074 5,320,999 6.500%, due 05/15/32 TBA 5,588,709 1,053,584 6.500%, due 10/15/31 1,106,592 1,088,283 7.000%, due 04/15/32 1,149,839 1,308,356 7.000%, due 05/15/31 1,382,359 1,183,778 7.000%, due 05/15/32 TBA 1,250,735 2,139,519 7.000%, due 09/15/24 2,276,253 934,305 7.000%, due 10/15/24 993,916 2,227,173 7.000%, due 10/15/24 2,369,274 571,597 7.000%, due 11/15/24 608,158 1,241,633 7.500%, due 11/20/30 1,312,318 6,031,634 7.500%, due 12/15/23 6,463,256 306,382 8.000%, due 07/15/24 332,834 4,104,466 8.000%, due 12/15/17 4,488,565 -------------- 30,077,889 -------------- Total U.S. Government Agency Obligations (Cost $145,347,957) 146,889,974 -------------- U.S. TREASURY OBLIGATIONS: 9.2% U.S. TREASURY BONDS: 1.9% 7,945,000 5.375%, due 02/15/31 8,948,994 12,980,000 6.250%, due 08/15/23 15,903,550 -------------- 24,852,544 -------------- U.S. TREASURY NOTES: 7.3% 62,006,000 S 1.250%, due 05/31/05 61,989,072 650,000 2.000%, due 05/15/06 657,110 1,932,000 2.625%, due 05/15/08 1,950,265 5,300,000 3.000%, due 01/31/04 5,363,563 5,000,000 3.000%, due 11/30/03 5,043,755 6,518,000 3.625%, due 05/15/13 6,570,965 11,480,000 3.625%, due 08/31/03 11,534,266 557,000 5.875%, due 11/15/04 592,966 -------------- 93,701,962 -------------- Total U.S. Treasury Obligations (Cost $119,173,201) 118,554,506 -------------- Total Long-Term Investments (Cost $1,202,870,419) 1,270,419,915 -------------- SHORT-TERM INVESTMENTS: 4.1% COMMERCIAL PAPER: 4.1% 12,000,000 S Credit Suisse First Boston, 1.250%, due 07/21/03 11,991,667 13,000,000 S Diamlerchrysler, 1.390%, due 07/21/03 12,989,961 8,000,000 S Ford Motor Credit Corp., 1.220%, due 07/28/03 7,992,680 8,000,000 S General Motors Accept., 1.230%, due 08/07/03 7,989,887 6,000,000 Kraft Foods, Inc., 1.360%, due 08/01/03 5,992,973 6,000,000 S Kraft Foods, Inc., 1.450%, due 07/25/03 5,994,200 -------------- 52,951,368 -------------- Total Commercial Paper (Cost $52,951,368) 52,951,368 -------------- REPURCHASE AGREEMENT: 0.0% 79,000 State Street Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $79,002 to be received upon repurchase (Collateralized by $85,000 Federal Home Loan Bank, 1.690%, Market Value $82,861 due 12/29/03) 79,000 -------------- Total Repurchase Agreement (Cost $79,000) 79,000 -------------- Total Short-Term Investments (Cost $53,030,368) 53,030,368 --------------
TOTAL INVESTMENTS IN SECURITIES (COST $1,255,900,787)* 102.9% $1,323,450,283 OTHER ASSETS AND LIABILITIES-NET (2.9) (37,025,601) ------ -------------- NET ASSETS 100.0% $1,286,424,682 ====== ==============
@ Non-income producing security @@ Foreign Issuer A Related Party # Securities purchased pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers XX Value of securities obtained from one or more dealers making markets in the securities which have been adjusted based on the Portfolio's valuation procedures TBA To be announced S Segregated securities for swaps and when-issued or delayed delivery securities held at June 30, 2003 REITs Real Estate Investment Trusts * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 86,577,135 Gross Unrealized Depreciation (19,027,639) ------------ Net Unrealized Appreciation $ 67,549,496 ============
See Accompanying Notes to Financial Statements 67 ING VP BALANCED PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - -------------------------------------------------------------------------------- Information concerning open swap contract at June 30, 2003 is shown below: SWAP COUNTER PARTY MERRILL LYNCH Notional Principal $2,235,000 Fund will Pay: Notional amount times (libor rate + 0.90%) times actual days divided by 360 Effective LIBOR rate: 1.2788% Fund will receive: Notional amount times Index Return [1]. Positive amounts are paid to the Fund. The absolute value of negative amounts are paid to Merrill Lynch Capital Services. Index: U.S. High Yield Cash Pay Index Payment Date: Quarterly on the 2nd Net unrealized gain: $194,138 Termination date: July 2, 2003
[1] Index return calculation: (Ending Index Level -- Starting Index Level) / Starting Index Level.
See Accompanying Notes to Financial Statements 68 ING VP GROWTH & INCOME PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Shares Value - ---------------------------------------------------------------------------- COMMON STOCK: 98.5% AEROSPACE/DEFENSE: 1.3% 1,018,200 Boeing Co. $ 34,944,624 257,000 @ L-3 Communications Holdings, Inc. 11,176,930 -------------- 46,121,554 -------------- APPAREL: 1.0% 1,232,100 @ Jones Apparel Group, Inc. 36,051,246 -------------- 36,051,246 -------------- BANKS: 6.2% 1,303,000 Bank of America Corp. 102,976,090 232,200 Charter One Financial, Inc. 7,239,996 1,478,800 National City Corp. 48,371,548 1,505,500 Wachovia Corp. 60,159,780 -------------- 218,747,414 -------------- BEVERAGES: 2.1% 1,074,000 Anheuser-Busch Cos., Inc. 54,827,700 221,800 Coca-Cola Co. 10,293,738 224,300 PepsiCo, Inc. 9,981,350 -------------- 75,102,788 -------------- BIOTECHNOLOGY: 2.0% 1,065,100 @ Amgen, Inc. 70,765,244 -------------- 70,765,244 -------------- BUILDING MATERIALS: 1.3% 634,600 @ American Standard Cos., Inc. 46,915,978 -------------- 46,915,978 -------------- COMMERCIAL SERVICES: 2.4% 2,332,400 @ Cendant Corp. 42,729,568 818,700 Equifax, Inc. 21,286,200 465,000 H&R Block, Inc. 20,111,250 -------------- 84,127,018 -------------- COMPUTERS: 5.6% 565,800 @ Affiliated Computer Services, Inc. 25,874,034 592,400 @ Computer Sciences Corp. 22,582,288 640,700 @ Dell Computer Corp. 20,476,772 3,204,300 Hewlett-Packard Co. 68,251,590 680,600 International Business Machines Corp. 56,149,500 389,100 @ Unisys Corp. 4,778,148 -------------- 198,112,332 -------------- COSMETICS/PERSONAL CARE: 3.3% 1,287,000 Procter & Gamble Co. 114,774,660 -------------- 114,774,660 -------------- DIVERSIFIED FINANCIAL SERVICES: 12.2% 985,000 Bear Stearns Cos., Inc. 71,333,700 2,705,600 Citigroup, Inc. 115,799,680 667,300 Countrywide Financial Corp. 46,424,061 391,300 Fannie Mae 26,389,272 622,900 Goldman Sachs Group, Inc. 52,167,875 1,889,200 JP Morgan Chase & Co. 64,572,856 1,170,600 Merrill Lynch & Co., Inc. 54,643,608 -------------- 431,331,052 -------------- ELECTRIC: 1.6% 506,800 Dominion Resources, Inc. 32,572,036 358,800 FPL Group, Inc. 23,985,780 -------------- 56,557,816 -------------- FOOD: 2.0% 2,043,300 Kellogg Co. 70,228,221 -------------- 70,228,221 --------------
Shares Value - ---------------------------------------------------------------------------- HEALTHCARE -- PRODUCTS: 5.6% 1,020,300 Bausch & Lomb, Inc. $ 38,261,250 754,100 Becton Dickinson & Co. 29,296,785 522,900 CR Bard, Inc. 37,287,999 1,790,000 Johnson & Johnson 92,543,000 -------------- 197,389,034 -------------- HOUSEHOLD PRODUCTS/WARES: 0.6% 381,100 Fortune Brands, Inc. 19,893,420 -------------- 19,893,420 -------------- INSURANCE: 2.5% 563,800 Aflac, Inc. 17,336,850 257,800 AMBAC Financial Group, Inc. 17,079,250 426,700 American Intl. Group 23,545,306 222,700 MGIC Investment Corp. 10,386,728 259,000 Progressive Corp. 18,932,900 -------------- 87,281,034 -------------- INTERNET: 0.6% 118,400 @ eBay, Inc. 12,334,912 217,300 @ InterActiveCorp 8,598,561 -------------- 20,933,473 -------------- MEDIA: 1.8% 451,300 @ Clear Channel Communications, Inc. 19,130,607 565,800 @ Fox Entertainment Group, Inc. 16,283,724 271,800 McGraw-Hill Cos., Inc. 16,851,600 263,800 Tribune Co. 12,741,540 -------------- 65,007,471 -------------- MINING: 0.2% 344,500 Freeport-McMoRan Copper & Gold, Inc. 8,440,250 -------------- 8,440,250 -------------- MISCELLANEOUS MANUFACTURING: 3.1% 2,720,000 General Electric Co. 78,009,600 1,175,900 Honeywell Intl., Inc. 31,572,915 -------------- 109,582,515 -------------- OFFICE/BUSINESS EQUIPMENT: 0.9% 217,000 Pitney Bowes, Inc. 8,334,970 2,152,900 @ Xerox Corp. 22,799,211 -------------- 31,134,181 -------------- OIL & GAS: 6.2% 456,800 Amerada Hess Corp. 22,465,424 821,100 Anadarko Petroleum Corp. 36,514,317 394,300 ConocoPhillips 21,607,640 28,100 Devon Energy Corp. 1,500,540 2,365,500 Exxon Mobil Corp. 84,945,105 915,500 Occidental Petroleum Corp. 30,715,025 532,200 Valero Energy Corp. 19,334,826 -------------- 217,082,877 -------------- PACKAGING & CONTAINERS: 0.6% 1,103,900 @ Pactiv Corp. 21,757,869 -------------- 21,757,869 -------------- PHARMACEUTICALS: 6.0% 1,102,300 Abbott Laboratories 48,236,648 275,200 Bristol-Myers Squibb Co. 7,471,680 937,400 Merck & Co., Inc. 56,759,570 277,000 Mylan Laboratories 9,631,290 2,091,700 Pfizer, Inc. 71,431,555 443,100 @ Watson Pharmaceuticals, Inc. 17,887,947 -------------- 211,418,690 -------------- RETAIL: 5.2% 135,000 @ Advance Auto Parts 8,221,500 492,400 Dillard's, Inc. 6,632,628 924,900 Federated Department Stores 34,082,565 508,800 Lowe's Cos., Inc. 21,852,960 295,700 Sears Roebuck and Co. 9,947,348 727,800 @ Starbucks Corp. 17,845,656
See Accompanying Notes to Financial Statements 69 ING VP GROWTH & INCOME PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Shares Value - ---------------------------------------------------------------------------- RETAIL (CONTINUED) 1,152,900 Wal-Mart Stores, Inc. $ 61,876,143 833,800 @ Williams-Sonoma, Inc. 24,346,960 -------------- 184,805,760 -------------- SAVINGS & LOANS 2.4% 2,040,000 Washington Mutual, Inc. 84,252,000 -------------- 84,252,000 -------------- SEMICONDUCTORS: 3.2% 3,559,800 Intel Corp. 73,986,883 236,000 Maxim Integrated Products 8,068,840 1,833,800 Texas Instruments, Inc. 32,274,880 -------------- 114,330,603 -------------- SOFTWARE: 7.2% 1,260,400 First Data Corp. 52,230,976 688,000 @ Intuit, Inc. 30,636,640 5,582,600 Microsoft Corp. 142,970,386 2,231,500 @ Oracle Corp. 26,822,630 -------------- 252,660,632 -------------- TELECOMMUNICATIONS: 10.2% 2,021,900 AT&T Corp. 38,921,575 3,080,400 @ AT&T Wireless Services, Inc. 25,290,084 1,227,700 BellSouth Corp. 32,693,651 5,311,000 @ Cisco Systems, Inc. 88,640,590 2,631,800 Motorola, Inc. 24,817,874 2,125,100 @ Nextel Communications, Inc. 38,421,808 1,296,200 Qualcomm, Inc. 46,339,150 910,300 Sprint Corp.-FON Group 13,108,320 1,353,900 Verizon Communications, Inc. 53,411,355 -------------- 361,644,407 -------------- TRANSPORTATION: 1.2% 668,200 FedEx Corp. 41,448,446 -------------- 41,448,446 -------------- Total Common Stock (Cost $3,065,663,322) 3,477,897,985 -------------- Principal Amount Value - ---------------------------------------------------------------------------- CORPORATE BONDS: 0.0% OIL & GAS: 0.0% $ 532,000 Devon Energy Corp., 4.900%, due 08/15/08 545,300 727,000 Devon Energy Corp., 4.950%, due 08/15/08 746,993 -------------- 1,292,293 -------------- Total Corporate Bonds (Cost $904,715) 1,292,293 -------------- Total Long-Term Investments (Cost $3,066,568,037) 3,479,190,278 -------------- SHORT-TERM INVESTMENT: 1.2% $42,305,000 Morgan Stanley Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $42,306,293 to be received upon repurchase (Collateralized by $3,735,000 Federal National Mortgage Association, 3.000%, Market Value $3,806,200, due 06/15/04; $7,330,000 FNMA, 5.250%, Market Value $8,209,604, due 04/15/07; $14,770,000 FNMA, 2.650%, Market Value $14,885,354, due 02/13/06 and $14,650,000 FNMA, 5.250%, Market Value $16,105,851, due 06/15/06) $ 42,305,000 -------------- Total Short-Term Investment (Cost $42,305,000) 42,305,000 --------------
TOTAL INVESTMENTS IN SECURITIES (COST $3,108,873,037)* 99.7% $3,521,495,278 OTHER ASSETS AND LIABILITIES-NET 0.3 11,862,701 ------ -------------- NET ASSETS 100.0% $3,533,357,979 ====== ==============
@ Non-income producing security @@ 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 $431,723,625 Gross Unrealized Depreciation (19,101,384) ------------ Net Unrealized Appreciation $412,622,241 ============
See Accompanying Notes to Financial Statements 70 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- CORPORATE BONDS: 37.3% ADVERTISING: 0.0% $ 165,000 # RH Donnelley Finance Corp. I, 10.875%, due 12/15/12 $ 193,050 240,000 # Vertis, Inc., 9.750%, due 04/01/09 250,800 -------------- 443,850 -------------- AEROSPACE/DEFENSE: 0.5% 1,300,000 Boeing Co., 6.125%, due 02/15/33 1,362,184 130,000 L-3 Communications Corp., 7.625%, due 06/15/12 143,650 3,688,000 Raytheon Co., 6.150%, due 11/01/08 4,174,916 165,000 Sequa Corp., 9.000%, due 08/01/09 175,725 190,000 # Titan Corp., 8.000%, due 05/15/11 202,350 165,000 # Vought Aircraft Industries, Inc., 8.000%, due 07/15/11 166,650 -------------- 6,225,475 -------------- AGRICULTURE: 0.4% 2,040,000 # Bunge Ltd. Finance Corp., 5.875%, due 05/15/13 2,108,507 145,000 # DIMON, Inc., 7.750%, due 06/01/13 149,712 2,250,000 RJ Reynolds Tobacco Holdings, Inc., 6.500%, due 06/01/07 2,255,870 1,340,000 RJ Reynolds Tobacco Holdings, Inc., 7.750%, due 05/15/06 1,379,403 -------------- 5,893,492 -------------- AIRLINES: 0.3% 4,520,000 American Airlines, Inc., 7.024%, due 10/15/09 4,317,806 -------------- 4,317,806 -------------- APPAREL: 0.0% 160,000 Levi Strauss & Co., 11.625%, due 01/15/08 138,000 230,000 # Phillips-Van Heusen, 8.125%, due 05/01/13 237,188 -------------- 375,188 -------------- AUTO MANUFACTURERS: 1.2% 6,525,000 Ford Motor Co., 6.375%, due 02/01/29 5,290,503 3,605,000 Ford Motor Co., 6.625%, due 10/01/28 3,007,997 385,000 Ford Motor Co., 7.250%, due 10/01/08 403,087 4,870,000 General Motors Corp., 6.750%, due 05/01/28 4,127,452 3,985,000 General Motors Corp., 8.375%, due 07/15/33 3,922,475 -------------- 16,751,514 -------------- AUTO PARTS & EQUIPMENT: 0.1% 105,000 # Advanced Accessory Systems LLC, 10.750%, due 06/15/11 111,825 120,000 Dana Corp., 10.125%, due 03/15/10 132,900 155,000 Dura Operating Corp., 8.625%, due 04/15/12 159,650 270,000 Lear Corp., 8.110%, due 05/15/09 310,500
Principal Amount Value - ---------------------------------------------------------------------------- $ 220,000 # TRW Automotive, Inc., 11.000%, due 02/15/13 $ 240,900 120,000 # UIS, Inc., 9.375%, due 06/15/13 125,100 -------------- 1,080,875 -------------- BANKS: 2.3% 3,240,000 Bank One Corp., 4.900%, due 04/30/15 3,351,530 810,000 BNY Capital I, 7.970%, due 12/31/26 942,954 4,840,000 @@,# Credit Suisse First Boston, 7.900%, due 05/01/07 5,504,319 885,000 Fleet Capital Trust II, 7.920%, due 12/11/26 1,007,458 450,000 FleetBoston Financial Corp., 6.875%, due 01/15/28 521,992 2,550,000 M&T Bank Corp., 3.850%, due 04/01/13 2,604,838 4,770,000 Mellon Capital I, 7.720%, due 12/01/26 5,634,472 2,415,000 NB Capital Trust IV, 8.250%, due 04/15/27 2,944,064 2,640,000 Sovereign Bank, 5.125%, due 03/15/13 2,732,656 2,660,000 US Bank National Association, 4.800%, due 04/15/15 2,749,586 2,922,000 US Bank National Association, 6.300%, due 07/15/08 3,377,417 470,000 # Wells Fargo Capital A, 7.730%, due 12/01/26 546,106 -------------- 31,917,392 -------------- BUILDING MATERIALS: 0.0% 135,000 Nortek Holdings, Inc., 9.875%, due 06/15/11 142,762 -------------- 142,762 -------------- CHEMICALS: 0.3% 2,555,000 Dow Chemical Co., 5.750%, due 11/15/09 2,798,009 115,000 Equistar Chemicals LP, 10.125%, due 09/01/08 119,025 90,000 # Equistar Chemicals LP, 10.625%, due 05/01/11 92,700 845,000 IMC Global, Inc., 10.875%, due 06/01/08 883,025 690,000 Lyondell Chemical Co., 9.625%, due 05/01/07 679,650 -------------- 4,572,409 -------------- COMMERCIAL SERVICES: 0.1% 185,000 Corrections Corp. of America, 7.500%, due 05/01/11 194,250 525,000 @@ Quebecor Media, Inc., 11.125%, due 07/15/11 603,750 635,000 # United Rentals North America, Inc., 10.750%, due 04/15/08 696,913 -------------- 1,494,913 -------------- COMPUTERS: 0.0% 140,000 @@ Seagate Technology Holdings, 8.000%, due 05/15/09 152,250 130,000 Unisys Corp., 8.125%, due 06/01/06 139,750 -------------- 292,000 --------------
See Accompanying Notes to Financial Statements 71 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- COSMETICS/PERSONAL CARE: 0.0% $ 340,000 Chattem, Inc., 8.875%, due 04/01/08 $ 352,750 -------------- 352,750 -------------- DISTRIBUTION/WHOLESALE: 0.0% 315,000 # Aviall, Inc., 7.625%, due 07/01/11 320,906 -------------- 320,906 -------------- DIVERSIFIED FINANCIAL SERVICES: 3.2% 3,365,000 Boeing Capital Corp., 7.375%, due 09/27/10 3,993,077 2,425,000 CitiCorp. Capital I, 7.933%, due 02/15/27 2,848,875 565,000 # Corestates Capital Trust I, 8.000%, due 12/15/26 673,432 4,040,000 Countrywide Home Loans, Inc., 4.250%, due 12/19/07 4,248,068 1,160,000 # Erac USA Finance Co., 8.000%, due 01/15/11 1,384,040 2,935,000 # Farmers Exchange Capital, 7.200%, due 07/15/48 2,426,954 1,705,000 Ford Motor Credit Co., 7.375%, due 10/28/09 1,790,076 2,445,000 General Electric Capital Corp., 5.000%, due 06/15/07 2,664,600 6,740,000 General Electric Capital Corp., 6.000%, due 06/15/12 7,621,289 145,000 # HLI Operating Co., Inc., 10.500%, due 06/15/10 152,975 1,990,000 International Lease Finance Corp., 5.875%, due 05/01/13 2,146,426 3,120,000 Lehman Brothers Holdings, Inc., 4.000%, due 01/22/08 3,255,052 1,200,000 Morgan Stanley, 6.750%, due 04/15/11 1,405,792 410,000 Nexstar Finance LLC, 12.000%, due 04/01/08 459,200 5,480,000 @@,XX PF Export Receivables Master Trust, 3.748%, due 06/01/13 5,530,361 2,840,000 @@,XX PF Export Receivables Master Trust, 6.436%, due 06/01/15 2,854,200 80,000 Technical Olympic USA, Inc., 10.375%, due 07/01/12 85,600 240,000 Technical Olympic USA, Inc., 9.000%, due 07/01/10 260,400 50,000 # Universal City Development Partners, 11.750%, due 04/01/10 55,125 -------------- 43,855,542 -------------- ELECTRIC: 2.9% 310,000 # AES Corp., 8.750%, due 05/15/13 323,950 4,260,000 Arizona Public Service, 4.650%, due 05/15/15 4,245,810 1,700,000 # Consumers Energy Co., 4.250%, due 04/15/08 1,759,831 3,185,000 Duke Capital Corp., 6.250%, due 02/15/13 3,391,923 200,000 Homer City Funding LLC, 8.734%, due 10/01/26 219,500 2,425,000 Nisource Finance Corp., 6.150%, due 03/01/13 2,607,801 1,975,000 Nisource Finance Corp., 7.625%, due 11/15/05 2,160,543 3,780,000 # Ohio Edison Co., 4.000%, due 05/01/08 3,881,451 3,810,000 # Ohio Power Co., 6.600%, due 02/15/33 4,267,032 2,295,000 # Oncor Electric Delivery Co., 7.250%, due 01/15/33 2,716,635 2,987,000 # PG&E Corp., 6.875%, due 07/15/08 3,113,948 2,680,000 # PSEG Energy Holdings, Inc., 7.750%, due 04/16/07 2,836,887 1,950,000 # Reliant Resources, Inc., 9.250%, due 07/15/10 1,969,500 3,207,000 # TXU Energy Co., 6.125%, due 03/15/08 3,442,849 1,985,000 # TXU Energy Co., 7.000%, due 03/15/13 2,201,577 -------------- 39,139,237 --------------
Principal Amount Value - ---------------------------------------------------------------------------- ELECTRICAL COMPONENTS & EQUIPMENT: 0.0% $ 135,000 @@,# FIMEP SA, 10.500%, due 02/15/13 $ 151,200 145,000 @@ Legrand, 8.500%, due 02/15/25 150,075 -------------- 301,275 -------------- ELECTRONICS: 0.0% 150,000 @@,# Flextronics Intl. Ltd., 6.500%, due 05/15/13 145,125 155,000 Stoneridge, Inc., 11.500%, due 05/01/12 174,375 -------------- 319,500 -------------- ENTERTAINMENT: 0.1% 180,000 Carmike Cinemas, Inc., 10.375%, due 02/01/09 189,900 25,000 # Cinemark USA, Inc., 9.000%, due 02/01/13 27,250 170,000 # Cinemark USA, Inc., 9.000%, due 02/01/13 185,300 195,000 Regal Cinemas, Inc., 9.375%, due 02/01/12 215,963 125,000 # Six Flags, Inc., 9.750%, due 06/15/07 124,375 105,000 Speedway Motorsports, Inc., 6.750%, due 06/01/13 109,200 -------------- 851,988 -------------- ENVIRONMENTAL CONTROL: 0.1% 345,000 Allied Waste North America, 10.000%, due 08/01/09 368,287 680,000 Allied Waste North America, 7.875%, due 04/15/13 714,850 165,000 Allied Waste North America, 8.500%, due 12/01/08 178,200 -------------- 1,261,337 -------------- FOOD: 2.1% 505,000 Ahold Finance USA, Inc., 8.250%, due 07/15/10 520,150 1,920,000 ConAgra Foods, Inc., 7.500%, due 09/15/05 2,142,180 350,000 # Del Monte Corp., 8.625%, due 12/15/12 372,750 230,000 # Domino's, Inc., 8.250%, due 07/01/11 238,625 290,000 Great Atlantic & Pacific Tea Co., 9.125%, due 12/15/11 272,600 280,000 Ingles Markets, Inc., 8.875%, due 12/01/11 283,150 1,300,000 Kroger Co., 5.500%, due 02/01/13 1,374,788 1,829,000 Kroger Co., 7.250%, due 06/01/09 2,138,672
See Accompanying Notes to Financial Statements 72 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- FOOD (CONTINUED) $ 1,975,000 Kroger Co., 7.500%, due 04/01/31 $ 2,349,942 330,000 Michael Foods, Inc., 11.750%, due 04/01/11 381,150 410,000 Pilgrims Pride Corp., 9.625%, due 09/15/11 439,725 190,000 Roundy's, Inc., 8.875%, due 06/15/12 199,500 2,775,000 Safeway, Inc., 4.800%, due 07/16/07 2,904,723 2,380,000 Safeway, Inc., 5.800%, due 08/15/12 2,556,651 140,000 # Smithfield Foods, Inc., 7.750%, due 05/15/13 150,850 5,530,000 Supervalu, Inc., 7.875%, due 08/01/09 6,455,351 5,855,000 Tyson Foods, Inc., 6.625%, due 10/01/04 6,070,786 230,000 Winn-Dixie Stores, Inc., 8.875%, due 04/01/08 244,950 -------------- 29,096,543 -------------- FOREST PRODUCTS & PAPER: 1.0% 1,718,000 @@ Abitibi-Consolidated, Inc., 6.950%, due 04/01/08 1,809,980 3,200,000 @@ Abitibi-Consolidated, Inc., 6.950%, due 12/15/06 3,386,250 525,000 Appleton Papers, Inc., 12.500%, due 12/15/08 590,625 2,360,000 Fort James Corp., 6.625%, due 09/15/04 2,413,100 400,000 Georgia-Pacific Corp., 8.125%, due 05/15/11 413,000 500,000 # Georgia-Pacific Corp., 8.875%, due 02/01/10 545,000 675,000 @@ Tembec Industries, Inc., 7.750%, due 03/15/12 658,125 100,000 @@ Tembec Industries, Inc., 8.500%, due 02/01/11 99,500 3,175,000 Weyerhaeuser Co., 6.875%, due 12/15/33 3,478,282 -------------- 13,393,862 -------------- HEALTHCARE -- PRODUCTS: 0.0% 205,000 # Medex, Inc., 8.875%, due 05/15/13 213,712 -------------- 213,712 -------------- HEALTHCARE -- SERVICES: 0.0% 175,000 Alliance Imaging, Inc., 10.375%, due 04/15/11 183,750 275,000 Triad Hospitals, Inc., 8.750%, due 05/01/09 293,906 -------------- 477,656 -------------- HOME BUILDERS: 0.1% 175,000 # K Hovnanian Enterprises, Inc., 7.750%, due 05/15/13 184,187 150,000 KB Home, 7.750%, due 02/01/10 162,937 80,000 # Meritage Corp., 9.750%, due 06/01/11 88,800 60,000 Meritage Corp., 9.750%, due 06/01/11 66,600 145,000 Standard-Pacific Corp., 7.750%, due 03/15/13 154,063 135,000 Toll Corp., 8.250%, due 02/01/11 151,200 215,000 WCI Communities, Inc., 10.625%, due 02/15/11 238,650 -------------- 1,046,437 --------------
Principal Amount Value - ---------------------------------------------------------------------------- INSURANCE: 2.5% $ 4,838,000 # AIG SunAmerica Global Financing VII, 5.850%, due 08/01/08 $ 5,461,009 6,900,000 CNA Financial Corp., 6.250%, due 11/15/03 6,997,787 2,940,000 # John Hancock Global Funding II, 5.250%, due 02/25/15 3,099,460 2,735,000 # Monumental Global Funding II, 3.850%, due 03/03/08 2,829,915 1,590,000 # New York Life Insurance Co., 5.875%, due 05/15/33 1,674,690 3,325,000 Travelers Property Casualty Corp., 6.375%, due 03/15/33 3,646,727 9,135,000 # Zurich Capital Trust I, 8.376%, due 06/01/37 10,068,122 -------------- 33,777,710 -------------- IRON/STEEL: 0.1% 745,000 AK Steel Corp., 7.875%, due 02/15/09 636,975 145,000 United States Steel Corp., 9.750%, due 05/15/10 147,900 -------------- 784,875 -------------- LEISURE TIME: 0.0% 190,000 @@ Royal Caribbean Cruises Ltd., 8.000%, due 05/15/10 198,550 100,000 # Worldspan LP/WS Financing Corp., 9.625%, due 06/15/11 103,500 -------------- 302,050 -------------- LODGING: 0.4% 560,000 Ameristar Casinos, Inc., 10.750%, due 02/15/09 637,700 270,000 Aztar Corp., 9.000%, due 08/15/11 293,625 215,000 Extended Stay America, Inc., 9.875%, due 06/15/11 232,200 125,000 Host Marriott Corp., 7.875%, due 08/01/05 127,812 85,000 Host Marriott Corp., 7.875%, due 08/01/08 86,700 570,000 Mandalay Resort Group, 9.500%, due 08/01/08 655,500 900,000 MGM Mirage, 8.375%, due 02/01/11 1,028,250 140,000 MGM Mirage, 8.500%, due 09/15/10 165,200 300,000 # Park Place Entertainment Corp., 7.000%, due 04/15/13 322,500 720,000 Park Place Entertainment Corp., 7.875%, due 03/15/10 777,600 535,000 Starwood Hotels & Resorts Worldwide, Inc., 7.875%, due 05/01/12 588,500 185,000 Venetian Casino Resort LLC, 11.000%, due 06/15/10 209,513 -------------- 5,125,100 -------------- MACHINERY -- DIVERSIFIED: 0.0% 65,000 # Cummins, Inc., 9.500%, due 12/01/10 74,100 -------------- 74,100 --------------
See Accompanying Notes to Financial Statements 73 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- MEDIA: 1.9% $ 2,130,000 AMFM, Inc., 8.000%, due 11/01/08 $ 2,486,775 3,335,000 AOL Time Warner, Inc., 6.875%, due 05/01/12 3,815,010 280,000 @@ CanWest Media, Inc., 10.625%, due 05/15/11 320,600 500,000 @@,# CanWest Media, Inc., 7.625%, due 04/15/13 533,750 220,000 Charter Communications Holdings, LLC, 0.000%, due 05/15/11 112,200 770,000 Charter Communications Holdings, LLC, 9.625%, due 11/15/09 565,950 3,890,000 # COX Enterprises, Inc., 4.375%, due 05/01/08 4,049,404 340,000 CSC Holdings, Inc., 10.500%, due 05/15/16 372,300 145,000 CSC Holdings, Inc., 7.625%, due 04/01/11 147,175 140,000 CSC Holdings, Inc., 7.625%, due 07/15/18 140,350 415,000 Dex Media East LLC, 12.125%, due 11/15/12 492,812 165,000 Dex Media East LLC, 9.875%, due 11/15/09 184,800 395,000 # DirecTV Holdings LLC, 8.375%, due 03/15/13 442,400 465,000 Granite Broadcasting Corp., 8.875%, due 05/15/08 456,862 280,000 Hollinger Intl. Publishing, 9.000%, due 12/15/10 301,000 125,000 @@,# Hollinger, Inc., 11.875%, due 03/01/11 139,375 320,000 Insight Communications, 0.000%, due 02/15/11 267,200 2,015,000 InterActiveCorp., 7.000%, due 01/15/13 2,325,024 605,000 Mediacom Broadband LLC, 11.000%, due 07/15/13 676,087 1,800,000 News America Holdings, 7.600%, due 10/11/15 2,182,756 215,000 # Nexstar Finance Holdings LLC, Inc., 0.000%, due 04/01/13 144,319 200,000 Paxson Communications Corp., 10.750%, due 07/15/08 216,000 180,000 # Primedia, Inc., 8.000%, due 05/15/13 185,400 270,000 Primedia, Inc., 8.875%, due 05/15/11 285,525 190,000 Radio One, Inc., 8.875%, due 07/01/11 209,950 75,000 @@,# Rogers Cable, Inc., 6.250%, due 06/15/13 75,188 60,000 Salem Communications Holding Corp., 9.000%, due 07/01/11 64,875 165,000 # Sinclair Broadcast Group, Inc., 8.000%, due 03/15/12 176,963 100,000 Susquehanna Media Co., 8.500%, due 05/15/09 106,000 3,630,000 Time Warner, Inc., 6.950%, due 01/15/28 3,900,290 480,000 @@,# Vivendi Universal SA, 9.250%, due 04/15/10 548,400 475,000 Young Broadcasting, Inc., 10.000%, due 03/01/11 516,563 -------------- 26,441,303 -------------- MINING: 0.2% 390,000 Compass Minerals Group, Inc., 10.000%, due 08/15/11 438,750 1,570,000 @@,# WMC Finance USA, 5.125%, due 05/15/13 1,624,617 -------------- 2,063,367 -------------- MISCELLANEOUS MANUFACTURING: 0.3% 190,000 SPX Corp., 7.500%, due 01/01/13 206,625 155,000 # Tenneco Automotive, Inc., 10.250%, due 07/15/13 157,713 2,270,000 @@ Tyco Intl. Group SA, 6.125%, due 01/15/09 2,372,150 1,280,000 @@ Tyco Intl. Group SA, 6.125%, due 11/01/08 1,344,000 540,000 @@ Tyco Intl. Group SA, 6.750%, due 02/15/11 575,100 -------------- 4,655,588 --------------
Principal Amount Value - ---------------------------------------------------------------------------- MULTI-NATIONAL: 0.4% $ 3,860,000 @@ Corp. Andina de Fomento CAF, 5.200%, due 05/21/13 $ 3,919,409 820,000 @@ Corp. Andina de Fomento CAF, 6.875%, due 03/15/12 935,391 -------------- 4,854,800 -------------- OFFICE/BUSINESS EQUIPMENT: 0.0% 310,000 Xerox Corp., 7.625%, due 06/15/13 311,938 -------------- 311,938 -------------- OIL & GAS: 2.8% 2,930,000 Amerada Hess Corp., 5.900%, due 08/15/06 3,225,309 2,565,000 Amerada Hess Corp., 7.125%, due 03/15/33 2,929,153 1,625,000 @@ Anderson Exploration Ltd., 6.750%, due 03/15/11 1,884,400 435,000 # Chesapeake Energy Corp., 7.500%, due 09/15/13 464,362 3,765,000 # Enterprise Products Partners LP, 6.875%, due 03/01/33 4,278,663 150,000 Forest Oil Corp., 8.000%, due 06/15/08 161,250 11,145,000 @@ Husky Oil Co., 8.900%, due 08/15/28 12,928,200 155,000 Nuevo Energy Co., 9.500%, due 06/01/08 163,331 2,330,000 Ocean Energy, Inc., 4.375%, due 10/01/07 2,452,418 4,945,000 Pemex Project Funding Master Trust, 7.375%, due 12/15/14 5,427,138 425,000 Swift Energy Co., 9.375%, due 05/01/12 464,313 2,000,000 Valero Energy Corp., 8.750%, due 06/15/30 2,570,236 845,000 @@ Western Oil Sands, Inc., 8.375%, due 05/01/12 946,400 505,000 Westport Resources Corp., 8.250%, due 11/01/11 555,500 -------------- 38,450,673 --------------
See Accompanying Notes to Financial Statements 74 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- OIL & GAS SERVICES: 0.1% $ 560,000 Hanover Equipment Trust, 8.500%, due 09/01/08 $ 590,800 200,000 Hanover Equipment Trust, 8.750%, due 09/01/11 211,000 -------------- 801,800 -------------- PACKAGING & CONTAINERS: 0.8% 275,000 Ball Corp., 6.875%, due 12/15/12 292,875 370,000 # BWAY Finance Corp., 10.000%, due 10/15/10 377,400 480,000 @@,# Crown European Holdings SA, 10.875%, due 03/01/13 525,600 130,000 @@,# Norampac, Inc., 6.750%, due 06/01/13 137,150 315,000 # Owens-Brockway, 8.250%, due 05/15/13 330,750 725,000 Owens-Brockway, 8.875%, due 02/15/09 790,250 1,220,000 # Sealed Air Corp., 5.375%, due 04/15/08 1,281,723 2,305,000 # Sealed Air Corp., 5.625%, due 07/15/13 2,329,571 4,445,000 # Sealed Air Corp., 6.950%, due 05/15/09 4,915,997 500,000 Smurfit-Stone Container Corp., 8.250%, due 10/01/12 538,750 -------------- 11,520,066 -------------- PHARMACEUTICALS: 0.0% 460,000 AmerisourceBergen Corp., 7.250%, due 11/15/12 501,400 -------------- 501,400 -------------- PIPELINES: 1.2% 235,000 # ANR Pipeline Co., 8.875%, due 03/15/10 257,912 5,320,000 CenterPoint Energy Resources Corp., 8.125%, due 07/15/05 5,765,199 2,965,000 Duke Energy Field Services LLC, 7.500%, due 08/16/05 3,244,167 300,000 # El Paso Production Holding Co., 7.750%, due 06/01/13 300,750 265,000 # GulfTerra Energy Partners LP, 8.500%, due 06/01/10 284,875 3,415,000 Kinder Morgan Energy Partners LP, 7.300%, due 08/15/33 4,114,826 500,000 Northern Border Pipeline Co., 6.250%, due 05/01/07 547,636 180,000 Southern Natural Gas Co., 7.350%, due 02/15/31 184,050 175,000 Southern Natural Gas Co., 8.000%, due 03/01/32 190,094 175,000 Tennessee Gas Pipeline Co., 8.375%, due 06/15/32 191,188 345,000 Transcontinental Gas Pipe LN, 8.875%, due 07/15/12 391,575 300,000 Williams Cos., Inc., 8.625%, due 06/01/10 315,000 -------------- 15,787,272 -------------- REAL ESTATE: 0.8% 2,240,000 EOP Operating LP, 7.250%, due 02/15/18 2,647,313 2,945,000 EOP Operating LP, 7.750%, due 11/15/07 3,452,565
Principal Amount Value - ---------------------------------------------------------------------------- $ 1,383,000 Liberty Property-LP, 7.250%, due 03/15/11 $ 1,634,865 2,910,000 Liberty Property-LP, 7.750%, due 04/15/09 3,516,883 -------------- 11,251,626 -------------- REITS: 0.8% 225,000 Felcor Lodging LP, 8.500%, due 06/01/11 227,812 60,000 Host Marriott LP, 9.500%, due 01/15/07 64,800 160,000 # La Quinta Properties, Inc., 8.875%, due 03/15/11 171,200 1,935,000 Liberty Property Trust, 6.375%, due 08/15/12 2,165,141 2,150,000 # Simon Property Group LP, 4.875%, due 03/18/10 2,239,079 3,068,000 Simon Property Group LP, 6.375%, due 11/15/07 3,426,198 1,893,000 Simon Property Group LP, 7.375%, due 06/15/18 2,267,858 -------------- 10,562,088 -------------- RETAIL: 0.2% 115,000 Dollar General Corp., 8.625%, due 06/15/10 127,794 520,000 JC Penney Co., Inc., 7.600%, due 04/01/07 548,600 150,000 # Rent-A-Center, Inc., 7.500%, due 05/01/10 158,250 400,000 Rite Aid Corp., 7.625%, due 04/15/05 399,000 165,000 # Rite Aid Corp., 9.250%, due 06/01/13 164,175 370,000 # Star Gas Partners LP/Star Gas Finance Co., 10.250%, due 02/15/13 386,650 275,000 Yum! Brands, Inc., 8.875%, due 04/15/11 327,250 -------------- 2,111,719 -------------- SEMICONDUCTORS: 0.0% 65,000 # AMI Semiconductor, Inc., 10.750%, due 02/01/13 73,775 65,000 # Amkor Technology, Inc., 7.750%, due 05/15/13 62,075 -------------- 135,850 -------------- SOVEREIGN: 6.4% 6,626,000 @@ Brazil Dcb L, 0.000%, due 04/15/12 5,017,870 617,000 @@ Brazilian Government Intl. Bond, 10.000%, due 01/16/07 635,510 1,148,000 @@ Brazilian Government Intl. Bond, 10.250%, due 06/17/13 1,099,210 4,470,000 @@ Brazilian Government Intl. Bond, 11.000%, due 08/17/40 4,090,050 750 @@ Central Bank Of Nigeria, 0.000%, due 11/15/20 -- 1,500,000 @@ Central Bank Of Nigeria, 0.000%, due 11/15/20 1,290,000 1,955,000 @@ Chile Government Intl. Bond, 5.500%, due 01/15/13 2,073,277 1,467,000 @@ Colombia Government Intl. Bond, 0.000%, due 02/25/20 1,830,082 3,915,000 @@ Colombia Government Intl. Bond, 10.000%, due 01/23/12 4,394,587 2,068,000 @@ Dominican Republic, 0.000%, due 01/23/13 1,930,064
See Accompanying Notes to Financial Statements 75 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- SOVEREIGN (CONTINUED) $ 13,335,000 Fannie Mae, 2.375%, due 04/13/06 $ 13,468,310 2,150,000 @@ Mexico Government Intl. Bond, 4.625%, due 10/08/08 2,200,525 3,265,000 @@ Mexico Government Intl. Bond, 6.625%, due 03/03/15 3,477,225 2,020,000 @@ Peru Government Intl. Bond, 9.125%, due 02/21/12 2,158,370 4,787,000 @@ Philippine Government Intl. Bond, 9.875%, due 01/15/19 5,295,619 3,466,000 @@ Republic Of Argentina, 0.000%, due 08/03/12 2,077,174 2,084,000 @@ Republic Of Bulgaria, 0.000%, due 01/15/15 2,468,081 2,099,000 @@ Republic Of Ecuador, 0.000%, due 08/15/30 1,343,360 1,477,000 @@ Republic Of El Salvador, 0.000%, due 01/24/23 1,558,235 1,725,018 @@ Republic Of Panama, 0.000%, due 07/17/16 1,395,108 879,000 @@ Republic Of Peru, 0.000%, due 03/07/17 686,719 1,821,429 @@ Republic Of Venezuela, 0.000%, due 12/18/07 1,449,766 11,121,000 @@ Russian Federation, 0.000%, due 03/31/30 10,910,257 3,911,699 Small Business Administration, 7.550%, due 11/01/12 4,283,080 5,979,000 @@ Turkey Government Intl. Bond, 12.375%, due 06/15/09 6,457,320 500,000 @@,# Ukraine Government Intl. Bond, 7.650%, due 06/11/13 498,440 909,444 @@ Ukraine Government, 0.000%, due 03/15/07 1,002,662 1,152,000 @@ Uruguay Government Intl. Bond, 7.500%, due 03/15/15 901,440 4,500,000 @@ Venezuela Government Intl. Bond, 9.250%, due 09/15/27 3,341,250 -------------- 87,333,591 -------------- TELECOMMUNICATIONS: 3.7% 190,000 American Tower Corp., 9.375%, due 02/01/09 191,900 230,000 American Tower Escrow Corp., 0.000%, due 08/01/08 149,500 2,292,000 AT&T Corp., 6.000%, due 03/15/09 2,456,086 6,175,000 AT&T Corp., 7.800%, due 11/15/11 7,072,017 1,520,000 AT&T Corp., 8.500%, due 11/15/31 1,729,506 1,045,000 AT&T Wireless Services, Inc., 8.125%, due 05/01/12 1,261,545 335,000 Block Communications, Inc., 9.250%, due 04/15/09 366,825 230,000 # Centennial Cellular Operating Co., 10.125%, due 06/15/13 228,850 295,000 Crown Castle Intl. Corp., 9.375%, due 08/01/11 308,275 2,309,000 @@ Deutsche Telekom Intl. Finance BV, 8.250%, due 06/15/05 2,576,244 130,000 Dobson Communications Corp., 10.875%, due 07/01/10 141,050 110,000 Dobson/Sygnet Communications Co., 12.250%, due 12/15/08 118,250 420,000 Insight Midwest LP/Insight Capital, Inc., 10.500%, due 11/01/10 463,050 1,115,000 Nextel Communications, Inc., 9.375%, due 11/15/09 1,202,806 90,000 Nextel Partners, Inc., 12.500%, due 11/15/09 101,700 120,000 # Nextel Partners, Inc., 8.125%, due 07/01/11 120,300 550,000 PanAmSat Corp., 8.500%, due 02/01/12 598,125 480,000 Qwest Communications Intl., 7.500%, due 11/01/08 446,400 265,000 # Qwest Corp., 8.875%, due 03/15/12 297,463 375,000 # Qwest Services Corp., 14.000%, due 12/15/14 436,875 310,000 @@ Rogers Wireless Communications, Inc., 9.625%, due 05/01/11 358,050 185,000 # Spectrasite, Inc., 8.250%, due 05/15/10 193,325 2,030,000 Sprint Capital Corp., 6.000%, due 01/15/07 2,183,632 6,285,000 Sprint Capital Corp., 6.875%, due 11/15/28 6,328,002 1,850,000 Sprint Capital Corp., 6.900%, due 05/01/19 1,943,434 8,355,000 TCI Communications Finance, 9.650%, due 03/31/27 9,984,225 415,000 @@ TELUS Corp., 8.000%, due 06/01/11 481,400 380,000 # Triton PCS, Inc., 8.500%, due 06/01/13 410,400 105,000 Triton PCS, Inc., 9.375%, due 02/01/11 107,888
Principal Amount Value - ---------------------------------------------------------------------------- $ 4,575,000 Verizon Global Funding Corp., 7.375%, due 09/01/12 $ 5,591,748 2,425,000 Verizon Wireless Capital LLC, 5.375%, due 12/15/06 2,666,021 -------------- 50,514,892 -------------- TRANSPORTATION: 0.0% 4,627 Chicago & Northwest Co., 6.250%, due 07/30/12 5,073 -------------- 5,073 -------------- Total Corporate Bonds (Cost $487,442,438) 511,505,302 -------------- COLLATERALIZED MORTGAGE OBLIGATIONS AND ASSET BACKED SECURITIES: 12.1% AUTOMOBILE: 1.0% 9,200,000 Capital Auto Receivables Asset Trust, 2.750%, due 04/16/07 9,416,305 4,320,000 Nissan Auto Receivables Owner Trust, 2.610%, due 07/15/08 4,389,526 -------------- 13,805,831 -------------- COMMERCIAL: 6.4% 6,167,579 Chase Manhattan Bank-First Union National Bank, 7.439%,due 08/15/31 7,440,105 1,750,000 XX CS First Boston Mortgage Securities Corp., 3.562%, due 05/15/38 1,725,738 3,782,279 CS First Boston Mortgage Securities Corp., 3.727%, due 03/15/35 3,868,368
See Accompanying Notes to Financial Statements 76 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- COMMERCIAL (CONTINUED) $ 5,200,000 First Union National Bank-Bank of America Commercial Mortgage Trust, 6.136%, due 12/15/10 $ 5,967,054 7,300,000 GE Capital Commercial Mortgage Corp., 6.531%, due 05/15/33 8,565,686 6,350,000 JP Morgan Chase Commercial Mortgage Securities Corp., 6.162%, due 05/12/34 7,291,475 9,380,000 JP Morgan Chase Commercial Mortgage Securities Corp., 6.244%, due 04/15/35 10,666,550 7,030,000 LB-UBS Commercial Mortgage Trust, 4.659%, due 12/15/26 7,433,915 2,000,000 LB-UBS Commercial Mortgage Trust, 6.133%, due 12/15/30 2,294,784 5,220,000 LB-UBS Commercial Mortgage Trust, 6.226%, due 03/15/26 5,974,313 4,500,000 LB-UBS Commercial Mortgage Trust, 7.370%, due 08/15/26 5,469,845 9,380,000 Mortgage Capital Funding, Inc., 6.663%, due 03/18/30 10,782,478 4,534,017 Prudential Commercial Mortgage Trust, 3.669%, due 02/11/36 4,627,554 5,281,576 Vendee Mortgage Trust, 5.849%, due 09/15/23 5,468,848 -------------- 87,576,713 -------------- CREDIT CARD: 1.0% 8,800,000 Citibank Credit Card Issuance Trust, 5.650%, due 06/16/08 9,674,947 3,460,000 Fleet Credit Card Master Trust II, 2.400%, due 07/15/08 3,509,411 -------------- 13,184,358 -------------- HOME EQUITY: 0.8% 695,000 Equity One, Inc., 2.976%, due 09/25/33 705,952 2,602,000 Residential Funding Mortgage Securities II, 3.450%, due 01/25/16 2,666,301 7,465,000 Saxon Asset Securities Trust, 3.960%, due 06/25/33 7,618,233 -------------- 10,990,486 -------------- OTHER: 0.2% 3,256,000 XX Residential Asset Mortgage Products, Inc., 2.140%, due 06/25/33 3,234,634 -------------- 3,234,634 --------------
Principal Amount Value - ---------------------------------------------------------------------------- WHOLE LOAN: 2.7% $ 1,868,821 Bank of America Alternative Loan Trust, 5.500%, due 02/25/33 $ 1,923,581 5,340,823 Bank of America Mortgage Securities, 4.413%, due 03/25/33 5,432,976 1,526,362 XX Bear Stearns Adjustable Rate Mortgage Trust, 6.020%, due 01/25/32 1,547,827 5,150,036 Bear Stearns Asset Backed Securities, Inc., 5.625%, due 11/25/32 5,359,483 16,778,141 MASTR Alternative Loans Trust, 6.500%, due 05/25/33 17,333,917 4,835,000 XX Washington Mutual, 5.000%, due 06/25/18 4,943,788 -------------- 36,541,572 -------------- Total Collateralized Mortgage Obligations and Asset Backed Securities (Cost $159,623,065) 165,333,594 -------------- U.S. GOVERNMENT AGENCY OBLIGATIONS: 27.6% FEDERAL HOME LOAN MORTGAGE CORPORATION: 8.7% 1,477,000 4.000%, due 04/15/21 1,499,992 13,350,000 4.250%, due 06/15/05 14,085,839 24,964,116 5.500%, due 05/01/23 25,861,050 19,033,841 5.500%, due 05/15/31 19,490,124 6,840,000 5.875%, due 03/21/11 7,706,211 44,630,000 6.000%, due 09/15/31 46,261,762 3,092,677 7.500%, due 11/01/28 3,295,755 747,788 7.500%, due 12/01/11 798,180 -------------- 118,998,913 -------------- FEDERAL NATIONAL MORTGAGE ASSOCIATION: 14.0% 929,032 10.000%, due 02/25/19 1,051,307 695,000 2.859%, due 12/26/29 704,270 12,880,000 2.875%, due 05/19/08 12,936,801 10,904,000 4.000%, due 06/25/16 11,046,913 19,860,000 4.600%, due 06/05/18 19,844,748 28,500,000 5.000%, due 08/25/18 29,381,733 8,500,000 5.000%, due 10/25/33 TBA 8,569,063 7,800,000 5.500%, due 10/15/33 TBA 8,014,500 6,467,498 6.000%, due 03/01/17 6,752,469 411,626 6.000%, due 03/01/17 429,764 8,476,702 6.000%, due 04/01/17 8,850,227 3,016,429 6.000%, due 07/01/29 3,141,313 491,368 6.000%, due 08/01/17 513,020 9,730,000 6.000%, due 10/15/32 TBA 10,100,956 12,300,000 6.500%, due 07/15/33 TBA 12,830,438 13,878,276 6.500%, due 08/01/29 14,492,240 8,000,000 6.500%, due 09/25/23 8,451,832 1,926,744 6.500%, due 11/01/13 2,034,822 956,510 7.000%, due 01/01/30 1,008,086 117,750 7.000%, due 02/01/26 124,441 224,406 7.000%, due 02/01/26 237,156 117,209 7.000%, due 03/01/26 123,819 203,849 7.000%, due 03/01/26 215,346 153,018 7.000%, due 03/01/26 161,648 186,148 7.000%, due 03/01/26 196,725 202,348 7.000%, due 03/01/26 213,845 6,403,621 7.000%, due 06/01/31 6,756,782 110,960 7.000%, due 08/01/25 117,265 118,023 7.000%, due 10/01/25 124,729 44,601 7.000%, due 11/01/25 47,135 126,379 7.000%, due 12/01/25 133,560 183,233 7.000%, due 12/01/25 193,645 157,294 7.000%, due 12/01/25 166,231 8,048,859 7.500%, due 01/25/48 8,987,058 6,401,748 7.500%, due 06/25/32 7,147,955 467,105 7.500%, due 07/01/11 500,248 654,247 7.500%, due 10/01/30 695,321 490,942 7.500%, due 11/01/30 521,763 898,100 7.500%, due 11/01/30 954,482 2,412,057 8.500%, due 01/01/25 2,628,194 1,474,566 8.500%, due 11/01/23 1,608,343 -------------- 192,010,193 --------------
See Accompanying Notes to Financial Statements 77 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION: 4.9% $ 419,193 5.000%, due 12/20/29 $ 435,618 617,492 5.375%, due 04/20/28 640,323 5,000,000 6.000%, due 10/15/31 TBA 5,223,440 22,965,904 6.500%, due 10/15/31 24,121,365 413,416 7.000%, due 04/15/26 438,117 652,911 7.000%, due 04/15/26 691,921 402,894 7.000%, due 04/15/26 426,966 558,102 7.000%, due 04/15/26 591,447 1,648,455 7.000%, due 04/15/32 1,741,695 2,792,854 7.000%, due 05/15/31 2,950,823 1,793,105 7.000%, due 05/15/32 TBA 1,894,526 1,926,554 7.000%, due 06/15/31 2,036,147 95,908 7.500%, due 01/15/26 101,932 244,432 7.500%, due 01/15/30 259,875 5,805 7.500%, due 01/15/31 6,170 6,663 7.500%, due 01/15/31 7,081 5,614 7.500%, due 01/15/31 5,966 578,033 7.500%, due 01/15/32 614,571 658,877 7.500%, due 02/15/30 700,263 6,276 7.500%, due 02/15/30 6,673 181,540 7.500%, due 02/15/31 192,940 3,318 7.500%, due 02/15/31 3,526 6,444 7.500%, due 02/15/31 6,849 7,147 7.500%, due 02/15/31 7,595 6,158 7.500%, due 02/15/31 6,548 4,062 7.500%, due 02/15/31 4,317 763,879 7.500%, due 02/15/32 811,857 131,132 7.500%, due 03/15/29 139,368 81,052 7.500%, due 03/15/31 86,142 18,656 7.500%, due 03/15/31 19,828 96,138 7.500%, due 03/15/32 102,177 503,581 7.500%, due 03/15/32 535,212 162,127 7.500%, due 04/15/22 173,718 293,474 7.500%, due 04/15/29 311,907 182,391 7.500%, due 04/15/31 193,845 28,960 7.500%, due 04/15/32 30,779 15,242 7.500%, due 05/15/22 16,199 271,040 7.500%, due 05/15/30 288,164 430,506 7.500%, due 05/15/32 457,546 12,849 7.500%, due 06/15/22 13,656 7,019 7.500%, due 06/15/22 7,460 13,619 7.500%, due 06/15/24 14,475 13,972 7.500%, due 06/15/24 14,849 101,863 7.500%, due 06/15/30 108,261 64,990 7.500%, due 06/15/30 69,072 171,263 7.500%, due 06/15/32 182,020 561,683 7.500%, due 06/15/32 596,962 9,559 7.500%, due 07/15/26 10,159 6,752 7.500%, due 07/15/30 7,179 229,326 7.500%, due 07/15/30 243,814 5,886 7.500%, due 07/15/30 6,258 507,435 7.500%, due 07/15/32 539,308 20,576 7.500%, due 08/15/22 21,868 6,470 7.500%, due 08/15/29 6,877 663,793 7.500%, due 08/15/29 705,487 5,951 7.500%, due 08/15/30 6,327 6,998 7.500%, due 08/15/30 7,440 62,794 7.500%, due 08/15/30 66,738 679,444 7.500%, due 08/15/32 722,119 250,844 7.500%, due 09/15/29 266,600 47,968 7.500%, due 09/15/31 50,981 2,628,981 7.500%, due 09/15/32 2,794,113 183,115 7.500%, due 10/15/29 194,617 251,287 7.500%, due 10/15/30 267,163 5,799 7.500%, due 11/15/30 6,166 6,664 7.500%, due 11/15/30 7,085 7,222 7.500%, due 11/15/30 7,678 6,424 7.500%, due 11/15/30 6,830 1,540,822 7.500%, due 11/20/30 1,628,539 282,873 7.500%, due 12/15/29 300,641 274,216 7.500%, due 12/15/30 291,440 4,609 7.500%, due 12/15/30 4,900 4,321,087 7.500%, due 12/15/31 4,594,144 6,906,872 8.000%, due 12/15/17 7,553,222 -------------- 67,607,884 -------------- Total U.S. Government Agency Obligations (Cost $374,337,571) 378,616,990 -------------- U.S. TREASURY OBLIGATIONS: 20.1% U.S. TREASURY BONDS: 4.4% 13,073,000 5.375%, due 02/15/31 14,725,009 36,553,000 6.250%, due 08/15/23 44,786,015 -------------- 59,511,024 -------------- U.S. TREASURY NOTES: 15.7% 183,306,000 S 1.250%, due 05/31/05 183,255,957 1,825,000 2.000%, due 05/15/06 1,844,962 8,190,000 2.625%, due 05/15/08 8,267,428 13,000,000 3.000%, due 01/31/04 13,155,909 9,014,000 3.625%, due 05/15/13 9,087,248 -------------- 215,611,504 -------------- Total U.S. Treasury Obligations (Cost $276,302,135) 275,122,528 -------------- Shares Value - ---------------------------------------------------------------------------- PREFERRED STOCKS: 0.4% AUTO MANUFACTURERS: 0.3% 167,874 General Motors 4,180,063 -------------- 4,180,063 --------------
Shares Value - ---------------------------------------------------------------------------- MEDIA: 0.1% $ 2,750 CSC Holdings, Inc. $ 282,563 26 @ Paxson 256,750 2,250 Primedia, Inc. 216,563 -------------- 755,876 -------------- TELECOMMUNICATIONS: 0.0% 120 @ Crown Castle, Inc. 131,700 -------------- 131,700 -------------- Total Preferred Stocks (Cost $5,068,744) 5,067,639 -------------- Total Long-Term Investments (Cost $1,302,773,953) 1,335,646,053 -------------- Principal Amount Value - ---------------------------------------------------------------------------- SHORT-TERM INVESTMENTS: 11.9% COMMERCIAL PAPER: 10.5% $ 12,000,000 S AOL TIME WARNER, Inc., 1.340%, due 07/15/03 11,993,747 12,000,000 Blue Ridge Asset Funding, 1.070%, due 07/31/03 11,989,300 13,000,000 S Credit Suisse First Boston, 1.250%, due 07/21/03 12,990,972 13,000,000 S Crown Point Capital, 1.040%, due 07/18/03 12,993,616 14,000,000 S Deere & Company, 1.330%, due 07/25/03 13,987,587 14,000,000 S Diamlerchrysler, 1.260%, due 08/04/03 13,983,340
See Accompanying Notes to Financial Statements 78 ING VP BOND PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- COMMERCIAL PAPER (CONTINUED) $ 12,000,000 S Edison Asset Security LLC, 1.230%, due 07/28/03 $ 11,988,930 14,000,000 S Ford Motor Credit Corp., 1.400%, due 07/28/03 13,985,300 13,500,000 S General Motors Accept., 1.420%, due 07/24/03 13,487,753 12,000,000 S Household Finance Corp., 1.250%, due 07/02/03 11,999,583 14,000,000 S Kraft Foods, Inc., 1.450%, due 07/25/03 13,986,467 -------------- 143,386,595 -------------- REPURCHASE AGREEMENT: 1.4% 19,770,000 S State Street Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $6,688,204 to be received upon repurchase (Collateralized by $6,820,000 Federal Home Loan Bank, 1.300%, Market Value $6,826,397, due 06/28/04) 19,770,000 -------------- Total Short-Term Investments (Cost $163,156,595) 163,156,595 --------------
TOTAL INVESTMENTS IN SECURITIES (COST $1,465,930,548)* 109.4% $1,498,802,648 OTHER ASSETS AND LIABILITIES-NET (9.4) (129,365,254) ------ -------------- NET ASSETS 100.0% $1,369,437,394 ====== ==============
@ Non-income producing security @@ Foreign Issuer # Securities purchased pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. XX Value of securities obtained from one or more dealers making markets in the securities which have been adjusted based on the Portfolio's valuation procedures. TBA To be announced S Segregated securities for swaps and when-issued or delayed delivery securities held at June 30, 2003. REITs Real Estate Investment Trusts * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $36,178,756 Gross Unrealized Depreciation (3,306,656) ----------- Net Unrealized Appreciation $32,872,100 ===========
Information concerning open swap contract at June 30, 2003 is shown below: SWAP COUNTER PARTY MERRILL LYNCH Notional Principal $6,805,000 Fund will Pay: Notional amount times (libor rate +0.90%) times actual days divided by 360 Effective LIBOR rate: 1.2788% Fund will receive: Notional amount times Index Return [1]. Positive amounts are paid to the Fund. The absolute value of negative amounts are paid to Merrill Lynch Capital Services. Index: U.S. High Yield Cash Pay Index Payment Date: Quarterly on the 2nd Net unrealized gain: $591,101 Termination date: July 2, 2003
[1] Index return calculation: (Ending Index Level -- Starting Index Level) / Starting Index Level.
See Accompanying Notes to Financial Statements 79 ING VP MONEY MARKET PORTFOLIO(1) PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- ASSET-BACKED COMMERCIAL PAPER: 17.3% $ 14,500,000 Blue Ridge Asset Funding, 1.050%, due 07/14/03 $ 14,494,502 14,000,000 Blue Ridge Asset Funding, 1.070%, due 07/31/03 13,987,517 14,800,000 Crown Point Capital, 0.950%, due 10/09/03 14,752,936 14,500,000 Crown Point Capital, 1.010%, due 09/19/03 14,462,590 26,400,000 Crown Point Capital, 1.160%, due 09/10/03 26,342,712 15,000,000 Crown Point Capital, 1.230%, due 08/05/03 14,982,062 14,500,000 Edison Asset Securitization LLC, 1.140%, due 11/17/03 14,442,290 15,000,000 Edison Asset Securitization LLC, 1.250%, due 07/16/03 14,992,188 14,400,000 Galaxy Funding, Inc., 1.170%, due 08/27/03 14,375,952 9,300,000 Galaxy Funding, Inc., 1.250%, due 07/28/03 9,291,281 14,500,000 Jupiter Securitization Corp., 0.990%, due 07/23/03 14,491,228 14,500,000 Jupiter Securitization Corp., 1.050%, due 07/15/03 14,494,079 14,500,000 Old Line Funding Corp., 1.230%, due 07/09/03 14,496,037 14,100,000 Old Line Funding Corp., 1.375%, due 07/24/03 14,089,415 16,000,000 Preferred Receivable Funding Corp., 1.200%, due 07/02/03 15,999,467 14,500,000 Thunder Bay Funding, Inc., 1.160%, due 07/28/03 14,487,385 10,900,000 Thunder Bay Funding, Inc., 1.190%, due 07/18/03 10,893,875 -------------- Total Asset-Backed Commercial Paper (Cost $251,073,877) 251,075,516 -------------- CERTIFICATES OF DEPOSIT: 8.1% 16,000,000.. @@ Barclays Bank PLC, 1.260%, due 09/03/03 16,005,760 17,500,000.. @@ Barclays Bank PLC, 1.620%, due 12/09/03 17,543,750 15,450,000.. @@ Canadian Imperial Bank, 1.290%, due 08/11/03 15,477,931 19,000,000 HBOS Treasury Services, 1.250%, due 07/29/03 18,999,832 17,900,000 State Street Bank & Trust, 1.220%, due 07/06/04 17,916,110 14,000,000 Washington Mutual Bank, 1.220%, due 11/25/03 14,009,520 17,100,000 Washington Mutual Bank, 1.290%, due 10/17/03 17,112,483 -------------- Total Certificates of Deposit (Cost $116,963,494) 117,065,386 --------------
Principal Amount Value - ---------------------------------------------------------------------------- COMMERCIAL PAPER: 3.8% 16,000,000 Credit Suisse First Boston, 1.250%, due 07/21/03 $ 15,988,889 9,250,000 Household Finance Corp., 0.980%, due 09/03/03 9,231,038 $ 15,000,000 Household Finance Corp., 1.240%, due 07/03/03 14,998,967 14,000,000 UBS Finance, Inc., 1.030%, due 07/11/03 13,995,994 -------------- Total Commercial Paper (Cost $54,217,734) 54,214,888 -------------- CORPORATE NOTES: 55.9% 24,100,000 American Honda Finance, 1.320%, due 08/04/03 24,100,294 18,000,000 American Honda Finance, 1.400%, due 09/16/03 18,006,660 14,817,000 Associates Corp., 5.750%, due 11/01/03 15,041,181 18,700,000 Bank Of America Corp., 1.354%, due 07/07/03 18,700,348 25,500,000 Bank Of America Corp., 6.820%, due 08/18/03 25,503,060 9,500,000 Bank Of New York, 1.310%, due 06/25/04 9,501,045 5,800,000... @@ Bank Of Scotland Treasury Services, 1.770%, due 01/22/04 5,823,316 16,000,000 Bank One, 1.290%, due 02/24/04 16,001,280 16,000,000 Bank One, 1.290%, due 03/04/04 16,001,280 14,000,000 Bank One, 1.933%, due 02/23/04 14,011,900 9,760,000 Bankamerica Corp., 5.750%, due 03/01/04 10,055,533 17,900,000.. @@ Barclays Bank PLC, 1.280%, due 03/08/04 17,925,955 3,920,000 Bell Atlantic, 5.875%, due 02/01/04 4,021,058 17,000,000 Bellsouth Corp., 4.160%, due 04/26/04 17,405,790 16,000,000 BP Capital, 1.295%, due 03/08/04 16,001,760 15,000,000 @@ Canadian Imperial Bank, 1.295%, due 12/15/03 15,000,352 11,300,000 Chase Manhattan Bank, 1.074%, due 06/30/04 11,294,689 24,000,000 Citigroup, Inc., 3.848%, due 07/17/03 24,001,255 5,600,000 First Union National Bank, 1.660%, due 02/20/04 5,613,832 8,000,000 First Union National Bank, 5.268%, due 06/08/04 8,010,720 13,000,000 Fleet Boston Corp., 6.913%, due 07/31/03 13,002,365 16,000,000 General Electric Capital, 1.340%, due 07/09/04 16,013,120 18,850,000 General Electric Capital, 1.770%, due 01/28/04 18,856,032 25,500,000 General Electric Capital, 2.019%, due 10/22/03 25,516,065 15,000,000 Goldman Sachs, 1.400%, due 10/27/03 15,013,500 16,000,000 Goldman Sachs, 1.350%, due 09/26/03 16,011,200 32,000,000 Goldman Sachs, 1.604%, due 08/01/03 32,000,000 5,150,000 GTE North, 6.000%, due 01/15/04 5,280,964 19,500,000 HBOS Treasury Services PLC, 1.270%, due 06/24/04 19,509,360 6,100,000 Heller Financial, Inc., 6.000%, due 03/19/04 6,306,790
See Accompanying Notes to Financial Statements 80 ING VP MONEY MARKET PORTFOLIO(1)PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Principal Amount Value - ---------------------------------------------------------------------------- $ 12,800,000 Household Finance Corp., 4.520%, due 09/15/03 $ 12,879,872 5,400,000 Household Finance Corp., 6.930%, due 09/26/03 5,402,430 9,200,000 Merrill Lynch & Co., Inc., 1.321%, due 11/19/03 9,200,000 23,950,000 Merrill Lynch & Co., Inc., 1.590%, due 03/08/04 24,005,324 12,800,000 Merrill Lynch & Co., Inc., 1.987%, due 08/01/03 12,803,642 13,500,000 Money Market Trust LLY, 1.370%, due 06/03/04 13,504,576 18,300,000 Money Market Trust Series 2003-A, 1.439%, due 02/19/04 18,303,843 31,400,000 Money Market Trust Series A-1, 1.460%, due 07/09/04 31,404,082 18,000,000 @@ Rabobank Nederland, 1.293%, due 01/22/04 18,024,120 18,000,000 @@ Rabobank Nederland, 1.295%, due 01/23/04 18,024,840 11,000,000 Salomon Smith Barney, 1.480%, due 11/13/03 11,009,900 19,000,000 Salomon Smith Barney, 1.970%, due 02/20/04 19,021,280 30,000,000 SBC Communications, Inc., 4.180%, due 06/05/04 30,964,500 31,000,000 Toyota Motor Credit Corp., 1.370%, due 01/16/04 31,004,650 15,000,000 US Bancorp, 1.569%, due 09/15/03 15,004,950 8,000,000 US Bank, 1.390%, due 11/14/03 8,001,920 15,500,000 Washington Mutual Bank, 1.260%, due 11/13/03 15,513,020 9,000,000 Wells Fargo Bank, 1.280%, due 02/06/04 9,001,350 18,000,000 Wells Fargo Bank, 1.300%, due 01/26/04 18,001,440 18,900,000 Wells Fargo Bank, 1.321%, due 11/24/03 18,900,756 10,000,000 Wells Fargo Bank, 1.338%, due 07/02/04 10,003,400 -------------- Total Corporate Notes (Cost $809,132,802) 809,510,599 -------------- U.S. GOVERNMENT AGENCY OBLIGATIONS: 8.7% 16,000,000 Federal Home Loan Bank, 1.410%, due 03/05/04 16,006,560 16,000,000 Federal Home Loan Bank, 1.410%, due 03/08/04 16,006,720 20,200,000 Federal Home Loan Bank, 5.375%, due 01/05/04 20,645,612 8,900,000 Federal Home Loan Bank, 5.500%, due 02/25/04 9,156,053 28,000,000 Federal Home Loan Mortgage Corporation, 3.250%, due 01/15/04 28,332,360 3,900,000 Federal Home Loan Mortgage Corporation, 3.400%, due 02/20/04 3,958,110 $ 15,000,000 Federal National Mortgage Association, 1.250%, due 07/07/04 15,004,200 16,000,000 Federal National Mortgage Association, 5.125%, due 02/13/04 16,400,480 -------------- Total U.S. Government Agency Obligations (Cost $125,399,430) 125,510,095 -------------- REPURCHASE AGREEMENT: 6.9% 100,555,000 Morgan Stanley Repurchase Agreement dated 06/30/03, 1.100%, due 07/01/03, $100,558,073 to be received upon repurchase (Collateralized by total $98,735,000 Federal National Mortgage Association, Market Value $102,570,931)(2) 100,555,000 -------------- Total Repurchase Agreement (Cost $100,555,000) 100,555,000 --------------
TOTAL INVESTMENTS IN SECURITIES (COST $1,457,342,337)* 100.7% $1,457,931,484 OTHER ASSETS AND LIABILITIES-NET (0.7) (10,342,021) ------ -------------- NET ASSETS 100.0% $1,447,589,463 ====== ==============
@@ Foreign Issuer PLC Public Limited Company (1) All securities with a maturity date greater than one year have a variable rate, a demand feature, are prerefunded, have optional or mandatory put resulting in an effective maturity of one year or less. Rate shown reflects current rate. (2) Collateral information for the repurchase agreement is as follows:
PAR MARKET MATURITY VALUE RATE VALUE DATE ----- ---- ------ -------- $11,000,000 4.375% $ 11,925,260 10/15/06 10,000,000 5.250% 10,248,333 08/14/06 10,265,000 3.000% 10,410,181 07/29/04 10,000,000 5.625% 10,464,062 05/14/04 10,000,000 4.400% 10,180,378 05/07/05 5,180,000 5.250% 5,801,603 04/15/07 8,470,000 3.625% 8,700,724 04/15/04 3,580,000 2.375% 3,632,775 04/13/06 10,100,000 4.750% 10,501,921 03/15/04 11,120,000 5.125% 11,611,713 02/13/04 9,020,000 2.750% 9,093,981 11/14/05 ----------- ------------ 98,735,000 102,570,931 ----------- ------------
* Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $649,262 Gross Unrealized Depreciation (60,115) -------- Net Unrealized Appreciation $589,147 ========
See Accompanying Notes to Financial Statements 81 ING VP MONEY MARKET PORTFOLIO PORTFOLIO OF INVESTMENTS as of June 30, 2003 (Unaudited) (Continued) - --------------------------------------------------------------------------------
Percentage of Industry Net Assets - -------------------------------------------------------------------------- Asset-Backed Commercial Paper 17.3% Bank holding companies 3.8% Commercial Banks, NEC 1.7% Federal & Federally-Sponsored Credit Agencies 8.7% Foreign bank, branches and agencies 13.3% Miscellaneous Business Credit Institution 1.3% National Commercial Banks 16.4% Personal Credit Institutions 16.4% Pharmaceutical Preparations 0.9% Security Brokers, Dealers & Flotation Companies 9.6% Short-Term Business Credit Institutions 0.4% Telephone Communications 4.0% Repurchase Agreement 6.9% Other Assets and Liabilities, Net -0.7% ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 82 DIRECTOR AND OFFICER INFORMATION (Unaudited) - -------------------------------------------------------------------------------- The business and affairs of the Portfolios are managed under the direction of the Portfolios' Board of Directors. Information pertaining to the Director and Officers of the Portfolios is set forth below. The Statement of Additional Information includes additional information about directors of the Registrant and is available, without charge, upon request at 1-800-992-0180.
TERM OF OFFICE POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) NAME, ADDRESS AND AGE WITH COMPANY TIME SERVED(1) DURING THE PAST FIVE YEARS - --------------------- ---------------- -------------- -------------------------- INDEPENDENT DIRECTORS Albert E. DePrince, Jr. Director June, 1998 Director, Business and Economic Research 7337 E. Doubletree Ranch Road to present Center (1999 to present) and Professor Scottsdale, AZ 85258 of Economics and Finance, Middle Born: 1941 Tennessee State University (1991 to present). Maria T. Fighetti Director April, 1994 Associate Commissioner, Contract 7337 E. Doubletree Ranch Road to present Management -- Health Services for New Scottsdale, AZ 85258 York City Department of Mental Health, Born: 1943 Mental Retardation and Alcohol Services (1973 to 2002). Sidney Koch Director April, 1994 Financial Adviser and Self-Employed 7337 E. Doubletree Ranch Road to present (January 1993 to present). Scottsdale, AZ 85258 Born: 1935 Corine T. Norgaard Director June, 1991 Dean, Barney School of Business, 7337 E. Doubletree Ranch Road to present University of Hartford (August 1996 to Scottsdale, AZ 85258 present). Born: 1937 Edward T. O'Dell Director June, 2002 Formerly, Partner/Chairman of Financial 7337 E. Doubletree Ranch Road to present Service Group, Goodwin Proctor LLP (June Scottsdale, AZ 85258 1966 to September 2000); Chairman, Born: 1935 Committee I -- International Bar Association (1995 to 1999). Joseph E. Obermeyer(2) Director January, 2003 President, Obermeyer & Associates, Inc. 7337 E. Doubletree Ranch Road to present (November 1999 to present) and Senior Scottsdale, AZ 85258 Manager, Arthur Anderson LLP (1995 to Born: 1957 October 1999). DIRECTORS WHO ARE "INTERESTED PERSONS" J. Scott Fox(3) Director December, 1997 President and Chief Executive Officer Aeltus Investment Management, to present (April 2001 to present), Managing Inc. Director and Chief Operating Officer 10 State House Square (April 1994 to April 2001), Chief Hartford, CT Financial Officer (April 1994 to July Born: 1955 2001), Aeltus Investment Management, Inc.; Executive Vice President (April 2001 to present), Director, Chief Operating Officer (February 1995 to present), Chief Financial Officer, Managing Director (February 1995 to April 2001), Aeltus Capital, Inc; Senior Vice President -- Operations, Aetna Life Insurance and Annuity Company, March 1997 to December 1997. NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY OTHER DIRECTORSHIPS NAME, ADDRESS AND AGE DIRECTOR HELD BY DIRECTOR - --------------------- ----------- ------------------- INDEPENDENT DIRECTORS Albert E. DePrince, Jr. 54 -- 7337 E. Doubletree Ranch Road Scottsdale, AZ 85258 Born: 1941 Maria T. Fighetti 54 -- 7337 E. Doubletree Ranch Road Scottsdale, AZ 85258 Born: 1943 Sidney Koch 54 -- 7337 E. Doubletree Ranch Road Scottsdale, AZ 85258 Born: 1935 Corine T. Norgaard 54 Director/Trustee, Mass Mutual 7337 E. Doubletree Ranch Road Corporate Investors Scottsdale, AZ 85258 Born: 1937 Edward T. O'Dell 54 -- 7337 E. Doubletree Ranch Road Scottsdale, AZ 85258 Born: 1935 Joseph E. Obermeyer(2) 54 -- 7337 E. Doubletree Ranch Road Scottsdale, AZ 85258 Born: 1957 DIRECTORS WHO ARE "INTERESTED PERSONS" J. Scott Fox(3) 54 Mr. Fox is a Director of IPC Aeltus Investment Management, Financial Network, Inc. Inc. 10 State House Square Hartford, CT Born: 1955
83 DIRECTOR AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
TERM OF OFFICE POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) NAME, ADDRESS AND AGE WITH COMPANY TIME SERVED(1) DURING THE PAST FIVE YEARS - --------------------- ---------------- -------------- -------------------------- DIRECTORS WHO ARE "INTERESTED PERSONS" Thomas J. McInerney(4) Director April, 2002 Chief Executive Officer, ING U.S. 7337 E. Doubletree Ranch Rd. to present Financial Services (September 2001 to Scottsdale, AZ 85258 present); General Manager and Chief Born: 1956 Executive Officer, ING U.S. Worksite Financial Services (December 2000 to present); Member, ING Americas Executive Committee (2001 to present); President, Chief Executive Officer and Director of Northern Life Insurance Company (2001 to present), ING Aeltus Holding Company, Inc. (2000 to present), ING Retail Holding Company (1998 to present). Formerly, ING Life Insurance and Annuity Company (1997 to November 2002); ING Retirement Holdings, Inc. (1997 to March 2003); General Manager and Chief Executive Officer, ING Worksite Division (December 2000 to October 2001), President, ING-SCI, Inc. (August 1997 to December 2000); President, Aetna Financial Services (August 1997 to December 2000); Head of National Accounts, Core Sales and Marketing, Aetna U.S. Healthcare (April 1996 to March 1997); NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY OTHER DIRECTORSHIPS NAME, ADDRESS AND AGE DIRECTOR HELD BY DIRECTOR - --------------------- ----------- ------------------- DIRECTORS WHO ARE "INTERESTED PERSONS" Thomas J. McInerney(4) 165 Director, Hemisphere, Inc. 7337 E. Doubletree Ranch Rd. (May 2003 -- Present). Scottsdale, AZ 85258 Trustee, ING Investors Trust Born: 1956 (February 2002 -- Present); Director, Equitable Life Insurance Co., Golden American Life Insurance Co., Life Insurance Company of Georgia, Midwestern United Life Insurance Co., ReliaStar Life Insurance Co., Security Life of Denver, Security Connecticut Life Insurance Co., Southland Life Insurance Co., USG Annuity and Life Company, and United Life and Annuity Insurance Co. Inc (March 2001 -- Present); Trustee, Ameribest Life Insurance Co., (2001-2003); Trustee, First Columbine Life Insurance Co., (2001-2002); Member of the Board, National Commission on Retirement Policy, Governor's Council on Economic Competitiveness and Technology of Connecticut, Connecticut Business and Industry Association, Bushnell; Connecticut Forum; Metro Hartford Chamber of Commerce; and is Chairman, Concerned Citizens for Effective Government.
- --------------- (1) Directors serve until their successors are duly elected and qualified, subject to the Board's retirement policy. (2) Mr. Obermeyer was elected to the Board on January 1, 2003. (3) Mr. Fox is an "interested person", as defined by the Investment Company Act of 1940 Act, as amended ("1940 Act"), because of his relationship with Aeltus Investment Management, Inc, an affiliate of ING Investments, LLC. (4) Mr. McInerney is an "interested person", as defined by the Investment Company Act of 1940 Act, as amended ("1940 Act") because of his relationship with ING U.S. Worksite Financial Services, an affiliate of ING Investments, LLC. 84 DIRECTOR AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
TERM OF OFFICE POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) NAME, ADDRESS AND AGE WITH COMPANY SERVICE(1) DURING THE LAST FIVE YEARS - --------------------- ---------------- -------------- -------------------------- OFFICERS: James M. Hennessy President, Chief February 2002 President and Chief Executive Officer, 7337 E. Doubletree Ranch Rd. Executive Officer, to present ING Capital Corporation, LLC, ING Funds Scottsdale, AZ 85258 and Chief Services, LLC, ING Advisors, Inc., ING Born: 1949 Operating Officer Investments, LLC, Lexington Funds Distributor, Inc., Express America T.C., Inc. and EAMC Liquidation Corp. (December 2001 -- Present); Executive Vice President and Chief Operating Officer and ING Funds Distributor, LLC (June 2000 -- Present). Formerly, Executive Vice President and Chief Operating Officer, ING Quantitative Management, Inc. (October 2001 -- September 2002), Senior Executive Vice President (June 2000 -- December 2000) and Secretary (April 1995 -- December 2000), ING Capital Corporation, LLC, ING Funds Services, LLC, ING Investments, LLC, ING Advisors, Inc., Express America T.C., Inc. and EAMC Liquidation Corp.; Executive Vice President, ING Capital Corporation, LLC and its affiliates (May 1998 -- June 2000); and Senior Vice President, ING Capital Corporation, LLC and its affiliates (April 1995 -- April 1998). Stanley D. Vyner Executive Vice February 2002 Executive Vice President of ING 7337 E. Doubletree Ranch Rd. President to present Advisors, Inc. and ING Investments, LLC Scottsdale, AZ 85258 (July 2000 to present) and Chief Born: 1950 Investment Officer of the International Portfolios, ING Investments, LLC (July 1996 to present). Formerly, President and Chief Executive Officer of ING Investments, LLC (August 1996 to August 2000). Michael J. Roland Executive Vice April 2002 Executive Vice President, Chief 7337 E. Doubletree Ranch Rd. President and to present Financial Officer and Treasurer of ING Scottsdale, AZ 85258 Assistant Funds Services, LLC, ING Funds Born: 1958 Secretary Distributor, LLC, ING Advisors, Inc., Principal February, 2002 ING Investments, LLC, Lexington Funds Financial Officer to present Distributor, Inc., Express America T.C. Inc. and EAMC Liquidation Corp. (December 2001 to present). Formerly, Executive Vice President, Chief Financial Officer and Treasurer ING Quantitative Management (December 2001 -- September 2002), formerly, Senior Vice President, ING Funds Services, LLC, ING Investments, LLC, and ING Funds Distributor, LLC (June 1998 to December 2001) and Chief Financial Officer of Endeavor Group (April 1997 to June 1998). Robert S. Naka Senior Vice February 2002 Senior Vice President and Assistant 7337 E. Doubletree Ranch Rd. President and to present Secretary of ING Funds Services, LLC, Scottsdale, AZ 85258 Assistant ING Funds Distributor, LLC, ING Born: 1963 Secretary Advisors, Inc., ING Capital Corporation, LLC ING Investments, LLC, (October 2001 to present) and Lexington Funds Distributor, Inc. (December 2001 to present). Formerly, Senior Vice President and Assistant Secretary, ING Quantitative Management, Inc. (October 2001 -- September 2002). Formerly, Vice President, ING Investments, LLC (April 1997 to October 1999), ING Funds Services, LLC (February 1997 to August 1999) and Assistant Vice President, ING Funds Services, LLC (August 1995 to February 1997). Robyn L. Ichilov Vice President and February 2002 Vice President of ING Funds Services, 7337 E. Doubletree Ranch Rd. Treasurer to present LLC (October 2001 to present) and ING Scottsdale, AZ 85258 Investments, LLC (August 1997 to Born: 1967 present); Accounting Manager, ING Investments, LLC (November 1995 to present). Kimberly A. Anderson Vice President and February 2002 Vice President and Secretary of ING 7337 E. Doubletree Ranch Rd. Secretary to present Funds Services, LLC, ING Funds Scottsdale, AZ 85258 Distributor, LLC, ING Advisors, Inc., Born: 1964 ING Investments, LLC (October 2001 to present) and Lexington Funds Distributor, Inc. (December 2001 to present). Formerly, Vice President, ING Quantitative Management, Inc. (October 2001 -- September 2002). Formerly, Assistant Vice President of ING Funds Services, LLC (November 1999 to January 2001) and has held various other positions with ING Funds Services, LLC for more than the last five years. Lauren D. Bensinger Vice President March 2003 Vice President and Chief Compliance 7337 E. Doubletree Ranch Rd. to present Officer, ING Funds Distributor, LLC. Scottsdale, AZ 85258 (July 1995 -- Present); Vice President Born: 1954 (February 1996 -- Present) and Chief Compliance Officer (October 2001 -- Present) ING Investments, LLC; Vice President and Chief Compliance Officer, ING Advisors, Inc. (July 2000 -- Present), Vice President and Chief Compliance Officer, ING Quantitative Management, Inc. (July 2000 -- September 2002), and Vice President, ING Fund Services, LLC (July 1995 -- Present).
85 DIRECTOR AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
TERM OF OFFICE POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) NAME, ADDRESS AND AGE WITH COMPANY SERVICE(1) DURING THE LAST FIVE YEARS - --------------------- ---------------- -------------- -------------------------- OFFICERS: Maria M. Anderson Assistant Vice April 2002 Assistant Vice President of ING Funds 7337 E. Doubletree Ranch Rd. President to present Services, LLC (October 2001 to present). Scottsdale, AZ 85258 Formerly, Manager of Fund Accounting and Born: 1958 Fund Compliance, ING Investments, LLC (September 1999 to November 2001); Section Manager of Fund Accounting, Stein Roe Mutual Funds (July 1998 to August 1999); and Financial Reporting Analyst, Stein Roe Mutual Funds (August 1997 to July 1998). Todd Modic Assistant Vice April 2002 Vice President of Financial 7337 E. Doubletree Ranch Rd. President to present Reporting -- Fund Accounting of ING Scottsdale, AZ 85258 Funds Services, LLC (September 2002 to Born: 1967 present). Director of Financial Reporting of ING Funds Services, LLC (March 2001 to September 2002). Formerly, Director of Financial Reporting, Axient Communications, Inc. (May 2000 to January 2001) and Director of Finance, Rural/Metro Corporation (March 1995 to May 2000). Susan P. Kinens Assistant Vice March 2003 Assistant Vice President and Assistant 7337 E. Doubletree Ranch Rd. President and to present Secretary, ING Funds Services, LLC Scottsdale, AZ 85258 Assistant (December 2002 -- Present); and has held Born: 1976 Secretary various other positions with ING Funds Services, LLC for the last five years.
- --------------- (1) The officers hold office until the next annual meeting of the Directors and until their successors are duly elected and qualified. 86 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 64141-6368 CUSTODIAN Bank of New York 100 Colonial Center Parkway, Suite 300 Lake Mary, FL 32746 LEGAL COUNSEL Dechert 1775 Eye Street, N.W. Washington, D.C. 20006 INDEPENDENT AUDITORS KPMG LLP 99 High Street Boston, MA 02110-2371 Contact your investment professional, or call (800) 992-0180 for a current ING Funds prospectus. The prospectuses contain more complete information on all charges, fees, risks and expenses. Please read the prospectus carefully before investing or sending money. [ING LOGO] AVPSAR0603 -- 081803 ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEMS 4-8. [RESERVED] ITEM 9. 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 or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. (a) Not applicable. (b) 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. 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 VP Money Market Portfolio By /s/ James M. Hennessy -------------------------- James M. Hennessy President and Chief Executive Officer Date: August 28, 2003 ------------------------------------- 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: August 28, 2003 ------------------------------------- By /s/ Michael J. Roland -------------------------- Michael J. Roland Executive Vice President and Chief Financial Officer Date: August 28, 2003 ------------------------------------- EX-99.CERT 3 p68192kexv99wcert.txt EX-99.CERT EX-99.CERT CERTIFICATION I, James M. Hennessy, certify that: 1. I have reviewed this report on Form N-CSR of ING VP Money Market Portfolio.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ James M. Hennessy Date: August 28, 2003 - ----------------------------- -------------------- James M. Hennessy President and Chief Executive Officer EX-99.CERT CERTIFICATION I, Michael J. Roland, certify that: 1. I have reviewed this report on Form N-CSR of ING VP Money Market Portfolio: 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Michael J. Roland Date: August 28, 2003 - ------------------------------------------- ------------------ Michael J. Roland Executive Vice President and Chief Financial Officer EX-99.906CERT 4 p68192kexv99w906cert.txt EX-99.906CERT EX-99.906CERT CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: ING VP Money Market Portfolio Date of Form N-CSR: Period Ended 6/30/03, to be filed 8/28/03 The undersigned, the principal executive officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to ING VP Money Market Portfolio and will be retained by ING VP Money Market Portfolio and furnished to the Securities and Exchange Commission or its staff upon request. IN WITNESS WHEREOF, the undersigned has executed this Certification below, as of this 28 day of August, 2003. /s/ James M. Hennessy ---------------------------- James M. Hennessy EX-99.906CERT CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: ING VP Money Market Portfolio Date of Form N-CSR: Period Ended 6/30/03, to be filed 8/28/03 The undersigned, the principal financial officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to ING VP Money Market Portfolio and will be retained by ING VP Money Market Portfolio and furnished to the Securities and Exchange Commission or its staff upon request. IN WITNESS WHEREOF, the undersigned has executed this Certification below, as of this 28 day of August, 2003. /s/ Michael J. Roland ------------------------------------------- Michael J. Roland -----END PRIVACY-ENHANCED MESSAGE-----