-----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, BXgnzrckD/AZlGS30sq7/YcdfkDBACJx50GiGwX+kfJwhSro9XwMAZiO3mu3BC46 dZjryhYZ9Q0EBgwATnyTAQ== 0000950147-03-000570.txt : 20030506 0000950147-03-000570.hdr.sgml : 20030506 20030506172018 ACCESSION NUMBER: 0000950147-03-000570 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030228 FILED AS OF DATE: 20030506 EFFECTIVENESS DATE: 20030506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ING PRIME RATE TRUST CENTRAL INDEX KEY: 0000826020 IRS NUMBER: 956874587 STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-05410 FILM NUMBER: 03684815 BUSINESS ADDRESS: STREET 1: ING PRIME RATE TRUST STREET 2: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85258 BUSINESS PHONE: 4804773000 MAIL ADDRESS: STREET 1: ING PRIME RATE TRUST STREET 2: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85258 FORMER COMPANY: FORMER CONFORMED NAME: PILGRIM AMERICA PRIME RATE TRUST DATE OF NAME CHANGE: 19960518 FORMER COMPANY: FORMER CONFORMED NAME: PILGRIM PRIME RATE TRUST/ DATE OF NAME CHANGE: 19960518 FORMER COMPANY: FORMER CONFORMED NAME: PILGRIM PRIME RATE TRUST DATE OF NAME CHANGE: 19920703 N-CSR 1 e-9904.txt CERTIFIED SHAREHOLDER'S REPORT DATED 02/28/2003 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: 811-5410 ING Prime Rate Trust (Exact name of registrant as specified in charter) 7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258 (Address of principal executive offices) (Zip code) C T 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: February 28 Date of reporting period: February 28, 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): ANNUAL REPORT February 28, 2003 ING PRIME RATE TRUST [GRAPHIC] [LION LOGO] ING FUNDS ING Prime Rate Trust ANNUAL REPORT February 28, 2003 Table of Contents Portfolio Managers' Report ............................................... 2 Statistics and Performance ............................................... 6 Additional Notes and Information ......................................... 9 Report of Independent Auditor's .......................................... 10 Statement of Assets and Liabilities ...................................... 11 Statement of Operations .................................................. 12 Statements of Changes in Net Assets ...................................... 13 Statement of Cash Flows .................................................. 14 Financial Highlights ..................................................... 15 Notes to Financial Statements ............................................ 16 Portfolio of Investments ................................................. 23 Shareholder Meeting Information .......................................... 41 Trustee and Officer Information .......................................... 43 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS' REPORT - -------------------------------------------------------------------------------- PERFORMANCE OF THE TRUST The Trust declared $0.45 of dividends during the fiscal year ended February 28, 2003. Based on the average month-end net asset value ("NAV") per share of $6.90, this resulted in an annualized distribution rate of 6.4%(1) for the year. The Trust's total return (based on NAV) for the fiscal year was 0.4%, reflective of the difficult market conditions experienced during most of calendar 2002. For the fiscal quarter ended February 28, 2003, the Trust's annualized distribution rate was 6.5%(1). The quarterly annualized distribution rate was down slightly from the previous fiscal quarter 6.9% due primarily to improvement in the average month-end NAV. During the fiscal quarter ended February 28, 2003, the Trust posted a 2.5% total market return, representing the second quarter of significant sequential improvement. A steady rise in underlying values, coupled with a generally healthier investor sentiment towards floating rate senior loan funds since the beginning of the year, has also had a decidedly positive impact on the Trust's common shares. Total return based on market value (assuming full dividend reinvestment) was 11.3% for the three-month period ended February 28, 2003, versus -9.7% for the S&P 500 Index. For the full fiscal year, the Trust's common shares returned 2.5% (dividends reinvested), versus -22.7% for the S&P 500 Index. The Trust's recent performance has been driven by a stronger overall tone to the loan market, made manifest by generally rising indicative loan prices. Several of the Trust's larger holdings benefited from credit-specific improvements. As an example, Nextel Communications ("Nextel"), the Trust's largest single position at period-end, accounting for approximately 4.1% of total assets, continues to exceed analysts' operational and financial expectations, thereby driving prices for the company's term loans to near-par levels. By way of its bellwether standing, Nextel's string of success has also had a tangible positive effect on prices across the cellular communications sector, historically one of the Trust's largest. Moreover, indicative pricing for term loans issued by Charter Communications Operating LLC ("Charter"), the Trust's second largest individual holding (roughly 2.6% of total assets at period-end), also improved during the fiscal quarter. The average bid now lies several percentage points off a low reached during the fourth quarter of 2002, and continues to slowly edge upward. Consistently underpinned by stable valuation levels of cable television systems, recent interest in Charter's term loans appears to have been driven by a renewed investor confidence in the ability of cable television operators to both defend and grow their higher margin subscriber base. Also contributing to fiscal fourth quarter results was, again, consistent performance across several of the Trust's other material sector concentrations (e.g., Healthcare, Containers & Packaging and Beverage & Food), offset to a degree by disappointing recoveries on a small number of existing non-performing loans, particularly the Trust's older, illiquid positions. We continue to dedicate significant time and resources in an effort to maximize recovery values in this area, typically under very difficult circumstances. The Trust utilizes financial leverage to seek to increase the yield to the holders of common shares. As of February 28, 2003, the Trust had $617 million of borrowings outstanding, consisting of $450 million of "aaa/AAA" rated cumulative auction rate preferred shares, and $167 million outstanding under $540 million in available credit facilities. Total leverage, as a percentage of total assets (including preferred shares), was 39.9% at quarter end. The weighted average leverage cost including all borrowings and preferred shares as of quarter ended February 28, 2003 was 1.38%. While the use of leverage for investment purposes increases both investment opportunity and investment risk, we continue to deploy leverage only when it is in the best interest of the Trust's common shareholders. 2 OUTLOOK In our view, the Trust, and the non-investment grade loan market at large, appears to be reasonably well positioned to meet the expected challenges of the coming months. Overall credit conditions continue to slowly improve, as evidenced by another quarter-over-quarter decline in the trailing loan default rate (by principal amount) for the industry to approximately 5.5%, after peaking at 7.4% in June of last year.(2) Further, the supply of new transactions, an important barometer of market health, has been fairly generous. Institutional M&A-related loan volume closed out at $6.2 billion during the first quarter of 2003, the highest level since the first quarter of 2000.(2) Understandably, the forward calendar looks less robust at this point, effectively capped by uncertainty surrounding the outcome of military action in the Middle East. Nonetheless, we maintain a cautious view of the economic outlook, both as it appears today and once hostilities in Iraq come to an end. Several indicators, not the least being a chronically anemic labor market, point to significantly slower growth than originally anticipated. Whether such weakness is a continuation of the unwinding of the excesses of the 1990s, or a by-product of caution on the part of companies and consumers alike, remains to be seen. If macro economic conditions were to deteriorate, it could further pressure a good portion of the non-investment grade issuer universe and increase the prospects for a further rate cut on the part of the Federal Reserve. An additional reduction in already historically low short-term interest rates could continue to depress returns, even if underlying loan values continue to rise. As stated in our prior report, we will remain in a relatively defensive posture while seeking to take advantage of selective buying opportunities. We thank you for your investment in ING Prime Rate Trust. /s/ Jeffrey A. Bakalar /s/ Daniel A. Norman Jeffrey A. Bakalar Daniel A. Norman SENIOR VICE PRESIDENT SENIOR VICE PRESIDENT CO-SENIOR PORTFOLIO MANAGER CO-SENIOR PORTFOLIO MANAGER ING Prime Rate Trust April 7, 2003 3 - -------------------------------------------------------------------------------- PORTFOLIO MANAGERS' FOOTNOTES - -------------------------------------------------------------------------------- 1. The distribution rate is calculated by annualizing dividends declared during the quarter and dividing the resulting annualized dividend by the Trust's average month-end net asset value (in the case of NAV) or the average month-end NYSE Composite closing price (in the case of Market). The distribution rate is based solely on the actual dividends and distributions, which are made at the discretion of management. The distribution rate may or may not include all investment income and ordinarily will not include capital gains or losses, if any. 2. Source: As tracked by S&P Leveraged Commentary & Data Group, a leading data provider to the Loan Market. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. SENIOR LOANS ARE SUBJECT TO CREDIT RISKS AND THE POTENTIAL FOR NON-PAYMENT OF SCHEDULED PRINCIPAL OR INTEREST PAYMENTS, WHICH MAY RESULT IN A REDUCTION OF THE TRUST'S NAV. THIS LETTER CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING STATEMENTS." ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING STATEMENTS." THE VIEWS EXPRESSED IN THIS LETTER REFLECT THOSE OF THE PORTFOLIO MANAGERS ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. 4 - -------------------------------------------------------------------------------- INDEX DESCRIPTIONS - -------------------------------------------------------------------------------- The S&P 500 INDEX is an unmanaged index that measures the performance of securities of approximately 500 large-capitalization companies whose securities are traded on major U.S. stock markets. The LSTA LEVERAGED LOAN INDEX (LLI) is a weekly return index that uses market to market pricing to calculate market value change. The LLI tracks the current outstanding balance and spread over LIBOR for fully funded term loans. All indices are unmanaged. An investor cannot invest directly in an index. 5 ING Prime Rate Trust - -------------------------------------------------------------------------------- STATISTICS AND PERFORMANCE as of February 28, 2003 - -------------------------------------------------------------------------------- PORTFOLIO CHARACTERISTICS Net Assets $ 922,383,342 - -------------------------------------------------------------------------------- Assets Invested in Senior Loans* $1,476,322,899 - -------------------------------------------------------------------------------- Total Number of Senior Loans 268 - -------------------------------------------------------------------------------- Average Amount Outstanding per Loan $ 5,508,668 - -------------------------------------------------------------------------------- Total Number of Industries 35 - -------------------------------------------------------------------------------- Average Loan Amount per Industry $ 42,180,654 - -------------------------------------------------------------------------------- Portfolio Turnover Rate 48% - -------------------------------------------------------------------------------- Weighted Average Days to Interest Rate Reset 46 days - -------------------------------------------------------------------------------- Average Loan Final Maturity 50 months - -------------------------------------------------------------------------------- Total Leverage as a Percentage of Total Assets (including Preferred Shares) 39.9% - -------------------------------------------------------------------------------- * INCLUDES LOANS AND OTHER DEBT RECEIVED THROUGH RESTRUCTURINGS TOP TEN SENIOR LOAN INDUSTRY SECTORS AS A PERCENTAGE OF: NET ASSETS TOTAL ASSETS Cable Television 12.6% 7.5% Cellular 12.2% 7.3% Healthcare, Education and Childcare 11.5% 6.9% Leisure, Amusement and Entertainment 9.8% 5.9% Containers, Packaging and Glass 9.7% 5.8% Automobile 8.4% 5.0% Beverage, Food and Tobacco 7.6% 4.6% Lodging 7.1% 4.2% Printing and Publishing 7.0% 4.2% Chemicals, Plastics and Rubber 6.6% 3.9% TOP TEN SENIOR LOAN ISSUERS AS A PERCENTAGE OF: NET ASSETS TOTAL ASSETS Nextel Communications (1) 6.9% 4.1% Charter Communications Operating, LLC 4.4% 2.6% SC International Services 2.7% 1.6% Wyndham International, Inc. 2.0% 1.2% Safelite Glass Corporation. 1.9% 1.2% Broadwing, Inc. 1.9% 1.1% Mandalay Resort Group 1.8% 1.1% Olympus Cable Holdings, LLC 1.8% 1.1% Extended Stay America, Inc. 1.7% 1.0% Western Wireless Corporation 1.7% 1.0% (1) COMBINATION OF NEXTEL FINANCE COMPANY AND NEXTEL OPERATIONS, INC. 6 ING Prime Rate Trust - -------------------------------------------------------------------------------- STATISTICS AND PERFORMANCE as of February 28, 2003 - -------------------------------------------------------------------------------- YIELDS AND DISTRIBUTION RATES
NET ASSET AVERAGE AVERAGE VALUE ("NAV") MARKET ANNUALIZED ANNUALIZED PRIME 30-DAY SEC 30-DAY SEC DISTRIBUTION DISTRIBUTION QUARTER ENDED RATE YIELD A YIELD A RATE AT NAV B RATE AT MARKET B - ------------------------------------------------------------------------------------------------------- February 28, 2003 4.25% 6.93% 7.23% 6.52% 6.93% - ------------------------------------------------------------------------------------------------------- November 30, 2002 4.25% 8.02% 9.10% 6.86% 7.87% - ------------------------------------------------------------------------------------------------------- August 31, 2002 4.75% 7.39% 8.53% 6.34% 7.33% - ------------------------------------------------------------------------------------------------------- May 31, 2002 4.75% 7.32% 7.94% 6.09% 6.52% - -------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS NAV MARKET - ----------------------------------------------------------------------- 1 Year 0.44% 2.53% - ----------------------------------------------------------------------- 3 Years -0.81% 0.98% - ----------------------------------------------------------------------- 5 Years 2.15% -0.67% - ----------------------------------------------------------------------- 10 Years 5.99% 5.22% - ----------------------------------------------------------------------- Since Trust Inception F,H 6.29% N/A - ----------------------------------------------------------------------- Since Initial Trading on NYSE G N/A 5.28% - ----------------------------------------------------------------------- ASSUMES RIGHTS WERE EXERCISED AND EXCLUDES SALES CHARGES AND COMMISSIONS C,D,E PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. See statistics and performance footnotes on page 8. 7 ING Prime Rate Trust - -------------------------------------------------------------------------------- STATISTICS AND PERFORMANCE FOOTNOTES - -------------------------------------------------------------------------------- (A) Yield is calculated by dividing the Trust's net investment income per share for the most recent thirty days by the net asset value (in the case of NAV) or the NYSE Composite closing price (in the case of market) at quarter-end. Yield calculations do not include any commissions or sales charges, and are compounded for six months and annualized for a twelve-month period to derive the Trust's yield consistent with the SEC standardized yield formula for open-end investment companies. (B) The distribution rate is calculated by annualizing each monthly dividend, then averaging the annualized dividends declared for each month during the quarter and dividing the resulting average annualized dividend amount by the Trust's average net asset value (in the case of NAV) or the NYSE Composite closing price (in the case of Market) at the end of the period. (C) Calculation of total return assumes a hypothetical initial investment at the net asset value (in the case of NAV) or the NYSE Composite closing price (in the case of Market) on the last business day before the first day of the stated period, with all dividends and distributions reinvested at the actual reinvestment price. (D) On December 27, 1994, the Trust issued to its shareholders transferable rights which entitled the holders to subscribe for 17,958,766 shares of the Trust's common stock at the rate of one share of common stock for each four rights held. On January 27, 1995, the offering expired and was fully subscribed. The Trust issued 17,958,766 shares of its common stock to exercising rights holders at a subscription price of $8.12. Offering costs of $4,470,955 were charged against the offering proceeds. (E) On October 18, 1996, the Trust issued to its shareholders non-transferable rights which entitled the holders to subscribe for 18,122,963 shares of the Trust's common stock at the rate of one share of common stock for each five rights held. On November 12, 1996, the offering expired and was fully subscribed. The Trust issued 18,122,963 shares of its common stock to exercising rights holders at a subscription price of $9.09. Offering costs of $6,972,203 were charged against the offering proceeds. (F) Inception Date -- May 12, 1988. (G) Initial Trading on NYSE -- March 9, 1992. (H) Reflects partial waiver of fees. 8 ING Prime Rate Trust - -------------------------------------------------------------------------------- ADDITIONAL NOTES AND INFORMATION - -------------------------------------------------------------------------------- SHAREHOLDER INVESTMENT PROGRAM The Trust offers a Shareholder Investment Program (the "Program," formerly known as the Dividend Reinvestment and Cash Purchase Plan) which allows holders of the Trust's common shares a simple way to reinvest dividends and capital gains distributions, if any, in additional common shares of the Trust. The Program also offers holders of the Trust's common shares the ability to make optional cash investments in any amount from $100 to $5,000 on a monthly basis. Amounts in excess of $5,000 require prior approval of the Trust. DST Systems, Inc., the Trust's Transfer Agent, is the administrator for the Program. For dividend reinvestment purposes, DST Systems, Inc. will purchase shares of the Trust on the open market when the market price plus estimated commissions is less than the net asset value on the valuation date. The Trust may issue new shares when the market price plus estimated commissions is equal to or exceeds the net asset value on the valuation date. New shares may be issued at the greater of (i) net asset value or (ii) the market price of the shares during the pricing period, minus a discount of 5%. For optional cash investments, shares will be purchased on the open market by the DST Systems, Inc. when the market price plus estimated commissions is less than the net asset value on the valuation date. New shares may be issued by the Trust when the market price plus estimated commissions is equal to or exceeds the net asset value on the valuation date. There is no charge to participate in the Program. Participants may elect to discontinue participation in the Program at any time. Participants will share, on a pro-rata basis, in the fees or expenses of any shares acquired in the open market. Participation in the Program is not automatic. If you would like to receive more information about the Program or if you desire to participate, please contact your broker or our Shareholder Services Department at (800) 992-0180. KEY FINANCIAL DATES -- CALENDAR 2003 DIVIDENDS: DECLARATION DATE EX-DIVIDEND DATE PAYABLE DATE ---------------- ---------------- ------------ January 31 February 6 February 25 February 28 March 6 March 24 March 31 April 8 April 23 April 30 May 8 May 22 May 30 June 6 June 23 June 30 July 8 July 22 July 31 August 7 August 22 August 29 September 8 September 22 September 30 October 8 October 22 October 31 November 6 November 24 November 28 December 8 December 22 December 19 December 29 January 13, 2004 RECORD DATE WILL BE TWO BUSINESS DAYS AFTER EACH EX-DIVIDEND DATE. THESE DATES ARE SUBJECT TO CHANGE. STOCK DATA The Trust's shares are traded on the New York Stock Exchange (Symbol: PPR). Effective March 1, 2002, the Trust's name changed to ING Prime Rate Trust and its CUSIP number changed to 44977W106. The Trust's NAV and market price are published daily under the "Closed-End Funds" feature in Barron's, The New York Times, The Wall Street Journal and many other regional and national publications. 9 ING Prime Rate Trust - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT AUDITORS - -------------------------------------------------------------------------------- To the Shareholders and the Board of Trustees ING Prime Rate Trust: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of the ING Prime Rate Trust (the "Trust") as of February 28, 2003, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of February 28, 2003 by confirmation with the custodian and other appropriate auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the ING Prime Rate Trust as of February 28, 2003 and the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and financial highlights for each of the years in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP Los Angeles, California April 11, 2003 See Accompanying Notes to Financial Statements 10 ING Prime Rate Trust - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES as of February 28, 2003 - -------------------------------------------------------------------------------- ASSETS: Investments in securities at value (Cost $1,667,758,669) $ 1,535,926,872 Cash 1,341,722 Receivables: Interest 7,378,577 Other 80,982 Prepaid expenses 203,777 --------------- Total assets 1,544,931,930 --------------- LIABILITIES: Notes payable 167,000,000 Deferred arrangement fees on senior loans 3,092,567 Accrued auction preferred shares dividends payable 46,414 Payable to affiliates 1,232,567 Accrued trustees' fees 29,375 Other accrued expenses 1,147,665 --------------- Total liabilities 172,548,588 --------------- Preferred shares, $25,000 stated value per share at liquidation value (18,000 shares outstanding) 450,000,000 --------------- NET ASSETS $ 922,383,342 =============== Net asset value per common share outstanding (net assets less preferred shares at liquidation value, divided by 136,972,914 shares of beneficial interest authorized and outstanding, no par value) $ 6.73 NET ASSETS CONSIST OF: Paid-in capital $ 1,287,948,209 Undistributed net investment income 11,723,349 Accumulated net realized loss on investments (245,456,419) Net unrealized depreciation of investments (131,831,797) --------------- NET ASSETS $ 922,383,342 ===============
See Accompanying Notes to Financial Statements 11 ING Prime Rate Trust - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS for the Year Ended February 28, 2003 - -------------------------------------------------------------------------------- INVESTMENT INCOME: Interest $ 88,756,974 Arrangement fees earned 2,531,760 Dividends 12,011 Other 3,467,200 ------------- Total investment income 94,767,945 ------------- EXPENSES: Investment management fees 12,698,403 Administration fees 3,968,231 Transfer agent and registrar fees 643,931 Interest 4,330,327 Shareholder reporting expense 170,485 Custodian fees 485,375 Revolving credit facility fees 260,923 Professional fees 878,332 Preferred shares -- Dividend disbursing agent fees 1,182,556 Insurance expense 27,337 Pricing expense 72,933 ICI fees 104,853 Postage expense 305,500 Trustees' fees 73,000 Miscellaneous expense 56,921 NYSE Registration fees 79,755 ------------- Total expenses 25,338,862 ------------- Net investment income 69,429,083 ------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS: Net realized loss on investments (115,778,026) Net change in unrealized depreciation of investments 51,893,096 ------------- Net loss on investments (63,884,930) ------------- DISTRIBUTIONS TO PREFERRED SHAREHOLDERS: From net investment income (7,499,067) ------------- Net decrease in net assets resulting from operations $ (1,954,914) ============= See Accompanying Notes to Financial Statements 12 ING Prime Rate Trust - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED FEBRUARY 28, FEBRUARY 28, 2003 2002 --------------- --------------- CHANGE IN NET ASSETS FROM OPERATIONS: Net investment income $ 69,429,083 $ 101,753,746 Net realized loss on investments (115,778,026) (53,063,828) Net change in unrealized appreciation (depreciation) on investments 51,893,096 (69,951,020) Distributions to preferred shareholders from net investment income (7,499,067) (15,273,093) --------------- --------------- Net decrease in net assets resulting from operations (1,954,914) (36,534,195) --------------- --------------- DISTRIBUTIONS TO COMMON SHAREHOLDERS: Distributions from net investment income: (61,643,423) (85,728,945) --------------- --------------- Decrease in net assets from distributions to common shareholders (61,643,423) (85,728,945) --------------- --------------- CAPITAL SHARE TRANSACTIONS: Common shares issued from dividend reinvestment -- 919,219 Common shares sold in connection with shelf offerings -- 87,513 Offering costs of preferred shares -- (194,010) --------------- --------------- Net increase from capital share transactions -- 812,722 --------------- --------------- Net decrease in net assets (63,598,337) (121,450,418) NET ASSETS: Beginning of period 985,981,679 1,107,432,097 --------------- --------------- End of period (including undistributed net investment income of $11,723,349 and $8,856,756, respectively) $ 922,383,342 $ 985,981,679 =============== =============== SUMMARY OF COMMON SHARE TRANSACTIONS: Shares issued in payment of distributions from net investment income -- 114,904 Shares sold in connection with shelf offering -- 10,939 --------------- --------------- Net increase in shares outstanding -- 125,843 =============== ===============
See Accompanying Notes to Financial Statements 13 ING Prime Rate Trust - -------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS for the Year Ended February 28, 2003 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH CASH FLOWS FROM OPERATING ACTIVITIES: Interest received $ 85,837,758 Dividends received 12,011 Facility fees paid 9,887 Dividends paid to preferred shareholders (7,530,264) Arrangement fees received 5,006,105 Other income received 3,528,097 Interest paid (4,847,393) Other operating expenses paid (20,105,511) Purchases of securities (765,856,229) Proceeds from sale of securities 881,063,596 ------------- Net cash provided by operating activities 177,118,057 ============= CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid to common shareholders (61,643,423) Net repayment of notes payable (115,000,000) ------------- Net cash flows used in financing activities (176,643,423) ------------- Net change in cash 474,634 Cash at beginning of period 867,088 ------------- Cash at end of period $ 1,341,722 ============= RECONCILIATION OF NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH USED FOR OPERATING ACTIVITIES: Net decrease in net assets resulting from operations $ (1,954,914) ------------- Adjustments to reconcile net increase in net assets resulting from operations to net cash used for operating activities: Change in net unrealized depreciation of securities (51,893,096) Net accretion of discounts on securities (4,532,794) Net realized loss on sale of securities 115,778,026 Purchase of securities (765,856,229) Proceeds on sale of securities 881,063,596 Decrease in interest receivable 1,613,578 Decrease in other receivables 60,897 Decrease in prepaid arrangement fees on notes payable 270,810 Decrease in prepaid expenses 123,617 Increase in deferred arrangement fees on senior loans 2,474,345 Decrease in accrued interest payable (517,066) Decrease in preferred shareholders dividend payable (31,197) Decrease in payable to affiliates (145,795) Increase in accrued trustees' fees 27,227 Increase in accrued expenses 637,052 ------------- Total adjustments 179,072,971 ------------- Net cash provided by operating activities $ 177,118,057 ============= See Accompanying Notes to Financial Statements 14 ING Prime Rate Trust - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- For a common share outstanding throughout the period
YEARS ENDED FEBRUARY 28 OR FEBRUARY 29, ------------------------------------------------------------------------ 2003 2002 2001 2000 1999(5) ---------- ---------- ---------- ---------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of year $ 7.20 $ 8.09 $ 8.95 $ 9.24 $ 9.34 Net investment income 0.50 0.74 0.88 0.79 0.79 Net realized and unrealized gain (loss) on investments (0.47) (0.89) (0.78) (0.30) (0.10) Distribution to Preferred Shareholders (0.05) (0.11) (0.06) -- -- ---------- ---------- ---------- ---------- ---------- Increase (decrease) in net asset value from investment operations (0.02) (0.26) 0.04 0.49 0.69 Distributions to Common Shareholders from net invest- ment income (0.45) (0.63) (0.86) (0.78) (0.82) Increase in net asset value from share offerings -- -- -- -- 0.03 Reduction in net asset value from Preferred Shares offerings -- -- (0.04) -- -- ---------- ---------- ---------- ---------- ---------- Net asset value, end of year $ 6.73 $ 7.20 $ 8.09 $ 8.95 $ 9.24 ========== ========== ========== ========== ========== Closing market price at end of year $ 6.46 $ 6.77 $ 8.12 $ 8.25 $ 9.56 TOTAL RETURN(1) Total investment return at closing market price(2) 2.53% (9.20)% 9.10% (5.88)% 1.11% Total investment return at net asset value(3) 0.44% (3.02)% 0.19% 5.67% 7.86% RATIOS/SUPPLEMENTAL DATA Net assets end of period (000's) $ 922,383 $ 985,982 $1,107,432 $1,217,339 $1,202,565 Preferred Rate Shares Aggregate amount outstanding (000's) $ 450,000 $ 450,000 $ 450,000 -- -- Liquidation and market value Per Share $ 25,000 $ 25,000 $ 25,000 -- -- Asset coverage Per Share** 250% 235% 215% -- -- Average borrowings (000's) $ 190,671 $ 365,126 $ 450,197 $ 524,019 $ 490,978 Ratios to average net assets including preferred* Expenses (before interest and other fees related to revolving credit facility) 1.49% 1.57% 1.62% -- -- Expenses 1.81% 2.54% 3.97% -- -- Net investment income 4.97%(A) 6.83% 9.28% -- -- Ratios to average net assets plus borrowing Expenses (before interest and other fees related to revolving credit facility) 1.82% 1.66% 1.31% 1.00%(4) 1.05%(4) Expenses 2.23% 2.70% 3.21% 2.79%(4) 2.86%(4) Net investment income 6.10%(B) 7.24% 7.50% 6.12% 6.00% Ratios to average net assets Expenses (before interest and other fees related to revolving credit facility) 2.19% 2.25% 1.81% 1.43%(4) 1.50%(4) Expenses 2.68% 3.64% 4.45% 4.00%(4) 4.10%(4) Net investment income 7.33%(C) 9.79% 10.39% 8.77% 8.60% Portfolio turnover rate 48% 53% 46% 71% 68% Common shares outstanding at end of period (000's) 136,973 136,973 136,847 136,036 130,206
- ---------- (1) Total return calculations are attributable to common shareholders. (2) Total investment return measures the change in the market value of your investment assuming reinvestment of dividends and capital gain distributions, if any, in accordance with the provisions of the dividend reinvestment plan. (3) Total investment return at net asset value has been calculated assuming a purchase at net asset value at the beginning of each period and a sale at net asset value at the end of each period and assumes reinvestment of dividends and capital gain distributions in accordance with the provisions of the dividend reinvestment plan. This calculation differs from total investment return because it excludes the effects of changes in the market values of the Trust's shares. (4) Calculated on total expenses before impact on earnings credits. (5) The Manager agreed to reduce its fee for a period of three years from the Expiration Date of the November 12, 1996 Rights Offering to 0.60% of the average daily net assets, plus the proceeds of any outstanding borrowings, over $1.15 billion. * Ratios do not reflect the effect of dividend payments to Preferred Shareholders; income ratios reflect income earned on assets attributable to preferred shares. ** Asset coverage represents the total assets available for settlement of Preferred Stockholder's interest and notes payables in relation to the Preferred Shareholder interest and notes payable balance outstanding. The Preferred Shares were first offered November 2, 2000. (A) Had the Trust not amortized premiums and accreted discounts, the ratio of net investment income to average net assets including preferred shares would have been 4.88% for the year ended February 28, 2003. (B) Had the Trust not amortized premiums and accreted discounts, the ratio of net investment income to average net assets plus borrowings applicable to common shares would have been 5.99% for the year ended February 28, 2003. (C) Had the Trust not amortized premiums and accreted discounts, the ratio of net investment income to average net assets applicable to common shares would have been 7.20% for the year ended February 28, 2003. See Accompanying Notes to Financial Statements 15 ING Prime Rate Trust - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS as of February 28, 2003 - -------------------------------------------------------------------------------- NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES ING Prime Rate Trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, closed-end, investment management company. The Trust invests in senior loans which are exempt from registration under the Securities Act of 1933 as amended (the "`33 Act"), but contain certain restrictions on resale and cannot be sold publicly. These loans bear interest (unless otherwise noted) at rates that float periodically at a margin above the Prime Rate of a U.S. bank specified in the credit agreement, the London Inter-Bank Offered Rate ("LIBOR"), the certificate of deposit rate, or in some cases another base lending rate. The following is a summary of the significant accounting policies consistently followed by the Trust in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. A. SENIOR LOAN AND OTHER SECURITY VALUATION. Loans are normally valued at the mean of the means of one or more bid and asked quotations obtained from a pricing service or other sources determined by the Board of Trustees to be independent and believed to be reliable. Loans for which reliable quotations are not available may be valued with reference to another loan or a group of loans for which quotations are more readily available and whose characteristics are comparable to the loan being valued. Under this approach, the comparable loan or loans serve as a proxy for changes in value. The Trust has engaged an independent pricing service to provide quotations from dealers in loans and to calculate values under the proxy procedure described above. As of February 28, 2003, 91.8% of total investments were valued based on these procedures. It is expected that most of the loans held by the Trust will be valued with reference to quotations from the independent pricing service or with reference to the proxy procedure described above. Prices from a pricing source may not be available for all loans and ING Investments, LLC (the "Investment Manager") may believe that the price for a loan derived from market quotations or the proxy procedure described above is not reliable or accurate. Among other reasons, this may be the result of information about a particular loan or borrower known to the Investment Manager that the Investment Manager believes may not be known to the pricing service or reflected in a price quote. In this event, the loan is valued at fair value as determined in good faith under procedures established by the Trust's Board of Trustees and in accordance with the provisions of the 1940 Act. Under these procedures, fair value is determined by the Investment Manager and monitored by the Trust's Board of Trustees through its Valuation Committee. In fair valuing a loan, consideration is given to several factors, which may include, among others, the following: (i) the characteristics of and fundamental analytical data relating to the loan, including the cost, size, current interest rate, period until the next interest rate reset, maturity and base lending rate of the loan, the terms and conditions of the loan and any related agreements, and the position of the loan in the borrower's debt structure; (ii) the nature, adequacy and value of the collateral, including the Trust's rights, remedies and interests with respect to the collateral; (iii) the creditworthiness of the borrower and the cash flow coverage of outstanding principal and interest, based on an evaluation of its financial condition, financial statements and information about the borrower's business, cash flows, capital structure and future prospects; (iv) information relating to the market for the loan, including price quotations for, and trading in, the loan and interests in similar loans; (v) the reputation and financial condition of the agent for the loan and any intermediate participants in the loan; (vi) the borrower's management; and (vii) the general economic and market conditions affecting the fair value of the loan. Securities for which the primary market is a national securities exchange or the NASDAQ National Market System are stated at the last reported sale price on the day of valuation. Debt and equity securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the mean between the last reported bid and asked price. Securities other than senior loans for which reliable quotations are not readily available and all other assets will be valued at their respective fair 16 ING Prime Rate Trust - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS as of February 28, 2003 (Continued) - -------------------------------------------------------------------------------- values as determined in good faith by, or under procedures established by, the Board of Trustees of the Trust. Investments in securities maturing in less than 60 days from the date of acquisition are valued at amortized cost, which, when combined with accrued interest, approximates market value. B. FEDERAL INCOME TAXES. It is the Trust's policy to comply with the requirements of the Internal Revenue Code applicable to "regulated investment companies" and to distribute all of its taxable income to its shareholders. Therefore, no provision for Federal income taxes is required. In addition, by distributing during each calendar year substantially all of its net investment income and net realized capital gains (if any), the Trust intends not to be subject to any federal excise tax. C. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Loans are booked on a settlement date basis and security transactions are accounted for on trade date (date the order to buy or sell is executed). Realized gains or losses are reported on the basis of identified cost of securities delivered. Dividend income is recognized on the ex-dividend date. Interest income is recorded on an accrual basis at the then-current interest rate of the loan. The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication that the borrower may be unable to meet payments as they become due. Upon such discontinuance, all unpaid accrued interest is reversed. Cash collections on nonaccrual senior loans are generally applied as a reduction to the recorded investment of the loan. Senior loans are returned to accrual status only after all past due amounts have been received and the borrower has demonstrated sustained performance. For all loans acquired prior to March 1, 2001, arrangement fees, which represent non-refundable fees associated with the acquisition of loans, are deferred and recognized over the shorter of 2.5 years or the actual terms of the loan. For all loans, except revolving credit facilities, acquired subsequent to February 28, 2001, arrangement fees are treated as discounts and accreted as described in Note 1.H. Arrangement fees associated with revolving credit facilities acquired subsequent to February 28, 2001 are deferred and recognized over the shorter of 4 years or the actual term of the loan. D. DISTRIBUTIONS TO COMMON SHAREHOLDERS. The Trust records distributions to its shareholders on the ex-dividend date. Distributions from income are declared by the Trust on a monthly basis. Distributions from capital gains, if any, are declared on an annual basis. E. DIVIDEND REINVESTMENTS. Pursuant to the Shareholder Investment Program (formerly known as the Automatic Dividend Reinvestment Plan), DST Systems, Inc., the Plan Agent, purchases, from time to time, shares of beneficial interest of the Trust on the open market to satisfy dividend reinvestments. Such shares are purchased only when the closing sale or bid price plus commission is less than the net asset value per share of the stock on the valuation date. If the market price plus commissions is equal to or exceeds the net asset value, new shares are issued at the greater of (i) net asset value or (ii) the market price of the shares during the pricing period, minus a discount of 5%. F. USE OF ESTIMATES. Management of the Trust has made certain estimates and assumptions relating to the reporting of assets, liabilities, revenues, expenses and contingencies to prepare these financial statements in conformity with generally accepted accounting principles in the United States of America. Actual results could differ from these estimates. G. SHARE OFFERINGS. During the year ended February 28, 1999, the Trust began issuing shares under various shelf registration statements, whereby the net proceeds received by the Trust from share sales may not be less than the greater of (i) the NAV per share or (ii) 94% of the average daily market price over the relevant pricing period. 17 ING Prime Rate Trust - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS as of February 28, 2003 (Continued) - -------------------------------------------------------------------------------- H. CHANGE IN ACCOUNTING PRINCIPLE. In November 2000 the American Institute of Certified Public Accountants (the "AICPA") issued a revised version of the AICPA Audit and Accounting Guide for Investment Companies (the "Guide"). Effective March 1, 2001, the Fund adopted the provisions of the Guide and began amortizing premiums and accreting discounts on debt securities. Prior to March 1, 2001, the Trust had not amortized premiums nor accreted discounts. The cumulative effect of this accounting change had no impact on net assets of the Trust, but resulted in a $3,653,000 increase in the cost of securities and a corresponding $3,653,000 increase in net unrealized depreciation of investments, based on securities held by the Trust on March 1, 2001. I. RECLASSIFICATION. Under EITF Topic D-98, CLASSIFICATION AND MEASUREMENT OF REDEEMABLE SECURITIES, which was issued on July 19, 2001, preferred securities that are redeemable for cash or other assets are to be classified outside of permanent equity to the extent that the redemption is at a fixed or determinable price and at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer. Subject to the guidance of the EITF, the Trust's preferred stock, which was previously classified as a component of net assets, has been reclassified outside of permanent equity (net assets) in the accompanying financial statements. Prior year amounts have also been reclassified to conform with this presentation. The impact of this reclassification creates no change to the net assets available to common shareholders. NOTE 2 -- INVESTMENTS For the year ended February 28, 2003, the cost of purchases and the proceeds from principal repayment and sales of investments, excluding short-term notes, totaled $764,209,674 and $880,505,551, respectively. At February 28, 2003, the Trust held senior loans valued at $1,476,322,899 representing 96.1% of its total investments. The market value of these assets is established as set forth in Note 1. The senior loans acquired by the Trust may take the form of a direct lending relationship with the borrower, an assignment of a lender's interest in a loan, or a participation interest in a lender's interest in a loan. The lead lender in a typical corporate loan syndicate administers the loan and monitors collateral. In the event that the lead lender becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into bankruptcy, the Trust may incur certain costs and delays in realizing payment, or may suffer a loss of principal and/or interest. Additionally, certain situations may arise where the Trust acquires a participation in a lender's interest in a loan and the Trust does not have privity with or direct recourse against the borrower. Accordingly, the Trust may incur additional credit risk as a participant because it must assume the risk of insolvency or bankruptcy of the lender from which the participation was acquired. Common and preferred shares, and stock purchase warrants held in the portfolio were acquired in conjunction with senior loans held by the Trust. Certain of these stocks and warrants are restricted and may not be publicly sold without registration under the '33 Act, or without an exemption under the '33 Act. In some cases, these restrictions expire after a designated period of time after issuance of the shares or warrant. 18 ING Prime Rate Trust - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS as of February 28, 2003 (Continued) - -------------------------------------------------------------------------------- The Fund values portfolio securities by using the market value of the securities when market quotations for the securities are readily available. When market quotations are not readily available, the Fund determines, in good faith, the fair value of the securities in accordance with the Trust's fair valuation procedures as established by the Board of Trustees. Dates of acquisition and cost or assigned basis of restricted securities are as follows:
DATE OF COST OR ACQUISITION ASSIGNED BASIS ----------- -------------- 360Networks, Inc. -- Common Shares 11/26/02 $ -- Allied Digital Technologies Corporation -- Residual Interest in Bankruptcy Estate 06/05/02 186,961 AM Cosmetics Corporation -- Common Shares 06/08/99 385,610 AM Cosmetics Corporation -- Preferred Shares 06/02/99 -- Autotote Systems, Inc. -- Option 02/26/97 -- Block Vision Holdings Corporation -- Common Shares 09/30/02 -- Boston Chicken Inc. -- Residual Interest in Boston Chicken Plan Trust 12/26/00 8,014,961 Breed Technologies, Inc. -- Common Shares 12/27/00 3,343,665 Capital Tool & Design, Ltd. -- Warrants 07/26/96 -- Cedar Chemical -- Residual Interest in Bankruptcy Estate 12/31/02 -- Covenant Care, Inc. -- Warrants 12/22/95 -- Covenant Care, Inc. -- Warrants 01/18/02 -- Decision One Corporation -- Common Shares 06/16/00 -- Electro Mechanical Solutions -- Residual Interest in Bankruptcy Estate 10/01/02 11,356 Enterprise Profit Solutions -- Liquidation Interest 10/21/02 -- Euro United Corporation -- Residual Interest in Bankruptcy Estate 06/21/02 4,466,250 Exide Technologies -- Warrants 11/30/01 -- Gevity HR -- Common Shares 07/21/97 34,325 Grand Union Company -- Residual Interest in Bankruptcy Estate 07/01/02 8,198 Holmes Group -- Warrants 10/24/01 -- Humphreys, Inc. -- Residual Interest in Bankruptcy Estate 5/15/02 25,000 IHDG Realty -- Common Shares 05/02/01 1 Imperial Home D-cor Group, Inc. -- Common Shares 05/02/01 1,654,378 Interra Group, Inc. -- Common Shares 11/29/02 -- Kevco, Inc. -- Residual Interest in Bankruptcy Estate 06/05/02 400,069 Morris Material Handling, Inc. -- Common Shares 01/10/01 3,009,059 MP Holdings, Inc. -- Common Shares 03/14/01 6 Murray's Discount Auto Stores, Inc. -- Common Shares 3/25/02 -- Murray's Discount Auto Stores, Inc. -- Warrants 02/16/99 -- New World Restaurant Group, Inc. -- Warrants 9/27/01 40 Safelite Glass Corporation -- Common Shares 09/12/00 -- Safelite Realty -- Common Shares 09/12/00 -- Sarcom Corporation -- Common Shares 12/11/02 -- Sarcom Corporation -- Preferred Shares 12/11/02 2,782,654 Scientific Games Corporation -- Warrants 5/11/01 -- Soho Publishing -- Common Shares 03/14/01 176 Stellex Aerostructures, Inc. -- Common Shares 10/17/01 275,767 Tartan Textile Services, Inc. -- Series D Preferred Shares 07/17/01 2,227,655 Tartan Textile Services, Inc. -- Series E Preferred Shares 07/17/01 2,333,852 Telinget, Inc. -- Residual Interest in Bankruptcy Estate 09/18/02 -- Tembec, Inc. -- Common Shares 01/10/01 1,442,942 Transtar Metals -- Residual Interest in Bankruptcy Estate 01/09/03 160,918 TSR Wireless, LLC -- Residual Interest in Bankruptcy Estate 10/14/02 -- U.S. Office Products Company -- Residual Interest in Bankruptcy Estate 11/28/00 -- ----------- Total restricted securities excluding senior loans (market value of $37,043,248 was 4.0% of net assets at February 28, 2003) $30,763,843 ===========
19 ING Prime Rate Trust - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS as of February 28, 2003 (Continued) - -------------------------------------------------------------------------------- NOTE 3 -- MANAGEMENT AND ADMINISTRATION AGREEMENTS The Trust has entered into an Investment Management Agreement with the Investment Manager, a wholly-owned subsidiary of ING Funds Services, LLC (the "Administrator"), to provide advisory and management services. The Investment Management Agreement compensates the Investment Manager with a fee, computed daily and payable monthly, at an annual rate of 0.80% of the Trust's average daily net assets (inclusive of preferred stock) plus borrowings ("Managed Assets"). The Trust has also entered into an Administration Agreement with the Administrator to provide administrative services and also to furnish facilities. The Administrator is compensated with a fee, computed daily and payable monthly, at an annual rate of 0.25% of the Trust's average daily Managed Assets. At February 28, 2003, the Trust had the following amounts recorded in payable to affiliates on the accompanying Statement of Assets and Liabilities: ACCRUED INVESTMENT ACCRUED MANAGEMENT FEES ADMINISTRATIVE FEES TOTAL ------------------ ------------------- ------------------ $ 939,138 $ 293,429 $1,232,567 The Trust has adopted a Retirement Policy covering all independent trustees of the Trust who will have served as a independent trustee for at least five years at the time of retirement. Benefits under this plan are based on an annual rate as defined in the plan agreement, as amended May 24, 2002. NOTE 4 -- COMMITMENTS The Trust has entered into both a $90 million 364-day revolving credit agreement which matures on August 27, 2003 and a $450 million five-year revolving credit agreement which matures on July 15, 2003, collateralized by assets of the Trust. Borrowing rates under these agreements are based on a fixed spread over LIBOR, the federal funds rate, or a commercial paper-based rate. Prepaid arrangement fees for any unborrowed amounts are amortized over the term of the agreements. The amount of borrowings outstanding at February 28, 2003, was $167 million, at a weighted average interest rate of 1.8%. The amount of borrowings represented 10.8% of total assets at February 28, 2003. Average borrowings for the year ended February 28, 2003 were $190,671,233 and the average annualized interest rate was 2.4%. As of February 28, 2003, the Trust had unfunded loan commitments pursuant to the terms of the following loan agreements: Airgate PCS, Inc. $ 644,951 Aurora Foods, Inc. 244,571 Block Vision Holdings Corp. 118,771 Citadel Broadcasting Company 2,180,500 Doshi Diagnostics 1,287,031 Express Scripts, Inc. 3,092,006 Fleming Companies, Inc. 692,691 Hercules Incorporated 1,500,000 Hilton Hawaiian Village, LLC 1,838,235 Insight Health Services Corporation 4,950,000 Lamar Media Corporation 6,843,750 Levi Strauss & Co. 2,500,000 Lyondell Chemical Company 9,000,000 Murray's Discount Auto Stores, Inc. 1,788,332 Owens -- Illinois, Inc. 2,779,385 Packaging Corporation of America 2,753,595 Park Place Entertainment Corporation 1,579,724 Peabody Energy Corporation 10,000,000 Relizon Company (The) 7,265,918 Riverwood International Corporation 5,000,000 Six Flags Theme Parks, Inc. 1,700,000 Waste Connections, Inc. 5,160,920 Western Wireless Corporation 6,000,000 ----------- $78,920,380 =========== 20 ING Prime Rate Trust - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS as of February 28 2003 (Continued) - -------------------------------------------------------------------------------- NOTE 5 -- RIGHTS AND OTHER OFFERINGS As of February 28, 2003, share offerings pursuant to shelf registrations were as follows: REGISTRATION SHARES SHARES DATE REGISTERED REMAINING ------------ ------------ ------------ 6/11/98 15,000,000 -- 6/19/98 10,000,000 9,730,800 9/15/98 25,000,000 19,170,354 3/04/99 5,000,000 3,241,645 On November 2, 2000, the Trust issued 3,600 shares each of Series M, Series W and Series F Auction Rate Cumulative Preferred Shares, $.01 Par Value, $25,000 liquidation preference, for a total issuance of $270 million. Also, on November 16, 2000, the Trust issued 3,600 shares of Series T and Series Th Auction Rate Cumulative Preferred Shares, $.01 Par Value, $25,000, liquidation preference, for a total issuance of $180 million. Costs associated with the offering of approximately $5,438,664 were charged against the proceeds received. The Trust used the net proceeds of the offering to partially pay down the then existing indebtedness. The Trust may reborrow amounts in the future to increase its use of leverage which will be consistent with the limitations imposed by the 1940 Act. Preferred Shares pay dividends based on a rate set at auctions, normally held every 7 days. In most instances dividends are also payable every 7 days, on the first business day following the end of the rate period. NOTE 6 -- CUSTODIAL AGREEMENT State Street Bank and Trust Company ("SSB") serves as the Trust's custodian and recordkeeper. Custody fees paid to SSB are reduced by earnings credits based on the cash balances held by SSB for the Trust. There were no earnings credits for the year ended February 28, 2003. NOTE 7 -- SUBORDINATED LOANS AND UNSECURED LOANS The primary risk arising from investing in subordinated loans or in unsecured loans is the potential loss in the event of default by the issuer of the loans. The Trust may acquire a subordinated loan only if, at the time of acquisition, it acquires or holds a Senior Loan from the same borrower. The Trust will acquire unsecured loans only where the Investment Manager believes, at the time of acquisition, that the Trust would have the right to payment upon default that is not subordinate to any other creditor. The Trust may invest up to 5% of its total assets, measured at the time of investment, in subordinated loans and unsecured loans. As of February 28, 2003, the Trust held 3.6% of its total assets in subordinated loans and unsecured loans. NOTE 8 -- FEDERAL INCOME TAXES Dividends paid by the Trust from net investment income and distributions of net realized short-term capital gains (if any) are, for federal income tax purposes, taxable as ordinary income to shareholders. The tax composition of dividends and distributions to common shareholders for years ended February 28, 2003 and 2002 were as follows: ORDINARY LONG-TERM TAX RETURN INCOME CAPITAL GAINS OF CAPITAL ----------- ------------- ---------- 2003 $61,643,423 $ -- $ -- 2002 $85,728,945 $ -- $ -- 21 ING Prime Rate Trust - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS as of February 28, 2003 (Continued) - -------------------------------------------------------------------------------- The amount of distributions from net investments 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, amortization of discounts 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. Accordingly, the following amounts represent current year permanent tax differences that have been reclassified as of February 28, 2003: ACCUMULATED NET UNDISTRIBUTED NET REALIZED GAINS INVESTMENT INCOME ON INVESTMENTS ----------------- --------------- $ 2,580,000 $(2,580,000) Capital loss carryforwards, which may be used to offset future realized capital gains for federal income tax purposes were as follows at February 28, 2003. AMOUNT EXPIRATION DATES ------------ ---------------- $209,579,956 2004-2011 The following represents the tax-basis components of distributable earnings as of February 28, 2003: CAPITAL POST OCTOBER UNDISTRIBUTED UNREALIZED LOSS LOSSES ORDINARY INCOME DEPRECIATION CARRYFORWARDS DEFERRED --------------- ------------ ------------- ------------ $ 9,433,349 $(131,116,264) $(215,654,956) $ (28,226,996) NOTE 9 -- SUBSEQUENT EVENTS Subsequent to February 28, 2003, the Trust paid to Common Shareholders the following dividends from net investment income: PER SHARE AMOUNT DECLARATION DATE RECORD DATE PAYABLE DATE ---------------- ---------------- ----------- ------------ $ 0.0330 2/28/03 3/10/03 3/24/03 $ 0.0355 3/31/03 4/10/03 4/23/03 Subsequent to February 28, 2003, the Trust paid to Preferred Shareholders the following dividends from net investment income:
TOTAL PREFERRED PER SHARE AUCTION RECORD PAYABLE SHARES AMOUNT DATES DATES DATES - --------- --------- -------------------- -------------------- -------------------- Series M $ 35.49 03/03/03 to 04/07/03 03/10/03 to 04/14/03 03/11/03 to 04/15/03 Series T $ 33.97 03/04/03 to 04/08/03 03/11/03 to 04/15/03 03/12/03 to 04/16/03 Series W $ 35.34 03/05/03 to 04/09/03 03/12/03 to 04/15/03 03/13/03 to 04/17/03 Series Th $ 37.69 03/06/03 to 04/10/03 03/13/03 to 04/17/03 03/14/03 to 04/21/03 Series F $ 34.85 03/07/03 to 04/11/03 03/14/03 to 04/17/03 03/17/03 to 04/21/03
22 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 - --------------------------------------------------------------------------------
SENIOR LOANS*: 160.1% BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ---------------- ---------------------------- ------- --- ----- AEROSPACE AND DEFENSE: 3.3% ALLIANT TECHSYSTEMS, INC. Ba2 BB- $ 2,638,955 Term Loan, maturing April 20, 2009 $ 2,645,883 DRS TECHNOLOGIES, INC. Ba3 BB- 1,975,018 Term Loan, maturing September 30, 2008 1,988,185 NEW PIPER AIRCRAFT, INC. NR NR 8,329,141 (3) Term Loan, maturing April 15, 2005 6,746,604 PIEDMONT AVIATION SERVICES NR NR 5,458,754 Term Loan, maturing July 23, 2006 5,404,167 5,458,755 Term Loan, maturing July 23, 2007 5,404,167 TITAN CORPORATION Ba3 BB- 2,985,000 Term Loan, maturing June 30, 2009 2,985,000 TRANSDIGM HOLDING CORPORATION B1 B+ 437,986 Term Loan, maturing May 15, 2006 440,792 1,146,201 Term Loan, maturing May 15, 2007 1,153,544 UNITED DEFENSE INDUSTRIES, INC. Ba3 BB- 3,309,888 Term Loan, maturing August 13, 2009 3,320,824 -------------- 30,089,166 -------------- AUTOMOBILE: 8.4% AFTERMARKET TECHNOLOGY CORPORATION Ba2 BB- 1,726,710 Term Loan, maturing February 8, 2008 1,729,639 1,255,777 Term Loan, maturing February 8, 2008 1,257,907 AMERICAN AXLE & MANUFACTURING, INC. Ba1 BB+ 5,453,298 Term Loan, maturing April 30, 2006 5,452,022 BREED TECHNOLOGIES, INC. NR NR 1,140,679 Term Loan, maturing December 20, 2004 1,077,942 CAPITAL TOOL & DESIGN, LTD. NR NR 6,683,524 Term Loan, maturing May 31, 2003 6,603,987 COLLINS & AIKMAN PRODUCTS Ba3 BB- 4,436,108 Term Loan, maturing December 31, 2005 4,450,431 DURA OPERATING CORPORATION Ba3 BB 3,184,000 Term Loan, maturing December 31, 2008 3,184,000 (2) EXIDE TECHNOLOGIES NR D 1,612,012 (3) Revolver, maturing December 18, 2003 981,312 371,195 (3) Term Loan, maturing December 18, 2003 225,965 3,227,260 (3) Term Loan, maturing March 18, 2005 1,976,697 FORD MOTOR CREDIT COMPANY A3 BBB 15,000,000 Floating Rate Note, maturing October 25, 2004 14,778,420 (2) HAYES LEMMERZ INTERNATIONAL, INC. Caa2 NR 3,478,750 (3) Term Loan, maturing December 31, 2005 2,888,813 METALDYNE COMPANY, LLC B1 BB- 3,995,000 Term Loan, maturing December 31, 2009 3,851,847 POLYPORE, INC. Ba3 B+ 5,458,750 Term Loan, maturing December 31, 2007 5,474,673 SAFELITE GLASS CORPORATION. B3 B+ 10,889,049 Term Loan, maturing September 30, 2007 10,725,714 7,289,144 Term Loan, maturing September 30, 2007 7,179,807 STONERIDGE, INC. Ba3 BB 985,000 Term Loan, maturing April 30, 2008 984,384
See Accompanying Notes to Financial Statements 23 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ AUTOMOBILE (CONTINUED) TENNECO AUTOMOTIVE, INC. B2 B $ 2,430,281 Term Loan, maturing November 4, 2007 $ 2,246,275 2,430,281 Term Loan, maturing May 4, 2008 2,250,613 -------------- 77,320,448 -------------- BANKING: 0.5% OUTSOURCING SOLUTIONS, INC. Caa1 D 12,055,854 (3) Term Loan, maturing June 10, 2006 4,279,828 -------------- 4,279,828 -------------- BEVERAGE, FOOD AND TOBACCO: 7.6% AURORA FOODS, INC. B3 CCC 1,755,429 Revolver, maturing June 30, 2005 1,524,297 3,765,462 Term Loan, maturing June 30, 2005 3,421,864 BIRDS EYE FOODS, INC. Ba3 B+ 4,488,750 Term Loan, maturing June 30, 2008 4,499,038 COMMONWEALTH BRANDS, INC. Ba3 BB- 12,025,000 Term Loan, maturing August 28, 2007 12,017,484 COTT BEVERAGES, INC. Ba3 BB- 1,176,363 Term Loan, maturing December 31, 2006 1,181,509 CP KELCO APS B3 B+ 4,004,613 Term Loan, maturing March 31, 2008 3,872,961 1,349,872 Term Loan, maturing September 30, 2008 1,306,844 DEAN FOODS COMPANY Ba1 BB+ 15,416,882 Term Loan, maturing July 15, 2008 15,433,270 DEL MONTE CORPORATION Ba3 BB- 5,000,000 Term Loan, maturing December 20, 2010 5,042,500 EMPIRE KOSHER POULTRY, INC. NR NR 13,545,000 (3) Term Loan, maturing July 31, 2004 5,553,450 FLEMING COMPANIES, INC. Ba3 B 854,545 Revolver, maturing June 18, 2007 766,243 1,741,087 Term Loan, maturing June 18, 2008 1,705,395 FLOWERS FOODS, INC. Ba2 BBB- 2,462,500 Term Loan, maturing March 26, 2007 2,472,761 INTERSTATE BRANDS CORPORATION Ba1 BBB- 2,955,000 Term Loan, maturing July 19, 2007 2,958,324 995,000 Term Loan, maturing July 19, 2007 994,068 MAFCO WORLDWIDE CORPORATION B1 B 2,655,031 Term Loan, maturing March 31, 2006 2,628,481 NATIONAL DAIRY HOLDINGS, L.P. Ba2 BB+ 2,481,250 Term Loan, maturing April 30, 2009 2,480,215 NUTRASWEET ACQUISITION CORPORATION Ba3 NR 598,232 Term Loan, maturing May 25, 2007 599,230 SOUTHERN WINE & SPIRITS OF AMERICA, INC. Ba3 BBB- 1,990,000 Term Loan, maturing July 2, 2008 1,994,975 -------------- 70,452,909 -------------- BUILDINGS AND REAL ESTATE: 2.2% ASSOCIATED MATERIALS, INC. Ba3 BB- 612,000 Term Loan, maturing April 19, 2009 615,442 (2) HQ GLOBAL WORKPLACES, INC. NR NR 3,865,243 (3) Term Loan, maturing November 6, 2005 2,009,927
See Accompanying Notes to Financial Statements 24 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ BUILDINGS AND REAL ESTATE (CONTINUED) JDN REALTY CORPORATION Ba3 BB- $ 10,000,000 Term Loan, maturing December 31, 2004 $ 10,025,000 MACERICH PARTNERSHIP, L.P. Ba2 NR 4,915,200 Term Loan, maturing July 26, 2005 4,921,344 (2) U.S. AGGREGATES, INC. NR NR 1,555,139 (3) Term Loan, maturing March 31, 2006 388,074 VENTAS REALTY, L.P. Ba3 BB- 1,990,000 Term Loan, maturing April 17, 2007 1,982,538 -------------- 19,942,325 -------------- CABLE TELEVISION: 12.6% (2) ADELPHIA COMMUNICATIONS CORPORATION NR BBB 3,000,000 Debtor in Possession Term Loan, maturing June 25, 2004 3,007,500 CC VI OPERATING, LLC B2 CCC+ 8,000,000 Term Loan, maturing November 12, 2008 6,171,431 CC VIII OPERATING, LLC B2 B- 4,455,000 Term Loan, maturing February 2, 2008 3,760,497 (2) CENTURY CABLE HOLDINGS, LLC Caa1 D 1,230,000 Revolver, maturing March 31, 2009 852,390 11,000,000 Term Loan, maturing June 30, 2009 7,929,163 5,000,000 Term Loan, maturing December 31, 2009 3,530,555 CHARTER COMMUNICATIONS OPERATING, LLC B2 B 28,838,328 Term Loan, maturing March 18, 2008 24,283,170 19,850,000 Term Loan, maturing September 18, 2008 16,627,133 (2) FRONTIERVISION OPERATING PARTNERS, L.P. B2 D 2,593,939 Revolver, maturing October 31, 2005 2,282,667 2,000,000 Term Loan, maturing September 30, 2005 1,760,000 2,400,000 Term Loan, maturing March 31, 2006 2,112,000 INSIGHT MIDWEST HOLDINGS, LLC Ba3 BB+ 14,500,000 Term Loan, maturing December 31, 2009 14,005,188 MCC IOWA MEDIACOM BROADBAND Ba3 BB+ 13,500,000 Term Loan, maturing September 30, 2010 13,221,563 (2) OLYMPUS CABLE HOLDINGS, LLC B2 D 2,000,000 Term Loan, maturing June 30, 2010 1,587,142 18,250,000 Term Loan, maturing September 30, 2010 14,803,232 -------------- 115,933,631 -------------- CARGO TRANSPORT: 2.3% (2) AMERICAN COMMERCIAL LINES, LLC Caa1 D 1,258,356 Term Loan, maturing June 30, 2006 1,012,977 1,804,934 Term Loan, maturing June 30, 2007 1,452,972 EVERGREEN INTERNATIONAL AVIATION, INC. Ba2 B+ 1,993,058 Term Loan, maturing May 7, 2003 1,704,064 337,411 Term Loan, maturing May 7, 2003 288,487 GEMINI LEASING, INC. B1 NR 4,117,116 (3) Term Loan, maturing August 12, 2005 1,749,774 NEOPLAN USA CORPORATION NR NR 9,562,848 (3) Term Loan, maturing May 29, 2005 7,363,393 OMNITRAX RAILROADS, LLC NR NR 3,811,673 Term Loan, maturing May 13, 2005 3,802,144
See Accompanying Notes to Financial Statements 25 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ CARGO TRANSPORT (CONTINUED) TEREX CORPORATION B1 BB- $ 3,488,750 Term Loan, maturing December 31, 2009 $ 3,378,271 -------------- 20,752,082 -------------- CELLULAR: 12.2% AIRGATE PCS, INC. B3 CCC- 931,148 Term Loan, maturing June 6, 2007 675,083 9,387,622 Term Loan, maturing September 30, 2008 6,806,026 AMERICAN CELLULAR CORPORATION B3 CC 2,499,241 Term Loan, maturing March 31, 2008 1,883,803 4,382,505 Term Loan, maturing March 31, 2009 3,303,313 INDEPENDENT WIRELESS ONE CORPORATION Caa1 CCC 10,000,000 Term Loan, maturing June 20, 2008 7,200,000 MICROCELL CONNEXIONS, INC. Ca D 2,250,000 (3) Term Loan, maturing March 1, 2006 1,632,500 5,000,000 (3) Term Loan, maturing February 22, 2007 3,780,000 NEXTEL FINANCE COMPANY Ba3 BB- 5,000,000 Term Loan, maturing December 31, 2007 4,587,500 3,740,625 Term Loan, maturing June 30, 2008 3,575,136 3,740,625 Term Loan, maturing December 31, 2008 3,575,136 45,500,000 Term Loan, maturing March 31, 2009 42,446,615 NEXTEL OPERATIONS, INC. Ba3 BB- 6,784,146 Term Loan, maturing March 15, 2005 6,656,009 2,353,577 Term Loan, maturing February 10, 2007 2,251,258 RURAL CELLULAR CORPORATION B2 B+ 4,911,130 Term Loan, maturing October 3, 2008 4,251,634 4,911,130 Term Loan, maturing April 3, 2009 4,251,634 WESTERN WIRELESS CORPORATION B3 B 4,000,000 Revolver, maturing March 31, 2008 3,191,000 8,000,000 Term Loan, maturing March 31, 2008 6,378,000 8,000,000 Term Loan, maturing September 30, 2008 6,372,000 -------------- 112,816,647 -------------- CHEMICALS, PLASTICS AND RUBBER: 6.6% ACADIA ELASTOMERS CORPORATION NR NR 9,306,569 Term Loan, maturing March 31, 2004 9,042,388 EQUISTAR CHEMICALS, L.P. Ba2 BB+ 7,929,924 Term Loan, maturing August 24, 2007 7,952,231 FMC CORPORATION Ba1 BBB- 4,000,000 Term Loan, maturing October 21, 2007 4,050,000 FOAMEX, L.P. B2 B+ 1,682,653 Term Loan, maturing June 30, 2005 1,543,834 1,529,690 Term Loan, maturing June 30, 2006 1,403,491 GEO SPECIALTY CHEMICALS, INC. B1 B+ 2,757,857 Term Loan, maturing December 31, 2007 2,546,421 HERCULES, INC. Ba1 BB 5,000,000 Term Loan, maturing May 15, 2007 5,007,815 HUNTSMAN COMPANY, LLC B3 B+ 7,700,916 Term Loan, maturing March 31, 2007 6,334,004 3,694,203 Term Loan, maturing March 31, 2007 3,038,482
See Accompanying Notes to Financial Statements 26 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ CHEMICALS, PLASTICS AND RUBBER (CONTINUED) HUNTSMAN INTERNATIONAL, LLC B2 B+ $ 904,712 Term Loan, maturing June 30, 2005 $ 880,285 3,940,128 Term Loan, maturing June 30, 2007 3,877,744 3,940,128 Term Loan, maturing June 30, 2008 3,877,744 JOHNSONDIVERSEY, INC. Ba3 BB- 3,980,000 Term Loan, maturing November 3, 2009 4,003,633 LYONDELL CHEMICAL COMPANY Ba3 BB 819,698 Term Loan, maturing May 17, 2006 822,132 MILLENNIUM AMERICA, INC. Baa3 BBB- 780,000 Term Loan, maturing June 18, 2006 782,340 NOVEON, INC. B1 BB- 4,663,901 Term Loan, maturing September 30, 2008 4,678,891 OM GROUP, INC. B2 B+ 992,506 Term Loan, maturing April 1, 2006 951,565 -------------- 60,793,000 -------------- CONTAINERS, PACKAGING AND GLASS: 9.7% BERRY PLASTICS CORPORATION B1 B+ 2,985,000 Term Loan, maturing July 22, 2010 3,001,791 BLUE RIDGE PAPER PRODUCTS, INC. B3 B+ 8,681,294 Term Loan, maturing May 14, 2006 8,464,261 CONSTAR INTERNATIONAL, INC. B1 BB- 2,992,500 Term Loan, maturing November 20, 2009 3,007,463 GRAPHIC PACKAGING CORPORATION Ba3 BB 1,980,000 Term Loan, maturing February 28, 2009 1,989,900 GREIF BROS. CORPORATION Ba3 BB 2,985,000 Term Loan, maturing August 23, 2009 2,997,313 IMPAXX, INC. NR NR 4,234,970 Term Loan, maturing April 30, 2005 3,769,123 JEFFERSON SMURFIT CORPORATION Ba3 B+ 2,989,091 Term Loan, maturing March 31, 2007 2,984,819 (2) LINCOLN PULP & EASTERN FINE NR NR 92,280 Term Loan, maturing December 31, 2001 65,519 14,881,108 Term Loan, maturing August 31, 2004 10,565,587 NEXPAK CORPORATION B1 B+ 2,271,860 Term Loan, maturing March 31, 2004 1,783,410 2,271,860 Term Loan, maturing March 31, 2004 1,783,410 OWENS-BROCKWAY GLASS CONTAINER, INC. B1 BB 9,628,331 Revolver, maturing March 31, 2004 9,506,773 PACKAGING CORPORATION OF AMERICA Baa3 BBB 1,002,633 Term Loan, maturing June 29, 2006 1,000,126 PLIANT CORPORATION B2 B+ 2,708,730 Term Loan, maturing May 31, 2008 2,679,104 RIVERWOOD INTERNATIONAL CORPORATION B1 B 550,000 Revolver, maturing December 31, 2006 522,156 15,000,000 Term Loan, maturing December 31, 2006 14,985,945 SILGAN HOLDINGS, INC. Ba2 BB- 1,990,000 Term Loan, maturing November 30, 2008 1,988,342 SMURFIT-STONE CONTAINER CANADA, INC. Ba3 B+ 4,307,692 Term Loan, maturing June 30, 2009 4,260,579
See Accompanying Notes to Financial Statements 27 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ CONTAINERS, PACKAGING AND GLASS (CONTINUED) STONE CONTAINER CORPORATION Ba3 B+ $ 11,692,308 Term Loan, maturing June 30, 2009 $ 11,567,165 TEKNI-PLEX, INC. B1 B+ 2,925,000 Term Loan, maturing June 21, 2008 2,881,581 -------------- 89,804,367 -------------- DATA & INTERNET SERVICES: 0.6% 360NETWORKS, INC. NR NR 1,353,721 Term Loan, maturing November 12, 2007 825,770 ARCH WIRELESS HOLDINGS, INC. Caa3 NR 773,116 Senior Note, maturing May 15, 2007 757,654 ICG COMMUNICATIONS, INC. NR NR 4,880,493 Term Loan, maturing May 31, 2005 3,440,748 MCLEODUSA, INC. Caa2 NR 1,329,412 Term Loan, maturing May 30, 2008 666,921 -------------- 5,691,093 -------------- DIVERSIFIED/CONGLOMERATE MANUFACTURING: 6.4% BARJAN PRODUCTS, LLC NR NR 4,826,250 Term Loan, maturing May 31, 2006 4,541,926 BRAND SERVICES, INC. B1 B+ 4,000,000 Term Loan, maturing October 16, 2009 4,015,000 DRESSER, INC. Ba3 BB- 5,219,136 Term Loan, maturing April 10, 2009 5,232,648 FLOWSERVE CORPORATION Ba3 BB- 1,553,145 Term Loan, maturing June 30, 2006 1,540,526 4,788,900 Term Loan, maturing June 30, 2009 4,788,043 GENERAL CABLE CORPORATION B1 BB- 2,567,281 Term Loan, maturing May 25, 2007 2,207,862 MANITOWOC COMPANY, INC. Ba2 BB 1,970,000 Term Loan, maturing May 9, 2007 1,973,201 MUELLER GROUP, INC. B1 B+ 3,980,000 Term Loan, maturing May 31, 2008 3,975,025 NEPTUNE TECHNOLOGY GROUP, INC. Ba3 BB- 3,881,919 Term Loan, maturing November 1, 2008 3,901,328 REXNORD CORPORATION B1 B+ 6,805,556 Term Loan, maturing November 25, 2009 6,867,234 SPX CORPORATION Ba2 BB+ 6,495,625 Term Loan, maturing September 30, 2009 6,485,882 7,627,211 Term Loan, maturing March 31, 2010 7,615,770 UNITED PET GROUP NR NR 6,055,561 Term Loan, maturing March 31, 2006 5,966,043 -------------- 59,110,488 -------------- DIVERSIFIED/CONGLOMERATE SERVICE: 1.4% IRON MOUNTAIN, INC. Ba3 BB 1,996,000 Term Loan, maturing February 15, 2008 2,002,238 PRIVATE BUSINESS, INC. NR NR 3,549,793 Term Loan, maturing August 19, 2006 3,496,546
See Accompanying Notes to Financial Statements 28 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ DIVERSIFIED/CONGLOMERATE SERVICE (CONTINUED) URS CORPORATION Ba3 BB- $ 2,992,500 Term Loan, maturing August 22, 2008 $ 2,827,912 US INVESTIGATIONS SERVICES, LLC B1 BB- 5,000,000 Term Loan, maturing January 10, 2009 4,965,625 -------------- 13,292,321 -------------- ECOLOGICAL: 1.6% ALLIED WASTE NORTH AMERICA, INC. Ba3 BB 2,220,129 Term Loan, maturing July 21, 2005 2,213,191 435,739 Term Loan, maturing July 21, 2006 434,961 522,885 Term Loan, maturing July 21, 2007 521,951 AMERICAN REF-FUEL COMPANY, LLC Baa2 BBB 3,558,140 Term Loan, maturing April 30, 2005 3,504,767 CASELLA WASTE SYSTEMS, INC. B1 BB- 3,000,000 Term Loan, maturing May 11, 2007 3,015,000 (2) IT GROUP, INC. Caa1 NR 4,154,605 (3) Term Loan, maturing June 11, 2007 401,613 WASTE CONNECTIONS, INC. Ba3 BB 4,839,080 Revolver, maturing May 16, 2005 4,693,908 -------------- 14,785,391 -------------- ELECTRONICS: 2.2% ACTERNA, LLC Caa1 CCC+ 6,098,973 Term Loan, maturing September 30, 2007 1,626,395 DECISION ONE CORPORATION B3 CCC 1,882,236 Term Loan, maturing April 18, 2005 1,599,901 9,492,004 Term Loan, maturing April 18, 2005 8,068,204 (2) INSILCO TECHNOLOGIES, INC. Caa2 D 4,925,016 (3) Term Loan, maturing March 25, 2007 1,083,503 KNOWLES ELECTRONICS, INC. B3 CCC+ 3,357,724 Term Loan, maturing June 29, 2007 2,837,277 SARCOM, INC. NR NR 1,003,670 Term Loan, maturing June 30, 2007 1,003,670 TRANSACTION NETWORK SERVICES, INC. Ba3 BB- 3,777,368 Term Loan, maturing April 3, 2007 3,772,645 -------------- 19,991,595 -------------- FINANCE: 2.8% ALLIANCE DATA SYSTEMS CORPORATION B1 B+ 8,710,638 Term Loan, maturing July 25, 2005 8,688,862 ANTHONY CRANE RENTAL, L.P. Caa2 CCC+ 14,475,000 Term Loan, maturing July 20, 2006 8,443,745 RENT-A-CENTER, INC. Ba2 BB 1,441,705 Term Loan, maturing January 31, 2006 1,439,363 3,174,077 Term Loan, maturing January 31, 2007 3,168,919 1,250,713 Term Loan, maturing December 31, 2007 1,250,582 UNITED RENTALS (NORTH AMERICA), INC. Ba3 BB 1,725,660 Term Loan, maturing August 31, 2007 1,707,109 VALUE ASSET MANAGEMENT, INC. B1 B+ 750,000 Term Loan, maturing April 28, 2003 726,562 -------------- 25,425,142 --------------
See Accompanying Notes to Financial Statements 29 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ GAMING: 4.4% (2) ALADDIN GAMING, LLC Caa1 NR $ 2,968,421 (3) Term Loan, maturing August 26, 2006 $ 2,463,789 4,455,000 (3) Term Loan, maturing February 26, 2008 3,697,650 ALLIANCE GAMING CORPORATION B1 BB- 4,962,500 Term Loan, maturing December 31, 2006 4,991,446 AMERISTAR CASINOS, INC. Ba3 BB- 2,929,258 Term Loan, maturing December 20, 2006 2,945,003 ARGOSY GAMING COMPANY Ba2 BB 4,432,500 Term Loan, maturing July 31, 2008 4,460,203 BOYD GAMING CORPORATION Ba1 BB+ 995,000 Term Loan, maturing June 24, 2008 998,421 ISLE OF CAPRI CASINOS, INC. Ba2 BB- 992,500 Term Loan, maturing April 26, 2008 995,292 MANDALAY RESORT GROUP Ba2 BB+ 17,000,000 Term Loan, maturing August 22, 2006 16,847,714 PARK PLACE ENTERTAINMENT CORPORATION Ba1 BBB- 3,420,276 Revolver, maturing December 31, 2003 3,360,422 -------------- 40,759,940 -------------- GROCERY: 0.2% GIANT EAGLE, INC. Ba2 BB+ 1,990,000 Term Loan, maturing August 2, 2009 1,993,731 -------------- 1,993,731 -------------- HEALTHCARE, EDUCATION AND CHILDCARE: 11.5% ALLIANCE IMAGING, INC. B1 B+ 1,038,168 Term Loan, maturing November 2, 2006 1,021,297 6,217,331 Term Loan, maturing June 10, 2008 6,139,615 APRIA HEALTHCARE GROUP INC. Ba1 BBB- 4,925,000 Term Loan, maturing July 20, 2008 4,926,542 BROWN SCHOOLS B3 B 7,908,931 Term Loan, maturing June 30, 2003 7,908,931 CAREMARK RX, INC. Ba2 BB+ 2,476,275 Term Loan, maturing March 31, 2006 2,478,338 COMMUNITY HEALTH SYSTEMS, INC. Ba3 BB- 12,967,500 Term Loan, maturing July 16, 2010 12,926,977 CONCENTRA OPERATING CORPORATION B1 B+ 2,995,019 Term Loan, maturing June 30, 2006 2,948,221 1,497,509 Term Loan, maturing June 30, 2007 1,474,111 COVENANT CARE, INC. NR NR 5,393,557 Term Loan, maturing June 30, 2003 5,326,138 DAVITA, INC. Ba3 BB- 8,913,441 Term Loan, maturing March 31, 2009 8,935,172 EXPRESS SCRIPTS, INC. Ba1 BBB- 3,692,308 Term Loan, maturing March 31, 2008 3,693,954 (2) FOUNTAIN VIEW, INC. NR NR 9,939,548 Term Loan, maturing March 31, 2004 9,507,089 FRESENIUS MEDICAL CARE HOLDING, INC. Ba1 BB+ 4,000,000 Term Loan, maturing June 30, 2006 4,000,000
See Accompanying Notes to Financial Statements 30 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ HEALTHCARE, EDUCATION AND CHILDCARE (CONTINUED) GENESIS HEALTH VENTURES, INC. Ba3 B+ $ 162,366 Term Loan, maturing March 31, 2007 $ 162,366 396,335 Term Loan, maturing March 31, 2007 390,390 1,539,950 Floating Rate Note, maturing April 2, 2007 1,455,253 HCA, INC. Ba1 BBB- 9,514,286 Term Loan, maturing April 30, 2006 9,389,411 IASIS HEALTHCARE CORPORATION B1 B 4,000,000 Term Loan, maturing February 7, 2009 4,021,668 KINETIC CONCEPTS, INC. Ba3 B+ 2,639,967 Term Loan, maturing March 31, 2006 2,642,443 MAGELLAN HEALTH SERVICES, INC. Caa1 CCC 1,231,415 Term Loan, maturing February 12, 2005 1,079,028 1,231,415 Term Loan, maturing February 12, 2006 1,083,645 MARINER HEALTH CARE, INC. B1 NR 988,381 Floating Rate Note, maturing May 13, 2009 973,555 SYBRON DENTAL MANAGEMENT, INC. Ba3 BB- 1,442,001 Term Loan, maturing June 6, 2009 1,447,588 TRIAD HOSPITALS, INC. Ba3 B+ 1,972,727 Term Loan, maturing September 30, 2008 1,984,688 VANGUARD HEALTH SYSTEMS, INC. Ba3 B+ 5,500,000 Term Loan, maturing January 3, 2010 5,517,188 VICAR OPERATING, INC. B1 B+ 4,979,987 Term Loan, maturing September 30, 2008 5,006,964 -------------- 106,440,572 -------------- HOME AND OFFICE FURNISHING, HOUSEWARES: 1.7% (2) DESA INTERNATIONAL, INC. Caa2 NR 7,136,217 (3) Term Loan, maturing November 26, 2004 7,136,217 HOLMES PRODUCTS CORPORATION B2 B 3,577,773 Term Loan, maturing February 5, 2007 3,363,107 IDENTITY GROUP, INC. NR NR 4,525,000 Term Loan, maturing May 11, 2007 2,262,500 IMPERIAL HOME D-COR GROUP, INC. NR NR 833,725 (3) Term Loan, maturing April 4, 2006 625,294 SEALY MATTRESS COMPANY B1 B+ 756,640 Term Loan, maturing December 15, 2004 748,127 545,722 Term Loan, maturing December 15, 2005 539,583 697,638 Term Loan, maturing December 15, 2006 689,790 -------------- 15,364,618 -------------- INSURANCE: 0.7% FUND AMERICAN COMPANIES, INC. Baa2 BBB+ 4,421,250 Term Loan, maturing March 31, 2007 4,407,986 USI HOLDINGS CORPORATION B1 B+ 2,361,668 Term Loan, maturing September 17, 2004 2,178,639 -------------- 6,586,625 -------------- LEISURE, AMUSEMENT AND ENTERTAINMENT: 9.8% AMF BOWLING WORLDWIDE, INC. B1 B 1,864,763 Term Loan, maturing February 28, 2008 1,859,323
See Accompanying Notes to Financial Statements 31 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ LEISURE, AMUSEMENT AND ENTERTAINMENT (CONTINUED) BALLY TOTAL FITNESS HOLDING CORPORATION Ba3 B+ $ 5,901,906 Term Loan, maturing November 10, 2004 $ 5,665,830 FITNESS HOLDINGS WORLDWIDE, INC. B1 B 8,578,059 Term Loan, maturing November 2, 2006 8,345,739 7,669,125 Term Loan, maturing November 2, 2007 7,461,422 KERASOTES THEATRES, INC. B1 B+ 2,000,000 Term Loan, maturing December 31, 2008 2,005,000 LODGENET ENTERTAINMENT CORPORATION Ba3 B+ 4,982,450 Term Loan, maturing June 30, 2006 4,950,273 LOEWS CINEPLEX ENTERTAINMENT CORPORATION NR NR 9,883,703 Term Loan, maturing February 29, 2008 9,714,859 METRO-GOLDWYN-MAYER STUDIOS, INC. Ba3 BB- 14,500,000 Term Loan, maturing June 30, 2008 14,429,762 PANAVISION, INC. Caa1 CCC 13,992,568 Term Loan, maturing March 31, 2005 12,033,608 REGAL CINEMAS, INC. Ba2 BB- 2,375,000 Term Loan, maturing December 31, 2007 2,383,906 SIX FLAGS THEME PARKS, INC. Ba2 BB- 1,300,000 Revolver, maturing June 30, 2008 1,261,000 11,000,000 Term Loan, maturing June 30, 2009 10,890,000 WASHINGTON FOOTBALL, INC. Baa3 NR 3,000,000 Term Loan, maturing October 16, 2007 3,016,876 XANTERRA PARKS & RESORTS, LLC NR NR 3,418,661 Term Loan, maturing September 30, 2004 3,410,114 3,418,661 Term Loan, maturing September 30, 2005 3,410,114 -------------- 90,837,826 -------------- LODGING: 7.1% EXTENDED STAY AMERICA, INC. Ba3 BB- 16,227,853 Term Loan, maturing January 15, 2008 15,974,293 HILTON HAWAIIAN VILLAGE, LLC Ba1 BBB- 13,786,765 Revolver, maturing June 1, 2003 13,579,963 KSL RECREATIONAL GROUP, INC. Ba3 B+ 1,513,611 Term Loan, maturing April 30, 2005 1,502,890 1,513,611 Term Loan, maturing April 30, 2006 1,505,570 5,518,687 Term Loan, maturing December 22, 2006 5,504,890 MERISTAR INVESTMENT PARTNERS Ba3 B- 6,022,138 Term Loan, maturing March 31, 2003 6,037,193 2,500,000 Term Loan, maturing March 31, 2003 2,506,250 WYNDHAM INTERNATIONAL, INC. NR CCC+ 7,176,801 Term Loan, maturing June 30, 2004 5,443,159 18,084,136 Term Loan, maturing June 30, 2006 13,140,386 -------------- 65,194,594 -------------- MACHINERY: 1.0% ALLIANCE LAUNDRY HOLDINGS, LLC B1 B 3,861,048 Term Loan, maturing August 2, 2007 3,830,480 MORRIS MATERIAL HANDLING, INC. NR NR 258,831 Term Loan, maturing September 28, 2004 245,889 NATIONAL WATERWORKS, INC. B1 BB- 2,000,000 Term Loan, maturing November 22, 2009 2,018,750
See Accompanying Notes to Financial Statements 32 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ MACHINERY (CONTINUED) VUTEK, INC. B1 NR $ 985,842 Term Loan, maturing July 31, 2005 $ 956,266 1,704,172 Term Loan, maturing July 31, 2007 1,653,046 634,785 Term Loan, maturing December 30, 2007 614,135 -------------- 9,318,566 -------------- MINING, STEEL, IRON AND NON-PRECIOUS METALS: 0.1% (2) NATIONAL REFRACTORIES & MINERALS CORPORATION NR NR 493,969 Term Loan, maturing March 30, 2002 469,270 -------------- 469,270 -------------- OIL AND GAS 2.1% PACIFIC ENERGY GROUP, LLC Ba2 BBB- 4,000,000 Term Loan, maturing July 26, 2009 4,023,752 PLAINS MARKETING, L.P. Ba1 BBB- 3,465,000 Term Loan, maturing September 21, 2007 3,482,325 PMC COMPANY Ba1 BBB- 2,970,000 Term Loan, maturing May 5, 2006 2,977,425 TESORO PETROLEUM CORPORATION Ba3 BB 6,216,279 Term Loan, maturing December 31, 2007 5,911,681 W-H ENERGY SERVICES, INC. B2 B+ 3,438,750 Term Loan, maturing April 16, 2007 3,387,169 -------------- 19,782,352 -------------- OTHER TELECOMMUNICATIONS: 2.4% BROADWING, INC. B1 B- 11,279,000 Term Loan, maturing November 9, 2004 10,865,433 6,310,798 Term Loan, maturing December 30, 2006 5,995,258 757,845 Term Loan, maturing June 28, 2007 720,711 GCI HOLDINGS, INC. Ba3 BB+ 1,500,000 Term Loan, maturing October 15, 2004 1,496,250 INTERA GROUP, INC. NR NR 2,905,339 Term Loan, maturing December 31, 2005 2,760,071 1,591,423 (3) Term Loan, maturing December 31, 2005 -- 909,384 (3) Term Loan, maturing December 31, 2005 -- -------------- 21,837,723 -------------- PERSONAL AND NON DURABLE CONSUMER PRODUCTS: 5.8% AM COSMETICS CORPORATION NR NR 2,292,689 (3) Revolver, maturing May 30, 2004 1,375,613 1,305,151 (3) Term Loan, maturing May 30, 2004 -- 2,610,303 (3) Term Loan, maturing December 31, 2004 -- AMSCAN HOLDINGS, INC. B1 BB- 2,000,000 Term Loan, maturing June 15, 2007 1,985,000 ARMKEL, LLC Ba3 B+ 1,975,000 Term Loan, maturing March 28, 2009 1,988,225 BUHRMANN U.S., INC. B1 B+ 2,535,153 Term Loan, maturing October 26, 2005 2,349,770 4,088,253 Term Loan, maturing October 26, 2007 3,882,308 (2) CENTIS, INC. B2 B 3,900,000 (3) Term Loan, maturing September 30, 2005 1,014,000 3,421,250 (3) Term Loan, maturing September 30, 2006 889,525
See Accompanying Notes to Financial Statements 33 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ PERSONAL AND NON DURABLE CONSUMER PRODUCTS (CONTINUED) CHURCH & DWIGHT CO., INC. Ba2 BB $ 2,987,494 Term Loan, maturing September 30, 2007 $ 3,006,476 JOSTENS, INC. B1 BB- 1,758,052 Term Loan, maturing May 31, 2006 1,728,751 4,486,364 Term Loan, maturing December 31, 2009 4,494,776 NORWOOD PROMOTIONAL PRODUCTS, INC. NR NR 10,197,523 Term Loan, maturing February 1, 2005 10,197,523 7,132,826 (3) Term Loan, maturing February 1, 2005 3,174,108 1,998,167 (3) Term Loan, maturing February 1, 2005 -- PAINT SUNDRY BRANDS CORPORATION B2 B+ 894,245 Term Loan, maturing August 11, 2005 831,648 875,811 Term Loan, maturing August 11, 2006 814,505 PLAYTEX PRODUCTS, INC. Ba3 BB- 11,275,083 Term Loan, maturing May 31, 2009 11,258,171 RAYOVAC CORPORATION Ba3 BB- 4,558,333 Term Loan, maturing September 30, 2009 4,572,577 -------------- 53,562,976 -------------- PERSONAL, FOOD AND MISCELLANEOUS SERVICES: 5.9% AFC ENTERPRISES, INC. Ba2 BB 1,592,000 Term Loan, maturing May 23, 2009 1,595,814 COINMACH CORPORATION B1 BB- 4,900,000 Term Loan, maturing July 25, 2009 4,915,312 DOMINO'S, INC. Ba3 BB- 2,985,000 Term Loan, maturing June 30, 2008 2,994,328 GATE GOURMET BORROWER, LLC B1 BB 1,000,000 Term Loan, maturing December 31, 2008 970,000 1,000,000 Term Loan, maturing December 31, 2009 990,000 NEW WORLD RESTAURANT GROUP, INC. Caa2 CCC+ 4,000,000 Secured Floating Rate Note, maturing June 15, 2003 3,600,000 OTIS SPUNKMEYER, INC. B1 B+ 6,920,455 Term Loan, maturing January 21, 2009 6,916,129 PAPA GINO'S, INC. NR NR 1,943,182 Term Loan, maturing August 31, 2006 1,908,686 4,839,844 Term Loan, maturing August 31, 2007 4,790,046 RELIZON COMPANY Ba3 BB- 1,112,147 Revolver, maturing August 4, 2006 1,000,933 SC INTERNATIONAL SERVICES Ba1 BB 25,057,291 Term Loan, maturing March 1, 2007 24,806,719 -------------- 54,487,967 -------------- PRINTING AND PUBLISHING: 7.0% ADAMS OUTDOOR ADVERTISING, L.P. B1 B+ 1,780,000 Term Loan, maturing February 8, 2008 1,786,305 ADVANSTAR COMMUNICATIONS, INC. B2 B 10,136,771 Term Loan, maturing April 11, 2007 9,401,855 AMERICAN MEDIA OPERATIONS, INC. Ba3 B+ 4,000,000 Term Loan, maturing April 1, 2007 4,012,500 BELL ACTIMEDIA, INC. Ba3 BB- 2,000,000 Term Loan, maturing November 29, 2010 2,014,250
See Accompanying Notes to Financial Statements 34 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ PRINTING AND PUBLISHING (CONTINUED) CANWEST MEDIA, INC. Ba3 B+ $ 4,222,181 Term Loan, maturing May 15, 2008 $ 4,226,872 4,521,976 Term Loan, maturing May 15, 2009 4,527,000 DEX MEDIA EAST, LLC Ba3 BB- 5,500,000 Term Loan, maturing May 8, 2009 5,559,010 HOLLINGER INTERNATIONAL PUBLISHING, INC. Ba2 BB- 2,500,000 Term Loan, maturing September 30, 2009 2,512,500 LAMAR MEDIA CORPORATION Ba2 BB- 5,150,000 Term Loan, maturing March 1, 2006 5,089,915 PRIMEDIA, INC. B3 B 3,743,351 Term Loan, maturing June 30, 2009 3,570,221 R.H. DONNELLEY, INC. Ba3 BB 8,000,000 Term Loan, maturing June 30, 2010 8,057,000 READER'S DIGEST ASSOCIATIONS, INC. Baa3 BB+ 6,965,000 Term Loan, maturing May 20, 2008 6,854,305 TRANSWESTERN PUBLISHING COMPANY Ba3 BB- 2,955,000 Term Loan, maturing June 27, 2008 2,953,153 VERTIS, INC. B1 B+ 2,457,389 Term Loan, maturing December 7, 2008 2,386,739 ZIFF DAVIS MEDIA, INC. B3 CCC- 1,694,296 Term Loan, maturing March 31, 2007 1,457,095 -------------- 64,408,720 -------------- RADIO AND TV BROADCASTING: 5.8% BLOCK COMMUNICATIONS, INC. Ba2 BB- 2,985,000 Term Loan, maturing November 15, 2009 2,996,194 CITADEL BROADCASTING COMPANY Ba2 B+ 1,260,000 Revolver, maturing April 2, 2008 1,174,950 750,000 Term Loan, maturing April 2, 2008 748,125 3,600,000 Term Loan, maturing June 26, 2009 3,614,400 CUMULUS MEDIA, INC. Ba3 B+ 3,000,000 Term Loan, maturing March 28, 2010 3,021,564 EMMIS OPERATING COMPANY Ba2 B+ 10,982,904 Term Loan, maturing August 31, 2009 11,030,954 FISHER BROADCASTING, INC. Ba3 B+ 2,000,000 Term Loan, maturing February 28, 2010 2,002,500 GRAY TELEVISION, INC. Ba3 B+ 4,000,000 Term Loan, maturing December 31, 2010 4,020,832 LIN TELEVISION CORPORATION Ba2 BB 1,897,143 Term Loan, maturing December 31, 2007 1,899,514 2,102,857 Term Loan, maturing December 31, 2007 2,105,486 PAXSON COMMUNICATIONS CORPORATION Ba3 BB 4,925,000 Term Loan, maturing June 30, 2006 4,903,453 PEGASUS MEDIA & COMMUNICATIONS, INC. B3 B- 5,884,937 Term Loan, maturing April 30, 2005 5,319,324 SINCLAIR BROADCAST GROUP, INC. Ba2 BB 5,000,000 Term Loan, maturing December 31, 2009 5,011,385 3,000,000 Term Loan, maturing December 31, 2009 3,007,635 SUSQUEHANNA MEDIA COMPANY Ba1 BB- 2,481,250 Term Loan, maturing June 30, 2008 2,493,656 -------------- 53,349,972 --------------
See Accompanying Notes to Financial Statements 35 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ RETAIL STORES: 5.3% ADVANCE STORES COMPANY, INC. Ba3 BB- $ 5,000,000 Term Loan, maturing November 30, 2007 $ 5,009,375 CH OPERATING, LLC B2 B+ 2,431,034 Term Loan, maturing June 30, 2007 2,412,802 HERBALIFE INTERNATIONAL, INC. B1 BB- 1,500,000 Term Loan, maturing July 31, 2008 1,494,375 (2) K MART CORPORATION Ba1 BBB 3,500,000 Debtor in Possession Term Loan, maturing April 22, 2004 3,466,460 MURRAY'S DISCOUNT AUTO STORES, INC. NR B 1,911,667 Revolver, maturing June 30, 2003 1,888,439 13,314,994 Term Loan, maturing June 30, 2003 13,228,635 PETCO ANIMAL SUPPLIES, INC. Ba3 BB- 3,481,912 Term Loan, maturing October 2, 2008 3,493,883 RITE AID CORPORATION B2 BB- 14,694,891 Term Loan, maturing June 27, 2005 14,547,942 SHOPPERS DRUG MART CORPORATION Ba1 BBB+ 882,353 Term Loan, maturing February 4, 2009 884,449 TRAVELCENTERS OF AMERICA, INC. Ba3 BB 2,475,000 Term Loan, maturing November 14, 2008 2,487,375 -------------- 48,913,735 -------------- TELECOMMUNICATIONS EQUIPMENT: 5.0% AMERICAN TOWER, L.P. B2 B 9,973,468 Term Loan, maturing June 30, 2007 9,251,638 1,667,986 Term Loan, maturing December 31, 2007 1,580,504 CROWN CASTLE OPERATING COMPANY Ba3 B- 13,000,000 Term Loan, maturing March 15, 2008 12,328,329 PINNACLE TOWERS, INC. B3 D 8,586,031 Term Loan, maturing October 31, 2005 7,963,544 SPECTRASITE COMMUNICATIONS, INC. B3 CC 7,654,927 Term Loan, maturing December 31, 2007 6,793,747 TRIPOINT GLOBAL COMMUNICATIONS, INC. NR NR 3,181,948 Term Loan, maturing May 31, 2006 3,022,851 TSI TELECOMMUNICATION SERVICES, INC. Ba3 B+ 5,693,182 Term Loan, maturing December 31, 2006 5,440,547 -------------- 46,381,160 -------------- TEXTILES AND LEATHER: 3.2% ACCESSORY NETWORK GROUP, INC. NR NR 8,194,791 Term Loan, maturing June 30, 2003 3,277,917 (2) GALEY & LORD, INC. Caa2 NR 2,692,043 Term Loan, maturing April 2, 2005 1,938,271 1,927,515 Term Loan, maturing April 1, 2006 1,387,811 LEVI STRAUSS & COMPANY B1 BB 5,000,000 Term Loan, maturing July 31, 2006 5,013,540 (2) MALDEN MILLS INDUSTRIES, INC. NR NR 8,958,296 (3) Term Loan, maturing October 28, 2006 4,755,010
See Accompanying Notes to Financial Statements 36 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ TEXTILES AND LEATHER (CONTINUED) (2) POLYMER GROUP, INC. B3 NR $ 4,779,769 Term Loan, maturing December 20, 2005 $ 4,380,319 5,462,500 Term Loan, maturing December 20, 2006 5,020,950 TARGUS GROUP, INC. NR NR 3,315,240 Term Loan, maturing August 31, 2006 2,933,987 WILLIAM CARTER COMPANY Ba3 BB 987,500 Term Loan, maturing September 30, 2008 994,905 -------------- 29,702,710 -------------- UTILITIES: 0.7% CALPINE CORPORATION Ba3 BBB- 1,899,130 Term Loan, maturing March 8, 2004 1,735,092 MICHIGAN ELECTRIC TRANSMISSION COMPANY Baa2 BB+ 2,985,000 Term Loan, maturing May 1, 2007 2,985,934 PIKE ELECTRIC, INC. Ba3 BB- 1,717,647 Term Loan, maturing April 18, 2010 1,728,383 -------------- 6,449,409 -------------- TOTAL SENIOR LOANS (COST $1,606,963,991) $1,476,322,899 -------------- OTHER CORPORATE DEBT: 2.0% AUTOMOBILE: 0.5% CAPITAL TOOL & DESIGN, LTD. NR NR $ 6,000,000 Subordinated Note, maturing July 10, 2004 4,800,000 DATA AND INTERNET SERVICES: 0.1% ARCH WIRELESS HOLDINGS, INC. Ca NR 739,789 (3) Subordinated Note, maturing May 15, 2009 584,433 FINANCE: 1.1% VALUE ASSET MANAGEMENT, INC. B3 B 10,000,000 Senior Subordinated Bridge Note, maturing August 31, 2005 9,687,500 HEALTHCARE, EDUCATION AND CHILDCARE: 0.0% BLOCK VISION HOLDINGS CORPORATION NR NR 13,365 Junior Term Loan, maturing January 31, 2006 -- HOME AND OFFICE FURNISHINGS, HOUSEWARES, AND DURABLE CONSUMER PRODUCTS: 0.0% MP HOLDINGS, INC. NR NR 38,060 Subordinated Note, maturing March 14, 2007 36,157
See Accompanying Notes to Financial Statements 37 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BANK LOAN RATINGS+ (UNAUDITED) --------------- PRINCIPAL AMOUNT BORROWER/TRANCHE DESCRIPTION MOODY'S S&P VALUE - ------------------------------------------------------------------------------------------------------------------ PERSONAL AND NONDURABLE CONSUMER PRODUCTS: 0.2% AM COSMETICS CORPORATION NR NR $ 3,626,611 (3) Subordinated Note, maturing March 31, 2006 $ -- PAINT SUNDRY BRANDS B2 B+ 2,875,000 Subordinated Note, maturing August 11, 2008 2,328,750 TEXTILES AND LEATHER: 0.1% TARTAN TEXTILE SERVICES, INC. NR NR 1,332,583 Subordinated Note, maturing April 1, 2011 1,265,954 -------------- TOTAL OTHER CORPORATE DEBT (COST $23,414,543) $ 18,702,794 -------------- EQUITIES AND OTHER ASSETS: 4.4% (@), (R) 360Networks, Inc. (76,029 Common Shares) -- (1), (@), (R) Allied Digital Technologies Corporation (Residual Interest in Bankruptcy Estate) 186,961 (@), (R) AM Cosmetics Corporation (37,197 Common Shares) -- (@), (R) AM Cosmetics Corporation (415 Perferred Shares) -- (@) Arch Wireless Holdings, Inc. (102,124 Common Shares) 214,460 (@), (R) Autotote Systems, Inc. (Option to Purchase 0.248% of Common Shares Issued and Outstanding, Expires October 31, 2002) -- (@), (R) Block Vision Holdings Corporation (571 Common Shares) -- (2), (@), (R) Boston Chicken Inc. (Residual Interest in Boston Chicken Plan Trust) 8,014,961 (@), (R) Breed Technologies, Inc. (212,171 Common Shares) 2,821,874 (@), (R) Capital Tool & Design, Ltd. (Warrants for 121,159 Common Shares, Expires July 10, 2006) -- (@), (R) Cedar Chemical (Residual Interest in Bankruptcy Estate) -- (@), (R) Covenant Care, Inc. (Warrants for 26,901 Common Shares, Expires March 31, 2003) -- (@), (R) Covenant Care, Inc. (Warrants for 19,000 Common Shares, Expires January 13, 2005) -- (@) Dan River, Inc. (127,306 Common Shares) 477,398 (@), (R) Decision One Corporation (350,059 Common Shares) 941,659 (2), (@), (R) Electro Mechanical Solutions (Residual Interest in Bankruptcy Estate) 51,870 (@), (R) Enterprise Profit Solutions (Liquidation Interest) -- (4), (@), (R) Euro United Corporation (Residual Interest in Bankruptcy Estate) 4,466,250 (2), (@), (R) Exide Technologies (Warrants for 16,501 Common Shares, Expires March 16, 2006) 165 (@) Genesis Health Ventures, Inc. (190,605 Common Shares) 2,567,449 (@) Genesis Health Ventures, Inc. (2,223 Preferred Shares) 200,070 (@), (R) Gevity HR (60,056 Common Shares) 323,702 (2), (@), (R) Grand Union Company (Residual Interest in Bankruptcy Estate) 130,143 (@), (R) Holmes Products Corporation (Warrants for 19,397 Common Shares, Expires May 7, 2006) --
See Accompanying Notes to Financial Statements 38 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - --------------------------------------------------------------------------------
BORROWER/TRANCHE DESCRIPTION VALUE - ------------------------------------------------------------------------------------------------------------------ (2), (@), (R) Humphreys, Inc. (Residual Interest in Bankruptcy Estate) $ -- (@), (R) Imperial Home Decor Group, Inc. (300,141 Common Shares) 1 (@), (R) IHDG Realty (300,141 Common Shares) 1 (@), (R) Intera Group, Inc. (864 Common Shares) -- (2), (@), (R) Kevco, Inc. (Residual Interest in Bankruptcy Estate) 147,443 (@) Mariner Health Care, Inc. (126,525 Common Shares) 398,554 (@), (R) Morris Material Handling, Inc. (481,373 Common Shares) 750,942 (@), (R) MP Holdings, Inc. (590 Common Shares) 6 (@), (R) Murray's Discount Auto Stores, Inc. (17 Common Shares) 67,756 (@), (R) Murray's Discount Auto Stores, Inc. (Warrants for 955 Common Shares, Expires January 22, 2007) 3,814,105 (@), (R) New World Restaurant Group, Inc. (Warrants for 4,489 Common Shares, Expires June 15, 2006) 37,173 (@), (R) Safelite Glass Corporation (660,808 Common Shares) 6,601,472 (@), (R) Safelite Realty (44,605 Common Shares) 1 (@), (R) Sarcom Corporation (462,983 Common Shares) -- (@), (R) Sarcom Corporation (4,015 Preferred Shares) 2,782,654 (@), (R) Scientific Games Corporation (48,930 Warrants for Class B Non-Voting Common Shares, Expires October 2003) 60,471 (@), (R) Soho Publishing (17,582 Common Shares) 176 (@), (R) Stellex Aerostructures, Inc. (11,130 Common Shares) -- (@), (R) Tartan Textile Services, Inc. (23,449 Shares of Series D Preferred Stock) 2,227,655 (@), (R) Tartan Textile Services, Inc. (36,775 Shares of Series E Preferred Stock) 2,333,852 (2), (@), (R) Telinget, Inc. (Residual Interest in Bankruptcy Estate) -- (@), (R) Tembec, Inc. (167,239 Common Shares) 1,121,036 (1), (@), (R) Transtar Metals (Residual Interest in Bankruptcy Estate) 160,919 (1), (@), (R) TSR Wireless, LLC (Residual Interest in Bankruptcy Estate) -- (2), (@), (R) U.S. Office Products Company (Residual Interest in Bankruptcy Estate) -- -------------- TOTAL FOR EQUITIES AND OTHER ASSETS (COST $37,380,135) 40,901,179 -------------- TOTAL INVESTMENTS (COST $1,667,758,669)(5) 166.5% $1,535,926,872 PREFERRED SHARES AND LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS, NET (66.5) (613,543,530) ------ -------------- NET ASSETS 100.0% $ 922,383,342 ====== ==============
See Accompanying Notes to Financial Statements 39 ING Prime Rate Trust - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS as of February 28, 2003 (Continued) - -------------------------------------------------------------------------------- - ---------- (@) Non-income producing security. (R) Restricted security. * Senior loans, while exempt from registration under the Security Act of 1933, as amended contain certain restrictions on resale and cannot be sold publicly. These senior loans bear interest (unless otherwise noted) at rates that float periodically at a margin above the London Inter-Bank Offered Rate ("LIBOR") and other short-term rates. NR Not Rated + Bank Loans rated below Baa by Moody's Investor Services, Inc. or BBB by Standard & Poor's Group are considered to be below investment grade. (1) The borrower filed for protection under Chapter 7 of the U.S. Federal bankruptcy code. (2) The borrower filed for protection under Chapter 11 of the U.S. Federal bankruptcy code. (3) Loan is on non-accrual basis. (4) The borrower filed for protection under the Canadian Bankruptcy and Insolvency Act. (5) For federal income tax purposes, the cost of investment is $1,667,043,136 and net unrealized depreciation consists of the following: Gross Unrealized Appreciation $ 11,009,275 Gross Unrealized Depreciation (142,125,539) -------------- Net Unrealized Depreciation $ (131,116,264) ============== See Accompanying Notes to Financial Statements 40 ING Prime Rate Trust - -------------------------------------------------------------------------------- SHAREHOLDER MEETING AND ADDITIONAL INFORMATION (Unaudited) - -------------------------------------------------------------------------------- A special meeting of shareholders of the ING Prime Rate Trust held August 1, 2002, at the offices of ING, 7337 East Doubletree Ranch Road, Scottsdale, AZ 85258. A brief description of each matter voted upon as well as the results are outlined below:
SHARES VOTED SHARES AGAINST OR SHARES BROKER TOTAL VOTED FOR WITHHELD ABSTAINED NON-VOTE SHARES VOTED ------------ ------------ ------------ ------------ ------------ 1. To elect ten (10) members of the Board of Trustees to represent the interests of the holders of Common Shares of the Trust until the election and qualification of their successors. Paul S. Doherty 110,359,707 3,388,734 -- -- 113,748,441 J. Michael Earley 110,479,938 3,268,503 -- -- 113,748,441 R. Barbara Gitenstein 110,365,051 3,383,390 -- -- 113,748,441 R. Glenn Hilliard 110,399,149 3,349,292 -- -- 113,748,441 Thomas J. McInerney 110,341,886 3,406,555 -- -- 113,748,441 David W.C. Putnam 110,446,047 3,302,394 -- -- 113,748,441 Blaine E. Rieke 110,433,012 3,315,429 -- -- 113,748,441 John G. Turner 110,476,871 3,271,570 -- -- 113,748,441 Roger B. Vincent 110,458,645 3,289,796 -- -- 113,748,441 Richard A. Wedemeyer 110,448,814 3,299,627 -- -- 113,748,441 2. To Confirm KPMG LLP as the current independent auditor of the Trust. 110,364,705 2,068,675 1,315,061 -- 113,748,441 3.To transact such other business as may properly come before the Annual Meeting or any ad- journment(s) or postponement(s) thereof. 108,508,381 2,871,397 2,368,663 -- 113,748,441
41 ING Prime Rate Trust - -------------------------------------------------------------------------------- SHAREHOLDER MEETING AND ADDITIONAL INFORMATION (Unaudited) (Continued) - -------------------------------------------------------------------------------- MANAGEMENT'S ADDITIONAL OPERATING INFORMATION (UNAUDITED) APPROVAL OF CHANGES IN INVESTMENT POLICIES At a Special Meeting of Trust Shareholders, held August 6, 1998, Shareholders approved changes in the Trust's fundamental investment policies which make available certain additional investment opportunities to the Trust, including (i) investing in loans in any form of business entity, as long as the loans otherwise meet the Trust's requirements regarding the quality of loans in which it may invest; (ii) the treatment of lease participations as Senior Loans which would constitute part of the 80% of the Trust's assets normally invested in Senior Loans; (iii) investing in all types of hybrid loans that meet credit standards established by the Investment Manager constituting part of the 20% of the Trust's assets that may be invested in Other Investments; and (iv) the ability to invest up to 5% of its total assets in both subordinated loans and unsecured loans which would constitute part of the 20% of the Trust's assets that may be invested in Other Investments. Additionally, another policy change approved by the Board of Trustees of the Trust, which does not require shareholder approval, permits the Trust to accept guarantees and expanded forms of intangible assets as collateral, including copyrights, patent rights, franchise value, and trademarks. Another policy change approved by the Board, that does not require shareholder approval, provides that 80% of the Trust's managed assets, as opposed to 80% of its net assets, may normally be invested in Senior Loans. The Trust's Manager considered the evolving nature of the syndicated loan market and the potential benefits to the Trust and its shareholders of revising the restriction to permit the Trust to invest in loans other than Senior Loans and the increase in the number of attractive investment opportunities available to the Trust due to the change. REPURCHASE OF SECURITIES BY CLOSED-END COMPANIES In accordance with Section 23(c) of the 1940 Act, and Rule 23c-1 under the 1940 Act the Trust may from time to time purchase shares of beneficial interest of the Trust in the open market, in privately negotiated transactions and/or purchase shares to correct erroneous transactions. SHAREHOLDER INVESTMENT PROGRAM The Trust offers a Shareholder Investment Program (the "Program") which enables investors to conveniently add to their holdings at reduced costs. Should you desire further information concerning this Program, please contact the Shareholder Servicing Agent at (800) 992-0180. NUMBER OF SHAREHOLDERS The approximate number of record holders of Common Stock as of March 31, 2003 was 8,100, which does not include approximately 48,100 beneficial owners of shares held in the name of brokers of other nominees. 42 ING Prime Rate Trust - -------------------------------------------------------------------------------- TRUSTEE AND OFFICER INFORMATION (Unaudited) - -------------------------------------------------------------------------------- The business and affairs of the Trust are managed under the direction of the Trust's Board of Trustees. A Trustee who is not an interested person of the Trust, as defined in the 1940 Act, is an independent trustee ("Independent Trustee"). The Trustees of the Trust are listed below. The Statement of Additional Information includes additional information about trustees of the Registrant and is available, without charge, upon request at 1-800-992-0180.
TERM OF NUMBER OF OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE ------- ---- --------- --------------- ---------- ------- INDEPENDENT TRUSTEES Paul S. Doherty(2) Trustee October Mr. Doherty is 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 1999 - President and Partner, (February 2002 - Scottsdale, Arizona 85258 Present Doherty, Wallace, Present). Born: 1934 Pillsbury and Murphy, P.C., Attorneys (1996 - Present); Director, Tambrands, Inc. (1993 - 1998); and Trustee of each of the funds managed by Northstar Investment Manage- ment Corporation (1993 - 1999). J. Michael Earley(3) Trustee February President and Chief 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, (1997 - Present). Scottsdale, Arizona 85258 Present Bankers Trust Company, Born: 1945 N.A. (1992 - Present). R. Barbara Gitenstein(2) Trustee February President, College of 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 - (1997 - Present). Scottsdale, Arizona 85258 Present Present). Formerly, Born: 1948 Executive Vice President and Provost, Drake University (1992 - 1998). Walter H. May(2) Trustee October Retired. Formerly, 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 1999 - Managing Director and (February 2002 - Scottsdale, Arizona 85258 Present Director of Marketing, Present) and Best Prep Born: 1936 Piper Jaffray, Inc.; Charity (1991 - Trustee of each of the Present). funds managed by Northstar Investment Management Corporation (1996 - 1999). Jock Patton(2) Trustee August Private Investor (June 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 1995 - 1997 - Present). (February 2002 - Scottsdale, Arizona 85258 Present Formerly, Director and Present); Director, Born: 1945 Chief Executive Officer, Hypercom, Inc. (January Rainbow Multimedia 1999 - Present); JDA Group, Inc. (January Software Group, Inc. 1999 - December 2001); (January 1999 - Director of Stuart Present); Buick of Entertainment, Inc.; Scottsdale, Inc.; Na- Director of Artisoft, Inc. tional Airlines, Inc.; BG (1994 - 1998). Associates, Inc.; BK En- tertainment, Inc.; and Arizona Rotorcraft, Inc.
43 ING Prime Rate Trust - -------------------------------------------------------------------------------- TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
TERM OF NUMBER OF OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE ------- ---- --------- --------------- ---------- ------- David W.C. Putnam(3) Trustee October President and Director, 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 1999 - F.L. Putnam Securities (February 2002 - Scottsdale, Arizona 85258 Present Company, Inc. and its Present), Anchor Born: 1939 affiliates; President, International Bond Secretary and Trustee, (December 2000 - The Principled Equity Present); Progressive Marke Fund. Formerly, Capital Accumulation Trustee, Trust Realty Trust (August 1998 - Trust (December Corp.; Present); Principled Anchor Investment Equity Market Fund Trust; Bow 2000 - (November 1996 - Present); Ridge Mining Present), Mercy Company and each of Endowment the F.L. Putnam funds Foundation (1995 - managed by Northstar Present); Director, F.L. Investment Foundation Putnam Investment Management Management Company Corporation (1994 - (December 2001 - 1999). Present); Asian American Bank and Trust Company (June 1992 - Present); and Notre Dame Health Care Center (1991 - Present) F.L. Putnam Securities Company, Inc. (June 1978 - Present); and an Honorary Trustee, Mercy Hospital (1973 - Present). Blaine E. Rieke(3) Trustee February General Partner, 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners (February 2002 - Scottsdale, Arizona 85258 Present (January 1997 - Present) and Morgan Born: 1933 Present). Chairman of Chase Trust Co. the Board and Trustee (January 1998 - of each of the funds Present). managed by ING Investment Management Co. LLC (November 1998 - February 2001). Roger B. Vincent(3) Trustee February President, Springwell 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - (1994 - Present); and Scottsdale, Arizona 85258 Present Present). Formerly, Director, AmeriGas Born: 1945 Director, Tatham Propane, Inc. (1998 - Offshore, Inc. (1996 - Present). 2000). Richard A. Wedemeyer(2) Trustee February Retired. Mr. 103 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 2001 - Wedemeyer was (February 2002 - Scottsdale, Arizona 85258 Present formerly Vice President Present) and Born: 1936 - Finance and Touchstone Consulting Administration, Group (1997 - Present). Channel Corporation (June 1996 - April 2002). Formerly, Vice President, Operations and Administration, Jim Henson Productions. (1979 - 1997); Trustee, First Choice Funds (1997 - 2001); and of each of the funds managed by ING Investment Management Co. LLC (1998 - 2001).
44 ING Prime Rate Trust - -------------------------------------------------------------------------------- TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
TERM OF NUMBER OF OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE ------- ---- --------- --------------- ---------- ------- TRUSTEES WHO ARE "INTERESTED PERSONS" R. Glenn Hilliard(4) Trustee February Chairman and CEO, ING 103 Trustee, GCG Trust ING Americas 2002 - Americas and Member, (February 2002 - 5780 Powers Ferry Road, NW Present Americas Executive Present) and Woodruff Atlanta, GA 30327 Committee (1999 - Arts Center; Member of Born: 1943 Present). Formerly, the Board of Directors, Chairman and CEO, ING Clemson University North America (1994 - Foundation, the Board 1999). of Councilors, Carter Center, and the High Museum of Art. Thomas J. McInerney(5) Trustee February Chief Executive Officer, 157 Trustee, GCG Trust 7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial (February 2002 - Scottsdale, Arizona 85258 Present Services (September Present); Equitable Life Born: 1956 2001 - Present); Insurance Co., Golden General Manager and American Life Chief Executive Officer, Insurance Co., Life ING U.S. Worksite Insurance Company of Financial Services Georgia, Midwestern (December 2000 - United Life Insurance Present); Member, ING Co., ReliaStar Life Americas Executive Insurance Co., Security Committee (2001 - Life of Denver, Security Present); President, Connecticut Life Chief Executive Officer Insurance Co., and Director of Southland Life Northern Life Insurance Insurance Co., USG Company (March 2001 - Annuity and Life October 2002), ING Company, and United Aeltus Holding Life and Annuity Company, Inc. (2000 - Insurance Co. Inc Present), ING Retail (March 2001 - Present); Holding Company Director, Ameribest Life (1998 - Present), ING Insurance Co., (March Life Insurance and 2001 to January 2003); Annuity Company Director, First (September 1997 - Columbine Life November 2002) and Insurance Co. (March ING Retirement 2001 to December Holdings, Inc. (1997 - 2002); Member of the Present). Formerly, Board, National General Manager and Commission on Chief Executive Officer, Retirement Policy, ING Worksite Division Governor's Council on (December 2000 - Economic October 2001), Competitiveness and President, ING-SCI, Inc. Technology of (August 1997 - Connecticut, December 2000); Connecticut Business President, Aetna and Industry Financial Services Association, Bushnell; (August 1997 - Connecticut Forum; December 2000). Metro Hartford Chamber of Commerce; and is Chairman, Concerned Citizens for Effective Government.
45 ING Prime Rate Trust - -------------------------------------------------------------------------------- TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
TERM OF NUMBER OF OFFICE AND PRINCIPAL PORTFOLIOS IN OTHER POSITION(S) LENGTH OF OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS NAME, ADDRESS HELD WITH TIME DURING THE OVERSEEN HELD BY AND AGE FUND SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE ------- ---- --------- --------------- ---------- ------- John G. Turner(6) Trustee October Chairman, Hillcrest 157 Trustee, GCG; Director, 7337 E. Doubletree Ranch Rd. 1999 - Capital Partners (May Hormel Foods Scottsdale, Arizona 85258 Present 2002-Present); Corporation (March Born: 1939 President, Turner 2000 - Present); Shopko Investment Company Stores, Inc. (August (January 2002 - 1999 - Present); and Present). Mr. Turner M.A. Mortenson was formerly Vice Company (March 2002 - Chairman of ING Present). Americas (2000 - 2002); Chairman and Chief Executive Officer of ReliaStar Financial Corp. and ReliaStar Life Insurance Company (1993 - 2000); Chairman of ReliaStar United Services Life Insurance Company (1995 - 1998); Chairman of ReliaStar Life Insurance Company of New York (1995 - 2001); Chairman of Northern Life Insurance Company (1992 - 2001); Chairman and Trustee of the Northstar affiliated investment companies (1993 - 2001) and Director, Northstar Investment Management Corporation and its affiliates (1993 - 1999).
- ---------- (1) Trustees serve until their successors are duly elected and qualified. (2) Valuation Committee member. (3) Audit Committee member. (4) Mr. Hilliard is an "interested person," as defined by the Investment Company Act of 1940, as amended (the "1940 Act"), because of his relationship with ING Americas, an affiliate of ING Investments, LLC. (5) Mr. McInerney is an "interested person," as defined by the 1940 Act, because of his affiliation with ING U.S. Worksite Financial Services, an affiliate of ING Investments, LLC. (6) Mr. Turner is an "interested person," as defined by the 1940 Act, because of his affiliation with ING Americas, an affiliate of ING Investments, LLC. 46 ING Prime Rate Trust - -------------------------------------------------------------------------------- TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
PRINCIPAL TERM OF OFFICE OCCUPATION(S) NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS ------- ------------------- -------------- --------------- OFFICERS: James M. Hennessy President and Chief February 2001 - President and Chief Executive 7337 E. Doubletree Ranch Rd., Executive Officer Present Officer of ING Capital Corporation, Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING Born: 1949 Chief Operating June 2000 - Present Advisors, Inc., ING Investments, Officer LLC, Lexington Funds Distributor, Inc., Express America T.C. Inc. and Senior Executive June 2000 - February EAMC Liquidation Corp. (since Vice President 2001 December 2001); Executive Vice President and Chief Operating Secretary April 1995 - February Officer of ING Funds Distributor, 2001 LLC (since June 2000). Formerly, Executive Vice President and Chief Operating Officer of ING Quantitative Management, Inc. (October 2001 to September 2002); Senior Executive Vice President (June 2000 to December 2000) and Secretary (April 1995 to December 2000) of ING Capital Corporation, LLC, ING Funds Services, LLC, ING Investments, LLC, ING Advisors, Inc., Express America T.C. Inc., and EAMC Liquidation Corp.; and Executive Vice President, ING Capital Corporation, LLC and its affiliates (May 1998 to June 2000) and Senior Vice President, ING Capital Corporation, LLC and its affiliates (April 1995 to April 1998). Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief 7337 E. Doubletree Ranch Rd., President and Present Financial Officer and Treasurer of Scottsdale, Arizona 85258 Assistant Secretary ING Funds Services, LLC, ING Funds Born: 1958 Distributor, LLC, ING Advisors, Inc., Chief Financial Officer June 1998 - Present ING Investments, LLC (December 2001 to present), Lexington Funds Senior Vice President June 1998 - February Distributor, Inc., Express America 2002 T.C. Inc. and EAMC Liquidation Corp. (since December 2001). Formerly, Executive Vice President, Chief Financial Officer and Treasurer of ING Quantitative Management, Inc. (December 2001 to October 2002); Senior Vice President, ING Funds Services, LLC, ING Investments, LLC, and ING Funds Distributor, LLC (June 1998 to December 2001) and Chief Financial Officer of Endeavor Group (April 1997 to June 1998). Daniel Norman Senior Vice President April 1995 - Present Senior Vice President, ING 7337 E. Doubletree Ranch Rd., Investments, LLC (since December Scottsdale, Arizona 85258 Co-Senior Portfolio November 1999 - 1994); ING Funds Distributor, LLC Born: 1957 Manager Present (since December 1995); has served as an officer of other affiliates of Treasurer June 1997 - Present ING since February 1992. Jeffrey A. Bakalar Senior Vice President January 1998 - Senior Vice President, ING 7337 E. Doubletree Ranch Rd., Present Investments, LLC (since November Scottsdale, Arizona 85258 1999). Formerly Vice President and Born: 1959 Co-Senior Portfolio November 1999 - Assistant Portfolio Manager, ING Manager Present Investments, LLC (February 1998 - November 1999); Vice President of First National Bank of Chicago (July 1994 - January 1998).
47 ING Prime Rate Trust - -------------------------------------------------------------------------------- TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
PRINCIPAL TERM OF OFFICE OCCUPATION(S) NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS ------- ------------------- -------------- --------------- OFFICERS: Elliot Rosen Senior Vice President May 2002 - Present Senior Vice President, ING 7337 E. Doubletree Ranch Rd., Investments, LLC (since February Scottsdale, Arizona 85258 1999). Formerly, Senior Vice Born: 1953 President IPS-Sendero (May 1997 - February 1999) and President of Sendero, which merged into IPS (August 1993 - May 1997). Robert S. Naka Senior Vice President November 1999 - Senior Vice President and Assistant 7337 E. Doubletree Ranch Rd., Present Secretary of ING Funds Services, Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC, Born: 1963 Assistant Secretary July 1996 - Present ING Advisors, Inc., ING Investments, LLC (October 2001 to present) and Lexington Funds Distributor, Inc. (since December 2001). Formerly, Senior Vice President and Assistant Secretary for ING Quantitative Management, Inc. (October 2001 to October 2002); Vice President, ING Investments, LLC (April 1997 to October 1999) , ING Funds Services, LLC (February 1997 to August 1999) and Assistant Vice President, ING Funds Services, LLC (August 1995 to February 1997). William H. Rivoir III Senior Vice President February 2001 - Senior Vice President and 7337 E. Doubletree Ranch Rd., and Assistant Present Secretary of ING Capital Scottsdale, Arizona 85258 Secretary Corporation, LLC and ING Funds Born: 1951 Services, LLC (since February 2001), ING Funds Distributor, LLC, ING Advisors, Inc., ING Investments, LLC, and ING Quantitative Management, Inc. (since October 2001), Lexington Funds Distributor, Inc., ING Pilgrim Funding, Inc., Pilgrim America Financial, Inc., Express America TC, Inc. and EAMC Liquidation Corp. (since December 2001). Formerly, Senior Vice President and Assistant Secretary of ING Funds Services, LLC (since June 1998), ING Investments, LLC, and Pilgrim America Financial, Inc. (since February 1999), Senior Vice President of ING Investments, LLC (since December 1998) and Assistant Secretary of ING Funds Distributor, LLC (since February 1999) and ING Investments, LLC (since June 1998). Curtis F. Lee Senior Vice President January 2001 - Present Senior Vice President and Chief 7337 E. Doubletree Ranch Rd., and Chief Credit Credit Officer of Senior Loans of Scottsdale, Arizona 85258 Officer ING Investments, LLC (since August Born: 1955 1999). Formerly, held a series of positions with Standard Chartered Bank in the credit approval and problem loan management functions (August 1992 - June 1999).
48 ING Prime Rate Trust - -------------------------------------------------------------------------------- TRUSTEE AND OFFICER INFORMATION (Unaudited) (Continued) - --------------------------------------------------------------------------------
PRINCIPAL TERM OF OFFICE OCCUPATION(S) NAME, ADDRESS POSITION(S) AND LENGTH OF DURING THE AND AGE HELD WITH THE TRUST TIME SERVED(1) PAST FIVE YEARS ------- ------------------- -------------- --------------- OFFICERS: Kimberly A. Anderson Vice President and February 2001 - Vice President and Assistant 7337 E. Doubletree Ranch Rd., Secretary Present Secretary of ING Funds Services, Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC, Born: 1964 Assistant Vice November 1999 - ING Advisors, Inc., ING President and February 2001 Investments, LLC (since October Assistant Secretary 2001) and Lexington Funds Distributor, Inc. (since December 2001). Formerly, Vice President for ING Quantitative Management, Inc. (October 2001 to October 2002); Assistant Vice President of ING Funds Services, LLC (November 1999 to January 2001) and has held various other positions with ING Funds Services, LLC for more than the last five years Robyn L. Ichilov Vice President November 1997 - Vice President of ING Funds 7337 E. Doubletree Ranch Rd., Present Services, LLC (since October 2001) Scottsdale, Arizona 85258 and ING Investments, LLC (since Born: 1967 August 1997); Accounting Manager, ING Investments, LLC (since November 1995). Maria M. Anderson Assistant Vice August 2001 - Present Assistant Vice President of ING 7337 E. Doubletree Ranch Rd., President Funds Services, LLC (since October Scottsdale, Arizona 85258 2001). Formerly, Manager of Fund Born: 1958 Accounting and 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 August 2001 - Present Director of Financial Reporting of 7337 E. Doubletree Ranch Rd., President ING Investments, LLC (since March Scottsdale, Arizona 85258 2001). Formerly, Director of Born: 1967 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 February 2003 - Assistant Vice President and 7337 E. Doubletree Ranch Rd. President and Present (For the ING Assistant Secretary, ING Funds Scottsdale, Arizona 85258 Assistant Secretary Funds) Services, LLC (December 2002 - Born: 1976 Present); and has held various other positions with ING Funds Services, LLC for the last five years.
- ---------- (1) The officers hold office until the next meeting of the Trustees and untill their successors shall have been elected and qualified. 49 INVESTMENT MANAGER ING Investments, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258-2034 ADMINISTRATOR ING Fund Services, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258-2034 1-800-992-0180 INSTITUTIONAL INVESTORS AND ANALYSTS Call ING Prime Rate Trust 1-800-336-3436, Extension 2217 DISTRIBUTOR ING Funds Distributor, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258-2034 1-800-334-3444 TRANSFER AGENT DST Systems, Inc. P.O. Box 219368 Kansas City, Missouri 64141-9368 CUSTODIAN State Street Bank and Trust Company 801 Pennsylvania Avenue Kansas City, Missouri 64105 LEGAL COUNSEL Dechert 1775 Eye Street, N.W. Washington, D.C. 20006 INDEPENDENT AUDITORS KPMG LLP 355 S. Grand Avenue, Suite 2000 Los Angeles, CA 90071 WRITTEN REQUESTS Please mail all account inquiries and other comments to: ING Prime Rate Trust Account c/o ING Fund Services, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258-2034 TOLL-FREE SHAREHOLDER INFORMATION Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account or other information, at 1-800-992-0180 A prospectus containing more complete information regarding the Trust, including charges and expenses, may be obtained by calling ING Funds Distributor, LLC, Distributor, at 1-800-992-0180. Please read the prospectus carefully before you invest or send money. [LION LOGO] ING FUNDS PRTAR022803-042803 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) Not applicable. (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 Prime Rate Trust By /s/ James M. Hennessy ------------------------------------- James M. Hennessy President and Chief Executive Officer Date May 6, 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 May 6, 2003 By /s/ Michael J. Roland ------------------------------------- Michael J. Roland Executive Vice President and Chief Financial Officer Date May 6, 2003 EX-99.CERT 3 ex-99cert.txt CERTIFICATION PURSUANT TO SARBANES-OXLEY ACT EX-99.CERT CERTIFICATION I, James M. Hennessy, certify that: 1. I have reviewed this report on Form N-CSR of ING Prime Rate Trust; 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. Not applicable. 5. Not applicable. 6. Not Applicable. /s/ James M. Hennessy Date: May 6, 2003 - ------------------------------------- James M. Hennessy President and Chief Executive Officer CERTIFICATION I, Michael J. Roland, certify that: 1. I have reviewed this report on Form N-CSR of ING Prime Rate Trust; 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. Not applicable. 5. Not applicable. 6. Not applicable. /s/ Michael J. Roland Date: May 6, 2003 - ------------------------------------- Michael J. Roland Executive Vice President and Chief Financial Officer EX-99.906CERT 4 ex99-906cert.txt CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES EX-99.906CERT CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: ING Prime Rate Trust Date of Form N-CSR: May 6, 2003 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 Prime Rate Trust and will be retained by ING Prime Rate Trust 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 6th day of May, 2003. /s/ James M. Hennessy ----------------------------- James M. Hennessy CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: ING Prime Rate Trust Date of Form N-CSR: May 6, 2003 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 Prime Rate Trust and will be retained by ING Prime Rate Trust 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 6th day of May, 2003. /s/ Michael J. Roland ----------------------------- Michael J. Roland -----END PRIVACY-ENHANCED MESSAGE-----