-----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, F24DMrfpuQd8riPX4C2AhW7o9c6X4g3T3CntXuXD8KjvmMYJOrcLbBDCaC7hzpMB lQyAo4wo8RNwEAoHIFp/Zw== 0001047469-04-027536.txt : 20040830 0001047469-04-027536.hdr.sgml : 20040830 20040830161441 ACCESSION NUMBER: 0001047469-04-027536 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040830 DATE AS OF CHANGE: 20040830 EFFECTIVENESS DATE: 20040830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ING VP NATURAL RESOURCES TRUST CENTRAL INDEX KEY: 0000844070 IRS NUMBER: 222932678 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05710 FILM NUMBER: 041005600 BUSINESS ADDRESS: STREET 1: THE PILGRIM FUNDS STREET 2: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85258 BUSINESS PHONE: 1-800-992-0180 MAIL ADDRESS: STREET 1: THE PILGRIM FUNDS STREET 2: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85258 FORMER COMPANY: FORMER CONFORMED NAME: PILGRIM NATURAL RESOURCES TRUST DATE OF NAME CHANGE: 20020405 FORMER COMPANY: FORMER CONFORMED NAME: ING NATURAL RESOURCES TRUST DATE OF NAME CHANGE: 20020320 FORMER COMPANY: FORMER CONFORMED NAME: PILGRIM NATURAL RESOURCES TRUST DATE OF NAME CHANGE: 20010508 N-CSRS 1 a2142231zn-csrs.txt N-CSRS ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0570 Expires: October 31, 2006 Estimated average burden hours per response: 19.3 ----------------------------- 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: 811-05710 -------------------------------------------- ING VP Natural Resources Trust - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) CT Corporation System, 101 Federal Street, Boston, MA 02110 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-800-992-0180 ---------------------------- Date of fiscal year end: December 31 -------------------------- Date of reporting period: January 1, 2004 to June 30, 2004 ---------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1): 1 ING VP NATURAL RESOURCES TRUST SEMI-ANNUAL REPORT JUNE 30, 2004 [GRAPHIC] [ING FUNDS LOGO] TABLE OF CONTENTS President's Letter 1 Market Perspective 2 Portfolio Managers' Report 4 Statement of Assets and Liabilities 6 Statement of Operations 7 Statements of Changes in Net Assets 8 Financial Highlights 9 Notes to Financial Statements 10 Portfolio of Investments 14 Trustee and Officer Information 15
(THIS PAGE INTENTIONALLY LEFT BLANK) PRESIDENT'S LETTER [PHOTO OF JAMES M. HENNESSY] JAMES M. HENNESSY Dear Shareholder, The past year has been unpredictable for investors. Strong growth in the overall economy coupled with questions concerning mutual fund trading practices have challenged investors. In general, economic activity has continued to increase, with the growth being widespread. Personal consumption of goods and services is leading the recovery supported by corporate purchases of equipment and software and by Government spending on defense. Worries of possible interest rate increases, worsening global turmoil and increasing oil prices have reduced the gains the market realized in the first few months of 2004. However, investors remain steadfast as nearly each of the last six months has seen an overall increase in assets invested in mutual funds despite continuing investigations into late trading and market timing issues at some of the largest and most respected financial services companies in the country. You should have received a letter from Thomas J. McInerney, the Chief Executive Officer of ING U.S. Financial Services, which provided information about the internal review ING management conducted regarding trading practices in ING mutual fund products. If you did not receive a copy of the letter, please contact Investor Services at 1-800-992-0180 and we will provide you with a copy. I wish to thank you on behalf of everyone here at ING Funds for your continued confidence. We look forward to helping you meet your investment goals in the future. Sincerely, /s/ James M. Hennessy James M. Hennessy President ING Funds July 19, 2004 1 MARKET PERSPECTIVE: SIX MONTHS ENDED JUNE 30, 2004 OVERVIEW Perhaps it was inevitable that the markets should be a little neurotic after the heady gains of 2003. But whatever the reasons, investors in 2004 alternately cheered and fretted over the developing economic outlook, sending markets up, down and up again before ending the first six months of 2004 with modest and distinctly fragile gains. At first the worry was the so-called jobless recovery, then half way through the six-month period a very strong U.S. employment report was released. The report generated euphoria until people realized that as the job market tightens, inflation picks up and rising interest rates were likely not far away. Investors took comfort from Federal Open Market Committee ("FOMC") Chairman Greenspan's soothing advice that the rebound in interest rates would be "measured". But as the six months ended June 30, 2004 drew to a close, attention switched nervously to the impending U.S. earnings season and the strong possibility that the splendid results of the last few quarters would likely not be maintained. GLOBAL EQUITIES managed a 3.52% return, net of withholding tax on dividends, for the six months ended June 30, 2004 according to the Morgan Stanley Capital International ("MSCI") World Index(1) in dollars, after peaking on average in mid February and spending much of May in negative territory. Among CURRENCIES, the euro reached a post launch record also in mid February before retreating and ending about 3.0% lower for the six months ended June 30, 2004. The British pound ended the six months 2.0% higher against the dollar, as the Bank of England became the first of the major central banks to raise interest rates. The yen lost approximately 1.5%, ironically after the Bank of Japan stopped buying dollars to keep the yen weak, spending a staggering $144 billion in the first quarter of 2004 to do so. FIXED INCOME MARKET U.S. FIXED INCOME classes started 2004 as they had ended 2003. Disappointing jobs reports, together with stubbornly high new unemployment claims, suggested continuing weakness, and gave bond investors a solid first quarter of gains. That all changed on the first Friday in April 2004, with the very bullish U.S. employment report. Investment grade bonds unsurprisingly bore the brunt of fears that a new cycle of rising interest rates from multi-decade low levels was about to start. For the six months ended June 30, 2004, the Lehman Brothers Aggregate Bond Index(2) of investment grade bonds returned a tiny 0.16%. The Lehman Brothers Corporate Index(3) component and the Lehman Brothers Treasury Bond Index(4) fell by 0.26% and 0.20%, respectively. Ten-year Treasury yields rose by 36 basis points to 4.62%, passing through rates not seen in nearly two years. Yields on 90-day Treasury Bills rose 39 basis points to 1.3%, emphatically breaching the 1.0% level, a rate above which they had not closed since June 9, 2003. High yield bonds did better, the Lehman Brothers U.S. Corporate High Yield Bond Index(5) hung on to return 1.35% for the six-month period. DOMESTIC EQUITY MARKET The U.S. EQUITIES market rose 3.44% in the six months ended June 30, 2004, based on the Standard & Poor's ("S&P") 500 Index(6) including dividends. This implies a price-to-earnings (P/E) level of just over 17 times 2004 earnings. Three strong employment reports in the second quarter of 2004 were welcomed, but all was not in harmony. For while successive, upbeat economic statistics sang of good economic times, there was also a steady drumbeat of evidence that inflation was picking up. The Federal Funds rate at just 1.0% meant that real interest rates were becoming ever more negative at the same time, while the economy was growing at over 4.0%. With labor markets tightening and oil prices breaking above $40 per barrel, this appears to be an increasingly unstable situation. Meanwhile, the FOMC took almost the entire second quarter of 2004 before increasing the Federal Funds rate to 1.25% on June 30, 2004. However, in the week before the increase, the wind seemed to shift again. First quarter of 2004 gross domestic product ("GDP") growth was revised down to 3.9%, durable goods orders fell, and retailers and auto companies complained of slack sales. On the day the FOMC raised rates, the Chicago Purchasing Managers' Index(7) had its largest monthly drop in 30 years. Perhaps Greenspan's "measured" policy was right, but perhaps something else was wrong. The first half of 2004 ended, with investors again nervously awaiting the employment report two days later. 2 MARKET PERSPECTIVE: SIX MONTHS ENDED JUNE 30, 2004 INTERNATIONAL MARKETS Most INTERNATIONAL MARKETS eked out similarly modest gains for the six months ended June 30, 2004, but JAPAN was the star, rising 10.73% in dollars according to the MSCI Japan Index(8). Sentiment was encouraged by first quarter GDP growth, reported at a surprisingly strong 6.1% annualized, suggesting that the world's second largest economy was at last emerging from its slump of more than a decade. EUROPEAN EX UK MARKETS gained 2.88% in dollars in the six months ended June 30, 2004, according to the MSCI Europe ex UK Index(9). Buoyant exports were about the only good news, as domestic demand still languished under unemployment of 9.0%. Still, these markets look relatively cheap. Finally the UK market rose 3.32% in dollars during the first six months of 2004, based on the MSCI UK Index(10). The economy appears to be strong, but the troubling imbalances of an over-indebted consumer and a housing price bubble led to three interest rate increases by the Bank of England, with more likely on the way. - ---------- (1) The MSCI WORLD INDEX reflects the stock markets of 22 countries, including the United States, Europe, Canada, Australia, New Zealand and the Far East -- comprising approximately 1,500 securities -- with values expressed in U.S. dollars. (2) The LEHMAN BROTHERS AGGREGATE BOND INDEX is composed of securities from the Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities Index, and the Asset-Backed Securities Index. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. (3) The LEHMAN BROTHERS CORPORATE INDEX includes all publicly issued, fixed-rate, nonconvertible, dollar-denominated, SEC-registered, investment-grade corporate debt. (4) The LEHMAN BROTHERS TREASURY BOND INDEX (U.S. Dollars) is composed of all bonds covered by the Lehman Brothers Aggregate Bond Index with maturities of 10 years or greater. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. (5) The LEHMAN BROTHERS U.S. CORPORATE HIGH YIELD BOND INDEX is generally representative of corporate bonds rated below investment-grade. (6) The S&P 500 INDEX is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. (7) The CHICAGO PURCHASING MANAGERS' INDEX measures manufacturing activity in the industrial Midwest. (8) The MSCI JAPAN INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan. (9) The MSCI EUROPE EX UK INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Europe, excluding the UK. (10) The MSCI UK INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK. ALL INDICES ARE UNMANAGED AND INVESTORS CANNOT INVEST DIRECTLY IN AN INDEX. THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE PORTFOLIOS' PERFORMANCE IS SUBJECT TO CHANGE SINCE THE PERIOD'S END AND MAY BE LOWER OR HIGHER THAN THE PERFORMANCE DATA SHOWN. FOR VARIABLE ANNUITY CONTRACTS, PLEASE CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END. MARKET PERSPECTIVE REFLECTS THE VIEWS OF THE CHIEF INVESTMENT RISK OFFICER ONLY THROUGH THE END OF THE PERIOD, AND IS SUBJECT TO CHANGE BASED ON MARKET AND OTHER CONDITIONS. 3 ING VP NATURAL RESOURCES TRUST PORTFOLIO MANAGERS' REPORT PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by James A. Vail, ING Investment Management Co. (formerly, Aeltus Investment Management, Inc.)-- the Sub-Adviser. GOAL: The ING VP Natural Resources Trust (the "Trust") seeks long-term growth of capital through investment primarily in common stocks of companies that own or develop natural resources and other basic commodities, or supply goods and services to such companies. Capital appreciation will be the primary determinant of total return and income is a secondary consideration. PERFORMANCE: For the six months ended June 30, 2004, the Trust returned -1.38%, compared to the Standard & Poor's ("S&P") 500 Index(1) and the Goldman Sachs Natural Resources Index(2), which returned 3.44% and 8.15%, respectively, for the same period. PORTFOLIO SPECIFICS: At the beginning of 2004, the Portfolio was underweight in the energy sector, specifically the larger capitalization integrated oils and oil service names, which hurt performance. Not owning large-capitalization chemical companies, Dow Chemical Company and Du Pont de Nemours and Company, and being underweight Alcoa, Inc. helped performance. The primary reason for the Trust's underperformance in the second half of the reporting period was likely being underweight energy, which was a strong performer, and overweight materials. It appears the materials sector suffered as concerns over a slowdown in the Chinese economy caused a dramatic reversal in commodity prices. Our prior holdings in United States Steel Corporation, Freeport-McMoRan Copper and Gold, Inc., and Barrick Gold Corporation were hurt by this severe downturn in metal prices. Stock selection was the primary reason for trailing the benchmark in energy. MARKET OUTLOOK: Natural resources and materials have experienced significant volatility recently. This volatility, in our opinion, has been driven by familiar fears of a hard landing in China's economy, interest rate increases in the United States, and Middle East uncertainties. Nevertheless, the macroeconomic environment appears to be positive for natural resources. Crude oil futures have fallen, which should bode well for continued global economic expansion. Natural gas, primarily reflecting domestic demand, remains at relatively high levels and given limited new production should stay so. Other significant materials, such as copper, nickel, aluminum, and zinc, may have retreated as speculators have exited the sector but should edge higher as global demand enters a more sustainable phase. Despite the recent volatility, investment in natural resources lagged other sectors in the late 1990s and early into the 21st century. This lack of investment, in the face of incremental demand from China, India, and Eastern Europe, may argue for higher material prices in the years ahead. As China shifts from a rural-based economy to a more urban and industrial center, this, in our opinion, sets the stage for attractive materials prices and sector corporate profits into the intermediate term. History points to similar experiences in the United States from 1900-1945 and Japan from 1945-1970 as templates for how the Chinese demand for materials and energy should unfold. Going forward, we believe the Trust is well positioned to benefit from the unfolding fundamentals as we perceive them. Approximately 58% of the Trust's holdings are in the broad energy sector to include oil and gas producers, energy services, drillers and producers of coal and uranium. 36% is represented by materials and paper and forest products, with the remainder in cash. We continue to search for companies in all sectors that possess attractive production growth potential selling at reasonable valuations. 4 PORTFOLIO MANAGERS' REPORT ING VP NATURAL RESOURCES TRUST
AVERAGE ANNUAL TOTAL RETURNS FOR THE YEARS ENDED JUNE 30, 2004 --------------------------------------- 1 YEAR 5 YEAR 10 YEAR ------ ------ ------- ING VP Natural Resources Trust 21.23% 4.01% 6.10% S&P 500 Index(1) 19.10% (2.21)% 11.83% Goldman Sachs Natural Resources Index(2) 31.45% 2.77% N/A(3)
The table above illustrates the total return of ING VP Natural Resources Trust against the S&P 500 Index and the Goldman Sachs Natural Resources Index. The Indices are unmanaged, have no cash in their portfolio, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Trust's performance is shown without the imposition of any expenses or charges which are, or may be, imposed under your annuity contract. Total returns would have been lower if such expenses or charges were included. The performance table does not reflect the deduction of taxes that a shareholder will pay on Trust distributions or the redemption of Trust shares. THE PERFORMANCE UPDATE ILLUSTRATES PERFORMANCE FOR A VARIABLE INVESTMENT OPTION AVAILABLE THROUGH A VARIABLE ANNUITY CONTRACT. THE PERFORMANCE SHOWN INDICATES PAST PERFORMANCE AND IS NOT A PROJECTION OR PREDICTION OF FUTURE RESULTS. ACTUAL INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES AND/OR UNITS, AT REDEMPTION, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PLEASE CALL (800) 366-0066 TO GET PERFORMANCE THROUGH THE MOST RECENT MONTH END. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. TRUST HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) The S&P 500 Index is an unmanaged index that measures the performance of securities of approximately 500 large-capitalization companies whose securities are traded on major U.S. stock markets. (2) The Goldman Sachs Natural Resources Index is a market-capitalization-weighted index of 112 stocks designed to measure the performance of companies in the natural resources sector, which includes energy, precious metals, timber, and other sub-sectors. (3) The Index commenced in August 1996. PRINCIPAL RISK FACTOR(s): Price volatility due to non-diversification and concentration in natural resource companies. Securities of such companies may be subject to broad price fluctuations, reflecting volatility of energy and basic materials' prices and possible instability of supply of various natural resources. The Trust's investments in foreign securities involve special risks including currency fluctuations, lower liquidity, political and economic uncertainties, and differences in accounting standards. The investment of a large percentage of the Trust's assets in the securities of a small number of issuers may cause the Trust's share price to fluctuate more than that of a diversified investment company. The Trust should be considered as a vehicle for diversification and not as a balanced investment program. The value of debt securities may fall when interest rates rise. 5 STATEMENT OF ASSETS AND LIABILITIES as of June 30, 2004 (Unaudited) ASSETS: Investments in securities at value* $ 24,630,226 Cash 30,421 Foreign currencies at value** 370,090 Receivables: Investment securities sold 530,124 Fund shares sold 62 Dividends and interest 7,222 Prepaid expenses 413 -------------- Total assets 25,568,558 -------------- LIABILITIES: Payable for investment securities purchased 266,183 Payable to affiliates 21,811 Payable for trustee fees 49,567 Other accrued expenses and liabilities 55,841 -------------- Total liabilities 393,402 -------------- NET ASSETS (EQUIVALENT TO $15.45 PER SHARE ON 1,629,709 SHARES OUTSTANDING) $ 25,175,156 ============== NET ASSETS WERE COMPRISED OF: Paid-in capital -- shares of beneficial interest at no par value (unlimited shares authorized) $ 21,018,928 Accumulated net investment loss (104,328) Accumulated net realized gain on investments and foreign currencies 804,420 Net unrealized appreciation on investments and foreign currencies 3,456,136 -------------- NET ASSETS $ 25,175,156 ============== *Cost of investments in securities $ 21,176,134 **Cost of foreign currencies $ 369,309
See Accompanying Notes to Financial Statements 6 STATEMENT OF OPERATIONS for the six months ended June 30, 2004 (Unaudited) INVESTMENT INCOME: Dividends, net of foreign taxes withheld* $ 77,117 Interest 4,323 -------------- Total investment income 81,440 -------------- EXPENSES: Investment management fees 123,912 Transfer agent fees 12,608 Administrative service fees 12,391 Shareholder reporting expense 12,659 Professional fees 18,200 Custody and accounting expense 4,189 Trustee fees 546 Miscellaneous expense 1,230 -------------- Total expenses 185,735 -------------- Net investment loss (104,295) -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on: Investments 854,200 Foreign currencies (7,899) -------------- Net realized gain on investments and foreign currencies 846,301 -------------- Net change in unrealized appreciation or depreciation on: Investments (1,139,395) Foreign currencies 2,037 -------------- Net change in unrealized appreciation or depreciation on investments and foreign currencies (1,137,358) -------------- Net realized and unrealized loss on investments and foreign currencies (291,057) -------------- DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (395,352) ============== *Foreign taxes $ 1,182
See Accompanying Notes to Financial Statements 7 STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
SIX MONTHS YEAR ENDED ENDED JUNE 30, DECEMBER 31, 2004 2003 -------------- --------------- FROM OPERATIONS: Net investment loss $ (104,295) $ (120,567) Net realized gain on investments and foreign currencies 846,301 1,409,063 Net change in unrealized appreciation or depreciation on investments and foreign currencies (1,137,358) 4,436,012 -------------- --------------- Net increase (decrease) in net assets resulting from operations (395,352) 5,724,508 -------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income (249,957) -- -------------- --------------- Total distributions (249,957) -- -------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 4,789,284 4,418,070 Dividends reinvested 249,957 -- -------------- --------------- 5,039,241 4,418,070 Cost of shares redeemed (3,954,149) (6,643,754) -------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions 1,085,092 (2,225,684) -------------- --------------- Net increase in net assets 439,783 3,498,824 -------------- --------------- NET ASSETS: Beginning of period 24,735,373 21,236,549 -------------- --------------- End of period $ 25,175,156 $ 24,735,373 ============== =============== Undistributed net investment income (accumulated net investment loss) at end of period $ (104,328) $ 249,924 ============== ===============
See Accompanying Notes to Financial Statements 8 ING VP NATURAL RESOURCES TRUST (UNAUDITED) FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000(1) 1999 - -------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 15.82 12.12 12.40 14.75 12.51 11.03 Income (loss) from investment operations: Net investment income (loss) $ (0.07) (0.08) (0.05) 0.03 (0.07) 0.06 Net realized and unrealized gain (loss) on investments $ (0.14) 3.78 (0.21) (2.38) 2.36 1.50 Total income (loss) from investment operations $ (0.21) 3.70 (0.26) (2.35) 2.29 1.56 Less distributions from: Net investment income $ 0.16 -- 0.02 -- 0.05 0.08 Total distributions $ 0.16 -- 0.02 -- 0.05 0.08 Net asset value, end of period $ 15.45 15.82 12.12 12.40 14.75 12.51 TOTAL RETURN(2) % (1.38) 30.53 (2.10) (15.93) 18.37 14.09 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000s) $ 25,175 24,735 21,237 23,741 32,291 31,737 Ratio to average net assets: Expenses(3) % 1.50 1.61 1.64 1.35 1.66 1.33 Net investment income (loss)(3) % (0.84) (0.58) (0.41) 0.17 (0.53) 0.34 Portfolio turnover rate % 60 121 80 85 72 41
(1) Effective July 26, 2000, ING Investments, LLC, became the Adviser to the Fund. (2) Total return is calculated assuming reinvestment of all dividend and capital gain distributions at net asset value and does not reflect the effect of insurance contract charges. (3) Annualized for periods less than one year. See Accompanying Notes to Financial Statements 9 NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) NOTE 1 -- ORGANIZATION ORGANIZATION. ING VP Natural Resources Trust (the "Trust") is an open-end, non-diversified management investment company registered under the Investment Company Act of 1940, as amended. The Trust was organized as a Massachusetts business trust on November 15, 1988 and commenced operation in 1991. NOTE 2 SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies are consistently followed by the Trust in the preparation of its financial statements: A. SECURITY VALUATION. Investments in equity securities traded on a national securities exchange are valued at the last reported sale price. Securities reported by NASDAQ will be valued at the NASDAQ official closing prices. Securities traded on an exchange or NASDAQ for which there has been no sale and equity securities traded in the over-the-counter-market are valued at the mean between the last reported bid and ask prices. All investments quoted in foreign currencies will be valued daily in U.S. dollars on the basis of the foreign currency exchange rates prevailing at that time. Debt securities are valued at prices obtained from independent services or from one or more dealers making markets in the securities and may be adjusted based on the Trust's valuation procedures. U.S. Government obligations are valued by using market quotations or independent pricing services which use prices provided by market-makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics. Securities and assets for which market quotations are not readily available (which may include certain restricted securities which are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Trust's Board of Trustees ("Board"), in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, which close earlier than the time that the Trust calculates its net asset value may also be valued at their fair values as determined in good faith by or under the supervision of the Trust's Board, in accordance with methods that are specifically authorized by the Board. If a significant event which is likely to impact the value of one or more foreign securities held by the Trust occurs after the time at which the foreign market for such security(ies) closes but before the time that the Trust's net asset value is calculated on any business day, such event may be taken into account in determining the fair value of such security(ies) at the time the Trust calculates its net asset value. For these purposes, significant events after the close of trading on a foreign market may include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis, the Board has authorized the use of one or more research services to assist with the determination of the fair value of foreign securities in light of significant events. Research services use statistical analyses and quantitative models to help determine fair value as of the time the Trust calculates its net asset value. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment, and the fair value assigned to a security may not represent the actual value that the Trust could obtain if it were to sell the security at the time of the close of the NYSE. Investments in securities maturing in less than 60 days are valued at amortized cost, which, when combined with accrued interest, approximates market value. B. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Securities transactions are accounted for on the trade date. Realized gains and losses are reported on the basis of identified cost of securities sold. Interest income is recorded on an accrual basis except when collection is not expected. Dividend income is recorded on the ex-dividend date, or for certain foreign securities, when the information becomes available to the Trust. Premium amortization and discount accretion are determined by the effective yield method. C. FEDERAL INCOME TAXES. It is the policy of the Trust to comply with subchapter M of the Internal Revenue Code and related excise tax provisons applicable to regulated investment companies and to distribute substantially all of its net investment income and any net realized capital 10 NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued) NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) gains to its shareholders. Therefore, no federal income tax provision is required. No capital gain distributions shall be made until any capital loss carryforwards have been fully utilized or expired. D. DISTRIBUTIONS TO SHAREHOLDERS. Dividends from net investment income and net realized gains, if any are declared and paid annually by the Trust. Distributions are determined annually in accordance with federal tax principles which may differ from accounting principles generally accepted in the United States of America for investment companies. The Trust may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code. Distributions are recorded on the ex-dividend date. E. USE OF ESTIMATES. Management of the Trust has made certain estimates and assumptions relating to the reporting of assets, liabilities, income, and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from these estimates. F. FOREIGN CURRENCY TRANSLATION. The books and records of the Trust are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis: (1) Market value of investment securities, other assets and liabilities -- at the exchange rates prevailing at the end of the day. (2) Purchases and sales of investment securities, income and expenses -- at the rates of exchange prevailing on the respective dates of such transactions. Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Trust does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities which are subject to foreign withholding tax upon disposition, liabilities are recorded on the Statement of Assets and Liabilities for the estimated tax withholding based on the securities current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Trust's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at period end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. Government securities. These risks include, but are not limited to, revaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. Government securities. G. FORWARD FOREIGN CURRENCY CONTRACTS. The Trust may enter into forward foreign currency contracts primarily to hedge against foreign currency exchange rate risks on their non-U.S. dollar denominated investment securities. When entering into a currency forward contract, the Trust agrees to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. These contracts are valued daily and the Trust's net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting date, is included on the Statement of Assets and Liabilities. Realized and unrealized gains and losses are included on the Statement of Operations. These instruments involve market and/or credit risk in excess of the amount recognized on the Statement of Assets and Liabilities. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movement in currency and securities values and interest rates. At June 30, 2004, the Trust did not have any open forward foreign currency contracts. 11 NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued) NOTE 3 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES The Trust pays an investment management fee to ING Investments, LLC (the "Investment Manager"), an indirect wholly-owned subsidiary of ING Groep N.V., at an annual rate of 1.00% of the Trust's average daily net assets. The Investment Manager has entered into an Expense Limitation Agreement with the Trust, under which it will limit expenses of the Trust to the extent of 2.50% of the value of the Trust's average daily net assets, excluding interest, taxes, brokerage and extraordinary expenses. Fee waivers and/or reimbursements by the Investment Manager may vary in order to achieve such contractually obligated expense limit. The Expense Limitation Agreement is contractual and shall renew automatically for one-year terms unless ING Investments provides written notice of the termination of the Expense Limitation Agreement within 90 days of the end of the then current term. The Investment Manager may at a later date recoup from the Trust for management fees waived and other expenses assumed by the Investment Manager during the previous 36 months, but only if, after such reimbursement, the Trust's expense ratio does not exceed the percentage described above. No reimbursement was required for the six months ended June 30, 2004. The Investment Manager has entered into a Sub-Advisory Agreement with ING Investment Management Co., (formerly, Aeltus Investment Management, Inc., "ING IM"), an indirect wholly-owned subsidiary of ING Groep N.V. ING Funds Services, LLC (the "Administrator"), an indirect wholly-owned subsidiary of ING Groep N.V., serves as Administrator to the Trust. The Trust pays the Administrator a fee calculated at an annual rate of 0.10% of the Trust's average daily net assets. NOTE 4 -- OTHER TRANSACTIONS WITH AFFILIATED AND RELATED PARTIES At June 30, 2004, the Trust had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities:
ACCRUED INVESTMENT ACCRUED MANAGEMENT ADMINISTRATIVE FEES FEES TOTAL ---- ---- ----- $ 19,828 $ 1,983 $ 21,811
The Trust has adopted a Retirement Policy covering all independent trustees of the Trust who will have served as an independent trustee for at least five years at the time of retirement. Benefits under this plan are based on an annual rate as defined in the plan agreement. NOTE 5 -- INVESTMENT TRANSACTIONS The cost of purchases and proceeds from sales of investments for the six months ended June 30, 2004, excluding short-term securities, were $15,655,930 and $14,816,207, respectively. NOTE 6 -- OTHER ACCRUED EXPENSES AND LIABILITIES At June 30, 2004, the Trust had a payable for professional fees of $28,845 included in Other Accrued Expenses and Liabilities that exceeded 5% of total liabilities on the Statement of Assets and Liabilities. NOTE 7 -- CONCENTRATION OF INVESTMENT RISKS FOREIGN SECURITIES. The Trust may invest in foreign securities and has a policy of investing in the securities of companies that own or develop natural resources and other basic commodities, or supply goods and services to such companies. There are certain risks involved in investing in foreign securities or concentrating in specific industries such as natural resources that are in addition to the usual risks inherent in domestic investments. These risks include those resulting from future adverse political and economic developments, as well as the possible imposition of foreign exchange or other foreign governmental restrictions or laws, all of which could affect the market and/or credit risk of the investments. NON-DIVERSIFIED. The Portfolio is classified as a non-diversified investment company under the Investment Company Act, which means that the Trust is not limited in the proportion of its assets in a single issuer. The investment of a large percentage of a Trust's assets in the securities of a small number of issuers may cause the Trust's share price to fluctuate more than that of a diversified investment company. NOTE 8 -- LINE OF CREDIT The Trust, in addition to certain other funds managed by the Investment Manager, have entered into an unsecured committed revolving line of credit agreement (the "Credit Agreement") with The Bank of New York for an aggregate amount of $125,000,000. 12 NOTES TO FINANCIAL STATEMENTS as of June 30, 2004 (Unaudited) (continued) NOTE 8 -- LINE OF CREDIT (CONTINUED) The proceeds may be used to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the funds; and (3) enable the funds to meet other emergency expenses as defined in the Credit Agreement. The funds to which the line of credit is available pay a commitment fee equal to 0.09% per annum on the daily unused portion of the committed line amount payable quarterly in arrears. The Trust utilized the line of credit for five days during the six months ended June 30, 2004, with an approximate average daily balance of $620,000 and an approximate weighted average interest rate of 1.51%. NOTE 9 -- CAPITAL SHARE TRANSACTIONS Transaction in capital shares and dollars were as follows:
SIX MONTHS ENDED YEAR ENDED JUNE 30, 2004 DECEMBER 31, 2003 ---------------------------- ---------------------------- SHARES DOLLARS SHARES DOLLARS ------------ ------------ ------------ ------------ Shares sold 303,978 $ 4,789,284 352,152 $ 4,418,070 Dividends reinvested 15,701 249,957 -- -- Shares redeemed (253,317) (3,954,149) (540,397) (6,643,754) ------------ ------------ ------------ ------------ Net increase (decrease) 66,362 $ 1,085,092 (188,245) $ (2,225,684) ============ ============ ============ ============
NOTE 10 -- FEDERAL INCOME TAXES The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America for investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, and wash sale deferrals. Distributions in excess of net investment income and/or net realized capital gains for tax purposes are reported as distributions of paid-in capital. Dividends to shareholders from ordinary income were $249,957 for the six months ended June 30, 2004. There were no distributions to shareholders during the year ended December 31, 2003. Dividends paid by the Trust from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders. The tax-basis components of distributable earnings and the expiration dates of the capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes as of December 31, 2003 were as follows:
UNDISTRIBUTED UNREALIZED CAPITAL ORDINARY APPRECIATION/ LOSS EXPIRATION INCOME (DEPRECIATION) CARRYFORWARDS DATE - ------------- -------------- ------------- ---------- $ 249,931 $ 4,593,487 $ (41,881) 2010
NOTE 11 -- OTHER INFORMATION As with many financial services companies, ING Investments and affiliates of ING Investments (collectively, "ING") have received requests for information from various governmental and self-regulatory agencies in connection with investigations related to trading in investment company shares. In each case, full cooperation and responses are being provided. In addition to responding to regulatory requests, ING management initiated an internal review of trading in ING insurance, retirement, and mutual fund products. The goal of this review has been to identify whether there have been any instances of inappropriate trading in those products by third parties or by ING investment professionals and other ING personnel. Additionally, ING reviewed its controls and procedures in a continuing effort to deter improper frequent trading in ING products. ING's internal reviews related to mutual fund trading are continuing. The internal review has identified several arrangements allowing third parties to engage in frequent trading of mutual funds within our variable insurance and mutual fund products, and identified other circumstances where frequent trading occurred despite measures taken by ING intended to combat market timing. In addition, the review has identified five arrangements that allowed frequent trading in certain ING Funds. ING entities did not receive special benefits in return for any of these arrangements, which have all been terminated. The internal review also identified two investment professionals who engaged in improper frequent trading in ING Funds. ING will reimburse any ING Fund or its shareholders affected by inappropriate trading for any improper profits that accrued to any person who engaged in improper frequent trading for which ING is responsible. 13 PORTFOLIO OF INVESTMENTS ING VP Natural Resources Trust as of June 30, 2004 (Unaudited)
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 97.8% COAL: 2.2% 10,000 Peabody Energy Corp. $ 559,900 ------------- 559,900 ------------- FOREST PRODUCTS AND PAPER: 4.1% 35,000 MeadWestvaco Corp. 1,028,650 ------------- 1,028,650 ------------- IRON/STEEL: 3.0% 25,000 @ International Steel Group, Inc. 743,750 ------------- 743,750 ------------- MINING: 31.3% 15,000 Alcan, Inc. 621,000 20,000 Alcoa, Inc. 660,600 20,000 Cameco Corp 1,164,274 100,000 @,@@ First Quantum Minerals Ltd. 1,055,379 12,100 @@ Impala Platinum Holdings Ltd. 917,397 15,000 @,@@ Inco Ltd. 518,400 30,000 @,@@ KGHM Polska Miedz SA 457,500 546,666 @,@@ Minara Resources Ltd. 894,900 93,000 @,@@ Mvelaphanda Resources Ltd. 254,497 5,000 Phelps Dodge Corp. 387,550 500,000 @,@@ Sons of Gwalia Ltd. 961,311 ------------- 7,892,808 ------------- OIL AND GAS: 24.2% 26,000 Burlington Resources, Inc. 940,680 74,900 Chesapeake Energy Corp. 1,102,528 9,000 Murphy Oil Corp. 663,300 10,400 @,@@ Nabors Industries Ltd. 470,288 16,500 Noble Energy, Inc. 841,500 25,500 Pioneer Natural Resources Co. 894,540 26,200 @ Pride Intl., Inc. 448,282 25,000 @ Transocean, Inc. 723,500 ------------- 6,084,618 ------------- OIL AND GAS SERVICES: 29.0% 24,000 Baker Hughes, Inc. 903,600 23,000 @ BJ Services Co. 1,054,320 24,000 @ Cooper Cameron Corp. 1,168,800 100,000 @ Global Industries Ltd. 572,000 100,000 @ Input/Output, Inc. 829,000 16,000 Schlumberger Ltd. 1,016,160 19,000 @ Smith Intl., Inc. 1,059,440 16,000 @ Weatherford Intl. Ltd. 719,680 ------------- 7,323,000 ------------- PACKAGING AND CONTAINERS: 4.0% 50,000 @ Smurfit-Stone Container Corp. 997,500 ------------- 997,500 ------------- Total Common Stock (Cost $21,176,134) 24,630,226 ------------- TOTAL INVESTMENTS IN SECURITIES (COST $21,176,134)* 97.8% $ 24,630,226 OTHER ASSETS AND LIABILITIES-NET 2.2 544,930 ----- ------------- NET ASSETS 100.0% $ 25,175,156 ===== =============
@ Non-income producing security @@ Foreign issuer * Cost for federal income tax purposes is the same as for financial statement purposes. Net unrealized Appreciation consists of: Gross Unrealized Appreciation $ 3,941,815 Gross Unrealized Depreciation (487,723) ------------- Net Unrealized Appreciation $ 3,454,092 =============
PERCENTAGE OF REGION NET ASSETS - -------------------------------------------------------------------------------- Australia 7.4% Barbados 1.9 Canada 13.3 Poland 1.8 South Africa 4.7 United States 68.7 Other Assets and Liabilities, Net 2.2 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 14 TRUSTEE AND OFFICER INFORMATION (Unaudited) The business and affairs of the Trusts are managed under the direction of the Trusts' Board of Trustees. A Trustee who is not an interested person of the Trusts, as defined in the 1940 Act, is an independent trustee ("Independent Trustee"). The Trustees and Officers 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 TRUST SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE ------- ----- --------- --------------- ---------- ------- INDEPENDENT TRUSTEES Paul S. Doherty(2) Trustee July 2000 - Mr. Doherty is President 118 University of 7337 E. Doubletree Ranch Rd. Present and Partner, Doherty, Massachusetts Scottsdale, AZ 85258 Wallace, Pillsbury and Foundation Board Born: 1934 Murphy, P.C., Attorneys (April 2004 - Present). (1996 - Present). J. Michael Earley(3) Trustee February 2002 - President and Chief 118 None 7337 E. Doubletree Ranch Rd. Present Executive Officer, Scottsdale, AZ 85258 Bankers Trust Company, Born: 1945 N.A. (1992 - Present). R. Barbara Gitenstein(2) Trustee February 2002 - President, College of 118 New Jersey Resources 7337 E. Doubletree Ranch Rd. Present New Jersey (1999 - (September 2003 - Scottsdale, AZ 85258 Present). Present). Born: 1948 Walter H. May(2) Trustee July 2000 - Retired. Formerly, 118 Trustee, BestPrep 7337 E. Doubletree Ranch Rd. Present Managing Director and Charity Scottsdale, AZ 85258 Director of Marketing, (1991 - Present) - Born: 1936 Piper Jaffray, Inc. Charitable organization. Jock Patton(2) Trustee July 2000 - Private Investor 118 Director, Hypercom, Inc. 7337 E. Doubletree Ranch Rd. Present (June 1997 - Present). (January 1999 - Scottsdale, AZ 85258 Formerly Director and Present); JDA Software Born: 1945 Chief Executive Officer, Group, Inc. Rainbow Multimedia (January 1999 - Group, Inc. (January Present); Swift 1999 - December 2001). Transportation Co. (March 2004 - Present). David W.C. Putnam(3) Trustee July 2000 - President and Director, 118 Anchor International 7337 E. Doubletree Ranch Rd. Present F.L. Putnam Securities Bond (December 2000 - Scottsdale, AZ 85258 Company, Inc. and its Present); Progressive Born: 1939 affiliates; President, Capital Accumulation Secretary and Trustee, Trust (August 1998 - The Principled Equity Present); Principled Market Fund. Equity Market Fund (November 1996 - Present), Mercy Endowment Foundation (1995 - Present); Director, F.L. Putnam Investment Management Company (December 2001 - 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).
15 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 TRUST SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE ------- ----- --------- --------------- ---------- ------- Blaine E. Rieke(3) Trustee February 2001 - General Partner, 118 Trustee, Morgan Chase 7337 E. Doubletree Ranch Rd. Present Huntington Partners Trust Co. (January Scottsdale, AZ 85258 (January 1997 - 1998 - Present); Born: 1933 Present). Chairman of Director, Members Trust the Board and Trustee Co. (November 2003 - of each of the funds Present). managed by ING Investment Management Co. LLC (November 1998 - February 2001). Roger B. Vincent(3) Trustee February 2002 - President, Springwell 118 Director, AmeriGas 7337 E. Doubletree Ranch Rd. Present Corporation (1989 - Propane, Inc. (1998 - Scottsdale, AZ 85258 Present). Formerly, Present). Born: 1945 Director Tatham Offshore, Inc. (1996 - 2000). Richard A. Wedemeyer(2) Trustee February 2001 - Retired. Formerly Vice 118 Director, Touchstone 7337 E. Doubletree Ranch Rd. Present President - Finance and Consulting Group Scottsdale, AZ 85258 Administration, (1997 - Present); Born: 1936 Channel Corporation Trustee, Jim Henson (June 1996 - April Legacy (1994 - Present). 2002); and Trustee of each of the funds managed by ING Management Co. LLC (1998 - 2001). TRUSTEES WHO ARE "INTERESTED PERSONS" Thomas J. McInerney(4) Trustee February 2001 - Chief Executive Officer, 171 Director, Equitable Life 7337 E. Doubletree Ranch Rd. Present ING U.S. Financial Insurance Co., Golden Scottsdale, AZ 85258 Services American Life Insurance Born: 1956 (September 2001 - Co., Life Insurance Present); Member ING Company of Georgia, Americas Executive Midwestern United Life Committee (2001 - Insurance Co., ReliaStar Present); ING Aeltus Life Insurance Co., Holding Company, Inc. Security Life of Denver, (2000 - Present), ING Security Connecticut Retail Holding Life Insurance Co., Company (1998 - Southland Life Present), and ING Insurance Co., USG Retirement Holdings, Annuity and Life Inc. (1997 - Present). Company, and United Formerly, President, Life and Annuity ING Life Insurance Insurance Co. Inc Annuity Company (March 2001 - Present); (September 1997 - Member of the Board, November 2002); Bushnell Performing President, Chief Arts Center; St. Francis Executive Officer and Hospital; National Director of Northern Conference of Life Insurance Company Community Justice; and (March 2001 - October Metro Atlanta Chamber 2002); General Manager of Commerce. and Chief Executive Officer, ING Worksite Division (December 2000 - October 2001), President ING-SCI, Inc. (August 1997 - December 2000); President, Aetna Financial Services (August 1997 - December 2000).
16 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 TRUST SERVED(1) PAST FIVE YEARS BY TRUSTEE TRUSTEE ------- ----- --------- --------------- ---------- ------- John G. Turner(5) Trustee July 2000 - Chairman, Hillcrest 118 Director, Hormel Foods 7337 E. Doubletree Ranch Rd. Present Capital Partners Corporation Scottsdale, AZ 85258 (May 2002 - Present); (March 2000 - Present); Born: 1939 Formerly, Vice Shopko Stores, Inc. Chairman of ING (August 1999 - Present); Americas (2000 - 2002); and M.A. Mortenson Chairman and Chief Company (March 2002 - Executive Officer of Present); Conseco, Inc. ReliaStar Financial (September 2003 - Corp. and ReliaStar Life Present). Insurance Company (1993 - 2000); Chairman of ReliaStar United Services Life Insurance Company (1995 - 1998); Chairman of ReliaStar Life Insurance Company of New York (1995 - 1998); Chairman of Northern Life Insurance Company (1992 - 2001); Chairman and Trustee of the Northstar affiliated investment companies (1993 - 2001) and Director, Northstar Investment Management Corporation and its affiliates (1993 - 1999).
- ---------- (1) Trustees serve until their successors are duly elected and qualified, subject to the Board's retirement policy. (2) Valuation and Proxy Voting Committee (formerly the Valuation Committee) member. (3) Audit Committee member. (4) Mr. McInerney is an "interested person," as defined under the 1940 Act, because of his affiliation with ING U.S. Financial Services and ING U.S. Worksite Financial Services, both affiliates of ING Investments, LLC. (5) Mr. Turner is an "interested person," as defined under the 1940 Act, because of his affiliation with ING Americas, an affiliate of ING Investments, LLC. 17 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, ING Investments, LLC Scottsdale, AZ 85258 (December 2001 - Present). Born: 1949 Chief Operating July 2000 - Present Formerly, Senior Executive Vice Officer President and Chief Operating Officer, ING Investments, LLC (April 1995 - December 2000); and Executive Vice President, ING Investments, LLC (May 1998 - June 2000). Stanley D. Vyner Executive Vice February 2002 - Executive Vice President, ING 7337 E. Doubletree Ranch Rd. President Present Investments, LLC and certain of its Scottsdale, Arizona 85258 affiliates (July 2000 - Present) and Born: 1950 Chief Investment Risk Officer (June 2003 - Present); Formerly, Chief Investment Officer for the International Portfolios, ING Investments, LLC (July 1996 - June 2003); and President and Chief Executive Officer, ING Investments, LLC (August 1996 - August 2000). Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief 7337 E. Doubletree Ranch Rd. President and Present Financial Officer and Treasurer, Scottsdale, AZ 85258 Assistant Secretary ING Investments, LLC (December Born: 1958 2001 - Present). Formerly, Senior Principal Financial July 2000 - Present Vice President, ING Investments, Officer LLC (June 1998 - December 2001). Robert S. Naka Senior Vice President July 2000 - Present Senior Vice President and Assistant 7337 E. Doubletree Ranch Rd. and Assistant Secretary, ING Funds Services, LLC Scottsdale, AZ 85258 Secretary (October 2001 - Present). Born: 1963 Formerly, Senior Vice President and Assistant Secretary, ING Funds Services, LLC (February 1997 - August 1999). Kimberly A. Anderson Senior Vice President November 2003 - Senior Vice President, ING 7337 E. Doubletree Ranch Rd. Present Investments, LLC (October 2003 - Scottsdale, AZ 85258 Present). Formerly, Vice President Born: 1964 and Assistant Secretary, ING Investments, LLC (October 2001 - October 2003); Assistant Vice President, ING Funds Services, LLC (November 1999 - 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 and July 2000- Present Vice President, ING Funds Services, 7337 E. Doubletree Ranch Rd. Treasurer LLC (October 2001 - Present) and Scottsdale, AZ 85258 ING Investments, LLC (August Born: 1967 1997 - Present). Lauren D. Bensinger Vice President February 2003 - Vice President and Chief 7337 E. Doubletree Ranch Rd. Present Compliance Officer, ING Funds Scottsdale, Arizona 85258 Distributor, LLC (July 1995 - Born: 1954 Present); Vice President (February 1996 - Present) and Chief Compliance Officer (October 2001 - Present), ING Investments, LLC.
18 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 ------- ------------------- -------------- --------------- Todd Modic Vice President August 2003 - Vice President of Financial 7337 E. Doubletree Ranch Rd. Present Reporting - Fund Accounting of Scottsdale, AZ 85258 ING Funds Services, LLC Born: 1967 (September 2002 - Present). Formerly, Director of Financial Reporting, ING Investments, LLC (March 2001 - September 2002); Director of Financial Reporting, Axient Communications, Inc. (May 2000 - January 2001); and Director of Finance, Rural/Metro Corporation (March 1995 - May 2000). Huey P. Falgout, Jr. Secretary August 2003 - Chief Counsel, ING U.S. Financial 7337 E. Doubletree Ranch Rd. Present Services (September 2003 - Scottsdale, Arizona 85258 Present). Formerly, Counsel, ING Born: 1963 U.S. Financial Services (November 2002 - September 2003); and Associate General Counsel of AIG American General (January 1999 - November 2002). Susan P. Kinens Assistant Vice February 2003 - Assistant Vice President and 7337 E. Doubletree Ranch Rd. President and Present Assistant Secretary, ING Funds Scottsdale, AZ 85258 Assistant Secretary Services, LLC (December 2002 - Born: 1976 Present); and has held various other positions with ING Funds Services, LLC for more than the last five years. Maria M. Anderson Assistant Vice August 2001 - Assistant Vice President of ING 7337 E. Doubletree Ranch Rd. President Present Funds Services, LLC (October 2001 - Scottsdale, AZ 85258 Present). Formerly, Manager of Born: 1958 Fund Accounting and Fund Compliance, ING Investments, LLC (September 1999 - November 2001); and Section Manager of Fund Accounting, Stein Roe Mutual Funds (July 1998 - August 1999). Theresa Kelety Assistant Secretary August 2003 - Counsel, ING U.S. Financial Services 7337 E. Doubletree Ranch Rd. Present (April 2003 - Present). Formerly, Scottsdale, Arizona 85258 Senior Associate with Shearman & Born: 1963 Sterling (February 2000 - April 2003); and Associate with Sutherland Asbill & Brennan (1996 - February 2000).
- ---------- (1) The officers hold office until the next annual meeting of the Trustees and until their successors have been elected and qualified. 19 (THIS PAGE INTENTIONALLY LEFT BLANK) (THIS PAGE INTENTIONALLY LEFT BLANK) INVESTMENT MANAGER ING Investments, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258 ADMINISTRATOR ING Funds Services, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258 DISTRIBUTOR ING Funds Distributor, LLC 7337 E. Doubletree Ranch Road Scottsdale, Arizona 85258 1-800-334-3444 TRANSFER AGENT DST Systems, Inc. P.O. Box 419368 Kansas City, Missouri 64141 CUSTODIAN The Bank of New York 100 Colonial Center Parkway, Suite 300 Lake Mary, FL 32746 LEGAL COUNSEL Dechert LLP 1775 I Street, N.W. Washington, D.C. 20006 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM KPMG LLP 99 High Street Boston, MA 02110 BEFORE INVESTING, CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE VARIABLE ANNUITY CONTRACT AND THE UNDERLYING VARIABLE INVESTMENT OPTIONS. THIS AND OTHER INFORMATION IS CONTAINED IN THE PROSPECTUS FOR THE VARIABLE ANNUITY CONTRACT AND THE UNDERLYING VARIABLE INVESTMENT OPTIONS. OBTAIN THESE PROSPECTUSES FROM YOUR AGENT/REGISTERED REPRESENTATIVE AND READ THEM CAREFULLY BEFORE INVESTING. THE TRUSTS' PROXY VOTING RECORD WILL BE AVAILABLE WITHOUT CHARGE ON OR ABOUT AUGUST 31, 2004 ON THE TRUST'S WEBSITE AT www.ingfunds.com AND ON THE SEC'S WEBSITE AT www.sec.gov. [ING FUNDS LOGO] PRESORTED STANDARD U.S. POSTAGE PAID BOSTON MA PERMIT NO. 57842 VPSAR-NRT (0604-081804) ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, Registrant had adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to the Registrant's principal executive officer and principal financial officer. There were no amendments to the Code during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code during the period covered by this report. The code of ethics is filed herewith pursuant to Item 11(a)(1), Exhibit 99.CODE ETH. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Trustees has determined that David Putnam is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Putnam is "independent" for purposes of Item 3 of Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Schedule is included as part of the report to shareholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Board has a Nominating Committee ("Committee") for the purpose of considering and presenting to the Board candidates it proposes for nomination to fill Trustee vacancies on the Board. The Committee currently consists of four Trustees of the Board, none of whom are considered "interested persons" of the Trust within the meaning of Section 2(a)(19) of the Investment Company Act of 1940. The Committee has adopted a written charter that sets forth the policies and procedures of the Committee. The Committee will accept referrals for potential candidates from Board members, Fund shareholders, legal counsel to the disinterested Trustees or such other sources as the Committee deems appropriate. Shareholders can submit recommendations in writing to the attention of the Chairperson of the Committee at an address to be maintained by Fund management for this purpose. In order for the Committee to consider a potential candidate, the Committee initially must receive at least the following information regarding such person: (1) name; (2) date of birth; (3) education; (4) business, professional or other relevant experience and areas of expertise; (5) current business, professional or other relevant experience and areas of expertise; (6) current business and home addresses and contact information; (7) other board positions or prior experience; and (8) any knowledge and experience relating to investment companies and investment company governance. ITEM 10. CONTROLS AND PROCEDURES. (a) Based on our evaluation conducted within 90 days of the filing date, hereof, the design and operation of the registrant's disclosure controls and procedures are effective to ensure that material information relating to the registrant is made known to the certifying officers by others within the appropriate entities, particularly during the period in which Forms N-CSR are being prepared, and the registrant's disclosure controls and procedures allow timely preparation and review of the information for the registrant's Form N-CSR and the officer certifications of such Form N-CSR. 2 (b) There were no significant changes in the registrant's internal controls that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as EX-99.CERT. (b) The officer certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as EX-99.906CERT. (3) Not applicable. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant): ING VP NATURAL RESOURCES TRUST By /s/ James M. Hennessy ----------------------------------------- James M. Hennessy President and Chief Executive Officer Date: August 30, 2004 --------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ James M. Hennessy ----------------------------------------- James M. Hennessy President and Chief Executive Officer Date: August 30, 2004 --------------------------------------- By /s/ Michael J. Roland ----------------------------------------- Michael J. Roland Executive Vice President and Chief Financial Officer Date: August 30, 2004 --------------------------------------- 4 EX-99.CODEETH 2 a2142231zex-99_codeeth.txt EX-99.CODEETH Exhibit 99.CODE ETH ING FUNDS SARBANES-OXLEY ACT CODE OF ETHICS A. ADOPTION The Boards of Directors/Trustees (collectively, the "Board") of the ING Funds (each a "Fund," and collectively, the "Funds") set forth on EXHIBIT A hereto, as such exhibit may be amended from time to time, have adopted this code of ethics (the "Code") in connection with the requirements of Section 406 of the Sarbanes-Oxley Act of 2002 (the "Act") concerning disclosure of a code of ethics for the principal executive officer, the principal financial officer, the principal accounting officer or controller, and persons performing similar functions (regardless of whether they are employed by a Fund or a third party) of the Funds (the "Covered Officers"). For the purposes of this Code, the chief executive officer and the chief financial officer of the Funds are the Covered Officers for the Funds. B. POLICY AND PURPOSE; CONFLICTS WITH LAW AND POLICY 1. POLICY AND PURPOSE It is the policy of the Funds to conduct their affairs in an honest and ethical manner, and to comply with all applicable laws, rules and regulations. The purpose of this Code is to assist in the accomplishment of the foregoing policy, to deter wrongdoing and to promote: a. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. b. Full, fair, accurate, timely and understandable disclosure in reports and documents that a Fund files with, or submits to, the Securities and Exchange Commission (the "SEC") and in other public communications made by a Fund. c. Compliance with applicable laws and governmental rules and regulations. d. The prompt internal reporting of violations of this Code to an appropriate person or persons identified in this Code. e. Accountability for adherence to this Code. 2. CONFLICTS WITH LAW AND POLICY If any part of this Code, or if compliance with any part of this Code, violates or is in conflict with any applicable law, the provisions of such applicable law shall control. If any part of this Code, or if compliance with any part of this Code, violates or is in conflict with any policy or practice of the Funds or of any service provider to the Funds, the provisions of this Code shall control. C. COVERED OFFICER DUTIES Each Covered Officer shall adhere to a high standard of business ethics in his or her dealings with and on behalf of a Fund. Specifically, each Covered Officer shall: 1. Conduct himself or herself in an honest and ethical manner when dealing with or on behalf of a Fund. 5 2. Refrain from engaging in any activity that would compromise his or her professional ethics or otherwise prejudice his or her ability faithfully to carry out his or her duties to the Funds. 3. Refrain from using or appearing to use material non-public information acquired in the course of his or her work for the Funds for unethical or illegal advantage, either directly or indirectly through others. 4. Place the interests of the Funds and their shareholders before his or her personal interests, and handle actual or apparent conflicts of interest between his or her personal interests and the interests of a Fund in an ethical manner. 5. Be familiar with the disclosure requirements generally applicable to the Funds and take all reasonable actions, consistent with his or her position(s) with a Fund and/or a Fund's service provider(s) to ensure full, fair, accurate, timely and understandable disclosure in reports and documents that a Fund files with, or submits to, the SEC or other governmental authorities, and in other public communications made by a Fund. 6. Comply with applicable laws and governmental rules and regulations in his or her dealings with or on behalf of a Fund, and take all reasonable actions, consistent with his or her position(s) with a Fund and/or a Fund's service provider(s), to ensure compliance by the Fund with applicable laws and governmental rules and regulations. 7. Take all reasonable actions, consistent with his or her position(s) with a Fund and/or a Fund's service provider(s), to ensure prompt internal reporting of violations of this Code to an appropriate person or persons identified in this Code. 8. Not knowingly misrepresent, or knowingly cause or permit others to misrepresent, facts about a Fund to a Fund's shareholders, directors, counsel or auditors, to governmental regulators or self-regulatory organizations, or to the public. 9. Consult with other officers and employees of a Fund, and its adviser(s), administrator and principal underwriter, with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Funds. 10. Promote compliance by the Funds with the standards and restrictions imposed by applicable laws, rules and regulations. 11. Not influence investment decisions or financial or other reporting by the Fund whereby the Covered Officer would benefit personally. 12. Not cause a Fund to take an action, or fail to take an action, whereby the Covered Officer would benefit personally. 13. Not retaliate or take any adverse action against, or cause or permit any retaliation or adverse action to be taken against, any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations of this Code or of applicable laws and governmental rules and regulations that are made in good faith. D. DEFINITIONS 1. CONFLICTS OF INTEREST For the purposes of this Code (i) an "actual conflict of interest" is a situation in which a Covered Officer, a member of a Covered Officer's immediate family, or an entity other than a Fund on whose behalf a Covered Officer is acting or from which a Covered Officer may receive compensation or other personal benefit, has an interest in a transaction or the results of a transaction in which a Fund is involved that is different from the interests of the Fund with regard to that same transaction, and (ii) an "apparent conflict of interest" is a situation in which a Covered Officer, a member of a Covered Officer's immediate family, or an entity other than a Fund on whose behalf a Covered Officer is acting or from which a Covered Officer may receive compensation or other personal benefit, appears to have an actual conflict of interest, without regard to whether an actual conflict of interest in fact exists.(1) - ---------- (1) Certain actual conflicts of interest are inherent in the relationship between a Fund and a Covered Officer who is employed by the Fund's investment adviser, administrator or principal underwriter. As a result, this Code recognizes that Covered Officers will, in the normal course of their duties (whether acting on behalf of a Fund or on behalf of the adviser, 6 Notwithstanding the foregoing, an actual conflict of interest shall not include situations that are covered by law or by the Funds' and an investment adviser's code of ethics required under Rule 17j-1 of the Investment Company Act of 1940.(2) 2. WAIVER AND IMPLICIT WAIVER The term "waiver" means the approval by a Fund of a material departure from a provision of this Code. The term "implicit waiver" means a failure by a Fund to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to an executive officer(3) of the Fund. 3. BENEFIT PERSONALLY; IMMEDIATE FAMILY With regard to a Covered Officer, the term "benefit personally" means the direct or indirect receipt by the Covered Officer, by a member of the Covered Officer's immediate family, or by any entity (other than a Fund's investment adviser or any affiliate thereof) of which the Covered Officer or any member of the Covered Officer's immediate family owns 5% or more of the beneficial ownership interest or by which the Covered Officer or any member of the Covered Officer's immediate family is employed, or from which the Covered Officer or any member of the Covered Officer's immediate family receives any compensation or other benefit, of any compensation or other personal benefit. For the purposes of this Code, the term "member of the immediate family" means a Covered Officer's parent, spouse of a parent, child, spouse of a child, spouse, brother, or sister, and includes step and adoptive relationships. E. ACTIVITIES REQUIRING PRIOR APPROVAL A Covered Officer and his or her immediate family shall not engage in any of the following activities without the prior written approval of the Funds' Chief Legal Officer (the "Chief Legal Officer") and the Funds' Chief Executive Officer, except that in the case of the Chief Executive Officer or a member of the Chief Executive Officer's immediate family, such approval shall be from - ---------- administrator or principal underwriter, or for a combination thereof), be involved in recommending actions that may have different effects on the respective parties or may redound to the benefit of the adviser, the administrator or the principal underwriter at the expense of the Fund. For example, the negotiation of the underlying advisory, administrative and underwriting agreements necessarily places such Covered Officers in an actual conflict of interest position as to a Fund. These inherent conflicts of interest are known to and understood by the Funds and the Board, and the Board has determined that the existence of these conflicts of interest is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Therefore, the fact that a Covered Officer acts primarily or exclusively on behalf of a party other than a Fund with regard to a transaction that is covered by such inherent conflicts of interest shall not IPSO FACTO cause such conduct to be in violation of the requirements of this Code. Absent specific dishonest or unethical conduct in such a transaction, the actions by a Covered Officer in such regard shall be deemed to be honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. (2) These inherent conflicts of interest are already subject to prohibitions in the Investment Company Act of 1940 (the "Investment Company Act") and the Investment Advisers Act of 1940 (the "Investment Advisers Act"). For example, a Covered Officer may not individually engage in certain transactions (such as the purchase of sale or securities or other property) with a Fund because of his or her status as an "affiliated person" of the Fund. The Funds' and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat and replace those programs and procedures, and such actual and apparent conflicts of interest fall outside of the coverage of this Code. All other actual and apparent conflicts of interest, even if such actual and apparent conflicts of interest are not subject to provisions in the Investment Company Act or the Investment Advisers Act, are covered by this Code. (3) The term "executive officer," when used with reference to a registrant, means its president, any vice president of the registrant in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function or any other person who performs similar policy making functions for the registrant. 7 the Chief Legal Officer and the Coordination and Compliance Committee of the Board. To obtain such approval, the Covered Officer shall submit a written statement to the Chief Legal Officer describing in detail the proposed activity and the reasons for it. 1. Service as a director, partner, officer, manager or managing member on the board of any public or private company(4) other than a Fund's investment adviser, administrator, principal underwriter, or an affiliate of any of the foregoing, if such company has current or prospective business dealings with a Fund or if any Fund may invest in securities issued by such company. 2. Receipt of any entertainment(5) or meals from any company with which the Fund has current or prospective business dealings unless such entertainment or meals are business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. For the purposes of this Code, entertainment and meals that are incidental to a business conference, seminar or meeting shall be deemed business-related, reasonable in cost, and appropriate as to time and place. 3. Having any ownership interest in, or any consulting, employment or compensation relationship with, any of a Fund's service providers, other than its investment adviser(s), administrator, principal underwriter, or any affiliated person thereof. 4. Exploit for his or her own personal gain any opportunity which a Fund may exploit. This prohibition shall not apply to securities trading undertaken in conformance with the Funds' and an investment adviser's code of ethics adopted pursuant to Rule 17j-1 of the Investment Company Act. F. PROHIBITED ACTIVITIES A Covered Officer and his or her immediate family shall not engage in any of the following activities: 1. Have a direct or indirect financial interest, such as compensation or equity ownership, in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment with the Fund's investment adviser, administrator, principal underwriter, or any affiliated person thereof. 2. Receive any gifts in excess of $500 in any calendar year from any entity or person that directly or indirectly currently or prospectively does or will do business with or receives compensation or other benefits from a Fund. For the purposes of this restriction, gifts from different persons employed by the same entity shall be aggregated, along with any gifts from the entity itself, in order to determine whether the $500 limit has been exceeded. 3. Accept employment from any company, other than a Fund's investment adviser(s), administrator or principal underwriter (or any affiliate thereof), with which the Fund has current or prospective business dealings within one year after the latest to occur of such Covered Officer's termination of employment at the Fund or at the Fund's investment adviser(s), administrator or principal underwriter (or any affiliate thereof). 4. Borrow money from any Fund, or borrow money from or have any other financial transactions with any company, other than a Fund's investment adviser(s), administrator or principal underwriter (or any affiliate thereof), with which the Fund has current or prospective business dealings, other than routine retail transactions that are effected on the same terms and conditions as are available to the general public. - ---------- (4) For the purposes of this Code, "company" includes any legal or business entity such as a corporation, limited liability company, partnership, limited partnership, trust, association, sole proprietorship, ETC. (5) For the purposes of this Code, "entertainment" means activities or events, such as golfing, theater, sporting events, ETC., at which a representative of the entertaining company is present along with the Covered Officer or his or her immediate family member. If a representative of the entertaining company is not present, such activities or events shall be treated as gifts hereunder. 8 5. Engage in a transaction directly as a principal with a Fund, except that this prohibition shall not apply to the purchase or redemption of the shares of any Fund on the same terms and conditions as all other shareholders. 6. Any other activity that would cause them to benefit personally at the expense of a Fund. G. REPORTING AND ACCOUNTABILITY 1. REPORTING Each Covered Officer must: a. Upon adoption of this Code (or thereafter, as applicable, upon becoming a Covered Officer), affirm in writing to the Chief Legal Officer and the Board that he or she has received, read and understands this Code. Such affirmation shall be substantially in the form attached hereto as EXHIBIT B. b. Annually thereafter affirm to the Chief Legal Officer and the Board that he or she has complied with the requirements of this Code. Such affirmation shall be substantially in the form attached hereto as EXHIBIT C. c. Report at least annually all employment, ownership, affiliations or other relationships related to conflicts of interest that the Fund's Directors and Officers Questionnaire covers. d. Notify the Chief Legal Officer promptly if he or she knows of any violation of this Code or of any applicable laws and governmental rules and regulations. Failure to do so is itself a violation of this Code. 2. INTERPRETATIONS The Chief Legal Officer has the authority and shall be responsible for applying this Code to specific situations and for making interpretations of this Code in any particular situation. In making interpretations of this Code, the Chief Legal Officer may consult with the Funds' outside counsel. 3. INVESTIGATIONS The Funds will follow these procedures in investigating and enforcing this Code: a. The Chief Legal Officer will take all appropriate action to investigate any potential violations reported to him or her. b. If, after such investigation, the Chief Legal Officer believes that no violation has occurred, the Chief Legal Officer is not required to take any further action. c. If, after such investigation, the Chief Legal Officer believes that a violation has occurred, the Chief Legal Officer shall report such potential violation to the Coordination and Compliance Committee. d. If the Coordination and Compliance Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; and a recommendation to discipline or dismiss the Covered Officer or to require reimbursement or disgorgement by the Covered Officer of any personal benefits received. 4. WAIVERS The Coordination and Compliance Committee and the Chief Legal Officer, as applicable, may grant a waiver to compliance with this Code by a Covered Officer or his or her immediate family if the Coordination and Compliance Committee or the Chief Legal Officer determines that the proposed activity will not have an adverse impact on any Fund or on the ability of a Covered Officer faithfully to perform his or her duties to the Funds. To obtain a waiver, a Covered Officer shall submit a written statement to the Chief Legal Officer describing in detail the proposed activity, and the reasons for it, and the provision(s) of this Code as to which a waiver is requested. Any waivers of the provisions of this Code shall be disclosed to the extent required by law and SEC rules. 9 H. RELATIONSHIP TO OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' adviser(s), administrator, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment advisers' and principal underwriter's codes of ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code. I. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board or committee thereof or the Funds' outside counsel. J. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund or any Covered Officer or his or her immediate family, as to any fact, circumstance, or legal conclusion. K. AMENDMENTS Any amendments to this Code must be approved or ratified by a majority vote of the Board, including a majority of the independent directors. Any amendments to this Code shall be disclosed to the extent required by law and SEC rules. Date: ---------------------------- 10 EXHIBIT A ING INVESTORS TRUST ING EQUITY TRUST ING FUNDS TRUST ING INVESTMENT FUNDS, INC. ING MAYFLOWER TRUST ING MUTUAL FUNDS ING PRIME RATE TRUST ING SENIOR INCOME FUND ING VARIABLE INSURANCE TRUST ING VARIABLE PRODUCTS TRUST ING VP EMERGING MARKETS FUND, INC. ING VP NATURAL RESOURCES TRUST USLICO SERIES FUND 11 EXHIBIT B INITIAL ACKNOWLEDGEMENT Covered Officer Name and Title: ------------------------------------------------- (PLEASE PRINT) I acknowledge that I have received and read a copy of the ING Funds Sarbanes-Oxley Act Code of Ethics (the "Code") and that I understand it. I further acknowledge that I am responsible for understanding and complying with the policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code. I also acknowledge my responsibility to report any violation of the Code to the Chief Legal Officer of the Funds. I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied. I also understand that, consistent with applicable law, the Funds have the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in their sole discretion, with or without notice. - ------------------------------------------ --------------------- Signature Date 12 EXHIBIT C ANNUAL ACKNOWLEDGEMENT Covered Officer Name and Title: ------------------------------------------------- (PLEASE PRINT) I acknowledge that I have received and read a copy of the ING Funds Sarbanes-Oxley Act Code of Ethics (the "Code") and that I understand it. I further acknowledge that I am responsible for understanding and complying with the policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code. I also acknowledge that I have fully complied with the terms and provisions of the Code during the period of time since the most recent Initial or Annual Acknowledgement provided by me. I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied. I also understand that, consistent with applicable law, the Funds have the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in their sole discretion, with or without notice. - ------------------------------------------ --------------------- Signature Date 13 EX-99.CERT 3 a2142231zex-99_cert.txt EX-99.CERT Exhibit 99.CERT CERTIFICATION I, James M. Hennessy, certify that: 1. I have reviewed this report on Form N-CSR of ING VP NATURAL RESOURCES 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. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 30, 2004 /s/ James M. Hennessy ---------------- --------------------- James M. Hennessy President and Chief Executive Officer 14 CERTIFICATION I, Michael J. Roland, certify that: 1. I have reviewed this report on Form N-CSR of ING VP NATURAL RESOURCES 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. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 30, 2004 /s/ Michael J. Roland ---------------- --------------------- Michael J. Roland Executive Vice President and Chief Financial Officer 15 EX-99.906CERT 4 a2142231zex-99_906cert.txt EX-99.906CERT Exhibit 99.906 Cert CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: ING VP NATURAL RESOURCES TRUST Date of Form N-CSR: JUNE 30, 2004 The undersigned, the principal executive officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to ING VP NATURAL RESOURCES TRUST and will be retained by ING VP NATURAL RESOURCES 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 30th day of August, 2004. /s/ James M. Hennessy --------------------- James M. Hennessy 16 CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: ING VP NATURAL RESOURCES TRUST Date of Form N-CSR: JUNE 30, 2004 The undersigned, the principal executive officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to ING VP NATURAL RESOURCES TRUST and will be retained by ING VP NATURAL RESOURCES 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 30 day of August, 2004. /s/ Michael J. Roland --------------------- Michael J. Roland 17 -----END PRIVACY-ENHANCED MESSAGE-----