-----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, BuTQI2jef6F/SUpxqAiWKKcUZe2l+Re1HgeyTLHnn2N+zUhlGZfMPidvSr8NpAia v65GjhCAH2zhn+y9ggbwgQ== 0001047469-04-000338.txt : 20040108 0001047469-04-000338.hdr.sgml : 20040108 20040107184716 ACCESSION NUMBER: 0001047469-04-000338 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031031 FILED AS OF DATE: 20040108 EFFECTIVENESS DATE: 20040108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ING MAYFLOWER TRUST CENTRAL INDEX KEY: 0000911294 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07978 FILM NUMBER: 04514059 BUSINESS ADDRESS: STREET 1: ING PILGRIM FUNDS STREET 2: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85258 BUSINESS PHONE: 800-992-0180 MAIL ADDRESS: STREET 1: ING PILGRIM FUNDS STREET 2: 7337 E. DOUBLETREE RANCH ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85258 FORMER COMPANY: FORMER CONFORMED NAME: PILGRIM MAYFLOWER TRUST DATE OF NAME CHANGE: 19991029 FORMER COMPANY: FORMER CONFORMED NAME: NORTHSTAR TRUST DATE OF NAME CHANGE: 19981209 FORMER COMPANY: FORMER CONFORMED NAME: NORTHSTAR ADVANTAGE TRUST DATE OF NAME CHANGE: 19950620 N-CSR 1 a2125748zn-csr.txt N-CSR ----------------------------- 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: 811-7978 ING Mayflower Trust ------------------- (Exact name of registrant as specified in charter) 7337 E. Doubletree Ranch Rd., Scottsdale, AZ 85258 -------------------------------------------------- (Address of principal executive offices) (Zip code) C T Corporation System, 101 Federal Street, Boston, MA 02110 ------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: 1-800-992-0180 -------------- Date of fiscal year end: October 31 ---------- Date of reporting period: October 31, 2003 ---------------- ITEM 1. REPORTS TO STOCKHOLDERS. The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1): ANNUAL REPORT ANNUAL REPORT OCTOBER 31, 2003 CLASSES A, B, C AND M INTERNATIONAL EQUITY FUNDS ING EMERGING COUNTRIES FUND ING FOREIGN FUND ING INTERNATIONAL FUND ING INTERNATIONAL SMALLCAP GROWTH FUND ING INTERNATIONAL VALUE FUND ING PRECIOUS METALS FUND ING RUSSIA FUND GLOBAL EQUITY FUNDS ING GLOBAL EQUITY DIVIDEND FUND ING GLOBAL REAL ESTATE FUND ING WORLDWIDE GROWTH FUND [GRAPHIC] [ING FUNDS LOGO] TABLE OF CONTENTS President's Letter 1 Market Perspective 3 Portfolio Managers' Reports 4 Index Descriptions 24 Independent Auditors' Report 25 Statements of Assets and Liabilities 26 Statements of Operations 30 Statements of Changes in Net Assets 33 Financial Highlights 37 Notes to Financial Statements 52 Portfolios of Investments 68 Shareholder Meeting Information 92 Tax Information 93 Trustee and Officer Information 94
(THIS PAGE INTENTIONALLY LEFT BLANK) PRESIDENT'S LETTER [PHOTO OF JAMES M. HENNESSY] JAMES M. HENNESSY Dear Shareholder, What a difference a few months can make. In my last letter to our shareholders in the semi-annual report, it was hard to escape the sense of anxiety that many investors were experiencing. Now, six months later, I believe there may be a renewed sense of optimism among investors -- cautious optimism, to be sure, but optimism nevertheless. And I believe there are good, solid reasons for this improved outlook. For one, many key corporations have been reporting profits in recent months. Granted, the numbers are modest, but they have been noteworthy, consistent and credible because many of these same companies are employing stricter accounting standards following the Enron debacle. Going hand-in-hand with these upbeat figures are the improving price-to-earning ratios and improving valuations that many investors are now seeing. The reasons for renewed confidence reach beyond the shores of the U.S. as well. Overall, world markets are reporting strong gains. This is certainly true of Japan, where the economy has been showing welcome signs of recovery in recent months. That recovery, in turn, has helped trigger increases in business activity and consumer confidence there. We are seeing similar surges in consumer confidence in several key European markets, and, although, some European markets remain sluggish, overall, financial benchmarks from Europe reflect steady growth. Markets in the United Kingdom, in particular, are reporting impressive returns, thanks in no small part to England's robust housing market as well as strong figures coming from the consumer in that country. This renewed confidence has been tempered, however, by recent events and news stories concerning mutual fund trading practices, including after-hours trading and market timing. As with many financial services companies, ING Investments, LLC ("ING Investments"), investment adviser to the ING Funds, 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. ING is also conducting an internal review of investment company share trading, as well as reviewing their policies and procedures in this area. Also, I want to clearly state that ING Funds does not condone the illegal practice of after-hours trading. In addition, it has been our long-standing policy to discourage inappropriate fund trading in our funds. In fact, over the years, ING Funds has taken a variety of steps to address inappropriate fund trading activity. We were among the first fund groups to employ innovative techniques such as making extensive use of fair-value pricing for foreign securities. ING Funds believes that mutual funds are an important vehicle for individual investors, because mutual funds provide the opportunity for investment in professionally managed and monitored, diversified portfolios. As such, we consider the fair treatment of committed investors to be of the utmost importance. We continue to look for effective strategies to address fund trading issues. We hope that the increased attention this issue is now receiving will make it easier for the industry to effectively address inappropriate fund trading in the future. On behalf of everyone at ING Funds, thank you for your continued support. We look forward to helping you meet your investment goals in the future. Sincerely, /s/ James M. Hennessy James M. Hennessy President ING Funds December 2, 2003 1 (THIS PAGE INTENTIONALLY LEFT BLANK) MARKET PERSPECTIVE: YEAR ENDED OCTOBER 31, 2003 This was a tumultuous twelve months for the world's financial markets. Just before the period started, global equity markets seemed to have found a bottom. But by mid-March, as the six months covered by the semi-annual report drew to a close and war clouds gathered, markets were again reaching new multi-year lows. Japan would in fact have another two months to wait until the low point was reached. However, the second six months had hardly started, when major conflict in Iraq quickly ended. This meant that the risk which investors consider inherent in assets like stocks (the "risk premium(1)"), diminished just as fast. This theme was strongly supported by the U.S. FIXED INCOME MARKETS, more particularly in the words of Federal Open Markets Committee Chairman Alan Greenspan. In May he seemed to move markets by saying that the risk of deflation was small but that the Federal Reserve might even buy bonds to forestall it, and that a second half recovery was expected. This sounded like the best of all worlds: low interest rates for the foreseeable future and an improving economy. Since the U.S. economy accounts for about 30% of the world's total, such a scenario boosted global sentiment and global stock markets soared. World EQUITY MARKETS had their best six months in years during the second half of the fiscal year. GLOBAL EQUITIES, as measured in dollars by the Morgan Stanley Capital International ("MSCI") World Index, jumped 19.7% (24.3% for the twelve months as a whole). In the U.S. the Standard & Poors ("S&P") 500 Index rose 15.6% (20.8% for the twelve months). In tune with the theme of the shrinking risk premium, small cap stocks did much better than mid cap stocks, which in turn substantially outperformed large cap stocks. In the U.S. there were increasingly encouraging signs in the economy. Second calendar quarter Gross Domestic Product ("GDP") growth estimates were revised up to 3.3%, within which corporate profits from current production rose 14.3% over the same quarter in 2002. Productivity growth was estimated at the remarkable rate of 6.8%. JAPAN'S market reached a twelve month low in May. Since then, having emerged from recession showing GDP growth of 3.0% in the second quarter of 2003, Japan's firmer economy continues to be driven primarily by exports, and especially by those connected to China's capital spending growth. In the six months ended October 31, 2003 the MSCI Japan Index rose 43.5%, and rose 33.2% for the year. However, internally, Japan is still beset by the problems of deflation and a banking system paralyzed by bad loans. Asia markets staged a remarkable comeback as the SARS story subsided and focus shifted to China's economic strength. China's rising influence on world markets became a dominant theme this year, as many industries are making investments aimed at participation in China's growth. In dollar terms, the MSCI Europe, Australia and Far East ("EAFE") Index returned 27.6%, with Asia ex-Japan rising 33.6% for the year ended October 31, 2003. Asian currencies are gaining political attention in the U.S. The rising belief is that countries such as Japan, China and others aim to keep their currencies artificially low against the dollar in order to maintain an export advantage. Since the cost of such policies is the loss of U.S. manufacturing jobs, policy makers are now attempting to force the issue with our trading partners. It is likely Asian currencies will continue rising versus the dollar and will be an important investment consideration. The period from November 2002 until October 2003 saw the RUSSIAN equity market continue its spectacular performance. However, this performance was overshadowed by developments that took place at the very end of October. In the last week of that month, government forces arrested Mikhail Khodorkovsky, the CEO of Yukos. Mr. Khodorkovsky was charged with tax evasion and fraud, and placed in a Moscow prison. It appeared to most market observers Mr. Khodorkovsky's arrest was driven by the political threat he represented to President Vladimir Putin, as well as parties that are believed to be loyal to the President. In the weeks and months prior to his arrest, Mr. Khodorkovsky had become more vocal about his political aspirations, and was known to be using his personal wealth to fund various opposition parties. Mr. Khodorkovsky has since resigned his position as the CEO of Yukos. However, the damage to Russian equities has already been done, as the market has fallen about 21.0% from its high in mid-October. More importantly, the arrest has raised questions globally as to whether Russia's political and economic transition to democracy since 2000, and its chief architect, Vladimir Putin, are genuine or not. In EUROPE EX UK, economic stagnation and high unemployment caused by inflexible, high cost labor markets and higher than expected interest rates, depressed demand. Much of Europe has slipped back into recession during 2003. Gradually business confidence has returned and the governments in France and Germany which account for just over half of the Eurozone's GDP, have embarked on a program of labor and social security reform as well as tax reductions. Some business surveys in Germany are up six months in a row, and the awaited personal tax cuts were brought forward to 2003. In the six months ended October 31, 2003 the MSCI Europe, ex UK, Index rose 20.2%, and for the year, 27.6%. In the UK, the economy was much healthier than that of its European neighbors. Unemployment was low, inflation fairly tame, and while manufacturing remained at a low ebb, overall demand was bolstered by a free spending consumer cheered by the lowest interest rates since Churchill and a housing price boom. In the six months to October 31, 2003 the MSCI UK Index rose 18.3%, and for the year, 20.3%. EMERGING MARKETS, dominated by Asia, are the workshop of the world. Little surprise then that they have benefited the most by the falling risk premium demanded of them and a recovering global economy. In the six months ended October 31, 2003 the MSCI Emerging Markets Free ("EMF") Index rose 40.4%, and 48.7% for the year. - ---------- (1) Risk premium is the expected additional return required by investors for securities that are perceived to be riskier than safer investments. See accompanying index descriptions on page 24. 3 ING EMERGING COUNTRIES FUND Portfolio Managers' Report MANAGEMENT TEAM: Jan Wim Derks, Director of Global Emerging Markets Equities; Bratin Sanyal, Senior Investment Manager; and Eric Conrads, Senior Investment Manager, all with ING Investment Management Advisors B.V., the Sub-Adviser. GOAL: The ING Emerging Countries Fund (the "Fund") seeks to maximize long-term capital appreciation by investing primarily in equity securities of companies in at least three Emerging Market countries. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class A shares, excluding sales charges, provided a total return of 39.23% versus 48.74% for the MSCI Emerging Markets Free ("MSCI EMF") Index. PORTFOLIO SPECIFICS: The Fund began the period with an overweight in Asia which we started trimming as South Korea began getting impacted by negative news from North Korea. We were also fairly quick in reducing China as SARS was reported there. However as the threat from SARS receded in early summer we increased our weighting in Asia, initially by adding to China, India and Thailand and thereby moving to an overweight in all these markets. Subsequently, we added significantly to Taiwan as foreign investment restrictions were lifted, allowing for several benchmark providers e.g. MSCI to consider increasing the investment factor in Taiwan. Such a move from the benchmark providers might lead to significant flows into Taiwanese equities. We have maintained a near neutral position in Korea as lower valuations seem balanced by poor economic fundamentals and the threat of fund outflows arising out of benchmark changes. Elsewhere in the region we maintained our neutral stance in Indonesia and an underweight position in Malaysia and the Philippines. Latin America was the best performing region within Emerging Markets gaining 60% driven by a spectacular performance from Brazil, up 91%. Having moved sideways for the first few months of the reporting period, Brazil gained sharply as the initial skepticism towards the new administration gave way to appreciation for conservative policy initiatives and new reform measures. Mexico's performance was a respectable 24% but gains were limited by concerns regarding the economic health of its largest trading partner, the United States. We have maintained our overweight in Latin America primarily via Brazil and Mexico. Recently, we have slightly reduced our positions in Brazil while maintaining our overweight stance. In the Europe, Middle East and Africa (EMEA) region we were overweight Eastern Europe and Russia while maintaining South Africa as an underweight. We have since reduced the weighting in Eastern Europe in favor of Asia as growth prospects in Asia brightened after the SARS crisis. However, we maintained our overweight in Russia via the oil sector until fairly late in the reporting period until forecasts for oil prices weakened with prospects of increased supply from countries like Venezuela, Nigeria and Iraq. We are continuing to maintain an underweight position in Russia because of rising political uncertainty and tentative corporate governance issues. The Fund's under-performance can be attributed to the quality of the very sharp rally over the last ten months. Stocks with poorer balance sheets, often with a large debt load have seen bigger gains than stocks with a more sound financial standing. Moreover, small capitalization (and often illiquid) stocks have outperformed large cap stocks. The fund holdings are biased away from either of these classes of stocks as medium to long-term prospects for such stocks remain poor. Very volatile in/outflows leading to a turnover rate of approximately 250% over the reporting period was also a significant detractor of performance. MARKET OUTLOOK: Several pieces of good economic news confirms our optimism over the last several months. Good industrial production figures from Japan, positive numbers from Germany and strong Gross Domestic Product from the U.S. all point to a potential broad based global economic recovery. Therefore, we remain constructive on the emerging markets asset class. Emerging markets may continue to offer good absolute returns, as we have seen in 2003 so far. We believe emerging markets may deliver relatively strong earnings growth of approximately 20% in 2004. We expect multiple expansion within the emerging markets as valuations remain at a deep discount to developed markets and at very low levels historically. For 2004 average Price/Earnings (P/E) are at around 10-12 times. Furthermore, emerging economies are expected to grow by 4.0% on average in 2003 and 5.2% in 2004. In addition, with the dividend yield of approximately 2.5% we also see yield support. Our investment strategy is to focus on countries where economic growth appears robust and on companies with improving cash flows, solid balance sheets and attractive valuations. We are currently finding the best opportunities in Brazil, Mexico, Taiwan, Thailand and India. 4 Portfolio Managers' Report ING EMERGING COUNTRIES FUND [CHART]
ING EMERGING COUNTRIES FUND CLASS ING EMERGING COUNTRIES FUND CLASS A WITH SALES CHARGE A WITHOUT SALES CHARGE MSCI EMF INDEX 11/28/94 $ 9,427 $ 10,000 $ 10,000 10/31/95 $ 9,617 $ 10,202 $ 8,501 10/31/96 $ 11,641 $ 12,348 $ 9,052 10/31/97 $ 13,270 $ 14,077 $ 8,284 10/31/98 $ 9,827 $ 10,425 $ 5,717 10/31/99 $ 13,640 $ 14,469 $ 8,268 10/31/2000 $ 13,549 $ 14,372 $ 7,540 10/31/2001 $ 9,860 $ 10,460 $ 5,771 10/31/2002 $ 10,334 $ 10,962 $ 6,259 10/31/2003 $ 14,388 $ 15,263 $ 9,309
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ----------------------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION OF CLASS A AND C OF CLASS B OF CLASS M 1 YEAR 5 YEAR 11/28/94 05/31/95 08/05/2002 ------ ------ ---------------- --------------- --------------- Including Sales Charge: Class A(1) 31.21% 6.66% 4.16% -- -- Class B(2) 33.42% 7.03% -- 4.60% -- Class C(3) 37.42% 7.07% 3.94% -- -- Class M(4) 33.75% -- -- -- 26.11% Excluding Sales Charge: Class A 39.23% 7.92% 4.85% -- -- Class B 38.42% 7.33% -- 4.60% -- Class C 38.42% 7.07% 3.94% -- -- Class M 38.62% -- -- -- 29.79% MSCI EMF Index 48.74% 10.24% -0.80%(5) 0.58%(6) 33.49%(7)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING Emerging Countries Fund against the MSCI EMF Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Reflects deduction of the maximum Class M sales charge of 3.25%. (5) Since inception performance for index is shown from 12/01/94. (6) Since inception performance for index is shown from 06/01/95. (7) Since inception performance for index is shown from 08/01/02. PRINCIPAL RISK FACTOR(S): Sensitivity to currency exchange rates, international, political and economic conditions and other risks that affect foreign securities. Risk of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 24. 5 ING FOREIGN FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Rudolph-Riad Younes, CFA, Senior Vice President and Head of International Equity and Richard Pell, Senior Vice President and Chief Investment Officer, both with Julius Baer Investment Management, Inc., the Sub-Adviser. GOAL: The ING Foreign Fund (the "Fund") focuses on long-term growth of capital by investing primarily in international equity securities. PERFORMANCE: For the period July 1, 2003 (inception date of the Fund) through October 31, 2003 the Fund's Class A shares, excluding sales chares, provided a total return of 10.10% compared to the Morgan Stanley Capital International Europe, Australia and Far East ("MSCI EAFE") Index, which returned 14.93%. PORTFOLIO SPECIFICS: The Fund was launched on July 1, 2003. Over the past four months, our focus has been to position this new fund according to our international equity strategy. As the Fund began to grow in terms of net assets, we were able to expand the number of individual issues held for diversification purposes, consistent with our general philosophy for the management of international equities. At present, the Fund holds over 200 individual companies. The majority of these issues are within the developed markets of Canada, Australia, Europe and Japan. We also maintain approximately 12% within a variety of emerging markets. With the Fund now well positioned within our recommended strategy, we are focused on performance with the aim to seek to outperform the MSCI EAFE Index, which serves as our benchmark. The underperformance of the Fund versus the benchmark was primarily due to underweighted positions in the Japanese and Hong Kong markets. Additionally, as the Fund did hold a position in cash equivalents during the period, this also negatively impacted the Fund's relative return. While we did invest in Japan, we were underweight versus the benchmark. Additionally, the Fund's underweight position within Hong Kong detracted from results amid an environment where investors were more comfortable adding to emerging markets generally. MARKET OUTLOOK: Our current views for markets as well as recommended positioning are as follows: The US dollar is likely to continue to decline over the next several years. It seems clear that the current administration favors a policy of gradual dollar depreciation. The huge U.S. current account deficit and negative real short-term rates place fundamental pressure on the value of the dollar. This view has important implications as to the sectors and individual companies that we purchase within the Fund. Specifically, companies that are largely dependent on US dollar earnings will likely come under pressure as we move forward. We would characterize our views for Japan as cautiously optimistic. The Japanese market is benefiting from the boom in China (huge capital expenditure expansion). There have been positive external and internal forces at work in Japan that are creating positive momentum for the Japanese economy. We have shifted a portion of our Japanese investments away from exporters that may be hampered by a stronger yen, toward financials and domestic demand driven companies. As an extra benefit, these domestic companies also provide us with better diversification benefits for investments held within Europe than the exporters. Over the past eight years as international equity managers, our positions held within the European equity markets often exceeded 80%. Currently, we have a position approaching only 56%. This reduced weighting to Europe is as a result of not only our Japanese investments, but also positions held within Emerging Markets. Within Emerging Markets, we have broadened positions beyond our long time favorite, Eastern Europe, to include the following additional markets: Turkey, a long-term European Union convergence candidate; India, a technology outsourcing beneficiary; Brazil, a resource-rich beneficiary of the rise of China, which has an insatiable appetite for all types of raw materials. Additionally, the Brazilian Real is strengthening, interest rates are falling and debt burdens are easing. Finally, with regard to China, rather than investing directly within this market, we prefer to focus on those beneficiaries of China's need for food, capital goods, metals and other resources. China's financial markets are small, and will likely remain so until the yuan becomes convertible (we do not anticipate this anytime soon). The horrific state of the Chinese banking system will likely be a huge problem for the equity market in the years ahead. Our indirect investments however should provide better protection while maintaining exposure to the structurally positive Chinese growth themes. 6 Portfolio Managers' Report ING FOREIGN FUND [CHART]
ING FOREIGN FUND CLASS A WITH SALES CHARGE ING FOREIGN FUND CLASS A WITHOUT SALES CHARGE MSCI EAFE INDEX 7/1/2003 $ 9,425 $ 10,000 $ 10,000 10/31/2003 $ 10,377 $ 11,010 $ 11,493
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 --------------------------------------------------- SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION OF CLASS A OF CLASS B OF CLASS C 07/01/03 07/08/03 07/03/03 --------------- --------------- --------------- Including Sales Charge: Class A(1) 3.77% -- -- Class B(2) -- 1.80% -- Class C(3) -- -- 6.21% Excluding Sales Charge: Class A 10.10% -- -- Class B -- 6.80% -- Class C -- -- 7.21% MSCI EAFE Index 14.93%(4) 14.93%(4) 14.93%(4)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING Foreign Fund against the MSCI EAFE Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for index is shown from 07/01/03. PRINCIPAL RISK FACTOR(S): Sensitivity to currency exchange rates, international, political and economic conditions and other risks that affect foreign securities. Risk of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 24. 7 ING INTERNATIONAL FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Richard Saler, Senior Portfolio Manager and Philip Schwartz, Senior Portfolio Manager, both with Aeltus Investment Management, Inc., the Sub-Adviser. GOAL: The ING International Fund (the "Fund") seeks to maximize long-term growth of capital through investment in equity securities and equity equivalents of companies outside the U.S. The Fund may hold up to 35% of its assets in securities of U.S. issuers, including investment-grade debt securities. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class A shares, excluding sales charges, provided a total return of 20.72%, compared to the Morgan Stanley Capital International Europe, Australia and Far East ("MSCI EAFE") Index, which returned 27.57% for the same period. PORTFOLIO SPECIFICS: Over the last year the Fund was repositioned in anticipation of an improving economy. Stock selection was the primary reason for the Fund's weak relative performance, and choices among economic sectors were less significant. Cash holdings muted gains relative to the MSCI EAFE Index, but were somewhat offset by an underweight in health care. Information technology was a strong performer, and the Fund's weighting was in line with the MSCI EAFE Index. Stock selection suffered because the Fund favored financially strong companies at a time when financially challenged companies and small cap stocks were the market leaders. Stock selection was an adverse factor in materials, consumer discretionary and consumer staples stocks. Stock selection in financials and energy helped relative performance. Individually, Australian insurer QBE made the biggest positive contribution, benefiting from strong pricing and cost controls. Other strong performers included generic drug maker Teva Pharmaceutical, and Japanese semiconductor equipment maker Tokyo Electron. Hurting performance was Sony, following a surprise earnings shortfall. Other negative performers were Japanese food retailer Ito-Yokado and UK publisher Pearson. MARKET OUTLOOK: The investment landscape has changed dramatically from last year. Global economic activity has clearly improved as evidenced by strong Gross Domestic Product numbers in the U.S. and China. Australian and UK central banks are already raising interest rates. Investors must weigh the possibility of continued economic growth against less attractive stock prices and the potential for disappointment in 2004. Although rates may have begun an upward trend, it is expected the major central banks will be slow to adopt a tighter monetary policy. Of greater concern is the risk of slowing U.S. growth, as the effects of lower interest rates and tax cuts are largely played out. The managers see continued opportunities in emerging markets, and particularly in Asia. Defensive sectors such as food and beverage are also looking more attractive after a lengthy period of underperformance. In Japan, our focus remains on companies that are restructuring to improve profitability. We remain skeptical of Japan's ability to sustain economic growth. In Europe, we find mixed opportunities, where the strong Euro and structural rigidities continue to plague the region. Some structural reform is, however, slowly taking place in Germany. Europe is likely to continue to experience slow growth. We will continue to seek attractively valued stocks and sectors together with improving fundamentals. 8 Portfolio Managers' Report ING INTERNATIONAL FUND [CHART]
ING INTERNATIONAL FUND CLASS A ING INTERNATIONAL FUND CLASS A WITH SALES CHARGE WITHOUT SALES CHARGE MSCI EAFE INDEX 1/3/94 $ 9,425 $ 10,000 $ 10,000 10/31/94 $ 10,603 $ 11,250 $ 11,276 10/31/95 $ 10,113 $ 10,730 $ 11,268 10/31/96 $ 11,546 $ 12,251 $ 12,485 10/31/97 $ 12,395 $ 13,151 $ 13,100 10/31/98 $ 13,495 $ 14,318 $ 14,403 10/31/99 $ 17,410 $ 18,471 $ 17,769 10/31/2000 $ 19,242 $ 20,416 $ 17,295 10/31/2001 $ 15,127 $ 16,050 $ 13,028 10/31/2002 $ 13,183 $ 13,987 $ 11,343 10/31/2003 $ 15,915 $ 16,886 $ 14,470
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ------------------------------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION OF CLASS A OF CLASS B OF CLASS C 1 YEAR 5 YEAR 01/03/94 08/22/00 09/15/00 ------ ------ --------------- --------------- --------------- Including Sales Charge: Class A(1) 13.78% 2.14% 4.84% -- -- Class B(2) 13.96% -- -- -10.18% -- Class C(3) 17.97% -- -- -- -8.09% Excluding Sales Charge: Class A 20.72% 3.35% 5.47% -- -- Class B 18.96% -- -- -9.39% -- Class C 18.97% -- -- -- -8.09% MSCI EAFE Index 27.57% 0.09% 3.83%(4) -7.64%(5) -7.64%(5)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING International Fund against the MSCI EAFE Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 3%, respectively, for the 1 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 01/01/94. (5) Since inception performance for the index is shown from 09/01/00. Effective November 1, 2001, Class A shares liquidated within 30 days of purchase are subject to a 2% redemption fee. PRINCIPAL RISK FACTOR(S): In exchange for higher growth potential, investing in stocks of smaller companies may entail greater price volatility than those of larger companies. Price volatility and other risks accompany an investment in growth-oriented foriegn equities. Currency exchange rates, international, political and economic conditions and other risk affect foreign securities. The risks of foreign investing are generally intensified for investing in emerging markets. See accompanying index descriptions on page 24. 9 ING INTERNATIONAL SMALLCAP GROWTH FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Horacio A. Valeiras, CFA, Chief Investment Officer and Loretta J. Morris, Lead Portfolio Manager, International, both with Nicholas-Applegate Capital Management, the Sub-Adviser. GOAL: The International Small Cap Growth Fund (the "Fund") seeks to maximize long-term capital appreciation primarily through investments in equity securities of small-sized companies in countries outside of the U.S. believed to have growth potential. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class A shares, excluding sales charges, provided a total return of 38.26%. The Citigroup Europe, Pacific Australasia Composite Extended Market ("EPAC EM") Index rose 45.03% during the same period. PORTFOLIO SPECIFICS: The Fund's holdings in almost every country and sector posted strong, double-digit returns. The Fund's relative underperformance was caused primarily by disappointing stock selection in technology companies. During the period, investors in international small-cap stocks preferred safer, lower-growth names. This hurt the Fund's relative performance since holdings were concentrated in stocks with higher growth expectations, which can be somewhat more volatile. A modest underweight in Japan was another negative, as was stock selection in the technology and transportation sectors relative to the benchmark. On the positive side, holdings in a number of sectors and countries helped performance versus the Citigroup EPAC EM. Issue selection among financial services companies was a plus. From a country perspective, select holdings in the United Kingdom and Switzerland outperformed the benchmark. The Fund's best-performing stocks included UK-based Man Group, a publicly traded hedge fund that advanced on strong demand for its products; and Swiss Life, a multinational insurance and financial services firm which is undergoing a restructuring. MARKET OUTLOOK: The upturn in economic and earnings growth worldwide and the more stable geopolitical climate bode well for international stock markets. We find the recent improvement in the U.S. employment market especially encouraging given we believe this has been a key risk to a sustained global recovery. We are also optimistic that corporations, which have held back on spending for several years, will once again make a contribution to global growth. As investors gain increased confidence in the persistence of the economic and earnings recovery, prices of international small-cap stocks should continue to climb higher. In particular, we are excited about the investment potential of many Asian companies that are leveraged to a cyclical resurgence in economic activity. More importantly, we remain committed to consistently applying our proven investment philosophy and process in all market environments. Our focus is on identifying and making timely investments in companies poised to benefit from positive, sustainable change. We are confident that by adhering to our approach, we will meet our goal of delivering strong, long-term performance to shareholders. 10 Portfolio Managers' Report ING INTERNATIONAL SMALLCAP GROWTH FUND [CHART]
ING INTERNATIONAL SMALLCAP GROWTH FUND CLASS A ING INTERNATIONAL SMALLCAP GROWTH FUND CLASS A CITIGROUP EPAC EMI WITH SALES CHARGE WITHOUT SALES CHARGE INDEX 8/31/94 $ 9,427 $ 10,000 $ 10,000 10/31/94 $ 9,374 $ 9,944 $ 9,882 10/31/95 $ 9,064 $ 9,615 $ 9,398 10/31/96 $ 10,556 $ 11,198 $ 10,529 10/31/97 $ 12,889 $ 13,672 $ 10,048 10/31/98 $ 14,905 $ 15,811 $ 10,161 10/31/99 $ 26,267 $ 27,864 $ 11,994 10/31/2000 $ 33,522 $ 35,561 $ 11,734 10/31/2001 $ 22,031 $ 23,370 $ 9,485 10/31/2002 $ 18,502 $ 19,627 $ 8,882 10/31/2003 $ 25,580 $ 27,135 $ 12,882
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ---------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION OF CLASS A & C OF CLASS B 1 YEAR 5 YEAR 08/31/94 05/31/95 ------ ------ -------- -------- Including Sales Charge: Class A(1) 30.31% 10.09% 10.78% -- Class B(2) 32.30% 10.44% -- 12.62% Class C(3) 36.28% 10.68% 10.73% -- Excluding Sales Charge: Class A 38.26% 11.40% 11.50% -- Class B 37.30% 10.71% -- 12.62% Class C 37.28% 10.68% 10.73% -- Citigroup EPAC EM Index 45.03% 4.86% 2.80%(4) 3.78%(5)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING International SmallCap Growth Fund against the Citigroup EPAC EM Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for index is shown from 09/01/94. (5) Since inception performance for index is shown from 06/01/95. PRINCIPAL RISK FACTOR(S): In exchange for higher growth potential, investing in stocks of smaller companies may entail greater price volatility than investing in larger companies. Price volatility and other risks accompany an investment in growth-oriented foreign equities. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 24. 11 ING INTERNATIONAL VALUE FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Brandes Investment Partners' Large Cap Investment Committee, the Sub-Adviser. GOAL: The ING International Value Fund (the "Fund") seeks long-term capital appreciation by investing primarily in foreign companies with market capitalizations greater than $1 billion, but it may hold up to 25% of its assets in companies with smaller market capitalizations. PERFORMANCE: For the twelve-month period ended October 31, 2003, the Fund's Class A shares, excluding sales charges, provided a total return of 35.11% compared to the Morgan Stanley Capital International Europe, Australia and Far East ("MSCI EAFE") Index, which returned 27.57% for the same period. PORTFOLIO SPECIFICS: Gains for holdings in the diversified telecom services and commercial banking industries helped drive performance for the year ended October 31, 2003. Banca Intesa (Italy - communications equipment - 2.0% of the Fund), Telefonica (Spain - diversified telecom services - 2.6%), and Deutsche Telekom (Germany - diversified telecom services - 2.6%) were among positions contributing to performance. Holdings in the communications equipment and oil & gas industries also tended to post gains. On a country basis, holdings in Japan, Brazil, France, and Spain helped drive performance. Positions from these countries posting gains included Eletrobras (Brazil - electric utilities - 2.0%), Alcatel (France - communications equipment - - 2.7%), Sumitomo Mitsui Financial Group (Japan - commercial banking - 1.8%), and Repsol (Spain -oil & gas - 1.5%). During the period, we sold positions such as Daiwa House (Japan - household durables - 0.0%), HSBC Holdings (United Kingdom - commercial banking - 0.0%), and Nortel Networks (Canada - communications equipment - 0.0%) as appreciation pushed their market prices toward our estimates of their fair values. New purchases included Ahold (Netherlands - food & staples retailing - 0.9%) and Interbrew (Belgium - beverages - 1.0%). In addition, we took advantage of price weakness and added to select existing holdings at prices that we consider attractive. MARKET OUTLOOK: As of October 31, 2003, the Fund's most significant weightings lie in Japan and the United Kingdom, and in the diversified telecom services and commercial banking industries. While we offer no predictions regarding the short-term direction of international equity markets, we note that share price volatility can create new opportunities to purchase shares of strong companies at discounts to their underlying values. Accordingly, we continue our search for undervalued companies that offer both long-term appreciation potential and an attractive margin of safety. We believe the broader market will eventually recognize the fundamental strengths of such companies, rewarding patient investors with favorable results over the long term. 12 Portfolio Managers' Report ING INTERNATIONAL VALUE FUND [CHART]
ING INTERNATIONAL VALUE FUND CLASS A ING INTERNATIONAL VALUE FUND CLASS A WITH SALES CHARGE WITHOUT SALES CHARGE MSCI EAFE INDEX 3/6/95 $ 9,427 $ 10,000 $ 10,000 10/31/95 $ 9,993 $ 10,600 $ 10,870 10/31/96 $ 11,216 $ 11,897 $ 12,044 10/31/97 $ 14,000 $ 14,851 $ 12,636 10/31/98 $ 15,381 $ 16,316 $ 13,894 10/31/99 $ 20,388 $ 21,627 $ 17,141 10/31/2000 $ 24,171 $ 25,640 $ 16,684 10/31/2001 $ 20,331 $ 21,566 $ 12,567 10/31/2002 $ 17,625 $ 18,696 $ 10,942 10/31/2003 $ 23,812 $ 25,259 $ 13,959
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ---------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION OF CLASS A AND C OF CLASS B 1 YEAR 5 YEAR 03/06/95 04/18/97 ------ ------ ---------------- --------------- Including Sales Charge: Class A(1) 27.34% 7.85% -- 10.53% Class B(2) 29.11% 8.05% 9.12% -- Class C(3) 33.08% 8.34% -- 10.54% Excluding Sales Charge: Class A 35.11% 9.13% -- 11.29% Class B 34.11% 8.34% 9.12% -- Class C 34.08% 8.34% -- 10.54% MSCI EAFE Index 27.57% 0.09% 3.92%(4) 2.03%(5)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING International Value Fund against the MSCI EAFE Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for index is shown from 03/01/95. (5) Since inception performance for index is shown from 05/01/97. PRINCIPAL RISK FACTOR(S): In exchange for higher growth potential, investing in stocks of smaller companies may entail greater price volatility than those of larger companies. International investing does pose special risks not found in investments that are solely domestic. The risks of foreign investing are generally intensified for investing in emerging markets. See accompanying index descriptions on page 24. 13 ING PRECIOUS METALS FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: James A. Vail, C.F.A., Vice President and Portfolio Manager with Aeltus Investment Management, Inc., the Sub-Adviser. GOAL: The ING Precious Metals Fund (the "Fund") seeks to attain capital appreciation and hedge against the loss of buying power of the U.S. dollar as may be obtained through investment in gold and securities of companies engaged in mining or processing gold throughout the world. PERFORMANCE: For the year ended October 31, 2003 the Fund's Class A shares, excluding sales charges, provided a total return of 57.73% compared to the Standard & Poors ("S&P") 500 Index, Gold Bullion and Financial Times ("FT") Gold Mines Index which returned 20.80%, 21.88% and 54.05%, respectively, for the same period. PORTFOLIO SPECIFICS: The ING Precious Metals Fund (the "Fund") seeks to attain capital appreciation and hedge against the loss of buying power of the U.S. dollar through investment in gold bullion and in the securities of companies engaged in the mining or processing of gold and other precious metals and materials. The fundamentals for the gold sector remained positive throughout the reporting period, fostered by continued international tensions, U.S. Dollar volatility, lower interest rates globally, and reduced producer hedging. Additionally, the sector continues to consolidate, bringing greater discipline and efficiency to the production equation. Lastly, gold as an alternative asset class appears to be gaining attention from individual and institutional investors around the world. During the year the Fund increased its exposure to emerging junior exploration and development companies. Senior producers are constantly looking for new sources of resources and reserves, and these smaller companies could provide needed ounces. In the last year these names provided solid out-performance in relation to the benchmark. Consolidation continues with Ashanti Goldfield being taken by AngloGold Limited, and we believe this trend will likely continue. MARKET OUTLOOK: Industry fundamentals continue to be strong, and gold prices are moving higher, achieving levels not seen in recent years. The key going forward remains the weakening U.S. dollar. As gold becomes more affordable in foreign currencies, we believe demand should increase. Demand could also be supported as hedged producers seek to increase exposure to higher metal prices by reducing or eliminating their hedge books. Finally, the World Gold Council is pursuing an exchange traded fund redeemable into gold bullion which should layer another level onto existing gold demand. 14 Portfolio Managers' Report ING PRECIOUS METALS FUND [CHART]
ING PRECIOUS METALS FUND CLASS A ING PRECIOUS METALS FUND CLASS A WITH SALES CHARGE(a) WITHOUT SALES CHARGE(b) 10/31/93 $ 9,430 $ 10,000 10/31/94 $ 11,228 $ 11,906 10/31/95 $ 9,302 $ 9,864 10/31/96 $ 11,273 $ 11,954 10/31/97 $ 7,224 $ 7,660 10/31/98 $ 6,307 $ 6,687 10/31/99 $ 6,307 $ 6,687 10/31/2000 $ 4,288 $ 4,547 10/31/2001 $ 5,769 $ 6,118 10/31/2002 $ 8,366 $ 8,872 10/31/2003 $ 13,196(a) $ 13,993(b) S&P 500 INDEX(c) GOLD BULLION(d) FT GOLD MINES INDEX(e) 10/31/93 $ 10,000 $ 10,000 $ 10,000 10/31/94 $ 10,387 $ 10,383 $ 10,922 10/31/95 $ 13,133 $ 10,351 $ 8,729 10/31/96 $ 16,297 $ 10,266 $ 9,511 10/31/97 $ 21,531 $ 8,424 $ 6,289 10/31/98 $ 26,266 $ 7,906 $ 5,636 10/31/99 $ 33,008 $ 8,090 $ 4,958 10/31/2000 $ 35,018 $ 7,162 $ 3,010 10/31/2001 $ 26,297 $ 7,548 $ 4,275 10/31/2002 $ 22,325 $ 8,581 $ 5,442 10/31/2003 $ 26,968(c) $ 10,458(d) $ 8,383(e)
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 -------------------------------------------------------- 1 YEAR 5 YEAR 10 YEAR ------ ------ ------- Including Sales Charge: Class A(1) 48.66% 14.54% 2.80% Excluding Sales Charge: Class A 57.73% 15.90% 3.42% S&P 500 Index 20.80% 0.53% 10.43% Gold Bullion 21.88% 5.73% 0.44% FT Gold Mines Index 54.05% 8.18% -1.77%
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING Precious Metals Fund against the S&P 500 Index, Gold Bullion and FT Gold Mines Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. PRINCIPAL RISK FACTOR(S): Price volatility due to non-diversification and concentration in the gold/precious metals industry. The market for gold and other precious metals is widely unregulated and is located in foreign countries that have the potential for instability. Precious metals earn no income, have higher transaction/storage costs and realize gain only with an increase in market price. International investing does pose special risks including currency fluctuation, economic and political risk not found in investments that are soley domestic. Risk of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 24. 15 ING RUSSIA FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Samuel Oubadia, Senior Investment Manager - Emerging Markets Equities, Michiel Bootsma, Investment Manager - Emerging Markets Equities, Jan Wim Derks, Director - Head of Emerging Markets Equities, Fritz Moolhuizen - Managing Director, Head of Equities, all with ING Investment Management Advisors B.V., the Sub-Adviser. GOAL: The ING Russia Fund (the "Fund") seeks long-term capital appreciation through investments primarily in equity securities of Russian companies. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class A shares, excluding sales charges, provided a total return of 58.98%. In the same period the Moscow Times Index and Russian Trading System Index (RTS) returned 46.25% and 45.93% respectively. PORTFOLIO SPECIFICS: Several key holdings have been behind the very strong performance of the Russia Fund. These include Russia's largest mining company, Norilsk Nickel. The stock gained a whopping 160.0% over the relevant period primarily in response to high nickel and copper prices. The company is increasingly broadening its activities and is becoming more involved in the production of precious metals. Norilsk has long been a producer of palladium. However, a series of acquisitions has turned Norilsk into an important producer of gold as well. By some estimates, Norilsk may be among the world's 10 largest gold producers by the end of 2003. Another one of the market's outstanding performers was the steel company Severstal. The Russia Fund steadily increased its position in Severstal over the past year. The company's shares gained about 102.0% from November 2002 until October 2003. Again, high steel prices were the main driver behind the rise in Severstal's share price. The stock that stood out in the Oil & Gas sector was the gas giant, Gazprom. The company's shares rose on the news that the ring fence, which prevents most foreign shareholders from holding local Gazprom shares, will likely be lifted before the end of 2004. Investors in the Russian market have been waiting for this development for quite some time, as Gazprom's local share trades at a substantial discount to the London-listed ADR (American Depository Receipt). Gazprom ADRs gained almost 80.0% over the relevant period. MARKET OUTLOOK: Our fundamental view on the Russian economy has not changed significantly. We expect real GDP growth of 4%-6% in 2004. Although the surplus in the current account (as a percentage of GDP) will likely decrease, it should still remain in the range of 2%-3%. Finally, we expect a balanced federal budget for 2004. In spite of the positive outlook for the Russian economy, the Russian equity market currently faces what is perhaps its first real test in some time. Some investors will clearly be put off by the recent political turmoil surrounding Yukos and its former CEO. It is reasonable to believe that at least a portion of these investors will choose to wait and see how the story develops before returning to the market. The next six-month period will see (at least) two critical points. They are the parliamentary elections in early December, and the Presidential elections in March of 2004. Until then, we can expect the market to remain volatile, as investors may fear that the Kremlin will try to silence some of its other political opponents. Nevertheless, we believe that these elections will pass relatively smoothly. Once the election period has passed, we would expect market participants to again turn their attention on Russia's economic fundamentals, and developments regarding the reform process. 16 Portfolio Managers' Report ING RUSSIA FUND [CHART]
ING RUSSIA FUND CLASS A ING RUSSIA FUND CLASS A WITH SALES CHARGE(a) WITHOUT SALES CHARGE(b) MOSCOW TIMES INDEX(c) RUSSIAN TRADING SYSTEM INDEX(d) 7/3/96 $ 9,425 $ 10,000 $ 10,000 $ 10,000 10/31/96 $ 8,227 $ 8,729 $ 9,433 $ 8,719 10/31/97 $ 16,951 $ 17,986 $ 23,697 $ 20,685 10/31/98 $ 2,434 $ 2,583 $ 3,057 $ 2,933 10/31/99 $ 3,860 $ 4,096 $ 5,745 $ 4,985 10/31/2000 $ 7,059 $ 7,490 $ 11,609 $ 9,616 10/31/2001 $ 7,937 $ 8,422 $ 13,276 $ 10,419 10/31/2002 $ 11,995 $ 12,727 $ 23,815 $ 18,584 10/31/2003 $ 19,199(a) $ 20,371(b) $ 34,829(c) $ 27,119(d)
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ------------------------------------------------------ SINCE INCEPTION 1 YEAR 5 YEAR 07/03/96 ------ ------ --------------- Including Sales Charge: Class A(1) 49.84% 49.13% 9.20% Excluding Sales Charge: Class A 58.98% 50.94% 10.09% Moscow Times Index 46.25% 62.70% 17.73%(2) Russian Trading System Index 45.93% 56.04% 13.17%(2)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING Russia Fund against the Moscow Times Index and the Russian Trading System Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Since inception performance for index is shown from 07/01/96. Redemptions on shares held less than 365 days are subject to a redemption fee of 2% of the redemption proceeds. PRINCIPAL RISK FACTOR(S): Increased price volatility and other risks that accompany an investment in equity securities of issuers in a single region. The Fund is a non-diversified portfolio. Concentration may lead to higher share-price volatility. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. See accompanying index descriptions on page 24. 17 ING GLOBAL EQUITY DIVIDEND FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: A team of investment professionals led by Jorik van den Bos, Director in the Global Equities team and Joris Franssen, Portfolio Manager and member of the Global Equities team both with ING Investment Management Advisors B.V., the Sub-Adviser. GOAL: The ING Global Equity Dividend Fund (the "Fund") seeks growth of capital with dividend income as a secondary consideration through investment primarily in equity securities of dividend paying companies. PERFORMANCE: For the period September 17, 2003 (inception date of the Fund) through October 31, 2003 the Fund's Class A shares, excluding sales charges, provided a total return of 4.90% compared to the Morgan Stanley Capital International ("MSCI") World Index and the FTSE World Index which returned 5.95% and 6.03%, respectively. PORTFOLIO SPECIFICS: During the reporting period the Fund benefited from consolidation of US tobacco companies and US regional banks. Bank of America made an offer for FleetBoston Financial, which probably will create the world's third biggest banking acquisition. Other regional banks performed well on the back of this news as investors expect that it will trigger more industry takeovers. RJ Reynolds and British American Tobacco agreed to combine their US cigarette operations. On top of that US tobacco companies took advantage of easing litigation risk. Phillip Morris USA had a favorable court ruling in Illinois where the Illinois Supreme Court lowered the deposit that the company must post to appeal. The Fund also profited from its position in the Industrial sector, due to its operational leverage, and European financials, given their equity-market-related exposure. Defensive sectors like European utilities and the oil majors were lagging and had a negative contribution to the relative performance of the Fund. On a regional basis, several countries in South-East Asia, like Hong Kong and China, had a strong performance as low valuations and above average growth for the region attracted many investors. During the reporting period we sold several stocks. We sold Huaneng Power and Pitney Bowes as the dividend yield dropped below our threshold after a strong increase for their share prices. Eastman Kodak was sold after its dividend was cut more than expected. Eastman Kodak has cut its dividend for the first time in history as sales of consumer films are falling and the company needs cash to expand into digital markets. The proceeds of our sales were invested in the U.S. utility DTE Energy, which dividend yield is very attractive and we foresee some upcoming events that could trigger a re-rating. We also bought Shin Corp and Citic Pacific. Both companies have an attractive dividend yield. Next to that they own a diversified portfolio of assets who clearly will benefit if the recovery of the Asian region will continue. MARKET OUTLOOK: The outlook for the Fund remains positive. We have investments in defensive sectors like Utilities, Real Estate and Consumer Staples. We believe these sectors are relatively cheap, less dependent on the economic environment and offer stable, high dividend yields. This will probably result in outperformance versus global equities if they fall further. If the equity markets move sideways, stock selection and our consistent, disciplined strategy may add value. It should result in positive absolute returns and outperformance of global equities. We believe, only in the case of a strong rally will it be difficult to outperform global equities. If the rally is broadly driven, investments in Financials and more cyclical sectors like Industrials and Basic Materials are also expected to show a strong performance. A rally driven by growth stocks (especially IT or HealthCare) may be the most difficult environment for the Fund. Although we do not expect that absolute returns will be negative in that scenario. Regardless of any scenario, the Fund will always look for countries, sectors or individual stocks to exploit any (temporary) undervaluations that often take place. 18 Portfolio Managers' Report ING GLOBAL EQUITY DIVIDEND FUND [CHART]
ING GLOBAL EQUITY ING GLOBAL EQUITY DIVIDEND FUND CLASS A DIVIDEND FUND CLASS A WITH SALES CHARGE(a) WITHOUT SALES CHARGE(b) MSCI WORLD INDEX(d) FTSE WORLD INDEX(c) 9/17/2003 $ 9,425 $ 10,000 $ 10,940 $ 10,940 10/31/2003 $ 9,887(a) $ 10,490(b) $ 10,595(c) $ 10,603(d)
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION OF CLASS A OF CLASS B OF CLASS C 09/17/03 10/24/03 10/29/03 --------------- --------------- --------------- Including Sales Charge: Class A(1) -1.13% -- -- Class B(2) -- -3.25% -- Class C(3) -- -- -0.62% Excluding Sales Charge: Class A 4.90% -- -- Class B -- 1.75% -- Class C -- -- 0.38% MSCI World Index 5.95%(4) 5.95%(4) 5.95%(4) FTSE World Index 6.03%(4) 6.03%(4) 6.03%(4)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING Global Equity Dividend Fund against the MSCI World Index and FTSE World Index. The Indices are unmanaged and have no cash in their portfolios, impose no sales charges and incur no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% for the since inception return. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for the index is shown from 10/01/03. PRINCIPAL RISK FACTOR(S): Price volatility and other risks that accompany an investment in growth-oriented foreign equities. Sensitivity to currency exchange rates, international, political and economic conditions and other risks that affect foreign securities. The Fund may also invest in small and medium sized companies, which may be more susceptible to price volatility than larger companies. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 24. 19 ING GLOBAL REAL ESTATE FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: T. Ritson Ferguson, Chief Investment Officer; Kenneth D. Campbell, Managing Director and Steven D. Burton, Director and Portfolio Manager, all with Clarion CRA Securities, L.P., the Sub-Adviser. GOAL: The ING Global Real Estate Fund (the "Fund") seeks to provide investors with high total return primarily through investments in equity securities of companies that are principally engaged in the real estate industry. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class A shares, excluding sales charges, provided a total return of 33.77% compared to the Citigroup World Property Index which returned 35.68%. PORTFOLIO SPECIFICS: The outperforming region over the past twelve months was the Asia-Pacific region which reflected a rebound in sentiment among investors towards the countries whose economic growth is leveraged to a global economic turnaround and continued strong growth from China. Hong Kong, Japan and Australia were the top major country performers over the past year, up 39.5%, 38.5% and 37.7%, respectively, versus Europe and North America, up 34.0% and 34.6%, respectively. The Fund underperformed its benchmark primarily as the result of being underweight the Asia-Pacific countries, particularly Hong Kong and Japan, both of which have garnered the lion's share of their annual gains over the past three months (Hong Kong is +33.7% over the past three months and Japan +38.3%). The Fund remains modestly underweight these highly volatile countries and remains overweight the more attractively valued European region. Currency continues to play an important role in total returns for the Fund, as the Fund has benefitted from a weakening U.S. dollar versus other currencies. Over the past year, the U.S. dollar has weakened 26.4% versus the Australian dollar, 18.6% versus the Canadian dollar, 16.5% versus the Euro, 11.5% versus the Japanese Yen and 8.9% versus the British pound. The portfolio management team believes over the next 12 months a U.S. dollar which remains in a trading range consistent with current exchange rate levels. MARKET OUTLOOK: Global property companies have provided strong absolute and relative returns when compared to broad equities over the past several years. Through an average 4-5% dividend yield plus 1-3% prospective annual earnings growth, global property stocks continue to be well-positioned to conservatively deliver attractive total returns over the next several years. Valuation disparities continue to provide investment opportunity as real estate stocks globally trade at a 5% discount on average to estimated private market valuations. Additionally, the low correlation with broad equities continues to provide diversification benefits in a volatile equities environment. 20 Portfolio Managers' Report ING GLOBAL REAL ESTATE FUND [CHART]
ING GLOBAL REAL ESTATE FUND CLASS A ING GLOBAL REAL ESTATE FUND CLASS A WITH SALES CHARGE(a) WITHOUT SALES CHARGE(b) CITIGROUP WORLD PROPERTY INDEX(c) 11/5/2001 $ 9,426 $ 10,000 $ 10,000 10/31/2002 $ 10,130 $ 10,747 $ 10,475 10/31/2003 $ 13,551(a) $ 14,377(b) $ 14,212(c)
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ------------------------------------------------------------------------- SINCE INCEPTION SINCE INCEPTION SINCE INCEPTION OF CLASS A OF CLASS B OF CLASS C 1 YEAR 11/05/01 03/15/02 01/08/02 ------ --------------- --------------- --------------- Including Sales Charge: Class A(1) 26.08% 16.53% -- -- Class B(2) 27.83% -- 13.61% -- Class C(3) 31.89% -- -- 16.20% Excluding Sales Charge: Class A 33.77% 20.05% -- -- Class B 32.83% -- 15.86% -- Class C 32.89% -- -- 16.20% Citigroup World Property Index(7) 35.68% 19.21%(4) 19.35%(5) 17.55%(6)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING Global Real Estate Fund against the Citigroup World Property Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 4%, respectively, for the 1 year and since inception returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the since inception return. (4) Since inception performance for index is shown from 11/01/01. (5) Since inception performance for index is shown from 03/01/02. (6) Since inception performance for index is shown from 01/01/02. (7) Formerly the Salomon Smith Barney World Property Index. PRINCIPAL RISK FACTOR(S): Investments in issuers that are principally engaged in real estate, including REITs (Real Estate Investment Trust), may subject the Fund to risks similar to those associated with the direct ownership of real estate (in addition to securities market risk). These companies are sensitive to factors such as changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer. REITs may also be affected by tax and regulatory requirements. The Fund may invest in foreign securities. International investing poses special risks not found in investments that are solely domestic, including currency fluctuations, lower liquidity, political and economic uncertainties, and differences in accounting standards. The Fund may invest in small- and medium-sized companies, which may be more susceptible to price swings than larger companies. Securities of smaller companies trade in lower volume and may be less liquid than securities of larger, more established companies. See accompanying index descriptions on page 24. 21 ING WORLDWIDE GROWTH FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: DOMESTIC EQUITY COMPONENT: Managed by a team of investment professionals led by James Vail, CFA, Senior Vice President and Portfolio Manager with Aeltus Investment Management, Inc., the Sub-Adviser. INTERNATIONAL COMPONENT: Managed by a team of investment professionals led by Richard Saler and Philip Schwartz each a Senior Vice President and Director of International Investment Strategy with Aeltus Investment Management, Inc., the Sub-Adviser. GOAL: The ING Worldwide Growth Fund (the "Fund") seeks maximum long-term capital appreciation. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class A shares, excluding sales charges, provided a total return of 19.42%, compared to the Morgan Stanley Capital International ("MSCI") World Index, which returned 24.32% for the same period. PORTFOLIO SPECIFICS, DOMESTIC: The period was characterized by positive investor response to the generally declining interest rate environment, continued high levels of consumer spending and a gradually improving domestic economy. During the third quarter, slightly improved mid-year earnings reports indicated confirmation of the positive trend, further encouraging investors to bid equity prices higher. In the early months of the reporting period investors continued their preference for value stocks over growth names, to the point where relative valuations, in terms of price-to-earnings ratios, of many slow growing and even unprofitable companies rose to levels usually associated only with successful, faster growing growth names. As the period unfolded, however, investors perceived that actual growth in earnings and shareholder equity had begun to accelerate, and the two styles produced virtually identical performance. Since the domestic portion of the Fund seeks genuine growth opportunities selling at attractive valuations, this shift in market leadership was beneficial to performance. The domestic portion of the Fund benefited from its holdings in Tyco, Yahoo and JP Morgan Chase, and not holding Johnson & Johnson, which underperformed. Performance was held back somewhat by our under-ownership of semiconductor stocks, exemplified by Intel, which were among the market leaders. PORTFOLIO SPECIFICS, INTERNATIONAL: Over the last year the Fund was repositioned in anticipation of an improving economy. Stock selection was the primary reason for the fund's weak relative performance, and choices among economic sectors were less significant. Cash holdings muted gains relative to the MSCI Europe, Australia and Far East ("EAFE") Index, but were somewhat offset by an underweight in health care, which underperformed. Information technology was a strong performer, and the Fund's weighting was in line with the MSCI EAFE Index. Stock selection suffered because the Fund favored financially strong companies at a time when financially challenged companies and small cap stocks were the market leaders. Stock selection was an adverse factor in materials, consumer discretionary and consumer staples stocks. Stock selection in financials and energy helped relative performance. Individually, Australian insurer QBE made the biggest positive contribution, benefiting from strong pricing and cost controls. Other strong performers included generic drug maker Teva Pharmaceutical, and Japanese semiconductor equipment maker Tokyo Electron. Hurting performance was Sony, following a surprise earnings shortfall. Other negative performers were Japanese food retailer Ito-Yokado and UK publisher Pearson. MARKET OUTLOOK, DOMESTIC: We continue to believe the fiscal, monetary and macro-economic stimuli should be positive for domestic equity markets over the intermediate term. Third quarter preliminary Gross Domestic Product ("GDP") growth of 7.2% reflects a temporary burst of growth, and although unsustainable at that high level, suggests potential for corporate profit growth over the next several quarters. Moreover, representatives of corporate management in recent interviews have expressed guarded optimism with respect to the outlook for near term business conditions. On balance, we believe the domestic holdings are well positioned for the economic and market environment we anticipate over the near to intermediate term. Nevertheless, we continue to search for attractive opportunities which offer above average growth that is not fully reflected in current share prices. MARKET OUTLOOK, INTERNATIONAL: The investment landscape has changed dramatically from last year. Global economic activity has clearly improved as evidenced by strong GDP numbers in the U.S. and China. Australian and UK central banks are already raising interest rates. Investors must weigh the possibility of continued economic growth against less attractive stock prices and the potential for disappointment in 2004. Although rates may have begun an upward trend, it is expected the major central banks will be slow to adopt a tighter monetary policy. Of greater concern is the risk of slowing U.S. growth, as the effects of lower interest rates and tax cuts are largely played out. The managers see continued opportunities in emerging markets, and particularly in Asia. Defensive sectors such as food and beverage are also looking more attractive after a lengthy period of underperformance. In Japan, our focus remains on companies that are restructuring to improve profitability. We remain skeptical of Japan's ability to sustain economic growth. In Europe, we find mixed opportunities, where the strong Euro and structural rigidities continue to plague the region. Some structural reform is, however, slowly taking place in Germany. Europe is likely to continue to experience slow growth. We will continue to seek attractively valued stocks and sectors together with improving fundamentals. 22 Portfolio Managers' Report ING WORLDWIDE GROWTH FUND [CHART]
ING WORLDWIDE FUND CLASS A ING WORLDWIDE FUND CLASS A WITH SALES CHARGE(a) WITHOUT SALES CHARGE(b) MSCI WORLD INDEX(c) 10/31/93 $ 9,424 $ 10,000 $ 10,000 10/31/94 $ 10,265 $ 10,892 $ 10,817 10/31/95 $ 10,951 $ 11,621 $ 11,902 10/31/96 $ 12,554 $ 13,322 $ 13,905 10/31/97 $ 15,298 $ 16,324 $ 16,303 10/31/98 $ 17,324 $ 18,383 $ 18,861 10/31/99 $ 28,525 $ 30,268 $ 23,639 10/31/2000 $ 32,787 $ 34,791 $ 23,967 10/31/2001 $ 20,067 $ 21,294 $ 17,918 10/31/2002 $ 16,054 $ 17,035 $ 15,319 10/31/2003 $ 19,171(a) $ 20,343(b) $ 19,046(c)
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ------------------------------------------------------------- SINCE INCEPTION OF CLASS B 1 YEAR 5 YEAR 10 YEAR 05/31/95 ------ ------ ------- -------- Including Sales Charge: Class A(1) 12.55% 0.84% 6.72% -- Class B(2) 13.61% 1.00% -- 7.11% Class C(3) 17.70% 1.38% 6.67% -- Excluding Sales Charge: Class A 19.42% 2.05% 7.36% -- Class B 18.61% 1.35% -- 7.11% Class C 18.70% 1.38% 6.67% -- MSCI World Index 24.32% 0.20% 6.65% 6.25%(4)
Based upon a $10,000 initial investment, the graph and table above illustrate the total return of ING Worldwide Growth Fund against the MSCI World Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Reflects deduction of the maximum Class A sales charge of 5.75%. (2) Reflects deduction of the Class B deferred sales charge of 5% and 2%, respectively, for the 1 year and 5 year returns. (3) Reflects deduction of the Class C deferred sales charge of 1% for the 1 year return. (4) Since inception performance for index is shown from 06/01/95. PRINCIPAL RISK FACTOR(S): Price volatility and other risks that accompany an investment in growth-oriented foreign equities. Sensitivity to currency exhange rates, international, political and economic conditions and other risks that affect foreign securities. The Fund may also invest in small and medium sized companies, which may be more susceptible to price volatility than larger companies. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 24. 23 INDEX DESCRIPTIONS The CITIGROUP WORLD PROPERTY INDEX (formerly known as Salomon Smith Barney World Property Index) is an unmanaged market-weighted total return index which consists of many companies from developed markets whose floats are larger than $100 million and derive more than half of their revenue from property-related activities. The FINANCIAL TIMES (FT) GOLD MINES INDEX is an unmanaged cap weighted index that is designed to reflect the performance of the worldwide market in the shares of companies whose principal activity is the mining of gold. The FTSE WORLD INDEX is an unmanaged index that aims to capture 82-90 percent of investable market capitalization in any country. The GOLD BULLION is a commodity traded on the New York Mercantile Exchange. The MSCI EAFE INDEX is an unmanaged index that measures the performance of securities listed on exchanges in markets in Europe, Australia and the Far East. The MSCI EMF INDEX is an unmanaged index that measures the performance of securities listed on exchanges in developing nations throughout the world. 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. The MSCI JAPAN INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan. The MSCI UK INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK. The MSCI WORLD INDEX is an unmanaged index that measures the performance of over 1,400 securities listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand and the Far East. The MOSCOW TIMES INDEX is an unmanaged index that measures the performance of 50 Russian stocks considered to represent the most liquid and most highly capitalized Russian stocks. The RUSSIAN TRADING SYSTEM is a capitalization-weighted index that is calculated in U.S. dollars. The index tracks the performance of Russia's 106 most active stocks traded on the Russian Trading System. The index is operated by the National Association of Participants in the Securities Markets (NAUFOR), a non-profit body. The S&P 500 INDEX is an unmanaged index that measures the performance of securities of approximately 500 large-capitalization U.S. companies whose securities are traded on major U.S. stock markets. The CITIGROUP EPAC EM INDEX (formerly known as Salomon EPAC EM Index) is an unmanaged index that measures the performance of securities of smaller-capitalization companies in 22 countries excluding the U.S. and Canada. All indices are unmanaged. An investor cannot invest directly in an index. 24 INDEPENDENT AUDITORS' REPORT Shareholders and Board of Trustees of ING Mutual Funds and ING Mayflower Trust We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of ING Emerging Countries Fund, ING Foreign Fund, ING International Fund, ING International SmallCap Growth Fund, ING Precious Metals Fund, ING Russia Fund, ING Global Equity Dividend Fund, ING Global Real Estate Fund, and ING Worldwide Growth Fund, each a series of ING Mutual Funds, and ING International Value Fund, a series of ING Mayflower Trust (collectively the "Funds"), as of October 31, 2003, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year or period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of changes in net assets for the year or period ended October 31, 2002 and the financial highlights for each of the years or periods in the prior periods then ended were audited by other auditors whose report dated December 17, 2002 expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2003 by correspondence with the custodian and brokers, or by other appropriate audit procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the above mentioned series of ING Mutual Funds and ING Mayflower Trust as of October 31, 2003, the results of their operations, changes in their net assets, and financial highlights for the year or period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP Boston, Massachusetts December 19, 2003 25 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003
ING ING INTERNATIONAL ING EMERGING ING ING SMALLCAP INTERNATIONAL COUNTRIES FOREIGN INTERNATIONAL GROWTH VALUE FUND FUND FUND FUND FUND --------------- ------------- ------------- ------------- ---------------- ASSETS: Investments in securities, at value* $ 114,702,124 $ 12,114,621 $ 85,101,180 $ 326,863,374 $ 3,140,822,386 Cash 1,080,743 3,245,153 8,930,214 12,748,262 59,949,355 Foreign currencies at value** 2,050,808 116,005 -- 175,035 117,057 Receivables: Investment securities sold 167,057 84,266 632,655 -- -- Fund shares sold 804,495 920,544 2,619,352 1,979,751 4,228,268 Dividends and interest 368,761 5,249 321,248 1,110,623 11,053,094 Other -- -- -- 143,936 -- Prepaid expenses 42,304 102,050 19,288 37,695 33,352 Reimbursement due from manager 5,138 62,723 -- -- -- --------------- ------------- ------------- ------------- ---------------- Total assets 119,221,430 16,650,611 97,623,937 343,058,676 3,216,203,512 --------------- ------------- ------------- ------------- ---------------- LIABILITIES: Payable for investment securities purchased 345,287 2,430,635 -- -- -- Payable for fund shares redeemed 311,522 -- 93,954 543,076 6,072,684 Payable to affiliates 182,076 14,698 141,293 464,350 4,446,900 Payable for trustee fees 113,510 332 59,332 3,598 11,013 Other accrued expenses and liabilities 452,206 52,292 180,585 532,861 3,008,385 --------------- ------------- ------------- ------------- ---------------- Total liabilities 1,404,601 2,497,957 475,164 1,543,885 13,538,982 --------------- ------------- ------------- ------------- ---------------- NET ASSETS $ 117,816,829 $ 14,152,654 $ 97,148,773 $ 341,514,791 $ 3,202,664,530 =============== ============= ============= ============= ================ NET ASSETS WERE COMPRISED OF: Paid-in capital $ 254,838,663 $ 13,609,027 $ 124,321,843 $ 497,144,222 $ 3,377,014,711 Undistributed net investment income 436,002 45,112 142,522 58,428 15,253,443 Accumulated net realized gain (loss) on investments and foreign currencies (173,258,233) 24,431 (37,854,307) (239,679,421) (100,519,184) Net unrealized appreciation (depreciation) of investments and foreign currencies (net of estimated India tax of $132,836, $0, $0, $0, $0) 35,800,397 474,084 10,538,715 83,991,562 (89,084,440) --------------- ------------- ------------- -------------- ---------------- NET ASSETS $ 117,816,829 $ 14,152,654 $ 97,148,773 $ 341,514,791 $ 3,202,664,530 =============== ============= ============= ============= ================ * Cost of investments in securities $ 78,882,972 $ 11,656,273 $ 74,578,750 $ 242,915,227 $ 3,230,842,178 ** Cost of foreign currencies $ 1,934,239 $ 115,922 $ -- $ 175,216 $ 117,681
See Accompanying Notes to Financial Statements 26 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003 (Continued)
ING ING INTERNATIONAL ING EMERGING ING ING SMALLCAP INTERNATIONAL COUNTRIES FOREIGN INTERNATIONAL GROWTH VALUE FUND FUND FUND FUND FUND --------------- --------------- --------------- --------------- --------------- CLASS A: Net assets $ 71,952,730 $ 6,598,135 $ 43,820,696 $ 150,042,733 $ 1,641,943,185 Shares authorized unlimited unlimited unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 Shares outstanding 4,153,315 599,075 5,165,787 5,914,440 119,793,591 Net asset value and redemption price per share $ 17.32 $ 11.01 $ 8.48 $ 25.37 $ 13.71 Maximum offering price per share (5.75%)(1) $ 18.38 $ 11.68 $ 9.00 $ 26.92 $ 14.55 CLASS B: Net assets $ 16,425,176 $ 1,344,467 $ 12,465,985 $ 62,104,325 $ 420,651,370 Shares authorized unlimited unlimited unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 Shares outstanding 957,861 122,298 1,515,803 2,349,763 31,271,787 Net asset value and redemption price per share(2) $ 17.15 $ 10.99 $ 8.22 $ 26.43 $ 13.45 Maximum offering price per share $ 17.15 $ 10.99 $ 8.22 $ 26.43 $ 13.45 CLASS C: Net assets $ 10,033,489 $ 5,601,055 $ 14,525,705 $ 50,227,490 $ 628,704,062 Shares authorized unlimited unlimited unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 Shares outstanding 614,921 508,701 1,766,112 2,072,898 46,844,402 Net asset value and redemption price per share(2) $ 16.32 $ 11.01 $ 8.22 $ 24.23 $ 13.42 Maximum offering price per share $ 16.32 $ 11.01 $ 8.22 $ 24.23 $ 13.42 CLASS I: Net assets n/a $ 187,804 $ 11,581,291 n/a $ 482,046,661 Shares authorized n/a unlimited unlimited n/a unlimited Par value n/a $ 0.00 $ 0.00 n/a $ 0.01 Shares outstanding n/a $ 16,997 1,370,759 n/a 35,071,815 Net asset value and redemption price per share n/a $ 11.05 $ 8.45 n/a $ 13.74 Maximum offering price per share n/a $ 11.05 $ 8.45 n/a $ 13.74 CLASS M: Net assets $ 1,237,499 n/a n/a n/a n/a Shares authorized unlimited n/a n/a n/a n/a Par value $ 0.00 n/a n/a n/a n/a Shares outstanding 72,270 n/a n/a n/a n/a Net asset value and redemption price per share $ 17.12 n/a n/a n/a n/a Maximum offering price per share (3.50%)(3) $ 17.74 n/a n/a n/a n/a CLASS Q: Net assets $ 18,167,935 $ 421,193 $ 14,755,096 $ 79,140,243 $ 29,319,252 Shares authorized unlimited unlimited unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 Shares outstanding 1,015,708 38,209 1,749,736 2,919,648 2,134,727 Net asset value and redemption price per share $ 17.89 $ 11.02 $ 8.43 $ 27.11 $ 13.73 Maximum offering price per share $ 17.89 $ 11.02 $ 8.43 $ 27.11 $ 13.73
- ---------- (1) Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. (3) Maximum offering price is computed at 100/96.50 of net asset value. On purchases of $50,000 or more, the offering price is reduced. See Accompanying Notes to Financial Statements 27 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003
ING ING GLOBAL ING ING PRECIOUS ING EQUITY GLOBAL WORLDWIDE METALS RUSSIA DIVIDEND REAL ESTATE GROWTH FUND FUND FUND FUND FUND --------------- --------------- --------------- --------------- --------------- ASSETS: Investments in securities, at value* $ 99,435,939 $ 157,138,385 $ 4,085,681 $ 43,326,713 $ 137,032,648 Cash 3,688,701 16,462,146 126,881 2,030,864 7,420,807 Foreign currencies at value** 117,977 -- -- -- 4,178 Receivables: Investment securities sold -- -- -- -- 514,498 Fund shares sold 87,190 1,976,692 18,500 152,370 34,264 Dividends and interest 11,252 1,209,244 9,092 221,408 484,345 Prepaid expenses 7,462 8,395 51,672 21,048 19,665 Reimbursement due from manager -- -- 28,434 -- 44,547 --------------- --------------- --------------- --------------- --------------- Total assets 103,348,521 176,794,862 4,320,260 45,752,403 145,554,952 --------------- --------------- --------------- --------------- --------------- LIABILITIES: Payable for investment securities purchased 1,141,917 8,178,529 -- 164,638 -- Payable for fund shares redeemed 148,850 6,471,632 -- 530,605 679,626 Payable to affiliates 104,016 260,729 3,719 172,403 224,576 Payable for trustee fees 3,605 54,695 50 846 55,542 Other accrued expenses and liabilities 253,891 228,629 12,233 97,093 329,607 --------------- --------------- --------------- --------------- --------------- Total liabilities 1,652,279 15,194,214 16,002 965,585 1,289,351 --------------- --------------- --------------- --------------- --------------- NET ASSETS $ 101,696,242 $ 161,600,648 $ 4,304,258 $ 44,786,818 $ 144,265,601 =============== =============== =============== =============== =============== NET ASSETS WERE COMPRISED OF: Paid-in capital $ 125,747,992 $ 167,663,416 $ 4,087,579 $ 36,317,546 $ 355,587,392 Undistributed net investment income -- -- 37,540 711,366 -- Accumulated net realized gain (loss) on investments and foreign currencies (57,388,906) (51,128,090) 599 1,902,784 (236,099,324) Net unrealized appreciation of investments and foreign currencies 33,337,156 45,065,322 178,540 5,855,122 24,777,533 --------------- --------------- --------------- --------------- --------------- NET ASSETS $ 101,696,242 $ 161,600,648 $ 4,304,258 $ 44,786,818 $ 144,265,601 =============== =============== =============== =============== =============== * Cost of investments in securities $ 66,102,559 $ 112,073,063 $ 3,906,896 $ 37,474,810 $ 112,301,140 ** Cost of foreign currencies $ 117,977 $ -- $ -- $ -- $ 4,200
See Accompanying Notes to Financial Statements 28 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003 (Continued)
ING ING GLOBAL ING ING PRECIOUS ING EQUITY GLOBAL WORLDWIDE METALS RUSSIA DIVIDEND REAL ESTATE GROWTH FUND FUND FUND FUND FUND --------------- --------------- --------------- --------------- --------------- CLASS A: Net assets $ 101,696,242 $ 161,600,648 $ 4,274,057 $ 41,549,461 $ 56,876,841 Shares authorized unlimited unlimited 100,000,000 unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 Shares outstanding 14,646,287 8,449,111 407,533 3,181,265 3,854,392 Net asset value and redemption price per share $ 6.94 $ 19.13 $ 10.49 $ 13.06 $ 14.76 Maximum offering price per share (5.75%)(1) $ 7.36 $ 20.30 $ 11.13 $ 13.86 $ 15.66 CLASS B: Net assets n/a n/a $ 11,614 $ 1,505,859 $ 35,458,976 Shares authorized n/a n/a unlimited unlimited unlimited Par value n/a n/a $ 0.00 $ 0.00 $ 0.00 Shares outstanding n/a n/a 1,107 128,314 2,189,930 Net asset value and redemption price per share(2) n/a n/a $ 10.49 $ 11.74 $ 16.19 Maximum offering price per share n/a n/a $ 10.49 $ 11.74 $ 16.19 CLASS C: Net assets n/a n/a $ 18,587 $ 1,731,498 $ 45,475,707 Shares authorized n/a n/a unlimited unlimited unlimited Par value n/a n/a $ 0.00 $ 0.00 $ 0.00 Shares outstanding n/a n/a 1,773 142,593 3,156,450 Net asset value and redemption price per share(2) n/a n/a $ 10.48 $ 12.14 $ 14.41 Maximum offering price per share n/a n/a $ 10.48 $ 12.14 $ 14.41 CLASS Q: Net assets n/a n/a n/a n/a $ 6,454,077 Shares authorized n/a n/a n/a n/a unlimited Par value n/a n/a n/a n/a $ 0.00 Shares outstanding n/a n/a n/a n/a 375,981 Net asset value and redemption price per share n/a n/a n/a n/a $ 17.17 Maximum offering price per share n/a n/a n/a n/a $ 17.17
- ---------- (1) Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. See Accompanying Notes to Financial Statements 29 STATEMENTS OF OPERATIONS
ING ING EMERGING ING ING INTERNATIONAL COUNTRIES FOREIGN INTERNATIONAL SMALLCAP GROWTH FUND FUND(1) FUND FUND --------------- --------------- --------------- --------------- YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2003 2003 2003 --------------- --------------- --------------- --------------- INVESTMENT INCOME: Dividends (net of foreign taxes)* $ 2,691,883 $ 10,476 $ 1,967,883 $ 5,478,161 Interest 18,135 -- 42,867 84,366 Other 1,674 -- 1,387 1,411 Securities loaned income 10,235 -- 31,443 214,335 --------------- --------------- --------------- --------------- Total investment income 2,721,927 10,476 2,043,580 5,778,273 --------------- --------------- --------------- --------------- EXPENSES: Investment management fees 1,361,309 17,306 810,521 2,988,646 Distribution and service fees: Class A 222,736 2,306 94,606 454,427 Class B 147,006 1,347 107,627 524,648 Class C 90,335 5,567 130,899 446,047 Class M 8,196 -- -- -- Class Q 51,098 268 25,836 179,897 Transfer agent fees: Class A 157,338 1,937 108,230 371,176 Class B 36,386 283 30,782 149,839 Class C 22,359 1,169 37,437 127,265 Class I -- 11 631 -- Class M 2,701 -- -- -- Class Q 4,059 118 724 24,046 Administrative service fees 108,905 1,731 81,052 298,865 Custody and accounting expense 232,875 2,606 77,317 306,896 Shareholder reporting expense 82,767 1,038 32,453 150,346 Registration fees 90,870 1,876 66,534 86,229 Professional fees 15,785 1,557 5,256 32,133 Trustee fees 5,265 346 2,398 17,380 Insurance expense 3,039 -- 1,716 8,151 Miscellaneous expense 24,067 346 3,802 11,308 Offering expense -- 59,486 -- -- Organizational fees -- 10,000 -- -- --------------- --------------- --------------- --------------- 2,667,096 109,298 1,617,821 6,177,299 --------------- --------------- --------------- --------------- Less: Net waived and reimbursed (recouped) fees 108,786 70,612 12,984 (30,000) --------------- --------------- --------------- --------------- Total expenses 2,558,310 38,686 1,604,837 6,207,299 --------------- --------------- --------------- --------------- Net investment income (loss) 163,617 (28,210) 438,743 (429,026) --------------- --------------- --------------- --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments 7,443,756 24,431 (1,986,957) 1,755,056 Net realized gain (loss) on foreign currencies (143,349) 17,965 (38,840) (1,065,287) Net change in unrealized appreciation (depreciation) of investments and foreign currencies (net of estimated India tax of $132,836, $0, $0, $0) 30,374,658 474,084 17,051,753 102,597,770 --------------- --------------- --------------- --------------- Net realized and unrealized gain on investments and foreign currencies 37,675,065 516,480 15,025,956 103,287,539 --------------- --------------- --------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 37,838,682 $ 488,270 $ 15,464,699 $ 102,858,513 =============== =============== =============== ===============
- ---------- * Foreign taxes $ 330,045 $ 1,215 $ 225,485 $ 743,581
(1) Fund commenced operations on July 1, 2003. See Accompanying Notes to Financial Statements 30 STATEMENTS OF OPERATIONS for the Year Ended October 31, 2003
ING ING INTERNATIONAL PRECIOUS ING VALUE METALS RUSSIA FUND FUND FUND --------------- --------------- --------------- INVESTMENT INCOME: Dividends (net of foreign taxes)* $ 64,119,510 $ 889,783 $ 2,420,282 Interest 189,404 63,343 54,258 Other 13,878 30,533 3,684 Securities loaned income 1,107,870 27,152 9,892 --------------- --------------- --------------- Total investment income 65,430,662 1,010,811 2,488,116 --------------- --------------- --------------- EXPENSES: Investment management fees 27,273,090 752,719 1,497,490 Distribution and service fees: Class A 4,113,748 209,239 299,498 Class B 3,709,113 -- -- Class C 5,583,025 -- -- Class Q 68,051 -- -- Transfer agent fees: Class A 2,077,997 137,859 162,705 Class B 565,365 -- -- Class C 850,800 -- -- Class I 6,102 -- -- Class Q 574 -- -- Administrative service fees 4,285,739 83,696 119,799 Custody and accounting expense 1,271,973 52,398 293,520 Shareholder reporting expense 1,383,166 38,280 60,900 Registration fees 176,268 18,094 28,818 Professional fees 411,702 9,016 24,177 Trustee fees 116,262 3,669 6,366 Insurance expense -- 1,224 2,131 Miscellaneous expense 116,709 4,406 10,891 --------------- --------------- --------------- Total expenses 52,009,684 1,310,600 2,506,295 --------------- --------------- --------------- Net investment income (loss) 13,420,978 (299,789) (18,179) --------------- --------------- --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (98,526,506) 25,278,248 11,569,534 Net realized loss on foreign currencies (165,164) (199,332) (12,757) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 925,896,407 14,618,885 38,398,668 --------------- --------------- --------------- Net realized and unrealized gain on investments and foreign currencies 827,204,737 39,697,801 49,955,445 --------------- --------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 840,625,715 $ 39,398,012 $ 49,937,266 =============== =============== ===============
- ---------- * Foreign taxes $ 8,984,162 $ 49,699 $ 438,255
See Accompanying Notes to Financial Statements 31 STATEMENTS OF OPERATIONS
ING GLOBAL ING ING EQUITY GLOBAL WORLDWIDE DIVIDEND REAL ESTATE GROWTH FUND FUND FUND --------------- --------------- --------------- PERIOD ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003(1) 2003 2003 --------------- --------------- --------------- INVESTMENT INCOME: Dividends (net of foreign taxes)* $ 16,417 $ 2,253,927 $ 2,249,058 Interest 100 6,576 37,442 Other -- -- 1,998 Securities loaned income -- 9,341 22,196 --------------- --------------- --------------- Total investment income 16,517 2,269,844 2,310,694 --------------- --------------- --------------- EXPENSES: Investment management fees 3,552 328,575 1,541,226 Distribution and service fees: Class A 1,268 76,008 222,651 Class B 1 8,905 355,096 Class C 1 15,641 461,144 Class Q -- -- 22,210 Transfer agent fees: Class A 1,014 49,257 178,757 Class B -- 1,443 99,782 Class C -- 2,534 129,581 Class Q -- -- 8,351 Administrative service fees 507 32,857 154,123 Custody and accounting expense 609 47,510 118,522 Shareholder reporting expense 202 28,635 81,661 Registration fees 489 52,197 63,889 Professional fees 102 7,005 22,545 Trustee fees 51 1,548 7,784 Insurance expense -- 763 4,942 Miscellaneous expense 53 3,660 6,753 Offering expense 17,672 1,507 -- Organization fees 10,000 -- -- --------------- --------------- --------------- 35,521 658,045 3,479,017 --------------- --------------- --------------- LESS: Net waived and reimbursed fees 28,434 63,060 122,064 --------------- --------------- --------------- Total expenses 7,087 594,985 3,356,953 --------------- --------------- --------------- Net investment income (loss) 9,430 1,674,859 (1,046,259) --------------- --------------- --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments 741 2,269,368 (571,599) Net realized gain (loss) on foreign currencies 8,555 (14,071) (68,995) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 178,540 5,899,370 27,582,974 --------------- --------------- --------------- Net realized and unrealized gain on investments and foreign currencies 187,836 8,154,667 26,942,380 --------------- --------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 197,266 $ 9,829,526 $ 25,896,121 =============== =============== ===============
- ---------- * Foreign taxes $ 479 $ 100,390 $ 212,935
(1) Fund commenced operations on September 17, 2003. See Accompanying Notes to Financial Statements 32 STATEMENTS OF CHANGES IN NET ASSETS
ING ING ING EMERGING COUNTRIES FOREIGN INTERNATIONAL FUND FUND FUND -------------------------------- --------------- -------------------------------- YEAR YEAR PERIOD YEAR YEAR ENDED ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003(1) 2003 2002 --------------- --------------- --------------- --------------- --------------- FROM OPERATIONS: Net investment income (loss) $ 163,617 $ (834,118) $ (28,210) $ 438,743 $ (217,920) Net realized gain (loss) on investments and foreign currencies 7,300,407 (21,740,055) 42,396 (2,025,797) (10,118,464) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 30,374,658 32,027,083 474,084 17,051,753 (2,700,015) --------------- --------------- --------------- --------------- --------------- Increase (decrease) in net assets resulting from operations 37,838,682 9,452,910 488,270 15,464,699 (13,036,399) --------------- --------------- --------------- --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- (1,786) -- (168,249) -- Class B -- -- -- -- -- Class C -- -- -- (1,612) -- Class I -- -- -- (50,182) -- Class Q -- (1,105) -- (45,138) -- --------------- --------------- --------------- --------------- --------------- Total distributions -- (2,891) -- (265,181) -- --------------- --------------- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 388,617,983 216,145,026 15,069,369 167,030,077 102,371,057 Dividends reinvested -- 2,537 -- 197,605 -- Redemption fee proceeds -- -- -- 306,800 132,507 Net assets received in connection with reorganization (Note 13) -- 10,040,276 -- -- 37,276,905 --------------- --------------- --------------- --------------- --------------- 388,617,983 226,187,839 15,069,369 167,534,482 139,780,469 Cost of shares redeemed (417,627,995) (248,063,246) (1,404,985) (164,862,362) (88,437,578) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (29,010,012) (21,875,407) 13,664,384 2,672,120 51,342,891 --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets 8,828,670 (12,425,388) 14,152,654 17,871,638 38,306,492 NET ASSETS: Net assets, beginning of period 108,988,159 121,413,547 -- 79,277,135 40,970,643 --------------- --------------- --------------- --------------- --------------- Net assets, end of period $ 117,816,829 $ 108,988,159 $ 14,152,654 $ 97,148,773 $ 79,277,135 =============== =============== =============== =============== =============== Undistributed net investment income $ 436,002 $ -- $ 45,112 $ 142,522 $ -- =============== =============== =============== =============== ===============
- ---------- (1) Fund commenced operations on July 1, 2003. See Accompanying Notes to Financial Statements 33 STATEMENTS OF CHANGES IN NET ASSETS
ING INTERNATIONAL ING SMALLCAP INTERNATIONAL GROWTH FUND VALUE FUND -------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 --------------- --------------- --------------- --------------- FROM OPERATIONS: Net investment income (loss) $ (429,026) $ (1,729,234) $ 13,420,978 $ 11,052,808 Net realized gain (loss) on investments and foreign currencies 689,769 (53,391,247) (98,691,670) 52,071,566 Net change in unrealized appreciation (depreciation) of investments and foreign currencies 102,597,770 1,153,419 925,896,407 (564,489,564) --------------- --------------- --------------- --------------- Increase (decrease) in net assets resulting from operations 102,858,513 (53,967,062) 840,625,715 (501,365,190) --------------- --------------- --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- -- (6,749,895) (9,049,951) Class B -- -- -- (97,412) Class C -- -- -- (119,172) Class I -- -- (3,415,778) (2,526,944) Class Q -- -- (275,730) (250,541) Net realized gain on investments Class A -- -- (26,207,763) (25,504,406) Class B -- -- (7,376,884) (8,951,514) Class C -- -- (11,254,215) (12,776,248) Class I -- -- (7,198,805) (4,759,757) Class Q -- -- (571,558) (784,233) --------------- --------------- --------------- --------------- Total distributions -- -- (63,050,628) (64,820,178) --------------- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 793,290,634 814,783,487 381,124,093 2,229,434,327 Dividends reinvested -- -- 47,901,712 48,205,060 --------------- --------------- --------------- --------------- 793,290,634 814,783,487 429,025,805 2,277,639,387 Cost of shares redeemed (847,606,966) (856,597,344) (712,137,091) (1,485,994,863) --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (54,316,332) (41,813,857) (283,111,286) 791,644,524 --------------- --------------- --------------- --------------- Net increase (decrease) in net assets 48,542,181 (95,780,919) 494,463,801 225,459,156 NET ASSETS: Net assets, beginning of year 292,972,610 388,753,529 2,708,200,729 2,482,741,573 --------------- --------------- --------------- --------------- Net assets, end of year $ 341,514,791 $ 292,972,610 $ 3,202,664,530 $ 2,708,200,729 =============== =============== =============== =============== Undistributed net investment income (accumulated net investment loss) $ 58,428 $ (253,833) $ 15,253,443 $ 10,440,192 =============== =============== =============== ===============
See Accompanying Notes to Financial Statements 34 STATEMENTS OF CHANGES IN NET ASSETS
ING ING PRECIOUS METALS RUSSIA FUND FUND -------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 --------------- --------------- --------------- --------------- FROM OPERATIONS: Net investment income (loss) $ (299,789) $ (246,612) $ (18,179) $ 1,221,694 Net realized gain on investments and foreign currencies 25,078,916 13,345,790 11,556,777 10,582,073 Net change in unrealized appreciation of investments and foreign currencies 14,618,885 12,849,763 38,398,668 13,682,689 --------------- --------------- --------------- --------------- Increase in net assets resulting from operations 39,398,012 25,948,941 49,937,266 25,486,456 --------------- --------------- --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- (302,618) (830,443) -- --------------- --------------- --------------- --------------- Total distributions -- (302,618) (830,443) -- --------------- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 23,459,610 23,370,196 84,437,970 74,776,336 Dividends reinvested -- 276,307 659,656 -- Redemption fee proceeds -- -- 326,534 156,582 --------------- --------------- --------------- --------------- 23,459,610 23,646,503 85,424,160 74,932,918 Cost of shares redeemed (33,507,092) (37,510,436) (58,588,061) (63,780,444) --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (10,047,482) (13,863,933) 26,836,099 11,152,474 --------------- --------------- --------------- --------------- Net increase in net assets 29,350,530 11,782,390 75,942,922 36,638,930 NET ASSETS: Net assets, beginning of year 72,345,712 60,563,322 85,657,726 49,018,796 --------------- --------------- --------------- --------------- Net assets, end of year $ 101,696,242 $ 72,345,712 $ 161,600,648 $ 85,657,726 =============== =============== =============== =============== Undistributed net investment income $ -- $ -- $ -- $ 825,244 =============== =============== =============== ===============
See Accompanying Notes to Financial Statements 35 STATEMENTS OF CHANGES IN NET ASSETS
ING ING ING GLOBAL EQUITY GLOBAL REAL WORLDWIDE DIVIDEND FUND ESTATE FUND GROWTH FUND --------------- -------------------------------- -------------------------------- PERIOD YEAR PERIOD YEAR YEAR ENDED ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003(1) 2003 2002(2) 2003 2002 --------------- --------------- --------------- --------------- --------------- FROM OPERATIONS: Net investment income (loss) $ 9,430 $ 1,674,859 $ 1,133,098 $ (1,046,259) $ (3,001,356) Net realized gain (loss) on investments and foreign currencies 9,296 2,255,297 404,577 (640,594) (74,277,585) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 178,540 5,899,370 (44,248) 27,582,974 31,285,489 --------------- --------------- --------------- --------------- --------------- Increase (decrease) in net assets resulting from operations 197,266 9,829,526 1,493,427 25,896,121 (45,993,452) --------------- --------------- --------------- --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- (1,402,599) (909,962) -- -- Class B -- (40,533) (9,777) -- -- Class C -- (74,301) (22,090) -- -- Class Q -- (1) -- -- -- Net realized gains on investments Class A -- (382,139) -- -- -- Class B -- (11,315) -- -- -- Class C -- (30,471) -- -- -- --------------- --------------- --------------- --------------- --------------- Total distributions -- (1,941,359) (941,829) -- -- --------------- --------------- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 4,106,992 11,101,275 29,722,567 297,182,498 188,403,422 Dividends reinvested -- 1,432,608 532,375 -- -- --------------- --------------- --------------- --------------- --------------- 4,106,992 12,533,883 30,254,942 297,182,498 188,403,422 Cost of shares redeemed -- (4,071,657) (2,370,115) (346,955,366) (300,460,131) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions 4,106,992 8,462,226 27,884,827 (49,772,868) (112,056,709) --------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets 4,304,258 16,350,393 28,436,425 (23,876,747) (158,050,161) NET ASSETS: Net assets, beginning of period -- 28,436,425 -- 168,142,348 326,192,509 --------------- --------------- --------------- --------------- --------------- Net assets, end of period $ 4,304,258 $ 44,786,818 $ 28,436,425 $ 144,265,601 $ 168,142,348 =============== =============== =============== =============== =============== Undistributed net investment income $ 37,540 $ 711,366 $ 195,372 $ -- $ -- =============== =============== =============== =============== ===============
- ---------- (1) Fund commenced operations on September 17, 2003. (2) Fund commenced operations on November 5, 2001. See Accompanying Notes to Financial Statements 36 ING EMERGING COUNTRIES FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A ------------------------------------------------------------------------ FOUR MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED ----------------------------------------- OCTOBER 31, JUNE 30, 2003 2002 2001 2000(1)(2) 2000 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.44 11.87 16.33 20.17 16.74 Income (loss) from investment operations: Net investment income (loss) $ 0.03 (0.10) (0.02) (0.24) (0.20) Net realized and unrealized gain (loss) on investments (net of Indian tax) $ 4.85 0.67 (4.44) (3.60) 3.63 Total from investment operations $ 4.88 0.57 (4.46) (3.84) 3.43 Less distributions from: Net investment income (loss) $ -- (0.00)* -- -- -- Net realized gain on investments $ -- -- -- -- -- Total distributions $ -- -- -- -- -- Net asset value, end of period $ 17.32 12.44 11.87 16.33 20.17 TOTAL RETURN(4) % 39.23 4.80 (27.31) (19.04) 20.49 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 71,953 62,063 67,247 59,541 75,311 Ratios to average net assets: Net expenses after expense reimbursement/recoupment(5)(6) % 2.27 2.32 2.32 2.23 2.19 Gross expenses prior to expense reimbursement/recoupment(5) % 2.37 2.26 2.33 2.38 2.34 Net investment income (loss) after expense reimbursement/recoupment(5)(6) % 0.22 (0.56) (0.16) (1.31) (1.15) Portfolio turnover rate % 135 124 74 94 211 CLASS A -------------------------- THREE MONTHS YEAR ENDED ENDED JUNE 30, MARCH 31, 1999(3) 1999 - ----------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 13.43 17.39 Income (loss) from investment operations: Net investment income (loss) $ (0.05) (0.06) Net realized and unrealized gain (loss) on investments (net of Indian tax) $ 3.36 (3.81) Total from investment operations $ 3.31 (3.87) Less distributions from: Net investment income (loss) $ -- 0.02 Net realized gain on investments $ -- 0.07 Total distributions $ -- 0.09 Net asset value, end of period $ 16.74 13.43 TOTAL RETURN(4) % 24.65 (22.23) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 53,483 47,180 Ratios to average net assets: Net expenses after expense reimbursement/ recoupment(5)(6) % 2.13 2.27 Gross expenses prior to expense reimbursement/recoupment(5) % 2.66 2.56 Net investment income (loss) after expense reimbursement/recoupment(5)(6) % (1.30) (0.25) Portfolio turnover rate % 67 213
CLASS B ----------------------------------------------------------------------- FOUR MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED ---------------------------------------- OCTOBER 31, JUNE 30, 2003 2002 2001 2000(1)(2) 2000 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.39 11.85 16.41 20.30 16.98 Income (loss) from investment operations: Net investment income (loss) $ (0.06) (0.16) (0.11) (0.23) (0.35) Net realized and unrealized gain (loss) on investments (net of Indian tax) $ 4.82 0.70 (4.45) (3.66) 3.67 Total from investment operations $ 4.76 0.54 (4.56) (3.89) 3.32 Less distributions from: Net realized gain on investments $ -- -- -- -- -- Total distributions $ -- -- -- -- -- Net asset value, end of period $ 17.15 12.39 11.85 16.41 20.30 TOTAL RETURN(4) % 38.42 4.56 (27.79) (19.16) 19.55 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 16,425 15,150 14,637 22,707 30,322 Ratios to average net assets: Net expenses after expense reimbursement/ recoupment(5)(6) % 2.92 2.97 2.99 2.98 2.84 Gross expenses prior to expense reimbursement/recoupment(5) % 3.02 2.91 3.00 3.12 2.99 Net investment loss after expense reimbursement/recoupment(5)(6) % (0.40) (1.23) (0.72) (1.01) (1.80) Portfolio turnover rate % 135 124 74 94 211 CLASS B -------------------------- THREE MONTHS YEAR ENDED ENDED JUNE 30, MARCH 31, 1999(3) 1999 - ----------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 13.64 17.64 Income (loss) from investment operations: Net investment income (loss) $ (0.07) (0.22) Net realized and unrealized gain (loss) on investments (net of Indian tax) $ 3.41 (3.70) Total from investment operations $ 3.34 (3.92) Less distributions from: Net realized gain on investments $ -- 0.08 Total distributions $ -- 0.08 Net asset value, end of period $ 16.98 13.64 TOTAL RETURN(4) % 24.49 (22.23) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 26,342 22,338 Ratios to average net assets: Net expenses after expense reimbursement/ recoupment(5)(6) % 2.75 2.91 Gross expenses prior to expense reimbursement/recoupment(5) % 3.28 3.20 Net investment loss after expense reimbursement/recoupment(5)(6) % (1.92) (0.80) Portfolio turnover rate % 67 213
(1) Effective October 1, 2000, ING Investments, LLC, became the Investment Adviser of the Fund replacing Nicholas-Applegate Capital Management. (2) The Fund changed its fiscal year-end from June 30 to October 31. (3) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to June 30. (4) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (5) Annualized for periods less that one year. (6) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 37 ING EMERGING COUNTRIES FUND (CONTINUED) FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS C ----------------------------------------------------------------------- FOUR MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED ---------------------------------------- OCTOBER 31, JUNE 30, 2003 2002 2001 2000(1)(2) 2000 - ------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 11.79 11.41 15.81 19.56 16.35 Income (loss) from investment operations: Net investment loss $ (0.06) (0.25) (0.12) (0.22) (0.32) Net realized and unrealized gain (loss) on investments (net of Indian tax) $ 4.59 0.63 (4.28) (3.53) 3.53 Total from investment operations $ 4.53 0.38 (4.40) (3.75) 3.21 Less distributions from: Net realized gain on investments $ -- -- -- -- -- Total distributions $ -- -- -- -- -- Net asset value, end of period $ 16.32 11.79 11.41 15.81 19.56 TOTAL RETURN(4) % 38.42 3.33 (27.83) (19.17) 19.63 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 10,033 9,519 12,746 22,456 29,610 Ratios to average net assets: Net expenses after expense reimbursement/recoupment(5)(6) % 2.92 2.97 2.99 2.98 2.84 Gross expenses prior to expense reimbursement/recoupment(5) % 3.02 2.91 3.00 3.09 2.99 Net investment loss after expense reimbursement/recoupment(5)(6) % (0.40) (1.20) (0.73) (0.95) (1.80) Portfolio turnover rate % 135 124 74 94 211 CLASS C --------------------------- THREE MONTHS YEAR ENDED ENDED JUNE 30, MARCH 31, 1999(3) 1999 - ------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 13.14 16.98 Income (loss) from investment operations: Net investment loss $ (0.07) (0.27) Net realized and unrealized gain (loss) on investments (net of Indian tax) $ 3.28 (3.49) Total from investment operations $ 3.21 (3.76) Less distributions from: Net realized gain on investments $ -- 0.08 Total distributions $ -- 0.08 Net asset value, end of period $ 16.35 13.14 TOTAL RETURN(4) % 24.43 (22.21) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 24,230 19,246 Ratios to average net assets: Net expenses after expense reimbursement/ recoupment(5)(6) % 2.75 2.90 Gross expenses prior to expense reimbursement/recoupment(5) % 3.28 3.19 Net investment loss after expense reimbursement/recoupment(5)(6) % (1.92) (0.77) Portfolio turnover rate % 67 213
CLASS M ---------------------------- YEAR AUGUST 5, ENDED 2002(7) TO OCTOBER 31, OCT. 31, 2003 2002 - --------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.35 12.39 Income (loss) from investment operations: Net investment income (loss) $ (0.02) (0.03) Net realized and unrealized gain (loss) on investments (net of Indian tax) $ 4.79 (0.01) Total from investment operations $ 4.77 (0.04) Less distributions from: Net asset value, end of period $ 17.12 12.35 TOTAL RETURN(4) % 38.62 (0.32) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 1,237 1,125 Ratios to average net assets: Net expenses after expense reimbursement/ recoupment(5)(6) % 2.67 2.73 Gross expenses prior to expense reimbursement/recoupment(5) % 2.77 2.73 Net investment income (loss) after expense reimbursement/recoupment(5)(6) % (0.14) (1.32) Portfolio turnover rate % 135 124
(1) Effective October 1, 2000, ING Investments, LLC, became the Investment Adviser of the Fund replacing Nicholas-Applegate Capital Management. (2) The Fund changed its fiscal year-end from June 30 to October 31. (3) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to June 30. (4) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (5) Annualized for periods less that one year. (6) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. (7) Commencment of offering of shares. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 38 ING FOREIGN FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A CLASS B CLASS C ----------- ----------- ----------- JULY 1, JULY 8, JULY 7, 2003(1) TO 2003(1) TO 2003(1) TO OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2003 2003 - ------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.00 10.29 10.27 Income (loss) from investment operations: Net investment loss $ (0.00)* (0.01) (0.01) Net realized and unrealized gain on investments $ 1.01 0.71 0.75 Total from investment operations $ 1.01 0.70 0.74 Net asset value, end of period $ 11.01 10.99 11.01 TOTAL RETURN(2) % 10.10 6.80 7.21 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 6,598 1,344 5,601 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 1.95 2.70 2.70 Gross expenses prior to expense reimbursement(3) % 6.03 6.78 6.78 Net investment loss after proceeds and expense reimbursement(3)(4) % (0.32) (1.03) (1.03) Portfolio turnover rate % 50 50 50
(1) Commencment of operations of class. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 39 ING INTERNATIONAL FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A -------------------------------------------------------------------------- TEN MONTHS ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, YEAR ENDED DECEMBER 31, ----------------------------------- ----------- ----------------------- 2003 2002 2001 2000(1)(2) 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 7.05 8.09 11.22 13.45 11.61 10.10 Income (loss) from investment operations: Net investment income (loss) $ 0.04 (0.02) (0.05) 0.19 (0.01) 0.17 Net realized and unrealized gain (loss) on investments $ 1.37 (1.04) (2.14) (1.48) 5.46 1.74 Total from investment operations $ 1.41 (1.06) (2.19) (1.29) 5.45 1.91 Less distributions from: Net investment income $ 0.03 -- -- 0.86 0.03 0.06 Net realized gain on investments $ -- -- 0.94 0.08 3.58 0.34 Total distributions $ 0.03 -- 0.94 0.94 3.61 0.40 Redemption fees applied to capital $ 0.05 0.02 -- -- -- -- Net asset value, end of period $ 8.48 7.05 8.09 11.22 13.45 11.61 TOTAL RETURN(3) % 20.72 (12.86) (21.38) (10.22) 47.85 19.02 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 43,821 43,314 37,489 30,653 25,304 24,000 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 1.85 2.14 2.51 2.23 1.98 1.75 Gross expenses prior to expense reimbursement(4) % 1.87 2.18 2.51 2.23 1.98 2.25 Net investment income (loss) after expense reimbursement(4)(5) % 0.64 (0.32) (0.74) (0.23) (0.21) 0.35 Portfolio turnover rate % 100 126 169 113 144 144
CLASS B -------------------------------------------------- AUGUST 22, YEAR ENDED OCTOBER 31, 2000(6) TO ------------------------------------- OCTOBER 31, 2003 2002 2001 2000(1) - ----------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 6.91 8.03 11.19 12.28 Income (loss) from investment operations: Net investment loss $ (0.00)* (0.02) (0.62) (0.05) Net realized and unrealized gain (loss) on investments $ 1.31 (1.10) (1.60) (1.04) Total from investment operations $ 1.31 (1.12) (2.22) (1.09) Less distributions from: Net realized gain on investments $ -- -- 0.94 -- Total distributions $ -- -- 0.94 -- Net asset value, end of period $ 8.22 6.91 8.03 11.19 TOTAL RETURN(3) % 18.96 (13.95) (21.74) (8.88) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 12,466 10,246 1,961 80 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 2.60 2.76 3.32 2.76 Gross expenses prior to expense reimbursement(4) % 2.62 2.83 3.32 2.76 Net investment loss after expense reimbursement(4)(5) % (0.05) (1.10) (1.40) (7.02) Portfolio turnover rate % 100 126 169 113
(1) The Fund changed its fiscal year-end from December 31 to October 31 (2) Effective July 26, 2000, ING Investments, LLC, became the Investment Adviser of the Fund. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized (4) Annualized for periods less than one year. (5) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. (6) Commencement of offering of shares. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 40 ING INTERNATIONAL FUND (CONTINUED) FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS C ------------------------------------------------------ SEPTEMBER 15, YEAR ENDED OCTOBER 31, 2000(1) TO -------------------------------------- OCTOBER 31, 2003 2002 2001 2000(2) - -------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 6.91 8.02 11.21 11.67 Income (loss) from investment operations: Net investment loss $ (0.00)* (0.02) (0.62) (0.04) Net realized and unrealized gain (loss) on investments $ 1.31 (1.09) (1.63) (0.42) Total from investment operations $ 1.31 (1.11) (2.25) (0.46) Less distributions from: Net investment income $ 0.00* -- -- -- Net realized gain on investments $ -- -- 0.94 -- Total distributions $ 0.00* -- 0.94 -- Net asset value, end of period $ 8.22 6.91 8.02 11.21 TOTAL RETURN(3) % 18.97 (13.84) (21.98) (3.94) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 14,526 12,384 1,514 85 Ratios to average net assets: Net expenses after expense reimbursement(4)(5) % 2.60 2.76 3.31 2.96 Gross expenses prior to expense reimbursement(4) % 2.62 2.84 3.31 2.96 Net investment loss after expense reimbursement(4)(5) % (0.05) (1.18) (1.46) (3.97) Portfolio turnover rate % 100 126 169 113
(1) Commencement of offering of shares. (2) The Fund changed its fiscal year-end from December 31 to October 31. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized (4) Annualized for periods less than one year. (5) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary (expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 41 ING INTERNATIONAL SMALLCAP GROWTH FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A --------------------------------------------------------------------------------------- FOUR MONTHS YEAR THREE MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED ----------------------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31, 2003 2002 2001 2000(1) 2000 1999(2) 1999 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 18.35 21.85 36.08 40.94 23.80 21.03 19.29 Income (loss) from investment operations: Net investment income (loss) $ 0.01 (0.07) (0.11) (0.10) (0.18) (0.03) 0.02 Net realized and unrealized gain (loss) on investments $ 7.01 (3.43) (11.39) (4.76) 19.38 2.80 3.21 Total from investment operations $ 7.02 (3.50) (11.50) (4.86) 19.20 2.77 3.23 Less distributions from: Net investment income $ -- -- 0.24 -- -- -- -- Net realized gain on investments $ -- -- 2.49 -- 2.06 -- 1.49 Total distributions $ -- -- 2.73 -- 2.06 -- 1.49 Net asset value, end of period $ 25.37 18.35 21.85 36.08 40.94 23.80 21.03 TOTAL RETURN(3) % 38.26 (16.02) (34.30) (11.90) 82.89 13.17 17.26 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 150,043 123,206 153,804 273,393 278,480 37,490 25,336 Ratios to average net assets: Net expenses after expense reimbursement/recoupment(4)(5) % 1.95 1.95 1.83 1.67 1.67 1.84 1.94 Gross expenses prior to expense reimbursement/recoupment(4) % 1.94 1.99 1.83 1.67 1.67 1.86 2.08 Net investment income (loss) after expense reimbursement/recoupment(4)(5) % 0.00 (0.32) (0.33) (0.80) (0.76) (0.69) (0.82) Portfolio turnover rate % 114 149 143 56 164 44 146
CLASS B --------------------------------------------------------------------------------------- FOUR MONTHS YEAR THREE MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED ----------------------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31, 2003 2002 2001 2000(1) 2000 1999(2) 1999 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 19.25 23.06 38.05 43.27 25.33 22.43 20.16 Income (loss) from investment operations: Net investment loss $ (0.24) (0.32) (0.32) (0.20) (0.37) (0.07) (0.20) Net realized and unrealized gain (loss) on investments $ 7.42 (3.49) (11.98) (5.02) 20.50 2.97 3.46 Total from investment operations $ 7.18 (3.81) (12.30) (5.22) 20.13 2.90 3.26 Less distributions from: Net investment income $ -- -- 0.07 -- -- -- -- Net realized gain on investments $ -- -- 2.62 -- 2.19 -- 0.99 Total distributions $ -- -- 2.69 -- 2.19 -- 0.99 Net asset value, end of period $ 26.43 19.25 23.06 38.05 43.27 25.33 22.43 TOTAL RETURN(3) % 37.30 (16.52) (34.59) (12.05) 81.63 12.93 16.55 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 62,104 52,661 74,541 126,861 132,028 19,331 16,158 Ratios to average net assets: Net expenses after expense reimbursement/recoupment(4)(5) % 2.60 2.60 2.48 2.32 2.32 2.49 2.59 Gross expenses prior to expense reimbursement/recoupment(4) % 2.59 2.63 2.48 2.32 2.32 2.51 2.73 Net investment loss after expense reimbursement/recoupment(4)(5) % (0.68) (0.98) (0.98) (1.46) (1.41) (1.34) (1.45) Portfolio turnover rate % 114 149 143 56 164 44 146
(1) The Fund changed its fiscal year-end from June 30 to October 31. (2) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to to June 30. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (4) Annualized for periods less that one year. (5) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. See Accompanying Notes to Financial Statements 42 ING INTERNATIONAL SMALLCAP GROWTH FUND (CONTINUED) FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS C --------------------------------------------------------------------------------------- FOUR MONTHS YEAR THREE MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED ENDED ENDED ----------------------------------- OCTOBER 31, JUNE 30, JUNE 30, MARCH 31, 2003 2002 2001 2000(1) 2000 1999(2) 1999 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 17.65 21.14 34.93 39.71 23.34 20.60 18.53 Income (loss) from investment operations: Net investment loss $ (0.29) (0.32) (0.38) (0.18) (0.31) (0.06) (0.10) Net realized and unrealized gain (loss) on investments $ 6.87 (3.17) (10.91) (4.60) 18.69 2.80 3.09 Total from investment operations $ 6.58 (3.49) (11.29) (4.78) 18.38 2.74 2.99 Less distributions from: Net investment income $ -- -- 0.09 -- -- -- -- Net realized gain on investments $ -- -- 2.41 -- 2.01 -- 0.92 Total distributions $ -- -- 2.50 -- 2.01 -- 0.92 Net asset value, end of period $ 24.23 17.65 21.14 34.93 39.71 23.34 20.60 TOTAL RETURN(3) % 37.28 (16.51) (34.62) (12.04) 80.89 13.31 16.55 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 50,227 46,703 69,320 136,830 144,068 18,354 13,226 Ratios to average net assets: Net expenses after expense reimbursement/recoupment(4)(5) % 2.60 2.60 2.48 2.32 2.32 2.49 2.59 Gross expenses prior to expense reimbursement/recoupment(4) % 2.59 2.63 2.48 2.32 2.32 2.51 2.73 Net investment loss after expense reimbursement/recoupment(4)(5) % (0.68) (0.99) (0.98) (1.46) (1.41) (1.34) (1.45) Portfolio turnover rate % 114 149 143 56 164 44 146
(1) The Fund changed its fiscal year-end from June 30 to October 31. (2) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to to June 30. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (4) Annualized for periods less that one year. (5) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. See Accompanying Notes to Financial Statements 43 ING INTERNATIONAL VALUE FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A ---------------------------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------------------------- 2003 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 10.40 12.33 16.68 14.75 11.88 Income (loss) from investment operations: Net investment income $ 0.08 0.06 0.11 0.15 0.08 Net realized and unrealized gain (loss) on investments $ 3.48 (1.64) (2.44) 2.58 3.58 Total from investment operations $ 3.56 (1.58) (2.33) 2.73 3.66 Less distributions from: Net investment income $ 0.05 0.09 0.14 0.11 0.12 Net realized gain on investments $ 0.20 0.26 1.88 0.69 0.67 Total distributions $ 0.25 0.35 2.02 0.80 0.79 Net asset value, end of year $ 13.71 10.40 12.33 16.68 14.75 TOTAL RETURN(1) % 35.11 (13.31) (15.89) 18.56 32.55 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of year (000's) $ 1,641,943 1,356,334 1,195,760 920,591 451,815 Ratios to average net assets: Expenses % 1.74 1.76 1.67 1.64 1.68 Net investment income % 0.66 0.58 0.88 1.14 0.92 Portfolio turnover rate % 9 20 15 34 29
CLASS B ---------------------------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------------------------- 2003 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 10.23 12.13 16.43 14.57 11.76 Income (loss) from investment operations: Net investment income (loss) $ (0.00)* (0.02) 0.02 0.07 0.01 Net realized and unrealized gain (loss) on investments $ 3.42 (1.62) (2.41) 2.51 3.51 Total from investment operations $ 3.42 (1.64) (2.39) 2.58 3.52 Less distributions from: Net investment income $ -- 0.00* 0.03 0.03 0.04 Net realized gain on investments $ 0.20 0.26 1.88 0.69 0.67 Total distributions $ 0.20 0.26 1.91 0.72 0.71 Net asset value, end of year $ 13.45 10.23 12.13 16.43 14.57 TOTAL RETURN(1) % 34.11 (13.90) (16.48) 17.69 31.55 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of year (000's) $ 420,651 375,967 421,884 437,765 278,871 Ratios to average net assets: Expenses % 2.44 2.45 2.37 2.34 2.41 Net investment income (loss) % (0.04) (0.13) 0.16 0.45 0.18 Portfolio turnover rate % 9 20 15 34 29
(1) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 44 ING INTERNATIONAL VALUE FUND (CONTINUED) FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS C ---------------------------------------------------------------------- YEAR ENDED OCTOBER 31, ---------------------------------------------------------------------- 2003 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 10.21 12.10 16.41 14.55 11.75 Income (loss) from investment operations: Net investment income (loss) $ (0.00)* (0.02) 0.02 0.07 -- Net realized and unrealized gain (loss) on investments $ 3.41 (1.61) (2.41) 2.52 3.51 Total from investment operations $ 3.41 (1.63) (2.39) 2.59 3.51 Less distributions from: Net investment income $ -- 0.00* 0.04 0.04 0.04 Net realized gain on investments $ 0.20 0.26 1.88 0.69 0.67 Total distributions $ 0.20 0.26 1.92 0.73 0.71 Net asset value, end of year $ 13.42 10.21 12.10 16.41 14.55 TOTAL RETURN(1) % 34.08 (13.85) (16.52) 17.76 31.50 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of year (000's) $ 628,704 573,712 603,229 605,678 310,227 Ratios to average net assets: Expenses % 2.44 2.46 2.37 2.34 2.41 Net investment income (loss) % (0.04) (0.13) 0.16 0.46 0.19 Portfolio turnover rate % 9 20 15 34 29
(1) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 45 ING PRECIOUS METALS FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A --------------------------------------------------------------------------------- TEN MONTHS YEAR ENDED OCTOBER 31, ENDED YEAR ENDED DECEMBER 31, --------------------------------------- OCTOBER 31, ------------------------ 2003 2002 2001 2000(1)(2) 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 4.40 3.05 2.27 3.29 3.03 3.24 Income (loss) from investment operations: Net investment income (loss) $ (0.02) (0.01) 0.02 0.01 (0.01) -- Net realized and unrealized gain (loss) on investments $ 2.56 1.38 0.76 (1.03) 0.27 (0.21) Total from investment operations $ 2.54 1.37 0.78 (1.02) 0.26 (0.21) Less distributions from: Net investment income $ -- 0.02 0.00* -- -- -- Total distributions $ -- 0.02 0.00* -- -- -- Net asset value, end of period $ 6.94 4.40 3.05 2.27 3.29 3.03 TOTAL RETURN(3) % 57.73 45.01 34.56 (30.98) 8.58 (6.39) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 101,696 72,346 60,563 40,130 72,516 50,841 Ratios to average net assets: Expenses(4) % 1.57 1.73 1.96 2.18 1.94 1.74 Net investment income (loss)(4) (0.36) (0.33) 0.67 0.28 (0.02) 0.08 Portfolio turnover rate % 94 54 83 27 79 29
(1) The Fund changed its fiscal year-end from December 31 to October 31. (2) Effective July 26, 2000, ING Investments, LLC, became the Investment Adviser of the Fund. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (4) Annualized for periods less that one year. * Amount represents less than $0.01 per share See Accompanying Notes to Financial Statements 46 ING RUSSIA FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A --------------------------------------------------------------------------- TEN MONTHS YEAR ENDED OCTOBER 31, ENDED YEAR ENDED DECEMBER 31, ----------------------------------- OCTOBER 31, ------------------------ 2003 2002 2001 2000(1)(2) 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.15 8.04 7.15 6.74 2.64 17.50 Income (loss) from investment operations: Net investment income (loss) $ (0.00)* 0.17 (0.04) (0.07) 0.18 0.15 Net realized and unrealized gain (loss) on investments $ 7.06 3.92 0.93 0.48 3.99 (14.70) Total from investment operations $ 7.06 4.09 0.89 0.41 4.17 (14.55) Less distributions from: Net investment income $ 0.12 -- -- -- 0.07 0.07 Net realized gain on investments $ -- -- -- -- -- 0.24 Total distributions $ 0.12 -- -- -- 0.07 0.31 Redemption fees applied to capital $ 0.04 0.02 -- -- -- -- Net asset value, end of period $ 19.13 12.15 8.04 7.15 6.74 2.64 TOTAL RETURN(3) % 58.98 51.12 12.45 6.08 159.76 (82.99) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 161,601 85,658 49,019 53,637 59,011 19,147 Ratios to average net assets: Net expenses after redemption fee proceeds and expense reimbursement(4)(5) % 2.09 1.77 2.23 1.40 2.23 1.84 Gross expenses prior to redemption fee proceeds and expense reimbursement(4) % 2.09 2.20 2.77 2.85 3.32 2.64 Net investment income (loss) after redemption fee proceeds and expense reimbursement(4)(5) % (0.02) 1.33 (0.56) (0.90) 4.39 1.36 Portfolio turnover rate % 23 32 28 52 91 66
(1) The Fund changed its fiscal year-end from December 31 to October 31. (2) Effective July 26, 2000, ING Investments, LLC, became the Investment Adviser of the Fund. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (4) Annualized for periods less that one year. (5) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount is less than $0.01 per share. See Accompanying Notes to Financial Statements 47 ING GLOBAL EQUITY DIVIDEND FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A CLASS B CLASS C ------------ ------------ ----------- SEPTEMBER 17, OCTOBER 24, OCTOBER 29, 2003(1) TO 2003(1) TO 2003(1) TO OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2003 2003 - ----------------------------------------------------------------------------- ------------ ----------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.00 10.31 10.44 Income from investment operations: Net investment income $ 0.02 0.00* 0.00* Net realized and unrealized gain on investments $ 0.47 0.18 0.04 Total from investment operations $ 0.49 0.18 0.04 Less distributions from: Net investment income $ -- -- -- Net realized gain on investments $ -- -- -- Total distributions $ -- -- -- Net asset value, end of period $ 10.49 10.49 10.48 TOTAL RETURN(2) % 4.90 1.75 0.38 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 4,274 12 19 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 1.40 2.15 2.15 Gross expenses prior to expense reimbursement(3) % 7.00 7.75 7.75 Net investment income after expense reimbursement(3)(4) % 3.58 (0.67) (0.88) Portfolio turnover rate % 3 3 3
(1) Commencement of operations of class. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount represents less than $0.01 per share See Accompanying Notes to Financial Statements 48 ING GLOBAL REAL ESTATE FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A CLASS B CLASS C --------------------------- ------------------------ ----------------------- YEAR NOVEMBER 5, YEAR MARCH 15, YEAR JANUARY 8, ENDED 2001(1) TO ENDED 2002(1) TO ENDED 2002(1) TO OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 2003 2002 - ------------------------------------------------------------------------------ ------------------------ ----------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.40 10.01 9.43 10.03 9.70 9.99 Income (loss) from investment operations: Net investment income $ 0.57 0.45 0.48 0.16 0.45 0.19 Net realized and unrealized gain (loss) on investments $ 2.79 0.31 2.47 (0.58) 2.60 (0.31) Total from investment operations $ 3.36 0.76 2.95 (0.42) 3.05 (0.12) Less distributions from: Net investment income $ 0.54 0.37 0.48 0.18 0.45 0.17 Net realized gain on investments $ 0.16 -- 0.16 -- 0.16 -- Total distributions $ 0.70 0.37 0.64 0.18 0.61 0.17 Net asset value, end of period $ 13.06 10.40 11.74 9.43 12.14 9.70 TOTAL RETURN(2) % 33.77 7.47 32.83 (4.29) 32.89 (1.24) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 41,549 25,440 1,506 677 1,732 2,320 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 1.75 1.76 2.50 2.52 2.50 2.52 Gross expenses prior to and expense reimbursement(3) % 1.95 2.46 2.70 3.19 2.70 3.19 Net investment income after proceeds and expense reimbursement(3)(4) % 5.14 4.12 4.44 3.74 4.60 3.51 Portfolio turnover rate % 124 141 124 141 124 141
(1) Commencement of offering of shares. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. See Accompanying Notes to Financial Statements 49 ING WORLDWIDE GROWTH FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS A ------------------------------------------------------------------- FOUR MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED --------------------------------------- OCTOBER 31, JUNE 30, 2003 2002 2001 2000(1)(2) 2000 - -------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.36 15.45 26.36 29.98 23.58 Income (loss) from investment operations: Net investment loss $ (0.06) (0.12)* (0.11) (0.07) (0.15) Net realized and unrealized gain (loss) on investments $ 2.46 (2.97)* (9.73) (3.55) 9.62 Total from investment operations $ 2.40 (3.09) (9.84) (3.62) 9.47 Less distributions from: Net investment income $ -- -- -- -- -- Net realized gain on investments $ -- -- 0.77 -- 3.07 Tax return of capital $ -- -- 0.30 -- -- Total distributions $ -- -- 1.07 -- 3.07 Net asset value, end of period $ 14.76 12.36 15.45 26.36 29.98 TOTAL RETURN(4) % 19.42 (20.00) (38.80) (12.07) 42.43 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 56,877 69,478 134,152 246,590 235,341 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 1.85 1.86 1.85 1.61 1.67 Gross expenses prior to expense reimbursement/recoupment(5) % 1.93 1.96 1.95 1.61 1.67 Net investment loss after expense reimbursement/recoupment(5)(6) % (0.35) (0.83) (0.65) (0.71) (0.79) Portfolio turnover rate % 125 281 302 71 169 CLASS A --------------------------- THREE YEAR MONTHS ENDED ENDED JUNE 30, MARCH 31, 1999(3) 1999 - ---------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 21.39 19.33 Income (loss) from investment operations: Net investment loss $ -- (0.02) Net realized and unrealized gain (loss) on investments $ 2.19 5.78 Total from investment operations $ 2.19 5.76 Less distributions from: Net investment income $ -- 0.06 Net realized gain on investments $ -- 3.64 Tax return of capital $ -- -- Total distributions $ -- 3.70 Net asset value, end of period $ 23.58 21.39 TOTAL RETURN(4) % 10.24 33.56 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 66,245 49,134 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 1.75 1.86 Gross expenses prior to expense reimbursement/recoupment(5) % 1.75 2.02 Net investment loss after expense reimbursement/recoupment(5)(6) % (0.03) (0.62) Portfolio turnover rate % 57 247
CLASS B ------------------------------------------------------------------- FOUR MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED --------------------------------------- OCTOBER 31, JUNE 30, 2003 2002 2001 2000(1)(2) 2000 - -------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 13.65 17.19 29.52 33.66 26.64 Income (loss) from investment operations: Net investment loss $ (0.16) (0.25)* (0.31) (0.15) (0.28) Net realized and unrealized gain (loss) on investments $ 2.70 (3.29)* (10.82) (3.99) 10.76 Total from investment operations $ 2.54 (3.54) (11.13) (4.14) 10.48 Less distributions from: Net investment income $ -- -- -- -- -- Net realized gain on investments $ -- -- 0.86 -- 3.46 Tax return of capital $ -- -- 0.34 -- -- Total distributions $ -- -- 1.20 -- 3.46 Net asset value, end of period $ 16.19 13.65 17.19 29.52 33.66 TOTAL RETURN(4) % 18.61 (20.59) (39.19) (12.27) 41.54 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 35,459 38,603 71,943 126,756 130,988 Ratios to average net assets: Net expenses after expense reimbursement/ recoupment(5)(6) % 2.50 2.51 2.51 2.26 2.32 Gross expenses prior to expense reimbursement/recoupment(5) % 2.58 2.61 2.61 2.26 2.32 Net investment loss after expense reimbursement/recoupment(5)(6) % (1.00) (1.46) (1.31) (1.37) (1.44) Portfolio turnover rate % 125 281 302 71 169 CLASS B -------------------------- THREE YEAR MONTHS ENDED ENDED JUNE 30, MARCH 31, 1999(3) 1999 - --------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 24.21 20.10 Income (loss) from investment operations: Net investment loss $ (0.03) (0.08) Net realized and unrealized gain (loss) on investments $ 2.46 6.25 Total from investment operations $ 2.43 6.17 Less distributions from: Net investment income $ -- 0.01 Net realized gain on investments $ -- 2.05 Tax return of capital $ -- -- Total distributions $ -- 2.06 Net asset value, end of period $ 26.64 24.21 TOTAL RETURN(4) % 10.04 32.74 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 27,938 18,556 Ratios to average net assets: Net expenses after expense reimbursement/ recoupment(5)(6) % 2.40 2.51 Gross expenses prior to expense reimbursement/recoupment(5) % 2.40 2.67 Net investment loss after expense reimbursement/recoupment(5)(6) % (0.68) (1.31) Portfolio turnover rate % 57 247
(1) Effective October 1, 2000, ING Investments, LLC, became the Investment Adviser of the Fund replacing Nicholas-Applegate Capital Management. (2) The Fund changed its fiscal year-end from June 30 to October 31. (3) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to June 30. (4) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized (5) Annualized for periods less that one year. (6) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. * Per share data calculated using average number of shares outstanding throughout the period. See Accompanying Notes to Financial Statements 50 ING WORLDWIDE GROWTH FUND (CONTINUED) FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS C ------------------------------------------------------------------- FOUR MONTHS YEAR YEAR ENDED OCTOBER 31, ENDED ENDED --------------------------------------- OCTOBER 31, JUNE 30, 2003 2002 2001 2000(1)(2) 2000 - -------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.14 15.29 26.26 29.92 23.69 Income (loss) from investment operations: Net investment loss $ (0.15) (0.22)* (0.40) (0.13) (0.33) Net realized and unrealized gain (loss) on investments $ 2.42 (2.93)* (9.50) (3.53) 9.65 Total from investment operations $ 2.27 (3.15) (9.90) (3.66) 9.32 Less distributions from: Net investment income $ -- -- -- -- -- Net realized gain on investments $ -- -- 0.77 -- 3.09 Tax return of capital $ -- -- 0.30 -- -- Total distributions $ -- -- 1.07 -- 3.09 Net asset value, end of period $ 14.41 12.14 15.29 26.26 29.92 TOTAL RETURN(4) % 18.70 (20.60) (39.20) (12.23) 41.48 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 45,476 51,868 102,919 213,843 239,432 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 2.50 2.51 2.51 2.26 2.32 Gross expenses prior to expense reimbursement/recoupment(5) % 2.58 2.61 2.60 2.26 2.32 Net investment loss after expense reimbursement/recoupment(5)(6) % (1.01) (1.46) (1.30) (1.37) (1.44) Portfolio turnover rate % 125 281 302 71 169 CLASS C -------------------------- THREE MONTHS YEAR ENDED ENDED JUNE 30, MARCH 31, 1999(3) 1999 - ---------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 21.52 19.05 Income (loss) from investment operations: Net investment loss $ (0.04) (0.20) Net realized and unrealized gain (loss) on investments $ 2.21 5.83 Total from investment operations $ 2.17 5.63 Less distributions from: Net investment income $ -- 0.01 Net realized gain on investments $ -- 3.15 Tax return of capital $ -- -- Total distributions $ -- 3.16 Net asset value, end of period $ 23.69 21.52 TOTAL RETURN(4) % 10.08 32.73 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 111,250 98,470 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 2.40 2.51 Gross expenses prior to expense reimbursement/recoupment(5) % 2.40 2.67 Net investment loss after expense reimbursement/recoupment(5)(6) % (0.68) (1.28) Portfolio turnover rate % 57 247
(1) Effective October 1, 2000, ING Investments, LLC, became the Investment Adviser of the Fund replacing Nicholas-Applegate Capital Management. (2) The Fund changed its fiscal year-end from June 30 to October 31. (3) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to June 30. (4) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value and excluding the deduction of sales charges. Total return for less than one year is not annualized (5) Annualized for periods less that one year. (6) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. * Per share data calculated using average number of shares outstanding throughout the period. See Accompanying Notes to Financial Statements 51 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 NOTE 1 -- ORGANIZATION ORGANIZATION. The ING Funds included in this report are comprised of ING Mutual Funds ("IMF") and ING Mayflower Trust ("IMT"); both are organized as open-end investment management companies registered under the Investment Company Act of 1940, as amended. IMF is a Delaware business trust organized in 1992 with nine separate series ("Portfolios"): ING Emerging Countries Fund ("Emerging Countries"), ING Foreign Fund ("Foreign") ING International Fund ("International"), ING International SmallCap Growth Fund ("International SmallCap Growth"), ING Precious Metals Fund ("Precious Metals"), ING Russia Fund ("Russia"), ING Global Equity Dividend Fund ("Global Equity Dividend"), ING Global Real Estate Fund ("Global Real Estate") and ING Worldwide Growth Fund ("Worldwide Growth"). IMT is a Massachusetts business trust organized in 1992 with two separate series (Portfolios). The one Portfolio in this annual report is ING International Value Fund ("International Value"). The investment objective of each Fund is described in each Fund's prospectus. Each Fund offers one or more of the following classes of shares: Class A, Class B, Class C, Class I, Class M and Class Q (Class I and Class Q are presented in a separate annual report). The separate classes of shares differ principally in the applicable sales charges (if any), distribution fees and shareholder servicing fees and transfer agent fees. Shareholders of each class also bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of the Fund and earn income from the portfolio pro rata based on the average daily net assets of each class, without distinction between share classes. Dividends from net investment income are determined separately for each class based on income and expenses allocable to each class. Distributions from realized gains are allocated to each class pro rata based on the total shares outstanding on the ex-dividend date. No class has preferential dividend rights. Differences in per share dividend rates generally result from the relative weighting of pro rata income and realized gain allocations and from differences in separate class expenses, including distribution and shareholder servicing fees. Class B shares, along with their pro rata reinvested dividend shares, automatically convert to Class A shares approximately eight years after purchase. Effective September 2, 2003, International Value was closed to new investors except for shares purchased (1) through the reinvestment of dividends and distributions; (2) by 401(k), 403(b) and 457 plans that have selected International Value as an investment option prior to May 17, 2002; (3) by shareholders participating in mutual fund wrap fee programs who were invested in International Value prior to May 17, 2002; or (4) by new 401(k), 403(b) and 457 plans and new shareholders participating in mutual fund wrap fee programs subject to approval by the Investment Adviser and Sub-Adviser based on their assessment of the Fund's ability to invest the monies consistent with the Fund's objectives in light of market conditions, the size of the purchase, and other relevant factors relating to International Value. International Value may reopen in the future subject to the discretion of the Board of Trustees ("Board"). NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements, and such policies are in conformity with accounting principles generally accepted in the United States of America for investment companies. A. SECURITY VALUATION. For all Funds except Russia, 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 price. Securities traded on an exchange or NASDAQ for which there has been no sale, securities traded in the over-the-counter-market and gold and silver bullion 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 the time such valuation is determined by each Fund's custodian. Debt securities are valued at bid prices obtained from independent services or from one or more dealers making markets in the securities and may be adjusted based on the Fund's valuation procedures. U.S. Government obligations are valued by using market quotations or independent pricing services that use prices provided by market-makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics. Securities and assets for which market quotations are not readily available (which may include certain 52 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) restricted securities which are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Funds' Board, in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, which close earlier than the time that a Fund calculates its net asset value may also be valued at their fair values as determined in good faith by or under the supervision of a Fund's Board, in accordance with methods that are specifically authorized by the Board. If a significant event which is likely to impact the value of one or more foreign securities held by a Fund occurs after the time at which the foreign market for such security(ies) closes but before the time that the Fund's net asset value is calculated on any business day, such event may be taken into account in determining the fair value of such security(ies) at the time the Fund calculates its net asset value. For these purposes, significant events after the close of trading on a foreign market may include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis, the Board has authorized the use of one or more research services to assist with the determination of the fair value of foreign securities in light of significant events. Research services use statistical analyses and quantitative models to help determine fair value as of the time a Fund calculates its net asset value. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment, and the fair value assigned to a security may not represent the actual value that a Fund could obtain if it were to sell the security at the time of the close of the NYSE. Investments in securities maturing in less than 60 days are valued at amortized cost, which approximates market value. For the Russia Fund the valuation procedures for Russian equity securities are to price local shares according to the most recent available bid prices. If securities are not listed on the Russian Trade System or on any other pricing service that lists available bid quotes, then the mean of at least two broker bid quotes is used. For equity securities of an issuer in Russia for which there are no readily available reliable market value quotations, the following benchmark pricing procedure shall apply on any day on which the largest securities exchange in Russia (the "RTS") declines by 2 1/2% or more. The price of the security shall be adjusted by the amount of the downward change in a composite of the other companies that are publicly traded in the same sector as the issuer, if ascertainable, and if not ascertainable, by the amount of downward change in the RTS. B. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Securities transactions are accounted for on the trade date. Realized gains and losses are reported on the basis of identified cost of securities sold. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date, or for certain foreign securities, when the information becomes available to the Funds. Premium amortization and discount accretion are determined by the effective yield method. C. FOREIGN CURRENCY TRANSLATION. The books and records of the Funds are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis: (1) Market value of investment securities, other assets and liabilities -- at the exchange rates prevailing at the end of the day. (2) Purchases and sales of investment securities, income and expenses -- at the rates of exchange prevailing on the respective dates of such transactions. Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Funds do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities that 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. 53 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. Government securities. These risks include but are not limited to re-evaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. Government securities. D. FOREIGN CURRENCY TRANSACTIONS. Certain Funds may enter into foreign currency exchange transactions to convert to and from different foreign currencies and to and from the U.S. dollar in connection with the planned purchases or sales of securities. The Funds either enter into these transactions on a spot basis at the spot rate prevailing in the foreign currency exchange market or uses forward foreign currency contracts to purchase or sell foreign currencies. When the contract is fulfilled or closed, gains or losses are realized. Until then, the gain or loss is included in unrealized appreciation or depreciation. Risks may arise upon entering into forward contracts from the potential inability of counterparties to meet the terms of their forward contracts and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. Each Fund may enter into futures contracts involving foreign currency, interest rates, securities and securities indices, for hedging purposes only. A futures contract obligates the seller of the contract to deliver and the purchaser of the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time for a specified price. Upon entering into such a contract, a Fund is required to deposit and maintain as collateral such initial margin as required by the exchange on which the contract is traded. Pursuant to the contract, a Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuations in the value of the contract. Such receipts or payments are known as variation margin and are recorded as unrealized gains or losses by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. E. DISTRIBUTIONS TO SHAREHOLDERS. The Funds record distributions to their shareholders on ex-dividend date. Each Fund pays dividends and capital gains, if any, annually. F. FEDERAL INCOME TAXES. It is the policy of the Funds, to comply with the requirements of Subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of their net investment income and any net realized capital gains to their shareholders. Therefore, a federal income tax provision is not required. In addition, by distributing during each calendar year substantially all of its net investment income and net realized capital gains, each Fund intends not to be subject to any federal excise tax. The Funds may utilize equalization accounting for tax purposes, where by a portion of redemption payments are treated as distributions of income or gain. The Board intends to offset any net capital gains with any available capital loss carryforward until each carryforward has been fully utilized or expires. In addition, no capital gain distribution shall be made until the capital loss carryforward has been fully utilized or expires G. USE OF ESTIMATES. Management of the Funds has made certain estimates and assumptions relating to the reporting of assets, liabilities, income, and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America for investment companies. Actual results could differ from these estimates. H. REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements only with government securities dealers recognized by the Board of Governors of the Federal Reserve System or with 54 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) member banks of the Federal Reserve System. Under such agreements, the seller of the security agrees to repurchase it at a mutually agreed upon time and price. The resale price is in excess of the purchase price and reflects an agreed upon interest rate for the period of time the agreement is outstanding. The period of the repurchase agreements is usually short, from overnight to one week, while the underlying securities generally have longer maturities. Each Fund will always receive as collateral securities acceptable to it whose market value is equal to at least 100% of the carrying amount of the repurchase agreements, plus accrued interest, being invested by the Fund. The underlying collateral is valued daily on a mark to market basis to assure that the value, including accrued interest is at least equal to the repurchase price. If the seller defaults, a Fund might incur a loss or delay in the realization of proceeds if the value of security collateralizing the repurchase agreement declines, and it might incur disposition costs in liquidating the collateral. I. SECURITIES LENDING. Each Fund has the option to temporarily loan up to 30% of its total assets to brokers, dealers or other financial institutions in exchange for a negotiated lender's fee. The borrower is required to fully collateralize the loans with cash or U.S. Government securities. Generally, in the event of counterparty default, the Fund has the right to use collateral to offset losses incurred. There would be potential loss to the Fund in the event the Fund is delayed or prevented from exercising its right to dispose of the collateral. The Fund bears the risk of loss with respect to the investment of collateral. Engaging in securities lending could have a leveraging effect, which may intensify the credit, market and other risks associated with investing in a Fund. No securities were on loan at October 31, 2003. J. OPTIONS CONTRACTS. All Funds may purchase put and call options and may write (sell) put options and covered call options. The Funds may engage in option transactions as a hedge against adverse movements in the value of portfolio holdings or to increase market exposure. Option contracts are valued daily and unrealized gains or losses are recorded based upon the last sales price on the principal exchange on which the options are traded. The Funds will realize a gain or loss upon the expiration or closing of the option contract. When an option is exercised, the proceeds on sales of the underlying security for a written call option, the purchase cost of the security for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Realized and unrealized gains or losses on option contracts are reflected in the accompanying financial statements. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties to meet the terms of the contract. K. ILLIQUID AND RESTRICTED SECURITIES. Illiquid securities are not readily marketable. Disposing of illiquid investments may involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Funds to sell them promptly at an acceptable price. Restricted securities are those sold under Rule 144A of the Securities Act of 1933 (1933 Act) or are securities offered pursuant to Section 4(2) of the 1933 Act, and are subject to legal or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. Restricted securities may be considered liquid pursuant to procedures adopted by the Board or may be deemed illiquid because they may not be readily marketable. Illiquid and restricted securities are valued using market quotations when readily available. In the absence of market quotations, the securities are valued based upon their fair value determined under procedures approved by the Board. The Funds may not invest more than 15% of their net assets in illiquid securities. L. DELAYED DELIVERY TRANSACTION. The Funds may purchase or sell securities on a when-issued or forward commitment basis. The price of the underlying securities and date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The market value of these securities is identified in the Funds' Portfolio. Losses may arise due to changes in the market value of the securities or from the inability of counterparties to meet the terms of the contract. In connection with such 55 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) purchases, the Funds are required to hold liquid assets as collateral with the Funds' custodian sufficient to cover the purchase price. NOTE 3 -- INVESTMENT TRANSACTIONS For the year ended October 31, 2003, the cost of purchases and proceeds from the sales of securities, excluding short-term securities, were as follows:
PURCHASES SALES --------- ----- Emerging Countries $ 140,318,744 $ 168,670,167 Foreign 14,158,468 2,829,898 International 75,254,600 74,193,202 International SmallCap Growth 321,524,933 373,903,812 International Value 240,034,009 617,722,680 Precious Metals 69,576,442 79,184,654 Russia 49,663,648 24,937,706 Global Equity Dividend 4,043,475 137,320 Global Real Estate 47,370,572 39,616,665 Worldwide Growth 183,424,343 238,164,353
NOTE 4 -- REDEMPTION FEES A 2% redemption fee is charged on shares of the Russia Fund that are redeemed within 365 days or less from their date of purchase. Effective November 1, 2002, the redemption fee is recorded as an addition to paid-in capital. Total redemption fee proceeds for the year ended October 31, 2003 were $326,534 and are set forth in the statement of changes in net assets. Prior to November 1, 2002, redemption fee proceeds were applied to the Russia Fund's aggregate expenses allocable to providing custody and redemption services. Any excess fee proceeds were added to the Fund's capital. For the year ended October 31, 2002, the amount of $156,582 was accounted for as an addition to paid-in capital. Effective November 1, 2001, International began imposing a 2% redemption fee on Class A shares redeemed (including in connection with an exchange) within 30 days or less from their date of purchase. The redemption fee is recorded as an addition to paid-in capital. Total redemption fee proceeds for the year ended October 31, 2003 were $306,800 and are set forth in the statements of changes in net assets. For the year ended October 31, 2002, the redemption fee proceeds were $132,507 and are set forth in the statement of changes in net assets. NOTE 5 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES Each of the Funds has entered into an Investment Management Agreement with ING Investments, LLC (the "Investment Manager", or the "Adviser"), a wholly-owned subsidiary of ING Groep N.V. ("ING"). The investment management agreements compensate the Adviser with a fee, computed daily and payable monthly, based on the average daily net assets of each Fund, at the following annual rates:
AS A PERCENTAGE OF AVERAGE NET ASSETS ------------------------------------- Emerging Countries 1.25% Foreign 1.00% on the first $500 million; and 0.90% thereafter International 1.00% International SmallCap Growth 1.00% on first $500 million; 0.90% on next $500 million; and 0.85% in excess of $1 billion International Value 1.00% Precious Metals 1.00% on first $50 million; 0.75% thereafter Russia 1.25% Global Equity Dividend 0.70% Global Real Estate 1.00% Worldwide Growth 1.00% on first $250 million; 0.90% on next $250 million; 0.80 on next $500 million; and 0.75 in excess of $1 billion
Julius Baer Investment Management Inc. ("JBIM"), a registered investment adviser wholly owned by the Julius Baer Group, services as Sub-Adviser to the Foreign Fund pursuant to a Subadvisory agreement between the Adviser and JBIM. Effective August 1, 2003, Aeltus Investment Management, Inc. ("ING Aeltus"), a registered investment adviser serves as Sub-Adviser to International, Precious Metals and Worldwide Growth Funds pursuant to a Subadvisory agreement between the Adviser and ING Aeltus. Both the Adviser and ING Aeltus are indirect, wholly owned subsidiaries of ING and affiliates of each other. Nicholas-Applegate Capital Management ("NACM"), a registered investment advisor, serves as a Sub-Adviser to the International SmallCap Growth Fund pursuant to a Subadvisory agreement between the Adviser and NACM. Brandes Investment Partners, LLC ("Brandes"), a registered investment advisor, serves as a Sub-Adviser to the International Value Fund pursuant to a Subadvisory agreement between the Adviser and Brandes. Clarion CRA Securities, L.P. ("CRA"), a registered investment advisor, serves as a Sub-Adviser to the Global Real Estate Fund pursuant to a subadvisory agreement between the Adviser and CRA. ING Investment Management Advisors B.V. ("IIMA"), a registered investment advisor, serves as Sub-Adviser to the Russia Fund, the Emerging Countries Fund and the Global Equity Dividend Fund pursuant to a Subadvisory agreement between the Adviser and IIMA. 56 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 5 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES (CONTINUED) ING Funds Services, LLC (the "Administrator" or "IFS"), serves as administrator to each Fund. IFS is a wholly-owned indirect subsidiary of ING. The Funds pay the Administrator a fee calculated at an annual rate of 0.10% of each Fund's average daily net assets. International Value Fund also pays IFS an annual shareholder account-servicing fee of $5.00, payable quarterly, for each account of beneficial owners of shares. NOTE 6 -- DISTRIBUTION AND SERVICE FEES Each share class of the Funds has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), whereby ING Funds Distributor, LLC (the "Distributor"), a wholly-owned indirect subsidiary of ING, is reimbursed or compensated (depending on the class of shares) by the Funds for expenses incurred in the distribution of each Funds' shares ("Distribution Fees"). Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month for actual expenses incurred in the distribution and promotion of each Fund's shares, including expenses incurred in printing prospectuses and reports used for sales purposes, expenses incurred in preparing and printing sales literature and other such distribution related expenses, including any distribution or shareholder servicing fees ("Service Fees") paid to securities dealers who have executed a distribution agreement with the Distributor. Under the 12b-1 Plans, each class of shares of the Fund pays the Distributor a combined Distribution and Service Fee based on average daily net assets at the following annual rates:
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q ------- ------- ------- ------- ------- ------- Emerging Countries 0.35% 1.00% 1.00% N/A 0.75% 0.25% Foreign 0.25% 1.00% 1.00% N/A N/A 0.25% International 0.25% 1.00% 1.00% N/A N/A 0.25% International SmallCap Growth 0.35% 1.00% 1.00% N/A N/A 0.25% International Value 0.30% 1.00% 1.00% N/A N/A 0.25% Precious Metals 0.25% N/A N/A N/A N/A N/A Russia 0.25% N/A N/A N/A N/A N/A Global Equity Dividend 0.25% 1.00% 1.00% N/A N/A 0.25% Global Real Estate 0.25% 1.00% 1.00% N/A N/A 0.25% Worldwide Growth 0.35% 1.00% 1.00% N/A N/A 0.25%
Fees paid to the Distributor by class during the year ended October 31, 2003 are shown in the accompanying Statements of Operations. The Distributor also receives the proceeds of the initial sales charge paid by shareholders upon the purchase of Class A shares, and the contingent deferred sales charge paid by shareholders upon certain redemptions for Class A, Class B, and Class C shares. For the year ended October 31, 2003, the Distributor retained the following amounts in sales charges for the Funds:
CLASS A CLASS B CLASS C CLASS M SHARES SHARES SHARES SHARES ------- ------- ------- ------- Initial Sales Charges $ 269,522 n/a n/a $ 236 Contingent Deferred Sales Charges $ 203,734 $ 0 $ 120,689 n/a
NOTE 7 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES At October 31, 2003, the Funds had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities (See Notes 5 and 6):
ACCRUED ACCRUED INVESTMENT ACCRUED SHAREHOLDER MANAGEMENT ADMINISTRATIVE SERVICES AND FEES FEES DISTRIBUTION FEES TOTAL ---- ---- ----------------- ----- Emerging Countries $ 123,992 $ 9,919 $ 48,165 $ 182,076 Foreign 8,684 868 5,146 14,698 International 98,096 8,109 35,088 141,293 International SmallCap Growth 283,089 28,309 152,952 464,350 International Value 2,708,826 426,038 1,312,036 4,446,900 Precious Metals 75,431 8,167 20,418 104,016 Russia 203,694 16,296 40,739 260,729 Global Equity Dividend 2,478 354 887 3,719 Global Real Estate 157,134 3,784 11,485 172,403 Worldwide Growth 124,134 12,413 88,029 224,576
At October 31, 2003, one shareholder owned 8.5% of the Russia Fund. Also, at October 31, 2003, the following wholly-owned indirect subsidiaries of ING owned the following Funds: ING Life Insurance and Annuity Company - Global Equity Dividend Fund (97.5%) and International Fund (12.4%) ING Investments, LLC -- Foreign Fund (7.8%) ING National Nederlanden Intervest-- Global Real Estate Fund (73.0%) ING National Trust -- International Fund (11.3%) Investment activities of these shareholders could have material impact on the Funds. Each Fund has adopted a Retirement Policy covering all independent trustees of the Fund who will have served as an independent trustee for at least five years at the 57 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 7 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) time of retirement. Benefits under this plan are based on an annual rate as defined in the plan agreement. NOTE 8 -- OTHER ACCRUED EXPENSES AND LIABILITIES At October 31, 2003, the following Funds had following payables included in Other Accrued Expenses and Liabilities on the Statements of Assets and Liabilities that exceeded 5% of total liabilities:
PAYABLE FOR CUSTODY FEES ------------ Emerging Countries $ 99,950 International 41,624 International SmallCap Growth 91,519 PAYABLE FOR TRANSFER AGENT FEES ---------- Emerging Countries $ 85,393 International 72,798 International SmallCap Growth 249,846 International Value 1,515,405 Global Equity Dividend 1,015 Worldwide Growth 76,954 PAYABLE FOR SHAREHOLDER REPORTING EXPENSE ------- International $ 38,348 International SmallCap Growth 89,589 International Value 750,614 Worldwide Growth 166,408 PAYABLE FOR ORGANIZATION FEES ---- Global Equity Dividend $ 10,000 PAYABLE FOR ESTIMATED INDIA TAX --------- Emerging Countries $ 132,836
NOTE 9 -- EXPENSE LIMITATIONS For the following Funds, the Investment Manager has agreed to limit expenses, excluding interest, taxes, brokerage and extraordinary expenses to the levels listed below: Maximum Operating Expense Limit (as a percentage of average net assets)
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q SHARES SHARES SHARES SHARES SHARES SHARES ------- ------- ------- ------- ------- ------- Emerging Countries 2.25% 2.90% 2.90% N/A 2.65% 2.15% Foreign 1.95% 2.70% 2.70% 1.60% N/A 1.85% International 1.95% 2.70% 2.70% 1.60% N/A 1.85% International SmallCap Growth 1.95% 2.60% 2.60% N/A N/A 1.85% International Value N/A N/A N/A N/A N/A N/A Precious Metals 2.75% N/A N/A N/A N/A N/A Russia 3.35% N/A N/A N/A N/A N/A Global Equity Dividend 1.40% 2.15% 2.15% 1.15% N/A 1.40% Global Real Estate 1.75% 2.50% 2.50% N/A N/A 1.75% Worldwide Growth 1.85% 2.50% 2.50% N/A N/A 1.75%
For International Fund, the voluntary expense limits provided above were effective July 1, 2003. Each Fund will at a later date reimburse the Investment Manager for management fees waived and other expenses assumed by the Investment Manager during the previous 36 months, but only if, after such reimbursement, the Fund's expense ratio does not exceed the percentage described above. Waived and reimbursed fees and any recoupment by the Investment Manager of such waived and reimbursed fees are reflected net on the accompanying Statements of Operations for each Fund. Amounts payable by the Investment Manager are reflected on the accompanying statements of Assets and Liabilities for each Fund. As of October 31, 2003, the cumulative amounts of reimbursed fees that are subject to possible recoupment by the Investment Manager are as follows: Emerging Countries $ 57,128 Foreign 70,612 International 43,933 International SmallCap Growth 106,688 Global Real Estate 258,604 Worldwide Growth 812,316
NOTE 10 -- LINE OF CREDIT All of the Funds included in this report, in addition to certain other funds managed by the Adviser, have entered into an unsecured committed revolving line of credit agreement (the "Credit Agreement") with The Bank of New York for an aggregate amount of $150,000,000. The proceeds may be used only to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the Funds; and (3) enable the Funds to meet other emergency expenses as defined in the Credit Agreement. The Funds to which the line of credit is available pay a commitment fee equal to 0.09% per annum on the daily unused portion of the committed line amount payable quarterly in arrears. The following Funds utilized the line of credit during the year ended October 31, 2003:
APPROXIMATE APPROXIMATE DAYS AVERAGE DAILY WEIGHTED AVERAGE UTILIZED BALANCE INTEREST RATE -------- ------- ------------- Emerging Countries 137 $ 4,011,255 1.60% International 1 2,290,000 1.75% International SmallCap Growth 20 3,322,650 1.46% International Value 7 2,280,000 1.80% Precious Metals 6 900,833 1.52% Russia 16 564,375 1.48% Global Real Estate 5 658,000 1.76% Worldwide Growth 17 1,590,588 1.66%
58 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 11 -- CAPITAL SHARES Transactions in capital shares and dollars were as follows:
CLASS A SHARES CLASS B SHARES -------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- EMERGING COUNTRIES (NUMBER OF SHARES) Shares sold 15,077,519 11,599,557 84,548 171,877 Shares issued in merger -- 407,103 -- 276,180 Dividends reinvested -- 121 -- -- Shares redeemed (15,912,953) (12,682,825) (349,157) (461,156) -------------- -------------- -------------- -------------- Net decrease in shares outstanding (835,434) (676,044) (264,609) (13,099) ============== ============== ============== ============== EMERGING COUNTRIES ($) Shares sold $ 209,705,771 $ 161,276,949 $ 1,250,314 $ 2,478,236 Shares issued in merger -- 5,280,325 -- 3,558,403 Dividends reinvested -- 1,567 -- -- Shares redeemed (222,355,701) (177,404,620) (4,809,392) (6,402,316) -------------- -------------- -------------- -------------- Net decrease $ (12,649,930) $ (10,845,779) $ (3,559,078) $ (365,677) ============== ============== ============== ============== CLASS C SHARES -------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- EMERGING COUNTRIES (NUMBER OF SHARES) Shares sold 352,142 361,853 Shares issued in merger -- -- Dividends reinvested -- -- Shares redeemed (544,473) (671,785) -------------- -------------- Net decrease in shares outstanding (192,331) (309,932) ============== ============== EMERGING COUNTRIES ($) Shares sold $ 4,452,036 $ 5,122,486 Shares issued in merger -- -- Dividends reinvested -- -- Shares redeemed (6,896,237) (9,265,932) -------------- -------------- Net decrease $ (2,444,201) $ (4,143,446) ============== ==============
CLASS Q SHARES CLASS M SHARES -------------------------------- -------------------------------- YEAR YEAR YEAR AUGUST 5, ENDED ENDED ENDED 2002 TO OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002(1) ---- ---- ---- ------- EMERGING COUNTRIES (NUMBER OF SHARES) Shares sold 12,331,900 3,391,625 3,626 921 Shares issued in merger -- -- -- 92,645 Dividends reinvested -- 72 -- -- Shares redeemed (12,967,395) (3,924,951) (22,486) (2,436) -------------- -------------- -------------- -------------- Net increase (decrease) in shares outstanding (635,495) (533,254) (18,860) 91,130 ============== ============== ============== ============== EMERGING COUNTRIES ($) Shares sold $ 173,161,999 $ 47,255,785 $ 47,863 $ 11,570 Shares issued in merger -- -- -- 1,201,548 Dividends reinvested -- 970 -- -- Shares redeemed (183,269,201) (54,959,947) (297,464) (30,431) -------------- -------------- -------------- -------------- Net increase (decrease) $ (10,107,202) $ (7,703,192) $ (249,601) $ 1,182,687 ============== ============== ============== ==============
CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS I SHARES CLASS Q SHARES -------------- -------------- -------------- -------------- -------------- JULY 1, JULY 8, JULY 3, SEPTEMBER 10, JULY 11, 2003 TO 2003 TO 2003 TO 2003 TO 2003 TO OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003(1) 2003(1) 2003(1) 2003(1) 2003(1) ------- ------- ------- ------- ------- FOREIGN (NUMBER OF SHARES) Shares sold 702,682 124,952 513,787 16,997 62,839 Shares redeemed (103,607) (2,654) (5,086) -- (24,630) -------------- -------------- -------------- -------------- -------------- Net increase in shares outstanding 599,075 122,298 508,701 16,997 38,209 ============== ============== ============== ============== ============== FOREIGN ($) Shares sold $ 7,385,657 $ 1,332,337 $ 5,506,304 $ 185,032 $ 660,039 Shares redeemed (1,050,695) (28,662) (55,392) (39) (270,197) -------------- -------------- -------------- -------------- -------------- Net increase $ 6,334,962 $ 1,303,675 $ 5,450,912 $ 184,993 $ 389,842 ============== ============== ============== ============== ==============
- ---------- (1) Commencement of operations of class. 59 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 11 -- CAPITAL SHARES (CONTINUED)
CLASS A SHARES CLASS B SHARES -------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL (NUMBER OF SHARES) Shares sold 7,762,080 8,189,311 411,047 455,458 Shares issued in merger -- 818,729 -- 1,223,633 Dividends reinvested 14,078 -- -- -- Shares redeemed (8,754,777) (7,499,690) (378,329) (440,191) -------------- -------------- -------------- -------------- Net increase (decrease) in shares outstanding (978,619) 1,508,350 32,718 1,238,900 ============== ============== ============== ============== INTERNATIONAL ($) Shares sold $ 55,834,069 $ 62,922,949 $ 2,964,613 $ 3,482,361 Shares issued in merger -- 7,189,923 -- 10,596,499 Dividends reinvested 100,936 -- -- -- Redemption fee proceeds 306,800 132,507 -- -- Shares redeemed (62,551,570) (59,009,071) (2,692,370) (3,410,635) -------------- -------------- -------------- -------------- Net increase (decrease) $ (6,309,765) $ 11,236,308 $ 272,243 $ 10,668,225 ============== ============== ============== ============== CLASS C SHARES -------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL (NUMBER OF SHARES) Shares sold 687,730 974,161 Shares issued in merger -- 1,243,707 Dividends reinvested 223 -- Shares redeemed (714,120) (614,252) -------------- -------------- Net increase (decrease) in shares outstanding (26,167) 1,603,616 ============== ============== INTERNATIONAL ($) Shares sold $ 4,915,756 $ 7,381,467 Shares issued in merger -- 10,762,961 Dividends reinvested 1,567 -- Redemption fee proceeds -- -- Shares redeemed (5,079,397) (4,729,016) -------------- -------------- Net increase (decrease) $ (162,074) $ 13,415,412 ============== ==============
CLASS I SHARES CLASS Q SHARES -------------------------------- -------------------------------- YEAR JANUARY 15, YEAR YEAR ENDED 2002 TO ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002(1) 2003 2002 ---- ------- ---- ---- INTERNATIONAL (NUMBER OF SHARES) Shares sold 4,236,967 3,152,664 9,642,227 471,191 Shares issued in merger -- -- -- 993,513 Dividends reinvested 7,018 -- 6,300 -- Shares redeemed (3,777,860) (2,248,030) (8,885,673) (478,675) -------------- -------------- -------------- -------------- Net increase in shares outstanding 466,125 904,634 762,854 986,029 ============== ============== ============== ============== INTERNATIONAL ($) Shares sold $ 31,427,964 $ 25,021,083 $ 71,887,675 $ 3,563,197 Shares issued in merger -- -- -- 8,727,522 Dividends reinvested 50,182 -- 44,920 -- Shares redeemed (28,083,521) (17,592,690) (66,455,504) (3,696,166) -------------- -------------- -------------- -------------- Net increase $ 3,394,625 $ 7,428,393 $ 5,477,091 $ 8,594,553 ============== ============== ============== ==============
CLASS A SHARES CLASS B SHARES -------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL SMALLCAP GROWTH (NUMBER OF SHARES) Shares sold 19,584,957 29,014,063 259,509 599,756 Shares redeemed (20,385,263) (29,337,016) (645,907) (1,096,685) -------------- -------------- -------------- -------------- Net decrease in shares outstanding (800,306) (322,953) (386,398) (496,929) ============== ============== ============== ============== INTERNATIONAL SMALLCAP GROWTH ($) Shares sold $ 382,529,561 $ 632,348,151 $ 5,554,909 $ 13,965,766 Shares redeemed (401,765,381) (642,058,647) (13,344,655) (25,182,365) -------------- -------------- -------------- -------------- Net decrease $ (19,235,820) $ (9,710,496) $ (7,789,746) $ (11,216,599) ============== ============== ============== ============== CLASS C SHARES -------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL SMALLCAP GROWTH (NUMBER OF SHARES) Shares sold 1,022,290 1,192,193 Shares redeemed (1,596,079) (1,824,566) -------------- -------------- Net decrease in shares outstanding (573,789) (632,373) ============== ============== INTERNATIONAL SMALLCAP GROWTH ($) Shares sold $ 19,024,592 $ 25,346,123 Shares redeemed (29,846,873) (38,544,051) -------------- -------------- Net decrease $ (10,822,281) $ (13,197,928) ============== ==============
- ---------- (1) Commencement of operations of class. 60 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 11 -- CAPITAL SHARES (CONTINUED)
CLASS Q SHARES -------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL SMALLCAP GROWTH (NUMBER OF SHARES) Shares sold 18,417,622 6,300,682 Shares redeemed (19,100,237) (6,626,006) -------------- -------------- Net decrease in shares outstanding (682,615) (325,324) ============== ============== INTERNATIONAL SMALLCAP GROWTH ($) Shares sold $ 386,181,572 $ 143,123,447 Shares redeemed (402,650,057) (150,812,281) -------------- -------------- Net decrease $ (16,468,485) $ (7,688,834) ============== ==============
CLASS A SHARES CLASS B SHARES --------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL VALUE (NUMBER OF SHARES) Shares sold 26,629,999 119,238,378 789,733 9,034,613 Dividends reinvested 2,380,188 2,046,200 522,401 542,229 Shares redeemed (39,577,685) (87,913,712) (6,780,391) (7,613,839) -------------- ---------------- -------------- -------------- Net increase (decrease) in shares outstanding (10,567,498) 33,370,866 (5,468,257) 1,963,003 ============== ================ ============== ============== INTERNATIONAL VALUE ($) Shares sold $ 300,379,527 $ 1,522,323,967 $ 8,617,865 $ 114,916,200 Dividends reinvested 24,301,715 25,679,811 5,265,802 6,739,902 Shares redeemed (433,441,524) (1,107,047,090) (72,491,973) (89,774,421) -------------- ---------------- -------------- -------------- Net increase (decrease) $ (108,760,282) $ 440,956,688 $ (58,608,306) $ 31,881,681 ============== ================ ============== ============== CLASS C SHARES -------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL VALUE (NUMBER OF SHARES) Shares sold 366,016 18,810,213 Dividends reinvested 793,701 774,598 Shares redeemed (10,503,035) (13,237,481) -------------- -------------- Net increase (decrease) in shares outstanding (9,343,318) 6,347,330 ============== ============== INTERNATIONAL VALUE ($) Shares sold $ 3,763,939 $ 239,956,133 Dividends reinvested 7,984,632 9,605,012 Shares redeemed (111,900,151) (159,086,448) -------------- -------------- Net increase (decrease) $ (100,151,580) $ 90,474,697 ============== ==============
CLASS I SHARES CLASS Q SHARES -------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL VALUE (NUMBER OF SHARES) Shares sold 5,744,382 24,400,308 414,335 3,129,171 Dividends reinvested 960,472 431,858 55,079 61,189 Shares redeemed (7,324,179) (7,442,390) (1,192,380) (3,233,666) -------------- -------------- -------------- -------------- Net increase (decrease) in shares outstanding (619,325) 17,389,776 (722,966) (43,306) ============== ============== ============== ============== INTERNATIONAL VALUE ($) Shares sold $ 64,019,780 $ 311,346,171 $ 4,342,982 $ 40,891,856 Dividends reinvested 9,787,206 5,411,186 562,357 769,149 Shares redeemed (81,395,062) (88,175,138) (12,908,381) (41,911,766) -------------- -------------- -------------- -------------- Net increase (decrease) $ (7,588,076) $ 228,582,219 $ (8,003,042) $ (250,761) ============== ============== ============== ==============
61 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 11 -- CAPITAL SHARES (CONTINUED)
CLASS A SHARES -------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- PRECIOUS METALS (NUMBER OF SHARES) Shares sold 4,466,542 5,093,937 Dividends reinvested -- 93,347 Shares redeemed (6,273,160) (8,565,463) -------------- -------------- Net decrease in shares outstanding (1,806,618) (3,378,179) ============== ============== ING PRECIOUS METALS ($) Shares sold $ 23,459,610 $ 23,370,196 Dividends reinvested -- 276,307 Shares redeemed (33,507,092) (37,510,436) -------------- -------------- Net decrease $ (10,047,482) $ (13,863,933) ============== ============== CLASS A SHARES -------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- RUSSIA (NUMBER OF SHARES) Shares sold 4,909,238 6,263,777 Dividends reinvested 54,743 -- Shares redeemed (3,566,373) (5,312,399) -------------- -------------- Net increase in shares outstanding 1,397,608 951,378 ============== ============== RUSSIA ($) Shares sold $ 84,437,970 $ 74,776,336 Dividends reinvested 659,656 -- Redemption fee proceeds 326,534 156,582 Shares redeemed (58,588,061) (63,780,444) -------------- -------------- Net increase $ 26,836,099 $ 11,152,474 ============== ==============
CLASS A SHARES CLASS B SHARES CLASS C SHARES -------------- -------------- -------------- SEPTEMBER 17, OCTOBER 24, OCTOBER 29, 2003(1) TO 2003(1) TO 2003(1) TO OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2003 2003 ---- ---- ---- GLOBAL EQUITY DIVIDEND (NUMBER OF SHARES) Shares sold 407,533 1,107 1,773 ------------ --------- --------- Net increase in shares outstanding 407,533 1,107 1,773 ============ ========= ========= GLOBAL EQUITY DIVIDEND FUND ($) Shares sold $ 4,077,071 $ 11,411 $ 18,510 ------------ --------- --------- Net increase $ 4,077,071 $ 11,411 $ 18,510 ============ ========= =========
- ---------- (1) Commencement of operations of class. 62 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 11 -- CAPITAL SHARES (CONTINUED)
CLASS A SHARES CLASS B SHARES --------------------------------- -------------------------------- YEAR NOVEMBER 5, YEAR MARCH 15, ENDED 2001(1) TO ENDED 2002(1) TO OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- GLOBAL REAL ESTATE (NUMBER OF SHARES) Shares sold 672,726 2,620,377 98,078 72,797 Dividends reinvested 138,301 46,906 5,050 670 Shares redeemed (74,909) (222,136) (46,588) (1,693) -------------- ---------------- -------------- -------------- Net increase (decrease) in shares outstanding 736,118 2,445,147 56,540 71,774 ============== ================ ============== ============== GLOBAL REAL ESTATE ($) Shares sold $ 8,188,091 $ 26,466,690 $ 1,043,292 $ 738,634 Dividends reinvested 1,498,260 505,181 49,301 6,378 Shares redeemed (902,108) (2,351,639) (467,192) (16,456) -------------- ---------------- -------------- -------------- Net increase (decrease) $ 8,783,367 $ 24,620,232 $ 625,401 $ 728,556 ============== ================ ============== ============== CLASS C SHARES --------------------------------- YEAR JANUARY 8, ENDED 2002(1) TO OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- GLOBAL REAL ESTATE (NUMBER OF SHARES) Shares sold 108,973 237,200 Dividends reinvested 10,157 2,126 Shares redeemed (215,666) (197) -------------- ---------------- Net increase (decrease) in shares outstanding (96,536) 239,129 ============== ================ GLOBAL REAL ESTATE ($) Shares sold $ 1,155,540 $ 2,517,243 Dividends reinvested 100,274 20,816 Shares redeemed (2,208,270) (2,020) -------------- ---------------- Net increase (decrease) $ (952,456) $ 2,536,039 ============== ================ CLASS Q SHARES OCTOBER 15, 2003(1) TO OCTOBER 31, 2003 ---- GLOBAL REAL ESTATE (NUMBER OF SHARES) Shares sold 37,120 Shares redeemed (37,120) -------------- Net increase in shares outstanding -- ============== GLOBAL REAL ESTATE ($) Shares sold $ 500,001 Shares redeemed (494,087) -------------- Net increase $ 5,914 ==============
- ---------- (1) Commencement of operations of class. 63 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 11 -- CAPITAL SHARES (CONTINUED)
CLASS A SHARES CLASS B SHARES --------------------------------- -------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- WORLDWIDE GROWTH (NUMBER OF SHARES) Shares sold 12,783,099 10,042,589 74,457 130,581 Shares redeemed (14,551,712) (13,104,424) (713,016) (1,486,694) -------------- ---------------- -------------- -------------- Net decrease in shares outstanding (1,768,613) (3,061,835) (638,559) (1,356,113) ============== ================ ============== ============== WORLDWIDE GROWTH ($) Shares sold $ 161,726,758 $ 145,141,054 $ 1,068,420 $ 2,247,925 Shares redeemed (185,501,020) (192,304,536) (10,063,284) (24,337,790) -------------- ---------------- -------------- -------------- Net increase (decrease) $ (23,774,262) $ (47,163,482) $ (8,994,864) $ (22,089,865) ============== ================ ============== ============== CLASS C SHARES --------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- WORLDWIDE GROWTH (NUMBER OF SHARES) Shares sold 525,179 372,981 Shares redeemed (1,639,911) (2,833,697) -------------- ---------------- Net decrease in shares outstanding (1,114,732) (2,460,716) ============== ================ WORLDWIDE GROWTH ($) Shares sold $ 6,434,456 $ 5,747,691 Shares redeemed (20,391,680) (41,522,976) -------------- ---------------- Net increase (decrease) $ (13,957,224) $ (35,775,285) ============== ================ CLASS Q SHARES --------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- WORLDWIDE GROWTH (NUMBER OF SHARES) Shares sold 8,644,664 2,165,766 Shares redeemed (8,840,185) (2,555,640) -------------- ---------------- Net decrease in shares outstanding (195,521) (389,874) ============== ================ WORLDWIDE GROWTH ($) Shares sold $ 127,952,864 $ 35,266,752 Shares redeemed (130,999,382) (42,294,829) -------------- ---------------- Net decrease $ (3,046,518) $ (7,028,077) ============== ================
NOTE 12 -- ILLIQUID SECURITIES Pursuant to guidelines adopted by the Funds' Board, the following securities have been deemed to be illiquid. The Funds currently limit investment in illiquid securities to 15% of the Fund's net assets, at market value, at time of purchase.
INITIAL PERCENT ACQUISITION OF NET FUND SECURITY SHARES DATE COST VALUE ASSETS - ---- -------- ------ ---- ---- ----- ------ Emerging Countries Larsen & Toubro Ltd. 240,000 10/31/01 $ 825,661 $ 2,154,016 1.8% Precious Metals Apollo Gold Corp. 350,000 09/19/03 583,982 586,852 0.6% Oxiana Resources NL 2,000,000 05/13/03 809,903 1,376,527 1.4 Wheaton River Minerals Ltd. 162,500 09/24/03 34,841 202,192 0.2 -------------- -------------- --- $ 1,428,726 $ 2,165,571 2.2% ============== ============== === Russia Aeroflot 2,446,350 08/15/97 $ 950,126 $ 1,225,621 0.8% Konakovskaya Gres 3,200,000 10/03/03 1,684,000 1,248,000 0.8 Moscow City Telephone 200,000 08/19/96 1,409,620 2,037,680 1.3 Severstal-Avto 36,550 05/07/02 -- 36,550 0.0 Sun Interbrew Ltd. 311,000 01/25/00 1,176,976 1,492,800 0.9 -------------- -------------- --- $ 5,220,722 $ 6,040,651 3.8% ============== ============== ===
64 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 13 -- REORGANIZATIONS On May 17, 2002 and August 2, 2002, certain Funds, as listed below (each an "Acquiring Fund"), acquired the assets and certain liabilities of other Funds, also listed below (each an "Acquired Fund"), in a tax -- free reorganization in exchange for shares of the Acquiring Fund, pursuant to a plan of reorganization approved by the Acquired Fund's shareholders. The number and value of shares issued by the Acquiring Fund are presented in Note 11 -- Capital Shares. The Adviser and the Funds allocated the cost associated with the Reorganization equally. Net assets and unrealized appreciation/(depreciation) as of the reorganization date were as follows:
ACQUIRED FUND UNREALIZED ACQUIRING ACQUIRED TOTAL NET ASSETS OF TOTAL NET ASSETS OF APPRECIATION/ FUND FUND ACQUIRED FUND (000'S) ACQUIRING FUND (000'S) (DEPRECIATION)(000'S) ---- ---- --------------------- ---------------------- --------------------- Emerging Countries Asia-Pacific Equity $ 10,040 $ 108,280 $ (4,828) International International Core Growth 37,277 48,767 1,524
The net assets of Emerging Countries and International after the acquisitions were approximately $118,319,926 and $86,044,454, respectively. NOTE 14 -- CONCENTRATION OF RISKS FOREIGN SECURITIES (ALL FUNDS). Investments in foreign securities may entail risks not present in domestic investments. Since investments of securities are denominated in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Funds. Foreign investments may also subject the Funds to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, as well as from movements in currency, security value and interest rate, all of which could affect the market and/or credit risk of the investments. EMERGING MARKETS INVESTMENTS (ALL FUNDS). Because of less developed markets and economies and, in some countries, less mature governments and governmental institutions, the risks of investing in foreign securities can be intensified in the case of investments in issuers domiciled or doing substantial business in emerging market countries. INDUSTRY CONCENTRATION (GLOBAL REAL ESTATE FUND AND PRECIOUS METALS FUND). As a result of the Fund concentrating its assets in securities related to a particular industry, the Fund may be subject to greater market fluctuation than a fund which has securities representing a broader range of investment alternatives. REGION CONCENTRATION (RUSSIA FUND). As a result of the Fund concentrating its assets in a single region of the world, the Fund's performance may be more volatile than that of a fund that invests globally. If securities in the region that the Fund is concentrated fall out of favor, it may cause the Fund to underperform in relation to funds that focus on other types of stocks. NON-DIVERSIFIED (RUSSIA, PRECIOUS METALS AND GLOBAL REAL ESTATE FUNDS). There is additional risk associated with being non-diversified, since the Fund is not limited in the proportion of its assets in a single issuer. The investment of a large percentage of a Fund's assets in the securities of a small number of issuers may cause that Fund's share price to fluctuate more than that of a diversified fund. NOTE 15 -- FEDERAL INCOME TAXES During the fiscal year ended October 31, 2003, the foreign taxes paid or withheld were $1,215, $225,485, $8,984,162, $100,390, on foreign source income for Foreign Fund, International Fund, International Value Fund, and Global Real Estate Fund, respectively. Foreign taxes paid or withheld should be included in taxable income with an offsetting deduction from gross income or as a credit for taxes paid to foreign governments. You should consult your tax advisor regarding the appropriate treatment of foreign taxes paid. Dividends paid by the Funds from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders. 65 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 15 -- FEDERAL INCOME TAXES (CONTINUED) The tax composition of dividends and distributions were as follow:
ORDINARY LONG-TERM INCOME CAPITAL GAINS ------ ------------- International $ 265,181 $ -- International Value 25,983,597 37,067,031 Russia 830,443 -- Global Real Estate 1,822,494 118,865 YEAR ENDED ORDINARY LONG-TERM OCTOBER 31, 2002: INCOME CAPITAL GAINS ------ ------------- Emerging Countries $ 2,891 $ -- International Value 19,220,965 45,599,213 Precious Metals 302,618 -- Global Real Estate 941,829 --
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. These book/tax differences are either considered temporary or permanent in nature. Key differences are the treatment of short-term capital gains, foreign currency transactions, wash sale deferrals, organization costs and other temporary differences. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassifications. To the extent distributions exceed net investment income and/or net realized capital gains for tax purposes, they are reported as distributions of paid-in capital. Accordingly, the following amounts represent current year permanent tax differences that have been reclassified as of October 31, 2003:
ACCUMULATED UNDISTRIBUTED NET REALIZED NET GAINS PAID-IN INVESTMENT (LOSSES) ON CAPITAL INCOME INVESTMENTS ------- ------------- ------------ Emerging Countries $ -- $ 272,385 $ (272,385) Foreign (55,357) 73,322 (17,965) International -- (31,040) 31,040 International SmallCap Growth -- 741,287 (741,287) International Value -- 1,833,676 (1,833,676) Precious Metals (499,121) 299,789 199,332 Russia (36,135) 23,378 12,757 Global Equity Dividend (19,413) 28,110 (8,697) Global Real Estate (8,866) 358,569 (349,703) Worldwide Growth (1,106,717) 1,046,259 60,458
Capital loss carryforwards, which may be used to offset future realized capital gains for federal income tax purposes were as follows at October 31, 2003:
EXPIRATION AMOUNT DATES ------ --------------- Emerging Countries $ 170,443,085 2005, 2007-2010 International 37,788,257 2007-2011 International SmallCap Growth 237,702,930 2008-2010 International Value 98,526,506 2011 Precious Metals 57,346,756 2007-2010 Russia 50,194,458 2007-2009 Worldwide Growth 235,346,672 2008-2011
The following represents the tax-basis components of distributable earnings as of October 31, 2003:
UNDISTRIBUTED CAPITAL UNDISTRIBUTED ORDINARY UNREALIZED LOSS LONG TERM INCOME APPRECIATION CARRYFORWARDS GAIN/LOSS ------------- ------------ ------------- ------------- Emerging Countries $ 436,002 $ 33,118,086 $ (170,443,085) $ -- Foreign 117,485 436,142 -- -- International 142,522 10,472,665 (37,788,257) -- International SmallCap Growth 58,426 82,015,071 (237,702,930) -- International Value 15,253,442 (91,077,118) (98,526,506) -- Precious Metals -- 33,292,833 (57,346,756) -- Russia -- 44,131,690 (50,194,458) -- Global Equity Dividend 47,766 178,913 -- --
NOTE 16 -- CHANGE IN FUNDS' AUDITORS (UNAUDITED) PricewaterhouseCoopers, LLP ("PwC") served as independent auditors for the Funds. On May 28, 2003, the Funds' Board dismissed PwC and selected KPMG LLP ("KPMG") as independent auditors for the Funds for the fiscal year ended October 31, 2003 upon the recommendation of the Funds' Audit Committee. During the two most recent fiscal years and through May 28, 2003, there was no disagreement with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to PwC's satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement. The audit reports of PwC on the financial statements of the ING Emerging Countries Fund, ING International Fund, ING International SmallCap Growth Fund, ING Precious Metals Fund, ING Russia Fund, ING Global Real Estate Fund, ING International Value Fund and ING Worldwide Growth Fund as of and for the periods or years ended October 31, 2002 and 2001 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. 66 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 17 -- OTHER INFORMATION (UNAUDITED) 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. ING is also conducting an internal review of investment company share trading as well as reviewing their policies and procedures in this area. NOTE 18 -- SUBSEQUENT EVENT For the Foreign Fund, effective December 1, 2003, the expense limitations for Classes A, B, C, I and Q are 1.70%, 2.45%, 2.45%, 1.35% and 1.60%, respectively. 67 ING Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 90.8% AUSTRIA: 0.6% 16,400 @ Bank Austria Creditanstalt AG $ 714,556 --------------- 714,556 --------------- BRAZIL: 9.4% 38,100 Banco Itau Holding Financeira SA ADR 1,556,385 14,300 Brasil Telecom Participacoes SA ADR 522,236 46,100 Cia de Bebidas Das Americas ADR 977,320 58,000 Cia Energetica de Minas Gerais ADR 849,120 38,900 Cia Vale do Rio Doce ADR 1,571,560 36,800 Gerdau SA ADR 535,808 179,600 Petroleo Brasileiro SA - Petrobras ADR 3,908,096 84,059 Tele Norte Leste Participacoes SA ADR 1,191,116 --------------- 11,111,641 --------------- CHILE: 1.2% 33,000 Cia de Telecomunicaciones de Chile SA ADR 502,590 131,900 Enersis SA ADR 912,748 --------------- 1,415,338 --------------- CHINA: 2.7% 1,596,000 China Oilfield Services Ltd. 462,418 1,746,000 China Petroleum & Chemical Corp. 578,950 1,418,000 China Telecom Corp. Ltd. 470,189 334,000 Huaneng Power Intl., Inc. 511,815 203,000 @ Weiqiao Textile Co. 237,879 1,384,000 Zhejiang Expressway Co. Ltd. 873,276 --------------- 3,134,527 --------------- HONG KONG: 3.1% 541,500 China Mobile Ltd. 1,537,540 434,000 Citic Pacific Ltd. 1,011,551 239,000 Cnooc Ltd. 450,874 702,000 Cofco Intl. Ltd. 433,908 302,000 @ Lee & Man Paper Manufacturing Ltd. 223,612 --------------- 3,657,485 --------------- HUNGARY: 0.4% 19,815 @ OTP Bank Rt. GDR 486,458 --------------- 486,458 --------------- INDIA: 5.2% 240,000 I Larsen & Toubro Ltd. 2,154,016 20,000 Ranbaxy Laboratories Ltd. GDR 458,000 116,014 # Reliance Industries Ltd. GDR 2,772,735 91,300 Tata Motors Ltd. GDR 766,920 --------------- 6,151,671 --------------- INDONESIA: 1.8% 615,346 @ Astra Intl. Tbk PT 315,042 4,097,500 @ Bank Mandiri Persero PT 458,145 360,000 Gudang Garam Tbk PT 557,171 1,037,000 Telekomunikasi Indonesia Tbk PT $ 732,302 --------------- 2,062,660 --------------- ISRAEL: 2.1% 26,500 @ Check Point Software Technologies 450,235 36,200 Teva Pharmaceutical Industries ADR 2,059,418 --------------- 2,509,653 --------------- MALAYSIA: 4.6% 14,700 @ Astro All Asia Networks PLC 18,259 418,000 Gamuda BHD 836,000 94,600 Genting BHD 460,553 221,200 Malayan Banking BHD 593,747 372,000 New Straits Times Press BHD 405,284 1,749,000 Public Bank BHD 1,380,789 292,000 Resorts World BHD 845,263 384,000 Telekom Malaysia Bhd 929,684 --------------- 5,469,579 --------------- MEXICO: 6.6% 69,700 America Movil SA de CV ADR 1,658,860 21,305 Cemex SA de CV ADR 511,320 15,700 Fomento Economico Mexicano SA de CV ADR 560,804 948,100 @ Grupo Financiero BBVA Bancomer 804,724 358,800 @ Grupo Mexico SA de CV 629,189 27,450 Grupo Televisa SA ADR 1,063,688 59,100 Telefonos de Mexico SA de CV ADR 1,900,066 15,910 TV Azteca SA de CV ADR 128,712 189,600 Wal-Mart de Mexico SA de CV 528,714 --------------- 7,786,077 --------------- PHILIPPINES: 0.3% 3,152,000 Ayala Land, Inc. 370,388 --------------- 370,388 --------------- POLAND: 0.9% 14,100 Bank Pekao SA GDR 406,362 182,200 Telekomunikacja Polska SA GDR 630,412 --------------- 1,036,774 --------------- RUSSIA: 4.2% 26,000 LUKOIL ADR 2,113,800 40,289 OAO Gazprom ADR 965,503 19,200 Surgutneftegaz ADR 476,928 30,175 YUKOS ADR 1,394,085 --------------- 4,950,316 --------------- SOUTH AFRICA: 7.4% 210,000 Absa Group Ltd. 1,213,706 780,000 Firstrand Ltd. 921,972 109,600 Gold Fields Ltd. ADR 1,569,472 49,800 Harmony Gold Mining Co. Ltd. ADR 752,976 11,500 Impala Platinum Holdings Ltd. 1,056,599 263,000 @ MTN Group Ltd. 942,146 18,300 Sappi Ltd. 231,543
See Accompanying Notes to Financial Statements 68 ING Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- SOUTH AFRICA (CONTINUED) 40,500 Sappi Ltd. ADR $ 518,400 304,000 Standard Bank Group Ltd. 1,473,044 --------------- 8,679,858 --------------- SOUTH KOREA: 16.0% 24,030 Daishin Securities Co. Ltd. 346,186 14,100 Honam Petrochemical Corp. 564,715 45,161 Kookmin Bank 1,648,462 37,210 Korea Electric Power Corp. 718,419 40,330 Korean Air Co. Ltd. 538,415 22,790 KT Corp. 906,978 9,030 KT Corp. ADR 177,981 69,300 # KT&G Corp. GDR 675,675 14,230 LG Chem Ltd. 571,124 21,100 LG Electronics, Inc. 1,092,886 4,462 Nong Shim Co. Ltd. 652,240 13,070 Posco 1,524,005 15,770 Samsung Electronics Co. Ltd. 6,262,695 13,190 Samsung Fire & Marine Insurance Co. Ltd. 753,396 2,840 Shinsegae Co. Ltd. 569,920 10,600 SK Telecom Co. Ltd. 1,871,906 --------------- 18,875,003 --------------- TAIWAN: 14.8% 182,613 Asustek Computer, Inc. GDR 440,097 246,600 China Motor Corp. Ltd. 468,159 19,000 China Steel Corp. GDR 304,000 968,000 Chinatrust Financial Holding Co. 1,005,751 1,147,000 Compal Electronics, Inc. 1,738,645 1,384,506 Eva Airways Corp. 586,810 1,675,000 Fubon Financial Holding Co. Ltd. 1,764,975 60,000 @ HannStar Display Corp. ADR 501,000 114,060 Hon Hai Precision Industry 510,291 164,424 HON HAI Precision Industry GDR 1,484,749 185,000 @ Ichia Technologies, Inc. 337,601 76,450 MediaTek, Inc. 787,564 1,033,360 Nan Ya Plastic Corp. 1,377,813 686,660 Synnex Technology Intl. Corp. 1,010,537 1,274,372 @ Taiwan Semiconductor Manufacturing Co. Ltd. 2,513,111 2,349,626 @ United Microelectronics Corp. 2,150,798 648,968 Yuanta Core Pacific Securities Co. 403,038 --------------- 17,384,939 --------------- THAILAND: 2.7% 221,900 @ Bangkok Bank PCL 520,056 962,650 Bangkok Expressway PCL 530,851 117,000 BEC World PLC 709,713 334,500 @ Kasikornbank PCL 373,111 3,044,500 Land & House PLC 1,030,223 --------------- 3,163,954 --------------- TURKEY: 1.6% 189,000,000 Akbank Tas 885,738 400,000,000 @ Turkiye Garanti Bankasi AS 937,289 --------------- 1,823,027 --------------- UNITED KINGDOM: 3.7% 188,000 Anglo American PLC 3,847,461 272,700 Old Mutual PLC 473,170 --------------- 4,320,631 --------------- UNITED STATES: 1.5% 12,000 @ iShares MSCI Emerging Markets Index Fund $ 1,780,920 --------------- 1,780,920 --------------- Total Common Stock (Cost $72,812,774) 106,885,455 --------------- PREFERRED STOCK: 3.1% BRAZIL: 0.3% 12,562,388 Duratex SA 315,406 --------------- 315,406 --------------- SOUTH KOREA: 2.8% 16,880 Samsung Electronics Co. Ltd. 3,351,753 --------------- 3,351,753 --------------- Total Preferred Stock (Cost $2,820,588) 3,667,159 --------------- WARRANTS: 3.5% INDIA: 3.5% 32,000 @,E Bajaj Auto Ltd., Expires 01/17/2006 646,249 60,500 @,E Bharat Heavy Electricals Ltd., Expries 09/09/2005 642,921 129,000 @,E Hindustan Lever Ltd., Expires 01/23/2004 496,985 127,400 @,E ICICI Bank Ltd., Expires 07/16/2004 697,439 11,000 @,E Infosys Technologies Ltd., Expires 06/14/2004 1,150,837 52,500 @,E Larsen & Toubro Ltd., Expires 04/24/2006 471,295 --------------- 4,105,726 --------------- SOUTH KOREA: 0.0% 52,500 @,E KT Corp. 43,784 --------------- 43,784 --------------- Total Warrants (Cost $3,249,610) 4,149,510 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $78,882,972)* 97.4% $ 114,702,124 OTHER ASSETS AND LIABILITIES-NET 2.6 3,114,705 ----- --------------- NET ASSETS 100.0% $ 117,816,829 ===== ===============
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company E Equity Linked Product I Illiquid Security # Securities with purchases pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees. * Cost for federal income tax purposes is $81,698,119. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 33,423,085 Gross Unrealized Depreciation (419,080) --------------- Net Unrealized Appreciation $ 33,004,005 ===============
See Accompanying Notes to Financial Statements 69 ING Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
PERCENTAGE OF INDUSTRY NET ASSETS - ----------------------------------------------------------------- Agriculture 1.1% Airlines 1.0 Auto Manufacturers 1.1 Banks 13.0 Beverages 1.3 Building Materials 0.7 Chemicals 4.5 Commercial Services 1.2 Computers 4.0 Diversified Financial Services 2.8 Electric 2.6 Electrical Components & Equipment 9.5 Electronics 1.1 Engineering & Construction 0.7 Entertainment 0.7 Food 0.9 Forest Products & Paper 0.8 Gas 0.8 Holding Companies-Diversified 3.1 Home Builders 0.9 Household Products/Wares 0.4 Insurance 1.0 Internet 0.4 Investment Companies 1.5 Iron/Steel 2.0 Leisure Time 0.6 Lodging 0.4 Media 2.0 Mining 8.0 Oil and Gas 7.6 Oil and Gas Services 0.4 Pharmaceuticals 2.1 Real Estate 0.3 Retail 1.2 Semiconductors 4.7 Software 1.0 Telecommunications 11.8 Textiles 0.2 Other Assets and Liabilities--Net 2.6 ------------- NET ASSETS 100.0% =============
See Accompanying Notes to Financial Statements 70 ING Foreign Fund PORTFOLIO OF INVESTMENTS as October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 81.5% AUSTRALIA: 3.2% 10,791 Alumina Ltd. $ 45,634 13,043 AMP Ltd. 60,896 1,052 Australia & New Zealand Banking Group Ltd. 13,287 13,347 BHP Billiton Ltd. 110,992 2,754 CSL Ltd. 33,220 25,702 John Fairfax Holdings Ltd. 66,018 5,022 Newcrest Mining Ltd. 43,046 7,687 News Corp. Ltd. 68,451 5,950 Sons of Gwalia Ltd. 14,608 --------------- 456,152 --------------- AUSTRIA: 1.5% 808 @ Bank Austria Creditanstalt AG 35,205 1,198 Erste Bank Der Oesterreichischen Sparkassen AG 132,456 348 Omv AG 44,500 --------------- 212,161 --------------- BELGIUM: 0.8% 470 Almanij NV 21,259 661 Delhaize Group 31,389 3,042 Fortis 54,247 --------------- 106,895 --------------- BRAZIL: 1.5% 867 Aracruz Celulose SA 24,363 3,985 Centrais Eletricas Brasileiras SA 26,152 5,054 Centrais Eletricas Brasileiras SA ADR 31,582 1,447 Cia de Bebidas Das Americas ADR 30,676 2,209 Cia Energetica de Minas Gerais ADR 32,340 430 Telemig Celular Participacoes SA 13,696 2,476 @ Telesp Celular Participacoes SA 14,113 1,611 Uniao de Bancos Brasileiros SA 35,619 --------------- 208,541 --------------- CANADA: 1.7% 2,022 Canadian Natural Resources Ltd. 85,894 1,690 Encana Corp. 58,045 6,946 @ Nortel Networks Corp. 30,987 1,562 Petro-Canada 62,964 --------------- 237,890 --------------- CZECHOSLOVAKIA: 1.5% 1,316 Cesky Telecom AS GDR 13,251 6,534 Komercni Banka AS GDR 194,298 --------------- 207,549 --------------- DENMARK: 1.1% 3 AP Moller-Maersk A/S 23,551 627 ISS A/S 29,906 307 Radiometer A/S 18,556 1,642 TDC A/S 52,769 1,083 Vestas Wind Systems A/S 22,779 219 @ William Demant Holding 7,449 --------------- 155,010 --------------- FINLAND: 2.4% 4,340 Fortum OYJ 40,009 10,742 Nokia OYJ 182,442 3,530 Sampo OYJ 29,710 1,442 Tietoenator Oyj $ 38,220 2,809 UPM-Kymmene OYJ 52,574 --------------- 342,955 --------------- FRANCE: 8.6% 1,198 Accor 47,114 9,119 @ Alcatel SA 120,318 6,273 @ Altran Technologies SA 77,590 1,327 @ Atos Origin 88,547 836 Aventis SA 44,268 1,530 AXA 28,991 2,456 BNP Paribas 129,049 3,238 Bouygues 88,082 594 Carrefour SA 31,184 1,243 Cie de Saint-Gobain 52,438 464 @ Credit Lyonnais Financial Products Guernsey Ltd. 12,237 1,234 @ France Telecom 29,867 933 LVMH Moet Hennessy Louis Vuitton SA 64,480 962 Renault SA 63,632 843 Societe Generale 62,621 1,845 Suez SA 29,598 1,119 Total SA 173,921 3,154 @ Vivendi Universal SA 66,254 --------------- 1,210,191 --------------- GERMANY: 5.0% 508 Altana AG 32,008 3,333 @ Bayerische Hypo-und Vereinsbank AG 72,765 1,300 Bayerische Motoren Werke AG 52,138 2,269 Deutsche Lufthansa AG 35,345 4,768 @ Deutsche Telekom AG 74,827 529 E.ON AG 26,628 1,842 @ Fraport AG Frankfurt Airport Services Worldwide 47,537 521 @ Heidelberger Druckmaschinen 18,109 601 Henkel KGaA 41,298 2,545 @ Hypo Real Estate Holding 43,934 939 Metro AG 38,096 281 @ Muenchener Rueckversicherungs AG 33,515 666 Schering AG 31,317 1,454 Siemens AG 97,697 764 @ Software AG 17,674 850 Stada Arzneimittel AG 43,685 --------------- 706,573 --------------- GREECE: 0.5% 4,331 Hellenic Telecommunications Organization SA 48,535 921 Public Power Corp. 19,850 --------------- 68,385 --------------- HUNGARY: 3.6% 559 Egis Rt. 21,657 180 Gedeon Richter Rt. 18,511 11,890 Matav Magyar Tavkozlesi Rt. 42,795 30,109 @ OTP Bank Rt. 368,865 2,549 @ OTP Bank Rt. GDR 62,833 --------------- 514,661 ---------------
See Accompanying Notes to Financial Statements 71 ING Foreign Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- INDIA: 0.1% 301 @,X Dr. Reddy's Laboratories Ltd. $ 7,588 --------------- 7,588 --------------- IRELAND: 0.1% 1,721 Bank of Ireland 21,334 --------------- 21,334 --------------- ITALY: 2.1% 8,081 Banca Intesa S.p.A. 27,243 16,448 @ Banca Nazionale del Lavoro S.p.A. 37,477 2,524 Banco Popolare di Verona e Novara Scrl 39,024 12,955 @ Capitalia S.p.A. 36,144 25,604 Cassa di Risparmio di Firenze S.p.A. 39,557 3,121 Mediaset S.p.A. 31,529 25,964 @ Telecom Italia S.p.A. 67,761 2,463 Unicredito Italiano S.p.A. 12,140 --------------- 290,875 --------------- JAPAN: 14.2% 11,469 Bank of Yokohama Ltd. 49,555 1,337 Canon, Inc. 64,700 1,700 Daiwa Securities Group Inc. 12,433 2,000 Fuji Photo Film Co. Ltd. 58,945 15 Fuji Television Network Inc 79,820 6,831 Hitachi Ltd. 40,141 879 Honda Motor Co. Ltd. 34,701 1,467 Ito-Yokado Co. Ltd. 53,910 1,898 Kao Corp. 39,019 6 KDDI Corp. 32,583 2,000 Matsushita Electric Industrial Co. Ltd. 26,361 6,000 Mitsubishi Estate Co. Ltd. 57,525 14 Mitsubishi Tokyo Financial Group, Inc. 100,604 9,966 Nikko Cordial Corp. 53,758 3,381 @ Nikon Corp 51,329 5 Nippon Telegraph & Telephone Corp. 22,331 12,186 Nomura Holdings, Inc. 209,280 57,680 Nomura TOPIX Exchange Traded Fund 550,907 6,000 Sanyo Electric Co. Ltd. 27,507 2,974 Shiseido Co. Ltd. 31,218 2,448 Sony Corp. 85,285 17 Sumitomo Mitsui Financial Group, Inc. 85,514 200 Takeda Chemical Industries Ltd. 7,077 9,703 The Bank of Fukuoka Ltd. 40,512 3,842 @ The Seiyu Ltd. 12,407 1,830 The Sumitomo Trust & Banking Co. Ltd. 10,221 6,100 Tokyo Broadcasting System, Inc. 97,713 2,100 Toyota Motor Corp. 59,790 502 Uni-Charm Corp. 23,425 --------------- 2,018,571 --------------- MEXICO: 0.2% 1,760 @ Grupo Financiero BBVA Bancomer 29,877 --------------- 29,877 --------------- NETHERLANDS: 3.5% 2,253 Aegon NV $ 29,543 1,041 Akzo Nobel NV 32,916 718 @ ASM International NV 12,470 1,653 European Aeronautic Defense And Space Co. 33,628 11,312 @ Getronics NV 25,117 575 Grolsch NV 15,254 1,666 Heineken NV 59,457 3,682 @ Koninklijke Ahold NV 31,161 6,046 Koninklijke Philips Electronics NV 162,989 828 Royal Dutch Petroleum Co. 36,740 6,638 @ Royal KPN NV 50,467 --------------- 489,742 --------------- NORWAY: 2.4% 8,795 DnB Holding ASA 51,362 511 Gjensidige NOR ASA 20,954 703 @ Golar LNG Ltd. 8,201 1,018 Norsk Hydro ASA 57,291 758 Sparebanken Midt-Norge 24,866 1,280 Sparebanken Rogaland 51,584 3,911 Statoil ASA 36,776 6,006 @ Storebrand 33,461 5,652 Telenor ASA 30,769 5,335 Tomra Systems ASA 30,703 --------------- 345,967 --------------- POLAND: 1.3% 1,790 @ Agora SA 22,052 4,114 @ Bank Pekao SA GDR 117,511 11,059 Telekomunikacja Polska SA GDR 38,731 --------------- 178,294 --------------- RUSSIA: 1.6% 366 MMC Norilsk Nickel ADR 18,849 3,291 @ Sun Interbrew Ltd. GDR 19,511 3,013 Unified Energy System ADR 76,380 6,035 Uralsvyazinform ADR 37,055 4,311 @ Wimm-Bill-Dann Foods OJSC 81,564 --------------- 233,359 --------------- SPAIN: 3.1% 746 Acerinox SA 32,477 225 Banco Pastor SA 6,604 7,065 Banco Santander Central Hispano SA 67,758 8,402 Endesa SA 133,322 2,330 Grupo Empresarial Ence SA 46,019 3,420 Promotora de Informaciones SA (PRISA) 37,928 3,643 Repsol YPF SA 63,524 3,558 Union Fenosa SA 57,493 --------------- 445,125 --------------- SWEDEN: 3.5% 1,127 Autoliv, Inc. ADR 37,129 2,361 @ Elekta AB 46,912 341 Getinge AB 12,480 19,950 Nordea AB 123,779 28,948 Skandia Forsakrings AB 106,131 1,621 Svenska Cellulosa AB 61,196
See Accompanying Notes to Financial Statements 72 ING Foreign Fund PORTFOLIO OF INVESTMENTS as October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- SWEDEN (CONTINUED) 38,732 @ Telefonaktiebolaget LM Ericsson $ 66,532 9,870 TeliaSonera AB 43,145 --------------- 497,304 --------------- SWITZERLAND: 6.4% 767 Baloise Holding Ltd. 31,160 1,469 Compagnie Financiere Richemont AG 33,058 660 Converium Holding AG 32,522 3,708 Credit Suisse Group 130,649 323 @ Micronas Semiconductor Hold 13,425 310 Nestle SA 68,252 2,945 Novartis AG 112,256 365 Phonak Holding AG 6,929 2,103 Roche Holding AG 174,022 126 Sulzer AG 29,958 670 @ Swiss Life Holding 113,645 157 Swisscom AG 45,677 718 UBS AG 44,090 543 Zurich Financial Services AG 69,535 --------------- 905,178 --------------- TURKEY: 1.0% 2,322 Akbank TAS 21,764 6,005 @ Anadolu Efes Biracilik Ve Malt Sanayii AS 14,739 60,605 @ Sabanci Holding 64,363 17,506 @ Turkiye Garanti Bankasi AS 41,020 --------------- 141,886 --------------- UNITED KINGDOM: 10.5% 3,335 Abbey National PLC 31,848 5,119 @ Acambis Plc 31,793 6,947 Standard Chartered PLC 111,108 9,118 BP PLC 63,284 10,310 Diageo PLC 121,246 3,275 Gallaher Group PLC 32,789 5,898 Glaxosmithkline PLC 126,309 30,268 Hilton Group PLC 100,030 8,702 HSBC Holdings PLC 130,688 3,875 Imperial Tobacco Group PLC 64,245 3,661 Reckitt Benckiser Plc 77,035 57,054 Royal & Sun Alliance Insurance Group 84,716 3,197 Royal Bank of Scotland Group PLC 85,663 7,885 Smith & Nephew PLC 62,654 4,778 Technest Holdings, Inc. 59,473 8,066 Tesco PLC 32,337 120,466 Vodafone Group PLC 252,978 3,850 William Hill PLC 22,148 --------------- 1,490,344 --------------- VENEZUELA: 0.1% 684 Cia Anonima Nacional Telefonos de Venezuela - CANTV ADR 10,233 --------------- 10,233 --------------- Total Common Stock (Cost $11,104,939) 11,532,640 --------------- PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------- CORPORATE BONDS: 0.0% FRANCE: 0.0% $ 561 AXA, 0.000%, due 12/21/04 $ 753 --------------- 753 --------------- Total Corporate Bonds (Cost $637) 753 --------------- SHARES VALUE - -------------------------------------------------------------------------------- MUTUAL FUNDS: 2.8% INDIA: 0.3% 1,372 @ S&P CNX Nifty Index $ 45,371 --------------- 45,371 --------------- UNITED STATES: 2.5% 37,578 @ Ishares MSCI Japan Index Fund 347,221 --------------- 347,221 --------------- Total Mutual Funds (Cost $393,296) 392,592 --------------- PREFERRED STOCK: 1.0% GERMANY: 1.0% 639 Henkel KGaA 46,806 6,165 ProSieben SAT.1 Media AG 93,885 --------------- 140,691 --------------- Total Preferred Stock (Cost $115,471) 140,691 --------------- RIGHTS: 0.0% AUSTRALIA: 0.0% 7,696 @,X AMP Ltd. Rights Allocated -- 155 @ Australia & New Zealand Banking Group Ltd. 474 --------------- 474 --------------- GERMANY: 0.0% 195 Muenchener Rueckversicherungs AG 1,612 --------------- 1,612 --------------- Total Rights (Cost $0) 2,086 ---------------
See Accompanying Notes to Financial Statements 73 ING Foreign Fund PORTFOLIO OF INVESTMENTS as October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- WARRANTS: 0.3% INDIA: 0.3% 6,804 @,E Satyam Computer Services Ltd., Expires 01/05/2004 $ 45,859 --------------- 45,859 --------------- Total Warrants (Cost $41,930) 45,859 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $11,656,273)* 85.6% $ 12,114,621 OTHER ASSETS AND LIABILITIES-NET 14.4 2,038,033 ----- --------------- NET ASSETS 100.0% $ 14,152,654 ===== ===============
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company X Fair Value as determined by ING Valuation Committee appointed by the Fund's Board of Directors. E Equity Linked Product * Cost for federal income tax purposes is $11,695,121. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 505,951 Gross Unrealized Depreciation (86,451) --------------- Net Unrealized Appreciation $ 419,500 ===============
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------------- Aerospace/Defense 0.2% Agriculture 0.7 Airlines 0.2 Auto Manufacturers 1.5 Auto Parts & Equipment 0.3 Banks 18.7 Beverages 1.8 Building Materials 0.4 Chemicals 0.2 Commercial Services 0.2 Computers 1.1 Cosmetics/Personal Care 0.7 Diversified Financial Services 2.7 Electric 3.1 Electrical Components & Equipment 0.6 Electronics 1.2 Engineering & Construction 1.5 Entertainment 0.9 Environmental Control 0.2 Equity Fund 6.7 Food 2.2 Forest Products & Paper 1.3 Healthcare-Products 1.1 Holding Companies-Diversified 2.1 Home Furnishings 0.8 Household Products/Wares 1.2 Insurance 4.4 Iron/Steel 0.2 Lodging 0.3 Machinery-Diversified 0.1 Media 4.0 Mining 1.7 Miscellaneous Manufacturing 1.7 Office/Business Equipment 0.5 Oil and Gas 4.8 Pharmaceuticals 4.8 Real Estate 0.4 Retail 0.7 Semiconductors 0.2 Software 0.5 Telecommunications 9.3 Transportation 0.2 Water 0.2 Other Assets and Liabilities, Net 14.4 ------- NET ASSETS 100.0% =======
See Accompanying Notes to Financial Statements 74 ING International Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 87.6% AUSTRALIA: 1.5% 206,000 Qbe Insurance Group Ltd. $ 1,505,523 --------------- 1,505,523 --------------- BELGIUM: 0.9% 3,030 Electrabel 837,973 --------------- 837,973 --------------- BRAZIL: 1.1% 47,000 Uniao de Bancos Brasileiros SA ADR 1,039,170 --------------- 1,039,170 --------------- CANADA: 0.9% 24,103 Encana Corp. 827,846 --------------- 827,846 --------------- CHILE: 0.5% 20,500 Banco Santander Chile SA ADR 487,080 --------------- 487,080 --------------- DENMARK: 2.0% 39,000 Danske Bank A/S 786,764 36,900 TDC A/S 1,185,846 --------------- 1,972,610 --------------- FINLAND: 0.7% 38,000 UPM-Kymmene OYJ 711,218 --------------- 711,218 --------------- FRANCE: 7.1% 10,850 Aventis SA 574,528 26,900 AXA 509,721 17,406 Lafarge SA 1,246,444 12,400 Schneider Electric SA 725,795 20,700 Societe Generale 1,537,673 20,239 Total SA 1,776,466 14,400 Valeo SA 539,195 --------------- 6,909,822 --------------- GERMANY: 5.5% 28,539 Deutsche Bank AG 1,882,439 20,200 Deutsche Boerse AG 1,122,933 77,000 @ Infineon Technologies AG 1,135,019 18,200 Siemens AG 1,227,135 --------------- 5,367,526 --------------- GREECE: 1.0% 82,000 Greek Organization of Football Prognostics SA 991,380 --------------- 991,380 --------------- HONG KONG: 1.9% 446,000 China Merchants Holdings Intl. Co. Ltd. 605,908 1,302,000 Giordano Intl. Ltd. 586,811 1,236,000 Global Bio-Chem Technology Group Co. Ltd. 628,688 --------------- 1,821,407 --------------- HUNGARY: 0.4% 34,500 @ OTP Bank Rt. 422,658 --------------- 422,658 --------------- INDONESIA: 0.5% 901,000 HM Sampoerna Tbk PT $ 461,290 --------------- 461,290 --------------- IRELAND: 2.3% 91,800 Irish Life & Permanent PLC 1,285,946 108,210 @ Ryanair Holdings PLC 918,297 --------------- 2,204,243 --------------- ISRAEL: 0.9% 15,700 Teva Pharmaceutical Industries ADR 893,173 --------------- 893,173 --------------- ITALY: 3.3% 148,200 Banca Fideuram S.p.A. 930,326 78,000 Bulgari S.p.A. 705,452 122,000 Enel S.p.A. 763,019 205,000 Snam Rete Gas S.p.A. 772,133 --------------- 3,170,930 --------------- JAPAN: 19.4% 76,000 Amano Corp. 521,945 129,000 Asahi Diamond Industrial Co. Ltd. 620,740 30,800 Familymart Co. Ltd. 669,596 16,200 Fanuc Ltd. 974,048 7,400 Hirose Electric Co. Ltd. 909,392 99,000 JGC Corp. 851,003 51,000 Kao Corp. 1,048,438 3,500 Mabuchi Motor Co. Ltd. 266,794 69,500 Marui Co. Ltd. 882,539 119,000 Nikko Cordial Corp. 641,897 200 Nippon Telegraph & Telephone Corp. 893,255 53,000 Nippon Yusen Kabushiki Kaisha 225,624 62,000 Nomura Holdings, Inc. 1,064,774 540 NTT Docomo, Inc. 1,169,054 18,700 Oriental Land Co. Ltd. 1,027,407 26,000 Otsuka Kagu Ltd. 756,811 51,000 Sekisui House Ltd. 500,559 47,500 Shimano, Inc. 907,354 57,000 Shiseido Co. Ltd. 598,335 21,200 Tokyo Electron Ltd. 1,519,589 31,000 Tostem Inax Holding Corp. 552,408 44,000 Toyota Motor Corp. 1,252,740 81,000 Yamato Transport Co. Ltd. 1,076,464 --------------- 18,930,766 --------------- MALAYSIA: 1.3% 256,000 Malayan Banking BHD 687,158 730,000 Public Bank BHD 576,316 --------------- 1,263,474 --------------- MEXICO: 1.1% 33,300 Telefonos de Mexico SA de CV ADR 1,070,595 --------------- 1,070,595 --------------- NETHERLANDS: 2.2% 18,276 Koninklijke Philips Electronics NV 492,691 35,990 Royal Dutch Petroleum Co. 1,597,202 --------------- 2,089,893 ---------------
See Accompanying Notes to Financial Statements 75 ING International Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- NEW ZEALAND: 0.9% 216,500 Carter Holt Harvey Ltd. $ 243,442 86,600 Fisher & Paykel Healthcare Corp 643,858 --------------- 887,300 --------------- NORWAY: 0.8% 127,200 Tomra Systems ASA 732,042 --------------- 732,042 --------------- RUSSIA: 1.1% 23,794 YUKOS ADR 1,099,283 --------------- 1,099,283 --------------- SINGAPORE: 0.9% 116,000 United Overseas Bank Ltd. 906,172 --------------- 906,172 --------------- SOUTH AFRICA: 1.4% 95,500 Gold Fields Ltd. ADR 1,367,560 --------------- 1,367,560 --------------- SOUTH KOREA: 1.1% 64,800 LG Investment & Securities Co. Ltd. 572,167 85,700 Woori Finance Holdings Co. Ltd. 469,232 --------------- 1,041,399 --------------- SPAIN: 1.6% 418 @ Antena 3 Television SA 13,654 123,800 Telefonica SA 1,539,917 --------------- 1,553,571 --------------- SWEDEN: 1.3% 55,180 Foreningssparbanken AB 919,566 40,800 Swedish Match AB 332,118 --------------- 1,251,684 --------------- SWITZERLAND: 5.2% 9,500 Adecco SA 560,246 8,165 Nestle SA 1,797,664 19,280 Novartis AG ADR 739,774 12,000 Roche Holding AG 992,998 15,100 UBS AG 927,248 --------------- 5,017,930 --------------- TAIWAN: 0.6% 52,704 @ Taiwan Semiconductor Manufacturing Co. Ltd. 582,906 --------------- 582,906 --------------- THAILAND: 0.5% 75,400 BEC World PLC 457,371 --------------- 457,371 --------------- UNITED KINGDOM: 16.9% 195,000 BAA PLC 1,542,018 239,600 BP PLC 1,662,950 91,300 British American Tobacco PLC 1,103,887 153,400 @ British Sky Broadcasting PLC 1,665,998 86,400 Diageo PLC 1,016,052 76,325 Glaxosmithkline PLC 1,811,722 16,800 HSBC Holdings PLC 1,261,176 46,500 Imperial Tobacco Group PLC 770,933 116,375 Kingfisher PLC 557,888 835,900 Legal & General Group PLC 1,475,220 59,600 Provident Financial PLC $ 653,859 29,200 Rio Tinto PLC 708,083 56,500 Severn Trent PLC 678,814 745,373 Vodafone Group PLC 1,565,265 --------------- 16,473,865 --------------- UNITED STATES: 0.8% 16,000 Schlumberger Ltd. 751,520 --------------- 751,520 --------------- Total Common Stock (Cost $74,578,750) 85,101,180 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $74,578,750)* 87.6% $ 85,101,180 OTHER ASSETS AND LIABILITIES-NET 12.4 12,047,593 ----- --------------- NET ASSETS 100.0% $ 97,148,773 ===== ===============
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company * Cost for federal income tax purposes is $74,644,800. Net unrealized appreciation consists of:
Gross Unrealized Appreciation $ 12,880,361 Gross Unrealized Depreciation (2,423,981) --------------- Net Unrealized Appreciation $ 10,456,380 ===============
See Accompanying Notes to Financial Statements 76 ING International Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------------- Agriculture 2.7% Airlines 0.9 Auto Manufacturers 1.3 Auto Parts & Equipment 0.6 Banks 11.8 Beverages 1.0 Biotechnology 0.6 Building Materials 1.9 Commercial Services 1.2 Cosmetics/Personal Care 1.7 Diversified Financial Services 7.0 Electric 1.6 Electronics 2.7 Engineering & Construction 2.5 Entertainment 2.1 Environmental Control 0.8 Food 1.9 Forest Products & Paper 1.0 Gas 0.8 Hand/Machine Tools 1.3 Healthcare-Products 0.7 Home Builders 0.5 Insurance 3.6 Leisure Time 0.9 Media 2.2 Mining 2.1 Miscellaneous Manufacturing 1.8 Oil and Gas 7.2 Oil and Gas Services 0.8 Pharmaceuticals 5.2 Retail 4.3 Semiconductors 3.3 Telecommunications 7.6 Transportation 1.3 Water 0.7 Other Assets and Liabilities--Net 12.4 ------- NET ASSETS 100.0% =======
See Accompanying Notes to Financial Statements 77 ING International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 92.9% AUSTRALIA: 0.7% 647,441 BHP Steel Ltd. $ 2,489,903 --------------- 2,489,903 --------------- AUSTRIA: 1.0% 31,000 Erste Bank Der Oesterreichischen Sparkassen AG 3,427,527 --------------- 3,427,527 --------------- BELGIUM: 0.8% 22,400 Colruyt SA 2,031,120 16,600 @ Mobistar SA 833,652 --------------- 2,864,772 --------------- BERMUDA: 0.6% 104,000 Frontline Ltd. 2,029,397 --------------- 2,029,397 --------------- CANADA: 11.1% 258,900 Abitibi-Consolidated, Inc. 1,742,303 190,100 AGF Management Ltd. 2,495,148 91,000 @ Ballard Power Systems, Inc. 1,178,450 146,600 Canadian Pacific Railway Ltd. 4,109,068 181,200 @ Cequel Energy, Inc. 1,044,816 221,900 CI Fund Management, Inc. 2,483,233 176,500 @ Compton Petroleum Corp. 752,574 103,800 @ Cott Corp. 2,703,990 101,400 Dofasco, Inc. 2,451,818 54,400 Ensign Resource Service Group 823,398 350,300 @ Esprit Exploration Ltd. 669,744 80,400 Finning Intl., Inc. 1,841,566 108,400 IPSCO, Inc. 1,497,640 151,600 @ Kingsway Financial Services, Inc. 1,591,855 133,700 @ Olympia Energy, Inc. 296,198 41,600 @ Precision Drilling Corp. 1,638,208 120,100 @ Progress Energy Ltd. 956,754 160,400 @ RONA, Inc. 2,981,525 228,000 @ Stake Technology Ltd. 2,186,520 127,000 Teck Cominco Ltd. 1,657,297 122,800 @ Westjet Airlines Ltd. 2,674,852 --------------- 37,776,957 --------------- CHINA: 1.4% 948,000 Byd Co. Ltd. 2,472,024 8,000,000 Sinopec Shanghai Petrochemical Co. Ltd. 2,266,377 --------------- 4,738,401 --------------- DENMARK: 0.7% 50,000 @ Jyske Bank 2,408,301 --------------- 2,408,301 --------------- FINLAND: 1.1% 20,000 Nokian Renkaat OYJ 1,494,045 271,600 Sampo OYJ 2,285,921 --------------- 3,779,966 --------------- FRANCE: 3.8% 42,400 Cie Generale D'Optique Essilor Intl. SA 2,039,620 37,800 Dassault Systemes SA 1,603,901 83,000 @ Flamel Technologies ADR 2,095,750 13,000 IPSOS 1,097,168 171,500 @ JC Decaux SA $ 2,524,008 51,853 Valeo SA 1,941,590 21,100 Vinci SA 1,529,368 --------------- 12,831,405 --------------- GERMANY 4.7% 50,000 Continental AG 1,697,250 83,600 @ Epcos AG 1,724,062 20,000 GFK AG 501,038 24,691 @ Heidelbergcement AG 1,054,846 105,700 @ Hypo Real Estate Holding 1,843,144 71,000 @ Infineon Technologies AG 1,046,576 65,000 KarstadtQuelle AG 1,615,526 66,100 Medion AG 2,936,873 164,200 MG Technologies AG 2,074,893 80,000 @ SGL Carbon AG 1,501,950 --------------- 15,996,158 --------------- GREECE: 1.0% 78,600 Coca Cola Hellenic Bottling Co. SA 1,525,921 46,760 Titan Cement Co. SA 1,793,831 --------------- 3,319,752 --------------- HONG KONG: 3.8% 493,500 ASM Pacific Technology 1,846,089 1,134,000 Cathay Pacific Airways Ltd. 2,168,497 200,000 DAH Sing Financial 1,397,170 5,000,000 @ First Pacific Co. 965,785 1,000,000 Hysan Development Co. Ltd. 1,455,116 1,087,500 Kerry Properties Ltd. 1,442,401 640,000 Kingboard Chemicals Holdings 836,499 279,000 Television Broadcasts Ltd. 1,322,122 250,000 Wing Hang Bank Ltd. 1,542,037 --------------- 12,975,716 --------------- INDIA: 0.4% 58,260 Ranbaxy Laboratories Ltd. GDR 1,334,154 --------------- 1,334,154 --------------- IRELAND: 1.9% 339,500 Anglo Irish Bank Corp. PLC 4,076,928 250,000 Grafton Group PLC 1,554,844 200,000 Greencore Group PLC 720,750 --------------- 6,352,522 --------------- ISRAEL: 0.9% 50,000 @ Taro Pharmaceuticals Industries 3,212,500 --------------- 3,212,500 --------------- ITALY: 2.7% 1,285,100 @ Banca Nazionale del Lavoro S.p.A. 2,928,100 95,100 Banco Popolare di Verona e Novara Scrl 1,470,365 150,000 Buzzi Unicem S.p.A. 1,668,768 98,600 Italcementi S.p.A. 1,186,343 289,100 Saipem S.p.A. 2,103,853 --------------- 9,357,429 --------------- JAPAN: 22.0% 36,800 Advantest Corp. 2,741,547 750,000 Aioi Insurance Co. Ltd. 2,797,107 590,000 Bank of Yokohama Ltd. 2,549,234
See Accompanying Notes to Financial Statements 78 ING International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- JAPAN (CONTINUED) 142,100 Capcom Co. Ltd. $ 1,835,467 37,000 Disco Corp. 1,985,719 25,000 Eneserve Corp. 1,023,332 25,700 Funai Electric Co. Ltd. 3,424,797 57,700 Hogy Medical Co. Ltd. 2,828,972 234,000 JSR Corp. 4,959,475 200,000 Kamigumi Co. Ltd. 1,302,588 378,000 Keihin Electric Express Railway Co. Ltd. 2,210,888 1,417,000 @ Kobe Steel Ltd. 1,817,410 152,000 Marui Co. Ltd. 1,930,159 45,000 Matsui Securities Co. Ltd. 1,080,639 43,400 Meitec Corp. 1,551,480 900,000 Mitsui Mining & Smelting Co. Ltd. 3,602,128 50,930 Nichii Gakkan Co. 2,770,376 30,500 Nidec Corp. 2,971,346 221,000 Nippon Electric Glass Co. Ltd. 4,060,763 69,900 Nitto Denko Corp. 3,668,741 402,000 NSK Ltd. 1,656,488 147,000 @ Sega Corp. 1,627,316 116,000 Shimano, Inc. 2,215,855 200,000 Sumitomo Corp. 1,388,093 400,000 The Bank of Fukuoka Ltd. 1,670,078 550,000 The Sumitomo Trust & Banking Co. Ltd. 3,071,814 107,500 THK Co. Ltd. 2,180,607 149,000 Toho Gas Co. Ltd. 436,422 179,000 Tokyo Broadcasting System, Inc. 2,867,322 859 @ UMC Japan 1,172,056 30,200 Uni-Charm Corp. 1,409,251 186,000 @ Victor Co. of Japan Ltd. 1,674,989 204,000 Yokogawa Electric Corp. 2,384,500 --------------- 74,866,959 --------------- LUXEMBOURG: 0.8% 683,600 @ Gemplus Intl. SA 1,446,327 35,125 Tenaris SA 92,218 48,349 Tenaris SA ADR 1,315,093 --------------- 2,853,638 --------------- NERHERLANDS: 1.6% 148,000 @ Asml Holding NV ADR 2,597,400 18,100 Fugro NV ADR 910,034 141,566 Vedior NV ADR 2,040,674 --------------- 5,548,108 --------------- NORWAY: 0.9% 150,600 @ Golar LNG Ltd. 1,756,846 250,000 Smedvig ASA 1,431,692 --------------- 3,188,538 --------------- PHILIPPINES: 0.2% 50,000 Globe Telecom, Inc. 714,092 --------------- 714,092 --------------- RUSSIA: 0.5% 26,000 @ Vimpel-Communications ADR 1,692,600 --------------- 1,692,600 --------------- SINGAPORE: 1.3% 2,000,000 @ Neptune Orient Lines Ltd. 2,550,332 2,000,000 Singapore Exchange Ltd. 1,907,005 --------------- 4,457,337 --------------- SOUTH KOREA: 3.5% 200,000 Daegu Bank $ 910,858 260,000 @ Hanwha Chem Corp. 1,805,830 99,000 Korean Air Co. Ltd. 1,321,673 56,780 Samsung Electro-Mechanics Co. Ltd. 1,923,851 18,600 Samsung SDI Co. Ltd. 1,917,364 108,520 SK Corp. 2,099,796 69,400 You Eal Electronics Co. Ltd. 2,075,843 --------------- 12,055,215 --------------- SPAIN: 0.4% 100,400 Red Electrica de Espana 1,353,894 --------------- 1,353,894 --------------- SWEDEN: 2.5% 73,000 Autoliv, Inc. ADR 2,404,995 187,106 @ Elekta AB 3,717,727 11,694 @ Elekta Blocked Acceptance Shares 210,244 59,900 SKF AB 2,119,307 --------------- 8,452,273 --------------- SWITZERLAND: 4.7% 42,800 @ Actelion Ltd. 4,070,543 6,000 Julius Baer Holding AG 1,945,557 45,430 @ Saurer AG 1,939,199 40,000 @ SEZ Holding AG 1,318,007 3,100 SGS Societe Generale Surveillance Holdings SA 1,750,403 14,500 @ Swiss Life Holding 2,459,468 245,000 Xstrata PLC 2,515,304 --------------- 15,998,481 --------------- TAIWAN: 1.1% 1,107,600 Benq Corp. 1,418,119 450,000 @ Siliconware Precision Industries Co. ADR 2,223,000 --------------- 3,641,119 --------------- UNITED KINGDOM: 16.0% 1,066,100 @ ARM Holdings PLC 2,057,872 141,100 Barratt Developments PLC 1,173,254 585,257 BBA Group PLC 2,579,712 172,000 Burberry Group PLC 1,149,989 196,900 Capital Radio PLC 1,570,408 592,100 Cattles PLC 3,205,197 208,300 Close Brothers Group Plc 2,553,855 190,000 Daily Mail & General Trust 1,855,530 401,900 @ easyJet PLC 1,913,022 194,500 Exel PLC 2,503,481 341,200 GKN PLC 1,598,038 715,400 Hilton Group PLC 2,355,156 501,000 Kidde PLC 856,548 183,400 Man Group PLC 4,509,587 353,964 Manchester United PLC 1,417,556 461,800 MFI Furniture PLC 1,271,475 217,084 Misys PLC 1,105,142 865,300 Peninsular And Oriental Steam Navigation Co. 4,060,045 200,000 Punch Taverns PLC 1,151,381 226,647 Rexam PLC 1,653,817 168,700 Schroders PLC 2,145,635 388,000 SIG PLC 2,182,651
See Accompanying Notes to Financial Statements 79 ING International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- UNITED KINGDOM (CONTINUED) 2,463,800 @ Skyepharma PLC $ 2,707,162 1,242,200 SMG PLC 2,129,030 133,500 Smiths Group PLC 1,589,198 491,400 Taylor Woodrow PLC 1,867,894 47,000,000 @ Telewest Communications PLC 1,674,890 --------------- 54,837,525 --------------- UNITED STATES: 0.8% 154,700 @ Ultra Petroleum Corp. 2,831,010 --------------- 2,831,010 --------------- Total Common Stock (Cost $236,204,550) 317,385,649 --------------- PREFERRED STOCK: 0.9% GERMANY: 0.9% 190,000 ProSieben SAT.1 Media AG 2,926,594 --------------- 2,926,594 --------------- Total Preferred Stock (Cost $1,744,020) 2,926,594 --------------- RIGHTS: 0.0% SWEDEN: 0.0% 2 @ Elekta AB -- --------------- -- --------------- Total Rights (Cost $0) -- --------------- WARRANTS: 1.9% INDIA: 1.0% 75,900 @,E Ranbaxy Laboratories, Expires 09/30/04 1,646,537 250,000 @,E Satyam Computer Services, Expires 01/08/04 1,688,500 --------------- 3,335,037 --------------- TAIWAN: 0.9% 1,492,410 @ Compal Electronic, Expires 06/26/06 2,262,494 2,000,000 @ Yageo Corp., Expires 09/15/06 953,600 --------------- 3,216,094 --------------- Total Warrants (Cost $4,966,657) 6,551,131 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $242,915,227)* 95.7% $ 326,863,374 OTHER ASSETS AND LIABILITIES-NET 4.3 14,651,417 ----- --------------- NET ASSETS 100.0% $ 341,514,791 ===== ===============
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company E Equity Linked Product * Cost for federal income tax purposes is $244,891,718. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 84,617,296 Gross Unrealized Depreciation (2,645,640) --------------- Net Unrealized Appreciation $ 81,971,656 ===============
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------------- Advertising 1.1% Airlines 2.4 Apparel 0.3 Auto Parts and Equipment 2.7 Banks 8.5 Beverages 1.2 Building Materials 2.3 Chemicals 4.4 Commercial Services 2.7 Computers 2.0 Cosmetics/Personal Care 0.4 Distribution/Wholesale 1.3 Diversified Financial Services 6.3 Electric 0.4 Electrical Components and Equipment 2.0 Electronics 4.6 Energy-Alternate Sources 0.4 Engineering and Construction 0.4 Entertainment 1.1 Food 1.5 Forest Products and Paper 0.5 Gas 0.1 Hand/Machine Tools 2.6 Healthcare-Products 2.6 Holding Companies-Diversified 0.9 Home Builders 0.9 Home Furnishings 0.9 Insurance 2.0 Internet 0.3 Iron/Steel 2.4 Leisure Time 0.6 Machinery-Diversified 0.6 Media 3.7 Metal Fabricate/Hardware 1.1 Mining 2.3 Miscellaneous Manufacturing 1.2 Oil and Gas 3.3 Oil and Gas Services 1.7 Packaging and Containers 0.5 Pharmaceuticals 4.4 Real Estate 0.9 Retail 2.7 Semiconductors 3.6 Software 1.8 Telecommunications 2.0 Toys/Games/Hobbies 0.5 Transportation 5.6 Other Assets and Liabilities, Net 4.3 -------- NET ASSETS 100.0% ========
See Accompanying Notes to Financial Statements 80 ING International Value Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 98.1% BELGIUM: 1.0% 1,317,000 Interbrew $ 30,834,592 --------------- 30,834,592 --------------- BERMUDA: 0.9% 1,426,170 Tyco Intl. Ltd. 29,778,430 --------------- 29,778,430 --------------- BRAZIL: 6.5% 10,027,700 Centrais Eletricas Brasileiras SA ADR 62,662,095 3,094,300 Petroleo Brasileiro SA - Petrobras ADR 67,331,968 2,532,786 Tele Norte Leste Participacoes SA ADR 35,889,578 1,208,600 Telecomunicacoes Brasileiras SA ADR 41,624,184 --------------- 207,507,825 --------------- FRANCE: 4.5% 6,561,800 @ Alcatel SA 86,578,849 1,463,100 Michelin (C.G.D.E.) 57,403,814 --------------- 143,982,663 --------------- GERMANY: 7.3% 805,500 BASF AG 36,950,097 1,644,800 @ Bayerische Hypo-und Vereinsbank AG 36,233,916 5,377,300 @ Deutsche Telekom AG 84,702,557 1,391,188 E.ON AG 70,318,293 411,200 @ Hypo Real Estate Holding 7,170,300 --------------- 235,375,163 --------------- HONG KONG: 1.9% 3,160,236 Jardine Matheson Holdings Ltd. 23,227,735 6,146,000 Swire Pacific Ltd. 37,513,733 --------------- 60,741,468 --------------- ITALY: 2.9% 19,093,700 Banca Intesa S.p.A. 64,369,636 10,329,085 @ Telecom Italia S.p.A. 26,956,975 --------------- 91,326,611 --------------- JAPAN: 23.6% 1,254,000 Daiichi Pharmaceutical Co. Ltd. 19,163,324 17,003,700 Hitachi Ltd. 99,917,135 6,438 Japan Tobacco, Inc. 42,984,418 9,584,000 Komatsu Ltd. 51,871,379 6,456,000 Matsushita Electric Industrial Co. Ltd. 85,093,410 1,762 Millea Holdings, Inc. 20,996,225 10,636,000 Mitsubishi Heavy Industries Ltd. 29,217,920 10,207 Mitsubishi Tokyo Financial Group, Inc. 73,348,160 12,161,000 Nippon Oil Corp. 60,066,612 13,125 Nippon Telegraph & Telephone Corp. 58,619,866 1,049,000 Ono Pharmaceutical Co. Ltd. 36,450,448 3,822,000 Sankyo Co. Ltd. 61,188,157 11,494 Sumitomo Mitsui Financial Group, Inc. 57,817,638 937,600 TDK Corp. $ 61,406,467 --------------- 758,141,159 --------------- MEXICO: 2.7% 1,275,060 America Movil SA de CV ADR 30,346,428 342,182 Cemex SA de CV ADR 8,212,368 1,471,160 Telefonos de Mexico SA de CV ADR 47,297,794 --------------- 85,856,590 --------------- NETHERLANDS: 3.6% 945,000 Akzo Nobel NV 29,880,900 1,344,451 European Aeronautic Defense And Space Co. 27,351,175 3,505,000 @ Koninklijke Ahold NV 29,662,815 466,200 Unilever NV 27,081,616 --------------- 113,976,506 --------------- NEW ZEALAND: 1.8% 19,086,427 Telecom Corp. of New Zealand Ltd. 56,761,851 --------------- 56,761,851 --------------- PORTUGAL: 1.8% 6,709,676 Portugal Telecom SGPS SA 56,393,988 --------------- 56,393,988 --------------- RUSSIA: 1.2% 477,800 LUKOIL ADR 38,845,140 --------------- 38,845,140 --------------- SINGAPORE: 3.8% 3,652,191 DBS Group Holdings Ltd. 29,998,754 6,060,800 # DBS Group Holdings Ltd. ADR 49,782,866 6,239,000 Overseas-Chinese Banking Corp. 43,362,475 --------------- 123,144,095 --------------- SOUTH KOREA: 4.4% 4,337,800 Korea Electric Power Corp. ADR 47,065,130 2,180,500 KT Corp. ADR 42,977,655 1,709,000 POSCO ADR 49,526,820 --------------- 139,569,605 --------------- SPAIN: 6.5% 23,023 @ Antena 3 Television SA 752,075 6,566,533 Banco Bilbao Vizcaya Argentaria SA 75,343,579 2,742,970 Repsol YPF SA 47,830,539 6,806,060 Telefonica SA 84,658,879 --------------- 208,585,072 --------------- SWITZERLAND: 4.4% 112,800 Nestle SA 24,834,837 91,700 Swisscom AG 26,678,736 697,374 @ Zurich Financial Services AG 89,303,144 --------------- 140,816,717 --------------- UNITED KINGDOM: 18.7% 22,621,100 BAE Systems PLC 70,247,982 4,901,200 British American Tobacco PLC 59,259,276 10,493,930 BT Group PLC 33,033,236 43,633,700 @ Corus Group PLC 17,770,610
See Accompanying Notes to Financial Statements 81 ING International Value Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- UNITED KINGDOM (CONTINUED) 15,012,600 Friends Provident PLC $ 34,965,304 18,801,490 Imperial Chemical Industries PLC 61,816,303 30,391,298 Invensys PLC 15,471,754 11,088,607 Marks & Spencer Group PLC 54,145,376 15,343,000 Reuters Group PLC 66,848,210 35,348,000 Royal & Sun Alliance Insurance Group 52,635,775 8,735,650 SABmiller PLC 73,786,267 12,395,700 Safeway PLC 61,001,161 --------------- 600,981,254 --------------- VENEZUELA: 0.6% 1,216,822 Cia Anonima Nacional Telefonos de Venezuela - CANTV ADR 18,203,657 --------------- 18,203,657 --------------- Total Common Stock (Cost $3,230,842,178) 3,140,822,386 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $3,230,842,178)* 98.1% $ 3,140,822,386 OTHER ASSETS AND LIABILITIES-NET 1.9 61,842,144 ----- --------------- NET ASSETS 100.0% $ 3,202,664,530 ===== ===============
@ Non-income producing security ADR American Depositary Receipt PLC Public Limited Company # Securities with purchases pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees. * Cost for federal income tax purposes is $3,232,834,856. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 358,576,808 Gross Unrealized Depreciation (450,589,278) --------------- Net Unrealized Depreciation $ (92,012,470) ===============
PERCENTAGE OF INDUSTRY NET ASSETS - -------------------------------------------------------------------------------- Aerospace/Defense 3.0% Agriculture 3.2 Auto Parts and Equipment 1.8 Banks 13.6 Beverages 3.3 Building Materials 0.3 Chemicals 4.0 Computers 1.9 Electric 5.6 Electrical Components and Equipment 3.1 Food 4.5 Holding Companies-Diversified 1.9 Home Furnishings 2.7 Insurance 6.2 Iron/Steel 2.1 Machinery-Construction and Mining 1.6 Media 2.1 Miscellaneous Manufacturing 2.3 Oil and Gas 6.7 Pharmaceuticals 3.6 Retail 1.7 Telecommunications 22.9 Other Assets and Liabilities, Net 1.9 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 82 ING Precious Metals Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 97.5% AUSTRALIA: 3.9% 300,000 Newcrest Mining Ltd. $ 2,571,409 2,000,000 @,I Oxiana Resources NL 1,376,527 --------------- 3,947,936 --------------- CANADA: 42.0% 303,500 Agnico-Eagle Mines Ltd. 3,299,045 300,000 @ Alamos Gold Inc. 650,962 350,000 @,I Apollo Gold Corp. 586,852 200,000 Barrick Gold Corp. 3,894,000 300,000 @ Eldorado Gold Corp. 1,008,307 300,000 @ Gabriel Resources Ltd. 914,988 900,000 @ Gammon Lake Resources Inc. 4,124,275 264,400 @ Glamis Gold Ltd. 3,697,721 177,800 Goldcorp, Inc. 2,795,050 463,600 Iamgold Corp. 3,482,144 584,998 @ Kinross Gold Corp. 4,805,263 600,000 @ Miramar Mining Corp. 1,249,924 200,000 @ Pan American Silver Corp. 2,106,000 463,500 Placer Dome, Inc. 7,151,806 1,913,000 @. Queenstake Resources Ltd. 957,915 100,000 @ SouthernEra Resources Ltd. 437,009 680,000 @ Wheaton River Minerals Ltd. 1,578,696 --------------- 42,739,957 --------------- PERU: 9.4% 200,000 @ Cia de Minas Buenaventura SA 9,524,000 --------------- 9,524,000 --------------- SOUTH AFRICA: 19.6% 95,000 Anglogold Ltd. 3,670,800 2,564,149 @ Avgold Ltd. 3,387,875 443,900 Gold Fields Ltd. ADR 5,728,001 70,000 Harmony Gold Mining Co. Ltd. 1,076,142 400,000 Harmony Gold Mining Co. Ltd. ADR 6,048,000 --------------- 19,910,818 --------------- UNITED KINGDOM: 9.7% 315,000 Lonmin Public Ltd. Co. 5,471,009 200,000 @ Randgold Resources Ltd. 4,406,000 --------------- 9,877,009 --------------- UNITED STATES: 12.9% 100,000 Freeport-McMoRan Copper & Gold, Inc. 3,875,000 450,000 @ Hecla Mining Co. 2,655,000 150,000 Newmont Mining Corp. 6,567,000 --------------- 13,097,000 --------------- Total Common Stock (Cost $65,978,224) 99,096,720 --------------- WARRANTS: 0.3% CANADA: 0.3% 17,500 @ Agnico-Eagle Mines Ltd., Expires 11/14/2007 42,000 90,000 @ Kinross Gold Corp., Expires 12/05/2007 $ 81,939 15,000 @ Wheaton River Minerals Ltd., Expires 08/25/2008 13,088 162,500 @,I Wheaton River Minerals Ltd., Expires 05/30/2007 202,192 --------------- Total Warrants (Cost $124,335) 339,219 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $66,102,559)* 97.8% $ 99,435,939 OTHER ASSETS AND LIABILITIES-NET 2.2 2,260,303 ----- --------------- NET ASSETS 100.0% $ 101,696,242 ===== ===============
@ Non-income producing security ADR American Depositary Receipt I Illiquid Security * Cost for federal income tax purposes is $66,144,709. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 33,407,202 Gross Unrealized Depreciation (118,145) --------------- Net Unrealized Appreciation $ 33,289,057 ===============
PERCENTAGE OF INDUSTRY NET ASSETS - -------------------------------------------------------------------------------- Diamonds/Precious Stones 0.4% Gold Mining 5.3 Metal-Diversified 1.8 Mining 85.0 Precious Metals 5.0 Telecommunications 0.4 Wine And Distilled Beverages 0.9 Other Assets and Liabilities, Net 1.2 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 83 ING Russia Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 92.6% AIRLINES: 0.8% 2,446,350 I Aeroflot $ 1,225,621 --------------- 1,225,621 --------------- AUTOMOBILE: 0.0% 36,550 @, I, X Severstal-Avto 36,550 --------------- 36,550 --------------- BANKS: 3.9% 25,000 Sberbank RF 6,250,000 --------------- 6,250,000 --------------- BEVERAGES: 0.9% 311,000 @, I Sun Interbrew Ltd. GDR 1,492,800 --------------- 1,492,800 --------------- ELECTRIC: 9.5% 3,200,000 I Konakovskaya Gres 1,248,000 5,000,000 Lenenergo 1,800,000 40,000,000 Mosenergo 2,660,000 38,000,000 Unified Energy System 9,633,000 --------------- 15,341,000 --------------- FOOD: 1.1% 90,000 @ Wimm-Bill-Dann Foods OJSC ADR 1,702,800 --------------- 1,702,800 --------------- GAS: 3.7% 250,000 OAO Gazprom ADR 6,000,000 --------------- 6,000,000 --------------- INVESTMENT COMPANIES: 1.8% 270,000 @ Vostok Nafta Investment Ltd. ADR 2,941,987 --------------- 2,941,987 --------------- IRON/STEEL: 3.6% 56,000 Cherepovets MK Severstal 5,880,000 --------------- 5,880,000 --------------- MINING: 8.5% 267,000 MMC Norilsk Nickel ADR 13,803,900 --------------- 13,803,900 --------------- OIL AND GAS: 40.4% 243,000 LUKOIL ADR 19,755,900 3,000,000 Sibneft 6,165,000 335,000 Surgutneftegaz ADR 8,321,400 188,000 Tatneft ADR 3,929,200 1,350,000 Tyumen Oil Co. 2,565,000 2,150,000 Yukos 24,510,000 --------------- 65,246,500 --------------- TELECOMMUNICATIONS: 18.4% 4,864,502 Central Telecommunications Co. 1,437,460 50,000 @ Golden Telecom, Inc. 1,293,500 90,000 Mobile Telesystems ADR 6,974,100 200,000 I Moscow City Telephone 2,037,680 1,098,882 Rostelecom 1,972,493 33,510,200 Sibirtelecom 988,552 15,409,869 Southern Telecommunication Co. 1,386,888 104,962,293 Uralsvyazinform ADR 3,180,357 110,000 @ Vimpel-Communications ADR 7,161,001 1,500,000 VolgaTelecom $ 3,330,000 --------------- 29,762,031 --------------- Total Common Stock (Cost $106,780,271) 149,683,189 --------------- PREFERRED STOCK: 4.6% ELECTRIC: 1.2% 9,000,000 Unified Energy System 1,980,000 --------------- 1,980,000 --------------- PIPELINES: 1.2% 4,000 Transneft 1,964,000 --------------- 1,964,000 --------------- TELECOMMUNICATIONS: 2.2% 189,500 Moscow City Telephone 1,231,750 71,082,514 Uralsvyazinform 1,364,784 658,030 Volgatelecom 914,662 --------------- 3,511,196 --------------- Total Preferred Stock (Cost $5,292,792) 7,455,196 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $112,073,063)* 97.2% $ 157,138,385 OTHER ASSETS AND LIABILITIES-NET 2.8 4,462,263 ----- --------------- NET ASSETS 100.0% $ 161,600,648 ===== ===============
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt I Illiquid Security X Fair Value determined by ING Funds Pricing Committee appointed by the Fund's Board of Trustees. * Cost for federal income tax purposes is $113,006,695. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 47,996,513 Gross Unrealized Depreciation (3,864,823) --------------- Net Unrealized Appreciation $ 44,131,690 ===============
See Accompanying Notes to Financial Statements 84 ING Global Equity Dividend Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 91.8% AUSTRALIA: 7.1% 3,300 Australia & New Zealand Banking Group Ltd. $ 41,679 13,800 Foster's Group Ltd. 44,748 2,800 TABCorp. Holdings Ltd. 23,026 12,600 Telstra Corp Ltd. 42,377 1,100 Wesfarmers Ltd. 22,634 17,000 Westfield Trust 40,168 3,600 Westpac Banking Corp. 41,253 5,400 Woodside Petroleum Ltd. 50,692 --------------- 306,577 --------------- BELGIUM: 0.9% 2,100 Fortis 37,449 --------------- 37,449 --------------- BRAZIL: 0.6% 1,100 Uniao de Bancos Brasileiros SA 24,321 --------------- 24,321 --------------- CANADA: 2.3% 2,500 BCE, Inc. 56,618 2,100 TransCanada Corp. 42,859 --------------- 99,477 --------------- CHINA: 1.4% 170,000 Petrochina Co. Ltd. 61,842 --------------- 61,842 --------------- DENMARK: 1.0% 1,300 TDC A/S 41,778 --------------- 41,778 --------------- FRANCE: 3.5% 1,000 Cie de Saint-Gobain 42,187 500 Lafarge SA 35,805 800 Peugeot SA 34,317 500 Societe Generale 37,142 --------------- 149,451 --------------- GERMANY: 0.8% 700 E.ON AG 35,235 --------------- 35,235 --------------- HONG KONG: 2.5% 9,000 Citic Pacific Ltd. 20,977 9,000 CLP Holdings Ltd. 40,679 3,600 Hang Seng Bank Ltd. 44,967 --------------- 106,623 --------------- ITALY: 3.3% 3,900 ENI-Ente Nazionale Idrocarburi S.p.A. 61,931 10,000 Snam Rete Gas S.p.A. 37,665 24,300 @ Telecom Italia S.p.A. 42,147 --------------- 141,743 --------------- MEXICO: 1.0% 1,300 Telefonos de Mexico SA de CV ADR 41,795 --------------- 41,795 --------------- NETHERLANDS: 2.2% 755 Rodamco Europe NV $ 38,530 1,300 Royal Dutch Petroleum Co. 57,684 --------------- 96,214 --------------- NEW ZEALAND: 0.9% 13,300 Telecom Corp. of New Zealand Ltd. 39,553 --------------- 39,553 --------------- NORWAY: 1.1% 7,800 DnB Holding ASA 45,551 --------------- 45,551 --------------- SOUTH AFRICA: 2.7% 600 Anglogold Ltd. 23,199 600 Impala Platinum Holdings Ltd. 55,127 1,600 Nedcor Ltd. 14,619 1,660 Sasol Ltd. 21,668 --------------- 114,613 --------------- SPAIN: 2.2% 2,800 Acesa Infraestructuras SA 37,758 3,700 Endesa SA 58,712 --------------- 96,470 --------------- SWEDEN: 4.1% 2,900 Foreningssparbanken AB 48,328 5,000 Investor AB 44,867 1,300 Sandvik AB 38,662 3,600 Skandinaviska Enskilda Banken AB 43,380 --------------- 175,237 --------------- THAILAND: 0.5% 35,600 Shin Corp PCL 20,702 --------------- 20,702 --------------- UNITED KINGDOM: 16.0% 2,700 Alliance & Leicester PLC 40,640 3,100 Standard Chartered PLC 49,581 2,800 BOC Group PLC 38,178 3,800 Diageo PLC 44,688 18,900 Dixons Group PLC 43,538 4,300 Gallaher Group PLC 43,052 10,300 GKN PLC 48,241 23,200 Hays PLC 48,030 12,200 Hilton Group PLC 40,319 6,000 Kelda Group PLC 45,232 8,600 Kingfisher PLC 41,228 35,300 Legal & General Group PLC 62,299 4,600 Persimmon PLC 36,259 8,600 Rank Group PLC 40,863 1,735 Smiths Group PLC 20,654 9,700 Tomkins PLC 46,254 --------------- 689,056 --------------- UNITED STATES: 37.7% 2,100 Albertson's, Inc. 42,609 1,000 Altria Group, Inc. 46,500 900 Ameren Corp. 40,185 1,300 American Capital Strategies Ltd. 35,100 1,900 Annaly Mortgage Management, Inc. 31,046 526 Bank of America Corp. 39,834 2,200 Bristol-Myers Squibb Co. 55,814
See Accompanying Notes to Financial Statements 85 ING Global Equity Dividend Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- UNITED STATES (CONTINUED) 1,100 Cinergy Corp. $ 39,941 1,800 Conagra Foods, Inc. 42,912 900 Dominion Resources, Inc. 55,440 1,100 Dow Chemical Co. 41,459 1,100 DTE Energy Co. 40,568 1,300 Duke Realty Corp. 38,064 1,400 Equity Office Properties Trust 39,214 2,100 Equity Residential 61,425 1,100 Firstenergy Corp. 37,829 1,500 Fleetboston Financial Corp. 60,586 800 Gatx Corp. 17,992 1,000 Goodrich Corp. 27,620 1,000 Health Care Property Investors, Inc. 46,630 1,100 Istar Financial, Inc. 41,866 1,300 JP Morgan Chase & Co. 46,670 900 Kerr-McGee Corp. 37,350 900 Kimco Realty Corp. 37,494 900 Kinder Morgan Energy Partners LP 38,556 1,000 Lincoln National Corp. 39,930 1,600 May Department Stores Co. 44,736 1,100 National City Corp. 35,926 1,000 Regions Financial Corp. 36,750 600 RJ Reynolds Tobacco Holdings, Inc. 28,818 1,400 Simon Property Group, Inc. 63,112 1,300 Southern Co. 38,740 1,100 St. Paul Cos. 41,943 1,200 Union Planters Corp. 39,924 1,100 Ust, Inc. 37,422 1,600 Verizon Communications, Inc. 53,760 800 Vornado Realty Trust 40,440 700 Wells Fargo & Co. 39,424 2,700 Xcel Energy, Inc. 44,280 --------------- 1,627,909 --------------- Total Common Stock (Cost $3,774,485) 3,951,596 --------------- RIGHTS: 0.0% AUSTRALIA: 0.0% 600 @ Australia & New Zealand Banking Group Ltd. 1,835 --------------- 1,835 --------------- Total Rights (Cost $0) 1,835 --------------- WARRANTS: 3.1% INDIA: 1.0% 5,700 @ Hindustan Petroleum Corp., Expires 07/15/2004 41,268 --------------- 41,268 --------------- NETHERLANDS: 0.4% 18,000 @ Link Corp., Expires 01/17/2006 18,900 --------------- 18,900 --------------- TAIWAN: 1.7% 35,000 @ Acer Inc., Expires 07/15/2004 51,100 26,000 @ China Steel Corp., Expires 08/20/2004 20,982 --------------- 72,082 --------------- Total Warrants (Cost $132,411) 132,250 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $3,906,896)* 94.9% $ 4,085,681 OTHER ASSETS AND LIABILITIES-NET 5.1 218,577 ----- --------------- NET ASSETS 100.0% $ 4,304,258 ===== ===============
@ Non-income producing security ADR American Depositary Receipt PLC Public Limited Company * Cost for federal income tax purposes is $3,906,404. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 209,177 Gross Unrealized Depreciation (29,900) --------------- Net Unrealized Appreciation $ 179,277 ===============
PERCENTAGE OF INDUSTRY NET ASSETS - -------------------------------------------------------------------------------- Aerospace/Defense 0.6% Agriculture 3.6 Auto Manufacturers 0.8 Auto Parts & Equipment 1.1 Banks 16.1 Beverages 2.0 Building Materials 1.8 Chemicals 1.9 Closed-end Funds 0.9 Commercial Services 3.0 Computers 1.2 Diversified Financial Services 1.1 Electric 10.0 Entertainment 1.4 Food 2.0 Gas 0.9 Hand/Machine Tools 0.9 Holding Companies-Diversified 2.8 Home Builders 0.8 Insurance 3.3 Investment Companies 1.8 Iron/Steel 0.5 Mining 1.8 Miscellaneous Manufacturing 1.0 Oil and Gas 7.8 Pharmaceuticals 1.3 Pipelines 1.9 Real Estate 0.9 REITs 9.3 Retail 3.0 Telecommunications 7.9 Trucking & Leasing 0.4 Water 1.1 Other Assets and Liabilities, Net 5.1 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 86 ING Global Real Estate Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 93.4% AUSTRALIA: 9.7% 314,000 Centro Properties Group $ 844,407 439,000 General Property Trust 869,064 775,000 Macquarie Goodman Industrial Trust 846,848 122,700 Stockland 422,250 35,000 Westfield Holdings Ltd. 352,895 422,600 Westfield Trust 998,520 --------------- 4,333,984 --------------- CANADA: 4.1% 16,000 Brookfield Properties Co. 408,640 10,000 Dundee Real Estate Investment Trust 166,913 55,000 Morguard Real Estate Investment Trust 371,382 80,100 Riocan Real Estate Investment Trust 883,011 --------------- 1,829,946 --------------- FRANCE: 3.0% 6,814 Gecina SA 853,913 6,200 Unibail 489,029 --------------- 1,342,942 --------------- GERMANY: 1.0% 40,000 IVG Immobilien AG 434,310 --------------- 434,310 --------------- HONG KONG: 8.2% 171,000 Cheung Kong Holdings Ltd. 1,425,789 400,000 Hang Lung Group Ltd. 512,510 450,000 Hongkong Land Holdings Ltd. 697,500 125,000 Sun Hung Kai Properties Ltd. 1,050,292 --------------- 3,686,091 --------------- JAPAN: 6.7% 75 Japan Retail Fund Investment Corp. 438,668 137,000 Mitsubishi Estate Co. Ltd. 1,313,486 95,000 Mitsui Fudosan Co. Ltd. 884,022 40,000 Sumitomo Realty & Development Co. Ltd. 371,128 --------------- 3,007,304 --------------- NETHERLANDS: 5.5% 14,000 Eurocommercial Properties NV 351,540 56,428 Rodamco Asia NV 1,141,397 18,600 Rodamco Europe NV 949,228 --------------- 2,442,165 --------------- SINGAPORE: 1.0% 130,000 City Developments Ltd. 451,765 --------------- 451,765 --------------- UNITED KINGDOM: 10.5% 40,000 British Land Co. PLC 351,099 370,000 @ Canary Wharf Group PLC 1,470,789 103,500 Capital & Regional PLC 645,456 38,000 Hammerson PLC 384,003 69,650 Land Securities Group PLC 1,064,915 25,556 Pillar Property PLC $ 201,224 91,000 Slough Estates PLC 592,210 --------------- 4,709,696 --------------- UNITED STATES: 43.7% 19,500 Apartment Investment & Management Co. 797,550 24,900 Arden Realty, Inc. 696,453 10,800 Avalonbay Communities, Inc. 493,236 20,000 Boston Properties, Inc. 885,000 30,000 Catellus Development Corp. 668,100 103,000 @ Cedar Shopping Centers, Inc. 1,186,560 12,100 Colonial Properties Trust 447,700 40,000 Corporate Office Properties Trust Sbi MD 773,600 14,000 First Industrial Realty Trust, Inc. 452,200 22,500 Gables Residential Trust 724,050 189,200 Hersha Hospitality Trust 1,646,040 178,900 @ Host Marriott Corp. 1,869,505 20,600 Keystone Property Trust 549,402 11,200 Liberty Property Trust 407,456 17,000 Macerich Co. 683,400 41,900 Maguire Properties, Inc. 913,420 16,500 Mills Corp. 673,200 18,500 Newcastle Investment Corp. 432,900 82,400 Omega Healthcare Investors, Inc. 618,000 24,900 Pennsylvania Real Estate Investment Trust 831,660 30,000 Post Properties, Inc. 792,000 27,700 Regency Centers Corp. 1,027,116 21,300 Shurgard Storage Centers, Inc. 771,060 61,000 Trizec Properties, Inc. 814,350 32,800 Urstadt Biddle Properties, Inc. 444,440 --------------- 19,598,398 --------------- Total Common Stock (Cost $36,055,177) 41,836,601 --------------- PREFERRED STOCK: 3.3% UNITED STATES: 3.3% 29,000 CBL & Associates Properties, Inc. 765,600 7,200 Crown American Realty Trust 423,072 12,000 @ La Quinta Corp. 301,440 --------------- 1,490,112 --------------- Total Preferred Stock (Cost $1,419,633) 1,490,112 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $37,474,810)* 96.7% $ 43,326,713 OTHER ASSETS AND LIABILITIES-NET 3.3 1,460,105 ----- --------------- NET ASSETS 100.0% $ 44,786,818 ===== ===============
@ Non-income producing security PLC Public Limited Company * Cost for federal income tax purposes is $38,221,865. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 5,266,521 Gross Unrealized Depreciation (161,673) --------------- Net Unrealized Appreciation $ 5,104,848 ===============
See Accompanying Notes to Financial Statements 87 ING Global Real Estate Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
PERCENTAGE OF INDUSTRY NET ASSETS - -------------------------------------------------------------------------------- Closed-End Funds 5.5% Property Trust 8.9 Real Estate Management/Services 10.6 Real Estate Operation/Development 22.5 REITS-Apartments 6.2 REITS-Diversified 4.9 REITS-Health Care 1.4 REITS-Hotels 8.5 REITS-Office Property 9.1 REITS-Regional Malls 5.7 REITS-Shopping Centers 10.7 REITS-Warehouse/Industrial 2.7 Other Assets and Liabilities, Net 3.3 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 88 ING Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCK: 95.0% AUSTRALIA: 0.8% 160,700 QBE Insurance Group Ltd. $ 1,174,454 --------------- 1,174,454 --------------- BERMUDA: 2.3% 158,100 Tyco Intl. Ltd. 3,301,128 --------------- 3,301,128 --------------- BRAZIL: 0.6% 36,600 Uniao de Bancos Brasileiros SA 809,226 --------------- 809,226 --------------- CANADA: 0.5% 20,532 Encana Corp. 705,196 --------------- 705,196 --------------- CHILE: 0.2% 15,100 Banco Santander Chile SA ADR 358,776 --------------- 358,776 --------------- DENMARK: 1.3% 42,200 Danske Bank A/S 851,319 30,400 TDC A/S 976,957 --------------- 1,828,276 --------------- FINLAND: 0.4% 29,000 UPM-Kymmene OYJ 542,771 --------------- 542,771 --------------- FRANCE: 3.9% 14,200 Aventis SA 751,917 26,500 AXA 502,142 15,987 Lafarge SA 1,144,829 10,500 Schneider Electric SA 614,585 13,300 Societe Generale 987,974 10,220 Total SA 1,588,456 --------------- 5,589,903 --------------- GERMANY: 2.7% 19,154 Deutsche Bank AG 1,263,403 14,650 Deutsche Boerse AG 814,404 61,400 @ Infineon Technologies AG 905,067 13,500 Siemens AG 910,238 --------------- 3,893,112 --------------- GREECE: 0.3% 38,000 Greek Organization of Football Prognostics SA 459,420 --------------- 459,420 --------------- HONG KONG: 1.0% 408,000 China Merchants Holdings Intl. Co. Ltd. 554,284 1,014,000 Giordano Intl. Ltd. 457,010 912,000 Global Bio-Chem Technology Group Co. Ltd. 463,886 --------------- 1,475,180 --------------- HUNGARY: 0.3% 30,300 @ OTP Bank Rt. 371,204 --------------- 371,204 --------------- INDONESIA: 0.3% 842,000 HM Sampoerna Tbk PT $ 431,083 --------------- 431,083 --------------- IRELAND: 1.5% 84,000 Irish Life & Permanent PLC 1,176,683 112,490 @ Ryanair Holdings PLC 954,618 --------------- 2,131,301 --------------- ISRAEL: 0.5% 11,500 Teva Pharmaceutical Industries ADR 654,235 --------------- 654,235 --------------- ITALY: 1.0% 131,500 Banca Fideuram S.p.A. 825,491 74,900 Bulgari S.p.A. 677,414 --------------- 1,502,905 --------------- JAPAN: 11.7% 58,000 Amano Corp. 398,326 106,000 Asahi Diamond Industrial Co. Ltd. 510,065 29,500 Familymart Co. Ltd. 641,334 14,100 Fanuc Ltd. 847,783 6,700 Hirose Electric Co. Ltd. 823,368 90,000 JGC Corp. 773,639 43,000 Kao Corp. 883,977 5,400 Mabuchi Motor Co. Ltd. 411,625 53,200 Marui Co. Ltd. 675,556 125,000 Nikko Cordial Corp. 674,262 160 Nippon Telegraph & Telephone Corp. 714,604 40,000 Nippon Yusen Kabushiki Kaisha 170,282 54,000 Nomura Holdings, Inc. 927,384 445 NTT Docomo, Inc. 963,387 14,600 Oriental Land Co. Ltd. 802,147 33,900 Otsuka Kagu Ltd. 986,764 64,000 Sekisui House Ltd. 628,153 39,400 Shimano, Inc. 752,627 45,000 Shiseido Co. Ltd. 472,370 20,200 Tokyo Electron Ltd. 1,447,910 24,000 Tostem Inax Holding Corp. 427,671 40,000 Toyota Motor Corp. 1,138,855 64,000 Yamato Transport Co. Ltd. 850,539 --------------- 16,922,628 --------------- MALAYSIA: 0.7% 191,000 Malayan Banking BHD 512,684 681,250 Public Bank BHD 537,829 --------------- 1,050,513 --------------- MEXICO: 0.8% 33,900 Telefonos de Mexico SA de CV ADR 1,089,885 --------------- 1,089,885 --------------- NETHERLANDS: 1.3% 14,023 Koninklijke Philips Electronics NV 378,037 32,400 Royal Dutch Petroleum Co. 1,437,762 --------------- 1,815,799 ---------------
See Accompanying Notes to Financial Statements 89 ING Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- NEW ZEALAND: 0.5% 160,000 Carter Holt Harvey Ltd. $ 179,911 68,400 Fisher & Paykel Healthcare Corp 508,543 --------------- 688,454 --------------- NORWAY: 0.4% 105,700 Tomra Systems ASA 608,309 --------------- 608,309 --------------- RUSSIA: 0.6% 19,222 YUKOS ADR 888,056 --------------- 888,056 --------------- SINGAPORE: 0.5% 90,000 United Overseas Bank Ltd. 703,064 --------------- 703,064 --------------- SOUTH AFRICA: 0.7% 73,200 Gold Fields Ltd. ADR 1,048,224 --------------- 1,048,224 --------------- SOUTH KOREA: 0.5% 48,200 LG Investment & Securities Co. Ltd. 425,594 63,400 Woori Finance Holdings Co. Ltd. 347,133 --------------- 772,727 --------------- SPAIN: 0.7% 276 @ Antena 3 Television SA 9,016 81,700 Telefonica SA 1,016,246 --------------- 1,025,262 --------------- SWEDEN: 1.0% 59,000 Foreningssparbanken AB 983,226 53,000 Swedish Match AB 431,427 --------------- 1,414,653 --------------- SWITZERLAND: 2.4% 7,000 Adecco SA 412,813 6,020 Nestle SA 1,325,405 8,880 Novartis AG 338,482 4,800 Roche Holding AG 397,199 16,500 UBS AG 1,013,218 --------------- 3,487,117 --------------- TAIWAN: 0.4% 57,024 @ Taiwan Semiconductor Manufacturing Co. Ltd. 630,685 --------------- 630,685 --------------- THAILAND: 0.3% 70,500 BEC World PLC 427,648 --------------- 427,648 --------------- UNITED KINGDOM: 8.8% 145,400 BAA PLC 1,149,792 147,800 BP PLC 1,025,810 83,900 British American Tobacco PLC 1,014,417 129,400 @ British Sky Broadcasting PLC 1,405,346 66,700 Diageo PLC 784,383 69,600 Glaxosmithkline PLC 1,490,519 50,800 HSBC Holdings PLC $ 765,366 59,800 Imperial Tobacco Group PLC 991,436 110,250 Kingfisher PLC 528,526 649,000 Legal & General Group PLC 1,145,373 47,500 Provident Financial PLC 521,112 23,250 Rio Tinto PLC 563,799 598,122 Vodafone Group PLC 1,256,042 --------------- 12,641,921 --------------- UNITED STATES: 46.1% 6,400 Allergan, Inc. 483,968 11,800 @ Amazon.Com, Inc. 642,156 31,600 American Intl. Group 1,922,228 37,100 @ Amgen, Inc. 2,291,296 16,900 Apache Corp. 1,178,268 52,600 @ Applied Materials, Inc. 1,229,262 28,800 Avon Products, Inc. 1,957,248 4,500 @ Barr Laboratories, Inc. 345,465 28,100 @ Biogen, Inc. 1,137,207 11,100 @ Boston Scientific Corp. 751,692 33,200 @ Cablevision Systems Corp. 670,640 13,300 Capital One Financial Corp. 808,640 100,800 @ Cisco Systems, Inc. 2,114,784 23,300 Citigroup, Inc. 1,104,420 13,200 @ Ebay, Inc. 738,408 61,000 @ EMC Corp. 844,240 20,900 Fannie Mae 1,498,321 23,500 @ Fox Entertainment Group, Inc. 650,950 8,600 General Dynamics Corp. 719,820 100,000 General Electric Co. 2,901,000 71,100 @ General Motors Corp. 1,168,172 9,600 @ Gilead Sciences, Inc. 523,968 10,400 Goldman Sachs Group, Inc. 976,560 23,400 Guidant Corp. 1,193,634 99,700 Halliburton Co. 2,380,836 9,300 Harley-Davidson, Inc. 440,913 38,000 Hewlett-Packard Co. 847,780 31,000 Home Depot, Inc. 1,149,170 65,100 Intel Corp. 2,151,556 22,100 International Business Machines Corp. 1,977,508 31,600 JP Morgan Chase & Co. 1,134,440 17,800 @ Kohl's Corp. 998,046 23,700 Lehman Brothers Holdings, Inc. 1,706,400 46,000 @ Medimmune, Inc. 1,226,360 19,200 Medtronic, Inc. 874,944 29,700 Merck & Co., Inc. 1,314,225 81,700 Microsoft Corp. 2,136,455 65,200 @ Nextel Communications, Inc. 1,577,840 16,300 Nike, Inc. 1,041,570 85,500 @ Oracle Corp. 1,022,580 17,800 Pepsico, Inc. 851,196 109,500 Pfizer, Inc. 3,460,200 6,800 @ Pharmaceutical Resources, Inc. 491,504 11,000 Schlumberger Ltd. 516,670 30,100 SLM Corp. 1,178,716 51,100 @ Staples, Inc. 1,370,502 22,450 Texas Instruments, Inc. 649,254 16,100 Unitedhealth Group, Inc. 819,168 50,800 @ Veritas Software Corp. 1,836,420 24,000 Wal-Mart Stores, Inc. 1,414,800 34,100 Wyeth 1,505,174 34,800 @ Yahoo!, Inc. 1,520,760
See Accompanying Notes to Financial Statements 90 ING Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - -------------------------------------------------------------------------------- UNITED STATES (CONTINUED) 17,900 @ Zimmer Holdings, Inc. $ 1,142,199 --------------- 66,589,533 --------------- Total Common Stock (Cost $112,301,140) 137,032,648 --------------- TOTAL INVESTMENTS IN SECURITIES (COST $112,301,140)* 95.0% $ 137,032,648 OTHER ASSETS AND LIABILITIES-NET 5.0 7,232,953 ----- --------------- NET ASSETS 100.0% $ 144,265,601 ===== ===============
@ Non-income producing security ADR American Depositary Receipt PLC Public Limited Company * Cost for federal income tax purposes is $113,053,792. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 25,668,586 Gross Unrealized Depreciation (1,689,730) --------------- Net Unrealized Appreciation $ 23,978,856 ===============
PERCENTAGE OF INDUSTRY NET ASSETS - -------------------------------------------------------------------------------- Aerospace/Defense 0.5% Agriculture 2.0 Airlines 0.7 Apparel 0.7 Auto Manufacturers 0.8 Banks 6.3 Beverages 1.1 Biotechnology 2.7 Building Materials 1.1 Commercial Services 0.7 Computers 3.8 Cosmetics/Personal Care 2.3 Diversified Financial Services 9.9 Electronics 1.7 Engineering and Construction 1.3 Entertainment 0.9 Environmental Control 0.4 Food 0.9 Forest Products & Paper 0.5 Hand/Machine Tools 0.8 Healthcare-Products 3.1 Healthcare-Services 0.6 Home Builders 0.4 Insurance 3.3 Internet 2.0 Leisure Time 0.8 Media 3.0 Mining 1.1 Miscellaneous Manufacturing 5.2 Oil and Gas 4.7 Oil and Gas Services 2.0 Pharmaceuticals 9.0 Retail 6.2 Semiconductors 4.9 Software 2.2 Telecommunications 6.7 Transportation 0.7 Other Assets and Liabilities, Net 5.0 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 91 SHAREHOLDER MEETING INFORMATION (Unaudited) A SPECIAL MEETING OF SHAREHOLDERS OF THE ING RUSSIA FUND AND ING EMERGING COUNTRIES FUND HELD DECEMBER 5, 2002, AT THE OFFICES OF ING FUNDS, 7337 EAST DOUBLETREE RANCH ROAD, SCOTTSDALE, AZ 85258. A BRIEF DESCRIPTION OF EACH MATTER VOTED UPON AS WELL AS THE RESULTS ARE OUTLINED BELOW: 1. To approve a Sub-Advisory Agreement between ING Investments, LLC and ING Investment Management Advisors B.V. with no change in the Adviser or the overall management fee paid by the Fund. 2. To transact such other business, not currently contemplated, that may properly come before the Special Meeting in the discretion of the proxies or their substitutes.
SHARES VOTED AGAINST OR SHARES BROKER TOTAL SHARES PROPOSAL SHARES VOTED FOR WITHHELD ABSTAINED NON-VOTE VOTED -------- ---------------- ------------ --------- -------- ------------ ING Russia Fund 1 6,315,267 175,814 49,981 -- 6,541,062 ING Russia Fund 2 6,131,930 247,492 161,640 -- 6,541,062 ING Emerging Countries Fund 1 6,649,778 95,502 93,806 -- 6,839,086 ING Emerging Countries Fund 2 6,435,163 270,753 133,170 -- 6,839,086
A SPECIAL MEETING OF SHAREHOLDERS OF THE ING FUNDS HELD JULY 22, 2003, AT THE OFFICES OF ING FUNDS, 7337 EAST DOUBLETREE RANCH ROAD, SCOTTSDALE, AZ 85258. A BRIEF DESCRIPTION OF EACH MATTER VOTED UPON AS WELL AS THE RESULTS ARE OUTLINED BELOW: 1. To approve a Sub-Advisory Agreement between ING Investments, LLC and Aeltus Investment Management, Inc., with no change in the Adviser, the portfolio manager(s), or the overall management fee paid by the Fund. 3. To transact such other business, not currently contemplated, that may properly come before the Special Meeting in the discretion of the proxies or their substitutes.
SHARES VOTED AGAINST OR SHARES BROKER TOTAL SHARES PROPOSAL SHARES VOTED FOR WITHHELD ABSTAINED NON-VOTE VOTED -------- ---------------- ------------ --------- -------- ------------ ING International Fund 1 8,291,101 67,541 88,760 -- 8,447,402 ING International Fund 3 8,133,071 161,615 152,716 -- 8,447,402 ING Precious Metals Fund 1 9,335,866 428,837 352,587 -- 10,117,290 ING Precious Metals Fund 3 9,055,163 486,570 575,557 -- 10,117,290 ING Worldwide Growth Fund 1 10,162,786 267,674 292,007 -- 10,722,467 ING Worldwide Growth Fund 3 9,725,321 295,481 701,665 -- 10,722,467
92 TAX INFORMATION (Unaudited) Dividends paid during the year ended October 31, 2003 were as follows:
FUND NAME TYPE PER SHARE AMOUNT - --------- ---- ---------------- ING International Fund Class A NII $ 0.0263 Class C NII $ 0.0009 Class Q NII $ 0.0453 Class I NII $ 0.0503 ING International Value Fund Class A NII $ 0.0520 Class Q NII $ 0.0974 Class I NII $ 0.0958 Class A STCG $ 0.0596 Class B STCG $ 0.0596 Class C STCG $ 0.0596 Class Q STCG $ 0.0596 Class I STCG $ 0.0596 Class A LTCG $ 0.1423 Class B LTCG $ 0.1423 Class C LTCG $ 0.1423 Class Q LTCG $ 0.1423 Class I LTCG $ 0.1423 ING Russia Fund Class A NII $ 0.1171 ING Global Real Estate Fund Class A NII $ 0.5352 Class B NII $ 0.4815 Class C NII $ 0.4515 Class Q NII $ 0.5172 Class A STCG $ 0.1560 Class B STCG $ 0.1560 Class C STCG $ 0.1560 Class Q STCG $ 0.1560
- ---------- NII -- Net investment income STCG -- Short-term capital gain LTCG -- Long-term capital gain Of the ordinary distributions made during the fiscal period ended October 31, 2003, the following percentage qualify for the dividends received deduction available to corporate shareholders: 2.30% for the ING Foreign Fund. Above figures may differ from those cited elsewhere in this report due to differences in the calculation of income and gains under accounting principles generally accepted in the United States of America (book) and Internal Revenue Service (tax) purposes. Shareholders are strongly advised to consult their own tax advisers with respect to the tax consequences of their investments in the Funds. In January, shareholders, excluding corporate shareholders, receive an IRS 1099 DIV regarding the federal tax status of dividends and distributions received by them in the calendar year. 93 TRUSTEE AND OFFICER INFORMATION (Unaudited) The business and affairs of the Fund are managed under the direction of the Fund's Board of Trustees. A trustee who is not an interested person of the Trust(s), as defined in the 1940 Act, is an independent trustee ("Independent Trustee"). The Trustees of the Trust(s) are listed below. The Statement of Additional Information includes additional information about directors of the Registrant and is available, without charge, upon request at 1-800-992-0180.
TERM OF 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- INDEPENDENT TRUSTEES Paul S. Doherty Trustee October Mr. Doherty is President 114 7337 E. Doubletree Ranch Rd. 1999 - and Partner, Doherty, Scottsdale, Arizona 85258 Present Wallace, Pillsbury and Born: 1934 Murphy, P.C., Attorneys (1996 - Present); Director, Tambrands, Inc. (1993 - 1998); and Trustee of each of the funds managed by Northstar Investment Management Corporation (1993 - 1999). J. Michael Earley Trustee February President and Chief 114 7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, Scottsdale, Arizona 85258 Present Bankers Trust Company, Born: 1945 N.A. (1992 - Present). R. Barbara Gitenstein Trustee February President, College of 114 7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 - Scottsdale, Arizona 85258 Present Present). Formerly, Born: 1948 Executive Vice President and Provost, Drake University (1992 - 1998). Walter H. May Trustee October Retired. Formerly, 114 Best Prep Charity (1991 - 7337 E. Doubletree Ranch Rd. 1999 - Managing Director and Present). Scottsdale, Arizona 85258 Present Director of Marketing, Born: 1936 Piper Jaffray, Inc.; Trustee of each of the funds managed by Northstar Investment Management Corporation (1996 - 1999). Jock Patton Trustee October Private Investor 114 Director, Hypercom, Inc. 7337 E. Doubletree Ranch Rd. 1999 - (June 1997 - Present). (January 1999 - Scottsdale, Arizona 85258 Present Formerly, Director and Present); JDA Software Born: 1945 (ING Chief Executive Officer, Group, Inc. May- Rainbow Multimedia (January 1999 - flower Group, Inc. Present); BG Associates, Trust) (January 1999 - Inc. May December 2001); 1999 - Director of Stuart Present Entertainment, Inc.; (ING Director of Artisoft, Mutual Inc. (1994 - 1998). Funds)
94 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- David W.C. Putnam Trustee October President and Director, 114 Anchor International 7337 E. Doubletree Ranch Rd. 1999 - F.L. Putnam Securities Bond Trust Scottsdale, Arizona 85258 Present Company, Inc. and its (December 2000 - Born: 1939 affiliates; President, Present); F.L. Putnam Secretary and Trustee, Foundation The Principled Equity (December 2000 - Market Fund. Formerly, Present); Progressive Trustee, Trust Realty Capital Accumulation Corp.; Anchor Trust (August 1998 - Investment Trust; Bow Present); Principled Ridge Mining Company Equity Market Fund and each of the funds (November 1996 - managed by Northstar Present), Mercy Investment Endowment Management Foundation (1995 - Corporation (1994 - Present); Director, F.L. 1999). 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). Blaine E. Rieke Trustee February General Partner, 114 Morgan Chase Trust Co. 7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners (January 1998 - Scottsdale, Arizona 85258 Present (January 1997 - Present). Born: 1933 Present). Chairman of the Board and Trustee of each of the funds managed by ING Investment Management Co. LLC (November 1998 - February 2001). Roger B. Vincent Trustee February President, Springwell 114 Director, AmeriGas 7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - Propane, Inc. (1998 - Scottsdale, Arizona 85258 Present Present). Formerly, Present). Born: 1945 Director, Tatham Offshore, Inc. (1996 - 2000). Richard A. Wedemeyer Trustee October Retired. Mr. Wedemeyer 114 Touchstone Consulting 7337 E. Doubletree Ranch Rd. 1999 - was formerly Vice Group (1997 - Present). Scottsdale, Arizona 85258 Present President - Finance and Born: 1936 (ING Administration, Channel May- Corporation (June 1996 flower - April 2002). Trust) Formerly, Vice February President, Operations 2001 - and Administration, Jim Present Henson Productions (ING (1979 - 1997); Trustee, Mutual First Choice Funds Funds) (1997 - 2001); and of each of the funds managed by ING Investment Management Co. LLC (1998 - 2001).
95 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- TRUSTEES WHO ARE "INTERESTED PERSONS" Thomas J. McInerney(2) Trustee February Chief Executive Officer, 168 Director, Equitable Life 7337 E. Doubletree Ranch Rd. 2001 - ING U.S. Financial Insurance Co., Golden Scottsdale, Arizona 85258 Present Services American Life Insurance Born: 1956 (September 2001 - Co., Life Insurance Present); General Company of Georgia, Manager and Chief Midwestern United Life Executive Officer, ING Insurance Co., ReliaStar U.S. Worksite Financial Life Insurance Co., Services Security Life of Denver, (December 2000 - Security Connecticut Present); Member, ING Life Insurance Co., Americas Executive Southland Life Committee (2001 - Insurance Co., USG Present); President, Annuity and Life Chief Executive Officer Company, and United and Director of Life and Annuity Northern Life Insurance Insurance Co. Inc Company (March 2001 - (March 2001 - Present); October 2002), ING Director, Ameribest Life Aeltus Holding Insurance Co., Company, Inc. (2000 - (March 2001 to Present), ING Retail January 2003); Director, Holding Company First Columbine Life (1998 - Present), ING Insurance Co. Life Insurance and (March 2001 to Annuity Company December 2002); (September 1997 - Member of the Board, November 2002) and National Commission ING Retirement on Retirement Policy, Holdings, Inc. (1997 - Governor's Council on Present). Formerly, Economic General Manager and Competitiveness and Chief Executive Officer, Technology of ING Worksite Division Connecticut, (December 2000 - Connecticut Business October 2001), and Industry President, ING-SCI, Inc. Association, Bushnell; (August 1997 - Connecticut Forum; December 2000); Metro Hartford President, Aetna Chamber of Commerce; Financial Services and is Chairman, (August 1997 - Concerned Citizens for December 2000); Effective Government.
96 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- John G. Turner(3) Chair- October Chairman, Hillcrest 114 Director, Hormel Foods 7337 E. Doubletree Ranch Rd. man 1999 - Capital Partners Corporation Scottsdale, Arizona 85258 and Present (May 2002 - Present); (March 2000 - Present); Born: 1939 Trustee President, Turner Shopko Stores, Inc. Investment Company (August 1999 - Present); (January 2002 - and M.A. Mortenson Present). Mr. Turner Company (March 2002 - was formerly Vice Present). Chairman of ING Americas (2000 - 2002); Chairman and Chief Executive Officer of ReliaStar Financial Corp. and ReliaStar Life Insurance Company (1993 - 2000); Chairman of ReliaStar United Services Life Insurance Company (1995 - 1998); Chairman of ReliaStar Life Insurance Company of New York (1995 - 2001); Chairman of Northern Life Insurance Company (1992 - 2001); Chairman and Trustee of the Northstar affiliated investment companies (1993 - 2001) and Director, Northstar Investment Management Corporation and its affiliates (1993 - 1999 ).
- ---------- (1) Trustees serve until their successors are duly elected and qualified, subject to the Board's retirement policy. (2) 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. (3) 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. 97 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 ------- ------------------- -------------- --------------- James M. Hennessy President and Chief February 2001 - President and Chief Executive 7337 E. Doubletree Ranch Rd. Executive Officer present Officer of ING Capital Corporation, Scottsdale, Arizona 85258 LLC, ING Funds Services, LLC, ING Born: 1949 Chief Operating February 2002 - Advisors, Inc., ING Investments, Officer present LLC, Lexington Funds Distributor, Inc., Express America T.C. Inc. and Senior Executive July 2000 - EAMC Liquidation Corp. (since Vice President February 2001 December 2001); Executive Vice President and Chief Operating Executive Vice May 1999 - Officer of ING Funds Distributor, President July 2000 LLC (since June 2000). Chief Operating July 2000 - Officer February 2001 Secretary May 1999 - February 2001 Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief 7337 E. Doubletree Ranch Rd. President and present Financial Officer and Treasurer of Scottsdale, Arizona 85258 Assistant Secretary ING Funds Services, LLC, ING Funds Born: 1958 Distributor, LLC, ING Advisors, Inc., Principal Financial May 1999 - ING Investments, LLC Officer present (December 2001 to present), Lexington Funds Distributor, Inc., Senior Vice President May 1999 - Express America T.C. Inc. and February 2002 EAMC Liquidation Corp. (since December 2001). Formerly, Executive Vice President, Chief Financial Officer and Treasurer of ING Quantitative Management, Inc. (December 2001 to October 2002); and Senior Vice President, ING Funds Services, LLC, ING Investments, LLC, and ING Funds Distributor, LLC (June 1998 to December 2001). Stanley D. Vyner Executive Vice May 1999 - Executive Vice President of ING 7337 E. Doubletree Ranch Rd. President present Advisors, Inc. and ING Investments, Scottsdale, Arizona 85258 LLC (July 2000 to present) and Born: 1950 Chief Investment Officer of the International Portfolios, ING Investments, LLC (July 1996 to present). Formerly, President and Chief Executive Officer of ING Investments, LLC (August 1996 to August 2000). Robert S. Naka Senior Vice November 1999 - Senior Vice President and Assistant 7337 E. Doubletree Ranch Rd. President present Secretary of ING Funds Services, Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC, Born: 1963 Vice President May 1999 - ING Advisors, Inc., ING November 1999 Investments, LLC (October 2001 to present) and Lexington Funds Assistant Secretary May 1999 - Distributor, Inc. (since Present December 2001). Formerly, Senior Vice President and Assistant Secretary for ING Quantitative Management, Inc. (October 2001 to October 2002); Vice President, ING Investments, LLC (April 1997 to October 1999), and ING Funds Services, LLC (February 1997 to August 1999).
98 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 ------- ------------------- -------------- --------------- Kimberly A. Anderson Senior Vice President November 2003 - Vice President and Assistant 7337 E. Doubletree Ranch Rd. present Secretary of ING Funds Services, Scottsdale, Arizona 85258 LLC, ING Funds Distributor, LLC, Born: 1964 Vice President February 2001 - ING Advisors, Inc., ING Investments, November 2003 LLC (since October 2001) and Lexington Funds Distributor, Inc. Assistant Vice November 1999 - (since December 2001). Formerly, President February 2001 Vice President for ING Quantitative Management, Inc. (October 2001 Secretary February 2001 - to October 2002); Assistant Vice August 2003 President of ING Funds Services, LLC (November 1999 to Assistant Secretary November 1999 - January 2001) and has held various February 2001 other position with ING Funds Services, LLC for more than the last five years. Robyn L. Ichilov Vice President and May 1999 - present Vice President of ING Funds 7337 E. Doubletree Ranch Rd. Treasurer Services, LLC (October 2001 to Scottsdale, Arizona 85258 present) and ING Investments, LLC Born: 1967 (August 1997 to present); Accounting Manager, ING Investments, LLC (November 1995 to present). J. David Greenwald Vice President August 2003 - present Vice President of Mutual Fund 7337 E. Doubletree Ranch Rd. Compliance of ING Funds Services, Scottsdale, Arizona 85258 LLC (May 2003 - Present). Formerly Born: 1957 Assistant Treasurer and Director of Mutual Fund Compliance and Operations of American Skandia, A Prudential Financial Company (October 1996 - May 2003). 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: 1957 Present); Vice President (February 1996 - Present) and Chief Compliance Officer (October 2001 - Present) ING Investments, LLC; Vice President and Chief Compliance Officer, ING Advisors, Inc. (July 2000 - Present), Vice President and Chief Compliance Officer, ING Quantitative Management, Inc. (July 2000 - September 2002), and Vice President, ING Fund Services, LLC (July 1995 - Present). Huey P. Falgout, Jr. Secretary August 2003 - present Counsel, ING U.S. Financial Services 7337 E. Doubletree Ranch Rd. (November 2002 - Present). Scottsdale, Arizona 85258 Formerly, Associate General Born: 1963 Counsel of AIG American General (January 1999 - November 2002) and Associate General Counsel of Van Kampen, Inc. (April 1992 - January 1999). Todd Modic Vice President August 2003 - present Vice President of Financial 7337 E. Doubletree Ranch Rd. Reporting - Fund Accounting of Scottsdale, Arizona 85258 Assistant Vice August 2001 - ING Funds Services, LLC Born: 1967 President August 2003 (September 2002 to present). Director of Financial Reporting of ING Investments, LLC ( March 2001 to September 2002). Formerly, Director of Financial Reporting, Axient Communications, Inc. (May 2000 to January 2001) and Director of Finance, Rural/Metro Corporation (March 1995 to May 2000).
99 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 ------- ------------------- -------------- --------------- Susan P. Kinens Assistant Vice February 2003 - Assistant Vice President and 7337 E. Doubletree Ranch Rd. President and present Assistant Secretary, ING Funds Scottsdale, Arizona 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 - present Assistant Vice President of ING 7337 E. Doubletree Ranch Rd. President Funds Services, LLC (since Scottsdale, Arizona 85258 October 2001). Formerly, Manager Born: 1958 of Fund Accounting and Fund Compliance, ING Investments, LLC (September 1999 to November 2001); and Section Manager of Fund Accounting, Stein Roe Mutual Funds (July 1998 to 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. 100 (THIS PAGE INTENTIONALLY LEFT BLANK) ING Funds Distributor, LLC offers the funds listed below. Investors may obtain a copy of a prospectus of any ING Fund by calling ING Funds Distributor, LLC at (800) 992-0180. Please read the prospectus carefully before investing or sending money. INTERNATIONAL EQUITY ING Emerging Countries Fund ING Foreign Fund ING International Fund ING International Growth Fund ING International SmallCap Growth Fund ING International Value Fund ING Precious Metals Fund ING Russia Fund INTERNATIONAL GLOBAL EQUITY ING Global Equity Dividend Fund ING Global Real Estate Fund ING Worldwide Growth Fund DOMESTIC EQUITY FUNDS ING Disciplined LargeCap Fund ING Growth Fund ING Growth + Value Fund ING Growth Opportunities Fund ING LargeCap Growth Fund ING MidCap Opportunities Fund ING Small Company Fund ING SmallCap Opportunities Fund ING Technology Fund DOMESTIC EQUITY INDEX FUNDS ING Index Plus LargeCap Fund ING Index Plus MidCap Fund ING Index Plus SmallCap Fund DOMESTIC EQUITY VALUE FUNDS ING Financial Services Fund ING MagnaCap Fund ING Tax Efficient Equity Fund ING Value Opportunity Fund ING SmallCap Value Fund ING MidCap Value Fund DOMESTIC EQUITY AND INCOME FUNDS ING Balanced Fund ING Convertible Fund ING Equity and Bond Fund ING Growth and Income Fund ING Real Estate Fund FIXED INCOME FUNDS ING Bond Fund ING Classic Money Market Fund* ING Government Fund ING GNMA Income Fund ING High Yield Opportunity Fund ING High Yield Bond Fund ING Intermediate Bond Fund ING Lexington Money Market Trust* ING National Tax Exempt Bond Fund ING Money Market Fund* ING Aeltus Money Market Fund* ING Strategic Bond Fund STRATEGIC ALLOCATION FUNDS ING Strategic Allocation Growth Fund ING Strategic Allocation Balanced Fund ING Strategic Allocation Income Fund LOAN PARTICIPATION FUNDS ING Prime Rate Trust ING Senior Income Fund * An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 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 85258-2034 1-800-334-3444 TRANSFER AGENT DST Systems, Inc. P.O. Box 419368 Kansas City, Missouri 64141-6368 CUSTODIAN Bank of New York 100 Colonial Center Parkway, Suite 300 Lake Mary, FL 32746 LEGAL COUNSEL Dechert LLC 1775 Eye Street, N.W. Washington, D.C. 20006 INDEPENDENT AUDITORS KPMG LLP 99 High Street Boston, MA 02110-2371 Prospectus containing more complete information regarding the Funds, including charges and expenses, may be obtained by calling ING Funds Distributor, LLC at 1-800-992-0180. Please read the prospectus carefully before you invest or send money. The Form N-PX (Proxy Voting Record) will be available without charge, upon request, by calling 800-992-0180 on or about August 31, 2004; and on the fund's website at www.ingfunds.com; and on the SEC's website www.sec.gov. [ING FUNDS LOGO] INTLABCAR1003-122903 ANNUAL REPORT ANNUAL REPORT OCTOBER 31, 2003 CLASSES I AND Q INTERNATIONAL EQUITY FUNDS ING EMERGING COUNTRIES FUND ING FOREIGN FUND ING INTERNATIONAL FUND ING INTERNATIONAL SMALLCAP GROWTH FUND ING INTERNATIONAL VALUE FUND GLOBAL EQUITY FUNDS ING WORLDWIDE GROWTH FUND [GRAPHIC] [ING FUNDS LOGO] TABLE OF CONTENTS President's Letter 1 Market Perspective 3 Portfolio Managers' Reports 4 Index Descriptions 16 Independent Auditors' Report 17 Statements of Assets and Liabilities 18 Statements of Operations 22 Statements of Changes in Net Assets 24 Financial Highlights 27 Notes to Financial Statements 33 Portfolios of Investments 45 Shareholder Meeting Information 63 Tax Information 64 Trustee and Officer Information 65
(THIS PAGE INTENTIONALLY LEFT BLANK) PRESIDENT'S LETTER [PHOTO OF JAMES M. HENNESSY] JAMES M. HENNESSY Dear Shareholder, What a difference a few months can make. In my last letter to our shareholders in the semi-annual report, it was hard to escape the sense of anxiety that many investors were experiencing. Now, six months later, I believe there may be a renewed sense of optimism among investors -- cautious optimism, to be sure, but optimism nevertheless. And I believe there are good, solid reasons for this improved outlook. For one, many key corporations have been reporting profits in recent months. Granted, the numbers are modest, but they have been noteworthy, consistent and credible because many of these same companies are employing stricter accounting standards following the Enron debacle. Going hand-in-hand with these upbeat figures are the improving price-to-earning ratios and improving valuations that many investors are now seeing. The reasons for renewed confidence reach beyond the shores of the U.S. as well. Overall, world markets are reporting strong gains. This is certainly true of Japan, where the economy has been showing welcome signs of recovery in recent months. That recovery, in turn, has helped trigger increases in business activity and consumer confidence there. We are seeing similar surges in consumer confidence in several key European markets, and, although, some European markets remain sluggish, overall, financial benchmarks from Europe reflect steady growth. Markets in the United Kingdom, in particular, are reporting impressive returns, thanks in no small part to England's robust housing market as well as strong figures coming from the consumer in that country. This renewed confidence has been tempered, however, by recent events and news stories concerning mutual fund trading practices, including after-hours trading and market timing. As with many financial services companies, ING Investments, LLC ("ING Investments"), investment adviser to the ING Funds, 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. ING is also conducting an internal review of investment company share trading, as well as reviewing their policies and procedures in this area. Also, I want to clearly state that ING Funds does not condone the illegal practice of after-hours trading. In addition, it has been our long-standing policy to discourage inappropriate fund trading in our funds. In fact, over the years, ING Funds has taken a variety of steps to address inappropriate fund trading activity. We were among the first fund groups to employ innovative techniques such as making extensive use of fair-value pricing for foreign securities. ING Funds believes that mutual funds are an important vehicle for individual investors, because mutual funds provide the opportunity for investment in professionally managed and monitored, diversified portfolios. As such, we consider the fair treatment of committed investors to be of the utmost importance. We continue to look for effective strategies to address fund trading issues. We hope that the increased attention this issue is now receiving will make it easier for the industry to effectively address inappropriate fund trading in the future. On behalf of everyone at ING Funds, thank you for your continued support. We look forward to helping you meet your investment goals in the future. Sincerely, /s/ James M. Hennessy James M. Hennessy President ING Funds December 2, 2003 1 (THIS PAGE INTENTIONALLY LEFT BLANK) MARKET PERSPECTIVE: YEAR ENDED OCTOBER 31, 2003 This was a tumultuous twelve months for the world's financial markets. Just before the period started, global equity markets seemed to have found a bottom. But by mid-March, as the six months covered by the semi-annual report drew to a close and war clouds gathered, markets were again reaching new multi-year lows. Japan would in fact have another two months to wait until the low point was reached. However, the second six months had hardly started, when major conflict in Iraq quickly ended. This meant that the risk which investors consider inherent in assets like stocks (the "risk premium(1)"), diminished just as fast. This theme was strongly supported by the U.S. FIXED INCOME MARKETS, more particularly in the words of Federal Open Markets Committee Chairman Alan Greenspan. In May he seemed to move markets by saying that the risk of deflation was small but that the Federal Reserve might even buy bonds to forestall it, and that a second half recovery was expected. This sounded like the best of all worlds: low interest rates for the foreseeable future and an improving economy. Since the U.S. economy accounts for about 30% of the world's total, such a scenario boosted global sentiment and global stock markets soared. World EQUITY MARKETS had their best six months in years during the second half of the fiscal year. GLOBAL EQUITIES, as measured in dollars by the Morgan Stanley Capital International ("MSCI") World Index, jumped 19.7% (24.3% for the twelve months as a whole). In the U.S. the Standard & Poors ("S&P") 500 Index rose 15.6% (20.8% for the twelve months). In tune with the theme of the shrinking risk premium, small cap stocks did much better than mid cap stocks, which in turn substantially outperformed large cap stocks. In the U.S. there were increasingly encouraging signs in the economy. Second calendar quarter Gross Domestic Product ("GDP") growth estimates were revised up to 3.3%, within which corporate profits from current production rose 14.3% over the same quarter in 2002. Productivity growth was estimated at the remarkable rate of 6.8%. JAPAN'S market reached a twelve month low in May. Since then, having emerged from recession showing GDP growth of 3.0% in the second quarter of 2003, Japan's firmer economy continues to be driven primarily by exports, and especially by those connected to China's capital spending growth. In the six months ended October 31, 2003 the MSCI Japan Index rose 43.5%, and rose 33.2% for the year. However, internally, Japan is still beset by the problems of deflation and a banking system paralyzed by bad loans. Asia markets staged a remarkable comeback as the SARS story subsided and focus shifted to China's economic strength. China's rising influence on world markets became a dominant theme this year, as many industries are making investments aimed at participation in China's growth. In dollar terms, the MSCI Europe, Australia and Far East ("EAFE") Index returned 27.6%, with Asia ex-Japan rising 33.6% for the year ended October 31, 2003. Asian currencies are gaining political attention in the U.S. The rising belief is that countries such as Japan, China and others aim to keep their currencies artificially low against the dollar in order to maintain an export advantage. Since the cost of such policies is the loss of U.S. manufacturing jobs, policy makers are now attempting to force the issue with our trading partners. It is likely Asian currencies will continue rising versus the dollar and will be an important investment consideration. The period from November 2002 until October 2003 saw the RUSSIAN equity market continue its spectacular performance. However, this performance was overshadowed by developments that took place at the very end of October. In the last week of that month, government forces arrested Mikhail Khodorkovsky, the CEO of Yukos. Mr. Khodorkovsky was charged with tax evasion and fraud, and placed in a Moscow prison. It appeared to most market observers Mr. Khodorkovsky's arrest was driven by the political threat he represented to President Vladimir Putin, as well as parties that are believed to be loyal to the President. In the weeks and months prior to his arrest, Mr. Khodorkovsky had become more vocal about his political aspirations, and was known to be using his personal wealth to fund various opposition parties. Mr. Khodorkovsky has since resigned his position as the CEO of Yukos. However, the damage to Russian equities has already been done, as the market has fallen about 21.0% from its high in mid-October. More importantly, the arrest has raised questions globally as to whether Russia's political and economic transition to democracy since 2000, and its chief architect, Vladimir Putin, are genuine or not. In EUROPE EX UK, economic stagnation and high unemployment caused by inflexible, high cost labor markets and higher than expected interest rates, depressed demand. Much of Europe has slipped back into recession during 2003. Gradually business confidence has returned and the governments in France and Germany which account for just over half of the Eurozone's GDP, have embarked on a program of labor and social security reform as well as tax reductions. Some business surveys in Germany are up six months in a row, and the awaited personal tax cuts were brought forward to 2003. In the six months ended October 31, 2003 the MSCI Europe, ex UK, Index rose 20.2%, and for the year, 27.6%. In the UK, the economy was much healthier than that of its European neighbors. Unemployment was low, inflation fairly tame, and while manufacturing remained at a low ebb, overall demand was bolstered by a free spending consumer cheered by the lowest interest rates since Churchill and a housing price boom. In the six months to October 31, 2003 the MSCI UK Index rose 18.3%, and for the year, 20.3%. EMERGING MARKETS, dominated by Asia, are the workshop of the world. Little surprise then that they have benefited the most by the falling risk premium demanded of them and a recovering global economy. In the six months ended October 31, 2003 the MSCI Emerging Markets Free ("EMF") Index rose 40.4%, and 48.7% for the year. - ---------- (1) Risk premium is the expected additional return required by investors for securities that are perceived to be riskier than safer investments. See accompanying index descriptions on page 16. 3 ING EMERGING COUNTRIES FUND Portfolio Managers' Report MANAGEMENT TEAM: Jan Wim Derks, Director of Global Emerging Markets Equities; Bratin Sanyal, Senior Investment Manager; and Eric Conrads, Senior Investment Manager, all with ING Investment Management Advisors B.V., the Sub-Adviser. GOAL: The ING Emerging Countries Fund (the "Fund") seeks to maximize long-term capital appreciation by investing primarily in equity securities of companies in at least three Emerging Market countries. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class Q shares provided a total return of 39.77% versus 48.74% for the MSCI Emerging Markets Free ("MSCI EMF") Index. PORTFOLIO SPECIFICS: The Fund began the period with an overweight in Asia which we started trimming as South Korea began getting impacted by negative news from North Korea. We were also fairly quick in reducing China as SARS was reported there. However as the threat from SARS receded in early summer we increased our weighting in Asia, initially by adding to China, India and Thailand and thereby moving to an overweight in all these markets. Subsequently, we added significantly to Taiwan as foreign investment restrictions were lifted, allowing for several benchmark providers e.g. MSCI to consider increasing the investment factor in Taiwan. Such a move from the benchmark providers might lead to significant flows into Taiwanese equities. We have maintained a near neutral position in Korea as lower valuations seem balanced by poor economic fundamentals and the threat of fund outflows arising out of benchmark changes. Elsewhere in the region we maintained our neutral stance in Indonesia and an underweight position in Malaysia and the Philippines. Latin America was the best performing region within Emerging Markets gaining 60% driven by a spectacular performance from Brazil, up 91%. Having moved sideways for the first few months of the reporting period, Brazil gained sharply as the initial skepticism towards the new administration gave way to appreciation for conservative policy initiatives and new reform measures. Mexico's performance was a respectable 24% but gains were limited by concerns regarding the economic health of its largest trading partner, the United States. We have maintained our overweight in Latin America primarily via Brazil and Mexico. Recently, we have slightly reduced our positions in Brazil while maintaining our overweight stance. In the Europe, Middle East and Africa (EMEA) region we were overweight Eastern Europe and Russia while maintaining South Africa as an underweight. We have since reduced the weighting in Eastern Europe in favor of Asia as growth prospects in Asia brightened after the SARS crisis. However, we maintained our overweight in Russia via the oil sector until fairly late in the reporting period until forecasts for oil prices weakened with prospects of increased supply from countries like Venezuela, Nigeria and Iraq. We are continuing to maintain an underweight position in Russia because of rising political uncertainty and tentative corporate governance issues. The Fund's under-performance can be attributed to the quality of the very sharp rally over the last ten months. Stocks with poorer balance sheets, often with a large debt load have seen bigger gains than stocks with a more sound financial standing. Moreover, small capitalization (and often illiquid) stocks have outperformed large cap stocks. The fund holdings are biased away from either of these classes of stocks as medium to long-term prospects for such stocks remain poor. Very volatile in/outflows leading to a turnover rate of approximately 250% over the reporting period was also a significant detractor of performance. MARKET OUTLOOK: Several pieces of good economic news confirms our optimism over the last several months. Good industrial production figures from Japan, positive numbers from Germany and strong Gross Domestic Product from the U.S. all point to a potential broad based global economic recovery. Therefore, we remain constructive on the emerging markets asset class. Emerging markets may continue to offer good absolute returns, as we have seen in 2003 so far. We believe emerging markets may deliver relatively strong earnings growth of approximately 20% in 2004. We expect multiple expansion within the emerging markets as valuations remain at a deep discount to developed markets and at very low levels historically. For 2004 average Price/Earnings (P/E) are at around 10-12 times. Furthermore, emerging economies are expected to grow by 4.0% on average in 2003 and 5.2% in 2004. In addition, with the dividend yield of approximately 2.5% we also see yield support. Our investment strategy is to focus on countries where economic growth appears robust and on companies with improving cash flows, solid balance sheets and attractive valuations. We are currently finding the best opportunities in Brazil, Mexico, Taiwan, Thailand and India. 4 Portfolio Managers' Report ING EMERGING COUNTRIES FUND [CHART]
ING EMERGING COUNTRIES FUND CLASS Q MSCI EMF INDEX 8/31/95 $ 10,000 $ 10,000 10/31/95 $ 9,520 $ 9,572 10/31/96 $ 11,552 $ 10,192 10/31/97 $ 13,235 $ 9,328 10/31/98 $ 9,901 $ 6,437 10/31/99 $ 13,781 $ 9,310 10/31/2000 $ 13,716 $ 8,490 10/31/2001 $ 10,015 $ 6,498 10/31/2002 $ 10,457 $ 7,047 10/31/2003 $ 14,615 $ 10,482
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 -------------------------------------------- SINCE INCEPTION OF CLASS Q 1 YEAR 5 YEAR 08/31/95 ------ ------ -------- Class Q 39.77% 8.10% 4.75% MSCI EMF Index 48.74% 10.24% 0.58%(1)
Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Emerging Countries Fund against the MSCI EMF Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. 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 RE?ECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Since inception performance for index is shown from 09/01/95 PRINCIPAL RISK FACTOR(S): Sensitivity to currency exchange rates, international, political and economic conditions and other risks that affect foreign securities. Risk of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 16. 5 ING FOREIGN FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Rudolph-Riad Younes, CFA, Senior Vice President and Head of International Equity and Richard Pell, Senior Vice President and Chief Investment Officer, both with Julius Baer Investment Management, Inc., the Sub-Adviser. GOAL: The ING Foreign Fund (the "Fund") focuses on long-term growth of capital by investing primarily in international equity securities. PERFORMANCE: For the period July 1, 2003 (inception date of the Fund) through October 31, 2003 the Fund's Class Q shares provided a total return of 8.79% compared to the Morgan Stanley Capital International Europe, Australia and Far East ("MSCI EAFE") Index, which returned 14.93%. PORTFOLIO SPECIFICS: The Fund was launched on July 1, 2003. Over the past four months, our focus has been to position this new fund according to our international equity strategy. As the Fund began to grow in terms of net assets, we were able to expand the number of individual issues held for diversification purposes, consistent with our general philosophy for the management of international equities. At present, the Fund holds over 200 individual companies. The majority of these issues are within the developed markets of Canada, Australia, Europe and Japan. We also maintain approximately 12% within a variety of emerging markets. With the Fund now well positioned within our recommended strategy, we are focused on performance with the aim to seek to outperform the MSCI EAFE Index, which serves as our benchmark. The underperformance of the Fund versus the benchmark was primarily due to underweighted positions in the Japanese and Hong Kong markets. Additionally, as the Fund did hold a position in cash equivalents during the period, this also negatively impacted the Fund's relative return. While we did invest in Japan, we were underweight versus the benchmark. Additionally, the Fund's underweight position within Hong Kong detracted from results amid an environment where investors were more comfortable adding to emerging markets generally. MARKET OUTLOOK: Our current views for markets as well as recommended positioning are as follows: The US dollar is likely to continue to decline over the next several years. It seems clear that the current administration favors a policy of gradual dollar depreciation. The huge U.S. current account deficit and negative real short-term rates place fundamental pressure on the value of the dollar. This view has important implications as to the sectors and individual companies that we purchase within the Fund. Specifically, companies that are largely dependent on US dollar earnings will likely come under pressure as we move forward. We would characterize our views for Japan as cautiously optimistic. The Japanese market is benefiting from the boom in China (huge capital expenditure expansion). There have been positive external and internal forces at work in Japan that are creating positive momentum for the Japanese economy. We have shifted a portion of our Japanese investments away from exporters that may be hampered by a stronger yen, toward financials and domestic demand driven companies. As an extra benefit, these domestic companies also provide us with better diversification benefits for investments held within Europe than the exporters. Over the past eight years as international equity managers, our positions held within the European equity markets often exceeded 80%. Currently, we have a position approaching only 56%. This reduced weighting to Europe is as a result of not only our Japanese investments, but also positions held within Emerging Markets. Within Emerging Markets, we have broadened positions beyond our long time favorite, Eastern Europe, to include the following additional markets: Turkey, a long-term European Union convergence candidate; India, a technology outsourcing beneficiary; Brazil, a resource-rich beneficiary of the rise of China, which has an insatiable appetite for all types of raw materials. Additionally, the Brazilian Real is strengthening, interest rates are falling and debt burdens are easing. Finally, with regard to China, rather than investing directly within this market, we prefer to focus on those beneficiaries of China's need for food, capital goods, metals and other resources. China's financial markets are small, and will likely remain so until the yuan becomes convertible (we do not anticipate this anytime soon). The horrific state of the Chinese banking system will likely be a huge problem for the equity market in the years ahead. Our indirect investments however should provide better protection while maintaining exposure to the structurally positive Chinese growth themes. 6 Portfolio Managers' Report ING FOREIGN FUND [CHART]
ING FOREIGN FUND CLASS Q MSCI EAFE INDEX 7/15/2003 $ 10,000 $ 10,000 10/31/2003 $ 10,879 $ 11,493
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 -------------------------------------------- SINCE INCEPTION SINCE INCEPTION OF CLASS I OF CLASS Q 09/10/03 07/11/03 -------- -------- Class I 3.95% -- Class Q -- 8.79% MSCI EAFE Index 9.54%(1) 14.93%(2)
Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Foreign Fund against the MSCI EAFE Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Since inception performance for the index is shown from 09/01/03. (2) Since inception performance for the index is shown from 07/01/02. PRINCIPAL RISK FACTOR(S): Sensitivity to currency exhange rates, international, political and economic conditions and other risks that affect foreign securities. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 16. 7 ING INTERNATIONAL FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Richard Saler, Senior Portfolio Manager and Philip Schwartz, Senior Portfolio Manager, both with Aeltus Investment Management, Inc., the Sub-Adviser. GOAL: The ING International Fund (the "Fund") seeks to maximize long-term growth of capital through investment in equity securities and equity equivalents of companies outside the U.S. The Fund may hold up to 35% of its assets in securities of U.S. issuers, including investment-grade debt securities. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class Q shares provided a total return of 20.51%, compared to the Morgan Stanley Capital International Europe, Australia and Far East ("MSCI EAFE") Index, which returned 27.57% for the same period. PORTFOLIO SPECIFICS: Over the last year the Fund was repositioned in anticipation of an improving economy. Stock selection was the primary reason for the Fund's weak relative performance, and choices among economic sectors were less significant. Cash holdings muted gains relative to the MSCI EAFE Index, but were somewhat offset by an underweight in health care. Information technology was a strong performer, and the Fund's weighting was in line with the MSCI EAFE Index. Stock selection suffered because the Fund favored financially strong companies at a time when financially challenged companies and small cap stocks were the market leaders. Stock selection was an adverse factor in materials, consumer discretionary and consumer staples stocks. Stock selection in financials and energy helped relative performance. Individually, Australian insurer QBE made the biggest positive contribution, benefiting from strong pricing and cost controls. Other strong performers included generic drug maker Teva Pharmaceutical, and Japanese semiconductor equipment maker Tokyo Electron. Hurting performance was Sony, following a surprise earnings shortfall. Other negative performers were Japanese food retailer Ito-Yokado and UK publisher Pearson. MARKET OUTLOOK: The investment landscape has changed dramatically from last year. Global economic activity has clearly improved as evidenced by strong Gross Domestic Product numbers in the U.S. and China. Australian and UK central banks are already raising interest rates. Investors must weigh the possibility of continued economic growth against less attractive stock prices and the potential for disappointment in 2004. Although rates may have begun an upward trend, it is expected the major central banks will be slow to adopt a tighter monetary policy. Of greater concern is the risk of slowing U.S. growth, as the effects of lower interest rates and tax cuts are largely played out. The managers see continued opportunities in emerging markets, and particularly in Asia. Defensive sectors such as food and beverage are also looking more attractive after a lengthy period of underperformance. In Japan, our focus remains on companies that are restructuring to improve profitability. We remain skeptical of Japan's ability to sustain economic growth. In Europe, we find mixed opportunities, where the strong Euro and structural rigidities continue to plague the region. Some structural reform is, however, slowly taking place in Germany. Europe is likely to continue to experience slow growth. We will continue to seek attractively valued stocks and sectors together with improving fundamentals. 8 Portfolio Managers' Report ING INTERNATIONAL FUND [CHART]
ING INTERNATIONAL FUND CLASS Q MSCI EAFE INDEX 2/26/2001 $ 10,000 $ 10,000 10/31/2001 $ 8,190 $ 8,169 10/31/2002 $ 7,118 $ 7,113 10/31/2003 $ 8,578 $ 9,074
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ------------------------------------------------ SINCE INCEPTION SINCE INCEPTION OF CLASS I OF CLASS Q 1 YEAR 01/15/02 02/26/01 ------ -------- -------- Class I 20.53% 1.74% -- Class Q 20.51% -- -5.57% MSCI EAFE Index 27.57% 3.49%(1) -3.58%(2)
Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING International Fund against the MSCI EAFE Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Since inception performance for index is shown from 01/01/02. (2) Since inception performance for index is shown from 03/01/01. Effective November 1, 2001, Class A shares liquidated within 30 days of purchase are subject to a 2% redemption fee. PRINCIPAL RISK FACTOR(S): In exchange for higher growth potential, investing in stocks of smaller companies may entail greater price volatility than those of larger companies. Price volatility and other risks accompany an investment in growth-oriented foriegn equities. Currency exchange rates, international, political and economic conditions and other risk affect foreign securities. The risks of foreign investing are generally intensified for investing in emerging markets. See accompanying index descriptions on page 16. 9 ING INTERNATIONAL SMALLCAP GROWTH FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Horacio A. Valeiras, CFA, Chief Investment Officer and Loretta J. Morris, Lead Portfolio Manager, International, both with Nicholas-Applegate Capital Management, the Sub-Adviser. GOAL: The International Small Cap Growth Fund (the "Fund") seeks to maximize long-term capital appreciation primarily through investments in equity securities of small-sized companies in countries outside of the U.S. believed to have growth potential. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class Q shares provided a total return of 38.74%. The Citigroup Europe, Pacific Australasia Composite Extended Market ("EPAC EM") Index rose 45.03% during the same period. PORTFOLIO SPECIFICS: The Fund's holdings in almost every country and sector posted strong, double-digit returns. The Fund's relative underperformance was caused primarily by disappointing stock selection in technology companies. During the period, investors in international small-cap stocks preferred safer, lower-growth names. This hurt the Fund's relative performance since holdings were concentrated in stocks with higher growth expectations, which can be somewhat more volatile. A modest underweight in Japan was another negative, as was stock selection in the technology and transportation sectors relative to the benchmark. On the positive side, holdings in a number of sectors and countries helped performance versus the Citigroup EPAC EM. Issue selection among financial services companies was a plus. From a country perspective, select holdings in the United Kingdom and Switzerland outperformed the benchmark. The Fund's best-performing stocks included UK-based Man Group, a publicly traded hedge fund that advanced on strong demand for its products; and Swiss Life, a multinational insurance and financial services firm which is undergoing a restructuring. MARKET OUTLOOK: The upturn in economic and earnings growth worldwide and the more stable geopolitical climate bode well for international stock markets. We find the recent improvement in the U.S. employment market especially encouraging given we believe this has been a key risk to a sustained global recovery. We are also optimistic that corporations, which have held back on spending for several years, will once again make a contribution to global growth. As investors gain increased confidence in the persistence of the economic and earnings recovery, prices of international small-cap stocks should continue to climb higher. In particular, we are excited about the investment potential of many Asian companies that are leveraged to a cyclical resurgence in economic activity. More importantly, we remain committed to consistently applying our proven investment philosophy and process in all market environments. Our focus is on identifying and making timely investments in companies poised to benefit from positive, sustainable change. We are confident that by adhering to our approach, we will meet our goal of delivering strong, long-term performance to shareholders. 10 Portfolio Managers' Report ING INTERNATIONAL SMALLCAP GROWTH FUND [CHART]
ING INTERNATIONAL SMALLCAP GROWTH FUND CLASS Q CITIGROUP EPAC EMI INDEX 8/31/95 $ 10,000 $ 10,000 10/31/95 $ 9,760 $ 9,790 10/31/96 $ 11,408 $ 10,969 10/31/97 $ 13,986 $ 10,468 10/31/98 $ 16,221 $ 10,585 10/31/99 $ 28,593 $ 12,494 10/31/2000 $ 36,581 $ 12,223 10/31/2001 $ 24,105 $ 9,881 10/31/2002 $ 20,311 $ 9,253 10/31/2003 $ 28,180 $ 13,419
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 -------------------------------------------- SINCE INCEPTION OF CLASS Q 1 YEAR 5 YEAR 08/31/95 ------ ------ -------- Class Q 38.74% 11.67% 13.52% Citigroup EPAC EM Index 45.03% 4.86% 3.67%(1)
Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING International SmallCap Growth Fund against the Citigroup EPAC EM Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Since inception performance for index is shown from 09/01/95. PRINCIPAL RISK FACTOR(S): In exchange for higher growth potential, investing in stocks of smaller companies may entail greater price volatility than investing in larger companies. Price volatility and other risks accompany an investment in growth-oriented foreign equities. Currency exchange rates, international, political and economic conditions and other risks affect foreign securities. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 16. 11 ING INTERNATIONAL VALUE FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: Brandes Investment Partners' Large Cap Investment Committee, the Sub-Adviser. GOAL: The ING International Value Fund (the "Fund") seeks long-term capital appreciation by investing primarily in foreign companies with market capitalizations greater than $1 billion, but it may hold up to 25% of its assets in companies with smaller market capitalizations. PERFORMANCE: For the twelve-month period ended October 31, 2003, the Fund's Class Q shares provided a total return of 35.37% compared to the Morgan Stanley Capital International Europe, Australia and Far East ("MSCI EAFE") Index, which returned 27.57% for the same period. PORTFOLIO SPECIFICS: Gains for holdings in the diversified telecom services and commercial banking industries helped drive performance for the year ended October 31, 2003. Banca Intesa (Italy - communications equipment - 2.0% of the Fund), Telefonica (Spain - diversified telecom services - 2.6%), and Deutsche Telekom (Germany - diversified telecom services - 2.6%) were among positions contributing to performance. Holdings in the communications equipment and oil & gas industries also tended to post gains. On a country basis, holdings in Japan, Brazil, France, and Spain helped drive performance. Positions from these countries posting gains included Eletrobras (Brazil - electric utilities - 2.0%), Alcatel (France - communications equipment - - 2.7%), Sumitomo Mitsui Financial Group (Japan - commercial banking - 1.8%), and Repsol (Spain -oil & gas - 1.5%). During the period, we sold positions such as Daiwa House (Japan - household durables - 0.0%), HSBC Holdings (United Kingdom - commercial banking - 0.0%), and Nortel Networks (Canada - communications equipment - 0.0%) as appreciation pushed their market prices toward our estimates of their fair values. New purchases included Ahold (Netherlands - food & staples retailing - 0.9%) and Interbrew (Belgium - beverages - 1.0%). In addition, we took advantage of price weakness and added to select existing holdings at prices that we consider attractive. MARKET OUTLOOK: As of October 31, 2003, the Fund's most significant weightings lie in Japan and the United Kingdom, and in the diversified telecom services and commercial banking industries. While we offer no predictions regarding the short-term direction of international equity markets, we note that share price volatility can create new opportunities to purchase shares of strong companies at discounts to their underlying values. Accordingly, we continue our search for undervalued companies that offer both long-term appreciation potential and an attractive margin of safety. We believe the broader market will eventually recognize the fundamental strengths of such companies, rewarding patient investors with favorable results over the long term. 12 Portfolio Managers' Report ING INTERNATIONAL VALUE FUND [CHART]
ING INTERNATIONAL VALUE FUND CLASS Q MSCI EAFE INDEX 1/24/2000 $ 10,000 $ 10,000 10/31/2000 $ 10,491 $ 9,212 10/31/2001 $ 8,832 $ 6,939 10/31/2002 $ 7,674 $ 6,042 10/31/2003 $ 10,389 $ 7,709
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 ------------------------------------------------ SINCE INCEPTION SINCE INCEPTION OF CLASS I OF CLASS Q 1 YEAR 06/18/01 01/24/00 ------ -------- -------- Class I 35.58% 2.08% -- Class Q 35.37% -- 1.02% MSCI EAFE Index 27.57% -0.85%(1) -6.71%(2)
Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING International Value Fund against the MSCI EAFE Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Since inception performance for index is shown from 07/01/01. (2) Since inception performance for index is shown from 02/01/00. PRINCIPAL RISK FACTOR(S): In exchange for higher growth potential, investing in stocks of smaller companies may entail greater price volatility than those of larger companies. International investing does pose special risks not found in investments that are solely domestic. The risks of foreign investing are generally intensified for investing in emerging markets. See accompanying index descriptions on page 16. 13 ING WORLDWIDE GROWTH FUND Portfolio Managers' Report PORTFOLIO MANAGEMENT TEAM: DOMESTIC EQUITY COMPONENT: Managed by a team of investment professionals led by James Vail, CFA, Senior Vice President and Portfolio Manager with Aeltus Investment Management, Inc., the Sub-Adviser. INTERNATIONAL COMPONENT: Managed by a team of investment professionals led by Richard Saler and Philip Schwartz each a Senior Vice President and Director of International Investment Strategy with Aeltus Investment Management, Inc., the Sub-Adviser. GOAL: The ING Worldwide Growth Fund (the "Fund") seeks maximum long-term capital appreciation. PERFORMANCE: For the year ended October 31, 2003, the Fund's Class Q shares provided a total return of 19.74%, compared to the Morgan Stanley Capital International ("MSCI") World Index, which returned 24.32% for the same period. PORTFOLIO SPECIFICS, DOMESTIC: The period was characterized by positive investor response to the generally declining interest rate environment, continued high levels of consumer spending and a gradually improving domestic economy. During the third quarter, slightly improved mid-year earnings reports indicated confirmation of the positive trend, further encouraging investors to bid equity prices higher. In the early months of the reporting period investors continued their preference for value stocks over growth names, to the point where relative valuations, in terms of price-to-earnings ratios, of many slow growing and even unprofitable companies rose to levels usually associated only with successful, faster growing growth names. As the period unfolded, however, investors perceived that actual growth in earnings and shareholder equity had begun to accelerate, and the two styles produced virtually identical performance. Since the domestic portion of the Fund seeks genuine growth opportunities selling at attractive valuations, this shift in market leadership was beneficial to performance. The domestic portion of the Fund benefited from its holdings in Tyco, Yahoo and JP Morgan Chase, and not holding Johnson & Johnson, which underperformed. Performance was held back somewhat by our under-ownership of semiconductor stocks, exemplified by Intel, which were among the market leaders. PORTFOLIO SPECIFICS, INTERNATIONAL: Over the last year the Fund was repositioned in anticipation of an improving economy. Stock selection was the primary reason for the fund's weak relative performance, and choices among economic sectors were less significant. Cash holdings muted gains relative to the MSCI Europe, Australia and Far East ("EAFE") Index, but were somewhat offset by an underweight in health care, which underperformed. Information technology was a strong performer, and the Fund's weighting was in line with the MSCI EAFE Index. Stock selection suffered because the Fund favored financially strong companies at a time when financially challenged companies and small cap stocks were the market leaders. Stock selection was an adverse factor in materials, consumer discretionary and consumer staples stocks. Stock selection in financials and energy helped relative performance. Individually, Australian insurer QBE made the biggest positive contribution, benefiting from strong pricing and cost controls. Other strong performers included generic drug maker Teva Pharmaceutical, and Japanese semiconductor equipment maker Tokyo Electron. Hurting performance was Sony, following a surprise earnings shortfall. Other negative performers were Japanese food retailer Ito-Yokado and UK publisher Pearson. MARKET OUTLOOK, DOMESTIC: We continue to believe the fiscal, monetary and macro-economic stimuli should be positive for domestic equity markets over the intermediate term. Third quarter preliminary Gross Domestic Product ("GDP") growth of 7.2% reflects a temporary burst of growth, and although unsustainable at that high level, suggests potential for corporate profit growth over the next several quarters. Moreover, representatives of corporate management in recent interviews have expressed guarded optimism with respect to the outlook for near term business conditions. On balance, we believe the domestic holdings are well positioned for the economic and market environment we anticipate over the near to intermediate term. Nevertheless, we continue to search for attractive opportunities which offer above average growth that is not fully reflected in current share prices. MARKET OUTLOOK, INTERNATIONAL: The investment landscape has changed dramatically from last year. Global economic activity has clearly improved as evidenced by strong GDP numbers in the U.S. and China. Australian and UK central banks are already raising interest rates. Investors must weigh the possibility of continued economic growth against less attractive stock prices and the potential for disappointment in 2004. Although rates may have begun an upward trend, it is expected the major central banks will be slow to adopt a tighter monetary policy. Of greater concern is the risk of slowing U.S. growth, as the effects of lower interest rates and tax cuts are largely played out. The managers see continued opportunities in emerging markets, and particularly in Asia. Defensive sectors such as food and beverage are also looking more attractive after a lengthy period of underperformance. In Japan, our focus remains on companies that are restructuring to improve profitability. We remain skeptical of Japan's ability to sustain economic growth. In Europe, we find mixed opportunities, where the strong Euro and structural rigidities continue to plague the region. Some structural reform is, however, slowly taking place in Germany. Europe is likely to continue to experience slow growth. We will continue to seek attractively valued stocks and sectors together with improving fundamentals. 14 Portfolio Managers' Report ING WORLDWIDE GROWTH FUND [CHART]
ING WORLDWIDE FUND CLASS Q MSCI WORLD INDEX 8/31/95 $ 10,000 $ 10,000 10/31/95 $ 9,904 $ 10,133 10/31/96 $ 11,384 $ 11,839 10/31/97 $ 13,920 $ 13,881 10/31/98 $ 15,832 $ 16,058 10/31/99 $ 26,112 $ 20,126 10/31/2000 $ 30,062 $ 20,406 10/31/2001 $ 18,465 $ 15,255 10/31/2002 $ 14,818 $ 13,043 10/31/2003 $ 17,742 $ 16,216
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED OCTOBER 31, 2003 -------------------------------------------- SINCE INCEPTION OF CLASS Q 1 YEAR 5 YEAR 08/31/95 ------ ------ -------- Class Q 19.74% 2.30% 7.27% MSCI World Index 24.32% 0.20% 6.10%(1)
Based on a $10,000 initial investment, the graph and table above illustrate the total return of ING Worldwide Growth Fund against the MSCI World Index. The Index is unmanaged and has no cash in its portfolio, imposes no sales charges and incurs no operating expenses. An investor cannot invest directly in an index. The Fund's performance is shown both with and without the imposition of sales charges. The performance table and graph do not reflect the deduction of taxes that a shareholder will pay on Fund distributions or the redemption of Fund shares. Total returns reflect the fact that the Investment Manager has waived certain fees and expenses otherwise payable by the Fund. Total returns would have been lower had there been no waiver to the Fund. PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NO ASSURANCE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE. SHARES, WHEN SOLD, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THIS REPORT CONTAINS STATEMENTS THAT MAY BE "FORWARD-LOOKING" STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PROJECTED IN THE "FORWARD-LOOKING" STATEMENTS. THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGERS, ONLY THROUGH THE END OF THE PERIOD AS STATED ON THE COVER. THE PORTFOLIO MANAGERS' VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER CONDITIONS. FUND HOLDINGS ARE SUBJECT TO CHANGE DAILY. (1) Since inception performance for index is shown from 09/01/95. PRINCIPAL RISK FACTOR(S): Price volatility and other risks that accompany an investment in growth-oriented foreign equities. Sensitivity to currency exhange rates, international, political and economic conditions and other risks that affect foreign securities. The Fund may also invest in small and medium sized companies, which may be more susceptible to price volatility than larger companies. Risks of foreign investing are generally intensified for investments in emerging markets. See accompanying index descriptions on page 16. 15 INDEX DESCRIPTIONS The CITIGROUP EPAC EM INDEX (formerly known as Salomon EPAC EM Index) is an unmanaged index that measures the performance of securities of smaller-capitalization companies in 22 countries excluding the U.S. and Canada. The MSCI EAFE INDEX is an unmanaged index that measures the performance of securities listed on exchanges in markets in Europe, Australia and the Far East. The MSCI EMF INDEX is an unmanaged index that measures the performance of securities listed on exchanges in developing nations throughout the world. 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. The MSCI JAPAN INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in Japan. The MSCI UK INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance in the UK. The MSCI WORLD INDEX is an unmanaged index that measures the performance of over 1,400 securities listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand and the Far East. The S&P 500 INDEX is an unmanaged index that measures the performance of securities of approximately 500 large-capitalization U.S. companies whose securities are traded on major U.S. stock markets. All indices are unmanaged. An investor cannot invest directly in an index. 16 INDEPENDENT AUDITORS'REPORT Shareholders and Board of Trustees of ING Mutual Funds and ING Mayflower Trust We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of ING Emerging Countries Fund, ING Foreign Fund, ING International Fund, ING International SmallCap Growth Fund, and ING Worldwide Growth Fund, each a series of ING Mutual Funds, and ING International Value Fund, a series of ING Mayflower Trust (collectively the "Funds"), as of October 31, 2003, and the related statements of operations, statements of changes in net assets, and the financial highlights for the year or period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statements of changes in net assets for the year ended October 31, 2002 and the financial highlights for each of the years or periods in the four-year period then ended for ING Emerging Countries Fund, ING International Fund, ING International SmallCap Growth Fund, ING Worldwide Growth Fund and ING International Value Fund were audited by other auditors whose report dated December 17, 2002 expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2003 by correspondence with the custodian and brokers, or by other appropriate audit procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the above mentioned series of ING Mutual Funds and ING Mayflower Trust as of October 31, 2003, the results of their operations, changes in their net assets, and financial highlights for the year or period then ended in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP Boston, Massachusetts December 19, 2003 17 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003
ING EMERGING ING ING COUNTRIES FOREIGN INTERNATIONAL FUND FUND FUND ---- ---- ---- ASSETS: Investments in securities, at value* $ 114,702,124 $ 12,114,621 $ 85,101,180 Cash 1,080,743 3,245,153 8,930,214 Foreign currencies at value** 2,050,808 116,005 -- Receivables: Investment securities sold 167,057 84,266 632,655 Fund shares sold 804,495 920,544 2,619,352 Dividends and interest 368,761 5,249 321,248 Prepaid expenses 42,304 102,050 19,288 Reimbursement due from manager 5,138 62,723 -- --------------- --------------- --------------- Total assets 119,221,430 16,650,611 97,623,937 --------------- --------------- --------------- LIABILITIES: Payable for investment securities purchased 345,287 2,430,635 -- Payable for fund shares redeemed 311,522 -- 93,954 Payable to affiliates 182,076 14,698 141,293 Payable for trustee fees 113,510 332 59,332 Other accrued expenses and liabilities 452,206 52,292 180,585 --------------- --------------- --------------- Total liabilities 1,404,601 2,497,957 475,164 --------------- --------------- --------------- NET ASSETS $ 117,816,829 $ 14,152,654 $ 97,148,773 =============== =============== =============== NET ASSETS WERE COMPRISED OF: Paid-in capital $ 254,838,663 $ 13,609,027 $ 124,321,843 Undistributed net investment income 436,002 45,112 142,522 Accumulated net realized gain (loss) on investments and foreign currencies (net of estimated India tax of $132,836, $0, $0) (173,258,233) 24,431 (37,854,307) Net unrealized appreciation of investments and foreign currencies 35,800,397 474,084 10,538,715 --------------- --------------- --------------- NET ASSETS $ 117,816,829 $ 14,152,654 $ 97,148,773 =============== =============== =============== * Cost of investments in securities $ 78,882,972 $ 11,664,262 $ 74,578,750 ** Cost of foreign currencies $ 1,934,239 $ 115,922 $ --
See Accompanying Notes to Financial Statements 18 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003 (Continued)
ING EMERGING ING ING COUNTRIES FOREIGN INTERNATIONAL FUND FUND FUND ---- ---- ---- CLASS A: Net assets $ 71,952,730 $ 6,598,135 $ 43,820,696 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 Shares outstanding 4,153,315 599,075 5,165,787 Net asset value and redemption price per share $ 17.32 $ 11.01 $ 8.48 Maximum offering price per share (5.75%)(1) $ 18.38 $ 11.68 $ 9.00 CLASS B: Net assets $ 16,425,176 $ 1,344,467 $ 12,465,985 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 Shares outstanding 957,861 122,298 1,515,803 Net asset value and redemption price per share(2) $ 17.15 $ 10.99 $ 8.22 Maximum offering price per share $ 17.15 $ 10.99 $ 8.22 CLASS C: Net assets $ 10,033,489 $ 5,601,055 $ 14,525,705 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 Shares outstanding 614,921 508,701 1,766,112 Net asset value and redemption price per share(2) $ 16.32 $ 11.01 $ 8.22 Maximum offering price per share $ 16.32 $ 11.01 $ 8.22 CLASS I: Net assets n/a $ 187,804 $ 11,581,291 Shares authorized n/a unlimited unlimited Par value n/a $ 0.00 $ 0.00 Shares outstanding n/a $ 16,997 1,370,759 Net asset value and redemption price per share n/a $ 11.05 $ 8.45 Maximum offering price per share n/a $ 11.05 $ 8.45 CLASS M: Net assets $ 1,237,499 n/a n/a Shares authorized unlimited n/a n/a Par value $ 0.00 n/a n/a Shares outstanding 72,270 n/a n/a Net asset value and redemption price per share $ 17.12 n/a n/a Maximum offering price per share (3.50%)(3) $ 17.74 n/a n/a CLASS Q: Net assets $ 18,167,935 $ 421,193 $ 14,755,096 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.00 $ 0.00 Shares outstanding 1,015,708 38,209 1,749,736 Net asset value and redemption price per share $ 17.89 $ 11.02 $ 8.43 Maximum offering price per share $ 17.89 $ 11.02 $ 8.43
- ---------- (1) Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. (3) Maximum offering price is computed at 100/96.50 of net asset value. On purchases of $50,000 or more, the offering price is reduced. See Accompanying Notes to Financial Statements 19 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003
ING INTERNATIONAL ING ING SMALLCAP INTERNATIONAL WORLDWIDE GROWTH VALUE GROWTH FUND FUND FUND ---- ---- ---- ASSETS: Investments in securities, at value* $ 326,863,374 $ 3,140,822,386 $ 137,032,648 Cash 12,748,262 59,949,355 7,420,807 Foreign currencies at value** 175,035 117,057 4,178 Receivables: Investment securities sold -- -- 514,498 Fund shares sold 1,979,751 4,228,268 34,264 Dividends and interest 1,110,623 11,053,094 484,345 Other 143,936 -- -- Prepaid expenses 37,695 33,352 19,665 Reimbursement due from manager -- -- 44,547 --------------- --------------- --------------- Total assets 343,058,676 3,216,203,512 145,554,952 --------------- --------------- --------------- LIABILITIES: Payable for investment securities purchased -- -- -- Payable for fund shares redeemed 543,076 6,072,684 679,626 Payable to affiliates 464,350 4,446,900 224,576 Payable for trustee fees 3,598 11,013 55,542 Other accrued expenses and liabilities 532,861 3,008,385 329,607 --------------- --------------- --------------- Total liabilities 1,543,885 13,538,982 1,289,351 --------------- --------------- --------------- NET ASSETS $ 341,514,791 $ 3,202,664,530 $ 144,265,601 =============== =============== =============== NET ASSETS WERE COMPRISED OF: Paid-in capital $ 497,144,222 $ 3,377,014,711 $ 355,587,392 Undistributed net investment income 58,428 15,253,443 -- Accumulated net realized loss on investments and foreign currencies (239,679,421) (100,519,184) (236,099,324) Net unrealized appreciation (depreciation) of investments and foreign currencies 83,991,562 (89,084,440) 24,777,533 --------------- --------------- --------------- NET ASSETS $ 341,514,791 $ 3,202,664,530 $ 144,265,601 =============== =============== =============== * Cost of investments in securities $ 242,915,227 $ 3,230,842,178 $ 112,301,140 ** Cost of foreign currencies $ 175,216 $ 117,681 $ 4,200
See Accompanying Notes to Financial Statements 20 STATEMENTS OF ASSETS AND LIABILITIES as of October 31, 2003 (Continued)
ING INTERNATIONAL ING ING SMALLCAP INTERNATIONAL WORLDWIDE GROWTH VALUE GROWTH FUND FUND FUND ---- ---- ---- CLASS A: Net assets $ 150,042,733 $ 1,641,943,185 $ 56,876,841 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.00 Shares outstanding 5,914,440 119,793,591 3,854,392 Net asset value and redemption price per share $ 25.37 $ 13.71 $ 14.76 Maximum offering price per share (5.75%)(1) $ 26.92 $ 14.55 $ 15.66 CLASS B: Net assets $ 62,104,325 $ 420,651,370 $ 35,458,976 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.00 Shares outstanding 2,349,763 31,271,787 2,189,930 Net asset value and redemption price per share(2) $ 26.43 $ 13.45 $ 16.19 Maximum offering price per share $ 26.43 $ 13.45 $ 16.19 CLASS C: Net assets $ 50,227,490 $ 628,704,062 $ 45,475,707 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.00 Shares outstanding 2,072,898 46,844,402 3,156,450 Net asset value and redemption price per share(2) $ 24.23 $ 13.42 $ 14.41 Maximum offering price per share $ 24.23 $ 13.42 $ 14.41 CLASS I: Net assets n/a $ 482,046,661 n/a Shares authorized n/a unlimited n/a Par value n/a $ 0.01 n/a Shares outstanding n/a 35,071,815 n/a Net asset value and redemption price per share n/a $ 13.74 n/a Maximum offering price per share n/a $ 13.74 n/a CLASS Q: Net assets $ 79,140,243 $ 29,319,252 $ 6,454,077 Shares authorized unlimited unlimited unlimited Par value $ 0.00 $ 0.01 $ 0.00 Shares outstanding 2,919,648 2,134,727 375,981 Net asset value and redemption price per share $ 27.11 $ 13.73 $ 17.17 Maximum offering price per share $ 27.11 $ 13.73 $ 17.17
- ---------- (1) Maximum offering price is computed at 100/94.25 of net asset value. On purchases of $50,000 or more, the offering price is reduced. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. See Accompanying Notes to Financial Statements 21 STATEMENTS OF OPERATIONS
ING ING EMERGING ING ING INTERNATIONAL COUNTRIES FOREIGN INTERNATIONAL SMALLCAP GROWTH FUND FUND(1) FUND FUND --------------- --------------- --------------- --------------- YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2003 2003 2003 ---- ---- ---- ---- INVESTMENT INCOME: Dividends (net of foreign taxes)* $ 2,691,883 $ 10,476 $ 1,967,883 $ 5,478,161 Interest 18,135 -- 42,867 84,366 Other 1,674 -- 1,387 1,411 Securities loaned income 10,235 -- 31,443 214,335 --------------- --------------- --------------- --------------- Total investment income 2,721,927 10,476 2,043,580 5,778,273 --------------- --------------- --------------- --------------- EXPENSES: Investment management fees 1,361,309 17,306 810,521 2,988,646 Distribution and service fees: Class A 222,736 2,306 94,606 454,427 Class B 147,006 1,347 107,627 524,648 Class C 90,335 5,567 130,899 446,047 Class M 8,196 -- -- -- Class Q 51,098 268 25,836 179,897 Transfer agent fees: Class A 157,338 1,937 108,230 371,176 Class B 36,386 283 30,782 149,839 Class C 22,359 1,169 37,437 127,265 Class I -- 11 631 -- Class M 2,701 -- -- -- Class Q 4,059 118 724 24,046 Administrative service fees 108,905 1,731 81,052 298,865 Custody and accounting expense 232,875 2,606 77,317 306,896 Shareholder reporting expense 82,767 1,038 32,453 150,346 Registration fees 90,870 1,876 66,534 86,229 Professional fees 15,785 1,557 5,256 32,133 Trustee fees 5,265 346 2,398 17,380 Insurance expense 3,039 -- 1,716 8,151 Miscellaneous expense 24,067 346 3,802 11,308 Offering expense -- 59,486 -- -- Organizational fees -- 10,000 -- -- --------------- --------------- --------------- --------------- 2,667,096 109,298 1,617,821 6,177,299 --------------- --------------- --------------- --------------- Less: Net waived and reimbursed (recouped) fees 108,786 70,612 12,984 (30,000) --------------- --------------- --------------- --------------- Total expenses 2,558,310 38,686 1,604,837 6,207,299 --------------- --------------- --------------- --------------- Net investment income (loss) 163,617 (28,210) 438,743 (429,026) --------------- --------------- --------------- --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments 7,443,756 24,431 (1,986,957) 1,755,056 Net realized gain (loss) on foreign currencies (143,349) 17,965 (38,840) (1,065,287) Net change in unrealized appreciation (depreciation) of investments and foreign currencies (net of estimated India tax of $132,836, $0, $0, $0) 30,374,658 474,084 17,051,753 102,597,770 --------------- --------------- --------------- --------------- Net realized and unrealized gain on investments and foreign currencies 37,675,065 516,480 15,025,956 103,287,539 --------------- --------------- --------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 37,838,682 $ 488,270 $ 15,464,699 $ 102,858,513 =============== =============== =============== ===============
- ---------- * Foreign taxes $ 330,045 $ 1,215 $ 225,485 $ 743,581
(1) Fund commenced operations on July 1, 2003. See Accompanying Notes to Financial Statements 22 STATEMENTS OF OPERATIONS for the Year Ended October 31, 2003
ING ING INTERNATIONAL WORLDWIDE VALUE GROWTH FUND FUND --------------- --------------- INVESTMENT INCOME: Dividends (net of foreign taxes)* $ 64,119,510 $ 2,249,058 Interest 189,404 37,442 Other 13,878 1,998 Securities loaned income 1,107,870 22,196 --------------- --------------- Total investment income 65,430,662 2,310,694 --------------- --------------- EXPENSES: Investment management fees 27,273,090 1,541,226 Distribution and service fees: Class A 4,113,748 222,651 Class B 3,709,113 355,096 Class C 5,583,025 461,144 Class Q 68,051 22,210 Transfer agent fees: Class A 2,077,997 178,757 Class B 565,365 99,782 Class C 850,800 129,581 Class I 6,102 -- Class Q 574 8,351 Administrative service fees 4,285,739 154,123 Custody and accounting expense 1,271,973 118,522 Shareholder reporting expense 1,383,166 81,661 Registration fees 176,268 63,889 Professional fees 411,702 22,545 Trustee fees 116,262 7,784 Insurance expense -- 4,942 Miscellaneous expense 116,709 6,753 --------------- --------------- Less: Net waived and reimbursed fees -- 122,064 --------------- --------------- Total expenses 52,009,684 3,356,953 --------------- --------------- Net investment income (loss) 13,420,978 (1,046,259) --------------- --------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized loss on investments (98,526,506) (571,599) Net realized loss on foreign currencies (165,164) (68,995) Net change in unrealized appreciation (depreciation) o f investments and foreign currencies 925,896,407 27,582,974 --------------- --------------- Net realized and unrealized gain on investments and foreign currencies 827,204,737 26,942,380 --------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 840,625,715 $ 25,896,121 =============== ===============
- ---------- * Foreign taxes $ 8,984,162 $ 212,935
See Accompanying Notes to Financial Statements 23 STATEMENTS OF CHANGES IN NET ASSETS
ING ING EMERGING COUNTRIES FOREIGN FUND FUND ---------------------------------- --------------- YEAR YEAR PERIOD ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003(1) ---- ---- ------- FROM OPERATIONS: Net investment income (loss) $ 163,617 $ (834,118) $ (28,210) Net realized gain (loss) on investments and foreign currencies 7,300,407 (21,740,055) 42,396 Net change in unrealized appreciation (depreciation) of investments and foreign currencies 30,374,658 32,027,083 474,084 --------------- --------------- --------------- Increase (decrease) in net assets resulting from operations 37,838,682 9,452,910 488,270 --------------- --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- (1,786) -- Class B -- -- -- Class C -- -- -- Class I -- -- -- Class Q -- (1,105) -- --------------- --------------- --------------- Total distributions -- (2,891) -- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 388,617,983 216,145,026 15,069,369 Dividends reinvested -- 2,537 -- Redemption fee proceeds -- -- -- Net assets received in connection with reorganization (Note 13) -- 10,040,276 -- --------------- --------------- --------------- 388,617,983 226,187,839 15,069,369 Cost of shares redeemed (417,627,995) (248,063,246) (1,404,985) --------------- --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (29,010,012) (21,875,407) 13,664,384 --------------- --------------- --------------- Net increase (decrease) in net assets 8,828,670 (12,425,388) 14,152,654 NET ASSETS: Net assets, beginning of period 108,988,159 121,413,547 -- --------------- --------------- --------------- Net assets, end of period $ 117,816,829 $ 108,988,159 $ 14,152,654 =============== =============== =============== Undistributed net investment income $ 436,002 $ -- $ 45,112 =============== =============== =============== ING INTERNATIONAL FUND ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- FROM OPERATIONS: Net investment income (loss) $ 438,743 $ (217,920) Net realized gain (loss) on investments and foreign currencies (2,025,797) (10,118,464) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 17,051,753 (2,700,015) --------------- --------------- Increase (decrease) in net assets resulting from operations 15,464,699 (13,036,399) --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A (168,249) -- Class B -- -- Class C (1,612) -- Class I (50,182) -- Class Q (45,138) -- --------------- --------------- Total distributions (265,181) -- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 167,030,077 102,371,057 Dividends reinvested 197,605 -- Redemption fee proceeds 306,800 132,507 Net assets received in connection with reorganization (Note 13) -- 37,276,905 --------------- --------------- 167,534,482 139,780,469 Cost of shares redeemed (164,862,362) (88,437,578) --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions 2,672,120 51,342,891 --------------- --------------- Net increase (decrease) in net assets 17,871,638 38,306,492 NET ASSETS: Net assets, beginning of period 79,277,135 40,970,643 --------------- --------------- Net assets, end of period $ 97,148,773 $ 79,277,135 =============== =============== Undistributed net investment income $ 142,522 $ -- =============== ===============
- ---------- (1) Fund commenced operations on July 1, 2003. See Accompanying Notes to Financial Statements 24 STATEMENTS OF CHANGES IN NET ASSETS
ING INTERNATIONAL ING SMALLCAP INTERNATIONAL GROWTH FUND VALUE FUND ---------------------------------- ---------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- FROM OPERATIONS: Net investment income (loss) $ (429,026) $ (1,729,234) $ 13,420,978 $ 11,052,808 Net realized gain (loss) on investments and foreign currencies 689,769 (53,391,247) (98,691,670) 52,071,566 Net change in unrealized appreciation (depreciation) of investments and foreign currencies 102,597,770 1,153,419 925,896,407 (564,489,564) --------------- --------------- --------------- --------------- Increase (decrease) in net assets resulting from operations 102,858,513 (53,967,062) 840,625,715 (501,365,190) --------------- --------------- --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS: Net investment income Class A -- -- (6,749,895) (9,049,951) Class B -- -- -- (97,412) Class C -- -- -- (119,172) Class I -- -- (3,415,778) (2,526,944) Class Q -- -- (275,730) (250,541) Net realized gain on investments Class A -- -- (26,207,763) (25,504,406) Class B -- -- (7,376,884) (8,951,514) Class C -- -- (11,254,215) (12,776,248) Class I -- -- (7,198,805) (4,759,757) Class Q -- -- (571,558) (784,233) --------------- --------------- --------------- --------------- Total distributions -- -- (63,050,628) (64,820,178) --------------- --------------- --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 793,290,634 814,783,487 381,124,093 2,229,434,327 Dividends reinvested -- -- 47,901,712 48,205,060 --------------- --------------- --------------- --------------- 793,290,634 814,783,487 429,025,805 2,277,639,387 Cost of shares redeemed (847,606,966) (856,597,344) (712,137,091) (1,485,994,863) --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (54,316,332) (41,813,857) (283,111,286) 791,644,524 --------------- --------------- --------------- --------------- Net increase (decrease) in net assets 48,542,181 (95,780,919) 494,463,801 225,459,156 NET ASSETS: Net assets, beginning of year 292,972,610 388,753,529 2,708,200,729 2,482,741,573 --------------- --------------- --------------- --------------- Net assets, end of year $ 341,514,791 $ 292,972,610 $ 3,202,664,530 $ 2,708,200,729 =============== =============== =============== =============== Undistributed net investment income (accumulated net investment loss) $ 58,428 $ (253,833) $ 15,253,443 $ 10,440,192 =============== =============== =============== ===============
See Accompanying Notes to Financial Statements 25 STATEMENTS OF CHANGES IN NET ASSETS
ING WORLDWIDE GROWTH FUND ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- FROM OPERATIONS: Net investment loss $ (1,046,259) $ (3,001,356) Net realized loss on investments and foreign currencies (640,594) (74,277,585) Net change in unrealized appreciation (depreciation) of investments and foreign currencies 27,582,974 31,285,489 --------------- --------------- Increase (decrease) in net assets resulting from operations 25,896,121 (45,993,452) --------------- --------------- FROM CAPITAL SHARE TRANSACTIONS: Net proceeds from sale of shares 297,182,498 188,403,422 --------------- --------------- 297,182,498 188,403,422 Cost of shares redeemed (346,955,366) (300,460,131) --------------- --------------- Net increase (decrease) in net assets resulting from capital share transactions (49,772,868) (112,056,709) --------------- --------------- Net increase (decrease) in net assets (23,876,747) (158,050,161) NET ASSETS: Net assets, beginning of period 168,142,348 326,192,509 --------------- --------------- Net assets, end of period $ 144,265,601 $ 168,142,348 =============== =============== Undistributed net investment income $ -- $ -- =============== ===============
See Accompanying Notes to Financial Statements 26 ING EMERGING COUNTRIES FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS Q -------------------------------------------- YEAR ENDED OCTOBER 31, -------------------------------------------- 2003 2002 2001 - ------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 12.80 12.26 16.81 Income (loss) from investment operations: Net investment income (loss) $ 0.12 (0.14) 0.09 Net realized and unrealized gain (loss) on investments $ 4.97 0.68 (4.64) Total from investment operations $ 5.09 0.54 (4.55) Less distributions from: Net investment income $ -- 0.00* -- Total distributions $ -- 0.00* -- Net asset value, end of period $ 17.89 12.80 12.26 TOTAL RETURN(4) % 39.77 4.41 (27.01) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 18,168 21,132 26,783 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 1.93 2.00 1.97 Gross expenses prior to expense reimbursement(recoupment)(5) % 2.03 1.94 1.98 Net investment income (loss) after expense reimbursement(recoupment)(5)(6) % 0.59 (0.24) 0.42 Portfolio turnover rate % 135 124 74 CLASS Q ------------------------------------------------------------ FOUR MONTHS YEAR THREE YEAR ENDED ENDED MONTHS ENDED OCTOBER 31, JUNE 30, JUNE 30, MARCH 31, 2000(1)(2) 2000 1999(3) 1999 - ---------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 20.74 17.20 13.79 17.76 Income (loss) from investment operations: Net investment income (loss) $ (0.27) (0.16) (0.04) (0.01) Net realized and unrealized gain (loss) on investments $ (3.66) 3.70 3.45 (3.78) Total from investment operations $ (3.93) 3.54 3.41 (3.79) Less distributions from: Net investment income $ -- -- -- 0.18 Total distributions $ -- -- -- 0.18 Net asset value, end of period $ 16.81 20.74 17.20 13.79 TOTAL RETURN(4) % (18.95) 20.58 24.73 (21.42) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 88,894 119,251 79,130 53,125 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 2.13 2.09 1.90 1.94 Gross expenses prior to expense reimbursement(recoupment)(5) % 2.28 2.24 2.43 2.23 Net investment income (loss) after expense reimbursement(recoupment)(5)(6) % (1.21) (1.05) (1.07) (0.01) Portfolio turnover rate % 94 211 67 213
(1) Effective October 1, 2000, ING Investments, LLC, became the Investment Adviser of the Fund replacing Nicholas-Applegate Capital Management. (2) The Fund changed its fiscal year-end from June 30 to October 31. (3) Effective May 24, 1999, ING Investments, LLC became the Investment Manager of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to June 30. (4) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. Total return for less than one year is not annualized. (5) Annualized for periods less that one year. (6) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary (expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 27 ING FOREIGN FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS I CLASS Q --------------- --------------- SEPTEMBER 10, JULY 11, 2003(1) TO 2003(1) TO OCTOBER 31, OCTOBER 31, 2003 2003 - ------------------------------------------------------------------------------------------- --------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.63 10.13 Income (loss) from investment operations: Net investment loss $ 0.00* (0.00)* Net realized and unrealized gain on investments $ 0.42 0.89 Total from investment operations $ 0.42 0.89 Less distributions from: Net investment income $ -- -- Net realized gain on investments $ -- -- Total distributions $ -- -- Net asset value, end of period $ 11.05 11.02 TOTAL RETURN(2) % 3.95 8.79 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 188 421 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 1.43 1.85 Gross expenses prior to and expense reimbursement(3) % 5.51 5.93 Net investment loss after proceeds and expense reimbursement(3)(4) % 0.21 (0.17) Portfolio turnover rate % 50 50
(1) Commencement of operations of class. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Adviser has agreed to limit expenses, (excluding, interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 28 ING INTERNATIONAL FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS I CLASS Q ----------------------- ------------------------------------- YEAR JANUARY 15, YEAR YEAR FEBRUARY 26, ENDED 2002 TO ENDED ENDED 2001 TO OCT. 31, OCT. 31, OCT. 31, OCT. 31, OCT. 31, 2003 2002(1) 2003 2002 2001(1) - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 7.06 8.25 7.04 8.10 9.89 Income (loss) from investment operations: Net investment income (loss) $ 0.10 0.05 0.07 (0.03) (0.02) Net realized and unrealized gain (loss) on investments $ 1.34 (1.24) 1.37 (1.03) (1.77) Total from investment operations $ 1.44 (1.19) 1.44 (1.06) (1.79) Less distributions from: Net investment income $ 0.05 -- 0.05 -- -- Total distributions $ 0.05 -- 0.05 -- -- Net asset value, end of period $ 8.45 7.06 8.43 7.04 8.10 TOTAL RETURN(2) % 20.53 (14.42) 20.51 (13.09) (18.10) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 11,582 6,384 14,755 6,949 7 Ratios to average net assets: Net expenses after expense reimbursement(3)(4) % 1.33 1.48 1.59 1.61 2.27 Gross expenses prior to expense reimbursement(3) % 1.34 1.53 1.59 1.70 2.27 Net investment income (loss) after expense reimbursement(3)(4) % 1.29 0.72 0.91 (0.08) (0.24) Portfolio turnover rate % 100 126 100 126 169
(1) Commencement of operations of class. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. Total return for less than one year is not annualized. (3) Annualized for periods less than one year. (4) The Investment Adviser has agreed to limit expenses, (excluding, interest, taxes, brokerage and extraordinary expenses) subject to possible recoupment by ING Investments, LLC within three years. See Accompanying Notes to Financial Statements 29 ING INTERNATIONAL SMALLCAP GROWTH FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS Q ------------------------------------- YEAR ENDED OCTOBER 31, ------------------------------------- 2003 2002 2001 - ----------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 19.54 23.19 38.18 Income (loss) from investment operations: Net investment income (loss) $ 0.21 0.04 0.00* Net realized and unrealized gain (loss) on investments $ 7.36 (3.69) (12.12) Total from investment operations $ 7.57 (3.65) (12.12) Less distributions from: Net investment income $ -- -- 0.24 Net realized gains on investments $ -- -- 2.63 Total distributions $ -- -- 2.87 Net asset value, end of period $ 27.11 19.54 23.19 TOTAL RETURN(3) % 38.74 (15.74) (34.11) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 79,140 70,404 91,089 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(4)(5) % 1.59 1.55 1.50 Gross expenses prior to expense reimbursement(recoupment)(4) % 1.58 1.59 1.50 Net investment income (loss) after expense reimbursement(recoupment)(4)(5) % 0.35 0.07 0.04 Portfolio turnover rate % 114 149 143 CLASS Q ----------------------------------------------------- FOUR MONTHS YEAR THREE YEAR ENDED ENDED MONTHS ENDED OCTOBER 31, JUNE 30, JUNE 30, MARCH 31, 2000(1) 2000 1999(2) 1999 - --------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 43.30 25.16 22.23 19.18 Income (loss) from investment operations: Net investment income (loss) $ (0.09) (0.21) (0.03) (0.02) Net realized and unrealized gain (loss) on investments $ (5.03) 20.53 2.96 3.36 Total from investment operations $ (5.12) 20.32 2.93 3.34 Less distributions from: Net investment income $ -- -- -- 0.09 Net realized gains on investments $ -- 2.18 -- 0.20 Total distributions $ -- 2.18 -- 0.29 Net asset value, end of period $ 38.18 43.30 25.16 22.23 TOTAL RETURN(3) % 11.82 82.99 13.18 17.61 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 164,719 163,843 42,881 32,819 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(4)(5) % 1.58 1.57 1.65 1.65 Gross expenses prior to expense reimbursement(recoupment)(4) % 1.58 1.57 1.67 1.80 Net investment income (loss) after expense reimbursement(recoupment)(4)(5) % (0.71) (0.66) (0.50) (0.50) Portfolio turnover rate % 56 164 44 146
(1) The Fund changed its fiscal year-end from June 30 to October 31. (2) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to to June 30. (3) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. Total return for less than one year is not annualized. (4) Annualized for periods less that one year. (5) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary (expenses) subject to possible recoupment by ING Investments, LLC within three years. * Amount represents less than $0.01 per share. See Accompanying Notes to Financial Statements 30 ING INTERNATIONAL VALUE FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS I ------------------------------------- YEAR YEAR JUNE 18, ENDED ENDED 2001 TO OCT. 31, OCT. 31, OCT. 31, 2003 2002 2001(1) - --------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.43 12.35 13.89 Income (loss) from investment operations: Net investment income $ 0.13 0.16 0.02 Net realized and unrealized gain (loss) on investments $ 3.48 (1.68) (1.56) Total from investment operations $ 3.61 (1.52) (1.54) Less distributions from: Net investment income $ 0.10 0.14 -- Net realized gains on investments $ 0.20 0.26 -- Total distributions $ 0.30 0.40 -- Net asset value, end of period $ 13.74 10.43 12.35 TOTAL RETURN(2) % 35.58 (12.89) (11.09) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 482,047 372,352 226,067 Ratios to average net assets: Expenses(3) % 1.29 1.32 1.24 Net investment income(3) % 1.12 1.04 0.62 Portfolio turnover rate % 9 20 15 CLASS Q --------------------------------------------------- YEAR YEAR YEAR JANUARY 24, ENDED ENDED ENDED 2000 TO OCT. 31, OCT. 31, OCT. 31, OCT. 31, 2003 2002 2001 2000(1) - ----------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.44 12.34 16.68 15.90 Income (loss) from investment operations: Net investment income $ 0.10 0.07 0.10 0.13 Net realized and unrealized gain (loss) on investments $ 3.49 (1.63) (2.42) 0.65 Total from investment operations $ 3.59 (1.56) (2.32) 0.78 Less distributions from: Net investment income $ 0.10 0.08 0.14 -- Net realized gains on investments $ 0.20 0.26 1.88 -- Total distributions $ 0.30 0.34 2.02 -- Net asset value, end of period $ 13.73 10.44 12.34 16.68 TOTAL RETURN(2) % 35.37 (13.11) (15.80) 4.91 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 29,319 29,836 35,802 24,882 Ratios to average net assets: Expenses(3) % 1.54 1.49 1.59 1.57 Net investment income(3) % 0.87 0.63 0.91 1.35 Portfolio turnover rate % 9 20 15 34
(1) Commencement of operations of class. (2) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. Total return for less than one year is not annualized (3) Annualized for periods less than one year. See Accompanying Notes to Financial Statements 31 ING WORLDWIDE GROWTH FUND FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each period.
CLASS Q --------------------------------------- YEAR ENDED OCTOBER 31, --------------------------------------- 2003 2002 2001 - ----------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 14.34 17.87 30.37 Income (loss) from investment operations: Net investment income (loss) $ (0.01) (0.08)* (0.07)* Net realized and unrealized gain (loss) on investments $ 2.84 (3.45)* (11.19)* Total from investment operations $ 2.83 (3.53) (11.26) Less distributions from: Net investment income $ -- -- -- Net realized gains on investments $ -- -- 0.89 Tax return of capital $ -- -- 0.35 Total distributions $ -- -- 1.24 Net asset value, end of period $ 17.17 14.34 17.87 TOTAL RETURN(4) % 19.74 (19.75) (38.56) RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 6,454 8,194 17,178 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 1.54 1.49 1.51 Gross expenses prior to expense reimbursement(recoupment)(5) % 1.62 1.59 1.60 Net investment income (loss) after expense reimbursement(recoupment)(5)(6) % (0.04) (0.47) (0.30) Portfolio turnover rate % 125 281 302 CLASS Q ---------------------------------------------------- FOUR MONTHS YEAR THREE YEAR ENDED ENDED MONTHS ENDED OCTOBER 31, JUNE 30 JUNE 30, MARCH 31, 2000(1)(2) 2000 1999(3) 1999 - ------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 34.53 27.12 24.59 19.63 Income (loss) from investment operations: Net investment income (loss) $ (0.07) (0.16) 0.01 0.22 Net realized and unrealized gain (loss) on investments $ (4.09) 11.11 2.52 6.15 Total from investment operations $ (4.16) 10.95 2.53 6.37 Less distributions from: Net investment income $ -- -- -- 0.15 Net realized gains on investments $ -- 3.54 -- 1.26 Tax return of capital $ -- -- -- -- Total distributions $ -- 3.54 -- 1.41 Net asset value, end of period $ 30.37 34.53 27.12 24.59 TOTAL RETURN(4) % (12.05) 42.63 10.29 33.97 RATIOS AND SUPPLEMENTAL DATA: Net assets, end of period (000's) $ 44,702 54,418 14,870 7,320 Ratios to average net assets: Net expenses after expense reimbursement (recoupment)(5)(6) % 1.52 1.57 1.55 1.59 Gross expenses prior to expense reimbursement(recoupment)(5) % 1.49 1.57 1.55 1.76 Net investment income (loss) after expense reimbursement(recoupment)(5)(6) % (0.62) (0.69) 0.17 0.17 Portfolio turnover rate % 71 169 57 247
(1) Effective October 1, 2000, ING Investments, LLC, became the Investment Adviser of the Fund replacing Nicholas-Applegate Capital Management. (2) The Fund changed its fiscal year-end from June 30 to October 31. (3) Effective May 24, 1999, ING Investments, LLC became the Investment Adviser of the Fund, concurrently Nicholas-Applegate Capital Management was appointed as Sub-Adviser and the Fund changed its fiscal year-end to June 30. (4) Total return is calculated assuming reinvestment of all dividends and capital gain distributions at net asset value. Total return for less than one year is not annualized. (5) Annualized for periods less that one year. (6) The Investment Adviser has agreed to limit expenses, (excluding interest, taxes, brokerage and extraordinary (expenses) subject to possible recoupment by ING Investments, LLC within three years. * Per share data calculated using average number of shares outstanding throughout the period. See Accompanying Notes to Financial Statements 32 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 NOTE 1 -- ORGANIZATION ORGANIZATION. The ING Funds included in this report are comprised of ING Mutual Funds ("IMF") and ING Mayflower Trust ("IMT"); both are organized as open-end investment management companies registered under the Investment Company Act of 1940, as amended. IMF is a Delaware business trust organized in 1992 with nine separate series ("Portfolios"), five in this report are: ING Emerging Countries Fund ("Emerging Countries"), ING Foreign Fund ("Foreign") ING International Fund ("International"), ING International SmallCap Growth Fund ("International SmallCap Growth") and ING Worldwide Growth Fund ("Worldwide Growth"). IMT is a Massachusetts business trust organized in 1992 with two separate series (Portfolios). The one Portfolio in this annual report is ING International Value Fund ("International Value"). The investment objective of each Fund is described in each Fund's prospectus. Each Fund offers one or more of the following classes of shares: Class A, Class B, Class C, Class I, Class M and Class Q (Class A, Class B, Class C and Class M are presented in a separate annual report). The separate classes of shares differ principally in the applicable sales charges (if any), distribution fees and shareholder servicing fees and transfer agent fees. Shareholders of each class also bear certain expenses that pertain to that particular class. All shareholders bear the common expenses of the Fund and earn income from the portfolio pro rata based on the average daily net assets of each class, without distinction between share classes. Dividends from net investment income are determined separately for each class based on income and expenses allocable to each class. Distributions from realized gains are allocated to each class pro rata based on the total shares outstanding on the ex-dividend date. No class has preferential dividend rights. Differences in per share dividend rates generally result from the relative weighting of pro rata income and realized gain allocations and from differences in separate class expenses, including distribution and shareholder servicing fees. Class B shares, along with their pro rata reinvested dividend shares, automatically convert to Class A shares approximately eight years after purchase. Effective September 2, 2003, International Value was closed to new investors except for shares purchased (1) through the reinvestment of dividends and distributions; (2) by 401(k), 403(b) and 457 plans that have selected International Value as an investment option prior to May 17, 2002; (3) by shareholders participating in mutual fund wrap fee programs who were invested in International Value prior to May 17, 2002; or (4) by new 401(k), 403(b) and 457 plans and new shareholders participating in mutual fund wrap fee programs subject to approval by the Investment Adviser and Sub-Adviser based on their assessment of the Fund's ability to invest the monies consistent with the Fund's objectives in light of market conditions, the size of the purchase, and other relevant factors relating to International Value. International Value may reopen in the future subject to the discretion of the Board of Trustees ("Board"). NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES The following significant accounting policies are consistently followed by the Funds in the preparation of their financial statements, and such policies are in conformity with accounting principles generally accepted in the United States of America for investment companies. A. SECURITY VALUATION. Investments in equity securities traded on a national securities exchange are valued at the last reported sale price. Securities reported by NASDAQ will be valued at the NASDAQ official closing price. Securities traded on an exchange or NASDAQ for which there has been no sale, securities traded in the over-the-counter-market and gold and silver bullion 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 the time such valuation is determined by each Fund's custodian. Debt securities are valued at bid prices obtained from independent services or from one or more dealers making markets in the securities and may be adjusted based on the Fund's valuation procedures. U.S. Government obligations are valued by using market quotations or independent pricing services that use prices provided by market-makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics. Securities and assets for which market quotations are not readily available which may include certain restricted securities which are subject to limitations as to their sale) are valued at their fair values as determined in good faith by or under the supervision of the Funds' Board, in accordance with methods that are specifically authorized by the Board. Securities traded on exchanges, including foreign exchanges, (which close earlier than the time that a Fund calculates its net asset value may also be valued at their fair values as determined in good faith by or under the supervision of a Fund's Board, in accordance with methods that are specifically 33 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) authorized by the Board. If a significant event which is likely to impact the value of one or more foreign securities held by a Fund occurs after the time at which the foreign market for such security(ies) closes but before the time that the Fund's net asset value is calculated on any business day, such event may be taken into account in determining the fair value of such security(ies) at the time the Fund calculates its net asset value. For these purposes, significant events after the close of trading on a foreign market may include, among others, securities trading in the U.S. and other markets, corporate announcements, natural and other disasters, and political and other events. Among other elements of analysis, the Board has authorized the use of one or more research services to assist with the determination of the fair value of foreign securities in light of significant events. Research services use statistical analyses and quantitative models to help determine fair value as of the time a Fund calculates its net asset value. Unlike the closing price of a security on an exchange, fair value determinations employ elements of judgment, and the fair value assigned to a security may not represent the actual value that a Fund could obtain if it were to sell the security at the time of the close of the NYSE. Investments in securities maturing in less than 60 days are valued at amortized cost, which approximates market value. B. SECURITY TRANSACTIONS AND REVENUE RECOGNITION. Securities transactions are accounted for on the trade date. Realized gains and losses are reported on the basis of identified cost of securities sold. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date, or for certain foreign securities, when the information becomes available to the Funds. Premium amortization and discount accretion are determined by the effective yield method. C. FOREIGN CURRENCY TRANSLATION. The books and records of the Funds are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis: (1) Market value of investment securities, other assets and liabilities -- at the exchange rates prevailing at the end of the day. (2) Purchases and sales of investment securities, income and expenses -- at the rates of exchange prevailing on the respective dates of such transactions. Although the net assets and the market values are presented at the foreign exchange rates at the end of the day, the Funds do not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses from investments. For securities that are subject to foreign withholding tax upon disposition, liabilities are recorded on the statement of assets and liabilities for the estimated tax withholding based on the securities' current market value. Upon disposition, realized gains or losses on such securities are recorded net of foreign withholding tax. Reported net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at fiscal year end, resulting from changes in the exchange rate. Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. Government securities. These risks include but are not limited to re-evaluation of currencies and future adverse political and economic developments which could cause securities and their markets to be less liquid and prices more volatile than those of comparable U.S. companies and U.S. Government securities. D. FOREIGN CURRENCY TRANSACTIONS. Certain Funds may enter into foreign currency exchange transactions to convert to and from different foreign currencies and to and from the U.S. dollar in connection with the planned purchases or sales of securities. The Funds either enter into these transactions on a spot basis at the spot rate prevailing in the foreign currency exchange market or uses forward foreign currency contracts to purchase or sell foreign currencies. When the contract is fulfilled or closed, gains or losses are realized. Until then, the gain or loss is included in unrealized appreciation or depreciation. Risks may arise upon entering into forward contracts from the potential inability of counterparties to 34 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) meet the terms of their forward contracts and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. Each Fund may enter into futures contracts involving foreign currency, interest rates, securities and securities indices, for hedging purposes only. A futures contract obligates the seller of the contract to deliver and the purchaser of the contract to take delivery of the type of foreign currency, financial instrument or security called for in the contract at a specified future time for a specified price. Upon entering into such a contract, a Fund is required to deposit and maintain as collateral such initial margin as required by the exchange on which the contract is traded. Pursuant to the contract, a Fund agrees to receive from or pay to the broker an amount equal to the daily fluctuations in the value of the contract. Such receipts or payments are known as variation margin and are recorded as unrealized gains or losses by the Fund. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. E. DISTRIBUTIONS TO SHAREHOLDERS. The Funds record distributions to their shareholders on ex-dividend date. Each Fund pays dividends and capital gains, if any, annually. F. FEDERAL INCOME TAXES. It is the policy of the Funds, to comply with the requirements of Subchapter M of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of their net investment income and any net realized capital gains to their shareholders. Therefore, a federal income tax provision is not required. In addition, by distributing during each calendar year substantially all of its net investment income and net realized capital gains, each Fund intends not to be subject to any federal excise tax. The Funds may utilize equalization accounting for tax purposes, where by a portion of redemption payments are treated as distributions of income or gain. The Board intends to offset any net capital gains with any available capital loss carryforward until each carryforward has been fully utilized or expires. In addition, no capital gain distribution shall be made until the capital loss carryforward has been fully utilized or expires G. USE OF ESTIMATES. Management of the Funds has made certain estimates and assumptions relating to the reporting of assets, liabilities, income, and expenses to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America for investment companies. Actual results could differ from these estimates. H. REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements only with government securities dealers recognized by the Board of Governors of the Federal Reserve System or with member banks of the Federal Reserve System. Under such agreements, the seller of the security agrees to repurchase it at a mutually agreed upon time and price. The resale price is in excess of the purchase price and reflects an agreed upon interest rate for the period of time the agreement is outstanding. The period of the repurchase agreements is usually short, from overnight to one week, while the underlying securities generally have longer maturities. Each Fund will always receive as collateral securities acceptable to it whose market value is equal to at least 100% of the carrying amount of the repurchase agreements, plus accrued interest, being invested by the Fund. The underlying collateral is valued daily on a mark to market basis to assure that the value, including accrued interest is at least equal to the repurchase price. If the seller defaults, a Fund might incur a loss or delay in the realization of proceeds if the value of security collateralizing the repurchase agreement declines, and it might incur disposition costs in liquidating the collateral. I. SECURITIES LENDING. Each Fund has the option to temporarily loan up to 30% of its total assets to brokers, dealers or other financial institutions in exchange for a negotiated lender's fee. The borrower is required to fully collateralize the loans with cash or U.S. Government securities. Generally, in the event of counterparty default, the Fund has the right to use collateral to offset losses incurred. There would be potential loss to the Fund in the event the Fund is delayed or prevented from exercising its right to dispose of the collateral. The Fund bears the risk of loss with respect to the investment of collateral. Engaging in securities lending could have a leveraging effect, which may intensify the credit, market and other risks associated with investing in a Fund. No securities were on loan at October 31, 2003. J. OPTIONS CONTRACTS. All Funds may purchase put and call options and may write (sell) put options and covered call options. The Funds may engage 35 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) in option transactions as a hedge against adverse movements in the value of portfolio holdings or to increase market exposure. Option contracts are valued daily and unrealized gains or losses are recorded based upon the last sales price on the principal exchange on which the options are traded. The Funds will realize a gain or loss upon the expiration or closing of the option contract. When an option is exercised, the proceeds on sales of the underlying security for a written call option, the purchase cost of the security for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Realized and unrealized gains or losses on option contracts are reflected in the accompanying financial statements. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties to meet the terms of the contract. K. ILLIQUID AND RESTRICTED SECURITIES. Illiquid securities are not readily marketable. Disposing of illiquid investments may involve time-consuming negotiation and legal expenses, and it may be difficult or impossible for the Funds to sell them promptly at an acceptable price. Restricted securities are those sold under Rule 144A of the Securities Act of 1933 (1933 Act) or are securities offered pursuant to Section 4(2) of the 1933 Act, and are subject to legal or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. Restricted securities may be considered liquid pursuant to procedures adopted by the Board or may be deemed illiquid because they may not be readily marketable. Illiquid and restricted securities are valued using market quotations when readily available. In the absence of market quotations, the securities are valued based upon their fair value determined under procedures approved by the Board. The Funds may not invest more than 15% of their net assets in illiquid securities. L. DELAYED DELIVERY TRANSACTION. The Funds may purchase or sell securities on a when-issued or forward commitment basis. The price of the underlying securities and date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The market value of these securities is identified in the Funds' Portfolio. Losses may arise due to changes in the market value of the securities or from the inability of counterparties to meet the terms of the contract. In connection with such purchases, the Funds are required to hold liquid assets as collateral with the Funds' custodian sufficient to cover the purchase price. NOTE 3 -- INVESTMENT TRANSACTIONS For the year ended October 31, 2003, the cost of purchases and proceeds from the sales of securities, excluding short-term securities, were as follows:
PURCHASES SALES --------- ----- Emerging Countries $ 140,318,744 $ 168,670,167 Foreign 14,158,468 2,829,898 International 75,254,600 74,193,202 International SmallCap Growth 321,524,933 373,903,812 International Value 240,034,009 617,722,680 Worldwide Growth 183,424,343 238,164,353
NOTE 4 -- REDEMPTION FEES Effective November 1, 2001, International began imposing a 2% redemption fee on Class A shares redeemed (including in connection with an exchange) within 30 days or less from their date of purchase. The redemption fee is recorded as an addition to paid-in capital. Total redemption fee proceeds for the year ended October 31, 2003 were $306,800 and are set forth in the statements of changes in net assets. For the year ended October 31, 2002, the redemption fee proceeds were $132,507 and are set forth in the statement of changes in net assets. NOTE 5 -- INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES Each of the Funds has entered into an Investment Management Agreement with ING Investments, LLC (the "Investment Manager", or the "Adviser"), a wholly-owned subsidiary of ING Groep N.V. ("ING"). The investment management agreements compensate the Adviser with a fee, computed daily and payable monthly, based on the average daily net assets of each Fund, at the following annual rates:
AS A PERCENTAGE OF AVERAGE NET ASSETS ------------------------------------- Emerging Countries 1.25% Foreign 1.00% on the first $500 million; and 0.90% thereafter International 1.00% International SmallCap Growth 1.00% on first $500 million; 0.90% on next $500 million; and 0.85% in excess of $1 billion International Value 1.00%
36 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued)
AS A PERCENTAGE OF AVERAGE NET ASSETS ------------------------------------- Worldwide Growth 1.00% on first $250 million; 0.90% on next $250 million; 0.80 on next $500 million; and 0.75 in excess of $1 billion
Julius Baer Investment Management Inc. ("JBIM"), a registered investment adviser wholly owned by the Julius Baer Group, services as Sub-Adviser to the Foreign Fund pursuant to a Subadvisory agreement between the Adviser and JBIM. Effective August 1, 2003, Aeltus Investment Management, Inc. ("ING Aeltus"), a registered investment adviser serves as Sub-Adviser to International and Worldwide Growth Funds pursuant to a Subadvisory agreement between the Adviser and ING Aeltus. Both the Adviser and ING Aeltus are indirect, wholly owned subsidiaries of ING and affiliates of each other. Nicholas-Applegate Capital Management ("NACM"), a registered investment advisor, serves as a Sub-Adviser to the International SmallCap Growth Fund pursuant to a Subadvisory agreement between the Adviser and NACM. Brandes Investment Partners, LLC ("Brandes"), a registered investment advisor, serves as a Sub-Adviser to the International Value Fund pursuant to a Subadvisory agreement between the Adviser and Brandes. ING Investment Management Advisors B.V. ("IIMA"), a registered investment advisor, serves as Sub-Adviser to the Emerging Countries Fund pursuant to a Subadvisory agreement between the Adviser and IIMA. ING Funds Services, LLC (the "Administrator" or "IFS"), serves as administrator to each Fund. IFS is a wholly-owned indirect subsidiary of ING. The Funds pay the Administrator a fee calculated at an annual rate of 0.10% of each Fund's average daily net assets. International Value Fund also pays IFS an annual shareholder account-servicing fee of $5.00, payable quarterly, for each account of beneficial owners of shares. NOTE 6 -- DISTRIBUTION AND SERVICE FEES Each share class of the Funds has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plans"), whereby ING Funds Distributor, LLC (the "Distributor"), a wholly-owned indirect subsidiary of ING, is reimbursed or compensated (depending on the class of shares) by the Funds for expenses incurred in the distribution of each Funds' shares ("Distribution Fees"). Pursuant to the 12b-1 Plans, the Distributor is entitled to a payment each month for actual expenses incurred in the distribution and promotion of each Fund's shares, including expenses incurred in printing prospectuses and reports used for sales purposes, expenses incurred in preparing and printing sales literature and other such distribution related expenses, including any distribution or shareholder servicing fees ("Service Fees") paid to securities dealers who have executed a distribution agreement with the Distributor. Under the 12b-1 Plans, each class of shares of the Fund pays the Distributor a combined Distribution and Service Fee based on average daily net assets at the following annual rates:
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q ------- ------- ------- ------- ------- ------- Emerging Countries 0.35% 1.00% 1.00% N/A 0.75% 0.25% Foreign 0.25% 1.00% 1.00% N/A N/A 0.25% International 0.25% 1.00% 1.00% N/A N/A 0.25% International SmallCap Growth 0.35% 1.00% 1.00% N/A N/A 0.25% International Value 0.30% 1.00% 1.00% N/A N/A 0.25% Worldwide Growth 0.35% 1.00% 1.00% N/A N/A 0.25%
Fees paid to the Distributor by class during the year ended October 31, 2003 are shown in the accompanying Statements of Operations. The Distributor also receives the proceeds of the initial sales charge paid by shareholders upon the purchase of Class A shares, and the contingent deferred sales charge paid by shareholders upon certain redemptions for Class A, Class B, and Class C shares. For the year ended October 31, 2003, the Distributor retained the following amounts in sales charges for the Funds:
CLASS A CLASS B CLASS C CLASS M SHARES SHARES SHARES SHARES ------ ------ ------ ------ Initial Sales Charges $ 37,086 n/a n/a $ 236 Contingent Deferred Sales Charges $ 179,532 $ 0 $ 120,689 n/a
NOTE 7 -- OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES At October 31, 2003, the Funds had the following amounts recorded in payable to affiliates on the accompanying Statements of Assets and Liabilities (See Notes 5 and 6):
ACCRUED ACCRUED INVESTMENT ACCRUED SHAREHOLDER MANAGEMENT ADMINISTRATIVE SERVICES AND FEES FEES DISTRIBUTION FEES TOTAL ---- ---- ----------------- ----- Emerging Countries $ 123,992 $ 9,919 $ 48,165 $ 182,076 Foreign 8,684 868 5,146 14,698 International 98,096 8,109 35,088 141,293 International SmallCap Growth 283,089 28,309 152,952 464,350 International Value 2,708,826 426,038 1,312,036 4,446,900 Worldwide Growth 124,134 12,413 88,029 224,576
37 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) At October 31, 2003, the following wholly-owned indirect subsidiaries of ING owned the following Funds: ING Life Insurance and Annuity Company - International Fund (12.4%) ING Investments, LLC -- Foreign Fund (7.8%) ING National Trust - International Fund (11.3%) Investment activities of these shareholders could have material impact on the Funds. Each Fund has adopted a Retirement Policy covering all independent trustees of the Fund who will have served as an independent trustee for at least five years at the time of retirement. Benefits under this plan are based on an annual rate as defined in the plan agreement. NOTE 8 -- OTHER ACCRUED EXPENSES AND LIABILITIES At October 31, 2003, the following Funds had following payables included in Other Accrued Expenses and Liabilities on the Statements of Assets and Liabilities that exceeded 5% of total liabilities:
PAYABLE FOR CUSTODY FEES ------------ Emerging Countries $ 99,950 International 41,624 International SmallCap Growth 91,519 PAYABLE FOR TRANSFER AGENT FEES ------------ Emerging Countries $ 85,393 International 72,798 International SmallCap Growth 249,846 International Value 1,515,405 Worldwide Growth 76,954 PAYABLE FOR SHAREHOLDER REPORTING EXPENSE ------------ International $ 38,348 International SmallCap Growth 89,589 International Value 750,614 Worldwide Growth 166,408 PAYABLE FOR ESTIMATED INDIA TAX ------------ Emerging Countries $ 132,836
NOTE 9 -- EXPENSE LIMITATIONS For the following Funds, the Investment Manager has agreed to limit expenses, excluding interest, taxes, brokerage and extraordinary expenses to the levels listed below: Maximum Operating Expense Limit (as a percentage of average net assets)
CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q SHARES SHARES SHARES SHARES SHARES SHARES ------ ------ ------ ------ ------ ------ Emerging Countries 2.25% 2.90% 2.90% N/A 2.65% 2.15% Foreign 1.95% 2.70% 2.70% 1.60% N/A 1.85% International 1.95% 2.70% 2.70% 1.60% N/A 1.85% CLASS A CLASS B CLASS C CLASS I CLASS M CLASS Q SHARES SHARES SHARES SHARES SHARES SHARES ------ ------ ------ ------ ------ ------ International SmallCap Growth 1.95% 2.60% 2.60% N/A N/A 1.85% International Value N/A N/A N/A N/A N/A N/A Worldwide Growth 1.85% 2.50% 2.50% N/A N/A 1.75%
For International Fund, the voluntary expense limits provided above were effective July 1, 2003. Each Fund will at a later date reimburse the Investment Manager for management fees waived and other expenses assumed by the Investment Manager during the previous 36 months, but only if, after such reimbursement, the Fund's expense ratio does not exceed the percentage described above. Waived and reimbursed fees and any recoupment by the Investment Manager of such waived and reimbursed fees are reflected net on the accompanying Statements of Operations for each Fund. Amounts payable by the Investment Manager are reflected on the accompanying statements of Assets and Liabilities for each Fund. As of October 31, 2003, the cumulative amounts of reimbursed fees that are subject to possible recoupment by the Investment Manager are as follows: Emerging Countries $ 57,128 Foreign 70,612 International 43,933 International SmallCap Growth 106,688 Worldwide Growth 812,316
NOTE 10 -- LINE OF CREDIT All of the Funds included in this report, in addition to certain other funds managed by the Adviser, have entered into an unsecured committed revolving line of credit agreement (the "Credit Agreement") with The Bank of New York for an aggregate amount of $150,000,000. The proceeds may be used only to: (1) temporarily finance the purchase and sale of securities; (2) finance the redemption of shares of an investor in the Funds; and (3) enable the Funds to meet other emergency expenses as defined in the Credit Agreement. The Funds to which the line of credit is available pay a commitment fee equal to 0.09% per annum on the daily unused portion of the committed line amount payable quarterly in arrears. The following Funds utilized the line of credit during the year ended October 31, 2003:
APPROXIMATE APPROXIMATE DAYS AVERAGE DAILY WEIGHTED AVERAGE UTILIZED BALANCE INTEREST RATE -------- ------- ------------- Emerging Countries 137 $ 4,011,255 1.60% International 1 2,290,000 1.75% International SmallCap 20 3,322,650 1.46% International Value 7 2,280,000 1.80% Worldwide Growth 17 1,590,588 1.66%
38 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 11 -- CAPITAL SHARES Transactions in capital shares and dollars were as follows:
CLASS A SHARES CLASS B SHARES ---------------------------------- ---------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- EMERGING COUNTRIES (NUMBER OF SHARES) Shares sold 15,077,519 11,599,557 84,548 171,877 Shares issued in merger -- 407,103 -- 276,180 Dividends reinvested -- 121 -- -- Shares redeemed (15,912,953) (12,682,825) (349,157) (461,156) --------------- --------------- --------------- --------------- Net decrease in shares outstanding (835,434) (676,044) (264,609) (13,099) =============== =============== =============== =============== EMERGING COUNTRIES ($) Shares sold $ 209,705,771 $ 161,276,949 $ 1,250,314 $ 2,478,236 Shares issued in merger -- 5,280,325 -- 3,558,403 Dividends reinvested -- 1,567 -- -- Shares redeemed (222,355,701) (177,404,620) (4,809,392) (6,402,316) --------------- --------------- --------------- --------------- Net decrease $ (12,649,930) $ (10,845,779) $ (3,559,078) $ (365,677) =============== =============== =============== =============== CLASS C SHARES ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- EMERGING COUNTRIES (NUMBER OF SHARES) Shares sold 352,142 361,853 Shares issued in merger -- -- Dividends reinvested -- -- Shares redeemed (544,473) (671,785) --------------- --------------- Net decrease in shares outstanding (192,331) (309,932) =============== =============== EMERGING COUNTRIES ($) Shares sold $ 4,452,036 $ 5,122,486 Shares issued in merger -- -- Dividends reinvested -- -- Shares redeemed (6,896,237) (9,265,932) --------------- --------------- Net decrease $ (2,444,201) $ (4,143,446) =============== =============== CLASS Q SHARES CLASS M SHARES ---------------------------------- ---------------------------------- YEAR YEAR YEAR AUGUST 5, ENDED ENDED ENDED 2002 TO OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002(1) ---- ---- ---- ------- EMERGING COUNTRIES (NUMBER OF SHARES) Shares sold 12,331,900 3,391,625 3,626 921 Shares issued in merger -- -- -- 92,645 Dividends reinvested -- 72 -- -- Shares redeemed (12,967,395) (3,924,951) (22,486) (2,436) --------------- --------------- --------------- --------------- Net increase (decrease) in shares outstanding (635,495) (533,254) (18,860) 91,130 =============== =============== =============== =============== EMERGING COUNTRIES ($) Shares sold $ 173,161,999 $ 47,255,785 $ 47,863 $ 11,570 Shares issued in merger -- -- -- 1,201,548 Dividends reinvested -- 970 -- -- Shares redeemed (183,269,201) (54,959,947) (297,464) (30,431) --------------- --------------- --------------- --------------- Net increase (decrease) $ (10,107,202) $ (7,703,192) $ (249,601) $ 1,182,687 =============== =============== =============== =============== CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS I SHARES CLASS Q SHARES --------------- --------------- --------------- --------------- --------------- JULY 1, JULY 8, JULY 3, SEPTEMBER 10, JULY 11, 2003 TO 2003 TO 2003 TO 2003 TO 2003 TO OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003(1) 2003(1) 2003(1) 2003(1) 2003(1) ------- ------- ------- ------- ------- FOREIGN (NUMBER OF SHARES) Shares sold 702,682 124,952 513,787 16,997 62,839 Shares redeemed (103,607) (2,654) (5,086) -- (24,630) --------------- --------------- --------------- --------------- --------------- Net increase in shares outstanding 599,075 122,298 508,701 16,997 38,209 =============== =============== =============== =============== =============== FOREIGN ($) Shares sold $ 7,385,657 $ 1,332,337 $ 5,506,304 $ 185,032 $ 660,039 Shares redeemed (1,050,695) (28,662) (55,392) (39) (270,197) --------------- --------------- --------------- --------------- --------------- Net increase $ 6,334,962 $ 1,303,675 $ 5,450,912 $ 184,993 $ 389,842 =============== =============== =============== =============== ===============
- ---------- (1) Commencement of operations of class. 39 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued)
CLASS A SHARES CLASS B SHARES ---------------------------------- ---------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL (NUMBER OF SHARES) Shares sold 7,762,080 8,189,311 411,047 455,458 Shares issued in merger -- 818,729 -- 1,223,633 Dividends reinvested 14,078 -- -- -- Shares redeemed (8,754,777) (7,499,690) (378,329) (440,191) --------------- --------------- --------------- --------------- Net increase (decrease) in shares outstanding (978,619) 1,508,350 32,718 1,238,900 =============== =============== =============== =============== INTERNATIONAL ($) Shares sold $ 55,834,069 $ 62,922,949 $ 2,964,613 $ 3,482,361 Shares issued in merger -- 7,189,923 -- 10,596,499 Dividends reinvested 100,936 -- -- -- Redemption fee proceeds 306,800 132,507 -- -- Shares redeemed (62,551,570) (59,009,071) (2,692,370) (3,410,635) --------------- --------------- --------------- --------------- Net increase (decrease) $ (6,309,765) $ 11,236,308 $ 272,243 $ 10,668,225 =============== =============== =============== =============== CLASS C SHARES ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL (NUMBER OF SHARES) Shares sold 687,730 974,161 Shares issued in merger -- 1,243,707 Dividends reinvested 223 -- Shares redeemed (714,120) (614,252) --------------- --------------- Net increase (decrease) in shares outstanding (26,167) 1,603,616 =============== =============== INTERNATIONAL ($) Shares sold $ 4,915,756 $ 7,381,467 Shares issued in merger -- 10,762,961 Dividends reinvested 1,567 -- Redemption fee proceeds -- -- Shares redeemed (5,079,397) (4,729,016) --------------- --------------- Net increase (decrease) $ (162,074) $ 13,415,412 =============== =============== CLASS I SHARES CLASS Q SHARES ---------------------------------- ---------------------------------- YEAR JANUARY 15, YEAR YEAR ENDED 2002 TO ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002(1) 2003 2002 ---- ------- ---- ---- INTERNATIONAL (NUMBER OF SHARES) Shares sold 4,236,967 3,152,664 9,642,227 471,191 Shares issued in merger -- -- -- 993,513 Dividends reinvested 7,018 -- 6,300 -- Shares redeemed (3,777,860) (2,248,030) (8,885,673) (478,675) --------------- --------------- --------------- --------------- Net increase in shares outstanding 466,125 904,634 762,854 986,029 =============== =============== =============== =============== INTERNATIONAL ($) Shares sold $ 31,427,964 $ 25,021,083 $ 71,887,675 $ 3,563,197 Shares issued in merger -- -- -- 8,727,522 Dividends reinvested 50,182 -- 44,920 -- Shares redeemed (28,083,521) (17,592,690) (66,455,504) (3,696,166) --------------- --------------- --------------- --------------- Net increase $ 3,394,625 $ 7,428,393 $ 5,477,091 $ 8,594,553 =============== =============== =============== =============== CLASS A SHARES CLASS B SHARES ---------------------------------- ---------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL SMALLCAP GROWTH (NUMBER OF SHARES) Shares sold 19,584,957 29,014,063 259,509 599,756 Shares redeemed (20,385,263) (29,337,016) (645,907) (1,096,685) --------------- --------------- --------------- --------------- Net decrease in shares outstanding (800,306) (322,953) (386,398) (496,929) =============== =============== =============== =============== INTERNATIONAL SMALLCAP GROWTH ($) Shares sold $ 382,529,561 $ 632,348,151 $ 5,554,909 $ 13,965,766 Shares redeemed (401,765,381) (642,058,647) (13,344,655) (25,182,365) --------------- --------------- --------------- --------------- Net decrease $ (19,235,820) $ (9,710,496) $ (7,789,746) $ (11,216,599) =============== =============== =============== =============== CLASS C SHARES ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL SMALLCAP GROWTH (NUMBER OF SHARES) Shares sold 1,022,290 1,192,193 Shares redeemed (1,596,079) (1,824,566) --------------- --------------- Net decrease in shares outstanding (573,789) (632,373) =============== =============== INTERNATIONAL SMALLCAP GROWTH ($) Shares sold $ 19,024,592 $ 25,346,123 Shares redeemed (29,846,873) (38,544,051) --------------- --------------- Net decrease $ (10,822,281) $ (13,197,928) =============== ===============
- ---------- (1) Commencement of operations of class 40 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued)
CLASS Q SHARES ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL SMALLCAP GROWTH (NUMBER OF SHARES) Shares sold 18,417,622 6,300,682 Shares redeemed (19,100,237) (6,626,006) --------------- --------------- Net decrease in shares outstanding (682,615) (325,324) =============== =============== INTERNATIONAL SMALLCAP GROWTH ($) Shares sold $ 386,181,572 $ 143,123,447 Shares redeemed (402,650,057) (150,812,281) --------------- --------------- Net decrease $ (16,468,485) $ (7,688,834) =============== =============== CLASS A SHARES CLASS B SHARES ---------------------------------- ---------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL VALUE (NUMBER OF SHARES) Shares sold 26,629,999 119,238,378 789,733 9,034,613 Dividends reinvested 2,380,188 2,046,200 522,401 542,229 Shares redeemed (39,577,685) (87,913,712) (6,780,391) (7,613,839) --------------- --------------- --------------- --------------- Net increase (decrease) in shares outstanding (10,567,498) 33,370,866 (5,468,257) 1,963,003 =============== =============== =============== =============== INTERNATIONAL VALUE ($) Shares sold $ 300,379,527 $ 1,522,323,967 $ 8,617,865 $ 114,916,200 Dividends reinvested 24,301,715 25,679,811 5,265,802 6,739,902 Shares redeemed (433,441,524) (1,107,047,090) (72,491,973) (89,774,421) --------------- --------------- --------------- --------------- Net increase (decrease) $ (108,760,282) $ 440,956,688 $ (58,608,306) $ 31,881,681 =============== =============== =============== =============== CLASS C SHARES ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- INTERNATIONAL VALUE (NUMBER OF SHARES) Shares sold 366,016 18,810,213 Dividends reinvested 793,701 774,598 Shares redeemed (10,503,035) (13,237,481) --------------- --------------- Net increase (decrease) in shares outstanding (9,343,318) 6,347,330 =============== =============== INTERNATIONAL VALUE ($) Shares sold $ 3,763,939 $ 239,956,133 Dividends reinvested 7,984,632 9,605,012 Shares redeemed (111,900,151) (159,086,448) --------------- --------------- Net increase (decrease) $ (100,151,580) $ 90,474,697 =============== =============== CLASS I SHARES CLASS Q SHARES ---------------------------------- ---------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- INTERNATIONAL VALUE (NUMBER OF SHARES) Shares sold 5,744,382 24,400,308 414,335 3,129,171 Dividends reinvested 960,472 431,858 55,079 61,189 Shares redeemed (7,324,179) (7,442,390) (1,192,380) (3,233,666) --------------- --------------- --------------- --------------- Net increase (decrease) in shares outstanding (619,325) 17,389,776 (722,966) (43,306) =============== =============== =============== =============== INTERNATIONAL VALUE ($) Shares sold $ 64,019,780 $ 311,346,171 $ 4,342,982 $ 40,891,856 Dividends reinvested 9,787,206 5,411,186 562,357 769,149 Shares redeemed (81,395,062) (88,175,138) (12,908,381) (41,911,766) --------------- --------------- --------------- --------------- Net increase (decrease) $ (7,588,076) $ 228,582,219 $ (8,003,042) $ (250,761) =============== =============== =============== ===============
41 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued)
CLASS A SHARES CLASS B SHARES ---------------------------------- ---------------------------------- YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 2003 2002 2003 2002 ---- ---- ---- ---- WORLDWIDE GROWTH (NUMBER OF SHARES) Shares sold 12,783,099 10,042,589 74,457 130,581 Shares redeemed (14,551,712) (13,104,424) (713,016) (1,486,694) --------------- --------------- --------------- --------------- Net decrease in shares outstanding (1,768,613) (3,061,835) (638,559) (1,356,113) =============== =============== =============== =============== WORLDWIDE GROWTH ($) Shares sold $ 161,726,758 $ 145,141,054 $ 1,068,420 $ 2,247,925 Shares redeemed (185,501,020) (192,304,536) (10,063,284) (24,337,790) --------------- --------------- --------------- --------------- Net increase (decrease) $ (23,774,262) $ (47,163,482) $ (8,994,864) $ (22,089,865) =============== =============== =============== =============== CLASS C SHARES ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- WORLDWIDE GROWTH (NUMBER OF SHARES) Shares sold 525,179 372,981 Shares redeemed (1,639,911) (2,833,697) --------------- --------------- Net decrease in shares outstanding (1,114,732) (2,460,716) =============== =============== WORLDWIDE GROWTH ($) Shares sold $ 6,434,456 $ 5,747,691 Shares redeemed (20,391,680) (41,522,976) --------------- --------------- Net increase (decrease) $ (13,957,224) $ (35,775,285) =============== =============== CLASS Q SHARES ---------------------------------- YEAR YEAR ENDED ENDED OCTOBER 31, OCTOBER 31, 2003 2002 ---- ---- WORLDWIDE GROWTH (NUMBER OF SHARES) Shares sold 8,644,664 2,165,766 Shares redeemed (8,840,185) (2,555,640) --------------- --------------- Net decrease in shares outstanding (195,521) (389,874) =============== =============== WORLDWIDE GROWTH ($) Shares sold $ 127,952,864 $ 35,266,752 Shares redeemed (130,999,382) (42,294,829) --------------- --------------- Net decrease $ (3,046,518) $ (7,028,077) =============== ===============
NOTE 12 -- ILLIQUID SECURITIES Pursuant to guidelines adopted by the Funds' Board, the following securities have been deemed to be illiquid. The Funds currently limit investment in illiquid securities to 15% of the Fund's net assets, at market value, at time of purchase.
INITIAL PERCENT ACQUISITION OF NET FUND SECURITY SHARES DATE COST VALUE ASSETS - ---- -------- ------ ---- ---- ----- ------ Emerging Countries Larsen & Toubro Ltd. 240,000 10/31/01 $ 825,661 $ 2,154,016 1.8%
42 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) NOTE 13 -- REORGANIZATIONS On May 17, 2002 and August 2, 2002, certain Funds, as listed below (each an "Acquiring Fund"), acquired the assets and certain liabilities of other Funds, also listed below (each an "Acquired Fund"), in a tax -- free reorganization in exchange for shares of the Acquiring Fund, pursuant to a plan of reorganization approved by the Acquired Fund's shareholders. The number and value of shares issued by the Acquiring Fund are presented in Note 11 -- Capital Shares. The Adviser and the Funds allocated the cost associated with the Reorganization equally. Net assets and unrealized appreciation/(depreciation) as of the reorganization date were as follows:
ACQUIRED FUND UNREALIZED ACQUIRING ACQUIRED TOTAL NET ASSETS OF TOTAL NET ASSETS OF APPRECIATION/ FUND FUND ACQUIRED FUND (000'S) ACQUIRING FUND (000'S) (DEPRECIATION)(000'S) ---- ---- --------------------- ---------------------- --------------------- Emerging Countries Asia-Pacific Equity $ 10,040 $ 108,280 $ (4,828) International International Core Growth 37,277 48,767 1,524
The net assets of Emerging Countries and International after the acquisitions were approximately $118,319,926 and $86,044,454, respectively. NOTE 14 -- CONCENTRATION OF RISKS FOREIGN SECURITIES (ALL FUNDS). Investments in foreign securities may entail risks not present in domestic investments. Since investments of securities are denominated in foreign currencies, changes in the relationship of these foreign currencies to the U.S. dollar can significantly affect the value of the investments and earnings of the Funds. Foreign investments may also subject the Funds to foreign government exchange restrictions, expropriation, taxation or other political, social or economic developments, as well as from movements in currency, security value and interest rate, all of which could affect the market and/or credit risk of the investments. EMERGING MARKETS INVESTMENTS (ALL FUNDS). Because of less developed markets and economies and, in some countries, less mature governments and governmental institutions, the risks of investing in foreign securities can be intensified in the case of investments in issuers domiciled or doing substantial business in emerging market countries. NOTE 15 -- FEDERAL INCOME TAXES During the fiscal year ended October 31, 2003, the foreign taxes paid or withheld were $1,215, $225,485, $8,984,162, $100,390, on foreign source income for Foreign Fund, International Fund and International Value Fund, respectively. Foreign taxes paid or withheld should be included in taxable income with an offsetting deduction from gross income or as a credit for taxes paid to foreign governments. You should consult your tax advisor regarding the appropriate treatment of foreign taxes paid. Dividends paid by the Funds from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders. 43 NOTES TO FINANCIAL STATEMENTS as of October 31, 2003 (Continued) The tax composition of dividends and distributions were as follow:
ORDINARY LONG-TERM INCOME CAPITAL GAINS ------ ------------- International $ 265,181 $ -- International Value 25,983,597 37,067,031 YEAR ENDED ORDINARY LONG-TERM OCTOBER 31, 2002: INCOME CAPITAL GAINS ------ ------------- Emerging Countries $ 2,891 $ -- International Value 19,220,965 45,599,213
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. These book/tax differences are either considered temporary or permanent in nature. Key differences are the treatment of short-term capital gains, foreign currency transactions, wash sale deferrals, organization costs and other temporary differences. To the extent that these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassifications. To the extent distributions exceed net investment income and/or net realized capital gains for tax purposes, they are reported as distributions of paid-in capital. Accordingly, the following amounts represent current year permanent tax differences that have been reclassified as of October 31, 2003:
ACCUMULATED UNDISTRIBUTED NET REALIZED NET GAINS PAID-IN INVESTMENT (LOSSES) ON CAPITAL INCOME INVESTMENTS ------- ------------ ------------ Emerging Countries $ -- $ 272,385 $ (272,385) Foreign (55,357) 73,322 (17,965) International -- (31,040) 31,040 International SmallCap Growth -- 741,287 (741,287) International Value -- 1,833,676 (1,833,676) Worldwide Growth (1,106,717) 1,046,259 60,458
Capital loss carryforwards, which may be used to offset future realized capital gains for federal income tax purposes were as follows at October 31, 2003:
EXPIRATION AMOUNT DATES ------------- --------------- Emerging Countries $ 170,443,085 2005, 2007-2010 International 37,788,257 2007-2011 International SmallCap Growth 237,702,930 2008-2010 International Value 98,526,506 2011 Worldwide Growth 235,346,672 2008-2011
The following represents the tax-basis components of distributable earnings as of October 31, 2003:
UNDISTRIBUTED CAPITAL UNDISTRIBUTED ORDINARY UNREALIZED LOSS LONG TERM INCOME APPRECIATION CARRYFORWARDS GAIN/LOSS -------------- -------------- -------------- -------------- Emerging Countries $ 436,002 $ 33,118,086 $ (170,443,085) $ -- Foreign 117,485 436,142 -- -- International 142,522 10,472,665 (37,788,257) -- International SmallCap Growth 58,426 82,015,071 (237,702,930) -- International Value 15,253,442 (91,077,118) (98,526,506) --
NOTE 16 -- CHANGE IN FUNDS' AUDITORS (UNAUDITED) PricewaterhouseCoopers, LLP ("PwC") served as independent auditors for the Funds. On May 28, 2003, the Funds' Board dismissed PwC and selected KPMG LLP ("KPMG") as independent auditors for the Funds for the fiscal year ended October 31, 2003 upon the recommendation of the Funds' Audit Committee. During the two most recent fiscal years and through May 28, 2003, there was no disagreement with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to PwC's satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement. The audit reports of PwC on the financial statements of the ING Emerging Countries Fund, ING International Fund, ING International SmallCap Growth Fund, ING International Value Fund and ING Worldwide Growth Fund as of and for the periods or years ended October 31, 2002 and 2001 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. NOTE 17 -- OTHER INFORMATION (UNAUDITED) 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. ING is also conducting an internal review of investment company share trading as well as reviewing their policies and procedures in this area. NOTE 18 -- SUBSEQUENT EVENT For the Foreign Fund, effective December 1, 2003, the expense limitations for Classes A, B, C, I and Q are 1.70%, 2.45%, 2.45%, 1.35% and 1.60%, respectively. 44 ING Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCK: 90.8% AUSTRIA: 0.6% 16,400 @ Bank Austria Creditanstalt AG $ 714,556 ---------------- 714,556 ---------------- BRAZIL: 9.4% 38,100 Banco Itau Holding Financeira SA ADR 1,556,385 14,300 Brasil Telecom Participacoes SA ADR 522,236 46,100 Cia de Bebidas Das Americas ADR 977,320 58,000 Cia Energetica de Minas Gerais ADR 849,120 38,900 Cia Vale do Rio Doce ADR 1,571,560 36,800 Gerdau SA ADR 535,808 179,600 Petroleo Brasileiro SA - Petrobras ADR 3,908,096 84,059 Tele Norte Leste Participacoes SA ADR 1,191,116 ---------------- 11,111,641 ---------------- CHILE: 1.2% 33,000 Cia de Telecomunicaciones de Chile SA ADR 502,590 131,900 Enersis SA ADR 912,748 ---------------- 1,415,338 ---------------- CHINA: 2.7% 1,596,000 China Oilfield Services Ltd. 462,418 1,746,000 China Petroleum & Chemical Corp. 578,950 1,418,000 China Telecom Corp. Ltd. 470,189 334,000 Huaneng Power Intl., Inc. 511,815 203,000 @ Weiqiao Textile Co. 237,879 1,384,000 Zhejiang Expressway Co. Ltd. 873,276 ---------------- 3,134,527 ---------------- HONG KONG: 3.1% 541,500 China Mobile Ltd. 1,537,540 434,000 Citic Pacific Ltd. 1,011,551 239,000 Cnooc Ltd. 450,874 702,000 Cofco Intl. Ltd. 433,908 302,000 @ Lee & Man Paper Manufacturing Ltd. 223,612 ---------------- 3,657,485 ---------------- HUNGARY: 0.4% 19,815 @ OTP Bank Rt. GDR 486,458 ---------------- 486,458 ---------------- INDIA: 5.2% 240,000 I Larsen & Toubro Ltd. 2,154,016 20,000 Ranbaxy Laboratories Ltd. GDR 458,000 116,014 # Reliance Industries Ltd. GDR 2,772,735 91,300 Tata Motors Ltd. GDR 766,920 ---------------- 6,151,671 ---------------- INDONESIA: 1.8% 615,346 @ Astra Intl. Tbk PT 315,042 4,097,500 @ Bank Mandiri Persero PT 458,145 360,000 Gudang Garam Tbk PT 557,171 1,037,000 Telekomunikasi Indonesia Tbk PT $ 732,302 ---------------- 2,062,660 ---------------- ISRAEL: 2.1% 26,500 @ Check Point Software Technologies 450,235 36,200 Teva Pharmaceutical Industries ADR 2,059,418 ---------------- 2,509,653 ---------------- MALAYSIA: 4.6% 14,700 @ Astro All Asia Networks PLC 18,259 418,000 Gamuda BHD 836,000 94,600 Genting BHD 460,553 221,200 Malayan Banking BHD 593,747 372,000 New Straits Times Press BHD 405,284 1,749,000 Public Bank BHD 1,380,789 292,000 Resorts World BHD 845,263 384,000 Telekom Malaysia Bhd 929,684 ---------------- 5,469,579 ---------------- MEXICO: 6.6% 69,700 America Movil SA de CV ADR 1,658,860 21,305 Cemex SA de CV ADR 511,320 15,700 Fomento Economico Mexicano SA de CV ADR 560,804 948,100 @ Grupo Financiero BBVA Bancomer 804,724 358,800 @ Grupo Mexico SA de CV 629,189 27,450 Grupo Televisa SA ADR 1,063,688 59,100 Telefonos de Mexico SA de CV ADR 1,900,066 15,910 TV Azteca SA de CV ADR 128,712 189,600 Wal-Mart de Mexico SA de CV 528,714 ---------------- 7,786,077 ---------------- PHILIPPINES: 0.3% 3,152,000 Ayala Land, Inc. 370,388 ---------------- 370,388 ---------------- POLAND: 0.9% 14,100 Bank Pekao SA GDR 406,362 182,200 Telekomunikacja Polska SA GDR 630,412 ---------------- 1,036,774 ---------------- RUSSIA: 4.2% 26,000 LUKOIL ADR 2,113,800 40,289 OAO Gazprom ADR 965,503 19,200 Surgutneftegaz ADR 476,928 30,175 YUKOS ADR 1,394,085 ---------------- 4,950,316 ---------------- SOUTH AFRICA: 7.4% 210,000 Absa Group Ltd. 1,213,706 780,000 Firstrand Ltd. 921,972 109,600 Gold Fields Ltd. ADR 1,569,472 49,800 Harmony Gold Mining Co. Ltd. ADR 752,976 11,500 Impala Platinum Holdings Ltd. 1,056,599 263,000 @ MTN Group Ltd. 942,146 18,300 Sappi Ltd. 231,543
See Accompanying Notes to Financial Statements 45 ING Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- SOUTH AFRICA (CONTINUED) 40,500 Sappi Ltd. ADR $ 518,400 304,000 Standard Bank Group Ltd. 1,473,044 ---------------- 8,679,858 ---------------- SOUTH KOREA: 16.0% 24,030 Daishin Securities Co. Ltd. 346,186 14,100 Honam Petrochemical Corp. 564,715 45,161 Kookmin Bank 1,648,462 37,210 Korea Electric Power Corp. 718,419 40,330 Korean Air Co. Ltd. 538,415 22,790 KT Corp. 906,978 9,030 KT Corp. ADR 177,981 69,300 # KT&G Corp. GDR 675,675 14,230 LG Chem Ltd. 571,124 21,100 LG Electronics, Inc. 1,092,886 4,462 Nong Shim Co. Ltd. 652,240 13,070 Posco 1,524,005 15,770 Samsung Electronics Co. Ltd. 6,262,695 13,190 Samsung Fire & Marine Insurance Co. Ltd. 753,396 2,840 Shinsegae Co. Ltd. 569,920 10,600 SK Telecom Co. Ltd. 1,871,906 ---------------- 18,875,003 ---------------- TAIWAN: 14.8% 182,613 Asustek Computer, Inc. GDR 440,097 246,600 China Motor Corp. Ltd. 468,159 19,000 China Steel Corp. GDR 304,000 968,000 Chinatrust Financial Holding Co. 1,005,751 1,147,000 Compal Electronics, Inc. 1,738,645 1,384,506 Eva Airways Corp. 586,810 1,675,000 Fubon Financial Holding Co. Ltd. 1,764,975 60,000 @ HannStar Display Corp. ADR 501,000 114,060 Hon Hai Precision Industry 510,291 164,424 HON HAI Precision Industry GDR 1,484,749 185,000 @ Ichia Technologies, Inc. 337,601 76,450 MediaTek, Inc. 787,564 1,033,360 Nan Ya Plastic Corp. 1,377,813 686,660 Synnex Technology Intl. Corp. 1,010,537 1,274,372 @ Taiwan Semiconductor Manufacturing Co. Ltd. 2,513,111 2,349,626 @ United Microelectronics Corp. 2,150,798 648,968 Yuanta Core Pacific Securities Co. 403,038 ---------------- 17,384,939 ---------------- THAILAND: 2.7% 221,900 @ Bangkok Bank PCL 520,056 962,650 Bangkok Expressway PCL 530,851 117,000 BEC World PLC 709,713 334,500 @ Kasikornbank PCL 373,111 3,044,500 Land & House PLC 1,030,223 ---------------- 3,163,954 ---------------- TURKEY: 1.6% 189,000,000 Akbank Tas 885,738 400,000,000 @ Turkiye Garanti Bankasi AS 937,289 ---------------- 1,823,027 ---------------- UNITED KINGDOM: 3.7% 188,000 Anglo American PLC 3,847,461 272,700 Old Mutual PLC 473,170 ---------------- 4,320,631 ---------------- UNITED STATES: 1.5% 12,000 @ iShares MSCI Emerging Markets Index Fund $ 1,780,920 ---------------- 1,780,920 ---------------- Total Common Stock (Cost $72,812,774) 106,885,455 ---------------- PREFERRED STOCK: 3.1% BRAZIL: 0.3% 12,562,388 Duratex SA 315,406 ---------------- 315,406 ---------------- SOUTH KOREA: 2.8% 16,880 Samsung Electronics Co. Ltd. 3,351,753 ---------------- 3,351,753 ---------------- Total Preferred Stock (Cost $2,820,588) 3,667,159 ---------------- WARRANTS: 3.5% INDIA: 3.5% 32,000 @,E Bajaj Auto Ltd., Expires 01/17/2006 646,249 60,500 @,E Bharat Heavy Electricals Ltd., Expires 09/09/2005 642,921 129,000 @,E Hindustan Lever Ltd., Expires 01/23/2004 496,985 127,400 @,E ICICI Bank Ltd., Expires 07/16/2004 697,439 11,000 @,E Infosys Technologies Ltd., 06/14/2004 1,150,837 52,500 @,E Larsen & Toubro Ltd., Expires 04/24/2006 471,295 ---------------- 4,105,726 ---------------- SOUTH KOREA: 0.0% 1,100 @,E KT Corp. 43,784 ---------------- 43,784 ---------------- Total Warrants (Cost $3,249,610) 4,149,510 ---------------- TOTAL INVESTMENTS IN SECURITIES (COST $78,882,972)* 97.4% $ 114,702,124 OTHER ASSETS AND LIABILITIES-NET 2.6 3,114,705 ----- ---------------- NET ASSETS 100.0% $ 117,816,829 ===== ================
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company E Equity Linked Product I Illiquid Security # Securities with purchases pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees. * Cost for federal income tax purposes is $81,698,119. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 33,423,085 Gross Unrealized Depreciation (419,080) ---------------- Net Unrealized Appreciation $ 33,004,005 ================
See Accompanying Notes to Financial Statements 46 ING Emerging Countries Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------- Agriculture 1.1% Airlines 1.0 Auto Manufacturers 1.1 Banks 13.0 Beverages 1.3 Building Materials 0.7 Chemicals 4.5 Commercial Services 1.2 Computers 4.0 Diversified Financial Services 2.8 Electric 2.6 Electrical Components & Equipment 9.5 Electronics 1.1 Engineering & Construction 0.7 Entertainment 0.7 Food 0.9 Forest Products & Paper 0.8 Gas 0.8 Holding Companies-Diversified 3.1 Home Builders 0.9 Household Products/Wares 0.4 Insurance 1.0 Internet 0.4 Investment Companies 1.5 Iron/Steel 2.0 Leisure Time 0.6 Lodging 0.4 Media 2.0 Mining 8.0 Oil and Gas 7.6 Oil and Gas Services 0.4 Pharmaceuticals 2.1 Real Estate 0.3 Retail 1.2 Semiconductors 4.7 Software 1.0 Telecommunications 11.8 Textiles 0.2 Other Assets and Liabilities--Net 2.6 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 47 ING Foreign Fund PORTFOLIO OF INVESTMENTS as October 31, 2003
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCK: 81.5% AUSTRALIA: 3.2% 10,791 Alumina Ltd. $ 45,634 13,043 AMP Ltd. 60,896 1,052 Australia & New Zealand Banking Group Ltd. 13,287 13,347 BHP Billiton Ltd. 110,992 2,754 CSL Ltd. 33,220 25,702 John Fairfax Holdings Ltd. 66,018 5,022 Newcrest Mining Ltd. 43,046 7,687 News Corp. Ltd. 68,451 5,950 Sons of Gwalia Ltd. 14,608 ---------------- 456,152 ---------------- AUSTRIA: 1.5% 808 @ Bank Austria Creditanstalt AG 35,205 1,198 Erste Bank Der Oesterreichischen Sparkassen AG 132,456 348 Omv AG 44,500 ---------------- 212,161 ---------------- BELGIUM: 0.8% 470 Almanij NV 21,259 661 Delhaize Group 31,389 3,042 Fortis 54,247 ---------------- 106,895 ---------------- BRAZIL: 1.5% 867 Aracruz Celulose SA 24,363 3,985 Centrais Eletricas Brasileiras SA 26,152 5,054 Centrais Eletricas Brasileiras SA ADR 31,582 1,447 Cia de Bebidas Das Americas ADR 30,676 2,209 Cia Energetica de Minas Gerais ADR 32,340 430 Telemig Celular Participacoes SA 13,696 2,476 @ Telesp Celular Participacoes SA 14,113 1,611 Uniao de Bancos Brasileiros SA 35,619 ---------------- 208,541 ---------------- CANADA: 1.7% 2,022 Canadian Natural Resources Ltd. 85,894 1,690 Encana Corp. 58,045 6,946 @ Nortel Networks Corp. 30,987 1,562 Petro-Canada 62,964 ---------------- 237,890 ---------------- CZECHOSLOVAKIA: 1.5% 1,316 Cesky Telecom AS GDR 13,251 6,534 Komercni Banka AS GDR 194,298 ---------------- 207,549 ---------------- DENMARK: 1.1% 3 AP Moller-Maersk A/S 23,551 627 ISS A/S 29,906 307 Radiometer A/S 18,556 1,642 TDC A/S 52,769 1,083 Vestas Wind Systems A/S 22,779 219 @ William Demant Holding 7,449 ---------------- 155,010 ---------------- FINLAND: 2.4% 4,340 Fortum OYJ 40,009 10,742 Nokia OYJ 182,442 3,530 Sampo OYJ 29,710 1,442 Tietoenator Oyj $ 38,220 2,809 UPM-Kymmene OYJ 52,574 ---------------- 342,955 ---------------- FRANCE: 8.6% 1,198 Accor 47,114 9,119 @ Alcatel SA 120,318 6,273 @ Altran Technologies SA 77,590 1,327 @ Atos Origin 88,547 836 Aventis SA 44,268 1,530 AXA 28,991 2,456 BNP Paribas 129,049 3,238 Bouygues 88,082 594 Carrefour SA 31,184 1,243 Cie de Saint-Gobain 52,438 464 @ Credit Lyonnais Financial Products Guernsey Ltd. 12,237 1,234 @ France Telecom 29,867 933 LVMH Moet Hennessy Louis Vuitton SA 64,480 962 Renault SA 63,632 843 Societe Generale 62,621 1,845 Suez SA 29,598 1,119 Total SA 173,921 3,154 @ Vivendi Universal SA 66,254 ---------------- 1,210,191 ---------------- GERMANY: 5.0% 508 Altana AG 32,008 3,333 @ Bayerische Hypo-und Vereinsbank AG 72,765 1,300 Bayerische Motoren Werke AG 52,138 2,269 Deutsche Lufthansa AG 35,345 4,768 @ Deutsche Telekom AG 74,827 529 E.ON AG 26,628 1,842 @ Fraport AG Frankfurt Airport Services Worldwide 47,537 521 @ Heidelberger Druckmaschinen 18,109 601 Henkel KGaA 41,298 2,545 @ Hypo Real Estate Holding 43,934 939 Metro AG 38,096 281 @ Muenchener Rueckversicherungs AG 33,515 666 Schering AG 31,317 1,454 Siemens AG 97,697 764 @ Software AG 17,674 850 Stada Arzneimittel AG 43,685 ---------------- 706,573 ---------------- GREECE: 0.5% 4,331 Hellenic Telecommunications Organization SA 48,535 921 Public Power Corp. 19,850 ---------------- 68,385 ---------------- HUNGARY: 3.6% 559 Egis Rt. 21,657 180 Gedeon Richter Rt. 18,511 11,890 Matav Magyar Tavkozlesi Rt. 42,795 30,109 @ OTP Bank Rt. 368,865 2,549 @ OTP Bank Rt. GDR 62,833 ---------------- 514,661 ----------------
See Accompanying Notes to Financial Statements 48 ING Foreign Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- INDIA: 0.1% 301 @,X Dr. Reddy's Laboratories Ltd. $ 7,588 ---------------- 7,588 ---------------- IRELAND: 0.1% 1,721 Bank of Ireland 21,334 ---------------- 21,334 ---------------- ITALY: 2.1% 8,081 Banca Intesa S.p.A. 27,243 16,448 @ Banca Nazionale del Lavoro S.p.A. 37,477 2,524 Banco Popolare di Verona e Novara Scrl 39,024 12,955 @ Capitalia S.p.A. 36,144 25,604 Cassa di Risparmio di Firenze S.p.A. 39,557 3,121 Mediaset S.p.A. 31,529 25,964 @ Telecom Italia S.p.A. 67,761 2,463 Unicredito Italiano S.p.A. 12,140 ---------------- 290,875 ---------------- JAPAN: 14.2% 11,469 Bank of Yokohama Ltd. 49,555 1,337 Canon, Inc. 64,700 1,700 Daiwa Securities Group Inc. 12,433 2,000 Fuji Photo Film Co. Ltd. 58,945 15 Fuji Television Network Inc 79,820 6,831 Hitachi Ltd. 40,141 879 Honda Motor Co. Ltd. 34,701 1,467 Ito-Yokado Co. Ltd. 53,910 1,898 Kao Corp. 39,019 6 KDDI Corp. 32,583 2,000 Matsushita Electric Industrial Co. Ltd. 26,361 6,000 Mitsubishi Estate Co. Ltd. 57,525 14 . Mitsubishi Tokyo Financial Group, Inc. 100,604 9,966 Nikko Cordial Corp. 53,758 3,381 @ Nikon Corp 51,329 5 Nippon Telegraph & Telephone Corp. 22,331 12,186 Nomura Holdings, Inc. 209,280 57,680 Nomura TOPIX Exchange Traded Fund 550,907 6,000 Sanyo Electric Co. Ltd. 27,507 2,974 Shiseido Co. Ltd. 31,218 2,448 Sony Corp. 85,285 17 Sumitomo Mitsui Financial Group, Inc. 85,514 200 Takeda Chemical Industries Ltd. 7,077 9,703 The Bank of Fukuoka Ltd. 40,512 3,842 @ The Seiyu Ltd. 12,407 1,830 The Sumitomo Trust & Banking Co. Ltd. 10,221 6,100 Tokyo Broadcasting System, Inc. 97,713 2,100 Toyota Motor Corp. 59,790 502 Uni-Charm Corp. 23,425 ---------------- 2,018,571 ---------------- MEXICO: 0.2% 1,760 @ Grupo Financiero BBVA Bancomer 29,877 ---------------- 29,877 ---------------- NETHERLANDS: 3.5% 2,253 Aegon NV $ 29,543 1,041 Akzo Nobel NV 32,916 718 @ ASM International NV 12,470 1,653 European Aeronautic Defense And Space Co. 33,628 11,312 @ Getronics NV 25,117 575 Grolsch NV 15,254 1,666 Heineken NV 59,457 3,682 @ Koninklijke Ahold NV 31,161 6,046 Koninklijke Philips Electronics NV 162,989 828 Royal Dutch Petroleum Co. 36,740 6,638 @ Royal KPN NV 50,467 ---------------- 489,742 ---------------- NORWAY: 2.4% 8,795 DnB Holding ASA 51,362 511 Gjensidige NOR ASA 20,954 703 @ Golar LNG Ltd. 8,201 1,018 Norsk Hydro ASA 57,291 758 Sparebanken Midt-Norge 24,866 1,280 Sparebanken Rogaland 51,584 3,911 Statoil ASA 36,776 6,006 @ Storebrand 33,461 5,652 Telenor ASA 30,769 5,335 Tomra Systems ASA 30,703 ---------------- 345,967 ---------------- POLAND: 1.3% 1,790 @ Agora SA 22,052 4,114 @ Bank Pekao SA GDR 117,511 11,059 Telekomunikacja Polska SA GDR 38,731 ---------------- 178,294 ---------------- RUSSIA: 1.6% 366 MMC Norilsk Nickel ADR 18,849 3,291 @ Sun Interbrew Ltd. GDR 19,511 3,013 Unified Energy System ADR 76,380 6,035 Uralsvyazinform ADR 37,055 4,311 @ Wimm-Bill-Dann Foods OJSC 81,564 ---------------- 233,359 ---------------- SPAIN: 3.1% 746 Acerinox SA 32,477 225 Banco Pastor SA 6,604 7,065 Banco Santander Central Hispano SA 67,758 8,402 Endesa SA 133,322 2,330 Grupo Empresarial Ence SA 46,019 3,420 Promotora de Informaciones SA (PRISA) 37,928 3,643 Repsol YPF SA 63,524 3,558 Union Fenosa SA 57,493 ---------------- 445,125 ---------------- SWEDEN: 3.5% 1,127 Autoliv, Inc. ADR 37,129 2,361 @ Elekta AB 46,912 341 Getinge AB 12,480 19,950 Nordea AB 123,779 28,948 Skandia Forsakrings AB 106,131 1,621 Svenska Cellulosa AB 61,196
See Accompanying Notes to Financial Statements 49 ING Foreign Fund PORTFOLIO OF INVESTMENTS as October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- SWEDEN (CONTINUED) 38,732 @ Telefonaktiebolaget LM Ericsson $ 66,532 9,870 TeliaSonera AB 43,145 ---------------- 497,304 ---------------- SWITZERLAND: 6.4% 767 Baloise Holding Ltd. 31,160 1,469 Compagnie Financiere Richemont AG 33,058 660 Converium Holding AG 32,522 3,708 Credit Suisse Group 130,649 323 @ Micronas Semiconductor Hold 13,425 310 Nestle SA 68,252 2,945 Novartis AG 112,256 365 Phonak Holding AG 6,929 2,103 Roche Holding AG 174,022 126 Sulzer AG 29,958 670 @ Swiss Life Holding 113,645 157 Swisscom AG 45,677 718 UBS AG 44,090 543 Zurich Financial Services AG 69,535 ---------------- 905,178 ---------------- TURKEY: 1.0% 2,322 Akbank TAS 21,764 6,005 @ Anadolu Efes Biracilik Ve Malt Sanayii AS 14,739 60,605 @ Sabanci Holding 64,363 17,506 @ Turkiye Garanti Bankasi AS 41,020 ---------------- 141,886 ---------------- UNITED KINGDOM: 10.5% 3,335 Abbey National PLC 31,848 5,119 @ Acambis Plc 31,793 6,947 Standard Chartered PLC 111,108 9,118 BP PLC 63,284 10,310 Diageo PLC 121,246 3,275 Gallaher Group PLC 32,789 5,898 Glaxosmithkline PLC 126,309 30,268 Hilton Group PLC 100,030 8,702 HSBC Holdings PLC 130,688 3,875 Imperial Tobacco Group PLC 64,245 3,661 Reckitt Benckiser Plc 77,035 57,054 Royal & Sun Alliance Insurance Group 84,716 3,197 Royal Bank of Scotland Group PLC 85,663 7,885 Smith & Nephew PLC 62,654 4,778 Technest Holdings, Inc. 59,473 8,066 Tesco PLC 32,337 120,466 Vodafone Group PLC 252,978 3,850 William Hill PLC 22,148 ---------------- 1,490,344 ---------------- VENEZUELA: 0.1% 684 Cia Anonima Nacional Telefonos de Venezuela - CANTV ADR 10,233 ---------------- 10,233 ---------------- Total Common Stock (Cost $11,104,939) 11,532,640 ---------------- PRINCIPAL AMOUNT VALUE - ------------------------------------------------------------------------------------------------------------- CORPORATE BONDS: 0.0% FRANCE: 0.0% $ 561 AXA, 0.000%, due 12/21/04 $ 753 ---------------- 753 ---------------- Total Corporate Bonds (Cost $637) 753 ---------------- SHARES VALUE - ------------------------------------------------------------------------------------------------------------- MUTUAL FUNDS: 2.8% INDIA: 0.3% 1,372 @ S&P CNX Nifty Index $ 45,371 ---------------- 45,371 ---------------- UNITED STATES: 2.5% 37,578 @ Ishares MSCI Japan Index Fund 347,221 ---------------- 347,221 ---------------- Total Mutual Funds (Cost $393,296) 392,592 ---------------- PREFERRED STOCK: 1.0% GERMANY: 1.0% 639 Henkel KGaA 46,806 6,165 ProSieben SAT.1 Media AG 93,885 ---------------- 140,691 ---------------- Total Preferred Stock (Cost $115,471) 140,691 ---------------- RIGHTS: 0.0% AUSTRALIA: 0.0% 7,696 @,X AMP Ltd. Rights Allocated -- 155 @ Australia & New Zealand Banking Group Ltd. 474 ---------------- 474 ---------------- GERMANY: 0.0% 195 Muenchener Rueckversicherungs AG 1,612 ---------------- 1,612 ---------------- Total Rights (Cost $0) 2,086 ----------------
See Accompanying Notes to Financial Statements 50 ING Foreign Fund PORTFOLIO OF INVESTMENTS as October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- WARRANTS: 0.3% INDIA: 0.3% 6,804 @,E Satyam Computer Services Ltd., Expires 01/05/2004 $ 45,859 ---------------- 45,859 ---------------- Total Warrants (Cost $41,930) 45,859 ---------------- TOTAL INVESTMENTS IN SECURITIES (COST $11,656,273)* 85.6% $ 12,114,621 OTHER ASSETS AND LIABILITIES-NET 14.4 2,038,033 ----- ---------------- NET ASSETS 100.0% $ 14,152,654 ===== ================
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company X Fair Value as determined by ING Valuation Committee appointed by the Fund's Board of Directors. E Equity Linked Product * Cost for federal income tax purposes is $11,695,121. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 505,951 Gross Unrealized Depreciation (86,451) ---------------- Net Unrealized Appreciation $ 419,500 ================
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------- Aerospace/Defense 0.2% Agriculture 0.7 Airlines 0.2 Auto Manufacturers 1.5 Auto Parts & Equipment 0.3 Banks 18.7 Beverages 1.8 Building Materials 0.4 Chemicals 0.2 Commercial Services 0.2 Computers 1.1 Cosmetics/Personal Care 0.7 Diversified Financial Services 2.7 Electric 3.1 Electrical Components & Equipment 0.6 Electronics 1.2 Engineering & Construction 1.5 Entertainment 0.9 Environmental Control 0.2 Equity Fund 6.7 Food 2.2 Forest Products & Paper 1.3 Healthcare-Products 1.1 Holding Companies-Diversified 2.1 Home Furnishings 0.8 Household Products/Wares 1.2 Insurance 4.4 Iron/Steel 0.2 Lodging 0.3 Machinery-Diversified 0.1 Media 4.0 Mining 1.7 Miscellaneous Manufacturing 1.7 Office/Business Equipment 0.5 Oil and Gas 4.8 Pharmaceuticals 4.8 Real Estate 0.4 Retail 0.7 Semiconductors 0.2 Software 0.5 Telecommunications 9.3 Transportation 0.2 Water 0.2 Other Assets and Liabilities, Net 14.4 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 51 ING International Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCK: 87.6% AUSTRALIA: 1.5% 206,000 Qbe Insurance Group Ltd. $ 1,505,523 ---------------- 1,505,523 ---------------- BELGIUM: 0.9% 3,030 Electrabel 837,973 ---------------- 837,973 ---------------- BRAZIL: 1.1% 47,000 Uniao de Bancos Brasileiros SA ADR 1,039,170 ---------------- 1,039,170 ---------------- CANADA: 0.9% 24,103 Encana Corp. 827,846 ---------------- 827,846 ---------------- CHILE: 0.5% 20,500 Banco Santander Chile SA ADR 487,080 ---------------- 487,080 ---------------- DENMARK: 2.0% 39,000 Danske Bank A/S 786,764 36,900 TDC A/S 1,185,846 ---------------- 1,972,610 ---------------- FINLAND: 0.7% 38,000 UPM-Kymmene OYJ 711,218 ---------------- 711,218 ---------------- FRANCE: 7.1% 10,850 Aventis SA 574,528 26,900 AXA 509,721 17,406 Lafarge SA 1,246,444 12,400 Schneider Electric SA 725,795 20,700 Societe Generale 1,537,673 20,239 Total SA 1,776,466 14,400 Valeo SA 539,195 ---------------- 6,909,822 ---------------- GERMANY: 5.5% 28,539 Deutsche Bank AG 1,882,439 20,200 Deutsche Boerse AG 1,122,933 77,000 @ Infineon Technologies AG 1,135,019 18,200 Siemens AG 1,227,135 ---------------- 5,367,526 ---------------- GREECE: 1.0% 82,000 Greek Organization of Football Prognostics SA 991,380 ---------------- 991,380 ---------------- HONG KONG: 1.9% 446,000 China Merchants Holdings Intl. Co. Ltd. 605,908 1,302,000 Giordano Intl. Ltd. 586,811 1,236,000 Global Bio-Chem Technology Group Co. Ltd. 628,688 ---------------- 1,821,407 ---------------- HUNGARY: 0.4% 34,500 @ OTP Bank Rt. 422,658 ---------------- 422,658 ---------------- INDONESIA: 0.5% 901,000 HM Sampoerna Tbk PT $ 461,290 ---------------- 461,290 ---------------- IRELAND: 2.3% 91,800 Irish Life & Permanent PLC 1,285,946 108,210 @ Ryanair Holdings PLC 918,297 ---------------- 2,204,243 ---------------- ISRAEL: 0.9% 15,700 Teva Pharmaceutical Industries ADR 893,173 ---------------- 893,173 ---------------- ITALY: 3.3% 148,200 Banca Fideuram S.p.A. 930,326 78,000 Bulgari S.p.A. 705,452 122,000 Enel S.p.A. 763,019 205,000 Snam Rete Gas S.p.A. 772,133 ---------------- 3,170,930 ---------------- JAPAN: 19.4% 76,000 Amano Corp. 521,945 129,000 Asahi Diamond Industrial Co. Ltd. 620,740 30,800 Familymart Co. Ltd. 669,596 16,200 Fanuc Ltd. 974,048 7,400 Hirose Electric Co. Ltd. 909,392 99,000 JGC Corp. 851,003 51,000 Kao Corp. 1,048,438 3,500 Mabuchi Motor Co. Ltd. 266,794 69,500 Marui Co. Ltd. 882,539 119,000 Nikko Cordial Corp. 641,897 200 Nippon Telegraph & Telephone Corp. 893,255 53,000 Nippon Yusen Kabushiki Kaisha 225,624 62,000 Nomura Holdings, Inc. 1,064,774 540 NTT Docomo, Inc. 1,169,054 18,700 Oriental Land Co. Ltd. 1,027,407 26,000 Otsuka Kagu Ltd. 756,811 51,000 Sekisui House Ltd. 500,559 47,500 Shimano, Inc. 907,354 57,000 Shiseido Co. Ltd. 598,335 21,200 Tokyo Electron Ltd. 1,519,589 31,000 Tostem Inax Holding Corp. 552,408 44,000 Toyota Motor Corp. 1,252,740 81,000 Yamato Transport Co. Ltd. 1,076,464 ---------------- 18,930,766 ---------------- MALAYSIA: 1.3% 256,000 Malayan Banking BHD 687,158 730,000 Public Bank BHD 576,316 ---------------- 1,263,474 ---------------- MEXICO: 1.1% 33,300 Telefonos de Mexico SA de CV ADR 1,070,595 ---------------- 1,070,595 ---------------- NETHERLANDS: 2.2% 18,276 Koninklijke Philips Electronics NV 492,691 35,990 Royal Dutch Petroleum Co. 1,597,202 ---------------- 2,089,893 ----------------
See Accompanying Notes to Financial Statements 52 ING International Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- NEW ZEALAND: 0.9% 216,500 Carter Holt Harvey Ltd. $ 243,442 86,600 Fisher & Paykel Healthcare Corp 643,858 ---------------- 887,300 ---------------- NORWAY: 0.8% 127,200 Tomra Systems ASA 732,042 ---------------- 732,042 ---------------- RUSSIA: 1.1% 23,794 YUKOS ADR 1,099,283 ---------------- 1,099,283 ---------------- SINGAPORE: 0.9% 116,000 United Overseas Bank Ltd. 906,172 ---------------- 906,172 ---------------- SOUTH AFRICA: 1.4% 95,500 Gold Fields Ltd. ADR 1,367,560 ---------------- 1,367,560 ---------------- SOUTH KOREA: 1.1% 64,800 LG Investment & Securities Co. Ltd. 572,167 85,700 Woori Finance Holdings Co. Ltd. 469,232 ---------------- 1,041,399 ---------------- SPAIN: 1.6% 418 @ Antena 3 Television SA 13,654 123,800 Telefonica SA 1,539,917 ---------------- 1,553,571 ---------------- SWEDEN: 1.3% 55,180 Foreningssparbanken AB 919,566 40,800 Swedish Match AB 332,118 ---------------- 1,251,684 ---------------- SWITZERLAND: 5.2% 9,500 Adecco SA 560,246 8,165 Nestle SA 1,797,664 19,280 Novartis AG ADR 739,774 12,000 Roche Holding AG 992,998 15,100 UBS AG 927,248 ---------------- 5,017,930 ---------------- TAIWAN: 0.6% 52,704 @ Taiwan Semiconductor Manufacturing Co. Ltd. 582,906 ---------------- 582,906 ---------------- THAILAND: 0.5% 75,400 BEC World PLC 457,371 ---------------- 457,371 ---------------- UNITED KINGDOM: 16.9% 195,000 BAA PLC 1,542,018 239,600 BP PLC 1,662,950 91,300 British American Tobacco PLC 1,103,887 153,400 @ British Sky Broadcasting PLC 1,665,998 86,400 Diageo PLC 1,016,052 76,325 Glaxosmithkline PLC 1,811,722 16,800 HSBC Holdings PLC 1,261,176 46,500 Imperial Tobacco Group PLC 770,933 116,375 Kingfisher PLC 557,888 835,900 Legal & General Group PLC 1,475,220 59,600 Provident Financial PLC $ 653,859 29,200 Rio Tinto PLC 708,083 56,500 Severn Trent PLC 678,814 745,373 Vodafone Group PLC 1,565,265 ---------------- 16,473,865 ---------------- UNITED STATES: 0.8% 16,000 Schlumberger Ltd. 751,520 ---------------- 751,520 ---------------- Total Common Stock (Cost $74,578,750) 85,101,180 ---------------- TOTAL INVESTMENTS IN SECURITIES (COST $74,578,750)* 87.6% $ 85,101,180 OTHER ASSETS AND LIABILITIES-NET 12.4 12,047,593 ----- ---------------- NET ASSETS 100.0% $ 97,148,773 ===== ================
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company * Cost for federal income tax purposes is $74,644,800. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 12,880,361 Gross Unrealized Depreciation (2,423,981) ---------------- Net Unrealized Appreciation $ 10,456,380 ================
See Accompanying Notes to Financial Statements 53 ING International Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------- Agriculture 2.7% Airlines 0.9 Auto Manufacturers 1.3 Auto Parts & Equipment 0.6 Banks 11.8 Beverages 1.0 Biotechnology 0.6 Building Materials 1.9 Commercial Services 1.2 Cosmetics/Personal Care 1.7 Diversified Financial Services 7.0 Electric 1.6 Electronics 2.7 Engineering & Construction 2.5 Entertainment 2.1 Environmental Control 0.8 Food 1.9 Forest Products & Paper 1.0 Gas 0.8 Hand/Machine Tools 1.3 Healthcare-Products 0.7 Home Builders 0.5 Insurance 3.6 Leisure Time 0.9 Media 2.2 Mining 2.1 Miscellaneous Manufacturing 1.8 Oil and Gas 7.2 Oil and Gas Services 0.8 Pharmaceuticals 5.2 Retail 4.3 Semiconductors 3.3 Telecommunications 7.6 Transportation 1.3 Water 0.7 Other Assets and Liabilities--Net 12.4 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 54 ING International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCK: 92.9% AUSTRALIA: 0.7% 647,441 BHP Steel Ltd. $ 2,489,903 ---------------- 2,489,903 ---------------- AUSTRIA: 1.0% 31,000 Erste Bank Der Oesterreichischen Sparkassen AG 3,427,527 ---------------- 3,427,527 ---------------- BELGIUM: 0.8% 22,400 Colruyt SA 2,031,120 16,600 @ Mobistar SA 833,652 ---------------- 2,864,772 ---------------- BERMUDA: 0.6% 104,000 Frontline Ltd. 2,029,397 ---------------- 2,029,397 ---------------- CANADA: 11.1% 258,900 Abitibi-Consolidated, Inc. 1,742,303 190,100 AGF Management Ltd. 2,495,148 91,000 @ Ballard Power Systems, Inc. 1,178,450 146,600 Canadian Pacific Railway Ltd. 4,109,068 181,200 @ Cequel Energy, Inc. 1,044,816 221,900 CI Fund Management, Inc. 2,483,233 176,500 @ Compton Petroleum Corp. 752,574 103,800 @ Cott Corp. 2,703,990 101,400 Dofasco, Inc. 2,451,818 54,400 Ensign Resource Service Group 823,398 350,300 @ Esprit Exploration Ltd. 669,744 80,400 Finning Intl., Inc. 1,841,566 108,400 IPSCO, Inc. 1,497,640 151,600 @ Kingsway Financial Services, Inc. 1,591,855 133,700 @ Olympia Energy, Inc. 296,198 41,600 @ Precision Drilling Corp. 1,638,208 120,100 @ Progress Energy Ltd. 956,754 160,400 @ RONA, Inc. 2,981,525 228,000 @ Stake Technology Ltd. 2,186,520 127,000 Teck Cominco Ltd. 1,657,297 122,800 @ Westjet Airlines Ltd. 2,674,852 ---------------- 37,776,957 ---------------- CHINA: 1.4% 948,000 Byd Co. Ltd. 2,472,024 8,000,000 Sinopec Shanghai Petrochemical Co. Ltd. 2,266,377 ---------------- 4,738,401 ---------------- DENMARK: 0.7% 50,000 @ Jyske Bank 2,408,301 ---------------- 2,408,301 ---------------- FINLAND: 1.1% 20,000 Nokian Renkaat OYJ 1,494,045 271,600 Sampo OYJ 2,285,921 ---------------- 3,779,966 ---------------- FRANCE: 3.8% 42,400 Cie Generale D'Optique Essilor Intl. SA 2,039,620 37,800 Dassault Systemes SA 1,603,901 83,000 @ Flamel Technologies ADR 2,095,750 13,000 IPSOS 1,097,168 171,500 @ JC Decaux SA $ 2,524,008 51,853 Valeo SA 1,941,590 21,100 Vinci SA 1,529,368 ---------------- 12,831,405 ---------------- GERMANY 4.7% 50,000 Continental AG 1,697,250 83,600 @ Epcos AG 1,724,062 20,000 GFK AG 501,038 24,691 @ Heidelbergcement AG 1,054,846 105,700 @ Hypo Real Estate Holding 1,843,144 71,000 @ Infineon Technologies AG 1,046,576 65,000 KarstadtQuelle AG 1,615,526 66,100 Medion AG 2,936,873 164,200 MG Technologies AG 2,074,893 80,000 @ SGL Carbon AG 1,501,950 ---------------- 15,996,158 ---------------- GREECE: 1.0% 78,600 Coca Cola Hellenic Bottling Co. SA 1,525,921 46,760 Titan Cement Co. SA 1,793,831 ---------------- 3,319,752 ---------------- HONG KONG: 3.8% 493,500 ASM Pacific Technology 1,846,089 1,134,000 Cathay Pacific Airways Ltd. 2,168,497 200,000 DAH Sing Financial 1,397,170 5,000,000 @ First Pacific Co. 965,785 1,000,000 Hysan Development Co. Ltd. 1,455,116 1,087,500 Kerry Properties Ltd. 1,442,401 640,000 Kingboard Chemicals Holdings 836,499 279,000 Television Broadcasts Ltd. 1,322,122 250,000 Wing Hang Bank Ltd. 1,542,037 ---------------- 12,975,716 ---------------- INDIA: 0.4% 58,260 Ranbaxy Laboratories Ltd. GDR 1,334,154 ---------------- 1,334,154 ---------------- IRELAND: 1.9% 339,500 Anglo Irish Bank Corp. PLC 4,076,928 250,000 Grafton Group PLC 1,554,844 200,000 Greencore Group PLC 720,750 ---------------- 6,352,522 ---------------- ISRAEL: 0.9% 50,000 @ Taro Pharmaceuticals Industries 3,212,500 ---------------- 3,212,500 ---------------- ITALY: 2.7% 1,285,100 @ Banca Nazionale del Lavoro S.p.A. 2,928,100 95,100 Banco Popolare di Verona e Novara Scrl 1,470,365 150,000 Buzzi Unicem S.p.A. 1,668,768 98,600 Italcementi S.p.A. 1,186,343 289,100 Saipem S.p.A. 2,103,853 ---------------- 9,357,429 ---------------- JAPAN: 22.0% 36,800 Advantest Corp. 2,741,547 750,000 Aioi Insurance Co. Ltd. 2,797,107 590,000 Bank of Yokohama Ltd. 2,549,234
See Accompanying Notes to Financial Statements 55 ING International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- JAPAN (CONTINUED) 142,100 Capcom Co. Ltd. $ 1,835,467 37,000 Disco Corp. 1,985,719 25,000 Eneserve Corp. 1,023,332 25,700 Funai Electric Co. Ltd. 3,424,797 57,700 Hogy Medical Co. Ltd. 2,828,972 234,000 JSR Corp. 4,959,475 200,000 Kamigumi Co. Ltd. 1,302,588 378,000 Keihin Electric Express Railway Co. Ltd. 2,210,888 1,417,000 @ Kobe Steel Ltd. 1,817,410 152,000 Marui Co. Ltd. 1,930,159 45,000 Matsui Securities Co. Ltd. 1,080,639 43,400 Meitec Corp. 1,551,480 900,000 Mitsui Mining & Smelting Co. Ltd. 3,602,128 50,930 Nichii Gakkan Co. 2,770,376 30,500 Nidec Corp. 2,971,346 221,000 Nippon Electric Glass Co. Ltd. 4,060,763 69,900 Nitto Denko Corp. 3,668,741 402,000 NSK Ltd. 1,656,488 147,000 @ Sega Corp. 1,627,316 116,000 Shimano, Inc. 2,215,855 200,000 Sumitomo Corp. 1,388,093 400,000 The Bank of Fukuoka Ltd. 1,670,078 550,000 The Sumitomo Trust & Banking Co. Ltd. 3,071,814 107,500 THK Co. Ltd. 2,180,607 149,000 Toho Gas Co. Ltd. 436,422 179,000 Tokyo Broadcasting System, Inc. 2,867,322 859 @ UMC Japan 1,172,056 30,200 Uni-Charm Corp. 1,409,251 186,000 @ Victor Co. of Japan Ltd. 1,674,989 204,000 Yokogawa Electric Corp. 2,384,500 ---------------- 74,866,959 ---------------- LUXEMBOURG: 0.8% 683,600 @ Gemplus Intl. SA 1,446,327 35,125 Tenaris SA 92,218 48,349 Tenaris SA ADR 1,315,093 ---------------- 2,853,638 ---------------- NERHERLANDS: 1.6% 148,000 @ Asml Holding NV ADR 2,597,400 18,100 Fugro NV ADR 910,034 141,566 Vedior NV ADR 2,040,674 ---------------- 5,548,108 ---------------- NORWAY: 0.9% 150,600 @ Golar LNG Ltd. 1,756,846 250,000 Smedvig ASA 1,431,692 ---------------- 3,188,538 ---------------- PHILIPPINES: 0.2% 50,000 Globe Telecom, Inc. 714,092 ---------------- 714,092 ---------------- RUSSIA: 0.5% 26,000 @ Vimpel-Communications ADR 1,692,600 ---------------- 1,692,600 ---------------- SINGAPORE: 1.3% 2,000,000 @ Neptune Orient Lines Ltd. 2,550,332 2,000,000 Singapore Exchange Ltd. 1,907,005 ---------------- 4,457,337 ---------------- SOUTH KOREA: 3.5% 200,000 Daegu Bank $ 910,858 260,000 @ Hanwha Chem Corp. 1,805,830 99,000 Korean Air Co. Ltd. 1,321,673 56,780 Samsung Electro-Mechanics Co. Ltd. 1,923,851 18,600 Samsung SDI Co. Ltd. 1,917,364 108,520 SK Corp. 2,099,796 69,400 You Eal Electronics Co. Ltd. 2,075,843 ---------------- 12,055,215 ---------------- SPAIN: 0.4% 100,400 Red Electrica de Espana 1,353,894 ---------------- 1,353,894 ---------------- SWEDEN: 2.5% 73,000 Autoliv, Inc. ADR 2,404,995 187,106 @ Elekta AB 3,717,727 11,694 @ Elekta Blocked Acceptance Shares 210,244 59,900 SKF AB 2,119,307 ---------------- 8,452,273 ---------------- SWITZERLAND: 4.7% 42,800 @ Actelion Ltd. 4,070,543 6,000 Julius Baer Holding AG 1,945,557 45,430 @ Saurer AG 1,939,199 40,000 @ SEZ Holding AG 1,318,007 3,100 SGS Societe Generale Surveillance Holdings SA 1,750,403 14,500 @ Swiss Life Holding 2,459,468 245,000 Xstrata PLC 2,515,304 ---------------- 15,998,481 ---------------- TAIWAN: 1.1% 1,107,600 Benq Corp. 1,418,119 450,000 @ Siliconware Precision Industries Co. ADR 2,223,000 ---------------- 3,641,119 ---------------- UNITED KINGDOM: 16.0% 1,066,100 @ ARM Holdings PLC 2,057,872 141,100 Barratt Developments PLC 1,173,254 585,257 BBA Group PLC 2,579,712 172,000 Burberry Group PLC 1,149,989 196,900 Capital Radio PLC 1,570,408 592,100 Cattles PLC 3,205,197 208,300 Close Brothers Group Plc 2,553,855 190,000 Daily Mail & General Trust 1,855,530 401,900 @ easyJet PLC 1,913,022 194,500 Exel PLC 2,503,481 341,200 GKN PLC 1,598,038 715,400 Hilton Group PLC 2,355,156 501,000 Kidde PLC 856,548 183,400 Man Group PLC 4,509,587 353,964 Manchester United PLC 1,417,556 461,800 MFI Furniture PLC 1,271,475 217,084 Misys PLC 1,105,142 865,300 Peninsular And Oriental Steam Navigation Co. 4,060,045 200,000 Punch Taverns PLC 1,151,381 226,647 Rexam PLC 1,653,817 168,700 Schroders PLC 2,145,635 388,000 SIG PLC 2,182,651
See Accompanying Notes to Financial Statements 56 ING International SmallCap Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- UNITED KINGDOM (CONTINUED) 2,463,800 @ Skyepharma PLC $ 2,707,162 1,242,200 SMG PLC 2,129,030 133,500 Smiths Group PLC 1,589,198 491,400 Taylor Woodrow PLC 1,867,894 47,000,000 @ Telewest Communications PLC 1,674,890 ---------------- 54,837,525 ---------------- UNITED STATES: 0.8% 154,700 @ Ultra Petroleum Corp. 2,831,010 ---------------- 2,831,010 ---------------- Total Common Stock (Cost $236,204,550) 317,385,649 ---------------- PREFERRED STOCK: 0.9% GERMANY: 0.9% 190,000 ProSieben SAT.1 Media AG 2,926,594 ---------------- 2,926,594 ---------------- Total Preferred Stock (Cost $1,744,020) 2,926,594 ---------------- RIGHTS: 0.0% SWEDEN: 0.0% 2 @ Elekta AB -- ---------------- -- ---------------- Total Rights (Cost $0) -- ---------------- WARRANTS: 1.9% INDIA: 1.0% 75,900 @,E Ranbaxy Laboratories, Expires 09/30/04 1,646,537 250,000 @,E Satyam Computer Services, Expires 01/08/04 1,688,500 ---------------- 3,335,037 ---------------- TAIWAN: 0.9% 1,492,410 @ Compal Electronic, Expires 06/26/06 2,262,494 2,000,000 @ Yageo Corp., Expires 09/15/06 953,600 ---------------- 3,216,094 ---------------- Total Warrants (Cost $4,966,657) 6,551,131 ---------------- TOTAL INVESTMENTS IN SECURITIES (COST $242,915,227)* 95.7% $ 326,863,374 OTHER ASSETS AND LIABILITIES-NET 4.3 14,651,417 ----- ---------------- NET ASSETS 100.0% $ 341,514,791 ===== ================
@ Non-income producing security ADR American Depositary Receipt GDR Global Depositary Receipt PLC Public Limited Company E Equity Linked Product * Cost for federal income tax purposes is $244,891,718. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 84,617,296 Gross Unrealized Depreciation (2,645,640) ---------------- Net Unrealized Appreciation $ 81,971,656 ================
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------- Advertising 1.1% Airlines 2.4 Apparel 0.3 Auto Parts and Equipment 2.7 Banks 8.5 Beverages 1.2 Building Materials 2.3 Chemicals 4.4 Commercial Services 2.7 Computers 2.0 Cosmetics/Personal Care 0.4 Distribution/Wholesale 1.3 Diversified Financial Services 6.3 Electric 0.4 Electrical Components and Equipment 2.0 Electronics 4.6 Energy-Alternate Sources 0.4 Engineering and Construction 0.4 Entertainment 1.1 Food 1.5 Forest Products and Paper 0.5 Gas 0.1 Hand/Machine Tools 2.6 Healthcare-Products 2.6 Holding Companies-Diversified 0.9 Home Builders 0.9 Home Furnishings 0.9 Insurance 2.0 Internet 0.3 Iron/Steel 2.4 Leisure Time 0.6 Machinery-Diversified 0.6 Media 3.7 Metal Fabricate/Hardware 1.1 Mining 2.3 Miscellaneous Manufacturing 1.2 Oil and Gas 3.3 Oil and Gas Services 1.7 Packaging and Containers 0.5 Pharmaceuticals 4.4 Real Estate 0.9 Retail 2.7 Semiconductors 3.6 Software 1.8 Telecommunications 2.0 Toys/Games/Hobbies 0.5 Transportation 5.6 Other Assets and Liabilities, Net 4.3 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 57 ING International Value Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCK: 98.1% BELGIUM: 1.0% 1,317,000 Interbrew $ 30,834,592 ---------------- 30,834,592 ---------------- BERMUDA: 0.9% 1,426,170 Tyco Intl. Ltd. 29,778,430 ---------------- 29,778,430 ---------------- BRAZIL: 6.5% 10,027,700 Centrais Eletricas Brasileiras SA ADR 62,662,095 3,094,300 Petroleo Brasileiro SA - Petrobras ADR 67,331,968 2,532,786 Tele Norte Leste Participacoes SA ADR 35,889,578 1,208,600 Telecomunicacoes Brasileiras SA ADR 41,624,184 ---------------- 207,507,825 ---------------- FRANCE: 4.5% 6,561,800 @ Alcatel SA 86,578,849 1,463,100 Michelin (C.G.D.E.) 57,403,814 ---------------- 143,982,663 ---------------- GERMANY: 7.3% 805,500 BASF AG 36,950,097 1,644,800 @ Bayerische Hypo-und Vereinsbank AG 36,233,916 5,377,300 @ Deutsche Telekom AG 84,702,557 1,391,188 E.ON AG 70,318,293 411,200 @ Hypo Real Estate Holding 7,170,300 ---------------- 235,375,163 ---------------- HONG KONG: 1.9% 3,160,236 Jardine Matheson Holdings Ltd. 23,227,735 6,146,000 Swire Pacific Ltd. 37,513,733 ---------------- 60,741,468 ---------------- ITALY: 2.9% 19,093,700 Banca Intesa S.p.A. 64,369,636 10,329,085 @ Telecom Italia S.p.A. 26,956,975 ---------------- 91,326,611 ---------------- JAPAN: 23.6% 1,254,000 Daiichi Pharmaceutical Co. Ltd. 19,163,324 17,003,700 Hitachi Ltd. 99,917,135 6,438 Japan Tobacco, Inc. 42,984,418 9,584,000 Komatsu Ltd. 51,871,379 6,456,000 Matsushita Electric Industrial Co. Ltd. 85,093,410 1,762 Millea Holdings, Inc. 20,996,225 10,636,000 Mitsubishi Heavy Industries Ltd. 29,217,920 10,207 Mitsubishi Tokyo Financial Group, Inc. 73,348,160 12,161,000 Nippon Oil Corp. 60,066,612 13,125 Nippon Telegraph & Telephone Corp. 58,619,866 1,049,000 Ono Pharmaceutical Co. Ltd. 36,450,448 3,822,000 Sankyo Co. Ltd. 61,188,157 11,494 Sumitomo Mitsui Financial Group, Inc. 57,817,638 937,600 TDK Corp. $ 61,406,467 ---------------- 758,141,159 ---------------- MEXICO: 2.7% 1,275,060 America Movil SA de CV ADR 30,346,428 342,182 Cemex SA de CV ADR 8,212,368 1,471,160 Telefonos de Mexico SA de CV ADR 47,297,794 ---------------- 85,856,590 ---------------- NETHERLANDS: 3.6% 945,000 Akzo Nobel NV 29,880,900 1,344,451 European Aeronautic Defense And Space Co. 27,351,175 3,505,000 @ Koninklijke Ahold NV 29,662,815 466,200 Unilever NV 27,081,616 ---------------- 113,976,506 ---------------- NEW ZEALAND: 1.8% 19,086,427 Telecom Corp. of New Zealand Ltd. 56,761,851 ---------------- 56,761,851 ---------------- PORTUGAL: 1.8% 6,709,676 Portugal Telecom SGPS SA 56,393,988 ---------------- 56,393,988 ---------------- RUSSIA: 1.2% 477,800 LUKOIL ADR 38,845,140 ---------------- 38,845,140 ---------------- SINGAPORE: 3.8% 3,652,191 DBS Group Holdings Ltd. 29,998,754 6,060,800 # DBS Group Holdings Ltd. ADR 49,782,866 6,239,000 Overseas-Chinese Banking Corp. 43,362,475 ---------------- 123,144,095 ---------------- SOUTH KOREA: 4.4% 4,337,800 Korea Electric Power Corp. ADR 47,065,130 2,180,500 KT Corp. ADR 42,977,655 1,709,000 POSCO ADR 49,526,820 ---------------- 139,569,605 ---------------- SPAIN: 6.5% 23,023 @ Antena 3 Television SA 752,075 6,566,533 Banco Bilbao Vizcaya Argentaria SA 75,343,579 2,742,970 Repsol YPF SA 47,830,539 6,806,060 Telefonica SA 84,658,879 ---------------- 208,585,072 ---------------- SWITZERLAND: 4.4% 112,800 Nestle SA 24,834,837 91,700 Swisscom AG 26,678,736 697,374 @ Zurich Financial Services AG 89,303,144 ---------------- 140,816,717 ---------------- UNITED KINGDOM: 18.7% 22,621,100 BAE Systems PLC 70,247,982 4,901,200 British American Tobacco PLC 59,259,276 10,493,930 BT Group PLC 33,033,236 43,633,700 @ Corus Group PLC 17,770,610
See Accompanying Notes to Financial Statements 58 ING International Value Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- UNITED KINGDOM (CONTINUED) 15,012,600 Friends Provident PLC $ 34,965,304 18,801,490 Imperial Chemical Industries PLC 61,816,303 30,391,298 Invensys PLC 15,471,754 11,088,607 Marks & Spencer Group PLC 54,145,376 15,343,000 Reuters Group PLC 66,848,210 35,348,000 Royal & Sun Alliance Insurance Group 52,635,775 8,735,650 SABmiller PLC 73,786,267 12,395,700 Safeway PLC 61,001,161 ---------------- 600,981,254 ---------------- VENEZUELA: 0.6% 1,216,822 Cia Anonima Nacional Telefonos de Venezuela - CANTV ADR 18,203,657 ---------------- 18,203,657 ---------------- Total Common Stock (Cost $3,230,842,178) 3,140,822,386 ---------------- TOTAL INVESTMENTS IN SECURITIES (COST $3,230,842,178)* 98.1% $ 3,140,822,386 OTHER ASSETS AND LIABILITIES-NET 1.9 61,842,144 ----- ---------------- NET ASSETS 100.0% $ 3,202,664,530 ===== ================
@ Non-income producing security ADR American Depositary Receipt PLC Public Limited Company # Securities with purchases pursuant to Rule 144A, under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Funds' Board of Directors/Trustees. * Cost for federal income tax purposes is $3,232,834,856. Net unrealized depreciation consists of: Gross Unrealized Appreciation $ 358,576,808 Gross Unrealized Depreciation (450,589,278) ---------------- Net Unrealized Depreciation $ (92,012,470) ================
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------- Aerospace/Defense 3.0% Agriculture 3.2 Auto Parts and Equipment 1.8 Banks 13.6 Beverages 3.3 Building Materials 0.3 Chemicals 4.0 Computers 1.9 Electric 5.6 Electrical Components and Equipment 3.1 Food 4.5 Holding Companies-Diversified 1.9 Home Furnishings 2.7 Insurance 6.2 Iron/Steel 2.1 Machinery-Construction and Mining 1.6 Media 2.1 Miscellaneous Manufacturing 2.3 Oil and Gas 6.7 Pharmaceuticals 3.6 Retail 1.7 Telecommunications 22.9 Other Assets and Liabilities, Net 1.9 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 59 ING Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- COMMON STOCK: 95.0% AUSTRALIA: 0.8% 160,700 QBE Insurance Group Ltd. $ 1,174,454 ---------------- 1,174,454 ---------------- BERMUDA: 2.3% 158,100 Tyco Intl. Ltd. 3,301,128 ---------------- 3,301,128 ---------------- BRAZIL: 0.6% 36,600 Uniao de Bancos Brasileiros SA 809,226 ---------------- 809,226 ---------------- CANADA: 0.5% 20,532 Encana Corp. 705,196 ---------------- 705,196 ---------------- CHILE: 0.2% 15,100 Banco Santander Chile SA ADR 358,776 ---------------- 358,776 ---------------- DENMARK: 1.3% 42,200 Danske Bank A/S 851,319 30,400 TDC A/S 976,957 ---------------- 1,828,276 ---------------- FINLAND: 0.4% 29,000 UPM-Kymmene OYJ 542,771 ---------------- 542,771 ---------------- FRANCE: 3.9% 14,200 Aventis SA 751,917 26,500 AXA 502,142 15,987 Lafarge SA 1,144,829 10,500 Schneider Electric SA 614,585 13,300 Societe Generale 987,974 10,220 Total SA 1,588,456 ---------------- 5,589,903 ---------------- GERMANY: 2.7% 19,154 Deutsche Bank AG 1,263,403 14,650 Deutsche Boerse AG 814,404 61,400 @ Infineon Technologies AG 905,067 13,500 Siemens AG 910,238 ---------------- 3,893,112 ---------------- GREECE: 0.3% 38,000 Greek Organization of Football Prognostics SA 459,420 ---------------- 459,420 ---------------- HONG KONG: 1.0% 408,000 China Merchants Holdings Intl. Co. Ltd. 554,284 1,014,000 Giordano Intl. Ltd. 457,010 912,000 Global Bio-Chem Technology Group Co. Ltd. 463,886 ---------------- 1,475,180 ---------------- HUNGARY: 0.3% 30,300 @ OTP Bank Rt. 371,204 ---------------- 371,204 ---------------- INDONESIA: 0.3% 842,000 HM Sampoerna Tbk PT $ 431,083 ---------------- 431,083 ---------------- IRELAND: 1.5% 84,000 Irish Life & Permanent PLC 1,176,683 112,490 @ Ryanair Holdings PLC 954,618 ---------------- 2,131,301 ---------------- ISRAEL: 0.5% 11,500 Teva Pharmaceutical Industries ADR 654,235 ---------------- 654,235 ---------------- ITALY: 1.0% 131,500 Banca Fideuram S.p.A. 825,491 74,900 Bulgari S.p.A. 677,414 ---------------- 1,502,905 ---------------- JAPAN: 11.7% 58,000 Amano Corp. 398,326 106,000 Asahi Diamond Industrial Co. Ltd. 510,065 29,500 Familymart Co. Ltd. 641,334 14,100 Fanuc Ltd. 847,783 6,700 Hirose Electric Co. Ltd. 823,368 90,000 JGC Corp. 773,639 43,000 Kao Corp. 883,977 5,400 Mabuchi Motor Co. Ltd. 411,625 53,200 Marui Co. Ltd. 675,556 125,000 Nikko Cordial Corp. 674,262 160 Nippon Telegraph & Telephone Corp. 714,604 40,000 Nippon Yusen Kabushiki Kaisha 170,282 54,000 Nomura Holdings, Inc. 927,384 445 NTT Docomo, Inc. 963,387 14,600 Oriental Land Co. Ltd. 802,147 33,900 Otsuka Kagu Ltd. 986,764 64,000 Sekisui House Ltd. 628,153 39,400 Shimano, Inc. 752,627 45,000 Shiseido Co. Ltd. 472,370 20,200 Tokyo Electron Ltd. 1,447,910 24,000 Tostem Inax Holding Corp. 427,671 40,000 Toyota Motor Corp. 1,138,855 64,000 Yamato Transport Co. Ltd. 850,539 ---------------- 16,922,628 ---------------- MALAYSIA: 0.7% 191,000 Malayan Banking BHD 512,684 681,250 Public Bank BHD 537,829 ---------------- 1,050,513 ---------------- MEXICO: 0.8% 33,900 Telefonos de Mexico SA de CV ADR 1,089,885 ---------------- 1,089,885 ---------------- NETHERLANDS: 1.3% 14,023 Koninklijke Philips Electronics NV 378,037 32,400 Royal Dutch Petroleum Co. 1,437,762 ---------------- 1,815,799 ----------------
See Accompanying Notes to Financial Statements 60 ING Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- NEW ZEALAND: 0.5% 160,000 Carter Holt Harvey Ltd. $ 179,911 68,400 Fisher & Paykel Healthcare Corp 508,543 ---------------- 688,454 ---------------- NORWAY: 0.4% 105,700 Tomra Systems ASA 608,309 ---------------- 608,309 ---------------- RUSSIA: 0.6% 19,222 YUKOS ADR 888,056 ---------------- 888,056 ---------------- SINGAPORE: 0.5% 90,000 United Overseas Bank Ltd. 703,064 ---------------- 703,064 ---------------- SOUTH AFRICA: 0.7% 73,200 Gold Fields Ltd. ADR 1,048,224 ---------------- 1,048,224 ---------------- SOUTH KOREA: 0.5% 48,200 LG Investment & Securities Co. Ltd. 425,594 63,400 Woori Finance Holdings Co. Ltd. 347,133 ---------------- 772,727 ---------------- SPAIN: 0.7% 276 @ Antena 3 Television SA 9,016 81,700 Telefonica SA 1,016,246 ---------------- 1,025,262 ---------------- SWEDEN: 1.0% 59,000 Foreningssparbanken AB 983,226 53,000 Swedish Match AB 431,427 ---------------- 1,414,653 ---------------- SWITZERLAND: 2.4% 7,000 Adecco SA 412,813 6,020 Nestle SA 1,325,405 8,880 Novartis AG 338,482 4,800 Roche Holding AG 397,199 16,500 UBS AG 1,013,218 ---------------- 3,487,117 ---------------- TAIWAN: 0.4% 57,024 @ Taiwan Semiconductor Manufacturing Co. Ltd. 630,685 ---------------- 630,685 ---------------- THAILAND: 0.3% 70,500 BEC World PLC 427,648 ---------------- 427,648 ---------------- UNITED KINGDOM: 8.8% 145,400 BAA PLC 1,149,792 147,800 BP PLC 1,025,810 83,900 British American Tobacco PLC 1,014,417 129,400 @ British Sky Broadcasting PLC 1,405,346 66,700 Diageo PLC 784,383 69,600 Glaxosmithkline PLC 1,490,519 50,800 HSBC Holdings PLC $ 765,366 59,800 Imperial Tobacco Group PLC 991,436 110,250 Kingfisher PLC 528,526 649,000 Legal & General Group PLC 1,145,373 47,500 Provident Financial PLC 521,112 23,250 Rio Tinto PLC 563,799 598,122 Vodafone Group PLC 1,256,042 ---------------- 12,641,921 ---------------- UNITED STATES: 46.1% 6,400 Allergan, Inc. 483,968 11,800 @ Amazon.Com, Inc. 642,156 31,600 American Intl. Group 1,922,228 37,100 @ Amgen, Inc. 2,291,296 16,900 Apache Corp. 1,178,268 52,600 @ Applied Materials, Inc. 1,229,262 28,800 Avon Products, Inc. 1,957,248 4,500 @ Barr Laboratories, Inc. 345,465 28,100 @ Biogen, Inc. 1,137,207 11,100 @ Boston Scientific Corp. 751,692 33,200 @ Cablevision Systems Corp. 670,640 13,300 Capital One Financial Corp. 808,640 100,800 @ Cisco Systems, Inc. 2,114,784 23,300 Citigroup, Inc. 1,104,420 13,200 @ Ebay, Inc. 738,408 61,000 @ EMC Corp. 844,240 20,900 Fannie Mae 1,498,321 23,500 @ Fox Entertainment Group, Inc. 650,950 8,600 General Dynamics Corp. 719,820 100,000 General Electric Co. 2,901,000 71,100 @ General Motors Corp. 1,168,172 9,600 @ Gilead Sciences, Inc. 523,968 10,400 Goldman Sachs Group, Inc. 976,560 23,400 Guidant Corp. 1,193,634 99,700 Halliburton Co. 2,380,836 9,300 Harley-Davidson, Inc. 440,913 38,000 Hewlett-Packard Co. 847,780 31,000 Home Depot, Inc. 1,149,170 65,100 Intel Corp. 2,151,556 22,100 International Business Machines Corp. 1,977,508 31,600 JP Morgan Chase & Co. 1,134,440 17,800 @ Kohl's Corp. 998,046 23,700 Lehman Brothers Holdings, Inc. 1,706,400 46,000 @ Medimmune, Inc. 1,226,360 19,200 Medtronic, Inc. 874,944 29,700 Merck & Co., Inc. 1,314,225 81,700 Microsoft Corp. 2,136,455 65,200 @ Nextel Communications, Inc. 1,577,840 16,300 Nike, Inc. 1,041,570 85,500 @ Oracle Corp. 1,022,580 17,800 Pepsico, Inc. 851,196 109,500 Pfizer, Inc. 3,460,200 6,800 @ Pharmaceutical Resources, Inc. 491,504 11,000 Schlumberger Ltd. 516,670 30,100 SLM Corp. 1,178,716 51,100 @ Staples, Inc. 1,370,502 22,450 Texas Instruments, Inc. 649,254 16,100 Unitedhealth Group, Inc. 819,168 50,800 @ Veritas Software Corp. 1,836,420 24,000 Wal-Mart Stores, Inc. 1,414,800 34,100 Wyeth 1,505,174 34,800 @ Yahoo!, Inc. 1,520,760
See Accompanying Notes to Financial Statements 61 ING Worldwide Growth Fund PORTFOLIO OF INVESTMENTS as of October 31, 2003 (Continued)
SHARES VALUE - ------------------------------------------------------------------------------------------------------------- UNITED STATES (CONTINUED) 17,900 @ Zimmer Holdings, Inc. $ 1,142,199 ---------------- 66,589,533 ---------------- Total Common Stock (Cost $112,301,140) 137,032,648 ---------------- TOTAL INVESTMENTS IN SECURITIES (COST $112,301,140)* 95.0% $ 137,032,648 OTHER ASSETS AND LIABILITIES-NET 5.0 7,232,953 ----- ---------------- NET ASSETS 100.0% $ 144,265,601 ===== ================
@ Non-income producing security ADR American Depositary Receipt PLC Public Limited Company * Cost for federal income tax purposes is $113,053,792. Net unrealized appreciation consists of: Gross Unrealized Appreciation $ 25,668,586 Gross Unrealized Depreciation (1,689,730) ---------------- Net Unrealized Appreciation $ 23,978,856 ================
PERCENTAGE OF INDUSTRY NET ASSETS - --------------------------------------------------------- Aerospace/Defense 0.5% Agriculture 2.0 Airlines 0.7 Apparel 0.7 Auto Manufacturers 0.8 Banks 6.3 Beverages 1.1 Biotechnology 2.7 Building Materials 1.1 Commercial Services 0.7 Computers 3.8 Cosmetics/Personal Care 2.3 Diversified Financial Services 9.9 Electronics 1.7 Engineering and Construction 1.3 Entertainment 0.9 Environmental Control 0.4 Food 0.9 Forest Products & Paper 0.5 Hand/Machine Tools 0.8 Healthcare-Products 3.1 Healthcare-Services 0.6 Home Builders 0.4 Insurance 3.3 Internet 2.0 Leisure Time 0.8 Media 3.0 Mining 1.1 Miscellaneous Manufacturing 5.2 Oil and Gas 4.7 Oil and Gas Services 2.0 Pharmaceuticals 9.0 Retail 6.2 Semiconductors 4.9 Software 2.2 Telecommunications 6.7 Transportation 0.7 Other Assets and Liabilities, Net 5.0 ----- NET ASSETS 100.0% =====
See Accompanying Notes to Financial Statements 62 SHAREHOLDER MEETING INFORMATION (Unaudited) A SPECIAL MEETING OF SHAREHOLDERS OF THE ING EMERGING COUNTRIES FUND HELD DECEMBER 5, 2002, AT THE OFFICES OF ING FUNDS, 7337 EAST DOUBLETREE RANCH ROAD, SCOTTSDALE, AZ 85258. A BRIEF DESCRIPTION OF EACH MATTER VOTED UPON AS WELL AS THE RESULTS ARE OUTLINED BELOW: 1. To approve a Sub-Advisory Agreement between ING Investments, LLC and ING Investment Management Advisors B.V. with no change in the Adviser or the overall management fee paid by the Fund. 2. To transact such other business, not currently contemplated, that may properly come before the Special Meeting in the discretion of the proxies or their substitutes.
SHARES VOTED AGAINST OR SHARES BROKER TOTAL SHARES PROPOSAL SHARES VOTED FOR WITHHELD ABSTAINED NON-VOTE VOTED -------- ---------------- ------------ --------- -------- ------------ ING Emerging Countries Fund 1 6,649,778 95,502 93,806 -- 6,839,086 ING Emerging Countries Fund 2 6,435,163 270,753 133,170 -- 6,839,086
A SPECIAL MEETING OF SHAREHOLDERS OF THE ING FUNDS HELD JULY 22, 2003, AT THE OFFICES OF ING FUNDS, 7337 EAST DOUBLETREE RANCH ROAD, SCOTTSDALE, AZ 85258. A BRIEF DESCRIPTION OF EACH MATTER VOTED UPON AS WELL AS THE RESULTS ARE OUTLINED BELOW: 1. To approve a Sub-Advisory Agreement between ING Investments, LLC and Aeltus Investment Management, Inc., with no change in the Adviser, the portfolio manager(s), or the overall management fee paid by the Fund. 3. To transact such other business, not currently contemplated, that may properly come before the Special Meeting in the discretion of the proxies or their substitutes.
SHARES VOTED AGAINST OR SHARES BROKER TOTAL SHARES PROPOSAL SHARES VOTED FOR WITHHELD ABSTAINED NON-VOTE VOTED -------- ---------------- ------------ --------- -------- ------------ ING International Fund 1 8,291,101 67,541 88,760 -- 8,447,402 ING International Fund 3 8,133,071 161,615 152,716 -- 8,447,402 ING Worldwide Growth Fund 1 10,162,786 267,674 292,007 -- 10,722,467 ING Worldwide Growth Fund 3 9,725,321 295,481 701,665 -- 10,722,467
63 TAX INFORMATION (Unaudited) Dividends paid during the year ended October 31, 2003 were as follows:
FUND NAME TYPE PER SHARE AMOUNT - --------- ---- ---------------- ING International Fund Class A NII $ 0.0263 Class C NII $ 0.0009 Class Q NII $ 0.0453 Class I NII $ 0.0503 ING International Value Fund Class A NII $ 0.0520 Class Q NII $ 0.0974 Class I NII $ 0.0958 Class A STCG $ 0.0596 Class B STCG $ 0.0596 Class C STCG $ 0.0596 Class Q STCG $ 0.0596 Class I STCG $ 0.0596 Class A LTCG $ 0.1423 Class B LTCG $ 0.1423 Class C LTCG $ 0.1423 Class Q LTCG $ 0.1423 Class I LTCG $ 0.1423
- ---------- NII -- Net investment income STCG -- Short-term capital gain LTCG -- Long-term capital gain Of the ordinary distributions made during the fiscal period ended October 31, 2003, the following percentage qualify for the dividends received deduction available to corporate shareholders: 2.30% for the ING Foreign Fund. Above figures may differ from those cited elsewhere in this report due to differences in the calculation of income and gains under accounting principles generally accepted in the United States of America (book) and Internal Revenue Service (tax) purposes. Shareholders are strongly advised to consult their own tax advisers with respect to the tax consequences of their investments in the Funds. In January, shareholders, excluding corporate shareholders, receive an IRS 1099 DIV regarding the federal tax status of dividends and distributions received by them in the calendar year. 64 TRUSTEE AND OFFICER INFORMATION (Unaudited) The business and affairs of the Fund are managed under the direction of the Fund's Board of Trustees. A trustee who is not an interested person of the Trust(s), as defined in the 1940 Act, is an independent trustee ("Independent Trustee"). The Trustees of the Trust(s) are listed below. The Statement of Additional Information includes additional information about directors of the Registrant and is available, without charge, upon request at 1-800-992-0180.
TERM OF 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- INDEPENDENT TRUSTEES Paul S. Doherty Trustee October Mr. Doherty is 114 7337 E. Doubletree Ranch Rd. 1999 - President and Partner, Scottsdale, Arizona 85258 Present Doherty, Wallace, Born: 1934 Pillsbury and Murphy, P.C., Attorneys (1996 - Present); Director, Tambrands, Inc. (1993 - 1998); and Trustee of each of the funds managed by Northstar Investment Management Corporation (1993 - 1999). J. Michael Earley Trustee February President and Chief 114 7337 E. Doubletree Ranch Rd. 2002 - Executive Officer, Scottsdale, Arizona 85258 Present Bankers Trust Company, Born: 1945 N.A. (1992 - Present). R. Barbara Gitenstein Trustee February President, College of 114 7337 E. Doubletree Ranch Rd. 2002 - New Jersey (1999 - Scottsdale, Arizona 85258 Present Present). Formerly, Born: 1948 Executive Vice President and Provost, Drake University (1992 - 1998). Walter H. May Trustee October Retired. Formerly, 114 Best Prep Charity (1991 - 7337 E. Doubletree Ranch Rd. 1999 - Managing Director and Present). Scottsdale, Arizona 85258 Present Director of Marketing, Born: 1936 Piper Jaffray, Inc.; Trustee of each of the funds managed by Northstar Investment Management Corporation (1996 - 1999). Jock Patton Trustee October Private Investor (June 114 Director, Hypercom, Inc. 7337 E. Doubletree Ranch Rd. 1999 - 1997 - Present). (January 1999 - Present); Scottsdale, Arizona 85258 Present Formerly, Director and JDA Software Group, Inc. Born: 1945 (ING May- Chief Executive (January 1999 - Present); flower Officer, Rainbow BG Associates, Inc. Trust) May Multimedia Group, Inc. 1999 - (January 1999 - Present December 2001); (ING Director of Stuart Mutual Entertainment, Inc.; Funds) Director of Artisoft, Inc. (1994 - 1998).
65 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- David W.C. Putnam Trustee October President and 114 Anchor International Bond 7337 E. Doubletree Ranch Rd. 1999 - Director, F.L. Putnam Trust (December 2000 - Scottsdale, Arizona 85258 Present Securities Company, Present); F.L. Putnam Born: 1939 Inc. and its Foundation (December 2000 - affiliates; President, Present); Progressive Secretary and Trustee, Capital Accumulation Trust The Principled Equity (August 1998 - Present); Market Fund. Formerly, Principled Equity Market Trustee, Trust Realty Fund (November 1996 - Corp.; Anchor Present), Mercy Endowment Investment Trust; Bow Foundation (1995 - Ridge Mining Company Present); Director, F.L. and each of the funds Putnam Investment managed by Northstar Management Company Investment Management (December 2001 - Present); Corporation (1994 - Asian American Bank and 1999). Trust Company (June 1992 - Present); and Notre Dame Health Care Center (1991 - Present) F.L. Putnam Securities Company, Inc. (June 1978 - Present); and an Honorary Trustee, Mercy Hospital (1973 - Present). Blaine E. Rieke Trustee February General Partner, 114 Morgan Chase Trust Co. 7337 E. Doubletree Ranch Rd. 2001 - Huntington Partners (January 1998 - Present). Scottsdale, Arizona 85258 Present (January 1997 - Born: 1933 Present). Chairman of the Board and Trustee of each of the funds managed by ING Investment Management Co. LLC (November 1998 - February 2001). Roger B. Vincent Trustee February President, Springwell 114 Director, AmeriGas Propane, 7337 E. Doubletree Ranch Rd. 2002 - Corporation (1989 - Inc. (1998 - Present). Scottsdale, Arizona 85258 Present Present). Formerly, Born: 1945 Director, Tatham Offshore, Inc. (1996 - 2000). Richard A. Wedemeyer Trustee October Retired. Mr. Wedemeyer 114 Touchstone Consulting Group 7337 E. Doubletree Ranch Rd. 1999 - was formerly Vice (1997 - Present). Scottsdale, Arizona 85258 Present President - Finance Born: 1936 (ING May- and Administration, flower Channel Corporation Trust) (June 1996 - April February 2002). Formerly, Vice 2001 - President, Operations Present and Administration, (ING Jim Henson Productions Mutual (1979 - 1997); Funds) Trustee, First Choice Funds (1997 - 2001); and of each of the funds managed by ING Investment Management Co. LLC (1998 - 2001).
66 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- TRUSTEES WHO ARE "INTERESTED PERSONS" Thomas J. McInerney(2) Trustee February Chief Executive 168 Director, Equitable Life 7337 E. Doubletree Ranch Rd. 2001 - Officer, ING U.S. Insurance Co., Golden Scottsdale, Arizona 85258 Present Financial Services American Life Insurance Born: 1956 (September 2001 - Co., Life Insurance Company Present); General of Georgia, Midwestern Manager and Chief United Life Insurance Co., Executive Officer, ING ReliaStar Life Insurance U.S. Worksite Co., Security Life of Financial Services Denver, Security (December 2000 - Connecticut Life Insurance Present); Member, ING Co., Southland Life Americas Executive Insurance Co., USG Annuity Committee (2001 - and Life Company, and Present); President, United Life and Annuity Chief Executive Insurance Co. Inc (March Officer and Director 2001 - Present); Director, of Northern Life Ameribest Life Insurance Insurance Company Co., (March 2001 to January (March 2001 - October 2003); Director, First 2002), ING Aeltus Columbine Life Insurance Holding Company, Inc. Co. (March 2001 to December (2000 - Present), ING 2002); Member of the Board, Retail Holding Company National Commission on (1998 - Present), ING Retirement Policy, Life Insurance and Governor's Council on Annuity Company Economic Competitiveness (September 1997 - and Technology of November 2002) and ING Connecticut, Connecticut Retirement Holdings, Business and Industry Inc. (1997 - Present). Association, Bushnell; Formerly, General Connecticut Forum; Metro Manager and Chief Hartford Chamber of Executive Officer, ING Commerce; and is Chairman, Worksite Division Concerned Citizens for (December 2000 - Effective Government. October 2001), President, ING-SCI, Inc. (August 1997 - December 2000); President, Aetna Financial Services (August 1997 - December 2000);
67 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 THE TRUST(S) SERVED(1) PAST 5 YEARS BY TRUSTEE TRUSTEE ------- ------------ --------- ------------ ---------- ------- John G. Turner(3) Chair- October Chairman, Hillcrest 114 Director, Hormel Foods 7337 E. Doubletree Ranch Rd. man 1999 - Capital Partners (May Corporation (March 2000 - Scottsdale, Arizona 85258 and Present 2002 - Present); Present); Shopko Stores, Born: 1939 Trustee President, Turner Inc. (August 1999 - Investment Company Present); and M.A. (January 2002 - Mortenson Company (March Present). Mr. Turner 2002 Present). was formerly Vice Chairman of ING Americas (2000 - 2002); Chairman and Chief Executive Officer of ReliaStar Financial Corp. and ReliaStar Life Insurance Company (1993 - 2000); Chairman of ReliaStar United Services Life Insurance Company (1995 - 1998); Chairman of ReliaStar Life Insurance Company of New York (1995 - 2001); Chairman of Northern Life Insurance Company (1992 - 2001); Chairman and Trustee of the Northstar affiliated investment companies (1993 - 2001) and Director, Northstar Investment Management Corporation and its affiliates (1993 - 1999 ).
- ---------------- (1) Trustees serve until their successors are duly elected and qualified, subject to the Board's retirement policy. (2) 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. (3) 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. 68 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 ------- -------------------- --------------- --------------- James M. Hennessy President and Chief February 2001 - President and Chief Executive Officer of 7337 E. Doubletree Ranch Rd. Executive Officer present ING Capital Corporation, LLC, ING Funds Scottsdale, Arizona 85258 Services, LLC, ING Advisors, Inc., ING Born: 1949 Chief Operating February 2002 - Investments, LLC, Lexington Funds Officer present Distributor, Inc., Express America T.C. Inc. and EAMC Liquidation Corp. (since Senior Executive Vice July 2000 - February December 2001); Executive Vice President President 2001 and Chief Operating Officer of ING Funds Distributor, LLC (since June 2000). Executive Vice May 1999 - July 2000 President Chief Operating Officer July 2000 - February 2001 Secretary May 1999 - February 2001 Michael J. Roland Executive Vice February 2002 - Executive Vice President, Chief Financial 7337 E. Doubletree Ranch Rd. President and present Officer and Treasurer of ING Funds Scottsdale, Arizona 85258 Assistant Secretary Services, LLC, ING Funds Distributor, LLC, Born: 1958 ING Advisors, Inc., ING Investments, LLC Principal Financial May 1999 - present (December 2001 to present), Lexington Funds Officer Distributor, Inc., Express America T.C. May 1999 - Inc. and EAMC Liquidation Corp. (since Senior Vice President February 2002 December 2001). Formerly, Executive Vice President, Chief Financial Officer and Treasurer of ING Quantitative Management, Inc. (December 2001 to October 2002); and Senior Vice President, ING Funds Services, LLC, ING Investments, LLC, and ING Funds Distributor, LLC (June 1998 to December 2001). Stanley D. Vyner Executive Vice May 1999- present Executive Vice President of ING Advisors, 7337 E. Doubletree Ranch Rd. President Inc. and ING Investments, LLC (July 2000 to Scottsdale, Arizona 85258 present) and Chief Investment Officer of Born: 1950 the International Portfolios, ING Investments, LLC (July 1996 to present). Formerly, President and Chief Executive Officer of ING Investments, LLC (August 1996 to August 2000). Robert S. Naka Senior Vice President November 1999 - Senior Vice President and Assistant 7337 E. Doubletree Ranch Rd. present Secretary of ING Funds Services, LLC, ING Scottsdale, Arizona 85258 Funds Distributor, LLC, ING Advisors, Inc., Born: 1963 Vice President May 1999 - November ING Investments, LLC (October 2001 to 1999 present) and Lexington Funds Distributor, Inc. (since December 2001). Formerly, Assistant Secretary May 1999 - present Senior Vice President and Assistant Secretary for ING Quantitative Management, Inc. (October 2001 to October 2002); Vice President, ING Investments, LLC (April 1997 to October 1999), and ING Funds Services, LLC (February 1997 to August 1999).
69 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 ------- -------------------- --------------- --------------- Kimberly A. Anderson Senior Vice President November 2003 - Vice President and Assistant Secretary of 7337 E. Doubletree Ranch Rd. present ING Funds Services, LLC, ING Funds Scottsdale, Arizona 85258 Distributor, LLC, ING Advisors, Inc., ING Born: 1964 Vice President February 2001 - Investments, LLC (since October 2001) and November 2003 Lexington Funds Distributor, Inc. (since December 2001). Formerly, Vice President Assistant Vice November 1999 - for ING Quantitative Management, Inc. President February 2001 (October 2001 to October 2002); Assistant Vice President of ING Funds Services, LLC Secretary February 2001 - (November 1999 to January 2001) and has August 2003 held various other positions with ING Funds Services, LLC for more than the last five Assistant Secretary November 1999 - years. February 2001 Robyn L. Ichilov Vice President & May 1999 - present Vice President of ING Funds Services, LLC 7337 E. Doubletree Ranch Rd. Treasurer (October 2001 to present) and ING Scottsdale, Arizona 85258 Investments, LLC (August 1997 to present); Born: 1967 Accounting Manager, ING Investments, LLC (November 1995 to present). J. David Greenwald Vice President August 2003 - present Vice President of Mutual Fund Compliance of 7337 E. Doubletree Ranch Rd. ING Funds Services, LLC (May 2003 - Scottsdale, Arizona 85258 Present). Formerly Assistant Treasurer and Born: 1957 Director of Mutual Fund Compliance and Operations of American Skandia, A Prudential Financial Company (October 1996 - May 2003). Lauren D. Bensinger Vice President February 2003 - Vice President and Chief Compliance 7337 E. Doubletree Ranch Rd. present Officer, ING Funds Distributor, LLC. (July Scottsdale, Arizona 85258 1995 - Present); Vice President (February Born: 1957 1996 - Present) and Chief Compliance Officer (October 2001 - Present) ING Investments, LLC; Vice President and Chief Compliance Officer, ING Advisors, Inc. (July 2000 - Present), Vice President and Chief Compliance Officer, ING Quantitative Management, Inc. (July 2000 - September 2002), and Vice President, ING Fund Services, LLC (July 1995 - Present). Huey P. Falgout, Jr. Secretary August 2003 - present Counsel, ING U.S. Financial Services 7337 E. Doubletree Ranch Rd. (November 2002 - Present). Formerly Scottsdale, Arizona 85258 Associate General Counsel of AIG American Born: 1963 General (January 1999 - November 2002) and Associate General Counsel of Van Kampen, Inc. (April 1992 - January 1999) Todd Modic Vice President August 2003 - present Vice President of Financial Reporting - 7337 E. Doubletree Ranch Rd. Fund Accounting of ING Funds Services, LLC Scottsdale, Arizona 85258 Assistant Vice August 2001 - (September 2002 to present). Director of Born: 1967 President August 2003 Financial Reporting of ING Investments, LLC ( March 2001 to September 2002). Formerly, Director of Financial Reporting, Axient Communications, Inc. (May 2000 to January 2001) and Director of Finance, Rural/Metro Corporation (March 1995 to May 2000).
70 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 ------- -------------------- --------------- --------------- Susan P. Kinens Assistant Vice February 2003 - Assistant Vice President and Assistant 7337 E. Doubletree Ranch Rd. President and present Secretary, ING Funds Services, LLC Scottsdale, Arizona 85258 Assistant Secretary (December 2002 - Present); and has held Born: 1976 various other positions with ING Funds Services, LLC for more than the last five years. Maria M. Anderson Assistant Vice President August 2001 - present Assistant Vice President of ING Funds 7337 E. Doubletree Ranch Rd. Services, LLC (since October 2001). Scottsdale, Arizona 85258 Formerly, Manager of Fund Accounting and Born: 1958 Fund Compliance, ING Investments, LLC (September 1999 to November 2001); and Section Manager of Fund Accounting, Stein Roe Mutual Funds (July 1998 to August 1999). Theresa Kelety Assistant Secretary August 2003 - present Counsel, ING U.S. Financial Services (April 7337 E. Doubletree Ranch Rd. 2003 - Present). Formerly, Senior Associate Scottsdale, Arizona 85258 with Shearman & Sterling (February 2000 - Born: 1963 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. 71 (THIS PAGE INTENTIONALLY LEFT BLANK) (THIS PAGE INTENTIONALLY LEFT BLANK) ING Funds Distributor, LLC offers the funds listed below. Investors may obtain a copy of a prospectus of any ING Fund by calling ING Funds Distributor, LLC at (800) 992-0180. Please read the prospectus carefully before investing or sending money. INTERNATIONAL EQUITY ING Emerging Countries Fund ING Foreign Fund ING International Fund ING International Growth Fund ING International SmallCap Growth Fund ING International Value Fund ING Precious Metals Fund ING Russia Fund INTERNATIONAL GLOBAL EQUITY ING Global Equity Dividend Fund ING Global Real Estate Fund ING Worldwide Growth Fund DOMESTIC EQUITY FUNDS ING Disciplined LargeCap Fund ING Growth Fund ING Growth + Value Fund ING Growth Opportunities Fund ING LargeCap Growth Fund ING MidCap Opportunities Fund ING Small Company Fund ING SmallCap Opportunities Fund ING Technology Fund DOMESTIC EQUITY INDEX FUNDS ING Index Plus LargeCap Fund ING Index Plus MidCap Fund ING Index Plus SmallCap Fund DOMESTIC EQUITY VALUE FUNDS ING Financial Services Fund ING MagnaCap Fund ING Tax Efficient Equity Fund ING Value Opportunity Fund ING SmallCap Value Fund ING MidCap Value Fund DOMESTIC EQUITY AND INCOME FUNDS ING Balanced Fund ING Convertible Fund ING Equity and Bond Fund ING Growth and Income Fund ING Real Estate Fund FIXED INCOME FUNDS ING Bond Fund ING Classic Money Market Fund* ING Government Fund ING GNMA Income Fund ING High Yield Opportunity Fund ING High Yield Bond Fund ING Intermediate Bond Fund ING Lexington Money Market Trust* ING National Tax Exempt Bond Fund ING Money Market Fund* ING Aeltus Money Market Fund* ING Strategic Bond Fund STRATEGIC ALLOCATION FUNDS ING Strategic Allocation Growth Fund ING Strategic Allocation Balanced Fund ING Strategic Allocation Income Fund LOAN PARTICIPATION FUNDS ING Prime Rate Trust ING Senior Income Fund * An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. 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 85258-2034 1-800-334-3444 TRANSFER AGENT DST Systems, Inc. P.O. Box 419368 Kansas City, Missouri 64141-6368 CUSTODIAN Bank of New York 100 Colonial Center Parkway, Suite 300 Lake Mary, FL 32746 LEGAL COUNSEL Dechert LLC 1775 Eye Street, N.W. Washington, D.C. 20006 INDEPENDENT AUDITORS KPMG LLP 99 High Street Boston, MA 02110-2371 Prospectus containing more complete information regarding the Funds, including charges and expenses, may be obtained by calling ING Funds Distributor, LLC at 1-800-992-0180. Please read the prospectus carefully before you invest or send money. The Form N-PX (Proxy Voting Record) will be available without charge, upon request, by calling 800-992-0180 on or about August 31, 2004; and on the fund's website at www.ingfunds.com; and on the SEC's website www.sec.gov. [ING FUNDS LOGO] INTLI&QAR1003-122903 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 10(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. RESERVED. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. RESERVED. ITEM 9. CONTROLS AND PROCEDURES. (a) Based on our evaluation conducted within 90 days of the filing date, hereof, the design and operation of the registrant's disclosure controls and procedures are effective to ensure that material information relating to the registrant is made known to the certifying officers by others within the appropriate entities, particularly during the period in which Forms N-CSR are being prepared, and the registrant's disclosure controls and procedures allow timely preparation and review of the information for the registrant's Form N-CSR and the officer certifications of such Form N-CSR. (b) There were no significant changes in the registrant's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. ITEM 10. EXHIBITS. (a)(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 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 Mayflower Trust By /s/ James M. Hennessy -------------------------------------------- James M. Hennessy President and Chief Executive Officer Date January 7, 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 January 7, 2004 ------------------------------------------ By /s/ Michael J. Roland ----------------------------------- Michael J. Roland Executive Vice President and Chief Financial Officer Date January 7, 2004 ------------------------------------------ EX-99.CODEETH 3 a2125748zex-99_codeeth.txt EX-99.CODEETH EX-99.CODEETH 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. 1 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. 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. 2 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) Notwithstanding the foregoing, - ---------- (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, 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 3 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 the Chief Legal Officer and the Coordination and Compliance - ---------- 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. 4 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 - ---------- (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. 5 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. 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. 6 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. 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' 7 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: ---------------------- 8 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 9 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 10 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 EX-99.CERT 4 a2125748zex-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 Mayflower 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ James M. Hennessy Date: January 7, 2004 - ----------------------- ---------------- James M. Hennessy President and Chief Executive Officer I, Michael J. Roland, certify that: 1. I have reviewed this report on Form N-CSR of ING Mayflower 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize, and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Michael J. Roland Date: January 7, 2004 - --------------------------- --------------- Michael J. Roland Executive Vice President and Chief Financial Officer EX-99.906CERT 5 a2125748zex-99_906cert.txt EX-99.906CERT EXHIBIT 99.906CERT CERTIFICATION Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Name of Registrant: ING Mayflower Trust Date of Form N-CSR: October 31, 2003 The undersigned, the principal executive officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to ING Mayflower Trust and will be retained by ING Mayflower 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 7th day of January, 2004. /s/ James M. Hennessy --------------------- James M. Hennessy Name of Registrant: ING Mayflower Trust Date of Form N-CSR: October 31, 2003 The undersigned, the principal financial officer of the above named registrant (the "Fund"), hereby certifies that, with respect to the Form N-CSR referred to above, to the best of his knowledge and belief, after reasonable inquiry: 1. such Form N-CSR fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in such Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Fund. A signed original of this written statement required by Section 906 has been provided to ING Mayflower Trust and will be retained by ING Mayflower 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 7th day of January, 2004. /s/ Michael J. Roland --------------------- Michael J. Roland -----END PRIVACY-ENHANCED MESSAGE-----